HomeMy WebLinkAboutProvisional Adoption Ordinance 1885, Sale of North Park Property to Micropolitan and Powder River_14
Memorandum for Provisional Adoption of Ordinance 1885 Page 1 of 8
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission.
FROM: Brit Fontenot, Director of Economic Development.
SUBJECT: Provisional Adoption of Ordinance 1885 – an ordinance ratifying the City
Manager’s signature on a purchase and sale agreement transferring ownership of the North Park
property to Micropolitan Ent., LLC and Powder River Comp., LLC. MEETING DATE: April 7, 2014
AGENDA ITEM TYPE: Action (4/5 vote of the Commission required for adoption of
Ordinance 1885).
RECOMMENDATION: Staff recommends the Commission hold a public hearing on the
ordinance, consider this, and other related staff memoranda, written and spoken public
testimony, and provisionally adopt by a two-third majority (i.e. four affirmative votes) Ordinance
1885 ratifying the City Manager’s signature, upon expiration of the 30 day effective period, on the attached Agreement to Sell and Purchase Real Estate, the North Park property, with
Micropolitan Ent., LLC and Powder River Comp., LLC (the “Agreement”).
SUGGESTED MOTION: Having conducted a public hearing, considered written and spoken public testimony, and based on the findings contained in this and other related staff memoranda, the content of Ordinance 1885 and findings articulated by the Commission during discussion, I
hereby move to provisionally adopt Ordinance 1885 ratifying the City Manger’s signature on the
Agreement to Sell and Purchase Real Estate, the North Park property, with Micropolitan
Enterprises, LLC and Powder River Company, LLC.
I. AUTHORITY TO SELL REAL PROPERTY
Ordinance 1885 authorizes the sale of the North Park property. (EXHIBITS A, A1 &
A2) The City Commission has authority over property owned by the City pursuant to Chapter
2.06 of the Bozeman Municipal Code (BMC). This chapter was created by Ordinance 1658 (2006) and later amended by Ordinances 1683 (2006) and 1713 (2007).
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II. BACKGROUND:
For a complete history of the North Park project please refer to the January 14, 2013
(EXHIBITS B & B1) and May 13, 2013 staff memos to the City Commission. In January, 2013, the City Commission, via Resolution 4426, unanimously adopted the
North Park Concept Land Use Plan (the Plan). Additionally the North Park project webpage
contains a link to the adopted plan and additional North Park materials including the North Park
Marketing Brochure, Phase 1 Environmental Site Assessment and the North Park Economic Impact Study and Job Benefit Analysis.
In May, 2013, the Commission authorized staff to prepare and publish a Request for
Proposals (RFP) for the acquisition of professional realty services and authorized the North Park
Realtor Selection Committee composed of EDC members and City staff (the Committee) to select a real estate broker to negotiate the sale of the property should the Commission make the determination that the North Park property is not needed for public use and that the public
interest is furthered by the sale of the property. Both the Plan and the direction to engage a
realtor were unanimously supported by the Commission.
In August, 2013, after conducting a public hearing, the Commission determined the North Park property was no longer necessary for the conduct of City business and that the public
interest would be furthered by disposing of the property, (EXHIBITS C & C1). The
Commission directed staff to hire a real estate professional to list and market the property for
sale. A Committee was formed to produce an RFP. The Committee reviewed the three
proposals submitted and selected CBRE to represent the City in the sale of the North Park
property. On September 25, 2013, the City signed the listing agreement with CBRE for a one-
year term, with an option to renew the agreement for one additional year, (EXHIBIT D). Since the listing agreement was signed, CBRE has actively marketed the property nationwide. To date,
two parties have shown interest in the North Park property but only one has agreed to terms.
In February, 2014, an appraisal was ordered for the North Park property. The appraisal
determined an “as is” market value of $ 10,000 per acre, or $850,000 (EXHIBIT E).
III. THE NORTH PARK PROPERTY
The North Park property was purchased in July 2003 for $3M dollars. The North Park
property consists of approximately 85 acres of unimproved land zoned M-2 (manufacturing and industrial) and within the boundaries of an industrial tax increment finance, or TIF, district.
Currently, the Industrial TIF District fund is experiencing a deficit of approximately $180,000.
The legal description of the North Park property is:
TRACTS 1A, 2A, 3A & 4A OF COS 2153 LOCATED IN THE NW ¼ & NE ¼ OF SECTION 36, TOWNSHIP 1 SOUTH, RANGE 5 EAST, PRINCIPAL
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MERIDIAN MONTANA, CITY OF BOZEMAN, GALLATIN COUNTY,
MOTANA.
The North Park property is generally located within the Bozeman City limits, between Frontage Road (Highway 10) and Interstate 90 and interchanges at North 7th and North 19th Avenues and is proximate to Redwing Drive, Reeves Road and North 7th Avenue. Click here for
a map of the North Park property generally showing the physical relationship between the City,
and neighboring State of Montana owned properties.
Currently, public infrastructure is limited on the property. Additionally, access to the
property is limited to one at-grade railroad crossing to the north and west. There is an absence of
a road network, curbs, gutters, sidewalks and functional water and sewer services. Additionally,
there are poor intersections for ingress and egress and limited connectivity to the existing street
network.
VI. RATIONALE FOR THE SALE OF THE NORTH PARK PROPERTY
In August of 2013, the Commission determined the North Park property was no longer
necessary for the conduct of City business and the public interest findings supported the sale. In doing so, the Commission considered and adopted the following findings:
1. The North Park property, if developed as proposed in the Plan, furthers the City’s
goals of job creation and economic diversification as described in the
Commission’s 2013 – 2014 Priorities; 2. The aggregate costs to date, approximately $5.25M, of the North Park property are high including purchase price, costs of preliminary plat and the MMIA
settlement, with very little return on this investment. The sale of the property
would help recoup some portion of the investment made by the City over the past
decade. Additional value, through private sector job creation and industry diversification, could be realized by the sale of the property; 3. The costs to the City to fund basic infrastructure to facilitate development is
higher than the City is willing to invest to develop the property. According to the
Plan, Phase I development is estimated at $5.4M. Phase I includes the majority of
the City owned portion of the North Park property; 4. The Plan, through local research and data collection, establishes the market viability of developing the property. In addition to the Plan, the partnership has
generated additional documents referenced in this memorandum. Through these
documents, a great deal of value has been created for the North Park that, once the
city-owned portion is sold, can be utilized to execute the development of the property; 5. There is both local and national interest in the sale or lease of the property for
private development. That interest has been generated, primarily, by the Plan;
6. Current commercial real estate market trends demonstrate increasing values of
commercial real estate throughout the Bozeman area;
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7. Sale of the North Park property supports the City’s desire to facilitate the
development of the property without the negative perception that as property
owner, the City may provide itself exemptions or variances to its own regulatory
processes; 8. The City does not have the staff resources or expertise to develop the property without significant outside assistance; and
9. There are significant bureaucratic implications of creating an additional layer of
quasi-governmental administration through the creation of a development
authority structure to manage the sale or development of the property. In considering the above, Staff provided the following additional discussion in support of
the determination that sale of the property furthers the public interest. Primarily, the objective of
the North Park Plan was to raise awareness of the economic development potential, in terms of
job creation and economic diversification, existing at the North Park properties. Additionally, an objective of the Plan was to demonstrate how governmental organizations and the private sector can work together to support a vision greater than any one partner organization. Also, Plan
objectives include provision of locally supportable, market based economic analysis using local
data, codes, standards and regulations, realistic infrastructure cost estimates and timelines
through multiple phases and viable use patterns, all to facilitate informed decision making. Finally, given rapidly changing market conditions and increasing development costs, the Plan established a sense of urgency for the sale and development of the North Park.
Throughout the project, selling all or part of the City-owned portion of the North Park
property at anytime, conditionally or unconditionally, remained a viable consideration. CBRE has marketed the property touting the aforementioned benefits as part of the overall strategy. The buyers have reviewed the North Park material and believe the property does have the
potential set forth in the Plan vision.
Additional rational for the “as is” sale of the North Park property include: 1. The buyer desires to begin development of the property immediately;
2. The property has access limitations;
3. The property has infrastructure limitations; and
4. The City will apply the proceeds to the Landfill Post-Closure Fund. Private ownership of the North Park property will likely result in a more timely and cost
effective development resulting in the catalyst for job creation and industry diversification
originally envisioned by the Commission.
VI. CONDITIONS OF THE SALE OF THE NORTH PARK PROPERTY
Conditions for the sale of the North Park property as stated in the agreement include:
1. The purchase price for the property is the greater of (i) $1,280,550 or (ii) 100% of appraised value, as determined by an appraisal ordered by Seller,
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said appraisal to have an effective date within one (1) year of the Closing Date. If 100% of the appraised value exceeds $1,280,550 by more than ten
percent (10%), Buyer may, within ten (10) days of its receipt of a copy of the
appraisal elect to terminate this Agreement by giving written notice of such termination to Seller, and upon termination pursuant to this paragraph, the Earnest Money [$10,000] shall be promptly returned to Buyer. If Buyer fails
to give notice of such election within the ten (10) day time period, Buyer will be
deemed to have waived its right to terminate this Agreement for the reasons set
forth in this paragraph, and the Purchase Price shall be 100% of the Property’s appraised value (Exhibit A1, City’s Counter Offer dated February 28, 2014, Section I);
2. The buyer and City, entering into a memorandum of understanding (MOU)
regarding the extension of the existing TIF district and the allocation of TIF funds
for costs resulting from Bozeman Solvent Site contamination including but not limited to those costs associated with the Solvent Site water main improvement payback district (Exhibit A1, Purchase and Sale Agreement dated January 27,
2014, Line 133);
3. This offer is contingent on the City of Bozeman approving a preliminary plat with
conditions acceptable to Buyer prior to the Closing Date. This offer is also contingent on vehicular and pedestrian access that is acceptable to Buyer. Nothing in the previous two sentences, however, shall be construed to require that the City of Bozeman approve any particular conditions or access
proposed by Buyer, it being understood by Buyer that the City will review
Buyer’s application for preliminary plat in its governmental and regulatory capacities, applying its normal development review criteria and procedures as it would in reviewing any other application. Contingency release date for
preliminary plat approval and access approval is 18 months from the date all
parties have executed the Buy-Sell. If the preliminary plat review process is
underway and the Buyer is proceeding diligently, either party may apply to have the contingency release date extended for up to an additional 12 months, and the other party shall not unreasonably withhold consent to such extension request
(Exhibit A1, City’s Counter Offer dated February 28, 2014, Section IV);
4. The City will provide the buyer with a copy of the Phase 1 Environmental Assessment (EA) (Exhibit A1, Purchase and Sale Agreement dated January 27, 2014, Addendum 1, Line 11); 5. The City will provide the buyer with a copy of the Preliminary Engineering
Report (PER) (Exhibit A1, Purchase and Sale Agreement dated January 27,
2014, Addendum 1, Line 15);
6. Leases, both cell tower and agricultural, transfer with the property (Exhibit A1, Purchase and Sale Agreement dated January 27, 2014, Addenda 5 and 6, Lines 11 and 23); and
7. The Commission must ratify the City Manager’s signature on the Purchase and
Sale agreement (Exhibit A1, Purchase and Sale Agreement dated January 27, 2014, Addendum 4, Line 11).
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V. THE DEVELOPMENT PROPOSAL
The buyers, Micropolitan Ent., LLC and Powder River Comp., LLC, have indicated that
they intend to develop the property in phases and are prepared to begin seeking entitlements immediately. Initially, a site, or sites, will be prepared for the construction of one or more buildings compatible with the existing zoning (M-2). On a portion of the property, the buyers
intend to consolidate business activities currently spread about community onto one site for the
purposes of accommodating current and future business growth and increasing efficiencies by
consolidating disparate activities. Other phases may include additional build-out for other compatible M-2 uses.
The North Park concept land use plan anticipated M-2 uses on the city-owned portion of
the site. The Plan sought to take advantage of the existing adjacency to a main-line railroad track
and partnerships with the State, through the DNRC, for improved access to the parcel. The adjacency to rail may be important to the buyer in the future. The buyer intends to work with the DNRC to secure the access required for development.
VI. MONTANA MUNICIPAL INTERLOCAL AUTHORITY SETTLEMENT
On December 10, 2012 the Commission authorized the approval of a settlement with the Montana Municipal Interlocal Authority (MMIA) over coverage of a $3M judgment against the
City regarding the City’s purchase of the Mandeville Farm. The settlement requires the City
reimburse MMIA in the amount of $2M over the next three fiscal years. The City Manager
signed the agreement December 20, 2012. The City has made two payments to the MMIA totaling approximately $1.3M. The final payment of $675,000 is scheduled for July, 2014.
Under section three of the settlement agreement, the City is required to pay additional
money to the MMIA only if the City obtains a “profit” from the sale. Profit is defined as “any
amount Bozeman receives over the $3M purchase price, plus the “costs of development.” A sale for just over $1.2M will not require any profit payment to the MMIA. Section four of the agreement requires notice of the sale to the MMIA. It states that if the property is sold the City
will provide the MMIA, within sixty (60) days of closing, an accounting of all costs of
development which the City believes should be credited against the potential profit. To date,
there are none. Additionally, within 30 days of notifying the MMIA of the sale, the City and the MMIA must meet to confer on the accounting for the effect of the costs of development on the profit. Again, as there will be no profit from the sale (as defined by the settlement agreement)
there will be no payment to the MMIA. After expiration of the 30 day effective period of
Ordinance 1885, the City Manager will contact MMIA informing them of the pending
transaction. VII. UNRESOLVED ISSUES
There are currently no unresolved issues as it relates to the sale of the North Park
property. The property is being sold “as is.” Seasonal water rights are proposed to transfer with the property as are the cell tower and agricultural leases currently in place.
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VIII. ALTERNATIVES
The listing agreement is in effect until August 29, 2014, with an additional one year
option to extend the agreement. An alternative to selling the property to the buyers listed herein is to maintain the listing with CBRE until at least August 29, 2014 and to work with the DNRC to secure access through State property as was attempted several years ago when the transfer
station was under consideration and the property was preliminarily platted for that proposed use.
When the transfer station discussion ended, further negotiations with the State on securing the
access through easements on the DNRC property ceased without executing the easement documents.
If the City were to retain ownership of the property and continue to market it, the
property value may rise due to an overall strengthening of the commercial real estate market.
The value would likely increase further if access easements were in place. While this alternative is feasible, Staff suggests that the timing of such work may not be
in the best interest of the City for the following reasons:
1. Since the initial listing in September of 2013, we have had one (1) signed Purchase and Sale agreement; 2. The current offer [$1.28M] is higher than the current appraisal [$10,000 per acre
or $850,000] and there is no way to predict how the commercial real estate market
may change the sale is delayed;
3. If a new purchase and sale agreement is negotiated with this or another buyer, it will likely be for the appraised value of $10,000 per acre; 4. We do not know the value of access easements needed to secure appropriate
access through the State property;
5. We do not know how long it will take or whether the easements will be granted
by the State Land Board to secure appropriate access through the State property; 6. It will take a considerable amount of staff time to negotiate the easements and achieve approval by the State Land Board;
7. The listing agreement, without extension, terminates in 4.5 months;
8. This effort will further slow the sale of the property to another interested party
and reduce the time it can work for the community creating jobs and diversifying the economy; and 9. Given what we know about the property today, limited infrastructure and access,
it is unlikely that even once the access issues was solved, the value of the North
Park property would likely not reach that of the original purchase price.
IX. FISCAL EFFECTS Pursuant to the requirements of the Bozeman Municipal Code, the property cannot be
sold for less than 90% of appraised value. Upon sale, because the City is using a real estate
broker, a commission of 6% will be paid. The City may have minimal additional expenses related to the transfer including title insurance, recording fees and expenses related to outside
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counsel. While the final purchase price is contingent on an appraisal, the established floor for
the sale is $1,280,550. At this price, the City would receive approximately $1,203,00 upon
closing, after realtor commission.
The City’s Industrial Tax Increment Finance (TIF) District invested approximately $225,000 in development of the preliminary plat in 2006-2008. The plat is currently active and
the buyers are considering an extension. The Industrial TIF continues to have a small amount of
increment each year, but has not fully recovered the money spent to develop the plat. The
balance in the Industrial TIF fund is ($180,000). Selling this land to a private developer will positively impact the TIF, bringing cash streams from property taxes into the fund to recover the initial investment.
