This is a request for City Council to authorize the purchase of the remaining 123.46 acres of Sunrise Mountain generally located at the northeast corner of 91^st Avenue and Happy Valley Road; and to approve a budget transfer to provide appropriation for this expenditure.

In furtherance of the City Council goal to “Preserve our Natural Environment,” on June 2, 2015, the City Council adopted the Peoria Sonoran Preservation Program.  The goal of the program is to identify areas that merit special consideration and then attempt to strategically assemble them over time through acquisition, conservation, partnerships and development into a meaningful network of connected open spaces for a variety of users. To that end, the program identifies priority areas throughout the City based on a variety of factors, including development pressure.    

One of the Primary Focus Areas – areas of highest priority -- identified therein is the area around what is known as Sunrise Mountain. This mountain complex is generally located at the northeast corner of the 91^st Avenue alignment and Happy Valley Road. The northern face abuts the West Wing Mountain community and includes approximately 108 acres of existing Peoria open space preserve. That Preserve contains a 4.2 mile trail loop and is currently accessed from the trailhead at West Wing neighborhood park.  Additionally, that Preserve is contiguous to a private land holding formerly consisting of 209 acres owned by Sunrise Mountain Development Partners, LLC (“Sunrise Mountain”).  

A 2016 acquisition by the City of the western 85 acres reduced the private land holding to 123.46 acres.  The remaining acreage is the subject of this communication and is further discussed below.

Sunrise Mountain PAD Zoning

The 209-acre Sunrise Mountain site is located within the high-growth Happy Valley corridor.  The property received its entitlement (PAD Zoning) in 1998 through ORD. No. 98-36 which permitted up to 138 single-family residential lots with lots located west of the primary ridgeline >32,000 SF and lots east of the primary ridgeline >18,000 SF. 

With the acquisition of the western 85 acres by the City in 2016, the remaining entitlement on the eastern 123.46 acres would permit up to 108 single-family residential homes.  If the City chose not to purchase the remaining acreage, with the PAD zoning in place, the development of the eastern property would only require approval of Preliminary/Final Plats (Subdivision) and construction permits, all of which are essentially ministerial.

Importance of Sunrise Mountain

The Peoria Sonoran Preservation Program identifies Primary Focus Areas or areas of highest priority which merit special attention.  The Sunrise Mountain environs are located within a Primary Focus Area. Moreover, there are several compelling variables that warrant immediate attention in this area and consideration for potential acquisition.

• Located within a Primary Focus Area:  Sunrise Mountain  is located within a Primary Focus Area as identified in the Sonoran Preservation Program; and

• Development Pressure:  The site enjoys existing PAD zoning and is located within the high-growth Happy Valley corridor; and

• Connectivity: The site is contiguous to an existing 193-acre Peoria open space Preserve (includes 2016 acquisition of western 85 acres) and would further enable the expansion of this Preserve for open space and recreational purposes; and

• Accessibility: The site is accessible via Happy Valley Road and an existing trailhead at West Wing Neighborhood Park; and

• Scenic Qualities: The site enjoys 360 degree views of the Valley, including Lake Pleasant; and

• Ownership: The property is under private ownership with an ownership entity that is willing to sell the balance of the property to the City.

Negotiations with the Landowner

Over the past few years, the City opened up a negotiation path with the landowner about the potential acquisition of the 209-acre Sunrise Mountain property.  That negotiation was fruitful and yielded a deal structure enabling the purchase of the western 85 acres of the site and an Option for the remaining portion of the site (123.46 acres).  The Purchase/Option deal structure was approved by the City Council on April 5, 2016.

A. Purchase of western 85 acres

•      Land purchased for appraised value of $1,950,000 + fees
•      City closed on the land in April/2016

B. Option Agreement for eastern 123.46 acres

•      Provided time to purchase site at appraised value of $7,020,000
•      Option Fee of $193,050 was paid to the landowner
•      Option period expires March 31, 2017
•      However, term cold be extended to July 31, 2017 at a cost of $70,020

The Purchase and Option Agreements identified above were funded through the Sonoran Preservation Program with approximately $3.6M for open space acquisition. This fund is a combination of impact fees collected in prior years and general obligation bonds.  The purchase of this open space put to use funds that had been collected for the sole purpose of open space acquisition.  Through the actions above, the City has spent $2,179,611. The remaining balance from the Sonoran Preservation Program is $1,403,994 consisting largely of general obligation bond funds.

Execution of Option – Purchase Agreement for eastern 123.46 acres

Recently, the City and the Landowner identified an amended financing structure that would enable acquisition of the remaining land with payments permitted to be spread out over a specified period of time.  More specifically, the terms of the Purchase Agreement are as follows:

• 1/2 of Purchase Price or $3,510,000 would be due upon Closing Date of April 17, 2017, including closing/recordation fees.

• Balance of the purchase price payable in three (3) equal principal payments of $1,170,000 plus accrued unpaid interest (4% per annum).  Payments would be due:

o   December 29, 2017

o   July 31, 2018

o   December 21, 2018 – Date of Maturity

April 5, 2016 – City Council approved a Real Estate Agreement authorizing the purchase of the western 85 acres; and an Option Agreement on the remaining 123.46 acres, active through the end of March, 2017, unless extended.

June 2, 2015 – City Council adopted the Sonoran Preservation Program and accompanying implementation strategies. Sunrise Mountain was identified as a Primary Focus Area or area of priority for special attention.

A:   Authorize the purchase of the remaining 123.46 acres with Sunrise Mountain Development Partners, LLC; and directing the City Manager to execute the Purchase Agreement; and approve a budget adjustment from General Fund Contingency to the Sonoran Preservation Project $1,400,000 and $2,120,000.

B:   Do not approve the attached Purchase Agreement.  The Option would expire and the City would not take possession of the remaining 123.46 acres.

Discussion and possible action to: (a) authorize the purchase of the remaining 123.46 acres with Sunrise Mountain Development Partners, LLC; (b) direct the City Manager to execute the Purchase Agreement; and (c) approve a budget adjustment from the General Fund Contingency Account to the Sonoran Preservation Project General Obligation Bonds Land Account in the amount of $1,400,000 and to the Capital Projects Fund Land Account in the amount of $2,120,000. 

The City has a remaining project balance of $1,403,994 from the Sonoran Preservation Program.  To acquire the remaining 123.46 acres, the Purchase Agreement attached hereto requires 1/2 of the payment ($3,510,000) + closing fees due by the Closing Date of April 17, 2017. The City is seeking to supplement the balance due through CIP reimbursements that have been received. The remaining installments, payable through the end of 2018, would be identified and programmed in the FY18 and FY19 Capital Improvement Program years.

The budget adjustment is from General Fund Contingency 1000-0300-570000 to the Sonoran Preservation Project (4251-4251-540000-CIPRT-CS00089: $1,400,000) and (4550-4550-540000 CIPRT-CS00089: $2,120,000).”