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HomeMy WebLinkAbout06-04-18 City Commission Packet Materials - C13. FY19 Midtown URD Work Plan and Budget Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: David Fine, Economic Development Specialist, Midtown Urban Renewal Board Staff Liaison SUBJECT: Midtown Urban Renewal District Fiscal Year 2019 Budget and Work Plan MEETING DATE: June 4, 2018 AGENDA ITEM TYPE: Consent RECOMMENDATION: Approve the Midtown Urban Renewal Board’s Fiscal Year 2019 Work Plan and Budget as submitted. BACKGROUND: On May 3, 2018, the Midtown Urban Renewal Board (MURB) unanimously approved the attached FY 2019 Budget from which staff prepared the proposed FY 2019 Work Plan and Budget. The total value of appropriations in the MURB budget request for FY 2019 is $1,604,400. The total value of new appropriations is $1,491,900. The MURB proposes a work plan and budget for approval by the City Commission during public hearings on the proposed City budget on an annual basis. In addition, the MURB will prepare and submit an annual report to the City Commission. This annual report will explore projects completed in the past year and explain how these projects conform with the 2015 Midtown Urban Renewal District Plan.1 The annual report will be presented to the City Commission by August 2018. FISCAL EFFECTS: The Midtown Urban Renewal District collected $651,949 in revenues in FY2018. Assuming similar revenues in FY 2019, the $1,604,400 in new expenditures 243 for FY 2018 will significantly exceed new revenues. The Midtown URD has significant cash reserves, which are adequate to undertake the proposed Work Plan and Budget. The board will likely ask the City Commission to issue tax increment revenue bonds in this fiscal year for some of the projects listed in this budget request. UNRESOLVED ISSUES: The MURB is proposing significant projects for this fiscal year for which issuing tax increment revenue bonds is the preferred funding solution. The largest component of this proposed bond would be the remainder of the streetscape project from Mendenhall St. to Durston Rd. While the District could conceivably do the portion of this project from Mendenhall St. to Beall St. in cash, this would significantly deplete funds which could be better used on incentives to redevelopment projects that would create new taxable value and that “but for” incentives would not be feasible. If the District can obtain the necessary approvals for the entire project from the Montana Department of Transportation (MDT) in a timely manner, the MURB goal is to bond for the entire streetscape project for construction spring 2019. If the District is unable to get approval for the curb bulbs at Villard that make the entire project feasible due to right-of-way constraints, the board may do a smaller section of the streetscape project in cash. Due to the uncertainty surrounding MDT review of the streetscape project, as well as contemplated private development projects, the City Commission should expect budget amendment requests during this fiscal year. ATTACHMENTS: Midtown Urban Renewal District Map Midtown Urban Renewal District Fiscal Year 2019 Work Plan and Budget 1 Last year, staff was under the impression that they needed to file an annual report as required by per Section 7-15-4237 of the Montana Code Annotated (MCA). However, this requirement only applies to an urban renewal “agency”. Nevertheless, staff will attempt in the annual report to explain how expenditures relate to the purposes of the adopted urban renewal plan, as this is a good district management practice. Prepared and uploaded May 9, 2018 244 N 7TH AVE W OAK ST W MAIN ST N 19TH AVE N ROUSE AVE INTERSTA T E 9 0 H W Y BAXTERLN DURSTON RD E MAIN ST N 11TH AVE W PEACH ST EOAKST S 11TH AVE S 19TH AVE E PEACH ST F R ONTAGERDS CHURCH AVE S WILLSON AVE BRIDGER DR N19THAVEN 7TH AVE INTERSTATE90HWY Legend City Limits Midtown Urban Renewal District Midtown Urban Renewal District 0 ½1¼MilesMap created by the City of Bozeman GIS Dept. and is intended for planning purposes only - 5/8/2018 ´ 245 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2019 Work Plan and Budget 1 Fiscal Year 2019 Work Plan and Budget Overview The Midtown Urban Renewal Board’s (MURB) Work Plan and Budget prioritizes the completion of right-of-way acquisition, engineering and permitting for the North 7th Avenue Lighting and Streetscape Project with a goal of construction in two phases in summer 2018 and spring 2019. The goal is to have a “shovel-ready” project in anticipation of infrastructure construction bonding. The next phases of the project promise to be much more expensive as they will include far more sidewalk construction as well as the addition of conforming ADA ramps, and street trees and tree grates, whereas previous phases mostly involved the replacement of street lights. Moreover, the remediation of blighted conditions in the district and its ongoing redevelopment will take many more years, while there are only three more years remaining on the district without extending the life of the district through bonding. This approach ensures that a significant, bondable project, with significant community impact, is ready prior to the end of the District’s initial life. In August 2017, the City Commission approved the Midtown Action Plan, which charted a new direction in pairing infrastructure spending and blight remediation with proposed private investment. This budget continues the longstanding priority of the streetscape project, while taking the first steps toward pairing public infrastructure and private investment. Lighting and Streetscape Project Engineering and Right of Way Acquisition Mendenhall St. to Beall St. Streetscape Construction This item includes construction administration for the described section of the project. It includes engineering costs for integrating the recently acquired Parcel “S” into the project. Addition of 120 N. 7th Ave Parcel (Parcel S) to the Mendenhall St. to Beall St. Streetscape Project The City recently acquired the right of way for this parcel (formerly Bridger Eyecare). This item includes the incorporation of this section into the existing bid through a change