Drainage Stalemate: Apache Junction Council Defers Vote on 160-Acre Development as City Confronts 16-Year Unfunded Settlement Obligation

Now, I'd like to call I'd like to call the city of Apache Junction work center work session of June 16, 2025 to order and ask everyone to again put their phones on silent. Roll call. Mayor Wilson here. Vice Mayor Schroeder present. Council member Cross here. Council member Hec here. Council member Johnson here. Council member Nesser present. Council member Ser here. You have a quorum, your honor. Thank you. Presentation to the discussion of award of a contract IFB CB or CDBG 107-25. Dave.

Good evening, Mayor and Council. Uh Dave Butler, park superintendent for the parks and recreation department, and I'm here tonight to go over the Super and Shadows Park improvements award of contract. Uh first thing that we wanted to make sure that everybody knows is that the project is fully funded through a community development block grant with the Arizona Department of Housing. Uh their state special project funds. Uh that SSP is in there because that's a state special project fund.

It's also at Superstition Shadows Park SSP. So, there's a lot of um abbreviations in there, so don't let them confuse you cuz I was confused the whole time. Um the expected construction completion is February of 2026. Um once we start on the project, we did go out for bid u posted April 4th and open those bids May 12th. We did receive five biders with the low bid uh low mountain construction on the screen there. Um this is a map of so the project is one big project kind of broken into two areas.

Part of the project is at the uh pool that you'll see in the little red highlight there and then further south of the park is the playground um in the other half of the project. In total it's about 8,800 square ft of new shade that is going to be installed. Um between the pool and the playground area. Um on this slide here, these are the concepts and the renderings of the types of shade that we're looking at installing in both of those areas.

Um they're two different designs and as we go through the process, they'll get put in place there. This next one is the same conceptual renderings of the actual playground equipment that will be installed uh in the play area. It's kind of hard to tell because they're renderings, but those are one of those is a 12ft tall climbing boulder and the other one's a 8ft tall climbing boulder.

The other feature is a 2 to 12year-old playground that will replace the existing structure that's there and has been there for about 20 years now. So, that one will come out and be replaced with essentially that exact same thing that's on the screen. Um, colors are still to be determined. Um, so staff does recommend award of the contract to the lowest responsive bidder, Low Mountain Construction, in the amount of $439,84.38 plus a maximum 10% contingency for a total not to exceed $483,784.82.

Uh, we will bring this item back in two weeks for final award of the contract. And I do want to take a quick second to let you know that the contracts that are in your packets tonight do have some minor clerical errors that we're still working uh to clear up and we'll make sure that we get those cleaned up before we come back in two weeks. A lot of uh not a lot, but a few page numbering issues.

Um some font things that we're working with Joel on right now and we will make sure those get finalized before we bring it back in two weeks. And with that, I can answer any questions you have. Yes. kind of have an off-the-wall one. Um it's a by American build American. Yes. Type product and um contractors fully aware of that? Yes. And do you foresee any of the um spec equipment being um out of country sourced or is it pretty much readily available here? It's mostly readily available here.

I'm sure there are some components that that might I I don't have the exact answer, but it is part of the bid was build American by American. So, they had to meet that. Okay. Uh to be able to be awarded the bid. Okay. Anyone else? Okay. Thank you. Thank you. So, our plan is to come back in a couple weeks. Yeah. Okay. All right. presentation, discussion, and proposed development agreement for the 160 acre property located at Meridian Drive and Southern Avenue. Rudy's here, your honor.

We we thought we'd kick it off with Rudy. We do have the owner of the property and his representative here that can speak as well. Rudy, why don't we come on up? Thank you, Bryant. Good evening, Mr. Mayor, members of the council. I'm Rudy Eskeez. I'm the development services director. going to give you a very quick presentation. Uh just update everybody on on where we at as far as the zoning of the property. Uh the property was reszoned uh or actually the the zoning case began back in 2005.

Uh couple of submitts were made. There was some changes like we normally do with all plans. We work with the developer on developing the plan. Uh engineering issues were explored. annexation also happened at the same time uh as we processed the resoning like we've done with several cases. Uh the case the the resoning case and the annexation case went to public hearings in 2009 approved in August of 2009. Ordinance uh 1340 approved the annexation. Ordinance 1341 approved the resoning.

Uh and basically the property was reszoned from the old county holding zone of GR, general rural uh to uh trailer homesite zone. The name of those zoning districts have changed under our new zoning ordinance. What used to be called THPD is now called MHPPD, but basically uh the development plan uh for the property is still in place. uh rough we we reszoneed roughly 110 111 acres and uh a a corner uh at the northwest corner of the property was reserved for future commercial.

Uh during this time there was also separately uh a development agree a development agreement being negotiated that had to do with drainage issues across the property. Uh the ordinance conceptually approved a 650 lot 55 plus uh adult mobile home park. I want to correct myself. Last time I was here I told you I thought it was a family park. It's not. It is it is a 55 plus park.

The amenities included conceptually uh approved a 20,000t clubhouse that new mobile homes only would be installed at the time of installation. Of course there was indoor and outdoor recreation. There were numerous model types. There was an RV storage area, uh, extensive perimeter landscaping and buffering, a six-foot multi-purpose path on the southern and meridian perimeters, uh, city entrance design at the southwest corner of the property.

These are all the things that were negotiated into the ordinance which uh, approved the the resoning and the conceptual PD plan. And this is the conceptual plan. Of course, the southwest corner of the property has now been taken up by the uh A DOT um uh exit or or on-ramp, off-ramp, whichever way you want to look at it.

But this basically shows plus or minus 650 space, mobile home park, central amenity areas, uh that that landscaping and buffering I was talking about, reserving the northwest corner for a potential future use. uh amenities uh like we've seen in some of our nicer uh mobile home parks. Um and this plan is still in place until someone proposes to uh propo proposes a different plan development plan. Conceptually, this is this is what's still approved on the property.

If someone wanted to develop a mobile home park tomorrow, we would look for them to come in with a very similar uh concept. not necessarily exact, you know, given the physical changes that have already occurred on the property, but something very, very similar. Uh, we have had a couple of inquiries uh since that 2009 resoning. I went back through my files, I noticed, uh, that uh, back around, I think it was around 2019, Westland Homes had asked about the property.

