HomeMy WebLinkAboutDiscussion Regarding Downtown Tax Increment District Draft Inter-Local Agreement
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Anna Rosenberry, Finance Director
Chris Kukulski, City Manager
SUBJECT: Discussion regarding need for Inter-local Agreement for Downtown Tax
Increment District.
MEETING DATE: September 28, 2009
AGENDA ITEM TYPE: Action
RECOMMENDATION: Discuss and provide direction to staff regarding the draft Inter-local
Agreement for the Downtown Tax Increment District.
BACKGROUND: When created in 1995, the City’s Downtown Tax Increment District was
created with a revenue-sharing cap and bond provision that was more strict than what was
required by state law. In 2005, the District life was extended from 11 to 15 years, and
Resolution No. 1628 stated:
With the 2008 reappraisal of property, and the resulting 2009 taxable values, the District is likely
over the inflation adjusted cap. Pending any further changes from the Department of Revenue,
we will know for certain after all levies have been set for the year (in October.)
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Meetings Held: With the knowledge that we were nearing the 15th year of the District, we met
with School District officials and with Chris Naumann, Executive Director of the Downtown
Bozeman Partnership, to begin discussions about the Inter-local Agreement. Our meeting with
the School District was in December, and a couple of more recent discussions had been held with
Chris Naumann as we worked on a draft inter-local agreement.
Draft Agreement: The attached agreement is a very preliminary draft. The agreement will
need to be signed by the City, the County, and Bozeman School District.
FISCAL EFFECTS: The TIF District will be in force until 2032, due to our issuance of bonds
for the Parking Garage. This draft inter-local agreement would continue to provide any money
the City of Bozeman may be allocated to the Downtown TIF, estimated at approximately
$200,000 per year. It also asks that the State Levies be allocated to the Downtown TIF and then
the School District, after a number of years go by.
ALTERNATIVES: As suggested by the City Commission.
Attachments: Draft Interlocal Agreement
Resolution No. 1628
Report compiled on: September 23, 2009
TIF Revenue History 1995-2007 CPI-U
July Inflation Adjusted Cap
1995 -$ 152.5 750,000
1996 20,055$
1997 33,522$ 67%
1998 16,901$ -50%
1999 53,838$ 219%
2000 61,458$ 14%
2001 140,984$ 129%
2002 225,519$ 60%
2003 301,960$ 34%
2004 393,324$ 30%
2005 459,314$ 17%
2006 485,000$ 6%
2007 516,721$ 7%
2008 673,623$ 30%
2009* Estimate 1,175,613$ 75%215.35 1,059,103
201015th Year of Payments
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INTERLOCAL AGREEMENT
GALLATIN COUNTY – BOZEMAN SCHOOL DISTRICT #7 - CITY OF BOZEMAN
BOZEMAN DOWNTOWN TAX INCREMENT FINANCE DISTRICT
Interlocal Agreement for the Disbursement of Downtown Tax
Increment Funds Pursuant to City of Bozeman Commission Resolution No. 1628
THIS AGREEMENT is made and entered into this ___ day of __________, 2009, between Gallatin
County, Bozeman School District #7, and the City of Bozeman, all being political subdivisions of the state of Montana, with principal offices at 311 West Main Street, Bozeman, Montana, 59715 (hereinafter referred to as the “County”), and XXXX, Bozeman Montana, 59715 (hereinafter referred to as the “School District”), and 121
