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HomeMy WebLinkAbout10. A3 Prov Ord 1906 Memorandum for Provisional Adoption of Ordinance 1906 Page 1 of 4 Commission Memorandum REPORT TO: Honorable Mayor and City Commission. FROM: Brit Fontenot, Director of Economic Development. SUBJECT: Provisional Adoption of Ordinance 1906, an Ordinance Ratifying the City Manager’s Signature on an Amendment to the Original Purchase and Sale Agreement Transferring Ownership of the North Park Property to Micropolitan Enterprises, LLC and Powder River Comp., LLC. MEETING DATE: February 2, 2015 AGENDA ITEM TYPE: Action (4/5 vote of the Commission required for adoption of Ordinance 1906). RECOMMENDATION: Staff recommends the Commission hold a public hearing on the ordinance, consider this and other related staff memoranda linked herein, written and spoken public testimony, and provisionally adopt, by a two-third majority (i.e. four affirmative votes), Ordinance 1906 ratifying the City Manager’s signature on the attached Addendum to the original Agreement to Sell and Purchase Real Estate, the North Park property, with Micropolitan Enterprises, LLC and Powder River Comp., LLC (the “Agreement”). If approved, staff will return to the Commission for second reading on February 23, 2014. If approved on February 23, 2015, the effective date of Ordinance 1906 is March 23, 2015. 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 1906 and findings enumerated in the Staff memo and articulated by the Commission during discussion, I hereby move to provisionally adopt Ordinance 1906 ratifying the City Manager’s signature on the amendment to the original Agreement to Sell and Purchase Real Estate, the North Park property, with Micropolitan Enterprises, LLC and Powder River Company, LLC. I. BACKGROUND: Currently the North Park property is under contract to sell to Micropolitan Enterprises, LLC and Powder River Comp., LLC. Proposed amendments to the original agreement can be found below in Section II. All background material can be found hyperlinked below in this 220 Memorandum for Provisional Adoption of Ordinance 1906 Page 2 of 4 memo. On July 7, 2014, the City Commission adopted Ordinance 1885 ratifying the City Manager’s signature on a purchase and sale agreement transferring ownership of the North Park property to Micropolitan Enterprises, LLC and Powder River Comp., LLC. On July 21, 2014, on the Consent Agenda, the Commission adopted Ordinance 1885 on second reading. Packet material and approved minutes from the July 7th and July 21st City Commission hearings are linked below: 1. City Commission packet material for provisional adoption of Ordinance 1885 held on July 7, 2014. a. Approved minutes from the July 7, 2014 City Commission Meeting. 2. City Commission packet materials for final adoption of Ordinance 1885 held on July 21, 2014. a. Approved minutes from the July 21, 2014 City Commission Meeting. II. LEGISLATIVE FINDINGS: By approving Ordinance 1906, the City Commission adopts the following findings in support of the adoption of the Ordinance: 1. The Commission adopts the legislative findings made during adoption of Ordinance 1885 for purposes of adoption of this Ordinance; 2. Buyers are seeking an Amendment to the original Agreement to Sell and Purchase Real Estate for the purchase of the North Park Property. 3. Included in the proposed Amendment is the Buyers request for an extension of the closing date from February 21, 2014 to on or before August 21, 2015; 4. Also included in the proposed Amendment is a contingency that the Buyer successfully negotiate and secure a long term lease with the State of Montana for all or a portion of State Trust Land south of the common boundary line of the property and abutting State Trust Lands; 5. On November 17, 2014, the City of Bozeman has obtained authorization of the Montana Board of Land Commissioners to purchase two easements for access to the North Park property through the State Trust Lands; and 6. For the purposes of the sale of the North Park property, the February 28, 2014 appraisal remains valid; the closing date as stated in the Amendment is on or before August 21, 2015, the one year anniversary of the effective date of Ordinance 1885 (August 21, 2014). 221 Memorandum for Provisional Adoption of Ordinance 1906 Page 3 of 4 III. UNRESOLVED ISSUES: Other than the City and the buyers addressing the contingencies, there are currently no unresolved issues as it relates to the sale of the North Park property. Currently there are no backup offers on the property. IV. ALTERNATIVES As directed by the Commission. V. 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 counsel. At this price, the City would receive approximately $1,410,000 upon closing, after realtor commission. The City’s industrial TIF district invested approximately $225,000 in development of the preliminary plat in 2006-2008. The plat is currently active. 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 approximately $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 and to possibly provide financing for the installation of public infrastructure within the district. 