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HomeMy WebLinkAbout2007.0213.TCWSM.Minutes TOWN OF FOUNTAIN HILLS MINUTES OF THE WORK STUDY SESSION OF THE TOWN COUNCIL (110, February 13,2007 AGENDA ITEM#1—CALL TO ORDER AND ROLL CALL Mayor Nichols called the meeting to order at 5:02 p.m. Present for roll call were the following members of the Fountain Hills Town Council: Mayor Nichols, Councilmember Kehe, Councilmember Leger, Vice Mayor McMahan, Councilmember Schlum and Councilmember Archambault. Town Manager Tim Pickering, Town Attorney Andrew McGuire and Town Clerk Bev Bender were also present. Councilmember Dickey was absent from the meeting. AGENDA ITEM#2—DISCUSSION OF ECONOMIC DEVELOPMENT IN FOUNTAIN HILLS. Town Manager Tim Pickering stated that staff had set up this workshop as an educational opportunity for the Council as well as the public so they could gain a better understanding of what happened with economic development and the effort that went into this important area. He said that economic development was one of the main priorities of the Council and staff wanted to give the Council an opportunity to ask questions. He added that staff had also invited some developers to give an overview of how they view the Town. He stated that Economic Development Specialist Megan Griego would provide an overview of economic development in Fountain Hills. (A copy of the presentation is available in the office of the Town Clerk.) Ms. Griego addressed the Council and presented a brief overview of demographic information relative to the Town in order to provide them with some insight on what developers are looking for when they choose to locate in one community versus another. She said that the presentation would cover both the pros and cons of development within the community. She added that following her presentation, she would introduce the Council to representatives from Westcor, DeRito Partners and the Greater Phoenix Economic Council(GPEC). Ms. Griego discussed the fact that the views, the beauty, quality of housing and small town atmosphere were all reasons why citizens decided to invest in Fountain Hills by purchasing homes and living there. She noted that 22,000 people have invested in the community and made it their home. Fountain Hills was definitely an upscale community with hometown character. The fact that the Town was insulated from the rest of the Valley made the community unique but they were still close enough to the city to enjoy all that it offers as well. Discussion ensued relative to the fact that developers had many choices relative to developing within a community; the number of households in the community; the potential number of customers developers look for in a certain trade area; the fact that Fountain Hills' trade area was commonly referred to as a 90-degree trade area in that most of the development actually occurred on the west side of town [map displayed in the Chambers]; the fact that the area was surrounded by Native American communities on both sides (north, east and southeast); income levels (approximately 60% of the U.S. average); the fact that figures such as these were analyzed by developers to determine demands for their products; lifestyles in the community and the fact that Fountain Hills fell within the top 25% of the lifestyle segments described in the United States; the fact that the Town had a total of 78.3 vacant commercial acres and an additional 9.3 acres of industrial acres, another factor developers look at; the fact that there was not much opportunity for commercial development in the Town because there were very few parcels that were more than ten contiguous acres in size; the largest parcel, 23 acres, was located at Shea and Palisades and was planned to be Fountain Hills Conference Resort and Spa; the second largest, 14 acres in size, was located on El Lago close to Town Hall and will one day be home to a Church; the fact that the majority of vacant commercial property in Town consisted of five sites (96%), and the other 4% would consist of small infill development projects. Z:\Council Packets\2007\R3-01-07\02-13-07 Work Study Minutes.doc Page 1 of 8 Ms. Griego discussed the fact that residents had been asking for a Harkins Theatre complex in Town and said that staff looked at the requirements the Town would have to meet in order for a Harkins to be established in Fountain Hills. She said that the company did have future plans to expand in most of the western United States and 14 theatres were planned in the next two years. Unfortunately for Fountain Hills, they required 60,000 to 85,000 square feet of space, which would be extremely difficult to find in the community. In addition, the company located in malls and were usually not free-standing buildings. She added that typically around theatres there were accommodating tenants, such as a Chili's or other similar developments. The co-tenants they required were also essential in determining whether or not to locate. They also looked at customer base and the minimum number required to attract a Harkins Theatre was 150,000 people in a five-mile radius. For Fountain Hills, the five-mile radius population was 27,000, 123,000 people short of getting Harkins to locate in Town based purely on density. Ms. Griego further stated that residents had expressed a strong interest in having a Trader Joe's locate in Town. She noted that