Fountain Hills Council considers 400-unit Daybreak mixed-use development requiring general plan amendment

Fountain Hills Council Weighs Controversial 400-Unit Daybreak Development as Staff Cites Design Gaps, Parking Concerns, and Grading Disputes

The Fountain Hills Town Council opened a contentious public hearing on October 2, 2019, on the Daybreak mixed-use development proposal—a request to amend the general plan from lodging to multifamily residential and rezone 60 acres at the northeast corner of Shea Boulevard and Palisades Drive for 400 apartment units, 270 unrestricted and 130 restricted for seniors age 55 and older. Planning Director John Wesley presented a neutral staff analysis identifying a range of unresolved technical and design issues, while developer representatives argued the lodging designation has been economically unviable for nearly 30 years and offered to address all staff concerns through a tiered approval process.

Key Speeches

"It's looking at kind of what the preponderance of the [general] plan is saying, trying to weigh those things out." — John Wesley, Planning Director

"This property has been designated for the lodging use since the 1990s, rezoned from R-1 to lodging back in '99, but no development has occurred consistent with that plan or zoning over this last 20 years." — John Wesley, Planning Director

"I've attempted to get other developers to look at this for alternative uses… The two new resorts in around Scottsdale, Mountain Shadows and Talking Stick Resort, both have residential components… It is the only way they become financially feasible today." — Greg Vogel, Real Estate Broker, Daybreak Advisor

"There is a real shift demographically in this country, and there are more rental households now than there has been in the last 50 years." — Jeremy Harrell, Daybreak Development Team

"Every time we have a project come before us in the last 15 years, parking has always been an issue… And before it's all over with, the parking is never met to the standards of Fountain Hills, and time again it is presented to us as Fountain Hills is requiring more parking that is actually needed or required in any other town." — Councilman Brown

"The time and time again these projects are brought before us in the town of Fountain Hills and the main issue that seems to drag the projects down is parking… The apartments behind us, the biggest issue was parking and it was dragged through the mud for weeks before we finally all agreed that it's okay… The apartment building's virtually full." — Councilman Brown

"To say that people at that age group are likely to have one car doesn't make any sense to me… If what you're suggesting is we might be able to find room for some more, I'm all for it." — Councilman Magazine

"We either did something very great or something not so great, but then I realized you had some couple of controversial issues on your agenda, so I was relieved." — State Senator (District 23)

Timeline

• Invocation and Reports (7:00–8:00 p.m.): Mayor Jenny Dickey opened with a fire prevention proclamation and hosted three District 23 state legislators (Representative Cavanaugh, Senator, and Representative Lawrence) who briefed the council on bills passed in the recent legislative session, including short-term rental regulations, animal cruelty penalties, and online sales tax collection (effective October 1).
• Call to Public (non-agenda items): Pam Agaloo urged the Council to think long-term about revenue and community needs rather than opposing development.
• Consent Agenda: Approved unanimously, 7–0.
• Staff Presentation (8:00–9:00+ p.m.): John Wesley presented a 60+ minute overview of the general plan amendment (23 acres, lodging to multifamily) and rezoning request (60 acres to Daybreak PAD). Council members interjected with extensive questions on lodging viability, density calculations, parking standards, grading/cut-and-fill, traffic analysis, and design standards. Town Engineer Randy Harrell addressed traffic and grading. Wesley outlined four major staff concerns: (1) parking inadequacy for 55+ seniors; (2) excessive grading (57-foot fill, 30-foot cut vs. 10-foot code limit); (3) minimal pedestrian connectivity; (4) architectural design below "exceptional" threshold.
• Recess: Council took a break at approximately 8:45 p.m. and reconvened at 8:00 p.m. for developer presentations.
• Developer Presentations (8:00–9:30+ p.m.): Brennan Ray (Daybreak attorney) presented justification for the general plan amendment, citing 30 years of zero lodging offers and comparing the proposed project favorably to the previously approved 5-story resort hotel (smaller buildings, lower massing, better architectural design). Greg Vogel (real estate broker) testified that the site has zero market feasibility for a resort, emphasizing he has found no offers in seven years and that modern resorts require golf, casinos, or exclusive residential to be viable. Jeremy Harrell (development team) addressed common objections: property values (citing Harvard/MIT studies showing multifamily does not harm nearby home values), traffic (1.7 trips per minute on average, 3 per minute at peak, no signal/roundabout required by traffic study but offered to address neighbor concerns), parking (1 space per 55+ unit is consistent with other valley senior communities and national standards), hillside cut (approved 30-foot cut already in prior zoning; 57-foot fill only in specific limited area for safe southern access and storm water retention), and demographics (national shift toward renters, especially 55+ demographic and under-35 professionals).
• Public Comment: Began at approximately 9:30 p.m. First speaker, Rick Ponzo (Palomino Boulevard resident near Palisades), testified in favor, noting he lives close to the site and still opposes excessive concerns about traffic; cited Park Place apartments did not create predicted traffic problems. Second speaker, Bob Courtney (West Ridge Village HOA president), testified against, arguing the PAD is incomplete and should be resubmitted to the full public process (Commission and Council) before staff approval; raised concerns about traffic on Palisades (described by staff as "most dangerous road in Fountain Hills"), noting a 2011 approved hotel development plan proposed the traffic light further north on the hill.
• Hearing Status: Public comment was continuing as the transcript ended; no vote had been taken.

