05. Resolution 4447 - Policy for Use of Funds in West Side Urban Renewal DistrictRESOLUTION N0. 4447
A RESOLUTION DESIGNATING A POLICY REGARDING THE USE OF FUNDS
GENERATED FROM THE WEST SIDE URBAN RENEWAL PLAN.
WHEREAS, the City of Kalispell adopted an Urban Renewal Plan
entitled the West Side Urban Renewal Plan dated March
17th1 1997, and
WHEREAS, the City did not appropriate tax increment funds accruing
to said Plan for the 1999 fiscal budget, and
WHEREAS, it is currently estimated that the West Side Urban
Renewal Plan will generate $180,000 during the 1999
fiscal year, and
WHEREAS, the City Council desires to commit certain revenue
accruing under the said Plan to fund certain improvements
for the Westbrook Square Project being developed by City
Service, Inc., and
WHEREAS, the City has identified infrastructure needs in the West
Side Urban Renewal Plan area, namely storm sewer, road
improvements, street improvements and park improvements
estimated to cost more than $1,815,000, and
NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL, MONTANA, AS FOLLOWS:
SECTION I. Tax funds generated under the West Side Urban
Renewal Plan will be used for the construction
of public infrastructure improvements within
public rights -of -way, or as otherwise provided
for by law, as outlined in the City's annual
budget or as approved by the City Council
pursuant to Developers' Agreements.
SECTION II. Requests received by the City staff for
financial assistance with the West Side Urban
Renewal Plan area shall be reviewed by the
staff and placed upon a City Council Agenda
for consideration.
SECTION III. The City will endeavor to sell tax increment
bonds for major projects, designated by
Council, within the West Side Urban Renewal
Plan, whenever said projects are deeded
feasible.
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PASSED AND APPROVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL,
AND SIGNED BY THE MAYOR THIS 16TH DAY OF FEBRUARY, 1999.
Wm. E. Boharski - Mayor
Attest:
Theresa White
Clerk of Council
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Am �=
MEMO
To: Mayor & City Council
From: Al Thelen, Interim City Manager
Date: February 11, 1999
Re.: City Service Request
In light of the discussion on Monday evening, I have completed some research on City Service's
request for tax increment funds for their Westbrook Square project:
A Mr. Waatti submitted a letter to the City on July 28, 1998 requesting tax increment funds
identifying $230,000 of projected expenses and indicating that they understood that about
$100,000 would be available from the City.
B. On October 14 representatives of the project met with the City Council to discuss their
project and request. It was made clear that the City did not have any funds available in this
district and we would explore bonding options. The developer was asked to submit a letter
outlining the specific infrastructure improvements needed such as storm sewers, curbs,
gutters, and landscaping that have typically been accomplished in other increment districts.
'• •' C• .. �. ..� ..FAL
Mayor and City Council
Page 2
February 12, 1999
Councilman Donahue stated that he had no problem with the $22 thousand for storm sewers,
the $16 thousand for landscaping, and $32 thousand for sidewalk and curbs, and perhaps $30
thousand for demolition for a total of $100,000. Mayor Boharski's concluding comment was
that we all agree to help, even though we don't know how much and the need to obtain a list
of projects for the City to fund was stressed. (See attached excerpts from October 14, 1998
meeting.)
C. On October 11, 1998 Westbrook obtained a foundation permit valued at $38,500 and on
January 11, 1999 Westbrook obtained a building permit for 23,217 square feet valued at
$865,302. The total building permit value then is $904,302 and what the taxable value will
be is unknown. The new value will be placed on the tax rolls on January 1 of 2000 and will
generate increment dollars in budget year 2000/2001. It is my estimate that the increment will
be approximately $15,000 a year.
D. On January 14, 1999 Mr. Waatti wrote Glen Neier a letter (copy attached) with the apparent
list that Council asked for in the October meeting. It includes water runoff and storm sewer
mitigation actual costs for the Westbrook project totaling $76,943.12. It also included a list
of Highway Beautification and Pedestrian improvements estimated to cost $47,980. This
letter (copy attached) proposed a Developers Agreement that would reflect an anticipated
$25,000 minimum increase in taxable value over a five year period. The aforementioned list
Mayor and City Council
Page 3
February 11, 1999
of improvements estimated to cost $47,980 are typical improvements that the City has funded
in the downtown increment project and would be constructed in the public right-of-way.
