Title
Ground Lease for Development of University of Arizona Central Chilled Water Plant (Ordinance S-47970)
Description
Request to authorize the City Manager, or his designee, to enter into a ground lease and other agreements as necessary with the Arizona Board of Regents (ABOR), on behalf of the University of Arizona (UA), for the development of a chilled water plant on the Phoenix Biomedical Campus (PBC) in downtown Phoenix. Further request authorization for the City Treasurer to accept funds. There is no impact to the General Fund as a result of this action.
Report
Summary
In 2004, the City entered into an Intergovernmental Agreement (IGA), City Contract No. 109415, with the ABOR that included options for the UA to lease and/or purchase certain real property from the City, as land owner, within the PBC. In 2010, the City entered into a ground lease agreement with the ABOR, on behalf of the UA, for the development of the Health Sciences Education Building, and subsequently, in 2014, entered into a separate ground lease for the development of the Biosciences Partnership Building. In 2018, the City amended the IGA to further clarify UA development rights on the PBC.
Staff requests approval to enter into a new ground lease, and other agreements as necessary, with the ABOR, on behalf of the UA, to allow the UA to develop a chilled water plant that will serve the UA's current and future operations on the PBC. The chilled water plant will be located on approximately 12,000 square feet of the Fillmore and 7th streets parcel, approximately 100 feet south of Fillmore Street on the western edge of the parcel. Subject to City Council approval, the following major business terms have been negotiated:
- UA will lease the site from the City for the development of a central chilled water plant for a term of 30 years at $1.85 per square foot per year with a 3 percent annual escalator. Rent will begin seven years after the construction completion date.
- Construction shall not exceed 36 months. Rent will be abated during the construction period up to 36 months. However, construction that exceeds 36 months shall be charged rent at $1.85 per square foot per year until the construction completion date.
- UA will ensure the development and all appurtenant devices are fully screened, with the incorporation of art and landscaping to be approved by the City.
- UA will ensure the north-south walkway through the PBC, the "pedestrian spine," is maintained and will be fully constructed at the time of the next building construction.
- UA will maintain all necessary fire access.
- UA will provide for any parking stalls that are displaced due to the development based on the City's Planning and Development Department regulatory requirements.
- UA will address lot line adjustments as needed on lots controlled by the UA throughout the PBC.
- At the expiration of the ground lease term, the leased premises will convey to the UA.
Contract Term
The ground lease term for the development of the central chilled water plant will be for a term of 30 years.
Financial Impact
There is no impact to the General Fund as a result of this action. Rent received as a result of the request will be deposited into the Genomics Facilities and Operations Fund.
Concurrence/Previous Council Action
On Dec. 3, 2003, City Council authorized, via Ordinance S-30511, the original agreements with UA on the PBC. On May 31, 2017, City Council authorized, via Ordinance S-43591, an amendment to the IGA with UA for the continued development and leasing of PBC parcels including this location.
Location
A portion of the southwest corner of 7th and Fillmore streets in downtown Phoenix.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Community and Economic Development Department.