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Home My WebLink About30-day Letter of Intent from Weston Solutions, IncCommission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager SUBJECT: Request for 30-day letter of intent from Weston Solutions, Inc. for purchase of the former Bozeman City Hall located at 411 East Main Street. MEETING DATE: August 31, 2009 AGENDA ITEM TYPE: Action Item RECOMMENDATION: Approve Weston Solution Inc.’s request for a 30-day Letter of Intent and authorize the Mayor to sign a letter agreeing to a new 30-day letter of intent for the purchase of the former Bozeman City Hall located at 411 East Main Street under the identical terms listed in the original letter of intent signed on May 27, 2009. BACKGROUND: On August 24, the Bozeman City Commission removed agenda item F4, Request for 30-day extension of letter of intent (dated May 15, 2009) from Weston Solutions, Inc. (Weston) for purchase of the former Bozeman City Hall located at 411 East Main Street, from the Consent agenda (Attachment 1). The LoI was scheduled to expire at 5 pm on Tuesday, August 25, 2009. Prior to the expiration, the 90-day letter of intent (LoI) was terminated by Weston (Attachment 2). Now that the original, 90-day LoI was terminated by Weston on August 25, 2009 to prevent expiration, Weston is requesting a new 30-day Letter of Intent, the terms of which are identical to those of the original 90-day LoI approved by the Commission on May 26, 2009. On May 26, the Bozeman City Commission authorized the City Manager to sign a 90-day letter of intent (LoI) from Weston Solutions, Inc. (Weston) for the purchase of the former Bozeman City Hall located at 411 East Main Street (Attachments 3 and 4). According to Weston’s August 14, 2009 request for a 30-day extension to the original LoI, the extension is necessary due to “the delay in obtaining the appraisal for the existing fire station and the award of the fire station grants by the federal government” and other unresolved issues between Weston and the City of Bozeman (Attachment 5). Staff recommends approval of the 30-day LoI and has attached a letter of acceptance of the proposed 30-day LoI under all existing terms of the original LoI (Attachment 6). 1 267 2 FISCAL EFFECTS: Entering into this 30-day letter of intent identical to the original LoI will not have any immediate fiscal effects. The 30-day LoI obligates the City to sell the former City Hall property for $900,000 cash if, and only if, an additional partnership agreement can be made for the relocation of the existing Fire Station One and the sale of the current Fire Station One property to the buyer. In recent calculations of the General Fund reserve, we have estimated a price of $900,000 and a sales commission of (6%) $54,000 for the Old City Hall property. This agreement continues to be in line with those estimates. The 30-day LoI does contemplate the disposal of site demolition debris at the City Landfill, pursuant to the city’s original agreement with the County Solid Waste District. The details of disposal fee revenues will be clarified in any future purchase and sale agreement. ALTERNATIVES: As suggested by the City Commission Respectfully submitted, Chris A. Kukulski City Manager Report prepared on August 26, 2009 Attachments: (1) August 24, 2009 LoI packet material; (2) Weston’s termination letter dated August 25, 2009; (3) Original signed letter of intent dated May 15, 2009, signed on May 27, 2009; (4) City Commission packet material from May 26, 2009 letter of intent; (5) Weston’s request for 30 day extension dated August 14, 2009; and (6) City Commission’s 30-day LoI acceptance letter. 