The City receives revenue from an agricultural lease and cell tower lease on the property,
which is deposited into the Solid Waste Fund. In 2012, the City obtained $5,148 from the agricultural lease and $7,260 from the cell tower lease. Should the City sell the property, these revenues will no longer be realized.
The North Park property was purchased without an appraisal in 2003 for
$3,000,000 with money from the City’s Solid Waste Fund. At this time, staff believes the goal is not to recover the initial purchase price; the goal is to turn the property over to a private owner and developer who will, in a timely manner, move forward with plans for development which
result in job creation and industry diversification as originally intended by the Commission.
Additional benefits include the addition of the North Park property on the City tax rolls, investment in the industrial TIF, and new development in the largest M-2 zoned property left in the Bozeman City limits. These benefits are consistent with the Commission’s intent to increase
and support manufacturing, and the associated jobs, as a primary sector development initiative.
Staff recommends that the proceeds from the sale of the North Park property be deposited in the Landfill Post-Closure Fund, to be used to assist with Landfill site remediation and monitoring.
EXHIBITS:
A Ordinance 1885; A1 Purchase and Sale Contract Documents;
A2 COS 2153;
B August 26, 2013 City Commission Staff Memo;
B1 August 26, 2013 City Commission Meeting Minutes; C January 14, 2013 City Commission Staff Memo; C1 January 14, 2013 City Commission Meeting Minutes;
D CBRE Listing Agreement; and
E North Park appraisal. Report prepared on March 18, 2013
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ORDINANCE NO. 1885
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, RATIFYING THE CITY MANAGER’S SIGNATURE ON A PURCHASE AND SALE AGREEMENT FOR THE SALE AND CONVEYANCE OF THE NORTH PARK PROPERTY DESCRIBED AS TRACTS 1-A, 2-A, 3-A AND 4-A OF
CERTIFICATE OF SURVEY 2153 CITY OF BOZEMAN, GALLATIN COUNTY,
MONTANA INCLUDING CONTINGENCIES REGARDING THE SALE AND REQUIRING THE PROCEEDS FROM THE SALE BE DEPOSITED IN THE CITY’S LANDFILL POST-CLOSURE FUND, AND PROVIDING FOR AN EFFECTIVE DATE.
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 known as the North Park Property,
formerly known as the Mandeville Farm identified as Tracts 1-A, 2-A, 3-A and 4-A
of Certificate of Survey 2153 located in the NW ¼ and NE ¼ of Section 36, Township 1 South Range 5 East, Principle Meridian Montana, City of Bozeman,
Gallatin County, Montana.
2. 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.”
3. Section 2.06.850 of the Bozeman Municipal Code (BMC) (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.
4. 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. 5. 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.
6. On August 26, 2013, the Bozeman City Commission conducted a public hearing
wherein the Commission determined by a vote of 4 – 0, adopted the findings
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included in the August 26, 2013 staff memorandum and concluded the City-owned portion of the North Park property, described in Section II of the staff memo, was no longer needed for public use and the public interest will be furthered by the sale
of the property as provided for in §§ 2.06.880 through 2.06.910 of the Bozeman
Municipal Code and directed the City Manager to complete all steps necessary to
negotiate a sale and transfer of the property and return to the Commission with an ordinance authorizing the City Manager to execute a Purchase and Sale Agreement for same.
7. 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 ratifies the City Manager’s signature on the attached Agreement to Sell and Purchase Real Estate (Attachment A1) and to take all other action necessary to effectuate the sale of the North Park property to purchaser Micropolitan Ent., LLC
and Powder River Comp. LLC and/or their assigns. The property is legally described as Tracts 1-
A, 2-A, 3-A and 4-A of Certificate of Survey 2153 located in the NW ¼ and NE ¼ of Section 36,
Township 1 South Range 5 East, Principle Meridian Montana, City of Bozeman, Gallatin County, Montana, according to the official Certificate of Survey thereof on file and of record in the office of the Clerk and Recorder of Gallatin County, Montana.
The Commission authorizes, subject to fulfillment of the contingencies as stated in the attached
Agreement and those contingencies listed below, the conveyance of the fee title to the Property by warranty deed to Micropolitan Ent., LLC and Powder River Comp. LLC and/or their assigns:
1. The sale price shall be One Million, Two Hundred and Eighty Thousand, Five Hundred
and Fifty US Dollars ($1,280,550) or no more than 10% above the appraised value,
whichever is greater. 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 Agreement to Sell and
Purchase Real Estate shall not be binding on the City of Bozeman until that time.
Section 3 Proceeds of the sale shall be deposited in the City’s Landfill Post-Closure Fund.
Section 4
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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 5 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 6
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 7
Codification Instruction.
This Ordinance shall not be codified but shall be kept by the City Clerk and entered into a disposition list in numerical order with all other ordinances of the City and shall be organized in a category entitled “Ordinances for Sale, Transfer, or Conveyance of Real Property.”
Section 8
Effective Date.
This ordinance shall be in full force and effect 30 days after final adoption.
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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 7th day of April, 2014.
____________________________________
JEFFREY K. KRAUSS 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
_______________, 2014. The effective date of this ordinance is _________________, __ 2014.
_________________________________
JEFFREY K. KRAUSS
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: Brit Fontenot, Economic Development Director
SUBJECT: Approval of Resolution 4426 Adopting the North Park Properties Concept Land Use Plan.
MEETING DATE: January 14, 2013
RECOMMENDATION: Approve Resolution 4426 adopting the North Park Properties Concept Land Use Plan and direct Staff on the future of the city-owned North Park property.
RECOMMENDED MOTION: I move to approve Resolution 4426 adopting the North
Park Properties concept land use plan.
OR ALTERNATIVE MOTION: I move to approve Resolution 4426 adopting the North
Park Properties Concept Land Use Plan and direct staff
to pursue one of the following or an alternative option
or options provided by the Commission: 1) Maintain the current status and condition of the North Park property;
2) Sell the property in whole or part,
unconditionally or with conditions to develop
in keeping with the North Park vision; 3) Develop the property in keeping with the North Park vision;
4) Turn the property over to a
management/development authority or entity
to develop and manage the property in keeping with the North Park vision; and/or 5) Alternative option or options provided by the
Commission.
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INTRODUCTION:
Staff recommends adoption of the North Park Properties Concept Land Use Plan (the
“Plan”) through approval of Commission Resolution 4426 (Attachment 1). Adoption of the Plan does not obligate the City to implement any part, or parts, of the Plan. As provided for in the motion and vote language above, adoption of the Plan requires no further action by the
Commission. T he Commission may adopt the Plan and provide no a dditional direction;
however, staff suggests that if the Commission adopts the Plan, direction to staff concerning the
future of the City-owned portion of the North Park properties, be provided. The name of the project was changed from Mandeville Farm Concept Land Use Plan to
North Park Properties Concept Land Use Plan in order to re-launch the project without the
negative history associated with the purchase of the City-owned portion of the property in 2003
and the ensuing litigation. The settlement is now final and the City of Bozeman retains a clean and clear ownership title to the City-owned portion of the North Park properties. In the context of the Plan, “North Park property” refers to the approximately 85 acres city-owned portion of the
property formerly known as the Mandeville farm and “North Park properties” refers to the
combination of the City-owned portion and the approximately 190 acres of State of Montana
owned property managed by the Department of Natural Resources and Conservation (“DNRC”) for the benefit of the Montana public education system. BACKGROUND:
Brief History of the North Park Properties The City-owned portion of the North Park properties was purchased from John and Donna
Mandeville in July, 2003 as a potential future site of a City-owned and operated solid waste
transfer station. By 2003, the approximately 190 acres of the State-owned portion was
aggregated by the State of Montana. Most of the State-owned portion of the North Park properties was acquired at Statehood as part of the Enabling Act of 1889, the remainder was
acquired from the Mandeville family in 2003. Combined both properties total approximately
275 acres and currently support agricultural activities.
The City-owned portion of the property consists of approximately 85 acres, is zoned M-2 (manufacturing and industrial) and is within the boundaries of an industrial tax increment
finance, or TIF, district. The 190 acres of State owned property is zoned M-1 (manufacturing
and industrial). The industrial TIF District, encompassing both parcels, was established in 2006
with a 15 year term. The industrial TIF District is 6 years old and approximately 40% through
its “life”; It sunsets in 2021. Given the 20 – 30 year time horizon of the Plan, consideration should be given to extending the life of the industrial district.
The City-owned portion of the North Park property was subdivided and platted
(preliminary) but due to rising project costs, objections from nearby residents and other related
issues, the transfer station was never constructed. The City’s Economic Development Council (“EDC”) and internal Economic Development Team (“EDT”) have discussed the North Park
properties on several occasions and have suggested the existing preliminary plat design on the
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City-owned 85 acres may not represent the highest and best design for the property today. Given
the amount of money invested in the engineering and preliminary platting of the City-owned
portion of the North Park properties and despite the uncertainty of the applicability of the
existing preliminary plat design, in April, 2012, the preliminary plat on the City-owned portion was extended for two additional years. The original site design and engineering on the City-owned portion of the North Park properties was intended for an entirely different configuration
and mix of uses than being contemplated in the Plan.
Currently, infrastructure resources are limited on the property. There is an absence of a road network, curbs, gutters, sidewalks and functional water and sewer services. Additionally, there are poor intersections for ingress and egress and limited connectivity to the existing street
network. Please note that a small portion of the State-owned North Park properties, managed by
the DNRC, was identified as a possible location for future Bozeman Fire Station 7 in the Fire Protection Master Plan adopted by the City Commission in August, 2006, see page 170. RATIONALE FOR THE PLAN:
The Commission identified North Park as part of their number one 2012 –2013 Work-Plan goal via implementation of the adopted 2009 Economic Development Plan, integrating economic development principles throughout the organization through the adoption of a North Park Properties Concept Land Use Plan in collaboration with the DNRC.
To assist with the project, the EDC identified several high growth potential sectors
including manufacturing and fabrication, along with the bio-science and bio-technology, high-technology, photonics and the outdoor industry as sectors that the City should encourage and support in an effort to create new, higher paying and skilled jobs while diversifying the local and
regional economies. The North Park properties represent a physical location where these types
of economic activities can be encouraged and supported.
Plan Objectives
Primarily, the objective of the Plan is to raise awareness of the economic development
potential in terms of job creation and economic diversification that exists in the North Park
properties. Additionally, an objective of this Plan is to demonstrate how governmental organizations and the private sector can work together to support a vision greater than any one
partner organization. Also, an objective of the Plan is to provide a locally supportable, market
based economic analysis and feasibility study and concept land use plan using local data, codes,
standards and regulations and adding realistic infrastructure cost estimates through multiple
phases to establish viable use patterns, timelines and costs to inform decision making and decision makers. Finally, given market conditions and development costs, the Plan establishes a
sense of urgency for the development of the North Park.
Specific objectives for the North Park project are shown below in long, medium and short
term time horizons. The total build-out time frame for the entire North Park properties is 25- 30 years. Please note that many of the medium and short term objectives are complete or are
currently underway.
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Long term objectives (present – 25 to 30 years) 1) In partnership with the DNRC, create a place (and space) where, once developed, high
growth potential businesses including manufacturing and fabrication, bio-science and
bio-technology, high-technology, photonics and the outdoor industry and others, can
start, grow or relocate to North Park, resulting in the creation of new jobs and increased economic diversity (Underway); and 2) Continue with infrastructure improvements for undeveloped phases.
Medium term objectives (present – 12 to 24 months)
1) Identify and seek funding sources for the preliminary engineering report and Phase I infrastructure development (Underway);
2) Create and/or adopt a management and operational structure that will manage the
development of the North Park properties (Underway);
3) Identify and/or secure an anchor tenant or tenants (Underway); and 4) Commence Phase I infrastructure improvements. Short term objectives (present 3 to 6 months)
1) Complete the North Park Properties Concept Land Use Plan and the North Park Properties Marketing Brochure (Completed); 2) Commission approval of the North Park Properties Concept Land Use Plan (Underway);
3) Add the North Park Phase 1 infrastructure improvements to the CIP (Completed);
4) Identify capacity expanding, off-site improvements that may aid in the development of the
North Park properties, i.e. intersection control device at the intersection of North 7th Avenue and Griffin Drive (Completed); 5) Re-name and re-brand the project from Mandeville Farm to North Park (Completed);
6) Recreate/extend the life of the industrial TIF district;
7) Phase 1 Environmental Site Assessment (Completed);
8) Low to moderate income study, or LMI, to support a State of Montana Department of Commerce economic development public infrastructure grant application (Underway);
9) Preliminary engineering report or PER, to support a State of Montana, Department of
Commerce, CDBG for public infrastructure application (Underway);
10) Install appropriate signage at key locations on the property representing the vision of
North Park; 11) Property appraisal; and
12) Phase 1 preliminary platting.
Selling all or part of the City-owned portion of North Park at anytime, conditionally or
unconditionally, as allowed in §§ 2.06.880 through 2.06.910 of the Bozeman Municipal Code, remains an option.
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THE NORTH PARK PROPERTIES:
North Park Properties Physical Adjacencies and Geographical Assets Its size, approximately 275 acres within Bozeman city limits, as well as North Park’s
existing zoning designations (M-1 and M-2), current inclusion in an industrial TIF district,
potential as a Foreign Trade Zone (FTZ), proximity to, and frontages on, Interstate 90, interchanges at North 7th Avenue, North 19th Avenue and a future interchange near Belgrade at
the Bozeman Yellowstone International Airport, the existing rail corridor and possible rail spur
and proximities to North 7th Avenue, Griffin Drive, Frontage Road, and Bozeman Yellowstone
International Airport, collectively support the concept of the North Park properties as an ideal
location for the development of a mixed use, light manufacturing/fabrication and/or distribution centers, commercial and/or hospitality center(s), flexible, unique and specialized office and hi-
tech facilities (technology, biosciences, etc.) with the vision of creating new job opportunities
and increasing the economic diversification in southwest Montana. The North Park vision is
supported by local market data research and feasibility studies conducted by the consultants in
preparation of the final Plan.
Please note that a significant connectivity improvement suggested in the preferred option
identifies a possible overpass spanning Interstate 90 and linking Baxter Lane and Mandeville
Road. This connection is identified in the Greater Bozeman Area Transportation Plan (2007 update), p. 3-38. PARTNERSHIPS:
In the early stages of the project (2011) it became clear that the City of Bozeman and the
State of Montana, through the DNRC, would benefit by working collaboratively on the North Park project. Each piece of property has inherent advantages and disadvantages. When considered and planned separately, many of the inherent disadvantages remain, i.e. size,
transportation connections, land features (grade, creeks etc.). When aggregated, the properties
may still have certain disadvantages like access and connectivity; however, the overall benefit of
working in cooperation with the DNRC on N orth Park begins to mitigate some of the disadvantages outlined above. T he City and the DNRC are an example of an effective partnership. With the assistance of our consultants, we have jointly brought the North Park
Properties Concept Land Use Plan to life. Both organizations agree on the overall vision of the
North Park project as a place where job creating and industry diversifying businesses can come
to start, grow or relocate operations adding value to the property, the community and the region. The North Park properties and associated plans and projects represent an important piece
of the City’s economic development strategy and works in cooperation with many other
economic development projects currently underway, i.e. the MSU Innovation Campus, Gallatin
College Programs and overall cluster support and development.
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It is important to note that as the MSU Innovation Campus begins campus expansion
within the recently established South Bozeman Technology District, there will likely be
opportunities to work together to facilitate the success of each site, the Innovation Campus and
North Park, by collaborating on t he most appropriate locations for new and expanding businesses. THE NORTH PARK PROPERTIES CONCEPT LAND USE PLAN:
North Park Properties Concept Land Use Plan The North Park Properties Land Use Plan was a cooperative effort between the City, the
DNRC, CTA Architects Engineers, MXD Development Strategists, City of Bozeman Planning
Department and Grants and Engineering Divisions, the Northern Rocky Mountain Economic
Development District (the “NRMEDD”), the Prospera Business Network (“Prospera”), The Bozeman Area Chamber of Commerce (the “BACC”) and local business owners and real estate and development professionals.
