HomeMy WebLinkAbout15- Between City and Micropolitan Enterprises, LLC and Powder River Company Exclusive Right of First Offer to Purchase Real Property EXCLUSIVE RIGHT OF FIRST OFFER
TO PURCHASE REAL PROPERTY
THIS AGREEMENT("Agreement')is made August 10,2015,between by the CITY OF BOZEMAN,City
Hall, 121 North Rouse Avenue, Bozeman, Montana 59715 (the "City"), and MICROPOLTTAN
ENTERPRISES, LLC and POWDER RIVER COMPANY, LLC, Box 1152, Bozeman, Montana 59715
and/or assigns (collectively"Buffer"). The City and Buyer are sometimes referred to herein collectively as
the"Parties" and individually as a"PNty."
RECITALS
A. The City owns the following described real property(the "Pro e "), located in Bozeman, Gallatin
County,Montana:
Tracts 1-A,2-A, 3-A and 4-A of Certificate of Survey No.2153,situated in the NW 1/4
of Section 36, Township 1 South, Range 5 East, P.M.M., Gallatin County, Montana,
according to the official plat thereof on file and of record in the office of the County
Clerk and Recorder, Gallatin County, Montana.
B. The City and Buyer entered into an Agreement to Sell and Purchase dated June 12, 2014 (the
Sell"). The Patties subsequently amended the Buy-Sell as provided in an Amendment to Agreement
to Sell and Purchase dated January 15, 2015.
C. The Buy-Sell, as amended, contains several conditions precedent to Buyer's obligation to purchase
the Property. One of those conditions is that Buyer negotiate and secure a long-term lease with the
State of Montana, on terms satisfactory and acceptable to Buyer, for all or a portion of abutting
Montana state trust lands located south of the Property in Section 36, Township I South, Range 5
East,MPM, Gallatin County,Montana(the "State Lands").
D. Buyer made a proposal to the State of Montana to lease the State Lands, and it has been working to
gain approval of its proposal from the State Board of Land Commissioners. However, further
governmental action on Buyer's lease proposal has been delayed by a recently discovered bald eagle's
nest located near the State Lands. The nest's existence may result in imposition of legal restrictions
on development of the State Lands and gives rise to uncertainties as to whether the State Lands are
suitable for Buyer's intended use.
E. The Buy-Sell requires that Buyer exercise, waive or release all conditions precedent to its purchase
of the Property,,including the contingency for securing a lease of the State Lands, no later than
August 18, 2015 (the"Contingency Date"). City staff has concluded that the Contingency Date may
not be extended without approval of the Bozeman City Commission and without first obtaining a new
appraisal of the Property, neither of which can be finalized prior to the Contingency Date. Buyer has
determined it unlikely, due to the presence of the eagle's nest, that its proposal to lease the State
Lands will be acted upon prior to the Contingency Date. Accordingly, Buyer desires to exercise the
contingency pertaining to the lease of State Lands and terminate the Buy-Sell.
F. Notwithstanding its decision to terminate the present Buy-Sell, Buyer remains committed to
purchasing the Property,provided it can secure a lease of the State Lands and prospective restrictions
regarding development near the bald eagle nest site be identified and addressed to its satisfaction.
Buyer desires to acquire an exclusive right for a specified period of time to negotiate with the City
with a goal of arriving at new agreement for the purchase and sale of the Property.
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G. The City acknowledges that Buyer has proceeded with diligence in its investigation of the Property
in accordance with the provisions of the Buy-Sell and that it has expended significant time, effort,
and funds on engineering design, development review,legal work, and other matters preparatory to
its prospective purchase. In consideration of Buyer's prior efforts, and in exchange for a payment to
made by Buyer to the City, the City is willing to withhold the Property fiom the real estate market
and grant Buyer an exclusive right for a specified period of time to negotiate with the City and make
a first offer to purchase the Property, all as set forth in this Agreement.
