Scottsdale sued over Museum Square deal

Article originally posted on HERE on January 22, 2026

In 2019 and 2020, Old Town Scottsdale residents and business owners were sharply divided by two words: Museum Square.

As the Progress reported in a series of articles, the planned Old Town development needed – and, apparently, received – the blessing of its neighbor, the Gateway at Main Street condos.

But was the removal of Gateway-city deed restrictions on neighboring development heights fairly obtained?

A lawsuit challenges “the viability of the termination and release of ‘covenants and restrictions’ executed on June 18, 2019.”

The Gateway at Main St. Plaza Scottsdale Condominium Association is suing the city of Scottsdale and ARC Scottsdale Holdings – an affiliate of Macdonald Development, the Museum Square developer.

The suit alleges then-Assistant City Manager Brent Stockwell manipulated board members and “overtly threatened the Gateway with a massive parking garage that the city said they would build immediately south of the Gateway if Gateway refused to terminate their covenants.”

Gateway attorneys allege the city tricked an elderly HOA president into signing off on the covenants’ termination – paving the way for the $28 million sale of city land to a developer.

What the lawsuit demands of Maricopa County Superior Court:

“Declare that the termination is void.”

Reverting to the 60-foot height limit agreement for neighbors Gateway once had with the city would effectively kill Museum Square – in its present plan for buildings soaring 150 feet, at least.

Construction on Museum Square has not started, though the developer says he plans to move forward.

After an unsuccessful initial attempt, attorneys for ARC/Museum Square recently filed a second request for the court to dismiss the lawsuit, saying the Gateway HOA claims are “insufficient as a matter of law.”

And, the motion states, the claim is littered with “baseless allegations and innuendo about purportedly improper conduct by the city and ARC.”

While Gateway claims key documents were signed without a vote by the condo owners, ARC/Museum Square counters no such vote was required and the termination of height-restriction covenants was properly signed by the Gateway HOA president and then-Mayor Jim Lane.

In any case, Museum Square’s motion for dismissal insists, the lawsuit is “time barred” – meaning the nearly six years Gateway waited to file the complaint was too long.

The Gateway condos are on Main Street off North Marshall Way, north of the city-owned Western Spirit: Museum of the West.

For Museum Square, Robert Macdonald purchased a 2-acre city lot at North Marshall Way and East Second Street, across from the Old Town museum for which it is named.

Before making the multi-million dollar purchase, he needed the city’s help.

As the Dec. 4, 2019, City Council agenda notes: “The closing of the city sale of the Museum Square lands … relies upon the termination and releases of covenants and restrictions.”

City Council unanimously approved that agenda item – which was buried deep in the “consent agenda” (items not discussed individually but voted on as a whole) in a meeting dominated by another hotly-debated Old Town development: Southbridge II.

‘Complete misinformation’

ARC/Museum Square’s response to the Gateway suit does not dispute the claim that, for months prior to the action, Stockwell met with the Gateway HOA.

This week, one of the three Gateway board members at the time told the Progress that Stockwell “misled and misguided us.”

“Complete misinformation,” Alan Karcich continued, “was given to us by Brent Stockwell and the city of Scottsdale.”

While Karcich’s statements align with the version painted by Gateway lawyers, attorneys for the Museum Square developer insist the lawsuit’s portrait of the city actions is confused and without merit.

Representing ARC Holdings, Jeffrey Goss of Scottsdale-based Berry Riddell filed an initial motion to dismiss the lawsuit in September, with the city joining the motion.

Stating there is no dispute that the Gateway HOA’s “duly elected” president signed a key document, the ARC motion for dismissal continues, “The association cites no authority that it can invalidate its own act because it allegedly did not follow the law or its own procedures.”

Maricopa County Superior Court Judge Christopher Whitten did not grant the ARC Scottsdale/city joint request, rejecting the dismissal motion at the end of October.

Even so, he gave Gateway 21 days to “file an amended complaint curing the deficiencies identified in the (ARC) motion.”

Whitten’s ruling noted the parties “seem to agree that on June 18, 2019, the (Gateway at Main Street) Association’s then-president, Richard Lamden, signed a document titled ‘Termination and Release of Covenants and Restrictions.’”

