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HomeMy WebLinkAboutSouth Bozeman Technology District 2014-15 Work Plan, Budget & agreement with MSU Innovation Campus1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: The South Bozeman Technology District 2014 – 2015 Work Plan and Budget and direction on a proposed reimbursement agreement between the City of Bozeman and the Montana State University Innovation Campus for costs incurred for initial funding of District infrastructure. MEETING DATE: December 16, 2013 AGENDA ITEM TYPE: Action Item RECOMMENDATION: Approve the South Bozeman Technology District 2014 – 2015 Work Plan and Budget and provide direction on the content of a proposed reimbursement agreement. RECOMMENDED MOTION: I move to approve the South Bozeman Technology District 2014 – 2015 Work Plan and Budget and direct staff to return to the Commission for final approval of a proposed reimbursement agreement on the Commission’s Consent agenda. I. PROJECT BACKGROUND The Commission created the South Bozeman Technology District (the “District”) in December, 2012 and authorized the District’s use of tax increment financing to support a wide array of activities within the District including the development of public infrastructure. Over the past 11 months we have been working to get the District up and running by appointing the District’s board, adopting bylaws, and now presenting the Commission with the District’s first Work Plan and Budget. Should the Commission adopt the Work Plan and Budget we will move forward with drafting a reimbursement agreement for costs that may be paid from tax increment between the City and the Montana State University Innovation Campus (“MSUIC”) should it make initial investments to fund public infrastructure within the District. Before the specifics of the Work Plan, Budget and proposed reimbursement agreement are discussed, I provide some additional background on the importance of the District to the ongoing vitality of Bozeman’s high tech industries. A primary purpose of creating the South Bozeman Technology District (the “District”) is to address existing public and high tech infrastructure deficiencies on property occupied by the MSU Innovation Campus (“MSUIC”). Developing public infrastructure is the first and most 482 2 critical step to achieve the goals for the District as set out in the South Bozeman Technology District Comprehensive Development Plan (the “CDP”). Obviously, the District’s CDP fulfills the goals of the Bozeman Community Plan (the “BCP”) and the City of Bozeman’s 2009 Economic Development Plan (the “EDP”). The goals of the City’s overall EDP are not only synchronized with those of the District’s CDP but also with MSUIC in the context of the development of a technology district. Currently, the District lacks the infrastructure necessary to facilitate the aforementioned development. Since the adoption of the City’s EDP in 2009, the City has prioritized support for the following high growth potential sectors: • Photonics; • Bio-sciences; • Manufacturing; • High-tech; and • The outdoor industry. Most of the sectors identified above are also supported by the mission and vision of the District’s CDP and MSUIC and will directly benefit from the development of public infrastructure in the District. With the development of public infrastructure, the District becomes critical in the growth of Bozeman’s high tech industry by assisting in the creation of a centralized campus where innovation and research at MSU is commercialized and transferred into high-tech businesses and high-paying jobs. MSU is a leader in the growth and development of Bozeman’s technology industry, and is the reason the Bozeman area is considered the technology center of the state. MSU’s research innovation has led to the creation and growth of businesses in Bozeman and throughout the state, providing employment opportunities in industries such as agriculture, energy, construction, healthcare, technology, photonics, manufacturing and biosciences. Home to more than 100 technology-based firms, Bozeman has become the high-tech center of Montana; and it is one of the largest technology communities in the northern Rocky Mountains. Bozeman’s technology sector has grown significantly since the early 1990s. Bozeman’s technology sector includes firms engaged in advanced manufacturing and laser optics; information technology—application development, information technology services, software, internet applications, telecommunications, pharmaceuticals, biotech or bioscience and agricultural, environmental and other activities. These firms are, for the most part, selling their goods and services entirely to customers located outside of Montana and many located outside of the United States. It is estimated that these firms directly employ more than 3,000 people whose earnings are significantly higher than the county’s annual average wage. MSU has grown to become a regional leader in research and creative projects with nearly $100 million in research expenditures in Montana each year. MSU was recognized by the Carnegie Foundation for the Advancement of Teaching as one of 96 research universities nationally with “very high research activity.” MSU has strong ties to industry in the Bozeman area, particularly in the life science, aerospace, agriculture, engineering and information technology sectors. MSU lists relationships with over 150 companies which include research support, licensing agreements, and consulting services. 