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Item 1.
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| City Council Work Session | |
| Date: | 10/16/2023 |
| Title: | MOU with Billings Tourism Business Improvement District |
| Presented by: | Gina Dahl |
| Department: | Legal |
| Presentation: | No |
| Legal Review: | Yes |
| Project Number: | N/A |
RECOMMENDATION
Staff requests Council review the MOU and provide feedback.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
On July 10, 2023, Council approved a resolution calling for a special election on November 7, 2023, on whether the City should be authorized to issue general obligation bonds not to exceed $143 million for parks, trails, and recreation projects. Council also approved an Initiative directing staff to prepare a resolution related to the parks, recreation, and trails bond issue that would outline the agreements and commitments made by the City and private partners and to provide guidelines regarding decision-making related to the debt financed parks projects for future Councils. The project management resolution was approved by Council on August 28, 2023.
One of the commitments referred to in the resolution was the Billings Tourism Business Improvement District (TBID) conditionally agreed to provide funding for administrative, operational, promotional, and marketing expenses up to $800,000 per year for ten years to help defray the anticipated deficit in operating costs for the recreation center. The TBID will seek to increase the assessment to fund this commitment. The resolution also required an MOU to formalize this commitment before the November 7, 2023, election.
The MOU memorializes this commitment and indicates the TBID will seek to increase the assessment starting in FY 2025 with funding to begin after completion of construction and the recreation center has begun operating, with a specific date to be determined by the parties. The TBID will seek to renew the district for an additional ten-year period prior to expiration of the current term in October 2027. Additional terms are set forth in the MOU attached for review.
Some Council members have expressed a concern about the TBID's authority to use these funds to defray the operating expenses of a recreational center. The Legal department has reviewed and analyzed this issue and considered the statutory authority that applies to these districts and will provide a summary below of its conclusions to alleviate these concerns.
Montana law provides for the creation of a TBID to 1) serve a public use; 2) promote the health, safety, prosperity, security, and general welfare of the inhabitants of the district and of the people of this state; 3) be of special benefit to the property within the boundaries of any district created pursuant to the provisions of this part; or 4) aid in tourism, promotion, and marketing within the district. See MCA 7-12-1102. The resolution of intent to create a TBID approved by City Council indicates the assessments collected shall be used as set forth in Montana law, sections 7-12-1101 through 7-12-1144, for the funding of all uses and projects for tourism promotion within Billings as specified in the TBID budget.
MCA section 7-12-1131 sets forth the authority of a board in administering a district. This statute does not provide an all-inclusive list and it deliberately uses broad language to ensure districts have the power to engage in activities necessary to carry out its functions.
One of the commitments referred to in the resolution was the Billings Tourism Business Improvement District (TBID) conditionally agreed to provide funding for administrative, operational, promotional, and marketing expenses up to $800,000 per year for ten years to help defray the anticipated deficit in operating costs for the recreation center. The TBID will seek to increase the assessment to fund this commitment. The resolution also required an MOU to formalize this commitment before the November 7, 2023, election.
The MOU memorializes this commitment and indicates the TBID will seek to increase the assessment starting in FY 2025 with funding to begin after completion of construction and the recreation center has begun operating, with a specific date to be determined by the parties. The TBID will seek to renew the district for an additional ten-year period prior to expiration of the current term in October 2027. Additional terms are set forth in the MOU attached for review.
Some Council members have expressed a concern about the TBID's authority to use these funds to defray the operating expenses of a recreational center. The Legal department has reviewed and analyzed this issue and considered the statutory authority that applies to these districts and will provide a summary below of its conclusions to alleviate these concerns.
Montana law provides for the creation of a TBID to 1) serve a public use; 2) promote the health, safety, prosperity, security, and general welfare of the inhabitants of the district and of the people of this state; 3) be of special benefit to the property within the boundaries of any district created pursuant to the provisions of this part; or 4) aid in tourism, promotion, and marketing within the district. See MCA 7-12-1102. The resolution of intent to create a TBID approved by City Council indicates the assessments collected shall be used as set forth in Montana law, sections 7-12-1101 through 7-12-1144, for the funding of all uses and projects for tourism promotion within Billings as specified in the TBID budget.
