|
Item 6.
|
| City Council Regular | |
| Date: | 11/22/2021 |
| Title: | SBBURD TIF Assistance for KSKC Properties, LLC - 3218 South Frontage Road |
| Presented by: | Wyeth Friday |
| Department: | Planning & Community Services |
| Presentation: | Yes |
RECOMMENDATION
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 $362,525.46 of funds from the South Billings Boulevard Tax Increment Finance District (TIFD) to KSKC Properties LLC. KSKC Properties LLC is a corporation established by Tim Compton, the owner of Mobile-Stor, a Billings business that manufactures temporary office and storage units. Actual reimbursement will be based upon 100% of the actual costs incurred for qualified expenses for the improvements made to the property at 3218 South Frontage Rd, subject to the following conditions:
- The Applicant shall sign a development agreement with the City of Billings and SBURA within 180 days of City Council’s approval.
- 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.
- If funds are not available, reimbursement can be carried over to the next fiscal year.
BACKGROUND (Consistency with Adopted Plans and Policies, if applicable)
The SBURA board initially considered Mr. Compton’s application at its October 5, 2021, board meeting and voted unanimously to recommend $713,386 of tax increment assistance. Subsequently, two issues required changes in the application. It was discovered that an inadvertent miscommunication between Mr. Compton and SBURA’s consultant Jim Tevlin had resulted in an omission of $66,138 of eligible expenses ($66,138 for a separated pathway along the South Frontage Road on the frontage of the property) from Mr. Compton’s application.
In addition, SBURA staff, City Public Works Department and City Planning and Community Services Department staff discussed the opportunity for the water line extension in the South Frontage Road to be a CIP project instead of trying to address it in multiple TIF applications for multiple properties. It was determined that a combination of TIF funds and Public Works funds could be used to complete the water line, finishing a looping of the line in this area of the City, and benefiting both the City and current and future property in the City along the South Frontage Road. Since the South Frontage Road will only have development on the south side, since the north side is the I-90 ROW, the City would normally pay for half of a water line in this situation anyway, so making the project a City managed CIP project was a better approach. Accordingly, Jim Tevlin amended the TIF application to include the omitted separated path expense and removed the water line extension item. The SBURA Board at its November 2, 2021 meeting reconsidered the application and recommended to the City Council the revised application for a total reimbursement $363,5252.46. The total project cost is estimated at $3,890,435.
Mr. Compton purchased this 17-acre property in 2015 from Knife River Corporation where it had been operated as a gravel mine. Mr. Compton’s plan was to relocate his business, Mobil-Stor Inc., from its present location adjacent to Midland Lane to this new location. Additionally, Mr. Compton wanted to subdivide and develop a portion of his acreage as retail or light industrial property. Knife River had taken all the steps, as required by the Montana Department of Environmental Quality, to restore the property prior to the sale. At the time, the property was within the City of Billings but not included in the South Billings Boulevard Urban Renewal District (SBBURD). Incomplete City services (water, sewer, streets, etc.) in the area and soil compaction issues resulting from the property’s prior use as a gravel mine significantly hampered Mr. Compton’s efforts to develop the property.
In late 2019, Mr. Compton contacted SBURA to inquire about the possibility of annexing his property to the District. Access to tax increment funds would provide Mr. Compton the opportunity to overcome the challenges of City infrastructure access and the property conditions. Given that there were two properties between the southeastern perimeter of the District and Mr. Compton’s property that were not within the City Limits at the time and not fully developed, the City and SBURA staff developed a strategy to include the properties in an expansion of the SBBURD. Following work session discussions with the City Council and a series of public hearings and Council actions, the Council in July 2021 voted to expand the boundaries of the District to include Mr. Compton’s property. The District’s revised boundary became effective in September 2021.
Mr. Compton seeks tax increment assistance in three primary areas as described below and outlined in Table 1:
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.
