Title
Authorization to Participate in Application Requesting Establishment of Community Facilities District and to Enter into Development Agreement (Ordinance S-44626)
Description
Request to authorize the City Manager, or his designee, to participate in an application by HPPC, LLC or its City-approved designee (Owner) requesting the establishment of a Community Facilities District (CFD) at Park Central Mall; and for the City to enter into a Development Agreement (DA), and any other agreements necessary with the Owner outlining the City’s participation in the proposed CFD.
Report
Summary
The Owner recently purchased the Park Central Mall property located at 3110 N. Central Ave. (Site). The Owner is currently investing in upgrading the property and is working to transform the site into mixed-use project supporting high-wage job growth. To facilitate this growth, the Owner would like to establish a CFD. The Owner has approached the City for possible participation in the CFD and the construction of a public parking facility (Garage). The City recognizes the significant economic impact of the renovation of the Site for the City of Phoenix and the region, and has identified a need for a public parking facility in this area. To facilitate the continued progress at the Site, staff recommends the City participate in an application to establish a CFD and that the City to enter into a DA with the Owner.
If approved by City Council approval, the following major business terms have been negotiated and would be implemented through the DA:
- City agrees to participate with the Owner in an application to establish a CFD.
- City and Owner would agree to follow Arizona Revised Statutes (A.R.S.), title 48, chapter 6, article 4 relating to the formation of a CFD.
- City and Owner would agree to follow the City’s Financial Policy and Process Guidelines for CFDs.
- The proposed CFD application would contain at least the following provisions:
- The CFD would be governed by a board consisting of City representatives and Owner (Board) pursuant to A.R.S. title 48.
- The Board would issue debt supported by the City.
- The Board will manage the Garage for 25 years.
- During this 25-year period, the City will dedicate the eligible City of Phoenix portion of construction, sales, rental and other transaction privilege tax dollars (TPT) generated by the properties within the CFD as described below, to service a portion of the debt for construction and management of the Garage.
The City and Owner will contribute the following monies to service the debt:
City Participation:
- Years 1-6: 100 percent of the City of Phoenix portion of eligible TPT.
- Years 7-25: 50 percent of the City of Phoenix portion of eligible TPT.
Owner Participation:
- Years 1-5: $720,000 per year.
- Years 6-7: $792,000 per year.
- Years 8-25: $942,000 per year (Existing private agreement requires Dignity to make a financial contribution towards monthly parking beginning in year 8).
- Any additional parking revenue generated by public parking on nights and weekends, special event parking, surface parking revenue, etc., will be contributed towards the CFD.
- Owner and any other property owners in the proposed CFD will be required to apply a special assessment to all properties within the CFD, to cover any revenue shortfall necessary to service the bond debt.
- If the combination of eligible TPT revenue and special assessment funds are still unable to service the debt of the project, Owner will be required to leverage the full value of the 39-acre property to service the outstanding balance.
- The DA will include other terms and conditions as needed.
Financial Impact
The City's financial impact will be the contribution of eligible City of Phoenix new sales taxes generated from the properties located within the Community Facilities District. This includes 100 percent of the new sales tax year 1 through 6; and 50 percent of the new sales tax thereafter. The development agreement will be reviewed by Budget and Research.
The redevelopment of Park Central is an important economic development opportunity that will create several thousand new jobs for the community, and will provide significant financial benefit for the City of Phoenix, above and beyond sales tax revenue generated.
Concurrence/Previous Council Action
The Downtown, Aviation, Economy and Innovation Subcommittee recommended Council approval of this item in a 4-0 vote on May 2, 2018.
Public Outreach
Staff has met with and received letters of support for the establishment of a community facilities district from the Midtown Neighborhood Association (Attachment A), Phoenix Community Alliance (Attachment B) and Dignity Health (Attachment C).
Location
3121 N. 3rd Ave.
Council District: 4
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Community and Economic Development Department.