| ITEM #: 2. DATE: 12/06/2021 AI #:571 |
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CITY COUNCIL ACTION REPORT
| SUBJECT: | APPROVE THIRD AMENDMENT TO DEVELOPMENT AGREEMENT (Amending the 2006 Development Agreement between the City of Goodyear and Westcor/Goodyear, L.L.C.) |
| STAFF PRESENTER(S): | Roric Massey, City Attorney |
SUMMARY
Approval of this Third Amendment document will formally recognize Globe Land Investors, LLC as successor to the original Development Agreement and will extend the deadline to construct Phase II Improvements for the site for one year, until December 31, 2022.
Recommendation
ADOPT RESOLUTION NO. 2021-2195 APPROVING THE THIRD AMENDMENT TO THE DEVELOPMENT AGREEMENT, PROVIDING AUTHORIZATION AND DIRECTION FOR EXECUTION AND PROVIDING AN EFFECTIVE DATE. (Roric Massey, City Attorney)
FISCAL IMPACT
This Amendment extends certain sales tax reimbursement incentives and pre-paid fees that the Developer may be eligible for should certain improvements be constructed within specified time frames totaling approximately $12 million.
This Amendment also reduces the potential Improvement District reimbursement by locking in a lower tier of repayment realizing a potential savings of approximately $30 million over the course of the Agreement.
This Amendment also reduces the potential Improvement District reimbursement by locking in a lower tier of repayment realizing a potential savings of approximately $30 million over the course of the Agreement.
BACKGROUND AND PREVIOUS ACTIONS
The City of Goodyear and Westcor/Goodyear LLC(the “Developer”), first entered into the Development Agreement effective September 1, 2006 to provide for the planning and development of certain regional commercial and mixed-use development generally located northwest of McDowell Road and Bullard Avenue.
The Developer and the City formed the McDowell Road Corridor Improvement District and the Developer then constructed approximately $43 million in roadway, infrastructure, and park improvements to Bullard Wash Park to support the regional center and surrounding commercial development. The Developer then constructed the Market at Estrella Falls power center generally located at the intersection of McDowell Road and Pebblecreek Parkway.
The Great Recession delayed the construction of the planned regional mall and on December 14, 2009, the City and Macerich/Westcor entered into the First Amendment to the Development Agreement to extend the time frames to meet certain milestones in the project development due to ongoing economic conditions.
The Second Amendment to the Development Agreement was entered into by the parties on November 17, 2014, to redefine project milestones and provide for Phase I and Phase II Improvements for the project. The developer subsequently constructed the existing Harkins Theatre and developed a restaurant pad site for the Cheddar’s Restaurant. The Second Amendment required that the Phase II improvements be completed no later than December 31, 2021 in order for certain incentives to remain in place.
In 2021, Globe Land Investors, LLC (“Globe”), purchased the approximately 150-acre regional center site from Macerich and assumed all rights and obligations under the original Development Agreement and its Amendments.
The Developer and the City formed the McDowell Road Corridor Improvement District and the Developer then constructed approximately $43 million in roadway, infrastructure, and park improvements to Bullard Wash Park to support the regional center and surrounding commercial development. The Developer then constructed the Market at Estrella Falls power center generally located at the intersection of McDowell Road and Pebblecreek Parkway.
The Great Recession delayed the construction of the planned regional mall and on December 14, 2009, the City and Macerich/Westcor entered into the First Amendment to the Development Agreement to extend the time frames to meet certain milestones in the project development due to ongoing economic conditions.
The Second Amendment to the Development Agreement was entered into by the parties on November 17, 2014, to redefine project milestones and provide for Phase I and Phase II Improvements for the project. The developer subsequently constructed the existing Harkins Theatre and developed a restaurant pad site for the Cheddar’s Restaurant. The Second Amendment required that the Phase II improvements be completed no later than December 31, 2021 in order for certain incentives to remain in place.
In 2021, Globe Land Investors, LLC (“Globe”), purchased the approximately 150-acre regional center site from Macerich and assumed all rights and obligations under the original Development Agreement and its Amendments.
STAFF ANALYSIS
Globe is currently in the process of re-envisioning the development of the 150-acre site and has engaged a development partner in that process. Globe and the City have collaboratively begun working on this project and anticipate it will continue into 2022 and likely involve re-zoning the site, and a significantly restructured development agreement will need to be negotiated.
This proposed Third Amendment to the Development Agreement will extend the deadline to construct Phase II improvements for one year until December 31, 2022, and will keep the associated incentives and pre-paid fees in place until that time to allow the parties to collaborate on a new vision for development of a commercial and mixed- use development on the site.
The Third Amendment also formally recognizes that Globe Land Investors has assumed all rights and obligations under the Development Agreement and has replaced Macerich/Westcor as the master developer of the site.
Under the original Development Agreement, there was a tiered level of reimbursement to the Developer related to Improvement District costs expended for infrastructure improvements. This Amendment will lock in the reimbursement at the lower City Improvement Payment obligation under the terms of the original Development Agreement, rather than a higher reimbursement rate the Developer would have been eligible for, had they met their Phase II construction obligations by December 31, 2021.
This proposed Third Amendment to the Development Agreement will extend the deadline to construct Phase II improvements for one year until December 31, 2022, and will keep the associated incentives and pre-paid fees in place until that time to allow the parties to collaborate on a new vision for development of a commercial and mixed- use development on the site.
The Third Amendment also formally recognizes that Globe Land Investors has assumed all rights and obligations under the Development Agreement and has replaced Macerich/Westcor as the master developer of the site.
Under the original Development Agreement, there was a tiered level of reimbursement to the Developer related to Improvement District costs expended for infrastructure improvements. This Amendment will lock in the reimbursement at the lower City Improvement Payment obligation under the terms of the original Development Agreement, rather than a higher reimbursement rate the Developer would have been eligible for, had they met their Phase II construction obligations by December 31, 2021.