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Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Economic Development Director SUBJECT: North Park Industrial Tax Increment Finance District Update
MEETING DATE: June 13, 2016
AGENDA ITEM TYPE: Consent RECOMMENDATION: Receive the information contained in this memo and consider this in the context of FY 17 TIF District work plans and budgets. BACKGROUND: Created by the City Commission in 2006, the North Park Industrial Tax Increment Finance District (the “District”) has failed to live up to its potential but may be on the brink of an exciting future. (Attachment 1) Originally, the District was created to entice M-1 and M-2 type intensive development. The District is made up of two property owners, the State of Montana (~270 acres) and the City of Bozeman (~85 acres). Currently, District properties suffer from poor access and a lack of infrastructure, especially a road network, water and sewer distribution and a telecommunication conduit system. Without development, the values of the properties inside the district may not rise, or do so much more slowly than if development, spurred by infrastructure investment, would occur thus increasing the increment available to deploy additional public infrastructure within the district. The District currently has a deficit of ($61,174.20). (Attachment 2) The city-owned North Park property, entirely bounded by the North Park Industrial TIF District, remains under contract for sale. All contingencies of the Purchase and Sale Agreement are met or otherwise resolved with one exception; a lease of State lands adjacent to the City-owned parcel(s). The State property is also entirely bounded by the District. Approval of any leases of State lands must be
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granted by the State Land Board. Department of Natural Resources and Conservation (DNRC) officials advise that prior to the purchasers of the City property appearing before the Land Board for lease approval on State land (a contingency of the sale of the city property), that a pending wildlife concern on adjacent State trust land be resolved. On May 31, 2016 it was confirmed with the DNRC, Bozeman Unit Manager Craig Campbell that the appropriate permits are being processed and will likely be issued in June, 2016 thus satisfactorily resolving the issue. It is likely that the purchasers of the City-owned property will appear before the Land Board in July, 2016. Finally, it is likely that the purchasers of the City-owned property will request that the City Commission consider sun-setting the existing Industrial TIF and create in its place a more flexible Targeted Economic Development District or TEDD. The TEDD offers more flexibility in uses than the older industrial TIF district model and may be more appropriate for the uses contemplated by the buyers. A District Board was never appointed by the Commission. To date, the District is devoid of most development activities, however, if the sale of the North Park property is concluded, the likelihood of development and additional activities following the sale is high.
UNRESOLVED ISSUES: The current value of one mill is $86,564. Estimates indicate an approximate 2% increase in taxable values during reappraisal in 2017 which will have an impact on Districts around the City. Commercial and residential property reappraisals have shifted from a six-year to a two-year reappraisal cycle. An additional unresolved issue concerns the debt of the District and how the Commission intends to deal with it in light of how, and when, the debt was incurred and the impact of debt on the District’s ability to reimburse the property owners for public infrastructure improvements. The debt continues to decline as property values climb. Last years’ s District deficit, reported in June of 2015, was ($151,110). FISCAL EFFECTS: The District deficit as of May 26, 2016 is ($61,174.20).
Attachments: 1) Map of the North Park Industrial Tax Increment Finance District; and
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2) North Park Industrial District Revenues and Expenditures to date. Report compiled on: June 2, 2016
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R:\Accounting\TIFD_Tax_Increment_Financing_Districts\Fund_145_Mandeville_Industrial\Mandeville_Industrial_
TIF_Fund_145_Balance_-_05.26.2016.xls\Presentation - 5.26.16
5/26/2016 at 4:05 PM
BEGINNING FUND BALANCE: JULY 1, 2006 -$
ADD: REVENUES
Property Tax Increment 196,673.29$
TOTAL REVENUES 196,673.29$
LESS: EXPENDITURES
Contracted Services/Consultants & Prof Services (7,720.00)$
Contracted Services/Engineers (37,251.23)
Contracted Services/General (2,567.49)
In-State Travel/Training (3.60)
Advertising (42.00)
Operating Interest Charged For Carrying Negative Cash Balance (21,111.74)
Postage (21.78)
Shipping & Handling (43.56)
Other/General (350.00)
Capital - Infrastructure & Improvements (188,736.09)
TOTAL EXPENDITURES (257,847.49)$
CURRENT FUND BALANCE/(FUND DEFICIT)(61,174.20)$
MANDEVILLE INDUSTRIAL TIF DISTRICT FUND BALANCE
Fund 145
As Of 5/26/2016
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