Disclaimer: The comments in this blog are my personal opinion and may or may not reflect an adopted position of the city of Glendale and its city council.

No project as large in scope as this one is simple or easy to create. This project is wide-ranging and complex reflected by the fact that it has taken over a year to put all of the pieces in place. There are 5 different agreements:

• Development Agreement with ECL Glendale, LLC. (approved by city council on Sept. 8)
• Government Property Improvement Leases with ECL Glendale, LLC. (approved by city council on Sept. 8)
• Purchase and Sale Agreement with ERD Glendale, LLC. to purchase approximately .2942 acres of city-owned land (scheduled to come before city council on Sept. 22)
• Option Agreement to purchase real estate with ERD Glendale, LLC to purchase approximately 4.154 acres of city-owned land (scheduled to come before city council on Sept. 22)
• Parking Agreement(s) (scheduled to come before city council on Sept. 22)

The Development Agreement acknowledges that this project qualified as a business expansion economic development project. The term of this agreement is 25 years. The agreement spells out the terms of a 25 year “partial” Government Property Lease Excise Tax (GPLET). Under Arizona Revised Statutes (A.R.S. 42-6208) a GPLET may be applied only to amusements and their related retail and restaurant concessions. It allows for a 25 year partial exemption of lease excise tax for recreation and entertainment uses. Once the project has completed all construction (October, 2022) the company sells the project to the city for a token amount. The city becomes the lessor (owner and landlord) exempting ECL from paying property tax.  ECL becomes the prime lessee (renter) paying the city a token annual rental payment and pays annual lease excise tax instead of property tax. After 25 years the GPLET terminates and cannot be renewed. At that time the project reverts back to ECL, becomes private property and pays property tax rather than a lease tax.

The Government Property Improvement Lease further refines the terms of the 25 year partial GPLET. The terms remain as represented above but they are spelled out in excruciating legal detail. It’s a 50 page document (yes, I read it all) that only an attorney would love. It even covers what happens if there is “an act of God” that destroys the project.  It’s a very detailed, boring, yet important document.

The company is obligated to operate and maintain the project for at least 25 years continuously. The company agrees to completion of construction of the entire project on or before October 31, 2022. The city recognizes the right of the company to develop, construct and use the property under its current Planned Area Development (PAD) zoning. The city will provide expedited plan review. The city will provide a Fee Waiver in the amount of $1M in permit, plan review and inspection fees but this waiver does not include Development Impact Fees (DIF) which is estimated to be a one time payment of $4.4M.

Purchase Sale Agreement for 0.29 acres allows ECL to purchase for $10 a square foot, totaling $126,000. This small sliver of city-owned land is situated on the southwest corner of Montebello Avenue and 95^th Avenue. It enhances access to the project site.

Option for Purchase Sale Agreement for 4.15 acres allows ECL to purchase for $10 a square foot, totaling $1.8 M. This land would be used for water retention, employee parking and maintenance operations for the project.

Parking Agreement(s) provide for the project’s overflow parking needs at the city-owned Black lot on all days but football game days and mega events at the stadium (attendance must be 40,000 minimum). ECL will maintain the black lot and pay for all associated utilities. This agreement will also be approved by the Arizona Sports and Tourism Authority (AZSTA) and the Cardinals. Additional agreements between the Bidwill family and ECL may provide alternate parking should the city decide to develop the Black Parking lot. Obviously, with this project and others within Westgate and Zanjero, at some point the Black Lot parking land becomes so valuable for development that its use as a parking lot no longer makes financial sense.

The Return on Our Investment (ROI) is substantial. Keep in mind the city always uses conservative figures and I think it is fair to assume the numbers provided could be higher. Over 25 years the county earns $60.4M or $2.4M a year; the schools earn $90.6M or $3.6M a year; and the state receives $309.3M or $12.3M a year. What does the city earn? Over 25 years $240.5M or $9.6M a year. During construction of the project the city earns construction sales tax of $5.9M; $1.8M for the sale of remnant land parcels; and DIF fees of $4.4M. I personally think the annual revenues will be higher, especially during and after the Super Bowl in 2023. This resort project is sure to be heavily promoted during the Super Bowl generating a ton of viewer interest and a spike in tourist visits to Glendale.

All of these revenues are generated because the city, in order to attract this project, was willing to forego $1M in fee waivers, agree to accept excise lease tax rather than property tax and already had an abundance of available overflow parking constructed. In return for which, the city will generate almost $10M a year in new revenue. The city did not have to pay a dime to entice the project. The city does not write a check as an incentive to the developer for anything. I think that it is a win-win for Glendale and ECL. That’s why it won my immediate and enthusiastic support from the time I first learned of the project.

There are cities across this country that will never have this kind of opportunity but Glendale has spent the past several years positioning itself to attract just such a project.  As I said in my last blog there are intangible benefits as well. This experiential retail, entertainment concept is a brand new concept and will be the very first anywhere in the world. It will claim the attention of both the retail and entertainment industries and provides a blueprint for marrying the two concepts together. Glendale was on the map as a host city for the Super Bowl and the Final Four but this project moves Glendale to a new level of prominence.

I thank ECL for choosing Glendale as its partner and for hanging in there for over a year to execute tedious, legal, governmental documents that can be frustrating at times. It’s a challenge for all concerned to bring a project such as this to reality. Kudos to Glendale and ECL for making it happen. I am very proud to welcome them as the newest member of our Glendale family and the Yucca district.

^{© Joyce Clark, 2020}         

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