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Home My WebLink About09-11-17 City Commission Packet Materials - C3. MURB TIF Grant Award for Midtown Apartments Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: David Fine, Economic Development Specialist SUBJECT: Ratify the Midtown Urban Renewal Board’s Awarding a Midtown TIF Assistance Program Grant for the Midtown Apartments Project at 511 W. Peach St. MEETING DATE: September 11, 2017 AGENDA ITEM TYPE: Consent RECOMMENDATION: Ratify the Midtown Urban Renewal Board’s award of up to $88,482 in incentive funds from the Midtown TIF Assistance Program for the Midtown Apartments Project. BACKGROUND: Pursuant to Resolution 4770, the Bozeman City Commission created the Midtown TIF Assistance Program (the “Program”) and authorized the Midtown Urban Renewal District Board (MURB) to administer the Program. While the Commission authorized the MURB to administer the program, the Commission required the placement of grant awards of over $50,000 on the City Commission consent agenda for ratification of the MURB’s award. The City Commission has final approval over TIF incentives exceeding this threshold. The applicant for this project proposes the demolition of a failing and aesthetically un-appealing single family home, which constitutes a non-conforming use in B-2M zoning. The applicant will replace the blighted structure with a three story, 9 unit apartment building. To make the project feasible, they are requesting $88,482 in TIF assistance to pay for demolition, impact fees, cash-in-lieu of parkland. Based on a our tax generation model, the project generates enough new incremental tax revenue to recoup the investment in just over five years. The recently adopted Midtown Urban Renewal District Action Plan promotes targeted private investment with a specific vision for the corridor, based on the values of the urban renewal plan, which focuses on an increase in housing units and the promotion of urban density mixed use redevelopment. Staff finds that the grant award to the Midtown Apartments aligns with the Midtown Urban Renewal District 71 Plan, the Midtown Action Plan, and the criteria of the Midtown TIF Assistance Program. UNRESOLVED ISSUES: In order to reach its full housing impact, this project is dependent on the City Commission adopting parking reductions in Midtown that allow a minimum of one car per unit. The project will only have seven units in the event that the City Commission does not adopt reduced parking requirements in the B-2M zoning district. FISCAL EFFECTS: Funding for the $88,482 grant is available in the FY 2018 Midtown Urban Renewal District Work Plan and Budget. As grants are awarded at the time of occupancy permit, the award will most likely occur in FY 2019 and the proposed work plan and budget for that fiscal year will include specific authorization for this grant award. ATTACHMENTS: 1. Midtown TIF Assistance Program Grant Application Staff Report for the Midtown Apartments Project 2. Leland Consulting Group tax generation report 3. Midtown Apartments Grant Application LINKS: Resolution 4770 – Midtown TIF Assistance Program Resolution 4781 – Midtown Urban Renewal District Action Plan Midtown Urban Renewal Plan (2015) 72 Midtown TIF Assistance Program Grant Application Staff Report Midtown Apartments, LLC, 511 W. Peach St Updated September 1, 2017 Date: August 1, 2017 To: Midtown Urban Renewal District Board From: David Fine, Economic Development Specialist Overview This project application is the second received under the new Midtown TIF Assistance Program. The new program places special emphasis on the five goals articulated in the urban renewal plan for relieving blighted conditions in the urban renewal area. Each of these five goals is further refined with particular criteria for a total of sixteen categories in which points can be received. In many categories, specific documentation must be received in order to receive points. The new program is designed to move away from the previous façade grant program to support projects that reinforced the goals of the new urban renewal plan, as well as projects that create significant new taxable value. Criteria for TIF Assistance Overall District Relevance 1. Relevance to the Midtown Urban Renewal Plan: Documentation of the project’s impact in relation to the goals and objectives of the Midtown Urban Renewal Plan, particularly mixed‐use development. Urban design elements are also considered, including pedestrian emphasis and quality of design. The project eliminates blight by demolishing a failing structure and replacing it with a contemporary building that adds housing units and intensifies the density of the property use. The project significantly increases the housing capacity of the site from a small single family home to a 9 unit 17 room apartment building. The building is moved far closer to the street although its front façade is not particularly engaging in terms of enhancing the pedestrian experience. The project does not provide a mix of uses and create spaces for long‐term traded sector jobs. [4 of 5] Promote Economic Development 2. Tax Generation: The project will increase the taxable value within the District. The increase in taxable value due to new construction & rehabilitation is estimated by the County Assessor’s office or State Department of Revenue to determine tax increment generation. Submit documentation of estimated tax projections to receive points for these criteria. 73 Leland Consulting Group (LCG) created a tax revenue generation model for the Midtown URD. Using data provided by the property owner, LCG estimates that the property will provide an annual net tax revenue increase of $26,082 for the TIF district. The new construction value of the new property is $1,550,000 which represents a $1,270,000 increase in the value of the property. For the assumptions related to these projections, please see the LGC report. [4 of 4] 3. Elimination of Blight: The project’s direct and indirect impact on the physical and fiscal deterioration within the Tax Increment Financing District and the community. Submit information showing current conditions of property. The project eliminates blight by demolishing a failing and aesthetically unapplealing structure and replacing it with a contemporary building that adds housing units and intensifies the density of development on the property. [4 of 4] 4. Employment Generation: Total employment generated by the project assessed in terms of new permanent and part‐time jobs, and construction jobs. Submit documentation of estimated new jobs to receive points for this criterion. The