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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 11/21/2023City of Glendale 5850 West Glendale Avenue Glendale, AZ 85301 C1-04 �P-- &7 Glendale A R I Z O N A Meeting Minutes Tuesday, November 21, 2023 10:00 A.M. Special Workshop Meeting Civic Center City Council Mayor Jerry Weiers Vice Mayor Joyce Clark Councilmember Jamie Aidama Councilmember Ian Hugh Councilmember Ray Malnar Councilmember Lauren Tolmachoff Councilmember Bari Turner CALL TO ORDER Mayor Weiers called the meeting to order at 10:05 a.m. ROLL CALL Present: Mayor Jerry Weiers Vice Mayor Joyce Clark Councilmember Jamie Aldama Councilmember Ian Hugh Councilmember Ray Malnar Councilmember Lauren Tolmachoff Councilmember Bart Turner Also Present: Kevin Phelps, City Manager Michael Bailey, City Attorney Julie K. Bower, City Clerk WORKSHOP SESSION 1. BLACK LOT PARKING GARAGE Presented by: Kevin R. Phelps, City Manager Ms. Bower read the item by title. Mr. Bailey suggested Council hold an executive session before the presentation to receive information. A motion was made by Councilmember Bart Turner, seconded by Vice Mayor Clark to hold an executive session. AYE: Mayor Jerry Weiers Vice Mayor Joyce Clark Councilmember Jamie Aldama Councilmember Ian Hugh Councilmember Ray Malnar Councilmember Lauren Tolmachoff Councilmember Bart Turner Passed Mayor Weiers recessed the meeting to go into executive session at 10:06 a.m. Mayor Weiers reconvened the workshop session at 11:19 a.m. Mr. Phelps presented information about Black Lot parking garage. The presentation included the following: Project Overview Construction Delivery Overview Construction Schedule Project Financing Items of Note Aerial Footprint City Council Meeting Minutes - November 21, 2023 Page 2 of 9 Temporary Parking Solutions Alternate Temporary Parking Solutions Garage Rendering Garage Aesthetics Mr. Phelps said the public parking garage would be fully owned by the City. It provided for an additional 3,063 parking spaces in the parking garage in addition to 744 parking spaces at grade, for a total of approximately 3,900 spaces. It maintained the City's contractual obligations to provide 4,001 at grade parking spaces within the Black Lot to the Arizona Cardinals and the Arizona Sports and Tourism Authority (AZSTA). It would provide additional parking capacity for large scale events in the Sports and Entertainment District and at the VAI Resort and would provide a long-term revenue stream for the City. Mr. Phelps said the City would deliver the project through a design -build contractor, Fisher Industries, pursuant to A.R.S. Title 34.606. There was a guaranteed maximum price of $71,850,000 which included all design, permits, site work, landscaping and off -site improvements. The contractor would absorb any costs over the guaranteed maximum price. Mr. Phelps said the contractor was currently mobilized adjacent to the Black Lot and would be ready to begin construction. The construction schedule was as followed: January 8, 2024 — March 29th 2024: Site work, grading, utility relocation, asphalt removal, caisson and foundation work April 10th, 2024 — September 6, 2024: assembly of precast components September 6, 2024 - Use of 720 at grade parking spaces available November 15, 2024 - Final closeout of project including landscaping, signage, lighting, elevators Mr. Phelps said the total project schedule was 302 days. There would be a pause leading up to and during the Final Four. The City would make sure access to parking to meet the contractual and financial obligations to the Cardinals was available. Mr. Phelps said the source of funding was the General Fund, Unreserved Fund Balance of $16 million paid to Fisher Industries between January 15th and June 1st, 2024. $55,600,000 would be paid to Fisher Industries between July 1st and project close out. The City would waive up to $250,000 in permit fees. Mr. Phelps said the project was largely concrete and steel. Both products were supply chain sensitive with a history of volatile pricing. Fisher was a vertically integrated contractor and was able to manage supply chain issues and was currently mobilized adjacent. Mr. Phelps said the existing asphalt on the Black Lot would be milled and moved to the City -owned site at the northeast corner of the unimproved portion of the Black Lot. The millings would be rolled out and could be striped and used for temporary parking to fulfill all parking obligations. Mr. Phelps said the parking garage would cover a portion of the retention basin. The City would be able to engineer it so that the City had ample capacity