483 3 Additionally, the concentration of research activity at MSU has fueled the development of technology-based companies clustered in and around Bozeman and is a significant contributor to Bozeman’s vibrant entrepreneurial technology economy. University technology transfer and commercialization activities have been driving economic development nationwide since the early 1980’s when changes in federal legislation accelerated the process and increased incentives for collaboration between universities and industry. MSU is no exception. According to the MSU Technology Transfer Office, technology developed at MSU has resulted in the spin-off of 30 companies and licensing by 37 companies in the Bozeman area and nearly 300 companies statewide. MSU holds 163 licenses for patents for innovations such as biological, chemical, and engineering processes and compounds, including coatings for the space shuttle and pharmaceutical drugs. Of those 163 licenses, 60% are with Montana companies, many located in Bozeman. Further development of MSUIC will enhance these results. The strength of Bozeman’s technology economy has also translated into private companies receiving research, development and investment funding. During the 2000-2004 time period, Montana ranked 10th in the nation in the average annual number of federal Small Business Innovation Research (SBIR) awards made, with nearly half going to Bozeman companies. The development of the District infrastructure and the facilities at MSUIC will further solidify MSUIC, MSU and Bozeman as the place to do high-tech business in Montana. II. DISTRICT CHRONOLOGY Each link contains the Commission Memo and associated packet material. A. On November 5, 2012, the City Commission approved Resolution 4414 adopting the South Bozeman Technology District Comprehensive Development Plan (“CDP”). B. November 19, 2012 the City Commission approved the second reading of Ordinance 1844 creating the South Bozeman Technology District. C. On May 20, 2013, the City Commission approved Resolution 4439 creating the South Bozeman Technology District Board. D. On July 8, 2013, the City Commission appointed the South Bozeman Technology District Board. E. On November 18, 2013, the City Commission ratified the South Bozeman Technology District Board bylaws. III. DISTRICT WORK PLAN AND BUDGET 2014-2015 The City has been a partner with MSUIC since the concept, and through the creation, of the District. As the Work Plan depicts, MSUIC envisions a rapid pace of development of the 40+ acres of the District. The option of waiting to the regular budget cycle for approval of the District Work Plan and Budget would only delay development plans already in motion, costing time and money. Generally, in May of the yearly budget cycle, the Board of each TIF District (Downtown, North 7th, Northeast and Mandeville1) presents an annual work plan and budget for Commission approval. The timing of this request reflects the desire of South Bozeman Technology District to gain Commission approval of its proposed Work Plan and Budget now 1 To date, the Mandeville TIF Board has not been appointed. 484 4 and further, get direction on the reimbursement agreement discussed in more detail below so development of public infrastructure in the District can move forward during 2014. Because the District is less than a year old it has not yet developed the tax increment necessary to fund the development of public infrastructure. As development occurs, the increment is provided by capturing the increase in property taxes as property values within the District increase. The captured dollar amount, the “increment” is returned to the District to pay the costs of certain improvements as allowed by MCA 7-15-4288. The District Board adopted the Work Plan and Budget on December 3, 2013. As shown in the District’s Work Plan and Budget, MSUIC has begun engineering and design work related to streets, roads, curbs, gutters, sidewalks, roadways, walking paths, irrigation, landscaping, water features, open green spaces, street lighting, signage and other infrastructure and intends to initially finance the necessary infrastructure to facilitate the build-out of MSUIC over the next two to five