Presentation - Infill Incentive Plan Amendment Proposal

Prepared by:
Economic Development Division
Infill Incentive Plan 
Amendments:
Economic Vitality Subcommittee 
September 6, 2023

Background
Infill Incentive Plan Amendments
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• City Council highlighted the importance of 
infill and redevelopment to Chandler’s 
continued economic vitality in its recently 
adopted 2023-2025 Strategic Framework.
• Through the Strategic Framework, 
City Council has provided a directive to 
make “targeted use of adaptive reuse, 
infill, mixed-use and redevelopment tools 
and plans supporting the vitality of 
commercial centers and neighborhoods.”

Background
Infill Incentive Plan Amendments
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• The City has recognized the need to offer programs that reduce the costs 
of revitalizing and redeveloping aging commercial properties for 20+ years. 
• Redevelopment projects often take longer than new construction on 
greenfield sites and have different costs.
• Project may require demolition of structures along with environmental 
remediation, depending on prior uses and their impacts.
• In addition, site improvements completed when the property was originally 
developed may not meet current development standards.

Program History
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Below are City Council actions taken to assist commercial property owners 
and help make desirable projects feasible. Priorities have changed over time.
• 2002: “Commercial Reinvestment Program” adopted by City Council to 
assist property owners in upgrading the appearance of aging retail centers.
• 2009: Infill Incentive Plan adopted, designating an “Infill Incentive District” 
under ARS 9-499.10, and shifting the focus of the Commercial Reinvestment 
Program to projects that completely redevelop retail centers.1
Infill Incentive Plan Amendments
1. The Infill Incentive Plan also includes a “Single-Family Infill Program” for new Energy Star / LEED certified homes, which staff proposes eliminating.

Infill Incentive Plan Area
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• The Infill Incentive District’s 
boundaries encompass most 
of the oldest areas in 
Chandler.
• Excludes more recent 
development, including along 
the Loop 101 and Loop 202 
freeways.
• Also excludes the “Downtown 
Improvement Fund Area.”
Infill Incentive Plan Amendments

Projects Supported
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Infill Incentive Plan Amendments
• 2009: Agreement with Great Hearts Academies 
to reimburse up to $250,000 in improvements 
for renovation and occupancy of a former 
Smitty’s Store/Bank First Call Center
• 2015: Agreement with NexMetro to reimburse 
up to $182,242 in demolition costs to convert a 
portion of East Valley Mall site to multi-family.
• 2016: Agreement with Furniture & Mattress 
Discounters to reimburse $11,000 for 
improvements to a former Mervyn’s store.
Bella Grace Apartments

Gift Clause Compliance
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Infill Incentive Plan Amendments
• More recently, the viability of the Infill Incentive Plan / Commercial 
Reinvestment Program (in its current form) has been impacted by an 
Arizona Supreme Court decision.
• In 2020, a case brought before the Arizona Supreme Court challenged 
whether benefits provided by a certain municipality to two private parties 
violated article 9, section 7 of the Arizona Constitution (the “Gift Clause”).2
• The Arizona Supreme Court issued its opinion in 2021, determining the 
municipality violated the Gift Clause. The court’s interpretation of the Gift 
Clause further limits how cities can support private development activity.
2. Schires v. Carlat, No. CV-20-0027-PR

Infill Incentive Plan Amendments
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Infill Incentive Plan Amendments
• Due to the Arizona Supreme Court’s ruling and following guidance from 
the Law Department, the Economic Development Division no longer 
advertises the Infill Incentive Plan and is not accepting applications.
• Economic Development is now proposing to amend the Infill Incentive 
Plan in a way that would mitigate the risk of Gift Clause challenges and 
allow the City to support desirable redevelopment projects.
• The amendments include incentives specifically authorized by the 
ARS Infill Incentive District legislation (e.g., fee waivers and expedited 
permitting) along with other incentives vetted by the Law Department.

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Infill Incentive Plan Amendments
• Staff proposes expanding the 
Infill Incentive District to include 
all of Chandler north of Loop 202.
• Recognizes that West Chandler 
has aging shopping centers that 
may no longer represent a 
property’s highest and best use.
• Able to support projects within 
the downtown area.
Infill Incentive Plan Amendments

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Eligibility Criteria:
Applicant must be an owner, or an owner’s representative, of an existing retail center or 
Class C office building located within the Infill Incentive District.
The retail center or Class C office building must be a minimum of 15 years old, 
OR its vacancy rate must be 50% higher than the citywide average for its property type.
Applicant must obtain all building permits, meet all building and zoning codes, and 
obtain all additional licenses or permits required for the project.
Applicant must enter into an agreement with the City to ensure the project will be 
developed for the purposes stated, subject to approval by Mayor and City Council.
Infill Incentive Plan Amendments
Infill Incentive Plan Amendments

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Infill Incentive Plan Amendments
Infill Incentive Plan Amendments
Retail Property Stats
• Within the expanded Infill Incentive 
District, 570 retail buildings out of 
652 total (87%) are at least 15 years 
old, and thus would be eligible.
• The citywide retail vacancy rate is 
currently 4.7%, so any retail center 
with a vacancy rate above 7.0% 
could also be considered.