to handle all of the stormwater on the site. It would reduce the area that was impacted in the existing lot. Mr. Phelps said the garage would have four elevated floors with a ground level floor. The total height was approximately 52 feet. The resort would be building a pedestrian bridge across 95th Avenue to connect the parking garage to the resort. The ground level floor would be segregated as part of the parking obligation to the Cardinals and AZSTA. City Council Meeting Minutes - November 21, 2023 Page 3 of 9 2. BLACK LOT PARKING GARAGE OPERATING PLAN Presented by: Kevin R. Phelps, City Manager Ms. Bower read the item by title. Mr. Phelps presented the following information about the Black Lot Parking Garage Operating Plan: . Project Overview . The garage would be owned by the City. The operating agreement did not change the ownership of the garage, it still provided the 3,063 spaces that were discussed previously. It continued to maintain the contractual obligations and provided additional parking for large scale events. . Purpose of Agreement . It would assign responsibility for operating and maintaining the parking garage on behalf of the City. . It also established the responsibility of both Operator and the City for how capital repairs would be addressed during the term of the lease. . Operating Agreement Overview . The initial term of the lease was 25 years with two 10-year extensions. . It established responsibility for day-to-day operations of the public parking garage. VAI Resort would be responsible for hiring staff, cleaning, maintaining, paying utility bills, emptying trash, and making repairs. . The agreement would require VAI to manage the garage in a way that was consistent with the existing parking agreements that the City had with AZSTA and the Arizona Cardinals. That included a number of different elements. . First, a recognition that during any NFL event or any mega event at the stadium there had to be a minimum of 4,001 parking spaces available for the use of the stadium. . Second, a prohibition of a sale of concessions including merchandise and food/beverage during qualified stadium events dates including Cardinal events or mega events. The prohibition would include all four levels of the parking garage. It also prohibited advertising and access to the attendees of stadium events. VAI agreed not to compete in offering spaces to fans at lower cost than what the Cardinals charged. . Established a process for the setting of all parking fees. . Dynamic Pricing — the City would work with the operator to maximize the revenue opportunities. . In the first 5 years of the agreement, the City would retain the ability to commit up to 2,000 of the spaces to help attract future Super Bowls, Final Fours, or World Cup events. . Financial Overview — Revenues . The parking revenues included all revenues collected from use of the garage. . The first 5 years of the agreement the operator would pay for 100% of all costs to maintain and operate garage and would collect the required local taxes and distribute as required to the City. Operator would retain 100% of all revenue collected. . Starting in year 6 through year 25 of the agreement, the distribution would be split as followed: . Operator would retain 77.5% . City would retain 22.5% . Financial Overview — Capital Repairs City Council Meeting Minutes - November 21, 2023 Page 4 of 9 . Required an established capital repair account. The City would require mutual development of a rolling 10-year Capital Improvement Plan to include funding mechanism. . Financial Overview — Initial Contributions . Established financial contributions by the operator. . Fees paid to the City established the right of the operator to retain a portion of the revenue during the term of agreement. Operator would receive 78.5% for pre -investing $58,000,000. . $16,000,000 would be paid during the current budget year. . $42,000,000 would be paid between July 1, 2024, and the issuing of the certificate of occupancy. . The City would require the $58,000,000 to be placed in escrow or a performance bond that would guarantee the project. . The schedule would be reflected in the 24-25 annual budget. . Financial Overview — Revenue Projections . Operating income starting year 6. Estimated revenue: . $8,322,00 - daily fee ($20 per vehicle x 1140 card per day) . $9,375,000 — Special events ($50 per vehicle x 75 event annually x 2500 cars per event) . ($3,832,500) — Validation credit ($15 per vehicle, net $5.00 to garage x 700 cars) Rate would be $20 per vehicle and refund $15 per vehicle. . Total next revenue was $13,864,500 total annual gross