Agenda Date: 04/14/2026
Subject:
Title
1st Street Farms Public-Private Partnership Agreement Discussion
Body
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From: |
James L. Becklenberg, City Manager |
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Prepared by: |
Rachel King, Economic Development Director |
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Presentations: |
Rachel King, Economic Development Director |
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Gastamo Group |
PURPOSE:
To discuss considerations regarding a public-private partnership between the City of Littleton and Gastamo Group (“Applicant”), the developer and owner/operator of the 1st Street Farms project.
LONG-TERM OUTCOME(S) SERVED:
Sustainable Community with Natural Beauty; Robust & Resilient Economy; Safe Community; High-Quality Governance; Vibrant Community with a Rich Culture
DISCUSSION:
The proposed 1st Street Farms development is a mixed-use commercial and community project designed to activate a currently vacant site along the South Platte Park Open Space in the RiverPark development located at Santa Fe and Mineral Ave. The development is intended to function as a community-oriented destination that combines commercial activity with public amenities and gathering spaces.
The Project spans two contiguous parcels totaling roughly 5 acres. A trail running through the adjacent South Platte Park Open Space, the E-trail, runs parallel to the Project site. The Applicant proposes to connect the open space and trail system with the Project via trail extensions running through the Project property. The trail extensions will lead into a community turf field on the southern end of the property, and continue north towards the primary building containing a restaurant and event venue. The trails and the turf field will be open to the general public. The trail extension and turf field will also include public gathering amenities such as picnic benches, bike repair stations, and landscaping with tree canopy installations for shade. Additional community benefits include access to the Project’s event venue for the City of Littleton and nonprofit or other community organizations.
A summary of key features of the Project includes:
• 15,000 sq. ft. full-service restaurant
• 13,000 sq. ft. event venue
• Community football/turf field designed for public use, youth sports, community programming, and special events
• Connection to and integration with nearby open space and trail connections; additional shaded gathering spots for public use
• Public gathering spaces for civic events, festivals, and community activities
• Space for arts, cultural organizations, and nonprofit events
The Project costs total approximately $28 million, which includes significant site improvements for the public spaces noted above, as well as the restaurant and event venue building. The costs also include acquisition costs for the two parcels. The Project site poses infrastructure challenges and high acquisition costs, which result in higher development costs at this specific site than they might be at an alternative site, creating a funding gap for the Project of $5.5 million. The Applicant’s analysis of the Project’s feasibility and funding gap is included in the attached Feasibility Analysis report from the Applicant’s consultant Pioneer Development Company (PDC). This feasibility analysis was further vetted by the City’s consultant, Economic & Planning Systems (EPS) to verify accuracy and reliability of the Applicant’s development and operations pro formas. EPS’ full Economic Analysis report is attached along with the Project’s estimated revenue projections as calculated by EPS.
Due to significant public-facing improvements, proposed community benefits, and an annual $35.2 million economic impact of the Project, city staff requests Council’s consideration of a public-private partnership agreement to support the development of 1st Street Farms. In the event that a partnership agreement with the City is not reached, the Applicant will not proceed with the development of the Project in Littleton. Original plans for the site by the RiverPark developer Evergreen Devco, Inc. conceived the development of 270 residential townhome units. In the event the 1st Street Farms development does not proceed at this site, the use would likely revert to the original plans. Annual fiscal impact to the City of this proposed site use would be a net loss of roughly $200,000-$250,000 per year, or a cumulative net fiscal impact of -$5.4 million over 30 years.
BACKGROUND:
Economic Development staff received an application from the Applicant (the Gastamo Group) requesting a partnership agreement with the City of Littleton for its Project, 1st Street Farms. Prior to submitting this application, the Applicant entered into a contract with the developer of the RiverPark mixed use development project, Evergreen Devco, Inc., to bring 1st Street Farms to the RiverPark “destination district”. RiverPark is a mixed-use, transit-oriented development including retail, multifamily and senior housing, and office located at the southwest corner of Santa Fe Drive and Mineral Avenue. The development is in close proximity to the RTD Mineral light rail station, located to the north, and to the Toll Brothers housing development with 390 new housing units, located to the south.
