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WELCOME TO PRESCOTT, CALIFORNIAWEST COAST YUPPIES ARE MAKING EVERYBODY'S HOMETOWN TOO EXPENSIVE FOR ITS OWN RESIDENT

It was summertime when Sherrie Rabellino, her husband and two children first visited Prescott and became enchanted with its historic downtown square. The family was hell-bent on moving from its lifelong home in Santa Rosa, California, a once-rural community 50 miles north of San Francisco that in the last ten years has been engulfed by urban blight.

"We sat on the courthouse steps and watched the square dancers," Rabellino says. "It had the feeling and small-town charm we were looking for."
Yavapai County's beautiful stone courthouse is the square's focal point. Flanked by a gently sloping lawn and a perimeter of shade trees interspersed with park benches, the courthouse projects an image of what's right with America. It is solid and imposing, graceful and reassuring. It is cozy, safe. It beckons one to lie down on the grass and take a nap.

"It's permanence. It's all the good qualities. It's a symbol of old- time value systems," says ten-year Prescott resident Nancy Thomen.

So the Rabellinos sold their retail jewelry business and their home, and moved to Prescott. They bought a new house and set up a wholesale handcrafted jewelry business that is not heavily reliant on Prescott's shaky, service-oriented economy.

Rabellino says many of her old friends in Santa Rosa also are considering a move to Prescott, but know they must act soon. "Prescott's real estate values are going up, and Santa Rosa's are going down," she says.

The Rabellinos and friends are not the only Californians moving to Prescott. In fact, one out of three people moving to this central Arizona mountain town of 30,000, breathtakingly flanked by the Prescott National Forest, is from California. Many of the immigrants are retirees (or within ten years of trading in the computer for the golf clubs), but there also are a sizable number coming with young families.

Most come flush with cash from the sale of overpriced California homes. They have little choice but to pay premium prices for real estate and build huge, quarter-million-dollar homes on Prescott's pine-covered hillsides. Otherwise, they fall victim to the federal government's capital-gains tax on their home-sale profits.

The steady influx of monied Californians is driving Prescott's real estate prices sky high. Lots in town that sold for $20,000 a few years ago are now snapped up at $40,000. Exclusive subdivisions with gated entrances are popping up, "offering" prime building sites for $100,000 and more.

"It's unbelievable," says Dave B. Gackle, a broker for Hidden Valley Real Estate and a 13-year veteran of Prescott's real estate market. His company sold 18 homes through the first three weeks of January, up from two homes for the same period last year.

The real estate boom is welcomed by Prescott's town council, which, after a few years of control by formerly out-of-state retirees, is back firmly in the grip of longtime Prescott business interests.

But lost in the euphoria of increasing building permits, jumps in retail sales and rising electrical hookups is the real impact on Prescott and other small towns in Arizona of this influx of new people.

In other areas of the country where Californians relocated in the past--primarily Oregon and Washington--a nasty backlash soon developed. The new arrivals were derided as "Californicators," because they screwed things up, driving real estate prices so high natives could no longer afford to live in their own town.

So far, rural Arizona--like Phoenix and Tucson--has welcomed the California money with open arms. But there are thunderclouds building on the horizon. Sooner or later, the pressure will build and all hell will break loose.

If there is any town that is ripe for good, old California-bashing, it's Prescott. The community sports a slogan of "Everybody's Hometown," because its visage pulls so strongly at American heartstrings. But it is quickly becoming a place too expensive for Prescott natives to live.

"The way the trend line is going for actually being able to live here, Prescott won't be anybody's hometown," says Town Manager Mark Stevens.

@rule:
@body:Ned Warren would roll over in his grave if he could see the steady stream of people moving into Prescott and the surrounding area. The late land-fraud kingpin made a killing in the 1960s selling the same high-desert acreage over and over to an untold number of naive, out-of-state investors. He figured few buyers would actually attempt to live on their ranchettes, making it a very remote likelihood that multiple "owners" of the same piece of property would show up at the same moment.