N. Rouse Ave, Bozeman, Montana, 59715 (hereinafter referred to as the “City.”)
WHEREAS, Since 1995, $1,234,567 of tax increment funding has been invested in projects valued at $123,456,789. Tax increment funds committed to urban renewal projects significantly raise the tax base of the district and in turn increase tax revenues for the County, School District and City. Tax increment funds are one
of the primary tools by which Bozeman’s historic and urban core is maintained and improved. Recognizing the
urban renewal, property value, and tax base benefits of tax increment districts, the County, School District, and
City seek to retain the option to pledge their portion of their tax increment funds to remain with the downtown Tax Increment District to be used for continued urban renewal, and
WHEREAS, Commission Resolution No. 1628 provides for the Tax Increment District, after the 15th
year of payments or after the annual tax increment reaches an inflation adjusted $750,000, whichever occurs
first, shall return to the taxing bodies payments that would normally accrue to those bodies with the exception of Tax Increment dollars pledged to the payment of principal and interest on outstanding tax increment bonds, and
WHEREAS, said resolution requires the return of payments to be accomplished through an interlocal
agreement between the City, County and School District, and
WHEREAS, the 15th year of payments shall occur in November 2010, and will occur before the inflation
adjusted cap of $750,000 is met, and
WHEREAS, the Tax Increment dollars will always, first and foremost, be committed to make scheduled payments on the outstanding City of Bozeman Downtown Tax Increment Urban Renewal Revenue Bonds,
Series 2007, and
WHEREAS, the County, School District, and City have the authority to enter into this agreement
pursuant to §§ 7-11-101 through 7-11-108, MCA.
NOW, THEREFORE, the County, School District, and City agree as follows:
1. PURPOSE OF INTERLOCAL AGREEMENT. The purpose of this Interlocal Agreement is to establish the terms under which annual Downtown Tax Increment Funds in excess of those
needed to pay principal and interest payments on outstanding bonds (hereinafter referred to as
the “Remaining Funds”) will be disbursed pursuant to Commission Resolution No. 1628.
Remaining Funds will be returned to the County, School District, and City on an annual basis as
set forth here within, unless otherwise pledged to remain as tax increment funds to be used for
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urban renewal purposes within the Downtown Tax Increment District pursuant to 7-25-XYZ, MCA.
2. PURPOSE OF URBAN RENEWAL. Any such Remaining Funds pledged to the downtown
Tax Increment District will be invested in infrastructure projects as stipulated by MCA123abc thus further raising the taxable value of the district.
3. FUTURE DEVELOPMENT AGREEMENTS IN THE DISTRICT. All parties agree to
discuss investing Remaining Funds in future development projects in the District. Such
agreements would be considered on a project-by-project basis, and would be approved by the entities using Remaining Funds.
4. DISBURSEMENT OF FUNDS. Beginning in November 2009, the City of Bozeman will
disburse Downtown TIF remaining funds according to the following formula, unless pledged to
remain with the tax increment district as a result of a signed development agreement (under section 3, above): a. To the City of Bozeman Downtown TIF – Debt Service, amounts:
To the City of Bozeman
Date Tax Year For Debt Service Payment
November 2011 2010 $ 423,087.50
November 2012 2011 $ 421,687.50
November 2013 2012 $ 425,087.50
November 2014 2013 $ 423,087.50
November 2015 2014 $ 425,887.50
November 2016 2015 $ 423,287.50
November 2017 2016 $ 425,487.50
November 2018 2017 $ 422,287.50
November 2019 2018 $ 423,572.50
November 2020 2019 $ 424,222.50
November 2021 2020 $ 424,102.50
November 2022 2021 $ 423,302.50
November 2023 2022 $ 421,802.50
November 2024 2023 $ 424,582.50
November 2025 2024 $ 426,382.50
November 2026 2025 $ 422,027.50
November 2027 2026 $ 422,177.50
November 2028 2027 $ 421,585.00
November 2029 2028 $ 425,250.00
November 2030 2029 $ 422,750.00
November 2031 2030 $ 424,500.00
November 2032 2031 $ 425,250.00
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b. Remaining Dollars are allocated based on pro-rated mill levy shares, where:
County Mill Levy
+ City Mill Levy
+ School District Mill Levy
+ State Mill Levy
Total Mill Levy for 7C
1. To School District #7 Building Fund:
For November 2009 – November 2013: Remaining Dollars * (School District Mill Levy/Total Mill Levy) For November 2014 – November 2032:
Remaining Dollars * (School District Mill Levy/Total Mill Levy), plus
Remaining Dollars * (State Mill Levy/Total Mill Levy)
2. To Gallatin County:
Remaining Dollars * (County Mill Levy/Total Mill Levy)
3. To City of Bozeman- Downtown TIF:
For November 2009 – November 2013: Remaining Dollars * (City Mill Levy/Total Mill Levy), plus
Remaining Dollars * (State Mill Levy/Total Mill Levy)
For November 2014 – November 2032:
Remaining Dollars * (City Mill Levy/Total Mill Levy)
5. DURATION. The term of this Agreement will end upon the final Downtown Tax Increment
district disbursement by the Gallatin County Treasurer, anticipated no later than December 2032.