project will generate temporary construction jobs. [1 of 3] Improve Multi‐Modal Transportation 5. Facilitates Public Health and Mobility: Project will construct or improve sidewalks, including ADA access to buildings. Provide detailed information demonstrating that the current condition inhibits public health and mobility. The current building has 4 foot sidewalks and is not ADA accessible. The new building will have 5 foot sidewalks and feature an at‐grade fully ADA accessible residential unit. [1 of 1] 6. Reduces Resource Demand: Project promotes the use of transit, ride sharing, or car sharing. Provide plans, agreements or other methods to demonstrate reduction of resource demand. While locating housing in Midtown places it in a centrally located location, this project does not take particularly exceptional or innovative measures to promote transit use, ride sharing, or car sharing. [0 of 1] 7. Promotes Active Transportation: Project promotes bicycling as an active transportation option by constructing or improving bike lanes, providing covered bike parking, and/or participating in a bike share program. Provide plans, agreements or other methods to demonstrate reduction of resource demand. Qualifying covered bike parking is proposed. [1 of 1] Improve, Maintain, and Support Innovation in Infrastructure 74 8. Infrastructure Improvements: Project promotes innovation in infrastructure and/or reduces long term costs of maintenance. Provide plans and descriptions of innovations proposed. The project proposes the installation of wet utility service lines and on‐site stormwater treatement. These improvements are necessary and not particularly innovative. The project also is not proposing any improvements beyond sidewalk widening to enhance the streetscape or pedestrian experience. The proposed roof design is ready for photovoltaic cells, but the cells will not actually be installed during initial construction. [0 of 2] Promote Unified Human Scale Urban Design 9. Street Frontage: The project improves the street frontage by eliminating parking between the right‐ of‐way and the building. Provide plans to demonstrate improvement in street frontage. The building removes a residential driveway from the front of the building and all parking is tucked under the building with a driveway on the side of the building. Moving parking to the side and rear of structures is a new code requirement and is consistent with the vision of the Midtown Urban Renewal Plan. [2 of 2] 10. Vehicular Access Points: The project reduces the number of vehicular access points to the property and improves the pedestrian experience. Provide plans, agreements or other methods to demonstrate reduction. [0 of 2] The project is moving its vehicular access point, but it is not changing the overall number of access points. 11. Street Orientation: The project enhances the North 7th Ave. entryway corridor by having buildings oriented toward the street and designed to provide interest and activity. The proposed structure would orient the structure toward the street and provide new interest and activity compared to the single‐family residential‐style construction of the existing building. [2 of 3] 12. Pedestrian Experience: The project enhances the pedestrian experience with elements such as façade transparency, building articulation, street furniture and/or landscaping. Submit plans and details that address this criterion. The project provides some enhanced façade transparency and new landscaping along Peach St. frontage. The building could do more to engage the street and enhance the public realm through the use of better landscaping and a more dynamic front façade. In particular the door of the front unit faces east rather toward the street. The applicant should consider the addition of a front porch and continuing the weather protection element around the corner further engages the building with the street. Sidewalk and ADA improvements will enhance the pedestrian experience. [1 of 3] 13. Quality of the Development Exceeds Minimum Requirements. The quality of development and overall aesthetics (architectural, site design, landscaping, etc.) are beyond that which is minimally required by the UDC. Submit documentation to demonstrate compliance with this criterion. 75 Based on preliminary renderings, the project as proposed appears to exceed the minimal requirements of the UDC for architecture, site design, and landscaping. [2 of 2] Support Compatible Urban Density Mixed Land Uses 14. Increases Housing Units: The project increases housing units within the District. Submit plans demonstrating an increase in the number of housing units. The project replaces a single family home with 9 residential units. [4 of 4] 15. Mix of Uses Including Residential: The project has a mix of uses, including residential. Submit plans detailing the proposed mix of uses within the project. The project includes residential, but not a mix of uses. [3 of 4] 16. Shared Parking: The project shares parking among compatible uses. Provide details demonstrating compliance with the UDC and as well as total number of parking spaces reduced because of a shared arrangement. The project provides parking for its uses and does not share parking among compatible uses. Future more detailed plans for parking could show a shared parking arrangement to receive points for this category. [0 of 2] Total Points (27/44) Staff Recommendation The Midtown TIF Assistance Program allows the payment of eligible costs of development to incentivize development that meets the goals of the urban renewal plan. The applicant is applying for five (5) eligible cost areas which include:  Impact fees: $42,661  Demolition: $41,365  Cash in Lieu of Parkland: $4,455.61  Stormtech drainage: $33,628  Water and Fire line: $17,704 The applicant requested funding for two items stormtech drainage and a water and fire line that, while possibly eligible for funding, have benefits that are predominately internal to the project. For this reason, staff does not recommend funding these items for this project. Excluding these items, the total funding request would be $88,481.61. Leland Consulting Group (LCG) completed a financial analysis of the project (attached) to help staff evaluate the project. Their report analyzed return on investment (ROI), estimated payback period for the public assistance and proposed target metrics for the ratio of private investment to public assistance. Their analysis was based on awarding the applicant’s full assistance request. LCG recommends a ratio of private investment to public assistance of 10:1 or greater for a multi‐family