As discussed above, the goals of the Plan are to recognize the community value, in terms
of job creation and economic diversification, in developing the North Park properties in some form or iteration using the Plan as a framework for development. Also, the Plan demonstrates
effective intergovernmental partnerships. Additionally, the Plan establishes the uses of the North
Park properties based largely on local sources of information, i.e. local codes and requirements,
building data, real estate market data and trends etc., while factoring in regional and national
trends and sources. While the Plan has a 25- 30 year outlook, the father away from the data collection the less reliable are the assumptions. Lastly, given market conditions, bare ground
development costs and time lines, the Plan establishes a sense of urgency.
The Planning Process
This section of the memo describes the process for creating the DNRC partnership and getting the North Park project underway.
In August, 2011, City staff was contacted by Mr. Craig Campbell, Unit Manager for the
DNRC’s Bozeman Field Office to discuss City plans for the Mandeville [North Park] property. Mr. Campbell was informed that our EDT was working on the issue and was exploring how an FTZ might function on the property. The EDT quickly entered into discussions with the DNRC
about the 200 + acres of State public school trust land. It was during those discussions that the
DNRC was informed of the availability of Community Development Block Grant (CDBG)
economic development planning grant and the City’s desire to apply for the grant in order to produce a workable plan for the City-owned 85 acres of North Park. Recognizing that the DNRC has similar goals for maximizing the economic output of the State’s school trust lands,
they were invited to join the City’s effort to seek the grant in partnership.
The DNRC manages approximately 190 acres known as the State [of Montana] school trust lands to the south, south-east, and contiguous with the City-owned North Park property. The stated goal of the DNRC is “manage the State of Montana's trust land resources to produce
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revenue for the trust beneficiaries while considering environmental factors and protecting the
future income-generating capacity of the land.” Rather than simply plan for the City-owned
portion of the North Park property, we endeavored to plan for the approximately 275 acres of
City and State-owned property. A dditionally, the DNRC matching funds in the amount of $12,500 offset the total required grant match of $25,000 by one-half.
The CDBG Economic Development Planning Grant presented a unique opportunity to
partner with the State of Montana through the DNRC and collectively plan both properties to
work together on one site. The North Park vision is to create a place in southwest Montana wherein manufacturers of products, i.e. textiles, vaccines, lasers, informatics, etc., can realize cost savings, increase efficiencies or take advantage of the existing TIF or future FTZ and/or
proximities to transportation corridors and air services by strategically locating, re-locating or
expanding operations into an area supportive of efforts to encourage job growth and increase the
economic diversity of southwest Montana. These efforts support Commission goals of creating jobs and diversifying the local and regional economies. The North Park properties represent the garden in our economic gardening strategy, a physical space where businesses can germinate,
grow, or become transplanted.
The City successfully negotiated, and the Commission approved, a Memorandum of Agreement (MOA) with the DNRC in September, 2011 to collaborate on a land use plan for the properties now collectively known as the North Park properties.
On September 19, 2011, the Commission authorized the City Manager to sign and submit
the grant application for the Montana Community Development Block Grant (CDBG), Economic Development Program 2011 Planning Grant, in partnership with the DNRC.
In November, 2011, The City received the $25,000 C DBG grant for economic
development from the Montana Department of Commerce. As outlined in the MOA, the City
and the DNRC agreed to equally divide the match requirement in the amount of $12,500 each. In January – March, 2012, the City and DNRC proceeded to draft and publish an RFP for
professional services to produce a joint land use and marketing plan for the North Park
properties. The City and the DNRC received five (5) proposals, interviewed four (4) respondents
and chose CTA Architects Engineers and MXD Development Strategists as project consultants. On April 9, 2012 t he Commission authorized the City Manager to sign a contract for
services with CTA Architects Engineers (CTA) for the commencement of the North Park
Properties Concept Land Use Plan.
On April 23, 2012 C TA provided the Commission with a special presentation outlining the goals and strategies of the project and plan. Additionally, CTA organized two public
stakeholder meetings designed to open the public discussion on t he use of the North Park
properties and identify opportunities for sustained economic development on the site. In addition
to the public stakeholder meetings and in conjunction with the Plan development, staff, Prospera, the NRMEDD, and the BACC organized and/or attended several developer and anchor tenant meetings. The goal of these meetings was twofold. First, the team intended to generate interest
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in the project. Second, we sought to listen and understand the needs of interested developers and
potential anchor tenants. We also met with private and public sector leaders. Many of whom
maintain a high level of interest in the North Park project.
Project Funding
We continue to discuss Phase I development funding. The estimated Phase I development
costs associated with the preferred development option, Option D, page 91 of the Plan, is
approximately $5.4m. With Plan completion, we have expended all the funds available from the Department of Commerce for the original planning grant.
If the Plan is approved and direction to move forward provided by the Commission, we
intend, in cooperation with the DNRC, to seek additional funding to complete the Preliminary
Engineering Report (PER). Possible sources for PER funding include the City’s General Fund, the State’s Big Sky Trust Fund and/or the U.S. Economic Development Administration. O n
December 3, 2012 t he Commission approved the Capital Improvement Plan (CIP) which
includes North Park Phase I improvements (GF185) broken down over three fiscal years:
1) Scheduled in FY 14 – $150k (for partial Phase 1 de velopment including preliminary engineering, site, geo-technical and platting work);
2) Scheduled in FY 15 - $4.6m (for partial Phase 1 development including completing the
geotechnical and platting work, if necessary, and major Phase I infrastructure
improvements);
3) Scheduled in FY 16 - $550k (for completion of the Phase 1 development)
It should be noted that the CIP process was completed prior to the North Park Properties
Concept Land Use Plan review or adoption by the Commission. North Park Phase I
improvements shown on the CIP in FY 14 – 16 will be adjusted based on Commission direction
for Plan implementation.
Also in 2012, the Commission approved adding an intersection control device(s) at the
Griffin Drive/Mandeville Road and North 7th Avenue (south and east of the North Park
properties) intersection to the CIP as unscheduled items in the amount of $500k from street
impact fees (SIF33). Public/private partnership arrangements should also be considered as a potential source of funding for Phase I infrastructure improvements.
Additionally, we are aware of a State of Montana, Department of Commerce, CDBG for
public infrastructure in the amount of $400k ($400k match required). Grant applications are due
in May, 2013 and require and completed PER and LMI referenced above.
During plan development we discussed and researched the concept of establishing a
development entity or authority that would be contractually responsible for the development of
North Park. If the Plan is adopted and implementation follows, we should be prepared to discuss
management and ownership alternatives to the City as property owner, property developer and development regulator. A s part of our research and investigation into development
authorities/entities we traveled to Great Falls, Montana to discuss the success of the Great Falls
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Development Authority (GFDA) managed by Mr. Bret Doney. The Great Falls model may be
transferable to Bozeman. If directed to do so, staff will return to the Commission in the future to
discuss specific models and options for the structure of ownership, management and operations
of North Park. The Marketing Brochure
North Park Properties Marketing Brochure
The North Park Properties Marketing Brochure was created along with the Plan using the information and graphics provided by the consultants for generating interest in the North Park
project to Bozeman residents and business owners, the wider southwest Montana community,
potential anchor tenants, development and real estate professionals and public officials.
NEXT STEPS IN COOPORATION AND COORDINATION WITH THE DNRC: If the Plan is adopted, the next most critical next step in the North Park project includes
Commission direction on the goals with, and future of, the City-owned North Park property. The
Commission may have additional options not listed below. Some options include: Determining the North Park Vision
1) Maintain the current status and condition of the North Park property;
2) Sell the property in whole or part, unconditionally or with conditions to develop in keeping with the North Park vision; 3) Develop the property in keeping with the North Park vision;
4) Turn the property over to a management/development authority or entity to
develop and manage the property in keeping with the North Park vision; and/or
5) Alternative option or options provided by the Commission. If direction is given on which path to pursue any number of next steps are required. The
list of “next steps” below assumes the Plan is approved and the North Park project is directed
toward options 2), 3) and/or 4) listed above. Some or all of the steps may be required as the
North Park direction is refined. Any action will have associated costs. Possible Next Steps
1) Add signage at the appropriate areas to encourage interest;
2) Preliminary Engineering Report (approximately $100k) March 1st, 2013. Possible funding sources include:
a. BSTF Planning Grant – $50k (inc. $12.5k match from each City and
DNRC);
b. EDA Grant - $50k ($50k match with CDBG and COB/DNRC funding);
c. City’s General Fund, see CIP, FY 14 - 16. 3) Identify an ownership, management and operational structure for North Park;
4) Secure a property appraisal;
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5) Begin preliminary platting process; and
6) Re-establish industrial TIF district.
UNRESOLVED ISSUES: The most substantial unresolved issue is that of the vision and direction of the North Park project. Once the North Park vision is established by the Commission there are many additional
unresolved issues to consider. If job creation and industry
diversification are cornerstones of our economic development
strategy and if the North Park vision represents an opportunity to strengthen these economic cornerstones, and in order to move the project forward past the planning stage into the implementation
stage we will require more leadership, more hard work and more
commitment. Additionally, we must move forward on answering
the following questions: 1) Who is interested in becoming the anchor tenant or tenants? 2) What incentives will be necessary to secure commitments
for anchor tenants?
3) Where will Phase I infrastructure funding come from?
4) When will Phase I infrastructure funding be available? 5) How will the ownership, management, development and operational structure function at North Park?
ALTERNATIVES: As determined by the Commission.
FISCAL EFFECTS: The direction on t he future of the North Park project will determine the ultimate fiscal effects. If the status quo is
maintained, the fiscal effects will continue to be minimal. If the
Commission directs something other than that, the costs will rise
commensurate with the scale and scope of the project. It should be noted that the fiscal effects have the potential to be significant. Specific effects are undetermined at this time.
Attachments:
1. Resolution 4426 adopting the North Park Properties Concept Land Use Plan.
Report prepared on December 27, 2012
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RESOLUTION NO. 4426
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA, ADOPTING THE NORTH PARK PROPERTIES CONCEPT LAND USE
PLAN.
WHEREAS, job creation and industry diversification are critical to the long-term
economic vitality of Bozeman; and,
WHEREAS, the City wishes to stimulate, encourage and support the attraction, retention
and growth of jobs and industry in a variety of high growth potential sectors. The number and
diversity of jobs created in a variety of sectors including manufacturing and fabrication, bio-
science and bio-technology, high-technology, photonics and the outdoor industry have high
growth potential and support moderate to high income employment; and,
WHEREAS, the City of Bozeman’s 2012 – 2013 adopted Work-Plan includes the implementation of the adopted economic development plan, integrating economic development
principles throughout the City of Bozeman organization which includes the adoption of a North
Park properties [formerly Mandeville farm] concept land use plan in collaboration with the
Montana Department of Natural Resources and Conservation (“DNRC”); and,
WHEREAS, the City of Bozeman and the DNRC have collaborated on the North Park
Properties Concept Land Use Plan (the “Plan”) which includes contiguous property owned by
the City of Bozeman (85.34 acres) and the State of Montana (189.66 acres) and entirely within
the Bozeman city limits, and,
WHEREAS, when combined, the North Park properties represent the largest contiguous
M-zoned parcels adjacent to a rail line within the Bozeman city limits; and,
WHEREAS, the North Park properties are entirely included in an established (2006)
industrial tax increment finance district; and,
WHEREAS, the North Park properties site is zoned M – 1 and M – 2, the highest
intensity zoning districts allowed, and could support the uses identified in the Plan; and,
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WHEREAS, the Plan suggests reasonable development patterns, configurations and
timelines based on locally, regionally and nationally acquired market and feasibility data; and,
WHEREAS, the Plan provides cost estimates on infrastructure requirements for North
Park Phases I – IV; and,
WHEREAS, the Bozeman City Commission did, on the 7th day of January, 2013,
conduct a public hearing to consider the proposed Plan.
NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of
Bozeman, Montana, that:
Section 1
That the North Park Properties Concept Land Use Plan, attached hereto as Exhibit A, is
hereby adopted.
Section 2
That the North Park Properties Concept Land Use Plan includes a marketing brochure for
the site and is attached hereto as Exhibit B. Exhibit B is hereby incorporated herein and made a
part hereof.
This resolution shall be in full force upon passage and approval.
PASSED AND APPROVED by the City Commission of the City of Bozeman, Montana at a
regular session thereof on the ___ of ____________________, 2013.
_________________________________
SEAN A. BECKER
Mayor
ATTEST:
_______________________________
STACY ULMEN, CMC
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City Clerk
APPROVED AS TO FORM:
_________________________________
GREG SULLIVAN
City Attorney
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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brit Fontenot, Economic Development Director
SUBJECT: Public hearing to determine whether real property owned by the City of
Bozeman, known as the North Park property, is needed for public use or
that the public interest may be furthered by the sale of the property as
provided for in §§ 2.06.880 through 2.06.910 of the Bozeman Municipal
Code. (2/3 vote of Commission required)
MEETING DATE: August 26, 2013
RECOMMENDATION: Conduct a public hearing and by a 2/3 vote of the Commission,
determine that the city-owned portion of the North Park
property is not needed for public use and that the public
interest will be furthered by the sale of the property.
PROPOSED MOTION: Having considered the information presented by staff, I hereby
move to adopt the findings included in the staff memorandum and
conclude the City-owned portion of the North Park property,
described in Section II of the staff memo, is no longer needed for
public use and the public interest will be furthered by the sale of
the property as provided for in §§ 2.06.880 through 2.06.910 of the
Bozeman Municipal Code and direct the City Manager to complete
all steps necessary to negotiate a sale and transfer of the property
and return to the Commission with an ordinance authorizing the
City Manager to execute a Purchase and Sale Agreement for same.
I. INTRODUCTION
For a complete history of the North Park project please refer to the January 14 and May
13, 2013 staff memos to the City Commission.
In January, 2013 the City Commission, via Resolution 4426, unanimously adopted the
North Park Concept Land Use Plan (the Plan). Additionally the North Park project webpage
contains a link to the adopted plan and additional North Park materials including the North Park
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Marketing Brochure, Phase 1 Environmental Site Assessment and the North Park Economic
Impact Study and Job Benefit Analysis.
In May, 2013 the Commission authorized staff to prepare and publish a Request for
Proposals (RFP) for the acquisition of professional realty services and authorized the North Park
Realtor Selection Committee composed of EDC members and City staff (the Committee) to
select a real estate broker to negotiate the sale of the property should the Commission make the
determination that the North Park property is not needed for public use and that the public
interest is furthered by the sale of the property. Both the Plan and the direction to engage a
realtor were unanimously supported by the Commission.
The Committee produced an RFP, reviewed the three proposals submitted and selected
CBRE to represent the City in the sale of the North Park property. The City has not yet signed a
listing agreement with CBRE. The City will not execute the listing agreement until the
Commission determines the City-owned portion of the North Park property is not needed for
public use and the public interest will be furthered by the sale of the property.
It is important to note that the Commission’s determination that the North Park
property is not needed for public use and the public interest is furthered by its sale is not
the final decision on the actual sale of the property. The sale process will require
additional step including the Commission’s adoption of an ordinance approving a purchase
and sale agreement with the corresponding opportunities for public involvement.
II. THE NORTH PARK PROPERTY
The North Park property was purchased in July 2003 for $3M dollars. The North Park
property consists of approximately 85 acres of unimproved land zoned M-2 (manufacturing and
industrial) and within the boundaries of an industrial tax increment finance, or TIF, district.
Currently, the Industrial TIF District fund is experiencing a deficit of approximately $180,000.
The legal description of the North Park property is:
TRACTS 1A, 2A, 3A & 4A OF COS 2153 LOCATED IN THE NW ¼ & NE ¼
OF SECTION 36, TOWNSHIP 1 SOUTH, RANGE 5 EAST, PRINCIPAL
MERIDIAN MONTANA, CITY OF BOZEMAN, GALLATIN COUNTY,
MOTANA.
The North Park property is generally located within the Bozeman City limits, between
Frontage Road (Highway 10) and Interstate 90 and interchanges at North 7th and North 19th
Avenues and is proximate to Redwing Drive, Reeves Road and North 7th Avenue. Click here for
a map of the North Park property generally showing the physical relationship between the City
and State of Montana owned properties.
Currently, public infrastructure is limited on the property. There is an absence of a road
network, curbs, gutters, sidewalks and functional water and sewer services. Additionally, there
are poor intersections for ingress and egress and limited connectivity to the existing street
network.
