Title
Amend Ordinance S-47957 to Modify Business Terms with Arizona Fresh Holdings LLC for redevelopment of the Del Rio Former Landfill at 1150 E. Elwood St. (Ordinance S-48799)
Description
Request to authorize the City Manager, or his designee, to amend Ordinance S-47957 and the approved business terms 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
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. Additional costs are included in the estimates to account for the generally approved building techniques and methods on former landfill sites including dynamic compaction and vapor layers, to name a few. To facilitate this redevelopment, the Developer will make several public infrastructure improvements, creating new public access through the Site, establishing access to the Rio Salado and new 20 acre public park and facilitating pedestrian connectivity and activity. Developer shall be responsible for the construction of the new 20 acre public park and shall pay the City an annual maintenance obligation in the form of a payment-in-lieu-of-taxes (PILOT) to maintain the park, but the park shall not be included as part of the leased property.
Upon approval of these proposed additional business terms, staff will incorporate the changes in the Agreements with the Developer:
- Extend the deadline an additional six months from April 7, 2022, until Oct. 7, 2022 to enter in the Agreements and authorize an additional 90 days from the execution date of the Agreements to enter into the Park Addendum upon Parks Board Approval if such Addendum is legally required.
- Increase the public infrastructure reimbursement of the General Fund share of Transaction Privilege Tax sales tax from $4 million to $5 million and increase the reimbursement period from 10 years to 25 years.
- City and Developer will collaboratively address construction of the Rio Salado Parkway.
- Authorize additional, non-city, funding sources to be applied for and pursued for the construction of public infrastructure improvements with a primary focus on the Rio Salado Parkway.
- Authorize the right to the Developer to purchase the leased area of the property (approximately 120 acres), excluding the park site, at the current appraised land value should certain conditions be realized.
- Should Developer not complete construction on all phases of the development, City will issue a Request for Proposal on the remaining land for compatible development. Any subsequent developer who constructs on the Site will be required, by the City, to contribute their proportional share of the park maintenance costs for the term of their land lease.
Ordinance S-47957 approved reimbursement of General Fund share of sales tax of no more than $4 million and a 10 year term. The request above would allow staff and Developer to apply for Federal, and other grants, to help pay for the public infrastructure. 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 be for no more than 20 years.
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.
Public Outreach
Public Outreach related to the 20-acre park took place in September and October 2021, and May and June 2022.
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.