Discussion and possible action on any and all matters regarding the First Amendment to the Development Agreement between the City of San Luis, Arizona and San Luis Commercial Holdings, L.L.C., an Arizona limited liability company. ITEM CONTINUED FROM REGULAR COUNCIL MEETING HELD FEBRUARY 26, 2020.  (Jenny Torres, Economic Development Manager)

The San Luis City Council adopted Resolution No. 1171 approving a Memorandum of Understanding 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 project site will be located at the northwest corner of the intersection of Highway 95 and County 22^nd 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.  On June 7, 2017, the parties entered into a Development Agreement.  This item amends the Development Agreement to extend the time for completion of the project. 

San Luis Commercial Holdings, L.L.C., has invested significant funding in proceeding with acquiring the financing to develop the project. The developers requested an extension of the proposed development to December 31, 2022. 

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 214%. The breakdown of the city benefits includes $2,328,200.00 of transaction privilege taxes, $750,000.00 in utility system revenue and $824,600.00 in payroll revenue, for total revenue of $3,902,800.00.  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 fifteen-million-dollar ($15,000,000) 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.