Miller Crossing is a commercial subdivision located south of King Avenue East, between South Billings Blvd and Orchard Lane.  Cabela’s, Sam’s Club and a hotel (RW Billings, LLC) occupy some of the property and the remainder is vacant.  In order for Cabela’s and Sam’s to build their stores, King Avenue East had to be improved to a five (5) lane urban road, which was completed in 2009. The City intended to pay for the improvements with a Tax Increment Finance (TIF) revenue bond. The 2008-2010 recession and lack of other development in the subdivision made it impossible for the City  to sell TIF bonds.  Therefore, the City, the developer and Cabela’s signed a development agreement and the City sold Special Improvement District (SID) bonds to finance the street improvements. The development agreement requires the City to reimburse the property owners for their SID assessment payments, up to the amount of increment generated by the development. The City paid partial reimbursements for the past few years and is required to make additional ones in the future as the taxable value and tax increment increase.    

The South Billings TIF board voted in December 2014, to recommend that the City sell TIF revenue bonds to retire the SID bonds. To accomplish this the City needed Cabela's, Sam's, RW Billings and South Billings Center (Developer) to sign an amendment to the original development agreement. The amendment eliminates paying for past SID reimbursement shortfalls and it discontinues future reimbursements to all four entities once the SID bonds are retired on July 1, 2015.

All four entities have signed  the amendment to the Miller Crossing development agreement and staff is requesting that the City Council also approve the amendment.

 City Council may:

• Approve, or;
• Disapprove the Amendment to Miller Crossing Development Agreement.  Both alternatives’ financial consequences are described below. 

 

The Miller Crossing tax increment is approximately $270,000 per year, and the new TIF revenue bond debt service payment is approximately $348,000 per year.The South Billings TIF district is generating about $1.6 million of increment per year, so there is enough money in the annual tax collections to pay the $78,000 per year difference between the TIF bond debt and the Miller Crossing tax increment.  When fully developed, Miller Crossing may produce enough increment to pay the entire annual debt service.

Staff recommends that the City Council approve the Amendment to the Miller Crossing Development Agreement.