Uh, back around 22 or 23, Lenar Homes had asked about the property. Uh but most recently a as Sean mentioned last time KB Home uh asked about the property. Uh they did uh process what's called a preliminary development review and obviously this is an extremely uh conceptual very preliminary plan and basically what it shows us is that they were proposing different uh density uh housing types, town homes uh and a couple of different densities for single family.

Once again, a central amenity area, uh how some of the water might be channeled across the property, those kinds of things. Very, very conceptual. And uh that's the most recent proposal we've had. Once again, the old development plan is still in place. And I'd be happy to answer any questions about the zoning. Any questions? Um on the drainage agreement that you have? Yes, sir. is what's the expiration on that? I will defer that to our city engineer.

That was all negotiated by a public works department and a former city manager. But uh yeah, having me come up. We we do have the owner here as well. Do you have the date there? You know, is it like five years? I'm sure that Sean knows exactly. Yeah. I mayor, council members, Emil Schmid, city engineer. Uh I unfortunately I don't have the exact expiration date for that settlement agreement. May 30th 2030.

So, so what what kind of issue does this create if we're trying to extend the one um agreement but not the other or they run together? They do run together. Okay. So, it's an amendment. So, Joel, it would be an Anyone else have a question? So, the thought was just to add time because they've got to work with Arizona water if they're going to go towards having single family homes, which is what they have had come in. So, anyway, Mr. Mr.

Mayor, just want to clarify that it is the development agreement that had to do with the drainage that expires in 2030. The zoning is still in place. The zoning is in place until a new PD plan comes comes along. Thank you. Okay. Yes. I'm I'm still a little confused over the fact that we're trying to extend this for 10 years for because I know we've had this for a very long time and there's been no development. They can't.

So now we're looking that somehow we think that in the next 15 years down the road that there would be something here in the hopes that it's going to be individual homes. But it could just as easily still after 15 more years still be a 55 plus mobile home park. Is that what I'm hearing? That is correct. The zoning is for what Rudy proposed and the developer can explain tonight.

That's why we have them on the agenda to explain why um they would like to enter into a amendment that it would allow 10 more years. Mr. I'm ready to hear something. What's what's the what's the actual purpose of extending this anyways? Is it so that they can that that this property can remain above any changes and policy changes the cities have for what we want or don't want to see in the city? I mean, once once this would expire here um shortly without the extension, then it's square one.

Then they're going to have to whoever owns the property is going to have to abide by what's going on with us as a city right now. My understanding, Rudy, if I've got this right, if it expires, the zoning stays the same. Correct. Okay. The zoning may stay the same, but we have strict policy about mobile home parks. That should that should trump anything new? I just I need to find I want to know. So, so what's the point of this extension? What is what is the end game here?

is so I mean if it's if it's a matter of it doesn't even matter what happens prop no matter what and nothing changes then what's the point of the extension? Well, if Rudy could explain uh zoning about mobile home parks and how many acres you need if you just had straight mobile home zoning. Yes.

If if this was if the property the property is already entitled, the entitlement does not go away unless there is another legislative act either by a new applicant or I suppose council could take action, but then I'm sure Joel would talk to you about takings issues and things like that. The zoning does not go away until a new plan comes along.

The drainage agreement, I think, buys us more time uh to talk to more developers and perhaps work through some of these complex drainage issues that are currently uh uh hindering the development of the property. Drainage. We're holding out for something better to be totally blunt. And and Rudy, they the owner could come to us and and ask for a reasoning. Yes. Whether they will or won't, it's their private property. They may may not choose that. Yes, sir.

So then Rudy, just to clarify, because of the reasoning the date that it occurred, this would this would not be trumped by our decisions within the city to not allow mo home parks. Just that would that policy still stands that, you know, if we're looking at another property, a minimum of 10 acres, which is which is what our zoning calls for for mobile home parks. uh somebody wanted to develop another uh property for mobile homes, we would tell them this is what our general plan says.

This is what our long-standing city policy has. Uh highly recommend against it. We cannot stop someone from applying, but we could uh highly uh advise them that uh the city's just not really interested in more mobile home parks. However, properties that are already entitled, they are allowed to develop under the zoning that they have. That's ex exactly my point. This extension literally extends. No, the extension only has to do with with with the drainage agreement. Yes, sir. Okay.

The zoning is a little deeper. Property rights, right? If I may, mayor. Yes. So, Rudy, if uh if this expires, they still have manufacturer housing uh zoning entitlements, correct? So, the process would be uh to submit a site plan. Is that correct? or very closely follow the conceptual plan that's already been approved. Okay. But that would not have to be approved by the city council. Correct. No. Unless there were substantial changes. So they could basically get their permits.

They can apply for permits and then uh development services would start issuing permits for those units. Correct. Yeah. The engineering, the street construction, everything that normally goes into developing a property. So So the council would not see that case again. Correct. So I want to make that clear to council. Now, yes, they would have some drainage issues they'd have to deal with. It's it's a little different than single family homes.

So, but you may want to hear from the u the developers attorney. Yes. And see what their impression would be and um take it from there. Yes. You want to come up now? Good evening, mayor and members of the city council. My name is Michael Theesman. Address is uh 215 North Power uh Mesa, Arizona. Thank you for taking the time to meet with us tonight to discuss the future development of our 115 acre southeast corner of Southern and Meridian site. We have owned the site for over 30 years.

It is our desire to continue to work with the city to build a residential community that is successful and enhances the appeal to have Apache Junction become the home of over 600 families. My father and I uh purchased this site back in 1993. Since then, my father passed away in 2011. Both myself and my father, we were raised in small towns in northeast Washington. My dad's high school graduating class, had 55 classmates that graduated with him. My class was 105 graduates.

My dad went to uh Gonzega College in uh Spokane, Washington. And to uh get through uh he taught ballroom uh uh dancing at uh Arthur Murray Studios and he eventually went on to own the franchise rights for all of Canada in the five western United States for uh Fred a stairs. Um, I ended up going to uh USC uh in Southern California and I got a uh bachelor of um science for finance and uh real estate development.

