04. Ordinance 1259 - Adopt TIF Westside Urban Renewal Plan - 1st ReadingAgenda -March 3, 1997
The Kalispell City -County Planning Board considered
Resolution No. 4309, a resolution of intent to create the
Westside Urban Renewal Tax Increment Finance District
Urban Renewal Plan. The proposed area of the Plan
encompasses the area of the North Meridian Neighborhood
Plan and an additional area South of Idaho Street in the
7th West North area. If the district is created there
are several projects proposed for the area including
revitalization of the Gateway West Mall, reconstruction
of Meridian Road, and storm drainage improvements. The
Plan has been drafted by Community Development outlining
the various financing options available to the City in
implementing potential projects. Tax Increment
Financing will be the primary source of funds for the
projects implemented pursuant to the plan. A copy of the
FRDO Staff Report and a "draft" of the Plan have been
included in your packet. An Ordinance creating the West
Side Tax Increment Urban Renewal Plan will be available
for your consideration. Since the Workshop, a Section XIV
has been added which allows an abbreviated method of
notice when adding property to the district or deleting
Agenda -March 3, 1997
property from the district. Under the method notice of a
proposed addition or deletion would be published and
notice sent to the owners of property directly affect by
the addition or deletion. Amendments or modifications to
involving substantive matters, ie. approval of urban
renewal plan remain subject to both personal notice and
publication as set forth in the Urban Renewal law.
AN ORDINANCE APPROVING THE WEST SIDE REDEVELOPMENT PLAN ANALYSIS
FOR THE CITY OF KALISPELL, MONTANA AS AN URBAN -RENEWAL PLAN;
PROVIDING FOR THE SEGREGATION AND APPLICATION OF TAX INCREMENT IN
THE WEST SIDE URBAN RENEWAL PLAN; ESTABLISHING JANUARY 11T, 1997 AS
THE BASE YEAR FOR CALCULATING THE TAX INCREMENT; AUTHORIZING THE
MANAGER TO IMPLEMENT THE PLAN WITH THE POWERS CONTAINED IN THE
URBAN RENEWAL LAW, ESTABLISHING AN AMENDMENT AND MODIFICATION
PROCEDURE, AND DECLARING AN EFFECTIVE DATE.
WHEREAS, under the provisions of the Montana Urban Renewal Law,
the City Council of the City of Kalispell, Montana, did
adopt Resolution No. 4309 finding that 1) blighting
conditions exist within the area of the West Side Urban
Renewal District, and 2) that rehabilitation,
redevelopment or a combination thereof, within the area
is necessary in the interest of public health, safety and
morals or welfare of the residents of the City of
Kalispell, and
WHEREAS, the City Council of the City of Kalispell acting in its
capacity as the Urban Renewal Agency has directed that an
V_ urban renewal plan for the blighted areas be developed in
accordance with the Montana Urban Renewal Law; and
WHEREAS, the City Council of the City of Kalispell, Montana
(herein Agency) has caused to be made detailed studies of
the land uses, ownership, building conditions,
demographics, transportation and safety within the
Neighborhood Plan area and determined that said factors
contribute to blighted conditions under § 7-15-4206, MCA,
and are detrimental and a menace to the safety, health
and welfare of the inhabitants and users of the area, and
WHEREAS, the Agency has been fully apprised and is aware of the
factors and conditions, and
WHEREAS, there has been prepared an Urban Renewal Plan for the
project, known as the West Side Urban Renewal Tax
Increment Finance District Urban Renewal Plan
(hereinafter Plan), and
j:\wp\ord\Westside
WHEREAS, in accordance with Title 7, Chapter 15, Part 42, Montana
Code Annotated, the City/County Planning Board is the
duly designated and acting official planning body for the
City and has submitted to the Agency its imput and
recommendations with respect to the Plan and has
certified that the Plan conforms to the general plan for
the locality and the Agency has duly considered the
input, recommendations and certification of the Planning
Board, and
WHEREAS, the Plan has been referred to the Agency for review and
approval. The Plan consists of textual matter inclusive
of supporting material and maps and is attached hereto as
Exhibit "A" and by this reference made a part hereof, and
WHEREAS, the Plan for the project area requires, among other
things:
a. setting a pattern of land use incorporating
sensitivity to neighboring uses;
b. creating a circulation pattern that maintains
a separation of incompatible uses;
C. creating a street system that can accommodate
increases in traffic safety; and
d. provide full range of services to area.
WHEREAS, the Agency is aware that a market exists in the area for
additional residential units, retail space, professional
space and other commercial uses consistent with the Plan,
and
WHEREAS, the City will comply with Federal and State laws
governing the relocation of person(s) displaced as a
result of implementation of the Plan, and
WHEREAS, the members of the Agency have general knowledge of the
conditions prevailing in the project area and the
availability of property for the relocation of families,
businesses and recreational property that may be
displaced by implementation of the Plan, and have
determined that a relocation program is both workable and
feasible for the needs of the project area, and
j:\wp\ord\Westside
WHEREAS, under § 7-15-4286, MCA mill rates of taxing bodies for
taxes levied after the effective date of the tax
increment provision shall be calculated on the basis of
the sum of the taxable value, as shown by the last
equalized assessment roll, of all taxable property
located outside the urban renewal area and the base
taxable value of all taxable property located within the
urban renewal area. The mill rate so determined shall be
levied against the sum of the actual taxable value of all
taxable property located within as well as outside the
urban renewal area. The tax increment, if any, received
in each year from the levy of the combined mill rates of
all the effected taxing bodies against the incremental
taxable value within the urban renewal area, except for
the university system mills levied and assessed against
property as defined in 7-15-4292 (6)(a), shall be paid
into a special fund held by the treasurer of the
municipality and used as provided in 7-15-4282 through 7-
15-4292, MCA, and
WHEREAS, the Agency is cognizant of the conditions that are
endorsed in the undertaking and carrying out of the Plan
including those prohibiting discrimination under the
Montana Human Rights Act, and
WHEREAS, in accordance with § 7-15-4215, MCA, the Agency did hold
a Public Hearing on March 3, 1997, after due and proper
notice, both by mail and publication of, same.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL, MONTANA, AS FOLLOWS:
S7XT_ -0N I. That the West Side Urban Renewal Tax Increment
Finance District Urban Renewal Plan of the
City of Kalispell, Montana contained yin
Exhibit "A" hereof, having been duly reviewed
and considered, is hereby approved and the
City Clerk of Council is hereby directed to
file said copy of the Plan with the minutes of
this meeting and in the Ordinance Book. Said
ordinance is to be posted as required by law
and copies made available to the public upon
request.
j:\wp\ord\Westside
S_KCTION II. That it,is hereby found and determined that
the project area of said Plan is blighted and
qualifies as an eligible project under the
Montana Urban Renewal Law,.
