Title
Development Agreement with NADG (Palm Court Tower) GP LLC, for Development at 440 E. Van Buren St. (Ordinance S-45037)
Description
Request to authorize the City Manager, or his designee, to enter into a development agreement, and other agreements as necessary, (Agreements) with NADG (Palm Court Tower) GP LLC, or its City-approved designee (Developer) for the development of a high-rise, multi-family rental residential tower at 440 E. Van Buren St; and for the City Treasurer to accept funds. The Project will have no expense impact to the General Fund.
Report
Summary
On April 10, 2018, the Developer submitted its proposal in response to the 2017-2018 Downtown Development Request for Proposals (RFP) requesting the City's consideration of a Government Property Lease Excise Tax (GPLET) transaction, including eight years of abatement of the excise taxes, for a high-rise development project on a vacant development pad at the Arizona Center located at 440 E. Van Buren St. (Site). This project will bring additional residential units to the downtown area in close proximity to the Arizona State University Downtown Phoenix Campus and the Phoenix Biomedical Campus, which is supported by the City Council-adopted Downtown Strategic Plan.
If approved, the development will result in a high-rise, multi-family rental residential tower, including 370 structured parking spaces and resident amenities (Project). Of the 354 units proposed for the Project, ten percent will be reserved for workforce housing. The Project will be constructed on a 39,971 square foot development pad located at the northwest corner of 5th and Van Buren streets at the Arizona Center. Additionally, the Project will bring a capital investment of approximately $107 million to the downtown community and create approximately 300 construction jobs, and 20 permanent jobs.
Procurement Information
An evaluation panel, consisting of a representative from the Downtown Neighborhood Association and City staff from the Community and Economic Development and Planning and Development departments, was convened earlier this summer to review the proposal. The panel unanimously recommended the City begin negotiations with the Developer.
Contract Term
The lease will be for eight years upon issuance of the certificate of occupancy. 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 lease.
Financial Impact
The Project will have no expense impact to the General Fund. The estimated one-time construction tax revenue to the City is approximately $1.3 million plus an estimated annual residential rental tax revenue generation of approximately $173,000. The Developer will pay an annual rental payment of $25,000. The rent payments shall be deposited into the Downtown Community Reinvestment Fund.
Public Outreach
Staff presented this proposal to the Downtown Voices Coalition on Sept. 8, 2018, and to the Downtown Neighborhood Alliance on Sept. 11, 2018. The Developer also met with the Phoenix Elementary School District No. 1 and Phoenix Union High School superintendents.
Location
440 E. Van Buren St., or the northwest corner of 5th and Van Buren streets.
Council District: 8
Concurrence/Previous Council Action
This item was heard at the Planning and Economic Development Subcommittee on Sept. 18, 2018, and was approved by a vote of 4-0.
Department
Responsible Department
This item is submitted by Deputy City Manager Deanna Jonovich and the Community and Economic Development Department.