Fairgrounds Land SwapREPORT TO:
FROM:
SUBJECT:
MEETING DATE:
City of Kalispell
Post Office Box 1997 • Kalispell. Montana 59903-1997 • Telephone (406) 758-7700 - FAX (406) 758-7758
The Honorable Mayor Boharski and City Council
Susan Moyer, Community Development
Chris A. Kukulski, City Manager
Fairground Relocation
November 22, 1999
BACKGROUND: A proposal has been made by Christenson Building Corporation to relocate the
County Fairgrounds to another site and do a commercial/retai development
project on the current site located on West Idaho and North Meridian.
Flathead County Commissioners have expressed an interest in pursuing the
relocation of the existing fairground; however, without the City's ability to
completely fund the relocation through the use of yet to be generated Tax
Increment revenue this relocation will not take place.
After numerous discussions with the City's bond counselor, Dorsey & Whitney
LLP, staff has the following information to relay to the council.
The Feasibility of Expanding the Westside Urban Renewal District:
1. A revision of Ordinance No. 1259 and Exhibit A which identifies Westfield Properties Inc. of Salt Lake
City, Utah, as the redevelopers of Gateway West Mall.
2. A current "fair market appraisal" on the existing fairground land and structures must be conducted, and that
would be the responsibility of Flathead County Commissioners.
3. A mailing to all property owners within 150 feet of the current fairgrounds will have to be done. The
purpose of the mailing is to notify the owners of the time, date, and location of a public hearing to obtain
public input regarding incorporating the fairgrounds into the Westside Urban Renewal District. Because a
specific purpose is driving the incorporation of the area into the existing district, the type and impact of the
redevelopment will have to be discussed. In order to ensure the legality of the mailing, the City will need to
retain the services of a local title company to research the names and addresses of all property owners. City
staff then would be able to mail the notice, with the individual staff person responsible preparing an
Affidavit of Mailing.
4. The existing fairground site will need to be incorporated into the district prior to any agreements being
executed with a developer. The County must determine whether or not it is willing to have the property
included into the existing district "without" their having any certainty that the project will proceed.
Pagel of 5
The Feasibility of Using Tax Increment Financing to Relocate the Fairgrounds:
Dorsey & Whitney LLP (see attached October 22, 1999 letter) has suggested an alternate scenario to the City's
proposed concept of a "relocation assistance plan" for the benefit of another governmental agency. The
following scenario would, they believe, satisfy the requirements of Montana law:
1. The County and the City would enter into an agreement whereby the County would give the City the option
to purchase the existing fairgrounds. This option would be conditional upon the County being able to:
a. Enter into an agreement for the purchase of a completed fairgrounds facility in a location acceptable to
the County; and
b. The new fairgrounds facility is completed and the sale closed in accordance with such purchase
agreement.
2. The City and County, would by public notice, invite proposals from interested persons for the purchase
and redevelopment of the existing fairgrounds property with the stipulation that such private redeveloper
must also be willing to provide to the County a completed new fairgrounds facility.
3. The City, the County and the developer would then enter into an agreement for the purchase and
redevelopment of the existing fairground property by the developer. The agreement would also commit the
developer to the sale of the new fairground property to the County. Both sales would be closed upon the
completion of the new fairground facility.
a. In order for the sale by the developer to the County to be closed, the completed new fairground facility
must be appraised. The appraised value is the maximum amount the County may be charged for
the facility.
b. Since the County will receive only the appraised value of the existing facility from the City as the
purchase price thereof, that amount will be the maximum amount the County will be willing to pay the
developer for the completed new facility. The developer must pay the difference in costs from its own
funds.
