05. Ordinance 1243 - Creating an Urban Renewal Plan - Downtown - 2nd Reading'96 06 28 09:46 124065430663 DORSEY & UITNEY Zoe3.0ca
ORDINANCE NO. _1243
ORDINANCE RELATING TO THE MODIFICATION OF
THE KALISPELL, MONTANA URBAN REN TEWAL
PLAN (THE URBAN RENEWAL PLAN) TO APPROVE
CERTAIN PROJECTS AS URBAN RENEWAL PROJECTS
BE IT ORDALNED by the City Council (the Council) of the City of Kalispell,
Montana (the City), as follows:
Section 1. SadSadt& The City by Ordinance No. 933, passed and approved on
September 10, 1979, adopted the Kalispell, Montana Downtown Redevelopment
Plan (the Plan) as an urban renewal plan for the project area known as the
Downtown Redevelopment Area which constitutes the City's Urban Renewal
District (the District) pursuant to Montana Code Annotated, Title 7, Chapter 15, Parts
42 and 43, as amended (the Act), which Plan contained a provision for tax increment
financing. Pursuant to the Act and, the procedures contained in the Plan, and
Resolution No. 4269, adopted June 3, 1996, the City has set forth its intention to issue
and sell urban renewal tax increment bonds in an amount sufficient, but not to
exceed $12,500,000 (the Bonds) to finance all or a portion of certain urban renewal
projects and has undertaken to designate and approve the following urban renewal
projects (the Projects), and modify the Plan accordingly, has given notice and
conducted public hearings with respect thereto:
a. Kalj5pell Cukr Mall. This project consists of the acquisition of real
property, the clearance of improvements thereon, construction of certain
public utilities and related relocation activities, all to make such property
available for expansion of the Kalispell Center Mall. The project is estimated
to cost $2,624,693, which will be financed from the proceeds of the Series 1996
Bonds.
b_ KDC Site (Kalispell Downes-vn Center) Development. This project
consists of the acquisition of certain real property, and related demolition and
site worm including public improvements to make the property available for
private development for uses consistent with the Plan. The project is
estimated to cost $4,000,000, which will be financed from the proceeds of the
Series 1996 Bonds.
c. Central Sc-,h al project. This project consists of the renovation and
rehabilitation of the old Central School building. The building could be used
for multi -purpose community and educational facilities, along with offices
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and museum space. The total cost of this project is estimated to be $2,5X,000,
which will be financed from the proceeds of the Series 1996 Bonds.
d. Improvementa to Buildin sg,hQol Distlict #5 This project consists
of improvements for School District #5 facilities at Elrod, Linderman and
Flathead High School. These projects would benefit the entire community
through improvements to the gym and auditorium at Flathead High School,
upgrading playground equipment to ADA standards, and sidewalk
replacement The project is estimated to cost $670,000, which will be financed
from the proceeds of the Series 1996 Bonds.
e. Aff`Qrd l�l,i e Housin :�Elimination of Ught. This project is a Private
Multi -Family Housing Density Development Incentive Program designed to
enable the City to: (1) offer incentives to both existing prop" owners and
private developers desiring to purchase substandard dwellings occupying
large lots with the Urban Renewal project Area and replace the substandard
single family units with higher density affordable multi -family housing; (2)
purchase substandard dwellings when they became available and vacant,
particularly if the site would accommodate multiple dwelling units, clear the
property and resell it to developers willing to build multi -family housing;
and (3) to provide the necessary incentives to encourage high density
affordable housing redevelopment of sites that may become developable
and/or affordable because of fire or other circumstances. The cost of this
project is estimated to be $300,000, which will be financed from proceeds of
the Series 1996 Bonds.
f. Downtgn Parki . This project consists of acquiring land and/or
construction of a parking structure on nearby sites (acquisition of the easterly
1/2 of Block 37) to provide additional off-street parking to encourage the
highest and best use with greater densities on the Kalispell Development
Center site and re -use of Central School in order to encourage the highest and
best use in terms of density and tax yield of both Central School and the
Kalispell Development Center site. The estimated cost of the project is
$800,000, which will be financed from proceeds of the Series 1996 Bonds.
g. 3rd Street East/Conrad M4n,i!2n to Hockaday Connection. This project
consists of improving the streets and sidewalks continuing the theme of
linking Downtown with Depot and Woodland Parks, parking lots, and
community cultural resources (i.e., Chamber, Library, City Hall, Hockaday,
Conrad Mansion and Central School). Improvements would include
replacing heaved sidewalks, providing benches, storm drainage, handicap
curb cuts at the corners, antique lights, and potential additional (angle) on -
street parking. The cost of the project is estimated to be $90,000, which will be
financed from proceeds of the Series 1996 Bonds.
