Summary:
The purpose of this item is to renew the council-approved North Peoria Redevelopment Area Plan ("Plan") in 1992 pursuant to A.R.S. §42-6209(F). Taking into consideration changes to State Statute, the municipality must take action to either renew, modify or terminate an existing redevelopment area designation before October 1, 2020. If the municipality does not take action to renew or modify the designation, the Plan will automatically terminate after September 30, 2025. If the City renews or modifies the designation, State Statute requires subsequent reviews on a ten-year cycle.
By renewing the Plan, this action provides options for public-private redevelopment projects utilizing the GPLET (Government Property Lease Excise tax) tool provided such projects are located in a redevelopment area and within a designated Central Business District (“CBD”). To this end, the City is seeking to establish a CBD within the P83 District as part of this agenda.
1992 North Peoria Redevelopment Area
The 1992 North Peoria Redevelopment Area was established by City Council as part of a comprehensive effort to address issues and conditions in an area impacted by development constraints and deteriorated conditions. The area includes approximately 3.5 square miles centered near the Loop 101 and Greenway Road alignment (Exhibit 2). The area includes the P83 District and areas along the Loop 101 corridor north of Thunderbird Road. At the time, the area was characterized by a high percentage of land in government ownership, land covered in weeds/debris and faulty land subdivisions and street layouts created by the Loop 101, Skunk Creek and Arizona Canal Diversion Channel (ACDC).
While the area has improved dramatically, some of the conditions remain; therefore, the North Peoria Redevelopment Area Plan continues to serve as a framework for guiding redevelopment in the area. The Plan met the requirements of A.R.S. §36-1479 and enabled the City to access redevelopment powers under State Statute.
One of the redevelopment powers authorized under State Statute enables the City to utilize a redevelopment financing tool known as a GPLET or Government Property Lease Excise Tax for government property improvements. The GPLET was established by the State of Arizona in 1996 primarily as an economic development tool to initiate redevelopment by reducing a project's operating cost by replacing the real property tax with an excise tax. The use of the excise tax cannot continue for more than 25 years and requires that the land and improvements conveyed to a governmental entity and leased back for private use. The excise tax can be abated for the first 8 years after a certificate of occupancy on the building is issued provided the property is located within a redevelopment area and a Central Business District. In short, the GPLET incentivizes redevelopment by reducing developers' tax burdens by removing the incentivized project from the property tax rolls -- the eligible project can then be exempt from the excise tax for 8 years -- called an "abatement."
By offering the incentive, a municipality expects to benefit from increased tax revenue from the development in the future. The City of Peoria owns a large portion of land in the redevelopment area including the Peoria Sports Complex and outlying parcels. This public land base provides the opportunity for future public-private partnerships for redevelopment, like the potential Stadium Pointe project. To use the GPLET, the project would need to be located in a a redevelopment area and a Central Business District.
As identified above, the City is seeking to establish the P83 District as a Central Business District, which is a separate item on this agenda for Council's consideration. Should the North Peoria Redevelopment Area not be renewed or modified by October 1, 2020, the redevelopment designation will automatically expire on September 30, 2025. Without the Plan in place, the use of redevelopment tools, like the GPLET, would not be available beyond that date. If the City renews the Redevelopment Plan, State Statute requires subsequent reviews every ten (10) years.