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Scottsdale Residents Get So Much For So Little

July 22, 2020
22 Jul 2020

By Jim Derouin

In light of the challenges faced by everyone because of Covid-19, and the fact that our way of life in Scottsdale is heavily supported by tourists who are going to stay away until the health crisis is over, this seems like the right time to consider what is good about the city.

Scottsdale is a special place and we are fortunate to live here. To keep our property values and amenities high and our property taxes low, we need to generate  economic activity from a variety of sources that produce sales tax revenue.

Basically 25% of Scottsdale’s area (about 47 square miles) is open space that is being purchased at the cost of $1 billion. Yet, it is not a “bedroom” community from which residents flee during the day and return at night. Data shows that Scottsdale is a self-sufficient, economically strong city. Rather than being a retirement community, it is an employment hub, which is important to supporting our lifestyle. 

Each day, 150,000 workers enter Scottsdale to work while half that number (Scottsdale residents) leave to work elsewhere in the Valley. In addition, 30,000 Scottsdale citizens live and work in the city. As a rule of thumb, those who work here, spend here – at some of the 18,000 businesses that operate in Scottsdale or at its 825 restaurants. 

Health care, finance, insurance and technology firms dominate the list of Scottsdale’s largest employers. Tourism, automobile dealerships, retail operations (large and small), entertainment (including restaurants) and construction all add economic activity vital to supporting Scottsdale’s amenities while keeping property taxes low. 

We host more than 4.5 million visitors annually at our hotels and resorts. In 2018, 1.7 million were from outside the United States. Scottsdale’s reputation as a diverse, welcoming community is critical to its success.

In addition to the McDowell Sonoran Preserve, Scottsdale has 42 parks; 70 athletic fields; 37 playgrounds; 53 tennis courts and two tennis centers; 39 basketball courts; seven museums; and four aquatic centers. 

Scottsdale is also an education center with 38 public schools (more than 25,000 students) and the Arizona State University Innovation Center at SkySong. Scottsdale Community College is immediately adjacent on the Salt River Pima-Maricopa Indian Community.   

Scottsdale has a projected build-out population of 285,000 residents; this is 200,000 less than originally planned because of the purchase of the McDowell Sonoran Preserve. Scottsdale’s explosive population growth occurred between 1980 and 2000 when the city increased from 88,000 to about 255,000 residents. Scottsdale is close to residential build-out in that there are less than 15,000 acres left for residential development out of a total of 118,000 acres in the city.

Most residents judge their community by a variety of characteristics. What physical amenities does it provide? How do property taxes compare with those in other communities? How do property values compare? Scottsdale scores well in all of these categories.

Scottsdale’s amenities are itemized above; they are unparalleled in any comparable community in the Valley. In addition, Scottsdale has the highest median housing price of any large Valley city (Phoenix, Mesa, Chandler, Glendale, Gilbert, Tempe and Peoria).  Because 70% of Scottsdale’s budget was projected for fiscal year 2019-20 to come from state and local sales taxes and from state income taxes, only 10% of the entire city budget was projected to come from property taxes.

Another way to think about it is that, of our total residential property tax bill, only five cents of each dollar of property taxes goes for the city budget. In terms of total property taxes used to fund city budgets (primary tax rate) and to pay off bonded indebtedness (secondary tax rate), Scottsdale’s primary and secondary combined tax rate is less than Tempe, Phoenix, Mesa, Glendale and Chandler. It is essentially the same as that for Gilbert. 

Innovative thinking, solid leadership and collaborative actions has stabilized the city over the last few months. Continued focus on how to sustain and grow our economic viability is critical to keep our city special.

Jim Derouin is a long-time Scottsdale resident, attorney and member of the city of Scottsdale’s Districting and Charter review task forces.

A Tale of Two Malls (A Cautionary Story About Changing Times)

July 22, 2020
22 Jul 2020

By Don Hadder

The recent mob attack on Fashion Square under the surge of demonstrations regarding the George Floyd incident brought to mind the unique story of Fashion Square as well as how there once was another mall in Scottsdale – Los Arcos Mall – that had a much different fate. These pillars of the Scottsdale community have played an important role in the life, culture and economic lifeblood of Scottsdale.  Their individual stories are unique, but in comparison provide valuable insight into how to manage in or during changing times.

Fashion Square

Fashion Square was the first of the two malls to get started. Located at the northwest corner of Scottsdale and Camelback Roads, the property had been used for a couple years as the rodeo grounds for the recently organized Parada Del Sol that was held at the end of January each year. The rodeo grounds moved to a downtown site at the northeast corner of Hinton and Osborn

Built in 1959-60, the original ‘mall’ was and odd collection of a grocery store (A. J. Bayless), a drug store, the Goldwater’s Department Store and an assortment of in-line retail and service stores. The concept of a shopping mall was not yet well defined and this early mall included components that would later be classified as a “neighborhood center” and as a “regional center.”

Some of the in-line store fronts filled the space between the grocery and drug stores while others fronted an east/west breezeway.  The mix of stores was definitely eclectic, ranging from a family-oriented diner to a high-end steak house.  During this period, the tourist orientation of stores in downtown Scottsdale was solidified along Main Street and Fifth Avenue.

The site was annexed by the City of Scottsdale in 1962 and shortly thereafter the Lenart office building facing Camelback Road was constructed. Other adjoining properties were being developed or prepared for development at this time as well.

