HomeMy WebLinkAbout03-25-19 City Commission Packet Materials - A1. Res 4993, Approving Aspen Crossing Development as Urban Renewal Project
Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: David Fine, Urban Renewal Program Manager SUBJECT: Resolution 4993 – A Resolution Approving a Project in the Bozeman Midtown Urban Renewal District as an Urban Renewal Project, Making Findings with Respect Thereto and Approving the Use of Tax Increment Revenues or Tax Increment Revenue Bonds to Pay, Reimburse or Finance Eligible Costs Thereof; Approving a Related Development Agreement; and Making a Reimbursement Declaration MEETING DATE: March 25, 2019 AGENDA ITEM TYPE: Action RECOMMENDATION: Adopt Resolution 4993.
RECOMMENDED MOTION:
Incorporating the information and findings in the staff report to the Midtown
Urban Renewal Board, the staff memorandum to the City Commission, oral
findings made by the Commission during the public hearing, information and
findings contained in the proposed resolution, and after considering public
comment, I hereby move to adopt Resolution 4993. BACKGROUND: The attached Staff Report to the Midtown Urban Renewal Board (“Board”) contains significant detail about this project and the proposed incentive. Please refer to the Staff Report for this detail. The Bozeman City Commission created the Midtown Tax Increment Financing (TIF) Assistance Program (the “Program”) in 2017 to support redevelopment activity in the District and advance the goals of the 2015 Midtown Urban Renewal Plan. The Midtown TIF Assistance Program supports projects that create significant new taxable value as well as meeting the five goals of the Midtown
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Urban Renewal Plan. These goals, as required by statute, focus on mitigating blighting conditions in the urban renewal area. The Applicant for Aspen Crossing, Aspen Land, LLC, submitted an application for TIF Assistance under the Program. Aspen Crossing is proposed as a 65,000 square foot, 3-story, mixed-use building with restaurant/retail uses on the ground floor, second floor offices, and 25 residential units on the upper floor. The Board considered the application at their regular meeting on December 6, 2018, voted unanimously to direct Economic Development staff to negotiate a development agreement with the Applicant and recommended an incentive award under the Program of $684,262 with an additional $165,696 to support a workable and feasible plan for making available adequate housing to persons displaced by the project. Resolution 4993 designates Aspen Crossing as an Urban Renewal Project and authorizes the City Manager to sign the proposed Development Agreement. The Resolution approves using tax increment revenues or proceeds of tax increment revenue bonds to pay or reimburse Aspen Land, LLC, as the Developer of the project for certain eligible costs, including public infrastructure, gas and electric infrastructure, demolition of structures, connection to the City of Bozeman conduit system, and impact fees (the “Eligible Costs”). These eligible costs are detailed in Exhibit “C” of the Development Agreement. Pursuant to the proposed Development Agreement, the City would agree to reimburse the Developer for the Eligible Costs only after the project receives a Certificate of Occupancy showing its completion.
REQUIRED FINDINGS: The Montana Urban Renewal Law requires, as a criterion for approval of an urban renewal project, that the City Commission make the following findings. See Staff Report to the Board for staff’s analysis. These findings are included in Resolution 4993 in Section 3. a. A workable and feasible plan exists for making available adequate housing for the persons who will be displaced from their housing by the Project; b. The Plan and the Project conform to the Bozeman Community Plan or parts thereof for the City as a whole; c. The Plan and the Project will afford maximum opportunity, consistent with the needs of the City as a whole, for the rehabilitation or redevelopment of the District by private enterprise;
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d. Taking into account the use of tax increment revenues or the proceeds of tax increment revenue bonds to pay or reimburse the Developer for all or a portion of the Eligible Costs, there is expected to be a sound and adequate financial program for the financing of the Project; and e. The Project constitutes an urban renewal project within the meaning of the Act and the Plan. As stated above, the City Commission must find “a workable and feasible plan exists for making available adequate housing to persons displaced by the project” (7-15-4217, MCA). The Applicant has proposed such a plan and is enlisting the assistance of the Human Resource Development Council of District IX, Inc. (HRDC) to provide their technical expertise and services to assisting persons displaced by the project with locating adequate housing. These services would including housing counseling, search, and placement assistance. In addition to these services, HRDC would manage funds designated for assisting persons displaced by the project with obtaining adequate housing. The proposed financial assistance for relocation is based on extensive conversations between HRDC, the Applicant and City staff and utilizes standardized data presented by the U.S. Department of Housing and Urban Development (HUD). The HUD Fair Market Rate (FMR) for Gallatin County is $898 a month for a two-bedroom apartment. Under the proposed plan, each household occupying a trailer space in the park would receive the difference between their current $300 monthly rent and the 2019 HUD FMR for 12 months, up to a total of $7,176 per unit in relocation assistance. With the project displacing 21 units of housing, the value of relocation assistance proposed is $150,696. HRDC’s fee for administering the relocation plan and providing relocation services is $15,000. The Development Agreement designates relocation assistance as an eligible cost. The Applicant would provide funds for relocation assistance in advance and be reimbursed $165,696 only following Certificate of Occupancy with other Eligible Costs. The Relocation Agreement between the Developer and HRDC is incorporated in the Development Agreement as exhibit “G”, and reimbursement is contingent on milestones related to relocation being met and reporting requirements being satisfied. Staff recommends that the City Commission make the required legislative finding that the plan proposed by the Applicant meets the statutory criteria for approval of an urban renewal project that, “a workable and feasible plan exists for making available adequate housing to persons displaced by the project.” The attached Staff Report includes a detailed analysis of Aspen Crossing’s Midtown TIF Assistance Application.
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FISCAL EFFECTS: The Development Agreement stipulates that the City will reimburse the Developer for Eligible Costs not to exceed $849,958, which includes $684,262 incentives and $165,696 to support relocation costs. The Applicant expects that project will be completed in summer 2020 (Fiscal Year 2021). At that time, Staff will likely recommend that the City Commission issue tax increment revenue bonds to reimburse the Developer for the eligible costs. Leland Consulting created a tax generation model for the Midtown Urban Renewal District. According to their model, the project would produce net new annual tax revenues of $177,191, which would allow TIF assistance for incentives to be paid back in approximately 5 years (assumes a 5% interest rate on the advanced amount) for new increment-based payback if assistance is provided at the staff recommended amount. ATTACHMENTS:
• Resolution 4993
• Development Agreement (Aspen Crossing)
• Staff Report to the Midtown Urban Renewal Board, Aspen Crossing mixed-use
project
• Aspen Crossing, Midtown TIF Assistance Application
• Leland Consulting Tax Increment Analysis
• EPS: TIF Request Review, Aspen Crossing
• 2015 Midtown Urban Renewal Plan
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RESOLUTION NO. 4993
A RESOLUTION APPROVING A PROJECT IN THE BOZEMAN MIDTOWN URBAN
RENEWAL DISTRICT AS AN URBAN RENEWAL PROJECT, MAKING FINDINGS
WITH RESPECT THERETO AND APPROVING THE USE OF TAX INCREMENT
REVENUES OR TAX INCREMENT REVENUE BONDS TO PAY, REIMBURSE OR
FINANCE ELIGIBLE COSTS THEREOF; APPROVING A RELATED DEVELOPMENT
AGREEMENT; AND MAKING A REIMBURSEMENT DECLARATION; KNOWN AS
ASPEN CROSSING
BE IT RESOLVED by the City Commission (the “Commission”) of the City of
Bozeman (the “City”), Montana, as follows:
Section 1
Recitals.
1.01. Under the provisions of Montana Code Annotated, Title 7, Chapter 15, Parts 42 and
43 (the “Act”), the City is authorized to create an urban renewal area, prepare and adopt a
redevelopment plan therefor and amendments thereto, undertake urban renewal projects therein,
provide for the segregation and collection of tax increment with respect to taxes collected in such
area, issue its bonds to pay the costs of such projects and to refund bonds previously issued under
the Act and pledge to the repayment of the bonds the tax increment and other revenues derived
from projects undertaken within the urban renewal area.
1.02. Pursuant to the Act and Ordinance No. 1685, adopted on November 27, 2006, as
amended by Ordinance No. 1925, adopted by the Commission on December 16, 2015 (collectively,
the “Ordinance”), the City created the Bozeman Midtown Urban Renewal District (the “District”)
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Resolution 4993, Approving a Project in the Midtown URD, Known as Aspen Crossing
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as an urban renewal district and approved the Bozeman Midtown Urban Renewal District Plan
(the “Plan”) as an urban renewal plan, which Plan contains a tax increment financing provision in
accordance with the Act.
1.03. On March 4, 2019, the Commission adopted Resolution No. 4992, calling a public
hearing to approve the development of a 3-story mixed-use building, expected to include
approximately 65,000 square feet, and to include restaurant and retail space, office space and
approximately 25 residential condominiums, to be known as Aspen Crossing (the “Project”), as an
urban renewal project under the Act and the Plan and to approve using tax increment revenues or
proceeds of tax increment revenue bonds to pay or reimburse Aspen Land Co., L.L.C., as the
developer of the Project (the “Developer”), for certain eligible costs thereof, including public
infrastructure, public utility connections, demolition of the existing structures, and impact fees, as
well as costs related to the relocation of households displaced by the project (the “Eligible Costs”).
1.04. On March 25, 2019, a duly noticed public hearing was held on the question of
approving the Project as an urban renewal project and the use of tax increment revenues or
proceeds of tax increment bonds to pay or reimburse the Developer for the Eligible Costs, and all
persons appearing were given an opportunity to speak at the public hearing.
Section 2
Relocation Agreement.
Based on information from the Developer, the Project includes removal and/or demolition
of the Sunset Mobile Home Park, which will have the effect of displacing approximately 21
households. The Human Resource Development Council of District IX, Inc., of Bozeman,
Montana (“HRDC”), a local nonprofit that specializes in housing, and the Developer have entered
into an agreement (the “Relocation Agreement”) to establish a workable and feasible plan for
relocating households that would be displaced by the Project. Under the Relocation Agreement,
HRDC will provide housing navigation services to the households being displaced and the
Developer will provide funds to be administered by the HRDC that will be made available, subject
to appropriate conditions, to assist the affected households in locating adequate replacement
housing. It is expected that, if the Developer completes the Project in accordance with the terms
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and conditions of the Development Agreement (defined below in Section 5), the City will
reimburse the Developer, from tax increment revenues or proceeds of tax increment bonds, the
dollar amount provided by the Developer to the HRDC under the Relocation Agreement to
facilitate the transition to replacement housing.
A draft of the Relocation Agreement has been provided to the Commission, and the
Commission has had the opportunity to ask questions of the Developer and HRDC. The
Commission hereby finds that the Relocation Agreement provides a workable and feasible plan
for making available adequate housing for the persons who will be displaced from their housing
by the Project.
Section 3
Findings.
The Commission hereby finds with respect to the Project as follows:
a. based on the Relocation Agreement, a workable and feasible plan exists for
making available adequate housing for the persons who will be displaced
from their housing by the Project;
b. the Plan and the Project conform to the Bozeman Community Plan or parts
thereof for the City as a whole;
c. the Plan and the Project will afford maximum opportunity, consistent with
the needs of the City as a whole, for the rehabilitation or redevelopment of
the District by private enterprise;
d. taking into account the use of tax increment revenues or the proceeds of tax
increment revenue bonds to pay or reimburse the Developer for all or a
portion of the Eligible Costs, there is expected to be a sound and adequate
financial program for the financing of the Project; and
e. the Project constitutes an urban renewal project within the meaning of the
Act and the Plan.
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Section 4
Approval of the Project as an Urban Renewal Project.
The Commission hereby approves the Project as an urban renewal project under the Act
and the Plan. The Project, including the Eligible Costs, is contemplated by and within the scope
of the Plan, and the Eligible Costs are eligible for tax increment financing under the Act.
Section 5
Development Agreement; Use of Tax Increment.
5.01. The Midtown Urban Renewal Board (the “Board”) and the Developer have
negotiated a Development Agreement, the form of which is attached hereto as Exhibit A (the
“Development Agreement”). The Development Agreement is hereby approved in substantially
the form attached. The City Manager, or her designee, is hereby authorized and directed to finalize,
approve, execute and deliver to the Developer the Development Agreement, substantially in the
form attached as Exhibit A, with such changes as she shall deem necessary or appropriate.
5.02. The Commission hereby approves the use of tax increment revenues or proceeds of
tax increment bonds to pay or reimburse the Developer for Eligible Costs of the Project, subject to
the terms and conditions of the Development Agreement. No further Commission action shall be
required if the City’s obligations under the Development Agreement are to be paid or satisfied
with tax increment revenues then on hand and available therefor. If the City’s obligations under
the Development Agreement are to be financed with proceeds of tax increment revenue bonds, the
forms of such bonds and the terms and conditions thereof shall be prescribed by a subsequent
resolution or resolutions to be adopted by this Commission.
Section 6
Reimbursement Expenditures.
6.01. Regulations. The City may issue tax-exempt bonds in one or more series (the
“Bonds”) to finance all or a portion of the Eligible Costs and pay costs associated with the
financing. The United States Department of Treasury has promulgated regulations governing the
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use of proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the
City for project expenditures paid by the City prior to the date of issuance of such bonds. Those
regulations (Treasury Regulations, Section 1.150-2) (the “Regulations”) require that the City
adopt a statement of official intent to reimburse an original expenditure not later than 60 days
after payment of the original expenditure. The Regulations also generally require that the bonds
be issued and the reimbursement allocation made from the proceeds of the bonds within 18
months (or three years, if the reimbursement bond issue qualifies for the “small issuer” exception
from the arbitrage rebate requirement) after the later of (i) the date the expenditure is paid or (ii)
the date the project is placed in service or abandoned, but (unless the issue qualifies for the
“small issuer” exception from the arbitrage rebate requirement) in no event more than three years
after the date the expenditure is paid. The Regulations generally permit reimbursement of capital
expenditures and costs of issuance of the bonds.
6.02. Prior Expenditures. Other than (i) expenditures to be paid or reimbursed from
sources other than the Bonds, (ii) expenditures constituting preliminary expenditures within the
meaning of Section 1.150-2(f)(2) of the Regulations, or (iii) expenditures in a “de minimus”
amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures for the Eligible
Costs of the Project have been paid by the City before the date 60 days before the date of
adoption of this Resolution.
6.03. Declaration of Intent. The City reasonably expects that it may reimburse the
expenditures made for Eligible Costs of the Project out of the proceeds of Bonds in an estimated
maximum aggregate principal amount of $849,958 after the date of payment of all or a portion of
the Eligible Costs of the Project. All reimbursed expenditures shall be capital expenditures, a
cost of issuance of the bonds or other expenditures eligible for reimbursement under Section
1.150-2(d)(3) of the Regulations.
6.04. Budgetary Matters. As of the date hereof, there are no City funds reserved,
allocated on a long-term basis or otherwise set aside (or reasonably expected to be reserved,
allocated on a long-term basis or otherwise set aside) to provide permanent financing for the
expenditures related to the Project, other than pursuant to the issuance of the Bonds. The
statement of intent contained in this Resolution, therefore, is determined to be consistent with the
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City’s budgetary and financial circumstances as they exist or are reasonably foreseeable on the
date hereof.
6.05. Reimbursement Allocations. The City’s Finance Director shall be responsible for
making the “reimbursement allocations” described in the Regulations, being generally the
transfer of the appropriate amount of proceeds of the bonds to reimburse the source of temporary
financing used by the City to make prior payment of the Eligible Costs of the Project. Each
allocation shall be evidenced by an entry on the official books and records of the City maintained
for the Bonds or the Project and shall specifically identify the actual original expenditure being
reimbursed.
