low-risk gamble with ADOT
of a fair buyout fuels home building in freeway's path
The Arizona Republic
Dec. 18, 2005 12:00 AM
To Ray Schumacher, it's a shot at owning his dream home.
To the state, it's an example of everything the state can't do to stop building
in places it wants to put freeways.
A 4,000-square-foot custom creation surrounded by breathtaking views,
Schumacher's house will be finished in about six weeks, the first in a posh new
Ahwatukee Foothills neighborhood. If all goes according to the state's plans, it
will be a strip of asphalt in a few years.
Builders in the Foothills 80 development are proceeding with
90 custom homes priced at $1 million to $3 million each, 27 of which sit
squarely in the path of the South Mountain Freeway. All but one of the lots have
sold, many to buyers specifically seeking a home in anticipation of a state
They are among the hundreds of homes planned in the 22- to 26-mile corridor from
Ahwatukee to the West Valley that the state wants to turn into a 10-lane highway
Funding shortfalls and state laws protecting private property have led to an
explosion of development in the way of the South Mountain Freeway. Developers
who bought the land years ago want to make good on their investments. The state
doesn't want to buy land until the route is set. And the questions of where and
if the freeway is going to be built are still very much up in the air.
So for now, owners along the proposed Loop 202 route are free to build on land
that could become a highway. Then they wait for the Arizona Department of
Transportation to shift the alignment and save their property, or buy them out
at fair market price.
As the study of Loop 202 drags on, the state's bill for all these houses could
run in the hundreds of millions of dollars.
Though ADOT wants to start buying homes in the right of way
as early as 2008, many of the 400 to 1,100 houses it may have to buy in the West
Valley and Ahwatukee are currently lots that have been platted but not yet
As currently planned, Loop 202 would run from Interstate 10 in the
south along Pecos Road, cut through the edge of South Mountain Park and connect
to I-10 in the West Valley through 55th Avenue, 71st Avenue or Loop 101.
In the West Valley, the proposed route along 71st Avenue would claim 775 homes,
543 of which are now empty lots. Placing the freeway along Loop 101 could take
more than 500 homes, as many as 323 of them lots. Owners of some of these lots
say they didn't realize the oft-postponed freeway could take their house when
they bought. Others specifically sought a home in the proposed alignment,
reasoning that if the freeway did ever come through, moving out was better than
living next to a highway.
Ray Schumacher is one such buyer. The 42-year-old attorney and his family were
living in Ahwatukee when they heard about the Foothills 80 development at the
west end of Pecos Road.
In early 2004, Calabrea Development LLC closed on 80 acres of desert adjacent to
South Mountain for just under $10 million. John Cochran is a partner with
Calabrea and co-owner of Forte Homes, which is building some of the houses. He
said Calabrea was aware of the proposed freeway alignment and had offered to
sell the land to ADOT before finalizing the purchase. An ADOT right-of-way
coordinator turned down the offer in a January 2003 letter to one of the
principals in the group, saying that the agency was "not prepared to do any
advance purchase in the area of your development."
At the time, ADOT spokesman Matt Burdick said, ADOT was too short of money and
too uncertain of the freeway's location to buy the land.
Schumacher discussed the Loop 202 route extensively with ADOT and Calabrea. He
said Calabrea fully disclosed the freeway's proximity before the sale.
Like many in Ahwatukee, Schumacher believes the state's ongoing talks with the
Gila River Indian Community could be successful and the freeway will be shifted
south from Pecos to the reservation. Knowing this was not guaranteed, he chose a
lot within the "clean take" line, the section of a development near a
planned highway designed to be cut out when the road comes through.
For Schumacher, realizing his goal of building a custom home in Ahwatukee was
worth the risk he could lose it in two or three years . It was an all or nothing
gamble: choosing a lot directly in the freeway's path meant he would not end up
with a highway in his back yard.
"I feel sorry for any resident whose home was not within the clean take
line, because that would destroy the value of the home and the whole purpose of
building within the niche of the mountain there," he said. "Who wants
to spend that kind of money and live next to a seven- or 10-lane freeway?"
Not all buyers want a house in the alignment. If the freeway goes in at 71st
Avenue or Loop 101, it would take the unbuilt Laveen home that Steve Seidler was
in the process of buying. Before purchasing, he and his wife were "more or
less assured" that the freeway would not affect their property. After
learning their home was threatened, they pulled out of the deal and lost money
they put down.
"It makes no sense to gamble that much money on a situation where there's
no guarantee the freeway's going to go (elsewhere)," he said.
While homeowners weigh the cost of living in a freeway's
path, the state faces a growing price tag to buy them out.
