Johnson/Modification of Airport/Athletic Complex Urban Renewal District,..--,-,raven
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis MN 55402
(612) 337-9259 telephone
(612)337-9310 fax
www.k-ennedy-graven.com
CHARTERED,
P.C.
MEMORANDUM
TO: Jane Howington, City Manager, City of Kalispell, Montana
Charles A. Harball, City Attorney, City of Kalispell, Montana
RE: Modification of City of Kalispell Airport/Athletic Complex Urban Renewal
District; Termination of Old School Station Industrial Tax Increment District and
Old School Station Technology Tax Increment District of the City of Kalispell
DATE: • e 4
The City of Kalispell, Montana (the "City") established the City of Kalispell
Air,port/Athletic Complex Urban Renewal District (the "Urban Renewal TIFD") and adopted an
Urban Renewal Plan (the "Original Urban Renewal Plan") therefor pursuant to Title 7, Parts 42
and 43, Montana Code Annotated (the "Act") on July 1, 1996. On September 15, 2005, the City
issued its (i) Tax Increment Urban Renewal Revenue Bonds, Series 2005A (non -AMT), in the
original aggregate principal amount of $1,445,000 (the "Series 2005A Bonds"), and (ii) Tax
Increment Urban Renewal Revenue Bonds, Series 2005B (AMT), in the original aggregate
principal amount of $555,000 (the "Series 2005B Bonds," and collectively with the Series
2005A Bonds, the "Series 2005 Bonds"), the proceeds of which Series 2005 Bonds were used to
finance various airport improvements in the Urban Renewal TIFD.
The City established the Old School Station Industrial Tax Increment District (the
"Industrial TIFD") and the Old School Station Technology Tax Increment District (the
"Technology TIFD") under the Act on November 21, 2005. The City additionally established
Special Improvement District No. 344 ("SID 344") on November 7, 2005, for the purpose of
making various public infrastructure improvements for the special benefit of SID 344 (the
"Public Improvements"). The boundaries of the Industrial TIFD and the Technology TIFD are
located within the boundaries of SID 344. On June 29, 2006, the City issued its Special
Improvement District No. 344 Bonds, Series 2006, in the original aggregate principal amount of
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$4,520,000 (the "Series 2006 Bonds"), the proceeds of which Series 2006 Bonds were used to
finance the Public Improvements.
The Series 2006 Bonds are payable from: (i) special assessments levied against property
benefited by the Public Improvements; (ii) money deposited in a reserve account established for
the Series 2006 Bonds (the "Reserve Account"); (iii) available tax increment revenues from the
Industrial TIFD and the Technology TIFD; and (iv) the Special Improvement District Revolving
Fund of the City. Since the Series 2006 Bonds were issued, due to a lack of development in SID
344, special assessments have at times been insufficient to pay debt service on the Series 2006
Bonds, and the City has had to transfer available tax increment revenues and money from the
Reserve Account to fully satisfy the debt service obligations.
The City is contemplating modifying the boundaries of the Urban Renewal TIFD and the
Original Urban Renewal Plan to cover the area represented by the Industrial TIFD and the
Technology TIM. The City's goal for the modification is to transfer available funds from the
Urban Renewal TIFD to pay down certain outstanding assessments in SID 344, which
assessments were put in place to support the payment of the Series 2006 Bonds in order to
finance the Public Improvements. Paying down the assessments would hopefully make the
property within SID 344 more attractive for development and increase development thereon. To
amend the boundaries of the Urban Renewal TIFD, the Original Urban Renewal Plan must be
modified (such modification referred to herein as the "Modified Urban Renewal Plan") to
include the additional property, pursuant to the same procedures required for the creation of a
new urban renewal district under the Act.
The purpose of this Memorandum is to provide a timeline for the adoption of the
Modified Urban Renewal Plan and the termination of the Industrial TIFD and the Technology
TIFD under the Act. Section 7-15-4221 of the Act provides that an Urban Renewal TIFD may
be modified by ordinance pursuant to the procedures required for the creation of a new urban
renewal tax increment district. Additionally, to capture the "base year taxable value" determined
as of January 1, 2010 of property subject to the modified boundaries of the Urban Renewal
TIFD, the City must complete the actions described below by December 31, 2010, and must
notify the Montana Department of Revenue ("DOR") of the modification by February 1, 2011,
pursuant to the procedures of Montana Administrative Rules 42.19.1401 through 49.19.1412.
1. Resolution of Necessitv (§7-15-4210)
• Required before any urban renewal powers are exercised by the City.
® Identifies blight within boundaries of modified Urban Renewal TIFD.
• Must have effective date prior to date on which Urban Renewal TIFD is modified.
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2. Update of Modified Urban Renewal Plan (§7-15-4217)
® The Modified Urban Renewal Plan may not be approved until a comprehensive
plan that includes the modified boundaries of the Urban Renewal TIFD has been
prepared.
® Criteria for approval of Modified Urban Renewal Plan and modification of Urban
Renewal TIFD:
o Workable and feasible plan exists for making available adequate housing
for persons displaced by the project;
o Modified Urban Renewal Plan conforms to the comprehensive plan for the
City as a whole;
o Modified Urban Renewal Plan affords maximum opportunity, consistent
with the sound needs of the City as a whole, for the rehabilitation or
redevelopment of the Urban Renewal TIFD by private enterprise; and
o A sound and adequate financial program exists for the financing of the
project.
