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HomeMy WebLinkAboutG4 Potential Sale of City Parking lot Mendenhall and Willson J Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager SUBJECT: Potential Sale of City Parking Lot at the Southeast Corner of Mendenhall Street and North Willson Avenue MEETING DATE: September 18, 2006 BACKGROUND: On August 28, 2006, the Commission reviewed a proposal for the purchase of the City parking lot located at the southeast corner of Mendenhall Street and North Willson Avenue. The property is approximately 83 feet wide and 140 feet deep, and consists of 28 parking spaces which are accessed from North Willson Avenue Public comment was received at the August 28, 2006 meeting, and that testimony is available at the City Clerk's office. Chapter 2.05 of the Bozeman Municipal Code establishes the procedures for the sale or exchange of City property. The Chapter specifically states that the City Commission has the power to sell, trade, or exchange any real or personal property belonging to the City that is not necessary to the conduct of City business or the preservation of its property. The Commission must first determine, after a public hearing is held,that the property is no longer needed by the City. The purpose of this public hearing is for the Commission to determine if the subject property is no longer needed by the City, and if not, authorize the process under which the property shall be transferred. Per Section 2.05.040, BMC, when the Commission has determined after public hearing that property is no longer needed, the property may be sold by bid, auction with reserve, or negotiated sale or exchange, subject, where appropriate, to a minimum price established through an appraisal that certifies the value of such property. The City received a proposed Buy-Sell Agreement from Libster Building LLC and Nygard Family LLC., owners of the Armory building and property, which is adjacent to the subject city parking lot. The Buy-Sell Agreement purchase offer is based on the premise that the buyer would replace the 28 parking spaces on the subject property within their project (a structure will have to be built to meet the parking demands created by the redevelopment). The proposed Buy-Sell Agreement indicates there would be NO cash exchange. The buyer would be spending over $672,000 to replace the lost public spaces and their offer, with no cash exchange proposed, is based on an estimated value of$24,000 per space as set forth in the buy-sell offer. Carl Walker, Inc., Denver, Colorado parking consultants, confirmed the value of underground, mixed-use parking at $25,000 - $30,000 per space (documentation previously provided to the Commission on August 28). Because of the property's proximity to the Armory redevelopment project (contiguous), and because of the dimensions of both properties, the City Manager previously suggested to the Commission that this case warrants the City to directly negotiate with the owners of the Armory under the conditions outlined by the Parking Commission (listed below), if the Commission determines after the public hearing that the land is no longer needed for the conduct of city business. The Armory parcel is approximately 137 feet wide and 140 feet deep and the City's parcel is approximately 83 feet wide and 140 feet deep; neither by themselves offer much opportunity for efficient underground or above ground level parking. We dealt with this issue when the City purchased the Powderhorn parking lot in order to assemble enough contiguous property to build our parking garage one block east of the property in question. Because parking is a primary concern of the Parking Commission and has been the focus of most of those concerned about this possible sale, the Armory redevelopment offers the greatest opportunity to enhance parking. I discussed the proposed sale of the property with the Parking Commission and the Parking Commission strongly supported the ideals of strengthening Bozeman's downtown through this type of development and suggested that "incentives" should be devised as a catalyst to bringing investment into the downtown, while balancing those incentives with parking needs. They recommend the following criteria be considered in any buy-sell agreement: 1) The "status quo" must be retained on publicly accessible parking spaces. In other words, some how and some way, 28 spaces should be replaced within the area lost with reasonable access provided. Cash alone is not ideal. 2) The sale must be consistent with Ordinance 1658 requiring that an appraisal be conducted in order to set a minimum value on the publicly owned asset. The appraisal needs to be based on the property's highest and best use consistent with zoning and not simply on its current use as a surface parking lot. 3) If the City fails to approve the project through its approval process outlined in the Unified Development Ordinance the property reverts back to the city without penalty. 4) If the buyer fails to perform on the approved project within a reasonably defined timeline (say 3 years), the City will refund the sale price less a $10,000 penalty to the buyer and the property would revert back to the City. 5) The buyer guarantees through a development agreement that a certain level of tax dollars will be generated by the project based on the estimated taxable value of the project. Because the property is in a Tax Increment Finance District (TIFD) the district would in theory receive 100% of the new taxes generated. This guaranteed minimum tax generation is critical in that several states, including Montana, commonly change commercial tax calculations, and therefore without the guaranteed minimum, the funds might not otherwise be paid to the TIFD. (This calculation would be based on the developer's best estimation of the investment and that information would be utilized by the department of revenue in order to calculate the estimated taxes that would be generated by the project). 