The Project site is located on 2 contiguous parcels on the northwestern edge of the RiverPark development, along the South Platte Open Space property. Due to the site’s location, the property presents significant development challenges, including site constraints and infrastructure costs that increase the overall cost of development, and high acquisition costs for the two parcels. Due to its location within the RiverPark development, the parcels and subsequent development are also within the boundaries of the RiverPark Metropolitan District. A summary of infrastructure and site improvement costs include:
|
Improvement |
Cost |
|
Community Turf Field |
$1,050,000 |
|
Landscaping & Park Space |
$900,000 |
|
Trails & Pedestrian Network |
$775,000 |
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Grading & Retaining Wall |
$950,000 |
|
Event Center Gardens |
$325,000 |
The Project is proposing to add significant site improvements that will be open to the public, including a trail and pedestrian network which connects the Project site to the E-trail that runs through the South Platte Open Space. These trail connections also connect the Project to the Mary Carter Greenway. Site improvements open to the general public include a community turf and football field, picnic benches, bike repairs stations, and additional landscaping and tree canopy installations in shaded gathering spots for public use.
The Applicant Gastamo Group is also offering community benefits with the Project’s event venue, including regular access for the City of Littleton and nonprofit organizations to use the space with no rental fee, and to purchase discounted food and beverage.
Because of the development conditions, the Applicant has indicated that the Project requires public participation to be financially feasible. Due to these site conditions, the economic benefits of the project, the proposed public-facing improvements, and the substantial community benefits offered, staff recommends Council’s consideration of a public-private partnership agreement with the Applicant.
Project Narrative
The proposed 1st Street Farms development is a 5-acre, lifestyle-oriented hospitality and community destination that blends dining, events, recreation, and public open space into a single integrated site.
Led by Denver-based Gastamo Group, the Project is envisioned as a high-quality, locally rooted gathering place that will serve as a regional destination for Littleton.
While Gastamo Group is responsible for the vision, development, and operation of 1st Street Farms, the inspiration for the Project is the impact and legacy that Peyton Manning has had on the Colorado community, specifically in the Denver metro area. Mr. Manning’s involvement with the Project is intended to be for promotional activities, and for the general use of his name, image, and likeness, which will allow Mr. Manning to help activate the site. Mr. Manning’s financial involvement, along with other equity partners, has been intentionally limited by Gastamo Group to ensure they retain long-term ownership and management of the Project, and to more adequately reflect the nature of Mr. Manning’s partnership and role with the Project; not as a majority owner, but rather, as a promoter.
At its core, the development features a 15,000-square-foot full-service restaurant offering Southern-inspired, Colorado-focused cuisine, complemented by five private dining rooms designed to accommodate a range of group sizes and community gatherings. The restaurant is intended to serve as both a dining destination and a regional draw, with an emphasis on accessibility, family-friendly atmosphere, and high-quality hospitality.
In addition to the restaurant, the project includes a 13,000-square-foot “Field House” event venue designed as a flexible, year-round facility capable of hosting weddings, corporate functions, concerts, fundraisers, and community events. The venue includes a glass-enclosed event barn, indoor and outdoor gathering spaces, and a total capacity of up to approximately 450 guests across its various components. A sophisticated plug-and-play PA system will be included to allow users to easily set up for audio and visual performances.
The site plan also incorporates significant outdoor amenities intended for public use and community benefit. These include a multi-use turf field suitable for youth sports and community programming, landscaped gardens and walking paths, and open green space designed for informal recreation and seasonal events. The project emphasizes connectivity and regular daily use, positioning the site as both a neighborhood amenity and a broader regional destination.
Programming and operations are expected to include community-oriented activities such as free concerts, festivals, farmers markets, and partnerships with local organizations. The overall concept is designed to create a “community hub” environment that supports both private enterprise and public benefit, reinforcing Littleton’s identity as a place for gathering, recreation, and shared experiences.
