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CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Missoula, Montana (the “City”), hereby certify that the attached resolution is a true copy of Resolution No. 7104 entitled: “RESOLUTION RELATED TO THE MILLSITE REVITALIZATION PROJECT PROPOSED BY MILLSITE REVITALIZATION PROJECT LLC: APPROVING THE MILLSITE REVITALIZATION PROJECT AS AN URBAN RENEWAL PROJECT FOR URBAN RENEWAL DISTRICT II; APPROVING THE FINANCING OF THE PURCHASE OF THE IDAHO TIMBER LEASE THROUGH THE ISSUANCE OF TAX INCREMENT URBAN RENEWAL REVENUE BONDS PAYABLE FROM THE TAX INCREMENT OF URBAN RENEWAL DISTRICT II, EXCLUSIVE OF THE MILL SITE PROPERTY (THE URD II BONDS) AND THE CONDITIONS THEREFOR; AND APPROVING AND IDENTIFYING THE COMPONENTS OF THE FINANCING FOR MILLSITE REVITALIZATION PROJECT” (the “Resolution”), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Council of the City on July 10, 2006, and that the meeting was duly held by the City Council and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following Council members voted in favor thereof: Ballas, Childers, Haines, Hendrickson, Jaffe, Kendall, Marler, Nicholson, Reidy, Rye, Strohmaier, and Wilkins; voted against the same: none; abstained from voting thereon: none; or were absent: none. WITNESS my hand and seal officially this 10th day of July, 2006. (SEAL) Martha L. Rehbein Martha L. Rehbein, City Clerk ---PAGE BREAK--- RESOLUTION NUMBER 7104 RESOLUTION RELATED TO THE MILLSITE REVITALIZATION PROJECT PROPOSED BY MILLSITE REVITALIZATION PROJECT LLC: APPROVING THE MILLSITE REVITALIZATION PROJECT AS AN URBAN RENEWAL PROJECT FOR URBAN RENEWAL DISTRICT II; APPROVING THE FINANCING OF THE PURCHASE OF THE IDAHO TIMBER LEASE THROUGH THE ISSUANCE OF TAX INCREMENT URBAN RENEWAL REVENUE BONDS PAYABLE FROM THE TAX INCREMENT OF URBAN RENEWAL DISTRICT II, EXCLUSIVE OF THE MILL SITE PROPERTY (THE URD II BONDS) AND THE CONDITIONS THEREFOR; AND APPROVING AND IDENTIFYING THE COMPONENTS OF THE FINANCING FOR MILLSITE REVITALIZATION PROJECT BE IT RESOLVED by the City Council (the “Council”) of the City of Missoula, Montana (the “City”), as follows: Section 1. Recitals; Authorizations; Previous Approvals. 1.01. The Council, pursuant to Ordinance No. 2803 (the “Ordinance”) adopted on December 16, 1991, created its Urban Renewal District II (the “District”) and adopted an urban renewal plan for the District which Plan has been amended by Resolution No. 6533 and Ordinance No. 3215 adopted on July 22, 2002, (the “Urban Renewal District II Plan” or the “Plan”). The Plan, as adopted, contains a tax increment financing provision all as set forth in the Ordinance in accordance with Montana Code Annotated (MCA), Title 7, Chapter 15, Parts 42 and 43, as amended (the “Act”). 1.02. Pursuant to Resolution No. 5210, adopted by the City on September 16, 1991, the Council determined that the Property described therein and commonly known as the Champion Mill Site Property (the “Mill Site Property”) was blighted within the meaning of Title 7, Chapter 15, Parts 42 and 43, M.C.A. 1.03. Resolution No. 5210 further provided that should the Mill Site Property be annexed into the City, it would be annexed to and included in the urban renewal district that was contemplated by Resolution No. 5210 (“Urban Renewal District II”). 1.04. The Missoula Redevelopment Agency (the “MRA”) has determined that the Mill Site Property has experienced continued deterioration due to neglect and vandalism since the Council declared that it was blighted through the adoption of Resolution No. 5210 on December 16, 1991, and that it continues to meet the definition of blight within the meaning of Title 7, Chapter 15, Parts 42 and 43, MCA. 1.05. Upon receipt of a petition signed by all persons with a property right interest in the Mill Site Property and pursuant to Resolution No. 6972, the City has annexed the Mill Site Property to the City and it is now part of Urban Renewal District II. 1.06. Pursuant to Resolution No. 6978, adopted on October 3, 2005, the Council approved the Remediation and Demolition Activities on the Mill Site Property as an Urban Renewal Project and authorized the use of tax increment financing to pay or secure the costs of the Remediation and Demolition Activities. 1.07. Pursuant to Resolution No. 6978, the City agreed to pledge tax increment generated by the Project (as hereinafter defined) to repay a loan from the Missoula Area Economic Development Center (the “MAEDC”) on behalf of the Brownfields Revolving Loan Program in the amount of $1,000,000 to finance certain costs of the environmental remediation of the Mill Site Property (the “RLF Loan”). 