Title
(CONTINUED FROM MARCH 25, 2026) - Amend Ordinance to Include Specific Agreement Terms for the Resource Innovation Campus Development (Ordinance S-52698) - District 7
Description
Request to authorize the City Manager, or the City Manager's designee, to amend Ordinance S-51535 to incorporate finalized agreement terms for the Development Agreement, Ground Lease, and Feedstock Agreement related to the development of the Resource Innovation Campus (RIC) resulting from participation in the Reinventing Cities Program.
Report
Summary
On December 18, 2024, City Council authorized the City Manager, or the City Manager's designee, to enter into a development agreement and execute any related agreements, instruments, or documents necessary with Krause Interior Architecture, Inc., and its affiliates or subsidiaries, for development of the RIC resulting from participation in the Reinventing Cities Program. Council further authorized the City Treasurer to accept and the City Controller to disburse funds associated with the ordinance.
Ordinance S-51535 initially established a two-phased approach with a five-year contract term beginning on or about December 18, 2024, with no options to extend. Phase II contemplated amending the term up to a maximum of 99 years.
Since the original City Council approval, environmental assessments, land appraisals, fair market lease rate assessments, and some parcel preparation have been completed. The Developer has provided documentation demonstrating financial capacity to complete construction. As a result, the previously contemplated pilot demonstrations and two-phased structure are no longer necessary.
This request amends the Ordinance to incorporate finalized agreement terms, eliminate the two-phase structure, and establish the following key provisions:
Ground Lease
- Approximately 22 acres located on the eastern portion of the southeast corner of 35th Avenue and Elwood Street will be leased for a term of 99 years.
- “Net Rent” shall equal one-fourth (1/4) of the Appraised Rental Value (determined annually) for the applicable phase(s), less any quarterly Diversion Deduction offset credit.
- “Diversion Deduction” shall mean, on a quarterly basis, amounts owed by the City to the Tenant pursuant to the Feedstock Agreement, as reflected on the Tenant’s invoice, up to the Appraised Rental Value for that quarter. Offset credits will only be earned based on the applicable quarterly Diversion Deduction. The credit is an offset of funds that would have been otherwise directed toward landfill operations costs by the Public Works Department and is not an additional payment.
Tenant shall have the right to use the Premises for circular economy solution developments, including but not limited to:
- Municipal solid waste and organic waste;
- Difficult-to-recycle plastics (#3, #4, #6, #7);
- Lithium-ion batteries and electronic waste;
- Textile waste;
- Construction and demolition waste; and
- Industrial, research, educational, office, and retail uses associated with circular economy activities.
The City may consider additional uses aligned with the 2050 Sustainability Goals, Phoenix Climate Action Plan, Rio Reimagined Initiative, and other environmental sustainability initiatives upon written request by Tenant.
The Campus Headquarters Building shall obtain one Petal Certification under the Living Building Challenge. All other permanent buildings shall, as applicable, obtain LEED v4.1 Building Design and Construction Certification and demonstrate compliance with energy efficiency, low-carbon energy, life cycle assessment, and sustainable materials management principles consistent with the C40 Reinventing Cities Competition requirements.
At least 30 days prior to the effective date of any Sublease, Tenant shall provide written notice to the Community and Economic Development Director and the Public Works Director for review and approval.
Development Agreement
The Development Agreement confirms RIC PHX, LLC as the Developer and confirms that the Developer does not intend to seek reimbursement from the City for Public Infrastructure Improvements.
Feedstock Agreement
- Term: 50 years following the Commercial Operation Date, with four 10-year renewal options and one additional nine-year renewal option, unless earlier terminated or extended as provided.
- RIC PHX, LLC will serve as Operator.
“Feedstock” means waste collected and delivered by the City to the 27th Avenue Transfer Station from residential customers and not otherwise obligated under existing agreements, including the WeCare Denali Agreement or the Circular Services Agreement.
Key provisions include:
- No obligation for Operator to accept, nor for City to supply, Feedstock between the Effective Date and the Commercial Operation Date.
- After the Commercial Operation Date, City shall maintain availability of Feedstock not otherwise under contract, and Operator shall accept such Feedstock and prioritize City-provided material.
- If Operator elects to receive additional Feedstock from other City locations, the parties shall negotiate in good faith to determine actual transfer costs. Such costs will reflect the City’s current contracted hauling rate and will be deducted from Post Collection Operational Costs.
- “Post Collection Operational Costs” means post-collection operational costs associated with transporting refuse from the 27th Avenue Transfer Station to SR85 landfill, as defined in the Feedstock Agreement. This is affiliated with the "Diversion Deduction" rent credit and is not an additional payment.
Contract Term
This amendment establishes a 99-year Ground Lease term and a 50-year Feedstock Agreement term, with renewal options as described above.
Financial Impact
The primary financial impact to the City consists of providing the feedstock, which consists of municipal solid waste, difficult-to-recycle plastics, and other materials otherwise destined for landfill. This allows for less solid waste being transported to the landfill and placed in the landfill, which will save operational costs and prolong the life of the landfill. Both of these help lower solid waste operational costs over the long term agreement period.
Concurrence/Previous Council Action
The Economic Development and Housing Subcommittee recommended approval on November 25, 2024, by a vote of 4-0.
City Council approved authorization to enter into the Development Agreement and related agreements on December 18, 2024 (Ordinance S-51535).
Location
East of 35th Avenue and Elwood Street.
Council District: 7
Department
Responsible Department
This item is submitted by Assistant City Manager Ginger Spencer, Deputy City Manager Alan Stephenson and the Community and Economic Development and Public Works departments.