Title
Authorization to Amend Contract 109415 and Enter into a Ground Lease between the City of Phoenix and University of Arizona for the Development of the Center for Advanced Molecular and Immunological Therapies at the Phoenix Bioscience Core (Ordinance S-51059)
Description
Request to authorize the City Manager, or his designee, to amend Intergovernmental Agreement (IGA), Contract 109415, and enter into a ground lease, and other agreements as necessary (Agreements), with the Arizona Board of Regents, on behalf of the University of Arizona (UA), for the development of the Center for Advanced Molecular and Immunological (CAMI) Therapies. Further request to authorize the City Treasurer to accept and the City Controller to disburse all funds under the terms of the Agreements.
Report
Summary
On Feb. 5, 2004, the City entered into an IGA with UA, and on various dates executed amendments to that contract, for the development of biomedical facilities at the Phoenix Bioscience Core (PBC). Subsequently, the City and UA entered into ground leases for the Dignity Health Cancer Institute (Contract 109415-UGL-0), Biomedical Sciences Partnership Building (Contract 109415-UGL-1), and Health Science Education Building and Research Core (Contract 128743-0). On May 23, 2018, the City entered into an amendment to the IGA (Contract 109415-IGA-5) giving UA development rights to the property located at the southwest corner of 7th St. and Fillmore St. on the PBC (Site).
UA has provided the City with notice of intent to develop the 2.5 acre Site as the proposed location for CAMI. The project includes two phases that, when fully developed, will include approximately 450,000 square feet (SF) of mixed-use educational and office space, a national biomedical research hub, research labs, and related facilities and amenities. The first phase of development (Phase 1), which is the CAMI building, is expected to include approximately 200,000 SF of mixed-use research space accommodating an estimated 500 jobs. Phase 1 development is expected to require a capital investment of approximately $265 million. The second phase of the development (Phase 2) is contemplated to be developed in one or more subsequent stages, the order, configuration and timing of which will be finalized at a later date (collectively known as the Project).
The following major business terms have been negotiated with UA to be implemented through the Agreements:
- UA will satisfy all requirements for issuance of the public infrastructure permit(s) and obtain the first infrastructure permit for Phase 1 within 36 months.
- UA will comply with Arizona Revised Statutes Title 34 for the public procurement of design and construction of the Project.
- Upon the later of Completion of Construction of Phase I, or Fiscal Year 2027/28, City will pay UA an initial payment of $1.5 million from the General Fund.
- Beginning in July 2029, the City will pay UA $1.5 million annually for a term of ten years for the development of the Phase 1 CAMI building.
- Ground lease rent will be $1.85 per square foot of land within the lease premises.
- The City will abate the annual rent for the Project for a term of 30 years following Phase 1 CofO.
- At the end of the ground lease term, UA will have the right to acquire the leased premises from the City.
- UA must secure or provided adequate parking for the Project. Any parking facilities developed must be made available for public use after hours or when building occupancy is low.
Contract Term
The ground lease will be for a term of 30 years.
Financial Impact
The City's financial impact will be the funding of $15.0 million from the Downtown Community Reinvestment Fund and $1.5 million from the General Fund. The first payment is projected to be in Fiscal Year 2027-28 with the remaining annual payments starting in July of Fiscal Year 2029-30 for a period of ten years. The other impact will be the abatement of the annual ground lease rent for the term of the Project.
Concurrence/Previous Council Action
The item was recommended for approval by the Economic Development and Housing Subcommittee at the June 12, 2024 meeting by a vote of 4-0.
Public Outreach
UA hosted a community engagement meeting April 30, 2024, and will continue to meet with community stakeholders regularly during the design and development process.
Location
Southwest corner of 7th and Fillmore streets.
Council District: 8
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.