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HomeMy WebLinkAbout07-27-20 City Commission Packet Materials - C6. Ord 2050 Final Adoption of Exchange Agreement w NWEPage 1 of 2 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Greg Sullivan, City Attorney Shawn Kohtz, City Engineer Mitch Overton, Director of Parks & Recreation SUBJECT: Final Adoption of Ordinance 2050 – Authorizing the City Manager to Execute an Exchange Agreement with NorthWestern Energy for a City-Owned Parcel on North Rouse Avenue in Exchange for Right-of-Way and Construction of a City Street to the Glen Lake Rotary Park and Granting of an Easement Across City Land MEETING DATE: July 27, 2020 AGENDA ITEM TYPE: Consent (Affirmative Vote of Four Commissioners Required) RECOMMENDATION: Approve final adoption. RECOMMENDED MOTION: If removed from the consent agenda: Having considered public comment and the information presented by staff, I hereby move to finally adopt Ordinance 2050 authorizing the City Manager to execute documents on Exhibit A of said Ordinance including the Exchange Agreement and granting of easement to NorthWestern Energy subject to contingencies provided in the Exchange Agreement and authorizing the City Manager and City Attorney to take all steps necessary to close the exchange. STRATEGIC PLAN: Section 4 of the City’s Strategic Plan calls for a Well Planned City stating, “4.3 Strategic Infrastructure Choices: Prioritize long-term investment and maintenance for existing and new infrastructure.” 79 Page 2 of 2 BACKGROUND: On Monday, July 13, 2020, the City Commission provisionally adopted Ordinance 2050 – authorizing the City Manager to enter into a land exchange agreement with Northwestern Energy. The exchange agreement will transfer ownership of a city owned parcel along North Rouse Avenue and grant an easement across the City storage yard to NorthWestern both in exchange for NorthWestern’s conveyance of fee title to two parcels and construction of a new access road to the southern portion of the Glen Lake Rotary Park. This action provides the final Commission decision regarding authorizing the exchange. The staff memorandum from July 13, 2020 provides detailed background information on the exchange. Attached to that staff memorandum are exhibits including a map showing the exchange parcels and appraisals for all real property involved. Those documents are not attached to this memorandum. Please refer to the July 13, 2020 Commission packet. Notice of passage of first reading will be published in the local newspaper on Sunday July 19th and Sunday July 26th. NEXT STEPS: Several additional steps are necessary to complete this exchange. These include: • Execution by the City Manager of the Exchange Agreement (30 days after final adoption); • Construction of the new city street; • Approval of the construction by the City Engineer; and • Closing on the Exchange Agreement including deeds and easement documents. UNRESOLVED ISSUES: As noted in the July 13, 2020 Commission Memorandum. FISCAL EFFECTS: As noted in the July 13, 2020 Commission Memorandum. ALTERNATIVES: None identified. Attachments: • Ordinance 2050 • Attachment A to Ordinance 2050 (Exchange Agreement and exhibits to the Exchange Agreement) 80 Ordinance 2050 Page 1 of 5 ORDINANCE NO. 2050 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, AUTHORIZING THE CITY MANAGER TO SIGN AN EXCHANGE AGREEMENT BETWEEN NORTHWESTERN ENERGY AND THE CITY OF BOZEMAN FOR THE CONVEYANCE OF PROPERTY OWNED BY THE CITY GENERALLY DESCRIBED AS APPROXIMATELY FOUR ACRES LOCATED ALONG NORTH ROUSE AVENUE AND AN ACCESS EASEMENT TO NORTHWESTERN ENERGY IN EXCHANGE FOR NEW RIGHT-OF-WAY AND CONSTRUCTION OF A CITY STREET ACCESSING THE GLEN LAKE ROTARY PARK NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA: Section 1 Legislative Findings. The City Commission hereby makes the following findings in support of adoption of this Ordinance: 1. The City of Bozeman owns real property along the west side of North Rouse Avenue north of Griffin Drive known described as Tract 33 of Northeast Annexation Tracts 33, 34, and 35 to the City of Bozeman, located in the Southwest Quarter, of Section 31, Township 1 South, Range 6 East, Gallatin County, Montana (the “City Property”). 2. NorthWestern Energy seeks to acquire a portion of the City Property for purposes of expanding its operations at its Griffin Drive location; the portion of the City property it seeks to acquire is shown on Exhibit A to the attached Exchange Agreement (the “City Exchange Parcel”). 3. In consideration of acquiring the City Exchange Parcel, Northwestern Energy (hereinafter referred to as “NorthWestern”) agrees to provide the City with two right- of-way parcels (“NorthWestern Exchange Parcels” (Exhibit B)) and pay the costs of design, engineering, and construction for a new city street accessing the southern portion of Glen Lake Rotary Park. 81 Ordinance 2050, Exchange Agreement with NorthWestern Energy Ordinance 2050 Page 2 of 5 4. Section 2.11 of the Bozeman City Charter requires adoption of an ordinance when the City “convey[s]… or authorize[s] the conveyance… of any lands of the city.” 5. Section 2.06.870 of the Bozeman Municipal Code (BMC) grants the City Commission the jurisdiction and power to sell and exchange city property, however acquired, belonging to the City that is not necessary to the conduct of city business or the preservation of property. 6. Section 2.06.890.B, BMC, subject to section 2.06.870.D, authorizes the sale of City property for not less than 90 percent of the appraised value. 7. Section 2.06.900, BMC provides that “[N]o sale of real property shall be made of any property unless it has been appraised within one year prior to the date of the sale. The appraisal report for the City Exchange Parcel is dated March 25, 2020. The date of valuation of the easement to be granted by the City is April 28, 2020. 8. On March 19, 2018, the City Commission conducted a public hearing and determined the City Exchange Parcel was no longer necessary for the conduct of City business or the preservation of City property and the public interest would be furthered by conveyance of the same. The City Commission hereby confirms this finding. 