In a special session to be held at 4 p.m. today, the Tempe City Council is expected to discuss a settlement to the city's lawsuit against developer Ciudad del Lago.
In 1996, the city of Tempe and Ciudad del Lago signed an agreement that gave the developer the right to redevelop land on both the north and south shores of Tempe Town Lake.
Ciudad del Lago was supposed to develop the Peabody Hotel, a 29-story, 1,000-room hotel on Rio Salado Parkway.
The city had given the developer nearly $50 million in tax incentives to build the hotel, but in July 1998 Ciudad del Lago was unable to fulfill its agreement to finance it.
At that time the city agreed to an extension to allow Ciudad del Lago more time to find financing until October 1999. Upon that deadline, Tempe again gave the developer another extension for 90 days. In February 2000, the city filed a breach of contract suit for an undetermined amount against the corporation.
Tempe Mayor Neil Giuliano said in a statement Tuesday that he was pleased to see that the dispute over the Peabody Hotel was coming to a close.
"This agreement allows us to move forward with discussions for new developments along Town Lake," Giuliano said.
Giuliano added that with a resolution over the construction of the Peabody Hotel, that space would be a "phenomenal" location for a new Arizona Cardinals Stadium, located at the southeast corner of Tempe Town Lake on Rio Salado Parkway.
The current settlement has a third party developer, Playa del Norte, paying $2.1 million to the city to settle the lawsuit.
In return, Playa del Norte will receive the right to purchase property in Boardwalk East and West on the north shore of the lake and the right to negotiate a development agreement for those areas.
Brad Wilde, manager of Playa del Norte, said that they are "comfortable" with the deal between his development firm and the city.
"We're very excited about moving forward with the development plans on Town Lake," Wilde said. "The mayor and City Council have been both very instrumental and helpful in getting through this process."
Wilde added that the reason his firm decided to become involved in the Town Lake settlement was in order to resolve the issue and that it was time to get over with the past projects and look toward the future.
Reach Tony Ku at thatsku@hotmail.com.
