In 2019 and 2020, Old Town Scottsdale residents and business owners were sharply divided by two words: Museum Square.<\/p>\n
As the Progress reported in a series of articles, the planned Old Town development needed \u2013 and, apparently, received \u2013 the blessing of its neighbor, the Gateway at Main Street condos.<\/p>\n
But was the removal of Gateway-city deed restrictions on neighboring development heights fairly obtained?<\/p>\n
A lawsuit challenges \u201cthe viability of the termination and release of \u2018covenants and restrictions\u2019 executed on June 18, 2019.\u201d<\/p>\n
The Gateway at Main St. Plaza Scottsdale Condominium Association is suing the city of Scottsdale and ARC Scottsdale Holdings \u2013 an affiliate of Macdonald Development, the Museum Square developer.<\/p>\n
The suit alleges then-Assistant City Manager Brent Stockwell manipulated board members and \u201covertly 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.\u201d<\/p>\n
Gateway attorneys allege the city tricked an elderly HOA president into signing off on the covenants\u2019 termination \u2013 paving the way for the $28 million sale of city land to a developer.<\/p>\n
What the lawsuit demands of Maricopa County Superior Court:<\/p>\n
\u201cDeclare that the termination is void.\u201d<\/p>\n
Reverting to the 60-foot height limit agreement for neighbors Gateway once had with the city would effectively kill Museum Square \u2013 in its present plan for buildings soaring 150 feet, at least.<\/p>\n
Construction on Museum Square has not started, though the developer says he plans to move forward.<\/p>\n
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 \u201cinsufficient as a matter of law.\u201d<\/p>\n
And, the motion states, the claim is littered with \u201cbaseless allegations and innuendo about purportedly improper conduct by the city and ARC.\u201d<\/p>\n
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.<\/p>\n
In any case, Museum Square\u2019s motion for dismissal insists, the lawsuit is \u201ctime barred\u201d \u2013 meaning the nearly six years Gateway waited to file the complaint was too long.<\/p>\n
The Gateway condos are on Main Street off North Marshall Way, north of the city-owned Western Spirit: Museum of the West.<\/p>\n
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.<\/p>\n
Before making the multi-million dollar purchase, he needed the city\u2019s help.<\/p>\n
As the Dec. 4, 2019, City Council agenda notes: \u201cThe closing of the city sale of the Museum Square lands \u2026 relies upon the termination and releases of covenants and restrictions.\u201d<\/p>\n
City Council unanimously approved that agenda item \u2013 which was buried deep in the \u201cconsent agenda\u201d (items not discussed individually but voted on as a whole) in a meeting dominated by another hotly-debated Old Town development: Southbridge II.<\/p>\n
\u2018Complete misinformation\u2019<\/strong><\/p>\n ARC\/Museum Square\u2019s response to the Gateway suit does not dispute the claim that, for months prior to the action, Stockwell met with the Gateway HOA.<\/p>\n This week, one of the three Gateway board members at the time told the Progress that Stockwell \u201cmisled and misguided us.\u201d<\/p>\n \u201cComplete misinformation,\u201d Alan Karcich continued, \u201cwas given to us by Brent Stockwell and the city of Scottsdale.\u201d<\/p>\n While Karcich\u2019s statements align with the version painted by Gateway lawyers, attorneys for the Museum Square developer insist the lawsuit\u2019s portrait of the city actions is confused and without merit.<\/p>\n 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.<\/p>\n Stating there is no dispute that the Gateway HOA\u2019s \u201cduly elected\u201d president signed a key document, the ARC motion for dismissal continues, \u201cThe association cites no authority that it can invalidate its own act because it allegedly did not follow the law or its own procedures.\u201d<\/p>\n 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.<\/p>\n Even so, he gave Gateway 21 days to \u201cfile an amended complaint curing the deficiencies identified in the (ARC) motion.