A $9.4-million infrastructure reimbursement deal designed to keep Axon from leaving Scottsdale won unanimous approval from City Council on Aug. 25 and drew widespread praise from its members.
The deal will pay the taser and body camera manufacturer up to $9.4 million if it meets construction and employment benchmarks connected to a proposed headquarters expansion in northern Scottsdale.
Even with Council approval, the deal hinges on Axon winning a state land trust auction to purchase a parcel in the Crossroads East near Loop 101 and Hayden Road.
The land, located near Axon’s existing headquarters, will go to auction on Sept. 10 with a starting bid of $31.7 million.
If Axon wins the bid, it will be eligible for up to $7.2 million in reimbursements for costs associated with the widening of Mayo Boulevard and Hayden Road.
Those improvements could also include associated infrastructure work like sidewalks, landscaping, sewer, wastewater and water improvements, according to a draft of the agreement.
Council also agreed to reimburse Axon $2.2 million for a payment it must make to the city after purchasing the land.
The Arizona Land Department requires any successful bidder on the land to pay the city $2.2 million within 30 days of the auction as payment to recoup city costs for existing infrastructure in the area.
In order to receive its full reimbursement, Axon must build at least 250,000 square feet of commercial or manufacturing space and have a payroll of $130 million over any continuous 12-month period within five years of the state land auction.
If Axon does not meet those benchmarks, it would still be eligible to receive up to 50 percent of the infrastructure reimbursement, or about $3.6 million.
If it wins the bid, Axon must reserve 4.5-6 acres for the city to build a fire station, water pump and potential future command center.
Under the deal, the city will pay Axon for the land using the same per-acre price the company pays the state for the larger parcel. The city anticipates the plot will cost it about $2.6 million, according to a council report.
Proponents of the deal cited a number of benefits to the city, including retaining Axon, formerly Taser International, a major employer founded in Scottsdale in 1993.
Scottsdale resident Rick Smith, a Chaparral High School graduate, founded the company in the 1990s and it has grown significantly since that time.
The now publicly-traded company has a local workforce of 850 employees in Scottsdale and had total revenue of $549 million in 2019.
Axon nearly left Scottsdale a few years ago after coming to an agreement with the Salt River Pima-Maricopa Indian Community to purchase a plot of land adjacent to Scottsdale. But in 2019, Axon backed out after it was unable to secure design approval for its new headquarters from the SRPMIC.
Smith credited Mayor Jim Lane for brokering a deal to keep the company in Scottsdale.
“I would also love to give some credit to the mayor here,” Smith said. “We were pretty far down the road on moving forward with a deal over in the Salt River location.”
“We were going somewhere else, and it was exactly (Lane’s) approach that got us to rethink it,” Smith said.
In addition to the 850 existing jobs at Axon in Scottsdale, the company expects to add 650 new positions after its expansion.
The city estimated it will give Axon $12 million, including the land sale, over the course of the deal but will receive $16.5 million in value, including the infrastructure improvements, land and existing and new taxes association with construction and Axon’s operations.
Additionally, both city and company leadership said Axon’s expansion will make the city a more attractive destination for other technology companies in the future.
“And, again, to the point that this further diversifies our city industry base and our reliance on hospitality and focuses on our emerging tech industry is important,” Scottsdale Economic Development Director Rob Millar said.
Smith said the company would like to play a role in making Scottsdale a tech destination.
“I’d like people to start saying Scottsdale in the same breath as San Francisco, Seattle, Austin and Scottsdale when they talk about the top tech cities,” Smith said.
Smith said that goal also benefits Axon’s recruiting goals, because industry talent tends to move to markets where they have more employment options.
Councilwoman Linda Milhaven called the vote “a watershed event for Scottsdale” and compared it to the Mayo Clinic’s role in sparking the growth of the city’s healthcare-centric “Cure Corridor.”
“I think this... raises our profile,” Milhaven said. “I think it improves our brand and our reputation.”
The deal sailed through the City Council – a somewhat unexpected occurrence considering a previous reimbursement plan in Crossroads East for the Nationwide development faced opposition from some residents and members of the Council when it passed on a 5-2 vote in 2018.
The Nationwide deal included zoning changes packaged together with an infrastructure reimbursement and some of the opposition was connected to requests for greater density and heights in the development.
Axon indicated its eventual project will require zoning changes – including a request to increase height allowances up to 82 feet – but those requests will come to Council at a later date.
Councilwoman Kathy Littlefield is the only council member who voted no on the Nationwide reimbursement and is still serving on Council.
At a City Council meeting in 2018, she said the Nationwide deal did not include enough public outreach and “the cost for this infrastructure improvement will be borne by the Scottsdale citizen who quite literally will be forced to pay for development that they don’t want.”
But, in the case of Axon, Littlefield said she believed the benefits of the project outweighed the costs to the city by diversifying the economy with quality manufacturing jobs.
“As you know, I do not like passing out city money to private companies, in general, and especially if I can’t be sure that we’re not going to be pretty sure of getting it back,” Littlefield said. “I’m pretty sure we’re going to get this back in spades.”
Littlefield’s comments were largely echoed by the rest of the Council, several of whom celebrated the city’s ability to hold onto one of its homegrown success stories.
“I think it’s a wise decision and I think it’s great to see us all come together on something that is as important as this is for the city,” Lane said.
The Axon deal did have its critics.
Betty Janik, the top vote getter in the Primary, took to Facebook earlier this month and said the infrastructure improvements were “of little benefit to citizens.”
Candidate Tom Durham also told the Progress he was against the deal.
“My first point is Axon is a very, very successful company,” Durham said. “Their profits and their sales are growing every year, and to me, that raises the question of why are we giving them $9 million when so many Scottsdale businesses are suffering, and we have a lot of businesses that are closing and shutting their doors?”
Councilwoman Solange Whitehead said, “I certainly didn’t get all that I wanted but when negotiations were over, I voted big picture. The City will acquire prime real estate at a discount and Scottsdale retains a cutting-edge tech company that is experiencing tremendous growth for all the right reasons.”
If Axon successfully purchases the state land, it will likely be back before the city in the coming year to ask for zoning changes and design approval for its new headquarters.
Preliminary designs for the new Axon campus show a unique building that includes an illuminated 40-foot-wide sign bearing the company’s name, banding around the building in the company’s signature yellow and a futuristic illuminated lighting system.
According to the agreement, Axon plans to request to rezone the property to I-1 industrial park zoning and will ask for amended standards to allow for buildings up to 82 feet tall – well above the 52 feet allowed under city code.
Millar, the economic development director, said the reimbursement deal approval does not guarantee approval of Axon’s future zoning or design requests.