These improvements could be placed in a Developers Agreement with City Service and now
that we have $90,000 in the West Side Urban Renewal Fund, you can amend the 1998/99
budget to appropriate the available funds and spend them for these improvements if that is
your desire.
Under past procedures we have not reimbursed a developer for on site work performed by the
developer that is included in Mr. Waatti's letter amounting to $76,913.12 and already completed.
In addition, we do not have the funds to cover this expense.
The concept that a developer should in some way be given funds directly related to the increment that
may be generated by a development needs to be set aside. It is not an entitlement! To be sure the
proposed development should be one factor to consider in the business deal but the value of a specific
development to the overall Urban Renewal Plan should be paramount.
A reading of Ordinance #1259 which establishes the West Side Urban Renewal Project reflects a
tremendous need for infrastructure improvements, namely curbs and streets, storm sewers, sidewalks,
highways and the development of a financial plan to build these infrastructure improvements. It
specifically identifies the Gateway West Mall Redevelopment as the key to the financing plan and
suggests that it could provide an annual tax increment of $284,827 per year and support a $2,000,000
bond issue. It will be some time before this becomes a reality and the City needs to be very cautious
about making commitments of tax increment dollars from the West Side Urban Renewal Project. At
best it will be three years before the Mall Redevelopment will produce additional tax dollars.
Mayor and City Council
Page 4
February 12, 1999
RECOMMENDATION: It appears to me that the Council can direct staff to prepare a Developers
Agreement with City Service to provide the improvements identified in their list estimate of the
Highway Beautification Improvements of $47,980 and also initiate a budget amendment to
appropriate the $90,000 currently available in the West Side Project so that you can implement the
Developers Agreement. The City's Public Works Department is reviewing the cost estimate and
quantities for the Highway Beautification and Pedestrian improvements with City Service and should
complete their review on Tuesday, February 16, 1999.
SUMMARY OF COUNCIL WORK SESSION
OCTOBER 14, 1998
City Service Request For Tax Increment Funding
All City Council Members Present
Presentation made by Chris Jackola
Discussion Highlights
Jackola: The first Phase will cost about 1.2 million dollars, generating approximately 25 thousand
dollars in increment. When completely finished, should generate approximately 40 thousand dollars
a year.
Haarr: The City could specify in Developers Agreement how much payback the City wants.
Robertson: Could have 160 thousand dollars coming in assuming everyone on the West side pays.
Neier: That's the entire amount available for that area and we don't have any money right now. The
City would have to look into bonding. If bonding is done, the project would have to be approved as
an urban renewal project through resolution and public hearing.
Nystul: Suggest City Service re -write a letter specifying infrastructure improvements needed, such
as storm sewer, curbs, gutters, landscaping, etc., things that have typically been done with tax
increment.
Van Natta: Before any decisions made, suggest staff develop policy for disbursing funds and a policy
for pay backs.
Atkinson: Sounds like a good idea, but there may be other people wanting money.
Nystul: Would like to encourage City Service in this project, but at this time can provide only moral
support, even though there are eight other opinions.
Atkinson: (Added) "However, I don't think there are any dollars attached to those opinions.
Larson: Said City has never really done much for that area of town and would be willing to look at
a longer payback, maybe 10 years. Would like to see Council go further than just sidewalks, curbs,
gutters, etc. Said even though demolition has never been done, what would be wrong with starting
it now.
Neier: Said probably nothing would be wrong with it, but the City doesn't have the money.
Boharski: Suggested the staff be directed to look into options, such as bonding to give City Service
an answer. Said it might work if the developers came forward and said that on Phase I they would
pay the City, say over a 7 year period of time, 25 thousand dollars a year.
Neier: Even a 2.5 million dollar improvement, generating 40 to 50 thousand dollars a year, is not
going to retire any significant bond the City has to float in that tax increment district.
Donahue: Have no problem with the 22 thousand dollars for the storm sewer, the 16 thousand for
landscaping and the 32 thousand for sidewalks and curbs. That adds up to about 70 thousand dollars
and I would agree to round that out to 100 thousand which would leave 30 thousand for demolition.
Susan: Feel very strongly that Mae Nan needs to come to town to look over proposal. Feel
personally there are many things proposed that are ineligible and before the Council goes much farther
the bond counsel needs to give an opinion about the viability of that area is for the future sale of
bonds.