6. SEPARATE LEGAL ENTITY/ADMINSITRATION. There shall be no separate legal entity
created as a consequence of this Agreement. Administration of this Agreement shall be the responsibility of the Gallatin County Treasurer.
7. PROPERTY. There shall be no sharing of property or equipment between the parties in the
execution of this Agreement.
8. COMPENSATION.
9. LIASON. The County designates _________________ (phone no. ___-_____ as liaison, or any
other person the liaison appoints. The City designates The City Manager (phone no. 582-2306)
as liaison under this Agreement. The School District designates ______________________ (phone no. ____-_____) as liaison under this Agreement.
10. HOLD HARMESS AND INDEMNIFICATION. The Parties shall indemnify and hold
harmless the other party from and against any and all claims, demands, or actions for damages to
property or injury or death to persons or other damage to persons or entities arising out of or resulting from the performance of this Agreement or the results of this Agreement, provided such
damage to property or injury or death to person is due, in whole or in part, to the error, omission,
or negligent act of the parties or any of its employees.
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11. NON-WAIVER. Waiver by either party of strict performance or any provision of this Agreement shall not be a waiver of or prejudice the party's rights to require strict performance of
the same provision in the future or of any other provisions.
12. TERMINATION. Any party may terminate this Agreement and allow their Remaining Funds to revert to the Downtown Tax Increment District by providing written notice to all parties.
13. TIME OF ESSENCE. It is mutually agreed that time is of the essence in the performance of all
covenants and conditions to be kept and performed under the terms of this Agreement.
14. HEADINGS. The section headings contained herein are for convenience and reference and are not intended to define or limit the scope of any provision of this Agreement.
15. NOTICES. All notices required under this Agreement shall be deemed properly served if
delivered in writing, personally, or sent by certified or registered mail to the last address previously furnished by the parties hereto. Until hereafter changed by the parties by notice in writing, notices shall be sent to the Gallatin County XXXXX, 311, West Main, Bozeman,
Montana 59715, and City of Bozeman City Manager, 121 N Rouse Ave., Bozeman, MT 59771,
and School District #7, XXXXXXXXXXXX. The date of mailing shall be deemed the date of
such notice and service thereof.
16. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the
parties. No alterations, modifications, or additions to this Agreement shall be binding unless
reduced to writing and signed by the parties to be charged herewith. No covenant, term or
addition to this Agreement shall be deemed waived by either party unless such waiver shall be reduced to writing and signed by the parties.
17. AMENDMENTS. The terms and conditions of this Agreement may not be modified or
amended except by an instrument in writing executed by each of the parties hereto. No oral
modification shall be enforceable.
18. SEVERABILITY. The provisions of this Agreement shall be deemed independent and
severable, and the invalidity, partial invalidity, or unenforceability of any one provision or
portion thereof shall not affect the validity or enforceability of any other provision herein.
19. EFFECTIVE DATE. This Agreement shall be effective after approval by the respective
governing bodies or July 1, 2010, whichever is later.
20. RECORDATION. This Agreement shall be filed with the Gallatin County Clerk and Recorder
and Montana Secretary of State as required by § 7-11-107, MCA.
BOARD OF COUNTY COMMISSIONERS
GALLATIN COUNTY, MONTANA
___________________________________ DATE:___________________
John Vincent, Chairman
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ATTEST:
____________________________________ DATE:___________________
Gallatin County Clerk and Recorder
CITY OF BOZEMAN COMMISSION
BOZEMAN, MONTANA
___________________________________ DATE:___________________ Kaaren Jacobson, Mayor
ATTEST:
____________________________________ DATE:___________________
Stacy Ulmen, City Clerk
SCHOOL DISTRICT #7 BOARD OF TRUSTEES
BOZEMAN, MONTANA
___________________________________ DATE:___________________
, Chairman
ATTEST:
____________________________________ DATE:___________________
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EXHIBIT A
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