Resolution 4446 - Application Process & Procedure for Tax Increment AssistanceRESOLUTION NO. 444f.
A RESOLUTION ADOPTING AN APPLICATION PROCESS AND PROCEDURE FOR
REVIEW FOR TAX INCREMENT ASSISTANCE AUTHORIZED BY ORDINANCE #933 ON
REDEVELOPMENT PROJECTS IN THE CITY OF KALISPELL.
WHEREAS, Title 7, Chapter 15, Parts 42 & 43, Montana Code
Annotated authorized the City of Kalispell to develop a workable
urban renewal plan to rehabilitate and eliminate blighted areas
utilizing "tax increment finances" in partnership with private
enterprise, and
WHEREAS, the City Council of the City of Kalispell created the
Kalispell Downtown Redevelopment Plan by Ordinance #933 on
September 10, 1979; the City Airport/Athletic Complex Redevelopment
Plan by Ordinance 1242, on July 1, 1996; and the West Side Urban
Renewal Plan by Ordinance No. 1259, on January 1, 1997, and
WHEREAS, the City Council of the City of Kalispell recognize
the benefits to be derived from working closely with private
developers seeking to use tax increment funds, and
WHEREAS, tax increment financing has been a successful
financial vehicle in enhancing economic development opportunities
both within and without the respective Redevelopment Plan areas,
and
WHEREAS, the City of Kalispell anticipates new projects from
developers wanting to participate in the tax increment program, and
WHEREAS, the City Council of the City of Kalispell previously
adopted a Tax Increment Policy Manual which established a Procedure
for Review of Proposals for Tax Increment Funds, described an
Application Process, and contained the forms necessary to submit a
Tax Increment Financing Application, and
WHEREAS, the revised Tax Increment Policy Manual, as amended,
shall provide the City with a means of implementing policy for a
wider variety of potential recipients within the respective
Redevelopment Plan areas.
NOW THEREFORE IT IS HEREBY RESOLVED BY THE CITY COUNCIL OF THE CITY
OF KALISPELL AS FOLLOWS:
SECTION I. That pursuant to the authority granted to the City
of Kalispell by Title '�, Chapter 15, Part 42 & 43, Montana
Code Annotated and as a means of implementing the tax
increment assistance provisions applicable to all
Redevelopment Plan areas, the City Council adopts the Tax
Increment Policy Manual, as amended, said Tax Increment
Policy Manual attached hereto as Exhibit "A" and for purposes
of this Resolution made a part hereof.
SECTION II. This Resolution shall become effective
immediately upon passage by the City Council and approval by
the Mayor.
PASSED D APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR
THIS � DAY OF 1999.
Wm. E. Boharski
ATTEST: Mayor
2 /Sz:c�
Theresa White
Clerk of Council
APPLICATION PROCESS
TAX INCREMENT FINANCING
I. INTRODUCTION
The existence of blighted areas within the municipalities of
Montana has been identified by the state legislature as a problem
which requires government action. Enabling legislation has given
local governing bodies the authority to establish urban renewal
districts, utilize urban renewal powers, and implement urban
renewal projects through the use of tax increment financing. Tax
increment financing (TIF) is a significant element of the urban
renewal law, allowing urban renewal programs to be financed locally
without reliance on limited federal funds. The principal behind
TIF is the ability of the local governments to use the increase in
taxes within a specified district above an established base year
for redevelopment projects. In 1979 Kalispell adopted an urban
renewal plan and designated the central business district as a
blighted area. Property taxes continue to be paid to all taxing
jurisdictions on the basis of the 1979 taxable valuation. Any
subsequent tax increases due to new development, inflation, or re-
appraisals, however, are set aside for the City of Kalispell which,
has been delegated the authority to undertake urban renewal
efforts. After the expiration of urban renewal authority on 1987
or after retiring of all bonded indebtedness incurred for renewal
activities, the base year restriction is eliminated and the local
taxing jurisdictions obtain the additional tax revenues generated
through redevelopment.
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II. UTILIZATION OF FUNDS
Tax increment financing is not an abatement program- for new
development. Revenues obtained, however, may be utilized to
encourage the implementation of public or private projects.
