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F. 2015-2016 TIF Annual Reports City of Kalispell Tax Increment Financing Districts Annual Report 2015-2016 Prepared by: Kalispell Urban Renewal Agency & Community and Economic Development Department Introduction The intent of this report is to provide a comprehensive understanding of existing Tax Increment Financing (TIF) Districts. Knowledge of TIF projects and other actions related to TIF in addition to financial reports serve to improve TIF management and implementation on behalf of the community. This report documents Kalispell Tax Increment Financing Districts for the period September 2015 through August 2016 and to provide sufficient information for review. Summary Tax Increment Financing District law is found at Title 7, Chapter 15, Parts 42 and 43, of the Montana Code Annotated. In Kalispell, applications for Tax Increment Financing are accepted through the Community and Economic Development Department, reviewed and considered by the Urban Renewal Agency and ultimately decided by City Council. >38,953,059 $39,229,175 .7% $8,387,046 $8,387,046 0% $8,117,731 $9,598,211 18% $1,000,265 $1,211,165 21% The Montana Department of Revenue 2016 Certified Taxable Valuation Information annual report is the source of all current taxable, base taxable and incremental values utilized in this report. The Department of Revenue's information for the Kalispell City taxing jurisdiction was certified August 1, 2016. Note that certification of values is determined on a single day in the calendar year and therefore provides a "snapshot" of value. it is not uncommon for values to vary between the time of the certification and the actual collection of taxes by the Department of Revenue. It should be mentioned that due to changes in the Department of Revenue's valuation method in 2015 readers will see significant changes in valuation from 2014 to 2015, with values becoming more comparable from 2015 to 2016. Further, it is important to note that the West Side TIF boundary was expanded by City Council action in December 2012 to include the Core Area leading to a recalculation of the base taxable value. The recalculation together with the significant variations in taxable values experienced throughout the City creates year to year calculations that can be counter -intuitive. The City of Kalispell Tax Increment Financing Districts are overseen by a five -member volunteer board, the Urban Renewal Agency (URA). Board members are appointed by City Council to serve four-year, staggered terms. Members and board terms for 2015-2016: OA Member Position Term Expires Marc Rold Chairman 04/30/2018 Murphy McMahon Vice Chairman 04/30/2016 Jeff Zauner Member 04/30/2018 Dave Girardot Member 04/30/2017 Shannon Freix New Member 04/30/2020 Matt Venturini New Member 04/30/2020 Filled McMahon Vacancy Filled Vacant Board Seat New board members Shannon Freix and Matt Venturini filled the existing vacant board position and the board opening left upon Murphy McMahon's term expiration. The URA held six meetings and attended one public meeting from September 10, 2015 and August 12, 2016. The Urban Renewal Agency receives staff support from the City of Kalispell, Community and Economic Development Department. The Urban Renewal Agency meeting history for the period September 2015 to August 2016 follows: Meeting Date Attendance Action 01/13/2016 All Members Wayne Freeman and Stephanie Ray of CTA joined committee to provide updated information on the South Kalispell Urban Renewal Plan —gave presentation and provided information regarding Board inquiries 01/13/2016 All Members CTA South Kalispell Urban Renewal Plan presentation for public 02/10/2016 All Members Members of the public Dave Hoerner and Scott Richardson in attendance - South Kalispell Urban Renewal Plan discussion and board's plan suggestions and modifications to CTA in addition to public member comment 02/22/2016 All Members Discussion and suggested plan revisions with Wayne Freeman of CTA regarding South Kalispell Urban Renewal Plan 04/27/2016 All Members Visited CTA's second South Kalispell Urban Renewal Plan Community Open House in lieu of meeting at City Hall 05/11/2016 All Members & New member introductions, South Kalispell Urban Renewal New Members Plan discussion and recommendation to Council 06/08/2016 Rold, Freix Tour of Westside TIF project at 7 Main Street City of Kalispell Tax Increment Finance [districts September to, ZU12 �I w Y t Legend Kalispell City Limits Boundary Westside TIF Airport TIF % s Old School Station TIF - Industrial