HomeMy WebLinkAbout22- Task Order 3 - Baker Tilly - Housing and Economic Development ProjectDocuSign Envelope ID: 89729612-6976-4A83-887D-A4D8A3CA34FA
City of Bozeman Term Contract
Housing and Economic Development Project Financial Analysis and Related
Services
PROJECT: Housing and Economic Development Project Financial Analysis and
Related Services – Financial Feasibility and Needs Analysis – Charter Reality and
Development
Issued under the authority of Urban Renewal District Term Contract Professional
Services Agreement with Baker Tilly Municipal Advisors, LLC for Housing and
Economic Development Project Financial Analysis and Related Services.
This Task Order is dated May 3, 2022 between the City of Bozeman and Baker Tilly
Municipal Advisors (Contractor).
The following representatives have been designated for the work performed under this
Task Order:
City: David Fine, Urban Renewal Program Manager
Contractor: Mikaela Huot, Baker Tilly Municipal Advisors, LLC
SCOPE OF WORK: The scope for this task order is for work on housing and economic
development financial analysis and related services as request by the City as described
in the attached scope of work requested.
COMPENSATION: Baker Tilly Municipal Advisors, LLC will bill for its services based on
the attached scope of work and rate sheet previously provided.
IN WITNESS WHEREOF, the parties authorized to commit resources of the parties
have executed this Task Order:
City of Bozeman Baker Tilly Municipal Advisors, LLC
Jeff Mihelich, City Manager Mikaela Huot, Director
_________________________________
Matt Eckerle, Principal
Task Order 3
DocuSign Envelope ID: 559F3580-AF67-43F1-9D5E-138C2817DC66
DocuSign Envelope ID: 89729612-6976-4A83-887D-A4D8A3CA34FA
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Scope of Work
South Bozeman Technology District TIF Assistance Request
City of Bozeman, Montana
Financial Feasibility and Needs Analysis April 2022
The City of Bozeman (the “City”) received a request for TIF assistance within the South
Bozeman Technology District related to the proposed construction of 2 office buildings and
related public infrastructure. The Developer has indicated there is a financial gap based on the
current project scope to support the costs of infrastructure and tax increment financing could be
a tool to assist with closing a gap. The purpose of this document is to outline a scope of work,
estimated fee and time frame for completion. Baker Tilly’s proposed scope of work includes the
following activities:
Phase 1: Preliminary Revenue Projections and Financial Feasibility
Objectives
To prepare preliminary tax increment revenue projections based on developer provided
information
To provide initial project financial feasibility
Analysis
1) Preparation of tax increment revenues
a. Review developer-supplied information for reasonableness
b. Forecast the projected tax increment revenues to be generated over the life of
the district based on those assumptions
i. Developer provided total development costs and project assumptions
ii. Tested against available comparable-type developments
iii. Estimated range of available revenues based on valuations
c. Financial Feasibility Review
i. Assess the sufficiency of tax increment revenues to support costs
Deliverable
Summary of preliminary revenue projections and initial feasibility
Preliminary financial feasibility analysis
DocuSign Envelope ID: 559F3580-AF67-43F1-9D5E-138C2817DC66
DocuSign Envelope ID: 89729612-6976-4A83-887D-A4D8A3CA34FA
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Phase 2: Financial Review and Needs Analysis and Development Agreement
Objectives
To review and analyze the request for assistance as related to the proposed development
project to determine necessity and appropriateness
To assist in negotiations of the development agreement, as applicable
To provide draft term sheet
Analysis
1) Financial Feasibility Review
a. Suggest alternative assumptions and provide sensitivity analysis
b. Assess the sufficiency of the tax increment revenues to support costs with
considerations for timing of bond issuance to provide financial support
c. Prepare cash flow analysis based on sensitivity analysis
2) Financial Needs (But For) 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
d. Complete sensitivity analysis with respect to developer return and need for
assistance (as appropriate)
3) 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 as proposed
c. Assist in negotiation of the development agreement, and prepare financing
exhibits as necessary
Deliverable
Financial analysis with determination of need for public assistance
Preliminary term sheet with recommended public assistance amounts
Compensation
The work as described will be completed with an estimated fee in the range of $5,250 - $6,900.
Excluded from the fee indicated above is any out-of-pocket expenses such as travel, copies,
faxes, conference calls, or other expenses necessary to complete the project. Additional work
DocuSign Envelope ID: 559F3580-AF67-43F1-9D5E-138C2817DC66
DocuSign Envelope ID: 89729612-6976-4A83-887D-A4D8A3CA34FA
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requested and authorized by the City outside the scope of services described in this proposal
will be invoiced at our standard hourly rates.
Completion Date
Upon full receipt of the requested information, Baker Tilly will complete Phase 1 of the above
work processes and outcomes within 1-2 weeks, subject to receipt of all information. The
remaining phases and steps of analysis will be subject to outcomes of Phase 1 and timing
needs of both the City and developer. We will be successful in meeting the requested time
frames for completion recognizing it is highly dependent on the timing and completeness of the
information received. A delay in receipt of critical material may result in an extension of the
completion date.
Sincerely,
Mikaela Huot, Director
Signature Section:
The services and terms as set forth in this Scope Appendix are agreed to on behalf of the Client
by:
City of Bozeman
Name:
Title:
Date:
DocuSign Envelope ID: 559F3580-AF67-43F1-9D5E-138C2817DC66
City ManagerCity Manager
5/10/20225/10/2022
DocuSign Envelope ID: 89729612-6976-4A83-887D-A4D8A3CA34FA
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Financial Feasibility Review: Additional Details for Financial Analysis
Project Details
To include commercial office building square footage, etc.
To include cost of construction for each development type
To include information for any commercial, civic or other uses
To include site improvement and public infrastructure costs
To include detailed breakdown of all costs
Project Phasing
To include commencement and completion for each building construction, or each site
improvement, or public infrastructure
To include date for sale of unit or lease of unit, occupancy start and full occupancy,
etc.
Project Financing
To include development of complete sources and uses of funds
To include detail on bank financing, i.e., principal, term, rate
To include equity amount and timing of equity in project
To include take-out source of bank financing for construction period, if applicable
To include letters of commitment or interest from financial institutions
To include amount of public financing request, and form of request, i.e., bonds, pay-
go-note, etc.
To include gap amount to match public financing request (all equity and private
sources are insufficient to pay all costs)
To include description of and rationale behind proposed governmental financial
assistance
Public Financing Revenue Assumptions
To include estimated assessed value per type of construction
To include sales per s.f. estimates (if applicable)
To include any growth assumptions
Project Operation
To include operating assumptions, etc.
To include revenue and expense assumptions and increases
To include reserve assumptions (capital, operating, etc.)
To include rent and/or sale assumptions
To include lease commission, sales commission assumptions
To include complete operating pro-forma calculating internal rate of return with and
without requested financial assistance
To include sale assumptions in appropriate future year (10 or 15), including
capitalization rate
To include proposed tenants, job and wage information
General Information/Assumptions
Provide sources of data used in any of the above
DocuSign Envelope ID: 559F3580-AF67-43F1-9D5E-138C2817DC66