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HomeMy WebLinkAboutFY27 - Urban Renewal Action Plan - MidtownBozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 1 of 12 MIDTOWN URBAN RENEWAL DISTRICT FY2026 ANNUAL REPORT FY2027 WORK PLAN AND BUDGET FY2028 WORK PLAN AND BUDGET The City Commission passed Ordinance No. 1685, “Adopting an Urban Renewal Plan for the North Seventh Avenue Corridor and Adjacent Properties”, on November 27, 2006. On December 16, 2015, the City Commission passed Ordinance No. 1925, which adopted a new urban renewal plan, expanded the boundaries of the original district, and renamed the North Seventh Urban Renewal District the Bozeman Midtown Urban Renewal District. The 2015 Midtown Urban Renewal Plan provides for the remediation of blighted conditions within the urban renewal area by advancing five broad goals through a series of implementing activities and strategies. The five goals include the following items: 1. Promote Economic Development • Rationale: Economic vitality strengthens the community, provides for physical needs of the citizens, opens reinvestment opportunities, and helps to eliminate the conditions that contribute to blight. 2. Improve Multimodal Transportation • Rationale: Increasing travel options supports public health, reduces resource demand, increases efficiency and reduces costs, improving the quality of life and making the community a better place to live and work, helping to eliminate conditions that contribute to blight. 3. Improve, Maintain and Support Innovation Infrastructure • Rationale: Infrastructure is the backbone of the community. Private development typically requires a corresponding public investment in infrastructure. Therefore, capital improvements in the district will help achieve economic vitality and address conditions that contribute to blight. 4. Promote Unified, Human Scale Urban Design • Rationale: Protecting and building upon existing physical assets increases vitality, desirability and leverages economic development, strengthening community values and mutual support helping to eliminate the conditions that contribute to blight. 5. Support Compatible Urban Density Mixed Land Uses • Rationale: A sense of place is strengthened by a strong core identity. Increasing live-work opportunities and community interaction, ensures that Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 2 of 12 the North 7th Avenue area remains a great place to live, work, operate a business, and play, and helps to eliminate conditions that contribute to blight. The City Commission approved the Midtown Action Plan in 2017, which charted a new direction in pairing infrastructure spending and blight remediation with proposed private investment. The intent of the Action Plan is to, “attract targeted private investment by leveraging the market potential of the Midtown District and removing barriers to redevelopment through strategic infrastructure investments and incentives.” The Annual Report and the recommended Work Plan and Budget reflect this specific strategy and approach to using private investment to propel blight remediation and urban renewal. The Midtown Action Plan proposes targeting future development that includes the following elements: • Infill. The intent of urban renewal is to remove blight to improve an area for the entire community benefit. Remodeling of existing structures or infill of underutilized lots is the priority of this Plan. As discussed, infill development is more challenging than vacant greenfield development and warrants focused investment of staff time and resources. • Increased building density. Increased building density increases the number of people in the District, which helps create the desired active pedestrian environment. More density of buildings grouped together in districts is especially desired to encourage pedestrians to explore adjacent buildings. Buildings that are separated by large parking area or vacant lots will impede pedestrian movement. • Encourages multimodal transportation. New projects should provide amenities such as adequate bike parking or bus schedule real time monitors in lobbies. At the same time, the Urban Renewal District should invest in infrastructure projects such as bike lanes and signals or covered bus stops to make alternative transportation options visible, safe, and desirable. • Retail that serves surrounding residents. To achieve a more vibrant pedestrian-oriented environment the District must consist of uses that are a frequent destination by residents. Retail amenities that are experience based such as restaurants or ice creams shops are desired because they generate activity and are more resilient to emerging ecommerce trends. Such amenities will also attract more housing investment. • Housing. Bozeman is in significant need of all types of housing, therefore it is called out as a specific use that is desired. The Midtown District zoning is intended to accommodate more dense housing projects with potential access to retail amenities nearby. The City Commission funded a package of several major infrastructure improvements in the District through the approval of $6,500,000 in bonds with a 25 year term on July 6, 2020. The infrastructure improvements include the streetscape