By Jeanie Hankins
The Town of Wickenburg will this week serve legal notice of breach and default to the organization known as the Wickenburg Regional Economic Development Partnership (WREDP) in relation to the Forepaugh Property, Town Attorney Trish Stuhan confirmed following a Council executive session on Monday night.
According to Town of Wickenburg and Maricopa County records, WREDP has two unfulfilled contracts with the Town, unpaid property taxes resulting in liens, a list of environmental concerns and seven private liens filed against the property. Meanwhile, three years of promises by WREDP representatives that developers are on the doorstep have yielded no progress.
The Forepaugh Property consists of three parcels totaling 77.5 acres about 16 miles west of Wickenburg along SR 60. Part of a former World War II training facility, the three parcels were given to the Town of Wickenburg by the US Government following the war. For the better part of the past 10 years, WREDP has been working to bring development of some kind to the property, according to its chairman Alan Abare.
On July 25, 2016, the Town entered into an agreement with WREDP, deeding the land to the partnership for $10 with the understanding it would be used for an economic development project. According to meeting minutes, Town Council trusted that WREDP had engaged with potential investors and property buyers with the intention of establishing a railroad rehabilitation and improvement facility.
By July 2017, WREDP reported it was applying for a Railroad Rehabilitation Improvement Financing Loan from the U.S. Department of Transportation which required the Town be paid fair market price for the property, rather than the initial $10. At that time, the agreement between the Town and WREDP was amended to reflect that within 60 days an escrow account would be set up to for the benefit of the Town and $50,000 would be deposited into it. Further, if WEDP or an investor were not engaged in a financing agreement within 180 days, the $50,000 would become property of the Town. If financing were found, the Town would be paid a total of $262,592.
According to Town Manager Vince Lorefice, the federal loan was never funded, and the escrow account was not established.
Another year later, on July 2, 2018, with still no visible progress, several WREDP representatives attended a Council meeting and requested another 120 days to complete the sale of the property, and requested for Town participation with WREDP in acquiring 640 acres of adjacent Bureau of Land Management (BLM) property. Prior to that meeting, then-WEDP Chairman Ben Routi wrote a letter to Council advocating for an extension and assuring them there was an interested investor who would cover all expenses on the property if given more time. He said WEDP had received a $2 million commitment with a matching grant but that could not proceed under an expired agreement with the Town. Carol Vernon attended the July 2 meeting and stated that she represented an unnamed developer which was in talks with WREDP. According to Council minutes, she affirmed that her client had made an offer on the property, but more time was necessary. Ultimately, Council authorized the town manager to execute an extension for another 120 days without renewing or otherwise changing the expired agreement.
After another 120 days had passed, newly installed WREDP Chairman Alan Abare forwarded an email he had received from WREDP Executive Director Denise Steiger dated Nov. 5 which stated in-part that it had been “determined that to sell the property to the developer as originally planned at this time would not be advantageous to the development of the project over the long haul.” Instead, WREDP would work on a lease with the developer, and as soon as the agreement was reviewed by the developer’s attorney, and after the principal party returned from an overseas trip, the lease would be signed and “a fee will be paid to cover the amount owed to the Town as part of the lease option and development agreement.”
Now, six months later, still no developer has come forward, and no sale or lease has taken place. WREDP also apparently no longer has an executive director. Abare told the Sun on Monday that Steiger is no longer employed with WREDP because the organization does not have funding to pay her, and she is currently out of state due to a family emergency. Abare said she is still involved and “has all the contacts.”
Meanwhile, since the property was conveyed to WREDP in 2016, Maricopa County property taxes have been adding up. When the three parcels were owned by the Town of Wickenburg, they were not subject to taxation. According to Abare, WREDP is a 501(c)6 nonprofit and its actual name is Wickenburg Economic Development Partnership. WEPD is not exempt from property taxation. Maricopa County Treasurer’s Office records show a total $111,092.61 due for 2017 and 2018. This year’s taxes which are not yet past due, will amount to an additional $55,000 or so, according to Lorefice. According to Maricopa County Assessor’s Office records, on Feb. 14, 2019, the Town of Wickenburg purchased, for $59,769.77, the tax liens, which had come up for auction as a result of the 2017 unpaid taxes. According to Lorefice, the taxes were paid in order to prevent other investor from obtaining an interest in the property.
