6. Fairgrounds/Land Swap DiscussionREPORT TO: Honorable Mayor Boharski and City Council
FROM: Chris A. Kukulski, City Manager
SUBJECT: Proposed Fair Ground Land Trade
MEETING DATE: September 20, 1999
BACKGROUND: At the close of the September 13th work session the City Council asked for a
discussion of this issue at this meeting. We were also asked to provide our initial thoughts
concerning the proposal, as it is presently understood, and to further develop this information for
the Council, as expeditiously as possible, as the process unfolds before us. We have discussed this
topic at two staff meetings. Without question, there is no desire to repeat any of the negative
learning experiences that accompanied the Domesite PUD process. That said, here are my initial
thoughts on the proposal, as I understand it today.
The Developer's Offer
Christiansen Building Corporation (CBC) has offered, in exchange for the existing 55 acre
county fair ground site at Meridian Road and Idaho Street, to relocate the fair ground facility to a
new site. This new location encompasses approximately 60 acres at the southwest corner of
Reserve Drive and US 93 North, presently referred to as the Domesite, and currently the location
of the Pack and Company industrial operations. On this site, CBC proposes to construct facilities
that essentially duplicate the present fair ground complex but would also include a sports arena, or
dome, which would be a new facility. In order to accomplish this, CBC proposes to invest
approximately $22 million. This total is comprised of approximately $10 million in private funds,
$9 million of public urban renewal funds to be generated by the Westside Tax Increment District
and approximately $3 million of future revenue to be generated by box seat sales.
Post Office Box 1997 • Kalispell, Montana 59903-1997
Telephone (406) 758-7700 • FAX (406) 758-7758
On the site of the existing fair grounds, CBC proposes to invest approximately $35 million
of private funds to develop approximately 500,000 square feet of new commercial space.
General Impressions
At this point, the proposal appears to offer both the City and County real and positive
benefits. The County receives a new facility in exchange for one needing significant renovation.
The City receives a new commercial complex that will generate significant business and tax
revenue. However, there are a number of unknowns that prevent us, at this time, from providing
the City Council and the developer with comprehensive advice and guidance.
New Fair Ground Site
We really need a thorough and complete proposal for the development. This must provide
detailed information on the track record, experience and qualifications of the group proposing the
development and the scope and details of the facilities to be built, in particular their relationship to
the existing open pit operation. The basic requirements for infrastructure are essentially the same
as would be anticipated for the currently approved Domesite PUD commercial development, but
would likely involve changes to accommodate the new style of use. All the proposed
improvements need to be clearly shown in relation to the significant excavation on this site so that
we can see how the finished product will function. The site drawings we have seen to date do not
make this relationship clear.
The pit operation is subject to specific remediation requirements once it ceases to operate
as a mine. These are, at a minimum, the restoration of all slopes to a minimum 2:1, replacement of
topsoil, and revegetation into pasture. Redevelopment of the property can, with approval of
1MEQ, satisfy these requirements in creative and alternative ways. The City and County need to
know that all requirements are met and that there is no public liability for the remediation of the
site following the exchange of ownership.
The addition of a sports arena, or dome, in the context of a publicly owned and operated
fair ground facility, may be a concept that warrants additional discussion. How will it be managed
and who will manage it? The proposal includes approximately $3 million in revenue from the sale
of box seats in this arena to support the financing of the whole facility. As was pointed out during
the work session, there is presently no commitment by a sporting organization that would
generate this potential revenue source. In this regard, perhaps the concept of a sports arena, or
dome, should remain as a future item that will be developed when feasible and when these
questions have answers.
The prospect of a satellite fire station in the vicinity of Reserve Drive and US 93 is of
definite interest. Chief Waggener and his staff are reviewing the location and weighing it against
other potential locations within the City's northern corridor. This review includes some
preliminary information on the cost of construction, renovations, personnel and equipment. We
cannot determine whether the development proposal anticipates any of these costs in the overall
financing of the package.
The concept of relocating the fair ground complex to this location would seem to be one
that warrants a thorough public discussion. Is this, in fact, the optimum location for the fair
grounds or is there a higher and better use of this property? It is presently planned for a $35
million commercial development that would generate an estimated $144,000 in City tax revenue
each year with additional tax revenues flowing to the County and the school district because it is
not within a TIF urban renewal district.
Redevelopment of the Existing Fair Ground Site
Again, we need a thorough and complete proposal for the proposed redevelopment of this
55 acre site. We understand that the initial plans would involve an investment of $35 million to
build 500,000 square feet of commercial space, but that is all we know at this point. Development
of this site in this way may be precisely what is needed to revitalize this area. We would expect
this project to create the same synergy between this site and a revitalized Westgate Mall that
typically results when complementary retailers congregate in an area. We understand this to have
been one of the reasons that Target chose to locate in Evergreen near Wal Mart, Shopko and K
Mart. With that in mind, would that be the City's desired result?
The $35 million of commercial development could be expected to generate about
$680,000 in annual tax increment revenue. However, the site would need to be rolled into the
current Westside TIF District through a boundary change in order to make this happen. Of this
revenue, approximately 80%, roughly $545,000, would support debt service because of the need
to maintain an income to debt ratio of about 125%. Therefore, the City could expect to bond for
about $5.4 million over a twenty year period. In order to generate the proposed $9 million public
investment necessary to relocate the fair grounds complex it would appear that the investment
commitment must be raised to generate more increment funding, or the cost of the relocation
proposal must be reduced.
Infrastructure needs for this site are a large unknown. As Councilman Van Natta correctly
pointed out, the current Meridian Road project will provide three lanes. Can this support the
traffic from 500,000 square feet of commercial space? If not, then the addition of lanes to this
project, which is on -track for 2001 construction, is a major undertaking that will entail major
costs for the City. Water, sewer and storm drainage needs for this proposal are equally unknown,
and I do not believe it is safe to assume that existing facilities are adequate for the purpose.
Summary
These thoughts are by no means all the issues that relate to this proposal. They are only
those that spring to mind based on what we know at this point. Clearly there is much work to be
done in order to move forward. I have asked staff to begin working to answer as many of the
questions as we can as soon as possible, and we are looking forward to working with CBC on this
project because of its significance to the community.
I feel strongly that this project has the potential for being one of the best things we can do
for our community over the next several years. In order to ensure its success all of the participants
in the process need to have a clear understanding of our mutual concerns and agreement on our
common goals. With these elements in place we can work together toward successful completion
of this project.
RECOMMENDATION: Provide your questions, concerns and direction to staff on proceeding
with this effort once a detailed proposal has be received.
FISCAL EFFECTS: Unknown at this time.
ALTERNATIVES: As suggested by the City Council
Respectfully submitted,
Chris A. Kukulski
City Manager
Report compiled September 16,1999