residential‐only project; the ratio for this project is 10.294:1. LCG also created a tax generation model 76 for the Midtown URD. According to their model, the project would produce annual taxes of $17,045, which would allow TIF assistance to be paid back in 5.5 years for new increment‐based payback if assistance is provided at the staff recommended amount. This level of increment generation to payback ensures that the proposed project will contribute to the long‐term ability of the District to make investments in new projects. Staff scored the application based on the program criteria. Based on our review and the application materials presented, the project received 27 of 44 available points. The project eliminates blight and advances the District goal of creating urban density land uses and providing increased housing stock within the District to drive further commercial development. Staff recommends authorizing staff to negotiate a development agreement with the Applicant for presentation to the Bozeman City Commission for approval. Recommended motion: “I move to authorize staff to negotiate a development agreement with the Applicant for TIF Assistance not‐to‐exceed $88,481.61 and to recommend the Midtown Apartments project for TIF Assistance to the Bozeman City Commission.” 77 Midtown Apartments, LLC Tax Increment Analysis August 16, 2017 Prepared by: Andy Parks, CPA Leland Consulting/GEL Oregon, Inc. on behalf of the City of Bozeman Economic Development Department Summary Applicant plans to build 9 unit apartment complex on property currently occupied by an older home. Applicant intends to invest approximately $1.64 million and is requesting $148,222 from the Agency. The following schedule summarizes our findings of our analysis. Estimated costs to complete project 1,673,981$ 2017 Market value per assessor 294,000 Net estimated increase in value 1,379,981 Estimated net increase in taxable value 26,082 TIF tax rate -‐ estimated -‐ FY 2019 653.53 Estimated incremental taxes (TIF) -‐ annual 17,045 TIF investment 88,482 ROI -‐ estimated 19.3% Estimated payback period 5.5 years assumes 4% interest rate on advanced amount Private investment to public investment 17.92 Metric: Greater than 8 to 1 -‐ commercial Greater than 5 to 1 -‐ family wage jobs Assumptions Cost and timing information provided in application -‐ except construction financing which is estimated Estimated start date Sep-‐17 Estimated completion per application is 8 months Apr-‐18 Increase in property taxes applicable fiscal year 2019 Construction Interest -‐ estimated 12 month construction loan rate 5.49% Current property taxes 2,344 Estimated Project Valuation -‐ Cost Approach Construction Financing Project Costs Amount Beg Month Ending Month Months of Interest Estimated Interest Demolition 41,365 -‐ 1 8 2,271 Building construction 1,369,475 1 8 4 25,061 Parking construction 27,250 8 8 1 125 Landscaping 18,000 8 8 1 82 Design/engineering 77,000 -‐ 1 8 2,818 Water and fire line 17,704 1 2 7 567 Storm water system 33,628 1 2 7 1,077 Park-‐land (cash in lieu)12,864 -‐ 1 8 471 Impact fees 42,661 -‐ 1 8 1,561 Project financing costs 34,034 34,034 Estimated cost to complete 1,673,981 Note: We did not include mortgage payoff or value of demoed house in the Cost Approach. After reviewing application and costs, Agency and staff have concluded maximum tax increment investment is http://gis.gallatin.mt.gov/common/parcel_informati note: rate included in Loan Commitment Letter Property valuation is limited to the cost approach, i.e., cost to complete project -‐ real market value will likely Greater than 10 to 1 -‐ desired for multi-‐family 78 79 80 Midtown Apartments – Project Narrative Revitalizing Midtown and removing blight from the north 7th entryway corridor is a difficult task for many reasons. The most obvious challenge is getting development and infill started. Once developers begin to invest in the area, the snowball of improvement will continue until the aesthetics and “livability” of Bozeman have permeated into our most central entryway. The Midtown apartment project is the perfect starting point for inspiring development in the area but will require help from the TIF program. Without TIF assistance, the Midtown apartment project will not occur. An increase in construction in other parts of town have driven building costs beyond what is feasible for this project given that the owner is aiming for rental rates at or close to what can be considered workforce housing. A close look at this project shows that it is a worthy candidate of TIF assistance. Project overview: 511 W Peach is home to a single family house approximately 2000 square feet. This property is central to downtown and adjacent to the Midtown corridor. This project will replace the single family home with a three story 9-unit apartment building 8100 square feet in size. Each unit will be approximately 600 square feet and maintained as long term rentals. The new building will house 9 single stall garages on the main floor, one space for each rental unit. This location faces a busy street and as such is not appropriate for single family residential development. The application process is underway with the city and, upon determining financial viability, the 8 month single phase building process could begin as soon as August. Why this project helps Midtown: Once completed, this project will result in a 5-fold increase in population density for the property. Adding higher density to Midtown provides both customers as well as employees for businesses along north 7th. Increasing the customer and employee base for the District is the foundation upon which Midtown development will be built. The Midtown Apartments project meets all of the Midtown TIF Assistance Program objectives. This project involves substantial private investment in commercial property. The property owner is pledging the land valued at $285,000 as well as an additional $600,000 to finance the construction. The attached property tax increase estimate indicates that the completion of this project will potentially increase the tax base by $100,000 over ten years. Finally, by demolishing and removing the failing structure on the property and replacing it with a contemporary building, this project will help reduce blight in the area. Where TIF money will be spent: • Impact fees: $42,661.00 • Demolition: $41,365.00 • Stormtech Drainage: $33,628.00 • Water and Fire line: $17,704.00 • Cash in Lieu of Parkland: $4,455.61 • Total= $139,813.61 81 This project meets the project objectives as stated in the Midtown Tax Increment Financing (TIF) Assistance program as follows: 1. Encourage private investment in commercial property in the District through the use of public incentives: The owner of this property is investing the property valued at $285,000 as well as up to $600,000 of private capital to fund this project if it is financially viable. The financial viability of this project is contingent on TIF assistance. 