HomeMy WebLinkAbout04-22-19 City Commission Packet Materials - A3. Res 5030, Approving a Project in the NURD as an Urban Renewal Project
Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: David Fine, Urban Renewal Program Manager SUBJECT: Resolution 5030 – A Resolution Approving a Project in the Northeast 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 Cottonwood and Ida MEETING DATE: April 22, 2019 AGENDA ITEM TYPE: Action RECOMMENDATION: Adopt Resolution 5030.
RECOMMENDED MOTION:
Incorporating the information and findings in 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 5030. BACKGROUND: The Applicant for Cottonwood and Ida, Bangtail Partners, LLC, submitted an application for TIF assistance to the Northeast Bozeman Urban Renewal Board (NEURB). The Staff Report for the Cottonwood and Ida Planned Unit Development (PUD), presented to the Bozeman City Commission on March 25, 2019, describes the project.
The development proposes a mix of uses including apartment buildings, an
office building, a mixed-use building including artisan manufacturing and a
restaurant building. The proposal include four buildings. The largest building
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includes apartments, 64 units, and offices, 29,700 sq. ft., separated horizontally over an underground parking structure consisting of 96 parking spaces. The other buildings on site include a 12 unit apartment building, a mixed use
building with artisan manufacturing, 5,400 sq. ft. with 16 units mixed into the
building and one 2,150 square foot commercial restaurant building.1 The NEURB considered the application at their regular meeting on March 5, 2019 regular meeting and voted unanimously, pursuant to NEURB Resolution 2019-01 (Attached), to “authorize Economic Development Staff to negotiate a Development Agreement with the Developer and make reports and recommendations to the City Commission regarding the Development Agreement, infrastructure reimbursement, and other appropriate incentives.” The NEURB also recommended that the City Commission approve Cottonwood and Ida as an Urban Renewal Project. Resolution 5030 designates Cottonwood and Ida as an Urban Renewal Project and authorizes the City Manager to sign the proposed Development Agreement. Additionally, the Resolution approves using tax increment revenues, or proceeds of tax increment revenue bonds, to pay or reimburse Bangtail Partners, LLC, as the Developer of the project for certain Eligible Costs totaling $2,169,228 including public infrastructure, 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 agrees to reimburse the Developer for the Eligible Costs only after the project receives a Certificate of Occupancy showing its completion. Based on existing bond obligations, most of the value of the existing increment is already pledged to servicing the first series of bonds. The project itself, therefore, will need to create sufficient tax increment to cover debt service on bonds that would be issued to reimburse the Applicant for the Eligible Costs. NORTHEAST BOZEMAN URBAN RENEWAL DISTRICT PLAN FINDINGS: Urban renewal projects in the Northeast Urban Renewal District (the “District”) should be evaluated for their consistency with the Northeast Bozeman Urban Renewal District Plan (the “Plan”) and its principles. The Bozeman City Commission adopted the Plan by Ordinance in 2005. The Plan includes nine principles to guide redevelopment efforts. These principles, as required by statute, focus on mitigating blighting conditions in the urban renewal area. This Commission Memorandum includes staff findings for all nine principals of the Plan in relation to relevant goals and implementation actions for those principles. 1 18516 Staff Report for the Cottonwood and Ida Planned Unit Development PUD, March 13, 2019
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Principle 1: Ensure the health, safety, and security of the District.
Goal A: Outdated or insufficient infrastructure should be repaired, replaced, or
otherwise improved.
Goal B: Encourage a land use pattern that facilitates all modes of transportation –
vehicular, bicycle, pedestrian, mass transit, and commercial – for safe, efficient, and
convenient access for residential, commercial, and industrial uses. The Project makes significant upgrades to public infrastructure within the District including significant water and sanitary main upgrades, and bringing East Cottonwood St., Ida Ave., and East Aspen St. up to modern street standards. Sidewalks will be included on all street frontages of the Project. The Project also will improve the safety of the traffic flow on Front St. by changing the traffic flow adjacent to the Depot and the boulder park to one-way and adding parking for the park.
Principle 2: Balance commerce and livability in the District with the mixed-use
framework.
Implementation Actions:
• Assure compatibility of land uses through appropriate urban design techniques.
• Encourage affordable housing The Project provides a mix of uses that includes 93 housing units, office space, artisan manufacturing, small studios and maker spaces, and a small restaurant. Seven of the housing units will be managed by HRDC at affordable rates (70% Area Median Income).
Principle 3: Honor the unique character and vitality of the District
Goal A: New structures should be designed and built keeping in mind public values of
durability, flexibility, and simplicity. Thoughtful consideration of design, materials, and massing in the construction of new private buildings will add strength and character to the built environment. To the degree that the private sector can be influenced by a public partner in development, the community ought to strongly encourage excellence in urban design as the basis of a partnership.
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The Bozeman City Commission recently approved a preliminary planned unit development (PUD) for the Cottonwood and Ida mixed-use project. The PUD process allows a developer to receive development code flexibility in exchange for design excellence.
Principle 4: Public open space is essential to a healthy and appealing urban
environment. Staff concurs with the Applicant. The Project “addresses the need for public open space that contribute to the health and appeal of the urban environment. This project creates over 18,000 SF of multiple public open spaces and provides improvements to adjacent greenways.” Principle 5: The costs of projects and programs shall be weighed against their benefits to the District. The requested incentive is primarily in the form of reimbursement for public infrastructure that benefits the District and the public at large. Based on a tax generation analysis prepared by Leland Consulting Group at the request of the City (attached), the project is expected to generate $355,919 in annual incremental taxes, which would allow for payback of the $2,169,228 incentive in under 8 years, which leaves significant additional new tax increment for making other investments in the District.
Principle 6: Private property shall not be acquired for other private use through the eminent domain process in the implementation of any aspect of this plan. Eminent domain is not a component of this project. Principle 7: The City shall not limit is vision for the District improvements to monies available solely through the TIF funding. Goal: Encourage the City to help ensure the success of the NE Urban Renewal Plan by
giving a high priority to the NE District in its capital improvements plan. In the proposed Development Agreement, the Applicant agrees to construct the infrastructure improvements and pay related impact fees using their own sources of funds. The incentive funds will be provided on a reimbursement basis, only when the project generates adequate new tax revenue to support debt service for a revenue bond to make the reimbursement.
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Principle 8: Projects shall consider impacts on adjacent neighborhoods.