Our main business since 1980 has been developing 55 plus manufactured housing communities. We currently have 10 communities and a little over 5,000 home sites. We have two properties in uh Florida, one in St. Petersburg, and one in Daytona Beach, two in Albuquerque, New Mexico, one in Las Vegas, and five here in the East Valley. You could look us up under the communities.com, and you'd see all of our projects there.

Currently, as Rudy said, our project is um currently zoned for a 650 home site, 55 plus manufactured home community. But he did leave out one thing. We have a temporary use for 10 years of a 121 site RV community to have people come and live in the property before they um buy their home or when they're building their homes, they'll be able to live in their RV um while that's going on. So, that was one other thing that was in it.

And basically the RV park is there until 575 home sites are leased, not to exceed 10 years from the date of the original certificate of occupancy. For the past 2 and 1/2 years, we've been going through with the city talking about single family development. In fact, we had a meeting in October, excuse me, April of and I at that time said I would be open to that suggestion given two major concessions from the city.

One is that the city start their development of the drainage storm drainage system that they needed to develop so we could develop our property. Since 1996, I have not been able to develop this property because the wa storm water has gotten diverted onto our property and now our property is just a big detention pond. So, the development agreement that we've been talking about was not only a development agreement, but it was a drainage settlement agreement.

We were basically in a going to be in a lawsuit with the city over the diversion of the water onto our property. So we ended up working out a settlement agreement that got written into the development agreement. So if you look at the agreement, it's a development agreement, but it's main even more important. It's a settlement agreement for diverted drainage onto our property. Our property is basically landlocked. We're we're the last person on the line.

So all the water coming from the uh northeast comes down to our property and we're the last person. We can't have it go any further south because of the freeway on 60 and we can't have it go any further west because of the cap canal. Now, so what does that mean? So, right now in the development agreement, it says there's 3,383 CFS of water that comes onto our property every time it rains. So, that's basically, think of 3,383 basketballs per second coming onto your property.

That's what comes onto our property every time it rains. historical flow 761 cfs. So that means we're 22% of that flow. The city is 77.5% of that flow or 2,622 CFS. Now what has happened since we signed that agreement in 2008? City has not spent one nickel to solve the drainage problem. that we agreed that they would solve. So, I don't know.

I mean, um Bryant and Joel, uh Rudy, uh Emil, they've all been a pleasure to work with, but the problem is we talk about the same things over and over and over, but they have no money. They have no ability to come up with a solution to get it funded. That's why KB backed out of our deal. We put KB under contract in October of 2024.

I extended their due diligence period three times because we were trying to get the city to commit to spend the money to design the infrastructure needed and to find out how they were going to get the water over to where it needed to go. And KB basically came to us and said, "Listen, if the city will not commit to a time frame, a plan, a dollar amount, and make sure that gets funded so we can close in 18 months, we have to walk." And that's what they did.

But they did say, "We want to come back if I can solve this problem." But here's the problem. the only place there there's been five opportunities for the city to solve this problem and it's gotten by them every time. So the first time that the city could have solved this problem of their of their flow, let me find it here, was the water was supposed to go back on the north side of Southern. And I have a map I can show you if Is that okay? Joel, can I give her? Okay.

So anyway, the water was originally diverted to the south to go onto our property across Southern. The water was originally the historical flow went through Meridian Meridian Manor went o over Meridian and into a drainage channel that runs behind the corner. There's a vacant corner over there right now, but if you go to that corner, there's a a channel that was designed for that drainage. And then that flowed to the cap canal and it was like number shoots number 10, 11 and 12.

That was where that water was supposed to go. So the first thing that we when we originally signed the agreement, uh Yao was the city manager and his said he told me we're going to build a drainage structure on the north side of Southern and we're going to have some of the water sheet flow onto Southern.

But then what happened is I think the city forgot about the development agreement and I think they forgot about it for a long time because what they did is they approved the Hampton Meridian uh rental housing project which took that option off the table. The next thing that happened is in 2014, ADOT came in and condemned part of our property and they built the on-ramp onto the 60 freeway.

They also did a drainage report and they said the historical flow that they needed to get from our property to the state land piece of property that was on the east side, excuse me, the west side of Meridian next to the CAP canal. They said that that was a,000 CFS. The city signed off on that. We didn't sign off on that. And so what they built is they built a box cover underneath Meridian as part of the on-ramp construction process.

So now a,000 cfs can flow underneath Meridian west to the cap canal. Not 3,3823 but just a thousand. Then the next thing is I can't tell you how many times I was told over the last 20 years that we're working on a week's wash project and when the week's wash project gets done you're probably going to we're going to probably reduce the flow dramatically that comes to your site and that probably we're going to save at least a th00and cfs of flow will stop when the week's watch project gets done.

Well, that also came with a caveat, but it's never been studied. So, when we were working at this in the last two years, I finally got the city to look at that with TY Lynn. Plus, I had our drainage engineer look at it, CVL, Cohen Vanloo, and they basically came back and said, "There's no um significant reduction in flow with the Weeks Watch project." My heart dropped cuz I for 20 years I've been thinking that was the savior of our property.

Then the next thing that happened is like I said, we had this big meeting in 2024 in April and I thought my prayers have been answered. The city said getting this drainage situation solved was their number one priority and that they had a time frame that they had to get this done in because they were going to use ARPA funds which was the American Rescue Plan Act funds for infrastructure. It was $350 billion. And so I thought, okay, there's a deadline.

They have to have their application in by December 2024 and they have to spend the money by 2026. I don't know what happened, but that came and went. All of a sudden it was like, well, we got some other way to fund it. Then the next thing that happened, this just happened in May, April of 2025. So, we had been working for the last two years with the city to design a drainage channel that would take the pro the water from our south east corner and get it over to our southwest corner.

And they were going to then put the water onto the Arizona state land piece and they were going to talk to Arizona state land piece that this was a regional drainage solution, but nobody ever talked to Arizona water. So what happened? Arizona Water sold the property a few weeks ago in April for $8.6 million, a little over 300,000 an acre for usable acre. Well, that was our that was our way to go.

So, the only thing I think that the city can do now is they got to put the drainage in the street, you know, like an underground drainage uh channel that would go in the street and eventually go back north. Um, but I don't know if the city knows. I mean, I don't know if you guys know this, but this project's been here since 2009, and it's a multi multi-million dollar project.

