Discuss the Moss Mansion, Alberta Bair Theater, Billings Depot and the Babcock Theater per the council initiative.  No direction is needed for the Moss Mansion and Alberta Bair Theater.

I recommend Council direct staff to place the Billings Depot TIF grant request back on a future agenda for re-consideration to leverage a $414,000 historic preservation grant and also place the Babcock Theater's TIF request on a future agenda to be approved not to exceed $300,000.

The following summarized information is for each asset:

The Moss Mansion – The Moss Mansion is owned by the State of Montana (61.5%) and the City of Billings ((38.5%).  The mansion is operated, maintained and repaired through a ten (10) year lease with the Billings Preservation Society.  The lease includes two (2) ten year extensions through 2048.  Page 3, paragraph 8 Utilities, Maintenance, and Repairs c. states "Further, the Society understands that it shall not request the City of Billings for any assistance for the above-described expenses." (see attached Billings Preservation Society Moss Mansion Acquisition and Lease).   

Alberta Bair Theater – The city signed a 30-year lease in 2012 with The Alberta Bair Theater Corp.  The lease includes a 30-year extension.  All costs to operate and maintain the facility belong to ABT Corp. (see attached lease).  The following summary of recent and anticipated expenses was provided by the ABT.

Status of ABT A/O October 2024
$13.6M Renovation 2019-2020 
     · Received $3.5M TIF Funding
Post Renovation ABT has contributed $1,327,000 to maintain the venue and purchase new equipment:
     · Smoke Hatch Doors                    $126,000
     · Piano                                           $263,000
     · LED Lighting Conversion            $355,000
     · Alley Lights                                 $    4,200                 
     · Security Cameras                       $  20,000                                          
     · Air Conditioning Unit                   $459,800     
     · New Black Stage Curtains          $  71,000
     · Sound Board                              $   28,000                              

Total number of events:
     · Pre-renovation      63/year                    
     · Post-renovation    87/year
The number of rental events increased from approx. 20/year to over 50/year

Economic Impact pre-renovation was $4.2M.
     · I’m unaware of the current economic impact, but with the increase in events it will be much higher.

Anticipated Future Maintenance:
     · New Orchestra Pit Elevator                  $500,000 (minimum estimated)
     · Bollards                                                $120,000 (minimum estimated)
     · Back Alley Security Door Gate             $    5,000 estimate

ABT collects a $3 Facility Fee on each ticket purchased to put in a restricted board designated account for future repairs.  In addition to the facility fee, these projects were funded with additional income from fundraising efforts.  The reason we applied for TIF funding for the safety bollards is they will be placed on City sidewalks for Patron safety, and it is currently a liability without parking spaces for protection from traffic.

Billings Depot – The most recent amended sublease between the city and Billings Depot Inc. was signed in 2018 and expires December 31, 2034.  Page 3 paragraph 10 make it clear that the city is not responsible for utilities, maintenance or repairs of "any kind".  That being said, nothing in the lease precludes the Depot from asking for assistance.  The Depot is asking the city to reconsider it's TIF grant application under two premises.  First, it wasn't made clear during the past discussion that the Depot pays property taxes.  Therefore, there is a financial return on investment case that can be made to support TIF funding their projects.  Secondly, they have raised funds and have lowered their request to $75,000 from their original $95,000 request.

The following information has been provided by the Depot:

Contrary to some of the concerns expressed by some regarding private businesses seeking money from the City for deferred maintenance, the Depot has never requested TIF funds to address deferred maintenance.  Rather, the Depot has obtained a $414,000 grant but risk losing it if the matching funds cannot be raised.  For that reason, the Depot, a multiuse property, requested $75,000 to secure the grant slated to be used on projects that would significantly increase the property value, thereby generating additional property taxes.  As a property-tax-paying-entity, this investment would be recouped by the City in less than four years in the property taxes paid by the Depot.  Absent matching funds, these improvements will not occur. 

To be clear, the improvements to be undertaken are not deferred maintenance.  The Depot has always, and will continue, to manage its maintenance obligations, as well as taking efforts to better the space in a manner that honors the historical importance of this space and our partnership with the City. 

The following are examples of work done by the Depot that supports the statements above:

• Every year, the Depot takes on at least 1 significant capital improvement project to maintain the campus. We understand the City has no obligation to support these improvements and have never asked for city assistance. In 2023, we spent $40k to upgrade our fire suppression system. In 2022, we repainted exteriors. In 2021, we upgraded all our internet and technology. 2020 saw an upgrade to gutters and new signage.
• In 2019, a new grant opportunity, valued at up to $500k, was released by DOC to assist with capital improvements and historic preservation. The Depot identified projects which met grant requirements for improving public safety, energy efficiency, restoration of historic assets, and economic development. The projects we included in our application are:

• • Floor refinishing
  • Cement walkway repairs
  • Roof updates on all four buildings
  • Restoration of the historic mail building
  • Refinishing & weather stripping all doors in main building and mail building

• The Depot was awarded the grant in 2023 in the amount of $414,000 with a 20% match requirement.
• Since the time the application was submitted to the time it was awarded, inflation caused a significant increase in project costs and the total project cost increased to $528,100. 
• The Depot has been fundraising to reach our required match amount AND the remaining costs of the project. To date, we’ve secured the following:

• • Billings Community Foundation grant: $5,000
  • A&E in kind design: $7,500
  • Misc. Private Business Donors: $14,000
  • Board donations:  $11,000