The judge recaps how Gateway now alleges “its board transferred those rights by executing the Termination without the member vote required by (Arizona law). It also claims the board gave no notice, held no open meeting, and took no vote.”

On Nov. 17, Whitten transferred the case to the commercial court system within Maricopa County Superior Court.

One week later, the city was granted a request to have the firm Gust Rosenfeld as its representative in place of city attorneys.

After Whitten granted a request for more time by Gateway’s attorneys, the Sun City-based Cavanagh Law Firm filed an amended complaint on behalf of Gateway on Dec. 8.

According to last month’s filing, the document to terminate key Gateway covenants “was sent to Mr. Lamden … and the Gateway members were not given an opportunity to review the Termination before the City hurried Mr. Lamden to sign it just five days after receipt in late June 2019.”

And, the suit alleges, “The city never showed the Gateway’s covenants” to any other Gateway condo owners.

Claiming a shell-game trickery, the Gateway lawyers continue, “Stockwell emphasized the existence of a separate 1920 deed restriction containing racist language. Members who attended the meeting only remember discussions about the ‘Jim Crow’ restrictions, and nothing about the height restrictions.

“Mr. Stockwell failed to explain that the racist language was void per the U.S. Supreme Court. He told the Gateway membership that the 1920 deed restriction had to be released for Museum Square to proceed.”

The board

A Gateway resident, who asked not to be identified, told the Progress he reached out to Stockwell in early 2025, a few months before Stockwell resigned from Scottsdale to take a city manager position in Oregon.

Stockwell referenced a Dec. 4, 2019, council meeting – which was dominated by heated debate over the Southbridge II development, which passed by a split vote.

The Museum Square issue was item 10 of the consent agenda, in which topics are voted on in a group, without discussion.

Eighteen consent agenda items were approved unanimously at that meeting, including “authorize a termination and release of covenants and restrictions in the vicinity of and including the Museum Square Project.”

In his email to the Gateway resident, Stockwell noted “a signed termination and release from the board,” stating he was “in regular communication” with Gateway’s three-person board of directors, with Lamden as president, Karcich and Carol Kowalke.

According to Stockwell’s 2025 email, “it was communicated that they had consented to this.”

This week, Karcich told the Progress that consent was because Stockwell “deceived us.”

In signing the document, Karcich said, Lamden “did not act on his own.”

But, Karcich said, “We relied on Brent Stockwell – who misled and misinformed us.

“As a board we had discussions about signing the (covenant termination) documents,” Karcich said.

“Stockwell was constantly sending us different emails saying ‘we researched CC&Rs (Covenants, Conditions, and Restrictions) – no votes needed.’

“He also blatantly told me to my face we’re only signing off on our property, which was already built at 60 feet.

“I said, ‘We’re only signing off on our property – not the other seven or eight (neighboring) properties?’ He said, ‘That’s correct.’

“We just weren’t informed properly,” Karcich stressed. “We were misled by the city.”

This echoes a portion of the lawsuit:

“Carol Kowalke, unpersuaded by Mr. Stockwell, wrote to Dick Lamden, Alan Karcich and Marshall Chess (July 24, 2019): ‘I think we need a vote and suggested the need for legal counsel.’.. Lamden agreed that a member vote was needed.

The suit continues, “Dick Lamden wrote to Brent Stockwell on July 24, 2019: ‘Considering the alleged unrest of a few owners, we have decided to hold another meeting of owners… If deemed appropriate we will hold an owner vote.’”

The Progress left voicemails for Lamden and Kowalke but did not hear back as of this edition’s deadline.

The Progress also reached out to Stockwell for comment on the allegations in the Gateway lawsuit. “The city is handling the lawsuit,” he said.

“I’ve not seen it, you can reach out to them for response.”

Background

According to the Gateway filing, “In or around 2002, Alan Ferris entered into an option agreement with the city to purchase 9 acres of properties adjacent to the property that he planned to develop as Gateway at Main Street Plaza Scottsdale, a Condominium and to encumber those optioned properties with Covenants and Restrictions, including a 60-foot height limit.”

Ferris completed the construction of the Gateway condominiums in 2004. He died 10 years later and was survived by his widow, Madeline Ferris.

