Neighbors unhappy with unfinished Scottsdale project near canal area

by Peter Corbett The Arizona Republic May. 11, 2010 02:35 PM

If you ask Liz Dawn Donahue, she will say that the failed Reflections on the Canal project does not reflect well on her downtown neighborhood.

She is angry that the townhouse and condominium project has disrupted the area southwest of the Arizona Canal and Chaparral Road for close to five years. Donahue is still looking at construction fencing and vacant lots.

"I don't want to look at this for the next five years," she said from her townhouse
south of the stalled development.

Donahue and her neighbors are indirect victims of a housing bubble that burst, leaving them to cope on a daily basis with the developer's failure and the uncertainty of what the lender will do with the narrow 5.38-acre property. Another condo project, X Lofts, on the southwestern edge of downtown, is stalled.

Summit Properties LLC of Las Vegas started the $58 million Reflections project in late 2007, planning 32 townhouses and 68 condos.

An investment banker was sure that buyers would snap up the urban condos even though the market was already starting to stall at the end of that summer.

Half the Reflection units and a clubhouse were completed last fall. But sales never materialized and the property went into foreclosure, Donahue said.

Donahue said the condo buildings look good, but the undeveloped half of the site has attracted vagrants and partiers who were sneaking into a dilapidated building about 100 feet from her townhouse.

She is an event promoter who was surprised the developers did so little to market the townhouses and condos.

Donahue has been hounding city officials to get the site cleaned up. That has helped, but near-term completion of the development seems unlikely with so little demand for luxury condominiums.

Prices announced a year ago ranged from $695,000 to $1.3 million for the condos and $845,000 to $949,000 for the townhouses.

Andrew Backman, iStar senior vice president of investor relations and marketing, said the company has worked with the city to resolve any previous code violations, hauling away debris and improving the landscaping and fencing.

IStar took over the property two months ago, he said.

It plans to sell the condos and townhouses in the near future and maintain the vacant land, Backman added.

Mike Clack, Scottsdale director of development services, said that neighbors will have to be patient.

"We can't make them build something there, obviously," Clack said.

That angers townhouse owner Joe McCormick. He said he doesn't understand how Scottsdale can allow the condo project to languish in a key area of downtown two blocks from the new Barneys New York luxury department store.

McCormick and Donahue's neighborhood is a quiet pocket of mid-century apartments, condos and townhouses, many of them well-cared for by their owners. The Reflections development replaced the Hotel Ivy along the canal.

The neighborhood also backs up to the Safari Drive project northeast of Scottsdale and Camelback roads. That condo development has struggled to find buyers and work halted after the first phase.

When the market was hot, redevelopment pressure pushed north along the canal. Condo flippers descended and an apartment building
across from Donahue's Sarkis Manor townhouse complex was torn down. That property sits vacant now with one withering saguaro propped up by wooden stakes.

"It used to be a beautiful neighborhood but now it looks awful," Donahue said.

Clack of the city development office said the Reflections condos are ready to be occupied by new residents if the units are sold.

"Our main interest is that they get the (other) buildings built," he said, adding that the project might need to be reviewed again by the city if there is more delay.


Neighbors unhappy with unfinished Scottsdale project near canal area