Goal: Work with neighborhoods and businesses to ensure actions taken in the District
are compatible with adjacent developed areas. The Applicant gave extraordinary attention to considering public opinion and neighborhood context for this project. The team organized an effort through the American Institute of Architects (AIA) to bring an AIA Rural/ Urban Design Team (R/UDAT) to Bozeman to facilitate significant public engagement and visioning work for the northeast area. The team also engaged the public throughout the design process and made substantive modifications to their design in response to that feedback. The Applicant also discussed the Project several times with the NEURB. Principle 9: The City shall consider the impact on the District of all projects undertaken outside the District. Principle 9 is not applicable to this project as the Project is taking place entirely within the District.
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. These findings are included in Resolution 5030 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;
• No persons will be displaced from their housing by this project. b. The Plan and the Project conform to the Bozeman Community Plan or parts thereof for the City as a whole;
• Yes. The Staff Report for the Cottonwood and Ida Planned Unit Development included the finding that the Project conformed to the Bozeman Community Plan (“Growth Policy”). The Bozeman City Commission accepted the findings in that Staff Report during their March 25, 2019 meeting.
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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;
• Yes. The project represents a $34.8 million investment in the District by private enterprise into a largely vacant site, surrounded by inadequate or deteriorating public infrastructure. 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
• Yes. The project is anticipated to create more than adequate new tax revenue to support the incentive payment. e. The Project constitutes an urban renewal project within the meaning of the Act and the Plan.
• This Commission Memorandum proposes findings that the project conforms to the Northeast Bozeman Urban Renewal Plan, which was adopted by the Bozeman City Commission as an Urban Renewal Plan pursuant to the Act.
FISCAL EFFECTS:
The Development Agreement stipulates that the City will reimburse the Developer for Eligible Costs not to exceed $2,169,228, under certain conditions. Leland Consulting completed a tax generation analysis for the project. According to their review, the project would produce net new annual tax revenues of $355,919, which would allow TIF assistance for incentives to be paid back in under 8 years (assumes a 5% interest rate on the advanced amount) for new increment-based payback if assistance is provided at the staff recommended amount. This agreement would likely be reflected in proposed work plan and budget requests for Fiscal Year 2021 or 2022.
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ATTACHMENTS:
• Resolution 5030
• Development Agreement (Cottonwood and Ida)
• Leland Consulting Tax Increment Analysis
• NEURD Resolution 2019-01, as amended
• Cottonwood and Ida, TIF Assistance Application LINKS:
• Ordinance 1655: Northeast Bozeman Urban Renewal Plan (2005)
• 18516 Staff Report for the Cottonwood and Ida Planned Unit Development PUD, March 13, 2019
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Page 1 of 8
RESOLUTION NO. 5030
A RESOLUTION APPROVING A PROJECT IN THE NORTHEAST 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
COTTONWOOD AND IDA
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. 1655, adopted on November 28, 2005 (the
“Ordinance”), the City created the Northeast Urban Renewal District (the “District”) as an urban
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Resolution 5030, Designating Cottonwood and Ida as an Urban Renewal Project
Page 2 of 8
renewal district and approved the Northeast 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 25, 2019, the Commission adopted Resolution No. 5029, calling a public
hearing to approve the construction of a mixed-use development consisting of residential housing;
office, retail and artist/maker spaces; parking; public plaza spaces, greenways and/or pavilions;
and related public infrastructure improvements, including sidewalks, bike lanes, street
improvements and utility improvements (collectively, 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 by Cottonwood and Ida, LLC, as developer of the
Project (the “Developer”), for certain eligible costs thereof, including the public infrastructure
improvements and impact fees (the “Eligible Costs”).
1.04. On April 15, 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
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 3
Findings.
The Commission hereby finds with respect to the Project as follows:
a. no persons will be displaced from their housing by the Project;
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Resolution 5030, Designating Cottonwood and Ida as an Urban Renewal Project
Page 3 of 8
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.
Section 4
Development Agreement; Use of Tax Increment.
4.01. The Northeast 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 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.
4.02. 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.
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Resolution 5030, Designating Cottonwood and Ida as an Urban Renewal Project
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Section 5
Reimbursement Expenditures.
5.01. 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
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.
5.02. 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.
5.03. 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 $2,169,228 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.
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Resolution 5030, Designating Cottonwood and Ida as an Urban Renewal Project
Page 5 of 8
5.04. 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
City’s budgetary and financial circumstances as they exist or are reasonably foreseeable on the
date hereof.
5.05. 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 22nd day of April, 2019.
___________________________________ CYNTHIA L. ANDRUS Mayor
ATTEST:
____________________________________
ROBIN CROUGH
City Clerk
APPROVED AS TO FORM:
___________________________________
GREG SULLIVAN City Attorney
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Resolution 5030, Designating Cottonwood and Ida as an Urban Renewal Project
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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. 5030, entitled: “RESOLUTION APPROVING A PROJECT IN THE
NORTHEAST 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 COTTONWOOD AND IDA” (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 April 22, 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 23rd day of April, 2019.
ROBIN CROUGH
City Clerk
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EXHIBIT A
Form of Development Agreement
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DEVELOPMENT AGREEMENT (Cottonwood and Ida)
This DEVELOPMENT AGREEMENT (this “Agreement”) is dated as of April 22, 2019
by and between BANGTAIL PARTNERS, LLC (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. 1655 adopted by the City Commission of the City (the “City Commission”) on November 28, 2005, the City has created
the Northeast Urban Renewal District (the “District”) as an urban renewal district and has
approved the Northeast 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 construction of a mixed-use
development consisting of residential housing; office, retail and artist/maker spaces; parking;
public plaza spaces, greenways and/or pavilions; and related public infrastructure improvements,
including sidewalks, bike lanes, street improvements and utility improvements, as described more particularly on Exhibit A hereto (the “Project”), on land in the District immediately to the
northwest of the intersection of East Cottonwood Street and North Ida Avenue, in Bozeman,
Montana, which is legally described on Exhibit B hereto (the “Land”);
WHEREAS, the Developer submitted to the Northeast 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 resolution adopted on March 5, 2019, 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. 5030 adopted on April 22, 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 $2,169,228, 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 fund a debt service reserve account, if necessary or appropriate, and to 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 April 22, 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 Cottonwood and Ida, LLC, 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 Northeast 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” means Ordinance No. 1655 adopted by the City Commission on November
28, 2005.
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“Original Resolution” means Resolution No. 4801 adopted by the City Commission on
May 22, 2017, pursuant to which the City issued the Series 2017 Bond.
