HomeMy WebLinkAboutA6. North 7th FY16 Budget and Workplan
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: David Fine, Economic Development Specialist
SUBJECT: North Seventh Avenue Urban Renewal Board (NSURB) FY 2016 Work
Plan and Budget.
MEETING DATE: June 1, 2015 AGENDA ITEM TYPE: Action
RECOMMENDATION:
Review the attached materials, listen to the Board presentation, ask questions, and provide direction on the proposed FY 2016 NSURB Work Plan and Budget. If approved by the City
Commission, the NSURB FY 2016 Work Plan and Budget Proposal will be adopted as part of
the City of Bozeman’s FY 2016 Budget.
BACKGROUND:
On May 7, 2016 the NSURB unanimously approved the attached FY16 Work Plan and
Budget. The total value of new appropriations in the NSURB budget request for FY16 is
$905,980. FY 2016 Proposed Budget Summary:
Lighting Project Engineering Services (Durston - Main) $178,025
Lighting Project Construction Services (Phase 2) $551,955 Rehabilitation Grants $125,000 Northwestern Energy Change Fees $10,000
Outreach & Mailing $5,000
City Staff and Professional Services $25,000
Total (New Appropriations) $905,980
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The NSURB proposes a work plan and budget and submits a report on an annual basis per
Section 7-15-4237 of the Montana Code Annotated (MCA)
(1) An agency authorized to transact business and exercise powers under this part and part 43 shall file with the local governing body, on or before September 30 of
each year, a report of its activities for the preceding fiscal year.
(2) The report shall include a complete financial statement setting forth its assets,
liabilities, income, and operating expenses as of the end of the fiscal year.
UNRESOLVED ISSUES: State-wide Reappraisal of Property Values
In November the City received preliminary data for the property reappraisal that the State of
Montana is conducting and implementing for our FY16 fiscal year (2015 tax year). We will not receive the final Certified Taxable Values until July 2015; this necessitates using the preliminary
information for a calculation of property tax levies in our budget.
The State has projected a dramatic decrease in assessed values for both commercial (19.25%
decrease) and residential (3.52% decrease) property in Bozeman. They attribute this change to the timing of appraisal cycles and the Great Recession. Under existing laws, the City is both
allowed and required to increase its number of mills in order to off-set decreased tax dollar
collections that come about from decreased assessed property values.
The State estimates that the value of one mill, levied city-wide after Tax Increments are excluded, will be $80,331 in FY16. This represents an 8.6% decrease in the city’s mill value in
FY15. For levies that are required to be established at certain dollar values (i.e. debt service), we
will need to raise our mills to bring in the same number of dollars. For levies that were approved
at set mill amounts (i.e. Fire Capital & Equipment levy), we will yield fewer dollars due to
reappraisal.
FISCAL EFFECTS:
Statewide reappraisal will have a negative impact on the value of the District. Reappraisal
will not, however, impact the ability of the district to make the expenditures in the proposed budget due to adequate reserves. If approved by the City Commission, the NSURB FY 16 Work
Plan and Budget Proposal will be adopted as part of the City of Bozeman Annual Budget.
Exhibits:
1. NSURB FY15 Annual Report
2. NSURB FY16 Work Plan and Budget
3. Map of the North 7th Urban Renewal District
Report prepared on May 25, 2015.
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North 7th Avenue Urban Renewal Board
FY 2015 Annual Report and
FY 2016 Annual Work Plan and Budget Proposal
City Commission Meeting, June 1, 2015
In November 2006, the City of Bozeman designated the N. 7th Ave Tax Increment Finance
District (TIFD), under which incremental increases in taxes due to redevelopment are accumulated in a TIFD fund. The stated goals and objectives of the District Plan were as follows: MISSION and VISION: The N. 7th Urban Renewal District Plan is the City’s response to
remedy the conditions of blight found in the August 2005 report through thoughtful
redevelopment of the Corridor. The following Corridor Goals are taken from the Design and
Connectivity Plan (DCP). An expanded description of the intent of each goal is found in the DCP Chapter 2.