268 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager SUBJECT: Request for 30-day extension of letter of intent (dated May 15, 2009) from Weston Solutions, Inc. for purchase of the former Bozeman City Hall located at 411 East Main Street. MEETING DATE: August 24, 2009 AGENDA ITEM TYPE: Consent Agenda Item RECOMMENDATION: Authorize the Mayor to sign a letter agreeing to the 30-day extension of the original letter of intent from Weston Solutions, Inc. for purchase of the former Bozeman City Hall located at 411 East Main Street under all existing terms listed in the original signed letter of intent signed on May 27, 2009. BACKGROUND: On May 26, the Bozeman City Commission authorized the City Manager to sign a 90-day letter of intent (LoI) from Weston Solutions, Inc. (Weston) for the purchase of the former Bozeman City Hall located at 411 East Main Street (Attachments 1 and 2). According to Weston’s request for a 30-day extension to the original LoI, the extension is necessary due to “the delay in obtaining the appraisal for the existing fire station and the award of the fire station grants by the federal government” and other unresolved issues between Weston and the City of Bozeman (Attachment 3). Staff recommends the 30-day extension be granted and has attached a letter of acceptance of the proposed 30-day extension under all existing terms of the original LoI (Attachment 4). FISCAL EFFECTS: Entering into this 30-day extension of the original letter of intent will not have any immediate fiscal effects. The 30-day extension of the original letter of intent obligates the City to sell the former City Hall property for $900,000 cash if, and only if, an additional partnership agreement can be made for the relocation of the existing Fire Station One and the sale of the current Fire Station One property to the buyer. 1 269 2 In recent calculations of the General Fund reserve, we have estimated a price of $900,000 and a sales commission of (6%) $54,000 for the Old City Hall property. This agreement continues to be in line with those estimates. The 30-day extension of the original letter of intent does contemplate the disposal of site demolition debris at the City Landfill, pursuant to the city’s original agreement with the County Solid Waste District. The details of disposal fee revenues will be clarified in any future purchase and sale agreement. ALTERNATIVES: As suggested by the City Commission Respectfully submitted, Chris A. Kukulski City Manager Attachments: (1) Original signed letter of intent dated May 15, 2009, signed on May 27, 2009; (2) City Commission packet material from May 26, 2009 letter of intent; (3) Weston’s request for 30 day extension; and (4) 30-day extension acceptance letter 270 271 272 273 274 275 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager SUBJECT: Letter of intent from Weston Solutions, Inc. for purchase of the former Bozeman City Hall located at 411 East Main Street MEETING DATE: May 26, 2009 RECOMMENDATION: Authorize the City Manager to sign the letter of intent from Weston Solutions, Inc. for purchase of the former Bozeman City Hall located at 411 East Main Street. BACKGROUND: The former City Hall property has had two appraisals since January, 2008. The first appraisal, performed in January, 2008 valued the property at $1,650,000. The City of Bozeman (City) was unsuccessful in attracting offers. The January, 2008 appraisal expired after 12 months. The Bozeman Municipal Code Chapter 2.05.060 – Appraisal Required for Certain Sales states: “Unless otherwise provided, no 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.” (emphasis added) The City of Bozeman commissioned an update of the January, 2008 appraisal. The appraisal update, performed in February, 2009 valued the property from $900,000 to $1,250,000 on a scale based on eventual use, i.e., for a building demolition and re-development the property is valued at $900,000. If the building remains standing and is utilized, the value increases to $1,250,000. On January 16, 2009 the City of Bozeman, after Commission authorization, entered into a property listing contract with the commercial real estate firm of Grubb & Ellis, Montana Commercial LLC (Grubb & Ellis) to sell the former City Hall property. Since that time, Grubb & Ellis has aggressively marketed the former City Hall property both locally and nationally. To date, Weston Solutions, Inc. (Weston) has made the only offer on the property. The Weston offer of $900,000 in cash presupposes a future demolition and redevelopment project on both the former City Hall and the current Fire Station One sites. The Weston letter of intent to purchase the former City Hall property, dated May 15, 2009 and attached hereto has been reviewed by City Staff, including the City Attorney’s Office and includes the following highlighted provisions, among others: 