The failure of the Billings City Council to approve an amendment to its agreement with Landmark has created a hiccup in plans for One Big Sky District (OBSD), but it’s not going to alter plans by the community “partnership” to continue to push for passage of legislation that would provide incentive for the development.
A five-to-five split among city council members, last week, failed to pass an amendment to the agreement that the City has with Landmark to reimburse Landmark for their up-front investment in developing plans for OBSD, should they not be involved in building any of the four catalyst projects.
Without that assurance, it is uncertain what the relationship between Landmark and the Billings partnership group will be, from this point forward, explained Steve Arveschoug, Director of Big Sky Economic Development (BSED), one of the partnership members. But, Arveschoug saw no reason for the community not to continue to move forward with the OBSD vision. “I don’t want to walk away from all of that time and work,” said Arveschoug, in a later interview.
Voting in favor of adopting the amendment were City Council members, Mike Yakawich, Denise Joy, Peggy Ronning, Shaun Brown and Mayor Bill Cole. Voting against it were Brent Cromley, Frank Ewalt, Chris Friedel, Reg Gibb and Richard Clark. Council member Roy Neece was absent.
One Big Sky District is an economic development plan for a major portion of the downtown Billings area that proposes four major multi-use structures which would in total invest about $2.5 billion of infrastructure, funded in part by private investors and in part relying on public funding through several federal investment programs, including one being proposed at the state legislature.
Sen. Roger Webb (R), Billings, is in the process of drafting a bill that would create a means for cities and the state to provide economic incentive for projects like OBSD. The draft is LC 1182 and is available to the public.
In the original agreement with Landmark, the City of Billings is already committed to the reimbursement requirement that the council considered at the Monday meeting, but only for $1.34 million. The issue before the City Council was to increase that amount to $2.578 million. Landmark wanted to increase the reimbursement amount in order to include expenditures they anticipate going forward over the next few months, which included preparing promotional materials and lobbying the state legislature.
Proponents said that the council’s rejection of the amendment “sends a negative message to Helena,” where Billings area legislators are working to get passage of the legislation.
Allison Corbyn who presented the proposal to the council on behalf of BSED said, immediately after the vote, that it “kills our legislative effort.” She said it would be extremely difficult to move forward.
Without the guarantee of being reimbursed it is uncertain what the relationship between the city partnership and Landmark will be going forward, explained Arveschoug.
Mayor Bill Cole said he was heartened that there were comments among city council members who voted against the measure that indicated they would be willing to re-visit the issue again in the future.
Arveschoug explained that there is an existing agreement with Landmark that had a defined scope of work for a development plan, and Landmark has delivered the development plan. Part of that agreement with the city includes a reimbursement plan. The proposed amendment was to extend that reimbursement regarding investments they were planning to make in 2019.
The failure to pass the amendment does impact the relationship the city partnership has with Landmark, conceded Arveschoug, but he went on to add, “They are not the only developer. So we are going to stay focused. We have a plan approved by council. We have an economic tool proposed. We want to get traction on that and create a tool for us and for the whole state.”
The agreement to reimburse Landmark, should a project be built without their involvement, extends for a period of five years, beginning from Jan. 25, 2019 to Jan. 25, 2024. If no project is built during that five year period, no reimbursement will be paid.
If Landmark is involved in at least one of the four catalyst projects proposed in the plan, there is no reimbursement.
Part of 2019 expenditures were explained in an announcement in January, when the issue of lobbying and pursuing the next phase was discussed by Arveschoug with his board members, at which time, Big Sky Economic Development (BSED) announced that it would commit $300,000 to the lobbying effort. At that time Arveschoug explained that the $300,000 would be part of a $578,000 commitment being requested from the community “partnership” by Landmark. BSED’s $300,000 was augmented by $100,000 from other contributions that did not include the City of Billings. Other members of the partnership include the Billings Chamber of Commerce, Downtown Billings Partnership, and Billings Tourism Business Improvement District.
At that same time, Landmark said it would be committing between $780,000 to $1.1 million for the next phase, and it was essentially that potential expenditure that Landmark was asking the City to add to the reimbursement commitment.
The city’s rejection of the amendment has no impact on the $400,000 of other community entities to continue lobbying for the legislation.
Councilman Brent Cromley explained his opposition to the amendment going through a list of objections including the conclusion that the plan presented by Landmark is far from what he would expect of a development plan. It isn’t all that different, he said, from the concept plan they first brought to the council. He also pointed out what he considered to be major flaws in their analysis of the availability of office space, which further undermined his confidence in the plan.
He reviewed a number of grand plans from the past upon which the city spent money but nothing came of them. Included in that list was the action taken by the city, with the first developer to propose One Big Sky, to purchase the Yesteryears building in downtown without getting an appraisal. It turns out that they purchased for $850,000 a building that is worth only about $400,000, and that is already borrowed against, “so it is of little value,” he said.
Cromley predicted that the legislation will not pass, a proclamation that elicited some murmurs of protest from others on the council.
Cromley went on to say that Hammes (Landmark) first came to the council with the promise of giving them a million dollars worth of services without charge…then “all of a sudden” there was a provision for a reimbursement with Landmark.
Cromley said that as far as attracting millennials to the labor force (one of the reasons it’s been said the development is necessary), they are attracted by things like “parks, trails, and recreation… buildings aren’t going to attract them.”
Councilman Frank Ewalt said that it appeared that “… our strategy partner group, we haven’t done the due diligence.” He noted that the plan says “you should hire your own consultant ... we listened to consultants hired by Landmark… most of the time the developer and buyer don’t go to the same room …”
Councilman Dick Clark expressed concern about what would happen if Landmark failed to do anything. “What happens if Landmark decides they don’t want to develop? I didn’t see that anywhere stated.”
To that there was a general response of “what could go wrong?” to which Councilman Reg Gibb pointed out all the ominous possibilities that could stem from federal proposals to eliminate airplane travel, cattle and carbon fuels over the next ten years. With no more airline travel, no more cattle and no more refineries, the economic base for Yellowstone County would be gone, he said.
In her support for the measure, Councilwoman Penny Ronning said, “I wish you could see the belief in all of the people with a strong belief in the community… so many have given out of their own pockets to move the community forward .. we need new growth and new development. I want to see that happen in the education system, the medical corridor and downtown.. I do believe in our community and it is up to us to invest in them and that means we take a risk.”
Shaun Brown said, “If everyone truly believes it is not going to make it through the state legislature then we aren’t going to owe them money.” To say ‘no’ now, he said, “. . we are throwing away everything. . . we don’t have to proceed if we choose not to.”
Arveschoug said that at the end of the week he will be working with Sen. Webb, ironing out the details of LC 1182. “Sen. Webb is committed to working with us and we are committed to continue moving forward. We have a plan that has been adopted by city council, and part of the planning was to adopt an economic tool to provide incentive.” It’s an economic tool that “would not just help our community but communities throughout the state of Montana.”
“From my understanding it is the only legislation that is finding a way to generate new tax revenue from new private investment; that should be of interest to the state legislature,” said Arveschoug.