3. Planning Board and Zoning Commission Review of Modified Urban Renewal
Plan (§7-15- 4213)
• Modified Urban Renewal Plan must be submitted to the City's Planning Board
and Zoning Commission for review and recommendations as to the Modified
Urban Renewal Plan's conformity with the growth policy for the development of
the City.
® Planning Board and Zoning Commission shall submit written recommendations
with respect to the Modified Urban Renewal Plan within 60 days after receipt of
the Modified Urban Renewal Plan.
• Public hearing on Modified Urban Renewal Plan approval (see #4) may not be
held until the written recommendations have been received or the 60 days have
elapsed.
4. Public Hearing on Modified Urban Renewal Plan (§§7-15-4214 and 7-15-4215)
Public notice requirements:
o Date, time, place and purpose of public hearing, amendments to and urban
renewal area identified, and general scope of Modified Urban Renewal
Plan outlined.
o Notice must be published twice in a newspaper of general circulation in
the City, with at least six days in between publications.
o Notice must be mailed not less than 10 days before the public hearing to
property owners located within the modified boundaries of the Urban
Renewal TIFD.
5. Approval of Modified Urban Renewal Plan (§§7-15-4216)
0 The Modified Urban Renewal Plan must be adopted by ordinance, as follows:
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o The ordinance must be approved by the City Council at two meetings not
less than 12 days apart.
o After first approval by the City Council, the ordinance must be posted and
copies made available to the public.
o The ordinance is effective 30 days after the second approval by the City
Council.
6. File Modified Urban Renewal Plan and Sup_ porting Materials with Montana
Department of Revenue (§7-15-4284)
® Certified copy of the Modified Urban Renewal Plan and the approving ordinance
must be filed with DOR and the clerk or other appropriate officer of each of the
affected taxing bodies.
® DOR has promulgated administrative rules for the administration of tax increment
financing districts. See Montana Administrative Rules 42.19.1401 through
42.19.1412.
o All proceedings related to the modification of the Urban Renewal TIFD
must be sent to DOR, pursuant to Rule 42.19.1410(1)(a).
o Base year taxable value of newly added property to the Urban Renewal
TIFD will be determined as of January 1, 2010, if all required information
is submitted to DOR by February 1, 2011.
7. Termination of Industrial TIFD and Technoloav TIFD (§7-I5-4292)
® Industrial TIFD and Technology TIFD boundaries cannot overlap with Urban
Renewal TIFD boundaries.
• Industrial TIFD and Technology TIFD generally terminate upon the later of:
o 15th year after its adoption (i.e. 2020); or
o payment or discharge of all bonds for which tax increment has been
pledged (i.e. Series 2006 Bonds).
8. Requirements for Advance Refunding of Series 2006 Bonds (§7-12-4194)
® To discharge the Series 2006 Bonds so that the Industrial TIFD and the
Technology TIFD may be terminated, the Series 2006 Bonds must be advance
refunded. The Series 2006 Bonds maturing on or after July 1, 2014 are
prepayable beginning on July 1, 2013.
• City must adopt resolution approving the advance refunding.
o Prerequisites to issuing Refunding Bonds: (i) bonds must bear interest of
at least 0.5% per annum less than the rate of interest on the Series 2006
Bonds, or (ii) 50% or more of the installments of the special assessments
levied in SID 344 and payable in a single fiscal year have been delinquent
for at least one year.
o Proceeds of refunding bonds plus other available funds (i.e. Reserve
Account money, available money derived from Urban Renewal TIFD,
etc.) must be deposited in an escrow account, which is irrevocable
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appropriated to the payment of the Series 2006 Bonds on the redemption
date (July 1, 2013).
INFEW1111 M -i : Ir P11 11111 111�111111q
KA2--.-)-IO(AJP)
368113v.2
1. . 2010: City Council adopts Resolution of Necessity.
2. . 2010: City updates Modified Urban Renewal Plan and sends to
Planning Board and Zoning Commission.
3. . 2010: Planning Board and Zoning Commission sends written
recommendations to City (within 60 days of submission of Modified Urban
Renewal Plan).
4. and . 2010: City submits notice of public
hearing on Modified Urban Renewal Plan to newspaper of general circulation
within the City (at least six days in between each publication).
5. , 2010: City mails notice of public hearing to all property
owners within the boundaries of the Urban Renewal TIFD, as modified (must be
mailed not less than 10 days before public hearing).
6. , 2010: City Council conducts first reading/public hearing of
ordinance approving Modified Urban Renewal Plan.
7. . 2010: City Council conducts second reading (and public
hearing, if not done during the first reading) of ordinance approving Modified
Urban Renewal Plan.
8. , 2010: Ordinance approving Modified Urban Renewal Plan
becomes effective (30 days after second reading and approval).
9. By February 1, 2011: File Modified Urban Renewal Plan and all documents
required by Montana Administrative Rules with DOR.
10. Later Date: City Council approves termination of Industrial TIFD and
Technology TIFD.
11. Later Date: City Council approves sale of Refunding Bonds and deposits proceeds
and other available funds in escrow agreement for payment of Series 2006 Bonds.
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