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HomeMy WebLinkAboutResolutions 2026-15 - Amending a Development Agreement Relating to a Project in the South Bozeman Technology Tax Increment Financing District RESOLUTION 2026-15 RESOLUTION AMENDING A DEVELOPMENT AGREEMENT RELATING TO A PROJECT IN THE SOUTH BOZEMAN TECHNOLOGY TAX INCREMENT FINANCING DISTRICT BE IT RESOLVED by the City Commission (the “Commission”) of the City of Bozeman, Montana (the “City”), as follows: Section 1 Amendment to Development Agreement. 1.01. Pursuant to Resolution No. 5420, adopted by this Commission on June 14, 2022, the City has entered into a Development Agreement, dated as of June 14, 2022 (the “Development Agreement”), with Big Sky ICINF, LLC, a Delaware limited liability company (the “Developer”). As described in the Development Agreement, Big Sky QF, LLC, a Delaware limited liability company (“BSQ”) leased approximately 4.87 acres of land located in the District from Montana State University Innovation Campus, a Montana non-profit corporation (“MSUIC”), and subleased such land (the “Industry Land”) to Industry Bozeman Property, LLC, a Montana limited liability company (“IBP”) on May 26, 2022. IBP has undertaken the construction on the Industry Land of an approximately 86,000 square foot building to be used as flexible commercial workspace, to include 61,000 square feet of offices and 25,000 square feet of indoor common space, as well as related site improvements and related improvements (the “INDUSTRY Project”). Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 Resolution 2026-15, Amending a Development Agreement Relating to a Project in the South Bozeman Technology Tax Increment Financing District 2 In addition, BIG SKY AURORA, LLC, a Delaware limited liability company (“BSA”) leased approximately 4.80 acres of land located in the District from MSUIC and subleased such land (the “Aurora Land”) to Aurora Operations, Inc., a Delaware corporation (“AOI”) on February 17, 2022. BSA has undertaken the construction on the Aurora Land of an approximately 78,000 square foot building to be leased to AOI for use as office space, research and design activities and potentially manufacturing, as well as related site improvements (the “Aurora Project” and, together with the INDUSTRY Project, the “Projects”). In furtherance of the Projects, BSQ and BSA have undertaken the construction of certain infrastructure improvements, including construction of street, curb, gutter and sidewalk improvements, street lighting improvements, water and sewer line extensions, storm sewer infrastructure, utilities, related landscaping and related improvements (collectively, the “Infrastructure Improvements”). In the Development Agreement, the City agreed to reimburse the Developer for costs of the Infrastructure Improvements from tax increment or the proceeds of tax increment revenue bonds. The Infrastructure Improvements and the Projects are now complete. 1.02. The City and the Developer desire to enter into a First Amendment to the Development Agreement, substantially in the form attached hereto as Exhibit A, providing that the City may, in its discretion, issue tax increment revenue bonds to reimburse the Developer for a portion of the costs of the Infrastructure Improvements, with the expectation that following increased tax increment revenues in the District, the City would use surplus tax increment revenues on hand to reimburse the Developer over time for remaining costs of the Infrastructure Improvements. 1.03. The First Amendment to the Development Agreement is hereby approved, substantially in the form attached hereto as Exhibit A, with such changes as may be necessary or desirable and approved by the City Manager. The City Manager (or, in the event of his absence or inability, his designee) is authorized and directed to execute the First Amendment to the Development Agreement. Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 3 Resolution 2026-15, Amending a Development Agreement Relating to a Project in the South Bozeman Technology Tax Increment Financing District PASSED, ADOPTED, AND APPROVED by the City Commission of the City of Bozeman, Montana, at a regular session thereof held on the 10th day of February 2026. ___________________________________ JOEY MORRISON Mayor ATTEST: ___________________________________ MIKE MAAS City Clerk APPROVED AS TO FORM: ___________________________________ GREG SULLIVAN City Attorney Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 Resolution 2026-15, Amending a Development Agreement Relating to a Project in the South Bozeman Technology Tax Increment Financing District CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Bozeman, Montana (the “City”), hereby certify that the attached resolution is a true copy of Resolution 2026-15 entitled: “RESOLUTION AMENDING A DEVELOPMENT AGREEMENT RELATING TO A PROJECT IN THE SOUTH BOZEMAN TECHNOLOGY TAX INCREMENT