Title
Development Agreement with The Real Real, Inc. (Ordinance S-46979)
Description
Request to authorize the City Manager, or his designee, to enter into a development agreement, and to execute any other instruments or documents necessary (Agreements) with The Real Real, Inc. for the development of a fourth e-commerce center location in Phoenix. Further request the City Controller to disburse funds in an amount not to exceed $1 million with this action. Funding is available in the Strategic Economic Development Fund.
Report
Summary
After a nationwide search involving multiple states and regions, The Real Real, Inc. (TRR) selected Phoenix as its fourth e-commerce location as it expands its physical footprint.
Founded in 2011 and headquartered in San Francisco, TRR is the world's largest online marketplace for authenticated, consigned luxury goods. With more than 17 million members and more than 14 million items sold to date, TRR has created a model that is revolutionizing the way people buy and sell high-end luxury items across all categories, including women's, men's, kids', fine jewelry, watches, fine art and home. TRR provides a safe and reliable platform for consumers to buy and sell their luxury items with its rigorous authentication process overseen by experts, including 150+ in-house gemologists, horologists and brand authenticators who inspect thousands of items each day.
Of note, TRR's Phoenix e-commerce center builds upon the company's existing roots. In collaboration with the University of Arizona, TRR created a degree program for gemology. Additionally, in 2018 TRR funded an endowed chair in the department of geosciences to help the University develop new research and proprietary technology for gemological studies.
It is expected that TRR will enter Phoenix in an existing building. TRR plans to make a capital investment into the new space to support TRR's growth. TRR's Phoenix e-commerce center will result in more than 1,685 new jobs to be phased in over a five-year period, including more than 400 in the first year of operations. TRR will work with the City’s workforce development team to identify and hire qualified previously laid-off personnel in the City of Phoenix during the COVID-19 pandemic.
The City recognizes the resulting substantial economic impacts to the City and region from TRR’s expansion into Phoenix. This innovative growing company will provide quality jobs with upward mobility in an area that has recently been impacted by layoffs due to the COVID-19 pandemic. To remain competitive on a national level and ensure an innovative company has a large operational footprint in Phoenix, the terms of a Development Agreement are as follows:
- TRR agrees to expand into the City with the expansion of a fourth e-commerce location in Phoenix.
- TRR intends to create up to 1,685 total new jobs within five years of entering into the Agreement. The City realizes 1,685 jobs is a program model estimate and is not contingent upon the exact total job creation nor is contingent upon the jobs created by each company.
- City will provide $600 to TRR for each net new employee earning an annual wage exceeding $33,452 in their second year of employment. If the jobs are not created in the specified timeline, the City will not be obligated to pay.
- Entering into the Agreement does not preclude TRR from working with the City's Workforce Innovation Opportunity Act (WIOA) Program or any other local and/or State program.
- The Agreement will contain other terms and conditions deemed necessary by City staff.
Contract Term
The Development Agreement will be for a term of six years.
Financial Impact
The total contract amount will not exceed $1 million over a five-year period. Funding is available in the Strategic Economic Development Fund beginning in Fiscal Year 2021-22.
Location
TRR is conducting due diligence for locations within Phoenix and a site will be identified before entering into Agreements.
Department
Responsible Department
This item is submitted by Deputy City Manager Jeff Barton and the Community and Economic Development Department.