Council and RDA receive detailed briefing on Cottonwood Mall urban renewal area and tax-increment commitments

City and RDA staff delivered an extended briefing on the Cottonwood Mall urban renewal project area, tax-increment financing (TIF) mechanics and the Agreement to Develop Land (ADL) that governs how increment is collected and distributed.

Staff explained that TIF captures the increased property- and point-of-sale sales-tax revenue generated by development inside a project area above a base year. For the Cottonwood Mall area, the base-year property value cited in the ADL was approximately $31 million, and multiple caps and commitments were established when the project-area agreements were negotiated. The ADL committed 75% of property-tax increment from participating taxing entities to the RDA until a set cap is reached and also included a 100-unit affordable-housing commitment at 80% of area median income; the developer is responsible for 50 of those units and the city is responsible for the other 50 through incentives, rehab or direct construction.

Staff said the ADL includes additional buckets and restrictions: 20% of property-tax increment retained by the RDA for affordable housing until it reaches $500,000; $150,000 earmarked for Highland Drive improvements; a 2.5% administrative retention; and payment of available sales tax to the developer. Minimum development thresholds in the ADL require a minimum investment amount (about $115 million), 134 housing units, 100,000 square feet of office and 60,000 square feet of retail before increment is available. Staff reported the developer has likely met the housing-unit threshold (staff cited roughly 250 built, 50 under construction and 105 entitled) but is short on the office and retail square footage, so no increment has yet flowed to the developer.

Council members asked clarifying questions about how reimbursements for public infrastructure have been handled; staff confirmed the city advanced certain public improvements (about $2.5 million worth of off-site improvements including a traffic signal and Highland Drive work) with an expectation of developer reimbursement when increment flows. Staff also noted historical litigation and a referendum in 2018 that left some misalignments between the SDMP (site development master plan) and the ADL, and that some ADL terms had been amended in 2018 and again in 2021.

What’s next: Staff said they will examine whether ADL conditions are met and bring revisions if necessary; council discussed reconvening affected taxing-entity representatives (a tech committee) if material changes to key tech conditions are proposed. Staff also said certain timing charts and funding clocks (deadlines) exist for housing obligations and would be provided to council.