HomeMy WebLinkAbout07-13-20 City Commission Packet Materials - C2. South Bozeman Technology District FY21 Update
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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Michael Veselik, Economic Development Specialist
Brit Fontenot, Economic Development Director
SUBJECT: South Bozeman Technology District FY21 Update
MEETING DATE: July 13, 2020
AGENDA ITEM TYPE: Consent
RECOMMENDATION:
Receive the information contained in this memo and consider this in the context
of the FY21 urban renewal district work plans and budgets.
BACKGROUND:
The Bozeman City Commission created the South Bozeman Technology District
(the "District") in December, 2012 and authorized the District's use of tax increment
financing to support a wide array of statutorily defined activities within the District,
including the development of public infrastructure. Click here to review the District’s
comprehensive development plan.
A primary purpose of creating the South Bozeman Technology District (the
"District") was to address existing public infrastructure deficiencies on property
envisioned for use by the Montana State University Innovation Campus ("MSUIC") as a
location to create a campus of innovation excellence. The Advanced Research Laboratory
(“ARL”) was recently completed in the south east corner of the site. Additional site
development, via infrastructure and new building construction, is planned for the
property over the next few years continuing to deploy the necessary infrastructure to
facilitate the aforementioned development. (Attachment 1)
In the effort to create and sustain the MSUIC as an innovation leader and
economic driver in this region, the City continues to support MSU, the MSU Foundation,
the MSUIC and other community partners to carry out the vision of the Innovation
Campus. Since the last report, the MSUIC Board was very active and much has been
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accomplished to get the first facility, the ARL, under construction and set the stage for the
development of the balance of the property within the District and on the MSUIC site.
After discussions with the development group, Charter Realty, and the MSUIC and
Foundation leadership, it became clear that construction start time(s) and remaining life
of the TIF (7 years), makes it difficult to reimburse for eligible infrastructure costs given
the short time horizon for increment growth and reimbursement.
UNRESOLVED ISSUES:
The timelines for TIF reimbursements have shortened to the extent that
reimbursement for eligible costs based on appreciating District values is highly unlikely.
Under these circumstances, the MSUIC development group is longer interested in
participating in the district’s reimbursement program. Staff has discussed this
misalignment of the TIF district timing with appropriate staff at the MSUIC and
Foundation. Due to a lack of activity in the district and timing misalignment of the TIF with
developer plans, staff is considering a recommendation to the City Commission to sunset
this district.
FISCAL EFFECTS:
Until late 2018 there was no real development activity on the site. Thus, very little
increment has accrued since 2012 when the District was created. As of June 19, 2020, the
District fund is -$7,611. The negative fund balance results from the following expenses;
1) in FY14 $7,085.50 in legal fees charged to the fund, and 2) in FY15 $536 in legal fees
was charged to the fund. These legal fees are resultant from the draft reimbursement
agreement prepared by outside counsel for eventual use with the site developer. The
value of the proposed first phase of development is approximately $17 million dollars
which should erase the deficit and add value, and increment, at the next reappraisal and
District valuation cycle in 2020. (Attachment 2)
ATTACHMENTS:
1) South Bozeman Technology District map;
2) South Bozeman Technology TIF District Fund Balance as of June 19, 2020.
Report compiled on: June 23, 2020
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BEGINNING FUND BALANCE: JULY 1, 2019 (7,611)$
ADD: REVENUES
Property Tax Increment 0
TOTAL REVENUES 0$
LESS: EXPENDITURES
Contracted Services/Consultants & Prof Services -$
TOTAL EXPENDITURES -$
CURRENT FUND BALANCE / (FUND DEFICIT)(7,611)$
SOUTH BOZEMAN TECHNOLOGY TIF DISTRICT FUND BALANCE
Fund 192
As Of 6/19/20