You know, I mean, I don't know how many 105 million projects you guys get that you have to go through every year, but this could exceed that number. It's a big It's a big big number. And what it does is it stops us from being able to develop because there's nowhere for the water to go. We can build our drainage system to handle the 761 and get it to the Arizona state land piece, but the city can't figure out how to get their water where it needs to go. How much is it going to cost?

When will they get it done? And we've been sitting here since 1996. That's when the water got diverted 30ome years ago. So if I if I could, we are highly motivated to get a project built. Would we prefer it to be single family today? Yes, we would prefer it to be single family. But the the problem is the only thing I legally entitled to build is a manufactured housing community.

The second thing is there is a water issue right now where if I subdivide the property in more than five parcels then I have to go get a certified assured water certificate. We are with the law firm of Finemore and they happen to be representing the homebuilders association in their lawsuit against the state regarding being able to count groundwater as part of a assured water supply. So what we're in the process of doing right now is we are doing a water study.

We hired a company called Matrix and it's about $50 or $60,000. They're going to do a study that says, "Hey, um we're going to go down to where the aquifer is and they'll do calculations based on that. How many homes our property or home sites or apartments, how many that would have for an assured water uh certificate?" Um then what we have to do and they've already assured me that because they've done a bunch of studies there that the water's there.

It's just right now um you have to have deed water not groundwater to get an assured water certificate. But if the home builders win the lawsuit, we'll be in position then to get an assured water certificate because they won't give it to us right now until the moratorium's listed lifted. Then what we do is we then go and get a certified assured water certificate. We have to join the Arizona um conservatory and it's called um it's when you put the water back in.

It's uh so we have to join this agency and that process is about $500,000 to a million dollars depending on how many number of home sites it is. So, we aren't waiting for Arizona Water to um go through that process. We're going through it ourselves.

So, what we're hoping is the homebuilders will win their lawsuit that we will already be in place and have all the paperwork done because it's like a year to get this done and then once they lift the moratorum, we will have our own assured certificate of assured water. So that is our our game plan right now. I do want to talk to Joel and Bryant because I have been told by Finemore that there is another way to get it done but I don't want to talk about that in a public setting.

Um then what I can show you is so the first thing here is this is KB and I can tell you KB spent over $100,000 between negotiating the contract with me and doing their due diligence and their attorney's fees over 120day period of time. They came up and the biggest reason that they couldn't continue to go forward was they were going, "Michael, how big's the channel?" I mean, how many feet do we need to plan for a channel? Is it 30 ft wide? Is it 100 ft wide?

You know, cuz when we started off with the city, the first time we met with them, they said, "Hey, we have to do a channel that's 250 ft wide." And the last time we talked to them, it was down to 100 ft wide. But the problem is we only can get the water to our corner at Southern and Meridian. We can't get it to the CIP canal. So this is KB's one of their um preliminary site plans that they did. This was one of ours original site plans that we did.

Um and it had a apartment um what do you call it component on the corner and then these were the kind of home elevations that KB was looking to do. Um here Rudy already showed you our development and the signage. And then the last thing is this is the drainage channel we designed back in 2007 and it's still the same design channel we have today for our channel to build it. The next thing is the aerial map. And as you can see where the wash comes, we're just this big detention area.

And we've been that for 30 years now. We've been detaining the city's water free. You know, I've been paying the property taxes and all of that, but the city's been putting their water on our property. What originally was supposed to happen is the water was supposed to come along the north side of Southern go around this development. And if you look, you'll see this concrete channel where there's some homes and then there's a vacant piece of property.

That's where the water was supposed to go, but it's no longer going there. And as you can see, we can't put any more water. Like what can go under the uh freeway? It's already maxed out. There's more water that can go. And I can show you on the next slide. This basically is all the design capacities of how much water can be carried. So like here under here we have a th00and cfs at Meridian um that the ADOT built and then you have all these uh cap channels.

So all that can go on the property that the Arizona state land people owned. The maximum the the design capacity of channel 13 was 610 CFS. The bottom one number 14 was 251. Then if you go north uh channel number where is that 12? It's 610. Channel 11 is 565. in channel 10. I can't read that right now. What is that? 565. So that that's that's where the water was supposed to go. Then this is a memo that was written in 2007 to your city engineer uh GA Yao Yao and it was by Kinley Horn.

So, the city hired Kinley Horn to look at our drainage plan. And these were all their recommendations back in 2007. And if you read it, it says the Meridian subdivision diverted the Palm Wash to the south across Southern Avenue to the Los Palmus site where historically that water stayed north on Southern. And then they basically go on that The primary drainage concept proposed by the RM masteraster is to restore the historical drainage pattern.

So downstream structures on the 60 and cap will function as they originally were designed and built. So, one of the things that we've always I don't know if you remember, but a few years ago the freeway flooded out and that was because there was too much water that came onto our property and there wasn't enough drainage underneath the cap.

That has somewhat stopped because of they increased the flow of meridian by putting in that box cover because it used to just flow over meridian before they put in the box cover. And then in my opinion, I actually looked at this piece of property to buy it to see if I could help solve the city's problem. But when it came down to it, once the city had to put the drainage structures in that they needed to put in, the property was really undevelopable.

But my feeling is the city should have bought this piece of property because that would have solved the problem. If the city would have bid on this piece of property, that's where the water could have gone to solve the problem. But I had no asurances from the city that if I spent $8.6 million, they would do the project. I mean, I I haven't heard the city ever give me a plan. I've asked for in writing, please give me a plan. When are we going to get it designed?

When are we going to get it uh engineered? When are we going to get it built? And I had to get that information because that's what KB was asking me. Then I know there's been some talk cuz I listened to the last meeting that you guys had from a couple weeks ago. We we have tried to market that corner since um we had it zoned, not zoned, since 2009 when it was cut out. We've tried to sell that as retail and we've had no luck.

So, this is a couple letters from some retail buyers, Vestar and Barkley Group. And then there's a map that shows where all the major retailers have already landed and fast food and restaurant people have already landed. But what I what I can tell you, I was even at um Signal But today at all the retail that they had there, and I was really surprised that there's vacancies there now. There's a handful of vacancies at at that property. But the good news for the city is there's internet shopping.

