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Bozeman proposal to provide economic development and housing finance services from Baker Tilly
City of Bozeman, Montana Proposal and qualifications to provide professional services in economic development and housing finance April 5, 2021 Baker Tilly Municipal Advisors, LLC 380 Jackson Street, Suite 300 St. Paul, MN 55101 +1 (651) 223 3000 +1 (651) 223 3046 bakertilly.com April 5, 2021 Mr. David Fine, MPA Urban Renewal Program Manager City of Bozeman P.O. Box 1230 Bozeman, MT 59771-1230 Dear Mr. Fine: Thank you for the opportunity to present Baker Tilly Municipal Advisors, LLC’s (BTMA) qualifications to provide professional services in support of economic development and housing finance to the City of Bozeman (City). We are energized at the prospect of helping the City achieve its economic development and housing finance goals. Our Housing and Economic Development (HED) practice is both longstanding, yet new. In 2019, Baker Tilly merged with two well-established, large and diversified municipal advisory firms, Springsted and Umbaugh, working only with the public sector. Both had dedicated HED practices. This expertise was integrated with a team within Baker Tilly Capital that focuses on leveraging on federal and state incentives. The new Baker Tilly HED practice group combines the expertise and services of all prior groups into a consolidated practice. The new HED practice has a substantially larger staff, dual industry perspectives and services and a broader experience base of a long-tenured client base. The HED group can access other Baker Tilly groups which adds another layer of resources and expertise related to housing and development, such as business taxes and public finance. Our HED group and the larger Baker Tilly organization bring significant and dedicated resources to the City to provide your scope of services in a high-quality and responsive way. We have a process that charges the developer and not the City for our services related to new development Of particular note is the former Springsted’s, now Baker Tilly, work in Montana. Beginning in the mid-1980’s Springsted began serving a number of the larger Montana local governments. Our Montana work includes HED services for these same larger Montana cities each with vibrant downtowns. We are well-versed in the Montana public incentive programs and the development industry participants both private and public. Our Montana and larger multi-state work cause us to know a full complement of financial institutions specializing in the credit profiles of HED financings. Thank you for taking the time to consider our qualifications. Our approach is based on building long-term relationships with our clients. These relationships are built upon our focused commitment, client service philosophy, expertise, and reputation for quality and responsive service. We look forward to talking with you more about how we can work together and serve Bozeman. We hope you will permit us to become your Value Architect™ so we can, together, address the needs that are apparent now and those that will only become apparent in the future. Baker Tilly – now, for tomorrow. Respectfully BAKER TILLY MUNICIPAL ADVISORS, LLC Mikaela Huot, CIPMA, Director Dave M. MacGillivray, CIPMA, Principal Emeritus Lead, Economic Development Review Principal T: +1 (651) 223 3036 T: +1 (651) 223 3068 E: mikaela.huot@bakertilly.com E: dave.macgillivray@bakertilly.com Contents Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and controlled subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. EXECUTIVE SUMMARY ...................................................... 1 FIRM PROFILE .................................................................... 2 BAKER TILLY MUNICIPAL ADVISORS ...................................... 3 PUBLIC-PRIVATE PARTNERSHIP EXPERIENCE .................... 6 THE BAKER TILLY DIFFERENCE IS YOUR CLIENT EXPERIENCE .............................................................................. 7 PROJECT EFFICIENCIES .......................................................... 8 DELIVERING EXCEPTIONAL CLIENT SERVICE ..................... 8 QUALIFICATIONS ..............................................................10 APPROACH AND STRATEGY .................................................. 10 EXPERIENCE ............................................................................ 14 BOZEMAN SERVICE TEAM ..................................................... 16 RELATED EXPERIENCE WITH PROJECTS SIMILAR TO THE SCOPE OF SERVICES ...............................................19 EXPERIENCE WITH PROJECTS IN MONTANA ................22 REFERENCES ....................................................................24 PRICE PROPOSAL .............................................................25 VALUE FOR FEES .................................................................... 25 GENERAL APPROACH FOR ECONOMIC DEVELOPMENT SERVICES ................................................................................. 25 NEGOTIATIONS ........................................................................ 26 AFFIRMATION OF NONDISCRIMINATION ........................27 APPENDIX I: RESUMES ....................................................... i APPENDIX II: RECENT PROJECT LIST .............................xi APPENDIX III: SAMPLE MATERIALS ............................... xix City of Bozeman, Montana Page | 1 Executive summary Baker Tilly has significant experience working with communities to achieve the City’s goals which may include growth, business retention and expansion, staying competitive, diversification of housing and variety of workforce options. Baker Tilly’s primary objective is to assist clients in developing and maintaining economically viable communities. Our services improve a community’s quality of life through expanded employment opportunities, a full range of housing options and an expanded economic base. Our comprehensive service covers policy development, financial feasibility and due diligence, cash flow sensitivity analysis, developer review and negotiation, incentive packaging and selected, individualized services to meet our clients’ specific needs. The organizational aspects that uniquely qualify Baker Tilly for this assignment are clear: deep economic development experience and sophistication, coupled with knowledge and resources of our real estate development practice. We are not aware of another municipal advisor firm in the country that has the same internal resources and experience to assist municipalities with alternative financing sources, such as New Markets Tax Credits, housing tax credits and Opportunity Zone financing. The table below lists the alternative financing sources Baker Tilly can assist the City of Bozeman with accessing that will reduce public participation and increase the likelihood of project success. Federal and state tax credits and incentives Local incentives Alternative capital − New Markets Tax Credits − Low-income housing − Historic preservation − Energy related − Other geographic/project type credits − Tax Increment Financing (TIF) − Tax abatement − Discretionary grants and forgivable loans − Low-cost land or lease rates − Utility rate reductions − Infrastructure improvements − Other geographic/project type incentives − Opportunity Zones − EB-5 − PACE financing − State and federal bonding programs − Local economic development loans − Characteristic based loans, such as: Brownfield, small business, minority, rural and energy Baker Tilly has the expertise and background to provide a comprehensive and thorough process for completion of the scope of work. Our team has the following skill sets that are needed to support all aspects of the work: − Economic development experience − Policy and procedures development − Facilitation − Transactional due diligence − Feasibility analysis − Economic and fiscal impact analysis − Project management − Economic incentive negotiations − Data collection and analysis − Interview skills − Public presentations − Facilitation of policy development based on benefit distribution We help our clients prepare for future development and redevelopment, and when opportunities arise, we represent their best interests in minimizing risks while supporting their desire for growth and new private sector. City of Bozeman, Montana Page | 2 Firm profile BTMA, a wholly owned subsidiary of Baker Tilly US, LLP (Baker Tilly), is part of Baker Tilly’s public sector practice. This practice provides a diverse set of services to more than 40,000 clients. Baker Tilly’s public sector practice has approximately 420 employees, with the extensive service platform shown below. Our clients’ benefits are extensive with the expanded BTMA service offerings, access to even more resources and expertise. Two immediate illustrations of these expanded resources are access to the firm’s COVID-19 public sector services and access to a broad array of training resources (please visit: bakertilly.com). The new BTMA retains its position as an independent advisory firm. Our full range of service offerings for local governments includes: Public finance/bond issuance Economic development Arbitrage/rebate regulatory compliance Financial management services Capital planning Investment services* TIF management Post-issuance compliance User fees Public sector human capital services CAFR & GAAP services Referendum assistance/surveys Cybersecurity planning Efficiency studies Accounting services Attestation services * Services provided by Baker Tilly Investment Services, LLC, a registered investment advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly is a nationally recognized firm with a long history of service to clients located throughout the country — and internationally. As a member of Baker Tilly International, the world’s 11th largest accountancy and business advisory network, we can extend our reach through trusted relationships with firms located across the country and throughout the world. Baker Tilly was founded in 1931 with one central objective: to use our industry specialization to help our clients improve their businesses. For 90 years, Baker Tilly has understood that our business demands absolute integrity, a belief in the value of trusted relationships and a willingness to collaborate with every client. We will strive to continue to deepen and enhance our relationship with Bozeman as we seek to become your Value Architect™. Key facts about Baker Tilly: − Provides a wide range of accounting, tax, assurance and consulting services by more than 4,600 total staff members, including 440 partners − Ranked as the 11th largest accounting and advisory firm in the U.S. − Large and varied Public Sector practice City of Bozeman, Montana Page | 3 Firm profile Baker Tilly Municipal Advisors BTMA’s team of professionals brings practical, realistic and creative solutions to the challenges faced by public entities. We have provided high quality, independent financial and management advisory services to public and non-profit organizations for more than 60 years. The Baker Tilly economic development advantage Our Housing and Economic Development (HED) group is part of our municipal advisory practice. HED is composed of dedicated professionals specializing solely in the services and market knowledge of this sector. These professionals come from both prior municipal advisory firms, Springsted and Umbaugh, plus members from Baker Tilly Capital. Together we bring experience in working with both public sector housing and development entities and private developers and lenders. These combined resources afford our clients these twin perspectives in achieving a proper balancing of public and private interests through negotiation and performance. Tailored service approach Baker Tilly proposes to serve as a key advisor to the City of Bozeman for the purpose of optimizing limited resources toward catalytic development efforts. Our approach offers our clients the option of selecting services across the entire range of related services from planning and analysis to implementation to ongoing management. Our broad continuum of real estate and economic development services serves to position public sector clients to: – Enhance the City’s ability to attract development and investment – Leverage public funds to ensure community investment and meet goals and objectives – Optimize resources to ensure project success – Engage constituents in development and funding decisions Your partner in navigating the complexities of economic development Economic development is a team sport. Successful projects are driven by community collaboration. Baker Tilly’s experience serving entities across the public sector brings unique perspectives to understand community-wide goals in support of sustainable economic development. We take a holistic approach to managing client project needs while bringing the community’s vision to life. City of Bozeman, Montana Page | 4 Firm profile Achieving economic development diversification and progress has always been influenced by changing public and private market challenges, a major obstacle being the COVID-19 pandemic – whose impacts will linger, making it more important than ever to expand expertise and resources to meet housing and economic development objectives. BTMA’s economic development practice provides the expansive skills, resources and governmental specialization that communities need. Our services span across the entire development process continuum: analysis, strategy and planning; financing and implementation; and program management. The BTMA team is substantial in size, years of experience and range of expertise, and dedicated to complementing and collaborating with our clients. Our depth of public sector knowledge and real estate industry resources gives communities that work with us advantages in realizing their goals. Baker Tilly has significant experience working with communities to achieve the same goals as the City of Bozeman. From high-growth, business retention and expansion, staying competitive, diversification of housing, and variety of workforce options. The following is a sample overview of services we have identified as relevant to the City. Public development planning and analysis Many jurisdictions are looking for opportunities to promote private development through direct public investment in targeted areas. Baker Tilly helps these clients prioritize their development goals and determine how best to reach those goals through public development and redevelopment activities. City of Bozeman, Montana Page | 5 Firm profile Private development review and analysis Baker Tilly offers real estate specialists and market analysts who regularly work with private sector entities to structure and execute development projects. Our specialists have the ability to review a development proposal and quickly identify assumptions that are inconsistent with the current capital or real estate markets. Our review may include: – Market assumptions: price/rent, size, absorption, among others – Construction cost review, including developer/architect/general contractor fees – Operating assumptions – Lending and investment availability and terms – Availability and terms of alternative funding sources The results of our review may include: – Memos and/or reports summarizing the findings of our review – Market study report to compare price/rent and absorption assumptions against comparable projects – Financial consulting to revise the proposed project and financial structure to ensure success – Meeting attendance with staff and/or project sponsors Developer review and negotiations We also assist clients in learning more about prospective developers by performing in-depth business credit analyses, evaluating market conditions, assessing proposed business plans, and checking credentials and references. We also assist clients in negotiating public assistance agreements with developers. Estimation of future values and tax increments for a targeted area Our staff of public sector financial consultants brings experience in estimating tax increment for both municipalities and developers throughout the state and region. Our approach may include the following steps: Incentive portfolio development and tax increment financing (TIF) district recommendations and management We assist clients in choosing from a wide variety of