“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.
“Series 2017 Bond” means the Tax Increment Urban Renewal Revenue Bond, Series
2017 (Northeast Urban Renewal District), issued in the principal amount of $1,446,000 pursuant
to the Original Resolution.
“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
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the delays of the other Party or its contractors, agents or employees in the performance of their
duties under or incident to this Agreement.
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
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 the Original Resolution, the City has issued and there is outstanding the Series 2017 Bond. In the Original Resolution, the City covenanted that it would not issue additional bonds payable on a parity with the Series 2017 Bond unless certain conditions are met,
including the requirement that the City have received Tax Increment (as adjusted in accordance
with the Original Resolution) in the last completed fiscal year in an amount equal to at least
110% of the maximum principal and interest requirements for any future calendar year with respect to outstanding bonds and the additional bonds proposed to be issued.
(c) Pursuant to Resolution No. 5030 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 $2,169,228.
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(d) The DOR has advised the City that the base taxable value (as defined in the Act)
of the District is $423,054.
(e) Based on the representations of the Developer, beginning in tax year 2022 (fiscal
year ending June 30, 2023), the completed Project is expected to have a market value of at least $37,027,833 and tax increment of at least $352,159.
(f) 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 a Montana limited liability company, 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 $35,300,000.
(d) 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.
(e) 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.
(f) 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.
(g) 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,
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which would be paid from Tax Increment, that the City’s ability to issue the Bonds is governed
in part by the terms of the Original Resolution, and that the City requires that the taxable value of
the Project be in an amount sufficient to produce adequate Tax Increment to issue the Bonds in
an amount that will pay or reimburse the Developer for the Eligible Costs and satisfy all other terms and conditions of the Original Resolution, including, without limitation, the additional bonds test and the funding of the Reserve Account. The Developer further acknowledges and
agrees the amount of Tax Increment is dependent upon a number of variables, including, without
limitation, the taxable value of the Project, the number of mills levied by Taxing Bodies, and
then-prevailing state laws regarding computation of Tax Increment, and that the City has no control over such variables. The Developer agrees that if Tax Increment in the amount required to issue the Bonds to pay or reimburse the Eligible Costs and satisfy all other terms and
conditions of the Original Resolution is not available to the City and/or, if the City, in its sole
discretion, determines that it cannot satisfy the conditions in the Original Resolution necessary to
issue the Bonds or 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.
(h) 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.
(i) 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 Original Resolution and the supplemental
bond resolution authorizing their issuance (such supplemental bond resolution, the “Bond Resolution”), including, without limitation, if the Parties agree, 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
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construction of the Project shall be completed by July 1, 2022, 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
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 [Planning Division], 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. Without limitation of the meaning of the foregoing, the
Developer acknowledges and agrees that the Project is scheduled to be reviewed as a planned
unit development (“PUD”) under the City’s municipal code and policies and procedures and
nothing contained in this MOU will have a bearing upon or affect the City’s review and, if
applicable, approval of the Project as a PUD. The City retains all powers and rights conferred upon it with regard to the PUD without any liability to or limitation on the City, including, but
not limited to, the right, within legal limits, to reject all or a portion of the Project or impose
conditions or limitations on the Project.
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
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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,
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.
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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.
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
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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. Walkaway Provision. The Developer shall have the option, in its sole discretion
and for any reason, to cease developing the Project and terminate this Agreement without penalty
at any time prior to the Developer submitting any request for reimbursement or payment to the
City (“walkaway provision”). If the Developer exercises this walkaway provision, this Agreement shall immediately terminate and all rights and obligations of the Parties under this
Agreement shall cease, except for those rights and obligations specifically identified in this
Agreement as surviving termination. If the Developer exercises this walkaway provision, the
Developer automatically waives any and all rights to reimbursement or payment from the City
under this Agreement. This walkaway provision shall not limit or prohibit any other rights, claims, or recourse outside of this Agreement that the City may have in connection with the
Project.
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 $[2,169,228]. Subject to the terms and conditions of the Original Resolution, the City may issue
the Bonds, in its sole discretion, to pay all or a portion of the Eligible Costs, to fund a deposit to
a debt service reserve account, if necessary or appropriate, and to pay Costs of Issuance. 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
City), and (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.
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(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 satisfy the conditions to the issuance of the Bonds set forth in the Original Resolution, pay the debt service on the Bonds as and when due, and, as applicable, to satisfy other requirements under the Original Resolution and/or the Bond
Resolution, such as funding a deposit to a debt service reserve account, 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 conditions set forth in the Original Resolution are met and that Tax Increment is and will be
sufficient to pay the Bonds timely, to satisfy the requirements of the Original Resolution and/or
Bond Resolution, and to satisfy all other financial obligations related to the District.
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 Developer Certificate 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
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.
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(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 $2,169,228, 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.
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
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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
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
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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.
(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.
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(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 8.3, 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; provided that:
(i) the Developer may assign this Agreement to an entity in which [Bangtail
Partners, LLC], as presently constituted, owns a majority of the membership interests
without the written consent of the City if prior to the assignment, the Developer has
provided notice to the City of such assignment and evidence satisfactory to the City that
[Bangtail Partners, LLC], as presently constituted, owns a majority of the membership interests of the proposed assignee, and
(ii) the Developer may assign this Agreement to an unrelated third party with the
City’s prior written consent, which shall not be unreasonably withheld so long as the
Developer provides evidence satisfactory to the City that the proposed assignee is at least
as financially solvent as the Developer and has the financial capability or commitments to complete the Project.
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
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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.
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. The Developer and the City previously entered into a Memorandum of Understanding
with respect to the Project, dated as of June 5, 2018 (the “MOU”), in which the City and the
Developer stated their shared intention to enter into a definitive development agreement defining
the obligations of the Developer and the City in connection with the Project. This Agreement constitutes the development agreement referenced in the MOU, and expressly supersedes and
replaces the MOU. As of the effective date of this Agreement, the MOU shall be of no further
force or effect. 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
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With a copy to:
City of Bozeman
Attention: Urban Renewal Program Manager If to Developer:
Bangtail Partners, LLC
PO Box 10195 Palo Alto CA 94303
With a copy to:
Holly March Summers 517 S. 22nd Ave, Suite 1
Bozeman, MT 59718
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.
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19
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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20
IN WITNESS WHEREOF, the Parties hereto have caused this Development Agreement
to be executed as of the 22 day of April, 2019.
