Document Kalispell_doc_3722cfd71d

fson Core Area Plan Market & Feasibility Study June 2013 ---PAGE BREAK--- Draft Project Report Kalispell Core Area Market Analysis and Feasibility Analysis Prepared for City of Kalispell Department of Community Planning & Economic Development and the Kalispell Core Area Steering Committee Submitted by Willdan Financial and Economic Consulting Services (Willdan) June 21, 2013 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 3 Table of Contents I. Introduction & Executive Summary 7 II. Baseline Demographic & Economic Overview 9 Population 9 Households 9 Age Profile 10 Income Profile 10 Unemployment and Labor Force 12 Educational Attainment 13 Skills Gap 14 Kalispell Tourism Market 14 III. Residential Market Analysis 17 New Housing Construction Trends in Kalispell 17 Housing Market Sales Prices & Pace in Kalispell 17 Kalispell Apartment Market Trends 19 Flathead County Housing Market Trends & Projections 19 Housing Affordability in Flathead County 20 Residential Development Opportunity in the Core Area 21 IV. Retail Market Analysis 23 Core Area Site Characteristics 23 Retail Trade Areas 24 Primary Trade Area 24 Secondary Trade Area 25 Retail Competition Overview 25 V. Office Market Analysis 32 VI. Business Park/Industrial Market Analysis 33 Key Recommendations 33 VII. Hotel and Hospitality Market Analysis 35 VIII. Opportunities and Constraints: Implications for Core Area Plan 36 and Opportunities 37 Constraints/Threats 39 IX. Core Area Economic Development Recommendations 40 Scenario 1 – Status Quo (Maintain Rail in Core Area) 40 Scenario 2 – Conservative (Limited Expansion of Core Area Retail) 41 Scenario 3 – Optimistic (Major Expansion of Core Area Retail) 42 Long-Term Redevelopment Potential 43 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 4 Rationale 43 Recommended Retail Recruitment Strategies 44 Leasing and Management 44 Phasing and Action Items 44 Conclusions 45 X. Kalispell Linear Park Conceptual Plan 47 Introduction 47 Linear Park Layout and Programming 47 Key Regional Trail Connection Points 48 Proposed Linear Park Programming “Bump out” Nodes 48 Street Extensions/ Railroad Crossing Conversions 49 Connection to the City of Kalispell Parks and Recreation Network 49 Linear Park Capital Cost Assumptions 49 Rail Line Removal 50 Linear Park Trail 50 Summary of Construction Costs 50 Linear Park Operating Cost Assumptions 52 XI. Core Area Financial Feasibility & Implementation Plan 53 Summary of Key Findings 53 Annex A: Detailed Assumptions & Calculations 59 Annex B: Public Park/Recreation Development Opportunities – Case Studies 60 Portland Trails, Maine 60 Potomac Overlook Regional Park Nature Education Center, Arlington, Virginia 61 Carolina Thread Trail & Cawtaba Lands Conservancy, North and South Carolina 62 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 5 Index of Tables/Figures Figure 1: Population Counts and Estimate (2010, 2012, 2017) 9 Figure 2: Household Counts and Estimate (2010, 2012, 2017) 9 Figure 3: 2012 Population by Age 10 Figure 4: 2017 Population by Age 10 Figure 5: Income Profile for the City of Kalispell 11 Figure 6: Income Profile for Flathead County 11 Figure 7: Per Capita Income, Flathead County, 1997-2010 11 Figure 8: Percent Change in Nonfarm Labor Income, Flathead County 12 Figure 9: Flathead County Employment Trends 2005 - 2010 12 Figure 10: Unemployment Rate, Flathead County, Not Seasonally Adjusted 13 Figure 11: Educational Attainment in Flathead County 14 Figure 12: Educational Attainment in the United States 14 Figure 13: Glacier National Park Visitor Spending (2010 and 2023 Projection) 16 Figure 14: Residential Construction Pipeline, City of Kalispell 17 Figure 15: Home Sales and Median Sales Price in Kalispell (2007-2012) 18 Figure 16: Median Home Values, Kalispell Zip Code 59901 18 Figure 17: Gross Rent as a Percentage of Household Income 19 Figure 18: Occupancy of Housing Units, Flathead County, 2010 20 Figure 19: Housing Affordability Index, Flathead County 2007-2010 21 Figure 20: Average Annual Housing Unit Construction 21 Figure 21: Conceptual Redevelopment Alternatives – Residential Development 22 Figure 22: Target-Anchored Shopping Center (Highway 93 North) 24 Figure 23: Kalispell Retail Competition Map 26 Figure 24: Retail Gap Analysis - City of Kalispell 28 Figure 25: Conceptual Redevelopment Alternatives – Retail Development 29 Figure 26: Incremental Residential Retail Spending Power & 10-Year Supportable Retail Development 30 Figure 27: Food, Retail & Entertainment Demand from Glacier National Park Visitor Spending (Square Feet) 31 Figure 28: Current Kalispell Office Market Lease Rate Trends 32 Figure 29: Leads for Rail Industrial Park 33 Figure 30: Profile of Kalispell Area Hotel/Lodging Properties 35 Figure 31: Downtown Kalispell 40 Figure 32: Proposed Core Area Redevelopment 43 Figure 33: Current Conditions: Kalispell Center Mall Parking Lot 45 Figure 34: Summary of Linear Park Development Costs and Phasing Recommendations 51 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 6 Figure 35: Kalispell Linear Park Annual Operating Cost Estimates 52 Figure 36: Core Area Financial Feasibility Analysis – Summary Results 53 Figure 37: Core Area Plan Real Property Tax Revenue Assumptions –Incremental Taxes Per Square Foot from Similar Redevelopment Activity 54 Figure 38: Fiscal Benefits at Buildout - Summary of Scenarios 55 Figure 39: Core Area Grant Funding Resource Strategy 56 Figure 40: Potomac Overlook Regional Park Environmental Stewardship Programming 62 Figure 41: Carolina Thread Trail Park Identification Signage 62 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 7 I. Introduction & Executive Summary The City of Kalispell commissioned this Core Area Commercial Market Analysis (“Market Analysis”) to assist it in the redevelopment of the Core Area. The City has developed a vision to revitalize the Core Area while retaining its character and identity. This Market Analysis will identify the opportunities to realize the vision, the impediments to implementation, and provide direction on bringing the plan from concept to reality. This study analyzes the plan’s impact on fiscal revenues, job creation (both one‐time construction and ongoing permanent jobs), and indirect spending. It also evaluates the environmental, social, and other public benefits that are difficult to quantify, but have a positive impact on the community. The City’s vision is to increase the appeal of the Core Area by:  Removing the railroad tracks that bisects the Project Area and replace the tracks with a Linear Park;  Improving and upgrading existing properties to remove the blighted areas within the Core Area; and  Developing a compatible mix of commercial retail, neighborhood services, residential housing and public areas that meets the needs of residents and fosters a greater sense of community. In turn, the proposed redevelopment will strengthen the local economy by increasing the local tax base, attracting new residents and businesses, creating new jobs, and increasing tourism. This report will assess and analyze development opportunities in the following sectors:  Retail  Office  Business Park  Hotel and Hospitality  Institutional  Single and Multi Family Housing The report will also identify ways in which public policy can encourage appropriately scaled new development that will positively shape and reinforce the Core Area of Kalispell through:  Retention of existing retailers  Strategy for the recruitment of new commercial uses  Impact of any recent and proposed development projects  Apparent and weaknesses in Kalispell for the following development sectors; ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 8  Elements that may now (or in the future) support or constrain the goals of the Core Area Strategy;  The consumers’ experience within Kalispell and the Core Area;  Characteristics within Kalispell that have the greatest impact on development;  Voids and opportunities in the marketplace that will affect local retailers and national chains; and  Public improvements and public and private investment strategies to reinforce project goals and objectives. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 9 II. Baseline Demographic & Economic Overview Population The City of Kalispell and Flathead County are both growing. Figure 1 shows that Kalispell had 20,603 residents in 2012. This number represents a growth rate of 1.70 percent per year from the 2010 US Census to 2012. Flathead County grew from 90,928 residents as reported in the 2010 US Census to 94,275 in 2012. The county grew at a rate of 1.84 percent per year during that time. The city and county are both expected to continue adding residents, but the rate of this growth is expected to slow over the next five years. Between 2012 and 2017 Kalispell is expected to grow its population by more than 1,200 residents, an annual growth rate of 1.20 percent. Flathead County will reach a population of 100,620 in 2017 by having an annual growth rate of 1.35 percent. Figure 1: Population Counts and Estimate (2010, 2012, 2017) 2010 2012 2010 - 2012 Annual 2017 2012 - 2017 Annual Kalispell 19,927 20,603 1.70% 21,844 1.20% Flathead County 90,928 94,275 1.84% 100,620 1.35% Source: ESRI Business Analyst; Willdan, 2013. Households The 2010 US Census identified 8,638 households in the City of Kalispell, as shown in Figure 2. By 2012, this number had grown by an annual rate of 1.53 percent to 8,903 while the population grew more quickly at 1.70 percent per year. Though the population of the City is expected to grow 1.2 percent annually from 2012 to 2017, the number of households is expected to rise 1.44 percent to 9,546 by 2017. The city added households more slowly than population from 2010 to 2012, but will add households more quickly than population from 2012 to 2017. Flathead County reflects this trend as well. While the population of the county grew by an annual rate of 1.84 percent from 2010 to 2012, the number of households only grew by 1.66 percent per year, from 37,504 to 38,748 in the same period. However, as the rate of population growth in the county is expected to decline to an annual rate of 1.35 percent, the annual household growth rate will increase to 1.58 percent per year, bringing the total number of households expected by 2017 to 41,808. Figure 2: Household Counts and Estimate (2010, 2012, 2017) 2010 2012 2010 - 2012 Annual 2017 2012 - 2017 Annual Kalispell 8,638 8,903 1.53% 9,546 1.44% Flathead County 37,504 38,748 1.66% 41,808 1.58% Source: ESRI Business Analyst; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 10 As in indicated in Figure 1 and Figure 2, both the City of Kalispell and Flathead County are expected to add households faster than they grow their populations. This signals anticipated demand for new housing starts. Friends and family cohabitating out of economic necessity will choose to form new households once their economic conditions allow it. The expected rise in household formation by 2017 indicates both a strengthening economy as well as reflects a larger national trend of decreasing household sizes regardless of economic conditions. Age Profile Both the City of Kalispell and Flathead County have a larger portion of the population in the 25 to 64 age range, the portion of the population that traditionally financially supports the other ends of the age spectrum. As Figure 3 shows, the population in 2012 in Kalispell that is in this age bracket is smaller than the same age cohort in the county as a whole; 50.6 percent as compared to 54.9 percent. The bulk of the difference in the remaining population comes in the younger age bracket. In the city, 33.5 percent of the population is under the age of 25 while just 30.4 percent of the county’s population is in this younger demographic. The City of Kalispell is younger than Flathead County. Figure 3: 2012 Population by Age Under 25 25 - 64 65 and Over City of Kalispell 33.5% 50.6% 15.9% Flathead County 30.4% 54.8% 14.9% Source: ESRI Business Analyst; Willdan, 2013. These trends are expected to continue through 2017. While the Kalispell is expected to remain generally younger than Flathead County, both places will cope with an aging population. Figure 4 shows that the portion of the population age 65 and older is expected to grow. By 2017, the city’s retirement‐aged population will be 17.5 percent of the population while the county will have a 16.9 percent share of older residents. Figure 4: 2017 Population by Age Under 25 25 - 64 65 and Over City of Kalispell 32.7% 49.8% 17.5% Flathead County 29.3% 53.7% 16.9% Source: ESRI Business Analyst; Willdan, 2013. Income Profile In 2012 the median household income in the City of Kalispell was $37,319, as shown in Figure 5. The share of households earning more than $75,000 per year was 19.2 percent. By 2017, the median income is projected to grow to $41,906, an increase of 12.29 percent, or 2.46 percent on an annualized basis. By 2017, 22.3 percent of households will earn more than $75,000. The per‐capita income is also projected to grow from $21,768 in 2012 to $24,169 by 2017, increasing by 16.15 percent. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 11 Figure 5: Income Profile for the City of Kalispell 2012 2017 (est.) % change Median Household Income $ 37,319 $ 41,906 12.29% Per-capita Income $ 21,768 $ 24,169 11.03% % of Households earning $75k or more 19.2% 22.3% 16.15% Source: ESRI Business Analyst; Willdan, 2013. Figure 6 demonstrates that residents of the county tend to be wealthier than City residents. The median household income for Flathead County was $42,873 in 2012, and 23.7 percent of the county’s households made more than $75,000 annually. By 2017, the median income is projected to grow to $50,288, an increase of 17.30 percent (3.46 annually), and the share of households earning more than $75,000 per year will increase to 27.5 percent. From 2012 to 2017, the region’s per‐capita income is projected to grow from $23,242 to $25,782. Figure 6: Income Profile for Flathead County 2012 2017 (est.) % change Median Household Income $ 42,873 $ 50,288 17.30% Per-capita Income $ 23,242 $ 25,782 10.93% % of Households earning $75k+ 23.7% 27.5% 16.03% Source: ESRI Business Analyst; Willdan, 2013. Flathead County’s per capita income rose steadily from 1997 to 2008, as demonstrated in Figure 7. This metric peaked in 2008 when the per capita income for the county surpassed $35,000 in 2010 dollars. When the economy faltered in 2009, it caused the per capita income levels of the count’s residents to fall for the first time in a decade. In 2010, the per capita income for the county rose, but still fell short of the pre‐ recession figures Figure 7: Per Capita Income, Flathead County, 1997-2010 Sources: US Bureau of Economic Analysis and Bureau of Business and Economic Research; Willdan, 2013. Nonfarm labor income measures how an economy is doing. Nonfarm income grew 28 percent between 2003 and 2007, as shown in Figure 8. $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 12 Nonfarm labor income declined in 2008 and 2009 as major industries including construction and wood products manufacturing experienced upheaval. Some recovery occurred in 2010 as the wood products industry and construction industry stabilized at lower levels, but the economy will take several years of consistent growth to fully stabilize to pre‐recession strength. Figure 8: Percent Change in Nonfarm Labor Income, Flathead County Sources: US Bureau of Economic Analysis and Bureau of Business and Economic Research; Willdan, 2013. Unemployment and Labor Force Unemployment rates for Flathead County began to climb as the United States entered a recessionary period in 2008. Prior to that time, unemployment rates held steady under 5 percent. By 2009, the unemployment rate in Flathead County had risen to more than 10 percent. Figure 9 shows the trend of rising unemployment rates by year in Flathead County, Montana from 2005 to 2010. Figure 9: Flathead County Employment Trends 2005 - 2010 Source: Montana Department of Labor and Industry; Willdan, 2013. Figure 9 also demonstrates that while the labor force declined from its peak in 2008, the labor force did not diminish in the recession to below the labor force numbers from 2005. This shows that the decrease in the labor force is not the result of outmigration or retirement, but rather a diminishment of the number of residents no longer seeking employment. Figure 10 shows the not seasonally adjusted unemployment rates for Flathead County, including their fluctuations from season to season. A clearer picture of the unemployment trend can be seen by observing 1.1% 13.4% -3.0% 6.3% 12.4% 2.4% 4.2% 7.2% 5.1% 6.4% 2.9% -2.7% -9.3% 0.2% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 0% 5% 10% 15% 40 45 50 2005 2006 2007 2008 2009 2010 Thousands Labor Force % Unemployment ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 13 the linear unemployment on the graph. This trend line shows that the overall rate has been dropping approximately one percentage point per year since 2010, when the average rate was around 10 percent. At peak unemployment season in 2010, the unemployment rate was nearly 14 percent. By September 2012, the employment rate for the county had dropped to 7.3 percent. This rate has subsequently risen, an expected trend given the cyclical nature of unemployment. However, the overall trend since the beginning of 2010 has been one of declining unemployment rates in Flathead County. Figure 10: Unemployment Rate, Flathead County, Not Seasonally Adjusted Source: Bureau of Labor Statistics; Willdan, 2013 According to the Montana Department of Labor and Industry, the recession hit the Flathead economy harder than any other major urban area in the state. The nonfarm labor income decline of 2.7 percent in 2008 and the 9.3 percent decrease in 2009 were the largest among the counties reported. Flathead County’s unemployment rate rose to 11.3 percent in November 2010, higher than any of the other large counties in the state. These sizable impacts were the result of permanent closures (such as Columbia Falls Aluminum Company) combined with cyclic declines in major industries such as wood products, nonresident travel, and construction. According to the Montana Department of Labor and Industry, it will be at least 2015 before real nonfarm labor income (an overall measure of the economy) in Flathead County regains its 2007 peak. However, the Kalispell economy is undergoing recovery. The evolution of Kalispell into a regional trade and service center continues to be one of the growing sectors of the economic base. Educational Attainment Educational attainment in Flathead County compares favorably to the rest of the country for those without a college degree. As Figure 11 and Figure 12 show, the share of the population over the age of 25 without a high school diploma in Flathead County is just 8.07 percent compared to 14.61 percent nationally. Continuing this trend, the share of the population over age 25 that has a high school diploma or an equivalent degree but not college experience is 32.1 percent in Flathead County, while just 28.64 percent of the nation fall into this category. 7 8 9 10 11 12 13 14 Unemployment Rate Linear (Unemployment Rate) ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 14 Figure 11: Educational Attainment in Flathead County Total population over age 25 Less than high school diploma High school graduate, GED, or alternative Some college or associate's degree Bachelor's degree or higher 62,992 5,083 20,221 20,465 17,223 100% 8.07% 32.10% 32.49% 27.34% Source: U.S. Census Bureau, 2007-2011 American Community Survey 5-Year Estimates, Willdan 2013. Flathead County also boasts impressive educational attainment for the segments of the population with college degrees. The share of the population over the age of 25 with some college or an associate’s degree in Flathead County is 32.49 percent compared to the national figure of 28.55 percent. Additionally, the share of the adult population in Flathead County with a bachelor’s degree or higher is 27.34 percent, less than one percentage point off of the national figure of 28.2 percent. Figure 12: Educational Attainment in the United States Total population over age 25 Less than high school diploma High school graduate, GED, or alternative Some college or associate's degree Bachelor's degree or higher 202,048,123 29,518,935 57,861,283 57,694,281 56,973,624 100% 14.61% 28.64% 28.55% 28.20% Source: U.S. Census Bureau, 2007-2011 American Community Survey 5-Year Estimates; Willdan 2013. Skills Gap Despite boasting strong educational attainment, the skill set of the local workforce in Flathead County does not adequately address the skills that businesses in the area need. According to a report by Montana West Economic Development Corporation and Flathead County Economic Development Authority, a “skills gap” exists in the county. Businesses have a difficult time finding employees who have the skills necessary to accomplish the jobs that they provide. To address this issue, the report recommends elevating the training resources available for advanced manufacturing in three specific fields: wood products, technology‐oriented manufacturing, and entrepreneurial manufacturing. Dedicating resources to these specific industries would educate and attract a pipeline of current and future workers in the skills that businesses need. Flathead Valley Community College led a group of public, private, and educational partners to develop a curriculum designed to better teach workforce development skills. The private partners provide some of the resources needed to teach the students, and in return have a better educated workforce from which to select employees. The private sector partners have identified that they anticipate hiring 457 employees using these new skills between 2013 and 2015. New jobs in these fields bring with them new money to the local economy, fueling demand for redevelopment. Kalispell Tourism Market The Kalispell economy benefits greatly from tourism spending due to its proximity to Glacier National Park and to the Canadian border. According to the National Park Service 2012 Economic Impact Study, ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 15 more than 2 million visitors spent approximately 110 million dollars in Glacier National Park and in communities near the park (based on 2010 data). That spending supported 1,695 jobs in the local area. The figures are based on $12 billion of direct spending by 281 million visitors in 394 national parks and nearby communities and are included in an annual, peer‐reviewed, visitor spending analysis conducted by Michigan State University for the National Park Service. According to Glacier National Park Superintendent Chas Cartwright, Glacier National Park has historically been an economic driver in the state. The economic impact study demonstrates the substantial value of the diverse goods and services provided by local businesses to the park visitor, as well as the role of the park as an employment opportunities for the Flathead County region. Most of the spending and jobs are related to lodging, food, and beverage service (52 percent) followed by other retail (29 percent), entertainment/amusements (10 percent), gas and local transportation (7 percent) and groceries (2 percent). The Canadian visitor market also represents a significant share of the overall visitor market. Canadian visitors travel to Kalispell to shop for apparel, electronics, household goods, and other retail goods to take advantage of Montana’s lack of state and local sales taxes. Kalispell also draws a steady business traveler market due to its role as the governmental hub of the region (the County seat) and frequent trade shows and conferences. Taking the Glacier National Park visitor market as an example, the visitor spending generated by this market segment is substantial and is an indicator of the source of inflow support for retail goods and services in the Kalispell region. Based on 2010 visitation of 2.1 million visitors and an average annual growth rate of 2.1 percent, Willdan estimates that Glacier National Park could expect to attract an additional 633,000 annual visitors over the next ten years. Assuming current per capita visitor spending patterns, Glacier National Park visitors are expected to generate $37.1 million in incremental (net new) annual spending by 2023. This potential redevelopment activity generated by visitor spending in the Core Area is analyzed further in the retail and lodging market analyses in this report. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 16 Figure 13: Glacier National Park Visitor Spending (2010 and 2023 Projection) Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total Annual Visitors 2,261,470 2,318,007 2,375,957 2,435,356 2,496,240 2,558,646 2,622,612 2,688,178 2,755,382 2,824,267 2,894,873 Annual Net New Visitors 56,537 114,487 173,886 234,770 297,176 361,142 426,707 493,912 562,796 633,403 Visitor Spending – Per Capita and Gross Annual Lodging $17.45 $40,442,400 $41,453,460 $42,489,797 $43,552,041 $44,640,842 $45,756,864 $46,900,785 $48,073,305 $49,275,137 $50,507,016 Food & Beverage $9.39 $21,776,125 $22,320,528 $22,878,541 $23,450,505 $24,036,767 $24,637,687 $25,253,629 $25,884,970 $26,532,094 $27,195,396 Other Retail $14.97 $34,699,325 $35,566,808 $36,455,978 $37,367,378 $38,301,562 $39,259,101 $40,240,579 $41,246,593 $42,277,758 $43,334,702 Entertainment $5.16 $11,964,825 $12,263,946 $12,570,544 $12,884,808 $13,206,928 $13,537,101 $13,875,529 $14,222,417 $14,577,977 $14,942,427 Gas & Transport $3.61 $8,375,275 $8,584,657 $8,799,273 $9,019,255 $9,244,737 $9,475,855 $9,712,751 $9,955,570 $10,204,459 $10,459,571 Groceries $1.03 $2,393,375 $2,453,209 $2,514,540 $2,577,403 $2,641,838 $2,707,884 $2,775,581 $2,844,971 $2,916,095 $2,988,997 Total $51.62 $119,651,325 $122,642,608 $125,708,673 $128,851,390 $132,072,675 $135,374,492 $138,758,854 $142,227,825 $145,783,521 $149,428,109 Visitor Spending – Per Capita and Net New Annual Lodging $17.45 $986,400 $1,997,460 $3,033,796 $4,096,041 $5,184,842 $6,300,864 $7,444,785 $8,617,305 $9,819,137 $11,051,016 Food & Beverage $9.39 $531,125 $1,075,528 $1,633,541 $2,205,505 $2,791,767 $3,392,687 $4,008,629 $4,639,970 $5,287,094 $5,950,396 Other Retail $14.97 $846,325 $1,713,808 $2,602,978 $3,514,378 $4,448,562 $5,406,101 $6,387,579 $7,393,593 $8,424,758 $9,481,702 Entertainment $5.16 $291,825 $590,946 $897,544 $1,211,808 $1,533,928 $1,864,101 $2,202,529 $2,549,417 $2,904,977 $3,269,427 Gas & Transport $3.61 $204,275 $413,657 $628,273 $848,255 $1,073,737 $1,304,855 $1,541,751 $1,784,570 $2,033,459 $2,288,571 Groceries $1.03 $58,375 $118,209 $179,540 $242,403 $306,838 $372,884 $440,581 $509,971 $581,095 $653,997 Total $51.62 $2,918,325 $5,909,608 $8,975,673 $12,118,390 $15,339,675 $18,641,492 $22,025,854 $25,494,825 $29,050,521 $32,695,109 1/ Assumes average annual growth rate = 2.50% Source: Glacier National Park Service; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 17 III. Residential Market Analysis The City of Kalispell commissioned this Core Area Housing Market Analysis (“Market Analysis”) to assist it in the redevelopment of the Core Area. The City has developed a vision to revitalize the Core Area while retaining its character and identity. This Market Analysis will discuss the current state of the housing market in the City of Kalispell. The analysis provides and overview of residential construction trends and projections to inform further dialogue on housing production in the Core Area and City. New Housing Construction Trends in Kalispell From 2003 through 2009, the creation of residential lots outpaced new residential construction every year but 2007. As Figure 14 shows, Kalispell added residential lots faster than housing units for nearly a decade. Once the economy slowed down in 2008 and 2009, construction companies slowed production to meet demand, but lot developers slowed production even more. As a result, builders constructed on the existing lots and have been slowly decreasing the pipeline of developable lots available for residential building. Meanwhile, the 2012 figures for new residential construction demonstrate that economic recovery has begun in Kalispell. Figure 14: Residential Construction Pipeline, City of Kalispell Source: Kelley Appraisal report on Flathead County’s real estate market; Willdan 2013 Housing Market Sales Prices & Pace in Kalispell The average sales price per square foot for homes in Kalispell was $99, an increase of 23.8 percent compared to February 2011. The median list price in May 2013 for single family homes in Kalispell is $249,900. The list prices increased by 3.15 percent from the previous month. The price per square foot for listings in this area is $153. However, the median sale price in February for single‐family homes was $169,626, reflecting an increase of 7.0 percent from the prior month. 0 100 200 300 400 500 600 Lots Created New Residential Construction ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 18 Figure 15: Home Sales and Median Sales Price in Kalispell (2007-2012) Source: City-Data.com; Willdan 2013. There are currently 547 resale and new homes for sale in Kalispell, including 36 homes in the pre‐foreclosure, auction, or bank‐owned stages of the foreclosure process. There are currently 6 new homes and 46 homes in excess of $500,000. The average listing price for homes for sale in Kalispell was $351,600 for the week ending March 20, 2013 which represents an increase of 4.8 percent, or $15,983, compared to the prior month. The high average listing price can be directly attributed to the 46 homes for sale in excess of $500,000. The February 2013 median home value in zip code 59901 is $147,500. Over the past six months, approximately 15 homes sold per month in the Kalispell market. Reviewing Kalispell building permit and construction data, approximately 50 new homes have been constructed annually in Kalispell since 2010. At the current rate of sales and new home development, it would take approximately 4 years to exhaust the current for sale housing supply. The average sales price per square foot for homes in Kalispell has increased 23.8 percent compared to February 2011. With both the median list and sales price of for‐sale homes in Kalispell continuing to rise, it would appear that the housing market is improving. In speaking with the Kalispell Building Department, local realtors and the Flathead Valley Association of Realtors, local and national housing indicators point to increased production and demand for housing. Figure 16: Median Home Values, Kalispell Zip Code 59901 Source: Zillow.com; Willdan, 2013. $50,000 $100,000 $150,000 $200,000 $250,000 $300,000 0 50 100 150 200 250 300 350 400 Housing Units (Left Axis) Median Price (Right Axis) $100,000 $125,000 $150,000 $175,000 $200,000 Mar 2008 Sep 2008 Mar 2009 Sep 2009 Mar 2010 Sep 2010 Mar 2011 Sep 2011 Mar 2012 Sep 2012 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 19 Kalispell Apartment Market Trends Based on primary market research conducted by Willdan, the Appleway Court and Depot Place apartment projects have brought renewed life to the rental community in Kalispell. Appleway Court identifies a 98 percent occupancy rate and leasing at Depot Place appears to be moving at a brisk pace. There are scant listings of available rental units in Kalispell. Current lease rates for traditional apartment communities in Kalispell are approximately $0.85 to $1.25 per square foot per month. Lease rates for single‐family homes or units within single family homes dips due to amenities, location and availability. Current rates are approximately $0.65 to $1.00 per square foot per month. Given the nature of the depressed housing market and continued population growth the apartment segment will continue to see strong activity. Figure 17: Gross Rent as a Percentage of Household Income Housing Units Percent Occupied units paying rent 9,591 100.00% Less than 15.0 percent 1,454 15.20% 15.0 to 19.9 percent 1,136 11.80% 20.0 to 24.9 percent 1,332 13.90% 25.0 to 29.9 percent 1,194 12.40% 30.0 to 34.9 percent 941 9.80% 35.0 percent or more 3,534 36.80% Source: U.S. Census Bureau, 2007-2011 American Community Survey; Willdan, 2013 Housing affordability for renters can be measured by calculating what a resident pays in gross rent as a percent of their household income. Residents paying 30 percent of their household income on rent are said to be living in unaffordable units. Figure 17 shows that in Flathead County, 9.80 percent of the renters spend between 30 and 34.9 percent of their household income on rent. The figure also shows that 36.8 percent of the population spends more than 35 percent of their household income on rent. In total a staggering 46.6 percent of the renters in Flathead County live in units that are considered by industry standard to be unaffordable. Flathead County Housing Market Trends & Projections Montana’s housing market had a strong year in 2012, with every major market across the state reporting an increase in activity as compared to 2011. The Montana Association of Realtors (“MAR”) received sales data from the eight largest associations in the state, and in all eight there was an increase in the number of single‐family homes sold compared to 2011. Overall, in the 8 major markets in Montana, 8,579 single‐family homes were sold in 2012 compared to 7,051 in 2011, a gain of 1,528 homes or 21.67 percent. “It is very exciting to see the Montana housing market continue to improve,” said MAR President Pam Wood. “Every major market in the state showed increased sales activity in 2012 when compared to the previous year, and that is very important as housing plays a major role in the overall economy.” ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 20 The Gallatin Association of Realtors saw the largest increase in single‐ family home sales in 2012, with an uptick of 364 homes sold in 2012 compared to the previous year, for an increase of 33.18 percent. The Northwest Association of Realtors was next with an increase of 307 homes (24.86 percent), followed by the Billings Association gain of 279 homes (15.96 percent). The average sales price of a home rose in six of the eight markets, the median sales price rose in seven of the eight markets and the average days a home was on the market fell in four of the eight major areas. Those figures do not include townhouses or condos, although six of the eight markets in the state reported an increase in the number of those sales as well. Record‐low interest rates and an increase in consumer confidence played a key role in Montana’s housing market improving in 2012. In relation to housing sales during the first quarter of 2013 there were 159 non‐distressed sales in the first quarter of 2013. This compares to 112 in 2012 and 102 in 2011. Although the total number of sales is nearly the same as 2012, the fact that bank‐owned sales are down 42 percent and non‐distressed sales are up 42 percent is a significant indicator that the market continues to improve. Nearly 14 percent of housing units in Flathead County are vacant for seasonal use. Another 23 percent are renter occupied with about 56 percent of units occupied by owners. The remaining 6 percent of units are vacant for various reasons including those properties listed for rent, for sale, or those having been subject to foreclosure. Figure 18: Occupancy of Housing Units, Flathead County, 2010 Source: ESRI Business Analyst; Willdan, 2013. Building and electric permits for Flathead County were robust during the early part of the prior decade, but have declined precipitously since 2007. Single family construction declined nearly 85 percent during that time frame in Kalispell and outlying areas. According to City staff, single family construction over the past 18 months has begun to return with nearly double the permitted new housing units in 2012 as those of 2011. Housing Affordability in Flathead County Flathead County remains one of the most unaffordable real estate markets in Montana. Housing affordability as measured by the Housing Affordability Index has improved somewhat following the recent real 56.5% 23.4% 13.9% 6.2% 34,773 housing units Owner occupied Renter occupied Vacant for seasonal use Other vacancies ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 21 estate downturn. Figure 19 outlines the housing affordability from 2007 to 2010. Figure 19: Housing Affordability Index, Flathead County 2007-2010 1/ preliminary estimates using 2009 Income data. Source: Bureau of Business and Economic Research; Willdan, 2013. Residential Development Opportunity in the Core Area Based on historic trends over the past ten years, adjusted to reflect the ongoing economic recovery, the City of Kalispell produced an average of 100 new housing units annually. Utilizing a conservative estimate and the baseline average annual housing production of 50 units (based on a 10‐year average of 232 units), it is plausible to expect approximately 1,250 new homes may be constructed in Kalispell over the next 25 years. Figure 20: Average Annual Housing Unit Construction Year New Housing Units Constructed 2002 280 2003 195 2004 480 2005 375 2006 350 2007 320 2008 185 2009 100 2010 90 2011 75 2012 100 Average Annual Units 232 Source: City of Kalispell; Willdan, 2013. The proposed housing would include a mix of apartments, Low‐Income Housing Tax Credit units, and a minor component of condominium units targeted for the latter phase of redevelopment (after year 7 of Plan implementation). Based on the financial feasibility analysis detailed in the Annex to this report, it is possible to achieve a sufficient return on new construction investment if assuming market rate rental rates of at least $1.10 per square foot. It is plausible to assume that residential construction in the Core Area will continue along current production rates in the near term with cautious developers achieving success when delivering units to satisfy pent up demand. Based on 76 80 90 95 0 20 40 60 80 100 2007 2008 2009 2010* ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 22 these parameters, the Core Area Plan assumes that a series of small residential projects over a seven to ten year buildout horizon as detailed in the following table. Given the Core Area’s size, opportunity for development and potential housing product types, we anticipate that the Core Area could expect to capture approximately eight to 14 percent of that total production, or 105 to 175 units over the 25 year life of the Westside TIF District. In total, this program assumes that the Core Area would capture an average of four to seven units annually. Figure 21: Conceptual Redevelopment Alternatives – Residential Development Scenario 1: Status Quo Scenario 2: Scenario 3 Conservative Optimistic Apartments - For Lease 0 25 75 Low-Income Housing Tax Credit Units 0 40 80 Condominium 0 - 20 Total Residential (units) 0 105 175 Source: Kalispell Core Area Plan; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 23 IV. Retail Market Analysis This study examines key real estate market and economic variables population growth, household income, consumer expenditure patterns, employment trends, etc.) to test the potential for retail development and/or redevelopment opportunities within the Core Area. The results of the demographic and economic analysis indicate there is little unmet retail demand within the Core Area and Kalispell. The opportunities to expand the Core Area’s retail trade exist in the introduction of additional soft goods retailers and full service restaurants. Retailing and shopping habits have changed over the past decade. Primarily the change occurred due to a shift in lifestyles. In the 1980s and 1990s going to the mall was the dominant form of shopping. Today, nearly 70 percent of purchases that are made come from discount retailers. This trend has established Wal‐Mart as the largest seller of women’s ready‐to‐wear apparel. Returning to the streets of our local neighborhoods is replacing the mall experience. Today over 60 percent of consumers prefer to buy their shoes in a neighborhood store. Today’s consumer enjoys having the opportunity to live, shop and work in their neighborhood. Main streets are becoming savvy and retailers are now able to compete with the mall on any level. The average consumer walks by storefronts at an average rate of seven seconds per storefront. Retailers understand that they have to make the most of this foot traffic and advertise their store through window and facade displays. Individual retailers are employing interesting window displays and unique merchandising techniques to capture shoppers’ attention. Competition is growing and national tenants are now searching out locations on main streets. Presently, the Core Area’s existing retail square footage is comprised of businesses that have limited synergy and cohesiveness. The expanse of the area, multitude of uses and lack of pedestrian or vehicular interconnection inhibits the future development of the Core Area. Core Area Site Characteristics The study area is generally defined as follows; Highway 2 on the north, Center Street on the south, Meridian Road on the west and Woodland Park Drive on the east. Although there is significant access to the Core Area via Highways 2 and 93, the Highways significantly impact development opportunities and the walkability of the Core Area. There is insufficient local access within the Core Area as several of the north/south connectors have been closed to accommodate railway traffic. Willdan surveyed local and regional stakeholders to analyze existing retail conditions. Survey interviews indicate that many of Kalispell’s residents identify the Core Area as lacking sufficient parking, hampered by Highway 93 and not containing significant synergy amongst uses. Main Street, as Kalispell’s primary downtown shopping district, ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 24 competes with new retailers often opening stores in the northern portion of Kalispell, adjacent to existing large scale retail developments and new housing product. The northern Kalispell retail developments serve as the primary regional shopping district in the greater Flathead Valley area. The retail development is anchored not only by big‐box retailers, but also by discount department stores, hotels, restaurants, and a multiplex movie theatre. Retailers that can appeal to the demographics of Main Street’s primary trade and serve neighborhood‐shopping needs, or create a unique specialty niche that draws shoppers to the district from beyond as an alternative to regional shopping centers, will most likely succeed as an alternative to the regional shopping centers of northern Kalispell. Retail Trade Areas The profile of the retail market within the Primary Trade Area shows that a great portion of the retail establishments are located within a 10 mile radius of the Core Area. The population of the City of Kalispell comprises 20 percent of the Trade Area’s total population, but 53.4 percent of the County’s retail businesses are in the 10 mile radius of the Core Area. These numbers show that Kalispell is a major source of retail activity in the Primary Trade Area. There are a variety of neighborhood business districts within close proximity to the Core Area including the intersection of Highways 2 and 35, Main Street (south of 18th Street), and downtown Kalispell. The regional shopping centers are located at the northern periphery of Kalispell. The Core Area is anchored by a number of large retailers and employers such as the Kalispell Center Mall, Smith’s Foods, Albertsons Grocery, and Super One Grocery. For the purposes of this study, the market area was split into both primary and secondary trade areas. The primary trade area consists of those consumers who shop the Core Area district on a regular/weekly basis for most of their needs. This accounts for a majority of the retail expenditures in the Core Area. The study’s primary trade area is defined as fifty (50) miles from the Kalispell Center Mall. The secondary trade area extends further north into Canada and to the west, east and south, up to one hundred (100) miles. Figure 22: Target-Anchored Shopping Center (Highway 93 North) Primary Trade Area The primary trade area is delineated by distance, the regional retail nodes to the north, northeast and south, area population and ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 25 demographics, and the flow of retail traffic in all directions. The primary trade area residents account for most of the sales of the convenience and neighborhood‐oriented retailers and services located in the study area. The primary trade area generally accounts for between 50 percent and 65 percent of sales. However, more destination‐oriented tenants, such as breweries, art galleries and restaurants, draw from not only the trade area, but also from beyond the defined trade boundary, as well as from the local business and tourist population. Secondary Trade Area The secondary trade area consists of tourists and those residents who live in the region surrounding the primary trade area who patronize retailers within the Core Area, but not as their primary source of shopping. The secondary trade area is defined by distance. This area has a current population estimate of approximately 141,500 persons, which is expected to increase to approximately 149,000 persons, or 5.3 percent by the year 2017. Persons per household are currently 2.41. More households in the secondary trade area are owner‐occupied (55.4 percent) than in the primary trade area, with the remaining 23.2 percent renter‐occupied. The median household income level for the secondary trade area of $40,154 is 6 percent lower than is found in the primary trade area. The median age is 42.5 years. Retail Competition Overview The retail competition map (Figure 23) identifies the Primary Trade Area retail competition by type of development. The Core Area faces significant retail competition in nearly every category. In particular, the Evergreen and Northwest Kalispell region offer large format retail, goods and services not readily available in the Core Area. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 26 Figure 23: Kalispell Retail Competition Map Source: ESRI Business Analyst; City of Kalispell; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 27 As part of this field evaluation, the project team conducted site visits to all major shopping areas in and just beyond the defined trade area. The core of retail in Kalispell is found either on Highway 93 near West Reserve Drive or at the intersection of Highways 2 and 35. Both of these retail areas offer several discount and big‐box retail stores. In addition to the regional shopping centers, the Core Area competes more directly with neighborhood shopping districts. Figure 24 shows the retail gap for selected sectors in the City of Kalispell. “Supply (retail sales)” estimates sales to consumers by establishments. Sales to businesses are excluded. “Demand (retail potential)” estimates the expected amount spent by consumers at retail establishments. Supply and demand estimates are in current dollars. The “Leakage/Surplus Factor” presents a snapshot of retail opportunity. This is a measure of the relationship between supply and demand that ranges from +100 (total leakage) to ‐100 (total surplus). A positive value represents 'leakage' of retail opportunity outside the trade area. A negative value represents a surplus of retail sales, a market where customers are drawn in from outside the trade area. The Retail Gap represents the difference between Retail Potential and Retail Sales. ESRI uses the North American Industry Classification System (NAICS) to classify businesses by their primary type of economic activity. Retail establishments are classified into 27 industry groups in the Retail Trade sector, as well as four industry groups within the Food Services & Drinking Establishments subsector. Several industries show leakage, meaning that demand exceeds supply in Kalispell. These industries include:  Lawn & Garden Equip & Supply Stores  Office Supplies, Stationery & Gift Stores  Electronic Shopping & Mail‐Order Houses  Vending Machine Operators  Direct Selling Establishments  Drinking Places ‐ Alcoholic Entrepreneurs seeking to open businesses in these sectors can expect strong sales because the market demands more of those products than the market currently supplies. On the other hand, the majority of the retail sectors show a market surplus, meaning that businesses in Kalispell supply more products and services than are demanded by the local population. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 28 Figure 24: Retail Gap Analysis - City of Kalispell Retail Category NAICS Demand (Retail Potential) Supply (Retail Sales) Retail Gap Leakage / Surplus Factor Number of Businesses Total Retail Trade and Food & Drink 44-45,722 $186,061,526 $497,331,466 -$311,269,940 -45.5 250 Total Retail Trade 44-45 $167,662,188 $465,957,479 -$298,295,291 -47.1 218 Total Food & Drink 722 $18,399,338 $31,373,987 -$12,974,649 -26.1 32 Selected Industry Sectors Motor Vehicle & Parts Dealers 441 $33,015,495 $77,099,716 -$44,084,221 -40.0 21 Furniture & Home Furnishings Stores 442 $3,945,348 $20,034,592 -$16,089,244 -67.1 17 Electronics & Appliance Stores 4431 $5,340,867 $39,954,533 -$34,613,666 -76.4 13 Bldg Materials, Garden Equip. & Supply Stores 444 $5,998,451 $22,255,978 -$16,257,527 -57.5 13 Bldg Material & Supplies Dealers 4441 $4,932,106 $22,255,978 -$17,323,872 -63.7 13 Lawn & Garden Equip & Supply Stores 4442 $1,066,345 $0 $1,066,345 100.0 0 Food & Beverage Stores 445 $29,041,621 $68,033,296 -$38,991,675 -40.2 23 Health & Personal Care Stores 446,4461 $9,911,054 $14,897,839 -$4,986,785 -20.1 16 Clothing & Clothing Accessories Stores 448 $9,990,213 $21,491,362 -$11,501,149 -36.5 28 Sporting Goods, Hobby, Book & Music Stores 451 $5,180,219 $29,630,265 -$24,450,046 -70.2 30 General Merchandise Stores 452 $32,637,167 $120,681,834 -$88,044,667 -57.4 7 Miscellaneous Store Retailers 453 $5,657,629 $18,884,029 -$13,226,400 -53.9 44 Florists 4531 $212,133 $1,380,676 -$1,168,543 -73.4 4 Office Supplies, Stationery & Gift Stores 4532 $1,782,795 $1,044,753 $738,042 26.1 5 Nonstore Retailers 454 $4,442,262 $3,155,377 $1,286,885 16.9 3 Electronic Shopping & Mail-Order Houses 4541 $2,418,490 $0 $2,418,490 100.0 0 Vending Machine Operators 4542 $117,545 $0 $117,545 100.0 0 Direct Selling Establishments 4543 $1,906,227 $3,155,377 -$1,249,150 -24.7 3 Food Services & Drinking Places 722 $18,399,338 $31,373,987 -$12,974,649 -26.1 32 Full-Service Restaurants 7221 $8,168,264 $9,202,167 -$1,033,903 -6.0 9 Limited-Service Eating Places 7222 $8,310,535 $20,152,463 -$11,841,928 -41.6 18 Special Food Services 7223 $880,705 $1,246,083 -$365,378 -17.2 3 Drinking Places - Alcoholic Beverages 7224 $1,039,834 $773,274 $266,560 14.7 2 Source: ESRI Business Analyst; Willdan, 2013 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 29 It is important to note that the retail gap analysis does not reflect inflow spending from the visitor market, as evidenced by the volume and location of the Kalispell region’s retail supply and continued development activity during the economic downtown. To illustrate the spending power of the visitor market, Willdan analyzed data reported by the US National Park Service, testing projections of visitation levels and per capita spending by major retail and entertainment categories. Assuming an average annual growth rate of 2.5 percent (based on 10‐ year historical trends), it is expected that the visitor market could grow from 2.1 million visitors (2010) to approximately 2.9 million visitors in 2022, or an increase of approximately 663,000 visitors. Associated incremental retail and entertainment spending will further support the strategy to revitalize the Core Area and attract new retailers. Based on spending patterns reported by the National Park Service (in 2010 dollars, held constant to illustrate a conservative case), new visitors to Glacier National Park could be expected to spend $149.4 million annually by 2022, or an increase of $37.2 million over 2010 retail spending. Assuming national chain quality annual sales productivity requirements of $300 per square foot, this spending translates to support for approximately 295,000 square feet of new retail space in the Kalispell region. Taking a similar perspective with the residential spending market, it is expected that nominal population and household income growth will also generate incremental demand for new or redeveloped retail and entertainment space. It is projected that Flathead County’s households will grow from 39,000 households to 45,000 by 2022. Average household incomes are expected to increase from $42,800 to $60,000 generating $3.5 in incremental gross income in Flathead County by 2022. Based on US Consumer Expenditure Data reported by the Consumer Expenditure Survey, U.S. Bureau of Labor Statistics, September, 2012, approximately 35 percent of gross household income is expended on food at home (grocery), restaurants, entertainment, apparel, personal care, and other retail goods. Assuming a conservative capture rate of five percent of total available county‐wide spending power and retail sales productivity rates of $300 per square foot, the Core Area could expect to attract approximately 205,200 square feet of new/redeveloped retail space. Based on these parameters, the conceptual redevelopment program includes three scenarios for retail development or redevelopment. The Status Quo scenario assumes no new retail development; the conservative scenario assumes that the Core Area will support 77,500 square feet of new retail (location unspecified). Scenario 3, the optimistic case, assumes that that Kalispell Center Mall will redevelop and expand and, along with other new retail businesses throughout the Core Area, will create approximately 117,500 of new retail space. Figure 25: Conceptual Redevelopment Alternatives – Retail Development Scenario 1 Scenario 2 Scenario 3 Status Quo Conservative Optimistic Retail - Apparel and Soft Goods 0 62,500 92,500 Retail - Restaurant (Casual & Full Service) 0 15,000 25,000 Total Retail (sf) 0 77,500 117,500 Source: Kalispell Core Area Plan; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 30 Figure 26: Incremental Residential Retail Spending Power & 10-Year Supportable Retail Development (2022) City of Kalispell Spending Flathead County Spending Gross Incremental Household Income (2022) Retail Sales/ sf Core Area Retail Capture Rate Gross Incremental Household Income (2022) Retail Sales/ sf Core Area Retail Capture Rate Retail Demand Assumptions (2012-2022) 596,736,871 $300 10% 3,527,674,063 $300 5% Retail Categories Spending as % of Household Income /1 Gross Spending Power by Retail Category Gross Supportable Retail (sf) Kalispell Capture of New Retail Demand (sf) Gross Spending Power by Retail Category Gross Supportable Retail (sf) Flathead County Capture of New Retail Demand (sf) Food at home 10.0% 59,645,000 199,000 19,900 352,595,000 1,175,000 58,800 Food away from home 6.2% 37,149,000 124,000 12,400 219,611,000 732,000 36,600 Household furnishings and equipment 3.2% 18,943,000 63,000 6,300 111,986,000 373,000 18,700 Apparel and services 4.2% 25,189,000 84,000 8,400 148,909,000 496,000 24,800 Entertainment 4.9% 29,084,000 97,000 9,700 171,936,000 573,000 28,700 Personal care products and services 1.4% 8,219,000 27,000 2,700 48,588,000 162,000 8,100 Service Stations 2.0% 11,935,000 40,000 4,000 70,553,000 235,000 11,800 Other Retail Stores 3.0% 17,902,000 60,000 6,000 105,830,000 353,000 17,700 34.9% 208,066,000 694,000 69,400 1,230,008,000 4,099,000 205,200 1/ Based on US Consumer Expenditure Survey Data by Average Household Income (averaged for Kalispell and Flathead County). Source: ESRI Business Analyst; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 31 Figure 27: Food, Retail & Entertainment Demand from Glacier National Park Visitor Spending (Square Feet) Gross Annual Retail & Entertainment Demand (Square Feet) Sales Productivity /sf Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 7 Year 9 Year 10 Total Retail Demand (sf) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Food & Beverage $300 72,600 74,400 76,300 78,200 80,100 82,100 84,200 86,300 88,400 90,700 Other Retail $300 115,700 118,600 121,500 124,600 127,700 130,900 134,100 137,500 140,900 144,400 Entertainment/Amusements $300 39,900 40,900 41,900 42,900 44,000 45,100 46,300 47,400 48,600 49,800 Groceries $300 8,000 8,200 8,400 8,600 8,800 9,000 9,300 9,500 9,700 10,000 236,200 242,100 248,100 254,300 260,600 267,100 273,900 280,700 287,600 294,900 Incremental (Net New) Annual Retail & Entertainment Demand (Square Feet) Sales Productivity /sf 0 0 0 0 0 0 0 0 0 0 Total Retail Demand (sf) 0 0 0 0 0 0 0 0 0 0 Food & Beverage $300 1,800 3,600 5,400 7,400 9,300 11,300 13,400 15,500 17,600 19,800 Other Retail $300 2,800 5,700 8,700 11,700 14,800 18,000 21,300 24,600 28,100 31,600 Entertainment/Amusements $300 1,000 2,000 3,000 4,000 5,100 6,200 7,300 8,500 9,700 10,900 Groceries $300 200 400 600 800 1,000 1,200 1,500 1,700 1,900 2,200 Total 5,800 11,700 17,700 23,900 30,200 36,700 43,500 50,300 57,300 64,500 Source: US National Park Service; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 32 V. Office Market Analysis Willdan researched Loop Net and the Multiple Listing Service to identify the available office properties in the Core Area and downtown Kalispell. There are currently 16 available office units, accounting for nearly 20,000 square feet of office space. The type and variety of available space would lend itself to small professional office, medical, real estate and financial services. Given that available properties had quoted lease rates of $4.20 to $13.20 per square foot per year, the current office lease rates in the Core Area do not support the costs of new construction. Given the identified lease rates and number of available properties, the development of additional office space would not be supported by the market in the near term and is proposed as potential adaptive redevelopment and reuse of existing space (substitution of existing demand). Based on the financial feasibility test detailed in the Annex to this report, office renovation would require lease rates of between $12 to $15 per square foot and new office construction would require lease rates of $17 to $22 per square foot. The current economics of the office market suggest that small format, independent professional office or medical office could be an attractive market for a developer in a position to redevelop existing office space. Accordingly, the Core Area conceptual redevelopment program includes approximately 17,500 square feet of new or redeveloped office space over a 25‐year buildout timeframe (assumed for Scenario 2: Conservative and Scenario 3: Optimistic). Figure 28: Current Kalispell Office Market Lease Rate Trends Low High Current Annual Lease Rates /1 $4.20 $13.20 Lease Rates Required for Office Renovation /2 $12.00 $15.00 Lease Rates Required for New Construction /3 $17.00 $22.00 1/ Based on office lease rates reported by loop net of $0.35 to $1.10 per square foot per month, April 2013. 2/ Based on interviews with local property developers/owners. 3/ Based on interviews with local property developers/owners. Source: LoopNet; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 33 VI. Business Park/Industrial Market Analysis To test the supply and demand for a new rail‐served industrial park, the Flathead County Economic Development Authority (FCEDA) retained KLJ Associates to perform a market analysis and feasibility study as part of ongoing engineering planning underway. KLJ determined that based on recent trends, the potential is increasing for the industrial rail park to create jobs and support new industries especially as manufacturing and other rail‐oriented industries continue to recover from the recession and expand operations. The report concluded that service‐oriented professions continue to be the largest employers in the region. However, Plum Creek and Applied Materials are large scale lumber and manufacturing companies that lend credence that these industry types can thrive in the Valley. Table 4 of the KLJ report identifies the top 10 Associate of Applied Science (AAS) degrees and the top 5 Certificate of Applied Science (CAS) degrees from Flathead Valley Community College (FVCC) for year 2011‐2012. Data indicates that degree earners such as Welding and Inspection Technology (19), Heavy Equipment Operator (17), Electrical Technology Small Business Management HVAC and Cabinet and Furniture Technology are graduates that can support manufacturing and industries associated with rail. Figure 3 of the KLJ report indicates that more than 50 percent of all AAS graduates and CAS graduates have a degree that could service manufacturing, agricultural/forestry, and rail‐oriented industries. Should potential businesses want to relocate or start‐up in the rail park, they would have a ready and available pool of human capital to meet and expand business needs. Table 9 of the KLJ report, recreated here as Figure 29, indentifies three companies with a high likelihood of relocation or expansion, and four other companies with a medium likelihood of relocation or expansion. Construction and construction‐related industries like lumber and landscaping dominate this list. Figure 29: Leads for Rail Industrial Park Business Industry Type Potential for Relocation / Expansion Cenex Harvest States Agriculture / Fertilizer High HE Simpson Lumber High Northeast Drywall Construction / Drywall High Blackwell Enterprises Construction / Trusses Medium Fastenal Construction Medium Glacier Stone Landscaping Stone Medium Cold Front Cabins Housing Low Welding Oil Tank Construction Low Source: KLJ Draft Industrial Rail Park Market Analysis; Willdan, 2013 Key Recommendations  KLJ recommended that MWED and FCEDA should pursue industries such as Lumber companies, scrap steel, and other ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 34 grain elevators/agricultural uses. In addition, industries related to creating machinery and other precision instruments should be targeted for the rail park.  KLJ also determined that emerging technologies such as electronics and pharmaceuticals and metallic ores/non‐ metallic minerals may be viable industries to locate within the park as long as they can prove a need for rail shipments. If they cannot prove a need for rail service, the business should not be allowed.  KLJ recommended that businesses that would utilize transload facilities are important to target because of their need to ship materials via truck and rail. Example industries that could utilize transload facilities are big box retailers, large good producers (recreational toys such as ATVs, boats, snowmobiles), and liquid/petroleum products. Creating a rail park with a transload operator will help stimulate rail freight movements for the Flathead County and thus improve economic development potential for the entire Flathead Valley. More importantly, the transload operator will market freight shipments to potential businesses as a viable and economical option.  For sale and for lease sites should be created to foster a mix of relocation or expansion options for potential businesses. While no “one size fits all” financial model can be established in terms of the number of sale versus lease sites, FCEDA should reserve at Least 25 percent of the sites for each option.  FCEDA should work with the City of Kalispell and BNSF Railway/WATCO Mission Mountain Railroad to create development agreements, deed restrictions or similar owner/lease agreements to foster rail‐only industry development within the park. Should a site become available that does not have access to rail siding, a potential non‐rail oriented business could occupy the site. However, the site may provide rail‐oriented business that may only require infrequent rail service (two or three times per year) the opportunity to conduct business without having to pay a premium for rail siding.  In addition, as the Valley continues to grow, some industries may only have a need for shipping rail without having to have direct access to rail siding on a daily, weekly or schedule.  FCEDA should lease out transload operations to a qualified transloader that has previous experience loading and unloading rail cars as well as loading truck shipments onto rail and vice versa. A qualified transloader will improve efficiency at the park, thus improving relations with businesses in the park as well as businesses throughout the area. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 35 VII. Hotel and Hospitality Market Analysis While the industrial trade in Kalispell continues to wane, tourism has become a bigger part of the Kalispell economy. Tourists are coming to Montana for many reasons, including sightseeing, outdoor recreation, and shopping. Kalispell is the gateway to Glacier National Park, which had 2.2 million visitors in 2010. Many of these visitors drive through or fly into Kalispell on their way to Glacier National Park. In addition to recreation, Canadian shopping tourism is strong in Kalispell. Canadians make planned trips to Kalispell to take advantage of favorable exchange rates, no state sales taxes, and retail establishments like Target, that are unavailable in their country. The region’s tourism activity generates a secondary retail market segment that further amplifies the primary countywide residential trade area of 90,000 residents. While this demand would also suggest support for new hotel construction, data reported by the Kalispell Convention and Visitors Bureau indicates that there are currently 100 hotel rooms currently under construction or in the pipeline and it is unclear whether additional hotel rooms could be supported until this inventory is delivered to the market and revenue per available room and occupancy rates stabilize. For these reasons, it is recommended that new hotel construction be considered as a mid‐ to long‐term opportunity in the Core Area. According to the American Hotel and Lodging Association, new construction cannot be supported until revenue per available room reaches $180 and annual average hotel occupancy is at least 68 percent. Based on current hotel research data acquired by Willdan, the average annual occupancy rate across 19 active hotel properties is approximately 58 percent. Figure 30: Profile of Kalispell Area Hotel/Lodging Properties  Aero Inn  Homewood Suites Kalispell  Best Western Plus Flathead Lake Inn & Suites  Kalispell Grand Hotel  Blue & White Motel  Kalispell Hilltop Inn  Comfort Inn Big Sky Kalispell  La Quinta Inns & Suites Kalispell  Econo Lodge Inn & Suites Kalispell  Motel 6 Kalispell  Glacier Peaks Inn  Red Lion Hotel Kalispell  Glacier Ridge Suites  Super 8 Kalispell Glacier Park Area  Hampton Inn Kalispell  The New Outlaw Hotel  Hilton Garden Inn Kalispell  Travelodge Kalispell Main Street  Holiday Inn Express & Suites Kalispell  Vacationer Motel Source: Willdan; 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 36 VIII. Opportunities and Constraints: Implications for Core Area Plan In order for the City to implement its vision and remove the railroad tracks, it must develop a partnership and plan with each of the two existing businesses that still use rail service. These two businesses are very important to the City of Kalispell. If the City were unable to relocate these businesses, then the tracks would not be considered abandoned and could not be removed. The Flathead County Economic Development Agency (FCEDA) recently purchased property just east of the City limits that would be a prime candidate for the businesses’ relocation. The acquisition of this industrial park has injected new enthusiasm for the Core Area Redevelopment Project as residents see the vision moving closer to reality. In addition, the City has secured Federal Brownfield remediation funds to assist with site remediation and demolition. The City plans to develop a Linear Park that would replace the railroad tracks and link Woodland Park from the east to the Great Northern Historical Trail on the west side of town. This park would improve the pedestrian and bike access throughout the Core Area thereby improving safety and mobility. It would also provide the public an opportune place to gather, socialize and enjoy the camaraderie within the neighborhood. The Linear Park would be one component to transforming the neighborhood into a lifestyle center of activity. Another component to building the community is the addition of more and varied dining and entertainment uses. The Downtown and Core Area has a limited number of dining and drinking establishments that are spread out such that they do not create a destination area for residents and tourists to visit. The addition of several establishments within a short proximity could generate positive energy to grow the entire district. One example may be the creation of a microbrewery tasting room. Flathead Valley craft breweries produce over 40 varieties of beers. A tasting room would promote these local businesses while creating a gathering place for area residents and tourists. One of the biggest threats to the Core Area Revitalization is the growth away from the Core Area. Over the past eight years, big box retail has developed on the north side of town along the Highway 93 corridor. The scarce availability of vacant, developable land within the City combined with abundant land on the outskirts of the City has encouraged suburbanization. The cluster of retailers in this corridor ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 37 generates strong traffic patterns, which in turn attracts new retailers such as Cabella’s. If the Core Area’s current conditions continue unabated, this trend will further diminish the competitive position of Core Area retailers. The City has already lost the downtown movie theaters when the owner decided to build the Signature Theaters Stadium 14 Cinema. The City should continue to take proactive measures to maintain the existing retail base while strengthening and enhancing the Core Area retail mix. and Opportunities Based upon Willdan’s observations and analysis, the Core Area Plan has significant that will support implementation. These include:  BNSF Railway/WATCO Mission Mountain Railroad is currently working with the City of Kalispell and FCEDA to design a rail‐ served industrial park that could accommodate the rail users in the Core Area  BNSF Railway/WATCO Mission Mountain Railroad has indicated their willingness to work with the community and rail users to identify scenarios where rail service is no longer necessary through the Core Area.  FCEDA has acquired a developable site to which rail‐served business could relocate.  The City already has a Brownfield Program to assist with cleanup of sites requiring remediation.  The City’s history presents a unique identity to the Core Area.  Active private investment in Kalispell retail/dining, small format office, and new infill housing is underway $3.7 million in new construction/renovation for Brannigan’s Pub, Depot Place, etc.).  The City has a vibrant local art community evidenced throughout the Core Area and downtown.  Woodland Park serves as a key terminus point on the east side of the proposed Linear Park.  The recently completed Depot Place housing project demonstrates that there is demand for higher density, affordable housing in the area.  The public support for the project gives it a higher probability for success and makes it easier to implement.  The Kalispell Center Mall owner/operator has indicated positive support for the Core Area Plan’s redevelopment goals and is a potential source of funding for components of the Linear Park plan and community gathering place (trail feature) on the mall property. The Plan highlights many of the constraints of the Core Area. These weaknesses include:  The property north of the railroad tracks is underutilized because it is separated by the railroad track from the Downtown. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 38  The lack of investment/re‐investment has created blight and neglected properties.  Many streets within the Core Area are not pedestrian friendly due to a lack of sidewalks, curbs and gutters.  Traffic flow through the North‐South connectors of the Core Area is hindered by the limited at‐grade railroad crossings.  There is a perceived parking problem in the downtown area. Spaces close to retail shops are often occupied by employees and workers in the area. The two hour time limits imposed on these spaces to stop employee and all day parking inhibits customers who would like to leisurely walk and shop in the downtown area.  There is a lack of green space, trees and park settings in the Core Area.  The Core Area lacks restaurant and entertainment venues. The distance separating the current establishments and those in the downtown diffuses the vibrancy versus having the establishments together in a closer cluster.  The charm and parking efficiency of Kalispell’s Main Street is diminished by State Highway activity. It is important that the City of Kalispell continue to lobby for State and Federal highway funding to finish the $32 million construction of the Highway 93 bypass to reclaim Main Street as a fully functioning, safe, pedestrian‐oriented, historic shopping destination. The City of Kalispell has a great opportunity to move forward and address these weaknesses by:  Relocating the rail‐served businesses in order to replace the railroad tracks with a Linear Park.  Developing a cohesive building and lot plan design that incorporates the character from downtown’s historical architecture with a modern appeal.  Enhancing streetscapes by adding sidewalks with gutters and curbs, widening existing sidewalks to accommodate patio dining and improve pedestrian traffic, incorporate angled parking to increase the amount of available spaces, and upgrading lighting to improve aesthetics and promote safety.  Improve city appearances by creating incentives to reinvest in neglected property, cleaning up alley ways and overgrown vegetation, enforcing city ordinances on abandoned vehicles and community decay, and renovating the East Side Rail Bridge to be a symbolic gateway into the Downtown area.  Encourage development to create a cohesive neighborhood with a vibrant atmosphere. The addition of the Linear Park, high‐density housing, and nightlife and entertainment establishments would transform the neighborhood into a desirable lifestyle center. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 39 Constraints/Threats The threats to the vision that the City has laid out for the Core Area are:  The cost may be prohibitively expensive for the City to attain a suitable return on investment.  The business owners, FCEDA, and the City of Kalispell must collaborate on the relocation of the rail‐served businesses.  The relocation requires development time for site planning, construction, and financing.  If the railroad tracks are not removed, the City would not be able to fully implement its vision.  Grant money from the Brownfield Program must be expended within the funding period.  If the Flathead Valley Electric Cooperative cannot move the substation near Woodland Park, the Linear Park plans may need alteration.  Legal restrictions may inhibit development. One example is the deed restrictions on the downtown theaters that prohibit their use to show movies. Another example is the limited number of liquor licenses. In 1947, the state enacted a quota system that limits the number of issued licenses based on local population. These restrictions have raised the value of liquor licenses on the secondary market into the hundreds of thousands of dollars.  The development of big box retail on the north side of the City along Highway 93 is attracting businesses away from the Core Area. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 40 IX. Core Area Economic Development Recommendations The City of Kalispell is actively engaged in transforming the Core Area into a destination and hub of activity for its residents, employees, and tourists. Willdan recommends that the Core Area’s retail strategy should not be to compete with northern Kalispell retail developments but instead to create a destination that offers something unique and outside that found in the traditional power center developments. There is opportunity for the current Core Area merchants to create an alternative to the existing regional shopping centers. Kalispell’s Core Area is presently a viable shopping and dining destination with significant potential to increase its retail activity through adaptive reuse and redevelopment of existing space by capturing a greater share of tourism spending generated by business travelers and visitors to Glacier National Park. We provide a range of potential redevelopment program scenarios and the interdependent variables impacting the conditions of feasibility for each alternative in the following discussion. The conceptual redevelopment program targets identified take into account full buildout of the Core Area over the 25‐year life Tax Increment Financing District. Figure 31: Downtown Kalispell Scenario 1 – Status Quo (Maintain Rail in Core Area) This scenario was tested to identify the development potential of the Core Area should rail service continue to operate. Acknowledging the previously identified impediments of continued rail service to development of the Core Area, there still is opportunity for development. To mitigate the impacts of continued rail service, Scenario 1 assumes that the City will create a cohesive marketing and development strategy focused on infill development and retention of existing users. The objective of this scenario would be focused development and retention of existing retail businesses in the Core Area. This scenario assumes that the rail‐served industrial park is not constructed and the rail is not relocated from the Core Area to the new ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 41 park. Consequently, the Core Area Linear Park Plan is not implemented and redevelopment and reuse is challenged by conditions of access, blight, and other factors. This scenario assumes that the Kalispell West Side TIF District generates only the baseline incremental tax revenues of approximately $407,838 annually over the life of the TIF. Scenario 2 – Conservative (Limited Expansion of Core Area Retail) The Enhanced Core Area Retail will result in adding a slight amount of retail to fill in the void areas, and will improve the existing conditions within the Core Area. The void areas are retail tenants that are underrepresented. They are determined by calculating expenditures, existing retail square footage and future sales projections. The Enhanced Core Area assumes the following:  Rail service through the Core Area will be discontinued.  A Linear Park has been developed and implemented to capture the former rail line right of way.  Street connections previously closed by the rail line have been reopened.  Street and sidewalk widths will remain unchanged and that pedestrian traffic, limited vehicular traffic will continue to co‐ exist.  Parking will continue to be limited to city parking lots, parallel parking on Highway 93 or on adjacent side streets.  An effective management structure will be established to coordinate overall leasing, marketing, design, merchandising, parking and maintenance of the Core Area.  Existing retailers will improve their merchandising, marketing and management strategies. Many of the Core Area’s businesses could generally increase sales and new commercial businesses could be supported including men’s and women’s apparel, brewery tasting rooms, bakeries and restaurants. This assumes that the City would implement the removal of the railroad tracks, undertake extensive streetscape improvements and the existing vehicular circulation patterns would remain in effect along Main Street. This model also assumes that the overall Core Area businesses organize to improve their merchandising techniques and develop an effective marketing campaign focusing on the tourist and visitor market and to promote more regular visits from persons outside of the primary trade area. Further business development projects that the Core Area could benefit from include the expansion of its restaurants and apparel categories. By expanding these two categories, the Core Area could eventually be the primary destination for visitors to Kalispell and significantly expand its primary trade area. Additional pedestrian traffic could increase existing business sales with appropriate management and marketing. This model assumes that the same enhancements of removal of the railroad tracks, extensive ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 42 streetscape improvements and maintaining the existing vehicular patterns along Main Street would be implemented. Further, this assumes the City would be able to enhance its current cultural entertainment programming in the Core Area. Scenario 3 – Optimistic (Major Expansion of Core Area Retail) Assuming the rail is removed and the Core Area Linear Park Plan is implemented, additional retail expansion is expected to occur. The needed additional improvements include:  The development of a major new cultural/entertainment‐ attraction such as a lifestyle center or regional brewery tasting room.  The establishment of a new Flathead County Library Significant new family‐focused attractions that create a welcoming environment for families with young children, such as play structures, public art, and small‐scale recreational features such as a playground water feature. Limited retail expansion could be achieved by expanding a few segments of the retail district, to encourage people outside of the trade area to come to the Core Area as a destination for those specific segments. The most promising segments identified for additional expansion include apparel and restaurant businesses. By expanding these two categories, the Core Area could eventually be the primary destination for visitors and significantly expand its primary trade area. Additional pedestrian traffic could increase the visibility and sales of existing business. This scenario was evaluated to identify the upper limit of the Core Area’s retail and entertainment development potential. Accounting for existing vacancies and based on the retail gap data reported by ESRI Business Analyst, the district can support up to 115,000 square feet of new retail business development over 25 years, assuming the following major improvements:  Removal of the railroad tracks, extensive streetscape improvements and maintaining the existing vehicular patterns along Main Street  The provision of additional parking (on‐street, structured or angled).  The widening of pedestrian walkways and the inclusion of additional public open space within the Core Area. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 43 Figure 32: Proposed Core Area Redevelopment Willdan forecasts that the improvements outlined in this model could significantly expand the Core Area’s primary trade area by attracting both new unique retailing concepts and shoppers from much of the greater Flathead Valley region. Long-Term Redevelopment Potential Assuming the enhancements outlined above in Scenarios 2 and 3 are implemented, coupled with additional improvements, major retail expansion could occur. This model is designed to strengthen the existing retail offered and to expand the variety, and thus the appeal of the Core Area to a wider market, without losing its existing appeal and charm. Additional off‐street and angled parking along with improved pedestrian access throughout the Core Area will enhance consumer appeal, increase accessibility and therefore help sales potential. Rationale The rationale for the recommended expansion alternatives within the Core Area is presented below: The addition of targeted retail, combined with the re‐tenanting of the existing retail, will create a more balanced mix, as well as strengthen the family appeal of the street to attract the tourist, business and secondary trade area population. The use of select national tenants will increase the vitality and credibility (name recognition) of the retail mix to strengthen the appeal of the street to visitors and tourists, as well as those living in the secondary trade area and beyond the defined trade areas. While the residential demographics of the primary trade area offer a stable residential base of over 90,000 persons, the median household income and ratio of rental property reflects the demographic trends of regional downtowns like that of Kalispell. Additionally, retail and restaurants have added sales potential in the area, due to both the existing trade area population and tourists drawn to the area that are presently underserved by the existing stock of commercial enterprises. A healthy mix of national, regional and independent tenants is needed to maintain an energetic retail district. National tenants add stability to a shopping district and give the consumer the perception that they can find a selection of standard items. Local retailers add the unique and eclectic element to a retail street that malls cannot offer. A successful ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 44 mix between the two tenant types develops unique retail with the convenience of name brand tenants together in a single area. Recommended Retail Recruitment Strategies Leasing and Management One of the most important elements in the success of any commercial development or redevelopment effort is strategy for leasing and management of the area. Just as a successful shopping mall is leased with a targeted tenant mix to maximize sales for all tenants, the leasing of an urban commercial district must follow a similar lead. The unique combination and mix of a successfully leased shopping district will assure its ongoing vitality. The challenge of managing and leasing a shopping district such as the Core Area is complex and diverse. Multiple landlords, some absentee, make implementing consistent street management or complementary leasing efforts difficult. Successful shopping districts, however, are typically well organized in their efforts to promote, market and attract desirable tenants. It is most important that the businesses throughout the Core Area be organized in a tight‐fitting group with consistent and realistic goals. Well‐compensated and qualified individuals should direct such an organization, much as a successful mall is leased and managed. The manner of financing such activities is an important part of assuring joint efforts to this goal. The existing Business Improvement District (BID) can be an effective tool for this purpose. Phasing and Action Items As a means of improving the vitality of the Kalispell Core Area, the following action items are recommended. Such improvements will aid in efforts to attract and preserve quality retailers and restaurants in Kalispell’s downtown. Near‐Term (3‐4 months)  Improve merchandising efforts by existing Core Area retailers and restaurants to enhance visual merchandising of their product lines and to promote cross shopping among businesses. Such efforts should include improved storefront design, window display, lighting, inventory control and choice, among others.  