Corridor Goals A basic goal is to have an active and exciting corridor that is attractive with a distinct
character. A strategy for achieving this goal is to improve the experience for the user by
creating safe attractive walkways and streets and by providing buildings and landscaping that are of interest to users and passersby. Several key strategies should be followed:
1. Provide a distinct identity for the corridor
2. Develop the corridor as a focus for commercial and entertainment activities that serve
residents and visitors alike
3. Strengthen the corridor as a neighborhood service center 4. Provide mixed use development
5. Clearly define gateways at key locations along the corridor
6. Improve vehicular, bicycle and pedestrian circulation along the corridor
7. Provide pedestrian connections to adjacent neighborhoods
8. Establish a way-finding system 9. Guide new development along the corridor such that it improves the aesthetic experience
10. Coordinate public and private improvements
11. Strengthen connections between complementary uses
12. Provide flexible public space along the corridor
GUIDING PRINCIPLES
In addition to the specifically stated goals for the District the following Guiding Principles have
been adopted to provide a basis for decision making over the life of the District. These principles
should be applied to any development program or other activity that will affect the District:
1. Ensure the health safety and security of the District
2. Balance commerce and livability in the District within the mixed use framework 3. Public open space is essential to a healthy and appealing urban environment
4. The costs of projects and programs shall be weighed against their benefits to the District
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5. Private property shall not be acquired for other private use through the eminent domain
process in the implementation of any aspect of this plan
6. The City shall not limit its vision for the District improvements to monies available solely
through the TIF funding 7. Projects shall consider impacts on adjacent neighborhoods
8. The city shall consider the impact on the District of all projects undertaken outside of the
District
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FISCAL YEAR 2015 – ANNUAL REPORT
NSURB’s FY15 AT-A-GLANCE
• The NSURB completed the engineering and design work for Phase 2 of the Lighting
Design and Construction Administration for N. 7th Avenue between Tamarack and Durston. Challenges with obtaining the necessary right-of-way easements from property owners to facilitate the project have significantly slowed the progress of
constructing this phase of project. The NSURB expects to put this phase out for bid
prior to the end of FY15. The installation of new light fixtures for the corridor was
identified as one of the top three priorities for District Plan Implementation in 2008. The NSURB recognizes that new light fixtures will help establish a distinct identity for the corridor, define key intersections, improve vehicular and pedestrian safety and
improve the aesthetic experience of the corridor.
• The NSURB is working with Community Development Services of Montana on rewriting the Urban Renewal Plan and investigating expanding the boundaries of the
district.
• The NSURB contributed to the Bozeman Fiber Master Plan and is undertaking planning and engineering work to develop an Urban Renewal Project that provides fiber optic telecommunications infrastructure throughout the district for consideration
by the Commission in FY16.
• The NSURB awarded 2 rehabilitation grants during the fiscal year to HRDC’s Community Café and Universal Athletics’ refresh of the Van’s IGA building for their
corporate headquarters and retail use.
• The NSURB received budget amendments for rewriting the urban renewal plan and studying an expansion of the district, developing new design standards for the district,
and considering an urban renewal project for fiber optic infrastructure. The majority of
this work will actually take place in FY16 and similar budget authority is requested for
See Table 1 further below on page 4 for FY2015 balance, revenue and expenditure
summary.
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N. 7TH LIGHTING, GATEWAY, AND SIDEWALK IMPROVEMENTS
– STATUS REPORT
Engineering Services for Phase 2 Lighting Design and Engineering
Morrison-Maierle, Inc. has been paid, to date, $48,409 for engineering services related to
designing Phase 2 of the N. 7th lighting and sidewalk project. FY15 N. 7TH LIGHTING PROJECT TOTAL: $48,409
TIF DISTRICT EXPANSION CONSULTANT – STATUS REPORT
The NSURB engaged Community Development Services of Montana to conduct preliminary work to investigate expanding the district for $2,500. The City Commission
authorized additional funds to rewrite the TIF plan and to undertake the next steps
necessary for the Commission to consider expanding the district.
