01-19-11 Urban Renewal Agency MinutesKALISP L
FOR BUSINESS. FOR LIFE. MONTAIVA
City of Kalispell • www.kalispell.com
AGENDA FOR 01/19/11 URA MEETING
4:00 AT CITY HALL CONFERENCE ROOM
1.) CALL TO ORDER:
2.) AGENDA:
3.) APPROVAL OF PRIOR MEETING SUMMARY OF ACTIVITIES:
4.) PUBLIC COMMENT:
5.) UNFINISHED BUSINESS:
201 1st Avenue East
Kalispell, MT 59901
Phone: 406.758.7738
Fax: 406.758.7758
• City Attorney Memorandum regarding "Historical Outline of Old School Station".
0 Old School Station Budget.
6.) NEW BUSINESS:
7.) ADJOURN MEETING:
I
201 1st Avenue East
1�,IFVNV,M118,00 L Kalispell, MT .7738
Phone: 406.758.7738
FOIL BUSINESS. Fort LIFE. MONM.5A `,4 Fax: 406.758.7758
City of Kalispell • www.kalispell.com
SUMMARY OF ACTIVITIES OF 12/08/10 URA MEETING
MEMBERS IN ATTENDANCE:
Marc Rold — Chairman
Tom Lund — Vice Chairman
Richard Kuhl
Shannon Nalty
Suzanne Faubert
OTHERS IN ATTENDANCE:
City of Kalispell City Manager, Jane Howington
City of Kalispell Community Development Manager, Katharine Thompson
City of Kalispell RLF Manager; Wade Elder
MEMBERS ABSENT:
None
Members had been E-Mailed an agenda for this meeting and a Summary of Activities of
the 11/17/10 meeting prior to the meeting.
The URA met on December 8, 2010 at 4pm at the City Hall upstairs conference room.
Chairman Rold called the meeting to order.
Reviewed the prior meetings "Summary of Activities" that was E-Mailed to members, the
"Summary of Activities" was accepted as written.
Public Comment:
There was no public comment.
Unfinished Business:
Chairman Rold opened the discussion on the West Side TIF expansion possibility.
Members had been sent an E-Mail from Jane Howington and a Memo from Wade Elder
in their packets prior to the meeting that discussed the proposed boundaries of the
expanded area, why this area is being proposed and potential projects and what
revenues are expected in the upcoming year in the TIF. The URA committee
reconfirmed it is generally in agreement of the proposed expanded area (subject to
changes or modifications to the boundaries if determined later) and are willing to
consider projects including the proposed concept of the Civic Center/Convention Center
project. There are many more details before any final decisions are to be made. There
was discussion regarding the upcoming Mayor's Summit in February in which there will
be discussion about potential projects, including this proposed expanded area, to see if
there are any partners or interest of others in the community. There was discussion
about bonding for a feasibility study of the proposed expanded area as an option the
committee would consider.
New Business:
Chairman Rold opened the discussion on Old School Station. Vice Chairman Lund
would like to see the budget completed for the Old School Station financial worksheet
that was provided at a previous meeting. Mr. Elder reported that he had a conversation
with the bank that is financing this project and as far as they are concerned the
developer is in good standings with them other than of course the real estate taxes and
SID's they are behind on.
Mr. Kuhl asked what happened with Glacier Investment Properties (GIP) request for
funding from the West Side TIF. Ms. Howington commented that we have not heard a
response from GIP regarding the special computer wiring improvements that were done
to the interior of the building of $21,376 as we requested. GIP did have a meeting with
the City Attorney and we will get a written response from the City Attorney to the URA.
Next meeting:
A tentative date was scheduled for 12/22/10, however if there were no items to discuss
presented by 12/20/10 the meeting would be called off and the committee would meet in
January 2011.
End of Summary of Activities of 12/08/10.
City of Kalispell
Charles A. Harball Office of City Attorney
City Attorney 201 First Avenue East
P.O. Box 1997
Kalispell, MT 59903-1997
MEMORANDUM
Date: January 3, 2011
To: Kalispell Urban Redevelopment Agency
cc: Wade Elder, Jane Howington
From: Charles A. Harball, Kalispell City Attorney
Subject: Historical Outline of Old School Station re: TIF
Tel 406.758.7709
Fax 406.758.7979
charball@kalispell.com
At the time when the previous city manager, Jim Patrick, was searching for ways to
bring business investment into the city, he discovered that an investor had
purchased property south of the city with plans to construct a business park. He
made contact with them and discussed the possibilities that the property may be
annexed into the city so that the city might benefit from the increased tax base.