years. Out of the strong desire to keep their development project on schedule, MSUIC is incurring allowable costs that may be paid by tax increment financing prior to the accumulation of any increment. The District proposes, upon Commission direction approval, to execute a “reimbursement agreement” between the City and MSUIC to facilitate the reimbursement for development costs that may be paid by tax increment financing. IV. REIMBURSEMENT AGREEMENT DISCUSSION POINTS As noted above, currently there are minimal increment funds available to cover allowable costs of the infrastructure improvements necessary to develop MSUIC. Despite the lack of increment funding available to cover allowable costs that may be paid by tax increment financing, MSUIC is proceeding with initial engineering and planning work required to develop the infrastructure phase of the project (see Section VII of the Work Plan and Budget). The District proposes a contractual agreement between the City and MSUIC whereby MSUIC will be reimbursed for upfront costs associated with the infrastructure phase that may be paid by tax increment financing. Elements of the “Reimbursement Agreement” may include: A. A significant percentage of each year’s tax increment would be committed to reimbursement to MSUIC for allowable costs incurred in engineering and constructing specific public infrastructure. 1. The remaining increment will be dedicated to other District needs at the discretion of the Board: “At the discretion of the Board, establish a reserve account for some percentage of the available yearly increment for other District needs. The rationale for establishing a reserve of the yearly available increment funds not dedicated to reimbursement allows some District flexibility in meeting the needs of a District tenant that may require unanticipated, yet allowable improvements.” (Section 7C of the Work Plan and Budget) B. The City Attorney suggests that contracts between the City and MSUIC for reimbursement must include: 1. The City’s standard discrimination provisions; 485 5 2. Require all contracts entered into by MSUIC wherein costs sought for reimbursement will be incurred must comply with the City’s purchasing policy and all requirements regarding prevailing wages, and if necessary the City’s living wage; 3. A requirement that all contracts entered into wherein costs sought for reimbursement will be incurred will be subject to a City audit; 4. Have a term no greater than 15 years unless bonding occurs; 5. Include a detailed list of services and infrastructure that will be authorized for reimbursement that can include engineering services, construction, and demolition of existing structures; and 6. Recognize that should sufficient increment to fully reimburse MSUIC for its authorized costs never be realized during the life of the District that such unpaid balance will not be paid unless the City agrees to sell bonds, at its sole discretion. C. The reimbursement agreement may also include payment to MSUIC of accrued interest on the payback balance remaining on MSUIC’s original expenditure. D. The reimbursement agreement may authorize reimbursement to MSUIC for allowable costs associated with District improvements, as authorized by 7-15-4288 MCA. E. Reimbursement must be consistent with the BCP and CDP. F. Frequency of reimbursement; and G. Demolition of existing structures, see Section II. B., Other Improvements (wetlands, signage, demolition) of the proposed Work Plan. FISCAL EFFECTS: There has been, and will continue to be, significant staff time invested in assisting the District’s forward progress. Creation of a reimbursement agreement and tracking costs and payments will require additional staff and legal review. Oversight of the District’s activities has, and will continue, to be a project of the Department of Economic Development in partnership with MSUIC. Other than staff time, additional fiscal effects to the City in addition to those identified here and the increment are undetermined at this time. ALTERNATIVES: As suggested by the City Commission. Report compiled on: December 3, 2013 Attachments: 1. SBTD 2014 – 2015 Work Plan and Budget. 