This is a zone change request from Agriculture Open-Space (A-1) to Controlled Industrial on 2 parcels of land described as C/S 2587, Tract 1 and C/S 3329, Tract 1, a 97.3 acre parcel of land. The property is located northwest of the intersection of Gabel Road and Hesper Road at 3815 Hesper Road. The property is owned by Industrial Planning Associates, LP and Rick Selensky, P.E. of Dowl HKM is the agent. The property is intended for the future development of a FedEx Ground transportation hub on a 50-acre portion of the site. The owner conducted a pre-application neighborhood meeting on December 19, 2012. The pre-application meeting notes are included as Attachment C. The owner has submitted a concurrent request for annexation of the property. The Zoning Commission received a valid protest from the surrounding property owners within 150 feet of the subject property. (Attachment D) The Zoning Commission conducted a public hearing on February 5, 2013, and is forwarding no recommendation on a 2-2 vote.  The City Council opened the public hearing on February 25, 2013, and voted to continue the public hearing until March 25, 2013.

State law at Section 76-2-304, MCA, requires that all zone changes be reviewed in accordance with 10 criteria. Using the 10 criteria to determine the appropriateness of the zone change request, the City Council may:
1. Approve the zone change request
2. Deny the zone change request
3. Allow withdrawal of the application
4. Delay action for up to thirty (30) days

If the annexation and zone change are approved, the property will begin paying taxes and fees to the city. If the property is developed, the taxes will increase accordingly. The property will have city services. Utilities will be extended to the property and street improvements will be made to accommodate any additional traffic. These costs will be paid for by the developer.

The applicant is requesting to rezone two certificates of survey tracts from A-1 to CI and annex the property into the city. The northwest corner of Tract 1, C/S 3329, an 87.3 acre parcel, will be within the South Shiloh Corridor Overlay District when it is annexed into the city. The owner intends to adjust the lot line between this parcel and C/S 2587, a 10-acre parcel also included within the zone change and annexation request. The lot line adjustment will result in 2 parcels that will be 50 acres (east ½) and 47.3 acres (west ½) in area. The east 50 acres is intended for a new FedEx Ground transportation hub.  The west 47.3 acre parcel will be subject to the South Shiloh Corridor Overlay District regulations for building design and site development standards. There are no development plans for the west parcel at this time.

The proposed zoning is identical to property to the east, north and south. Property to the west, across the BBWA canal, is property still located within the County. This property supports a Baptist college and church as well as a small residential subdivision. Property to the east is the Transtech Subdivision and Gabel Subdivision. This area has been developed for a variety of CI allowed uses including service business, corporate offices, a hospital, distribution warehouses, financial services as well as more intense uses such as pre-stressed concrete manufacturing, metal fabrication, powder coating and sandblasting. Property to the south is currently undeveloped property with the exception of a wireless communication tower just southeast of the intersection of Hesper Road and Shiloh Road. Further south is the Broso Valley Park Subdivision where several hotels, restaurants, vehicle sales and service businesses are located close to the Zoo Drive interchange with the interstate. A veteran’s health service center is also located in this subdivision. The mixture of commercial and industrial uses is the result of individual developers imposing covenants and restrictions on subdivision lots rather than requirements of the underlying zoning district. The South Shiloh Corridor Overlay District does apply to a few of the properties closer to Zoo Drive and the interstate.  The proposed CI zoning allows the same uses as the surrounding properties in the city limits.

A new drive approach will be required to the property from Hesper Road for the proposed FedEx Ground transportation hub. The annexation will require a development agreement to improve the section of Hesper Road, bring in utilities, and provide any required mitigation for potential traffic impacts to the surrounding road network including the intersection of Gabel Road and Hesper Road. Other intersections may be impacted and those will be identified in a traffic accessibility and impact study currently underway for the proposed FedEx development. Any development of the property will add traffic to the existing street network, so street improvements and mitigation of impacts will be necessary.