2. Expand the property tax base in the District through private investment in income producing properties: The increase value of this property will increase the tax base in the district by up to $100,000 over the next 10 years. 3. Stimulate economic and business development within the District: This project will provide a 5-fold increase in population density for the property. That increase in population density will increase the customer base for businesses in the area in turn stimulating economic and business development in the district. 4. Reduce blighting influences in the District: The property is currently home to a 1950’s single family home with a failing foundation, deteriorating siding, and design standard that detracts from the district. The replacement building will be of contemporary design promoting urban style development thus reducing blight within the District. The owners and developer of this project intend to be transparent with their intentions and financial projections. Please do not hesitate to reach out for clarification regarding any part of this project. Sincerely Luke Welborn Owner Midtown Apartments LLC P.O. Box 6507 Bozeman, MT 59771 303-482-7533 lukewelborn@gmail.com 82 MIDTOWN TAX INCREMENT FINANCI NG (TIF) ASSISTANCE PROGRAM INTRODUCTION The Midtown Urban Renewal Plan (“Plan”), adopted by the Bozeman City Commission on November 16, 2015, authorized the Midtown Urban Renewal Board (“Board”) to establish monetary incentives in the Midtown Urban Renewal District (“District”) in support of the Plan’s goal to promote economic development. The Board established and administers this Tax Increment Financing (“TIF”) assistance program for the redevelopment and rehabilitation of properties within the District. TIF assistance applications are subject to program eligibility criteria and project guidelines listed below. Applications will be accepted and processed in the order in which they are received and approved based on the availability of funds for the program. PURPOSE The purpose of the TIF assistance program is to encourage desirable development/redevelopment projects, as well as assist projects that would not otherwise occur “but for” the assistance provided through tax increment financing. The purpose of this document is to provide guidelines for the Board to offer monetary incentives for development activities in the District in the form of TIF assistance funds. This policy shall be used as a guide in processing and reviewing applications requesting TIF assistance. The Board shall have the option of amending or waiving sections of this policy when it determines, in its sole discretion, such an amendment or waiver is necessary or appropriate. In amending or waiving any sections of this policy, the Board shall document the reason for the deviation. The provision of financial assistance is at the sole discretion of the Board. The Board reserves the right to reject or approve applications on a case-by-case basis, taking into account established policies, specific project criteria and the demand on District services in relation to the potential benefits to be received from the proposed project. Meeting policy guidelines or other criteria does not guarantee the award of TIF assistance. Furthermore, the approval or denial of one application is not intended to set precedent for approval or denial of another application. 83 Page 2 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 PROGRAM OBJECTIVES The primary objective of the TIF assistance program is to encourage investment in development and redevelopment of commercial and mixed use property within the District in accordance with the provisions of the Montana Urban Renewal Law (7-15-4209, 7-15-4233, and 7-15-4288, M.C.A.). Additional District objectives are to: • Encourage private investment in commercial property in the District through the use of public incentives; • Expand the property tax base in the District through private investment in income producing properties; • Stimulate economic and business development within the District; and • Reduce blighting influences in the District The grants are awarded at the discretion of the Board as authorized by the Bozeman City Commission, based upon review of the Applicant's compliance with program objectives, eligibility requirements, and eligible construction activities. GENERAL POLICIES 1. TIF assistance priority will be given to projects that do not have the financial feasibility to proceed without the benefit of the assistance. 2. The applicant shall provide any market and financial feasibility studies, appraisals or other information provided to private lenders for the project as well as any other information or data which the Board, or its financial consultants, may require in order to review the need for TIF assistance. 3. TIF assistance will not be used for projects that place extraordinary demands on District infrastructure or services. 4. The applicant must be able to demonstrate, to the Board’s satisfaction, an ability to construct, operate and maintain the proposed project based upon past experience, general reputation and credit history. 5. The applicant shall provide sufficient market, financial, environmental and other data relative to the successful operation of the project. 6. The Applicant must retain ownership of the project long enough to complete it, to stabilize its occupancy, to establish the project management, and to initiate payment of taxes based on the increased project value. This application must be signed by both the applicant(s) and the property owner(s) (if different). 7. Project plans and construction must comply with all applicable code and permit requirements. Applicant is advised to consult with the City of Bozeman planning and 84 Page 3 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 building departments, licensed architects, engineers, or building contractors before proceeding with final plans or construction. 