SECTION-1-II. That it is hereby found and determined that
the objectives of the Plan cannot be achieved
except through more extensive rehabilitation
of the project area.
S�CTIO.N IV. That it is hereby found and determined that
the Plan for the project area conforms to the
Kalispell City -County Master Plan or parts
thereof adopted for the City of Kalispell
planning area.
SES"TIOXT V. That it is hereby fond and determined that a
sound and adequate financial program exists in
the Plan for financing the projects contained
therein.
SECTION VI. That the City shall segregate and apply tax
increments accruing to the district, as
.,, provided in H 7-15-4282 through 7-15-4292,
MCA.
SEC=K -V_LI . That the redevelopment of the Plan is
necessary for the proper development of the
community.
S,F,CTIDK VIII. That it is hereby found and determined that
the Plan for the area will afford maximum
opportunities consistent with the sound needs
of the locality as a whole for the renewal of
the area by private enterprise.
SECTION --IX. That it is hereby found and determined that
the Plan for the area gives due consideration
to the providing of adequate park and
recreational areas and facilities as may be
desirable for the neighborhood improvement
with special consideration for the health,
safety and welfare of children using
j:\wp\ord\Westside
facilities within the vicinity of the Plan
area.
SECTION X. That a workable and feasible plan exists
therein for making available adequate housing
for person(s) who may be displaced by the
projects.
S C—T�ON_.XI. That in order to implement and facilitate the
effectuation of the Plan, hereby approved, it
is found and determined that certain official
actions must be taken by the Agency with
reference among other things to setting a
pattern of land use incorporating sensitivity
to neighboring uses; creating a circulation
pattern that maintains a separation of
incompatible uses; creating a street system
that can accommodate increases in traffic
safety; and provide full range of services to
area:
a) Pledging its cooperation in carrying out
the Plan;
b) Directing the various officials,
departments, boards, and agencies of the
locality having administrative
responsibility in the premises likewise
to cooperate to such end and to exercise
the respective functions and powers in a
manner consistent with the Plan, and
c) Standing ready to consider and take
appropriate action and measures
designated to effectuate the Plan.
SECTION xII. The City Council of the City of Kalispell,
Montana does authorize the Manager to
implement the Plan with the powers set forth
in Title 7, Chapter 15, Parts 42 & 43, MCA,
and to seek financial assistance as it may
become available from the Federal or State
j:\wp\ord\Westside
government or such other sources as may be
determined appropriate by the City Council.
SEN XIII. That January 1Bt, 1997 shall be established as
the base year for calculating tax increment.
SECTI-ON-=. Modification of Plan and Designation of and
Approval of Urban Renewal Projects shall be
subject to the following:
A) The Council may modify and amend the
Plan, including modifications and
amendments to designate and approve urban
renewal projects to be undertaken
pursuant thereto, excepting modifications
involving the addition or deletion of
land from the Area, by enacting an
ordinance providing for and setting forth
the modification and amendment, following
the procedures set forth in subsection 7-
15-4212 through 7-15-4219, MCA, with
respect to adoption of an urban renewal
plan.
B) Modifications or amendments involving
the addition or deletion of land from the
Area, only, shall be made by Ordinance,
providing for and setting forth the
modification or amendment, after a public
hearing, notice of said public hearing
on the proposed modification or amendment
shall be given in the official newspaper
once a week for two consecutive weeks
preceding the hearing and by mailing
notice of said modification or amendment
to all persons owning property to be
added or deleted at the time and the
manner provided by Section 7-15-4215,MCA.
1) All notices shall provide the
information regarding the modification
required by Section 7-15-4215(2), MCA.
2) Nothing contained herein shall limit
or effect the authority of the Council to
j:\wp\ord\Westside
undertake and carry out renewal
activities on a yearly basis as provided
in Section 7-15-4220, MCA.
C) All other changes affecting the Project
Area including, but not limited to, bulk
and area requirements, Planned Unit
Developments, building heights, street
set backs, parking, signage, land use
changes or zoning classifications, may be
made after review by the City -County
Planning Board and Zoning Commission and
approved by the City Council, subject to
the applicable Montana law.
SECTz_ON XV. This Ordinance shall take effect, from and
after, 30 days of its passage by the City
Council.
FINALLY PASSED AND APPROVED BY THE CITY COUNCIL AND THE MAYOR OF
THE CITY OF KALISPELL, THIS DAY OF MARCH, 1997.
Douglas D. Rauthe - Mayor
Attest:
Debbie Gifford, CMC
Clerk of Council
j:\wp\ord\Westside
EXHIBIT "A"
WEST SIDE URBAN RENEWAL
TAX INCREMENT FINANCE DISTRICT
URBAN RENEWAL PLAN
INTRODUCTION
On January 6, 1997, the Kalispell City Council adopted Resolution No. 4309 finding that one or
more blighted areas exist within the areas of the North Meridian Neig:.borhood Plan (Exhibit "A"),
and an additional area described below (Exhibit "B"). The North Meridian Neighborhood Plan in
general covers an area bounded by U.S. Hwy 2 on the south, U.S. Hwy 93 and Wedgewood Lane
on the north; 7th Avenue WN on the east; and Hawthorne Avenue and Northern Lights Blvd on the
west. The additional area is formed by extending the easterly 7th Avenue WN boundary described
above, south across the railroad tracks to 7th Avenue Wert and then westerly to include all of the
B-2 zoned parcels abutting the south right-of-way of West Center Street to the west Kalispell City
Limits at Meridian Road and then north along the westerly boundary of the Kalispell City Limits to
Northern Lights Blvd. It was found that rehabilitation, redevelopment, or a combination thereof,
within such area is necessary in the interest of the public health, safety, morals or welfare of the
residents of the City of Kalispell.
The primary goals in creating the Westside Urban Renewal Tax Increment Finance District are to
implement the North Meridian Neighborhood Plan that was adopted as an amendment to the
Kalispell City -County Master Plan in December of 1994, by both the Kalispell City Council and
the Flathead County Board of Commissioners to assist, if necessary, in the redevelopment of the 39.5
acres encompassing the Gateway West Mall and the former Crop Hail Building, and to use available
tax increment funds to assist in the reconstruction of Meridian Road and associated projects such as
providing storm drains in the area.
URBAN RENEWAL PROJECTS
The West Side Urban Renewal Tax Increment Finance District Urban Renewal Plan (the "Plan')
contains many undertakings that need to be implemented under the authority of this Plan. As
specified in Part 42, Urban Renewal, MCA, the purpose of an Urban Renewal Plan is to assure
that a sound and adequate financial program exists for the financing of Urban Renewal projects.
