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7. Resolution 5262 - Business Incentive GuidelinesREPORT TO. i 1Kall'spell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406) 758-7000 Fax - (406) 755-7758 Honorable Mayor and City Council FROM: Nellie Danielson, Community & Economic Development James H. Patrick, City Manager SUBJECT, Business Incentive Guidelines MEETING BATE: February 4, 2008 BACKGROUND The Community &Economic Development Department of the City of Kalispell is undertaking marketing and promotion efforts to businesses that may have expansion opportunities. The outreach includes both internal and external (in market and out of market) business firms. Besides community information and data, the second most requested information from businesses or consultants representing business firms is what are the financial incentive opportunities from the community? The C&EDD department would like to be able to respond with incentive guidelines that are consistent, equitable and of value to the inquiring business organization. A typical approach is to provide the incentive guidelines on the community website and include the information in marketing materials. Standard incentive elements Common factors to assess when offering financial incentives include job creation, particularly "net" new, which refers to new positions being created over and above the annual average employee base; the creation of additional capital investment to enhance the tax base; wage levels that are "livable" in a community; and incenting those businesses that import money from outside the local service economy. Determining which Business to Incent A standard regulation or policy for business incentives include those businesses that are in the manufacturing, distribution, and/or professional and technical services sectors. Because funds are in short supply and the demand for incentives are high, thresholds need to be set in order for the community to get the "biggest bang for the buck." Typical thresholds are an annual average salary for the area, number of new positions created, additional capital investment created, at least half of the businesses revenues are derived from outside of Montana, and the business must be adding value to its product. Examples are logging is not considered value added, but wood component/product manufacturing such as fence and doors are; printing is not value added but software development is considered value added. Eligible Kalispell Incentives The industrial and technology tax increment financing districts established at [old School Station Business Park allow the TIF funds to be used for land acquisition, demolition and removal of structures, infrastructure, the plans, appraisals, title searches, surveys and studies necessary to prepare for infrastructure projects, the connection of infrastructure outside of the district, and to bonds to pay eligible costs. The deficient side of the incentives for Kalispell is if a business does not "fit" into the Old School Station Business Park what incentives are available outside of using TIF increments? The answer is not much. Through the Montana Board of Investments (MBOI) the City can enter into lease facility agreements with the MBOI to construct facilities to lease to expanding business. Therefore it is attractive to market the city's ability to participate with MBOI and business in leasing facilities. Another option may be the use of the City's redevelopment incentives program.. Suizaested Incentives at Cold School Station Business Park and Other Available Sites • Infrastructure development assistance • Site improvement assistance • Assistance with facilities and or land with participation from MBOI ► Property tax abatement for the restoration or rehabilitation of historic buildings (already adopted) • Revolving loan fund (already adopted) RECOMMENDATION: The C&EDD Department has created a user friendly incentive document to use in marketing materials and place on the city website. The resolution approving this incentive program is presented for your approval. It would be beneficial for CD's outreach and current discussions with both internal and external customers to have "approved" incentive guidelines from the City Council. The thresholds "set" would then determine eligibility of interested business firms. All final agreements and proposals require the approval of City Council. FISCAL IMPACT: Today there is no ability to show impact but when the City Council is presented a project that needs approval the economic impact will be presented in the project materials. Respectively submitted, a F 1 � It Kellie Danielson .Isatrick Community& Economic Development ity Manager p RESOLUTION NO. 5262 A RESOLUTION TO ESTABLISH 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 TYPES OF FINANCIAL INCENTIVES THAT MAY BE OFFERED BY THE CITY, WHEREAS, the Kalispell City Council finds that the economy of the City of Kalispell, and therefore the citizens of Kalispell, benefit when new businesses locate and existing businesses expand and invest within the City limits of Kalispell and thereby create new jobs and increase the tax base; and WHEREAS, the Kalispell City Council finds that it is in the best interests of the City of Kalispell and its citizens that there be marketing and promotion efforts as well as some level of investment by the City to attract new business and business expansion within the city limits; and WHEREAS, the Kalispell City Council finds that it will be a benefit to the business promotion efforts of the City to define the eligibility requirements for potential business recipients of such incentives as well as to identify the types of financial incentives that may be offered through the City. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL AS FOLLOWS: SECTION I. Businesses eligible to receive financial incentives through the City of Kalispell to locate or expand within the City shall. - 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 an average wage of $30,004. SECTION II. the City shall analyze each investment opportunity on a case by case basis and the amount and type of incentives shall correlate with the economic impact the business investment will potentially have on the community. SECTION IIL the financial incentives that may be offered by the City include: a) eligible costs from the tax increment financing districts; b) participation through the City with the Montana Board of Investments programs; c) numerous other state incentive programs as are now or may become available; d) miscellaneous cost reductions or structured payment plans which will be specified based on the end user needs and as maybe approved by Council. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL, THIS 41h DAY OF FEBRUARY, 2008. Pamela B. Kennedy Mayor ATTEST: Theresa White City Clerk