“In or around early 2017,” the Gateway narrative continues, “Macdonald began discussions with the city to develop a $300 million project called ‘Museum Square’ on approximately 4.5 acres of properties encumbered by the Gateway’s Covenants consisting of four buildings that would be up to 156 feet tall.

“Macdonald and the City both anticipated enormous profits from the Museum Square project: Macdonald’s return on their $300 million investment was estimated to be in excess of $1 billion; the City realized a gain of $27.75 million by selling the land to Macdonald, and approximately $900,000 per year in taxes and fees generated by the project.”

Then, the lawsuit claims:

“The discovery of the Gateway’s covenants was a threat to the entire project.”

Lamden and Stockwell

On July 12, 2018, according to the lawsuit, Lamden attended the city’s Museum Square informational meeting.

“Mr. Lamden met Brent Stockwell for the first time at this meeting. Mr. Lamden was, at that time, an 80-year-old retired nursing home administrator who had most recently worked as a retail sales clerk at the Men’s Wearhouse.”

Lamden, the Gateway attorneys stress, “had no background or experience in real estate development.”

His relationship with Stockwell expanded three weeks after the initial meeting, when Stockwell emailed Lamden an offer to “sit down with you and your other board members to get your feedback on the Museum Square project.”

On Oct. 22, 2018, Stockwell attended a Gateway HOA board meeting and “rolled out the strategy … First, Mr. Stockwell minimized the height of the planned buildings and their close proximity to the Gateway.

“Mr. Stockwell presented numerous drawings that were misleading,” the suit alleges.

“The drawings were drawn by Macdonald’s architectural firm, Swaback Architects and Planners, specifically for this meeting, and under Macdonald and the city’s direction, they were drawn to contain inaccurate information and material misrepresentations by depicting the Macdonald buildings to be much smaller, shorter, and farther away from the Gateway building than they actually would be.”

‘No vote needed’

One year after the initial city Museum Square pitch to Gateway, the lawsuit claims “the prospect of a member meeting was apparently very alarming to Mr. Stockwell,” who reached out to the Vancouver-based developer.

“On Aug. 13, 2019, Rob Macdonald and Brent Stockwell met in secret with Dick Lamden alone at the Gateway. No members of the Gateway were notified or allowed to attend,” the suit alleges.

“Dick Lamden wrote to Alan Karcich, Carol Kowalke and Marshall Chess following his secret meeting with Rob Macdonald and Brent Stockwell, ‘Brent noted they still believe we acted within our scope and responsibility.’

“Upon information and belief, Mr. Stockwell told Mr. Lamden that no vote was needed.”

Karcich also commented on the lawsuit’s claim about Stockwell showing the board a parking garage on its boundaries – as an alternative if Museum on the Square was not allowed to build.

“That parking garage, that was a dog and pony show,” Karcich said. “There is no way they were going to put a parking garage there. That was a threat to scare the other owners.”

The 72-year-old Karcich, who has lived at Gateway since 2006, pondered the city’s statements and presentations in the crucial months of 2018.

“Lying is a strong word – but they have misrepresented and misinformed,” he said.

Though he disputes the version that Lamden acted on his own, Karcich insisted, “I really feel the city deceived me – not only me but other board members.

“There’s a greed factor involved here,” he concluded.

The developer

According to the Gateway lawsuit, “Stockwell arranged for Dick Lamden to go to the city notary’s office on June 18, 2019, to sign the termination.”

In 2019, Museum Square received a unanimous green light from the Scottsdale City Council, setting the stage for the developer to break ground the following year.

MacDonald Development Corporation agreed to pay the city $27.75 million for land with reductions of over $8 million in exchange for the developer’s commitment to build public parking spaces and facilitate the removal of a decades-old height restriction.

The city-owned land south of Scottsdale’s Museum of the West was home to the closed Loloma Transit Station, then used by the museum for administrative offices.

In a response to the lawsuit, attorneys for the developer state the transaction – originally scheduled for the spring of 2020 – was completed in 2022.

This week, the Progress asked if the money has been received – and if so, what it has been used for.

The Progress also asked City Manager Greg Caton to comment on the lawsuit’s portrait of Stockwell’s actions.

No response was received as of press time.

On Oct. 16, 2021, Council voted 7-0 to approve zoning amendments and a development deal for Museum Square: a 190-room hotel, public plaza, three condo buildings and an apartment building totaling 346 rooms.