The following is a brief description of the City of Kalispell's intent to use Tax Increment Funds.
to implement and finance eligible Urban Renewal Projects:
GATEWAY WEST MALL REDEVELOPMENT
Westfield Properties Inc., of Salt Lake City, Utah, has entered into a joint venture relationship with
Woodbury Corporation, also headquartered in Salt Lake City, UT, forming WOODMEN
PROPERTIES L.C., to pursue the redevelopment of Gateway West Mall and related properties.
(Exhibit "C"). The property comprises approximately 39.5 acres with the two primary components
being the Gateway West Mall and the former Crop Hail Building, which is currently owned by
Egghead Software Company.
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
Woodmen Properties L.C. has an option with the mall owners, Collier -Heinz, to redevelop and
expand the existing mall. It is their intention to proceed under the Urban Renewal Law by
developing a workable and feasible plan, which can be implemented through private enterprise
without the exercising of eminent domain. As stated in their proposal:
"Our goal is to reverse the trend toward deteriorating physical facilities and falling property
values associated with the Property. We would intend to make immediate efforts to create
new tenancies in the existing facilities as we move forward with the formation of an
acceptable redevelopment plan. As the redevelopment plan is established, we are prepared
to make the necessary investment to eliminate the blight and economic distress currently
associated with the Property. At the present time we are studying the redevelopment of the
Property under three different scenarios:
a. Regional retail mall with three -anchor configuration and associated out parcel
retail.
b. Business park with multiple low-rise office buildings and limited retail facilities.
c. Mixed -use office and retail.
... we would estimate that the investment and redevelopment process could result in a
market value for the Property of $20,000,000 to S=000,000 which represents a substantial
increase over the current combined assessed value of the property of $7,857,378.
Additionally, this type of redevelopment activity, once completed, will generally require a
labor force of approximately 900 to 1,000 individuals to support the ongoing operations
associated with the businesses which will locate in the Property. Further, it is important to
note that of these jobs, we would estimate that 75% will be new jobs created by businesses
locating in Kalispell for the first time."
As the analysis shows in Exhibit C, the post redevelopment of the Gateway West Mall could
generate an annual tax increment of $284,827. This new incremental tax value will support the
issuance of an urban renewal bond in excess of $2,000,000. The bond proceeds will assist in the
redevelopment of the Property in accordance with applicable statues, Part 42, Urban Renewal, and
as specified in Section 7-15-4288, MCA. The specific redevelopment plan will depend on market
conditions and development scenarios as outlined above.
NORTH MERIDIAN NEIGHBORHOOD PLAN
► The North Meridian Neighborhood Plan was adopted as an amendment to the Kalispell City -
County Master Plan in December of 1994. The Neighborhood Plan was adopted to serve as a
guide for the most appropriate action to take when a request for a change in zoning or major
development is proposed for the area. The land immediately adjacent to Meridian Road generally
P
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
has a haphazard organization to its zoning and land use pattern. This situation makes it difficult for
property owners to predict what will happen regarding land use in their neighborhood. In addition
to the land use and zoning, the Plan looks at the needs of the neighborhood regarding infrastructure,
such as roads, pedestrian access, water, sewer, and stonn drainage, and sets general policies toward
supplying those services.
The Plan identifies four (4) major issues of concern in this area and outlines goals to address each
of these issues. Those goals are identified as follows:
ISSUE 1: The present urbanized land use pattern incorporates a haphazard and
incompatible mix of uses.
GOAL 1: To set a pattern of land use that incorporates sensitivity to neighboring
uses.
This could be done by encouraging multi -use commercial development along Meridian Road and
U.S. Hwy 2, and primarily west of Two Mile Drive, and by encouraging attached single family
or apartment type dwellings to buffer the commercial development from the single family
development to the east. Using tax increment funds the City could also assist with the relocation
of businesses that are incompatible with the zoning so that the land could be redeveloped with a
use that is compatible with the surrounding area and with the zoning.
Certain public utility companies located on Meridian Road are facing difficulties in expanding
their offices because of zoning designations. A public utility company located on Meridian Road
had at one time shown an interest in purchasing additional property adjacent to their's so that
they could expand and consolidate their offices. When the North Meridian Neighborhood Plan
was adopted as an amendment to the Kalispell City -County Master Plan, this property and
those surrounding it were designated for future high density residential zoning. Because the
Kalispell City -County Master Plan designates the entire area around the utility company as
high density residential, they were unable to apply for a zone change to allow their business to
expand. The City, with tax increment funds, could assist with the relocation of these public
utility companies and encourage the redevelopment and re -use of these sites to a use that is
compatible with the Neighborhood Plan.
ISSUE 2: The interaction of pedestrians, bicycles, and vehicles can create
dangerous situations.
GOAL 2: Create a circulation pattern that maintains a separation of incompatible
systems.
This could be done by providing sidewalks and boulevards along all major streets and roads and
by encouraging bicycle lanes that are separate from the vehicle traveling lanes on Meridian Road,
3
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
Three Mile Drive and Two Mile Drive. This could be done also by implementing the portion of
the Kalispell Transportation Plan that deals specifically with the reconstruction of Meridian
Road.
ISSUE 3: As the City grows, additional traffic will strain the existing system
making it more dangerous.
GOAL 3: Create a street system that can accommodate increases in traffic safely.
The reconstruction of Meridian Road from U.S. Hwy 2 north to U.S. Hwy 93 is a significant
factor in creating a street system that can handle the increased volumes of vehicle and pedestrian
traffic in this area.
ISSUE 4: City services are not yet available to parts of the North Meridian area.
GOAL 4: Provide a full range of services to the area.
While infrastructure such as water, sewer, and storm drains exist in the area, these improvements
are discontinuous. Storm drains, sewer mains, and water mains should be extended to those
areas not served by such improvements. The City could possibly assist in the construction of
Y these improvements with tax increment funds.
MERIDIAN ROAD RECONSTRUCTION
The adopted Kalispell Transportation Plan has identified the reconstruction of North Meridian
from U.S. Hwy 2 West north to U.S. Hwy 93 North as the top priority for urban system funding.
The project includes the widening of the road to accommodate additional travel lanes, turn lanes,
curb, gutter, and pedestrian/bicycle facilities. Design and construction documents are scheduled
to be completed late summer, 1997.
Project funding comes from Urban Highway Funds with a current credit of approximately
$1 million. Total project costs are estimated at $3.1 million with an additional $500,000 needed
for related storm drainage improvements. The fluids accrue to the project account at "$235,000
per year, thus requiring another eight years before construction contracts could be awarded.
Additional right-of-way will also be needed, creating impacts on several properties fronting
Meridian Road.
As tax increment funds become available from the redevelopment of Gateway West Mall and
other properties in the district, the West Side Urban Renewal Plan provides a variety of financing
options to expedite the reconstruction project. The road and intersections are at or over capacity
now, with increasing traffic because of steady growth of commercial and residential development
2
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
on the west side of Kalispell. Improvements to North Meridian Road are critical to the proper
growth of the area to stabilize and improve the tax base.