8. The Applicant must demonstrate significant leverage of private investment through the use of public dollars. ELIGIBLE COSTS TIF eligible expenses are defined by Montana Code Annotated, 7-15-4288 and further limited by the Plan. The project seeking TIF assistance must be located within the boundary of the District. Costs related to the following are eligible for financial assistance: 1. Demolition and removal of structures 2. Construction and improvement of public improvements or infrastructure, including streets, curbs, gutters, sidewalks, alleys, parking lots and off-street parking facilities, sewer lines, storm sewers, waterlines, and impact fees Requests for funding above $50,000 will require the ratification of the Bozeman City Commission. DISBURSEMENT OF ASSISTANCE FUNDS The TIF assistance program is a reimbursement program. No funds will be disbursed until all completion criteria have been satisfactorily met as determined by the Board in its sole discretion. At the end of the project, the recipient will submit a Certificate of Completion and required supporting documentation to the Board including itemized invoices and other documentation as the Board may reasonably request. USE OF ASSISTANCE FUNDS The award of TIF assistance funds is subject to the Applicant entering into a grant agreement with the District. The grant agreement will include requirements that the grantee comply with (i) applicable City of Bozeman procurement regulations related to bidding, hiring, and prevailing wages; (ii) the City’s nondiscrimination policy; and (iii) State of Montana public records laws. The grant agreement will include such additional terms as the District in its sole discretion determines are prudent or necessary to fulfill the goals of the TIF assistance program. TIF assistance funds must be used within two years of the date of the Letter of Award. Any funds not disbursed to the Applicant within that time will remain in the District fund. The Board, in its sole discretion, may provide an extension of up to one year to the original two year timeframe. Use of TIF assistance funds must be in compliance with the terms of the grant agreement 85 Page 4 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 between the Applicant and the District. REVOCATION OF AWARD The grant agreement will include terms providing that an award of TIF assistance may be revoked by the Board if the Board finds, in its sole discretion, that Applicant has failed to comply with any of the terms of the assistance program or grant agreement, or has failed to provide information or provided inaccurate information on the application. Upon such a finding, the Board will provide Applicant with notice of the default and a 30-day opportunity to cure before the award is revoked. The grantee will be required to return TIF assistance funds already disbursed pursuant to the terms of the grant agreement. DISCLAIMER: Neither the Board nor the City of Bozeman will be responsible for the planning, design, or construction proposed by any work conducted as part of the TIF assistance program. No warrantees or guarantees are expressed or implied by the description of, application for, award of or participation in the TIF assistance program. APPLICATION PROCESS AND PROCEDURE Application for TIF assistance shall be made on the forms provided by the Board and submitted to the Economic Development Department for review and comment. Deadlines for submittals shall be as published and posted by the Board. Incomplete forms will be returned to the applicant with an explanation on additional information as may be required. For projects seeking TIF assistance for demolition or payment of impact fees, the City of Bozeman Economic Development Department will review the application and provide a recommendation to the Board and, if applicable, the Bozeman City Commission. If approved by the Board, or City Commission, a “letter of intent” outlining the specific terms and conditions of the TIF assistance will be provided to the applicant. SUBMITTAL INFORMATION There are two parts to the attached application. All applicants must complete Part 1. Applicants requesting TIF assistance above $50,000 must complete and include information identified in Part 2. Part 1 – All Applications Part 2 – Applications requesting funding over $50,000 86 Midtown Urban Renewal District TAX INCREMENT FINANCING APPLICATION PART 1 Property Information Property Address: ____________________________________________________________ Property Owner: _____________________________________________________________ Legal Description: ____________________________________________________________ Property Geo-Code: __________________________________________________________ County Tax ID #: ____________________________________________________________ Applicant Information Property Owner Tenant Developer Other Applicant’s primary contact: Name: ________________________________________________________________________ Business Name: _________________________________________________________________ Business Phone: _______________________________Cell Phone: _______________________ Email: ________________________________________ Project Representative (if not applicant): Name: ________________________________________________________________________ Business Name: _________________________________________________________________ Business Phone: _______________________________Cell Phone: _______________________ Email: ________________________________________ Property Owner (if not applicant): Name: ________________________________________________________________________ Business Name: _________________________________________________________________ Business Phone: _______________________________Cell Phone: _______________________ Email: ________________________________________ 87 Page 6 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 Please attach a list of all other property owners, business partners, developers and/or investors associated with this project, with the above information provided for each. This application must be signed by both the applicant(s) and the property owner(s) (if different). I (we), by signature below, certify that the information supplied in this application is, to the best of my (our) knowledge, true, accurate, and complete, and is provided for the purpose of obtaining approval to participate in the Midtown Urban Renewal District TIF assistance program. I (we) understand that failure to comply with the terms of the TIF assistance program may result in revocation of an award. I (we) understand the work to be undertaken must be in accordance with all applicable requirements of the Bozeman Municipal Code and any special conditions established by the approval authority, and must receive all required approvals prior to commencing the work. I (we) understand if approved for TIF assistance, the work to be performed must also be in accordance with TIF assistance