The Scottsdale City Council narrowly approved the 150-foot Marquee office building in downtown Scottsdale in a decision that exposed an ideological split on the dais.
The council on a 4-3 vote approved zoning amendments that will allow developer Stockdale Capital Partners to build a structure up to 150 feet, plus 6 feet for rooftop mechanical equipment, on the site just north of Stockdale’s Galleria Corporate Center on Scottsdale Road.
Mayor Jim Lane and council members Suzanne Klapp, Virginia Korte and Linda Milhaven voted for the approval. Kathy Littlefield, Guy Phillips and Solange Whitehead dissented.
The vote also approved a number of bonuses requested by the developer, including reduced building setbacks along Scottsdale Road and Shoeman Lane.
In exchange for those bonuses, the developer will pay the city $2.1 million for street and pedestrian improvements along Shoeman Lane and $1.56 million in cash.
The council had already approved a different version of the Marquee in 2016.
At the time, the building was approved up to a height of 90 feet and passed on a 4-3 vote with Littlefield, Phillips and former Councilman David Smith dissenting.
The council would later approve a new Old Town Scottsdale Character Area Plan in 2018 that created Type 3 zoning areas with heights up to 150 feet in certain areas of downtown Scottsdale, including the Marquee site.
Zoning attorney Jason Morris, who represented Stockdale before the council, said that change was one reason the case was brought back before the city.
The height is not the only thing that changed under the new development agreement.
The allowable floor area of the building also increased from 204,660 square feet to 271,900 square feet, and parking for the office building was reduced from 970 spaces to 906 spaces. Parking for the ground level retail will increase from 50 to 68 spaces.
The total bonus payment was also less under the old agreement at $685,066.
The Marquee project was a lightning rod among residents as it worked its way through city boards and commissions — culminating with the split vote at the City Council.
The city received many emails in support or opposition to the project, and 26 people requested to speak on the topic to the City Council.
Of those speakers, 10 were against the Marquee as currently designed and 16 spoke in favor of it.
At least five speakers in favor of the Marquee work for businesses with connections to Marquee developer Shawn Yari, including W Scottsdale General Manager David Cronin and Kevin Callahan with commercial real estate firm CBRE.
A number of project proponents were local business owners eager to see an infusion of workforce downtown.
“We are in need of new office space downtown…to create diverse economic use,” said longtime Scottsdale resident and business owner Ryan Hibbert.
Hibbert’s Riot Hospitality owns several restaurants in downtown Scottsdale.
“The synergy of residential, entertainment and office is really important to keep our downtown vital and successful,” Hibbert said.
Not all residents agreed that Marquee would be the shot in the arm supporters claimed it to be.
Some complained that the buildings design and massing looked similar to large cruise ship and would dominate the skyline along Scottsdale Road and negatively impact tourism.
“Does it live up to the aesthetic and architectural value that the city of Scottsdale deserves? I’m not so sure it does,” said resident Betty Janik, president of the Coalition of Greater Scottsdale.
“It’s been called a monster and it’s been called the Titanic…will it be a gem or will it be a sore thumb like the Henkel building,” Janik added, referencing the large glass building in northern Scottsdale.
“I take great issue with the folks who say that this is not a quality project… Are there some minor modifications to the guidelines? Yeah,” Milhaven said.
“While we tweaked the standards, I think for every exception we made, they gave us a little bit more,” Milhaven said, noting the developer agreed to add open space in the form of sidewalks and pedestrian plazas, though it is not required.
A number of residents and council members also noted the new Marquee plans reduced office parking spaces by 64 spaces.
The parking is still above the requirements under city code, though many business owners have argued that code is insufficient.
The neighboring Galleria, also owned by Stockdale, is parked at a similar ration and has been blamed for cannibalizing local street parking in the past.
Towering buildings that became an inevitability after it approved Type 3 zoning in 2018.
Whitehead echoed concerns expressed by residents who were against the project, including the parking, massing and design concerns.
Whitehead, who was not on the council when it approved the Marquee at 90 feet, said she did not believe the developer was giving enough value to the city in exchange for the height increase and other bonuses.
“I think I’m very supportive…of having office space in this area…but I still don’t see a lot give to the community,” Whitehead said. “I see a lot of benefit to the developer and I understand that he has financial constraints, but I don’t think the parking, design and the height provide enough benefit to the community.”
However, the council majority looked at the project as boon for the city that will result in the first Class A office building built downtown since the Finova building in 1999, something several local business owners spoke in favor of during public comment.
Lane said the discussions over “added value” were misguided.
“I don’t know where this has come from, but the real element that any (property owner) has to the city is to pay their taxes,” Lane said. “That’s the primary thing.”
Lane said there is no “unspoken, informal obligation on the part of businesses or property owners to do something over and above paying taxes.”
Klapp said the city needs to focus on bringing in projects that will generate revenue and jobs.
“We can’t provide all the services that citizens expect if we aren’t finding ways to bring revenue in…” Klapp said.
Littlefield countered that the project did not provide value commensurate to what the city was providing by increasing the height 150 feet.
Littlefield said the $2.1 million bonus payment to the city is dwarfed by $20 million the developer will save by the height increase, intimating more money could be spent to address resident concerns, such as moving parking underground.
“That’s the cost for destroying our height restrictions and increasing our density,” Littlefield said. “I do not object to the developer making a profit…but I do mind that he makes a profit at the expense of the city and on the backs of the citizens.”
At the Planning Commission, Morris, the zoning attorney, estimated the developer will save $20 million because the height increase will allow parking to be built above ground without sacrificing office space.
Phillips said he opposed to project for much the same reason that he voted against it in 2016, namely that the building itself was too narrow and too tall to fit in with surrounding property.
Morris also said the building’s design is the result of a unique site, which is also long and narrow.
Littlefield said the developer knew the site’s limitations when he purchased it.
“Neither the council nor the citizens are obligated to sacrifice our high standards of design and development in order to relieve him of a bad business decision,” Littlefield said.
Lane said the city should encourage developers like Stockdale who are willing to build costly projects without subsidies.
Lane found allies in Klapp, Korte and Milhaven — who all said the project will bring much needed jobs to an area of downtown the council had already designated for high-density commercial development.
“If we all agree — which everyone has said they think attracting jobs is a good idea and class A office is a good idea — this is exactly where we want to do it,” Milhaven said.
Korte, a former president of the Scottsdale Chamber of Commerce, said she remembers a time in the early 2000s when she walked past “tumbleweeds blowing down the street” in downtown Scottsdale and commended the developer for its investments in the areas since that time.
Stockdale’s leadership has been involved in a number of projects in downtown Scottsdale throughout the years, including the W Scottsdale hotel and the Galleria Corporate Centre.
Both Whitehead and Littlefield argued the project simply did not provide enough benefit to Scottsdale to offset the decreased setbacks and increased height, among other concerns.
The Marquee approval sets the stage for even more 150-foot projects that are scheduled to come before the Council in the coming months.
The two most high-profile cases are Museum Square in the Arts District and Southbridge Two, which could result in a wholesale redevelopment of 5th Avenue and include another 150-foot office building across the street from the Marquee building.
“This will not be the last one coming before us in Scottsdale because there is going to be many, many more…so look forward to the new downtown.” Phillips said.