PASSED, ADOPTED, AND APPROVED by the City Commission of the City of
Bozeman, Montana, at a regular session thereof held on the 25th day of March, 2019.
___________________________________
CYNTHIA L. ANDRUS Mayor
ATTEST:
___________________________________ ROBIN CROUGH City Clerk
APPROVED AS TO FORM:
___________________________________
GREG SULLIVAN
City Attorney
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CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE
I, the undersigned, being the duly qualified and acting recording officer of the City of
Bozeman, Montana (the “City”), hereby certify that the attached resolution is a true copy of
Resolution No. 4993, entitled: “RESOLUTION APPROVING A PROJECT IN THE
BOZEMAN MIDTOWN URBAN RENEWAL DISTRICT AS AN URBAN RENEWAL
PROJECT, MAKING FINDINGS WITH RESPECT THERETO AND APPROVING THE
USE OF TAX INCREMENT REVENUES OR TAX INCREMENT REVENUE BONDS TO
PAY, REIMBURSE OR FINANCE ELIGIBLE COSTS THEREOF; APPROVING A
RELATED DEVELOPMENT AGREEMENT; AND MAKING A REIMBURSEMENT
DECLARATION, KNOWN AS ASPEN CROSSING” (the “Resolution”), on file in the original
records of the City in my legal custody; that the Resolution was duly adopted by the City
Commission of the City at a regular meeting on March 25, 2019, and that the meeting was duly
held by the City Commission and was attended throughout by a quorum, pursuant to call and notice
of such meeting given as required by law; and that the Resolution has not as of the date hereof
been amended or repealed.
I further certify that, upon vote being taken on the Resolution at said
meeting, the following Commissioners voted in favor thereof: _______
; voted against
the same: ; abstained from voting
thereon: ; or were absent: ___.
WITNESS my hand officially this 26th day of March, 2019.
ROBIN CROUGH City Clerk
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EXHIBIT A
[Form of Development Agreement]
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DEVELOPMENT AGREEMENT (Aspen Crossing)
This DEVELOPMENT AGREEMENT (this “Agreement”) is dated as of March 25,
2019 by and between ASPEN LAND CO., L.L.C., a Montana limited liability company (the “Developer”), and the CITY OF BOZEMAN, MONTANA, 121 N. Rouse Ave., Bozeman,
Montana 59771 (the “City”). The Developer and the City are each individually referred to
herein as a “Party” and collectively as the “Parties.”
RECITALS:
WHEREAS, under the provisions of Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended (the “Act”), the City is authorized to create urban renewal areas, prepare and adopt an urban renewal plan therefor and amendments thereto, undertake urban renewal
projects therein, provide for the segregation and collection of tax increment with respect to
property taxes collected in such areas, and apply tax increment revenues derived from projects
undertaken within the urban renewal area to pay eligible costs;
WHEREAS, pursuant to the Act and Ordinance No. 1685 adopted by the City Commission of the City (the “City Commission”) on November 27, 2006, as amended by
Ordinance No. 1925, adopted by the City Commission on December 16, 2015 (collectively, the
“Ordinance”), the City has created the Bozeman Midtown Urban Renewal District (the
“District”) as an urban renewal district and has approved the Bozeman Midtown Urban Renewal Plan (the “Plan”) as an urban renewal plan in accordance with the Act, which Plan provides for the segregation and collection of tax increment revenues with respect to the District;
WHEREAS, the Developer proposes to undertake the development of a 3-story mixed-
use building, expected to include approximately 65,000 square feet, and to include restaurant and
retail space, office space and approximately 25 residential condominiums, as described more particularly on Exhibit A hereto (the “Project”), on land located in the District at 515 West
Aspen, Bozeman, Montana, which is legally described on Exhibit B hereto (the “Land”);
WHEREAS, the Developer submitted to the Midtown Urban Renewal Board of the City
(the “Board”) an application for tax increment assistance with respect to certain eligible costs of
the Project;
WHEREAS, by motion and vote on December 6, 2018, the Board approved and recommended that the City Commission approve, subject to the terms and conditions of this
Agreement, the application of tax increment assistance with respect to certain eligible costs of
the Project;
WHEREAS, pursuant to Resolution No. 4993 adopted on March 25, 2019, after a duly called and noticed public hearing, the City Commission approved the Project as an urban renewal project under the Plan and the Act and authorized the use of tax increment revenue of
the District to reimburse the Developer for certain eligible costs of the Project described more
particularly on Exhibit C hereto (the “Eligible Costs”) in the maximum amount of $849,958,
subject to the terms and conditions of this Agreement; and
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WHEREAS, certain of the Eligible Costs are costs paid by the Developer in connection
with the design, engineering, work, construction, materials, equipment, and other improvements
eligible to be reimbursed by Tax Increment, which improvements are identified as such
on Exhibit C hereto (the “Infrastructure Improvements”), and certain of the Eligible Costs are costs to be paid by the Developer as fees or charges pertaining to the Project, which fees and
charges are identified as such on Exhibit C hereto (the “Project Fees and Charges”); and
WHEREAS, the City Commission may determine in its sole discretion to issue tax
increment urban renewal revenue bonds in one or more series (the “Bonds”) to finance all or a
portion of the Eligible Costs to be reimbursed to the Developer in the maximum amount of $849,958 and pay associated costs of the financing; and
WHEREAS, the Parties desire to enter into this Agreement which sets forth the
obligations and commitments of the Parties with respect to the Project, including the Eligible
Costs consisting of the costs of the Infrastructure Improvements and of the Project Fees and
Charges.
NOW, THEREFORE, the City and the Developer, pursuant to the Act, each in
consideration of the representations, covenants and agreements of the other, as set forth herein,
mutually represent, covenant and agree as follows:
Section 1. Definitions; Rules of Interpretation; Exhibits.
1.1. Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context clearly requires otherwise, the following terms have the meanings
assigned to them, respectively:
“Act” means Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, as amended
or supplemented.
“Agreement” means this Development Agreement, dated as of March 25, 2019, by and between the City and the Developer, as it may be amended or supplemented from time to time in accordance with the terms hereof.
“Bonds” has the meaning given in the Recitals above.
“City” means the City of Bozeman, Montana, or any successors to its functions under
this Agreement.
“City Commission” means the governing body of the City.
“Costs of Issuance” means, if the City issues Bonds, the following costs but only to the
extent incurred in connection with, and allocable to the Bonds: underwriter’s spread, counsel
fees, financial advisor fees, rating agency fees, trustee fees, paying agent fees, bond registrar,
certificate, and authentication fees, accounting fees, printing costs for bonds and offering documents, public approval process costs, feasibility study costs, guarantee fees, other than for qualified guarantees; and similar costs.
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“Developer” means Aspen Land Co., L.L.C., a Montana limited liability company, and
its successors and assigns in accordance with and as permitted under this Agreement.
“Developer Certificate” means the certificate attached hereto as Exhibit E.
“District” means the Midtown Urban Renewal District, an urban renewal district created by the Ordinance pursuant to the Act, as such may be enlarged or reduced from time to time in accordance with the Act.
“DOR” means the State of Montana Department of Revenue.
“Eligible Costs” means the costs identified as such on the attached Exhibit C.
“Environmental Laws and Regulations” means and includes the Federal Comprehensive Environmental Compensation Response and Liability Act (“CERCLA” or the “Federal Superfund Act”) as amended by the Superfund Amendments and Reauthorization Act
of 1986 (“SARA”), 42 U.S.C. §§ 9601 et seq.; the Federal Resource Conservation and Recovery
Act of 1976 (“RCRA”), 42 U.S.C. §§ 6901 et seq.; the Clean Water Act, 33 U.S.C. § 1321 et
seq.; and the Clean Air Act, 42 U.S.C. §§ 7401 et seq., all as the same may be from time to time amended, and any other federal, state, county, municipal, local or other statute, code, law, ordinance, regulation, requirement or rule which may relate to or deal with human health or the
environment including without limitation all land use, zoning, and stormwater control
regulations as well as all regulations promulgated by a regulatory body pursuant to any statute,
code, law, ordinance, regulation, requirement or rule.
“Fiscal Year” means the period commencing on the first day of July of any year and ending on the last day of June of the next calendar year, or any other twelve-month period
authorized by law and specified by the Commission as the City’s fiscal year.
“Indemnified Parties” has the meaning given to it in Section 7.1.
“Infrastructure Improvements” means the design, engineering, work, construction, materials, equipment, and the other improvements, the costs of which form a part of the Eligible Costs described as such in Exhibit C hereto, as the same may be amended or supplemented from
time to time, in accordance with the terms hereof.
“Land” has the meaning given to it in the recitals hereof.
“Land Use Regulations” means all federal, state and local laws, rules, regulations, ordinances and plans relating to or governing the development or use of the Land or the Project.
“Milestone” of “Milestones” has the meaning given in Section 3.4 hereof.
“Milestone Date” or “Milestone Dates” has the meaning given in Section 3.4 hereof.
“Ordinance” has the meaning given in the recitals hereof.
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“Person” means any individual, corporation, limited liability company, partnership,
limited liability partnership, joint venture, association, joint-stock company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
“Prevailing Wage Rates” means the Montana Prevailing Wage Rate for public works projects as published from time to time by and available from the Montana Department of Labor and Industry, Research and Analysis Bureau, P.O. Box 1728, Helena, Montana 59624, telephone
number (800) 541-3904.
“Project” means the facilities to be constructed by the Developer on the Land pursuant to
this Agreement, as described more particularly on the attached Exhibit A.
“Project Fees and Charges” means those fees and charges pertaining to the Project that
form a part of the Eligible Costs described as such in Exhibit C hereto, as the same may be
amended or supplemented from time to time, in accordance with the terms hereof.
“Relocation Agreement” has the meaning given in Section 3.13(a) hereof, the form of
which is attached as Exhibit G.
“Relocation Report” has the meaning given in Section 3.13(e) hereof.
“State” means the State of Montana.
“Tax Increment” means the amount received by the City pursuant to the Act from the
extension of levies of Taxes (expressed in mills) against the incremental taxable value (as
defined in the Act) of all Taxable Property, and shall include all payments in lieu of Taxes attributable to the incremental taxable value and all payments received by the City designated as
replacement revenues for lost Tax Increment.
“Taxable Property” means all real and personal property located in the District and
subject to Taxes, including land, improvements and equipment.
“Taxes” means all taxes levied on an ad valorem basis by any Taxing Body against the Taxable Property (exclusive of the six mill levy for university purposes levied by the State), and
shall include all payments in lieu of taxes received by the City with respect to Taxable Property.
“Taxing Body” means the City; the County of Gallatin, Montana; High School District
No. 7 (Bozeman), Gallatin County, Montana; Elementary School District No. 7 (Bozeman),
Gallatin County, Montana; the State; and any other political subdivision or governmental unit that levies or may hereafter levy or cause to be levied Taxes against property within the District.
“Unavoidable Delay” means a delay resulting from a cause over which the Party
required to perform does not have control and which cannot or could not have been avoided by
the exercise of reasonable care, including but not limited to, acts of God, accidents, war, civil
unrest, embargoes, strikes, unavailability of raw materials or manufactured goods, litigation, and the delays of the other Party or its contractors, agents or employees in the performance of their
duties under or incident to this Agreement.
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1.2. Rules of Interpretation.
(a) The words “herein,” “hereof” and words of similar import, without reference to
any particular section or subdivision, refer to this Agreement as a whole rather than to any of its
particular sections or subdivisions.
(b) References to any particular section or subdivision hereof are to the section or
subdivision of this Agreement in its original signed form, unless otherwise indicated.
(c) The word “or” is not exclusive but is intended to contemplate or encompass one,
more or all of the alternatives conjoined.
1.3. Exhibits. The following Exhibits are attached to and by reference made a part of this Agreement:
Exhibit A: Project and Project Costs
Exhibit B: Description of the Land
Exhibit C: Eligible Costs; Infrastructure Improvements and Project Fees and
Charges
Exhibit D: Milestones
Exhibit E: Form of Developer Certificate
Exhibit F: City’s Statement of Non-Discrimination
Exhibit G: Relocation Agreement
Section 2. Representations.
2.1. City Representations. The City hereby represents as follows:
(a) Pursuant to the Act, and after a public hearing duly called and held, the City by
the Ordinance has duly created the District.
(b) Pursuant to Resolution No. 4993 of the City Commission, the City approved the
use of Tax Increment, if available, to reimburse or, as appropriate, pay the Eligible Costs in a total amount not to exceed $849,958
(c) The DOR has advised the City that, as of January 1, 2019, the base taxable value
(as defined in the Act) of the District is $3,507,723.
(d) Based on the representations of the Developer, beginning in tax year 2020 (fiscal
year ending June 30, 2021), the completed Project is expected to have a market value of at least $15,000,000.
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(e) The City Commission has duly authorized the execution and delivery of this
Agreement.
2.2. Developer Representations. The Developer hereby represents as follows:
(a) The Developer is duly formed, validly existing and in good standing under the laws of the State, and is duly qualified to do business in the State. The Developer has the power to enter into this Agreement and by all necessary corporate action has duly authorized the
execution and delivery of this Agreement.
(b) The Developer has good marketable title to the Land, free and clear of all liens,
encumbrances and defects except such as do not materially affect the value of the Land or materially interfere with the use made and proposed to be made of the Land by the Developer.
(c) The Developer has the financial capability or commitments to complete the
Project at a cost not less than $16,147,097.
(d) The Developer has or will have by the applicable Milestone Date the full legal
right, title and interest in and to any mobile homes located on the Land, or any portion thereof, free and clear of all liens and encumbrances, sufficient to allow the Developer to remove such mobile homes from the Land without the need for third-party approval or consent.
(e) The Developer is not aware of any facts the existence of which would cause the
Developer to be in violation in any material respect of any Environmental Laws and Regulations
applicable to the Project or the Infrastructure Improvements. The Developer has not received from any local, state or federal official any notice or communication indicating that the activities of the Developer have been, may be or will be in violation of any Environmental Laws and
Regulations applicable to the Project or the Infrastructure Improvements.
(f) Neither the execution and delivery of this Agreement, the consummation of the
transactions contemplated hereby, nor the fulfillment of or compliance with the terms and conditions hereof is prohibited or limited by, conflicts with or results in a breach of the terms, conditions or provisions of the certificate of formation, partnership agreement or operating
agreement of the Developer or any evidence of indebtedness, agreement or instrument of
whatever nature to which the Developer is now a party or by which it is bound, or constitutes a
default under any of the foregoing.
(g) There is no action, suit, investigation or proceeding now pending or, to the knowledge of the Developer, threatened against or affecting the Developer or its business,
operations, properties or condition (financial or otherwise) before or by any governmental
department, commission, board, authority or agency, or any court, arbitrator, mediator or grand
jury, that could, individually or in the aggregate, materially and adversely affect the ability of the Developer to complete the Project.
(h) The Developer acknowledges and agrees that the sole source of funds for
reimbursing the Developer under this Agreement is Tax Increment and/or proceeds of the Bonds,
which would be paid from Tax Increment. The Developer further acknowledges and agrees the
amount of Tax Increment is dependent upon a number of variables, including, without limitation,
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the taxable value of the Project, the number of mills levied by Taxing Bodies, and then-
prevailing state laws regarding computation of Tax Increment. The Developer agrees that if Tax
Increment in the amount of $849,958 is not available to the City to reimburse the Developer
and/or, if the City, in its sole discretion, determines that it cannot reasonably sell the Bonds, whether due to lack of Tax Increment, market conditions, or otherwise, the City shall have no obligation to pay to the Developer the amount of reimbursement described in Section 4. The
Developer agrees that such event shall not constitute a default by the City hereunder.
