Councilmember proposes $45 million riverfront residential fund from insurance reserves

Councilmember Joe Carlucci proposed ordinance 2025-385 at the May 29 Special Committee on the Future of Downtown meeting to create a $45 million contingency account titled "riverfront residential" intended to incentivize development on a concentrated Bay Street corridor.

Carlucci told the committee the money would be a dedicated pool to catalyze development on a narrowly defined set of parcels along Bay Street and the riverfront. "This is sort of that last frontier of downtown," he said, urging a focused approach rather than spreading funds across a broad area.

Finance staff described the source and safety of the funds. "This dates back — this fund is our self insurance fund, which is our workers' comp and general liability," a finance official told the committee and said actuarial and investment performance produced a favorable variance that created roughly $45 million in excess reserves. Staff said the fund must retain a required reserve (cited in discussion as approximately $160 million) and that the $45 million represents amounts in excess of the current required operating reserve; some amounts would otherwise be returned to the general fund under code once audited statements are issued.

The draft ordinance would deposit the selected surplus into a special contingency account. Staff and DIA described the account's intended flexibility: council will set detailed guidelines later by ordinance, but the intent is "primarily for residential uses with appropriate secondary mixed uses," and the account can be used for tools such as low‑interest loans, completion grants or other incentives depending on deal underwriting.

Council members raised several concerns. Finance questions focused on near‑term budget projections: staff noted projected structural gaps in upcoming fiscal years and cautioned about using reserves without factoring upcoming pension and service pressures. Several members urged expanding the geographic boundary to allow funds to help other priority historic or redevelopment parcels (Hogan to Liberty); others said the funds should remain focused on the small Bay Street box to achieve a transformational effect. Committee members also asked for data on recent projects and how many transactions would trigger council review if thresholds are changed.

Carlucci said money would be placed in an interest‑bearing account and expected to grow, and that the pool was intended to shield the general fund from large future incentive requests by having availability to back negotiated deals. He said the item will be considered in committee and noted a likely one‑cycle deferral so committee amendment and budget review can proceed.

No ordinance vote occurred at the May 29 meeting. Committee members asked for additional fiscal analysis and a report on prior similar incentives and projects; committee discussion will continue in the upcoming committee meeting before any final action.