GLENDALE, AZ (3TV/CBS 5) - Business isn't exactly booming in downtown Glendale with a number of vacant shops and a lack of new development.
So you'd expect a lot of excitement surrounding the City's plan to sell an empty 7,000 square foot building at 57th and Glendale avenues and bring in a new tenant.
Instead, the deal is under scrutiny after the City Council agreed to sell the property for $25,000.
The City purchased the building in 2008 for $735,000.
"I think if you live in this community, you need to definitely be paying attention to what your government is doing," said Glendale resident Dustin Smith.
Glendale City manager Kevin Phelps said that rents are down significantly in downtown Glendale, and that's dragged down the price of commercial real estate, making it harder to attract quality tenants.
The City didn't want to sell to another investor, who would sit on the property and leave it vacant, so when the owners of a local high-end furniture company came to them promising to fix the place up, recruit other businesses and promote downtown, the City saw it as a good, long-term investment, according to Phelps.
"We're granted the ability to do what is in the best interest of the City," said Phelps. "For us, to get private investment downtown, increase our tax base and to bring jobs downtown, we get to factor that into how we construct the agreement in this particular case."
But Jon Riches with the Goldwater Institute claims that what the City of Glendale did may be illegal.
Not only did the City not get the building appraised prior to sale, but it also didn't market the property out to seek out the highest bidder.
Riches said the sale of the building, at such a rock bottom price, appears to violate the gift clause in the state constitution.
"The promise of, we'll imagine all the anticipated jobs this will create and the redevelopment opportunities this might bring, that's purely speculative," said Riches. "There's no guarantee that will happen. If the City is going to sell public property, it has to get back direct value that's roughly proportional to what that's worth."
The Goldwater Institute is considering a possible lawsuit to stop the deal from going through.
The new owners are expected to close on the property next month.
According to Phelps, there is a stipulation that if the new owners try to sell the building in the next five years, the City of Glendale has the right of first refusal.
Phelps also said that the new owners have agreed to invest more than a half a million dollars to make improvements and get the business up and running in the next six months.