Hesper Road and Gabel Road are both designated principal arterial streets and have the capacity, or can be improved, to handle additional commercial and industrial traffic. In 2012, Gabel Road east of the Hesper Road intersection carried 5,700 vehicle trips per day. Hesper Road west of the Gabel Road intersection handled 2,370 vehicle trips per day in 2012. Principal arterial streets are designated to carry the greatest volumes of traffic throughout the community. The current traffic volumes on Gabel Road and Hesper Road are well below the capacity of a principal arterial street. Hesper Road west of the intersection with Gabel Road will need to be upgraded to accommodate additional commercial traffic.

The CI zone allows a wide variety of land uses from manufacturing to commercial retail and offices. CI zoning does not allow any residential uses by right but may allow single family dwelling units by special review approval. This area of West Billings has sustained a mixture of uses in this area of CI zoning since the early 1980s. The commercial and retail uses have concentrated on the high traffic arterial streets such as King Avenue West, S 32nd Street West, S 24th Street West and Zoo Drive and Shiloh Road. The industrial uses, manufacturing and uses requiring larger buildings or storage yards have been developed on the other street fronts such as the east end of Gabel Road, Conrad Street, S 29th Street West, S 27th Street West, Enterprise Avenue and Overland Avenue west of S 24th Street West. The Transtech Subdivision and the Broso Valley Park Subdivision do have lots with frontage on arterial streets but have controlled the potential land uses through covenants and restrictions on the lots in those subdivisions.

The Zoning Commission conducted a public hearing on February 5, 2013, and received the staff recommendation. In addition, the Zoning Commission received testimony from the applicant, Greg MacDonald of Industrial Planning Associates, the agent, Rick Selensky of Dowl HKM, and the prospective buyer, Jon Phillips of SunCap Property Group. Surrounding property owner David Brown of Wyo-Ben and Ken Petersen as attorney for 9 property owners in protest of the zone change provided testimony in opposition.

Jon Phillips of SunCap Property Group stated they are the preferred developer for a new site for a FedEx Ground transportation hub in the Billings region. He stated they intend to purchase the entire parcel of 97.3 acres and develop the east 50 acres for this new transportation hub. He stated given the 50-acre size, the proposed 140,000 square foot building and parking area could be much larger but his company decided to push the building back away from the adjacent streets and property lines to provide for additional landscaping and berming. He stated the amount of truck traffic - both line haul trucks and package delivery trucks - will be small in comparison to some of the surrounding uses and would be about 600 new trips per day total. He stated his company and FedEx Ground have developed similar hubs adjacent to Class A office spaces, residential neighborhoods, and other sensitive land uses including two recent projects in Windsor, CT and Redmond, WA. He stated the hubs do not have idling trucks, especially line haul trucks. He stated these trucks arrive and immediately deliver the trailer and either head out with no load or pick up another trailer and leave. The parked trailers are then moved by hub employees to the loading docks of the transfer facility. Mr. Phillips stated most of the traffic will be from package delivery vans that will deliver to Billings residents and the surrounding region. He stated a FedEx Ground hub in Redmond, WA is under construction and will be a 220,000 square foot building on 23 acres. He showed the Zoning Commission the approved site plan (Attachment F) with adjacent uses that included a large Class A office park to the south west, the Microsoft Millennium Campus (a high-end technology office complex) to the north and a large residential neighborhood to the south east. He stated the Redmond, WA building is about 150 feet from a Class A office building but the site will be extensively landscaped with berms to buffer those adjacent properties. Mr. Phillips stated the Windsor, CT facility was just completed and is a 220,000 square foot building on 62 acres.

Mr. Phillips stated Fed Ex Ground specializes in small package delivery and this proposed hub is part of FedEx Ground's nationwide expansion based on their logistics model for package delivery. Mr. Phillips stated it is their intent to develop this property with much greater separations to the Class A offices in Transtech, the County residents to the west, and to Hesper Road. He stated the plan is to set the facility approximately 800 feet west of Transtech and 800 feet from Hesper Road. The only entrance or exit from the property will be on Hesper Road about 1,000 feet west of the Gabel Road intersection. He stated the site will be heavily landscaped and bermed along the south and east to diminish the impact of the larger transfer building and parking area. He stated he has met and discussed site development specifics with the owners and representatives of Transtech Center. Mr. Phillips stated he understands the adjacent owners have placed covenants and restrictions on their subdivisions but these private restrictions should not encumber adjacent property. He showed graphic renderings of what the property would look like from the Transtech Center and from Hesper Road when it is built and landscaped. Commission member Dan Wagner asked whether the proposed building would be similar to the Windsor, CT building. Mr. Phillips stated the building would be a similar design only smaller.