9. Should the Bozeman City Commission provisionally adopt this ordinance by no less than a two-thirds vote of its total membership, notice of provisional adoption of this ordinance shall be published in compliance with Sect. 7-1-4127, MCA, prior to final adoption. Section 2 The Bozeman City Commission hereby adopts this Ordinance and in doing so authorizes the City Manager to sign the attached Exchange Agreement (Exhibit A to this Ordinance). In doing so, the Commission authorizes, subject to fulfillment of the contingencies as stated in the attached Exchange Agreement and those contingencies listed below: 1. The conveyance of the fee title of the City Exchange Parcel to NorthWestern; 2. The conveyance of an easement to NorthWestern for NorthWestern’s access from NorthWestern’s existing yard across a portion of City-owned property (the “triangle property”) to the City Exchange Parcel; 3. The acceptance of fee title to two right-of-way parcels to be granted by NorthWestern to the City; and 4. The construction of a new city street in a design to be approved by the City Engineer from Manley Road to the Glen Lake Rotary Park. 82 Ordinance 2050, Exchange Agreement with NorthWestern Energy Ordinance 2050 Page 3 of 5 The Commission’s authorization for the City Manager to sign the Exchange Agreement is not be effective until 30 days after final adoption of this Ordinance; as such, the Exchange Agreement shall not be binding on the City of Bozeman until that time. Section 4 The Commission hereby authorizes the City Manager and City Attorney to take all steps necessary to finalize and close the Exchange Agreement and easement, including preparation and execution of all necessary documents. Section 5 Repealer. All provisions of the ordinances of the City of Bozeman in conflict with the provisions of this ordinance are, and the same are hereby, repealed and all other provisions of the ordinances of the City of Bozeman not in conflict with the provisions of this ordinance shall remain in full force and effect. Section 6 Savings Provision. This ordinance does not affect the rights and duties that matured, penalties that were incurred or proceedings that were begun before the effective date of this ordinance. All other provisions of the Bozeman Municipal Code not amended by this Ordinance shall remain in full force and effect. Section 7 Severability. That should any sentence, paragraph, subdivision, clause, phrase or section of this ordinance be adjudged or held to be unconstitutional, illegal, or invalid, the same shall not affect the validity of this ordinance as a whole, or any part or provision thereof, other than the part so decided to be invalid, illegal or unconstitutional, and shall not affect the validity of the Bozeman Municipal Code as a whole. 83 Ordinance 2050, Exchange Agreement with NorthWestern Energy Ordinance 2050 Page 4 of 5 Section 8 Codification Instruction. The provisions of this Ordinance shall not be codified in the Bozeman Municipal Code; rather, this Ordinance shall be maintained by the City Clerk in an indexed file of all Ordinances not to be codified. Section 9 Effective Date. This ordinance shall be in full force and effect 30 days after final adoption. 84 Ordinance 2050, Exchange Agreement with NorthWestern Energy Ordinance 2050 Page 5 of 5 PROVISIONALLY ADOPTED by the City Commission of the City of Bozeman, Montana, on first reading at a regular session held on the 13th day of July, 2020. ____________________________________ CHRIS MEHL Mayor ATTEST: _______________________________ MIKE MAAS City Clerk FINALLY PASSED, ADOPTED AND APPROVED by the City Commission of the City of Bozeman, Montana on second reading at a regular session thereof held on the ____ day of _______________, 2020. The effective date of this ordinance is _________________, __ 2020. _________________________________ CHRIS MEHL Mayor ATTEST: _______________________________ MIKE MAAS City Clerk APPROVED AS TO FORM: _________________________________ GREG SULLIVAN City Attorney 85 Page 1 of 21 EXCHANGE AGREEMENT THIS EXCHANGE AGREEMENT (“Agreement”) is made and entered into this ____ day of ___________, 2020, by and between the City of Bozeman, a self-governing municipality operating pursuant to its Charter and the laws of the State of Montana, of 121 N. Rouse Avenue, Bozeman, Montana 59715 (the “City”) and NorthWestern Corporation, a Delaware Corporation, d/b/a NorthWestern Energy of 11 East Park, Butte, Montana 59701 (“NorthWestern”) provides as follows: Recitals 1. The City is the owner of a certain parcel of real property, located in Gallatin County, Montana, which is described as follows: Tract 33 of Northeast Annexation Tracts 33, 34, and 35 to the City of Bozeman, located in the Southwest Quarter, of Section 31, Township 1 South, Range 6 East, Gallatin County, Montana (the “City Property”) 2. NorthWestern is the owner of two certain parcels of real property, located in Gallatin County, Montana which are described as follows: Lot 2B of the Amended Plat of Lot 2, Minor Subdivision No. 154, located in the Southwest Quarter, of Section 31, Township 1 South, Range 6 East, Gallatin County, Montana (“Lot 2B”); and A tract of land located within the SE1/4 of Section 31, T1S, R6E, PMM, Gallatin County, Montana, and being a portion of Certificate of Survey No. 157 and described as follows: Beginning at a point on the south boundary line of Section 31, T1S, R6E from which the SW corner of said Section 31 bears S88°10’08”W 1463.36 feet, said point being the SE Corner of said Certificate of Survey No. 157 and the SE corner of the tract herein described and being witnessed by a 5/8” x 24” rebar with cap which bears N2°17’33”W 35.00 feet from said point; thence N2°17’33”W 1221.71 feet on the most easterly boundary of said Certificate of Survey No. 157; thence S88°10’08”W 240.00 feet; thence S2°17’33”E 1221.71 feet to the south boundary line of said Section 31, being coincident with south boundary line of said Certificate of Survey No. 157, said point being witnessed by a 5/8” x 24” rebar with cap which bears N2°17’33”W 158.40 feet from said point; thence N88°10’08”E 240.00 feet on the south boundary line of said Section 31 to the point of beginning, according to Certificate of Survey No. 157A. (“COS 157A”) (Collectively the “NorthWestern Properties”) 86 Page 2 of 21 3. NorthWestern intends to construct a city standard street from Manley Road, through a city park (the “Manley Road Park”), and over the NorthWestern Properties, and which street will provide access to the Manley Road Park, Glen Lake Rotary Park, and NorthWestern’s Real Property. NorthWestern is willing to construct such street to the Glen Lake Rotary Park, (the “Park”) and to exchange the costs of design, engineering, and constructing the street and the portions of the NorthWestern Properties over which the street will be located to the City in exchange for a certain portion of the City Property. 