FY15 N. 7TH CODE SERVICES TOTAL: $2,500
N. 7th REHAB GRANTS – STATUS REPORT
N 7TH Rehabilitation Grants
1) Universal Athletics Corporate Headquarters (Former Van’s IGA Building) – 912 N. 7th Ave.
This grant was for a significant renovation of the Van’s IGA building to serve as the new corporate headquarters of Universal Athletic. The grant included funds to support site
demolition, excavation and grading, exterior concrete and ADA improvements, landscaping, façade enhancements and a new entryway to the buildings.
Grant amount: $64,921.35
2) Human Resource Development Council Community Café – 302 N. 7th Ave.
This grant provided valuable supplementary funds that allowed the HRDC
Community Café to refresh the façade and landscaping to improve the aesthetic
presence of the building.
Grant Amount: $24,249.12
FY15 N 7TH REHAB TOTAL: $89,170
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FY15 BUDGET
BALANCES FY15
TIF Balance (beginning cash balance) $1,466,251
Big Box Funds - BBF (beginning cash balance) $58,998
Total $1,525,249
REVENUES
Tax Interest Revenue (actual YTD) $7,527
Tax Allocation Revenue (actual YTD) $452,597
Total
EXPENDITURES (YTD)
TIF District Expansion Consultant $2,500
Lighting Project Engineering Services $48,409
Part-time staff from Community Development $36,000
N. 7th Rehabilitation Grants $89,170
Anticipated TIF Balance Beginning FY16: $2,018,185
Anticipated BBF Balance: $58,998
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North Seventh Urban Renewal District Work Plan and Budget
Fiscal Year 2016 (2015-2016)
In 2008, the Board began implementing the North Seventh Urban Renewal District Plan by
establishing their top three priorities for the District: improving sidewalks, lighting and
landscaping along the N. 7th Avenue corridor. During the next fiscal year, the NSURB proposes
continuation of the redevelopment incentive program (N7Rehab) and focusing funds towards the installation of new street lights and related improvements in a portion of the corridor. The
NSURB recommends allocating their available funds as follows:
Lighting Project Engineering Services (Durston to Main) $ 178,025
• Estimate includes Construction Administration and Easement Acquisition
Engineering services are needed to assist the Board with three of the District goals: o Provide a distinct identity for the corridor o Clearly define gateways at key locations along the corridor, and o Improve vehicular, bicycle and pedestrian circulation along the corridor.
• Engineering services will be hired to provide Lighting Design and Construction Administration for Phase 3 (Durston to Main) of the N. 7th lighting project. FY2016 goal is to obtain all necessary easements so construction may begin.
• The installation of new light fixtures for the corridor was identified as one of their top
three priorities for District Plan Implementation in 2008. The NSURB recognizes that new light fixtures will help establish a distinct identity for the corridor, define key intersections, improve vehicular and pedestrian safety and improve the aesthetic
experience of the corridor.
It is an allowable expense under Section 7-15-4288, MCA which states, “Costs that may be paid by tax increment financing” allows the municipality to use tax increments to pay the following costs of or incurred in
connection with an urban renewal project: (1) land acquisition; (2) demolition and removal of structures; (3) relocation of occupants; (4) the acquisition, construction, and improvement of infrastructure…; and 5) costs
incurred in connection with the redevelopment activities allowed under 7-15-4233…
Lighting Project Construction Services $551,955
• Construction services are needed to install the lights and any necessary sidewalk
connections.
• The installation of new light fixtures for the corridor was identified as one of their top three priorities for District Plan Implementation in 2008. The NSURB recognizes that
new light fixtures will help establish a distinct identity for the corridor, define key
intersections, improve vehicular and pedestrian safety and improve the aesthetic
experience of the corridor.