6) Until the existing parking lot is made unusable, the public spaces therein are leased back to the City for$1. Section 2.05.040, BMC, states that when it has been determined that property is not needed by the City, it may be: sold by bid; sold by auction with reserve; or sold through negotiated sale or exchange, where appropriate, to a minimum price established through an appraisal that certifies the value of the property. RECOMMENDATION: Conduct public hearing. If the Commission determines the subject property is not necessary to the conduct of City business, authorize the City Manager to negotiate the necessary agreements to complete the sale of the property to Libster Building LLC, Nygard Family LLC. Because the property is contiguous to the Armory and because of the benefit to the downtown area for both properties to be developed together, negotiated sale is the recommended disposal method. The negotiated sale would be subject to the conditions outlined above that were recommended by the Parking Commission. I am NOT recommending we accept the buy-sell agreement as proposed by the buyer. FISCAL EFFECTS: The cost of the required appraisal is unknown at this time, but will be an expense of the city. The sale price will be determined based on the appraised value of the land for its intended use. The taxes generated by the proposed development would be paid into the City's downtown Tax Increment Finance District as outlined under criteria number 5 of the Parking Commission recommendations. ALTERNATIVES: 1. Determine the subject property is not necessary to the conduct of City business and authorize the City Manager to negotiate the sale of the property to Libster Building LLC, Nygard Family LLC, subject to the applicable provisions outlined in the proposed buy-sell agreement, and subject to the conditions recommended by the Parking Commission, with the minimum price established through an appraisal that certifies the value of the property. 2. Determine the subject property is not necessary to the conduct of City business and authorize the City Manager to sell the property by bid,to the highest bidder,with a minimum price established through an appraisal that certifies the value of the property. 3. Detenmine the subject property is not necessary to the conduct of City business and authorize the City Manager to sell the property to the highest bidder at auction with reserve, with the reserve price established through an appraisal that certifies the value of the property. 4. Determine the subject property is necessary to conduct City business, making the property not for sale. 5. As suggested by the City Commission. Respectfully submi ted, Chris A_ Kukulski, City Manager Report compiled on September 14, 2006 Copy to: Libster Building LLC Nygard Family LLC IIEATHER M JERNBERG September 12,2006 City of Bozeman Bozeman City Commission P.O.Box 1230 Bozeman,M'I'S9771-1230 Dear Members of the City Commission: Please do not sell,barter,exchange or give away the City-owned Mendenhall/Willson parking lot.The City would be reckless to allow such a valuable piece of land to slip into the hands of private property developers.City Commission should heed the old adage,"Never sell your land." Sincerely, 1leather M.Jernbcrg 1013 HO'YI AN RD • AQZFMAN, MT • 59715 PFIONF 587 2254 REAL ESTATE INVESTMENTS 9/12/2006 Mayor Krauss and City Commissioners PO Box 1230 Bozeman, MT 59771 Dear Mayor Krauss and Commissioners, This letter is in regard to the sale of the public parking lot on the southeast corner of N. Willson and Mendenhall Street. In my opinion this parking lot is very necessary to the continued vitality of Downtown Bozeman for the following reasons: 1- It is well located to serve the businesses on the west end of Main Street. 2_ It is strategically and conveniently located so that people do not have to cross busy Mendenhall Street in order to access Main Street, making it safer for pedestrians- 3- Surface parking is much safer and more desirable than other types of parking, such as underground parking. 4. Underground parking is undesirable because it does not feel safe, which causes people to dislike it. When people dislike something, they tend to avoid using it. 5. It is an important piece of what makes downtown work. If any part of downtown ` starts to malfunction it negatively impacts the rest of downtown. It is like an ecosystem — in order for downtown to remain economically viable, there must be a balance of parking spread out on the east and west ends of Main Street, as explained in Maker's Plan. 6. Once you sell a key property such as this, all future opportunity for this to be a fully public parking lot is lost. Please review the Maker's Plan. It is a very important roadmap that has been effective in helping us revitalize Downtown Bozeman. We do not need to reinvent the wheel when we currently have an excellent framework. Thank you for your time and consideration Sincerely, Ileana Indreland Vice President, Delaney & Company Member, BID 101 East Main Street ♦ Bozeman, Montana 59715 ♦ (406)586-3132 + Fax(406)586-8692 ZOOI j 00 V IHNYIHa Z69898590$T YU CT:fT Q3A1 90/VTi60 r � Arthur V Witt.ic.h 602 Ferguson Ave., Suite 5 ,r,,,iii, ,1,rre:f,fr . Bozeman. Montane. 59718 WITTIFr•edpric•k Y Ganders,Jr. Phone: (406) 585-5598 Afl .11l•tl wr e,un Fax: (406) 58 5-281 1 wit t.ich,Maw-advisor.corn Margot E Hari; JII n r Atli„illnl MT N UA ,•./��ti6P�LT c-i Nrti•�ayµ •• September 14, 2006 City Commission 411 East Main P.O. Box 1230 Bozeman, MT 59771 HAND DELIVERED Re. Mendenhall and Willson Parking Property Dear Commissioners: You have now set a public hearing for September 18, 2006 in accordance with Ordinance No. 1658 to discuss the disposition of the current parking lot located at the corner of Mendenhall and Willson. Please introduce this letter, on behalf of my client Thomas Mosser, into the public record for your hearing. After reviewing the various actions by city personnel, and the City Commission at its August 28, 2006 meeting, the conclusion is inescapable. While a process usually concludes with a result, here the city has the result, and is searching for a process to "get there." Namely, the result here is the city's insistence to continue its behind closed door negotiations with Libster-Nygard in order to cut a deal on future use of the Mendenhall parking lot. In order to achieve this result, the city has floated various scenarios and processes that seem defensible. This search for process is most evident by the fact that the city manager issued no less than three "Commission Memorandums" for the August 28, 2006 meeting'. Apparently the final process recommended by the city manager, and adopted by the City Commission, is to hold the public hearing and dispose of the property in accordance with Ordinance No. 1658. However, Ordinance No. 1658 is internally inconsistent when applied to this particular issue. In the future,the public would benefit if the city manager dated his memorandums,or simply marked early versions as "drills." City Commission September 14,2006 Page 2 Notably, Section 2.05.030(3) states in absolute terms that "any sale, trade, or exchange of real or personal property must be accomplished under the provisions of this chapter." However, Section 2.05.030(1) grants the City Commission the power to "sell, trade, or exchange any real or personal property, however acquired, belonging to the city that is not necessary to the conduct of the city .business..." In addition Section 2.05.040 allows city property to be sold