Loading...
HomeMy WebLinkAbout2007-02-08 City Council Special MinutesCITY COUNCIL SPECIAL MEETING FEBRUARY 8, 2007 The special meeting of the City Council of the City of Apache Junction, Arizona, was held on February 8, 2007 at the Apache Junction City Council Chambers pursuant to the notice required by law. CALL TO ORDER Mayor Coleman called the meeting to order at 4:00 p.m. ROLL CALL Council members Present: Mayor Coleman Vice Mayor Eck Councilmember Dietz Councilmember Insalaco Councilmember Severs Councilmember Sippel Councilmember Waldron Staff Present:City Manager George Hoffman City Clerk Kathleen Connelly City Attorney Joel Stern Interim Dev. Svcs. Dir. Dennis Dixon Community Relations Mgr. Patrick Brenner Executive Legal Asst. Nichole Fernandez Asst. City Attorney Mary Ann Coyne Others Present:None. RESOLUTION 07-08,ADOPTING A NOTICE OF INTENT TO ENTER INTO A RETAIL DEVELOPMENT TAX INCENTIVE AGREEMENT WITH THE SUPERSTITION SQUARE DOWNTOWN PROJECT WITH AJ TOWN CENTRE, LLC; AND SELECTION OF DATE, SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 1 OF 24 TIME AND LOCATION FOR ADOPTION AND APPROVAL OF THE DEVELOPMENT AGREEMENT )City Manager George Hoffman briefed the council on the item.He stated that on Monday evening the council directed the staff to return to the council on Thursday, February 8, 2007 with the real estate investor's proposal.Council expressed interest in leaving the core of the proposal unchanged, that is that the developer be reimbursed for the city's infrastructure and for the infrastructure that they the developer normally would have to provide. The council did indicate interest in refining the agreement.Council expressed interest in eliminating two phrases that could unduly expose tax payers to litigation.The council indicated that they did not favor a section of the proposal that would have until 2031 resulted in the development over time of two sets of rules in the community, one for the real estate investors and one for the rest of the community. The council wanted to make explicit that a future developer could not unilaterally compel the city to utilize powers of condemnation or eminent domain against a business or property owner. The council expressed an interest in not providing to the estate investor sales tax money that is dedicated to the improvement of the library, rodeo grounds event center and other community capital improvements.While there remains tremendous developer flexibility and market adaptability in the proposal the council expressed interest in having an agreement that would do what the real estate investors proposed that they would do specifically that big box stay east of Idaho as shown in their proposal and that the big box on Idaho be oriented to the street as shown in their proposal and consistent with the conceptual design guidelines for the other three streets as depicted in exhibit G-2 and that the main street organization's design dictionary and commercial design guidelines form the ecstatic foundation for the design standards, standards that a future developer is to present to the city council and that the proposal for main street's pedestrian oriented mixed use at height of four to five stories be set for in an agreement in a way that better helps that vision become a reality.The council indicated that they wanted the Community Facilities District's language to be consistent with state law and that the document receive the scrutiny of bond council.Because both the developer and the community will benefit from this investment in SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 2 OF 24 infrastructure, the council offered that both should therefore share equally in the cost of any litigation to defend this infrastructure funding resource.Lastly, the council suggested that they did not deem it appropriate to subsidize infrastructure for a business moving from one part of town to this project area. The staff brings back to the council the real estate investor's proposal unchanged in its fundamentals but, refined to reflect the interest of the council articulated Monday night.Staff did point out that the conceptual plan in Exhibit B-2 does not appear to depict the focal point or the Don's monument.The City Manager and the City Attorney have not yet accessed what the proposal would do if anything to those structures.He stated that they will assess the issue before possible action on the proposal. City Attorney Joel Stern briefed and quickly highlighted the places in the proposal where these changes have been made. He provided the council with a copy of the changes in highlighted form so they could go through them rather quickly. Directing their attention to Page Five under 1.10 minimum public improvements, this was changed to add pedestrian oriented street essentially with a minimal of four stories; going to Page Six that was a bond council change which he was not going to argue with.Going to Page Seven 3.2 this is under design standards, council wanted to make sure that there was some kind of standards that would be applicable and would apply at the time that this was written so we have incorporated the Apache Junction Main Street Program Commercial