revenue before taxes. . Estimated expenses: . ($472, 185) — 3% credit card transaction fees . ($720,000) - traffic control, customer service . ($540,000) — security (labor, vehicle, supplies) . ($1,140,000) — Maintenance ($300/year x stall) . ($270,000) — General administration (Utilities, insurance, supervisory labor) . Total Annual Expenses ($3,142,185) . $10,722,315 was the net revenue and the City's share of 22.5% was $2,412,521. The amount would start year 6 through year 25 and any extensions of the agreement. . Financial Overview — Other considerations . The operator would not be reimbursed for management fees, only actual expenses incurred. . Established the ability of a dynamic pricing model to maximize revenue opportunities. . Required the garage to be managed in a manner consistent with parking agreements the City had with AZSTA and the Arizona Cardinals. . Did not allow competition with stadium events. Did not allow the use of surface parking spaces in the Black Lot during non -stadium events. The City could negotiate a separate agreement with the operator to address use of spaces and how revenue, operations and maintenance would be addressed. . Aerial Footprint . Garage Rendering . Garage aesthetics Councilmember Tolmachoff asked for clarification on the validation credit. Mr. Phelps said staff would confirm the numbers as a lot of changes had come through in the last 24 hours. He believed the numbers to be relatively close to what was presented. City Council Meeting Minutes - November 21, 2023 Page 5 of 9 3. VAI RESORT ECONOMIC IMPACT ANALYSIS Presented by: Jessi Pederson, Director, Economic Development Ms. Bower read the item by title. Mr. Phelps reminded Council that the City, before entering into an agreement with VAI Resort back in 2020, asked for an economic impact study and hired Applied Economics to look at that development and estimate what new tax revenues would be once the resort was fully open. That number came in at just under $10 million. Ms. Pederson presented the following information regarding the VAI Resort economic impact: Background Original scope of the project included: .630 hotel rooms (three hotels) . 11-acre lagoon . 130,000+ square feet of office . 263,000+ square feet of retail/restaurant . 75,000 square feet family entertainment center . The total revenue impact estimated for the original scope was $700.8 million over 25 years to all taxing jurisdictions. . The revenue impact specific to the city for the original project was $240 million over 25 years, or $9.6 million annually Current scope of the project included: . 1,083 hotel rooms (four luxury hotels) . 171,000+ square feet of retail/restaurants . 571,000+ square feet of attractions . Entertainment amenities including 9-acre Mattel Adventure Park, night club, multi -level concert venue . 5-acre swimming area with beaches and related amenities . 55,000 square feet of corporate office occupied by the owner/developer . 70,000 square feet of convention space Summary of Revenues and Incentives for VAI Resort To support the VAI Resort project, the City offered permit/plan review fee waiver up to $1 million and a 25-year Government Property Lease Excise Tax agreement (GPLET) on the entertainment, recreation and concession portions of the development. (The total value of the incentive is estimated at $107.4 million) The project was estimated to result in $2.2 billion in new sales, property and bed tax revenues to the City, county and state over the next 25 years. The revenue impact specific to the City for the VAI Resort was $811.7 million over 25 years, or $32.4 million annually Alternatives for comparison (Estimated revenues over 25 years to the City) *Alternative 1 Multifamily/Retail - $71.2 million *Alternative 2 Multifamily/Office — $17.7 million . VAI Resort - $811.7 million Annual Revenue Impacts to School Districts . VAI Resort could generate an annual increase in property tax revenues to schools of $6.2 City Council Meeting Minutes - November 21, 2023 Page 6 of 9 million, and $7.9 million to all jurisdictions combined, net of the GPLET exemptions. . Summary . In 2020, the initial economic analysis estimated the total revenue impact to be $700.8 million over the next 25 years, including $9.6 million annually to the City. . With the growth of the project, the return had more than tripled with an estimated revenue impact of over $2.2 billion over 25 years, including $32.4 million annually to the city. . The figures did not include the estimated impact of the parking garage revenues. . The analysis represented a conservative approach based on the current site plan for the VAI