after the City Commission determines after a public hearing that the property "is no longer needed." Accordingly, these conditional provisions beg the question: what happens when property is necessary to the conduct of city business, or the property continues to be needed? Does Ordinance No. 1658 then apply? More importantly, my specific concerns relate to how the City Commission and the city manager have treated my client. I hand delivered a letter to the city manager dated August 21, 2006 (approximately 3 weeks ago) asking for an audience to discuss my client's written offer, which was equal or better than the other offer made. To date I have not received one letter, fax, or phone call in response. At the August 28, 2006 meeting neither my letter, nor my client's offer, were even mentioned by the City Commission. The record is clear. The City Parking Commission has various legal rights and responsibilities under Montana law and City Ordinance. This commission reviewed two competing proposals and approved both (i.e., the Libster-Nygard proposal and the Mosser proposal). However, one proposal is now being fast tracked by the city, while the other is being ignored. In conclusion, the city's process following Ordinance No. 1658 is flawed. The fact is that the parking lot at Mendenhall and Willson is needed by the city and the public. Accordingly, the city must recognize the past actions by the Parking Commission, and both current proposals, before deciding how the property in the future can best meet the needs of the city and the public. Sincerely, Arthur V. Wittich AVW/11b cc: City Manager City Attorney Client September 15, 2006 City Manager Chris Kukulski, Mayor Jeff Krauss, Sean Becker, Kaaren Jacobson, Jeff Rupp, and Steve Kirchhoff, Regarding the property currently used as parking on the corner of Mendenhall and North Wilson: We would like to purchase this property, while providing a guarantee of maintaining the current status of public parking. Upon development of the site, we would further guarantee an equal amount of parking spaces as is currently available. We feel it's in the best interest for the taxpayers of Bozeman to be financially compensated for this property and are willing to do that. In the spirit of good governance, we would like to help the City of Bozeman maximize the value of this property,while maintaining publicly available parking. David L. Perlstein Red Star Acquisitions L.L.C. 1627 W Main#365 Bozeman, MT 59715 406-579-3500 September 15, 2006 RE: Monday, September 18, 2006 Public Hearing Potential Sale of City Parking Lot at Southeast Corner of Mendenhall Street and North Willson Avenue, also known as "Armory Lot" Dear Downtown Stakeholder: I am enclosing for your information a letter from my attorney, Art Wittich, dated Septebmer 14, 2006, addressed to the City Commission, and pertaining to the above referenced. The essence of the letter is noting that there has been a pre-determined result now in search of a process to justify the desired outcome. Also, this morning I obtained a copy of the city manager's "Commission Memorandum,"also pertaining to the above referenced, and also enclosed for your information. I would like to point out a significant flaw in the cily manager's justification for his recommending a direct negotiated sale to Libster-Nygard. The city manager incorrectly states on page two of his memo, "neither by themselves [the armory property or the city-owned parking lot next to the armory] offer much opportunity for efficient underground or above ground level parking." Quite to the contrary, I previously provided by hand delivery to the city manager,the planning director, every City Commission member, and every Parking Commission member, schematic drawings previously approved by the Parking Commission which depict"above ground level parking" in mixed-use, stand-alone,multi-level projects at both the southeast and northeast corners of Willson and Mendenhall. Finally, I would like to point out a subtle distinction in language included within Ordinance No. 1658,the City of Bozeman's newspaper advertisement for the public hearing titled, "NOTICE TO BOZEMAN RESIDENTS,"the city manager's "Commission Memorandum," and the "Public Hearing"agenda item pertaining to the above referenced, as follows: 1) Ordinance No. 1658: The only provision within the Ordinance requiring a public hearing is 2.05.040, which states, "When the City Commission has determined, after public hearing, that any real property which is owned by the city is no longer needed, ..." 2) NOTICE TO BOZEMAN RESIDENTS: "... a public hearing for the purpose of determining if real property, ... is no longer needed; ..." 3) City manager's "Commission Memorandum": "RECOMMENDATION: Conduct public hearing. If the Commission determines the subject property is not necessya to the conduct of City business, ..." 4) Public Hearing Agenda item: "*Motion and Vote to determine the necessity of the subject property to the conduct of City business." Downtown Stakeholder September 15, 2006 Page 2 It appears to me the purpose of the public hearing has been subjected to a last- minute"spin." How the question is posed can certainly lead to different answers, and therefore entirely different outcomes. For example: Is the parking lot needed any longer? Yes. Is the lot necessary to conduct city business? No. This simply reinforces my attorney's contention that there has been a pre- determined result now in search of a process to justify the desired outcome. By copy of this letter to the City Commission, I request this letter be introduced into the public record for the public hearing on September 18, 2006. Sincerely, Thomas M. Mosser 120 W. Main Street Bozeman, Montana 59715 ✓Cc: City Commission Arthur V. Wittich r al 602 Ferguson Ave., Suite 5 Admitted MT&CO WITTI 8ozerna.n, Montana 59718 Frederick P.Landers,Jr. Phone: (406) 585.5598 Admitted MT&GA LAWFax: (406) 585-2811 Mast F. Bari2---N-177�2'17= -:`,' ;;. wittich@law-advisor.corn Admitted MT&(:A ✓ 11ir-tT1 Volt,��v September 14, 2006 City Commission 411 East Main P.O_ :Box 1230 Bozeman, MT 59771 HAND DELIVERED Re: Mendenhall and Willson Parking.Property Dear Commissioners: You have now set a public hearing for September 18, 2006 in accordance with Ordinance No. 1658 to discuss the disposition of the current parking lot located at the corner of Mendenhall and Willson. Please introduce this letter, on behalf of my client Thomas Mosser, into the public record for your hearing. After reviewing the various actions by city personnel, and the City Commission at its August 28, 2006 meeting, the conclusion is inescapable. While a process usually concludes with a result, here the city has the result, and is searching for a process to "get there." Namely, the