FLATHEAD COUNTY FAIRGROUNDS
The 57 acre fairgrounds has been the subject of several recent studies analyzing the costs and
implications of relocation versus rehabilitation. One of the goals of Urban Renewal is to
eliminate blight and blighting influences. A recent assessment by fire and building code officials
identified extensive structural and life -safety deficiencies that need correction in the immediate
future. The studies are extensive and need not be duplicated in this plan, but as the Urban
Renewal Plan is adopted and implemented for the west side area, the fairgrounds are utilized by a
wide variety of activities occurring year round, and will continue to be a dominant land -use
commanding planning and financial resources. The creation of the West Side Urban Renewal
Tax Increment Finance District will provide additional opportunities to redevelop the fairgrounds
to its highest and best use.
INFRASTRUCTURE IMPROVEMENTS
The west side of Kalispell has grown piecemeal over the decades, with city services of sewer and
water extended incrementally when requested by developers. Road construction has been limited
and added onto narrow County roads as expediency dictated. Major widening and reconstruction
of existing roads along with new arterials are critical to reduce the increasing traffic congestion
associated with the retail and residential development rapidly occurring on the west side. Storm
drainage and flood plain management are two other critical areas that need analysis to develop and
implement solutions.
PROPERTIES SOUTH OF U.S. Hwy 2 WEST
The area lying to the south of U.S. Hwy 2, east of Meridian Road, has been included into the
West Side Urban Renewal Tax Increment Finance District to encourage and facilitate the
following projects:
I . To assist in the redevelopment of private property to provide opportunities for light
industrial uses in an appropriate neighborhood of similar uses.
2. The construction of additional access roads to better serve underutilized industrial land.
3. Completion of storm drain and flood plain mitigation measures implemented on the north
end of the district.
4. Extension of water mains to provide adequate pressure for fire hydrant flows.
5
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
FINANCING OPTIONS FOR URBAN RENEWAL PROJECTS
Tax Increment Financing ("TTF") may only be used in conjunction with the implementation of an
urban renewal plan and project. The City Council must declare that urban renewal is "necessary
and in the public interest" and that blight exists in an area.
The principal of TTF is that the redevelopment project is financed through the use of new tax
dollars -generated as a result of increased private investment stimulated by a redevelopment
project. It assumes that the existence of blight has a deleterious effect on private investment in
an area. It must also be assumed that if the City of Kalispell adopts a redevelopment plan which
will instill developer -investor confidence, the existing tax base will be maintained at least at
present levels and improved measurably over the term of the project. The tax increment financed
urban renewal project, then, is intended to assure that all levying agencies (schools, state, county,
city) may continue to count on a stable "original" base value of private property on which to levy
taxes. Any increase in the fair market value of property above the "original base" value, or the
increment, will generate new tax dollars; tax dollars that in all probability would not exist were it
not for the urban renewal project. Tax increment is "... the collections realized from extending
the tax levies, expressed in mills, of all taxing bodies in which the urban renewal area or an
industrial district or a part thereof is Iocated against the incremental taxable value." (Section
7-15-4283(8), MCA)
"The tax increment, (the new tax dollar) if any, received in each year from the levy of the
combined mill rates of all the affected taxing bodies against the incremental taxable value
within the urban renewal area ... shall be paid into a special fund held by the treasurer of
the municipality and used as provided in 7-15-4282 thru 7-15-4292." (Section 7-15-
4286(2)(a), MCA)
The tax increment may be used to pay the following costs of or incurred in connection with an
urban renewal project:
1. land acquisition;
2. demolition and removal of structures;
3. relocation of occupants; and
4. the acquisition, construction, and improvement ... of streets, roads, curbs, gutters,
sidewalks, pedestrian malls, alleys, parking lots and off-street parking facilities, sewers,
sewer lines, sewage treatment facilities, storm sewers, waterlines, waterways, water
treatment facilities, public buildings, and other public improvements ... and items of
personal property to be used in connection with improvements for which the foregoing
costs may be incurred. (Section 7-15-4288, MCA)
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
Tax increment funds may be pledged for the payment of revenue bonds issued for urban renewal
projects or of general obligation bonds, revenue bonds, or special assessment bonds issued to pay
urban renewal costs (Section 7-15-4290, MCA). All of these bonds are tax exempt, i.e., the
interest earned by the bond buyer cannot be taxed as income, therefore, a lower than market rate
of interest is paid by the seller (municipality).
Urban renewal should result in measurable, tangible benefits, as well as keep the area's base
taxable value from declining. The base taxable value means, "the actual taxable value of all
taxable property within an urban renewal area ... prior to the effective date of a tax increment
financing provision" (Section 7-154283(2), MCA). If blight is eliminated, and if investor -
developer confidence is restored in the area, all levying agencies may continue to share in the
taxes generated by the base. After urban renewal costs have been paid and all bonded indebted-
ness for the project satisfied, the segregation of tax increment will cease and all taxing bodies
will share in taxes generated by the improved tax base. There are no tax benefits or fair market
value reductions to properties within the area. Such properties will, however, benefit from any
improvements within the area which may occur because of the project.
URBAN RENEWAL BONDS AND REFUNDING BONDS
A municipality has the power to issue bonds to finance urban renewal, including the payment of
principal and interest upon any advances for surveys and plans, and to issue refunding bonds for
the payment of such bonds previously issued. Such bonds shall be authorized by resolution or
ordinance of the local governing body and shall not pledge the general credit of the municipality
(Section 7-15-4301, MCA). Specifics related to urban renewal bond authority are contained in
Chapter 7, Title 15, Part 43, of the Montana Code Annotated.
CONCLUSION
The true test of any redevelopment and/or economic development plan will be whether or not the
plan stimulates private investment which results in jobs, an improved tax base, and a more
humane environment. This statement has been reiterated throughout this text because it is
important. Planners, community leaders, and elected officials must realize that investor
developers are motivated by profit, reasonably secure investment, and the opportunity for
investment growth. We should perhaps add that it is a delusion to assume that a
businessperson's social conscience will prevail over his or her desire for profit, and thus compel
them to invest in our communities and at Kalispell City.
Redevelopment and economic development plans must not just treat the symptoms of blight,
inadequate public improvements and a stagnant tax base, but attack the cause - lack of profit
incentive. Federal and state programs are now focusing on leveraging private dollars with
7
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
limited grants; local government also ought to channel its efforts in that direction. In order to do
so, local government needs to understand what profit incentives are available to businesses in
addition to: low interest loans, grants, good planning, adequate public services, technical
assistance required, and local governments' interest in viability of businesses.