It is an allowable expense under Section 7-15-4288, MCA which states, “Costs that may be paid by tax increment financing” allows the municipality to use tax increments to pay the following costs of or incurred in
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connection with an urban renewal project: (1) land acquisition; (2) demolition and removal of structures; (3)
relocation of occupants; (4) the acquisition, construction, and improvement of infrastructure…; and 5) costs
incurred in connection with the redevelopment activities allowed under 7-15-4233… Rehabilitation Grants $125,000
This funding proposal is for the N7Rehab redevelopment incentive program to encourage
developers to build on parcels along the N. 7th Avenue corridor. It recognizes the complexities of redeveloping parcels which have existing substandard buildings and infrastructure and 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 4307 and is administered by the NSURB. N7Rehab meets the mission
and goals of the District Plan by
• guiding new development along the corridor such that it improves the aesthetic
experience and by assisting in; and
• coordinating public and private improvements.
These proposed expenditures are allowable under Section 7-15-4233, subsection (1)(a), MCA, which grants the City the power to formulate and coordinate a workable program as specified in Section 7-15-4209, MCA, which states : (1) A municipality may formulate a workable program for utilizing appropriate private
and public resources: (a) to eliminate and prevent the development or spread of blighted areas; (b) to encourage needed urban rehabilitation;
(c) to provide for the redevelopment of such areas; or (d) to undertake such of the aforesaid activities or other feasible municipal activities as may be suitably employed to achieve the objectives of such workable program.
(2) Such workable program may include, without limitation, provision for:
(b) the rehabilitation of blighted areas or portions thereof by re-planning, removing congestion, providing parks, playgrounds, and other public improvements; by encouraging voluntary rehabilitation; and
by compelling the repair and rehabilitation of deteriorated or deteriorating structures; and (c) the clearance and redevelopment of blighted areas or portions thereof. Additionally, Section 7-15-4288, MCA, allows the municipality to use tax increments to pay the following
costs of or incurred in connection with an urban renewal project: (1) land acquisition; (2) demolition and removal of structures; (3) relocation of occupants; (4) the acquisition, construction, and improvement of
infrastructure;… and 5) costs incurred in connection with the redevelopment activities allowed under 7-15-4233…
Northwestern Energy Change Fees $10,000
Miscellaneous charges to Northwestern Electric related to electricity being reassigned to
new lights.
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Outreach & Mailing $5,000
The Board has requested money for public noticing and outreach events in the District.
The purpose of these outreach events is to inform property owners and the public of the District Plan and the N7Rehab program.
This money is a permissible use under state statute 7-15-4233, “Powers which may be exercised by urban
renewal agency or authorized department…(f) to disseminate blight clearance and urban renewal information;”
City Staff and other Professional Services $36,000
The Board needs City staff assistance with District Plan implementation. Additionally,
City staff will need to contract for professional services to assist with district management and
implementation of the work plan and budget.
This item is a permissible use under state statute 7-15-4288, (5), “costs incurred in connection with the redevelopment activities allowed under 7-15-4233 and 7-15-4288 (7) “administrative costs associated with
the managements of the urban renewal area…”
Design Standards Project $75,000
The existing North 7th Avenue Plan was drafted to primarily address street connections
and improvements. The implementation of the lighting plan will realize much of what the plan
called for in terms of street improvements. Other recommended plan improvements, such as the
inclusion of traffic circles at major intersections were recommendations that cannot be realized
due to right of way constraints. The district and the community have moved beyond the scope of the initial study and would benefit from the cooperative development of a new design plan to
address the continuing evolution of the district.
