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NURB Meeting – December 1, 2015 1
Northeast Urban Renewal Board (NURB)
Regular Meeting
Tuesday, December 1, 2015
The Northeast Urban Renewal Board met in regular meeting at 6:30 p.m. on Tuesday,
December 1, 2015, in the Conference Room, Professional Building, 20 East Olive Street,
Bozeman, Montana. Present: Absent:
Voting Members:
Tom Noble, Chair Daniel Doehring (arrived at 6:32 p.m.)
Erik Nelson
Robert Pavlic Jeanne Wesley-Wiese Non-Voting Members:
John Usher
Commissioner Liaison: I-Ho Pomeroy
Staff:
Robin Sullivan, Recording Secretary Guests:
Maurice Quanbeck, 520 North 11th Avenue
John How, KLJ Engineering Shari Eslinger, KLJ Engineering Call to Order – Chair Tom Noble called the meeting to order at 6:30 p.m.
Changes to the Agenda – No changes were made to the agenda.
Public Comment – No comment was received under this agenda item.
Minutes – November 10, 2015. It was moved by Bob Pavlic, seconded by Erik Nelson, that
the minutes of the meeting of November 10, 2015, be approved as submitted. The motion
carried on 4-0 vote.
Discussion/Action Items –
Update on Neighborhood Conservation Overlay Districts. John How, KLJ, noted
that he distributed copies of the executive summary from their report at last month’s meeting and asked that the Board consider a motion to support parts or all of the report. He also
NURB Meeting – December 1, 2015 2
asked for comments about those items which the Board does not support. He has presented
this report to the Historic Preservation Advisory Board and the Community Affordable
Housing Advisory Board, and both have generally supported the report with emphasis on
specific issues. He indicated that the Midtown Urban Renewal Board gave its initial support at their last meeting but have not acted on this final report.
Chair Noble voiced his support for ground floor accessory dwelling units.
Erik Nelson stated he is broadly supportive of the whole document and is comfortable with the Board acting to support it with an emphasis on the ground floor accessory dwelling units.
He then disclosed that he has a ground floor accessory dwelling unit.
Responding to Erik Nelson, John How suggested that the three most important issues this Board may wish to consider supporting are infill development, some type of general design
guidelines and historic preservation. He then identified the demolition of non-contributing
structures and the reduction of parking standards in the B-3 zoning district as potential uphill
battles. It was moved by Tom Noble, seconded by Erik Nelson, that the Board formally support the
entire document with emphasis on the ground floor accessory dwelling units. The motion
carried on a 5-0 vote.
Update on bonding; set priorities for District Capital Improvement Program.
Dan Semmens, a partner in the Missoula office of Dorsey and Whitney, participated via
teleconference. He noted his firm acts as bond counsel for several local governments in
Montana, including the City of Bozeman. He has reviewed the organizational documents for the Northeast Urban Renewal District, the current work plan and budget, and information on the increment provided by Administrative Services Director Anna Rosenberry. He voiced
appreciation that he has been involved early in the process.
Economic Development Director Fontenot stated that he and Administrative Services Director Rosenberry had a conference call with Mr. Semmens last week to talk about the specifics of
the projects and timelines for construction and issuance of bonds. He noted that tonight’s
conversation provides an opportunity for the Board to understand the process and the steps
to be taken in the issuance of bonds. Dan Semmens stated it is his understanding this Board wishes to issue tax increment bonds
toward the end of the current fiscal year, with those proceeds to fund mostly road
improvements and potentially a pedestrian bridge. He noted the Board will not yet have bids for the projects to be financed with those bonds, but it seems the intent is to use the bond proceeds to begin street improvements in the upcoming summer and finish them the
following summer. He cautioned that seeking bids in the heart of the construction season
can result in significantly higher bids than originally estimated and it may then become
necessary to rebid projects.
Dan Semmens stressed that tax increment bonds are classified as revenue bonds and not
general obligation bonds, with the finite source of revenues to repay those bonds being
based on the taxable value of properties within the district. He cautioned that if the taxable values within the district go down, then the amount of revenues from property taxes decreases as well. In this instance, he observed that the district seems pretty stable and
NURB Meeting – December 1, 2015 3
actually trending slightly upward due to improvements within the district boundaries. He
stressed that the tax increment must be sufficient to cover the debt service plus a cushion,
noting that the increment will need to be 130 percent of the maximum annual debt service to
ensure a successful bond sale. He stated the Board must determine which projects are to be funded with the bond proceeds, in priority order, understanding that if the bids make some
projects not feasible, subsequent projects will move up on the list. He also cautioned that the
interest rate at the time of sale can potentially limit the size of the bond issue.
