Scottsdale inks development agreement with Axon

Taser company seeks corporate growth as state land auction nears

At the meeting

"Mayor, thanks for reaching out. Literally if you had not reached out — we were pretty far along, and you really did a great job advocating for the City of Scottsdale and working with us to demonstrate how we could collaborate — that was a real win, win, win."”

Rick Smith, Axon Enterprise Inc. Founder & CEO

The improvements may include, but are not limited to:

•Mayo Boulevard from Hayden Road to Perimeter Drive, which includes Mayo Boulevard adjacent to the property, and associated public sidewalks, landscaping tracts, streetscape and lighting;

•Improvements to Mayo Boulevard/Union Hills Drive include Axon’s right to rename the street to Axon Way or similar street designation;

•Hayden Road widening from Mayo Boulevard to Loop 101; and

•Sewer, portable water delivery system, storm drainage retention areas and utilities within public streets and rights of way.

By Melissa Rosequist
Twitter: @mrosequist_

It appears that Mayor Jim Lane is to thank for convincing — at a subsidized cost of up to $9.4 million for tax payers — Axon Enterprise, Inc. to keep its business in Scottsdale.

On Aug. 25, the Scottsdale City Council unanimously approved a public infrastructure reimbursement development agreement with Axon, which is seeking to purchase a 74-acre parcel of state-owned land within the city of Scottsdale in the development area known as Crossroads East.

The state land auction for the Crossroads East parcel at Loop 101 and Hayden Road is scheduled for Sept. 10. The parcel has been appraised at $31.7 million.

Prior to Mayor Lane facilitating a conversation, Axon was headed to neighbor Salt River Pima-Maricopa Indian Community.

Axon Enterprise Inc., formerly Taser International, is a homegrown Scottsdale company specializing in public safety tools.

Scottsdale native Rick Smith started the company in 1993, earning recognition for its creation of Taser stun guns, body-worn cameras and cloud-based digital evidence software.

In its current facility, Axon employs 850 people and is anticipating an additional 650 jobs during the next five years, according to a city staff report.

According to its most recent filing with the U.S. Securities and Exchange Commission, the publicly traded Axon reported a $30.8 million loss for the second quarter on revenue of $141 million.

While the Taser company uses more than 220,000 square feet of office space throughout Scottsdale and Phoenix, officials plan to consolidate its operations in Scottsdale and expand to approximately 330,000 square feet during the next five years.

If it is the successful bidder of the parcel, Axon seeks to construct its future campus in one or more phases, and link to its existing headquarters with the future expansion.

“This development agreement is for public infrastructure only,” Rob Millar, Scottsdale’s economic development directly, said in his presentation to the Council.

“There are elements within the development agreement that refer to zoning, design, signage, and that is only included because Axon, and Rick [Smith], have a very unique building. They want to make sure the City Council and public was very aware of exciting buildings they can’t wait to bring forward to the city as they go through the standard public hearing processes of [design review board], planning commission and city council. The development agreement does not provide for any elements that those public hearing processes would be circumvented.”

The development agreement between the city and Axon stipulates the maximum reimbursement for public infrastructure costs, if all performance requirements are met, is capped at $9,408,716 and includes:

• Mayo Boulevard: $6.4 million;
• Arizona State Land Department Hayden Road payback: $2.2 million;
• Hayden Road widening: $782,848.

An additional component of the auction is a requirement to dedicate 4.5- to 6-acres for a civic use, which will be used to build a fire station, water pump station and a possible future command center.

The city staff report states if all performance requirements are met, the city will pay Axon for the civic use site, at a per-acre-cost that will be determined by the final auction price. The estimated cost, based on the appraisal, is $2.6 million.

Details of the agreement

In a Council presentation, Mr. Millar outlined that Axon is contractually obligated to build a minimum of 250,000 square feet of commercial or manufacturing space, and achieve a payroll of $130 million per year to receive reimbursement.

The improvements may include, but are not limited to:

• Mayo Boulevard from Hayden Road to Perimeter Drive, which includes Mayo Boulevard adjacent to the property, and associated public sidewalks, landscaping tracts, streetscape and lighting;
• Improvements to Mayo Boulevard/Union Hills Drive include Axon’s right to rename the street to Axon Way or similar street designation;
• Hayden Road widening from Mayo Boulevard to Loop 101; and
• Sewer, portable water delivery system, storm drainage retention areas and utilities within public streets and rights of way.

