HomeMy WebLinkAboutProvisional Adoption of Ordinance 1836, Part14.pdf
Memorandum to City Commission: Provisional Adoption of Ordinance 1836
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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission.
FROM: Scott Lee, City Parking Manager.
SUBJECT: Provisional Adoption of Ordinance 1836 – an Ordinance ratifying the
signature of the City Manager entering into a Commercial Buy-Sell Agreement for the sale of
vacant office space on the second floor of the Bridger Park Downtown parking garage.
MEETING DATE: September 24, 2012
AGENDA ITEM TYPE: Action (4/5 vote of the Commission required for adoption of
Ordinance 1836
RECOMMENDATION: I recommend the Commission hold a public hearing on the ordinance,
consider this staff memorandum, public comment, and provisionally adopt by a two-third
majority (i.e. four affirmative votes) Ordinance 1836 ratifying the signature of the City Manager
entering into a Commercial Buy-Sell Agreement for the sale of vacant office space on the second
floor of the Bridger Park Downtown parking garage. (the “Agreement”).
SUGGESTED MOTION: Having conducted a public hearing and considered public comment I
hereby move to provisionally adopt Ordinance 1836 ratifying the signature of the City Manager
entering into a Commercial Buy-Sell Agreement for the sale of vacant office space on the second
floor of the Bridger Park Downtown parking garage.
BACKGROUND:
The action tonight is the result of efforts on the part of the City to obtain a buyer for the office
space located on the second floor of the Bridger Park garage on East Mendenhall Street as
directed by adopted motion of the City Commission on June 4, 2012. At that meeting it was
moved by Deputy Mayor Krauss seconded by Cr. Mehl that the Commission find the subject
office space located on the second floor of the Bridger Park garage on East Mendenhall Street
not necessary for the conduct of city business, or the preservation of City property, and that sale
of the vacant space is in the public interest. The motion passed 4-0.
The staff memorandum from that meeting is attached for your reference.
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Since that time, I, along with the City Attorney and City Manager, along with the City’s retained
real estate consultant, Mike McKenna, negotiated an agreement for the sale of the Property. The
agreement contains several contingencies; most notably, the agreement must be ratified by the
Commission.
Sale Price: The City negotiated a price of $125,000.00 without the benefit of an appraisal prior to
negotiation. The sale price is less than 1.6% below the appraised price –within the requirements
of the Bozeman Municipal Code1. The Buyers agreed to pay one-half of the appraisal costs
(usually fully paid by a seller) or $750.00 additional.
Real Estate Appraisal: I attached a real estate appraisal conducted by Keith O’Reilly, MAI, of
Bridger Appraisals, Inc. The appraiser used a sales comparison approach using comparables
from three of the ground level retail spaces in the Bridger Park Downtown garage (adjusted for
street frontage and first floor location) as well as a commercial property on Main Street to arrive
at the as-is appraised price of $127,000 for this unfinished second floor space. He estimated the
market exposure time as 6-12 months and stated there appears to be some stability taking place
in the market. The appraisal report also indicates the highest and best use is to build out the
interior of the unit and use it as a professional office space.
City Improvements Prior to Sale: The Buyer submitted an inspection report indicating certain
items that would need to be completed prior to purchase. We negotiated with the Buyer for the
City to address installation of an individual electrical panel and provision of potable water. The
cost to the City to complete these improvements is estimated at $3,667.00 The City did not
agree to complete other improvements requested by the Buyer, including installation of
telephone, a request to fill and seal openings in the north (outside) wall and to fill cracks in the
concrete floor. The appraiser did not consider these factors in the appraised value of the
property.
Creation of a Condominium: In order for the City to sell the office space the property must be
identified as an independent parcel/unit; as such, the City retained attorney Holly March
Summers to assist the City in the creation of the property into a condominium unit. Because the
parking garage is a member of the Intermodal Commerce Condominium Association, we
determined the best course of action was to create the unit and add it to the existing Mendenhall
Marketplace Condominium Association (the condominium association of the other retail/office
spaces). That process is currently underway with the draft documents being updated and
discussed with the existing Condominium Association President. Should the Commission
approve the ordinance, we will move forward on an amendment to both the Intermodal
Commerce Condominium Declaration (removing the space) and an amendment to the
Mendenhall Marketplace (adding the space). Ideally, an approval of 100% of the owners (Park
Garage Unit and Retail Unit) is best, although 51% is the required vote to remove the Unit. A
vote of 75% is required to amend the Declaration for Mendenhall Marketplace. At this time, the
other members of both associations appear to be in favor of the changes. This is a contingency of
the sale that must be fulfilled prior to closing.
