Tempe Rising: The Landlocked College Town Explodes with New Development -- as Planned

Jared Diamond, the Pulitzer Prize-winning author of the bestsellers Guns, Germs and Steel and Collapse, is surrounded by a few academics and fans at a wine-and-cheese reception on the north patio of Tempe Center for the Arts.

It's November 5, the weather's gorgeous, and the dark blue of twilight reflects off the shimmering surface of Tempe Town Lake, which dominates the view.

Diamond, a professor of geography at the University of California-Los Angeles, looks every bit the eccentric, brilliant former field researcher that he is, sporting his trademark beard with no mustache and wearing a robin-red suit jacket. He's here to talk about his new book, The World Until Yesterday, which describes his work with Papua New Guinea natives and ponders what modern people in developed areas can learn from primitive societies.

The talk and book-signing event, sponsored by Changing Hands Bookstore and Arizona State University's Global Institute of Sustainability, is so popular that it must be held at the large arts center -- prices started at $25 a head (book included). His books explain masterfully the accidents of geography that led to the dominance of Western societies and how the failure to create sustainable environments leads to sometimes-rapid declines. A reporter works his way to the professor for a handshake and question: What does he think about the long-term prospects of the Phoenix metro area?

"I'd better not say. I haven't researched the history of the place," he says, declining the question with a thin smile. "But . . ."

He turns away for a second, holding out an arm to sweep the view of manmade Town Lake. "What is that doing there?"

A few people chuckle uncomfortably as Diamond smiles at his quip. It's unclear whether he realizes he's made a social faux pas at the expense of his hosts. As he walks away to chat with others who want to meet him, the ASU faculty members who heard the exchange suggest, in hushed voices, that the esteemed professor didn't know what he was talking about.

Tempe Town Lake is a source of pride for ASU. The idea for it sprang in 1966 from the minds of ASU students, who were asked by then-dean of the architecture school, James Elmore, to think of ways to rehabilitate the dry scar of a riverbed that runs through most of Central Phoenix and its eastern suburbs.

Water in the riverbed, arguably, isn't an example of wasteful water policy -- it's the restoration of the natural order of things.

Water ran year-round through the Valley of the Sun in the Salt River until the 1940s, when canal improvements dried up the last trickles. The main flow had been stanched decades earlier with the construction of upstream dams that tamed the river, capturing water for use through years of drought and nearly eliminating the threat of damaging floods. In the process, dozens of miles of tree-lined riparian habitat running across the Phoenix area were destroyed.

When Town Lake was filled 15 years ago this summer, a two-mile section of the sad-looking, trash-ridden, dry riverbed became something like the pleasant place it used to be many decades earlier.

And it's been a money magnet.

About $1.5 billion in lakeside development either has been built or is on the way, city officials boast. The economic feedback to the city has been about $578 million, enabling it to build structures like the Center for the Arts, which opened in 2007. Professor, that's what Town Lake is doing there.

The college town of Tempe has gone through plenty of sea changes in recent decades, but its current growth spurt is without precedent. It's also an example of what many people consider "smart growth." That is, the 40-square-mile city on Phoenix's eastern border is growing vertically -- instead of sprawling -- and is adding job centers and public entertainment areas, not auto-centric bedroom communities.

Visually speaking, the centerpiece of the new growth is the $600 million State Farm office complex under construction on the south bank of the lake, just east of Sun Devil Stadium. Called Marina Heights, it's the largest-ever office-building project in Arizona. Announced just a year ago, the construction now is a beehive of activity, with one building shell already several stories high as workers toil amid miles of rebar laid in a vast concrete foundation.

Other significant projects:

• A $300 million renovation of Sun Devil Stadium that began in April. Plans are to modernize and revamp the aging venue by 2017.

• Hundreds of new apartment units going up near the lake, in downtown, and across the city.

• The Liberty Center near Rio Salado and Priest drives, which broke ground in December and is expected to add a million square feet of new office and light-industrial space.

• The Discovery Business Center near Elliot and Price roads, a 136-acre mixed-use commercial property under development by the father-son team at Wentworth Property.

• The venerable Twin Palms Hotel at Apache Boulevard and 13th Street that's under renovation.

• The final office tower in the Hayden Ferry Lakeside development, which already includes two multi-story office buildings and two condominium towers.

• USA Place, a dense $350 million development housing the relocated headquarters of USA Basketball as its most important anchor tenant. The organization is the governing body for non-professional basketball in the United States, the organization that selects U.S. basketball teams for the Olympic Games. The project would transform the 10.5-acre parcel at the corner of University Drive and Mill Avenue into a proper gateway to downtown, with a 350-room Omni Hotel, 500 luxury apartment units, an arena, retail space, maybe even a long-awaited grocery store, and another 240,000 square feet of office space. Groundbreaking has been delayed for several months but could begin this summer.