Chairman Leonard Dailey, Jr. asked what the proposed time line for construction is for FedEx. Mr. Phillips stated SunCap would like to begin construction as soon as possible this spring. Mr. Phillips stated he anticipates a project completion by the end of 2013 with installation of the interior transfer equipment by FedEx in early 2014. He stated the facility would likely start operation by June 2014. Chairman Dailey asked whether SunCap would retain ownership of the property. Mr. Phillips stated they would remain the property and building owner and have a long-term lease with FedEx Ground. 
Rick Selensky of Dowl HKM stated his firm has completed a preliminary traffic analysis for the proposed FedEx Ground facility. He stated the facility will generate about 672 new vehicle trips per day with many of those being employee trips. He stated the facility is a 24-hour day work environment so the employees work in shifts. He stated the line haul deliver trucks (semi-tractor trailers) would be arriving and departing mostly in the evening between 6 pm and 10 pm. He stated the package and delivery vans departures are concentrated in the early morning with returns later in the afternoon and early evening. He stated the developer plans to participate in the required signalization of Hesper and Gabel and Gabel and 32nd Street West. He stated the developer will pay for all the improvements to Hesper Road west of Gabel Road including 1,100 linear feet of curb, gutter, sidewalk and a 39-foot wide street. He stated the developer will pay for and install all city utilities including water, sanitary sewer, and storm sewer lines.

Greg MacDonald of Industrial Planning Associates testified as the owner of the property. He state the proposed zoning is consistent with all adopted City plans and is identical to the adjacent city zoning to the north, south, and east. He stated the West Billings Plan, adopted in 2001, identified this 500-acre area near the Zoo Drive and Shiloh Road interchange as a regional commerce center. He stated most of this 500-acre area is already zoned Controlled Industrial. He state this property is in a strategic location with ready access to arterial streets and efficient access to the interstate highway. He stated there are several adjacent and nearby properties with similar or more intensive industrial uses. Mr. MacDonald urged the Commission to adopt the unbiased and considered recommendation of its Planning staff and recommend approval of the zone change. He stated the proposed zoning has several practical and positive reasons for approval.
 
Mr. David Brown of Wyo-Ben Incorporated located at 1345 Discovery Drive testified in opposition to the application. He stated his office building is 200 feet from the property line where FedEx intends to construct its facility. He stated he believed it was great FedEx was expanding in the area but he believes this is not an appropriate site for the transfer hub. Mr. Brown stated the project will have two major impacts on his business - visual impact and air pollution or emissions. He state the size and construction style of the building is not consistent with the Transtech Center. He stated his building draws a lot of outdoor air for its HVAC system. He stated when someone is smoking outside the building, the HVAC will draw in that cigarette smoke. He stated the FedEx trucks and fuel smells will impact the indoor air quality for his employees. He presented a photo of the existing FedEx transfer facility in Lockwood. He stated the picture shows many trucks idling and starting diesel tractor trailers. He stated this is what the new hub will be like. He urged the Commission to recommend denial of the zone change.

