Ordinance 1259 - West Side Urban Renewal Plan484
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ORDINANCE NO. ._.12.52__
AN ORDINANCE APPROVING THE WEST SIDE URBAN RENEWAL PLAN 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 1", 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
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 S 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 Plan
(hereinafter Plan), and
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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 input 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
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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 S 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:
SECTION I. That the West Side Urban Renewal Plan of the
City of Kalispell, Montana contained in
Exhibit "A" and "BO 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.
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SECTION IT. 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.
SEThat 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$CTION 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.
SECTION 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.
SECTION VII. That the redevelopment of the Plan is
necessary for the proper development of the
community.
SECTION 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.
SIECTIONLIX 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
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facilities within the vicinity of the Plan
area.
That a workable and feasible plan exists
therein for making available adequate housing
for person(s) who may be displaced by the
projects.
SECTION 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: In the event the implementation of the 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
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District 5 schools.
SECTION XIII. 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
government or such other sources as may be
determined appropriate by the City Council.
ARrTTON XTTT, That January lat, 1997 shall be established as
the base year for calculating tax increment.
SECTIONXTY. Modification of Plan and Designation of and
Approval of Urban Renewal Projects shall be
subject to the following:
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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
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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
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.
SECTION 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 il-fl,DAY OF MARCH, 1997.
Attest:
Debbie Giff C
Clerk of Council
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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 Neighborhood
Plan and an additional area described below (Exhibit 'A'). 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 West to its intersection with First Street West and then
westerly 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,
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forming WOODMEN PROPERTIES L.C., to pursue the redevelopment of Gateway West
Mall and related properties (Exhibit "B'). 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.
Woodmen Properties L.C. has an option with the mail 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 retai I.
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 759 will be new jobs created by businesses locating in Kalispell for the first
time.'
As the analysis shows in Exhibit B, 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 7-154288, MCA. The specific
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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 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 Neighborhood 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 Neighborhood 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 property 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 CitKounty 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
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March 14, 1997
funds, could assist with the relocation of these public utility companies and encourage the
redevelopment and reuse 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, Three Mile Drive, and Two Mile Drive. This could also be done 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 toppriority for urban
system funding. The project includes the widening of the road to accommodate additional
travel lanes, tum lanes, curb, gutter, and pedestrian/bicycle facilities. Design and
construction documents are scheduled to be completed late summer, 1997.
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Project funding comes from the Urban Highways Fund 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 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 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 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.
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 Iimited and added on to 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 occuring 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 in the
West Side Urban Renewal Tax Increment Finance District to encourage and facilitate the
following projects:
1. 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.
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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 redevelop-
ment 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)
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The tax increment may be used to pay the 94owing costs of or incurred in connection
with y<rban renewal projects `p
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
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improvements for which the foregoing costs may be incurred. (Section 7-154288,
MCA)
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 7-15-4283(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 indebtedness 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.
Under Section 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), MCA, shall be paid into a. special
fund held by the treasurer of the municipality and used as provided in Sections 7-15-4282
through 7-15-4292, MCA. Therefore, the City shall segregate and apply tax increments
accruing to the district as provided in Sections 7-15-4282 through 7-15-4292, MCA.
Ordinance No. 1259 authorizes the City 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 government or such other sources'as may
be determined appropriate by the City Council. January 1, 1997, shall be established as
i the base year for calculating tax increment.
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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.
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 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.
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EXHIBIT "A"
WEST SIDS URBAN RENEWAL TAX INCREXE T
FINANCE DISTRICT PROPOSED BOUNDARIES
Beginning at the intersection of Meridian Road and Highway 93 in Section
6, Township 28 North, Range 21 West, and heading Southeast along Highway
93 to its intersection with Colorado Street. Then heading West along
Colorado Street approximately 700 feet to the Eastern boundary of
Assessor's Tract SCA, then West along the Southern boundary of said
parcel a distance of approximately 224 feet, then North along West
boundary of Assessor Tract SCA, then West along the North boundary of
Assessor's Tract 5F, then South along the Western boundary of said parcel
to its intersection with West Wyoming Street, then East a distance of
approximately 448 feet along the North boundary of West Wyoming Street
to its intersection with Seventh Avenue WN, then South to the Southern
border of West Wyoming Street, then West along the Southern border of
West Wyoming Street to its intersection with Meridian Road, then South
along Meridian Road to its intersection with Highway 2, then East along
Highway 2 to its intersection with Seventh Avenue WN, then South along
Seventh Avenue West a distance of approximately 1,725 feet to its
intersection with First Street West.
