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HomeMy WebLinkAbout2004-03-31 Minutes, City Commission, SPEC - .----.-. ---.-. ----..------- --.".-.---...-...- MINUTES OF THE SPECIAL MEETING OF THE CITY COMMISSION BOZEMAN, MONTANA March 31, 2004 ***************************** The Commission of the City of Bozeman met in special session in the Commission Room, Municipal Building, on Wednesday, March 31,2004, at 7:00 pm. Present were Mayor Andrew Cetraro, Commissioner Jeff Krauss, Commissioner Marcia Youngman, Commissioner Steve Kirchhoff, Commissioner Lee Hietala, Acting City Manager Ron Brey, Planning Director Andy Epple, Director of Finance Miral Gamradt, City Attorney Paul Luwe, and Deputy Clerk of the Commission Karen DeLathower. The meeting was opened with the Pledge of Allegiance and a moment of silence. Sianina of Notice of SDecial Meetina Each of the Commissioners, in turn, signed the Notice of Special Meeting. Presentation of DroDosal to construct Darkina structure alona south side of West Mendenhall Street between North Tracy Avenue and North Black Avenue Included in the Commissioners' packets were a memo from Finance Director Gamradt, dated March 29; notes from the Parking Commission meeting held at 7:30 a.m. on Friday, March 26; and notes from the Downtown Bozeman Improvement District Board (lOB) meeting held at 3:30 p.m. on Friday, March 26. Distributed just prior to the meeting were a position statement forwarded by the Parking Commission, the Downtown Bozeman Improvement District Board (lOB) and the Business Improvement District (BID) Board, dated March 29; a memo from City Attorney Paul Luwe, dated March 30; an e-mail message from Angela Kociolek, 620 North Tracy Avenue; a letter from 1. H. Crawford, 15 South Tracy Avenue, dated March 31; and a letter from Sheryl Sanders, owner of Lilly Lu, dated March 31, 2004. Mr. Dick Clotfelter presented an overview of his proposal to construct a parking structure along the south side of West Mendenhall Street between North Tracy Avenue and North Black Avenue. He has heard comments that this proposal is being pushed too fast, so, in response, he presented the following history of this project. In January, 2003 he approached the City regarding his idea; and in June, 2003 there was a public announcement of the Arts at City Center project. During that announcement he indicated there would be three components to this project; a parking garage, the performing arts center, and a hotel/convention center. At that time, he clearly stated one cannot raise over $45 million in private money to build an arts center unless the key ingredients are in place; and that includes a downtown parking garage with at least 400 spaces. Mr. Clotfelter stated he initially thought it would take between 90 and 120 days for the parking garage decision. In the fall, he started looking at other types of financing relating to a convention center with a private hotel located on top. The convention center may possibly be financed by federal funding, and he hired lobbyists to get help to procure that federal funding. During this time, a request for proposals was done for the parking structure, and there were four proposals submitted. Those were narrowed down to two firm.s, who were interviewed; and the committee made their recommendation in late January, 2004. Mr. Clotfelter said he thought that was probably the end of the line for a commitment to a parking garage because of the length of time this process was taking. He wanted to find out if there could be a special improvement district created to help pay back the $3 million portion of the garage costs not covered by tax increment financing monies, but that would take another four to five months. Three weeks ago, he made the decision to pull out of this project because there still was no commitment to a parking structure; and without that commitment, he wasn't able to begin raising money for the performing arts center. However, some supportive people came up with a way to guarantee private financing and take the City totally out of the financing picture. Mr. Clotfelter noted he then talked to a bank who had approached him earlier on another portion of this project, and he shared the concept with them. Mr. Clotfelter said he is now here to propose an alternate garage plan; one that will take the City off the financial hook. This proposal says a non-profit entity will be set up to lease the parking site the City 03-31-04 Special - ----,,-- --. ...-...--..- ---------.- .-.... __ . .