Dan Semmens stressed that it is important for the Board to establish a priority list of projects to be funded with the bond issue. The list will then be forwarded to the Commission for their
review and approval as the bond process moves forward. He noted that the public must also
understand how the bond proceeds are to be used.
Erik Nelson stated it is his understanding the best approach is to float the maximum amount
of bonds possible rather than issuing multiple smaller issues. He noted that it may take up to
five years to get satisfactory bids and the work completed once the bonds are issued and
asked if it would be possible to put together a program that identifies which projects are to be funded in each of the next four or five years.
Dan Semmens stated the maximum duration of a tax increment financing district is 15 years
from the date of adoption of the ordinance creating the district if no bonds are issued. The
maximum term of a bond issue is 25 years, so the maximum life span of a district is 40 years. He cautioned that if subsequent bond issues are undertaken, they may not extend past the
maturity date set by the first bond issue. He also noted it may be possible to adjust the debt
service schedules for each bond issue to ensure the tax increment is adequate to service the
bonds. Responding to additional questions from Erik Nelson, Dan Semmens noted it is important for
projects to have a direct nexus to taxable values within the district. He noted that, in this
district, the projects selected for funding through the bond proceeds are for infrastructure improvements.
Further responding to Erik Nelson, Dan Semmens confirmed that interest on the bonds starts
the day of the bond sale. He then cautioned that under the tax code, on the date of issuance
of the bonds, there must be a written commitment to spend five percent of the net bond proceeds within six months; and all of the bond proceeds plus investment earnings must be spent within three years of issuance. He indicated that the engineering contract qualifies for
the initial requirement to spend five percent within six months.
Responding to additional questions from Erik Nelson, Dan Semmens stated it is possible to adopt a reimbursement resolution so that monies from the bond sale can be used to
reimburse the district for monies already spent on those projects to be funded through the
bonds. He cautioned that this resolution must be adopted within sixty days of the
expenditure.
Erik Nelson noted that improvements to North Wallace Avenue are to be undertaken this
summer. Approximately half of the street length lies within the district while the other half lies
outside the district boundaries. Under the City’s program for street reconstruction, the City will bear 85 percent of the costs while the remaining 15 percent will be subject to a special improvement district. The Board is considering the use of tax increment monies to pay the
NURB Meeting – December 1, 2015 4
SID costs for those properties within the district. He suggested that this is a fairly small
amount but it might be preferable to pay those costs through the bond proceeds.
Responding to questions from Erik Nelson, Dan Semmens suggested that the process for the sale of bonds include adoption of a resolution calling for a public hearing on the list of
projects and their priorities as well as the intention to make tax increment financing monies
available for those projects. He noted that this step will provide protection for this Board. He
stated that a negotiated bond sale with an underwriter will take approximately sixty days from the date of the initial resolution that starts the bonding process. He indicated that this process can run concurrently with the public hearing process.
Responding to questions from John How, Dan Semmens noted that a certain amount of
flexibility must be provided in how the bond proceeds are spent. He recognized that some projects may be determined not feasible while others may cost more than anticipated, which
will impact the list of projects actually completed. He noted that a determination must be
made up front on the process and the appropriate body to make those changes.
Dan Semmens stated that certificates must be signed in conjunction with the bond sale that state the plan is to spend all of the money from that sale. He recognized that there may not
be enough money from the sale of bonds to cover all of the project costs; however, he
stressed it is important to spend all of the monies from the bond sale within three years.
Erik Nelson stated he does not see all of the projects being completed within three years, so
he acknowledged it may be preferable to float a new bond issue every year or two.
Dan Semmens cautioned that there is a transaction cost for every bond sale. He noted that the underwriter costs are a percentage of the bond sale while some of the other costs are fixed.
Responding to Erik Nelson, Dan Semmens stated he feels the projected interest rate of 5 percent being used to estimate the maximum size of the bond issue is a reasonable one, particularly since tax increment bonds are not the most secure. He then encouraged the
Board to sell fixed rate bonds rather than adjustable rate bonds.
Responding to Economic Development Director Brit Fontenot, Dan Semmens stated the next step is to prioritize the projects. He noted that the Board can follow the traditional process of determining which project is most important, then the next, if all things are equal. He
cautioned, however, that timing may cause some projects to move up or down on that list.
He then stated the engineer needs to do both cost and time estimates for each of the projects on the list.
The Board concluded its teleconference with Dan Semmens, thanking him for his
presentation and responses.
Chair Noble noted that the first priority would be the North Wallace Avenue improvements
because of the City’s interest in completing that project next summer.
Erik Nelson stated he does not feel the Board should bond for the full $1.5 million that it could, but he feels it should carefully consider what the next project is. He then suggested that the Board consider bonding for half of its capacity at this time.
