Loading...
HomeMy WebLinkAbout06-03-19 City Commission Packet Materials - A3. Midtown URD FY20 Budget and Work Plan Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: David Fine, Urban Renewal Program Manager SUBJECT: Midtown Urban Renewal District Fiscal Year 2020 Budget and Work Plan MEETING DATE: June 3, 2019 AGENDA ITEM TYPE: Action RECOMMENDATION: Listen to the presentation, ask questions, and provide guidance to Staff. BACKGROUND: On May 2, 2019, the Midtown Urban Renewal Board (MURB) unanimously approved the attached FY 2020 Budget from which staff prepared the proposed FY 2020 Work Plan and Budget. The total value of appropriations in the MURB budget request for FY 2020 is $3,001,852. The MURB proposes a Work Plan and Budget for approval by the City Commission during public hearings on the proposed City budget on an annual basis. In addition, the MURB will prepare and submit an annual report to the City Commission. This annual report will explore projects completed in the past year and explain how these projects conform with the 2015 Midtown Urban Renewal District Plan.1 The annual report will be presented to the City Commission in September 2020. FISCAL EFFECTS: The Finance Department projects revenues of $651,949 for FY 2020. The $3,001,852 in proposed new expenditures for FY 2020 will significantly exceed new revenues. The Midtown URD has significant cash reserves and this budget proposes spending $542,203 of those reserves to complete projects. The board will ask the City Commission to issue tax increment revenue bonds in this fiscal year for some of 339 the projects listed in this budget request. The proposed budget assumes $1,806,500 in tax increment revenue bond revenue. UNRESOLVED ISSUES: The MURB is proposing significant projects for this fiscal year for which issuing tax increment revenue bonds is the preferred funding solution. The largest component of this proposed bond would be the remainder of the streetscape project from Mendenhall St. to Durston Rd. While the District could conceivably do the portion of this project from Mendenhall St. to Beall St. in cash, this would significantly deplete funds which could be better used on incentives to redevelopment projects that would create new taxable value and that “but for” incentives would not otherwise be feasible. If the District can obtain the necessary approvals for the entire project from the Montana Department of Transportation (MDT) in a timely manner, the MURB may ask the City Commission to issue bonds to fund all or a portion of the streetscape project for construction spring 2020. Due to the uncertainty surrounding MDT review of the streetscape project, contemplated private development projects, and the competitive bidding environment the City Commission should expect budget amendment requests during this fiscal year. ATTACHMENTS: Midtown Urban Renewal District Map Midtown Urban Renewal District Fiscal Year 2020 Work Plan and Budget 1 Last year, staff was under the impression that they needed to file an annual report as required by per Section 7-15-4237 of the Montana Code Annotated (MCA). However, this requirement only applies to an urban renewal “agency”. Nevertheless, staff will attempt in the annual report to explain how expenditures relate to the purposes of the adopted urban renewal plan, as this is a good district management practice. Prepared and uploaded May 23, 2020. 340 N 7TH AVE W OAK ST N19THAVEW MAIN ST INTERSTATE90HWY N ROUSE AVE BAXTERLN W COLLEGE ST DURSTON RD E MAIN ST S 11TH AVE S 19TH AVE SCHURCHAVES WILLSON AVE N 11TH AVE W PEACH ST FRO N T A G ERDEOAKST BRIDGERDR E PEACH ST N 7TH AVE INTERSTATE90HWY 0 ½1¼Miles Legend Northeast Neighborhood Urban Renewal District Midtown Urban Renewal District Mandeville Farms Tax Increment District Downtown Tax Increment District South Bozeman Technology District ´ Revised: 5/18/2016 This map was created by the City of Bozeman GIS DepartmentIntended for Planning purposes only. Midtown TIF District Boundaries 341 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2020 Work Plan and Budget Page 1 of 6 Fiscal Year 2020 Work Plan and Budget Overview The City Commission approved the Midtown Action Plan in 2017, which charted a new direction in pairing infrastructure spending and blight remediation with proposed private investment. This work plan and budget reflects the results of this change in the urban renewal strategy. Three projects, the Monarch, the Ruh Building and West Peach Condos represent $17,046,760 in private investment for $1,153,182 in public incentives, which signifies a private to public investment ratio of 14.78:1. The Midtown Urban Renewal Board’s (MURB) Work Plan and Budget calls for the issuance of tax increment revenue bonds to cover some of the costs of these projects. The Work Plan and Budget calls for construction of a section of the North 7th Avenue Lighting and Streetscape Project between Mendenhall St. and Beall St. Delays prompted by the Montana Department of Transportation’s (MDT) permitting process caused late bidding on the project this spring and we received no bids. Staff plans to rebid the project