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HomeMy WebLinkAbout07-13-20 City Commission Packet Materials - A3. Midtown URD FY20 Annual Report and FY21 WP and Budget Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: David Fine, Urban Renewal Program Manager SUBJECT: Midtown Urban Renewal District Fiscal Year 2021 Budget and Work Plan, and Annual Report for Fiscal Year 2020 MEETING DATE: July 13, 2020 AGENDA ITEM TYPE: Action RECOMMENDATION: Listen to the presentation, ask questions, and provide guidance to staff. BACKGROUND: On April 30, 2020, the Midtown Urban Renewal Board (MURB) unanimously approved the attached FY 2021 Budget from which staff prepared the proposed FY 2021 Work Plan and Budget. The total value of appropriations in the MURB budget request for FY 2021 is $9,399,176. The MURB proposes a Work Plan and Budget for approval by the City Commission on an annual basis. Staff also prepared an Annual Report on significant expenditures in FY 2020. The report also highlights items of interest, or items where no action was taken during the fiscal year. FISCAL EFFECTS: The Finance Department projects revenues of $1,089,328 for FY 2021. Staff also estimates that the District will start the year with $2,300,000 cash-on-hand. The District also expects the Construction Fund from bond proceeds to include $6,763,030.57 in additional funds. Available cash in FY 2021 totals $10,152,359. The FY 2021 budget includes an expenditure of all the bond proceeds and significant available cash to complete projects. The budget includes $9,399,176 in appropriations. 128 UNRESOLVED ISSUES: None. ATTACHMENTS: Midtown Urban Renewal District Fiscal Year 2021 Work Plan and Budget 129 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 1 of 9 MIDTOWN URBAN RENEWAL BOARD FY2020 ANNUAL REPORT and FY2021 WORK PLAN AND BUDGET The City Commission passed Ordinance No. 1685, “Adopting an Urban Renewal Plan for the North Seventh Avenue Corridor and Adjacent Properties”, on November 27, 2006. On December 16, 2015, the City Commission passed Ordinance No. 1925, which adopted a new urban renewal plan, expanded the boundaries of the original district, and renamed the North Seventh Urban Renewal District the Bozeman Midtown Urban Renewal District. The 2015 Midtown Urban Renewal Plan provides for the remediation of blighted conditions within the urban renewal area by advancing five broad goals through a series of implementing activities and strategies. The five goals include the following items: 1. Promote Economic Development • Rationale: Economic vitality strengthens the community, provides for physical needs of the citizens, opens reinvestment opportunities, and helps to eliminate the conditions that contribute to blight. 2. Improve Multimodal Transportation • Rationale: Increasing travel options supports public health, reduces resource demand, increases efficiency and reduces costs, improving the quality of life and making the community a better place to live and work, helping to eliminate conditions that contribute to blight. 3. Improve, Maintain and Support Innovation Infrastructure • Rationale: Infrastructure is the backbone of the community. Private development typically requires a corresponding public investment in infrastructure. Therefore, capital improvements in the district will help achieve economic vitality and address conditions that contribute to blight. 4. Promote Unified, Human Scale Urban Design • Rationale: Protecting and building upon existing physical assets increases vitality, desirability and leverages economic development, strengthening community values and mutual support helping to eliminate the conditions that contribute to blight. 5. Support Compatible Urban Density Mixed Land Uses • Rationale: A sense of place is strengthened by a strong core identity. Increasing live-work opportunities and community interaction, ensures that the North 7th Avenue area remains a great place to live, work, operate a business, and play, and helps to eliminate conditions that contribute to blight. 130 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 2 of 9 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. The intent of the Action Plan is to, “attract targeted private investment by leveraging the market potential of the Midtown District and removing barriers to redevelopment through strategic infrastructure investments and incentives.” The Annual Report for Fiscal Year 2020 and the Work Plan and Budget for FY 2021 reflects this specific strategy and approach to using private investment to propel blight remediation and urban renewal. The Midtown Action Plan proposes targeting future development that includes the following elements: • Infill. The intent of urban renewal is to remove blight to improve an area for the entire community