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. In November, 2014 the Montana Board of Land Commissioners approved the sale of two easements to the City of Bozeman (extensions of Wheat Drive and Flora Lane) The easements, totaling 5.26 acres, were purchased for full market value based on the appraised per acre value of the existing tract ($18,013.05 per acre) for a total of $94,748.64. 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. 222 Memorandum for Provisional Adoption of Ordinance 1906 Page 4 of 4 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. Currently there are no backup offers on the property. VI. ATTACHMENTS: 1) Ordinance 1906 with Exhibit A, the signed version of the Amendment to Agreement to Sell and Purchase. Report prepared on January 23, 2015 223 Page 1 of 4 ORDINANCE NO. 1906 AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, RATIFYING THE CITY MANAGER’S SIGNATURE ON AN AMENDMENT TO THE PURCHASE AND SALE AGREEMENT FOR THE SALE AND CONVEYANCE OF THE NORTH PARK PROPERTY. WHEREAS, the Bozeman City Commission finally adopted Ordinance 1885 on July 21, 2014 authorizing the sale of the North Park property; WHEREAS, on December 23, 2014 Micropolitan Ent., LLC and Powder River Comp., LLC (the “Buyer”) advised the City of Bozeman that they seek City Commission approval of an Amendment to the existing purchase and sale agreement transferring ownership of the North Park property; WHEREAS, the Amendment includes, inter alia, an extension of the closing date on or before August 21, 2015, the one year anniversary of the effective date of Ordinance 1885 (August 21, 2014); and WHEREAS, the Amendment also includes a contingency that the Buyer successfully negotiate and secure a long term lease with the State of Montana for all or a portion of State Trust Land south of the common boundary line of the property and abutting State Trust Lands. NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA: 224 Ordinance 1906, Ratifying City Manager Signature on Purchase and Sale Agreement for North Park Property Page 2 of 4 Section 1 Legislative Findings. The City Commission hereby adopts the following findings in support of the adoption of this Ordinance: 1. The Commission adopts the legislative findings made during adoption of Ordinance 1885 for purposes of adoption of this Ordinance; 2. Buyers are seeking an Amendment to the original Agreement to Sell and Purchase Real Estate for the purchase of the North Park Property. 3. Included in the proposed Amendment is the Buyers request for an extension of the closing date from February 21, 2014 to on or before August 21, 2015; 4. Also included in the proposed Amendment is a contingency that the Buyer successfully negotiate and secure a long term lease with the State of Montana for all or a portion of State Trust Land south of the common boundary line of the property and abutting State Trust Lands; 5. On November 17, 2014, the City of Bozeman has obtained authorization of the Montana Board of Land Commissioners to purchase two easements for access to the North Park property through the State Trust Lands; and 6. For the purposes of the sale of the North Park property, the February 28, 2014 appraisal remains valid; the closing date as stated in the Amendment is on or before August 21, 2015, the one year anniversary of the effective date of Ordinance 1885 (August 21, 2014). Section 2 The Bozeman City Commission hereby ratifies the City Manager’s signature on the attached Amendment to the Agreement to Sell and Purchase Real Estate (Exhibit A) 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. Section 3 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. 225 Ordinance 1906, Ratifying City Manager Signature on Purchase and Sale Agreement for North Park Property Page 3 of 4 Section 4 Savings Provision This ordinance does not affect the rights and duties that matured, penalties that were incurred or proceedings that were begun before the effective date of this ordinance. All other provision of the Bozeman Municipal Code not amended by this Ordinance shall remain in full force and effect. Section 5 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 6 Codification 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. Section 7 Effective Date This ordinance shall be in full force and effect thirty (30) days after final adoption. PROVISIONALLY ADOPTED by the City Commission of the City of Bozeman, Montana, on first reading at a regular session held on the 2nd day of February, 2015. ____________________________________ JEFFREY K. KRAUSS Mayor 226 Ordinance 1906, Ratifying City Manager Signature on Purchase and Sale Agreement for North Park Property Page 4 of 4 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 23rd day of February, 2015. The effective date of this ordinance is March 23, 2015. _________________________________ JEFFREY K. KRAUSS Mayor ATTEST: _______________________________ STACY ULMEN, CMC City Clerk APPROVED AS TO FORM: _________________________________ GREG SULLIVAN City Attorney 227 228 229 230 231