An economic development agreement between Scottsdale and Nationwide Realty Investors will now include a full service hotel rather than two select service hotels.
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An economic development agreement between Scottsdale and Nationwide Realty Investors will now include a full service hotel rather than two select service hotels.
The amendment, which was on the consent agenda, garnered the City Council’s approval at its Dec. 4 meeting. The city and Nationwide Realty Investors originally entered into an agreement in June 2018.
The original pact outlined how NRI would receive public infrastructure reimbursements under the stipulation of certain structures at the southwest corner of Hayden Road and Legacy Boulevard just north of Arizona Loop 101.
Per the agreement, there were three phases. In the second and third phases, NRI agreed to build two 130-room select service hotels, defined as hotels not offering all amenities such as a restaurant or a pool.
With the amendment, NRI will now build a 230-room full service hotel with at least 10,000 square feet of conference space. Plans call for the full service hotel to undergo construction and reach completion in the second phase.
Initially, the estimated revenue from hotel sales and lodging tax under the original plans of two select service hotels over the 20-year agreement would have yielded almost $10.1 million. With the new plan, the estimation jumps to a bit more than $19.4 million.
The economic development agreement called for Nationwide Mutual Insurance Company to build a regional headquarters campus on the site. It also established performance milestone requirements, to be met within five years, to achieve a maximum reimbursement of $21.9 million for public infrastructure costs.
NRI estimated at the time for the total public infrastructure cost to be more than $30 million.
The minimum improvement requirements for reimbursement are divided into three phases. Milestone requirements are further past the minimum requirement.
The first phase includes the construction of 460,000 square feet of commercial space and a minimum payroll of $76.56 million. The city also stipulated the first phase had to meet its requirements or reimbursement for all other phases would not materialize.
The second phase includes the recently amended full service hotel as well as 207,000 square feet of commercial space. The final phase, minus the select service hotel, includes an additional 192,000 square feet of commercial space.
Milestones for each phase require further improvements beyond the minimum requirement. This includes a total payroll of $127.6 million in the first phase and an extra 345,000 square feet of commercial space in the second phase. Additional requirements originally called for a 130-room select service hotel in the second and third phase but the amendment canceled those out.
The city plans to pay out the incentive in three equal payments of $7.3 million upon the completion of each phase. If NRI doesn’t hit the milestone requirements within the designated time frame, the city will reduce the incentives for each phase proportioned to the amount constructed.
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