By Melissa Rosequist
Twitter: @mrosequist_

For the second time this year, a large mixed-use project is seeking Scottsdale’s approval to redevelop a portion of the downtown area.

The anticipated SouthBridge 2.0 project coming down the municipal pipeline is set to go before Scottsdale City Council next month.

Led by Spring Creek Development, SouthBridge 2.0 seeks to redevelop nearly 10 acres in Old Town Scottsdale, near Goldwater Boulevard and Fifth Avenue along the Arizona canal.

The mixed use project --- estimated to cost $574.5 million throughout construction --- was slated to go before council in October, before being continued to the Nov. 12 meeting at the request of city staff. According to the City Council agenda, staff requested the continuance to finalize the associated development agreement and other outstanding items.

SouthBridge 2.0 has been in the works for some time, but has just begun its municipal approval process.

In late August, the Scottsdale Planning Commission unanimously approved three requests, including a zoning district map amendment, a downtown infill incentive district application and a request by owner to abandon multiple alley and other rights-of-way to allow development.

At its core, SouthBridge 2.0 is setting out to redevelop a 9.94-acre site to include a mix of residential, hotel, office and commercial uses, with up to 570 multi-family dwelling units, 200 hotel units, 120,000 square feet of class A office space and 80,000 square feet of retail space.

Spring Creek Development President Carter Unger says the project has been supported by residents and merchants in the area, pointing to using this project to anchor human beings in the area during the non-tourism times.

“We’re very blessed and fortunate to have a large amount of support,” Mr. Unger said.

“A lot has to do with the fact that people in that area and part of Scottsdale realize how hard it is for retail to survive, and the human density needed to support the area. What we want to do is put back the same retail along the street and put in above that high-end residential, office and hotel so we can sustain in summer time when the tourism slows down.”

According to an economic and fiscal impact analysis provided to the Independent, prepared by Scottsdale-based Elliott D. Pollack & Company, SouthBridge 2.0 is projected to be an economic powerhouse in Old Town Scottsdale.

The report outlines that construction along with the ripple effects throughout the economy would generate 7,126 person years of employment. In total, $386.8 million in wages would be paid to these workers, and the construction would create $1 billion in economic impact throughout Greater Phoenix.

In addition, if SouthBridge 2.0 is completed, and the businesses are operating at stabilized levels, a total of 2,368 people would be employed with wages of $112.2 million, the report stated.

This economic activity would generate $290.5 million in annual output.

“A lot of people use the term mixed-use loosely,” Mr. Unger said. “This, in my opinion, is the largest true mixed-use. We have everything but industrial involved at this Scottsdale scene.”

The project

Artists’ renderings of the proposed project show the impact SouthBridge 2.0 would have along Fifth Avenue in Old Town.

SouthBridge 2.0 covers a vast area of real estate --- which is all owned by Spring Creek Development. None of this project is on public land, Mr. Unger said, dispelling rumors.

“We are not building over private land, or over the street. Everything is on our own land, we are not building out to over the canal, and we’re not getting anything for free from city --- that could have been nice but it’s not happening,” Mr. Unger said.

“It should be an amazing transformational project, and it’s why we have support from all merchants and landlords, except for one on Fifth Avenue.”
SouthBridge’s development plan includes multiple phases of construction across four sites. The two western development sites front onto both Fifth Avenue and the Arizona Canal.

The remainder of the site located at Sites A and B is more knitted with the existing urban fabric of the Fifth and Sixth Avenue areas of downtown, west of Scottsdale Road.

Currently, the area houses various uses including retail, service and restaurants.

The project’s Planning Commission report shows the project seeks:

• Building height proposed: varies from 66 feet to a maximum of 150 feet;
• Parking provided: 1,500 spaces;
• Density proposed: 57.35 dwelling units per gross acre; and
• Purchasing and redeveloping current city-owned property known as the Rose Garden near Fifth Avenue and Goldwater Boulevard.

The Planning Commission staff report states the city has not yet made a decision regarding the sale of Rose Garden. Meanwhile, the City Council met behind closed doors on Oct. 15 to seek legal advice, discuss and consult with designated city representatives and discuss and consult with city attorneys in regards to contracts that are subject to negotiations, pertaining to property near Goldwater Avenue and Fifth Avenue.

“We did get some amended standards, for setbacks and stepbacks. The Development Review Board unanimously approved, and Planning Commission unanimously approved,” Mr. Unger said. “Everyone we showed the renderings to, with high degree of architectural experience and using different palettes, adjusting things, you can really achieve the same things without having an exact setback in every location. We do have a lot of setbacks, stepbacks, the only place that’s a little challenging is along the canal.”

Mr. Unger points to the development upgrades put forth by the city in 2018, which specifies the approved heights for different sections of the Old Town area.

“It is a challenge; we believe we’ve created something architecturally and aesthetically pleasing,” he said, pointing out walkability and public spaces within the project. “Looking back, the height won’t pop in their heads five years from now.”

