Phoenix City Manager Ed Zuercher has bowed to Councilman Sal DiCiccio's demand that the state Attorney General's office be asked to review a bargain-priced land deal involving 10 city-owned lots.
DiCiccio last week called on constituents to request the state Attorney General's determination of whether the city violated the state’s prohibition of government gifts when it sold for $50,000 10 lots with a total appraised value of at least $700,000.
“Arizona has a constitution that says these types of gifts to developers are illegal. It is called the gift clause,” DiCiccio posted on Facebook. “I would implore everybody to help on this that is concerned by asking the attorney general to look into the violation of the gift clause on this case.”
City Council on June 24 approved the deal at the request of the city manager.
It sold 10 vacant lots in the Garfield Neighborhood Initiative effort at $5,000 apiece to Texas-based Trellis Company for development of “affordable, single-family owner-occupied residences,” according to city records.
DiCiccio said the land, located roughly in the area of Van Buren Street and I-10, was appraised at $700,000 a year ago and that with rising home values, the area likely is worth more now. He urged citizens to ask the state attorney general to require it “use an updated appraisal and not one that is over a year old, which was clearly expired.”
In a response to DiCiccio, Zuercher noted that "The transaction rests on adequate consideration: sale of the ten lots for a lower purchase price to induce the nonprofit developer to pay for offsite and onsite improvements and develop 10 houses that enable affordable home ownership for low- to medium-income persons. The sale of each house will also return the real estate to the tax rolls, which will generate revenue to the City."
He also said the developer, Trellis, has developed and sold affordable housing for decades."
But he also told DiCiccio, "Notwithstanding my view that the transaction complies with all applicable laws, I will transmit your letter, this memo, and the documents referenced above to the Attorney General in your name for his review."
DiCiccio claimed another developer was prepared to pay the city at least the year-old valuation price.
DiCiccio said he was "guessing" that Zuercher submitted the paperwork to the AG "because we had so many people contact the Attorney General on this case."
That second package, about 1.44 acres, “consists of properties acquired and assembled by the city through the Slum and Blight Program over the past 21 years,” city records state.
Under the sales agreement, Trellis would develop homes with off-street covered parking spaces that would be between 855 and 1,255 square feet and meet national green building standards and EnergyStar performance specifications.
“Additionally, the homes will utilize a fully accessible design standard with flexible and adaptable floor plans, and be built with the philosophy of being lifetime homes where families can grow and homeowners will be comfortable aging in place. The homes will be built in the American Craftsman Bungalow-style, with designs previously approved by the Historic Preservation Commission,” sales documents show.
The city manager’s office said the project “will bring an estimated value of investment up to $2.58 million to the Garfield neighborhood and create up to 60 construction jobs.”
Under the agreement with Trellis, the developer must sell seven homes to people at or below 120 percent of the area median income and the other three to people at or below 80 percent of that income level.
The agreement also forbids Trellis from flipping the lots without city approval.
“The sale of these lots will put up to 1.44 acres of land back into private ownership, which will generate new property tax revenues,” the city manager’s office told council.
“This is just wrong,” DiCiccio told City Manager Ed Zuercher in a letter last week. “This is not fair to the taxpayers who have to pay the taxes for these insider giveaways. This is not a Republican or Democrat issue, this is an insider deal, and these insider deals have no party affiliation.”
He told the AFN, “This is as bizarre as it gets and clearly demands an attorney general look as to whether not this broke the law.”