Mr. Millar states the city will receive $16.51 million; and pay Axon $12 million, between the different development agreement terms, and additional project benefits, such as existing sales tax.

Specifically, existing sales tax, over 10 years, is estimated to be $1.28 million.

“We wanted to reflect that there’s a curtain value associated with Axon being in the community, and a significant amount,” Mr. Millar said.

“It’s important to note also there’s additional property tax for the Paradise Valley Unified School District.”

According to Mr. Millar, the city has worked with the State Land Department for a handful of years to identify a 5-acre parcel within Crossroads East for a needed fire station and water pump station.

“Because of this development agreement we’ve decided to work with Axon directly and identify where that 4.5- to 6-acres could be located,” Mr. Millar said.

Further, Axon’s expansion and output is estimated to be a boon for the city. Mr. Millar estimates $31,500 in new real and personal primary property taxes annually; as well as a one-time construction economic impact of $93.5 million.

Overall, the total 10-year impact to the community is estimated to be $5.9 billion, Mr. Millar said.

“This would be a new headquarters that will attract top talent and serve as a premier training facility,” Mr. Millar said.

“Tech is one of our leading industries in Scottsdale, and an emerging opportunity for Scottsdale. This new headquarters, we believe, would not only attract top talent for Axon, but also top talent for other tech industries and companies within Scottsdale.”

This proposed training facility is aimed to bring in people from around the country and world, Mr. Millar said.

“Not only would it be benefiting our tech industry, but also our hospitality industry,” he said.

A win, win, win

Mr. Smith, Axon’s founder and CEO, was provided a few minutes to speak during the late-August City Council meeting.

His company was founded after the 1991 murders of Todd Bogers and Cory Holmes, two Scottsdale residents, who were shot after a traffic altercation, published news reports from the time state.

After the local deaths, Mr. Smith says he became passionate about issues of violence and the use of technology to solve crime.

“We’ve been blessed with a lot of success having grown the company right here. We manufacturer in Scottsdale,” Mr. Smith said. “We’re really excited to do a true next-generation manufacturing site as this comes together.”

Mr. Smith was not shy about thanking Mr. Lane for keeping the company on Scottsdale soil.

“We were pretty far down the road on moving forward on a deal at the Salt River location, which had some advantages, particularly because we were very focused on bringing customers and police from around the world to our facilities for training,” Mr. Smith said.

“This center will also serve as an epicenter where we’ll host these types of training events, both with the public safety community, and as we’re a growing tech company, our goal is to — about half of our revenue now is coming from software and censors, as opposed to the Taser business. Our goal is to further help raise Arizona’s profile, and Scottsdale’s profile, frankly.”

Mr. Smith has aspirations that Scottsdale will be known among the top tech hubs of the country.

“Mayor, thanks for reaching out. Literally if you had not reached out — we were pretty far along, and you really did a great job advocating for the City of Scottsdale and working with us to demonstrate how we could collaborate — that was a real win, win, win,” Mr. Smith said.

Keeping the economy growing

Council members voiced support for the company, Mr. Smith, and the excitement of retaining a world-renowned entity.

Councilwoman Kathy Littlefield poked fun at Mr. Smith for being a graduate of Chaparral High School, while she was an Arcadia High graduate.

Ms. Littlefield warned, for the city, that as nine more parcels at Crossroads East are developed, providing taxpayer money cannot become a habit.

“Each one of these deals in Crossroads East has to be judged separately on its own individual merits; we can’t use this as a precedent-setting device for other companies coming in and expecting just to raid our coffers,” she said.

Mr. Lane says he’s personally happy to be able to exchange value.

“I’m delighted to have them retained here in Scottsdale, among other things, certainly, but also to be able to grow here as other companies have — inclusive of Nationwide. Those are some great examples of keeping good employers, with good jobs, good salaries, and keeping our economy growing,” Mr. Lane said. “And doing it on the basis of the rules that we have here in Scottsdale. It’s been good.”

The development agreement was approved by the council 7-0.