4. The developer could also receive a note from the City, on behalf of the County, for the portion of the cost
attributable to the appraised value of the existing fairground property, to be repaid by the City over time
from tax increment funds.
a. Under the note scenario, tax increment funds from either the entire urban renewal district or only the
existing fairgrounds property could be used by the City to repay the developer for money advanced by
Page 2 of 5
the developer for land acquisition costs of the existing fairgrounds, demolition costs, and any public
infrastructure improvements necessary in connection with the redevelopment of the existing property.
b. Based on the above, Dorsey & Whitney LLP would be able to give an unqualified opinion that an
obligation of the City issued to finance such costs, payable from tax increment, would be a valid
obligation of the City.
The Feasibilily of Redeveloping the Current Fairground Site for Commercial/Retail Use:
The assessment of the ability of the existing facilities to support current and new uses of any type is speculative
at this time. The current budget includes funds for major water, sewer and storm drainage facility planning
which will provide reasonably definitive answers to the questions of adequacy for existing systems. However,
these studies are not yet underway and will not be commenced until first quarter of 2000. Their completion will
require at least a year.
The redevelopment of the existing fairground site, as proposed, is generally dependent on the availability of the
existing public infrastructure to support the planned use. For the current analysis, there are four basic Public
Works infrastructure systems that would support such an improvement plan:
1. WATER
Existing water facilities would require a significant upgrade to support any added level of development at this
site, including the improvement of the site for its continued use as County fairgrounds. A new water loop is
required in West Wyoming from Meridian Road to 7 h Avenue WN. From that point the loop would continue
south down 7t' to connect with existing facilities in US 2. In general, all the existing water mains in this area
should be considered marginal for their current demand level. Public Works believes that the west north area, as
a water service region, should be considered a probable candidate for significant upgrade to ensure continuation
of a reasonable level of service. On -site water facilities would require a total renovation and replacement at the
developer's expense to support the specific plan for development. IA'ater facilities in Meridian Road may be
adequate to serve development near Meridian Road. This would require a major analysis such as that planned
for the water facility planning effort.
In addition, the degree of potential new and refurbished commercial retail development in the Westside Urban
Renewal District has caused the Public Works Department to believe that a new well site may be necessary to
ensure adequate supplies are available for the area. This potential, along with any new storage needs, is to be
thoroughly evaluated in the water master plan process.
2. SEWER
As with water facilities, the sewer needs of a redevelopment at this site will necessitate installation of a sewer
main in 7 h Avenue WN, and possibly on West Wyoming, to ensure availability of service. Facilities in
Page 3 of 5
Meridian Road may be adequate to serve construction near the roadway. It is assumed that pumping, and the
necessary lift station(s), will not be necessary, however, this will depend on the specifics of the development
plan. The internal collection system will, again, depend on the specific design for the development and should
be done at the developer's expense.
3. STORM DRAINAGE
There are a number of significant storm drainage concerns in the Westside URD. These are the subjects of on-
going work on how best to remedy the problems. In general, if the redevelopment of the fairground site takes
place in full accord with the City's present rules, the existing off -site facilities may be marginally adequate to
deal with the flow. This is potentially possible because the City's present rules require that storm water
discharges off -site may not exceed current flow rates and volumes. All flows in excess of the present amount
must be retained on -site in order to prevent adverse down stream impacts. A new commercial/retail
development should be expected to significantly increase the impermeable surface area because of roofs and
paved parking lots. On -site management of this added storm water will be a significant challenge for the
developer. Again, the internal storm water system should be the financial responsibility of the developer.
!�•�.1�7-��I1-�•I
A number of potential commercial/retail changes are envisioned for the Westside URD. These include the
possibility of 300,000 to 400,000 square feet of new and refurbished commercial/retail for the Gateway West
mall complex. This will potentially add upwards of 500 new jobs to the area. In addition, a new Public Services
Campus in the vicinity of Apple Way is proposed that may also add upward of 450 new and relocated jobs to
the district. If these changes take place as hoped, then the capacity of the existing street network will be greatly
challenged. This situation will be further aggravated by a redevelopment of the fairground site that could add to
the district another 600,000 square feet of commercial/retail development.