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III. MONTANA MUNICIPAL INTERLOCAL AUTHORITY SETTLEMENT
On December 10, 2012 the Commission authorized the approval of a settlement with the
Montana Municipal Interlocal Authority (MMIA) over coverage of a $3M judgment against the
City regarding the City’s purchase of the North Park property. The settlement requires the City
reimburse MMIA in the amount of $2M over the next three fiscal years. The City Manager
signed the agreement December 20, 2012. The City has made two payments to the MMIA
totaling approximately $1.3M. The final payment of $675,000 is scheduled for July, 2014.
IV. FINDINGS TO DETERMINE THE NORTH PARK PROPERTY CAN BE SOLD
OR THAT THE SALE FURTHERS THE PUBLIC INTEREST
Prior to finalizing a sale, the Commission must determine the North Park property is no
longer necessary for the conduct of City business, or, that the public interest may be furthered by
disposing of the property. The conclusions above are distinct. Therefore, for purposes of this
memorandum, Commission findings are provided below.
First, the North Park property has been identified in the past as a possible location for
several City facilities; however, the property is no longer necessary for the conduct of the
City’s business for the following reasons:
A. Solid Waste Transfer Station
The original intent for the purchase of the North Park property in 2003 was for the future
site of a solid waste transfer station. Due to rising project costs and other related issues, a
transfer station was never constructed. Now, because of the City’s current participation in the
Gallatin Solid Waste Management District, the City has no current plans, or need, to construct
such a facility.
B. The Mandeville Subdivision Preliminary Plat
On December 1, 2008 the City Commission held a public hearing to discuss the approval
of the Mandeville Major Subdivision preliminary plat, #08008. The meeting minutes are linked
here. During the hearing, there was discussion and public comment regarding the original intent
of the purchase of the North Park property for the location of a solid waste transfer station. It
was explained that while the property was originally purchased for that purpose, the City had
joined the Gallatin Solid Waste Management District and a transfer station on the North Park
property was no longer necessary. The purpose of the preliminary plat therefore was primarily to
create 22 lots for M-2 (manufacturing and industrial zoning district) development, rather than
further consider development of the transfer station. Based upon that premise, the preliminary
plat was approved by the Commission. In 2010, and again in 2012, the City approved extensions
of the preliminary plat.
Given the funds invested in the engineering and preliminary platting of the City-owned
portion of the North Park properties, approximately $225,000, and despite the uncertainty of the
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applicability of the existing preliminary plat design with the North Park design, the Mandeville
Subdivision preliminary plat (File # P-0808) was extended for two years on April 12, 2012 in
order to provide the maximum amount of flexibility available for the development of the
property. The existing preliminary plat expires on April 6, 2014.
It is clear that while a preliminary plat remains active on the property, the existence of the
entitlement does not affect, nor is it directly relevant, to whether the property is necessary for the
conduct of City business.
C. Solid Waste Consolidation Station
In July, 2013, in a presentation to the City Commission regarding the possibility of a
consolidation station at the existing City landfill site, the North Park property was mentioned by
members of the public and Commissioners as an alternative to the proposed landfill location.
After discussions with Public Works Director Craig Woolard and Solid Waste Superintendent
Kevin Handelin it became clear the cost to construct a consolidation station facility on the North
Park property is not financially feasible given the amount of infrastructure and other necessary
improvements required for the development of the North Park property and the costs of
additional staffing required to operate such a facility if located separately from other solid waste
operations. Additionally, use of the property as a publicly operated solid waste consolidation or
transfer station is incompatible with the vision of the North Park property as a catalyst for private
sector job creation and economic diversification and, in fact, would negatively impact the North
Park properties for future development as identified in the Plan. As such, the North Park property
is not needed for development of solid waste facilities. Director Woolard will be in attendance
during this agenda item to answer any questions.
D. Location of Future Fire Station 7
The 2006 Fire Protection Master Plan (see pages 131 – 134) recommends a future fire
station, Station 7, be located near the intersection of North 7th Avenue and Flora Lane, as future
growth and response times dictate. Any future annexations that may occur in this area will affect
response times and thus the need for a station in this part of the City. However, the projected
need for a fire station in this general area of Bozeman, and specifically when to construct it, is
undetermined at this time but the need may arise at some point in the distant future. The
Bozeman Fire Department currently operates three fire stations located on South Rouse Avenue,
South 19th Avenue and Vaquero Parkway. Prior to the purchase of North Park property in 2003,
the City did not own property in the general location recommended for future fire station 7. In
order to provide for future expansion of the City’s fire station network in this area of Bozeman,
the Commission included Condition 5 in the April 6, 2009 Findings of Fact and Order (#P-
08008):
Lot 11, or another lot suitable to the City of Bozeman Fire Department, shall be reserved
for the site of a future fire station.
Bozeman Fire Chief Jason Shrauger now indicates a need may exist for a station in the
northeast area of Bozeman in the distant future; however, the Chief believes the majority of
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growth in the City is currently occurring to the west and has affirmed that there are other sites in
the northeast section of Bozeman that could accommodate a future fire station when the need
arises. Chief Shrauger will be in attendance during this agenda item to answer any questions. At
this time, it is clear the North Park property is not needed for the development of a future fire
station.
Finally, there are no other City purposes currently identified by City staff for which
the North Park property may be used.
Next, the sale of the North Park property furthers the public interest for the following
reasons:
1. The North Park property, if developed as proposed in the Plan, furthers the City’s goals
of job creation and economic diversification as described in the Commission’s 2013 –
2014 Priorities;
2. The aggregate costs to date, approximately $5.25M, of the North Park property are high
including purchase price, costs of preliminary plat and the MMIA settlement, with very
little return on this investment. The sale of the property would help recoup some portion
of the investment made by the City over the past decade. Additional value, through
private sector job creation and industry diversification, could be realized by the sale of
the property;
3. The costs to the City to fund basic infrastructure to facilitate development is higher than
the City is willing to invest to develop the property. According to the Plan, Phase I
development is estimated at $5.4M. Phase I includes the majority of the City owned
portion of the North Park property;
4. The Plan, through local research and data collection, establishes the market viability of
developing the property. In addition to the Plan, the partnership has generated additional
documents referenced in this memorandum. Through these documents, a great deal of
value has been created for the North Park that, once the city-owned portion is sold, can be
utilized to execute the development of the property;
5. There is both local and national interest in the sale or lease of the property for private
development. That interest has been generated, primarily, by the Plan;
6. Current commercial real estate market trends demonstrate increasing values of
commercial real estate throughout the Bozeman area;
7. Sale of the North Park property supports the City’s desire to facilitate the development of
the property without the negative perception that as property owner, the City may provide
itself exemptions or variances to its own regulatory processes;
8. The City does not have the staff resources or expertise to develop the property without
significant outside assistance; and
9. There are significant bureaucratic implications of creating an additional layer of quasi-
governmental administration through the creation of a development authority structure to
manage the sale or development of the property.
In considering the above, Staff provides the following additional discussion in support of
the determination that sale of the property furthers the public interest. Primarily, the objective of
the Plan is to raise awareness of the economic development potential, in terms of job creation
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and economic diversification, existing at the North Park properties. Additionally, an objective of
the Plan is to demonstrate how governmental organizations and the private sector can work
together to support a vision greater than any one partner organization. Also, Plan objectives
include provision of locally supportable, market based economic analysis using local data, codes,
standards and regulations, realistic infrastructure cost estimates and timelines through multiple
phases and viable use patterns, all to facilitate informed decision making. Finally, given rapidly
changing market conditions and increasing development costs, the Plan establishes a sense of
urgency for the sale and development of the North Park. Throughout the project, selling all or
part of the City-owned portion of the North Park property at anytime, conditionally or
unconditionally, remained a viable consideration.
In addition to the Plan, the City and the Department of Natural Resources and
Conservation (the DNRC) partnership produced the following supporting material – all of which
will be valuable to a purchaser:
1. North Park Properties Marketing Brochure;
2. North Park Phase 1 infrastructure improvements added to the Capital Improvements Plan
or CIP, (CIP FY 14 – 18, GF 185, p. 54);
3. Identification of capacity expanding, off-site improvements that may aid in the
development of the North Park properties, i.e. intersection control device at the
intersection of North 7th Avenue and Griffin Drive (CIP FY 14 – 18, SIF 33, p. 157);
4. Completed of a Phase 1 Environmental Site Assessment;
5. Completed of a Economic Impact and Job Benefit Analyses; and
6. Preliminary Engineering Report (PER). CTA has started the work on the PER. Expected
completion of the PER is the end of September, 2013.
The Commission identified North Park as part of their number one 2012 –2013 Work-
Plan goal via implementation of the adopted 2009 Economic Development Plan. In addition to
these goals, the City identified several high growth potential sectors ideally suited for location in
the North Park including manufacturing and fabrication, bio-science and bio-technology, high-
technology, photonics/optics and the outdoor industry sector. It is these industries the City
encourages and supports for the creation of new, higher paying and skilled jobs which add
diversity to the local and regional economies. The North Park property represents a physical
location where these types of economic activities can be encouraged and supported. In addition,
the development of the North Park property represents an important piece of the City’s economic
development strategy of working in cooperation with other economic development projects and
agencies such as the MSU Innovation Campus, Gallatin College, the Prospera Business Network
and the Northern Rocky Mountain Economic Development District. Sector support and
development, especially in photonics/optics and the outdoor industry is in accordance with the
City’s funded FY 14 economic development initiatives.
Next, the sale of the property is in the public interest because the partnership that existed
with DNRC to create the Plan could still exist with a private purchaser and developer. In the
early stages of the project (2011) it became clear that the City and the State of Montana, through
the DNRC, would benefit by working collaboratively on the North Park project. Both
organizations agree on the overall vision of the North Park project as a place where job creating
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and industry diversifying businesses can come to start, grow or relocate operations adding value
to the property, surrounding properties, the community and the region.
Each entity’s property has inherent advantages and disadvantages for development in
terms of size, location, land features (grade, creek, etc.), ingress and egress and infrastructure.
When development is planned separately, many of the inherent disadvantages remain or are
exacerbated. However, when jointly planned and developed, while certain disadvantages may
remain, the overall benefit of working in cooperation with the DNRC on North Park mitigates
some many of the disadvantages.
This proven partnership can continue with a private owner and may, in fact, result in
more timely and cost effective development of the property. As such, once sold, the City will
evolve its role from property owner and DNRC partner to that of development facilitator to work
with the new property owner and the DNRC to explore and encourage a new partnership to
further the North Park guiding vision of the North Park as a catalyst for job creation and industry
diversification.
V. UNRESOLVED ISSUES
Sale of the property to a private owner has risks in terms of the fulfillment of the vision
through implementation of the North Park Plan. The City Commission determined that the
North Park property should be a catalyst for job creation and industry diversification in
furtherance of the City’s broad economic development strategy. The City may find a buyer for
the City-owned portion of the North Park properties that believes in the vision created by the
City and the DNRC and the data supporting that vision, but there is no certainty that
development will come to fruition in the manner called for by the Plan.
Despite the effort at creating a vision for the North Park properties, a buyer may not see
the North Park as an economic development catalyst and may not share the City’s vision for
North Park as a stimulator to economic growth. There is a risk that with a new owner the
property remains undeveloped, underdeveloped, or that the property develops in a manner
inconsistent with the City’s economic development goals.
Considering the above, the only way to mitigate that risk is to place binding expectations
on the buyer for the development of the City-owned portion of the North Park property. The
Commission should carefully consider the pros and cons of a restrictive buy-sell agreement as
opposed to selling the property unconditionally while encouraging and supporting the use of the
Plan and associated documents as a framework for development. Staff recommends the
Commission refrain from imposing direct obligations on a purchaser to develop the property in
compliance with the Plan as this may negatively impact interest in purchasing the property.
Alternatively, staff pledges to remain proactively involved with the new owner, creating a
conduit to the DNRC to facilitate development of the property in conformance with the Plan.
VI. ALTERNATIVES
As determined by the Commission.
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VII. FISCAL EFFECTS
The North Park property was purchased in 2003 for $3M dollars. Pursuant to the
requirements of the Bozeman Municipal Code, the property must be appraised prior to sale and
cannot be sold for less than 90% of appraised value. Upon sale, because the City is using a real
estate broker, a commission of 6% will be paid. The City may have minimal additional expenses
related to the transfer including title insurance, recording fees, and possibly expenses related to
outside counsel.
The City invested approximately $225,000 in development of the preliminary plat.
The City receives revenue from an agricultural lease and cell tower lease on the property.
In 2012, the City obtained $5,148 from the agricultural lease and $7,260 from the cell tower
lease. Should the City sell the property, these revenues will no longer be realized.
Attachments:
None - all supporting documentation is hyperlinked in this memo.
Report prepared on August 15, 2013
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AN APP RAISAL OF
T H E 85.35 ACRE
NORT H PARK PRO PERTY
O WNED B Y T H E
CIT Y OF BOZEM AN, M ONTANA.
DATE O F VALUATIO N
FEBRUARY 28, 2014
FO R
B RIT FONTENOT
DIRECT O R OF ECO NO MIC DEVELOP M ENT
& CO M MUNIT Y RELAT IO NS FO R
T HE CIT Y O F BO ZEM AN, MONTANA
B Y
J. MICHAEL JO KI, MAI, SRA
HELENA, M O NT ANA
285
J. MICHAEL JOK I, MAI, SR A
P.O. BOX 281
HELENA, MONTANA 59624
Phone (406) 442-2159
March 17, 2014 FAX (406) 442-6196
Brit Fontenot
Director of Economic Development
& Community Relations
City of Bozeman
121 N. Rouse, 2nd Floor
Bozeman, Montana 59771
RE:An appraisal of the 85.35 acre North Park Property located south and west of North 7th Avenue and
Frontage Road in Bozeman, Montana.
Dear Mr. Fontenot:
Per your authorization I have made the necessary inspection and analysis to appraise the above
referenced property. The attached report provides the essential data and detailed reasoning employed in
estimating my final value estimate. The report contains 52 pages.
I have appraised the property as a whole, owned in fee simple and unencumbered. I assume no
responsibility for matters that are legal in nature nor do I render any opinion as to title.
The property being appraised is the 85.35 acre North Park Property that lies at the north end of North
7th Avenue where it transitions into Frontage Road in Bozeman, Montana. An aerial photograph of this
property is shown on page 4. The old farm buildings on this site provide no contributory value.
The values reported are qualified by certain definitions, assumptions and limiting conditions, and
certification which are set forth within the attached report. The analysis contained herein is a summary
appraisal report. This appraisal report is intended to conform with the Uniform Standards of Professional
Appraisal Practice.
Based on my analysis, the “as is” market value of the subject property with access only from Red
Wing Drive, as set forth, documented and qualified in the attached report under conditions prevailing on
February 28, 2014 was:
Eig h t Hu nd re d Fifty -Th re e Th o u s and Fiv e Hund re d Dollars
$853,500*
MEMBER APPRAISAL INSTITUTE
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SUB JECT PRO PERTY PHO TO GRAP H
Aerial view of the North Park property.
J. Michael Joki, MAI, SRA
HELENA, MONTANA
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SUM M ARY OF IMPO RT ANT FACT S AND CO NCLUSIO NS
PURPORTED OWNER:City of Bozeman
LOCATION OF PROPERTY:The property is located on North 7th Avenue where
it transitions into Frontage Road and east of
Interstate 90 in Bozeman, Gallatin County, Montana.
SITE SIZE:An irregular shaped parcel of land that is comprised
of four tracts that total 85.35 acres.
BUILDING IMPROVEMENTS:There are old farm buildings however they provide
no contributory value to this property.
PROPERTY RIGHTS APPRAISED:Fee Simple
ZONING:M-2 (Manufacturing and Industrial District)
PRESENT USE:Agricultural use
HIGHEST AND BEST USE, ‘AS IS’:Continued agricultural use
DATE OF VALUATION:February 28, 2014
“AS IS” MARKET VALUE ESTIMATE :$853,500 *
“AS PROPOSED” MARKET VALUE
ESTIMATE :$1,536,300 **
*Subject to the Extraordinary Assumptions and Limiting Condition on page 8.
** Subject to the Hypothetical Condition as shown on page 8.
J. Michael Joki, MAI, SRA
HELENA, MONTANA
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ASSUM PTIO NS AND LIMITING CO NDITIO NS
This is to certify that the appraiser in submitting this statement and opinion of value of subject property acted
in accordance with and was bound by the following principles, limiting conditions and assumptions.