Development of a management group and appropriate funding to assure clean and attractive streetscapes, open spaces, and storefronts.  A review of existing wayfinding and signage directing vehicles to the parking surrounding the Core Area and downtown is encouraged. Mid‐Range (6‐9 months)  The enforcement of short‐term parking (1 to 2 hours) in appropriate areas within the Core Area and its side streets to allow vehicular traffic and to encourage turnover of prime parking spaces. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 45  The development and implementation of an overall marketing and advertising campaign designed to expand the trade area and overall sales.  The organization of an effective tenant recruitment program to attract targeted retailers and restaurants to the study area. Include a common 800‐phone number and active participation in the International Council of Shopping Centers and other trade group activities.  The installation of permanent directories to be located downtown to direct pedestrians and shoppers to the Core Area and various shops and restaurants.  The creation of an ongoing assemblage of the inventory of all leasable commercial space (occupied, vacant, and planned) in the study area with appropriate data including square footage, lease rates, lease terminations, footprints, etc. This will facilitate the efficient flow of information to existing and prospective tenants, brokers, landlords and investors.  The creation and design of marketing materials, including a brochure for leasing and marketing purposes, to attract potential retailers and restaurants.  The continuation and expansion of study area programming and promotional activities seasonal activities, Holiday festivals) to provide additional incentives for shoppers to come to the Core Area’s shopping, dining, and entertainment enterprises. Long‐Range (12 months)  Expand existing BID or create new BID for Core Area  Plan for ongoing routine repair and updating of the public realm.  Finalize planning, site design and layout for Linear Park.  Identify State and Federal funding to complete the $32 million construction of the Highway 93 by‐pass and reconfigure angled parking on Main Street. Figure 33: Current Conditions: Kalispell Center Mall Parking Lot Conclusions Willdan’s analysis of the current Core Area’s real estate and market conditions indicate that there is unmet demand for retail and ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 46 restaurant uses. The Core Area’s unique combination of holding the county seat, government employment center, residential and visitor customer base provides a stable economic marketplace for expansion. The Core Area has the potential to achieve higher market capture rates by implementation of the Plan’s key objectives of:  Removing the railroad tracks that bisects the Project Area and replace the tracks with a Linear Park.  Improving and upgrading existing properties to remove the blighted areas within the Core Area.  Developing a compatible mix of commercial retail, neighborhood services, residential housing and public areas that meets the needs of residents and fosters a greater sense of community. In turn, the proposed redevelopment will strengthen the local economy by increasing the local tax base, attracting new residents and businesses, creating new jobs, and increasing tourism. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 47 X. Kalispell Linear Park Conceptual Plan Introduction One of the primary objectives of the Kalispell Core Area Plan is to formulate a funding and implementation strategy for installation of the Kalispell Linear Park The City of Kalispell’s overarching vision is to further the revitalization of the Core Area by removing the existing live freight rail line that bisects the town and replace the tracks with a Linear Park, attracting private investment to upgrading infrastructure, remove blight, and achieve a diversified mix of infill activity through new construction and adaptive reuse/redevelopment of commercial, retail, residential, neighborhood services, and community gathering areas, and other public amenities. Willdan provides a summary of the high‐level planning parameters associated with the Linear Park’s layout and proposed programming elements, as well as the underlying capital and operating assumptions that are the foundation of the park’s implementation strategy. Linear Park Layout and Programming Based on input from City of Kalispell staff, the Kalispell Core Area Steering Committee, and other community stakeholders, there is broad public support for the removal of the existing freight rail line and the installation of a new Linear Park in Kalispell. The removal of the active rail line not only provides new commercial and residential redevelopment opportunities, but also the ability to reconnect Kalispell’s street grid to create a fully functioning, pedestrian‐oriented Main Street community retail destination. Upon relocation of the rail line, the City of Kalispell is opening opportunities for private land owners and businesses to strategically reposition property located the downtown core for redevelopment and reuse. The City’s role is to create the optimal conditions for private investment through the following key action steps:  attract the maximum private investment and development activity with a minimum level of public funding/support  upgrade basic public infrastructure to provide optimal conditions for development/redevelopment activity (sidewalks, street lights)  improve transportation flow through new street crossings previously blocked by rail activity, better connecting drivers with employment and commercial activity centers  safely connect pedestrians to active and passive recreational amenities by investing in new trail heads at key locations. After more than 20 years of public debate, the City’s long‐term investment in the Kalispell Core Area planning initiative is now taking the next step in moving towards the active implementation phase of the downtown rail‐served business relocation by the BNSF Railway/WATCO Mission Mountain Railroad. The possible subsequent implementation of the Linear Park plan is strategically structured to, eliminate blight, catalyze private investment in the downtown Core Area, and achieve substantial enhancement in the community’s amenities. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 48 The following provides a high‐level overview of current proposed layout and programming targets for the KLP: Key Regional Trail Connection Points  North & East Connection: Create a contiguous linear connection via BNSN Railway Highway 2 overpass (the new “Kalispell Gateway Bridge”) between Woodland Park (at the east end of study area) and Lawrence Park (in the NE quadrant of city).  West Connection: Connect the KLP to the existing Meridian Trail Head via a new trail head at West 5th Avenue WN (connecting hikers 8 miles out to Kila trail and 4 miles up to North Reserve).  South Connection: Connect hikers 11 miles south to Somers/Flathead Lake). Proposed Linear Park Programming “Bump out” Nodes  Depot Park: Locomotive climbing equipment at Depot Park: The City of Kalispell and FCEDA have begun discussions with BNSF Railway regarding the possibility of donating an out of service locomotive for public park use. This question needs to be further explored with BNSF Railway/WATCO Mission Mountain Railroad and others involved in the rail relocation initiative.  Mall Clock Tower Pedestrian Plaza: potential for a developer‐ funded and constructed open air farmer’s market and creation of a focal gathering “third place” on privately‐held Kalispell Center Mall property (with potential for capital investment and ongoing operating support from Mall owner/operator).  Senior Outdoor Fitness Park: proposed at Meridian Road and Appleway Trail; this facility could be a small scale facility (new or existing adaptive reuse structure) with outdoor exercise equipment, and portable vending carts.  Flathead Electric Co‐Op Site Comfort Station: the current Flathead Electric Co‐Op site is underutilized and is strategically located at a potential trail connection point to Woodland Park (and – long‐term, to the proposed outdoor amphitheater site). It is recommended that the City of Kalispell partner with the FEC to redevelop the site to a low‐cost/low‐intensity comfort station and trail head. This could be accomplished with minimal capital investment through a land swap, long‐term lease, or shared‐use agreement. It is envisioned that the comfort station would include the following amenities:  trail head parking lot with city of Kalispell‐branded directional signage (potentially shared parking with FEC)  Restrooms/healthy snack vending machines ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 49  Solid waste receptacles (potentially to be included in the Linear Park’s new recycling program) Street Extensions/ Railroad Crossing Conversions To maximize the impact of regional trailhead reconnection points, the Willdan team strongly recommends that the Kalispell Linear Plan include funding to achieve the installation of at‐grade pedestrian crossings and/or street reconnections key intersections where the streets cross the railroad, as appropriate: Street Extensions / Railroad Crossing Conversions (requires removal of tracks and new construction to reconnect street grid):  5th Avenue EN  6th Avenue WN  7th Avenue WN  8th Avenue WN Based on discussions with city staff, it is expected that the street extension costs would be substantial (approximately $2.4 million). These costs are reflected in the Core Area funding strategy in the following section. To the extent possible, street extension costs would mitigated by retrofitting existing rail crossing equipment and power lines for vehicular/pedestrian crossing use.. Connection to the City of Kalispell Parks and Recreation Network The City of Kalispell Department of Parks and Recreation currently maintains approximately 406 acres of parkland, including 138 acres dedicated for the Kalispell Youth Athletic Complex. The parkland inventory includes 321 acres of active parkland and 73 acres of natural open space. Kalispell also owns 12 acres of undeveloped land. The City maintains several beautification areas, including roadway greens and annual plantings, via its Parks Department. The Kalispell Core Area Linear Park Plan offers the potential reconnection of downtown to several trail heads with connections to nearby neighborhoods and vehicle parking. The Linear Park would connect nearly the entire length of the city, providing approximately two miles in paved surfaces, opportunities for environmental and recreational programming, and the installation of climbing equipment at Depot Park, enhancing the cultural heritage of Kalispell’s railroad history. Linear Park Capital Cost Assumptions There are three distinct capital components to the Kalispell Linear Park Plan:  Removal of the active rail freight line  Installation of the Linear Park trail/street reconnections  Adaptive reuse and new construction of facilities and equipment related to programmed park nodes ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 50 Rail Line Removal The cost estimates to remove the active rail line is still pending further input from BNSF Railway/WATCO Mission Mountain Railroad, and other stakeholders; therefore this cost estimate is subject to change pending refinement of the Linear Park plan concept. Linear Park Trail Based on Willdan’s site visits and interviews with city staff (Planning, Community & Economic Development, Public Works, and Parks and Recreation departments), the installation of the Kalispell Linear Park trail is expected to be a low impact construction project. From a utilities perspective, the city’s existing grid of power, water, wastewater, and roads are in a state of good repair with sufficient capacity to serve the proposed Linear Park plan’s trail/road connections and minimal active programming alternatives. The primary capital costs appear to be associated with the street extensions and the installation of street lights, curb cuts, sidewalks, and other basic vehicle and pedestrian‐oriented infrastructure upgrades. Summary of Construction Costs Construction cost estimates are provided in the preliminary implementation strategy (see Figure 34: Summary of Linear Park Development Costs and Phasing Recommendations and in the detailed calculations and assumptions located in the annex to this report). It is expected that the Linear Park design and construction will be initiated concurrently with the latter phases of the FCEDA Rail Served Industrial Park construction and associated business relocation. It is anticipated that the Linear Park will be implemented in phases, based on availability of funding as follows (see Figure 34: Summary of Linear Park Development Costs and Phasing Recommendations for detail):  Phase I: Assessment 0‐3 Months  Phase II: Assessment & Cleanup Plan 3‐6 Months  Phase III: Remediation Plan 6‐12 Months  Phase IV: Cleanup 12‐24 Months  Phase V: Park Design & Planning tbd  Phase V: Business Relocation tbd  Phase VI: Park Construction tbd According to current estimates of park costs and available funding sources, it appears that the installation of the Linear Park is financially feasible, as discussed in the following implementation section of this report. Nine percent of total budget for FY 2014 is planned for reserves (future maintenance). The Parks & Recreation Department currently holds $280,000 in cash reserves (14.3 percent reserve account). It is feasible to explore utilizing the reserve fund to pay for small shortfalls projected in the early years of development. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 51 Figure 34: Summary of Linear Park Development Costs and Phasing Recommendations Private/ Non- Profit Other Grant Funding City of Kalispell Total Cost Near Term: Years 1-3 # 1 Linear Park Land/Easement Acquisition $5,000 $5,000 # 2 Linear Park Environmental Remediation $55,000 $55,000 # 3 BNSF Track Removal # 4 Park Master Plan $20,000 $20,000 5 Installation of Shared Use Trail $1,423,812 $1,423,812 Subtotal $55,000 $1,448,812 $1,503,812 Mid-Term: Years 4-6 6 Regional Trailhead Connection Points: $30,000 $30,000 $60,000 7 Kalispell Gateway Bridge $112,500 $112,500 8 KLP Trail Feature - Depot Park $175,000 $25,000 $200,000 9 KLP Trail Feature - Appleway Trail Senior Outdoor Fitness Park $61,600 $2,500 $64,100 10 KLP Trail Feature - Flathead Electric Co-Op Park $15,000 $55,000 $14,000 $84,000 11 Pedestrian Crossing Upgrades (Railroad Conversions) : $1,303,941 $1,303,941 Subtotal $281,600 $167,500 $1,375,441 $1,824,541 Long-Term: Years 7-10 12 Street Extensions (Railroad Conversions) : $1,074,001 $1,074,001 13 KLP Trail Feature - Kalispell Center Mall Clock Tower Plaza 14 Woodland Park Amphitheater $25,000 $25,000 $50,000 15 Health, Wellness, Sustainability Programming Subtotal $25,000 $1,099,001 $1,124,001 6% 6% 88% 100% Total Linear Park Costs - City of Kalispell $281,600 $247,500 $3,923,254 $4,452,354 Source: City of Kalispell; Willdan, 2013 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 52 Linear Park Operating Cost Assumptions Based on the current Kalispell Linear Park Plan concept noted in rough map graphics provided in this memorandum, the length of the park as drawn is 17,221 feet or 3.26 miles. Other potential operating impacts likely to be to Public Works Department to expand solid waste collection points along trail and/or at programmed nodes (especially if recycling program is expanded in City of Kalispell). Note that operating cost estimates for the programmed elements of the Linear Park are illustrative. Figure 35: Kalispell Linear Park Annual Operating Cost Estimates Length (feet) 17,200 Width (feet) 60 total area (sq. ft.) 1,032,000 sq. ft/acre 45,560 Total Linear Park Acres 23 Tier 1 Park Maintenance cost/acre 1,200 Annual Maintenance Cost: $27,182 Source: City of Kalispell Department of Parks & Recreation; Willdan, 2013. The Kalispell Department of Parks & Recreation supports implementation of the Linear Park; the scale and intensity of uses can be programmed as part of typical expected growth for parks budget (combined with reserves); expected annual operating costs the operating costs for shared use trail and features are within a range that can be managed and maintained. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 53 XI. Core Area Financial Feasibility & Implementation Plan To initiate the implementation planning for the proposed Kalispell Core Area Plan the Kalispell Linear Park – the Willdan Team conducted work sessions with City of Kalispell staff to collect preliminary data regarding the individual action steps, cost estimates, and potential funding sources. Table 12 in Annex A: Linear Park Implementation Strategy: Sources & Uses of Funding provides a summary snapshot of these actions steps. Based on a detailed review of the relationship between costs, revenues and grant funding sources, and proposed phasing, the Core Area plan is financial feasible. Summary of Key Findings  Implementation of the Core Area Plan is vital to the future stability of the City of Kalispell’s tax base.  The capital costs required to construct the Linear Park are supported by a combination of grant funding, incremental real property tax revenues, and TIF funding.  Other funding sources will be pursued and it’s expected that these would adequately address any projected shortfalls (up to $1.1 million in Year 7 of the most conservative case (Scenario 1: Status Quo), assuming 100% of the street extension improvements are funded by the TIF. See Figure 39: Core Area Grant Funding Resource Strategy for a detailed listing of grant funding targets).  Assuming conservative development activity that would result from implementation of the Linear Park Plan as detailed by the market analysis findings, the quantifiable public return on investment is positive. It is expected that the incremental real property values would reach between $71,000 and $133,000 per year at full buildout of the conservative and optimistic scenarios, respectively.  The 25‐year cumulative cash flows of anticipated development costs and incremental tax revenues flowing to the West Side TIF are estimated to be between $5.75 million and $7.91 million indicating that investment in the Core Area Plan will yield sufficient incremental tax revenues to the City of Kalispell. Figure 36: Core Area Financial Feasibility Analysis – Summary Results Cumulative Values (25 Years- $Millions) Scenario 1: Status Quo Scenario 2: Conservative Scenario 3: Optimistic Current TIF Fund Reserves $2.56 $2.56 $2.56 Incremental TIF Revenues (Life of TIF) $9.79 $9.79 $9.79 Real Property Tax Revenues: New Construction/Redevelopment $1.29 $2.16 Rail Served Industrial Park Costs 1/ $(2.68) $(2.68) $(2.68) Core Area Linear Park Development Costs $(3.92) $(3.92) $(3.92) TIF Funds Remaining $5.75 $7.04 $7.91 Source: Kalispell Core Area Plan; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 54 Figure 37: Core Area Plan Real Property Tax Revenue Assumptions –Incremental Taxes Per Square Foot from Similar Redevelopment Activity Before Renovation After Renovation After Renovation Business Property Type/Description Total Size (sf or units) Taxable Value - Land Taxable Value - Building Taxable Value - Land Taxable Value - Building Incremental Assessed Value (Land + Building) Total Incremental Taxes PSF After Renovation Sykes Supermarket/ Restaurant/Apt commercial- multifamily imp 3,466 695 723 1,883 4,963 3,108 0.90 Sykes Supermarket/ Restaurant/Apt mixed use- retail, storage & apts 27,540 2,409 - 2,814 52,521 47,298 1.72 Sykes Supermarket/ Restaurant/Apt restaurant 7,466 2,409 4,523 2,738 8,042 7,418 0.99 Sykes Supermarket/ Restaurant/Apt retail 2,700 2,409 1,652 2,738 2,239 (1,256) (0.47) Appleway Trail Apts apts 71,320 10,665 83,733 73,068 1.02 Brannigan's Pub/Restaurant /1 restaurant/bar 13,000 7,243 5,330 (1,913) A to Z /2 retail 7,540 7,414 8,853 9,747 10,120 1,812 0.24 Depot Place Apts apts 35,607 6,281 15,681 9,400 0.26 Kalispell Center Mall /3 retail/hotel 297,696 103,023 231,119 103,023 231,119 256,192 Assumed Averages for TIF Calculations Incremental Taxes psf Retail Development $0.26 Office Development $0.24 Apartments - For Lease $0.98 Low-Income Housing Tax Credit Units $0.90 Condominium $1.02 1/ Completed remodel value has not been picked up for 2013 yet. Renovation not complete as of 1/1/13. Full renovation value will be added for 2014 tax year. 2/ value only at 50% complete construction for 2013. This project has also applied for a property tax exemption. 