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HomeMy WebLinkAbout08-04-22 Midtown Urban Renewal Board Agenda & Packet MaterialsA.Call meeting to order at 4:30 Via Webex: https://cityofbozeman.webex.com/cityofbozeman/onstage/g.php?MTID=ef384fbfe68683a773b509490e0566958 Click the Register link, enter the required information, and click submit. Click Join Now to enter the meeting Via Phone: This is for listening only if you cannot watch the stream or channel 190 • Call-in toll number (US/Canada): 1-650-479-3208 • Access code: 2557 381 3581 B.Disclosures C.Changes to the Agenda D.Public Service Announcements E.Approval of Minutes E.1 Approve minutes from June 2, 2022.(Fine) F.Consent G.Public Comment Please state your name and address in an audible tone of voice for the record. This is the time for individuals to comment on matters falling within the purview of the Committee. There will also be an opportunity in conjunction with each action item for comments pertaining to that item. Please limit your comments to three minutes. H.Special Presentation I.Action Items I.1 Request for TIF Assistance from Bozeman Hotel Group (Fine) J.FYI/Discussion K.Adjournment THE MIDTOWN URBAN RENEWAL BOARD OF BOZEMAN, MONTANA MURB AGENDA Thursday, August 4, 2022 For more information please contact 1 This board generally meets the xx xxxday of the month from xx:xx to xx:xx Committee meetings are open to all members of the public. If you have a disability and require assistance, please contact our ADA coordinator, Mike Gray at 582-3232 (TDD 582-2301). In order for this Board to receive all relevant public comment in time for this meeting, please submit via the Commission Comment Page or by emailing agenda@bozeman.net no later than 12:00 PM on the day of the meeting. Public comment may be made in person at the meeting as well. 2 Memorandum REPORT TO:Midtown Urban Renewal Board FROM:David Fine, Economic Development Program Manager SUBJECT:Approve minutes from June 2, 2022. MEETING DATE:August 4, 2022 AGENDA ITEM TYPE:Citizen Advisory Board/Commission RECOMMENDATION:Approve minutes from June 2, 2022. STRATEGIC PLAN:1.1 Outreach: Continue to strengthen and innovate in how we deliver information to the community and our partners. BACKGROUND:Minutes from April 7, 2022 and June 2, 2022. UNRESOLVED ISSUES:None. ALTERNATIVES:n/a FISCAL EFFECTS:None. Attachments: June 2 notes.pdf Apr 7 notes.pdf Report compiled on: August 2, 2022 3 Page 1 of 6 Unapproved minutes from June 2, 2022 board meeting via WebEx TO DO List: Everyone attend July 7 board meeting In attendance: David Fine, Susan Fraser, Maddy Roche, Hillary Folkvord, Alicia Ward, Nolan Campbell, Valerie Wyman, Tracy Menuez, Emily Talago A. Call to Order – Valerie called the meeting to order at 4:33pm. B. Disclosers – Nolan said he’d received phone calls concerning Hemlock Street. C. Changes to agenda – none. D. Public Comment – Mary Wictor, 1504 Boylan Rd, spoke to variety of housing and the missing middle housing situation. E. Action Item – MURB FY23 work plan and budget David presented (see Attachment A). Discussion. Public comment was called. Mary Wictor noted N. 7th has needed help for years so work is great, but please remember housing needs. More discussion. Another member of the public, Mitch Billis, owner of 602 Hemlock, spoke to current situation on Hemlock, noting police required to help, etc. Mitch is very concerned about doing more business in the district due to the RVs, campers, etc, parked along many streets. Chair Valerie asked David as city staff to speak to the board’s role concerning this situation. David spoke to City’s handling plan is developing as such incidents happen. HRDC was asked by the city to place a porta potty and a dumpster along Hemlock in order to maintain sanitation. Discussion continued. Valerie asked for a motion to approve the FY23 plan. Tracy made the motion and Valerie seconded. All in favor. F. FYI/Discussion David reported working on documentation to get El Mercadito’s funding to them as soon as is possible. A July 7 board meeting is highly probable as expecting 3Rivers Hotel’s request to be submitted, a request for demolition and impact fees at an estimated price of $2million. G. Adjournment Valerie adjourned meeting at 5:33pm. 4 Page 2 of 6 Attachment A 5 Page 3 of 6 6 Page 4 of 6 7 Page 5 of 6 8 Page 6 of 6 9 Page 1 of 1 Unapproved minutes from April 7, 2022 board meeting via WebEx TO DO List: Everyone attend May 5 board meeting In attendance: Nolan Campbell, David Fine, Tracy Menuez, Valerie Wyman, Emily Talago, Susan Fraser A. Call to Order – Nolan called the meeting to order at 4:34pm. B. Disclosers – none. C. Changes to agenda – none. D. Public Comment – none. E. Action Item – MURB FY23 work plan discussion David described this annual process. He then went over past projects and city commission’s foci. David walked thru the FY22 budget as a starting point for discussion. David noted the BMX project is delayed so will roll over from FY22 to FY23 plan. The codifying project is still progressing but some work may also need to roll over to FY23. The operation manual is nearly completed. Discussion. David shared five projects for consideration of FY23 funding. Discussion continued. The practice, not policy, of paying grants only after the project is completed was based on 2016-2017 board discussions about previous projects. The decision was made that in order to get big projects done larger incentives would be required. It is a conservative approach/practice to only fulfill the grant funding after the project is completed. Discussion continued. Affordable housing, including ADU additions, came up. Tracy said HRDC has looked into this, learning some communities have built ADUs for this situation. The building is actually done by a non-profit and most become deed-restricted properties. Emily brought up fiber. David shared the history and map of fiber in the district/city, including conduit installed years ago is now leased to Yellowstone Fiber. This organization is building out over the next 2-3 years to cover most every residence in Bozeman. David asked for feedback on his suggested five projects, i.e. what to include and what to toss away for the FY23 work/budget plan he will bring to the board at the May meeting. Disclosures shared by board members – Nolan, 9TEN; Valerie, property on 8th; Tracy, HRDC work with 9TEN and El Mercadito. Discussion. David noted bond advising currently occurring as more bonding will be needed. Phasing is a concern. Nolan said it is good to let projects come to the board. He then asked David what is forecast on revenue, and staff responded it more than likely to increase but will base the FY23 budget on current year’s income figures. Public comment was called for and no one was online. G. FYI/Discussion Tracy requested to be added to the next board meeting agenda a discussion of early funding on the El Mercadito project. H. Adjournment Nolan adjourned meeting at 5:53pm. 10 Memorandum REPORT TO:Midtown Urban Renewal Board FROM:David Fine, Economic Development Program Manager SUBJECT:Request for TIF Assistance from Bozeman Hotel Group MEETING DATE:August 4, 2022 AGENDA ITEM TYPE:Citizen Advisory Board/Commission RECOMMENDATION: “Having read considered the Application, the findings of the Staff Report, public comment and all information presented, I hereby move to recommend that Staff negotiate a development agreement with the Applicant for the consideration of the Bozeman City Commission for reimbursement of TIF eligible costs of demolition not-to-exceed $2,000,000.” STRATEGIC PLAN:2.2 Infrastructure Investments: Strategically invest in infrastructure as a mechanism to encourage economic development. BACKGROUND:Please see attached Staff Report and supporting documentation. UNRESOLVED ISSUES:Please see attached Staff Report and supporting documentation. ALTERNATIVES:Please see attached Staff Report and supporting documentation. FISCAL EFFECTS:Please see attached Staff Report and supporting documentation. Attachments: Bozeman Hotel Group staff report 08042022.docx Baker Tilly BHG Request for Assistance Financial Review summary memo update 080122.docx Application BLG TIF Request 040122 final draft.pdf Report compiled on: August 2, 2022 11 Staff Report To: Midtown Urban Renewal Board From:David Fine, Economic Development Program Manager Meeting Date:September 1, 2022 Subject:Bozeman Lodging Group Hotel Event Center 5 Baxter Ln. TIF Assistance Program Overview The Bozeman City Commission created the Midtown TIF Assistance Program in 2017 to support redevelopment