In general, the existing street network adequately functions for most of the time. During the County Fair the
traffic load overwhelms the network for about two weeks of the vear. This is usually considered to be
manageable for the short time involved. The upgrade planned for Meridian Road is designed for the present
situation. Addition of the jobs and daily traffic that may be generated by 600,000 square feet of fairground
redevelopment will totally overtax the road network.
At this point, it is not considered feasible to redesign the Meridian Road project, which is scheduled for
construction in 2001. It is believed that there is not adequate ROW to add lanes even if the time was available to
redesign the project. Therefore, the added traffic load will very probably be proposed to be shifted into the
surrounding neighborhoods, with fairly predictable results. Upgrading existing residential streets will be
extremely costly, and the neighborhood residents can be expected to object to the change. Overall, the service
level of the intersection of Meridian and Idaho (US 2) should be expected to deteriorate significantly. Public
Works is in no position to estimate the degree of this impact at this time.
Page 4 of 5
SUMMARY
Generally speaking, the redevelopment of the County fairground site appears feasible, but has the significant
potential for requiring major public infrastructure reinvestment in order to adequately serve the project. The
magnitude of this investment and the overall scope of the resulting project(s) cannot be adequately estimated at
this time. It will require the availability of a complete and comprehensive development plan from which service
requirements can be determined and then matched against the capabilities of the existing infrastructure systems.
This should be done for the entire area and should consider all potential growth opportunities.
Christenson Building Corporation, if selected as the redeveloper, is proposing a 650,000 sq. ft retail/commercial
development on the fairground site, which will entail a S35,000,000+ investment. Using the $35,000,000
figure, the TIF formula equates to an estimated annual increased tax base of $712,060.
Respectfully submitted,
>-e-Z-7 7
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Susan Moyer,
Community Development
Chris A. Kukulski,
City Manager
Attachments: Dorsey & Whitney LLP's correspondence of October 22,1 1999
C:\myfiles\TaxlncrementFinancing\WestsideDistrict\Fairgrounds
Page 5 of 5
DORSEY & WHITNEY LLP
MINNEAPOLIS
PILLSBURY CENTER SOUTH
NEW YORR
220 SOUTH SIXTH STREET
SEATTLE
MINNEAPOLIS. MINNESOTA 55402-1498
DENVER
TELEPHONE: (612) 340-2600
ICASHINGTON, D.C.
FAX: (612) 340-2868
DES MOINES
PAULA S. RMELS
ANCHORAGE
(612) 343.7983
FAx (612) 340-2644
LONDON
rindel&paula@dorseylaw.com
COSTA MESA
October 22, 1999
Susan Moyer
Acting Community Development Director
City of Kalispell
P.O. Box 1997
Kalispell, Montana 59903-1997
Via Fax and Mail
Re: West Side Urban Renewal District — Fairgrounds Relocation
Dear Susan:
BILLINGS
GREAT FALLS
MISSOL:A
BRUSSELS
FAR GO
HONG KONG
ROCHESTER
SALT LATE CITY
VANCOUVER
This letter is in response to the questions you raised regarding the Flathead County
fairgrounds project in your letter dated September 23, 1999 to Mae Nan Ellingson of our
Missoula office. This letter does not address the issues and questions which were also in that
letter regarding Gateway West Mall which we have been dealing with separately.
Relocation Expenses
The discussion and questions in your letter regarding the County fairgrounds project were
premised on the concept of a "relocation assistance plan" for the benefit of another governmental
agency. We do not believe that we can give an unqualified opinion that the costs of relocation.
insofar as they relate to building the County a new fairgrounds facility, are authorized to be paid
from tax increments under Montana tax increment law. Costs relating to "relocation of
occupants" are Iisted as an eligible cost in 7-154288, MCA. References in the Urban Renewal
Law to relocation expenses do not shed much light on the legislative intent. See 7-15-4217,
MCA, 7-15-4233, MCA and 7-154253, MCA There is no Montana case law relating to what
constitutes a relocation expense under 7-154288, MCA.