The applicant/development team, Gastamo Group, is an established Colorado-based hospitality operator with a portfolio of successful restaurant concepts and a focus on scalable, community-oriented dining experiences. Examples of concepts included in Gastamo Group’s portfolio include Park Burger, Homegrown Tap & Dough, Perdida - Mexican Kitchen, Park & Co., and Lady Nomada. Gastamo Group is led by its founder, Jean-Phillipe Failyau, and its CEO, Peter Newlin. Mr. Failyau trained at the French Culinary Institute in New York City and worked in acclaimed kitchens such as Daniel, JoJo, and Le Cirque 2000. After relocating to Denver, he was instrumental in opening Osteria Marco alongside restaurateur Frank Bonanno. Mr. Newlin has an MBA from the University of Denver, and co-founded the Denver Deluxe Music & Arts Festival and Fuel Hope Kitchen, which served 250k meals during the pandemic. He sits on the boards of Eat Denver and YPO Rocky Mountain, and has been recognized as a Denver Business Journal 40 Under 40 honoree and a Titan 100 Colorado 2025 winner.
Mr. Failyau’s and Mr. Newlin’s experience, combined with the project’s branding and regional appeal, as well as Mr. Manning’s involvement in promotional activities, will position 1st Street Farms and Littleton as a truly one-of-a-kind destination within the Denver Metro area and in Colorado.
In summary, 1st Street Farms represents a mixed-use hospitality and community development that combines restaurant, event, and recreational uses into a cohesive site plan. The project is designed to generate economic activity, expand local amenities, and create a long-term community asset for the City of Littleton.
Community Benefits
While the economic impact of the Project is substantial, as further outlined below, the Project also includes several amenities intended to serve the broader community. Specifically, Gastamo Group will offer the following benefits through a community benefits agreement, at minimum, with the expectation to offer more benefits and expanded access as requested:
Event Venue
• 1x/month use for nonprofit organizations
• 1x/month use for the City of Littleton
• Additional availability during periods of non-use
• No rental fee
• Discounted food & beverage
Community Ball Field
• 1x/month use for nonprofit organizations
• 4x/year use for free public events
• No rental fee
• Open to general public during operating hours
• Free community events and public programming/ other activations
• Lit at night for additional use and safety
• Managed and monitored by 1st Street Farms team
Open Space and Trails
• Trail extensions from the E-trail to the community ball field and project site, with continuous connectivity from the south and north of the project site
• Trail enhancements including picnic benches and bike repair stations
• Landscaping, pocket gathering spaces, and shade features
• Open to general public
Additional opportunities
• Naming rights
• Art installations
• Community gardens
• Farmer’s market partnerships
• First responder & teacher appreciation benefits
• Possible marketing collaborations with City
Strategic Alignment
The proposed development aligns with several City strategic priorities, as outlined in Horizon 2027, the Comprehensive Economic Development Strategy (CEDS), the Arts & Culture Strategic Plan, the 2018 Mineral Station Area Framework, and the Economic Partnership Incentive Policy (EPIP). A summary of each strategic plan or policy and their relevant goals and initiatives that align with the Project are outlined below.
Horizon 2027
• Vibrant Community with Rich Culture
o Event space for up to 450 guests (250 seated + 200 patio)
o Arts & Culture activation and events
o Community gathering space
o Youth and family programming
o City events
• Sustainable Community with Natural Beauty
o Open space and trail activation
o 5 acres of landscaped gardens and pathways to celebrate mountain view-scape from property
o Creation of additional public outdoor space to complement open space
• Robust and Resilient Economy
o Market and sustain Littleton’s unique character and charm as a balance to larger-scale development
o Increase tourism, sales and lodger's tax revenues, Littleton’s local economy, and support local workforce
• Safe Community
o Quality services, education, and engagement
o Reinvestment in public infrastructure
o Reinvestment in multi-modal transportation
• High-Quality Governance
o Ensure policies and programs reflect the needs and priorities of residents
o Fiscally responsible and adaptive government
Comprehensive Economic Development Strategy - adopted by City Council in 2024
• Pillar 1: Foster local business; bring new business that enhances existing ecosystem
• Pillar 2: Boost Littleton as a great place to work; develop and hire local talent
• Pillar 3: Strengthen Littleton’s community image, identity, and livability
• Pillar 4: Enhance cultural fabric; leverage assets to strengthen city’s brand
• Pillar 5: Pursue creative redevelopment options and ideas; modernize city infrastructure and reinvestment
• Pillar 6: Leverage Littleton’s regional transportation and connectivity; increase visitation and extended stay; evolve the city to be a place where ideas are piloted
Mineral Station Area Framework - adopted by City Council in 2018
The purpose of the Mineral Station Framework is as a foundational guide for the city’s efforts to improve South Santa Fe Drive (US 85) and the South Santa Fe Drive and Mineral Avenue intersection. It serves as a foundation for future decision-making in the area of the city. Future decisions will build upon the Framework to strengthen the city’s sense of community, its livability, its fiscal health, and its sustainability.