The site that would become Camelview Plaza, west of Fashion Square, went through a series of rezoning cases in 1964-65 that resulted in the property receiving High-Rise Commercial zoning.  Across Camelback Road, the original Camelback Mall, including a Safeway grocery and a Thrifty drug store, was built in 1964. Later in the 1960s, freestanding restaurants at the corner of Highland and Scottsdale Road, a gas station and the Days Inn were added to the mall site.

In the early 1970s, several zoning and design cases were approved for the proposed Camelview Plaza property. Ultimately, from 1971 through 1974, the plans for this mall were approved and included the Arizona Bank office tower, a Sakowitz Department Store and a Bullocks Department Store, along with a limited group of smaller mall tenant spaces.

In the late 1970s the Camelview Harkins Theaters were added northeast of the main mall area.  The unique aspects of this project were the office tower and the underground parking structure.  Also, across the street at Camelback Mall, additions were approved for a major spa, a two-theater complex, and some pad tenants.

In response, Fashion Square expanded with the addition of another department store (Dillard’s) and the reconstruction of the breezeway mall into an open air and sunken “Palm Court” mall area. In addition, the original grocery and drugstore “neighborhood” portions had been removed.

By the mid- to late-1970s the three major retail centers along Camelback Road west of Scottsdale Road had emerged as a major core of regional and high-end commercial and service uses that clearly took advantage of the market conditions in Scottsdale, Paradise Valley and the Arcadia portion of Phoenix. These were three separate sites and facilities, each competing with each other as well as the broader regional marketplace across the Phoenix metro area.

The economic volatility of the mid-1970s and the early 1980s, however, pointed out some of the vulnerability of three separate sites acting on their own interests in a rapidly changing environment. With two department store anchors each, Fashion Square and Camelview Plaza were not able to compete head-to-head with the newer malls that had four and five department stores as anchors. As a result, the owners of Fashion Square bought Camelview Plaza and started a program of expansion that would transform the properties.

At about the same time, the city was creating the original Downtown Area Plan. Many of the stores and services that had been popular and busy in the 1960s were no longer in business, and high vacancy rates, T-shirt shops and other signs of decay had crept into the downtown area. The new plan also addressed major transportation problems as Scottsdale Road through the area was heavily congested and intimidated some who might have gone to the downtown to shop and entertain. The enlarged Fashion Square property coordinated with the emerging plan as it prepared for its next phase of development and economic activity.

The new master plans and zoning for Fashion Square were approved in 1986 and presented a radically new version of the mall. With the new plans came the Goldwater Blvd. bridge along with the new Goldwater Blvd. road that was intended to be the west side of a diversion loop around the core of the downtown area, the change from an outdoor mall to a fully enclosed mall, and several new parking structures. 

With these changes, Fashion Square could compete directly with newer malls and could grow its ability to market itself and to draw quality tenants.  As this plan went forward, expansions to Bullock’s at the west end, Goldwater’s at the east end and a new department store building on the north side were also included. By the end of the 1980s a new and strategically different Scottsdale Fashion Square was emerging.

During the early 1990s, several minor modifications were incorporated into the mall area as it consolidated the recent major expansion and adjusted to yet another economic slow-down. It was during this period that the ability of Fashion Square to draw customers from not only out of state but out of the country emerged. Visitors to Scottsdale area resorts began to spend more time and money at the mall and in some cases, visitors even came to town with the express intent to shop at Fashion Square.

By the second half of the 1990s, Fashion Square made another major expansion bid. In acquiring Camelback Mall on the south side of Camelback Road, Fashion Square began a series of plans to add another department store anchor (Nordstrom’s) across the very busy Camelback Road and further transform the Mall into a powerhouse retail center. This expansion was able to open in the midst of one of the largest economic expansion periods in post-War American history. It created the basic mall footprint that exists today. Given the east/west main mall and the south wing extension, the interior mall is close to a half-mile in length and the entire mall encompasses over two million square feet of building.

Again, in the late 2000s, Fashion Square went through another reconstruction and expansion to remove the former Robinson’s May department store (and by doing so finally eliminated the last of the original Goldwater’s building structure) for the Barney’s mall extension along with the expanded and relocated Harkins multiplex theaters. And barely a decade later, even this remodel was remodeled.

Los Arcos mall

The story of Los Arcos Mall takes a different track from Scottsdale Fashion Square, and has different results. Built in total as a two-anchor mall in 1969, Los Arcos came on the scene as a major modern mall with some of the most popular anchors at the time: Sears and Broadways.

Fashion Square then was still a partial mall, and with the two-anchor Thomas Mall about 4 miles to the west and the two-anchor Tri-City Mall 4 miles to the southeast, the East Valley had emerged as a hot spot of shopping. Other than the fairly small Tri-City Mall, the Southeast Valley communities of Tempe, Chandler and Mesa were underserved with major retail space, so Los Arcos quickly drew from the south and east, which were areas of rapid growth over the following decades.

Los Arcos Mall was an odd real estate feature in that it had four owners: Sears and Broadways both owned their own buildings and the parking that served them and the in-line and enclosed mall area had two owners. Amazingly, the minor mall owner was the managing partner.

