4. Payment in Lieu of Taxes Agreement - Accessible Space, Inc.PLANNING FOR THE FUTURE
REPORT TO: Kalispell Mayor and City Council
FROM: Sean Conrad, Senior Planner
Jane Howington, City Manager
Planning Department
201 1" Avenue East
Kalispell, MT 59901
Phone: (406) 758-7940
Fax: (406) 758-7739
www.kalispell.com/planning
SUBJECT Payment In Lieu of Taxes — Accessible Space, Inc. (ASI) Senior
Apartment Project
MEETING DATE: December 21, 2009
BACKGROUND: In July of 2009 the city council adopted Resolution No. 5374
which requires the Planning Department to negotiate a payment in lieu of taxes
(PILT) agreement with non-profit entities which compete with for -profit entities.
ASI is a non-profit entity which will provide apartment housing for low income
seniors. The city council determined that ASI will be competing with other for -
profit apartments throughout the city. As part of their conditional use permit, the
city council required ASI to enter into an agreement with the city for an annual
PILT payment. This agreement is required to be in place prior to the Building
Department issuing a building permit for the apartment project.
The Planning Department contacted ASI to determine the cost to construct the
apartment building and property value of the site. Value for the future finished
building was estimated at $1,575,000 with the land value at $600,000 and land
improvements (earthwork, landscaping, site utilities, parking lot and walkways) at
$205,000. With these figures the Planning Department staff contacted the
Montana Department of Revenue who provided a total market/ productivity value
for ASI's project (land, building, improvements) for the years 2002 and 2009.
Based on these values planning staff entered the information into a property tax
calculator operated by the Department of Revenue to determine the yearly taxes
from 2008 to 2014. A copy of the tax calculator information sheet is attached.
Based on the property tax calculator, an initial annual PILT payment of $4,700.00
to the city would be required if ASI was a for -profit entity.
As part of Resolution No. 5374, the Planning Department is also required to
prepare a cost of services analysis. The cost of services analysis (copy attached) is
an estimate of the city taxes the non-profit entity would otherwise pay if it were not
tax exempt as well as a reasonable annual estimate of the cost of services the city
provides the property. The analysis concludes that to provide services to the
future apartment complex would cost the city roughly $12,000 per year over the
anticipated revenue generated by assessments. Therefore, planning staff requested
ASI pay the entire initial annual amount of $4,700 calculated by the state's
property tax calculator to help defray part of the cost of services that the city could
expect to provide the future apartment complex. ASI agreed to the initial annual
payment of $4,700 to the city.
RECOMMENDATION: A motion to approve an initial annual payment in lieu of
taxes of $4,700 and direct staff to finalize the agreement between the city and ASI
would be in order.
FISCAL EFFECTS: Minor negative impacts once fully developed.
ALTERNATIVES: As suggested by the city council.
Respectfully submitted,
Sean Conrad lane Howington
Senior Planner City Manager
Report compiled: December 15, 2009
c: Theresa White, Kalispell City Clerk
Dan Billmark, Director of Real Estate Development, Accessible Space, Inc.
2550 University Avenue, Suite 330N, Saint Paul, MN 55114
Attachments: Cost of services analysis
Property tax calculator analysis
ESTIMATED COST OF SERVICES ANALYSIS
Project Name: Accessible Space, Inc.
