Paradise Valley denies Ritz-Carlton proposal as presented Dec. 17

 Paradise Valley Town Hall, 6401 E. Lincoln Drive, has seen full crowds over the last few weeks as Five Star Development pursues the creation of a luxury resort community within town limits. (Independent Newsmedia/Terrance Thornton)

Paradise Valley Town Hall, 6401 E. Lincoln Drive, has seen full crowds over the last few weeks as Five Star Development pursues the creation of a luxury resort community within town limits. (Independent Newsmedia/Terrance Thornton)

Four of the seven members of Paradise Valley Town Council held steadfast to their assertion last Thursday that the current Five Star Development proposal to build a luxury resort community is too dense, has too many unknown variables and lacks firm financial commitments to benefit the community at large.

During a public hearing Dec. 17 at Town Hall, Paradise Valley Town Council voted against approving a special-use permit and subsequent development agreement for what has been billed as a Ritz-Carlton resort community within town limits.

Council members Paul Dembow, Mark Stanton, David Sherf and Jerry Bien-Willner voted against the measure, while Mayor Michael Collins and council members Maria Syms and Mary Hamway were in the affirmative.

Following the failed role call vote for Ordinance No. 694, which specifically considers the project’s site plan heights, densities and setbacks, the council unanimously approved a continuance of the matter.

The local governing board is expected to host a public hearing 6 p.m. Monday, Dec. 21 at Town Hall on both the proposed site plan and subsequent development agreement.

Five Star Development, owned by Scottsdale resident Jerry Ayoub, is represented by Jason Morris of Whitey Morris PLC in this matter.

Scottsdale-based Five Star Development, through an investment of $130 million, is preparing a 105-acre swath of land an arrow’s shot from Scottsdale and Lincoln roads for a Ritz-Carlton project that now includes seven development-area characteristics (as of press time Friday, Dec 18):

  • •Area A: 200-room resort on 18.1 acres
  • Area A1: 94 resort-branded villas
  • Area B: 66 single-family homes on 31.3 acres
  • Area C: 45 resort-branded, single-family homes on 22.5 acres
  • Area D: 62 townhomes on 8.8 acres
  • Area E1: A 54,000 square-foot luxury retail center on 7.2 acres
  • Area E2: Influx design as the use of 5.7 acres is yet to be determined

The development agreement

Concerns regarding stipulations within the development agreement — the nuts and bolts of the deal between the municipality and the developer that, in this case, speaks to tax revenues, phasing of construction and identification of a luxury resort operator — appear to be the roadblock to approval.

Paradise Valley Town Manager Kevin Burke provided the Town of Paradise Valley Independent a copy of the proposed development agreement Wednesday, Dec. 16, but by 4 p.m. Thursday, Dec. 17 the document had been significantly changed by the applicant, records show.

Kevin Burke

Kevin Burke

Mr. Burke says the document is a measure of risks and mitigations for Paradise Valley Town Council to weigh.

“It presents a choice of risks and mitigations. Mayor and council will have to make that decision. Overall, the project stands to bring in more revenue than the new development costs to maintain.”

A major point of consternation has been the identification of a luxury brand operator within the development agreement.

“The town manager has been shown an agreement and been directly told by the vice president of Ritz-Carlton for the western region that Five Star has an agreement with the (Ritz-Carlton),” the Dec. 17 development agreement states.

“However, the applicant is not willing to guarantee this will be the lodging product built as they believe it hampers negotiating powers on further operating terms if there is no leverage to go to a competitor. Therefore the D.A. requires that the lodging product open as either a Ritz-Carlton, Four Seasons, St. Regis or a Montage.”

Mr. Burke says he spoke with Chris Gabaldon of the Ritz-Carlton Hotel Company last summer but could not recall the date.

“The development agreement is intended to implement what you see in the site plan and in the stipulations in more detail,” he said at the Dec. 17 work session discussion prior to the public hearing. “It truly is an implementation document. We continue to have some disagreements but what we have to you is our latest proposal. Option A is what came through today.”

Mr. Burke says the development agreement and accompanying stipulations will guarantee a luxury resort will be built.

“This is intended to make sure what is advertised is what will be built,” he said of the brand identification criteria within the document.

“We felt like if we picked certain brands we could have a minimum expectation. They can change that but they would have to come back and amend this document.”

Paradise Valley Vice Mayor Paul Dembow called into question the suggested phasing when, and if, an SUP were to be approved by town council.

Paradise Valley Community Development Director Eva Cutro responded to the line of questioning.

“While the permitted landscaping goes up than you can start on area A, which is the hotel and Area E1, which is retail,” she said.

“You could have, once the perimeter landscaping and walls are up, you could be working on all elements. The only thing that assured is infrastructure and landscaping first, then you can start to build the hotel. But you can’t get certificate of occupancy until you have 75 percent of the hotel rooms and permits issued.”

A major change to the development agreement between Dec. 15 and Dec. 17 was the deletion of the applicant providing resort unit revenue replacement payments or “in-lieu” fees, records show. Over the next 20 years those fees could equate to $14 million, officials say.

“The hotel project will have probably 50 different building permits,” said Councilman Sherf. “Taking away in-lieu is only a benefit for the applicant. Things have changed this week and I think we have to change our thinking.”

Mr. Morris, the zoning attorney representing Five Star in this matter, says the current development agreement contemplates concessions previously not included.

“The starting point for this was in 2008 — that this plan was an SUP with no in in-lieu fees contemplated,” he said at the work session. “We would be entering into a development agreement with the town … the whole concept of the development agreement is to ensure the town gets exactly what is in the SUP and in the order the town wants to see it.”

Mr. Morris says his client has taken on more rules for development than any other applicant in recent history.

“There are terms within this development agreement that are more stringent that any other SUP,” he said. “We are coming to you with a brand. You have the benefit of strict controls of what is built and when. We are asking you to take ‘yes’ for an answer.”

A view of what the pool scene might be at the Paradise Valley Ritz-Carlton resort community. (Submitted graphic)

A view of what the pool scene might be at the Paradise Valley Ritz-Carlton resort community. (Submitted graphic)

The public hearing

Hundreds of people attended the Dec. 17 public hearing at Town Hall — Paradise Valley residents along with other interested parties offering support for the luxury resort project.

“The plan in front of you — as much as Five Star and the Ritz-Carlton would like to take credit — the plan really reflects the town’s input,” Mr. Morris said at the public hearing. “It is reflective of your statement of direction, guidelines and comments taken from the community. You have the ability, regardless of what occurs with the development agreement, you have the opportunity to go forward with the SUP.”

Following the opening statements from the municipality and zoning attorney, about two hours of public testimony were heard followed by a synopsis of events provided by Mr. Burke, the town manager.

“You are faced with a very difficult decision,” he told members of council. “Can you live with the political risks and rewards? I would say by definition it is in standard compliance with your statement of direction.”

Vice Mayor Dembow told the standing-room only crowd that, at this time, he couldn’t support the site plan or the tenets of the development agreement.

“I just can’t support the amount of density,” he said.

Councilman Sherf and Councilman Bien-Willner echoed that tone pointing out time has to be taken to understand the revisions of the development agreement delivered to council hours earlier.

“I do feel that it is my responsibility to review anything that comes through,” said Councilman Bien-Willner prior to casting his vote. “I also want to protect the town to ensure this is done on the right basis.”

Councilwoman Hamway, who voted for the SUP, contends the developer of the project has brought his best plan to the municipality.

“This is probably denser than we would like,” she said. “But what we have is as good as it is going to get.”

Northeast Valley Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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