Then West along First Street West a distance of approximately 1,050 feet
to the Eastern boundary of Assessor's Tract 5DDB, then along the Southern
boundary of said tract and Assessor's Tract 5DDA to Meridian Road. Then
North along Meridian Road to the Northern boundary of the Burlington
Northern railroad easement. Then West along the easement for a distance
of approximately 350 feet; then North along the Eastern boundary of
Assessor's Tract 14A approximately 175 feet, then East approximately 50
feet; then North and West following the boundaries of the city limits to
Highway 2 West.
From Highway 2 West, following the Westerly most city limits to Three
Mile Drive. Then Bast along Three Mile Drive to its intersection with
Northwest Lane. Then heading North along Northwest Lane to the Northwest
corner of Lot Z9, Block 1, Northwest Tract_ Then along the Northern
boundary of Lot 29 and approximately 200 feet along the Northern boundary
of Lot 13, Block 1 of Northwest Tracts; then North along the Eastern
boundary of Lot 3, Block 1, Northridge Heights Subdivision to Parkway
Drive.
Then North along Parkway Drive a distance of approximately 950 feet to
the Northwest corner of Lot 9, Block 2, Northridge Heights Subdivision,
then East along the Northern boundary of said parcel to its intersection
with Highway 93 North, then South along Highway 93 North to Meridian Road
and the point of beginning as shown on the map of the WEST SIDE URBM
RENEWAL TAE INCRECKNT FINANCS DISTRICT PROPOSED BOUNDARY map dated
January 2, 1997.
496
DEC 2 4
EXHIBIT 'B'
_ ESfiFIELD
PROPERTIES INC.
December 19, 1996
Lawrence Gallagher
Director, Kalispell City
Planning, Economic & Community Development Department
248 3rd Ave. East
P.O. Box 1997
Kalispell, MT 59903-1997
Re. Proposal for the creation of an Urban Renewal Area, and Tax Increment District, at the
location of the 1203 Hwy. 2 West, Kalispell Montana
Dear Larry:
The following proposal has been prepared subsequently to our meetings over the course of the
last year with yourself and members of your staff, and the city manager Clarence Krepps. It has
been our intention and desire to better understand the factors affecting the feasibility of
redeveloping the Gateway West property and adjacent properties which we are under contract to
purchase, or which we are in negotiation to acquire (herein after the "Property"l which is more
specifically identified on Exhibit A attached hereto. It has been our intention to first understand
the interest and desires of Kalispell City, which have been expressed through the city
representatives as well as having been established in the North Meridian Neighborhood Plan,
which was adopted as an amendment to the Kalispell City - County Master Plan, in which the
study area incorporates the Property, and to understand the City's policy and procedures for
Urban Renewal and the formation of Urban Renewal Areas.
The following is intended to be an introduction to Woodmen Properties and our ambition to
facilitate the redevelopment of the Property, which comprises approximately 39.5 acres, through
the creation of an Urban Renewal Area.
Introduction to Woodmen Properties L.C.
Westfield Properties Inc. has entered into a joint venture relationship with Woodbury
Corporation to pursue the redevelopment of the Gateway West Mall and related
properties. Both Westfield Properties Inc. and Woodbury Corporation are headquartered
in Salt Lake City, and have been active in real estate investments and development for
many years.
By way of further introduction, Woodbury Corporation has been active in the real estate
management and development business in the Intermountain States area since 1919.
Currently, its portfolio comprises approximately four million square feet of commercial
property. its primary emphasis is retail malls and strip renters, with a notable presence in
hotels, office, industrial and business parks. Woodbury rGorporation is active in all
2681 East Parleys Way. Side 203 /Salt Lake City Utah 84109 / (801) 467-7000 FAX (801) 467-7027
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aspects of asset and property management, not only for its own account, but it also
provides services to third parties on a limited basis
The principals of Westfield Properties Inc. have been actively involved in all aspects of
commercial property operations in the mountain states area since 1980. Specifically in
Montana, these individuals have dealt with the acquisition, management, leasing,
financing, and disposition issues related to enclosed malls and community centers in
Glendive, Missoula, and Helena, Montana
The Woodmen Properties joint venture combines the benefits of Westfield Properties
Inc.'s market presence, its control of critical real estate in the project area, and its past
success in bringing similar projects to fiuition, with the credibility and financial strength
of Woodbury Corporation. Woodmen Properties has the capability of facilitating the
redevelopment of the Gateway West Mall and related properties in accordance with the
plan which proves to be acceptable to the city and which is economically feasible.