Unlike 30 years ago, when hardly anyone moved to such mini-Ponderosas, thousands of people now actually have set up housekeeping in Arizona's outback. And many of the new arrivals are loaded to the gills with cash. While Phoenix and Tucson were in the midst of a deep real estate recession during the late 1980s and early 1990s, Arizona's rural communities, particularly the towns along the Colorado River and in the central mountains, kept growing at a steady clip. Even Yuma, with a main drag famous as home to every type of fast-food restaurant ever to turn on a grease-fryer, has experienced a population boom, fueled by companies fed up with the high cost of doing business in California.

 

The influx of newcomers, particularly Californians, isn't evenly spread across rural Arizona. No one is beating down the doors to move to Arizona's economically depressed and hideously ugly copper-mining towns--Globe-Miami, Hayden and Clifton, for example--where mountains of mine tailings are considered scenic sites.

There are no California-plated Volvos cruising the main streets of desolate, Interstate 40 towns like Winslow, where boarded-up buildings outnumber occupied structures in a dilapidated downtown that no one would have ever heard about, except for a song by the Eagles rock group. Nor is there much interest in moving to rural farming towns such as Safford, where state and federal prisons are among the largest employers.

The Left Coasters want to settle in Arizona's most beautiful rural communities, turning them, gradually and perhaps unintentionally, into the same overpriced, high-stress ratholes they just fled.

The horde is making strong inroads in Flagstaff and has already overrun the red rocks of Sedona. The Verde Valley, graced by one of Arizona's few free-flowing rivers, is beginning to show on California radar screens. So are towns in southeastern Arizona, particularly Sonoita (Arizona's feeble attempt to re-create a Napa Valley) and the artsy burg of Patagonia.

The invasion of rural Arizona by Californians isn't happenstance. It is being fueled by Arizona Public Service Company.

APS, the state's largest electric utility and operator of Palo Verde Nuclear Generating Station, has been multiplying the numbers of people flowing into the state's rural areas through an aggressive marketing campaign. APS assists rural towns in business development, advertising, direct-mail campaigns, trade shows and economic-development planning.

The marketing program clearly is working. In the small mountain town of Payson, located 90 miles northeast of Phoenix, 40 percent of the new electrical hookups last year were for California exiles. This is great news for Bill Stevenson, APS director of economic development. His work is graded on the number of jobs created and the increase in electricity sales.

"Half of our leads from all our marketing efforts come from California," Stevenson says.

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@body:Prescott is perhaps the easiest Arizona town to market to Californians seeking a new nest. The town has elements that are missing from many of California's, and for that matter, most of Arizona's, towns and cities.

Prescott has a focus: The old-fashioned town square, so simple in design, yet so powerful a force for creating a sense of community. In newer municipalities, this straightforward approach to design has been sacrificed on the automobile altar. Prescott's downtown, however, provides a respite from the gnawing uniformity that characterizes so much of urban America.

"There is an integrity to the place, a unity to the place," says recent California transplant Barbara Tyrrell. "Everyone is focusing on a central point."
At the center of that central square is the courthouse. It isn't just any courthouse. Prescottonians place a near-mystical importance on the Yavapai County Courthouse, somewhat akin to the worship bestowed by New Agers on nearby Sedona's mythical energy vortexes.

Built from granite pulled from nearby quarries during the World War I era, the courthouse sets the tone for the ultraconservative outlook of the town's leading citizens. Adding to a feeling of independence and permanence is the town's rugged foothill terrain, punctuated by rock outcroppings that combine to create pockets of relatively isolated neighborhoods. The older hillside neighborhoods feature mostly one-story homes on one-acre lots, unobtrusively tucked into the forest.

Prescott's geography, history and architecture have all contributed to a strong, communal, "Don't Tread on Me" philosophy. It is a place where full-page advertisements condemning the United Nations appear routinely in local newspapers.

"We are not of a nature to want to tell someone else what to do," says Prescott College dean Joel Hiller.

All of which leaves the town dreadfully exposed to unrestrained development. The rapid influx of rich Californians in the last couple of years is just the tip of the iceberg. More are on the way.