Montana statutes do address relocation assistance in the context of Fair Treatment of
Condemnees, at Chapter 31, MCA, specifically noting that one of the purposes of Chapter 31 is
to comply with the Act. The statute provides that:
DORSEY & WHITNEY LLP
Susan Moyer
October 22, 1999
Page 2
For any project that results in the displacement of a person from his home, business, or
farm and for which federal financial assistance may be available to pay all or any part of
the cost of displacement, an entity of the state or any public or private entity that has the
authority to acquire property by eminent domain under state law is authorized to provide
relocation assistance and to make relocation payments to the full extent permitted by the
federal relocation assistance law, 42 U.S. C. 4601, et seq., as amended. The entity is
authorized to do what may be necessary or required to obtain for property owners the full
benefit of federal relocation assistance, including the adoption of methods of
administration as may be required by federal law or rules to cant' out the operation of
relocation assistance.
70-31-311, MCA. Since Montana relies on the federal meaning of "relocation assistance" in its
eminent domain actions, the Uniform Relocation Assistance and Real Property Acquisition
Policies Act of 1970 (the "Act") (42 U.S.C.A. Section 4601 et seq.) and the federal regulations
relating thereto (49 C.F.R. Section 24), while not controlling, are helpful in examining the limits
of relocation assistance. Under the Act, persons, including businesses, displaced by a
redevelopment project are entitled to relocation assistance which applies to federal and federally
assisted programs.
The federal regulations regarding business or nonresidential relocation assistance specify
which reasonable and necessary moving and reestablishment expenses qualify for federal
relocation expenses. The regulations address payment of actual moving and related expenses
which are reasonable and necessary. Reestablishment expenses must be reasonable and
necessary, and are limited to $10,000. Actual reestablishment expenses covered include, among
other things, repairs and improvements to the replacement property that are required by federal,
state or local law, modifications to make the property suitable for conducting the business,
advertisement of the replacement location, and estimated increased costs of operation during the
first two years at the site for certain expenses such as lease charges, property taxes, insurance
premiums and utility charges. The cost of moving any structure or other real property
improvement in which the displaced entity reserves ownership, and the purchase of capital assets,
are specifically excluded as covered expenses. The regulations do not seem to include new
construction of a replacement facility, addressing only modifications, repairs and improvements
to existing properties.
We have not found any case law in other jurisdictions relating to relocation expenses of
businesses under state statutes which addresses the construction of a new facility for a displaced
occupant. However, a New Jersey court reversed an order to pay certain relocation costs to a
former tenant, stating that "neither the Relocation Assistance Act nor the regulations
promulgated thereunder allow a dislocated person to palm off constructions costs, such as
erecting new fences, walls, or new offices or installing a modern electrical system, under the
DORSEY & WHITNEY LLP
Susan Moyer
October 22, 1999
Page 3
guise of relocation expenses in order to reduce the monthly rental." Foreign Auto Preparation
Service v. New Jersey Economic Dev. Auth., 493 A.2d 550, 554 (N.J. Super Ct. App. Div. 1985).
Thus, it does not appear to us, under Montana law, that the acquisition and construction
of a new facility for a displaced person, whether a governmental entity or not, constitutes a cost
of "relocation of occupants" within the meaning of 7-15-4288, MCA. But, in general, we believe
that relocation expenses relate to costs of moving a business or family who are displaced by
urban renewal activities; the interest of an owner or tenant who is displaced in real property
would be compensated by acquisition of the property or property interest through negotiation or
condemnation at fair market value. Costs of relocation could include moving expenses and
reestablishment expenses of the types detailed in the federal regulations. Other costs which
could be reimbursed from tax increments would include demolition and removal of structures
with respect to land in the district and public infrastructure improvements in the district in
connection with the redevelopment of the existing fairgrounds facility.
