HomeMy WebLinkAbout11-26-24 Public Comment - A. Hoitsma - Application 24-105 (Block 104_Bozeman Yards) TIF assistance requestFrom:Amy Kelley Hoitsma
To:Bozeman Public Comment
Cc:Terry Cunningham; Joey Morrison; Jennifer Madgic; Douglas Fischer; Emma Bode
Subject:[EXTERNAL]Application 24-105 (Block 104/Bozeman Yards) TIF assistance request
Date:Monday, November 25, 2024 11:56:48 AM
Attachments:Application_24-107_Tax_Increment_Financing_request_public_comment_Hoitsma.docx
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Please consider my comments related to this TIF assistance application.
With my best,
Amy Kelley Hoitsma
706 E. Peach St, Bozeman
TO: Bozeman City Commission FROM: Amy Kelley Hoitsma RE: Application 24-107 Tax Increment Financing Request
DATE: 24 November 2024 Honorable Mayor Cunningham, Deputy Mayor Morrison, and Bozeman City Commissioners: I am quite sure the applicant is well-acquainted with all of the boxes that need to be checked for this proposal to be approved. And yet, I find there are many things that are questionable in terms of meeting code requirements. I submitted separate public comment outlining those issues (although sections are repeated here as some issues overlap), as well as comments specifically directed toward the Affordable Housing Ordinance and the shallow incentives sought by the applicant. Here I want to address the issue before you: whether to approve $3.66 million in public assistance through Tax Increment Financing (TIF) to the applicant, which would theoretically allow them to build the first of two 5-story luxury condominium buildings that will offer two of 42 units at 120% AMI. I do not know whether they will again seek TIF assistance for the second phase of the project. I respectfully request that you deny this TIF request for several reasons:
Targeted rate of return The City hired the firm Baker Tilly to conduct a financial analysis to help determine whether the requested TIF assistance is justified for this project. In their report, Table 4 shows that with $3.66 million in TIF assistance the applicant should be able to reach its targeted 10.544% rate of return. Without the assistance, the estimated return would be 7.346%. According to the Baker Tilly analysis: “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. … Financial assistance from the City would increase the projected
returns as it would reduce the Developer’s permanent equity investment in the
project.” I understand that the industry believes a “reasonable range” for the rate of return on investment is 8–12+%. But I do not believe it is the City’s responsibility to ensure that the investors get a 10.5% rate of return. Interestingly, the analysis for the TIF assistance you recently approved for Wallace Works shows that —with the TIF assistance that they requested—the project’s targeted return rate is 7.19%.
This application proposes the first of two 5-story buildings, with two “affordable” units and 40 “market rate” units. According to the Baker Tilly report: “The estimated
sales price per square foot for phase 1 is $608 for the affordable units and $1,026 for
the market rate units.” This means that the smallest first-floor 1-bedroom unit (797 sq ft) would sell for $484,576 were it one of the “affordable” units, and $817,722 if it were “market rate.” The smallest fifth-floor 2-bedroom unit (1,739 sq ft) would sell for $1,784,214. The largest fifth-floor 3-bedroom unit would sell for $2,804,058. According to the report, the proposed total development cost of the project is estimated to be $65,397,132 and the estimated sales of the units would generate $74,279,000. To be honest, I don’t see how the City is going to explain to the average Bozeman property tax payer that a project of this scale and profitability will not have to pay $3.66 million in future property taxes in exchange for building infrastructure required by the City for the project.
