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URBAN RENEWAL DISTRICT III TAX INCREMENT FINANCING CRITERIA FOR REVIEW BACKGROUND INFORMATION In 1999, an urban renewal plan was adopted by the Missoula City Council creating Urban Renewal District III (URDIII). The intent of Plan is to eliminate “blight” and encourage redevelopment in District III through the use of tax increment financing (TIF) as specified by State Law. The goals and objectives of the Urban Renewal Plan lay the groundwork for redevelopment. In 2003, the MRA engaged the Urban Land Institute to analyze the redevelopment potential of URD III and to make recommendations for development strategies. The MRA Board of Commissioners has adopted the Advisory Services Panel Report: Midtown Missoula, Missoula Montana (ULI Report) for use as a guiding document for the redevelopment of URD III. Through the use of the ULI Report, the City of Missoula Comprehensive Plan and other plans and regulations, the goals and objectives of the URD III Plan will be realized by adhering to the more specific recommendations and requirements contained in those documents. The language of these planning documents encourages the development of innovative and creative projects in our community. It is the intention of the MRA Board to foster creative and innovative projects within this third Urban Renewal District as well through the use of its public/ private partnership programs and construction of public projects. The URD III district is a large area encompassing 555 acres. Due to its size and finite budget, most initial redevelopment efforts will be focused along the major arterials including Brooks Street, Russell Street, South Avenue, Mount Avenue, and Stephens Avenue so that a more concentrated impact may be realized, which is in keeping with the Urban Renewal Plan and recommendations of the ULI Report. CRITERIA FOR REVIEWING APPLICATIONS FOR ASSISTANCE Throughout the application and review process, it should be recognized that the overriding goal of the Urban Renewal District is the elimination of blight resulting in an increased tax base. TIF Applications will be assessed based on the merits of individual projects in relation to the goals and objectives of the Urban Renewal Plan and the recommendations of the ULI Report. The review process is conducted with a three-tiered approach divided into categories of geographic location (referring to the primary traffic arterials), economic development potential, and special opportunities or effects. However, even though projects are assessed based on the tiered approach and will generally be assessed favorably if meeting these criteria, projects that demonstrate other unique or special opportunities will also be considered. I. Geographic Location Consideration will be given to projects located along the five traffic arterials of URD III. As ---PAGE BREAK--- Tax Increment Financing – URD III Narrative stated above, due to the large size of the District, most redevelopment efforts will be focused along these arterials so that a more concentrated impact may be realized. These arterials include: - Brooks Street - Russell Street - South Avenue - Mount Avenue - Stephens Avenue II. Economic Development Potential The economic development potential of a project is very important in assessing the viability of the project and the ability of the project to have a significant positive impact on the health of the District and community. The amount of economic activity to be generated by the project is assessed, including the relationship of public and private investment, tax generation and job creation. Generally, projects located within the main corridors and that meet the following economic development criteria are thought to be projects worth consideration for tax increment financing. - Tax generation. – In order for the Urban Renewal District to stay economically healthy for the maximum benefit to the District and community, a project should demonstrate the ability to generate new taxes that exceed the public’s TIF investment within ten years. - Relationship of public and private investment. – The relationship of private investment to public investment of a project shall be significant enough ensure prudent investment of public funds within the urban renewal district. A public investment of no more than $1 for every $10 of private funds may be considered a responsible use of public funds. - Job Creation. – Projects that create opportunities for new employment contribute to the economic vitality of the District and community in a variety of ways. Projects creating five or more full-time equivalent jobs would be considered to have a significant positive impact on the economic well-being of the district. - Investment Spin-off – Projects that have potential for investment spin-off in a blighted area would be seen as having a positive impact on the District. These projects may or may not be within one of the four major corridors. III. Special Opportunities or Effects Projects may have varying degrees of positive effects on the district, or in some cases may have negative impacts. A project having a positive influence on the District in categories such as innovative architecture or site design, infrastructure, environment and potential for investment spin-off, the more beneficial that project would be to the District. The following points seek to measure the impacts a Project would have on the District and the community: - The Project’s ability to improve public services such as water, sewer, sidewalks 2 ---PAGE BREAK--- Tax Increment Financing – URD III Narrative parking, improved traffic circulation, etc., to an area currently underserved. - The Project’s potential to present a unique opportunity, meet a special need, or address specific MRA or community goals such as filling a market niche or provide an un-met community need. - The Project’s ability to significantly further specific goals found in the current Urban Renewal Plan, ULI Report, or Missoula Comprehensive Plan. - The Project’s impact, positive or negative, on the environment in terms of noise, dust, pollution, public safety, traffic congestion, pedestrian access, visual aesthetics, etc.. Logistical Considerations In addition to the three categories of review criteria listed above, an assessment of a project will be made through evaluation of the project in terms of the following: Project Financing - Types of financing available to the Applicant. Lender participation commitments, industrial development revenue bonds, and State and federal grant monies, for example, are examined to assess the need for TIF assistance. Project Feasibility - A determination of feasibility is made based on the strength of the Applicant's demonstration of market demand for the project as contained primarily on the pro forma and financing commitments. Developer Ability to Perform - An assessment of the Applicant's capability to undertake the relative complexities of the project based on past performance of the developer and the Project design and management team on similar projects. Timely Completion - The feasibility of completing the project according to the Applicant's proposed project schedule. Payment of Taxes - All property taxes, special improvement district assessments, and other assessments on the project property must be paid to date. ELIGIBLE ACTIVITIES As specified by state law, TIF may be used to finance redevelopment activities including the following (from 7-15-4288, 1. Land acquisition, including acquisition of infrastructure-deficient areas and assemblage of land for development or redevelopment by private enterprise or public agencies, including sale, initial leasing, or retention by the municipality itself at fair value. 