in early 2020 and may request a budget amendment to consolidate other segments of the streetscape project in that bid. The MURB continues to coordinate public infrastructure planning and investment with private investment. To that end, the MURB is initiating full design of the Aspen Festival Street, which coordinates with the Aspen Crossing project, the Audrey’s Pizza and Brewery project, and Midtown Tavern project. Additionally, the Board plans construction of the 5th St. multi-use path to connect the new Festival Street area to the existing path system on Oak St. The remediation of blighted conditions in the district and its ongoing redevelopment will take well over a decade, while there are only two more years remaining on the district without extending the life of the district through bonding. The approach of this Work Plan and Budget ensures that bondable projects, with significant community impact, are ready prior to the end of the District’s initial life. These early investments in projects will create new incremental taxable value that will allow for greater blight remediation throughout the District in the coming years. Over time, these increases in taxable value will benefit the broader community by increasing the tax base through productive infill development. Lighting and Streetscape Project Engineering, Right-of-Way Acquisition, and Construction Mendenhall St. to Beall St. Streetscape Construction The City received no bids in response to our recent solicitation for this project. Bidding was late due to unforeseen MDT requirements. Staff will attempt to package bidding for this project with other projects in spring or summer 2020 to make the project more attractive to bidders. We also have a plan for submitting the full plan to MDT to allow more time for expected issues and delays. Due to these changes, the City Commission should expect a budget amendment related to the streetscape project. Mendenhall St. to Beall St. Streetscape Construction Administration This item includes construction administration for the described section of the project. Mendenhall to Beall, MDT Clear Zone Design Exceptions This item is for newly required design exception details that were requested by MDT. Beall St. to Durston Rd.: Finalize Plan Set and MDT Design Exceptions 342 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2020 Work Plan and Budget Page 2 of 6 Complete design of the Beall St. to Durston Rd. segment of the streetscape project and submit to MDT for review, including preparing documentation and participating in the review process for clear zone objects. Miscellaneous Requested Services This item provides for additional effort as directed by the City and/or required by MDT through the review process. Includes effort such as preparation of updated exhibits, easements, etc. as well as meeting attendance as necessary. Administrative Settlements As final construction nears for this project, it may be necessary to enter into settlements with property owners to speed the final transfer of easements and right of way necessary for the project. Public Infrastructure Coordination with Private Investment 5th Street Multi-Use Path Construction The 5th Street Multi-Use path is an element of the Transportation Master Plan, which will allow pedestrian and bike connectivity to the new Aspen Festival Street, BMX Park, and Aspen Crossing Project. The Monarch Conduit System Connection The Monarch is a 21,884 SF vertical mixed-use project, with ground floor commercial, second floor office, and third floor residential units. The City Commission approved the project at its September 11, 2018 meeting. The Applicant for the Monarch mixed-use project requested a connection to the City’s fiber optic conduit system. Due to the need for the City to design this section of the system, the item was not included in the grant agreement for this project. Now that the system is designed for this area, the MURD can make the connection as part of its infrastructure program. 5th Street Conduit Design/ Aspen Crossing Conduit Connection Aspen Crossing is a 65,000 SF 3-story, mixed-use building with restaurant/retail uses on the ground floor, second floor offices, and 25 residential units on the upper floor. The City Commission approve the project as an urban renewal project pursuant to Resolution 4993 following a public hearing on March 25, 2019. Due to the need for the City to design this section of the system, the item was not included in the grant agreement for this project. Designing a conduit expansion for this area will allow the MURD to make the connection as part of its infrastructure program. Aspen Festival Street Design This unique one block street (Aspen St., between 5th Ave. and 7th Ave.) holds potential as the gateway from the N. 7th Corridor to the soon-to-be enhanced BMX Park. With a great view of the park, the Bridger Range and the Gallatin County Fairgrounds, and with a cluster of four restaurants and bars, the area offers a pedestrian and cycling draw unlike any other part of the corridor. This item includes final engineering design of the Aspen Festival Street and its integration with the Aspen Crossing Project. 