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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Greg Sullivan, City Attorney
Chris Kukulski, City Manager
SUBJECT: Provisional Adoption of Ordinance 1773: An Ordinance of the
City Commission of the City of Bozeman, Montana authorizing the City Manager to enter into a
99-year ground lease with the Human Resources Development Council, Inc. for the lease of a
.539-acre parcel for the purposes of developing a public transportation storage and repair facility.
MEETING DATE: September 14, 2009
AGENDA ITEM TYPE: Action (NOTE: a 2/3 vote of the Commission is required by state
law. Thus, four Commissioners must vote in the affirmative.)
RECOMMENDATION: Provisionally adopt Ordinance 1773.
BACKGROUND: On March 23, 2009, the Commission authorized staff to "continue
working on the proposal to construct a shared facility for city vehicle maintenance and the
Streamline Bus Barn" and "to enter into a Memorandum of Understanding (MOU) with HRDC
for the construction of a shared facility". On April 6, 2009, the Commission directed staff to
bring back a lease agreement and to design and bid a joint vehicle maintenance building with
HRDC/Streamline.
Tonight you have two actions before you. First, under this staff report and as required by Section
2.11 of the City of Bozeman Charter and Sect. 7-8-4201, MCA, we ask you consider approving
an ordinance authorizing the City Manager to enter into a 99-year ground lease with the HRDC.
Second, by a separate agenda item, we request you approve a Memorandum of Understanding
with HRDC related to construction of the project.
Approval and Adoption of a 99-Year Ground Lease. Section 2.11 of the City of Bozeman
Charter requires the Commission adopt an ordinance anytime the City leases City owned land.
As such, this item requests you consider adoption of the first reading of an ordinance to lease the
0.539 acre parcel to HRDC for 99 years. Ordinance 1773 is attached to this staff report.
The Bozeman Municipal Code (BMC) does not provide specific enabling authority for you to
lease City land. Chapter 2.05 of the BMC applies to the sale, trade, or exchange of real property.
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By its plain language it does not apply to the leasing of real property. See Sect. 2.05.030. BMC.
As you do not have specific enabling language addressing the leasing of City property in your
municipal code, your authority to lease lies in Montana statute. As such you must comply with
Sect. 7-8-4201, MCA, which states:
(1) Subject to the provisions of subsection (2), the city or town council may sell, dispose of,
donate, or lease any property belonging to the city or town. (2) (a) Except for property described
in subsection (3), the lease, donation, or transfer must be made by an ordinance or resolution
passed by a two-thirds vote of all the members of the council. (b) Except for property acquired by
tax deed or property described in subsection (3), if the property is held in trust for a specific
purpose, the sale or lease must be approved by a majority vote of the electors of the municipality
voting at an election called for that purpose. The election must be held in conjunction with a
regular or primary election.
Emphasis added.
Thus, under the above statute, you may lease this parcel as long as the ordinance required by the
Charter is passed by a two-thirds vote of all members of the council. A two-thirds vote of five
commissioners requires a vote of four in the affirmative. See 43 Mont. Op. Atty. Gen. 130
Opinion No. 41.
In addition, from reviewing the original warranty deed wherein the City obtained the parent tract
in 1948 and other documents in the Clerkâs office, it does not appear the property is held in trust
for a specific purpose. Thus, you may lease the property if you deem the lease is in the best
interest of the City of Bozeman.
Should you provisionally adopt Ordinance 1773, second reading will be scheduled for your
regular meeting on September 28, 2009. Per Sect. 2.04.090.B, BMC, every ordinance except
emergency ordinances are not effective until 30 days after the date of their passage by the
Commission. Thus, the City Manager will not be authorized to sign the lease until October 28,
2009.
FISCAL EFFECTS: Entering into this lease will result in the City receiving cash (or
improvements to the property of equivalent value) equal to the appraised value of the leased
land. The appraised value of the unimproved land is $6.00 per square foot. Based on this
appraisal, the .539 acre (23,478.84 sq.ft.) parcel is valued at $140,873.04. At the end of the lease
term, any improvements on the leased land will revert to the City, although that is expected to be
decades beyond the useful life of what is constructed today.
ALTERNATIVES: As suggested by the City Commission.
Attachments: Ordinance 1773
Report compiled on: September 8, 2009
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