Phoenix, CityNorth at odds over ending development agreement

Phoenix's effort to revoke its $97.4 million development agreement with the developer of CityNorth has gotten off to a rocky start. Phoenix sent a letter to an attorney for the Klutznick Co. arguing that Klutznick has defaulted on the terms of the agreement. Scott Hershman, who said on Tuesday he had not been in contact with the city, responded with a demand for the full amount of the agreement, claimed the city was interfering in the company's contractual rights, and threatened a lawsuit. The Phoenix City Council in October directed city staff to study how to end the contract, which the city spent more than $750,000 in court defending between 2007 and 2010. The agreement with Klutznick Co. calls for the city to share with the developer half the sales taxes generated at the northeast Phoenix project for 11 years and 3 months, or a maximum of $97.4 million. The sharing agreement would start after the developer opens 1.2 million square feet of retail space, plus parking structures with more than 3,000 free spaces.

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