(Source: AZCentral): Dustin Gardiner
Almost two years after Phoenix canceled a downtown land sale over conflict-of-interest concerns involving Councilman Michael Nowakowski, the city finally has agreed to sell the property to a developer.
The City Council voted 5-1 on Thursday to approve the terms of the sale. Trammell Crow Co., a large commercial real-estate firm that was part of the canceled first sale, is the master developer of a team selected to buy and redevelop the coveted 7.6-acre property.
The company will pay $10 million for the land, on Fillmore Street between Fourth and Sixth avenues, but receive up to $3.1 million back from the city in reimbursements for building “public-infrastructure improvements.”
Trammell Crow plans to transform the vacant piece of city-owned property into “The Fillmore,” a bustling urban center with about 659 apartments, 20 townhomes, retail shops and office space, sidewalk cafes and plazas.
While the project is poised to transform a sleepy corner of downtown, it was mired in controversy related to Nowakowski’s conduct.
In November 2015, concerns about Nowakowski’s conduct led the city to scrap a plan to sell the property to Trammell Crow and the Cesar Chavez Foundation, a non-profit where Nowakowski is an executive vice president. Trammell Crow successfully rebid for the project without the Chavez Foundation as its partner.
Still drawing scrutiny
Nowakowski’s involvement in the first bidding continues to draw scrutiny.
The Arizona Attorney General’s Office has conducted an investigation stemming from the incident since at least spring 2016. Public records indicate the probe includes a review of the Fillmore land sale.
A spokeswoman for the attorney general did not respond to a request for comment Thursday about the status of the investigation.
Nowakowski was accused of failing to disclose a conflict of interest related to the city’s first attempt to sell the property. He has denied any wrongdoing, and a city-funded report from a private law firm found no evidence that Nowakowski violated any laws.
But critics blasted the law firm’s report as being incomplete because Trammell Crow refused to provide emails and other requested documents.
On Thursday, Nowakowski recused himself and left the council dais during the vote.
The councilman released a statement Thursday praising the project, but didn’t address the attorney general’s investigation.
“As the council member representing the downtown, this unparalleled opportunity will be a catalyst for further growth and redevelopment in the area,” Nowakowski wrote.
Developer gets $3.1M reimbursement
Trammell Crow’s vision for the property calls for a $140.7 million mixed-use development that would be the largest residential project downtown, based on the number of units.
The company had originally requested a property-tax break from the city, on the rental portions of the project, but that wasn’t part of the final deal council members approved.
Eric Jay Toll, a spokesman for the city’s Community and Economic Development Department, said the street and paseo “would normally not be required for a project of this type.” He added, “because of the size of the east-west connection, the city is offering to offset a portion of the cost.”
Councilman Jim Waring, a frequent critic of taxpayer incentives for developers, cast the lone vote in opposition to the deal. He did not respond to a request for an explanation for his vote.
Council members Sal DiCiccio and Kate Gallego were not present.
Some renderings of the proposal appear similar to Trammell Crow’s first bid, but there are several differences:
- Trammell Crow is no longer partnered with the Cesar Chavez Foundation.
- Trammell Crow’s $10 million offer for the vacant land is above its previous $9 million offer and the land’s 2015 appraised value of $8.5 million.
- Trammell Crow’s proposal includes both for-rent and for-sale housing. The previous bid only included apartments.
The company submitted its bid under a subsidiary, High Street Fillmore LLC. Trammell Crow has two primary partners on the project: Principal Financial Group and MetroWest Development.
The project would come in two phases, and construction must start within 18 months