Another City Giveaway? – Howard Mechanic

Photo: Lake at Friendly Pines

On Tuesday’s Council agenda, there is a proposal to approve a rezoning of a property owned by the City of Prescott – a 94-acre parcel that is part of Friendly Pines Camp in Groom Creek.

Many people may think this property is in the “boonies” and can’t be worth much, but the reality is very different. Across the street are homes that were in the million-dollar-plus price range when purchased several years ago. Think Haisley Homestead, but with homes on 2- or 3-acre parcels.  Decades ago, the city created a lake on the city property on Groom Creek. The lake is about 600 feet long and 250 feet wide – about 3 times the area of a football field, including the end zones. That’s got to be extremely valuable land.

Back in 1955, when the city initially leased this land to Friendly Pines, the value of the land was likely low. The problem is that the city hasn’t changed the lease more than incrementally since then. Friendly Pines is now paying only $1964 per month for this 94-acre city parcel that adjoins its own parcels.  That’s $21 per acre per month that the city collects.

The camp is owned by a private for-profit company that charges each child over $6600 for a four-week stay. The camp has 321 beds. In addition to the camp use from May to August, off-season rentals are available for groups. While the tenant certainly has a right to make whatever profit they can, these numbers are important to consider when analyzing the appraised value of the property based on one common method of appraisal: the income approach.

The proposal on council’s Tuesday agenda states: “The proposed zoning overlay is consistent with the property’s existing use …” The question is: Does this rezoning restrict future uses that are now legally available to the city? Furthermore, does this rezoning reduce the value of the property?

The city can terminate the lease in three years. The city should determine the highest and best use of the property before approving this proposal.  Additionally, since it would be best for the tenant to have a couple of years’ notice of the city’s intentions, it would be prudent for the city to determine soon if it is better to continue leasing the property and, if so, determine the appropriate future lease price. If the city determines it is better to sell the property, then it should determine a fair-market purchase price for the property through an independent appraisal.

Many times in the past, private parties have requested actions from the city that provide benefits to them. Often the city asks for nothing in return. It appears this may be the case here. The city should now ask itself: What is fair for the city to request in return regarding a new lease or sale?

If the Friendly Pines rezoning is not clearly to the benefit of the city, City Council should table the item until the Council and public have a clear understanding of the implications.

The city leases out various properties. There has been, and continues to be, a serious issue with the city failing to charge a fair lease amount. This shows a lack of fiduciary responsibility to the public and is also bad public policy. Many times, such leases have not conformed to the Arizona Constitution’s Gift Clause because the lease payments were well below market value; therefore, the leases were unconstitutional gifts. It is now time for the city to review all leases to determine if they are equitable.