In 2022, the Development Review Board approved a 92-unit apartment building, “the first phase of the larger Museum Square master plan.”

The plan included underground parking.

The most recent Museum Square action listed on the city’s website is the June 9, 2023, approval of a “re-plat.”

Though the project is years behind its original timeline, Robert Macdonald of Macdonald Development said he hopes to move forward soon.

Asked this week about an updated construction timeline, Macdonald responded, “I’m working on that with my lawyers and architects.

“We have meetings with the city on Jan. 16,” Macdonald added. “We’re working with the city – they’re very good people to deal with.”

Macdonald declined to comment on the Gateway lawsuit.

“The attorneys are handling all that,” he said. “I’m just trying to get my buildings built.”

According to its website, Macdonald Development is based in Vancouver, Canada with offices in Calgary and Phoenix.

“Founder Robert Macdonald has led the company since 1985, creating a legacy of commercial and residential properties across North America,” the website states.

“Since 1999, the company has focused mainly on the development of single-family communities and multi-family condominium projects, creating over 4,000 high quality homes and properties.”

One of the company’s listed core values is “Respect for Community…our process always includes a thorough consultation with local shareholders, recognizing that our activities can often have a significant impact on our neighbors.”

Love/hate

Like Southbridge before it and Axon after, Museum Square in 2019 was a headline-dominating project that had ardent supporters and fierce critics.

In an Aug. 19, 2019, letter to the editor, Jim Bloch insisted “Museum Square is a terrible idea, it will change the complexion of downtown Scottsdale and the Arts District forever, and seemingly is not supported by the local citizenry, and that is shameful.”

His plea: “The city council must listen to the folks, not the money!”

But other folks were strongly in favor of the development.

“I’m excited about the proposed Museum Square project in Old Town Scottsdale because of what it offers to the city, because of its unique public-private aspects and because of the positive energy that members of the city council and the public have brought to the review process,” Jim Derouin wrote in a Sept. 2, 2019, editorial.

“I am excited because Museum Square offers a great opportunity to transform an abandoned city-owned parcel of land at Marshall Way and Second Street (the Loloma Transit Center) into an attractive mixed-use redevelopment.”

Following ARC/Museum Square’s motion to dismiss the lawsuit, Gateway is expected to file a response to that motion.

No date has been scheduled for a final ruling.

Carol McNulty, who has lived at Gateway since 2008, said for years she “had no idea about the covenants – I didn’t know we had any control over what was being built around here.”

She said she rarely misses a board meeting.

McNulty said she was at the Stockwell-led meetings, but had no idea about the plan to sign off on covenants.

“I’m amazed Dick (Lamden) signed off and allowed that to happen,” she said. “The membership – we didn’t know anything.”

She said she is “just so disappointed in Dick and the fact they never brought (the covenants termination) to the membership.

“Why didn’t he consult an attorney? Why didn’t the city of Scottsdale let us – the membership – know what was going on?”

The widow – her husband, a former board member, died in 2014 – said she supports the lawsuit.

“I just hope we can get our covenants back,” McNulty said.

“I don’t really want to see a 14-story hotel next to us. Don’t we have enough hotels?”

Stockwell out

Brent Stockwell worked for the city of Scottsdale for 23 years. From 2015 to 2025, he was one of the city’s three assistant managers.

Last year, as new City Manager Greg Caton was shaking up leadership, Stockwell competed for a position as city manager of Tigard. According to tigardlife.com, Stockwell was unanimously approved by the Tigard City Council April 23, 2025, with a $225,000 annual salary.

He resigned from Scottsdale in May, taking over the Tigard position in June.

According to an Oct. 2 Oregon Public Broadcasting story, “The Tigard City Council placed City Manager Brent Stockwell on administrative leave this week — after just four months on the job.”

That move followed the resignation of Tigard’s mayor “after an investigation found she engaged in disrespectful workplace conduct,” according to the story.

On Nov. 18, Stockwell resigned.

The Progress asked Stockwell if his resignation was linked to the Gateway-Museum Square lawsuit.

Stockwell said his leaving Tigard is not related to Gateway-Museum Square lawsuit.

Stockwell’s LinkedIn profile this week showed his status as “Relocation/career break” since November.