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Developer proposes to deliver 100 affordable units at Cottonwood Mall in exchange for RDA/TIF funding; council probes guarantee and termination option
Summary
A developer offered to commit 100 units at or below 80% AMI in Block D of the Cottonwood Mall redevelopment in exchange for $2.5 million of RDA/TIF support and an assignment of 20% of project increment; council members questioned the size of the guarantee, the administration of annual compliance, and a proposed termination-and-repayment option after seven years.
The council heard a lengthy developer presentation on a proposal tying the city's remaining Cottonwood Mall affordable-housing obligation (100 units) to an incentive package of RDA and TIF funding.
Staff summarized the situation: the Cottonwood Mall urban area renewal project, created in 2008, included a 100-unit affordable-housing commitment at or below 80% AMI. By agreement the developer had received 50 of those units; the remaining 50 are the city's responsibility. Staff reported roughly $800,000 of increment has been collected since 2020, and the developer is proposing to commit all 100 units in Block D in exchange for the 20% project increment plus an additional $2.5 million that includes $500,000 of current increment and $2,000,000 held in reserve from a different project.
A developer representative outlined financing assumptions, market projections and a schedule for ramping leases and retail anchors. He said the package would make the overall project financeable and allow the developer to meet lender milestones for a parking structure and other retail components.
The developer proposed a termination option: if by year 7 the city determined the approach was not working, the developer would begin repayment around year 10 and amortize a guaranteed repayment (developer presented an example of roughly $5.5 million paid back over time) so the city could reclaim funds and pursue alternatives. The developer described the termination option as a protection for the city while acknowledging it complicates financing and raises questions about collateral, whether interest should apply to the repayment, and how repayments would be measured against TIF flows.
Council members asked for more detail on the $3,000,000 TIF projection underlying the developer's repayment math, the exact compliance and reporting process for the 100 units (annual rent rolls and a compliance certificate were discussed), and the potential administrative burden for the city. Staff said a courtesy consultation with the two largest taxing entities (Salt Lake County and the Granite School District) would be scheduled before final action.
No final decision was made; staff will return with clarified contract language on termination and repayment, more precise NPV and TIF projections, and proposed compliance reporting requirements in advance of the public hearing and budget review.