• Transportation Goal 2: Multimodal Connectivity
o Action Step C: Create a plan that identifies walkable and bicycle-friendly opportunities throughout the study area, particularly from the Mineral Station platform to the overflow parking lot west of South Platte Parkway.
o Action Step D: Work with South Suburban Parks and Recreation (SSPR) to identify future appropriately located connections to the South Platte Park, Carson Nature Center, and the Mary Carter Greenway.
• Transportation Goal 4: Safety
o Action Step A: Establish a program for providing and maintaining additional street, sidewalk, intersection, street crossing, trail, streetscape, lighting, parking, and traffic calming improvements that enhance the safety of multi-modal connections throughout the study area.
• Recreation, Open Space, Parks And Trails Goal 1: South Platte River
o Action Step B: Require future development and redevelopment to enhance its adjacency to the river corridor, and not create barriers to views and access to the river corridor.
• Recreation, Open Space, Parks And Trails Goal 2: South Platte Park
o Action Step B: Require future development and redevelopment to enhance its adjacency to the park, and not create barriers to views nor crowd the area’s natural resources.
• Recreation, Open Space, Parks And Trails Goal 3: Natural Resources, Floodplain And Open Space Areas
o Action Step B: Future decision-making needs to provide opportunities for users to continue to be able to experience the natural setting of the park and river corridor.
o Action Step D: Future development and redevelopment adjacent to the river and park needs to enhance, protect and be compatible with enjoying the recreational opportunities and river experience.
• Recreation, Open Space, Parks And Trails Goal 4: Trail Access And Connections
o Action Step A: Establish a plan and identify priorities within it to improve existing trails and connections from the adjacent residential neighborhoods to the South Platte Park and Mary Carter Greenway trail system.
o Action Step B: Create a plan to improve the trail connections into the Mineral Station from the neighborhoods, within the study area and nearby, through the station and from the station, and to the Carson Nature Center and Mary Carter Greenway.
• Character And Design Goal 1: Character And Design
o Action Step B: Establish character elements that distinguish this area as the southern gateway into Littleton.
o Action Step D: Future decision-making needs to enhance the livability and desirability of the properties in the study area.
• Character And Design Goal 3: Streetscape
o Action Step A: Add more streetscape amenities, such as enhanced sidewalks, bikeways and crosswalks, and landscaping, such as street trees and greenery throughout the study area, including South Platte Parkway at Mineral Station.
o Action Step B: Design streetscape, parking lots, crosswalks, and other infrastructure to improve safety within the study area.
o Action Step C: Establish a program for providing and maintaining wayfinding signage and pedestrian-level signage at key locations in order to improve orientation and help create a cohesive identity for the study area.
• Character And Design Goal 4: Natural Assets
o Action Step A: Future trail connections need to be designed to be compatible with the river corridor and park, and are functional for all recreational pathway users.
o Action Step B: Future decision-making needs to protect views of the river corridor, the park, and mountains.
o Action Step C: Future decision-making needs to recognize, celebrate and protect the high quality natural resources within the study area.
• Land Use Goal 1: Livability, Viability, And Compatibility
o Action Step C: Future decision-making needs to support and enhance the study area as a southern gateway into Littleton.
o Action Step E: Future decision making needs to anticipate and seek to complement future commercial and residential development on the undeveloped land south of Mineral Avenue.
