HomeMy WebLinkAboutA4. Adoption of Ordinance 1941
Memorandum for Provisional Adoption of Ordinance 1941 Page 1 of 6
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission.
FROM: Brit Fontenot, Director of Economic Development.
SUBJECT: Provisional Adoption of Ordinance 1941 – an Ordinance Ratifying the City
Manager’s Signature on a Purchase and Sale Agreement Transferring Ownership of the North
Park Property to Micropolitan Ent., LLC and Powder River Comp., LLC. MEETING DATE: April 4, 2016
AGENDA ITEM TYPE: ACTION - Requires a 4/5 vote of the Commission required for
adoption of Ordinance 1941).
RECOMMENDATION: Staff recommends the Commission conduct a public hearing and, by
at least 4/5 vote, provisionally adopt Ordinance 1941 and direct staff to return to the Commission
for a second reading of the ordinance on the April 18, 2016 Consent Agenda.
RECOMMENDED MOTION LANGUAGE: I move to provisionally adopt Ordinance 1941
and direct staff to return to the Commission for a second reading on the April 18, 2016 Consent
Agenda.
I. AUTHORITY TO SELL REAL PROPERTY
Ordinance 1941 authorizes the sale of the North Park property. (ATTACHMENT 1) The
City Commission has authority over the disposition of property owned by the City pursuant to
Chapter 2.06 of the Bozeman Municipal Code (BMC). This chapter was created by Ordinance
1658 (2006) and later amended by Ordinances 1683 (2006) and 1713 (2007).
II. PURCHASE AND SALE AGREEMENT: OFFER PRICE AND
CONTINGENCIES OF THE SALE OF THE NORTH PARK PROPERTY
The City has been working with Micropolitan Ent., LLC and Powder River Comp., LLC (the “Buyers”) to negotiate a purchase and sale agreement for the North Park Property. The
attached agreement is the result of these extensive negotiations. The Commission action is to
ratify the City Manager’s approval of this agreement via approval of Ordinance 1941 with
at least a 4/5 affirmative vote. (ATTACHMENT 2)
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The negotiated sale price for the property is $1,655,000, 100% of the current
appraised value. As a condition of the Right of First Offer Agreement, see Sections II and IV
above, the City re-appraised the North Park property in January, 2016. The appraised market value of the 85.35-acre North Park property is $1,655,000, or approximately $19,391 per acre. The City has remained under contract with the Buyers for the sale of the North Park
property for approximately 2 years. Over that period of time the City has fulfilled some
Agreement contingencies and negotiated others. There are but two contingencies in the current Purchase and Sale Agreement; 1) the ratification of the City Managers signature on the Purchase and Sale Agreement, and 2) approval of a long term lease with the State of Montana.
Contingencies for the sale of the North Park property as stated in the agreement include
(p 3, Sec. 6, A & B of the Purchase and Sale Agreement, Attachment 2):
A) Bozeman City Commission Ratification Contingency: The City’s desire to accept this Offer shall be evidenced by the City Manager’s execution of the Agreement according to the terms
herein. The formal Effective Date and contract is deemed final however only upon
ratification by the Bozeman City Commission of the City Manager’s execution of this
Agreement by duly adopted ordinance of the Bozeman City Commission pursuant to the requirements of Section 2.11 of the Bozeman City Charter and Chpt. 2, Art. 6, Div. 5, BMC. Final ratification of this agreement shall then be effective thirty (30) days after final adoption
of such ordinance (“Effective Date”). Should the Bozeman City Commission fail to ratify the
City Manager’s approval and execution of this Agreement for whatever reason, this
Agreement shall be terminated, BUYER shall be entitled to a refund of Earnest Money, neither SELLER nor BUYER shall have further obligations to the other. If the Effective Date
is not established within ninety (90) days of the date of this offer, then at BUYERS election
this offer shall terminate and BUYER shall be entitled to a refund of Earnest Money.