result here is the city's insistence to continue its behind closed door negotiations with Libster-Nygard in order to cut a deal on future use of the Mendenhall parking lot. In order to achieve this result, the city has floated various scenarios and processes that seem defensible. This search for process is most evident by the fact that the city manager issued no less than three "Commission Memorandums" for the August 28, 2006 meeting. Apparently the final process recommended by the city manager, and adopted by the City Commission, is to hold the public hearing and dispose of the property in accordance with Ordinance No. 1658. However, Ordinance No. 1658 is internally inconsistent when applied to this particular issue. In the future,the public would benefit if the city manager dated his rneinorandutns,or simply marked early versions as "drafts." City Commission September 14,2006 Page 2 Notably, Section 2.05.030(3) states in absolute terms.that "any sale, trade, or exchange of real or personal property raust be accomplished under the provisions of this chapter." However, Section 2.05.030(1) grants the City Commission the power to "sell, trade, or exchange any real or personal property, however acquired, belonging to the city that is not necessary to the conduct oj'the city business..." In addition Section 2.05.040 allows city property to be sold after the City Commission determines after a public hearing that the property "is no longer needed." Accordingly, these conditional provisions beg the question: what happens when property is necessary to the conduct of city business, or the property continues to be needed? Does Ordinance No. 1658 then apply? More importantly, my specific concerns relate to how the City Commission and the city manager have treated my client. I hand delivered a letter to the city manager dated August 21, 2006 (approximately 3 weeks ago) asking for an audience to discuss my client's written offer, which was equal or better than the other offer made. To date I have not received one letter, fax, or phone call in response. At the August 28, 2006 meeting neither my letter, nor my client's offer, were even mentioned by the City Commission. The record is clear. The City Parking Commission has various legal rights and responsibilities under Montana law and City Ordinance. This commission reviewed two competing proposals and approved both (i.e., the Libster-Nygard proposal and the Mosser proposal). However, one proposal is now being fast tracked by the city, while the other is being ignored. In conclusion, the city's process following Ordinance No. 1658 is flawed. The fact is that the parking lot at Mendenhall and Willson is needed by the city and the public. Accordingly, the city must recognize the past actions by the Parking Commission, and both current proposals, before deciding how the property in the future can best meet the needs of the city and the public. Sincerely, Arthur V. Wittich AV W/llb cc: City Manager City Attorney Client Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris Kukulski, City Manager SUBJECT: Potential Sale of City Parking Lot at the Southeast Corner of Mendenhall Street and North Willson Avenue MEETING DATE: September 18, 2006 BACKGROUND: On August 28, 2006, the Commission reviewed a proposal for the purchase of the City parking lot located at the southeast corner of Mendenhall Street and North Willson Avenue. The property is approximately 83 fect wide and 140 feet deep, and consists of 28 parking spaces which are accessed from North Willson Avenue Public comment was received at the August 28, 2006 meeting,and that testimony is available at the City Clerk's office. Chapter 2.05 of the Bozeman Municipal Code establishes the procedures for the sale or exchange of City property. The Chapter specifically states that the City Commission has the power to sell, trade, or exchange any real or personal property belonging to the City that is not necessary to the conduct of City business or the preservation of its property. The Commission must first determine, after a public hearing is held, that the property is no longer needed by the City. The purpose of this public hearing is for the Commission to determine if the subject property is no longer needed by the City, and if not, authorize the process under which the property shall be transferred. Per Section 2.05.040, BMC, when the Commission has determined after public hearing that property is no longer needed, the property may be sold by bid, auction with reserve, or negotiated sale or exchange, suhlect, where appropriate, to a minimum price established through an appraisal that certifies the value of such property. The City received a proposed Buy-Sell Agreement from Libster Building LLC and Nygard Family LLC., owners of the Armory building and property, which is adjacent to the subject city parking lot. The Buy-Sell Agreement purchase offer is based on the premise that the buyer would replace the 28 parking spaces on the subject property within their project (a structure will have to be built to meet the parking demands created by the redevelopment). The proposed Buy-Sell Agreement indicates there would be NO cash exchange. The buyer would be spending over $672,000 to replace the lust public spaces and their offer, with no cash exchange proposed, is based on an estimated value of$24,000 per space as set forth in the buy-sell offer. Carl Walker, Inc., Denver, Colorado parking consultants, confirmed the value of underground, mixed-use parking at $25,000 - $30,000 per space (documentation previously provided to the Commission on August 28). Because of the property's proximity to the Armory redevelopment project (contiguous), and because of the dimensions of both properties, the City Manager previously suggested to the Commission that this case warrants the City to directly negotiate with the owners of the Armory under the conditions outlined by the Parking Commission (listed below), if the Commission determines after the public hearing that the land is no longer needed for the conduct of city business. The Armory parcel is approximately 137 feet wide and 140 feet deep and the City's parcel is approximately 83 fcct wide and 140 feet deep; neither by themselves offer much opportunity for efficient underground or above ground level parking. We dealt with this issue when the City purchased the Powderhorn parking lot in order to assemble enough contiguous property to build our parking garage one block east of the property in question. Because parking is a primary concern of the Parking Commission and has been the focus of most of those concerned about this possible sale, the Armory redevelopment offers the greatest opportunity to enhance parking. I discussed the proposed sale of the property with the Parking Commission and the Parking Commission stroingly supported the ideals of strengthening Bozeman's downtown through this type of development and suggested that "incentives" should be devised as a catalyst to bringing investment into the downtown, while balancing those incentives with parking needs. They recommend the following criteria be considered in any buy-sell agreement: 1) The "status quo" must be retained on publicly accessible parking spaces. In other words, some how and some way, 28 spaces should be replaced within the area lost with reasonable access provided. Cash alone is not ideal. 