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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 03/27/2007 - URBAN RENEWAL PLAN FOR THE FOOTHILLS MALL DATE: March 27, 2007 WORK SESSION ITEM STAFF: Joe Frank FORT COLLINS CITY COUNCIL Mike Freeman Ken Waldo SUBJECT FOR DISCUSSION Urban Renewal Plan for the Foothills Mall. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED 1. Does the Council have any questions regarding establishing an urban renewal plan for the Foothills Mall area? 2. Does the Council agree there is sufficient reason to bring forward for adoption an urban renewal plan for the Foothills Mall area? 3. Is Council comfortable with the schedule for establishing an urban renewal plan for the Foothills Mall area? BACKGROUND Colorado Revised Statutes provides for the establishment of"urban renewal areas"; primarily, for the purpose of using property tax increment financing (TIF) to "fix" infrastructure problems that hinder redevelopment. URAs are intended to be used in areas where the private sector development is not capable of showing a return on investment due to the excessive costs of correcting site issues, or infrastructure deficiencies or other issues that hinder development. The Statutes describe the findings that Council must make to approve an urban renewal plan; and, provide a technical definition of the conditions(a.k.a. "blight")that the Council must find present to declare an area an "urban renewal area". There is also a process that must be followed in approving an"urban renewal plan." The Foothills Mall originally opened in the fall of 1973. For the first couple of decades of operation, the Mall was a major regional retail offering that attracted shoppers from northern Colorado, southeastern Wyoming, and southwestern Nebraska. The Mall underwent expansions in 1980 and again in 1989, but has experienced declining sales and increasing vacancies in recent years with increasing competition from larger and newer retail ventures in northern Colorado. The recent loss of two major anchor stores, Mervyn's and JCPenney, at the Mall has left larger areas of un- and under-utilized retail space, parking areas, and other areas. The overall impact of the decline of Foothills Mall has been significant for the City and indirectly, the community. If the growth rate of sales tax collections at the Mall tracked with the growth rate of the overall City since 2002, then annual sales tax collected at the Mall in 2006 would have been March 27, 2007 Page 2 approximately $4.5 million. Unfortunately, actual collections in 2006 were approximately $3.3 million, or a decline of 27% from the projected amount of$4.5 million in sales tax collections had the Mall kept pace with the retail activity experienced by the overall City. This differencetranslates into$1.2 million less sales tax paid to the City to support ongoing operations for core services like Police,Fire,Transportation, and Parks and Recreation; as well as a decline in dedicated funding to open space, transportation and the Building on Basics capital campaign. Further, the retail categories, General Merchandise Stores (down 24%), Clothing and Clothing Accessories Stores (down 11%), and Miscellaneous Store Retailers(down 8%), which have been hardest impacted by regional competition City-wide, are the same categories which have seen the most significant decreases at the Mall due to the specific retailers who have gone out of business or relocated elsewhere in the region. An increase in retail activity at the Mall will reverse these trends and prevent further leakage of sales tax dollars from the City of Fort Collins to other retail destinations in the region. The 34-year old Mall also has significant site and infrastructure problems; problems that present significant barriers (and costs) to the economic health of the Mall as well as fixture redevelopment including site layout, traffic circulation, obsolescent buildings and building systems, inadequate public facilities and utilities, and vandalism; conditions that will only get worse over time if significant steps are not taken; problems that will require a public/private partnership to resolve. The Foothills Mall redevelopment is identified in the City's Economic Action Plan as the"single most important retail redevelopment initiative in the City" (this Plan also identified establishment of a URP as the"most effective manner for the City to assist in the redevelopment"). The Mall has also been identified in City Plan,the City's comprehensive plan,as a"targeted redevelopment area", areas that are parts of the City where general agreement exist that development and redevelopment is beneficial. A major goal is to increase economic activity in the area, and, where necessary, provide the stimulus to redevelop. Tax increment financing by way of an urban renewal authority is a tool that is commonly used throughout Colorado for a variety of economic development purposes. Timnath, Loveland (Centerra),Westminster/Thornton(The Orchard retail project at 136th Street)and many other front range communities are already using TIF to bolster their economic efforts as a principal tool for funding public improvements related to redevelopment and non-redevelopment sites. TIF has proven an effective tool by these communities to overcome significant public improvement costs to facilitate development, to assist in producing a healthy economy in a competitive regional market, and to make their retail projects more competitive in the region and state. Given the lack of economic tools at the City's disposal and the effectiveness of TIF, staff believes that utilizing TIF is the most effective tool and may be the only tool the City has to help keep the Downtown, North College, Foothills Mall and other targeted redevelopment areas competitive with these other communities. The obvious advantage of using TIF is that public assistance toward the development is driven by enhancements to the assessed valuation of the property and is funded through property tax revenues versus sales tax revenues. City staffhas been working with General Growth Partners(GGP)for the past several years regarding redevelopment of the Mall. The overall redevelopment has been a high priority for the City and community. All indications are that GGP is now ready to move forward with its redevelopment March 27, 2007 Page 3 plans. However, the costs of redevelopment are significant. The use of the property tax increment is key to GGP's redevelopment plans for the site and for making the Foothills Mall competitive in the regional retail economy. The use of other public and private financing mechanisms is also anticipated. The staff has prepared the necessary documents to establish an urban renewal plan for the area and is ready to proceed with the adoption process. Staff has discussed the establishment of an urban renewal plan for the Mall with County staff, and because there are no additional homes beingplanned,does not expect objection by the County to this proposal. Staff continues to meet with the County staff to identify specific details regarding the financial impacts to the County. The proposed schedule for processing of the Foothills Mall Urban Renewal Plan is as follows: April 11: Public Open House April 17: Council refers the Urban Renewal Plan to the Planning and Zoning Board, Larimer County, and the Poudre School District April 19: Planning and Zoning Board hearing regarding the Urban Renewal Plan's conformance to City Plan May 15: City Council hearing adopting the Urban Renewal Plan and the Existing Conditions Study ATTACHMENTS 1. Foothills Mall Urban Renewal Plan boundary map. . 1 • • • � I • I I • I ®GC�C!�. �4�4 `•�,�©�'�©�i as MW e >> © lo WIN e .