Unauthorized use of this report is set forth below.
1. No responsibility is assumed for matters that are legal in nature nor is any opinion rendered on title
of property appraised.
2.Unless otherwise noted, the property has been appraised as though free and clear of all
encumbrances.
3.Where the values of the land and the improvements are shown separately, the value of each is
segregated only as an aid to better estimate the value which it lends to the whole parcel, rather than
value of that particular item if it were by itself.
4.All maps, areas, plans, specifications, and other data furnished your appraiser were assumed to be
correct. No survey of the property was made by this firm. Furthermore, all numerical references to
linear measurements, area, volume or angular measurements should be assumed to be "more or less"
(+/-) and are accurate to a degree consistent with their use for valuation purposes.
5.This appraisal considers only surface rights to the property with consideration of current zoning and
land use controls. The estimate of highest and best use will form the basis for the value estimate. This
appraisal does not consider mineral, gas, oil or other natural resource rights that may be inherent in
the ownership of the property.
6.In this appraisal assignment any potentially hazardous material found on the land such as petroleum
residue and/or existence of toxic waste or gases, which may or may not be present on the property,
has not been considered. The appraiser is not qualified to detect such substances. A Phase I
Environmental Assessment and Engineering Report pertaining to the subject property has been
provided to me. I have relied on these documents as being accurate and will refer any interested party
to obtain and read these documents if there are any questions regarding such potentially hazardous
material. If such material or substance is present it could adversely effect the value of the subject
property.
7.The appraiser is not a seismologist. This appraisal should not be relied upon as to whether a seismic
problem exists, or does not actually exist on the property. The property which is the subject of this
appraisal is within a geographic area where earthquakes and other seismic disturbances have
previously occurred and where they may occur again. Except as specifically indicated in the report,
no seismic or geologic studies have been provided to the appraiser concerning the geologic and/or
seismic condition of the property. The appraiser assumes no responsibility for the possible affect
on subject property on seismic activity and/or earthquakes. I have not made a specific compliance
survey and analysis of this property to determine whether or not it is in conformity with the various
detailed seismic requirements by the City or County. It is possible that a survey of the property
could reveal that the property does not meet the required seismic requirements. If so, this fact could
have a negative effect upon the value of the property. Since I have no direct evidence relating to
this issue, I did not consider possible noncompliance requirements in estimating the value of the
property.
J. Michael Joki, MAI, SRA
HELENA, MONTANA
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8.All data contained in this report and in the appraiser's files, as obtained from other sources, upon
which to any degree the opinions and conclusions were based, are considered reliable and believed
to be true and correct. However, the appraiser does not assume responsibility for the accuracy of
such items that were obtained from other parties.
9.There shall be no obligation to give testimony or attendance in court by reason of this appraisal with
reference to the property in question unless arrangements have been previously made and at an
additional fee.
10.Disclosure of the contents of this appraisal report is governed by the by-laws and regulations of the
Appraisal Institute.
Neither all nor any part of the contents of this report especially the conclusions as to value, the
identity of the appraiser, or the firm with which he is connected, or to the MAI and SRA
designation, shall be disseminated to the public through advertising media, news media, public
relations media, sales media, or any other public means of communication without the prior written
consent of the appraiser.
11.J. Michael Joki, MAI, SRA, specifically does not authorize the out-of-context quoting from or partial
reprinting of this appraisal report.
12.The liability of J. Michael Joki, MAI, SRA and employees is limited to the client and to the fee
collected. Further, there is no accountability, obligations or liability to any third party. If this report
is placed in the hands of anyone other than client, the client shall make such party aware of all
limiting conditions and assumptions of the assignment and related discussions. The appraiser
assumes no responsibility for any costs incurred to discover or correct any deficiencies of any type
present in the property; physically, financially, or of a legal nature.
13.The fee for this appraisal report is for the service rendered and not for time spent on the physical
report or for the physical report itself.
14.This appraisal report is prepared for the sole and exclusive use of the appraisers’ client the City of
Bozeman, Montana. No other parties are authorized to rely upon this report without the express
written consent of the appraiser.
15.This Summary Appraisal Report is intended to comply with the reporting requirements set forth
under Standard Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a
Summary Appraisal Report. As such, it presents only summary discussions of the data, reasoning,
and analysis that were used in the appraisal process to develop the appraiser’s opinion of value.
Supporting documentation concerning the data, reasoning and analysis is contained in the
appraiser’s file. No third parties are authorized to rely upon this report without the express written
consent of the appraiser.
J. Michael Joki, MAI, SRA
HELENA, MONTANA
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EXTRAORDINARY ASSUMP T IO N & LIM IT ING CO NDIT ION
An extraordinary assumption is an assumption that is directly related to a specific assignment, which,
if found to be false, could alter the appraiser’s opinions or conclusions. Extraordinary assumptions assume
as fact otherwise uncertain information about physical, legal or economic characteristics of the subject
property, or about conditions external to the property, such as market conditions or trends or about the
integrity of data used in an analysis.
1.Currently the only legal access to the subject property is from Red Wing Drive which is an
unimproved, unmaintained road that parallels the subject property along its northeast boundary. Red
Wing Drive can be accessed from North 7th Avenue then it crosses over the adjacent property to
the south of the subject property and then parallels the northeast boundary of the subject property
to where it intersects Frontage road near the northwest corner of the subject property. To get from
Frontage Road to Red Wing Drive requires travel over a set of railroad tracks that have no gate at
this crossing.
A copy of the document dated October 19, 1925 wherein Northern Pacific Railway Company
provides access over the right of way to Gallatin County was provided to me by Brit Fontenot. This
document is allowing the owner of the subject property access over the railroad tracks where Red
Wing Drive meets Frontage Road and to the best of my knowledge Red Wing Drive currently
provides the only legal access to the subject property. The “as is” market value estimate provided
in this appraisal report is based upon the only legal access to the subject property coming from Red
Wing Drive. If this information is found to be false it could change my conclusion to value in this
appraisal report.
HYPO THETICAL CONDIT IO N
A hypothetical condition is a condition that is contrary to what exists but is supposed for the
purpose of the analysis. Hypothetical conditions assume conditions contrary to known facts about physical,
legal, or economic characteristics of the subject property; or about conditions external to the subject
property, such as conditions or trends; or about the integrity of data used in an analysis.
1.The “as proposed” market value estimate in this appraisal report is subject to the subject property
gaining legal access from Wheat Drive or Flora Lane to the south and over the adjoining land that
is owned by DNRC (State of Montana). The map depicting the potential access from Wheat Drive
or Flora Lane and my conclusion to the “as proposed” market value of the subject property is
shown on page 48 of this appraisal report. Currently the subject property does not have legal access
from Wheat Drive or Flora Lane and because this is contrary to what actually exists this is
considered to be a hypothetical condition. However, this scenario is supposed for purposes of the
“as proposed” market value estimate.
J. Michael Joki, MAI, SRA
HELENA, MONTANA
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SCO P E O F T HE APPRAISAL
All known, available, relevant market data considered to have an impact on the estimation
of market value of the subject property has been considered. As identified under Assumptions and
Limiting Conditions and as explained under Property Rights Appraised, the title is assumed to be
free and clear of liens and encumbrances.
The Scope of Work defines an appraiser’s conclusions as to what is deemed necessary to
provide a credible appraisal report. The client is identified as the City of Bozeman, Montana. The
intended user is the client, and the intended use will be to assist the client in the potential sale of the
subject property. The market value estimates provided in this appraisal report are subject to the
Extraordinary Assumption and Hypothetical Condition as shown on page 8.
On February 28, 2014 I met Brit Fontenot and we discussed a number of issues pertaining
to the subject property and he also provided me a number of documents pertaining to the subject
property. Mr. Fontenot gave me permission to inspect the subject property and this is the day all
photographs of the subject property were taken.
Information pertaining to the subject property was obtained from the Gallatin County
Courthouse. The neighborhood and surrounding competitive market areas were researched to find
comparable land sales. Real estate agents, real estate appraisers and developers active in this market
were interviewed in an attempt to find relevant market data. Market data has been confirmed by
personal contact with the buyer, seller or real estate agent involved in the transaction. Market data
was obtained from the following resources:
•Gallatin County Clerk and Record’s Office
•City of Bozeman Planning Department
•Craig Campbell, DNRC
•Chris Laity, Great West Engineering
•Keith O’Reilly, MAI, Appraiser
•Ed Jackson, Appraiser
•Mike McKenna, Realtor
•Scott Dehlendorf, Developer
•Paul Rubright, Realtor
•Jason Leep, Realtor
•Four Corners Construction, Developer
•Dave Osterman, Developer
•Jason Basye, Realtor
•Bill Elfland, Realtor
J. Michael Joki, MAI, SRA
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•Ray Atteberry, Realtor
•Mike Wilmer, Realtor
Exp o su re T im e :
Exposure time is defined by the Appraisal Standards Board of the Appraisal Foundation as follows:
"The estimated length of time the property interest being appraised would have been offered on the market
prior to the hypothetical consummation of the sale at market value on the effective date of the appraisal;
a retrospective estimate based upon an analysis of past events assuming a competitive and open market".
Exposure time is typically based on historical data found in the market place. As shown on the
comparable sale sheets in the addenda the days on market for these sales range from approximately 1 to 2
years. Market conditions in Bozeman are relatively strong which is expected to remain in the foreseeable
future but I do not anticipate high demand for a property like the subject property. It is my opinion a
reasonable exposure time for the subject property is 18 months.
Ef f e c tive Date :
The effective date of this appraisal is February 28, 2014. This is the date of valuation and was the
actual date of the property inspection. It is also the date all enclosed photographs of the subject property
were taken. This appraisal report was completed on March 17, 2014. Market conditions have remained
effectively unchanged between the effective date of appraisal and the completion date of the written report.
M arke tin g T im e :
Marketing time is defined as "the estimated time it takes an interest in real property to sell on the
market subsequent to the date of appraisal". Exposure time has previously been estimated at 18 months.
Marketing time differs from exposure time if at the date of appraisal market conditions are changing or are
expected to change in the near future. However, in this case market conditions are expected to remain at
least stable or show moderate growth, but I do not expect there would be high demand for the subject
property. Therefore, marketing time is estimated at 18 months and the concluded estimate of market value
is based upon that time period.
J. Michael Joki, MAI, SRA
HELENA, MONTANA
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DEFINIT ION O F MAR K ET VALUE
Market value, as used in this report is defined as follows:
“The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other
precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a
competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting
prudently, knowledgeably, and for self interest, and assuming that neither is under undue duress.”1
Implicit in this definition is the consummation of a sale as of a specified date and the passing of title
from seller to buyer under conditions whereby:
1.Buyer and seller are typically motivated;
2.Both parties are well informed or well advised, and acting in what they consider their own
best interests;
3.A reasonable time is allowed for exposure in the open market;
4.Payment is made in terms of cash in United States dollars or in terms of financial
arrangements comparable thereto; and
5.The price represents the normal consideration of the property sold unaffected by special or
creative financing or sales concessions granted by anyone associated with this sale.
Additional discussion pertaining to exposure time can be seen on page 10 of this appraisal report.
PURPOSE OF THE APPR AISAL
The purpose of this appraisal report is to arrive at a supportable estimation of the market value.
The Appraisal of Real Estate, 12 Edition, (Appraisal Institute, 2006), p. 22.th1
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INT ENDED USE OF T H E APPRAISAL AND INT ENDED CLIENT
It is understood that the intended use of this appraisal report is to assist the City of Bozeman with
the potential sale of the subject property. The user of this appraisal report is the City of Bozeman.
PRO PERTY RIGHTS AP PRAISED
This appraisal is made with the understanding and assumption that present ownership of the subject
property includes all rights that may be lawfully owned, and is therefore, title in fee simple as of February
28, 2014. A fee simple estate is subject only to the limitations imposed by the governmental powers of
taxation, eminent domain, police power and escheat.
IDENTIFICAT I ON O F P RO PERT Y AND LEGAL DESCRIPTIO N
The property which is the subject matter of this appraisal report consists of four tracts of land that
total 85.35 acres and are located at the north end of North 7th Avenue where it transitions into Frontage
Road in Bozeman, Gallatin County, Montana.
The legal description of the land involved is as follows:
"Tract 1-A, Tract 2-A, Tract 3-A and Tract 4-A of Certificate of Survey No. 2153, situated in the NW¼ of
Section 36, Township 1 South, Range 5 East, PMM, Gallatin County, Montana."
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PURPORTED O WNER
An investigation was made at the Gallatin County Courthouse Clerk and Recorder's Office, State of
Montana. Records within that Office indicate that the City of Bozeman is the current owner of record. This
is shown on the two warranty deeds that recorded on July 29, 2003 in the addenda.
SALES HIST O RY O F T HE P RO PERTY
The City of Bozeman purchased the four tracts that comprise the subject property from the
Mandeville family in 2003. Brit Fontenot reported to me that the City of Bozeman paid $3,000,000 for this
property in 2003. As I understand it was the intent of the City of Bozeman to purchase this land for a
transfer station site. Then the City tried to gain better legal access to the property and subdivide the property
into multiple lots for development with light industrial uses. Craig Campbell with DNRC explained that
access agreements with the City of Bozeman were reached that would have provided access to the subject
property over their land that lies directly to the south. Apparently the access agreement was subject to
several conditions being met however the access agreement expired and now the only legal access to the
subject property is from Red Wing Drive. A preliminary plat showing the subject property subdivided into
22 light industrial lots was provided to me and a copy is included in the addenda. Chris Laity with Great
West Engineering and Dustin Johnson with the City of Bozeman confirmed that approval of this subdivision
was subject to legal access being obtained over the DNRC property to the south and among other
conditions. It is my understanding the subject property still has its preliminary plat status however better
access is still one of the main pending issues. Mike Elliott, Senior Vice President of the local CBRE Real
Estate office, provided me a copy of the brochure that marketed the subject property for sale as a potential
light industrial development. The North Park Conceptual Use Plan shows the subject property being
developed in conjunction with the DNRC land to the south. A listing price per se is not shown in this
document.
Neither of the development scenarios came to fruition and as I understand the issue of gaining better
access has been the biggest deterrent. Currently the subject property is leased to Bill Tatarka who farms the
land and the DNRC land to the south. A copy of the agricultural lease is included in the addenda. Also in
the addenda is the copy of the utility easement provided to me by Brit Fontenot that provides access to a
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cell tower on the subject property. The cell tower is also subject to an annual lease agreement but a copy
of the lease was not given to me.
A copy of the Buy-Sell Agreement dated January 27, 2014 is included in the addenda. Micropolitan
Enterprises, LLC and Powder River Company and/or assigns has offered $1,280,550 for the subject
property. A copy of the Buy-Sell Agreement, Counter Offer and addendums to the buy-sell agreement are
all included in the addenda.
J. Michael Joki, MAI, SRA
HELENA, MONTANA
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REGIONAL M AP
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R EGIO NAL AND CIT Y ANALYSIS
Bozeman is the county seat of Gallatin County and is one of 56 counties in the State of Montana.
Gallatin County is located in a mountainous area of Montana north of the Montana/Wyoming border and
Yellowstone National Park. Bozeman primarily lies on the south side of Interstate 90 and is located
approximately 140 miles west of Billings, Montana and 80 miles east of Butte, Montana.
Gallatin County has grown faster than any other county in the State of Montana over the past decade
according to the Census Bureau. Gallatin County includes almost 2,500 square miles of mountainous lands
that offer a variety of topography and climate. Nearly half of Gallatin County is under public ownership by
the Gallatin National Forest, State of Montana, Bureau of Land Management or the National Park Service.
Fo rc e s In f lu e n c in g Pro p e rty Va lu e s
The value of real estate is influenced by the interaction of four major forces. Social considerations,
economic considerations, government and environmental considerations. The four forces are discussed as
follows:
So c ia l Co n s id e ratio n s
Social forces are exerted largely by population characteristics, including population growth, density,
and age distribution. According to the U. S. Census Bureau the population of the City of Bozeman increased
from 27,509 in 2000 to 37,280 as of April, 2010 and increase of nearly 9,800 people. This represents an
increase in population of approximately 35.5% over this 10 year period, or an average rate of growth of about
3.55%/year. From April, 2010 to April, 2012 the population increased from 37,280 to 38,695, an increase
of nearly 1,415 people which equated to a growth of 3.8% over this time frame.
