City Council narrowly approved the $450-million Scottsdale Collection last week, paving the way for a project that promises a new mix of uses in the downtown bar district.
Stockdale Capital Partners’ project covers over 10 total acres spread across three main sites in the northeastern quadrant of downtown Scottsdale, primarily located in the Entertainment District.
Stockdale, owned by developer brothers Shawn and Steven Yari, is the largest land owner in the Entertainment District and owns other properties like the W Scottsdale hotel and the Galleria Corporate Centre.
Council approved the Scottsdale Collection on a 4-3 vote Dec. 7, with Mayor Jim Lane, Linda Milhaven, Suzanne Klapp and Virginia Korte voting for it.
Overall, the development plan calls for replacing dated office and club properties with 580,000 square feet of commercial space, and hundreds of apartments and hotel rooms.
The project’s centerpiece is City Center, a 150-foot building at the northeast corner of Scottsdale and Camelback Roads that could feature between 200 and 400 hotel rooms, 100 apartments and over 40,000 square feet of retail and restaurant space.
The project could also feature up to 60,000 square feet of public space, including a plaza at the City Center site, according to development plans.
Other buildings would stand between 32 and 141 feet. That includes 96-foot and 60-foot-tall buildings straddling the east and west sides of Saddlebag Trail, respectively, on the site of the former Mint nightclub and a 141-foot hotel next to the Maya Day and Nightclub site.
Prior to the rezoning, entitled heights varied widely in the district, ranging from 34 feet at the southeast corner Scottsdale and Camelback Roads to 90 feet at The Stetson Apartments and 150 feet on the site of the Marquee office building.
The developer will pay the city up to $896,000 in bonus payments for that extra height.
The development outline includes plans to replace the former Mint nightclub with a 116-room hotel or 62 units of multifamily housing and building a 165-room hotel next to the Maya Day and Nightclub.
The city also approved reduced stepback and setbacks for some buildings by up to 20 feet at certain locations and a zero stepback on the proposed hotel near the Maya despite city rules requiring stepbacks beginning at the 45-foot mark.
At an early open house in 2019, Shawn Yari pitched the project as a way to activate the eastern edge of downtown and improve walkability and the pedestrian experience through public art, which will be dispersed throughout the development.
Backers of the Scottsdale Collection said it will mark the “maturation” of the district, where bars and nightclubs packed into less than a tenth of a square mile and has been the subject of fights among the industry, city and neighbors over the past 20 years.
The bar district, as it is also called, is the central hub of the downtown nightlife scene.
The Yaris played a large role in developing the district over the past 20 years as owners of the W hotel and other night clubs in the area.
Longtime defenders of the area, including Lane, have called the Entertainment District a financial boon for the city, though they have acknowledged its problems in recent years and adopted some area-specific policies and ordinances to reduce crime.
Some residents over the past two decades have complained about noise, crime, littering and public intoxication downtown.
Detractors have also called into question how much economic benefit the area really generates for the city.
In 2011, former City Councilman David Smith, then the city treasurer, reported that the area produced $400,000 in revenue but also generated $1.2 million in public safety costs.
The next year, a report by economic consultant Elliot D. Pollack & Co. – commissioned by an industry trade group – gave a rosier outlook, reporting that downtown bars generated a total economic output of $306 million annually.
The development team behind Scottsdale Collection made a concerted effort to win over previous critics, hiring longtime downtown business owner and advocate Bill Crawford.
“This project is a dream come true for this part of downtown Scottsdale,” Crawford told Council.
Crawford years ago waged a campaign against the entertainment district that resulted in a messy defamation suit.
The Yaris pitched the Scottsdale Collection as a way to transition the Entertainment District away from just bars and night clubs.
“We’re eliminating nightclubs and bars; we’re adding hotels, restaurants, residential,” attorney John Berry said, adding that will result in a demographic shift to an older demographic and families with higher income.
Lane said he had high hopes for the project, citing the Yaris’ history of investment in Scottsdale, including developments like the W Scottsdale hotel, which the brothers spearheaded during the Great Recession.