The $1 billion to $1.3 billion now estimated as the cost for the South Mountain
Freeway does not include right-of-way purchases. ADOT is working with an
appraiser and expects to have an estimate of total acquisition costs by January.
Right-of-way costs will likely run in the "hundreds of millions of
dollars," Burdick said. "Every day that goes by, you have more
development that's occurring."
Reviews of past freeway land purchases suggest that the cost of land for this
section of Loop 202 could be staggering. In 2002, ADOT paid a record $26.9
million for nearly 110 acres at the intersection of Pecos and I-10. And that
parcel was undeveloped. Total land for the South Mountain Freeway will be
several times the area of that parcel, and much of it will have houses on it.
ADOT also pays for relocation expenses.
Right-of-way money will come from a $16.8 billion pot controlled by the Maricopa
Association of Governments. That's the total amount that Proposition 400
authorized MAG to spend on transportation over the next 20 years. Other projects
the region wants to tackle with that money include widening I-10, I-17, Loop 101
and Loop 202, building Loop 303 and buying land for future roads to avoid the
problems now facing South Mountain Freeway planners.
Burdick said ADOT doesn't expect to have to bump anything off that list because
of Loop 202 land costs, but added that "anything's possible."
Depending on where the South Mountain Freeway goes, ADOT could have a long
shopping list. It owns nothing along 71st Avenue or Loop 101, routes proposed
after the federal study resumed in 2001. In Ahwatukee, it owns no land between
24th and 28th streets or west of 19th Avenue, where hundreds of homes have gone
up in recent years.
Critics ask why growth was allowed to flourish in corridors
marked 20 years ago for a freeway. State and regional officials say that budget
shortfalls and state laws protective of private property limit their ability to
buy land ahead of time.
Shortly after the Regional Transportation Plan was approved in 1988, ADOT
snapped up several parcels of land along Pecos Road to prevent future
development in the Loop 202 corridor.
However, the South Mountain Freeway soon dropped to the bottom of the priority
list in a region scrambling to meet its transportation needs. By 1994, it was
officially dubbed a "non-funded freeway," and the state and region
directed their transportation dollars elsewhere.
The 2004 passage of Proposition 400 elevated Loop 202's status. By then,
however, ADOT had embarked on a new federal study that required planners to look
at alternative routes in addition to the original alignment. With the route up
in the air, ADOT put an unofficial freeze on the purchase of right-of-way land.
From ADOT's point of view, Burdick said, "until we get some idea of where
it's going to go ... we really don't want to pursue any right-of-way
Buying land before the Federal Highway Administration's final approval of a
freeway's route is risky. The alignment could change, and planners don't want to
be left with excess land.
"We are working with tax dollars here. You have to be careful," said
R. Brian Rockwell, assistant chief right-of-way agent.
When ADOT is unable or unwilling to buy land, the options for preserving it are
relatively few. The law forbids government from forcing property owners to delay
development until the state makes up its mind where and if to build a freeway.
It's a stance that developers support.
"How would you like it if you owned a house or a business and the state
came to you and said, 'You know what, we're not going to buy this piece of land
... and in the meantime, you can't do anything with your land?' " said
Cochran of Calabrea Development. "It's just wrong. It's totally against
property rights and what this country is built on. You can't control someone's
land without owning it."
property protections in Arizona show no signs of eroding.
If anything, the laws are moving toward strengthening owners' rights.
In 1995, for example, the state Legislature passed a law allowing owners to sue
ADOT if the department doesn't make a written offer within six months of
announcing that it needs the property.
Instead of pressuring property owners, lawmakers said, the answer could lie in
speeding up the freeway building process to avoid the types of dilemmas facing
Rep. Andy Biggs, R-District 22, is chairman of the House transportation
committee. He believes that the Legislature should protect transportation funds
and give ADOT more money to speed up its studies and buy land in the right of
way before houses get built. He pointed to Hunt Highway between Chandler and the
Gila River Reservation as another example of a road where excessive nearby
development has thwarted the road's expansion.
"What you need to do is put the state in a position to move more quickly.
That way you can value the property rights and protect the interest of the
state," Biggs said.
Skyrocketing right-of-way costs could also be avoided through better
coordination between the cities and counties that develop land and those who
build the roads to serve them.
"It's a flaw in the system," Burdick said. "It points to the fact
that there needs to be a greater link between transportation and land-use
In the meantime, homes are still rising on the Foothills 80 development. They
may be a headache to the state, but for buyers and builders, the houses are a
"If the freeway goes through, then you're fine," Calabrea's Cochran
said. "You get bought out and paid for, and if it doesn't go through ...
you have a nice house and a nice lot in a quiet area. That's what Ahwatukee is
all about. You're out in your own little world there."