I mean, what people want now is to be able to shop from their homes. And now the city gets a cut of that. So, the more home sites you have, the more rooftops you have, you're going to get more sales tax without having to have retail because people are going to buy Amazon or Apple or whatever shopping sites they go to. And I'm sure your income is going up each and every year compared to what it was 10 years ago. So, my desire on this project, I don't want to wait five more years.

I'd like to get it done tomorrow. But here's what I said. I don't know why the city I said being kind. I said the only thing I can think of is the city forgot about the agreement because any other motive would just be they're delaying till the end of the agreement so they don't have to pay all this money for the drainage that they need to solve. I mean you guys hit it off the nail on the head right off the top. You go, "Hey, in five years our our obligation goes away, right?

All we have to do is wait five more years and our obligation's gone and now the developer has to pay for all that drainage. Well, I can tell you I won't wait that long, you know, and and when I try to put plans in, the city won't approve my plans because I'm only taking care of 761 CFS, not 3,383. But there is some good news. The good news is according to the FEMA's latest study that the city hasn't yet told me that they've accepted is that the CFS now is not going to be 3,383.

It's going to be like 1,900. So all of a sudden 1300 CFS, you know, goes away if the FEMA model is correct. So that is good news for both us and the city. And so all I can say to you guys is I asked for 10 years because I've already been working on this as hard as I could for the last 3 years and the only number that I've gotten that has been any good news is the one I just gave you. That that's the only good news I have.

You know, and I don't know how you guys are going to solve your problem without spending multi multi-million dollars. And I can guarantee you this, I'm not going to let you out of that obligation. You know, I worked too hard to get that obligation. Back in 2009, I settled a lawsuit, you know, so that we would get the development or the de uh the de settlement agreement, the draining settlement agreement. The reason I asked for 10 more years is because I haven't seen anything.

You guys say I haven't done anything. I can't do anything. And you and the thing I could do, you don't want I could have built a mobile home park, but the city couldn't have fixed their problem. And I don't know what they would have done with the water.

But right now, I say, if I want to be in a position, I would rather be in the city's position than my position because you can only get what you want, which is probably a single family development, but the problem is we got two big problems to solve. And I'm going, you're going like, "Hey, what's taking me so long?" I'm going, "What's taking you guys so long?" So, I I don't know what else to say other than thank you so much for listening to my uh 30 years of of working on this project.

Thank you. Thank you. Okay. This is not good. Any questions or anything? I'm wondering why a lot of this information has been withheld. I mean, it's a lot of information. So, the city staff has been working closely. I think I would articulate the relationship with Mr. Thesman is productive in the last year and working on trying to find a productive path forward to the drainage issue.

And it does require it's very complex and it does require a level of sophistication to design it but also to pay for it. And we are working on coming up with a budget that we can propose so that we can move it through um his property and over to the to the cap and too over to other areas that can take on the channel. Um the obligation has been there. We've always known that if if he were to pull a permit, we'd have to hustle up a plan.

Uh, I don't know if Emil you want to come up now and talk a little bit about our plan. Well, hang on a second. Yeah. Yeah. I I would like to say your city people are there very responsive. They've met every time. I probably talked to Bryant more than his wife. So, he's been very responsive. The only issue is I think his hands are high. So um Joel, were you involved with this settlement plan? You were here. Uh, yes. I was a city attorney when that was negotiated. There was no lawsuit.

So, that's not true. Uh, well, there was no lawsuit. There was no claim filed. So, that's not true. There were different opinions on engineering going back to three three different engineers I believe. Um you know at the time we had a different city manager. So that was another factor that you have to uh deal with. Also a different city council and the drainage things things did change over time. So So just so I have this correct. So at the time of purchase this wasn't a drainage nightmare. No.

Okay. So over progress uh things were built, things happened and then all of a sudden it became a drainage nightmare three years after we bought in 1996. Okay. And then this is something that I'm still trying to piece together. You come to the city and or should I say the applicant come to the city and said, "Hey, this isn't right. What's going on here?" Um and then enter settlements and things like that. I'm I'm assuming that's pretty correct so far. Well, once again, there was never a lawsuit.

There was never a claim. Said settlements, but uh there was a different attorney involved. He said it wasn't Mr. Lake. It was actually um Mr. Pew. So I mean the city didn't build Marine Manor. No. So but yet yet we're responsible for the drainage that resulted in that bill. We are now How would you describe that Joel? We are now responsible for in this agreement for managing that off-site drainage. So we got to move it through and we settled and agreed to to that in 2009.

So historically before Meridian Manor was built and everything else, most of that water stayed on the north side of Southern according to according to those guys. And I'm sure if we maybe looked up topical graphical maps from yesterday year, we could see the channels and the and the washes that went through and we could determine where that water went. Yes.

Based on that then we should also be able to determine whether we are 100% obligated to fix this or do they have some culpability in it as much as us or right 7030 40 60 I think a meal should be brought up to talk about the historical flow um and also remember the economy went to hell in ' 06 0708 um and it wasn't good until well who knows when 2017 I mean it was not good so we didn't hear from the thasments for a while so there wasn't an absolute blame but I think Mr.

I think email should come up to talk about the historical flows. I have a question. I agree. Should but I mean I know I'm not done asking you questions. I don't know about Yeah, I got a couple here too. So, go for it. Well, my my biggest question is when the city signed this drainage settlement agreement, I don't care how it happened. Okay. And they knew at the time that they were obligated. Is that correct? That is correct. Yes. And that was in 200 n nine. Yes.

And why I'm trying to figure out was there some kind of thought that well we're not we don't do the obligation until somebody is ready to crack ground or was the obligation made where we said businessmanto businessman type thing. this is our deal and we will do it.

The agreement required us just like now and it did did then to deal with that proportionate share of the drainage and I think from my standpoint Rudy I think we were just waiting for development to come forward so that it would make sense to work together um with the private property owner to deal with the drainage and no we had obligated ourselves we didn't say I didn't see anything in here that said we're obligated if they build I just see an obligation, right, that we said we would do, right?

And yet I never see that come forward till didn't see budget. Yeah. Well, it's right. It's been in the it's been in the um contractual mode for this long period of time. And I've been working with the developer on bringing forward a single family home subdivision to try to get that forward. And then at that point we would have the funds to be able to um to be able to pay for this.