• Land Use Goal 2: Recreation And Open Space
o Action Step B: Future decision-making needs to focus on natural resource stewardship, and provide appropriate integration of uses that interface with the natural assets in the study area.
o Action Step C: Future decision-making regarding land use needs to protect views to the river corridor, South Platte Park, and the mountains.
• Land Use Goal 3: Development And Redevelopment
o Action Step A: Future development and redevelopment must incorporate land use best practices into site planning, including establishing functional neighborhood layouts and orientation, compatibility of land uses, and appropriate transitions between different uses.
Arts & Culture Strategic Plan - adopted by City Council 2025
• 1-2. Identify and promote existing spaces and places for arts and culture
• 2-1. Develop community-wide arts and culture initiatives
• 2-2. Design a cohesive placemaking strategy
• 2-3. Introduce resources in areas without arts and culture assets
• 2-5. Promote and measure arts and culture as economic drivers
• 3-1. Champion arts and culture in parks and trails
• 3-3. Facilitate collaboration with key arts and culture partners
• 5-2. Integrate arts and culture throughout City planning
• 5-3. Examine the feasibility of renovating or building new arts and culture spaces
• 5-4. Leverage Littleton’s vibrancy within the greater Denver metropolitan area
Economic Partnership Incentive Policy Criteria - adopted by City Council in 2024
• 1. Long-term commitment to city
• 2. Positive fiscal and economic impact
• 3. Beneficial impact on a particular area of the city
• 4. Significant private-sector financial investment
• 5. Compatible with the associated development plan
• 6. Economic and employment benefits of the incentive accrues to the residents and taxpayers
• 7. Positively impacts the diversification of the city’s economy
• 8. Potential for future expansion and additional job creation
• 9. Benefits outweigh the direct public costs of infrastructure costs, utility, increased police, and other public expenses
• 10. Project would not otherwise be established in the city if it were not for an incentive partnership
• 11. The incentive intends to achieve significant economic growth and/or the creation of new jobs
Revenue Assumptions
The City’s consultant Economic & Planning Systems reviewed the Project’s anticipated revenues in several categories, as listed in their attached Economic Analysis report. Revenues are projected as follows:
• Sales Tax: The total sales from the project are expected to range from $15.6 million in year 1 to $39.3 million in year 30. After applying Littleton’s sales tax rate of 3.75 percent, annual sales tax revenues range from $583,605 to nearly $1.5 million over the same period.
• Property Tax: Using the current 25 percent assessment rate (beginning in 2027) for commercial properties and an effective City property tax mill levy of 2.000, annual City property tax revenues are estimated to range from $14,186 in year 1 to $25,192 in year 30. Over the 30-year projection period, cumulative property tax revenues to the City are projected to total approximately $580,631.
• Use Tax: Use tax revenues are a one-time revenue generated from the value of the project’s building materials at the time of development. Building material value was estimated by utilizing a factor equal to 50 percent of the total project valuation, equating to a total value of $14.2 million. Total use taxes are estimated at $531,977.
• General Revenues: These revenues account for miscellaneous sources including franchise fees, licenses and permits, and fines and forfeitures and are estimated based on future service demand hours generated by employees at 1st Street Farms. With an estimated $3.41 in general revenue per service demand hour, FSF is projected to generate general revenues ranging from $8,470 in Year 1 to $15,041 in Year 30 ($343,592 cumulatively).
• Lodger’s Tax: The Project is also anticipated to generate indirect revenues, partially in the form of lodger’s tax revenue, which is conservatively estimated at $250,000-$500,000 annually depending on visitor and venue activity levels.
The Project is also forecasted to generate significant economic impacts. These are further outlined below under the section “Fiscal Impacts”, but broadly they include $30.6 million in one-time construction-related impacts, and $35.2 million annually in ongoing impacts.
