HomeMy WebLinkAbout03-26-18 City Commission Packet Materials - C2. Opportunity Zone Proposal to Department of Commerce
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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brit Fontenot, Director of Economic Development
SUBJECT: Authorize the City Manager to Sign the Opportunity Zone
Proposal to the Montana Department of Commerce
MEETING DATE: March 26, 2018
AGENDA ITEM TYPE: Consent
RECOMMENDATION: Authorize the City Manager to Sign the Opportunity Zone
Proposal to the Montana Department of Commerce
BACKGROUND:
The Tax Cuts and Jobs Act of 2017 established a new economic
development program called Opportunity Zones designed to encourage long-term
private investments in low-income communities. The program provides a federal
tax incentive for taxpayers who reinvest unrealized capital gains into
“Opportunity Funds,” which are specialized vehicles dedicated to investing in low-
income areas called “Opportunity Zones.”
The zones themselves are to be comprised of Low-Income Community
Census tracts and designated by governors in every state and territory. The
program has the potential to direct private capital toward distressed
communities and serve as a catalyst for long-term, inclusive economic
development. This may include downtown revitalization, workforce development,
affordable housing, infrastructure, and business startup and expansion.
The Governor of Montana may nominate up to 25 eligible Low-Income
Community Census tracts for Opportunity Zone designation within the state.
Census tracts are small, relatively permanent statistical subdivisions of a county
with population sizes between 1,200 and 8,000. Their primary purpose is to
provide a stable set of geographic units for the presentation of statistical data.
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The State of Montana has 270 total census tracts. (Note that Opportunity
Zones are defined by Census tracts, not by city or county boundaries. However,
some census tracts in rural Montana may cover an entire county because of low
population.) Of these tracts, 106 have been identified as Low-Income-
Communities (LIC) based on the following criteria:
• Tracts in which the poverty rate is at least 20 percent; or
Tracts in which the median family income does not exceed 80 percent of
the statewide median family income if located outside of a metropolitan
area; or
• Tracts in which the median family income does not exceed 80 percent of
the statewide median family income or the metropolitan area median
family income, whichever is higher.
Staff has prioritized the eligible tracts and is proposing the following priorities for
consideration:
1) Census Tract 11.02;
2) Census Tract 6 ; and
3) Census Tract 9.
ALTERNATIVES:
As determined by the City Commission.
FISCAL EFFECTS:
None at this time.
ATTACHMENTS:
1) Opportunity Zone proposal;
2) Census tract map; and
3) Letters of support.
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Opportunity Zone Proposal to the
Montana Department of Commerce
For submission by March 30, 2018
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Opportunity Zone Proposal Form
Provide brief answers for each Census tract if proposal contains multiple tracts.
1. Enter name of City, Town, County, Tribe, Certified Regional Development Corporations (CRDCs)
or lead economic development organizations.
The Census tracts in this proposal are within the city limits of Bozeman, and county limits of
Gallatin County, Montana. The Prospera Business Network is the authorized CRDC for this
region.
2. Enter the unique tract code(s) you are submitting to be a potential Opportunity Zone (Note: This
is the 11-digit code provided on the Commerce website). If more than one Census tract is being
proposed, prioritize each Census tract in your jurisdictional area, with a rank of one being the
highest priority. Briefly justify the ranking. (100 Words)
Ranked Priority Tracts for this proposal
1) Census Tract 11.02 30031001102
2) Census Tract 6 30031000600
3) Census Tract 9 30031000900
Rationale: The high priority tracts listed below are already are ideally located to attract significant
new private investment. Tract 11.02 includes at least one significant project on the MSU Innovation
Campus that is underway and is a major catalyst for future investment.
1) Tract 11.02 includes the new MSU Innovation Campus. The initial building on the campus,
the advanced research laboratory is currently under review by the City and development of
the forty acre site is underway with significant private investment already secured. This site
represents investments in high-tech facilities and companies facilitating high-wage job
growth grounded on the strength of MSU research and technology transfer in a variety of
high-tech sectors. The large amount of developable commercial and residential land in this
tract makes it a very desirable location for private investment and increased opportunity to
add jobs in Bozeman’s many of Bozeman’s growing sectors. The tract is served by
appropriately sized infrastructure, including transportation, water, sewer, stormwater and
broadband infrastructure, to incentivize significant new private investment and
development. This tract can also leverage the existence of the South Bozeman Technology
(TIF) District.
