CityNorth and Desert Ridge, once expected to be the crown jewels of Phoenix’s expansion into empty lands north of Loop 101 in northeast Phoenix, have been turned over to a new developer.
As a result of a long, detailed lawsuit, Gray Development Group of Phoenix has won control of the undeveloped 140 acres of CityNorth and with it, master developer responsibilities at Desert Ridge.
Desert Ridge is a 5,700-acre master-planned development centered at Tatum Boulevard and Loop 101. CityNorth, located on the northwest corner of 56th Street and Loop 101, is planned as a large, multiple-use development with upscale shopping, homes and hotels.
A group called Northeast Phoenix Partners controlled the land after winning the initial auction of the Desert Ridge commercial core in 1993. The Klutznick Co., the original developers of CityNorth, took over the partnership several years later.
NPP got into trouble when exercising its rights as master developer clashed with Gray.
Gray, a developer of upscale apartments in the Valley, had purchased land north of Desert Ridge Marketplace in 2004, and it later won zoning variances for the property that enabled it to add density to the project.
NPP, which enforced the covenants, conditions and restrictions for the entire Desert Ridge area, challenged the variances and lost. In the process, Gray countersued, arguing that NPP and the Klutznick Co. interfered with its efforts to develop the land. Gray eventually defaulted on the property, and it remains vacant.
Gray won a $110.7 million jury verdict in the case in 2010.
NPP/Klutznick, meanwhile, defaulted on Phase 1 of CityNorth and lost a portion of the property. It has been unable to develop the land further.
NPP, unable to pay the verdict, entered into mediated negotiations with Gray, which accepted the land and master developer rights in a settlement. That activity took place over the past month, and the deal was recently closed.
It is unknown now what Gray will do with the property. Company president Bruce Gray was unavailable for comment.
The principals of the Klutznick Co., John and Daniel Klutznick, closed up shop and moved out of town a year ago.
They were not available for comment.
Since the mediation began, lawyers in the case have not commented.
Others involved in the growth and development of Desert Ridge were pleased that the lawsuit is over.
Former Phoenix City Councilwoman Peggy Neely, who as a representative for the area was deeply involved in the dispute and Desert Ridge generally, said she hopes growth in the area can resume now that the legal cloud has dissipated.
“Hopefully the future of Desert Ridge can once again move forward with the settlement of this lawsuit,” she said, “and the community and the city can again see this highly desirable area become a productive commercial and residential community again.”
Doug Dickson, president of the Desert Ridge Community Association, said the resolution should help clarify the future of CityNorth.
“To the extent that this accelerates growth in the retail and commercial development of Desert Ridge, it is a positive and welcomed event for our community.”