SkySong

The project was billed as a business incubator and research park that officials hoped would help revitalize the blighted McDowell Road corridor. Scottsdale paid more than $40 million for about 40 acres.

SkySong’s first two office buildings opened in 2008. A 325-unit apartment complex opened in 2014, followed by a third office tower last year. Construction on a fourth office building along with a restaurant complex is underway.

Hotel could bring 120 rooms

The new SkySong hotel is expected to be a Starwood brand, according to Don Couvillion, vice president of real estate for ASU Foundation. The hotel developer paid $75,000 for a franchise agreement with Starwood and wants to move forward quickly to avoid complications from Starwood’s impending merger with Marriott International, he said.

Starwood brands include Westin, Sheraton, Aloft and Elements, among others. Officials have not announced which brand would open at SkySong but have said the hotel will feature 120 rooms and a ground floor restaurant open to the public.

The hotel is planned for the southwestern corner of the SkySong complex, near Scottsdale Road and Enterprise Drive.

Sharon Harper, CEO of Plaza Cos., said about half of the current tenants at SkySong use local hotels on a weekly basis and thousands of people visit the complex each month for meetings and conferences.

“The hotel component has been planned since the project’s inception,” Harper said. “A high-level hotel will be a great amenity in helping SkySong attract more regional and national corporate headquarters.”

ASU Foundation will pay additional rent to the city — about $42,000 per year for a 100,000-square-foot hotel — if the foundation enters into a lease with the hotel developer by July 6, 2017.

Councilman criticizes hotel plan

Plans for the hotel sparked criticism from City Councilman David Smith, who argued the public-private project has strayed too far from its original purpose as a technology center.

“I’m deeply troubled by the fact that this is morphing into a project competing with the private sector for hotels, apartments and restaurants,” Smith said. “We’re getting further and further from the original objective.”

Catalyst to revive neighborhood

South Scottsdale’s McDowell Road corridor — once known as the “Motor Mile” for its array of car dealerships — fell on hard times during the 1990s. Competition from other regional shopping malls put Los Arcos out of business. Auto dealers left for newer locations, and vacancies added up.

“For several years, this southern part of our city, the neighbors and businesses in this area, dealt with a real fear of the unknown,” Councilwoman Virginia Korte said. “We saw our property values tumble.”

A plan to replace Los Arcos with a Phoenix Coyotes hockey arena emerged in 1998 but fell apart amid community opposition and mixed views from the City Council. The partnership for an “ASU Innovation campus” formed in 2004, and the complex has since helped usher in what many see as a new era for the corridor.

Scottsdale Mayor Jim Lane said he initially opposed the SkySong project over some of the same concerns shared by Smith. But Lane said he “puts a lot of stock” in the SkySong development team assembled by ASU President Michael Crow and urged the council to support the partnership.

“Hotels have always been called for (at SkySong),” Lane said. “It’s within the agreement. It’s always been talked about.”

According to a recent analysis by the Greater Phoenix Economic Council, SkySong is expected to have a $32 billion economic impact while generating more than 10,000 new jobs over the next 30 years. The complex could have 11 office buildings open by 2022.

While most of the 42-acre project is leased to ASU Foundation for development, Scottsdale retains a 1.5-acre lot within SkySong for its own use. Before ASU could lease property for the new hotel, however, it needed the City Council to clarify where that 1.5-acre parcel will be.

The council decided to reserve its land, which could be used for a public project or sold to a private developer, at the southeastern corner of McDowell Road and Innovation Place, according to the July 6 vote.

Smith again voiced concerns that it appeared ASU was dictating to the city where its land would be and picked a site that is partially blocked by a Salt River Project well.

“I think I’m wondering who’s in charge here,” Smith said. “This is our land that we have leased to ASU Foundation, and they’re telling us where the acre and a half is going to be.”

Smith’s statements evoked a strong reaction from other council members, including Councilwoman Linda Milhaven, who defended the SkySong project.

“I can’t help but feel my colleague’s concerns are a little bit about fretting over spilled milk,” Milhaven said. “The real purpose of SkySong was to be a catalyst for this part of our community.”

Milhaven said the property was a “humongous dust bowl” for many years as property values declined and merchants fled the area. Neighbors were begging the city to do something, she said.

“It has certainly served its purpose as a catalyst, and if over the last 20 years it’s now going to also include apartments and hotels, I think bravo,” Milhaven said.

Smith suggested Milhaven and Korte, who had thanked him for “a stroll down memory lane,” were getting too personal in their comments.

“I will try not to offend my colleagues here by talking about spilled milk or going down memory lane,” Smith said. “We’re getting a little personal here.”