The new proposal for development of the Mission Gateway property represents an abrupt reversal of plans that the developer had been talking about only three months ago. Now, the proposal faces a number of hurdles before it can move forward.
The deal that died
In January 2013 the city council approved a deal that would have given $30 million in bond money to back the project. That passed on a 5-3 vote. Amy Miller is the only remaining councilor who voted against the deal. In August 2013, the developer held a groundbreaking ceremony for the project. This summer, the city was told to expect a new plan that would contain additional retail space. The Gateway site has been vacant for approximately 10 years since the Mission Mall was demolished.
The new proposal
This proposal only contains three major elements now: a 175,000 square foot Walmart, a hotel and a much smaller retail footprint of 8,000 square feet – and a large surface parking lot. Developer Tom Valenti said most of the retail had signed tenants and could include new restaurants. “We needed to have a project where tenants are signed so we can get our financing,” Valenti said Wednesday.
What is not in it
The project won’t have the other big anchor retailers, any residential, the Sprouts grocery or the Toby Keith venue. Valenti said he had been close to a deal with a movie theater, but that fell through. No public use is in the current plan. Previously, it had a trail and public space on the west end. Long ago the aquarium plan fell through.
The developer is asking the city to issue $25 million in special obligation bonds, which means the city would have no liability to make good on the payments. The bonds, under his proposal, would be paid by property tax and sales tax that would be diverted to bond payments. Increased property tax assessments over a base property value (TIF district), some city sales tax on new retail sales diverted to bonds and an additional sales tax of .5 cents on Walmart sales and 1 cent on other retailers (CID).
What the city gets
The developer says the bonds will be paid off in about 13 years based on retail sales projections. The TIF and CID would have longer lives – 20 and 22 years – so the city would collect some extra taxes (the developer is saying $23 million total) after year 13. From the opening of the project, even while bonds are being paid down, the developer says the city will see $640,000 per year in new sales tax revenue and whatever property tax comes in on an increased property valuation of $1.5 million (the rest of the increased value is in the TIF).
What the city does not get
An upfront reimbursement for part of its $12 million storm water investment in the property. The financing plan approved in January 2013 gave the city $6 million back immediately. Now all of the city payback comes at the end of the financing. Valenti said he needs the $25 million to make the deal work with the banks.
The next steps
The developer needs to file an actual plan with the city. That will trigger reviews by the planning commission and the council and public hearings. The new proposal requires rezoning of the property plus changes to the comprehensive plan and zoning text. The council would have to approve a new development agreement and approve the bond proposal and the CID and TIF districts. The city’s financial adviser is likely to give the council a breakdown on the financing proposal in the near future.
None of the Mission city council members gave an opinion on the plan during the Wednesday night presentation. Councilor Debbie Kring did comment that “the uniqueness has gone from one extreme (to the other).” Jennifer Cowdry said she was glad to see that general obligation bonds are not part of the mix. When Valenti asked when he could expect to hear a reaction from the council, Pat Quinn responded, “Less time than we have been waiting to hear back from you.”
The developer’s investment
Valenti told the council Wednesday that he has $38 million already invested in the project. The new proposal is valued at $100 million. “We can’t recover part of our money if we don’t build something,” he said.