486 1 SOUTH BOZEMAN TECHNOLOGY DISTRICT 2014-2015 WORK PLAN & BUDGET This Work Plan and Budget implements, for the years 2014 and 2015, the South Bozeman Technology District’s Comprehensive Development Plan. I. INTRODUCTION The South Bozeman Technology District (the “District”) was created by Ordinance 1844 on November 4, 2012. The District is a mechanism designed to assist in financing major infrastructure improvements critical to the revitalization and development of 42-acres located between College and Garfield Streets. The District will address existing infrastructure deficiencies at the Montana State University Innovation Campus (“MSUIC”) to achieve the goals set out in the Bozeman Community Plan (“BCP”), City of Bozeman’s 2009 Economic Development Plan (“EDP”) and the District’s Comprehensive Development Plan (“CDP”). Plan goals are aligned to enhance the local and regional economies through job creation and industry diversification, cornerstones of the City’s economic development strategy. Additionally, commercialization of MSU’s research and intellectual property has led to the creation and growth of businesses in Bozeman and throughout the state, providing employment opportunities in industries such as agriculture, energy, construction, healthcare, technology, pharmaceuticals, photonics, manufacturing and biosciences. The District may provide funding for costs as authorized by law in 7-15-4288, Montana Code Annotated (“MCA”): Costs that may be paid by tax increment financing. The tax increments may be used by the local government to pay the following costs of or incurred in connection with an urban renewal area or targeted economic development district as identified in the urban renewal plan or targeted economic development district comprehensive development plan: (1) land acquisition; (2) demolition and removal of structures; (3) relocation of occupants; (4) the acquisition, construction, and improvement of public improvements or infrastructure, including streets, roads, curbs, gutters, sidewalks, pedestrian malls, alleys, parking lots and off-street parking facilities, sewers, sewer lines, sewage treatment facilities, storm sewers, waterlines, waterways, water treatment facilities, natural gas lines, electrical lines, telecommunications lines, rail lines, rail spurs, bridges, publicly owned buildings, and any public improvements 487 2 authorized by Title 7, chapter 12, parts 41 through 45; Title 7, chapter 13, parts 42 and 43; and Title 7, chapter 14, part 47, and items of personal property to be used in connection with improvements for which the foregoing costs may be incurred; (5) costs incurred in connection with the redevelopment activities allowed under 7-15-4233; (6) acquisition of infrastructure-deficient areas or portions of areas; (7) administrative costs associated with the management of the urban renewal area or targeted economic development district; (8) assemblage of land for development or redevelopment by private enterprise or public agencies, including sale, initial leasing, or retention by the local government itself at its fair value; (9) the compilation and analysis of pertinent information required to adequately determine the needs of the urban renewal area or targeted economic development district; (10) the connection of the urban renewal area or targeted economic development district to existing infrastructure outside the area or district; (11) the provision of direct assistance to secondary value-adding industries to assist in meeting their infrastructure and land needs within the area or district; and (12) the acquisition, construction, or improvement of facilities or equipment for reducing, preventing, abating, or eliminating pollution. II. PARTNERSHIPS FOR THE DEVLOPMENT OF THE DISTRICT One of the District’s primary partners in accomplishing its stated goals is the MSU Innovation Campus (“MSUIC”). The MSUIC is a 501 (c) (3) non-profit organization and a subsidiary of the MSU Alumni Foundation (“MSUAF”) and governed by the MSUAF Board of Governors. The mission of MSUIC is to “Create a world-class university-related research park to promote economic development and partnerships between high tech-based businesses and the research community of Montana State University, the region, and the State of Montana”. MSUIC is governed by MSUAF and responsible for the development of the 42-acres outlined in the South Bozeman Technology District Comprehensive Development Plan. In addition to MSUIC, the Advanced Technology Inc. (“ATI”) is a for-profit corporation established in the 1980s for the development of the Advanced Technology Park – a 22-acre park with 11 landowners and 15 buildings. ATI is also a subsidiary of MSUAF and governed by the MSUAF Board of Governors. MSUAF is an independent 501 (c) (3) non-profit organization. The mission of the MSUAF is to “create lifelong relationships and strengthen its resources to advance Montana State University.” Their mission is accomplished through a variety of means including the engagement of alumni and friends (alumni relations), promotion of membership (alumni association), and the cultivation and solicitation of private support (donor relations) for the advancement of MSU. MSUAF has daily interactions with a wide array of constituents – campus leaders, students, alumni, members, donors, friends of MSU and the public at large. 