3/ completed remodel value for 2013 still pending review ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 55 Figure 38: Fiscal Benefits at Buildout - Summary of Scenarios Average Incremental Real Property Tax Values/sf Scenario 1: Status Quo Scenario 2: Conservative Growth Redevelopment Program Development Program (sf) Incremental Taxable Value Real Property Taxes Development Program (sf) Incremental Taxable Value Real Property Taxes Development Program (sf) Incremental Taxable Value Real Property Taxes Retail Development (sf) Retail - Apparel and Soft Goods $0.26 - 62,500 $16,015 $10,998 92,500 $23,702 $16,276 Retail - Restaurant (Casual & Full Service) $0.26 - 15,000 $3,844 $2,639 25,000 $6,406 $4,399 Subtotal - 77,500 $19,858 $13,637 117,500 $30,108 $20,675 Office Development (sf) $0.24 - 17,500 $4,206 $2,888 17,500 $4,206 $2,888 Residential Development (units) Apartments - For Lease $0.98 - 52,500 $51,222 $35,175 78,750 $76,833 $52,763 Low-Income Housing Tax Credit Units $0.90 - 32,000 $28,695 $19,705 64,000 $57,389 $39,411 Condominium $1.02 - - 25,000 $25,613 $17,589 Subtotal - 84,500 $79,917 $54,881 167,750 $159,836 $109,762 Total Incremental Value/Real Property Taxes 179,500 $103,981 $71,406 302,750 $194,149 $133,326 Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 56 Figure 39: Core Area Grant Funding Resource Strategy Funding Source Grant Program Due Date Grant Amount Match Required Proposed Use of Funds/Project Phase Expected Date of Notification US DOT TIGER V 06/03/13 $8.7 million 40% Construction of rail and road improvements at Kalispell/FCEDA Rail Park September 2013 US EDA Public Works 09/13/13 Avg $1MM + Infrastructure Within 25 days of funding cycle deadline Montana Department of Commerce Community Development Block Grant Not stated $20,000 $1 local cash to $3 CDBG funds Plans for the adaptive re-use and redevelopment of vacant industrial areas, including “brownfield” areas where reuse may be complicated due to the presence (or potential presence) of a hazardous substance, pollutant or contaminant, and any subsequent studies or plans for remediation required Not stated Montana Department of Commerce Community Development Block Grant—Economic Development $25,000 per job created, max $400,000 1:1 May be used for construction of infrastructure at the Rail Park pending commitment on job creation Montana Department of Commerce Big Sky Trust Fund Rolling $25,000 1:1 Planning Within three months of application Montana DNRC Reclamation & Development May 15, Odd Years and 09/15/13 $50,000 Yes, no minimum Planning, environmental site assessments and writing grant application—perhaps for rails to trails phase. September of that year And Montana DNRC Reclamation & Development Grants Program May 15, Even Years $300,000+ Yes, no minimum Environmental clean-up, particularly along the rail line in preparation for building trail Following Legislative Session ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 57 Funding Source Grant Program Due Date Grant Amount Match Required Proposed Use of Funds/Project Phase Expected Date of Notification Montana Department of Commerce Treasure State Endowment Program May of Even Years $750,000 maximum 1:1 Construction of infrastructure. **Unlikely that Kalispell would be funded b/c charging below target rate. Following Legislative Session US HUD HOPE VI Main Street 07/22/13 $500,000 5% Grants to small communities to assist in the renovation of an historic or traditional central business district or “Main Street” area by replacing unused commercial space in buildings with affordable housing units. Anticipated mid-Oct 2013 US EPA Brownfields Assessment Expected Nov 2013 $200,000 None Conduct environmental site assessments in Kalispell for hazardous substance or petroleum. Spring 2014 National Endowment for the Arts Our Town January annually $25,000 $50,000 $75,000 $100,000 or $200,000 1:1 Non-federal Cash and/or In-kind Planning: creative asset mapping, cultural district planning, development of master plans or community-wide strategies for public art, creative industry/hub development. Design: of cultural facilities (adaptive reuse), community engagement activities, predevelopment, design fees. July annually ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 58 Funding Source Grant Program Due Date Grant Amount Match Required Proposed Use of Funds/Project Phase Expected Date of Notification Wells Fargo and the National Fish & Wildlife Foundation Environmental Solutions for Communities December $25,000 – $100,000 1:1 cash and/or in-kind Support community-based conservation projects that protect & restore local habitats/natural areas, enhance water quality, promote urban forestry, educate & train community leaders on sustainable practices, promote related job creation/training, & engage diverse partners & volunteers. Approximately following April HUD Choice Neighborhoods May annually $500,000 Minimum of 5% of project cost Cash only support development of comprehensive neighborhood revitalization plans which, when implemented, are expected to achieve three core goals: 1. Housing 2. People 3. Neighborhood. Each application must focus on the revitalization of at least one severely distressed public and/or HUD- assisted housing project. **For this reason, not a match for the Core Area. Multiple federal agencies Strong Cities, Strong Communities Initiative helping localities overcome economic struggles through interagency assistance Tax Increment Finance District West Side TIF Rolling Revitalization, public infrastructure ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 59 Annex A: Detailed Assumptions & Calculations ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table of Contents Table 1: Redevelopment Program Alternatives Table 2: Conceptual Development Program by Opportunity Site Table 3: Development Cost Assumptions Table 4: Financial Feasibility - Retail Table 5: Financial Feasibility - Office Table 6: Financial Feasibility - Multifamily Residential Table 7: Commercial & Residential Construction Cost Assumptions Table 8: Real Property Tax Assumptions Table 9: Fiscal Benefits at Buildout - Summary of Scenarios Table 10: Redevelopment Phasing & Tax Generation Assumptions - Scenario 2: Conservative Table 11: Redevelopment Phasing & Tax Generation Assumptions - Scenario 3: Optimistic Table 12: Linear Park Implementation Strategy: Sources & Uses of Funding Table 13: Summary of Linear Park Development Costs and Phasing Recommendations Table 14: West Side TIF District Projections: Scenario 1 - Status Quo Table 15: West Side TIF District Projections: Scenario 2 - Conservative Table 16: West Side TIF District Projections: Scenario 3 - Optimistic Page A-1 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 1: Redevelopment Program Alternatives Kalispell Core Area Scenario 1 Scenario 2 Scenario 3 Conceptual Redevelopment Alternatives Status Quo Conservative Optimistic Retail Development (sf) Retail - Apparel and Soft Goods 0 62,500 92,500 Retail - Restaurant (Casual & Full Service) 0 15,000 25,000 Total - 77,500 117,500 0 Office Development (sf) 0 17,500 17,500 Residential Development (units) Apartments - For Lease 0 25 75 Low-Income Housing Tax Credit Units 0 40 80 Condominium 0 - 20 Total 0 105 175 Source: Kalispell Core Area Plan; Willdan, 2013. Page A-2 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 2: Conceptual Development Program by Opportunity Site Total Buildout Opportunity Site Opportunity Site Opportunity Site Opportunity Site Opportunity Sites /1 Site 1 Site 2 Site 3 Site 4 (Core Area) Retail Development (sf) Retail - Apparel and Soft Goods 92,500 2,500 30,000 50,000 10,000 Retail - Restaurant (Casual & Full Service) 25,000 10,000 10,000 5,000 Total 115,000 2,500 40,000 - 60,000 15,000 Office Development (sf) 17,500 2,500 - 5,000 - 10,000 Residential Development (units) Apartments - For Lease 75 50 25 Low-Income Housing Tax Credit Units 80 40 40 Condominium 20 20 Total 175 - 70 40 40 25 1/ Core Area wide opportunity sites are assumed to be throughout the project area and less than one acre on average. Source: Kalispell Core Area Plan; Willdan, 2013. Page A-3 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 3: Development Cost Assumptions Costs per Square Foot - New Construction Hard Costs Soft Costs Tenant Improvements Parking Retail Development (sf) Retail - Apparel and Soft Goods 150 $ 30 $ 45 $ 36 $ 261 $ Retail - Restaurant (Casual & Full Service) 175 $ 35 $ 68 $ 36 $ 314 $ Office Development (sf) 75 $ 15 $ 20 $ 36 $ 146 $ Residential Development (units) Unit Size Apartments - For Lease 1,050 100 $ 20 $ 2.25 $ 26 $ 148 $ Low-Income Housing Tax Credit Units 800 100 $ 20 $ 2.25 $ 30 $ 152 $ Condominium 1,250 200 $ 40 $ 2.50 $ 14 $ 257 $ Assumptions Parking Cost 12,000 $ Soft Costs (as % of hard costs) 20% Contingency 10% Gross building area per parking space 350 $ SF Parking Revenue - $ Per Year - $ Sale Interest Rate 7.5% Source: Kalispell Core Area Plan; Willdan, 2013. Total Page A-4 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 4: Financial Feasibility - Retail Buildout Yr Yr Yr Yr Yr Yr Buildout Year Year 1 2 3 4 5 6 Retail Development - Gross (Annual) Retail - Apparel and Soft Goods 30,000 30,000 Retail - Restaurant (Casual & Full Service) 10,000 10,000 Subtotal Retail (sf) 40,000 - - - - 40,000 - Retail Development - Net SF (Ongoing) Retail - Apparel and Soft Goods 85% 25,500 - - - - 25,500 25,500 Retail - Restaurant (Casual & Full Service) 85% 8,500 - - - - 8,500 8,500 Subtotal Retail (sf) 34,000 - - - - 34,000 34,000 Net Income $Rent / SF Retail - Apparel and Soft Goods $20.00 4,080,000 - - - - 510,000 510,000 Retail - Restaurant (Casual & Full Service) $20.00 1,360,000 - - - - 170,000 170,000 Net Income 5,440,000 - - - - 680,000 680,000 Total Development Costs Cost/ sf Total sf Retail - Apparel and Soft Goods 261 30,000 7,830,000 Retail - Restaurant (Casual & Full Service) 314 10,000 3,135,000 Subtotal Retail (sf) 40,000 10,965,000 Debt 60% 6,579,000 $ Equity 40% 4,386,000 $ Interest Rate 7.5% Term 10 Down Payment 4,386,000 $ Points + Closing Costs 3% 131,580 Total Cash Investment 4,517,580 $ Annual Payment ($5,265,183) ($658,148) ($658,148) ($658,148) Annual Cash Flow 7,018,522 - (658,148) 21,852 21,852 Cash on Cash Return 0% -15% 0% 0% Cumulative Cash Flow (for Payback Year) - - - (658,148) (636,296) (614,443) Return on Investment (Cash on Cost) - Yr 17 15% Assumptions: Leasing Costs 3% Operating Costs Revenue) 25% Stabilized Vacancy Factor 5% 33% Source: Kalispell Core Area Plan; Willdan, 2013 Page A-5 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 4: Financial Feasibility - Retail Buildout Buildout Year Year Retail Development - Gross (Annual) Retail - Apparel and Soft Goods 30,000 Retail - Restaurant (Casual & Full Service) 10,000 Subtotal Retail (sf) 40,000 Retail Development - Net SF (Ongoing) Retail - Apparel and Soft Goods 85% 25,500 Retail - Restaurant (Casual & Full Service) 85% 8,500 Subtotal Retail (sf) 34,000 Net Income $Rent / SF Retail - Apparel and Soft Goods $20.00 4,080,000 Retail - Restaurant (Casual & Full Service) $20.00 1,360,000 Net Income 5,440,000 Total Development Costs Cost/ sf Total sf Retail - Apparel and Soft Goods 261 30,000 7,830,000 Retail - Restaurant (Casual & Full Service) 314 10,000 3,135,000 Subtotal Retail (sf) 40,000 10,965,000 Debt 60% 6,579,000 $ Equity 40% 4,386,000 $ Interest Rate 7.5% Term 10 Down Payment 4,386,000 $ Points + Closing Costs 3% 131,580 Total Cash Investment 4,517,580 $ Annual Payment ($5,265,183) Annual Cash Flow 7,018,522 Cash on Cash Return Cumulative Cash Flow (for Payback Year) Return on Investment (Cash on Cost) - Yr 17 15% Assumptions: Leasing Costs 3% Operating Costs Revenue) 25% Stabilized Vacancy Factor 5% 33% Source: Kalispell Core Area Plan; Willdan, 2013 Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr 7 8 9 10 11 12 13 14 15 16 - - - - - - - - - - 25,500 25,500 25,500 25,500 25,500 25,500 25,500 25,500 25,500 25,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 510,000 510,000 510,000 510,000 510,000 510,000 510,000 510,000 510,000 510,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 ($658,148) ($658,148) ($658,148) ($658,148) ($658,148) ($658,148) ($658,148) 21,852 21,852 21,852 21,852 21,852 21,852 21,852 680,000 680,000 680,000 0% 0% 0% 0% 0% 0% 0% 15% 15% 15% (592,591) (570,739) (548,887) (527,035) (505,183) (483,330) (461,478) 218,522 898,522 1,578,522 Page A-6 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 4: Financial Feasibility - Retail Buildout Buildout Year Year Retail Development - Gross (Annual) Retail - Apparel and Soft Goods 30,000 Retail - Restaurant (Casual & Full Service) 10,000 Subtotal Retail (sf) 40,000 Retail Development - Net SF (Ongoing) Retail - Apparel and Soft Goods 85% 25,500 Retail - Restaurant (Casual & Full Service) 85% 8,500 Subtotal Retail (sf) 34,000 Net Income $Rent / SF Retail - Apparel and Soft Goods $20.00 4,080,000 Retail - Restaurant (Casual & Full Service) $20.00 1,360,000 Net Income 5,440,000 Total Development Costs Cost/ sf Total sf Retail - Apparel and Soft Goods 261 30,000 7,830,000 Retail - Restaurant (Casual & Full Service) 314 10,000 3,135,000 Subtotal Retail (sf) 40,000 10,965,000 Debt 60% 6,579,000 $ Equity 40% 4,386,000 $ Interest Rate 7.5% Term 10 Down Payment 4,386,000 $ Points + Closing Costs 3% 131,580 Total Cash Investment 4,517,580 $ Annual Payment ($5,265,183) Annual Cash Flow 7,018,522 Cash on Cash Return Cumulative Cash Flow (for Payback Year) Return on Investment (Cash on Cost) - Yr 17 15% Assumptions: Leasing Costs 3% Operating Costs Revenue) 25% Stabilized Vacancy Factor 5% 33% Source: Kalispell Core Area Plan; Willdan, 2013 Yr Yr Yr Yr Yr Yr Yr Yr Yr 17 18 19 20 21 22 23 24 25 - - - - - - - - - 25,500 25,500 25,500 25,500 25,500 25,500 25,500 25,500 25,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 8,500 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 34,000 510,000 510,000 510,000 510,000 510,000 510,000 510,000 510,000 510,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 170,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 680,000 15% 15% 15% 15% 15% 15% 15% 15% 15% 2,258,522 2,938,522 3,618,522 4,298,522 4,978,522 5,658,522 6,338,522 7,018,522 7,698,522 Page A-7 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 5: Financial Feasibility - Office Buildout Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Buildout Year Year 1 2 3 4 5 6 7 8 9 10 11 12 Office Development (sf) Small format/independent office - - 2,500 - - - 10,000 - - 5,000 - - Absorption Assumptions - % of Total - - 2,500 2,500 2,500 2,500 12,500 12,500 12,500 17,500 17,500 17,500 Space Absorbed/ Annual sf 0% 0% 100% 100% 100% 100% 50% 50% 50% 75% 75% 100% Total Net New Office Space/sf 17,500 - - 2,500 2,500 2,500 2,500 6,250 6,250 6,250 13,125 13,125 17,500 Retail Development - Net SF (Ongoing) Small format/independent office 85% 14,875 - - 2,125 2,125 2,125 2,125 5,313 5,313 5,313 11,156 11,156 14,875 Subtotal Retail (sf) 14,875 - - 2,125 2,125 2,125 2,125 5,313 5,313 5,313 11,156 11,156 14,875 Lease Rate/sf Gross Retail Sales (Gross Income) 12 $ 3,060,000 - - 25,500 25,500 25,500 25,500 63,750 63,750 63,750 133,875 133,875 178,500 % of Sales Operating Costs -13% - - (3,315) (3,315) (3,315) (3,315) (8,288) (8,288) (8,288) (17,404) (17,404) (23,205) Net Lease Income 3,457,800 - - 28,815 28,815 28,815 28,815 72,038 72,038 72,038 151,279 151,279 201,705 Annual Debt Service (Mortgage Payment) Total Development Costs Total sf 17,500 Cost/ Sf 146 Total Net New Office Space/sf 2,555,000 $ Debt 60% 1,533,000 $ Equity 40% 1,022,000 $ Interest Rate 7.5% Term 10 Down Payment 1,022,000 $ Points + Closing Costs 3% 30660 Total Cash Investment 1,052,660 $ Debt Service ($2,233,365) ($223,337) ($223,337) ($223,337) ($223,337) ($223,337) ($223,337) ($223,337) ($223,337) ($223,337) ($223,337) Cash Flow 1,224,435 - (194,522) (194,522) (194,522) (194,522) (151,299) (151,299) (151,299) (72,058) (72,058) (21,632) Cash on Cash Return 0% -18% -18% -18% -18% -14% -14% -14% Cumulative Cash Flow (for Payback Year) - (194,522) (389,043) (583,565) (778,086) (929,385) (1,080,684) (1,231,983) (1,304,041) (1,376,099) (1,397,730) Return on Investment (Cash on Cash) 19% Assumptions: Leasing Costs 3% Operating Costs Revenue) 5% Stabilized Vacancy Factor 5% Total 13% Source: Kalispell Core Area Plan; Willdan, 2013. Page A-8 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 5: Financial Feasibility - Office Buildout Buildout Year Year Office Development (sf) Small format/independent office Absorption Assumptions - % of Total Space Absorbed/ Annual sf Total Net New Office Space/sf 17,500 Retail Development - Net SF (Ongoing) Small format/independent office 85% 14,875 Subtotal Retail (sf) 14,875 Lease Rate/sf Gross Retail Sales (Gross Income) 12 $ 3,060,000 % of Sales Operating Costs -13% Net Lease Income 3,457,800 Annual Debt Service (Mortgage Payment) Total Development Costs Total sf 17,500 Cost/ Sf 146 Total Net New Office Space/sf 2,555,000 $ Debt 60% 1,533,000 $ Equity 40% 1,022,000 $ Interest Rate 7.5% Term 10 Down Payment 1,022,000 $ Points + Closing Costs 3% 30660 Total Cash Investment 1,052,660 $ Debt Service ($2,233,365) Cash Flow 1,224,435 Cash on Cash Return Cumulative Cash Flow (for Payback Year) Return on Investment (Cash on Cash) 19% Assumptions: Leasing Costs 3% Operating Costs Revenue) 5% Stabilized Vacancy Factor 5% Total 13% Source: Kalispell Core Area Plan; Willdan, 2013. Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr 13 14 15 16 17 18 19 20 21 22 23 24 25 - - - - - - - - - - - - - 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 17,500 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 14,875 178,500 178,500 178,500 178,500 178,500 178,500 178,500 178,500 178,500 178,500 178,500 178,500 178,500 (23,205) (23,205) (23,205) (23,205) (23,205) (23,205) (23,205) (23,205) (23,205) (23,205) (23,205) (23,205) (23,205) 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 201,705 19% 19% 19% 19% 19% 19% 19% 19% 19% 19% 19% 19% 19% (1,196,025) (994,320) (792,615) (590,910) (389,205) (187,500) 14,205 215,910 417,615 619,320 821,025 Page A-9 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 6: Financial Feasibility - Multifamily Residential Buildout Yr Yr Yr Yr Yr Yr Yr Yr Buildout Year Year 1 2 3 4 5 6 7 8 Residential Development - Units Apartments - For Lease - - - 25 25 Cumulative Units Available - - - 25 25 25 25 50 Absorption Assumptions - % of Total 0% 0% 0% 25% 50% 75% 100% 63% Apartments Rented 50 - - - 6 13 19 25 31 Net Leasable Area 1,050 - - - 6,563 13,125 19,688 26,250 32,813 Lease Rate/sf/mo Gross Lease Revenue 1.05 12,237,750 - - - 82,688 165,375 248,063 330,750 413,438 % of Gross Lease Revenue Operating Costs -13% (1,590,908) - - - (10,749) (21,499) (32,248) (42,998) (53,747) Net Operating Income (Before Debt Service) - - - 71,938 143,876 215,814 287,753 359,691 Total Development Costs Total sf 52,500 Cost/ Sf 148 Total 7,768,125 $ Debt 60% 4,660,875 $ Equity 40% 3,107,250 $ Interest Rate 7.5% Term 10 Down Payment 3,107,250.00 $ Points + Closing Costs 3% 93,217.50 $ Total Cash Investment 3,200,467.50 $ Debt Service ($6,790,239) ($679,024) ($679,024) ($679,024) ($679,024) ($679,024) ($679,024) Cash Flow 3,856,604 - (679,024) (607,086) (535,148) (463,210) (391,271) (319,333) Cash on Cash Return 0% -21% -19% -17% -14% -12% -10% Cumulative Cash Flow (for Payback Year) - (679,024) (1,286,110) (1,821,257) (2,284,467) (2,675,738) (2,995,072) Return on Investment (Cash on Cash) 18% Housing Assumptions Number of Units 50 Year Selling Commences 1 Absorption (per Year) 75 Average Unit Size 1,050 Net Saleable Area 1,050 Lease Rate/sf $1.50 Housing Occupancy Factor 100% Operating Cost Assumptions Leasing Costs 3% Operating Costs Revenue) 5% Stabilized Vacancy Factor 5% Total 13% Source: Kalispell Core Area Plan; Willdan, 2013. Page A-10 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 6: Financial Feasibility - Multifamily Residential Buildout Buildout Year Year Residential Development - Units Apartments - For Lease Cumulative Units Available Absorption Assumptions - % of Total Apartments Rented 50 Net Leasable Area 1,050 Lease Rate/sf/mo Gross Lease Revenue 1.05 12,237,750 % of Gross Lease Revenue Operating Costs -13% (1,590,908) Net Operating Income (Before Debt Service) Total Development Costs Total sf 52,500 Cost/ Sf 148 Total 7,768,125 $ Debt 60% 4,660,875 $ Equity 40% 3,107,250 $ Interest Rate 7.5% Term 10 Down Payment 3,107,250.00 $ Points + Closing Costs 3% 93,217.50 $ Yr Yr Yr Yr Yr Yr Yr Yr 9 10 11 12 13 14 15 16 50 50 50 50 50 50 50 50 75% 88% 100% 100% 100% 100% 100% 100% 38 44 50 50 50 50 50 50 39,375 45,938 52,500 52,500 52,500 52,500 52,500 52,500 496,125 578,813 661,500 661,500 661,500 661,500 661,500 661,500 (64,496) (75,246) (85,995) (85,995) (85,995) (85,995) (85,995) (85,995) 431,629 503,567 575,505 575,505 575,505 575,505 575,505 575,505 Total Cash Investment 3,200,467.50 $ Debt Service ($6,790,239) Cash Flow 3,856,604 Cash on Cash Return Cumulative Cash Flow (for Payback Year) Return on Investment (Cash on Cash) 18% Housing Assumptions Number of Units 50 Year Selling Commences 1 Absorption (per Year) 75 Average Unit Size 1,050 Net Saleable Area 1,050 Lease Rate/sf $1.50 Housing Occupancy Factor 100% Operating Cost Assumptions Leasing Costs 3% Operating Costs Revenue) 5% Stabilized Vacancy Factor 5% Total 13% Source: Kalispell Core Area Plan; Willdan, 2013. ($679,024) ($679,024) ($679,024) ($679,024) (247,395) (175,457) (103,519) (103,519) 575,505 575,505 575,505 575,505 18% 18% 18% 18% (3,242,467) (3,417,924) (3,521,443) (3,624,961) (3,049,456) (2,473,951) (1,898,446) (1,322,941) Page A-11 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 6: Financial Feasibility - Multifamily Residential Buildout Buildout Year Year Residential Development - Units Apartments - For Lease Cumulative Units Available Absorption Assumptions - % of Total Apartments Rented 50 Net Leasable Area 1,050 Lease Rate/sf/mo Gross Lease Revenue 1.05 12,237,750 % of Gross Lease Revenue Operating Costs -13% (1,590,908) Net Operating Income (Before Debt Service) Total Development Costs Total sf 52,500 Cost/ Sf 148 Total 7,768,125 $ Debt 60% 4,660,875 $ Equity 40% 3,107,250 $ Interest Rate 7.5% Term 10 Down Payment 3,107,250.00 $ Points + Closing Costs 3% 93,217.50 $ Yr Yr Yr Yr Yr Yr Yr Yr Yr 17 18 19 20 21 22 23 24 25 50 50 50 50 50 50 50 50 50 100% 100% 100% 100% 100% 100% 100% 100% 100% 50 50 50 50 50 50 50 50 50 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 52,500 661,500 661,500 661,500 661,500 661,500 661,500 661,500 661,500 661,500 (85,995) (85,995) (85,995) (85,995) (85,995) (85,995) (85,995) (85,995) (85,995) 575,505 575,505 575,505 575,505 575,505 575,505 575,505 575,505 575,505 Total Cash Investment 3,200,467.50 $ Debt Service ($6,790,239) Cash Flow 3,856,604 Cash on Cash Return Cumulative Cash Flow (for Payback Year) Return on Investment (Cash on Cash) 18% Housing Assumptions Number of Units 50 Year Selling Commences 1 Absorption (per Year) 75 Average Unit Size 1,050 Net Saleable Area 1,050 Lease Rate/sf $1.50 Housing Occupancy Factor 100% Operating Cost Assumptions Leasing Costs 3% Operating Costs Revenue) 5% Stabilized Vacancy Factor 5% Total 13% Source: Kalispell Core Area Plan; Willdan, 2013. 