tools to facilitate housing and economic development projects. Typical options include TIF, NMTC, Opportunity Zones and low-interest loans. We also develop incentive programs to match each community’s unique set of resources and priorities. Our team of municipal finance, real estate, housing and development specialists understand both the statutory regulations regarding incentives, as well as the strategy for making the most of public investment tools. We are experienced in the creative layering of additional public and private funding sources. As planners, auditors, finance specialists and public facilitators, we frequently advise clients through the incentive planning and creation process, creation of incentive policies, annual auditing and reporting. City of Bozeman, Montana Page | 6 Firm profile We anticipate that the City and project team may benefit from our experience in: – Determining the financial and strategic feasibility – Identifying other available public and private funding sources and tools – Project planning – Policy implementation – Public outreach and facilitation Review of federal, state and local tax credits and incentives available As the credit and capital markets for economic development continue to be constrained, Baker Tilly can assist the City and development team to identify the various private and public funding resources available to fill financing gaps and contribute to the financial feasibility of development projects. In addition to the financial incentives report described above, Baker Tilly can also provide the City with a financial incentives report addendum that provides details on each financial resource identified, including: – Current availability of funding and information regarding future funding cycles – Estimates of the possible benefit the programs – Procedure and deadlines for applications to funding agencies Estimation of economic impacts Our staff of public sector financial consultants brings experience in estimating economic impacts including jobs, property tax and tax increment for both municipalities and developers throughout the state and region. Our approach may include the following steps: – Project direct, indirect and induced construction and operational job creation – Estimate additions to property tax base Public-Private Partnership experience P3’s in various forms are becoming an increasingly common approach for a broad base of public entities. Public jurisdictions turning over operations, ownership and financing - singularly or in combination - to private parties. These decisions are most often major undertakings for an entity which may only occur once in their experience. In order to evaluate these opportunities, we have a specialized staff with extensive P3 experience from the Indiana Tollway privatization to medium-sized community enterprise funds. A member of our team served on the National GFOA Committee that drafted their P3 Best Practices. Another is now working on the proposed privatization of the Iowa State University utility services. We provide various services to clients pursuing development projects including assessing feasibility, performing due diligence, analyzing project components, reviewing financing alternatives, developing and implementing financing plans and reviewing the performance of completed projects. City of Bozeman, Montana Page | 7 Firm profile Our services include: P3 Infrastructure Investment Advisory Financial and Transaction Advisory – Development of P3 strategy and process – Financial advisory and execution support of P3 projects – P3 procurement support; best value analysis – Public stakeholder management – Project post mortem and performance review – Transaction advisory and due diligence – Institutional investor support; deal development and execution – Market assessment and studies – Development of investment programs – Investment monitoring – Financial review and business plan analysis – Financial feasibility study – Valuations and due diligence – Divestment advisory – Debt and equity financing strategies; Capital raising The Baker Tilly difference is your client experience The City has one-of-a-kind needs… and we’re here to meet them as your Value Architects™. We’ll listen first, work with you to develop a blueprint and then assemble the right resources to help solve pressing problems and seize new opportunities. At the end of the day, our goal is to enhance and protect the City’s value. The value you created – the value you want to keep and grow. A relationship-centric way of doing business Our ability to enhance and protect value begins with a strong, collaborative working relationship between the City and Baker Tilly. The City’s definition of satisfaction is the only definition that matters. We ask. We listen. We improve. From junior staff to managing partner, we learn your organization. Through knowledge sharing and free-flowing discussions, you will experience the value of working with a team of professionals that focuses on you and your success — a team that dedicates itself to: – Proactively meeting your needs by fostering an atmosphere of trust, responsiveness and respect – Taking responsibility for developing and sustaining a strong working relationship – Protecting and enhancing value in ways that increase your satisfaction and loyalty – Protecting value: helping you adhere to legal, governance and/or regulatory requirements while eliminating risks and improving operating efficiencies – Enhancing value: growth-oriented and transformation-enabling services, support and advice to help create and grow additional enterprise value – Consistently applying the characteristics of the Baker Tilly client service model to everything we do Above all, it means we are continually working to provide a return on your client experience. City of Bozeman, Montana Page | 8 Firm profile Project efficiencies Project management approach Project success depends on the effective coordination of many interdependent activities. Without effective communication and project management, the City’s engagement could be at risk of falling behind schedule, going over budget, being billed incorrectly or being incompletely delivered. Doing so means that we apply a disciplined approach to managing our efforts and delivery to ensure that we are responsive to the City’s needs, aligned with the City’s culture and organizational values, and conscientious of the sensitivity of information that we are provided. Additionally, all Baker Tilly deliverables undergo a rigorous quality review process within the firm to help ensure that both internal and client quality standards are achieved. The combination of our experience and best practices has consistently enabled our teams to deliver projects for clients on schedule. Our partners, managers and staff are available in-person, via email or via telephone to the City whenever the need arises, and we will respond promptly to your inquiries and concerns. The City can rely on us to raise probing questions and offer ideas to spark conversation rather than imposing judgment and conclusions. Managing client working relationship and staff availability We understand the necessity of having a direct and multi-faceted working relationship. This type of relationship ensures availability, responsiveness and ultimately better outcomes for Bozeman. As we move to a new COVID 19 environment, we anticipate a combination of face-to-face meetings as well as some continued use of remote platforms to engage. The City’s engagement team has various tools enabling them to assist you from any location. When Baker Tilly and the City are not able to meet in person, we have web conferencing software — including Zoom, WebEx and Microsoft Teams — to quickly set up online meetings. Delivering exceptional client service While other firms may talk about providing great service, we measure and publicly report on our client service results. Client satisfaction is measured through both qualitative and quantitative market research methods and reported on a firm, office, industry and individual partner level. Our scores have improved every year since this rigorous approach was implemented in 2008, and we continue to develop ways to serve clients better. We understand that each client defines Exceptional Client Service differently. When we begin our work with the City of Bozeman, we will meet with your management to define and understand your definition of Exceptional Client Service and tailor our service approach accordingly. Our client service plan will be co-developed with your leadership and other appropriate staff members to help ensure we meet your timelines and expectations. Our team will be proactive in our communication and planning to ensure all deadlines and requirements are met. As part of our planning, we will discuss the frequency, format and type of communication preferred by leadership and will follow those expectations. City of Bozeman, Montana Page | 9 Firm profile Building trust through significant partner and manager involvement On average, we have observed that Baker Tilly’s partner and manager involvement in client engagements is substantially greater than what other firms offer. Your team of partners and managers believe that three core areas — communication, accessibility and efficiency — complete our Exceptional Client Service approach. Here is how we keep this commitment: Communication. Consistent communication is vital to our relationship with you. We will connect with your management throughout the year to share relevant information. Should issues arise, we will share them immediately and transparently. Clear and proactive communication ensures that everyone understands the issues and accountabilities and that problems are resolved on a timely basis. Accessibility. We stand ready to serve you when you need us, where you need us, for as long as you need us. Whether it is an early morning email or late-night phone call, we are here to give you peace of mind when it comes to the delivery of your projects. Efficiency. To perform efficiently, we believe in up-front planning and investing a significant amount of time from the beginning to understand your operations, internal controls and greatest challenges. This allows us to more readily identify your unique risks and opportunities — and respond more quickly with targeted insights and services. City of Bozeman, Montana Page | 10 Qualifications The City of Bozeman is seeking economic development, housing and public finance consultants to provide technical expertise for facilitating projects initiated by the City of Bozeman. BTMA has reviewed the tasks requested within Bozeman’s Request for Proposal and will undertake economic development, tax increment finance projects and development planning projects initiated by the Economic Development Department, Community Development Department or Downtown Bozeman Partnership. BTMA will assist the City on any task defined by the general scope of services as directed by written task order. The City can be assured the analysis and solutions will be understandable and explainable to administration, elected officials and citizens. BTMA’s proposed services will provide the exceptional value to the City. Each year, Baker Tilly’s HED state and local government practice generates dozens of pieces of thought leadership including webinars, articles, white papers, podcasts, etc. All of our thought leadership is readily accessible and searchable on our website. Our process for evaluating economic development projects can be summarized by six key questions. We provide a number of analytic tools to address each of these questions. These include: – Review of the applicant’s managerial and financial capacity to execute the project – Public cash flow analysis – Cost-benefit analysis – Need for assistance (internal rate of return or “but-for”) analysis Approach and strategy Our approach is spending time at the beginning of each project to understand the entire scope. We create tasks and a timeline so that the entire BTMA team and staff contacts are prepared and efficient in completing each task. We seek to be complementary to the staff and Bozeman’s existing professional resources. – Mikaela Huot will lead as connecting points for major economic development projects and will be backup for each other in all areas of economic development City of Bozeman, Montana Page | 11 Qualifications – Our response identifies the individuals to be assigned by projects, services and functions including a team lead contact and staff supporting each – Calendars with measurable and achievable outputs will be developed for each project along with a scope of services – Depending on the project, weekly/periodic call-ins at an established time will include specific BTMA staff assigned to a project and appropriate staff as assigned by the City of Bozeman to allow all members to stay informed and to work in tandem – Gantt charts, group calendars, and group emails will be employed to communicate the status The request for proposals and qualifications provided by the City of Bozeman included the desired scope of services to be provided for housing and economic development projects. The services proposed to be provided by BTMA include those requested in the RFP/Q with further definition as applicable and described below. We understand City needs may fluctuate as future and current projects and opportunities arise and present themselves: Assist in economic development and housing project development and financial analysis 1) Financial needs (Rate of Return) analysis a. Review developer information and comment on the reasonableness of assumptions i. Suggest alternative assumptions and provide sensitivity analysis as necessary b. Complete a rate of return calculation i. Cash-on-Cash Return ii. Internal Rate of Return iii. Identify alternative assumptions if appropriate iv. Recalculate the return with alternative assumptions, as necessary v. Define appropriate level of assistance based on developer’s rate of return c. Compare developer rate of return to the “market” return for similar projects, comment on reasonableness of return considering type of project, current market and developer at risk equity (including existing land ownership) d. Complete sensitivity analysis with respect to developer return and need for assistance (as appropriate) 2) Financial feasibility review a. Review developer-supplied information for reasonableness b. Suggest alternative assumptions and provide sensitivity analysis c. Forecast the projected tax increment revenues to be generated over the life of the Tax Incremental Financing District based on those assumptions d. Assess the sufficiency of the tax increment to support costs either on a pay-as-you go basis or through bond debt service e. Prepare cash flow analysis based on sensitivity analysis 3) Developer review a. Examine financial information requested from the developer and prepare summary of results b. Contact developer supplied references, document findings, and prepare summary of results c. Identify and interview additional contacts (if any) for like projects – including multi-use and multi-phased projects - not referenced by the developer, document findings and prepare a summary of results. City of Bozeman, Montana Page | 12 Qualifications 4) Development agreement negotiations a. Provide proposed business points between the City and the developer in conjunction with City staff b. Assist City staff with review of developer request as it relates to business points for the development agreement to maximize redevelopment and maintain City security – including: i. Pay as You Go Financing shifts financing risk from City to developer ii. Look Back Provisions to verify actual returns to projected returns following project commencement iii. Claw Back Provisions to ensure developer proceeds with future phases as anticipated c. Assist in identifying and developing alternative financial resources d. Assist in evaluating and negotiating financial, security, timing and default provisions e. Assist in integrating development agreement into overall plan and documents f. If needed, project management on selected portions of redevelopment plans g. Assist in implementation of redevelopment plans 5) Assist in the implementation and management of new and existing tax increment financing district(s) a. Developing or revising policies for the use of TIF and other economic development tools b. Developing management controls on the monitoring of TIF districts c. Analyzing the financial components to determine the type of TIF district for a given project and the associated financial considerations d. Preparing document preparation and the process of district establishment e. Meeting compliance requirements 6) Related administrative and reporting services a. Review of City documentation for each district that may include original and modified TIF Plans, prior years’ financial reports, financial statements and other related documentation b. Analysis of the reported historical expenditures and verification of revenues, expenditures and transfers c. Perform various testing of compliance with laws, regulations and governing documents for all expenditures d. Written summary regarding each district, including recommendations, as necessary e. Prepare memorandum regarding overall TIF operations for permanent file records f. Recommendation of options for use of future fund balances, as available, subject to City policies regarding outstanding obligations, use of available revenues, timing for closing districts, and other options that maximize potential opportunities for use of revenues within the City’s TIF districts g. Provide an overview financial report and action plan for each TIF district h. Provide a summary working reference document for ‘quick’ access on day-to-day items and overall plan City of Bozeman, Montana Page | 13 Qualifications Housing and economic development financial planning and capital budgeting 1) Development and implementation of a long-range economic development strategic financial plan that may include: a. Identify and evaluate City goals and objectives b. Develop performance metrics to measure and define objectives c. Review and analyze cost effective alternatives for financing approaches and tools d. Estimate revenue and financing requirements 2) Create and implement multi-year economic development capital budget that may include: a. Review of current and potential future revenue sources and determination of funding capacities b. Align sources with uses to optimize the City’s overall financial capacities c. Examination of related fiscal and credit rating impacts. 