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HomeMy WebLinkAbout09-01-15 NURB min NURB Meeting – September 1, 2015 1 Northeast Urban Renewal Board (NURB) Regular Meeting Tuesday, September 1, 2015 The Northeast Urban Renewal Board met in regular meeting at 6:30 p.m. on Tuesday, September 1, 2015, in the Conference Room, Professional Building, 20 East Olive Street, Bozeman, Montana. Present: Absent: Voting Members: Tom Noble, Chair Daniel Doehring Erik Nelson Robert Pavlic Jeanne Wesley-Wiese Non-Voting Members: John Usher Commissioner Liaison: I-Ho Pomeroy Staff: Anna Rosenberry, Administrative Services Director Robin Sullivan, Recording Secretary Guests: John How, KLJ Engineering Dustin Johnson, KLJ Engineering Erica Lattanzio, 220 South 16th Avenue Robin Alonzo, 17 West Lamme Street Alzada Roche, 8 Sunlight Avenue Call to Order – Chair Tom Noble called the meeting to order at 6:33 p.m. Public Comment – No comment was received under this agenda item. Consent Items – Approve minutes from August 4, 2015 meeting. It was moved by Erik Nelson, seconded by Bob Pavlic, that the minutes of the meeting of August 4, 2015, be approved as submitted. The motion carried on a 5-0 vote. Discussion/Action Items – Staff update regarding bond issue for TIF district. Administrative Services Director Anna Rosenberry distributed an information sheet showing the average annual NURB Meeting – September 1, 2015 2 growth of the tax increment over the past five years, the projected trend for the next three years, and the estimated amount of bonds that could be issued in both Fiscal Year 2016 and Fiscal Year 2018 based on the projected growth in the increment. She gave a brief overview of the bonding process, noting that the sale of bonds provides an immediate influx of monies for the construction of projects that must then be repaid over twenty-five years at a set interest rate. She stressed that the coverage requirement for a tax increment financing district is currently 130 percent, so the district may bond for $1.5 million this fiscal year and potentially $1.8 million in Fiscal Year 2018. She noted that the issuance of bonds will extend the life of the district for the life of the bond. She estimated that the difference between the amount needed to service the bonds annually and the actual increment will be $33,000 this fiscal year and $38,000 in Fiscal Year 2018; and that money can be used to fund the administrative costs of the district as well as small projects. The Administrative Services Director stressed that bonds must be issued before the district sunsets, which she noted will occur in 2020. Responding to Erik Nelson, the Administrative Services Director stated the district was created in 2005; however, the first increment was not received until 2008 due to a dispute with the Department of Revenue over the initial year taxes. Staff has conservatively determined the district will sunset in 2020 to ensure that it does not expire prior to the issuance of bonds if the Board determines it wishes to do so. Further responding to Erik Nelson, the Director stressed that staff does not recommend waiting until the last minute to issue bonds. She estimated it will take six months to put the bond issue together and get the bonds sold. She stated that those purchasing the bonds want to know what is being built with the proceeds and they are also interested in the health of the district. She noted that the estimated costs of construction should be accurate, with reasonable contingencies built in. She cautioned that it is best to have the full projected costs of construction covered, noting that the cash on hand can then be used to fund any unanticipated costs incurred. Administrative Services Director Rosenberry cautioned that once the Board issues debt, it will not be able to do so again. She stated that when the bonds are issued, a separate fund will be set up, and those funds must be expended as established in the resolution selling the bonds. She noted that tax increment financing bonds are not general obligation bonds and, as a result, typically carry a riskier bond rating and attendant higher interest rate. She stated that, while state statutes typically require a bond issue be for no more than 20 years, bond issues for tax increment districts may be for 25 years. She stressed that a bond issue may be for no more than the useful life of the improvement; however, since it is anticipated the proceeds from the bond issue will be for infrastructure improvements, that is not a factor. The Administrative Services Director stated another factor to be considered is when the monies are needed, so project timelines are essential. She noted that if it takes a couple years to plan for construction of the projects, it may be possible to package more projects NURB Meeting – September 1, 2015 3 than would be possible this fiscal year. Responding to Erik Nelson, the Director stated that it is