Title
Amendment to the Intergovernmental Agreement and Master Lease between the City of Phoenix and Arizona State University (Ordinance S-48735)
Description
Request to authorize the City Manager, or his designee, to amend the Intergovernmental Agreement, Master Lease, Operating Agreement, and any other agreements as necessary (Amendments), with Arizona State University (ASU), to extend and modify certain business terms. There is no impact to the General Fund as a result of this action.
Report
Summary
On May 11, 2005, City Council authorized an Intergovernmental Agreement (City Contract 116493) (IGA) with ASU for the development of the Downtown Phoenix ASU campus. Subsequently, on May 10, 2006, City Council authorized a Master Lease and Operating Agreement (City Contract 119092) (Master Lease) with ASU related to the Downtown property for ASU's Downtown Phoenix campus. Since the agreements were originally envisioned, the campus has grown from it's infancy with just a few hundred students, to the modern, urban campus we know today with approximately 18,000 students enrolled in a variety of degree programs. As a result of the growth and changing priorities of the City and ASU, certain contract terms are no longer in the best interest of the parties or Downtown Phoenix.
As it exists today, the IGA states that ASU shall transfer the university owned Mercado property located at 541 E. Van Buren St. (aka 502 E. Monroe St.) to the City on June 15, 2024. The Master Lease also gives ASU rights to develop the City-owned McKinley parking lot located at the southeast corner of 1st and McKinley streets. In the time that has passed since the initial agreement, the city has grown significantly in its urban core, that now provides a different vision for the remaining City-owned properties in Downtown. ASU has continued to invest in the Mercado property and activate the property with university related programming. ASU has also become a partner in the Phoenix Bioscience Core (formally the Phoenix Biomedical Campus) and now has a vested interest in the success of the Mercado. Removing the Mercado requirement from the IGA will allow ASU to continue to integrate the Mercado into the university's long term vision for the Downtown Phoenix campus, while removing the City-owned McKinley lots from the IGA will provide the City the opportunity to consider alternative future development options for that land.
Finally, the Master Lease also requires ASU to begin development planning activities (Initial Development Period) on the Valley Youth Theatre (VYT) site, located at 525 N. 1st St., on or before Aug. 1, 2020 while still honoring all existing leases with VYT on the property. In compliance with the Master Lease, ASU began development planning activities for the VYT site, but has determined they will not be ready to commence construction for several years. Extending the timeline for redevelopment of the VYT site, will give ASU the time they need to grow into the site and allow VYT to remain in operation on the site for the next several years.
These amendments will remove the requirement for ASU to transfer the Mercado property to the City on June 15, 2024; remove the City-owned McKinley lots from the ASU Downtown Phoenix Campus District in the Master Lease; and extend ASU’s deadline for the Initial Development Period on the VYT lots to Jan. 5, 2030. The amendments will allow for the City and ASU to retain the properties each currently own and the extension will better align ASU's development activities with VYT's current operating agreement termination date of Jan. 5, 2030.
Financial Impact
There is no impact to the General Fund as a result of this action.
Concurrence/Previous Council Action
Ordinance S-31934 authorizing the IGA with ASU was passed by the City Council on May 11, 2005. Ordinance S-32895 authorizing the Master Lease was passed by the City Council on May 10, 2006. Ordinance S-37853 authorizing the first amendment to the IGA was passed by the City Council on May 18, 2011. This item was recommended for approval by the Economic Development and Equality Subcommittee on May 25, 2022 by a vote of 4 to 0.
Location
Mercado Property: 541 E. Van Buren St. (aka 502 E. Monroe St.)
McKinley Lots: 713, 717, 721 N. 1st St. and 714, 718, 722 N. 2nd St.
Valley Youth Theatre: 525 N. 1st St.
Council District(s): 7 and 8
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Community and Economic Development Department.