0
Incorporated 1892
Planning, Economic &
Community Development Department
P.O. Box 1997
Kalispell, MT 59903-1997
IUr�
248 Third Avenue East
(406) 758-7740
(406) 758-7739 (office fax)
(406) 758-7758 (City Hall fax)
To: Clarence W. Krepps, City Manager, and Glen Neier, City Attorney
From: Lawrence Gallagher, PECDD Director
Subject: WEST SIDE URBAN RENEWAL TAX INCREMENT FINANCE DISTRICT URBAN
RENEWAL PLAN - School District #5 Meeting, February 24, 1997
Date: February 28, 1997
On February 24, 1997, Glen Neier, Ross Plambeck, and I met with Bill Cooper,
Superintendent of School District #5, School Board members Marjorie Simpson and jack
Fallon, and Todd Watkins, Finance Director for School District #5. The purpose of the
meeting was to discuss the school district's concerns with the proposed West Side Urban
Renewal Tax Increment Finance District Urban Renewal Plan. Those representing the
school district all expressed concern that implementing the plan would encourage the
construction of multi -family residential housing, generating new families with school age
children placing additional demand on already crowded elementary schools.
All School District #5 representatives present agreed they would not protest the plan if,
prior to adoption of the ordinance to create the West Side Urban Renewal Tax Increment
District Urban Renewal Plan, the City would consider including language in the ordinance
expressing its willingness to consider the use of tax increment funds to help mitigate
potential impacts on schools.
We discussed the reality that, more than likely, the area will continue to attract high
density multi -family development regardless of the City's involvement in a redevelopment
plan for the area. If there is no Urban Renewal Plan and, therefore, no potential for tax
increment segregation, there is no way the City can or should help mitigate any impact on
schools. However, it was agreed that one of the plan's objectives is to encourage
additional high density residential development and that to the extent feasible, a portion of
the tax increment generated from new residential development could be allocated by the
City to mitigate impacts on schools.
EUUntrtH�S•.��:
OPPORTUNITY
Clarence W. Krepps, City Manager and Glen Neier, City Attorney
Page 2
February 28, 1997
It should be noted that the proposed Westside Urban Renewal Tax Increment Finance
District Urban Renewal Plan has three primary objectives:
1. Preservation and expansion of the Gateway West Mall;
2. Promotion of commercial development along Meridian Road by assisting in the
reconstruction of Meridian Road; and
3. Mitigation of storm water and surface drainage along Spring Creek and in the
Northwest quadrant of the City.
While the achievement of the above objectives may not operate to exclude participation
by the City in mitigating School District #5 enrollment demands, no one can guarantee that
the West Side Urban Renewal Tax Increment District will generate the necessary revenues
to reach all goals.
It was generally agreed that the following language would be submitted for City Council
consideration before the March 3, 1997, Public Hearing on the Plan, with the
recommendation that it be incorporated into the ordinance adopting the Plan:
In the event the implementation of the West Side Urban Renewal Tax
Increment Finance District Urban Renewal Plan increases student enrollment
for elementary schools serving the area, the City of Kalispell will consider
utilizing a portion of the tax increment that may be generated in excess of
that needed for development or redevelopment to mitigate the impact on
School District #5 schools.
Flathead Regional Development Office
723 5th Avenue East - Room 414
Kalispell, Montana 59901
February 18,1997
Phone: (406) 758-5980
Fax: (406) 758-5781
Re: Planning Board Consideration of the West Side Urban Renewal Plan -
Tax Increment Finance District
Dear Clarence:
The Kalispell City -County Planning Board and Zoning Commission held their regular
meeting of February 11,1997, to consider the West Side Urban Renewal Plan in accordance
with, Section 7-15-4213(1) M.CA. which states that "Prior to the approval of an urban
renewal project; the local governing body shall submit the urban renewal project to the
planning commission of the municipality for review and recommendations as to its
conformity with the comprehensive plan or parts thereof for the development of the
municipality as a whole."
Staff report #I RD-96-3 was presented by Narda Wilson of the Flathead Regional
Development Office describing the Plan, the Tax Increment Finance District boundaries and
how the financing mechanisms facilitate the anticipated improvements.
Larry Gallagher with the Department of Community Department elaborated on the goals of
the Flan to encourage economic development and expansion in established commercial
areas, and upgrading of existing infrastructure, which includes reconstruction of Meridian
Road. Richard Mendenhall, a representative for the Woodmen Property LC from Salt
Lake City, talked about their cooperative efforts for redevelopment of Gateway West Mall
and how they intended to provide a benefit to the community through redevelopment of
the mall, rather than building another commercial facility.
The Board discussed the West Side Urban Renewal and agreed that it is a valuable project
for the City as well as the community.
The motion was made to find that the West Side Urban Renewal Plan will implement the
goals of the Kalispell City -County Master Plan and the North Meridian Neighborhood
Plan, improve infrastructure and investment opportunities in the area as well as increase
the tax base.
Providing Community Planning Assistance To:
• Flathead County • City of Columbia Falls • City of Kalispell • City of Whitefish
Clarence Krepps, City Manager
West Side Urban Renewal Plan
Page 2
The Planning Board recommends that the City Council move ahead with the creation of the
tax increment finance district and the implementation of the West Side Urban Renewal
Plan. This matter has been scheduled for public hearing at the regular meeting of the City
Council on March 3,1997.
Please contact this Board or Narda Wilson at the Flathead Regional Development Office if
you have any questions.
Respectfully submitted,
7 KA ELL CM -COUNTY PLANNING BOARD AND ZONING COMMISSION
l"
Therese Fox Hash
President
TFH/NW/eo
Attachments: FRDO Report #KRD-96-3 and packet
Minutes from the 2/11/97 Planning Board meeting to follow
c Larry Gallagher, Director of PECDD
c w/Att Debbie Gifford, Clerk of Council
fffflwww�,
4 10, •MJ
WEST SIDE URBAN RENEWAL PLAN AND
REPORTTAX INCREMENT FINANCE DISTRICT
FLATHEAD REGIONAL DEVELOPMENT OFFIC
STAFF i •.
..
A report to the Kalispell City -County Planning Board and the Kalispell City Council
regarding the adoption of a West Side Urban Renewal Plan and the creation of the
West Side Tax Increment Finance District. A meeting on this matter has been
scheduled before the Kalispell City -County Planning Board for February 11, 1997
in the Kalispell City Council Chambers, beginning at 7:00 p.m. The planning board
will make a recommendation to the Kalispell City Council who will then schedule a
public hearing on the matter.
The City of Kalispell has been working to encourage economic development and
planned growth in the west side of Kalispell. This began with the North Meridian
Neighborhood Plan which was adopted approximately two years ago as an
addendum to the Kalispell City -County Master Plan. Several issues were identified
in the plan with regard to the redevelopment of the area. Since that time, other
issues have arisen in the area that should be considered as a part of this general
area. These issues include the redevelopment of the Gateway West Mall, the
reconstruction of Meridian Road, storm water drainage in the area, and the general
upgrading of infrastructure.
