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That Goes On Behind Closed Doors?

There were great sighs of relief at City Hall Monday. Now we can get this damn thing off our backs was the prevailing sentiment in the offices of Mayor Terry Goddard and Councilwoman Linda Sue Nadolski. For months, the two had been fighting off charges that someone--and each accused the other--had crawled into bed with developer Bob Gosnell in a secret meeting last year to rezone Thomas Mall.

Neighborhood groups were up in arms; so were other developers, because it appeared City Hall had secretly given Bob Gosnell the store and then abdicated its duties by putting the final decision in the hands of a hired consultant doing a market study.

The deal was so bizarre, city planners admitted they'd never seen anything like it and hoped they never would again.

So there were great sighs of relief at City Hall as the consultant's final report said the words that could save Goddard and Nadolski from further anguish: Giving Gosnell any additional space would create a traffic nightmare around the mall at 44th Street and Thomas.

Nadolski immediately said she knew all along there was too much office space zoned in that area and the study was a "common sense" conclusion that put an end to the issue.

But anyone who knows Bob Gosnell knows it's not over yet. This is not a developer who's used to losing when he steps inside City Hall. In many circles, he's best remembered as the guy who convinced the Phoenix City Council three years ago to trade him Phoenix Mountains Preserve land so he could build a private golf course at his Pointe at South Mountain Resort. That sleight of hand--coming as it did right after voters thought they'd protected the preserve against development--so riled Phoenix that it went back to the ballot box to prevent the council from touching an inch of the preserve without a vote of the people.

The 1986 preserve vote was a clear signal that citizens don't trust City Hall when Gosnell is involved. There are plenty who say the strange case of Thomas Mall is further proof. Many think City Hall still has a lot of explaining to do about how it got itself into this weird position.

THE CROWD GATHERED at Arcadia High School on May 25 was definitely hostile. For weeks, these folks had been accumulating a fascinating collection of correspondence between Gosnell and city officials about the redevelopment of Thomas Mall, an aging hulk of a shopping center on 72 acres of prime urban land. Nobody liked what they were reading. Not the neighbors who live around the mall and had long fought Gosnell's ambitious plans--especially for a giant office complex that would bring constant traffic headaches. Not the people who live farther south around the Gateway project at 44th Street and Van Buren, who don't want to see Gosnell gobbling up all the office space--they hope to be bought out by developers and escape the shadows of Sky Harbor Airport and the Papago Freeway. Not volunteer members of the 44th Street Specific Plan Committee, who thought they were charged with planning the future of that major corridor of Phoenix and now wondered if they'd been snuckered.

Some of the unhappy readers had happy memories of the hard-won compromise the Phoenix City Council passed on May 18, 1988: Gosnell would build only 650,000 square feet of offices at Thomas Mall, half of what he'd originally sought. Now they were reading, among the prodigious output of Gosnell's letter-writing staff, that he was confident of getting far more. Some letters mentioned as much as 900,000 square feet more, depending on an economic study that Gosnell was helping to finance and that would determine the corridor's future needs for office space.

In the letters, Gosnell repeatedly claimed his project--he plans to rename Thomas Mall "Camelhead"--had first dibs on any additional space the study found justified, if not all of it. And what was worse, Gosnell was claiming the council had given him that increase automatically upon completion of the study. No more council hearings, no more citizen hearings, forget what the specific plan committee was doing--whatever the magic amount of unzoned "excess" need would be Gosnell's for the taking. As he told the city countless times, his ability to attract a major retail store like Macy's or Nordstroms depended on having significant office space nearby (in other words, lots of built-in shoppers).

But what most disgusted the readers was Gosnell's constant reference that his claims were based on an "agreement" privately worked out two weeks before the public zoning hearing on May 4. And who made such an incredible agreement? As Gosnell's letters boasted, Councilwoman Linda Sue Nadolski--the district representative for these neighbors--and Mayor Terry Goddard.

That private agreement was the basis for the No. 1 zoning stipulation the council had approved. (A zoning decision includes various stipulations--the particulars of the case--which spell out everything from square footage to landscaping requirements.) But when citizens looked up the zoning stipulation that was changing their lives, for the life of them, they couldn't see it. Yes, it said there'd be an economic study. Yes, it said Gosnell could have more office space if the study could justify it. But it also provided for the formation of the 44th Street Specific Plan Committee--and most readers concluded that meant the plan would help decide if Gosnell got more space and how much.

The thick file also contained a few response letters from city planners, letters requested by Gosnell that "interpreted" the language of the zoning stipulation. Most of Gosnell's claims matched the staff's interpretations.

