Pima County To Mortgage Buildings For Diamond Ventures Speculative Deal

On March 5, 2019, a majority of the Pima County Board of Supervisors voted to mortgage taxpayers’ property to fund a speculative deal with Rocking K Development Co. and Diamond Ventures, Inc.

As part of the deal, Pima County  will issue up to $16,000,000 of tax-exempt certificates of participation (COPs) to cover the cost of the “Valencia Road extension, the spine infrastructure and the on-site infrastructure” of the controversial Diamond Ventures’ (DVI) project.

While Pima County residents beg for road repairs in their long-neglected neighborhoods, Pima County leadership approved the resolution that funds brand new roads for Rocking K home buyers.

The deal has raised eyebrows since it was first proposed years ago. From losing development partners, to budgeting issues, the project has had a rough road. And while Pima County residents are struggling to get around on the over 80 percent failing roads, the speculative deal is not sitting well with taxpayers or their representative on the Board, Supervisor Ally Miller.

According to a letter to the supervisors, David Goldstein, president of DVI, outlined the travails. He advised the supervisors that “two of the five national homebuilders backed out of their purchase contracts.” By August 2018, “The combination of the increased costs and loss of two builders meant the opening of the project was no longer viable.”  According to the Goldstein letter to Pima County, the project is 10 to 15% higher than the original estimate of $16 million.

Goldstein advised the supervisors that the company “spent the next several months working to value engineer the project in order to make an opening feasible. Also, during that time, DVI was able to secure “interest”  from an “active adult” developer to acquire 500 lots near the second entrance to the community. This combination of changes has, once again, put the opening of the project back on track, subject to final due diligence by our homebuilder partners.”

Supervisor Ally Miller was the only leader to reject the scheme. She shared her concerns before casting her lone no vote. “I am really concerned about using the credit of the county to improve the roads that any other developer would have to do themselves. This increased risk due to the developers backing out of the project is cause for great concern in my opinion. I know that they need the roads, but the taxpayers of this community, whose buildings are being mortgaged are tired of being put last in line yet again. It is always someone or something else that is the higher priority than the taxpayers, who have waited 20, 30, even 40 years for some maintenance on their roads.”

“In addition,” continued Miller, “I am very concerned about selling these bonds and turning the monies  over to Diamond Ventures and allowing them to contract outside the  county procurement process to ensure the roads are being built by the most competitive contractor to meet county standards.”

Memo from Pima County Administrator Chuck Huckelberry dated March 5, 2019 reads in part:

“The COPs are to be repaid from development fees generated by the development of the property, with DVI obligated to cover shortfalls, if any. The agreement provided that, if bonds are not issued within nine months, reauthorization of the issuance of bonds may be required. As explained in the attached letter from David Goldstein, President of Diamond Ventures, Inc., the project has been delayed and DVI is requesting the County to again take steps to authorize the future issuance of debt for this purpose.

The resolution for the COPs authorizes staff to sell additional debt not to exceed $16,000,000. The proceeds of the debt will be available to fund the Valencia Road Extension  as needed. The debt will be repaid over a 15-year period from development fees from the DVI project.

Letter by David Goldstein, President Diamond Ventures, dated February 15, 2019:

On May 15, 2018, the Pima County Board of Supervisors approved that certain Second Amended and Restated Rocking K Development Agreement (the “Agreement”) by and between Pima County (the “County”), Rocking K Development Co. and Diamond Ventures, Inc. (collectively, “DVI”). The Agreement requires DVI to construct certain off-site roadway improvements, including the extension of Valencia Road approximately 2.6 miles east from Houghton Road to Old Spanish Trail and related bridge and bank-protection improvements (the “Valencia Road Extension”). The Agreement also provides for the County issuance of up to $16,000,000 of tax-exempt certificates of participation (the “Bonds”) to cover the cost of the Valencia Road Extension. The Bonds are to be repaid from development fees generated by the development of the property, with DVI obligated to cover shortfalls, if any. Finally, recital H of the Agreement states that if Bonds were not issued within nine months (i.e., February 15, 2019), reauthorization of the Bonds may be required.

At the time of entering into the Agreement, DVI was in escrow with five national homebuilders for the sale of approximately 811 lots, which was designed to be the first phase of the project. DVI spent several months working with the builders and finalizing the plans for Valencia Road, the spine infrastructure and the on-site infrastructure, all of which were bid out in August of 2018. Unfortunately, Valencia Road and the various other project bids came back 10-15% over budget. In addition, two of the five national homebuilders backed out of their purchase contracts. The combination of the increased costs and loss of two builders meant the opening of the project was no longer viable.

spent the next several months working to value engineer the project in order to make an opening feasible. Also, during that time, DVI was able to secure interest from an “active adult” developer to acquire 500 lots near the second entrance to the community. This combination of changes has, once again, put the opening of the project back on track, subject to final due diligence by our homebuilder partners. DVI is proceeding as expeditiously as possible to move forward, with the goal of breaking ground this summer.