3) Provide independent and community comparisons on available and potential economic development incentives and desired outcomes that may include: a. Types and uses of local, state, and federal incentives and their applications within Montana and other comparable jurisdictional markets b. Examples of economic development policies, applications, fee structures and levels and related administrative and market information 4) Financial feasibility review a. Review financial information for reasonableness b. Suggest alternative assumptions and provide sensitivity analysis c. Forecast the projected tax increment revenues to be generated over the life of the District(s) based on those assumptions d. Assess the sufficiency of the tax increment to support project costs e. Prepare cash flow analysis based on sensitivity analysis 5) Development of financial plan a. Establish a budget of project costs and timing for implementation b. Suggest interest rates based upon varying lengths of maturities for bonds c. Suggest the probable annual debt service and/or lease rental payment d. requirements over the term of the bonds 6) Debt capacity analysis a. The findings of the financial feasibility study will be considered. Items to be considered will include but not be limited to: i. Profile debt issuance alternatives with accompanying pluses-and-minuses of each ii. Profile security profile and marketability of alternatives iii. Provide estimates of potential debt structures and related financial impacts iv. Effect upon the debt service tax rate, and interrelationship of overlapping taxing units, if applicable v. Effect on debt service coverage of revenue supported debt, if applicable b. Consideration of expected trends in net assessed value, if applicable c. Alternative sources of funding, grant funding, contributions, etc. City of Bozeman, Montana Page | 14 Qualifications 7) Assist and advise the application and management of short- and long-term debt programs that may include: a. Outstanding economic development debt issues for compliance requirements, estimating financial capacities, refunding opportunities and any related administrative items b. Public and private market perspectives relating to the marketability and levels of economic development revenue bonds c. Credit quality and marketability of potential debt issuances Experience Following is a list of HED services provided by the BTMA team to Montana clients. List of Relevant Projects: 2018 – Present Year Client Par Amt Project 2021 Missoula RA AC Hotel/ Private Placement 2021 2020 Billings City Office Financing Project 2020 Billings $3,000,000 Airport Revenue Refunding Bonds, Series 2020B 2020 Billings $30,000,000 Airport Revenue Bonds, Series 2020A 2020 Missoula $865,000 Taxable Sewer System Revenue Refunding Bonds, Series 2020B 2020 Missoula $3,531,680 Capital Lease 2020 Missoula $11,645,000 Sewer System Revenue and Refunding Bonds, Series 2020A 2020 Missoula Redevelopment Agency $3,302,000 Tax Increment Senior-Subordinate Urban Renewal Revenue Bond, Series 2020A 2020 Missoula Redevelopment Agency $3,302,222 Tax Increment Senior-Subordinate Urban Renewal Revenue Bond, Taxable Series 2020B 2019 Billings $21,990,000 Solid Waste System Revenue Bonds, Series 2019 2018 Billings Executive Search: City Administrator 2018 Billings $1,090,000 Special Improvement District No. 1405 Bonds, Series 2018 2018 Billings $3,465,000 Tax Increment Urban Renewal Revenue Bonds, Series 2018 2018 Missoula $394,000 Pooled Special Sidewalk, Curb, Gutter and Alley Approach Bonds, Series 2018 2018 Missoula $3,600,000 Limited Tax General Obligation Bonds, Series 2018 2018 Missoula Redevelopment Agency $3,921,186 Taxable Tax Increment Urban Renewal Revenue Bonds, Series 2018A; Tax Increment Urban Renewal Revenue Bonds, Series 2018B 2017 Billings $56,505,000 Sewer System Revenue Bonds, Series 2017 2017 Missoula $364,013 Pooled Special Sidewalk, Curb, Gutter and Alley Approach Bonds, Series 2017 2017 Missoula $1,600,000 Tax Increment Urban Renewal Revenue Bond, Series 2017A 2017 Missoula $138,225,000 Water System Bond Anticipation Notes, Series 2017A and 2017B 2017 Missoula Parking Commission Funding Capacity Analysis 2017 Missoula Redevelopment Agency East Front Street Student Housing 2017 Missoula Redevelopment Agency $723,514 Urban Renewal Tax Increment Revenue Bonds 2017 2017 Missoula Redevelopment Agency $1,600,000 Tax Increment Urban Renewal Revenue Bond, Series 2017A City of Bozeman, Montana Page | 15 Qualifications List of Relevant Projects: 2018 – Present Year Client Par Amt Project 2017 Yellowstone County $5,000,000 Limited Tax General Obligation Note, Series 2017 2017 Yellowstone County $9,385,000 Limited Tax General Obligation Bonds, Series 2017A 2016 Billings Downtown Developer Review 2016 Billings $4,935,000 Tax Increment Urban Renewal Revenue Bonds, Series 2016A 2016 Missoula $1.6M Cap Lease (USB Private) 2016 Missoula $342,685 Pooled Special Sidewalk, Curb, Gutter and Alley Approach Bonds, Series 2016 2016 Missoula $2,550,000 Hillview Way Special Improvement District No. 549 Bonds, 2016 2016 Missoula $3,900,000 Limited Tax General Obligation Bonds, Series 2016A 2016 Missoula Redevelopment Agency $1,364,400 Tax Increment Senior-Subordinate Urban Renewal Revenue Bonds, Series 2015 2016 Montana Association of Counties Executive Search: Trust Operations Director 2016 Whitefish $9,800,000 Tax Increment Urban Renewal Revenue Bonds, Series 2016AB 2015 Billings $3,165,000 Tax Increment Urban Renewal Revenue Bonds, Series 2015 2015 Billings $5,170,000 Tax Increment Urban Renewal Revenue Refunding Bonds, Series 2015 2015 Billings $6,270,000 General Obligation Refunding Bonds, Series 2015 2015 Billings $9,615,000 Storm Sewer Revenue Bonds, Series 2015 2015 Missoula $598,600 Pooled Special Sidewalk, Curb, Gutter and Alley Approach Bonds, Series 2015 2015 Missoula $1,006,225 Equipment Master Lease 2015 Missoula Parking Commission $1,400,000 Parking Meter Lease, Serie 2015 Missoula Redevelopment Agency $5,000,000 Tax Increment Urban Renewal Revenue Bonds, Series 2015A 2015 Whitefish $3,591,000 Tax Increment Urban Renewal Revenue Refunding Bonds, Series 2015A 2015 Whitefish $3,591,000 Tax Increment Urban Renewal Revenue Refunding Bonds, Series 2015B 2014 Missoula Carlyle Financial Advisor Placement 2014 Missoula Parking Commission $7,160,000 Parking Facilities Revenue Refunding Bonds, Series 2014 2013 Billings $5,325,000 Tax Increment Urban Renewal Revenue Bonds (Taxable) Series 2013B 2013 Missoula Bank Evaluation Reports 2013 Missoula $393,000 Pooled Special Sidewalk, Curb, Gutter and Alley Approach Bonds, Series 2013 2013 Missoula $1,514,851 Equipment Lease 2013 Missoula $5,860,000 General Obligation Refunding Bond, Series 2013 City of Bozeman, Montana Page | 16 Qualifications Bozeman service team Our service team brings to Bozeman a combination of Montana experience and expertise in the full range of our economic development services. Mikaela Huot leads our team and brings an extensive history of working with our Montana clients. Dave MacGillivray is the principal emeritus with a corresponding long-tenured Montana experience. Other direct team members with specialized skills are Matt Eckerle, Anton Voinov, Dan Kennelly, Larry Mohr and Heidi Amspaugh. Summary profiles of our Bozeman service team Mikaela Huot, CIPMA, EDFP, Director Qualifications: Mikaela has been with Baker Tilly’s HED team since 2000. Mikaela is a specialist in the comprehensive analysis and use of a variety of economic development, redevelopment and housing programs in the Midwest and Mid-Atlantic regions, including property tax and sales tax increment financing, tax abatement, state grant and loan programs, enterprise zones, community development authorities and special service/business improvement districts. Mikaela received a Bachelor of Science in Applied Economics and Business and Industry Education from the University of Minnesota. She is certified through the National Development Council as an Economic Development Finance Professional and she is also MSRB Municipal Advisor Series 50 Qualified. City of Bozeman, Montana Page | 17 Qualifications Summary profiles of our Bozeman service team Dave MacGillivray, CIPMA, Principal Emeritus Qualifications: Dave is a principal emeritus with Baker Tilly. He was with Baker Tilly (Springsted) for more than 30 years, starting with the firm as a financial analyst. In addition to his financial advisory work, he has served as lead development advisor on projects of all sizes and types. His articles have appeared in Government Finance Review and other publications. For one downtown brownfield project, his client received the Ford Foundation’s Award for Innovation with the first use of ‘tax decrement financing’ for groundwater contamination cleanup. Dave’s experience covers economic development policy formation and strategic planning, developer review and negotiation, project financing and setting up internal monitoring systems. He served on the National GFOA’s Capital Planning and Economic Development Subcommittee. While on the Committee he participated in the drafting of ‘Best Practices’ on the Role of the Finance Director in Economic Development, Proper Use of Incentives and Public-Private Partnerships. Dave’s direct client responsibilities cover major cities and counties, as well as high-growth suburban jurisdictions. He worked as a municipal finance director for ten years. In 2017, one of his client’s transactions was recognized nationally by The Bond Buyer’s ‘Deal of the Year Award – Small Issuer Category’ for a reverse P3 $138 M acquisition financing of a private water system. He is MSRB Municipal Advisor Series 50 Qualified. Dan Kennelly, Director Qualifications: Dan recently joined Baker Tilly as Director in the housing & economic development practice. Dan brings 15 years of public and private sector economic development experience to the firm. His specialties include economic development strategic planning, development finance, economic impact studies, cost/benefit analysis and project management. Prior to joining Baker Tilly, Dan managed the City of Madison Wisconsin Business Resource office where he oversaw business incentive programs and led the creation and implementation of the City’s economic development strategy. Dan previously held economic development consulting positions in Madison and Chicago. Dan has a Bachelor of Science in Economics and Political Science from the University of Wisconsin and a master’s in urban planning from the University of Michigan. He is MSRB Municipal Advisor Series 50 Qualified. Larry Mohr, CPA, MBT, Partner Qualifications: Larry is a tax partner in the commercial services group. He has been with Baker Tilly since 2007. Larry has worked in public accounting since 1986. He is a Value Architect who works closely with owners, investors and executive management to develop and implement corporate strategies that enhance business growth. Larry received a Bachelor of Science in Accounting and a Master of Business Taxation from the University of Minnesota and is a Certifi8ed Public Accountant. Heidi Amspaugh, Director Qualifications: Heidi’s practice includes working with municipalities and counties to assist them in improving local communities through the use of tax increment financing (TIF), tax abatements and other incentives. She also assists communities with capital infrastructure projects through issuance of bonds payable from property taxes, local income taxes or other revenue sources. Heidi assists communities through long term financial, capital planning and TIF management and reporting. City of Bozeman, Montana Page | 18 Qualifications Summary profiles of our Bozeman service team Heidi holds a Bachelor of Science in Public Affairs. She is a Certified Independent Professional Municipal Advisor (CIPMA) and is also MSRB Municipal Advisor Series 50 Qualified. Matt Eckerle, CIPMA, Partner Qualifications: Matt has more than 15 years of experience and specializes in capital projects financing and economic development financing for municipalities. He has assisted communities with the preparation and negotiation of economic development incentives, evaluation of and planning for tax increment financing (TIF) areas, annual reporting requirements, capital projects financings, financial planning and the development or update of recreation impact fees. Matt has assisted in preparing special legislative analyses for municipal organizations. Matt holds a bachelor’s degree in Finance from Indiana University, Bloomington. He is also MSRB Municipal Advisor Series 50 Qualified. Anton Voinov, Director Qualifications: Anton joined the firm in 2019 with approximately 15 years of experience in the municipal finance industry. Most recently, he was a senior vice president with Siebert Williams Shank, a national investment banking firm focused on municipal infrastructure. At Siebert, Anton focused on new business origination in the Mid-Atlantic and Southeast and provided customized solutions and quantitative analytics to a number of state and local issuers. Key industry areas covered include water/sewer, transportation, higher education and economic development. Previously, he was a senior managing consultant with Public Financial Management, providing municipal advisory services to local and state issuers in Maryland, Pennsylvania and New York. Anton is a founding member and sits on the board of governors of the Association of Public Finance Professionals of DC, Maryland and Virginia. He holds FINRA Series 52, 53 and 63 licenses and is MSRB Municipal Advisor Series 50 Qualified. City of Bozeman, Montana Page | 19 Related experience with projects similar to the Scope of Services To demonstrate relevant experience related to Scope of Services, we are providing four case studies that demonstrate relevant experience in each of the two subareas: Project Financial Analysis and Financial Planning and Capital Budgeting. Project financial analysis Housing and Redevelopment Authority (HRA) of the City of Bloomington, Minnesota – Ongoing housing and redevelopment services Population: 85,000 Home to Mall of America and MSP International Airport Baker