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Missoula Redevelopment Agency 140 West Pine Street Missoula MT 59802 [PHONE REDACTED] phone • [PHONE REDACTED] fax www.ci.missoula.mt.us/mra [EMAIL REDACTED] M E M O R A N D U M TO: MRA Board of Directors FROM: Ellen Buchanan, Director DATE: October 17, 2010 SUBJECT: Front Street Parking Structure – Resolution to Issue Bonds It is the goal of the Missoula Parking Commission and the Missoula Redevelopment Agency to construct a parking structure at the corner of East Front and Pattee Streets. It has been determined by the Parking Commission that the structure should provide at least 400 parking spaces and approximately 5,000 square feet of commercial space on the street floor in order to meet current and future parking demand, address the goals of the Greater Downtown Master Plan and serve as catalyst for redevelopment of the Front Street Urban Renewal District. The identified means of financing the project are a combination of tax increment revenue bonds, parking revenue bonds and cash from the Parking Commission. As a part of the American Recovery and Reinvestment Act, the State of Montana was authorized to issue Recovery Zone Facility and Economic Development Bonds. Recovery Zone Facility Bonds are a new type of tax-exempt private activity bond that will allow the issuance of tax increment revenue bonds at tax- exempt rates even though some of the proceeds are used to finance private business uses. Portions of that allocation were made available to Missoula County and, through the County, the City of Missoula. Missoula County adopted a resolution on September 30, 2009 designating both the County and the City of Missoula a “recovery zone” for purposes of utilizing these bonding opportunities. The City has applied for and received an allocation of Recovery Zone Facility Bonds for issuance as tax increment bonds for the purpose of construction of this parking structure. The City also applied for and received an allocation of Recovery Zone Economic Development Bonds. It is anticipated that the use of this bonding vehicle may be advantageous for the parking revenue bonds that will be issued for construction of the parking structure. These bonds allow governmental entities to bond for certain types of activities resulting in economic development at lower interest rates through a subsidy that writes down the interest by 45%. ---PAGE BREAK--- These bonds must be issued prior to December 31, 2010 in order to take advantage of this opportunity. One of the steps necessary to secure the allocations for the Front Street parking structure is for the City Council to adopt the attached resolution stating the intention of utilizing a portion of the allocated capacity of Recovery Zone bonds for the parking structure project and setting a public hearing. Approval of the resolution in no way obligates the City or the Parking Commission to issue these bonds or to issue them as Recovery Zone Bonds. It does preserve the right of the City and the Parking Commission to do so if deemed advantageous to the project. If adopted by the City Council, the Notice of Public Hearing will be published on 10/28, 11/4, 11/11 and the public hearing will be held on November 22, 2010. During that interval, additional financial analysis will be conducted to determine the appropriateness of using Recovery Zone Facility and/or Economic Development Bonds for financing the construction of the East Front Street parking structure. Recommendation: Staff recommends that the MRA Board forward a recommendation to the City Council that they adopt the attached resolution setting forth the City’s intention to issue Front Street Urban Renewal District tax increment revenue bonds, calling a public hearing, setting forth the City’s intention to negotiate the sale of the bonds and designating them as Economic Recovery Zone Facility Bonds and authorizing the Missoula Parking Commission to issue parking revenue bonds and designating them as Economic Recovery Zone Economic Development Bonds.