During this temporary hiatus, DVI has continued to work with the Vail School District (whose use of the Valencia Road Extension is critical to their new high school). We also have found an operator for the vacant convenience store, bringing much needed goods to the area. Finally, we have brought in Heirloom Farmers Markets to professionally manage the farmers market, a major activity for the Rincon Valley area residents.

The purpose of this letter is to request Pima County take whatever steps it deems appropriate to authorize the future issuance of the Bonds to allow DVI time to close with the homebuilders and commence construction of the project as described above. Please let us know if you have any question or need any additional information in connection with this request. We appreciate the County’s continuing cooperation in bringing this important regional project to fruition.

18 Comments

  1. Ah, who would have guessed that the county would help Don Diamond with making money and paying for roads that other builders have to do themselves….and yet the roads continue to fall apart and noting is even being remotely talked about to fix them.

    Hey Albert, I-11 is Don’s next payback isn’t it? The taxpayers should be so pissed that all 4 of the BOS idiots are recalled but alas, it will never happen. How absolutely pathetic that the BOS screw the taxpayer and don’t even offer them a smoke after they are done.

    • maybe they will give us a SNICKERS bar so we could have something to spit out afterwards? Doubt it they are having to eat them themselves after being cozy with their puppet masters. Cheapest politicians to be owned anywhere.

      • We, the voters have spoken, we do not want bonds to fund our infrastructure improvements, potholes and all. Let’s raise the gas tax to adequately fund road improvements. We spoke loud and clear last November. No road improvements!

        • Wow, how really short sighted and uninformed you are to make a statement like that. The county has plenty of HURF funds that are being used to pay for everything but roads. You know, like rubber bands, bureaucrats salaries, bond paybacks, pencils, etc. Might want to check out how much HURF funds the county got last year and this year…. We want our roads fixed but not at the expense of more taxes. The money is there and the General Fund can also be used. Gee, Huck might have to cut a few bodies to repair our roads, but it will never happen.

  2. Sounds like another balloons in the sky project the BOD i supporting. Oh well, at least Mr. Giffords can us the building for his campaign headquarters for cheap.

  3. Diamond Ventures owns the BOS. Always have and probably always will. Where are they getting water for a total build out of Rocking K? At taxpayers expense I would guess!

  4. Where the Hell is the FBI in some of these dealings. This sure seems like Pay for play type activity. I mean we know they are here, they busted that coach for recruiting So why are they not looking into the business that this county seems to get in regularly.

    • I wonder how the corruption is allowed to continue myself….no charges against them. Makes me SMH at this being allowed to continue. I think Lord Chuckster should be in jail.

  5. The Vail area needs additional access to downtown, airport and employment. The bonds here are not to be repaid by Pima County residents. They will be repaid by the developer, home builders and home buyers. It is a great way to fund infrastructure at no cost to the public. The collateral and cash offered by Diamond, including the 4000 acre Rocking K will more than support the entire project. Pima County does need streets, bridges etc. and its residents are not happy about public debt. If one looks at the funding process as a benefit to the public without their cost rather than looking for ways to criticize a major developer in Pima County, we would all be better off.

    • How much did they pay for this political hit piece I wonder. Yes the develeoper is on the hook supposedly but not with this deal the people will be. You want roads get you supervisor to put it in his budget. Why worry about a small section getting ALL NEW stuff while the rest who have already PAID for it get NOTHING. Just like the new interstate, its for the benefit of a couple of folks at the expense of the rest of the people in the county. POOR ROAD already exist and are not scheduled for repairs due to $$. Yet they will try to put a burden on folks where its not needed. In the county the builders are supposed to finance the initial costs and they pass them on to the buyers, yet try to get the taxpayer to fund the stuff. How much are the new structures to be reduced in price for this pig in poke deal? Betcha nothing, its all for the puppet masters pocket.

  6. I have lived out in Vail for 21 years off Camino Lomo Alta/Garrigans Gultch. Once in those 21 years Pima county did a chip seal on Garrigans. Since then only horrible patch jobs. What happened to all the money all these developers were suppose to be paying per home for our roads? The current infastructure cannot handle the current traffic much less the new Rocking K development. It’s going to take more than the Valencia extension to handle that increase. $16 million would do a lot for the road repair in Pima County and 15 years to repay it by diamond means we all lose again. Thanks BOS for looking out for the developer instead if your constituents.

    • No offense but if you haven’t figured out by now that the BOS ONLY cares about the Developers then you haven’t been here long enough. I’ve been here since the late 50s and it’s always been like that. They figure if they (the developer) put in a 1/4 mile deceleration or a middle turn lane into their development, they have “fixed” the road leading to and from.

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