Phoenix Unloading Hundreds of City-Owned Properties Following Republic Report

Article originally posted on AZ Central on March 29, 2017

Phoenix plans to dramatically shrink its portfolio of city-owned real estate after an internal review found the city doesn’t need at least 656 pieces of land that it owns.

That number includes hundreds more excess properties than officials previously acknowledged, and comes after an Arizona Republic investigation revealing widespread concerns about Phoenix’s land-management practices.

Among The Republic’s findings: The city owns vast swaths of vacant land — about 1,400 individual properties covering 2.3 square miles with a combined assessed value of more than $150 million.

The Republic’s report last fall detailed how the vacant lots are a scourge in neighborhoods from south Phoenix to Sunnyslope. Residents complain the empty dirt parcels create problems with illegal dumping, dust and weeds. Some accuse the city of violating its own blight codes.

Developers also criticize the city for sitting on prime land in the urban core. They said Phoenix has stiffed opportunity in some areas, particularly as it experiences a construction boom.

City officials now are ramping up efforts to dispose of the excess properties by selling the land or, if the parcel carries no value or shouldn’t be on the city’s rolls to begin with, transferring it to a different owner.

The city’s updated list of unneeded properties includes hundreds of vacant dirt and gravel lots, some of which have sat idle for a decade or longer with no planned use on the horizon. It also includes properties the city should have relinquished years ago.

Greta Rogers, a retired real-estate agent who lives in Ahwatukee Foothills, has complained about the city’s ownership of excess land for years. She said the city finally is making the right changes after unnecessarily holding empty properties for decades, allowing its land portfolio to balloon.

“The city has sat with this plethora of land since point of beginning and it’s just grown like mold,” Rogers told council members last week. “I’m glad we’re finally addressing this situation.”

The overhaul started about five months ago, with an order from the top.

City Manager Ed Zuercher directed his staff to thoroughly review Phoenix’s portfolio of about 5,500 properties last fall, as The Republic questioned city departments about their long-term ownership of vacant lots. The review, which isn’t complete, has already shown at least 656 parcels are excess and could be disposed of, according to data from the city.

Prior to that, Phoenix pushed back against complaints from some residents and city leaders that it was sitting on numerous properties it could sell.

In late 2015, the city had identified about 30 excess properties. Mary Vivion-Withrow, the city’s then-deputy finance director, said city departments had reviewed all their parcels and the few dozen on the list were the bulk of the unneeded land.

“At this juncture, it’s not as if we have a large list of excess properties,” Vivion-Withrow said at the time.

Deputy City Manager Paul Blue, who led the recent review, said while the city knew some excess parcels were missing from the earlier list, others came as a surprise. He said the review team questioned city departments about their reasons for holding land. They previously hadn’t done that type of analysis.

“I think everybody acted in good faith,” Blue said. “This just wasn’t their day job and so we helped apply more attention. There just wasn’t enough hands to the task.”

Blue and other officials outlined the results of the overhaul last week in a presentation to the City Council’s efficiency subcommittee. About four years ago, City Council members called for the city to sell unneeded properties, but the effort moved slowly.

The city also recently launched a new website showing all of its for-sale properties — something real-estate investors said was needed given the difficulties they have encountered inquiring about city land sales.

As of mid-March, Phoenix was in negotiations or under contract to sell 132 properties. It has about 38 other parcels listed for sale and plans to list 43 more in the near future, according to city officials.

But that’s just the beginning. The city is figuring out how best to dispose of 417 additional properties. And city officials still are reviewing land owned by the Aviation Department: The airport owns about 800 vacant lots, which it acquired by buying and demolishing homes near runways using federal money for noise remediation.

With airport land included, the city’s list of excess properties could top 1,500 parcels, or more than a quarter of its total land holdings.

Blue said some properties added to the list of excess city land aren’t surprising because the city always knew they eventually would be sold. For instance, the city is undergoing a federal-review process to dispose of the airport lots. The Housing Department also has a few hundred homes it bought to provide affordable housing during the recession but now plans to sell.

But Blue acknowledged the list of excess properties likely includes hundreds of parcels the city hadn’t realized it could put on the market or should dispose of through other means.

Maricopa County Supervisor Bill Gates, who resigned from the City Council last year, helped lead the drive to sell excess city land when it started several years ago. He said the results of the latest review are what he and other elected leaders hoped to see.

“I don’t think it should have taken this much time,” Gates said. “Hey, when you’re dealing with an aircraft carrier, it takes a long time to turn it around. But I’m very encouraged to hear this.”

