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Title:
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Development Agreement with Scannell Properties for installation of Public Infrastructure and Public Space Improvements (Ordinance S-48443)
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Title
Development Agreement with Scannell Properties for installation of Public Infrastructure and Public Space Improvements (Ordinance S-48443)
Description
Request to authorize the City Manager, or his designee, to negotiate and enter into a development agreement and any other agreements as necessary (Agreements), with Scannell Properties, or its City-approved designee (Developer), for the installation of public infrastructure and outdoor public space improvements. Further request to authorize the City Controller to disburse all funds associated with this request.
Report
Summary
Developer is planning to develop more than three million square feet of class A industrial buildings on approximately 240 acres in Laveen (Project) in the area dubbed as the South Mountain Technology Corridor (SMTC). The property is generally located from the Laveen Conveyance Channel on the north, to the Olney Avenue Alignment on the South, the 67th Avenue Alignment to 63rd Avenue Alignment north of Dobbins Road, and the Gila River Indian Community border on the west, to the 63rd Avenue Alignment south of Dobbins Road (Site). To date, the Developer has successfully acquired 60 of the 240 acres and is in the process of closing on the remaining 180 acres. The first phase of the 240 acres, to be known as Dove Ranch, will span across 60 acres, and will feature state of the art industrial shell buildings that are designed to house high wage employers and capture the widest range of end users possible.
On Oct. 6, 2021, City Council approved the Developer's Planned Unit Development (PUD) rezoning request. In conformance with the intent of creating a technology corridor, the PUD does not allow warehouse distribution as a single use and gives a three year buffer after the buildings are finished to land high tech and advanced manufacturers. To facilitate the development and kick off the SMTC, the Developer will make several public infrastructure improvements, creating new public access through the Site, bringing in needed infrastructure and facilitating pedestrian connectivity and activity.
Subject to City Council approval, the following major business terms have been negotiated with the Developer and would be implemented throughout the Agreements:
Developer will privately finance and construct the enhanced public infrastructure improvements.
Developer will improve and construct Dobbins Road to its full build-out according to the City of Phoenix Street Transportation Department specifications along its property frontage.
Developer will install, construct and dedicate public north-south street improvements (including landscaping and appurtenant amenities) for public access through the Project at approximately 67th Avenue and 63rd Avenue as detailed in the plans approved by the City of Phoenix Planning and Development Department.
Agreements may include other such public infrastructure and related components (and costs thereof) as approved by the City of Phoenix Community and Economic Development Department Director.
These improvements shall be in conformance with the zoning for the Site.
Developer must comply with Title 34 of the Arizona Revised Statutes in constructing the improvements to qualify for reimbursement, and the specifics and cost of the public infrastructure improvements must be pre-approved by the City in order to qualify for reimbursement.
The City will reimburse the Developer for public infrastructure improvements as listed above in the following manner and will not exceed the maximum amount of $7.5 million.
Reimbursements shall be paid on an annual basis and shall not exceed the amount of the General Fund portion of the Construction Sales tax (Commercial Contracting) and General Fund portion of the Commercial Lease Tax (Commercial Real Estate Property Rental, Leasing, Licensing) collected that year. These taxes shall be comprised of the taxes relating to both (i) the construction and installation of the public infrastructure improvements, private infrastructure improvements constructed, and the build-out and lease up of the Project, and (ii) the construction of vertical and other on-site improvements on the Site from time to time (whether by Developer or by third parties such as technology support companies, and including any tenant improvements). In order to track Construction Sales Taxes eligible for reimbursement, all contractors and subcontractors must secure an independent City of Phoenix Transaction Privilege Tax (TPT) License related solely to the Project. Developer has received a preliminary estimate that is in excess of the $7.5 million to design, install, construct, and dedicate the public infrastructure improvements.
Reimbursement shall not exceed actual verifiable costs for the approved public infrastructure improvements.
Reimbursement would not begin until after the Developer completes the public infrastructure improvements at the Site and the City has accepted those improvements. Reimbursements would be made annually, in arrears, with additional details to be specified in the Agreements.
Years 1 through 10: City will reimburse 100 percent of the eligible General Fund TPT revenue generated from new construction and business activity.
No other sources of funds would be used if the above resources are not adequate to meet the projected construction expenses.
Agreements will include other terms and conditions as deemed necessary by the City.
This property is vital to kick off the SMTC and is crucial to provide existing space for the many advanced manufacturing companies coming into the market. The redevelopment of the Site is an important economic development opportunity that will create several hundred new high wage jobs over time for the community, and will yield significant financial and public benefits for the City above and beyond the TPT revenues generated.
Contract Term
The development agreement will terminate 10 years after the Developer's completion and the City's acceptance of public infrastructure improvements.
Financial Impact
The City's financial impact will not exceed $7.5 million from the City's General Fund portion of eligible TPT revenue generated from the Site for 10 years. Financial terms of the Agreements will be reviewed by the Budget and Research Department to verify funding availability prior to execution.
Concurrence/Previous Council Action
This item was recommended for approval by the Economic Development and Equity Subcommittee at the Feb. 23, 2022, meeting by a vote of 4-0.
Location
Generally located from the Laveen Conveyance Channel on the north, to the Olney Avenue Alignment on the South, the 67th Avenue Alignment to 63rd Avenue Alignment north of Dobbins Road, and the Gila River Indian Community border on the west, to the 63rd Avenue Alignment south of Dobbins Road.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Community and Economic Development Department.