B) Long Term Lease With The State Of Montana: The closing of this Agreement is contingent
on BUYER, at its complete discretion, entering into a long-term lease with the State of
Montana prior to the Closing date for all or a portion of the State Trust Lands located south
of the common boundary line between the Property and the abutting State Trust Lands in Section 36, Township 1 South, Range 5 East, MPM, Gallatin County, Montana (the “State Lands”) with terms satisfactory and acceptable to BUYER (“State Lands Lease”). If BUYER
fails to execute the State Lands Lease with terms satisfactory and acceptable to BUYER
including to its satisfaction the resolution of the issue known by both parties with regard to
the eagle’s nest located on the State Lands, by the Closing date, BUYER, in its sole discretion, may either (i) waive this contingency or (ii) give SELLER written notice prior to
the Closing date (or any extension thereto) of BUYER’s desire to terminate the Agreement,
and upon such notice this Agreement shall terminate and BUYER shall be entitled to a refund
of Earnest Money.
III. NORTH PARK APPRASIALS
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In January, 2016, as a condition of the Right of First Offer Agreement, the City
conducted a second appraisal on the North Park property. The appraisal report valued the 85.35-
acre North Park property at $1,655,000 or approximately $19,391 per acre. In February, 2014 the City conducted the first appraisal on the North Park property. The
appraisal determined an “as is” market value of $850,000, or $10,000 per acre. As part of the
appraisal, the City requested an “as proposed” value. The “as proposed” value assumes viable
access to the site. The “as proposed” value is estimated at $1,536,300, or $18,000 per acre. The difference between the 2014 “as proposed” valuation and the 2016 valuation is
$118,000 or approximately $1,391 per acre.
IV. BACKGROUND: On August 17, 2015 the City Commission authorized the City Manager to sign a Right of
First Offer Agreement with Micropolitan Ent., LLC and Powder River Comp., LLC. The
minutes from the August 17, 2015 City Commission meeting can be found at the hyperlink.
On July 7, 2014 the City Commission held a public hearing on Ordinance 1885. At that
time, the Commission considered this, and other related staff memoranda, written and spoken
public testimony, and provisionally adopted Ordinance 1885 by a 5-0 vote thus ratifying the City
Manager’s signature on the attached Agreement to Sell and Purchase Real Estate, the North Park
property, with Micropolitan Ent., LLC and Powder River Comp., LLC (the “Agreement”). Ordinance 1885 was approved on second reading on July 21, 2014 and became effective on
August 23, 2014. The minutes from the July 7 and July 21, 2014 City Commission meetings can
be found at each hyperlink.
For a complete history of the North Park project please refer to the January 14, 2013 and May 13, 2013 staff memos to the City Commission.
In January, 2013, the City Commission, via Resolution 4426, unanimously adopted the
North Park Concept Land Use Plan (the Plan). Additionally the North Park project webpage
contains a link to the adopted plan and additional North Park materials including the North Park Marketing Brochure, Phase 1 Environmental Site Assessment and the North Park Economic
Impact Study and Job Benefit Analysis.
In August, 2013, after conducting a public hearing, the Commission determined the North
Park property was no longer necessary for the conduct of City business and that the public interest would be furthered by disposing of the property. The Commission directed staff to hire a real estate professional to list and market the property for sale.
V. THE NORTH PARK PROPERTY
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The North Park property was purchased in July, 2003, without the benefit of an appraisal,
for $3,000,000 dollars. The North Park property consists of 85.35 acres of unimproved land
zoned M-2 (manufacturing and industrial) and within the boundaries of an industrial tax increment finance, or TIF, district. The legal description of the North Park property is:
TRACTS 1A, 2A, 3A & 4A OF COS 2153 LOCATED IN THE NW ¼ & NE ¼
OF SECTION 36, TOWNSHIP 1 SOUTH, RANGE 5 EAST, PRINCIPAL
MERIDIAN MONTANA, CITY OF BOZEMAN, GALLATIN COUNTY, MOTANA.
The North Park property is generally located within the Bozeman City limits, between
Frontage Road (Highway 10) and Interstate 90 and interchanges at the North 7th and North 19th
Avenues and is proximate to Redwing Drive, Reeves Road and North 7th Avenue. Click here for a map of the North Park property generally showing the physical relationship between the City, and neighboring State of Montana owned properties.
