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THE PATH OF PROGRESS: Builders pave the way for 270 square miles of development in far East Valley

When a pair of homebuilders plopped down $245.5 million as the winning bidder for 2,783 acres of state land in November, the stage was set for the development of yet another chunk of the far East Valley.

That’s because the Arizona State Land Department crafted the bid so that the auction winner would be required to entitle another 5,300 acres of adjacent land currently owned by the state land department — paving the way for future development.

What’s more, the plan also includes annexing the entire 8,100 acres into Apache Junction, offering more opportunity for growth and economic development of the area.

Opening more state land for development comes at a time when area residents are hungry for home purchases amid a squeeze on development when existing lots are getting scarcer throughout metro Phoenix.

As the winning bidders on the state land auction for about 2,783 acres of prime real estate last November, Arlington, Texas-based D.R. Horton Inc. (NYSE: DHI) and the U.S. arm of Canadian builder Brookfield Residential plan to develop a master-planned community called Superstition Vistas, which eventually will boast more than 10,000 homes and nearly 30,000 residents upon completion.

“The state land department has one large contiguous piece of property that is in the path of progress,” said John Bradley, Brookfield’s Arizona division president. “This is 270 square miles referred to by the state land department as Superstition Vistas. The state land department has been wanting to initiate development there for quite a long time. It is the future of the East Valley.”

The 2,783 acres D.R. Horton and Brookfield bought is bounded by Elliott Road on the north and Ray Road on the south. It starts one mile east of Eastmark master-planned community at Meridian and goes through Idaho Drive. Ironwood Drive, which is a four-lane road that goes south to Pinal County up to US 60, goes right through the middle of the property, Bradley said.

The area of development is shown in the map below:

This is the first time a bid included a stipulation to entitle adjacent state-owned land under the direction of Lisa Atkins, commissioner of the Arizona State Land Department.

Having state land already entitled with certain infrastructure components already installed before putting it out to bid will make it more attractive to potential bidders, Atkins told the Business Journal.

“It also provides certainty regarding uses that will be on that land,” she said.

Once that 5,300 acres is annexed into Apache Junction, it should have a higher appraised value, she said.

While garnering more money for the beneficiaries of state land sales — mainly K-12 education — it also is instrumental in economic development for the area, Atkins said.

Unlocking potential

While the extra infrastructure work on the 5,300 adjacent acreage immediately unlocks future development opportunities next to Superstition Vistas, it really unlocks the 270 square miles, Bradley said.

“This will be an example of progress as the state works through that whole area,” he said.

Not only did D.R. Horton and Brookfield agree to entitle the extra land that isn’t even theirs, they paid $177 million over the appraised value of $68 million for the parcel.

“The state land department was ecstatic and we’re very happy — that works for us,” Bradley said. “It’s not to say that Horton and ourselves won’t be bidders for this other land in the future.”

Developing that area of the far East Valley — near Brookfield and DMB Inc.’s Eastmark in Mesa — has been a long time coming, said Mike Hutchinson, executive vice president of PHX East Valley Partnership.

He was recruited by the business group in 2008 to guide the development of Superstition Vistas — what they named it back then when they created a web site to keep the community up to date on the development of this 270 square miles owned by the state land department.

“We’ve had hundreds of people over the years involved in the planning — on committees and political leadership and staff from cities and the county,” Hutchinson said. “We all worked hard to try to think through the best uses of this property moving forward. We all knew it would not be a five-year project. It would be a 50-year project. It’s great to see two developers involved in this. We know they’re going to do thoughtful things. They’ll be thinking about the future that will enhance their development and surrounding properties.”

Superstition Vistas will also include commercial development, Hutchinson said.

“Our hope was that it would be a development that would have both jobs and housing so that people could live closer to where they work,” he said. “We’re hopeful over the next 5, 10, 15 years that businesses looking for a good amount of land will find this an appealing place that will be driven by good infrastructure, electric service, water, wastewater and having access through freeway/highway corridors.”

Bryant Powell, city manager for Apache Junction, said this development will give the city an opportunity to put its unique stamp on planning in the East Valley.

Poised for growth

With a current population of 42,110, Apache Junction is poised for significant growth, he said.

Powell said the annexation of the 8,100 acres into Apache Junction would be its largest annexation since Apache Junction became a city in 1978.

The city council is expected to vote on the annexation this summer, he said.

Nate Nathan, a land broker who handles large land transactions in the Valley, said this is a fantastic opportunity for Apache Junction to capitalize on the development.

“It’s bringing Apache Junction into the energy of our market because they’re so land constrained,” said Nathan, founder of Scottsdale-based Nathan & Associates Inc. “It’s a new era for Apache Junction, with two great stewards of the land: Brookfield and D.R. Horton. Who better to spearhead it but Brookfield and D.R. Horton?”

Brookfield already is developing about 15,000 acres throughout the Valley, including the 3,700-acre Alamar in Avondale and the 3,200-acre Eastmark, which is just west of Superstition Vistas.

Jordan Rose, founder of Rose Law Group LLC, has handled hundreds of zoning cases in that area for two decades.

“To say this will reshape Apache Junction is an understatement,” Rose said.

Market opportunity

The future development of the overall East Valley region will be determined by what takes place as the plan evolves and as execution begins, said R.L. Brown, publisher of RL Brown Housing Reports.

“This overall parcel represents what could be described as the dominant future development and growth opportunity for the Apache Junction area and the areas east of Queen Creek, and is a massive undertaking in both planning and in infrastructure construction,” Brown said. “We can expect the region’s major builders and developers to be involved and the velocity and timing of growth to be determined by the availability, scope and the timing of infrastructure. While most anticipate a continued thrust of growth in the direction of Casa Grande, the Superstition Vistas will impact that growth over time, and become a major factor in the overall growth of the metro areas.”

This new development comes at a time when the nearby rapidly growing Eastmark master-planned community is close to selling out.

Brookfield and D.R. Horton are splitting the acreage in half, with Brookfield taking 1,400 acres that will house 5,200 units, which comes to a $562 million investment, Bradley said.

“As developable lots in Eastmark wane, Superstition Vistas serves a real market need,” Rose said. “With the continued acceleration of new jobs coming to Mesa, Chandler and Pinal County, this location is now the heart of it all.”

Rose said the deal shows what can happen when market demand and the right business opportunity intersect.

“Superstition Vistas will awaken the rest of the world to what those who live and work in Pinal County have known — Apache Junction, with the backdrop of the Superstition Mountains, is one of the most spectacular settings in Arizona,” Rose said. “Go take a hike or even spend the night in the Superstition Mountains and you’ll feel the magic of possibility.”

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