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Home My WebLink About06-04-18 City Commission Packet Materials - C18. FY18 North Park URD Annual Report and FY19 Work Plan and Budget 1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Economic Development Director SUBJECT: North Park Urban Renewal District FY 19 Update MEETING DATE: June 4, 2018 AGENDA ITEM TYPE: Consent RECOMMENDATION: Receive the information contained in this memo and consider this in the context of FY 19 URD/TIF District work plans, budgets and updates and the City of Bozeman’s FY 19 Budget. BACKGROUND: Created by the City Commission in 2006, the original North Park Industrial Tax Increment Finance District (the “TIFID”) failed to live up to its potential but is on the verge of an exciting future as an urban renewal district. Originally, the TIFID was created to entice M-1 and M-2 type industrial-style development to the area. This never materialized. The TIFID was made up of two property owners. The State of Montana owns and manages approximately 270 acres of M-1 zoned property and the North Park Development Partners, LLC, a private development firm, owns and manages approximately 85 acres of M-2 zoned property in the former TIFID. The North Park partners purchased the aforementioned 85 acres from the City of Bozeman in 2016 and secured leases with the State of Montana for properties within the boundary. The TIFID lacked significant development activities in 2017 with the exception of a gas transmission line relocation performed by Northwestern Energy in 2016/2017. The properties within the District have historically been, and are currently, leased for agricultural purposes while development planning continues. 314 2 With no past development activity, TIFID properties continued to suffer from poor access and lack of basic infrastructure, especially ingress/egress, an interior road network, a water and sewer distribution system, a stormwater control system and a telecommunication conduit system. However, despite the lack of activity, i.e. infrastructure investment and development, the value of properties within the TIFID continued to rise, but much more slowly than if new development, spurred by infrastructure investment, occurs. Initial public infrastructure, and other private development investments, increase the increment value and thus the dollars available to facilitate additional investment in necessary public infrastructure within the TIFID allowing additional investment and development, remediation of blight, job creation, urban renewal and an increase in property values. In 2015, as a condition of the negotiated sale of the North Park property, the City purchased two public access easements across State land in the TIFID; Wheat Drive and Flora Lane. The structure changed in late 2017 with the termination of the TIFID and creation of the North Park Urban Renewal District (the “URD”). The boundaries of the North Park URD are slightly larger than the boundaries of the original North Park TIFID in an effort to capture significant infrastructure improvement opportunities related to the adjacent rail line and interstate interchange at North 19th avenue. (Attachments 1 - 3) TERMINATION OF THE TIFID AND CREATION OF THE URD: Over a series of public hearings held in 2017, staff recommended the termination the TIFID and the creation of a URD. The original TIFID was created to encourage the attraction and retention of value-adding industries. The TIFID, however, failed to attract private investment, or contribute to the implementation of Bozeman’s economic development strategy. The TIFID was set to expire in 2021. Acknowledging that economic development is a long-term proposition, the City Commission decided preserve the opportunity to use tax increment financing as a tool within a more flexibly designed URD structure to attract and retain value-adding commerce, which includes traded and local sector businesses. However, more innovative approaches to economic development were needed. Thus, staff forwarded a proposal to terminate the existing TIFID and create a URD representative of this approach. The URD creation ordinance (Ordinance 1979) included a proposal to terminate the TIFID and subsequently create the North Park URD to prevent and eliminate 315 3 conditions that contribute to blight per §7- 15-4202 MCA, improve the economic condition of City residents, and deliver efficient public services through the following: • The investment in public infrastructure in support of economic development, with a focus on value-adding commerce; • The attainment of urban density to achieve greater efficiency in the delivery of public services; • The facilitation of live-work opportunities for workforce housing in proximity to places of employment in value-adding commerce; and • The creation of opportunities for livable wage jobs in value-adding commerce. Useful Links to past Commission discussions and decisions related to the North Park URD: • Resolution 4792 Adopting Findings of Blight and Establishing the Necessity of Rehabilitation and Redevelopment of the North Park Area o Packet Material from the April 10, 2017 City Commission Meeting o Minutes from the April 10, 2017 City Commission Meeting • Ordinance No. 1979 Terminating the Mandeville Farms Tax Increment Financing Industrial District Created by Ordinance No. 1684, Establishing the North Park Urban Renewal Area, Creating the North Park Urban Renewal District and Adopting the North Park Urban Renewal District Plan with a Tax Increment Financing Provision Pursuant To Title 7, Chapter 15, Part 42 And 43 Of The Montana Code Annotated, And Amending Section 2.06.1330, BMC, Regarding Urban Renewal, Tax Increment, And Economic Development Districts And Section 2.05.1830, BMC, Regarding Urban Renewal, Tax Increment, and Economic Development District Boards. o Packet Material from the September 25, 2017 City Commission Meeting – First reading of Ordinance 1979 o Packet Material from the September 25, 2017 City Commission Meeting – First reading of Ordinance 1979 Supplemental Materials o Minutes from the September 25, 2017 City Commission Meeting o Packet Material from the October 9, 2018 City Commission Meeting – Second Reading of Ordinance 1979 o Minutes from the October 9, 2017 City Commission Meeting 316 4 • Materials submitted to the Montana Department of Revenue terminating the North Park Industrial District and creating the North Park Urban Renewal District • Adopted North Park Urban Renewal District Plan CURRENT DEVELOPMENT UPDATE: Developers of the North Park properties, which includes sites on both private and public, State-owned school trust land, are progressing slowly. As of the date of this memorandum, the development group has submitted the final master site plan to the Community Development Department and the entitlement is pending final review. Additionally, the development group is pricing the current infrastructure package and expects a one-month the bidding phase to commence sometime early this summer. Finally, the development group is proceeding into financing discussions. Following the infrastructure bidding, infrastructure construction is planned to start sometime late summer of 2018. Finally, the development group has expressed interest in working with the City on an infrastructure reimbursement agreement for the portions of public infrastructure improvements within the URD eligible for such reimbursement under Montana’s urban renewal statutes. UNRESOLVED ISSUES: Neither a TIFID nor URD board was appointed by the Commission when the TIFID was originally organized nor was a board appointed for the newly created URD. Economic Development staff has, and will continue to provide support and resources on an as needed basis to the URD. As development plans within the URD progress, a discussion of the appointment of a URD board, or some other organizational structure, is recommended. Finally, staff will return to the Commission at a future date for a discussion of the aforementioned proposed infrastructure reimbursement agreement. FISCAL EFFECTS: Despite the lack of development activity within the District, increment is slowly rising and the District has rebounded from a long-time negative balance. 317 5 The TIFID operated with a deficit since its creation in 2006 due to costs incurred for platting the formerly city-owned 85 acres in the northern section of the TIFID. Only in 2016 did the TIFID begin show a positive balance. The TIFID balance was rolled forward from the terminated district with the creation of the North Park URD. As of May 14, 2018, the North Park Urban Renewal District has a positive fund balance of $28,334. The next reappraisal and URD valuation cycle occurs in 2020. ATTACHMENTS: 1. Map of the original North Park TIFID (terminated); 2. Map of the overlap of the terminated TIFID and new URD; and 3. Map of the current North Park URD (active). Report compiled on: May 22, 2018 318 319 320 321