1.08. The Millsite Revitalization Project, LLC (the “MRP”) has presented to the MRA and the City its Mill Site Revitalization Plan, which consists of the acquisition of the Property, including the ---PAGE BREAK--- 2 acquisition of Idaho Timber’s leasehold interest in the Mill Site Property (the “Leasehold Interest”), the installation and construction of public infrastructure, site development, and making available for sale and development 26 acres of land for mixed-use development, consisting of multifamily and single family residential units, office and retail space (the “Developable Parcels”), and approximately 14 acres of parkland and trail systems (the “Project”), a site plan of which was filed with the Office of Planning and Grants on June 9, 2006 (the “Site Plan”). The MRP and MRA have identified the estimated costs of the Project as $19,359,050, as shown on Exhibit A hereto (the “Project Costs”). The Project Costs are estimated and will be revised from time to time as components of the Project are bid, completed, or further refined. 1.09. The option to purchase the Leasehold Interest will expire on September 1, 2006, and the option to purchase the Mill Site Property will expire on December 31, 2007, unless extended. 1.10. The MRP and the MRA have determined that it is in the best interest of the Project and the City that the Leasehold Interest be acquired prior to the termination date of the option. 1.11. In order to proceed with the acquisition of the Leasehold Interest using tax increment revenue bonds, it is necessary that the City declare the Project an Urban Renewal Project. 1.12. On June 12, 2006, the City Council adopted Resolution No. 7089, a Resolution of Intention Related to the Millsite Revitalization Project Proposed by Millsite Revitalization Project LLC: to Approve the Millsite Revitalization Project as an Urban Renewal Project for Urban Renewal District II; to Set Forth the Council’s Intention to Finance the Purchase of the Idaho Timber Lease through the issuance of Tax Increment Urban Renewal Revenue Bonds Payable from the Tax Increment of Urban Renewal District II, Exclusive of the Mill Site Property (the URD II Bonds) and to set forth the Conditions therefor; to Preliminarily Approve and Identify the Components of the Financing for Millsite Revitalization Project; Calling a Public Hearing on the Proposed Project and the Issuance of the URD II Bonds, and Authorizing the Negotiation and Finalization of a Development Agreement between the City, the Missoula Redevelopment Agency, and Millsite Revitalization Project to be Presented to the City Council for Public Hearing at a Later Date; and Related Matters (the “Resolution of Intention”) 1.13. Pursuant to the Resolution of Intention, as a condition precedent to the issuance of the URD II Bonds (as hereinafter defined), the City, the MRA, and the MRP were to enter into an agreements which would: grant the City the right to and use of approximately 14 acres of land to be used for park, open space, and river front trail system (the “Public Park Land”) grant MRP control of the remainder of the Mill Site Property for purposes of development of the Project, and grant the respective rights, responsibilities, and obligations of the Parties with respect to their respective interests in the Leasehold. The City, the MRA, and MRP are in the process of negotiating and finalizing two agreements to meet the requirements of Section 3.01(ii) of the Resolution of Intention: An Agreement to Purchase the Idaho Timber Lease to be entered into between the City, the MRA and MRP, and a Sublease and Partition Agreement to be entered into the between the City and MRP (collectively, the “City-MRP Lease Agreements”). Prior to the sale of the URD II Bonds, the City-MRP Lease Agreements shall be presented to this Council for approval. 1.14. Pursuant to Resolution No. 7089, a public hearing was duly noticed and held on July 10, 2006, at which all persons wishing to speak were given the opportunity to address the Council with respect to the Project. Section 2. Overview of Project; Timing and Sequence. The Project is expected to be developed and implemented as follows: a. MRP is continuing to work with the Department of Environmental Quality (the “DEQ”) to implement the Voluntary Cleanup Plan and obtain a letter of no further action for the Mill Site Property in late fall, 2006 (the “No Action Letter”). ---PAGE BREAK--- 3 b. It is anticipated that the proceeds of the RLF Loan will become available for the environmental remediation by July 15, 2006. c. It is anticipated that the final approval of the Site Plan will be received from the City Council on or about October 23, 2006. d. The City will issue the URD II Bond to