HomeMy WebLinkAboutAuthorize Waiver of Discrimination Requirement and Approve Agreement for Sharing and Severing Utilities, former City Hall.pdfCommission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Chris Kukulski, City Manager
SUBJECT: Authorize waiver of discrimination requirement and approve agreement
for sharing and severing utilities at former Bozeman City Hall.
MEETING DATE: May 17, 2010
AGENDA ITEM TYPE: Consent Item
RECOMMENDATION:
Authorize waiver of discrimination requirement and approve agreement for sharing and
severing utilities at former Bozeman City Hall.
BACKGROUND:
Since March 3, 2010, the effective date of Ordinance 1779, the City of Bozeman (the
City) has conducted negotiations with Sleepy Eye LLC (Sleepy Eye), formerly GSC Family
Limited Partnership, for an agreement to share and sever the utilities at the former Bozeman City
Hall located at 411 East Main Street. (Attachment 1)
The Agreement for the Severance and Sharing of Utilities and Systems at the former
Bozeman City Hall (the Agreement) is required by Ordinance 1779, Section 1 (5), which states:
Prior to release of contingencies, an agreement, acceptable to the Bozeman City
Commission, shall be signed by the purchaser and the City regarding ownership,
and maintenance of all infrastructure within the building including the tunnel and
that infrastructure related to heating and other utilities shared with Fire Station
No. 1 and for payment of related utility services. (Attachment 2)
The original agreement for purchase and sale of the former Bozeman City Hall was
entered into between the City and GSC Limited Family Partnership; however, the current
Agreement, as drafted, is between the City and Sleepy Eye, LLC. The members of Sleepy Eye,
LLC are identical to those of GSC Family Limited Partnership who determined, for financial
planning purposes, to create the new entity, Sleepy Eye, LLC. The original agreement for
purchase and sale allows for such an assignment.
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The closing date for the sale of the former Bozeman City Hall to Sleepy Eye, LLC has
been twice extended and, if this Agreement is approved by the Commission, is currently set for
May 26, 2010.
The Agreement requires that the boiler steam provided by the City from Fire Station 1 to
the former City Hall be severed within 30 days of Closing, domestic water will be metered
within 6 months and severed within 36 months of Closing, and electrical service provided by the
City from Fire Station No. 1 to the former City Hall be severed within 90 days of Closing.
Currently, there are 11 surface parking spaces associated with the former City Hall
property and 24.9 “air” spaces associated with both the former City Hall and Fire Station No. 1
properties. At Closing, should this agreement be approved, Sleepy Eye obtains ownership of all
surface parking spaces physically located on the tracts or record being transferred and 12.45, or
exactly one-half of the 24.9 “air” spaces associated with the Former City Hall property. Any
other “air” parking spaces having been paid for by the City shall remain property of the City.
Additionally, Sleepy Eye, LLC requests a waiver of the City’s requirement under
Resolution 4250 to not discriminate in the performance of this Agreement.
SALE OF FORMER CITY HALL TIMELINE:
On July 14, 2008 the Commission found, by a vote of 4 - 0, that “the subject property,
the [former] City Hall, is not necessary for the conduct of City business and that we [the
Commission] would direct staff to proceed with the Request for Proposal [RFP] process and
negotiate the sale under provisions of Chapter 2.05 of the Bozeman Municipal Code”. Staff, in
consultation with the Gallatin Association of Realtors, produced an RFP for realty services.
In September, 2008, the City of Bozeman relocated City offices and administrative
services to the former library property located at 121 North Rouse Avenue.
On January 5, 2009 the Commission “[a]uthorize[ed] the City Manager to negotiate and
sign a listing contract for the sale of the former City Hall lots (10 – 14) and facility with the
commercial real estate firm Grubb & Ellis, Montana Commercial LLC.
On February 19, 2009, Keith O’Reilly, MAI, a General Certified Appraiser from
Bridger Appraisal, Inc., appraised the value of the former Bozeman City Hall to be between
$900,000.00 and $1,200,000.00.
On January 15, 2010, the Bozeman City Manager, through the City’s listing agent
Grubb and Ellis, LLC, received an offer to purchase the former City Hall property for eight
hundred ten thousand dollars ($810,000) cash.
On January 19, 2010, by a vote of 4 – 0, the Bozeman City Commission (Commission)
provisionally adopted Ordinance 1779 authorizing the City Manager to sign a purchase and sale
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agreement with GSC Family Limited Partnership for the former Bozeman City Hall and directed
staff to return to the Commission on February 1, 2010 for final adoption of the ordinance.
On February 1, 2010, by a vote of 5 – 0, the Bozeman City Commission finally adopted
Ordinance 1779 authorizing the City Manager to sign a purchase and sale agreement with GSC
Family Limited Partnership for the former Bozeman City Hall.
On March 3, 2010, the Bozeman City Manager executed the purchase and sale
agreement with GSC Family Limited Partnership for the former Bozeman City Hall. The closing
date agreed to in the original purchase and sale agreement for the sale of the former City Hall
property was April 15, 2010. (Attachment 3)
On April 15, 2010, the Bozeman City Manager executed an Amendment to Agreement
between Parties for Existing Terms and Conditions with GSC Family Limited Partnership thus
extending the closing date from April 15, 2010 to May 15, 2010. (Attachment 4)
On April 20, 2010, the Bozeman City Manager executed an Assignment of Real Estate
Agreement with GSC Family Limited Partnership assigning and transferring all of the buyer’s
right, title and interest in the former Bozeman City Hall to Sleepy Eye LLC. (Attachment 5)
On April 22, 2010, the Bozeman City Manager executed an Amendment to Agreement
between Parties for Existing Terms and Conditions with Sleepy Eye LLC thus extending the
closing date from May 15, 2010 to May 26, 2010. (Attachment 6)
UNRESOLVED ISSUES:
There are currently no unresolved issues regarding the utility agreement. Closing
documents must be prepared but are ministerial and do not require Commission involvement.
The City Manager is the City’s authorized agent for closing. No additional Commission action
will be required.
FISCAL EFFECTS:
Allow the closing to occur. Per the original contract with Grubb Ellis, a sales commission
of $48,600 will come from the proceeds of the sale. The City will also pay approximately
$2,500 in closing costs and title insurance.
The City will receive approximately $758,900 in net proceeds, after sales and closing
costs. This amount will be deposited to the City Hall Construction Fund, and the construction
fund will be closed; approximately $38,000 additional dollars will be needed from the General
Fund as a result of this sale. We will find existing FY2010 budget savings to accommodate this
shortfall.
There will be minimal costs associated with severing the utilities including costs
associated with installation of a blackflow preventer on the water line and other miscellaneous
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costs associated with the city’s obligations to sever utilities all of which are to be incorporated
within existing facility budgets.
ALTERNATIVES: As suggested by the City Commission
Respectfully submitted,
_______________________
Chris Kukulski
City Manager
Attachments: (1) Agreement for the Severance and Sharing of Utilities and Systems at the
Former Bozeman City Hall (2) Ordinance 1779; (3) Purchase and Sale Agreement (including
revised pages); (4) Amendment to Agreement between Parties extending the closing date to May
15, 2010; (5) Assignment of Real Estate Agreement with GSC Family Limited Partnership
assigning and transferring all of the buyer’s right, title and interest in the former Bozeman City
Hall to Sleepy Eye LLC and (6) Amendment to Agreement between Parties extending the
closing date to May 26, 2010
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