Title
Authorization to Enter into Intergovernmental Agreement with Arizona State University for Development of Thunderbird School of Global Management Facilities in Downtown Phoenix (Ordinance S-44440)
Description
Request to authorize the City Manager, or his designee, to enter into an Intergovernmental Agreement (IGA) with Arizona State University (ASU), and to execute any other instruments or documents necessary to facilitate ASU’s development of facilities to house the ASU Thunderbird School of Global Management (Thunderbird) and other academic units on City property and develop graduate level residential facilities in downtown Phoenix. Additionally, request authorization for the City Treasurer to accept funds and the City Controller to disburse funds. The City will participate in the project through $13.5 million from the Downtown Community Reinvestment Fund.
Report
Summary
ASU proposes to develop the ASU Thunderbird School building on approximately one-quarter of a block designated for facilities related to ASU’s downtown Phoenix campus. The site is located at the northwest corner of Second Street and Polk Street on a City-owned block, the majority of which was recently developed with the Beus Center for Law and Society, which opened in 2016. ASU will be investing approximately $100 million in downtown Phoenix for Thunderbird, including $60 million for the new educational facility, $30 million for a graduate student housing building, and $10 million in interim improvements, and operational costs, for the school to locate downtown in the fall of 2018. The minimum four-story, 100,000-square-foot educational facility will include the graduate and executive programs of the ASU Thunderbird School and will include office, classroom, lecture and other education-related space as well as retail amenities on the ground floor.
The City will lease the property to ASU, pursuant to terms of the Master Lease (City Contract 119092). There will be no cost for the lease the first 10 years of the term, after which ASU shall begin to remit the City $110,000 annually for 15 years to repay the City for the portion of land not purchased with ASU-related 2006 General Obligation bond funds.
ASU shall provide the City with all necessary prerequisites for development of the Thunderbird facility by Jan. 31, 2019, and will commence construction by Aug. 31, 2019. ASU shall open the facility by March 31, 2021. All design, construction, furnishings and operational expenses will be the responsibility of ASU.
The City will pay $13.5 million to ASU over a period of nine years, upon timely completion of the Thunderbird facility. Payments will assist with part of ASU’s expenses for capital necessary for ASU to carry out its public education mandate as well as further the growth and development of the downtown Phoenix Campus and construct new public infrastructure.
This project will allow ASU to expand and strengthen Thunderbird to reinforce its position as a global leader in management studies. In addition to the new students and faculty brought to downtown Phoenix by this investment, the visibility and reputation of Phoenix will improve through the wide national and international exposure from the graduates of Thunderbird. In addition to the construction taxes generated by this project, approximately 640 construction-related jobs will be created, and when the graduate housing is created, additional rental residential tax revenues will be created. As the major Arizona hub of government, finance and commerce, the location of Thunderbird in downtown Phoenix also provides real-world educational benefits and opportunities for the school’s students.
Financial Impact
The $13.5 million will be reserved in the Downtown Community Reinvestment Fund with $1.5 million annual payments to be made in fiscal years 2020-21 through 2028-29. The lease rental payments will be deposited into the Downtown Community Reinvestment Fund. There will be no impact to the General Fund.
Concurrence/Previous Council Action
This item was recommended for City Council approval by the Downtown, Aviation, Economy and Innovation Subcommittee on March 13, 2018, by a vote of 4-0.
Public Outreach
Staff presented to the Downtown Voices Coalition on March 10, 2018, the Phoenix Downtown Neighborhood Alliance on March 13, 2018 and the Evans Churchill Community Association on March 14, 2018. ASU itself has discussed the project with a number of stakeholders and will meet with downtown community stakeholders regularly during the design and development process.
Location
The facility will be located at the northwest corner of Second Street and Polk Street (APN 111-45-191).
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Managers Deanna Jonovich and Karen Peters and the Community and Economic Development Department.