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HomeMy WebLinkAboutA039 - Request for Bluffs Development Agreement Change for Financial Contribution to Lane Widening or Roundabout to be Constructed by the CityITEM #:42 DEPT:PW October 13, 2026 Staff Report BLUFFS DEVELOPMENT AGREEMENT AMENDMENT FOR THE DEVELOPER TO CONSTRUCT A LANE WIDENING OR FOR THE CITY TO CONSTRUCT A ROUNDABOUT BACKGROUND: The Bluffs commercial development area at the corner of GW Carver and Cameron School Road has been the subject of many recent discussions regarding road improvements and financial incentives related to housing development. To address these issues, amendments must be made to an existing pre-annexation agreement that currently requires the developer to construct a lane widening with intersection improvements at Cameron and GW Carver at their sole cost. On September 23, City Council referred the developers' request for direction regarding the removal of the their responsibility for road improvements, and instead provide a $200,000 contribution to the City for any type of road improvement that would be completed by the City due to the timing of the project (see attached letter). City Council has provided direction to staff on two occasions regarding this issue and how to proceed with a development agreement amendment. The first was Council's support in December 2025 of $1,000,000 of a TIF rebate from the commercial properties to help pay for the estimated $1,200,000 of the developers' expense for the cost of the road widening improvements. Later, the City Council decided to evaluate a city-led roundabout project that included developer funding and other funding sources in lieu of the developer widening and signal project. At the August 11 City Council meeting, Public Works reviewed the difference in costs and construction needs of the two road improvements. Public Works supported the roundabout project as a City project because of the coordination required between multiple projects and the potential of a state grant. Public Works indicated that the lane widening project was not of the same magnitude and would not be eligible for a state grant. The lane widening and traffic signal could be implemented in phases between the Bluffs project and the planned Greenbriar project by developers without the City undertaking the project. While the project could be managed and completed by the City as a complete widening and signal project at one time, the burden of priorities related to other projects and cost risk did not warrant the City taking on the project. The City Council decided on August 11 to move forward with with a grant application for a construction of a roundabout in lieu of the developer lane widening project. The roundabout project is a projected as a higher cost project than the lane widening and signal and has a 1 combination of planned funding sources from Ames, Story County, developer, and grant funding. At that time, the developer pledged to contribute $200,000 for the roundabout in addition to their prior traffic signal contribution. However, since the project has not yet been awarded a grant and is not scheduled for final design and bidding until fall 2027, the project is not a certainty in lieu of the developer lane widening option with a developer TIF rebate. Based upon the August 11 Council review and direction regarding the roundabout option vs. a lane widening option, staff proceeded to draft a development agreement that accounted for both options through October 2027. The draft agreement provided to the developer included the following basic structure: 1. If the roundabout option is selected by the City Council, the developer would provide $200,000 of additional funding and be relieved of the roadway widening option. -or- 2. If City Council decides at any point not to move ahead with the roundabout project, the developer would then be responsible for the lane widening project at their full cost within two years. The developer would then receive up to $1 million of a TIF rebate from the commercial properties over ten years (20 payments). 3. Minimum assessment agreements would be required for the three commercial properties in the Bluffs subdivision. The proposed minimum values are $1 million of building improvement values for each of the smaller commercial lots and $2 million of building improvement values for the larger lot planned for a Kwik Star. 4. Dedication of ROW for roundabout at no cost to the City; no dedication required for a lane widening. OPTIONS: Option 1: City Project for Either Roundabout or Lane Widening and Signal If City Council agrees with the developer's request, an amendment would be drafted for payment of the additional $200,000 to the City for roadway improvements with payment due at the time of the approval of an agreement. Payment at that time ensures collection of the fund in timely manner and allows the City to accrue interest towards future costs. The actual timing of implementation and the scope of the improvements would be up to the City. Additionally, the agreement would still require the minimum assessment agreement for the commercial lots to ensure that valuable development described by the developer does occur and that the City has a financial basis to support use of TIF for financing of road improvements. Option 2: City Project for the Roundabout Only or Developer Lane Widening If City Council agrees that City resources are best utilized only for the roundabout project, staff would proceed with a draft agreement that includes the four terms described above. The developer would not be delayed from completing any of Bluffs lots sale or site improvements, but they would not know if they must undertake the road widening project until as late as fall 2027. 2 Option 3: Defer Action on the Request until January 2027 The developer seeks certainty at this time in order to complete a land sale to Kwik Star in 2026 and to plan for development of a housing project on Everest Drive in 2027. However, the City does will not know about the next step in the roundabout project until the end of this year when the grant awards are announced by the state. If the grant award is not approved, it is unlikely the City and County would continue with the roundabout project and the developer could then commence the road widening project in 2027. STAFF COMMENTS: Comprehensive corridor improvements are always desirable, but costs and timing are significant factors when prioritizing road projects in the CIP. The roundabout project is consistent with a type of regional project that is beyond the control of one developer and is best suited to being a City project. However, lane widenings have been completed successfully in phases by developers and do not necessarily warrant being a City project. Staff believes the Council would only undertake Option 1 as requested if it believed there was additional value to the City of one comprehensive project for the corridor regardless of it being a roundabout or a lane widening. City Council may also believe that the delay to the developer of waiting for a final decision is detrimental to Council's housing development goals for the City that were the original impetus for granting an incentive to the developer. ATTACHMENT(S): Clarity on The Bluffs Developer Agmt.pdf 3