Larry Rains, City Manager, stated that tonight there will not be a public hearing on the Dreamport Villages Project. The public hearing for this project will be in conjunction with the Planned Area Development (PAD), zoning action, tentatively scheduled for August 16, 2017. Tonight's meeting is for the City Council to consider a Notice of Intent to enter into a retail development tax incentive agreement with The Block Sports Company for the Dreamport Villages Project. Adopting the Notice of Intent does not obligate the Mayor and Council to enter into the agreement, but is a necessary first step in order to consider whether to adopt it. Further, City Manager Rains noted that the City has one other similar incentive agreement, which is the Promenade Mall. State Statutes Governor Incentive Agreements. To address the Notice of Intent for the Dreamport Villages project, City Manager Rains highlighted the below information.
Over the past several months, staff have been involved in negotiations with The Block Sports Company regarding the proposed development of a world class entertainment, resort, office and retail mix use development known as Dreamport Villages. The development as proposed would include resorts with supporting recreational amenities, indoor entertainment facilities, water parks, restaurants, special retail, amusement parks, a tech park, and residential development within a master planned community. The proposed development is comprised of approximately 1,507 acres and consists of two planned area developments north and south of Interstate 8 and West of Interstate 10.
Significant additional infrastructure, most likely including a new interchange at the Henness and I-8 location, would be required in order to develop a project of this magnitude in this location. The Block Sports Company claims that, due to the significant infrastructure that needs to be constructed - much of which would have a regional benefit well beyond that needed for the Dreamport Villages project - it would be unable to build this development and amenities in this location at this time absent reimbursement of some of the infrastructure costs from the City and, accordingly, has asked the City to consider entering into a development agreement that would repay a portion of the sales tax the development generates to Block Sports. The proposed sales tax reimbursements would be used to repay the company for public infrastructure. Block Sports would be responsible for constructing.
In order to consider a development agreement with terms and conditions that include retail sales tax incentives, state statute first requires that the City adopt a Notice of Intent to enter into the agreement. This notice must be adopted at least 14 days before approving any such agreement. Adoption of the Notice of Intent, which is the only substantive item on the agenda for tonight's meeting, does not obligate the Mayor and Council to enter into the development agreement but adoption of such a Notice of Intent is a mandatory prerequisite to later consider this type of agreement. Adoption of the Notice of Intent can be done by motion with a simple majority needed to pass the Notice of Intent. A form of the proposed Notice of Intent is attached to the RCA, and staff is recommending that the Mayor and Council adopt the Notice of Intent in order to further consider the agreement at a later meeting.
If Council adopts the Notice of Intent tonight, also pursuant to state statute, the City would be required (prior to approving any agreement) to make a finding that the tax generation from the proposed project will raise more revenue than the amount of the incentive within the duration of the agreement, and that in the absence of a tax incentive, the development would not locate in the city or town in the same time, place, or manner. The statute also requires that an independent third party is required to verify the research and analysis of these findings before the municipality enters into the agreement. To fulfill this requirement of the statute, the City has engaged Applied Economics to perform the independent review. The report of Applied Economics has been completed. City Manager Rains distributed a copy of the report to the Council. Sara Murley, Applied Economics representative, was not available to present the report tonight. But, will be able to attend the Council meeting of August 16, 2017. Obviously, in order for the Mayor and Council to enter into a retail sales tax incentive agreement, the analysis must demonstrate that the terms of the agreement ensure that the City will raise more revenue than the amount of the proposed incentive and that the flow of tax revenues would be sufficient to cover the reimbursement amount within the time period set forth in the development agreement.
The findings by Council are not on tonight's agenda, but - if the Notice of Intent is adopted - staff anticipates asking the Mayor and Council to consider these findings at a special meeting on August 16th, as well as considering the first read of an Ordinance authorizing the City to enter into a retail sales tax incentive development agreement with Block Sports at the same meeting. Both the findings and the Ordinance authorizing the agreement must receive a 2/3 vote of the Mayor and Council (at least 5 votes) in order to be approved.
At this time, Cameron Carter of Rose Law Firm, offered a PowerPoint presentation which included the below information on Dreamport Villages, which is proposed to be a multi-faceted destination resort and theme park.
- Multi-Faceted Destination Resort and Theme Park
- Major Economic Development Project
*$1.2 Billion Total Investment
- Major Economic Development Project
*$300 Million Infrastructure Investment
- Significant City Benefits!
