Council Memo

Introduction and presentation of proposed annexation of property owned by Arizona Eco Development, LLC.


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Item Summary


This is an introduction and presentation of a proposed annexation of property located in the vicinity of Prescott Airport and Granite Dells Estates. The property is owned by Arizona Eco Development, LLC. The area exceeds the 250 acre trigger established by Proposition 400 and will follow the extended public review process as required by that proposition.


Meeting History

Sep 12, 2017 1:00 PM Video City Council Study Session Meeting
draft Draft

Jason Gisi, with Arizona Eco Development LLC, introduced himself for the presentation. He explained that the goal of today's meeting is to introduce the Council and public the proposed annexation generally in the vicinity of the Prescott Airport, point of rocks, north and south of Granite Dells traffic interchange Explained the property is owned by Arizona Eco Development LLC and the annexation is subject by Proposition 400 and will follow the extended public review process by that proposition and first of many public meetings which he will be required to host.

Mr. Gisi pointed out that the two main land masses are proposed to be annexed into the City of Prescott. The areas involved are the Prescott Airport, Granite Dells Traffic Park Interchange, and Granite Dells subdivision (Phase I) in the northwest corner. The two nodes to be proposed for annexation are south and west of the Dells Subdivision (along Granite Creek into the pointed rocks), and the northern annexation node coming out of the Traffic Interchange into Arizona Eco land. They are also proposing extending into the north end of the Airport. They are anticipating the Airport will be extending it's runway, which will be discussed in more detail. He explained that Watson Lake was originally created and damned by property owner John Duke (former owner of Wilkinson Ranches) in order to irrigate his farm ground along Granite Creek. Arizona Eco Development is the successor and interest to John Duke and the water right dates back to the 1890's. Beneficial use - meaning the use of 375 acre feet of water has been demonstrated throughout the course of time, by Arizona Eco Development's successors in interest. Arizona Eco Development spent about two years working with Salt River Project (SRP) on this matter, because Watson Lake and Granite Creek flow into the Verde River to the north over the course of time and SRP owns the majority of the surface water rights on the Verde River and the tributaries that flow into the Verde River. After two years, SRP eventually advised Arizona Eco Development that they would "not oppose their water right." The next step of the water right is to submit an application to Arizona Department of Water Resources (ADWR) to sever and transfer the 375 acre feet of water that they own (sever means to sever from the land and transfer means to transfer it to City of Prescott's water portfolio) for successful in annexing the property to the City of Prescott. Prescott is a designated water provider and that water would go into Prescott's portfolio, and Arizona Eco Development would have a water service agreement back from the City of Prescott to service their developments with their water. Mr. Gisi noted fairly simple to explain and not so simple to execute. They are very optimistic that with SRP's understanding and not contesting their right, are anticipating it will move through the second leg of the water transaction as quickly as they can. Mr. Gisi anticipates people will want to speak with him regarding that water right and he'd be more than happy to speak with them.

Mr. Gisi said Arizona Eco Development is going to submit an application to the City of Prescott in order to annex both parcels simultaneously, so it's not a single annexation. To the north of the traffic interchange they are proposing a residential subdivision in the southeast corner. They will be proposing to the City of Prescott that they trade 652 acres for water. The reason that they would be trading land for water is that their water portfolio comprises approximately 80% of what they are proposing to the City of Prescott, meaning they own the water and can cover that need. About 20% of their proposed density would not be covered by their private water portfolio. In lieu of cash and selling land to the City of Prescott, they are proposing a swap for water. The amount of water is yet to be determined, but they want a basic concept out there. The acreage totals are 652 acres proposing to trade to the City Prescott. There is a total amount of 2,190 acres to the north of the traffic interchange. There is 1,538 acres to the southeast corner and is a residential subdivision with open space and the uses as prescribed by the Airport impact lighting zones by FAA requirements, Land Development Code and the General Plan of the City of Prescott. The parcel that they are proposing for annexation is not exactly consistent with the General Plan amendment that occurred in late 2014, and now two and one-half years later is 90-95% consistent as what was proposed then. Are proposing to be annexed in the City of Prescott and assume will be subject to the Land Development Code as it exists today. Arizona Eco Development is working with prescribed land uses and densities in the locations as proposed previously.

Mr. Gisi indicated that the transitions south of the Granite Dells traffic interchange and their land is west of the Peavine Trail (old farm ground irrigated today). They are proposing annexing 864 acres and they had conversations to purchase a portion of the Storm Ranch (which is approximately 100 acres) in order to buffer the project. The densities are 2.25 units to one acre and have land to the north that would be easy to develop (flat and no rocks). As transition south in to the point of rocks the density starts to stretch out and the open space picks up. Land plan at present assumes 25% open space as required by the Land Development Code. He feels once aerial photograph and drainage studies are completed, the open space number will grow.