“Stockdale has been around for quite a while, and, of course, it’s backed by a family that actually assisted the City of Scottsdale to a great extent,” Lane said.
Berry said Stockdale Capital has invested $434 million in Scottsdale as of 2019.
Not all council members felt ready to throw their support behind the Scottsdale Collection because of concerns over specifics of the development deal with the city that still needed to be ironed out.
Those concerns led to a familiar outcome at the Dec. 7 meeting when Council members Kathy Littlefield, Solange Whitehead and Guy Phillips voted against it.
Over the past several years, some controversial downtown projects, including Southbridge Two and the Yaris’ Marquee office building, passed Council along identical lines.
But the Scottsdale Collection did not face the same volume of resident opposition that those projects generated.
No member of the public or Council outright opposed the project.
Rather, some called on Council to delay the vote in order to give more time to residents to weigh in and to the city and developer to iron out the details.
Councilmember-elect Betty Janik said there were too many unknowns in the deal, citing language in the development agreement making the public space at the City Center site optional.
Janik found allies in her future colleagues Littlefield and Whitehead.
“I would say some of the most outstanding concepts in the proposal are simply not nailed down contractually,” Whitehead said.
Janik was also concerned that the agreement includes multiple options for what the developer can place on the sites.
“We have options for 214 to 449 hotel rooms and 0 to 237 residential units. I would suggest that dependent upon what numbers you choose, the traffic patterns and the parking needs will vary with the different options,” Janik said.
Janik suggested the project be broken up into three separate submissions to Council.
She expressed concerns that stipulations in the agreement call for the city to use $896,000 in bonus payments– paid to the city by Stockdale to increase building heights – to pay the developer back for other public improvements.
“For the most part, all the bonus money he’s giving to the city could, in theory, be returned to him and one would think then what is the benefit to the city to allow a 156-foot-tall building?” Janik said.
Littlefield and Whitehead sought a delay in the vote until the new Council comes in.
“If we vote on this tonight, we basically would be making the decision without the majority of the council who will have to deal with any and all future issues regarding it,” Littlefield said.
Three of the four votes in favor of the project – Lane, Klapp and Korte – are leaving office at the end of the year, and the new Council majority – Littlefield, Whitehead, Janik and Tom Durham – have been more skeptical about developer requests for greater heights and densities.
But the four yes votes – including the three departing members – said the process was not rushed and they were well within their authority to vote on the project at the last meeting of their terms.
“I respect the fact that there are new councilmen and continuing councilmen, but it’s incumbent on us as council people to vote on things that we believe are good projects for the City of Scottsdale,” Klapp said, noting the current council has been looking at the project for over a year.
“This has not been rushed,” she said.
Milhaven, the lone supporter who will still be on Council next year, said she had no problems with the freedom given to the developer in the agreement.
“We need to give them the flexibility they need to develop the project right,” she said.
“Is it going to be retail? Is it going to be office? Is going to be residential? Is it going to be a hotel? I welcome them all….” Milhaven said.
It will likely be years before locals find out exactly what the developer will bring to the sites.
Phase one would include the Maya Hotel followed by the City Center parcel in phase two and the Mint parcel in phase three. A potential phase four could include other scattered properties the Yaris own in the area.
Back in 2019, Shawn Yari said the redevelopment could take 10 to 15 years, and the development agreement gives the developer 25 years to build out the whole project.
“This isn’t a blank canvas. This is a successful entertainment area in downtown Scottsdale,” Yari said in 2019. “The opportunity is piece by piece, time to time, there’ll be a piece of that canvas available for me to develop.”
In order to qualify for bonus payment reimbursements under the development agreement, the developer must submit design plans for phase one within two years and start construction on that phase within three years of receiving design approval from the city’s Development Review Board.
They must then begin construction on phase two 30 months after the start of phase one and start work on phase three 30 months after that.
However, the agreement also gives the developer the ability to extend those deadlines twice for up to six months, and City Manager Jim Thompson can also modify the deadlines without City Council approval.