4. The City determined on March 19, 2018 that a portion of the City Property, was no longer necessary for the conduct of City business or the preservation of City property and also that the public interest will be furthered by an exchange of the portion of the City Property for the portion of the NorthWestern Properties on which the street is to be constructed, allowing a second public access to the Park. 5. The City and NorthWestern (individually “Party” and collectively the “Parties”) desire to exchange such properties on the terms and subject to the conditions, as established pursuant to this Agreement. Agreement Now therefore for good and valuable consideration, the Parties agree as follows: 1. Exchange Parcels. a. City Exchange Parcel. The portion of the City Property, as is generally depicted as Remainder Tract 2 on Exhibit “A” (the “City Exchange Parcel”), together with all interest of the City in any adjacent, vacated streets and alleys; all easements and other appurtenances thereto; and all improvements and all permanently installed or attached fixtures. Further provided, the City’s conveyance of the City Exchange Parcel shall be: i. Reserving an easement to the City for its existing sewer line and future telecommunications facilities 30 feet in width and located at the southerly end of the City Exchange Parcel, for the benefit of the City, its successors or assigns. This existing sewer line shall remain the sole property of the City. ii. Together with an easement for ingress and egress to and between the City Exchange Parcel and NorthWestern’s Service Center Property (Tract 37 Northeast Annexation) as generally depicted as Proposed New 50’ Wide Private Access Easement on Exhibit “A”. The easement shall be for the benefit of NorthWestern, its successors or assigns. The easement shall not be for use by the general public or any other person or entity; however, the City may continue to use the easement area for purposes related to its Storage Yard Property, provided such use does not unreasonably interfere with 87 Page 3 of 21 NorthWestern’s use of the easement. In the event NorthWestern transfers ownership of the City Exchange Parcel without transferring its ownership of its Service Center property to the same party this easement shall terminate. If the easement does not terminate as described above, the uses authorized by the easement shall be limited to those uses substantially similar to NorthWestern’s use or the easement shall terminate. Notwithstanding the above, in the event the easement does transfer to NorthWestern’s assigns or successors, the easement shall not be for ingress and egress for the public and may not be used for non-industrial commercial or residential purposes. b. NorthWestern Exchange Parcels. Lot 2B as is generally depicted on Exhibit “B”, page 1 and the portion of the COS 157A, as in generally depicted as TR 4 on Exhibit “B”, page 2 (the “NorthWestern Exchange Parcels”), together with all interest of NorthWestern in any adjacent, vacated streets and alleys; all easements and other appurtenances thereto; and all improvements and all permanently installed or attached fixtures. Further provided, NorthWestern’s conveyance of the NorthWestern Exchange Parcels shall be: i. Reserving an easement to NorthWestern for its existing natural gas and electric lines, for the benefit of NorthWestern, its successors or assigns. These existing natural gas and electric lines shall remain the sole property of Northwestern. c. Generally. The City Exchange Parcel and the NorthWestern Exchange Parcels (Collectively the “Parcels”) shall be conveyed along with all interests of the conveying party in any surface or ground waters, whether the same be statements of claim, certificate of water right, permits to appropriate water, exempt existing rights, interests in irrigation or ditch companies, ditch rights or easements or otherwise, which are appurtenant to the respective Parcels. 2. Property Division. a. City Exchange Parcel. The Parties understand that to create a legally conveyable parcel that the City Exchange Parcel will need to be divided from the City Property. The Parties understand that such a division is intended to be accomplished by certificate of survey, creating the City Exchange Parcel, using the exemption for “rights of way or utility sites” pursuant to Montana Code Annotated §76-3-201(1)(h). In order to record such a survey all real property taxes and special assessments assessed and levied on the City Property, if any, may need to be paid. NorthWestern will pursue the survey and necessary governmental approvals, at its own cost and expense. The City agrees, subject to Section 10, below, to cooperate with the survey and governmental approvals, to permit NorthWestern, its surveyors, engineers and contractors access to both the City Exchange Parcel and the City Property for all necessary survey and planning work, to sign all applications, consents, surveys and other documents associated with the same, and, if applicable, to pay before the recording of the survey all real 88 Page 4 of 21 property taxes and special assessments assessed and levied on the City Property as required to record the survey dividing the City Exchange Parcel from the City Property. At closing, the Parties agree that NorthWestern shall reimburse the City for the portion of the real property taxes and special assessments paid by the City in order to record the survey, which are attributable to the City Exchange Parcel from the date of Closing. In determining the amount of real property taxes and special assessments attributable to the City Exchange Parcel, all improvements other than those located on the City Exchange Parcel shall be excluded and the real property taxes and special assessments pertaining to the bare land shall be in proportion which the area of the City Exchange Parcel bears to the area of the City Property. b. NorthWestern Exchange Parcels. The Parties also understand that to create a legally conveyable parcel that one of the NorthWestern Exchange Parcels will need to be divided from the second of the NorthWestern Properties identified in Section 2 of the Recitals. It is understood that such a division is intended to be accomplished by certificate of survey, creating the second of the NorthWestern Exchange Parcels, using the exemption for “rights of way or utility sites” pursuant to Montana Code Annotated §76-3-201(1)(h). In order to record such a survey all real property taxes and special assessments assessed and levied on the NorthWestern Properties, if any, may need to be paid. NorthWestern will pursue the survey and necessary governmental approvals, at its own cost and expense. NorthWestern agrees, if applicable, to pay before the recording of the survey all real property taxes and special assessments assessed and levied on the NorthWestern Properties as required to record the survey dividing the NorthWestern Exchange Parcels from the NorthWestern Properties. At closing, the Parties agree that the City shall reimburse NorthWestern for the portion of the real property taxes and special assessments paid by NorthWestern in order to record the survey, which are attributable to the NorthWestern Exchange Parcels from the date of Closing. In determining the amount of real property taxes and special assessments attributable to the NorthWestern Exchange Parcels, all improvements other than those located on the NorthWestern Exchange Parcels shall be excluded and the real property taxes and special assessments pertaining to the bare land shall be in proportion which the area of the NorthWestern Exchange Parcels bears to the area of the NorthWestern Properties. 