Staff recommends that the City Council approve the Annexation Agreement with G2 Investments, LLC.

At the October 9th City Council meeting, Council approved the annexation of Lots 3, 4, 5, 6, and 7 of Riverside Acreage Tracts Subdivision but delayed action on the annexation agreement at the request of city staff. The property to be annexed is located along the South Frontage Road west of Sugar Avenue.  Typically, as a condition of approval of the annexation, the property owner enters into an Annexation Agreement with the City of Billings outlining necessary public improvements.  The Annexation Agreement outlines the off-site improvements necessary for development including access to the site, construction of water, sanitary sewer, and storm drain.  The Annexation Agreement provides for City required off-site improvements should the property be annexed and developed without a subdivision plat. The Annexation Agreement for this Council action generally includes the following conditions or improvements:

• Requirement for access;
• Requirements for extension of the sanitary sewer main along the South Frontage Road;
• Requirements for reimbursement for a portion of the existing water main to City's South Tax Increment Fund;
• Requirements for construction of a multi-use path along the South Frontage Road;
• Requirements for easements for the construction of a multi-use path along the southern and eastern boundaries of the property; and
• Outlines requirements for a traffic impact study.

There is sewer main fronting a portion of the property.  The sewer main was installed in 1981 and therefore, reimbursement for that section of the sewer line was not included in the annexation agreement.  Staff will be presenting an ordinance modification to City Council in a future meeting that recommends reimbursement for all mains that were installed less than 30 years ago.  

City Council may:

• If the annexation is approved, then approve the Annexation Agreement with the property owner; or
• Not approve the Annexation Agreement.  If the agreement is not approved within 45 working days, the annexation would be nullified as per the annexation resolution. 

Section 2 of the Annexation Agreement requires an extension of a sanitary sewer main along the South Frontage Road.  Since there is public right-of-way to the north of the sewer extension (Interstate 90) and no developable land, the City would typically pay for one-half of the cost of the extension if a compensation request is made by the Developer.  Staff estimates one-half of the sewer cost to be about $100,000 and would be paid from wastewater funds budgeted annually for this specific compensation purpose. 

There is an existing water main along the frontage of the Developer Tracts.  Approximately 700-feet of the existing water main along the property frontage was constructed in 2022 by TPA (the developer to the west).  TPA was reimbursed by the City and the City's South Tax Increment Fund for the construction of the water main.  The City reimbursed for one-half of the cost of construction due to the public right-of-way (Interstate 90) on the north side of the South Frontage Road, and the City's South Tax Increment Fund for the other half of the cost of construction of the water main.  The remaining 200-feet of water main along the frontage of the Developer Tracts was constructed in 1938 and replaced in 1985 utilizing an RSID.  Since a portion of the existing water main was paid by RSID, the City is not requesting reimbursement for that portion of the existing water main. In summary, the Developer will be required to reimburse the City's South Tax Increment Fund for their portion of the water main ($53,881).  

There are several requirements of the Annexation Agreement that would not be required upon site development.  Section 3 requires reimbursement for a portion of the water main to City's South Tax Increment Fund.  Section 5 requires the dedication of public right-of-way, if needed.  Section 7 requires the construction of a multi-use path along the South Frontage Road along with the requirements of easements along the southern and eastern boundary of the property for a future multi-us path.  These costs are Developer costs.

The financial impact of the remainder of the agreement is dependent on policy changes that may occur before development. If development occurs before any changes to the City's development policies, there would be no financial impact. If development occurs after City development policies change, the financial impact would be dependent on the changes.