______ _. n ___. ". _ - 2 - owns and purchase the PowderHorn property. This non-profit entity will be a board consisting of seven to nine members and will include members of City staff, Downtown Bozeman Improvement District Board (lOB), Parking Commission, and either the guarantors of the private note or their representatives. That entity would then design and build the parking garage, which would be financed, in part, with tax increment financing money. The lOB voted to put a $3.5 million bond up for financing of the garage, plus $150,000 for design of the structure. He then went to a group of investors and a bank to layout this plan, and they agreed to a plan to come up with private financing for $2.8 million. Therefore, there is now enough money to construct at least the first phase of the parking garage. The bank will finance the garage for five to seven years because the lOB has agreed to extend the life of the tax increment financing district, which will continue to grow to possibly $3 million in the next five to seven years. The bank has said they would not allow a non-profit entity to transfer ownership of the parking structure to the City until they have been paid off. The idea would be that at the end of five to seven years, the bank will be paid off either through tax increment financing or with federal funds. It would then be the option of the City to take control of the garage or allow the non-profit board to continue to operate the facility. Mr. Clotfelter stated it is their desire that this structure be a public design and constructed of brick to fit with the downtown community. While the garage is under construction, rent will be $100 per year; but after it is operational, 100 percent of the profits of the parking garage will be turned over to the City. Mr. Clotfelter noted there have been comments regarding the need for such a parking structure. City staff recommended a traffic study be conducted to determine if a parking garage were needed, and what its effects on the downtown would be. Robert Marvin and Associates was hired to do that study, and the report was received last week. In part the report states, "current parking space utilization ranges from 72 to 79 percent during the daytime hours. Greater than 80 percent utilization indicates parking is at or near capacity. Existing conditions are at capacity and parking demand has been increasing". There is no question a parking garage needs to be constructed downtown. The Arts at City Center is the primary venue, but they need parking for 400 vehicles in order to proceed. Therefore, if the Arts at City Center is funded and under construction, the City would need to commit to constructing additional stalls if 400 aren't constructed in the initial phase of the parking garage. Commissioner Kirchhoff stated there may be a chance of building a parking structure for 400 vehicles in the first phase and asked under what condition that could occur. Mr. Clotfelter replied it is his intention to try to keep everyone's costs corralled enough to have sufficient money in the budget to initially provide four levels of parking or 400 spaces. Mr. Clotfelter noted that, at this time, there is no need for creation of a special improvement district. A lease and a memorandum of understanding will be written as soon as possible, so this project can go forward if it is granted Commission approval. Mr. Clotfelter reiterated his team is committed to a public involvement process; and they have followed the process used by the Bozeman Public Library by appointing Martel Construction as the contractor, who will go through the public bidding process for construction of the structure. Mr. Clotfelter stated people often talk about the risks, but the only people at risk at this point in time are the five guarantors. No one else is at risk because thetax increment will grow, and the city will get a parking garage irregardless of the rest of the project coming to fruition. If this proposal is approved by the Commission, his team will get in gear and start raising money to get the performing arts center and convention center going. Regarding the convention center, Mr. Clotfelter noted he is not asking the City for anything more than moral support in the form of a letter to federal representatives. Commissioner Kirchhoff was approached by lobbyists asking for a letter to support their lobbying efforts to bring public money to Bozeman. The Commission responded and the lobbyists were able to get a line item, thanks to the efforts of Representative Rehberg and his staff, included in the transportation bill, which only comes around every three years. There is no City, County, or State money available for construction of the convention center, so this is very important. Commissioner Krauss stated he would like to talk about how the debt service payments are going to be made. Mr. Clotfelter responded the tax increment financing money will pay its share of the $3.5 million bond, and the guarantors will payout of pocket the first year and will use income from the garage after that. Cash flow out of the tax increment can also help pay. 03-31-04 Special ---------------------------------------- ...--.....-..--- . --. -- ---.--.- . ----"..-...--......- - 3 - Commissioner Kirchhoff clarified the private guarantors will pay during the construction of the parking garage and the first year debt service on the loan. Mr. Clotfelter replied interest is built into the loan during the construction period; and if there is a shortfall from garage income, the guarantors will pay that out of pocket. Commissioner Kirchhoff noted it will take some time to payoff a $2.8 million loan. Mr. Clotfelter stated it is not an amortizing loan; it is interest only, and right now the interest rate is fairly low. Commissioner Krauss reiterated the portion backed by tax increment financing would be interest and principal paid from the increments. The private guarantors of the $2.8 million will pay interest only until the full 15 years of tax increment financing is