By Matthew Hendley
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"A river is made to eventually overtop all dams and levees," says Dr. Troy P‚w‚, professor emeritus of geology at Arizona State University. "That's the nature of a river. And the flood plain belongs to the river. If you don't believe that, just build in it."
@body:In February 1991, Steve Nielsen, Tempe's Rio Salado development director, told members of the city's Rio Salado Advisory Commission to expect a national response from developers seeking exclusive rights to the commercial corridor along the south bank of Tempe's grand waterfront.
But one year later, it became clear that no big developers were interested. The city extended the deadline for proposals by six months, but the only bid received for the commercial project was from a joint venture fronted by John Benton. Benton's partner in the development proposal is Bay State Milling Company, owner of the historic flour mill originally built in 1872 by Charles Trumbull Hayden. Bay State has agreed to fund predevelopment costs and include its land along Mill Avenue and First Street in the proposed commercial development. Bay State is also paying Benton an undisclosed retainer.
Lacking any real estate development experience, Bay State hired one of the biggest promoters of large-scale real estate developments in Arizona.
Now working out of the accounting firm of Coopers & Lybrand, James A. Chalmers headed his own economic consulting business, Mountain West, in the 1980s. His company put out reams of reports extolling the virtues of development in Arizona in the late 1980s--just as the market was collapsing. Chalmers also worked on commercial office zoning for Fife Symington in the early 1980s, when Symington was battling neighborhood groups opposed to the construction of the ill-fated Esplanade at 24th Street and Camelback.
Chalmers and Bay State have been working for five years to come up with a suitable development plan for the mill site, which occupies the most strategic location in downtown Tempe. The site is a crucial link between Mill Avenue and the planned lakefront development. Bay State also owns 15 acres of future lakefront property.
In Chalmers' view, Bay State has been in the driver's seat since the Rio Salado Project resurfaced once again four years ago. The company began searching for development partners in 1989, and after interviewing five potential players, it settled on Benton in 1990.
Benton was selected, Chalmers says, because he had an intimate understanding of downtown development projects and a close relationship with Tempe officials. The major issue facing the company in the early stages, Chalmers says, was to obtain a development agreement with the city.
"John had the experience and sensitivity to help us work our way through these issues, and essentially get us to the point where we are ready to contemplate the vertical development," Chalmers says.
While Nielsen was telling members of the Rio Salado Advisory Commission that they should expect more than one bidder for the development project, Chalmers says it was clear years ago the only real contender for the project was Bay State.
Once Bay State selected the Benton group, the die was cast. @rule:
@body:From his second-floor office in the Casa Loma Building, Benton has a commanding view of Mill Avenue stretching to the south. Benton has devoted much of his professional career to the redevelopment of downtown Tempe.
Dressed in tan shorts, running shoes and a blue work shirt, the 45-year-old ASU graduate in construction engineering appears to be anything but a developer. The term, in fact, is something Benton, who wears a neat beard and drives a Volkswagen Westfalia van, clearly doesn't like attached to his name. If anything, he sees himself as a businessman devoted to historic preservation.
For the last 15 years, Benton has played a crucial role in the makeover of downtown Tempe. Working closely with the city and aligning himself with longtime Mayor Harry Mitchell, Benton successfully rehabilitated the historic Andre Building, built in 1884, before taking on the Casa Loma Building, circa 1899, across the street. The two projects proved to be successful, and he was ready for a bigger redevelopment opportunity.
That turned out to be Hayden Square, which, ten years after it was planned, remains mired in bankruptcy and nearly devoid of retail activity.
The project started off well enough. In 1983, the city acquired 7.5 acres along the west side of Mill Avenue and entered into an agreement with Benton to build 95,000 square feet of office space and 118 condominiums. The city sold the property to Benton "at a reduced cost in exchange for the construction of public" facilities.
The Hayden Square project was hailed as a great example of urban architecture. The office space was 100 percent leased when the project was completed in 1988, and the condominiums, perched on top of a parking garage, sold quickly. But four years later, Hayden Square fell into bankruptcy, and ownership was returned to the lender. The primary tenant, America West Airlines, had plunged into bankruptcy first, dragging leasing rates down sharply. The 1990 recession then pulled the rug out from under many of the high-end specialty retailers who had set up shop in Hayden Square. The commercial and retail sectors of Hayden Square weren't Benton's only problem. An angry swarm of condominium owners has raised more than $140,000 to take Benton to court, alleging construction shortcuts he authorized are slowly destroying the condos.