Until the late 1970s, Los Arcos was very popular and drew customers from Tempe, Mesa, Chandler and to a degree even from the emerging neighborhoods in the Paradise Valley area. The intersection of Scottsdale Road and McDowell Road for many years was the busiest one in the entire state. As one of two routes from the East Valley to central Phoenix, McDowell Road functioned as a regional highway. In fact, the original zoning in the county for the Los Arcos Mall site was due to the projection that it would be next to the proposed Papago Freeway.

Events in 1978 and 1979 would bring drastic changes to Los Arcos from which it would not recover. In the spring of 1978, there was a major flood that washed out almost all the crossings of the normally dry Salt River through the Valley. And basically, at the same time as the flood, Fiesta Mall, with four department store anchors, opened in southwest Mesa. This double whammy effectively cut off the market capture of the Southeast Valley that Los Arcos had depended on. Sales dropped dramatically, and although they would recover to a degree over time, it’s ability to draw customers had been greatly diminished. Just a year later, Paradise Valley Mall opened and cut into the portion of customers Los Arcos had been able to draw from that direction.

Through the 1980s, Los Arcos tried to sustain traffic and sales by recruiting lower cost outlets and seasonal stores. As sales sagged at Sears, the second floor was converted into a call center for their “Discover Card” division. The two-screen theater was closed. With limited frontage and not willing to build expensive parking structures, the mall had few options for expansion.

In addition, with such a complex ownership structure, it was difficult to get four property interests to agree to any major course of change or expansion. Pepinos’ Mexican food restaurant, Luby’s cafeteria, Red Robin restaurant and the Trails End party after the Parada Del Sol parade added glimmers of activity, but the mall and it’s major tenants struggled. A cosmetic remodeling in the early 1990s did little to draw shoppers and tenants and by the end of the decade, Los Arcos Mall finally closed for good.

A comparison

Some of the ‘take-aways’ from these stories are:

— Change is inevitable and almost all cases outside of one’s control or influence. In the cases of these malls, changing demographics, changing transportation corridors, new competition, changing market preferences, natural disasters and other events resulted in the need for adaptability.

The ability and willingness to recognize and adapt to change is critical in the success of an organization. When reviewing the actions taken on the three properties that now form Fashion Square, from 1959 to 2013 (54 years) there were 101 cases submitted to and approved by the county and city. This reveals an ongoing and persistent effort to keep these commercial properties relevant and successful. Often, as soon as a remodel is completed, the management at Fashion Square is already looking ahead and working on the next adaptation of the property in order to stay economically active.

Where separate and individual interests hold sway, such as at Los Arcos, the organization will not be able to respond to and stay relevant with change. Ultimately, this will lead to the failure of the organization. Any organization that cannot look forward, look around and look within itself is one that cannot make good decisions and remain healthy.

— The willingness to take action and then accept it when such action is not successful or becomes irrelevant is important. In the case of Fashion Square, there have been at least 12 department and junior department store anchors, innumerable restaurants, all range of stores from bookstores to toy stores to bicycle stores that were successful for a period but no longer, various services and offices, and many more attempts to find the ‘right’ mix. 

There have been pop-up stores, seasonal outlets, special events and other creative ways to attract customers. Some of these have worked well, others not so much. Two restaurant chains started at Fashion Square (Hops and PF Chang’s) but are no longer located there or even in business. This willingness to try and then adjust if it is not working as hoped, has been a long-term hallmark of this enterprise.  A failure does not cause the mall to complain and blame others, rather, they move on and continue to look forward. Los Arcos tried to adapt, but their approach tended to be reactive and not proactive and as such they were mostly behind the times

— As was exhibited recently, Fashion Square has become emblematic of the economic and social context of Scottsdale and Paradise Valley. It is interesting that before the pandemic arrived, there was an amazing mix of cultures, languages and lifestyles represented in the customers who came to the mall. Sometimes it was possible to hear up to four or five different languages spoken in the mall during an evening visit. This ultimately was not as relevant as the symbolism it represents to those who have not frequented it. This is a new role for the mall and it will be important to see how the mall responds. It has become a cultural icon of sorts – one that has the experience and resources to reach out and embrace the changing and dynamic community that Scottsdale is becoming.

In order for Scottsdale to continue to be a desirous place to visit, to do business in and to live in, the community will need to recognize the changes that are happening and likely to happen, to embrace the changes and find ways to be successful with them, and in many cases to lead the ways of change. The Scottsdale of today is a place not imaginable by those early pioneers who cleared the land to make this place their home, but it likely is a place they would embrace as one that is welcoming and well-rounded.

A formal declaration of Scottsdale community values

July 20, 2020
20 Jul 2020

By Don Henninger

EDITOR’S NOTE: Over 60 Scottsdale business and community leaders have endorsed the “Declaration of Community Values” listed below. Their names are at the end. To add your endorsement, email donh@scottsdale.com .

The sounds of silence often can be damaging.

That point comes to light after recent events in Scottsdale have presented an image to the national and international media that does not reflect the values embraced by the majority of community and business leaders in the city.

Some of those images have harmed the city’s reputation, and we don’t know yet what kind of effect that will have on the city – socially, culturally or economically – on a longer-term basis.

These events – even the words and actions from a single individual – do not reflect the city we are proud to call home.

Good reputations built over a lifetime can be shattered in an instant. Perhaps that’s not fair, but that’s the way it works.

Based on conversations over the past two weeks with a score of community and business leaders, it’s clear they are concerned that these events have stained the city’s brand.

