Hunt Communities' deal with the city and El Paso Water Utilities’ Public Service Board to buy and serve as master developer for 4,833 acres in Northeast El Paso appears to be on again.
Signaling that, City Council today unanimously agreed to delay Hunt’s closing on the sale until late September.
For City Council and the PSB, salvaging the $131 million sale has got to be the best news of the year so far. It keeps a massive, first-of-a-kind development that the city could not afford to lose – financially or politically -- on track, avoiding the new fight that would inevitably take place with developers if the sale wound up back on square one.
In March, Hunt Communities requested a three-month delay in the scheduled closing, citing the fact that the city had not approved a new subdivision ordinance with the changes that would allow the company to develop the PSB land as required by city’s master plan for the property.
When City Council refused to approve the delay, Hunt Communities announced it was backing away from the deal it made with the city last August when it submitted the highest bid to buy the raw acreage for $131 million.
That price worked out to $27,132 an acre for land the utility originally acquired in the 1950s for $17 an acre.
Council members, including Mayor John Cook, suggested that Hunt was backing out because it had bid too much for the land, especially in light of the looming national recession driven by the crisis in home financing.
But after the hot words, negotiations quietly resumed between the city and Hunt.
Today, the council also approved the subdivision ordinance that PSB Chief Executive Officer Ed Archuleta said Hunt has been waiting for.
It also gives Hunt the time four months for a land-use study and to propose zoning changes the company could not have come up with without the new ordinance, Archuleta said.
“The need that time now,” he said. “They couldn’t have done what they have to do because they didn’t know what they had to build to. All this was supposed to have happened last summer.”
Under the prior agreement, Archuleta said, the price would actually have worked out to $151 million because of a 7 percent carrying charge.
With the changes in the order of the sale and the land payments, Archuleta said, Hunt would pay $168 million in all to the utility with the 7 percent in carrying charges.
The ordinance also states that Hunt will forfeit its $3 million in earnest money if it fails to close in September.
David Crowder can be reached at dcrowder@epmediagroup.com