Abare maintains that the County has over-assessed the value of the property, and WEDP is currently in the process of appealing the assessment to re-value the property at its current condition, rather than with improvements which existed in the 1940s but are no longer of value. “We have put in the request for the county to reconsider those taxes because they’re stupid. The property is really worth the $262,000 that we owe the town, and the county appraised it for millions of dollars.” Nevertheless, the county will not forgive taxes unless disputed a short time after billed, and too much time has gone by to reduce the delinquent taxes in this case, Abare said. He is hopeful the amounts will be reduced on future tax bills.
The County liens are not the only encumbrances on the property. During the May 6 Town Council meeting, David Cameron of Dewey appeared with his attorney seeking restitution for money he had given WEDP to purchase property. According to the Maricopa County Recorder’s Officer, WEDP Secretary Bill Cowles filed a lien on Jan. 15, 2019, against the Forepaugh Property on behalf of Cameron in the amount of $39,204. The lien was filed despite a provision in the 2016 agreement with the Town which stated no liens could be filed against the property.
Abare said it was his understanding Cameron was interested in buying 10 acres of Bureau of Land Management Land which adjoins the Forepaugh Property. The WEDP plan has been to purchase that land from BLM. While that process has not taken shape, Cameron paid $39,240, as a down payment for 10 acres of the BLM property when it became available. “I do know that we don’t have (Cameron’s) money, so it must have been used. It shouldn’t have been used in my humble opinion, but it was, and so we need to pay it back.”
Acquiring the BLM property requires significant financial backing, Abare said. “To purchase BLM we’ve been trying to get somebody to invest $2 million, presumably a developer … we just haven’t been successful for a variety of reasons,” Abare said.
Meanwhile, in addition to the Cameron lien, the Recorder’s Office records reveal six additional liens filed on Jan. 15, 2019, by Cowles for the following persons/entities and amounts: Bill Cowles, $18,060; Tom Watt, $1,000; Denise Steiger, $63,337.61; Wickenburg Community Hospital, $14,500; Brian Jones, $14,500; and Ron Badowski, $16,250.
“I have not seen anything, I’ve heard that there are (additional liens), and I just talked to one of the guys that put some money in to help us out, this morning – one of the initial investors. My sense is that if any of those guys have liens on the property, that they would probably cancel them. I don’t have that in writing, but I truly believe that. None of us have ever profited from any thing to do with this organization. All we are trying to do is something right for the town but it hasn’t worked.”
The Environmental Concerns
Abare said if the project does not take off, he is committed to getting the 77.5 acres sold by July. He anticipates searching for a buyer himself.
In addition to back taxes, a purchase price owed to the Town and seven liens against the property, a potential buyer would likely also consider the Phase I Environmental Site Assessment performed by ATC Group Services LLC in February 2018. According to the study:
• the Forepaugh Property is the former location of five underground storage tanks which contained gasoline and aviation fuel. While the tanks were removed in 1994, possible contaminates in surrounding soil have not been determined;
• Mining ventures in the 1960s left rusted drums from suspected chemical storage and soil discoloration;
• Dump areas and debris piles with elevated concentrations of lead and arsenic;
• Former ponds with lead concentrations;
• A septic system containing high mercury concentrations;
• Water wells containing high levels of fluoride and arsenic;
• Possible asbestos and lead-based paint in the remains of the WWII-era buildings on the property.
According to Lorefice, Phase II of the study is being carried out this year by Arizona Department of Environmental Quality through a grant, at no cost to the Town or WEDP, to determine the best practices for clean up of the areas of concern. The third stage is expected to be an ADEQ clean up of the property, a project which will also be funded through a grant and is expected to be carried out in 2020, Lorefice said.
WEDP however has run out of time. “The Town has run out of patience, and I don’t blame them,” Abare said.
The 2016 and 2017 agreements state that if WEDP defaults, it shall re-convey the property back to the Town at no cost and free of all liens and other encumbrances not acceptable to the Town. Any liens against the property remain the responsibility of WEDP and shall be paid by WEDP. The transaction shall occur no less than 60 from the notice of default, according to the contract.
Attorney Stuhan said following the Council meeting she expects to prepare the legal notice of breach and default to WEDP this week.