Pursued amendments push back Ritz-Carlton Paradise Valley debut

A view of a model outlining how the Paradise Valley Ritz-Carlton will ultimately be developed. (Independent Newsmedia/Terrance Thornton)

While many have speculated on it and few have been able to provide concrete answers, Five Star Development officials contend the Ritz-Carlton, Paradise Valley resort community will begin to sprout sometime over the next calendar year.

The Paradise Valley special-use permit — approved by a 4 to 3 vote in early 2016 — entitles Five Star, through an investment of $130 million, to build a Ritz-Carlton-branded resort on more than 100 acres an arrow’s shot from the intersection of Scottsdale and Lincoln roads.

But many in the community — from elected leaders to Independent readers — are beginning to wonder when the latest five-star resort will become operational.

Or at least, some say, an indication of when meaningful construction will commence at the coveted site. But work has begun — so far most of it underground and invisible to the casual observer.

Five Star Development Project Manager Richard Frazee points to where he intends to build the most innovative Ritz-Carlton design in any market worldwide. (File Photo)

Richard Frazee, Five Star Development project manager, says millions of dollars have been spent on subterranean infrastructure.

“The project site is extremely active as we speak,” he said in a July 11 phone interview. “We were slow out of the gate, but momentum is rapidly ramping up. The underground infrastructure of the project — where no one from the periphery can appreciate — about $10 million has gone into the ground for the last year.”

Mr. Frazee says people will soon begin to see above-ground structures being built.

“The vertical development of the Ritz-Carlton hotel is slightly behind schedule, but it is now under way and is targeted for an opening at the end of 2019.”

The development entitlements granted to Five Star Development for the creation of a Ritz-Carlton Paradise Valley resort community are broken into seven development-area characteristics:

  • 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: 39 resort-branded, single-family homes on 17.2 acres.
  • Area D: 53 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.

Most recently, Paradise Valley Town Council unanimously approved an amended final plat for Area C, 39 lots on 17.2 acres. Original plans called for 45 homes on 22.5 acres.

In addition to Paradise Valley entitlements, Five Star Development also has been granted zoning standards for the project on land that extends into neighboring Scottsdale.

Five Star Development sold 23 acres of land to Shea Homes within the Ritz-Carlton community in Paradise Valley and the city of Scottsdale has approved a new shopping center coined “The Palmeraie” that will, in part, encompass 20 acres of land adjacent to the forthcoming Ritz-Carlton resort community.

The new shopping center got the go-ahead by a unanimous vote from Scottsdale City Council in March 2017.

The city approved the rezoning of a 20-acre site at 6990 N. Scottsdale Road from resort/townhouse residential to planned regional center.

In all, Scottsdale City Council approved three different measures for the zoning change with one being a $408,000 contribution to the municipality from Five Star Development for the city to use to assist in constructing and maintaining the city’s drainage system.

The approved measures will allow for a mixed-use development that can consist of 141 residential units in 170,000 square feet, a maximum of 150 hotel units on 134,000 square feet, 226,000 square feet of commercial space and 80,000 square feet of office space, city officials say.

Meanwhile Shea Homes has announced that it is set to debut an exclusive high-end brand called, Shea Signature, appearing on a 23-acre portion of the Ritz-Carlton project where 66 single-family luxury homes will be built.

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

Five Star Development President Jerry Ayoub, on left, and Herve Humler, chairman emeritus of The Ritz-Carlton sign the first key for the property at a ground-breaking ceremony held earlier this year. (photo by Five Star Development)

Underlying concerns abound

In an early July message to Paradise Valley Town Council, Town Manager Kevin Burke expressed concern regarding changes pursued by Five Star officials.

“I am feeling less comfortable with the Ritz Hotel progress lately,” he said. “There are several reasons.”
Over the last several months, town officials say, modifications to the approved SUP document have been loosely pursued.

Changes to the original plan, says Mr. Burke, could be slowing down construction.

He notified developers that changes could not be approved by the town manager; minor amendments to the plan would need approval from the Planning Commission.

A view of ongoing construction at the Ritz-Carlton, Paradise Valley resort community site. (File photo)

The approved development agreement between Five Star and the municipality also requires the hotel be operational before a certificate of occupancy can be awarded for the housing stock.