Date: Dec-09
Calculated By: Kalispell Planning Department
Number of dwelling units proposed:
Estimated Increase in population: 2.20
Expected number of people per acre: -`W7674
Average square foot per lot:
"43;560e%�z-
<- approximate # of people per acre
Per capita costs based on increase in population:
51
SERVICE
POPULATION
COST (2009)
TOTAL
Fire
50.6
76.19
$3,855
Police
50.6
122.69
$6,203
Administration
0.53
%,
'-
$71
Solid Waste (none for 5 years)
50.6
0
$0
Costs per dwelling unit or Equivalent Residential Unit(
RU):
23
SERVICE
NO. OF UNITS
COST (2009)
TOTAL
Roads
23
219.00
$5,037
Water
23
56.00
$1,288
Sewer
23
103.00
$2,369
Wastewater Treatment
23
122.00
$2,806
Stormwater
23
43.50
550
$1.001
Parks
23
71
$1,633
ITOTAL
ANTICIPATED COST OF SERVICE
Assessments based on average square foot per lot:
43,560
ASSESSMENT
2009 ASSESSMENT
TOTAL
Storm sewer assessment:
0.00999
$827
Street maintenance assessment:
0.01803
$1,492
Urban forestry assessment (cap $300):
0.00171
$142
Light maintenance assessment (cap $300):
0.003
$0
Special assessment:
$0
No. of Units
AVERAGE BILL 2009
Average water and sewer bill
23
447.40
$10,290
TOTAL ANTICIPATED REVENUE FROM ASSESSMENTS
=
- ".$IIZ7511-
ITotal Sewer Impact Fee ($) 2009: 2499.00 1 -:446,22
I Total Water impact Fee 2009: 2 Meter Size °$17J0
ITotal Storm Impact I-ee 2009: `"$119337.25
ITotal Police Impact i-ee '$805:00;-
I otal Fire Impact Fee ($) 2009: a49;959.00
I otal I ransportation Impact Fee ($) 2009: 00
rTotal —Project Impact Fee ($) 2009: 499,7,14:L,,'-"
Note: All items marked "Ibc!"will be determined on an individual basis by the City.
15—TO,TAL?A — NTLIP.IFAT.EDIREVENUF-iGENERATr:D�TDaT.HEiCITV,'(IT.EMSr2fAND,,3)rrr�r4 ,$17;527-�
E,AMFA—CT;IFEEfRAYMENT,.TU-,THEiC M— ITEM,4)�rp'.�� 4--
11 :$99,714 �J
17,,i NE,T}REV-EN4T0 T,HECi. n : PERtY.EAR,(rr,EM)24,' ,$6,735;67
Projected Property Tax Impact of Montana Reappraisal
if Mill Levies are Held Constant - Residential
Legal Ownerlsj:
2009 Assessment Notice
Date: 6/25/2009
OWNER 1, PROPER T
Property Subject to Taxation
Assessment Code: 576435
School District: 057706
Duluth County
2008 Mill Levy: 0758.940
1000 S Skyline Drive Rm 1
Duluth, MT 59699-0000
THIS IS NOT A TAX BILL. For details about your.propefty
taxation values, please
visit your local Department of Revenue -Office or call 40&555-1212.
r
-
Market/
Productivity
previous
'Current
Value
Year, -
: ?year
Legal Description
Property
Taxable
As of As of
'Taxable
':Taxable ,;
Geocode
Classification `-Percent
Quantity
1/112002 7/1/2008
',Value
Value
DETROIT LAKES ADDN, s36, T10 N,
Residential Citylrown Lots -
2.93%
0.25
30,468
78,531
r605
7,13
R04 W, BLOCK 144, Lot 011, CANNON
ADD BLK 144 PT LT 11 LTS 12-13
PERPICH BLK 144 PT LT 12
57-1B.2-1-30-15-0000
-Residential Cltyffown
2.93%
0
56,982
134,399
A 132
1,294
F Lots
Totals 87,450 212,930 A;737 '?21007
NOTE: The total values In the shaded columns provide the best value change comparisons and reflect trt-gislatui#6reappraisal mitigation
strategy. Livestock shown on this notice are exempt from property tax but are subject to a per capita fee Inat is billeclin November.
If you have questions or concerns, please contact your local Department of Revenue offlc4 We welcpme hearing from you.
Enter Information from Your 2009 Residential Property A sess ent Notice Below
Total Market Productivity Value as of 1/1/2002 $1,396,519
Total Market/Productivity Value as of 7/1/2008 $2,131,274
Mill Levy (Upper Right on Assessment Notice) 0.17
Return to:
City Clerk
City of Kalispell
P.O. Box 1997
Kalispell. MT 59903-1997
THIS AGREEMENT is entered into this day of December, 2009, by and between
Accessible Space, Inc., a Minnesota corporation, ("ACCESSIBLE SPACE"), of 2550 University
Avenue, Suite 330N, Saint Paul, MN 55114, its successors and assigns, and the City of Kalispell,
Montana (the "City").