Design Guidelines and the Design Dictionary and four sided architectural treatment.Dropping down to 3.4, this is the relocated business provision where if a business desires to relocate into the project area from a different location in the city that they not be paid back for the public improvements adjacent to that piece of property. Going to Page Eight, 3.7 that's the Scott Ruby change essentially consider the formation of, rather than being compelled to form a district because it is really up to the city council under §48.701. Page Nine, 3.11 was completely stricken that involved the "materially impairs" language; or on the use of building codes for the term of the agreement or ten years for actual building code provisions. Page 12, this particular paragraph talks about the use of big box, where it can go.Council's decision was to pretty much to have it east of Idaho Road and if it is done east of Idaho Road the SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 3 OF 24 parking lot should be behind the actual building as to the east of the building. Page 13, 6.4, "which may not be unreasonably withheld" that language was stricken and in some other sections also. Page 14, has some minor changes in reference to the 3.11 which council completely struck out. Tax Increment on Page 15, 8.2 basically what the city was saying if there is any administrative or judicial challenge to the Tax Increment, the parties shall share all defense costs equally.He believed this is what the Council desired. Going to Page 58, Mr. Ruby made some changes to the public improvement sections which staff did not bring to Council's attention on Monday. Essentially, he cites some of these things are potentially illegal. Going to Page 64, Mr. Ruby also looked at this exhibit and also made significant changes however, the City Attorney felt it really affected the actual deal points.He mentioned that in Monday's meeting it was discussed that it should be the taxes based on what is collected and not levied. CFD will be followed under statutory references. On Page 66, there were also changes that Mr. Ruby though were very needed because of the bond language and it was not written the way it should have been the first time around and with these changes it would be legal. Mr. Ruby is bond counsel and is also City Attorney in five different cities so he is also familiar with other types of municipal issues.On Page 70 the language highlighted talks about the public improvement fund whether the .2 % of the 2.2% sales tax should be used for the payment amount and here it is being excluded.We are essentially saying that the capital improvement fund .2% will not be used for the payment amount for public improvements. Councilmember Sippel asked if they extended the tax that if it would still not be used because the agreement used tax year 2010. City Attorney Joel Stern stated all it says is that it is due to sunset at 2010. If it gets extended it still will not be allowed to be used under this provision. City Clerk Kathleen Connelly asked what happens if the council changes that rate. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 4 OF 24 City Attorney Joel Stern stated he does not think it will become part of the payment because it is whatever is paying the city capital improvement projects. Councilmember Dietz commented that kind of covers it if we decided after the sunset to go to 3%. He asked if we would not be able to attach that because it is basically covered under the city capital improvement projects. City Attorney Joel Stern stated if you did increase it, 1% of 3% could be used. We can look at that language a little harder. Councilmember Dietz asked even if it is covered under capital improvement projects. City Manager George Hoffman stated he and City Attorney Joel Stern and City Clerk Kathy Connelly could maybe refine it further.What they might want to do is just find a way of just referencing the base tax. City Clerk Kathleen Connelly asked if that is current or future. City Manager George Hoffman stated this agreement runs until 2031. Many communities for example have developed a public safety revenue stream that is dedicated to public safety. The year 2031 is a long ways away. Maybe what the city could do is reference the base tax. Councilmember Dietz asked if they could just base it on the 2.2% city sales tax. Councilmember Waldron asked if they could scratch the .2% because then it will say except for the portion of such tax which is specifically dedicated to pay for capital improvement projects no matter what the amount is. City Attorney Joel Stern stated they can do that. It would work out. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 5 OF 24 City Manager George Hoffman commented it would not have a provision if in 2025 the community wanted a revenue stream dedicated to public safety operational issues. In a way it would end up owing that public safety revenue stream.He suggested they look at that language some more. City Clerk Kathleen Connelly commented she is not sure that it makes it real clear if it is current and future.It appears to lock it into 2010. Councilmember Dietz commented that is why he thought it should be stated that they would receive the 2% city sales tax. If something else comes up ten years from now and we have another half cent sales tax for public safety or something of that nature and that is not defined in this and it will cover us. Councilmember Severs stated he believed it should be the base tax only. Councilmember Waldron asked if they have to do that language today before for they can adopt the resolution. City Clerk Kathleen Connelly agreed.She added it would be good to put that in the motion. Councilmember Dietz commented that would have to be included. City Attorney Joel Stern stated that is correct. City Manager George Hoffman commented it is going to be harder than just saying the base 2% percent because over $2,000 it drops to 1.2.He asked the City Clerk how to express that. City Attorney Joel Stern commented it should be in the motion. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 6 OF 24 City Clerk Kathleen Connelly suggested the provisions exclude any current and future transaction privilege taxes collected, not just assessed, but collected for the purpose of capital facilities or capital improvement projects. Councilmember Dietz asked what would happen if we do something for public safety or something else in the future? City Clerk Kathleen Connelly commented she did not know the appropriate word to address it. Mayor Coleman suggested possibly something like they are specifically earmarked for other purposes above the general sales tax. Councilmember Dietz stated it would be based on the regular sales tax collected. City Manager George Hoffman asked if they are going to try to solve the language now or just have a specific language motion that tells us what it is. City Clerk Kathleen Connelly stated she thinks all that is needed is just a direction to change this so that it is clear that it limits the incentive to those taxes collected, excluding capital facilities projects. She was not sure what they want to call the other category. Councilmember Severs commented it could be that they are not eligible for any additional taxes implemented from today forward. Councilmember Dietz added over the city's base. Councilmember Severs asked if they implement tax for this or that or whatever they are not eligible for it. Councilmember Insalaco asked how they are eligible for it. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 7 OF 24 Councilmember Severs commented it is what they are agreeing upon today. City Manager George Hoffman commented they do not have to flush out the words; they have have the concept to make that happen. Councilmember Dietz stated they have to put it in the motion. Vice Mayor Eck commented they do not need the specific wording. Staff will come up with the specific wording. City Attorney Joel Stern stated that is it for the agreement.They are here because of A.R.S. 9-500.11(K) which requires a city or town which desires to enter into a retail development tax incentive agreement to adopt a Notice of Intent to enter into such agreement a minimum of fourteen (14) days before adoption of the agreement. They are not really approving the language of the agreement, they are just here to comply with the statute which is just a notice of intent to enter into an agreement. He wanted everyone to understand that. Councilmember Insalaco commented they understand it, but he was not sure the public would understand it. City Attorney Joel Stern commented he also wants the public to understand. Mayor Coleman commented that is because they did this once before. City Attorney Joel Stern stated they did but with a different proposal. Councilmember Sippel asked if this is just a vote to start that 14 day clock. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 8 OF 24 City Attorney Joel Stern stated that is correct.They do not have to vote on the 15th day; they can wait a while if they want to.They just have to give 14 days notice. Mayor Coleman stated it has to be at least 14 days. Councilmember Dietz suggested they do it as soon as possible. Mayor Coleman stated at the end of that they should have the language they are going to be voting on.He asked if next time they see this it will be what they are voting on. City Attorney Joel Stern stated that is correct.It will be the language that they say tonight with the exception of the other sales tax issue and that will be going in. That will be what the public will see as to what they are going to consider to adopt at a future date. Actually, he believes they need to pick the date tonight. City Clerk Kathleen Connelly asked if he thinks they could take a couple of minutes to go over the proposed motion because there are some blanks in there and some things that tie into other parts of the motion. The very first paragraph of the motion is the adoption of the resolution which includes the notice of intent and the lengthy document as an attachment.The option there is to approve or deny it.The next part is to set the date, time and location for the meeting of the adoption and it has to be a minimum of 14 days.The earliest would be the 23rd of February.The next portion is that they direct the city attorney to send all of these documents, the resolution, notice and the attached agreement, to the attorney for the Downtown LLC group. They need to be told of the date when council is going to convene again to look at adoption and request that all of their comments be sent in writing to the city attorney at least five days prior to whatever day the council picks. The next section simply restates the statute. The purpose of the statute which is to keep the public informed or advised of what the council is about to do. The last thing is the council's discretion if they want to have the second meeting open to the public. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 9 OF 24 Councilmember Insalaco stated he did. City Clerk Kathleen Connelly stated that is the council's choice. Councilmember Severs commented he had some things he needed to say.He is incredibly uncomfortable with this, being there today, and the amount of pressure they have received to enter into the Notice of Intent and agreement that they do not even know if they have. These people withdrew their offer.The council is acting as if they never did. They can come back and say they were angry and so they withdrew it.He does not like what is happening.A letter of intent is that the council intends to enter into something and we have been told this is it this is the best offer.This is it.No changes will be accepted; and then the council has questions and answers. The city explains to the community our concerns and finally lets the truth out.Our side of the story is let out to the public and somebody stops him and they are crazy.He thought the city would have all the control in the world over the downtown.He does not feel this person was in the same meeting they were in.The city does not have all the control, nor does it have any commitment to anything.They have not committed to any time frame, to building one single building, to what it is going to look like or the percentage of residential to commercial.Not one thing have these people committed to and yet they tell us no changes. This is it, this is what they want, no changes.Then they send the city a letter that they are backing out of the deal.A letter of intent would be misleading right now; that the city is intending to get into an agreement with these people.He asked if they had seen the changes yet, and if there were any negotiations that could happen now.They told the city this was the final best offer. Councilmember Dietz commented • they will find out once they give them the agreement and where it goes from there. Councilmember Severs asked where the agreement gets them?Does it get a time frame, commitment of any construction whatsoever, or tell the city they SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 10 OF 24 are ever going to put a shovel in the ground. It does not get a developer.It does not commit or guarantee.It gets the city a plan.It gets the investors more value for their land.Tonight the council would be signing an intent to agree to something that would be nothing more than a commitment of millions of dollars with nothing substantial in return in writing.It is only a concept of what this might look like.He see a forty million dollar dream, an idea, that they would be committing to and he is not comfortable at all.A citizen today told him that they are being forced by 35 people in the business group to make a decision here for thirty five thousand people. This is not right.He questioned why they had to rush into this and not have normal negotiations like normal development agreements. Vice Mayor Eck stated he did not disagree with a lot of what Councilmember Severs had to say. The quality and the value of the property is what this is all about.They are not dealing with vertical developers. If they agree with the four dozen or so changes in the contract, then there is a deal that is probably about as good a deal as the city will be able to get. It is not the deal that they wanted. They are voting on something where provisions were made to protect the city dramatically more.He feels much more comfortable.He would rather be with one person who is the developer of every vertical building but that is not the case for now.They have forty revisions that cover the city that were not in the revisions of the business community.He is tired of a standstill.Nothing is happening.Instead of saying the council is hearing all the things they are saying, the council disagrees with them. They need to come to some type of agreement that the best development agreement the city can get for that area and go with that.He does not think they are going to be happy with this development agreement.But the council is saying they agree to this and tell the 35 or 40 business people that the council felt it was the most responsible agreement for this community for the citizens. Councilmember Severs asked at what point in time do they stop negotiating? Vice Mayor Eck commented this is it, this is the city's plan. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 11 OF 24 Councilmember Severs asked if it was. Vice Mayor Eck stated it is. He added the city is finally going to get an answer of yes or no. Councilmember Severs stated then they can go to the business group and say they want to take out certain things and they would have an agreement.They are ruining this because they want some things. Vice Mayor Eck commented it depends on what those things are. Councilmember Joe Severs asked what is going to happen if they want two of the things just put in there taken out.He asked if they are going to take them out. Vice Mayor Eck stated one item is whether they have to plant a palo verde tree instead of a mesquite tree.They might do it. Councilmember Severs stated that is not in there. Vice Mayor Eck commented if it is something that is not overbearing as far as dollars lost to the community, possibly. Councilmember Severs stated they are going to enter into negotiations again. Vice Mayor Eck commented he doubted it; also doubts it is going to be a yes or a no. Councilmember Dietz stated they gave us their best and final offer.The city took their best and final offer, looked at it, analyzed it, and saw the need for some changes and changed them.The city is giving it to them as a final offer.If they take it they take it. If they SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 12 OF 24 do not, they do not.They sell the property and leave, they do. If they enter into an agreement so be it. Councilmember Severs asked if they enter into this agreement, what will happen. He asked what if they say no to this agreement. Vice Mayor Eck commented they wait and see what happens.They are not developers; they own land. Councilmember Dietz stated let them go to the business people.The council has done what it feels is best for this community with this agreement. Vice Mayor Eck stated they are finally moving forward on this agreement. Councilmember Dietz stated if they go to the business community, they go to the business community.It is time to get this going and be done with it. Council Severs asked what will happen if they go to the business community and they, inturn, come and say the city is ruining the agreement and this needs to be done. Vice Mayor Eck stated they defend it to that individual the best they can, but they are not going to sign the life of the community away for one specific group in this community.The city will come up with the best development agreement it can, and this is it. Today he had one of those thirty-five business people tell him he finally read the development agreement.He cannot repeat what words he used. All along he felt it was not a two-way street.This man got it, he was one of them who got it, it is going to be difficult to do.There will always be ones, who have not read the entire thing but he feels they are moving forward.He does not see how else they can move forward.They are trying to get the best for our community in this agreement. The council wants the downtown to happen; everybody does. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 13 OF 24 Councilmember Waldron stated he would like to remind the council that this is only the first part of a three step process. This starts the 14 days and then they have to approve or reject the agreement and then sign it. This argument is a little bit premature; they are not looking at the agreement yet.This is a notice of intent. Vice Mayor Eck asked if after 14 days they can revise this after 14 days? Councilmember Waldron stated they have to come back and either except it or reject it.They have not even done that yet. They have two more steps to go. Vice Mayor Eck stated this is not going to be revised except for a couple of things that were discussed earlier. Councilmember Severs commented he thinks they are wasting time now.They pass the intent, which is another two weeks, and they do not, know if they will consider it. He thinks they are doing things a little bit backwards. They should have gone to these people and given them the changes and asked what they think? If they said absolutely not, they would not be here today. Vice Mayor Eck commented that is what he thought they were doing. Councilmember Insalaco stated that is what the council are doing but they are doing it legally.It is being done the way it is supposed to be done. Mayor Coleman commented on Page 11 they removed the language "compelled the city to create the districts upon request", the CFD and the enhanced maintenance, the public improvements, and 4.7 and 4.8, both of those.In 4.8, we still have language dealing with those two entities, the CFD and the EMSD.He asked if there should be language included under that provision which says if created by the council. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 14 OF 24 City Attorney Joel Stern stated he thought other provisions would cover it.These are just options.They can create a community facilities dstrict or they can create a public improvement district which would be the EMSD district.He said he thinks it is covered under other provisions.They don't have to create them unless they want to. Mayor Coleman asked if they are not created then it does not mean anything. City Attorney Joel Stern stated that is correct. Mayor Coleman commented the other thing is under 4.1 on the zoning of the property and 4.2 the development of the property.It says the developer agrees that the development of the property should be in accordance with the city center district zoning designation general plan, the redevelopment area plan, the conceptual master development plan, the downtown center design standards, and the downtown center public improvement standards approved by the city and further acknowledges that no planned development plan shall be submitted to or approved by city until the downtown center design standards and the downtown center public improvement standards are submitted to and approved by city.He asked if that gives the city some control. City Attorney Joel Stern Commented they do have to submit and have them approved. Mayor Coleman stated the development along the main street does have to be four stories. City Attorney Joel Stern commented that is new language. Mayor Coleman asked if any building 50,000 square feet or more would be on the east side of Idaho. City Attorney Joel Stern stated that was under the big box provision on Page 12. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 15 OF 24 Mayor Coleman stated he was not sure if every building 50,000 square feet or over had to be located east side of Idaho. If they want to build a movie theater by the other end of main street they could have a huge anchor on Idaho and a movie theater near the Grand. Vice Mayor Eck commented he knows what he is getting at.The mayor is not necessarily against the big box on the other side.If they want to bring big box to the west side and if is a theater, he would like it. especially at Phelps or Superstition Plaza. City Attorney Joel Stern said he was not sure, but he got 50,000 square feet from their new planning manager. They had talked about big boxes and what was typical. Anything that was 50,000 was considered big box or major retail development. There was general discussion on the size of Wal-Mart. Mayor Coleman stated he did not know how much square footage a 10 plex theater was. City Attorney Joel Stern asked if they should make it except for theaters. Vice Mayor Eck stated no, it should be something appropriate. Mayor Coleman commented maybe the big box could be enlarged a little bit so they could put something bigger. Vice Mayor Eck stated even if an appropriate business came in on the other side of Idaho it might be 80,000 square feet it might be 190,000 square feet.It could be our center.We do not know.The city is not dealing with the vertical developer. He was concerned they might stop a awesome, catalyst business from going on that side just because they said to build the big boxes on the east side of Idaho. City Manager George Hoffman SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 16 OF 24 stated that is not the intent. They have the right to put the big box on the east side. It does not prohibit them from coming to the council and say through the zoning process that they would like to do A,B or C on the eastside of Idaho.It means the council will have a mutual dialogue about it instead of a categorical right to do it laterally.He stated that if it was going to go west of Idaho the developers would come in and the council and the citizens would have the mutual ability to have that discussion instead of them saying it is in the zoning and this is what they are doing and then council has the ability to say they are concerned that the city is not getting the pedestrian oriented mixed use. Vice Mayor Eck said it allows the city ability to negotiate. City Manager George Hoffman stated they then could have a two party dialogue instead of a unilateral direction. Vice Mayor Eck stated he was concerned with this because we allow big box east which might stop something else appropriate from going anywhere in the area. Mayor Coleman stated in the agreement all major retail development; or big boxes with 50,000 square feet or more with leasable, useable space, shall only be located east of Idaho road.He asked if they can entitle that and add language saying except as approved by the city council. City Clerk Kathleen Connelly stated they need to also make sure the 50,000 square feet would be under one roof. City Attorney Joel Stern stated unless approved by the city council. Councilmember Severs stated they were not sure about the agreement yet, and because they were being rushed they were getting ready to enter into an intent that they were not even sure of yet. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 17 OF 24 Vice Mayor Eck stated he agreed yes and no.He agreed they were being rushed by a group of business folks that felt it either had to happen or they were going to lose it all.On the other hand they have had it for how long now; he feels like it has dragged on. Mayor Coleman stated he would not have had the understanding he had he not been working on this for the past two years. If he had been handed it ten days ago and asked what he thought, he might have felt differently. He understood there are different levels of understanding. What they have generally reflects the concerns they voiced Monday night. Vice Mayor Eck stated he thinks they have something that the business community will look at and say they did what was needed; others who