Alternate Proposal
However, we would like to suggest an alternate scenario for this project which we believe
would satisfy the requirements of Montana law.
First, as you already realize, the City would have to go through the statutory process to
amend the urban renewal plan to include the existing fairgrounds property and the redevelopment
of such property.
Second, the County and the City would enter into an agreement whereby the County
would give the City the option to purchase the existing fairgrounds property for its appraised
value (pursuant to 7-15-4267, MCA) and with the further condition that such option could not be
exercised by the City unless the County is also able to enter into an agreement for the purchase of
a completed fairgrounds facility in a location acceptable to the County and such new fairgrounds
facility is completed and the sale is closed in accordance with such purchase agreement.
Third, the City and the County, would, by public notice, invite proposals from interested
persons for the purchase and redevelopment of the existing fairgrounds property (pursuant to 7-
154263, MCA) with the stipulation that such private redeveloper must also be willing to provide
to the County a completed new fairgrounds facility.
The City, the County and the developer would then enter into an agreement for the
purchase and redevelopment of the existing fairgrounds property by the developer and the sale of
the new fairgrounds property by the developer to the County, with both of such sales to be closed
upon the completion of the new fairgrounds facility. In order for the sale by the developer to the
County to be closed the completed new fairgrounds facility must be appraised and the appraised
DORSEY & WHITNEY LLP
Susan Moyer
October 22, 1999
Page 4
value is the maximum amount the County may be charged for the new facility. However, since
the County will receive only the appraised value of the existing facility from the City as the
purchase price thereof, that amount will be the maximum amount the County will be willing to
pay the developer for the completed new facility. The developer must pay the difference in costs
from its own funds.
The developer could also receive a note from the City, on behalf of the County, for the
portion of the cost attributable to the appraised value of the existing fairgrounds property, to be
repaid by the City over time from tax increments, as described in the next paragraph. Under this
scenario, tax increments from either the entire urban renewal district or only the existing
fairgrounds property could be used by the City to repay the developer for money advanced by the
developer for the land acquisition cost of the existing fairgrounds property, demolition costs
relating to such property and any public infrastructure improvements necessary in connection
with the redevelopment of such property. We would be able to give an unqualified opinion that
an obligation of the City issued to finance such costs, payable from tax increments, would be a
valid obligation of the City.
Responses to Specific Questions
I will now attempt to answer your specific questions about the fairgrounds project in the
order posed and in light of the above discussion regarding a "relocation assistance plan" and the
Alternate Proposal.
The City is not required by law to have a letter from the County requesting
inclusion in the urban renewal district prior to the notice and public hearing
process beginning. The City will not be able to request proposals for the sale of
the existing fairgrounds property until it is a part of an urban renewal area.
Therefore, the property will need to be incorporated into the district prior to any
agreements being executed with a developer. If the County does not object to
such inclusion without their having any certainty that the project will proceed,
there is probably no reason from the standpoint of the viability of the urban
renewal district to not proceed to include this property and project in the district.
noted in the materials you sent to Mae Nan that the City originally intended to
include this property in the district.
2. Yes, all other anticipated and proposed eligible activities with the district should
be identified in the modified plan.
3. See the discussion at the beginning of this letter regarding Relocation Expenses.
4. See the discussion at the beginning of this letter regarding Relocation Expenses.
DORSEY & WHITNEY LLP
Susan Moyer
October 22, 1999
Page 5
5. See the discussion at the beginning of this letter regarding Relocation Expenses.
6. See the discussion at the beginning of this letter regarding Relocation Expenses.
7. We cannot give an unqualified opinion if the project is structured as described in
your letter.
8. Mr. Christenson will probably will have to provide his own financing for the
construction of the new fairgrounds and the City would repay certain eligible
development expenses as TIF funds are generated as set forth in the discussion
above regarding the Alternate Proposal.
a. Again, see the discussion at the beginning of this letter regarding
Relocation Expenses.
b. [No question here.]