3. Street Construction. The Parties desire a city standard street be constructed connecting Manley Road to the Park. The Parties acknowledge the street shall be located over the Manley Road Park and over the NorthWestern Exchange Parcels. Upon approval and recording of the survey anticipated by Section 2(b) creating the NorthWestern Parcels, NorthWestern shall, at its own cost and expense, cause a city standard street in a design approved by the City Engineer to be constructed connecting Manley Road to the Park, in conformance with all applicable design, engineering and construction standards as typically required by the City for its public streets, including seeding of disturbed areas and control of noxious weeds. NorthWestern, upon acceptance of the street by the City Engineer, shall assign to the 89 Page 5 of 21 City all the assignable warranties related to the construction of the street which it obtains from the contractor(s) retained by NorthWestern to construct the street. NorthWestern agrees to include in its contract for construction of the City Street a requirement its contractors provide the City a 2-year maintenance bond listing the City as an obligee. 4. Consideration. The Parties recognize the estimated costs of constructing the street connecting Manley Road to the Park, combined with the costs of survey and engineering to create the NorthWestern Exchange Parcels and the City Exchange Parcels, and the appraised value of the NorthWestern Exchange Parcels as used for road purposes is anticipated to be greater than the appraised value of the City Exchange Parcel. The Parties nonetheless determine the exchange to be in their respective interests. NorthWestern specifically recognizes the City will not provide any additional remuneration to NorthWestern above the appraised value of the City Exchange Parcel excepting closing costs as described herein. Similarly, the City specifically recognizes NorthWestern will not provide any additional remuneration to the City above the costs of constructing the street connecting Manley Road to the Park, combined with the costs of survey and engineering to create the NorthWestern Exchange Parcels and the City Exchange Parcels, and the appraised value of the NorthWestern Exchange Parcels as used for road purposes, excepting closing costs as described herein. 5. Contingencies. The Parties agree that this transaction is subject to the contingencies as follows: a. Title Review. The Parties’ obligation to consummate the exchange is contingent upon their respective review and approval of a preliminary title commitment concerning the Parcels, which each would acquire under this Agreement (the “Title Review”). If the Title Review discloses any condition(s) that is unacceptable to either of the Parties, such Party shall give written notice of said unacceptable condition(s) to the other Party on or before thirty (30) days from the date the Party giving the notice received the preliminary title commitment. If a Party fails to provide such notice and copy by such date, then this contingency shall be deemed waived by that Party. Upon receipt of written notice of unacceptable condition(s) the receiving Party shall have thirty (30) days to advise the Party giving the notice in writing whether it will agree to remedy the unacceptable condition(s). If the receiving Party elects to remedy the unacceptable condition(s) the transaction shall proceed to closing, however it shall have an additional thirty (30) days from the specified closing date to affect the remedy, if necessary. If the receiving Party elects not to remedy the unacceptable condition(s) noted the obligation of the Party giving the notice to consummate the exchange shall be terminated. b. Appraisals. Pursuant to Bozeman Municipal Code Section 2.06.870, both the City Exchange Parcel and the NorthWestern Exchange Parcels must be appraised. The City will commission a disinterested certified general real estate appraiser to 90 Page 6 of 21 provide an appraisal of the City Exchange Parcel. Similarly NorthWestern will commission a disinterested certified general real estate appraiser to provide an appraisal of the NorthWestern Exchange Parcels, which appraisal shall account for the value of the street, and related improvements, to be constructed by NorthWestern and which must also recognize the NorthWestern Exchange Parcels are to be used for road purposes only and not for future development. Upon receipt of such appraisals, the Party receiving the appraisal shall promptly provide a copy to the other Party. If the appraisals result in the exchange anticipated by this Agreement to not qualify under Bozeman Municipal Code Section 2.06.870, than the Parties’ respective obligations to exchange shall be terminated and this Agreement will have no further force or effect. c. Subdivision. The Parties’ respective obligations to exchange under this Agreement are contingent upon their agreeing as to the final configuration of the City Exchange Parcel and NorthWestern Exchange Parcels, including easements (if any) and the filing of the requisite surveys. If the surveys creating the City Exchange Parcel and NorthWestern Exchange Parcels are not able to be filed of record on or before sixty (60) days from the date of this Agreement, the Parties’ obligations to exchange shall be terminated and this Agreement will have no further force or effect. d. Floodplain Permit. NorthWestern’s obligation to consummate the exchange is contingent upon receipt of a floodplain permit for or assurances, adequate in NorthWestern’s sole opinion, that NorthWestern’s anticipated use of the City Exchange Parcel will be permitted (the “Floodplain Permit or Assurance”). If NorthWestern does not receive the Floodplain Permit or Assurance, NorthWestern shall give written notice of the