Arizona

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

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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 www.usaplace.us, 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."

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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.