CITY OF BOZEMAN, MONTANA
By: _______________________________________
Printed Name: Andrea Surratt
Title: City Manager
[Signature Page to Development Agreement]
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21
BANGTAIL PARTNERS, LLC
By:
Name:
Title:
[Signature Page to Development Agreement]
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A-1
EXHIBIT A
PROJECT AND PROJECT COSTS
SUMMARY DESCRIPTION OF PROJECT: The project is to construct roughly 125,000 SF of space on a 90,000 SF site to accommodate 92
residential units, 30,000 SF of commercial space, a 96 unit below grade parking structure, public
plaza space and other associated landscape and site amenities. The project requires the
reconstruction and new construction of offsite infrastructure that includes the following. EAST ASPEN STREET
The entire right-of-way adjacent to the property is currently undeveloped. The proposal is to construct a
roadway, with sidewalk and other street improvements along the north and south side of the right-of-way. In
addition to the parking garage entry, the street will accommodate several parallel parking spaces, and a
loading zone. These improvements will also include underground public utilities such as new sewer water
and storm drain lines.
EAST COTTONWOOD STREET
The Northern half of the right-of-way adjacent to the project site will be improved. The intention is for the
proposed improvements to match the character of recent improvements directly across the street - with
sidewalk, street trees, and diagonal parking. This improvements will also include upgrades to existing public
water, sewer and storm drain facilities.
NORTH IDA AVENUE
The right-of-way adjacent to the project site will be improved with sidewalk, street trees, curb, and parallel
parking. Improvements will continue East across the Ida right-of-way up to, but not including, the opposite curb.
FRONT STREET PARKING IMPROVEMENTS
A parking lot will be constructed in the Front street right of way along the East side of the current boulder
park to provide parking for the park. CITY INFRASTRUCTURE IMPACT FEES
The project requires funds for the various impact fees the City levies for infrastructure needs and is included as part of the overall Infrastructure project costs.
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2
PROJECT COSTS:
Cottonwood & Ida Project
Development Budget Summary
Amount % of Total Project Cost
Site Acquistion $ 2,385,106 6.44%
Hard Costs
Vertical Construction $ 25,310,436
Offsite Construction $ 965,807
Onsite Construction $ 1,723,757
Contingency $ 1,400,000
Total Hard Costs $ 29,400,000 79.40%
Soft Costs
A&E $ 2,226,098
Financial $ 913,877
Fees $ 872,000
Pre-Opening Marketing & Leasing $ 70,000
FFE $ 70,000
Other Third Party Fees $ 564,000
Other Costs $ 277,098
Soft Cost Contingency $ 249,654
Total Soft Costs $ 5,242,727 14.16%
Total Project Costs $ 37,027,833 100.00%
Total Project Costs ..........................................................................................$37,027,833
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B-1
EXHIBIT B
LEGAL DESCRIPTION OF THE LAND
Parcel A: Lots 5 through 16, inclusive, all in Block 105 of The Northern Pacific Addition to The
City of Bozeman, Gallatin County, Montana. Together with the vacated alley, adjacent and
contiguous thereto, pursuant to Ordinance No 628, recorded July 29, 1991 in Film 117, page
1328,,according to the official plat thereof on file and of record in the office of the County Clerk and Recorder of Gallatin County, Montana. [Plat No. C-23]
Parcel B: Lots 17 through 28, inclusive, all in Block 105 of The Northern Pacific Addition to the
City of Bozeman, Gallatin County, Montana. Together with the vacated alley adjacent and
contiguous thereto, pursuant to Ordinance No. 628, recorded July 29, 1991 in Film 117, page 1328, according to the official plat thereof on file and of record in the office of the County Clerk and Recorder of Gallatin County, Montana.
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C-1
EXHIBIT C
ELIGIBLE COSTS
Summary Description of the Infrastructure Improvements:
Improvements to East Cottonwood Street, including replacing water
and sewer mains, new diagonal parking on the north side of Cottonwood Street, new concrete sidewalk, gravel base and asphalt paving patch for new water and sewer mains $544,842.12
Improvements to Ida Avenue, including new 31-foot asphalt street section with 1 ½-inch base course gravel and curb and cutter, new
sidewalk on west side 279,987.35
Improvements to East Aspen Street, including new water, sewer and storm drain mains; new water, sewer and fire service lines; new
manholes; new sidewalks on the north and south sides; new 35-foot
asphalt street section with 1 ½-inch base course gravel and curb and
gutter 590,950.05
Improvements for Front Street parking, including new 31-foot asphalt
parking section with 1 ½-inch base course gravel and curb and gutter 191,316.16
Total Costs of Infrastructure Improvements $ 1,607,095.68
Summary Description of the Project Fees and Charges:
Transportation Impact Fees $ 420,395
Water Impact Fees 73,459
Fire Impact Fees 28,266
Total Project Fees and Charges $ 522,120
Total Eligible Costs $2,169,228
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D-1
EXHIBIT D
MILESTONES
MILESTONE MILESTONE DATE
Approval by City of Site Plan December 1, 2019
Approval by City of Infrastructure
Plans
March 1, 2020
Building Permit Issued May 1, 2020
Infrastructure Complete February 1, 2021
Issuance of Certificate of
Occupancy
July 1, 2022
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E-1
EXHIBIT E
FORM OF DEVELOPER CERTIFICATE
TO: City of Bozeman, Montana FROM: Bangtail Partners, LLC (the “Developer”) SUBJECT: Reimbursement for Eligible Costs This Developer Certificate requests $_________ for reimbursement of Eligible Costs, as defined in the Development Agreement between the Developer and the City of Bozeman, Montana, dated as of ________________, 2019 (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 5.2(b) 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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E-2
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__ Bangtail Partners, LLC 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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Northeast Urban Renewal District Board
Resolution 2019-01
1
RESOLUTION OF THE CITY OF BOZEMAN NORTHEAST URBAN RENEWAL DISTRICT BOARD RECOMMENDING THE BOZEMAN CITY COMMISSION
APPROVE THE COTTONWOOD AND IDA MIXED-USE PROJECT LOCATED
WITHIN THE NORTHEAST URBAN RENEWAL DISTRICT AND FINANCE ALL OR A PORTION OF THE COSTS OF SUCH PROJECTS BY THE ISSUANCE OF TAX INCREMENT URBAN RENEWAL REVENUE BONDS
WHEREAS, the Northeast Urban Renewal District Plan was duly adopted by the Bozeman
City Commission by City of Bozeman Ordinance No. 1655, dated November 28, 2005 (the