Partnership Agreement Scenarios
The Applicant submitted its application for a partnership agreement on February 17, 2026. The proposed incentive package represents a public-private partnership structure. Public-private partnerships, as explained by the Government Finance Officers Association (GFOA), are “complex arrangements that use public and private sector resources to accomplish a stated goal.” Further, GFOA notes “Historically, Public-Private Partnership (P3) agreements have been focused upon economic development projects proposed by developers looking for financial assistance from a jurisdiction that stands to benefit from the project. However, these agreements have now evolved to include a wide range of potential uses. Accordingly, P3 implies any agreement as long as it involves a contract between the public sector and the private sector where the private sector is providing public services or public benefits (including financing assistance from the private sector).”
GFOA also addresses the use of P3s specifically for economic development:
“Use of a Public-Private Partnership (P3) for economic development or redevelopment purposes involves the use of public resources or financing capabilities to promote local economic development. Generally, governments participate in projects of high importance to the community; and, in some cases, public resources are required to make the project feasible. In these P3 agreements, the public entity will provide some combination of tax incentives, public land or other assets, infrastructure investments or financing assistance. The private entity will contribute capital investments, commit to provide jobs, contribute development expertise and should assume most of the financial risk for the ultimate project outcomes. These “partnerships” can either have short life spans covering only the construction period for the project, or longer life spans covering debt repayment or long-term operating agreements.”
The partnership as proposed by the Applicant is outlined below and is compared to two alternative scenarios; first, the baseline scenario that contemplates the default use of the property by Evergreen Devco., Inc. for the development of townhome units, and second, an alternative partnership scenario as drafted by city staff.
• Baseline development scenario:
o Vacant parcels
o Anticipated residential development if 1st Street Farms doesn’t move forward - approx. 270 market rate townhomes; will generate the following revenues and incur the following expenditures:
§ City will receive $2.0 M in use tax
§ City will receive approximately $70,000 annually, from a combination of sales tax (including on-line sales), property tax, and general revenues
§ City will spend approximately $320,000 annually, which is representative of current service levels
o Over a 30-year horizon, the City will be net negative $5.4M (appx. -$250K annually)
• Proposed partnership request from Applicant:
o Developer Receives:
EPIP:
§ 35% sales tax revenues generated Year 1 through Year 5
§ ~$663,761 in fee waivers
Community Benefits Agreement
§ $4.0M forgivable loan for public-access improvements (turf, trails, park space)
o City Receives:
§ 65% sales tax revenues Year 1 through Year 5
• Net positive cashflow to City Y1-5
§ 100% sales tax revenues Year 6+
• Projected to be $750,000+ per year
§ $4.0M loan is retired in Year 7; net positive revenues generated Year 8+
§ Net Fiscal Impact to city is $27.4M over 30 years (or $10.4M present value at 5% discount rate)
§ Substantial community benefits outlined above
• Alternative partnership scenario:
o Developer Receives:
EPIP:
§ 100% sales tax revenues generated Year 1 through Year 5
§ ~$663,761 in fee waivers
Community Benefits Agreement:
§ $2.0M forgivable loan for public improvements (turf, trails, and park space)
o City Receives:
§ 0% sales tax revenues Year 1 through Year 5
§ 100% sales tax revenues Year 6+
• Projected to be $750,000+ per year
§ $2.0M loan is retired in Year 7; net positive revenues generated Year 8+
§ Net Fiscal Impact to city is $27.1M over 30 years (or $10.4M present value at 5% discount rate)
§ Substantial community benefits outlined above
Forgivable loan: The latter two scenarios (the proposed partnership request and the alternative developed by city staff) include a forgivable loan component in consideration of the significant expense presented by the development site for public improvement costs. These public improvements allow for many of the proposed community benefits, as outlined above, including the community turf field, park infrastructure and landscaping, and extension of trails and pedestrian network. These are costs that would otherwise be the responsibility of the City, therefore the loan is being proposed as forgivable if certain criteria is met.