Priority in funding assistance will be given to publicly owned
utility improvements for a development vs. a request for on -site
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utility improvements assistance in the form of a low interest loan.
As specified in state law, the City of Kalispell may utilize TIF
for the following activities:
1) Land acquisition;
2) Demolition and removal of structures;
3) Relocation of occupants
4) Public improvements; and
5) Costs incurred in the exercise of urban renewal powers,
including urban renewal projects as authorized by
Kalispell City Council, Ordinance 933. Loans and grants
may be eligible under this provision.
6) Acquisition of infrastructure -deficient areas or portions
thereof;
7) Administrative costs associated with the management of
the industrial district;
8) Assemblage of land for development or redevelopment by
private enterprise or public agencies, including sale,
initial leasing, or retention by the municipality itself
at its fair value;
9) The compilation and analysis of pertinent information
required to adequately determine the infrastructure needs
of secondary, value -adding industries in the industrial
district;
10) The connection of the industrial district to existing
infrastructure outside the industrial district; and
11) The provision of direct assistance to secondary, value -
adding industries to assist in meeting their
infrastructure and land needs within the industrial
district.
Costs to be paid with TIF monies may not be incurred by the
applicant prior to the effective date of funding approval and the
satisfaction of any conditions of such approval. Additionally,
TIF assistance to a proposed project shall not exceed 10% of the
entire project cost. The City Council will evaluate the "but for
statement" of each project in determining that private investment
is contingent on TIF, based on cash -on -cash return and internal
rate of return.
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III. APPLICATION PROCESS
The City Council of the City of Kalispell has the. authority to
assist developers in the implementation of redevelopment projects.
The following procedure has been developed to process TIF funding
requests.
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IV. APPLICATION REQUIREMENTS
1) Project Description - A description of the project, type of
development and scope of work including:
• Plans/schematics
• Project schedule - proposed timetable for completion of
project
• Project feasibility - substantiate the market and
economic feasibility of the project
2) Project Financing - A description of the financial
arrangements of the project to include:
• Source of funds - detailing terms and conditions.
• Lender commitments - evidence of commitments of funds
necessary for completing the project.
• Cost breakdown - estimated cost of project
• pro forma - projections of anticipated income, expenses,
cash flow and depreciation for the first five years of
the project.
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3) Development Entity - A public disclosure of the development
entity and other involved parties including information on
qualifications and past experience.
4) Financial Disclosure - Ful_1 financial disclosure of
development entity with evidence that the developer as both
the financial and legal ability to complete the proposed
project. As per adopted policy, this information will be kept
confidential, subject to a challenge of this policy in a court
of law. Provide a letter from financial source.
5) Necessity of TIF - A "but for statement" that private
investment is contingent on TIF, based on cash -on -cash return
and internal rate of return.
6) Leverage Ratio - Ratio of public to private investment.
7) Employment Generated - Best estimate of construction and
permanent jobs to be generated by the project and a
wage/salary scale for employment created.
8) Letters of Intent from tenants for lease project.
9) Tax Generation - The existing tax base of the property upon
which TIF assistance is requested must be compared to the
anticipated tax base resulting from the proposed project and
must demonstrate that the increase in taxes generated by
proposed project will cover TIF assistance over a period of
ten years.
V. CRITERIA FOR REVIEW
The submission of an application for tax increment assistance
begins the review process by City Council. Materials contained in
the application provide information needed to assess the merits of
the project in relation to the goals and objectives of the Urban
Renewal Plan. This will allow the City Council to decide between
competing projects or determine if a proposal has sufficient
benefits to warrant assistance.
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The City Council will evaluate:
• Economic Stimulus
• Employment Generation
• Tax Generation
• Elimination of Blight
• Financial Assistance - Other forms of financing
associated with the project including equity, lender
participation, industrial development revenue bonds, and
state or federal monies will be examined to assess the
need for TIF assistance.
• Developer Past Performance
• Project Feasibility
• Impact Analysis/Assessment - This is based on
environmental impacts, design and dislocation associated
with the project.
• Special or Unique Opportunities - The extent to which the
project represents a special or unique opportunity to
meet local priority needs that are consistent with
economic revitalization and urban redevelopment
objectives.
• Timely Completion
• The amount of TIF assistance requested.
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