infrastructure on N. 7th Ave. that enhances the walkability, aesthetics, and investment potential of the District as a whole, Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 3 of 12 along with improvements to Aspen St. and N. 5th Ave. that will accelerate ongoing private investment in this emerging node of commercial activity. The District is also focused on investing in public infrastructure that removes barriers to specific private investments. These incentives primarily pay for the costs of public infrastructure associated with the private projects, as well as demolition costs and the cost of various system development charges, such as impact fees. These early investments in projects will create new incremental taxable value that will allow for greater blight remediation throughout the District in the coming years. Over time, these increases in taxable value will benefit the broader community by increasing the overall tax base through productive infill development. The remediation of blighted conditions in the District and its ongoing redevelopment will take many years. Bozeman has 20 more years to focus on redevelopment of the Midtown area. As instructed by Commission adopted policy documents, the District will continue to focus on remediating blight, by attracting targeted private investment and growing the tax base. Midtown Urban Renewal District (MURD) FY2026 Annual Report (July 1, 2025 to June 30, 2026) Row Labels FY26 Proj FY27 Budget FY28 Budget 3-Resources (6,655,700) (8,380,200) (2,961,600) Beginning Balance (3,963,400) (5,444,600) - Revenue (2,692,300) (2,935,600) (2,961,600) 30-TAXES (2,540,900) (2,771,700) (2,865,900) 33-INTERGOVERNMENTAL REVENUE (58,600) (58,900) (59,000) 36-INTEREST INCOME (92,800) (105,000) (36,700) 4-Expenditures 1,211,100 8,380,200 2,961,600 Salaries & Benefits 120,700 142,600 150,500 10-SALARIES & WAGES 92,000 106,700 112,200 12-BENEFITS 27,000 33,900 36,200 19-OTHER PERSONAL SERVICES 1,700 2,000 2,100 Operations 677,600 7,828,000 2,399,900 20-SUPPLIES AND MATERIALS 9,400 2,300 2,300 30-MAINTENANCE - 10,000 10,000 40-UTILITIES 4,900 5,000 5,100 50-CONTRACTED SERVICES 659,400 5,290,100 1,002,000 60-TRAVEL/TRAINING 3,500 8,200 11,800 70-OTHER 400 2,512,400 1,368,700 Transfers Out 412,800 409,600 411,200 Grand Total (5,444,600) - - Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 4 of 12 Highlights of investments are documented below. Debt Service Series 2020 $412,800 The City Commission approved the Series 2020 bonds for a 25 year term that ends 2045. This expenditure is the annual payment on the $6,500,000 in debt issued to finance the cost of the N. 7th Ave. Streetscape Project, and the Aspen and N. 5th Ave. Improvements Project. Lighting Design 5th Ave Trail $36,100 Construction of a multi-modal paved path along N. 5th Ave from Oak Street to Westlake Park was completed in FY25. To enhance safety on the trail, pedestrian scale lighting from Westlake Park to Hemlock Street was designed in FY26. Temporary lights have been placed on the portion of the path from Hemlock Street to Oak Street as that portion of the trail will be removed if the adjacent properties are developed. Whittier Parking Lot Design $67,100 The Midtown Action Plan calls for building partnerships for key infrastructure improvements. Per State Law, there are only a few ways urban renewal funds can assist schools in Montana. Tax increment financing may be used to complete certain infrastructure projects, including parking lots. During the design process for a new Whittier School parking lot, it was discovered that a utility will need to be relocated underground. To bury the utility, additional design will need to be completed. This project began in FY25 and was completed in FY26. Aspen Intersection Improvements Design $37,100 Enhanced multimodal transportation is a pillar of the Midtown Urban Renewal District Plan and the Midtown Urban Renewal District Action Plan. To realize that vision, safe pedestrian connections must be built. Design includes survey, mapping, and project management for a pedestrian crosswalk with a rectangular rapid flash beacon (RRFB) on North 7th Avenue at Aspen Street. The original agreement was amended in FY26 to include a speed study. This project began in FY25 and was completed in FY26. Mendenhall Sewer 5th Avenue and Main Street Sewer $464,000 Tax increment financing from the Downtown Urban Renewal District, the Midtown Urban Renewal District, and funds from the City’s Wastewater Fund were approved in order to upgrade of the existing, aged 6-inch sanitary sewer main in Mendenhall from 5th Avenue to Grand Avenue to a new eight-inch sanitary sewer main. Agreements for the infrastructure improvement were entered into in October of 2023. Construction of the main began in the spring of 2024. The Midtown portion of sewer construction is was completed in the fall of 2025 and the reimbursement payment occurred in FY26. Codify Engineering Design Standards for N. 7th Ave. Streetscape $47,300 Recent improvements to the N. 7th Ave. streetscape are not currently required for redevelopment projects on the corridor. In order to protect the public investments already Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 5 of 12 made and to ensure design continuity for the corridor, codifying