Title
Authorization to Amend Contract with IDM Companies for Reimbursement of Public Infrastructure Improvements
Description
This report requests the Economic Development and Housing Subcommittee recommend City Council approval to amend Contract 159118 and any other agreements as necessary (Agreements), with IDM Companies or its City-approved designee (Developer), for the reimbursement of public infrastructure improvements.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
Developer acquired 34 acres for a 678-unit multi-family project that is currently under construction. As a part of that project, a development agreement was approved by City Council on June 15, 2022. This resulted in City Contract 159118, which reimburses the Developer for costs associated with boring and constructing a water line under Loop 101 with a maximum reimbursement of $1 million. Developer has now acquired 111 additional acres adjacent to the multi-family project at the southeast corner of Thomas Road and 99th Avenue with plans to develop a mixed-use retail and business park. The new project will include 10 acres of retail at the southeast corner of Thomas Road and 99th Avenue intersection and Phase 1 of the Business Park will include approximately 750,000 square feet of new Class A Industrial spread over five buildings. Phase 2 will include an additional 650,000 square feet. The property is currently farmland and has been farmed by the same family for many years. Due to the extensive cost of public infrastructure here in comparison to other more developed parts of the City, and in an effort to prevent retail leakage as well as help attract high-wage employers along Loop 101, the following business terms are being recommended.
- Developer will privately finance and construct the public infrastructure improvements including half-street frontage of Thomas Road and 99th Avenue and a full street of 97th Avenue and Water and Wastewater lines, as approved by the Planning & Development, Street Transportation and Water Services departments.
- Agreements may include other such public infrastructure and related components (and costs thereof) as approved by the City's Community and Economic Development Director.
- These improvements must be in conformance with the zoning for the Site.
- The new project must start construction within 18 months of Council authorization.
- 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 public infrastructure improvements must be pre-approved by the City to qualify for reimbursement.
- The City will reimburse the Developer for public infrastructure improvements as listed above and will not exceed a total reimbursement of $10 million.
- No other sources of funds will be used if resources are not adequate to meet the projected construction expenses.
- Agreements will include other terms and conditions as deemed necessary by the City.
Reimbursement Terms are as follows:
- Reimbursement will be paid on a semi-annual basis, in arrears, from the City's eligible General Fund portion of the Transaction Privilege Taxes (TPT) collected and received by the City, as verified by the City, from the following categories: construction sales tax, retail sales tax, speculative builder tax and commercial lease tax.
- The maximum reimbursement amount for the public infrastructure improvements related to the project will not exceed $10 million.
- Reimbursement will not exceed actual verifiable costs for the approved improvements and tracking of reimbursable costs will begin with the issuance of the first permits for the first phase.
- The reimbursement period will begin upon Developer's completion of the public infrastructure for the first phase of the improvements, as made evident by the (Construction Completion Date), and continue for a period of 10 years or upon the date Developer has received reimbursements totaling the Reimbursement Cap.
The project is ideally located along the Loop 101 making it attractive to potential high-wage employers. This corridor, which has waited over 20 years for development, now has needed infrastructure improvements thanks to the investment and work of Developer. Phoenix has reached a critical point in the real estate market that makes this investment a possibility, and will bring significant investment in the employment projects in the corridor and help prevent retail leakage. The development of the Site is an important economic development opportunity that will transform the community and yield significant financial and public benefits for the City above and beyond the TPT revenues generated.
Contract Term
The development agreement will terminate 10 years after the Construction Completion Date or upon the date Developer receives the maximum reimbursement, whichever occurs first.
Financial Impact
The City's financial impact will be the reimbursement of the eligible General Fund share of the TPT generated from the Site over 10 years with a maximum of $10 million in payments. Financial terms of the Agreements will be reviewed by the Budget and Research Department to verify funding availability prior to execution of Agreements.
Location
Generally located west of Loop 101 and Thomas Road.
Council District: 5
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.