activity and advance the goals of the 2015 Midtown Urban Renewal Plan. The City Commission amended the Program in January 2020. The Midtown TIF Assistance Program supports projects that create significant new taxable value as well as meeting the five goals of the Midtown Urban Renewal Plan. These goals, as required by statute, focus on mitigating blighting conditions in the urban renewal area. Each of these five goals is further refined with particular criteria for a total of seventeen categories that can receive points. Point awards demonstrate specific compliance with the criteria, but are not the only factors the board may consider in recommending an incentive award. For example, the board may also consider new taxable value created by the project, or whether the project would be feasible without a public incentive. In addition to tax generation, the goals of the Urban Renewal Plan and the need for assistance, the Board must also make affirmative findings as required by State Law. Recommended Motion: “Having read considered the Application, the findings of the Staff Report, public comment and all information presented, I hereby move to recommend that Staff negotiate a development agreement with the Applicant for the consideration of the Bozeman City Commission for reimbursement of TIF eligible costs of demolition not-to-exceed $2,000,000.” Staff Recommendation The Applicant, Bozeman Lodging Group, proposes demolishing the existing 218 room, 3 Rivers Hotel (formerly the Holiday Inn). The group would replace the existing aging and dilapidated 12 hotel with a new dual branded, Holiday Inn and Staybridge Suites, with 195 total rooms, and 17,500 SF of new restaurant and meeting space. The proposed project is aligned with the Midtown Urban Renewal Plan (the “Plan”). Goal 1 of the Plan calls for promoting economic development of the Midtown area. The Plan proposes fostering activity centers in the District and specifically mentions the development of conference facilities. The Plan also encourages preparing properties for redevelopment. In this case, the subject property is nearing the end of its useful life, but redevelopment requires the property owner to shoulder the nearly $2 million cost to demolish the building while forgoing nearly 2 years of sales. These are the kinds of economic factors that prevent beneficial redevelopment and for which incentives make projects more viable. The Midtown TIF Assistance Program allows the payment of eligible costs of development to incentivize development that meets the goals of the Midtown Urban Renewal Plan. The applicant is applying for several eligible cost areas totaling $2,000,000. Staff finds that the proposed costs are eligible for TIF assistance. Staff scored the application based on the program criteria. Based on our review and the application materials presented, the project received 26 of 52 available points. The application scored points toward four of five goals of the Midtown Urban Renewal Plan. In order to ensure that the level of assistance makes the project feasible, but does not provide unreasonable returns to the developer, staff hired Baker Tilly to provide a third-party assessment of the development pro forma. This component of the review process is obtained to assess the reasonableness of each applicant’s incentive request. Baker Tilly evaluated several scenarios including comparing the project to similar projects in terms of room rates and rates of return. Based on this analysis, Baker Tilly recommended TIF assistance, but at a lower level than requested by the applicant. In effect, their recommendation of $2 million in assistance would only cover demolition of the existing structure. Baker Tilly concluded that, “Without public assistance the project is expected to generate below market investor returns. With assistance at the recommended level, the project performance is expected to increase, but still be on the low range of market returns.” Baker Tilly also created a tax generation model for the Midtown URD. According to their model, the project would produce net new annual taxes of $116,520, which would allow TIF assistance of $2 million to be paid back in 17 years using a pay as you go reimbursement model. While the payback period is long, the ratio of public to private investment is significant. The ratio for this project is 23.19:1, yielding significant private investment $47,826,818 for a relatively modest public investment. 13 Criteria for TIF Assistance Goal Number 1: Promote Economic Development 1. Tax Generation: The project will increase the taxable value within the District. The increase in taxable value due to new construction & rehabilitation is estimated by the County Assessor’s office or State Department of Revenue to determine tax increment generation. Submit documentation of estimated tax projections to receive points for these criteria. The four buildings, totaling approximately 158,000 square feet, including 195 hotel units, and 17,500 square feet of commercial space, will increase the tax base for the site. The property is currently paying taxes of approximately $150,000. Upon redevelopment, the Baker Tilly estimates the new tax amount would be closer to $267,000. The addition of this development from an old hotel to a vibrant, mixed-use commercial center will increase the property values for adjacent sites, thus increasing the overall tax generation for the area. [4 of 4] 2. Elimination of Blight: The project’s direct and indirect impact on the physical and fiscal deterioration within the Tax Increment Financing District and the community. Projects that redevelop underutilized properties will be given priority. The characteristics of an underutilized site includes land on which development occupies only a small amount, and/or land or buildings that are or have been vacant for some time. Submit information showing current conditions of property. Currently, the site is a 53-year-old dilapidated hotel that is past its useful life and needs rehabilitation. The parking lots, sidewalks and curbs in and around the site are not up to City standards and are unsafe. The development of this site, encompassed by Baxter Lane and 7th Avenue, will help revitalize the City block to an updated and fresh look, complete with standard sidewalks, improved drive access points, and boulevard tree plantings. This infrastructure will create safer, more pedestrian friendly streetscapes, and replace vacant land with an active, mixed-use property that will foster a more vibrant destination consistent with the goals of the district. [4 of 4] 3. Employment Generation: Total employment generated by the project assessed in terms of new permanent and part-time jobs, and construction jobs. Submit documentation of estimated new jobs to receive points for this criterion. The project development itself will create jobs in the form of design and construction opportunities for local businesses. Upon final build out, the hotel and commercial space will generate many hospitality service-based jobs, along with many retail-based jobs. Additionally, property management and maintenance positions will be required for the post-occupancy 14 operations and upkeep. The total number of employees are expected to increase by almost three times compared to current staff. The hotel is expected to have 50-60 employees and the event center could have up to 200 employees, according to the Applicant. [2 of 3] Goal Number 2: Improve Multi-Modal Transportation 4. Facilitates Public Health and Mobility:Project will construct or improve ADA access to and within existing structures. Provide detailed information demonstrating that the current condition inhibits public health and mobility and the proposed improvements benefit accessibility. This project will provide equal accessibility throughout the buildings, site, and streetscape by meeting or exceeding current ADA design requirements. Up to ten accessible units will be provided and the remainder of the units will be designed to be adaptable units, providing flexibility for any unit in the development to be upgraded with accessible features. Additionally, four total elevators will be provided in the buildings for accessible entree to all floors and amenity areas. [1 of 1] 5. Reduces Resource Demand:Project promotes the use of transit, ride sharing, or car sharing. Provide plans, agreements or other methods to demonstrate reduction of resource demand. The pink and blue bus lines travel directly adjacent to the site and allow riders to access the transfer station downtown in under ten minutes, and then connect to the other lines headed for other destinations within the city. Ride sharing is also a probable form of transportation.