The City Council is set to decide tonight whether to give a $22 million incentives deal to a Birmingham, Ala., developer who plans on building a mega-shopping center in southeastern Fort Collins.
“This (development) is enormous,” said Mike Freeman, the city’s economic development director. “The overall economic benefit of the project is very significant as well.”
The proposed center, which would boast about 900,000 square feet of retail space – including a Super Target, a Lowes and a new library – would only be the city’s first serious foray into the regional shopping market. A much larger shopping development is in the works, Freeman said, along with the redevelopment of the Foothills Mall.
And the city is betting they will all prove profitable.
“We’re talking huge amounts – basically $2 million in sales tax, which we can’t afford to lose,” said Karen Weitkunat, councilwoman and mayor pro tem. “We’re talking market share in the Northern Colorado region. We can’t afford to lose anymore. We’re talking about the ability of residents of Fort Collins to keep money in Fort Collins.”
And though the budget-strapped city has been wary of offering incentives to large developers, she said that this plan is filled with conditions and offers security against defaulting or failure on the developer’s part.
Compared to the incentives package that Loveland cut with McWhinney Enterprises for the Centerra development, this one is small.
The city would add a special sales tax – up to .75 percent – on items sold in the center. This public improvement fee would total $18.5 million for the developer. In addition, the package would kick $1.5 million in regular sales taxes to Bayer Properties.
Officials from Bayer Properties were not available for comment last week.
The city would also give $2 million to the developer to help compensate for transportation improvements that it would have to make along Harmony, Ziegler, Horsetooth and Timberline roads to accommodate the 101-acre Front Range Village shopping center.
Front Range Village is expected to cost the developer more than $115 million to build, and with the city’s assistance, would yield Bayer an estimated $131 million over its first 10 years.
The city stands to gain plenty, as well.
Fort Collins expects a 4 percent increase in net new sales tax under the proposed deal, and $600,000 in dedicated sales taxes for open space, transportation and Building on the Basics, according to city documents.
Fort Collins Mayor Doug Hutchinson said he expects the shopping center to draw people from across Northern Colorado, as well as enable local residents to shop within their own city.
“It’s going to be an important part of the retail aspect of the economic health of Fort Collins,” he said. “There’s no question that it will help the city budget. Sixty percent of the general fund is funded by retail sales tax, and this will be a substantial increase.”
Add to this the prestige of a regional shopping center, Freeman said.
The city of Loveland’s 25-year, $249 million deal gives tax breaks, public improvement fees and transportation funds to the developer McWhinney and Co., which is owned by a member of CSU’s board of governors.
Loveland and Centerra officials said they aren’t afraid of the emerging competition in Fort Collins. The population is growing quickly enough to support more shopping centers.
“The demographics of this region are interesting,” said Rocky Scott, president of McWhinney’s Centerra development. “The expectation is that the population, largely through natural population increase . is going to increase by almost 100 percent in the next 25 years.”
He added that the center stands only to benefit the region.
“At the end of the day,” he said, “someone graduates from high school or from college and they need a job.”
Loveland Assistant City Manager Renee Wheeler said everything’s still going according to plan.
“Market competition is a good thing,” Wheeler said. “I think the agreement is performing as good as planned or better.”
Even if Centerra were to go sour, an urban renewal district mechanism shields schools in Loveland from any possible losses the city would suffer.
The 2004 deal has also allowed Loveland to begin on $100 million in sorely needed fixes to the Interstate 25 and Highway 34 junction, which Wheeler said the state would probably take more than a decade to make, due to funding shortfalls. Construction is set to be completed in 2008.
And, after 25 years are up, the city’s end of the bargain is fulfilled and all of the sales tax collected goes straight to the city.
But Fort Collins didn’t model their deal after Loveland’s – or any other similar deals, for that matter. Every deal is custom-made for the region.
“There’s no cookie-cutter deal,” economic development director Freeman said. “Nor should there be.”
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