WHEREAS, the City, on July 20, 2009 approved a Conditional Use Permit for the benefit of
ACCESSIBLE SPACE to construct and manage a 23 unit two story apartment
building for very low income senior citizens.
WHEREAS, ACCESSIBLE SPACE as a federal and state recognized nonprofit corporation and
therefore exempt from certain real property taxes and personal property taxes under
Section 15-6-201, Montana Code Annotated; and
WHEREAS, ACCESSIBLE SPACE, in recognition of the City's consideration of approving the
Conditional Use Permit and providing essential municipal services to the property,
agrees to make certain payments in lieu of such taxes; and
WHEREAS, such payments by ACCESSIBLE SPACE are being made as a business expense
and will defray the cost of certain necessary services provided by the City to
ACCESSIBLE SPACE as owner of above described Project.
NOW, THEREFORE, in consideration of the mutual covenants contained herein, the parties
agree as follows:
1. Payments In Lieu Of Taxes: Procedure For Calculating
ACCESSIBLE SPACE agrees that it shall pay to the City annual payments in lieu of taxes
("PILOT"). Generally speaking, the amount of the PILOT will be based on the current market
value of the Real Property (as defined below) and Personal Property (as defined below)
comprising the Project that is subject to taxation multiplied by the current rate of taxation
applicable to the class or type of property, times the current mills levied by the applicable taxing
jurisdictions as more fully described in this Section.
(a) Current Value of Real Property. The property constituting the Project and currently
subject to property tax consists of a parcel of land with no improvements (the "Real
Property"). Value for the future finished building is estimated to be $1,575,000 with the
estimated value of the land being $600,000 and an additional value of land improvement in
the nature of site work, utilities and amenities estimated to be $205,000. Given the agreed
upon estimated values set forth above, the parties agree that the property tax that would
otherwise be paid by ACCESSIBLE SPACE on the real estate, based upon the .170 Mill
Levy for 2008 would be $4,700 for the year 2008. See Exhibit `B" attached hereto and
incorporated fully herein by this reference.
(b) Determination of Market Value of Real Property. The market value of the Real Property will
only be adjusted upon reappraisal. The City shall apply the then existing rate of taxation to the
taxable value of the Real Property for such tax year. No later than October 1 of each year the
City shall notify ACCESSIBLE SPACE of the then existing rates of taxation for the then current
fiscal year and the taxable value of the Real Property for the fiscal year.
(c) Determination of Market Value of Personal Property. So long as personal property is subject
to taxation under Montana law, the PILOT attributable to such Personal Property shall be
calculated as follows: On or before July 1 of each year, ACCESSIBLE SPACE will submit to the
City, on a form provided by the Department of Revenue, a sworn statement setting forth all
Personal Property owned by, in possession of, or under ACCESSIBLE SPACE'S control and the
date of acquisition and the purchase price of such Personal Property. The City will consult with
the Flathead County Assessor (the "County Assessor") to determine the value of the Personal
Property, using the methodology and schedules utilized by the County Assessor to determine the
market value of other personal property in the County. The City shall apply the then applicable
rate of taxation to the market value of the Personal Property to determine the taxable value of the
Personal Property for such tax year. No later than October 1 of each year, the City shall notify
ACCESSIBLE SPACE of the market value, the then existing rate of taxation to be applied for
such year and the taxable value of the Personal Property.
(d) Mill Rates and Taxing Jurisdictions. The City will calculate the amount of PILOT that will
be due and payable for each fiscal year through the term of this Agreement by multiplying the
taxable value of the Real Property and Personal Property for the subject tax year, as calculated in
accordance with Section 1(b) and Section 1(c) respectively, or as provided by Montana
Department of Revenue, by the number of mills levied for the fiscal year by the City and notify
ACCESSIBLE SPACE of such amount no later than November 30 of each year.