488 3 All assets under ATI and MSUIC – buildings and land – are governed and controlled by MSUAF through its Board of Governors. The MSUIC has obtained funds through the MSU Alumni Foundation to initially finance the geo-technical, engineering services, and administration of construction to install public infrastructure on the 42-acre site. A request for the services was advertised through an RFP process, and after review of all submitted proposals, a contract is currently under negotiation with CTA Engineering (“CTA”) in Bozeman, Montana. MSUIC will pay for the costs of the services to be provided by CTA. It is intended that the costs for these services, not to exceed $225,000, will be reimbursed to MSUIC, through the District over time, from annual increments of the District. MSUIC will reimburse MSU Alumni Foundation. MSUIC and MSU Alumni Foundation understand that the timing of, and eventual amount of reimbursements, are not guaranteed by the City or the District. The primary active uses within the District include office, laboratory, light manufacturing, warehouse, distribution, and specialized research and design facilities, which collectively will occupy approximately 70% of the District. The balance of the area is comprised of public infrastructure that includes; streets, roads, curbs, gutters, sidewalks, roadways, walking paths, irrigation, landscaping, water features, open green spaces, street lighting, signage and other public infrastructure as defined in 7-15-4288, MCA. Without bonding, the term of the District is limited by Montana law to 15 years. The District established tax year 2012 as the base year for valuation. Construction of facilities in the District is projected to begin in the next 12 to 24 months and continue over the next 10 – 20 years. The following table provides the estimated construction start dates: SOUTH BOZEMAN TECHNOLOGY DISTRICT PROJECT ESTIMATED START DATES Professional Services/Engineering 2013/2014 Installation of Infrastructure & Open/Green Space(s) 2014 Construction of Buildings 2014 – 2029 Project funds will be a combination of District increment funds and grant funds to cover geo-technical, professional services/engineering, and installation of all infrastructure and open/green space(s), as outlined on pages 7 - 8. Developer equity, conventional financing, tax credits through the Montana Community Development Corporation, and federal grant funds through the Department of Commerce will be used to cover construction of buildings. Conventional financing provided by the developer(s) will include both private construction financing and permanent financing. Terms of construction and permanent financing will be determined through negotiations between MSUIC, private developer(s), and private developer’s equity partners and private lending institutions. Currently, there are minimal increment funds available to cover allowable costs of the necessary infrastructure improvements. MSUIC is proceeding with initial engineering and planning work required to develop the infrastructure phase of the project. It is anticipated that MSUIC will request reimbursement for allowable costs associated with the improvements within 489 4 the District. Commonly TIF districts enter into reimbursement agreements for repayment of upfront costs initially borne by the developer provided those costs are allowable to be paid by tax increment financing (see Section I). The District could identify up to 100% of the available yearly increment for reimbursement of allowable costs to MSUIC. Alternatively, rather than allocate the entire increment to reimbursement the District could allocate some percentage to a reserve fund for other District needs. Within the next one to three years, some percentage of available yearly increment will be utilized for: A. Reimbursement to MSUIC for allowable costs of Professional Services/Engineering of public infrastructure; and B. Reimbursement to MSUIC for allowable costs for the installation of Infrastructure and Open/Green Space(s). III. DISTRICT MISSION The District’s mission is to: A. Promote technology-based and knowledge-based economic development; B. Provide funding mechanisms to support the development of a world-class research park in order to promote academic and industry collaboration and technology transfer; C. Support the development of state-of-the-art-facilities including specialized research and development activities, programs, services, and amenities to grow successful research and technology-based businesses; and D. Promote ‘the place’ to link academic, private, government researchers and scientists in order to advance new discoveries in support of the citizens of the City of Bozeman, Gallatin County, the Bozeman School District and State of Montana. IV. DISTRICT GOALS District goals as established by the 2012 CDP include: A. Establish public/private partnerships between business, industry, government and Montana State University; B. Create internships, assistantships, and part-time and full-time opportunities for Montana State University students; C. Create high-tech/high-paying jobs for the citizens of the City of Bozeman and the State of Montana; D. Increase local, regional, State and global competitiveness; and E. Increase economic benefits for the citizens of Bozeman, Gallatin County and the State of Montana. The District conforms to the City of Bozeman‘s Community Plan and provides a funding mechanism to pay for the costs of improvements needed to stimulate the growth of high-tech, high-paying jobs and development of a university-related research park with specialized research and development facilities through public and private investment. 