The Billings City Council will have its first chance to endorse a multimillion-dollar downtown development project when it meets Monday night.
The council will be asked to vote on a pre-development memorandum of understanding with the developers proposing to create the One Big Sky Center in the area of First Avenue North and North 29th Street.
The project, which has been in the works for two years and was announced with much fanfare in mid-August, would have a footprint of 70,000 square feet and a price tag of at least $120 million. Plans call for hotel rooms and high-end apartments, a parking garage, a conference center, a pedestrian mall and a 25-story building that would be the tallest in the state.
According to a report to the council from city administrators, the memorandum of understanding would not entail any spending by the city and “contains no concrete commitments or responsibilities.”
What it would do is authorize city staff to work with the developers to produce a formal development agreement by June 30, 2017, spelling out, among other things, proof of financing commitments for the project, how much public financing would be needed and who would own various parts of the project.
The developers have said they will need the city to authorize at least $30 million in tax increment financing to build the public aspects of the project—the parking garage, the pedestrian mall and the conference center.
The City Council has already approved some measures to move the project forward. Last May, it authorized the Downtown Billings Partnership to spend $850,000 in tax increment district funds to buy a building that is part of the project footprint, with the understanding that the partnership will sell that building to the developers at a later date.
Two months later, the council approved a $250,000 loan to the developers from the Downtown Revolving Loan Fund, which also uses tax increment money. But as the staff report to the council says, Monday night’s vote on the memorandum of understanding will be the council’s “first official opportunity to endorse the project.”
The council meeting will begin at 6:30 on the second floor of City Hall, 220 N. 27th St.
For the past few weeks, the city’s bond financial adviser, Springsted Inc., has been performing a due diligence review of the developers and the proposed project. David McGillivray, chairman of the advisory firm, is scheduled to be at the meeting to present the results of the analysis and to answer questions from council members.
City staff is recommending approval of the pre-development MOU.
Assistant City Administrator Bruce McCandless said he hasn’t seen the results of Springsted’s analysis yet, but based on the city’s own research and informal indications from Springsted, “I don’t think that there are going to be any big red flags.”
At an event on Tuesday, two of the developers, George “Skip” Ahern and M. Burke McHugh, both of Denver, said they also plan to be at the meeting Monday night. With Greg Tatham, who lives in Phoenix, Ariz., they formed a company called MontDevCo LLC to pursue this project.
The pre-development MOU says the city and the developers are to identify and assess what public improvements the project will require and what role the city should play in financing them. If they are able to reach a preliminary agreement, it continues, both sides will “work to negotiate a definitive development agreement.”
The document also specifies that the city “shall not be liable for any costs, expenses or debts associated with or incurred by the Developer or its affiliates in connection with this Memorandum or any development, marketing or other activities with respect to the Project and the Public Improvements.”
It further says that the obligations of the parties “are merely a present statement of intent,” and partial performance of any terms of the agreement by either party “shall not be deemed evidence of intent by any party to be bound by the terms of any contract or agreement.”
If the City Council, “through the exercise of its discretion,” decides not to approve any of the actions outlined in the MOU, the document says, “the City will not be held liable.”
The developers have previously said that they have spent about $1.35 million of their own money so far, including $880,000 to buy a parking lot at First Avenue and North 29th Street.
They have also said that they and other investors will put up $15 million to $25 million to fund the project, and that they expect to raise another $30 million to $32 million from foreigners taking advantage of the IRS-administered EB5 Immigrant Investor Program.
That program virtually guarantees that foreigners who invest at least $500,000 in U.S. projects and create or preserve at least 10 jobs will obtain green cards for permanent residency for themselves, their spouses and children under 21.
The remaining financing would come from a traditional bank loan, they have said.