program procedures and the general design guidelines for the District, as well as the specific plans approved for the project. I (we) acknowledge that the City has an Impact Fee Program and impact fees may be assessed for my project. Further, I (we) agree to grant City personnel and other review agency representative’s access to the subject site during the course of the review process (Section 38.34.050, BMC). Applicant (s) (Print Name) Signature of Applicant Date Property Owner(s) (Print Name) Signature of Property Owner Date 88 Page 7 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 Company Profile Business Location New business establishing itself in Bozeman Existing business Expanding/remodeling at same location Expanding to an additional location Existing business relocating from (identify location): Street Address: City: State: Zip: Other: Year Business Established: Type of Business (Describe): Has a business plan been developed in relation to the proposed project? No (Development of a business plan may be required as part of the application process.) Yes (Include a copy with the application.) 89 Page 8 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 Project Detail Property Status: Vacant land Building on leased land – Describe: Land and building(s) – Describe: Type of TIF Assistance Sought: Requesting assistance for public infrastructure costs Building demolition Value of TIF Assistance Sought: $ Will this project proceed if TIF assistance is not granted? No In a limited fashion (explain): Yes, but at a later date (explain): Yes, as scheduled Other: 1. Project Narrative Provide an overview of the project in narrative format. The narrative must include a description of the following aspects of the project: Proposed use(s) or project (e.g. industrial, commercial, retail, office, mixed use, residential for sale or for rental, etc.) Construction information about the project including size of any existing structure to be demolished or rehabbed; sized of any new construction; types of construction materials (structural and finish); delineation of square foot allocation by use; Total number and individual square footage of residential units; type of residential units (e.g. for-sale, rental, condominium, single-family, etc.); number and type of parking spaces provided; and construction phasing. 90 Page 9 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 2. Site Maps and Building Plans The Applicant must submit a completed Conceptual Review Application to the Board and concurrently to the Community Development Department. The Conceptual Review application must include, at minimum: Photographs of project site and/or building Map showing the location of the site and its immediate surroundings Proposed development plans including site plans, floor plans indicating square footage and layout, building elevations Description of parking accommodations for residential units and commercial uses Estimated date of occupancy Prior to Board action on the grant application, the Applicant must have obtained and provide to the Board the Community Development Director’s written comments on the proposed development from the Conceptual Review Application. 91 Page 10 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 CRITERIA FOR TIF ASSISTANCE In reviewing the TIF assistance application the Board will evaluate each project utilizing the following criteria and point system. Points can range from 0 to the maximum shown below in each category. Please rate your project according to the following criteria. To receive points for any given item, documentation demonstrating adherence to the criteria must be submitted with the application. The Board will use this information to evaluate the project. Overall District Relevance Points 1. Relevance to the Midtown Urban Renewal Plan – Documentation of the project’s impact in relation to the goals and objectives of the Midtown Urban Renewal Plan, particularly mixed-use development. Urban design elements will also be considered, including pedestrian emphasis and quality of design. /5 Promote Economic Development 2. Tax Generation: The project will increase the taxable value within the District. The increase in taxable value due to new construction & rehabilitation is estimated by the County Assessor’s office or State Department of Revenue to determine tax increment generation. Submit documentation of estimated tax projections to receive points for this criteria /4 3. Elimination of Blight – The project’s direct and indirect impact on the physical and fiscal deterioration within the Tax Increment Financing District and the community. Submit information showing current conditions of property. /4 4. Employment Generation – Total employment generated by the project assessed in terms of new permanent and part-time jobs, and construction jobs. Submit documentation of estimated new jobs to receive points for this criterion. /3 Improve Multi-Modal Transportation 5. Facilitates Public Health and Mobility: Project will construct or improve sidewalks, including ADA access to buildings. Provide detailed information demonstrating that the current condition inhibits public health and mobility. /1 6. Reduces Resource Demand: Project promotes the use of transit, ride sharing, or car sharing. Provide plans, agreements or other methods to demonstrate reduction of resource demand. /1 7. Promotes Active Transportation: Project promotes bicycling as an active transportation option by constructing or improving bike lanes, providing covered bike parking, and/or participating in a bike share program. Provide plans, agreements or other methods to demonstrate reduction of resource demand. /2 Improve, Maintain and Support Innovation in Infrastructure 8. Infrastructure Improvements: Project promotes innovation in infrastructure and/or reduces long term costs of maintenance. Provide plans and descriptions of innovations proposed. /2 92 Page 11 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 Promote Unified Human Scale Urban Design 9. The project improves the street frontage by eliminating parking between the right-of-way and the building. Provide plans to demonstrate improvement in street frontage. /2 10. The project reduces the number of vehicular access points to the property and improves the pedestrian experience. Provide plans, agreements or other methods to demonstrate reduction. /2 11. The project enhances the North 7th Ave. entryway corridor by having buildings oriented toward the street and designed to provide interest and activity. /3 12. The project enhances the pedestrian experience with elements such as façade transparency, building