Mr. Ken Petersen, an attorney representing 9 property owners opposed to the zone change, testified in opposition to the zone change. Mr. Petersen stated the new FedEx Ground hub is a great project for Billings but should not be located on Hesper Road. He stated he commended the owner and FedEx for being up-front about the intended use for the property. He stated his analysis of the 10 criteria for zone changes indicated the zone change should be denied. He stated the zoning is not consistent with the Growth Policy for many reasons. He stated his clients believe the city should require installation of two left turn lanes at the Gabel and Zoo Drive intersection. He stated his clients own many of the properties in Transtech and they will be negatively affected by the air emissions from the transfer hub. He stated there is 1 hotel on Zoo Drive with plans for 3 more. He stated a 24-hour trucking operation will negatively effect these hotels. He stated the zoning is not consistent with the County neighborhood to the west. He stated the owner and developer should conform to the Shiloh Road Overlay District even though they intend to move the lot lines so the FedEx lot is outside the overlay district. Mr. Petersen stated Transtech is a Class A office park and this transfer hub will result in a loss of value for these owners. He stated the developer should apply the Shiloh Road Overlay District standards to all the property. He stated the development will hurt the market value of the property to the south and east. He stated the proposed zoning will have a large impact on the transportation network. He stated this network was paid for by all the existing owners and they should not be burdened by this new development. He stated the protest petition the Commission received and the City Council will receive outlines all the criteria that recommend denial. He stated the city and economic development agencies should work together to find another site for the FedEx facility. Mr. Petersen showed the Commission a map and pointed to a property south of the interstate on South Frontage Road west of the King Avenue interchange. Mr. Petersen stated the property could easily be annexed and re-zoned for the Fed Ex project. He stated his clients estimated the cost of extending city services to the property to be about $ 1.7 million - a comparable cost to the Hesper Road site. He stated this South Frontage Road site would have direct access to 3 interstate interchanges and not just 1.

Chairman Dailey asked the applicant and agents to provide rebuttal to the testimony in opposition. Mr. Phillips stated the air quality standards adopted by the city, county, state and the federal government will be met by FedEx. He stated there should be no emission impacts to adjacent properties. He stated if the site were developed without landscaping or berming it would have a visual impact. He re-stated the developer's intent to substantially landscape and berm the site so the visual impact is minimized to a great extent. He stated the building will not be a metal sided structure but will be upgraded siding that will also diminish any visual impact. He stated he was aware of and had read the covenants and restrictions on the adjacent subdivisions but these restrictions and covenants do not apply to this property. He stated he believed the market for land in the area will be improved by the FedEx facility. He stated they are paying a very good price for the land which can only help raise value for future land sales in the area. He stated market velocity for land in this area has been slow but this sale and development should help drive demand up for new development.

Mr. Selensky re-stated that the developer will be shouldering all of the adjacent street and site improvements and will provide its fair share to the signalization projects for Gabel and Hesper as well as Gabel and South 32nd Street West. Mr. Selensky clarified the traffic study was based on an initial employee level of 200 - not on 400 employees. Mr. Phillips stated when FedEx asks for proposals on sites for new transfer hubs, it has very exacting standards based on its logistics model. He stated if the zone change is not approved, FedEx will have to re-work the logistics model to accommodate another site. He stated FedEx may chose to split its transfer hub in to 2 or more locations if it cannot build just one facility. Mr. Phillips stated the site and development are time sensitive so another site may not accommodate those time lines.

Commission member Dan Wagner asked if any of the FedEx traffic would go west on Hesper Road and why the developer is not improving that section of Hesper Road. Mr. Selensky stated some traffic will head west on Hesper Road but not a large percentage. Mr. Selensky stated the city requires the developer to do street improvements on the immediately adjacent street but not on right-of-way that is outside the city limits or beyond the boundaries of the development with the exception of intersection improvements to accommodate the added traffic.

Member Dan Wagner asked what SunCap intends for the west 47 acres as he understands it is all just swamp with high ground water. Mr. Phillips stated it will retain the 47 acres and market the property appropriately. He stated the entire site has high ground water and the FedEx facility will be built on pilings to accommodate this issue. He stated this is an engineering issue on the property and a solution is available.

Chairman Dailey closed the public hearing. Member Mike Boyett made a motion to recommend approval of the zone change and adopt the findings of the 10 criteria. The motion was seconded by member Barbara Hawkins. Chairman Dailey stated the Commission should focus on the proposed zoning and not get too involved in considering the specifics of the FedEx project. Member Dan Wagner stated that he was concerned about the air quality impacts to the adjacent property and the visual impact to the area. The Zoning Commission voted 2-2 on the motion to recommend approval to the City Council. Chairman Dailey and member Dan Wagner voted no and members Mike Boyett and Barbara Hawkins voted in favor. Therefore, there is no recommendation to the City Council for the zone change.