\ These features are attributable to the location and are not features of the project itself. [0 of 1] 6. Promotes Active Transportation:Project promotes bicycling as an active transportation option by constructing or improving bike lanes, providing covered bike parking, and/or participating in a bike share program. Provide plans, agreements or other methods that demonstrates the project goes beyond the minimum Bozeman UDC requirements for site development. This project seeks to promote bicycle transport given proximity to downtown and other area amenities by providing covered bike parking and bike rentals as an amenities to tenants. [2 of 2] Goal Number 3: Improve, Maintain, and Support Innovation in Infrastructure 7. Infrastructure Improvements:Project promotes innovation in infrastructure and/or reduces long term costs of maintenance. Examples include low impact development for Stormwater, incorporation of green roof design into building architecture, or car charging stations. Low impact development (LID) incorporates designs such as bio retention facilities, rain gardens and permeable pavers. Does the project enable better connectivity or provide critical infrastructure for the community? Provide plans and descriptions of innovations proposed. 15 The project proposes to collaborate with the City of Bozeman to refresh the areas on an adjacent to this property. Anticipated infrastructure improvements include the water, sewer, and Stormwater infrastructure needed at these building locations. The Applicant also committed to providing 4 car charging stations. [1 of 2] Goal Number 4: Promote Unified Human Scale Urban Design 8. Vehicular Access Points: The project reduces the number of vehicular access points to the property and improves the pedestrian experience. Provide plans, agreements or other methods to demonstrate reduction. There are two main vehicular access points via the front and rear of the site, designed to consolidate access points while moving vehicular access to the rear of the buildings and away from the pedestrian circulation on East Baxter Lane and 7th Avenue. [0 of 2] 9. Street Orientation: The project enhances the North 7th Ave. entryway corridor by having buildings oriented toward the street and designed to provide interest and activity. The commercial space will front onto Baxter Lane and is adjacent to East 7th Avenue, providing an active streetscapes and engaging storefront for pedestrians. Patrons and customers will have many options to access restaurants, event center and meeting space, services, bus lines, schools, and easy access to Downtown. In conformance with the current zoning, the project is moving the buildings forward to address the street and moving parking to the side and rear. [2 of 2] 10. Pedestrian Experience: The project enhances the pedestrian experience by using a storefront block frontage (BMC 38.510) as a component of the project. Key elements of the frontage would include façade transparency, building articulation, street furniture and/or landscaping. Submit plans and details that address this criterion. Buildings 2, 3, and 4 have been moved closer to the street along Baxter Lane and 7th Avenue, promoting pedestrian activity with sidewalks, weather protection The Applicant also committed to providing 4 car charging stations. The overall site configuration highlights the pedestrian oriented street façade and prioritizes pedestrian access. Furthermore, setbacks and landscaping along Baxter and 7th will meet the requirements of the Bozeman UDC, and landscaped areas are placed directly adjacent to the sidewalks at building entries. While all these things are positive, the project does not utilize storefront block frontage. [1 of 2] 11. Quality of the Development Exceeds Minimum Requirements: The quality of development and overall aesthetics (architectural, site design, landscaping, etc.) are beyond that which is minimally required by the UDC. Provide a narrative and submit documentation to demonstrate compliance with this criterion. 16 The design intent is to exceed the Bozeman UDC requirements in order to provide thoughtful hotel units and commercial space. This includes specific tenant amenity spaces unique to the site and project as well as enhanced open space including a variety of landscaped areas. The design of the building and layout of dwelling units will maximize natural light coupled with surrounding views of the mountains encompassing the valley. [1 of 1] Goal Number 5: Support Compatible Urban Density Mixed Land Uses 12. Increases Housing Units: The project increases housing units within the District. Submit plans demonstrating an increase in the number of housing units. The hotels combined will include approximately 195 rooms. However, hotel rooms do not constitute as housing units, and will not increase the housing supply within the district. [0 of 6] 13. Mix of Uses Including Residential: The project is a mix of residential and commercial. Commercial uses include retail, restaurant, office and services. Hotels would not be supported unless included with a project that included residential development. Submit plans detailing the proposed mix of uses within the project. Buildings 1, 2, 3, and 4 include 17,500 square feet of commercial on the ground floor along with 200 hotel units on the subsequent four floors. The project, as a whole, places multiple commercial units in the Midtown District, walkable to multiple commercial and retail destinations, and encourages future development. Mixed use, for purposes of this criterion requires residential. [0 of 6] 14. Shared Parking: The project shares parking among compatible uses. Provide details demonstrating compliance with the UDC and as well as total number of parking spaces reduced because of a shared arrangement. Currently, the site does not have a shared parking component. The project development will provide, at a minimum, the required commercial zoning parking requirements, as opposed to providing limited parking. The applicant may explore a shared parking agreement with adjacent properties in the future. No documentation was provided to support this criterion. [0 of 2] 15. Affordable Dwelling Units: The project provides affordable dwelling units. For the purposes of this criterion, an affordable dwelling unit is defined as a unit that requires no more than 33 percent of a household’s income for housing payments based on a designated percentage of area median income (AMI). Eligible rental units shall be affordable at 70% AMI and eligible for sale units shall be affordable at 90% AMI. Condominium units are eligible as for sale units. Additional points may be awarded for projects that provide on-site housing for the proposed workforce. 17 Eligible rental dwellings to be constructed in the proposed residential development shall be provided by long-term contractual obligation to an affordable housing agency, for a period of not less than 20 years, with a written plan assuring ongoing affordability guidelines and subsequent revisions establish affordability and eligibility. To receive 3 points under this criterion, 10% of all units must meet the affordability criteria. To receive 6 points under this criterion, 20% of all units must meet the affordability criteria. This project is anticipated to provide 195 units of new market rate hotel rooms. [0 of 3] Overall District Relevance 16. Relevance to the Midtown Urban Renewal Plan: Documentation of the project’s impact in relation to the goals and objectives of the Midtown Urban Renewal Plan, particularly mixed- use development. Urban design elements are also considered, including pedestrian emphasis and quality of design. This project touches on the major goals and objectives identified in the Midtown Urban Renewal Plan. Specifically, the hotel event center will promote economic development; improve opportunities for multimodal transportation; promote unified, human scale urban design and support compatible urban density mixed land uses. [5 of 5] 17. Private / Public Investment Ratio: The investment of public funds in the project results in a leverage ratio of at least 10:1 for multifamily, 8:1 for commercial, or 5:1 for family wage jobs. The ratio of private investment to public investment for the project is 23.91:1. [4 of 4] Total Points (26/52) 18 Memo To:David Fine, City of Bozeman From:Mikaela Huot, Director Date:June 13, 2022 Subject:Review of Request