You're saying like the impact fees from that the combination of impact fees the combination of construction sales tax. Okay. The constructionation of future revenue that would come from um you know the change in growth. So apart from apart from that we wouldn't have the we would not be able to fund this without that. It's always been a dilemma to be able to fund it. Yeah. I'm sure it's more expensive to fund it now than if we had done it in 2009. Right. True that. Yeah.

Fund balance in09 was way much different than now. But it was our obligation no matter what was built right after we signed this. It's all Yes. So when we signed it, it's our obligation. Yes. That's that was that's what the levels we came up with based on a study. So that that is correct. So where does where does settlement come into play here? That this is what I really would like to know. At what point you said, okay, no lawsuit was filed. Nothing was filed.

Well, then where did settlement come from? Did we did did we look at a situation and said, "All right, it's on us. Therefore, we're settling. So this doesn't go any further." I don't remember it being I don't recall that. I really don't. I'd have to check the file. I don't know if there's anything in my file that says that. Um, and you know, perhaps that's really an issue for executive session.

And and from my standpoint, I think I've always viewed this as a development agreement that when development comes, like many other developments, we will work we'll work with the developer and then when you know when Sean approached us a couple years ago uh and and Michael that we could have the opportunity to move from a a mobile home park to a single family home, to me that was like, okay, let's figure this out. We have something to work on. Okay. So, just just two more things.

Um, I want to know I want to know what transpired to have this fall into the city's lap in the first place. Um, but ultimately, I mean, I know he had some studies done, but you know, we live at the foothills of the mountains and this is where our flooding comes from. How do we know that that weak swash dam won't be affected? Doesn't flow there. That's Well, it's kind of like a situation. That's an engineering issue. Not my That's an I don't know the answer. That's an engineering uh issue.

Um yes, another question regarding this. You know, do we have specific language in the in this agreement that says we will do our part once a contract has been signed and and the builder's ready to build? Is there any language? And if not, um anything? No, I didn't see anything either. I don't think so. I don't think it's that for us to just sit on this. It was not that specific at the time. They didn't ask for a timetable, so they didn't negotiate it.

Um, and because they didn't know when, uh, development was going to occur and remember that was 2009. The economy was horrific. And so, I think that was part of the issue. Well, they didn't really know when they were going to bring a project. Um, there was a different city engineer and plus again there was a different city manager. also different development services director. So there were different uh individuals involved who were making those decisions.

If I may, your honor, I feel under under what we just heard, I feel like an executive session is in order and I feel like every stone gets unturned and and this particular council and like you said, we had different city manager, different council. Uh, and I think we all just really need to say, take us back to that date and start from the beginning and let's let's find out how this became, what it became, and then find out what we need to do to fix this problem. That's my suggestion.

Yeah, I agree. Well, can Oh, yeah. Can he come up now? I still like to have him weigh in on this question. Good. Sorry. Good afternoon, mayor, council members. Emil Schmidt, city engineer. Would would I be able to say something before any questions? Um uh there was a lot of information uh that Mr. Thesman uh presented to us this evening. Uh I can certainly understand his frustration.

Uh I can also say uh it was mentioned a few minutes ago that uh different city manager, different city engineers, but uh it'd be easy for me to say, you know what, that was a different people, different time. I don't have any skin of the game, but I am your city engineer, which means by default I I guess inherit uh a lot of this. Uh I guess you could say I'm stuck holding the bag, but we do have a a willing partner uh with the Thesman properties. Uh like Mr.

Thesman said, we have been working uh with multiple engineers. Uh he mentioned Ty Lynn, which is one of the city's on call engineering consultants. Uh Mr. Thesman also mentioned CVL, Cohen Vanloo.

There's also another engineer uh involved on his behalf uh Bowman Engineering and they have worked Bowman Engineering has worked directly with Ty Lynn uh to kind of get get me out of the middle of the conversation and let the the two engineers that know uh a lot more than I do to get together and figure this out.

Uh yeah, there are some um hurdles uh significant hurdles and it seems like every time we take a step forward uh you know something comes our way that takes us you know one and a half steps backwards. Uh it is frustrating. Um we do uh we do still have an outfall in the form of this uh structure that was built by AOT under Meridian Road. Um that's one thing. There was also uh Mr.

Thesman also mentioned that with the uh um the FEMA flood plane restudy uh which as an FYI will become effective formally here in November of this year. uh that the modeling that they did uh for this study which was initiated about five years ago that uh that is a a lot more accurate given you know current technologies and study techniques uh than the initial FEMA maps that were done some 30 plus years ago.

Uh and that's where the the number 1,900 plus or minus cubic feet per second comes from is from the current FEMA model. And um I I believe that uh that information is uh has been shared with Bowman Engineering uh with with Nathan and uh he he concurs and Tylink concurs that the number that they're getting from the FEMA model is uh you know they they both feel confident with with that number. So that's that's one item. Another item is the uh the weeks wash uh re regional flood control facility.

Um, we as a city, we made an application to FEMA for flood mitigation assistance funds. Uh, it was either late uh it was in 2022 and it was in July of 2023 where it was announced that the city of Apache Junction had received uh uh just just shy of $45 million in flood mitigation assistant funds uh for a project which right now uh could potentially run about 80 to 100 million dollars. So, um, where are we at with, uh, with that project as soon as that announcement was made?

It went into, uh, what's called an environmental historical preservation review with FEMA. It's been there for, uh, we're coming up on two years, and we're not quite sure where they're at with the review. We are not allowed to contact FEMA directly. uh our consultant did so and uh got their wrists slapped a little bit by the Department of Emergency and Military Affairs that uh oversees this funding for the state.

So, we have to defer to AZ DEMA to be able to contact FEMA to find out, you know, where we're at. All I know is that once FEMA is done with that review, it starts a 2-year window where we as a city have to design and build this structure uh roughly 1 million cubic yards that we need to excavate and build up this empoundment structure. Built into that though is a at least a one year and a potential two-year extension.

So, three to four years to where we still have to design this thing and then have it the last teaspoon of dirt turned on that site and then have it fully functional. Um, I I wish that EHP was done already so we could get moving forward with that design because every year that we have to wait, of course, you know, there's another uh monsoon season that that comes upon us. Uh, what will that structure do ultimately to Palm Wash?