same to the City, on or before the date of Closing, and NorthWestern’s obligation to consummate the exchange shall be terminated. NorthWestern shall be responsible for all costs associated with pursuing the Floodplain Permit or Assurance. e. Zoning Change. NorthWestern’s obligation to consummate the exchange is contingent upon its review and approval of a change in the zoning district for the City Exchange Parcel from PLI to M-1 (the “Zoning Change”). If NorthWestern does not receive the Zoning Change NorthWestern shall give written notice of the same to the City, on or before the date of Closing, and NorthWestern’s obligation to consummate the exchange shall be terminated. NorthWestern shall be responsible for all costs associated with pursuing the Zoning Change. f. General Due Diligence. The Parties’ obligation to consummate the exchange is contingent upon their respective review and approval of such other professional, independent due diligence investigations concerning the Parcels, which each would acquire under this Agreement, which such Party desires to have investigated (the “Due Diligence”). If the Due Diligence discloses any condition(s) that are unacceptable to either of the Parties, such Party shall give written notice of said unacceptable condition(s) to the other Party, on or before 91 Page 7 of 21 sixty (60) days from the date of this Agreement. If a Party fails to provide such notice and copy by such date, then this contingency shall be deemed waived by that Party. Upon receipt of written notice of unacceptable condition(s) the receiving Party shall have sixty (60) days to advise the Party giving the notice in writing whether it will agree to remedy the unacceptable condition(s). If the receiving Party elects to remedy the unacceptable condition(s) the transaction shall proceed to closing, however it shall have an additional sixty (60) days from the specified closing date to affect the remedy, if necessary. If the receiving Party elects not to remedy the unacceptable condition(s) noted the obligation of the Party giving the notice to consummate the exchange shall be terminated. The Parties shall be responsible for all costs associated with their respective Due Diligence. Each Party shall, upon reasonable prior notice, permit reasonable access to its Parcel for the other Party and those involved in its Due Diligence. Provided, that Due Diligence shall cause no material damage to the Parcels, and if it should the Party or its representative causing such damage shall indemnify and hold the Party owning the damaged Parcel completely harmless from such damage. 6. Closing Date. The closing date shall be on or before forty-five (45) days from the date the street construction anticipated by Section 3 is substantially complete as determined by the City Engineer, unless the Parties otherwise agree in writing. The closing shall take place at Security Title Company 600 South 19th Avenue, Bozeman, Montana 59715 (the Closing Agent). The Parties shall deposit with the Closing Agent all monies and executed documents as necessary to complete the transaction as anticipated by this Agreement. 7. Closing Costs. a. NorthWestern’s Closing Costs. i. Acquisition of City Exchange Parcel. NorthWestern shall pay for one-half of the charges of the Closing Agent related to its acquisition of the City Exchange Parcel; for the recording charges for all deeds, water right transfers, or other documents, associated with its acquisition of the City Exchange Parcel, other than those to be paid by the City per this subsection (a); and any commissions or fees charged by any real estate broker or salesperson, attorney, accountant, appraiser or any other professional retained by NorthWestern in conjunction with the transaction anticipated herein. ii. Disposition of the NorthWestern Exchange Parcels. NorthWestern agrees to pay for one-half of the charges of the Closing Agent related to the disposition of the NorthWestern Exchange Parcels; all title insurance premiums and charges, including the cost of an ALTA Survey if required to issue the title policy for the NorthWestern Exchange Parcels; and the recording charges associated with the release of any encumbrances or liens on the NorthWestern Exchange Parcels to be satisfied by the City per the terms of this Agreement. 92 Page 8 of 21 b. The City’s Closing Costs. i. Acquisition of the NorthWestern Exchange Parcel. The City shall pay for one-half of the charges of the Closing Agent related to its acquisition of the NorthWestern Exchange Parcels; for the recording charges for all deeds, water right transfers, or other documents, associated with its acquisition of the NorthWestern Exchange Parcels, other than those to be paid by NorthWestern per this subsection (b); and any commissions or fees charged by any real estate broker or salesperson, attorney, accountant, appraiser or any other professional retained by the City in conjunction with the transaction anticipated herein. ii. Disposition of the City Exchange Parcel. The City agrees to pay for one-half of the charges of the Closing Agent related to the disposition of the City Exchange Parcel; all title insurance premiums and charges, including the cost of an ALTA Survey if required to issue the title policy for the City Exchange Parcel; and the recording charges associated with the release of any encumbrances or liens on the City Exchange Parcel to be satisfied by the City per the terms of this Agreement. 8. Taxes, Assessments (SID/RSID) and Rents. The City and NorthWestern agree to prorate taxes, special improvement assessments for the current tax year, as well as pre-paid rents, permit fees, water and sewer charges, irrigation assessments, maintenance fees, and any other pre-paid charges concerning the Parcels, as are applicable, as of the date of closing. If the current year taxes are not known, NorthWestern and The City agree that the previous year's tax assessment or an estimated amount can be used to base the pro-ration. 9. Conveyance. a. City Exchange Parcel. The City agrees, upon Closing, to execute and deliver to NorthWestern a Warranty Deed ("Deed") to the City Exchange Parcel, substantially in the form attached hereto as Exhibit “C”. The City shall convey any interests in leases, permits, allotments, water rights or other property by appropriate transfer documents for the interest at issue. b. NorthWestern Exchange Parcels. NorthWestern agrees, upon Closing, to execute and deliver to the City a Warranty Deed ("Deed") to the NorthWestern Exchange Parcels, substantially in the form attached hereto as Exhibit “D”. NorthWestern shall convey any interests in leases, permits, allotments, water rights or other property by appropriate transfer documents for the interest at issue. 