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HomeMy WebLinkAbout06-12-17 City Commission Packet Materials - C8. North Park TIF District FY18 Update 1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Economic Development Director SUBJECT: North Park Industrial Tax Increment Finance District FY 18 Update MEETING DATE: June 12, 2017 AGENDA ITEM TYPE: Consent RECOMMENDATION: Receive the information contained in this memo and consider this in the context of FY 18 TIF District work plans and budgets and the City of Bozeman’s FY 18 Budget. 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 is on the verge of an exciting future. Originally, the District was created to entice M-1 and M-2 type development. This never materialized. The District is made up of two property owners. The State of Montana owns and manages approximately 270 acres of M-1 zoned property and the North Park Development Partners, LLC, a private development firm, owns and manages approximately 85 acres of M-2 zoned property in the District. A District Board was never appointed by the Commission. To date, the District lacks development activities with the exception of a gas transmission line relocation performed by Northwestern Energy in late 2016. The properties within the District are currently leased for agricultural purposes while development planning continues. Currently, District properties suffer from poor access and lack of infrastructure, especially District ingress/egress, an interior road network, a water and sewer distribution system, a stormwater control system and a 154 2 telecommunication conduit system. Without infrastructure investment and development, the values of properties within the District may continue to rise, but much more slowly than if new development spurred by infrastructure investment, occurs. Initial public infrastructure, and other private development investments, increase the increment values and thus the available dollars to continue investment in additional public infrastructure within the District allowing additional development, remediation of blight and an increase in property values. Due to an original debt of approximately $250,000 incurred by the City for planning within the District and slowly rising increment, the District maintains a deficit of ($19,781.73). (Attachment 1) The formerly City-owned owned North Park property, approximately 85 acres and entirely bounded by the North Park Industrial TIF District, is now privately owned and development planning is underway. (Attachment 2) As anticipated, the owners of the North Park property within the North Park Industrial District have requested that the City Commission consider sun-setting the existing Industrial TIFD in 2017 and create in its place an Urban Renewal District, or URD, with incentives for the development of value-adding, job-creating industries within the District. (Attachment 3) On April 10, 2017, staff introduced, and the City Commission considered, Resolution 4792. By a vote of 4 – 1, the Commission adopted the findings of blight and established the necessity of rehabilitation and redevelopment of the North Park area. Packet Material from the April 10, 2017 City Commission Meeting Minutes from the April 10, 2017 City Commission Meeting Staff intends to return to the Commission in August, 2017 to present an ordinance sun-setting the existing Tax Increment Industrial District and replacing it with an urban renewal district with an emphasis on incentivizing value-added, job-creating industries. The intended base year for a new North Park urban renewal district is 2017. UNRESOLVED ISSUES: There are two unresolved issues. 1) Will the Commission complete the sun-setting of the Industrial TIF and creation of an Urban Renewal District in 2017? 2) 155 3 How will the Commission deal with the existing District debt, if any, at the sunset of the Industrial TIFD? It is possible that the FY 17 increment will cover most, if not all, of the existing District debt. It should be noted that the District debt continues to decline as property values slowly increase. FISCAL EFFECTS: Fiscal effects of the sun-setting of the Industrial TIFD and creation of an urban renewal district are unknown. At the time of publication of the FY 17 Budget the estimated value of one mill was $88,295. The current fund balance, as of May 30, 2017 is ($19,781.73). The District deficit reported in June, 2015, was ($151,110). Attachments: 1. North Park [Mandeville] TIF Revenues and Expenditures as of May 30, 2017; 2. Map of the existing North Park Industrial Tax Increment Finance District; and 3. Map of Proposed North Park Urban Renewal District. Report compiled on: May 30, 2017 156 157 158 ´ 0 0.25 0.50.125 Miles Legend Parcels North Park TIFID North Park URD Midtown URD North Park URD Revised: 3/10/2017 159