Subsidizing Scottsdale Golf Course Water

Another no bid sale of taxpayer-owned property was reported by the Republic last week. This one is a double-doozy, because the indirect beneficiaries are professional golfers and golf course owners.

Scottsdale to sell water farm to Georgetown Holdings for $9.13 million

Beth Duckett, The Republic/azcentral.com 10:14 p.m. MST March 24, 2014

Scottsdale plans to sell a water farm in western Maricopa County for about $9.1 million

The funds will pay for a new pipeline and other expenses to deliver water to golf courses.

A new pipeline will make sure that golf courses have a replacement supply of water and don’t pump groundwater from within Scottsdale’s groundwater aquifers

Scottsdale is selling its water farm in western Maricopa County for about $9.13 million to a company owned by businessman Conley Wolfswinkel.

The money from the sale will pay for a pipeline that will provide groundwater to Scottsdale golf courses for irrigation, wells and other infrastructure.

Tempe-based Georgetown Holdings offered Scottsdale close to $9.13 million for the roughly 1,200-acre farm on Buckeye Road in the Harquahala Valley, northwest of Phoenix, according to a city report.

Wolfswinkel is listed as the sole member of Georgetown Holdings LLC. He is one of the most resilient players in the cyclical Valley real-estate market. The patriarch of a booming family real-estate empire, Wolfswinkel was convicted in the early 1990s of a felony and saddled with $2 billion in judgments — eventually reduced to $22 million — for his role in the savings-and-loan debacle of the late 1980s.

The city report said Georgetown Holdings’ offer was higher than the farm’s appraised value. Scottsdale declined an Arizona Republic request to reveal the appraised value, deeming it confidential [Not surprising, given the atrocious appraisals that have been used in the past to justify dumping city property].

Scottsdale’s revised code says that, under standard circumstances, the city will seek bids to sell city property.

But the code allows an exception. The city manager can decide that the public benefit is “served by uniting the ownership of the city’s land with an adjoining owner’s land,” a city memo said, so no public bid is required.

Georgetown Holdings owns land adjoining the farm on the north, the report said.

In 2002, Scottsdale bought the land for the water farm with funds contributed by golf courses in the city’s Irrigation Water Distribution System, said Brian Biesemeyer, Scottsdale’s water-resources executive director.

The funds were from irrigation rates, Biesemeyer said by e-mail.

The Irrigation Water Distribution System moves 5.25 million gallons per day. It primarily delivers non-potable water to golf courses for irrigation, said Annie DeChance, public-outreach manager for the city’s Water Resources Department.

Four million gallons per day is allocated between Desert Mountain golf courses and Scottsdale National Golf Club, of which GoDaddy founder and executive chairman Bob Parsons is a member.

The remaining gallons are allocated for groundwater recharge, DeChance said.

Years ago, the plan was to build a 13½-mile pipeline to deliver groundwater from the water farm to the Central Arizona Project Canal, which carries water from the Colorado River to the Valley and Tucson.

The idea was to transfer the irrigation water via the canal to Scottsdale golf courses. But the pipeline would have cost an estimated $30 million, the city said.

As a result of the high price, the city bought another farm in the Harquahala Valley that is closer to the CAP Canal.

The city now plans to sell the first farm on Buckeye Road, and use the second farm.

Scottsdale bought the second farm last year using the Irrigation Water Distribution System funds.

In a 2013 city report, the purchase price was listed at around $10 million. The estimated cost to construct a pipeline at the second farm is much lower than the original plan, at $5 million, a report said.

“The intention is to transport groundwater from the second farm to Scottsdale to irrigate the IWDS golf courses,” Biesemeyer said.

“Since the second parcel is much closer to the CAP Canal, it will reduce the costs to build the wells and pipeline.”

Biesemeyer said Scottsdale’s aim “is to provide a reliable and affordable source of irrigation water to golf courses, without impacting our sustainable drinking-water sources.”

“This land sale will provide the golf courses the necessary funds to design and construct the wells and needed infrastructure at a lower cost than if the first farm were developed,” he said.

The groundwater pumping for the project is authorized by the Arizona Department of Water Resources, under the rules of the Harquahala Irrigation Non-Expansion Area, Biesemeyer said.

In October, the Central Arizona Groundwater Replenishment District alerted Scottsdale that no excess CAP water can be used by golf courses in three years — a result of ongoing drought conditions.

The city must design and construct wells, the pipeline and other infrastructure in that timeline, the report said.