Loading...
1. Ordinance 1347 - 1st Reading - Modifying West Side Urban Renewal DistrictAgenda - January 24, 2000 AGENDA ITEM C - PUBLIC HEARING - WEST SIDE URBAN RENEWAL PLAN ORDINANCE NO. 1347 C: ORDINANCE RELATING TO THE MODIFICATION OF THE KALISPELL MONTANA URBAN RENEWAL PLAN (THE URBAN RENEWAL PLAN) TO APPROVE CERTAIN PROJECTS AS URBAN RENEWAL PROJECTS AND TO AMEND ORDINANCE NO. 1259 REGARDING THE PROCEDURE FOR APPROVING PROJECTS. BE IT ORDAINED by the City Council (the "Council") of the City of Kalispell, Montana (the "City") as follows: Section 1. Recitals. The City by Ordinance No. 1259 (the "Ordinance"), passed and approved on March 17, 1997, created the West Side Urban Renewal District as an urban renewal district (the "District") and approved the West Side Urban Renewal Plan (the "Plan") for the District containing a tax increment financing provision as set forth in the Ordinance. Pursuant to the procedures contained in the Plan and Resolution No. 4530, adopted January 3, 2000, the City has set forth its intention to modify the Plan to approve certain projects as urban renewal projects and to amend Section XIV(A) of the Ordinance regarding the procedure for approving projects, and has given notice and conducted a public hearing with respect thereto. Section 2. Modification of Plan and Approval of Projects. The City reconfirms the findings contained in Resolution No. 4530 and hereby approves the following projects as Urban Renewal Projects and modifies the Plan accordingly. a. Gateway West Project. The City would acquire an office facility (the "Complex") in the Gateway West Complex at an estimated cost of $2,500,000 for the purpose of providing leased office space to a business enterprise agreeing to provide new jobs in the City for at least 500 full time employees for a period of not less than 10 years and agreeing to install taxable property and equipment in the approximate amount of $7,300,000. The City has received and approved a proposal from Stream International to lease the property. Subsequent to successful negotiations of the terms of various agreements with Stream International and obtaining financing through the issuance of its tax increment bonds, the City will acquire the Complex. The City and the Authority will enter into an agreement for the joint ownership of the Complex, whereby the Authority will be responsible for the day to day operation of the Complex. b. Meridian Road Urban Highway Improvement Project. This project consists of storm drainage improvements to Meridian Road. The project is estimated to cost $350,000. c. Lower Spring Creek Improvement Project. This project consists of storm drainage improvements related to the abatement of flood level increases on Lower Spring Creek. This project is estimated to cost $600,000. d. Two Mile Drive Road Improvements Protect. This project consists of road improvements to Two Mile Drive to remedy substandard existing road cross-section, from Meridian Road to approximately 500 feet west of Hawthorne Street, a project length of approximately 1,500 feet. This project is estimated to cost $750,000. e. Liberty Street Project. This project consists of acquiring and installing an emergency generator for the Liberty Street sewage lift station. This project is estimated to cost $15,000. f. Human Service Campus Improvements Project. This project consists of water and sewer improvements for the Human Service Campus on Apple Way. This project is estimated to cost $250,000. g. Gateway West Complex Improvements Project. This project consists of water and sewer improvements for the redevelopment of Gateway West Complex. This project is estimated to cost $325,000. h. District Improvements Project. This project consists of pavement preservation projects for streets within the District, street and other general drainage improvements and pedestrian mobility improvements throughout the District. This project is estimated to cost $475,000. The Urban Renewal Projects herein designated and approved may be modified by the City Council of the City of Kalispell if the Council determines by Resolution that an adjustment to a Project or Projects is required in the best interest of the City of Kalispell. Section 3. Amendment of Section XIV(A) of the Ordinance. Section XIV(A) of the Ordinance shall be amended to read as follows " (A) The Council may modify and amend the Plan, including modifications and amendments to designate and approve urban renewal projects to be undertaken pursuant thereto excepting modifications involving the addition or deletion of land from the Area, by enacting an ordinance providing for and setting forth the modification and amendment, followinT the procedures set forth i to adoption of an urban reTyew.