Amended City Council Regular


Print

Return to the Search Page Return to the Agenda
  ITEM 16.       
Meeting Date: 09/08/2020  
Submitted For: Kevin Phelps
Department: City Manager's Office  

Subject
RESOLUTION NO. R20-112
 
A RESOLUTION OF THE COUNCIL OF THE CITY OF GLENDALE, MARICOPA COUNTY, ARIZONA, AUTHORIZING AND DIRECTING THE ENTERING INTO OF A DEVELOPMENT AGREEMENT WITH ECL GLENDALE, LLC.
Presented by: Kevin Phelps, City Manager
Purpose and Recommended Action
This is a request for City Council to waive reading beyond the title and adopt a resolution authorizing the City Manager to enter into a development agreement with ECL GLENDALE, LLC.
 
The corresponding resolution associated with this development for separate Council action includes:
  • Resolution authorizing the City Manager to enter into a government property improvement lease with ECL GLENDALE, LLC.
Background
ECL GLENDALE, LLC entered escrow on 48+/- acres located on the southwest corner of 95th Avenue and Cardinal Ways, directly adjacent to the Loop 101 freeway to construct a one-of-a-kind unique mixed-use destination attraction. In total the development will include:
  • 11-Acre Lagoon Style Waterpark
  • 630 hotel rooms
  • Office
  • Retail
  • Fly and 4D theaters
  • Amusement Rides
  • Family Entertainment Center
  • Restaurants and Bars
  • Venue Spaces
 
ECL GLENDALE, LLC has partnered with Crystal Lagoons for the development of the 11-acre lagoon waterpark.
Analysis
In accordance with A.R.S. 9-500.05 and 9-500.11, the City is authorized to enter into economic development agreements with businesses or landowners located in the city and appropriate and spend public monies for and in conjunction with economic development activities.
 
Additionally, pursuant to Glendale City Code, Chapter 2, Article I, Section 2-3, the City Council may waive Community Development Fees as an economic development incentive upon finding that the waiver is in the best interest of the City of Glendale.
 
The proposed agreements with the developer include the following city offerings:
  • One-time permit and plan fee waiver of up to $1 Million
  • A 25-year “partial” GPLET agreement on the restaurant, theater, amusements, retail and lagoon concessions with an exemption from both property and lease excise taxes for qualifying uses

Additionally, as part of the project deal structure, on September 22, 2020, the City Council is scheduled to take action on the following items to support this project:
  • Sale of 0.29 acres of city-owned land that would be sold to the developer for its market value ($10 per square foot)
  • Option to Sell 4.15 acres of city-owned land to be sold at market value ($10 per square foot)
  • Parking agreement(s)
 
The term of the proposed GPLET agreement is for 25 years.  Since this property is located outside the designated Central Business District for the city and is not in a redevelopment area, it could not qualify for an eight-year abatement.  However, there are certain exemptions that exist in A.R.S. 42-6208 with regard to facilities that are used primarily for athletic, recreational, entertainment, artistic, cultural or convention activities and related concessions.  For the Crystal Lagoons project, the analysis includes restaurants as well as themed retail (also concessions), theaters, amusement and gaming areas, the lagoon, and additional experiential attractions.  All hotels, office space and parking structures in the Crystal Lagoons project have been excluded from the GPLET.  Additional retail and restaurants within the project are excluded from the GPLET when there are no associated amusements.
 
During the 25-year term, the prime lessee would normally pay lease excise tax instead of real property tax, although the recreation, entertainment and related retail and restaurant concessions of the development are assumed to be exempt from lease excise taxes.
 
The city obtained a third-party fiscal economic impact analysis of the project from Applied Economics to evaluate the net benefit accounting for the proposed city offerings noted above, and based on the comprehensive study, the public benefits anticipated to accrue to the city from the development far exceed the city’s investment.
 