The Kalispell City Council passed a resolution on January 6, 1997, to consider the
creation of a West Side Tax Increment Finance District which includes the North
Meridian Neighborhood Plan area. The Kalispell Department of Community
Development has prepared a West Side Urban Renewal Plan which establishes
district boundaries and outlines potential projects within the area. The plan and
map are attached as Exhibit A.
Once a tax incrementrfznance district has been establ: shed, the City is then able to
issue and sell tax increment bonds to finance all or a portion of the urban renewal
projects. Some of the projects outlined in the West Side Urban Renewal Plan
include a cooperativtaeffortl_--with Woodmen Property L.C. from Salt Lake City, Utah,
and the. City of-EKalspeJ1fo`r the redevelopment of Gateway West Mall, generating
tax revenues to ,facili�ecthe reconstruction of Meridian Road which will include a
bike and- pedest ianA d the general upgrading of roadways, drainage systems,
and buildings rutitheiaxeaipa..
The Montana aCcd treqUf s that the planning board of the municipality review the - _4 2 i.
proposed urbaba aze t (pldn and make a recommendation to the City Council as -brio s
to .its conf6 ' a thr€ pmaster plan. After receiving the planning board'sfdy withi
n; ng board. i-
.1
comments, the city council will schedule a public hearing on the matter. Notice of
the public hearing is required to be provided to all of the property owners within
the proposed urban renewal district.
The proposed boundaries for the West Side Urban Renewal/Tax Increment Finance
District includes all of the area within the Meridian Neighborhood Plan Kalispell
and properties to the south and west. Those properties are shown on the map
included in Exhibit A and can be generally described as follows: The northern
boundary beginning at the intersection of Highway 93 and Meridian Road; then
southeast along Highway 93 to Colorado; then heading west along Colorado to
Seventh Avenue W.N.; the south to First Street West; then west to Meridian and the
city limits; then following the city limit to Appleway Drive and continuing to follow
the western boundary of the city limits to Three Mile Drive; then east to Northwest
Lane; then north to Parkway Drive to the point of beginning; i.e., the intersection of
Meridian Road and Highway 93.
Projects within the urban renewal district can be considered for assistance through
tax increment financing and may be eligible for low -interest loans for urban
renewal, rehabilitation and construction of new buildings, thereby increasing the
City's tax base. The increased revenue will be used to pay off the bonding
obligations within a relatively short period of time and will ultimately generate more
tax revenue for the City.
Parts 42 and 43 of the Montana Code Annotated are cited as the "Urban Renewal
Law." Part 42 provides a statement of policy in blighted areas, the need for
redevelopment and rehabilitation of blighted areas, as well as the preparation of an
urban renewal plan. Section 7-15-4213 through Section 7-15-4215 outlines the
responsibilities of the Planning Commission and hearing requirements on the
urban renewal plan. Part 43 provides for the authorization to issue urban renewal
bonds, infrastructure development bonds, obligations for the repayment of bonds
and other financing elements.
With regard to the Planning Commission, Section 7-15-4213(1) states that "Prior to
the approval of an urban renewal project, the local governing body shall submit the
urban renewal project to the planning commission of the municipality for review
and recommendations as to its conformity with the comprehensive plan or parts
thereof for the development of the municipality as a whole."
Further, Section 7-15-4213(2) states, "The planning commission shall submit its
written recommendations with respect to the proposed urban renewal plan to the
local governing body within 60`' 'after receipt of it." Subsequent to receiving the
recommendation of the planning board, the City Council will schedule a public
2
hearing on the matter. All property owners within the proposed district will be
notified by mail. This notice will include the date and time of hearing, area
proposed for urban renewal and a general scope of the plan.
"Goals and Objectives" are listed in the Kalispell City -County Master Plan. Goal S,
Economy, encourages a healthy diversified economy promoted by planning the
location of design of shopping areas and tourist facilities. Goal 6, Land Use,
encourages the orderly development of land with ample space for future growth
which is compatible with adjacent land uses. The master plan also encourages the
efficient use of transportation facilities and existing infrastructure. The proposed
West Side Urban Renewal Plan promotes the goals of the master plan by upgrading
the existing infrastructure and encouraging economic development and expansion
in established commercial areas.
The North Meridian Neighborhood Plan includes a policy section which identifies
four issues and goals. Several of the policy statements intended to facilitate the
goals for the plan encourage the Community Development Department to adopt a
redevelopment plan for the area which will assist in the redevelopment or relocation
of non -compatible buildings or uses, facilitate the construction of safe traffic and
pedestrian traffic, and facilitate the development of full services in the area. The
proposed West Side Urban Renewal Plan promotes the goals of the neighborhood
plan by providing a financing mechanism to achieve the upgrading and/or
construction of compatible uses and infrastructure in the area.
COMMENDATION
Staff would recommend the Kalispell City -County Planning Board find that the
proposed West Side Urban Renewal Plan and the proposed tax increment finance
district furthers the goals of the Kalispell City -County Master Plan and the North
Meridian Neighborhood Plan and that they recommend to the Kalispell City Council
that they proceed with the public hearing process.
H:\FRDO\REPORTS\KALISPEL\KRD96-3.RPT .,
P?
EXHIBIT "A"
WEST SIDE URBAN RENEWAL
TA,Y INCREMENT FINANCE DISTRICT
URBAN RENEWAL PLAN
INTRODUCTION
On January 6, 1997, the Kalispell City Council adopted Resolution No. 4309 finding that one or
more blighted areas exist within the areas of the North Meridian Neig aborhood Plan (Exhibit "A"),
and an additional area described below (Exhibit "B"). The North Meridian Neighborhood Plan in
general covers an area bounded by U.S. Hwy 2 on the south, U.S. Hwy 93 and Wedgewood Lane
on the north; 7th Avenue WIN on the east; and Hawthorne Avenue and Northern Lights Blvd on the
west. The additional area is formed by extending the easterly 7th Avenue WN boundary described
above, south across the railroad tracks to 7th Avenue West and then westerly to include all of the
B-2 zoned parcels abutting the south right-of-way of West Center Street to the west Kalispell City
Limits at Meridian Road and then north along the westerly boundary of the Kalispell City Limits to
Northern Lights Blvd. It was found that rehabilitation, redevelopment, or a combination thereof,
within such area is necessary in the interest of the public health, safety, morals or welfare of the
residents of the City of Kalispell.
