Monroe Mixed-Use
Scottsdale Waterfront
Project Details
Location
Old Town Scottsdale, Arizona
Uninflated Cost
$200 Million
Strategy
Infill, Ground-Up Development;
Public-Private Partnership
Roles
Acquisition, Entitlements, Asset Management, Project Management
about the project
Waterfront property in Scottsdale? Really? Where?
It turns out just about any inland body of fresh water is a big deal in a hot, desert climate, and the historic Arizona Canal, which happens to run right through the middle of downtown Scottsdale, or Old Town as it is affectionately known to locals and tourists, is no exception.
Constructed in the 1880’s, the canal delivers life-giving water and irrigation control to Scottsdale and towns westward in Arizona’s Valley of the Sun. Coastal financial centers lampooned this “water feature” in 1997 when Geoff Beer acquired the 11.3 acres of overlooked land for his then employer, Starwood Capital Group, at a substantial discount to market value. In reality, the Scottsdale Waterfront was a diamond in the rough.
The underdeveloped site would outlast multiple developers and endure multiple obstacles during its transformation from derided eyesore, to reimagined town center, to controversial blueprints, to beloved civic treasure. As evidence, the Waterfront is now the permanent home of Scottsdale’s most anticipated public art festival – Canal Convergence, a week-long, annual celebration of “Water + Art + Light” next to acclaimed shopping, dining, office, and multi-family residential – both for sale and for rent.
After two unsuccessful attempts at third-party management of the complicated project that tripled Starwood’s basis in the land, Geoff relocated to Arizona and assumed full-time control of operations in November 2001, just two months after September 11th.
Despite a national economy still reeling from unthinkable tragedy and a “tech bubble” implosion, as well as an Old Town economy steadily declining from migration of residential and commercial development to the more affluent “North” Scottsdale, there remained raucous political opposition to the proposed, trailblazing project. For example:
- The City of Scottsdale was reluctant to renegotiate the Waterfront Redevelopment Agreement, which had expired and was essential to restarting the project.
- At the urging of community organizers that wanted to usurp private development rights for open space, the City was threatening condemnation, which had to be taken off the table, in writing.
- A significant zoning (height) variance was needed to make the project economics feasible – a seemingly impossible task in a community strongly opposed to tall buildings.
As if the political challenges were not enough, daunting environmental challenges were present, as well, including:
- Compartmentalizing the liability from multiple phases of environmental risk assessments and remediations associated with a former dry cleaner that had operated on the site for years.
- Addressing a nearby Superfund site, whose plume was beginning to encroach on the property.
- Relocating an active water well for the Arcadia Water District inside a dense urban project. Not only did the new well need to be shielded from public view, but also it had to avoid contaminated zones and produce water of high quality and yield, meaning an elevated chance of costly redrills.
OUR
EFFECT
To gain approval for the project, Geoff presented and amended his unconventional vision for the Waterfront parcels at over 100 community outreach and city staff meetings over an 18-month period, integrating extensive feedback from stakeholders across Scottsdale’s 31-mile length from Papago Plaza in the south to Pinnacle Peak in the north.
The groundbreaking project ultimately proved to be an across-the-board success for its residents, commercial operators, investors, public officials, and neighborhood stakeholders alike, and achieved several unique “firsts” for Geoff and his development team. These included:
- An unprecedented variance to construct the two tallest buildings in Scottsdale history, each more than twice the maximum height permitted at the time of their approval.
- A groundbreaking public/private/quasi-public partnership with Salt River Project and the Flood Control District of Maricopa County to implement the first large-scale activation of SRP and District rights-of-way along the Arizona Canal.
- A courageous and unanimous 7 – 0 vote by the Scottsdale Mayor and City Council members, which was further punctuated by a rare 7 – 0 “emergency clause” to thwart activists who were threatening a voter referendum to overturn the decision.
- The pioneering utilization of a newly enacted, but untested, State of Arizona law to establish Scottsdale’s first Infill Incentive District, a brand-new zoning category designed specifically for the Waterfront project.
- The formation of an inventive private/nonprofit venture to effectuate a pressing City of Scottsdale objective to relocate the Fiesta Bowl Museum and organizational offices to the Waterfront site – today, a must-see attraction for NCAA football fans!
- The funding, commissioning, and dedication of two consequential public art installations – the Doors and Sound Passage by Donald Lipski and Jim Green and Passing the Legacy by Herb Mignery, at one time, the final stopping point for the annual Hashknife Pony Express ride, the longest U.S. Postal Service contract in history.
- The accommodation of horses (yes, the equine variety) to enable riders to traverse an urban landscape, given the Arizona Canal banks were a part of the historic Arizona Sun Circle Trail.
- A never-attempted execution of an unusual one-stop approval process wherein the Scottsdale City Council co-administered the Development Review Board, providing simultaneous approval of the project’s zoning, site plan, and design, ensuring architectural standards were maintained post-approval.
- A novel financing and operating agreement with the City of Scottsdale to include high-cost underground parking, but make it free to the public, per longstanding city ordinance.
- Convincing a roomful of smart, highly skeptical New York City dealmakers that top-of-the-market condo prices and commercial rents could be underwritten adjacent to a neglected canal in a designated “slum and blighted” area.
Today, the completed $200 million (uninflated cost), 1,000,000 GSF, mixed-use lifestyle center sets the bar for condominium resale prices, apartment rents, and commercial lease rates in the State of Arizona – not a bad outcome for a blighted, “waterfront” tract once disparaged as Scottsdale’s Yacht Club!
Bon voyage, ‘o ye, of little faith!