the streetscape design is necessary for the future development of the corridor. Update Special Improvement Lighting Districts $7,800 To account for lighting improvements along the North 7th coordinator, an existing lighting district (SILD 460) was modified. Additionally, a new lighting district was created for the improvements on Aspen Street. Midtown Urban Renewal District (MURD) FY2027 Work Plan (July 1, 2026 to June 30, 2027) Debt Service Series 2020 $409,600 The City Commission approved the Series 2020 bonds for a 25 year term that ends 2045. This expenditure is the annual payment on the $6,500,000 in debt issued to finance the cost of the N. 7th Ave. Streetscape Project, and the Aspen and N. 5th Ave. Improvements Project. Whittier Parking Lot Construction $200,000 The Midtown Action Plan calls for building partnerships to hone in on key infrastructure improvements. Per State Law, there are only a few ways urban renewal funds can assist schools in Montana. Tax increment financing may be used to complete certain infrastructure projects, including parking lots. $200,000 represents an estimate of the construction cost for the Whittier Parking Lot in FY27. 5th Avenue Pedestrian Scale Lighting Construction $250,900 Construction of a multi-modal paved path along N. 5th Ave from Oak Street to Westlake Park was completed in FY25. To enhance safety on the trail, pedestrian scale lighting from Westlake Park to Hemlock Street was designed in FY26. Temporary lights have been placed on the portion of the path from Hemlock Street to Oak Street as that portion of the trail will be removed if the adjacent properties are developed. Aspen Street Intersection Improvements Construction $200,000 Enhanced multimodal transportation is a pillar of the Midtown Urban Renewal District Plan and the Midtown Urban Renewal District Action Plan. To realize that vision, safe pedestrian connections must be built. Design includes survey, mapping, and project management for a pedestrian crosswalk with a rectangular rapid flash beacon (RRFB) on North 7th Avenue at Aspen Street. The original agreement was amended in FY26 to include a speed study. This project began in FY25 and was completed in FY26. Parking Garage Design and Due Diligence $889,000 As the district begins to reach goals associated with walkable density, staff recognizes the importance of additional parking within the district and continues to monitor the progress of any potential proposal to construct a parking structure. The city issued a request for Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 6 of 12 proposals (RFP) for the construction of public parking spaces as a component of a private redevelopment project. These monies cover the costs of retaining consultants to do due diligence to determine if a proposal is in the best interest of the district and to cover conceptual design costs associated with the city’s selection of a project. The RFP was issued in FY26 and due diligence will continue into FY27. North 5th Avenue Improvements Design $40,000 In FY26, North 5th Avenue was surveyed for potential improvements. Improvements recommended include sidewalk extension, midblock crosswalk, RRFB at Farr Automotive, constructing sidewalk at the northwest corner of 5th and Peach, intersection improvements at 5th and Short, and crosswalk improvements at 5th and Villard. 5th Avenue and Main Street Intersection Improvements $55,000 In order to improve pedestrian connectivity between Downtown Bozeman and Midtown Bozeman, additional lighting poles and electrical work were completed near the intersection of Main Street and 5th Avenue. As the work is in both districts, the cost is split between the Downtown Urban Renewal District and the Midtown Urban Renewal District. Mendenhall Sewer (7th-5th) Design $100,000 Design costs for an upgrade to the 6-inch vitrified clay sewer line to the current 8-inch standard sewer line as identified in the 2017 Midtown Action Plan. 5th and Mendenhall Lighting Development Agreement $375,000 The lighting project includes 20 new light poles and luminaires located on both sides of the street on 5th Avenue from Main Street to Mendenhall Street, the south side of Mendenhall Street from 5th Avenue to 7th Avenue, and the north side of Main Street from 5th Avenue to 7th Avenue. Midtown Aspen Development Agreement $3,024,100 The 7th and Aspen project is a three-phase project consisting of affordable housing, workforce housing, market rate housing, and commercial development. Phase 1 and 2 of the project are expected to have 29 rental units affordable at 60% AMI, 17 rental units affordable at 50% AMI, 50 units of workforce housing for 80% AMI. Phase 3 will initially be developed as parking and will eventually be developed to include market rate apartments and commercial spaces. Per the development agreement reimbursement will take place at occupancy of phase 1 and phase 2. Payment on this development agreement is expected in FY 28. Other $2,500,000 Provide low-cost direct loans to housing builders to acquire land for affordable housing. Other projects as suggested by the TIF Advisory Board or City Commission. Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 7 of 12 Professional Services and Outside Legal Counsel Contracted Professional Services $ 100,000 To assist with district management and implementation of the work plan and budget, as well as responding to new opportunities, Staff will contract for services on an as-needed basis. Outside Legal Counsel $ 60,000 The Midtown Urban Renewal District continues to see strong interest in redevelopment. This interest will necessitate work on development agreements under the Midtown TIF Assistance Program, and depending on the scope of the projects, the need to issue additional bonds. Maintenance $10,000 Maintenance of basic infrastructure can prevent blight and prevent long-term deterioration and decline. Utilities $5,000 Electrical payments as newly installed infrastructure is transitioned to special improvement lighting districts. Midtown Marketing and Recruitment $ 10,000 This item includes maintenance of the District website, midtownbozeman.org, as well as programs like the banner program to drive traffic to the website. The District uses the website to communicate effectively with property owners, developers, and the public and “to disseminate blight clearance and urban renewal information.” In addition, the board and staff continue to actively recruit development projects in the district that are in support of the urban renewal plan. Additionally, this money will assist in the district exploration of a business improvement district. District Operations Payroll $ 142,600 The City’s Economic Development Department manages the Bozeman Urban Renewal District in response to City Commission and the Midtown Urban Renewal Board work plans and policy guidance. 1.5 FTE are dedicated to staffing the Bozeman Urban Renewal Program as a whole, of which the Midtown URD contributes a proportionate share of funding. Training $ 8,200 Strong professional development drives the success of the urban renewal program. Staff plans to participate in the National Development Council’s Economic Development Finance Professional (EDFP) Certification Program and the International Economic Development Council’s (IEDC) certified economic developer course series over a number of years. Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 8 of 12 Midtown Urban Renewal District (MURD) FY2028 Work Plan (July 1, 2027 to June 30, 2028) Series 2020 Bond Repayment $ 411,200 The City Commission approved the Series 2020 bonds for a 25 year term that ends 2045. This expenditure is the annual payment on the $6,500,000 in debt issued to finance the cost of the N. 7th Ave. Streetscape Project, and the Aspen and N. 5th Ave. Improvements Project. Mendenhall Sewer (7th-5th) Construction $672,000 The 2017 Midtown Action Plan includes the reconstruction of the sewer line in Mendenhall from 5th Avenue to 7th Avenue. Design costs for an upgrade to the 6-inch vitrified clay sewer line to the current 8-inch standard sewer line are included in the FY26 proposed budget. North 5th Avenue Improvements Construction $160,000 In FY26, North 5th Avenue was surveyed for potential improvements. Improvements recommended include sidewalk extension, midblock crosswalk, RRFB at Farr Automotive, constructing sidewalk at the northwest corner of 5th and Peach, intersection improvements at 5th and Short, and crosswalk improvements at 5th and Villard. Professional Services and Outside Legal Counsel Contracted Professional Services $ 100,000 To assist with district management and implementation of the work plan and budget, as well as responding to new opportunities, Staff will contract for services on an as-needed basis. Outside Legal Counsel $ 60,000 The Midtown Urban Renewal District continues to see strong interest in redevelopment. This interest will necessitate work on development agreements under the Midtown TIF Assistance Program, and depending on the scope of the projects, the need to issue additional bonds. Maintenance $10,000 Maintenance of basic infrastructure can prevent blight and prevent long-term deterioration and decline. Utilities $2,300 Electrical payments as newly installed infrastructure is transitioned to special improvement lighting districts. Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 9 of 12 Midtown Marketing and Recruitment $ 10,000 This item includes maintenance of the District website, midtownbozeman.org, as well as programs like the banner program to drive traffic to the website. The District uses the website to communicate effectively with property owners, developers, and the public and “to disseminate blight clearance and urban renewal information.” In addition, the board and staff continue to actively recruit development projects in the district that are in support of the urban renewal plan. Additionally, this money will assist in the district exploration of a business improvement district. District Operations Payroll $ 150,500 The City’s Economic Development Department manages the Bozeman Urban Renewal District in response to City Commission and the Midtown Urban Renewal Board work plans and policy guidance. 