Old School Station TIF - Technology, , 3 4 West Side/Core Area Tax Increment Financing District In accordance with provisions of Montana State Law, City Council adopted Ordinance No. 1259 on March 17, 1997, establishing the West Side Urban Renewal Tax Increment Financing District and adopting the urban renewal plan. The ordinance also established January 1, 1997, as the base year for calculating the tax increment of the district. The enabling legislation documents the following purpose of the West Side TIF: Whereas, the Plan [West Side Urban Renewal 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 increase in traffic safety; and d. providing a full range of services to area. In November 2012, City of Kalispell Ordinance No. 1717 modified the boundaries of the Westside TIF District to include an area referred to as the "Core Area." The Core Area encompasses 365 acres and is focused along the major roadways of Idaho Street, Main Street, Center Street, Meridian Street, and 5th Avenue West North. In February 2013, Kalispell City Council Resolution No. 5605 was adopted as an amendment to the West Side Urban Renewal Plan, the Core Area Plan. The intent of the plan is to eliminate blight and encourage redevelopment in the district through the use of TIF as specified by State Law. Current City Council Ward: Ward 1 Council Members: Kari Gabriel and Sandy Carlson West Side TIF District JFV. Chan&e.Since 2015 West Side Base Taxable Value West Side Current Taxable Value �' .. :. • Total West Side T&I-ncremental- alien . The table shows increases in both the current taxable value and the total incremental value from 2015 to 2016. The current assessed value of property within the West Side TIF District increased from $7,932,918 to $8,332,869 resulting in 5% growth from the base assessed value established in 2012 at the time of the District's expansion. On September 10, 2014 the URA approved a 6-month extension of the 11 Main Street Developer's Agreement to accommodate street and sidewalk closure required for the extension of the fire line to the building as well as fagade improvements, the project was completed in November 2015. The URA also approved Historic Fagade Improvement Grant funding for 7 Main Street to accompany the already approved Westside TIF Technical Assistance funding for repair and rehabilitation of the building fagade comparable to historic standards, this project was completed in June 2016. 5 In April 2015, City Council approved Resolution No.5719, accepting the recommendation by the City of Kalispell Urban Renewal Agency to identify the project known as the Core and Rail Redevelopment Project as an urban renewal project that may be financed by West Side Tax Increment Funds. The funds identified are considered match for the Transportation Investment Generating Economic Recovery (TIGER) grant and will be used to fund a portion of the Kalispell Core and Rail Redevelopment Project. In October 2015, the City of Kalispell and its partner Flathead County Economic Development Authority (FCEDA) were awarded $10 million in TIGER VII grant funding for the Kalispell Core and Rail Redevelopment Project. This project begins with the construction of the new Glacier Rail Park at the reclaimed gravel pit east of Kalispell, allowing the two businesses currently using rail services to relocate to the new rail park. Following the relocation of those businesses the old rail line, currently dissecting the center of Kalispell, will be converted into a bike and pedestrian trail, creating a safe, alternative transportation corridor that connects citizens of this economically disadvantaged section of the community to work and education opportunities. This project allows for redevelopment of approximately 44 acres of vacant, blighted, brownfields properties within the area, creating new vitality in the epicenter of the community. For more information and updates on this project please visit: http:/Lwww.kalispelicoreandrail.com This project has become an economic catalyst within the Kalispell Core Area and has led to a number of redevelopment projects in the area from 2012 to present: Year of Completion Project Name Permit Amount Location 2012 A to Z Engineering $210,000 138 E Center St 2012 Loading Dock/Brannigan's Renovation/ Addition $700,000 101 E Center St 2013 Depot Place Senior Living $2,741,438 249 E Center St 2013 Flathead Liquor $119,600 1121 Hwy 2 W 2013 River Church $587,500 1275 Hwy 2 W 2014 Starbucks $750,000 10 N Main St 2014 Kalispell Kidds Dental $1,300,000 1252 N Meridian 2016 7 Main Street $83,000 7 