Title
Amend Ordinance S-49260 and Development Agreement with Halle Properties LLC. (Ordinance S-52596) - District 2
Description
Request the City Council to amend Ordinance S-49260 and the Development Agreement (Contract 157613) with Halle Properties LLC, or its City-approved designee (Developer), to modify certain terms. Further request to authorize the City Controller to disburse all fund related to this item and authorize the City Treasurer to accept funds associated with this request.
Report
Summary
On December 14, 2022, City Council approved Ordinance S-49260 (Ordinance) authorizing staff to negotiate and enter into a Development Agreement (DA) with the Developer for installation of public infrastructure improvements to bring a 32-acre destination office employment campus to Phoenix with 1,100 high-wage jobs. Phase 1 of the campus will include approximately 300,000 square feet of new development representing a capital investment estimated at $198 million (Project). The Developer is Discount Tire, which has called Arizona home since 1970 and is a national leader in the tire industry with over 1,000 locations across 35 states.
Pursuant to the DA, the Developer will complete the construction of the required improvements and the City (upon completion of construction and acceptance by the City of public infrastructure improvements) will reimburse the Developer a maximum of $5 million from the General Fund portion of the City’s Transaction Privilege Tax and the City’s Strategic Economic Development Fund. As site design has progressed, the Developer performed additional due diligence work associated with acquisition of required rights-of-way. An Arizona State Land Department requirement was to improve the Tatum and Mayo Boulevard intersection to its ultimate configuration. This infrastructure improvement requires acquisition of private real estate, which is in process but is taking longer than expected. Due to these challenges, the City and Developer have agreed to amend the DA with the following revised terms:
- Amend the description of the public infrastructure improvements impacted by the private acquisitions to reflect the final configuration approved by the City and Developer.
- Extend the Phase 1 36-month permitting requirement to the later of (i) December 31, 2026, or (ii) 180 days following completion of the private acquisitions.
The Project remains in the pre-construction phase with the Developer working on the off-site improvements to the Tatum and Mayo Boulevard intersection. Upon approval of these proposed amended business terms, staff will incorporate the changes into the current agreement with the Developer. Other than the changes referenced above, all other terms and conditions of the DA remain the same.
Contract Term
The development agreement will terminate 10 years after the Developer's completion and the City's acceptance of public infrastructure improvements.
Financial Impact
There is no new direct financial impact resulting from this amendment request.
Concurrence/Previous Council Action
On December 14, 2022, City Council approved Contract 157613 (Ordinance S-49260).
Location
32-acres west of Tatum and Mayo Boulevard
Council District: 2
Department
Responsible Department
This item is submitted by Assistant City Manager Ginger Spencer and the Community and Economic Development Department.