Trustee sale of land threatens Solis project

A developer of a planned $600 million downtown hotel and condominiums is facing foreclosure on a canal-bank property northeast of Scottsdale and Camelback roads.

A trustee sale set for Aug. 31 threatens to derail the Solis Scottsdale project, which was to include a 72-foot hotel and 140 condos on an 11-acre site north of the W Scottsdale Hotel.

Mark Madkour, principal of Scottsdale Canal Development LLC, said he has been working for about a year to renegotiate the loan. The original balance of the loan was $45 million.

"I'm feeling very confident we can work something out," he said. "But the timing of this is not good for us."

Scottsdale Canal Development, which started assembling the property in 2006, has faced a number of financial and political hurdles in building the 240-room luxury hotel and condos.

Objections surfaced over the project's height and density, and residents fought plans to move a Salt River Project electrical substation from the site to 68th Street and Indian School Road.

The economy tanked as Scottsdale Canal Development was getting city approval for Solis Scottsdale and the project has been stalled for nearly 2½ years.

"I understand the skepticism" about the development, Madkour said. "It's a very tough environment."

Utility yard relocation delayed

Madkour had said he hoped to start work by last September on relocating the utility yard, but it has not yet occurred.

SRP spokesman Jeff Lane said the utility has extended the land-swap agreement twice this year with the deal now set to expire Aug. 1.

If it can avoid foreclosure, Scottsdale Canal Development is reconsidering its plans for Solis Scottsdale's residential component. The company might build fractional ownership condos at $300,000 for a one-eighth share rather than trying to sell single-owner units in the current market, Madkour said.

Scottsdale Canal Development tore down a number of apartments along 73rd Street to clear the site for the hotel and condos. It also cleared the site at 68th Street and Indian School for the substation.

Helen Cooner, who lives near the Solis Scottsdale site, said the developer has done a good job of maintaining the property over the past few years. She initially objected to the project because the substation was going to be moved across from her house.

Solis Scottsdale is east of the Safari Drive condos and the recently approved Blue Sky apartment project.

Lender forecloses on property

The May 25 foreclosure filing on Scottsdale Canal Development lists the IMH Special Asset NT 179 LLC as the beneficiary for the loan, according to records provided by Ion Data, a Mesa firm that tracks real-estate transactions. The limited-liability company is affiliated with IMH Financial Corp. of Scottsdale.

Attorney Lawrence Petrowski of Stinson Morrison Hecker LLP is the trustee for the Scottsdale Canal Development property.

Madkour remains optimistic about Solis Scottsdale, but he has taken some hits in the commercial real-estate collapse.

Two years ago, Wells Fargo Foothill LLC sued Madkour and other principals in Maricopa County Superior Court over the balance of a $15 million loan that funded investments in apartments, condo conversions, land and office properties.

A receiver sold the real-estate assets to repay the $6 million loan balance. The lawsuit was settled late last year.

by Peter Corbett The Arizona Republic Jun. 17, 2011 09:39 AM



Trustee sale of land threatens Solis project