Consideration of a Development Agreement for Prologis Commerce Park located at the northeast corner of Yuma Road and Bullard Avenue.
 

ADOPT RESOLUTION NO. 2022-2247 APPROVING THE DEVELOPMENT AGREEMENT FOR PROLOGIS COMMERCE PARK; PROVIDING AUTHORIZATION AND DIRECTION TO TAKE ACTIONS AND EXECUTE DOCUMENTS NECESSARY TO CARRY OUT THE INTENT OF THE RESOLUTION AND DEVELOPMENT AGREEMENT AND PROVIDING FOR AN EFFECTIVE DATE and AUTHORIZING NECESSARY BUDGET AMENDMENTS. (Steve Scinto, Deputy Director of Development Engineering)
 

The Development Agreement creates financial obligations for the City as outlined below:

The city is to reimburse Prologis for a portion of the costs incurred in the installation of the Bullard Avenue Enhanced Landscaping Improvements.  The amount of the reimbursement is to be equal to fifty percent (50%) of the difference between the actual costs incurred for the construction of the Bullard Avenue Enhanced Landscaping Improvements and the Bullard Avenue Standard Landscaping Estimate (0.5 × (Actual cost of constructing Bullard Avenue Enhanced Landscaping Improvements – Bullard Avenue Standard Landscaping Estimate) in an amount not to exceed $164,500.  The source of the reimbursement is limited to plan review and permit fees collected from development activities within the Property and is included in the FY2023 Capital Improvement Project (CIP) budget (Project #40006).

Reimbursement for Traffic Signal at Bullard Avenue and Harrison. The city is to reimburse Prologis for 75% of the actual cost of the traffic signal infrastructure improvements up to a maximum of $504,365. The sole source of the funding for this reimbursement is in-lieu payments the city has collected from owners of the property adjacent to the three corners of the traffic signal not adjacent to the Property.
 
Reimbursement for Traffic Signal at Yuma Road and 143rd Avenue Alignment.  The city is to reimburse Prologis for 50% of the actual cost of the traffic signal infrastructure improvements.  The source of the funding for this reimbursement are in-lieu payments collected from the adjacent property owners, plan review fees, and permit fees collected for development activities within the Property. As fees to be reimbursed were collected in prior fiscal years a budget amendment will be necessary to process the reimbursement whish is estimated at approximately $350,000.  The actual reimbursement will be based upon verified actual costs.
 
The Development Agreement also calls for the City to purchase an approximate 125’ by 125’ parcel of land at the northeast corner of Bullard and Yuma.  The cost will be established by an appraisal and the acquisition is likely to be completed within the next fiscal year. The purchase price is to be the fair market value of the Property determined by a third-party appraiser agreed upon by the city and Prologis.  The costs of the appraisal will be split between the city and Prologis.  Funding for the purchase of the property and appraisal is included in the FY2023 Capital Improvement Project (CIP) budget (Project #41003).
 

Prologis Commerce Park 1 QOZB, LLC, a Delaware limited liability company, and Prologis Commerce Park 2 QOZB, LLC, a Delaware limited liability company (collectively “Prologis”) own approximately 112 acres of land generally located at the northeast corner of Yuma Road and Bullard Avenue commonly known as Prologis Commerce Park at Goodyear (the “Property”).  The Property was conditionally rezoned by Ordinance 2018-1414, which was approved by the Mayor and Council of the City of Goodyear on December 17, 2018.  The Approved Zoning included certain obligations related to the development of the property, including obligations for the installation of enhanced landscaping improvements consistent with Bullard Avenue Corridor Design Treatment Strategies November 2018 (the “Bullard Avenue Enhanced Landscaping Improvements”), the conveyance of land needed for the entry features that the city will be installing on the northeast corner of Yuma Road and Bullard Avenue (the “Yuma Corner Property”), and the payment of a proportionate share of the cost of various intersection traffic signals or the construction of certain traffic signals if warranted. Prologis has installed a portion of the Bullard Avenue Enhanced Landscaping Improvements it is required to install and has fully completed certain of the traffic signals and is close to fully completing other traffic signals. 

 

Because the Owner is responsible only for a proportionate share of the costs of certain of the traffic signals, Prologis is entitled to reimbursements for a portion of the costs of the traffic signals installed.  Similarly, the city has been reimbursing property owners installing the enhanced landscaping a portion of the additional costs incurred for the installation of the enhancements (i.e. the landscaping improvements that are over and above what would otherwise have been installed). The proposed development agreement identifies Prologis’s obligations regarding the construction of certain infrastructure improvements required, provides terms for the reimbursement of a portion of the costs incurred in constructing certain infrastructure improvements, and terms for the conveyance of the Yuma Corner Property.  In addition, the development agreement includes a commitment by Prologis to dedicate an easement to APS for the construction of power lines, 69kV or larger. The power lines are needed to support the industrial development that is being developed in the area, and the corridor supported by city staff and APS requires the location of power lines on the Property.
 
Although not included as a term in the development agreement, Prologis has conditioned the development agreement on the city’s support for the inclusion of the Prologis 303 Business Park, an approximate 113-acre business park generally located at the northwest corner of North Cotton Lane and West Minnezona Avenue, as a magnet site within the FTZ No. 277 Western Maricopa County (commonly known as the Greater Maricopa Foreign Trade Zone or GMFTZ). The inclusion of this site is consistent with economic development policies within the City and Resolution 2022-2249 supporting the inclusion of this property as a magnet site within the GMFTZ is being presented by separate action. 

