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2. Highway 93 South Extension of Utilitiesr N JN 1 REPORT TO: Honorable Mayor and City Council FROM: Chris A. Kukulski, City Manager SUBJECT: Utilities to Four Corners MEETING DATE: October 25, 1999 BACK GROUND: Prior to my arrival, the City Council had made a decision to extend water and sewer utilities south along US-93 to the Four Corners area. This project is directly tied to the State of Montana's US-93 reconstruction project which is expected to reach Kalispell during the 2001 construction season. Several concerns have been raised to me regarding the financing ofthis project. Therefore, I have placed this issue on the October 25 Council Work Session Agenda. The US-93 project is complex and includes improvements within the Downtown Urban Renewal District (URD), the Airport URD, City of Kalispell and Flathead County. This discussion is meant to include those improvements within the Airport URD. The City has committed approximately $1 million in funding for improvements within the Airport URD. At issue is how the City will pay for these improvements, particularly as related to item one on the agenda which is the financing of the Airport Improvements. Assuming that the City is prepared to invest $1.3 million into the Airport and $1 million into the US- 93 project, we have committed $2.3 million in expenditures. As indicated in the previous memo, the City is attempting to sell two lots within the Airport URD which are estimated to sell for $1.7 million (1999 tax rolls place the value at $1,731,553). Assuming both parcels sell, the City will be $600,000 short in paying cash for both the Airport upgrade and the US-93 projects. Post Office Box 1997 - Kalispell, Montana 59903-1997 Telephone (406) 758-7700 - FAX (406) 758-7758 Based on the current tax rolls and development agreements which are in place, the Airport URD will have an annual increment of approx. $250,000 by the 2002 tax year. Thus, based on the sale of the above listed property we should be able to pay cash for the US-93 project which is slated for the 2001 construction season. The Airport project is not expected to begin until 2002, by which time the URD will either have the additional $600,000 necessary or will have the capacity to pay on a debt in order to bridge the gap. Therefore, unless the City is unsuccessful at selling the two lots or the State Legislature drastically alters future revenues, the City should be in a position to cover the expenses outlined above. RECOMMENDATION: None at this time. FISCAL EFFECTS: The cost of the US-93 improvements within the Airport URD are estimated at $1 million. The improvements will be paid for out of the proceeds generated from the sale of two lots within the district. ALTERNATIVES: As suggested by the Council. Respectfully submitted, Chris A. Kukulski City Manager Report compiled October 21, 1999