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Development authority seeks share of Kroger "pilot" payments as pilot now exceeds debt service
Summary
Forest Park attorneys told the Development Authority that Kroger-related "pilot" payments assigned to the city to repay URA bonds now exceed debt service by roughly $113,000 annually; the board was told staff will seek an agreement amendment so the DA can retain a portion for local projects.
Chair called the meeting to order and the board received a legal briefing on Kroger-related pilot payments and how they are used to repay bonds issued for the Fort Gilliam redevelopment.
Attorney Glaze said the pilot payments were pledged to repay Urban Redevelopment Agency (URA) bonds issued to fund infrastructure and land costs at Fort Gilliam, and that the city guaranteed those bonds. "Since that time, the pilot payments exceed the debt service, currently by about a $113,000 a year," Attorney Glaze said, noting the DA and city finance staff met to review numbers and that Ed Wall, the city's financial adviser, provided a breakdown of debt service and payments.
The briefing traced the transactions: initial bond issues to finance land acquisition and infrastructure, lease and additional-rent (pilot) payments associated with the Kroger lease, and a 2021 refinancing that reduced interest costs. Attorney Glaze explained that the DA previously assigned pilot payments to the city under an agreement entered into in 2015; after refinancing, pilot payments began to exceed the debt service, generating a modest excess that grows in coming years.
Board members asked whether the excess could be divided between the DA and other authorities. Attorney Glaze said the practical path would be an amendment to the 2015 assignment agreement that would allow the DA to retain a portion of the payments annually rather than assigning the full amount to the city. He emphasized the need to clarify the source and amount of funds and said staff will follow up with a proposal. "If we're able to come to some agreement with the city regarding using the pilot payments as a source of funding for the development authority...it looks like currently the city has about 113,000 in excess funds," he said.
Why it matters: those pilot payments are a recurring revenue stream linked to an existing lease; even a partial allocation could give the DA operating funds for property repairs, programming and small capital projects instead of relying solely on property sales or external grants.
Next steps: staff will meet with city finance and the financial adviser to refine numbers, return with an amendment proposal, and update the board at a future meeting. No final decision or formal amendment was made at this meeting.