1 Sec. 2.06.890.B, BMC: “Subject to section 2.06.870.D, a sale may not be made for less than 90 percent of the appraised
value.”
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Subdivision Exemption: In addition, the creation of the unit will require processing an
application for exemption from subdivision review through the City’s Department of Planning
and Community Development. I have submitted the application for exemption since this
approval will need to be obtained regardless of who the Buyer is or when the sale occurs. The
City Planning Director has approval authority for the subdivision exemption.
Next Steps: If the Commission provisionally adopts Ordinance 1836, final adoption of the
Ordinance will be placed on the Commission’s October 8, 2012 consent agenda; only upon the
expiration of 30 days after approval of final adoption will the City Parking Manager be
authorized to conclude the sale. Closing will then take place according to the terms of the
Commercial Buy-Sell Agreement.
AUTHORITY TO SELL REAL PROPERTY:
The City Commission has authority over property owned by the City pursuant to Chapter 2.06 of
the Bozeman Municipal Code (BMC). This Article was created by Ordinance 1658 (2006) and
later amended by Ordinances 1683 (2006) and 1713 (2007). The BMC requires the following
when the city of Bozeman sells this type of property:
1. The City must conduct a public hearing and determine by a two-thirds vote of all
members of the Commission that any real property owned by the city is “not needed for
public use, or that the public interest may be furthered…” (2.06.880, BMC). In addition,
section 2.06.870.A, BMC authorizes the City Commission to sell property “however
acquired” that is “not necessary to the conduct of City business or the preservation of its
property.” Note: The Commission conducted this hearing and made the requisite
finding on June 4, 2012.
2. The City may sell property using several listed methods: bid, auction with reserve, or
negotiated sale or exchange, 2.06.880, BMC. The City negotiated a sale after placing
the unit on the market.
3. The City Commission may deposit the proceeds from the sale “in any account that is in
the best interest of the city.” 2.06.910, BMC. Note: The Ordinance provides the
proceeds will be deposited in the parking enterprise fund and assigned to capital
replacement and long term maintenance.
4. The sale of real property must be approved by an ordinance. Bozeman Charter, Sect.
2.11(5).
5. The sale may not be made for less than 90% of the appraised value. 2.06.890, BMC.
Note: the negotiated sale price is greater than 90% of the appraised value. NOTE: The
sale price is greater than 90% of the appraised value.
6. The appraisal must have been conducted within one year of the sale. 2.06.900, BMC.
Note: this requirement has been met.
Finally, the Agreement between the Federal Transit Authority and the City for grant monies
related to the construction of the Bridger Park does not restrict the sale of this office or other
commercial spaces within the physical structure of the facility.
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ALTERNATIVES: As determined by the City Commission.
FISCAL EFFECTS:
The purchase price for the sale is $125,000 cash at closing. Ordinance 1836 directs the proceeds
from the sale payment to be placed into the Parking Enterprise fund and assigned to capital
replacement and long term maintenance.
Legal fees and other expenses related to the sale are estimated at $3,500.00, and the cost of the
performed appraisal was $1,500 to be split equally between the Buyer and the Seller. There are
additional nominal closing costs typical of a commercial real estate sale estimated at $1,000.00
total. Mr. McKenna’s fees as Seller’s Agent are 5.75% of the purchase price, or approximately
$7,187.50. This amount will be paid to Mr. McKenna at closing.
In sum, with a sale price of $125,000.00, subtracting the above fees and costs, the City will
obtain approximately $112,562.50 at closing.
UNRESOLVED ISSUES:
Aside from adoption of this ordinance, completion of the structural improvements discussed
above, approval of the subdivision exemption, and approval by the condominium associations to
remove/add the unit, all other provisions of the buy-sell agreement have been fulfilled.
Therefore, if the Commission votes in the affirmative to ratify the signature of the City Manager
on the Buy-Sell Agreement, the following will need to take place:
· Creation of the condominium unit by approval of exemption from subdivision review
(see discussion above);
· Preparation of a deed to transfer title of condominium from the City of Bozeman to the
buyers;
· Obtain Title Insurance and obtain buyer’s approval of such;
· Acquire monetary compensation from the buyer per the negotiated purchase price;
Upon approval of first reading, the pursuant to 2.06.880, BMC, the City must public notice
of sale as provided in MCA 7-1-4127. The notice will be published on September 30 and
October 7.
ATTACHMENTS:
· Ordinance 1836 for provisional adoption.