Currently, public infrastructure is limited on the property. Additionally, access to the
property is limited to one at-grade railroad crossing to the north and west. There is an absence of a road network, fiber or conduit network, curbs, gutters, sidewalks and functional water and sewer services. Additionally, there are poor intersections for ingress and egress and limited
connectivity to the existing street network.
VI. RIGHT OF WAY DEEDS – WHEAT DRIVE AND FLORA LANE In 2015 the City acquired two public access easements across State land. Under terms of
the agreements, the City purchased and recorded two Right of Way Deeds with the Gallatin
County Clerk and Recorder; Wheat Drive and Flora Lane.
VII. UNRESOLVED ISSUES
There are three related unresolved issues. Decisions and timeliness with one, impacts
each of the other issues:
A) Development restrictions related to the proximity of a federally protected bald eagle nest located in a cottonwood tree along the bank of Mandeville Creek on
State lands to the south of the adjacent City owned property. The State has
applied to the Fish and Wildlife Service, a federal agency, for the appropriate
permit(s) to allow for mitigation. B) Anticipated May 24, 2016 Land board decision on buyers proposed ground lease of State land.
C) Closing date is dependent on when FWS approves permit and subsequent Land
Board decision on State land lease.
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Inability of, or protracted delays in, the State to receiving the proper permits from the
Fish and Wildlife Service will have an impact on either closing on the property in FY16, or
closing on it at all with the current buyers.
VIII. ALTERNATIVES
There are no back-up offers at this time. An alternative to selling the North Park property
is to either determine a municipal use and maintain ownership or place the property back on the
market. IX. FISCAL EFFECTS
Upon sale, because the City is using a real estate broker, a commission of 5% 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.
The City’s North Park Economic Development District, an industrial TIF district,
invested approximately $225,000 in development of the preliminary plat in 2006-2008. 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 $105,000. 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. There are
ongoing discussions with the buyers that if the property is sold, possibly sun-setting the existing industrial TIF and creating a Targeted Economic Development District (TEDD). The City receives revenue from an agricultural lease and cell tower lease on the property,
which is deposited into the Solid Waste Fund. In 2015, the City received approximately $5,148
from the agricultural lease and approximately $7,260 from the cell tower lease. Should the City sell the property, the leases will be assigned to the new property owners and these revenues will no longer be realized by the City.
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, for which we have no basis; the goal is to turn the property over to a private owner and developer who will, in a timely manner, move forward with plans for
development which result in job creation and industry diversification as originally intended by
the Commission.
Additional benefits include the addition of the North Park property on the City tax rolls, investment in the industrial TIF or TEDD, and new development in the largest tract M-2 zoned
property remaining 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.
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X. ATTACHMENTS:
1) Ordinance 1941; and
2) Purchase and Sale Agreement for the Sale of the North Park Property. Report prepared on March 24, 2016
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Page 1 of 4
ORDINANCE NO. 1941
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN, MONTANA, RATIFYING THE CITY MANAGER’S SIGNATURE ON A PURCHASE AND SALE AGREEMENT FOR THE SALE AND CONVEYANCE OF THE NORTH PARK PROPERTY DESCRIBED AS TRACTS 1-A, 2-A, 3-A AND 4-A OF
CERTIFICATE OF SURVEY 2153 CITY OF BOZEMAN, GALLATIN COUNTY,
MONTANA INCLUDING CONTINGENCIES REGARDING THE SALE AND REQUIRING THE PROCEEDS FROM THE SALE BE DEPOSITED IN THE CITY’S LANDFILL POST-CLOSURE FUND, AND PROVIDING FOR AN EFFECTIVE DATE.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE
CITY OF BOZEMAN, MONTANA: Section 1
Legislative Findings.
The City Commission hereby makes the following findings in support of adoption of this Ordinance:
1. The City of Bozeman owns real property known as the North Park Property,
formerly known as the Mandeville Farm identified as Tracts 1-A, 2-A, 3-A and 4-A
of Certificate of Survey 2153 located in the NW ¼ and NE ¼ of Section 36, Township 1 South Range 5 East, Principle Meridian Montana, City of Bozeman,
Gallatin County, Montana.