Gallatin County’s population increased from 67,831 in 2000 to 89,513 in 2010 or approximately
21,700 people. This represents an increase in population of approximately 32% over a 10 year period or an
average growth rate of 3.2%/year. Between April, 2010 and April, 2012 the population increased from
89,513 to 92,614 people or 3,101people which equates to a growth rate of about 3.5% over this time period.
Comparatively, the State of Montana grew from 989,417 people in April 2010 to 1,005,140 people in 2012
or 15,724 people which equates to a growth rate of 1.6% over that time frame.
In addition to population growth the City of Bozeman continues to see growth in its geographic size.
In 1990 the City of Bozeman was approximately 6,420 acres (± 10 square miles) and by the end of 2009 it
had expanded to 12,300 acres (±19.25 square miles) resulting in an increase of ±92% over this 19 year period.
This growth was to accommodate the increasing population which required new land for residential,
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commercial and industrial development. This growth significantly slowed in 2009 and 2010 which was being
seen all throughout this region as the national economic recession took effect.
Bozeman has a significantly lower home ownership rate than most other communities in the county
primarily due to the student body of Montana State University. Bozeman also has a smaller average
household size and a smaller portion of families than other areas of Gallatin County. Bozeman has an
average household size of 2.27 people while the average household size for Gallatin County is 2.49 people.
Just over half of the Bozeman households are families compared to ±63% countywide. The population of
Bozeman is considerably younger than Gallatin County as a whole, and even more so, in comparison to the
State of Montana. Again this emphasizes the significance of Montana State University being located in
Bozeman. Bozeman and Gallatin County has transformed over the past decade from a primarily agricultural
based community to a tourism related community. Bozeman and Gallatin County offers a high quality of
life due to its low crime rate, offering of many cultural experiences, the presence of Montana State University
and its education offerings. An abundance of outdoor activities that include excellent downhill snow skiing,
world class fly fishing rivers, streams and access to numerous state and federally owned lands are all nearby.
Ec o n o m ic Co n s id e ratio n s
Bozeman, like many communities in Montana experienced significant growth in population and economy for
a number of years. This area was affected by the national recession just like many other areas in the country
however new growth and development has begun again and the outlook for Bozeman and the vicinity is quit
positive based on a number of factors.
C County seat of Gallatin County.
C Wide range of skills in the labor force.
C Home of Montana State University.
•Well located in southwestern Montana.
•Numerous recreational opportunities
Bozeman is somewhat unique when compared to other communities in Montana because there are few
employers who employ a large amount of the population. Missoula, Montana, as an example was very
dependent on the lumber and timber industry and Butte, Montana had always relied heavily on the mining
industry. When those industries slowed those communities were very heavily impacted. The primary employer
in Bozeman is Montana State University. Other major sectors of the economy that provide employment are
construction, local and state government, manufacturing, technology, agricultural and retail service. Montana
State University currently employs about 3,500 people as permanent faculty/staff and they also employ over
2,000 students in part time work. In the fall of 2,013 the student enrollment at MSU was slightly over 15,000
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people which certainly has a significant affect on the local economy. Other major employers in Gallatin
County include the State of Montana, Gallatin County, the City of Bozeman, Bozeman Deaconess Hospital,
Right Now Technologies. With such a diverse employment base the local economy tends to be sheltered from
a downturn in any of the Country’s key employment industries.
In 2010 Bozeman was declared as the most expensive place to live in Montana based upon a report
by Propera Business Network. This report stated that Bozeman’s 2009 cost of living was 4.4% above the
national average. The other Montana cities that showed an overall cost of living above the national average
were Missoula at 1.8% and Kalispell at 1.5%. Residential rent levels in Gallatin County have remained stable
primarily due to the presence of Montana State University. Rents in this community will periodically show a
slight decline however they tend to stabilize or even increase rather quickly due to the continued growth of
Montana State University.
Overall the economic growth has been much stronger in Bozeman and Gallatin County than what is
being seen statewide. Historically the sectors in Bozeman and Gallatin County that show the most substantial
growth are agricultural services, construction, manufacturing, finance, insurance, real estate and lodging.
Currently the unemployment rate in Montana is 6.4% and Gallatin County recorded a slightly lower
unemployment rate at 5.8%. Gallatin County’s labor force is currently estimated at 52,070 employees, the third
largest labor force in Montana’s 56 counties.
Over the past ±10 years residential building permit activity in the City of Bozeman was on the rise and
reached its peak in 2005 and then began to decline over the next 5 years, and most significantly in 2008 and
2009. Residential building permits began to increase again in 2010 and have been on a steady incline.
Bozeman has been experiencing new growth in several areas of town but no area has provided as much
commercial real estate development at the 19th Avenue corridor. Recent stores and restaurants developed
along 19th Avenue include Sportsman’s Warehouse, Lowes, IHOP, Bed Bath and Beyond, Staples, World
Market and REI. Most recently a new Safeway grocery store (±58,000 SF) was completed in December, 2011
and a Kohls department store (±55,300 SF) was completed in October, 2011.
The City of Bozeman facilities over the past 5 years have seen significant development and/or
renovation which includes the fire stations, police station, waste water treatment facilities, the completion of
a downtown parking garage, City of Bozeman Library, construction of the Gallatin County Detention Center,
an expansion of the landfill building etc. Montana State University has also seen significant expansion and
renovation which include a significant remodel of the football stadium, addition of the Molecular Biology
Center, renovations to the Health and Physical Education Center, addition of the Black Box Theater,
renovation of Gaines Hall etc.
Tourism brings a significant number of visitors to the Bozeman area. Yellowstone National Park, the
first national park in the United States, is located approximately 65 miles south of Bozeman. Big Sky Ski
Resort is located approximately 45 miles south of Bozeman and has recently been listed as the seventh best
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ski resort in the United States. This ski area averages over 300" of annual snowfall with skiing available
November through April. The Yellowstone Club lies adjacent to Big Sky Ski Resort and is an exclusive
vacation/residential development that includes both private skiing and golfing. This exclusive, private
development had filed for bankruptcy in 2008 and in 2010 was purchased by Cross Harbor Capital and for
several years saw significant decline in sales and values. However the private development has begun to
rebound again as sales are starting to climb again. Other ski resorts in Gallatin County include Moonlight
Basin which is also adjacent to Big Sky and Bridger Bowl which lies approximately 15 miles to the north of
Bozeman.
En v iro n m e n ta l Co n s id e ra tio n s
Environmental and physical forces, both natural and man made, can influence property values. These
forces include climatic conditions, topography and natural barriers, and transportation systems.
Bozeman’s climate clearly reflects its mountain valley location. Bozeman truly has four seasons with
its short summers being pleasant which are typically characterized by warm to hot days and cool nights. The
average high temperature in the summer is in the upper 80°’s and the average low in the winter is the mid to
lower 30°’s. Spring tends to come late in the Gallatin Valley as a of its annual precipitation ±19" falls during
May and June. The average annual snowfall in Bozeman is ±72" and the average length of the growing season
is about 107 days. The climate of the county varies according to elevation but is generally characterized by
relatively cold winters and warm summers. Snow removal is a common operating cost that will affect real
estate in the winter months. In contrast air conditioning costs are less during the fairly temperate summer
months however heating bills can be quite high during the cold winter months.
Bozeman is located on the south side of Interstate 90. Access to the south towards Yellowstone Park
is via U.S. Highway 91. There are numerous other state highways and Gallatin County maintained roads that
provide access throughout this region. Commercial air service, truck and rail transportation are considered
to be adequate. Gallatin Field which is located in the adjacent community of Belgrade is the second busiest
airport in the state and provides air service for this area.
Go v e rn m e n tal Co n s id e ratio n s
The City of Bozeman is a City Commission/City Manager form of government with an elected
municipal judge. There are five commissioners elected with no party affiliation and are elected to a four year
term which are overlapping. The City Commissioner elections are held every two years and the terms of the
commissioners are staggered and the candidate who receives the most votes in an election becomes the mayor
the last two years of their term.
The City of Bozeman has approximately 40 police officers and the fire department has approximately
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18 firefighters plus the Fire Chief, Deputy Chief/Marshall, and seven captains. There are three fire stations
in the City of Bozeman and overall the fire and police protection services are considered to be good.
The Department of Planning and Community Development processes applications for new
development in the city limits. This department enforces the zoning regulations within the city limits of
Bozeman. Gallatin County administers all zoning for properties outside the city limits and within the “zoning
donut”. The Gallatin County Comprehensive Plan encourages development near the existing city limits
and/or services and discourages development in more remote locations. In general the planning and zoning
regulations in this area are considered stringent.
Co n c lu s io n
Bozeman and Gallatin County has population and overall growth trends that are continuing upward.
This area offers a wide variety of outdoor recreational opportunities, cultural resources, tourism, and coupled
with the presence of Montana State University this area is poised for continued growth. Bozeman has a young
and very well educated work force and coupled with its diverse economy the general outlook for Bozeman,
Belgrade and the surrounding small communities is good.
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NEIGHB O RHO O D DATA AND T RENDS
The subject property is located at the northern edge of the Bozeman city limits and lies between
Interstate 90 and North 7th Avenue where it transitions into Frontage Road. The subject property is annexed
into the city limits and zoned M-2 and is one of the largest industrial zoned vacant sites in the City of
Bozeman. This site is adjacent to Frontage Road and North 7th Avenue which is one of the main
transportation routes between Bozeman and Belgrade and for those who live in the valley north of Frontage
Road. North 19th Avenue lies just to the west and across Interstate 90. There are I-90 interchanges at North
7th Avenue and North 19th Avenue which are both in proximity to the subject property. A new interchange
is currently being constructed several miles to the west in front of the Bozeman-Yellowstone International
Airport. The railroad tracks that pass through Belgrade parallel Interstate 90 to approximately North 19th
Avenue and then lie between the subject property and Frontage Road, and then pass beneath North 7th
Avenue and continue on through the northeastern edge of Bozeman. Reportedly there are approximately 25
trains a day passing the subject property. This rail line offers rail spur possibilities for those light industrial
and manufacturing properties in this neighborhood.
To the north/northwest of the subject property there are a number of residential subdivisions and the
Riverside County Club. To the west and across Interstate 90 is North 19th Avenue which is heavily developed
with commercial properties including restaurants, banks, retailers and is the location of most big box stores
in Bozeman. Directly to the south of the subject property is 190 acres of land owned by DNRC (State of
Montana) that are currently unimproved and there is a mix of light industrial and commercial properties
continuing south into Bozeman.
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The subject property in conjunction with the 190 acres of land owned by DNRC was a conceptual
master plan being marketed for development with a mix of light industrial, office, retail and hotel buildings.
This conceptual plan never “took hold” in the market and neither piece of land, the subject property nor the
State owned land, have ever been developed.
From this neighborhood other areas of Bozeman can easily be accessed. North 19th Avenue has
turned into the main north/south corridor through Bozeman and leads directly to the western edge of the
Montana State University Campus. North 7th Avenue also provides north/south travel through Bozeman
and nearly all of the main east/west thoroughfare streets pass through North 19th Avenue and North 7th
Avenue.
Many of the long time farm and ranch operations that were located between Bozeman and Belgrade
have been developed into residential subdivisions. There is still farmland in this area however it is being
developed into residential developments as demand for this property type continues to grow and I expect
commercial development will also continue to grow where land is available along North 19th Avenue or along
West Main Street and towards the Four Corners area.
City water and sewer services are readily available to those properties in the Bozeman city limits.
Natural gas and electricity is provided throughout the neighborhood by Northwestern Energy.
In this neighborhood I expect demand for commercial properties will remain good. There are other
clusters of light industrial property to the southeast of the subject property that historically have been slow
to develop. There are other areas around the fringe of Bozeman and areas closer to Belgrade and Four
Corners that are more conducive to light industrial development because land prices are cheaper. Land values
near the subject property have reached a level that make the financial feasibility of light industrial development
challenging in this area. Overall I expect market conditions to continue to get stronger in the
Bozeman/Belgrade market and this neighborhood is well situated to receive some of the new growth that is
expected in this community.
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P LO T PLAN
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PROP ERTY DESCRIP T IO N
Site
Size:As shown on the facing page the subject property is comprised of four tracts
of land. Tract 1-A is 22.22 acres, Tract 2-A is 10.01 acres, Tract 3-A is 24.76
acres, and Tract 4-A is 28.36 acres. These total 85.35 acres.
Shape:Irregular.
Topography:Most of this land is level. There are areas that are elevated slightly above Red
Wing Drive. Near the center of the site and just east of the building
improvements Mandeville Creek, a seasonal creek, passes through the center
of the subject property in a north/south direction and has created an area of
high ground water and/or a wetland area. I confirmed the general location
of the creek/wetland area with Brit Fontenot because at the time of my site
inspection the subject property was very heavily snow covered.
Soil Conditions:I was provided a copy of the Phase I Environmental Assessment and
Engineering Report that was completed for either the City of Bozeman or the
State of Montana. It was concluded in these documents that no significant
impacts were found that would adversely affect the subject property. I have
relied on these documents as being accurate and they are considered in my
final market value estimates.
Easements:No title policy was provided to your appraiser. A title policy should be used
for the final determination of easements and encroachments. As shown on
the facing page the Yellowstone Pipeline Company gas easement passes
through the center of the site generally in an east/west direction.
Access:Currently access to the subject site is from Red Wing Drive that parallels the
north/northeast boundary of the subject property and lies between the
subject property and the railroad right of way. Red Wing Drive is an
unimproved and unmaintained road that can be accessed from North 7th
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Avenue or from Frontage Road near the subject’s NWC. Neither intersection
of Red Wing Drive has a traffic light. The access off of Frontage Road
requires travel over the railroad tracks /railroad right of way and this is not
a gated crossing. A copy of the October 19, 1925 document wherein
Northern Pacific Railway Company is granting Gallatin County, Montana
access over this crossing was provided to me by Brit Fontenot. As explained
to me by Mr. Fontenot and as shown in this document access over the
railroad tracks/railroad right of way can be denied by the railway company
with six months notice. It appears this intersection as well as the intersection
at North 7th Avenue would both need a significant amount of improvement
before a multi-lot development could be built at this location.
The City of Bozeman has had negotiations with DNRC (State of Montana)
about accessing the subject property through their land via Wheat Drive or
Flora Lane to the south. However these negotiations are not finalized as of
the writing of this appraisal report and therefore these access points are not
considered in the “as is” valuation estimate. However these access points are
considered in the “as proposed” valuation estimate discussed later in this
appraisal report.
Utilities:Natural gas and electrical service are provided throughout this area by
Northwestern Energy. In the addenda there is an aerial photograph showing
the location of city water and sewer service on the subject property. On this
photograph there is a blue line crossing through the eastern ¼ of the subject
property in a north/south direction. I spoke with Dustin Johnson, PE from
the City of Bozeman Planning Department and he explained this line depicts
the location of the city water and sewer services. The sewer line is a
transmission main only and can only serve land to the east of the sewer line
so the western 75% of the subject property currently has no sewer service.
City water lines are in the same location and could serve one building on this
property however a second feed would be required to serve the remainder of
the site if this property is ever developed into multiple lots.
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Functional Adequacy:Currently the subject site is being leased to a local farmer who grows wheat
on this property. Reportedly the access, topography and size (when coupled
with the adjoining land to the south) serves well for this purpose. In terms
of future development there are several challenges. As previously discussed
access to this site is going to have to be greatly enhanced before development
could occur, the Yellowstone Pipeline Company gas easement crosses
through the site in an east/west direction and Mandeville Creek will create
limitations when it comes time to develop this property. Also, this property
has proximity to Interstate 90 but only its very SWC has interstate frontage.
Nuisances or Hazards:To the south of the subject property is undeveloped land owned by the State
of Montana. To the north/northeast is the railroad right of way with
Frontage Road beyond. The very SWC of the subject property is adjacent to
Interstate 90 and the North 19th Avenue corridor is beyond and to the west.
These uses are typical to this mixed use commercial and light industrial area
that is at the northern fringe of the Bozeman city limits.
Site I m p ro v e m e n ts There is some old field fencing on site and several old farm buildings just on
the south side of Red Wing Drive. These improvements were given no value
when the City of Bozeman purchased this property in 2003 and currently see
very little use and appear to be almost fully depreciated. The fencing and old
farm buildings have been given no value in this appraisal report.