The basic framework of the exchange was that the investor would pay the cost of
running the utility infrastructure to the property and deed the utilities to the city
when it was completed according to city specifications. The city would enter into a
latecomer agreement with the investor such that properties hooking into the utility
services would pay a fee to reimburse the investor for his outlay.
Further, the city would cooperate with the financing of needed infrastructure within
the business park by creating a special improvement district. Such a district is
eligible for relatively attractive financing through the issuance of bonds for which
the individual parcels within the park would be primarily responsible.
Finally, the city would create an industrial tax increment district and a technology
tax increment district within the park as an overlay to the SID. The intent was
that the tax increment created by investment within the districts would create
revenue that would be used to pay on the SID bond obligations.
Memorandum Re: Old School Station — Historical Context
January 3, 2011
Page - 2
Based upon these discussions the following occurred. The property known as Old
School Station was annexed into the city and subdivided into 17 parcels. The owner
of Old School Station constructed sewer and water conveyance from Four Corners
on Highway 93 South and Cemetery Road to the Old School Station property
according the city specifications and dedicated these utilities to the city. A
latecomer agreement was executed. At the same time, the city created a special
improvement district and issued bonds for the construction of public infrastructure
within the subdivision. This included a water well with water and sewer
conveyance, layout of other utilities, streetlights, roadways and right-of-way
appurtenances. This construction was completed according to city specifications.
Contemporaneous to this the industrial and technology tax increment districts were
created such that the tax base was considered agricultural property and all
improvement thereafter created tax increment.
Particular to the plan and its execution are the following relevant incidents:
Fun Beverage began construction of its facility within OSS prior to the completion
of the utilities running to OSS or within the subdivision, and for that matter prior
to the creation of the TIF districts. It was determined, at that time, after
consultation with the Department of Revenue that Fun Beverage would not be an
eligible activity for tax increment financing as it met neither criteria of industrial
nor technology districts. Therefore neither tax increment district included the Fun
Beverage parcel. Because the parcel did benefit from the infrastructure constructed
for the subdivision it was included within the special improvement district. It is
therefore obligated on the SID bonds. Because of long delays in the completion of
the sewer and water facilities to OSS and reconciliation of those costs, the latecomer
agreement was finally implemented long after it was expected. Fun Beverage
therefore paid its latecomer connection fees pursuant to the agreement some time
after actual hook up to the facilities.
Glacier Investments constructed its facility sometime after the interior
infrastructure of the SID was completed but prior to execution of the latecomer
agreement. Once the latecomer fee was established, Glacier Investments paid that
obligation. Inquiry was made to the city prior to its purchase and construction as to
the statutory eligibility for tax increment financing. Consultation with Department
of Revenue determined that its activities would be deemed legally eligible.
In the meantime the city was attempting, with the assistance of bond counsel, to
negotiate a master agreement with the owner of OSS regarding the utilization of
TIF. Such an agreement would set out terms that investors would be able to rely
upon to determine the value of investing in a parcel. The agreement would
determine the criteria that businesses would need to meet in order to be eligible for
TIF benefits. For a variety of reasons, this agreement has never been reached.
Office of City Attorney
City of Kalispell
Memorandum Re: Old School Station — Historical Context
January 3, 2011
Page - 3
Due to the downturn in the economy, when the investor seeking to construct a
facility for FedEx in OSS came forward, it was determined to enter into a
developer's agreement with him even though a master agreement had not been
established with the OSS owners. This agreement essentially directed that
increment created by the investment on that parcel would be dedicated to the SID
obligation on that parcel. In order to complete the transaction the owners of OSS
agreed to substantially buy down the SID obligation for that parcel as well.
In the meantime Glacier Investments continues to seek an agreement which would
allow it to share some of the benefits of its TIF district, at least to the extent that
the FedEx parcel has been allowed. Glacier Investments chose to forge ahead with
its purchase and construction without an agreement in place regarding the use of
tax increment financing. As a result of this the city and other owners of parcels
within OSS are benefitting from the increment that it has created. Looking through
the lens that Glacier Investments views this situation there is no difference
between it and the FedEx project other than an accident of time and change in
economy.
Office of City Attorney
City of Kalispell