This map, from a presentation to Tempe Union school board members by Nathan and Associates, shows the 63-acre site, bordered in yellow, that the district is selling.

Tempe Union officials are selling a 63-acre plot of land in Ahwatukee that could lead to the construction of as many as 178 new homes not far from the South Mountain Freeway and make the school district co-developers of the project.

The school board two weeks ago authorized Nathan and Associates to begin marketing the property on the southwest corner of Desert Foothills Parkway near Frye Road for a sale that could yield between $15 million and $19 million for the district.

Despite several members’ strong reservations, the board also decided to leave open for now the possibility of entering a potentially risky joint venture with the builder who buys the site instead of only looking to sell it outright.

Voters last November approved a ballot question allowing the board to sell the site.

“It’s a highly coveted site by the development community,” Ryan Duncan of Nathan and Associates told the board during a study session April 5. “There’s not a builder in town who doesn’t know about it.

“A property like this, given its size and location, we envision 40 to 50 potential suitors who would consider this,” he added, saying he anticipated that the district would receive “10 to 15 offers – maybe more but at least that many.”

Duncan told the board it had two options for a sale. The “least risky” would be an outright sale, although he cautioned that a builder would want to get as close to final approval of the development plan by the city before finalizing the deal.

Duncan also said the board could elect to enter a joint venture in which it would share the proceeds for the sale of each plot.

In such an arrangement, he said, “the builder would go in on their dime” to prepare the land and divide it into plots for homes and the district would realize revenue when each plot is sold.

“This has the potential to generate more income,” he said. “If the money was coming in more of an installment basis, that may be more beneficial to the district.”

But Duncan warned that such an arrangement is “less risky for the builder, more risky for the district” and that “you have to make sure you’re picking the right partner.”

The “more complicated” joint venture option also would mean that it could take the district as long as six years to realize all the revenue it can get from the deal.

“I am strongly opposed to a joint venture,” said board member Sandy Lowe. “Builders go belly-up all the time and we could be left with a bunch of dirt and half-built houses, and that would be the worst case.”

Added board member Michelle Helm: “I agree. I think we should go for the straight-up sale. I don’t like the idea of a joint sale.”

But the board decided that for now it would not rule out a joint venture completely after Brandon Schmoll, the only Ahwatukee member, said, “I don’t like to take anything off the table, especially if there haven’t been any offers made. I don’t want to rule anything out immediately.”

However, Duncan cautioned that while there was potential for more revenue from the deal than an outright sale, “there’s always a downside in a joint venture – you could get less.”

The land was originally purchased well before the current board and administration were in office, with an eye toward the possible construction of a third high school in Ahwatukee.

That vision was never realized – partly because of demographics, but also because of the site’s topography.

Indeed, board members agreed that the site is so hilly that it likely would never have been suitable for a large building like a school or even a commercial development.

And Duncan said that the sale’s ultimate worth to the district will depend on a more detailed analysis of the land by the winning bidder.

Other contingencies also will affect the site’s final price as well as the number of homes that could be built on it, Duncan said.

He said an outright sale is “the least complicated deal structure,” would attract the largest number of bidders and likely would realize the quickest closing, which he estimated could take eight months to a year.

Stating an outright purchase also carried “little market risk” to the district, Duncan said. “The housing density for the site is still an open issue.”

That’s because the builder’s proposed development plan would be subject to the review of the Ahwatukee Foothills Village Planning Committee and Phoenix officials. Those officials would also be listening to reaction from neighboring homeowners.

The vagaries in the review process also explain why Nathan and Associates would not get more specific about the land’s worth to the district besides saying it could range between $15 million and $19 million.

“The builder will want a final ruling by the City of Phoenix,” Duncan advised.

He also said he and his associates would make sure “the builder is not seeking any exotic zoning.”

Nathan and Associates expect to collect the bids, analyze them and present them with a recommendation to the board during a closed-door meeting sometime over the next two months.

The district will be able to use all the sale proceeds because the funds will go into its capital fund. There, it can be used to buy everything from supplies to improvements for buildings and grounds. The money also can be used to pay down debt, Superintendent Kenneth Baca told the board.

Assistant Superintendent Anna Battle, who lives near the site, said she expected the sale will be greeted enthusiastically by neighbors.

With the impending freeway, she added, “there’s optimism right now.”

“Once the road goes in, there are exciting possibilities,” Battle said of the freeway.

Some board members, like Michelle Helm, also expressed regret that the district was selling an asset.

“I came in here not in favor of selling and yet, after listening to all our administrative people, I am convinced now is the time and it will be advantageous for our district,” Helm said.

Other board members, as well as Battle, concurred, calling it a “win-win” for the district. They also said they were being “good stewards” with an asset that can be sold for the benefit of students and taxpayers.

Duncan said the district is going to market at a good time.

“We can never time a real estate cycle, but I think your timing is good,” he told the board.

Battle called it “a responsible and thoughtful move” by the board, noting new homes will bring more students.

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