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h. !C:itv Hall Improvements. This project consists of the conversion of the
old motorcycle garage into a space large enough to accommodate regular sized
vehicles. The enlarged garage area will allow for multiple uses by the Police
Department Other items in this project include repainting the exterior, and
constructing a connection between City Hall and the annex. The cost of the
project is estimated to be $100,OW, which will be financed from proceeds of
the Series 1996 Bonds.
i. West Railroad Street. This project consists of the construction of the
West Railroad street between 6th Ave W.N. and Sth .Ave W.N. and
installation of water, storm drainage and sanitary sewer improvements
which will complete the extension of the street to 5th Ave W.N. and provide
access to an isolated industrial area prime for redevelopment. The cost of the
project is estimated to be $125,000, which will be financed from proceeds of
the series 1996 Bonds.
j . Mazket_Place III Prn_,,,,i' The project will consist of certain acquisition
and demolition activities at the site locaed between Center Street and the
railroad right-of-way/ 1st Ave East and 3rd Ave East. The purpose of this
project is to encourage existing or future property owners of portions of the
site to redevelop the area to its highest and best use. Estimated cost of the
project is $275,000, which will be financed from the proceeds of the Series 1996
Bonds.
Section 2. F-inding5. The Council hereby finds, with respect to each of the
Projects described in Section 1 hereof, as follows:
a. a workable and feasible plan exists for making available adequate
housing for any persons who may be displaced by the Projects;
b. the Plan, as modified to include the Projects, conforms to the
comprehensive plan or parts thereof of the City;
C. the Plan, as modified to include the Projects, will afford
maximum opportunity, consistent with the needs of the City as a
whole, for the rehabilitation or redevelopment of the District by
private enterprise;
d. a sound and adequate financial program exists for the financing
of each of the Projects, which program includes the sale and issuance by
the City of its urban renewal tax increment bonds in an amount not to
exceed the costs of the Projects and other Projects heretofore or
hereafter approved by this Council, including administration costs and
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costs of issuance of the bonds, and for the application of available funds
in the Development Account in the Tax Inurement Fund of the City, in
proportions yet to be determined, for the purpose of financing all or a
portion of the costs of the Projects as set forth above; and
e. each. of the Projects constitutes an urban renewal project within
the meaning of the Act and the Plan.
Section 3. The Urban Renewal Projects herein designated and approved
may be modified -by -the City Council of -the City of Kalispell if the Council
determines by Resolution that an adjustment to a Project or Projects is required in
the best interest -of-the City of Kalispell.
Section 4. All actions of the City Council heretofore taken with respect to
the Projects herein designated, to the extent not inconsistent herewith, are ratified
and confirmed.
Section 5. -- This Ordinance shall take effect from and aftaL.-30 days of its
passage by the City -Council and approval by the Mayor.
Section 6. ApVrDyal -af-PrQjects. This Council hereby approves ratifies and
confirms modification of the Plan to designate the Projects as urban renewal projects
within and under and to be undertaken pursuant to the Plan, and the Projects are
hereby approved. All actions of this Council heretofore taken with respect to the
Projects, to the extent not inconsistent herewith, are hereby ratified and corfirmed.
PASSED, ADOPTED and APPROVED on first reading this 1st day of July, 1996.
PASSED, ADOPTED and APPROVED on second reading this — day of
-.-,1996,
Attest
Bv:
City Clerk of Council
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CITY OF KALISPELL'
y
Mayor
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Qrdinance 1243-Creating an Urban Renewal Plan- Downtown- 2-d Reading:
Several of the members of the Council have spoken to me regarding
some reservations about the $12,500,000 proposed bond issue for
projects within the Downtown Urban Renewal Area. Comments have
ranged from financing none of the projects to elimination of
several and a cutback in the size of some. Specific concerns that
have been expressed include:
A. A desire to return tax values to the taxing districts by 2002
when the initial bond issue is scheduled to be retired.
B. A desire to return some of or all of the tax valuation in the
downtown increment district to the taxing district as soon as
possible.
C. A desire to reduce the size and amortization schedule of the
proposed $12,500,000 20 year issue.
It appears to me there are five potential alternatives to react to
some of or part of these concerns, in addition to several different
degrees of each alternative. The alternatives are:
1. Action to eliminate the downtown tax increment district by June
30, 1997. Call the outstanding tax increment bonds in January of
1997 and close out the project, including disposition of land.
This would permit the existing taxing districts to use the tax
valuation created by the district in FY 1998, four years sooner
than originally projected. It would have the disadvantage of not
encouraging the continued progressive development in the area and
give a negative signal to current and potential developers in the
downtown area. The opportunity to use increment funds for public
improvements, including infrastructure, in the area would be lost.
