The FY 2013 Parking Fund budget anticipates refinancing the Park 2 garage expansion debt in order to reduce annual expenses.  The refinancing would be achieved by applying Park 4 sale proceeds to the current amount due under the Park 2 Lease Purchase Agreement and applying the proceeds of parking revenue refunding bonds to the repayment of the remaining amount.  The parking revenue refunding bonds would be issued by the City and be paid by the Parking Fund.  Staff has worked with the City Attorney and bond counsel to determine whether some portion of tax increment funds from the Expanded North 27th Street TIFD could be applied to the repayment of the refinanced Park 2 Expansion debt and has determined that it is legal as long as the City follows proper procedures.  Staff is requesting that City Council declare the Park 2 Expansion as an urban renewal project under Montana Code Annotated, Title 7, Chapter 15, Parts 42 and 43, in order to apply $100,000 annually of tax increment from the Expanded North 27th TIFD toward the repayment of the parking revenue refunding bonds.  The attached resolution announces the Council's intention to adopt an ordinance naming the Park 2 Expansion as an urban renewal project and sets a public hearing date of July 23, 2012.  

The City Council may:
1.  Approve the Resolution of Intent and announce a July, 23, 2012 public hearing.  If the Council adopts the ordinance at the meeting, staff will be able to proceed with bond financing.

2.  Dispprove the Resolution of Intent.  Without the resolution and subsequent ordinance, the Park 2 Expansion cannot be refinanced and staff will have to find another way to reduce expenses and increase revenues to have the same impact on the Parking Division that the porposed refinancing will have.

3.  Delay action on the Resolution of Intent.  This action will delay staff proceeding with bond financing until the Council takes action at a future Council meeting.

The Resolution of Intent and the subsequent ordinance do not have a direct financial impact.  However, if Council approves them, it will allow staff to work with bond counsel and financial advisors to prepare for a bond sale.  Staff has estimated that the refinancing of the Park 2 Debt will drop the annual payment from $495,395.00 to approximately $300,000.  With the approval of using $100,000 of Tax Increment to help pay the refinanced debt, the Parking Division will see an annual expense reduction of about $295,000. 

Staff recommends the the City Council approves the Resolution of Intent to adopt an ordinance approving the Expansion of Park 2 as an Urban Renewal Project in the Expanded North 27th Street Urban Renewal Area in order to allow tax increment to be used to help pay parking revenue refunding bonds.