Many leaders, individually, have posted comments on social media and been quoted in traditional media abhorring some of the things that have happened here.

But there has not been a collective voice that has spoken as one community, and as the summer drags on the opportunity lessens for that to occur on a prominent stage. I’ve been asked to draft a statement that reflects our values and share them collectively at a time when silence is not acceptable.

“Declaration of community values:

“In Scottsdale, we think that everyone of us has a leadership role that is reflected in our thoughts, words and actions. If we live here, each of us represents the character and values that collectively determine what our city is all about.

“We believe that every person who lives, works or visits this city deserves to be treated with respect and dignity. There is no room for discrimination in our city and we will not tolerate racism.

“We embrace taking actions that are in the best interests of the community as a whole, and we respect the rule of law. When we disagree with it, we do it in an orderly fashion and in ways that are not disruptive or disrespectful.

“We believe that diversity in every way it’s measured – ethnicity, gender, sexual orientation, age – makes our city stronger and a more desirable place to live, work and visit.

“We know the city is not perfect, and we are willing to roll up our sleeves and do the work required to solve our challenges.”

If these values reflect yours, consider endorsing this statement and sharing it with your individual and professional networks and see if they’ll support it, too.

Let’s not allow the events of the past few weeks tarnish a reputation built by generations before us. Let’s protect it and make our city even better for our children and the generations to come.

Let’s break the silence and tell everyone what we stand for in Scottsdale.

Don Henninger is executive director of SCOTT and can be reached at donh@scottsdale.com

Endorsed by: Scottsdale Community College, Chris Haines, interim president; Scottsdale Leadership, Lee Ann Witt, executive director; Scottsdale Together, Jason Alexander, editor;

Kenneth Allen,  Andrea Alley, Todd Bankofier, Brian Bednar, Peter Bezanson,  Denny Brown, Bill Callahan, Sam Campana, Tammy Caputi, Julie Cieniawski, Dana Close, Doug Craig, Brion Crum, Bill Crawford, Joe Cusack, Carol Damaso, Todd Davis, Brendan Denker, Jim Derouin, Wes Frank, Bob Frost, Amy Greer, Don Hadder, Jesica Hays.

Also: Richard Hayslip, Bill Heckman, Steve Helm, Mark Hiegel, Emily Hinchman, George Jackson,  Frank Jacobson, Michael King, Jason Kush, Larry Kush, John Little, Al Maag, Kevin Maxwell, Sean McGarry, Alex McLaren, Fred Mercaldo, Cory Miller, Mike Norton, Randy Nussbaum, Rachel Pearson, Todd S. Peterson,  Mary Platner, Denise Pulk, Dennis Robbins, Laraine Rodgers, Yvonne Rosales,  Jon Ryder, Rachel Sacco, Dan Schweiker, Gary Shapiro, Enid Seiden, Charlie Smith, Paula Sturgeon, Neil Sutton, Douglas Sydnor, Linda Tucker, Lawrence Tucker, Steve Tyrrell, Carter Unger, Josh Weiss, Sasha Weller, Raoul Zubia

Primary season is upon us; ballots soon in your hands!

July 9, 2020
09 Jul 2020

Ballots for the Aug. 4 primary are due to be mailed back on/before July 29. For additional voting information, see the Election 2020 election calendar.

“Young Voters Engage the Candidates”

Forums were held recently for the candidates for Scottsdale mayor and City Council. “Young Voters Engage the Candidates” virtual events were moderated by a young professionals’ panel. They were hosted by FUEL Scottsdale, a subgroup of SCOTT; Scottsdale Community CollegeScottsdale Leadership, Inc. and  Scottsdale Rising Young Professionals, a subgroup of the Scottsdale Area Chamber of Commerce.

The mayoral forum was held June 29; the council forum on June 30. Below are links to each in its entirety. To view specific segments, forward to the timing marker provided before each topic to see candidates’ responses.
 
Young Voters Engage the Mayoral Candidates
–1:40: What are five words that describe you, your campaign, your ideas for our city.
–3:48: Why should a young person vote for you?
–11:17: Attainable housing
–29:00: Diversity and inclusion
–35:57: Public safety and public health
–44:00: Education
–53:00: Economy
–1:02:00: Vision to inspire our children for the future of our city.

Young Voters Engage the City Council Candidates

(Guy Phillips declined to participate)

–1:46: What are five words that describe you, your campaign, your ideas for our city.

–3:48: Attainable housing

–11:24: Economy and heritage

–20:00: Why should a young person vote for you?

–29:20: Reaction to “I can’t breathe” at masks’ protest

–40:10: Education

–53:00: Diversity

–1:04:14 COVID-19 response

–1:12:48: Vision to inspire our children for the future of our city.

Civic Engagement: Many opportunities

June 24, 2020
24 Jun 2020

By Laraine Rodgers

For those of us who live, work, or do business in Scottsdale, this is a great time to learn more about the city, from simply receiving email updates to actively being a part of civic engagement.

When COVID-19 hit in March, the city quickly began to address issues caused by this pandemic. Emergency plans were put in motion and some staff was redeployed to help as needed. Staff rethought processes and focused on critical activities, needs of citizens, the community and the budget.

As the community at large started to adapt their practices during and beyond this emergency, interest in the city’s services and operations increased. Community outreach was expanded; timely updates were provided online for key information.

For the latest information, see City of Scottsdale COVID-19 Updates.

