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HomeMy WebLinkAboutA7. Right of First Offer1 Commission Memorandum REPORT TO: Honorable Mayor and City Commission FROM: Brit Fontenot, Director of Economic Development SUBJECT: Authorize the City Manager to Sign a Right of First Offer Agreement with Micropolitan Enterprises, LLC and Powder River Comp., LLC Granting an Exclusive Six Month Right to Make an Offer for the Purchase of the North Park Property MEETING DATE: August 17, 2015 AGENDA ITEM TYPE: Action RECOMMENDATION: Authorize the City Manager to sign a Right of First Offer agreement with Micropolitan Enterprises, LLC and Powder River Comp., LLC granting an exclusive six- month right to make an offer for the purchase of the North Park property. SUGGESTED MOTION: I move to authorize the City Manager to sign a Right of First Offer agreement with Micropolitan Enterprises, LLC and Powder River Comp., LLC granting an exclusive six-month right to make an offer for the purchase of the North Park property. BACKGROUND: Currently the North Park property is under contract to sell to Micropolitan Enterprises, LLC and Powder River Comp., LLC. The closing date, as proscribed by Ordinance 1906, is August 21, 2015. On February 2, 2015, after conducting a public hearing, the City Commission voted 4 – 1 to provisionally adopt Ordinance 1906, ratifying the City Manager’s signature on an Addendum to the original Agreement to Sell and Purchase Real Estate, the North Park property, with Micropolitan Enterprises, LLC and Powder River Comp., LLC, extending the closing date from February 21, 2015 to August 21, 2015. The Commission conducted a second public hearing on February 23, and adopted Ordinance 1906 upon second reading by a vote of 5 – 0. The February amendment included a contingency wherein closing is contingent on buyer negotiating and securing a long term lease with the State of Montana for State trust lands adjacent to the North Park property. On July 3, 2015, the City of Bozeman was notified that at least one bald eagle, a federally protected species, has nested on that state trust land. See 236 2 Attachment 1, letter dated July 30, 2015 from Jason Leep. As described in Section 3 (vi), page 3 of the Right of First Offer Agreement, at the appropriate time, the City will seek an updated appraisal on the North Park property as required by the Bozeman Municipal Code. (Attachment 2) During the past two weeks, we have worked with the buyers on this issue and its effect on the buyer’s ability to close on the property. Given the commitment the buyers have shown and the good faith work between the city and the buyers, the buyers are proposing the city enter into this right of first offer agreement. The City Manager supports providing the buyers additional time to resolve the how development may occur on the DNRC and City properties in a manner compatible with federal law related to the eagles nest. The City Attorney has reviewed the Right of First Offer agreement and finds no legal basis preventing the city commission from entering into the agreement. Background material can be found as attachments hereto and hyperlinked 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. 3. City Commission packet material for provisional adoption of Ordinance 1906 held on February 2, 2015. a. Approved Minutes from the February 2, 2015 City Commission Meeting. 4. City Commission packet material for final adoption of Ordinance 1906 held on February 23, 2015. a. Approved Minutes from the February 23, 2015 City Commission Meeting. UNRESOLVED ISSUES: Unknowns include 1) the impact that the presence of the bald eagle will have on the ability of the buyers to lease state land, a contingency for the sale, 2) the impact that the presence of the bald eagle will have on the re-appraisal of the City property and 3) the impact that the presence of the bald eagle will have on potential development of the City property. Currently there are no backup offers on the property. 237 3 ALTERNATIVES As determined by the Commission. FISCAL EFFECTS Currently there are no backup offers on the property. ATTACHMENTS: 1) Signed Right of First Offer Agreement; and 2) July 20, 2015, Jason Leep’s North Park Update Letter. Hyperlink as background: Report prepared on August 6, 2015 238 406.556.5069 1811 W. Dickerson Bozeman Montana 59718 July 30, 2015 Mr. Brit Fontenot Director of Economic Development City of Bozeman Via e-mail: bfontenot@bozeman.net RE: Update to City of Bozeman regarding North Park purchase Dear Brit, Please accept this letter as the formal scheduled update that is required by section 5 of the Amendment to the Purchase and Sale Agreement for the North Park property. The contract to purchase the North Park property has a contingency requiring that the State Land Board approve of the buyers land lease proposal with terms acceptable to buyer. The buyers have diligently worked to gain approval from the State Land Board regarding the land lease proposal. However, they have been informed by DNRC staff that a hearing will not be scheduled for an extended period of time, due to the sudden presence of a bald eagle in a nest very near the lands that the buyer is attempting to lease from the State. Current Federal and State guidelines regarding the restrictions on development near an active bald eagles nest may make all of the State Lands and a majority of the City owned lands undevelopable. There are scenarios where the subject lands are developable but until the matter is studied in detail and a Federal permit is processed, the outcome is unknown. Since the buyer intends to develop the property so that local businesses can locate there, this is a matter that will cause at minimum a delay in the buyers plans for development. In our meetings with DNRC staff, we have concluded that the studying of and permits regarding the eagle nesting site will require several months of work. The State has begun this work within the last few days. DNRC staff will meet with the appropriate Federal agency in the coming few days to identify the process, which will likely include a biologist’s report, and an application that will take 90 days for the Federal agency to process and render a decision on. Once the Federal application process is complete, the State Land Board would be able to consider setting a meeting date to discuss the buyers lease proposal. We understand that the current contract to purchase the City property requires us to close in less than 30 days from now and unless an unforeseen solution presents itself in that time frame the buyers will not be able to close on the specified date, given the uncertainty that the eagles nest site creates. We are also aware that the City is of the opinion that any further delay in the closing will require that the property be re-appraised. 239 406.556.5069 1811 W. Dickerson Bozeman Montana 59718 Given these dynamics we propose that the current buy sell agreement and amendment be replaced with an exclusive right to negotiate a future sale of the north park property. The exclusive agreement would need to be in effect for 6 months so that: 1. The restrictions regarding development near the bald eagle nest site can be identified. 2. The State Land Board meeting can be held. 3. A decision on the buyers proposal to lease the State Lands can be made. 4. The City can acquire a new appraisal. Once those 4 steps are complete (assuming it does not take more than 6 months) the buyer and City would have 30 days to approve the new sales contract on terms acceptable to both parties. As you know, the buyers and the City have both performed their duties in good faith over the last several months. The buyers have spent considerable funds on engineering, design, and legal efforts in preparation of making the purchase. If not for the newly found bald eagles nest, it appears as though the transaction was going to be completed. The buyers intend to complete the transaction once the 4 steps above are resolved in a satisfactory manner. Thank you for your attention to this matter and please call with questions. Jason Leep NAI Landmark cc: Micropolitan Enterprises Powder River Company 240 241 242 243 244 245 246