In 2008 the City Council approved a Development Agreement between the City and the Babcock, LLC, a local partnership that is renovating the Babcock Building, consisting of the Babcock Theater, adjacent second story apartments and ground floor retail spaces. The Development Agreement provided funding to the Babcock LLC of approximately $1,900,000 for these renovations. This amount came from tax increment funds from the downtown Billings tax increment district that terminated in 2008. The Babcock LLC also secured funding from other sources for the property purchase and additional work. The $1,900,000 is an advance to the Babcock LLC, secured by a Trust Indenture on the Babcock Building as security for the advance and for performance of the developer’s obligations under the Development Agreement. Upon satisfactory completion of the developer’s obligations the City’s Trust Indenture will be released. As part of the Development Agreement, the Babcock LLC and City agreed that a condominium agreement would be prepared and approved to separate the Babcock Theater from the rest of the Babcock Building. Under the proposed Condominium Declaration there will be three condominium units established and the Babcock Theater will be one of those condominiums. Pursuant to the Development Agreement, the City will take title to the renovated Babcock Theater unit on or before April 1, 2016. The attached Condominium Declarations and Condominium Owners Association ByLaws are being presented to the Council for approval since they will govern the Babcock Theater before and after the City takes title to that condominium. These documents define and describe the condominium owners’ relationships and provide rules concerning how the owners’ association operates. City staff and staff for the Downtown Billings Partnership have extensively reviewed and revised these documents in cooperation with the Babcock LLC. So that the Babcock LLC may continue its renovations and secure additional financing to do so, these Condominium Declarations and ByLaws must be approved by the Council and then recorded with the County Clerk and Recorder.

Council may:

1. Approve the Condominium Declarations and Condominium Owners Association Bylaws; or
2. Disapprove the Condominium Declarations and Condominium Owners Association Bylaws.

There is no immediate financial impact to the City arising from approval of these documents. When the City takes title to the Babcock Theater in 2016, there will be annual condominium association dues and other related expenses to fund maintenance and insurance for common areas owned by all three condominiums including the Babcock Theater.

Staff recommends that Council approve the attached Condominium Declarations and Association ByLaws.