“I sense the developer is going to challenge the holding of the certificates of occupancy even though the positions I have taken directed that the town must be — we have been — extremely clear about this condition with all parties,” Mr. Burke said in his July 2 message.

“We continue to meet regularly with the project manager and he is advancing many of the items on the property, but I am less than satisfied the stipulations for this project will be met.”

But Mr. Frazee contends Five Star is determined to meet the tenets of its development agreement, specific to housing stock.

Mr. Frazee assures Five Star will deliver on their development promise.

“We are on track to deliver,” he said.

“You don’t want a resident of a branded project living in a residence where they don’t have immediate access to the Ritz-Carlton experience. We are working well hand-in-hand with the town. We are acknowledging and playing by those set of rules.”

Mr. Burke says since his July 2 email, several updates have been in the works.

“Since my last weekly update (7-2-2018) I have several items of progress to report on Ritz,” Mr. Burke stated. “They have submitted plans and an application for amendment to the building permit for the hotel garage. This was expected as it was improving a particular parking element within the garage. I as concerned that this had not been submitted nor concrete work begun on the hotel garage. So this is positive progress.”

Five Star has also submitted a managerial amendment application for the casitas associated with the hotel, Mr. Burke says, as well as initiated discussions with the Planning Commission chair on a minor amendment.

Mr. Frazee says Five Star is pursuing a modification at the behest of Ritz-Carlton officials that could offer superior views of Mummy Mountain and an additional 15 rooms to the Paradise Valley hotel.

He contends negotiations are ongoing and the magnitude of the Ritz-Carlton project forces constant re-evaluation of the site and pending construction.

“It is pretty simple, and it is exciting news,” he said outlining the changes being pursued.

“It will entail two components: parameters of reconfiguring of the casitas and an alteration of the hotel building. We have developed the Ritz-Carlton amended site plan, which offers a better end result for the developer and the town in terms of bed tax dollars. But it actually altered our schedule for a couple of months.”

Paradise Valley Town Manager Kevin Burke. (File photo)

A view from the top

Paradise Valley Councilwoman Julie Pace would like to see the resort open as quickly as possible. She also acknowledges the deep complexity of the project.

“I understand that this project has complexities to it and construction and design are fluid, especially on this large 100-acre site with many components,” said Councilwoman Pace.

“Diverse construction projects sometimes require reassessment and consideration of potential changes. This site is in both Scottsdale and Paradise Valley so any changes can mean communicating and going through procedures by each municipality.”

With power-brokers on each side of the development equation, Ms. Pace contends luxury brands oftentimes can be fickle partners.

Julie Pace

“In addition, there is the luxury quality brand of the Ritz-Carlton, which likely has its own eyes on the project and may want changes or to make suggestions as any franchise has its own set of advisors to work with the applicant,” she pointed out alluding to the pending SUP amendment request.

“There are many high-end boutique retailers with whom to negotiate and secure commitments. The applicant is understandably very busy with many facets to make the project successful. The residential side of the project appears to be full of energy and interest, but that is to be expected with an integrated Ritz-Carlton residential resort community located in prestigious and beautiful Paradise Valley.”

Ms. Pace points out municipal leaders are steadfast in the assertion hotel structures must be built prior to occupancy certificates being issued.

“Our town manager is staying on top of things and does not want the town to be pushed to issue any temporary certificates of occupancy prior to the hotel being completed,” she said. “The Ritz-Carlton project was negotiated by council before my time in office. To protect the town’s interests, one key component was that the hotel should be built and operating before the residences were completed. That timeline still holds true.”

But Ms. Pace says changes pursued are likely further positives for the municipality.

“Changes can be for the better or be minor or major,” she said. “We just do not know yet until the applicant provides its entire set of changes, if any, for the project so we can evaluate any proposed changes as part of the whole project.”

But changes aside, Ms. Pace contends municipal leaders and Five Star officials need to cooperatively come to the end goal: a one-of-a-kind Paradise Valley resort community.

“We need to work cooperatively with the applicant to ensure the town’s goals and interests are met. This is a privately financed project, subject to the marketplace,” she said.

“The leadership of Mayor Collins in shepherding this project over many years is one of the legacies of his service to the town. The mayor obviously will take a continued leadership role regarding this project and we as council will work for the best interests of the town.”

Independent Newsmedia Arizona Managing Editor Terrance Thornton can be contacted at tthornton@newszap.com

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