benefit. Remodeling of existing structures or infill of underutilized lots is the priority of this Plan. As discussed, infill development is more challenging than vacant greenfield development and warrants focused investment of staff time and resources. • Increased building density. Increased building density increases the number of people in the District, which helps create the desired active pedestrian environment. More density of buildings grouped together in districts is especially desired to encourage pedestrians to explore adjacent buildings. Buildings that are separated by large parking area or vacant lots will impede pedestrian movement. • Encourages multimodal transportation. New projects should provide amenities such as adequate bike parking or bus schedule real time monitors in lobbies. At the same time, the Urban Renewal District should invest in infrastructure projects such as bike lanes and signals or covered bus stops to make alternative transportation options visible, safe, and desirable. • Retail that serves surrounding residents. To achieve a more vibrant pedestrian-oriented environment the District must consist of uses that are a frequent destination by residents. Retail amenities that are experience based such as restaurants or ice creams shops are desired because they generate activity and are more resilient to emerging ecommerce trends. Such amenities will also attract more housing investment. • Housing. Bozeman is in significant need of all types of housing, therefore it is called out as a specific use that is desired. The Midtown District zoning is intended to accommodate more dense housing projects with potential access to retail amenities nearby. The City Commission funded a package of several major infrastructure improvements in the District through the approval of $6,500,000 in bonds with a 25 year term on July 6, 2020. The infrastructure improvements include the streetscape infrastructure on N. 7th Ave. that enhances the walkability, aesthetics, and investment potential of the District as a whole, along with improvements to Aspen St. and N. 5th Ave. that will accelerate ongoing private investment in this emerging node of commercial activity. The District is also focused on investing in public infrastructure that removes barriers to specific private investments. The proposed FY 2021 includes appropriations for $2,048,159 131 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 3 of 9 in previously approved incentives, which leverage $30,154,499 in associated private investment, which represents a private to public investment ratio of 14.72:1. These incentives primarily pay for the costs of public infrastructure associated with the private projects, as well as demolition costs and the cost of various system development charges, such as impact fees. 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 overall tax base through productive infill development. The remediation of blighted conditions in the District and its ongoing redevelopment will take many years. The July issuance of revenue bonds means, Bozeman has 25 more years to focus on redevelopment of the Midtown area. As instructed by Commission adopted policy documents, the District will continue to focus on remediating blight, by attracting targeted private investment and growing the tax base. 132 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 4 of 9 Midtown Urban Renewal District (MURB) FY2020 Annual Report (July 1, 2019 to June 30, 2020) All investments over $15,000 are documented below. Other projects have been highlighted by Staff. North 7th Avenue Streetscape Project $ 77,334 The FY2020 Work Plan included funding for construction of the section of N. 7th Ave. streetscape between Mendenhall St. and Beall St. Due to a change in strategy, staff elected to seek approval from the Montana Department of Transportation (MDT) for a larger section between Durston Rd. and Mendenhall St. Staff obtained final approval from MDT to construct the section of streetscape improvements including new lighting, setback sidewalks, permeable pavers, and street trees. Engineering expenditures included final design work, approval submissions, bid documentation and review and final contract work on the project. Expenditures on this project also included $13,341 to replace signage impacted by the project. The project is under contract with Treasure State, Inc. for construction and is scheduled to start in mid-July. Aspen Festival Street Design $68,556 This item included design of the Aspen Festival Street as well as design related private property that was required in order to facilitate removal of drive approaches impacted by the project. Full design of the project facilitated public bidding of the Aspen and 5th Improvements Project, which was awarded to Knife River – Belgrade in spring 2020.The Project is currently underway. Westlake BMX Park Power Line Burial $46,797 An overhead power line ran along the western edge of the Westlake BMX Park where the park master plan called for the installation of back-in angle parking. To facilitate the installation of the parking in FY2021, the District paid to bury the power lines. North 5th Ave Conduit Design/ Aspen Crossing Connection $10,200 The District completed design for an extension of the public fiber optic conduit system along the west side of N. 5th Ave. 