In addition, SBURA staff, City Public Works Department and City Planning and Community Services Department staff discussed the opportunity for the water line extension in the South Frontage Road to be a CIP project instead of trying to address it in multiple TIF applications for multiple properties. It was determined that a combination of TIF funds and Public Works funds could be used to complete the water line, finishing a looping of the line in this area of the City, and benefiting both the City and current and future property in the City along the South Frontage Road. Since the South Frontage Road will only have development on the south side, since the north side is the I-90 ROW, the City would normally pay for half of a water line in this situation anyway, so making the project a City managed CIP project was a better approach. Accordingly, Jim Tevlin amended the TIF application to include the omitted separated path expense and removed the water line extension item. The SBURA Board at its November 2, 2021 meeting reconsidered the application and recommended to the City Council the revised application for a total reimbursement $363,5252.46. The total project cost is estimated at $3,890,435.
Mr. Compton purchased this 17-acre property in 2015 from Knife River Corporation where it had been operated as a gravel mine. Mr. Compton’s plan was to relocate his business, Mobil-Stor Inc., from its present location adjacent to Midland Lane to this new location. Additionally, Mr. Compton wanted to subdivide and develop a portion of his acreage as retail or light industrial property. Knife River had taken all the steps, as required by the Montana Department of Environmental Quality, to restore the property prior to the sale. At the time, the property was within the City of Billings but not included in the South Billings Boulevard Urban Renewal District (SBBURD). Incomplete City services (water, sewer, streets, etc.) in the area and soil compaction issues resulting from the property’s prior use as a gravel mine significantly hampered Mr. Compton’s efforts to develop the property.
In late 2019, Mr. Compton contacted SBURA to inquire about the possibility of annexing his property to the District. Access to tax increment funds would provide Mr. Compton the opportunity to overcome the challenges of City infrastructure access and the property conditions. Given that there were two properties between the southeastern perimeter of the District and Mr. Compton’s property that were not within the City Limits at the time and not fully developed, the City and SBURA staff developed a strategy to include the properties in an expansion of the SBBURD. Following work session discussions with the City Council and a series of public hearings and Council actions, the Council in July 2021 voted to expand the boundaries of the District to include Mr. Compton’s property. The District’s revised boundary became effective in September 2021.
Mr. Compton seeks tax increment assistance in three primary areas as described below and outlined in Table 1:
- Mr. Compton currently has two drive approaches that must be moved as per requirements of the Montana Department of Transportation (MDT has jurisdiction over the South Frontage Road in this area).
- Mr. Compton’s property was a former gravel mine. The previous owner complied with all the Montana Department of Environmental Quality-mandated restoration requirements. The soil, however, is not compacted enough to allow for property development. Consequently, Mr. Compton’s development plans require soil stabilization procedures prior to the construction of parking lots, buildings, sidewalks etc.
- As per City regulations, a “separated side path” (i.e., a 10ft-wide asphalt pathway) must be constructed adjacent to the South Frontage Road to meet City Arterial Street Standards. A pathway system on the Frontage Road in this area will provide public infrastructure for pedestrians and bikers similar to separated paths and sidewalks on other arterial streets in Billings. This infrastructure is even more critical in this area as the north side of the Frontage Road will not be developed as it is adjacent to the I-90 ROW.
Qualified Improvements |
Estimated Cost |
City TIF Policy |
Urban Renewal Plan | MT Code Annotated |
| Drive Approaches Soil Compaction Separated Pathway |
$196,387 $100,000 $66,138 |
Section 1(b) Section 1(b) Section 1(b) |
Section 12 Section 4 Section 14 |
5-4288(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.
ALTERNATIVES
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.
· 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.
FISCAL EFFECTS
The recommendation is for a maximum of $362,525.46 to be reimbursed to Tim Compton, Developer, for the identified work (See SBURA recommendation attached to this memo). The estimated total project cost is $3,890,435, making the private to public investment ratio for this project about 11:1. The funds are payable per the conditions of approval outlined in the SBURA recommendation and pending satisfactory submission of all paid invoices showing actual cost incurred for the project. Currently, the project is estimated for completion in late 2022. These potential TIF project payments are already incorporated into the FY22 budget.
Attachments
- Compton TIF Application
- Tim Compton TIF Application Analysis and SBURA Recommendation
- City TIF Policy
- SBBURD Urban Renewal Plan