“Plan”); and WHEREAS, the City of Bozeman Northeast Urban Renewal District Board (the “Board”)
has been duly established by the Bozeman City Commission as provided for in the Northeast Urban
Renewal District Plan; and
WHEREAS, the Blight Study for the Northeast Urban Renewal District complete June 6, 2005, identified defective, inadequate and deficient public infrastructure and transportation
facilities; and
WHEREAS, through Commission Resolution No. 05-3835, the Bozeman City Commission declared that blight within the Northeast Urban Renewal area associated with the defective or inadequate street layout; and inadequate provisions and/ or age obsolescence public
improvements: water, sewer, storm drainage, streets, sidewalks and parks; and that rehabilitation
and redevelopment is necessary in the interest of the public; and
WHEREAS, the Plan has the mission, vision and goals to remedy conditions associated with blight, to improve infrastructure, revitalize the neighborhood, and utilize Tax Increment
Financing (TIF) in conjunction with other funding sources to improve the economic vitality within
the district; and
WHEREAS, Cottonwood and Ida, LLC, a Montana limited liability company (the “Developer”) desires to undertake the development and cause the construction on the Project Site
of a mixed-use development consisting of buildings to be used for residential, office, and
commercial purposes and related improvements and amenities (the “Proposed Project”); and
WHEREAS, on June 5, 2018, the Board reviewed and approved a MOU supporting the Cottonwood and Ida Project attached hereto as Exhibit “A”; and
WHEREAS, The Developer intends to request that the City consider issuing tax increment
revenue bonds secured by the tax increment of the District (the “Bonds”) and use the proceeds thereof to reimburse the Developer for costs of certain off-site infrastructure that will serve the Proposed Project, such as sewer and water improvements, sidewalks, and dry utilities (including
but not limited to, electrical, gas, telecommunications, CATV, etc) to reimburse the Developer for
impact fees and other system development charges associated with the Proposed Project; and
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Northeast Urban Renewal District Board
Resolution 2019-01
2
WHEREAS, the City of Bozeman has determined that public infrastructure and
transportation facilities projects are needed and important to the function of the overall public
infrastructure and street network; and WHEREAS, the Proposed Project is contemplated by and falls within the scope of the Plan,
and in particular those provisions regarding repairing, replacing, or improving streets and alleys;
and projects that facilitate all modes of transportation, such as sidewalks, crosswalks, bike lanes,
trails, and bridges; and under the Plan those undertakings are eligible for tax increment financing; and
WHEREAS, the spending of TIF funds on infrastructure improvements is allowed under
Section 7-15-4288, MCA; and
WHEREAS, the Board desires that the Bozeman City Commission authorize the issuance of tax increment urban renewal revenue bond(s) to finance all or a portion of the costs of the
Projects and intends to utilize tax increment to make payments on the bonds; and
WHEREAS, the use of tax increment financing revenues to make bond payments has been shown to be a sound and adequate approach for urban renewal infrastructure development projects; and
WHEREAS, at their regular meeting on Tuesday, March 5, 2019, the City of Bozeman
Northeast Urban Renewal District Board voted to recommend that the City Commission designate Cottonwood and Ida as an Urban Renewal Project.
WHEREAS, the Board passed a motion directing staff in consultation with bond counsel
to move this resolution as edited and supporting documentation forward, recommending that the
Bozeman City Commission approve this Urban Renewal Project, the costs of which are eligible and appropriate to be financed with tax increment urban renewal revenue bonds to which tax increment is pledged to make payments on the bonds; and
WHEREAS, the City of Bozeman Northeast Urban Renewal District Board moved to
recommend adopting this resolution on the Proposed Project and finds: 1. Infrastructure improvements meet Guiding Principle 1 and Goals A & B of the
Northeast Urban Renewal District Plan:
• Principle 1. Ensure the health, safety, and security of the District,
• Goal A: Outdated or insufficient infrastructure should be repaired, replaced, or
otherwise improved,
• Goal B: Encourage a land use pattern that facilitates all modes of transportation - vehicular, bicycle, pedestrian, mass transit, and commercial - for safe, efficient
and convenient access for residential, commercial, and industrial uses; and
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Northeast Urban Renewal District Board
Resolution 2019-01
3
2. The Projects are infrastructure projects in conformance with Goal A & B of Principle
1, and other Principles and Goals of the Northeast Urban Renewal District Plan.
3. The Cottonwood and Ida Project meets the Guiding Principle 2 of the Northeast
Bozeman Urban Renewal District Plan:
• Principle 2: Balance commerce and livability in the District within the mixed-
use framework
• Implementation Actions: o Assure compatibility of land uses through appropriate urban design techniques.
o Encourage affordable housing.
NOW, THEREFORE, BE IT RESOLVED that the City of Bozeman Northeast Urban Renewal Board authorizes Economic Development Staff to negotiate a Development Agreement with the Developer and make reports and recommendations to the City Commission regarding the
Development Agreement infrastructure reimbursement and other appropriate incentives;
BE IT FURTHER RESOLVED that the City of Bozeman Northeast Urban Renewal District Board, having heard and considered all input, adopted the findings presented herein and recommends that the Bozeman City Commission undertake appropriate proceedings to:
1. Approve Cottonwood and Ida as an Urban Renewal Project.
2. Authorize the issuance of tax increment urban renewal revenue bond(s) to finance eligible costs or a portion of the costs of the Projects; 3. Pledge future annual tax increment to tax increment urban renewal revenue bonds as
authorized by the Bozeman City Commission.
DATED THIS 5th DAY OF March, 2019 .
_____________________________ John Usher, Chair Northeast Urban Renewal District Board
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Cottonwood and Ida Mixed Use Project
Tax Increment Analysis
March 28, 2019
Prepared by:
Andy Parks, CPA
Leland Consulting/GEL Oregon, Inc.
on behalf of the City of Bozeman Economic Development Department
Summary
* 92 units of housing; 24+/- market, 68+/- apartments
* 20,000 square feet of office space
* 5,000 square feet of manufacturing space
Applicant plans to invest approximately $35.0 million and is requesting $2.17 million from the Agency.
