Council set to move $8.4 million toward paying off the $50 million loan behind roads and pipes at the LG Energy Solution site

Queen Creek's finance staff says the town is close to having every dollar it needs to retire the $50 million short-term loan it took out to build roads, water lines and sewer lines around the LG Energy Solution development, and the Town Council is set to approve the next round of transfers on Nov. 4.

The item sits on the consent agenda for the council's 6:30 p.m. regular session in the Community Chambers, 20727 E. Civic Parkway. It would move $8,394,855 into the loan payoff account and trim $566,140 that had been counted from transportation impact fees.

How the work was paid for

The town signed a development agreement with LG Energy Solution, known as LGES, on April 19, 2022. According to the staff report from Deputy Town Manager and Chief Financial Officer Scott McCarty, the infrastructure Queen Creek built for the first phase of the project, called Alpha, now totals a little over $51 million.

The council's direction from the start was that the work would not be paid with general tax dollars or with fees charged to town customers, and the report says that goal has been met.

Most of the money has come back through the state. Under an agreement with the Arizona Department of Revenue, the Title 42 program returns construction sales tax collected from LGES's prime contractor to the town for qualifying manufacturing projects. Those reimbursements have covered nearly 80% of the town's costs, the report says.

The agreement caps the refund at 80% of the cost or the contractor's tax receipts, whichever is lower, so the town is responsible for at least 20%.

That remaining share is being covered with impact fees for transportation and capacity fees for water and sewer, because the road and utility work along Pecos, Germann, Kenworthy and Ironwood is already in the town's master plans and will also serve later growth in the northeast part of town.

Staff acknowledges this differs from the original plan to rely only on revenue generated by LGES, but says it spreads part of the cost to the new development that will use the roads and utilities.

The loan math

The town borrowed $50 million in fiscal 2023-24 through Series 2023A obligations due in June 2027. With $7,221,690 in interest, the total owed comes to $57,221,690. Queen Creek has already paid $375,000 in principal and $5,192,028 in interest, and the remaining $51,654,662 is scheduled to be paid in fiscal 2026-27, with the final payment on June 1, 2027.

The council set up an invested sinking fund for the payoff on Nov. 5, 2025. The $8.4 million transfer reflects a recent state reimbursement for the last eligible costs of the 2025-26 fiscal year, while the $566,140 cut reflects transportation work that came in under its projected cost. After the changes, the fund would hold about $52.48 million as of June 30, 2026.

The last $4,743,401 is expected to come from water capacity fees once a fee study update is finished in December, the report says; until that new fee takes effect, the money cannot be moved into the fund. Staff plans to bring a final accounting of the entire project after the loan is paid off.

Also on the Nov. 4 agenda

Council members are also scheduled to consider a fiber access agreement with the City of Mesa and to hear an update on putting the proposed water resource fee into effect. A continuance to Dec. 2 has been requested for the rezoning case known as The Union, at Queen Creek and Ellsworth roads.

Sources

queencreekaz.granicus.com

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