Main St 2016 Papa Murphy's $400,000 238 E Center St 2016 Fuel Fitness $1,700,000 1305 Hwy 2 W 2017 Herberger's Addition $2,000,000 20 N Main St TOTAL $10,591,538 b The West Side TIF District will expire on January 1, 2037. West Side TIF Fiscal Year 2016 Revenue (7/1/15-6/30/16) West Side TIF beginning cash July 1, 2015: $3,995,240 Tax Increment Revenue: $282,012 Investment Earnings Revenue: $28,073 Fiscal Year 2015 Available for Expenditures: $4,305,325 West Side TIF Fiscal Year 2016 Expenditures and Commitments: Personal Services: ($45,541) Contract Services: ($2,192) Administration Transfer: ($3,198) Debt Service: ($32,340) Pre -TIGER ($126,377) Redevelopment Activity: ($233,689) Total Expenditures and Commitments: ($443,336) Uncommitted Cash as of 6/30/2016: $3,861,989 7 Westside Urban Renewal Plan & Tax Increment Finance District September 16, 2012 T M Leg 1 n - Westside Urban Renewal Plan & TIF ,w � •a �� !w Kalispell City Limit Boundary w M1, W Hwy 93 Alternate Complete _ T Hwy 93 Alternate Planned - Not Built ^� 0 o�:s ST West Side/Core Area TIF Projects 2015-2016 KALISPELL CENTER MALL HERBERGER' S NEW CONSTRUCTION 0 South Kalispell/Airport TIF In accordance with provisions of Montana State law, City Council adopted Ordinance No. 1242 on July 1, 1996, establishing the City Airport/Athletic Complex Urban Renewal District and adopting the "Kalispell City Airport/Athletic Complex Redevelopment Plan Analysis" establishing January 1, 1996, as the base year for calculating the tax increment of the district. The enabling legislation documents the following purpose of the Airport Tax Increment Finance District: Whereas, among the identified goals and objectives of the Urban Renewal Plan are: a. Minimizing hazards to navigation; b. Developing the airport in accordance with an airport layout plan; c. Increasing development opportunities on nearby properties; d. Promoting compatible land use in and around the airport; e. Establishing a funding mechanism for airport properties; and f. Establishing a priority schedule for plan implementation. Ordinance No. 1541 was adopted by Council on July 18, 2005, amending the City Airport/Athletic Complex Redevelopment Plan, authorizing an urban renewal project and approving revenue bonds. Current City Council Ward: Ward 4 Council Members: Tim Kluesner and Phil Guiffrida The table above compares values from year 2015 to 2016, showing a slight decrease in both the current taxable value and the total incremental value. It should be noted that the current assessed value of property within the South Kalispell/Airport TIF District has increased from $453,612 to $1,149,21 resulting in a 153% increase above the base assessed value established in 1996 at time of District's creation. As a result of project bonding issued in September 2005, beginning January 1, 2006, and continuing each year through July 1, 2020, up to $500,000 of the annual increment will be utilized to pay debt service. In the November 2013 election the city electorate, by referendum, voted to reject a City Council proposal to undertake significant upgrades at the city airport. In response to the referendum vote City Council retained the services of CTA Architects/Engineers to provide planning services for updating the South Kalispell/Airport Urban Renewal Plan. This update, through public outreach, identified key 10 development and redevelopment concepts in the South Kalispell Corridor, to specifically develop a series of short term and long term options for the airport, airport lands and surrounding affected neighborhoods. City Council approved Ordinance No. 5764 on August 1, 2016 amending the City of Kalispell Airport/Athletic Complex Redevelopment Plan to adopt and incorporate the April 2016 draft of The South Kalispell Urban Renewal Plan. The South Kalispell/Airport TIF District will expire July 1, 2020. South Kalispell/Airport TIF Fiscal Year 2015 Revenue (7/1/15-6/30/16) South Kalispell/ Airport TIF beginning cash July 1, 2015: Tax Increment Revenue: $1,025,557 $ 714,382 Investment Earnings Revenue: $9,820 Fiscal Year 2016 Available for Expenditures: $1,749,759 South Kalispell/Airport TIF Fiscal Year 2016 Expenditures and Commitments: Personal Services: ($22,307) Contract Services: ($1,648) Administration Transfer: ($8,674) Debt Service: ($179,573) Redevelopment Activity: ($18,354) Total Expenditures and Commitments: ($230,556) Uncommitted Cash as of 6/30/2016: $1,519,203 a y y+1TMSSW I +ZSN SS W f N gglMAR BLUESTONE Airport Tax Increment Finance District September 15, 2012 ;Legend N � a q ` Airport TIF m13 