So the crowd was skeptical, to say the least, when Nadolski insisted Gosnell had it all wrong. That he'd misstated their deal and that somebody--she'd later say it was Mayor Goddard--had pressured the staff to give Gosnell what he wanted.

Goddard denies the accusation. "I absolutely didn't. The language of the zoning stipulation isn't a model of clarity. I did ask the staff to straighten things out, to be as clear as possible."

Nadolski insisted she would never have cut a deal to give Bob Gosnell the store. Yes, he might eventually get more office space, "but only after the specific plan was completed," she insisted, not before. No, he never was to get anything automatically without public review, based on an economic study by a hired consultant. "It was never my intent to give any of the legislative powers of the council to a consultant," she maintained, saying she was asking the city attorney for a ruling on whether the council could even legally do that. That didn't stop the attack on this first-term councilmember who'd been elected as a "neighborhood advocate" and who thought she'd pulled off a major coup a year ago when she got Gosnell to bend. Not only had she forced him to cut his office project in half, she'd also used the case to create the 44th Street Specific Plan Committee and gotten Gosnell to chip in $50,000 for the economic study. Frankly, she thought she'd done a good job for the neighborhood. And only recently, she told the crowd, had she found out "through the gravevine" that everything had gone to hell.

"There are all these letters from Gosnell's people about the deal," said a stern Velma Dunn, who sells real estate around the Gateway Center. "But there's not one letter of denial. If you didn't agree with Gosnell, why didn't you write back and say, `Hey, Gosnell, you're full of bull'?"

Nadolski leaned forward. "As far as telling Gosnell he's full of bull, I spent two and a half years doing that. The letters I got were nothing different than I'd heard from him for years. I threw the letters away. I don't owe Gosnell a letter."

She now wishes she had. At least one more. And Nadolski is getting little help from Mayor Terry Goddard.

"I respect Linda's recollection [of the private May 4 meeting], but mine is different," he says. "The [zoning] stipulation was drafted by Linda as a compromise at the last minute. [Gosnell] would get 650,000 square feet immediately and then after the study, based on traffic and demand, the extra square footage would go to him. There was a lot of discussion on the record about what this proposal would be." But in a later interview, the mayor notes that things aren't as clear as they should be. There's an "interpretation problem" with what the council passed and how Gosnell now sees it, he says. (Goddard isn't surprised by the mountains of correspondence from Gosnell. "There's always lots of letters when Gosnell is concerned," he explains. "It's a negotiating tactic he uses. There's always a lot of sword rattling.")

Former Planning Commission chairman Bob Kerrick remembers he got a call from Nadolski on May 4, shortly after the "agreement" meeting broke up. "Linda was trying to be a peacemaker. Her attempt was to do something positive," he says. "She wanted the commission to know they'd made peace. That they'd worked out a deal everyone could live with." Kerrick says he doesn't remember the particulars, but understood Gosnell's office space would increase "if certain things occurred."

"Once [the case] got to us, since Linda had sprinkled holy water on the deal--it was her district and if anyone was to be a naysayer, it would be her--it was a fait accompli," Kerrick explains.

So did Nadolski blow it, cutting a deal she didn't understand with her old nemesis?

That's not how it's seen by citizens who joined forces with Nadolski for years to fight Gosnell. And a careful reading of letters in that thick file at City Hall shows Gosnell is masterful at manipulating words to say what he wants them to mean.

Attorney Gil Shaw, who closely followed the case for the neighborhood, says he can't believe a windfall for Gosnell was part of the discussion before the council or the deal Nadolski cut. "That's certainly not what was on the table when citizen groups were discussing it--it's certainly not what we thought we had walked away from [after the zoning case] a year ago."

Kathy Bishop agrees, saying "no way" did her Greater East Phoenix Neighborhood Association think Gosnell walked away with so much. "To me, this is a betrayal of the compromise," she says, adding that she also doesn't believe Nadolski was party to a sellout. "It really pains me to see neighborhood people feeling so poorly about [Nadolski] when she really is a neighborhood activist. I talked to her a month ago when I found out [about the Gosnell letters] and she was furious, too. I always thought the specific plan would be done before any more space was decided."

So did the chair of the 44th Street committee, Bert Stanfield-Pinel. "I was unaware of this [Gosnell] roadblock, or detour, when I embarked on this task," he recently told his thirteen-member committee. (Meanwhile, one of the most vocal members of the committee has shown his disgust by saying it's just a "mushroom committee--keep them in the dark and feed them bullshit.")

