4. Resolution 5409 - Ashley Square Tax Increment Financing201 1st Avenue East
Kalispell, MT 59901
Phone: 406.758.7738
Fax: 406.758.7758
City of Kalispell • www.kalispell.com
Office of Community & Economic Development
MEMORANDUM
TO: Mayor Pamela B. Kennedy
And Kalispell City Council
FROM: Jane Howington, City Manager it `J
Wade Elder, Revolving Loan Fund Manager
SUBJECT: Resolution No. 5409 — Ashley Square / West Side TIF Grant based
on job creation.
MEETING DATE: December 7, 2009 — Regular Council Meeting.
BACKGROUND: The Ashley Square property is owned by two parties, B1umCo
Partners, LLC and Pentana Group. LLC. It is located at 1325 & 1327 Highway 2 West,
Kalispell, MT. The property has a total of approximately 63,500 square feet. The building
is an older building that is in need of updating. The building is located at the intersection
of Highway 2 and the soon to be built alternate truck route. Currently housed in the
building are several businesses some of which include the Social Security
Administration, Department of Motor Vehicle, Internal Revenue Services, Avail Media,
H&R Block, IBM, Bonnie & Clyde Salon, Montana Mortgage and soon to be Access
Fitness Center.
The West Side TIF District was established on March 11, 1997 by Ordinance 1259.
The City of Kalispell started talking with the current owners in January 2009 about TIF
dollars being available and doing rehab to the property. In June 2009 they presented to
Council their plans to improve their property and for a TIF request.
The TIF grant request is based on 15 jobs that have been created or are to be
created as follows:
• 4 JOBS -Stellar has put on 4 jobs that meet the $14.43 / hour or MDOC
Average Wage for Flathead County of $15.45 / Hour (Resolution 5262) since
this process started in January 2009.
0 02/01 /09 Director of Strategy - $3 8.44 / Hour.
0 03/02/09 Division Manager - $23.94 / Hour.
0 03/16/09 Operations Manager - $38.60 / Hour.
0 03/01/09 VP of Business Development - $30.00 / Hour.
• 2 JOBS - Stellar is also to add 2 administrative jobs that are to pay $14.87+ /
hour by 12/31/09.
• 1 JOB -Stellar is to add 1 manager position that starts in January 2010 at
$23.95+ / hour.
• 3 JOBS - Avail Media added 2 administrative jobs at $14.42+ per hour & 1
engineer at $21.64 / hour during 2009.
• 3 JOBS — Social Security Administration has added 3 new positions that
range in base salary of $13.22 / hour, $14.80 / hour & $18.33 / hour, plus
benefits of $4.81 / Hour — $5.77 / hour. These 3 positions are expected to be
up to $27.12 / hour + benefits within 3 years. I used $350 per month for
benefits which adds $2.02 / hour to the base wage bringing the 3 jobs to
$15.24, $16.82 & $20.3 5 / hour.
• 2 JOBS — 1 Taxpayer Advisor Specialist added in 06/09 at $24.52 / Hour +
benefits and another Revenue Officer that is to be added in 02/10 for $14.90 —
18.27 / hour + benefits.
® These 15 jobs have an annual estimated payroll and benefits of $684,694.40.
2.) Also as a late finding, Access Fitness Club is coming to the Ashley Square in
January 2010 and they will be hiring 10 employees of which 2 positions will be
paid at $15.70 / hour.
3.) In addition to the 4 jobs Stellar has put on since the beginning of the year that
qualify for the grant they have put on an additional 29 employees with hourly
compensation including benefits as follows:
® 22 Employees at $10.87 / hour.
• 1 Employee at $11.87 / hour.
® 4 Employees at $12.87 / hour.
• 2 Employees at $13.36 / hour.
• These 29 employees would have an annual payroll of $684,756.80.
4.) Stellar also has 19 other employees with an estimated annual payroll of
$921,211.20.
5.) Stellar currently has a current annual estimated payroll & benefits in Kalispell of
$1,878,240 & adding another 16 positions between now and 02/01/10 with an
annual estimated payroll of $405,600, bringing estimated payroll for 2010 in the
range of $2,200,000.
6.) The $450,000 from the grant is going into the Ashley Square property for Parking
lot repairs, lighting, waterline extension, structural alterations for seismic,
signage, electrical, telecommunications, architectural fees & demolition totaling
$456,443.
7.) In addition B1umCo & Pentana is estimating to put additional $4,900,000 into the
property, based on renovating 63,500 square feet @ $75 / square foot & other
miscellaneous repairs.
2
8.) In the FY2010 budget there is $1,500,000 allocated for community development.
The balance in the fund as of 07/01/09 was $1,674,567.
RECOMMENDATION: Staff is recommending that the Council find that it is in the
best interest of the local economy to grant this TIF request to help with the job creation
that has been established in this memo. There is an added benefit of an updated and
improved property in a very visible location that in the future will have increased tax
revenues.
