Staff Report/FedEx TIF FundsL
Charles A. Harball Office of City Attorney
City Attorney 312 First Avenue East
P.O. Box 1997
Kalispell, MT 59903-1997
TO: Mayor Pamela B. Kennedy
and Kalispell City Council
Tel 406.758.7708
Fax 406.758.7771
charball@kalispell.com
FROM: Charles Harball, City Attorney
Jane Howington, City Manager
SUBJECT: Resolution No. 5396 - Approval of Use of Old School Station
Technology Increment Funds to Pay Special Improvement
District Assessments on DCP Kalispell, LLC Investment
ETING DATE: October 5, 2009 — Regular Council Meeting
DCP Kalispell, LLC has negotiated the purchase of Lot 2 of Old School Station for
the purpose of constructing a facility for a long term lease to FedEx. Lot 2 is in the Old
School Station Technology TIF District and the planned use of the facility to be built there
complies with the statutorily acceptable uses in a technology TIF district.
An integral component of the financial package for DCP Kalispell, LLC that makes
this project possible is the development agreement being proposed between the City of
Kalispell and the developer. In this contract the City of Kalispell is agreeing to the
following:
1. The increment tax created by the development of Lot 2 shall be applied to the
Special Improvement District assessments on Lot 2.
2. If the initial increment tax flow is not sufficient to pay the SID assessments, the
City will reimburse the developer for those portions of SID assessments that the developer
must pay at such time as sufficient increment tax flows from Lot 2 become available and
only to the extent of the increment tax flows generated by Lot 2. This obligation of the City
will be expressed by a TIF Note bearing no interest.
In this contract DCP Kalispell, LLC is agreeing to the following:
1. The developer shall complete the improvements to the property according to the
plans he has submitted to the City and as approved by the City.
2. The developer shall pay, when due, all taxes and assessments levied on Lot 2.
3. The improvements shall be used for purposes that are consistent with those uses
approved by statute in technology tax increment districts.
Approval of Use of Old School Station Technology Increment Funds to Pay Special
Improvement District Assessments on DCP Kalispell, LLC Investment Memorandum
September 30, 2009
Page - 2
At the time of closing the Seller is using a large portion of the proceeds to bring the
taxes current on Lots 2 and 3, to buy down the SID obligation on Lot 2 by more than 2/3rds,
and to apply most of the balance to taxes due on the remaining lots still owned by Seller.
This will bring the annual SID assessments on Lot 2 in line with the projected tax
increment that will be created by Lot 2 when it is fully built out.
DCP Kalispell, LLC intends, by this contract, to begin construction no later than
December of this year and to be completed by no later than September, 2010. Because the
term of construction will be over two tax years and the nature of our state's property tax
system, the anticipated tax increment will not be fully realized for 1 1/2 to 2 years. For this
reason it is expected that the available tax increment will not be initially adequate to pay
the necessary SID assessment and DCP Kalispell, LLC will be required, pursuant to the
contract, to pay the balance when it is due.
This project meets the goals of the technology TIF district with the investment it is
making to property in the district which will raise the property value of Lot 2 to what has
been estimated by the Department of Revenue to be over $1.5 million dollars. This value
will create increment that is estimated to exceed $70,000 over the next five year period.
The FedEx facility which will operate out of this property and serve the community will be
better suited to meet the future need of a growing community, will retain the current jobs
that are now assigned to its existing facility and will be capable of providing future jobs at
the new facility as the demands by the community on the facility require it.
Respectfully submitted,
C a a� City Attorney
Mane Howington, City Manag
Office of City Attorney
City of Kalispell
Amy Robertson
Front:
Charlie Harball [charball@kalispeli.com]
Sent:
Tuesday, August 25, 2009 2:00 PM
To:
'Amy Robertson'
Cc:
Katharine Thompson; Jane Howington
Subject:
FW: Federal Express Estimate
Amy:
Can you use these figures to come up with the anticipated increment this will
provide to the district through the year 2014?
Charlie
From: Williams, Scott [mailto:scwilliams@mt.gov]
Sent: Tuesday, August 25, 2009 1:09 PM
To. Charlie Harball
Subject: Federal Express Estimate
Hi Charlie,
Sorry it took so long to get you a figure on the Fed Ex proposed building values - the following
values represent the reappraised value of the proposal and the indicated taxable market value
once the exemptions and phase in have taken place. These f igures are based upon the property
being completed, we assess only what exists as of December 31. The 2009 estimated
know •'. have f questions.
2010
26528 -°
2011
27354
2012
28085
2013
29309
2014
29980
Scott Williams
Department of Revenue
100 Financial Drive, Suite 230
Kalispell MT 59901
voice 406-758-5922
cell 406-253-9145
maiftascwilliams( MIsaov
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