1 82276 1) Due Diligence Contingency Weston is allowed 90 days from the date signatures are finalized on the letter of intent to complete an onsite analysis of the properties and determine if the former City Hall and Fire Station One sites meet the needs of the buyer while simultaneously seeking an appropriate relocation site for Fire Station One. If Weston terminates the letter of intent, copies of the results of all analyses will be provided to the City. 2) Public Private Partnership Contingency Weston seeks to aggregate the former City Hall property and the current Fire Station One property into one downtown redevelopment project. Several benchmarks must be achieved by both Weston and the City before a sale of the former City Hall property occurs: a) The City must commission an appraisal of Fire Station One and the property; b) Weston must locate a piece of land deemed suitable by the City for the relocation of Fire Station One; c) The City Commission must conduct a public hearing, as was done prior to the sale of the former City Hall, and find that the City no longer needs Fire Station One for the conduct of City business; d) Weston must purchase the property and the Fire Station One facility; e) Weston must construct a new Fire Station One on property, the location of which is agreed to by the City, to minimum design and operational specifications determined by the City; and f) Neither party shall be required to consummate the sale of the former City Hall property without the concurrent transfer from Seller to Buyer, on terms acceptable to both parties, of Fire Station One. 3) Purchase and Sale Agreement The purchase and sale agreement will require that if Fire Station One is included in the sale, location, design and operational functionality must be acceptable to the City. The City will discuss waste disposal options with Weston when the former City Hall facility is demolished. 4) Non-Binding Agreement With the following exceptions, this paragraph [from the signed letter of intent], and the paragraphs entitled “Due Diligence Contingency,” “Public-Private Partnership Contingency,” and “Negotiations with other Prospective Purchasers,” this offer is not binding on any party and is subject to delivery of signed P[ublic] P[rivate] P[artnership] and Purchase and Sale Agreements to all parties which will include all terms of the sale including those not listed in this [letter of intent]. 5) Seller’s Negotiations with other Prospective purchasers During the 90 day due diligence period, the City, or its representative, may continue to meet with and show the property to interested parties but cannot enter into negotiations or otherwise commit the property. 2 83277 3 6) Buyers Negotiations with other Prospective Purchasers Upon signing of the letter of intent, Weston may market the former City Hall property to potential purchasers or lessors contingent on the successful consummation and sale of the former City Hall property. If the purchase and sale agreement is not consummated, the City maintains its right to negotiate with any party interested in purchasing or leasing either the former City Hall or Fire Station One property. CONCLUSION: The attached letter of intent provides more detail on the above sections and includes additional sections not referenced in this memo. The intention of this memo is to call to the Commission’s attention the most salient points of the letter of intent and reassure the Commission and the public that the success or failure of this potential sale of the former City Hall property, or Fire Station One, and any subsequent redevelopment or relocation opportunities will not be allowed to negatively impact emergency services in the City of Bozeman in the short or long term. FISCAL EFFECTS: Entering into this letter of intent will not have any immediate fiscal effects. The letter obligates the City to sell the former City Hall property for $900,000 cash if, and only if, an additional partnership agreement can be made for the relocation of the existing Fire Station One and the sale of the current Fire Station One property to the buyer. In recent calculations of the General Fund reserve, we have estimated a price of $900,000 and a sales commission of (6%) $54,000 for the Old City