ESTIMATED NET CITY REVENUES ASSOCIATED WITH THIS PROJECT INCLUDING GPLET AND FEE WAIVER
  • First year sales tax (including construction) is estimated at $5.9M
  • Over the 25-year period, total estimated revenue is $240.5 Million. Below is a breakdown of the estimated revenues:
    • Estimated Sales Tax Revenue: $188.2M
    • Estimated Property Tax Revenue: $13.4M
    • Estimated Bed Tax Revenue: $38.8
  • Average annual revenues over 25-year period estimated at $9.6M
 
The fiscal economic impact study also analyzed alternative development assumptions to compare the estimated benefit to the community. The alternatives used for comparison included:
 
  • 500 high quality multi-family units and a 200,000 square foot retail supercenter.  There is a high demand for multi-family development in the metro area currently.  The site also has good accessibility to the Loop 101 and could support big box retail. 
 
  • 500 multi-family units plus 266,000 square feet of spec office.  While this amount of office space is not supportable on this site in the current market, it represents twice the amount of office space in the Crystal Lagoons project in order to create a more extensive example of how office without retail and hotels would compare.
 
As noted in the study, both of these alternatives yielded significantly lower revenues to the city than the Crystal Lagoons project due to the lesser intensity of development. 
 
The property is currently zoned appropriately for the proposed project uses. Additionally, the proposed mix of uses for the project also supports multiple economic development goals outlined in the General Plan including:
  • Maximizing opportunities for commercial development on sites with freeway access
  • Supporting office development in mixed-use settings in growth areas
  • Monitoring the Sports and Entertainment District for opportunities to remain fresh and relevant to the current economic potential
  • Supporting and fostering new tourist-based attraction development in the Sports and Entertainment District
Community Benefit/Public Involvement
As noted in the Analysis section, the public benefits anticipated to accrue to the city from the development is an estimated $240.5 million over the 25-year period of the lease.
 
Additional community benefits from this development include:
  • Serves as a significant revenue generator for the city and all other taxing entities.
  • Actively supports one-of-a-kind destination-based experiential venues that enhance our world class Sports and Entertainment District
  • Supports and fosters new tourist-based attraction development in the Sports and Entertainment District
  • Advances the city vision of our premiere Sports and Entertainment District as a preferred host for mega events
  • Leverages growth in our experiential retail and entertainment year-round with a peak summer season
  • Creates estimated 1,800 net new jobs
 
Based on the fiscal economic impact study, the state, county and school districts with which this project is located within, will also realize significant net revenues over the 25-year period.

Fiscal Impact
Fiscal Year: FY20-2021
Fiscal Year Amount Requested: N/A
Budgeted Y/N?: N/A
Account: N/A
Transfer Required? Y/N: N/A
If Yes, what account will be used?:
Budget and Financial Impacts:
ESTIMATED NET CITY REVENUES ASSOCIATED WITH THIS PROJECT INCLUDING GPLET AND FEE WAIVER
  • First year sales tax (including construction) is estimated at $5.9M
  • Over 25-year period, total estimated revenue to the city is $240.5 Million:
    • Total Sales Tax Revenue: $188.2M
    • Total Property Tax Revenue: $13.4M
    • Total Bed Tax Revenue: $38.8
  • Average annual revenues over 25-year period estimated at $9.6M
 
DEVELOPMENT AGREEMENT:
There is no direct expense to the city for the fee waiver outlined in section 5.6 of the Agreement. This Development Agreement would result in the city foregoing $1,000,000 of development fees which includes the waiving of city fees related to the initial design and construction of, or the issuance of a certificate of occupancy for the project, including, any plan review or permit fees. This fee waiver does not include development impact fees. As part of this agreement, the Company agrees it will pay all development impact fees related to the Project, subject to the terms of this Agreement.
 
GOVERNMENT PROPERTY IMPROVEMENT LEASE:
As part of the GPLET agreement, Crystal Lagoons will pay an annual rental payment of $120 to the city. Additionally, the city will acquire the project from Crystal Lagoons, in the amount of $10.00, plus applicable closing costs.
 
After the termination of the GPLET Lease, Crystal Lagoons will have the option to purchase the project from the city at the original purchase price. The sale, if any, of the property and any improvements will be governed by the Glendale Charter and City Code in effect on the date of this Agreement, including but not limited to Section 2-166 and Section 2-167.
 
Attachments
R20-112
Economic Impact Study
Agreement
Legal Description
Site Plan


    

Level double AA conformance,
                W3C WAI Web Content Accessibility Guidelines 2.0

AgendaQuick ©2005 - 2021 Destiny Software Inc. All Rights Reserved.