490 5 Important components of the District: A. Specialized Research and Development Facilities – Mixed use office, laboratory, light manufacturing, warehouse, distribution, institutional and research facilities focused development; and B. Open Space – The Plan will provide open green spaces with walking paths, water features, and a small park. V. MSUIC BACKGROUND The following narrative provides a brief background of the evolution of MSUIC. In 1986, MSU, under the leadership of President Bill Tietz, requested Montana State University Alumni Foundation develop and manage the first and only university-related research park in Bozeman, Montana, known as the Advanced Technology Park (ATP). Montana State University Alumni Foundation obtained property upon which the ATP was developed. In that same year, engineering services and installation of infrastructure was completed. In 1988, the first building known as the Nopper Building was completed. Over the subsequent 10 years, 12 additional buildings were constructed. As of January 1, 2012, there are more than 35 businesses and research groups housed in the ATP employing more than 200 people. Approximately 46% of those employed are MSU graduates. In addition, more than a dozen start-up companies originated in the ATP between 1988 and 2008. In November of 2011, the Advanced Technology Inc. (ATI) Board received approval from the MSU Alumni Foundation to hire the first Executive Director to oversee full operation of ATI and push forward a new vision and development of a 21st Century University-related Research Park, to be known as the MSUIC. In July of 2012, MSUIC was formed as a 501(c) (3) with non-profit exemption status. The District was created by the City of Bozeman, via Ordinance 1844 on November 4, 2012. The District Board was authorized on May 20, 2013 via Commission Resolution 4439. The focus of the District is development of a university-related research park on 42-acres, referred to as the MSUIC. A conceptual master plan was developed by MSUIC projecting construction of up to 19 buildings on the site with more than 750,000 square feet to be developed over a 15-year period. Investment in infrastructure and construction costs at full build-out of the 42-acres is estimated to be approximately $100 million. This represents the estimated cost of all public infrastructure and the MSUIC funded construction of 19 specialized research and development facilities. It is important to note there are over 200 university-related research parks across the United States. Several funding mechanisms are used to develop these parks, which include a combination of: 1) TIF District increment; 2) federal grants; 3) state grants and programs; and 4) private developers. It is common practice for university-related research parks to work with their respective municipalities to establish TIF Districts to assist in funding engineering and associated costs related to the installation of infrastructure in order for development to occur. 491 6 VI. DISTRICT FUNDING PRIORITIES This section outlines District funding priorities for the development of the District and the MSUIC: A. Property assembly costs including, but not limited to, acquisition of land, or rights and interests therein. If additional land is required, funds allowable through the TIF may be considered for such acquisition; B. Demolition of structures on the 42-acre site (farm sheds & buildings), and the clearing and grading of land. Currently, there are several farm sheds and buildings the property that must be demolished and removed before construction of infrastructure can begin; C. Costs of studies, surveys, designs, plans and specifications. In order to maximize the design to its full potential and use, MSUIC hired CTA Engineering to conduct all environmental, geo-tech, and infrastructure design; D. Professional service costs, including, but not limited to, architectural, engineering, legal, marketing, financial, and planning services. MSUIC awarded a contract, through an RFP process, to CTA Engineering to assist with all engineering design and construction, documentation required by the City and/or legal document filings; E. Environmental remediation and site preparation. CTA Engineering, as