Foothills Mall developer lets bond deadline pass

FORT COLLINS – Slow leasing activity continues to plague the Foothills Mall redevelopment, making tenuous a $53 million public-financing agreement between the city of Fort Collins and developers should interest rates suddenly rise or the project fall behind schedule.

Josh Birks, director of the city’s economic health office, said Tuesday, however, that he doesn’t foresee termination of that agreement at this time, even though a key June 30 deadline has passed.

The Foothills Metropolitan District – a collection of property owners at the mall site, essentially meaning developer Alberta Development Partners LLC – is to issue $72 million in bonds to generate the $53 million in public proceeds. The bonds would be paid back over time through a variety of mechanisms, including property and sales tax-increment financing and a public improvement fee on goods purchased at the site.

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The agreement between the city and developers included a clause that granted either side the option to terminate the agreement if the bonds weren’t issued by June 30. Birks acknowledged Tuesday that the bonds haven’t been issued because Alberta is still trying to reach a minimum lease threshold.

Before proceeds of the bonds can be released to Alberta, the agreement with the city stipulates that Alberta have signed leases for at least 155,000 square feet of the 660,000-square-foot, $312 million project. In May, city council passed a resolution lowering that threshold from 240,000 square feet to try and fend off further project delays. Developers had leased only about 90,000 square feet at the time.

It’s unclear how much space Alberta has leased, and company officials could not be reached for comment Tuesday. Also unclear is what timeline developers have in mind for issuing the bonds.

Birks said the June 30 deadline gives the city wiggle room to get out of the public financing agreement if the bond issuance delay causes “adverse impacts” for the city. But he said the city has met with Alberta officials, and Alberta officials are still confident that they’re on track to eclipse the lease threshold and issue the bonds while interest rates remain low.

Demolition has been ongoing at the site, as have interior renovations of parts of the old mall that will remain. The mall remains on track to be completed by the 2015 holiday season, about a year behind the original plan before the project suffered various delays.

“Neither one of those is imminent,” Birks said of an increase in the cost of the bonds or further delay to the construction timeline, the two main triggers that could cause the city to terminate the financing agreement. “At this time we don’t see anything that would cause us to see an adverse impact.”