2) Tract 6 includes areas of the North 7th Avenue along the Midtown corridor and its active
Urban Renewal District, and the areas along Rouse Ave. and the Northeast Urban Renewal
District and surrounding residential neighborhoods. Both the Midtown URD and Northeast
URD are experiencing increased public and private investment in both commercial and
residential developments. Increased availability of private capital investments will allow for
the efficient utilization of public infrastructure, including, transportation, water, sewer,
stormwater and broadband infrastructure, which maximizes the public investment in the
urban renewal districts. ED staff has noted the strong interest in this district for new, high
tech jobs adjacent to these new vibrant urban corridors. This area of the Bozeman
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community is highly sought after by new and expanding high tech businesses including OnX
Maps, Kudos, Elixiter and outdoor industry leaders Sitka and Mystery Ranch. The City
recently streamlined zoning in the area by encouraging urban-density commercial
development through increased building height, and removing minimum parking
requirements.
3) Tract 9 includes areas along Bozeman’s west entryway corridor, a major entryway and
commercial district in the City of Bozeman. MSUs growing student population and tract 9’s
proximity to the campus, in addition to existing aging affordable housing options in the area
creates the incentive to invest in improvements to meet the growing demand. Increased
availability of capital will facilitate the dense redevelopment of this walkable centrally
located area.
3. Does a community within the designated census tract participate in the Montana Main Street
Program?
No, there is no formal involvement with that program to date.
4. Tract Descriptions
a. Development in this Census tract is primarily related to: (Check boxes)
RANK → 1 2 3
TRACT → Tract 11.02 Tract 6 Tract 9
Commercial Real Estate X X X
Natural Resources
Downtown Revitalization or Small Business X X X
Manufacturing and Industry X X
Travel and Tourism X
Health Care
Education X
Technology X X
Other: Mixed-use, Residential, Small Business X X X
b. Considering current or expected development, describe the benefit an Opportunity
Zone designation would have for the selected Census tracts. Include areas in which
development is occurring or likely to occur that would leverage investments for the
specific Census tracts.
Tract 11.02 includes a significant development project currently underway. The MSU Innovation
Campus (MSU IC) is representative of the dawning of the high-tech economy in Bozeman, the
Gallatin Valley and the State of Montana. Considering the investments being made and proposed
west of the MSU campus and the available land for meeting the growing demand for both
commercial facilities and residential units, this tract has the potential to receive a highly diverse,
multi-sector business and residential area that sustains mid to high-wage jobs in close proximity to
MSU, transportation routes and the Bozeman’s downtown core. Additionally, the MSU IC also has
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mutually reinforcing state, local, and private support needed to attract additional investment and
foster more startup activity. The MSU IC development team envisions that the combination of a
top-tier research university with a robust technology transfer mechanism complements the rapidly
expanding technology industry. Tract 11.02 can absorb additional new private capital supporting a
variety of commercial and residential offerings, support local entrepreneurs and global companies,
and has the growing population, airport and other transportation infrastructure to facilitate growth
in this tract and the rest of Montana. Also, Tract 11.02 includes properties within a Technology
District which can leverage private investment for public investment in public infrastructure.
Finally, areas within Tract 11.02 have access to fiber optic networks with large portions of
undeveloped land within the tract adjacent to the Bozeman city limits. An Opportunity Zone
designation, combined with the presence of the South Bozeman Technology (TIF) District,
compounds all the existing public investment and activity adding additional value to those projects.
Tract 6 is currently attracting new private investment in commercial neighborhood-scale
development in and around the Northeast Urban Renewal District, as well as planned new
commercial investment in the Midtown corridor and Midtown Urban Renewal District. These urban
renewal districts excel at leveraging public dollars for public infrastructure to incentivize private
investment, the impact of which compounds if included in an Opportunity Zone. Opportunity Zone
designation will be a major incentive to speed up private investment that been incrementally
appearing in the area, i.e. The Cannery District. Factors for the slower than anticipated private
investment include outdated zoning and land use regulations, inappropriate lot sizes and existing
large and centrally located brownfield sites. Private investment interest is largely due to Bozeman’s
rapidly growing designation as Montana’s technology leader, the need for a variety of housing
options, a high quality of life and proximity to downtown and other commercial and high-tech
corridors. Finally, Tract 6 includes properties with direct and immediate access to the recently
constructed high speed, high capacity and redundant fiber optic network and a large, centrally
located and undeveloped and de-listed brownfield site.
Tract 9 currently hosts a variety of hosing options for students and middle to low income residents.