It all adds up to Tempe's becoming an exciting suburban city.

Years, if not decades, of planning are starting to pay off, but city leaders aren't responsible for everything. Being home to a major university has given Tempe the revenue, people, and attractions to do things that other municipalities can't. But one look at the basket case of Glendale, a Valley city facing budget shortfalls of $30 million a year because of bad decisions regarding sports arenas, proves that leadership counts. Tempe didn't have to be the job attractor it is, but instead of stagnating, its daily workforce is expected to rise an impressive 29 percent by 2020. A population of about 162,000 is estimated to grow to 183,000 by 2020, and 217,000 by 2040, by the Maricopa Association of Governments.

The picture's not all rosy.

Longtime residents worry about Tempe's character changing.

More high-density development will bring in more traffic congestion and crime, and homeowners and families are expected to be replaced by apartment dwellers and childless adults in certain areas.

The influx of new residents, workers, and tall buildings will change Tempe in fundamental ways. With about 40,000 students attending ASU's main campus, Tempe always will be a fun place to hang out. But it remains to be seen whether the city, founded in the pioneer era, can sustain so much growth and retain its high quality of life for residents.

Indeed, the potential exists for financial shortfalls, more vacant offices and storefronts, traffic gridlock, fewer places to park, and more noisy neighbors who care only about the next keg party.

Yet the hundreds of millions of dollars getting invested in the city obscures potential downsides.

For now, at least, Tempe is the place to be.

The success of modern Tempe dates to the early 1970s, when it lost what should have been its rightful sprawl land by getting penned in by municipal neighbors. Viewed as tragic by some at the time, it was actually a blessing in disguise, forcing Tempe leaders to focus inward. A new development pattern was kick-started -- and it continues to pay dividends.

The city's relatively long history (it was founded in 1871, more than a decade before Mesa and Scottsdale), central location, and prominence as home to ASU has given it a strong advantage over the years.

But regional competition always has been intense in growing Arizona. As Tempe and other Valley cities experienced growth spurts in the 1970s and '80s, they fought over political power, annexations, and development dollars.

If you look at a map, the short-shrifting becomes obvious: Tempe could have been a smaller mirror image of Scottsdale, sprawling southwest into what's now Ahwatukee, which became part of Phoenix.

At the least, the map shows, Tempe should have acquired land directly south of the city's current border near Ray Road, all the way to the Gila River Indian Community border of Pecos Road. Instead, Chandler juts west, cutting off Tempe at the knees.

The Chandler annexation was sealed one night in 1974 when Chandler officials and property owners in the Ray-to-Pecos area came together in what may have been the proverbial smoke-filled room and decided to swipe the land from Tempe.

That year, former Arizona Congressman Harry Mitchell was starting his second term as Tempe mayor.

"We had what we called a 'gentlemen's agreement' at the time," Mitchell recalls.

The 1968 pact, reaffirmed in 1971, required the joint planning of some land, and each city's officials were supposed to confer with one another when an annexing issue that could affect them came up.

But "late at night," Mitchell says, Chandler leaders -- with the approval of more than 50 percent of property owners -- drew up paperwork that legally annexed the strip all the way to Interstate 10.

Tempe begged to keep land it had planned for Corona Del Sol High School, built in 1977, which is the reason for the jagged line of Tempe's southern border.

"[Chandler officials] gobbled up more land than they could digest at the time," Mitchell says. "They had trouble trying to service it."

Yet Mitchell admits property owners had their reasons for wanting to be in Chandler as opposed to Tempe. Because of its rapid growth, Tempe had enacted restrictions for land use that other Valley cities didn't have, and this made development more expensive.

"Some [large landowners] were so pissed at the time, as we went farther south, that they moved to Chandler," Mitchell says. So when given the choice to have their land fall under the control of Tempe or Chandler, he says, the majority chose Chandler.

Soon after, Tempe lost dibs to the Ahwatukee Foothills area in another less-than-gentlemanly deal.

Randall Presley and his company, Presley Development, had wanted to build homes on the rugged terrain near the western end of South Mountain. But installing water and sewer services would require a complex system of pumps to move water over land. Presley asked Tempe officials to help. Tempe agreed -- but only on the condition that he let Tempe annex his land, Mitchell says.

Presley declined. He offered Chandler the same deal and was turned down there, too. But Presley was buddies with Phoenix Mayor John Driggs. On a handshake, with no input from other city officials or the public, Driggs told Presley in 1971 that Phoenix would install water and sewer lines and other utility services for Ahwatukee.