possible to use bond monies to cover some of the soft costs involved in a project. She also noted that it is possible to issue bonds for a project that is not fully designed but for which the costs are known. Further responding to Erik Nelson, the Director stated that during presentation of the budget and work plan for this fiscal year, the Commission was interested in knowing if the issuance of bonds was anticipated. She then observed that tax increment financing districts were hobbled by the recession, and opportunities are now beginning to arise for projects within this district. She does not anticipate that any of the governmental entities will object to the extension of this district’s life as a result of issuing bonds; and she noted the creation of this district did not include any provision for rebating any excess cash back to the county or the school district. She also noted that the issuance of bonds to cover the costs of infrastructure improvements could help with further redevelopment within this district. Chair Noble asked Administrative Services Director Rosenberry to address the use of tax increment monies in conjunction with a possible special improvement district for improvements to North Wallace Avenue. The Administrative Services Director stated that a special improvement district could be set up to include the entire length of the North Wallace Avenue improvements or just for that portion of the street lying outside this district. She noted that property owners may protest either the nature of the improvements or the amount of the improvements; and protests from 50 percent or more of the property owners results in killing the project. She stated that if the entire length of the street project is included in the special improvement district, this Board may choose to use tax increment funds to pay a portion or all of the assessments against properties in the district. Chair Noble stated that a straw poll taken a couple months ago reflected overwhelming support for the street improvements. Jeanne Wesley-Wiese noted, however, that those who support the street improvements also want traffic circles and expensive traffic calming features; and they may react differently when the costs are known. She then stated she owns two houses along the street and has lived there for forty years. Responding to questions from Bob Pavlic, the Administrative Services Director stated that the total costs of the project are borne by the property owners along the street frontage; and those costs include the intersection improvements. Administrative Services Director Rosenberry briefly reviewed the City’s current program for paying the costs of street reconstruction within the city, noting that street maintenance NURB Meeting – September 1, 2015 4 monies are contributed to the reconstruction, based on traffic counts. Based on the traffic counts on North Wallace Avenue, those funds would cover 85 percent of the improvement costs while the special improvement district would fund the remaining 15 percent. Erik Nelson voiced his support for proceeding with the North Wallace Avenue project, particularly since the City would be paying 85 percent of the costs. He noted that, at the present time, the costs of improving the other streets in the district would be fully covered by the tax increment financing district. Chair Noble expressed interest in waiting to see if the City approves the designs for East Peach Street and East Tamarack Street, noting that if it does, then those street improvements could be bundled with the North Wallace Avenue improvements. Responding to Erik Nelson, the Administrative Services Director stated the Director of Public Service is interested in proceeding with the North Wallace Avenue project on an aggressive schedule. As a result, design is to be completed early in 2016, with the special improvement district established in the spring, the construction bid, and the work to be done next summer. Chair Noble noted that the North Wallace Avenue improvement project arose when the Board asked Director of Public Service Woolard to talk to them about the East Tamarack Street and East Peach Street improvements. At that meeting Director Woolard proposed the North Wallace Avenue project, identifying it as one of his top priorities. Until that time, the Board had not even discussed that project and has been ambivalent about the project to date. Erik Nelson asked if East Tamarack Street is on the City’s capital improvement plan and, if so, what the split would be for funding. He then asked if it would be possible to bundle the package so that, if this district agrees to participate in the costs of improving North Wallace Avenue, the City’s program would participate in the costs of improving the other streets in the district that have been this Board’s priority. Responding to questions from Erik Nelson, Administrative Services Director Anna Rosenberry stated that the $30,000 currently budgeted for bond counsel may be a little high but is an appropriate number. She then stated the next step is to package the projects to be covered by a bond issue. After that is complete, Economic Development Director Brit Fontenot will work with City Attorney Greg Sullivan and Dan Semmens at Dorsey and Whitney to proceed with the bond issue. She stressed that this process is under the City’s umbrella and, as a result, is to be handled by City staff rather than by this Board. Review of projects in work plan. Recording Secretary Robin Sullivan distributed copies of the spreadsheet of projects funded from inception to date and the spreadsheet containing the list of projects in the work plan for Fiscal Year 2015-2016, noting that the “notes” column contains some updated information. She stated the balance carried forward from last fiscal year is higher than previously projected, and the new number is included in NURB Meeting – September 1, 2015 5 the “notes” column. Also, she noted that the estimated value of the increment for this fiscal year was based on a projected 18-percent decrease in property values in the district; however, based on the new appraisal information received a couple weeks ago, the amount of the increment will actually increase by 12 percent. Dustin Johnson distributed copies of the September progress report, a sheet showing the projects that could be funded with and without bonding, and a spreadsheet containing the draft capital improvements plan (CIP). He stated the spreadsheet is from the list of projects in this year’s work plan, spread across the next five years. He noted the big items on the CIP are the street improvements and possibly the quiet railroad crossings that were added as a result of last month’s meeting. Dustin Johnson noted it is important to realize that this Board cannot afford to do all of the projects on its work plan, so the need now arises to identify which projects are more important. Chair Noble asked that all Board members take this list and, during the upcoming month, identify their priorities. Erik Nelson suggested the first step is for the Board to determine whether bonding is a good idea and, if so, to state its intent. He feels that it will then be very easy to prioritize the projects based on the issuance of bonds for a package of projects that can be adjusted based on estimated cost and monies available. Bob Pavlic asked if the consulting engineers have any cost estimates for the quiet zone. Dustin Johnson distributed a letter dated September 1 written by Brad Koon from Helena’s KLJ Engineering office. He noted that Brad is working on the quiet crossings in Helena and, based on that engineering data, has prepared a list of options and cost estimates. He suggested that the Board consider quiet crossings at both North Wallace Avenue and North Rouse Avenue, since both impact this district. He then stated the initial estimate ranges from $95,000 to $143,000 per crossing, depending on pedestrian crossing improvements. John How stressed that these numbers are very rough because the consulting firm was uncertain how interested the Board is in pursuing this project and did not want to spend a lot of time on it. Erik Nelson stated a review of the district expenditures to date reveals that it costs approximately $20,000 a year to cover operational costs, so this Board would have roughly $10,000 a year to cover smaller projects once bonds are issued. He feels that once the bonds are issued for the larger projects and an SID created for the North Wallace Avenue improvements, there will not be sufficient monies for a project of this magnitude. NURB Meeting – September 1, 2015 6 Responding to John Usher, John How estimated that 15 percent needs to be added to the hard costs to cover administrative and engineering costs, which would bring the cost of a quiet crossing to approximately $170,000. John Usher voiced his support for bonding for the East Peach Street and East Tamarack Street projects, covering at least a portion of the SID costs for property owners along the North Wallace Avenue project, and implementing the quiet crossings. Responding to John How, Chair Noble stated the Board is obtaining information on bonding; and determining the estimated costs for the East Peach Street and East Tamarack Street improvements is important in that process. Erik Nelson stated it is important to have a breakdown of the soft costs and the hard costs because it may be necessary to fund some of those soft costs before the bonds have been issued. Chair Noble noted it is critical to have estimated costs for the construction of each of the projects on the work plan so that the Board can begin to eliminate the low priority items on its list. Dustin Johnson stated he is meeting with Director of Public Service Woolard tomorrow and will talk to him about bonding and the possibility of including the railroad crossing in the North