(i) The Developer acknowledges and agrees that the estimates of assessed (market)
and taxable values set forth in this Agreement (and any resulting estimates of Tax Increment) are estimates only and are based on information provided by the Developer to the City and various assumptions that the City believes are reasonable. Actual assessed (market) and taxable values
of the Project and actual Tax Increment generated by the Project or in the District may vary
significantly based on variables over which the City has no control.
(j) The Developer acknowledges and agrees that the Bonds, if authorized and issued, are special, limited obligations of the City and shall not be paid from any funds of the City other than Tax Increment. The Developer understands and agrees the Bonds, if authorized and issued,
will be subject to all the terms and conditions of the bond resolution authorizing their issuance
(the “Bond Resolution”), including, without limitation, if the City determines in its sole
discretion, a requirement that the Developer make up any shortfalls in the Tax Increment available to pay the debt service on the Bonds, and that, if the Bonds are draw-down bonds, the City may be prohibited from making future draws on the Bonds if all the conditions applicable to
a draw are not satisfied. The Developer acknowledges and agrees that an event of default or
default under the Bonds or the Bond Resolution does not constitute a default under this
Agreement, unless the event of default or default is a result of the failure by the Developer to perform an obligation of the Developer identified in the Bond Resolution.
Section 3. Developer Undertakings.
3.1. Construction and Maintenance of Project. The Developer hereby agrees and
commits to the City that it will diligently prosecute to completion the construction of the Project
in accordance with this Agreement, the site plan submitted to the City and all applicable federal, State and local laws, rules, regulations, ordinances and plans relating to or governing the
development or use of the Project, including applicable Land Use Regulations and
Environmental Laws and Regulations. The Developer agrees and commits to the City that
construction of the Project shall be completed by May 1, 2020, subject to Unavoidable Delays.
The total costs of the Project are shown on Exhibit A hereto. The Developer has the financial capacity to complete the Project, and the Developer agrees to pay all costs thereof. If there is an
increase in the costs of the Project from that shown on Exhibit A hereto that cannot be covered
by the contingency amount, the Developer shall notify the City of the increase and submit
additional evidence in a form acceptable to the City that the Developer has the financial capacity
to cover such additional costs and complete the Project. At all times during the term of this Agreement, the Developer will operate and maintain, preserve and keep the Project or cause the Project to be operated, maintained, preserved and kept for the purposes for which it was
constructed, and with the appurtenances and every part and parcel thereof, in good repair and
condition. The Developer agrees to permit the City and any of its officers, employees or agents
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access to the Land for the purpose of inspection of all work being performed in connection with
the Project; provided, however, that the City shall have no obligation to inspect such work.
3.2. Preparation, Review and Approval of Construction Plans. In connection with the
Project, the Developer, at its sole expense, shall prepare and submit construction plans, drawings, and related documents for each portion of the Project to the appropriate City officials for architectural, engineering or land use review and written approval or permits. The Developer
acknowledges that no review or approval by City officials hereunder may be in any way
construed by the Developer to replace, override or be in lieu of any required review, inspection,
or approval by the City, or any other building construction official review or approvals required by any State laws or local ordinances or regulations. Nothing contained in this Agreement indicates or evidences that the City has approved or will approve the Project or any portion
thereof. This Agreement does not affect or limit the City’s regulatory powers with regard to the
Project, including, without limitation, those relating to building permits or other permits or the
payment of fees.
3.3. Construction of the Infrastructure Improvements. The Developer shall acquire,
install, construct or otherwise provide the Infrastructure Improvements. The Developer
acknowledges and agrees that the City is not responsible for acquiring, installing, constructing or
otherwise providing the Infrastructure Improvements. The estimated costs of the Infrastructure
Improvements, which form a part of the Eligible Costs, are shown on Exhibit C hereto.
3.4. Milestones of the Project. Certain steps in the development of the Project are
listed on Exhibit D attached hereto (collectively, the “Milestones”; each a “Milestone”),
together with the dates by which the Developer is obligated to complete the Milestones
(collectively, the “Milestone Dates”; each as it relates to a particular Milestone, the “Milestone Date”). The Developer acknowledges and agrees that the City in reserving or offering to make available Tax Increment to pay or reimburse the Eligible Costs necessarily means that certain Tax Increment is not available to pay or reimburse other undertakings or costs for the benefit of
the District and that the City reasonably expects additional Tax Increment as a result of
completion of the Project. The Developer acknowledges and agrees that conditioning the
availability of Tax Increment or proceeds of Bonds to pay or reimburse the Eligible Costs on completion or satisfaction of the Milestones by the corresponding Milestone Dates is reasonable. If the Developer is unable to complete or satisfy a Milestone by the corresponding Milestone
Date, the Developer shall make a formal written request to the City Commission, with
appropriate supporting material, to extend the Milestone Date and, as appropriate, subsequent
Milestone Dates. The City Commission may, in its sole discretion, determine whether such extension is appropriate and, if so, fix a new and superseding Milestone Date and also adjust other subsequent Milestone Dates, along with any other terms or conditions, or it may, in its sole
discretion, elect to terminate this Agreement, in which case the City will have no obligation to
reimburse or pay the Developer hereunder.
3.5. Prevailing Wage Rates; Competitive Bidding. The Developer understands that the City is obligated to follow certain laws with respect to the expenditure of public funds, which
includes Tax Increment. The Developer agrees to comply with laws that govern City contracting
obligations, including public procurement laws relating to all of the Infrastructure Improvements,
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such as, without limitation, laws and rules regarding prevailing wage and solicitation of work on
a competitive basis.
Without limitation of the foregoing, the Developer agrees that in the awarding of
contracts for the Infrastructure Improvements (i) it will, and it will cause its contractor to, publicly bid competitively contracts for each component of the Infrastructure Improvements, and (ii) through its contract with its contractor, it will, in addition to the requirements of Sections 3.9
and 3.10, require its contractor to, pay the Prevailing Wage Rates on such contracts related to the
Infrastructure Improvements. The Developer will provide to the City all documentation
requested to verify the compliance of the Developer and its contractor with the foregoing requirements. Failure of the Developer or its contractor to bid competitively contracts for each component of the Infrastructure Improvements or to require contracts entered into directly with
contractors or sub-contractors to include provisions requiring the contractor or sub-contractor to
pay the Prevailing Wage Rates on the work related to the Infrastructure Improvements will be
considered a breach of this Agreement and the City will be entitled, at its discretion and without obligation, to exercise any and all measures to assure compliance and retroactive compensation plus interest to workers not paid in accordance with this Agreement, and recovery of any penalty
or fine assessed by the State attributed to any failure to pay the Prevailing Wage Rates.
Additionally, the Developer acknowledges that a violation of these requirements may, in the
City’s sole discretion, cause the Infrastructure Improvements to be ineligible for the application of Tax Increment, in which case the City will have no obligation to reimburse or pay the Developer hereunder.
3.6. Utilities. The Developer shall not interfere with, or construct any improvements
over, any public street or utility easement without the prior written approval of the City. All
connections to public utility lines and facilities shall be subject to approval of the City and any private utility company involved. The Developer at its own expense shall replace any public
facilities or utilities damaged during the Project by the Developer or its agents or by others acting
on behalf of or under their direction or control of the Developer.
3.7. Permits and Compliance With Laws. The Developer will obtain, in a timely
manner, all required permits, licenses and approvals, and will meet all requirements of all local, state and federal laws, rules and regulations which must be obtained or met in connection with the acquisition and construction of the Project, including the Infrastructure Improvements.
Without limiting the foregoing, the Developer will request and seek to obtain from the City or
other appropriate governmental authority all necessary land use, zoning, and building permits.
The Developer will comply in all material respects with all Environmental Laws and Regulations applicable to the construction, acquisition, and operation of the Project, including the Infrastructure Improvements, will obtain any and all necessary environmental reviews, licenses
or clearances under, and will comply in all material respects with, Environmental Laws and
Regulations. In addition, the Developer shall comply fully with all applicable state and federal
laws, regulations, and municipal ordinances related to worker safety including but not limited to the Occupational Safety and Health Act (OSHA), the safety rules, codes, and provisions of the Montana Safety Act in Title 50, Chapter 71, MCA, all applicable City, County, and State
building and electrical codes, and the Americans with Disabilities Act.
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3.8. Easements. To the extent that the Infrastructure Improvements are to be located
on the Land, the Developer hereby agrees to grant to the City and applicable utility companies
from time to time such easements, rights-of-way and similar licenses in a form required by the
City and as are reasonably necessary to permit the City to own, operate and maintain the Infrastructure Improvements.
3.9. Non-Discrimination Statement. The Developer agrees to require its contractor(s)
to be in compliance with the City’s Statement of Non-Discrimination attached hereto as Exhibit
F, as well as Title 49, Montana Code Annotated, regarding activities related to the Project,
including the Infrastructure Improvements. The Developer agrees that in its contracts with its contractors the Developer’s contractor will be required to require its subcontractors to comply with the City’s Statement of Non-Discrimination attached hereto as Exhibit F, as well as Title
49, Montana Code Annotated, regarding activities related to the Project. The Developer agrees to
provide copies of all such contracts upon request by the City.
3.10. Worker’s Compensation Insurance. The Developer shall provide in its construction contracts related to the Project with all of its respective contractors that such
contractors are to be covered by a Worker’s Compensation insurance program with the State, a
private insurance carrier, or an approved self-insurance plan in accordance with State law.
3.11. Cooperation with City and DOR. The Developer agrees to provide to the City
and, as requested, the DOR information that may be required by the City and/or the DOR to determine, or make reasonable projections regarding, the amount and timing of receipt of Tax Increment resulting from the Project. Such information may include, but is not limited to timing
of construction and estimated completion dates of all or portions of the Project, costs of
construction, materials used in construction, uses of the Project or any portion thereof,
allocations of uses to spaces and square feet of spaces included in the Project, and any other information that may be relevant. The Developer understands and agrees that the City will rely on such information from the Developer in making determinations regarding the amount of Tax
Increment resulting from the Project that may be available and the timing of the availability of
Tax Increment resulting from the Project, and that such information may be a critical factor in
the City’s determination regarding whether to issue and the sizing and other features of the Bonds.
3.12. Project Fees and Charges. The Developer reasonably expects that it will
capitalize the Project Fees and Charges (other than Costs of Issuance, if any) into the costs of the
Project, and treat such fees and charges as capital expenditures.
3.13. Relocation. In connection with approving a project as an urban renewal project, a municipality must find, among other things, that a workable and feasible plan exists for making
adequate housing available for the persons who may be displaced by the project. The Project is
expected to displace persons currently residing in mobile homes located on the Land.
(a) To assist the City in finding that a workable and feasible plan exists for
making adequate housing available for the persons to be displaced by the Project, the Developer has entered into an agreement (the “Relocation Agreement”) with Human Resource Development Council of District IX, Inc., of Bozeman, Montana (“HRDC”),
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which is attached as Exhibit G. Pursuant to the Relocation Agreement, HRDC will assist
in overseeing relocation details and benefits made available to persons who may be
displaced by the Project and administer funds for such purposes. The Developer commits
to and agrees to perform its obligations as set forth in the Relocation Agreement and acknowledges and agrees that the City Commission is relying on the Relocation
Agreement and assurances provided by HRDC and the Developer to reach the finding of
the City Commission that the undertakings and commitments set forth in the Relocation
Agreement constitute a workable and feasible plan for making adequate housing
available to persons displaced by the Project. The Developer agrees that if the City determines that the Developer is failing or has failed to perform its obligations under the
Relocation Agreement, the City may terminate this Agreement, in which case the City
will have no obligation to reimburse or pay the Developer hereunder. The Parties
acknowledge and agree that (i) the City may, but shall have no obligation to, obtain
information from HRDC with regard to the Developer’s performance of its obligations under the Relocation Agreement and may, but shall have no obligation to, perform
independent investigations with regard to the same, and (ii) this Section 3.13 has no
effect on the terms and conditions of, and does not create any obligations of the City in
connection with, the Relocation Agreement.
(b) By the date that is no later than [thirty (30) days after the date of this Agreement], the Developer shall have notified in writing each of the households residing in mobile homes on the Land of the details of the relocation plan set forth in the
Relocation Agreement. For obtaining information in addition to that set forth in the
notice, such notice must contain the name, address, and telephone number of the person
at HRDC who will be responsible for providing housing navigation services.
(c) By the applicable Milestone Date set forth on Exhibit D, the Developer shall provide the City with evidence that it owns full legal right, title and interest in and
to any and all mobile homes remaining on the Land, free and clear of all liens and
encumbrances, sufficient to allow the Developer to remove such mobile homes from the
Land, without the need to obtain third-party approval or consent.
(d) By the applicable Milestone Date set forth on Exhibit D, the Developer shall have caused all mobile homes to be removed from the Land.
(e) By the applicable Milestone Date set forth on the attached Exhibit D, the
Developer shall provide to the City information regarding whether adequate housing was
made available to persons displaced by the Project pursuant to the Relocation Agreement (the “Relocation Report”). The Relocation Report must include, at a minimum, the following information:
(i) a narrative summarizing the results of the housing relocation
undertakings pursuant to the Relocation Agreement and whether, in the
reasonable estimation of the Developer and HRDC, such undertakings resulted in the provision of adequate housing to persons displaced by the Project;
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(ii) the total number of households and the total number of persons
displaced by the Project;
(iii) the total number of households that declined relocation assistance;
(iv) a description of the relocation assistance provided to each household;
(v) of the households that accepted relocation assistance, the total number of households for whom adequate housing was ultimately obtained, as well as:
(1) the total cost of relocation for each household, and
(2) the amount of time it took each household to obtain
housing; and
(vi) of the households that accepted relocation assistance, the total number of households for whom adequate housing was not ultimately obtained, a
summary of the assistance provided to such households, the total relocation
amounts expended in respect of such households, and an explanation for each
such household of the reason(s) housing was not ultimately obtained.
(e) Reimbursement of the Developer by the City of any of the relocation costs or fees shown on the attached Exhibit C shall be based upon invoices for costs or fees
paid by the Developer under the Relocation Agreement, which the City may reject in its
sole discretion. The City will notify the Developer of any rejected invoice and the reason
it was rejected.
Section 4. City Undertakings. Subject to satisfaction of all conditions in Section 5
below, and solely from Tax Increment on hand or proceeds of the Bonds, the City agrees to
reimburse the Developer for, or, as applicable, pay the Eligible Costs in an amount not to exceed
$849,958. The City may issue the Bonds in its sole discretion to pay all or a portion of the
Eligible Costs. The Bonds, if authorized and issued, will have such terms and conditions as are approved by the City Commission. This Agreement does not require or imply that the City has
any obligation to issue the Bonds.
Section 5. Payment of Reimbursement Amount for the Eligible Costs. Payment of
the amount of reimbursement described in Section 4 by the City to the Developer for Eligible
Costs paid by the Developer shall be subject to the following conditions and in accordance with the following procedures:
5.1. Conditions to Payment or Reimbursement.
(a) (i) The Developer must have completed or satisfied each of the Milestones by the
applicable Milestone Date, as such date may have been extended by the City Commission
pursuant to Section 3.4 hereof, (ii) the City must have issued a certificate of occupancy for the Project, (iii) the Infrastructure Improvements must have been completed in their entirety and the City must have delivered to the Developer written acceptance of the Infrastructure Improvements
(which may be in the form of a Certificate of Completion or such other format as required by the
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City), (iv) the Developer must demonstrate to the City’s satisfaction, by a title report or other
means acceptable to the City, that the Infrastructure Improvements are free of financial liens and
any encumbrances affecting the Infrastructure Improvements must be acceptable to the City, and
(v) the Developer must have provided the Relocation Report, which the City, in its sole discretion, finds acceptable in form and substance.