FINANCING DISTRICT” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Commission of the City at a regular meeting on February 10, 2026, and that the meeting was duly held by the City Commission and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following Commission members voted in favor thereof: ; voted against the same: ; abstained from voting thereon: ; or were absent: . WITNESS my hand and seal officially this 10th day of January 2026. (SEAL) __________________________________ MIKE MAAS City Clerk Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 None Mayor Morrison, Deputy Mayor Fischer, None None Commissioners Madgic, Bode, and Sweeney Resolution 2026-15, Amending a Development Agreement Relating to a Project in the South Bozeman Technology Tax Increment Financing District EXHIBIT A Form of First Amendment to Development Agreement Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 1 4920-4340-6461, v. 2 FIRST AMENDMENT TO DEVELOPMENT AGREEMENT (MSU Innovation Campus Project) This FIRST AMENDMENT TO DEVELOPMENT AGREEMENT (this “Amendment”) is dated as of February 10, 2025 by and between BIG SKY ICINF, LLC (the “Developer”), and the CITY OF BOZEMAN, MONTANA (the “City”). The Developer and the City are each individually referred to herein as a “Party” and collectively as the “Parties.” RECITALS: WHEREAS, the City and the Developer are parties to that Development Agreement, dated as of June 14, 2022 (the “Development Agreement”), relating to the construction by the Developer or its Affiliates of the Projects and the Infrastructure Improvements and the use by the City of Tax Increment or proceeds of Bonds to reimburse the Developer for costs of the Infrastructure Improvements, subject to the terms and conditions of the Development Agreement (all capitalized terms used and not defined herein have the meanings given in the Development Agreement); and WHEREAS, the Parties reserved the right in Section 8.9 of the Development Agreement to amend the Development Agreement by written amendment authorized and signed by the Parties; and WHEREAS, the Parties have determined to amend certain provisions of the Development Agreement. NOW, THEREFORE, the City and the Developer, each in consideration of the representations, covenants and agreements of the other, as set forth herein and in the Development Agreement, mutually represent, covenant and agree as follows: Section 1. Amendment of Section 5 of the Development Agreement. Section 5 of the Development Agreement is hereby amended as follows (strikethroughs indicate deletions; underlining indicates additions): “Section 5. Payment of Reimbursement Amount for Costs of the Infrastructure Improvements. Payment of the Reimbursable Amount by the City to the Developer for costs of the Infrastructure Improvements shall be subject to the following conditions and in accordance with the following procedures: 5.1 Conditions to Payment or Reimbursement. (a) (i) The Developer must have completed or satisfied each of the Milestones by the applicable Milestone Date, as such date may have been extended by the Director of Economic Development or the City Commission pursuant to Section 3.4 hereof, (ii) the City must have issued a certificate of occupancy for each of the Projects, (iii) the Infrastructure Improvements must have been completed in their entirety and the City must have delivered written acceptance of the Infrastructure Improvements (which may be in the form of a Certificate of Completion or such other format as required by the City), and (iv) the Developer must demonstrate to the City’s satisfaction, by a title report Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 2 4920-4340-6461, v. 2 or other means acceptable to the City, that the Infrastructure Improvements are free of financial liens and any encumbrances affecting the Infrastructure Improvements must be acceptable to the City. (b) Reimbursement by the City for costs of the Infrastructure Improvements must be based on paid invoices for costs incurred by the Developer, the Affiliated Entities, their contractors and subcontractors or utility companies, which the Developer must supply to the City. The City may reject, in its sole discretion, any invoice related to the Infrastructure Improvements. The City will notify the Developer of any rejected invoice and the reason it was rejected. The Parties acknowledge that some combination of the Developer and the Affiliated Entities will incur and pay the costs of the Infrastructure Improvements, and the City will not reject any invoice solely because it was paid by one of the Affiliated Entities rather than the Developer. Regardless of which entity pays costs incurred with respect to the Projects and the Infrastructure Improvements, the Developer has the sole right to receive all reimbursements from City for costs of the Infrastructure Improvements as provided under the Agreement. (c) The Parties agree that the City will have