Wallace Avenue project. Responding to Jeanne Wesley-Wiese, Dustin Johnson stated the right-of-way necks down significantly at the railroad crossing, which means it is important to work with the railroad if any pedestrian improvements are to be done. Responding to questions from John Usher, Administrative Services Director Anna Rosenberry stated it is possible for a bond issue to fail if no one submits a bid for the bonds. She noted, however, that a bond underwriter will be involved in the process so she does not anticipate that will occur, although it may not be possible to negotiate a desirable interest rate. Introduction to District Capital Improvement Plan (CIP). Consulting Engineer Dustin Johnson, KLJ Engineering, stated this item was covered under the previous agenda item. Update regarding Neighborhood Conservation Overlay Districts. John How, KLJ Engineering, provided an update on the Neighborhood Conservation Overlay District (NCOD), stating that he has met with the NorthEast Neighborhood Association (NENA), the North 7th Avenue Urban Renewal Board and representatives of several of the neighborhood associations. He noted the North 7th Avenue Urban Renewal Board wants to be outside the NURB Meeting – September 1, 2015 7 NCOD rather than having another layer of regulations for the district. He then asked if this Board wants NENA to represent this Board or if the Board wishes to be involved in discussions about this district. Jeanne Wesley-Wiese states she wants this Board to be involved and does not want NENA to serve as its representative. Responding to Erik Nelson, John How stated he anticipates a draft will be ready in late September or early October after which there will be a public meeting; and the project is to be completed by December 14. He suggested that this Board could review the draft at its October meeting if it wishes, providing input at that time. He then noted that NENA wants less regulation but the same guidelines on design. Responding to Erik Nelson, John How stated that administration of the district would lie with City staff. He noted that staff would consider each project in an overlay district in light of the guidelines for that district. John How concluded the discussion by noting that the public will have two more opportunities to formally comment on the draft NCOD guidelines prior to their adoption. Prepare list of questions to submit to Jim Lewis, MRL, regarding depot, railroad crossing and other railroad issues. Chair Noble requested that this item be moved to next month’s meeting. Erik Nelson noted that the responses provided by Joe Gentri to the questions from David Chambers seem to be straight forward. He then asked if the indemnification section of the lease agreement can be forwarded to an insurance agent to find out how much it would cost to meet those requirements. John How stated he will contact Brad Koon in KLJ Engineering’s Helena office to see if he can get an answer prior to next month’s meeting. Bob Pavlic stated that after reviewing the indemnification information he “wouldn’t touch it with a ten-foot pole.” Set agenda for October 6, 2015 meeting or cancel meeting. Chair Noble requested that the list of questions regarding railroad issues be included on next month’s agenda, along with an update on the Neighborhood Conservation Overlay Districts. Erik Nelson suggested that, based on tonight’s discussion, a list for the capital improvement program be included. He also asked that discussion on bonding be included with an action line under which the Board can make a formal statement on its intent to issue bonds for listed projects. NURB Meeting – September 1, 2015 8 Dustin Johnson stated that KLJ Engineering is working with the City on designs for North Wallace Avenue. The survey work is done, and a town hall meeting is scheduled for October to get initial public input on traffic calming, stormwater drainage and alternative design options. Based on that input, KLJ Engineering will design proposed street improvements and that plan will be the subject of a second town hall meeting, probably in January. He stressed that under the City’s timeline, the design work is to be completed in February, with construction to be bid in the spring and the work to be done next summer. Responding to Dustin Johnson, the Board indicated they would like to have an update on the North Wallace Avenue project every month. As a result of responses to questions, Dustin Johnson stated he will put together a couple different renderings and options for board consideration. Jeanne Wesley-Wiese noted it is important to get an answer from the railroad regarding the right-of-way as soon as possible. Neighborhood News. No items were presented under this agenda item Adjournment – 8:17 p.m. There being no further business to come before the Board at this time, Chair Noble adjourned the meeting. Tom Noble, Chair Northeast Urban Renewal Board City of Bozeman