Blue Sky in Scottsdale soldiers on despite multitude of problems
Blue Sky timeline
July 2010 — Gray Development Group submits its downtown infill-incentive application for Scottsdale Riverwalk, later renamed Blue Sky.
September 2010 — Planning Commission unanimously recommends City Council approval of Blue Sky. After revisions, the panel gives two subsequent recommendations for approval.
October 2010 — City Council grants its first continuance of Blue Sky to allow the developer to continue working with surrounding property owners who filed legal protests forcing a supermajority vote for council approval. Other continuances follow.
April 2011 — City Council approves Blue Sky with the conditional-zoning stipulation that it be under construction within 24 months.
April 2013 — Gray Development starts work on site. City Manager Dan Worth affirms it has met the stipulation. City Council votes to reconsider Worth’s decision.
By Edward Gately
The Republic | azcentral.com
Wed Apr 17, 2013 7:43 AM
There are a number of firsts associated with Gray Development Group’s controversial Blue Sky apartment complex, to be built east of Scottsdale Fashion Square.
It was the first proposal filed under the city’s downtown infill-incentive district and plan, which allow developers and property owners to request amended development standards, such as increased building height and density, in exchange for public benefits, such as investment in public art and amenities.
It also was the first infill-incentive proposal approved by the City Council, in April 2011, and is Gray Development’s first project in Scottsdale.
“The Gray team has developed, designed and/or land-planned more than 30 projects in Scottsdale over the past 32 years, although this is our first together as Gray Development,” said Brian Kearney, Gray’s chief operating officer.
Now, Blue Sky has the distinction of being Gray Development’s first project without financing to at least complete the first phase. Kearney insists the project will get built, although the time line remains uncertain.
“We’ve never not finished a project ... but this is a unique situation,” he said. “We see this as our signature project (in the Valley) ... and we intend to finish it.”
Blue Sky will include more than 700 units in three, 13-story buildings near the northeastern corner of Camelback and Scottsdale roads. It also will include retail and restaurant space along Scottsdale Road, as well as a penthouse restaurant.
In addition, Blue Sky is facing new criticism from residents of the Safari Drive condominium complex east of the site. They say the approved plan doesn’t adequately account for on-site traffic, creating unreasonable congestion for those entering and exiting the properties.
“The concern that everyone has is what the impact of that project is going to be on not only the people who live in it, but here at Safari,” said Larry Kush, a Safari Drive resident. “And as a city, have they really thought out traffic, fire safety, etc.? Have they really taken a hard look at all these things together and the impact they have on everyone as a group of projects, not just a single project?”
At build-out, Blue Sky and Safari Drive combined would include more than 1,000 residential units, bringing a potential surge in population to the area just north of Camelback Road and east of Scottsdale Road across from Scottsdale Fashion Square mall.
Phillip Kercher, the city’s traffic engineering manager, said the traffic study completed for the Blue Sky application took into account both projects.
Tough road
Last August, Kearney said construction on the first phase of Blue Sky — the underground parking garage, north tower and improvements along the Arizona Canal — would begin early this year. In the meantime, it faced a council-imposed deadline to begin construction by April 26.
When meeting with Safari Drive residents last week, Kearney said Gray Development’s equity partner, Berkshire Multifamily Equity Fund, was set to provide financing for both Blue Sky and another apartment project in San Diego. However, Berkshire decided to fund only the San Diego project, he said.
Without a new equity partner, Gray began dirt work on the Blue Sky site early this month and is self-funding the project at this point, he said.
“Our intent is to move forward with construction, albeit at a slower pace,” Kearney said.
The cost of the first phase will total $70 million to $75 million, he said. The overall financial investment is expected to approach $200 million.
For now, Gray Development no longer has to worry about the time-limit stipulation. On April 5, interim City Manager Dan Worth sent an e-mail to Mayor Jim Lane and all council members saying city staff conducted an inspection of the “reinforcement of a segment of the footings for a wall that will be part of the underground parking” in the first phase of the project.
Worth sent a letter to Gray Development affirming that it had met the time stipulation.
Kearney said the time-limit stipulation had been an “albatross” that was keeping his firm from attracting a new equity partner.
“We’re optimistic now that the time stipulation is gone,” he said.
However, a divided council last week voted to place on a future agenda consideration of Worth’s determination that Blue Sky met the construction stipulation. Several council members expressed skepticism that the work done on-site means the project is under construction.
Councilman Bob Littlefield said Worth didn’t have the authority to send the letter affirming that it met the stipulation, “so I intend to ask that we go back.”
However, Councilman Guy Phillips told Safari Drive residents that, since Gray has that letter, “if we say no, they’ll take us to court.”
Vice Mayor Suzanne Klapp said she supports Worth’s decision.
“As part of his review of the case, he consulted with council members individually before making his decision,” she said.
The flour analogy
Many Safari Drive residents say the council approved Blue Sky several months before they purchased their condominiums. Therefore, they never had a say on how it could affect them.
John McLinden, who owns a condominium at Safari Drive, said Blue Sky is just too big for 4.28 acres, and that fitting it onto the acreage is like “trying to cram 10 pounds of flour into a five-pound sack.” The on-site traffic analysis has underestimated the amount of congestion that will occur on-site, he said.
Kercher said several improvements will be made to Fashion Square Drive east of Scottsdale Road to accommodate heavier traffic.
“The access from the shopping center to the south (of Blue Sky) will be moved farther east to provide more stacking room for vehicles approaching the Scottsdale Road intersection,” he said.
In addition, Gray Development will extend the left-turn capacity for southbound movement from Scottsdale Road to the site, and will widen the driveway to make the lanes line up better with the existing Fashion Square driveway to the west, Kercher said.
Syd Saperstein, also a Safari Drive resident, said the council’s approval of a Mercedes-Benz dealership near Highland Avenue and Scottsdale Road will make traffic even worse.
“That changes one of the roads we can no longer use once they move in, which changes our access points in and out of the property significantly,” he said. “We’re going to end up with about 1,100 cars here, and during any normal commute time, that backup is going to be significant, so significant that if an emergency vehicle had to get here ... the place would be totally congested with vehicles that would have to get out of the way, back up or turn around.”
Kercher said two existing driveway connections from Safari Drive/Blue Sky to the property to the north will be either removed or gated by the Mercedes-Benz dealership.
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