Kalispell City Limits Boundary; w w c � a m m � m pl�iaSIT m KYR�E VN E 0.4-t. + 40 STAG LN KELLY /gyp BEGG PARK' w oe44%R V S MEADOWS DR TEAL DR c Z MERGANSER DR a d i! Old School Station, Industrial 12 In accordance with provisions of Montana State Law, City Council adopted Ordinance No. 1557 on November 21, 2005, establishing the Old School Station Industrial Tax Increment Financing District, identifying its boundaries and establishing January 1, 2005, as the base year for calculating the tax increment of the district. Current City Council Ward: Ward 4 Council Members: Tim Kluesner and Phil Guiffrida $126 $126 0 $20,890 $20,890 0 $20,764 1 $20,764 1 0 The table above shows no changes in current taxable value or incremental value from 2015 to 2016. It should be noted that the current assessed value of property within the Old School Station —Industrial District increased from $126 to $20,890, a 16,479% over the base assessed value established in 2005 at time of District's creation. This high percentage of increase in value is the result of the TIF being created while the properties were still undeveloped sites. A portion of the annual increment from this TIF is pledged for repayment of Special Improvement District bonds, as needed and as funds are available, over the life of the bond, January 1, 2007, through July 1, 2026. In fiscal year 2016 $10,000 was transferred for this purpose. City Council took action by means of Resolution No. 5710 on April 6, 2015 to take assignment from Flathead County of its tax liens on the six parcels of Old School Station, for the both Technology and Industrial Districts, by paying past dues taxes and assessments, subsequently, Council passed Resolution No. 5712 on April 20, 2015 to retain and sell the properties. City Council selected Flathead Valley Brokers to list and market the properties. For additional information on the properties for sale, please visit the following webpage: http:jjwww.kalis2g�ll..com/communit economic_ development; The Old School Station —Industrial TIF is scheduled to terminate on the fifteenth year following its creation, meaning January 1, 2020. 13 Old School Station Industrial Fiscal Year 2016 Revenue (7/1/15-6/30/16) OSS TIF beginning cash July 1, 2015: $12,928 Tax Increment Revenue: $9,416 Investment Earnings Revenue: $84 Fiscal Year 2016 Available for Expenditures: $22,428 Old School Station Industrial Fiscal Year 2016 Expenditures and Commitments: Personal Services: ($0) Contract Services: ($10,000) Administration Transfer: ($0) Debt Service: ($0) Redevelopment Activity: ($0) Total Expenditures and Commitments: ($10,000) Uncommitted Cash as of 6/30/2016: $12,428 14 Old School Station Tax Increment Finance District September 15, 2012 FOYS BEND LN 3 O J J O S F z Q dl SNOWUNE LN j a J N O W N s 0 SCHOO S£ P y�C �9t ROCKY CUFF DR �3 �o FRONTAGE PARK y 3 m o r � 3 g Y V O O' AUCTION RD Legend w Kalispell City Limits Boundary U. Old School Station TIF - Industrial Old School Station TIF - Technology 15 Old School Station, Technology In accordance with provisions of Montana State Law, City Council adopted Ordinance No. 1558 on November 21, 2005, establishing the Old School Station Technology Tax Increment Financing District, identifying its boundaries and establishing January 1, 2005, as the base year for calculating the tax increment of the district. Current City Council Ward: Ward 4 Council Members: Tim Kluesner and Phil Guiffrida O Sc oo a ange . -1 - ince2015.j Old School Station —Technology Bas Old School Station —Technology Current Taxable Valu Total Old School Station —Technology TIF Incremental JWalue ®® -- .... The table above compares the values for year 2015 to 2016, showing a slight decrease in current taxable value and total incremental value. The current assessed value of property within the Old School Station —Technology TIF District increased from $390 to $95,241, a 24,321% increase over the base assessed value established in 2005 at the time of the District's creation. This high percentage of increase in value is the result of the TIF being created while the properties were still undeveloped sites. A portion of the annual increment from this TIF is pledged for repayment of Special Improvement District bonds, as needed and as funds are available, over the life of the bond, January 1, 2007, through July 1, 2026. In fiscal year 2015, $60,000 was transferred for this purpose. The Old School Station —Technology TIF is scheduled to terminate on the fifteenth year following its creation on January 1, 2020. 