the company was looking to expand all across the country but pointed out that that meant the Town was in competition with 49 other states and thousands of other communities just like Fountain Hills. The company required 8,000 to 15,000 square feet of space, which could be found, but their co-tenants and where they were located (within a community strip center or a neighborhood strip center) were also essential for their survival. As far as density, they require 90,000 people within a five-mile radius. Although the Town met their income level requirements and their age requirements (customer age), they did not meet a lot of their other criteria to get them to even look at the community and consider them over another location. Additional discussion ensued relative to the fact that developers look at supply and demand; the fact that Fountain Hills was only meeting 7% of the demand for a book store; as far as sporting goods, Town retailers were only accounting for 16% of the demand and this forced residents to make their purchases in neighboring communities; the fact that existing businesses might choose to look at some of the weak areas and expand some of the items they sell to help meet the demands of residents; the fact that 50 different retail categories were analyzed in the report and staff picked the top 10 in which the Town had a deficit to focus on, and the fact that the only surplus out of the 50 retail categories was furniture. 'vs) Ms. Griego stated that based on the bare minimum requirements that companies had for locating in a community, she would now like to discuss the types of retailers the Town could attract based on the supply and demand information provided. She said that The Orvis Company was a sporting goods store and there was a demand for such a business. The company was looking to expand in Arizona and was seeking 13,000 to 15,000 square feet of space, a realistic figure for the community. They were also looking to locate in downtown business areas and seeking customers with high incomes that are of adult age. She said it was likely they could build a building and the Town's customer base would meet all of their needs. She added, however, that these were just the minimum requirements to get them to consider looking at Fountain Hills. She said that her job was to analyze the information and when a developer came in and was looking for anchor tenants, she would reveal this information and let them know that these were the types of tenants she believed would be a good fit for the community. Ms. Griego also discussed Barnes & Noble and noted that the Town met the company's basic requirements. They too were looking to expand all across the United States and have stores that range in size from 28,000 square feet to 67,000 square feet so she believed the Town could accommodate them as far as size. The Town's income levels and customer age group also met their requirements. She stated that she would take this information to a developer — the need and the ability to accommodate both a sporting goods store and a book store in Town—and then it would be up to the developer to help the Town attract those types of businesses. Ms. Griego introduced Amy Malloy of Westcor to the Council and noted that Westcor was Arizona's leading mall developer, headquartered in Phoenix. She provided brief background information relative to Ms. Malloy. Ms. Malloy addressed the members of the Council and highlighted a brief PowerPoint presentation (a copy of which is on file in the office of the Town Clerk). She noted that for nearly four decades, Westcor had led Arizona's retail industry with trend setting and forward thinking shopping developments. Their portfolio Z:\Council Packets\2007\R3-01-07\02-13-07 Work Study Minutes.doc Page 2 of 8 included 28 shopping centers, including 11 regional centers, 3 specialty centers and 14 urban villages. The company's reputation and solid industry relationships allowed them to consistently introduce unique retail coy offerings, including many first-to-market concepts. The company was founded on the philosophy of responsible, market-driven growth. Additional discussion ensued relative to the fact that Westcor currently had several regional destinations in different development stages (in Gilbert, Goodyear, Surprise, North Phoenix and Casa Grande; Westcor is currently reinvesting in more than half of its current portfolio, including Biltmore Fashion Park, Desert Sky Mall, Fiesta Mall, Flagstaff Mall, Kierland Commons, Metrocenter, Paradise Valley Mall and Scottsdale Fashion Square) and various Westcor projects and history. Ms. Malloy highlighted the manner in which Westcor determined its new locations and emphasized that retailers were the company's primary customer—their "need to be" in certain regional areas identifies where they would "plant their flag." This was often done almost a decade before certain centers were built. She noted that once regional mall locations were determined, the latest trend was to offer a more unique mixed-use environment (power centers, office components, residential (condo towers) and auto malls. The company was in the regional mall business and effective trade areas for regional malls contained a minimum of 300,000 people (150,000 households), household income of$70,000/per capita income of$20,000 and a strong potential for growth. She added that the company