10. Title Insurance. a. City Exchange Parcel. The City shall purchase for the benefit of NorthWestern an American Land Title Association (ALTA) Coverage Owners Title Insurance 93 Page 9 of 21 Policy (as evidenced by a standard form ALTA title insurance commitment) in an amount equal to the Appraised Value of the City Exchange Parcel. NorthWestern may, as its option and expense, purchase additional coverages and/or a mineral guarantee. Upon entry into this Agreement by both Parties, the City will order a preliminary commitment for title insurance concerning the City Exchange Parcel and will provide same to NorthWestern, promptly after such commitment is issued. b. NorthWestern Exchange Parcels. NorthWestern shall purchase for the benefit of the City an American Land Title Association (ALTA) Coverage Owners Title Insurance Policy (as evidenced by a standard form ALTA title insurance commitment) in an amount equal to the Appraised Value of the NorthWestern Exchange Parcels. The City may, as its option and expense, purchase additional coverages and/or a mineral guarantee. Upon entry into this Agreement by both Parties, NorthWestern will order a preliminary commitment for title insurance concerning the NorthWestern Exchange Parcels and will provide the same to the City, promptly after such commitment is issued. 11. Possession and Risk of Loss. The Parties shall deliver possession and occupancy of their respective Parcels to the each other upon the closing date, after all monies are received and documents delivered. All loss or damage to any of the Parcels, by any cause, is assumed by the Party presently owning such Parcel through the time of closing unless otherwise specified. 12. City Not Bound In Its Regulatory Authority. NorthWestern recognizes the City enters this Agreement as a landowner to this Agreement and not in its regulatory role. As such, NorthWestern agrees that nothing herein binds the City to make certain approvals in its regulatory authority in review of \subdivision exemptions, floodplain permits, zoning changes, or site plan applications. 13. Disclosures. a. General Disclosure. Except as provided herein, each Party acknowledges that it has examined the Parcel it is to acquire in the exchange anticipated by this Agreement and acknowledges that it enters into this Agreement reliance upon such examination, upon inspections conducted by the inspectors of its choice and that it is acquiring such Parcel, "AS IS" without any warranty or representation as to its condition, unless expressly stated or referenced in this Agreement. Specifically, NorthWestern acknowledges it has conducted an environmental field investigation (Phase II), which consisted of the installation of soil borings and monitoring wells to test the soil and groundwater for contamination, of the City Exchange Property and agrees it will acquire the City Exchange parcel with full knowledge of the contents of the environmental field investigation (Phase II). b. Encroachments on City Exchange Parcel. NorthWestern acknowledges certain encroachments exist on the City Exchange Parcel including several trailer homes 94 Page 10 of 21 located in the southern portion of the City Exchange Parcel (the “Encroachments”). NorthWestern agrees to take possession of the City Exchange Parcel subject to the Encroachments. c. Environmental Disclosure of City Exchange Parcel. NorthWestern acknowledges the City Parcel may contain Hazardous Substances. NorthWestern enters into this agreement having conducted and reviewed the environmental condition of the City Exchange Property and agrees THE CITY DOES NOT WARRANT, EITHER EXPRESSLY OR IMPLIEDLY, THE CONDITION OR FITNESS OF THE CITY PARCEL, ANY SUCH WARRANTY BEING HEREBY EXPRESSLY NEGATED. NorthWestern, by acceptance hereof, acknowledges that it has made a complete inspection of the City Exchange Parcel and is in all respects satisfied as to the condition of the City Exchange Parcel regarding Hazardous Substances and accepts the City Exchange Property in respect to Hazardous Substances “AS IS.” The term “Hazardous Substances” as used in this Agreement means (1) any petroleum or petroleum products, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, polychlorinated biphenyls and radon gas and (2) any chemicals, materials or substances defined as or included in the definitions of “hazardous substances,” “hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “bio-hazard,” “biological waste,” “medical waste” or words of similar import, under any applicable federal, state or local environmental, safety or health laws, ordinances, rules of common law, regulations or directives (“collectively “Environmental Laws”). d. Hazardous Substances found during Road Construction. NorthWestern agrees that should any Hazardous Substances be found on the NorthWestern Exchange Parcels during construction of the street as provided for in Section 3, above, NorthWestern shall remediate such Hazardous Substances during construction of the city street in conformance with all applicable Environmental Laws and be solely responsible for liabilities and costs of such remediation. Similarly, the City agrees that should any Hazardous Substances be found on Manley Road Park during construction of the street as provided for in Section 3, above, the City shall remediate such Hazardous Substances during construction of the city street in conformance with all applicable Environmental Laws and be solely responsible for liabilities and costs of such remediation. e. Megan’s Law. In accordance with Title 46, Chapter 23, Part 5 of the Montana Code Annotated certain individuals are required to register their address with local law enforcement agencies as part of Montana’s Sexual and Violent Offender Registration Act. You may obtain information on these registrations by contacting the local county sheriff’s office, the Montana Department of Justice in Helena, Montana and probation officers assigned to your area. The real estate broker or salesperson, identified above does not have actual knowledge of sexual or violent offender registration information that pertains to the property that is the subject of this Agreement. 