The primary goals in creating the Westside Urban Renewal Tax Increment Finance District are to
implement the North Meridian Neighborhood Plan that was adopted as an amendment to the
Kalispell City -County Master Plan in December of 1994, by both the Kalispell City Council and
the Flathead County Board of Commissioners to assist, if necessary, in the redevelopment of the 39.5
acres encompassing the Gateway West Mall and the former Crop Hail Building, and to use available
tax increment funds to assist in the reconstruction of Meridian Road and associated projects such as
providing storm drains in the area.
URBAN RENEWAL PROJECTS
The West Side Urban Renewal Tax Increment Finance District Urban Renewal Plan (the "Plan')
contains many undertakings that need to be implemented under the authority of this Plan.,.As u
.< specified in Part 42, Urban Renewal, MCA, the purpose of an Urban Renewal Plan is`to' assure
IW
y y y
w.u4 -q x rs4
that a sound and adequate financial program exists for the financing of Urban Renewal pro. ept ,
1 �11i wiz e follounng is a brief description of the City of Kalispell's intent to use Tax Incren enduric s
F _ �o Ppa
to implement and finance eligible Urban Renewal Projects: 4,2
11 x5 era ion 7l
irATEWAY WEST MALL REDEVELOPMENT
BoT
1'a 6' field Properties Inc., of Salt Lake City, Utah, has entered into a joint venture relafionshi fit w µ , .r
I,Woodbury Corporation, also headquartered in Salt Lake City, UT, forming , WOODIV>1F�T `" g
" _# € % A aI a x st alb s,` 3I1ell�i�
�dtea,ftc p8rir ROPERTIES L.C., to pursue the redevelopment of Gateway West Mall and reldeod,�p o er i�s
tg «x. ter Ian to D t
ffi cr p erg Albit C ). The property comprises approximately 39.5 acres with the two pii�ar co poner(t8
'e ng .t e tateway West Mall e and the former Crop Hail Buildingwhihs ow;t is p`ry o op r a
wo
Egghead`Software Company.
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
Woodmen`Properties L.C. has an option with the mall otivners, Collier -Heinz, to redevelop and
expand the existing mall. It is their intention to proceed under the Urban Renewal Law by
developing a workable and feasible plan, which can be implemented through private enterprise
without the exercising of eminent domain. As stated in their proposal:
"Our goal is to reverse the trend toward deteriorating physical facilities and falling property
values associated with the Property. We would intend to make immediate efforts to create
new tenancies in the existing facilities as we move forward with the formation of an
acceptable redevelopment plan. As the redevelopment plan is established, we are prepared
to make the necessary investment to eliminate the blight and economic distress currently
associated with the Property. At the present time we are studying the redevelopment of the
Property under three different scenarios:
a. Regional retail mall with three -anchor configuration and associated out parcel
retail.
b. Business park with multiple low-rise office buildings and limited retail facilities.
c. Mixed -use office and retail.
... we would estimate that the investment and redevelopment process could result in a
market value for the Property of $20,000,000 to $22,000,000 which represents a substantial
increase over the current combined assessed value of the property of $7,857,378.
Additionally, this type of redevelopment activity, once completed, will generally require a
labor force of approximately 900 to 1,000 individuals to support the ongoing operations
associated with the businesses which will locate in the Property. Further, it is important to
note that of these jobs, we would estimate that 75% will be new jobs created by businesses
locating in Kalispell for the first time."
As the analysis`isl ows io° Exhibit C, the post redevelopment of the Gateway West Mall could
generate an'dififfi = t c !n6 rhent of $284,827. This new incremental tax value will support the
'
issuance of a`ii fi a�+6&Wal :bond in excess of $2,000,000. The bond proceeds will assist in the
'
redevelopment oftlie Property ii~i accordance with applicable statues, Part 42, Urban Renewal, and
�,
as specified n!�tion 7-15.4288, MCA. The specific redevelopment plan will depend on market
i h,
conditions and dyevellopmpentscenarios as outlined above.
lun
y
NORTWMEMTII NEIGHBORHOOD PLAN
-
kl#�tt
i The North Meridian'Neighborhood Plan was adopted as an amendment to the Kalispell
County Master"P aa-in=Decetnber of 1994. The Neighborhood Plan was adopted to serve as a
gwde'*forrvth�m�t app pi a e`caction to take when a request for a change in zoning or major' i
developmenfii; prb0d1dd f'dr"the area The land immediately adjacent to Meridian Road generally `
'
2
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
has a haphazard organization to its zoning and land use pattern. This situation makes it difficult for
property owners to predict what will happen regarding land use in their neighborhood. In addition
to the land use and zoning, the Plan looks at the needs of the neighborhood regarding infrastructure,
such as roads, pedestrian access, water, sewer, and storm drainage, and sets general policies toward
supplying those services.
The Plan identifies four (4) major issues of concern in this area and outlines goals to address each
of these issues. Those goals are identified as follows:
ISSUE 1: The present urbanized land use pattern incorporates a haphazard and
incompatible mix of uses.
GOAL 1: To set a pattern of land use that incorporates sensitivity to neighboring
uses.
This could be done by encouraging multi -use commercial development along Meridian Road and
U.S. Hwy 2, and primarily west of Two Mile Drive, and by encouraging attached single family
or apartment type dwellings to buffer the commercial development from the single family
development to the east. Using tax increment funds the City could also assist with the relocation
of businesses that are incompatible with the zoning so that the land could be redeveloped with a
use that is compatible with the surrounding area and with the zoning.
Certain public utility companies located on Meridian Road are facing difficulties in expanding
their offices because of zoning designations. A public utility company located on Meridian Road
had at one time shown an interest in purchasing additional property adjacent to their's so that
they could expand and consolidate their offices. When the North Meridian Neighborhood Plan
was adopted as an amendment to the Kalispell City -County Master Plan, this property and
those surrounding it were designated for future high density residential zoning. Because the
Kalispell City -County Master Plan designates the entire area around the utility company as
high density residential, they wqq ppablq1tqjqpply for, a zone change to allow their business to
expand. The City, with tax in fiindscoul4 assist with the relocation of these public
utility companies and encourage the .r dau�ILLoop i, and re -use of these sites to a use that is
compatible with the Neighborhood Plan, , Enx$ti
is ; :r 4 ire
ISSUE 2: The interaction of pedestrians, bicycles, and vehicles can create
dangerous situations. ,
GOAL 2: CreateQa cirgA
te-�p-Pttr at maintains a separation of incompatible
Vste
intersections a_ --
This could be done by providing,§ d4 aj1-anti poi�eyards along all major streets and: roads and
by encouraging bicycle lanes that are separate from the vehicle traveling lanes on Meridian Road,
3
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
Three Mile Drive and Two Mile Drive. This could be done also by implementing the portion of
the Kalispell Transportation Plan that deals specifically with the reconstruction of Meridian
Road.
ISSUE 3: As the City grows, additional traffic will strain the existing system
making it more dangerous.
GOAL 3: Create a street system that can accommodate increases in traffic safely.