City staff anticipates that the loan funds would be sourced from the City’s use tax revenues. There would be no impact on the general fund, city reserves, Capital Sales Tax Fund (formerly 3A fund), or the existing CIP projects. Use taxes are contemplated for this application because they are revenues received from development (they are paid to the City upon the establishment of a new business), which can then be reinvested in new development. Use tax is a one-time tax of 3.75% that must be paid on the purchase price of all furniture, fixtures, equipment and supplies made incidental to the opening of the business. If the Project moves forward, it will pay an estimated $523,004 in use tax to the City upon opening, thereby reducing the net fiscal impact of a City loan in year 1 of the Project.
The forgivable loan structure would include terms meant to secure the loan and mitigate risk for the City. An example of loan terms could include the following requirements (note any final terms must be fully negotiated and mutually agreed upon by each party, therefore these terms are for consideration only):
§ Use of Proceeds:
• Strictly limited to reimbursement of eligible public improvements, including but not limited to:
o Community turf field: $1,050,000 maximum
o Landscaping and park infrastructure: $900,000 maximum
o Trails and pedestrian network: $775,000 maximum
§ Extended Loan Term: e.g. - ten (10) years from the date of final disbursement
§ Disbursement Structure:
• Subject to reimbursement basis and gradual project completion schedule
• Retainer until Certificate of Occupancy is issued
§ Conditions for Disbursement:
• Completion of eligible public improvements (in whole or in part)
• Submission of evidence of payment and completion, if needed
§ Forgiveness Framework:
• Performance-based and earned over time; schedule can run after sales tax reimbursement
§ Annual Forgiveness:
• Allows tiered forgiveness of portion of original loan principal per year, subject to compliance with performance requirements, below:
A. Revenue Performance
• Project achieves at least X% of projected gross revenues on an annual average basis
B. Sales Tax Generation
• Project generates at least X% of projected municipal sales tax revenues on an annual average basis
C. Continuous Operations
• Project remains open and operational
• No closure exceeding 60-90 consecutive days without City approval
D. Public Benefit Obligations
• Maintenance of public access to improvements funded by the loan
• Continued operation of publicly accessible amenities
• Continued compliance with the terms of the Community Benefits Agreement
§ Repayment Obligations:
Any portion of the loan not forgiven can be deferred at the City’s discretion until the following year in the forgiveness schedule, when the unforgiven portion may become immediately due and payable or amortized over a defined repayment period, at the City’s discretion, upon the occurrence of:
• Consistent failure to meet performance thresholds
• Default under agreement
• Unauthorized change of use
• Sale or transfer of the Project without:
o City’s consent to the assignment of the loan to the buyer
o Assumption of the Community Benefits Agreement by the buyer
§ Security and Guarantees:
• Promissory note
• City may require:
o Deed of trust or subordinate lien on the property
o Guaranty
§ Default & Claw back:
• Events of Default Include:
o Failure to meet performance thresholds (as defined)
o Misuse of funds
o Project closure or abandonment
o Bankruptcy or insolvency
• Remedies:
o Suspension of forgiveness
o Repayment of outstanding balance
o Claw back of previously forgiven amounts (in cases of fraud or material misrepresentation)
§ Transfer and Assignment:
• Restrictions on sale, transfer, or assignment of the Project
• City may require:
o Assumption of obligations by successor, or
o Repayment of outstanding loan balance
§ Conditions Precedent:
Prior to funding, the following must be satisfied:
• Final project approvals
• Execution of definitive agreements
• Verification of project financing
• Evidence of construction commencement
• Confirmation of eligible public improvement budget
Sales Tax Reimbursement Scenarios: In both scenarios for a partnership agreement, an economic partnership incentive is considered for a period of 5 years.
Under the partnership request submitted by the Applicant, a sales tax reimbursement of 35% is proposed, wherein 35% of the sales tax revenues are shared back to the Project, and the City retains 65% of the revenues. The reimbursement would expire after year 5, or when a maximum present value of $836,239 in sales tax revenues is reached, whichever occurs first.
Under the alternative partnership scenario considered by city staff, a sales tax reimbursement of 100% is proposed, and the City would reimburse the Applicant with 100% sales tax revenues through year 5. In this scenario, the reimbursement maximum would be $2,836,239.