C. Yes, if the City determines that is the best use of tax increments generated
throughout the district, the City can use any tax increments generated in
the district for this project.
9. The developer will have to bear the risk of the outcome of the determination
regarding responsibility for reclamation of the gravel pit since the developer will
be responsible for costs of construction of the new fairgrounds facility as set forth
in the Alternate Proposal. As such, the lack of a determination would not affect
our ability to give an unqualified opinion.
10. We can give an unqualified opinion on the City's obligation to use tax increments
to pay costs of relocation which constitute moving expenses and reestablishment
expenses of the types detailed in the federal regulations, costs of demolition and
removal of structures with respect to land in the district and costs of public
infrastructure improvements in the district in connection with the redevelopment
of the existing fairgrounds facility.
11. Yes, the City can meet Section 4 of 7-15-4217, MCA through CBC raising their
own financing and then retiring that debt with amounts paid back to CBC by the
City as tax increments are generated by the existing fairgrounds site. That is the
structure which we have assumed will have to be followed for this project to
occur. Whether this is sound as a financial matter depends on the specific
financing proposal, but legally it can be done.
DORSEY & WHITNEY LLP
Susan Moyer
October 22, 1999
Page 6
Please call me if you wish to discuss any of our responses, conclusions or proposals
further or if you have additional questions.
Very truly yours,
qL'8'�
Paula S. Rindels
PSRllmm
cc: Mae Nan Ellingson
Ms. Mae Nan Ellingson
Dorsey & Whitney LLP
127 East Front Street, Suite 310
Missoula, Montana 59802
Re: West Side Urban Renewal District
Dear Mae Nan:
The City Council took formal action this past Monday to retain your firm as legal counsel for the
above district. The following is an outline of the two proposals Christenson Building
Corporation (CBC) has before the City Council and the questions relating to the proposals which
staff needs you to address.
Flathead County/CBC Land Swap:
CBC has offered, in exchange for the existing 55 acre county fairground site at Meridian Road
and Idaho Street, to relocate the fair ground facility to an approximately 60 acre site at the
southwest comer of Reserve Drive and US 93 North. The new site is presently referred to as the
"Domesite" and currently houses the Pack and Company offices and gravel pit.
CBC proposes to construct new fairground facilities, which will essentially duplicate the present
fairground complex. In addition to recreating the existing facilities, CBC is proposing a sports
arena (dome) which would be a new facility. In order to accomplish this, CBC estimates an
investment of approximately $22 million. This investment would be comprised of
approximately $10 million in private funds, $9 million of City Tax Increment funds to be
generated by the Westside Urban Renewal District and approximately $3 million of future
revenue to be generated by box seat sales in the new dome. CBC would then invest
approximately $35 million of private funds to develop approximately 500,000 square feet of new
commercial space at the old, existing fairground site.
The FIathead County Commissioners have been very emphatic that they will not release
ownership of the existing site until the new fairgrounds are constructed and the operation is truly
a "turn key" one.
Post Office Box 1997 - Kalispell, Montana 59903-1997
Telephone (406) 9 &7700 - FAX (406) 758-7758
As staff currently understands the project, the initial steps CBC, Flathead County, and the City
need to implement to make this project a reality are:
i . Current appraisals of both sites need to be completed per statute 7-8-2211, MCA. If the
properties are not of equivalent values, an exchange can only be completed if a cash payment
is made in addition to the delivery of title for property having the lesser value. These
appraisals are the responsibility of both the County and CBC.
2. The developer needs to present to the City a detailed proposal for both the new fairground
site and the redevelopment of the existing fairground site. The proposal must identify
exactly what will be constructed on each site as well as the costs for each component on the
respective sites so the City and bond counselor can determine what is or is not eligible for
financial assistance.
3. A detailed "Memorandum of Understanding" will have to be entered into between Flathead
County and CBC as to what will be constructed on the new fairground site prior to the land
swap and a commitment that when satisfactorily completed the County will immediately
complete the land swap.
