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Effingham council debates draft $2 million TIF redevelopment agreement for Village Square Mall
Summary
City staff and developers presented a draft $2 million TIF agreement to redevelop the Village Square Mall; council and public probed timelines, project area boundaries, occupancy requirements and litigation contingencies before asking staff and counsel to refine exhibits and renderings.
Effingham City Council spent the bulk of its meeting discussing a draft $2 million tax‑increment financing (TIF) redevelopment agreement for the Village Square Mall, presented as the Square Southtown project. Staff outlined the agreement’s structure: a $637,500 reimbursement tied to property assembly and roughly $1.33 million earmarked for eligible building expenses including HVAC, parking lot and façade work, and space conversion to allow exterior access. The draft assumes the resolution of pending litigation before final disbursements.
City staff identified a three‑year performance window requiring three tenants or condominium purchasers to occupy the project area; failure to meet occupancy triggers a $500,000 clawback provision. Staff and the developer also agreed to timing changes for invoice/payment to align with the city’s October tax receipt schedule to ensure the city can meet payment deadlines.
Attorney and staff discussion centered on clarifying the project area and attaching concrete exhibits to the agreement. "We need drawings or renderings so it’s crystal clear what the project area is," said an attorney advising council; staff said they would provide revised renderings and updated exhibits and expected to confer with the developer’s counsel the next morning. Council members and staff emphasized the need to remove ambiguity so future councils or invoices could read the contract consistently.
Public commenters and at least one council member pressed for clarity on how past TIF dollars were spent and whether the proposed allocation matched TIF’s economic‑development purpose. A resident who identified himself as Scott Kabbas said the city reported $8,394,000 in TIF expenditures in recent years and questioned how much of that supported private economic development versus public works. Developers responded that their private investment would be in the range of $8 million to $10 million and said they were committed to redeveloping the mall.
Council members and legal counsel also flagged litigation constraints. "Both parties are cognizant of pending appeals and will comply with court proceedings," counsel said; staff confirmed red‑lined language deleted warranty representations the city could not make because of a federal case affecting the property. Members directed staff to return with cleaned‑up contract language, clarified exhibits showing the project area (excluding portions not part of the city’s $2 million commitment) and a clear timeline for performance and payment.
Next steps: staff and the city attorney will refine the contract exhibits and renderings, confer with the developer’s counsel, and present a revised agreement for council consideration once the project plan and legal wording are finalized.
