Developer Ready to Move Forward on Long-Awaited Old Town Scottsdale Hotel Project

Article originally posted on Phoenix Business Journal on February 19, 2024

Six years after receiving approval from Scottsdale City Council to build a new hotel in Old Town, Desco Arizona LLC aims to break ground on the project this year.

On Feb. 6, Phoenix-based Biltform Architecture Group submitted an application to reapprove the site plan, landscape plan and building elevations for the planned hotel at 4221 N. Scottsdale Road. The hotel, which is dubbed “SLS Scottsdale” under the flag of French multinational hospitality company Accor, would be nine stories tall with 235 guest rooms and five restaurants. A pool would be on the fourth floor, overlooking Scottsdale Road.

The project has reemerged as the property is scheduled to be sold at an April foreclosure auction, which is being spearheaded by a lender. However, a Desco executive said this week that the company is days away from closing on a new loan that would allow it to proceed with building the hotel with its project partners.

The site is located next to breakfast and brunch restaurant Morning Squeeze, and across the street from Cold Beer & Cheeseburgers and Bourbon & Bones.

Plans to redevelop the site, which is home to an existing building, have been explored in recent years. The property owned by 4221-Associates AZ LLC, an entity connected to Desco, offers a rare possibility for a new destination hotel in Old Town Scottsdale. Dave Slattery, chairman of Desco, said the development has been years in the making after closing on the land throughout 2017 and 2018.

The developer’s previous undertakings include a pair of Low Income Housing Tax Credit projects in Phoenix: Garfield Sacred Heart Housing and Highland Metro Apartments. Those two projects were developed in partnership with Berkshire Affordable Housing Partners. On the hospitality front, Slattery’s portfolio includes redeveloping The Westin Aquila Hotel-Omaha from an office building into a hotel in the late 1990s in Nebraska, according to its website.

Slattery relocated from Omaha, Nebraska, to Scottsdale in 2009, he said.

4221-Associates AZ LLC initially pursued a development called the Winfield Hotel and Residences at 4221 N. Scottsdale Road, the Arizona Republic reported in 2017. Plans called for a 246-key hotel with 16 luxury condos, with Davis Architecture as the architect of the project. Scottsdale Planning Commission and City Council each voted to approve the project in 2018.

In February 2020 — nearly two years after Scottsdale City Council approved a rezoning and site plan approval — Desco was granted a time extension by the council as the developer worked toward construction and final financing approvals, according to previous correspondence from Desco with the city on this project.

Desco worked with John Berry of Scottsdale-based law firm Berry Riddell LLC for that rezoning and site plan approval.

With costs rising by $25 million in the middle of the Covid-19 pandemic’s disruption of business, Slattery said the project was put on hold to raise additional capital and find the right project partners. In total, the new vision for the hotel, which won’t include luxury condos, will cost more than $150 million.

As of Feb. 16, the newly submitted application will be heard by Scottsdale’s Development Review Board at a date “to be determined.”

Slattery anticipates starting the demolition of the building in the third quarter of this year with roughly 22 months of construction ahead. Desco is targeting the fourth quarter of 2026 for a possible opening date.

Accor affirmed the plans for SLS Scottsdale in a 2021 statement as it would develop the site with Desco and Dakota Development, which has done other SLS-branded hotels in Miami, Beverly Hills, California, Seattle, Las Vegas and The Bahamas.

Accor couldn’t immediately be reached for comment on the resuscitated plans.

More on the scheduled trustee sale

As Desco refiled plans with the city of Scottsdale to get reapproval of the site plan, a notice of trustee sale was recorded Jan. 18 in Maricopa County for the land where the hotel would be built — meaning a lender is seeking to sell the property to the highest bidder.

The sale is currently set for 10 a.m. on April 26 at 1850 N. Central Ave. in Phoenix. CS Finance LLC executed a loan to 4221-Associates AZ for $10.3 million in February 2023, according to the notice. CS Finance is connected to Dave Megdal, who is part of the development team for the more than $1 billion mixed-use redevelopment of the former CrackerJax amusement park site, now dubbed The Parque.

Neither Megdal or trustee Andrew Abraham of Burch & Cracchiolo could be reached for comment.

Slattery said the issue with the lender has been “cleared up” and that the trustee’s sale will probably come off the books in the next week or so as Desco closes on a new loan.

Slattery said the funding for the project is mostly made up of high-net-worth individuals with investments of $250,000 and up. Slattery said the interest in raising money or getting financial commitments for the hotel has gotten easier with the opening and early success of the Global Ambassador in Phoenix and the anticipation surrounding the nearby Caesars Republic Scottsdale, which is set to open March 6.

The Phoenix metro is among the top three cities in the country for the number of new hotel rooms under construction, according to a report from CoStar.