As Montana State University’s population grows, additional proximate housing options are under
consideration. Currently, aging affordable housing options in the area are not sufficient to keep
pace with the demand and the establishment of an Opportunity Zone for Tract 9 creates incentive
for private investors to make improvements to meet the growing demand. Increased availability of
capital will facilitate the dense redevelopment of this walkable centrally located area.
5. How will the designation of an opportunity zone reduce poverty and the LMI percentage? (200
Words)
The dominant new development currently underway in Tract 11.02, the MSU IC, and large amounts
of available undeveloped land supports the rapid growth of Bozeman’s high-tech sectors, including
high-tech manufacturing, supporting mid to high-wage job growth. Incentivizing additional private
investment through an Opportunity Zone will increase commercial and residential options across a
wide spectrum of economic strata due to the large areas of undeveloped land in the tract thus
improving live/work options for job seekers at multiple income levels.
Tract 6 represents the opportunity to incent private investment to develop or redevelop large areas
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of previously undeveloped or underdeveloped land due to a variety of outdated zoning
designations and required environmental remediation. Recent updates to the city’s zoning code
and delisting of a large area within the tract by the appropriate agencies creates significant infill
investment opportunities and leverages the public investment in infrastructure in the urban
renewal districts. Private investment incented by an Opportunity Zone will create additional
live/work options for job seekers at multiple income levels.
Tract 9’s location, which includes the growing west end of Main Street, proximity to new
commercial development in the area and downtown as well as the Montana State University
campus creates the incentive, with substantial private investment, to improve residential offerings
in the tract that currently cater to MSU students and moderate to low income residents.
These tracts are also currently served by educational and social support services (HRDC and others).
These combined circumstances offer a high likelihood of reducing the LMI, over time, in each of
these zones. Additional private investment within any and all of these census tracts that will also
provide opportunities throughout the whole of Gallatin and Park Counties which has a positive
cascading effect on LMI in these areas.
6. Describe capacity to attract investment if the selected census tract is nominated as an
Opportunity Zone. Describe the strategy to market and promote the area to potential investors,
including partners. (200 Words)
The Bozeman community has a high functioning business, educational and financial support
ecosystem and network currently in place. The partnerships include: the Prospera Business
Network, City of Bozeman, Bozeman Area Chamber of Commerce, Montana State University and
its entities, MSU Innovation Campus (and Campus Partners), Gallatin County, Bozeman School
District 7, Next Frontier Capital, Northwestern Energy, the Downtown Bozeman Partnership, the
Northern Rocky Economic Development District, the Montana Manufacturing Extension Center, the
Frontier Angle Fund, multiple area banks, and many, many others. These organizations have a
history of partnership, cooperation and communication and success. Investors, companies,
residents and students are attracted to the Bozeman area for its high quality of life, access to public
lands and the outdoors, educational and employment opportunities, airport, broadband, financing
and other amenities like healthcare, parks and trails. Bozeman is the fastest growing city in the
State of Montana and its growing national reputation positions it well to receive significant
investment.
7. Are there environmental, social or health concerns or other relevant regulatory limitations in the
Census tract that would need to be resolved before commercial development takes place? Could
these factors weaken or reduce resources used to leverage investment in the Census tract and
could more development help alleviate these impediments? (200 Words)
These concerns are extremely low as significant portions of each tract locations are within the city
limits of Bozeman and have already undergone significant development or redevelopment. Much
is already known about the environmental condition of the land within the tracts proposed in this
application. The few brownfield sites under serious consideration for investment and
development, which are large and centrally located in Tract 6, were recently delisted. However,
even delisted brownfield sites are more costly to develop and opportunity zone designation may
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be the right incentive to trigger sorely needed private investment in these areas, which has been
discussed for decades but has, to date, not come to fruition. The city planning and permitting
processes, as well as the City-County Health Department are informed and well established to
address any site-specific concerns that might arise.
**** End of Application Except for Signatures ****
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CITY OF BOZEMAN
Printed Name of Official Representative: Official Title:
Andrea Surratt Bozeman City Manager
Official Representative Signature: Date:
_____________________________ _____________________
PROSPERA BUSINESS NETWORK
Printed Name of Official Representative: Official Title:
Paul Reichert Executive Director
Official Representative Signature: Date:
_____________________________ _____________________
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Office of Research
and Economic
Development
207 Montana Hall
Bozeman, MT 59717-2460
Tel (406) 994-2891
Fax (406) 994-2893
www.montana.edu/wwwvr
March 11, 2018
To: Governor Steve Bullock
Re: Support for Opportunity Zone Tract 11.02 (30031001102)
Dear Governor Bullock:
The recent Tax Cuts and Jobs Act of 2017 established a new economic development
program aimed at designating Opportunity Zones to encourage long-term private
investments, especially in areas that are the focus of mutually reinforcing State,
local, or private economic nitiatives to foster startup activity. Candidate Opportunity
Zone tract 11.02 (30031001102), which encompasses Montana State University, the
Montana State University Innovation Campus (MSUIC) and the East Main Street
corridor, provides a unique opportunity not only for Montana State University, but
also for Montana industry to take advantage of these development initiatives.
