ROBBED OF $380,591

12/12/2006 Item 5-C on the City of Mesa Council Agenda:   authorizes the City Manager to sign an agreement on behalf of the City of Mesa with Mesa Housing Associates LL, LLC; and MHA III LLC.  The following is a summary of the agreement.

1. The City will sell a 0.59 acre partial at a market value of $129,000 to Mesa Housing Associates II, LLC for a 3-story 24 unit apartment project. 

2. The City will sell a 63, 400 SF (1.45 acre) lot adjacent to #1 above for $1 provided the developer obtains Low Income Housing Tax Credit (LIHTC) approval for a 5-story, 71 unit affordable senior apartment building (ie low income).  The developer has until June 29, 2018 to obtain LIHTC award and close escrow.  If he doesn’t achieve LIHTC approval, the developer will purchase the land for $380,591. 

#1 (Market Rate Parcel) above is not of much concern to me because it simply is following a successful pattern of a recently constructed projects and should benefit the City.

However, #2 was a big concern to me.  Why?

• Low Income Housing is not needed in this part of town
• It makes no sense to sell land worth $380,591 for $1.  The City Council needs to learn a basic law of economics = Buy Low, Sell high!!  not the other way around.
• Lack of Transparency.  The Council did not go through a reasonable bidding or public comment phase.

The following were the Players in the game to make this decision:

DEVELOPER:  The developer is in the game for one purpose---to make money.  I do not fault him for that and I hope he continues to be a successful businessman.  In this particular case he has proven he can build a quality product that is successful---which he has completed right next door to this property.  There is some negative press about this developer in the Tempe News where there were some pretty shady things going on in the City of Tempe on an unrelated project, but I do not have the facts and will not pass along what I do not know.  If someone wants to research it, they can easily enough.  The developer would be crazy to not take a chance on this property if he can get it for $1 with Federal subsidies to boot.  This is a sweet deal for the Developer at Tax payer expense.  There is no doubt the Developer has nurtured the City Staff and City Council to ensure the project passes.  It would be interesting to know which Council members received campaign donations from the Developer.

CITY OF MESA STAFF:  If you read the City staff report you will find the staff supports this project and even make the statement in Section L of the “Amended and Restated Development Agreement” that this project is “in the vital and best interest of the City and the health, safety and welfare of the residents”.   It makes no sense to me why the staff would say this project is "vital" or has anything to do with health and safety of the community.  You could argue that those who live in the low income housing have increased welfare, but it seems strange the staff thinks the project is so vital.  It would have been more 'vital' to sale the land for market value and use the money for Police and Fire personnel that did not pass in the recent Question 1.  It makes me wonder what was going on behind the scenes.

CITY COUNCIL: 6 of the council members were present at the council meeting.  In the end only Mayor Giles voted against the item.  Councilmen Luna, Kavanaugh, Finter, Thompson and Richins voted for the item.  Even though there were many people who spoke passionately against the issue, Councilmen Luna and Kavanuagh didn't think it important to explain their vote to the public.  I respect and appreciate all of the Councilmen.  Each of them are good men and I have no doubt have a sincere interest in the City.  They are intelligent and successful in their careers.  So it seems very strange to me indeed why they would vote to give a valuable piece of land away for $1.  I wish I really understood the forces acting behind the scene to make them choose this option.  I am sure that if any one of them had personal title to this piece of land and were asked to give it away for $1, not one of them would do it!

PUBLIC: 2 people spoke in favor--the Developer and a businessman next door who good see increased income if the item passed.  8 members of the public spoke against it.  Nearly every one expressed concern about having more low income housing in the area and some mentioned the land giveaway. Anyone familiar with Mesa recognizes that the West side of Mesa is deteriorating because it is the older part of Town.  Residents believe that more low income housing will simply turn downtown Mesa into a 'destination site' for welfare recipients and will continue to devalue property.

RANDOM QUESTIONS:
When the City posted these parcels to receive bids from Developers, it was for only a few days---really not adequate time to test the market.  Why?

There was no 'Public Comment' phase during the process that lasted nearly a year.  The item was on the Consent agenda and would have passed without Public Awareness.  Why?

Why is the price per SF for the Affordable project nearly $1 greater than the price set on the Market rate land?  It isn't a lot of money, but it appears there was a conscious effort to increase the value of the land the City was giving away.  Why?

The price on the land was fixed early 2016 and remains fixed until November 2017.  Why is there no allowance for adjustment of price given such a long period before close of escrow?

I and a few friends only had 2 days to research this agenda item and prepare a rebuttal, but we did our best.  We prepared fliers and got them out to people, I and Arizona Senator David Farnsworth, District 16, visited with Council Kevin Thompson before the meeting to try to convince him to vote ‘NO’.

I attended the Council study session and requested item 5-C be removed from the Consent agenda.  Then I and about 8 people spoke during the Council meeting.

Here is a video of me speaking.  CLICK HERE

The right thing for the Council to have done is to vote 'NO' on the item which would have effectively killed the deal.  The City could then begin the process again with a sufficient time to receive more competitive bids and to receive public comments or could have just let the land sit until a more opportune time.  There is no pressing need to give away $380,591!

In the end, Mayor Giles voted ‘NO’ and Councilmen Thompson, Luna, Kavanaugh, Finter and Richins all voted ‘YES’.  

As a result the residents of Mesa were robbed of $380,591.

The 6 members of the council who made this decision are like the Team on a basketball court.  They are the 'players'.  I am confident that none of them would have given this land away for $1 if it had been their personal land.  So I ask myself, these are the players, but who is the coach calling the shots or at least who is really in control of the decisions that are being made on the playing field?

I am not happy about the result.  But I am happy for the opportunity to understand better how the council thinks, to develop more relationships, establish additional credibility and to have the opportunity to work with some of my friends learning how to magnify the power of our Civic Authority!  So for me, I consider the activity a great success and had a lot of fun doing it!

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