CityNorth

CityNorth is a large planned mixed-use development in the Northeast Valley of Phoenix, Arizona. Conceived by Thomas J. Klutznick as an urban center for the rapidly growing Northeast Valley and as the commercial core of the Desert Ridge master-planned community, the project was designed to combine retail, restaurants, residences, hotels, offices, cultural and civic facilities, and entertainment uses in a more walkable, pedestrian-oriented setting than a conventional suburban shopping center. Its location near the intersection of Loop 101 and State Route 51 was intended to give it regional accessibility across the Phoenix metropolitan area. The master plan covers approximately 144 acres and was projected to contain more than 5.5 million square feet of development when complete. The initial phase, known as High Street and previously associated with the CityCenter of CityNorth branding, opened in November 2008. It occupied roughly 20 acres and included restaurants, retail, residential units, and office space. The project was planned in phases, with a second phase known as The Boulevard originally expected to follow in 2009. Economic deterioration in Arizona and the wider effects of the Great Recession delayed that expansion, and later phases were placed on hold. High Street itself reverted to its construction lenders through foreclosure in July 2010. CityNorth became nationally notable in Arizona because of a public-private sales-tax incentive agreement between the City of Phoenix and the Thomas J. Klutznick Company. Under the agreement, the developer could retain 50 percent of sales-tax revenue generated at the project, subject to a stated maximum of $97.4 million over 11.3 years. In return, the city would lease 3,180 parking spaces for 45 years, including 200 spaces reserved for bus riders and carpool users. Phoenix and the developer argued that the arrangement would support a dense, garage-based development pattern, generate substantial tax revenue and employment, and prevent the site from becoming dominated by surface parking. The Goldwater Institute challenged the arrangement, arguing that it amounted to an unconstitutional corporate subsidy and that the projected economic benefits were overstated. The litigation, Turken v. Gordon, moved through Arizona's courts. A Maricopa County Superior Court judge upheld the agreement in April 2008, finding that the expected economic activity served a public purpose. The Arizona Supreme Court ultimately upheld the agreement in January 2010, while clarifying the legal standard for future public-private development deals: benefits offered to a private developer must correspond to a direct benefit received by the government, rather than relying only on indirect outcomes such as jobs or broader sales-tax activity. The development's original leasing concept included Bloomingdale's, Macy's, and Nordstrom as department-store anchors. All three withdrew during the 2009 recession, weakening the original large-scale retail strategy. The project later saw renewed site activity: infrastructure work involving water and sewer systems began in June 2019, and early site improvements reported in 2020 included grading for a planned four-lane road. The available reference material does not establish whether the complete master plan was ultimately delivered or identify a current owner, operating company, or definitive completion date. CityNorth is therefore best understood as a branded, phased real-estate development whose first phase opened but whose broader plan experienced substantial delays and restructuring.

CityNorth emerged from a vision for a concentrated urban center in Phoenix's Northeast Valley, an area characterized by suburban growth and major freeway expansion. Developer Thomas J. Klutznick sought to create more than a conventional enclosed mall: the proposed district would combine shopping, dining, housing, offices, hotels, entertainment, cultural facilities, and civic uses in a pedestrian-friendly environment. The site was positioned near Loop 101 and State Route 51, allowing access from across metropolitan Phoenix while serving the Desert Ridge master-planned community. The full plan covered approximately 144 acres and contemplated more than 5.5 million square feet of construction. Thomas J. Klutznick Company led the development, while Related Companies joined the initial CityCenter phases as a co-developer. The project was intended to be built incrementally, with the first phase establishing an active mixed-use district before later phases expanded the retail, office, residential, and civic program. Phase One, High Street, opened in November 2008. It brought restaurants, shops, homes, and offices to approximately 20 acres of the site. The development was launched during a difficult period for commercial real estate, however, and the broader project quickly encountered the effects of the Great Recession. The planned second phase, The Boulevard, had been scheduled for November 2009 but was delayed. Several intended department-store anchors, including Bloomingdale's, Macy's, and Nordstrom, withdrew from the project in 2009. In July 2010, High Street reverted through foreclosure to the lenders that had supplied its construction financing. Future phases were subsequently put on hold amid economic conditions. The project's public financing structure generated a major legal dispute. Phoenix agreed that the developer could retain half of the sales-tax revenue generated at CityNorth up to $97.4 million over an 11.3-year period. The arrangement was linked to a 45-year lease of 3,180 parking spaces by the city, including 200 spaces designated for bus commuters and carpoolers. Phoenix and the developer described the deal as a way to support structured parking and a denser urban form. They argued that, without the incentive, the site might have been developed with extensive surface parking and fewer tax-producing businesses. They also maintained that the developer, rather than the city, would bear the project's large development costs and financial risk. The Goldwater Institute challenged the agreement in Turken v. Gordon. Its criticism focused on Arizona constitutional provisions governing gifts of public money, privileges and immunities, and special laws. The institute argued that the arrangement was an improper corporate subsidy, that the project would likely have been built without public assistance, and that city-sponsored economic-impact studies overstated employment, output, and tax benefits by failing to account adequately for alternative economic activity and retail costs. Phoenix and the developer disputed those claims and emphasized the direct value of the parking lease and the intended public benefits of a compact development pattern. A Maricopa County Superior Court judge ruled for Phoenix and the developer in April 2008. The case continued through appeal, and on January 25, 2010, the Arizona Supreme Court allowed the agreement to remain in force. The decision also established an important principle for later public-private projects: indirect benefits such as jobs and general sales-tax growth could not alone justify the government's contribution. Agreements would need to identify what the government directly receives and demonstrate that the value of that benefit supports the public investment. After the first phase's financial difficulties and the suspension of later phases, the project experienced renewed construction activity years later. Water and sewer infrastructure work began in June 2019, and early site improvements in 2020 included grading for a planned four-lane road. The reference material does not provide a confirmed final build-out, current ownership structure, or current operating status. CityNorth's documented history is therefore one of ambitious urban planning, partial delivery, recession-related disruption, foreclosure of its first phase, constitutional litigation, and an uncertain later redevelopment trajectory.