After learning that Presley had spoken to Tempe and Chandler officials about utilities for his land a few years later, Phoenix moved quickly to provide services for Presley, without any annexation agreement. In an interview, Driggs tells New Times that the deal was based on mutual trust. And it paid off for Phoenix, which later annexed all of Ahwatukee. The loss of these square miles spurred Tempe leaders toward grand ideas like Town Lake and the so-called "Manhattanization" of Tempe.

In 1987, Maricopa County voters overwhelmingly rejected the Rio Salado Plan, which would have let some water flow through the Salt River all the way through the Valley. After the vote, Mitchell began pushing for Tempe to do its own, smaller version.

As New Times reported in 1999, the city downplayed the lake's cost. Archived Tempe fact sheets on the Internet show it cost about $45 million. The new fact sheets are more transparent, breaking down expenses and revenues and detailing how Tempe alone spent about $268 million on the project, with tens of millions more coming from state and federal coffers.

The city expects to break even on its initial $45 million investment by 2023. Operations and maintenance costs on the lake, about $3 million a year, are increasingly paid by private development. Tempe always has wanted private developers to pay for slightly more than half the figure -- they'll be paying more than 24 percent of it (up from up from 18 percent now) when Marina Heights is finished in 2016 or 2017. Not quite there, but getting closer.

As of 2014, the lake -- with numerous high-rise commercial and residential projects on its concrete shores and others projected to come in a few years -- has been worth its high price tag.

It's May 20, the day of a special election in Tempe that asks residents to weigh in on the city's direction.

Up for voter approval is the city's General Plan 2040, outlined in a 248-page document that hardly any residents read. An update to previous plans, the new version is seen as a blueprint for even higher-density development, especially around light-rail hubs, and it pushes public transit over private vehicles.

It's a warm day, and the 2040 plan is the only question on the ballot. Few people head to the polls; most already had voted early by mail.

Dan Mayer, a visual artist, rides his bicycle away from the Knights of Pythias ballot site on Apache Boulevard after casting a ballot. He voted "no," he says, because he's concerned about plans for increased development next to neighborhoods.

Next door to the ballot site is Gracie's Village, a new four-story apartment building adjacent to a light-rail station and beside a neighborhood of single-family homes. Mayer was part of a large group of Tempe residents who opposed the 50-unit apartment building in 2012. Foes of the affordable-housing project succeeded in shrinking it from six stories to its current four.

Mayer, a Tempe resident since 1979, lives in the adjacent neighborhood just north of Gracie's Village. He admits that since the apartment building opened last year, he's neither seen nor heard of problems regarding it. But he's still concerned that the city isn't doing enough to buffer planned multi-story buildings from surrounding neighborhoods. A proposed project that alarmed him last year was a 20-story sorority building at Terrace Road and Apache Boulevard. This deal, by developer Wally Trace, apparently has fallen through. But, Mayer says, "that [structure] would have impacted neighborhoods immensely. It would have overlooked people's backyards."

The city's still considering projects of seven stories or more near existing low-rise residential areas. It's too much for residents like Mayer.

Farther south, at the polling site at Gethsemane EV Lutheran Church near Guadalupe and Rural roads, "VOTE NO" is scrawled in pen on a sign stuck into the landscaping rocks at the parking lot's entrance.

Roberta Stultz, a 42-year Tempe resident, is in the parking lot between running errands. She's already voted "no" by mail. A question about the election draws out the curmudgeon in her. When her adult children asked what the election was about, she says, she told them: "It's about money. What else is it ever about?"

Stultz worries about decreases in services, like "cleaning up [her] alley," and laments that only two of her original neighbors have remained over the years.

On the other hand, the lakeside development is "not bad . . . I'm all for the entrepreneurial spirit," she says.

As it turned out, the plan wound up passing comfortably, 56 percent to 44 percent. Turnout was especially low, at 15.4 percent, with 13,260 ballots cast. If the vote serves as a poll of city residents, Tempeans are cautious about overdoing it but believe the city generally is headed in the right direction.

A day after the vote, city leaders told New Times they're aware of potential problems with new development patterns. A giveaway of their coming challenges is the solutions the city has planned for them.

In discussing problems and solutions, Tempe officials noted:

• More owner-occupied housing is needed. When the Great Recession hit, a high-profile effect on Tempe was the unfinished 22- and 30-story residential towers at Sixth Street and Maple Avenue. After a $120 million investment, they sat empty for nearly three years ("Concrete Bungle," October 15, 2009). An Ohio apartment company, backed financially by the California State Teachers' Retirement System, bought the towers for $30 million, completed them, and opened them as apartment buildings with many student renters. Good, to an extent, but the city has plenty of student housing. Owner-occupied condos, the original plan, would have attracted a stable and wealthy base of residents.