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SUB JECT PRO PERTY PHO TO GR AP HS
Looking northwest on Red Wing Drive. Subject property is to the left and the railroad
right of way is to the right.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Photograph taken from the south property boundary and looking west across the subject property.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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SUB JECT PRO PERTY PHO TO GR AP HS
Photograph taken from the south boundary and looking north over the subject property.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Photograph taken from near the north boundary and near the center of the site and
looking west across the subject property.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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SUB JECT PRO PERTY PHO TO GR AP HS
Photograph taken from the SEC of the subject property and looking northwest over the subject property.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Photograph taken from the North 19th Avenue off ramp from Interstate 90 and looking
southeast at the subject property.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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SUB JECT PRO PERTY PHO TO GR AP HS
Photograph shows where Red Wing Drive meets North 7th Avenue.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Looking south on North 7th Avenue from near the intersection of Red Wing Drive.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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SUB JECT PRO PERTY PHO TO GR AP HS
Photograph shows Red Wing Drive as it leads north towards the subject property.
The railroad underpass/North 7th Avenue overpass is shown on the right.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Photograph shows the intersection of Red Wing Drive and Frontage Road near
the NWC of the subject property.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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SUB JECT PRO PERTY PHO TO GR AP HS
Looking west on Frontage Road and at the North 19th Avenue overpass.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Railroad crossing.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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SUB JECT PRO PERTY PHO TO GR AP HS
Looking east at the railroad tracks. The subject property is to the right and Frontage Road is to the left.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Photograph shows the NWC of the subject site and the North 19th Avenue overpass in the distance.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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SUB JECT PRO PERTY PHO TO GR AP HS
Old farm buildings on the subject property.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Fire hydrant on the south side of Red Wing Drive.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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SUB JECT PRO PERTY PHO TO GR AP HS
Metal post depicting the location of the Yellowstone Pipeline Company gas easement.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
Photograph shows the cell tower located adjacent to the south property boundary.
Photograph taken February 28, 2014 by J. Michael Joki, MAI, SRA.
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ZO NING
The subject site is zoned M-2 (Manufacturing and Industrial District). This district’s intent is to
provide land for the manufacturing and industrial needs and for the general benefits of the City of Bozeman.
The typical uses in a M-2 zoning district are automobile sales and service, automobile repair, hotel or
motel, laboratories, light manufacturing, manufacturing and industrial use, truck, bus and rail terminal
facilities, trade schools, warehousing etc.
As shown in the copy of the zoning ordinance in the addenda there are additional conditional uses
and accessory uses allowed by this zoning ordinance. Also shown in the document are the lot coverage/floor
area ratios, minimum lot width, set backs and minimal building height requirements.
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H IGHEST AND B EST USE
"The reasonably probable and legal use of vacant land or an improved property that is
physically possible, appropriately supported, financially feasible and that results in the highest
value."2
The definition above applies to the highest and best use of vacant land or improved property. It is
to be recognized that in cases where a site has existing improvements on it, the highest and best use may very
well be determined to be different from the existing use. The existing use will continue, however, unless and
until land value in its highest and best use exceeds the total value of the property in its existing use.
Quite often in estimating the highest and best use of land, the appraiser is controlled by governmental
regulations. These controls are generally zoning ordinances, parking requirements and building codes. Also,
in the estimate of highest and best use, one must recognize the attitude of typical investors in the
marketplace.
Real estate will usually fall into certain definite development patterns, and their uses can be classified
as: residential, agricultural, recreational, industrial, commercial and public use. In valuing the highest and best
use of the land both as if vacant and improved, the following criteria must be met. 1) legally permissible, 2)
physically possible, 3) financially feasible, and 4) maximally productive.
Le g a lly Pe rm is s ib le
The subject property is currently zoned M-2 (Manufacturing and Industrial District) and this zoning
ordinance allows for a wide range of uses however this type of land is primarily intended for development
with light industrial, industrial and manufacturing uses. Several of the use classifications previously discussed
can be eliminated from consideration. Residential and recreational use are not allowed by this zoning
ordinance and therefore they can be eliminated from consideration. When the City of Bozeman purchased
this property in 2003 the intended use was for a transfer station site. For various reasons this site is no longer
needed for this use, nor for any other public agency use, and therefore public use can also be eliminated from
consideration. Some forms of commercial use are a legally permissible use in the M-2 zoning however there
is land in Bozeman that has better access and is better located for commercial development with typical retail
or office use and therefore this use can also be reasonably eliminated from consideration.
The Appraisal of Real Estate, 12 Edition, (Appraisal Institute, 2006), p. 305.th2
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This leaves agricultural and industrial use as the remaining uses.
P h y s ic a lly Po s s ib le
Historically this land has been in an agricultural use. In 2003 the City of Bozeman purchased this
land with the intent to use as a transfer station site however it was determined this was not the best location
or use of this property so it was being marketed as a potential light industrial development in conjunction
with the DNRC (State of Montana) land to the south. The marketing efforts never found a developer or
buyer for this project and this land has remained in an agricultural use ever since.
The one issue that has hampered development of this site is its access. Where Red Wing Drive meets
Frontage Road near the NWC of the subject site access is required over railroad tracks that are not a gated
crossing and neither road (Red Wing or Frontage Road) is currently designed to stack cars when a train is
passing by. This intersection as well as the one at North 7th Avenue and Red Wing Drive would require
significant improvement to provide adequate access to the subject site for a multi-lot development. I
confirmed with Craig Campbell from DNRC that access agreements were reached between the City of
Bozeman and DNRC, that were subject to several conditions before final approval, however they have since
expired. Craig Campbell also reported to me that officials from the City of Bozeman have recently inquired
about renewing the access agreements over their land but nothing official has begun yet.
As shown in the addenda I have provided a copy of the preliminary plat that shows subdivision of
the subject property into 22 light industrial lots. Dustin Johnson with the City of Bozeman explained to me
that this preliminary plat status was granted in 2008 and one condition of approval was gaining access to the
subject property across the DNRC land to the south. Obviously this never happened and the lots were never
developed. Essentially, the subject site does not have adequate access that will allow for a multi-lot
development at this time.
Fin an c ially Fe as ib le
Market conditions in Bozeman have been improving over the past 18 to 24 months in comparison
to when the national and local recession was taking effect. The City of Bozeman is naturally expanding to
the north and to the west and the subject property is in direct proximity to some of the most recent
development along North 19th Avenue corridor which lies directly across Interstate 90. The financial
feasibility of the conceptual North Park Development which included the subject property and the DNRC
land to the south was never put to the test per se because a buyer and/or developer was not found. Even
with preliminary plat status for a 22 light industrial lot subdivision in place development of the subject site
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will never occur until adequate access can be provided. Until adequate access can be provided the legally
permissible, physically possible and financially feasible use of this property is for continued agricultural use.
Most likely development of the subject site would be expensive when considering extension of city
services, development of roads and the cost of the City of Bozeman impact fees. A light industrial
development at this location has the potential of a long holding/sell out period and I suspect the
development expenses would be difficult to cover considering the price of a typical light industrial lot near
this location.
M axim ally Pro d u c tive
The use that conforms with the requirements of the first three tests is for continued agricultural use
until better access to this property can be provided. Once adequate access is provided then development
to a higher and better use may occur.
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PRO PER T Y VALUATIO N
Sufficient data was found in the market to employ the Sales Comparison Approach to value. In the
Sales Comparison Approach an indication of value is derived by comparing the relative utility and desirability
of the subject property with the comparable properties recently sold.
Basic to this approach is the principle of substitution which states that "when a property is
replaceable in the market, its value tends to be set by the price required to acquire an equally desirable
substitute property."
In this appraisal report unimproved land is valued. Therefore the Cost and Income Approaches to
value are not applicable.
SITE VALUAT ION
The method employed to value the site as if vacant and available for sale is the Sales Comparison
Approach. An investigation of the market revealed several sales and listings indicative of what a well-
informed buyer or seller would consider in forming an opinion of value. Five sales of vacant land were
chosen as being most appropriate to compare against the subject land. Descriptive data and photographs of
these sales are contained in the Addenda.
Ad ju s tm e n ts
All comparables differ somewhat from each other, and from the subject in various ways. The usual
differences are for cash equivalency, market conditions, location, and a number of physical characteristics.
Many of these factors, in varying degrees, are applicable in the appraisal of the subject property. When
dissimilarities are found in comparable properties, they are adjusted for by adding to the comparable price
when the dissimilar factor is inferior to the same factor found in the subject property. Likewise, a minus
adjustment should be made when the comparable sale has a factor which is superior to that found in the
subject property. The sale properties, then, are adjusted to the subject property.
However, in the market it is often difficult and sometimes impossible to accurately isolate a given
factor. In short, one very seldom finds sales which are identical in all respects but one, and thus is able to
prove conclusively the value, or lack of it, for any one factor due to a difference in sale price. Often, there
are plus and minus factors which offset each other. Thus, the use of professional subjective judgment, to
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some degree, may be exercised.
Nevertheless, the differences in values are real and adjustments based on as much fact as can be
found, will be made. Then, the appraiser may call upon his experience to make professional subjective
judgments.
P ro p e rty Rig h ts
Each of the sales involve fee simple property rights. As a result, no property rights adjustments were
warranted.
Fin an c in g :
All sales were cash to the seller or on terms considered cash equivalent, and no adjustments were
required.
C o n d it io n s o f Sale :
No non-market conditions motivating the buyer or seller involved in the transactions are known,
therefore no adjustments are required.
Exp e n d itu re s Im m e d iate ly Af te r Sale :
None of the sales required expenditures immediately after sale, and therefore no adjustments are
required.
M arke t Co n d itio n s :
A market conditions (time adjustment) is required to bring all comparables up to the effective date
of the appraisal report. Bozeman was experiencing significant decline in market values when the local and
national recession was in effect. Since 2011 real estate values have rebounded in this market and new
projects are being developed again and demand for unimproved land is beginning to outweigh the supply.
I will utilize five comparables in the following analysis with three sales closing in 2012, one in 2013 and one
pending sale. In my opinion these comparables are all indicative of current market value. I cannot find
enough conclusive market evidence, i.e. paired sales analysis, to extract a monthly rate of appreciation. Each
of the developers, real estate agents and real estate appraisers I interviewed in this market were of the opinion
that market conditions are currently strong in Bozeman and there is more demand than supply of vacant
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land, and values will at least remain stable and most likely appreciate in the foreseeable future. Because all
of the sales used in the following analysis closed within 16 months of the effective date of this report I have
not adjusted any of the sales for market conditions.
R e m ain in g Ad ju s tm e n ts :
The remaining adjustments will be explained in a qualitative analysis which is an effective technique
that recognizes the inefficiencies of a real estate market and the difficulty in expressing the adjustments with
mathematical precision. The adjustments included in the qualitative analysis are location, size, access,
topography, creek/wetland area, city services and zoning. The land sales adjustment grid can be seen on the
following page.
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LAND SALE LOCAT IO N M AP
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LAND SALE ADJUSTM ENT GR ID
SUBJECT SALE 1 SALE 2 SALE 3 SALE 4 SALE 5
Sale Price $800,000 $1,050,000 $1,345,000 $2,000,000 $1,046,500
Size (acre)85.35 54.28 78.06 53.77 79.87 155.00
Price/AC $14,738 $13,451 $25,014 $25,041 $6,752
Date of Sale 10/1/12 11/20/12 10/31/13 Pending Sale 12/27/12
Market Adjustment -0--0--0--0--0-
Adjusted Price $800,000 $1,050,000 $1,345,000 $2,000,000 $1,046,500
Adjusted Price/AC $14,738 $13,451 $25,014 $25,041 $6,752
Location N. 7th/Frontage Rd.,
East of I-90
N. of East Baxter,
west side of Davis Lane
North side of Durston,
East of Gooch Hill
E. Valley Center Rd.,
South of I-90
SWC of Baxter Land
and Flanders Mill Rd.
E. Hulbert Rd., ½ mi.
east of Jack Rabbit Rd.
Comparability Slightly Inferior Slightly Inferior Superior Slightly Inferior Inferior
Size (acre) 85.35 54.28 78.06 53.77 79.87 155.00
Comparability Similar Similar Similar Similar Inferior
Access Poor Good Good Good Good Good
Comparability Superior Superior Superior Superior Superior
Topography Generally Level Level Level Level Level Level
Comparability Similar Similar Similar Similar Similar
Creek/Wetland Mandeville Creek,
wetland area
Baxter Creek,
wetland area
Baxter Creek,
wetland area None None Hyalite Creek & Pond
Comparability Inferior Inferior Superior Superior Slightly Superior
City Services Available to eastern
25% of site City water and sewer City water and sewer City water City water and sewer None
Comparability Similar Similar Slightly Inferior Similar Inferior
Zoning M-2 R-3/R-4 SFR-Low Density R-3 Will annex into city
at closing None
Comparability Superior Similar Superior Inferior Inferior
Overall Comparability Similar Similar to
Slightly Inferior Superior Superior Inferior
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Sale s An aly s is
The subject property is an 85.35 acre site that is located at the northern fringe of the Bozeman city
limits where North 7th Avenue transitions into Frontage Road. The only access to the subject property is via
Red Wing Drive which is an unimproved road along the north/northeast boundary and requires access over
a railroad crossing. Even though the subject property has M-2 zoning the access has essentially limited this
property to an agricultural use until the access can be improved. Mandeville Creek passes through the eastern
a of this site which has created some low lying land or wetland area on the subject property. A city sewer
transmission main serves the eastern 25% of the subject property but the western 75% currently has no sewer
service. A city water main crosses through the subject property next to the sewer transmission main but could
only serve a portion of the property and a second feed would be required to develop the entire property. The
Yellowstone Pipeline Company gas line easement passes through the subject property in an east/west
direction which also creates some limitations to the future development of this property.
Comparable No. 1 is the sale of the 54.28 acre site that sold on October 1, 2012 at $800,000 or
$14,738/Ac. This sale is located on the western fringe of the Bozeman city limits and is a slightly inferior
location when compared to the subject property. Comparable No. 1 has good access from the west side of
Davis Lane which is superior to the subject property. Baxter Creek crosses through this site and it was
estimated that 24 of the 54 acres, or 44%, is not developable because of wetland issues. This site is zoned R-3
and R-4 which has higher demand and higher density development potential than the subject’s M-2 zoning.
City water and sewer service are adjacent to this site. When compared to the subject property Comparable
No. 1 has superior access from a city street and has superior zoning. However this sale has a slightly inferior
location and there is more land affected by wetland issues which allows for less land to be developed. On an
overall basis this comparable is considered to be similar to the subject property.
Comparable No. 2 is the sale of 78.06 acre site that sold on November 20, 2012 for $1,050,000 or
$13,451/Ac. This site is also located on the western fringe of the Bozeman city limits and as compared to
the subject property is considered to be a slightly inferior location. Comparable No. 2 has good access from
Durston Road which is a city street. Baxter Creek crosses through most of this property and because of the
set back requirements from the creek challenges and potentially higher development costs will be realized
when this site is developed. This site has a single family residential - low density zoning which is considered
to be similar to the subject property. City water and sewer service are adjacent to this site. Comparable No.
2 has superior access when compared to the subject property but it has a slightly inferior location and there
appears to be more water issues on this property. Overall this sale is considered to be similar or slightly
inferior when compared to the subject property.
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Comparable No. 3 is the sale of the 53.77 acre site that sold on October 31, 2013 at $1,345,000 or
$25,015/acre. This sale is located at the intersection of East Valley Center Road and Westlake Road at the
northwestern fringe of the Bozeman city limits. This location is just west of the Gallatin Center and the newer
Costco store that is just west of North 19th Avenue and clearly has a superior location when compared to the
subject property. Comparable No. 3 is accessed from a city street, has no high water or wetland issues and
was zoned R-3 which is a higher demand, higher density development zoning than the subject’s M-2 zoning.
Comparable No. 3 is superior to the subject property in almost all aspects.
Comparable No. 4 is the pending sale of the 79.87 acre site at $2,000,000 or $25,041/acre.
Comparable No. 4 is located at the western fringe of the Bozeman city limits which is considered to be a
slightly inferior location when compared to subject property. Comparable No. 4 has good access, no high
water or wetland issues, and city services are adjacent to this site. At closing this site will be annexed into the
city limits and adopt a zoning that will allow public use. Overall this sale is superior to the subject property.
