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Council debates $2 million Square Southtown TIF draft; staff to finish contingency language while appellate stay remains
Summary
Council and developers discussed a draft $2 million TIF package for the Square (Southtown) mall. Staff described payment timing, escrow/clawback options and litigation constraints; council agreed to keep drafting contingency language and do not finalize a binding agreement while an appellate‑court stay remains in force.
The City of Effingham and representatives of Square Southtown LLC spent an extended portion of the meeting reviewing a draft tax‑increment financing (TIF) agreement for the Village Square Mall redevelopment. Developers requested up to $2,000,000 in TIF assistance; staff outlined terms including property‑assembly costs of $1,275,000, a proposal to pay 50% of that amount within 60 days of closing, and pay‑as‑you‑go progress payments for the remaining work.
Staff and legal counsel warned that the proposed agreement is contingent on the resolution of an appellate‑court stay blocking the sale of the property. A city legal advisor said the city cannot lawfully enter into actions that violate a court’s stay and recommended drafting conditional language that would allow the city to approve an agreement only after the stay is lifted. Several council members agreed with preparing a final draft now so the city can act quickly once litigation ends; others asked for further review to avoid obligating taxpayers to open‑ended additional requests.
Developer representative Scott Kavis reiterated the developer contribution and existing city investment, saying the city has already invested roughly $1,237,000 into the mall area and that the incremental request would be about $800,000 more in addition to prior investments. Kavis argued the request is consistent with prior city uses of TIF funds and would help make the redevelopment feasible.
A minority council member expressed concern about the scale of taxpayer contribution compared with other incentive agreements the city has made and asked for stricter guardrails in contract language to prevent future open‑ended asks. Supporters said TIF is designed to reverse decline and increase assessed value and that the proposed terms are within precedent for local projects.
Outcome: Council did not adopt a binding agreement. The council instructed staff to continue drafting clear contingency and clawback language, to supply final draft documents to council members for review, and to be prepared to act if and when the appellate stay is lifted.