own property in the area and would benefit will say it is not enough because it is not giving them a wide open door.He thinks they have something he can comfortably go to the citizens with and say they acted in their best interest. City Clerk Kathleen Connelly mentioned that the motions are just suggestions, but by having their legal counsel put the comments in writing and direct them to the city attorney that would suggest that any outside comments received would not fit within that motion. Mayor Coleman stated the additional language he suggested about the 50,000 square feet and the tax should be mentioned in the motion. City Attorney Joel Stern stated he referenced the pages, which were Page 12 and Page 17. Vice Mayor Eck mentioned there were three things they have to look for in the contract. He wanted to know if they were accomplishing those three things in this contract. City Attorney Joel Stern stated that they were not guaranteed square footage, not getting SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 18 OF 24 a perform schedule as to when anything is going to be built or when.He stated they were getting a schedule for essentially a plan which is Exhibit C. Mayor Coleman asked if those would be developed at sometime. City Attorney Joel Stern asked if what would be developed. Mayor Coleman asked if the schedule of performance would be developed. City Attorney Joel Stern stated they have to submit construction documents but not for 30 months. Vice Mayor Eck stated his point is they were not given anything unless they do the development so who will want to sit on the property. City Attorney Joel Stern stated they are not just getting twenty million dollars; they have to actually have to do something.They have to build public improvements in the main street area which has to be accepted by the city.They have to submit a planned development plan Phase One Plan for the main street also one that includes 100,000 square feet of some kind of mixed use development and retail.If they do not do those things, they do not get paid. Those are preconditions. Councilmember Severs stated they have committed the money to them which means they cannot use that money for anybody or anything else.He asked what happens if they decide to turn in their documents and not build this until year 20.That money has been committed, tied up and not available for twenty years. City Attorney Joel Stern asked if that is the tax increment money or the value of that tax increment. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 19 OF 24 •Councilmember Severs stated that was right because they had nothing.The development agreement specialist attorney said they have to know what they are doing to get, when they are going to get and who is going to build it.They have none of it. Councilmember Dietz stated they are not going to let this thing go for years with all the growth that is happening south of the City. Mayor Coleman asked if this is limited to the life of the tax incentive fund. City Manager George Hoffman stated it is not. It runs two years beyond at 2031.The intent is that there might be a cash flow lag as to when the monies actually get submitted and run through the process; that is why they had it run past the incentive fund. City Attorney Joel Stern stated that if something is committed before the 2029 date then the City would have to pay back the public improvements that are even done after that time but, as long as it is committed for the 2029. Councilmember Severs stated the agreement binds them to giving the city a phased plan. Phase one will be this within a year and a half from now.A year and a half from now they have to tell the city here is a plan for something.He asked when they are going to start building something south of the freeway. Councilmember Dietz stated they need to get on top of this and get it going before anything goes south of the freeway.They want to get the downtown established before that happens. Councilmember Severs stated they want to sell their land. They do not want to get anything going before the land is sold. Mayor Coleman commented he thinks they do because the vertical development is what is going SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 20 OF 24 to increase the tax incentive fund.The longer they wait for that to happen, the more tax incentive fund money they lose. City Manager George Hoffman stated there is a huge financial incentive for them.The more they build and the sooner they build it, the more value they create, and the more over the term of the agreement that they can put in their pockets. Mayor Coleman stated he does share some concerns that Councilmember Severs has. They do not know because it is a very unusual model and unusual circumstances as far as the downtown opportunity they have goes. Vice Mayor Eck stated no one in the state has had to deal with this issue except Apache Junction. City Manager George Hoffman stated the tax incentive fund is simply the funding vehicle.A lot of these have been done around the state using another vehicle. Two-thirds of the agreement looks okay. Councilmember Severs commented in most cases that is correct.This is a huge