Is it just that City Hall doesn't know how to cut a decent deal?
That's the impression given by the prices the city is paying for land for the downtown Suns Arena--in many cases, paying far above appraised value. Never mind that Phoenix is in the midst of a real estate bust. Never mind that you can't give some land away. If you're lucky enough to own the ground where the Suns want to play, you're making a killing. So far, attorney Robert Kerrick has negotiated deals on behalf of the city on ten of the fifteen parcels needed for the arena. The city has paid from $35 to $40 a square foot. These are depression prices? No way. They're top dollar. Correction, they're better than top dollar.
When Fife Symington finally bought the prime land for the Esplanade--in the heart of the Valley's hottest stretch of Camelback--he paid the princely sum of $27.50 a square foot. So what gives? Kerrick says City Hall is well aware that when it's got a hurry-up project, it not only has to move off the dime but move up the dollar signs. He says the city couldn't afford to hold firm at appraised values but had to show flexibility in order to get the job done in time for the February groundbreaking. If groundbreaking is missed, the arena can't be done in time for the 1991 season and in that case, the Phoenix Suns can walk away from the deal. (The city and the Suns have made a pact to split the $70 million construction cost of the arena, with the city throwing in the land and a parking garage and taking 60 percent of any profit the arena generates.)
Kerrick notes there's nothing magical about appraised values in the first place since they're just the best guess about what land is worth. And if you thought sleepy downtown land had no value, Kerrick has news for you. "There's a 100 percent corner in downtown Phoenix--the most valuable corner in all of Phoenix," he says. That corner, at Central and Washington, used to hold a Valley Bank branch and the historic Lil's Convention Center (a bar with not only a history but a past). Kerrick reports that private developers paid $107 a square foot for that property. "And only a block away is the first block we're buying for the arena," he adds. "It would be hard to convince a jury that what we're buying isn't worth more than its appraised value."
Besides, condemnation lawsuits and jury trials are time-consuming, and the city has no time for such things. Couldn't it have foreseen that when it cut the deal with the Suns earlier this year? Kerrick acknowledges Phoenix knew then that it would pay top dollar but couldn't see any way to avoid it. (Hint: Making the contract specify the arena would be done for the 1992 season would have given the city another whole year, for the 1993 season . . . )
Kerrick is actually quite pleased with himself for the smooth way negotiations have gone for the property, preferring to say that overall, the city has paid 13.2 percent above appraisals (rather than noting it paid 28 percent above appraisal on one piece). "We're well within the reasonable range of value," he says.
What worries Kerrick is the last five parcels. Owners of two of those have hired a noted condemnation attorney in town to plead their case. They're asking $60 a square foot. Another final parcel owner, apparently acting on his own, wants $65 a square foot. Is it any comfort to know that all the arena land has been owned for years by families and businesses and none was scooped up recently by land speculators? We thought not.
Kerrick says he's still confident the city can buy all the arena parcels for the $10 million it set aside for the land acquisition--a generous figure, considering the original appraisals valued the land at $8.3 million.
By the way, Kerrick has been a particularly busy fellow these days. At the same time he was representing the city in negotiations with the arena land owners, he was representing a land owner in a lawsuit against the Arizona Department of Transportation. That lawsuit was decided this week, handing his clients the largest jury award for a condemnation suit in the state's history: The Paloma Corp. was awarded $21.6 million for a 31-acre parcel at I-17 and Beardsley Road, where the "stack" connecting I-17 and the Outer Loop will be built. The company said its land was appraised at $28.5 million. The state's appraisal was $8 million. "The state didn't offer a dime about their appraised value, so it wasn't a hard decision at all to go to court," Kerrick says.
