Tribune Special Report:
The Challenge Downtown

Development bolsters Tempe’s downtown oasis
By Kirsten Searer, Tribune

Bonnie and Dave Ender gave up a north Scottsdale address (and a sprawling five-bedroom home) for a loft in downtown Tempe.
Have they gone mad?

The Enders say no, calling Tempe's downtown the most happening, most urban place in the East Valley.

"So many small towns and medium-sized cities are in urban decay, and here we have a city where something's going on," Dave Ender explained.

Tempe leaders are in the midst of plans to urbanize the city's downtown by encouraging more housing and nurturing growth along Tempe Town Lake, now the northern border of downtown.

They're looking to create a niche as the region's best place for amateur sports tournaments. They're preparing for the new light-rail system and the Tempe Center for the Arts.

Yet the area has taken some hits.

The Arizona Cardinals and the Fiesta Bowl are moving to Glendale in 2006.

Downtown businesses complain about the city's tough smoking ban, the high rent along Mill Avenue, the poorly labeled parking garages and the lack of customers during the day.

And competition has grown. Chandler opened a new mall with parking as far as the eye can see and Scottsdale continues to cement its place as the East Valley's most popular night spot.

There's a worry among many that Mill Avenue has seen its heyday come and go.

"It kind of hit a peak in the early to mid ’90s,” said longtime Tempe resident Don Warne, who stopped on Mill recently to buy wine at Vinoteca, a new wine boutique. "A few places have gone out of business lately. I don’t know if it's the smoking ban law or the economy in general — or maybe both.”

Yet downtown is the only district in the city that has posted increasing sales tax revenue, even during the recession. City leaders seem optimistic that new downtown housing developments will boost the area and that major projects along Town Lake will finally come to fruition.

"More people go to downtown and Mill Avenue than ever before," said Rod Keeling, executive director of the Downtown Tempe Community, a nonprofit association of downtown businesses and residents.

"The problem is the ratios are out of whack," he said. "There's too much commerce for the number of customers we actually have.”

The long-term key to downtown Tempe's success, Keeling said, lies in convincing people to live there.


One weekend night in March, almost 15,000 people were on Mill Avenue, according to a pedestrian count the downtown association conducted.

That's a big increase from five years ago, when the economy was much better. The downtown association estimates that just 5,600 people visited Mill Avenue on a weekend night in October 1998.

Turning Tempe into a destination hasn't been cheap or easy. Since 1983, the city has given out $25.4 million in incentives to developers. Top that with the $102 million the city spent on constructing Town Lake and at least $12.5 million more for the 98 acres the city owns along the lake.

Those costs might seem steep, considering that much of the lake's shore remains bare. But Keeling said the investment has been worth it, and was driven by a choice Tempe leaders faced in the 1980s: Did they want their city to become Compton or Pasadena?

Both cities are so-called “core suburbs” in the Los Angeles metropolitan area. Both were mostly developed decades ago, leaving buildings — and longtime residents — to age.

Yet somehow downtown Pasadena ended up with Colorado Boulevard and a vibrant night life. Compton's downtown has struggled. That's why downtown Tempe must continue to reinvent itself, Keeling said.

“The alternative is not to grow, to stagnate," Keeling said. "The alternative is lower property values, slum and blight, crime and decay.”

Tempe passed out tax abatements, land acquisitions and help with relocating, demolishing and cleaning up environmental problems.

"Our primary function is that of a packager," said former Development Services director Dave Fackler, who guided much of the downtown revitalization.

The city has used the much-criticized eminent domain power for two projects in the past two decades, said Steve Nielsen, Tempe's director of Community Design and Development.

Tempe took over an empty sub shop and a Circle K for the Ruby Tuesdays complex at University Drive and Mill Avenue.

In the early 1990s, the city also cleared out an area for the Centerpoint project, which now houses the Harkins Theatres and other commercial space. The city used eminent domain to buy out a boarded-up gas station, several bars, a run-down housing development and an adult bookstore, Nielsen said.

“That was really kind of the beginning, when it was biker bars and it was a really nasty place downtown,” he said.


Now — at least $130 million later — opinions vary greatly regarding Mill Avenue and Town Lake.

City officials brag that the lake draws an estimated 2 million visitors a year. They tout estimates that each visitor spends an average of $15 on food, gas and trinkets, making the annual economic impact of lake visitors up to $30 million.

"That would be a pretty low figure, actually," said lake spokeswoman Kris Baxter, "when you're looking at events that bring people from around the country."

City staff members recently gave the City Council a status report on downtown, saying:

• The area boasts 3.3 million square feet of commercial space, compared with 1.8 million in 1993.

• Downtown cleared $160.6 million in taxable sales in 2002, compared with $71.4 million in 1993.

• About 8,000 people work in or near downtown compared with about 3,000 in 1993.

• The area has about 235,442 square feet of restaurant space compared with 121,357 square feet in 1993.

• The area has about 140,778 square feet of retail space compared with 107,351 square feet in 1993.

Fackler quotes other statistics. In the 1980s, he said, Arizona State University represented about 95 percent of all business done in downtown Tempe. Now it's just about 45 percent, he said.

Inevitably, the success and resulting increases in rent has drawn national chains. In 1993, 93 percent of businesses were independently owned; now about 78 percent of businesses are local.