· Commercial Buy-Sell Agreement between the City and Ross Wenger and Rebecca Pape
including all of its Exhibits. (Attachment A to Ord. 1836).
· Appraisal performed by Keith O’Reilly, MAI of Bridger Appraisals, Inc. prepared on
July 23, 2012.
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Memorandum to City Commission: Provisional Adoption of Ordinance 1836
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· Staff Memorandum from the June 4, 2012 public hearing.
Report compiled on: September 14, 2012
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ORDINANCE 1836
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ORDINANCE NO. 1836
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA, RATIFYING THE SIGNATURE OF THE CITY MANAGER ENTERING INTO
A PURCHASE AND SALE AGREEMENT FOR THE SALE AND CONVEYANCE OF A
1000 SQUARE FOOT UNFINISHED VACANT OFFICE SPACE ON THE SECOND FLOOR
OF THE BRIDGER PARK PARKING GARAGE, PROVIDING CONTINGENCIES AND AN
EFFECTIVE DATE.
WHEREAS, the City of Bozeman owns property located on the second floor of the
Bridger Park Parking Facility located at 26 East Mendenhall Street; known as the vacant
unfinished office space on the second floor of the Bridger Park multi-modal parking facility,
hereinafter referred to as the “Property”; and
WHEREAS, the City is desirous of selling the Property; and
WHEREAS, 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”; and
WHEREAS, Section 2.05.030 of the Bozeman Municipal Code (BMC), adopted
pursuant to Ordinance 1658, grants the City Commission the jurisdiction and power to sell any
real property, however acquired, belonging to the City that is not necessary to the conduct of city
business or the preservation of property; and
WHEREAS, Section 2.05.040, BMC, adopted pursuant to Ordinance 1713, states,
“When the City Commission, after a public hearing, has determined by a two-thirds vote of all
the members, that any real property owned by the city is not needed for public use, or that the
public interest may be furthered, the City may sell such property by… negotiated sale…,
subject… to a minimum price established through an appraisal that certifies the value of such
property…” and
WHEREAS, Section 2.05.040, BMC, also states, “Notice of sale… shall be published as
provided in MCA 7-1-4127”; and
WHEREAS, Section 2.05.050.B, BMC, adopted pursuant to Ordinance 1658, states, “…
a sale may not be made for less than 90% of the appraised value”; and
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ORDINANCE 1836
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WHEREAS, Section 2.05.060, BMC, adopted pursuant to Ordinance 1658, states, “…
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”; and
WHEREAS, on June 4, 2012, the Bozeman City Commission, by a vote of 4 to 0,
determined the Property was no longer necessary to the conduct of city business; and
WHEREAS, Keith O’Reilly, MAI, a General Certified Appraiser from Bridger
Appraisal, Inc., on July 12, 2012, appraised the value of the Property at $127,000.00; and
WHEREAS, on July 11, 2012, the Bozeman City Manager signed an agreement for the
sale of the Property for $125,000.00 cash subject to several contingencies including appraisal,
creation of a condominium unit through an exemption from subdivision review, inclusion of the
condominium unit into the Mendenhall Marketplace Condominiums and ratification of the
agreement by ordinance of the Commission; and
WHEREAS, the agreement to sell the Property is attached to this Ordinance as
Attachment A; and
WHEREAS, should the Bozeman City Commission provisionally adopt this ordinance
ratifying said agreement 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.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA: Section 1
The Bozeman City Commission hereby ratifies the attached agreement for the sale of the
Property.
By accepting this offer the Commission authorizes, subject to completion of the contingencies as
stated in the attached Commercial Buy - Sell Agreement and those contingencies listed below,
the conveyance of the fee title to the property to the purchaser:
1. The sale price shall be one hundred twenty five thousand dollars and zero cents
($125,000.00).
2. The purchaser shall pay cash to the City at closing.
3. The Commission’s ratification of the City Manager’s signature shall not be effective until
30 days after final adoption of this ordinance; as such, the Purchase and Sale Agreement
shall not be binding on the City of Bozeman until such time and until completion of all
included contingencies.
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ORDINANCE 1836
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4. The sale shall close as stated in the agreement.
5. Proceeds of the sale shall be deposited in the parking enterprise fund and assigned to
capital replacement and long term maintenance.
Section 2 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 3
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
provision of the Bozeman Municipal Code not amended by this Ordinance shall remain in full
force and effect.
Section 4
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.
Section 5
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 6
Effective Date.
This ordinance shall be in full force and effect 30 days after final adoption.