4. The Flathead County Commissioners need to request incorporating the existing fairgrounds
into the Westside Urban Renewal District.
S. Modification of the existing Westside Urban Renewal District Plan will have to be
accomplished. This will be the responsibility of the City of Kalispell. Following the
modification to the plan, the Flathead Regional Development Office (FRDO) will have sixty
(60) days after receipt to submit its written recommendations.
6. The City will need to create a relocation policy, which will provide relocation assistance
exclusively to another governmental entity. This relocation policy will then need to be
adopted, we assume by ordinance, by the city council
7. Upon receipt of the recommendations from FRDO, the City of Kalispell shall publish notice
once each week for two (2) consecutive weeks and not less than ten (10) or more than thirty
(30) days prior, that it intends to hold a public hearing on the modified plan and the projects
therein identified. In addition to the newspaper advertisement, a mailing to each property
owner within the existing district must take place. The City will retain the services of a local
title company to research the property owners.
8. Narda Wilson, the Flathead Regional Development Planner for the City, has stated she does
not believe the Master Plan will have to be revised. Her opinion is that the current
designation is commercial and she feels the project can be done under that classification.
Nee 2 of 6
Narda does feel the current PUD for commercial redevelopment of the site will need to be
rescinded and another PUD applied for on behalf of the relocation project due to need for
relief from the height restrictions and change of use.
Questions From Staff:
1. Does the City need to have a letter from the County requesting to be included in the existing
Westside Urban Renewal District prior to starting the notification and public hearing of such
action? Is it advisable to hold off on incorporating the existing fairgrounds into the district
until after the Memorandum of Understanding between the County and CBC is executed?
2. In declaring the fairground relocation a project in the modified Plan, shouldn't all other
anticipated and proposed eligible activities within the district be identified whether or not the
Relocation Project is funded through the sale of bonds or through CBC's personal financing?
(I believe the original downtown plan identified several projects to be accomplished with the
proceeds from the sale of bonds, and that a mix of funding sources was not involved.)
3. If the City passes an ordinance adopting a relocation assistance plan exclusively for the
benefit another governmental agency, can the City invest tax dollars on that agency's behalf
if ownership of the land doesn't transpire until the construction/relocation becomes a "turn
key operation"?
4. In order to have a legally acceptable Relocation Plan, would it require replacement of item
for item? Example: 100 horse stalls at the existing site could not be replaced by more than
100 horse stalls of equal size at the new site — 3 live stock barns would have to be replaced
by either three of the same size or one of a size equal to the previous total footage involved in
livestock barns? New building and fire codes may result in a higher replacement cost.
5. If the above is true, then would the construction of a new, enclosed "dome" be eligible for
TIF assistance? If the use of a dome would partially be an indoor seated arena, would this
qualify as a replacement of the existing covered grandstands? If not, could an equal dollar
amount, based on the fair market appraisal identifying the costs associated directly with the
existing covered grandstands, be applied toward the dome cost?
6. Is a "Memorandum of Understanding" between Flathead County and CBC solid enough for
you to give an "unqualified opinion of bond counsel" for either the sale of TIF bonds or for
CBC to satisfy their underwriter?
7. Can an "unqualified opinion of bond counsel" be obtained if the project is structured as a
partnership between Flathead County (ownership) and the City (financial TIF assistance)
and/or the County does not do an RFP for the construction of the development?
Page , of 6
8. Mr. Christenson has raised the possibility of providing his own financing for the actual
construction of the new fairgrounds. He then would look to the City, in essence, to rebate
from the TiF funds generated at the old fairground location the dollars necessary to retire his
debt. This, then, raises other questions for staff.
a. If Mr. Christenson has the ability to raise the construction financing for both the new and
old fairground sites, are you in a position to provide his underwriters with an unqualified
opinion due to the fact the City is assisting another governmental agency with eligible
relocation activities?
