The short version
The Scottsdale Galleria opened on the Arizona Canal in 1991 and failed almost at once, leaving a huge empty mall at the city’s busiest corner. In 1996 the city declared downtown a redevelopment area, and a team that included developer Fred Unger, who had restored the Hermosa Inn, won the right to remake the Galleria and the canal bank. Their answer was the Canals of Scottsdale: 27 acres of waterways, plazas and museums, its public parts paid for by the sales taxes the district would generate.
Mayor Sam Campana backed it. A coalition of downtown owners, north Scottsdale activists and anti-tax voters fought it. On September 7, 1999 the voters killed it, 17,823 to 15,411, on the same ballot on which they approved up to $200 million to buy the McDowell Mountains.
The plan
The redevelopment designation of 1996 gave the city power to assemble land, by condemnation if need be, for a chosen developer. A newspaper reported that the redevelopment board accepted a bid from Unger and the Galleria’s owner, Excel, in 1997. The plan grew into what investors called a project of “more than $650 million,” with waterways and gondolas along the canal and museums in the Galleria; the campaign’s treasurer named three, “The Museum of Progress, the Health World Children’s Museum, and the Arizona African Art Museum.” Unger told voters he was “one of the private investors,” and another investor wrote that they had “pledged to invest more than $458 million in the project. That’s more than 70 percent of the overall cost.”
The ballot question was narrow. Question 2 asked whether the council could “facilitate the financing of a state approved cultural ‘theme park’ generally located adjacent to the Arizona Canal and Scottsdale Road,” by replacing the existing sales taxes inside the district with a theme-park tax at no higher rate, used only for public improvements. Campana’s argument was that this cost voters nothing: the money would pay “only for public improvements like underground parking, bridges, plazas and waterways,” and “Mountain preserve and transit taxes would not be affected. It’s a rare opportunity to have a world-class attraction in the heart of our community.”
The opposition
The opponents’ case was that the city was using public power for a private developer. The Save Old Scottsdale Committee, chaired by Barbara Espinosa, warned that “AS MANY as 40 PLUS HISTORICAL/LANDMARK BUILDINGS” could be condemned, that Scottsdale and Camelback roads could close “for as LONG as ONE YEAR,” and urged voters to “AVOID ANOTHER CORPORATE WELFARE GIVEAWAY.” Tom Silverman argued that “the City of Scottsdale will need to purchase, improve and operate the Galleria for the developer at a cost of millions of dollars to the taxpayer in perpetuity,” in violation of the state constitution’s gift clause. Another signer put the public money at “$300,000,000 (MILLION).” The Coalition of Pinnacle Peak, the north-side growth group, added its own line: “Tell the developers to take their gondolas back to California!”
The vote
On September 7, 1999 Question 2 failed, 17,823 to 15,411. On the same ballot the Preserve bonds passed 25,573 to 7,499. The pairing became the point. Opponents had borrowed the Preserve campaign’s language (“You voted to SAVE THE McDOWELL MOUNTAINS. Now we are asking you to SAVE OLD SCOTTSDALE”), and the electorate that would tax itself for open desert would not underwrite a downtown attraction.
Campana accepted the verdict in her State of the City address that January: “What seems clear from September’s vote is this: Citizens were wary of the scope and cost of the Canals project and how it might change the scale and feel of the downtown area.” She did not run again in 2000, and Silverman was elected to the council that spring.
What came after
The redevelopment area outlived the plan by three years. In 2002, after a petition by more than a hundred property and business owners, the council repealed it, the Institute for Justice reported. The canal bank was rebuilt anyway, in smaller pieces: the Waterfront on the north bank in the 2000s, and Unger’s own Southbridge on the south. Years later the Arizona Republic summed up the plan as something “akin to the San Antonio Riverwalk” that was “rejected by voters.” The 1990s politics chapter sets the vote beside the decade’s other referendums.