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ORDINANCE 1836
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PROVISIONALLY ADOPTED by the City Commission of the City of Bozeman,
Montana, on first reading at a regular session held on the 24th day of September, 2012.
____________________________________
SEAN A. BECKER
Mayor
ATTEST:
_______________________________
STACY ULMEN, CMC
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 _______________, 2012. The effective date of this ordinance is _____________, __ 2012.
_________________________________
SEAN A. BECKER Mayor
ATTEST:
_______________________________
STACY ULMEN, CMC
City Clerk
APPROVED AS TO FORM:
_________________________________
GREG SULLIVAN
City Attorney
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Commission Memorandum
REPORT TO Honorable Mayor and City Commission
FROM Paul Burns City Parking Manager
SUBJECT Public hearing to determine whether approximately 1000 sq ft of
unfinished real property located on the second floor of the Bridger Park
garage is necessary for the conduct of City business or the preservation of
its property 2 3 vote of Commission required
MEETING DATE June 4 2012
RECOMMENDATION That the Commission hold a public hearing consider public
comment this staff memorandum and the recommendation of the Parking Commission and by a
two third majority of the Commission i e four affirmative votes determine the vacant office
space on the second floor of the Bridger Park parking structure is no longer necessary for the
conduct of city business or the preservation of city property and also that the public interest may
be furthered by the sale of the property Specifically the staff recommends the Commission
make the following two motions
PROPOSED MOTION Having considered the information presented by staff I
move that the Commission find the subject office space located on the second
floor of the Bridger Park garage on East Mendenhall Street is not necessary for
the conduct of city business or the preservation of City property and that sale of
the vacant space is in the public interest
NOTE Per Section 2 06 880 Bozeman Municipal Code a two thirds vote of all members of
the commission is necessary
AND
PROPOSED MOTION Having found the subject vacant office space located on
the second floor of the Bridger Park garage on East Mendenhall Street is
unnecessary for the conduct of city business the preservation of its property and
that the sale is in the public interest I move the Parking Manager be authorized
to complete all steps necessary to negotiate a sale and transfer of the property
and return to the Commission an ordinance authorizing the City Manager to
execute a Purchase and Sale Agreement for same
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It is important to note that the decision whether this real property is necessary for the
conduct of the city s business or the preservation of its property is NOT a final decision on
the sale of the property The Commission must at some point in the future when a buyer
has stepped forward adopt an ordinance authorizing the City Manager to sign a negotiated
purchase and sale agreement
BACKGROUND The proposed property is approximately 1 000 square feet of office space
located on the second floor of the Bridger Park parking structure and overlooking East
Mendenhall Street see attached diagram of the space The Parking Commission has determined
that the office is no longer needed for the operation and management of the Parking Enterprise s
business plan see attached memo to the Parking Commission The vacant space was originally
conceived as a future office for the Parking Enterprise but has sat empty and unfinished since
Bridger Park opened in April 2009
As the space is unfinished several estimates have been received on what it might cost to make
the space habitable The estimates range from 50 000 to 60 000 for a ceiling plumbing of a
restroom walls and flooring The Parking Enterprise views the required work as an unnecessary
expense
Currently the Parking Enterprise operates out of the Al Stiff Professional Building at 20 East
Olive Street Working from the Professional Building has helped the Parking Enterprise staff
become integrated in City business and operations it has allowed for the establishment of a
rapport that would not exist were the staff isolated in Bridger Park
At its regularly scheduled monthly meeting in April 2012 the Parking Commission decided to
explore the possibility of selling the office space At its May meeting the Parking Commission
voted unanimously to recommend to the City Commission that the unfinished property was no
longer part of the Parking Enterprise business plan and that the property was not necessary for
the conduct of City business see attached memo to the Parking Commission
AUTHORITY TO SELL REAL PROPERTY
The City Commission has authority over property owned by the city pursuant to Chapter 2
Article 6 Division 5 of the Bozeman Municipal Code BMC This chapter was created by
Ordinance 1658 2006 and later amended by Ordinances 1683 2006 and 1713 2007 The
BMC requires the following when the city of Bozeman sells this type of real property
1 The City must conduct a public hearing and determine by a two thirds vote of all
members of the Commission that any real property owned by the city is not needed for
public use or that the public interest may be furthered 2 06 880 BMC In addition
section 2 06 870 A BMC authorizes the City Commission to sell property however
acquired that is not necessary to the conduct of City business or the preservation of its
property
