Title
Amend Business Terms with Arizona Fresh Holdings, LLC for Redevelopment of the Del Rio Former Landfill at 1150 E. Elwood St. (Ordinance S-48956)
Description
Request to authorize the City Manager, or his designee, to amend the business terms previously approved by Ordinances S-46989, S-47957 and S-48799 for entering into a development agreement, ground lease, easements and other agreements as necessary (collectively, the Agreements) with Arizona Fresh Holdings, LLC, or its City-approved designee (Developer), for the lease and redevelopment of the approximate 140 acre City-owned Del Rio former landfill site located at 1150 E. Elwood St. (Site).
Report
Summary
The Site is a former municipal solid waste landfill operated between 1971 and 1981. In the center of the Site, running north-south are approximately 20 acres that formerly comprised the municipal Rio Salado Industrial Recreation Park that closed in 2008. The Site has been inactive since this time and is currently vacant and partially used for dirt and asphalt milling storage. The Site is also being monitored to ensure protection of adjacent properties and the environment from the landfill including controlling landfill gas and monitoring for protection of surface and groundwater.
In October 2020, City Council authorized Agreements with the Developer to redevelop the Site into a mixed-use project that includes: an Agri-Food Innovation Center with a wholesale produce distribution center; retail; education; research facilities; and, an approximately 20 acre City park (Project).
As the site design has continued to progress, the Developer has performed additional due diligence including geo-technical investigations to determine the viability and pricing estimates for the Project and public infrastructure improvements. The City has also finalized further environmental research in Phase 1 and Phase 2 Environmental Site Assessment reports, results of which where favorable for the viability of the proposed project. Additionally, the Parks Board approved the conceptual design of the proposed 20-acre park in May 2022. This was followed by a series of community meetings held in both English and Spanish updating the community on the status of the project.
Upon approval of these proposed additional business terms, staff will incorporate the changes in the Agreements with the Developer:
- Allow the Developer to request an additional 25 year extension at any time during the term of the ground lease at a yet-to-be determined rental rate.
- Increase the reimbursement cap for public infrastructure improvements from $10 million to $20 million and increase the reimbursement period from 25 years to the life of the Agreements.
- Add the Primary Property Tax that the City collects on the improvements to the reimbursement bank for public infrastructure.
- Set the annual payment-in-lieu-of-taxes (PILOT) paid by Developer to the City in the amount at $125,000 to begin in year 6 of the Lease term and continue for the duration of the Agreements.
All other previously approved business terms not listed above would remain unchanged.
Contract Term
The ground lease term of 100 years remains unchanged. The term of the development agreement will where necessary match the ground lease.
Financial Impact
No other sources of funds would be used if the above resources are not adequate to meet the projected construction expense.
Concurrence/Previous Council Action
City Council originally approved the Project through Ordinance S-46989 on Oct. 7, 2020 and amended through Ordinance S-47957 on Sept. 15, 2021 and Ordinance S-48799 on June 15, 2022.
Public Outreach
Public outreach related to the 20-acre park took place in Sept. and Oct. 2021, and May and June 2022. Community updates regarding the project took place in June 2022 in both English and Spanish.
Location
1150 E. Elwood St.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Community and Economic Development Department.