Title
Authorization to Amend Development Agreement with PV Land SPE, LLC (Ordinance S-51714) - District 3
Description
Authorize the City Manager, or his designee, to amend Contract 154095 with PV Land SPE, LLC (Developer), or its City-approved designee, to extend the term of the reimbursement period.
Report
Summary
The City and Developer entered into a development agreement (Agreement) in 2021 to facilitate the demolition and redevelopment of the former Paradise Valley Mall into a mixed-use development (Project). The Agreement allows for reimbursement by the City of certain public improvements constructed by the Developer utilizing the general fund (GF) share of Project-generated transaction privilege tax (TPT).
Following the completion of demolition and commencement of construction in 2022, a new state law, SB 1131, was passed in 2023 prohibiting municipalities from collecting a residential rental tax, effective January 1, 2025. Reimbursement of the residential rental tax was forecasted over a period of 25 years under the Agreement and was part of the Developer’s financial assumptions for constructing the Project.
In 2024, City Council authorized an amendment to allow the use of restricted Non-GF share of TPT generated on-site to reimburse for public infrastructure constructed on the site. The parties would like to extend the reimbursement term of the Agreement from 25 years to 30 years to make up for additional lost revenue from the elimination of the residential rental tax. All other terms and conditions of the Agreement will remain in full force and effect.
Financial Impact
Project-generated TPT is only available for actual public infrastructure and amenities completed by the Developer and accepted by the City for a 30-year term.
Concurrence/Previous Council Action
On February 17, 2021, City Council approved Contract 154095 (Ordinance S-47323). On June 26, 2024, City Council approved an amendment authorizing Non-GF TPT as reimbursable (Ordinance S-51125).
Location
4500 - 4610 East Cactus Road
Council District: 3
Department
Responsible Department
This item is submitted by Deputy City Manager John Chan and the Community and Economic Development Department.