* Return on Investment (ROI)
* Estimated payback period, and
The following schedule summarizes analysis findings:
Total Residential Commercial
100.0%74.3%25.7%
Estimated construction costs to complete project 35,215,586 26,165,180 9,050,406
Less: 2018 market value per assessor (improvements
only) 409,558 - 409,558
Net estimated increase in value 34,806,028 26,165,180 8,640,848
Estimated net increase in taxable value 516,542 353,230 163,312
TIF tax rate - estimated - FY 2023 689.04 689.04 689.04
Estimated incremental taxes (TIF) - annual 355,919 243,390 112,529
TIF investment 2,169,228 1,611,736 557,492
ROI - estimated 16.4%15.1%20.2%
Estimated payback period (years)7.26 9.36 6.05
Private investment to public investment 15.23 15.23 15.23
Metric:
Greater than 8 to 1 - commercial
Greater than 5 to 1 - family wage jobs
Assumptions
Units Cost/unit Total cost Residential Commercial
24 395,000 9,480,000 9,480,000
68 245,000 16,660,000 16,660,000
20,000 390 7,800,000 7,800,000
5,000 250 1,250,000 1,250,000
35,190,000 26,140,000 9,050,000
74.3%25.7%
The above cost/unit amounts were estimated to ascertain order of magnitude amounts to allocate to the types of
proposed development
Order of magnitude cost allocation
RGH28111 $39,710 and
RGH20158 $369,848
assumes 5.0% interest rate
on TIF investment
Applicant plans to build a mixed-use commercial/residential development located in the Northeast Urban Renewal District.
Allocation
Greater than 10 to 1 - desired for multi-family
Analysis has been performed to determine:
* Private investment to public investment
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Cottonwod and Ida – Mixed use project in NE Bozeman
Project Narrative
The Northeast neighborhood has always been a special place in our minds. Our development group,
made up of reluctant developers but enthusiastic community builders operates with one simple
principal “Do something good for Bozeman”. Our team has completed the revitalization of the Lark
Hotel in downtown Bozeman and most recently is finishing the rehabilitation of the Rialto Theater. We
continue to search for areas of need in Bozeman to build on what we consider to be the best place.
Following completion of these projects we sought to find the next pressing need for the community and
have centered in on creating affordable and attainable housing. The project is in the heart of the
Northeast Urban Renewal District on the corner of Cottonwood and Ida. We selected this neighborhood
for its truly unique character and diversity of uses. We further focused our efforts on a need to provide
housing in older parts of town that was both affordable and attainable to those who live and work in
Bozeman.
The design team championed and organized the RUDAT to come to Bozeman and focus on the
Northeast to further understand the needs specific to the Northeast. The outcomes of this community
design effort have been invaluable, guiding us in the design and concepting for our project. Born from
this and other research, our assertions were confirmed that creating both affordable and attainable
housing in a mixed-use project that provides open public spaces and opportunities for offices and artist
spaces is both needed and desired.
The culmination of this research and community input has led us to propose the Cottonwood and Ida
Mixed use project. The identity of which is meant to be part of the neighborhood rather than a project
unto itself. The project proposes a broad range of housing types that include 20 (+/-) single family
townhouse flats, 70 (+/-) apartment options including 2 bedrooms, 1 bedrooms, studios, and efficiency
units. The units will include a mix of both affordable (20% of the apartments) and attainable units. As an
example, the rent differential between a attainable 1 bedroom and a 70% AMI affordable is nearly $400
per month. The project includes a healthy mix of commercial options that include spaces for office, small
neighborhood retail and artist / makers spaces. The project also places special emphasis on public plaza
spaces and provides a community centered pavilion for future markets, CSA drop-offs, private events,
and public meetings.
The mass, scale, and orientation of buildings has been thoughtfully considered to respond to the existing
fabric and adjacent uses in the neighborhood. The buildings along the perimeter of the site are three
stories in height to promote the neighborhood feel and preserve view sheds. The project provides all
the onsite parking underground to both reduce the scale of buildings and prevent views of large
expanses of parking. By placing the parking under the development, we can break the buildings up into
smaller components and provide plazas and greenways between them. The uses are organized to
address neighborhood adjacencies. For instance, we keep the residential uses along Ida and the
majority of commercial uses near other commercial uses along Cottonwood and Wallace.
This project takes lead from some of the most progressive urban planning and design techniques in the
United States and abroad, in a effort to create a live able, walkable mixed use community. This addition
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to the neighborhood will support the need for affordable housing, create artist spaces, provide public
plazas and urban rooms for residents, the neighborhood, and community members to enjoy.
Overview of project:
• Cottonwood and Ida – Founded on the principal of “doing something good for Bozeman”.
• Project team history- Successful revitalization projects include the Lark (phase 1 and 2) the
Rialto theater.
• Beyond hotels and event spaces what does Bozeman need – affordable places for residents to
live in great parts of town.
• Project goal for the NE – providing housing at reasonable prices, while maintaining the integrity
of the existing community- honoring the past and accommodating the future
• Provide for a broad range of housing types and bolster the creative artist community that is the
very fabric of the neighborhood.
• Housing – 93 units – mix of 20 (+/-) for sale units and 70 (+/-) apartment units ranging from 2
bedrooms to efficiency units. 20% of the apartments will be offered at affordable rates (70%
Area Median Income) and 80% at “attainable” rates (100% AMI)
• Creative spaces-
• Open office space for tenants that enjoy the walkable / bike-able community (27,000 sf)
• Artisan manufacturing spaces, small studios, and makers spaces (5,000 SF)
• All onsite parking is below grade and provides a dedicated space for each residential unit. A
surplus of spaces are provided for the public and commercial activities.
• Public plaza and landscaped areas (20,000 sf) available to the public for interaction and
enjoyment
• Massing and scale for the buildings have been thoughtfully considered to remain at 3 stories on
the perimeter of the site and special consideration was given to adjacent properties for massing
and scale. The maximum height for the project is 48’
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Outline of proposed development agreement
The project seeks to establish a development agreement with the City to facilitate the improvement to
public infrastructure and creation of public parking. The improvements include the completion of Aspen
street while preserving the trail access to the climbing boulder, full construction of Ida street to provide
parking along the west side and completion of Cottonwood street to match the South side with angled
parking. Improvements to underground utilities are also proposed and include new water lines under
Aspen and Ida street. The street improvements will also include pedestrian facilities like walking paths,
sidewalks and bike lanes. The project is creating public parking in the underground garage that can be
used by the general public and will assist other smaller lots in the district in meeting their parking
demands. All the proposed residential units will have one dedicated parking space in the parking garage.
There is a total of 181 parking spaces provided within the proposed project of which 157 spaces are in
the underground garage. 93 of those spaces are dedicated to each residential unit, 2 spaces are
designated as car share and 62 spaces in the underground garage are dedicated to the public for
commercial uses.
