Failed Development Leaves Glendale Saddled With Camelback Ranch Debt
When William Almazan asked Bob Howry for his autograph, the former Major League Baseball player grinned and gave the 7-year-old his signature. Almazan met Howry at Camelback Ranch after the closing ceremonies of Glendale’s Youth Baseball League.
“My favorite was first base,” Almazan said.
This city-run program didn’t just give Almazan a chance to meet a real big-leaguer. It also let him go onto the actual field where the Los Angeles Dodgers and Chicago White Sox play spring training games. Almazan is definitely playing again next year.
“Yes, I’m sure about that,” he said.
It’s impossible to predict how long Almazan will play baseball. But if he settles in Glendale as an adult, there’s a real chance he’ll have to help pay some of the roughly $331 million the city currently owes on Camelback Ranch.
“Possibly one would argue this was a high-risk transaction,” said Michael Bailey, Glendale city attorney.
When it was originally conceived, Camelback Ranch was to be the centerpiece for one of Glendale’s biggest revenue sources. But plans to develop the land around the Cactus League venue fizzled during the Great Recession. Camelback Ranch has so far been a money pit for Glendale.
“Everything came to fruition, except for the mixed-use project,” Bailey said. “And that was to be the funding source for what was the facility.”
Retail, hotels and a golf course were planned for around Camelback Ranch, which Glendale agreed to build in 2007. But the economy tanked in 2008. The venue opened in 2009, and developers failed to deliver sales tax generators needed to pay for the project.
Now the facility is only projected to bring in $160,000 over the next year, and there’s still no developer.
“We’re always looking for the right partner,” Bailey said. “We’re probably more cautious than we were.”
Glendale City Councilwoman Joyce Clark served during the city’s free-dealing days. She voted for Camelback Ranch, according to her blog.
“I don’t know if I supported it so much as I didn’t fight it,” Clark said.
Records show about $96 million has already been paid toward the debt on Camelback Ranch. But most of the money has gone toward interest.
The city front-loaded the deal so it could pay it off with revenue from the surrounding developments, Clark said.
Payments on the principal are scheduled to resume in 2019.
“Well we figured by then, we’d be in fat city because all of this stuff would have developed around it to cover that principal (and) interest payment,” she said.
Clark said Glendale has new projects in the pipeline that will to help pay for Camelback Ranch, but she declined to discuss specifics.
If they don’t work out, the city will have to use general fund money to pay off the debt by 2038, which is a decade after the Dodgers and White Sox could decide to leave Camelback Ranch.
“I’m sorry that it’s in the position it's in,” Clark said. “But I do know that the city is healthy enough to make the necessary payments over the long-term to reduce the debt.”
What happened with Camelback Ranch is not unique to Glendale or similar big projects, according to Mark Stapp, the executive director of the Master of Real Estate Development program at Arizona State University’s W. P. Carey School of Business. He said the development landscape is littered with deals where financial projections failed to materialize.
“That’s a fundamental issue with not just the real estate business, but with any business where you are trying to predict the future,” Stapp said.
Stapp has about four decades of development experience. He worked for the company that later went on to develop the Westgate Entertainment District, which is Glendale’s other venture built around a sports venue.
“There was an exuberance based upon this idea that the metropolitan area was growing substantially and Glendale wanted to be one of the growth leaders,” Stapp said.
The recession brought Glendale’s ambition to a screeching halt. Despite new economic growth, Stapp said developing Camelback Ranch now is a tough deal.
“I think that the probability of successfully completing the commercial development portions of that project (is) small, if not nonexistent,” Stapp said.
Anyone willing to take on the project faces unique hurdles. Camelback Ranch is on Glendale-owned land. But it’s physically located in Phoenix.
“What it tells me is that’s great Glendale. I can try to make a deal with you,” Stapp said. “But I need to go talk to the city of Phoenix to make sure I can actually do this.”
There is some potential good news for Glendale going forward. The city's much improved financial standing has increased its bond rating. It will be able to refinance the debt on Camelback Ranch and shave millions off of the interest owed on the facility.
There’s also a chance the city could receive partial reimbursement for Camelback Ranch from the Arizona Sports & Tourism Authority, or AZSTA. Payments had been forecasted to start this year. But less-than-projected revenue has pushed the timeline back to at least 2021. An ongoing legal challenge to AZSTA’s funding source could ultimately prevent any reimbursement.