575,505 575,505 575,505 575,505 575,505 575,505 575,505 575,505 575,505 18% 18% 18% 18% 18% 18% 18% 18% 18% (747,436) (171,931) 403,574 979,079 1,554,584 2,130,089 2,705,594 3,281,099 3,856,604 Page A-12 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 7: Commercial & Residential Construction Cost Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Buildout Year Total Cost 1 2 3 4 5 6 7 8 9 10 11 12 Retail Development Retail - Apparel and Soft Goods 16,313,000 - - 653,000 - - - - - 13,050,000 - - 2,610,000 Retail - Restaurant (Casual & Full Service) 4,703,000 - - - - - - - - 3,135,000 - - 1,568,000 Subtotal Retail (SF) 21,016,000 - - 653,000 - - - - - 16,185,000 - - 4,178,000 Office Development Office for Lease (per sf) 2,555,000 - - 365,000 - - - 1,460,000 - - 730,000 - - Residential Development Apartments - For Lease 7,768,000 - - - 3,884,000 - - - 3,884,000 - - - - Low-Income Housing Tax Credit Units 4,872,000 - - - - - - 4,872,000 - - - - - Condominium 25,000 - - - - - - - - - 25,000 - - Subtotal 12,665,000 - - - 3,884,000 - - 4,872,000 3,884,000 - 25,000 - - Total Annual Construction Investment 36,236,000 - - 1,018,000 3,884,000 - - 6,332,000 3,884,000 16,185,000 755,000 - 4,178,000 Source: Kalispell Core Area Plan; Willdan, 2013. Page A-13 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 7: Commercial & Residential Construction Cost Buildout Year Total Cost Retail Development Retail - Apparel and Soft Goods 16,313,000 Retail - Restaurant (Casual & Full Service) 4,703,000 Subtotal Retail (SF) 21,016,000 Office Development Office for Lease (per sf) 2,555,000 Residential Development Apartments - For Lease 7,768,000 Low-Income Housing Tax Credit Units 4,872,000 Condominium 25,000 Subtotal 12,665,000 Total Annual Construction Investment 36,236,000 Source: Kalispell Core Area Plan; Willdan, 2013. Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr 13 14 15 16 17 18 19 20 21 22 23 24 25 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page A-14 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 8: Real Property Tax Assumptions Business Property Type/Description Total Size (sf or units) Taxable Value - Land Taxable Value - Building Taxable Value - Land Taxable Value - Building Incremental Assessed Value (Land + Building) Total Incremental Taxes PSF After Renovation Sykes Supermarket/ Restaurant/Apt commercial- multifamily imp 3,466 695 723 1,883 4,963 3,108 0.90 Sykes Supermarket/ Restaurant/Apt mixed use- retail, storage & apts 27,540 2,409 - 2,814 52,521 47,298 1.72 Sykes Supermarket/ Restaurant/Apt restaurant 7,466 2,409 4,523 2,738 8,042 7,418 0.99 Sykes Supermarket/ Restaurant/Apt retail 2,700 2,409 1,652 2,738 2,239 (1,256) (0.47) Appleway Trail Apts apts 71,320 10,665 83,733 73,068 1.02 Brannigan's Pub/Restaurant /1 restaurant/bar 13,000 7,243 5,330 (1,913) A to Z /2 retail 7,540 7,414 8,853 9,747 10,120 1,812 0.24 Depot Place Apts apts 35,607 6,281 15,681 9,400 0.26 Kalispell Center Mall /3 retail/hotel 297,696 103,023 231,119 103,023 231,119 256,192 Assumed Averages for TIF Calculations Incremental Assessed Value psf Retail Development 0.26 $ Office Development 0.24 $ Apartments - For Lease 0.98 $ Low-Income Housing Tax Credit Units 0.90 $ Condominium 1.02 $ 1/ Completed remodel value has not been picked up for 2013 yet. Renovation not complete as of 1/1/13. Full renovation value will be added for 2014 tax year. 2/ value only at 50% complete construction for 2013. This project has also applied for a property tax exemption. 3/ completed remodel value for 2013 still pending review Before Renovation After Renovation After Renovation Page A-15 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 9: Fiscal Benefits at Buildout - Summary of Scenarios Redevelopment Program Development Program (sf) Incremental Taxable Value Real Property Taxes Development Program (sf) Incremental Taxable Value Real Property Taxes Development Program (sf) Incremental Taxable Value Real Property Taxes Retail Development (sf) Retail - Apparel and Soft Goods 0.26 $ - - $ - $ 62,500 16,015 $ 10,998 $ 92,500 23,702 $ 16,276 $ Retail - Restaurant (Casual & Full Service) 0.26 $ - - $ - $ 15,000 3,844 $ 2,639 $ 25,000 6,406 $ 4,399 $ Subtotal - - $ - $ 77,500 19,858 $ 13,637 $ 117,500 30,108 $ 20,675 $ Office Development (sf) 0.24 $ - - $ - $ 17,500 4,206 $ 2,888 $ 17,500 4,206 $ 2,888 $ Residential Development (units) Apartments - For Lease 0.98 $ - - $ - $ 52,500 51,222 $ 35,175 $ 78,750 76,833 $ 52,763 $ Low-Income Housing Tax Credit Units 0.90 $ - - $ - $ 32,000 28,695 $ 19,705 $ 64,000 57,389 $ 39,411 $ Condominium 1.02 $ - - $ - $ - - $ - $ 25,000 25,613 $ 17,589 $ Subtotal - - $ - $ 84,500 79,917 $ 54,881 $ 167,750 159,836 $ 109,762 $ Total Incremental Value/Real Property Taxes - $ - $ 179,500 103,981 $ 71,406 $ 302,750 194,149 $ 133,326 $ Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. Growth Average Incremental Real Property Tax Values/sf Scenario 1: Status Quo Scenario 2: Conservative Page A-16 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 10: Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Buildout Year Total Buildout 1 2 3 4 5 6 7 8 9 10 11 12 Retail Development Retail - Apparel and Soft Goods 62,500 2,500 50,000 10,000 Retail - Restaurant (Casual & Full Service) 15,000 10,000 5,000 Subtotal Retail (sf) 77,500 - - 2,500 - - - - 60,000 - - 15,000 Office Development 17,500 2,500 10,000 5,000 Residential Development - Units Apartments - For Lease 50 25 25 Low-Income Housing Tax Credit Units 40 40 Condominium - Total Units 90 - - - 25 - - 40 25 - - - - Residential Development - sf sf/Unit Apartments - For Lease 1,050 52,500 - - - 26,250 - - - 26,250 - - - - Low-Income Housing Tax Credit Units 800 32,000 - - - - - - 32,000 - - - - - Condominium 1,250 - - - - - - - - - - - - - Total Units 84,500 - - - 26,250 - - 32,000 26,250 - - - - Incremental Real Property Tax Revenues Tax Value PSF / 1 Retail Development Retail - Apparel and Soft Goods 0.26 $ - $ - $ 440 $ - $ - $ - $ - $ - $ 8,798 $ - $ - $ 1,760 $ Retail - Restaurant (Casual & Full Service) 0.26 $ - $ - $ - $ - $ - $ - $ - $ - $ 1,760 $ - $ - $ 880 $ Subtotal - $ - $ 440 $ - $ - $ - $ - $ - $ 10,558 $ - $ - $ 2,639 $ Office Development 0.24 $ - $ - $ 413 $ - $ - $ - $ 1,650 $ - $ - $ 825 $ - $ - $ Residential Development Apartments - For Lease 0.98 $ - $ - $ - $ 17,588 $ - $ - $ - $ 17,588 $ - $ - $ - $ - $ Low-Income Housing Tax Credit Units 0.90 $ - $ - $ - $ - $ - $ - $ 19,705 $ - $ - $ - $ - $ - $ Condominium 1.02 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Subtotal - $ - $ - $ 17,588 $ - $ - $ 19,705 $ 17,588 $ - $ - $ - $ - $ Annual Real Property Tax Revenues - $ - $ 852 $ 17,588 $ - $ - $ 21,356 $ 17,588 $ 10,558 $ 825 $ - $ 2,639 $ Cumulative Tax Revenues 1,358,504 - $ - $ 852 $ 18,440 $ 18,440 $ 18,440 $ 39,796 $ 57,383 $ 67,941 $ 68,766 $ 68,766 $ 71,406 $ 1/ 2013 Flathead County Millage Rate = 68.67% Source: Kalispell Core Area Plan; Willdan, 2013. Redevelopment Phasing & Tax Generation Assumptions - Scenario 2: Conservative Page A-17 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 10: Buildout Year Retail Development Retail - Apparel and Soft Goods Retail - Restaurant (Casual & Full Service) Subtotal Retail (sf) Office Development Residential Development - Units Apartments - For Lease Low-Income Housing Tax Credit Units Condominium Total Units Residential Development - sf sf/Unit Apartments - For Lease 1,050 Low-Income Housing Tax Credit Units 800 Condominium 1,250 Total Units Incremental Real Property Tax Revenues Tax Value PSF / 1 Retail Development Retail - Apparel and Soft Goods 0.26 $ Retail - Restaurant (Casual & Full Service) 0.26 $ Subtotal Office Development 0.24 $ Residential Development Apartments - For Lease 0.98 $ Low-Income Housing Tax Credit Units 0.90 $ Condominium 1.02 $ Subtotal Annual Real Property Tax Revenues Cumulative Tax Revenues 1/ 2013 Flathead County Millage Rate = 68.67% Source: Kalispell Core Area Plan; Willdan, 2013. Redevelopment Phasing & Tax Generation Assumptions - Scenario 2: Conservative Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr 13 14 15 16 17 18 19 20 21 22 23 24 25 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ Page A-18 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 11: Redevelopment Phasing & Tax Generation Assumptions - Scenario 3: Optimistic Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Buildout Year Total Buildout 1 2 3 4 5 6 7 8 9 10 11 12 Retail Development (sf) Retail - Apparel and Soft Goods 92,500 2,500 30,000 50,000 10,000 Retail - Restaurant (Casual & Full Service) 25,000 10,000 10,000 5,000 Subtotal Retail (sf) 117,500 - - 2,500 - 40,000 - - - 60,000 - - 15,000 Office Development (sf) 17,500 2,500 10,000 5,000 Residential Development (Units) Apartments - For Lease 75 25 25 25 Low-Income Housing Tax Credit Units 80 40 40 Condominium 20 20 Total Units 175 - - - 25 - - 40 - 25 20 - 65 Residential Development (sf) sf/Unit Apartments - For Lease 1,050 78,750 - - - 26,250 - - - - 26,250 - - 26,250 Low-Income Housing Tax Credit Units 800 64,000 - - - - - - 32,000 - - - - 32,000 Condominium 1,250 25,000 - - - - - - - - - 25,000 - - Total Units 167,750 - - - 26,250 - - 32,000 - 26,250 25,000 - 58,250 Incremental Real Property Tax Revenues Tax Value PSF / 1 Incremental Real Property Tax Revenues / 1 Retail - Apparel and Soft Goods Retail - Restaurant (Casual & Full Service) 0.26 $ - $ - $ 440 $ - $ 5,279 $ - $ - $ - $ 8,798 $ - $ - $ 1,760 $ Subtotal Retail (sf) 0.26 $ - $ - $ - $ - $ 1,760 $ - $ - $ - $ 1,760 $ - $ - $ 880 $ Subtotal - $ - $ 440 $ - $ 7,038 $ - $ - $ - $ 10,558 $ - $ - $ 2,639 $ Office Development 0.24 $ - $ - $ 413 $ - $ - $ - $ 1,650 $ - $ - $ 825 $ - $ - $ Residential Development Low-Income Housing Tax Credit Units 0.98 $ - $ - $ - $ 17,588 $ - $ - $ - $ - $ 17,588 $ - $ - $ 17,588 $ Condominium 0.90 $ - $ - $ - $ - $ - $ - $ 19,705 $ - $ - $ - $ - $ 19,705 $ Total Units 1.02 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 17,589 $ - $ - $ Subtotal - $ - $ - $ 17,588 $ - $ - $ 19,705 $ - $ 17,588 $ 17,589 $ - $ 37,293 $ Annual Real Property Tax Revenues - $ - $ 852 $ 17,588 $ 7,038 $ - $ 21,356 $ - $ 28,145 $ 18,414 $ - $ 39,932 $ Cumulative Tax Revenues 2,292,245 - $ - $ 852 $ 18,440 $ 25,479 $ 25,479 $ 46,834 $ 46,834 $ 74,979 $ 93,393 $ 93,393 $ 133,326 $ 1/ 2013 Flathead County Millage Rate = 68.67% Source: Kalispell Core Area Plan; Willdan, 2013. Page A-19 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 11: Redevelopment Phasing & Tax Generation Assumptions - Scenar Buildout Year Retail Development (sf) Retail - Apparel and Soft Goods Retail - Restaurant (Casual & Full Service) Subtotal Retail (sf) Office Development (sf) Residential Development (Units) Apartments - For Lease Low-Income Housing Tax Credit Units Condominium Total Units Residential Development (sf) sf/Unit Apartments - For Lease 1,050 Low-Income Housing Tax Credit Units 800 Condominium 1,250 Total Units Incremental Real Property Tax Revenues Tax Value PSF / 1 Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr Yr 13 14 15 16 17 18 19 20 21 22 23 24 25 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Incremental Real Property Tax Revenues / 1 Retail - Apparel and Soft Goods Retail - Restaurant (Casual & Full Service) 0.26 $ Subtotal Retail (sf) 0.26 $ Subtotal Office Development 0.24 $ Residential Development Low-Income Housing Tax Credit Units 0.98 $ Condominium 0.90 $ Total Units 1.02 $ Subtotal Annual Real Property Tax Revenues Cumulative Tax Revenues 1/ 2013 Flathead County Millage Rate = 68.67% Source: Kalispell Core Area Plan; Willdan, 2013. - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ Page A-20 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 12: Linear Park Implementation Strategy: Sources & Uses of Funding Private/ Non-Profit Other Grant Funding City of Kalispell Private/ Non-Profit Other Grant Funding City of Kalispell Phasing Unit Type Units Total Cost of Total) of Total) of Total) (Total (Total (Total (Plan Year) Summary of Sources and Uses of Funding $4,452,354 6% 6% 88% $281,600 $247,500 $3,923,254 1 Linear Park Land/Easement Acquisition BN/Property owners donates/transfers deed to City of Kalispell via rail banking mechanism Legal Fees 5,000 $ 1 5,000 $ 0% 0% 100% $0 $0 $5,000 1-3 2 Linear Park Environmental Remediation Phase I 5,000 $ 1 5,000 $ 0% 100% 0% $0 $5,000 $0 environmental assessment Phase II 50,000 $ 1 50,000 $ 0% 100% 0% $0 $50,000 $0 1-3 55,000 $ - $ 55,000 $ - $ 3 BNSF Track Removal BNSF removes & recycles rails & ties tbd 17,200 - $ 100% 0% 0% $0 $0 $0 1-3 4 Park Master Plan Services 20,000 $ 1 20,000 $ 0% 0% 100% $0 $0 $20,000 1-3 Potential Funding Sources Core Area Linear Park Improvement Unit Cost $/linear ft rails /1 Page A-21 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 12: Linear Park Implementation Strategy: Sources & Uses of Funding Private/ Non-Profit Other Grant Funding City of Kalispell Private/ Non-Profit Other Grant Funding City of Kalispell Phasing Unit Type Units Total Cost of Total) of Total) of Total) (Total (Total (Total (Plan Year) Summary of Sources and Uses of Funding $4,452,354 6% 6% 88% $281,600 $247,500 $3,923,254 Potential Funding Sources Core Area Linear Park Improvement Unit Cost 5 Installation of Shared Use Trail Shared use trail construction (concrete) $/linear ft 45.00 $ 17,200 774,000 $ 0% 0% 100% $0 $0 $774,000 Lighting - Poles $/Pole 4,400 $ 45 198,000 $ 0% 0% 100% $0 $0 $198,000 Lighting - Bollards $/Bollard 2,200 $ 45 99,000 $ 0% 0% 100% $0 $0 $99,000 Electrical wiring $/linear ft 1.74 $ 17,200 30,000 $ 0% 0% 100% $0 $0 $30,000 4-6 Irrigation $/sq ft 0.30 $ 619,200 185,760 $ 0% 0% 100% $0 $0 $185,760 Sod & seed $/sq ft 0.19 $ 619,200 114,552 $ 0% 0% 100% $0 $0 $114,552 Trees & perennials $/linear ft 1.31 $ 17,200 $ 22,500 $ 0% 0% 100% $0 $0 $22,500 150 ft 1,423,812 $ - $ - $ 1,423,812 $ 6 Regional Trailhead Connection Points: Trail improvements to include: Trail features to include: grading/paving/mulching, site amenities (seating), branded signage & wayfinding funded by public and private (naming rights/sponsorships) North & East Connection: Connect Woodland Park & Lawrence Park via BN Highway 2 overpass (“Kalispell Gateway Bridge”) 4-6 West Connection: Connect the Meridian Trail to the Kila Trail via a new trail head at West 5th Avenue WN South Connection: Connect the KLP to Somers/Flathead Lake $/trailhead 15,000 $ 4 60,000 $ 50% 0% 50% $30,000 $0 $30,000 7 Kalispell Gateway Bridge $/bridge improvements: $/ft 100 $ 600 60,000 $ 0% 100% 0% $0 $60,000 $0 fencing $/linear ft 125 $ 300 37,500 $ 0% 100% 0% $0 $37,500 $0 4-6 travel surface $/sign 15,000 $ 1 15,000 $ 0% 100% 0% $0 $15,000 $0 signage 112,500 $ $0 $112,500 $0 8 KLP Trail Feature - Depot Park installation of caboose climbing equipment (donated by BNSF) $/locomotive 150 000 $ 1 150 000 $ 100% 0% 0% 150 000 $ $0 - $ installation of caboose climbing equipment (donated by BNSF) $/locomotive 150,000 $ 1 150,000 $ 100% 0% 0% 150,000 $ $0 - $ $/site 50,000 $ 1 50,000 $ 50% 0% 50% 25,000 $ $0 25,000 $ 4-6 200,000 $ 175,000 $ - $ 25,000 $ 9 KLP Trail Feature - Appleway Trail Senior Outdoor Fitness Park installation of comfort station amenities: legal fees 2,500 $ 1 2,500 $ 0% 0% 100% - $ $0 2,500 $ site acquisition (land donated to non-profit) $/site 33,600 $ 1 33,600 $ 100% 0% 0% 33,600 $ $0 - $ outdoor fitness equipment /4 $/facility 9,000 $ 2 18,000 $ 100% 0% 0% 18,000 $ $0 - $ 4-6 restrooms (chemical toilets) $/trailhead 5,000 $ 2 10,000 $ 100% 0% 0% 10,000 $ $0 - $ wayfinding signage/trailhead 64,100 $ 61,600 $ - $ 2,500 $ 10 KLP Trail Feature - Flathead Electric Co-Op Park Phase I & II Environmental 5,000 $ 1 5,000 $ 0% 100% 0% - $ 5,000 $ - $ Phase III & IV Environmental 50,000 $ 1 50,000 $ 0% 100% 0% - $ 50,000 $ - $ land acquisition (donation or exchange TBD) $/acre - $ 2 - $ 100% 0% 0% - $ - $ - $ 4-6 restrooms $/facility 15,000 $ 1 15,000 $ 100% 0% 0% 15,000 $ - $ - $ parking (potentially to be shared with FEC) /5 $/parking lot 10,000 $ 1 10,000 $ 0% 0% 100% - $ - $ 10,000 $ trailhead 4,000 $ 1 4,000 $ 0% 0% 100% - $ - $ 4,000 $ 84,000 $ 15,000 $ 55,000 $ 14,000 $ park site prep, caboose relocation, security, amenities (seating), & interpretative signage costs Page A-22 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 12: Linear Park Implementation Strategy: Sources & Uses of Funding Private/ Non-Profit Other Grant Funding City of Kalispell Private/ Non-Profit Other Grant Funding City of Kalispell Phasing Unit Type Units Total Cost of Total) of Total) of Total) (Total (Total (Total (Plan Year) Summary of Sources and Uses of Funding $4,452,354 6% 6% 88% $281,600 $247,500 $3,923,254 Potential Funding Sources Core Area Linear Park Improvement Unit Cost 11 Pedestrian Crossing Upgrades (Railroad Conversions) : pedestrian safety features (crossing lights) at: 5th Avenue EN $/crossing 598,850 $ 1 598,850 $ 0% 0% 100% - $ - $ 598,850 $ 7th Avenue WN $/crossing 705,091 $ 1 705,091 $ 0% 0% 100% - $ - $ 705,091 $ 7-10 1 1,303,941 $ - $ - $ 1,303,941 $ 12 Street Extensions (Railroad Conversions) : 6th Avenue WN $/crossing 629,460 1 629,460 $ 0% 0% 100% - $ - $ 629,460 $ 8th Avenue WN $/crossing 444,541 $ 1 444,541 $ 0% 0% 100% - $ - $ 444,541 $ 7-10 1,074,001 $ - $ - $ 1,074,001 $ 13 KLP Trail Feature - Kalispell Center Mall Clock Tower Plaza streetscape upgrades and pedestrian plaza tbd tbd tbd 100% 0% 0% - $ $0 - $ developer constructed clock tower construction tbd tbd tbd 100% 0% 0% - $ $0 - $ 7-10 - $ - $ - $ - $ 14 Woodland Park Amphitheater 300-400 seats; Location to be determined $/site $50,000 1 50,000 $ 0% 50% 50% - $ 25,000 $ 25,000 $ 7-10 15 Health, Wellness, Sustainability Programming Recycling Receptacles - private contractor $/Activity Center tbd - $ 100% 0% 0% - $ - $ - $ Public Outreach Boards - donated by medical community $/Activity Center tbd - $ 100% 0% 0% - $ - $ - $ 7-10 Portable Vending Pads $/Activity Center tbd - $ 100% 0% 0% - $ - $ - $ - $ - $ - $ 1/ Cost to BNSF net of iron disposition value is to be determined 1/ Cost to BNSF net of iron disposition value is to be determined. 2/ assumes City will enter into long-term lease with All Families LLC for center operations 3/ Linear Park area assumes: length 17,200 width 60 total area (sq. ft.) 1,032,000 sq. ft/acre 45,560 acres 23 Tier 1 Park Maintenance cost/acre 1,200.00 Annual Maintenance Cost: 27,182 4/ Parking costs potentially funded by grant from Roundup for Safety. 5/ Appleway Senior Fitness Center assumes cost estimates provided by LifeTrail Advanced Wellness System. Source: City of Kalispell; BNSF Railway/WATCO Mission Mountain Railroad; Flathead Valley Economic Development Authority; Willdan, 2013. Page A-23 of 33 ---PAGE BREAK--- Table 13: Kalispell Core Area Plan Financial Feasibility Analysis Summary of Linear Park Development Costs and Phasing Recommendations Private/ Non-Profit Other Grant Funding City of Kalispell Total Cost 1 Linear Park Land/Easement Acquisition - $ - $ 5,000 $ 5,000 $ 2 Linear Park Environmental Remediation - $ 55,000 $ - $ 55,000 $ 3 BNSF Track Removal - $ - $ - $ - $ 4 Park Master Plan - $ - $ 20,000 $ 20,000 $ 5 Installation of Shared Use Trail - $ - $ 1,423,812 $ 1,423,812 $ Subtotal - $ 55,000 $ 1,448,812 $ 1,503,812 $ 6 Regional Trailhead Connection Points: 30,000 $ - $ 30,000 $ 60,000 $ 7 Kalispell Gateway Bridge - $ 112,500 $ - $ 112,500 $ 8 KLP Trail Feature - Depot Park 175,000 $ - $ 25,000 $ 200,000 $ 9 KLP Trail Feature - Appleway Trail Senior Outdoor Fitness Park 61,600 $ - $ 2,500 $ 64,100 $ 10 KLP Trail Feature - Flathead Electric Co-Op Park 15,000 $ 55,000 $ 14,000 $ 84,000 $ 11 Pedestrian Crossing Upgrades (Railroad Conversions) : - $ - $ 1,303,941 $ 1,303,941 $ Subtotal 281,600 $ 167,500 $ 1,375,441 $ 1,824,541 $ 12 Street Extensions (Railroad Conversions) : - $ - $ 1,074,001 $ 1,074,001 $ 13 KLP Trail Feature - Kalispell Center Mall Clock Tower Plaza - $ - $ - $ - $ 14 Woodland Park Amphitheater - $ 25,000 $ 25,000 $ 50,000 $ 15 Health, Wellness, Sustainability Programming - $ - $ - $ - $ Subtotal - $ 25,000 $ 1,099,001 $ 1,124,001 $ Total Linear Park Costs - City of Kalispell 281,600 $ 247,500 $ 3,923,254 $ 4,452,354 $ 6% 6% 88% 100% Source: City of Kalispell; Willdan, 2013. Near Term: Years 1-3 Mid-Term: Years 4-6 Long-Term: Years 7-10 Page A-24 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 14: West Side TIF District Projections: Scenario 1 - Status Quo Implementation Year 0 1 2 3 4 5 6 7 8 TIF YEAR 2 3 4 5 6 7 8 9 10 Base Year Value 2013 2014 2015 2016 2017 2018 2019 2020 2021 Growth Rate 0% 0% 0% 0% 0% 0% 0% 0% Taxable Property Value 11,551,896 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 Total 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 Increase 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 Increment 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 Expiring Developer Payment (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) Remaining TIF Revenue 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 Cumulative Value 407,838 815,676 1,223,514 1,631,352 2,039,190 2,447,028 2,854,866 3,262,704 3,670,542 Current TIF Value 2,562,811 Cumulative Value (including current TIF) 3,020,649 3,478,487 3,936,325 4,394,163 4,852,001 5,309,839 5,767,677 6,225,515 6,683,353 Core Area Plan Costs Rail Served Industrial Park (2,676,454) (2,676,454) Core Area Linear Park (3,923,254) (1,448,812) (30,000) (41,500) (1,303,941) (1,074,001) (25,000) Subtotal (6,599,708) - (2,676,454) (1,448,812) (30,000) (41,500) (1,303,941) (1,074,001) (25,000) - Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 2,562,811 2,970,649 702,033 (338,941) 38,897 405,235 (490,868) (1,157,031) (774,193) Incremental TIF Revenues (Baseline) 9,788,112 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 Incremental Taxes: New Dev/Redevelopment - Rail Served Industrial Park Costs (2,676,454) - (2,676,454) - - - - - - - Core Area Linear Park Costs (3,923,254) - - (1,448,812) (30,000) (41,500) (1,303,941) (1,074,001) (25,000) - TIF Funds Remaining 5,751,215 2,970,649 $ 702,033 $ (338,941) $ 38,897 $ 405,235 $ (490,868) $ (1,157,031) $ (774,193) $ (366,355) $ Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. Page A-25 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 14: West Side TIF District Projections: Scenario 1 - Status Quo Implementation Year TIF YEAR Base Year Value Growth Rate Taxable Property Value 11,551,896 Total Increase Increment Expiring Developer Payment Remaining TIF Revenue Cumulative Value Current TIF Value 2,562,811 Cumulative Value (including current TIF) Core Area Plan Costs Rail Served Industrial Park (2,676,454) Core Area Linear Park (3,923,254) Subtotal (6,599,708) Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 Incremental TIF Revenues (Baseline) 9,788,112 Incremental Taxes: New Dev/Redevelopment - Rail Served Industrial Park Costs (2,676,454) Core Area Linear Park Costs (3,923,254) TIF Funds Remaining 5,751,215 Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. 