By Roland Murphy for AZBEX
The next round is chambered in an ongoing battle over a north Scottsdale healthcare campus: Banner Health has submitted its rezoning and conditional use permit requests for 31.5 acres for the property at the NEC of Mayo Blvd. and the Miller Road alignment.
At first blush, it looks like a straightforward step by the state’s largest private employer to develop the second phase of a long-planned project. Phase I, which consists primarily of a 119KSF medical office building, is currently under construction.
However, since it was first announced, rival healthcare giant HonorHealth has gone to great lengths to scuttle Banner’s efforts. Future fireworks over the new submittal appear highly likely.
Banner’s Request
Banner submitted documents requesting a zoning change for approximately 31.5 gross acres and a conditional use permit to allow for development of a 640KSF, 300-bed hospital and a helipad on July 16.
According to the submittal, “The Site is adjacent to the Nationwide/Cavasson campus located to the north across State Route 101, to the east by the planned Health Center Plus and future retail and commercial uses, to the southeast across Mayo Boulevard by San Artes apartment community, to the south across the Mayo Boulevard alignment by vacant, undeveloped land owned by the Arizona State Land Department, and to the west across the Miller Road alignment by ASM campus currently under construction.
“Notable uses in the surrounding area include the planned Axon global world headquarters campus to the east across Hayden Road, the Fairmont Scottsdale Princess and the TPC Scottsdale golf course to the south, and Optima McDowell Mountain condominiums to the west.”
The site is within the Crossroads East Planned Community District, a roughly 1,000-acre area generally bounded by Legacy and Princess blvds. to the north and south and Hayden and Scottsdale roads to the east and west. The PCD was established in 2002 for land wholly managed by the Arizona State Land Department, and many parcels have been sold for development over the years.
The P-C zoning currently in place allows for large scale mixed-use development with residential, commercial and other compatible uses. Banner explains its rezoning request thusly: “Pursuant to the requirements of the Crossroads East PCD and associated Development Agreement, the allocation of comparable zoning designations from the Land Use Budget of C-2 (Commercial Intermediate) and I-1 (Industrial Park) were affirmed for the Property in May 2023…. In accordance with the terms of the Zoning Approval and the Development Agreement, and with consent of the Arizona State Land Department as required therein, Banner requests to modify the comparable zoning designation for the Site from C-2 and I-1 to C-O (Commercial Office), as follows:
- “Relinquish and return to the Crossroads East Land Use Budget approximately 6.78 acres of I-1 and approximately 24.88 acres C-2 comparable zoning; and
- “Assign approximately 31.66 acres of C-O comparable zoning from the Crossroads East Land Use Budget to the Site.”
It goes on to say C-O is an approved designation under the development plan and ASLD has authorized the allocation under the land use plan budget. “No modifications to the approved P-C zoning or Development Plan for Crossroads East PCD, or terms of the underlying Development Agreement (as amended), are requested or required,” the submittal states.
Banner is requesting the conditional use permit in support of developing the hospital and its associated helipad.
The hospital will be built in the approximate center of the site and is planned for emergency services, acute care and inpatient services, among others.
“More specifically,” the overview says, “the first phase of the Hospital is planned to include a four-story patient tower, a two-story diagnostics & treatment building that will house emergency, surgery, laboratory, pharmacy and associated support services, a one-story central utility plant and MEP yard, at-grade Helipad, loading dock, surface parking, landscaping, hardscape and other associated site improvements. Phase 2 is planned to include a second two-story diagnostics & treatment facility. Phase 3 is planned to include a five-story patient tower, along with rooftop Helipad. Finally, Phase 4 is planned to include a four-story patient tower and four-story parking garage. At full build- out, the Hospital will accommodate approximately 300 licensed patient beds. Phasing and development may change depending on community needs.”
Primary access will be along Mayo, with secondary access coming from both Hayden and Miller. Hardscape pathways are planned to connect the various parking areas and facility entry and exit points.
Banner Health is the project owner and will serve as the developer. SmithGroup is the design firm. Dibble Engineering is the civil engineer and prepared the traffic analysis. Banner Health is represented by Gammage & Burnham PLC.
As of the morning of July 28, hearing dates have been scheduled before the Scottsdale Planning Commission or City Council.