Getting to the expanded list of excess city properties required an exhaustive review. Over the past five months, Blue and a team of city finance and planning experts examined satellite images of parcels and questioned department leaders about their holdings.

In some cases, Blue said, department leaders had good reasons to keep land, such as property where the city might want to build a fire station in a few years. The property could cost more later if the city had to buy it back.

But the city found other cases where departments were sitting on land they didn’t need, at least not anymore. City departments previously had broad authority to decide what land was labeled excess, which critics say created little incentive to divest.

“I’m pushing,” Blue said. “Departments weren’t acting in bad faith, but I was pressing to ask the question.”

He said once the review is complete, Phoenix will regularly evaluate its land ownership to ensure it doesn’t have to go through a similar ordeal.

Among the unneeded properties found in the internal review were:

  • Two properties that the city owns but shouldn’t, according to Jami Spear, the city’s assistant real-estate administrator. One lot is a water-infrastructure property that actually belongs to the city of Glendale. The other is a road in Scottsdale.
  • 131 parcels that should be dedicated as public roadways, a process that removes them from the county assessor’s property-tax rolls. Some streets were built years ago “but for whatever reason, that (dedication) did not happen,” Spear said.
  • A boarded-up home near 27th Avenue and Van Buren Street. The home was bought using federal money for first-time buyer assistance, but the city foreclosed on the property in 2008. It has sat vacant since then and the Housing Department has no plans to redevelop it. The property is one of several structures that have sat unused for years.

Improving neighborhoods, saving money

Charisse Walls, president of the Country Place HOA, talks about the frustration in her neighborhood about a vacant lot that she says the city of Phoenix has ignored for years that is not only ugly, but potentially dangerous. Tom Tingle/azcentral.com

The benefits of unloading properties are two-fold: The city brings in money that could help address its financial problems and alleviates complaints from residents about vacant lots.

Selling excess land could generate millions of dollars in one-time revenue for city departments, though Phoenix faces limits on how it can use money from land bought with federal funding.

But the immediate proceeds are just one piece of the financial impact. For every lot the city has, someone isn’t paying property taxes to support local governments. And the city spends hundreds of thousands of dollars per year to remove weeds and trash from vacant properties.

The city doesn’t have an estimate for how much it has spent to maintain vacant lots, but the number likely is in the millions of dollars. The Aviation Department alone spends $500,000 per year. The Neighborhood Services Department, which owns about 300 vacant lots, spends another roughly $180,000.

Beyond the financial implications, frequent complaints about the city’s ownership of vacant lots come from neighborhoods.

Councilwoman Kate Gallego frequently called the city a “bad neighbor” when she ran for office in 2013. Her district includes the largest number of vacant city-owned lots, including large clusters of empty dirt and gravel parcels near the airport, in the Garfield neighborhood east of downtown and in south Phoenix.

Now, the city is preparing to sell empty lots in those areas. A mix of business and residential projects is proposed for land near Phoenix Sky Harbor International Airport. Elsewhere, the focus is building affordable, single-family homes.

Gallego said she now sees a strategy to not just sell land, but to ensure it is developed in a way that improves the surrounding areas.

“I want the city to be a good neighbor, and I didn’t feel that a parcel that had no planning process and was sitting vacant was meeting our responsibilities,” Gallego said. “We are not done. I’m looking forward to the day when we have houses on those parcels.”

Phoenix city-owned vacant land

In a metropolis known for urban sprawl, one of the biggest owners of vacant land is the city of Phoenix. City officials said they don’t track how much vacant land City Hall owns. But The Republic and azcentral.com found Phoenix owns enough empty lots to cover 2.3 square miles, or nearly 1,087 football fields. The land, according to data released in August, has an assessed value of about $150 million.

‘Happy with anything that came along’

The city also is preparing to sell numerous stand-alone properties, including some that have received stinging criticism from neighbors.

In downtown Phoenix, the city will soon accept bids for a dirt lot on Fifth Avenue. The city has owned the lot, enclosed with a chain-link fence on which hangs a “No Trespassing” sign, for more than 14 years.

Jonathan Pring, owner of the Teapot coffee shop next door, complained last year that the lot is an “eyesore” that attracts homeless people and litter, hurting the curb appeal of the surrounding Roosevelt Historic District. He said the city was tight-lipped about plans for the parcel.

About a month ago, he said he got a call letting him know the city will sell it.

“Had I not been a squeaky wheel, I don’t know that it would have been done so quickly,” said Pring, who’s considering buying the land. “At this stage, as the adjacent property owner, I would be happy with anything that came along over its current vacant status.”

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