Title
Authorization to Enter into a Development Agreement with Exact Sciences Corp. (Ordinance S-50198)
Description
Request to authorize the City Manager, or his designee, to enter into a development agreement (Agreement), and to execute any other agreements, instruments or documents necessary with Exact Sciences Corp., for the installation of public infrastructure improvements and a performance-based job creation reimbursement. Further request to authorize the City Controller to disburse funds under the terms of the agreement.
Report
Summary
Exact Sciences Corp. was founded in 1995 and is headquartered in Madison, Wis. It is a leading provider of cancer screening and diagnostics, building from the success of its widely known products Cologuard and Oncotype tests. The company is investing in its pipeline to develop innovative solutions for use before, during and after a cancer diagnosis. The company expanded to Phoenix following acquisitions and licensing of companies and technologies that originated from the Translational Genomics Research Institute (TGen), part of City of Hope, and the International Genomics Consortium (IGC), original founding companies on the City of Phoenix’s Phoenix Bioscience Core campus. Exact Sciences is seeing success and continually expanding its Phoenix footprint. The company now employs more than 190 people in Phoenix. It seeks to significantly expand by creating a 250,000 square-foot center of excellence at Phoenix Sky Harbor Center to further its mission to reduce cancer deaths via earlier cancer detection, and informing smarter, precise treatments.
Exact Sciences, who will be a sub lessee of Chicanos Por La Causa on land within the Phoenix Sky Harbor Center, proposed expansion will result in more than 800 newly created jobs at this location. A third-party economic analysis indicates a 10-year direct-revenue benefit to the City of more than $21.5 million. The City recognizes the resulting substantial economic impacts to the City and region from Exact Sciences' expansion efforts. To remain competitive on a national level, and ensure these quality positions are retained and created in Phoenix, staff is recommending entering into Agreements for the creation of this new, state-of-the-art center of excellence for Exact Sciences to expand its advancement of earlier detection and more precise treatments for cancer patients. The proposed terms of an Agreement are as follows:
- Exact Sciences will expand to create a new center of excellence within the City of Phoenix, in a newly constructed lab, office and warehouse building of approximately 250,000 square feet, at the northeast corner of Sky Harbor Circle North and Buckeye Road (Site).
- Exact Sciences intends to retain approximately 190 jobs and create an estimated 800 additional net new jobs for its future center of excellence. The City realizes up to 800 new jobs is a program model estimate and the Agreement is not contingent upon the exact job creation.
- The City will offer a performance-based job creation reimbursement through the Strategic Economic Development Fund. The City will provide $2,000 to Exact Sciences, in arrears for each net new high-wage job created and located at, reporting to or taking oversight from the Site. Certain other terms and conditions will be outlined and captured in the Agreement. The total reimbursement amount will not exceed $1.6 million over the term.
- Entering into the Agreement and participation in the job creation fund does not preclude Exact Sciences from working with the City’s Workforce Innovation and Opportunity Act (WIOA) Program or any other local and/or state program.
Exact Sciences will be subleasing approximately 17 acres of the 35-acre Sky Harbor Center at Phoenix Sky Harbor International Airport. The Exact Sciences expansion will cause the construction of 250,000 square foot facility with lab, office, manufacturing and warehouse space. To accommodate for this growth, Exact Sciences will construct the additional public infrastructure improvements and the City will reimburse Exact Sciences a maximum of $5 million (Reimbursement Cap) from eligible revenue generated through Transaction Privilege Tax (TPT) generated from the Site. Examples of the expected TPT revenue generation on the site include construction, leasing and retail activities. The reimbursement will take place upon completion of construction, the City’s acceptance of the public infrastructure improvements, and the dedication of any necessary public easements and improvements to the City. The public infrastructure improvements include water and wastewater infrastructure, any needed street improvements, traffic signal(s), streetlights, pedestrian amenities, landscaping and sidewalks.
- Exact Sciences will privately finance and construct the public improvements.
- Exact Sciences must comply with Title 34 of the Arizona Revised Statutes in constructing the improvements to qualify for reimbursement; the specifics and cost of the improvements must be pre-approved by the City to qualify for reimbursement.
- Reimbursement will be paid on an annual basis, in arrears, from the following sources during the term: 100 percent of the City's eligible General Fund portion of the TPT.
- The maximum reimbursement amount for the public infrastructure improvements, as they relate to the project, will not exceed $5 million.
- Reimbursement will not exceed actual verifiable costs for the approved public improvements.
- The term will begin upon commencement of the first phase of the improvements, as made evident by the issuance of required permits (Construction Commencement Date) and continue for a period not to exceed 10 years or upon the date Developer has received reimbursements totaling the Reimbursement Cap, whichever is less.
- The Agreement, and any other agreements as necessary, will include other terms and conditions as deemed necessary by the City.
Contract Term
The term of the Agreement will be approximately 10 years from completion of the building, with performance requirements of 10 years for employee job creation and public improvements.
Financial Impact
The City's financial impact will be the reimbursement of the eligible General Fund share of the TPT generated from the Site over 10 years with a maximum of $5 million in payments. The $1.6 million for job creation reimbursement funding will be from the Strategic Economic Development Fund. Financial terms of the Agreement will be provided to the Budget and Research and Finance departments for review prior to execution of the Agreements.
Location
Sky Harbor Center, Northeast corner of Sky Harbor Circle North and Buckeye Road.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Managers Mario Paniagua and John Chan, and the Aviation and Community and Economic Development departments.