Title
***ADDITIONAL INFORMATION (SEE ATTACHED MEMO)*** Public Hearing - Historic Preservation Conservation Easement Release for Arizona OIC - 15-39 E. Jackson St.
Description
Request to hold a public hearing on the request City Council deny the owner's request to release the Historic Preservation conservation easement on the subject property, located in the Warehouse District at 15-39 E. Jackson St.
Report
Summary
The subject property was listed on the National Register of Historic Places in 1985 and on the Phoenix Historic Property Register in 1990. Built in phases between 1920 and 1922, the two-story, approximately 100,000-square-foot building was the headquarters for the Arizona Hardware Supply Company and the largest commercial warehouse in Arizona. In 1940, the O.S. Stapley Company took over the building and continued to occupy it until the mid-1960s. In 1968, the building became the new home of the Phoenix Opportunities Industrialization Center (OIC), a private, nonprofit job training organization with strong ties to the city’s African American community. Phoenix OIC leased the property until 1979, when it took ownership. In 1996, Phoenix OIC became “Arizona OIC,” and, in 2017, Arizona OIC sold the property to 39 East Jackson, LLC, an Arizona limited liability company. This LLC still owns the property today, and the building is still occupied by Arizona OIC.
In June of 2020, Nicholas J. Wood of Snell & Wilmer, LLP, submitted a rezoning application (Z- 26-20-7) on behalf of the owner to remove the HP overlay zoning from the subject property, as well as a text amendment (Z-TA-5-20-7) proposing that the maximum building height allowed be changed from 80-140 feet to 285 feet. In October of 2020, Mr. Wood submitted a letter requesting that the existing conservation easement on the subject property be terminated (Attachment A). The conservation easement was executed on March 20, 1998 and had a 15-year term; it was granted to the City in exchange for $4,592.50 in historic preservation grant funds (Attachment B). On Aug. 28, 2007, the city and property owner mutually agreed to extend the conservation easement another 15 years in exchange for an additional $5,000 in grant funds (Attachment C). The grant funds provided by the City were used to repair the roof of the historic building. The conservation easement requires that the building be preserved in accordance with historic preservation guidelines, maintained in a state of good repair, and insured to cover any loss or liability. The current expiration date for the conservation easement is March 20, 2028.
Mr. Wood states that the reason the property owner wishes to terminate the conservation easement is “to remove an obstacle to a visionary project to reinvigorate Arizona OIC.” Specifically, they are proposing to develop a “world-class high-rise mixed-use tower” on the site. This proposal calls for the removal of the roof and rear wall of the historic building, while retaining and renovating the north, east and west walls (Attachment D). Because the proposal is not allowed under the terms of the conservation easement, Mr. Wood is requesting that the easement be terminated. If the easement is terminated, the owner will repay the City the $9,592.50 received in grant funds.
Staff recognizes the important role Arizona OIC has played in the community and acknowledges that the proposed tower could provide a great benefit for the organization. However, staff recommends that the request to terminate the conservation easement be denied for the following reasons:
The request is not consistent with the Historic Preservation Ordinance, the Preserve Historic Phoenix Plan, the Downtown Phoenix Plan, and the General Plan land use policies, which encourage the continued use of historic resources through rehabilitation and adaptive reuse;
The proposal to construct a tower of up to 285 feet in height is not compatible with the safe operation of the Sky Harbor International Airport, based on comments the Aviation Department has sent to Planning and Development staff opposing the project;
The Arizona State Historic Preservation Office (SHPO) has stated that the proposal violates the Secretary of the Interior’s Standards for the Treatment of Historic Properties and that the property will be removed from the National Register of Historic Places if the proposal moves forward (Attachment E). Retaining the conservation easement will help ensure that the property is not removed from the National Register;
In addition to the two Historic Preservation Bond Fund grants, the City has further invested in the building by facilitating several Community Development Block Grants for the long-term benefit of low- and moderate-income individuals. Since 1987, a total of five grants have been awarded totaling $500,766-these funds have been used for general rehabilitation of the facility, including roof repair, ADA restrooms, exterior stucco and painting, installation of a fire sprinkler system on the second floor and ADA restroom stalls. Given the City’s repeated investment in the structure with the intention of it remaining an historic building, the request to terminate the easement should be denied;
There is already a provision in place in the Downtown Code that allows additional height and density on properties in the downtown area. The “sustainability bonus,” referenced in Section 1223 of the Zoning Ordinance, may be awarded if a designated historic property is rehabilitated or if a conservation easement is granted on the property. In this case, the owner is attempting to receive the sustainability bonus without preserving the historic property, and, in fact, is terminating an existing easement and removing the property from the Phoenix Register. This is the exact opposite of what was intended with the provision in the Downtown Code. If the owner were to rehabilitate the historic property or extend the term of the conservation easement, they could receive additional height and density on another site within the boundary of the Downtown Code; and
Finally, staff recognizes that this is an unprecedented request - since the time the Historic Preservation Bond program was approved in 1989, no one has tried to terminate a conservation easement while the building was still standing. While the City has modified easements to allow the demolition of additions or accessory structures, it has never wholly terminated an easement to allow the loss of a primary building. Approving the request would set an unfortunate precedent and open the door to conservation easements on other historic buildings being terminated.
Staff Recommendation
Staff recommends that the request to terminate the conservation easement be denied for the reasons listed in the summary.
Financial Impact
If the easement is terminated, the owner will repay the City the $9,592.50 received in grant funds.
Concurrence/Previous Council Action
The Historic Preservation Commission heard this request on Dec. 21, 2020 and did not adopt Staff's recommendation. The Commission recommended that the conservation easement be amended to expire on Jan. 1, 2022; that the owner repay the $9.592.50 in historic preservation grant funds, plus 10 percent interest; and that the owner record a new 30-year conservation easement on the three remaining walls. The decision was approved, by a vote of 7-2.
The City Council Land Use and Livability Subcommittee approved to forward this item without recommendation on Jan. 21, 2021, by a vote of 3-1.
Location
15-39 E. Jackson St.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Mario Paniagua and the Planning and Development Department.