(b) Reimbursement by the City for costs of the Infrastructure Improvements must be
based on paid invoices for costs incurred by the Developer, its contractors and subcontractors or
utility companies, which the Developer must supply to the City. The City may reject, in its sole
discretion, any invoice related to the Infrastructure Improvements. The City will notify the Developer of any rejected invoice and the reason it was rejected.
(c) The Parties agree that the City will have no obligation to pay or reimburse any of
the Eligible Costs unless at the time of such request (i) all of the Developer’s representations as
set forth in Section 2.2 are true and correct, (ii) the Developer is not in breach of any covenant or
undertaking as set forth in Section 3, and (iii) unless and to the extent the City issues the Bonds, there shall be adequate Tax Increment on hand to pay the amount of the reimbursement or cost or expense and satisfy all other financial obligations related to the District.
(d) If some or all of the Eligible Costs are to be paid with the proceeds of the Bonds,
the City shall have determined, in its sole discretion, but with the cooperation of the Developer,
that the Tax Increment is sufficient to pay the debt service on the Bonds as and when due and, as applicable, to satisfy other requirements under the Bond Resolution, such as funding an adequate reserve, meeting applicable debt service coverage requirements, and paying costs of issuance,
and to satisfy all other financial obligations related to the District. The Developer understands
and agrees the City shall have no obligation to and may not issue the Bonds if the City is unable
to find and determine that the Tax Increment is sufficient to pay the Bonds timely, to satisfy the requirements of the Bond Resolution, and to satisfy all other financial obligations related to the District.
(e) If any of the above conditions are not satisfied in the determination of the City,
the City shall have no obligation to pay or reimburse any of the Eligible Costs and the City’s
determination to refrain from paying or reimbursing, or its inability to pay or reimburse, any of the Eligible Costs shall not be or result in a default of this Agreement.
5.2. Process for Payment or Reimbursement.
(a) By the date that is 90 days before the date the Developer estimates the Project will
be first placed in service, the Developer shall notify the City in writing of the components of the
Project remaining to be completed before it expects the City will issue the certificate of occupancy for the Project. The Developer shall provide a further update to the City when it reasonably expects that the Project will be placed in service in roughly 30 days.
(b) After receiving a certificate of occupancy for the Project, the Developer shall
provide to the City a signed request for reimbursement substantially in a form attached as Exhibit
E hereto and acceptable to the City, accompanied by the invoices and lien waivers from the contractors or subcontractors performing or that have performed the work to be reimbursed. In
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addition, the Developer agrees to provide to the City any additional information requested by the
City for the City to determine whether the Developer’s request for reimbursement complies with
this Agreement.
(c) By the date that is five months after the submission by the Developer of a complete and acceptable request for reimbursement, as determined by the City, the City, subject to the terms and conditions of this Agreement, shall reimburse to the Developer such Eligible
Costs, in an amount not to exceed $849,958, either directly from Tax Increment or from proceeds
of Tax Increment Bonds; provided, however, if the City shall earlier determine that the Tax
Increment is not sufficient to reimburse the Developer for the Eligible Costs it has paid, either because there is insufficient Tax Increment then available or the City determines there is insufficient Tax Increment to permit the issuance of Bonds, then the City shall so inform the
Developer in writing and this Agreement shall thereupon terminate and neither Party will have
any further rights or obligations hereunder, except as set forth in those provisions that expressly
survive termination of this Agreement.
Section 6. Sources of Repayment; Covenants to Pay Taxes.
6.1. Taxes. The Developer shall pay or cause to be paid when due and prior to the
imposition of penalty all Taxes and all installments of any special assessments payable with
respect to the Land and the Project and any improvements thereto or extension thereof.
6.2. Maintenance of Land and Project. The Developer agrees to use its commercially reasonable best efforts to maintain and operate the Land and the Project so as to be able at all
times to pay promptly and when due all property taxes levied with respect to the Land and the
Project.
6.3. Injunction; Specific Performance. The Parties agree that, in the event of a breach
of this Section 6 by the Developer or its successors or assigns, the City would suffer irreparable harm. Therefore, in the event the Developer or its successors or assigns fails to comply with the provisions of this Section 6, the Developer agrees that the City may pursue any remedy at law or
in equity, including without limitation, the remedies of injunction and specific performance.
Section 7. Indemnification and Insurance.
7.1. Indemnification. The Developer releases the City and all City Commission members, board members, officers, agents, servants and employees of the City (the
“Indemnified Parties”) from, and covenants and agrees that the Indemnified Parties shall not be
liable for, and agrees to indemnify, defend and hold harmless the Indemnified Parties against,
any loss, damage, cost (including reasonable attorneys’ fees), claim, demand, suit, action or other
proceeding whatsoever (i) arising or purportedly arising out of, or resulting or purportedly resulting from, the acquisition and construction of the Project, including the Infrastructure
Improvements, any violation by the Developer of any agreement, condition or covenant of this
Agreement, the ownership, maintenance and operation of the Project, or the presence on any
portion of the Land, of any dangerous, toxic or hazardous pollutants, contaminants, chemicals,
waste, materials or substances; or (ii) which is proximately caused by the Developer or its officers, agents, contractors, consultants or employees.
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7.2. Insurance. Developer shall keep and maintain the Project at all times insured
against such risks and in such amounts, with such deductible provisions, as are customary in
connection with facilities of the type and size comparable to the Project, and the Developer shall
carry and maintain, or cause to be carried and maintained, and pay or cause to be paid timely the premiums for direct damage insurance covering all risks of loss, including, but not limited to, the
following:
1. fire
2. extended coverage perils
3. vandalism and malicious mischief 4. boiler explosion (but only if steam boilers are present)
5. collapse
on a replacement cost basis in an amount equivalent to the Full Insurable Value thereof. “Full
Insurable Value” shall include the actual replacement cost of the Project, exclusive of
foundations and footings, without deduction for architectural, engineering, legal or administrative fees or for depreciation. The policies required by this Section 7.2 shall be subject
to a no coinsurance clause or contain an agreed amount clause, and must contain a deductibility
provision not exceeding $100,000.
Subject to the terms of any mortgage relating to the Project, policies of insurance
required by this Section 7.2 shall insure and be payable to Developer, and shall provide for release of insurance proceeds to Developer for restoration of loss. The City shall be furnished
certificates showing the existence of such insurance. In case of loss, Developer is hereby
authorized to adjust the loss and execute proof thereof in the name of all parties in interest.
During construction of the Project, any and all of the foregoing insurance policies may be
maintained by the Developer’s contractor; provided that once the Project is placed into service, Developer shall maintain all of the foregoing insurance policies. In addition, as a condition to
placing the Project in service, the City may require that the Developer or owner of the Project
obtain additional insurance that would protect the City or the City’s interest in the Infrastructure
Improvements.
In addition to and independent of the above, the Developer shall at the Developer’s expense secure liability insurance through an insurance company or companies duly licensed and
authorized to conduct insurance business in Montana. The insurance shall not contain any
exclusion for liabilities specifically assumed by the Developer in this Section. The insurance
shall cover and apply to all claims, demands, suits, damages, losses, and expenses that may be
asserted or claimed against, recovered from, or suffered by the City in relation to construction of the Project and the Infrastructure Improvements without limit and without regard to the cause
therefore. The Developer must furnish to the City an accompanying certificate of insurance and
accompanying endorsements in amounts not less than as follows:
Commercial General Liability - $1,000,000 per occurrence; $2,000,000 annual
aggregate
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The above amounts shall be exclusive of defense costs. The City, its officers, agents, and
employees, shall be endorsed as an additional or named insured on a primary non-contributory
basis on the Commercial General Liability policy. The insurance and required endorsements
must be in a form suitable to City and shall include no less than a thirty (30) day notice of cancellation or non-renewal. The City must approve all insurance coverage and endorsements prior to the Developer commencing work on Project or Infrastructure Improvements. Developer
must notify the City within two (2) business days of Developer’s receipt of notice that any
required insurance coverage will be terminated or Developer’s decision to terminate any required
insurance coverage for any reason.
Section 8. General Provisions.
8.1. Conflicts of Interest; City’s Representatives Not Individually Liable. The
Developer represents that it does not employ, retain, or contract with an officer or employee of
the City and that no member, officer or employee of the City has a personal or financial interest,
direct or indirect, in this Agreement or in the Project, or a financial interest in the Infrastructure Improvements. No member, officer or employee of the City shall be personally liable to
Developer in the event of any default under or breach of this Agreement by the City, or for any
amount that may become due to Developer for any obligation issued under or arising from the
terms of this Agreement.
8.2. Rights Cumulative. The rights and remedies of the Parties of this Agreement, whether provided by law or by this Agreement, shall be cumulative, and the exercise by any
Party hereto of any one or more of such remedies shall not preclude the exercise by such Party,
at the same or different times, of any other remedy for the same default or breach or of any of its
remedies for any other default or breach of the Party subject to the limitation of remedies
provided herein. No waiver made by such Party with respect to the performance or the manner or time thereof, of any obligation under this Agreement, shall be considered a waiver with
respect to the particular obligation of the other Party or a condition to its own obligation beyond
those expressly waived in writing and to the extent thereof, or a waiver in any respect in regard
to any other rights of the Party making the waiver of any obligations of the other Party. Delay by
a Party hereto instituting or prosecuting any cause of action or claim hereunder shall not be deemed a waiver of any rights hereunder.
8.3. Term of Agreement. This Agreement shall remain in effect until the date that it
terminates or is terminated by the City, as follows:
(a) If payment or reimbursement of Eligible Costs is made directly from Tax
Increment and not proceeds of Bonds, this Agreement will terminate on the date that is 10 days after the date the City makes the final payment or reimbursement of Eligible Costs to the
Developer hereunder.
(b) If the City issues Bonds, this Agreement will remain in effect until the final
maturity or payment date of the Bonds or such earlier date that the Bonds are prepaid in full,
discharged, and no longer outstanding.
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(c) This Agreement may be terminated by the City in its sole discretion on a date
earlier than described in (a) or (b) above at any time after failure by the Developer to complete or
satisfy a Milestone by the applicable Milestone Payment Date.
(d) If the City has determined Tax Increment is insufficient under Section 5.2(c) above, this Agreement shall terminate in the manner and on the date described in Section 5.2(c) above.
(e) Notwithstanding the foregoing provisions of this Section, Sections 6, 7 and 8 of
this Agreement shall in all events survive the termination of this Agreement.
8.4. Limitation on City Liability. No agreements or provisions contained in this Agreement nor any agreement, covenant or undertaking by the City contained in any document
in connection with the Project, including the Infrastructure Improvements, or the Eligible Costs
shall give rise to any pecuniary liability of the City or a charge against its general credit or taxing
powers, or shall obligate the City financially in any way except with respect to then-available
Tax Increment. No failure of the City to comply with any term, condition, covenant or agreement herein shall subject the City to liability for any claim for damages, costs or other
financial or pecuniary charge except to the extent that the same can be paid or recovered from
then-available Tax Increment; and no execution on any claim, demand, cause of action or
judgment shall be levied upon or collected from the general credit, general funds or taxing
powers of the City (except as such constitute then-available Tax Increment). Nothing herein shall preclude a proper party in interest from seeking and obtaining specific performance against
the City for any failure to comply with any term, condition, covenant or agreement herein;
provided that no costs, expenses or other monetary relief shall be recoverable from the City
except as may be payable from the Tax Increment. This Agreement shall not constitute or be
construed to give rise to a debt of the City.
8.5. Assignment. This Agreement is unique between the City and Developer and no
Party may assign any rights or privileges, or delegate any duties or obligations under this
Agreement, without first obtaining the written consent of the other Party.
8.6. Successors Bound By Agreement; No Third Party Beneficiary; No Property
Interest. Subject to compliance with Section 8.5, this Agreement will inure to the benefit of and be binding upon the Parties to this Agreement and their respective successors in interest and
permitted assignees. This Agreement is for the exclusive benefit of the Parties, does not
constitute a third-party beneficiary agreement, and may not be relied upon or enforced by a third
party. This Agreement, by itself, does not create or give rise to a property interest in the Land or
the Project.
8.7. Prior Agreements. This Agreement supersedes, merges and voids any and all
prior discussions, negotiations, agreements and undertakings between the Parties with respect to
the subject matter of this Agreement. The Parties waive and release each other from any claims,
actions, or causes of action that relate in any manner to any prior discussions, negotiations,
agreements and undertakings between the Parties with respect to the subject matter of this Agreement.
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8.8. Entire Agreement. This Agreement, including any exhibits and attachments
hereto, embodies the entire agreement and understanding of the Parties with respect to its subject
matter. All Parties shall be prohibited from offering into evidence in any arbitration or civil
action any terms, conditions, understandings, warranties, statements or representations, whether oral or written, with respect to the subject matter of this Agreement and that are not contained in
this Agreement.
8.9. Amendments, Changes and Modifications. This Agreement may be amended and
any of its terms may be modified only by written amendment authorized and signed by the
Parties hereto.
8.10. Headings. The headings of articles and sections in this Agreement are inserted for
convenience of reference only and do not limit or amplify the terms and provisions of the
Agreement in any manner. The headings will be ignored and will not affect the construction of
any provisions of this Agreement.
8.11. Notice. Any formal notice, demand or communication required or permitted by the terms of this Agreement to be given to the City or Developer will be in writing and will be
delivered to such Party either: (i) by personal hand-delivery; or (ii) by depositing the same in the
United States mail, certified mail with return receipt requested, addressed to such Party at the
address named below, with postage prepaid thereon. Notice will be deemed complete upon
receipt of the notice pursuant to any of the foregoing methods of notice.
If to City:
City of Bozeman
Attention: Bozeman City Manager
121 N. Rouse Ave. P.O. Box 1230
Bozeman, MT 59771
With a copy to:
Bozeman City Attorney
121 N. Rouse Ave.
P.O. Box 1230
Bozeman, MT 59771
If to Developer:
Aspen Land Co., L.L.C.
Attn: Mike Hope c/o Rocking R Bar 211 E. Main St.
Bozeman, MT 59715
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The City and the Developer, by notice given hereunder, may designate different addresses to
which subsequent notices, certificates or other communications should be sent.
8.12. Severability. If any provision of this Agreement is declared void or held invalid,
such provision will be deemed severed from this Agreement and the remaining provisions of this Agreement will otherwise remain in full force and effect.
8.13. Duplicate Originals or Counterparts. This Agreement may be executed in two or
more counterparts, each of which will be deemed to be an original copy of this Agreement and
all of which, when taken together, will be deemed to constitute one and the same agreement.
8.14. Place of Performance. The place of performance of this Agreement will be in the City of Bozeman, Gallatin County, Montana.
8.15. Governing Law. This agreement and the legal relations between the Parties
hereto will be governed by and construed in accordance with the laws of the State of Montana,
without giving effect to any choice of law statutes, rules, or principles.
8.16. Dispute Resolution.
(a) Any claim, controversy, or dispute between the Parties, their agents, employees, or
representatives shall be resolved first by negotiation between senior-level personnel from each
Party duly authorized to execute settlement agreements. Upon mutual agreement of the Parties,
the Parties may invite an independent, disinterested mediator acceptable to the Parties to assist in
the negotiated settlement discussions.
(b) If the Parties are unable to resolve the dispute within thirty (30) days from the date
the dispute was first raised, then such dispute may only be resolved in a court of competent
jurisdiction in compliance with the applicable law and the provisions of this Agreement.
