The Scottsdale City Council narrowly approved Southbridge Two on Dec. 4 following a spate of last-minute changes meant to address community concerns.
Those changes were enough for two City Council members who were on the fence – Mayor Jim Lane and Councilwoman Suzanne Klapp – to give thumbs up in the 4-3 vote.
The approval, which included zoning changes and the sale of a city-owned parking lot, paved the way for the massive 10-acre development that will redevelop a significant portion of existing low-slung retail space in downtown Scottsdale’s 5th Avenue shopping district and replace it with new retail space, condos a hotel and an office building.
Developer Carter Unger of Springcreek Development said it would increase year-round foot traffic for retailers in the area, who he argued were struggling during the off-season.
However, some local property owners disputed that contention, arguing the traffic and congestion resulting from the project’s height and density, along with the construction disruption, would harm their tenants and local businesses.
Both Lane and Klapp, said they had been concerned about impact of the project’s construction.
Jordan Rose, an attorney for the project, said the developer agreed to a plan that guarantees access to all properties affected by construction and to keep two lanes open along 5th Avenue at all times during business hours.
Rose said if 5th Avenue closures were necessary, they would take place before or after business hours.
The developer also has a tenant relocation and support plan in place to assist retailers affected by construction, Rose said.
“I feel good about that,” Lane said. “The idea of getting out from under the right of way on Fifth Avenue was a big issue for me and also relates to that same problem because it literally would shut down roads for a long time...that was critical.”
Councilman Guy Phillips praised some aspects of the project but said the new uses would damage the city’s existing retail-supported tourism and that traffic at 5th Avenue would be “backed up a mile.”
Vice Mayor Kathy Littlefield was more direct, stating, ““I will not be the vote that destroys Old Town.”
Following the vote, Unger said he would continue to work to address concerns from Council opponents and win their support.
“Your work has just begun,” Littlefield told him in response.
“Since this project has passed, I pray for a success because the fate of downtown tourism lies in the balance,” Phillips said.
Councilmembers Linda Milhaven and Virginia Korte indicated they long supported the project.
Milhaven said she was sad to see the existing low-slung 5th Avenue shops go but that the redevelopment is necessary for the area’s future success.
Height and density proved to be sticking points for opponents, including area property owners who started a political action committee to oppose the project.
Southbridge Two includes a 150-foot hotel and 128-foot office building.
The developer agreed to lower the height of two 150-foot condos along the Arizona Canal to 139 feet and 129 feet, respectively, to address concerns.
However, those changes did not appease all critics.
“The mass is so huge,” said property owner Jane Wilson, contending that reducing the height of the building along the canal by 10 feet would not make a difference for tenants in the neighboring one-story buildings.
Wilson co-chairs the Committee for the Preservation of Old Town Scottsdale political action committee that organized a few weeks ago to oppose projects like Southbridge Two.
WIlson also said the city’s decision to sell the Rose Garden parking lot to the developer for $8 million will directly affect her tenants’ customers.
Former Councilman David Ortega and others raised questions about the legality of the Rose Garden sale. The site was subject to a previous development agreement with an entity owned by the Ungers dating back to the mid-2000s.
That agreement ended in 2015 but the city did not officially terminate recorded documents associated with it until the Dec. 4 meeting.
Ortega said the city may have violated ordinance by failing to properly cancel the original agreement and put the land out for competitive bids.
Scottsdale Public Works Executive Director Dan Worth said the city received two independent appraisals and a bid process was unnecessary under city rules. Those rules give the city manager discretion to sell city land to adjacent property owners without bids if he determines it is the public interest to do so.
Assistant City Manager Brent Stockwell told the Progress the land sale price accounted for the increased heights allowed on the parcel.
Littlefield, Phillips and Councilwoman Solange Whitehead opposed the project, expressing concerns that it was too large and dense and would disrupt area businesses and ruin downtown’s unique character.
Littlefield, who previously voted for the Museum Square project that features a 150-foot hotel in the Arts District, said Southbridge Two was different because its located in a more active area with existing retailers whereas the Museum Square site was largely unutilized land that housed an old transit station.
“Old town is active. There are stores there,” Littlefield said. “They open every day and people own those stores.Some of them have been there for 20, 30 years and they have customers. It's not a dead area.”
Phillips also said he thought the project would damage downtown’s allure to tourists and was part of a larger effort by the city to replace its tourism industry with a focus on office jobs.
Unger, who received significant support from the community during the City Council hearing, was visibly joyous following the Council vote.
Unger, who was a Chandler firefighter before taking over the project for his late father, developer Fred Unger, said there were times “when I wondered if I didn’t screw up” by trading a job he loved for the stress of development.
However, ultimately, he said he was humbled to carry on his father’s vision “and the good days kept me going. And now this, and I like to believe my dad can see this.”
Unger was heard telling attendees that construction could begin by mid-2021.
He told the Progress the timeline was still not final but that his company planned to begin working to finalize deals with joint venture partners and architects to prepare to bring the project before the city’s Development Review Board.