\u201d<\/p>\n Whitten\u2019s ruling noted the parties \u201cseem to agree that on June 18, 2019, the (Gateway at Main Street) Association\u2019s then-president, Richard Lamden, signed a document titled \u2018Termination and Release of Covenants and Restrictions.\u2019\u201d<\/p>\n The judge recaps how Gateway now alleges\u00a0\u201cits 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.\u201d<\/p>\n On Nov. 17, Whitten transferred the case to the commercial court system within Maricopa County Superior Court.<\/p>\n One week later, the city was granted a request to have the firm Gust Rosenfeld as its representative in place of city attorneys.<\/p>\n After Whitten granted a request for more time by Gateway\u2019s attorneys, the Sun City-based Cavanagh Law Firm filed an amended complaint on behalf of Gateway on Dec. 8.<\/p>\n According to last month\u2019s filing, the document to terminate key Gateway covenants \u201cwas sent to Mr. Lamden \u2026 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.\u201d<\/p>\n And, the suit alleges, \u201cThe city never showed the Gateway\u2019s covenants\u201d to any other Gateway condo owners.<\/p>\n Claiming a shell-game trickery, the Gateway lawyers continue, \u201cStockwell emphasized the existence of a separate 1920 deed restriction containing racist language. Members who attended the meeting only remember discussions about the \u2018Jim Crow\u2019 restrictions, and nothing about the height restrictions.<\/p>\n \u201cMr. 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.\u201d<\/p>\n The board<\/strong><\/p>\n 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.<\/p>\n Stockwell referenced a Dec. 4, 2019, council meeting \u2013 which was dominated by heated debate over the Southbridge II development, which passed by a split vote.<\/p>\n The Museum Square issue was item 10 of the consent agenda, in which topics are voted on in a group, without discussion.<\/p>\n Eighteen consent agenda items were approved unanimously at that meeting, including \u201cauthorize a termination and release of covenants and restrictions in the vicinity of and including the Museum Square Project.\u201d<\/p>\n In his email to the Gateway resident, Stockwell noted \u201ca signed termination and release from the board,\u201d stating he was \u201cin regular communication\u201d with Gateway\u2019s three-person board of directors, with Lamden as president, Karcich and Carol Kowalke.<\/p>\n According to Stockwell\u2019s 2025 email, \u201cit was communicated that they had consented to this.\u201d<\/p>\n This week, Karcich told the Progress that consent was because Stockwell \u201cdeceived us.\u201d<\/p>\n In signing the document, Karcich said, Lamden \u201cdid not act on his own.\u201d<\/p>\n But, Karcich said, \u201cWe relied on Brent Stockwell \u2013 who misled and misinformed us.<\/p>\n \u201cAs a board we had discussions about signing the (covenant termination) documents,\u201d Karcich said.<\/p>\n \u201cStockwell was constantly sending us different emails saying \u2018we researched CC&Rs (Covenants, Conditions, and Restrictions) \u2013 no votes needed.\u2019<\/p>\n \u201cHe also blatantly told me to my face we\u2019re only signing off on our property, which was already built at 60 feet.<\/p>\n \u201cI said, \u2018We\u2019re only signing off on our property \u2013 not the other seven or eight (neighboring) properties?\u2019 He said, \u2018That\u2019s correct.\u2019<\/p>\n \u201cWe just weren\u2019t informed properly,\u201d Karcich stressed. \u201cWe were misled by the city.\u201d<\/p>\n This echoes a portion of the lawsuit:<\/p>\n \u201cCarol Kowalke, unpersuaded by Mr. Stockwell, wrote to Dick Lamden, Alan Karcich and Marshall Chess (July 24, 2019): \u2018I think we need a vote and suggested the need for legal counsel.\u2019.. Lamden agreed that a member vote was needed.<\/p>\n The suit continues, \u201cDick Lamden wrote to Brent Stockwell on July 24, 2019: \u2018Considering 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.\u2019\u201d<\/p>\n The Progress left voicemails for Lamden and Kowalke but did not hear back as of this edition\u2019s deadline.<\/p>\n The Progress also reached out to Stockwell for comment on the allegations in the Gateway lawsuit. \u201cThe city is handling the lawsuit,\u201d he said.