CITY NEWS
SCOTTSDALE PROGRESS | WWW.SCOTTSDALE.ORG | AUGUST 23, 2020
BY WAYNE SCHUTSKY Progress Managing Editor
falling,” MacDonald wrote Assistant City Manager Brent Stockwell on Feb. 28. In May, Stockwell said the developer requested a delay through this November. “We are trusting that time will heal all these wounds and that we will be able to deliver our landmark project as planned that will also inject substantial direct and indirect revenues into city coffers at a time when they will need them the most,” MacDonald’s statement read. Emails obtained by the Progress showed that MacDonald had proposed in March to increase the $1 million security deposit on the land to $4 million in exchange for delaying the deadline. But that deal is no longer on the table, Stockwell said. “No, the developer is not increasing his security deposit as part of the extension,” Stockwell said. “The security deposit and the purchase price remain the same and would be paid at closing.” Stockwell said the developer is still required to file papers recording the termination of deed restrictions on the land within 10 days of the closing. Those restrictions included a 60foot height restriction held by a neighboring condo complex that complicated negotiations in 2019, because MacDonald plans to build multiple buildings over 100 feet tall in the area. In 2019, city staff initially planned to ask Council to approve a $2.25-million payment in July 2019 to Madeleine Ferris, who owned the development company that built the complex, to purchase a unit in the complex and remove the restrictions. The unit would then be used to replace administrative offices for Museum of the West displaced by the development. However, staff pulled that proposal just hours before it was scheduled to go before Council. Ultimately, MacDonald’s camp negotiated a deal with Ferris to purchase the condo and the city agreed to partially reimburse him by reducing the land sale total by $1 million.
6
Pandemic-related money woes delay Museum Square
T
he long-delayed Museum Square development could be pushed back to November 2021 due to the pandemic’s financial fallout. City Council originally approved the Museum Square development in October 2019, but the city and developer MacDonald Development Corporation have yet to finalize an associated $28-million sale of city land that is a key part of the deal. The $300-million project includes plans for a 190-room luxury hotel, three condominium buildings and an apartment building totaling 346 along with public improvements that include a plaza, pedestrian connections and new traffic signals. Much of the development would sit on land currently owned by the city just south of Scottsdale’s Museum of the West in the downtown Arts District. The city agreed to sell its land to the developer for $ $27.75 million for land with reductions of over $8 million in exchange for the developer’s commitment to build public parking spaces and pay for the removal of a decadesold height restriction. The sides were set to finalize the land sale by April, but the City has approved multiple amendments to the agreement delaying that deadline. Council will consider a fifth amendment at its meeting Aug. 25 that would push the deadline to no later than Nov. 12, 2021. If approved, that amendment would essentially delay the entire Museum Square development through 2021, even the pieces that sit on land already owned by the developer. That includes a parcel of land MacDonald owns to the east of the Museum of the West that is slated to house the apartment building. As of December 2019, the development team planned to begin construction on the apartment building in late summer 2020, followed by the hotel in late spring 2021, according to city staff emails. But the new amendment would bar MacDonald from beginning work on
The Scottsdale City Council approved the Museum Square development in October 2019, but the city and developer MacDonald Development Corporation have yet to finalize a $28-million land sale that is central to the deal. (Special to the Progress)
any property until the land sale is finalized. The most recent delays are connected to financial issues stemming from the pandemic that has hit the hotel industry particularly hard, according to the developer and city. According to a city report, the developer is experiencing delays in financing commitment due to uncertainty in national and global financial markets. “This delay takes into account a myriad of issues to do with the COVID-19 pandemic and the related collapse in hotel occupancies,” MacDonald Development President Rob MacDonald told the Progress. The Progress reported in May that the city and MacDonald were already hashing out an agreement to delay the sale and that MacDonald had concerns about the effects of the pandemic as early as February.
“And on top of all other things – this virus is really starting to cause fear. Cruise ship trip cancellations out of Vancouver collapsing; hotel room reservations in Vancouver falling by the tens of thousands; Restaurant sales
“We are trusting that time will heal all these wounds and that we will be able to deliver our landmark project as planned that will also inject substantial direct and indirect revenues into city coffers at a time when they will need them the most.”