2) The sale must be consistent with Ordinance 1658 requiring that an appraisal be conducted in order to set a minimum value on the publicly owned asset. The appraisal needs to be based on the property's highest and best use consistent with zoning and not simply on its current use as a surface parking lot. 3) If the City fails to approve the project through its approval process outlined in the Unified Development Ordinance the property reverts back to the city without penalty. 4) If the buyer fails to perform on the approved project within a reasonably defined timeline (say 3 years), the City will refund the sale price less a $10,000 penalty to the buyer and the property would revert back to the City_ 5) The buyer guarantees through a development agreement that a certain level of tax dollars will be generated by the project based on the estimated taxable value of the project. Because the property is in a Tax Increment Finance District(TIFD) the district would in theory receive 100% of the new taxes generated. This guaranteed minimum tax generation is critical in that several states, including Montana, commonly change commercial tax calculations, and therefore without the guaranteed minimum, the funds might not otherwise be paid to the TIFD. (This calculation would be based on the developer's best estimation of the investment and that information would be utilized by the department of revenue in order to calculate the estimated taxes that would be generated by the project). 6) Until the existing parking lot is made unusable, the public spaces therein are leased back to the City for$1. Section 2,05.040, BMC, states that when it has been determined that property is not needed by the City, it may be: sold by bid; sold by auction with reserve; or sold through negotiated sale or exchange, where appropriate, to a minimum price established through an appraisal that certifies the value of the property. RECOMMENDATION: Conduct public hearing. if the Commission determines the subject property is not necessary to the conduct of City business, authorize the City Manager to negotiate the necessary agreements to complete the sale of the property to Libster Building LLC, Nygard Family LLC. Because the property is contiguous to the Armory and because of the benefit to the downtown area for both properties to be developed together, negotiated sale is the recommended disposal method. The negotiated sale would be subject to the conditions outlined above that were recommended by the Parking Commission. 1 am NOT recommending we accept the buy-sell agreement as proposed by the buyer. FISCAL EFFECTS: The cost of the required appraisal is unknown at this time, but will be an expense of the city. The sale price will be determined based on the appraised value of the land for its intended use. The taxes generated by the proposed development would be paid into the City's downtown Tax Increment Finance District as outlined under criteria number 5 of the Parking Commission recommendations. ALTERNATIVES: 1. Determine the subject property is not necessary to the conduct of City business and authorize the City Manager to negotiate the sale of the property to Libster Building LLC, Nygard Family LLC, subject to the applicable provisions outlined in the proposed buy-sell agreement, and subject to the conditions recommended by the Parking Commission, with the minimum price established through an appraisal that certifies the value of the property. 2. Determine the subject property is not necessary to the conduct of City business and authorize the City Manager to sell the property by bid, to the highest bidder, with a minimum price established through an appraisal that certifies the value of the property. 3. Determine the subject property is not necessary to the conduct of City business and authorize the City Manager to sell the property to the highest bidder at auction with reserve, with the reserve price established through an appraisal that certifies the value of the property. 4. Determine the subject property is necessary to conduct City business, making the property not for sale. 5. As suggested by the City Commission. rR�esp�ec_t`fix�lly submi tcd, l \ Chris A. Kukulski, City Manager Report compiled on September 14, 2006 Copy to: Libster Building LLC Nygard Family LLC THE CITY COMMISSION MEETING OF BOZEMAN, MONTANA AGENDA Septernber .I 8, 2006 A. Call to Order - 6:00 p.m. - Community Room, Gallatin County Courthouse, 3111 West Main H- Pledge of Allegiance and Moment of Silence C. Public Service.Announcement D. Minutes-,June 12, July 10, and September 5 *Motion and Vote to approve the ,lone 12, Jicly 10, and September 5, 2006 linked minutes cis submitted. Outstarrd1jig Jniv 17, and Septernber 11, 2006 L. Consent I. Authori7.e payment of claims (LaMeres) 2. Acknowledge receipt of petition for annexation Cattail North at the intersection of 27'h and East Valley Center, ftA-06004: Acknowledge receipt of staff report: Direct staff to prepare an annexation agreement (Sant-o.rd) 3. Approve public access easement for the Springhill Carwash (Johnson) 4- Acknowledge Monthly Report—Building Division (Poulsen) 5. Acknowledge receipt of application of annexation Mengel Annexation, Fast of Meagher Avenue: and.North of Uurston Road (Skelton) 6. Adopt Resolution No. 3964, Intent to Create Special Improvement Lighting District No. 692, Baxter Meadows Phases 111 and VI (Shannon). 7. Authorize City Manager to sign Public Utility Easement—REA Development (1-Ieaston) 8. Approve the appointment of Cornrnissioners Rupp and Kirchhoff to review the depository bonds and pledged securities as of June 30, 2006 (Clark) 9. Approve Laurel Glen, Phase fl (Cooper) 10. Adopt Bridger Creek. Growth Policy Arrtendrnent Resolution of .Intent, #06046 (Sanford) 11_ Approve Baxter Meadows Phase II Park Plan (Windeznaker) *Motion and vote to approve consent items 1-11 as listed above. F. Public comment G. Public Hearings 1. Wright Accessory Dwelling at Unit 417 W. Olive St., Site Plan/Certificate of Approval/Deviations,#Z-06187 (Bristor) *Motion and Vote to creprove/rlerty/conditionallyapprove Wright Accessory Dwelling, Site Plan/Certificate of Approval with one deviation as conditioned by planning staff. 