Hall property. This agreement is in line with those estimates. The letter does contemplate the disposal of site demolition debris at the City Landfill, pursuant to the city’s original agreement with the County Solid Waste District. The details of disposal fee revenues will be clarified in any future purchase and sale agreement. ALTERNATIVES: As suggested by the City Commission Respectfully submitted, Chris A. Kukulski City Manager Attachments: Letter of intent to purchase the former Bozeman City Hall located at 411 East Main Street signed by Mr. John Walker, Vice President for Real Estate Development, Weston Solutions, Inc. 84278 85279 86280 87281 88282 89283 Wolton - Cit-v of BozemRr LOI Augnst l4t 2009 Ptgc I ofz Grubb & Ellir 2020 Charlotrc SL, Bozcmai. Mt 59718 Atteulion: Refercnce: Subj€rl: Joh.fl Wnlk.r Vice Presidcor Real E$aLe Del.elopment Westo! SolL ioffi, loc. August 14, 2009 Mr. Mike Ellion Fomlcr Cit) llall, Bozerrar!, Monttut$ (a,k,u. 411 East Main St,, Bozemall. MI) Req$cst for Extension ofLetler oflntcDt (dstcd May 15, 2009) to purdlase fic Froper:rl" and enler into a Publio-Private Purtlership Mr, EIliofti Wc$on Solution$, Trc (WESTON*) is requestitrg a 30 day cxteDsion to our l,elte! ol lDtem ("LOl") executed by thg City of Bozemm. M(htan^il ("Edr9nra[") for tl1E refffcnccd Propcrty knornn as Former Ciry Hall locatcd ar 4ll Easr Main st. in Bozeman, MT. t'lp LOI *.irh Bozeman cxpircs ol1 A gusl 25. 2009, WIS'ION is .pqEesting tij$ exteosion heoousc ol'the dclLrt in obt'r,ining the appraisal li)T the cxisting firc station and fl,eald o/ the fre station gatrts bv rhc l'ederal governnrent. Persorurel u'ilh the DHStrEMAJGIa$I Progranls DiftctoEte. Assistsocc to Firefrghtels Glaot Progmln itrdicated yestcrdrry that granr$ !.!ill bc aw$ded stafling next l'e€k and going through Septembcr 30. 2009. The requestr.d extensioo rrill alsoqllow \IESTON i d Bozeman to resoh'c rrny othcf .rursranding issues beforc exec.rtirg 6 pur0hose afld sulc agrecmellt. llcose llel ficc to contact John Reinslu. Acquisitjons a$d DevelopmeDL at 303-729-6143, or tnc al 202-741-4805 if you have €ny questions rcgarding this submittal. Ill the rcrlrs are aDccptable, pleirsc sier and retum on€ copy to my attention. Sincerely, I Solutiqs, lryr) c Liffi_- 284 *12rr r, a0z .rl 12 W€rtoD - Citv ol BozcnEr l,Ol August l.l,2009 !fg" r.,{? Agrred aDd Acucpted ljy: Authorized Representative City of Bozenun 285 Office of the City Commission Mayor Kaaren Jacobson Commissioners Sean Becker Eric Bryson Jeff Krauss Jeff Rupp CITY OF BOZEMAN 121 North Rouse P.O. Box 1230 Bozeman, MT 59771 Phone: (406) 582‐2320 Fax: (406) 582‐2344 TDD: (406) 582‐2301 www.bozeman.net August 24, 2009 John Walker Weston Solutions, Inc 1101 14th Street NW Suite 700 Washington, DC 20036 Dear Mr. Walker, The Bozeman City Commission (Commission) has reviewed your request for a 30- day extension of the May 15, 2009 Letter of Intent (LoI) to purchase the former Bozeman City Hall located at 411 East Main Street, Bozeman, Montana. The Commission agrees to the proposed 30-day extension under the existing terms of the LoI signed by the Bozeman City Manager on May 27, 2009. Sincerely, Kaaren Jacobson, Mayor City of Bozeman 286 287 288 289 290 291 292 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager SUBJECT: Letter of intent from Weston Solutions, Inc. for purchase of the former Bozeman City Hall located at 411 East Main Street MEETING DATE: May 26, 2009 RECOMMENDATION: Authorize the City Manager to sign the letter of intent from Weston Solutions, Inc. for purchase of the former Bozeman City Hall located at 411 East Main Street. BACKGROUND: The former City Hall property has had two appraisals since January, 2008. The first appraisal, performed in January, 2008 valued the property at $1,650,000. The City of Bozeman (City) was unsuccessful in attracting offers. The January, 2008 appraisal expired after 12 months. The Bozeman Municipal Code Chapter 2.05.060 – Appraisal Required for Certain Sales states: “Unless otherwise provided, no 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.” (emphasis added) The City of Bozeman commissioned an update of the January, 2008 appraisal. The appraisal update, performed in February, 2009 valued the property from $900,000 to $1,250,000 on a scale based on eventual use, i.e., for a building demolition and re-development the property is valued at $900,000. If the building remains standing and is utilized, the value increases to $1,250,000. On January 16, 2009 the City of Bozeman, after Commission authorization, entered into a property listing contract with the commercial real estate firm of Grubb & Ellis, Montana Commercial LLC (Grubb & Ellis) to sell the former City Hall property. Since that time, Grubb & Ellis has aggressively marketed the former City Hall property both locally and nationally. To date, Weston Solutions, Inc. (Weston) has made the only offer on the property. The Weston offer of $900,000 in cash presupposes a future demolition and redevelopment project on both the former City Hall and the current Fire Station One sites. The Weston letter of intent to purchase the former City Hall property, dated May 15, 2009 and attached hereto has been reviewed by City Staff, including the City Attorney’s Office and includes the following highlighted provisions, among others: 1 82293 1) Due Diligence Contingency Weston is allowed 90 days from the date signatures are finalized on the letter of intent to complete an onsite analysis of the properties and determine if the former City Hall and Fire Station One sites meet the needs of the buyer while simultaneously seeking an appropriate relocation site for Fire Station One. If Weston terminates the letter of intent, copies of the results of all analyses will be provided to the City. 2) Public Private Partnership Contingency Weston seeks to aggregate the former City Hall property and the current Fire Station One property into one downtown redevelopment project. Several benchmarks must be achieved by both Weston and the City before a sale of the former City Hall property occurs: a) The City must commission an appraisal of Fire Station One and the property; b) Weston must locate a piece of land deemed suitable by the City for the relocation of Fire Station One; c) The City Commission must conduct a public hearing, as was done prior to the sale of the former City Hall, and find that the City no longer needs Fire Station One for the conduct of City business; d) Weston must purchase the property and the Fire Station One facility; e) Weston must construct a new Fire Station One on property, the location of which is agreed to by the City, to minimum design and operational specifications determined by the City; and f) Neither party shall be required to consummate the sale of the former City Hall property without the concurrent transfer from Seller to Buyer, on terms acceptable to both parties, of Fire Station One. 3) Purchase and Sale Agreement The purchase and sale agreement will require that if Fire Station One is included in the sale, location, design and operational functionality must be acceptable to the City. The City will discuss waste disposal options with Weston when the former City Hall facility is demolished. 4) Non-Binding Agreement With the following exceptions, this paragraph [from the signed letter of intent], and the paragraphs entitled “Due Diligence Contingency,” “Public-Private Partnership Contingency,” and “Negotiations with other Prospective Purchasers,” this offer is not binding on any party and is subject to delivery of signed P[ublic] P[rivate] P[artnership] and Purchase and Sale Agreements to all parties which will include all terms of the sale including those not listed in this [letter of intent]. 5) Seller’s Negotiations with other Prospective purchasers During the 90 day due diligence period, the City, or its representative, may continue to meet with and show the property to interested parties but cannot enter into negotiations or otherwise commit the property. 