Peoria council approves $1.412 million transfer to bid on 834‑acre state land parcel

The Peoria City Council on Aug. 26 approved a contingency budget transfer of $1,412,000 to cover administrative fees required for the city to participate in an Arizona State Land Department public auction for the Core 2 parcel of the Peoria Innovation Corps, the council voted 7‑0.

City Manager Henry Darwin told the council the city has been pursuing a state land purchase as part of its capital improvement program for two budget cycles and views development of state trust land as a way to create shovel‑ready economic development projects. "Per the direction of council, staff is going out. We have every intention of participating in this auction," Darwin said during the meeting.

The parcel described in the State Land auction materials totals 834 acres; staff estimated about 600 acres are developable because portions near Loop 303 and the Agua Fria riverbed include slopes and open space. The state appraiser set the minimum bid at $46,700,000; to qualify as a bidder the city must provide a minimum check of $6,212,000 at auction, staff said. That upfront amount includes a 10 percent down payment based on the appraised value plus roughly 3 percent in administrative fees and other costs.

Peoria’s capital improvement program had budgeted $4,800,000 for the initial 10 percent down payment, leaving a gap staff requested the council cover with a contingency transfer. The council approved the transfer and the motion to proceed with participation in the auction.

City staff described several state requirements and subsequent steps tied to the purchase. After a planning agreement and required due diligence — including a cultural resources survey, an environmental study and an ALTA survey — the state orders an appraisal and places the parcel on public notice for a 10‑week period. Staff said the application to bring the land to auction began Dec. 2, the planning agreement arrived in March, and the appraisal review board met June 13; the 10‑week public notice period closed Aug. 22 and the auction was scheduled for the following Wednesday.

If the city is the successful bidder, staff said, it must sign a participation agreement with the state that guides development and sets a 50/50 split of net proceeds on any eventual sale. Staff also explained the state requires successful bidders to patent land in minimum 20‑acre parcels over time, to patent a proportional share of undevelopable land, and to pay interest on unpaid balances at the secured overnight financing rate (SOFR) plus 4.5 percent — a figure staff said was running at about 8.83 percent that week. Staff added that patenting transactions typically require paying about 101 percent of the auction price per acre up front, with adjustments later.

Deputy city managers and staff described the project as tied to previously approved intergovernmental agreements that allow reimbursement to the city for public‑infrastructure costs from a successful bidder. Staff said the city’s development strategy anticipates designing and constructing public infrastructure and bringing shovel‑ready parcels to market. The council-approved contingency transfer covers the administrative fees the state requires before the city can be an active bidder.

Council members voted without recorded individual roll call on the item at the time of the motion; the motion passed 7‑0. The council did not take any other immediate land‑use or zoning action tied to the parcel at the Aug. 26 meeting.

Background and next steps: If the city wins the auction, staff said it will receive a certificate of purchase and then pursue partial patent applications for subparts of the 834 acres to bring land into production. The participation agreement with the State Land Department will be executed immediately after auction by the authorized representative, and rights of way for future roads included in the bid will be conveyed to the city for construction, staff said.