2. Cattail North Zone Map Amendment, at the intersection of 271" and Fast Valley Center, #Z-06144 (Sanford) Motion and Vote to creprove/derly/coridrtio71c711)' approve Cattail North Zone Map Amendment, with the contingencies listed on page 2 oj'Zoning Commission Resolution #7,-06144 3_ Bridger Creek Growth Policy Arnendn-ient, Birdie Drive between Bridger Canyon Drive and Boylan Road, #06046 (Sanford) *Motion and Vote to approve'/denylcvriditionrally approve Bridger Creek Growth Policy Amendment, #06046 4. Mendenhall/Willson Parking Lot, located at the southeast corner of North Willson Avenue and West Mendenhall Street (Kukulski) *Motion and Vote to detennine the necessity of the subject property to the conduct of City business. If the Commission detel7nirles that the property is not necessary to the conduct of City business: *Motion and Vote to authorize the City Manager to negotiate sale of the Armory parking lot to I_,ibster Building LLC, Nygard Family LLC. 5. Lighting District Assessments (Rosenberry) *Motion and Vote to adopt/deny Commission Resolution No. 3957 H. Action Items I. Reclaim to itself the final approval of.Lincoln Park Condominiums (Epple) *Motion and Vote to re-claim to the City Cara nission the final approval of Lincoln Park Condominiums I. Non-Action Items 1. FYI[Discussion a. Follow-up discussion on joint City-County Commission meeting from September 15, 2006 b. Electronic Waste Collection )~vent, Saturday, October21, 2006 8 AM to 3- I'M at the Gallatin County Fairgrounds,Building#3 (Arkell) J, Adjournment h Mayor Krauss to adjourn the meeting CZ. BOZEMAN DAILY CHRONICLE, Friday, September 8 20 08 s that b Moricy ejo � r � its �`� al r meeting corAn 4i.d1bg t .Op rn �n the. ".ur n fllahnvurit Courthouse., 3�1 V1est 1Wi �rt St "., i - tana, the p-ozem n CIty C0M nt.sion w111 t�rduCtb t�r 1 i'n if real propor�tY locate. at f orth �Nllson Avenue and est lVI'end,6nh l�tx � :": ��;d��ilialllWlllso� a.l�'�tr ��:"�"�`� , a.>=, .. parlrng lot,. and and whether th1 ,pVo1perty m . ° cl IC�1 'wit .. ` "ITe, O sr Teg�tiacedeoxcharg tib �. ., aPprt�p�r� te, o:a m nimum'price established through, n appr r . that cez`ti s the vklue of such prapertY. x ?Y t re ted part9;es art r vited t+ x ublx��t written:testimony tQ the ty : ,� 0 Boy 1230 Bbexria ,' 'T'5'971; da C @lc p41, ublic here p q 1 � � 0' aid', d ts � n e�ntact°thy �G1t C1el rs ............ uw+ ;ate M a.w,w» .. .. . n r A 04 BOZEMAN DAILY CHRONICLE, Friday, Sept errtber 1,•20`�C ar, rf v'♦. E J 4 II fl 7 h ���<a�".k�,�4��-..�4 r�Vt:. �� t°�"V„ rM,�� 1���t�r��``<i f' v✓ `�kr. ar�� t �r lf# h� r. s�Fla �a,�;�3 � ':'4 g:�.',�y. Jam', V tfpyir {w?Fr :^ "• '� ': tX Sa imp +1t',.� ��1 xiM � eetJ, ebreclh' tm` n the Cps R '�. t Co .ou�fy .1� Glwt�.�ll14!4j0 1t�1.C�hhn111S1.Q11 w ©I1dllt: yel t"el fib' ' lo'AWCd, t, _" "al �•; M61 w .. •• w #�nc ;nh � xNlll on paki Xo ,' d E ry q ee1ed, ar�d wheth th� ropr15 r h ' .� r H. pserve, Qr Regotl��d ���'� b� e�cehan��� i y��A 1w � T�[`7� p to A, minimum pre Qstblished tlrgtpr. .a� , iie #fiea1ue of such prvpepty, %.• _�, �/� ;, �7�t � a"z gin.°:�:"•;'%;;"�.�:� u7 �e�rr�gb�id to tab Y e t S ` �i �� 1 "' .• C41itice ORDINANCE NO. 1658 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA PROVIDING THAT THE BOZEMAN MUNICIPAL CODE BE AMENDED BY ADDING CHAPTER 2.05 PERTAINING TO ACQUISITION AND TRANSFER OF CITY PROPERTY. BE IT ORDAINED by the City Commission of the City of Bozeman, Montana: Section 1 That Chapter 2.05 be added to the Bozeman Muni4cipal Code, so that such Chapter shall read as follows: "Chapter 2.05 ACQUISITION AND TRANSFER OF CITY PROPERTY 2.05.010 Authorization for City to obtain property.The City Commission has jurisdiction and power, under such limltations and restrictions as are prescribed by law,to purchase, receive by donation or exchange, or lease any real or personal property necessary for the use of the City and to preserve, take care of, manage, and control the same. 2.05.020 Appraisal required for certain purchases of real property or consorvation easements. Unless otherwise provided by law, the City may not purchase real property in an amount in excess of l 86 1200,000 or a conservation easement using public funds in an amount in excess of $40,000 unless the value of the property or conservation easement has been previously estimated by, a disinterested certified general real estate appraiser selected by the City Manager. The City may not pay more than the appraised value for the real property or conservation easement. 2.05.030 Authorization to sell and exchange City property. A. The City Commission has the power to sell,trade, or exchange any real or personal property, however acquired, belonging to the City that is not necessary to the conduct of City business or the preservation of its property. B. Whenever the City purchases equipment, as provided in M.C.A. Sections 7-5- 4301 through 7-5-4310, City equipment that is not necessary to the conduct of the City business may be traded in as part of the purchase price or may be sold at public auction, as provided in 7-5-4310, in the discretion of the City Manager or City Manager's designee. C. Any sale, trade, or exchange of real or personal property must be accomplished under the provisions of this Chapter. In an exchange of real property, the properties must be appraised, and an exchange of City property may not be made unless property received in exchange for the City property is of an equivalent value. If the properties are not of equivalent values, the exchange may be completed if a cash payment is made in addition to the delivery of title for property having the lesser value. D. If the City owns property containing a historically significant building or monument, the City may sell or give the property to nonprofit organizations or groups that agree to restore or preserve the property. The contract for the transfer of the property must contain a provision than: 1. requires the property to be preserved in its present or restored state upon any subsequent transfer; and 2. provides for the reversion of the property to the City for noncompliance with conditions attached to the transfer. 