for Financial Assistance through Tax Increment Financing (TIF) District for Bozeman Lodging Group, LLC Background The City of Bozeman received an application from Bozeman Lodging Group, LLC, the developer, for financial assistance through Tax Increment Financing (TIF) to assist with financing a portion of the extraordinary redevelopment costs related to the proposed redevelopment of the property including demolition of the existing old Holiday Inn Hotel and replace it with a new mixed use entertainment area composed of a new Holiday Inn Hotel, a Staybridge Suites extended stay hotel, meeting room/conference space, and restaurant. The hotels combined will include approximately 195 rooms and the conference meeting space and restaurant will be approximately 15,000 square feet. Parking will be provided to accommodate the hotel, restaurant, and event center guests with over 336 parking spaces. The developer has requested approximately $3.3M of financial assistance through tax increment financing (TIF) to assist with some of the redevelopment costs. The purpose of this memorandum is to provide a summary of Baker Tilly’s review of the development project costs and operating pro formas 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 TIF assistance, and to determine the appropriate amount, if any, of public assistance. Prior to providing financial assistance, there are findings that need to be made by the City that include: 1) determination that the project qualifies and 2) determination that the project as proposed would not proceed without public assistance (meeting the “but-for” test). It can also be beneficial to make a 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. The developer provided an initial application for financial assistance and additional supporting details including financial projections for future cash flow performance of the hotel rooms, conference center and restaurant space to assist in the financial review. Following review of the developer’s request for public assistance and projected financial performance of the project upon completion (as further described in this memo), we can support financial assistance for demolition costs in an estimated amount of $2,000,000. The developer has initially requested the assistance be provided as reimbursement for actual costs incurred (considered take-out financing upon successful project completion) that would require the City to finance those costs upfront and use future increments as repayment. Alternatively the City may consider providing the financing through a pay-as-you-go method, in which the developer continues to privately finance the entire project amount, and would receive annual tax increment settlements from the City that would be used to pay back the initial debt repayment and/or equity investment. Additional details regarding financing strategies are included within Project Financing on page 2 Developer Request for Assistance The developer is proposing an approximate $47.8 million project that would be funded initially with an estimated $12.2 million of equity and $35.6 million of private financing. This equates to approximately 75% debt and 25% equity for project financing. We may see typical lending standards for hotel projects closer to 65-70% with the 19 remaining costs financed through equity or other funding sources. The project includes land costs of $6,000,000 – based on the structure of ownership between the development partners – and will be included as a portion of the estimated $12.2M of equity needed for the project. It is possible based on the actual funding structures that the levels of debt and equity may adjust based on financial performance. Financial assistance from the City of Bozeman has been requested to reduce the permanent equity commitment for a portion of the extraordinary costs to meet minimum equity requirements and debt coverage ratios. The developer’s request for assistance has included the City financing the extraordinary redevelopment costs as reimbursement through bond issuance following project completion. There are generally significant costs associated with redevelopment projects including acquisition of an existing business and land, demolition, updated infrastructure improvement costs, and in some cases, structured/underground parking. For this project, the developer has indicated that tax increment financing assistance is necessary for the project to proceed and has identified several TIF-eligible redevelopment costs that could be financed by the project. Those extraordinary redevelopment costs that cannot be supported solely by the project alone typically may justify the need for some type of public financial assistance. The developer’s total development cost budget and funding sources are listed below. Sources Amount Development Costs Amount Land $6,000,000 Debt $35,625,000 Soft Costs $800,000 Equity *$12,201,818 Construction Costs $27,600,000 Hard Cost Contingency $3,000,000 Impact Fees $976,818 Permit Fees $300,000 Demolition & Removal $2,000,000 Misc.$50,000 Finance Costs $200,000 Loan Interest $800,000 Public Infrastructure Costs $100,000 Furnishings $6,000,000 Total Sources $47,826,818 Total Development Cost $47,826,818 * Any public assistance through TIF would be used to reduce the level of equity (take-out financing) and/or increase level of debt service (pay-as-you-go) with additional annual cash flow provided through TIF Project Financing There are different ways in which financial public assistance can be provided for development projects and historically the City has provided assistance through the issuance of tax increment revenue bonds upon some or all of project completion (take-out financing). This method can reduce the risk of debt issuance of the City as the development being completed is the source of revenue for which the tax increments are generated to repay the debt service. Alternate financing approaches to be considered (and as further described) may include upfront (prior to project completion) and/or on a pay-as-you-go basis (developer financed and reimbursed over time with future increments). With take-out financing, the developer is responsible for financing all costs upfront through private investment (or other funding sources) and the City would reimburse a portion of those costs through bond issuance upon completion of the project (or determined level of private investment made or development completed) to generate sufficient revenues for debt repayment. 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. This is generally done prior to construction commencement and used as a funding source when the developer is unable to obtain sufficient upfront funds to pay all project costs. In certain cases, not all project costs generate revenues and a development may experience a value gap, in which upfront funding is necessary to support all project costs. In this scenario, future tax increments generated by the new development would be collected by the City and used to pay debt service on City-issued bonds or repayment of an internal loan (subject to actual financing terms). 20 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 City assistance through bond financing to pay for a portion of the identified extraordinary redevelopment (demolition) costs necessary for development of the project. The financing structure, if the public assistance request is granted, would include City debt issuance following construction of the project as a means of reducing developer equity investment. Review of the developer’s cash flow performance indicates financial assistance through pay-as-you-go or takeout financing would be financially feasible, subject to market conditions in either financing scenario. Financing Assumptions The assumption is that future tax increment revenues generated from the new hotel/conference center redevelopment would be the source of repayment for the new project bond debt service. The property is currently paying taxes of approximately $150,000. Upon redevelopment, the developer has estimated the new tax amount would be closer to $267,000. Certain assumptions were used to estimate the projected available property taxes and applicable tax increment revenues to assist with understanding feasibility of the project to support debt repayment up to the recommended assistance amount of $2.0M to support demolition costs. For purposes of our analysis, the market value of the completed project may be determined one of three ways: 1) Income based using the projected net operating income of the project