no obligation to reimburse any of the costs of the Infrastructure Improvements unless at the time of such request (i) all of the Developer’s representations as set forth in Section 2.2 are true and correct, (ii) the Developer is not in breach of any covenant or undertaking as set forth in Section 3, and (iii) subject to Section 5.2(b), unless and to the extent the City issues the Bonds, there shall be adequate Tax Increment available to pay the Reimbursable Amount and satisfy all other financial obligations related to the District. (d) The Developer, or other Person(s) responsible for paying such Taxes, shall have paid Taxes with respect to the Projects through June 2026. (e) If some or all of the Reimbursable Amount is to be paid with the proceeds of the Bonds, the City shall have determined, in its sole discretion, but with the cooperation of the Developer, that the Tax Increment is sufficient to pay the debt service on the Bonds as and when due, with the target of producing to produce a Coverage Ratio (as defined in Section 5.2(a)(ii)) with respect to the Bonds of not less than 1.7, and, as applicable, to satisfy other requirements under the Bond Resolution, such as funding an adequate reserve, meeting applicable debt service coverage requirements, and paying Costs of Issuance, and to satisfy all other financial obligations related to the District. The Developer understands and agrees the City shall have no obligation to and may not issue the Bonds if the City is unable to find and determine that the Tax Increment is sufficient to pay the Bonds timely, to produce a Coverage Ratio acceptable to the City, with a targeted Coverage Ratio of not less than 1.7, to satisfy the requirements of the Bond Resolution, and to satisfy all other financial obligations related to the District. For the avoidance of doubt, a Coverage Ratio of 1.7 or higher shall be deemed acceptable to the City. If any of the above conditions are not satisfied in the determination of the City, the City shall have no obligation to reimburse the Developer for any of the costs of the Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 3 4920-4340-6461, v. 2 Infrastructure Improvements and the City’s determination to refrain from reimbursing, or its inability to reimburse, any of the costs of the Infrastructure Improvements shall not be or result in a default of this Agreement. 5.2 Process for Reimbursement; Determination of Reimbursable Amount; Developer Option to Terminate. Subject to the provisions of subsection (c) of this Section 5.2, the process for reimbursement of the Developer is as follows: (a) The City will determine the Reimbursable Amount in the following manner: (i) Following the payment of Taxes relating to the Projects as completed for one full Fiscal Year, as described under Section 5.1(d) above, the Developer shall provide to the City a signed request for reimbursement substantially in the form attached as Exhibit E hereto and acceptable to the City, accompanied by the invoices paid by the Developer or the Affiliated Entities and lien waivers from the contractors or subcontractors performing or that have performed the work to be reimbursed. In addition, the Developer agrees to provide to the City any additional information requested by the City for the City to determine whether the Developer’s request for reimbursement complies with this Agreement. Based on this Developer certificate and the related information provided by the Developer, the City Manager or his or her designee shall determine the actual cost of the Infrastructure Improvements. (ii) Based on Tax Increment revenues received in the District in the first Fiscal Year that the assessed and taxable values of the Projects, as completed, are included in the certified taxable values provided to the City by the Department of Revenue, and using assumptions regarding interest rates and terms of proposed Bonds that the City finds reasonable in its sole discretion, the City will determine the maximum principal amount of the Bonds (including amounts to be used to pay Costs of Issuance and, if desirable, to fund a debt service reserve account) that can be issued, with a targeted that produces a Coverage Ratio on the Bonds of not less than 1.7. “Coverage Ratio” for this purpose means the quotient of (A) Tax Increment in the first Fiscal Year that assessed and taxable values of the Projects as completed are reflected in the certified taxable values of the City provided by the Department of Revenue, divided by (B) projected maximum annual debt service on the proposed Bonds. (iii) To the extent that Tax Increment is not sufficient to permit the issuance of Bonds in a principal amount sufficient to reimburse the Developer for the full Reimbursable Amount, the City reserves the right to issue Bonds to reimburse the Developer for a portion of the Reimbursable Amount, and to reimburse the Developer for the remaining amount of the Reimbursable