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ITEM 7
City Council Memorandum Economic Development Memo No.
ED22-007
Date:
October 14, 2021
To:
Mayor and Council
Thru:
Joshua H. Wright, City Manager
Debra Stapleton, Assistant City Manager
From:
Micah Miranda, Economic Development Director
Subject:
Resolution No. 5528, authorizing a Development Agreement between the City of Chandler and Intel Corporation
Proposed Motion:
Move City Council pass and adopt Resolution No. 5528, authorizing a Development Agreement between the City of Chandler and Intel Corporation, a Delaware corporation, for the financing and construction of public infrastructure needed to serve Intel’s expansion of its manufacturing facility located at 4500 S. Dobson Road.
Background:
Intel is proposing to invest at least $17 billion to further expand development of its Ocotillo Campus on Price Road by constructing two new manufacturing facilities, Fab 52 and Fab 62, along with related support infrastructure. This project would represent Phase V of development at the campus. Prior phases included construction of Fab 12 (Phase I), Fab 22 (Phase II), Fab 32 (Phase II), and Fab 42.1 (Phase IV). Intel and the City previously entered into separate development agreements for these projects. In addition, Intel and the City are parties to an active Public Infrastructure Master Agreement (dated May 24, 2019) and Reclaimed Water Agreement (dated February 1, 2021), which were entered into to support further development at the campus.
Discussion:
Intel will require additional water supplies, wastewater treatment, and public infrastructure improvements from the City for Phase V. Under the proposed development agreement, the City would make a maximum contribution of $20 million toward these needs. This financial contribution would be in exchange for the significant, measurable economic value to be provided by the project through increased tax revenues, enhanced economic development, and the creation of up to 3,000 new, high-paying jobs by Intel.
The City’s maximum contribution of $20 million would support the following requirements, listed in order of priority:
Up to $12.1 million to acquire 1.1 million gallons per day (MGD) of additional water rights to enable the City to serve an additional 3.1 MGD of potable water to Intel. The City would bear any excess cost above $12.1 million to acquire the water rights and that excess portion would not count toward the City’s maximum contribution.
Design, construction, and financing of public infrastructure improvements required to deliver an additional 3.1 MGD of potable water to Intel. The City would finance 20% of the cost up to any remainder of the City’s maximum contribution and would seek reimbursement of the remaining 80% of the cost from the Arizona Department of Revenue under the Public Infrastructure Master Agreement. Intel would reimburse the City for any costs not reimbursed by the Arizona Department of Revenue that exceed the City’s maximum contribution.
Design, construction, and financing of a transmission line capable of delivering up to 11 MGD of reclaimed water from the City’s Airport Water Reclamation Facility to the City’s 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. This project is included in the Reclaimed Water Agreement and would be covered under the Public Infrastructure Master Agreement. The City would finance 20% of the cost up to any remainder of the City’s maximum contribution and would seek reimbursement of the remaining 80% of the cost from the Arizona Department of Revenue under the Public Infrastructure Master Agreement. Intel would reimburse the City for any costs not reimbursed by the Arizona Department of Revenue that exceed the City’s maximum contribution.
The City would commit any remaining portion of the City’s maximum contribution to public infrastructure needed to support Phase V. The City and Intel would confer regarding the selection of public infrastructure projects. The City would finance 20% of the cost up to any remainder of the City’s maximum contribution and would seek reimbursement of the remaining 80% of the cost from the Arizona Department of Revenue under the Public Infrastructure Master Agreement. Intel would reimburse the City for any costs not reimbursed by the Arizona Department of Revenue that exceed the City’s maximum contribution.
In addition to the maximum contribution of $20 million, the City would agree to provide up to $10 million for public improvements to the intersection of Alma School and Ocotillo Roads. Intel will submit a Traffic Impact Study that details the expected traffic impacts of Project V for review by the City Traffic Engineer.
Financial Implications:
The maximum $20 million in funding will be achieved through use of contingency resources in the City's water and wastewater enterprise funds. The related Streets cost would be funded through General Fund Contingency. Transfers from contingency to the related projects will be requested as contracts come forward to Council.
Attachments
Resolution No. 5528
Development Agreement - Intel
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