order or a modification of the bid award. Beall St. to Villard St. Modify Construction Plan Set Modify existing 90% construction plan set (civil, electrical, landscape) to match streetscape section adjacent to parcels H and I. Prepare MDT/City response letter and accompanying documentation for submittal to regulatory agencies. Villard St. to Durston Rd. Modify Construction Plan Set Modify existing 90% construction plan set (civil, electrical, landscape) to match streetscape section adjacent to parcels H and I (RSVP Motel/ The Local). Prepare MDT/City response letter and accompanying documentation for submittal to regulatory agencies. Excludes previously completed parcel H and I design. Durston Rd. to Interstate 90 Tree Installation Engineering In recent negotiations, MDT declared that the proposed location of boulevard trees in this section, where a parking lane exists, is outside the clear zone. MDT assertions regarding clear zones had prevented the installation of trees in this section during previous phases of the project. With this new 246 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2019 Work Plan and Budget 2 policy conclusion, the board wishes to compete the original vision of the 2006 N. 7th Avenue Design and Connectivity Plan for this section. • Modify existing 90% construction plan set (civil, electrical, landscape) to match streetscape section adjacent to parcels H and I. Prepare MDT/City response letter and accompanying documentation for submittal to regulatory agencies. Excludes previously completed parcel H and I design. Administrative Settlements As final construction nears for this project, it may be necessary to enter into settlements with property owners to speed the final transfer of easements and right of way necessary for the project. Public Infrastructure Coordination with Private Investment Midtown Sewer Capacity Land Use Projections The goal of this project generally is to determine the size and extent of wastewater infrastructure required to serve the Midtown and Downtown Urban Renewal Districts at full buildout, particularly as it relates to the upgrades of existing facilities. This project is being undertaken because there are concerns that uncertainty around wastewater facility needs are negatively affecting development. Specifically, developers are being required to expand infrastructure on an inefficient piecemeal basis adding cost to projects while not necessarily improving the capacity of the entire system. To do this, our consultants will perform a build out analysis to determine the amount of development that can be supported under current zoning. The amount of development possible, measured in square footage for commercial development and number of dwelling units for residential development, will be used, in conjunction with the Wastewater Collection Facility Plan and any other applicable documents to determine future wastewater flows and from that, the City and HDR will derive facility sizing using their existing wastewater facility model. This project complements the sewer flow monitoring work undertaken in April 2018. 8th Ave. Street and Utility Improvements Engineering Sewer infrastructure between Mendenhall St. and Villard St. is composed of aging and undersized vitrified clay pipe. The water line is also undersized and the area has drainage issues. In addition, 8th St. from Beall St. to Villard St. is unpaved or unconstructed. This project would allow redevelopment on the west side of this part of the corridor and improve the overall connectivity. The project generally includes construction of a new local street on 8th Avenue from Villard Street to Beall Street. The existing street width south of Beall Street will be matched and sidewalk will be included on both sides of the street. The project will also include a new 8-inch water main connection along the same length, replacement of the existing 12-inch sewer main, and new storm drain improvements. The 2017 Midtown Action Plan proposed this project for coordination with private development. This project would likely be included in the District’s first infrastructure bond. 247 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2019 Work Plan and Budget 3 Peach St. Fiber Conduit Engineering Three proposed projects in the District have requested the extension of the Midtown fiber conduit to their properties. These projects include one mixed-use building and a total of 29 new residential units. The project would also allow all of the parcels along Peach St. from N. 7th Ave. to N. 3rd Ave. to receive competitive broadband options from multiple providers. Construction of this project would coordinate with private redevelopment. Fiber Conduit Connection Incentive Program The District has made significant investments in facilitating competitive telecommunications options through the provision of public conduit. This program, modeled on a program created by the Downtown URD provides matching grants of up to $2,500 to connect buildings to the City conduit system. The program facilitates connections to infrastructure and the utilization of the existing conduit investment. Whittier School Public Improvements Replace Exterior Doors and Landings With the design of Whittier School, each classroom has an exterior door and concrete landing. This project replaces those doors and landings. Outside Legal Counsel The MURB is designing several major public infrastructure projects including the lighting, streetscape, park, and multi-use path projects. Bonding will allow these projects to be constructed concurrently and extend the life the life of the district. Planning for a bond would start in FY 2018, with most of the work occurring in FY 2019, with the Commission considering a bond proposal in FY 2019. In addition, outside counsel may be necessary to respond quickly to development proposals by creating development agreements under the Midtown TIF Assistance Program. Redevelopment Incentive Programs The Midtown Urban Renewal District’s redevelopment incentive programs are based on criteria included in the 2015 Midtown Urban Renewal District Plan. Technical Assistance Grants (TAG) This program is to provide technical assistance funding to encourage developers to build on parcels along the N. 7th Avenue corridor or rehabilitate existing structures. It recognizes the complexities of redeveloping parcels which have existing substandard buildings and infrastructure; it was created to offset the costs of those complexities with grants for those proposing work which eliminates blight and advances the implementation of the District Plan. The program was approved by Resolution 4777 and is administered by the MURB. The maximum grant amount for the program is $7,500 and requires a 1:1 match. 