up, and at that time the tax increment financing cash flows will be bonded again and the private guarantors will be paid off. If there is a shortfall during that time, that risk will be born solely by the private guarantors. Commissioner Youngman questioned if the typical design review process will be followed, to which Mr. Clotfelter replied that it will. Commissioner Youngman then asked if there will be opportunities for public input for the design of the structure, and Mr. Clotfelter answered there will be many public meetings to invite the community to provide their input. Mack Butler, 321 East Main Street, stated he is neutral on this issue but would like to make one point. He has been reading the newspaper and is concerned that over and again there is the notion the downtown businesses and property owners will be bearing some of the burden of the cost this parking garage. His understanding of tax increment financing is that if these funds are spent on this garage, they will have to be replenished, which will be a burden upon the existing and new businesses on Main Street. He owns one-half interest in the Bozeman Hotel; and he has spent over $1 million on the Hotel, which hasn't been funded by any method other than his private funding. He doesn't want anything imposed on the downtown business owners with respect to this venture. He is in favor of anything that improves downtown Bozeman, but most Main Street business owners have funded what they've done out of their own pockets. Any improvements or venture should be done privately and not on the backs of property owners in the downtown. Larry Bowman, 36 East Main Street, said he would like to encourage Commission support of the garage because the city needs a parking garage irregardless of the Arts at City Center. There is inadequate parking for downtown customers; and he is anxious to see additional parking in the area, particularly employee parking, which is the bigger issue. If employees park elsewhere, then customers will have places to park. His business leases spaces for some of their employee parking, and he would be anxious to lease more spaces for additional employee parking. Mr. Bowman stated he spent a number of years on the Parking Commission, and the goal was to provide additional employee parking. The downtown belongs to the citizens of Bozeman, and it is a jewel. There needs to be reinvesting to keep up with the times and to keep the downtown vital. Lori Lawson, Emerson Cultural Center Board of Directors, stated the Emerson Cultural Center supports this project; it will work well with their projects. Ana Maria Torres, 128 East Main Street, said she is in favor of a parking structure. Downtown parking is inadequate for their renters; and whether people realize it or not, Main Street is a huge residential district. They do lease parking spaces for their employees and renters, but it still is inadequate. They end up ticketing and towing cars because no one respects that relationship. They would like to commit to 20 spaces in this parking garage, if they would know for sure retailers would getfree parking. Currently the City is ticketing every two hours and kicking people out of the downtown. They would like to see overnight parking and monthly leases guaranteed for employees and renters, which would be the ideal situation. Jack Leddick, 552 Triple Tree Road, noted he served for five years on the Board of Directors for the Gallatin Performing Arts Center; so he knows about this issue. From the point of view of a county resident, he said he understood the concern of the downtown property owners that there mayor may not be an immediate need for a parking garage. The need for a parking garage is growing; and consequently, if a case could be made there isn't an immediate need, there certainly will be in three to five years. If the City waits until then to build a garage, this opportunity may be lost; and it will be many years before this opportunity arises again. The Arts at City Center has a chance of succeeding, so the Gallatin Performing Arts Center Board was discontinued in favor of the Arts at City Center. Karla Hill, 1417 South Fifth Avenue, stated the biggest question is, is there a need for this garage. 03-31-04 Special ------- ._. __"...n_.__....____... __n_.. ___u .._. _ .._._ .._..". _...._._ --.-.-------.- - - 4 - She takes customer feedback very seriously; and they have hired the Brandt Group, who sends weekly mystery diners to the restaurant and provides them with feedback. Their feedback indicates that parking in the downtown is very poor; and she shared some of the audits, which highlighted the difficulties people experience when parking in the downtown. These reflect downtown customers' need for this parking garage. People don't mind walking, but they do mind wasting their time driving around trying to find a parking spot. Matthew Savery, 315 Flathead and Director of the Bozeman Symphony Orchestra, said he has been in this community for 10 years; and this is the most European community in the United States. He has been making himself available to anyone who can build a proper, state-of-the-art performing arts facility in the community. At one time there was a proposal to build a performing arts center on Huffine Lane, which . would