typically liked to develop a minimum of one million square feet for regional malls (minimum of 300 acres in size). Ms. Malloy further stated that over the past 40 years, Westcor had built a long-standing reputation within the community that would not have been possible without developing strong partnerships with City and other thoughtful leaders within communities. She said that the core elements included open communications, knowledge of the market, a teamwork approach, an openness to thinking outside of the box, planning for the future, long-term commitment and trust (they stand behind what they deliver). She highlighted the Chandler Fashion Center (500 acres in size, with five distinct centers) as a great example of their reputation-building projects and ability to work with the community to achieve maximum results. She emphasized that large retailers, such as a Nordstrom's or Target tell Westcor where they need to be and call the shots and if Westcor was lucky enough to be the chosen developer, they work would within selected communities to accommodate the development. Ms. Malloy commended staff on their extensive research that had provided them with ideas as to what could realistically be done in the Town of Fountain Hills. She said that this would now allow them to go after those projects by developing plans to attract those types of markets. She stressed the importance of demanding projects for the Town that would compliment and work with the aesthetic beauty of the area rather than negatively impacting it. She noted that mixed-use development was the trend now but cautioned that trends change and the Town must be ready to work with the developers to achieve their goals. Ms. Malloy also discussed the importance of public/private partnerships and relationships and said that the citizens needed to decide upon a direction in which to move forward in order to achieve maximum results. She thanked the Council for the opportunity to address them on this very important issue. Mr. Brad Smith, Vice President of Business Development for the Greater Phoenix Economic Council (GPEC), also addressed the members of the Council and highlighted a brief presentation. (A copy of the presentation is available in the office of the Town Clerk.) He noted that GPEC is the region's official economic development authority and a true model where public and private members collaborate to promote Greater Phoenix as a great place to "grow business." He added that GPEC was supported by Maricopa County, 16 cities and towns and more than 130 private-sector businesses. He emphasized that GPEC was the catalyst that strengthens the region's economic base, ensuring that it was both diversified and competitive. Discussion ensued relative to GPEC's Mission (attract quality businesses to the Greater Phoenix region from around the world and advocate and champion foundational efforts to improve the region's competitiveness); the organization's vision (GPEC and its members work cooperatively to project a regional identify and collaborate Z:\Council Packets\2007\R3-01-07\02-13-07 Work Study Minutes.doc Page 3 of 8 with organizations to ensure a competitive, vibrant and self-sufficient regional economy, supported by a talented,technologically-advanced, diverse workforce); traditional GPEC (monitoring core strengths) and GPEC next(enhancing with new initiatives); the fact that Greater Phoenix was one of the fastest growing regions in the nations and the #1 destination for Americans relocating from other states; #1 in the nation for entrepreneurial startups; the 3`d youngest metro (2 million or more); the fact that the average age was 33.4 (the U.S. average was 36.4); the fact that Newsweek magazine projects Greater Phoenix to be the 2nd largest "job engine" in the U.S. through 2025, and the fact that the East Valley was projected to grow by 45% by the year 2030 while the West Valley was project to grow by 182%. Mr. Smith discussed the "competitiveness factor" an emphasized the importance of continuing to attract large- scale office developments to house advanced business service companies. He reported that the average size of a GPEC office project was 90,000 square feet and said that the various communities might need to re-evaluate zoning codes to accommodate taller structures. He discussed partnerships with nearby assets to attract biotechnology companies (Mayo Clinic, Community Colleges); and the importance of considering a "technology accelerator" building to house rapidly growing technology companies. He stated that typical projects required public involvement of project costs up to 60% in order to substantially reduce operating costs for emerging companies. Mr. Smith thanked the Council for the opportunity to address them and present an overview of GPEC's operations and goals. Mr. Jim Hood, representing DeRito Partners also addressed the Council and provided a brief overview of his company. (A copy of the presentation is on file in the office of the Town Clerk.) He informed them that a developer looked for"tenants" and that was the driving force behind development. He added that tenants on the other hand looked for demographics; they had an obligation, if it's a corporation, to make sure they could bring in the best investment and the highest return on their money. They had to determine the ability to generate income. He noted that software that predicted