• Along the same lines, Tempe entertainment areas should appeal to a diverse customer base. While college students are Tempe's captive customers, they spend too little in the city, says Tempe City Manager Andrew Ching. Out-of-state students buy the bulk of their clothes, for instance, in their hometowns. In general, he says, students party too much and annoy neighbors. But the upside is that they keep cash registers humming at bars and nightclubs.

• The city wants to "recruit" businesses seen as more desirable. The Downtown Tempe Community is working on this, too. Professionals and others making decent livings want more upscale, hip eateries and bars. City leaders look with envy at the trendy spots evolving in downtown Phoenix at, say, Seventh Avenue and McDowell Road or along Roosevelt Row.

• Transportation and parking will be an increasing problem in Tempe. The city wants more "bicycle boulevards" (Ching notes bike-friendly College Avenue as an example) and signage that was added to make motorists more aware of bikers. Success can be a headache, in other words. But it beats the alternative.

The old Tempe Center strip mall and parking lot -- on a 10.5-acre parcel ASU owns on the prime southeast corner of Mill and University avenues, less than a mile from the lake -- never has looked worse.

As of mid-May, a few people were attending a class inside what used to be a grocery store, Stabler's Market. ASU converted the store to offices and classrooms in a quickie alteration several years ago. Only Sacks Gourmet Sandwich Shop remains open. It's the one surviving business in Tempe Center. Most of the former businesses there, such as Tower Records and Ray's Barber Shop, departed along with Stabler's during preparation for a much-touted new development that never happened.

ASU long has wanted a hotel, conference center, and retail shops on the site. Over the years, several developments were proposed. None has come to fruition.

Now, a new proposal is creating a buzz: an ambitious $300 million project that's supposed to break ground sometime this summer.

It's called USA Place, in honor of its planned primary tenant, USA Basketball, which will move from Colorado to the Tempe site. The nonprofit company is chaired by Arizona sports mogul Jerry Colangelo, and USA Basketball features giants of the pro game in international competitions, including the Summer Olympics. Among recent team members are LeBron James, Kevin Durant, ASU alum James Harden, Kobe Bryant, and Chris Paul.

Craig Miller, USA Basketball spokesman, calls the pending move a "phenomenal opportunity" for the organization and for the Valley. Although just 15 full-time employees are to move to Tempe, the group would bring in top-ranked players and coaches for "training and clinics," he says. It runs a youth program, and its senior national teams tour to raise funds. It's also funded by the U.S. Olympic Committee. Miller notes that, with the new facility, certain exhibition games will be played in Tempe.

The project is slated to include an exhibition arena seating 4,000. But the complex would be dominated not by basketball-related buildings but by a large hotel, apartments, offices, and retail space (which may include that grocery store). Some or all of the project is supposed to be finished by 2016.

An online rendering of what may be the finished project, seen at, looks somewhat like a block of Coruscant, the over-developed planet where the Jedi High Council meets in the Star Wars prequels.

When news broke of the potential development last July, media reports focused on USA Basketball, not the less-exciting (from the public's point of view) conference center, hotel, and office space. The reports claimed groundbreaking would take place by the end of 2013. As of mid-June this year, it hasn't happened.

Denise Resnik, spokeswoman for the project, acknowledges that some setbacks have occurred in obtaining land-use agreements from various business partners. But the partners in the group, including ASU, sports-venue architect Michael Hallmark, Omni Hotels and Resorts, and Key Bank (serving as the lead underwriter for the project) are said to be moving forward.

USA Place has a lease for the development's land. ASU obtained approval for the project from the Arizona Board of Regents in January 2014. Tempe has agreed to delay collecting sales tax from revenue generated at the site, sweetening the deal for developers.

The financing isn't locked down yet, though, meaning it's possible the deal could fall through.

"The reality of financing a large project on state-owned land is that the private sector is not able to finalize project financing until all public-sector issues and approvals have been settled," Resnik says. She adds, optimistically, that "we are where we should be, really ahead of our own expectations, as far as pulling the capital together for a multi-use project on state-owned land."

The hoped-for 2013 groundbreaking was scheduled so that USA Basketball would be in Tempe before the 2016 Summer Olympics in Rio de Janeiro. Now, Resnik says, with the groundbreaking scheduled for this summer, the complex would open in mid- to late 2016. ASU President Michael Crow declined comment about the project.

