Mesa to sell Pinal County farmland for $135 million - East Valley Tribune: Mesa

Mesa to sell Pinal County farmland for $135 million

Print
Font Size:
Default font size
Larger font size

Posted: Thursday, May 3, 2012 4:44 pm

Mesa plans to sell a vast swath of farmland it owns in Pinal County so it can plow $135 million into economic development initiatives that include the downtown and a Chicago Cubs complex.

The sale would be a windfall for a city that has long considered the land a burden.

Mesa had expected it would take 20 years to unload the nearly 11,500 acres between Coolidge and Eloy, but a recent offer generated interest because the price was higher than surrounding deals, Mesa City Manager Chris Brady said.

Mesa will get about $10,000 an acre, which Brady said is three or four times higher than similar transactions on neighboring farms.

The timing raises the question of whether Mesa should sell because of deeply depressed land values for housing, office buildings and industrial property.

Mesa Councilman Alex Finter said farm prices have bucked that trend. Finter said he feels confident in selling the land now because of his family’s experience owning agricultural property across the U.S.

“There’s actually a bubble in the market,” Finter said. “We’re selling it at the top of the market in my mind, which I think is a real positive because that could change in a heartbeat.”

The City Council is expected to begin the transaction Monday, in a deal with Scottsdale-based Farm Sources International. FSI would have 120 days to conduct a water due diligence study and then 150 days to perform a general feasibility study.

Mesa would then sell the land in three phases over 5.5 years, while charging millions a year to FSI in leases.

The city bought the land in 1985 for its water rights to ensure it could support decades of growth. But Arizona outlawed any more so-called water ranches shortly after. And a 2004 study estimated it would cost Mesa $90 million to drill wells, build a water treatment plant and deliver the water to the far-away city.

Mesa has since determined it doesn’t need the land because it’s secured other sources of water.

The city generated some money by leasing the land to a farm management company, but Mesa made only $65,000 a year after expenses.

Finter said he’ll be glad to have the land in private ownership and to have economic development funding. He has been pushing the city to figure out how to make a bigger profit from its landholdings or to sell.

“Why do we have a non-performing asset?” he said. “You could never have that in a business or a corporation.”

Mesa had already decided to sell the land as it was planning to build a $99 million spring training complex to keep the Cubs from moving to Florida. The land has been on the market for several years, but Brady said the city has never gotten nibbles on anything more than a few hundred acres at a time. That lead him to believe the process would take 20 years or so.

FSI approached the city to buy most of it. Brady said Mesa insisted the company buy the rest so the city could make a clean exit from the farm business.

“We’re not going to allow them to take the prime pieces and leave us with the remnants,” Brady said.

The proceeds will go in an economic development fund for the city’s HEAT initiative, which targets health care, education, aerospace, tourism and technology. Most, but not all, of the Cubs complex cost will come from the proceeds. Mesa also plans to spend $14 million to attract multiple colleges to its downtown. Other potential investments could include a business accelerator and a defense research lab.

Brady said the city has spent months studying the sale and the buyer. He cautions that several smaller farm sales have fallen through and that it will take more than Monday’s action to finalize the transaction.

“We have a long way to go, that’s one thing I want to emphasize,” Brady said.

• Contact writer: (480) 898-6548 or ggroff@evtrib.com

More about

More about

More about

  • Discuss

EVT Ice Bucket Challenge

The East Valley Tribune accepts the Ice Bucket Challenge.

Your Az Jobs