Tract 11.02 coincides with a rapidly growing Montana State University research
budget that provides the necessary State and local investment to make this
Opportunity Zone a success. Indeed, current research expenditures at Montana
State University exceed $130M annually with nearly $100M of those expenditures
supporting personnel in technical jobs. Thus, tract 11.02 will provide further support
for current faculty and staff in providing internships and enhanced opportunities for
entrepreneurship for students that will result in improved employment opportunities
upon graduation and improved employment options for citizens across the state.
As my title, and that of my office, highlights, I am dedicated to collaborative efforts
and initiatives for economic development in Bozeman and throughout the State. One
example is the current MSUIC project; this project will expand our robust research
culture and further provide growth not only for research expenditures, but also for
entrepreneurial opportunities for students and faculty, specifically in the areas of
cybersecurity (with the University of Montana and Montana Tech), photonics and
optics and healthcare. The first building on the MSUIC is the Applied Research
Laboratory (ARL) that had a groundbreaking February 23, 2018, and will allow
faculty and Montana industry to engage in many areas of technological expertise in
the classified research and development realm.
Governor, I believe that by selecting tract 11.02 as an Opportunity Zone, we can do
great things in Montana. This will allow Montana State University, the state’s land
grant university, to deepen longstanding research partnerships with United States
government federal agencies and local and national private industry to further
increase economic growth in Bozeman and translate that growth to establishment of
similar or satellite systems throughout the state. I ask for your support in selecting
tract 11.02 as an Opportunity Zone in Bozeman.
Sincerely,
Renee A Reijo Pera, PhD
Vice-President for Research and Economic Development
Email: renee.reijopera@montana.edu; Cell: 406-539-2602
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Renee Reijo Pera
Chair
Chris Murray
Vice Chair
Cory Pulfrey
Paul Reichert
Susan Carstensen
Ken Fichtler
Brit Fontenot
Richard Harjes
Richard Harte
Steve Barrett
Bob Mokwa
Scott Levandowski
Mary Beth Walsh
MSUIC
BOARD OF
DIRECTORS
March 13, 2018 To: Governor Steve Bullock
From: Montana State University Innovation Campus Subject: Support for Opportunity Zone Tract 11.02 (30031001102)
Dear Governor Bullock, The Tax Cuts and Jobs Act of 2017 established a new economic development program
called Opportunity Zones designed to encourage long-term private investments,
specifically in areas that are currently the focus of mutually reinforcing state, local, or
private economic development initiatives to foster startup activity. Candidate Opportunity Zone tract 11.02 (30031001102), which encompasses MSU, the MSUIC and
the East Main Street corridor will offer opportunities for investment in a creative and
entrepreneurial environment that will provide next generation state of the art facilities,
support start-up companies, and provide students with hands-on learning experiences that will result in improved employment opportunities upon graduation. Additionally, this
will push forward cutting-edge science and technologies that will contribute to the
economic vitality of the Gallatin Valley and across the State of Montana.
As an example of local and private economic development initiatives already occurring on the MSUIC, the Applied Research Laboratory (ARL) will utilize MSU faculty and
students combined with Montana industry to engage in many areas of the university’s
research expertise, including laser and photonics, advanced manufacturing, advanced
materials, and cyber security. The ARL will allow MSU to deepen longstanding research partnerships with U.S. government federal agencies as well as private contractors in
defense, energy and other areas of national security interest.
Selecting tract 11.02 as an Opportunity Zone, will directly benefit current and new investments as the MSUIC is shovel ready to implement of a highly diverse business
district with high-wage jobs in close proximity to MSU and the Downtown Bozeman
core. The combination of a technical university and burgeoning local industry allows for
the absorption of new capital and support to local entrepreneurs. Research conducted by Enrico Moretti in “The New Geography of Jobs” discovered that for every high-tech job created, five additional jobs are created outside of the high-tech sector making the
MSUIC a facilitator of growth in and around Gallatin County.
I would like to ask for your support in selecting tract 11.02 as an Opportunity Zone in
Bozeman.
Justin Cook
Executive Director
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