Economic Partnership Incentive Policy (EPIP): The City adopted its current EPIP in 2024, which allows for the reimbursement of sales tax revenues generated by a development that meets the policy criteria (Criteria 1-11 as outlined above under Strategic Alignment). However, the EPIP limits the share back percentage to a maximum of 50%. For any scenario wherein an economic partnership incentive for sales tax reimbursement is proposed that exceeds the 50% threshold, Council would also need to amend the adopted EPIP.
Prior Actions or Discussions
N/A
FISCAL IMPACTS:
Net Fiscal Impact
The net fiscal impact of the development generates its revenues generated for the City against the costs the City incurs to service the development. A positive net fiscal impact suggests that the City can accommodate the development based on the projected revenues. Conversely, a negative net fiscal impact indicates that the City cannot accommodate the development without identifying additional revenue sources. Note that the figures discussed are net of sales tax reimbursement dollars paid to the developer.
|
|
Partnership Investment from City |
Cumulative Net Fiscal Impact (30 yrs) |
|
Baseline scenario |
$0 |
-$5,435,414 |
|
Proposed request |
$4M loan $663,761 fee waiver 35% share back (5 yrs) |
$27,472,116 |
|
Alternative scenario |
$2M loan $663,761 fee waiver 100% share back (5 yrs) |
$27,171,254 |
In both partnership agreement scenarios, the development generates an overall net positive value to the City beginning in year 8 of Project operations. See the attached revenue project analysis. The primary difference between the two scenarios is that the City’s model (lower loan amount, higher sales tax share back) results in a slightly lower net fiscal impact at year 15 ($8.0M as opposed to $8.3M), and a net loss to the City’s annual operating budget in years 2-5 (year 1 remains positive due to the development’s payment of approximately $531,000 in use tax). The Applicant’s proposal (higher loan amount, lower sales tax share back) retains a net positive impact to the City’s annual operating budget in years 1-5 due to the City’s ability to retain a portion of its sales tax revenues in these years.
Economic Impact Analysis
Economic impact defines the relationships (transactions) between industries, commodities (goods and services), and institutions (households, government, etc.). Impacts are estimated using the Impact Analysis for Planning (IMPLAN) input-output model. Direct impacts include the total employment at 1st Street Farms by industry type. Indirect impacts are accrued from the jobs created by the transactions involved in maintaining the operations of the businesses occupying the development. Induced impacts represent jobs created by the spending of employee wages generated by direct and indirect employment.
Additionally, the one-time impacts accruing from the value of construction are estimated. The direct value of construction also generates indirect and induced spending in the area economy. The construction impacts are calculated on a total basis at buildout and for an average year based on the estimated buildout period.
$30.6 Million Construction Impacts (One-Time): Construction activity for the Project will sustain one-time employment and economic impacts. Over the buildout of the Project, an average of 156 direct jobs are supported by the construction, which in turn supports an additional 15 indirect and 39 induced jobs for a total labor impact of 210 jobs per year. The total economic impact from construction is $30.6 million, which is comprised of $20.0 million from direct spending, $3.6 million from indirect spending, and $7.1 million from induced spending.
$35.2 Million Ongoing (Annual) Impacts: Operating revenues for the restaurant, beer garden, and event space total $22.3 million annually, and this revenue served as the basis for estimating economic impacts. Using IMPLAN’s production functions, this level of output is expected to support approximately 324 total jobs: 260 direct jobs, along with 31 indirect and 33 induced jobs throughout the region. At full buildout, the Project is estimated to have a total annual impact of $35.2 million on the regional economy, which is comprised of a direct impact of $22.3 million, an indirect impact of $6.9 million, and an induced impact of $6.0 million.
STAFF RECOMMENDATION:
Staff recommends entering into a public-private partnership agreement for public improvement costs and economic incentives with the Applicant. If directed to proceed at the study session, staff will prepare an agreement for Council’s consideration at the June 2, 2026, regular meeting as currently scheduled.
ALTERNATIVES:
1. Do not recommend support for a partnership agreement; or
2. Propose modifications to staff recommendations. Modifications may impact applicant’s ability to complete the project as proposed.
Proposed Motion