95 Page 11 of 21 f. Noxious Weeds. Each Party hereby notifies the other Party that noxious weeds exist or may exist on the Parcels that are the subject of this Agreement. Each Party hereby notifies the other Party that it is unlawful for any person to permit any noxious weed to propagate or go to seed on the person's land, except that any person who adheres to the noxious weed management program of the person's weed management district or who has entered into and is in compliance with a noxious weed management agreement is considered in compliance with the law. g. Water Right Ownership Update Disclosure. By Montana law, failure of the Parties at closing or transfer of real property to pay the required fee to the Montana Department of Natural Resources and Conservation for updating water right ownership may result in the transferee of property being subject to a penalty. Additionally, in the case of water rights being exempted, severed, or divided, the failure of the Parties to comply with section 85-2-424, MCA, could result in a penalty against the transferee and rejection of the deed for recording. 14. Entire Agreement and Modifications. This Agreement supersedes all prior agreements, contracts and understandings between the Parties. It may not be modified or terminated orally. No modification, termination or attempted waiver shall be valid unless in writing signed by the party against whom the same is sought to be enforced. 15. Time. Time is of the essence in this Agreement and all clauses herein. 16. Discrimination. The Parties agree not to discriminate in the fulfillment of this Agreement on the basis of race, color, religion, creed, sex, age, marital status, national origin or actual or perceived sexual orientation, gender identify or disability. 17. Assignment. The Parties acknowledge the unique nature of this Agreement; as such, a Party may not assign this Agreement without the express written authorization from the other Party. 18. Remedies. (a) If NorthWestern fails to close under the provisions of this Agreement because of NorthWestern’s default, then the City shall have as the City’s sole remedy the option of either of the following: (i) Terminating this Agreement by giving written notice to NorthWestern; or (ii) Enforcing specific performance by NorthWestern of NorthWestern’s obligations under this Agreement. 96 Page 12 of 21 (b) If the City fails to close under the provisions of this Agreement because of the City’s default, NorthWestern shall have as NorthWestern’s sole remedy the option of either of the following: (i) Terminating this Agreement by giving written notice to the City; or (ii) Enforcing specific performance by the City of the City’s obligations under this Agreement. a. (c) For all other breaches by a Party of the express representations, warranties, continuing obligations, made or given in this Agreement (including the attached exhibits), the other Party shall have any and all remedies available to it in law or in equity. 19. Controlling Law. This Agreement shall be interpreted under the laws of the State of Montana. 20. Interpretation. This Agreement has been reviewed by both Parties, each of whom has had the opportunity to consult with independent counsel regarding it and has done so to the extent that such party desired. No stricter construction or interpretation of the terms hereof shall be applied against either party as the drafter hereof. 21. Attorney’s Fees. In the event either party finds it necessary to employ counsel in order to enforce, rescind or interpret any term or provision of this Agreement, , the prevailing party shall be entitled to recover from the other party in addition to costs and disbursements allowed by law, the prevailing party's reasonable attorneys fees. Attorneys fees shall include any attorneys services rendered prior to the institution of litigation, including the Bozeman City Attorney’s Office and NorthWestern’s in-house attorneys, and include all matters pertaining to litigation as may be necessarily incurred in such proceedings. 22. Facsimile and Counterparts. The Parties agree that a facsimile copy, which contains the Parties’ respective signatures, shall be considered an original. Further, this Agreement may be executed in counterparts, each of which when taken together shall constitute a fully executed Agreement. 23. Notices. Any notice, demand, request or other communication which either Party hereto may be required or may desire to give under this Agreement shall be in writing and shall be deemed to have been properly given if (a) hand delivered (effective upon delivery), (b) mailed (effective three (3) days after mailing) by United States registered or certified mail, postage prepaid, return receipt requested, (c) sent by a nationally recognized overnight delivery service (effective one (1) day after delivery to such courier) or (d) sent by facsimile or email (effective upon confirmation of transmission), in each case, addressed as follows: 97 Page 13 of 21 IF TO NORTHWESTERN: IF TO THE CITY: NorthWestern Energy Attn. Pat Patterson Division Manager 121 E Griffin Drive Bozeman, Montana 59771-0490 pat.patterson@northwestern.com City of Bozeman Attn: City Manager Bozeman City Hall PO Box 1230 Bozeman, Montana 59771-1230 WITH A COPY TO: WITH A COPY TO: NorthWestern Corporation Attn: John Tabaracci Corporate Counsel 208 N. Montana Ave. Suite 205 Helena, Montana, 59601 john.tabaracci@northwestern.com Bozeman City Attorney PO Box 1230 Bozeman, MT 59771-1230 City of Bozeman a self-governing municipality operating pursuant to its Charter and the laws of the State of Montana By:_________________________ Its: _________________________ Attest: ______________________ Its: _________________________ NorthWestern Corporation d/b/a NorthWestern Energy, a Delaware Corporation By:_________________________ Its: _________________________ 98 Page 14 of 21 Exhibit “A” - Illustration of the City Exchange Parcel 99 Page 15 of 21 Exhibit “B” Page 1 - Illustration of NorthWestern Exchange Parcels 100 Page 16 of 21 Exhibit “B” Page 2 - Illustration of NorthWestern Exchange Parcels 101 Page 17 of 21 Exhibit “C” - Form of Deed City Exchange Parcel After Recording, Return To: NorthWestern Energy Attn: Lands and Permitting 11 East Park Butte, MT 59701 WARRANTY DEED FOR VALUE RECEIVED, City of Bozeman, a self-governing municipality operating pursuant to its Charter and the laws of the State of Montana, of 121 N. Rouse Avenue, Bozeman, Montana 59715 (“Grantor”) does hereby grant, bargain, sell and convey unto, NorthWestern Corporation, a Delaware Corporation, d/b/a NorthWestern Energy of 11 East Park, Butte, Montana 59701 (“Grantee”), and to its successors and assigns, the following described premises in Gallatin County, Montana, to-wit: Remainder Tract 2 of Certificate of Survey No. ____, being a part of Northeast Annexation Tract 33, situated in the SW¼ of Section 31, T1S, R6E, PMM in the City of Bozeman, Gallatin County, Montana Together with an easement for ingress and egress over Remainder Tract 1 of Certificate