Title
Authorization to Enter into Intergovernmental Agreement with Arizona Board of Regents for Development of Arizona State University Health Headquarters and to Enter into Lease of a City-Owned Property Located at the Northeast Corner 4th Street and Fillmore Street (Ordinance S-52677) - Council District 8
Description
Authorize the City Manager, or the City Manager's designee, to enter into an Intergovernmental Agreement (IGA) with Arizona Board of Regents (ABOR), and to execute any other instruments or documents necessary, including a lease pursuant to City Contract 142599, to facilitate the development of facilities to house the Arizona State University (ASU) Health Headquarters and other academic units on City property in downtown Phoenix. Additionally, request authorization for the City Treasurer to accept funds and the City Controller to disburse funds. The City will participate in the project through approximately $12 million from the 2023 General Obligation Bond Program and approximately $38 million from the Sports Facilities, Biosciences, and Tourism Fund.
THIS ITEM IS FOR DISCUSSION AND POSSIBLE ACTION.
Report
Summary
ABOR proposes to develop the ASU Health Headquarters (ASU Health HQ) building on an approximately 0.89-acre City-owned property (Site) combined with a 0.17-acre ABOR-owned property for a total site that is approximately 1.06 acres. The Site is located at the northeast corner of 4th Street and Fillmore Street. The remaining parcel on the block remains under private ownership.
ABOR will be investing approximately $160 million in downtown Phoenix to construct the 175,000 square foot, five-story ASU Health HQ. Initial plans for the building include housing the John Shufeldt School of Medicine and Medical Engineering. This medical school blends clinical education, engineering, artificial intelligence, interprofessional collaboration, humanism, and systems thinking to train doctors who have the vision to transform the medical system. The building will also house the School of Technology for Public Health and professional training programs in the Edson College of Nursing and Health Innovation and College of Health Solutions.
The City will contribute a total of $50 million to the project in addition to the City-owned parcel. Approximately $12 million will come from the 2023 General Obligation Bond Program approved for this project. The Bond funds will be paid as a lump sum upon construction commencement of the project. The City will also contribute approximately $38 million in total from the Sports Facility, Biosciences, and Tourism Fund paid in annual increments over the next ten years, starting on June 1, 2026.
ASU and the City will use the facility to work in collaboration on three strategic pillars: (1) City Employee Health and Safety Innovation, (2) Urban Public Health and Resilience, and (3) Health Programs to support the Phoenix population. The details of this partnership will be further detailed within the IGA.
The facility will include traditional and virtual reality classrooms, health care simulation and skills labs, a medical technology innovation suite, and faculty and administrative offices. Building amenities will include community learning spaces, student engagement as support spaces, a library, and convening spaces. The lobby will also include spaces where the public can interact with personal and public health information. ASU has agreed to allow the City to host, without a use charge, up to two events per year at the Project.
The City will lease the property to ASU, pursuant to terms of IGA 142599 between the City and ABOR that was executed in May of 2016. There will be no rent for the lease during the first eight years of the term, after which ASU will pay the City a rental rate of $1.85 per square foot of land, escalated through the date the City Council approves such Subsequent Phase Lease by the lesser of either the cumulative increase in the Phoenix-Mesa Consumer Price Index or three percent per annum. The City and ASU will not be permitted to sell or dispose of their parcels during the duration of the lease. Upon successful completion of the 30-year lease term, the City will convey title of the City-owned parcel to ASU.
Financial Impact
The General Obligation Bond Funds are programmed in the budget for Fiscal Year 2026-27 and will total $11,881,188. The Sports Facility, Biosciences, and Tourism Funds are available starting this Fiscal Year with a total amount of $38,118,812 to be paid over ten years. There will be no impact to the General Fund.
Concurrence/Previous Council Action
The original IGA, City Contract 142599, was authorized on May 19, 2015, by Ordinance S-41736.
Location
The facility will be located at the northeast corner of 4th Street and Fillmore Street (APN 111-46-156).
Council District: 8
Department
Responsible Department
This item is submitted by Assistant City Manager Ginger Spencer and the Community and Economic Development Department.