Some national chains have struggled downtown. McDonald's and Gap dropped their Tempe locations, which worries Steve Goumas, managing partner of Rula Bula, a downtown Irish pub.

"That should not be taken lightly," he said.

Despite the successes the city holds up, longtime Mill Avenue shop owner Steve Lewis has one simple request: "More people."

Lewis has owned the Cool Jewell on Mill Avenue since 1984. Daytime business has slowed, he said. And while city officials tout the number of people going to Town Lake, he said they walk right past his shop toward their destination.

"It didn't seem to translate to customers," he said. Goumas of Rula Bula said he has a longer to-do list for improvements along Mill Avenue. He and his partners settled their Irish pub in downtown Tempe because of the comfortable atmosphere and to be in a historic building, he said.

"It doesn't have the heavy foot traffic that some of the other developments have in the Phoenix area," Goumas said. "The sales per square foot aren't generally as great in Tempe. There is not adequate parking. The average person is confused as to where it is."

Cullen Campbell, a chef at Tempe's House of Tricks restaurant, was looking to open a farmers market near the Orchid House, a downtown residential development. Downtown residents have long said they want a market, but Campbell said the rent was too expensive.

"The rent is getting way too high," he said. "Almost all of the people coming in are corporations."

Another obvious concern is the ban on smoking in public places.

Even at Rula Bula, where there's a huge outdoor patio and a thriving restaurant, Goumas said he's had to cut two bartenders and one manager since the smoking ban began. He's lost about 20 percent of his bar sales to the ban, he said.

"It takes a little more effort to do business in Tempe," he said.


The city continues to float new ideas for downtown Tempe. It's difficult to go to a City Council meeting lately when there's not talk of building the region's largest tennis facility and soccer complex — and maybe even a water park — on the southwest corner of Town Lake. Officials hope the area will become a regional hub for youth and amateur sports.

Few cities in the Southwest have elaborate sports facilities for regional tournaments, said Stephanie Nowack, chief executive officer and president of the Tempe Convention and Visitors Bureau. Tempe could carve a niche as a draw for tournaments. That's a market that thrives even during a bad economy, she said.

"Kids still play sports and families still travel with their kids," she said.
Since its inception, the lake has been a springboard for grand development plans. Original studies looked at a $28.6 million sportsplex with an ice arena and amusement park; the $24.8 million Rio Beach project with restaurant, hotel, retail and a golf course; and the $200 million boardwalk project with a hotel, restaurant, office and retail space.

Plans are toned down, but the city has resurrected the idea of a downtown or lakeside hotel and convention center, something sorely needed since downtown Tempe has just 300 hotel rooms.

The Hayden Ferry Lakeside project is one of the few original ideas for the lake that is continuing to plug along. The boat-shaped mid-rise office building on the northeast corner of Mill Avenue and Rio Salado Parkway is at least 65 percent full, said senior project manager Randy Levin of SunCor, the project's developer.

As soon as the building is 75 percent full, plans for the second, 12-story office building will go into motion, he said.

"We're getting very, very close," he said.

The 40 condos in the Edgewater complex, the first of four residential towers planned for the Hayden Ferry Lakeside project, could start construction early next year. Eventually, the project could total 1.6 million square feet in commercial and residential space.

Levin hopes the project will soon resemble redevelopment areas in Vancouver, British Columbia.

"It's very very clean, very pristine," he said. "I've heard it referred to as a clean San Francisco."

The city also has made it easier to clear lakeside development. Levin said he prepared for about 30 public hearings when planning the Hayden Ferry Lakeside project. The new Redevelopment Review Commission approves lakeside redevelopment plans in just two meetings.

"It's a one-stop shop," Levin said.

One major question mark is the redevelopment of the Hayden Flour Mill. Tempe entered into an agreement with a branch of MCW developers to purchase the mill and surrounding land for $11.8 million if the developers didn't have funding for redevelopment by July 15.

That deadline is drawing near, and so far MCW hasn't made a deal, Fackler said.

"They're still trying to put that package together," Fackler said. "Hopefully, we'll get it done."

For now at least, the economy has put a damper on lakeside amusement parks and other grand schemes. But no matter the economic climate, the Hayden Ferry Lakeside project is always close to Mill Avenue and Arizona State University and a seven-minute drive to Phoenix Sky Harbor International Airport.

It faces Loop 202, where 187,000 vehicles pass by each day. And, in 2006, the light-rail line and the Tempe Center for the Arts are set to be completed.

"All these things combined," Levin said, "We just can't duplicate that."
SunCor also is helping ASU develop land near Rural Road and Rio Salado Parkway, a potential hotel site. ASU is looking at several projects that would blur the lines between the campus and downtown Tempe. The university plans to build a new business complex on University Drive and Mill Avenue. This fall, ASU will open a computer department in the downtown Brickyard development.

But many city officials, developers and small-time entrepreneurs go back to a linchpin in Tempe redevelopment: New downtown housing — a critical mass of customers, concert lovers and diners to draw in money and urban energy.

Of the 84 homes in Tempe's Orchid House complex, just a few remain unsold. All construction will be completed by the end of the summer, when the Enders will move into their penthouse.

Until then, just seeing the street sweepers on Mill Avenue every morning, or driving over the Mill Avenue bridges, makes it feel like home, Dave Ender said.

"I like the togetherness here," Bonnie Ender said.