FISCAL IMPACTS: The investment of the TIF dollars by the City is anticipated to
meet the goals of TIF financing by increasing the taxable value of the subject property as
well as promote additional employment within the local economy.
Respectfully submitted,
Wade Elder, Revolving Loan Fund Manager ne Howington, City Manager
RESOLUTION NO.5409
A RESOLUTION RELATING TO THE WESTSIDE URBAN RENEWAL PLAN FOR THE
CITY OF KALISPELL; APPROVING A CERTAIN PROJECT AS AN URBAN RENEWAL
PROJECT AND AUTHORIZING THE NEGOTIATION OF A DEVELOPMENT
AGREEMENT WITH BLUMCO PARTNERS LLC & PENTANA GROUP LLC WITH
REGARD TO SAID URBAN RENEWAL PROJECT, PLEDGING UP TO $450,000.00 OF
TAX INCREMENT REVENUE CASH FLOW FOR PUBLIC INFRASTRUCTURE
IMPROVEMENTS NECESSARY UNDER A DEVELOPMENT AGREEMENT TO BE
NEGOTIATED BETWEEN THE CITY OF KALISPELL AND BLUMCO PARTNERS LLC
& PENTANA GROUP LLC.
WHEREAS, under the provisions of the Montana Urban Renewal Law, the City Council of the
City of Kalispell, Montana, did adopt Resolution No. 4309 finding that 1) blighting
conditions exist within the area of the West Side Urban Renewal District, and 2) that
rehabilitation, redevelopment or a combination thereof, within the area is necessary in
the interest of public health, safety and morals or welfare of the residents of the City
of Kalispell; and
WHEREAS, on the 11`h day of March 1997, after proper review by the Planning Board and public
hearing, the City Council of the City of Kalispell passed Ordinance 1259 approving
the Westside Urban Renewal Plan for the City of Kalispell, Montana as an urban
renewal plan; providing for the segregation and application of tax increment in the
Westside Urban Renewal Plan and authorizing the City Manager to implement the
Plan with the powers contained in the urban renewal law; and
WHEREAS, on February 4, 2008 the Kalispell City Council passed Resolution No. 5262
establishing guidelines to define the eligibility of new and expanding businesses to
which the City of Kalispell may offer potential financial incentives and to identify the
financial incentives that may be offered by the City to include the use of tax
increment financing funds; and
WHEREAS, Resolution No. 5262 identifies eligible businesses to receive tax increment financing
funds to:
a) be manufacturing, technology, office, professional or technical service
firms that are financially sound with balanced and prudent business plans; and
b) meet statutory tax increment financing requirements if the business is to
be located within a TIF District or other statutory or regulatory requirements
of the underlying funding mechanism; and
c) which create at least 10 net new full-time positions; and
d) provide health care benefits to the employees; and
e) pay at least the average wage of $30,004 or the average wage for Flathead
County as determined by the Montana Department of Commerce; and
WHEREAS, certain property included within the Westside Urban Renewal Plan and existing at the
time the plan was implemented is commonly known as the Ashley Square Shopping
Center generally bounded by US Highway 2 and Corporate Drive, the majority of
such property now being owned by Blumco Partners LLC & Pentana Group LLC,
each being Montana limited liability companies; and
WHEREAS, Blumco Partners LLC & Pentana Group LLC have submitted a proposed project to
the City Department of Community and Economic Development in which it proposes
to invest approximately $4.9MM into the subject property, renovating 63,500 square
feet at an estimated cost of $75 per square foot and to create fifteen new jobs within
the refurbished center; and
WHEREAS, the proposed project by Blumco Partners LLC & Pentana Group LLC meets the
criteria of Resolution 5262 and otherwise meets all other criteria of tax increment
funding; and
WHEREAS, based upon the estimated creation of 15 new jobs at the wage and benefit package
anticipated the proposed project will be eligible to receive up to $450,000 of tax
increment financing funds from the Westside Tax Increment Fund to assist in
rehabilitation of eligible public infrastructure within the proposed project which
would otherwise not be rehabilitated.
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL AS FOLLOWS:
SECTION I. That the proposed project by Blumco Partners LLC & Pentana Group LLC
for the rehabilitation of that property commonly known as Ashley Square
Shopping Center is found to be eligible to receive up to $450,000 from the
Westside Tax Increment District Fund based upon the terms and conditions of
a Developers Agreement which the City Manager is hereby authorized and
directed to negotiate with the applicants and to be brought before the City
Council for final approval. Such funds shall be appropriated at such time as
the Developers Agreement is approved by the City Council.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE
CITY OF KALISPELL, THIS 7TH DAY OF DECEMBER, 2009.
Pamela B. Kennedy
Mayor
ATTEST:
Theresa White
City Clerk