Title
Improvement and Escrow Agreement with South 99th Ave. LP and Commonwealth Land Title Insurance Company NCS (Ordinance S-48250)
Description
Request to authorize the City Manager, or his designee, to enter into an improvement and escrow agreement and any other agreements as necessary (Agreements), with George Oliver Industrial, doing business as South 99th Ave, LP, or its City-approved designee (Developer) and Commonwealth Land Title Insurance Company NCS, or its City-approved designee (Escrow) for installation of public infrastructure improvements, outdoor space improvements, and dedication of public right-of-way (ROW) or easements, and holding in escrow an amount equal to 150 percent of the estimated cost to complete offsite improvements which include necessary roadway improvements along 99th Avenue and relocation of an existing irrigation ditch until such work is completed. Further request to authorize the City Treasurer to accept such funds if the required work is not completed under the terms of the Agreement.
Report
Summary
Developer would like to construct approximately 2.5 million square feet of new Class A Industrial product in three to four buildings on approximately 147 acres at the southeast corner of 99th Avenue and Buckeye Road (Project). On 99th Avenue, along the frontage of the Project, is a USA Fee Title irrigation ditch that is required to be relocated. The lengthy process required to relocate the ditch involves approval of the relocation plan by both the federal Bureau of Reclamation and Salt River Project. This process can typically take 18 to 24 months and must be completed before permits can be pulled and Project construction can commence. The subject of the current request pertains to the speed of which the Developer can pull permits and commence construction of the Project. Currently, vacancy rates for available industrial buildings are at historic lows. Not having this type of readily available space could result in high-wage employers looking at markets outside of Phoenix.
To continue to attract high-wage employers, staff has devised a mechanism to allow the Developer to move forward with the Project. Subject to City Council approval, the following major business terms have been negotiated with the Developer and would be implemented through the Agreements:
- Developer will construct necessary roadway improvements on 99th Avenue along the frontage of the Project;
- Developer will relocate the USA Fee Title irrigation ditch along 99th Avenue to the subject property outside of any future proposed ROW;
- Developer will deposit 150 percent of the cost of the offsite improvements, in an amount approved by the City Engineer but estimated at $12,000,000, into Escrow;
- Developer may, with City's approval, deposit 150 percent of the offsite improvements in phases, for the portions of the Project that Developer is planning to commence construction;
- City will allow Developer to pull permits and commence construction on the phases of the Project for which it has deposited 150 percent of the offsite improvements into escrow before approvals for the relocation of the irrigation ditch is complete;
- The development will not request Certificate of Occupancy from the City for any building until the USA Fee Title irrigation ditch has been relocated, constructed, and accepted by both the City and Bureau of Reclamation;
- Developer will leave up to 150 percent of funds required to complete the offsite improvements in case the City assumes responsibility to complete the required improvements;
- The Developer will provide the necessary dedications to the City, at no charge, in the event that the City assumes responsibility to complete the required improvements;
- Upon completion of the offsite improvements, any remaining funds in the account will be disbursed to the Developer by Escrow;
- Offsite improvements are scheduled to be completed by June 1, 2023; and
- Other terms and conditions deemed necessary and/or appropriate at the City's discretion.
Contract Term
Developer will use diligent, good faith efforts, subject to Force Majeure Delays, to substantially complete the offsite improvements by June 1, 2023.
Financial Impact
There is no financial impact to the City. If the offsite improvements are not completed by the Developer as required, the City will accept the Escrow funds to complete the required improvements.
Location
Southeast corner of Buckeye Road and 99th Avenue.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Managers Ginger Spencer and Mario Paniagua, and the Community and Economic Development and Street Transportation departments.