Tilly has been retained by the City of Bloomington and Bloomington HRA municipal and economic development advisor to assist with a multitude of projects that include both redevelopment, economic development and housing. Our recent contributions to projects managed by the HRA have included analyzing the need for public financing assistance, determination of potential funding sources and the structuring of funding to balance the needs of both the private developer and the policy objectives of the City and HRA. We have assisted with developing a financing plan that considers multiple projects to maximize the use of the City and HRA’s limited resources and can be flexible to meet the growing and evolving needs of the City. Most recently, we worked with the HRA on the establishment of an affordable housing trust fund and revolving loan fund to assist with financing of housing projects that meet the identified criteria. A component within the revolving loan fund is creating the criteria of which the loan applicants will be reviewed for eligibility. Upon establishment of the fund, we have been assisting the HRA with review of the applicants to determine the loan terms including amount, need, repayment terms and types of projects that warrant public assistance. Each project funded by the loan fund requires a certain level of creativity to close large funding gaps while minimizing public exposure. The goal of the fund has been to provide gap financing for certain qualifying projects while creating additional funding resources through repayment of loan funding and provide future opportunities for future projects. Approximate work dates: summer 2019/spring/summer 2021 City of Grand Forks, North Dakota – Ongoing housing and economic development services Population: 56,500 Home to University of North Dakota Baker Tilly serves as municipal advisor to the City for bond and economic development projects. Most recently, the City and Baker Tilly worked together on the review of several redevelopment projects that were requesting public financial assistance from the City. Our role in assisting the City was to understand the need for public assistance and provide recommendations as to the level and type of assistance. The City received applications for financial assistance through Tax Increment Financing (TIF) to assist with financing a City of Bozeman, Montana Page | 20 Related experience with projects similar to the Scope of Services portion of the extraordinary costs related to the redevelopment projects. The purpose of the review of the development project costs and operating pro formas as provided by the developers is to assist the City with making a determination if the projects as proposed would be unlikely to proceed “but-for” the requested Tax Increment Financing (TIF) assistance, and to determine the appropriate amount, if any, of public assistance. When analyzing the requests for public financial assistance, variables that have been considered and measured include financial feasibility with debt coverage and return on equity, extraordinary costs, public purpose benefits, public versus private financing, type of assistance including upfront (type of bonds, security/coverage, availability of revenues, debt coverage) or reimbursement. Approximate work dates: Winter 2020/Spring 2021 Financial planning and capital budgeting City of Saint Paul, Minnesota – Redevelopment of Ford manufacturing brownfield site into mixed-use Population: 304,000 Capital City and home to Minnesota Wild and Saint Paul Saints Baker Tilly assisted the City and its Housing and Redevelopment Authority with analysis of redevelopment opportunities of the former Ford Plant Site. The City commissioned research and sought professional and community involvement over the last decade as it worked to develop a Zoning and Master Plan to provide a framework to guide the redevelopment of the 122-acre Ford Site. The conclusion of these efforts is that the site is best developed as a mixed-use urban neighborhood that advances economic, environmental and social sustainability. Baker Tilly worked with the City to develop a financing plan that incorporated also potential funding sources to align with estimated project costs. We worked in tandem to determine what resources would be needed to deliver on the established Plan and to get a sense of who would be financially responsible for the various elements of the plan. Baker Tilly created a financial model for the City to analyze various development scenarios. The purpose of the model is to analyze the estimated financial gaps based on the City’s required public improvements, additional enhancements including parks, structured parking, affordable housing, sustainability and energy efficiency. The projected revenues are based on a potential mix of residential, rental, commercial, office and public space. Our analysis also looked at absorption rates and build-out assumptions provided by previous market research and studies for the site. Approximate work dates: Fall 2018-Spring 2020 City of Rochester, Minnesota - $5 billion Destination Medical Center (Public-Private Partnership) and ongoing housing and economic development services Population: 115,000 Home to Mayo Clinic The City of Rochester and Mayo Clinic worked together in obtaining new statutory authority to develop a "Destination Medical Center” (DMC) which would expand on the current Mayo Downtown Rochester campus. Over the next years, Mayo and other private parties will invest approximately $5 Billion in new medical facilities, related support developments and hospitality uses. City of Bozeman, Montana Page | 21 Related experience with projects similar to the Scope of Services Baker Tilly’s role was multilayered. We assisted the City in the development, negotiation and passage of the authorizing state legislation. We are performing a fiscal impact analysis for the City’s comprehensive plan review and as the City’s financial advisor, we have helped both design a capital financing policy statement for the DMC funded projects and related debt issuance program, and we are serving as an advisor on individual transactions. As the City’s economic development consultant, we are assisting in the review of private developer projects, their need for any public incentives and the negotiation of related agreements. At full development, the DMC is projected to generate between 35,000 to 45,000 new jobs. The State of Minnesota, City of Rochester and Olmsted County will financially participate in the construction of related public infrastructure. The City’s financial participation is the funding of public improvements in an approximate amount of $120 Million. The City and Rochester DMC also retains Baker Tilly services to assist with financial analysis relating to the statutorily required ‘but-for’ test required to be met prior to providing tax increment financing assistance, as well as providing recommendations on the appropriate level and types of public financing assistance. Most recently, we assisted the City and DMC with financial feasibility analysis and analyzing a request for public financial assistance related to the construction on a brownfield site to include an approximate 180-unit mixed income, mixed-use project that would provide long-term affordable and workforce housing units and incorporated financing elements of both the City and DMC relative to financing needs and obligations associated with DMC public-private partnership. Approximate work dates: 2013-spring/2021 City of Bozeman, Montana Page | 22 Experience with projects in Montana Baker Tilly Municipal Advisors is Montana’s only independent financial and economic development advisor. We began working with Montana communities in the mid-1980s with our assistance in solving the major problem of cancellation of certain liability coverage for all Montana cities. This resulted in a creative solution which received national recognition by the Government Finance Officers Association. Since that time, we have expanded our work with Montana communities, having ongoing relationships with a number of cities and counties of all sizes. Baker Tilly has also developed relationships with professionals in the State of Montana that will be of benefit to the City of Bozeman through strong partnerships. City of Missoula, Montana - Downtown riverfront brownfield redevelopment project Missoula, with a population of 80,000, is home to the University of Montana. The City’s Downtown fronts on the Clark’s Fork River. Historically the Downtown riverfront was the site of major industrial users, which left a major brownfield remediation problem. The Downtown has the vibrancy of a major regional service center with the state’s flagship university. To clean up this sizeable site and expand the Downtown community, the City undertook a substantial program of planning, development and financings. As advisor to the City and the Redevelopment Agency, we worked from the beginning on most all aspects of this multi-year process. We contributed to the planning land-use process on the proportions of public space and private development to include financial modeling. We reviewed individual developer proposals, their incentive requests and the mix of private and public investments. We advised on individual financial programs. Today the Missoula Riverfront Redevelopment project area includes a variety of private development projects and public amenities such as riverside trails and parks to enhance the Missoula Downtown environment. City of Missoula and Parking Commission – Parking meterage and structured parking system Downtown Missoula’s ongoing vitality is in part the result of the City and its Parking Commission’s investment in the multi-faceted parking system. This system includes both an automated metering system and a series of structured parking facilities. The ongoing investment relies on a capital planning program merging pay-as-you-go and debt financing. The periodic debt issuances related to structured parking have been secured by one or more of parking system revenues and tax increment financing. As the City’s and the Commission’s long-tenured advisor, we have assisted in executing the financing planning and programs. City of Bozeman, Montana Page | 23 Experience with projects in Montana City of Billings, Montana - One Big Sky Center redevelopment The City of Billings, Montana was approached by a developer, MontDevCo LLC, regarding the construction of a multi-use redevelopment project in downtown Billings. The proposed $165 million development is expected to include a 70,000-square-foot conference center, 80 apartment units, 160 room hotel, 100,000 square feet of office space, 36,500 square feet of retail, and a 650 stall structured parking ramp. Financing for the project was anticipated to include owner equity, private financing, EB-5 funding, and the City’s public funding through tax increment financing. The redevelopment will be on several blocks of privately owned property and the developer is currently working through the process of obtaining full site control. Due to the proximity of the location to the City near neighborhoods and existing properties, the inclusion of a potential conference center, more public parking, and potential types of housing, community engagement, and strategy is necessary for the process. The project is still in preliminary stages with an anticipated further review of the financial capacity of the development team. A project of this magnitude was expected to have a significant impact on the City of Billings, which had a population of approximately 130,000. As the City’s municipal advisor, Baker Tilly assisted throughout the year with the first phases of the project, which included the negotiation of the terms of the preliminary development agreement, initial financial feasibility and analysis, and the developer due diligence review. The intent of the due diligence review was to understand the developer’s ability and capacity to perform as presented to the City, with the financial resources and experience to achieve a successful outcome. We continued to work with the City of Billings as the project entered the next stages of redevelopment beyond the initial preliminary development agreement terms. City of Bozeman, Montana Page | 24 References The following projects, which we feel reflect the scope of services, were conducted by members of the Bozeman service team. Missoula Redevelopment Agency Name Ms. Ellen Buchanan Title Director Phone +1 (406) 552 6156 Email ebuchanan@ci.missoula.mt.us Name Mr. Chris Behan Title Assistant Director Phone +1 (406) 552 6156 Email cbehan@ci.missoula.mt.us Services Economic development, housing and municipal advisory services City of Missoula & Missoula Parking Commission, Montana Name Mr. Dale Bickell Title Chief Administrative Officer Phone +1 (406) 552 6109 Email dbickell@ci.missoula.mt.us Name Ms. Leigh Griffing Title Finance Director Phone +1 (406) 552 6122 Email lgriffing@ci.missoula.mt.us Services Housing and municipal advisory services City of Grand Forks, North Dakota Name Mr. Todd Feland Title City Administrator Phone +1 (701) 787 3735 Email TFeland@grandforksgov.com Services Economic development, housing and municipal advisory services City of Billings Name Mr. Andy Zoeller Title Finance Director Phone +1 (406) 657 8209 Email zoellera@billingsmt.gov Services Economic development, housing and municipal advisory services City of Bozeman, Montana Page | 25 Price proposal Value for fees With Baker Tilly, you will never need to question the value you get for the fees you pay. This is best exemplified by the long-term relationships with our clients. In Montana, our client relationships all cover decades of service and resulting enhanced communities. General approach for economic development services First and foremost, we want to encourage a long-term relationship so we do not charge for routine phone calls, general discussions, client training and other similar activities. While our compensation approach varies across the full range of our economic development services, most often for project related services we charge on an hourly basis. Economic development projects often have a varying process given the dynamics of the private and public participants. Therefore, we have adopted this hourly approach. Other services are provided on a flat fee basis or a defined rate per activity. Our current hourly fees vary between $75 and $300, with the majority of staff levels in the $260 area. The staff assigned to the City of Bozeman would be at the senior manager/director rate of $260 (Huot, Kennelly, Voinov, Amspaugh) and principal/partner/firm director rate of $300 (MacGillivray and Mohr) In addition to our advisory fees, we would like to have direct out-of-pocket expenses reimbursed at cost. Our fees are typically paid by the Developer through an application fee that requires and up-front payment so that the City has a commitment that time spent and consideration of the project is important enough to the developer to invest in the project and it requires payment from the user or benefactor rather than the taxpayers at large. Upon engagement, we would help develop the policy that requires the upfront payment and an agreement to pay more to cover consulting costs if the fees provided upfront are not enough. For each project, a scope of work will be prepared with an estimate of costs before commencing work. Title Hourly Rate Principal, Partner, Firm Director $300 Senior Manager, Director $260 Manager, Senior Staff $215 Staff $160 Support $75 City of Bozeman, Montana Page | 26 Price proposal Negotiations If selected, we will provide the City with our standard engagement terms. Should the City wish to provide alternate terms or proceed on the basis of its own format agreement, we would require the ability to negotiate mutually acceptable terms and conditions prior to executing a final contract. City of Bozeman, Montana Page | 27 Affirmation of Nondiscrimination Attachment A NONDISCRIMINATION AND EQUAL PAY AFFIRMATION ____________________________________(name of entity submitting) hereby affirms it will not discriminate on the basis of race, color, religion, creed, sex, age, marital status, national origin, or because of actual or perceived sexual orientation, gender identity or disability and acknowledges and understands the eventual contract will contain a provision prohibiting