The Mission City Council began prepping for the probability of a new negotiation for the Gateway project Wednesday. Councilors went through a refresher course on the financial tools the city has at its disposal as incentives for development deals.
The current development agreement with the Cameron Group, owners of the Gateway property, took about six months to negotiate in the summer and fall of 2012. That agreement and the incentive package that provides for about $30 million in financial assistance to the project were approved by the council in January 2013. None of that assistance has been put in play because of delays in the start of construction.
“No one will rush you,” Bruce Kimmel, the city’s outside financial advisor told the council Wednesday. Kimmel said that if developer Tom Valenti proposes a new plan, then a new development agreement will be required and financial incentives will be considered again. The city has approved both a Tax Increment Financing District (TIF) and a Community Improvement District (CID) for the project and proceeds from additional property tax and sales tax in those districts pay off the bonds that the city would issue to assist the development.
The current development agreement requires that construction of the Gateway be substantially complete by Dec. 31, 2015. That deadline could be extended or superseded by a new agreement.
“As your financial advisor) I am not freaking out,” Kimmel said. He told the council that the city is in a good financial position because its storm water bonds did not count on Gateway revenue to pay the debt. Refinancing has lowered the city’s debt cost and it has a strong credit rating with a stable outlook.
The council got a refresher on how TIF and CID bonding works and the discussion covered these points:
- The city has no control over specific tenants in a development but can set a preferred mix of the types of tenants.
- A new TIF agreement requires a two-thirds approval of the council.
- A TIF agreement can be vetoed by the school district or county, but it has never happened in Johnson County.
- A developer has no standing for legal action against the city for impeding development if the city takes time to consider or refuses to approve a financial package.