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 approved 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. The line will also allow for the connection of two yet to be developed pad sites adjacent to the Aspen Crossing Project. Construction did not occur during the fiscal year, but is included in the FY2021 Aspen and 5th Improvements Project. 133 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 5 of 9 Outside Legal Counsel $928 The FY 2020 Budget included $60,000 for outside counsel to support redevelopment work and bonding activities. While $50,000 in fees for bond counsel were incurred in connection with issuance of bonds, the fees were paid from bond proceeds at closing, which occurred in FY 2021. The Monarch Conduit System Connection – moved to FY 21 $ - 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. Due to construction delays, this item is carried forward into FY 2021. 5th Street Multi-Use Path – moved to FY 21 $ - 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. Construction did not occur during the fiscal year, but is included in the FY2021 Aspen and 5th Improvements Project. Technical Assistance Grants – moved to FY 21 $ - One technical assistance grant was awarded during the fiscal year to the property owners at 719 West Lamme St. The grant will not be reimbursed until FY 2021. Approved Grants and Direct Incentives – moved to FY 21 $ - The FY 2020 Budget included appropriations for reimbursements on existing grants and development agreements for The Monarch, The Ruh Building, and West Peach Condos. These three projects are expected to be completed in FY 2021.A legacy N7 Rehab Grant for a patio area at Midtown Tavern was appropriated, but not expended during the fiscal year. Whittier School Public Improvements $ - The FY 2020 Budget included $86,000 in appropriations in requested improvements to Whittier School. The School District did not complete any of the proposed projects. This is the second year in which a request for appropriations has not resulted in expenditure on the proposed projects. The School District did not make a request for FY 2021. Expenditures Compiled June 18, 2020 134 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 6 of 9 Midtown Urban Renewal District (MURB) FY2020 Work Plan (July 1, 2019 to June 30, 2020) Midtown Infrastructure Improvements Urban Renewal Project Midtown Infrastructure Improvements Urban Renewal Project $6,997,645 The Midtown Infrastructure Improvements Project includes several sets of public infrastructure improvements throughout the District: • North 7th Avenue Streetscape between Mendenhall Street and Durston Road • Aspen Street Festival Street Streetscape Enhancements and new Water Line • Westlake BMX Park Parking on N. 5th Ave. • North 5th Avenue Sewer Line between Aspen and Oak Street • North 5th Avenue Multi-Use Path between Tamarack and Oak Street • Extension of the City of Bozeman Fiber Optic Conduit System along N. 5th Ave. $6,500,000 in bond proceeds are facilitating the completion of this project. The project is expected to be completed by fall 2020. Outside Legal Counsel Outside Legal Counsel $ 60,000 The Midtown Urban Renewal District continues to see strong interest in redevelopment. This interest will necessitate work on development agreements under the Midtown TIF Assistance Program, and depending on the scope of the projects, the need to issue additional bonds. 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 and the 2017 Midtown Action Plan. Technical Assistance Grants (TAG) $ 15,000 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. 135 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 7 of 9 Midtown Tax Increment Finance Assistance Program – Direct Incentives $ 100,000 The City Commission approved an incentive program, the Midtown TIF Assistance Program pursuant to Resolution 4770 in 2017. Resolution 5087 reauthorized and updated the Program in 2019. Awards will be based on the quality of projects and their support of the Midtown Urban Renewal Plan. Projects of a larger magnitude may require the issuance of tax increment revenue bonds. Projects under $50,000 may be awarded by the Board and sent to the City Commission as Consent Items. Projects over $50,000 require the approval of the City Commission. Fiber Conduit Connection Incentive Program $ 20,000 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. District Operations Outreach and Mailing $ 2,000 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 $ 10,000 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. Contracted Professional Services $ 50,000 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. Payroll $ 62,470 The City’s Economic Development Department manages the Bozeman Urban Renewal District in response to City Commission and the Midtown Urban Renewal Board work plans and policy guidance. 