• In 2024, the Depot campus was struck by a series of unforeseen but significant repairs, totaling over $80k and depleting our savings. These included:

• Security alarm panel replacement
• HVAC control system replacement
• AC Chiller repair
• Fire sprinkler air compressor replacement
• Gas leak repair and pipe replacement
• Roof leak (office building)
• Boiler replacement x2 (office building
• Water heater replacement (office building)
• Water damage repair (office building)
• HVAC water testing (office building)

• While the Depot is a 501(c)3 nonprofit, we do pay property taxes on the improvements which generate business (2 tenant buildings, 2 parking lots) contributing back to the tax base.
• Our initial ask to TIF was $95k. Due to fundraising efforts, this ask would now be reduced to $75k. These dollars would allow us to secure contracts with vendors to complete the capital improvement projects identified within the historic grant application. Delays in contracting with vendors and starting improvements would incur additional project costs or losing the grant in its entirety.
• The Depot has only utilized TIF funding on three other occasions in our 27 year history. Outside of these instances, the Depot has been maintained entirely using Depot-generated funds:

• 1997: $200k for restoration of the Depot campus
• 2020: $3,000 matching funds for signage grant & $3,000 for CPTED grant

Babcock Theater - The city signed a 15-year lease with the Art House Management LLC, a nonprofit limited liability Co. for the Babcock Theater in 2018.  The lease may be extended 15 years through three, five year extensions.  Section 6 Funding of Repairs and Renovations - City shall not be required to make any improvements, replacements of any kind or character to the leased premises except as provided below...  City shall provide Lessee funds as approved through the budget process by the Mayor and Council for improvements to the premises.  Lessee shall make recommendations to the City regarding improvements, however, City shall make final determination and approval of improvements."  The city is not obligated under the lease to maintain the Babcock, however the partnership that was created in 2018 to secure the theater anticipated both private and public investments to bring the property into a functional state of repair. 

In 2017 an Ad Hoc committee was created to review and make recommendations to Council regarding the Babcock Theater.  A January 22, 2018 memo to Council recommends Council approve the Art House Cinema & Pub proposal and to negotiate a lease.  Under the Financial Impact section of the memo, the following was stated.  The Council approved $500,000 in the FY 2018 budget for the capital replacement/improvements and discussed budgeting the same amount in FY 2019 for the Babcock.  No money was appropriated in the FY 2019 budget for the Babcock.  

John Caterino, Facilities Manager has been working with the Babcock to assess the facility's condition and offers the following:  There are a substantial number of rehabilitation and repairs that are needed at the Babcock Theater. The major and immediate items that have been identified by City Staff are the following:
- Sidewalk vault repairs – currently being completed and paid for by Art House (Historic Preservation Grant + local Match totals ~$300,000)
- Exterior marquee rehabilitation – estimated repair costs at $250,000
- Boiler stack masonry repairs – estimated repair costs at $30,000
- Projection booth repair – estimated engineering service costs TBD

Visible deterioration, water infiltration, and drainage issues of the marquee give cause for concern about the overall integrity of the structure. Thus, City Facilities Division secured services from Cushing Terrell in December 2023 to conduct a condition audit and provide a written report summarizing findings and providing repair methodology. The report recommends various degrees of repair, from general maintenance to replacement of components and systems as most of the components are in fair to poor condition. For more detailed information on the marquee or to see the engineers report, reference item 3 from the March 18, 2024 Council work session. Estimated cost to repair is $250,000. 

The original steam boiler exhaust stack is experiencing masonry bond failure, brick deterioration, and delamination of cementitious coating. To avoid further degradation and to ensure historic integrity of the element, Staff recommends repair by method of tuckpointing all good and serviceable mortar beds, replacement of failed masonry and mortar, and skim coat application. Estimated cost to repair is $30,000.

Babcock Theater had a projection booth added at some point in time after the building was constructed. It is still in use today to house the motion picture projector equipment which projects the movie onto the screen. The projection booth element is pulling away from the building and if not repaired it could cause a larger structural failure. No measurement tools have been placed on the element to observe the amount of movement but if left unaddressed it could become a liability. Since City staff is unaware of any drawings of the projection booth it is difficult to pinpoint the type of structural failure or the repair methodology. Therefore, Staff recommends securing a licensed professional structural engineer to perform an analysis. Estimated engineering cost is $4,000.

Therefore, with all of the above information in mind and the information included in the enclosed power-point presentation from the Art House, we need to decide how to move forward.  We believe $300,000 is needed in addition to the $299,891 Art House has secured for the sidewalk vault, stairs support/mop closet projects.

The final attachment is a letter from the Downtown Partnership Board recommending against using TIF dollars to fund capital projects for these city assets.  
 

City Council may:

• Approve; or,
• Not Approve

Moss Mansion - $0 requested/recommended
Alberta Bair Theater - $0 requested/recommended (their bollard grant request was turned down this past summer).
Billings Depot - $75,000 requested and recommended through the downtown TIF budget. (their grant request was also turned down this past summer - see above new information under background) 
Babcock Theater - $300,000 is recommended by staff to renovate the Marquee, repair the brick boiler stack/chimney and to investigate the projection booth repair.

*  A TIF reimbursement agreement totaling $600,000 for the Stone building project is no longer a liability for the TIF budget.  This grant has been revoked because the project did not meet its timelines in spite of two extensions.