discrimination as described above and this prohibition on discrimination shall apply to the hiring and treatments or proposer’s employees and to all subcontracts. In addition, ____________________________________(name of entity submitting) hereby affirms it will abide by the Equal Pay Act of 1963 and Section 39-3-104, MCA (the Montana Equal Pay Act), and has visited the State of Montana Equal Pay for Equal Work “best practices” website, https://equalpay.mt.gov/BestPractices/Employers, or equivalent “best practices publication and has read the material. ______________________________________ Name and title of person authorized to sign on behalf of submitter Baker Tilly Municipal Advisors, LLC Baker Tilly Municipal Advisors, LLC Matthew Eckerle, Principal City of Bozeman, Montana i Appendices Appendix I: Resumes City of Bozeman, Montana ii Appendices Mikaela R. Huot, CIPMA, EDFP Mikaela Huot, a director and municipal advisor within the public sector practice group, has been with the firm since 2000. Baker Tilly Municipal Advisors, LLC Director 380 Jackson Street Suite 300 Saint Paul, MN 55101 United States T +1 (651) 223 3036 M +1 (651) 368 2533 mikaela.huot@bakertilly.com bakertilly.com Education Bachelor of Science, Applied Economics and Business and Industry Education University of Minnesota – Minneapolis Registered Municipal Advisor with the Securities and Exchange Commission Mikaela is a member of Baker Tilly’s housing and economic development practice group specializing in economic development, redevelopment and housing programs for municipal and non- profit clients. Specific experience Assists communities with public policy development, developer review and negotiations, revenue projections and financial feasibility studies, tax increment establishment and compliance, project feasibility and financing Expertise working on complicated financing projects to provide creative solutions while balancing policy objectives and goals Extensive experience with tax increment financing, the “but-for” and needs test and review, cost-benefit analysis, bond cash flow analysis, fiscal impact study, tax impact analysis, proforma analysis, rate of return analysis and general project management Strong background in property tax and sales tax increment financing, tax abatement, state grant and loan programs, enterprise zones, community development authorities and special service/business improvement districts Experience with economic incentive programs including work in North Dakota, Wisconsin, Georgia, Kansas, Missouri, Montana, Virginia, North Carolina, Iowa and extensively in Minnesota Industry involvement Economic Development Association of Minnesota (EDAM) Virginia Economic Development Association (VEDA) Wisconsin Economic Development Association (WEDA) National Association of Housing Redevelopment Authorities (NAHRO) National Association of Municipal Advisors (NAMA) International Economic Development Council (IEDC) City of Bozeman, Montana iii Appendices Mikaela R. Huot, page 2 Community involvement United Way Ambassador Boy Scouts of America Continuing professional education Economic Development Finance Professional (EDFP) Certified Independent Professional Municipal Advisor (CIPMA) City of Bozeman, Montana iv Appendices David N. MacGillivray, CIPMA David MacGillivray, a principal and municipal advisor within the public sector practice group, has more than 35 years of experience in local government and as a municipal advisor. Baker Tilly Municipal Advisors, LLC Principal Emeritus 380 Jackson Street Suite 300 Saint Paul, MN 55101 United States T +1 (651) 223 3048 M +1 (612) 805 0399 david.macgillivray@bakertilly.com bakertilly.com Education Master of Arts, Economics University of Minnesota – Minneapolis Bachelor of Arts, Economics University of Minnesota – Minneapolis Registered Municipal Advisor with the Securities and Exchange Commission Dave’s direct client responsibilities cover major cities and counties, special districts, municipal power utilities, as well as high-growth growth suburban jurisdictions. He joined Springsted in 1985 as a senior analyst and has attained a succession of positions in the analytical and client representative areas. Dave worked for several municipalities in financial and city management. Specific experience Represents municipal advisory clients Worked for several municipalities in financial and city management Economics background based in addressing financial management objectives In 2017 one of his client’s transactions was recognized nationally by The Bond Buyer’s ‘Deal of the Year Award – Small Issuer Category’ for a reverse P3 $138M acquisition financing of a private water system. Recognition received by his clients National Awards for Excellence in Debt Management and Financial Planning The joint Ford Foundation-John F. Kennedy School of Government Award for Innovation in Government U.S. Conference of Mayors National Award for Public- Private Partnerships for downtown revitalization Author of numerous studies on fiscal impact analysis, economic development finance, debt management and the use of specialized revenue sources such as utility, sales and hospitality/admissions taxes and frequently lectures on economic development, financial management and the municipal bond industry Taught the National Government Finance Officers Association economic development training course and has served on GFOA committee(s) City of Bozeman, Montana v Appendices David N. MacGillivray, page 2 Industry involvement Government Finance Officers Association of the United States and Canada, past service on Standing Committee on Economic Development & Capital Planning, contributor on numerous initial best practices covering economic development and P3’s Thought leadership National Government Finance Officers Association (GFOA) Numerous national GFOA conference presentations on public finance, financial management and economic development Government Finance Review, authored cover story and other articles on economic development and financial management Taught course on economic development for financial professionals National Forum of Black Public Administrators, annual forum presenter on capital planning and municipal finance National Water Environment Federation of Municipal Water Utilities, annual conference presenter on Attaining the Highest Credit Ratings: City of Saint Paul AAA Story Regional and multiple state forums; presenter on a wide variety of topics, such as municipal bonds, credit ratings, capital planning, budgeting, economic development, green bonds, neighborly bonds Continuing professional education Certified Independent Professional Municipal Advisor (CIPMA) Series 7 and Series 66 City of Bozeman, Montana vi Appendices Dan Kennelly Dan Kennelly, is a director within the housing and economic development practice group and joined the firm in 2020. Baker Tilly Municipal Advisors, LLC Director 4807 Innovate Lane Madison, WI 53718 M +1 (608) 217-7470 dan.kennelly@bakertilly.com bakertilly.com Education Bachelor of Science, Economics & Political Science University of Wisconsin - Madison Master of Urban Planning University of Michigan – Ann Arbor Registered Municipal Advisor with the Securities and Exchange Commission Dan is a member of Baker Tilly’s housing and economic development practice. His background includes a blend of public and private sector experience in economic development, project management, real estate analysis, development finance and land use planning. He specializes in providing clients with analysis, strategies and insights to plan, finance and implement economic development projects and priorities. His services include real estate analysis, economic impact studies, cost/benefits analysis, creating strategic plans and structuring economic development financial tools. Specific experience − Developing and implementing forward-looking and market-driven economic development strategic plans for communities − Analyzing the financial implications of proposed real estate development projects − Evaluating the economic impacts of development and the cost/benefits projects − Coordinating and analyzing how to structure economic development incentive tools − Assisting communities with leveraging non-traditional development financing tools including state and federal grants, opportunity zones and tax credit programs − Providing detailed economic data analysis to help communities understand the issues and trends shaping their economies Industry involvement − Wisconsin Economic Development Association (WEDA) − American Planning Association (APA) Community involvement − Dane Buy Local Board (2018-2020) − Downtown Madison Business Improvement District Board (2016-2020) − Bay Creek Neighborhood Association Secretary (2008-2012) City of Bozeman, Montana vii Appendices Larry Mohr, CPA, MBT Larry Mohr, tax partner in the commercial services group, has been with Baker Tilly since 2007. Baker Tilly US, LLP Partner 225 S Sixth St Suite 2300 Minneapolis, MN 55402 United States T +1 (612) 876 4630 lawrence.mohr@bakertilly.com bakertilly.com Education University of Minnesota–Twin Cities Bachelor of Science in Accounting Master of Business Taxation Larry has worked in public accounting since 1986. He is a Valued Business Advisor who works closely with owners, investors and executive management to develop and implement corporate strategies that enhance business growth. Specific experience Identifies business and tax planning opportunities for clients Advises clients throughout the business life cycle — business formation, operational planning, reorganizations, acquisitions and strategic succession planning Develops tax strategies with respect to mergers, acquisitions, conversions and dispositions Performs tax risk assessments and assists clients in developing tax risk policies Provides representation before IRS and state taxing authorities Advises clients on federal and state flow through and corporate tax issues with an emphasis on strategic planning and risk management Industry involvement American Institute of Certified Public Accountants (AICPA) Friends of the Saint Paul College Foundation Minnesota Chapter of the German American Chamber of Commerce – President Minnesota Society of Certified Public Accountants University of Minnesota, Master of Business Taxation – Instructor, “Tax-Exempt Organizations” class City of Bozeman, Montana viii Appendices Heidi L. Amspaugh, CIPMA Heidi Amspaugh is a director and municipal advisor within the public sector practice group and has been with the firm since 2006. Baker Tilly Municipal Advisors, LLC Director 8365 Keystone Crossing, Suite 300 Indianapolis, IN 46236 United States T +1 (317) 465 1517 M +1 (317) 650 4207 heidi.amspaugh@bakertilly.com bakertilly.com Education Bachelor of Science in Public Affairs Public Financial Management concentration Indiana University, Bloomington Registered Municipal Advisor with the Securities and Exchange Commission Heidi’s practice includes working with municipalities and counties to assist them in improving local communities through the use of tax increment financing (TIF), tax abatements and other incentives. She also assists communities with capital infrastructure projects through issuance of bonds payable from property taxes, local income taxes or other revenue sources. Heidi assists communities through long term financial, capital planning and TIF management and reporting. Specific experience Tax-exempt and taxable municipal bond structuring and issuance Structuring incentive packages for industrial/commercial prospects Negotiating economic development terms with companies, developers and underwriters Combining incentives and revenue sources, such as tax abatement, tax increment, local option income taxes Tax impact and analysis TIF creation, management and reporting requirements Industry involvement National Association of Municipal Advisors (NAMA), Vice President and Communications committee chair Indiana Economic Development Association (IEDA), past Treasurer Accelerate Indiana Municipalities (Aim) Indiana League of Municipal Clerk Treasurers (ILMCT) Association of Indiana Counties (AIC) Indiana Auditor’s Association Indiana Women in Public Finance Speaks on municipal bond issuance and other financial topics related to public finance at conferences and universities Community involvement Saint Simon the Apostle Women’s Club City of Bozeman, Montana ix Appendices Matt Eckerle, CIPMA Matt Eckerle is a partner and municipal advisor within the public sector practice group. Baker Tilly Municipal Advisors, LLC Partner 8365 Keystone Crossing Suite 300 Indianapolis, IN 46240 USA T +1 (317) 465 1520 matt.eckerle@bakertilly.com bakertilly.com Education Bachelor of Science in Business, Finance Concentration Indiana University, Bloomington Registered Municipal Advisor with the Securities and Exchange Commission Matt specializes in capital projects financing and economic development financing for municipalities. He has assisted communities with the preparation and negotiation of economic development incentives, evaluation of and planning for tax increment financing (TIF) areas, annual reporting requirements, capital projects financings, financial planning and the development or update of recreation impact fees. Matt has assisted in preparing special legislative analyses for Indiana municipal organizations, and he frequently participates as a guest speaker at events of various Indiana local government and economic development organizations. Specific experience Assists cities, towns, counties and townships with capital project funding solutions, including debt issuance, financial planning and impact fees Works with municipal entities to develop local incentive packages for economic development prospects, including tax increment financing (TIF) and property tax abatement Provides support for communities related to the administration of TIF allocation areas, including strategic planning, compliance with annual reporting requirements and monitoring annual revenues Began career with H.J. Umbaugh & Associates (now Baker Tilly Municipal Advisors) in 2005 Industry involvement Indiana Economic Development Association Redevelopment Association of Indiana Council of Development Finance Agencies National Association of Municipal Advisors City of Bozeman, Montana x Appendices Anton Voinov Anton Voinov, a director and municipal advisor within the public sector practice group, joined the firm in 2019 and has more than 15 years of municipal finance experience. Baker Tilly Municipal Advisors, LLC Managing Director 380 Jackson Street Suite 300 Saint Paul, MN 55101 United States T +1 (651) 223 3039 M +1 (202) 679 7711 anton.voinov@bakertilly.com bakertilly.com Education Master of Science, Finance London Business School (London, England) Bachelor of Arts, Economics Swarthmore College (Swarthmore, Pennsylvania) Registered Municipal Advisor with the Securities and Exchange Commission Anton has worked with numerous municipal clients across the United States both as a municipal advisor and underwriter, providing customized and complex solutions to some of the nation’s largest municipal issuers. Key areas of focus have included higher education, large urban centers and state governments, water/sewer and transportation infrastructure and economic development. Anton is active in the municipal finance industry through his involvement in various industry conferences and organizations (GFOA, CDFA) and is on the board of governors of the Association of Public Finance Professionals (APFP). Specific experience Provides municipal advisory services related to bond issuance, financial management and credit analytics Works directly with clients on establishing multi-year financial and borrowing plans Assists with rating agency process Advises on policy and indenture changes Presents financial concepts and results to client staff and elected officials Areas of expertise include Higher education Utilities Transportation Structured products Quantitative analysis and customized financial modeling Industry involvement Association of Public Finance Professionals of DC, Maryland and Virginia (APFP-DMV), founding member, board of governors Government Finance Officers Association (GFOA) CDFA conference speaker GFOA-WMA conference speaker Continuing professional education FINRA Series 50, 52, 53, 63 licenses City of Bozeman, Montana xi Appendices Appendix II: Recent project