Artist's rendering of Cape Coral Grove. PROVIDED

Cape Coral City Council approved a $123 million Enhanced Property Value Recapture Grant to support development for the $1.3 billion Cape Coral Grove project Wednesday.

Cape Coral Grove, to be located on 131-acre parcel on Pine Island Road between Chiquita Boulevard and Burnt Store Road, is to feature a variety of retail spaces, entertainment venues, hotels, and luxury apartments and townhouses.

According to the city’s Economic Development Office website, the city’s Enhanced Property Value Recapture Grants are “designed to attract larger-scale private capital investment and/or redevelopment into a mixed-use or nonresidential project site to create a destination, town center or mixed-use development” or to redevelop properties within the Community Redevelopment Area.

Such projects “expand the tax base, create employment opportunities, or attract targeted industries and businesses.”

They work by establishing a “base year” assessed property value from the Property Appraiser’s database for the project, then computing a percentage of the incremental increase in ad valorem taxes on real and/or tangible personal property paid by the Project above the base year amount.

The difference, up to 20 percent of the total project cost, is then available as a grant to incentivize the project.

“Total project cost” is defined as the cost of development of the project “including all, site development, and public infrastructure, and building and site amenity costs necessary to complete the project.”

City Manager Michael Ilczyszyn said the incentive agreement was structured similar to the developer agreement for Cape Coral Grove.

“The incentive is to get the developer to develop fast and as big a magnitude as possible in there,” he said.

The highlights include $123 million in incentives payable in a 25-year period, Ilczyszyn said.

The first payment would not be granted until the developer hits 50,000 square feet of nonresidential. All the revenue would begin flowing after 200,000 square feet is met.

“The project is $1.2 billion, and our maximum incentive would be about $123 million. We are sitting at a 10% investment,” Ilczyszyn said.

“They have to deliver it quickly. If they hit the 50,000 mark and stall out, don’t start flowing all the funds, only revenue coming off that square foot that is delivered.”