2. Demolition and removal of structures. 3. Relocation of occupants. 4. Public improvements such as the acquisition, construction and improvement of infrastructure which includes streets, roads, curbs, gutters, sidewalks, pedestrian malls, 3 ---PAGE BREAK--- Tax Increment Financing – URD III Narrative alleys, parking lots and off-street parking facilities, sewers, sewer lines, storm sewers, waterlines, waterways, sewage and water treatment facilities, natural gas lines, electrical lines, telecommunication lines, rail lines, rail spurs, bridges, publicly owned buildings and other public improvements. 5. Costs incurred in the exercise of urban renewal powers (found in 7-15-4233, including urban renewal projects as authorized by the City Council. IMPORTANT: Costs to be paid with TIF monies may not be incurred by the Applicant prior to funding approval and the satisfaction of any conditions of such approval. APPLICATION PROCESS Anyone seeking TIF assistance from MRA must submit a written application for each TIF- assisted project. The following procedure has been developed to expedite the review of TIF funding requests. 1. Initial Contact. Contact the Missoula Redevelopment Agency, 140 West Pine Street, Missoula MT 59802, (406) 552-6160, [EMAIL REDACTED] to discuss the project and determine eligibility for TIF assistance. 2. Prepare a Written Application. The Applicant must prepare a written application for each funding request. The MRA staff will assist the developer in preparing a formal application. The application should address the fourteen Criteria for Review (see attached list). For all TIF requests over $10,000, the Applicant must complete a "Developer's Statement of Qualification and Financial Responsibility" which includes submittal of personal financial statements. This form may also be required of other applicants when deemed necessary for the evaluation of the project by the MRA Director or Board of Commissioners. 3. Staff Review. Upon submittal of all necessary information, the MRA staff will review the merits of the project and the need for funding. At any point in the review process the staff or Board may request more information of the Applicant or solicit comment on the project from other public agencies. Items included in personal financial statements will not be subject to public review or presentation to or comment by other agencies. 4. Board Review and Approval. The MRA Board of Commissioners will review the project and staff recommendations, and then issue approval/disapproval of the funding request or any part thereof, and any special terms of TIF assistance. 5. Development Agreement. The MRA and the Applicant must execute a legally binding Development Agreement which establishes the terms and conditions of the TIF assistance. Among the terms and conditions, the Agreement shall specify the schedule for the start and completion of the project and may require the Applicant to guarantee repayment of TIF assistance if the terms of the Agreement are violated by the Applicant. The Development Agreement shall also specify whether the Applicant or MRA will be responsible for bidding or obtaining cost estimates and selecting contractors for funded activities. If MRA 4 ---PAGE BREAK--- Tax Increment Financing – URD III Narrative 5 is specified, it will follow public bidding and selection procedures as required by state law. CRITERIA FOR REVIEW Applications will be evaluated based on the following fourteen criteria. 1. Geographic Location - The Project’s location in relation to the major arterials of the District. 2. Tax generation. – In order for the Urban Renewal District to stay economically healthy for the maximum benefit to the District and community, a project should demonstrate the ability to generate new taxes that exceed the public’s TIF investment within ten years. 3. Relationship of public and private investment. – The relationship of private investment to public investment of a project shall be significant enough ensure prudent investment of public funds within the urban renewal district. A public investment of no more than $1 for every $10 of private funds may be considered a responsible use of public funds. 4. Job Creation. – Projects that create opportunities for new employment contribute to the economic vitality of the District and community in a variety of ways. Projects creating five or more full-time equivalent jobs would be considered to have a significant positive impact on the economic well-being of the district. 5. Investment Spin-off - The Project’s potential for investment spin-off in a blighted area but that may not be within one of the four major corridors. 6. Improvement of Public Services - The Project’s ability to improve public services such as water, sewer, sidewalks parking, improved traffic circulation, etc., to an area currently underserved. 7. Unique Opportunities - The Project’s potential to present a unique opportunity, meet a special need, or address specific MRA or community goals such as filling a market niche or provide an un-met community need. 8. Urban Renewal Goals - The Project’s ability to significantly further specific goals found in the current Urban Renewal Plan, ULI Report, or Missoula Comprehensive Plan. 9. Environmental Impacts - The Project’s impact, positive or negative, on the environment in terms of noise, dust, pollution, public safety, traffic congestion, pedestrian access, visual aesthetics, etc. 10. Project Financing - Types of financing available to the Applicant. Lender participation commitments, industrial development revenue bonds, and State and federal grant monies, for example, are examined to assess the need for TIF assistance. 11. Project Feasibility - A determination of feasibility is made based on the strength of the Applicant's demonstration of market demand for the project as contained primarily on the pro forma and financing commitments. 12. Developer Ability to Perform - An assessment of the Applicant's capability to undertake the relative complexities of the project based on past performance of the developer and the Project design and management team on similar projects. 13. Timely Completion - The feasibility of completing the project according to the Applicant's proposed project schedule. 14. Payment of Taxes - All property taxes, special improvement district assessments, and other assessments on the project property must be paid to date.