* Is the city's special citizens' group that was supposed to plan the future of the 44th Street Corridor, where Thomas Mall is a major factor, really just a "mushroom committee--keep them in the dark and feed them bullshit"?

In fact, even the planning staff admits the situation today is a recent "interpretation" of what the council meant last May. Deputy planning director Ray Quay told the gathering at Arcadia High School that it was last October--five months after the council's zoning decision--that the staff agreed with Gosnell's interpretation that the economic study was to be done early, long before the 44th Street committee had completed its specific plan. And it was only six weeks ago, he noted, that the staff had "interpreted" the zoning stipulation to say Gosnell would get first dibs on any excess office space justified by the study. Those interpretations, Quay said, were the "result of Gosnell's assertion" that this was what the Nadolski-Goddard deal meant.

But if citizens and planners were in the dark, so were other developers who also chipped in to pay for the economic study. One of them, John Graham from the Gateway Center, says he still can't believe what Gosnell's trying to pull. "When we agreed to help pay for the study, I had no concept that anyone believed there should be a cap on capacity or a direction of where it should go," he says. "I would be shocked if anyone believed those things." Like most others, he's only recently learned how Gosnell's No. 1 zoning stipulation was being interpreted by City Hall."But I could have read that stipulation six months ago and I would never have interpreted it the way it's being interpreted," he says.

"Everyone agrees the [automatic nature of the deal] is an abdication of the council's authority--it's truly amazing," Graham adds.

Planners also see it as amazing. "If I'm asked, I'll recommend we not do this again," says Quay. "It abdicates a legislative power to an independent group [the study consultants] who are not part of the legislative system. I don't think this will ever happen again because we've all learned a lesson from it."

But Mayor Goddard expressed surprise that anyone saw that technique as an abdication of power. "The planning staff wrote the stipulation at Linda's direction," he says. "If they had a problem with it, it would have been nice if they'd mentioned it before." He said the reliance on the study results, without further council action, came about in that May 4 meeting. "Gosnell felt a series of hearings [after the study] would be painful," the mayor says, so he agreed to cut his office request based on the understanding he would get whatever space the study justified. "There was a lot of acclaim at the time of getting it out of the political arena," Goddard says. "I think the market study is a good idea. It has the effect of bringing sanity back into the discussion."

Nadolski insisted the mayor had again misinterpreted things. "I agreed we'd put people on the 44th Street committee who hadn't been fighting with Gosnell for three years--that's what the discussion of keeping it out of the political arena meant; not that the council would abdicate its responsibilities."

Coming to Goddard's aid is former Republican lawmaker Burton Barr, who now is one of the mayor's major advisers. Barr said he sat in on several meetings with Gosnell about Thomas Mall. "The Gosnell case is the longest- running play in the history of the country," Barr says with his customary hyperbole. "I realize when you have a history like Gosnell's, it creates problems. But all the mayor wants is that whatever this deal was, that it be fulfilled. Gosnell has gone through hoops. It's unfair to say he has City Hall in his pocket. He's just trying to get the project off the ground. There's a great deal of money involved. In all fairness, Gosnell is doing exactly what he's supposed to be doing."

The history that keeps getting Gosnell in trouble is the history of a hometown boy who made good. As Kerrick of the planning commission puts it, "At least initially, most people thought Gosnell was owed something special because he'd taken three lousy sections of the city and made something good out of them," he says, referring to the three Pointe Resorts Gosnell developed. (One is on North Seventh Street, another on North 16th Street and the newest is in South Phoenix.) "But Bob's gotten arrogant and gone beyond his due. He thinks, `Because I've done these marvelous things, I deserve more.'"

BOB GOSNELL BOUGHT Thomas Mall in 1983 as the city was still developing its general plan for future growth. More commonly called the Village Plan, it shows where intense development is to settle--the "cores" of each village--as well as where neighborhoods should reign. But there was a particular problem with the corner of 44th and Thomas, a 72-acre site that was potentially a "secondary core" for the East Camelback Village. So many concerns existed about what redevelopment of Thomas Mall would mean to its surrounding neighborhoods that the general plan shows it as a "hot spot" deserving further study. The old "planned shopping center" zoning for the mall came from the days when that category meant just that: a place to shop. But the zoning category didn't prevent other uses, like offices--an oversight that future zoning modifications would correct. Gosnell has never been one to overlook such things, plus times had changed. Major retailers now like to settle in projects with significant office space nearby. And when Gosnell talks major retailers, he's talking about the likes of Macy's or Nordstroms--upscale stores that haven't entered the Phoenix market but sound very delicious to a city that relies heavily on sales taxes.