list Following is a list of recent HED services provided by the BTMA team. List of Relevant Projects: 2018 – Present Year Client State Project Pop. 2021 Bloomington HRA MN Springside Housing 85,332 2021 Chaska MN Chaska Creek ED TIF 23 26,371 2021 Cohasset MN Frontier 2,729 2021 Elk River MN Sportech Abatement 24,522 2021 Golden Valley MN 2020 TIF Analysis-Affordable Hsg Analysis 21,566 2021 Lawson MO Economic Development Consulting 2021 2,145 2021 Missoula RA MT AC Hotel/ Private Placement 2021 73,710 2021 Oakdale MN Pres Homes Housing 27,963 2021 Rochester MN Bryk Apartments Financial Review 115,557 2021 Roseau MN ED TIF 6 2,697 2020 Amcor Flexibles LLC WI Incentives Advisory- Project Vulcan 2020 Austin MN TIF District Review 25,114 2020 Austin MN TIF Pooling 25,114 2020 Baraboo WI EDA Grant 12,138 2020 Basehor KS Brothers Grocery Feasibility Analysis 5,951 2020 Baudette MN 2019 OSA TIF Reports 1,030 2020 Baudette MN Lakewood Foods Exp 1,030 2020 Bel Aire KS STAR Bond Due Diligence 6,916 2020 Blaine MN Ind Park Fin Analysis 60,407 2020 Bloomington HRA MN 8012 Cedar 85,332 2020 Bloomington HRA MN Lyndale Flats 85,332 2020 Bloomington HRA MN Syndicate Redev 85,332 2020 Bloomington HRA MN Village Club 172 85,332 2020 Bloomington PA MN American Square TIF District 85,332 2020 Bloomington PA MN Rosa TIF District Creation 85,332 2020 Bloomington PA MN SICK Manufacturing Review 85,332 2020 Blue Earth MN APX Hsg Dev 3,269 2020 Blue Springs MO COVID EDA Grant 53,294 2020 Brainerd MN Abatement Analysis 13,487 2020 Cannon Falls MN Create TIF District 2-8 4,078 2020 Carlton MN 2019 OSA TIF Reports 1,098 2020 Chaska MN 2019 OSA TIF Reports 26,371 2020 Chaska MN Ernst House Grant Application 26,371 2020 Clinton County IN 2020 Solar Project 32,399 2020 Dakota County CDA MN TIF 10 Decertification 429,021 City of Bozeman, Montana xii Appendices List of Relevant Projects: 2018 – Present Year Client State Project Pop. 2020 Delano MN ED TIF 13 6,085 2020 Delano MN Granite Works Redev 6,085 2020 Detroit Lakes MN Detroit Lakes TIF 41-1 TIF Projections 9,197 2020 Drexel Building Supply, Inc. WI Credits & Incentives 2020 Duluth EDA MN Paper Mill Incentives 85,915 2020 Duluth EDA MN Paper Mill NMTC 85,915 2020 Elk River MN ED TIF 26 24,522 2020 Elk River MN Hillside Heights 24,522 2020 Elk River MN Hillside Hsg Redev 24,522 2020 Elk River MN Morrell Microloan 24,522 2020 Elk River MN TIF 24 Mod 24,522 2020 Faith Technologies, Inc. WI KS Compliance 2020 Fergus Falls MN TIF 4-13 Shopko 13,351 2020 Flad Devel & Invest Corp. WI TIF Consulting 2020 Grand Forks ND Edgewood TIF Review 56,500 2020 Grand Forks ND Lyon's Auto Redev 56,500 2020 Grand Forks ND Memorial Village 56,500 2020 Grand Forks ND The Beacon 56,500 2020 Harrisonville MO EDA Grant 2020 10,043 2020 Harrisonville MO EDA Grant Application 10,043 2020 Hennepin County HRA MN TOD Financing Review 1,266,000 2020 Henry County IN 2020 Solar Project 47,972 2020 IM Property Investments, LLC IL The Corners Brookfield 2020 Jefferson City MO Missouri State Penitentiary Review 43,330 2020 Joplin MO 32nd Street TIF But-For 50,386 2020 Jordan MN 2019 OSA TIF Reports 6,230 2020 Jordan MN Abatement Analysis 2020 6,230 2020 Kansas City EDC MO Grand Reserve Updated Review 486,404 2020 Kansas City EDC MO Pioneer Plaza Redevelopment Review 486,404 2020 Kansas City EDC MO Review of James Reed Road Project 486,404 2020 Kansas City EDC MO Rochester Apartment But-For 486,404 2020 Kansas City EDC MO Financial Analysis Waldo Icehouse 486,404 2020 Lenexa KS 87th & Renner Review 54,011 2020 Lenexa KS Ace Properties Developer Review 54,011 2020 Lenexa KS Block LLE Bldg 2 & 4 Review 54,011 2020 Lenexa KS Eurofin Developer Review 54,011 2020 Lenexa KS Ford Mercantile Developer Review 54,011 2020 Lenexa KS Jayhawk Ridge Developer Review 54,011 2020 Lenexa KS Johnson County VA Review 54,011 2020 Lenexa KS Oddo Apartment Project 54,011 City of Bozeman, Montana xiii Appendices List of Relevant Projects: 2018 – Present Year Client State Project Pop. 2020 Lenexa KS Sims Developer Review 54,011 2020 Manhattan KS Bev-Hub Review 55,290 2020 Moorhead MN Enclave TIF 42,929 2020 Movin' Out, Inc. WI TIF Advisory 2020 Muncie IN 2020 - BUILD Grant BCA Guidance 68,750 2020 Muncie IN 2021 ARP EDA Grant 68,750 2020 New Brighton MN 2019 TIF District update 22,556 2020 North Branch MN ED TIF 2020-1 10,454 2020 North Branch MN Housing Policy 10,454 2020 North Branch MN TIF Review 10,454 2020 North Saint Paul MN 2019 OSA TIF Reports 12,406 2020 Oakdale MN 2019 OSA TIF Reports 27,963 2020 Proctor MN TIF District Bernick's 2020 3,040 2020 Pulaski County IN 2020 Solar Analysis 12,559 2020 Racine WI Development Review 2020 Randolph County IN 2020 Solar Project 24,926 2020 Red Wing MN 2019 OSA TIF Reports 16,388 2020 Red Wing MN St Johns Redev 16,388 2020 Red Wing HRA MN 2019 OSA TIF Reports 16,388 2020 Rochester MN Library P3 115,557 2020 Roseau MN Housing Review 2,697 2020 Savage MN Economic Snapshot / Feasibility Analysis 31,254 2020 Savage MN Sedgeview Terrace TIF District 31,254 2020 Scott County CDA MN Elko New Market Infr Proj 2020 149,013 2020 Shakopee MN 2019 OSA TIF Reports 40,731 2020 Shakopee MN TIF Analysis 2020 Bonds 40,731 2020 Sitka Salmon LLC WI Credits & Incentives 2020 Stacy MN 2019 OSA 1,987 2020 Stillwater MN 2019 OSA TIF Reports 19,341 2020 Stillwater MN Central Commons 19,341 2020 The Enterprise Center PA 52nd St Comm Corridor Eco Develop 2020 Vermillion County EDC IN 2020 Solar Analysis 14,598 2020 Wadena MN 2019 OSA TIF Reports 4,158 2020 Waunakee WI Village Hall RFP 13,730 2020 Winona MN BCS MIF Loan Review 26,854 2020 Winona MN Waters Edge Hsg Abate 26,854 2020 Wyoming MN Revised Roers Project Review 7,914 2019 Austin MN Fox Pointe Hsg TIF 14 25,114 2019 Austin MN Nu Tek ED TIF 25,114 2019 Baudette MN 2019 ISA TIF Reporting (FY 2018) 1,030 City of Bozeman, Montana xiv Appendices List of Relevant Projects: 2018 – Present Year Client State Project Pop. 2019 Becker MN Stolt Trucking TIF District 4,605 2019 Becker MN TJ Potter TIF District 4,605 2019 Becker MN Trucking Project TIF Projections 4,605 2019 Bethesda Lutheran Communities WI Housing Project in Victoria 201 2019 Bettendorf IA Economic Development Revie 35,919 2019 Bloomington MN Community Dev Housing Pla 85,332 2019 Bloomington MN Gateway Development District 85,332 2019 Bloomington MN Syndicate Dev Review 85,332 2019 Bloomington HRA MN Allina SouthHealth Med Campus TIF 85,332 2019 Bloomington HRA MN Clover Center/Southtown 85,332 2019 Bloomington HRA MN Knox American Hsg TIF 85,332 2019 Bloomington HRA MN Revolving Loan Fund 85,332 2019 Bloomington HRA MN The Heights HIA 85,332 2019 Bloomington HRA MN Village West Housing TIF 85,332 2019 Blue Earth MN Thriving Acres ED TIF 3,269 2019 Carlton MN Housing TIF 2 1,098 2019 Carver MN TIF 1-8 Note Calcs 4,771 2019 Carver MN Trident TIF Housing District 4,771 2019 Chaska MN Abatement Review 26,371 2019 Chaska MN City Square West 26,371 2019 Chaska MN TIF District Review 26,371 2019 Chaska MN TIF Redev 22 26,371 2019 Crookston MN Downtown Red. TIF Dist 2018 7,756 2019 Crookston MN Epitome Energy Soybean Project 2019 7,756 2019 Crow Wing County HRA MN 2018 OSA TIF Report 65,055 2019 Dundas MN OSA TIF Reporting (FY 2018) 1,433 2019 Edwardsville KS Development Agreement Amendment 4,355 2019 El Dorado KS Orscheln TIF Review 12,852 2019 Eudora KS Nottingham 2019 6,211 2019 Excelsior MN 2019 OSA TIF Reporting (FY 2018) 2,434 2019 Grain Valley MO TIF Pro Forma 13,966 2019 Grandview MO Microbrewery Project 2019 25,069 2019 Hugo MN 165th Street Study 2019 14,767 2019 Hugo MN Developer Review Tony Harmening 14,767 2019 Independence MO Comp TIF Dist Review-Task 117,084 2019 Independence MO TIF Review Task II 117,084 2019 Independent School District No. 534 MN Abatement Analysis 2019 Joplin MO Boomtown Central TIF Review 50,386 2019 Jordan MN Hotel Abatement Run 6,230 2019 Kansas City EDC MO Metro North Update 486,404 City of Bozeman, Montana xv Appendices List of Relevant Projects: 2018 – Present Year Client State Project Pop. 2019 Kansas City EDC MO 1832 McGee Project 486,404 2019 Kansas City EDC MO 211 Armour But-For Analysis 486,404 2019 Kansas City EDC MO Armour Development Project 486,404 2019 Kansas City EDC MO Pendleton Redevelopment Project 486,404 2019 Kansas City EDC MO Waldo Icehouse Redevelopment Project 486,404 2019 Lakeville MN ED TIF 24 QA1 58,562 2019 Lawrence KS Update TIF Tracking Model 2019 96,369 2019 Lenexa KS Block IRB Rev LL6 & Waterside 54,011 2019 Lenexa KS Greystone Assignment Dev Rev 54,011 2019 Lenexa KS Lenexa Logistics East Bldg 3 Dev Review 54,011 2019 Lenexa KS Lenexa Point CID Developer Review 54,011 2019 Lenexa KS Chrysalis Developer Review 54,011 2019 Lenexa KS Lofts at City Center Dev Review 54,011 2019 Lenexa KS Oddo Basys Review 54,011 2019 Lenexa KS Radison CID Dev Review 54,011 2019 Lenexa KS Update Cost-Benefit model 2019 54,011 2019 Lino Lakes MN County Rd J/Hwy 49 Redev 21,404 2019 Lino Lakes MN Legacy TIF 1-11 Cash Flow 21,404 2019 Lino Lakes MN Watermark Tax Abatement 21,404 2019 Lino Lakes MN Fiscal Disparities Analysis 21,404 2019 Lino Lakes MN Hsg TIF 1-13 21,404 2019 Marshall MN Block 11 Redevelopment 13,651 2019 Marshall MN TIF 2-3 Review 13,651 2019 Metropolitan Council MN Innovative Financing Strategies 2,980,000 2019 New Brighton MN TIF Review 22,556 2019 New Prague MN TIF 8-1 Review 7,899 2019 Nisswa MN 2018 OSA TIF Reports 1,817 2019 North Branch MN BS and TIF Policy Update 2019 10,454 2019 North Saint Paul MN 2018 OSA TIF Reports 12,406 2019 North Saint Paul MN Redev TIF 4-8 12,406 2019 North Saint Paul MN Redev TIF 4-9 12,406 2019 North Saint Paul MN TIF 4-10 Anchor Block N 12,406 2019 North Saint Paul MN TIF Soils 4-11 12,406 2019 Oakdale MN TIF 1-4 Modification 27,963 2019 Oakdale MN TIF 6 Modification 27,963 2019 Oakdale MN 2018 OSA TIF Reports 27,963 2019 Parkville MO I-435 and 45 Hwy TIF 6,724 2019 Pleasant Valley MO TIF Review 2019 Ramsey County MN Riverfront Development 550,321 2019 Red Wing MN Housing TIF Analysis 16,388 City of Bozeman, Montana xvi Appendices List of Relevant Projects: 2018 – Present Year Client State Project Pop. 2019 Red Wing MN 2019 OSA TIF Reporting (FY 2018) 16,388 2019 Red Wing PA MN OZ Prospectus 2019 16,388 2019 Robbinsdale MN Parkers Village TIF Analysis 14,468 2019 Rochester MN Staybridge ButFor Review 115,557 2019 Rochester MN Two Discovery Square Review 115,557 2019 Saint Paul PED MN Ford Site Review & Negotiation 304,547 2019 Saint Paul Reg Water Svcs MN General Contractor RFP Selection, 2020 304,547 2019 Savage MN 2018 OSA Reports 31,254 2019 Savage MN Valley Oil Redev 31,254 2019 Sedalia MO North Gables Project Review 21,633 2019 Shakopee MN 2018 OSA TIF Reports 40,731 2019 Shakopee MN KEB Abatement Project 40,731 2019 Shakopee MN TIF 18 Riverfront Mod 40,731 2019 Shakopee MN TIF 19 Canterbury Modification 40,731 2019 Shorewood WI ED Policy and Strategy 13,290 2019 Spring Hill KS Dayton Creek But-For Review 6,626 2019 Stacy MN 2019 OSA TIF Report (FY 2018) 1,987 2019 Stillwater MN Curve Crest TIF Sale Calc 19,341 2019 Stillwater MN 2018 OSA TIF Reports 19,341 2019 Stillwater MN TIF District Review 19,341 2019 Sugar Hill GA Affordable Housing Program 23,121 2019 Sugar Hill GA Community Center 23,121 2019 UG of Wyandotte Co/Kansas City KS Opportunity Zone Est, 2019 152,522 2019 UG of Wyandotte Co/Kansas City KS Turner Vista Apts TIF and CID HED 152,522 2019 Wadena MN 2018 OSA Reports 4,158 2019 Wadena MN Hospital Financial Review 4,158 2019 Wauwatosa WI HSA Phase 3 TID Review 47,971 2019 Wauwatosa WI TID 7 Cash Flow Update 47,971 2019 Wichita KS Delano Project Developer Rev 398,877 2019 Wichita KS Downtown Redev Developer Review 398,877 2019 Winona MN 102 Walnut Redev 26,854 2019 Winona MN Rivers Hotel Redev 26,854 2019 Wyoming MN Roers Affordable Housing Review 7,914 2018 Becker MN Project Assistance 4,605 2018 Blaine MN Crown Iron Works ED TIF 60,407 2018 Bloomington HRA MN Portland Commons 85,332 2018 Bloomington HRA MN Sutton Place II HIA 85,332 2018 Blue Earth MN Welcome Center TIF 3,269 2018 Branson MO Eco Devo Planning/Policy 11,064 2018 Branson MO Entertainment Center TIF 11,064 City of Bozeman, Montana xvii Appendices List of Relevant Projects: 2018 – Present Year Client State Project Pop. 2018 Branson MO Fee Hedrick TIF 11,064 2018 Branson MO The Grand TIF 11,064 2018 Carlton MN OSA TIF Reports 1,098 2018 Carver MN Lakeview TIF and Grant Application 4,771 2018 Carver MN Mills Fleet Farm Note Calc 4,771 2018 Chaska MN Bavaria Downs Abatement 26,371 2018 Chaska MN Formacoat TIF 26,371 2018 Chaska MN OSA TIF Reports 26,371 2018 Chaska MN TIF 20 Redev Brewery 26,371 2018 Chaska MN Total Loss Redev 26,371 2018 Cologne MN Modern Design TIF District 1,564 2018 Council of Dev Finance Agencies OH Duluth Block D 2018 Dakota County CDA MN TIF Review 429,021 2018 Delano MN Industrial Park Analysis 6,085 2018 Detroit Lakes MN TIF 37-1 Apex Twnhm TIF Projections 9,197 2018 Detroit Lakes MN TIF 38-1 TIF Projections 9,197 2018 Dundas MN Downtown Redevelopment 1,433 2018 Edwardsville KS S Village TIF 4,355 2018 Edwardsville KS Village South TIF Revision 2018 4,355 2018 Elk River MN Downtown Redev 24,522 2018 Elk River MN Main & Gates Redev 24,522 2018 Fergus Falls MN Dairy Property Analysis 13,351 2018 Fergus Falls MN TIF 4-11 Modification 13,351 2018 Germantown School District WI Single Family Housing Study 2 19,749 2018 Grand Forks ND TIF Pure Dev 56,500 2018 Grandview MO Village TIF 25,069 2018 Hibbing MN Tax Abatement L&M Radiator 2017 16,301 2018 Joplin MO Hope Valley TIF Modification 50,386 2018 Jordan MN Clancy's Redevelopment TIF Projections 6,230 2018 Jordan MN OSA TIF Reports 6,230 2018 Jordan MN Schron Construction Housing TIF 6,230 2018 Jordan MN TIF 1-7 Decert 6,230 2018 Kansas City EDC MO 6410 Paseo Review 486,404 2018 Lakeville MN Schneidermans ED TIF 58,562 2018 Lenexa KS Karbank Developer Review 54,011 2018 Lenexa KS Kiewit Developer Review 54,011 2018 Lenexa KS KSMC, LLC Developer Review 54,011 2018 Lenexa KS KWB Developer Review 54,011 2018 Lenexa KS Oddo Sonoma Project Developer Review 54,011 2018 Lenexa KS Restaurant Row Dev Rev 54,011 City of Bozeman, Montana xviii Appendices List of Relevant Projects: 2018 – Present Year Client State Project Pop. 2018 Lenexa KS Stag's Pass LLC Developer Review 54,011 2018 Madelia MN OSA TIF Reports 2,286 2018 Madison EDD WI Exact Sciences Review 254,977 2018 Manhattan KS Aggieville TIF Capacity Forecast 55,290 2018 Manhattan KS Ultra Electronics 55,290 2018 Maplewood MN Abatement Analysis 39,765 2018 Marshall MN Abatement Analysis 13,651 2018 Marshall MN ED TIF 1-14 13,651 2018 Marshall MN Housing TIF District 13,651 2018 Nisswa MN ANB Redevelopment TIF 1,817 2018 North Branch MN Housing TIF 2018-1 10,454 2018 North Saint Paul MN Anchor Block Redev 12,406 2018 Oakdale MN TIF 2-12 IDP Proposal Review 27,963 2018 Pequot Lakes MN TIF and Abatement Analysis 2,234 2018 Red Wing MN OSA TIF Reports 16,388 2018 Rochester MN Holiday Inn Redev Review 115,557 2018 Rochester MN Hyatt House Legion Redev Review 115,557 2018 Rochester MN Wells Fargo Redev Review 115,557 2018 Sedalia MO Midtown TIF Amendment 21,633 2018 Shakopee MN Canterbury Redevelopment 40,731 2018 Shakopee MN Old City Hall TIF District 40,731 2018 Shakopee MN Riverfront TIF District No. 1-19 40,731 2018 Shakopee MN Soils TIF District 20 40,731 2018 Shawnee KS Bellmont Promenade TIF Revision 64,323 2018 Spring Hill KS ED Policy Review 6,626 2018 UG of Wyandotte Co/Kansas City KS Healthy Campus Downtown Develop 152,522 2018 UG of Wyandotte Co/Kansas City KS Turner Vista Apts TIF and CID 152,522 2018 Willmar MN Abatement Analysis 19,680 2018 Winona MN YWCA Abatement 26,854 2018 Wyoming MN Peterson Tax Abatement Project 7,914 City of Bozeman, Montana xix Appendices Appendix III: Sample materials Summary Tax Increment By DistrictSummary Borrowing Capacity by District2020 (FY21) Certified Taxable ValueBase Taxable ValueFY21 Certified Incremental Taxable ValueFY21 Mill ValueFY21 Est. TIF RevFY20 Est. TIF Rev VarianceMRA State ReimbursementTotal Revenue for CoverageDistrict SunsetAssumed RateMinimum CoverageBorrowing Capacity*URD II (1-1C)4,991,090 1,546,186 3,444,904 893.82 3,079,124 3,143,098 (63,974) 400,286 3,479,410 6/30/2031 3.35% 1.25X See CombinedURD II (4-1C)600,499 313,637 286,862 879.48 252,289 231,253 21,037 42,305 294,594 6/30/2031 3.35% 1.25X See CombinedURD III12,366,431 8,172,844 4,193,587 893.82 3,748,312 3,846,456 (98,144) 277,850 4,026,162 6/30/2040 3.75% 1.25X 28,135,000 Front Street3,045,179 1,413,035 1,632,144 893.82 1,458,843 1,447,122 11,721 53,975 1,512,818 6/30/2043 3.90% 1.25X 7,485,000 Riverfront Triangle694,384 157,858 536,526 893.82 479,558 627,065 (147,508) 9,316 488,874 6/30/2043 3.90% 1.25X 4,490,000 Hellgate URD1,404,251 1,025,448 378,803 893.82 338,582 369,039 (30,457) - 338,582 6/30/2030 3.25% 1.25x 2,295,000 NRSS URD (east)679,471 295,864 383,607 893.82 342,876 328,369 14,507 - 342,876 6/30/2045 4.00% 1.25X See CombinedNRSS URD (west)2,381,008 1,195,341 1,185,667 879.48 1,042,770 1,124,819 (82,048) - 1,042,770 6/30/2045 4.00% 1.25X See Combined26,162,313 14,120,213 12,042,100 10,742,354 11,117,220 (374,866) 783,732 11,526,086 Combined URD II5,591,589 1,859,823 3,731,766.00 892.72 3,331,413 3,374,351 (42,937) 442,591 3,774,004 6/30/2031 3.35% 1.25X 17,590,000 Combined NRSS3,060,479 1,491,205 1,569,274.00 882.99 1,385,646 1,453,187 (67,541) - 1,385,646 6/30/2045 4.00% 1.25X 8,785,000 *Amounts are estimates based on assumed bank ratesPrepared by Baker Tilly Municipal Advisors, LLCand are gross amounts assuming a portion would beAs of: 11/24/2020used to pay costs of issuance.Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP tradingas Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of which are separate and independent legal entities. © 2020 Baker Tilly Municipal Advisors, LLC Preliminary as of November 24, 2020 $4,490,000 City of Missoula, Montana Urban Renewal Tax Increment Revenue Bonds, Series 2021 (Riverfront Triangle Urban Renewal District) Capacity Analysis Sources & Uses Dated 01/01/2021 | Delivered 01/01/2021 Sources Of Funds Par Amount of Bonds......................................................................................................................................................$4,490,000.00 Total Sources................................................................................................................................................................$4,490,000.00 Uses Of Funds Deposit to Project Construction Fund..............................................................................................................................4,412,170.00 Costs of Issuance...........................................................................................................................................................77,830.00 Total Uses......................................................................................................................................................................$4,490,000.00 File | MISSOULA_RA_NEW.sf | TIF Riverfront Triangle U | SINGLE PURPOSE | 11/24/2020 | 3:57 PM Page 1 Preliminary as of November 24, 2020 $4,490,000 City of Missoula, Montana Urban Renewal Tax Increment Revenue Bonds, Series 2021 (Riverfront Triangle Urban Renewal District) Capacity Analysis NET DEBT SERVICE SCHEDULE Date Principal Coupon Interest Total P+I Existing D/S Net New D/S Revenue Surpls(Deficit) 07/01/2021 205,000.00 3.900%87,555.00 292,555.00 94,390.93 386,945.93 488,874.00 101,928.07 07/01/2022 125,000.00 3.900%167,115.00 292,115.00 94,390.93 386,505.93 488,874.00 102,368.07 07/01/2023 130,000.00 3.900%162,240.00 292,240.00 94,390.93 386,630.93 488,874.00 102,243.07 07/01/2024 135,000.00 3.900%157,170.00 292,170.00 94,390.93 386,560.93 488,874.00 102,313.07 07/01/2025 140,000.00 3.900%151,905.00 291,905.00 94,390.93 386,295.93 488,874.00 102,578.07 07/01/2026 150,000.00 3.900%146,445.00 296,445.00 94,390.93 390,835.93 488,874.00 98,038.07 07/01/2027 155,000.00 3.900%140,595.00 295,595.00 94,390.93 389,985.93 488,874.00 98,888.07 07/01/2028 160,000.00 3.900%134,550.00 294,550.00 94,390.93 388,940.93 488,874.00 99,933.07 07/01/2029 165,000.00 3.900%128,310.00 293,310.00 94,390.93 387,700.93 488,874.00 101,173.07 07/01/2030 170,000.00 3.900%121,875.00 291,875.00 94,390.93 386,265.93 488,874.00 102,608.07 07/01/2031 180,000.00 3.900%115,245.00 295,245.00 94,390.93 389,635.93 488,874.00 99,238.07 07/01/2032 185,000.00 3.900%108,225.00 293,225.00 94,390.93 387,615.93 488,874.00 101,258.07 07/01/2033 195,000.00 3.900%101,010.00 296,010.00 94,390.93 390,400.93 488,874.00 98,473.07 07/01/2034 200,000.00 3.900%93,405.00 293,405.00 94,390.93 387,795.93 488,874.00 101,078.07 07/01/2035 210,000.00 3.900%85,605.00 295,605.00 94,390.93 389,995.93 488,874.00 98,878.07 07/01/2036 215,000.00 3.900%77,415.00 292,415.00 94,390.93 386,805.93 488,874.00 102,068.07 07/01/2037 225,000.00 3.900%69,030.00 294,030.00 94,390.93 388,420.93 488,874.00 100,453.07 07/01/2038 235,000.00 3.900%60,255.00 295,255.00 94,390.93 389,645.93 488,874.00 99,228.07 07/01/2039 245,000.00 3.900%51,090.00 296,090.00 94,390.93 390,480.93 488,874.00 98,393.07 07/01/2040 250,000.00 3.900%41,535.00 291,535.00 94,390.93 385,925.93 488,874.00 102,948.07 07/01/2041 260,000.00 3.900%31,785.00 291,785.00 94,390.93 386,175.93 488,874.00 102,698.07 07/01/2042 270,000.00 3.900%21,645.00 291,645.00 94,390.93 386,035.93 488,874.00 102,838.07 07/01/2043 285,000.00 3.900%11,115.00 296,115.00 94,391.31 390,506.31 488,874.00 98,367.69 Total $4,490,000.00 -$2,265,120.00 $6,755,120.00 $2,170,991.77 $8,926,111.77 $11,244,102.00 $2,317,990.23 SIGNIFICANT DATES Dated...................................................................................................................................................................................................1/01/2021 Delivery Date.........................................................................................................................................................................................1/01/2021 First Coupon Date..................................................................................................................................................................................7/01/2021 Yield Statistics Bond Year Dollars..................................................................................................................................................................................$58,080.00 Average Life...........................................................................................................................................................................................12.935 Years Average Coupon....................................................................................................................................................................................3.9000000% Net Interest Cost (NIC)...........................................................................................................................................................................3.9000000% True Interest Cost (TIC).........................................................................................................................................................................3.9000000% Bond Yield for Arbitrage Purposes.........................................................................................................................................................3.9000000% All Inclusive Cost (AIC)..........................................................................................................................................................................4.0839202% Net Interest Cost in Dollars....................................................................................................................................................................2,265,120.00 Weighted Average Maturity....................................................................................................................................................................12.935 Years File | MISSOULA_RA_NEW.sf | TIF Riverfront Triangle U | SINGLE PURPOSE | 11/24/2020 | 3:57 PM Page 2 Preliminary as of November 24, 2020 $4,490,000 City of Missoula, Montana Urban Renewal Tax Increment Revenue Bonds, Series 2021 (Riverfront Triangle Urban Renewal District) Capacity Analysis Coverage Ratio Date Total Revenues Total D/S Coverage 07/01/2021 488,874.00 386,945.93 1.2634168x 07/01/2022 488,874.00 386,505.93 1.2648551x 07/01/2023 488,874.00 386,630.93 1.2644462x 07/01/2024 488,874.00 386,560.93 1.2646751x 07/01/2025 488,874.00 386,295.93 1.2655427x 07/01/2026 488,874.00 390,835.93 1.2508420x 07/01/2027 488,874.00 389,985.93 1.2535683x 07/01/2028 488,874.00 388,940.93 1.2569364x 07/01/2029 488,874.00 387,700.93 1.2609565x 07/01/2030 488,874.00 386,265.93 1.2656410x 07/01/2031 488,874.00 389,635.93 1.2546944x 07/01/2032 488,874.00 387,615.93 1.2612330x 07/01/2033 488,874.00 390,400.93 1.2522357x 07/01/2034 488,874.00 387,795.93 1.2606476x 07/01/2035 488,874.00 389,995.93 1.2535362x 07/01/2036 488,874.00 386,805.93 1.2638741x 07/01/2037 488,874.00 388,420.93 1.2586191x 07/01/2038 488,874.00 389,645.93 1.2546621x 07/01/2039 488,874.00 390,480.93 1.2519792x 07/01/2040 488,874.00 385,925.93 1.2667560x 07/01/2041 488,874.00 386,175.93 1.2659360x 07/01/2042 488,874.00 386,035.93 1.2663951x 07/01/2043 488,874.00 390,506.31 1.2518978x Total $11,244,102.00 $8,926,111.77 - File | MISSOULA_RA_NEW.sf | TIF Riverfront Triangle U | SINGLE PURPOSE | 11/24/2020 | 3:57 PM Page 3 City of Missoula, Montana Urban Renewal Tax Increment Revenue Bonds Riverfront Triangle Urban Renewal District Debt Service Coverage Fiscal TIF Revenues State Entitlement 2019 Remaining TIF District Debt Year & Reimbursements Bond Revenue Coverage 2021 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2022 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2023 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2024 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2025 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2026 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2027 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2028 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2029 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2030 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2031 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2032 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2033 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2034 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2035 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2036 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2037 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2038 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2039 479,557.67 9,316.00 94,390.93 394,482.74 5.17924 2040 479,557.67 9,316.00 94,390.93 394,482.74 5.179242041479,557.67 9,316.00 94,390.93 394,482.74 5.179242042479,557.67 9,316.00 94,390.93 394,482.74 5.179242043479,557.67 9,316.00 94,391.31 394,482.36 5.17922 Total $11,029,826.39 $214,268.00 $2,170,991.77 $9,073,102.62 Max FY Debt Service $94,391.31 TIF Revenues &State Entitlements $488,873.67 Coverage 5.17922x Italics Represents Estimated Values Based on Tax Value Increase of District Projects as provided by MRA staff 2019 MRA TIF URD Front S | New Money | 1/ 7/2018 | 2:16 PM $4,490,000 City of Missoula, Montana Urban Renewal Tax Increment Revenue Bonds, Series 2021 (Riverfront Triangle Urban Renewal District) Capacity Analysis Disclaimer Baker Tilly Municipal Advisors, LLC is a registered municipal advisor and wholly-owned subsidiary of Baker Tilly US, LLP, an accounting firm. Baker Tilly US, LLP trading as Baker Tillyis a member of the global network of Baker Tilly International Ltd., the members ofwhich are separate and independent legal entities.Copyright 2020 Baker Tilly Municipal Advisors, LLC File | MISSOULA_RA_NEW.sf | TIF Riverfront Triangle U | SINGLE PURPOSE | 11/24/2020 | 3:57 PM Memo To: Terry Spaeth, City of Rochester From: Mikaela Huot, Director Date: April 15, 2020 Subject: Review of Request for Financial Assistance through Tax Increment Financing (TIF) District for Rochester Partners, LLC Background The City of Rochester received an application from Mortenson Development, the developer, for financial assistance through Tax Increment Financing (TIF) to assist with financing a portion of the extraordinary development costs related to the construction of Discovery Square Two, a high amenity research building furthering the development efforts following One Discovery Square. The developer has envisioned Discovery Square Two before the groundbreaking of One Discovery Square. Since the inception of the DMC effort, Discovery Square has been considered as the economic engine of the Destination Medical Center initiative. Fueled by the success of One Discovery Square, Two Discovery Square will attract even more talent and tenants to the district. The purpose of this memorandum is to provide a summary of Baker Tilly’s review of the development project costs and operating pro forma as provided by the developer to assist the City with making a determination if the project as proposed would be unlikely to proceed “but-for” the requested Tax Increment Financing (TIF) assistance, and to determine the appropriate amount, if any, of public assistance. Prior to establishing a tax increment financing district, there are findings that need to be made by the City that include: 1) determination that the project qualifies as a TIF district, 2) determination that the project as proposed would not proceed without public assistance (meeting the “but-for” test and 3) determination that the estimated market value created on the site with tax increment financing assistance is greater than what would be created without assistance. When reviewing requests for financial assistance it is important to understand how the level of financial assistance would impact the ability of the project to proceed as proposed and maximize new value created on the current project site. Developer Request for Assistance The developer’s original application included an approximate $44-$45 million project that would be funded by an estimated $12 million of equity, $22 million of private financing and an approximate $10.5M gap. Private debt financing would be approximately 55% of the total project costs. With the speculative nature of Discovery Square Two as opposed to having an anchor tenant in One Discovery Square, debt funding will be more challenging to secure and potential lenders need to understand feasibility of the project in absence of a AAA credit rated tenant. Typically for speculative buildings, lenders underwrite to a higher return threshold and require a higher debt coverage ratio (DCR) due to increased risk. They will also require recourse and a posting of a letter of credit to secure the loan. Mortenson is confident in the momentum and demand that exists in the market but is uncertain if the project will be able to obtain signed Letters of Intent (LOI) before groundbreaking. Financial assistance through pay-as-you-go tax increment financing from the City of Rochester has been requested to provide additional annual cash flow necessary to meet minimum the developer’s minimum equity return on cost of 7.5% at project stabilization. Once completed, Discovery Square will be comprised of research buildings with many amenities designed with collaboration in mind. Discovery Square Two will have a link to One Discovery Square with an enclosed courtyard that will be shared by and between the two buildings and the district. The link will provide Discovery Square Two direct access to One Discovery Square and will further activate Discovery Walk. The courtyard will facilitate community events. Following construction of Discovery Square One, it was determined there is a need for large amenity spaces within the district for events and conferences for up to 200-300 people. This large amenity space will not be feasible without financial support from tax increment revenues as it does not generate typical rental rates. Additionally, there will be extra costs incurred to program the space. Mortenson is currently adding digital infrastructure to achieve a Wired Score Certification for the building. Wired score certification is a commercial real estate rating system that promotes digital infrastructure. There are only eight buildings in Minnesota with this certification and Two Discovery Square expects to be the first Wired Score Certified building in the city of Rochester. This infrastructure will allow Two Discovery Square to attract and retain tenants. In addition, infrastructure required for a lab and research