Opposition

• Number of Speakers Against: Transcript shows at least one organized opposition group (West Ridge Village HOA through Bob Courtney); additional speakers expected but not fully captured in transcript.
• Main Concerns:
  1. Parking Inadequacy for 55+ Senior Component: Staff report notes only 76 spaces for 105+ senior apartment units; senior residents (70s and 80s) often have multiple vehicles despite developer claims; shuttle service insufficient substitute.
  2. Traffic Safety on Palisades Boulevard: Neighbors assert Palisades is already the "most dangerous road in Fountain Hills" with speeding (45 mph limit often exceeded); only 1.7 average trips per minute (3 at peak) may underestimate cumulative impact with nearby Copper Wind resort and Adero Canyon projects; question whether roundabout/signal should be at northern (previously approved) location rather than 600 feet south near Shea.
  3. Excessive Hillside Grading: 30-foot cut and 57-foot fill far exceed 10-foot code maximum; concerns about natural topography preservation per general plan; potential blasting impacts on nearby homes (video documentation and seismic monitoring typically required but liability issues unresolved).
  4. Incomplete Development Agreement and Architectural Standards: PAD lacks full design detail (elevations, material boards, utility equipment concealment, colors, lighting, signage); staff stipulation to "upgrade design and amenities to meet exceptional standards" is vague; should require full revised site plan return to Planning & Zoning Commission and Council, not staff-level approval only.
  5. Loss of Last Practical Lodging Site: Property designated for lodging since 1990s; while market may be weak, approval converts town's only remaining potential resort site to permanent residential use; question whether other uses (office, medical, educational) better serve community long-term needs.
  6. Incompatibility with Existing Neighborhoods: Concerns about mixed 55+ senior and under-35 multifamily community adjacent to established single-family (Summit at Crestview, West Ridge Village) neighborhoods; architectural design not "exceptional" as required; limited amenities (single pool/spa/clubhouse on south side; no playgrounds, picnic tables, or amenities serving northern residents without driving).
  7. Unsuitability of Specific Demographic Mix: 55+ component primarily serves residents in 70s-80s and may not attract younger professionals/families that town needs to sustain schools and commerce; isolated senior apartments from main 270-unit community.
• Most Compelling Arguments:
  • Palisades Boulevard is documented by staff as dangerous; traffic study may not fully account for Copper Wind and Adero Canyon projects (MAG projections used but don't include specific future projects).
  • Parking stipulation for 55+ seniors leaves apartment building short ~30 spaces; convertible landscaping to parking is uncertain and undetailed.
  • PAD process circumvents full public re-review if final site plan approved by staff rather than Council; this is a first-time opportunity to set exceptional design standards for a major site.
• Organized Groups:
  • West Ridge Village Homeowners Association (Bob Courtney, President).