-." plan after a public hearing, notice of said public hearing on the proposed modification or amendment shall be coven in the official newspaper once a week for two consecutive weeks preceding the hearing." Section 4. Effective Date. This Ordinance shall take effect from and after 30 days of its passage by the City Council and approval by the Mayor. PASSED, ADOPTED and APPROVED on first reading this day of , 2000. PASSED, ADOPTED and APPROVED on second reading this day of , 2000. Wm. E. Boharski Mayor Attest: Theresa White City Clerk City of Kalls�ell Post Office Box 1997 • Kalispell. Montana 59903-1997 • Telephone (406) 758-7700 • FAX 1406) 758-7758 REPORT TO: Honorable Mayor and City Council FROM: Chris A. Kukulski, City Manager Susan Moyer, Community Development Director SUBJECT: West Side Urban Renewal District Project List - Stream International Project MEETING DATE: January 24, 2000 BACKGROUND: Stream International Inc. identified Kalispell as a potential site for one of their expansions during the fall of 1999. After visiting the Valley and reviewing research data Kalispell was placed on a "short list" of potential future sites. As a result of that, the City and the FVEDA (Port Authority) began working with representatives of Stream in an effort to secure their next facility in Kalispell (see attached outline of Stream's background). Stream International recently submitted a proposal to the Port Authority in response to a Request For Proposal (RFP) that recently ran in the Daily Interlake for three consecutive weeks (see attached RFP notice). The RFP process is a requirement of Montana Law in order to insure the citizens of the Valley that our efforts to expend public dollars in recruiting jobs results in the highest level of commitment from a winning proposal. Stream International Inc. was the only firm to respond to the RFP and based on the commitments outlined in the attached bid proposal we are prepared to move forward with the project (see attached proposal). This project is extremely complex and, as a result, I will try to break it down into several small components. Please remember that the project will not be successful if we try to change each piece with disregard as to how they impact the overall deal. In order for Stream to commit to creating five hundred jobs, they want an incentive package that over a ten year period equates to four million dollars. The chart on the next page outlines a package that is consistent with Stream's request. January 10, 2000 Incentive Package 1. Rent Reduction $2,750,000 2. Base Building Imp. - U.S. EDA Grant $500,000 3. CenturyTel $250,000 4. Flathead Electric $250,000 5. CDBG ED Training Grant $400,000 Incentive Total $4,150,000 Though I will be happy to explain how each specific piece of the incentive package works, it is the rent reduction portion of the incentive package that the City and the Port Authority are responsible for. The "rent reduction" is based on our ability to provide Stream with 50,000 square feet of space at the Gateway West Mall at a zero per square foot lease. In exchange for creating 500 jobs within thirty six months (see breakdown on bid proposal) Stream will have its lease payment per square foot reduced to zero. If Stream fails to create the jobs in the agreed upon time schedule, Stream will be subject to a market rate lease payment for the building. The details of this will be in the lease arrangement between the City, the Port Authority and Stream. What is of primary concern to the City and the Port Authority is our ability to purchase 50,000 square feet at an agreed upon sale price of $2.5 million based on revenue generated by the project. We would propose selling $2.5 million in tax increment bonds through the Montana Board of Investment. The Board of Investment has agreed that the project would fall within the definition of their Infrastructure Loan Program which currently holds a fixed interest rate of 6.9 percent. The debt retirement on a ten-year $2.5 million loan at 6.9% interest would be $346,780 annually. Therefore, assuming that the Council agrees to in -debt itself along with the Port Authority in order to bring Stream to Kalispell, the real question becomes "how will we cover the debt retirement payments?" Montana Board of Investments will be mailing an explanation of the project to their respective board members on Wednesday and their recommendation to fund a $2.5 million loan through the sale of a tax increment bond. A 9:30 a.m. conference call to their board members will be conducted to receive formal board approval to make the loan to the City of Kalispell. A first lien on the tax increment revenues received by the City from its West Side Urban Renewal District (the "Tax Increment"). For fiscal year ending June 30, 1999, the amount of tax increment received from the District was $235,000. The additional tax generated by the Project under a Development Agreement with American Capital will result in an additional annual increment of approximately $20,000. Another potential revenue source that could be used to help retire the principal and interest will be generated from interest differential based on a loan to Stream for $1,000,000 through our UDAG fund. Stream has agreed to borrow the $1,000,000 at 11.5 percent interest rate over ten years to be secured by a letter of credit to be repaid in quarterly payments. The City currently earns 5.6 percent interest on UDAG investments. Therefore, the $1,000,000 loan will generate an average of $38,000 in additional revenue annually. These funds could be used in lieu of TIF funds from the district if needed. RECOMMENDATION: That City Council finances a $2,500,000 loan through the Montana Board of Investment with repayments based on funding sources structured above. The necessary steps that Council must take to apply for this loan are: January 24 Conduct a public hearing and have the first reading of an ordinance to modify the Westside Urban Renewal Plan. Conduct a public hearing on the City applying for a $400,000 Community Development Block Grant (CDBG) Economic Development Grant to pass through to Stream International for training purposes of newly hired and upgraded employees. Though the City held a previous public hearing, the guidelines have changed and we will be applying under the new criteria. Thus, the need for a "first" public hearing on this date. February 7 Second reading and approval of ordinance modifying the Westside Urban Renewal Plan. Adopt a resolution to sell a Tax Increment Financing (TIF) bond. Approve an Interlocal Agreement between Flathead County and the City of Kalispell. Approve a Developers Agreement between American Capital LLC and the City of Kalispell. Conduct a second public hearing to identify the City- of Kalispell's intention to submit a second CDBG Economic Development grant application for training purposes. Again, the intent of this application will be to provide employee training dollars for use by Stream International. FISCAL EFFECTS: A conservative estimate of the spendable wages that would impact the Flathead Valley on an annual basis is $7,800,000 to $9,750,000. Respectfully submitted, Chris A. Kukulski City Manager Report compiled January 21, 2000 Susan Moyer Community Development Director Stream International Project Description January 6, 2000 Stream International is a technical support company providing out -sourced services to Hardware, Software, Internet Service Providers and Internet Service Vendors. The company was established in 1992, as a start-up of Corporate Software, Inc. Today the company employs 6000 plus people worldwide, supporting 350 technical products in 12 languages. The company is privately held by Bain Capital holding a 93% ownership interest, and RR. Donnelly with a 7% ownership interest. The business to be conducted at the proposed location will be technical support, 24 hours per day 7 days per week. The technical support will occur via voice, live chat and e-mail response. Stream will provide a total of 500 jobs, at a starting wage of $7.50 per hour. Certain positions will be paid at a higher rate of salary. In addition the company will provide all full-time employees a benefit package which will include: Medical Benefits, Dental Coverage, Vision Care Benefits, Flexible Spending Accounts, Prescription Drug Coverage, Short and Long -Term Disability Income Protection, Life and Accident Insurance, and 401 (k) Savings and Retirement Plan. Stream proposes the following hiring plan as it relates to the potential Kalispell location. 150 total employees within 9 months of occupancy. 300 total employees within 18 months of occupancy. 500 total employees within 36 months of occupancy. Specific Requirements of the Leased Space 50,000 rentable square feet, at $0.00 rent, "as is" • One (1), ten year lease term with Two (2) five year options. AD options to be at fair market value and market terms. • Parking ratio of 7 spaces per 1000 rentable square feet. • Back-up diesel generator to be provided by tenant, and to be installed at ground level within close proximity to the lease premise main electrical service. • Economic incentive package of $3,900,000 over the initial ten year lease term, provided by the Landlord, City or government entities in the State of Montana. • The City of Kalispell to amortize within rent, $1,000,000 of tenant improvements at an estimated 11.5% rate of interest (detailed terms and final rate to be mutually agreed upon by both parties). A letter of credit will e provided by Stream at an amount to be determined. FLATHEAD VALLEY ECONOMIC DEVELOPMENT AUTHORITY Request for Proposal Flathead Valley Economic Development Authority(FVEDA), in cooperation with the City of Kalispell, plans to purchase 50,000 square feet of Zone B3, Community Business space in the WestGate Mall in Kalispell, MT. The space provided would be in its present condition. The space is anticipated to be available in February 2000. FVEDA invites all interested firms or agencies to submit a proposal for the lease of the above described space. The proposal should meet the following conditions: the term will be for not less than 10 years, the firm will create 400 new jobs within 36 months with a wage and full benefits(medical and retirement) package agreeable to FVEDA. The lease will require that the jobs be maintained during the period of the lease. Any site improvements are at the expense of the leasee. Proposals should include information on the nature of business to be conducted, organizational structure, key officers of the firm, a description of the ability of the firm to respond, financial strength