1.5 FTE are dedicated to staffing the Bozeman Urban Renewal Program as a whole, of which the Midtown URD contributes a proportionate share of funding. Training $ 11,800 Strong professional development drives the success of the urban renewal program. Staff plans to participate in the National Development Council’s Economic Development Finance Professional (EDFP) Certification Program and the International Economic Development Council’s (IEDC) certified economic developer course series over a number of years. Other $ 1,373,800 We propose allocating the entirety of the expected increment to be responsive to opportunities. It is likely that we will either support developer or city led Infrastructure projects and development agreements. These funds could also be devoted to the design or construction of public infrastructure that serves the District. Redevelopment Incentive Programs The Midtown Urban Renewal District’s redevelopment incentive programs are based on criteria included in the 2015 Midtown Urban Renewal District Plan and the 2017 Midtown Action Plan. Due to the rapid growth in the tax increment financing districts and limited staff capacity, the following redevelopment incentive programs will be suspended for FY 25 and FY 26, but there is the intent that they may return in future fiscal years. Technical Assistance Grants (TAG) This program is to provide technical assistance funding to encourage developers to build on parcels along the N. 7th Avenue corridor or rehabilitate existing structures. It recognizes the complexities of redeveloping parcels which have existing substandard Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 10 of 12 buildings and infrastructure; it was created to offset the costs of those complexities with grants for those proposing work which eliminates blight and advances the implementation of the District Plan. The program was approved by Resolution 4777 and is administered by the MURB. The maximum grant amount for the program is $7,500 and requires a 1:1 match. Midtown Tax Increment Finance Assistance Program – Direct Incentives The City Commission approved an incentive program, the Midtown TIF Assistance Program pursuant to Resolution 4770 in 2017. Resolution 5087 reauthorized and updated the Program in 2019. Awards will be based on the quality of projects and their support of the Midtown Urban Renewal Plan. Projects of a larger magnitude may require the issuance of tax increment revenue bonds. Projects $50,000 and under may be awarded by staff (previously the Board) and sent to the City Commission as Consent Items. Projects over $50,000 require the approval of the City Commission. Fiber Conduit Connection Incentive Program The District has made significant investments in facilitating competitive telecommunications options through the provision of public conduit. This program, modeled on a program created by the Downtown URD provides matching grants of up to $2,500 to connect buildings to the City conduit system. The program facilitates connections to infrastructure and the utilization of the existing conduit investment. Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 11 of 12 Midtown Tax Increment Finance Assistance Program Approved Development Agreements Lumberyard Pay Go Development Agreement $5,581,016 The Lumberyard Project consists of hundreds of new units of housing, including at least 155 units of housing affordable at 60% of area median income for a period of 50 years. The development agreement approved reimbursement of $7,581,016 for certain eligible costs of the project. The development agreement approved by the City Commission outlined an initial payment of $2,000,000, which has already been paid, and subsequent payments when certain project milestones are met. The project will receive 80% of its actual new tax generation as reimbursement until the remaining $5,581,016 is reached or the district ends, whichever comes first. There are currently no tax proceeds for this project, so no appropriations are budgeted for this item in this fiscal year. Unscheduled Future Projects Construct N. 8th Avenue between W. Beall Street and W. Villard Street Construct N. 8th Ave. to current city standards including curb, gutter, sidewalk, street trees, stormwater, and water and sewer lines. Construct N. 8th Avenue between Durston Road. and W. Birch Street Construct N. 5th Ave. to current city standards including curb, gutter, sidewalk, street trees, stormwater, and water and sewer lines. Construct N. 5th Avenue between W. Tamarack Street and Oak Street Construct N. 5th Ave. to current city standards including curb, gutter, sidewalk, street trees, stormwater, and water and sewer lines. Mendenhall Sewer between 7th Avenue and 8th Avenue Install standard water and sewer infrastructure in Mendenhall between N. 7th Ave and N. 8th Ave. Construct North 3rd Street between Tamarack Street and Oak Street Construct N.3rd Ave. to current city standards including curb, gutter, sidewalk, street trees, stormwater, and water and sewer lines. Construct 15th Avenue from Tschache Lane to Baxter Lane Construct 15th Avenue to current city standards including curb, gutter, sidewalk, street trees, stormwater, and water and sewer line between Tschache Lane and Baxter Lane. Bozeman Midtown Urban Renewal District An Urban Renewal District with a Tax Increment Financing (TIF) Program Page 12 of 12 Beautification at Westlake Park Beautification would include public benches and seating, as well as other park amenities. Future Park Acquisition Acquisition of the vacant parcel at 11th Street and Tschache Lane.