AGREEMENT
In consideration of the mutual promises,the money consideration hereinafter described, and other valuable
consideration,the receipt and adequacy of which are hereby acknowledged,the Parties agree as follows:
1. Termination of Buy-Sell. Pursuant to Section 5 of the Amendment to Agreement to Sell and
Purchase dated January 15, 2015, Buyer hereby exercises its right to terminate the Buy-Sell for the
reason that it has been unable to secure a satisfactory and acceptable lease of the State Lands. This
termination shall be effective on the date set forth at the head of this Agreement. Promptly after
execution of this Agreement, the City shall instruct Security Title Company, the closing and escrow
agent under the Buy-Sell, to release Buyer's earnest money deposit ($10,000.00) to Buyer and to
close the escrow.
2. Effective Date; Ratification. The effective date ("Effective Date") of this Agreement shall be the
date the Bozeman City Manager executes this Agreement after authorization from the Bozeman City
Commission.
3. Exclusive Right of First Offer.
(a) Grant of Exclusive Right of First Offer. The City hereby gives and grants unto Buyer an
exclusive light, for a period of six (6) months measured from the Effective Date (the
"Exclusivity Period"), to present to the City a notice(the"Offer Notice")offering to purchase
the Property.
(b) Form of Offer Notice. The Offer Notice shall be in the form of a proposed agreement for sale
and purchase of the Property signed by Buyer. The Offer Notice shall specify the purchase
price and other terms of Buyer's proposed purchase of the Property, incorporate the required
terms and condition set out in Paragraph 3(c), and include all other customary terms necessary
for the transaction to proceed to closing.
(c) Offer Notice Required Provisions. In addition to other content proposed by Buyer, the Offer
Notice shall include(or exclude, as the case may be)the following terms and conditions:
(i) Entirejy of Properly.The Offer Notice must contemplate purchase of all of the Property.
(ii) Earnest Money Deposit. Buyer shall make an earnest money deposit in the amount of
$15,000.00.This deposit shall be in addition to the Exclusivity Payment(defined below)
made under this Agreement. The Offer Notice shall be accompanied by a check made
payable to "Security Title Company" in the amount of the earnest money deposit. The
earnest money deposit shall be refundable only if the City cannot convey title to the
Property at closing or if the conditions required by Subparagraph 3(c)(iv) are not met;
otherwise the earnest money deposit shall be non-refundable.
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(iii) Manner of Payment of Purchase Price.The balance of the purchase price for the Property,
after application of the earnest money, credit for the Exclusivity Payment as provided in
Paragraph 5(a), and closing prorations and adjustments (for taxes, rents, closing fees,
etc.), shall be paid in certified or other immediately available cash funds at closing.
(iv) Buyer Contingencies. Buyer may condition its obligation to close on its purchase of the
Property upon the City's ability to convey it good and sufficient title.Title to the Property
shall be deemed good and sufficient for the purposes of this Agreement so long as the
Property is conveyed to Buyer in fee simple,free and clear of all encumbrances excepting
only those itemized and described in Exceptions 1 through 38 and Exception 41 of
Schedule B — Section 2 of Commitment for Title Insurance No: G140369 prepared by
Security Title Company (issued by Old Republic National Title Insurance Company)
having an Effective Date of July 27, 2015 (Updated 7/30/15). Additionally the original
contingency from the previous Buy-Sell remain and added to as follows:
a. An MOU with the City and to the Buyer's satisfaction regarding the
creation of a new TIF district;
b. A lease for the State land agreeable to the Buyer;
c. Buyer's approval of conditions relating to the presence and resolution
surrounding the eagle located on the Property; and
d. Complete easements as outlined in paragraph 6 of the original Buy—
Sell agreement.
Otherwise, the Offer Notice shall contain no contingencies conditioning Buyer's
obligation to complete purchase of the Property.
(v) Closing Date. Closing of the purchase and sale transaction shall occur no later than
thirty(30) days after the date that an ordinance ratifying the Acceptance Notice is duly
and finally adopted by the Bozeman City Commission.