Due to limitations on in-person activity, many city services modified delivery methods and continue to focus on, “Simply better service for a world-class city.” Changes were made to the way Scottsdale’s citizens engage and participate as a community, enabled by increased use of technology and communication platforms.

The requirement for community input and feedback throughout Scottsdale’s municipal planning process emphasizes the role of residents across visioning, planning, and review processes.

Here are some ways to stay engaged:

–The General Plan: Citizens may engage with the ongoing General Plan effort: Specific links and more details can be found in blogs: SCOTT website.

–Operating Budget and CIP: The 2020/2021 Operating Budget and Capital Improvement Plan was adopted at the June 16 City Council meeting. The annual report to Citizens for 2019/2020 will be published by September. See the 2018/2019 report.

–Ongoing City Council meetings: The City Council Agenda and Minutes page provides links to council sessions, past, current and planned, with marked agendas with votes and actions. You’ll also find links to the city’s organization chart, with names and contact information.

–For now, physical facilities are not open to the public. The meetings can be viewed on Cox Channel 11, streamed online at scottsdaleaz.com (search “live stream”). Check each meeting agenda to see how to provide input and make comments.

–Volunteer: There are over 20 ways to engage with the city as a volunteer. Although the volunteer program is still on “pause,” you can reach out now to learn more. If you know High School students, encourage them to check out the Mayor’s Youth Council

–Board and commissions members provide input on a variety of issues affecting the city. You can learn more about their work and their meeting schedules, if there are any vacancies and how to apply to serve here. Their work and meetings are continuing electronically until further notice. There are vacancies on many of the city’s boards and commissions.

–Learn more about the candidates running for mayor and the three seats open on City Council in the Candidate information pamphlet. Two of the five mayoral and six of the nine council candidates will go forward to the General election on Nov. 3.

–Last day to register to vote is July 6 for the Aug. 4 Primary. You can also register to vote by mail by July 24. To learn more about the election see the City’s Election page on scottsdaleaz.gov.

Civic engagement opportunities abound, even during this pandemic. Your voice counts – at City Hall, with the community at large, and as a volunteer. This year there are two important ways you can engage with the City: Speak up by voting in the primary and in the general election. The ultimate method of civic engagement is your vote!

The Drivers of Scottsdale’s Economy

June 24, 2020
24 Jun 2020

By Jim Derouin

In our prior articles we have presented fundamental data about Scottsdale’s finances, so we know how the city’s revenues are generated. But what we often don’t know is what areas of the city generate the most business-related income for the city.

About 70 percent of the revenues for Scottsdale’s operating budget comes from local sales taxes and state sales and income taxes. This explains why only 10 percent of Scottsdale’s operating budget comes from property taxes. Scottsdale does an excellent job of raising revenue from sources other than property taxes.

The state keeps track of sales tax revenue by business category and we know that there are more than 18,000 businesses in Scottsdale that sell products and services.

For fiscal year 2019/20, retail sales were projected to account for approximately 26 percent of local sales tax revenue, followed by rental revenue at 15 percent, automobile sales at 14 percent, restaurants at 10 percent, construction at 9 percent, food at 7 percent and the remaining categories together amounting to about 19 percent.

Because data is not kept by area, the question is where in the city do these business categories operate.    

Scottsdale’s geography.

The city has about 185 square miles; of this, 25 percent is dedicated to the McDowell Sonoran Preserve (at a cost of about $1 billion). Although there are a number of resorts north of the Central Arizona Project Canal, little of the sales tax generating activity takes place there. That means other parts of the city must generate enough economic activity and tax revenue to maintain services throughout the entire city while keeping property taxes low. 

A lot of economic activity is spread through the area south of the canal. This includes among others, the McDowell Road Corridor and the Cure Corridor along Shea Boulevard.

But there are two mega-areas of economic importance: downtown and the Scottsdale Airpark.

Downtown: Small area, huge impact

Downtown Scottsdale is commonly confused with the Old Town District of Downtown Scottsdale. Old Town is one of 10 districts in “downtown.” Downtown runs from Scottsdale Fashion Square on Chaparral Road on the north to Earl Drive on the south; and from 68th Street on the west to Miller Road on the east. The applicable character area plan identifies the 10 districts (as shown on the district map). Downtown consists of about 2 square miles (or about 1,200 acres of the total 118,000 acres in the city.) Old Town consists of about 4 to 5 acres. 

We know generally what businesses exist downtown, but tax data is not kept by area. Based on presentations to the City Council for 2015, Fashion Square was responsible for 70 percent of gross revenues downtown while the Fifth Avenue and Old Town areas contributed 5 percent and 6 percent, respectively.

(Just to note: The recently withdrawn Southbridge Two development along Fifth Avenue was projected to produce $290 million in gross revenues annually – a five to six fold increase over the 2015 estimate for the Fifth Avenue district and a little less than half of what Fashion Square produced in 2015; in other words, it would have been a major generator of gross revenue downtown.)

The Airpark: Big contributor

Approximately 180,000 people work in Scottsdale; of those, 30,000 also live here. More than 10,000 jobs are in the healthcare industry (Honor Health, Mayo and CVS Health among others). Other major employers include Yelp, GoDaddy, Nationwide Insurance, the Scottsdale School District, General Dynamics, Vanguard and the city itself.

