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HomeMy WebLinkAboutLetter of Understanding from City to Bozeman Schools and Gallat CommissionMemorandum REPORTTO: HonorableMayorandCityCommission FROM: AnnaRosenberry,FinanceDirector ChrisKukulski,CityManager SUBJECT: LetterofUnderstandingfromCitytoBozemanSchoolsandGallatinCounty regardingtheDowntownTIFDistrictfundingforFiscalYears2010and2011. MEETINGDATE: November23,2009 AGENDAITEMTYPE: Consent RECOMMENDATION: AuthorizeCity ManagertoSignLetterofUnderstandingfromCityto BozemanSchoolsandGallatinCountyregardingtheDowntown TIFDistrictfundingforFiscal Years2010and2011. BACKGROUND: OnSeptember28,2009,youdiscussedtheissuessurroundingtheCity's Downtown TaxIncrementFinancing(TIF)District'sinflationadjustedcap.Whencreatedin 1995,theCity’sDowntown TaxIncrementDistrictincludedarevenue-sharingcapandbond provisionthatweremore-strictthanwhatwasrequiredbystatelaw.Becauseanumberof Commissionersandstaffpeoplehaddifferingunderstandingsofhowthecapwasintendedto operate,weweredirectedtomeetwithSchoolandCountyofficialstotrytoclarifytheissue. OnOctober29,2009wemetwithofficialsfromGallatinCounty(EdBlackman),SchoolDistrict #7(Kurt Miller,SteveJohnson),andtheDowntown TIFBoard(ChrisNaumann,BobbieBare, BobLashaway.)Afterdetaileddiscussionsabouttheintentofthecapandhowitwasanticipated thatitwouldfunction,weallcametothefollowingagreementonfundingforthe14thand15th yearoftheDistrict: x Theincrementdollarsabovetheinflationadjustedcapof$1,060,000willbedistributed totheCity,County,andSchoolDistrictonapro-ratabasis,accordingtocurrentyearmill levies. x TheBozemanDowntown TaxIncrementDistrictwillretaintheamountbelowthecap (Below$1,060,000)thatisnotneededforannualdebtservicepayments. ThisfundingplanwouldbecarriedoutviaaLetterofUnderstandingfromtheCitytotheCounty andtheSchoolDistrict. Allentitiesagreethataformalinter-localagreementisneededforyearsbeyondthe14thand 15thyearofthedistrict.Overthenextyear,wewillallmeetagainwiththe TIFBoardtocraft theinter-localagreementthatwillgoverndistributionof TIFmoneyafterthe15thyearof payment.Ourintentistohavetheinter-localagreementadoptedbytheCity,County,andSchool Districtbythetimefundingisavailablefordistributioninthe16thyearofpayment,around December2011. FISCALEFFECTS: The TIFDistrictwillbeinforceuntil2032,duetoourissuanceofbonds fortheParkingGarage.Accordingtothisletter,approximately$99,000(theamountabovethe inflationadjustedcap)willbedistributedtotheCity,County,andSchoolDistrictonapro-rata basisinFY10,basedonmilllevies. Amountsareestimatedtobe: EntityNote øÍÐÐÛÊÉ CityPortion**Dedicated toBozemanDowntown TIF   CountyPortion   SchoolDistrict7Portion  TotalDollarsToDivide$99,023 Itwillalsoprovideforannualdebtservicepaymentstobemade,andprovideapproximately $635,000inFY10and$635,000inFY11totheDowntown TIFDistrict. ALTERNATIVES: AssuggestedbytheCityCommission. Attachments:LetterofUnderstanding Reportcompiledon:September23,2009 CityofBozeman,Montana November 23, 2009 BozemanPublicSchools SteveJohnson,AssistantSuperintendent 404West MainStreet Bozeman, MT59715-0520 GallatinCounty EdBlackman,Finance Officer 311W Main,Room 300 Bozeman, MT 59715 Re:LetterofUnderstandingregardingDowntown TIFDistrictforFY2010 & FY2011. Gentlemen: Thankyouforyourattendanceat themeetingonOctober 29,2009 todiscuss theBozemanDowntown TaxIncrementFinancing(TIF)District’sFY2010andFY2011fundingissues. These twoyearsrepresent thth the 14and 15yearofpaymentsfor the TIF. Therehasbeensome confusionabouttheeffectoftheinflation-adjusted capontheDistrict’sfunding, especiallyinlightof thenewlyreappraisedvalueof theDistrict.Weappreciateyourwillingness to discuss theeffectsof thisrecentdevelopmentinlightof thespiritoftheoriginalagreement. Basedon thediscussionon the29thbetween theCity,County,SchoolDistrictandTaxIncrementDistrict Board,fundingwilloccuraccording to thefollowingparametersfor thenexttwoyears: x Theincrementdollarsabove theinflationadjusted capof $1,060,000willbedistributed to the City,County,andSchoolDistrictonapro-ratabasis,according to currentyearmilllevies. x TheBozemanDowntownTaxIncrementDistrictwillretain theamountbelow the cap(Below $1,060,000) thatisnotneededforannualdebtservicepayments. 121N.RouseAvenuewww.bozeman.net POBox1230406-582-2300(phone) Bozeman,MT59771406-582-2344(fax) Over thenextyear,wewillmeetagainwith the TIFBoard tocrafttheinter-localagreement thatwill th governdistributionof TIFmoneyafter the15yearofpayment. Ourintentis tohave theinter-local agreementadoptedby theCity,County,andSchoolDistrictby the timefundingisavailablefor th distributionin the 16yearofpayment,aroundDecember 2011. Respectfully, ChrisKukulski City Manager Cc:ChrisNaumann, ExecutiveDirector,DowntownBozemanPartnership GregSullivan,CityAttorney 121N.RouseAvenuewww.bozeman.net POBox1230406-582-2300(phone) Bozeman,MT59771406-582-2344(fax)