(vi) City S Appraisal Contingency. The City's obligation to complete sale of the Property
shall be conditioned upon the purchase price set forth in the Offer Notice,as accepted by
7 the City, being at least ninety percent(90%) of the appraised value of the Property, as
required by City ordinance and determined by an appraisal commissioned by the City
and made within one(1)year prior to the date of sale. If the agreed upon purchase price
is less than ninety percent of the appraised value of the Property, the City shall notify
Buyer of that fact and shall provide Buyer with a complete copy of the appraisal. Buyer
may,within ten(10)days of such notice,elect to increase the purchase price to an amount
equal to ninety percent(90%)or greater of the Property's appraised value.If Buyer elects
not to not to do so, the agreement to sell and purchase arising out of the Offer Notice
shall terminate, and the City shall promptly instruct the escrow agent to return Buyer's
earnest money deposit.The City shall be entitled to retain the Exclusivity Payment in the
event of such termination upon Buyer's approval of the conditions relating to the
presence and resolution surrounding the eagle located on the Property.
(d) Acceptance Notice; Findl Acceptance. If the City desires to accept the offer set forth in the
Offer Notice,the City Manager(or his designee), shall,within thirty(30)days after the Offer
Notice is effectively given, give Buyer written notice to such effect(the"Acceptance Notice")
by executing the proposed agreement for sale and purchase of the Property and delivering a
copy of it to Buyer. The Acceptance Notice shall, however, be deemed final only upon the
Bozeman City Commission's final adoption of an ordinance ratifying the City Manager's
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approval and execution of the Acceptance Notice. The Bozeman City Commission's failure to
ratify the City Manager's approval and giving of the Acceptance Notice for whatever reason
shall constitute rejection of the Offer Notice, and no contract for the sale and purchase of the
Property shall have been formed.
(e) Rejection of Offer Notice. If the City rejects the Offer Notice, whether by the City Manager's
failure to give an Acceptance Notice or by the Bozeman City Commission's decision not to
ratify the City Manager's giving and approval of an Acceptance Notice, the City may
commence negotiations, enter into one or more agreements to sell, and sell all or any portion
of the Property to one or more thud parties.
5. Consideration.
(a) Exclusivity Payment. The price for the exclusive right of first offer granted in Paragraph 3(a)
is$30,000.00(the"Exclusivity Pa meet").Buyer shall pay the Exclusivity Payment to the City
as follows:
(i)provide non-exclusive,unlimited use to the City of the planning documents created for use
as a Master Site Plan ("Master Site Plan") for the Property(an equivalent value of$25,000);
and
(ii) $5,000 in certified or other immediately available cash funds or in any other form
acceptable to the City,upon Buyer's signing of this Agreement.
The cash portion of the Exclusivity,payment($5,000) shall be refndable until such time that
the City orders an appraisal for the purposes of this agreement. The non-exclusive, unlimited
use of the Master Site Plan shall remain property of the City for use on the Property,which use
by City has been approved by Think Tank Design Group,LLC(who created the documents for
Buyer) and may be assigned or used by future purchasers of the Property. Additionally the
cash portion of the Exclusivity Payment shall be refunded to Buyer if the contingencies set
forth in subsection 3(c)(iv) are not satisfied; otherwise the Exclusivity Payment shall be non-
refundable. If the City accepts the Offer Notice and the Parties close on the resulting purchase
and sale agreement, the cash portion($5,000) of the Exclusivity Payment shall be credited to
the purchase price for the Property at closing.
6. Exclusive Negotiations. During the Exclusivity Period the City agrees it will negotiate in good faith
and exclusively with Buyer in efforts to arrive at terms acceptable to the Parties for the purchase and
sale of the Property. During such period the City will not enter into negotiations with a prospective
third party purchaser nor will it make any offers to,or accept any offers made by, a third party for the
purchase and sale of the Property.Nothing herein precludes the City from discussing the status of the
Property with any interested party.
7. Extension of Exclusivity Period. The City Manager may, in the City Manager's sole discretion and
without the necessity.of obtaining further approval from the Bozeman City Commission, extend the
Exclusivity Period for up to an additional three(3)months.