8.17. Further Assurances and Corrective Instruments. The Parties agree that they will,
from time to time, execute, acknowledge and deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such further instruments as may reasonably be required for correcting any inadequate or incorrect description of the Project, including the Infrastructure
Improvements, or the Eligible Costs or for carrying out the expressed intention of this
Agreement.
8.18. Reports/Accountability/Public Information. Developer agrees to develop and/or provide documentation as requested by the City demonstrating the Developer’s compliance with
the requirements of this Agreement. Developer shall allow the City, its auditors, and other
persons authorized by the City to inspect and copy its books and records for the purpose of
verifying that the reimbursement of monies distributed to Developer pursuant to this Agreement
was used in compliance with this Agreement and all applicable provisions of federal, state, and local law. The Developer shall not issue any statements, releases or information for public
dissemination regarding this Agreement or the work contemplated hereunder without prior
written approval of the City.
[Balance of page intentionally left blank]
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IN WITNESS WHEREOF, the Parties hereto have caused this Development Agreement
to be executed as of the 25 day of March, 2019.
CITY OF BOZEMAN, MONTANA
By: _______________________________________
Printed Name: Andrea Surratt
Title: City Manager
[Signature Page to Development Agreement]
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ASPEN LAND CO., L.L.C.
By:
Name: Mike Hope
Title:
[Signature Page to Development Agreement]
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A-1
EXHIBIT A
PROJECT AND PROJECT COSTS
SUMMARY DESCRIPTION OF PROJECT: Development of a 3-story mixed-use building, expected to include approximately 65,000 square feet, and to include restaurant and retail space,
office space and approximately 25 residential condominiums.
PROJECT COSTS:
Land (Fair Market Value) ............................................................................................$2,774,500
Soft Costs ......................................................................................................................$2,921,171
Hard Costs ...................................................................................................................$10,451,426
Total Project Costs ..........................................................................................$16,147,097
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B-1
EXHIBIT B
LEGAL DESCRIPTION OF THE LAND
Parcel 1: NORTH 7TH ADD, S01, T02 S, R05 E, BLOCK 2, Lot 6A - 10A, PLAT E-21-A
Parcel 2: NORTH 7TH ADD, S01, T02 S, R05 E, BLOCK 2, Lot 11 - 15, 310'X150' PROJ 94-307 PLUS VAC ALLEY LESS RW PARCEL 3
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C-1
EXHIBIT C
ELIGIBLE COSTS
Summary Description of the Infrastructure Improvements:
Demolition $250,000
Sidewalks, curbs, gutters and alley $159,262
Northwestern Energy [relocation of services] $25,000
Installation of fiber optics $25,000
Total Costs of Infrastructure Improvements $459,262
Summary Description of the Project Fees and Charges:
City of Bozeman Impact Fees $225,000
Relocation costs or fees pursuant to Relocation Agreement $165,696
Total Project Fees and Charges $390,696
Total Eligible Costs $849,958
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D-1
EXHIBIT D
MILESTONES
MILESTONE MILESTONE DATE
Approval by City of Site Plan July 1, 2019
Approval by City of Infrastructure Plans August 1, 2019
Building Permit Issued October 1, 2019
Evidence that the Developer owns full right, title, and
interest in and to mobile homes, free and clear of all liens and encumbrances
January 1, 2020
Removal of all mobile homes from the Land April 1, 2020
Delivery to City of Complete Relocation Report May 1, 2020
Foundation Inspection Complete June 1, 2020
Issuance of Certificate of Occupancy May 1, 2021
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G-1
EXHIBIT E
FORM OF DEVELOPER CERTIFICATE
TO: City of Bozeman, Montana FROM: Aspen Land, LLC (the “Developer”) SUBJECT: Reimbursement for Eligible Costs This Developer Certificate requests $_________ for reimbursement of Eligible Costs, as defined in the Development Agreement between _____________________ and the City of Bozeman, Montana, dated as of ________________, 20__ (the “Development Agreement”). Capitalized terms used but not otherwise defined herein shall have the respective meanings given such terms in the Development Agreement. Pursuant to Section 5(d) of the Development Agreement, the undersigned hereby certifies on behalf of the Developer that: (a) the expenditures for which reimbursement is requested are listed in summary form in the attached schedule headed “Project Expenditures;” (b) invoices paid by the Developer corresponding to the expenditures set forth on the attached Project Expenditures Schedule are appended to the attached schedule headed “Project Invoices;” (c) the amounts for which reimbursement is requested have been paid by the Developer to the [City] for Project Fees and Charges or to contractors, subcontractors, materialmen, engineers, architects or other persons who or that have performed necessary or appropriate services or supplied necessary or appropriate materials for the acquisition, construction, renovation, equipping, and installation of the Infrastructure Improvements; (d) with respect to the Infrastructure Improvements, the contractor and subcontractors were solicited and retained competitively and all persons performing work on the Infrastructure Improvements were paid the Montana prevailing wage for such work; (e) no part of the several amounts requested to be paid, as stated in such certificate, has been or is the basis for the payment of any money in any previous request; (f) the reimbursement of the amounts requested will not result in a breach of any of the covenants of the Developer contained in the Development Agreement; and (g) no litigation has been instituted or is threatened with regard to any amounts sought to be reimbursed, and binding and enforceable lien waivers have been obtained from all contractors, subcontractors, materialmen, and others with regard to all work related to any amounts for which reimbursement is requested.
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The Developer represents that all of the representations of the Developer in Section 2.2 of the Development Agreement are true and correct as of the date hereof and the Developer is not in default of the performance of any of its undertakings or obligations under Section 3 of the Development Agreement as of the date hereof. Dated: _____________, 20__ [__________________] By: Authorized Developer Representative
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F-1
EXHIBIT F
CITY’S STATEMENT OF NON-DISCRIMINATION
Statement of Non-Discrimination ____________________________________(name of entity submitting) hereby affirms it will
not discriminate on the basis of race, color, religion, creed, sex, age, marital status, national
origin, or because of actual or perceived sexual orientation, gender identity or disability and
acknowledges and understands the eventual contract will contain a provision prohibiting discrimination as described above and this prohibition on discrimination shall apply to the hiring and treatments or proposer’s employees and to all subcontracts.
______________________________________ Name and title of person authorized to sign on behalf of submitter
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G-1
EXHIBIT G
RELOCATION AGREEMENT
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G-2
RELOCATION AGREEMENT
For Aspen Land LLC North 5th Tenant Relocation
This Relocation Agreement (herein referred to as the “Agreement”) is dated as of (
) by and between Aspen Land Co, LLC (the “Developer”) and the Human Resource Development
Council of District IX, Inc. (HRDC). The purpose of this Agreement is to outline services to be provided by
HRDC to the Developer to meet the objective of providing a feasible and workable plan to assist persons
displaced by the development project as required by the Aspen Crossing Development Agreement.
Section 1. Services. HRDC shall provide the services outlined below.
Relocation Assistance
1.1 Outreach: The project start date of proposed services for the relocation of North 5th tenants,
begins once Aspen Land, LLC serves tenants with written notices to vacate. Outreach efforts to
tenants will include:
a. Identification of HRDC staff contact lead
b. Town hall meeting for tenants
c. Follow up (by phone, email or other identified means) with each tenant to develop a
housing plan
1.2 Housing Counseling, Search and Placement Assistance: HRDC staff will offer households
housing counseling to access housing resources and create a relocation plan with the purpose of
helping households better understand their specific housing goals and needs. Tenants must
participate in a minimum of 2 housing counseling sessions to access funds for relocation
expenses.
1.2.1 Assessment of housing barriers, needs and preferences;
1.2.2 Develop a plan for the relocation and location of affordable housing;
1.2.3 Housing search; Landlord outreach and advocacy;
1.2.4 Assistance with completing and submitting rental applications;
1.2.5 Financial assistance with obtaining utilities, moving arrangements and expenses, and;
1.2.6 Financial assistance with obtaining and maintaining housing.
1.3 Documentation: HRDC staff will develop a customer file for each household, process tracking
and gather supporting documents from vendors needed for allocating financial assistance for
moving expenses. HRDC has a file retention policy of 5 years. HRDC will provide reports on the
15th and 30th (or first business day after) to the Developer outlining:
1.3.1 Contacts by household
1.3.2 Progress by household
1.3.3 Relocation plans
1.3.4 Relocation costs incurred
1.3.5 Amount of time to obtain housing
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HRDC will also assist the Developer in creation of the Relocation Report required in the
Development Agreement. This report will detail the number of households receiving assistance,
a description of assistance received, and outcomes for households both obtaining and not
obtaining adequate housing. For households that did not obtain housing, HRDC will provide an
explanation as to why housing was not obtained.
1.4 Fiscal Agent: HRDC will be acting as the fiscal agent for the agreement between the developer
and benefactor (Aspen Land, LLC) and service provider (HRDC) to allocate a benefit of $7,176 per
participating household for moving expenses, up to 21 possible households. This agreement is
referenced in an agreement between Aspen Land, LLC and the City of Bozeman.
1.5 Relocation Funds: HRDC staff will help households identify relocation expenses including but
not limited to the following;
1.5.1 Trailer relocation, application fees, security deposit, unit rent, lot rent, utility deposits
(gas, electric, water, sewage, trash), truck rental, moving company, temporary storage
fees, financial assistance to remove barriers to obtaining housing such as credit repair,
arrears, etc.
1.6 Invoicing and Allocation: HRDC will invoice Aspen land, LLC for the release of funds and allocate
funds directly to vendors for relocation expenses until maximum benefit for each participating
household is exhausted.
1.6.1 HRDC will invoice monthly by the 10th. Aspen Land, LLC will release the full household
allocated benefit of $7,176 upon the household’s first housing counseling appointment.
1.6.2 HRDC will invoice 6 months from project start for an administrative fee of $15,000 for
Housing Navigation services provided and to continue the ongoing monthly payments to
vendors for moving expense until funds have been exhausted for all participating
households. The project start date is the date which Aspen Land, LLC serves tenants
with written notices to vacate. A copy of this notice is attached to this agreement.
1.6.3 HRDC will allocate relocation expenses paid directly to vendors on behalf of
participating households, until the total relocation dedication of $150,696 has been
expended. Maximum assistance per household in $7,176. If a household does not need
or desire to use the full $7,176, the Developer may direct HRDC to reallocate funds to
households with extenuating circumstances that have reached the $7,176 limit.
Section 2. Developer Obligations. Aspen Land, LLC, through this agreement with HRDC, will provide
relocation funds on a per household basis for households whose tenants occupy and/or owner occupy
trailers on North 5th Ave, for purpose of helping households with expenses associated with relocation.
Exclusions apply to owners whose only interest is in the ownership of the physical building and are not
forced to relocate their nightly residence.
Tenants who own trailers may use relocation funds to move their trailer to a new location. Tenants
electing to not move their trailers must execute a bill of sale to the Developer in order to avoid cost for
demolition and disposal of the trailer. Tenants who own trailers that choose to abandon their trailer will
be responsible for the cost of demolition and/or removal. Tenants with an executed bill of sale to
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Developer will not be responsible for the cost of demolition and disposal of the trailer. The Developer
will provide copies of all bills of sale to HRDC to include in tenant files.
Section 3. Changes. Any changes to this Agreement must be presented in writing and agreed upon by
both parties.
Section 4. Fees. The Developer agrees to pay HRDC a sum of $15,000 for contract services, to be paid as
outlined in Section 1.6.2. The Developer agrees to commit a sum not to exceed $150,696 for direct tenant
relocation costs, to be reimbursed as outlined in Sections 1.6.1 and 1.6.3.
Section 5. Limits of Agreement. This instrument contains the entire agreement between parties, and no
statement, promises, or inducements made by either party or agent of either party that is not contained
in this written Agreement shall be valid or binding. This Agreement may not be enlarged, modified, or
altered except as provided in Section 3, Changes.
Section 6. Default. In the event either party fails to comply with the terms, conditions, or covenants
contained in the agreement, the other party shall be entitled to any and all remedies available in law or
in equity, including but not limited to specific performance, termination, injunction relief and monetary
damages. It is understood and agree that time is of the essence in this agreement.
Witness Whereof, the parties have executed this Agreement on the above date:
Heather Grenier, President/CEO
Human Resource Development Council of District IX, Inc.
Mike Hope
Aspen Land Co., LLC
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Staff Report
To: Midtown Urban Renewal Board
From: David Fine, Urban Renewal Program Manager
Date: December 4, 2018
Subject: Aspen Crossing at Midtown mixed‐use project
515 W. Aspen St. (N. 5th Ave. and W. Aspen St.)
TIF Assistance Program Overview
The Bozeman City Commission created the Midtown TIF Assistance Program in 2017 to support
redevelopment activity and advance the goals of the 2015 Midtown Urban Renewal Plan. The
Midtown TIF Assistance Program supports projects that create significant new taxable value as
`well as meeting the five goals of the Midtown Urban Renewal Plan. These goals, as required by
statute, focus on mitigating blighted conditions in the urban renewal area. Each of these five
goals are further refined with particular criteria for a total of sixteen categories that can receive
points. Point awards demonstrate specific compliance with the criteria, but are not the only
factors the board may consider in recommending an incentive award. For example, the board
may also consider new taxable value created by the project, or whether the project would be
feasible without a public incentive. In addition to tax generation, the goals of the Urban Renewal
Plan and the need for assistance, the Board must also make affirmative findings as required by
State Law.
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 an aging structure and replacing it with a 3‐story
vertical mixed‐use building with one floor of restaurant/retail, one floor of office, and 25
173
housing units on the upper level, which increases the taxable value of the property use. This
65,000 square foot mixed‐use project locates a new building closer to the street adding interest
and activity. The project will provide, at minimum 12 foot sidewalks with street trees and tree
grates and the applicant is actively participating in the Festival Street design process for Aspen
Street, which may further augment the pedestrian experience. [5 of 5]
Goal Number 1: 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.
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
estimated annual net tax revenue increase of $249,240 for the District, with the net increase in
the value of the property increasing $13,187,285. 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 replacing a low value building with a 65,000 square foot vertical
mixed‐use building that adds storefront restaurant/retail commercial space, office space and 25
residential condo units. The project substantially increases the density of development on the
property. Sidewalks, curb, gutter and upgraded stormwater facilties will be added on N. 5th
Avenue.
[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.
According to the Applicant, the project will support 350 construction jobs over a 14 month
period. Once completed, the two commercial floors will support 175‐225 jobs depending on the
tenants. [3 of 3]
Goal Number 2: Improve Multi‐Modal Transportation
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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 project adds new 12 foot storefront block frontage standard sidewalks on the Aspen St.
frontage and 10 foot sidewalks along Tamarack and N. 5th Ave. The new building will be ADA
accessible. Pedestrian access and facilities will be dramatically improved. [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 and commercial development 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.
Covered bike and scooter parking is proposed for the basement of the building. [1 of 1]
Goal Number 3: 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 project, with TIF Assistance, plans to extend and utilize the City of Bozeman fiber conduit
system. The project is improving pedestrian facilities on three frontages and is participating in
the Aspen Festival Street design process. [2 of 2]
Goal Number 4: 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 project provides all parking behind the building, which is consistent with the vision of the
Midtown Urban Renewal Plan. [2 of 2]
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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.
The project eliminates multiple vehicular access points along N. 5th Ave. and consolidates them
to one access point. [2 of 2]
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 is not on N. 7th Avenue, though it does orient itself toward the street to
provide interest and activity.
[0 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 enhanced façade transparency with a store front design along Aspen St.
The project includes street trees and tree grates as well as 12 and 10 foot sidewalks. No
landscaping plan was submitted with this application. [2 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.