(e) Special Assessments: ACCESSIBLE SPACE acknowledges and agrees that it is not exempt
from City's special assessments and it will pay the same and that it will be assessed in the future,
regardless of any property tax exemption ACCESSIBLE SPACE may receive, provided that any
such special assessments shall be paid from the available cash flow of ACCESSIBLE SPACE,
represented as gross rental income less operating expenses and required reserves, and shall not
constitute a forecloseable or executable lien against the Project until such time as available Cash
Flow would allow for such payment and then only to the extent that available Cash Flow would
allow for such payment. Any such special assessments that are not paid when otherwise due and
owing shall accrue and earn interest at the same rate, calculated in the same manner, as
delinquent property taxes under the laws of the State of Montana. At this time ACCESSIBLE
0
SPACE is obligated to pay special assessments for Kalispell Garbage, Kalispell Storm Sewer,
Kalispell Special Maintenance District, Kalispell Lighting 50 and Kalispell Urban Forestry.
2. Procedure For Payment
ACCESSIBLE SPACE agrees to pay the City each fiscal year during the term of this
Agreement, commencing with the fiscal year beginning July 1, 2009, the amount calculated as a
PILOT, reduced by the amount of any such property tax actually paid (not including special
assessments) with respect to the Project by ACCESSIBLE SPACE or its general partners with
respect to such tax year. Fifty percent (50%) of the PILOT shall be due and payable
semiannually on the fifteenth day of December and June of each year, beginning June 15, 2009,
and shall be paid by ACCESSIBLE SPACE directly to the City. ACCESSIBLE SPACE may, to
the extent allowed by law, seek reimbursement from federal and/or state agencies of the amount
so calculated as the PILOT. Any portion of the PILOT not paid when due shall bear interest at
the same rate, calculated in the same manner, as delinquent property taxes under the laws of the
State of Montana and such delinquent amounts will become liens on the property in the same
manner as delinquent taxes shall become a lien against the Project to the extent permitted by
law.
3. Reimbursement
The City acknowledges that ACCESSIBLE SPACE may, to the extent allowed by law, seek
reimbursement from federal and/or state agencies for the required PILOT. The City agrees to
cooperate fully with ACCESSIBLE SPACE, without expense to the City, in the efforts of
ACCESSIBLE SPACE to apply for and collect such reimbursement.
4. Term
This Agreement shall continue in effect so long as ACCESSIBLE SPACE, or its successors
and assigns, as the owner of the subject property is exempt from federal or state property
taxes.
5. Governing Law
This Agreement shall be governed and construed in accordance with the laws of the State of
Montana.
6. Notices
All notices, reports or other communications relating to this Agreement shall be sent to the
parties at the following addresses, unless otherwise provided by one party to the other party in
writing:
To ACCESSIBLE SPACE
ACCESSIBLE SPACE, INC.
Attn: Chief Financial Officer
2550 University Avenue
Suite 330N
Saint Paul, MN 55114
To the City: City of Kalispell
Attn: City Manager
P.O. Box 1997
Kalispell, Montana 59903-1997
7. Recording
The document shall be recorded in the office of the Flathead County, Montana Clerk and
Recorder.
8. Severability
In the event any provision of this Agreement shall be held invalid or unenforceable by any court
or competent jurisdiction, such holding shall not invalidate or render unenforceable any other
provision hereof.
9. Amendments, Changes, and Modifications
This Agreement may be amended or any of its terms modified only by written amendment
authorized and executed by the City and ACCESSIBLE SPACE.
10. Further Assurances and Corrective Instruments
ACCESSIBLE SPACE and the City agree that they will, if necessary, execute, acknowledge and
deliver, or cause to be executed, acknowledged and delivered, such supplements hereto and such
further instruments as may reasonably be required for correcting any inadequate or incorrect
description of the Project or for carrying out the expressed intention of this Agreement.
