Big Deal--and a Shaky One

The U.S. Department of the Interior and Congress are rushing into the largest and richest land exchange ever made by the department without any certainty that the federal government is getting its money’s worth. All that the public has to go on is the U.S. General Accounting Office’s strong impression that the appraised value of 70 acres of land near downtown Phoenix that would be involved in the exchange is flawed. That should be enough to slow the deal at least.

A bill to approve the exchange of some of the choicest urban land in the West for cash and some swampland owned by a major Florida land developer has passed the House of Representatives and is pending in the Senate. The Senate should consider an amendment, offered unsuccessfully in the House by Rep. George Miller (D-Martinez), that would open the sale of the prime Phoenix land to all bidders.

The federal land is part of a 104-acre tract that has been the site of the Phoenix Indian School for nearly a century. The Interior Department would close the school and trade the 70 acres to the Collier family of Florida for more than 118,000 acres of Florida land, valued at $50 million, that would be added to the Big Cypress National Preserve and the Florida Panther National Wildlife Refuge. The Colliers also would give the Interior Department $35 million in cash.

Theoretically it is an even $85 million trade. But the General Accounting Office says that it is impossible to determine the real value of the Indian school land until the city of Phoenix decides what sort of development it will allow on the site and under what conditions. The value clearly could be higher, the report said. The GAO also questioned whether the Florida land really is worth $50 million. Much of it may be below the mean high-tide line and actually belong not to the Colliers but to the state of Florida, Miller said.

The agreement gives the Colliers three years in which to work out a development plan with the city of Phoenix and obtain the required rezoning. The sale price will remain the same during that period, although one appraiser said that nearby land is expected to appreciate by 12% a year.

The Colliers can cancel if they don’t get the right deal from Phoenix. If they do, other developers would have 90 days to bid for the land, but at a minimum would have to assemble an $85-million package in cash, reimburse Collier for all planning and zoning costs and accept any agreement worked out by Collier and the city. Collier would have 30 days in which to match any offer.

A number of other issues and controversies are involved, including the fate of the Indian school, alternative means for educating Indian youths and the dedication of some of the Indian School property as a historic site and an Indian and cultural center. The bottom line for now, however, is the economics of the land exchange. The bottom line needs to be a bit more solid.