upon stabilization, 2) cost based assuming a replacement cost of the improvement, minus depreciation, plus the land value or 3) comparison based on similar properties. The cost approach may be most reliable for estimating a new hotel value and it can be categorized into real property and personal property. Real property includes the land and improvements. Personal property includes personal property. When valuing a hotel for ad valorem tax purposes, it is often necessary to separate the tangible personal property value from the real property value, as the real property would be taxed separately. To understand new market values upon project completion and how it compares to the developer’s estimates, assumptions were made relative to the cost, income and comparison estimates for the proposed project. Using the available information that has been provided and making some additional projections and assumptions, the table below illustrates a potential range of estimated valuations and corresponding revenues. We anticipate there may be adjustments as additional project details become available and building construction commences. Scenario 1 Scenario 2 Scenario 3 Scenario 3 Valuation Assumptions and Scenarios Construction Cost Approach Construction Cost Approach Income Approach Comparison Approach Total Estimated Construction Cost $27,600,000 $27,600,000 $27,600,000 $27,600,000 Percent Construction Cost as Value 100%90%NA – NOI estimates $149,593/room plus $200/SF (2) Estimated Market Value $27,600,000 $24,840,000 $31,440,430 $32,170,556 Estimated Revenues $296,292 $266,662 (1)$337,519 $345,357 Existing Taxes paid on Property $150,142 $150,142 $150,142 $150,142 Estimated Incremental Taxes $146,150 $116,520 $187,377 $195,215 Estimated Debt Service $204,000 $204,000 $204,000 $204,000 Required Revenues with 1.30x DCR $266,000 $266,000 $266,000 $266,000 (1)close to developer total tax estimate of $267,000 upon project stabilization 21 (2)based on Residence Inn by Marriott Bozeman Downtown values ($15.5M for 104 rooms) Developer Pro forma Analysis including But-For Upon approval of a TIF 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 blighted building, along with the inability of the project to support those costs upon completion. The current estimated project costs ($47,826,818) are in excess of the estimated future value of the building upon redevelopment. 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 current request of $3.3M is approximately 7% of total development costs and based on the developer’s projections would take up to 12 years for payback. We understand that due to the developer’s desire and vision for redevelopment of the project site that there are some 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 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 initial development and completion of the project (stabilization) 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 is no set rate of return benchmarks that dictate 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. 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 1.27x DCR, which could be considered reasonable for this type of project. It also illustrates that the project would not be able to support additional debt as a potential means of reducing the required level of equity and increasing the projected rate of returns. Our review of the operating proformas both with and without assistance, as well as modifications to the operating assumptions, provides a projected range of equity returns to the developer including annual cash-on- cash upon project stabilization, yield on cost, and both leveraged and unleveraged internal rate of return (IRR). Testing the assumptions used to prepare the operating proformas assists with understanding how adjustments made to the upfront levels of debt and equity amounts, and operating details that include annual revenues generated from the hotel rooms, restaurant and event spaces, occupancy rates, operating expenses for all project components and operating inflators are expected to impact the projected developer returns. 22 The developer has provided projected annual cash-on-cash returns of the project without financial assistance resulting in projected below market returns. Financial assistance from the City would increase the projected returns as it would reduce the developer’s permanent equity investment in the project. This is based on information provided by the developer regarding the annual operating assumptions for revenues and expenditures and debt service payments. The analysis includes assumptions relative to the hotel industry terms including average daily rate (ADR), revenue per available room (RevPAR) and occupancy rates, as well as the supporting industry services of restaurant and event space. Based on the developer’s assumptions used in the original operating proforma illustrating projected cash flow of the project upon completion, public assistance would be considered necessary to increase the developer’s projected annual cash-on-cash rate of return. To understand viability of the project and need for public assistance, including testing a potential necessary level of assistance, we prepared a sensitivity analysis to the proformas with adjustments made to the estimated revenues and operating expenses. Using market data for the Bozeman/Yellowstone area as included in the chart below, we altered the room rate assumptions including an increased ADR and decreased occupancy rates to understand how potential adjustments may reduce and/or eliminate the need for public assistance. From the Hospitality Submarket Report for the Bozeman/Yellowstone Area we share the following information: The Bozeman/Yellowstone Area submarket comprises close to 8,100 hotel rooms spread across 129 properties. The Bozeman/Yellowstone Area is characterized by small hotels and inns. The average hotel has 62 rooms, not far from the market average, but easily below the national norm of about 90 rooms per building. Bozeman/Yellowstone Area has a diverse hotel stock, with plenty of hotels at both the luxury and cost-efficient ends of the spectrum. Twelve-month RevPAR in the Bozeman/Yellowstone Area hotel submarket was up sharply as of March and climbed at an 85.0% year-over-year rate. That's stronger than the otherwise considerable 77.0% increase observed market wide. Key Indicators for the Bozeman/Yellowstone Area submarket Class Rooms 12 Mo Occ 12 Mo ADR 12 Mo RevPAR 12 Mo Delivered Under Constructio n Luxury and Upper Scale 2,117 70.4%$242.53 $170.66 125 0 Upscale and Upper Midscale 3,079 74.6%$178.33 $132.99 247 0 Midscale and Economy 2,858 70.6%$140.12 $98.86 0 0 Total / Average all Hotel Types 8,054 72.0%$181.56 $130.79 372 0 Average Trend Current 3 Mo YTD 12 Mo Historical Average Forecast Average Occupancy 66.7%67.0%67.0%72.0%65.5%66.0% Occupancy Change 5.2%15.2%15.2%28.6%1.3%-2.2% ADR $182.02 $159.83 $159.83 $181.56 $142.48 $202.98 ADR Change 58.9%48.7%48.7%43.8%7.6%3.3% RevPAR $121.46 $107.13 $107.13 $130.79 $93.26 $133.95 RevPAR Change 67.1%71.2%71.2%85.0%9.0%1.0% Incorporating some of this data and modifying the operating proformas results in similar ranges of developer equity returns and debt coverage ratios as what the developer provided with the average daily rates being higher but overall long-term occupancy rates lower, averaging in similar net revenues available to support operating expenses and debt repayment. This analysis supports the developer’s need for financial assistance as it uses available market data to test the developer’s assumptions. We understand based on information provided by the applicant that the projected room rates are close to the long-term range of the competitive market rental rates; and there is some question on what the long-term forecasting rates will be. Additional conversations with the City and developer have resulted in an understanding that the projected levels are within market standards with adjustments as described above not eliminating the need for public assistance but could 23 result in a reduction. We do not reasonably expect it to be feasible that room 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. Any increase in annual property tax payments or other operating expenses would be expected to have a negative impact on the annual cash flow and project performance as well. Conclusion The developer is proposing a $47.8 million project comprising of redevelopment of the project site including demolition of the existing hotel followed by subsequent construction of two new hotels with conference