The Scottsdale Airport and Scottsdale Airpark account for 4,000 jobs. In 2014, the airport generated some $690 million in economic activity.

There are just under 500 aircraft based at the airport. Visitors for such events as the Waste Management Phoenix Open, Cactus League baseball and the Fiesta Bowl generated between $50 and $60 million in gross revenue in 2019. The Airpark is considered to extend to the Scottsdale Quarter and the area that includes the Scottsdale Promenade at Scottsdale Road and Frank Lloyd Wright Boulevard.

The Bell Road Corridor

The State Land Department owns multiple parcels of valuable land near the Loop 101 freeway that is within the city limits and already zoned by the city. Much of it is used for event parking associated with the Phoenix Open and the Barrett-Jackson auto show as well as serving as the current event site for the Celebration of Fine Art. 

Many commercial interests have shown a desire to build along this corridor, but they have wanted to own the land rather than lease it from the state. The Bell Road Study Area includes WestWorld, other land owned by the city and state and land involving additional recreational attractions and several resorts and hotels.

In 2018, there were about 19,000 acres of vacant land in Scottsdale (of a total of 118,000 in the city) of which 14,000 were zoned for residential use. The remaining 5,000 acres were zoned for commercial, employment, mixed use and other purposes, such as recreation and open space. The areas within the Bell Road Corridor owned by the state along the Loop 101 freeway can be expected to eventually be auctioned for commercial use, which will significantly increase the economic benefit to the city from these lands.

Where to from here?

Scottsdale is mostly built out. Most vacant land is zoned for residential purposes. To keep the city’s property taxes low, commercial land needs to be used in a way that generates sales tax revenue and general economic activity. 

The downtown needs to become a year-round economic engine rather than merely a seasonal attraction. It needs to become a place to live and work for 12 months out of the year.  Whereas Old Town needs to be protected, it is a very small piece of one of the most important economic contributors to the city’s finances and cannot be used as an excuse to let the downtown deteriorate and underperform.

And maximum use needs to be made of the remaining few vacant acres zoned for commercial use within the city’s boundaries.

The importance of tourism to Scottsdale

June 10, 2020
10 Jun 2020

By Jim Derouin

In terms of emphasizing the importance of tourism to Scottsdale, it can be simplified as follows: In fiscal year 2019-20, the city expected to get 47 percent of its budget revenues from the city sales tax and another 22 percent from the state shared tax revenue pool made up of proceeds from state sales tax and income tax collections.

In other words, basically 70 percent of the city’s budget was projected to be from state and local sales taxes and from state income tax sources. 

In contrast, revenue from the city’s primary property tax was projected to be 10 percent. This means that, of our total residential property tax bill, only five cents of each dollar of property taxes we pay goes to the city’s budget. Our property taxes are low because we generate lots of sales tax revenue.

And that leads to the importance of tourism.

Although tourism is not one of the economic sectors for which data is routinely kept by the state, the impact from tourism can be seen based on sheer numbers; and a 2019 study fills in lots of details. Source: Scottsdale Tourism Study, October 2019

In 2018, Arizona hosted 45 million visitors; of those, Scottsdale hosted 4.6 million overnight visitors (of which a whopping 1.7 million were international guests) and an additional 4.5 million “day visitors.” Tourism, however, is a “great multiplier” because visitors not only stay here at our 50 resorts and hotels, but they also shop at our retail stores and dine at our 825 restaurants. Visitor spending patterns in 2018 showed that 41 percent of visitor spending was for lodging, 27 percent for food and beverage, 12 percent for retail purchases and 11 percent for recreation and entertainment.

In total, the hotel/motel, retail and restaurant sectors contributed 42 percent of the city’s sales tax revenue (over and above their contribution to the state shared tax pool). In 2018, Scottsdale visitors created an annual economic impact of $3.1 billion. The top 10 activities for visitors were:  shopping, upscale dining, night clubs, visiting historic sites and landmarks, swimming, visiting state parks, museums, casinos, hiking and golf.

Economic impact data was kept for “domestic tourism” and “international tourism.” Domestic tourists were credited with spending $1.65 billion, generating $2.47 billion in total economic impact and creating 27,000 jobs. International tourists spent $443 million, generated $664 million in total economic impact and created 7,900 jobs.

In addition to sales tax revenue, hotel/motel users contributed an additional $22 million in bed tax revenue in 2018. Bed tax revenue funds a variety of events such as the annual Parada del Sol parade and a variety of capital projects at WestWorld (including the Tony Nelssen Equestrian Center), the Scottsdale Stadium, Museum of the West and the Tournament Players Club which hosts the Waste Management Phoenix Open — all of which, in turn, generate tax revenue for the city.

Every state has its own mix of taxes. Arizona cannot, for example, rely on oil tax revenue, thus it has created its own mix of taxes that disproportionately relies on the sales tax. When considering what Arizona has done, it is interesting to compare the tax mixes of a few other states

State               Overall Tax Rank                    Property         Income            Sales
                                                                         

Arizona                        27                                     32                    40                  12

Texas                           33                                     11                    44                  10

Florida                         47                                     27                    44                  17

Alaska                          50                                     12                    44                  46

(Source: Wallet Hub):

Note:  Florida, Texas and Alaska are tied for 44th in income tax burden because they have none.  Their tax mix is reliant on other means of raising tax revenue. Overall, however, Arizona has a good balance and clearly has attractive property tax rates. If Scottsdale were to try to replace the revenue it raises by sales taxes with revenue raised by property taxes, its rates would go up many fold. 

