Title
Authorization to Enter into a Development Agreement with IDM Companies for Reimbursement of Public Infrastructure Improvements (Ordinance S-49772)
Description
Request to authorize the City Manager, or his designee, to negotiate and enter into a development agreement and any other agreements as necessary (Agreements), with IDM Companies, or its City-approved designee (Developer), for the reimbursement of public infrastructure improvements. Further request to authorize the City Controller to disburse all funds under the terms of the Agreements.
Report
Summary
Developer is planning to develop approximately 80-acres into several speculative Class A industrial buildings, totaling an estimated 1,240,000 square feet of new construction, along the Loop 202 Ed Pastor South Mountain Freeway (Site). This area is the newest employment corridor in Phoenix and has been named the Loop 202 South Mountain Technology Corridor. The property is currently farmland and has been farmed by the same family for over 70 years. Due to the extensive cost of public infrastructure in comparison to other parts of the City, and in an effort to help attract world-class employers along the Loop 202, the following business terms are being recommended.
- Developer will privately finance and construct the public infrastructure improvements including Dobbins and Olney Roads, 63rd and 67th Avenue, a portion of the 63rd and Dobbins intersection and Water and Wastewater lines, as approved by the Planning & Development, Streets Transportation and Water Services departments.
- Agreements may include other such public infrastructure and related components (and costs thereof) as approved by the Community and Economic Development Director.
- These improvements shall be in conformance with the zoning for the Site.
- The project must start construction within 18 months of Council authorization.
- Developer must comply with Title 34 of the Arizona Revised Statutes in constructing the improvements to qualify for reimbursement, and the specifics and cost of the public infrastructure improvements must be pre-approved by the City in order to qualify for reimbursement.
- The City will reimburse the Developer for public infrastructure improvements as listed above and will not exceed a total reimbursement of $10 million.
- No other sources of funds would be used if resources are not adequate to meet the projected construction expenses.
- Agreements will include other terms and conditions as deemed necessary by the City.
Reimbursement Terms are as follows:
1. Reimbursement shall be paid on a quarterly basis, in arrears, from the following sources: 100 percent of the City’s eligible General Fund portion of the Transaction Privilege Taxes (TPT) collected and received by the City, as verified by the City, from the following categories: construction sales tax, retail sales tax, speculative builder tax and commercial lease tax.
2. The maximum reimbursement amount for the public infrastructure improvements, as they relate to the project, will not exceed $10 million.
3. Reimbursement shall not exceed actual verifiable costs for the approved Improvements.
4. The term shall begin upon commencement of construction of the first phase of the Improvements, as made evident by the issuance of required permits (Construction Commencement Date), and continue for a period of 10 years or upon the date Developer has received reimbursements totaling the Reimbursement Cap.
The project is vital to activate the Loop 202 South Mountain Technology Corridor. Multiple high-wage employers have short-listed this site for their new location. Phoenix has reached a critical point in the real estate market that makes this investment a possibility, and will bring significant investment in the employment projects in the corridor. The redevelopment of the Site is an important economic development opportunity that will transform the community and yield significant financial and public benefits for the City above and beyond the TPT revenues generated.
Contract Term
The development agreement will terminate 10 years after the Construction Commencement Date.
Financial Impact
The City's financial impact will be the reimbursement of the eligible General Fund share of the TPT generated from the Site over ten years with a maximum of $10 million in payments. Financial terms of the Agreements will be provided to the Budget and Research and Finance Departments for review prior to execution of Agreements.
Concurrence/Previous Council Action
This item was recommended for approval by the Economic Development and Equity Subcommittee on April 26, 2023 by a 4-0 vote.
Location
Generally located west of Loop 202 Ed Pastor South Mountain Freeway and Dobbins Road
Council District: 7
Department
Responsible Department
This item is submitted by Interim Deputy City Manager John Chan and the Community and Economic Development Department.