16 Old School Station Technology Fiscal Year 2016 Revenue (7/1/15-6/30/16) OSS TIF beginning cash July 1, 2015: $25,430 Tax Increment Revenue: $65,981 Investment Earnings Revenue: $172 Fiscal Year 2016 Available for Expenditures: $91,583 Old School Station Technology Fiscal Year 2016 Expenditures and Commitments: Personal Services: ($0) Contract Services: ($81852) Reimbursements/other: ($0) Debt Service: ($0) Redevelopment Activity: ($0) Total Expenditures and Commitments: ($81852) Uncommitted Cash as of 6/30/2016: $9,731 17 Glacier Rail Park Targeted Economic Development District (TEDD) Established May 2, 2016 Glacier Rail Park Targeted Economic Development District Current City Council Ward: Ward 2 Council Members: Wayne Saverud and Chad Graham In accordance with provisions of Montana State Law, City Council adopted Ordinance No. 1770 on May 2, 2016, establishing the Glacier Rail Park Targeted Economic Development District, identifying its boundaries and establishing January 1, 2016, as the base year for calculating the tax increment of the district. The Glacier Rail Park Development Plan embraces a 104-acre area under multiple ownerships located in the heart of Flathead County in and adjacent to the City of Kalispell. The City of Kalispell in conjunction with the Flathead County Economic Development Authority (FCEDA) sought to foster the development of secondary, value adding industries within the Glacier Rail Park Plan Area as part of the City's overall mission to meet its needs of promoting economic development, improving area employment opportunities and expanding the community's tax base. This effort was made possible through the creation of a Targeted Economic Development District (TEDD) on 49 acres of land within the larger Glacier Rail Park Plan Boundary. The City of Kalispell will to utilize Tax Increment Financing as 18 part of the overall strategy to provide infrastructure in support of value -adding industry pursuant to the 2013 Targeted Economic Development District Act, embodied in 7-15-4279, Montana Code Annotated (MCA). The TEDD provides the City of Kalispell with the ability to employ tax increment financing as provided in 7-15-4282, MCA for appropriate public infrastructure projects in support of "value -adding industry or secondary value-added products or commodities" within the Glacier Rail Park Plan Boundary. The Glacier Rail Park TEDD allows the City to appropriately marshal tax revenues to help fund the public infrastructure that will spur a diverse private business base to invest in the area. It is the primary focus of the Glacier Rail Park TEDD to develop the necessary infrastructure to encourage the location, expansion and retention of diverse value added industries suitable for an industrial Rail Park. The goal of the Glacier Rail Park TEDD are to assist the Flathead Valley to recover from being an Economically Distressed Area by accomplishing the following: a) To foster economic vitality in the Valley and increase employment opportunities through infrastructure development in support of secondary value -adding industry; b) To provide support for business and industries that preserve the quality of life for all residents; c) To facilitate the creation of a diversified tenant base of multiple independent tenants within the TEDD; d) To encourage secondary, value -adding industries that take advantage of the Valley's resources for the purpose of engaging in interstate commerce; and e) To encourage the orderly growth and development of the community. Investment in this project allows for the redevelopment of the former McElroy/Wilson gravel pit into an active industrial rail park creating a long term boon to the local economy. The Glacier Rail Park transforms acres and decades of disinvestment and decay into a robust and vibrant economic hub. Even with the infusion of fund from the TIGER grant, such funds must be properly focused and leveraged with economic tools such as a TEDD to bring the Glacier Rail Park and the Kalispell Core and Rail Redevelopment Project to successful completion. The Glacier Rail Park TEDD is scheduled to terminate on the fifteenth year following its creation on January 1, 2031. 19 This report reviewed and approved by the Urban Renewal Agency on March 1, 2017. 05. 01 O1 Date Mar old, Urban Renewal Agency Chairman Katharine Thompson, Assistant 6irector of Community & Economic Development C__ �V�V� Kr' to rs, Co unity Development Coordinator 20 Submit Inquiries To: Katharine Thompson Assistant Director of Community and Economic Development 201 First Avenue East Kalispell, MT 59901 406/758.7713