In the proposed annexation, Mr. Gisi advised there are 188 acres of possible commercial development, but in the time of on-online ordering, they are planning alternative ways to absorb this area, specifically providing pre-manufactured and pre-fabricated housing, multi-family family apartment and in order to keep pricing reasonable for family housing in this area.

As part of annexation, Arizona Eco Development will be providing a cost benefit analysis and will be including the commercial area (with more accurate sales tax generated by retail and commercial use over the course of time). They are trying to provide their expectations with the public's understanding of what they are proposing as accurately as possible. The next step would be to formally submit the annexation application to the City of Prescott as they have timely state statutes that they are required to meet on annexations and enhanced Proposition 400 requirements and regulations as well. said the intent is to introduce the projects so that feedback can be gathered from by Council. The goal is to flush out cost benefit analysis with the City of Prescott and begin working towards a final deal.

Councilwoman Wilcox noted with Arizona Eco Development anticipating exceeding the open space requirement, but just as important to the City of Prescott and our economy is to be able to access open space from a public road, parking area, etc. She asked how the open space would be laid out. Mr. Gisi advised that their goal is to create connectivity of the trail system (public and private) over the course of time. They could be discussing in the future for a secondary access to the trail, direct proximity to Highway 89 and good proximity to Highway 89A to the north and wasn't sure if it would be horse accessible, but could be an opportunity in the future. He stated that open space would be dealt with on a case by case basis, but he wasn't sure how it would occur with the giant rock formations. There will be connectivity with the Peavine Trail, City of Prescott and Iron King Trail in Prescott Valley as well. Their intent is be accommodating as possible and to maximize trails and to allow for connectivity that makes sense. Councilwoman Wilcox stated what the City needs is a meaningful connected open space as one large area of land and what is being offered looks like small areas of unconnected land. Individuals would then have to travel through suburbs, with walls and fences to get from one to another. She and many others would like preservation of the natural beauty of this land, which is tremendously important to the experience and landscape viewed on the trails. Otherwise having walls/fences on the trails would destroy experience and could damage our economy. She would like to see more connection of the islands of open space with the trail system. Mr. Gisi advised that the 25% requirement of open space would be valuable public open space. She agreed and would like to see more density further north and rearrange it, so there is more open space at the junction of the Peavine Trail at the Iron King.

Councilwoman Wilcox asked how many crossings were being planned across the Peavine Trail at grade/over grade? Mr. Gisi indicated that this is very difficult to answer right now as more information is needed on drainage and topography. On the east side of the development near the Town of Prescott Valley, there will be a crossing at the Storm Ranch headquarters. They are looking at possibly re-routing and straightening the trail to make a more safer crossing. At the southern location an "at grade crossing" would be installed. Mr. Gisi explained that Prescott Valley owns the right of way crossing for Iron King and they would need to sign an annexation petition, which they are not opposed to doing.

Councilman Sischka asked for an estimate for build out date. Mr. Gisi said they are projecting 12 months for a vote and 12 months to engineer the first phase, which would most likely be 2019. With 1,200 units at four phases on the south side of the freeway, they anticipate a fifteen (15) year project. In regards to the north of the freeway, it is suitable for a mass grade with the more affordable 1,500 units, Timing would probably be similar at 15 years from point of annexing, due to price point. The Granville project has about 6 years left and would be hitting the market at a perfect time for an affordable product. The main competitor is the Deep Well Ranch to the west and a few current building communities right now, which are progressing very successfully. In regard to the commercial area, and funneling traffic to Highway 89A, if market holds they would begin a grocery store deal (possibly Fry's) in about two years which will anchor a neighborhood center. He stated the question does the commercial land go with Arizona Eco Development or with Deep Well Ranch? Both developers will be competing with those types of uses and will end up in the City of Prescott. There will be more then one store built during the course of time.

Councilman Sischka asked about the airport extension and trading the 600 acres for water with the City of Prescott, asking if they would be needing the wet water in the very near future. Mr. Gisi stated that as long as there is a written contract with the City of Prescott, the exchange could be done rather quickly. The land is free and clear and sitting with the County, which has been included in the city annexation.