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Alignment of goals with NEURD Plan (20
The Northeast Urban Renewal District Mission and Vision:
“The Plan envisions a mixed-use neighborhood that is user-friendly, safe, secure and healthy. While
the plan envisions a District with diversity of housing, businesses, and amenities, it intends to
maintain the unique ambiance and historic character of the District.” NEURD Plan pg. 5
We used this mission statement along with feedback from the RUDAT to develop our plan. We are
seeking to create a neighborhood that is user-friendly offering plaza spaces and good connectivity to the
surrounding neighborhood. We are providing a healthy mix of housing, businesses and amenities that
respond to the unique ambiance of the district through massing and scale and configuration of buildings.
The NEURD plan outlines nine principals along with goals and implementation policies that it seeks to
achieve through the creation of Our project it addresses many of these principals, goals, and
implementation policies aligned in the plan. In fact, our project directly addresses 7 of these Principals.
Specifically,
Principal 1 is to ensure health safety and security of the district by updating outdated or insufficient
infrastructure. We intend to make improvements to the surrounding street network and utilities in
collaboration with the District. This project also furthers the goal of a land use pattern that facilitates all
modes of transportation. We have included substantial underground parking to provide the needed
parking while shielding the presence of “parking lots” from the neighborhood view shed. We have
provided plazas and greenways to facilitate public pedestrian uses on the site and intend to create
specific bike garage facilities to accommodate bike parking, storage, and maintenance areas.
Principal 2 speaks to the desire to balance commerce and livability in the district within the mixed-use
framework. Our project provides this balance and compatibility through the very best practices of urban
design. We achieve this by providing good connections to public spaces for all that improve quality of life
for the residents and business owners alike.
Principal 3 is to “honor the unique character and vitality of the district”. We have taken great effort to
include opportunities within this project for affordable and attainable housing, unique artist spaces and
commercial uses that best fit the emerging character of the district. Additionally, our thoughtful
consideration of mass and scale, attention to public values, and sustainable building practices will both
honor the vitality and show a path forward that the district can truly be proud of.
Principal 4 addresses the need for public open space that contribute to the health and appeal of the
urban environment. This project creates over 18,000 SF of multiple public open spaces and provides
improvements to adjacent greenways.
Principal 5 establishes the framework to evaluate the cost of projects and programs weighted against
their benefits to the district. This project provides the much-needed benefit of affordable housing and
unique artists spaces in a progressive urban design the will enhance and preserve the unique character of
the district. The project will also substantially increase the available increment in the district which can
be used to achieve additional goals outlined in the plan. The amount of increment beyond what is
needed to support the improvements for the project will be in excess of the amount of increment of the
entire district to date. We have estimated this at $100,000 annually, after debt service, that can be used
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on other projects within the district. This principal exemplifies our project insofar that it will promote the
principals and goals of the district and contribute significantly to the underlying value of the district.
Principal 6 states that private shall not be acquired for private use through the eminent domain process.
Our project does not use any eminent domain in the redevelopment. We do offer our own private land to
the general public in the form of public plazas.
Principal 8 states that projects shall consider impacts on adjacent neighborhoods. Our project has
thoughtfully address the surrounding neighborhood by incorporating smaller scale housing next to
smaller scale adjacent homes and placed more commercially oriented uses next to existing commercial
uses.
Essential goals of the 2006 NEURD Plan achieved:
✓ “Outdated or insufficient infrastructure should be repaired, replaced, or otherwise improved”
(Principal 1, pg. 5 NEURD Plan)
✓ “Assure compatibility of land use through appropriate urban design techniques” (Principal 2,
pg. 6 NEURD Plan)
✓ “Promote sustainable building practice and design within the District” (Principal 3, pg. 7
NEURD Plan)
✓ “Encourage affordable housing” (Principal 2, pg. 6 NEURD Plan)
✓ “Secure public open spaces in locations that will optimize accessibility” (Principal 4, pg.7
NEURD Plan)
✓ “New structures should be designed keeping in mind public values of durability, flexibility, and
simplicity. Thoughtful consideration of design, materials, and massing in construction of new
private buildings will add strength and character to the built environment. To the degree that
private sector can be influenced by a public partner in development, the community ought to
strongly encourage excellence in urban design as a basis of partnership.” (Principal 3, pg.7
NEURD Plan)
✓ “Harmonize commercial and industrial development with residential quality of life” (Principal
2, pg. 6 NEURD Plan)
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Alignment of goals from the Vision NE (RUDAT follow-up committee)
Many of the District goals drafted in 2005 are aligned with the recent RUDAT effort and the subsequent
Vision NE Draft Goals and Principals.
• Values the neighborhoods unique vibrancy, diversity, artistry, history, commercial / industrial
interface, walk- and bike – ability, and special Bridger Mountain views
• Understand that growth and change in our neighborhood is inevitable; and
• Embraces the notation that change can be positive, that it can enhance the neighborhoods
unique character and vitality and increase opportunities for affordable housing, connectively
and civic participation.
The goals of the Cottonwood and Ida project very much align with these as we endeavor to create
affordable housing opportunities and embrace the artistry, history of the district while making
opportunities for civic participation on site.
The Vision NE further seeks to
✓ Enhance neighborhood character
We are looking to enhance the character through unique buildings and public spaces and provide
commercial opportunities for artists to continue to contribute to the fabric of place
✓ Recognize the importance of the Bridger Mountain view shed
By maintaining a three-story limit on all buildings along street edges and breaking the massing into
smaller footprint buildings we can create view sheds through the site as well as over the site from afar.
✓ Create new pocket parks, urban rooms and public gathering spaces
We have incorporated several public plaza spaces and pocket parks within the site to support public
gathering and invite the neighborhood to be part of the location as we ask to be part of the
neighborhood
✓ Provide safe transportation through residential neighborhoods
The project provides full pedestrian circulation through the site connecting to the existing sidewalk and
trail network. Transportation patterns have been considered to keep the majority of traffic on existing
major roadways
✓ Support artists and artisans and providing opportunities for public art
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From the beginning our intent is to support and provide opportunity for the burgeoning artist community
to flourish by adding additional artist spaces, as well as affordable places for artists to live and
incorporate within the public spaces art.
✓ Expand the trail network and connectivity to the downtown Bozeman, the North 7th
corridor, and Story Mill Community Park
This project creates a through pathway and can become a hub of connection to the various sub districts.
