Scottsdale approves Marcato Village rezoning to 235 condos, Fairmont hotel expansion with 155 rooms
SCOTTSDALE, ARIZONA — December 4, 2024

Scottsdale approves Marcato Village rezoning to 235 condos, Fairmont hotel expansion with 155 rooms

City Council approved Marcato Village rezoning (6-1) with condos replacing apartments after multi-year opposition, and unanimously approved Fairmont Princess Hotel expansion with 44% parking reduction, while audit showed strong financial health with AAA rating and $200M+ fund balance.


Scottsdale Approves Mixed-Use Condo Rezoning and Hotel Expansion; Audit Confirms AAA Financial Health

The Scottsdale City Council took decisive action on three major items at its December 4, 2024 meeting, approving a long-contested 6.64-acre mixed-use development with for-sale condominiums, unanimously clearing a 36-year-old resort expansion with a 44% parking reduction, and accepting a clean financial audit that underscores the city's fiscal strength despite looming state revenue cuts. The decisions reflect the council's commitment to its General Plan 2035 and to preserving local control over land use in the face of state legislative pressure on residential zoning.

Key Speeches

The debate over Marcato Village crystallized the tension between neighborhood preservation and growth policy. Councilman Tom Durham framed the vote in terms of the adopted General Plan:

"The General Plan determines what the citizens want to see in Scottsdale, and I feel obligated to follow it. This plan meets the General Plan more than almost any project we've voted on in the last four years." — Councilman Tom Durham

Councilwoman Jan Dubauskas echoed that sentiment while acknowledging the project's difficulty:

"You have responded to that opposition and you have neutralized the opposition. I'm very impressed with that. I have not been able to do that." — Jan Dubauskas Mayor Barry Graham, the sole dissenter, expressed concern about the enforceability of the condo restriction and the traffic impact:

"This area is unlike any area in the city in that its congestion for traffic is uniquely high and those things just give me pause for concern." — Vice Mayor Barry Graham

Councilwoman Solange Whitehead rebutted concerns about government overreach, noting the switch to condos was a major concession:

"I have to admit I'm a little bit shocked that councilman Barry Graham wants the city to overreach to that extent into the free market and into a private development agreement and a private business." — Solange Whitehead the Fairmont expansion, Councilman Tom Durham noted the resort's track record and the success of the parking strategy:

"They have been operating this hotel for 36 years; they don't have any parking problems. Only 27% of the resort guests today have cars... and only 8% of conference users do not stay at the hotel." — Jordan Rose, representing Fairmont Scottsdale Princess Hotel

Timeline

Marcato Village General Plan Amendment and Rezoning

Fairmont Scottsdale Princess Hotel Master Plan Update and Ground Lease Amendment

FY 2023-24 Financial Audit and Compliance Report

Opposition

Marcato Village Opposition:

Support

Marcato Village Support:

Project Details

Marcato Village Mixed-Use Development

Fairmont Scottsdale Princess Hotel Expansion

Ground Lease Amendment (Item 22)

Vote Breakdown

Marcato Village General Plan Amendment and Rezoning:

Fairmont Scottsdale Princess Hotel Master Plan Update (Item 21):

Fairmont Scottsdale Princess Ground Lease Amendment (Item 22):

FY 2023-24 Financial Audit and Compliance Report:

Outcome & Next Steps

Marcato Village:

The rezoning was approved 6-1. Resolutions and ordinances adopted:

The project now proceeds to the Design Review Board process for detailed architectural and site plan review. The applicant recorded a private deed restriction limiting the property to for-sale condominiums (not enforceable by the city, but serves as a contractual commitment to the developer's stated intentions). Key conditions include signalization of the intersection at Cois and 92nd Street, cross-access easements for truck traffic and future development, compliance with International Green Construction Code, and adherence to Scottsdale Green Building Codes.

Fairmont Scottsdale Princess:

Both the master plan update (Item 21) and ground lease amendment (Item 22) were approved unanimously. Ordinance 4659 amends the development plan to allow the expanded guest rooms, restaurant, conference space, and building height increase. Resolution 13305 declares the development plan a public record. Resolution 13297 authorizes the Fifth Amendment to the ground lease agreement (25-CE1-A5). Vice Mayor Barry Graham suggested the applicant consider adding an additional level to the parking garage in the future, though no formal condition was imposed.

Financial Audit:

The audit was accepted unanimously. The city is required to present a compliance report regarding the state-imposed expenditure limitation. The audit cleared the city on all fronts: clean opinion, AAA bond rating maintained, $200M+ fund balance, 25%+ general fund reserve, and clear federal grant audit (housing program cleared prior findings). The city treasurer and city manager will continue to recommend additional PSPRS pension liability paydown in future budgets to reduce the public safety personnel cost burden (currently 50+ cents per dollar earned; comparable cities are at 65+ cents or dollar-for-dollar). The council is expected to revisit the parking code in future sessions to better accommodate hotel and multi-use projects that do not impact public parking or neighborhoods.