So Gosnell told the city he wanted to redevelop the old place with offices and retail, reminding them that he could have--without any permission from the city--some 3 million square feet of offices under his existing zoning. Of course, that was ludicrous. Given the four-story limitation of the code, it would have meant covering the entire site with four-story buildings of office cubicles. The market doesn't like such boredom, and Gosnell knows it. So he went to City Hall with a rezoning request. As he unveiled his plan, he kept bantering about the 3-million-square-foot number as though his new plan for only 1.8 million square feet of offices were a modest request. It wasn't. Along with the retail and resort space he wanted, it would have made Thomas Mall--the secondary core--larger than the 24th Street Camelback Esplanade, the central core for that village.

Meanwhile, the "hot spot committee," counting yet-to-be-elected Nadolski as a member, recommended Gosnell be limited to 200,000 square feet of offices, along with 1.2 million square feet of retail and 300,000 square feet for resort uses. Gosnell responded by cutting his office request to 1.3 million square feet. His attorney, John Theobald, announced Gosnell would be willing to put off building 400,000 square feet of those offices until a study on the 44th Street corridor was completed.

By the time the case was ready for public hearing, Nadolski was an elected official and was finding it difficult to convince the other councilmembers that Gosnell should be cut back. "Terry was the only one fighting me. The rest of the council was waiting to see what we'd come up with," Nadolski says.

Nadolski decided to go it alone, calling a news conference to tell Gosnell she'd fight his project tooth and nail unless he cut his request in half. That was May 3, 1988. The next night the Phoenix Planning Commission would hear Gosnell's zoning application. "Terry called and asked if I'd meet with Gosnell," she recalls. "I asked the mayor if I had his support for my position. He said we'd talk about it after the meeting." So on May 4, the now infamous secret meeting took place.

Nadolski left the meeting and called planning commission chairman Bob Kerrick to tell him the fight was over. It wasn't until recently, she says, she discovered the case was very much alive. "Three weeks ago I heard Gosnell was in to see Terry and Terry was telling the staff to hurry [the consultants to get the economic study done] because Gosnell might get Macy's. I confronted Terry: `You're mucking in my district. This is my political career. Stay out of it.' He told me, `I think you're exaggerating.'"

But if Goddard didn't see the political implications, Nadolski quickly did. "I went down to the staff and said, `What the hell's going on.'" It was then she started reading some of the Gosnell correspondence that was filling file folders in the planning department.

"I had convinced developers up and down the 44th Street Corridor to hold off on projects until the specific plan was completed," she says. It looked, she admits, as if she had held them off to give Gosnell an unfair advantage--a proposition she found preposterous considering their longstanding feud. (In her May 3 news conference announcing her cutback demands, she joked about the widely reported acrimony between them: "One could easily get the impression that Mr. Gosnell and I will be meeting at noon, guns blazing, and one of us will walk away the victor.")

The correspondence clearly shows Gosnell's people have a way with words. "Gosnell has sent lots of letters and made many statements that we have not responded to at all," says planner Quay. "That in no way means we agree with these assertions."

But an examination of one example is illustrative of numerous word-jockeying attempts.

In April, as Gosnell was preparing to pitch his pending project to Macy's, he wanted a statement on city letterhead that would say he was going to get considerably more office space than the zoning allowed. Quay explains the city, always interested in new sales taxes, was trying to help him out. "But we were very careful in that letter," Quay says. "We never said he would get more office space and we never said he wouldn't." Quay should go back and read the final version.

Quay wrote the first draft of the letter, FAXing a copy to Gosnell. Back came a response from Gosnell, with recommended changes. The city revised its letter again, ignoring many of Gosnell's suggested changes but adopting others. Most critically, Quay's first draft said that after the economic study is completed and "approval of same by the city council," additional office space "can be added" to Gosnell's approved plan.

But the final letter, signed by planning director Ron Short on April 11, instead copies Gosnell's suggested wording that additional space "will be added" to Thomas Mall. It's not just semantics. Gosnell has already put the city on notice that he's not pleased with how things have gone and his attorney has drafted a letter that very much sounds like the precursor to a lawsuit. If the city pulls back now, as it's being pressured to do by neighborhood groups and Nadolski, the "paper trail" in those city files would undoubtedly be used in court to support Gosnell's contention that the city was reneging.

