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2014-2015 TIF Annual ReportCity of Kalispell Tax Increment Financing Districts Annual Report 2014-20 15 Prepared by: Kalispell Urban Renewal Agency & Community and Economic Development DepartmentMONTA 1 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 2014 through August 2015 and to provide adequate 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. The Montana Department of Revenue 2015 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 3, 2015.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. Further,it is important to note that the West Side TIE boundary was expanded by City Council action in December 2012 to include the Core Area.This expansion led to the recalculation of the base taxable value:still at 1997 values when the West Side TIE was originated,but now including a larger physical boundary area.This change taken in tandem with the significant reduction in taxable values, experienced throughout the City and mirrored in two of the TIE Districts,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 2014-2015: 2 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 Vacant Member 04/15/2019 *Board Member needed The URA held six meetings and attended two open houses in lieu of meetings from September 10, 2014 and August 12,2015.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 2014 through August 2015 follows: Meeting Date Attendance Action 09/10/2014 RoId,McMahon,Zauner,7 Main Street intention of application,11 Main Street Girardot Developer’s Agreement extension request 2013 02/12/2015 Rold,McMahon,Zauner Met with CTA to discuss work on the South Kalispell Urban Renewal Plan Project 03/10/2015 All Members Visited CTA’s South Kalispell Urban Renewal Plan Community Open House in lieu of meeting at City Hall 04/08/2015 All Members Visited CTA’s second South Kalispell Urban Renewal Plan Community Open House in lieu of meeting at City Hall 04/29/2015 McMahon Update session with CTA and the Airport Advisory Board to discuss CTA’s finding from survey,community meetings and open houses 05/14/2015 Rold,McMahon,Zauner,7 Main Street application presented and approved,US Girardot Department of Transportation TIGER VII Grant Application match approved 07/15/2015 Rold,McMahon,Zauner,CTA presentation of initial draft of South Kalispell Urban Girardot Renewal Plan 08/12/2015 RaId,McMahon,Girardot,Discussion of South Kalispell Urban Renewal Plan to Zauner date,suggestions and changes shared with CTA following meeting 3 City of Kalispell Tax Increment Finance Districts —September 15,2012 .9 /[ — Legend I I Kalispell City Limits Boundary Westside TIF 9 Airport TIF Old School Station TIF -Industrial Old School Station TIF Technology., 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 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 2014 2015 %Chige Since 2014 West Side Base Taxable Value _______________________________ West Side Current Taxable Value _______________________________ Total West Side TIF Incremental Value The current assessed value of property within the West Side TIF District decreased 16%below the base assessed value established in 1997 at the time of the District’s creation due to changes in the valuation methods used by the Montana Department of Revenue in 2015. 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 façade improvements,the project was completed in November 2015.The URA also approved Historic Façade Improvement Grant funding for 7 Main Street to accompany the already approved Westside TIF Technical Assistance funding for repair and rehabilitation of the building façade to historic standards,this project is due to be completed in 2016. $9,151,936 $6,663,338 $1,219,018 -$1,269,580 0 -27.2% -204% 5 On January 5,2015,City Council approved expenditures to send City Council members and two City employees to Washington D.C.to meet with the US Department of Transportation and other federal representatives involved in attaining funding for the US Department of Transportation TIGER VII grant. This $10 million request would be a significant driver in the construction of the industrial rail park and removal of the railroad tracks and replacing them with a linear pedestrian trail,in keeping with the Kalispell Core Area Plan. On April 21,2015,City Council approved Resolution No.5719,accepting the recommendation of the City of Kalispell Urban Renewal Agency to identify that certain project known as the Core Area Linear Trail Project as an urban renewal project that may be financed by West Side Tax Increment Funds which will be considered as local match funds to a Transportation Investment Generating Economic Recovery (TIGER)grant for the Core Area Urban Renewal Plan. Both abovementioned endeavors proved successful as the City of Kalispell and its partner the Flathead County Economic Development Authority (FCEDA)were awarded $10 million in TIGER VII grant funding for the Kalispell Core and Rail Redevelopment Project in October 2015. The West Side TIF District will expire on January 1,2037. West Side TIF Fiscal Year 2015 Revenue (7/1/14-6/30/15) West Side TIF beginning cash July 1,2015:$3,130,274 Tax Increment Revenue:$1,099,970 Investment Earnings Revenue:$24,168 Fiscal Year 2015 Available for Expenditures:$4,254,412 West Side TIF Fiscal Year 2015 Expenditures and Commitments: Personal Services:($41,346) Contract Services:($2,189) Administration Transfer:($3,120) Debt Service:($32,000) Redevelopment Activity:($202,593) Total Expenditures and Commitments:($281,248) Uncommitted Cash as of 6/30/2015:$3,973,164 j c r CD r\ 3 — - c_ )3 CD D -n C,CD Q C’, - I C-) West Side/Core Area TIF Projects 2014-2015 I 7 8 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 $1,339,930 $1,337,249 -.2% $886,318 $883,637 -.3% The current assessed value of property within the South Kalispell/Airport TIF District has increased by 195%over 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. During 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,approved by the Urban Renewal Agency Board in Fall of South Kalispell/Airport TIF District 2014 2015 South Kalispell/Airport Base Taxable Value ____________ South Kalispell/Airport Current Taxable Value Total South KaIispeTlF Incremental Value $453,612 $453,612 rTV1 I 0 2014,approved by City Council and signed by all parties on December 1,2014. 