1. Resolution 5365 - Finding of Eligibility for Tax Increment Financing - FedEx201 1st Avenue East
Kalispell, MT 59901
406.758.7740
Fax: 406.758.7758
City of Kalispell • www.kalispell.com
Office of Community & Economic Development
MEMORANDUM
To: Honorable Mayor Kennedy and City Council Members
CC: Myrt Webb, Interim City Manager , W,014
From: Kellie Danielson, Director, Community & Economic Development Department
Date: May 11, 2009
RE: Fed Ex TIF funding
Backgound
The developer of the FedEx Ground project anticipates receiving full approval by the Fed Ex
Corporation to move forward by June 1 on the development of a new facility in Old School
Station. The one incentive that the City controls is the tax increment financing district (TIF) at
Old School Station Business Park. As stipulated in the City's resolutions regarding Old School
Station TIF funds can be utilized to offset the special improvement district costs assessed to each
lot in the park. It is our recommendation that the developer, Devron Property Services Inc.,
receives funding from the TIF to offset the special improvement district assessments.
Description of Project
Devron Property Services Inc. is a private sector developer that was recently awarded the
development contract from FedEx Ground. The developer will provide a turn -key building
around 18,000 square feet on Lot 2 to lease to FedEx. FedEx will provide the furniture, fixtures
and equipment for internal operations. The initial lease agreement is for 10 years. FedEx Ground
provides the employment.
Investment Scenario
Building and land
Furniture, fixtures and equipment
Employment
Retained jobs
Net, new jobs
Approximate investment $2.8 million
$TBD
2 full-time, 7 part-time
1 part time
Average wage is $13.81/hour + Benefits
This facility will provide an opportunity for 10 delivery routes for independent contractors in the
Kalispell area who can make upwards in the six figures.
Timin
The full approval of the development contract to Devron Property Services is anticipated by June
1, 2009. The construction phase is planned to begin August or September 2009. Move in date is
May 2010.
Fiscal Impact
• Adds $7.2 million in new dollars to the County economy
• Produces $5.7 million I labor income
• Supports 148 full and part time jobs
• Produces $330,000 in indirect business tax revenues
Source: Solution Mountain, Inc., IMPLAN economic modeling system
Action Recommended
A proforma was provided during the workshop to support the recommendation TIF funds be
utilized to offset a portion of the developer's site development costs. We request the Council
move to approve the use of the TIF funds generated by the FedEx development to Devron
Property Services to assist in offsetting some of the Special Improvement District fee costs.
Special Improvement District Fee-$369,135.84
Old School Station owners providing an incentive of $250,000
TIF to provide the remaining SID balance estimated at $151,560
About FedEx Ground
FedEx Ground is a small -package transportation service that connects global buyers to suppliers
with the world's most innovative supply chain and information technology ever created. FedEx
provides its customers access to real time information on the logistics services; each delivery
driver is equipped with intelligent mobile computers that provide the basis for real time delivery
confirmation and tracking services. Additionally, FedEx facilities are equipped with cutting -edge
material handling, automation, and mobile wireless technologies that provide a foundation for
efficient package handling and sophisticated supply chain visibility.
Respectfully submitted,
� � L,�(Xg" 1
0 S')'y
Kellie Danielson
2
A RESOLUTION AUTHORIZING THE USE OF TAX INCREMENT FINANCING
FUNDING FROM THE OLD SCHOOL STATION TECHNOLOGY DISTRICT FOR
APPLICATION TO SPECIAL IMPROVEMENT DISTRICT ASSESSMENTS FOR
FEDEX GROUND INC. INVESTMENT IN THAT DISTRICT.
WHEREAS, Devron Property Services, Inc. is a private sector developer that was recently
awarded the development contract for FedEx Ground to invest in a facility to be
potentially located in the Old School Station Technology Tax Increment
Financing [TIF] District; and
WHEREAS, the business of FedEx Ground meets the statutory criteria for eligibility for TIF
funding for the reason that its operations are technology based and, through the
employment of knowledge and labor, value will be added to product, process or
export service through more efficient package handling and sophisticated supply
chain visibility that reduces the cost of shipping which results in additional wealth
to those sending and receiving goods and which at least 50% of all sales occur
outside of the State of Montana; and
WHEREAS, the parcel of property that Devron Property Services, Inc. intends to develop is
subject to Special Improvement District [SID] assessments which are applied to
payments on the bond that funded the construction of public infrastructure within
the Old School Station Technology TIF District; and
WHEREAS, the SID assessments on the parcels within the Old School Station Technology TIF
District are eligible under state law for reimbursement with TIF funds; and
WHEREAS, the Kalispell City Council finds that the FedEx Ground facility developed by
Devron Property Services, Inc., would be a beneficial use within the Old School
Station Technology TIF District and that it would be in the best interests of the
City to make use of TIF funds for the reimbursement of all or some portion of the
SID assessments otherwise paid or payable by Devron Property Services, Inc. or
FedEx Ground, Inc. within the Old School Station Technology TIF District.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL, AS FOLLOWS:
SECTION I. That the City Manager is hereby authorized and directed to confer with
representatives from Devron Property Services, Inc. and/or FedEx
Ground, Inc. for the purposes of negotiating a Developers Agreement that
is in the best interests of the City and is consistent with the findings of the
City Council.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, THIS 18TH DAY OF MAY, 2009.
ATTEST:
Theresa White
City Clerk
Pamela B. Kennedy
Mayor