Papago Plaza redevelopment project

An early rendering showing the view from the southeast of the proposed Papago Plaza redevelopment project. On Dec. 12, the City Council approved zoning amendments needed by the developer to move forward with the project.

Long-gestating plans to redevelop Papago Plaza in southern Scottsdale surpassed a major hurdle on Dec. 12 when the City Council unanimously approved zoning changes needed to move forward with the project.

Plans for the redevelopment include 274 units of multifamily residential housing, a 20,000-square-foot grocery store, a 118-room hotel and 25,000 square feet of retail and restaurant space.

The project will also include a three-story parking garage for the retail and hotel components. The four-story residential building will sit on top of one level of parking for residents.

The project will also include some on-street parking and public gathering space that may include a splash pad, said Jason Morris, a zoning attorney with Withey Morris, who represents the property owner.

Dozens of Scottsdale residents showed up to share their thoughts on the project with just under half of them supporting the plans.

“This project embodies exactly what we learned from the neighborhood,” said resident and business owner Austin Jack, worked on the Scottsdale Gateway Alliance’s revitalization efforts for the McDowell Corridor. “This mixed-use project has so many advantages, not just for the city’s economy but for those living in the surrounding areas."

Others voiced concerns that the project included too much housing and not enough retail and could negatively impact traffic congestion in the area.

“They’re still building more residential right there on McDowell Road right across the street,” said Grace Gavin, whose home shares an alley with Papago Plaza. “We just don’t feel the residential is needed.”

Still, nearly all involved agreed that the redevelopment of Papago Plaza needs to happen, though they disagreed about exactly what that redevelopment should look like.

“Folks on the ‘yes’ side were saying this project is pretty good and the rest of the folks said this pretty good but we can make it better,” Jason Alexander said. “That is a great example of the ability to find common ground.”

Papago Plaza, once thriving retail center at Scottsdale and McDowell roads, was built in the 1960s and is now down to five percent occupancy, Morris said.

Though its Pueblo-style buildings still carry some vintage charm hearkening back to the Scottsdale of yesteryear, the plaza’s massive parking lot and nearly 120,000 square feet of retail space are largely run down and outdated.

The Plaza, last updated in 1988, was purchased by a joint venture organized by Alex Brown Realty, Inc. and Pivot Development in 2015. At the time, the property was 36 percent occupied.

Morris said the current composition of the Plaza, with over 100,000 square feet of retail space, is no longer viable in the current market and that the mixed-use project will provide on-site residents to support the retail component.

“This property has held onto this property and looked for an opportunity to redevelop this property with its existing zoning, but there is not a market, as staff referenced, for this amount of retail at this location and in today’s society,” Morris said.

Morris cited a traffic study showing that activity at the intersection of McDowell and Scottsdale Road dropped from 105,000 trips per day in 1996 to 70,000 trips per day in 2016.

He also said the project will provide needed amenities to the area, including a grocery store.

“This proposed project is something that me and my peers and my coworkers have all wanted for a very long time,” said Lindsey Jensen, who lives and works at SkySong across the street from Papago Plaza. “Papago has been not well used. There is nothing over there. There are no restaurants for us to visit (and) we really want the grocery store…”

Preliminary renderings of the development showed an Aldi store operating in the grocery space, though it is unclear if the Germany-based brand has officially signed on to the development.

The developer will also put underground all existing and new power lines.

Some residents were not convinced, though, and argued that there are plenty of residential offerings in the area, including several new apartment developments.

“This is trading 120,000 square feet of retail for 50,000 square feet of retail…As many have told you, there are lots of other apartments coming in and they don’t want more residences; they want more retail,” Alexander said.

Multiple residents pointed out that there is a glut of new residential in the area, including Las Aguas, San Travesia and Diamante Townhomes. A city report from 2017 stated more than 1,300 new residential units had been built in the McDowell Corridor in recent years.

In addition to rezoning the site, the council approved a zoning amendment to allow for the 270 units of multifamily.

Under the standard zoning approved for the site, residential use can only amount to 50 percent of the floor area that is reserved for commercial uses.

The council approved the applicants’ request to change that ratio to 275 percent of commercial floor area – a move that drew the ire of some residents and that Scottsdale Planner Greg Bloemberg said could affect the balance of services offered in the mixed-use development.

Morris said that without the amendment, the development would only be able to build about 40 residential units.

He added that he still believes the project is mixed-use because approximately half of the 11 acres will be used for residential and lodging and the other half will be used for retail and commercial development.

Morris also said that the property owner has been responsive to community concerns and added ground-level retail space to the residential building – a change that pleased some detractors.

The City Council largely approved of the project, though it included stipulations to address community concerns.

Those stipulations include requiring the owner to include at least one retail building in phase one of the development and finish all infrastructure improvements before a Certificate of Occupancy or Certification of Shell Building is issued.

At the request of Councilwoman Virginia Korte, the council also included a stipulation requiring two additional public outreach meetings facilitated by the city and notification of neighbors within 1,500 feet of the site.

The council and several citizens were also concerned about how the project addresses the corner of Scottsdale and McDowell roads, which Councilmember Kathy Littlefield characterized as a premier entryway into Scottsdale.

The corner is currently occupied by a Wells Fargo bank branch and owned by a separate property owner.

The current plan calls for a retail building with a drive-thru and multiple tenants, including “a coffee chain you’ve probably heard of,” according to Morris.

The council pushed back on those designs, asking for public art to be included on that “premier corner.”

Ultimately, the council included stipulation from Councilwoman Suzanne Klapp requiring that public art installations be displayed “within the retail component of the project, as well as at or near the southwest corner of the intersection of Scottsdale and McDowell Roads,” according to city documents.

With zoning approvals in place, the property owner can begin moving forward with the redevelopment project. It will have to go before the city’s Development Review Board at a later date as it finalizes specifics of the project’s design.