building is expensive – prohibitively so in a market where tertiary lab space exists at a significant discount to what can be offered within a newly constructed building. The BioBusiness Center and One Discovery Square are case studies for why lab infrastructure is needed in the market. By delivering a building with robust lab infrastructure to the market, Discovery Square Two will provide a convenient next step for companies as they evolve and their space needs change. In this way, Discovery Square Two will capture and retain the pipeline of bioscience tenants in downtown Rochester including One Discovery Square tenants who may grow out of their space. With the success of One Discovery Square, Discovery Square Two will provide the market with the resources it needs to continue to grow an economy built upon lab-based collaborative research. For the benefit of the public, Discovery Square Two will enable growth of this bioscience economy which bolsters tax base, increases the growth of non-Mayo employers, diversifies the downtown environment, broadens talent base and facilitates an entrepreneurial ecosystem. The developer has identified significant costs associated with construction of Discovery Square Two. For this project, the developer has indicated that tax increment financing assistance is necessary for the project to proceed and has identified TIF-eligible development costs in excess of $22 million – more than both a TIF district could support and developer’s request - that could be financed by the project. Those extraordinary development costs that cannot be supported solely by the project alone typically may justify the need for some type of public financial assistance that would allow the project to proceed as proposed and meet debt coverage and value assumptions. The developer has indicated the receipt of City financial assistance is necessary for the project to proceed. After multiple discussions between City and DMC staff and the developer following review of the developer’s application and identification of potential extraordinary project costs that the developer was able to make some reductions to the total estimated project costs in an effort to close the financial gap and reduce the amount of needed public assistance. As a result, the adjusted amount of public assistance has been reduced from $10.5M to $7.3M. The updated sources and uses of funds from the developer’s financial materials is illustrated in the table below. Sources Amount Uses Amount Equity $12,853,824 Ground Lease $158,550 Debt $24,632,453 Site Development $750,000 TIF * $7,300,000 Building Cost $29,632,479 Design Fees $1,100,000 Development Costs $4,211,412 Structural Enhancements $1,600,000 Marketing $350,000 Contingency $448,696 Development Fee $1,682,611 TI Allowance $3,774,190 Leasing Commissions $1,078,340 Total $44,786,278 Total $44,786,278 * financed as pay as you go for reimbursement of certain costs Tax Increment Revenue Estimates The County provided taxable value estimates to the City based on the financial information from the developer. Baker Tilly utilized those values to provide preliminary tax increment revenue estimates. The estimated taxable value of the project as provided by the County is approximately $30,824,000. The actual taxable value may be higher, subject to annual review and full project buildout and performance. For purposes of our analysis, we are including a taxable value of $30,824,000 with no market value inflator and current tax capacity rates and classification rates. Based on those assumptions, the projected annual tax increment revenues of the project are estimated to be approximately $705,057 with 75% equalling $528,793. The estimated total tax increment revenues over the recommended term of 15 years is estimated to be $7.9M. Project Financing There are generally two ways in which assistance can be provided for most projects, either upfront or on a pay- as-you-go basis. With upfront financing, the City would finance a portion of the developer’s initial project costs through the issuance of bonds or as an internal loan. Future tax increment would be collected by the City and used to pay debt service on the bonds or repayment of the internal loan. With pay-as-you-go financing, the developer would finance all project costs upfront and would be reimbursed over time for a portion of those costs as revenues are available. Pay-as-you-go-financing is generally more acceptable than upfront financing for the City because it shifts the risk for repayment to the developer. If tax increment revenues are less than originally projected, the developer receives less and therefore bears the risk of not being reimbursed the full amount of their financing. However, in some cases pay as you go financing may not be financially feasible. With bonds, the City would still need to make debt service payments and would have to use other sources to fill any shortfall of tax increment revenues. With internal financing, the City reimburses the loan with future revenue collections and may risk not repaying itself in full if tax increment revenues are not sufficient. The developer’s financial information includes pay-as- you-go financing. Developer Pro forma Analysis including But-For Upon approval of a TIF district and project, the City must make several findings, including the “but for” test: that the proposed development would not reasonably be expected to occur solely through private investment within the reasonably foreseeable future. The developer has stated the assistance is necessary due to the high costs of redeveloping the site, that includes acquisition of an existing building, along with the inability of the project to support those costs upon completion. The current estimated project costs ($44,786,278) are in excess of the estimated future value of the building ($30,824,000) upon development as provided by the Olmsted County Assessor. Based on the developer’s stated position relative to the need for tax increment financing assistance, the City could make its “but for” finding and provide tax increment assistance. We recommend, however, that the City also consider an appropriate level and type of TIF assistance for the project based on the information submitted by the developer. The City’s position relative to the use of tax increment has typically been to finance extraordinary costs and the level of assistance is in part dictated by the ‘extraordinary’ costs of the project. The City’s TIF policy focuses on maintaining a limit to the amount of public assistance to no more than 75% of annual increment for a period of no more than 10 years for TIF projects. The City’s policy acts as a guideline for the City’s use of TIF. A DMC TIF project is not a conventional City redevelopment TIF project with goals and objectives that may be different from other projects, with possible consideration for adjustments to the terms. The recommended level of public assistance of $7.3M is approximately 16% of total project costs with a maximum term of 15 years assuming a 4.75% interest rate. We understand that due to the developer’s desire and vision for Discovery Square Two there are some significant extraordinary costs to be incurred for the project to proceed. Not all those costs will equate to increased value to the developer, as represented by the total estimated assessed value. Following thorough evaluation of the project as provided allows the City to be prepared to make an informed “but-for” decision based on the likelihood of the project needing assistance, as well as the appropriate level of assistance. To complete this analysis, we reviewed the developer’s provided operating proforma and constructed similar ten-year project proformas, showing a result if the developer received the assistance as pay-as-you-go (reimbursement for TIF eligible costs) and showing a result if the developer did not receive assistance. Our analysis of the proformas included a review of the development budget, projected operating revenues and expenditures, and the project’s capacity to support annual debt service on outstanding debt. The purpose of evaluating the operating proformas is to understand the potential returns to the developer through the initial development of the project and the operation of the enterprise over a 10-year period. Generally, should the rates of return lie below a reasonable range without assistance; we could assume the project as proposed would not move forward without assistance. Should the returns lie within a reasonable range with the assistance, we could assume the amount of assistance tested is appropriate for the project. All such estimates should be viewed as general indicators of performance and not exact forecasts. The number of current and future variables affecting these estimates and actual results are great. There are no set rate of return benchmarks that dictates whether a project needs TIF assistance or not; however, there are market/industry standards for certain types of projects, as well as more specific investor/developer thresholds that need to be achieved. The developer has provided a minimum return on cost threshold of 7.5%. An additional measure of project feasibility is the Debt Coverage Ratio (DCR), which is a calculation detailing the ratio by which operating income exceeds the debt-service payments for the project. If the DCR is greater than 1.0 it indicates the project has operating income that is greater than the debt-service payment by some margin; conversely if the DCR is less than 1.0 it indicates the project is incapable of meeting its debt-service payment and would need to seek additional revenue sources in order to pay its debt. Typical lending standards will require a DCR of significantly greater than 1.0 as a measure of cushion in the event actual revenues and expenses are different than projected. The developer’s operating proforma includes a 1.5x DCR, which could be considered reasonable for this type of project. Due to the speculative nature of this project, the developer’s lenders will require a healthy debt coverage to provide financing. We have assumed the level of debt would not change in the without assistance scenario as the developer is limited on the amount it can obtain based on project performance. Any financial gaps would have to be filled by other funding sources (equity, public or other). Our review of the operating proformas based on with assistance as paygo and with no assistance provides the projected returns to the developer as illustrated in the table below. It is important to note that certain assumptions were made based on the developer’s provided information including the debt and equity amounts, annual lease rates for the multiple tenants, vacancy rates and annual revenue and operating expense inflators in order to analyze the projected returns to the developer and overall project performance. Adjustments were made to those assumptions to understand the potential impact on the project performance and need for assistance. The table below represents the projected returns and debt coverage ratios for the project utilizing the developer’s provided financial information. Additional adjustments were made to the assumptions for revenues, expenses and permanent financing to understand project viability and need for assistance. Projected Performance Metrics * Developer Without Assistance Developer With Assistance Internal Rate of Return 4.60% 10.76% Return on Cost 5.91% 7.25% Debt Coverage Ratio (DCR) 1.54x 1.54x * calculated using stabilized net operating income and net project costs financed by the developer. Debt coverage ratio would not change as the project is limited in ability to attract financing The above calculations are based on information provided by the developer regarding the annual operating assumptions for revenues and expenditures and debt service payments. Based on the original assumptions, public assistance is necessary to meet the developer’s minimum return threshold of 7.5%, and adjusted down to 7.25% with value engineering, that would allow the project to proceed. Financial assistance to the project is expected to increase the projected rate of return to a level that would be considered feasible as represented by the developer and would allow the project to proceed. Ultimately, actual revenues and expenditures will impact the ultimate performance of the project. To understand viability of the project and test the necessary level of assistance, we also provided a sensitivity analysis to the proformas with adjustments made to the upfront sources and uses of funds and annual operating revenues and expenses. Increases in the projected lease rates or decreases in operating expenses may result in similar returns and DCR calculations as would be through providing tax increment assistance. However, through discussions with the developer we understand that the projected rates are in the range of the competitive market rental rates and consistent with One Discovery Square. Additional conversations with the City and developer have indicated that it is not feasible to expect that lease rates could increase, or operating expenses decrease to levels that would eliminate the need for financial assistance. In addition, increases in operating expenses or decrease in revenues would be expected to have a negative impact on the cash flow performance. Conclusion The developer has requested financial assistance related to construction of Discovery Square Two. After significant discussions between City and DMC staff and the applicant, it was determined that $7.3M would be a reasonable level of public assistance as deemed necessary for the project to proceed. This amount has been reduced from than the original request of over $10 million. The applicant identified potentially TIF-eligible costs in excess of $20 million. Through submission of the tax increment financing application and supporting financial information, the developer has indicated that the project would not occur as proposed without financial assistance from the City due to those extraordinary costs. The with-assistance scenario illustrates that public financial assistance will have a positive impact on the project performance and the annual revenues are projected to increase the rate of return to a level that is consistent with industry standards for similar type projects and necessary to attract equity investors. Without assistance, the project is expected to have below market returns to the developer and are not expected to be sufficient to meet equity investor requirements. Annual tax increment revenues through pay-as-you-go financing would increase annual net operating incomes needed to support debt service payments and meet minimum return thresholds. After analyzing the operating proformas and providing sensitivity analysis, we have found that making moderate adjustments to the operating proforma and cost assumptions may have a positive impact on the project performance, thus reducing the amount of financial assistance to a level that could support potential reimbursable costs. The City’s current TIF policy did not allow for the developer’s original full requested amount be granted to the developer. With additional analysis and review, it was determined that a deviation from the policy to meet the City and DMC goals and objectives was necessary for the project to proceed as proposed. Multiple discussions with the developer have resulted in a better understanding of the project financing components. The developer has indicated the projected lease rates are within market standards and consistent with One Discovery Square. They are not expected to increase significantly enough to reduce the need for public participation. In addition, the developer has been working to reduce estimated project costs to an amount that would be feasible for the project to proceed assuming a reduced level of public participation may be available to close the financial gap. The recommended amount of public assistance would allow the project to proceed as proposed while providing the developer with a reasonable return on investment as necessary for the project to be constructed in a manner that meets the City’s and DMC’s objectives for Discovery Square. Thank you for the opportunity to be of assistance to the City of Rochester. Please contact me at 651.368.2533 or Mikaela.huot@bakertily.com with any questions or comments.