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ITEM 28
City Council Memorandum Public Works & Utilities Memo No.
CP22-115
Date:
January 24, 2022
To:
Mayor and Council
Thru:
Joshua H. Wright, City Manager
Andy Bass, Deputy City Manager
John Knudson, Public Works and Utilities Director
Andrew Goh, Capital Projects Manager
From:
Gina Ishida-Raybourn, Principal Engineer
Subject:
Resolution No. 5545, Authorizing Project Agreement No. 5 Under the Public Infrastructure Master Agreement Dated May 24, 2019, Between the City of Chandler and Intel Corporation
Proposed Motion:
Move City Council approve Resolution No. 5545, authorizing Project Agreement No. 5 under the Public Infrastructure Master Agreement dated May 24, 2019, between the City of Chandler and Intel Corporation, a Delaware Corporation, for the construction of improvements to the City's Airport Water Reclamation and Ocotillo Water Reclamation facilities needed to serve Intel’s campus at 4500 S. Dobson Road.
Background:
On October 14, 2021, City Council approved a Development Agreement with Intel Corporation for the financing and construction of public infrastructure needed to serve additional Intel potable water. The Development Agreement identified the design, construction, and financing of a transmission line capable of delivering up to 11 million gallons per day (MGD) of reclaimed water from the Airport Water Reclamation Facility to the Ocotillo Water Reclamation Facility and Intel’s Blended Reuse Water Tank, plus any other infrastructure required to enable the City to deliver a total annual average of five MGD of reclaimed water to Intel, including any volumes required for peaking.
Arizona Revised Statute (A.R.S.) § 42-5032.02 provides for distribution of revenues for City infrastructure improvements related to manufacturing facilities. On May 23, 2019, City Council approved a Public Infrastructure Master Agreement between the City and Intel under A.R.S. § 42-5032.02 for funding and construction of public improvements necessary to support Intel’s capital investment at its Ocotillo Plant located at 4500 South Dobson Road in Chandler. The Master Agreement contemplates that Intel and the City will enter into specific project agreements for funding and construction of public improvements that will be reimbursed through a combination of transaction privilege tax revenues set aside under A.R.S. § 42-5032.02 (80%) and Intel private funds (20%).
This project will be funded by the Arizona Department of Revenue (ADOR), Intel, and the City of Chandler. The City will finance 20% of the cost of any remainder of the City’s maximum contribution (as defined in the Development Agreement) and will seek reimbursement of the remaining 80% of the cost from ADOR. Intel will reimburse the City for any costs not reimbursed by ADOR that exceed the City’s maximum contribution. Related contracts for infrastructure design and construction will be brought forward for City Council consideration at subsequent meetings.
Financial Implications:
This item has no direct financial implications, as the contracts related to the public infrastructure improvements will be managed by separate agreements under CIP Project No. WW2206. The separate agreements will manage the public infrastructure design and construction costs of $35,000,000, of which Intel will pay $28,000,000. Intel’s share will be Public Infrastructure Improvement Project No. 5 under the terms of the Public Infrastructure Master Agreement between Intel and the City, dated May 24, 2019, which allows the City to seek 80% (up to $22,400,000) reimbursement of Intel’s share from the Arizona Department of Revenue and 20% (up to $5,600,000) directly from Intel.
Attachments
Resolution No. 5545
Agreement
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