Discussion and possible action on any and all matters regarding Resolution No. 1193.  A resolution of the Mayor and City Council of the City of San Luis, Arizona approving a Development Agreement with San Luis Commercial Holdings, L.L.C., an Arizona limited liability company. (Jenny Torres, Community Development Director)

The City of San Luis staff negotiated a development agreement with 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 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 include $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 two acres for a retention basin at the fair market value and reimburse the developer for the cost of public infrastructure at a combined cost with the retention basin not to exceed $500,000.00 to the City. The development agreement includes a sales tax rebate.  The developer will receive 50% of the City's 4% transaction privilege taxes as generated from businesses established on the project site.  The amount of the rebate is capped at a maximum of $1,822,680.00 over a period of 15 years.

The conditions to receive the transaction privilege taxes include complete construction improvements within 18 months from the commencement of the hotel project, operation and lease of proposed projects (hotel, restaurant, convenience store, gas station, and other commercial enterprises) and disclosing of employment figures to the city to be sure the projects are hitting the employment marks in the agreement.

The proposed project consists of a $15 million 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 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.

The final development agreement is in the final negotiation stage and so at time of posting this agenda item, the draft rather than the final version is attached.  The final agreement will be provided by the time of the Agenda Item or before.

Staff recommends the approval of the proposed resolution which include adoption  and its attached and incorporated development agreement.