Comparable No. 5 is the sale of the 155 acre site that sold on December 27, 2012 at $1,046,500 or
$6,752/acre. This sale is located on the north side of East Hulbert Road and approximately ½ mile east of
Jack Rabbit Lane which is an inferior location when compared to the subject property. Sale No. 5 has
superior access and no known wetland issues, however this is a significantly larger site, there are no city
services and this site is not zoned. Overall this sale is considered to be inferior when compared to the subject
property.
Comparables No. 1 through No. 4 have a number of similarities when compared to the subject
property, i.e. size, topography, creek/wetland area, city services etc. however the one glaring difference is their
superior access. Comparable Sale No. 1 and No. 2 on an overall basis are the most similar to the subject
property but again they have better access that will allow for further development of these properties. These
comparables sold at $14,738/acre and $13,451/acre respectively. Sale No. 5 is the sale of a larger parcel of
land that has an inferior location when compared to the subject property and sold for $6,752/acre. Sale No.
5 is more indicative of agricultural prices in Gallatin Valley. Sales No. 3 and No. 4 are both clearly superior
to the subject property for the reasons previously stated and both sold near $25,000/acre.
Because of the existing access to the subject property it is my opinion having the subject property
divided into four lots, as shown on the plat map on page 23, creates no additional value. The existing access
allows for little more than an agricultural use on this property. It is my opinion the “as is” or current market
value of the subject site is between the price per acre of comparables No. 1, No. 2 and No. 5. Giving
consideration to the subject’s location at the north end of the Bozeman city limits, its proximity to city services
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and its M-2 zoning I’m still of the opinion this property has a current market value that is more or less
indicative of an agricultural use or $10,000/acre.
$10,000 x 85.35 acres = $853,500
“AS PROP OSED” VALUE ESTIMATE
I have been asked to provide an “as proposed” value estimate of the subject property as if there were
adequate access to further develop this property to a higher and better use i.e. light industrial development.
On the next page I have provided a map showing an aerial view of the subject property and this proposed
access coming from either Wheat Drive or Flora Lane to the south and crossing through the adjoining DNRC
(State of Montana) owned land. The proposed accesses are highlighted in red on the following map.
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With this scenario access is gained to the subject property from Wheat Drive or Flora Lane. As shown
on the map this is still a circuitous way to access the subject property. Access is still not gained from North
7th Avenue or Frontage Road which are the major traffic streets abutting the subject property, and there is
still limited exposure to Interstate 90.
In addition to the typical costs to develop this type of property there would be additional costs
because of the long stretch of road that would be built between the subject property and Wheat Drive or Flora
Lane, and as previously discussed the holding period for a development on this property could be long. A
light industrial development at this location would have its challenges because of the development costs and
the City of Bozeman impact fees, and light industrial lot prices in this area may not be high enough to make
this type of development feasible at this location.
I will analyze the same five sales used to estimate the “as is” market value of the subject property used
earlier in this appraisal report. If there were better access to the subject property comparables sales No. 1 and
No. 2 could be considered as slightly inferior to the subject property because of their location and they have
more wetland issues. Comparable Sale No. 5 would clearly be inferior to the subject property because of its
location, larger size, lack of city services and zoning. I am still of the opinion that Sale No. 3 and No. 4 are
superior to the subject property because of their location, zoning or they have no wetland issues. Considering
this market data it is my opinion a reasonable “as proposed” value estimate would be no lower than the price
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per acre indicated by Sale No. 2 or $13,451/acre, and no higher than the price per acre indicated by Sale No.
4 or $25,041/acre. Giving slightly more emphasis to the lower end of the value range it is my opinion a
reasonable market value estimate for the subject property is $18,000/acre as proposed.
As previously explained there is a Buy-Sell Agreement in the addenda where the buyer has offered to
pay $1,280,550 for this 85.35 acre site which equates to a value of $15,000/acre. As shown in the additional
provisions section of this document this offer is contingent upon the City of Bozeman approving a
preliminary plat and vehicular/pedestrian access being provided to this site. Essentially the buyers are willing
to pay $15,000/acre assuming they can be granted adequate access that would allow preliminary plat approval
for further development of this property. In my opinion the purchase price being offered in the Buy-Sell
Agreement is slightly below the market value of the subject property if it had better access from Wheat Drive
or Flora Lane.
Considering this information it is my opinion the “as proposed” value estimate of the subject property
is $18,000/acre.
$18,000 x 85.35 = $1,536,300
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VALUE EST IM AT E AND CERT IFICAT IO N
The undersigned does hereby certify that, to the best of his knowledge and belief, except as otherwise
noted in this appraisal report:
1.the statements of fact contained in this report are true and correct.
2.the reported analysis, opinions, and conclusions are limited only by the reported assumptions and
limiting conditions and/or those found in the letter of engagement or appraisal consultation contract
authorizing this report and are my personal, impartial, and unbiased professional analysis, opinions,
and conclusions.
3.I have no present or prospective interest in the property that is the subject of this report, and I have
no personal interest or bias with respect to the parties involved.
4.I have performed no services, as an appraiser or in any other capacity, regarding the property that is
the subject of this report within the three year period immediately preceding acceptance of this
assignment.
5.I have no bias with respect to the property that is the subject of this report or to the parties involved
with this assignment.
6.my engagement in this assignment was not contingent upon developing or reporting predetermined
results.
7.my compensation for completing this assignment is not contingent upon the development or
reporting of a predetermined value or direction in value that favors the cause of the client, the
amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent
event directly related to the intended use of this appraisal. This appraisal assignment was not based
on a requested minimum valuation, a specific valuation or the approval of a loan.
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8.my analysis, opinions and conclusions were developed, and this report has been prepared, in
conformity with The Uniform Standards of Professional Appraisal Practice and with the
requirements of the Code of Professional Ethics and the Standards of Professional Practice of the
Appraisal Institute.
9.the use of this report is subject to the requirements of the Appraisal Institute relating to review by
its duly authorized representatives.
10.as of the date of this report, I, J. Michael Joki, have completed the requirements of the continuing
education program of the Appraisal Institute.
11.I have made a personal inspection of the properties that are the subject matter of this report.
12.no one provided significant real property appraisal assistance to the person signing this report.
13.I am currently licensed in the State of Montana (Certificate #152) as a Certified General Real Estate
Appraiser, and hold the MAI and SRA designations conferred by the Appraisal Institute. Regarding
the Competency Provision of USPAP I further attest that over the past 27 years I have had
substantial approved education and experience in the appraisal of residential and commercial
properties. Specifically I have appraised a variety of residential, industrial and commercial tracts of
land in western Montana.
Based on my analysis, the “as is” market value of the subject property with access only from Red
Wing Drive, as set forth, documented and qualified in the attached report under conditions prevailing on
February 28, 2014 was:
Eig h t Hund re d Fifty-T hre e Th o usan d Five Hun dre d Do llars
$853,500 *
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ADDENDA
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COMPARABLE LAND SALE NO. 1
JOKI & ASSOCIATES REAL ESTATE APPRAISERS
PO Box 281, Helena, MT 59624, (406) 442-2159
Location: West side of Davis Lane and just north of East Baxter Lane in Bozeman, Montana.
Site Data:
1. Size : 54.28 acres
2. Zoning: R-3/R-4
Photo Data:
1. Date: February 28, 2014
2. Taken From: Davis Lane
3. Facing: West
4. Taken By: J. Michael Joki, MAI, SRA
5. Comp: Boz 014
Current Use: Unimproved
Legal Description:
Lot 2A1 of COS No. 2202C, City of Bozeman, Gallatin County, Montana.
Grantor: First Interstate Bank Grantee: Michael Tracy
Recorded Sales Price: $800,000 Confirmed Sales Price: $800,000
Instrument: Warranty Deed Confirming Party & Phone No.: Broker - Jason Leap
Recorded: October 1, 2012 (406) 556-5005
Recording Info.: 2427941 Confirmed By: J. Michael Joki, MAI, SRA
Financing: Cash to the Seller Confirmation Date: March 13, 2014
Property Description:
This 54.28 acre site is located on the west side of Davis Lane just north of East Baxter Lane and at the
western fringe of the Bozeman city limits. This site is accessed from a city maintained street and is zoned with a
combination of R-3 and R-4 multi-family residential zoning. A nearby lift station provides city sewer service to the
edge of the property and city water lines are adjacent to the site. Approximately 24 of the 54.28 acres is
undevelopable due to high ground water and/or wetlands which leaves approximately 30 acres for development.
This property was bank owned however it was still on the market for over 750 days.
Indication At Time Of Sale: $800,000 ÷ 54.28 acres = $14,738/acre
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COMPARABLE LAND SALE NO. 2
JOKI & ASSOCIATES REAL ESTATE APPRAISERS
PO Box 281, Helena, MT 59624, (406) 442-2159
Location: 3662 Durston Road in Bozeman, Montana. This site is located on the north side of Durston Road
and just east of Gooch Hill Road.
Site Data:
1. Size : 78.06 acres
2. Zoning: SFR-Low Density
Photo Data:
1. Date: February 28, 2014
2. Taken From: Durston Road
3. Facing: North
4. Taken By: J. Michael Joki, MAI, SRA
5. Comp: Boz 015
Current Use: Unimproved
Legal Description:
Lot 2 and Lot 3 of Minor Subdivision No. 201, City of Bozeman, Gallatin County, Montana.
Grantor: Hinesley Family LTD Partnership Grantee: Four Corners Construction, LLC
Recorded Sales Price: $1,050,000 Confirmed Sales Price: $1,050,000
Instrument: Trustees Deed Confirming Party & Phone No.: Grantee - John Rosa -
Recorded: November 20, 2012 Four Corners Construction
Recording Info.: 2432709 Confirmed By: Keith O’Reilly, MAI
Financing: Cash to the Seller
Property Description:
This 78.06 acre site is located on the north side of Durston Road and at the western fringe of the Bozeman
city limits. This site has good access from a city street, has level topography and was zoned Single Family
Residential-Low Density. City sewer service is available from a nearby lift station and city water lines are adjacent
to the site. Baxter Creek flows through the southern portion of Lot 3 and the northern portion of Lot 2 and has 70'
watercourse setbacks and makes a portion of this site undevelopable.
Indication At Time Of Sale: $1,050,000 ÷ 78.06 acres = $13,451/acre
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COMPARABLE LAND SALE NO. 3
JOKI & ASSOCIATES REAL ESTATE APPRAISERS
PO Box 281, Helena, MT 59624, (406) 442-2159
Location: 4900 Westlake Road in Bozeman, Montana. This site is located at the intersection of East Valley
Center Road and Westlake Road and on the south side of Interstate 90.
Site Data:
1. Size : 53.77 acres
2. Zoning: R-3
Photo Data:
1. Date: November 21, 2013
2. Taken From: North 27th Avenue
3. Facing: West
4. Taken By: J. Michael Joki, MAI, SRA
5. Comp: Boz.008
Current Use: Unimproved
Legal Description:
Lot 2A of Minor Subdivision No. 221E, being the corrected plat of Lots 1 and 2 of Minor Subdivision No.
221, a tract of land located in the SW¼ of Section 26, Township 1 South, Range 5 East, Gallatin County, Montana.
Grantor: Jerald E. Swenson Grantee: Valley Center, LLC
Recorded Sales Price: $1,345,000 Confirmed Sales Price: $1,345,000
Instrument: Warranty Deed Confirming Party & Phone No.: Listing Agent - Jason Basye
Recorded: October 31, 2013 (406) 587-7653
Recording Info.: 2467102 Confirmed By: J. Michael Joki, MAI, SRA
Financing: Cash to the Seller Confirmation Date: November 22, 2013
Property Description:
This 53.77 acre site is located on the south side of Valley Center Road and has good exposure to Interstate
90 which is directly to the north. This site is level at road grade with Westlake/Valley Center Road along the north
boundary, and North 27th Avenue along the east boundary. This site has relatively level topography and has
historically been in an agricultural use. This site is located on the northwestern fringe of the Bozeman city limits and
sits just west of a large retail commercial development known as the Gallatin Center and a new Costco store. The
listing agent confirmed the one issue that slowed the sale of this property was access to city sewer service. It is my
understanding the buyer of this site will pay $50,000 towards a water and sewer analysis and will be required to install
a sewer lift station. The buyer’s prorata cost of the sewer service is estimated at $150,000. Extension of the sewer
service will be required to develop this site to its highest and best use which is for residential subdivision. City water
service is available and the site was annexed into the city limits before the sale closed.
This property was listed for sale at $1,450,000 and sold for $1,345,000 after being on the market for 463 days.
Indication At Time Of Sale: $1,345,000 ÷ 53.77 acres = $25,014/acre
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COMPARABLE LAND SALE NO. 4
JOKI & ASSOCIATES REAL ESTATE APPRAISERS
PO Box 281, Helena, MT 59624, (406) 442-2159
Location: SWC of Flanders Mill Road and East Baxter Lane in Bozeman, Montana
Site Data:
1. Size : 79.87 acres
2. Zoning: See Comments
Photo Data:
1. Date: February 28, 2014
2. Taken From: Baxter Lane
3. Facing: Southwest
4. Taken By: J. Michael Joki, MAI, SRA
5. Comp: Boz 016
Current Use: Unimproved
Legal Description:
Northern portion of Tract 1A as shown on Certificate of Survey No. 2554A, Gallatin County, Montana.
Grantor: Vesta Anderson Grantee: Soccer Education Foundation, Inc.
Sales Price: $2,000,000 Confirmed Sales Price: $2,000,000
Instrument: Pending Sale Confirming Party & Phone No.: Broker-Paul Rubright
Recorded: Closing end of April, 2014 (406) 580-9163
Recording Info.: N/A Confirmed By: J. Michael Joki, MAI, SRA
Financing: Cash to the Seller Confirmation Date: March 14, 2014
Property Description:
This 79.87 acre site is located at the intersection of Flanders Mill Road and East Baxter Lane and at the
western fringe of the Bozeman city limits. The broker confirmed this site lies adjacent to the Bozeman city limits
and will be annexed into the city upon closing. City sewer and water mains lie adjacent to this site. Once the sale
has closed and the site is annexed into the city limits it will adopt a city zoning ordinance that will allow public use
as the intended use for this site is to be developed with a soccer facility. Reportedly there are no wetland or high
water table issues on this land.
The broker reported that this site has been marketed for sale for at least 2 years.
Indication At Time Of Sale: $2,000,000 ÷ 79.87 acres = $25,041/acre.
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COMPARABLE LAND SALE NO. 5
JOKI & ASSOCIATES REAL ESTATE APPRAISERS
PO Box 281, Helena, MT 59624, (406) 442-2159
Location: 1691 East Hulbert Road in Bozeman, Montana.
Site Data:
1. Size : 155.00 acres
2. Zoning: None
Photo Data:
1. Date: January 2, 2014
2. Taken From: East Hulbert Road
3. Facing: Northeast
4. Taken By: J. Michael Joki, MAI, SRA
5. Comp: Boz 011
Current Use: Farm Land
Legal Description:
Very lengthy - See attached Warranty Deed
Grantor: First Interstate Bank, a Montana Banking Corp. Grantee: Robin & Larinda Spaulding
Recorded Sales Price: $1,046,500 Confirmed Sales Price: $1,046,500
Instrument: Joint Tenancy Warranty Deed Confirming Party & Phone No.: Listing Agent - Jerry Pape
Recorded: December 27, 2012 (406) 579-3636
Recording Info.: 2436228 Confirmed By: J. Michael Joki, MAI, SRA
Financing: Cash to the Seller Confirmation Date: January 6, 2014
Property Description:
This 155 acre parcel is level at road grade and is currently functioning as farm land. This site is located on
the north side of East Hulbert Road and approximately ½ mile east of Jack Rabbit Lane. This site has a pond and
Hyalite Creek passes through this site. Reportedly there are numerous, very good water rights associated with this
property.
This property was sold in 2006 at the height of the market for approximately $35,000/Ac. with intention to
be developed into a large residential subdivision. This property eventually went back to the lender and was most
recently listed for sale at $2,100,000 and sold for $1,046,500 after 590 days on the market. This property was a
portion of a much larger parcel of land for the intended subdivision from 2006 and this was the last piece of that
parcel to sell.
Indication At Time Of Sale: $1,046,500 ÷ 155 acres = $6,752/Ac.
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