Title
Contract with Capital Cardinal Management, Inc. for the Sale and Redevelopment of City-Owned Property at 723 W. Polk St.
Description
This report requests the Workforce and Economic Development Subcommittee recommend City Council authorization to enter into a disposition and redevelopment agreement, and other agreements as necessary (Agreements), with Capital Cardinal Management, Inc., or its City-approved designee (Developer), for the sale and redevelopment of the City-owned American Legion site located at 723 W. Polk St. (Site). The project will generate a one-time sale proceeds revenue of $1.6 million for the General Fund.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
The City owns a parcel comprised of approximately 73,220 square feet (SF), or 1.68 acres, at 723 W. Polk St., at the southwest corner of 7th Avenue and Polk Street. The Site, zoned C-3 (General Commercial), is located within the Downtown Phoenix Redevelopment Area as well as the Arts, Culture and Small Business and Capital Mall overlays. The Site was deeded to the City in 1920 to allow the establishment of the American Legion Post Number No. 1 (Legion). The original agreement allowed the Legion to use the Site, subject to certain limitations and contract provisions, for 99-years with an end date of Feb. 20, 2019. In September 2018, City Council approved an 18-month lease extension allowing the Legion to continue operations while the City determined the future of the Site. The property is not designated on the Phoenix Historic Property Register or the National Register of Historic Places. A National Register Nomination was prepared by individuals not associated with the Legion, however, the Legion does not support the nomination moving forward.
In June 2019, City Council authorized the Community and Economic Development Department (CEDD) to issue a Request for Proposals (RFP) seeking offers for the disposition and redevelopment of the Site for a compatible, infill, mixed-use, mixed-income development. The City received two proposals in response to the RFP, which was issued in October 2019. Only one of the proposals was responsive as the other proposal was received after the published proposal deadline and staff entered into negotiations with the responsive proposer (Developer). If approved, the redevelopment will result in a mixed-use, mixed income development consisting of one building ranging between three and four stories with approximately 102,000 gross SF of building space (Project), which will include:
Approximately 92 multifamily residential units offered in a mix of Affordable and Workforce units with a preference for veterans, and distributed as follows:
Approximately 52 percent of the total units will be dedicated as Affordable Housing, restricted to households with incomes less than or equal to 50 percent of Phoenix-Mesa-Scottsdale, AZ MSA Area Median Income Limits (AMI).
Approximately 24 percent of the total units will be dedicated as Income Restricted Housing, restricted to households with incomes that are less than or equal to 80 percent of Phoenix-Mesa-Scottsdale, AZ MSA AMI.
Approximately 24 percent of the total units will be dedicated as Workforce Housing, restricted to households with incomes that are between 80.01 to 120 percent of Phoenix-Mesa-Scottsdale, AZ MSA AMI.
Minimum 3,000 SF for community support services for veterans.
A pedestrian gateway into the Project at the southwest corner of 7th Avenue and Polk Street.
An interpretative feature documenting the history of the Luke-Greenway American Legion Post No. 1, to be located in a prominent, publicly accessible area of the Site.
Preservation of the existing flagpole or a comparable flagpole.
Preservation and re-purposing of the existing meeting hall as a community meeting space.
Creation of an approximately 6,500 SF memorial park.
Approximately 88-parking spaces provided in a mix of covered and surface parking.
Subject to City Council approval, the following major business terms have been negotiated with the Developer and would be implemented through the Agreements:
Purchase price $1,605,000, equal to the appraised value.
99-Year deed restriction guaranteeing the income restrictions, with a preference for veterans, on the Site.
City will provide a minimum of 25 project-based Veterans Affairs Supportive Housing (VASH) Vouchers for a term of 20 years, subject to future fund allocations to the City from the U.S. Department of Housing and Urban Development (HUD). The project can accept up to a total of 48 VASH Vouchers, or 52% of the total project.
Developer will enter into Agreements with the City within six months of City Council authorization (Authorization Date).
Developer will file to rezone the Site within 60 days of the Authorization Date and successfully entitle the Site within 12 months.
Developer will commence construction within 12 months of completion of the rezoning process.
Developer will complete construction within 24 months of construction commencement.
The Project will adaptively reuse a portion of the existing building and preserve key elements of the Legion property while adding veteran preference housing aimed at a mix of income levels. The Project will create approximately 100 construction jobs and approximately 20 permanent jobs after completion. In addition, the Project will create other new revenues through construction sales tax and new property tax and rental sales tax.
Financial Impact
The Project will generate a one-time sale proceeds revenue of $1,605,000 for the General Fund.
Public Outreach
Staff presented to the Downtown Voices Coalition on May 8, 2021; the City's Central City Village Planning Committee on May 10, 2021; the Grand Avenue Members Association and Grand Avenue Arts & Preservation on May 11, 2021; the City's Historic Preservation Commission on May 17, 2021 and the Roosevelt Action Association on May 18, 2021. Staff also reached out to the Capital Neighborhood Association and the Triangle Neighborhood Association to provide information.
Location
723 W. Polk St.
Council District: 7
Department
Responsible Department
This item is submitted by Deputy City Manager Ginger Spencer and the Community and Economic Development Department.