Palm Wash breaks out of Weeks Wash in the northeast quadrant of the Tomahawk Road and Junction Street intersection just a couple houses upstream from there. With that week's wash structure, that breakout gets cut off. But that breakout is also about uh I don't know three four miles upstream from Mr. Thessman's property. So, we still have an area of land that is uh susceptible to receiving rainfall that would uh generate storm runoff that makes his the way to his property.

Um what that exact reduction would be. Uh we haven't modeled it completely. You know, we've we've run some initial uh estimates. We're still trying to refine that. Um but there there is a you know a significant area of land between Tomahawk and Junction that flows down towards Meridian and Southern that still produces some water. And if you recall uh I think it was back in 2013 where we had some uh significant flooding events, three of them within like a three or four week period, you know.

So we hear this term about, you know, this massive 100-year storm, but we had three of those back to back to back and two of those landed west of Idaho Road. So they landed in the proper part of the city and cause significant flooding damage there. So it's not just uh, you know, Weeks Wash and the 10 square miles out of town that provides runoff, but there's also storms that happen in town.

So, you know, storms like that would still impact the Palm Wash area that still drains southwest towards Meridian and Southern. Um, I I kind of threw out a lot of information. I don't know if there's still any specific uh questions or something that you would like me to research and maybe get back. Your honor. Yes. So, it's it's not what So, what I'm hearing is that the week's wash project would have some effect on the Palm Wash.

It's just because of weather and just natural landscape, they're going to get water anyways. It's just a matter of we are cutting the amount down through this project. Correct. So, I mean, I I see it every day on the news. Towns gets flooded because of rain. You know, it's just it's a it's fact of life. It's nature. I mean, what what what are we what do exactly are we trying to go for?

you know, dry land or are we trying to stop nature or are we just trying to just make sure they can, you know, build on it and it be uh satisfactory as far as no flooding because no matter what you do, there could be a time where it's going to flood. I mean, it's just fact of life.

So at what point are where we are at right now is we would because of our week project if I'm understanding you correctly our our challenge now is to um try to mitigate just the natural landscape when we have storms of how it would run off because of the distance between where it gets cut off and where is actually at. Is that I understand that correctly? Uh yeah, correct. Uh I wish I had the benefit of foresight to know exactly, you know, what this structure will do and and could provide for us.

Other than I know with that structure in place, uh our the engineers have looked at it and said there's over 4,000 parcels that would benefit from that. A lot of those are outside of the FEMA flood plane. there's other areas as well. But, you know, until that happens or until that starts, we still have to deal with uh, you know, natural drainage courses, man-made drainage courses that are, you know, through the other parts of the city that we we're still going to have to to deal with. Sure.

Until then, so I I guess as far as, you know, the legal standpoint, as a city, we are attempting to do something to help mitigate Palm Water. We are. Yeah. And as Mr. Tesman said, you know, certainly the the 1,900 CFS is a it's still a significant number. It's still large, but it is, you know, less than what uh I think our storm water master plan study from 23 years ago was analyzing.

And there's been a lot of development throughout the city uh since then that probably contributed to that reduction in flow that we're seeing now. Thanks, Anyone else? Thank you. Thank you. Okay. For him to come up and talk. Anything else? Sean. Yes. I'm listed on the agenda, too. So, thank you, mayor, council members. I appreciate the opportunity um to be here as I'm sure all of you on the dis when you put yourself in Mr. Thesman's shoes if that were if you were that person.

You can appreciate his frustration. Um, but we truly appreciate the opportunity we've had to be before you this evening so that we can start getting this to resolution. The agreement that's in place, the settlement agreement, the development agreement and settlement agreements in place had we talk about cross-sections, we talk about improvements. Really what we want, we don't want to get protracted. We want to know an answer to simple question.

When we file for a permit to develop southern and meridian and we design our channel consistent with the approved plan, which is about a 30 foot wide channel that handles our portion of the water, what happens to the rest of it? Do we put a big giant berm in Southern Avenue and let it run sheet flow down Southern Avenue? Is the city going to handle it upstream? Those are the questions that we've been asking and and want to know what the city's plans are.

And quite honestly, getting back to the development agreement, getting this extension of the development agreement gives us some breathing room to say because projects just don't happen overnight. things take time. We don't want we don't want Mr. Thesmi to go file permits to do off-site improvements on Southern Avenue and put in his drainage channel now according to the terms of development agreement because I don't think the city's ready for that. We don't have a development ready to go.

But the de extension of the development gives Mr. Thesman some breathing room and the city some breathing room so that we both can take a step back, get answers to the very simple question, what's the city going to do with that water? so that we can move forward with our project, hopefully a single family development and the city can can resolve its obligation under the development agreement. So that's what we're looking for. We hope to get it soon.

We hope this doesn't get protracted and drugged out. We hope to have answers. We we've had have an email in to Emil say, "Hey, what do you need? tell us what you're gonna how you're going to handle the water is if we go file for permits, what are we doing with that 2500 cfs? What do we write on our plan? And that's what we're looking for an answer.

Hopefully the city will get back to us shortly with an answer to that and and we can move forward handinand together and and see a gorgeous development go up on this corner. So, thank you very much, honor. I would think that you could write on the print uh C city's engineering and design for uh all of that extra water. We don't want to we're not dealing, you know, you yourself are not dealing with it. Um I'm sorry you're having to go through this.

U you know, if we left left it at expiring in 30 uh 2030, that gives you five years for the city to make a decision and and get something done. Um, you know, to me it it creates a sense of urgency, but I also see what you're saying. I fully understand. I mean, you could submit prints today and it'd be three years before you get approval for them. Sometimes things just take forever. But, you know, is is maybe a five-year extension more realistic than 10 years? Don't know.

I mean, you let us know, mayor, council member. I appreciate that. We would like 10. This is going to be done before 10. Um, quite honestly, with we still have I'm sorry, but we still have five years left. We still have five years. That's where I'm thinking, you know, okay, realistically, you said we can get it done in 10, but you're talking 15 if we're adding 10. Correct.

