Title
Authorization to Amend the Development and Operating Agreements for 1101 N. Central Avenue, with Prisma Community Care (Ordinance S-51902) - District 7
Description
Request to authorize the City Manager, or his designee, to amend Development and Operating Agreements (Contact No. 132389), and execute other agreements as necessary (Agreements) with Prisma Community Care. This request is for the continued operations, lease, and renovation of the City-owned parcel located at 1101 N. Central Avenue (Site). Further request to authorize the City Treasurer to accept all funds related to this item.
Report
Summary
In March 2006, the City of Phoenix voters approved bonds, in part, for the purpose of acquiring real estate, constructing, renovating, and equipping a center for HIV/AIDS services. On July 7, 2010, Phoenix City Council approved Ordinance No. S-37273. This Ordinance authorized the City Manager to enter into development and operating agreements with the Southwest Center for HIV/AIDS, which has now changed their business name to Prisma Community Care (Prisma). Additionally, in October 2010, Ordinance No. 37464 was approved which authorized the City's acquisition of the Site utilizing 2006 Bond Funds. Prisma and the City entered into their Agreements and the facility has been operational since September 2013.
Prisma has been operating the facility, maintaining the Site, and providing care for the community for more than 11 years with an operating budget of over $13 million. However, the funding Prisma uses does not account for several major capital improvements which are now needed. In July 2023, the City of Phoenix Public Works Department completed a Facility Condition Assessment through a third-party contractor which documented that more than $10 million in capital improvements were needed for the Site over the next 20 years.
Prisma has brought quality community health care providers together under one roof, in downtown Phoenix, and has maintained a tremendous level of community benefit to the Phoenix residents. In order to continue providing these services at the Site, and create the opportunity for Prisma to borrow against the leasehold interest of the Site for the necessary capital improvements, staff propose the following business terms and conditions:
- Within one year from City Council authorization, the parties will execute an amendment to the Development and Operating Agreements which will convert those agreements into a Lease.
- Prisma will continue to operate the Site with the same uses and conditions as in the Operating Agreement incorporated into the Lease. Operations include providing the community access to prevention, treatment, social services, wellness promotion, and research services.
- Prisma shall have the right to continue its partnerships with its Sub-Operators.
- Prisma may use the leasehold interest of the Site for collateral, not to exceed $2.5 million at any given point in time, for capital improvements and deferred maintenance, subject to City approval.
- If the City chooses to dispose of the Site in the future, Prisma would have a first right to pursue a purchase of the Site from the City.
The Agreements will include other terms and conditions.
Contract Term
The Lease will have a maximum term of 99 years.
Financial Impact
Annual rent will be at a fair market value for the current Site use, and the tenant will be credited for the improvement's value made to the Site. Additionally, credits from the community benefits that are currently provided for in the Operating Agreement will be transferred to the Lease. There will be no expense impact to the General Fund by this action.
Concurrence/Previous Council Action
This project was originally approved on March 31, 2006 by the City of Phoenix voters to use bond funds for the acquisition and development of the Site. Phoenix City Council approved the Agreements on July 7, 2010.
Location
1101 N. Central Avenue
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Managers Gina Montes and John Chan and the Community and Economic Development and Human Services departments.