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Study says Union Pacific project potential limited

Paul Davenport, Associated Press

PHOENIX (AP) -- There would be limited potential to develop state trust land near the southern Arizona landmark of Picacho Peak as an industrial park if Union Pacific Corp. is allowed to buy some of the property for a new railroad switching yard, according to a study released Monday.

The report by consultants hired by the state Land Department said a value set on the site should probably depend on its unique value to the railroad, not the expectation of a larger payoff from development of adjacent trust land.

The proposed 900-acre site, now consisting of desert and farmland, is next to Interstate 10 and about 35 miles northwest of Tucson.

Local officials have endorsed the rail project as an economic development opportunity, while critics have said it'd be an environmental blemish within eyesight of Picacho Peak State Park, particularly at night.

Suggestions by Union Pacific that the state could benefit by developing adjacent trust land for industrial use may be too optimistic, according to the report by Gruen Gruen and Associates.

It cited slow development near other railroad freight yards, limited demand for certain types of rail capacity and availability of land elsewhere in Pinal County.

A separate state-commissioned study also released Monday listed infrastructure projects totaling tens of millions of dollars that would be needed to provide road, drainage, water and sewer services to a potential industrial park.

That study said access to an industrial park on the eastern side of the rail yard would be constrained because the yard itself would be about six miles long to accommodate long tracks to park and assemble trains.

The yard project was first proposed about six years ago, but the railroad and the state put it on the backburner for several years when the Great Recession slowed rail traffic.

Trust land is former federal property that Arizona acquired at statehood. Proceeds from use or sale of trust land must be used to benefit schools and certain other public institutions.

State Land Commissioner Maria Baier said department officials will use the studies as a basis for additional talks with Union Pacific about the company's proposal.

"We have a pretty level playing field now to try to have conversations on whether this land can and should be auctioned," Baier said.

No decision has been made yet on whether to auction the land, Baier said, adding that she couldn't estimate when a decision would be made. Typical proposed sales of trust land take 12 to 18 months, but this one is complex and already has been in the works for years, she noted.