Councilman Blair said he understands this is a long process and his concern is for the future of the development in the Dells in itself is a space for a fire department and police sub-station. We continue to strap public safety services and having to travel many miles in response to a 911 or fire call which isn't in the best interest of the community. In planning of the area Councilman Blair asked if they've considered property for fire and police sub-station. Mr. Gisi advised there will be multiple needs and have had preliminary discussions. The decision was made that would not need fire service within the Dells annexation because it could be serviced in the airport area. As population is added (Dells and in the homestead area at Walden Ranch) there is going to be a need, most likely two locations one at Deep Well and second at AED. He noted the best location for police and fire responders would probably be in the commercial area with access to everyone. They are also considering the Granite Creek shoulder for ball fields, etc., and looking at a master plan for a school and possibly including a couple of charter schools as well. Councilman Blair asked the Mr. Lamar if the conversations with both chiefs could be ongoing on this matter in regards to the Dells and Mr. Gisi's proposal. City Manager Lamar indicated they have had these discussion with Deep Well and very preliminary discussions with Mr. Gisi on this subject.

Mayor Pro Tem Lamerson stated that in regards to the issue of water deal, he asked Mr. Gisi if there are any other opportunities with the amount of land that would benefit citizens as a whole with certain levels of concessions on behalf of the taxpayers and residents, not only schools, but other needs (medical, etc.) He asked if any other ideas have been contemplated on how to use the property that might benefit the community. Mr. Gisi said the quality of the trail head and view shed doesn't match the facility that you park at. McDowell Mountain Ranch in Scottsdale has a wonderful simple, classy and timeless design where the public can park, meet, ride a bike and take a hike. He said beyond first responders and education, the obvious next piece is trail heads. He advised they are getting interest from folks that would like to provide athletic facilities. So the trend in metro Phoenix and large metro areas across the country is privatization of volleyball, soccer and baseball facilities for youth. Cities struggle with the use of who pays and are responsible for the fields. Along Granite Creek, there is a margin of open land, that would benefit kids. Are required to provide public parks as well as taking consideration water consumption and grass/artificial grass. Priority would be parks, trail head and possibly private utilization for the same area.

Mayor Pro Tem Lamerson said that he believed he heard Mr. Gisi mention that he would like some of that open space belong to their development and not necessarily to "the public". As they move through the process, a lot of these deals will be worked out in a development agreement which will contractually bind a mutual expectation, the community as well as the developer. Mr. Gisi confirmed there will be a development agreement that will come before Council prior so both parties have a bound contract. He also mentioned the possibility of a storage tank which will benefit not only the property but properties of Prescott (in and around the airport area). A storage tank is something else that may be addressed in the development agreement.

Councilwoman Orr noted that work force housing, especially affordable housing for young families is needed in Prescott. Mr. Gisi advised that he has to be careful how he refers to "cheaper" housing. Mr. Gisi advised that the airport is the city's jewel and we have capacity to create base jobs which in turn creates retail sales tax. We currently export our youth and talent here, with hope for opportunity to focus and bring about some positive change. Councilwomen Orr stated it is important that the city annex and control what we have and work with Arizona Eco Development.

Councilwoman Wilcox asked Mr. Gisi what else are they expecting the taxpayers of the City of Prescott to pay for this development. Mr. Gisi stated that the water storage tank would be a joint venture and their utility to their company, as well to the public benefit. The biggest item not discussed is crossing Granite Creek and what does the crossing look like. There are five ways in an out of the southern property, ingress/egress. He believes the main entry would come out at the Phippen Museum across Granite Creek and into the northern end of the existing farm fields today, which would be the shortest way in and would be a Prescott entrance. For the crossing of Granite Creek, what is actually necessary is seismological studies that dictate flow of water through the area. The worse case scenario would be the dam breaks. The creek has been mined and is much wider than flow characteristics that exist today. They do not need a bridge that spans shoulder to shoulder, but what is the proper and rational way to cross the creek. Specifically, he feels there is a big chunk of low water crossing and a smaller bridge that spans the creek. Willow Creek flows through there and the city closes the creek crossing when the water flows high. Would it make more sense, if there is a combination of low crossing and bridge. They could be asked by the private sector to build a big bridge. It's a matter of what access looks like and cost and who is going to pay for it. In his opinion that bridge will have regional implication and not just City of Prescott and Arizona Eco that will benefit from that crossing, but the neighbors who will not be financially responsible. The crossing will need a lot of work and clarity for an agreed result. The taxpayer could pay a portion of it as well (all or part) and will depend on package. Development happens incrementally and this is a large chunk of land, and in that opportunity, they may find the accommodations that both parties need to make in order to cut a fair deal.