248 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2019 Work Plan and Budget 4 Technical Assistance Grants Encumbered from FY 2017 The MURB awarded (1) TAG grants in FY 2018 that will not be complete until sometime in FY 2019. A complete description of these grants will be included in the FY 2018 Annual Report. Direct Incentives / Midtown Tax Increment Finance Assistance Program For the past several years, the MURB has administered the N7 Rehabilitation Grant program, which incentivizes improvements to sites and façades of existing structures to facilitate blight remediation. The existing program was a component of several successful and worthy projects in recent years. Nevertheless, the board and staff were concerned that the program (15% of eligible project costs up to $50,000) was too small to actually incentivize projects that were not already feasible. In addition, by rehabilitating existing building forms and site designs, the program was actually preserving development patterns that are counter the land use goals of the district. The final grant under this program, awarded two years ago, includes the proposed patio expansion at Midtown Tavern. The City Commission approved a new incentive program, the Midtown TIF Assistance Program pursuant to Resolution 4770. Awards will be based on the quality of projects and their support of the Midtown Urban Renewal Plan.. Projects of a larger magnitude will require a budget amendment and possibly bonding and will require the authorization of the City Commission mid-year. The Midtown Apartments project has been the only project to date awarded funds under this program. Previously Awarded Incentives These incentive awards were approved by the MURB in a previous fiscal year and are expected to be expended in FY 2019. • Midtown Tavern Patio N7 Rehab Grant o This project is the final outstanding award under the N7 Rehab façade grant program. • Audrey’s Pizza and Brewery Technical Assistance Grant o This grant will assist the new property owner with plans to do a significant addition to the existing Village Inn Pizza building to make the building double front Aspen St. and N. 7th Ave. • Midtown Apartments TIF Assistance Incentive o The Midtown Apartment project replaces an aging single family home with nine new housing units. The project adds new housing and new taxable value to the District in a manner that meets goals of the Midtown Urban Renewal Plan. 249 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2019 Work Plan and Budget 5 District Operations Outreach and Mailing The Board has requested money for public noticing and outreach activities in the District. The purpose of these outreach activities is to inform and engage property owners and the public in the implementation of the Midtown Urban Renewal Plan. Midtown Marketing and Recruitment This item includes maintenance of the new website midtownbozeman.org as well as programs like the banner program to drive traffic to the website. With the change in name to the Midtown Urban Renewal District, the board recently launched a new brand identity and website to communicate effectively with property owners and the public and “to disseminate blight clearance and urban renewal information.” The website is expected to launched in April 2018. In addition, the board and staff are planning to actively recruit development projects in the district that are in support of the urban renewal plan. Economic Development Staff/ Professional Services to Support District Staff The Board needs City staff assistance with District Plan implementation. Additionally, City staff will need to contract for professional services to assist with district management and implementation of the work plan and budget. 250 Bozeman Midtown Urban Renewal Board Fiscal Year 2019 Budget Scheduled Infrastructure Planning and Construction Streetscape, Mendenhall to Beall: Construction Administration 39,600$         Streetscape, Mendenhall to Beall: Parcel S Expansion 3,500$           Streetscape, Beall to Villard: Modify Construction Plan Set 10,600$         Streetscape, Villard to Durston: Modify Construction Plan Set 22,700$         Streetscape, Durston to I‐90: Tree Planting Construction Plans 10,000$         Administrative settlements 30,000$         Peach St Fiber Conduit Engineering 12,000$         Midtown Sewer Capacity Land Use Projections 20,000$         8th Avenue Street and Utility Improvements Engineering 42,500$         Mendenhall to Beall Streetscape Construction 800,000$      Outside Legal Counsel For Bonding and Redevelopment Agreements 50,000$         Incentive Programs Technical Assistance Grants 1:1 match [4 grants]30,000$         Direct Incentives ‐ Midtown TIF Assistance Program 200,000$      City Conduit Connection Incentive Program 10,000$         District Operations Outreach and Mailing 5,000$           Midtown Marketing and Recruitment 10,000$         Professional Services to Support District Staff 20,000$         Economic Development Staff 36,000$         Whittier School Whittier School Miscellaneous Doors and Hardware 110,000$      Miscellanous concrete 30,000$         Total New Expenditures for FY 18 New Expenditures 1,491,900$   FY 2018 Encumbered Projects Midtown Tavern Patio N7 Rehab Grant 15,000$         Midtown Apartments TIF Assistance (Approved by the City Commission 2018) 90,000$         Audreys Pizza and Brewery Technical Assistance Grant 7,500$           TOTAL EXPENDITURES FY 2019 1,604,400$    Estimated FY 2018 Ending Balance 1,350,000$   Estimated Revenues 651,949$      Estimated Total Cash FY 2019 2,001,949$   Estimated Cash minus expenditures (FY19 Ending Balance) 397,549$      251