Amount from Surplus Tax Increment as such Surplus Tax Increment becomes available. “Surplus Tax Increment” for this purpose means 50% of the amount of Tax Increment the City has on hand and available after paying or providing for the Bonds and any additional tax increment revenue bonds of the District, Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 4 4920-4340-6461, v. 2 maintaining the required balance on hand in the debt service reserve account and satisfying any other financial obligations of the District. Payments to the Developer of Surplus Tax Increment will be made not more than once per fiscal year, and only to the extent Surplus Tax Increment is available. The City expects to be able to reimburse the Developer for approximately $2,800,000 of the Reimbursable Amount from Tax Increment funds then on hand and proceeds of an initial Bond issuance (the “Initial Targeted Reimbursement”). However, the parties agree that, if necessary to achieve a Coverage Ratio acceptable to the City in accordance with Section 5.1(e), the City may proceed with an initial Bond issuance resulting in reimbursement to the Developer in an amount less than the Initial Targeted Reimbursement. (iiiiv) The Reimbursable Amount will be equal to the least lesser of (A) $3,599,178; or (B) the actual cost of the Infrastructure Improvements determined as described under Section 5.2(a)(i); and (C) if the Bonds are issued, the proceeds of the Bonds, less proceeds of the Bonds used to pay Costs of Issuance and, if desirable, to fund a debt service reserve account; recognizing that the Bonds must meet the Coverage Ratio determined as described in Section 5.2(a)(ii). (b) By the date that is five months after the submission by the Developer of a complete and acceptable request for reimbursement, as determined by the City, the City, subject to the terms and conditions of this Agreement, shall reimburse to the Developer such costs of the Infrastructure Improvements, in an amount not to exceed the Reimbursable Amount, either directly from Tax Increment or from proceeds of Bonds; provided, however, if the City shall earlier determine that the Tax Increment is not sufficient to reimburse the Developer for the costs of the Infrastructure Improvements, either because there is insufficient Tax Increment then available or the City determines there is insufficient Tax Increment to permit the issuance of Bonds, then the City shall so inform the Developer in writing and this Agreement shall thereupon terminate and neither Party will have any further rights or obligations hereunder, except as set forth in those provisions that expressly survive termination of this Agreement. Provided, however, that to the extent that the City determines, in its sole discretion, that Tax Increment is not sufficient to permit the issuance of Bonds in a principal amount sufficient to reimburse the Developer for the full Reimbursable Amount, the City reserves the right to issue Bonds to reimburse the Developer for a portion of the Reimbursable Amount, and to reimburse the Developer for the remaining amount of the Reimbursable Amount from Surplus Tax Increment. Payments to the Developer of Surplus Tax Increment will be made not more than once per fiscal year, and only to the extent Surplus Tax Increment is available. (c) Alternatively, the Developer may terminate this Agreement by written notice to the City at any time prior to providing the City with a signed request for reimbursement as described under Section 5.2(a)(i) above.” Section 2. Effect of Amendment. The Development Agreement shall be amended only as specifically set forth in Section 1 above, and shall otherwise remain in full force and Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 5 4920-4340-6461, v. 2 effect unamended. The amendments set forth in Section 1 above shall be effective as of the date of this Amendment. Section 3. Consent to Electronic Signatures. The Parties have consented to execute this instrument electronically in conformance with the Montana Uniform Electronic Transactions Act, Title 30, Chapter 18, Part 1, MCA. Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 6 4920-4340-6461, v. 2 IN WITNESS WHEREOF, the Parties hereto have caused this First Amendment to Development Agreement to be executed as of the 10th day of February 2026. CITY OF BOZEMAN, MONTANA By: _______________________________________ Printed Name: Chuck Winn Title: City Manager [Signature Page to First Amendment to Development Agreement] Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5 7 4920-4340-6461, v. 2 BIG SKY ICINF, LLC By: Innovation Campus Partners, LLC By: Bough Development, LLC By:______________________________________ Loren Bough, Manager By: Charter MSU, LLC By:______________________________________ Daniel Zelson, Member of Charter MSU, LLC [Signature Page to First Amendment to Development Agreement] Docusign Envelope ID: 25981017-9F1D-4EC6-8000-DA03EDF391B5