Scottsdale council delays decision on developer's plan

SouthBridge developer Fred Unger didn't receive the reception he was hoping for from the Scottsdale City Council Tuesday when he announced that plans are back on track to develop property along the southern side of the Arizona Canal.

Unger asked the council to adopt an amendment allowing a three-year extension on the development agreement relating to the city-owned Rose Garden parking lot, on the northwestern corner of Goldwater and Fifth Avenue, and the adjacent developer-owned property along Fifth and the canal.

The amendment would extend the timeframe for submitting construction documents. The original agreement allowed Unger to develop both parcels on either side of Goldwater as long as the Rose Garden site included a specific number of public parking spaces.

The agreement originally was approved in July 2005, and was amended in each of the following three years . The original agreement specified that 124 parking spaces and an additional 60 public parking spaces would be built on the Rose Garden property.

The parking requirement was reduced in 2008.

Unger told the council that after a recession-dictated dormancy, he's now ready to proceed with development and has a new group of partners. He also said that one of the contingencies of a planned merger between his company and the group is to have a new agreement with the city in place by June 17.

However, Unger's deadline didn't convince the council to adopt the amendment. It instead voted to postpone consideration until its June 28 meeting. The vote came after extended discussion of whether to change the amendment to include the original parking requirement.

Councilman Ron McCullagh said the original agreement included Unger providing public parking in exchange for the Rose Garden property, and he wants that to be included in the new agreement.

"That was the price that the city received for the Rose Garden," he said. "When we came back with the amendment in 2008, the argument was that Fred needed to change the deal because there was no financing available for what he wanted to do, but he had an investor who was going to put up the money if he could put in a limited-service hotel, but ... the city had to take back the obligation to put in the parking."

The Rose Garden property now includes more than 120 parking spaces, and Unger was going to add 60 more, McCullagh said.

"Now Fred wants to extend that agreement and we didn't get what we were supposed to get," he said. "If we're going to extend an agreement, we need to extend the agreement that was the original agreement by which Fred got that land, not one that reduced substantially Fred's obligation, which was part of the price that we received, because we never got the hotel that was going to stimulate the economy and the canal."

Councilwoman Lisa Borowsky said the council could adopt the amendment and then staff could add a stipulation that included the parking spaces. However, City Attorney Bruce Washburn said doing so wouldn't be possible because the city can't execute an agreement and then go back and change it.

McCullagh made a motion to grant the extension on the property east of Goldwater, and then to amend the extension on the Rose Garden property to adhere to the 2005 agreement.

The council instead voted 5-2 to postpone consideration, with Borowsky and Councilwoman Linda Milhaven voting against the motion.

In other action, the council

- Directed staff to negotiate revisions to the rental terms in the city's ground lease agreement with Strategic Hotels & Resorts for the Fairmont Scottsdale Princess Resort. The resort has been paying 2 percent of its annual gross revenue to the city. Strategic Hotels & Resorts wants a cut in rent to help reduce its debt, and build a ballroom and meeting space.

The council agreed to an annual fixed rent of $1.5 million per year with an additional 1.25 percent for any annual revenue over $70 million, for 2011-14. For 2015-20, the annual fixed rate would be either $1.5 million or 1. 5 percent of its annual revenue, whichever is larger.

- Directed staff to continue discussions and negotiations with Greenbrier Southwest Corp. for a future agreement to develop a multi-use facility at WestWorld.

- Directed staff to continue discussions and negotiations with Stage Coach Gap for a future agreement to develop a Western village with a historic museum on 80 acres of city-owned land at 94th Street and Bell Road.

by Edward Gately The Arizona Republic Jun. 8, 2011 01:41 PM




Scottsdale council delays decision on developer's plan