Town Center special-service district projected shortfall; staff recommends temporary TIF transfer while options studied

Staff told the council that the Town Center Special Service District (SSD) fund is operating at a structural deficit and that current projections show the SSD will exhaust its fund balance in the coming fiscal year unless steps are taken.

Why it matters: the SSD pays for operating and capital expenses in Town Center (garage maintenance, enhanced cleaning and security, plaza landscaping and events) and its shortfall could reduce services that support downtown businesses, residents and visitors.

Deputy Director of Economic Development Emily Archer and colleagues summarized the SSD’s revenue and spending. The SSD is financed by a real-estate surcharge currently at $0.45; SSD expenditures total about $3.8–3.9 million annually, with the largest line item being garage maintenance (23 percent). Archer said the cumulative SSD fund balance of roughly $1.1 million is projected to be insufficient in the next fiscal year, leaving the city to consider: service reductions (estimated ~20% cut), a rightsizing of the surcharge, a blended approach (some service reduction plus a rate increase), or temporary funding from another source while the city engages stakeholders and develops a longer-term plan.

Staff proposed a short-term option to transfer surplus from the Central Business District tax-increment financing (TIF) balance — currently about $12.9 million — and suggested a one-year transfer of $1 million to stabilize SSD operations while staff conducts more robust engagement and develops sustainable alternatives. Archer said the transfer would provide time for workshops, surveys and negotiations with commercial and residential stakeholders.

Council discussion favored a temporary funding bridge paired with further public engagement. Council members stressed fairness concerns for residential property owners in the SSD, asked whether the surcharge could be bifurcated to reduce the burden on residents while keeping commercial contributions higher, and asked staff to assess whether any SSD-eligible capital work (for example, garage recapitalization) could be supported by TIF under current legal restrictions. Several council members asked staff to return with specific options in time for the upcoming budget cycle.

Council direction: staff will prepare a recommended budget approach that likely includes a temporary TIF transfer to stabilize the SSD and a schedule of community engagement and policy options (service adjustments, rate rightsizing, or blended solutions) for council consideration in the FY26 budget process. The council asked staff to analyze the legal parameters and implications of using TIF funds for SSD needs.