and restaurant space. Financial assistance of approximately $3.3 million has been requested from the City of Bozeman to finance a portion of the redevelopment costs including demolition, ROW infrastructure upgrades and City fees as related to the project. The developer’s application and supporting financial data illustrate a need for public assistance to reduce developer equity and increase the projected rates of returns. Additional due diligence review of the provided financial information with sensitivity analysis of the assumptions based on market data has resulted in support for the need for public assistance. However, following review of the financial project components of the project, it has been determined that reimbursement for certain redevelopment costs would be consistent with the city’s use of tax increment financing, but not to the full requested level, based on what is considered extraordinary for the project. It is also important to understand that the projected performance of the project will be dictated by actual market and financial conditions. Should actual room rates and long-term occupancy rates greatly exceed current and forecasted market trends, project performance would be expected to increase, but not to a level significant enough to reduce the need for public assistance. The extraordinary costs for redevelopment of the project site identified by the developer include impact and permit fees, public right of way infrastructure upgrades and building/site demolition. Those costs that could be supported for reimbursement through TIF are listed below as Potential Costs. Identified Project Costs Requested Amount Potential Costs Impact Fees $976,818 May be lower based on actual project components Permit Fees $300,000 Public ROW Infrastructure Upgrades $100,000 Building and Site Demolition $2,000,000 $2,000,000 Total $3,376,818 $2,000,000 Without public assistance the project is expected to generate below market investor returns. With assistance at the recommended level, the project performance is expected to increase, but still be on the low range of market returns. The financial analysis demonstrates that public assistance through TIF from the City of Bozeman has a positive impact on the project and the level of financial assistance to be considered for demolition costs could be considered a reasonable level and provide for a financially feasible project. Based on financial performance of the project following demolition and subsequent new construction and stabilization, it appears public assistance of up to $2,000,000 for demolition costs could be provided as either takeout financing (City debt issuance) or pay-as-you-go reimbursement financing. The ability of the developer to obtain financing and using future tax increment revenues for repayment will be subject to credit and marketability of the project. The total development costs include $6,000,000 for acquisition of the existing property and it is our understanding that the current owner will be an equity investor and the value (cost of $6,000,000) would be included as equity in the project and a consideration for the development team in long term equity returns. Redevelopment of the project site is expected to result in the increase of property values and taxes generated from the site. The projected range of market values and correlating tax estimates is included in the chart under Financing Assumptions. The incremental taxes generated from the new taxable value would be used to finance the $2,000,000 of financial assistance to the developer. 24 BOZEMAN MIDTOWN TIF ASSISTANCE REQUEST MARCH 2022 5 East Baxter Lane Bozeman Lodging Group Hotel Event Center 25 Project Summary Bozeman Lodging Group, LLC Proposed Redevelopment of 5 East Baxter Lane, Bozeman, MT The Holiday Inn currently located at 5 East Baxter Lane, Bozeman, MT is on the main thoroughfare through Bozeman. This property is in disrepair and has become an eyesore in this amazing town and location. The proposed redevelopment of this property will be to demolish the existing old Holiday Inn Hotel and replace it with a new mixed use commercial project composed of a new Holiday Inn Hotel, a Staybridge Suites extended stay Hotel, meeting room/conference space, and a restaurant will all be built in the same location. Each hotel will have approximately 100 rooms and the conference meeting space and restaurant will be approximately 15,000 square feet. Parking will be provided to accommodate the hotel, restaurant, and event center guests with over 336 parking spaces. The site is already in the possession of Bozeman Lodging Group, LLC. The anticipated demo start date is June of 2022 with an estimated completion date of June 2024. The project will be built concurrently to maximize construction efficiency while minimizing the disruption to the town during construction. The existing structure, the Holiday Inn, will be demolished and the site cleared. The square footage of the existing structure is approximately 108,000 square feet. The site is approximately 273,121 square feet. The new Holiday Inn that will be built is approximately 65,000 square feet. The event center and restaurants is approximately 17,500 square feet. The Staybridge Suites Hotel will be approximately 74,344 Square Feet. The materials that will be used will be a combination of concrete, steel, and wood. The exterior finishes will be EIFS and stone. These color and texture combinations will be both visually appealing and energy efficient. Interior finishes will be modern franchise approved schemes. The public benefits of this project are numerous. The easiest to see and foremost is that the project will remove a 53-year-old dilapidated building and replace it with a modern and beautiful complex of hotels, meeting space, and a restaurant. An increase in hotel rooms and meeting space benefits the community by having adequate space to host large events that bring in people from all over the state and country. Bozeman Lodging Group Bozeman Midtown TIF Assistance Request 26 The number of employees will be increased by almost 3 times compared to current staff. Tax revenue will increase not only from room rentals and restaurant and event patrons, but also from those guests and patrons doing activities within the town also with an increase to the real estate tax base. Parking will also increase on the site which is another big benefit to the city. Funds are in the process of being secured by lending institutions to finance the project. Owners will also be putting in equity. The site and some cash is the equity being injected by the owners. The financing and very needed TIF funds will be used for demolition and off site improvements, site costs, hard construction costs and soft costs. The project is seeking TIF assistance for public infrastructure, impact/permit fees, and demolition costs for the development. The property abuts existing right-of-way along Baxter Lane and is adjacent to 7th Avenue East. 27 PART 1 PROPERTY INFORMATION • • • • • • APPLICANT INFORMATION • • • • • • COMPANY PROFILE • • • • • • PROJECT INFO & DETAIL • • • • • • CRITERIA FOR TIF ASSISTANCE • • • • • • PROJECT NARRATIVE • • • • • • MAPS, EXHIBITS, PLANS 28 PROPERTY & APPLICANT INFO Property Address: 5 East Baxter Lane Legal Description: TANGES ADD, S01, T02 S, R05 E, BLOCK 1, Lot 1 Property Owner & Developer: Project Representative: Bozeman Lodging Group, LLC Jeff Lamont 605.225.1712 jlamont@lamontcompanies.com Bozeman Lodging Group, LLC Jeff Lamont 605.225.1712 jlamont@lamontcompanies.com 29 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Mixed-Use In- Application attached. 30 Bozeman Lodging Group Bozeman Midtown TIF Assistance Request COMPANY PROFILE Business Location: The project site is currently an existing old hotel, at 5 East Baxter Lane Year Business Established: 2022 (Bozeman Lodging Group, LLC) Type of Business Bozeman Lodging Group, LLC is a development company Outline Business Plan: See following pages for Development revenue, tax generation, source, and use of funds. (Please note these are the best estimates and projections at this time). 