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AGENDA ITEM REVIEW FORM |
6.B.
Regular City Council Meeting
- Meeting Date:
- 02/26/2020
- Department Head:
- Jenny Torres
- Submitted By:
- Ivan Gutierrez, Economic Development Assistant, Administration, Economic Development
Action Requested:
Motion
ITEM:
Discussion and possible action on any and all matters regarding the amendment to the Memorandum of Understanding between the City of San Luis, Arizona and San Luis Commercial Holdings, L.L.C., an Arizona limited liability company. (Jenny Torres, Economic Development Manager)
SUMMARY:
The San Luis City Council adopted Resolution No. 1171 approving a memorandum of understanding between the City of San Luis Commercial Holdings, L.L.C. to develop a brand hotel and restaurant, a franchise convenient store and gas station, and other transaction privilege tax-generating businesses on the project site to be located at the northwest corner of the intersection of Highway 95 and County 22nd Street within the San Luis city limits. The memorandum of understanding was signed on December 14, 2016. The agreement was conditioned upon the development of the opening of the hotel on or before January 1, 2020.
San Luis Commercial Holdings, LLC, have invested significant funding in proceeding with acquiring the financing to develop the project. The developers requested an extension of the proposed development to January 1, 2020.
The development agreement complies with A.R.S §95-500.11 where actions taken by the city pursuant to this agreement are for economic development purposes and will assist in the creation and retention of jobs. The economic impact analysis findings demonstrate that the total projected revenues exceed the anticipated tax credit by over 196%. The breakdown of the city benefits includes $2,170,900.00 of transaction privilege taxes, $730,000.00 in utility system revenue and $676,900.00 in payroll revenue, for total revenue of $3,578,700.00. The city will participate by purchasing from the developer two (2) acres of retention basin at the fair market value and reimburse the developer for the cost of public infrastructure at the cost not to exceed $500,000.00. The development agreement includes a sales tax rebate where the developer will receive 50% of the city's 4% transaction privilege taxes as generated from businesses established on the project site in the amount not to exceed $1,822,680.00 in a period of 15 years. The condition to receive the transaction privilege taxes includes complete construction of improvements within 18 months from the commencement of the hotel project, operation and lease of proposed projects, and disclosing of employment figures to the city.
The proposed project consists of a $15 million dollar investment that will enhance the economic welfare of the residents, increase the tax revenues to the city, provide job opportunities for San Luis residents and will trigger other development in the area. The city has taken the necessary steps to comply with Arizona law with regards to the power granted by A.R.S. §95-500.11 and the limitations imposed by Article 9, Section 5 of the Arizona Constitution, known as the anti-gift clause.
San Luis Commercial Holdings, LLC, have invested significant funding in proceeding with acquiring the financing to develop the project. The developers requested an extension of the proposed development to January 1, 2020.
The development agreement complies with A.R.S §95-500.11 where actions taken by the city pursuant to this agreement are for economic development purposes and will assist in the creation and retention of jobs. The economic impact analysis findings demonstrate that the total projected revenues exceed the anticipated tax credit by over 196%. The breakdown of the city benefits includes $2,170,900.00 of transaction privilege taxes, $730,000.00 in utility system revenue and $676,900.00 in payroll revenue, for total revenue of $3,578,700.00. The city will participate by purchasing from the developer two (2) acres of retention basin at the fair market value and reimburse the developer for the cost of public infrastructure at the cost not to exceed $500,000.00. The development agreement includes a sales tax rebate where the developer will receive 50% of the city's 4% transaction privilege taxes as generated from businesses established on the project site in the amount not to exceed $1,822,680.00 in a period of 15 years. The condition to receive the transaction privilege taxes includes complete construction of improvements within 18 months from the commencement of the hotel project, operation and lease of proposed projects, and disclosing of employment figures to the city.
The proposed project consists of a $15 million dollar investment that will enhance the economic welfare of the residents, increase the tax revenues to the city, provide job opportunities for San Luis residents and will trigger other development in the area. The city has taken the necessary steps to comply with Arizona law with regards to the power granted by A.R.S. §95-500.11 and the limitations imposed by Article 9, Section 5 of the Arizona Constitution, known as the anti-gift clause.
RECOMMENDATION / SUGGESTED MOTION:
I MOVE TO APPROVE THE EXTENSION OF THE MEMORANDUM OF UNDERSTANDING BETWEEN THE CITY OF SAN LUIS AND SAN LUIS COMMERCIAL HOLDINGS, L.L.C., IN THE AMOUNT OF $500,000.00 AS PRESENTED.
Fiscal Impact
- IS THERE FISCAL IMPACT ASSOCIATED WITH THIS ITEM:
- Yes
- CITY/STATE/FEDERAL FUNDS:
- City
- TOTAL:
- $500,000.00
- BUDGETED AMOUNT:
- $500,000.00
- AVAILABLE AMOUNT TO TRANSFER:
- N/A
- ACCT NAME & GL#/REMAINING BALANCE BEFORE PURCHASE:
- TBD
FISCAL IMPACT STATEMENT (IF THIS IS A BUDGET TRANSFER, YOU MUST ATTACH THE BUDGET ADJUSTMENT FORM):
This cost is for the City to obtain the City's own land for infrastructure and the infrastructure itself. Specifically, under the MOU the purchase for the City would include two (2) acres of land for City infrastructure( including closing costs) and the costs of infrastructure in the public right of way. These costs are capped under the MOU at $500,000.00.