Controversies & Context

Marcato Village:

The rezoning has been before the city for multiple years, with substantial and vocal opposition from McCormick Ranch and Cactus Quarter homeowner associations. The primary concern has been traffic on the 92nd Street corridor, which residents and some council members acknowledge as one of Scottsdale's most congested segments. However, data reviewed by Councilman Tom Durham indicated the 92nd/Shea intersection is not a top collision hotspot, and collision rates have been declining. The applicant's willingness to switch from apartments to for-sale condominiums significantly reduced opposition, as did the inclusion of a signalized intersection, cross-access easements, and enhanced design with street-front setbacks.

Barry Graham primary concern was the lack of enforceability of the condo-only deed restriction. He noted that if the developer later determined condos were not economically viable, the city would have no mechanism to prevent a conversion to apartments. A development agreement was considered but rejected by city staff because it would not solve the enforceability problem (the city would still be unable to compel the developer to build condos or prevent a subsequent conversion). The applicant indicated the condo model is intended to be permanent, citing Caliber Company's long-term Scottsdale presence and the higher construction cost and quality inherent in the condo product.

State Legislative Pressure:

Councilwoman Solange Whitehead and Councilwoman Maryann McAllen referenced Arizona's recent adaptive reuse law, which allows residential development by right in commercial areas without local land-use review. Scottsdale currently falls within a "loophole" that may be closed in the next legislative session. If the law is amended to include Scottsdale, the property owner could return and develop by right (without city approval) as apartments, stripping the city of its ability to negotiate quality standards, design, parking, traffic mitigation, or any other community benefits. Approving a well-designed condo project now preserves local control.

Fairmont Scottsdale Princess:

The parking reduction of 44% was the primary point of contention, though no council member voted against it. Vice Mayor Barry Graham expressed discomfort, wishing for a smaller reduction (15–25%). However, the applicant's 36-year track record of successful operations without parking complaints, combined with data showing only 27% of guests have cars and only 8% of conference attendees do not stay at the hotel, provided confidence. Multiple council members (Solange Whitehead, McAllen) noted that the city's parking ordinance is overly stringent for mixed-use facilities, requiring parking for each separate use as if patrons would not overlap. A future review of the parking code was encouraged.

Councilman Tom Durham also asked whether the 2% ground lease rent could be updated, given inflation and the resort's success. City Engineer Alison Timm confirmed the rate has been flat since 1986 with no escalation clause. No motion to amend the lease terms was made, and the 2% rate was accepted as part of the amendment.

Financial Audit and Fiscal Context:

The FY 2023-24 audit is clean, but the treasurer's presentation highlighted significant near-term revenue headwinds: elimination of the residential rental sales tax (state action), state income tax reductions, and normalization of sales tax growth (from the pandemic-era 99.7% growth in 2023 to -3.4% in 2024, reflecting the prior year's Super Bowl-driven spike). Proposition 491 (voter-approved increase to the expenditure limitation, effective FY 2525-26) and Proposition 490 (community facilities district) are critical to maintaining fiscal flexibility. The city is currently at 94% of the state-imposed expenditure limitation and faces pressure to contain costs even as PSPRS pension liability remains a concern (the city pays approximately 50+ cents per dollar earned in public safety wages toward the pension; comparable cities in the valley pay 65+ cents or dollar-for-dollar).

Mayor Ortega emphasized that several high-profile projects (Pima Road, Scottsdale Road, Fire Academy building) have been successfully managed through strategic use of federal and county funding, as well as judicious deployment of general fund reserves. The city's AAA bond rating, $200M+ fund balance, and 25%+ general fund reserve position it as the strongest fiscal entity in the valley—a narrative that stands in stark contrast to election-cycle criticism of financial mismanagement.

Duration

Other Notable Items

Dog Park Etiquette Signage Petition (Public Comment): Steve Sutton, a frequent user of Cholla Dog Park, presented a petition requesting city installation of large-format dog park etiquette signs (approximately 3/4 the size of a 6-ft by 7-ft fence panel) in the dog park to encourage owners to manage their dogs' behavior and reduce conflicts. The sign's dual message (primary command, secondary explanation) is intended to serve as a communication tool among users, helping prevent escalation to dangerous confrontations. Sutton argued the signs are more effective than small, text-heavy regulatory signs and noted that incidents of verbal and physical assaults among owners (over dogs' behavioral conflicts) have occurred. The council took no action; the petition was presented for consideration.