31 9TEN mixed use Bozeman Midtown TIF Assistance Request PROJECT REVENUE PROJECTED SALES REVENUE Gross Sales Hotels/Event Center Revenue: (See Below) $12,256,371 Total Gross Sales Revenue $12,256,371 TAX REVENUE Annual Tax Generation $267,732 TIF FUNDING Eligible TIF Funding Requested $3,376,818 PAYBACK PERIOD Estimated TIF Payback timeline 12.61 Years Hotels/Event Center Operating Revenue: Room Sales 8,621,592.00 Telephone, Internet, Movies 66,386.00 Event Center Sales 750,000.00 Restaurant Sales 2,500,000.00 Meeting Rooms Sales 129,323.00 Retail Store Sales 189,070.00 $12,256,371.00 32 9TEN mixed use Bozeman Midtown TIF Assistance Request SOURCES & USES OF FUNDS The BLG project will use and allocate funds and resources as outlined below. USE of FUNDS LAND (fair market value) $ 6,000,000 SOFT COSTS (Planning, Arch, Engineering, Entitle- ments) $800,000 CONSTRUCTION COSTS $27,600,000 HARD COST CONTINGENCY $3,000,000 IMPACT FEES $ 976,818 PERMIT FEES $ 300,000 DEMOLITION & REMOVAL $2,000,000 MISC (Title, Recording, Insurance) $50,000 FINANCE COSTS (Origination, Lender Legal, Ap- praisal) $ 200,000 LOAN INTEREST $800,000 PUBLIC INFRASTRUCTURE COSTS $100,000 FURNISHINGS $6,000,000 TOTAL $47,826,818 SOURCE of FUNDS (CONSTRUCTION) CONSTRUCTION LOAN $35,625,000 DEVELOPER EQUITY $12,201,818 TOTAL $47,826,818 33 9TEN mixed use Bozeman Midtown TIF Assistance Request The property is currently an old Holiday Inn Hotel. PROJECT INFO & DETAILS Project Site: Project Information: Property Manager: General Contractor: Project Manager: Property Status Type of TIF Assistance Sought Bozeman Lodging Group Hotel Event Center is a mixed-use commercial development consisting of four buildings: two new hotels (Bldgs 1 & 2) and an event center & restaurant use (Bldg 3) and a commercial pad site for a commercial retail building (Bldg 4). Assistance with Public Infrastructure Costs, Impact Fees, CILP, Demolition costs & disposal of waste. Bozeman Lodging Group, LLC Attn: Jeff Lamont 605.225.1712 jlamont@lamontcompanies.com TBD Bozeman Lodging Group, LLC Bozeman Lodging Group Hotel Event Center The subject site (6.27 acres) is an old Holiday Inn hotel at 5 East Baxter Lane in Bozeman just off of 7th avenue north. The site is adjacent to the current Best Western Plus Grantree Inn and the Hampton Inn. Value of TIF Assistance Sought $3,376,818 Estimated Occupancy: Summer 2024 34 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Mixed-Use In- 35 9TEN mixed use Bozeman Midtown TIF Assistance Request CRITERIA FOR TIF ASSISTANCE PROMOTE ECONOMIC DEVELOPMENT 1. Tax Generation: The four building, totaling approximately 158,000 SF and including 200 hotel units and 17,500 sf of commercial space will significantly increase the tax base for the site. Further, the addition of this development from an old hotel to a vibrant mix used commercial center will increase the property values for adjacent sites, thus increasing the overall tax generation for the area. 2. Elimination of Blight: Currently the site is an old hotel that is past its useful life that needs rehabilitation. The development of this site will help build out the City block to a new fresh look generally encompassed by Baxter Lane and 7th Avenue complete with standard sidewalks, improved drive access points, boulevard tree plantings. This infrastructure will create safer and more and pedestrian friendly streetscapes, and replacing vacant land with an active mixed-use will foster a more vibrant destination consistent with the goals of the district. 3. Employment Generation: The project development itself will create jobs in the form of design and construction opportunities for local businesses. Upon final build out, the hotel and commercial space, totaling approximately 158,000 sf, will generate many hospitality service based jobs along with many retail based jobs. Additionally, property management and maintenance positions will be required for the post-occupancy operations and upkeep. We expect the total jobs to more than double at the facility. 4/4 4/4 3/3 36 9TEN mixed use Bozeman Midtown TIF Assistance Request CRITERIA FOR TIF ASSISTANCE IMPROVE MULTI-MODAL TRANSPORTATION 4. Facilitate Public Health & Mobility: This project will provide equal accessibility throughout the buildings, site, and streetscape by meeting or exceeding current ADA design requirements. Up to 10 accessible units will be provided and the remainder of the units will be designed to be adaptable units, providing flexibility for any unit in the development to be upgraded with accessible features. Additionally, four total elevators will be provided in the buildings for accessible access to all floors and amenity areas. 5. Reduces Resource Demand: The pink & blue line bus stop travels right adjacent to our site and allows riders to access the transfer station downtown in under 10 minutes and then connect to the other lines headed for other destinations in the city. With these planned densities, ride sharing opportunities are probable, as is bicycle transport. We also plan to have covered bike parking and bike rentals. 6. Promotes Active Transportation: This project seeks to promote Bicycle transport given proximity to downtown and area amenities by providing covered bike parking as an amenity to the tenants. IMPROVE, MAINTAIN and SUPPORT INNOVATION IN INFRASTRUCTURE 7. Infrastructure Improvements: The project proposes to complete sidewalks, and utilities to complete the public infrastructure. At this time, standard systems are anticipated all on- site infrastructure. 1/1 1/1 2/2 1/2 37 9TEN mixed use Bozeman Midtown TIF Assistance Request CRITERIA FOR TIF ASSISTANCE PROMOTE UNIFIED HUMAN SCALE URBAN DESIGN 8. Reduced Vehicular Access: There are two main vehicular access points via the front and rear of the site, designed to consolidate access points while moves vehicular access to the rear of the buildings and away from the Pedestrian circulation on East Baxter lane and 7th Avenue. 9. Enhances 7th Ave Entry Corridor: The proposed project does front directly onto East 7th Avenue. The commercial space is located on the Baxter Lane and 7th Ave Street frontage and utilizes storefront block frontage design features (see item 10) to activate this streetscape and provide a visual connection to 7th and the surrounding corridor. Although set back with landscape frontage, the building facades along Baxter Lane are oriented towards the street. An active landscaped open space is proposed to serve as a both a buffer from ground floor units and the street as well as to engage pedestrians along Baxter lane and 7th. 10. Street Frontage: As mentioned above, Buildings 2,3, and 4 will adhere to Storefront Block standards along Baxter Lane and 7th Ave, promoting pedestrian activity with sidewalks, weather protection, and expansive storefront glazing. The overall site configuration highlights the pedestrian oriented street façade and prioritizes pedestrian access. Furthermore, setbacks and landscaping along Baxter and 7th will meet the requirements of the Bozeman UDC and landscaped areas are placed directly adjacent to the sidewalks at building entries. 11. Quality of Development: The design intent is to exceed the Bozeman UDC requirements in order to provide thoughtful hotel units and commercial space. This includes specific tenant amenity spaces unique to the site and project as well as enhanced open space including a variety of landscaped areas. 2/2 2/2 1/1 6/6 38 9TEN mixed use Bozeman Midtown TIF Assistance Request SUPPORT COMPATIBLE URBAN DESNITY MIXED LAND USES 12. Increases Parking and Hotel Units: This project proposes 100 units in Building One and 100 units Building two, for a total of 200 hotel units including 10 much needed ada units. This will include a mix of Studio, 1, and 2 bedroom units. 13. Mixed Use: Building 1, 2, 3, and 4 includes 17,500 sf of commercial on the ground floor along with 200 hotel units on the subsequent 4 floors. The project as a whole places multiple commercial units in the Midtown district, walkable to multiple commercial and retail destinations, and encouraging future development. 14. Shared Parking: The project currently does not have a shared parking component. It will be providing, at a minimum, the required commercial zoning parking requirements; as opposed to providing no or limited parking. The applicant may explore a shared parking agreement with adjacent properties in the future. 