Posted Oct 3, 2016, 7:32 PM
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Join Date: Oct 2015
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Block 23
For those interested, the City Council will vote tomorrow on approving authorization for the City Manager to contract with RED for the development of and tax incentives regarding Block 23.
Item 36 here: https://www.phoenix.gov/cityclerksit...6%20Formal.pdf
Highlights include:
Quote:
[A]pprov[al] by at least two-thirds of the Phoenix City Council [is required]...
...Most recently Block 23 has been used as a public parking lot, controlled by the Barron Collier Company (BCC). Since the property has always been in the City's name since the 1800s, this property has never generated property tax.
...RED has reached terms with BCC to secure all development rights to Block 23, to develop a dense, vibrant, urban, mixed-use, high-rise development project in the heart of Downtown, with a capital investment of approximately $160 million, and will include a grocery store. The development will take the parcel from non-revenue-generating to a productive mixed-use project. In order to facilitate the development of Block 23, staff recommends the following new terms be incorporated into an amended development
agreement:
An amended Project Improvement description including:
● Approximately 300 multifamily, for-rent, high-rise residential units.
● 150,000 square feet of creative, open, office space attractive to technology- and innovation-oriented tenants.
● 50,000 square feet of commercial space to include:
● An urban Fry's grocery store.
● Additional commercial space for restaurants and retail.
● 1,000 above- and below-grade structured parking stalls.
● Streetscape, pedestrian and cycling improvements, enhancing walkability and bikeability in downtown.
● RED must complete acquisition of BCC's development rights and terminate all remaining BCC rights and eliminate City obligations under the 1991 and 2007 contracts, except as identified below.
● Amend the existing redevelopment agreement within six months after the Phoenix City Council's authorization of the business terms.
● Execute the development lease prior to June 27, 2017.
● Within 18 months from execution of the agreement, Developer shall commence construction; and RED will complete the Project within 36 months.
● Maintain the City's prior approval for a Government Property Lease Excise Tax (GPLET), but reduce the length from 75 years down to 50 years.
To defray the expense of acquiring the development rights to Block 23, the City will:
● Provide up to $18.3 million of financial support.
● Provide $2.5 million to RED to fund the expense of historic and prehistoric site evaluation/excavation, environmental work, demolition and other site work, similar to a private sector sale of property. Funds are available in the Downtown Community Reinvestment fund.
● Pay to RED, by reimbursement or other method reasonably acceptable to the City and RED, City construction sales taxes ($1.8 million estimate) collected from the Project.
● Pay to RED, by reimbursement or other method reasonably acceptable to the City and RED, $560,000 annually of all other City Privilege License Taxes (PLT) collected from the Project for a period of 25 years not to exceed $14 million. If the 2016 Project does not generate at least $560,000 per year in PLT taxes, City shall only pay the amount that has actually been collected (subject to the limitations in the following paragraph).
● During the first 10 years after the completion of construction, if the Project does not generate $560,000 during the year, then in years two through 10, the City will pay RED, by reimbursement or other method reasonably acceptable to the City and RED, any excess PLT collected in the amount necessary to "true up" the previous year's total to achieve $560,000 for the year.
● The sales tax reimbursement will be performance-based. Reimbursement will occur only to the extent the project generates sufficient funds. To complete the purchase of Block 23 from the City, RED will:
● Pay lease payments totaling $18 million to the City.
● Remit to City annual lease-to-purchase payments for a total of $15 million over the Term of the Agreement.
● Pay a final purchase payment of $3 million at the end of the lease.
● Develop the project as described above.
RED may purchase the Site and Project Improvements and terminate the Lease at any time during the Term for the total outstanding amount as identified above, but not less than $18 million. The Agreements will include other terms and conditions as needed, and deadlines for performance benchmarks may be modified by the City.
Contract Term
The amended lease term will be for a maximum of 50 years.
Financial Impact
The project will generate an estimated net new City Sales Tax revenue to the General Fund of $76.5 million over the Term. The $2.5 million referenced for site work is available in the Community and Economic Development Capital Improvement Plan (CIP) budget in the Downtown Community Reinvestment Fund. The City shall reimburse RED all of the City construction sales taxes collected from the project. The City shall reimburse RED up to $560,000 annually of all other City PLT collected from the Project for a period of 25 years (not to exceed $14 million). All rent payments and final purchase payment generated from this project will be deposited into the General Fund ($18 million over the Term).
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