NURB Meeting – December 1, 2015 5
John How asked if the Board’s direction is to package the East Peach Street and East
Tamarack Street/Front Street/North Ida Avenue projects for the bond sale or if it wishes to
place those projects on hold and undertake the North Wallace Avenue and Aspen Street
projects instead.
Responding to questions from Erik Nelson regarding the costs of the North Wallace Avenue
project, John How stated the Board must first decide whether to include the laying of conduit
in the street for future fiber connectivity. Economic Development Director Brit Fontenot stated the City does not currently have a
policy for conduit installation. He noted that he is working with the Director of Public Service
to include the laying of conduit in conjunction with street improvement projects to reduce the
costs of future fiber installations and the extension of fiber to residences in the community.
John Usher noted that additional connectivity will be needed in the future, particularly if
Bozeman is successful in attracting a data center.
Dan Doehring stated he feels that East Tamarack Street should be a high priority.
Chair Noble stated he feels East Peach Street should be a high priority. He is interested in
the quiet zone and pedestrian crossing. a project that will have an extremely high impact on
the district and people’s perception of the district.
John How forwarded his recommendation that the quiet zone not be included in the bonding
because it will probably not be ready for construction within three years. He cautioned that
the quiet zone in Helena is taking five years from the start of the process to construction. He stated it is important to include those projects in the priority list that can be completed within the three-year window after issuance of the bonds.
Responding to Jeanne Wesley-Wiese, John How stated the pedestrian crossing is included in the North Wallace Street improvements. He noted that at the last Board meeting, it was determined the cheapest and easiest pedestrian crossing will be undertaken at this time; and
other agencies can pay for future improvements to that crossing.
Erik Nelson suggested this Board may wish to earmark seed monies to encourage other groups to upgrade the crossing.
Economic Development Director Brit Fontenot reminded the Board that it has just contributed
$20,000 toward completion of the Front Street trail and is now working to solve a safety problem in crossing the railroad tracks. He suggested that this Board consider contributing 50 percent toward the cheapest pedestrian crossing option and ask GVLT or TOPS to
contribute the other 50 percent.
John How asked the Board to make a decision on what it will support or fund for the North Wallace Avenue improvements and trails.
Erik Nelson noted that a burdensome amount of traffic from the new Story Mill Park will come
through this district and, as a result, he feels there should be some discussion about that group contributing toward the costs of the improvements.
NURB Meeting – December 1, 2015 6
John How stated a financing arrangement needs to be set as soon as possible. He then
reminded the Board that the railroad crossing will be outside the special improvement district
for street improvements.
Responding to Chair Noble, John How confirmed that the pedestrian crossing will occur
within the existing right-of-way. He noted it will take at least a year to obtain additional right-
of-way for an upgraded crossing.
John Usher suggested that discussions regarding the quiet zone could possibly be tied to the additional right-of-way discussions.
Responding to John How, Erik Nelson suggested that a meeting be set for January 4 to work
with other agencies in an effort to determine the funding for the pedestrian crossing. He and Chair Noble expressed an interest in attending that meeting.
Responding to Bob Pavlic, John How stated he envisions the pedestrian improvements
installed at this time will be incorporated into future upgrades once additional right-of-way is acquired. He suggested that the new crossing might include a 10-foot-wide trail or a 15-foot-wide shared use trail.
Responding to John Usher, John How confirmed that the future pedestrian upgrades could
be undertaken in conjunction with planning for the quiet zone.
Jeanne Wesley-Wiese voiced her interest in proceeding with the pedestrian bridge as soon
as possible, particularly since the Board has the monies set aside for that project.
Erik Nelson noted the Board members are currently trying to digest the information they have received on bonding and asked that setting the priorities of the various projects be delayed
until the January meeting.
John How stated his firm has almost finalized the costs for the North Wallace Avenue improvements, and by January they should have good cost estimates for all of the street
projects they have been working on. He suggested the Board could begin the prioritization
process in January and finalize it at their February meeting.
The Board members asked for a timeline on each of the projects and the impacts they will have on the district.
Responding to John Usher, John How stated the North Wallace Avenue project is large enough that it should result in good bids. He then suggested that some of the other projects be packaged to attract good bids in the future.
Presentation of final street improvement design for North Wallace Avenue. John
How, KLJ Engineering, stated the preliminary design for the street improvements will be updated by December 15. The design includes bulbouts at several intersections, a traffic
circle, and water and sewer improvements. He projected the improvements will cost $1.5 to
$1.6 million. He stated the costs per individual lot have not yet been determined, but that
information should be available for the December 15 public meeting and this Board’s January 4 meeting. He then stated the one outstanding issue at this time is whether this Board supports the installation of fiber conduit in conjunction with the street improvements.