2.05.040 Requirements for certain sales. When the City Commission has determined, after public hearing, that any real property which is owned by the city is no longer needed, the property may be sold by bid, auction with reserve, or negotiated,sale or exchange, subject, where appropriate, to a minimum price established through an appraisal that certifies the value of such property. Notice of sale, exchange,or auction shall be published as provided in M.C.A. Section 7-1-4127. The city may terminate the sale procedures used at any time and may reinitiate the same or different procedures at a later date. 2.05.050 Terms of sale. A. Except as provided in Section 2.05.030.D, a sale under this part must be for cash or on terms that the City Commission may approve, provided that at least 20%of the purchase price is paid in cash. All deferred payments on the purchase price of any property sold must bear interest at the-rate of 6% fir a madSet rate payable annually, and may be extended over a period of not more than five years. B. Subject to Section 2.05.030.1), a sale may not be made for less than 90% of the appraised value. C. Subject to Section 2.05,030.1), the title to any property sold may not pass from the City until the purchaser or the purchaser's assigns have paid the full amount of the purchase price into the City treasury for the use and benefit of the City. 2.05.060 Appraisal required for certain sales. Unless otherwise provided, no sale of real property shall be made of any property unless it has been appraised within three•rReritha gneyear prior to the date of the sale. - 2 - 2.05.070 Use of proceeds of property disposition.The funds derived from property disposed of in accordance with this chapter, in the discretion of the City Commission, may be credited to any account that is in the best interest of the City." Sect ReMle All resolutions, ordinances and sections of the Bozeman Municipal Code and parts thereof in conflict herewith are hereby repealed. Section 33 Sayings Pro_yjs1on 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. Se 'a 4 Seyerability If any portion of this ordinance or the application thereof to any person or circumstances is held invalid,such invalidity shall not affect other provisions of this ordinance which may be given effectwithout the invalid provisions or application and, to this end, the provisions of this ordinance are declared to be severable. S_qoon 5 Effer,tilygl Date This ordinance shall be in full force and effect thirty(30) days after final adoption. PASSED by the City Commission of the City of Bozeman, Montana, on first reading at a regular session thereof held on the 19th day of December 2005. ANDREW L. CETRARO, Mayor ATTEST.- SULLIVAN City Clerk _ 3 . 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 17th day of January 2006. JEFF K. US , Mayor ATTEST: 4 ROBIN L. SULLIVAN City Clerk APPROVED AS TO FORM: r~ 9 PA L J. LOW City Attome - 4 - Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris A. Kukulski, City Manager SUBJECT: Schedule Public Hearing for the Potential Sale of the City's Parking Lot at the South East Corner of Mendenhall and Willson. MEETING DATE: August 28, 2006 BACKGROUND: After further review of Ordinance 1658 the City Commission must hold a noticed Public flearing in order.for the Commission to determine IF a publicly owned piece of property is "no longer needed." In addition to the public hearing requirement, the City utilizes "where appropriate" an appraisal to insure that the public receives fair value out of any bid, auction or direct negotiation sale process. Section 1, 2.05.040 reads as follows, "—the property may be sold by bid, auction with reserve, or negotiated.sale or exchange, subject, where appropriate., to a minimum price established through an appraisal... " 'Therefore 1 believe it would be helpful to this process for the Commission to consider setting a course of action to be followed IF the property at the south east corner of Mendenhall and Willson is determined to be "no longer needed. " Because of the property's proximity to the Annory redevelopment project(contiguous), and because of the dimensions of both properties, I believe this case warrants the City to directly negotiate with the owners of the Armory under the conditions outlined by the Parking Commission and me (see original merno regarding this subject compiled on August 24, 2006), IF the city determines after the public hearing that the land is no longer needed. The Annory parcel is approx. 137 feet wide and 140 feet deep and the City's parcel is approx. 83 feet wide and 140 feet deep; neitl1pr by themselves offer much opportunity for efficient underground or above ground level parking. We dealt with this issue when the City purchased the Powderhom parking lot in order to assemble enough contiguous property to build our parking garage one block east of the property in question. Because parking is a primary concern of the Parking Commission and has been the focus of most of those concerried about this possible sale, I believe the Armory redevelopment offers the greatest opportunity to enhance parking. The following timeline has been created based on the above information. 1. August 31, 2006-Advertise September 18`}' Public Hearing to consider the question of 1F the property at Mendenhall and Willson should be sold. (the Chronicle requires 48 hours notice to advertise a public hearing) 2. September 7, 2006 _Advertise September 18`h Public Hearing to consider the question of IF the property at Mendenhall and Willson should be sold. 3. September 18, 2006-Hold the Public Hearing regarding the question of IF the property should be sold. IF the Commission detennines that the property is to be sold then they would authorize the staff to negotiate the necessary documents consistent with Ordinance 1658 with the Libster Building LLC, Nygard Family LLC. RECOMMENDATION: Authorize the City Manager to advertise for a public hearing to be held September I g1h to consider sale of the City's perking lot located on the south east corner of Willson and Mendenhall. FISCAL EFFECTS: The sale price is yet to be determined based on an appraised value of the land for its intended use. Also, the taxes generated by the proposed development would be paid into the City's downtown Urban Renewal District. The minimum amount of property taxes will be set in the development agreement and will be paid by the owner even if the taxable value falls short of the estimates or the State changes property tax fonnulas. ALTERNATIVES: As suggested by the City Commission. Respectfully submitted, Chris A. Kukulski, City.Manager l Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Chris A. Kukulski, City Manager SUBJECT: Potential Sale of Parking; Lot at the South East Corner of Mendenhall and Willson. MEETING DATI!: August 28, 2006 BACKGROUND: Over the past several months our planning staff and I have met with the owners of the Armory regarding their redevelopment plans and interest in including the city's parking lot to the west of the Arniory in their redevelopment. Additionally, I have rnet with the owner of the Imperial Inn as he has expressed interest in redeveloping this same property. This parcel of property is owned by the city and provides 28 surface public parking spaces. It is