have been a fine site; but comments made always indicated this facility needs to be downtown. Mr. Savery said he has traveled around the country, and it is very evident how poorly some communities have designed their downtown areas. It is unacceptable that Bozeman doesn't have a state-of-the-art performing arts center, and Mr. Clotfelter's proposal addresses the concerns of such a center being in the downtown. Tom Garnsey, 317 North Bozeman Avenue and Voodie Productions, stated they were involved early on with the earlier performing arts center group; and they still offer performances in the Emerson Cultural Center and the Willson Auditorium. He has produced between 300 and 400 shows here in Bozeman. Mr. Clotfelter is an amazing individual who has a far superior plan, and Mr. Garnsey said this is the most viable thing for the downtown this city could ever see. Carol Wilder, Equinox Theater, noted she has observed the parking crunch over the years she grew up here. She has a very strong belief in Mr. Clotfelter, and she feels like giving up this opportunity would be a huge mistake. She strongly encourages a unanimous, favorable vote on this project. Terry Quatraro, 5205 Eclipse Drive and owner of Little People's Academy, mentioned she is involved with Music on Main, the Christmas Stroll, and serves on the Bozeman Beautification Advisory Board. The Christmas Stroll and Music on Main are steadily growing and are important elements of this community. They both take place downtown, and it would be nice to have appropriate parking downtown for those who are unable to walk to the downtown. Also, it snows here in Montana; and it would be nice to go back to your car and not have to scrape snow, which would be another benefit of a parking garage. She has had contact with Mr. Clotfelter, and she enjoyed his foresight, enthusiasm, and wonderful ideas. Ms. Quatraro stated she wholeheartedly supports the parking garage as the first step of Mr. Clotfelter's proposal. Bobby Cove, 136 East Main Street, voiced his support for a parking structure downtown. Steve Schnee, 121 West Main Street and Chair of the Downtown Bozeman Improvement District Board (lOB), said he wanted to convey the Board has followed this process from the beginning; and they held a special meeting earlier this week to discuss this proposal. The Board unanimously supports the funding process outlined this evening; and if there are any questions, they should be directed to either Bobby Bear or himself. Bobby Bear, 318 North Bozeman Avenue and lOB member, reiterated the Board unanimously approved funding of the parking garage and the going forward with this project. This is one project that has created unity in the downtown community. Chris Pope, 1508 South Bozeman Avenue and Parking Commission representative, noted people have heard a lot about parking tonight in some valuable ways. With the current parking situation in the downtown, business owners and the Parking Commission work double time to create parking for employees, residents, and customers. While many would like to think this parking garage will be a panacea, it won't; but it will make a huge difference. This week the Parking Commission met in special session to review this proposal, and they unanimously support this proposal. Mike Hope, 322 North 20 Avenue and involved in the Rocking R, Ferraros, and Little Johns, said this parking garage is being proposed from a different perspective; not on the heels of a blighted downtown area, which is when most people discuss parking garages. This is very visionary and proactive, and he commended the Commission for addressing this. Parking downtown will also benefit North 7th Avenue, which is a blight on Bozeman, because not everyone will stay downtown. If the only thing that comes out of this proposal is a parking garage, it will create redevelopment. He cited North 19tti Avenue, saying when 03-31-04 Special - 5 - the City committed to investing in that area, it was built and they came and are still coming. Mr. Hope predicted the city will see the same rejuvenation in the downtown. Benjamin Bennett, 215 South Bozeman Avenue, stated he works at the Bozeman Hotel and is a downtown resident. He was against the parking lot suggested between Bozeman Avenue and Olive Street, which was a bandaid only. He is in favor of Mr. Clotfelter's plan for a garage with 400 spaces, which is proactive. Thail Davis, 224 East Main Street, Downtown Bozeman Partnership, brought to the Commission's attention there are currently 40 people on waiting lists for leased parking spaces in the downtown lots. Kent Madin, 108 South Bozeman Avenue, stated he remodeled those homes on South Bozeman Avenue that were slated to become a parking lot. He said he believes this is a really sweet deal and to think this will appear again in the future, particularly in light of the previous two failures, is foolish. There is momentum for this project, and he supports it. Ray Erickson, 125 McGee, noted that when the streetscape project was proposed for the downtown, many people said those efforts should be put into a parking garage; and he was one of them. Now the downtown is being handed a parking garage on a silver platter, with no costs to the business people. It is embarrassing that Bozeman may get