11. Execution in Counterparts
This Agreement may be simultaneously executed in several counterparts, each of which shall be
an original and all of which shall constitute but one and the same instrument.
12. Captions
The captions or headings in this Agreement are for convenience only and in no way define, limit
or describe the scope or intent of any provisions or Sections of this Agreement.
13. No Assijznment
ACCESSIBLE SPACE may not assign its rights under this Agreement without the written
consent of the City to any such assignment.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed on the
day and year first written above.
ATTEST:
Theresa White
City Clerk
CITY OF KALISPELL
RE
Jane Howington, City Manager
ACCESSIBLE SPACE, INC.
Its Chief Executive Officer
5
STATE OF MONTANA )
) ss.
County of Flathead )
On this day of , 2009, before me, a Notary Public for the State of
Montana, personally appeared Jane M. Howington and Theresa White, respectively, proved to
me to be the persons whose names are subscribed to the within instrument, and acknowledged to
me that they each executed the same in their respective authorized capacities as City Manager
and City Clerk of the City of Kalispell.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year hereinabove first written.
STATE OF
ss.
County of
Printed Name:
NOTARY PUBLIC for the State of Montana
Residing at:
My Commission expires:
On this day of , 20_, before me, a Notary Public for the State of
, personally appeared and proved to me to be the person
whose name is subscribed to the within instrument, and acknowledged to me that he/she
executed the same in his/her authorized capacity as
ACCESSIBLE SPACE, INC, a Minnesota not for profit corporation.
of the
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year hereinabove first written.
Printed Name:
NOTARY PUBLIC for the State of
SEAL Residing at:
My Commission expires:
Exhibit "A"
"
Parcel A of Corrected Certificate of Survey No. 13066 located within the NW 1/ of Section 6
Township 28 North, Range 21 West, P.M.M. Flathead County, Montana.
Exhibit"T"
Projected Property Tax Impact of Montana Reappraisal
if Mill Levies are Held Constant - Residential
Legal owner(s): 2009 Assessment Notice Date: 612512009
OWNER 1, PROPER T Property Subject to Taxation Assessment Code: 576435
School District: 057706
Duluth County 2008 Mill Levy: 0758.940.+—
A L
1000 S Skyline Drive Rm 1
Duluth, MT 59699-0000
THIS IS NOT A TAX BILL For details aboutyoa4rope6 taxation V1.i-'-P"...
visit vour local Devartment of R.venliff.OffiCe or cAll 4116*55-121!7
Matketl
Productivity
'Previous,
4Cummt,`
Value
tye.r.
Year.
Legal Description
Ge-ode
Property
cI—If%qn
Percent
Quantity
As I' As of
1/112002 7111120011
`Taxable;}
!,i
walue..
:7axabla7�
lvalu.:
DETROIT
LAKES ADDN, s36, 710N,
Reside"Cityrrown. Lots�E-'
2.93%
0.25
30,468
78,531
+606-
71.5
R0L4
W' BLOCK 144, Lot 011, CANNON
ADD
BLK 144 PT LT 11 LTS 12-131C
PER
K
H B 144 PT LT 12
57-18P86-26-L130-154=
0
� Improvementsb ,Residential City/Town
Lots
2.93%
ol
56,9821
1 34,399,
11-,132
-4-.294
I
Totalsl
87,4501
212.9301,1�
I -r�1372TJ
-2MD71
NOTE:
The total values in the shaded columns provide the best value change comparisons and reflect td
co
�eglslaturl
�Teappralsal mitigation
strategy.
L{vestock shown on this notice are, exempt from property tax but are subJecttoapercapitafee
at is bills
In November. I
If you have questions or concerns, please contact your local Department of Revenue offici. We wet )me hearing from you.
Enter Information from Your 2009 Residential Property Asessi nent Notice Below
Total Market Productivity Value as of 1/1/2002 $1,396,519
Total Market/Productivity Value as of 7/1/2008 $2,131,274
Mill Levy (Upper Right on Assessment Notice) 0.17
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