Council divided over seeking court ruling or negotiated exit for Rock Creek Entertainment District TIF

Council debate over the Rock Creek Entertainment District and its associated Tax Increment Financing (TIF) paused at a legal crossroads as members weighed litigation, negotiated exit and the political consequences of either route.

The item opened with staff and legal counsel summarizing outstanding technical questions about the project plan’s compliance with statutory requirements and the composition of the authority. Council Grant asked staff to review material alleging the project plan conflicts with the Local Development Act; City Attorney Rick Knight said he would respond in writing.

Questions then turned to legal exposure. Knight explained that many council members also serve as trustees of a public trust that houses the tax increment account and that “you can’t rule out the possibility” that an aggrieved party could sue trustees for breach of fiduciary duty. He warned that, if a conflict arises, the city attorney’s office may be ethically conflicted out and trustees might need private counsel: “I can’t represent two entities that have conflicting legal obligations,” he said.

Rob Norman, representing petitioners who gathered roughly 11,000 signatures, urged a judicial resolution: “Let’s get this in front of a judge and get a decision,” he said, arguing that the petitioners sought a clear judicial answer rather than open‑ended political fights.

Legal options discussed included a declaratory judgment asking the court whether the council can place the matter before voters and an agreed termination negotiated with the developer/authority — the latter described by staff as the least‑risky path in prior TIF unwinds. Knight and Walker noted past instances where negotiated exits settled the dispute without prolonged litigation and cautioned that unilateral repeal of an adopted plan could invite breach‑of‑contract suits against both the city and the trust and raise potential taxpayer exposure.

Councilors split on the right approach. Some argued that litigation would produce a definitive judicial answer and respect the will of the petitioners; others said litigation risks and public optics (a city suing its citizens) counseled toward negotiated resolution or leaving rights of petition and referendum to the statutory process. Several members also flagged that a precedent allowing easy repeal of prior council actions could raise borrowing costs and undermine confidence in the city’s bond‑backed commitments.

Staff committed to producing a written analysis of the specific contract and project‑plan questions raised by councilors and petitioners, and to returning with options. No binding legal action was authorized at the meeting; council discussion will continue and staff will present follow‑up findings to help the council evaluate litigation risk, contract cure options and potential negotiated outcomes.

Next steps: staff to provide written responses to the compliance and contract questions, and council to revisit the issue at a future meeting or study session once more information is available.