articulation, street furniture and/or landscaping. Submit plans and details that address this criterion. /3 13. The quality of development and overall aesthetics (architectural, site design, landscaping, etc.) are beyond that which is minimally required by the UDC. Submit documentation to demonstrate compliance with this criterion. /2 Support Compatible Urban Density Mixed Land Uses 14. The project increases housing units within the District. Submit plans demonstrating an increase in the number of housing units. /4 15. The project has a mix of uses, including residential. Submit plans detailing the proposed mix of uses within the project. /4 16. The project shares parking among compatible uses. Provide details demonstrating compliance with the UDC and as well as total number of parking spaces reduced because of a shared arrangement. /2 Total Points /44 APPROVAL (For Official Use Only) Approval Status: Date Approved: Date Letter of Award Sent: Date Certificate of Completion: Date of Payment Request: 93 Page 12 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 PART 2 FOR PROJECTS REQUESTING OVER $50,000 IN ASSISTANCE 1. Detailed Project Information Submit the following information regarding the project requesting TIF assistance. Project Timeline A project timeline is required. Include anticipated dates for site acquisition, project start and completion, as well as other project milestones. Multi-phase projects must include details for each phase. The timeline should also identify any critical or time-sensitive dates as well as any time constraints facing the applicant. Public Benefits Fully describe the public benefits that can be realized by the completion of this project. Projects with a high degree of public benefits are typically more likely to receive TIF assistance. Examples of public benefits include, but are not limited to the following: 9 Re-occupancy of a vacant building 9 Elimination of blight 9 Creation of new retail choices 9 Increased tax revenue 9 Job-training opportunities This statement should include qualitative examples of public benefits as well as quantifiable and measurable outcomes of the short-term and long-term benefits to the District. Include documentation in support of estimates of public benefits. 2. Project Financial Information In order for the Midtown Urban Renewal District Board to adequately review applications seeking TIF assistance, the following information must be submitted with the application. Sources & Uses of Funds Identify the sources of funds used to finance the project. Typical sources include equity, lender financing, mezzanine financing, other anticipated types of public assistance, and any other types or methods of financing. Describe the sources of equity and include a term sheet for lender financing, if available. TIF assistance is available as a reimbursement after the project is complete. Thus, the project budget must identify the up-front sources intended to finance the development costs of the project. If determined, specify the specific line items of the project budget that each source will finance. 94 Page 13 of 13 Midtown Urban Renewal District TIF Assistance Revised January 2017 Summarize the uses of funds. General categories to be identified include: acquisition and related site costs, hard construction costs, and a breakdown of soft costs. Development Budget Provide an accurate and detailed development budget for the project that includes a detailed breakdown of significant line item costs consistent with the sample included in the application packet. The budget should be arranged to identify acquisition and site related costs, hard costs, and soft costs. Also, identify all line items that are performed by the developer, owner, or related entities. Budget of TIF Eligible Expenses Identify which of the development budget costs are eligible for reimbursement as allowed by 7-15-4288, MCA. Financial Commitments Submit commitment letters and/or term sheets from all lenders for proposed debt (such as construction, mezzanine, permanent, and government financing) and all other financial sources of the project (such as grants, and tax credits). Commitment letters must clearly specify the nature and terms of the obligations. 95 TIF project evaluation Overall District Relevance 1.Relevance to the Midtown Urban Renewal Plan – Documentation of the project’s impact in relation to the goals and objectives of the Midtown Urban Renewal Plan, particularly mixed-use development. Urban design elements will also be considered, including pedestrian emphasis and quality of design. • This project is the foundation upon which commercial growth in the Midtown District will be built. The Midtown apartment building will add population to the District thereby ensuring a strong customer base for businesses in the area. This project also replaces an old, blighted house with a contemporary building with Urban design elements and pedestrian based infrastructure. 4/5 Promote Economic Development 2.Tax Generation: The project will increase the taxable value within the District. The increase in taxable value due to new construction & rehabilitation is estimated by the County Assessor’s office or State Department of Revenue to determine tax increment generation. Submit documentation of estimated tax projections to receive points for this criteria • The finished Midtown Apartment property value will be in excess of $1,550,000 compared to the current property value of $280,000. This $1,270,000 increase in property value will increase the taxable value and potentially result in $173,851.68 in tax revenue over ten years, a net gain of $135,563.512 over the projected tax revenue if the property were to be left as is. 4/4 3. Elimination of Blight – The project’s direct and indirect impact on the physical and fiscal deterioration within the Tax Increment Financing District and the community. Submit information showing current conditions of property. • Attached to this application is a picture of the single family home proposed for replacement. This home has a cracked foundation, deteriorating siding, and is out of date with the goals for urban revitalization in the District. 4/4 4. Employment Generation – Total employment generated by the project assessed in terms of new permanent and part-time jobs, and construction jobs. Submit documentation of estimated new jobs to receive points for this criterion. • This project will indirectly promote employment generation. Employment generation is caused by the expansion and creation of business and those businesses require customers. By increasing population density and thereby creating a strong customer base, the Midtown Apartment building will indirectly spur employment generation in the District. 