Title
Authorization to Enter Into a Development Agreement with IDM Companies for Reimbursement of Public Infrastructure Improvements for Envision Loop 202 West (Ordinance S-50401)
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 IDM Companies, or its City approved designee (Developer), for the reimbursement of public infrastructure improvements for the Envision Loop 202 West project. Further request to authorize the City Controller to disburse all funds under the terms of the Agreements.
Report
Summary
The Developer is planning to develop approximately 65 acres into a mixed-use project that will include residential, retail and industrial buildings. The project, Envision Loop 202 West, includes construction of two buildings with more than 500,000 square feet of Class A flex tech space, eight acres of retail with four separate retail buildings along the Elliot Road frontage, and a single-family residential for rent project on the southern portion of the site. This property has been owned by the same family and utilized as farmland for over 70 years. Due to the extensive cost of public infrastructure needed at the site, compared to other parts of the City, and in an effort to help attract world-class employers along the Loop 202, the following business terms are being recommended:
- Developer will privately finance and construct public infrastructure improvements, including half-streets of Elliot Road and Carver Road frontage, full street of 59th Avenue, and water and wastewater lines, as approved by the Planning and Development, Street Transportation and Water Services departments.
- Agreements may include other such public infrastructure and related components (and costs thereof) as approved by the City's Community and Economic Development Director.
- These improvements will be in conformance with zoning for the Site.
- The project must start construction within 18 months of Council authorization.
- 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 to qualify for reimbursement.
- The City will reimburse the Developer for public infrastructure improvements as listed above, not to exceed a total reimbursement of $4 million.
- No other sources of funds would be used if resources are not adequate to meet the projected construction expenses.
- Agreements will include other terms and conditions as deemed necessary by the City.
Reimbursement terms are as follows:
- Reimbursement will be paid on a semi-annual basis, in arrears, from the City's eligible General Fund portion of the Transaction Privilege Taxes (TPT) collected and received by the City, from the following categories: construction sales tax, retail sales tax, speculative builder tax and commercial lease tax.
- The maximum reimbursement amount for the public infrastructure improvements related to this project will not exceed $4 million.
- Reimbursement will not exceed actual verifiable costs for the approved improvements and tracking of reimbursement costs will begin with the issuance of the first permits for the first phase.
- The reimbursement period will begin upon Developer's completion of the public infrastructure for the first phase of the improvements, as made evident by the Construction Completion Date, and continue for a period of 10 years or upon the date Developer has received reimbursements totaling the Reimbursement Cap.
The project is vital to activate the Loop 202 South Mountain Technology Corridor. There is significant new residential activity with a need for retail amenities. The proposed housing, retail and new industrial development is crucial to creating the Loop 202 South Mountain Technology Corridor. Phoenix has reached a critical point in the real estate market that makes this investment a possibility and will bring significant investment in the employment projects in the corridor. The redevelopment of the site is an important economic development opportunity that will transform the community and yield significant financial and public benefits for the City above and beyond the TPT revenues generated.
Contract Term
The Agreement will terminate 10 years after the Construction Completion Date or upon the Developer receiving the maximum reimbursement amount, whichever occurs first.
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 $4 million in payments. Financial terms of the Agreements will be reviewed by the Budget and Research Department to verify funding availability prior to execution of Agreements.
Concurrence/Previous Council Action
This item was recommended for approval by the Economic Development and Housing Subcommittee at its Nov. 8, 2023 meeting by a 4-0 vote.
Location
Generally located east of Loop 202 Ed Pastor South Mountain Freeway and Elliot Road
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.