Support

• Number of Speakers For: Transcript captures at least one public speaker; developer and representatives support throughout.
• Main Arguments:
  1. Resort Designation Economically Unviable: Property has been marketed for 30 years (since 1990s) with zero offers; current owner has held it 7+ years with no serious inquiries; reputable broker (Greg Vogel, largest land brokerage in country) found no interest; modern resorts require golf, casino, or high-end residential tie-in to be financially viable; site lacks golf, seclusion, shopping proximity, and security.
  2. Multifamily is Appropriate Alternative: Staff report itself states multifamily is "an appropriate alternative" to lodging; general plan encourages diversity in housing; recent national and Phoenix-area trends show shift from single-family to multifamily and rental housing.
  3. Traffic Impact Acceptable: Independent traffic study approved by town engineer shows 1.7 average trips per minute (3 at peak rush), split between two entrances; nearly identical to hotel's traffic projection; no signal or roundabout required by traffic study but developer voluntarily offering one; intersections meet/exceed code visibility and safety standards; applicant placed entries where town engineer directed.
  4. Parking Standards Outdated: Fountain Hills' ordinance does not distinguish senior independent living from standard multifamily; nearby cities use 1 space per 55+ unit standard; national standards (CITE) average 0.59 per unit; previous Keystone project operated successfully with reduced parking; no complaints to date at Park Place apartments despite similar parking reduction.
  5. Grading Comparable to Approved Projects: Firerock (27-foot cut), Camelback Canyon (27-foot cut), Darrell Canyon (27–38-foot cuts) previously approved; prior hotel zoning on this site also approved for 30-foot cut; 57-foot fill is localized to southern access/storm water retention area only; grading preserves views for existing neighborhoods; avoids 4+ million yards of dirt import/export (as lodging plan would have required).
  6. Project Superior to Approved Resort: Proposed buildings are 3 stories (vs. 5-story hotel); smaller massing; greater separation; better architecture and desert blending; lower building heights reduce view impact; better open space (80% of site); fewer light and noise impacts (no weddings, conferences, events).
  7. Economic and Demographic Benefits: GPEC analysis: $20M local employment income, $42M consumer spending, $2.2M sales tax, $1.7M rental tax over 10 years; addresses national demographic shift (55+ is fastest-growing segment; under-35 renters increasing); 52% of Fountain Hills already 55+; project provides housing to retain seniors and attract younger professionals/families to support schools and commerce.
  8. Developer Committed to Stipulations: All staff-recommended stipulations agreed to in writing; meetings with Planning Director Wesley clarified specific code chapter 19 design standards to satisfy "exceptional design" requirement; developer willing to increase parking if needed; committed to shuttle service; flexible on color palette; agreed to eliminate assisted-living references and adopt roundabout to address neighbor traffic concerns.
• Most Compelling Arguments:
  • Seven-year marketing effort with zero offers is strong empirical evidence of resort non-viability; current owner has strong incentive to develop if economically viable.
  • Traffic study shows minimal impact (1.7/3 trips per minute); same volume as approved hotel but with more distributed, less event-driven pattern.
  • Grading/cut-and-fill similar to recently approved projects (Firerock, Camelback Canyon); 57-foot fill isolated to one area serving flood control and safe access.
  • GPEC economic analysis shows substantial local tax and employment benefits ($20M+ over 10 years).
• Organized Groups:
  • Daybreak Development team and representatives.

