First Step — Land Purchased For Asu

Town fosters deal to allow university plan to go forward, despite Forest Service delays

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The investors backing a college campus in Payson on Monday struck a deal to buy enough private land to start initial construction, Payson Mayor Kenny Evans has confirmed.

Payson and the investors remain in negotiation with other private landowners for additional parcels and declined to publicly release the number of acres and purchase price as talks continue.

The purchase of the private land will keep interest rates low for the eventual construction of the campus and related facilities and will enable Payson and Arizona State University to open the campus by 2013 or 2014, even if it takes another 18 months to two years to complete the proposed purchase of a portion of the 300 acres of Forest Service land, said Evans. As rising municipal interest rates continue their meteoric climb, timing of the project becomes increasingly important.

The parcel “is large enough for us to begin phase one construction,” said Evans.

Evans stressed that the private investors are buying the land contingent on Payson and ASU finalizing their deal to build a low-cost college campus here. The forested campus would have classrooms and dorms for 600 to 1,200 students initially, but could eventually grow to about 6,000 students.

Evans said if the deal falls through in the next few months, the investors could cancel the purchase. In that case Payson would still have no financial liability for the land purchase.

The terms of the land purchase would ultimately help Payson lock in favorable interest rates on some $500 million in money committed to the project, which includes roughly $100 million in promised donations.

Monday’s land purchase “is important in locking in financing and locking in the commitment — it’s all intertwined,” said Evans.

The purchase also potentially frees the project from one of the chief bottlenecks — getting the U.S. Forest Service

to complete the studies and planning necessary to sell the 300 acres fronting the highway surrounding the Payson Ranger Station. Congress earmarked the parcel for sale a decade ago, but the Forest Service still hasn’t gone through the time-consuming process necessary to free up the land.

Evans estimated that the process of buying the Forest Service land will likely take another 18 to 24 months.

The additional private land will allow the Forest Service to keep a portion of the 300 acres and might also provide land for additional satellite businesses. Already, the town has struck a deal with a 500-room conference hotel and a Chinese manufacturer of solar cells to anchor a research park — both contingent on the ASU plan going through.

The plans ultimately envision a roughly 150-acre campus, complete with solar and geothermal facilities that would mean the campus would generate more electricity than it uses.

The purchase of the private land means that Payson and ASU could move forward with the project quickly, while the town continues to wait for the Forest Service to approve the sale.

That removes one of the two chief stumbling blocks to the project. However, the town must still convince ASU to sign an intergovernmental agreement to build the campus.

A joint coordinating committee continues to meet regularly to work out those details.

ASU has held back in substantial measure due to the state budget crisis, which has resulted in deep cuts in state support for the universities.

In the past two years, the state has cut support by about 50 percent per student, even in the face of rapid increases in enrollment. The universities have cut their work force by 2,100 positions — or about 11 percent. ASU made up a lot of the loss of support by essentially doubling tuition. Enrollment grew 15 percent from FY 08 to FY 11 and is projected to rise another 19 percent by 2012. Arizona has few private colleges and therefore is dependent on its public universities.

Gov. Jan Brewer on Monday proposed an additional $170 million cut in the coming fiscal year.

Arizona Board of Regents Chairman Anne Mariucci said the latest cuts will have a “serious impact” on the universities.

“We have to be brutally objective in our assessment of costs, efficiencies and productivity of every university function and program,” she said.

However, ASU officials have previously observed that the Payson campus could provide students with degrees at less than half the cost as the other, research-based campuses. ASU officials have said that the Payson campus would remain viable even if the Legislature funded enrollment here at a much lower rate.

Evans said although the budget crisis has appropriately preoccupied ASU officials in the past year, ultimately the much lower cost per student of the Payson campus coupled with the offer of what amounts to a free campus ASU would not have to build or bond could prove compelling.

However, the budget issues have convinced him to abandon his hopes that the campus might open in 2012 and to accept ASU’s estimates of a 2013 or 2014 opening. “ASU’s focus at this time is to mitigate the impact of the budget proposal. And that’s where their efforts ought to be,” said Evans. “We are still fully engaged with ASU and anticipate that we will be able to make this work and move it forward.”

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