* 4,400-9,000 jobs in Casa Grande
* $298.3 Million in tax revenues to City
Phase 1 Improvements
- Amendments to Planned Area Developments (PADs)
- Development Agreement
Minimum Resort District Improvements
Phase 2 Improvements
- 300 Room Hotel
- 100,000 SF Indoor Water Park
- 40,000 SF Indoor Meetings and Entertainment Space
- Extreme Sports Park
- Adventure Zone
- RV Park
- 10-14 Restaurants
- 200 Room Extended Stay Hotel
- Regional Transit Center
- The Wild - Animals and Rides Park
- The Wild Hotel (300 Rooms) and Restaurant
- Welcome Center
Regional Infrastructure Improvements
- Theme Parks (Indoor/Outdoor)
- Resort Hotels and Time Shares
- School & Tech Office Park
- Entertainment Zone
- Retail, Office and Residential
Development Agreement Terms
- Henness Road Traffic Interchange
- Resort Parkway North (Henness Alignment)
- Resort Parkway South
- UPRR Overpass
- Village Springs Road – Turn Lanes and Signal
Development Agreement Terms
- Complete Minimum Resort District Improvements within 10 years
- Complete All Regional Public Infrastructure
- Vested development rights consistent with PADs
- Development process (plats, amendments, phasing (conditioned on required infrastructure)
- Offsite signage
- Operational restrictions
- City reimbursement for regional public infrastructure up to $124M (Noted that Applied Economics has independently verified and confirmed, with the development agreement as proposed, the City would retain more tax revenue, than it would reimburse for the public infrastructure.)
*Retail sales tax reimbursement (49% of taxes generated)
*Construction sales tax reimbursement (27.5% of taxes generated)
- Reimbursements conditioned on completion of Minimum Resort District Improvements and completion of roadway infrastructure
- Reimbursement Payment Period of 20 years
Development Process (NEXT STEPS)
- Soft Opening (minimum improvements) – Q4 2020
- Grand Opening – Q1 2021
- Master Planning/Landscape Plans/Sign Plans
- Preliminary and Final Development Plans/Site Planning
- Improvement Plans/Permitting
- ADOT Approvals (Henness Rd. (min) and Jimmie Kerr/Cox Rd.)
- Construction of Horizontal Improvements (On-site and Off-site)
- Vertical Construction (On-site)
Council Member Powell voiced that when the City entered into the development agreement for the development of the Promenade Mall, it was the best way to get infrastructure without having to tax the residents. Promenade's infrastructure was $20,000,000, which included widening Florence Blvd., widening of the overpass, built roads, etc, that the City would have had to build in the future. All of the infrastructure was done and the City didn't have to issue any special bonds. Reimbursement for the infrastructure come out of the taxes, and if the Promenade Mall didn't produce enough taxes, they didn't get their money back. He understands that the same scenario will apply to Dreamport Village. The taxpayers do not see any difference in taxes. It worked well with the Promenade, and therefore, he is accepting of the Dreamport Village development agreement.
Mr. Carter stated that Block Sports Company will build all of the infrastructure required. They will be incentivized to maximize the City's revenues, so there can be a reimbursement for the infrastructure.
Council Member Fitzgibbons voiced that she concurs with Council Member Powell's statement. She thanked Mr. Carter and staff for working hard on the development agreement. She noted that Dreamport Villages' plan mentioned regional transit which is needed for the community and surrounding areas. She asked Mr. Carter to explain their plans for regional transit.
Responding to Council Member Fitzgibbons, Mr. Carter stated it's their hope that the regional transit will be a multi-model transit center. They have talked about having Amtrak connectivity with other communities.
Council Member Herman stated that he is pleased that this project will bring in new revenue. Currently, the City's sales tax streams are dwindling, due to on-line sales. This project will bring people to Casa Grande - while allowing the community to still keep its identity, as well as bring new jobs to the community. Dreamport Villages will provide entertainment for the residents. He voiced that would be a good idea, if community members could get a discount to the entertainment. George Chasse, property owner, also had a great vision of his property. He noted that Dreamport will only get reimbursed if they build the development. However, after 25 years, the roads will get old and the City will need to make the improvements. He asked if staff had an estimate of how much it will cost the City to maintain the improvements, and what it will cost to provide services; e.g., police and fire, etc. Happy to see that the city code provides taxing tickets.
Mr. Carter noted that the development agreement provides for police and fire station sites to be donated by the developers.