a parking structure without paying for one. Mr. Erickson said he respectfully asks the Commission's support for this proposal. Doug Bundren, 16 East Main Street, noted that one of the frequent comments he hears as a business owner revolves around the problem of parking downtown. As Bozeman continues to grow, that problem will also grow. He stated he is in favor of a parking garage, as long as it is done in a fiscally and legally responsible manner. Lon Lundberg, PO Box 970, Manhattan, stated he is now a commercial real estate broker. He is an ex-retailer from two communities in California where the viability of the downtown was in question. Both those communities decided to build a parking garage; and both those communities owe their current vitality and excitement to the parking garages that were constructed downtown. Ivan Dieruf, PowderHorn, said when he first met Mr. Clotfelter, he was skeptical; but then he looked into Mr. Clotfelter's background and heard that anything he said he honored, and it went as he said it would. Mr. Dieruf said he made a handshake deal with Mr. Clotfelter, so the two contracts came into agreement with each other. He is in favor of this parking garage, even though they are giving up parking to get parking. Tim Crawford, 15 South Tracy Avenue, stated he did not come here to speak against the entire project; but he did want to caution the Commission to be ever mindful of its responsibility to the entire community, not just the downtown. It is still taxpayers' dollars that are paying for this, so be careful. He said he hasn't heard one word about what the infrastructure costs will be down the line to the citizens of Bozeman. There is no money coming from the developers to mitigate those costs; that entire issue is being sidestepped. Jane Jelenski, 433 North Tracy Avenue, said a wise man once said we are doomed to repeat our failures. She then reviewed the history of the Valley Unit Subdivision and Hebgen Estates. She pointed out Mr. Clotfelter went bankrupt while proposing such a project in Seattle and that performing arts center was never built. Ms. Jelenski said it is repugnant that Mr. Clotfelter has made threats that he will walk away from this project if this isn't hustled through the City's processes. This project requires full disclosure and citizen participation. Ms. Jelenski stated she is against meetings of such significance being held without the agenda being published in the newspaper; Rebecca Adams, 2503 Rose Street and downtown employee, said she can attest to the parking problems downtown. While she does see a parking problem downtown, she is concerned about the use of public funds. She said she would appreciate it if someone could address the use of public funds for this facility. Ms. Adams stated she would rather move her car every two hours than to have money taken away from any other aspects of the city, such as education. Don Baide, 402 East Main Street, noted the vast number of comments he hears from customers is how wonderful and how beautiful downtown Bozeman is. The two negative comments he hears is the lack 03-31-04 Special - -----------..-------- ..---.-----..-....----- -----..-- ------ - 6 - of downtown public toilets and the lack of downtown parking. Toilet comments come from out-of-towners, while parking comments come from community members. He urged the Commission to adopt this garage proposal because the downtown needs one, and this is a good opportunity to get one. The downtown parking problem is going to continue to get bigger. Ken Nordtvedt, 118 Sourdough Ridge Road, stated he has no strong opinions on the parking garage. His concern is how it is financed; and if it is sound, or will the taxpayers be subsidizing a private developer. When the smoke clears, this new proposal means all $6.3 million for this parking structure will be covered by tax increment financing money, spread out over time. Mr. Nordtvedt said he would like to see a schedule developed and published in the newspaper showing how long tax increment financing will take to pay this $6.3 million. He asked what will happen if the legislature terminates tax increment financing laws before this debt is covered. Mr. Nordtvedt stated he talked to both Director of Finance Gamradt and the ex-state budget director and asked if schools and county governments have to agree to begin and extend tax increment financing districts. He was told that as a courtesy they are asked their opinions, but they don't have to agree to have their moneys diverted to tax increment financing districts. Mr. Nordtvedt said he wants to know if the Bozeman School District and County Commissioners have agreed to give up their tax revenue; and if so, he wants to see that published in the local newspaper. He then asked what the projected income stream from the parking garage will be, and if it will cover the operations and maintenance of this parking structure. He noted business owners have said they want free parking and asked if hotel guests have to pay for their parking spaces in the garage, noting urban parking is not usually free. Kendall Dittmar, PO Box 6266 and IDB Board member, stated she is very much in favor of this project. However, she hasn't heard about the intangible benefits of other potential investors