By MARK FLATTEN TRIBUNE East Valley Tribune Updated: 3:49 a.m. MT Aug 19, 2007 Life in Arizona has gotten tough for developer Jim Rhodes. In recent weeks the Las Vegas homebuilder has lost a major lawsuit that will likely cost him several thousand acres he wanted near Kingman. He also failed to block efforts at the Arizona Corporation Commission to have him testify under oath as to why he kept a crooked ex-politician from Nevada on his payroll.
So far the rough times Rhodes is having in Mohave County have not slowed his work in master planning 7,700 acres of critically situated state land near Baseline Avenue and Ironwood Drive in Apache Junction, which he bought rights to in December.
But with all the turmoil surrounding the controversial developer, officials in both Apache Junction and the state Land Department say they are making sure they are getting iron-clad protections to ensure the problems Rhodes is having in other parts of the state do not surface here.
"We have to, to the greatest extent possible, bulletproof this process to protect the interest of this city and provide the opportunity for success for all parties," said Brad Steinke, director of development services for Apache Junction.
LAND PURCHASE
Rhodes became a major player in East Valley development in December, when he bought more than 1,000 acres of State Trust Land in Apache Junction, as well as the right to master plan the adjacent 6,700 acres of state holdings. The sale was the first in a 275-square-mile block of state holdings that extends from western Apache Junction to Florence.
The Tribune published a three-part series about the controversial developer in April.
The work on the Apache Junction property has largely been technical, focusing on such things as assessments of drainage and geographic features that will eventually dictate what can be built where, Steinke said.
As the planning process advances, Rhodes will have to gain approvals from both the land department and the city for developments he ultimately proposes.
But while things are going smoothly for Rhodes in Apache Junction, August has been a bad month for Rhodes in Mohave County, where his plans to build more than 130,000 homes are at a standstill.
Rhodes has been trying for more than two years to get approval from the Arizona Corporation Commission to operate a water and sewer company to serve two of his planned subdivisions, one in Golden Valley west of Kingman and the other in White Hills off U.S. Highway 93 between Kingman and Hoover Dam.
LAWSUIT LOST
Earlier this month, Rhodes lost a lawsuit involving 6,900 acres south of his Golden Valley project that has dragged on for more than two years. The dispute began in October 2004 when Rhodes cut a deal to buy the property with an investment group headed by Kingman businessman Scott Dunton, who also was trying to buy the land.
The agreement aimed at ending a bidding war called for a simultaneous closing on the property. Rhodes would buy the 1,700 acres he wanted, and Dunton's group would buy the balance of the property.
But when the sale closed, all of the land was titled to a Rhodes company.
Dunton's group sued in 2005, alleging Rhodes committed fraud and breach of contract.
A Mohave County jury unanimously sided with Dunton after a five-day trial. As a result, Rhodes will have to go through with the sale of 5,184 acres to Dunton's group, and pay its attorney's fees.
Rhodes is considering an appeal, said Lisa Urias, his spokeswoman.
The verdict in the Dunton case came shortly after other bad news for Rhodes.
The administrative judge in Rhodes' corporation commission case ruled Aug. 3 that Rhodes will have to testify again in front of the commission if he wants to proceed with his applications to run a water and sewer company in Mohave County.
Though Rhodes testified at a commission hearing in March, he was not asked about his relationship with Erin Kenny, a former Clark County, Nev., commissioner who admitted to taking bribes from a strip club owner.
Kenny revealed during testimony at a Las Vegas criminal trial in June that she has been on Rhodes' payroll since she left the commission in January 2003, making more than $200,000 per year as a consultant. She cut a deal with prosecutors and last month was sentenced to 30 months in prison.
Dwight Nodes, the judge in the commission case, did grant a 90-day extension to allow Rhodes to come up with a way to provide water and sewer service to his properties that does not require commission approval.
UTILITY DISTRICT
One alternative that has been mentioned by Rhodes' officials in the past is having the Mohave County Board of Supervisors create a special utility district.
But two of the three supervisors told the Tribune they are skeptical of that idea. Supervisor Buster Johnson said he would oppose any effort by Rhodes to circumvent the commission's authority.
Supervisor Tom Sockwell said he would be reluctant to create a district to benefit Rhodes.
"One of the big things that's going to weigh pretty heavy up here will be the public opinion," Sockwell said. "Rhodes has had enough problems that public opinion is pretty high against him."
The third supervisor, Pete Byers, could not be reached for comment.
Aside from a county-created district, Rhodes could contract with existing utility providers, or ask Kingman to extend its water service to his development.
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