Title
Enter into a Development Agreement Related to the Construction and Operation of Water and Sewer Facilities Necessary to Serve the Verdin Development (Ordinance S-51721) - District 2
Description
Request to authorize the City Manager, or his designee, to negotiate and enter into a three-party development agreement between the City of Phoenix (City) and Taylor Morrison/Arizona, Inc., and MacEwen Ranch, LLC (collectively, Developer), outlining the parties' obligations related to repayment, impact fee credit, reimbursement, and other financial considerations associated with the construction and operation of water and sewer facilities required to serve the Verdin Development. Further request authorization for the City Treasurer to accept, and for the City Controller to disburse, funds related to this item.
Report
Summary
Pursuant to approved water and sewer master plans, the Developer is required to construct water and sewer facilities necessary to serve the Verdin Development. Several of the required facilities may be subject to Water or Sewer Repayment Agreements (Repayment), Water or Wastewater Development Impact Fee Credit Agreements (Credit), or reimbursement from the Verdin Community Facilities District (Reimbursement). The three-party development agreement will outline the terms and conditions by which the Developer may qualify for Repayment, Credit, or Reimbursement. Additionally, the Developer will be required to construct a public lift station and dual-force main. This agreement will establish the terms by which the Developer shall cover temporary revenue shortfalls related to the operation and maintenance of the lift station and dual-force main.
The following major deal points have been accepted by the Developer.
1. WASTEWATER LIFT STATION SHORTFALL
(a) The City conducted an in-depth financial analysis to calculate the estimated operational shortfall created by the timing of the Verdin lift station completion and planned buildout of the community (Shortfall Study).
(b) The agreement will specify the Verdin Developer's obligation to fund the City's operational and maintenance shortfall costs for the Verdin lift station upon the completion of construction and final acceptance of the lift station by the City. The shortfall obligation will be paid by the Developer in amounts covering a period of 10 years as estimated in the Shortfall Study, subject to payment terms to be defined in the agreement.
2. WASTEWATER CAPACITY
(a) The agreement will acknowledge that wastewater planned capacity allocation for Verdin will be estimated in accordance with City of Phoenix Water Services Department Engineering Policy P-103, dated November 19, 2004, as may be amended by the City, subject to Phoenix City Code requirements.
3. REPAYMENT AGREEMENTS
(a) The agreement will specify the share of capital costs associated with oversizing sewer facilities to be constructed by the Developer (meaning those facilities providing excess capacity over that required to serve Verdin) that are not reimbursed from the Verdin Community Facilities District (Verdin CFD) but would, notwithstanding Section 28-23 Parts D and E of the Phoenix City Code, otherwise qualify for the Sewer Repayment Program as provided in Phoenix City Code Chapter 28, including terms as set forth in Section 28-23 Part G. Repayment Program eligible capital costs will be calculated as a percentage of the Title 34 compliant Guaranteed Maximum Price (GMP) of the sewer facilities, using the acreage of the benefited parcels outside of the Verdin CFD divided by the total benefited acreage (Verdin CFD and the benefited parcels outside of the Verdin CFD).
(b) The agreement will identify the water facilities that qualify for impact fee credit as provided in Phoenix City Code Chapter 29 and specify the requirement to enter into separate water Impact Fee Credit Agreements as applicable.
(c) The agreement will include a "Reimbursement Matrix" exhibit created by the City and Developer to serve as a guideline regarding the Repayment Program and Impact Fee Credit Agreements.
Financial Impact
There is no negative financial impact to the City.
Location
Council District: 2
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Water Services Department.