Mesa revives halted downtown GRID project. After a year of nothing, what now? Article originally posted on AZ Central on April 10, 2025 Along Main Street in downtown Mesa, a half-constructed multi-family project dubbed The GRID that has sat untouched for nearly a year. But that is all expected to change soon. The City Council approved a non-binding agreement on April 7 with SolTrust Residential REIT to take over the project from its previous developer, which filed for bankruptcy in the U.S. District Court of Arizona in 2024. The GRID was a $75 million six-story mixed-use development planned by Palladium Enterprises and 3W Management, LLC on city-owned land along Main Street and Pomeroy. The city initially approved it in 2017. Governor-hopeful Karrin Taylor Robson, along with partners Tony Wall and Trevor Barger, made up the team behind Palladium Enterprises. The GRID was one of the city’s first large-scale residential projects at the start of its redevelopment efforts in downtown Mesa following the opening of the light rail extension in 2015. The developer entered into a lease agreement with the city to develop the 3 acres of city-owned land, which originally called for 250 residential units, 14,000 square feet of office space, with the first floor reserved for retail and dining. The agreement between the city and developer laid out benchmarks for Palladium Enterprises to reach, such as deadlines to break ground and complete construction. The project broke ground in 2019. But after failing to meet deadlines, the city sent the developer a letter of default and termination in February 2024, said Jeff McVay, Mesa’s Downtown Transformation Manager. A month later, the developer, now renamed as The Grid at Mesa, LLC, filed for Chapter 11 bankruptcy. Other contractors and subcontractors had additionally filed liens against The Grid at Mesa, LLC. The council’s approval on Monday will allow the appointed U.S. trustee in the bankruptcy case to present the agreement to the judge for approval to settle liens and move forward with development on the site. The project has served as a learning lesson for future development on city-owned land. Outgoing City Manager Chris Brady warned the City Council of future pitches from developers that don’t show the financial wherewithal to complete their projects. What happened between Mesa and the GRID developers? Palladium Enterprises entered into a development agreement and a ground and air lease in late 2017 with the city, with a project poised to ramp up redevelopment in downtown Mesa. The roughly 3 acres were previously the parking lot for Benedictine University, which the city owned. The project called for market-rate residential units, retail and office space, as well as requirements for street improvements on Pomeroy. Housing units were also planned to be built on top of the Pomeroy parking garage. Even before 2019, the city amended its agreement with the developer to provide more time to get the financing in order, McVay said. McVay said, after COVID-19 hit, the developer ran into difficulties with supply chain issues and cost overruns. Again, the city extended its compliance dates. In April 2021, McVay sent the developer, now renamed as The Grid at Mesa LLC, a non-compliance warning letter, the Arizona Republic acquired through a public records request. In it, he wrote, “construction progress on The GRID has been limited.” He wrote that several issues had been identified and the city needed the developer to provide details regarding project funding, city fees and permits. He also wrote that despite the issues, the city remained committed to the developer’s efforts and to the “successful completion and opening of the GRID.” In total, the development agreement for the GRID was amended seven times. Phase one of the project was never completed and construction of phase two of the project never began. McVay said the city held on to its agreement with The Grid at Mesa LLC for so long because it was “sympathetic” to the hardships the company faced because of the pandemic. “We are not in the business of starting a partnership with somebody and at the first sign of adversity cutting ties,” McVay said. He said that would be a sign of “bad faith” from the city and not look good to the development world. Instead, the city added more protections to its contract amendments, he said. In 2022, the city demanded that the developer set aside $1.7 million into an escrow account that Mesa could use to restore the site to its original condition in case the developer failed to complete the project. The city did tap into that account to reopen the sidewalks, restore landscaping and resurface parts of Pomeroy in 2024. The city didn’t consider demolishing the current site because construction was far enough along that another developer could step in and finish it, McVay said. That’s been part of the discussion during the bankruptcy hearings. After months with no construction activity, on February 29, 2024, the city sent the letter of default and termination. It demanded that the default be resolved by the end of that March, and if not, the development agreement would be terminated. The Grid at Mesa LLC filed for bankruptcy on March 30, 2024. Bankruptcy case forces developer change Amid the city’s termination letter, the company had several liens filed against it from contractors and subcontractors. Midland States Bank provided the $35 million loan to The GRID developer in December 2021 for the construction of the project. The bank stated in court filings that the developer failed to make payments and had a balance of $28.4 million as of March 2024. At least 19 mechanic liens were recorded against The Grid at Mesa LLC, totaling $8.5 million, according to court records. The majority was made up of the Grid Construction LLC, the project’s general contractor, liens. Throughout the bankruptcy case, McVay said there was an effort to try and work through to see if the developer could bring in new money and a new developer to finish the project. “Unfortunately, there was not a point at which we felt comfortable with the plans they were moving forward with,” McVay said. A U.S. bankruptcy trustee was appointed in July 2024 to stabilize the project and find a new developer to take over and resolve any outstanding debts, a decision the city and Midland States Bank supported. Over the past year, the trustee and the city have worked closely to find a new developer. McVay said this is because a court settlement deal would not succeed if the city doesn’t enter into a new development and lease agreement with a new developer. After a lengthy bidding and vetting process, the trustee and the city decided to move forward with selecting SolTrust Residential REIT. McVay said SolTrust was able to show proper financial capacity and a willingness to develop the site and address the liens against the project. What’s next for The GRID? The City Council approved the MOU with SolTrust Residential REIT on Monday. That sets the stage to move the project forward. During a presentation to the City Council on April 3, McVay shared potential changes to the project. The city and developer have scrapped plans to build housing on top of the Pomeroy Garage. McVay told the council the restaurant Crust Simply Italian was still interested in leasing parts of the first floor for a new location. He mentioned the second floor, which was built for office space, could take time to lease out because it was initially built out for a specific user. He said he was confident in the new proposed developer because its team had already begun to do design work for the additional phases. SolTrust will have the option to purchase the land after it finishes construction on each phase of the project. That’s estimated to sell for nearly $3 million. SolTrust has also redeveloped a 13-story assisted-living facility in downtown Mesa into an apartment building, along with several housing projects across the Valley. Brady warned the council during its discussion on April 3 about doing deals with a “single developer without an (request for proposal) process” in the future. “I think we fell into a trap with a developer who came to us with an idea that we all fell in love with but there was no evaluation against anybody else or any financing of a developer. And we came to find out pretty quickly that the developer was pretty shallow in their financial capacities,” Brady told the council. Brady said the bankruptcy process has benefited the city in getting it to a “solid ground.”