4. Hampstead Partners LoanCity of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax(406)758-7758
January 19, 2001
TO: Mayor, City Council and AnerFROM: Glen Neier, City AttornRE: Hampstead Loan for Purc Montana Motor Sports
Hampstead Partners, Inc. as part of the redevelopment effort on the
Plaza West Parking Lot, will be purchasing Lots 13, 14 and the South
M of Lot 15, Block 47 (Montana Motor Sports). The selling price of
that property is $280,000. Hampstead has requested that the City loan
through tax revenue generated in the Downtown Urban Renewal Area the
sum of $340,000 for purchase and basic renovation of the Montana Motor
Sports Building.
The note, bearing interest at a rate of 6%, will be payable quarterly
for a period of 14 years commencing May 1, 2002. The quarterly payment
is $6,571.00 with a balloon payment on February 1, 2016. The note will
be secured by a trust indenture on only Lot 13 because of Hampstead's
need to have clear title to a designated amount of property in order
to qualify for the HOME/CDBG funds and tax credits.
Hampstead intends on redeveloping the Montana Motor Sports building
for a variety of uses which were discussed in a memo from Susan Moyer,
dated January 11, 2001 and by Jay Wentz at the January 11, 2001
Council Workshop.
The approval of the loan to Hampstead Partners for the purchase and
rehabilitation of the Montana Motor Sports building is an integral
part of the redevelopment project on the Plaza West Parking Lot.
A motion authorizing the City Manager and Finance Director to make the
loan to Hampstead Partners, Inc. in the amount of $340,000 for the
purpose of purchasing and rehabilitating Montana Motor Sports is in
order.
hampsteadloan.wpd
9
City of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fa (406)758-7758
REPORT TO: The Honorable Wm. E. Boharski and City Council
FROM: Susan Moyer, Community Development Director
Chris A. Kukulski, City Manager
SUBJECT: Redevelopment Loan — TIF Funds
MEETING DATE: January 11, 2001
BACKGROUND:
Hampstead Partners anticipates the completion of a three-phase redevelopment project on
Second Avenue West over the next couple of years. Phase I was accomplished with the purchase
and renovation in 2000 of Big Sky Manor (a 30 year + old, sixty unit elderly housing complex)
on the corner of Second Avenue West and First Street West.
Phase II will involve the acquisition and renovation of the North half of Lot 15 and all of Lots 16
& 17 of Block 47 which currently house Montana Motor Sports and an adjacent mixed -use
building housing small businesses and very low-income apartment rentals. Additionally, new
construction and existing commercial renovation is part of the overall development.
Phase III will entail:
• Land acquisition and new construction of a "below market" assisted living facility so that
the neighboring elderly may age in place.
• Relocating Meals on Wheels, Agency on Aging, and Eagle Transit from the Old
Courthouse East into the first floor of the new facility.
• Construction of a new Kalispell senior center within the same facility.
• Establishing the Rimrock Trailways Bus Terminal within the three -block area rather than
six miles north of the city limits.
The County Commissioners have unofficially agreed to reinvest the proceeds from the sale of the
current, non-ADA compliant senior center and adjacent lot to the construction of the proposed
new center.
Neighboring commercial properties such as Sykes, the Knead Cafe, etc. have expressed a
willingness to dress up their commercial properties so that the sites would be compatible with the
overall redevelopment of the area. It is further anticipated that developers will target other
dilapidated or vacant properties for renovation or new construction as the neighborhood
improves.
Hampstead Partners is requesting the City make them a $340,000 redevelopment loan to acquire
and renovate the Montana Motor Sports Property. The loan is requested at 6% interest,
amortized over a twenty-five year period, with a balloon payment in year 15. Interest is to
accrue but not compound until May 1, 2002.
a
RECOMMENDATIONS:
Staff recommends the City Council approve the financing of this project through one of two
methods:
1. A TIF Loan in the amount of $340,000.
Rationale For The Use Of TIF Dollars:
The use of TIF dollars is in direct compliance with the statutes establishing a TIF district.
The elimination of blight and blighting structures, urban density redevelopment, and the
creation or retention of low -to -moderate employment opportunities are the primary thrust
of a redevelopment district.
a) The principal and interest accrued during the fifteen -year term of the mortgage can
then be used to further achieve other redevelopment activities. One such activity
could be addressing the space needs of City Hall.
b) Council has previously implemented a Downtown TIF Loan Program for
redevelopment activities. To date, three major redevelopment loans have been made
through this program.
2. A UDAG Loan in the amount of $340,000.
Rational Why UDAG Dollars Would Be A Second Option.
UDAG funds can be utilized on eligible activities throughout the city limits as long as the
use of these funds meet the requirements of the original funding. To encumber UDAG
dollars in a TIF district might preclude the city from assisting other redevelopment
projects that may develop in other parts of the city.
FISCAL EFFECTS:
Interest earned by the city during the fifteen -year term of the loan will amount to $252,616 and
the entire $340,000 principal will be recaptured. The tax base for this project, when renovated, is
anticipated to be $40,000 per year. Future redevelopment benefits cannot be estimated at this
time.
ALTERNATIVES: As suggested by council.
Respectfully submitted,
Susan Moyer
Community Development Director
Report compiled December 29, 2000
CAA, 94
Chris A. Kukulski
City Manager