Resort. The project was expected to open in two phases with the first phase opening at the end of 2024 and the second phase opening in summer 2025. Councilmember Tolmachoff asked if the rates were blended on/off season rates or if they were off season rates. Ms. Pederson said the rates VAI Resort provided were average rates. She said that the rates were luxury hotel rates. Mr. Phelps said in the entertainment district the hotel occupancy was around 70%. He noted that not everyone could afford luxury hotel rates. Councilmember Tolmachoff asked for average rates for comparable luxury hotels. Ms. Pederson said staff would provide that. Mayor Weiers asked if someone rented a room, did they get to watch the concert. Ms. Pederson said that was correct. Councilmember Tolmachoff recalled that during the VAI resort tour, Council was told during concert days, it was charged by the person. A person would not be able to rent a room with a view of the concert and invite 5 friends. Instead, they would be charged per person occupying the room. Ms. Pederson was reluctant to discuss VAI Resort's business model relative to the study. The revenue impact could be even greater. Councilmember Tolmachoff asked if event date information was not included in the study. Ms. Pederson said that VAI resort provided its development assumptions based on conservative numbers on how much was to be spent per square foot in different areas of the hotel. These all got built into the averages. Councilmember Aldama said when staff brought back the comparable rates, they should also include each hotels amenities. Councilmember Malnar said that it was a significant rate of return for the investment in the project. He thanked staff for all its work and VAI Resort for coming to Glendale. Vice Mayor Clark said VAI Resort had the potential to be the most impactful project to come to Glendale. The project would help cover the loss of rental revenue and help create other projects for the citizens of Glendale. Mayor Weiers said the project would bring in about $32 million annually. He thanked Mr. Phelps and the entire team. City Council Meeting Minutes - November 21, 2023 Page 7 of 9 CITY MANAGER'S REPORT No report CITY ATTORNEY'S REPORT No report COUNCIL ITEMS OF SPECIAL INTEREST Councilmember Aldama had attended an event and noticed there was not a quorum notice posted for it. He asked the City Manager to work with the City Clerk to ensure quorums were posted when there was a possibility of a Council quorum. Councilmember Tolmachoff asked staff to look into a separate ordinance to address repeat code offenders and have a discussion. Mayor Weiers wished everyone a Happy Thanksgiving. MOTION AND CALL TO ENTER INTO EXECUTIVE SESSION A motion was made by Councilmember Bart Turner, seconded by Vice Mayor Joyce Clark to hold an executive session. AYE: Mayor Jerry Weiers Vice Mayor Joyce Clark Councilmember Jamie Aldama Councilmember Ian Hugh Councilmember Ray Malnar Councilmember Lauren Tolmachoff Councilmember Bart Turner Passed EXECUTIVE SESSION Council met in executive session at 12:19 p.m. for: . Discussion/consultation with the City Attorney and City Manager to receive an update, to consider its position, and to provide instruction/direction to the City Attorney and City Manager regarding Glendale's position in connection with contracts, agreements and/or development agreements of the area in, near and surrounding 95th Avenue and Montebello Avenue that are the subject of negotiations pursuant to A.R.S. §§ 38-431.03 (A)(3)(4) . In accordance with the City of Glendale City Council Guidelines, adopted February 24, 2015, the City Council will meet to review and discuss an alleged violation of the Guidelines by Vice Mayor Clark pursuant to A.R.S. § 38-431.03(A)(1)(3) City Council Meeting Minutes - November 21, 2023 Page 8 of 9 A motion was made by Vice Mayor Joyce Clark, seconded by Councilmember Lauren Tolmachoff to adjourn the executive session. AYE: Mayor Jerry Weiers Vice Mayor Joyce Clark Councilmember Jamie Aldama Councilmember Ian Hugh Councilmember Ray Malnar Councilmember Lauren Tolmachoff Councilmember Bart Turner Passed Mayor Weiers adjourned the executive session at 1:38 p.m. ADJOURNMENT Mayor Weiers adjourned the meeting at 1:38 p.m. I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the meeting of the Glendale City Council of Glendale, Arizona, held on the 21 st day of November, 2023. 1 further certify that the meeting was duly called and held and that a quorum was present. Dated this 30th day of November, 2023. Ju . Bower, MMC, City Clerk City Council Meeting Minutes - November 21, 2023 Page 9 of 9