1.5 FTE are dedicated to staffing the Bozeman Urban Renewal Program as a whole, of which the Midtown URD contributes a proportionate share of funding. The Economic Development and Finance Departments created a new funding 136 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 8 of 9 formula for financing the Bozeman Urban Renewal Program for FY 2021, which is based on the average revenues from the past two years of the urban renewal districts. Training $ 3,000 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. Midtown Tax Increment Finance Assistance Program Approved Grants and Direct Incentives Five 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 2021. Taken together, these five projects are expected to generate $30,154,499 in private investment for $2,048,159 in public incentives, which represents a private to public investment ratio of 14.72:1. West Peach Condos $ 256,355 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. The Monarch Grant $ 149,346 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 $ 747,500 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. Aspen Crossing $ 849,959 The Ruh Building is proposed as a 10,000 SF, 2-story, retail and commercial building. The project is located at the southwest corner of N. 5th Ave. and Tamarack St. The Midtown Urban Renewal Board approved the project at its April 30, 2020 meeting. The project represents a $16,147,097 investment in the District. 137 Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Midtown Urban Renewal Board Annual Work Plan and Budget FY2021 Page 9 of 9 Zambon Building $ 45,000 The Zambon Building is proposed as a 65,000 SF, 3-story, mixed-use building with restaurant/retail uses on the ground floor and 25 residential units on the upper floors. The project is located at the northwest corner of N. 5th Ave. and Aspen St. The City Commission approved the project as an urban renewal project pursuant to Resolution 4992 following a public hearing at its March 25, 2019 meeting. The project represents a $2,941,000 investment in the District. Midtown Tavern N7 Rehabilitation Grant Program $ 15,000 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 patterns that are counter the land use goals of the District. The final grant under this program, awarded four years ago, includes the proposed patio expansion at Midtown Tavern. 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. The Monarch Conduit System Connection $ 10,000 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. Due to construction delays, this items is carried forward into FY 2021. 138 Bozeman Midtown Urban Renewal Board Fiscal Year 2021 Work Plan and Budget FY2021 Revenue and Cash Estimated FY20 Ending Balance $2,300,000 Estimated FY21 Revenue $1,089,328 Bond Proceeds/ Construction Fund $6,763,030.57 Total Cash $10,152,359 Midtown Infrastructure Improvements Urban Renewal Project Aspen and 5th Improvements $2,018,420 Aspen and 5th Improvments, Project Construction Management and Engineering $125,475 Aspen and 5th Improvements Change Order #1 - Audreys $110,000 Aspen and 5th Improvements Change Order #2 - Sewer line $520,000 Extra PM Cost for Change Orders including Audrey's and Sewer Line Design & PM $60,000 N. 7th Ave Streetscape - Mendenhall to Durston $3,495,000 N. 7th Ave Streetscape Change Order #1 - Nu2u $250,000 N. 7th Ave Streetscape, Project Construction Management and Engineering $194,750 Streetscape, Short to Durston Balance (RSVP)$24,000 Contingency $200,000 Outside Legal Counsel For Bonding and Redevelopment Agreements $60,000 Redevelopment 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 Contracted Professional Services $50,000 Payroll $68,372 Training $3,000 Approved Grants and Direct Incentives West Peach Condos $256,355 The Monarch $149,346 The Ruh Building $747,500 Aspen Crossing $849,958 Zambon Building $45,000 Midtown Tavern Patio Legacy N7 Rehab Grant $15,000 Monarch Conduit System Connection $10,000 Total New Expenditures for FY 2021 New Expenditures $9,399,176 TOTAL EXPENDITURES FY 2021 $9,399,176 Year End Balance $753,183 *Items in green have been updated or added since the Midtown Urban Renewal Board voted to recommend this budget on April 30, 2020 139