enable MRP to exercise the option to purchase the Leasehold, simultaneously with the City, the MRA, and MRP entering into the City-MRP Lease Agreements. e. The City, MRA and MRP will continue to finalize the budget for the Project, identify and secure the sources for financing of the Project, and prepare and submit to the Council for public hearing and approval the Development Agreement. f. Once the Site Plan for the Project has been approved and a letter of No Further Action and/or consent orders have been issued by the DEQ for the Project site, MRP will exercise its option to purchase the Mill Site Property, assuming all of the conditions of the Development Agreement can be met and all of the financing is in place. g. MRP will transfer ownership of the Public Park Land to the City as described herein and as more specifically described in the Development Agreement. Section 3. Anticipated Sources of Financing for the Project. Based on preliminary discussions between and among the City, the MRA, the MRP, and various financial institutions, it is anticipated that the Project can and will be financed from the following sources. 3.01. Urban Renewal District II Bonds. It is proposed that the City will issue tax increment urban renewal revenue bonds in an aggregate principal amount not to exceed $3,600,000 (the “URD II Bonds”), which will be payable from the tax increment of the City’s Urban Renewal District II, exclusive of the Mill Site Property, the property commonly referred to as the lumber company property, located at 119 Russell Street (the “Intermountain Property”), and the City Shop property located at on the 800 block of West Broadway which is anticipated to be developed for a new Safeway supermarket (the “City Shop Site”) (collectively, the “Excluded Property”). The URD II Bonds will be issued to purchase the Leasehold Interest and to pay costs associated with the sale and issuance of the URD II Bonds. The maximum annual payment of principal and interest on the URD II Bonds, assuming a true interest rate of 4.850%, is $252,540. The City hereby determines that amount of tax increment revenue projected to be received in the District, exclusive of the Excluded Property, will be approximately $838,000 annually and will be adequate to pay the principal of and interest on the URD II Bonds over a term of twenty-five (25) years. The issuance of the URD II Bonds is subject to the following terms and conditions: i) Prior to the sale of the URD II Bonds, MRP will deliver to the City an executed, notarized, and recordable agreement of the Silver Foundation that the annexation of the Mill Site Property to the City is unconditional; and ii) The City, the MRA, and MRP will enter into the City-MRP Lease Agreements. 3.02. Project Bonds. It is proposed that the City will issue tax increment urban renewal revenue bonds payable from the tax increment to be derived from the Project on the Mill Site Property to pay the Project Costs described herein (the “Project Bonds”). Based on the current projections of MRP, substantially all of the Developable Parcels that will be created pursuant to the approved subdivisions plat will be sold by December 30, 2014, there will be approximately $75,000,000 to $100,000,000 of development on the Developable Parcels, producing an estimated annual tax increment of approximately $1,300,000 annually at the end of 10 years; which increment would be sufficient to pay the principal of and interest on Project Bonds in the estimated amount of $7,002,000 over a term of 25 years at a market interest rate, and the amortization of $800,000 of the RLF Loan commencing on the January 1st of the year first occurring after the sixteenth anniversary date of the RLF Loan. The interest rate on the Project Bonds will be subject to negotiation between the City and the Purchaser of the Project Bonds, with the advice of the City’s Financial Advisor. The final principal amount of Project Bonds that can be issued may be dependent on the agreed upon interest rate. In the event the projected tax increment will be sufficient ---PAGE BREAK--- 4 to pay the principal of and interest on a greater principal amount of Project Bonds and the RLF Loan over the 25 year term, the City will agree to issue Project Bonds in the greater amount to pay eligible project costs and reduce the Special Improvement District Bonds (as hereinafter defined). The issuance of the Project Bonds is subject to the following conditions: i) The approval, execution, and delivery of the Development Agreement; ii) The execution of an agreement between the City, the Silver Foundation, and MRP as to purchase or assignability of right to purchase the Mill Site Property; iii) MRP