9 10 11 12 13 14 15 16 11 12 13 14 15 16 17 18 2022 2023 2024 2025 2026 2027 2028 2029 0% 0% 0% 0% 0% 0% 0% 0% 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 4,078,380 4,486,218 4,894,056 5,301,894 5,709,732 6,117,570 6,525,408 6,933,246 7,141,191 7,599,029 8,056,867 8,514,705 8,972,543 9,430,381 9,888,219 10,346,057 - - - - - - - - (366,355) 41,483 449,321 857,159 1,264,997 1,672,835 2,080,673 2,488,511 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 - - - - - - - - - - - - - - - - 41,483 $ 449,321 $ 857,159 $ 1,264,997 $ 1,672,835 $ 2,080,673 $ 2,488,511 $ 2,896,349 $ Page A-26 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 14: West Side TIF District Projections: Scenario 1 - Status Quo Implementation Year TIF YEAR Base Year Value Growth Rate Taxable Property Value 11,551,896 Total Increase Increment Expiring Developer Payment Remaining TIF Revenue Cumulative Value Current TIF Value 2,562,811 Cumulative Value (including current TIF) Core Area Plan Costs Rail Served Industrial Park (2,676,454) Core Area Linear Park (3,923,254) Subtotal (6,599,708) Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 Incremental TIF Revenues (Baseline) 9,788,112 Incremental Taxes: New Dev/Redevelopment - Rail Served Industrial Park Costs (2,676,454) Core Area Linear Park Costs (3,923,254) TIF Funds Remaining 5,751,215 Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. 17 18 19 20 21 22 23 19 20 21 22 23 24 25 2030 2031 2032 2033 2034 2035 2036 0% 0% 0% 0% 0% 0% 0% 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 666,703 666,703 666,703 666,703 666,703 666,703 666,703 457,838 457,838 457,838 457,838 457,838 457,838 457,838 (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) 407,838 407,838 407,838 407,838 407,838 407,838 407,838 7,341,084 7,748,922 8,156,760 8,564,598 8,972,436 9,380,274 9,788,112 10,803,895 11,261,733 11,719,571 12,177,409 12,635,247 13,093,085 13,550,923 - - - - - - - 2,896,349 3,304,187 3,712,025 4,119,863 4,527,701 4,935,539 5,343,377 407,838 407,838 407,838 407,838 407,838 407,838 407,838 - - - - - - - - - - - - - - 3,304,187 $ 3,712,025 $ 4,119,863 $ 4,527,701 $ 4,935,539 $ 5,343,377 $ 5,751,215 $ Page A-27 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 15: West Side TIF District Projections: Scenario 2 - Conservative Plan Yr. 1 2 3 4 5 6 7 TIF YEAR 2 3 4 5 6 7 8 9 Base Year Value 2013 2014 2015 2016 2017 2018 2019 2020 Growth Rate 0% 0% 0% 0% 0% 0% 0% Taxable Property Value 11,551,896 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 Total 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 Increase 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 Increment 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 Expiring Developer Payment (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) Remaining TIF Revenue 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 Cumulative Value 407,838 815,676 1,223,514 1,631,352 2,039,190 2,447,028 2,854,866 3,262,704 Current TIF Value 2,562,811 Cumulative Value (including current TIF) 2,970,649 3,378,487 3,786,325 4,194,163 4,602,001 5,009,839 5,417,677 5,825,515 Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 $ 2,562,811 $ 2,970,649 $ 702,033 $ (338,089) $ 58,189 $ 442,968 $ (434,695) $ (1,061,063) $ Incremental TIF Revenues (Baseline) 9,788,112 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ Incremental Taxes: New Dev/Redevelopment 1,287,098 - $ - $ 852 $ 18,440 $ 18,440 $ 18,440 $ 39,796 $ 57,383 $ Rail Served Industrial Park Costs (2,676,454) - $ (2,676,454) - $ - $ - $ - $ - $ - $ Core Area Linear Park Costs (3,923,254) - $ - $ (1,448,812) $ (30,000) $ (41,500) $ (1,303,941) $ (1,074,001) $ (25,000) $ TIF Funds Remaining 7,038,313 2,970,649 $ 702,033 $ (338,089) $ 58,189 $ 442,968 $ (434,695) $ (1,061,063) $ (620,841) $ Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. Page A-28 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 15: West Side TIF District Projections: Scenario 2 - Conservative Plan Yr. TIF YEAR Base Year Value Growth Rate Taxable Property Value 11,551,896 Total Increase Increment Expiring Developer Payment Remaining TIF Revenue Cumulative Value Current TIF Value 2,562,811 Cumulative Value (including current TIF) Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 $ Incremental TIF Revenues (Baseline) 9,788,112 Incremental Taxes: New Dev/Redevelopment 1,287,098 Rail Served Industrial Park Costs (2,676,454) Core Area Linear Park Costs (3,923,254) TIF Funds Remaining 7,038,313 Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. 8 9 10 11 12 13 14 15 16 17 10 11 12 13 14 15 16 17 18 19 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 3,670,542 4,078,380 4,486,218 4,894,056 5,301,894 5,709,732 6,117,570 6,525,408 6,933,246 7,341,084 6,233,353 6,641,191 7,049,029 7,456,867 7,864,705 8,272,543 8,680,381 9,088,219 9,496,057 9,903,895 (620,841) $ (145,062) $ 331,542 $ 808,146 $ 1,287,390 $ 1,766,633 $ 2,245,877 $ 2,725,121 $ 3,204,364 $ 3,683,608 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 67,941 $ 68,766 $ 68,766 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (145,062) $ 331,542 $ 808,146 $ 1,287,390 $ 1,766,633 $ 2,245,877 $ 2,725,121 $ 3,204,364 $ 3,683,608 $ 4,162,851 $ Page A-29 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 15: West Side TIF District Projections: Scenario 2 - Conservative Plan Yr. TIF YEAR Base Year Value Growth Rate Taxable Property Value 11,551,896 Total Increase Increment Expiring Developer Payment Remaining TIF Revenue Cumulative Value Current TIF Value 2,562,811 Cumulative Value (including current TIF) Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 $ Incremental TIF Revenues (Baseline) 9,788,112 Incremental Taxes: New Dev/Redevelopment 1,287,098 Rail Served Industrial Park Costs (2,676,454) Core Area Linear Park Costs (3,923,254) TIF Funds Remaining 7,038,313 Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. 18 19 20 21 22 23 20 21 22 23 24 25 2031 2032 2033 2034 2035 2036 0% 0% 0% 0% 0% 0% 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 666,703 666,703 666,703 666,703 666,703 666,703 457,838 457,838 457,838 457,838 457,838 457,838 (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) 407,838 407,838 407,838 407,838 407,838 407,838 7,748,922 8,156,760 8,564,598 8,972,436 9,380,274 9,788,112 10,311,733 10,719,571 11,127,409 11,535,247 11,943,085 12,350,923 4,162,851 $ 4,642,095 $ 5,121,339 $ 5,600,582 $ 6,079,826 $ 6,559,070 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ 71,406 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 4,642,095 $ 5,121,339 $ 5,600,582 $ 6,079,826 $ 6,559,070 $ 7,038,313 $ Page A-30 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 16: West Side TIF District Projections: Scenario 3 - Optimistic Plan Yr. 1 2 3 4 5 6 7 8 TIF YEAR 2 3 4 5 6 7 8 9 Base Year Value 2013 2014 2015 2016 2017 2018 2019 2020 Growth Rate 0% 0% 0% 0% 0% 0% 0% Taxable Property Value 11,551,896 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 Total 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 Increase 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 Increment 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 Expiring Developer Payment (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) Remaining TIF Revenue 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 Cumulative Value 407,838 815,676 1,223,514 1,631,352 2,039,190 2,447,028 2,854,866 3,262,704 Current TIF Value 2,562,811 Cumulative Value (including current TIF) 2,970,649 3,378,487 3,786,325 4,194,163 4,602,001 5,009,839 5,417,677 5,825,515 Core Area Plan Costs Rail Served Industrial Park (2,676,454) (2,676,454) Core Area Linear Park (3,923,254) (1,448,812) (30,000) (41,500) (1,303,941) (1,074,001) (25,000) Subtotal (6,599,708) - (2,676,454) (1,448,812) (30,000) (41,500) (1,303,941) (1,074,001) (25,000) Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 $ 2,562,811 $ 2,970,649 $ 702,033 $ (338,089) $ 58,189 $ 450,006 $ (420,618) $ (1,039,947) $ Incremental TIF Revenues (Baseline) 9,788,112 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ Incremental Taxes: New Dev/Redevelopment 2,158,919 $ - $ - $ 852 $ 18,440 $ 25,479 $ 25,479 $ 46,834 $ 46,834 $ Rail Served Industrial Park Costs (2,676,454) $ - $ (2,676,454) - $ - $ - $ - $ - $ - $ Core Area Linear Park Costs (3,923,254) $ - $ - $ (1,448,812) $ (30,000) $ (41,500) $ (1,303,941) $ (1,074,001) $ (25,000) $ TIF Funds Remaining 7,910,134 2,970,649 $ 702,033 $ (338,089) $ 58,189 $ 450,006 $ (420,618) $ (1,039,947) $ (610,275) $ Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. Page A-31 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 16: West Side TIF District Projections: Scenario 3 - Optimistic Plan Yr. TIF YEAR Base Year Value Growth Rate Taxable Property Value 11,551,896 Total Increase Increment Expiring Developer Payment Remaining TIF Revenue Cumulative Value Current TIF Value 2,562,811 Cumulative Value (including current TIF) Core Area Plan Costs Rail Served Industrial Park (2,676,454) Core Area Linear Park (3,923,254) Subtotal (6,599,708) Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 $ Incremental TIF Revenues (Baseline) 9,788,112 $ Incremental Taxes: New Dev/Redevelopment 2,158,919 $ Rail Served Industrial Park Costs (2,676,454) $ Core Area Linear Park Costs (3,923,254) $ TIF Funds Remaining 7,910,134 Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. 9 10 11 12 13 14 15 16 10 11 12 13 14 15 16 17 2021 2022 2023 2024 2025 2026 2027 2028 0% 0% 0% 0% 0% 0% 0% 0% 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 3,670,542 4,078,380 4,486,218 4,894,056 5,301,894 5,709,732 6,117,570 6,525,408 6,233,353 6,641,191 7,049,029 7,456,867 7,864,705 8,272,543 8,680,381 9,088,219 - - - - - - - - (610,275) $ (127,458) $ 373,774 $ 875,005 $ 1,416,169 $ 1,957,333 $ 2,498,497 $ 3,039,660 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 74,979 $ 93,393 $ 93,393 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ (127,458) $ 373,774 $ 875,005 $ 1,416,169 $ 1,957,333 $ 2,498,497 $ 3,039,660 $ 3,580,824 $ Page A-32 of 33 ---PAGE BREAK--- Kalispell Core Area Plan Financial Feasibility Analysis Table 16: West Side TIF District Projections: Scenario 3 - Optimistic Plan Yr. TIF YEAR Base Year Value Growth Rate Taxable Property Value 11,551,896 Total Increase Increment Expiring Developer Payment Remaining TIF Revenue Cumulative Value Current TIF Value 2,562,811 Cumulative Value (including current TIF) Core Area Plan Costs Rail Served Industrial Park (2,676,454) Core Area Linear Park (3,923,254) Subtotal (6,599,708) Core Area Plan Financial Feasibility Analysis Cumulative TIF Fund (Balance Forward) 2,562,811 $ Incremental TIF Revenues (Baseline) 9,788,112 $ Incremental Taxes: New Dev/Redevelopment 2,158,919 $ Rail Served Industrial Park Costs (2,676,454) $ Core Area Linear Park Costs (3,923,254) $ TIF Funds Remaining 7,910,134 Assumptions: 2013 Flathead County Millage Rate = 0.68672 Source: Kalispell Core Area Plan; Willdan, 2013. 17 18 19 20 21 22 23 24 18 19 20 21 22 23 24 25 2029 2030 2031 2032 2033 2034 2035 2036 0% 0% 0% 0% 0% 0% 0% 0% 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 12,218,599 666,703 666,703 666,703 666,703 666,703 666,703 666,703 666,703 457,838 457,838 457,838 457,838 457,838 457,838 457,838 457,838 (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) (50,000) 407,838 407,838 407,838 407,838 407,838 407,838 407,838 407,838 6,933,246 7,341,084 7,748,922 8,156,760 8,564,598 8,972,436 9,380,274 9,788,112 9,496,057 9,903,895 10,311,733 10,719,571 11,127,409 11,535,247 11,943,085 12,350,923 - - - - - - - - 3,580,824 $ 4,121,988 $ 4,663,152 $ 5,204,315 $ 5,745,479 $ 6,286,643 $ 6,827,807 $ 7,368,970 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 407,838 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ 133,326 $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ 4,121,988 $ 4,663,152 $ 5,204,315 $ 5,745,479 $ 6,286,643 $ 6,827,807 $ 7,368,970 $ 7,910,134 $ Page A-33 of 33 ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 60 Annex B: Public Park/Recreation Development Opportunities – Case Studies The Core Area is centrally located to substantial open space, parks, designated wild life areas and recreational areas. Woodland Park is a valuable community amenity, providing the community with active and passive recreation offerings. If the rail tracks were to be removed, the Core Area is poised to be Kalispell’s central connective spine, providing safe pedestrian and bike trail access to regional trailheads to the North, South, East and West. To evaluate a range of potential programming uses for the proposed Kalispell Linear Park, the Willdan project team conducted case study research to find examples of low‐capital intensity, revenue producing public amenities that could be developed within strategic “bump out” nodes within the park plan area. Willdan conducted research to identify relevant examples to develop a profile of the capital investment costs, operating costs and revenues, annual attendance requirements for such a public amenity. Willdan researched a range of conceptual uses to develop case study examples of facilities which might be determined appropriate as redevelopment concepts including:  Nature Education Centers  Events Venue/ Outdoor Pavilion Facilities  Greenbelt Trail Services and Amenities Based on Willdan’s review of the potential land uses and the City of Kalispell’s objectives to create a low‐capital and low operating cost approach to furthering the revitalization objectives of the Core Area Plan, the following case study profiles were researched to provide high‐ level “Lessons Learned” for the City’s consideration of future improvements to integrate the Linear Park land to adjacent commercial/mixed uses:  Portland Trails, Maine  Potomac Overlook Regional Park Nature Center, Arlington, Virginia  Carolina Thread Trail & Cawtaba Lands Conservancy, North and South Carolina Portland Trails, Maine Willdan evaluated several greenbelt park/trail systems in the United States to evaluate the typical services, amenities, and operating structures. The Portland, Maine Trail maintains a 50‐mile network of trails in Greater Portland. Portland Trails offers "Lunch & Learns" to businesses and organizations in greater Portland in which staff travel to area businesses or they lead a Guided Trail Walk to educate employees about Portland Trails, the trail network, current projects. Portland Trails is also involved in school ground greening projects for students. Portland Trails collaborates with the Portland Public Health Department on a worksite fitness program for employees of area businesses. ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 61 Last year over 1,000 people from 15 companies participated in the program. The purpose of the program is to encourage the use of the trails and awareness of the urban open spaces available for recreation and alternative transportation. The campaign markets Portland’s opportunities for exercise in a scenic environment. Portland Trails also offers a range of events open to the public including guided trail walks with historical background, information on flora and fauna, and the trail‐building process among other topics. Potomac Overlook Regional Park Nature Education Center, Arlington, Virginia The Potomac Overlook Regional Park (PORP) Nature Center, managed by the Northern Virginia Regional Park Authority, was established to provide residents and visitors with direct access to local historic and natural resources. The PORP site features unique interpretive exhibits housed within the nature center and woodland trails that lead through natural areas. Potomac Overlook Regional Park offers three miles of wooded trails and staff‐led experiential learning programming just five miles from the center of Washington, D.C. The buildings and grounds are free and open to the public year round. The PORP Nature Center was opened in 1974. The initial capital investment costs were not available as the Nature Center facility is a 1,500 square foot preexisting reconverted historic bungalow house. Capital costs for maintenance and repair construction of the current park shelter/comfort station, auditorium, outdoor amphitheater and pavilion, and solar energy conversions is estimated at $100,000. Annual operating costs are approximately $265,000 (primarily for staff costs), of which approximately $20,000 is committed to annual capital costs for path maintenance, way finding, marketing, and signage. With annual attendance in the range of 25,000 visitors generate approximately $40,000 in operating revenues, primarily from birthday parties, weddings, canoe trips, and auditorium/shelter rentals. Elementary school groups also visit the Center as part of curriculum field trips for a modest fee. The park is anchored by its nature education center, a retrofitted mid‐ 20th century home from which PORP staff operate a range of community and environmental stewardship programs. The Nature Center includes a wide range of interconnected sustainability education programs/messaging boards, including:  Energerium: The main floor exhibit is devoted to exploring the interconnectivity of energy and living systems.  Auditorium: The bottom floor auditorium holds up to 50 people (open for birthday parties and other private functions) and features plant and animal exhibits.  Environmental Stewardship and Cultural Programs: Several environmental organizations, including Arlingtonians for a Clean Environment and the Arlington Regional Master Naturalists, are regular park stewards. In addition, the Nature Center regularly hosts school groups, scout groups, and local companies in educational programs including:  Volunteer Work Days first Saturday) with indoor and outdoor projects around the park ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 62  Annual Earth Day Celebration (April 17) where volunteers plant trees and milkweed for monarch butterflies  Open House & Heritage Festival (May including music, food, exhibits, and games  Free Summer Concerts (starting May 22) offering Saturday evening performances. Figure 40: Potomac Overlook Regional Park Environmental Stewardship Programming Carolina Thread Trail & Cawtaba Lands Conservancy, North and South Carolina Another example of a potential public investment that would serve to leverage the City of Kalispell’s natural resources is the use of trail head and park branding/identification signage along the Carolina Thread Trail in North and South Carolina. Carolina Thread Trail is a network of regional trails that covers 15 counties in North and South Carolina. The goal is to link regional attractions, provide a place to experience a wide range of recreational activities such as walking, bicycling, and picnicking. Since the project was announced in 2007, local businesses have donated $50,000 in signage and services. Because the project uses many existing trails, some of which are already branded with their own community's identity, the challenge became identifying the Thread Trail in cooperation with the existing identity ‐ not instead of it. Figure 41: Carolina Thread Trail Park Identification Signage ---PAGE BREAK--- Kalispell Core Area Market & Feasibility Analysis Page 63 Working in conjunction with the Carolina Thread Trail, the Catawba Lands Conservancy, and a local designer the project team designed and installed multiple sign types to be used along the trails to further the trail community brand. The City of Kalispell should consider the Core Area Revitalization Plan process as an opportunity to adopted a refined community brand that could be further extended throughout the Kalispell Linear Park trail and the downtown Main Street, purposely connecting to a range of the proposed redevelopment options and programming opportunities by providing way finding, “wellness” information, recycling and sustainability messaging, or other community services (potentially at the Meridian Road/Appleway Trail comfort station). Based on a survey of a community trails in the United States reported by Rails to Trails (www.railstotrails.org), the trails can serve as a connector to a wide variety of income generating services and amenities, including:  Restaurants  Water  Grocery Stores  Restrooms  Camping Sites  Phone  Bike Shop Repair/Bike Rental  Internet  Vending/Retail  Souvenirs/Gifts  Visitors Bureau  Medical Services  Shuttle  Parking These uses provide a range of capital and operating intensity alternatives that could be employed at the proposed Meridian Road/Appleway Senior Recreation Comfort Station. The higher the programming/staffing intensity, the higher the need for quality branded wayfinding signage throughout the trail system to drive traffic (and earned revenue) to the center.