The West Billings Neighborhood Plan adopted by the City in 2001 states the purpose of the plan is to guide the long-term growth of West Billings by achieving planned growth. A preferred land use map was developed locating neighborhood, community, and regional commercial nodes at major arterial intersections. The plan indicated this area near the Shiloh Road interchange with the interstate should serve as a regional commerce center. The plan describes this center as an area intended to serve the entire Billings community and beyond. It designates the regional center to be located where it will have direct and efficient access to Interstate 90. A regional commercial center should accommodate a variety of uses including transportation hubs, central offices for regional businesses, services for Billings and visitors and other uses that need direct and efficient access to the interstate.

The CI zone is described in the zoning code as follows: “The Controlled Industrial zone is intended to accommodate a variety of business, warehouse and light industrial uses related to wholesale plus other business and light industries not compatible with other commercial zones, but which need not be restricted in industrial or general commercial zones, and to provide locations directly accessible to arterial and other transportation systems where they can conveniently serve the business and industrial centers of the city and county.” The proposed zoning of the property for a FedEx Ground hub is compatible with the goals and policies of the West Billings Neighborhood Plan.

The applicant conducted a pre-application neighborhood meeting on December 19, 2012, and surrounding property owners or their agents attended the meeting. The Planning Division was contacted by Jerry Thomas, Chair of the Transtech Center Owners Association, with concerns regarding the truck traffic impacts from the proposed FedEx Ground hub, the landscaping requirements, the building design, and the proximity of the property adjacent to the Transtech Center, a high tech business park. The Planning Division received a petition in protest of the proposed zone change from several property owners within the 150-foot valid protest area around the subject property. (Attachment D). The petition is a valid protest against the zone change. This protest will require a 2/3 majority vote of the present and voting members of the City Council to approve the zone change.

The Planning Division recommended approval of the proposed zone change. Planning staff found the proposed CI zone compatible with the zoning north, south, and east of the subject property. The lots north are developed and developing as a large retail center, Shiloh Crossing. Scheel’s has broken ground in this development for a 220,000 square foot sporting goods store, scheduled for opening in 2014. Property to the east is in the Transtech Subdivision and Gabel Subdivision. Advanced Care Hospital, Stillwater Mining, Briggs Distributing (warehouse), GE Capital, Sanderson Stewart, Windmill Restaurant, Electrical Consultants, Inc. (ECI), Hub Mountain States Insurance, Land Design, Alphagraphics and JGA Architects and Engineers, Watkins Shepard Trucking, EC Power Systems, and Timmer Roofing are a few of the businesses located in these subdivisions. The Broso Valley Park Subdivision is located to the south and east. It includes the Veteran’s Health Service, an assisted living facility, Big Horn Resort, Rib & Chop House Restaurant, Hampton Inn and Suites, and a Holiday Gas Station. All three subdivisions have placed private covenants and restrictions on the lots to prohibit some uses and control the design of buildings and landscaping. There may be uses allowed in the CI zone that are not compatible with the restricted subdivisions to the east and south east of the subject property. For example, wood products manufacturing such as cabinet making, factory-built buildings, and roof truss plants are allowed uses in the CI zone. These uses may or may not be compatible with the restricted uses in the surrounding subdivisions.

The Planning Division reviewed the application and recommended approval to the Zoning Commission based on the 10 criteria for zone changes. The Zoning Commission has no recommendation on the 10 criteria findings of fact on the proposed zone change. If the City Council moves to approve the zone change it may adopt these 10 criteria as stated below. If the City Council moves to deny the zone change it will need to propose findings that are contrary to 1 or more of the 10 criteria.

The subject property is adjacent to Public and R-150 zoning in the county and CI zoning in the city. The uses allowed within the proposed CI zoning are compatible with the surrounding zoning and neighborhood character. Any development of the property requires compliance with the new zoning and the ability to meet site design criteria and traffic safety standards. The 2008 Growth Policy and the West Billings Neighborhood Plan encourage predictable land use decisions that are consistent with neighborhood character and land use patterns. The existing use and proposed zoning are consistent with this neighborhood and land use pattern.