who will see a private investment of this magnitude; and who will then be attracted here and will add to the amenities of downtown Bozeman. She would like to see this project go forward. Marrietta Glase, 3800 Richmond Road, pointed out there is supposed to be a new amphitheater being built at the Gallatin County Fairgrounds and asked if this is viable. If so, she questioned why this community needs two performing arenas, noting there is plenty of parking at the fairgrounds. Steve Johnson, 223 Circle Drive and Assistant Superintendent of Administration for the Bozeman School District, thanked the Commission for inviting the school district to express an opinion on extending the length of the tax increment financing district. In 1995 the Bozeman School District had an opportunity to express an interest in forming a tax increment financing district. The final conclusion was that the school district would agree to it because it was a significant reinvestment in a tax base that they didn't want to see deteriorate. When that happens, it cannot be brought back. A pUblic meeting was held regarding extension of the tax increment financing district for four years, and it was approved by the school board. The County Commission also supported a four-year extension of the tax increment financing district in a public meeting held last week. Reinvestment of that money will benefit the city, county, and school district for many years to come. Commissioner Krauss thanked Mr. Johnson for his testimony and asked if there is any reason to believe, had the tax increment financing district not been created, there would have been additional private investment downtown. Mr. Johnson replied the investment in downtown Bozeman is greater as a result of tax increment financing than it would have been otherwise. Responding to Mayor Cetraro, Mr. Schnee stated the Parking Commission, BID, and IDB all agreed unanimously to support this project. They met with Mr. Clotfelter earlier this week to make sure they had addressed several points of clarification, and that information has been provided to the Commission in the position statement. These are not areas of contention, they are only points of clarification; and there is nothing in the document submitted to the Commission that Mr. Clotfelter and his group have any problems with. In followup to Mr. Johnson's comments, tax increment financing districts typically have 15-year life spans; but when this district was formed, as a concession, an 11-year district was agreed upon. Therefore, this district will not be extended beyond the normal life span. At the time the tax increment financing district was formed, the State froze all property tax values, so the tax increment didn't grow. Over time there has been reinvestment and growth, but not according to the schedule originally planned. The goal of the tax increment financing district was to support major downtown improvements, with a parking garage being a major component. Economic development of the downtown will benefit all taxing agencies in the long run. Mr. Schnee then highlighted the Downtown Parking Structure Position Statement as submitted to the Commission. Key points include assurance t he public involvement component and expectations 03-31-04 Special .........--.-.. - 7 - outlined in the request for proposals will be followed, and that substantive public participation will be used to design this structure. Any design greater than four stories above grade will be carefully considered in the context of the scale of the historic downtown. It is recommended any additional required spaces be created downtown as an option to additional floors. The initial structure will provide a total of approximately 400 parking spaces. While no special improvement district (SID) is anticipated at this time. the City may create an SID or use other public funds to cover any tax increment funding shortfall. Mr. Schnee pointed out the IDB has committed funds to the library project as well, as a financial commitment of support for the new library. Mayor Cetraro noted the Commission heard public testimony regarding the legality of this meeting based on advertising requirements. City Attorney Luwe noted Ms. Jelenski indicated the agenda for this meeting should have been published in the newspaper. While the City normally publishes regular meeting agendas in the newspaper, it does not publish special meeting agendas in the newspaper. He had been contacted by Ms. Jelenski earlier in the day. and she gave her understanding of the Attorney General's opinion. City Attorney Luwe said he disagreed with her on that opinion because that ruling normally refers to County Commissioners. Ms. Jelenski was informed the special meeting notice was posted in City Hall, on the official posting board, on Tuesday afternoon in accordance with Commission policy. State law provides that before a final decision of significant public interest is made, there must be appropriate notice given pursuant to applicable resolution or ordinance. State law also states public notice requirements have been met if there is an article publicly published sufficiently in advance of the meeting. In this case, the Bozeman Daily Chronicle published an article that mentioned this public hearing and included