96 3/3 Improve Multi-Modal Transportation 5.Facilitates Public Health and Mobility: Project will construct or improve sidewalks, including ADA access to buildings. Provide detailed information demonstrating that the current condition inhibits public health and mobility. • The current building has 4’ sidewalks and is not ADA accessible. The new building will have 5’ sidewalks and feature an at-grade fully ADA accessible residential unit. 1/1 6. Reduces Resource Demand: Project promotes the use of transit, ride sharing, or car sharing. Provide plans, agreements or other methods to demonstrate reduction of resource demand. • By providing a substantial increase in centrally located housing, the Midtown Apartment project directly reduces resource demand by reducing the distance residents will have to commute to work or other activities. 1/1 7.Promotes Active Transportation: Project promotes bicycling as an active transportation option by constructing or improving bike lanes, providing covered bike parking, and/or participating in a bike share program. Provide plans, agreements or other methods to demonstrate reduction of resource demand. • This project provides housing in a location that is “bikeable” to most places of work and entertainment for residents. Additionally, as you can tell from the attached drawings, covered bike parking will be provided on site for all residents and a bike share program will be encouraged amongst residents. 2/2 Improve, Maintain and Support Innovation in Infrastructure 8.Infrastructure Improvements: Project promotes innovation in infrastructure and/or reduces long term costs of maintenance. Provide plans and descriptions of innovations proposed. • The design of this building is such that PV (solar panels) can be incorporated on the flat roof facing peach. This will reduce demand on the grid and move towards sustainability. 2/2 9. The project improves the street frontage by eliminating parking between the right-of-way and the building. Provide plans to demonstrate improvement in street frontage. • Parking at this location and much of the N 7th district involves cars in front of buildings. This design incorporates all of the parking on-site but in garages hidden from view from 97 the street frontage. The street frontage view of this building will not involve any parking and greatly improve the aesthetics of the District. 2/2 10.The project reduces the number of vehicular access points to the property and improves the pedestrian experience. Provide plans, agreements or other methods to demonstrate reduction. • As mentioned above, all of the parking for this building will be in garages hidden from view. The current property involves a three car wide drive isle often utilized for parking giving pedestrians a view of parking. The revised plans (attached) show a drive isle never to be used for parking and street frontage that does not involve parking therefore greatly improving the pedestrian experience when walking past the Midtown Apartment building. 2/2 11.The project enhances the North 7th Ave. entryway corridor by having buildings oriented toward the street and designed to provide interest and activity. • As explained in the previous two responses, this project orients building design to showcase urbanization in design and promote aesthetics for the pedestrian experience creating a welcoming feel to the North 7th Ave district. 3/3 12. The project enhances the pedestrian experience with elements such as façade transparency, building articulation, street furniture and/or landscaping. Submit plans and details that address this criterion. • The attached plans demonstrate how the façade of this building and orientation relative to parking will enhance the pedestrian experience. Additionally, the landscaping plans demonstrate significant investment by the developer in enhancing the pedestrian experience. 3/3 13. The quality of development and overall aesthetics (architectural, site design, landscaping, etc.) are beyond that which is minimally required by the UDC. Submit documentation to demonstrate compliance with this criterion. • So far through the process of DRC and UDC, this building has been well received by the COB Planning Department with regard to its design and landscaping. The building offers visible patio space for each unit, a common area open deck space on the front, contemporary architecture, and a fully landscaped site plan. All of these components take this project beyond the minimally required design standards and work to improve the overall aesthetics of the District. 98 2/2 Support Compatible Urban Density Mixed Land Uses 14. The project increases housing units within the District. Submit plans demonstrating an increase in the number of housing units. • At its core, the purpose of this project is to increase housing density in the District. The current site is home to a single family residence and, once complete, this project will house up to 9 separate housing units resulting in a 5 fold population increase at this location. 4/4 15. The project has a mix of uses, including residential. Submit plans detailing the proposed mix of uses within the project. This project proposes only residential use at this time. The at grade unit holds the potential for conversion to small scale commercial use in the future. But the impact if drastically increasing population density in the District with projects such as this will only increase feasibility of mixed use projects within the District. 1/4 16. The project shares parking among compatible uses. Provide details demonstrating compliance with the UDC and as well as total number of parking spaces reduced because of a shared arrangement. • This is not relevant to this project. 0/2 Total Points 38/44 99 Sources and uses of funds The primary source of funding for this project will be private equity. The owner of this project is pledging the land which was purchased for $285,000 and carries a $100,000 note. The owner will also be leveraging three other properties in Bozeman to bring up to $650,000 in capital to the project. This will be considered a down payment on a loan through First Security Bank for the remaining project costs. The owner will work with the bank to ensure TIF eligible expenses are paid upfront so they can be reimbursed. TIF eligible expenses (outlined in the attached budget) include: • Teardown:$41,365.00 • Impact Fees: $42,661.00 • Storm water system: $33,628.00 • Park Land (cash-in-lieu): $12,864.00 • Water/Fire line: $17,704.00 100