And that's great news to Prescott Mayor Daiton Rutkowski.
"People who have lived here a long time don't have any problem with the growth," Rutkowski says. "We like meeting new people."
That's good, because there will be plenty of new hands to shake in Prescott. A 1992 census reported 52,800 people living within a ten-mile radius of the downtown square. The population is projected to jump to more than 60,000 by 1997.

 

Housing prices already are 24 percent above the national average, and the trend for ever more expensive homes is strongly upward. Naturally, the number of Prescott realtors is soaring, too, with 600 property hawkers belonging to the multiple listing service, up from 400 a year and a half ago.

"The people with the biggest smiles on their faces are realtors," says Tyrrell.
The town's leaders have given the green light for a squadron of bulldozers to clear more land. It's boom time, and there's no reason to put a damper on the party.

"I don't even like to use the word 'managed' with [the word] 'growth,'" says Mayor Rutkowski, a Prescott native who operates a combination soda fountain and antique store just off the downtown square.

Rutkowski espouses the type of laissez faire economics that reigned in the West in 1918, when the Yavapai County Courthouse was completed for $223,000. Rutkowski is against federal grants, believing local government should take care of its own business. At the same time, he says the town should keep its nose out of development.

"We let the market dictate it," he says.
What sweet words those must be to the banks, title companies, realtors, utilities and the Chamber of Commerce, all of which stand to profit, at least in monetary terms, if rapid growth continues. There are, however, clear signals of market failure flashing almost everywhere in Prescott.

Roads are crumbling as traffic steadily increases. There is a lack of neighborhood parks. Schools are jammed and seeking more money. Property taxes are soaring, and a rebellion led by retirees, who make up nearly half the population, is in the works.

The town is seeing its sales-tax base eroded by the construction of a large retail center on the neighboring Yavapai Indian Reservation. The job base is poor and affordable housing is history. Rental property is rare, and expensive.

"I saw a guy pull into town the other day with a U-Haul hoping to find a place to rent. Bad idea," says Prescott realtor Tom Garrow.

So far, Prescott has appeared to be content to ignore these problems and turn the once well-rounded, although relatively low-income, town into an exclusive bedroom community for those who made or make their money elsewhere. The working class--struggling at $6-an-hour jobs--will need to move on, perhaps to nearby Prescott Valley, which was ranch land until 1966.

There is little appealing about Prescott Valley, other than land that is cheaper than Prescott's. While Prescott has a town core designed for people, Prescott Valley is a "market-dictated," milelong strip of shops, housed in substandard buildings, strewn along the highway. Behind this ragged commercial center lie thousands of manufactured homes that assault the dignity of what once was a beautiful, grassy valley.

And, Rutkowski happily predicts, "I see high-rises in Prescott Valley in 25 years."

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@body:Despite Prescott's underlying problems, the town still seems like nirvana to many who have recently fled the problems of the big city. Many of those problems, however, are just a few turns of the calendar away from reaching Prescott. There is enough undeveloped land in Prescott's current town limits to hold a population of 100,000, although a population that high will probably not be reached for years.

"Prescott is like an oasis, but it's not going to remain that way unless there is some effort to control the growth," says Nancy Thomen, who is on a communitywide strategic planning committee.

The committee is about the only formal structure in place to grapple with the mounting growth problems facing the town. So far, the committee amounts to little more than talk.

"It's not too popular a subject," says Thomen, who moved to Prescott from Rochester, New York. "We don't have the moral or ethical right to keep other people from coming to town, even as we say we don't want the town to grow much bigger."
Former town councilmember Joe Gallo has drawn the wrath of the real estate and business communities by trying to put a wrench into the growth machine. He is widely vilified for speaking against the construction of a Wal-Mart a few blocks east of the downtown square. The Wal-Mart ended up going on the Yavapai Indian Reservation, located between Prescott and Prescott Valley.

"To be called a no-growther in this town is worse than being called an adulterer," he says.

Gallo also has been trying to prevent the town from approving subdivisions with ever-diminishing lot sizes, in hopes of preventing the spread of huge tract homes on tiny lots--a development feature that characterizes many California communities. His overall guiding principle to development is environmental harmony.