MCA section 7-12-1131 sets forth the authority of a board in administering a district. This statute does not provide an all-inclusive list and it deliberately uses broad language to ensure districts have the power to engage in activities necessary to carry out its functions.
7-12-1131. Powers of board in administering district. The board in administering a district has all powers necessary to carry out the functions of the district contained in the ordinance creating it, including the power to:
(1) sue and be sued, enter into contracts, and hire and terminate personnel needed for its purposes;
(2) provide special police, maintenance, or cleaning personnel for the protection and enjoyment of the general public using the business district;
(3) landscape and beautify public areas and to maintain those areas;
(4) contract with the governing body to maintain, operate, or repair public parking facilities;
(5) contract with the governing body to maintain streets, alleys, malls, bridges, ramps, tunnels, landscaping, and other public facilities as mutually agreed upon;
(6) promote private investment and business expansion in the district;
(7) provide for the management and administration of the affairs of the district;
(8) promote business activity by advertising, decorating, marketing, and promoting and managing events and other actions designed for the general promotion of business activities in the district; and
(9) perform such other functions as are necessary to carry out the purposes of this part and to further the objectives of the district.
(1) sue and be sued, enter into contracts, and hire and terminate personnel needed for its purposes;
(2) provide special police, maintenance, or cleaning personnel for the protection and enjoyment of the general public using the business district;
(3) landscape and beautify public areas and to maintain those areas;
(4) contract with the governing body to maintain, operate, or repair public parking facilities;
(5) contract with the governing body to maintain streets, alleys, malls, bridges, ramps, tunnels, landscaping, and other public facilities as mutually agreed upon;
(6) promote private investment and business expansion in the district;
(7) provide for the management and administration of the affairs of the district;
(8) promote business activity by advertising, decorating, marketing, and promoting and managing events and other actions designed for the general promotion of business activities in the district; and
(9) perform such other functions as are necessary to carry out the purposes of this part and to further the objectives of the district.
Tourism business improvement districts enhance public/private partnerships as well as the quality of life for residents by providing funding for local events and sports facilities. These funds are utilized for a variety of uses that promote tourism related businesses, including for sports events and facilities, throughout the Country as well as in Montana. For example, Denver, Colorado's tourism district uses this funding to host sporting events as well as to fund capital improvements to Denver's event facilities, including the Colorado Convention Center. Another example that may not traditionally appear to be tourism-related is the City of Bozeman's tourism business improvement district which contributes funds to support housing. These funds specifically benefit the Human Resources Development Council’s 24/7, 365 days a year shelter in Bozeman.
The TBID presents a work plan and budget to Council every year for approval pursuant to MCA 7-12-1132. The work plan outlines the goals, objectives, activities and budget for the next fiscal year. Montana law does not restrict the use of TBID funds to contribute for operating expenses of a recreation center that will draw visitors to Billings. This use of funds is consistent with the statutory purposes of these districts as well the TBID's stated purpose and if the work plan and budget includes a specific goal, objective, or activity that will aid in tourism within the district then it is an allowed use of funds.
The TBID presents a work plan and budget to Council every year for approval pursuant to MCA 7-12-1132. The work plan outlines the goals, objectives, activities and budget for the next fiscal year. Montana law does not restrict the use of TBID funds to contribute for operating expenses of a recreation center that will draw visitors to Billings. This use of funds is consistent with the statutory purposes of these districts as well the TBID's stated purpose and if the work plan and budget includes a specific goal, objective, or activity that will aid in tourism within the district then it is an allowed use of funds.
ALTERNATIVES
This is a discussion item and no formal action will be taken.
FISCAL EFFECTS
This will provide funding up to $800,000 to help defray operational deficits of the recreation center for a period of ten years.
SUMMARY
Staff seeks any feedback Council may have regarding this MOU because it is scheduled to appear on the October 23rd regular business meeting agenda for Council's consideration prior to the November 7th election.