volumes in restaurants, gas stations, etc. was not a reality, it was ,100) still a best "guesstimate" and reality was based on residential population, daytime population and people who live in the area generate lunch business. They also look at age brackets based on the types of products being provided because as people get older they have different needs. They look at incomes, ethnic groups and noted that his company has established a Hispanic Division, one of the fastest growing segments in the United States (only beat by the Asian population). Mr. Hood also emphasized the importance of education levels within a community because they affect different eating levels and habits(housing, etc.). Discussion ensued relative to Mesa's Riverview project; Eagle Mountain Shopping Center (82,000 square feet anchored by Fry's Shopping Center); the fact that the Center currently has approximately 6,000 to 8,000 vacant square feet right now; leasing difficulties based on demographics; the fact that the Center was below grade, which offered additional challenges; the fact that traffic counts in the area are good; access was also good; parking was below average (tiered parking) and not convenient; signage was below average, and the importance of listening to both developers and tenants. Mr. Hood thanked the Council for providing him the opportunity to address them and said that although he did not have time to conduct a full market analysis, he believed that the uniqueness of Fountain Hills should not be given away or taken lightly. He stated that the Town's views, different terrain and visibility were tremendous assets. He noted that the Town was basically "an island" and likened Fountain Hills to La Jolla, California. He said that Fountain Hills was one of those areas that people want to drive out to and enjoy the "flavor" that only this community could deliver. He said that he would suggest that the Town focus on its uniqueness, build the brands and work together. Mayor Nichols thanked all of the presenters for their interesting and informative input. Ms. Griego encouraged the members of the Council to pose questions to any of the presenters or to her at this ,41110) time. Z:\Council Packets\2007\R3-01-07\02-13-07 Work Study Minutes.doc Page 4 of 8 Mr. Pickering stated that staff had noticed the same things about the Fry's Shopping Center as Mr. Hood and said that the Town tried to take advantage of its the views because they were spectacular and could not be found (11., elsewhere. He commented on the fact that the Center was not functioning at its best and asked whether there were any thoughts on the part of DeRito to develop any outer lots where they could take advantage of the views or do any type of redevelopment at that site. Mr. Hood concurred that the Center was underutilized and was not the highest and best use in his opinion. He agreed that the views were a strong asset and said he would encourage the Town to capitalize on them. He said that developers, like tenants, were trying to "feed their families" and that was why they looked at volumes; they would always try to maximize out the properties. He added that it was a great piece of property but it was just difficult right now and it might have to go through a number of different cycles before it ends up being the ideal property that they could be proud of. Councilmember Archambault commented on the development that was occurring in the East Valley and said that one of the things the Town and Fort McDowell Indian Community have been talking about for a long time, as well as several other communities in the area, was getting a road across from Usery Pass over to the Beeline Highway. He asked how the development of Queen Creek or that part of the East Valley would impact that particular road. Mr. Smith stated the opinion that being able to open the Town's area to increase traffic, especially as far as labor force availability, would be an asset. He said that skilled, available labor was a number one issue. He added that the Town probably did not have the space to attract a very large employer but opportunities still existed for some medium sized employment. He said he believed that at some point the Town was going to need to bring in additional labor force and so the road would probably be advantageous. He added that people liked to have different opportunities available for employment. Councilmember Leger stated that he had gotten a "mixed message" from the various presentations this evening. co, First he heard the words "opportunity, uniqueness, no other place like it on earth" but when he listened to what was being said about the technology used in their professions, which he respected from a marketing perspective, it did not seem to fit what Fountain Hills was. He asked whether there were any economic development models or people out there who worked specifically in specialty markets such as the Town. He noted that they had 13 acres in the Town Center area that have incredible views and questioned what types of specialty scenarios would work in the downtown center. Ms. Griego responded to Councilmember Leger's comments and stated that Mr. Sam Gambacorta and his wife were present at the meeting and acknowledged their presence. She recommended that councilmembers meet with them after the meeting if they had not already had the opportunity to do so. Mr. Hood agreed that Fountain