Development Agreement for King Ranch resolving the dispute regarding contributions towards the cost of Cotton Lane Bridge.
STRATEGIC PLAN ALIGNMENT
RECOMMENDATION
ADOPT RESOLUTION NO. 2023-2346
APPROVING THE FORM OF A DEVELOPMENT AGREEMENT FOR KING RANCH, CONDITIONALLY AUTHORIZING ITS EXECUTION, PROVIDING DIRECTION AND AUTHORIZATION, PROVIDING FOR THE TERMINATION OF THE APPROVALS AND AUTHORIZATIONS PROVIDED IN THE RESOLUTION; AND PROVIDING AN EFFECTIVE DATE.
(Roric Massey, City Attorney)
FISCAL IMPACT
The proposed agreement provides the city with the recovery, either by direct payments or the value of amenities requested by the city, for improvements the city previously constructed. Finally, the proposed development agreement will facilitate the sale and the development of King Ranch. Although a fiscal impact analysis has not been conducted on this specific project, all new development will have an ongoing fiscal impact on the city. The development will be responsible for the construction of all infrastructure necessary to serve the site and will generate one-time revenue for the city through payment of permits, construction sales tax, and development impact fees. Longer-term fiscal impacts include increased demands for municipal services, the costs of which may or may not be offset by increased property values/tax levies, city sales tax, state shared revenues, and the increased demand for commercial and retail development. Any areas that will be maintained by the city are constructed by the developer and then conveyed to the city two years after construction.
BACKGROUND AND PREVIOUS ACTIONS
The property known as King Ranch, which currently consists of approximately 1800 acres of land generally bounded by the Gila River to the north, was rezoned to Preliminary PAD by Ordinance 2004-927 adopted on December 13, 2004. On August 22, 2005, Council adopted Ordinance 2006-960 rezoning the King Ranch Property to Final PAD, and Resolution 2005-997 approving and adopting the Development Agreement for King Ranch. The First Amendment to the Development Agreement for King Ranch was approved and adopted by Resolution 2006-1069 on August 28, 2006. On September 25, 2006, the King Ranch Final PAD was amended by Ordinance 2006-1027 and the Second Amendment to the Development Agreement for King Ranch was approved and adopted by Resolution 2006-1080. The Third Amendment to the King Ranch Development Agreement was approved and adopted on July 9, 2007, by Resolution 2007-1173. The Development Agreement for King Ranch, as it was amended, addressed various infrastructure obligations and contributions that were to be made in connection with the development of the King Ranch Property, including contributions towards the costs associated with the construction of the Cotton Lane Bridge, which included the costs of the bridge, two lanes of the first phase of Cotton Lane, bridge abutment protections, a 30" water transmission line, and the installation of irrigation piping for RID.
STAFF ANALYSIS
PURPOSE OF THE AGREEMENT
No development has occurred on the King Ranch property and the property is currently being marketed. During the due diligence period, the obligation for contributing toward the Cotton Lane Bridge was disputed, and city staff informed representatives of the buyer and the seller that the City would be seeking a contribution towards the costs of the Cotton Lane Bridge, which will be a primary source of access to the King Ranch Property.
The buyer intends to apply to rezone and develop the Property and desires to resolve the outstanding dispute over the obligation for a contribution towards the cost of the Cotton Lane Bridge. The proposed form of the Development Agreement for King Ranch includes terms that satisfy any obligations of the King Ranch property for the costs of the Cotton Lane Bridge.
DEVELOPMENT AGREEMENT TERMS.
Under the terms of the agreement, a $16,845,393 payment for the cost of the Cotton Lane Bridge (described above) will be provided to the city. The payment will be funded by the following sources. The owner will remit a $4,000 payment for each building permit until the obligation is satisfied. However, the city may request certain recreational amenities that will be open to the general public. In such cases, the value of the land conveyed to the city and the costs incurred by the owner in constructing recreational facilities on such land can be used to satisfy the $4,000 per building payment. If the bridge payment has not been fully satisfied within seventeen (17) years from the effective date of the Agreement, interest will accrue on the outstanding balance of 7% per annum compounded annually. The city will continue to collect the $4,000 per building permit.
This agreement is contingent upon the acquisition of the King Ranch property being completed by December 11, 2023. Accordingly, the resolution is only seeking the approval of the form of the attached Development Agreement and it provides the City Attorney or his designee with authority to make non-substantive changes to the agreement before it is finalized. It also sets forth conditions that must be satisfied before the City Manager can execute the agreement. If the development agreement is not fully executed and recorded with the Maricopa County Recorder by December 11, 2023, the authorizations to execute the agreement terminate.
RECOMMENDATION
Staff is recommending the adoption of Resolution 2023-2346 and the approval of the Development Agreement for King Ranch, as it furthers Council's requirement that growth pays for growth and resolves any dispute over the city's ability to require a contribution towards the cost of the Cotton Lane Bridge.