2 The City may sell property using several listed methods bid auction with reserve or
negotiated sale or exchange 2 06 880 BMC
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3 The City Commission may deposit the proceeds from the sale in any account that is in
the best interest of the city 2 06 910 BMC
4 The sale of real property must be approved by an ordinance Bozeman Charter Sect
2 11 5
5 The sale may not be made for less than 90 of the appraised value 2 06 890 B BMC
6 The appraisal must have been conducted within one year of the sale 2 06 900
UNRESOLVED ISSUES If the Commission votes in the affirmative to declare the proposed
office space unnecessary for the conduct of city business the following events will take place
Complete a real estate appraisal to determine the monetary value of the space with the
Parking Enterprise covering the expense of appraisal services
Create a condominium agreement
Advertise and negotiate a purchase and sale agreement for the property subject to
Commission approval
Provisionally adopt an ordinance that once effective authorizes the City Manager to sign
a Purchase and Sale Agreement with the buyer
Prepare a deed to transfer title of new parcel from the City of Bozeman to the buyer
Acquire monetary compensation from the buyer per the negotiated purchase price
FISCAL EFFECTS The income generated from the sale of this space is proposed to be
transferred to the Parking Fund to be managed by the Parking Commission for long term
maintenance of Bridger Park Immediate fiscal effects include the cost of an appraisal of the
space and costs associated with creating a condominium The cost of the appraisal s and legal
costs associated with creation of a condominium will be borne by the Parking Enterprise Fund
ALTERNATIVES As suggested by the City Commission
Respectfully submitted
Paul Burns City Parking Manager
Attachments 1 Parking Commission Memorandum 2 diagram showing the location of the
space within the Bridger Park and 3 office space floor plan
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Bozeman
Parking Commission
Memorandum
REPORT TO Honorable Chairman and Parking Commissioners
FROM Paul Burns Parking Manager
SUBJECT Discussion and recommendation to the City Commission that the upstairs
office in Bridger Park be sold
MEETING DATE May 9 2012
AGENDA ITEM TYPE Action item
RECOMMENDATIONS That the Bozeman Parking Commission offer its recommendation to
the City Commission that the office space located on the second floor of Bridger Park be sold
Suggested motion The Bozeman Parking Commission recommends to the City
Commission that the approximately 1 000 square feet of unfinished office space that is
located on the second floor of Bridger Park and is owned by the City of Bozeman and
managed by the Parking Commission be sold as that property is not necessary to the
conduct of City business or the preservation of its property
BACKGROUND The proposed property is approximately 1 000 square feet overlooking
East Mendenhall Street and north of the exterior wall of Bridger Park
On April 11 2012 the Parking Commission moved seconded and voted unanimously that the
office is no longer needed for the operation and management of the Parking Enterprise s business
plan The space was originally conceived as a future office for the Parking Enterprise but has sat
empty since Bridger Park opened in April 2009 The space is unfinished and several estimates
have been received on what it might cost to make the space habitable The estimates range from
50 000 to 60 000 for a ceiling plumbing of a restroom walls and flooring The Parking
Enterprise views the required work as an unnecessary expense
Currently the Parking Enterprise operates out of the Al Stiff Professional Building at 20 East
Olive Street Working from the Professional Building has helped the Parking Enterprise staff
become integrated in City business and operations it has allowed for the establishment of a
rapport with other City employees that would not exist were the staff isolated in Bridger Park
As stipulated by Bozeman Municipal Code Section 2 06 870 the Parking Commission does not
have the authority to sell public property Selling city property can only be done by the City
Commission However the City Commission has the power to sell trade or exchange any real
or personal property however acquired belonging to the City that is not necessary to the conduct
of City business or the preservation of its property
In Section 2 06 880 the Bozeman Municipal Code goes on to state When the City
Commission after public hearing has determined by a two thirds vote of all the members that
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any real property owned by the City is not needed for public use or that the public interest may
be furthered the City may sell such property
FISCAL EFFECTS Because the property is part of the city s existing element of the
Intermodal Commerce Condominiums it must be condominimized prior to being sold The
property must also be formally appraised The costs of appraisal and being condominimized will
be paid by the Parking Enterprise Fund The sale shall not be consummated if it is found through
ongoing due diligence that the cost of creating a legal address and appraising the property
represent an unreasonable percentage of the total net proceeds
It is expected that the Parking Enterprise Fund will receive any and all proceeds from the sale of
the office space It is suggested that proceeds from the sale be used to fund operations and
maintenance in Bridger Park
ALTERNATIVES As suggested by the Parking Commission
Report compiled on May 4 2012
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