As the TIF matures, broader design guidelines are needed in order to address the goal of
district revitalization. The key to altering the suburban development patterns of the area that seem to be devaluing property – overly wide roads, large, barren and numerous parking lots,
wasted space, and outdated site design – is to create a design plan that can guide the Board and
the Commission in the allocation of limited funds to create the greatest impact to revitalize the
district. Developing a vision and plan for the district will assist property owners in seeing the unrealized value in their property. Retrofitting is incremental and adaptive, but needs to be
guided by an overall vision for the district. Maximizing the use of one “suburban” property, with
denser, walkable, synergistic uses, results in the retrofit of another. One successful retrofit
begets another, but we are now at the point where we are not sure how to move forward to
incentivize the courageous civic minded development entrepreneur to take bold steps to maximize the value of properties for the benefit of the owner, adjacent owners, and the
community.
A new design plan will help the NSURB to create implementing policies that maximize
market forces to encourage diversification and redevelopment. Recommendations to address key
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design challenges to altering the suburban development pattern to create internal and external
integration of the parts over time and over multiple parcels is a critical policy that is needed to
move the district to the next stage. Innovative ideas to address zoning and subdivision
regulations to overcome the existing fragmentation are needed. Transforming a parcel of as little as 15 acres can transform the character of an area and spark excitement. We have seen this in
Bozeman already with the redevelopment of the Cannery District. A new urban design plan is
needed to continue to move this TIF district from “blight” to buzz.
Funding for this project was authorized pursuant to Resolution 4589 amending the work plan and budget for FY15. However, due to timing issues, the majority of the work on this
project is expected to occur in FY16, so budget authority for the same amount is being requested
for the new fiscal year.
These proposed expenditures are allowable under Section 7-15-4233, subsection (1)(a), MCA, which grants the City the power to formulate and coordinate a workable program as specified in Section 7-15-4209,
MCA, which states : (1) A municipality may formulate a workable program for utilizing appropriate private and public resources:
(a) to eliminate and prevent the development or spread of blighted areas; (b) to encourage needed urban rehabilitation;
(c) to provide for the redevelopment of such areas; or (d) to undertake such of the aforesaid activities or other feasible municipal activities as may be suitably
employed to achieve the objectives of such workable program. (2) Such workable program may include, without limitation, provision for:
(b) the rehabilitation of blighted areas or portions thereof by re-planning, removing congestion, providing parks, playgrounds, and other public improvements; by encouraging voluntary rehabilitation; and
by compelling the repair and rehabilitation of deteriorated or deteriorating structures; and (c) the clearance and redevelopment of blighted areas or portions thereof.
Rewrite the Urban Renewal Plan and Consider Expansion of the Urban Renewal District $20,000
The North Seventh Urban Renewal Board (NSURB) voted on January 8, 2015 to
recommend that the Commission consider five (5) areas contiguous to the district for expansion. Those areas are indicated on the attached map. The City Commission would have the ultimate
authority to include any of these areas in a proposed district. If, however, an area is not included
in the study area, the area cannot be included in any expanded district. The contract with
Community Development Services of Montana (CDS) includes considerable time for public
outreach and engagement with key stakeholders like the school board and county commission. Staff recommends continuing with the expansion study for all five areas and making an
expansion decision later in the process.
The NSURB and staff recommend completely rewriting the Urban Renewal Plan for the
North 7th District. The existing TIF plan is outdated and could provide much better direction regarding the specifics of the urban renewal projects that should take place within the district.
The Administrative Rules of the State of Montana (ARM) governing TIF district expansion
specify processes that are very similar to the creation of a new TIF district, including submitting
the proposed TIF plan to the Montana Department of Revenue. The contract with CDS includes
rewriting the TIF plan, in conjunction with the NSURB, to better meet the needs of the District and the requirements of the Department of Revenue should the district be expanded. The
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NSURB believes that rewriting the TIF plan is in the best interests of the District, even if the
Commission elects not to expand the boundaries of the district.
Funding for this project was authorized pursuant to Resolution 4589 amending the work plan and budget for FY15. However, due to timing issues, the majority of the work on this
project is expected to occur in FY16, so budget authority for the same amount is being requested
for the new fiscal year.