<\/p>\n \u201cI\u2019ve not seen it, you can reach out to them for response.\u201d<\/p>\n Background<\/strong><\/p>\n According to the Gateway filing, \u201cIn 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.”<\/p>\n Ferris completed the construction of the Gateway condominiums in 2004. He died 10 years later and was survived by his widow, Madeline Ferris.<\/p>\n \u201cIn or around early 2017,\u201d the Gateway narrative continues, \u201cMacdonald began discussions with the city to develop a $300 million project called \u2018Museum Square\u2019 on approximately 4.5 acres of properties encumbered by the Gateway\u2019s Covenants consisting of four buildings that would be up to 156 feet tall.<\/p>\n \u201cMacdonald and the City both anticipated enormous profits from the Museum Square project: Macdonald\u2019s 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.\u201d<\/p>\n Then, the lawsuit claims:<\/p>\n \u201cThe discovery of the Gateway\u2019s covenants was a threat to the entire project.\u201d<\/p>\n Lamden and Stockwell<\/strong><\/p>\n On July 12, 2018, according to the lawsuit, Lamden attended the city\u2019s Museum Square informational meeting.<\/p>\n \u201cMr. 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\u2019s Wearhouse.\u201d<\/p>\n Lamden, the Gateway attorneys stress, \u201chad no background or experience in real estate development.\u201d<\/p>\n His relationship with Stockwell expanded three weeks after the initial meeting, when Stockwell emailed Lamden an offer to \u201csit down with you and your other board members to get your feedback on the Museum Square project.\u201d<\/p>\n On Oct. 22, 2018, Stockwell attended a Gateway HOA board meeting and \u201crolled out the strategy \u2026 First, Mr. Stockwell minimized the height of the planned buildings and their close proximity to the Gateway.<\/p>\n \u201cMr. Stockwell presented numerous drawings that were misleading,\u201d the suit alleges.<\/p>\n \u201cThe drawings were drawn by Macdonald\u2019s architectural firm, Swaback Architects and Planners, specifically for this meeting, and under Macdonald and the city\u2019s 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.\u201d<\/p>\n \u2018No vote needed\u2019<\/strong><\/p>\n One year after the initial city Museum Square pitch to Gateway, the lawsuit claims \u201cthe prospect of a member meeting was apparently very alarming to Mr. Stockwell,\u201d who reached out to the Vancouver-based developer.<\/p>\n \u201cOn 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,\u201d the suit alleges.<\/p>\n \u201cDick Lamden wrote to Alan Karcich, Carol Kowalke and Marshall Chess following his secret meeting with Rob Macdonald and Brent Stockwell, \u2018Brent noted they still believe we acted within our scope and responsibility.\u2019<\/p>\n \u201cUpon information and belief, Mr. Stockwell told Mr. Lamden that no vote was needed.\u201d<\/p>\n Karcich also commented on the lawsuit\u2019s claim about Stockwell showing the board a parking garage on its boundaries \u2013 as an alternative if Museum on the Square was not allowed to build.<\/p>\n \u201cThat parking garage, that was a dog and pony show,\u201d Karcich said. \u201cThere is no way they were going to put a parking garage there. That was a threat to scare the other owners.\u201d<\/p>\n The 72-year-old Karcich, who has lived at Gateway since 2006, pondered the city\u2019s statements and presentations in the crucial months of 2018.<\/p>\n \u201cLying is a strong word \u2013 but they have misrepresented and misinformed,\u201d he said.<\/p>\n Though he disputes the version that Lamden acted on his own, Karcich insisted, \u201cI really feel the city deceived me \u2013 not only me but other board members.<\/p>\n \u201cThere\u2019s a greed factor involved here,\u201d he concluded.<\/p>\n The developer<\/strong><\/p>\n According to the Gateway lawsuit, \u201cStockwell arranged for Dick Lamden to go to the city notary\u2019s office on June 18, 2019, to sign the termination.\u201d<\/p>\n 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.<\/p>\n 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.