Prior to any making a decision on the proposed zone change, the City Council shall consider the following 10 criteria:

1. Is the new zoning designed in accordance with the Growth Policy?
The proposed zone change is consistent with the following goals of the Growth Policy:
• Predictable land use decisions that are consistent with neighborhood character and land use patterns. (Land Use Element Goal, page 6) 
The proposed zoning is identical to the adjacent zoning in the city limits. The current neighborhood character is a mixture of service businesses, retail, corporate offices and industrial uses. The proposed zoning will allow similar business and commerce on the property.
• Limit regional commercial centers to areas having efficient and direct access to Interstate 90 or other regional corridor (Planned Growth Goal, page 18)
The proposed zoning will allow the regional commerce center planned in the West Billings Neighborhood Plan to be complete with compatible zoning throughout.

2. Is the new zoning designed to secure from fire and other dangers?
The new zoning requires minimum setbacks, open and landscaped areas, and building separations. The new zoning, as do all zoning districts, provides adequate building separations and density limits to provide security from fire and other dangers. The City Fire Department will ensure safe access to the site and provision for minimum fire flow to the new buildings.

3. Whether the new zoning will promote public health, public safety and general welfare?
Public health and public safety will be promoted by the proposed zoning. Any development of the property will require connection to the city public utilities and improvements to adjacent streets and intersections. The city and state have invested in nearby transportation systems and utilities that will provide service to the property. Additional users and rate payers for those systems will benefit the general welfare. The proposed zoning will likely result in economic development and provision of new jobs to the Billings labor market. 

4.  Will the new zoning facilitate the adequate provisions of transportation, water, sewerage, schools, parks, fire, police, and other public requirements?
Transportation: The proposed zoning will impact the surrounding streets, and a traffic impact study will be required. The City Engineering Division will have to approve the study and will require street and intersection improvements prior to or concurrent with any development of the property.
Water and Sewer: The City will be able to provide water and sewer to the property by extension of lines. The developer will pay all related costs of this utility extensions as well as systems development fees.
Schools and Parks: There should be no impact to schools from the proposed zone change.
Fire and Police: The subject property is currently served by the Billings Urban Fire Service Area. City Public Safety Services have no concerns.

5. Will the new zoning provide adequate light and air?
The new zoning, as do all zoning districts, require building setbacks and separations so
adequate light and air are assured.

6. Will the new zoning effect motorized and non-motorized transportation?
The subject property when developed will likely add more than 500 vehicle trips per day to
adjacent streets. This will require a Traffic Accessibility Study to determine the impacts and to provide for improvements to those streets and intersections.

7. Will the new zoning will promote compatible urban growth?
The new zoning does promote compatibility with urban growth. Lower density development is inefficient and ineffective in recovering the costs to extend city services. The area was included in the regional commerce center as part of the West Billings Neighborhood Plan in 2001. The property is the last major piece of the commerce center to be proposed for annexation and zoning. There are compatible uses and zoning to the north, south, and east. 

8. Does the new zoning consider the character of the district and the peculiar suitability of the property for particular uses?
The proposed zoning does consider the character of the district and the suitability of the property for a variety of commercial and industrial uses. The intended use of the eastern 50 acres of the 97-acre property is for a FedEx Ground transportation hub. The applicant and agent describe this use as a transfer location from larger trucks to smaller trucks for local deliveries within Billings and the region. The property is located to allow for efficient and direct access to the interstate and regional transportation network.

9. Will the new zoning conserve the value of buildings?
Surrounding property exhibits higher taxable land value. The property is currently vacant and should increase in value when developed. There is one older manufactured home on the property that will become a nonconforming use of land. This uses is protected by the zoning code so long as it continues in place. The zoning code also allows replacement of this manufactured home with a newer or larger manufactured home. 

10. Will the new zoning encourage the most appropriate use of land throughout the City of Billings?
The proposed zoning will encourage the most appropriate use of land in this area of Billings. The proposed CI zone is identical to the adjacent zoning in the city. The adjacent subdivisions have been developed for a variety of allowed uses including corporate offices, service businesses, health care, retail and hospitality businesses. The proposed zoning allows this mixture of uses and the development standards for site design, landscaping and transportation improvements will be appropriate for this location.