Hills had things that other communities could not offer but added that the Town did not have enough "depth" to keep "driving their retail train here." He said that they would need to attract people to come here. They would have to develop a uniqueness that people would want to drive to. Employment would remain a challenge. He said that the plan would be a painful one for the Town and emphasized the importance of developing a trend. He stated the opinion that if he conducted a full market analysis it might show that the Town's retail was at its saturation point right now. Additional discussion ensued relative to the Town Center's 13 available acres and the fact that "niche developers" did exist; the fact that the property was infill (between other development); the possibility of doing zero lot line development where the storefronts face the sidewalk with parking behind; developing mixed-use or vertically developed parcels; a suggestion that the Town talk to the City of Phoenix and the City of Chandler to find out what steps they had taken to solve similar problems; the importance of talking about height as far as downtown development; retail on the ground level and residential on the top; the fact that any vision must be a Low. determined vision; the fact that such visions represented a 25 to 50 year commitment on the part of both developers and communities, and the fact that Ms. Griego had laid out the cold hard facts and they had justified what she had explored and proven to be true, and the fact that the Town now had a great opportunity as a Z:\Council Packets\2007\R3-01-07\02-13-07 Work Study Minutes.doc Page 5 of 8 Council and a community to determine what was possible and what they needed and were willing to do to achieve the goals. Councilmember Archambault said that they had talked before about overlay districts and asked if there was something they could do to help encourage the type of development they were looking for in such a district that would "fast track" permitting, etc. Ms. Griego responded that she had seen overlay districts work in other communities where they were looking for retail on the first floor only. She added that it was usually followed up with some type of incentive on the part of the city or town in the form of financial incentives (to get retailers to locate on the first floor or getting existing offices to move to another location where there would be a better fit). She said that she had already explored overlay districts with the Town's Zoning Administrator and his staff and she believed the idea was a viable one. She stated the opinion that that no restraints existed that were hurting the development on the south side of the area as far as the zoning that was currently in place. She added that the only benefit to doing an overlay district would be to shift what already existed in the downtown area. She has heard that a number of people were concerned with the number of offices located along the Avenue of the Fountains and if the residents and the Council felt there was too much office saturation, perhaps an overlay district would be appropriate. Councilmember Kehe commented on the fact that Mr. Hood encouraged the Town to exploit its uniqueness in order to bring customers in from outside the smaller areas that were used to compute the desirability on the part of organizations that want to develop. He asked what the vision would be; the type of specialty shops that would bring people in from outside of the Town's marketing area. Mr. Hood replied that some mixed-use projects might make a lot of sense (office, retail and residential). He stressed the importance of attracting a unique first development and said that others would then follow. Councilmember Kehe noted that the Town was interested in retail because of sales taxes and said that developments such as medical complexes and office space were okay but did not generate the type of income retail establishments do. He asked how they could get retail to express an interest to a developer and what practical tactics should be applied. Ms. Griego responded that it was a matter of supply and demand and said that the previously illustrated chart outlined the top ten retail opportunities for Fountain Hills. The key was to look at those lines and then attract those tenants that were a good fit for those lines. She added that tenants are looking to make money and in order to do so, they need to ascertain that certain numbers exist (households, customer base to meet demographic requirements, etc.). Mr. Pickering said that the thinking in the past was to create a denser downtown, which they had done, and put condos in that would create the density they need to support the retailers. He stated that what had happened was a lot of the condos sit empty because they were owned by investors who had short-term rentals. He added that they should look at that and determine whether that was really working(to have winter visitors as residents). He said that people would always leave in the summer because it is hot but that was something to consider and they had this discussion on short-term rentals versus long-term rentals in the past. He added that this was something that they did control; how short a time those visitors could actually stay. Additional discussion ensued relative to increasing daytime traffic counts by attracting employers to the