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]
Goal Number 5: 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 includes 25 housing 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 a mix of uses including restaurant, retail, office, and 25 residential units.
[4 of 4]
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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 appears to share parking between its commercial and residential uses. Future more
detailed plans for parking could show a shared parking arrangement to receive points for this
category. [0 of 2]
Total Points (37/44)
Relocation of Persons Displaced by the Project
The Montana Urban Renewal Law requires the local governing body to make a finding when
approving incentive funds for an urban renewal project that “(1) a workable and feasible plan
exists for making available adequate housing for the persons who may be displaced by the
project” (7‐15‐4217, MCA). In conjunction with the property owner and HRDC, staff has been
working on a proposal that we believe would allow the City Commission to make a finding that
such a “workable and feasible plan exists” for relocating residents that will be displaced by the
proposed project. While many details still need to be negotiated in the final development
agreement, Staff recommends a proposed relocation plan with the following details:
Space rental in the trailer park is $300 per space
21 spaces are currently occupied in the trailer park
The 2019 HUD Fair Market Rent (FMR) for a two bedroom apartment in Gallatin County
is $898
Each property owner would receive the 12 month value of the difference between their
current rent and the two bedroom FMR: $7,176 (12 x $598); $150,696 TOTAL relocation
cost
HRDC would manage the funds. We propose that the residents could draw down on the
funds over time and use them for deposits, first and last month’s rent, or possibly even
take the money as a lump sum. They could also use the money to move their trailer in
the event that the trailers are movable.
The Developer would front 100% of the relocation funds to HRDC.
The Midtown URD would, via development agreement, agree to reimburse the
Developer for the value of the relocation funds at the same time as other incentive
funds are paid at or around certificate of occupancy for the new project.
The Midtown Board would pay a 10% upfront management fee to HRDC for managing
the relocation funds.
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Criteria for Approval of Urban Renewal Project, 7‐15‐4217 MCA
1) a workable and feasible plan exists for making available adequate housing for the
persons who may be displaced by the project;
The proposed rent assistance solution is workable and feasible to make adequate
housing available for the persons who may be displaced by the project.
2) the urban renewal plan conforms to the comprehensive plan or parts thereof for the
municipality as a whole;
The Midtown Urban Renewal Plan adopted in 2015 made findings that mixed‐use
projects that included commercial and residential uses were in conformance with
the comprehensive plan.
3) the urban renewal plan will afford maximum opportunity, consistent with the sound
needs of the municipality as a whole, for the rehabilitation or redevelopment of the
urban renewal area by private enterprise; and
The project includes a request for tax increment financing assistance that makes the
proposed redevelopment project feasible to be undertaken by private enterprise.
4) a sound and adequate financial program exists for the financing of said project.
The Midtown Urban Renewal District currently has adequate revenue to support the
issuance of tax increment bonds to finance the tax increment finance assistance for
this project.
Staff Recommendation
The Midtown Urban Renewal District needs catalyst projects to drive growth in taxable
value and create demand for market‐driven redevelopment. The City Commission created the
District in 2006 with the vision of a walkable pedestrian centric area with compact urban
density. Redevelopment projects have focused on reuse of existing buildings, which provide less
potential new tax revenue. Vertical mixed‐use buildings add residents to support neighborhood
commercial uses and typically share parking among compatible uses, which allows developers to
produce building forms with more value per acre. These projects, however, are typically more
difficult to finance and develop. The City Commission structured the Midtown Urban Renewal
Plan and the Midtown TIF Assistance Program to focus on vertical mixed‐use buildings. To date,
there have been no significant vertical mixed‐use projects in the Midtown Urban Renewal
District. The lack of these projects suggests the market for these projects is untested, which
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increases the degree of risk for developers, and makes incentives important for early catalyst
projects. Incentives may create the potential for higher returns to mitigate higher risk, which
may attract investment that would not occur without these incentives.
The Midtown TIF Assistance Program allows the payment of eligible costs of
development to incentivize development that meets the goals of the Midtown Urban Renewal
Plan. The applicant is applying for several eligible cost areas totaling $759,862 (. Staff finds that
the proposed costs are eligible for TIF assistance. Staff scored the application based on the
program criteria. Based on our review and the application materials presented, the project
received 37 of 44 available points. The application scored points toward all five goals of the
Midtown Urban Renewal Plan. 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.
Leland Consulting Group (LCG) completed a financial analysis of the project to help staff
evaluate the application for creation of new taxable value. 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. LGC bases their analysis on
awarding the applicant’s full assistance request. LCG recommends a ratio of private investment
to public assistance of 8:1 or greater for commercial projects; the ratio for this project is greater
than 16.60:1.
LCG also created a tax generation model for the Midtown URD. According to their
model, the project would produce net new annual taxes of $177,191, which would allow TIF
assistance to be paid back in 5 years (assumes a 5% interest rate on the advanced amount) for
new increment‐based payback if assistance is provided at the staff recommended amount.
The proposed incentive request is larger than past requests, but is consistent with the
goals of the Midtown Urban Renewal Plan. In order to ensure that the level of assistance makes
the project feasible, but does not provide unreasonable returns to the developer, staff hired
Economic and Planning Systems, Inc. (EPS) to provide a third party assessment of the
development pro forma. This component of the review process is new and was primarily
obtained to assess the reasonableness of each applicant’s incentive request. EPS performed
their analysis using a target discount rate and capitalization rate based on Bozeman market
conditions. Their analysis projects that the project would require incentives between $254,000
and $850,000 to meet the reasonable target rates of return. The Applicant’s request is within
this range. Due to untested nature of the market for Midtown mixed‐use, the catalytic nature of
the project, and the high ROI for creating new taxable value staff recommends that the
Midtown Urban Renewal Board award between the developers full request of $684,262 with
the addition of $150,696 in relocation costs.
179
Consider the Motion:
“Having reviewed the findings of the Staff Report, Public Comment, and Board Deliberation and
Discussion, I move to direct staff to negotiate a development agreement with the Applicant for
Midtown TIF Assistance not to exceed $684,262 and to draft a Resolution to designating the
Aspen Crossing as an Urban Renewal Project.”
Staff also recommends that the Board direct staff to work with the Applicant and HRDC on a
relocation plan as described in the Staff Report.
Consider the Motion:
“Having reviewed the findings of the Staff Report, Public Comment, and Board Deliberation and
Discussion, I move to direct staff to develop a relocation plan for existing residents as
recommended by the Staff Report.”
180
181
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
TIF APPLICATION
Property Information
Property Addresses | Owners:
• Parcel 1: 515 West Aspen | Aspen Land LLC
• Parcel 2: 522 West Tamarack Street | Kali LLC
• Parcel 3: 727 North 5th Avenue | RJM Holdings
Legal Description: See Attached
Geocode Locations | County Tax ID Numbers:
• Parcel 1: 06-0798-01-3-02-48-0000 | RGG3862
• Parcel 2: 06-0798-01-3-02-20-0000 | RGG3709
• Parcel 3: 06-0798-01-4-05-29-000 | RGG2844
Applicant Information
Property Owner and Developers:
• Mike Hope 61% | Primary Contact
o Aspen Land LLC | 406-539-0169 | mkwnhope@aol.com
• Ralph Ferraro 18%
• John Kesserich 18%
• Tony Kaber 3% 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).
___________________________ ___________________________ Mike Hope Date Ralph Ferraro Date
___________________________ ___________________________
John Kesserich Date Tony Kaber Date
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BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
COMPANY PROFILE
Business Location
This is an existing business at 515 West Aspen in Bozeman that is expanding. Year Business Established
1985 Type of Business
This new building, Aspen Crossing, will be mixed use to include retail, professional office, and residential. We are tentatively planning to complete the project in the summer of 2020.
Business Plan
Gross Condo Sales $7,038,000
Taxes Condo Sales $1,249,778
Sales Commissions $422,280
Net Condo Sales $5,365,942
Constuction Loan $12,685,000
Net Condo Sales $5,365,942
Net Loan Compilation $7,319,058
NNN Lease 43,333 Square Feet
Rental Income @ $20 per $866,660
P & I 5.5% 25 year /per year $539,340
Net Cash Flow Per Year $327,320
Break Even - 62% Occupancy PROJECT DETAIL
Project Information
Project Description: The Aspen Crossing will be a mixed-use building with retail space, hospitality
services, professional offices, and residential units. Further details are explained below.
Project Manager General Contractor Project Architect
Aspen Land, LLC Martel Construction A & E Architects
Mike Hope Tony Martel Dusty Eaton
406-539-0169 406-580-6344 406-698-1816 mkwnhope@aol.com tmartel@Martelconstruction.com Deaton@aearchitects.com
183
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Property Status
The property is currently land and buildings. It is currently used for retail, hospitality, and offices.
There are also rental mobile homes on the premise.
Type of TIF Assistance Sought
We are requesting assistance with public infrastructure costs, building demolition, relocation
expense reimbursements for current mobile home residents. Value of TIF Assistance Sought
$759,862 Will this project proceed if TIF assistance is not granted?
No
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BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Project Narrative
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
The 2.14-acre B-2M zoned property is directly east of the old Village Inn Pizza Parlor on the north
side of West Aspen and the south side of west Tamarack.
The site currently the home of Mixers Saloon, Fiesta Mexicana, Mr. Macks Barber Shop, and Sunset Mobile Home Park. All existing structures will be moved or demolished prior to the
commencement of construction.
Shown on the next page is a draft letter from Mike Hope that will be sent to all Sunset Mobile Home Park residents with his plan to help them transition to another location.
West Aspen is designated to be a festival street in the Midtown redevelopment plan, and Aspen
Crossing will face West Aspen and be an anchor development and paramount to achieving the
festival street goal.
Aspen Crossing will have 65,000 square feet divided equally between three floors. Ground level will be hospitality and retail driven. The second floor will be office space. The third floor will include 25 residential condominiums.
Building access will be provided from North 5th and a shared use alley between west Aspen and Tamarack. Parking will be on the north side of the building on the land currently occupied by
Sunset Mobile Home Park. There will also be on street parking along West Aspen, West Tamarack,
and North 5th. We insist the development be pedestrian and biker friendly.
Space for a future structure will be prepared on the south side of Tamarack. This space will
accommodate a 5,000 to 15,000 square foot structure from one to three stories in height.
The goal of this development is to create a lifestyle area for living, working, and relaxing.
As a planned festival street, West Aspen will be a central area to the Midtown District. We
envision the Midtown District hosting concerts, farmers markets, car shows and other events that attract people from across Montana. It will be an economic driver for the Midtown District and overall Bozeman community.
Aspen Crossing will lead a paradigm shift for the Midtown District. Aspen Crossing is a visionary
infill development that further links North 7th and downtown Bozeman. It enhances the social and
economic corridor between these two vital areas in our community.
185
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
186
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
187
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Site Maps and Building Plans
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Photographs of Project Site
Map showing location of the site and immediate surroundings
188
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Proposed development plans – site plans, floor plans indicating square footage and layout, building elevations
Parking accommodations for residential units and commercial uses
Estimated date of occupancy.
August 2020
189
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Part Two
Project Timeline
Public Benefit | Re-Occupancy of Vacant Land and Building
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ● ● ● ●
Approximately 25 % of the current Aspen land building (currently Mixers) is not leasable. The
footprint of that building is approximately 10,000 square feet, which is 55,000 square feet smaller
than the proposed Aspen Crossing building.
Aspen Crossing is a more productive use of limited land and enhances urban density. The
Midtown District will attract more investment funds, making it a more desirable area for our entire community. Public Benefit | Elimination of Blight This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ● ● ● ● ●
Buildings, parking lots, curbs, and sidewalks throughout and adjacent to this property are unsafe and unsightly. Electrical utilities above and below ground and at the end of their useful life.
Aspen Crossing will modernize this area with new infrastructure, modern buildings, bike and
pedestrian paths, and adequate ADA friendly access to welcome everyone.
This is a 1960’s unplanned commercial and residential area that is prime for a modern makeover.
Photos are worth a thousand words…here are a few that show the blight of this property. Urban Living Options
J F M A M J J A S O N D J F M A M J J A S O N D J F M A M J J A S O N D
Demolition and Construction
Occupancy
2018 2019 2020
Concept & Design
Planning & Review
190
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Public Benefit | Public Health & Mobility
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ● ● ●
Aspen Crossing will modernize this area with new infrastructure, modern buildings, bike and
pedestrian paths, and adequate ADA friendly access to welcome everyone.
Outdating utilities, both above and below ground, will be replaced to improve reliability and
safety.
This property will be cleaner, safer, and more inviting – supporting the goals of the Midtown
District.
191
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Public Benefit | Creation of New Office / Retail / Hospitality Space
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ● ● ● ● ● ● ●
Aspen Crossing will offer two floors (approximately 45,000 square feet) of new modern urban
lifestyle space. The main level will open to West Aspen in the summer creating an inviting
indoor/outdoor work and social space.
These residences and business will generate their own tax revenue, plus the taxes paid from new
jobs.
Public Benefit | Residential
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ● ● ● ● ● ● ● ● ● ● ● ●
Twenty-five condominiums ranging from 600 to 1,300 square feet will occupy the third floor,
taking advantage of the spectacular views of downtown and the Bridger Mountains. Vertical
housing also lowers the demand for land consumption in our open fields – and this project does not remove any historic character or charm to our community.
12 foot wide sidewalks on Aspen and 10 foot on Tamarack and 5th streets to encourage
pedestrian and bicycle friendliness.
Parking will be shared with the old Village Inn Pizza Parlor.
192
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Public Benefit | Reduction of Resource Demand & Active Transportation
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ● ● ●
We anticipate Aspen Crossing capitalizes on the modern live where you work movement that is
spurring mixed use developments elsewhere in Bozeman. We will be providing garage storage in
the basement for bikes and scooters.
193
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Public Benefit | Increased Tax Revenue
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
●
New property tax revenue will fund future opportunities for the Midtown redevelopment. Aspen
Crossing offers a short-term payback opportunity for the TIF district and a long-term gain for both
the City of Bozeman and the Bozeman School District.
Current Taxes and Future Tax Projections
Current Taxes Paid: $ 23,141 Projected Taxes Paid: $ 180,000 Five Year Payback to the TIF*: $ 784,295
Total Value of Building $15,000,000
*$156,859 (Projected Taxes Paid – Current Taxes Paid) x 5 (Years)
Public Benefit | Construction Jobs/ New Jobs/ Local Sales
This section answers the following criteria numbers from the TIF Assistance score sheet.
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16
● ● ● ●
The construction of Aspen Crossing will support 350 full-time construction jobs over a 14-month period. Average construction jobs in Bozeman offer a livable wage and benefits that include
health insurance. Construction is a major contributor to our Gallatin Valley economy.
Once operational, Aspen Crossing is expected to support 175 to 225 new jobs. We plan to create a strategic partnership with MSU’s new Hospitality program to prepare the next
generation of hospitality industry leaders. Hospitality could be considered Gallatin Valley’s
biggest economic driver and one that has an insatiable appetite for qualified workers. Aspen
Crossing and MSU have an opportunity to feed this need.
A thriving hospitality industry in Gallatin Valley has sustained our community through past
economic downturns in the past – and will be relied on to do so again in the future. Project Financial Information Sources of Funds
Land - Aspen land / Kali / RJM $ 2,774,500
Construction Loan – First security Bank $12,685,000
Gap in Financing $ 687,597 Total $16,147,097
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BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
Uses of Funds
Land Fair Market Value $ 2,774,500
Soft Cost* $ 2,921,171
Hard Cost (See Development Budget Below) $10,451,426 Total Uses of Funds $16,147,097
*Engineering, Architecture, Planning, Permitting, Carrying Cost, Marketing, Relocation etc.
