Venetian Blind

Will Scottsdale voters preserve "The West's Most Western Town," or opt for "a little bit of Venice"?

Espinosa says the city should just buy it and blow it up.

"Then make a nice park," she says.

Canals of Scottsdale point man Fred Unger.
Canals of Scottsdale point man Fred Unger.
Canals of Scottsdale point man Fred Unger.
Paolo Vescia
Canals of Scottsdale point man Fred Unger.

Article nine, section seven of the Arizona Constitution dictates neither the state nor any subdivision of the state "shall ever give or loan its credit in the aid of, or make any donation or grant, by subsidy or otherwise, to any individual or corporation. . . ." (Emphasis added.)

Last November 3, Excel Legacy Corporation CEO Gary Sabin penned a letter to Excel's shareholders, in which he outlined their investment strategy:

"Our philosophy is to pursue projects that have the potential to generate above-average profits because of their unique locations, concepts, and entry barriers," Sabin wrote.

"We prefer projects with substantial government subsidies, and incentives to lower development risk."

Excel's investment portfolio consists mostly of Wal-Marts and AMC movie theaters. The company also owns the Desert Fashion Plaza shopping center in Palm Springs, California, and recently purchased a ski-in retail and condominium development at the base of the mountain in Telluride, Colorado.

Recently, Excel has concentrated its investment efforts on Scottsdale. In addition to buying up most of the property in the Canals zone, Excel bought the mortgage on the Los Arcos mall.

Furthermore, as this article went to press, Excel was negotiating with another California-based company, Starwood, to take over the financing of the Scottsdale Waterfront -- a retail and condominium development now underway on the vacant, north bank of the Arizona Canal. The Waterfront is unrelated to the Canals of Scottsdale Project.

Campana says she hopes the deal goes through.

"The city would like to see a unified redevelopment vision," she says. "We'd like to see a project where people park once, then explore a retail, culture and recreation area on both sides of the canals."

Whether it complements the Waterfront project or not, The Canals of Scottsdale would easily be the crown jewel in Excel's collection. The firm has no experience with so huge an undertaking.

Neither has Unger -- although he has a stellar record as a developer, with his highly vaunted renovations of the Hermosa Inn and the Royal Palms hotel.

"The extra care taken in those projects, the Royal Palms and the Hermosa Inn, that's an indication of how this project will be handled," says Unger. "It's bigger, but it's going to be just as good. Or better."

Excel Corporation would put up three-quarters of the money for the Canals of Scottsdale, and Unger the rest -- signing his name for at least $160 million.

He reminds Scottsdale voters that even if they vote down the Canals project, he and Excel still own most of the property in the redevelopment zone.

"I assure you of this: Something new is going to go there. The city needs to decide if it wants to make it something special.

"Without the public's participation, we'll have to lop a limb off," he says. "We'd lose the museums, probably, and a lot of the public space. You won't find a developer who will put in 48 percent open space in a urban setting without this funding mechanism, that's for sure."

Unger says he thinks those who oppose the Canals either subscribe to "an anti-everything city hall philosophy" or suffer from nostalgia disease.

"A lot of them are people who yearn for the days when Scottsdale was a sleepy little town," he says. "They want to keep it the way it was. Well, you can't do that."

Scottsdale architect Sam West, an outspoken critic of the Canals plan, says he fears an invasion of name-brand retail outlets that would make shopping in Scottsdale a generic experience.

"You look at a charming town like Telluride, Colorado, and you see a main street shopping area dominated by unique local stores. Why would people come to Scottsdale to shop at the same mega-retail stores they have at home?"

According to election records, Great For Scottsdale, Great For You! has spent nearly $800,000 trying to convince Scottsdale voters that the Canals of Scottsdale is the right plan for the future of their city's downtown.

Great For Scottsdale, Great For You! has promoted the Canals project with a line of bottled "Canal Water," and a television spot which depicts children pleading with voters to give them a new museum.

In early August, Save Old Scottsdale -- which has spent less than a 10th as much as Canals proponents -- put up 200 red and white campaign signs. Great For Scottsdale, Great For You! responded with twice as many, nearly identical signs promoting "the only plan to revitalize the Galleria Area."

Spokespeople from both groups have rhetorically sparred in several well-attended public debates, including an August 12 match in which Espinosa blindsided Great For Scottsdale, Great For You! chairman Bill Heckman with a set of real-estate transaction records that she said proved Unger had recently purchased another building on Fifth Avenue, then immediately deeded it back to the city (in Espinosa's mind this was some indication of dark machinations behind the scenes).

Heckman sputtered about personally knowing Fred Unger and being sure there was a reasonable explanation, as Jason Rose and a cadre of young men wearing stonewashed jeans and "Canals of Scottsdale" golf shirts all reached for their mobile phones.

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