Councilwoman Wilcox asked if there were any other infrastructure improvements that the taxpayers might pay. Mr. Gisi stated that a nice trail head will be important and the public would want. He indicated they provided a nice trail head to Prescott Valley and Eco Development maintained it for 5-10 years and then would dedicate that public feature eventually back to the City of Prescott Valley. He didn't know how this would net for the City of Prescott if they pass on that cost maintenance after so many years.

Councilwoman Wilcox asked about increasing the size and capacity of the water line for adjoining properties and yet to be developed properties. Mr. Gisi explained historically how this happens is the engineers quantify what Arizona Eco Development needs are for their subdivision. Sometimes, not routinely, the municipality may come back requesting a larger line and then the municipality would pay for the upgrade over and above the line that Arizona Eco Development needs (a prorata type deal). The area already has built-in infrastructure so conversations regarding upsizing should be very limited as no neighbor would benefit from that activity. It might be them that Arizona Eco has proposed on the north end of the build, but he can't see not anticipating that need, otherwise they would be proposing now.

Councilwomen Orr asked when could they have something to share with the public. Mr. Gisi stated they have a couple things to be completed before they have something physical to show and these are aerial photograpy and master drainage study. Both could take about 120 days. They also well need the cost benefit analysis and archeological report, impact density and open space reports. They will be working with city staff and will be bringing items to Council as necessary.

Mayor Pro Tem Lamerson asked if Mr. Gisi assumed the trail heads were tourism oriented. Mr. Gisi said that he felt they did. He continued to ask Mr. Baynes if that was Parks and Recreation development. Mr. Baynes confirmed that it would be Parks and Recreation infrastructure. Mayor Pro Tem Lamerson stated the citizens of this community passed the 1% sales tax for Parks and Recreation Development and Tourism.

Joannne Oellers, citizen, asked regarding the considerations for the current residents in the area and traffic impact. What is the consideration for corridors for wildlife, crossings and connectivity. She asked if Arizona Eco Development is considering working with the Granite Creek Preservation Association for any plans with Granite Creek. Mr. Gisi stated generally speaking, they are not proposing any improvements to Granite Dells Road (is County owned right-of-way) but would be planning for secondary access (fire danger). They would have a crash gate installed in event of an emergency. They are not proposing any improvements to Granite Dells Road or Highway 89 owned by the City of Prescott. In regards to corridors for wildlife, he indicated there are natural drainages/corridors in the southern property that will continue to stay open (primarily for drainage). To the north as it relates to Proghorn (the ranch is 1,500 acres) and they work routinely with Game and Fish and still questioning what to do with antelope. The 89A corridor is clearly going to be developed and when they look at the northern two-thirds of they ranch, they will be questioning legal water right. There was an annexation that occurred in the Town of Chino Valley, prior to their ownership with the possibility of being a cattle ranch for the extended future. He doesn't have specific answers, but will continue working with Game and Fish and then in the future the Central Yavapai Metropolitan Planning Organization has added a committee to work on issues such as this. They have been contacted by the committee so they will continue discussions. As far as the Granite Creek Preservation Association, it is on one side of their property and is planned for open space. He stated they would be happy to meet with the Granite Creek Preservation Association.

Happy Oasis, citizen, asked if eco aspects in this development and in regards to lead certification, solar panels on individual homes/clubhouse, how many miles per trail, wildlife and number of homes are there per acre. Mr. Gisi stated that are discuss solar panels and renewables, the vertical side of house stock is a real opportunity as it relates to the solar. They are currently working with a builder on federal guidelines and as part of their marketing. They are focused on the vertical product (which is the home's legacy cost to live in a home) and they are working to minimize through architectual design guidelines and requirements (privately imposed) on vertical housing utilizing solar panels. In regards to "eco" they are annexing with the City of Prescott, which comes with good things but will have it's challenges. They are meeting with Game and Fish, rock climbers and lots of other individuals that will access with corridors and connectivity for those that live in subdivision and those who don't. They are creating housing stock that reduces the Arizona Eco footprint and power utilizing efficiency. They It will be integrating best practices from horizontal to vertical and sell within with the context of market Ms. Oasis asked if they would consider individualized water tanks for the homeowners options and for pumps of eco cars.

Sandra Smith, citizen, asked about the northern property at the end of the airport runway and asked if there would be an open space around the airport. Mr. Gisi advised they are proposing this to be the trade property for the City of Prescott and would then be the city's decision how to utilize it.

Mayor Oberg advised this was the closing of this item and would be many more meetings and opportunities to discuss this issue.