8. Termination. This Agreement and all rights, duties, and obligations under it, shall terminate and be
of no futher force or effect as follows:
(a) If no Offer Notice is given within the Exclusivity Period,the expiration of the Exclusivity
Period(including any extension granted);
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(b) If an Offer Notice is given within the Exclusivity Period, the expiration of the period of
time within which the City is required to respond to the Offer Notice; or
(c) Buyer elects to terminate based on contingencies provided in Section 3.6v of this
agreement
9.. Assignment. Buyer shall not assign its rights, duties, and obligations under this Agreement without
fast obtaining the City's written consent. Such consent will not be unreasonably withheld.
10. Notices. Any notice, demand, request or other communication which either Party hereto may be
required or may desire to give under this Agreement shall be in writing and shall be deemed to have
been properly given if(i) hand delivered (effective upon delivery), (ii) mailed (effective three (3)
days after mailing) by United States registered or certified mail, postage prepaid, return receipt
requested, (iii)sent by a nationally recognized overnight delivery service(effective one(1)day after
delivery to such courier) or (iv) sent by facsimile (effective upon confirmation of transmission), in
each case, addressed as follows:
If to the City:
The City of Bozeman
Attn: City Manager
City Hall
121 North Rouse Avenue
Bozeman,Montana 59715
If to Buyer:
Micropolitan Enterprises, LLC
Powder River Company, LLC
Box 1152
Bozeman, Montana 59715
A Party may change its above address by a notice in writing delivered to the other Party in accordance
with the provisions of this Section.
11. Miscellaneous.
(a) Principals of Interpretation. No inference in favor of or against a Party shall be drawn from
the fact that such Party has drafted any part of this Agreement. The Parties have both
participated substantially in its negotiation, drafting, and revision, with advice from counsel
and other advisers.A term defined in the singular may be used in the plural, and vice versa, all
in accordance with ordinary principles of English grammar, which also govern all other
language in this Agreement. The words "include" and "including" shall be construed to be
followed by the words"without limitation."
(b) Time is of the Essence. Time of payment and performance shall be of the essence of each and
every provision of this Agreement.
(c) Attorney Fees. Should either Party incur any costs or expenses, including reasonable attorney
fees(including those of the Bozeman City Attorney),in enforcing any of the provisions of this
Agreement,the other or unsuccessful Party shall reimburse the prevailing Party on demand.
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(d) Entire Agreement. This Agreement contains the entire agreement and understanding of the
Parties with respect to its subject matter, and supersedes any and all prior negotiations and
understandings. This agreement shall not be modified, amended or changed in any respect
except by a written document signed by all Parties hereto.
(e) Captions. The captions, titles and section headings throughout this Agreement are for
convenience and reference only and shall not be deemed or held to explain,modify,amplify or
aid in the interpretation, construction or meaning of the provisions of this Agreement, nor to
define,limit or describe the scope or intent of a particular section.
(f) Governing Lmv. This Agreement and any disputes arising hereunder shall be governed
hereafter and construed and enforced in accordance with the laws of the State of Montana,
without reference to principles of choice or conflicts of laws. The Parties agree that any action
or proceeding arising out of or related in any way to this Agreement shall be brought solely in
a court of competent jurisdiction sitting in Gallatin County,Montana.
(g) Recording.Either Party may elect to record an abstract of this Agreement or any memorandum
of it, in a form agreeable to both parties.
(h) Counterparts; Facsimile. This Agreement (and any amendment hereto) may be executed in
any number of counterparts, all of which when taken together will constitute one and the same
instrument. A counterpart signed and delivered by facsimile transmission copy thereof or via
electronic means in pdf,tiff,or jpeg file format shall be as valid and effectual as the original of
that counterpart.
(i) Incorporation of Recitals. The Recitals A-G set forth above are fully incorporated herein by
reference as if fully set forth.
IN WITNESS WHEREOF,the Parties have executed this Agreement on the date set forth above.
THE CITY:
City of Bozeman
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by. 1
Chris A. Kukulski, City Manager
BUYER:
Micropolitan Enterpris s LLC
by:
ayton R. Schubert, Member
Powder River Company,LLC
by:
Quin Williams,Managing Member
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