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STRATEGIC OUTCOMES |
ACTION |
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Department: |
☐ Safe & Prosperous |
☐ Motion |
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City Attorney |
☒ Active & Appealing |
☐ Resolution |
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☐ Respected & Responsible |
☐ Ordinance - Introduction |
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Division: |
☐ Connected & Engaged |
☒ Ordinance - Adoption |
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Administration |
☐ Unique & Creative |
☐ Public Hearing |
TITLE: t
GPLET Lease: Spencrazi, L.L.C.
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SUMMARY RECOMMENDATION: Summary Recommendation
Authorize: (1) accepting title to land and improvements on Parcel A of the Center Pointe Commons Lot Tie/Lot Split at the southwest corner of 16th Street and 4th Avenue; (2) an eight-year government property land and improvements lease with Spencrazi, L.L.C., as the statutory prime lessee; (3) abatement of the government property lease excise tax for the term of the lease; and, (4) reconveyance of the land and improvements to the prime lessee at the conclusion of the lease. (This item must be adopted by a simple majority vote without the use of the consent calendar) (City Attorney) (Richard Files)
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STRATEGIC OUTCOME:
This previously vacant parcel has been improved with a Slim Chickens restaurant on Parcel A pursuant to a development agreement previously entered with the developer Spencrazi, L.L.C., furthering the City Council’s strategic outcome of Active and Appealing.
REPORT:
On December 21, 2022, the City Council adopted Ordinance No. O2022-054, authorizing a Real Sale, Option, and Development Agreement (Agreement) between the City and Hardknocks, LLP, which then assigned the Agreement to Spencrazi, L.L.C. The Agreement described, among other things, a real property sale of surplus City property, a lot tie/lot split into two parcels, Parcel A and Parcel B of the Center Pointe Commons Lot Tie/Lot Split, the redevelopment of the Parcel A property, an option to purchase and redevelop Parcel B, and the potential for Spencrazi to take advantage of a government property land and improvements lease on either or both Parcel A and Parcel B, provided Developer deeded the redeveloped property to the City prior to opting into the lease. The City then would lease either or both parcels to Developer, under a government property land and improvements lease with the City as landlord and Developer as prime lessee. At the conclusion of the eight-year lease, the City must reconvey the property back to the Developer. This Ordinance concerns Parcel A and authorizes acceptance of title to Parcel A by the City and the Lease of Parcel A to the Prime Lessee, Spencrazi, L.L.C.
During the term of the lease, the leased land and improvements is subject to the Government Property Lease Excise Tax (GPLET), which, because the redevelopment property is in a statutory central business district and statutory redevelopment area, qualifies for abatement of the GPLET. Pursuant to statute, GPLET abatement requires that prior to entering into the Land and Improvements Lease, “the government lessor determines that, within the term of the lease or development agreement, the economic and fiscal benefit to this state and the county, city or town in which the government property improvement is located will exceed the benefits received by the prime lessee as a result of the development agreement or lease on the basis of an estimate of those benefits prepared by an independent third party in a manner and method acceptable to the governing body of the government lessor.” A.R.S. § 42-6209C(2)
In a March 13, 2024, 2019 report prepared by Elliott D. Pollack & Company titled, Economic and Fiscal Impact of a Proposed Fast-Food Restaurant, Yuma Arizona, the estimated fiscal benefit based on the proposed redevelopment of Parcel A over a 10-year period will generate $8.5 million in revenues. This amount includes $3.9 million for the State of Arizona, $1.3 million for Yuma County, over $2.7 million for the City of Yuma and approximately $520,700 for local school districts. This information is summarized on page 7 of the report. In addition, the redevelopment of Parcel A will create approximately 100 local direct-employment jobs with an average annual wage of approximately $27,200. The property tax abatement is estimated at $136,880 over eight years or approximately $17,110. Of this amount the City would give up approximately $23,200 in GPLET payments over the eight-year period or $2,900 per year. A copy of the report is on file with the Yuma City Clerk and included as a supplement to this City Council Report (CCR).
The Spencrazi L.L.C. Parcel A Project is the Slim Chickens Restaurant, which received a Certificate of Occupancy on February 20, 2025. The letters included as a supplement to this RFCCA demonstrate that City Staff has provided the required notice to all local taxing agencies. To date, no comments from any of the taxing entities concerning the GPLET abatement request have been received by City staff.
Also attached to this CCR is a copy of the proposed form of the Parcel A Land and Improvements Lease which shall remain on file with the Yuma City Clerk. The final form shall be substantially similar.
FISCAL REQUIREMENTS:
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CITY FUNDS: |
$ 0.00 |
BUDGETED: |
$ 0.00 |
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STATE FUNDS: |
$ 0.00 |
AVAILABLE TO TRANSFER: |
$ 0.00 |
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FEDERAL FUNDS: |
$ 0.00 |
IN CONTINGENCY: |
$ 0.00 |
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OTHER SOURCES: |
$ 0.00 |
FUNDING: ACCOUNT/FUND #/CIP |
TOTAL $ 0.00
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To total; right click number & choose “Update Field” |
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FISCAL IMPACT STATEMENT:
NONE
ADDITIONAL INFORMATION:
SUPPORTING DOCUMENTS NOT ATTACHED TO THE CITY COUNCIL ACTION FORM THAT ARE ON FILE IN THE OFFICE OF THE CITY CLERK:
NONE
IF CITY COUNCIL ACTION INCLUDES A CONTRACT, LEASE OR AGREEMENT, WHO WILL BE RESPONSIBLE FOR ROUTING THE DOCUMENT FOR SIGNATURE AFTER CITY COUNCIL APPROVAL?
☐ Department
☐ City Clerk’s Office
☐ Document to be recorded
☐ Document to be codified
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Acting City Administrator: |
Date: |
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John D. Simonton |
02/26/2025 |
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Reviewed by City Attorney: |
Date: |
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Richard W. Files |
02/26/2025 |