providing such credit enhancement, collateral, and/or covenants and guarantees to ensure the marketability of the Project Bonds, or purchasing the Bonds itself, upon terms and conditions to be mutually agreed upon by the City and MRP; and iv) Simultaneously with the closing of the Project Bonds, MRP will close on the Mill Site Property, and will transfer by deed to the City the Public Park Land. 3.03. Special Improvement District Bonds. It is proposed that the City will create a special improvement district within the Mill Site Property for the purpose of paying the costs of eligible public infrastructure improvements (the “Infrastructure Improvements”) to the extent there are not sufficient Project Bond proceeds to pay the costs of the needed infrastructure. Based on the current Project Costs and Project Bonds in the amount of $7,002,000, it is estimated that the City will issue special improvement district bonds in the estimated amount of $4,112,000 (the “Special Improvement District Bonds”) to pay the costs of the Infrastructure Improvements, a deposit to the Revolving Fund, capitalized interest, and costs associated with the creation of the District and the sale and security of the Special Improvement District Bonds. The issuance of the Special Improvement District Bonds is subject to the following conditions: i) Approval of the subdivision plat; ii) Receipt of Construction Bids for the Infrastructure Improvements; iii) Evidence that all other sources of funds are available to complete the Project; iv) a district reserve equal to 5% of the principal amount of the Bonds and the 5% deposit to the City Revolving Fund will be paid from the proceeds of the Special Improvement District Bonds; and v) MRP shall provide a letter of credit in an amount equal to one year’s principal amount of assessments for the Developable Parcels and one year’s interest thereon. 3.04. Public Park Land Improvements; City Cash Contribution. The MRA has agreed to pay the costs of designing the 14 acre public park, the river front trail connecting California Street Bridge to the Civic Stadium (the “Public Park Land Improvements”), and the linear park that is being developed as part of the Developable Parcels. The City and MRA have retained Abbotswood Design Group to design the Public Park Land Improvements and the lineal parkway. MRP, MRA, the Silver Foundation, and Missoula Parks and Recreation will be involved in the design of the Public Park Land Improvements. The Public Park Land Improvements will be constructed in accordance with the plans and specifications prepared by Abbotswood Design Group. The preliminary estimated costs of the Public Park Land Improvements is $2,000,000. It is currently proposed that the City and MRA will commit $1,060,250 from available funds toward the construction of the Public Park Land Improvements, and $939,750 of the Project Bonds will be used to pay costs of the Public Park Land Improvements. To the extent that the costs of the Public Park Land Improvements exceed amounts available to the City and the amount provided by the Project ---PAGE BREAK--- 5 Bonds, the remainder of the Public Park Land Improvements will be constructed by the City as money becomes available. 3.05. Silver Foundation. The Silver Foundation has agreed to contribute $500,000 to MRP for the costs of development of common space areas and improvements within the Developable Parcels. Costs of those improvements are not included in the estimated Project Costs. 3.06. Cash Contribution of MRP and Deficiency. MRP shall pay the costs of the acquisition of the Fee Interest in the Property in the amount of $2,500,000. In the event the costs of the Project, excluding the Park Land Improvements, exceeds what can be funded from the foregoing sources in permitted amounts, MRP shall be responsible for securing additional funding if it determines to proceed with the Project. Proof of ability to provide the necessary financing to complete the Project will be required before the City issues the Project Bonds and the Special Improvement District Bonds. 3.07. RLF Financing. A loan in the amount of $1,000,000 has been committed to pay the costs of Environmental Remediation from the RLF Fund administered by the MAEDC. Project Bonds will be used to prepay $200,000 of the RLF Loan. Otherwise, the RLF Loan will be repaid from tax increment revenues from the Mill Site Property as provided as provided in the RLF Loan Agreement to be entered into by the MAEDC, the City, MRP, and MRA, and as approved by the City Council. 3.08. MRA Contribution. The City has previously committed $150,000 of MRA Funds to MRP to pay preliminary planning costs of the Project. 