The Property
The Property comprises approximately 39.5 acres with the two primary components
being the Gateway West Mall and the former Crophail Building, which is currently
owned by Egg Head soft ware company. We are currently operating under separate
agreements with the owners of both properties to acquire the properties provided we can
create a redevelopment plan which the city will support and which can be determined to
be economically feasible. Additionally, we are under negotiations with the owners of the
balance of the property in the proposed redevelopment area. We anticipate the
assemblage process for the Property will be completed by consensual agreements and that
eminent domain will not be required.
The Gateway West Mall is currently under -leased and has experienced a significant
vacancy problem since the expansion in 1984. 7 -he Crophail Building has been entirely
vacant for many months. The properties are currently economically depressed and have
successfully appealed and received reductions in property tax valuations through the
course of the past few years.
Proposed Redevelopment
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 plea. As the redevelopment plan is
established, we are prepared to make the necessary investment to eliminate the blight and
economic distress tuurently associated with the Property. At the present time we are
studying the redevelopment of the Property under three different scenarios:
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498
a. Regional retail mall with a 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.
The specific redevelopment plan will depend on the market conditions at the time of final
commitments for Iand acquisition and the formation of an Urban Renewal Area.
As indicated in the project totals on Exhibit B Page 2, 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,$57,378. 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.
Urban Renewal Area and Tax Increment District
In accordance with the applicable statutes, Part 42 Urban Renewal, we are requesting that
a review and analysis be conducted evaluating the formation of an Urban Renewal Area
and Tax Increment District incorporating the Property. We believe that this request is in
compliance with the North Meridian Neighborhood Plan and will be the first step
establishing the necessary infrastructure and economic momentum to move the plan
toward fruition. It is our 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. Any proceeds from tax increment
financing will be used for approved uses as defined in 7-154288 of the Urban Renewal
statutes. The specifics of the proposed uses of will be determined as the redevelopment
plan for the Property is finalized, however we have analyzed a potential redevelopment
scenario, attached hereto as Exhibit B, which suggests that the tax increment will support
the issuance of urban renewal bonds in excess of $2,000,000.
Timing
At the present time, our understanding is that this proposal will come before the City
Council during their work session on December 30, 1996. We are is the process of
negotiating leases with a tenant to whom we will Lin to make definitive commitments
during the month of January 1997. Additionally we will have to make irrevocable
commitments to complete the purchase of some of the parcels which comprise the
Property by January 31, 1997. Consequently we are requesting that the City Council
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A99
during the month of January 1997. Additionally we will have to make irrevocable
commitments to complete the purchase of some of the parcels which comprise the
Property by January 31, 1997. Consequently we are requesting that the City Council
schedule, as an action item no later then January 13, 1997 a "Resolution for Intention to
Create an Urban Renewal District" for the Property.
At this point we are conclusive in our analysis that wid art the assistance of the creation of an
Urban Renewal Area and Tax increment Financing the redevelopment of the Property is not
economically feasible. We have had extensive negotiations with both office and retail tenants
who will locate in the Kalispell city limits provided the appropriate facilities can be developed in
an acceptable location within a reasonable time frame. The Kalispell, or Flathead County
market, has grown to the point of being able to support significant additional retail or office
facilities. All of the tenants we have been in negotiations with have been presented with
alternatives to locate their businesses in the county, and are indicating to us that they will do so if
a suitable project does not evolve with in the city limits in the very near future. Our study of the
market area of Kalispell has brought us to the conclusion that the interest of Kalispell City will
best be served by:
1. Strengthening the economic base of the traditional business corridors through
encouraging reinvestment and redevelopment in commercial facilities located in the
Highway 93 and Highway 2 corridors.
2. Discouraging the establishment of retail or commercial business centers near the city
which would not contribute to the city's economic base and which in some form transfer
costs to the city.
3. With the advent of the Highway 93 Bypass transferring vehicle traffic out of the
commercial corridors, particular emphasis should be placed on improving the link
between the Highway 2 corridor between Highway 93 and the Bypass.
4. Eliminate blight and economic distress associated with physical dilapidation or
deterioration associated with properties located in the West Ifighway 2 corridor.
We believe that growth and redevelopment linking the Bypass to central core of Kalispell is
critically important in evaluating the potential of community and economic growth in Kalispell.
Your consideration and favorable review of our request to create an Urban Renewal Area as
addressed herein will establish a pattern of economic growth and development which will enable
the realization of the city's goals and objectives.
Sincerely,
Richard L.K. Mendenhall
Manager, Woodmen Properties L.C.
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