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Riverdale owes us tax subsidy, says developer

The developer of the Family Center South in Riverdale, Weber County, is accusing the city of reneging on a subsidy agreement in retaliation for a lawsuit it filed against the city.

Riverdale Retail Associates contends it is entitled to a portion of the local option sales tax generated by the Family Center, which was part of the city Redevelopment Agency's "1050 West Neighborhood Development Project Area."According to a lawsuit filed Thursday in U.S. District Court in Salt Lake City, Riverdale agreed in 1994 to distribute a portion of the sales tax from the project as a subsidy to the developer through the RDA.

Riverdale paid the developer a tax increment subsidy the first year after the project was completed but has "failed and refused" to continue the payments since then, the suit said.

The city is holding back, according to the suit, because Riverdale Retail Associates filed a suit opposing the city's moratorium on its proposed development of other land owned by the city.

While declining to comment on the specifics of the suit, Salt Lake attorney Nick J. Collesides said the project is producing sales tax revenue that should be appropriated as specified in the agreement.

"The city should do the honorable thing," Collesides said.

Riverdale City Attorney John Geilmann denied the developer's assertions, saying there was no retaliation and no requirement under the agreement to appropriate revenues from the local option sales tax.

The city did agree to pay the tax increment subsidy for improvements to the property - which it has done - but the payment of portions of the ensuing local option sales tax was dependent upon City Council budget decisions, Geilmann said.

The agreement specifically states that if the council fails to make the appropriation, the city has no obligation to pay the developer anything from the sales tax, he said.

Geilmann added that the agreement further includes a provision stating that the developer would not file a lawsuit if the payment wasn't made.

The council has opted not to make the appropriation because of other "tremendous demands" on the budget, particularly in the area of capital improvements, Geilmann said.

Riverdale Retail Associates is asking that the federal court order the city to pay the annual sales tax subsidy plus $15 million in punitive damages for violating its constitutional rights.