3.09. Civic Stadium Parking. The City had previously committed $226,500 of Urban Renewal District No. 1 (“URD tax increment revenues toward the costs of providing parking for the Civic Stadium. The City shall pay $226,500 to MRP to acquire parking rights and facilities for the Civic Stadium. In consideration therefor, MRP has agreed to provide a minimum of 100 parking spaces within the parking areas and lots developed by MRP or its successors in interest (the “Parking Rights”). The Public Park Land Improvements will be designed and constructed to include 150 parking spaces that will also be available for Civic Stadium parking. Section 4. Findings. 4.01. General Findings. Based on the information and testimony presented at the public hearing, the Council hereby finds, with respect to the Project, as follows: a. That upon the satisfaction of the conditions outlined in Section 3 hereof and the final approval and execution of a Development Agreement obligating the parties to provide the financing and other obligations, pursuant to which the Developer will agree to acquire the Land, complete the Project, that a sound and adequate financial program will exist for the financing of the Project; b. no persons will be displaced by the Project; c. the Project is consistent with the Plan, and both the Plan and Project conform to the Comprehensive Plan or parts thereof of the City and its Growth Plan; d. the Project will afford maximum opportunity, consistent with the needs of the City as a whole, for the rehabilitation or redevelopment in the District by private enterprise; and e. the Project constitutes an urban renewal project within the meaning of the Act and the Plan. ---PAGE BREAK--- 6 4.02. The City-MRP Lease Agreements. The issuance of the URD II Bonds is subject to the execution and delivery of the City-MRP Lease Agreements in a form acceptable to the City. The final form of the City-MRP Lease Agreements shall be presented to this Council for approval prior to the sale of the URD II Bonds. 4.03. Approval of the Site Plan. The Site Plan is subject to final review and approval in compliance with all applicable rules and regulations of the City and the State, which is anticipated to occur on October 23, 2006. Section 5. Development Agreement. The MRA shall proceed to negotiate a Development Agreement between the City, MRA, and MRP which shall contain all of the key provisions of this Resolution and such other provisions that are necessary to protect the interest of the City and accomplish the objectives of the Project. Pursuant to Section 7-15-4217, M.C.A. and Ordinance No. 3309, the Council may approve the Development Agreement after a public hearing duly noticed and held thereon. Section 6. Authorization. The MRA and the City staff are authorized: i) to proceed with the creation of the special improvement district; ii) to negotiate and prepare the Development Agreement; and iii) to work with MRP to establish terms and conditions of and/or find a purchaser for the Project Bonds, subject to final approval by the Council. Section 7. Conditional. The adoption of this Resolution in no way obligates the City to finally approve the Project, to issue any bonds, or to provide other financing. All representations herein are conditioned upon final approval and the execution of a Development Agreement; the City and MRP being able to obtain financing for their respective obligations; finding a purchaser for the Project Bonds; and the successful sale by the City of the Special Improvement District Bonds. PASSED AND APPROVED by the City Council of the City of Missoula, Montana, this 10th day of July, 2006. Attest: Approved: Martha L. Rehbein John Engen Martha L. Rehbein, City Clerk John Engen, Mayor ---PAGE BREAK--- A-1 EXHIBIT A ESTIMATED PROJECT COSTS SOURCES & USES USES Land $ 2,500,000 Lease 3,730,000 Environmental Remediation (RLF) 1,000,000 Insurance 150,000 Demolition 1,000,000 Infrastructure 4,500,000 Costs associated with the sale and security for SID Bonds, including Revolving Fund 961,000 Public Park Land Improvements 2,000,000 Planning, Outreach, Survey, Marketing 250,000 Legal Services, Environmental, RLF (Both MRP’s and City’s, including Bond Counsel) 415,000 Financing Costs related to Project Bonds and URD II Bonds 375,000 Contingencies (includes RLF, Infrastructure, Project Contingencies) 1,256,000 Park Acquisition 662,500 Development Fees 560,000 TOTAL ESTIMATED USES $19,359,500 SOURCES Project Bonds $ 7,102,000 Developer Contribution 2,500,000 URD II Bonds 3,409,000 Special Improvement District Bonds 4,112,000 RLF Loan 800,000 MRA Grant 150,000 URD I Funds 226,500 City of Missoula Contribution 1,060,000 TOTAL ESTIMATED SOURCES $19,359,500