• 2020

  Road-related site grading is reported

  [1]CityNorthen.wikipedia.org

  Early site work included grading for a proposed four-lane road.

• 2019

  Water and sewer infrastructure work begins

  [1]CityNorthen.wikipedia.org

  Construction activity restarted with underground infrastructure work, followed by plans for a formal groundbreaking.

• 2010

  Arizona Supreme Court upholds the CityNorth deal

  [1]CityNorthen.wikipedia.org

  The court preserved the agreement while requiring future government-development arrangements to demonstrate a direct governmental benefit.

• 2010

  High Street enters foreclosure

  [1]CityNorthen.wikipedia.org

  The first phase reverted to its construction lenders through foreclosure in July.

• 2009

  The Boulevard is delayed

  [1]CityNorthen.wikipedia.org

  The second planned phase missed its expected opening as Arizona's economy weakened and litigation continued.

• 2009

  Planned department-store anchors withdraw

  [1]CityNorthen.wikipedia.org

  Bloomingdale's, Macy's, and Nordstrom abandoned their planned anchor roles during the Great Recession.

• 2008

  High Street opens

  [1]CityNorthen.wikipedia.org

  The first CityNorth phase opened in November with a combination of retail, restaurants, residences, and offices.

• 2008

  Superior Court upholds the public-private agreement

  [1]CityNorthen.wikipedia.org

  Maricopa County Superior Court rejected the Goldwater Institute's constitutional challenge to the Phoenix incentive arrangement.

A walkable, high-density urban center within suburban Phoenix, intended to serve as the retail, employment, residential, cultural, and civic core of the Northeast Valley and Desert Ridge.

• Mixed-use district · 2008

  High Street

  The first completed phase of CityNorth, High Street opened in November 2008 on approximately 20 acres. It was planned as a walkable combination of restaurants, retail, residential units, and office space, establishing the initial operating component of the larger master plan. The phase later reverted to its construction lenders through foreclosure in July 2010.

• Planned mixed-use phase

  The Boulevard

  The Boulevard was planned as the second major phase of CityNorth and was originally expected to open in November 2009. Its program was intended to expand the district's retail, commercial, residential, and public-oriented urban environment. The phase was delayed by the Arizona economic downturn and the litigation surrounding the project's incentive agreement, and later phases were placed on hold.

• Master-planned mixed-use development

  CityCenter of CityNorth

  CityCenter of CityNorth refers to the initial phases of the broader CityNorth concept, developed jointly by Thomas J. Klutznick Company and Related Companies. The planned program combined retail, restaurants, residences, offices, hospitality, entertainment, cultural, and civic uses in a pedestrian-oriented setting. The available reference describes a phased plan rather than a completed project.

• 2019

  Infrastructure work restartsOther

  Background

  After years of delay, the project recorded renewed site activity.

  Action taken

  Water and sewer construction began in June, with additional site work and road grading reported in the following year.

  Aftermath

  The work indicated an attempt to advance or reconfigure portions of the development, but the reference does not establish the project's eventual completion or current operating status.

  Source

• 2009

  Development phases are placed on holdStrategy

  Background

  The Great Recession, weak Arizona economic conditions, anchor-store withdrawals, and litigation reduced the feasibility of the original build-out schedule.

  Action taken

  The planned expansion beyond High Street, including The Boulevard, was delayed and later placed on hold.

  Aftermath

  The original regional retail strategy was scaled back in practice, and the available material does not confirm completion of the full 5.5-million-square-foot plan.

  Source

• 2007

  Phoenix adopts a sales-tax incentive and parking lease structureStrategy

  Background

  The city and developer sought to encourage a dense, garage-based mixed-use project rather than a lower-density scheme dominated by surface parking.

  Action taken

  The agreement allowed the developer to retain 50 percent of sales-tax revenue generated at CityNorth up to $97.4 million over 11.3 years, while Phoenix would lease 3,180 parking spaces for 45 years.

  Aftermath

  The arrangement triggered the Turken v. Gordon constitutional challenge and became a significant Arizona precedent concerning direct public benefits in development agreements.

  Maximum sales-tax retention. $97.4 million (11.3 years)

  Source

1. 1CityNorthen.wikipedia.org