dollar incentive for them to develop the vertical development to create tax to get their money back if they are the developer.They are not.This is a huge dollar incentive for the real estate investors, for the city to commit millions of dollars to them so they can sell their land and be done with it. Councilmember Dietz stated it is in the same best interest of whoever buys the land to get it built. Councilmember Severs commented then they need to be dealing with the people who will be getting the incentive. Vice Mayor Eck commented this is the first step. They are going to take our agreement and the city we are dealing with them or they are not going to accept it SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 21 OF 24 and we are not going to deal with them.We are going finally in a positive direction in that manner. Councilmember Severs asked who are they would be dealing with if they are not dealing with them.They would be dealing with somebody who spends maybe twenty million dollars to buy some land.Two things could happen here: these people could come to the city and say they are thinking about buying this piece of land in this downtown center but, heard the city is terrible to deal with.They asked what the city can do. Our staff is going to say they buy this land and the city will give them tax increment financing to pay back every penny spent on infrastructure. The city will ask them what they want to build and they say they are going to build a theater and a restaurant. The city says it loves that, do it, and here is anything they want.They are going to go back and tell this investor they are crazy, the city is great to work with.Then they are going to tell all their developer friends the same thing and that land is going to sell. The people who do not have sixty to seventy million dollars to spend every month on interest are going to come to us and want to build. The city will say it wants buildings on the ground in two years and it will give them all this. They will say great.In two years the city could have construction instead of two -and -a -half years to have a plan for something to be constructed someday. Vice Mayor Eck stated they have to complete the process with the current landowners first. Hopefully, something with occur there. If not, then the city will probably end up with his second part. Councilmember Insalaco stated this has to happen first, whether they like it or not. Mayor Coleman closed the discussion with no further comments and called for a motion. Councilmember Waldron MOVED THAT RESOLUTION NO. 07-08, A RESOLUTION OF THE MAYOR AND CITY COUNCIL OF THE CITY OF APACHE JUNCTION, PINAL COUNTY ARIZONA, ADOPTING A NOTICE OF INTENT TO ENTER INTO A RETAIL DEVELOPMENT TAX INCENTIVE AGREEMENT FOR THE SUPERSTITION SQUARE DOWNTOWN PROJECT WITH AJ TOWN CENTRE, LLC BE APPROVED WITH THE FOLLOWING SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 22 OF 24 AMENDMENTS: ON PAGE 12, ARTICLE 5, SECTION 5-1, INSERT THE LANGUAGE ACCEPT AS APPROVED BY THE CITY COUNCIL AND UNDER EXIBIT F, SECTION 6A AND 6B, THE LANGUAGE BE INSERTED THAT PROTECTS ANY TAXES OVER AND ABOVE THE BASE TAX RATE FOR A SPECIFIC PURPOSE. I FURTHER MOVE THAT WE MEET FOR THE PURPOSE OF ADOPTING THE DEVELOPMENT AGREEMENT ON FEBRUARY 23, 2007 AT 4:00 P.M. IN THE CITY COUNCIL CHAMBERS AND THAT WE DIRECT THE CITY ATTORNEY TO SEND A RESOLUTION OF NOTICE OF INTENT AND COPY OF THE AGREEMENT TO LEGAL COUNSEL FOR AJ TOWN CENTRE, LLC ADVISING THEM OF THE DATE SCHEDULED FOR THE ADOPTION OF THE AGREEMENT AND REQUESTING THAT ALL COMMENTS BE SENT IN WRITING TO THE CITY ATTORNEY AT LEAST FIVE DAYS PRIOR TO THE ADOPTION DATE; AND SINCE THE OBJECTIVE OF THE STATE STATUTE IS FOR THE PUBLIC TO BE INFORMED AND UNDERSTAND WHAT IS BEING CONSIDERED BY THE COUNCIL, WE DIRECT THAT THIS AGREEMENT COME BACK UNCHANGED AND THAT THE MEETING FOR ADOPTION OF THIS AGREEMENT ALLOW FOR PUBLIC COMMENT. Vice Mayor Eck stated he could not make the meeting that day. City Attorney Joel Stern stated on the day this agreement is voted on there needs to be a two-thirds vote; that means five out of seven. There was general discussion on a date where the entire council could attend the meeting.The consensus was Monday, February 26 th. Councilmember Waldron amended his motion to February 26th, 2007 AT 4:00 P.M. Councilmember Sippel seconded the motion. Vote:6-1 (Councilmember Severs voted in opposition.) The motion carried. ADJOURNMENT ) Mayor Coleman adjourned the meeting at 4:53 p.m. SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 23 OF 24 ACCEPTED THIS 6Th DAY OF MARCH , BY THE MAYOR AND CITY COUNCIL OF THE CITY OF APACHE JUNCTION, ARIZONA. SIGNED AND ATTESTED TO THIS 6TH DAY OF KATHLEEN CONNELLY City Clerk MARDI DOUGLAS fOLEM Mayor CITY COUNCIL MINUTES CERTIFICATION 2007. I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the special meeting of the City Council of the City of Apache Junction, Arizona, held on the 8th day of February, 2007.I further certify that the meeting was duly called and held and that a quorum was present. Dated this 21st day of February, 2007. KATHLEEN CONNELLY City Clerk SPECIAL MEETING OF THE CITY COUNCIL FEBRUARY 8, 2007 PAGE 24 OF 24