City outlines West Falls revenue terms, flags phase‑2 timing and $10 million option

City Manager Wyatt Shields and staff reviewed the West Falls project’s financial terms and timeline, telling the joint meeting that proceeds from the development are a major revenue source for school capital costs. Staff said the ground‑lease capitalized payments total $25.5 million (paid over the life of the agreement) and described a pre‑negotiated phase‑2 closing payment of $10 million (or appraised value, whichever is higher) that is due if the developer exercises closing options on the phase‑2 site (outside closing date June 2026).

Shields said a supplemental base rent of $200,000 a year will begin in the FY2026 budget year and escalate at 2.75% annually; affordable‑housing payments (approximately $230,000 per year) will begin once the senior building is completed and then escalate roughly 3% annually. Staff summarized the net fiscal impact of the project as projected between $5 million and $6 million per year when the full set of payments and eventual tax revenues materialize. The comprehensive agreement also includes a limited tax‑abatement design and profit‑share/admin fee provisions tied to condo sales.

Staff cautioned that timing matters: some payments and tax benefits depend on project phases and sellouts, and cash timing had previously been affected by delay of the senior building. The staff presentation flagged the developer’s option to pay incremental nonrefundable fees to extend the phase‑2 outside closing date and noted that council and staff will need to consider phase‑2 decisions in the coming months.

What happens next: staff will monitor West Falls phase‑2 milestones, and any change in timing or developer choices will be factored into future revenue forecasts and the FY26 budget deliberations.