Title
Amendment to Intergovernmental Agreement between the City of Phoenix and Arizona State University for the Development of the Health Solutions Center at the Phoenix Bioscience Core (Ordinance S-50542)
Description
Request to authorize the City Manager, or his designee, to amend the Intergovernmental Agreement (IGA) with Arizona State University (ASU) to extend and modify certain business terms and to enter into other agreements as necessary. There is no impact to the General Fund as a result of this action. Further request to authorize the City Treasurer to accept funds associated with this request.
Report
Summary
On May 10, 2016, City Council authorized an IGA (City Contract 142599) with ASU for the development of approximately 1.5 million square feet of biomedical facilities at the Phoenix Bioscience Core (PBC). Subsequently, the City and ASU entered into a ground lease (City Contract 149060) for Phase 1 of the Health Solutions Center, now called 850 PBC, which completed construction in December 2020. Since the original agreement was envisioned, the campus and development collaborations have grown. As a result of the growth the parties have a better understanding of how changing market conditions impact development of future phases and certain contract terms are no longer in the best interest of the parties or the PBC.
As it exists today, the IGA includes very strict development timelines that do not allow enough time between phases to complete stabilization of the prior phase while completing design and financing of the next. Specifically, the IGA states that ASU shall, within 180 days of receiving the certificate of occupancy for the prior phase, issue a notification exercising its option to develop the next phase of the development and must complete the design and construction of the subsequent phase no later than 30 months following the prior phase completion. This amendment will replace the existing timeline requirements in regards to Phase 2 with updated timing as follows:
- Option to lease the Phase 2 parcel shall be exercised by ASU on or before July 31, 2024.
- ASU and the City shall use commercially reasonable efforts to enter into the subsequent phase lease for Phase 2 on or before Oct. 31, 2024, no later than Oct. 31, 2025.
- Completion of subsequent phase shall occur no later than 30 months from execution of subsequent phase lease.
In addition, a need to locate a temporary building for an MRI machine has been identified. This new MRI will allow the continued advancement of new research opportunities throughout the campus. Upon completion of the Phase 2 building, the MRI will move to a permanent location and the temporary building will be removed. To facilitate the temporary building, this amendment shall also modify the Temporary Surface Parking Provision as follows:
- The temporary surface parking area may be utilized for other temporary structures that support the function and business of the PBC.
- The rental rate for any temporary structure shall be one dollar and eighty-five cents ($1.85) per square foot of land.
Financial Impact
There is no impact to the General Fund as a result of this action.
Concurrence/Previous Council Action
City Council previously approved:
- Contract 142599 (Ordinance S-41736) on May 19, 2015;
- Amendment to Contract 142599 (Ordinance S-43332) on March 22, 2017; and
- Amendment to Contract 142599 (Ordinance S-49043) on Oct. 12, 2022.
Location
Approximately four blocks bounded by 4th and 6th streets and Garfield and Fillmore streets.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.