 

"I believe that population growth should be limited to what the environment can afford, and that planning should be directed toward preserving natural beauty," he says.

Gallo's progressive outlook apparently was out of step with Prescott's business ethos. He was booted out of office.

With philosophical and political forces steadfastly against moderating, or even guiding, the community's growth, the importance of maintaining the image of the downtown square has increased dramatically. Prescott quickly loses its Old West feel just a few blocks from downtown, where suburban-style shopping centers and minimalls control key corners, and cookie-cutter apartments are beginning to make inroads.

Mayor Rutkowski, an actor who has landed a few parts in television shows and commercials, knows the importance of image. While he hopes the rest of Prescott won't go to hell in a handbasket, he believes a sense of community can remain, so long as residents can go to the courthouse square, and so long as they think they live in a unique place.

"It's like a different place when you go downtown," he says. "It's Mayberry."
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@body:But not even Mayberry lasted for long. It was infinitely easier to cancel The Andy Griffith Show when the script ran dry than it will be for Prescott and the surrounding communities of Prescott Valley and Chino Valley to cope with the tremendous wave of growth they are courting.

"Who is going to finance the cost associated with not just the current infrastructure, but all the infrastructure needed to support future growth?" asks Joel Hiller of the rapidly growing Prescott College. "The city right now, given its revenue base, isn't in position to do it."
Prescott leaders don't appear to have the desire to make the choices necessary to decide who will pay for the basic needs of a rapidly expanding community. There is nothing, for example, requiring developers, who are making huge profits by selling expensive lots, to build or fund schools in the new high-end communities. Such requirements are standard in many California towns.

Efforts to raise the taxes for any specific interest group also are likely to be met with strong resistance. More general taxes, such as a sales-tax increase or property-tax boost, will be met with vehement opposition.

The reluctance to spend money on infrastructure is most clearly reflected in the never-ending debate on whether Prescott should build a public swimming pool. Most communities the size of Prescott have a public pool. While many people in Prescott want one, few are willing to pay for it.

"Until the community determines it needs a swimming pool and is willing to pay for it, we won't build one," says Jim McCasland, the town's director of recreational services.

McCasland isn't holding his breath until that happens. "It's not going anywhere," he says.

It's not that Prescott can't afford the $300,000 to build an outdoor swimming pool. The town's 21,689 households have an average household income of $33,672. If the community can't agree to provide a minor amenity like a swimming pool, how is it going to deal with far more expensive issues that come with the rapid growth it is so strongly encouraging?

That question leaves Town Manager Mark Stevens shaking his head.
Stevens is credited with at least bringing growth questions to the table for discussion. He clearly sees that the town is at a crossroads. It is in danger of losing the essense that made it a wonderful place to live, precisely because of its own failure to develop a clear vision of the future.

"Prescott just can't decide," Stevens says.
Stevens is nurturing a citywide strategic planning committee to develop an outline of what the town needs to do.

And meanwhile, Mayor Rutkowski downplays any growing pains the community is facing. Most of the growth complaints come from people who moved to Prescott in the last couple of years, he says.

"It's the new people who bitch," Rutkowski says.
Prescott, he points out, is still one of the best places to live in the country, as Money magazine underscores in an upcoming profile on the nation's best communities.

"Everything is just too good," Rutkowski says. "How can you bitch about living here?"
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@body:Easy. Just ask retired Air Force officer Lennie Lee. He and his wife have had enough of Prescott after moving from Santa Barbara, California, just five years ago.

The couple hoped Prescott would be their permanent retirement home, but during the short time they have lived in the town, it has grown increasingly crowded and contentious.

"I see Prescott as pretty well being inundated with people," says Lee, who writes a regular guest column for the Prescott Sun, a twice-weekly community newspaper.

 

Lee has tried to encourage discussion on growth issues, but has met with little support from the town's conservative community. Lee says Prescott is on the same growth curve that eventually engulfed Santa Barbara, California, transforming that community from a diverse town into a ritzy and crowded enclave by the shore.

