The City of Chandler recognizes the importance of redevelopment to the community’s long-term economic vitality. It has been incorporated into city visioning documents including the Chandler General Plan and City Council’s recently adopted 2023-2025 Strategic Framework. In addition, the city has proactively established policies and programs to encourage desirable redevelopment activities. These include the adoption of the Chandler Infill Incentive Plan and designation of the Chandler Infill Incentive District, both of which occurred in 2009.
Staff is now seeking City Council approval to amend the Chandler Infill Incentive District and Chandler Infill Incentive Plan to better support future redevelopment projects. These items complement each other and are therefore packaged together in this request.
The Chandler Infill Incentive District was designated under Arizona Revised Statutes (A.R.S.) § 9-499.10. This statute authorizes municipalities to establish an infill incentive district and adopt an infill incentive plan to encourage redevelopment in the district. For an area to be designated as an infill incentive district, it must meet certain criteria demonstrating a need for redevelopment. Specifically, the area must meet at least three of the following requirements:
- There is a large number of vacant older or dilapidated buildings or structures;
- There is a large number of vacant or underused parcels of property, obsolete or inappropriate lot or parcel sizes or environmentally contaminated sites;
- There is a large number of buildings or other places where nuisances exist or occur;
- There is an absence of development and investment activity compared to other areas in the city;
- There is a high occurrence of crime; and/or
- There is a continuing decline in population.
The Chandler Infill Incentive District boundaries were established as Ellis Street to the west, Pecos Road to the south, and the city limits to the north and east. The district includes retail centers along Alma School Road and Arizona Avenue that in the past housed national big box tenants and attracted customers from a large area. However, their standing within the regional retail landscape and continued viability has since been impacted by several factors, including traffic pattern changes, newer development projects, and retailers shifting to smaller store formats. Of note, Downtown Chandler is not included within the current district due to a now-defunct Downtown Improvement Fund that previously supported redevelopment projects.
The Chandler Infill Incentive Plan was adopted to support the redevelopment of aging and underutilized retail centers in the Chandler Infill Incentive District. The program is managed by the Economic Development Division. Through the program, property owners interested in redeveloping existing retail centers can apply for city financial support. This involves negotiation and City Council approval of an agreement that requires certain redevelopment work to be completed in exchange for city funding. City support has generally been provided as a reimbursement of costs associated with redevelopment, such as the demolition of existing buildings or installation of public infrastructure needed to accommodate new users. Projects that participated in the program included Great Hearts Academies renovating and occupying a former Smitty’s Store/Bank First Call Center near the southeast corner of Alma School and Warner roads, Furniture & Mattress Discounters improving and occupying a former Mervyn’s store at the southwest corner of Alma School and Elliot roads, and NexMetro demolishing a portion of the East Valley Mall and building an apartment complex west of the northwest corner of Arizona Avenue and Warner Road.
The amendments now proposed by staff aim to better support redevelopment in Chandler in three ways: (1) expand the Chandler Infill Incentive District to encompass other areas that could benefit from redevelopment, (2) edit Chandler Infill Incentive Plan eligibility criteria to add redevelopment of Class C office buildings as a project type that can be considered for city support, and (3) adjust Chandler Infill Incentive Plan incentives to align with state statute and ensure compliance with the Arizona Constitution’s Gift Clause.
First, staff requests City Council amend the Chandler Infill Incentive District boundaries to include all areas within Chandler located north of the Loop 202 Santan Freeway. The proposed expanded area meets at least three of the six criteria set forth in A.R.S. § 9-499.10, as detailed in the attached “2023 Chandler Infill Incentive District Analysis” report. The amended boundaries would allow owners of qualifying properties in West Chandler and Downtown Chandler to seek city support for redevelopment projects through the Chandler Infill Incentive Plan. In recent years, there has been less investment and development activity in these areas than in south Chandler. This is primarily because there is not much undeveloped land remaining north of Loop 202. Since 2018, more than eight (8.0) million square feet of non-residential development has been completed citywide, per CoStar’s commercial real estate database. The area north of Loop 202 accounted for 2.7 million square feet, or only 34%, of total space delivered. Expanding the infill incentive district would encourage new investment north of Loop 202 by helping offset the higher costs associated with redevelopment projects.
The area north of Loop 202 also generates more City Code violations and Part I Crimes (those considered most serious) than the area south of Loop 202. More than 91% of City Code violations recorded citywide since the start of 2023 occurred north of Loop 202. In addition, while Chandler is currently experiencing historic low overall serious crime rates comparable to in the late 1980's when the population was far smaller, 75% of total violent crimes and 74% of total property crimes since the start of 2023 occurred in the area north of Loop 202. This data is provided in the attached “2023 Chandler Infill Incentive District Analysis” report. Studies have repeatedly shown that abandoned and neglected properties contribute to increased local crime. Expanding the infill incentive district would help protect against the spread of blight and its effects north of Loop 202 by supporting the reactivation of underutilized properties.
Second, staff requests City Council amend the Chandler Infill Incentive Plan eligibility criteria to allow for consideration of applications from property owners of existing Class C office buildings (in addition to retail centers). This is the lowest classification of office building with properties generally in need of renovation, often featuring outdated infrastructure and technology. The Economic Development Division recommends including Class C office buildings in the Chandler Infill Incentive Plan to facilitate redevelopment should these properties struggle to attract tenants in the face of changing office market dynamics (e.g., tenants downsizing office footprints and seeking more amenities). According to CoStar, there are 77 office buildings rated Class C in the proposed expanded infill incentive district. The median construction year among these buildings is 1977, nearly 50 years ago.
Lastly, staff requests City Council amend the Chandler Infill Incentive Plan to state the city may consider the following types of incentives: waivers of municipal fees for development activities, expedited building plan review, and reimbursement of public infrastructure costs (capped at $250,000 per project). Funding for reimbursements is included in the 2024-2033 Capital Improvement Program and would be awarded on a first come, first served basis until exhausted. Upon receiving a qualifying application, Economic Development staff would consider an incentive offer based on benefits to the city, including public improvements and economic and fiscal impact. The potential offer would then be incorporated into an agreement and subject to City Council approval. The agreement would be placed on a City Council meeting agenda, usually concurrent with the project’s rezoning and preliminary development plan approval request. No reimbursements would be made until the project has been completed, passed required city inspections, and the public infrastructure dedicated to the city.
Staff presented these proposed amendments to the Economic Vitality City Council Subcommittee on September 6, 2023, and received direction to proceed with submitting this item for City Council consideration. In addition, staff presented to the Economic Development Advisory Board on September 13, 2023, which also expressed support for the proposed amendments. |