The Opposition Battle
Banner first announced its plans for a medical center campus in north Scottsdale in April 2022 and submitted rezoning and conditional use requests for its originally planned site that May. (AZBEX; April 18, 2022; May 27, 2022)
The originally planned property was 48 acres across the street from the current site. Trouble erupted during the ASLD auction for the property when, in a surprise move, HonorHealth engaged Banner in a bidding war and ultimately won. According to AZBEX’s article at the time, “HonorHealth CEO Todd LaPorte, however, came to the public auction on Nov. 16 and entered into a 15-minute bidding war with Banner Health CFO Dennis Laraway. The minimum bid for the site had been set at $56.95M. In back-and-forth bidding, LaPorte eventually drove the price up to $84M. Laraway conceded the fight at that point, telling media representatives afterward that any higher price would have made the costs untenable.” (AZBEX; Nov. 18, 2022)
HonorHealth officials said at the time it had no plans in place to develop the property. To date, no plans have been announced. Company officials said the area does not need another hospital, as it is well-served by existing facilities, including existing HonorHealth operations.
In March of 2023, Banner fired back, announcing plans to buy roughly 48 acres across the street from the earlier site. The announcement said, “With an investment of more than $400M, the project will include an acute care hospital, an adjacent medical office building and a cancer center. Banner Scottsdale Medical Center will be a full-service, destination hospital with a focus on key areas of distinction for Banner, including cardiovascular, orthopedic, cancer and neuroscience programs. This new, digitally enabled medical center will provide seamless integration with Banner’s ambulatory and virtual sites of care, furthering Banner’s mission of making health care easier so life can be better. The project complements Banner’s comprehensive, market-wide network and brings Banner services and options to those who work and live in the Northeast Valley.”
Banner requested an initial rezoning for the site in July 2023. (AZBEX; July 14, 2023)
Entrenched organized resistance emerged immediately after. HonorHealth and the Scottsdale Fire Fighters Association issued statements saying the Banner project was unnecessary and, incongruously, would worsen healthcare quality in the area by reducing the pool of doctors and nurses available to work in the community. They also said existing facilities might no longer be able to treat enough patients to maintain their specialty certifications, such as for trauma and stroke care services.
Along with questioning the medical need, they raised quality of life issues, including noise and traffic concerns. Those concerns were also voiced by leadership of the nearby Scottsdale Stonebrook II HOA. The HOA was also an early opponent of the Axon projects but adopted a neutral stance after Axon revised the layout of its site.
In an apparent attempt to close the door well and soundly on these types of concerns, Banner’s latest request includes 395 pages of traffic analyses and volume assessments, including a core study from Dibble with supporting materials from Kimley-Horn, Inc.; CivTech; Field Data Services of Arizona, Inc.; Veracity Traffic Group and the City of Scottsdale, itself.
In the interim between announcing the plan and late 2023, Banner shifted its approach. The company had originally planned to build the hospital first and follow it with the supporting facilities and services. The revised plan called for building the MOB currently under development first, since it did not require rezoning.
HonorHealth also undertook legal action to thwart Banner’s plan. According to the subscriber-only edition of AZBEX from May 10, 2024, in late December 2023, “HonorHealth requested that Scottsdale Zoning Administrator Erin Perreault interpret the zoning ordinance as to where a hospital can be built in the area. While HonorHealth’s request did not specifically mention Banner, it has alleged Banner’s land is not appropriately zoned for a hospital. It also started a public relations effort to sour the community on Banner’s plan, alleging its planned hospital complex is not needed and that it could, if developed, harm the available labor pool and diminish the quality of healthcare in the area.”
Perreault ruled in favor of Banner, saying that since HonorHealth had no plans to build anything, it would not be harmed if Banner proceeded.
HonorHealth appealed that ruling. Quoting the article, “HonorHealth appealed that determination to the Scottsdale Board of Adjustment, saying Perreault’s decision was arbitrary, not supported by the zoning ordinances, that it failed to resolve ambiguity surrounding the definitions of ‘hospital’ and ‘office,’ and that ambiguity could harm its plans to move eventually forward with its own plans.”
Banner argued it had submitted plans and a rezoning request for the property, while HonorHeath had provided no details about its intentions. The Board agreed by a vote of 5-1, and Board Chair Gary Donahoe said if HonorHealth had a complaint about the Zoning Administrator’s findings, it should be pursued in Maricopa County Superior Court, not before the Board of Adjustment.
Since losing its appeal to the Board of Adjustment, there have been no new reports of actions to delay or stop the plan. Now that Banner has moved on to the next steps in the process, it is reasonable to guess that this will not remain the case for long.
