Friday, July 28, 2006

Developer Seeks Help From City ~ Phoenix, AZ

Developer Seeks Help From City
By Ginger D. Richardson The Arizona Republic

Phoenix has agreed to negotiate with a group of developers that wants to build a massive $900 million mixed-use project across three square blocks on the southern end of downtown Phoenix.

The proposed high-rise development, which would include Patriots Square Park , contains four towers, about 1,200 condominium units and up to 100,000 square feet for a public plaza.

It would also include a 150-room boutique hotel and retail and office space.

If it's successful, the ambitious proposal would be the largest infusion of private dollars in burgeoning downtown Phoenix .

The problem is, the developers don't think they can make it work without Phoenix 's help.

Neither city economic development officials nor the project's backers would be specific about what Phoenix might have to do, or give, to make the deal happen. But talks could focus on everything from city-supported parking to tax subsidies.

Deputy City Manager David Krietor said negotiations would probably take place for at least the next couple of months.

"We'll have to see what would make good business sense for them, and for the city of Phoenix ," Krietor said.

The project, known as CityScape, is the brainchild of Scottsdale-based RED Development, which has completed retail developments in the Midwest and Southwest; Donald Cardon, a developer and former Phoenix deputy housing director; and Barron Collier Cos., a Naples, Fla.-based developer that owns the Collier Center in downtown Phoenix .

CityScape, at full-build out, has the potential to change the face of downtown Phoenix 's southern section.

The land on which it would sit is largely vacant or underutilized. The project would be bordered by Washington Street on the north, Jefferson Street on the south, Second Street on the east and First Avenue on the west.

Officials are confident that despite its ambitious scope it will be successful.

They acknowledge that they are banking that an influx of new energy, residents and students from other major downtown projects, such as the new Arizona State University campus, will help support it. But they say that the early response has been positive.

"What we hear is, 'It's about time, we are glad it's happening,' " said John Bacon, a RED spokesman. "That's from people in the community."

Portions of the project could open as early as 2008, developers say. The timing is key, because that's when the first phase of light-rail comes online, the city's $600 million plus expansion of the Phoenix Convention Center will be complete, and when the second, and much larger, phase of the ASU campus opens.

A key barometer of the project's success is likely to be the retail component.

Downtown Phoenix has been a challenging market for such development. The Arizona Center, for example, has struggled since opening in 1990, and traditional mall developers have avoided downtown.

But Bacon said CityScape hopes to have the one thing that has eluded downtown Phoenix: a true grocery store.

"Everyone has said that there needs to be a grocery store downtown," Bacon said. "And we agree with that. It's going to be the key."

Other options include restaurant space and traditional shopping venues, he said.

The project's plans are still very conceptual, city officials said. But it's likely that much of the public open space would be on Patriots Square Park .

The CityScape development has the backing of Mayor Phil Gordon, and most of the City Council, although some members were quick to say that they would not be in favor of giving too much assistance to the deal without having some concrete indication of how it would benefit the city.

The developer has told the city that the project would create 2,900 jobs and generate about $215 million in tax revenues during the project's construction and first 20 years of operation, Krietor said.

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