343 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2020 Work Plan and Budget Page 3 of 6 Outside Legal Counsel The MURB is designing several major public infrastructure projects including the lighting, streetscape, park, and multi-use path projects. Bonding will allow these projects to be constructed concurrently and will allow for reimbursement for eligible costs of City Commission approved urban renewal projects. We expect to request that the City Commission issue bonds within FY 2020. In addition, outside counsel may be necessary to respond quickly to development proposals by creating development agreements under the Midtown TIF Assistance Program. Redevelopment Incentive Programs The Midtown Urban Renewal District’s redevelopment incentive programs are based on criteria included in the 2015 Midtown Urban Renewal District Plan. Technical Assistance Grants (TAG) This program is to provide technical assistance funding to encourage developers to build on parcels along the N. 7th Avenue corridor or rehabilitate existing structures. It recognizes the complexities of redeveloping parcels which have existing substandard buildings and infrastructure; it was created to offset the costs of those complexities with grants for those proposing work which eliminates blight and advances the implementation of the District Plan. The program was approved by Resolution 4777 and is administered by the MURB. The maximum grant amount for the program is $7,500 and requires a 1:1 match. Fiber Conduit Connection Incentive Program The District has made significant investments in facilitating competitive telecommunications options through the provision of public conduit. This program, modeled on a program created by the Downtown URD provides matching grants of up to $2,500 to connect buildings to the City conduit system. The program facilitates connections to infrastructure and the utilization of the existing conduit investment. N7 Rehabilitation Grant Program Until January 2017, the MURB administered the N7 Rehabilitation Grant (N7 Rehab) program, which incentivized improvements to sites and façades of existing structures to facilitate blight remediation. The program was a component of several successful and worthy projects in recent years. Nevertheless, the board and staff were concerned that the program (15% of eligible project costs up to $50,000) was too small to actually incentivize projects that were not already feasible. In addition, by rehabilitating existing building forms and site designs, the program was actually preserving development 344 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2020 Work Plan and Budget Page 4 of 6 patterns that are counter the land use goals of the District. The final grant under this program, awarded three years ago, includes the proposed patio expansion at Midtown Tavern. →Midtown Tavern Patio N7 Rehab Grant This project, which includes the installation of a patio at the Midtown Tavern, is the final outstanding award under the N7 Rehab façade grant program. Midtown Tax Increment Finance Assistance Program – Direct Incentives The City Commission approved a new incentive program, the Midtown TIF Assistance Program pursuant to Resolution 4770 in 2017. Awards will be based on the quality of projects and their support of the Midtown Urban Renewal Plan. Projects of a larger magnitude will require the issuance of tax increment revenue bonds. Three projects were approved by the City Commission as Urban Renewal Projects under the Midtown TIF Assistance Program and are expected to be complete in FY 2020. Taken together, these three projects are expected to generate $17,046,760 in private investment for $1,153,182 in public incentives, which represents a private to public investment ratio of 14.78:1. →The Monarch Grant The Monarch is a 21,884 SF vertical mixed-use project, with ground floor commercial, second floor office, and third floor residential units. The project is located behind the Cellular Plus Verizon store at Peach Street Lot 1-A-2. The City Commission approved the project as an urban renewal project at its September 11, 2018 meeting. The project represents a $2,713,847 investment in the District. →The Ruh Building Development Agreement The Ruh Building is proposed as a 34,066 SF, 3-story, mixed-use building with restaurant/retail uses on the ground floor and 16 residential units on the upper floors. The project is located at the northwest corner of N. 7th Ave. and Durston Rd. The City Commission approved the project as an urban renewal project pursuant to Resolution 4991 following a public hearing at its February 11, 2019 meeting. The project represents a $6,676,667 investment in the District. →West Peach Condos The West Peach Condos project is comprised of 17 two bedroom, one office, three bathroom, and two car garage, townhouse-style condominium units. The project is located at the northwest corner of N. 3rd Ave. and W. Peach St. The City Commission approved the project as an urban renewal project pursuant to Resolution 5046 following a public hearing at its May 20, 2019 meeting. The project represents a $7,656,246 investment in the District. 