and stability, and any specific requirements the firm may have for the leased space. Proposals will be evaluated by the Authority Board and the proposal considered to be in the best interests of the Authority will be accepted The Authority Board may reject and or modify any or all proposals. The Iease negotiated for the space will be subject to successful negotiations on all provisions, conditions in the lease and or related agreements. Site inspections can be arranged through the Authority manager. Written proposals are due not later than 12:00 PM local time, January 7, 1999. Submit proposals to: Manager Flathead Economic Development Authority 215 East Idaho Kalispell, MT 59901 Further information can be obtained by contacting Myrt Webb, Manager, FVEDA at (406)257-7711, FAX (406)257-7772, Email: iobsnow(acenrurytel.net. Place in legal section of the DailyInterLake: on 24 Dec, 29 Dec and 4 Jan. January 6, 2000 Mr. Myrt Webb Manager Flathead Economic Development Authority 215 East Idaho Kalispell, MT 59901 RE: Request for Proposal Response, Stream International Dear Mr. Webb: Stream International Inc. 85 Dan Road Canton, XIA 02021 www.stream.com r 781.575.6800 f 781.575,6988 Via Facsimile & Overnight Mail This letter is in response to your "Request For Proposal" regarding the lease and business teams surrounding occupancy within the GateWay West Mall. The response by Stream International is as follows: Nature of the Business Stream International is a technical support company providing out -sourced services to Hardware, Software, Internet Service Providers and Internet Service Vendors. The business to be conducted at the proposed location will be technical support, 24 hours per day 7 days per week The technical support will occur via voice and e-mail response. Organizational Structure and Key Officers Key officers of the company are: Mr. Stephen D.R. Moore, Chief Executive Officer, President and Chairman of the Board Mr. Jeffrey D. Glidden, Chie: Financial Officer and Vice President, Finance Mr. Lloyd R. Linnell, Vice President and Chief Information Officer Ms. Alicia T. Brophy, Vice President, General Counsel and Corporate Secretary See attached Organizational Structure. Ability Of The Firm To Respond The company was established in 1992, as a start-up of Corporate Software, Inc. Today the company employs 6.000 plus people worldwide, supporting 350 technical products in 12 languages. The company is privately held by Bain Capital, holding a 93% ownership interest, and R.R. Donnelly with a 7% ownership interest. Stream will gladly provide detailed financial information to specific individuals of the Flathead Valley Economic Development Authority, after signing Stream's "Non -Disclosure Agreement'. The agreement is attached and should be returned via facsimile prior to the release of financial information, to Mr. Craig Weinstein at Stream International (781-575-6987). Specific Requirements Of The Leased Space • 50,000 rentable square feet, at $0.00 rent, "as is". • One (1), ten year lease term with Two (2) five year options. All options to be at fair market value and market terms. • Parking ratio of 7 spaces per 1000 rentable square feet. • Back-up diesel generator to be provided by tenant, and to be installed at ground level within close proximity to the leased premise main electrical service. • Economic incentive package of $4,000,000 over the initial ten year lease term, provided by the Landlord, City or government entities in the state of Montana. 0 The City of Kalispell to amortize within rent, $1,000,000 of tenant improvements at an estimated 11.5% rate of interest (detailed terms and final rate to be mutually agreed upon by both parties). A letter of credit will be provided by Stream at an amount to be determined. • Stream will require a fully executed lease with the owner of the property by January 28, 2000. Stream does realize that the ownership of the GateWay West Mall will change with the final Lessor being a Municipal Entity in Kalispell. Stream requests the assistance of the Municipal Entity in securing a lease by 1/28/00. • In addition Stream will need 15,000 square feet of space as temporary space located within the mall prior to its final occupancy in the space. Stream requests the assistance of the Municipal Entity to successfully secure this space at $0.00 rent cost for 90 days, beginning on 2/1/00. Stream International Provides Stream will provide a total of 500 jobs, at a starting wage of $7.50 per hour. Certain positions will be paid at a higher rate of salary. In addition the company will provide all full-time employees a benefits package which will includes; Medical Benefits, Dental Coverage, Vision Care Benefits, Flexible Spending Accounts, Prescription Drug Coverage, Short and Long -Term Disability Income Protection, Life Insurance, and 401(k) Savings and Retirement Plan. The provision of benefits will depend on availability in your location. Stream proposes the following -hiring plan as it relates to the potential Kalispell location. 