Development Budget | Financial Commitments
Budget of TIF Eligible Expenses
Impact Fees $ 225,000 Demolition (Included in Line Item #2 Above) $ 250,000 Relocation Fee* $ 75,600
Northwestern Energy $ 25,000
Fiber Optics $ 25,000 Side Walks/ Curb/ Gutter/Alley** $ 159,262
Estimated Total $ 759,862
*See the letter (shown above) to residents of the Sunset Hills Mobile Home Park.
** See the spreadsheet below.
195
BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST
196
Aspen Crossing at Midtown
Tax Increment Analysis
November 27, 2018
Prepared by:
Andy Parks, CPA
Leland Consulting/GEL Oregon, Inc.
on behalf of the City of Bozeman Economic Development Department
Summary
Applicant plans to expand existing business with new mixed used commercial/residential development that
links North 7th and downtown Bozeman - 2.14 acre B-2M zoned propety.
Applicant plans to invest approximately $13.3 million and is requesting $759,862 from the Agency.
The following schedule summarizes our findings of our analysis.
Estimated construction costs to complete project 13,029,045$
Estimated capitalized interest 343,552
Less: 2017 market value per assessor
(improvements only)
parcel 1 (RGG3862) - retained as project expands
on existing improvements - does not appear to
demolish on this parcel -
parcel 2 (RGG3709)91,542
parcel 3 (RGG2844)93,770
Net estimated increase in value 13,187,285
Estimated net increase in taxable value 249,240
TIF tax rate - estimated - FY 2022 710.93
Estimated incremental taxes (TIF) - annual 177,191
TIF investment 759,862 or 687,597 funding gap per sources/uses
ROI - estimated 23.3%
Estimated payback period (years)5.0 assumes 5.0% interest rate on advanced amount
Private investment to public investment 16.60 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 May-19
Estimated completion per application is approximately 14 months Aug-20 Occupancy August 2020
Increase in property taxes applicable fiscal year 2020
Construction Interest - estimated 343,552
12 month construction loan rate 5.00%Note: estimated commercial rate
Current property taxes -
Analysis has been performed to determine: Return on Investment (ROI), Estimated payback period and metrics related to
private to public sector investment
http://gis.gallatin.mt.gov/common/parcel_informati
on.aspx?tab=taxcode&taxID=RGG3097&geocodeid=0
6079801405070000
Greater than 10 to 1 - desired for multi-
family
Property valuation is limited to the cost approach, i.e., cost to complete project - real market value will likely differ.
Different valuation methods include but are not limited to; income approach, sales comparisons, and Capital Asset Pricing
Model.
http://gis.gallatin.mt.gov/common/parcel_informati
on.aspx?tab=taxcode&taxID=RGG3097&geocodeid=0
6079801405070000
http://gis.gallatin.mt.gov/common/parcel_informati
on.aspx?tab=taxcode&taxID=RGG3097&geocodeid=0
6079801405070000
197
Aspen Crossing at Midtown
Tax Increment Analysis
November 27, 2018
Estimated Financing Cost - Construction
Financing 12,685,000 Construction Financing
Month Amount Beg Month
Ending
Month
Months of
Interest
Estimated
Interest
1 906,071 13 49,079
2 906,071 12 45,304
3 906,071 11 41,528
4 906,071 10 37,753
5 906,071 9 33,978
6 906,071 8 30,202
7 906,071 7 26,427
8 906,071 6 22,652
9 906,071 5 18,876
10 906,071 4 15,101
11 906,071 3 11,326
12 906,071 2 7,551
13 906,071 1 3,775
14 906,071 - -
Estimated cost to complete 12,684,994 343,552
Note: Financing cost assues 14 month construction period, equal monthly expenditures throughout construction.
198
M E M O R A N D U M
To: David Fine, City of Bozeman
From: Brian Duffany and Tim Morzel, Economic & Planning
Systems
Subject: Bozeman URA TIF Request Review: Aspen Crossing
Date: November 29, 2018
This memorandum provides a summary of the analysis Economic &
Planning Systems (EPS) has completed relating to the request for tax
increment financing (TIF) for the Aspen Crossing development. EPS has
been contracted by the City of Bozeman to complete an evaluation of
developer requests for TIF and specifically evaluate key project
assumptions, such as construction costs, sales revenues, and operating
revenues and expenditures, as well as overall developer return. The
purpose of this analysis is to ensure that the assumptions presented by
a developer align with current market conditions and industry standards.
This memorandum provides an overview of the evaluation criteria, an
overview of the key inputs, and a summary of the key findings. The
detailed analysis and supporting tables are provided in the appendix of
this memorandum.
Approach
As part of the TIF application process, each development team is
required to submit a formal proposal that includes a project overview
and key project assumptions. These materials include a summary of the
development program, construction costs, eligible costs, sales revenues,
and ongoing revenue and expenditures assumptions. Using this
information as a starting point, EPS has structured a static and time
series pro forma that summarizes this information as well as a number
of other key project metrics such as project return. This analysis
evaluates the performance of each project on an unleveraged pre-tax
basis in order to evaluate the project fundamentals exclusive of the
unique equity and debt structure of each project.
199
Memorandum November 30, 2018
Bozeman TIF Review: Aspen Crossing Page 2
183082-MEMO-TIF Review-Aspen Crossing
Project Assumptions
This section provides a summary of the development assumptions submitted by the development
team and a comparison to current market conditions or industry standards.
Development Program
Location: NW Corner of N 5th Avenue and W Aspen Street
Parcel Area: 2.14 acres (93,218 square feet)
Stories: 3-stories
Total Building Area: 65,000 square feet
Commercial Program: The current proposal contemplates 43,333 square feet of commercial
space that is anticipated to make up the first and second floor. The first floor is contemplated as
fast casual dining or restaurant with a small amount of ancillary retail. The second floor is
contemplated as office space.
For-Sale Residential Condos: The third floor is contemplated to be occupied by 25 for-sale
condo units occupying roughly 21,667 square feet of space. The residential unit mix currently
contemplates 11 studio units, 12 1-bedroom units, and two 2-bedroom units.
Project Costs
Land Costs
Total: $2,774,500
Cost per Land SF: $30 per square foot
% of Total Costs: 17 percent of total
Comments: Land costs typically range from 10 to 20 percent of total project costs depending on
the development type and local market. At 17 percent of total, this project is within that range.
In addition, land costs at roughly $30 per square foot appear to be in align with other recent
transactions in this area.
Hard Costs
Total: $10,451,427
Cost per GBA: $161 per square foot
Comments: Average construction costs in the larger market area are estimated to range from
$110 to $150 per square foot. At $161 per square foot, this project falls just above that range.
However, the development team anticipates using higher quality finishes and steel construction,
which both increase overall construction costs.
Soft Costs
Total: $2,950,151
% of Hard Costs: 28.23 percent
Comments: Generally, soft costs for comparable projects typically range from 20 to 30 percent
of hard construction costs (vertical construction costs). At 28.23 percent of hard costs this
project is within that range.
200
Memorandum November 30, 2018
Bozeman TIF Review: Aspen Crossing Page 3
183082-MEMO-TIF Review-Aspen Crossing
For-Sale Revenues
Gross Revenue: $7,178,760
Comments: Sales values are currently estimated at an overall average of $281,520 per unit.
Smaller studio units are anticipated to be priced closer to $200,000 per unit and larger 1-
bedroom and 2-bedroom units are anticipated to be priced between $300,000 and $400,000 per
unit. In the City of Bozeman, prices for for-sale residential condo units generally range from the
mid-$200,000’s up to roughly $800,000 per unit. The market for condos at this location is
unproven and, as a result the somewhat lower anticipated sales prices appear to be reasonable.
Operating Revenue
Commercial Rental Rate: The 43,333 square feet of space that is contemplated as a mix of
commercial uses is currently anticipated to rent for $20 per square foot (NNN). Rental rates for
comparable space in downtown Bozeman are roughly $25 per square foot while rental rates for
office space outside of downtown can range from $16 to $18 per square foot. The proposed
commercial rental rates appear to be reasonable for this location.
Project Return
The performance of the project with and without a public investment is estimated by using two
primary criteria. The first is an evaluation of the overall project returns on an annual basis. This
approach relies on an evaluation of the projects Net Present Value (NPV) and Internal Rate of
Return (IRR). The second approach is based on a static (single point in time) evaluation of the
project’s total value and compares those to total construction costs. Although this approach is
generally less precise than the times series evaluation, it provides an additional test of overall
project feasibility. The purpose of this analysis is to provide an evaluation of the feasibility of the
project with and without a potential public investment.
Overall Project Return
The first method used to evaluate project return is an evaluation of the project’s internal rate of
return (IRR). Generally, the IRR is the percentage rate earned on each dollar invested for each
period it is invested. The IRR is typically used by investors to compared alternative investments
based on their potential rate of return. Mathematically, the IRR is the discount rate that makes
the net present value (NPV) of a project equal to zero. The NPV is the estimated value of all
future cash flows of an investment discounted to the present. The NPV of a given series of cash
flows is heavily dependent on an investor’s discount rate, which reflects an individual investor’s
opportunity cost of capital. In other words, an investor’s discount rate reflects their expected
rate of return for investments with a comparable level of risk.
For the purpose of this analysis, the discount rate is used as a hurdle rate in determining an
appropriate rate of return for a given project. When determining appropriate discount it is
important to consider the following rates when building up to a project discount rate.
Inflation rate
Riskless rate of return (typically U.S. 10-Year Treasury Note rate of return)
General real estate risk (timing and market cycle risk)
Product type risk (i.e. multifamily, retail, office, etc.)
Market risk (geographic specific)
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In addition to an evaluation of these rates EPS referenced published data documenting discount
rates in the western U.S. Finally, in determining an appropriate discount rate for this specific
property EPS considered the following project specific factors:
Program – The amount of commercial development including both restaurant and office
space was an important factor in determining an appropriate discount rate. Generally,
commercial uses such as retail and office warrant a higher discount rate than multifamily
uses. While for-sale condo development at this scale is less risky in Bozeman as a whole, it
remains untested in the area surrounding the project.
Project Location – While this site is only a short drive from downtown Bozeman, the area is
still relatively untested for the uses proposed for development and this project would
represent an initial test of an unproven market, which results in added risk and warrants a
higher discount rate.
Market Cycle – The nation and generally the local real estate market has experienced nearly
10 straight years of year-over-year growth. In most real estate markets there is a natural
cycle of expansion and contraction that typically ranges from seven to 10 years. Given the
fact that Bozeman is likely at the tail end of this cycle or nearing a phase of oversupply,
there is additional risk associated with the timing of the market.
Without public investment the project achieves an internal rate of return of 8.08 percent. The
factors outlined above and the risks associated with this type of project, at this location, and in
this phase of the real estate cycle warrant a discount rate of 9.25 percent (1.5 percent above the
capitalization rate, below). While this estimate is somewhat subjective, it reflects a variety of
current market conditions and risk factors. In order to achieve an internal rate of return of 9.25
percent the project requires nearly $850,000 in public investment.
Static Project Feasibility
Evaluating the project from a static (i.e. single point in time) perspective provides an evaluation
of a given project’s feasibility. This method relies on a comparison of the total project costs to a
given project’s total estimated value. For the Aspen Crossing project, total value is calculated by
summing the value of the condominium units and adding the estimated value of the commercial
space. The value of the commercial space is calculated by using an estimated capitalization rate
at stabilization. The capitalization rate (cap rate) is relatively straight forward metric that reflects
a project’s net operating income (NOI) and perceived value. Mathematically the cap rate is
calculated by dividing a project’s stabilized NOI by its actual sales value.
For this project a cap rate of 7.75 percent is estimated to be reasonable from a review of market
data in the western U.S. The cap rate for the Aspen Building should be higher than the Rue
Building in EPS’ opinion due to the mix retail and office uses which are trading at higher cap
rates than rental residential in the current market. This results in a total valuation for the
commercial space of $9.47 million. Adding the estimated value of the commercial space to the
net revenues from the condo sales of $6.62 million and subtracting the total construction costs of
$16.34 million, results in a total project gap of $254,000.
Project Request
The developers of the Aspen Crossing project are requesting $759,862 in public investment in
order to fund project specific eligible costs. Based on the two methodologies outlined above, EPS
estimates that the project funding gap ranges from $254,000 to $850,000. The developer
request is within this range.
202
Prepared for:
City of Bozeman
Prepared by:
Economic & Planning Systems, Inc.