<\/p>\n The city-owned land south of Scottsdale\u2019s Museum of the West was home to the closed Loloma Transit Station, then used by the museum for administrative offices.<\/p>\n In a response to the lawsuit, attorneys for the developer state the transaction \u2013 originally scheduled for the spring of 2020 \u2013 was completed in 2022.<\/p>\n This week, the Progress asked if the money has been received \u2013 and if so, what it has been used for.<\/p>\n The Progress also asked City Manager Greg Caton to comment on the lawsuit\u2019s portrait of Stockwell\u2019s actions.<\/p>\n No response was received as of press time.<\/p>\n 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.<\/p>\n In 2022, the Development Review Board approved a 92-unit apartment building, \u201cthe first phase of the larger Museum Square master plan.\u201d<\/p>\n The plan included underground parking.<\/p>\n The most recent Museum Square action listed on the city\u2019s website is the June 9, 2023, approval of a \u201cre-plat.\u201d<\/p>\n Though the project is years behind its original timeline, Robert Macdonald of Macdonald Development said he hopes to move forward soon.<\/p>\n Asked this week about an updated construction timeline, Macdonald responded, \u201cI\u2019m working on that with my lawyers and architects.<\/p>\n \u201cWe have meetings with the city on Jan. 16,\u201d Macdonald added. \u201cWe\u2019re working with the city \u2013 they\u2019re very good people to deal with.\u201d<\/p>\n Macdonald declined to comment on the Gateway lawsuit.<\/p>\n \u201cThe attorneys are handling all that,\u201d he said. \u201cI\u2019m just trying to get my buildings built.\u201d<\/p>\n According to its website, Macdonald Development is based in Vancouver, Canada with offices in Calgary and Phoenix.<\/p>\n \u201cFounder Robert Macdonald has led the company since 1985, creating a legacy of commercial and residential properties across North America,\u201d the website states.<\/p>\n \u201cSince 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.\u201d<\/p>\n One of the company\u2019s listed core values is \u201cRespect for Community\u2026our process always includes a thorough consultation with local shareholders, recognizing that our activities can often have a significant impact on our neighbors.\u201d<\/p>\n Love\/hate<\/strong><\/p>\n Like Southbridge before it and Axon after, Museum Square in 2019 was a headline-dominating project that had ardent supporters and fierce critics.<\/p>\n In an Aug. 19, 2019, letter to the editor, Jim Bloch insisted \u201cMuseum 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.\u201d<\/p>\n His plea: \u201cThe city council must listen to the folks, not the money!\u201d<\/p>\n But other folks were strongly in favor of the development.<\/p>\n \u201cI\u2019m 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,\u201d Jim Derouin wrote in a Sept. 2, 2019, editorial.<\/p>\n \u201cI 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.\u201d<\/p>\n Following ARC\/Museum Square\u2019s motion to dismiss the lawsuit, Gateway is expected to file a response to that motion.<\/p>\n No date has been scheduled for a final ruling.<\/p>\n Carol McNulty, who has lived at Gateway since 2008, said for years she \u201chad no idea about the covenants \u2013 I didn\u2019t know we had any control over what was being built around here.\u201d<\/p>\n She said she rarely misses a board meeting.<\/p>\n McNulty said she was at the Stockwell-led meetings, but had no idea about the plan to sign off on covenants.<\/p>\n \u201cI\u2019m amazed Dick (Lamden) signed off and allowed that to happen,\u201d she said. \u201cThe membership \u2013 we didn\u2019t know anything.\u201d<\/p>\n She said she is \u201cjust so disappointed in Dick and the fact they never brought (the covenants termination) to the membership.<\/p>\n \u201cWhy didn\u2019t he consult an attorney? Why didn\u2019t the city of Scottsdale let us \u2013 the membership \u2013 know what was going on?\u201d<\/p>\n The widow \u2013 her husband, a former board member, died in 2014 \u2013 said she supports the lawsuit.<\/p>\n \u201cI just hope we can get our covenants back,\u201d McNulty said.<\/p>\n \u201cI don\u2019t really want to see a 14-story hotel next to us. Don\u2019t we have enough hotels?\u201d<\/p>\n