The Downtown Billings Partnership (DBP) Board recommends the City Council approve up to a maximum reimbursement of $614,268, starting in the fiscal year following the year in which the project is completed, from Downtown Urban Renewal tax increment financing district funds to Griffin Development for its mixed use project at 2316 1st Avenue North. The City already approved a TIF reimbursement of up to a maximum of $1,693,050 in February 2022 for this same project. This brings the total maximum request for reimbursement up to $2,307,318 for this single project. Actual reimbursement will be based upon 100% of the actual costs incurred for qualified expenses for renovation, subject to the following conditions:

1. The Applicant shall sign an amendment to the previously executed development agreement for this project with the City of Billings and DBP within 180 days of City Council’s approval.
2. 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.
3. This TIFD reimbursement is approved per the condition that it be broken down into six disbursements of $102,378 each within six continuous fiscal years following the year in which the project is completed. This disbursement also may be combined with the previously approved disbursement for this project to follow a six fiscal year distribution schedule. 
4. If funds are not available, reimbursement can be carried over to the next fiscal year

Griffin Development submitted an application on September 30, 2021 to the DBP requesting TIF assistance to remove an old blighted building and construct a new five-story, mixed use 36-unit residential apartment building with some retail on the ground floor. The property is located at 2316 1st Avenue North and may be the first phase of a development that would ultimately include two mixed use buildings on the half block property between North 23rd Street and North 24th Street. The application was vetted by staff, the Development Committee and the DBP Board before a recommendation to fund the project was sent to City Council for $1,693,050. The City Council approved the TIF grant in February 2022.

The project has started but has encountered significant cost increases and Griffin Development returned to the DBP Board in February 2023 to seek additional TIF funds to help complete the project. The project was first estimated at about $11 million and now is estimated to cost about $15.3 million. The applicant updated the financial information (See attached DBP Board Recommendation) and has requested an additional $614,268 to fund some of the same eligible costs for the project. The added TIF award would not go to new project elements but would further cover existing project elements as identified in the DBP Recommendation document attached.

The reasoning for further support of increasing the funding for this application by DBP are all of the same reasons that were outlined below in the first request in 2022. The DBP Board in reviewing this new request acknowledged that costs have increased in many areas of construction and development, and the Board still wants to see this project add to the housing options in the Downtown with 36 added units. The project is in alignment with the elements/goals of the DBA Strategic Plan, North 27th Street Urban Renewal Plan, City TIF Policy and MCA as outlined in detail below:

• The project addresses blight remediation (MCA 7-15-4282 through 7-15-4294 and Ordinance 12-5590) through the demolition of the existing old building on the site that has been vacant for several years and exceeds (@7:1) the 5:1 private to public matching fund requirements of the DBP Large Project Incentive Grant criteria (not including the property acquisition).
• The project further enhances the vibrancy of Downtown Billings through revitalization of this half block along 1st Avenue North; increased public activity along 1st Avenue North, North 23rd and North 24th streets; enhanced pedestrian experience and safety in this area of 1st Avenue North; and improved public safety through modern construction of structural, fire, electrical, plumbing and HVAC systems.
• The application aligns with the issue of addressing housing in Downtown Billings and city-wide, as well as other elements/goals of the DBA Strategic Plan (may be viewed through this link https://downtownbillings.com/about/about-the-dba/), City TIF Policy, MCA, and the North 27th Street District Urban Renewal Plan (See Table 1 below and the DBP Board Recommendation document attachment).

  Table 1.

Qualified Improvements	DBA Strategic Plan	City TIF Policy	Urban Renewal Plan	Montana Code Annotated
Site work and safety - Demolition and Site Prep; Concrete work for sidewalks, driveways, front patio areas, exit stairways; Alley improvements Utility Connections and Improvements - water and sewer trunk line from street; storm sewer system; gas and electrical main service connections from utility mains;  Building Exterior and Facade and work - groundfloor metal and glass siding, safety and emergency lighting of the street frontage/sidewalk areas Public access and area improvements - ADA compliance for parking areas, ground floor patio areas, elevator and entrance areas. Building Safety and Utility work to code - Mechanical, plumbing, electrical, HVAC	Vibrant &Connected Downtown – includes downtown living P.13 Strong Downtown Identity –P.13 Transformative Initiative - P. 15 - Increase Downtown Residential Population Through Targeted Downtown Housing Initiatives	Permitted uses of TIF Funds: Demolition and structure removal - P.2 Private infrastructure with Public Benefit and Public infrastructure –P.2 Financial Assistance Through TIF – (grants may be for for-profit businesses) P.2	Infrastructure Improvements– includes improvements to support workforce housing and loft and condo housing development - P.55 Crime Prevention and Public Safety -P.55	7-15-4202 (3) 7-15-4233 (i) 7-15-4288 (2) (4)

