Title
Development Agreement with Lines Family Entities for Public Infrastructure Improvements (Ordinance S-51134)
Description
Request to authorize the City Manager, or his designee, to negotiate and enter into a Development Agreement (DA), and any other agreements as necessary, with Lines Family Entities, or its City-approved designee, for the installation of public infrastructure improvements in and around a proposed development on 290 acres at Estrella Drive and 51st Avenue. Further request authorization for the City Controller to disburse funds relating to this item.
Report
Summary
Lines Family Entities (Developer) is the owner of approximately 290 acres around the area of Estrella Drive and 51st Avenue (Site). The Developer proposes to construct a new mixed-use commercial, auto park, residential, resort and hospital development (Project). As part of the first phase, approximately 80 acres will be used for a new mixed-use commercial auto park. This new mixed-use commercial auto park will consist of a minimum of five auto dealers and ancillary development including destination retail that will create employment opportunities, provide public infrastructure improvements and pedestrian friendly connections to the Site. The Project is an important economic development opportunity that will create several thousand new jobs over time for the community and provide significant financial benefit for the City of Phoenix, above and beyond the sales tax revenue generated.
This area of Phoenix continues to be a high demand, high growth area for both retail, new residential and employment uses. To accommodate this growth, increased traffic, and the creation of the Project, additional public infrastructure improvements are required. The Developer will construct the required public infrastructure improvements including water and wastewater lines, public streets, traffic signals, public art, enhanced landscaping, public drainage, a joint fire and police station, a trail head and public parking lot for an entrance into South Mountain Park. It is anticipated that the Project will generate approximately $400,000,000 of Transaction Privilege Tax (TPT) over the next 25 years. The proposed major business terms are as follows:
- Developer shall design and construct public streets, as mandated by the standards of the Street Transportation and the Planning and Development departments, including 47th and 51st Avenues, Estrella Drive, Gila Foothills Parkway, County Land and additional collector streets as approved by the City and respective governing jurisdictions (including landscaping, sidewalks, streetlights, public art and appurtenant amenities) for public access through the Project.
- Developer shall design and construct the public water and wastewater infrastructure as required by the City Approved Plans and City Codes, and as illustrated in accordance with the approved Planned Unit Development (PUD).
- Upon execution of the DA, Developer and Phoenix Fire Department shall identify and reserve a mutually agreeable location within the Project for the future fire station and combined police substation. The Parties acknowledge that Fire response times will govern the acceptable locations to be considered.
- Within 30 days of the first site work, Developer will provide funding to an Escrow Account to be used by the City Parks and Recreation Department (Parks) for the design of the trail head and publicly-owned parking lot that provides access to South Mountain Park. At the City's discretion and contingent to the prioritization and approval through the annual budget process by City Council, Developer shall either provide funding into the Escrow Account for construction of the trail head and parking lot by the City, or Developer shall construct the trail head and parking lot.
- Within 30 days of the first site work, Developer will provide funding to an Escrow Account to be used for the design of a new fire station, and a combined police substation within the Project. At the City's discretion and contingent on the prioritization and approval through the annual budget process by City Council, Developer shall either provide funding into an Escrow Account for construction of the facility, or Developer shall construct the fire station/combined police substation.
- Parks will lead community engagement efforts, through its normal process, for design of the trail head, this effort will begin not more than 18 months following execution of the DA. City and Developer acknowledge that the publicly-owned parking lot provides public parking, during park hours, for access to South Mountain Park. This lot may be considered for shared parking based on the terms of the DA.
- City will reimburse the Developer, through the eligible TPT generated by the Project into the City's General Fund, for the construction of such public infrastructure, upon completion of construction, the City's acceptance of the improvements and the dedication of the public improvements to the City. City may use other restricted fund sources for eligible approved costs in lieu of TPT Reimbursements, where available.
- Following construction of the public trail head and parking lot, City will withhold from the annual TPT Reimbursement to Developer, the amount identified by the Parks Department that represents the ongoing Operation and Maintenance of both the trail head and parking lot on an annual basis for a period of 10 years.
- Following construction of the Fire Station and combined Police Substation, City will withhold from the annual TPT Reimbursement to Developer, the amount identified by the City that represents the ongoing Operation and Maintenance of the facility on an annual basis for a period of 10 years.
- 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 Improvements must be pre-approved by the City in order to qualify for reimbursement. Reimbursement terms are as follows:
- Additional public infrastructure and related components (and costs thereof) may be approved by the Community and Economic Development Director.
The term of the DA shall end upon the earlier of 25 years after the commencement of construction of the first phase, as made evident by the issuance of required permits (Construction Commencement Date) or upon the date Developer has received reimbursements totaling the actual approved verifiable costs. The DA will include other terms and conditions as deemed necessary by the City.
Reimbursement shall be paid on an annual basis, in arrears, from the following sources: Years one through 25: 100 percent of the City's eligible General Fund portion of the TPT generated by the Project and collected and received by the City, and as verified by the City. City may use other restricted fund sources to reimburse Developer for eligible approved costs, at the City's sole discretion. Reimbursement shall not exceed actual verifiable costs for the approved Improvements.
Contract Term
The earlier of 25 years from the Construction Commencement Date or when reimbursements have reached the total actual approved verifiable costs.
Financial Impact
The City's financial impact will be the reimbursement of the eligible General Fund share of the TPT generated from the Project over 25 years as well as other restricted fund sources, as applicable to the improvements constructed. Financial terms of the Agreements will be provided to the Budget and Research and Finance Departments for review prior to the execution of the Agreements.
Concurrence/Previous Council Action
The Gila Foothills PUD was approved by City Council on May 15, 2024. Recommended for approval by the Economic Development and Housing Subcommittee by a vote of 4-0 on June 12, 2024.
Location
Approximately 290 acres around Estrella Drive and 51st Avenue, bordered by South Mountain Park to the south and the Loop 202 Freeway to the west.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan, and the Community and Economic Development and Parks and Recreation departments.