Date:
November 27, 2018
EPS #183082
Financial Model
TIF Request Review:
Aspen Crossing
203
TIF Request Review: City of Bozeman
12/3/2018
Table 1
Project Summary and Key Assumption Sensitivity
TIF Request Review: Aspen Crossing
Description Amount Developer
Low High
KEY ASSUMPTIONS
Revenue Assumptions
Commercial Rental Rate $20.00 NNN $18.00 $22.00 $20.00 Inside
Multifamily Rental Rate N/A per square foot $1.25 $1.55 N/A N/A
Condo Sales Value $281,520 per unit $275,000 $325,000 $281,520 Inside
Cost Assumptions
Land Cost 16.98%% of total cost 10% 20%16.98%Inside
Hard Construction Costs $161 per GBA $110 $150 $161 Higher
Soft Construction Costs 28.23%% of HC 20% 30%28.23%Inside
Total Construction Cost $251 per GBA $200 $250 $251 Higher
Return Assumptions
Overall Project Discount Rate 9.25%project discount rate
Commercial Cap Rate 7.75%Commercial capitalization rate, used to determine static value
Multifamily Cap Rate N/A MF capitalization rate, used to determine static value
PROJECT SUMMARY
Total Cost land, infrastructure, hard, and soft
Total Condo Sale Revenue net revenues
Capitalized Commercial Value
Capitalized Multifamily Value N/A
Stabilized Commercial NOI at year 4
Stabilized Multifamily NOI N/A
Commercial Disposition Revenue at year 10
Multifamily Disposition Revenue at year 10
PROJECT GAP
Developer Request as stated in application
Static Estimate total revenues/value less cost
Time Series Estimate discount rate hurdle
Sensitivity Analysis
Time Series Estimate: Commercial Rental Rate
-849,938 8.75% 9.00% 9.25% 9.50% 9.75%
$16.20 -$2,327,214 -$2,474,391 -$2,618,545 -$2,759,751 -$2,898,082
$18.00 -$1,460,238 -$1,622,187 -$1,780,784 -$1,936,112 -$2,088,254
$20.00 -$496,931 -$675,294 -$849,938 -$1,020,958 -$1,188,445
$22.00 $466,375 $271,600 $80,908 -$105,804 -$288,636
$24.20 $1,526,012 $1,313,183 $1,104,838 $900,865 $701,154
Static Estimate: Commercial Rental Rate and Cap Rate
-253,762 7.25% 7.50% 7.75% 8.00% 8.25%
$16.20 -$1,523,458 -$1,796,655 -$2,052,227 -$2,291,825 -$2,516,902
$18.00 -$612,802 -$916,354 -$1,200,322 -$1,466,542 -$1,716,628
$20.00 $399,039 $61,758 -$253,762 -$549,562 -$827,435
$22.00 $1,410,879 $1,039,871 $692,799 $367,419 $61,758
$24.20 $2,523,904 $2,115,795 $1,734,015 $1,376,097 $1,039,871
Condo Sales Prices
-849,938 8.75% 9.00% 9.25% 9.50% 9.75%
$228,031 -$1,675,898 -$1,851,556 -$2,023,509 -$2,191,850 -$2,356,670
$253,368 -$1,117,440 -$1,294,379 -$1,467,607 -$1,637,217 -$1,803,300
$281,520 -$496,931 -$675,294 -$849,938 -$1,020,958 -$1,188,445
$309,672 $123,578 -$56,208 -$232,269 -$404,699 -$573,590
$340,639 $806,137 $624,787 $447,167 $273,186 $102,751
Time Series Estimate: Construction Hard Cost
-849,938 8.75% 9.00% 9.25% 9.50% 9.75%
$130 $1,488,840 $1,310,478 $1,135,833 $964,813 $797,326
$145 $548,211 $369,849 $195,205 $24,185 -$143,302
$161 -$496,931 -$675,294 -$849,938 -$1,020,958 -$1,188,445
$177 -$1,542,074 -$1,720,436 -$1,895,080 -$2,066,101 -$2,233,588
$195 -$2,691,731 -$2,870,093 -$3,044,737 -$3,215,758 -$3,383,245
Source: Economic & Planning Systems
\\EPSDC02\Proj\183082-Bozeman MT P3 Development Analysis\Models\[183082-MODEL-Aspen Crossing-11-21-2018.xlsm]T-Summary
-$253,762
-$849,938
7.75% cap rate
$786,464
$0
$10,874,259
$0
-$759,862
Market Range
-$16,335,086
$6,615,720
$9,465,605
$0
Sales PriceProject Discount Rate
Cost per sfCommercial Cap Rate
NNN NNN
Project Discount Rate
Project Discount Rate
Economic & Planning Systems 2 of 8204
TIF Request Review: City of Bozeman
12/3/2018
Table 2
Eligible Costs Summary
TIF Request Review: Aspen Crossing
Description Amount % of Total
Impact Fees $225,000 29%
Demolition $250,000 32%
Relocation Fee $104,580 13%
Northwestern Energy $25,000 3%
Fiber Optics $25,000 3%
Side Walks/Curb/Gutter/Alley $159,262 20%
TOTAL $788,842 100%
% of Total Project Cost 4.8%
Source: Development Team; Economic & Planning Systems
\\EPSDC02\Proj\183082-Bozeman MT P3 Development Analysis\Models\[183082-MODEL-Aspen Crossing-11-21-2018.xlsm]T-Elig Costs
Economic & Planning Systems 3 of 8205
TIF Request Review: City of Bozeman
12/3/2018
Table 3
Development Program
TIF Request Review: Aspen Crossing
Description Units Square Feet % of Total Revenue Assumptions
COMMERCIAL NNN ($/sf)
Office N/A N/A N/A N/A
Retail N/A N/A N/A N/A
Flex N/A N/A N/A N/A
Other N/A N/A N/A N/A
Subtotal N/A 43,333 67% $20.00
RESIDENTIAL
Ownership (Condos)Sale Price ($/unit)
1-Bed N/A N/A N/A N/A
2-Bed N/A N/A N/A N/A
3-Bed N/A N/A N/A N/A
4-Bed N/A N/A N/A N/A
Total 25 21,667 33% $281,520
Rental (Apts.)Rental Revenue ($/sf)
1-Bed 0 0 0% N/A
2-Bed 0 0 0% N/A
3-Bed 0 0 0% N/A
4-Bed 0 0 0%N/A
Total 0 0 0% N/A
TOTAL 25 65,000 100%
Source: Development Team; Economic & Planning Systems
\\EPSDC02\Proj\183082-Bozeman MT P3 Development Analysis\Models\[183082-MODEL-Aspen Crossing-11-21-2018.xlsm]T-Program
Economic & Planning Systems 4 of 8206
TIF Request Review: City of Bozeman
12/3/2018
Table 4
Development Costs
TIF Request Review: Aspen Crossing
Description Quantity Allocation per GBA Total % of Total
LAND COSTS
Land 2,774,500$ 17.0%
Land Costs 2,774,500$ 17.0%
TOTAL LAND COST 2,774,500$ 17.0%
Horizontal Development Costs
North Site 13,216 sf $10,543.77 total $8.05 per sf 106,440$ 0.7%
City Sidewalk 10,315 sf $7,088.32 total $6.25 per sf 71,557$ 0.4%
City Curb & Gutter 967 sf $2,179.59 total $20.50 per sf 22,003$ 0.1%
Street Patch 1,934 sf $1,275.86 total $6.00 per sf 12,880$ 0.1%
South Site 1,434 sf $1,859.09 total $9.00 per sf 12,912$ 0.1%
City Sidewalk 978 sf $1,028.15 total $6.25 per sf 7,141$ 0.0%
City Curb & Gutter 152 sf $524.13 total $20.50 per sf 3,640$ 0.0%
Street Patch 304 sf $306.81 total $6.00 per sf 2,131$ 0.0%
Alley Paving 8,624 sf $0.00 total $4.60 per sf 39,657$ 0.2%
Total Costs 8,624 sf $3,953.53 total $4.14 per sf 39,657$ 0.2%
TOTAL HORIZONTAL CONSTRUCTION COSTS 159,009$ 1.0%
Vertical Development Costs
Direct Construction Costs $145.00 per GBA 9,425,040$ 57.7%
General Conditions $11.95 per GBA 776,589$ 4.8%
Excavation - Building Only $6.80 per GBA 442,260$ 2.7%
Concrete $5.63 per GBA 365,820$ 2.2%
Masonry $10.33 per GBA 671,580$ 4.1%
Steel $2.69 per GBA 174,785$ 1.1%
Wood - Structure & Finishes $32.96 per GBA 2,142,311$ 13.1%
Thermal & Moisture Protection $7.46 per GBA 484,836$ 3.0%
Doors & Windows $11.95 per GBA 776,623$ 4.8%
Finishes (Pain, Flooring, etc)$15.50 per GBA 1,007,509$ 6.2%
Specialties $0.46 per GBA 29,608$ 0.2%
Equipment $3.28 per GBA 213,203$ 1.3%
Furnishings $0.80 per GBA 52,001$ 0.3%
Special Construction $0.00 per GBA -$ 0.0%
Conveying Systems $3.99 per GBA 259,350$ 1.6%
Mechanical $19.01 per GBA 1,235,560$ 7.6%
Electrical $12.20 per GBA 793,004$ 4.9%
Indirect Construction Costs $15.79 per GBA 1,026,387$ 6.3%
Preconstruction Fee $0.00 per GBA -$ 0.0%
Construction Fee $7.25 per GBA 471,252$ 2.9%
General Liability Insurance $1.29 per GBA 83,883$ 0.5%
Bond $0.00 per GBA -$ 0.0%
Gross Receipts Tax $0.00 per GBA -$ 0.0%
Construction Contingency $7.25 per GBA 471,252$ 2.9%
TOTAL VERTICAL CONSTRUCTION COSTS $161 per GBA 10,451,427$ 64.0%
Soft Costs
General Soft 2,950,151$ 18.1%
Engineering, Arch, Planning, Permitting, Carrying Cost, Marketing, Relocation, etc. $45.39 per GBA 2,950,151$ 18.1%
TOTAL SOFT COSTS $45 per GBA 2,950,151$ 18.1%
TOTAL PROJECT COST $251 per GBA 16,335,086$ 100.0%
Source: Development Team; Economic & Planning Systems
\\EPSDC02\Proj\183082-Bozeman MT P3 Development Analysis\Models\[183082-MODEL-Aspen Crossing-11-21-2018.xlsm]T-Cost
Economic & Planning Systems 5 of 8207
TIF Request Review: City of Bozeman
12/3/2018
Table 5
Operating Revenues and Expenditures
TIF Request Review: Aspen Crossing
Building Area Area % of Total
Net Rentable Area 43,333 sf 100.0%
Common Area N/A sf 0.0%
Total Residential GSF 43,333 sf 100.0%
Type Rentable SF Lease Rate Total Revenue % of Total
per year Annual
REVENUE
Rental Income 43,333 rentable sf 866,660$ 100.0%of PGI
All Retail and Office Space 43,333 rentable sf 20.00$ per year 866,660$ 100.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
[Blank]0 rentable sf -$ per year -$ 0.0%of PGI
Average 43,333 sf 20.00$ per month
Other Income -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
[Blank]0 unit -$ per month -$ 0.0%of PGI
POTENTIAL GROSS INCOME (PGI)866,660$ 100.0%of PGI
Less: Vacancy 10.0%per year (86,666)$ -10.0%of PGI
EFFECTIVE GROSS INCOME (EGI)779,994$ 90.0%of PGI
EXPENDITURES
Operating Expenditures 0.90$ per RBA Adjustment (39,000)$ 5.0%of EGI
Property Taxes -$ per RBA 100%% of total -$ 0.0%of EGI
Insurance -$ per RBA 100%% of total -$ 0.0%of EGI
Utilities -$ per RBA 100%% of total -$ 0.0%of EGI
CAM -$ in general OPEX 100%% of total -$ 0.0%of EGI
Property Management Fee (% of Gross Rev)5.0%% of EGI 100%% of total (39,000)$ 5.0%of EGI
General Operating Expenses -$ per RBA 100%% of total -$ 0.0%of EGI
[BLANK]-$ -$ 0.0%of EGI
[BLANK]-$ -$ 0.0%of EGI
[BLANK]-$ -$ 0.0%of EGI
[BLANK]-$ -$ 0.0%of EGI
[BLANK]-$ -$ 0.0%of EGI
NET OPERATING INCOME (NOI)17.10$ per GSF 740,994$ 95.0%of EGI
Asset Management Fee (% of NOI)1.0%% of NOI 100%% of total (7,410)$ 1.0%of EGI
NET CASH FLOW 16.93$ per GSF 733,584$ 94.1%of EGI
PROJECT COST (excluding condos)251.31$ per GSF 10,889,974$
RETURN ON COST (ROC)6.74%
Reserves (Annual/ unit)2,500.00$ per unit 100%% of total (40,000)$ 5.1%of EGI
PROJECT VALUE
ESTIMATED PROJECT VALUE 7.75%cap rate 9,465,605$
PER NSF 218.44$
PER GSF 218.44$
Source: Development Team; Economic & Planning Systems
\\EPSDC02\Proj\183082-Bozeman MT P3 Development Analysis\Models\[183082-MODEL-Aspen Crossing-11-21-2018.xlsm]T-Operating
Economic & Planning Systems 6 of 8208
TIF Request Review: City of Bozeman
12/3/2018
Table 6
Condo Revenue Estimate
TIF Request Review: Aspen Crossing
Description Amount
Gross Revenue
Total Units 25
Revenue per Unit $281,520
Total Revenue $7,038,000
Taxes
Tax Rate [1] 0.00%
Total Taxes $0
Sales Commissions
Commissions Rate 6.0%
Total Commissions -$422,280
NET CONDO REVENUE $6,615,720
Source: Development Team; Economic & Planning Systems
[1] This analysis is an evaluation of returns before taxes and
debt and as a result does not account for the estimated
taxes that the developer will have to pay.
\\EPSDC02\Proj\183082-Bozeman MT P3 Development
Analysis\Models\[183082-MODEL-Aspen Crossing-11-21-2018.xlsm]T-
Condos
Economic & Planning Systems 7 of 8209
TIF Request Review: City of Bozeman12/3/2018Table 7Development Revenues and Expenditures TIF Request Review: Aspen CrossingKEY ASSUMPTIONSProject Timing Project DispositionConstruction Period12 monthsCommercialYear 10Condo Absorption Period12 monthsMultifamilyYear 10Vacancy Commercial ResidentialYear 130.0% 30.0%Year 220.0% 20.0%Year 310.0% 10.0%Stabilization10.0% 10.0%DescriptionFactor EscalationTotal Year 0 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15DEVELOPMENT COSTSConstruction Cost -$16,335,086 -$16,335,086 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Land$2,774,5002.0%-$2,774,500 -$2,774,500 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Horizontal Development Costs$159,0092.0%-$159,009 -$159,009 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Vertical Development Costs$10,451,4272.0%-$10,451,427 -$10,451,427 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Soft Costs$2,950,1512.0%-$2,950,151 -$2,950,151 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Total Commercial Costs -$16,335,086 -$16,335,086 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0NET OPERATING INCOMECondo Sales $6,748,034 $0 $6,748,034 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Gross Revenue$7,038,0002.0%$7,178,760 $0 $7,178,760 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Taxes Condo Sales0.0% N/A$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Sales Commissions6.0% N/A-$430,726 $0 -$430,726 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Commercial Net RevenuePotential Gross Income$866,6601.5%$20,340,963 $0 $879,660 $892,855 $906,248 $919,841 $933,639 $947,644 $961,858 $976,286 $990,930 $1,005,794 $1,020,881 $1,036,194 $1,051,737 $1,067,513 $1,083,526Vacancy Loss -$2,299,314 $0 -$263,898 -$178,571 -$90,625 -$91,984 -$93,364 -$94,764 -$96,186 -$97,629 -$99,093 -$100,579 -$102,088 -$103,619 -$105,174 -$106,751 -$108,353Effective Gross Income$18,041,649$0 $615,762 $714,284 $815,623 $827,857 $840,275 $852,879 $865,672 $878,657 $891,837 $905,215 $918,793 $932,575 $946,564 $960,762 $975,174Operating Expenditures-$39,0001.5%-$915,343 $0 -$39,585 -$40,178 -$40,781 -$41,393 -$42,014 -$42,644 -$43,284 -$43,933 -$44,592 -$45,261 -$45,940 -$46,629 -$47,328 -$48,038 -$48,759Commercial Net Operating Income $17,126,306 $0 $576,177 $674,105 $774,842 $786,464 $798,261 $810,235 $822,389 $834,725 $847,245 $859,954 $872,853 $885,946 $899,235 $912,724 $926,415Multifamily Net RevenuePotential Gross Income$01.5%$0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Vacancy Loss $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Effective Gross Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Operating Expenditures$01.5%$0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Multifamily Net Operating Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0DISPOSITION REVENUEGross Revenue $11,096,182 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $11,096,182 $0 $0 $0 $0 $0Commercial7.8% cap rate$11,096,182$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $11,096,182 $0 $0 $0 $0 $0MultifamilyN/A$0$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Cost of Sale -$221,924 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -$221,924 $0 $0 $0 $0 $0Commercial2.0%-$221,924 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 -$221,924 $0 $0 $0 $0 $0Multifamily2.0%$0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Commercial Net Sale Revenue $10,874,259 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,874,259 $0 $0 $0 $0 $0Multifamily Net Sale Revenue $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0PROJECT CASH FLOWSNet Project Cash Flows $9,071,605 -$16,335,086 $7,324,212 $674,105 $774,842 $786,464 $798,261 $810,235 $822,389 $834,725 $847,245 $11,734,213 $0 $0 $0 $0 $0Construction Costs -$16,335,086 -$16,335,086 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Condo Sales $6,748,034 $0 $6,748,034 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Commercial Operating Income $7,784,398 $0 $576,177 $674,105 $774,842 $786,464 $798,261 $810,235 $822,389 $834,725 $847,245 $859,954 $0 $0 $0 $0$0Multifamily Net Operating Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Commercial Disposition Income $10,874,259 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $10,874,259 $0 $0 $0 $0 $0Multifamily Disposition Income $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0Net Present Value9.25%-$849,938 -$16,335,086 $6,704,084 $564,787 $594,222 $552,069 $512,906 $476,521 $442,718 $411,312 $382,134 $4,844,395 $0 $0 $0 $0 $0Internal Rate of Return 8.08%Source: Economic & Planning Systems\\EPSDC02\Proj\183082-Bozeman MT P3 Development Analysis\Models\[183082-MODEL-Aspen Crossing-11-21-2018.xlsm]T-Time SeriesEconomic & Planning Systems8 of 8210