The following is a high-level summary of the major deal points in the development agreement:
 

• Prologis is required to install the Bullard Avenue Enhanced Landscaping Improvements.  The Bullard Avenue Enhanced Landscaping Improvements that have not been completed have to be completed and accepted by the City by June 30, 2022. 
  • The city will issue temporary certificates of occupancy for structures within the Property before these improvements are completed and accepted provided the city is provided financial assurances ensuring the completion of the improvements.  No permanent certificates of occupancy shall be issued for any structure on the Property until these improvements are completed and accepted by the city.

 

• Subject to the submittal of required documentation, the city is to reimburse Prologis for a portion of the costs incurred in the installation of the Bullard Avenue Enhanced Landscaping Improvements.  The amount of the reimbursement is to be equal to fifty percent (50%) of the difference between the actual costs incurred for the construction of the Bullard Avenue Enhanced Landscaping Improvements and the Bullard Avenue Standard Landscaping Estimate (0.5 × (Actual cost of constructing Bullard Avenue Enhanced Landscaping Improvements – Bullard Avenue Standard Landscaping Estimate) in an amount not to exceed $164,500.  The source of the reimbursement is limited to plan review and permit fees collected from development activities within the Property. 

 

• Traffic Signal obligations.  Prologis was required to construct traffic signals at various intersections adjacent to the Property.  The development agreement identifies Prologis’s outstanding obligations and the city’s reimbursement obligations vis-à-vis these traffic signals, which are briefly summarized below.
  • Traffic Signal at Bullard Avenue and Harrison.  Prologis is required to complete the two-year warranty period and convey to the City, in fee and lien-free, the portion of the Property upon which the traffic signal infrastructure improvements have been constructed (the “Bullard/Harrison Traffic Signal ROW").  No temporary or permanent certificates of occupancy for any structures on the Property are to be issued until the Bullard/Harrison Traffic Signal ROW has been conveyed to the City. 
  • Reimbursement for Traffic Signal at Bullard Avenue and Harrison. Subject to the submittal of required documentation and the conveyance of the Bullard/Harrison Traffic Signal ROW to the city, the city is to reimburse Prologis for 75% of the actual cost of the traffic signal infrastructure improvements up to a maximum of $504,365. The sole source of the funding for this reimbursement is in-lieu payments the city has collected from owners of property adjacent to the three corners of the traffic signal not adjacent to the Property.
  • Traffic Signal at Yuma Road and 143rd Avenue Alignment.  Prologis is required to design and construct all traffic signal infrastructure improvements needed for a full traffic signal at the intersection of Yuma Road and the 143rd alignment.  No temporary or permanent certificates of occupancy for any structures on the Property are to be issued until the signal is completed and accepted by the City Engineer, subject to the completion of the two-year warranty period.
  • Reimbursement for Traffic Signal at Yuma Road and 143rd Avenue Alignment.  Following the completion of the full traffic signal at the intersection of the Yuma Road and 143rd Avenue alignment and subject to submittal of required documentation, the city is to reimburse Prologis for 50% of the actual cost of the traffic signal infrastructure improvements.  The source of the funding for this reimbursement are the in-lieu payments collected from owners of property adjacent to the three corners of the traffic signal not adjacent to the Property, plan review fees, and permit fees collected for development activities within the Property.
  • Traffic Signal at Grant and Bullard Avenue.  Prologis is required to complete the two-year warranty period and convey to the City, in fee and lien-free, the portion of the Property upon which the traffic signal infrastructure improvements have been constructed (the “Bullard/Grant Traffic Signal ROW").  No temporary or permanent certificates of occupancy for any structures on the Property are to be issued until the Bullard/Grant Traffic Signal ROW has been conveyed to the City.  (No reimbursements are owed for this traffic signal because the need for the signal is driven solely by the development of the Property.)

 

• At the request of Arizona Public Service (APS), Prologis will provide APS, at no cost, an electrical utility easement within the Property along the length of the W. Harrison Street alignment from 143rd Avenue to Bullard Avenue. The easement is to be per Arizona Public Service (APS) standards for a 69KV and/or greater above-ground electrical utility line and shall be a maximum of one hundred and twenty feet wide and in form and content reasonably acceptable to the Owner and APS.

 

• Prologis is to sell the Yuma Corner Property to the City lien-free and free of all encumbrances except for those encumbrances that do not interfere with the construction, maintenance, repair, replacement, and/or removal of the Bullard Avenue Enhanced Landscaping Improvements and or the monument sign the City plans on constructing within the Yuma Corner Property subject to the following terms.
  • City has to submit a written request to purchase the Yuma Corner Property at the latter of 9 months from the effective date of the development agreement or ten business days after the Yuma Corner Improvements Completion Date. 
  • The purchase price is to be the fair market value of the Property determined by a third-party appraiser agreed upon by the city and Prologis.  The appraisal shall not include the value for the Bullard Avenue Enhanced Landscaping but will be appraised as if it is undeveloped.  The costs of the appraisal will be split between the city and Prologis. 
  • If the city decides to dispose of the Yuma Corner Property, the owner of the property adjacent to the Yuma Corner Property on the east side is to have the right to purchase it for the price the city paid for the Yuma Corner Property.

Staff supports the Prologis Commerce Park Development Agreement and recommends its approval.