The time for addressing the growth issues is past, Lee says, and it is unlikely that Prescott will ever face the question head-on. "It's out of hand already, but nobody wants to pick up on it and see it," he says.

As with most California transplants, it was the town square and the great year-round weather that convinced Lee to move into Prescott and build a "modest," 1,800-square-foot home with 19-foot-high ceilings.

Lee once saw the town square as a symbol of small-town America. He now foresees only gridlock around the courthouse, increasing battles over rising property taxes, a deteriorating road system, a rapid deployment of unsightly housing tracts and, generally, a more hectic lifestyle.

"Hey, we're not going to live here anymore," he says. "We don't want to get back into the rat race."
After a nine-year stint there, Ed Siereveld is also bailing out of Prescott. He gives rising property taxes and the increasing number of people as the reasons he's moving 15 miles north to Chino Valley, which is undergoing its own housing boom.

Siereveld says that it used to be rare to see another car travel down the unpaved road where he and his wife built their home. "Now, if you don't see a car every five minutes, it's a surprise," he says.

Such complaints may seem petty, but they are enough for people to cut their ties to a community and move on--a beautiful downtown square notwithstanding.

Even Sherrie Rabellino, the recent arrival from Santa Rosa, isn't sure whether the family will remain in Prescott for more than the time it takes for her kids to finish school--about ten years. Does she fear Prescott will grow into a big city and bring with it the problems she left behind in California?

"I do," she says.
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@body:Some opposition to Prescott's rapid growth is beginning to appear.

In the last year, more than a half-dozen skirmishes erupted on the neighborhood level, as residents voiced strong opposition to planned residential and commercial developments. Perhaps the most significant clash came when residents of one of the oldest communities in the area, located outside Prescott's town limits, forced a developer to withdraw plans to build a 120-room hotel inside the town.

The mostly retired residents of Mountain Club, an unincorporated community dating back 70 years, mounted a vigorous campaign against the proposed hotel, saying it would destroy the character of their wooded neighborhood.

The Mountain Club residents stressed they weren't against all growth, but insisted that development in the area be closely related to the existing land uses.

"We can control growth to make sure it is site-specific, so it is pleasing to everybody," says Phyllis Metcalfe, a four-year resident of Mountain Club.

The group kept steady pressure on town officials, and the Prescott Planning and Zoning Commission voted against the proposal, even though the Mountain Club residents couldn't vote in town elections. The developer withdrew the plans before the town council voted on them.

On another, perhaps broader, front, many homeowners are becoming increasingly resentful of the dramatically higher property taxes they are paying, primarily as a result of Californians driving up real estate values.

The property-tax issue has attracted the attention of state Senator Carol Springer, a Prescott realtor who chairs the Senate Finance Committee. Springer wants to eliminate the property tax and replace it with a sales tax and flat income tax.

"We have reached a crisis point where we are going to see a citizen's initiative similar to Proposition 13," says Springer.

Proposition 13 was California's strident reaction to soaring real estate values, which drove that state's property taxes through the roof. But a decade after the proposition passed, limiting property-tax increases to 1 percent per year, California's public schools are facing massive funding problems.

The same problems linked to California's high real estate values are now being transferred to Prescott.

Robert Samz can document the dramatic rise in property taxes for the modest Prescott home he has lived in for 22 years. Ten years ago, his home was valued at $62,000, and he paid $440 in property taxes. In 1993, the home was assessed at $120,000. His taxes had jumped to $1,354.

Samz and other members of Prescott's Citizens Tax Committee are closely monitoring not only why the taxes are going up, but where their property taxes are going. Not surprisingly, the bulk is going to the public schools. The result is a building resentment toward financing public education.

 

Just how much resentment has built against Prescott's rapidly expanding public schools, which added 500 students in the last two years, will be determined next month when the school district asks voters to extend a special property tax for another three years, to cover increases in teacher salaries.

The vote is expected to be razor-to-cheek close.
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@body:There is little to constrain growth in Prescott and the neighboring communities beyond citizen protest, which has, so far, been limited. Water supplies are plentiful, at least in the near future, according to Phil Foster, director of the state Department of Water Resources' Prescott Active Management Area.

