Title
Development Agreement with NRP Holdings, LLC for the Development of the Southwest Corner of 69th Avenue and Thomas Road (Ordinance S-51815) - District 7
Description
Request to authorize the City Manager, or his designee, to enter into a development agreement, lease agreement, easements and other agreements as necessary (Agreements), with NRP Holdings, LLC or its City-approved designee (Developer), for the development of a multi-family rental residential project located at the southwest corner of 69th Avenue and Thomas Road in Phoenix. Further request to authorize the City Treasurer to accept funds related to this item.
Report
Summary
On December 20, 2024, the Developer submitted an application for the City's consideration of a Government Property Lease Excise Tax (GPLET) transaction for the development of a 288-unit, mixed-income, multi-family residential project in the Maryvale community. The overall project includes 262,824 square feet of new construction along with amenities such as a resident clubhouse, dog park and pool on the 10.06-acre site.
If approved, the project will bring a capital investment of approximately $59 million to Maryvale and create approximately 381 construction jobs. Upon issuance of a certificate of occupancy (C of O) for the project, and other terms and conditions specified in the Agreements, the Developer will convey title of the property to the City, and the City will lease the property back to the Developer for a term not to exceed 25 years. The project will not be eligible for abatement of the GPLET. The Developer has also agreed that the project will generate to the City and other taxing jurisdictions new revenue in the form of certain minimum tax payments (during construction of the project, and in ad valorem property taxes after the lease term). These minimum tax payments would be estimated by a third-party economic impact study. Details regarding those minimum tax payments will be specified in the Agreements, as well as other terms and conditions deemed necessary by City staff.
Contract Term
The lease term will be for a maximum of 25 years upon issuance of the C of O. There are no extensions to the proposed lease, and upon conclusion of the term, ownership of the property will be transferred back to the Developer. The Developer will have the ability to terminate the lease at any time subject to the terms of the Agreements.
Financial Impact
The project will have no expense impact to the General Fund. The estimated one-time construction sales tax revenue to the City is approximately $679,941. The Developer will pay an annual rental payment starting at $5,000 in year one and escalate to $20,000 in year 25 for a total of $287,500 over the lease term. The rent payments will be deposited into the Downtown Community Reinvestment Fund.
Public Outreach
In compliance with Arizona Revised Statutes 42-6206(B)(1)(a) and 42-6209(C), the impacted jurisdictions were notified via US Mail on February 6, 2025, of the proposed GPLET transaction.
Location
6903 and 6939 West Thomas Road and 2832 North 69th Avenue (APNs 102-40-001D, 102-40-001E, 102-40-001F, 102-40-001G and 102-40-001J.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.