Mr. Unger says the companies currently in business in the development area will have an opportunity to return, and they will work to make changes as seamless as possible for their tenants.

“It will all be divided up and separated in different ways for tenants to come right back in,” Mr. Unger said. “The phasing works for different sites in the project, if we can move some people into one [area]; our goal is to be as minimally negatively impactful as possible --- not only for our merchants, but others. When we did SouthBridge, we took a lot of care to do it the right way.”

Profit vs. service

While Mr. Unger says thoughtfulness is being put behind the plans of their project, former Scottsdale City Councilman and architect, David Ortega, has concerns.

“SouthBridge Two is so out-of-scale it would encroach 20 feet into Fifth Avenue and excavate 30 feet deep, destroying existing businesses,” Mr. Ortega said.

“[It] needs to be downsized to fit within its own property. Worst yet, SB2 would eliminate all public parking.”

Mr. Ortega takes issue with the proposed procurement of the Rose Garden property, stating he believes putting condos on the property and removing public parking is “just wrong.”

“I see the city public parking lot at the Rose Garden expanding into a garden terraced multi-level parking structure, which serves all of Fifth Avenue including SB2, employees, customers and visitors.”

In a letter to the City Council, Mr. Ortega says: “The SouthBridge Two proposal would trespasses into the Fifth Avenue, demolishing angular parking, blading trees, relocating utilities, and causing havoc; but NOT for ‘public good or public transportation.’ The City Council would allow the catastrophic consequences for the sole purpose --- a private developer’s profit. The City of Scottsdale would bear direct liability for tangible financial losses, and probably punitive damages as well.”

Mr. Unger, however, refutes the claims that this project is solely for personal gain.

His late father, Fred Unger, was the former president of Spring Creek Development, and led the charge on the first SouthBridge project years ago.

Before his father’s death, Mr. Unger was in the military before coming back home and becoming a local fire fighter. Getting into business and development was not part of his plan, he says.

“I hope people can trust this was not the path I was on. I am truly all about improving lives of citizens,” Mr. Unger explained.

“The last two months with my dad, while medically caring for him, I was trying to pick up any pieces I could with development --- we didn’t talk about [personal gain] we talked about how development can and should be used as a service to others. How it can truly change lives of merchants and citizens in this area.”

Mr. Unger says his father instilled in him the belief that if they have the ability to help others, they should.

“Every decision made on this is how we can make the best possible project. It didn’t start with designing something that’s most profitable,” he said. “We came in with something that’s designed for the whole community. That’s what I was raised to believe. It’s not quite the same as the Army or fire department, but it’s a different way to serve.”

A sustainable town

The economic development report completed for Spring Creek Development estimates construction would generate $15.8 million in revenues for the city, including $2.8 million in direct construction sales taxes, $6.7 million in estimated speculative builder’s tax, and $5.3 million in project permit taxes.

Once the project is built out and operating at stabilized occupancy, the city would see an estimated $4.1 million each year, the report states.

“The largest revenue source would be the sales taxes generated by the retail establishments and restaurants and bars followed by property taxes paid,” the report states.

City Councilwoman Linda Milhaven says the proposed project would be a wonderful boom to the area’s economic development, pointing to the Downtown 2.0 study completed a couple years ago.

“What it told us was there aren’t enough people who come downtown, to Old Town, to keep it sustainable,” Ms. Milhaven said.

“That doesn’t bode well for the retail market. This is bringing in more people who will live and work, and will also help all the other businesses in downtown, and bring in more new businesses.”

The Downtown Scottsdale 2.0 study, among other things, states the residential population in the area was projected to reach 6,100 in 2020 --- compared to approximately 4,020 residents in 2015.

However, the study recommends an increase in downtown population to 8,200 to reach the average population-to-establishment ratio.

“Reaching the goal of 8,200 residents would require development of approximately 1,050 in additional units (beyond those under construction),” the 2.0 study states. “Given the status of on-going residential planning initiatives, this would appear achievable by 2025.”

Ms. Milhaven says the area, specifically the proposed acreage of SouthBridge 2.0 along Fifth Avenue, is in need of updates.

“They absolutely need this revitalization,” Ms. Milhaven said. “Some buildings there are tired and warn, they need to be replaced in some way.”

Ms. Milhaven says recently she walked through the area from Scottsdale Road to Goldwater Boulevard, up Fifth Avenue and down to Marshall Way.

“Somebody’s using retail space for office space, the buildings are tired and past their useful life,” Ms. Milhaven said. “The marketplace isn’t there for local neighborhood retail businesses. Having more people live and work in the area will be huge.”

While the area will change with Museum Square and potentially SouthBridge 2.0, Ms. Milhaven says the charm of Old Town Scottsdale will remain.

“I think we can keep the core of what makes our downtown special. If you look at the section over east of Scottsdale Road and south of Indian School, that really is the original Old Town,” she said. “I think Main Street where the galleries are will remain, but by developing around the edges of Old Town, we bring in the people who will support the core.”