Build-out of Aspen Street I would argue that the build-out of Aspen Street does not provide any real utility to the neighborhood—it would primarily serve the development itself. In fact, using TIF funds to build out Aspen Street is actually subsidizing the development’s parking requirement. Without utilizing on-street parking on Aspen, they do not provide enough spaces in the underground parking garage to support the number of residential units (even at the low requirement of one parking space per unit as opposed to one per bedroom) and a commercial space (for which I understand they are providing 2 on-street parking spaces). The “but-for” argument says that without TIF assistance, the applicant would likely not build the project, and therefore the associated infrastructure would not be completed. I feel this puts the cart before the
horse: if the project weren’t built, the neighborhood would have no need
for the build-out of Aspen Street. I am also confused by the claim that the applicant will be improving—or newly installing?—the sewer line in the Aspen Street right-of-way. I thought that the City Commission already provided TIF assistance for this in approving the Wallace Works request? Expanding Northern Pacific Park While it could very well turn out to be a positive amenity for the neighborhood, I do not understand how the decision was made to vacate Ida Avenue and extend the climbing rock greenspace (Northern Pacific Park) to meet the applicant’s property edge. Recently another neighborhood applicant, Cloverleaf (Outlaw Partners), had
to petition the City Commission to vacate the platted north-south alley in their property (formerly the site of Bronken’s Distributing and currently creatively repurposed as an indoor pickleball court). They are following Resolution 3628, which sets an extensive procedure for abandonment of streets or alleys. According to the October 1, 2024 memorandum from City staff to the City Commission:
“Accepting of the petition and directing staff to review the petition is the initial step of
that procedure. Future steps include: completion of an engineering staff report, a
Resolution of Intent, a noticed public hearing, and finally a Resolution of
Abandonment.” In this application, I see no documentation or rationale for why the street has been vacated. It does not seem to follow the procedure set out in Resolution 3628, which would require a public hearing and approval by the City Commission. In the “Bozeman Yards Development Staff Report” (15 November 2024), David Fine and Brit Fontenot state not only that this expanded park is a public benefit (which it may well be) but also that “reconstruction of Front St. adjacent to the Depot and Northern Pacific Park may facilitate the future redevelopment and preservation of the
Depot site.” I assume the applicant would normally be required to make improvements to the section of Ida Avenue that fronts their property and not Front Street. But attaching the park to their property now essentially makes Front Street the block frontage. I am certainly in favor of repurposing the depot one day, as it is a historic gem to the neighborhood and the City—but not at the cost of incentivizing two 5-story luxury condominium buildings that will forever loom over and cast a shadow upon the historic depot. I also question the legality of the decision to vacate Ida Avenue for this application. If, after proper review, it were decided that Ida should NOT be vacated, it would fundamentally alter the required project infrastructure improvements (i.e. likely no improvements to Front Street would be required as it is not block frontage). This would necessitate a major revision of the TIF assistance request.
Staff Report
I take issue with many of the points staff awarded the applicant on criteria representing the goals of the Northeast Urban Renewal District Plan. It gives 6/6 points for infrastructure improvement. Two of the three justifications for this are the expansion of the Northern Pacific Park and the improvements to Front Street. If, as I suspect, the decision to vacate Ida Avenue was made improperly, then I don’t see that there is any guarantee that these improvements will actually happen.
They award 2/4 points for incorporating “mixed use development that promotes livability” because they are “activating the Aspen St. frontage” with 1,624 square feet of ground floor commercial space. I would like to note that Aspen Street is currently essentially a park, where my good friends were hired to build a trail, plant trees, and install a bench for public enjoyment. They correctly awarded 1.5/6 for community housing, as the criterion directly states: “To receive 3 points under this criterion, 10% of all units must meet the
affordability criteria.” The project is providing 5% of the units at “affordable” rates. The most egregious award is under the goal “Honor the Unique Character and Vitality of the District.” One criterion is “Character: The physical design, materials, and massing of the project reflects the community’s values of durability, flexibility, and simplicity, and add vitality to the neighborhood” [underlines are my highlights]. They award 2/2 for providing “accentuated overhangs and planters” yet fail to mention that this is a massive structure relative to the surrounding neighborhood. Zone Map Amendment Although this is water under the bridge, I feel it is an important piece in terms of the context of this application. This area used to be zoned M-1, but is mostly surrounded by the NEHMU zone. In recent years I have worked with neighbors to maintain the NEHMU zone in the face of developers wanting to rezone it as B2M. We have had some success with this, receiving support from the Commission that this is a unique neighborhood, worth preserving, and that keeping the NEHMU zone intact is integral to that goal. I am grateful for that support. At the time the rezoning proposal came to the attention of the neighborhood, we did not yet understand the potential of B2M development. In fact, we were told by someone leading the rezoning effort that “B2M isn’t the boogeyman that everybody makes it out to be! It could be anything! It could be single family residences—it could be cottage housing!” I imagine that this project (or one very much like it) was the impetus for the zone change. And here we are today, faced with a proposal that will forever change the character of the neighborhood yet probably “meets code” and will be administratively approved with little citizen input. I wish we had spoken out and made the case that the area should have been rezoned as NEHMU. We may not have been successful, but the conversation it would have spurred would have been important and could have changed the future of that piece of our neighborhood. We will certainly not miss the opportunity to make the case when the M1 rail yard properties apply for a zone map amendment.
In conclusion I understand the desire to improve infrastructure in the northeast neighborhood. But I do not believe this particular project is the thing the City Commission should approve in order to get those improvements made. After all, these improvements are not free—they will cost $3.66 million in foregone future property tax revenue to the City. More importantly, it will cost the very character of this unique part of Bozeman. Please deny this request. With my best, Amy Kelley Hoitsma 706 E. Peach St., Bozeman