A groundbreaking agreement to finance the $1.1 billion Legends at Sparks Marina retail, restaurant and entertainment complex will be considered by the Sparks City Council on Wednesday.

The 8 a.m. meeting will reveal how much financial risk the Sparks Redevelopment Agency is willing to take in order to offer public financing as one of three funding sources for the project by RED Development.

The three methods of financing will be a mix of Sales Tax Anticipated Revenue (STAR) bonds — which depend on bringing in more tourist dollars — funds collected from a local improvement district and Tax Increment Financing (TIF) bonds. Some councilmen have previously called TIF bond a potential risk to the city's finances.

For Legends, the Redevelopment Agency and Sparks staff have been forced to use their best educated guesses to weigh financial risk versus the benefit that could be received.

At a redevelopment agency meeting on Feb. 11, Sparks Finance Director Tom Minton presented information about the project's possible financing arrangement.

At that time, the Sparks Redevelopment Agency was considering issuing $13 million in TIF bonds. The bonds are issued based on taxes collected within the redevelopment district for improvements within that district.

Minton said the most significant factor — "the 800-pound gorilla" — in determining the value of the Legends development is the Legends Bay Casino Resort Spa. The size and value of Olympia Gaming's 1,000-room casino-resort will determine how much in property taxes the county can collect from Olympia.

In turn, if a large amount of property taxes is collected, then the city-issued $13 million in TIF bonds would be paid off sooner. The sooner the financing is paid off, the more time the redevelopment agency can collect taxes to use on other redevelopment projects. The city has a limited amount of time to improve economic conditions within each redevelopment district.

"If it takes six to seven years to (pay back) the TIF bonds, it only leaves the Redevelopment Agency 13 years to leverage those revenues," Minton said.

Another complicating factor is the potential risk that city taxpayers could be on the hook financially if Legends does not meet high expectations for bringing in tax revenue. Staff has been working diligently to address these concerns and protect the city should the project fail to meet its goals, staff said.

If construction is completed on time, the first phase of Legends — including Scheels All-Sports store — is expected to open on Sept. 28, according to Dave Claflin, RED Development's vice-president of marketing.