Project Details

• Case Number: Not explicitly stated in transcript; referenced as "three items" (general plan amendment, rezoning, development agreement).
• Applicant / Developer: Daybreak Development (represented by Brennan Ray, attorney; Jeremy Harrell, development team; Greg Vogel, real estate broker/advisor).
• Attorney: Brennan Ray (Ray Law Firm) — primary counsel presenting on behalf of applicant.
• Location / Address: Northeast corner of Shea Boulevard and Palisades Drive, Fountain Hills, Arizona.
• APN: Not stated in transcript.
• Current Zoning → Proposed Zoning: L-3 (Lodging) with PUD (Planned Unit Development) overlay and OSR (Open Space Residential) → Daybreak PAD (Planned Area Development).
• General Plan Designation Change: Lodging (on ~23 acres) → Multifamily Residential, Medium Density (4–10 units per acre).
• Density / Units / Square Footage:
  • Total Units: 400 (270 unrestricted multifamily apartments + 130 restricted 55+ senior units)
  • Unrestricted Apartments (Lot 1A): 270 units, 1–3 bedrooms, standard walk-up apartments and garages with apartments above
  • Restricted 55+ Senior (Lot 1B): 130 units, townhomes with 2-car garages and apartments, independent living (no assisted living per revised proposal)
  • Density: 6.7 units per acre (calculated on full 60-acre PAD); 10+ units per acre if calculated only on 23-acre general plan amendment area
  • Acreage: 60 total acres; 23 acres subject to general plan amendment; ~37 acres open space buffer (including common areas, trails, landscaping, drainage)
• Changes from Previous Version:
  • Eliminated assisted-living designation (per neighbor requests and revised proposal)
  • Offered roundabout or traffic signal at Shea/Palisades intersection (not originally required by traffic study; offered to address neighbor traffic concerns)
  • Shuttle service for 55+ seniors (added to address parking concerns)
  • Agreed to all staff stipulations without modification
  • Preliminary site plan status (not full engineered submission); applicant seeking approval to submit revised, detailed site plan post-entitlement

Vote Breakdown

• Final: Not taken; hearing ongoing at end of transcript.
• Yes: N/A
• No: N/A
• Abstentions / Absences: N/A
• Note: Mayor Jenny Dickey, Vice Mayor La Crone [phonetic transcription unclear], Councilman Charnow, Councilman [name not clearly transcribed], Councilman Brown, Councilman Magazine, Councilman Spelch [phonetic] all present; specific individual votes not recorded as of transcript end.

Outcome & Next Steps

The public hearing was ongoing at the end of the transcript. A decision was not rendered. The Council is expected to:

1. Continue Public Comment: Audience members will present testimony (3 minutes each) for and against the proposal; Council members may request clarification but not debate directly with speakers.
2. Council Discussion: After public comment concludes, the Council will discuss and debate the merits of the general plan amendment and rezoning.
3. Possible Outcomes:
   • Approve General Plan Amendment + Rezoning + Development Agreement: If approved, developer commits to submitting a revised, detailed site plan within 180 days addressing all stipulations. Key Issue: Staff will review and approve the revised site plan administratively; however, multiple council members (notably Councilman Brown and Vice Mayor) questioned whether the revised site plan should return to Planning & Zoning Commission and/or the full Council for public re-review rather than staff-only approval.
   • Approve General Plan Amendment + Deny Rezoning: Would preserve flexibility for alternative uses but leave developer with costly entitlement and uncertain future.
   • Deny Both: Would effectively block the project; developer (or successors) unlikely to return to Fountain Hills given process length and denial precedent.
4. Stipulations (if approved): Staff report includes conditions that developer has agreed to address:
   • Design & Amenities Upgrade: Building setbacks (25 feet from property line or building height, whichever greater); pedestrian connectivity throughout site; detailed amenities (clubhouse program, colors, materials, signage, lighting, utility screening).
   • Site Plan Revision: Return with full engineered elevations, material boards, landscape details, and parking solutions.
   • Hillside Protection Easement: Minimum 33 acres designated as non-disturbance hillside preservation.
   • Parking: Flexibility to convert landscaping to additional parking spaces if operational experience shows need; shuttle service for seniors.
   • Blasting & Soils: Full geotechnical study required; blasting (if needed) subject to standard pre-blast foundation videography and seismic monitoring within 750-foot radius.

Controversies & Context

Lodging vs. Multifamily Land Use (Central Dispute)

The property has been designated for lodging since the 1990s (rezoned from R-1 to L-3 in 1999), but no development has occurred in 20+ years. Staff Position: Lodging may no longer be the best or most appropriate use; multifamily is one of several viable alternatives, but not the only option (office, medical, educational also possible). Developer Position: Resort hotel market is fundamentally broken nationally; this site lacks essential components (golf, casino, seclusion, shopping proximity) and has attracted zero serious offers in 7+ years of marketing; multifamily serves genuine demographic need (55+ retirees, under-35 renters) and is economically viable. Council Tension: Some council members (Charnow, Spelch) expressed concern about losing the town's "last practical lodging site" and questioned whether a general plan amendment should precede (or be contingent on) a specific development approval. Others (Brown, Magazine) emphasized economic reality and the need for housing diversity. The general plan itself contains language supporting both preservation of lodging sites and provision of diverse housing, creating conflicting policy directives.