M mayor, council member cross, the 10 gives us some flexibility because we don't know what's going to happen with water and to do a residential single family for sale subdivision. That issue could be solved in three years, five years, eight years. I don't know the answer to that. I' I've been on the phone with Michelle Vanquam who's a water right or water attorney uh in downtown Phoenix who is following this every step of the way and represents just about everybody and involved in the lawsuit.

And she looks at me like Sean, it could be five years, it could be eight years, it could be two years, I don't know. But from Mr. Thesman's standpoint right now, if nothing's done, he's he's got to move. Yeah. And if he mo if he has to if if the city forces his hand, he's going to have to submit for permits.

And then the city's going to have to come up with some emergency funds to solve the water because I don't think the city wants the water back in southern just make turn southern into a river trying when it flows. And so what we don't want to do is create force Mr. Thesman's hand to create an emergency effect to use a term my dad. We don't want to shoot ourselves in the foot here. Sure.

Let's give us some time so that we both we both can step back and say, "Let's solve this quickly, but not in urgency." But you guys are committed for the long haul then. He's held this property for 30 years. He is Well, that's the thing. I'm looking at Gez, 30 years is an awful stinking long time. I don't know. As if it if I had my feet in his shoes, I'd be willing to wait another 15 years. He he's patient, but I think the patience is near an end.

So that's why we want some flexibility to get this done. Well, I greatly appreciate the amount of information that came out this evening. I thank you both for being here so that we could get this information from you. Amen. I want to ask one question if you asked on it and it's going to pull from memory from Rudy and you all. When was Southern washed out? What year was that? That might be about five years ago. You're talking about when we Matt, do you remember? I remember happening. Yeah.

Eight years ago. I was going to say five, six years ago. Five, six, maybe longer than that when they had to do all the covert work. Yeah, the covert work. Yeah. Only five, six years. Emil thinks it's that 2013 time frame that he was describing. More than 10. Oh, okay. I got one question. Why did just sit here. Why didn't the city do what they were obligated to do?

Is there a reason we didn't back in the day move forward with I don't I don't know back in 09 10 11 12 Joel I wasn't involved all the way I know that in 2015 2016 I worked with some developers in the area to to work with Mr. Thesman to see if we can get some things going. Wasn't quite I was told not ready for the market I think a couple years ago. Maybe Matt you want to add to this but I I know I'm we're ready to get going. In 2011, we were in survivor mode. We were laying off employees.

We're doing all sorts of stuff. I mean, we're pulling out our pockets to the community, asking for 2% sales tax so we could fund just roadway maintenance. A lot of stuff was going on back then that we weren't. I think the logical thing though is that during that it's natural in the development process to work in partnership with the developer and the property owner through these. Rudy, I don't know if that's something that makes sense.

you were here that we would normally wait for a project to come in to try to coordinate that water. I think that we always felt like, if I remember right, the plan had the water going through the middle and that we thought we had a, you know, we could work with them. I mean, of course, I wasn't part of the negotiation. I wasn't wasn't I mean, I knew that it went on.

I knew that it was going on, but we didn't um have a project in front of us until a couple years ago started working on on the drainage. Honor Bryant. Yeah. If we just right now, poof, we're going to forget about everything that's happened in the past. If this gentleman submits a plan tomorrow, the city has an obligation to do what it's legally supposed to do with whatever it's got to do with the water, wherever we get the money or however we come up with it. Right. That is correct. Yes.

So, it's not too over complicated. I'm either underthinking this. No, you're right. If the permit, if a plans came forward, we would we would look at the onetime construction sales tax. We look at the impact fees. We'd look at our savings. We would we're closer much more closer to knowing exactly what that design would look like. We could do an estimate and, you know, like Mr. Lake said, we would then be obligated and we would come up with a plan to deal with the water.

I've got one more question. We give us 10 years. What's that? We give us 10 years. Is this just going to sit here stagnant on our end and we do nothing and just sit there because it's been how many years? 30. 30 years. And we haven't done it since 1996 when we It's not that we have because it's it's unfair to say that we haven't done a thing. We've been working really hard the last two years. We never move forward with the project, but we didn't have a project.

It's tough because it's the chicken ring. wasn't a project to respond to until the last in my in in my estimation. We What were we going to respond to in 11 12? He said he's never submitted a plan. So, there's never been a a project. I mean, we could go design the drainage up there and we would have been told wait until we get a project that we can, you know, respond back to. Can I say something? So, come on up. Right.

The problem is is I had somebody I I had KB, one of the top five home builders in the nation. Where's the plan? They sat right across us and every day they asked, "What's the plan on the drainage?" And I told you and I wrote you an email and I said in the email, KB needs to take to their investment committee, right?

in order to spend all this money to do all their plans, do the zoning and do all this, they need to know what is the plan, what's the time frame, is the money allocated, and will you hit submit to get the project done in 18 months? And that was a no. So, I can't get a home builder to put the property under contract and close if the city won't commit that they'll get the project done in an 18month period of time. I mean, I have KB.

If Rudy would say, or not Rudy, if if uh Brian and the city council would say, "Hey, we'll figure it out. We'll we'll we'll fund it. You bring KB back and we'll give them a guarantee that in 18 months we'll have it built and done. So when they're ready to start construction, they don't have to deal with the city water. KB will come back to the deal. They they'll be back. But the problem is I don't have that commitment. What are we going to do with the water? Well, yeah.

I also understand as far as water supply, drinking water. I heard that's not that's an issue too, right? That's not just a matter of drainage. We're talking about for single family homes, right? Can't be done through Arizona water, right? That's correct. So, that's kind of a moot point. Anyways, yeah, but here's here's where I'm at. Um, three years after purchase, flooding problem. Here we are 22, 25 years later.

Um, we get this bomb dropped on us about settlements and ignoring contracts and things like that and then, you know, with all due respect, you know, get this done fast breathing room. I I don't believe we should. I think we need to sit and really dig into this and I especially would want to find out the other option that can't be discussed in public. I'm really interested in that one. Um, so that's that's where I'm at, guys. So, are we supposed to vote on this tomorrow, right? No. No.

We'll bring it back in the session and talk about Yeah. All right. I'm done for tonight. Okay. You're done, huh? I'm done. My brain is All right. So, I will now adjourn the meeting. Thank you.