Fa
2. Alternative two would be to proceed with using all of the
projects in the Resolution of Intent. The Kalispell Mall has been
reduced by $603,000, and the school board is not interested in the
$670,000 project that they originally submitted if it delays the
return of the increment tax base. The project extends the tax
increment program in the downtown area by another 16 years, which
is a real concern for many people. A tax return to the existing
tax districts could be implemented in 1998.
3. Action to move ahead with the district as originally proposed
but limit the amortization schedule to 15 years. This would allow
the City to provide maximum assistance to encourage investment in
the area and a mechanism to.finance needed public infrastructure
and public improvements. It would delay the full return of taxable
evaluation to other taxing jurisdictions for an additional 11
years; however, it would increase the ultimate taxable value for
all tax districts that includes the downtown district. A
significant amount of taxable value could be returned in the year
2002 and some as early as FY 1998.
4. Eliminate the issuance of additional bonds, and use the
approximately 9.5 million dollars available between now and 2002
for projects. This would require a reduction of proposed projects
to an 8 million dollar level and the use of approximately 1.3
million to pay the interest and principal of the current issue over
its projected five year life. This approach would have either the
advantage or disadvantage of returning tax value to the taxing
districts in accordance with original plans, but no sooner. it
would require the reduction of three million dollars in project
costs plus the value of any projected land sales that might be lost
in this type of project cut. It would also save interest costs of
between $4,237,375 and $5,517,670, depending on the amount of bonds
that might otherwise be issued - less the costs of temporary
financing.
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5. The issuance of bonds in an amount between $8,000,000 and
$9,000,000, with $8,000,000 being used for current project costs
for a 15 year period. This would have the major advantage of
permitting a return of a portion of the increment dollars to
property taxing districts in 1998. Based on projections from Kreg
Jones of D. A. Davidson, this approach would allow the City to
return $952,570 beginning in 1998 - four years prior to the current
time table. Exhibit #1 (at end of memo), which is based on the FY
1996 tax levies, illustrates the percentage of return to each
taxing district and the amount each would receive based on a one
million dollar distribution. This option would be similar to the
one being used in Great Falls and Billings. The Council would
still have to cut approximately three million in projects. The
bond issue would be in the amount of $9,000,000 to cover necessary
reserves and issuance cost. One million dollars of projects would
be funded from the 1997 fiscal year budget from funds now earmarked
for the pay off of the current bond issue. Three million dollars
worth of projects would have to be cut.
It appears to me that one, or a combination, of these alternatives
could meet a majority but certainly not all the concerns that were
identified above.
To be sure, no decision should be made until after you have the
input at the public hearing; however, due to the ultimate time
table of reaching a point where a bond closing can be met no later
than September 9, it is almost imperative that you pass an
ordinance on First Reading on July 1, 1996 if bonds are to be
reissued. On July 15, 1996; the ordinance can be amended to permit
you to dwell on the information provided at the hearing for a
couple of weeks. It is my suggestion that you review each project
and decide to include the project at a specific amount or eliminate
them altogether.
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We will be prepared to amend and rewrite the ordinance at the
meeting so it can reflect your best collective judgement on July 1
and, like any other ordinance, it can be amended on July 15 to meet
your collective judgement at that time. The ordinance as included
in your packets includes the projects and numbers included in the
Resolution of Intent. We have a better figure on the Kalispell
Mall, which is now $2,624,000, $603,000 less than the figure in the
original resolution and the school board has indicated that they do
not want the $670,000 project but want to accelerate the schedule
for returning valuation to their districts so this $1,223,000 can
be the first things cut.
EXHIBIT #1
EXAMPLE OF DISTRIBUTION OF $1,000,000
OF TAX INCREMENT FUNDS.
1995 % 1 000,000
Tax Levy of total levy distribution
COUNTY
0.049105
9.86%
$98,589
WEED
0.001417
0.28%
$2,845
SHERIFF
0.025000
5.02%
$50,193
MOSQUITO
0,000366
0.07%
$735
HEALTH
0.004150
0.83%
$8,332
subtotal county
CITY
0.108000
21.68%
$216,834
GEN SCHOO 0.090290 18.13% $181,277
H.S.
0.050890
10.22%
$102,173
ELEM.
0.112500
22.59%
$225,868
subtotal schools
UNIVERSITY
0.006000
1.20%
$12,046
STATE AID
0.040000
8.03%
$80,309
FVCC
0.010360
2.08%
$20,800
TOTAL
0.498078
100.00%
$ QMOQ0
$160,694
$509,318