part of services to be provided, will conduct a Phase I Environmental survey of the 42- acres; F. Streetscape and costs of construction of public and, if necessary, private utilities and facilities or improvements. CTA Engineering, through an RFP process, has been awarded a contract to work with MSUIC to design, and construct, professional streetscapes that will complement the design standards between College, 19th and Garfield Streets. MSUIC and CTA Engineering will work with City Staff to control costs of construction of public utilities and facilities improvements; and G. Financing costs for the above listed items including, but not limited to, all necessary and incidental expenses related to the issuance of obligations incurred by MSUIC, and which may include payment of interest on any obligations. H. Construction of all streets, roads, curbs, gutters, sidewalks, roadways, walking paths, irrigation, landscaping, water features, open green spaces, street lighting, signage, small park, utilities (water, sewer, storm water, gas, electric, telephone and fiber optic), and other public infrastructure on the 42-acres. VII. DISTRICT BUDGET FY2015 The District intends the allowable costs shown in the priorities below would be approved for reimbursement from available yearly increment of the District. The District’s partner, MSUIC, is expected to provide up-front funding for the amounts shown below and reimbursed through a “reimbursement agreement” with the City. The agreement could commit up to 100% of each annual yearly increment to reimburse MSUIC for these allowable costs. The District intends to allocate some large percentage of the available yearly increment to the MSUIC 492 7 reimbursement. However, the District could also establish a reserve fund and direct a small percentage of the available yearly increment for other District needs that fall within allowable costs. The District Board has not yet identified a percentage of reimbursement from the yearly allowable increment and prefers to maintain some flexibility in this regard. The District’s priorities for 2014 and 2015 include the following priorities with corresponding initial budget estimates: A. PRIORITY I: Professional Services/Geo Technical and Engineering, to include: 1. Phase I environmental site assessment $9,000 2. Topographical survey $6,500 3. Street dedication easement $4,500 4. Preliminary engineering report $27,300 5. Design and permitting $109,400 6. Construction administration $68,300 TOTAL PROFESSIONAL COSTS $ 225,000.00 B. PRIORITY II: Installation of Grand Avenue off of Garfield Street, running north and south, which connects (T’s) to Technology Boulevard roadway running east and west between the Advanced Technology Park and the Morrison Maierle building, and which also includes installation of all curb, gutter, sidewalks, irrigation, signage, street lighting and landscaping along common roadways (Grand Avenue and Technology Boulevard). In addition, installation of all utilities (water, sewer, storm water, electrical, gas, telephone & fiber optic), wetland relocation or damage mitigation, demolition of farm sheds and buildings, entrance and street signage, and street lighting, which includes all costs associated with bonding, insurance, mobilization, preparation of Notice of Intent (“NOI”) and Stormwater Pollution Prevention Plan (“SWPP”) and contingencies. Estimated Construction/Project Costs: Roads, Curb, Gutter, Sidewalks, Irrigation & landscape $ 914,755.27 Sewer, Water & Storm Drainage & Dry Utilities $ 1,080,248.76 Other Improvements (wetlands, signage, demolition) $ 648,240.00 Taxes, Bonds, Insurance and Mobilization, Prepare NOI and SWPPP $ 406,487.00 Construction Contingency $ 304,973.00 TOTAL ESTIMATED CONSTRUCTION/PROJECT COSTS $ 3,354,704.03 493 8 C. PRIORITY III: The Board proposes the establishment of a TIF reserve account to secure from 0% and 20%, at the discretion of the Board, of the available yearly increment for other District needs. The rationale for establishing a reserve of some percentage of the yearly available increment funds not dedicated to reimbursement allows some District flexibility in the yearly reimbursed amount to MSUIC and balances the potential needs of a District tenant that may require site improvements, the costs of which may be paid by tax increment financing. VIII. DISTRICT DEVELOPMENT STRATEGIES The following strategies, outlined in the approved CDP, A. Plans to develop the property within the District primarily emphasize improving vehicular access, innovative design both interior and exterior, use of land, conservative sewer, water, and storm water management, as well as a redundant fiber backbone and state-of-the-art telecommunication facilities; B. Install innovative water wise landscaping and, to the extent practical, preserve existing trees and vegetation; C. Provide