The reconstruction of Meridian Road from U.S. Hwy 2 north to U.S. Hwy 93 is a significant
factor in creating a street system that can handle the increased volumes of vehicle and pedestrian
traffic in this area.
ISSUE 4: City services are not yet available to parts of the North Meridian area.
GOAL 4: Provide a full range of services to the area.
While infrastructure such as water, sewer, and storm drains exist in the area, these improvements
are discontinuous. Storm drains, sewer mains, and water mains should be extended to those
areas not served by such improvements. The City could possibly assist in the construction of
these improvements with tax increment funds.
MERIDIAN ROAD RECONSTRUCTION
The adopted Kalispell Transportation Plan has identified the reconstruction of North Meridian
from U.S. Hwy 2 West north to U.S. Hwy 93 North as the top nriorit)� for urban system funding.
The project includes the widening of the road to accommodate additional travel Ianes, turn lanes,
curb, gutter, and pedestrian/bicycle facilities. Design and construction documents are scheduled
to be completed late summer, 1997.
Project funding comes from Urban Highway Funds with a cuifent`credit of approximately
$1 million. Total project costs are estimated at $3.1 `Wanton with an -additional $500,000 needed
for related storm drainage improvements. The funds accrue to the project account at $235,000
per year, thus requiring another eight years before construction contracts could be awarded.
Additional right-of-way will also be needed, creating impacts on'several properties fronting
Meridian Road.
As tax increment funds become available from' redev fi pmont °of Gateway West Mall and
other properties in the district, the West Side Urban Renewal Plan provides a variety of financing
options to expedite the reconstruction project: �Tiie46ac "and intersections are at or over capacity
now, with increasing traffic because of steady growth of commercial and residential development
4
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
FINANCING OPTIONS FOR URBAN RENEWAL PROJECTS
Tax Increment Financing ("TIF") may only be used in conjunction with the implementation of an
urban renewal plan and project. The City Council must declare that urban renewal is "necessary
and in the public interest" and that blight exists in an area.
The principal of TIF is that the redevelopment project is financed through the use of new tax
dollars generated as a result of increased private investment stimulated by a redevelopment
project. It assumes that the existence of blight has a deleterious effect on private investment in
an area. It must also be assumed that if the City of Kalispell adopts a redevelopment plan which
will instill developer -investor confidence, the existing tax base will be maintained at least at
present levels and improved measurably over the term of the project. The tax increment financed
urban renewal project, then, is intended to assure that all levying agencies (schools, state, county,
city) may continue to count on a stable "original" base value of private property on which to levy
taxes. Any increase in the fair market value of property above the "original base" value, or the
increment, will generate new tax dollars; tax dollars that in all probability would not exist were it
not for the urban renewal project. Tax increment is "... the collections realized from extending
the tax levies, expressed in mills, of all taxing bodies in which the urban renewal area or an
industrial district or a part thereof is located against the incremental taxable value." (Section
7-15-4283(8), MCA)
"The tax increment, (the new tax dollar) if any, received in each year from the levy of the
combined mill rates of all the affected taxing bodies against the incremental taxable value
within the urban renewal area ... shall be paid into a special fund held by the treasurer of
the municipality and used as provided in 7-15-4282 thru 7-15-4292." (Section 7-15-
4286(2)(a), MCA)
The tax increment may be used to pay the following costs of or incurred in connection with an
urban renewal project: t{tt , _ C S }Ao-»
I. ` land acquisition;
2: demolition and removal of structures;
ills, a off; � ;j..`r€ =
3: relocation- of occupants; and _cc
4. ` the acquisition, construction, and improvement ... of streets, roads, curbs, gutters, �aa!
sidewalks, pedestrian malls, alleys, parking lots and off-street parking facilities, sewers,
.eater` sewer lines, sewage treatment facilities, storm sewers, waterlines, waterways, water
items ems of treatment facilities, public buildings, and other public improvements ... and items of
,u ; o_ me nt and econom' c. d
personal property to be used in connection with improvements for which theore°n prover,
costs may be incurred. (Section 7-15-4288, MCA)
P ede a, and state pro
W.
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
Tax increment funds may be pledged for the payment of revenue bonds issued for urban renewal
projects or of general obligation bonds, revenue bonds, or special assessment bonds issued to pay
urban renewal costs (Section 7-15-4290, MCA). All of these bonds are tax exempt, i.e., the
interest earned by the bond buyer cannot be taxed as income, therefore, a lower than market rate
of interest is paid by the seller (municipality).
Urban renewal should result in measurable, tangible benefits, as well as keep the area's base
taxable value from declining. The base taxable value means, "the actual taxable value of all
taxable property within an urban renewal area ... prior to the effective date of a tax increment
financing provision" (Section 7-154283(2), MCA). If blight is eliminated, and if investor -
developer confidence is restored in the area, all levying agencies may continue to share in the
taxes generated by the base. After urban renewal costs have been paid and all bonded indebted-
ness for the project satisfied, the segregation of tax increment will cease and all taxing bodies
will share in taxes generated by the improved tax base. There are no tax benefits or fair market
value reductions to properties within the area. Such properties will, however, benefit from any
improvements within the area which may occur because of the project.
URBAN RENEWAL BONDS AND REFUNDING BONDS
A municipality has the power to issue bonds to finance urban renewal, including the payment of
principal and interest upon any advances for surveys and plans, and to issue refunding bonds for
the payment of such bonds previously issued. Such bonds shall be authorized by resolution or
ordinance of the local governing body and shall not pledge the general credit of the municipality
(Section 7-15-4301, MCA). Specifics related to urban renewal bond authority are contained in
Chapter 7, Title 15, Part 43, of the Montana Code Annotated.
CONCLUSION
The true test of any redevelopment and/or economic development plan will be whether or not the
plan stimulates private investment which results in jobs, an improved tax base, and a more
humane environnment. This: statement has been reiterated throughout this text because it is
important. Planners, community -leaders, and elected officials must realize that investor
developers are motivated by prof t, reasonably secure investment, and the opportunity for
investment growth. We shouldperhaps add that it is a delusion to assume that a
businessperson's social conscience will prevail over his or her desire for profit, and thus compel
them to invest in our communities and at Kalispell City.
Redevelopment and :economic; development plans must not just treat the symptoms of blight,
inadequate public improvements -'and a stagnant tax base, but attack the cause - lack of profit
incentive. Federal and state programs are now focusing on leveraging private dollars with
7
Draft - West Side Urban Renewal Tax Increment District
Urban Renewal Plan
February 3, 1997
limited grants; local government also ought to channel its efforts in that direction. In order to do
so, local government needs to understand what profit incentives are available to businesses in
addition to: low interest loans, grants, good planning, adequate public services, technical
assistance required, and local governments' interest in viability of businesses.
8