Grading and Terrain Modification (Major Technical Dispute)

Proposal: 57-foot fill and 30-foot cut (20 feet above the 10-foot code maximum). Developer Justification: Grading balances the site, avoiding import/export of millions of yards of dirt; necessary for safe southern access and storm water retention; preserves views for existing neighborhoods; localized to one area. Prior lodging zoning on same property already approved for 30-foot cut; Firerock (27-foot cut) and Camelback Canyon (27-foot cut) set precedent. Staff Concerns: General plan and subdivision code emphasize preserving natural topography; excessive cut/fill on prominent hillside contradicts policy. Town Engineer Randy Harrell noted the site has existing fill from Palisades Boulevard construction (50–60 feet), so proposed grading is not entirely on natural terrain. Council Response: Mixed; Councilman Charnow noted prior development (Firerock, Camelback Canyon) had comparable cuts; Gayle Earle acknowledged legitimate precedent but wanted more detail. The 57-foot fill is disputed as to whether it constitutes an unacceptable departure from natural topography or a reasonable project-specific solution.

Parking Standards for 55+ Senior Independent Living (Ongoing Technical Issue)

Proposal: 1 space per 55+ unit, with 2-car garages for townhomes (creating a distribution of 76 spaces for 105+ apartment units). Staff Concern: Inadequate concentration of parking for apartment residents; seniors often have multiple vehicles; 30-space shortfall. Developer Response: National standards (CITE) average 0.59 spaces per 55+ unit; other valley cities (Phoenix) use 1 per unit; Fountain Hills ordinance has no 55+ standard (only generic multifamily, which is higher); shuttle service and convertible landscaping parking mitigate. Council Debate: Councilman Brown cited 15 years of parking objections that never materialized (Park Place apartments full, no complaints); argued Fountain Hills ordinances may be outdated compared to national practice. Councilman Magazine, living in the 55+ demographic, personally disagreed with the 1-space standard but indicated willingness to work with developer on solutions. The issue remains unresolved; stipulation allows developer to add parking if needed, but process and timing unclear.

Traffic on Palisades Boulevard (Neighbor vs. Traffic Engineering Assessment)

Proposal: Two access points—primary northern entry (full ingress/egress) and secondary southern entry (also full access but less direct to main property). Developer offered roundabout or traffic signal at southern entry (Shea/Palisades intersection, ~600 feet south of property). Traffic Engineer Finding: Applicant's traffic study shows 1.7 average trips per minute (3 at peak), split between two entries; no traffic signal or roundabout required by code or study; designated turn lanes sufficient. Town Engineer Harrell stated applicant was directed by staff to locate entries at these safe, high-visibility locations. Neighbor Concern: Palisades Boulevard already the "most dangerous road in Fountain Hills" per staff; speed limit (45 mph) not enforced; may not account for Copper Wind resort and Adero Canyon projects. Proposal was to place signal/roundabout further north (near original hotel development plan, 2011). Council Response: Councilman Spelch asked whether traffic study included Copper Wind and Adero Canyon; Harrell clarified study used MAG (Maricopa Association of Governments) regional projections which incorporate general growth but not specific projects. Developer offered traffic mitigation despite it not being required, suggesting willingness to address concerns. Unresolved: whether roundabout/signal at current southern location is adequate or should be at northern location per prior approval.

