Discussion and possible action on any and all matters regarding the Development Agreement between the City of San Luis, Arizona, and Green San Luis, L.L.C., an Arizona Limited Liability Company.  (Jenny Torres, Economic Development Manager)

The San Luis City Council adopted Resolution No. 1171 approving a Memorandum of Understanding (MOU) between the City of San Luis and San Luis Commercial Holdings, L.L.C., to develop a brand hotel and restaurant, a franchise convenience store/gas station, and other transaction privilege tax-generating businesses.  The MOU was signed on December 14, 2016, and entered into a development agreement on June 7, 2017.  An amendment was approved by the City Council on March 11, 2020, extending the development to December 31, 2022.  San Luis Commercial Holdings, L.L.C., advised staff that the L.L.C. will be dissolved, and Green San Luis, L.L.C. is interested in proceeding with the development of this commercial project.  Mr. Sharad Kadakia, founding principal at Green, a privately held real estate development and hotel company, has been in business for 31 years.  The company develops and operates hotels in Arizona, California, and Utah.  Mr. Ross Wait, one of the partners from San Luis Commercial Holdings, L.L.C., will be a partner in the San Luis Green, L.L.C.  The project was revised to complete the hotel and gas station development in Phase I.  Phase I will include the development of a hotel, convenient store and gas station as shown on the conceptual plan and will be completed by December 31, 2023. 

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 180%.  The breakdown of the city benefits includes $2,102,600.00 of transaction privilege taxes, $515,000.00 in utility system revenue and $677,000.00 in payroll revenue, for total revenue of $3,294,600.00.  Under Article 9, Section 7 of the Arizona Constitution, it recognizes that if the public treasury receives benefits that meet or exceed the cost of the public treasury, the transaction does not violate the provision of law.  The city will participate by reimbursing the developer for the cost of public infrastructure at the cost not to exceed $300,000.00.  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 fifteen-million-dollar ($15,000,000.00) 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 in regard 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.