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SDLE Backs Off $3M Condo Deal – For Now

Downtown Scottsdale business owner Scott Jarson said the city “put the cart before the horse” when it proposed buying a $2.25M condo unit to pave the way for the proposed Museum Square development, which has not yet been approved by City Council. Credit: Kimberly Carillo, Scottsdale Progress

By Wayne Schutsky for Scottsdale Progress

Hours before a Scottsdale City Council meeting on July 2, city staff pulled a controversial item from consideration that would have seen the city shell out close to $3M to pave the way for the proposed Museum Square project.

A Progress report June 30 on the proposed deal triggered a wave of public backlash on social media, with many residents urging council members to vote no on the purchase.

The Council was set to consider purchasing a ground-level commercial unit at the Gateway at Main Street Plaza condominium complex for $2.25M. The unit — which would also need $700K in renovations, according to the city — would house offices for Scottsdale’s Museum of the West displaced by the future Museum Square development.

As a condition of the purchase, the condo’s home owners association agreed to vacate a deed restriction limiting building heights in the area to 60 feet, paving the way for Museum Square, which includes a 150-foot hotel on land the developer is in the process of purchasing from the city.

The deed restriction covers 405KSF of city-owned land, and it is unclear how much of the 180KSF the city agreed to sell is included within that area.

It is unclear exactly why city staff decided to remove the proposal from consideration or if it will come back before the Council.

Assistant City Manager Brent Stockwell said the item was removed “due to new information discovered that requires additional investigation and negotiation.”

The City did not elaborate on the nature of that information, which may have to do with the fact that the land deal between City of Scottsdale and Museum Square developer ARC Scottsdale Holdings has not been completed.

On June 30, Councilwoman Solange Whitehead voiced her opposition to the proposal on Facebook, stating she thought it didn’t make financial sense and that public money should not be spent on tourism venues.

Whitehead was also opposed to the city’s funding mechanism for the purchase, which would have included borrowing money from Capital Improvement Funds to pay for the condo.

According to City documents, the city would have used CIP funds to pay for the purchase up front and then reimbursed itself with proceeds from the eventual $28M sale of city land to ARC Scottsdale Holdings.

Read more at Scottsdale Progress.

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