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Infill Incentive Plan Amendments
Infill Incentive Plan Amendments
Class C Office Property Stats
• Within the expanded Infill Incentive 
District, all 79 office buildings rated 
as “Class C” are at least 15 years old.3
• Class C is the lowest classification of 
office building. They are generally 
located in less desirable areas, in 
need of renovation, with outdated 
infrastructure and technology.
3. Designated as “Class C” in the CoStar commercial real estate database.
Before
After

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Infill Incentive Plan Amendments
Incentives Overview: State Infill Incentives District Legislation
Infill Incentive Plan Amendments
• ARS 9-499.10 states that an infill incentive plan adopted by a municipality 
can include the following incentives to encourage redevelopment:
1. Expedited zoning or rezoning procedures.
2. Expedited processing of plans and proposals.
3. Waivers of municipal fees for development activities as long as the 
waivers are not funded by other development fees.
4. Relief from development standards.

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Infill Incentive Plan Amendments
Incentives Overview: Proposed Infill Incentive Plan Amendments
Infill Incentive Plan Amendments
• Staff proposes the following incentives for the Infill Incentive Plan. These 
pull from the state’s legislation and include additional support the City 
can provide while adhering to the Gift Clause. Approval of any incentives 
would be at the discretion of City Council.
1. Fee Waivers
2. Expedited Plan Review
3. Reimbursement of Public Infrastructure Costs

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Infill Incentive Plan Amendments
Incentives Overview: Fee Waivers
Infill Incentive Plan Amendments
• The City may approve up to a 100% waiver of building permit fees, 
building plan review fees, and City of Chandler development impact fees.
o
If the City waives development impact fees, it must reimburse the 
development fee accounts for the amount that was waived.
o
The City would use General Fund dollars already allocated to the Infill 
Incentive Plan project to reimburse waived development impact fees.
o
Other cities have waived development impact fees to attract desirable 
projects.

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Infill Incentive Plan Amendments
Incentives Overview: Expedited Building Plan Review
Infill Incentive Plan Amendments
• The City may provide expedited plan reviews at no additional cost 
(10-working day review cycles).
o
Require plans to be submitted electronically.
o
Development Services generally reviews and provides comments for all 
projects before the end of the normal 20 working-day review cycle.
o
Expedited plan review is usually double the plan review fee.

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Infill Incentive Plan Amendments
Incentives Overview: Reimbursement of Public Infrastructure Costs
Infill Incentive Plan Amendments
• The City may provide a reimbursement of costs for pre-approved public 
infrastructure (e.g., roads, sidewalks, utilities, streetscape improvements). 
• The public infrastructure must be dedicated to the City upon completion.

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Infill Incentive Plan Amendments
Incentives Overview: Reimbursement of Public Infrastructure Costs
Infill Incentive Plan Amendments
• The amount of City funding available to an individual project would be 
capped at $250,000, contingent on funding availability.
• The $250,000 cap would not include the value of any fee waivers or 
expedited permitting offered by the City.
• Applications seeking reimbursement for planned public infrastructure 
costs would be evaluated and awarded funding first come, first serve.

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Infill Incentive Plan Amendments
Incentives Overview: Reimbursement of Public Infrastructure Costs
Infill Incentive Plan Amendments
• City’s payment for public infrastructure costs would also depend on the 
improvement type and if it meets or exceeds City development standards.
o
Meets standards: 50/50 cost split between the City and applicant.
o
Upsized utilities: if City elects to upsize a water/wastewater line to 
better serve future development, City will pay 100% of additional costs.
o
Enhanced Streetscape: for streetscape improvements that exceed 
standards, City will pay 75% of additional costs and applicant 25%. 4
4. Improvements must be in City right-of-way and could include landscaping, shade structures, public seating areas, decorative lighting, public art, etc.

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Infill Incentive Plan Amendments
Application and Approval Process
Infill Incentive Plan Amendments
1. Property owner/developer submits an application for the proposed 
project to the Economic Development Director.
2. Negotiation of benefits and preparation of an agreement, in a form to be 
approved by the City Attorney.
3. Agreement brought to City Council for consideration.
4. Project completed as proposed. Must pass City inspections.
5. Reimbursement of fees/public infrastructure costs paid upon issuance 
of Certificate of Occupancy/Completion.

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Infill Incentive Plan Amendments
Next Steps
• Staff requests direction from the Economic Vitality Subcommittee on 
whether to proceed with the Infill Incentive Plan amendments as proposed, 
with changes, or not at all. 
• A resolution amending the Infill Incentive Plan and the designated Infill 
Incentive District would be brought to City Council.
• If approved by City Council, Economic Development would work with CAPA 
on promoting and providing education on the Infill Incentive Plan benefits.
• Economic Development would also proactively engage with property 
owners and developers about properties with redevelopment potential.

Thank you!  Questions?