These proposed expenditures are allowable under Section 7-15-4233, MCA, subsection 1(a) and 1(b) which allows the City to authorize the NSURB “to formulate and coordinate a workable program” and “to prepare
urban renewal plans”.
Fiber Optic Infrastructure Planning and Engineering $100,000 On January 8, 2015, the NSURB voted to request an amendment to their work plan and budget
requesting funding for engineering and project management services to plan for fiber optic
infrastructure within the District. The funding request is consistent with the goals of the
Bozeman Fiber Master Plan. Moreover, it would allow the district to plan more comprehensively for fiber optic infrastructure throughout the district to facilitate blight remediation by means of enhanced infrastructure that may attract new businesses and support existing businesses. This
work would allow the NSURB to present a comprehensive urban renewal project for fiber optic
telecommunications infrastructure to the City Commission for its consideration sometime in
FY16. Approval of such an urban renewal project by the Commission would likely also require amendment of this work plan and budget within the fiscal year.
Funding for this project was authorized pursuant to Resolution 4589 amending the work plan and
budget for FY15. However, due to timing issues, the majority of the work on this project is
expected to occur in FY16, so budget authority for the same amount is being requested for the new fiscal year.
These proposed expenditures are allowable under Section 7-15-4233, subsection (1)(a), MCA,
which grants the City the power to formulate and coordinate a workable program as specified in Section 7-15-4209, MCA, which states : (1) A municipality may formulate a workable program for utilizing appropriate private and public resources:
(a) to eliminate and prevent the development or spread of blighted areas; (b) to encourage needed urban rehabilitation; (c) to provide for the redevelopment of such areas; or
(d) to undertake such of the aforesaid activities or other feasible municipal activities as may be suitably employed to achieve the objectives of such workable program.
(2) Such workable program may include, without limitation, provision for:
(b) the rehabilitation of blighted areas or portions thereof by re-planning, removing congestion, providing parks, playgrounds, and other public improvements; by encouraging
voluntary rehabilitation; and by compelling the repair and rehabilitation of deteriorated or
deteriorating structures; and (c) the clearance and redevelopment of blighted areas or portions thereof.
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Fiber Optic Urban Renewal Project TBD
The NSURB is currently doing engineering and planning work to put together a
comprehensive fiber optic infrastructure project for the district. The project would allow the district to plan more comprehensively for fiber optic infrastructure throughout the district to
facilitate blight remediation by means of enhanced infrastructure that may attract new businesses
and support existing businesses. The City Commission should expect to consider and urban
renewal project and budget amendment for this item within FY 16.
Prepared May 25, 2015
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Fiscal Year 2016 Draft Budget
FY 2015 - 2016 North Seventh Urban Renewal District
TIF Balance (anticipated start of FY16)2,018,185$
Newly Budgeted Expenditures
Lighting Project Engineering Services (Durston - Main)178,025$
Lighting Project Construction Services (Phase 2)551,955$
Rehabilitation Grants 125,000$
Northwestern Energy Change Fees 10,000$
Outreach & Mailing 5,000$
City Staff and Professional Services 36,000$
Encumbered Projects from FY 2014 - 2015
*new engineering estimate is higher than old estimate but most funds will be encumbered
Design Standards Project 75,000$
Rewrite the Urban Renewal Plan and Consider Expansion of the Urban Renewal District 20,000$
Fiber Optic Infrastructure Planning and Engineering 100,000$
Total Expenditures 1,100,980$
Remaining TIF Balance (not including FY16 revenues)917,205$
Remaining BBF Balance (not including FY16 revenues)58,998$
Projected FY 2016 Revenues
Anticipated Interest (FY16)8,800$
Anticipated Tax Allocation (FY16)719,213$
Projected Starting Balance - Expenditures + Projected FY16 Revenues 1,645,218$
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