15. Provides Affordable Housing: This project is anticipated to provide 200 units of affordable hotel rooms. OVERALL DISTRICT RELEVANCE 16. Relevance to the MURD: This project touches on the major goals and objectives identified in the Midtown Urban Renewal Plan: Specifically, BLG will promote economic development; improve opportunities for multimodal transportation; promote unified, human scale urban design and support compatible urban density mixed land uses. 4/6 2/2 3/3 5/5 4/4 TOTAL POINTS: 45/52 39 9TEN mixed use Bozeman Midtown TIF Assistance Request PROJECT NARRATIVE Intro This project consists of a 6.27 acre site zoned B-2 located along Baxter Lane and East 7th Avenue. The Bozeman Lodging Group Baxter & 7th Avenue project consists of two 4-story hotel buildings, one event center/restaurant building, and one commercial retail pad building and the related site improvements. Building 1 and 2 are exclusively hotels and Building 3 and 4 provide ground floor commercial space. Building 1 totals 74,344 gross sf and includes 100 hotel units and 8,000 sf of tenant amenity space. Building 2 totals 65,000 gross sf and includes 100 hotel units, 9,500 of tenant amenity space. Buildings 3 and 4 are 17,500 gross sf of ground floor commercial, and 4,000 sf of amenity space. This application seeks TIF assistance for Impact and Permit fees and for all buildings and to demolish the existing old buildings as well as costs to build out needed infrastructure adjacent to the property. A concept review application for this project was submitted to the City of Bozeman Office of Community Development. Building Design Upon full build out, the site will include off-street parking, 2 hotel buildings, and 2 buildings with ground floor commercial space, as well as open space and tenant amenities. The commercial space will front onto Baxter Lane and adjacent to East 7th Ave, providing an active and engaging storefront for pedestrians. The commercial space will be built as an event center and restaurant space with the flexibility to accommodate multiple commercial tenants. The hotel buildings will house hotel units, which at this time are anticipated to be a mix of Studio, 1, and 2 bedroom units. Preliminarily, this project will include 100 units in Building 1 and 100 units in Building 2. Open space for tenants will be provided by a mix of in- building amenity space, and ground-level open and patio space. Buildings 1, 2, 3, and 4 will house ground level lobbies with workstations and lounge space, and additional tenant amenity areas. 40 9TEN mixed use Bozeman Midtown TIF Assistance Request PROJECT NARRATIVE Anticipated Infrastructure improvements The public right-of-way abuts the property on the north and east sides. This project proposes to collaborate with the City of Bozeman to refresh the areas on an adjacent to this property. Anticipated improvements include demolition, paving, landscaping, curbs, gutter and public sidewalks along Baxter Lane. Additional improvements along Baxter Lane are anticipated. This includes the water, sewer, and stormwater infrastructure needed at these building locations. It is anticipated the project will incur the burden of these costs with some sort of payback program with the city and through the TIF assistance program. Access and Parking Buildings 2,3, and 4 will front on Baxter Lane and adjacent to East 7th Avenue, where the two primary commercial entrances will be located on each end of the site. A central drive access and parking is located in between buildings 3 and 4. Surface parking will flank the entire length of the west side of the property, accessible via the north and south entrances off of Baxter Lane. Schedule With necessary approvals, construction demolition and infrastructure will begin summer 2022 with building construction beginning in fall 2022, and a target completion date of summer 2024. 41 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Mixed-Use In- MAPS, EXHIBITS, PLANS 42 9TEN mixed use Bozeman Midtown TIF Assistance Request SITE SURVEY 43 9TEN mixed use Bozeman Midtown TIF Assistance Request SITE DIAGRAM & VICINITY 44 9TEN mixed use Bozeman Midtown TIF Assistance Request 45 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Urban Infill PERSPECTIVE IMAGES Conceptual Perspective looking East 46 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Urban Infill 47 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Urban Infill 48 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Urban Infill Conceptual Perspective Looking North 49 9TEN mixed use Bozeman Midtown TIF Assistance Request CONCEPTUAL SITE PLAN 50 9TEN mixed use Bozeman Midtown TIF Assistance Request FLOOR PLANS BUILDING 1 LEVEL 1-2 FLOOR PLANS 51 9TEN mixed use Bozeman Midtown TIF Assistance Request BUILDING 1 LEVEL 3-4 FLOOR PLANS 52 9TEN mixed use Bozeman Midtown TIF Assistance Request FLOOR PLANS BUILDING 2 LEVEL 1-4 FLOOR PLANS 53 9TEN mixed use Bozeman Midtown TIF Assistance Request 54 9TEN mixed use Bozeman Midtown TIF Assistance Request 55 9TEN mixed use Bozeman Midtown TIF Assistance Request 56 9TEN mixed use Bozeman Midtown TIF Assistance Request FLOOR PLANS BUILDING 3 LEVEL 1 FLOOR PLAN 57 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Mixed-Use In- PART 2 PROJECT TIMELINE • • • • • • PUBLIC BENEFITS • • • • • • PROJECT FINANCIAL INFORMATION 58 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Mixed-Use In- 59 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Mixed-Use In- 60 Projected Project Milestones Infrastructure entitlements submittal May 15, 2022 Development entitlements submittal (Site Plan) May 15, 2022 Start of demo construction June 15, 2022 Development Building Permit Submittal May 15, 2022 Start of development Construction Nov. 1, 2022 Est. completion of infrastructure construction July 1 ,2023 Est. completion of development construction (occupancy) Nov 1, 2024 61 PUBLIC BENEFIT Re-Development of Blighted hotel and site This lot has historically been a hotel, so this isn’t re-occupancy it is redevelopment. However, the addition of this project will make the area more vibrant, desirable and walkable. Additionally, Baxter Lane is a designated “Storefront” block frontage, and the streetscape will be reflective of that with sidewalks and an activated streetscape. Elimination of Blight Currently the parking lots, sidewalks and curbs in and around the site are not up to city standards and are unsafe. As part of this project and site development, infrastructure will contribute to complete and improve conditions on the site and in the area. Rather than unsightly blighted buildings and property, the area will be completed and built to City Engineering Standards. This means pedestrian friendly routes, sidewalks and boulevard tree plantings. Clearly defined ground level spaces will surround the new buildings providing commercial and retail spaces along with a mixture of hotel units. Creation of New Office/Retail Spaces Buildings 3 and 4 includes 17,500 sf of ground level commercial space. The use(s) is event center, restaurant, and commercial retail/office and it will be well suited for office or retail space with a highly visible location in the 7th Avenue area. 62 9TEN mixed use Bozeman Midtown TIF Assistance Request PUBLIC BENEFIT Urban Living Options This project proposes a variety of dwelling types including Studio, 1,2, & 3 bedroom units. The design of the building and layout of dwelling units will maximize natural light coupled with surrounding views of the mountains encompassing the valley. This site is located in the 7th avenue corridor and patrons and customers will enjoy many options to access restaurants, event center/meetings, services, bus lines, schools and easy access to Downtown. Health and Mobility Site development will modernize this block and area of the Midtown Corridor. It is close to the Blue Line and easily accessible for pedestrians, cyclists, bus riders and drivers alike. The site will include accessible facilities and a green space for passive recreation and enjoyment. Its proximity to other amenities and the sidewalk network make it an easy destination to access. Site improvements will also create a clean, safe and inviting location within the district. Increased Tax Revenue This project development will translate into new property tax revenues that contribute to future Midtown projects. A breakdown of the anticipated tax projections are as follows: Projected Annual Taxes: $ 267,732 Payback to TIF 12.6 years: $3,376,818 New Jobs and Local Sales The project development itself will create many jobs in the form of design and construction opportunities for local businesses. Upon final build out, the commercial space, totaling 156,844 sf, will generate hospitality and retail based jobs. Additionally, property management, sales, and maintenance positions will be added. 63 9TEN mixed use Bozeman Midtown TIF Assistance Request Residential Urban Infill TIF ELIGIBLE EXPENSES Description Amount CITY of BOZEMAN: Impact Fees $976,818 CITY of BOZEMAN: Permit Fees (156,844 SF) $300,000 Public R.O.W. Infrastructure Upgrades ( Baxter Lane ) $100,000 Building and site Demolition $2,000,000 TOTAL $3,376,818 64