Title
Development Agreement with Biscuit Flats Dev LLC for Public Infrastructure Improvements
Description
Request the Economic Development and Housing Subcommittee recommend City Council approval to enter into a Development Agreement (DA), and any other agreements, instruments or documents as necessary, with Biscuit Flats Dev LLC, or its City-approved designee, for the installation of public infrastructure improvements in and around a proposed development on 2,300 acres of land surrounding the Taiwan Semiconductor Manufacturing Company (TSMC) development.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
In May 2020, TSMC announced its intention to build and operate an advanced semiconductor fabrication facility (FAB) in Phoenix. This was followed with announcements of three total Fabs with an investment totaling $65 billion, with room for six total Fabs. In the summer of 2020 the City zoned 3,500 acres for TSMC (1,100 acres) and a Tech Park (2,300 acres). In Taiwan, TSMC is located in science and technology parks, and it has always been TSMC's vision to have the same innovative activity and amenities located around their project site. In May 2024, an Arizona State Land Department auction was held after several years of research and planning, which estimated $1.7 billion in public infrastructure would be needed to develop the 2,300 acres. The applicant group comprised of Mack Real Estate Group and McCourt Partners entity Biscuit Flats Dev LLC (Developer) was the successful bidder on May 29, 2024.
The Developer proposes to construct a new mixed-use commercial park known as Halo Vista consisting of an estimated 12 million square feet of industrial space (The Forge), 3.5 million square feet of flex-tech/office space (Sonoran Oasis Science and Tech Park), 500,000 square feet of major destination retail, restaurant, hotels, an auto mall planned for ten dealers, residential, medical, and educational uses. Halo Vista is an important economic development opportunity that will create thousands of high-wage jobs over time and provide significant financial benefit for the City, above and beyond the sales tax revenue generated.
This area of Phoenix continues to be a high-demand, high-growth area for retail, new residential and employment uses. To accommodate for this growth, increased traffic, and the creation of the Halo Vista, significant public infrastructure improvements are required. The Developer will construct the required public infrastructure improvements, including water and wastewater lines, public streets, traffic signals, public art, enhanced landscaping and public drainage. It is anticipated that Halo Vista will generate 62,000 jobs at ultimate build-out and will be a hub of industry and research in the southwest United States, and throughout the entire country. The proposed major business terms are as follows:
- Developer shall, within three months of Council Approval ("Authorization Date"), submit complete and conceptual site master plans to the City's Planning and Development Department.
- Developer shall design and construct public streets, as mandated by the standards of the Street Transportation and Planning and Development departments, including 43rd and 51st avenues and Dove Valley Road and additional collector streets as approved by the City and respective governing jurisdictions (including landscaping, sidewalks, streetlights, public art and appurtenant amenities), for public access through the Project.
- Developer shall design and construct the public water and wastewater infrastructure as required by the City-approved master plans, and as illustrated in accordance with the approved Planned Unit Development zoning.
- Developer shall convey all rights-of-way at no cost to the City.
- Developer must comply with Title 34 of the Arizona Revised Statutes in constructing the improvements to qualify for reimbursement, and the specifics and cost of the improvements must be pre-approved by the City to qualify for reimbursement.
- Developer and its contractors shall produce documents to verify taxes paid to the City.
- City will reimburse the Developer, for the construction of approved public infrastructure improvements through the City's eligible General Fund portion of the Transaction Privilege Tax (TPT) generated by the Project. The public infrastructure improvements will be completed in a phased manner, and reimbursements will begin at the completion of the first phase of public infrastructure improvements, and the City's acceptance of the improvements and the dedication of the public improvements to the City. The City may use other restricted fund sources for eligible approved costs in lieu of TPT reimbursements, where available.
- City will reserve 400,000 gallons of wastewater capacity for the first phase of Halo Vista.
- Additional public infrastructure and related components (and costs thereof) may be approved by the Community and Economic Development Director.
The DA will include other terms and conditions as deemed necessary by the City.
Reimbursement shall be paid on an annual basis, in arrears, from the following sources: 100 percent of the City's eligible General Fund portion of the TPT generated by the Project and collected and received by the City, and as verified by the City. City may use other restricted fund sources to reimburse Developer for eligible approved costs, at the City's sole discretion. Reimbursement shall not exceed actual verifiable costs for the approved improvements.
Contract Term
The term of the DA shall end upon the earlier of 25 years after the commencement of construction of the first phase, as made evident by the issuance of required permits (Construction Commencement Date) or upon the date Developer has received reimbursements totaling the actual approved verifiable costs
Financial Impact
The City's financial impact will be the reimbursement of the eligible General Fund share of the TPT generated from the Project over 25 years as well as other restricted fund sources, as applicable to the improvements constructed. Financial terms of the Agreements will be provided to the Budget and Research and Finance Departments for review prior to the execution of the Agreements.
Location
Approximately 2,300 acres around TSMC, bordered by the 74 Carefree Highway to the north, I-17 Freeway to the east, Loop 303 Freeway to the south and Deadman's wash to the west
Council District: 1
Department
Responsible Department
This item is submitted by Assistant City Manager Lori Bays, Deputy City Managers John Chan, Alan Stephenson, Ginger Spencer and Inger Erickson, and the Community and Economic Development, Fire, Planning and Development, Street Transportation and Water Service departments.