community; the importance of attracting employers to increase daytime dollars that will help attract the retail they are looking for; the fact that 65 acres of previously commercially zoned property had been turned into residential and the limited amount of commercial that existed; Councilmember Schlum's statement that the Town's available commercial land should be strongly sought after especially now that the Town more residents in the former commercial space and a suggestion that they looked at existing office vacancies that would accommodate businesses of 15 or 20 people or greater and explore those opportunities. Mayor Nichols stated that the challenge was to make the Town special so that people would to drive to Fountain Hills on a daily or weekend basis. He commented on the fact that the Town was made up of a lot of bright people with excellent ideas who needed to be tapped. He suggested that they explore putting together a Blue Z:\Council Packets\2007\R3-01-07\02-13-07 Work Study Minutes.doc Page 6 of 8 t, a Ribbon Committee to come up with ideas on what type of uniqueness they wanted to put into the 13 acres in the downtown area. e Vice Mayor McMahan recommended that the Town work very closely with the Chamber of Commerce and the Tourism Bureau and agreed that although the condos went in, many of them remain vacant. Councilmember Schlum emphasized the importance of leveraging the uniqueness that already existed — the views, proximity to Saguaro Lake, the river, the McDowell Mountain Preserve, the trails, the Verde Valley, etc. He added that they also had to make sure that they addressed what residents want, as outlined in the Strategic Plan. He said that they wanted a movie theatre and other things they could do locally. The mindset has always been to drive to Scottsdale and they have to get beyond that and employment would help. Mayor Nichols said that what he believed he had heard this evening from the experts was that the requirements of the businesses they wanted to attract to Town far exceeded any projections they would have at build-out. He stated that it was frustrating to want to do things but know that they were not going to have the necessary mass to achieve the goals. He stressed the importance of creative marketing ideas to focus on what makes Fountain Hills special. Councilmember Leger discussed the importance of having a vision and noted that the Town was collaborating with the Chamber of Commerce in visioning exercises relative to downtown development. He said that they needed to determine their next steps and added that there were niche market developers out there and that they had to tap that expertise. Mr. Pickering stated that it was important that the vision be created with reality in mind. He added that he too had heard citizens' desire for a movie theatre downtown. He said that this was not an impossible task but they should be talking to smaller theater owners rather than Harkins or AMC. He advised that staff would continue to work with the landowner of the downtown area, Mr. Gambacorta, and said that staff continually meets with investors that he or staff brings to the table. He also stressed the importance of looking at the uses that they did not have in the community. He said that the demand was there and that was what would make them successful. He pointed out that this was a long-term project and cautioned that whatever they ended up with they would have to live with. He agreed that they should take advantage of their views and uniqueness but said it might take some time. Mayor Nichols commented that the vision could be worked on right away but the implementation might take years. Councilmember Schlum noted that the public realized that the Town did not own any property to speak of so they simply could not do some things they would like to do. Mayor Nichols again thanked all of the speakers and staff for their excellent presentations. He said that he had learned a lot this evening and hoped that others did as well. AGENDA ITEM#3 -ADJOURNMENT Councilmember Leger MOVED to adjourn and Vice Mayor McMahan SECONDED the motion, which CARRIED UNANIMOUSLY by those present(6-0). The meeting adjourned at 6:57 p.m. L Z:\Council Packets\2007\R3-01-07\02-13-07 Work Study Minutes.doc Page 7 of 8 1 TOWN OF FOUNTAIN S likt, e 4111)/ By 01 ally Ni ols,' ayor ATTEST AND PREPARED BY: Bevelyn J. B de own Clerk CERTIFICATION I hereby certify that the foregoing min - e a true .nd correct copy of the minutes of the Regular and Executive Session held by the Town Co • 11 of Fountai . Hills on the 15th day of February 2007. I further certify that the meeting was duly called .i,a that a quorum w.s present. DATED this 1st day of March 2007. . . .. Li/,A, ALL.. Bevelyn J. Bp •fir,Town Cler j _„ ,....0 Z:\Council Packets\2007\R3-01-07\02-15-07 Regular and Executive Session Minutes.doc Page 8 of 8 TOWN OF FOUNTAIN HILLS By Wally Nichols,Mayor ATTEST AND PREPARED BY: Bevelyn J.Bender,Town Clerk CERTIFICATION foregoing minutes are a true and correct copy of the minutes of the Work Study Session I hereby hce Toy that the cilf Fountain Hills on the 13th day of February 2007. I further certify that the meeting held by the Town Council ouruas present. was duly called and that a q DATED this 1st day of March 2007. Bevelyn J.Bender,Town Clerk Page 8 of 8 Z:\Council Packets\2007\R3-01-07\02-13-07 Work Study Minutes.doc N11110 **NO