NURB Meeting – December 1, 2015 7
Economic Development Director Brit Fontenot stated that the proposal is to install a 2-inch
conduit with 7-way interduct. The cost to install the conduit in conjunction with the street
improvements is $10 to $15 per foot while the cost to bore and install the conduit at a later
date is $200 per foot. He stated that, typically, the vast majority of costs associated with installing fiber is for boring or digging up the ground to install the conduit. He is now trying to
convince the City to include 7-way interduct conduit in conjunction with infrastructure
improvements to create more paths for fiber. He noted that some day the community will
have the ability to provide fiber to individual residences and businesses. He acknowledged that the conduit will not benefit the district immediately, but it will set up the district for the future.
Shari Eslinger, KLJ Engineering, stated the installation of fiber typically includes pedestals
that stand approximately four feet out of the ground that can service twelve houses, so they are generally installed at the mid-point of the area they are to serve. She indicated that,
while there are ways to splice the line, it is typically not as strong a connection, so each
pedestal will be served by enough lines to serve its area. She stated that it could take four
fibers to serve a large commercial development, based on the services needed. John How estimated the length of the street within the district at 1800 lineal feet. He then
stated the $10 per lineal foot estimate includes the pedestals. He asked that the Board take
action on whether or not to include the conduit in the reconstruction project.
It was moved by Erik Nelson, seconded by Jeanne Wesley-Wiese, that installation of conduit
for fiber connectivity be included as a piece of the infrastructure improvements within the
District. The motion carried on a 5-0 vote.
Proposed GVLT press release/outreach regarding Front Street trail project and NURD contribution. Chair Noble stated he feels a press release identifying this Board’s
contribution to the Front Street trail project is important. He noted that Kelly Pohl, Associate
Director of GVLT, has proposed a news brief that reads “The Northeast Urban Renewal District (NURD) has donated $20,000 to the Gallatin Valley Land Trust to support construction of a new paved, shared-use pathway, connecting from Oak at Rouse to Wallace
Street near the Story Mill Spur Trail. The NURD’s contribution helps match funding from
other donors and from Bozeman’s Trails, Open Space and Parks bond. The proposed trail
will help improve safety and connectivity for bicyclists and pedestrians in the northeast neighborhood. Trail construction is expected in 2016.” The Chair stated he feels it is important for the public to be aware that projects are beginning to occur within the district due
to the tax increment.
As a result of discussion, the Board agreed that the language in the press release should be revised to reflect that this $20,000 contribution actually brought the project over the finish line
and that, if possible, the total cost of the project be included in the press release.
Economic Development Director Fontenot volunteered to revise the press release and get it out to the various news sources, noting that may provide more coverage on the project than simply sending it in the newspaper.
Review of projects in work plan. Recording Secretary Sullivan distributed copies of
the spreadsheet showing revenues and expenditures as of December 1.
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The Recording Secretary noted there has been little activity in the fund during the past
month, but stated next month’s report should show revenues from the first half taxes as well
as some additional expenditures.
Recording Secretary Sullivan stated that, as a result of issues raised during discussion at last
month’s meeting, she contacted Administrative Services Director Rosenberry to get some
answers. She confirmed that, since the Commission has approved the work plan and budget
as submitted by this Board, the Board may not move monies around between projects. The Director stated, however, that as long as the Board does not expend more than the total budgeted for this year, it may spend more than budgeted on specific line items.
The Administrative Services Director noted that expenditures for the North Wallace Avenue
project, including the pedestrian crossing, will not occur before June 30, so that project can be included in next year’s work plan. Also, it is not anticipated that any costs will be incurred
for the quiet zone; however, if they are, they can be covered from the undesignated reserve
since the street project was included in the work plan.
Administrative Services Director Rosenberry noted that the bond issue will be evaluated and based on the annual increment and not on the monies in the bank today, so expenditure of
monies on hand will not be detrimental to bonding.
Recording Secretary Sullivan stated it was her understanding that the Board had intended to use monies on hand to fund a portion or all of the special improvement district assessments
for those property owners within this district. Her conversation with the Administrative
Services Director revealed that if the Board does not pay those costs up front, then staff will
need to reconsider how the SID is set up. She also voiced concern about selling bonds to cover those costs since they are low and the monies are currently available.
Set agenda for January 5, 2016 meeting or cancel meeting. Chair Tom Noble
stated items for next month’s agenda include updates on all of the projects, setting priorities
for bonding based on the updated information, initial discussion regarding the work plan for
Fiscal Year 2016-17, and an update on the January 4, 2016 meeting with GVLT. FYI/Discussion (formerly Neighborhood News). Bob Pavlic voiced his concern about the
percentage increase in residential property taxes this year, noting his did not increase so
dramatically because it is a commercial property.
Commissioner Liaison Pomeroy responded that the increase was city-wide and not limited to this urban renewal district.
Adjournment – 8:32 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