HomeMy WebLinkAboutC4. Mandeville TIF1
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brit Fontenot, Director of Economic Development
SUBJECT: Mandeville (North Park) Industrial District Update MEETING DATE: June 1, 2015
AGENDA ITEM TYPE: Consent
RECOMMENDATION:
Receive the information contained in this memo and consider this in the context of FY 16
TIF District work plans and budgets.
BACKGROUND:
Created by the City Commission in 2006, the Mandeville Farm (North Park) Industrial Tax Increment Finance District (the “District”) has failed to live up to its potential. (Exhibit 1)
Originally, the District was created to entice M-1 and M-2 type development. The District is
made up of two property owners, the State of Montana (~270 acres) and the City of Bozeman
(~85 acres). Currently the District suffers from poor access and a lack of infrastructure,
especially a road network and water distribution system. Without development, the values of the properties inside the district will fail to rise and increase the increment available to deploy public
infrastructure within the district. The District has a deficit of $151,110.
As part of the negotiations for sale of the North Park property, there have been
discussions of leveraging the District for public infrastructure improvements and utilizing a reimbursement agreement to repay the presumed property owner for the installation of public
infrastructure. Additionally, there have been discussions regarding sun-setting the existing
industrial TIF and creating a Targeted Economic Development District which would provide
more flexibility in use within the District.
In late 2014, as part of the Purchase and Sale Agreement, the City purchased two public
access easements (Wheat Drive for and Flora Lane) from the State of Montana for a total of
$94,749. Additionally, the City has shared a draft of a reimbursement agreement with the
presumed buyers.
A Board was never appointed by the Commission and the District is devoid of most
development activities, however, if the sale of the North Park property is concluded, the
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likelihood of development following the sale is high. Development adds value and the
Commission should consider appointing a Board to manage the future activities within the
District whether the District maintains its original mission as a TIF or is re-created as a TEDD.
UNRESOLVED ISSUES:
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. An additional unresolved issue concerns the debt of the District and how the Commission
intends to deal with it in light of how, and when, the debt was incurred and the impact of debt on
the District’s ability to reimburse the property owners for public infrastructure improvements.
FISCAL EFFECTS:
Currently the District balance as of May 19, 2015 is ($151,110). (Exhibit 2)
Exhibits: 1) Map of the Mandeville Farm (North Park) Industrial Tax Increment Finance District;
and
2) Mandeville (North Park) Industrial District Revenues and Expenditures to date. Report compiled on: May 21, 2015
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Mandeville TIF District
Fund 145
beginning balance July 1, 2006 ‐$
* * PLUS: Revenues
Property Tax Increment 98,232$
TOTAL REVENUES 98,232$
* * LESS: Expenditures
ALLIED ENGINEERING SERVICES INC 4,716$
CITY OF BOZEMAN‐Planning Fees 3,975$
DEPT OF NATURAL RESOURCES & CONSERVATION 600$
GREAT WEST ENGINEERING INC 218,671$
SIMONSON CONSTRUCTION LLP 886$
FUND INTEREST EXPENSE for carrying negative cash balance 20,493$
TOTAL EXPENDITURES (249,342)$
current balance May 19, 2015 (151,110)$
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