Title
Authorization to Amend Ordinance to Modify Development Agreement with Farmers Insurance Exchange (Ordinance S-46074)
Description
Request to authorize the City Manager, or his designee, to amend an existing development agreement, Contract 144954-1, Ordinance S-42299, and to execute any other instruments or documents necessary with Farmers Insurance Exchange. Further request the City Controller to disburse additional funds in an amount not to exceed $250,000 with this action. Funding is available in the Strategic Economic Development Fund.
Report
Summary
After a search involving multiple states and regions, Farmers Insurance Exchange (Farmers) expressed its desire to significantly expand its presence in Phoenix. Farmers currently occupies 150,000 square feet (SF) of Class A office space at 17 North Corporate Center (24000 N. Farmers Way) and will expand into an additional 150,000 SF on an adjacent parcel.
The expansion will result in more than 900 new jobs to be phased in from 2019-2023 and would generate new net annual payroll figures exceeding $50 million per year once fully operational. A third-party economic impact analysis indicates the 10-year direct-revenue to the City being $12.5 million over 10 years.
The City recognizes the resulting substantial economic impacts to the City and region from Farmers' expansion efforts. To remain competitive on a national level and ensure quality job positions are created in Phoenix, the terms of a Development Agreement (DA) are as follows:
- Farmers agrees to expand its organization within the City of Phoenix in a build-to-suit office near 24000 N. Farmers Way, known as 17 North Corporate Center.
- Farmers intends to create an estimated 943 additional new jobs within four years of entering into the DA. The City realizes 943 jobs is a program model estimate and this DA is not contingent upon the exact total job creation.
- The City will amend its current DA and Ordinance (Contract 144954-1 and Ordinance S-42299 dated Sept. 22, 2017) which offers a performance-based training fund through the Strategic Economic Development Fund. The City will continue to provide $1,000 to Farmers for each net new employee earning an annual wage exceeding $44,000 in their second year of employment, and certain conditions contained in the development agreement. The City will add $250,000 to the original agreement of $500,000. The new total combined reimbursement amount will not exceed $750,000 over the term of the DA.
- Entering into the DA and participation in the job creation fund does not preclude Farmers from working with the City’s Workforce Innovation Opportunity Act (WIOA) Program or any other local and/or State program.
- Payments to Farmers will be generated by City revenue created by the project, based on the terms outlined in the DA. City payments to Farmers will not exceed revenue created and collected by the project.
Financial Impact
This action will add $250,000 to the original DA. With the amendment, the total contract amount will not exceed $750,000 over a 10-year period. Funding is available in the Strategic Economic Development Fund.
Concurrence/Previous Council Action
City Council approved the original action via Ordinance S-42299 on Feb. 3, 2016.
Location
24000 N. Farmers Way
Council District: 1
Department
Responsible Department
This item is submitted by Assistant City Manager Deanna Jonovich and the Community and Economic Development Department.