Title
Authorization to Enter into Development Agreement for Sale and Development of City-Owned Parcel at 30 N. 1st St. (Ordinance S-44791)
Description
Request to authorize the City Manager, or his designee, to enter into a sale and development agreement, and other agreements as necessary (Agreements) with Berger Holdings, LLC, or its City-approved designee (Developer), for the sale and development of the City-owned parcel located at 30 N. 1st St. (Site), at the southeast corner of Central Avenue and Adams Street in downtown Phoenix. Further request authorization for City Treasurer to accept funds related to this item as this project will create a one-time purchase price of $2.8 million.
Report
Summary
The City acquired the Site in 1983 for redevelopment purposes. Since that time, the One North Central Building (formerly the Phelps Dodge Building) and the Hanny's Building were developed and renovated, respectively. The Site remained as a 30-space surface parking lot since that time. On Nov. 1, 2017, City Council authorized staff to issue a Request for Proposals (RFP) for the sale and development of the Site.
In response to the City's RFP, the Developer submitted a proposal to purchase the Site and develop an approximately $62 million, 200,000-square-foot, mixed-use high-rise tower consisting of approximately 50,000 square feet of office, flex and commercial space, 200 hotel rooms, 20 hospitality suites and 60 structured parking spaces (Project). Subject to City Council approval, the following major business terms have been negotiated with the Developer and would be implemented through the Agreements:
Developer will enter into agreements with the City within six months of City Council authorization (Authorization Date).
Developer will commence construction within 18 months of the Authorization Date (Commence Construction Date).
Developer will complete construction within 30 months of of the Commence Construction Date (Completion of Construction).
Developer will pay a Purchase Price of $2.8 million.
With its proposal, the Developer submitted a $25,000 proposal guarantee, which will become non-refundable upon execution of Agreements. The Agreements will include other terms and conditions as needed and deadlines for performance benchmarks may be modified at the City's discretion.
This project will activate an under-utilized, City-owned property by adding a high-rise, mixed-use tower that is proposing to incorporate the recommendations of the Adams Street Activation Study. The development of the Project will create approximately 500 construction jobs and after completion, approximately 230 permanent jobs. In addition, this Site will be removed from City ownership into private ownership, which will create net new property and other tax revenues.
Procurement Information
In November 2017, the Community and Economic Development Department issued the RFP for disposition and redevelopment on the Site. Three proposals were received, one of which was deemed non-responsive. On Feb. 15, 2018, an evaluation panel interviewed the two responsive proposers. The evaluation results are listed below:
Berger Holdings, LLC: 930 Points.
M.A. Mortenson Company: 765 Points.
Berger Holdings, LLC is the recommended proposer.
Financial Impact
The Project will create a one-time sale revenue to the City of $2.8 million. In addition, the construction of the Project is estimated to generate approximately $2.4 million in construction taxes and an ongoing annual tax generation of approximately $450,000 per year.
Concurrence/Previous Council Action
This item was recommended for approval by the Downtown, Aviation, Economy and Innovation Subcommittee on June 6, 2018, by a vote of 4-0.
Public Outreach
Staff provided details of the Project to the Downtown Neighborhood Alliance on May 8, 2018, and presented the Project at the Downtown Voices Coalition meeting on May 12, 2018.
Location
30 N. 1st St.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Community and Economic Development Department.