9 CTA held two community open houses,launched a website,carried out primary stakeholder meetings and conducted a community survey in order to create a plan that will complement the City Growth Policy and provide guidance about the City’s airport.A final draft of the plan will be presented to City Council in early 2016.The website can be found at the following web address: www.southkalispellurbanrenewal.com The South Kalispell/Airport TIF District will expire July 1,2020. South Kalispell/Airport TIF Fiscal Year 2015 Revenue (7/1/14-6/30/15) South Kalispell/Airport TIF beginning cash July 1,2014:$720,423 Tax Increment Revenue:$680,686 Investment Earnings Revenue:$6,812 Fiscal Year 2015 Available for Expenditures:$1,407,921 South Kalispell/Airport TIF Fiscal Year 2015 Expenditures and Commitments: Personal Services:($19,503) Contract Services:($1,644) Administration Transfer:($8,646) Debt Service:($180,383) Redevelopment Activity:($106,646) Total Expenditures and Commitments:($316,822) Uncommitted Cash as of 6/30/2015:$1,091,099 0-J U, 0 S MEADOWS DR Airport Tax Increment Finance District September 15,2012 10 s E Legend Airport TIF 1LJ yLiundary 4 cn 18TH STE BLUESTONE z z STAG LN TEAL DR 0 D 0 0 0 D 11 $22,883 $20,890 -8.7% $22,757 $20,764 -8.8% The current assessed value of property within the Old School Station—Industrial District increased by 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 2015,$59,360 was transferred for this purpose. Due to non-payment of property taxes as assessed,there exists the potential for tax receipts to be inadequate to meet SID payments.Any shortfall would need to be covered per City Council action.For these reasons,this account is budgeted by City Council for fiscal year 2014 at a zero balance. 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.Appraisal of the properties has been performed and the City is currently seeking a commercial real estate firm to assist in the marketing and sale of the properties. The Old School Station—Industrial TIF is scheduled to terminate on the fifteenth year following its creation,meaning January 1,2020. Old School Station,Industrial 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 Old School Station—Industrial TIF District 2014 -r 2015 %Change Since — 2014 Old School Station—Industrial Base Taxable Value _______________________________ Old School Station—Industrial Current Taxable Value _________________________________ Total Old School Station—Industrial TIF Incremental Value - ______________________________ $126 0 12 Old School Station Industrial Fiscal Year 2015 Revenue (7/1/14-6/30/15) OSS TIF beginning cash July 1,2014:$1 Tax Increment Revenue:$18,876 Investment Earnings Revenue:$34 Fiscal Year 2015 Available for Expenditures:$18,911 Old School Station Industrial Fiscal Year 2015 Expenditures and Commitments: Personal Services:($0) Contract Services:($0) Administration Transfer:($0) Debt Service:($5,982) Redevelopment Activity:($0) Total Expenditures and Commitments:($5,982) Uncommitted Cash as of 6/30/2015:$12,929 Old School Station Tax Increment Finance District September 15,2012 FOYS BEND LN 13 SNOWLINE LN ROCKY CLIFF DR FRONTAGE PARK z U) 0 0 —Lii AUCTION RD 0 -J 0 Iz Lii I LI. Legend ______ Kalispell City Limits Boundary Od School Station TIF -Industrial Old School Station TIF -Technology: Lii U. 14 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 Old School Station—Technology TIF District h11 2014 2015 %Change _____ since 2015 Old School Station—Technology Base Taxable Value _______________________________ Old School Station—Technology Current Taxable Value _______________________________ Total Old School Station—Technology TIF Incremental Value $390 $390 0 $112,113 $96,254 -14.1% $111,723 $95,864 -14.2% The current assessed value of property within the Old School Station—Technology TIF District increased by 24,581%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,$276,289 was transferred for this purpose. Due to non-payment of property taxes as assessed,there exists the potential for tax receipts to be inadequate to meet SID payments.Any shortfall would need to be covered per City Council action.For these reasons,City Council fiscal year 2014 budget reflects a zero balance for this account. The Old School Station—Technology TIF is scheduled to terminate on the fifteenth year following its creation on January 1,2020. 15 Old School Station Technology Fiscal Year 2015 Revenue (7/1/14-6/30/15) 055 TIF beginning cash July 1,2015:$13,210 Tax Increment Revenue:$136,437 Investment Earnings Revenue:$182 Fiscal Year 2015 Available for Expenditures:$149,829 Old School Station Technology Fiscal Year 2015 Expenditures and Commitments: Personal Services:($0) Contract Services:($0) Reimbursements/other:($22,230) Debt Service:($95,923) Redevelopment Activity:($0) Total Expenditures and Commitments:($118,153) Uncommitted Cash as of 6/30/2015:$31,676 This report reviewed and approved by the Urban Renewal Agency: \/4/ Date j Yi c Marc I4oId,Urban Renewal Agency Chairman Kathirine Thompson,Community Development Manager Development Coordinator