located on the southeast corner of Willson and Mendenhall, bordering the west side of 24 W. Mendenhall. In an attempt to move the conversation forward, I received the attached Buy-Sell Agreement from Libster Building LLC and Nygard Family LLC., owners of the Armory, and an Exchange Agreement has been presented from the Wittich Law Firm, representing Thomas Mosser. Each document outlines the parameters of their perspective proposals. I have spoken with owners of the,Armory and they have agreed to extend the deadline on their Buy-Sell Agreement offer(which has expired) provided they receive an expedited response from me with the support of the City Commission. The idea of redeveloping this site is exciting and certainly merits the attention of the Commission as we hope to take advantage of opportunities to strengthen Bozeman's downtown. During the Parking; Commission's discussions this morning; they strongly supported the ideals of strengthening Bozeman's downtown - going as far as to say that"incentives" should be devised as a catalyst to bringing investment into the downtown while balancing those incentives with parking needs. The Buy-Sell Agreement purchase offer is based on the premise that the buyer would replace the 28 spaces within their project (a structure will have to be built to meet the parking demands created by the redevelopment). Even though there would be NO cash exchange, the buyer is spending over $672,000 to replace the lost public spaces and their offer, with no cash exchange proposed, is based on an estimated value of$24,000 per space as set forth in the buy-sell offer. Also attached is a letter from Carl Walker, Inc., Denver, Colorado parking consultants, confirming the value of underground, mixed-use parking at $25,000 - $30,000 per space. The Exchange Agreement presented by Thomas Mosser has no financial information to review or consider. If the City is inclined to entertain the idea of selling this property the Parking Commission recommends that the following criteria be considered in any buy-sell agreement. 1) The "status quo' must be retained on publicly accessible parking spaces. In other words, some how, and some way 28 spaces should be replaced within the area lost with reasonable access. Cash alone is not ideal. 2) The sale must be consistent with Ordinance 1658 requiring that an appraisal be conducted in order to set a minimum value on the publicly owned asset. The appraisal needs to be based on the properties highest and best use consistent with zoning not simply on its current use as a surface parking lot. (see attached ordinance outlining the sale of publicly o)Yned-pjoperty as adopted by-the City in-2005)— 3) If the City fails to approve the project through its approval process outlined in the Unified Development Ordinance the property reverts back to the city without penalty. 4) If the buyer fails to perform on the approved project within a reasonably defined timeline (say 3 years), the City will refund the sale price less a$10,000 penalty to the buyer and the property would revert back to the City. 5) The buyer guarantees through a development agreement that a certain level of tax dollars will be generated by the project based on the estimated taxable value of the project. Because the property is in a Tax Increment Finance District (TIFD) the district would in theory receive 100%of the new taxes generated. This guaranteed minimum tax generation is critical in that several states, including Montana, commonly change commercial tax calculations, and therefore without the guaranteed minimum,the funds might not otherwise be paid to the TIFD. (This calculation would be based on the developer's best estimation of the investment and that information would be utilized by the department of revenue in order to calculate the estimated taxes that would be generated by the project). 6) Some type of proof acceptable to the City and buyer that the buyer has the financial wherewithal to perform. One option is a performance bond. 7) Until the existing parking lot is made unusable, the public spaces therein are leased back to the City for$1 Because this property is contiguous to the Armory and because of its ability to enhance the redevelopment of the Armory project in a way that improves Bozeman's downtown as the business center of Bozeman and southwest Montana, and in reviewing attached Buy-Sell and Exchange Agreement, I believe that the Armory redevelopment project provides the greatest opportunity to successfully meet the above listed parameters and goals outlined in the City's 2020 plan and UDO. Therefore, I recommend you authorize the city staff to enter into negotiations with the owners of the Armory to meet the above 1 isted criteria for your approval as soon as the necessary documents can be completed. Unfortunately, at the time that this memo was drafted, I had not received return phone calls from parking consultants and several Cities that I had hoped to get advice from regarding their success or failure in converting surface parking lots into mixed-use, multi-story developments. Hopefully some of these conversations will take place in time for our August 28th City Commission meeting. Also it is critical that the Parking Commission be a leader in guiding this process as they are our volunteers who have taken on the responsibilities of setting policies to manage public parking in the downtown area. RECOMMENDATION: The City Commission authorize the City Manager and staff to negotiate the necessary agreements to complete the sale of the parking lot at the south east corner of Willson and Mendenhall with the Libster Building LLC,Nygard Family LLC. If however the Commission is uncomfortable moving forward in this manner, I would suggest setting a tight deadline of September 8 for the City to receive proposals from either entity and/or others. The proposals will be reviewed against the parameters listed above. Once reviewed, the City staff would enter into negotiations with the entity we believe has the greatest opportunity to meet our requirements for selling the property. t w FISCAL EFFECTS: The sale price is yet to be determined based on an appraised value of the land for its intended use. Also, the taxes generated by the proposed development would be paid into the City's downtown Urban Renewal District. The minimum amount of property taxes will be set in the development agreement and will be paid by the owner even if the taxable value falls short of the estimates or the State changes property tax formulas. ALTERNATIVES: As suggested by the City Commission. Respectfully submitted, Chris A. Kukulski, City Manager Attachments: Purchase Offer;Letter from Carl Walker, Inc.;Exchange Agreement; Ordinance NO. 1658 Report compiled on August 24,2006