Or, would your unqualified opinion still need to be predicated on the RFP process?
b. In talking with Monty Long, County Tax Assessor and Chairman of the Fair Board,
absolutely nothing will happen with the existing fairgrounds until the fall of 2000. This
means it will be January of 2001 before the land value will be established and November
of 2001 before some dollars (land value only) will be generated in the district from the
existing fairground site. While some construction will occur in 2001, we are again
looking at the taxable value for 2002 being based on what's been done as of January 2002
and available from the district in November of 2002 for any sort of debt retirement. Mr.
Long believes it will be 2003 before the City would start seeing any sort of substantial tax
base increase.
c. Based on the 2003 scenario for adequate funds from the project being available for debt
retirement, can the City legally utilize other TIF funds generated within the district to
assist with debt retirement?
9. Would an "unqualified opinion from bond counsel" be clouded in anyway if the final
responsibility for the reclamation of the gravel pit is not completely settled with DEQ and
the Board of Mines as the relocation project is entered into?
10. What if any of the relocation project activities can receive an "unqualified opinion" without
the Request for Proposal (RF) process having been followed?
11. Finally, can the City meet Section 4 of 7-15-4217, MCA
"...(4) a sound and adequate financial program.exists for the financing of said project."
through CBC raising their own construction financing and then retiring that debt through
future taxes to be !tenerated from the old fairground site?
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or, through the City selling TIF bonds and contributing the bond proceeds to the County?
Would this trigger a competitive bid process for the County and/or City? By the County
and/or City's investment of funds, would the developer be required to pay the State Mini -
Davis Bacon Wage rates?
Gateway West Mall Acquisition and Renovation:
CBC has an option to purchase the old, failed Gateway West Mall. They are seeking TIF
assistance in anyway possible to help them do new construction on site and renovate the old mall
structure and parking area. CBC has provided the city with a breakdown of their revised site
work and demolition costs as follows:
Demolition
$500,000
Site Grading & Asphalt Removal
$105,000
Utilities
$ 25,000
Asphalt Paving
$350,000
Site Lighting
$ 75,000
Landscaping
$100,000
General Expenses/Supervision
S 75 00
Total Assistance Requested
$1,230,000
Mr. Christenson indicated in his August 27, 1999, letter to Chris Kukulski (copy to you) that he
estimates the total Gateway West Mall project would cast approximately $15,300,000.
I am enclosing a copy of our current Tax Increment Financing Policy that the City has utilized in
assistance to other for -profit developers. ilus policy has predominantly addressed direct
contribution of infrastructure improvements around a privately owned site, and such assistance
has been structured not to exceed 10% of the cost of the development. The City has on three
occasions made a 3% low interest loan to for -profit developers for on -site infrastructure work
only. Again, the "not to exceed 10% of the total development costs" rule was applied.
Questions From Staff:
If the City declared the renovation of the Gateway West Mall with CBC, who has site
control, as a "project" in the Modified Urban Renewal Plan, do we have the ability to commit
the total amount of assistance requested without going through the RFP process? Ordinance
No. 1259 created the district and specifically addressed participating with Woodmen
Properties L. C. as the redeveloper. This was done without an RFP process. Are you able to
provide CBC with an "unqualified opinion for his underwriter?
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2. If the City exceeds the cap on the established Tax Increment Policy to for -profit developers
of property not owned by the City, are we opening ourselves up to problems in the future?
3. Are we not in the same position of being a couple of years out before the new tax base would
be paid to the City which would be used to retire the financing obligations of CBC 7
I apologize for the length of this letter. Chris and staff were formally authorized to explore the
feasibility of this project and report back to City Council. Thanks for your help.
Sincerely,
Susan Moyer,
Acting Community
Development Director
cc: Chris A. Kukulski, City Manager
Amy Robertson, Finance Director
Glen Neier, City Attorney
C:\FairgroundsRelocation\DorseyV;Mtney 9,23,99
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