opportunities for the mixing and integration of different types of uses, both business and light manufacturing, under a well-designed plan; D. Amend the zoning ordinances for high-tech and mixed-use development that allows the integration of different types of activities with businesses within a pedestrian-oriented development under a coherent overall plan; E. Promote development in highly visible locations by working with land owners, purchasing properties, demolishing existing structures, and improving the sites; F. Install public improvements for the public good; and G. Transform and expand the site into a world-class university-related research park, MSUIC, and into a high-tech research and development community while at the same time contributing to the economic growth and prosperity of Montana State University, the City of Bozeman, Gallatin County, the region, and State of Montana. IX. DISTRICT IMPACTS AND BENEFITS A. Direct Economic Impact: The build-out of MSUIC within the District has the potential for significant positive economic impacts to the community, the region and the State of Montana in terms of short and long-term job creation. The business sectors supported by the development of the District add economic diversity to the region, have high-growth potential, and generally provide mid-to-high level wages. Additionally, the development of the District increases the amount of public infrastructure in the area and, consequently, 494 9 the values of the properties within and surrounding the District. The economic impact of District development also includes increased opportunities for MSU and Bozeman School District students to work and gain experience at the MSUIC with MSU researchers and private companies. The value of the proposed MSUIC high-tech facilities will significantly increase the increment over the term of the District. Estimated direct economic impacts of District development include: 1. Short and long-term Construction jobs; 350 2. Permanent jobs; 1,900 3. Assistantships/internships/part-time; employment for MSU students; 800 4. Infrastructure costs; and $ 8,150,000 5. Research and Development Facilities costs $ 91,850,000 B. Benefits to Montana State University: 1. Increase in research grants and sponsored research opportunities; 2. Opportunities to work with private sector to solve “real world” problems; 3. Collaborate with industry experts; 4. State-of-the-art facilities – unique architecture both interior and exterior; 5. Opportunities for faculty consulting recruiting and retention; and 6. Internship and career opportunities for students. C. Benefits to Bozeman, Gallatin County, Region and State of Montana: 1. Direct benefits: a. Provide a mix of quality jobs (functions and skills): i. Working in MSUIC (permanent jobs with opportunity for growth and career development) b. Provide new amenities and infrastructure (amenities, improved street grid, utilities, etc.): ii. Transportation:  Linkage to connect central business district;  Linkage to Montana State University and Gallatin College;  Linkage to restaurants and retail; and  Linkage to surrounding neighborhoods and housing. iii. Attract commercial development:  Retail;  Dining;  Entertainment;  Hotel/Conference Center; and  Parking iv. Attract new residents to the area. 495 10 v. Increase surrounding property values. 2. Indirect benefits: a. There will be a ripple effect on the community from the development of the MSUIC – development will enhance the caliber, size and reach of those ripples; b. Area jobs servicing employees and companies located on the MSUIC; c. Critical mass and cluster of high-tech research and development companies, services and amenities in and around MSUIC; and d. Support for schools through collaboration with MSUIC (science, technology engineering and math/STEM) schools that could provide alternative educational options. 3. Benefits to the City, County and State: a. Solidify Bozeman as a global technology city; b. Develop a world-class 21st Century University-related research park; c. Attract tech companies, established and start-up, to the region; d. Create jobs throughout the area; e. Create an option for high-growth tech companies to remain, expand and prosper in the City; f. Attract additional risk capital (investment and investors) to the region; g. Help retain top rated science, technology, and research talent in the region; h. Provide a living laboratory for cutting-edge sustainable development; i. Create an environment for technology companies to seed, take root and make a home in Bozeman, the region, and the State; and j. Tap into the commercial potential of private and federal dollars invested in research. X. DISTRICT ADMINISTRATION Administration of the District will be conducted by the District Board, City staff, MSUIC Executive Director, and the Bozeman City Commission. #### 496