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HomeMy WebLinkAbout10-10-16 CC Mtg. - A4. Public Hearing Rouse Justice Center Site Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager SUBJECT: Public Hearing to determine whether approximately 7.8 acres of real property owned by the City known as the Rouse Justice Center site is necessary for the conduct of City business or that the public interest may be furthered by the sale of the property. MEETING DATE: October 10, 2016 AGENDA ITEM TYPE: Action (2/3 vote of the Commission required) RECOMMENDATION: Conduct a public hearing and by a 2/3 vote of the Commission determine that the entire Rouse Justice Center site1, should the bond vote and mill levy vote for the Law and Justice Center pass on November 8, 2016, is no longer necessary for the conduct of City business or the preservation of City property and that the public interest will be furthered by a market sale of the property. I also suggest you direct me to develop a recommendation for the process to be used to sell the property and return to the Commission for a proposal on the procedures to be used to sell the property. PROPOSED MOTION: Having considered the information presented by staff and public comment, I hereby move that should the bond and mill levy election for a new Law and Justice Center pass on November 8, 2016, the entire City-owned property known as the proposed Rouse Justice Center site (described as Parcel A of the Amended Plat of Lots 14, 15 & 28 of the Imes’ Addition,) will no longer be necessary for the conduct of City business or the preservation of City property, that the public interest will be furthered by a market rate sale of the property, and to direct the City Manager to return to the Commission with a proposal for how to sell the property. It is important to note that the decision whether this real property is necessary for the conduct of the city’s business or the preservation of its property or that the sale is in the public interests is NOT a final decision on the sale of the property. The Commission must, at some point in the future, adopt an ordinance authorizing the City Manager to sign a purchase and sale agreement. 1 The Rouse Justice Center site is Parcel A of the Amended Plat of Blocks 14, 15 & 28 of the Imes’ Addition to Bozeman (Plat Reference C-41-K). 1401 AUTHORITY TO SELL REAL PROPERTY: The City Commission has authority over property owned by the City pursuant to Chapter, Art. 6, Div. 5 of the Bozeman Municipal Code (BMC). This chapter was created by Ordinance 1658 (2006) and later amended by Ordinances 1683 (2006) and 1713 (2007). The BMC requires the following when the city of Bozeman sells this type of property: 1. The City must conduct a public hearing and determine by a two-thirds vote of all members of the Commission that any real property owned by the city is “not needed for public use, or that the public interest may be furthered…” (2.06.880, BMC). In addition, section 2.06.870.A, BMC authorizes the City Commission to sell property “however acquired” that is “not necessary to the conduct of City business or the preservation of its property.” 2. The City may sell property using several listed methods: bid, auction with reserve, or negotiated sale or exchange, 2.06.880, BMC. 3. The City Commission may deposit the proceeds from the sale “in any account that is in the best interest of the city.” 2.06.910, BMC. 4. The sale of real property must be approved by an ordinance. Bozeman Charter, Sect. 2.11(5). 5. The sale may not be made for less than 90% of the appraised value. 2.06.890, BMC. 6. The appraisal must have been conducted within one year of the sale. 2.06.900, BMC. BACKGROUND: In light of the pending election for a bond measure and mill levy for the proposed joint Law and Justice Center, the City Commission should consider selling the City- owned Rouse Justice Center (RJC) site and allocate the resources to offset City debt connected to the new Law and Justice Center project. This public hearing provides the Commission the opportunity to take the first step in furtherance of the sale of the property. On July 14, 2014, the Commission adopted Ordinance 1894 authorizing the City Manager to approve a land exchange conveyance agreement between the Montana Department of Transportation (MDT) and the City of Bozeman. The City received approximately 7.8 acres owned by the MDT at 907 Rouse Avenue in exchange for approximately 12 acres at the Water Reclamation Facility (at the intersection of Nelson and Frontage Roads). The July 2014 exchange provided a high visibility and accessible location for the City’s criminal justice functions. In addition, obtaining the RJC property provided the City an opportunity to address redevelopment along the Rouse Avenue Corridor. In November 2014, property tax measures to fund the construction and operation of the proposed Rouse Justice Center were defeated at the polls. Per section Sec. 206.880, BMC, the City Commission may sell property if the property is not needed for public use, or the preservation of City property, or if “the public interest may be furthered.” For the past decade, providing adequate facilities for the City’s criminal justice functions (including police, municipal courts, and required support functions) has been the top priority for the City and the largest general fund capital facility investment we have tried to pass and, to date, have been unable to achieve. To that end, if sold, the public interest would be furthered by sale of the property as the City could allocate all resources from the sale of the RJC site toward the new joint Law and Justice Center project, thus reducing the City’s share of debt and lowering the annual levy. The levy for the proposed new Joint Law and Justice Center is 1402 currently set for $20,669,519. Multiple parties have expressed interest in the RJC property and one unsolicited letter of intent offered $3 million for the property. Using this offer as an example of the amount this sale could garner, $3 million used to offset the levy would result in a 15 percent reduction in the total levy cost. Until the City addresses the acute deficiencies related to insufficient and substandard law and justice facilities, all other general fund large facility projects have been placed on hold. Additionally, the public interest will be furthered as there is expressed interest in buying the property for redevelopment. At the time of purchase, redevelopment along Rouse was another priority along with affixing a location for the law enforcement center. Should the City sell to a developer the redevelopment goal will also be met. The redevelopment also places the property on the tax rolls for the first time in nearly a century, therefore the City will both benefit from sale price and long-term tax benefits by increasing the tax base. While the RJC site could be used for other City purposes, clearly the primary reason for obtaining the property was to secure it for the City’s criminal justice functions. If the bond measure and mill levy pass, the City’s criminal justice functions will continue to be located on the current Law and Justice Center campus and as such the RJC site will no longer be needed for this purpose. In totality, should the bond measure and mill levy pass, the property will no longer be needed for the primary purpose for which it was obtained. The public benefits of using the revenue from the sale to lower the City’s mill levy for new criminal justice facilities, spurring private economic development along the Rouse corridor, and returning the property to the tax rolls clearly outweigh any other governmental purposes for which the property could be used. Should the City Commission decide that the sale of this property is in the best interest of the City, City staff will come back in November with recommended next steps. The determination of need and public benefit is contingent on the bond measure and mill levy; as such, if the ballot measure is not approved by voters, the determination of need must be reconsidered. UNRESOLVED ISSUES: None ALTERNATIVES: As suggested by the City Commission. FISCAL EFFECTS: Positive. Should the City sell the property I recommend the ordinance authorizing the sale allocate the net revenue from the sale to lowering the City’s share of costs related to the construction of the new law and justice center. For illustrative purposes only: IF the city were to accept an offer to purchase, equal to the proposal received in August 2016, we could reduce our debt associated with the joint law and justice center from $20, 667 to $17, 667 thus reducing the City’s debt by ~15%. Attachments: Amended Plat of Blocks 14, 15 & 28 of the Imes’ Addition to Bozeman showing the RJC site 1403 1404 1405