City staff recommends the City Council approve reimbursement to KSKC Properties, LLC, Torgerson, LLC, or a third party contractor working on their behalf for tax increment assistance to complete a City water line extension in the South Frontage Road between Washington Street and Sugar Avenue. The water line project must meet all City of Billings infrastructure standards and specifications, and actual reimbursement will be based upon 100% of the actual costs incurred for the water line project.

This item is being presented to Council in combination with Compensation Agreements to outline the Public Works contribution to the project for KSKC Properties, LLC, and Torgerson, LLC. Approval of all three of these elements will make it possible for the project to move forward early this spring and in alignment with new private development planned adjacent to the South Frontage Road in this area.

In 2021, SBURA, City Public Works Department and City Planning and Community Services Department staff coordinated the opportunity for this water line extension in the South Frontage Road to be a CIP project instead of trying to address it in multiple TIF applications for multiple properties. The City Council included this project in the FY23-FY27 CIP that was adopted in December 2021. It was determined that a combination of TIF funds and Public Works funds could be used to complete the water line, finishing a looping of the line in this area of the City, and benefiting both the City and current and future property in the City along the South Frontage Road. Since the South Frontage Road will only have development on the south side, since the north side is the I-90 ROW, the City would normally pay for half of a water line in this situation anyway, so making the project a City managed CIP project is a logical approach.

The City could start this water line extension project this summer as soon as the FY23 Budget cycle is started. However, property owners and developers along the water line project corridor would like to start the project as soon as possible this spring to align with commercial development projects they intend to start construction on this summer. To accommodate this request, staff is recommending the Council approve reimbursing the developers or a private contractor working on their behalf to complete the project early. The project will still be built to City standards, with City oversight, and the reimbursement request will be subject to City staff review to ensure the project is completed to City requirements. This Council action reaffirms this already approved CIP project but provides the option for a private construction process to complete it early in 2022.


 

City Council may:
· Approve the City staff recommendation for the reimbursement to a third party of SBBURD tax increment finance (TIF) funds to complete the water line extension project, or;
· Disapprove City staff recommendation for the reimbursement to a third party of SBBURD tax increment finance (TIF) funds to complete the water line extension project. If the Council chooses not to approve this reimbursement, the project will be constructed by the City in FY23 per the approved CIP.
 

The recommendation is for up to a maximum of $474,177 in TIF funds to be reimbursed to KSKC Properties, LLC, Torgerson, LLC, or a third party contractor working on their behalf to construct the water line extension.  The funds are payable per the project meeting all City standards and requirements for a public infrastructure project. The project is estimated for completion in early 2022.  The TIF and City portions of this project are already incorporated into the FY23 budget per the adopted City FY23-FY27 CIP.