Boharski: Agrees but am trying to get, from a policy standpoint, whether the Council is interested
in some level of involvement so that City Service has a feeling from the Council.
Scarff: Said he feels the general consensus is the Council is interested in doing what it can, when it
can, whether that helps or not.
Haarr: It's real time sensitive, just a little window of opportunity to make that area viable, and it isn't
going to cost the City much money. Can support Norbert's 100 thousand dollar figure. City Service
needs to come back with specific list.
Atkinson: Would love to see sidewalks and landscaping, but we don't have the decision making
ability because we have to talk to bond counsel to see if it's even feasible. We're not in the position
to offer anything at this time, especially if we're expecting tax increment to pay for storm drainage
down Meridian.
Moyer: Suggest researching further to see if other things, such as Hampton Ian's storm drainage
issue, can be incorporated into a Master Plan for the area.
Boharski: One way or another City Service is going to put up a building, if the City wants to see it
as a budding that will beautify the neighborhood, then the City needs to help with the landscaping and
-other aspects to enhance the project.
Larson: The City has 160 thousand dollars coming in and if the City agrees to fund a certain amount
for Phase I, then the money should be in the coffers before the City actually has to expend any of it.
By doing that, we could participate phase by phase without getting into trouble. The purpose of tax
increment funds is to fill the tax base in a certain area, not necessarily just infrastructure
improvements.
Neier. The whole idea of urban renewal was not to necessarily to subsidize business decisions, but
to provide an infrastructure those businesses could use and then thereby enticing them to do business
in a certain area.
Larson: But we have helped the Kalispell Center Mall and Tidymans and it's my philosophy to look
at the development, and not just the infrastructure.
Moyer: The City, in the past, has always upgraded infrastructure all around the sights, but have never
put our money directly on site.
Boharski: We did a whole "slug" of on -site improvements on the Yachechak property, and even
though the City owned it, the end result is the same thing. If the City can pay for the curbs, lighting,
etc., and City Service puts the money they would have spent on those items back into the project,
then it will really enhance the area.
Boharski: Is the Council saying that City Service should give us a list of 100 thousand dollars worth
of "infrastructure type" improvements with the understanding that over a certain period of time, set
in a Developers Agreement, a payback will be made to the City.
Nystul: Need a list of projects, numbers, Developers Agreement and the rest to make a final
decision.
Atkinson: It's okay to me to move forward, but we have to move forward cautiously.
Van Natta: With this request and possible others, the City may not have any money left for the storm
sewer.
Donahue: That's why a suggested a limit of 100 thousand, the 60 thousand dollars could be put in
the storm sewer fund.
Boharski: Then we all agree to help, even though we don't know how much.
January 14, 1999
Mr. Glen Neier
Acting City Manager
City of Kalispell
312 1"Ave East
Kalispell, Mt. 59901
Dear Mr. Neier:
Following is a summary of estimated and incurred costs for on -site improvements related
to water and storm runoff mitigation with the WestBrook project. As discussed with the
council, we are requesting TIF fund reimbursement for these costs along with anticipated
expenses for sidewalk, lighting, and highway right-of-way planned for the spring. The
anticipated budget for these two TIF projects is S 124,923.12. We propose a Developer's
Agreement that would reflect the anicipated $25,000 minimum increased taxable
valuation over a five-year period to cover the costs.
TAX INCREMENT ITEMS:
Site Water Mitigation and Storm Sewer Improvements — Actual Costs
11 rolls of filter cloth
6,208.12 yards of fill material screened and compacted
Separator tanks, manholes
Labor
Pipe and fittings
Drain rock and compaction
Total
S 4,400.00
45,008.87
6,683.50
8,451.52
3,179.53
9,219.70
S 76,943.12
P.O. Box 1 9 1645 ". 93 South • Kdkpen, Montana 59903-0001 . (406) 755-4321 • 80D-U3-3835 • FAX (406) 7564%1
-2-
Highway Beautification and Pedestrian Improvements — Estimated
4 light poles S 9,600.00
Electrical bases and wiring 6,400.00
Hwy 2 sidewalks, curbs and gutters 16,480.00
Seating 500.00
Landscaping, irrigation and grass 15,000.00
Total S 47,980.00
Enclosed are the actual billing invoices for the storm water mitigation. Also, the selected
light poles and proposed design for the highway beautification is included along with a
rendering of the new building. If you have questions, please call.
Sincerely,
i
Matthew J. Waatti
Nice President - Properties