 
This property was purchased by Griffin Development in August 2019 with the intent to start construction much earlier. However, the arrival of COVID-19 delayed the project. While Phase One of this project has started and consists of the demolition of the existing structure on the eastern half of the half-block site, escalating project costs are making success of the project more challenging. The western half of the site will be used as a staging area for Phase One. Phase One is the portion of the project that is the subject of this second TIF request. The Phase One first building will be a five-story structure with an enclosed first floor of a 24-space parking garage, and 13 additional individual garages located off the alley for tenant or public rental. The first floor will also have 2,000 square feet of retail/restaurant space along 1st Ave North, with terrace seating on the structure’s roof. The second through fifth floors will house 36, two-bedroom apartments with individual balconies.

This project accomplishes many priorities of the Urban Renewal Plan, DBA Strategic Plan, Downtown Housing Study, and the City’s Growth Policy. The new build of the structure will increase the property value and generate more taxable value in the building itself as well as the surrounding neighborhood. Buildings adjoining the property to the South are Ciao Mambo, Uberbrew, Nova theater, and Buffalo Block. To the East is Cushing Terrell and the Griffin Sawyer building that was rehabilitated with TIF funds a few years ago (formerly the Antique Depot or the Spaghetti Depot prior to that). To the West is the Buchanan Capital building. Ultimately, the two buildings of Phase One and Phase Two will take up the entire block frontage from North 23rd street to North 24th Street, and back to the existing alley.

The DBP Board continues to support this application request, recognizing this project will make a significant commitment and investment in Downtown Billings by adding to existing redevelopment along this block of 1st Avenue North, as well as along North 23rd Street and North 24th Street, adding needed housing units to the Downtown Core, and building where City services and infrastructure already exist.  
 

The DBP Board Meeting and the City Council Meeting are both public meetings that members of the public may attend and provide comment on agenda items. PCSD staff was not aware of any public comment at the DBP Board meeting per the attached minutes and had not received any comment from the public at the time this memo was prepared.

City Council may:

• Approve the recommendation from the DBP Board for the expenditure of these TIF funds consistent with some elements/goals of the DBA Strategic Plan, North 27th Street Urban Renewal Plan, City TIF Policy and MCA.
• Modify the recommendation from the DBP Board for the expenditure of these TIF funds before taking action, or;
• Disapprove the recommendation from the DBP Board for the expenditure of these TIF funds. If the Council chooses not to approve this TIF application, specific reasoning for the denial is necessary to provide further direction to the DBP Board and staff, and City staff for future applications.

The recommendation is for an additional maximum up to $614,268 to be reimbursed to Griffin Development for the identified building demolition, site preparation and construction of portions of a new mixed use building on the site. The new estimated total project cost included with this new request for TIF funds is about $15.3 million (property purchase included but not reimbursed). This change in project cost, with the increased request for TIF funds (total TIF if approved would be $2,307,318), maintains the private to public investment ratio for this total project of about 7:1.

The funds are payable per the conditions of approval outlined above in the DBP recommendation, pending satisfactory submission of all paid invoices showing actual cost incurred for the project, and per the reimbursement being broken down into six disbursements within six continuous fiscal years following the year in which the project is completed. If approved, payments will be incorporated into future year budgets, the earliest is expected to be FY25 assuming project completion prior to that time. The increased funding for this project will likely limit future projects, based upon the current estimates of the Downtown District revenues. Present cash flow projections show future years cash position for the Downtown District as negative. These projections are based upon conservative revenue estimates and approved projects anticipated to be completed. However, housing is a high priority of the DBP Board and the approval of any TIF award is contingent on the District having available cash to make annual reimbursements, so the developer assumes the risk that there may be delay in project reimbursements in future fiscal years.