Mayor Pro Tempore Varela stated that he concurred with Council Member Fitzgibbon's statement relating to public transportation. It would be a good idea for the developers to tie into the transportation study that is currently being developed. He believes that developments which have been successful are those that have become active community partners, with the city, schools, non-profits, etc. Further, Mayor Pro Tempore Varela expressed that he likes this project, because it is not a high risk project for the City. He asked for clarification on how the reimbursement will work.
In response to Mayor Pro Tempore Varela, Mr. Carter stated that once the infrastructure is completed, and the minimum resort improvements are completed and operational, then the developer will be able to come to the City to request reimbursement. He noted that the reimbursement is very detailed and outlined in the proposed development agreement.
Council Member Kortsen voiced that she likes the location for the Dreamport Village development. The development will allow the City to retain its character. In order to provide clarification to the residents, she believes that the city needs to get the message out that the developer will be reimbursed for the infrastructure with sales tax money generated from the project. The development will provide an opportunity for Pinal County communities to work together and benefit from the project. She wants to ensure that access to Casa Grande Mountain is preserved, as well as the view of the mountain.
Council Member McBride expressed that the developers need to have a good plan/marketing for outreach in order to be successful. She concurs with Council Member Herman that the developer should develop a plan to offer local residents a discount to the entertainment venues. It would benefit the developers to work with the current transit study. Putting together a good training program will benefit the developer and recruitment efforts. She expressed her concern with preserving the beauty of Casa Grande Mountain.
Mr. Carter reported that Block Sports is looking into the possibility of offering discounts to local residents. Regarding the preservation of Casa Grande Mountain, he voiced that Block Sports Company is committed to preserving what currently exists at Casa Grande Mountain and providing enhancement to the mountain area. They will not restrict, cut off, or limit access to the Mountain that currently exists.
Council Member Powell voiced that he agreed with Council Member Kortsen's comment relating to regional benefits to surrounding communities. The community has the opportunity to have entertainment, etc. that will draw people to Casa Grande, as well as the community members who will have a place to go for entertainment. He is pleased that Block Sports will build infrastructure for the community, and if they do not make a dollar from the development, then the roads are free. He understands the development will be built on the base of the mountain.
Mayor McFarland voiced that he is excited to work with Block Sports representatives to move forward with developing Dreamport Villages. The City will need to manage the project. Casa Grande Mountain is very important to the City. He is hopeful that Dreamport Villages will add to the City's marketing efforts. The development will add to the quality of life for the local residents. He reported that Supplied Economics, performed an independent study, which shows a positive financial impact on the community; e.g., first 10-years shows an output of $5.6 billion dollars in operations; personal income of 1.8 billion dollars; total jobs of 17-18,000 jobs, etc.
City Manager Rains voiced that he will direct the City Clerk to post the Economic Impact Analysis on the City's Agenda program, which is linked to the City's website.
Relating to Council Member Herman's question regarding on-going infrastructure costs, he stated that there will be costs - just like any other infrastructures built by the City or dedicated to the City. He will work with Staff to put together a projection of costs to present to the Council.
Responding to Council Member Herman, City Attorney Wallace stated the development agreement contains a provision that requires Block Sports to complete the minimum resort improvements and complete them in 10 years from the date that the agreement starts. Once Block Sports starts construction, the City will start taking the funds and will set aside the funds for reimbursement. The City's portion can be used. If they complete the minimum resort improvements within 10-years, they will be eligible for reimbursement. The City will not make any payments to Block Sports, until they complete the minimum resort improvements. All payments are reimbursement for infrastructure - it's not fronting any future infrastructure costs. He offered a review of the repayment period, which is contained in the development agreement.
Council Member Powell voiced that it's important to understand that if the Block Sports does not build Dreamport Villages, then all of the infrastructure built will belong to the City for nothing.
Responding to Mayor Pro Tempore Varela, Mr. Carter reported that the project team/principle of Block Sports Company have a diverse background relating to real estate and resort development. Several of their development partners, Ron Segal and his family have been developing resort properties and high properties in Miami, Florida for 30-40 years, and have built many projects. They own a development and construction company have been very successful. The other principle has worked for Disney. This principle has a company that designs themed amusement parks throughout the world. The principles for the development have been working closely with their financial partners, as well as with the County and State levels to work on components of the development.
Relating to the infrastructure necessary to serve the development area, City Manager Rains voiced that the infrastructure cost will be approximately $300,000,000 for the roadway infrastructure, which are strategic roadways for the community. He offered a description of the roadways.