345 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2020 Work Plan and Budget Page 5 of 6 District Operations Outreach and Mailing The Board has requested money for public noticing and outreach activities in the District. The purpose of these outreach activities is to inform and engage property owners and the public in the implementation of the Midtown Urban Renewal Plan. Midtown Marketing and Recruitment This item includes maintenance of the new website midtownbozeman.org as well as programs like the banner program to drive traffic to the website. The District website, midtownbozeman.org to communicate effectively with property owners, developers, and the public and “to disseminate blight clearance and urban renewal information.” In addition, the board and staff continue to actively recruit development projects in the district that are in support of the urban renewal plan. Professional Services To assist with district management and implementation of the work plan and budget, as well as responding to new opportunities, Staff will contract for services on an as-needed basis. Economic Development Staff The City’s Economic Development Department manages the Midtown Urban Renewal District in response to City Commission and the Midtown Urban Renewal Board plans and policy guidance. For FY2020, the department requested an additional $22,470 to support staffing in the ED Department. The previous $40,000 request covered approximately 0.5 FTE. The District is receiving significantly more than 0.5 FTE of staff time and this request should move the District toward paying its true share of its management cost. The balance of the FTE costs are proposed to be borne by the Parking Enterprise Fund, Downtown URD, and the Northeast URD. Training Strong professional development drives the success of the urban renewal program. Staff plans to participate in the National Development Council’s Economic Development Finance Professional (EDFP) Certification Program. Whittier School Public Improvements (Descriptions as provided by Bozeman Public Schools) Irrigation Well and Greenhouse Spigot Install frost free hydrant for greenhouse area. Possible location for well inside greenhouse fence or modular fence. Expansion of irrigation system. Reduces dependence on city water. 6th Ave Masterplan Preliminary Architectural and Planning Study to include the rebuilding of staff parking lot, enhancement to sidewalks, boulevards and loading/unloading zones along the N 6th Ave. corridor. 2019 planning/design effort. It is anticipated that this work will result in a funding request for 2020 to complete the actual work that will be identified by this planning effort. 346 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Fiscal Year 2020 Work Plan and Budget Page 6 of 6 Repairs and replacement of aging doors and frames. Cyclical replacement program to replace all wooden exterior and interior doors, exterior due to weathering. Include new interior doors in gym. (1) pocket (1) double (1) kitchen. Alta Care door at modular. Include new re-key project for all doors. Costs include doors, frames, existing retrofits plus patching and repairs. Door replacement design completed in 2017 with 5 doors completed in 2018. This is a request to carryover a portion of the approval that was given in 2018 to allow us to complete that work. 347 Bozeman Midtown Urban Renewal Board Fiscal Year 2020 Work Plan and Budget FY2020 N. 7th Ave. Lighting Streetscape Project Streetscape, Mendenhall to Beall: Construction $1,059,000 Streetscape, Mendenhall to Beall: Construction Administration $50,000 Streetscape, Mendenhall to Beall: MDT Clear Zone Design Exceptions $4,000 Streetscape, Beall to Durston: Finalize Plan Set and MDT Design Exceptions $5,000 Streetscape, Miscellaneous Requested Services $6,000 Administrative Settlements $30,000 Public Infrastructure Coordination with Private Investment The Monarch Conduit System Connection $20,000 5th Street Conduit Design $10,200 5th Street Multi-Use Path $191,000 Aspen Festival Street Design $60,000 Outside Legal Counsel For Bonding and Redevelopment Agreements $60,000 Incentive Programs Technical Assistance Grants 1:1 match [2 grants]$15,000 Direct Incentives - Midtown TIF Assistance Program $100,000 City Fiber Conduit Connection Incentive Program $20,000 District Operations Outreach and Mailing $2,000 Midtown Marketing and Recruitment $10,000 Professional Services $40,000 Economic Development Staff and Administrative Support $62,470 Training $3,000 →Approved Grants and Direct Incentives Midtown Tavern Patio Legacy N7 Rehab Grant $15,000 The Monarch Grant $149,347 The Ruh Building $747,500 West Peach Condos $256,335 Whittier School Public Improvements Irrigation Well and Greenhouse Spigot $30,000 6th Avenue Master Plan $6,000 Interior/ Exterior Door Replacement $50,000 TOTAL EXPENDITURES FY 2020 $3,001,852 Estimated FY 2019 Ending Balance $1,600,000 Estimated Revenues $651,949 Estimated Total Cash FY 2019 $2,251,949 Bond Revenue FY2020 $1,806,500 Estimated Cash minus expenditures (FY20 Ending Balance)$1,056,597 348