of Survey No. ____, in the location and of the dimensions as depicted in Certificate of Survey No. ___ to and between Remainder Tract 2 of Certificate of Survey No. ____ and Tract 37 Northeast Annexation; provided the easement shall be for the benefit of the Grantee, its successors or assigns. The easement shall not be for use by the general public or any other person or entity; however, the Grantor may continue to use the easement area for purposes related to its Storage Yard Property, provided such use does not unreasonably interfere with Grantee’s use of the easement. In the event Grantee transfers ownership of Remainder Tract 2 of Certificate of Survey No. ____ without transferring its ownership of Tract 37 Northeast Annexation to the same party this easement shall terminate. If the easement does not terminate as described above, the uses authorized by the easement shall be limited to those uses substantially similar to Grantee’s use or the easement shall terminate. Notwithstanding the above, in the event the easement does transfer to Grantee’s assigns or successors, the easement shall not be for ingress and egress for the public and may not be used for non-industrial commercial or residential purposes. But reserving onto the Grantor an easement for an existing sewer line and future telecommunications facilities, 30 feet in width and located at the southerly end of Remainder Tract 2 of Certificate of Survey No. ____, for the benefit of the Grantor, its successors or assigns. The existing sewer line shall remain the sole property of the Grantor. 102 Page 18 of 21 [Note this description may change to reflect the survey for the City Exchange Parcel] TO HAVE AND TO HOLD the said premises together with its appurtenances unto the Grantee, and its successors and assigns forever, SUBJECT TO THE FOLLOWING: 1. Reservations and exceptions in patents from the United States or the State of Montana; 2. Existing easements and rights-of-way of record; 3. All building, use, zoning, sanitary, and environmental restrictions; and 4. All prior conveyances, leases or transfers of any interest in minerals, including oil, gas, and all other hydrocarbons and minerals. Grantor further covenants and warrants that Grantor is now seized in fee simple absolute of said premises; that Grantor has full power to convey the same; that the premises is free from all encumbrances except those set forth above; that Grantee shall enjoy the quiet and peaceful possession thereof without any disturbance; that Grantor will, on demand, execute and deliver to Grantee, at the expense of Grantor, any further assurance of the same that may be reasonably required; and, with the exceptions set forth above, Grantor agrees to defend all right, title, and interest in the premises against any person lawfully claiming the same. DATED this _____ day of ___________, 20___ 103 Page 19 of 21 City of Bozeman a self-governing municipality operating pursuant to its Charter and the laws of the State of Montana By:_________________________ Its: _________________________ Attest: ______________________ Its: _________________________ STATE OF MONTANA ) : ss County of Gallatin ) This instrument was acknowledged before me on the _____ day of _______________, 20__ by __________ as ___________ and __________ as ___________ of the City of Bozeman, a self-governing municipality operating pursuant to its Charter and the laws of the State of Montana. ______________________________ Notary Seal 104 Page 20 of 21 Exhibit “D” – Form of Deed NorthWestern Exchange Parcels After Recording Return To: City of Bozeman 121 North Rouse Avenue Bozeman, Montana 59715 WARRANTY DEED FOR VALUE RECEIVED, NorthWestern Corporation, a Delaware Corporation, d/b/a NorthWestern Energy of 11 East Park, Butte, Montana 59701 (“Grantor”) does hereby grant, bargain, sell and convey unto, City of Bozeman, a self-governing municipality operating pursuant to its Charter and the laws of the State of Montana, of 121 N. Rouse Avenue, Bozeman, Montana 59715 (“Grantee”), and to its successors and assigns, the following described premises in Gallatin County, Montana, to-wit: Lot 2B of the Amended Plat of Lot 2, Minor Subdivision No. 154, located in the Southwest Quarter, of Section 31, Township 1 South, Range 6 East, Gallatin County, Montana; Tract 4 of the Amended Certificate of Survey No. 157A, situated in the SW¼ of Section 31, T1S, R6E, PMM in the City of Bozeman, Gallatin County, Montana; Together with all road improvements, including but not limited to all road base, asphalt paving, striping, curbs, gutters for the road connecting Manley Road to the Glen Lake Rotary Park, f/k/a East Gallatin Recreation Area; But reserving onto the Grantor an easement for existing natural gas and electric lines, located on the subject property, for the benefit of the Grantor, its successors or assigns. These existing natural gas and electric lines shall remain the sole property of the Grantor. [Note this description may change to reflect the survey for the City Exchange Parcel] TO HAVE AND TO HOLD the said premises together with its appurtenances unto the Grantee, and its successors and assigns forever, SUBJECT TO THE FOLLOWING: 1. Reservations and exceptions in patents from the United States or the State of Montana; 2. Existing easements and rights-of-way of record; 3. All building, use, zoning, sanitary, and environmental restrictions; and 4. All prior conveyances, leases or transfers of any interest in minerals, including oil, gas, and all other hydrocarbons and minerals. 105 Page 21 of 21 Grantor further covenants and warrants that Grantor is now seized in fee simple absolute of said premises; that Grantor has full power to convey the same; that the premises is free from all encumbrances except those set forth above; that Grantee shall enjoy the quiet and peaceful possession thereof without any disturbance; that Grantor will, on demand, execute and deliver to Grantee, at the expense of Grantor, any further assurance of the same that may be reasonably required; and, with the exceptions set forth above, Grantor agrees to defend all right, title, and interest in the premises against any person lawfully claiming the same. DATED this _____ day of ___________, 20___ NorthWestern Corporation A Delaware Corporation d/b/a NorthWestern Energy By:_________________________ Its: _________________________ STATE OF MONTANA ) : ss County of Silver Bow ) This instrument was acknowledged before me on the _____ day of _______________, 20__ by __________ as ___________ of NorthWestern Corporation, a Delaware Corporation, d/b/a NorthWestern Energy. ______________________________ Notary Seal 106