Ivan Morrow, owners of Sacks' four Valley locations, says he was told by ASU officials this month that his Tempe Center restaurant might be able to stay open until December. Whether USA Place becomes a reality, it's a good bet that Tempe Center's barren parking lot will be gleaming with new buildings within a few years. Under Crow, ASU's total square footage in the Valley increased by 26 percent from 2007 to 2012. A mile away, ASU already leads the way in Tempe's new growth with Marina Heights, the official name for the 2-million-square-foot State Farm complex going up at Rio Salado Drive and Rural Road.

In the complicated State Farm deal, Sunbelt Holdings sold the 10.6-acre parcel northeast of Sun Devil Stadium to ASU, which granted a 99-year prepaid lease to a company owned by Sunbelt, Ryan Companies, and State Farm. The insurance company is financing the deal and leasing 1.9 million square feet of the space. The joint venture between the three companies also will sublease retail space.

John Creer, ASU's assistant vice president for real estate development, tells New Times that Marina Heights "will certainly spur and excite the area for more development." ASU is working diligently at the "more" part: Over the next six to 12 months, Creer says, the university will create "extensive master planning" for a 330-acre parcel it owns off Rio Salado Drive, just east of Rural Road, the current site of Karsten Golf Course. Much of this will include market research to determine what people need and want for that land. Nothing's going to happen soon: Creer says ASU is taking it slow, over a 10- to 20-year timeframe.

"Any time there's urban redevelopment, there are always challenges," he says. "Responsible developers take that into consideration."

Tempe Mayor Mark Mitchell, wearing a hardhat and orange vest over his business attire, stands on a platform overlooking construction workers 100 feet below, showing a time-lapse video of the site on a smart phone to a few reporters and fellow council members. "Wait 'til you see the haboob!" he yells over the noise with a smile.

The dust storm he references is a blip in the fast-forward scenes of the rising Marina Heights -- the extensive digging, the laying of concrete, the skyward eruption of one of the main towers. Mitchell, son of Harry Mitchell, is having a spate of good luck as a politician. He's mayor at a time when the hard work of those who came before him is paying off. He takes on the expected jubilant attitude during the tour of the State Farm site.

"This is a boom!" he says of new crop of construction cranes across his city. "But it's just the beginning. This will benefit generations to come."

Landing the State Farm regional headquarters will provide an immediate reward by importing thousands of new workers. State Farm's other Valley locations house about 4,000 people who eventually will go to work in Tempe, says Marina Heights spokesman Victor Flugo during the tour. State Farm hopes to employ as many as 8,000 workers at the site in the future. Most of them will "serve Phoenix-area claims," he says.

On the other hand, one price of that success will be the way incoming employees will jam-pack Scottsdale Road near the Loop 202 during rush hour.

Meanwhile, near the lake at South Farmer Avenue, a beloved music venue is preparing to close its doors after a 15-year run. The upcoming closure of Sail Inn, popular with local musicians and music fans, is clear evidence of how the city's character is changing because of its growth. The new development slated for Sail Inn's land includes restaurants, a coffee shop, a fitness studio, and retail space.

"A lot of people are sad it's closing," owner Gina Lombardi says.

Not that Lombardi is sad.

In the 1990s, she received a tip from a friend: Buy land near the riverbed because Tempe's Town Lake is coming, and someday it will be worth a fortune.

It took longer than she (or city leaders) expected, but it finally happened. Lombardi has profited from her sale. And she's re-establishing the venue's signature events in an existing club on Tempe's border near Elliot Road and I-10.

"We knew that the Town Lake was going to attract these high-rises and the great environments," she says. "This body of water changed everything. Now everyone can enjoy it."

The future Tempe won't look like what we're used to today. But it'll have character along with the high-rises. After all, places like Casey Moore's -- a popular pub tucked into a residential neighborhood near Ninth and Ash streets -- still thrive.

Tempe always will have its vibrant base of students and ASU workers, and Town Lake always will inhabit its concrete basin. Plus, the future will bring more amenities and fresh development.

Penned in on all sides by its sprawling neighbors, Tempe has opted for what it calls "smart growth" -- in which people live, shop, and recreate near their workplaces, reducing reliance on automobiles.

It appears to have chosen well.

Got a tip? Send it to: Ray Stern.

Follow Valley Fever on Twitter at @ValleyFeverPHX. Follow Ray Stern on Twitter at @RayStern.

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Ray Stern has worked as a newspaper reporter in Arizona for more than two decades. He's won numerous awards for his reporting, including the Arizona Press Club's Don Bolles Award for Investigative Journalism.