the date and time. That notice was more in advance than the published Sunday meeting notice that is normally given. Additionally, the meeting agenda was posted on the City's web site on March 26th; and while that site was down for a brief time this morning, it was functioning over the weekend and earlier in the week. Therefore, the City is not in violation of the Attorney General's opinion or state law. City Attorney Luwe stated his recommendation to cure the perceived deficiency would be for the Commission to delay its decision on this item until next week, so the agenda could be published in its normal manner. If not, there is the potential of a lawsuit, which could delay this project even more, even though all state laws have been met. Acting City Manager Brey responded to Mr. Crawford's comment that there has been no indication of what the infrastructure costs and impacts will be. When Mr. Clotfelter first brought this proposal forward, the Public Works staff met to discuss what the possible impacts on infrastructure would be. Staff did not identify anything that would preclude the elements of these projects, the parking garage and performing arts center only. When the parking garage or performing arts center proposal comes through the normal review process, those detailed assessments will be disclosed. Responding to Mr. Nordtvedt's concerns regarding school district and County Commission participation in the tax increment financing district, Acting City Manager Brey reiterated Mr. Johnson's comments addressing that issue. In the near future, there will be a request from the IDB to extend the life of the tax increment financing district; and members of that Board have already been to the Bozeman School District and County Commission to get their blessings. Regarding the proposed amphitheater at the Gallatin County Fairgrounds, Acting City Manager Brey stated he has not seen that proposal. Director of Finance Gamradt noted that whenever public participation is required to help finance or subsidize a project developer, the primary criteria is whether or not this proposal is sound. In 1995 the Commission created the tax increment financing district. Downtown boundaries were created and property values within that district were frozen and all taxes generated went to each taxing jurisdiction at the same rate; but, over time, the increased taxes from that district went into a separate fund, which is the increment. Now that fund is at the point where the income flow will allow the bonding of $3.5 million. Interest only will be paid until the tax increment financing expires, when another bond will be taken out to retire the $2.8 million loan. There is no SID proposed, and there will be no contributions by downtown business owners. Those tax increment funds will not have to be repaid or replenished. Mr. Gamradt stated it is encouraging that parking revenues are not being anticipated to retire this indebtedness. Communities that get into trouble paying for parking garages are ones that rely too heavily on the income stream from the parking garage. Parking garages do not pay for themselves; that is why public funds are needed to get them going. Any income from the garage will be turned over to the City, but no one is counting on that money. 03-31-04 Special _.. u__..___. - 8- Commissioner Krauss stated he feels the notice question needs to be cured, so he would make a motion to continue this hearing for one week to cure any noticing deficiency. There are a lot of people here who have testified, and he would like to have some discussion on the testimony received this evening. Commissioner Hietala said he has supported a performing arts center downtown for a long time. However, he will be voting against this because he doesn't believe in complicating the financing of this parking garage by allowing a private group to get a bridge loan for $2.8 million. It appears to him that the tax increment financing money, plus a much smaller bridge loan pursued by the City, should be adequate; and that way, the entire project would be controlled by the City because the City is ultimately on the hook for the success or failure of this project. It appears to him there is sufficient tax increment revenue available to finance a three-level parking garage; and the fourth level could be added if, and when, federal funding becomes available. A City-controlled project would also be properly bid. Commissioner Hietala suggested the Commission needs to ascertain that a majority of the stakeholders are in favor of this, that there is a performance bond to ensure the completion of the contract, and to further simplify the transaction, the City should purchase the Oieruf property. Commissioner Kirchhoff thanked those in attendance and stated he appreciates the informed testimony and questions asked. He said he feels the Commission knows a fair amount about this deal; and he doesn't have the sense the City is moving into unknown territory, but there are obstacles in every deal. There is a risk to do something, but a greater risk not to do something. He doesn't believe this needs to be worried to death, nor does it need to be restructured for the security of the City's investment because there are risks with every undertaking. The tax