As evidence, Gosnell's attorney, John Theobald, had a letter hand-delivered to Mayor Goddard on April 27 that declares Short's April 11 letter "represents the legal position of the city." But then Theobald misstates Short's letter, claiming several points Short never made.

Jennifer Whittle, director of public relations for Gosnell, says she is the only one from the company who will comment on the case. "There was an accord reached [in the private meeting] which was defined by a zoning stipulation passed in a public meeting," she says. "Since then, the city has sent a letter confirming [the deal]."

The final study, by EDAW, Inc., got to City Hall on Monday and surprised a lot of people. Although most had expected the study to justify hundreds of thousands of additional square footage of offices, it concluded that any more space at Thomas Mall would create a traffic nightmare. But while that would seem to be the end of the argument, Whittle says Gosnell feels the door is still open for more office space if he can get traffic improvements in that area.

Whittle also recasts the neighborhood opposition, ignoring those immediately around Thomas Mall and concentrating instead on the vocal protests coming from the Gateway Center area. "There's a difference between neighborhoods and investors," she says. "We feel these are very nice people, but they're trying to convert their neighborhood to commercial and their concern is [Thomas Mall] will take all the absorption [of office space]."

She has hit one nail on its head, Mayor Goddard says. "I think the real controversy here is that this is a pissing match between developers," he says, with Gosnell being one and the neighborhood sellout people being the other. "A lot of the so-called `Gosnell conspiracy' has been thrown up to draw fire away from what they're doing. There's no conspiracy. There's an interpretation problem, I agree. But that's it."

The Gateway neighborhoods have been the target of the city's largest neighborhood buyout effort for the last several years. Two years ago, when New Times profiled that fight, it found some neighbors steadfastly resisting wholesale buyouts and others vehemently supporting them. Now, it seems, most neighbors have decided they can no longer live peacefully in an area where Sky Harbor Airport is expanding a half mile south of them and the Papago Freeway is being built on their northern boundary. So they've given up the fight and decided their best option is to be bought out en masse by a developer who could pay a decent dollar and then tear down their homes to use the land for commerce. In making that decision, they've joined forces with former enemies.

Case in point: Those neighbors now want zoning approval for the Oasis Project, a mixed-use plan that would be built next to Gateway Center. Its zoning case will come before the council later this month. Ironically, the land for the Oasis project was assembled over the last seven years by John Rooze, who bought up individual homes within the neighborhood and, as neighbors loudly complained two years ago, let them deteriorate into a "blighted slum." In fact, the city helped sell voters on the neighborhood maintenance policy passed in 1987 by using guys like Rooze as an example: The new law would help prevent the deliberate deterioration of neighborhoods by land speculators. That law is one reason Phoenix recently was named an All-America City. Now those same neighborhoods are supporting Rooze.

THE GOSNELL CASE IS the kind of mistake that haunts for a long time. Regardless of its outcome, the way it was handled will be remembered by those intent on criticizing the mayor, or Nadolski, or the council as a whole, or the city's seven-year-old district system. It just raises too many questions a council up for re-election would rather not be asked.

Nadolski now suspects Gosnell was purposely creating a "paper trail" to politically embarrass her. She worries that her future relationship with Mayor Goddard will be strained. ("I know he'll be furious at me for saying these things about him, but I don't want him to do this to me again," she says.)

The last thing Goddard needs is to lose Nadolski as a regular ally (especially since he's shown little skill in lobbying his own council for his pet projects). Nor does he need any more tarnish on his image as the crusader who cleaned the developers out of City Hall.

And why didn't anyone else on the council warn that Gosnell was getting some very strange concessions? Does the district system mean councilmembers don't pay attention when it's not their own district?

One cynic asked, "If Gosnell can get `automatic' approval for space based on a market study, why should the council bother with zoning at all? Why not just order studies for all of Phoenix and automatically rezone the whole place?"

The question wouldn't sound so cynical if this weren't supposed to be the days of "opening the doors of City Hall" to everyone; if Goddard and this council didn't give so many speeches about neighborhood rights; or if this weren't an "All-America City" because of citizen participation in local government.

The crowd was skeptical, to say the least, when Nadolski insisted Gosnell had it all wrong.

"If you didn't agree with Gosnell, why didn't you write back and say, `Hey, Gosnell, you're full of bull'?"

"Gosnell has gone through hoops. It's unfair to say he has City Hall in his pocket."

"Three weeks ago I heard . . . Terry was telling the staff to hurry because Gosnell might get Macy's."

Nadolski now suspects Gosnell was purposely creating a "paper trail" to politically embarrass her.

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Jana Bommersbach