Land availability isn't a problem. There are thousands of acres of private land to the east and north of Prescott that someday can be developed. The state is widening Highway 69, the main route into Prescott from Interstate 17, to four lanes. The intersection of the two highways in Cordes Junction is the likely site of a regional outlet shopping mall.

New businesses, including large warehouse distribution centers like a massive Ace Hardware facility that features 81 truck bays and 18 acres of storage under one roof, are setting up operations in Prescott Valley. Toyota Motor Company is said to be eyeing the small town of Paulden, 35 miles north of Prescott, for a parts center. Rumors of a Sun City North development, to be built just northwest of Prescott in Williamson Valley, are making the rounds. Prescott economic development officials say they will announce the arrival of five or six new businesses in the next few months.

In other words, all the potential growth indicators are flashing green. The ultimate result will be urbanization of the Tri-City Area now known as Prescott, Prescott Valley and Chino Valley.

The real estate mania and resulting sprawl sweeping the area leave longtime rancher Joey Wilkinson befuddled. The Wilkinson family has operated the far-flung Granite Dells Ranch northeast of Prescott since 1909. The family has no intention of selling the ranch--at least for another ten years--although offers come in all the time. The spiraling real estate prices and the leapfrog-type development that have long plagued the Phoenix area leave Wilkinson uneasy.

"I sometimes wonder if the values are really there," he says. "This feeling of 'Hurry and get something, before it's too late' is getting out of hand."
Wilkinson wishes there was some way he could keep his ranch from being swept up into the real estate boom. The rising property taxes are taking a bite out of his operation, as well.

He would like area governments to consider allowing him to place the ranch into perpetual land trust. Such a trust would guarantee that the property be used for ranching, forever. With such an arrangement, the rancher would be granted stable tax valuations on his property. At the same time, the rapidly urbanizing community would be guaranteed open space.

Wilkinson says there appears to be little support for this long-term approach to land management. Instead, the desire for more dollars appears to be ruling the day.

"Money can blind," he says. "All they ask is: 'How big can the bottom line be?' Not, 'Did we do it right?'"
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@body:Prescott's aggressive scramble to import new money has gone this far: Christmas is being affected.

As it has for 41 years, Prescott's Christmas lighting ceremony, held on the first weekend of December, marked the high point of the town's winter season. The ceremony has always been a family event, similar to thousands of other Christmas lighting pageants held in small towns across the country.

Last year was different. Unsatisfied with the amount of business generated by local residents attending the ceremony, the Chamber of Commerce launched an aggressive advertising campaign that brought thousands of tourists into town for the affair.

The Chamber was delighted. Hotel rooms were full. Restaurants packed. And the Whiskey Row bars were braced for a lively evening, pouring hot toddies for the excited crowd gathered for the ceremony.

But there was a trade-off.
Heavy promotion of the Prescott Christmas lighting spurred a Phoenix television news station to cover the ceremony. It was another coup for the Chamber. Could there be a better advertisement for Prescott's pricey real estate than a live news broadcast into Phoenix homes depicting Rockwellian images of small-town America gathering around its anchor of civility?

Everyone gathered for the big moment; thousands of Christmas lights would illuminate the north steps of the Yavapai County Courthouse.

The courthouse lighting system, which earlier had bathed the smiling white faces of singing children, grew dim. Everyone was waiting for full darkness, and the dramatic impact of a sudden display of Christmas lights.

 

But darkness never arrived.
The television crew's floodlights continued to beam down on the courthouse. This was a live feed, and the innocence of a small town celebrating for the sake of celebration was gone. Prescott's downtown square--famous for events that range from drunken fights on July Fourth to Barry Goldwater's 1964 presidential campaign declaration--had become nothing more than another cheap sales prop.

The Christmas lights were turned on, and the crowd's muffled reaction told the story.

"This year, there wasn't so much oohing and aahing," says state Representative Sue Lynch, a former Prescott town councilmember. "The cameras were on, and there were all these bright lights.

"It just wasn't the same.


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