Solis developer plans revision to Scottsdale condo project

The developer of the Solis Scottsdale hotel and condominiums downtown hopes to close escrow on a land swap this month with Salt River Project that would allow the project to get under way.

Mark Madkour, principal of Scottsdale Canal Development LLC, said the land exchange would clear the way for SRP to move an electrical substation at 73rd Street and Camelback Road to a site northeast of 68th Street and Indian School Road. He estimated it will take about 18 months to accomplish that and then construction could begin on the 72-foot Solis hotel.

"It's taken longer than expected," Madkour said, adding that his anxious investors "understand the nature of the market we're in."

As other mid-rise residential projects percolate downtown, Solis Scottsdale has been on the radar screen since May 2006 and the project's rezoning was approved in January 2009. Scottsdale Canal Development tore down apartments on its 11-acre site along the east side of the Arizona Canal, but the substation relocation and other work has been delayed.

Skeptics doubt project will fly

Solis Scottsdale Resort and Residences is touted as a $600 million development that would include 140 condominiums and a 240-room hotel. Critics question whether Scottsdale Canal Development can pay to move the substation and get the project out of the ground.

"I'm hearing there's no money out there for him," said downtown bar owner Tom Anderson. ""It's got nowhere to go with financing."

Anderson's Forbidden nightclub is next to the new substation site.

Madkour said the skepticism doesn't surprise him.

"All along I've been told that we'd never be able to assemble the property, never be able to rezone it and we would never get an agreement with SRP to move the substation," he said. "I'm proud of where we are."

Scottsdale senior planner Hank Epstein said there is no deadline for work starting on the new substation site.

Scottsdale Canal Development told the city it is working with SRP on design issues for the facility, Epstein said.

Costs jump on utility-yard move

Scottsdale Canal Development spent nearly $7 million to buy the relocation site, and the city required that it put $13 million in an escrow account to pay for the utility-yard move.

But the actual cost of relocating the substation turned out to be considerably higher, Madkour said.

SRP spokesman Jeff Lane said Scottsdale Canal Development will pay SRP about $20 million for the substation relocation.

Madkour said some underground construction could start on the Solis Scottsdale site while SRP is moving the substation.

That could include burying a 69-kilovolt power line along the canal between Camelback and Chaparral roads. Excavation of the parking garage could also begin, he said.

Scottsdale Canal Development plans to revise the residential component of Solis Scottsdale in light of changes in the luxury condo market.

"The whole multimillion-dollar condo play has to be rethought," Madkour said.

Construction costs should be substantially lower than previously budgeted and that should lead to lower condo prices, he said.

by Peter Corbett The Arizona Republic Jan. 6, 2011 10:20 AM




Solis developer plans revision to Scottsdale condo project