✓ Consider the area’s agricultural and light industrial historical legacy; and
The character of the buildings will incorporate attributes that pay homage to the legacy of the various
historical uses.
✓ Provide affordable housing options
Lastly – we are providing both affordable housing and attainable housing through a mix of unit types to
support the unique character of the neighborhood.
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GOALS – MATRIX OF ALIGNMENT
PRINCIPALS, GOALS,
IMPLEMENTATION
POLICIES AND
OBJECTIVES
NEURD
PLAN
2005
RUDAT
VISION NE
GOALS
2017
COTTONWOOD
AND IDA
MIXED USE
PROJECT
METHODS AND MEANS
HONOR / ENHANCE
UNIQUE CHARACTER
OF DISTRICT ✓ ✓ ✓
Through massing scale,
and placement of
buildings on the site.
Additionally, program
elements such as artists,
makers etc.
PROMOTE
ENVIRONMENTALLY
SOUND BUILDING AND
PLANNING
TECHNIQUES
✓ ✓
The project meets LEED
ND standards and
incorporates several
sustainable design
techniques
PROVIDE SAFE,
HEALTHY PUBLIC
TRANSPORTATION
FACILITES AND
INFRASTRUCTURE
✓ ✓ ✓
Through the creation of
additional public
infrastructure and
pedestrian plazas and
walks
SUPPORT ARTISTS AND
PROVIDE
OPPORTUNITY FOR
PUBLIC ART
✓ ✓
Providing opportunities
for artist residences and
studio spaces and will
incorporate public art in
the plaza spaces
RECOGNIZE
IMPORTANCE OF
BRIDGER VIEW SHED
AND NEIGHBORHOOD
IMPACTS ✓ ✓ ✓
By keeping the buildings
on the perimeter to
maximum of 3 stories and
breaking up the buildings
into several smaller
buildings rather than one
large one to maintain
view angles through the
site.
PROMOTE SECURE
PUBLIC OPENSPACES,
POCKET PARKS, URBAN
✓ ✓ ✓
The project has over
20,000 SF of public plaza
spaces and nearly a 1/4
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ROOMS AND PUBLIC
GATHERING SPACES
mile of pedestrian walks
will be improved
PROMOTE AND
PROVIDE AFFORDABLE
HOUSING OPTIONS ✓ ✓ ✓
The project provides 20%
of the units at affordable
rates and the balance of
units are intended to be
attainable at 100% AMI
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Exhibit A
EXHIBIT A URBAN RENEWAL PROJECT REQUEST
COTTONWOOD AND IDA MIXED USE PROJECT 5/8/2019
PROPOSED IMPROVEMENTS RELATED TO TIF
PROJECTS ESTIMATED COSTS
OFF-SITE INFRASTRUCTURE 1,647,108$
IMPACT FEES 522,120$
TOTAL ESTIMATED TIF FUNDED PROJECTS 2,169,228$
POTENTIAL BOND ABLITY BASED ON TAX REVENUE AND REQUIRED DEBT COVERAGE
BOND AMOUNT 2,169,228$
PROJECT DETAILS
OFF-SITE INFRASTRUCTURE 1,647,108$
See Engineers estimates
COTTONWOOD 544,842$
IDA 191,316$
ASPEN 590,950$
TAMARAK (BOULEVARD ONLY)20,000$
WALLACE (BOULEVARD ONLY)20,000$
FRONT STREET / PARK PARKING 280,000$
IMPACT FEES per unit (93 residential / per 1,000 SF commercial)
Transportation/ Residential 3,053$ 283,894$
Transportation / Commercial 4,535$ 136,501$
Water / Residential 559$ 60,962$
Water / Commercial 3,556$ 12,497$
Fire / Residential 186$ 17,265$
Fire / Commercial 365$ 11,001$
TOTAL IMPACT FEE COSTS 522,120$
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Exhibit B
EXHIBIT B URBAN RENEWAL PROJECT REQUEST
COTTONWOOD AND IDA MIXED USE PROJECT 2/27/2019
PROJECT ESTIMATES FOR TAX GENERATION AND BONDING ABLITIY
TOTAL PROJECT COST 35,215,856$
ESTMATED TAXES 1%352,159$ annually - all increment
Debt coverage limits 1.5
Amount availible for Bond payment 234,772$
Estimated bond rate 4.5%
BOND TERM 20 years
ESTIMATED BOND POSSIBLE 3,100,000$
with above assumptions on debt coverage and taxes collected
PROPOSED BOND REQUEST 2,169,228$
ESTIMATED BOND PAYMENTS 184,949$
ESTIMATED BALANCE OF PROJECT TAXES AVAILIBLE FOR FUTURE NEURB PROJECTS
167,210$ ANNUALLY
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SUMMARY of Cottonwood+Ida Off-Site Costs – updated 2-27-19
East Cottonwood ($544,842.12)
Improvements for East Cottonwood include the following:
• replacing a 6-inch water main with a new 8-inch main, from the west property line to Ida Avenue
• replacing a 6-inch sanitary main with a new 8-inch main, from the west property line to a manhole
near Plum Avenue
• New diagonal parking on the north side of Cottonwood street
• New concrete sidewalk on the north side of the parking
• Gravel base and asphalt paving patch for new water and sewer mains
Ida Avenue ($279,987.35)
Improvements for Ida Avenue include the following:
• New 31-foot asphalt street section with 1-1/2-inch base course gravel (16-inch section) and curb and
gutter
• New 5-foot wide sidewalk on west side
Front Street ($191,316.16)
Improvements for Front Street Parking:
• New 31-foot asphalt parking section with 1-1/2-inch base course gravel (16-inch section) and curb
and gutter.
East Aspen Street ($590,950.05)
Improvements for East Aspen Street include the following:
• New 8-inch water main from North Wallace to Front Street, with new water and fire service lines
• New 8-inch sewer main from North Wallace to Front Street, with new service lines
• New 8-inch storm drain main from the west property line to Wallace Street, including 2 new
manholes
• New 8-foot sidewalk on the north side
• New 5-foot sidewalk on the south side
• New 35-foot asphalt street section with 1-1/2-inch base course gravel (16-inch section) and curb and
gutter from Wallace Avenue through the Ida/Aspen intersection
Summary
East Cottonwood $544,842.12
Ida Avenue $279,987.35
Front Street / parking $191,316.16
East Aspen Street $590,950.05
Total $1,607,095.68
Cost estimates include 15% contingency and 13.5% design/inspection/testing fees
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