A pair of current issues being discussed in Scottdale, in light of COVID-19 restrictions that have largely killed tourism, retail sales and restaurant demand, are “how do we rebuild economic activity” and “can we diversify our economy.”

It is easy to note some of the immediate impacts of the crisis. One is that online sales, in competition with brick-and-mortar retailers, have increased by 60 percent.  We know that, as compared to March 2019, sales tax revenue was down 56 percent for the hospitality industry and 40 percent for restaurants. Overall, sales tax revenue was down 26 percent. At the same time, the city’s actual expenditures in this fiscal year are below projected expenditures; and the level of staffing is the lowest per capita in the last 15 years.

As stated in a prior article, Scottsdale is neither a retirement nor a bedroom community. Every day, 150,000 people enter Scottsdale to work here while 75,000 others leave to work elsewhere. In addition, 30,000 Scottsdale residents work in Scottsdale. Every dollar of income paid to a person employed in Scottsdale is thought to be a multiplier in its own right because they spend money at Scottsdale’s 18,000 businesses, including hospitals, restaurants, resorts and retail establishments.

In effect, while diversification is good, it is hard to do. But Scottsdale has a significant degree of diversification already even though, in tough times, we might wish that there would be more. Remember, however, that the buildings in the Airpark, along the 101 and in the downtown are generating tax revenue that keeps our property taxes down, too. 

We are a beautiful residential community, but we are far more; we are a vibrant, diverse community in which close to 200,000 people work — people who help pay our freight. Next time there is a debate about issues over growth and development, that reality should be kept in mind.

Jim Derouin is a long-time Scottsdale resident, attorney, and member of the city of Scottsdale’s Districting and Charter review task forces.

How the city’s planning process works

June 10, 2020
10 Jun 2020

By Laraine Rodgers

There has been a lot of focus recently on the subject of Scottsdale’s General Plan. It’s one of the top campaign issues heading into the city’s upcoming mayoral and City Council races. It clearly is one of the most pressing concerns on the minds of many residents in the city.

A citizen review committee (CRC) has been appointed to update the General Plan that will go to the City Council for review and action and ultimately to city residents to approve in 2021. As its work continues, it would be helpful to know how the city’s overall planning framework operates.

The city’s municipal planning process (see chart at end of this article) consists of an integrated framework at three levels, policy, regulatory/strategy and operations.The General Plan is the primary tool used to guide short- and long-term decision making for the city’s operations. Starting with a shared vision and guiding principles, the goals and policies are implemented through ordinances, regulations and procedures. Community input and feedback are received throughout the process.

Character Area Plans

“The city of Scottsdale has a long history of using area-based plans to provide policy and program direction for certain areas of the city. Consequently, Character Area Plans are components of the General Plan that focus on long range, area-related goals and policies. To avoid repetition, Character Area Plans supplement the city-wide goals and policies provided by the General Plan.” — Source: City of Scottsdale

There are three levels of the city’s planning process:

–Level 1: Citywide Planning: This incorporates policies that that apply to the city overall.

–Level 2: Character Area Planning: These plans, developed on a priority basis over a period of time, address goals and special attributes of areas like land use, infrastructure and broad urban architectural design philosophy.

–Level 3: Neighborhood Planning: These plans identify and implement efforts to improve specific neighborhoods within the city.

As of today, seven Character Area Plans have been adopted:

–Cactus Corridor (1992)

–Shea Area (1993)

–Desert Foothills (1999)

–Dynamite Foothills (2000)

–Southern Scottsdale (2010)

–Greater Airpark/Airport (2010)

–Old Town/downtown Scottsdale (2018)

Three of these plans — Southern Scottsdale, the Greater Airpark/Airport and Old Town/downtown Scottsdale — have been designated as growth areas, meaning areas considered as most appropriate for development focus. Old Town/downtown is the most recently updated plan.Since its adoption in 1984, the downtown Scottsdale plan had been successful at shaping its area’s growth, both financially and physically. Over time, the majority of the goals, policies and implementation programs established by the community have been successfully accomplished under the plan.

In January 2018 the City Council initiated the review of the 2009 downtown plan to adjust to changes in business, residential and retail uses. The city staff conducted a six-month public outreach process to obtain the community’s vision and goals for downtown and worked to align it with other plans adopted in prior years.Because the city rebranded downtown Scottsdale as Old Town Scottsdale after a year-long outreach project, the revised plan was renamed the Old Town Scottsdale Character Area Plan. City Council adopted it in July 2019. The city’s website lists several resources related to the Old Town Character Area Plan, including the Old Town Urban Design and Architectural Guidelines.

The General Plan

The work of the Citizen’s Review Committee (CRC) is a vital step in the update of the General Plan. State Statutes for public participation will be followed in all steps throughout the process:

· January to December 2020: CRC established; review and make recommendations on the Draft 2035 Plan. The Final Draft 2035 Plan will be released for community, Planning Commission and City Council consideration.

· January to July 2021: The Final Draft 2035 Plan will undergo public outreach: city boards and commissions, community open houses, study session, working sessions.

Here’s how you connect to the CRC: Work Plan, Meeting agenda and minutes. Public comment is welcome. Get involved!

Laraine Rodgers is a former chief information officer, long-time Scottsdale resident and civic leader and director of operations for SCOTT.