Architectural Design Standards and "Exceptional Design" Requirement

General Plan Language: Projects on multifamily transitional zones should have "exceptional design and enhanced site amenities." Staff Assessment: Proposed elevations are "fairly standard walk-up type apartments" with "typical" amenities (one pool, spa, clubhouse on south side); colors and materials follow design guidelines but are not necessarily outstanding; full details (material boards, all elevations, signage, lighting) not yet submitted. Staff stipulation requires "upgrade design and amenities to meet exceptional standards." Developer Response: Proposed architecture includes varied massing, roof lines, diverse materials and facade detailing; comparable to or superior to Ridgeview, Four Peaks, and Park Place apartments (juxtaposed in presentation); willing to work on colors and details. Amenities can be specified in revised site plan. Council Concern: Councilman Brown noted that 20 years ago, preliminary submissions required full engineered drawings; what constitutes "exceptional" is subjective. Agreed to hold developer accountable for detailed compliance post-entitlement. Unresolved: How "exceptional design" will be objectively measured and enforced; whether revised site plan will be sufficient detail or if architecture must be bound in PAD/development agreement.

Process Issue: Preliminary Site Plan Approval and Staff-Level Revision Review

Applicant Request: Approval of a preliminary site plan, with right to submit revised site plan to staff for administrative review and approval (not requiring return to Planning & Zoning Commission or Town Council). Rationale: Project size and cost require phased approach; full design detail expensive before entitlement secured. Staff View: Ordinance contemplates full site plan submission for Council approval; however, PAD mechanism allows for flexibility in projects of this scale. Staff has proposed to review revised site plan against stipulations and approve if compliant. Council Concern: Councilman Brown and Gayle Earle questioned whether final design decisions (amenities, parking, layout, architectural detail) should require Commission and Council re-review rather than staff-only approval, given this is the "one chance for public involvement" and the project's significance. Developer Assurance: Attorney Brennan Ray stated applicant will submit a full revised site plan addressing all stipulations and has met with Wesley to understand exact requirements. Unresolved: Whether the revised site plan will be approved by staff unilaterally or must return to Planning & Zoning Commission and/or Town Council. Multiple council members signaled this is a key condition of support.

State Preemption and Fiscal Pressures

During the legislators' remarks, Representative Cavanaugh noted that a short-term rental regulation bill (HB 2659) passed in the 2019 session, restricting Arizona municipalities' ability to regulate short-term rentals; this reflects state preemption of local land-use authority. Representative Lawrence noted various bills on sanctuary cities, election integrity, and regulatory reform. Mayor Dickey referenced Proposition 400 renewal (Maricopa County transportation tax) and the need for legislative support. Context: Fountain Hills, as a small town, faces constraints on revenue sources and regulatory tools; multifamily housing approval could significantly expand the residential tax base ($2.2M in projected sales tax over 10 years per GPEC analysis), offsetting any lost commercial/lodging potential. This fiscal dynamic underlies some council members' openness to the project despite neighborhood opposition.

Duration

• Daybreak Item (Staff Presentation + Developer Presentation + Public Comment): Approximately 3.5+ hours (8:00 p.m. start, with recess; public comment ongoing at transcript end, ~11:30 p.m. estimated).
• Total Meeting: Not fully concluded; began approximately 7:00 p.m. with pledge, invocation, reports, and legislators' remarks; expected to extend past midnight.

Other Notable Items

Legislative Updates (District 23): Three state legislators (Representative Cavanaugh, Senator, and Representative Lawrence) presented on 2019 session bills passed and future priorities. Key items included short-term rental regulations (HB 2659), online sales tax collection (effective October 1, now collecting from Amazon, eBay, Walmart, Etsy), animal cruelty penalties, sexual abuse reporting requirements, and election integrity measures. Representative Cavanaugh emphasized expansion of short-term rental restrictions as a future priority; Senator highlighted tax-cut offsetting and regulatory reform (including "blow dry" licensing deregulation). Mayor Dickey requested legislative support for Proposition 400 renewal and Census 2020 participation. Council member Magazine raised concern that education funding, despite 20% teacher raises over three years, remains inadequate (Arizona 49th nationally in per-pupil spending). No votes taken; informational only. (~45 minutes)

Fire Prevention Week Proclamation: Mayor Dickey read a proclamation designating October 6–12, 2019, as Fire Prevention Week, emphasizing home fire escape planning and smoke alarm use. Theme: "Not Every Hero Wears a Cape." No votes; ceremonial. (~5 minutes)

Consent Agenda: Routine items approved unanimously, 7–0. (~2 minutes)