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Development Project at Old School Station201 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 From: Kellie Danielson, Director, Community & Economic Development Department Date: April 29, 2009 RE: Workshop Item: Development Project at Old School Station Background In July 2008 our office was contacted by an out of state real estate firm representing a multi- national corporation. We were asked to assist in providing Greenfield site data with applied specifications in a certain geographical area of the City of Kalispell. We contacted property owners and provided the data to the firm. We also assisted in identifying available buildings that met certain specifications for the client. Once all the data was collected from various sources the broker matched up their selected sites and provide to their client. Out of the Kalispell opportunities the broker informed me that Old School Station business park best suit the needs of the client. We were then asked what resources are available to the project to assist in upfront development costs, i.e. incentives to reduce or offset development costs to keep the project competitive. 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 Approximate investment $2.8 million Furniture, fixtures and equipment $TBD Emplgyment Retained jobs 2 full-time, 7 part-time Net, new jobs 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. Timm 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 As of today's date the tool(s) to calculate an impact analysis are not immediately available to our department. Unfortunately we cannot present an analytical statement of the impact to you. What we can express subjectively is the current FedEx Ground facility is not within city limits, the investment is new to the City in terms of tax revenues, and the construction will add to the purpose of the park. Our department will provide a proforma during the workshop on the development costs associated with Old School Station business park and why staff supports' the TIF funds be used to offset development fees. Future Action Recommended Staff will present the proforma during the workshop to support the recommendation TIF funds be utilized to offset a small portion of the developer's site development costs. Because this is a work session the approval will be requested at the May 11 `h Council meeting. 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, %\ Kelh ,Danielson 2 :_ 0 1"1 to .e00 00 -1 1 to t) 00 I r tLf! 0.# 00 m L W ai -! . . 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