The South Billings Urban Renewal Association (SBURA) Board has reviewed this application for tax increment assistance and recommends the City Council approve, upon project completion, a maximum of $1,000,000 of funds from the South Billings Boulevard Tax Increment Finance District to TPA Group, LLC for right-of-way and site improvements, utility extensions and demolition of existing structures on the property.  TPA Group, LLC is an Atlanta-based corporation that specializes in developing large scale distribution and logistical facilities for lease to businesses.  Reimbursement is based upon the actual costs incurred for qualified expenses for the improvements made to the property subject to the following conditions:

1.    The Applicant shall purchase the land for the project resulting from a boundary line adjustment between properties located at 3508 South Frontage Road and 3218 South Frontage Road.
2.    The Applicant shall sign a development agreement with the City of Billings and SBURA within 180 days of City Council’s approval.
3.    This TIFD reimbursement is the maximum that can be received pending satisfactory submission of all paid invoices showing the completion of expenditures related to this project.
4.    If funds are not available, reimbursement can be carried over to the next fiscal year.

The SBURA board considered TPA Group, LLC’s application at its April 5, 2022, board meeting and voted unanimously to recommend up to $1,000,000 of tax increment assistance for public infrastructure, property condition mitigation for development, and demolition of abandoned infrastructures and structures.

TPA Group, LLC builds and leases large scale distribution and logistics centers throughout the United States.  TPA Group, LLC has a portfolio of over 60 facilities in 23 states.  Their market research indicated that there is considerable unmet demand for warehousing and logistical services in Billings and the surrounding Northern Rocky Mountain region.  TPA Group, LLC intends to build two buildings with a combined total space of approximately 295,000 square feet. The project, to be known as the Billings Logistics Center, will consist of two state-of-the-art Class A concrete tilt-wall warehouse/distribution centers. The buildings will be situated on a 23-acre site and will feature attractive glass office elevations, 32’ clear heights, rear-load configurations, 268’ deep shared truck courts and ample car and trailer parking. The location provides proximity to regional transportation hubs with the Billings-Logan International Airport located 5 miles northwest of the site and the BNSF Railway running 2.5 miles from the site. The estimated total cost for this project is about $38 million, making the private to public investment ratio for this project about 38:1, if land cost is included. Removing land cost, brings the ratio to about 34:1. The Council also approved extension of the City's water system to serve this and other properties along the South Frontage Road at its meeting on March 14. This is a City investment of about $845,000 utilizing Public Works and SBBURD TIF funds.

There are two properties located at 3508 and 3218 South Frontage Road that are currently owned by Torgerson Real Estate Holdings, LLC and KSKC Properties, LLC, respectively.  In 2021, the City annexed the Torgerson property and expanded the South Billings Boulevard Urban Renewal District to include both the Torgerson and KSKC properties.  TPA Group, LLC plans to purchase portions of property from both Torgerson and KSKC via a boundary line adjustment. The acqusition will create one larger parcel for the project, with both Torgerson and KSKC still retaining property on both sides of the new project location. The closing date for this purchase is tentatively scheduled for mid-April 2022.  Accordingly, a City Council determination to award tax increment assistance is contingent on TPA Group’s property acquisition.

The development of this property requires TPA Group, LLC to address some significant infrastructure and blight-related issues as noted below:

• South Frontage Road Right of Way Improvements: Deceleration lane, driveway approach apron, the required separated side path on the South Frontage Road and landscaping.
• Site Structural Improvements: Rammed aggregate pier foundations and geomeshing to address poor soil conditions. This is similar to the TIF award provided to KSKC Properties by the City in late 2021 to improve the site for redevelopment due to soil conditions and poor fill left from past gravel mining operations in the area.
• Property Condition Improvements: Demolition of septic tanks and wells at site of old residential structures. Remove existing power lines and fencing, and import fill to bring the site out of the floodplain.
• Utility Extensions, Relocations and Connections for the Site: Extend power from Garden Ave, extend gas main from Washington St., extend telecommunications service from Garden Ave, and relocate Grey Eagle Ditch.

The location of this project, like the adjacent KSKC and Torgerson properties, is planned for a multi-modal recreational trail along the south side of these properties adjacent to the Yellowstone River. Easements for the trail corridor have been secured for all of the properties that are now in the City and within the SBBURD. The trail project also is included in the adopted City FY2023-2027 Capital Improvement Plan. TPA had originally asked to include the portion of the trail across the back of its property in its TIF application. However, the idea of trying to build all or most of the trail segment at once, going both east and west of the TPA site, supports the idea of allocating TIF and other fund to the project through the CIP. This trail segment has been discussed with TPA Group regarding the opportunity to construct the trail in coordination with the construction on the site to take advantage of both mobilization and disruption of the site all at once. TPA group has stated they are prepared to work with the City to accomplish this coordinated effort.

Table 1 below details TPA Group, LLC’s estimates to address redevelopment elements that fall under the City’s Tax Increment Finance Policy, the South Billings Urban Renewal Plan and Montana Code Annotated. The SBURDA board voted unanimously to recommend to the City Council that $1,000,000 be awarded to TPA Group, LLC for the expenses detailed in Table 1.

Table 1

Qualified Improvements	Estimated Cost	City TIF Policy	Urban Renewal Plan	MT Code Annotated
South Frontage Road ROW Improvements Site Soil Compaction/Improvements Utility Extensions, relocations and connections Existing structure demolition and clean up Total	$204,997 $289,062 $195,883 $310,058 $1,000,000	Section 1(b) Section 1(b) Section 1(b) Section 1(b)	Section 10, 13 Section 4, 5 Section 4, 5 Section 2, 12	7-15-4288(4) 7-15-4288(4) 7-15-4288(4) 7-15-4288(4)

 This property lies immediately south of Interstate 90 and has remained undeveloped for many years. City infrastructure in the area also has not been completed to serve the area. There infrastructure issues and property conditions have impeded development and will likely deter future private investment without support from the SBBURD.  The use of tax increment funds to promote investment in an otherwise blighted and unattractive property in Billings’ transportation corridor will simultaneously reduce blight and provide additional taxable value to the City.



 

City Council may:

· Approve the recommendation from the SBURA board for the expenditure of these tax increment finance (TIF) funds that are consistent with elements of the South Billings Boulevard Urban Renewal Plan, or;
· Modify the recommendation from the SBURA board for the expenditure of these TIF before taking action, or;
· Disapprove the recommendations from the SBURA board for these expenditures of these TIF funds.  If the Council chooses not to approve the TIF application, specific reasoning for the denial is helpful to provide further direction to the SBURA board and City Staff for future applications.
 

The recommendation is for a maximum of $1,000,000 to be reimbursed to TPA Group, LLC for the identified work.  The estimated total project cost is $38 million, making the private to public investment ratio for this project about 38:1.  The funds are payable per the conditions of approval outlined in the attached SBURA recommendation document and pending satisfactory submission of all paid invoices showing actual cost incurred for the project.  Currently, the project is estimated for completion in 2023. The draft FY23 SBBURD budget currently has development funds proposed that would cover this project reimbursement.