SCOTTSDALE: YESTERDAY AND TODAY

May 26, 2020
26 May 2020

As we reach a pivotal moment in Scottsdale’s history – an upcoming election for mayor and three city council seats combined with the devastating fiscal effects of the COVID-19 crisis – the Scottsdale 2020 committee over the next few weeks will be providing historical and fiscal background to give residents context and understanding as they look at what the city faces ahead.

By Jim Derouin

The story of Scottsdale begins in 300 BC with the area occupied by the ancient Hohokam, an indigenous people who practiced agriculture and built canals to carry water; there is evidence of their culture until about 1450 AD after which they were succeeded by the Pima and Papago. Many descendants today are members of the Salt River Pima-Maricopa Community.

In 1888, Army Chaplain Winfield Scott and his wife purchased 640 acres of land in what is now downtown Scottsdale. In 1937, Frank Lloyd Wright purchased what is now known as Taliesin West. In 1942, the current Scottsdale Airport, then called Thunderbird II Airfield, was created to train pilots for World War II. These were all pivotal events in the city’s development.

With a population of 2,000 residents, the city was incorporated on June 25, 1951, with an area of less than one square mile. Over time, the city has expanded to more than 184 square miles (about 118,000 square acres). Offset against this growth, Scottsdale citizens twice voted to increase the city’s sale tax, once in 1995 and once in 2004, to spend more than $1 billion to purchase the McDowell Sonoran Preserve and its 30,000 acres – or 47 square miles. That’s 25 percent of the city’s total area. The projected population of Scottsdale without the Preserve was 480,000; deducting the area for the Preserve leaves a projected population of 285,000.

Geographic growth brought more residents: population grew from 88,000 in 1980 to 202,000 in 2000 and an estimated 255,000 in 2018. The most explosive growth in the city’s history came between 1980 and 2000. Population has increased less rapidly since 2000 and Scottsdale is close to residential build-out.The median age of Scottsdale residents is 47 with 25 to 54 being the largest age group, followed by the 55 to 74 age group. Scottsdale’s median age is 9 years older than the national average, and the city is growing older.This has created challenges to the continued progress of Scottsdale and maintaining its quality of life. A recent study done by the Athena Foundation found that families with children have the highest incomes of any segment of the city’s population by age group, but that segment has decreased by 12 percent since 1990. The segment of those most likely to have children also has dropped by over 22 percent. The Athena study found that 19 schools have been closed in the city in the last 20 years.

Given those trends, including the fact that Scottsdale’s population is ageing, it is important that the residential buildout for the last 30,000 residents in Scottsdale be suitable to recruit and retain families with children.In terms of home values, Scottsdale has the highest median housing value ($433,000) of any of the large Valley cities. The next highest are in Chandler ($268,000) and Gilbert ($286,000). Of the 132,500 total housing units in Scottsdale, 81 percent are owned or rented by year-round residents while 19 percent are owned or rented by seasonal residents.

Data shows that Scottsdale is a self-sufficient, economically diverse city, not a bedroom or a retirement community. It is an employment hub which is important to supporting our lifestyle.Heath care, finance, insurance and technology firms dominate the list of Scottsdale’s largest employers. Along with 18,000 other businesses in the city (including those in the tourist, automobile, retail, entertainment and construction sectors), they generate sales tax revenue, keeping property taxes low and home values high.Each day, 150,000 workers enter Scottsdale while half that number (Scottsdale residents) leave to work elsewhere in the Valley.

The next chapter in this series will deal with how Scottsdale pays for itself. But, in ending this chapter, it is useful to recite why we are fortunate to live in Scottsdale and to celebrate what we have.

Scottsdale is an asset-rich community; but it won’t stay that way without appreciating what got us here.

Here is a short list of the assets and amenities that make Scottsdale great.

· 42 parks consisting of 975 acres

· 30,000 acres (47 square miles) of Preserve land

· 70 athletic fields

· 4 aquatic facilities

· 4 urban lakes

· 5 public libraries

· 2 senior centers

· 6 community centers

· 37 playgrounds

· 39 basketball courts

· 53 tennis courts and 2 tennis centers

· A world-class, multi-use, multi-purpose baseball stadium

· 3 equestrian centers

· 129 miles of paved pathways

· 153 miles of unpaved pathways

· 31 volleyball courts

· 19 pickleball courts

· 2 skate board parks

· A renowned railroad park

· 38 public schools with 25,500 students

· Scottsdale Community College, with more than 6,000 students

· The Arizona State University Scottsdale Innovation Center at SkySong

· 7 museums· An international airport that generates $1.9 million a day in economic benefit

· 111 art galleries and art dealers

· 827 restaurants

· 50 hotels with 8,800 rooms as part of a tourist industry that is unparalleled

· 18,000 businesses

· 51 golf courses, many irrigating with recycled water

· WestWorld, an event center with about 300 special events annually

· 4 police stations

· 15 fire stations

· 6 water treatment facilities which deliver 66 million gallons of water daily

· 52 solid waste trucks

· 1,483 miles of sanitary sewers and

· 2,126 miles of water mains.

Keeping Scottsdale great will require constant effort. No place moves forward (or, for that matter, maintains its status) by standing still.

Jim Derouin is a long-time Scottsdale resident, attorney, and member of the city of Scottsdale’s Districting and Charter review task forces.

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