2 83294 3 6) Buyers Negotiations with other Prospective Purchasers Upon signing of the letter of intent, Weston may market the former City Hall property to potential purchasers or lessors contingent on the successful consummation and sale of the former City Hall property. If the purchase and sale agreement is not consummated, the City maintains its right to negotiate with any party interested in purchasing or leasing either the former City Hall or Fire Station One property. CONCLUSION: The attached letter of intent provides more detail on the above sections and includes additional sections not referenced in this memo. The intention of this memo is to call to the Commission’s attention the most salient points of the letter of intent and reassure the Commission and the public that the success or failure of this potential sale of the former City Hall property, or Fire Station One, and any subsequent redevelopment or relocation opportunities will not be allowed to negatively impact emergency services in the City of Bozeman in the short or long term. FISCAL EFFECTS: Entering into this letter of intent will not have any immediate fiscal effects. The letter obligates the City to sell the former City Hall property for $900,000 cash if, and only if, an additional partnership agreement can be made for the relocation of the existing Fire Station One and the sale of the current Fire Station One property to the buyer. In recent calculations of the General Fund reserve, we have estimated a price of $900,000 and a sales commission of (6%) $54,000 for the Old City Hall property. This agreement is in line with those estimates. The letter does contemplate the disposal of site demolition debris at the City Landfill, pursuant to the city’s original agreement with the County Solid Waste District. The details of disposal fee revenues will be clarified in any future purchase and sale agreement. ALTERNATIVES: As suggested by the City Commission Respectfully submitted, Chris A. Kukulski City Manager Attachments: Letter of intent to purchase the former Bozeman City Hall located at 411 East Main Street signed by Mr. John Walker, Vice President for Real Estate Development, Weston Solutions, Inc. 84295 85296 86297 87298 88299 89300 Wolton - Cit-v of BozemRr LOI Augnst l4t 2009 Ptgc I ofz Grubb & Ellir 2020 Charlotrc SL, Bozcmai. Mt 59718 Atteulion: Refercnce: Subj€rl: Joh.fl Wnlk.r Vice Presidcor Real E$aLe Del.elopment Westo! SolL ioffi, loc. August 14, 2009 Mr. Mike Ellion Fomlcr Cit) llall, Bozerrar!, Monttut$ (a,k,u. 411 East Main St,, Bozemall. MI) Req$cst for Extension ofLetler oflntcDt (dstcd May 15, 2009) to purdlase fic Froper:rl" and enler into a Publio-Private Purtlership Mr, EIliofti Wc$on Solution$, Trc (WESTON*) is requestitrg a 30 day cxteDsion to our l,elte! ol lDtem ("LOl") executed by thg City of Bozemm. M(htan^il ("Edr9nra[") for tl1E refffcnccd Propcrty knornn as Former Ciry Hall locatcd ar 4ll Easr Main st. in Bozeman, MT. t'lp LOI *.irh Bozeman cxpircs ol1 A gusl 25. 2009, WIS'ION is .pqEesting tij$ exteosion heoousc ol'the dclLrt in obt'r,ining the appraisal li)T the cxisting firc station and fl,eald o/ the fre station gatrts bv rhc l'ederal governnrent. Persorurel u'ilh the DHStrEMAJGIa$I Progranls DiftctoEte. Assistsocc to Firefrghtels Glaot Progmln itrdicated yestcrdrry that granr$ !.!ill bc aw$ded stafling next l'e€k and going through Septembcr 30. 2009. The requestr.d extensioo rrill alsoqllow \IESTON i d Bozeman to resoh'c rrny othcf .rursranding issues beforc exec.rtirg 6 pur0hose afld sulc agrecmellt. llcose llel ficc to contact John Reinslu. Acquisitjons a$d DevelopmeDL at 303-729-6143, or tnc al 202-741-4805 if you have €ny questions rcgarding this submittal. Ill the rcrlrs are aDccptable, pleirsc sier and retum on€ copy to my attention. Sincerely, I Solutiqs, lryr) c Liffi_- 301 *12rr r, a0z .rl 12 W€rtoD - Citv ol BozcnEr l,Ol August l.l,2009 !fg" r.,{? Agrred aDd Acucpted ljy: Authorized Representative City of Bozenun 302 Office of the City Commission Mayor Kaaren Jacobson Commissioners Sean Becker Eric Bryson Jeff Krauss Jeff Rupp CITY OF BOZEMAN 121 North Rouse P.O. Box 1230 Bozeman, MT 59771 Phone: (406) 582‐2320 Fax: (406) 582‐2344 TDD: (406) 582‐2301 www.bozeman.net August 31, 2009 John Walker Weston Solutions, Inc 1101 14th Street NW Suite 700 Washington, DC 20036 Dear Mr. Walker, The Bozeman City Commission (Commission) has reviewed your request for a new 30-day Letter of Intent (LoI) to purchase the former Bozeman City Hall located at 411 East Main Street, Bozeman, Montana. The Commission agrees to the proposed 30-day LoI under the identical terms of the original LoI signed by the Bozeman City Manager on May 27, 2009. Sincerely, Kaaren Jacobson, Mayor City of Bozeman 303