Discussion and possible action to: (a) approve a Development Agreement with Pederson Group, Inc., an Arizona corporation, pursuant to Arizona Revised Statutes §9-500.05 and authorize the City Manager to execute associated instruments and approve such additional terms and conditions, deemed necessary to carry out the intent of the agreement, and; (b) approve the use of reserves and a budget amendment in the amount of $1,500,000 from the Half Cent Sales Tax Contingency Fund to the  Economic Development Agreement Project.

The Trailhead project, located on the Northeast corner of Happy Valley Road and 83rd Avenue, is a proposed mixed-use project that consists of an assemblage of five separate parcels from four separate property owners to create a cohesive mixed-use development. These parcels have remained undeveloped due to the difficulty of assembling them, and it is the desire of the City and the Owner to develop the parcels as a mixed-use project, including but not limited to a regional grocery store, first-to-market restaurants, a variety of retail users, multi-family housing, a worship center, and pedestrian/trail amenities.

This project aligns with the City’s Smart Growth initiatives, which include strategies to create quality commercial development that integrates a wide range of commercial, office, employment and residential uses into a single mixed use development. Integrating these uses into a single development helps to minimize the impact of growth by providing housing, shopping and employment within the same area as well as allowing for a more cohesive plan to address traffic safety and circulation improvements within the area.

In order to complete the project, the city is requiring the developer to construct certain public improvements that benefit more than just their project. These include 83rd Avenue Roadway improvements, a traffic signal at 79th Avenue and Happy Valley Road, and certain regional drainage improvements that will serve areas to the north and west of the development.

City staff and representatives of Pederson Group, Inc., have worked together to negotiate and draft a Development Agreement for the Trailhead project for reimbursement of the public improvements.

Development Agreement Terms:

1. The site is the northeast corner of 83rd Avenue and Happy Valley Road
2. Owner will develop approximately 150,000 sq. ft. of commercial space, a 15,000 sq. ft. worship center and 336 multi-family units.
3. Owner will construct, at their cost, upscale Placemaking Amenities, community gathering areas, upscale design features and trail connectivity to the surrounding community. 
4. The Project must include at least four (4) Quality Restaurants that offer a unique/boutique culinary destination experience contributing to the activation of the Placemaking Amenities and public spaces.
5. The Owner will construct the required public improvements within the city right of way or public easements.
6. The City agrees to reimburse the Owner for design and construction costs of the public improvements, not to exceed $2,000,000.  Reimbursement shall occur when certain performance requirements have been met:

a. 50%, not to exceed $1,000,000, reimbursed as costs are incurred for the public improvements.

b. 25%, not to exceed $500,000, upon substantial completion of the Placemaking amenities.

c. Remaining 25% will be reimbursed for securing quality restaurants ($125,000 each).  Payment will be made following the issuance of a certificate of Occupancy for each restaurant.

7. Owner will receive transportation impact fee credits in accordance with the Impact Fee city’s policy. The proposed Development Agreement and exhibits are attached for City Council review and approval.

Council will consider and take action on the PCD Amendment, General Plan Amendment and Rezone for this site prior to considering the Development Agreement. Consideration of this agreement is contingent upon the approval of the three aforementioned actions.

1. Approve the Development Agreement between the City of Peoria and Pederson Group, Inc. and authorize the City Manager to execute associated instruments and approve such additional terms and conditions deemed necessary to carry out the intent of the agreement, and;
2. approve an FY2023 budget amendment and use of reserves in the amount of $1,500,000 from the Half Cent Sales Tax Contingency Account 1210-0350-570000 to the Economic Development Agreement Project account 1210-0350-522070-CIPOT-ED00031.

Per the terms of the agreement, the city will fund public infrastructure improvements up to $2,000,000. These costs include improvements to 83rd Avenue and Happy Valley Road, a traffic signal at 79th Avenue and regional drainage improvements. A portion of the funding ($500,000) is available in the Placemaking Initiative Project (EN00021) and staff requests a FY2023 budget amendment in the amount of $1,500,000 from the Half Cent Sales Tax Contingency Fund to the  Economic Development Agreement Project (ED00031).