Title
Amend Development Agreement with Phoenix IG, LLC (Ordinance S-51124)
Description
Request to authorize the City Manager, or his designee, to amend Contracts 157702 and 157703 (Agreements) with Phoenix IG, LLC, or its City-approved designee (Developer), to allow for reimbursement of Developer-built public infrastructure and amenities utilizing the Phoenix Parks and Preservation Initiative (PPPI), Transportation 2050 (T2050), and Convention Center share of the City’s Transaction Privilege Tax (TPT) for eligible purposes. Furthermore, staff requests authorization to extend the term of the Agreements to 30-years and to further define eligible public infrastructure.
Report
Summary
Developer entered into a Development Agreement (DA) with the City in January 2023 to facilitate the demolition and redevelopment of the former Metrocenter Mall into a mixed-use development (Project). The DA allowed for reimbursement by the City of public improvements constructed by the Developer utilizing the general fund (GF) share of Project-generated TPT.
Following the execution of the Agreements, Senate Bill (SB) 1131 was passed in August 2023 prohibiting municipalities from collecting a residential rental tax beginning Jan. 1, 2025. Reimbursement of the residential rental tax was forecasted over a period of 25 years under the DA and was part of the Developer’s financial assumptions as part of constructing the Project. In response, staff is recommending allowing the following TPT generated on-site to be reimbursable under the DA, in addition to the eligible General Fund share of TPT:
- PPPI TPT is proposed to be utilized only to reimburse costs of constructing approved park improvements available to the general public through a perpetual easement.
- T2050 TPT is proposed to be utilized only to reimburse costs of constructing approved public transit and street improvements.
- Convention Center TPT is proposed to be utilized to reimburse cost of approved infrastructure.
Further, the term of the Agreements will be extended to 30-years.
All other terms and conditions of the Agreements will remain in full force and effect.
Financial Impact
Project-generated TPT is only available for actual public infrastructure and amenities completed by the Developer and accepted by the City.
Concurrence/Previous Council Action
Council previously approved:
- TPT DA with Phoenix IG, LLC (Ordinance S-48677) on May 25, 2022.
- Government Property Lease Excise Tax DA (Ordinance S-49180) on Nov. 16, 2022.
- Amendments to Development Agreements (Ordinance S-49950) on June 28, 2023.
Location
9617 N. Metro Parkway West
Council District: 1
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.