150 total employees within 9 months of occupancy 300 total employees within 18months of occupancy 500 total employees within 36 months of occupancy Please also note that Stream does from time to time have changes in client structure which require it to shift employees from one account to another within a location. Additionally internal or external business conditions may require Stream to expand or reduce its work force in a given year. Stream will provide on -going technical training for those technical products the company supports in a particular Iocation. Stream University will provide additional training for employees who meet tenure and job performance requirements. This is representative of Stream's general hiring, training and benefits plan which may change from time to time. If the specific requirements set out in this proposal by Stream International are not met by the City of Kalispell or the Flathead Economic Development Authority, then the terms of this proposal shall become null and void, with no further responsibility by Stream International. Should you have further questions, I may be reached at 781-830-7431. Sincerely, Craig J.J. Weistem Director Corporate Services & Real Estate ON of Kalispell Post Office Box 1997Kalispell.• ••• • -• • •I• 00 40 MEMORANDUM To: Mayor and City Council From: Tim Hansz, Director of Public Works Subject: West Side TIF District Public Improvement Needs Meeting Date: January 13, 2000 Background: In December we provided a listing of projects to remedy public infrastructure deficiencies within the West Side TIF Urban Renewal District. These projects and estimated costs are listed below. The projects on this Iisting could, in general terms, be funded in either of two ways. Funds could be provided from a bond issue, or the projects could be funded from current tax increment revenue of the URD as the District grows and increment revenues increase. For the most part, theseprojects are similar to those in the Downtown URD, and in that district, they are typically funded from current increment revenues. The first three projects have been developed sufficiently that the estimated cost and scope are well defined. 1. Storm drainage improvements for the Meridian Road Urban Highway Improvement project Cost: $350,000.00 2. Storm drainage improvements to abate flood level increases on Lower Spring Creek. Cost- $600,000.00 3. Road improvements to Two Mile Drive to remedy a substandard existing road cross-section, from Meridian Road to approximately 500 feet west of Hawthorne Street, a project length of approximately 1,500 feet. Cost: $750,000.00 4. Emergency generator for Liberty Street sewage lift station. Cost: $15,000.00 5. Water improvements on Apple Way. Cost: $150,000.00 6. Sewer improvements on Apple Way. Cost: $100,000.00 7. Water improvements for redevelopment of Gateway Complex. Cost: $200,000.00 8. Sewer improvements for redevelopment of Gateway Complex. Cost: $125,000.00 9. Pavement preservation for streets within the District. Cost: $200,000.00 10. Street and other general drainage improvements within the District. Cost: $125,000.00 11. Pedestrian mobility improvements throughout the District. Cost- $150,000.00 Total Cost: $2,765,000.00 RECOMMENDATION: The project listing should be considered as an unprioritized listing of public infrastructure needs within the Westside URD and not a commitment to complete any specific project with finds from any specific source. FISCAL EFFECTS: Potential expenditure of Westside URD funds up to $2,765,000.00 ALTERNATIVES: As suggested by the City Council Respectfuljy-sp1 rnitted, �s C� 14ansz, W. Chris A Kukulski Director of Pu is orks / City Engineer City Manager Report compiled January 12, 2000 REPORT TO: FROM: SUBJECT: City_ of Kalispell Post Office Box 1997 • Kalispell. Montana 59903-1997 - Telephone (406) 758-7700 • FAX (406) 758-7758 Honorable Mayor and City Council Chris A. Kukulski, City Manager Amendment of Section XIV(A) of Ordinance No. 1259 Regarding the Procedure for Approving Urban Renewal Projects MEETING DATE: January 13, 2000 BACKGROUND: Resolution 4530, calling for a public hearing on the proposed modifications of the West Side Urban Renewal Plan, also provides for a change in the procedure for any future modifications to any of the Urban Renewal Plans. Ordinance 1259 requires not only a public hearing on any proposed modifications, but also a personal mailing of the notice of public hearing to all residents living within the Urban Renewal District. In order to legally add the proposed projects to the West Side Urban Renewal Plan, Community Development was required to mail the public hearing notice to almost six hundred property owners. The proposed amendment to Ordinance 1259 would allow property owners in the future to be notified of any amendments by publication of the public hearing only, and not by individual mailings. RECOMMENDATION: The Council approve the amendment at the Special Meeting January 24th. FISCAL EFFECTS: This amendment will save the City not only a considerable amount of money, but also a lot of staff time. ALTERNATIVES: As suggested by Council. Respectively submitted, Chris A. Kukulski City Manager Report compiled January 13, 2000