Start of Gateway CID ‘clock’ extended to preserve capture of future sales tax

Dan Blom - September 17, 2015 8:00 am
The Gateway
The Gateway signs at the vacant development were changed this summer. The old signs had the names of some contractors who are in dispute with the developer over payment for past work.

When the Mission Gateway development agreement received the approval of the city council in early 2013, part of the financial package included two Community Improvement Districts. Those CIDs anticipated collecting additional sales taxes from the new retailers that would be populating the new development.

The plan laid out an extra half-cent for the new Walmart store and a one-cent additional sales tax for all of the other retailers in the district. The extra sales tax could be collected for 22 years and was to be dedicated to paying off bonds that would in part support the construction of the development.

With no construction started, the city has already agreed to extend the start of the implementation of the CIDs once: from January 1, 2015, to January 1, 2016. Wednesday, the council extended the start of the CIDs once again, this time until October 2016.

That is not likely to be the last CID extension because the latest Gateway plan has not yet begun to wind its way through the planning reviews, let alone get construction off the ground. A proposal for any kind of public financing incentive also has not been presented to the council on the latest iteration of the Gateway plan, which was filed last month. It is expected to be on the planning commission agenda later this month.

City councilors were careful to point out in earlier discussions that the CIDs are tied to the property and not the developer or a development proposal. Because tax collections for the CIDs are limited to 22 years, the city does not want to “start the clock” when no retail business is within the district boundaries to generate sales tax that would come back to the city. Once a district is activated, the time it runs cannot be reset.

The current development agreement with Cameron Group will expire at the end of this year. That means a new development agreement will need to be negotiated and the use of the CID revenue also will need to be determined.

Developer Tom Valenti has said he will be asking for public financing assistance on the latest version of the project. Any public assistance will require new approval from the city council.

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