increment growth projections are very much in line with the obligations being discussed. Commissioner Kirchhoff noted this is opportunity knocking, and the community needs to answer. If the Commission believes action on this item should be delayed for one week, that may be the safe thing to do; and he would support that. Commissioner Youngman stated the Commission needs to give direction to staff regarding what kinds of things the Commission is looking for. The position statement provided by the three downtown boards is a good start, and she asked staff if there is anything else they would like the Commission to provide support for. Commissioner Youngman noted this proposal will get the city taxpayer out from under any obligation, while still allowing public protection and input. There will be considerable savings for the taxpayers up front, while still allowing the opportunity to get federal funding or other financing options. The parking garage needs to be considered separately as a needed asset and resource, and there has been some significant indications in the last week of a good faith investment in the downtown by this developer. Representative Rehberg was able to fold $5 million of potential Congressional funds into the transportation bill; and even though it isn't certain that money is going to be forthcoming, it does build positive energy. Commissioner Youngman stated she, too, appreciates the pUblic input and concerns expressed this evening; and she is ready to be supportive of this project based on the information provided. Mayor Cetraro noted this alternate proposal has made this decision more simplified, and he is supportive of this proposal. Staff has worked with the developer to make this project move forward smoothly. Commissioner Kirchhoff referred to Director of Finance Gamradt's memo showing the tax increment actual and required revenue stream, noting there is $130,000 between what is projected and what is required. There may be a way to recoup some of that money by looking at the way the lOB allocates some of those funds. There are some items included in expenses that would narrow that gap, and it might be possible for the lOB to find other ways to fund those expenses. Commissioner Krauss noted the tax increment financing district was created in 1995; and as was pointed out, the increment was only $17,000, but some tax increment districts have gone negative in the beginning. While it looked as though it wasn't going to go at first, the increment has done well because of the business owners downtown. It cannot be concluded that downtown investment would have been made without this district. The tax increment financing district is a good thing, and how good it is is measured by the growth in the increment. Commissioner Krauss stated he likes the caveats provided by the Parking Commission, lOB, and BID. He still thinks it is important that the property be appraised, and it be purchased with the initial bond. Commissioner Krauss said he believes there should be proportional representation on the non-profit board by the City, including the Parking Commission, lOB, and BID. He noted the City will still be quite vitally involved with everything that goes on with this project. He would rather not subsidize the debt service of the private financing from the tax increment financing at this time, but would rather look at what the $2.8 million is going to do long term. Commissioner Krauss stated he wanted to publicly thank 03-31-04 Special .------......- .-.- -..--.--.-- - 9- Representative Rehberg for getting the funding included in the transportation bill with such speed and efficiency. It was moved by Commissioner Krauss, seconded by Commissioner Youngman, that action on this item be delayed until the April 5th meeting and that, in the meantime, staff be directed to continue reviewing the project and attendant documents. The motion carried by the following Aye and No vote: those voting Aye being Commissioner Krauss, Commissioner Youngman, Commissioner Kirchhoff, Commissioner Hietala, and Mayor Cetraro; those voting No, none. City Attorney Luwe recommended that the Commission allow new public comment on this item at the April 5th meeting. Public Comment No public comment was received under this agenda item. FYI Items (1 ) Letter from Michael W. Delaney, dated March 30, 2004, forwarding a petition signed by twelve business owners asking that the two parking lots at the intersection of North Willson Avenue and West Mendenhall Street be retained as free public parking lots. (2) Letter from Michael W. Delaney, dated March 30, 2004, offering to purchase the Soroptimist Park from the City of Bozeman for $250,000.00. Adiournment - 9:27 pm There being no further business to come before the Commission at this time, it was moved by Commissioner Hietala, seconded by Commissioner Krauss, that the meeting be adjourned. The motion carried by the following Aye and No vote: those voting Aye bei Commissioner Hietala, Commissioner Krauss, Commissioner Youngman, Commissioner Kirch ff, Mayor Cetraro; those voting No, none. A ETRARO, Mayor ATTEST: ~J~ R IN L. SULLIVAN Clerk of the Commission PREPARED BY: 1\~M~~ KAREN L. DeLA THO ER Deputy Clerk of the Commission - 03-31-04 Special - ----------- .-"'---.----- .-..-.-.--.-