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City Council Report Date: November 2, 2026 To: City Council Through: Scott Butler, City Manager Marc Heirshberg, Assistant City Manager From: Nana Appiah, Development Services Director Ashley Scott, Management Assistant II Subject: DA26-02412 The Grove at Lehi Development Agreement Council District 5 Purpose and Recommendation The purpose of this report is to discuss and consider approving a Resolution to authorize the City Manager to enter into a Development Agreement (“DA”) with The Grove at Lehi Community Association, an Arizona nonprofit corporation (“Developer”). The Development Agreement addresses the installation and ongoing maintenance of landscaping within the Arizona Department of Transportation (“ADOT”) right-of-way adjacent to The Grove at Lehi residential subdivision, north of McDowell Road and east of the Loop 202 Red Mountain Freeway. Staff recommends that the City Council approve the Development Agreement. Background The Developer owns the subdivision’s common areas, which adjoin ADOT property along Loop 202. To enhance the appearance of the area, the Developer proposes to install trees and the irrigation infrastructure within the adjacent ADOT right-of-way. ADOT allows governmental entities to obtain encroachment permits for the improvements on its property. ADOT issued an encroachment permit to the City on September 10, 2026, for the proposed landscaping. The Developer and the City now propose a Development Agreement to establish responsibility for the permitted improvements. Discussion Under the Development Agreement, the Developer will undertake the landscaping work and assume the City’s obligations under the ADOT encroachment permit. The proposed improvements include approximately 28 mesquite and live oak trees and irrigation infrastructure along the Loop 202 frontage. The Developer will be responsible for installing, maintaining, repairing, and replacing the landscaping at its sole cost and expense, in accordance with applicable laws and ADOT permit requirements. Any material changes to the improvements will require prior written approval from the City. The agreement has an initial 20-year term and will automatically renew for an additional 20 years unless terminated earlier under the terms of the agreement. Upon termination, the Developer will be responsible for removing the improvements and restoring the ADOT property at its expense if required by ADOT, unless the City elects to maintain the improvements as provided in the agreement. The agreement also requires the Developer to indemnify the City for specified third-party claims arising from the improvements or permit obligations. If the Developer fails to maintain the landscaping, the City may perform the work and recover its direct costs from the Developer. The Developer’s obligations are binding on successors and assigns as covenants running with the land. Alternatives The following alternatives are presented for consideration: Not to Approve the Resolution: If Council chooses not to approve the Resolution, the City Manager will not be authorized to enter into the Development Agreement. The City would not have the proposed contractual commitments from the Developer assigning responsibility for installation, maintenance, costs, and performance of the City’s obligations under the ADOT encroachment permit. Staff recommends the City Council approve the Resolution authorizing the Development Agreement for the Developer to establish responsibility for the landscape improvements within the ADOT right-of-way. Fiscal Impact The Development Agreement does not require any additional investment. The Developer is responsible for the costs of installing and maintaining the landscape improvements. The agreement gives the City the right, but not the obligation, to perform maintenance if the Developer fails to do so and seek reimbursement of its direct costs. Coordinated With The Development Agreement was coordinated with the Development Services Department and the Department of Transportation.