2. Section 2.11 of the Bozeman City Charter requires adoption of an ordinance when
the City “convey[s]… or authorize[s] the conveyance… of any lands of the city.”
3. Section 2.06.850 of the Bozeman Municipal Code (BMC) (Ordinance 1658) grants the City Commission the jurisdiction and power to sell any real property, however
acquired, belonging to the City that is not necessary to the conduct of city business
or the preservation of property.
4. Section 2.06.890.B, BMC, subject to section 2.06.870.D, authorizes the sale of City
property for not less than 90 percent of the appraised value. 5. Section 2.06.900, BMC provides that “[N]o sale of real property shall be made of
any property unless it has been appraised within one year prior to the date of the
sale.” On January 16, 2016 the appraised market value was determined to be
$1,655,000.
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6. On August 26, 2013, the Bozeman City Commission conducted a public hearing wherein the Commission determined by a vote of 4 – 0, adopted the findings included in the August 26, 2013 staff memorandum and concluded the City-owned
portion of the North Park property, described in Section II of the staff memo, was
no longer needed for public use and the public interest will be furthered by the sale
of the property as provided for in §§ 2.06.880 through 2.06.910 of the Bozeman Municipal Code and directed the City Manager to complete all steps necessary to negotiate a sale and transfer of the property and return to the Commission with an
ordinance authorizing the City Manager to execute a Purchase and Sale Agreement
for same.
7. Should the Bozeman City Commission provisionally adopt this ordinance by no less than a two-thirds vote of its total membership, notice of provisional adoption of this ordinance shall be published in compliance with Sect. 7-1-4127, MCA, prior to
final adoption.
Section 2 The Bozeman City Commission hereby ratifies the City Manager’s signature on the attached
Agreement to Sell and Purchase Real Estate (Attachment 1) and hereby authorizes the City
Manager 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. The property is legally described as Tracts 1-A, 2-A, 3-A and 4-A of Certificate of Survey 2153 located in the NW ¼ and NE ¼ of Section 36, Township 1 South Range 5 East, Principle Meridian Montana, City of
Bozeman, Gallatin County, Montana, according to the official Certificate of Survey thereof on
file and of record in the office of the Clerk and Recorder of Gallatin County, Montana.
The Commission authorizes, subject to fulfillment of the contingencies as stated in the attached Agreement and those contingencies listed below, the conveyance of the fee title to the Property
by warranty deed to Micropolitan Ent., LLC and Powder River Comp. LLC and/or their assigns:
1. The sale price shall be One Million Six Hundred and Fifty-Five Thousand Dollars ($1,655,000.00). 2. The purchaser shall pay cash to the City at closing.
3. The Commission’s ratification of the City Manager’s signature shall not be effective until
30 days after final adoption of this ordinance; as such, the Agreement to Sell and
Purchase Real Estate shall not be binding on the City of Bozeman until that time. Section 3
Proceeds of the sale shall be deposited in the City’s Landfill Post-Closure Fund.
Section 4 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
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of the City of Bozeman not in conflict with the provisions of this ordinance shall remain in full force and effect.
Section 5
Savings Provision. This ordinance does not affect the rights and duties that matured, penalties that were incurred or proceedings that were begun before the effective date of this ordinance. All other
provisions of the Bozeman Municipal Code not amended by this Ordinance shall remain in full
force and effect.
Section 6 Severability.
That should any sentence, paragraph, subdivision, clause, phrase or section of this
ordinance be adjudged or held to be unconstitutional, illegal, or invalid, the same shall not affect the validity of this ordinance as a whole, or any part or provision thereof, other than the part so decided to be invalid, illegal or unconstitutional, and shall not affect the validity of the Bozeman
Municipal Code as a whole.
Section 7
Codification Instruction.
This Ordinance shall not be codified but shall be kept by the City Clerk and entered into a
disposition list in numerical order with all other ordinances of the City and shall be organized in
a category entitled “Ordinances for Sale, Transfer, or Conveyance of Real Property.”
Section 8
Effective Date.
This ordinance shall be in full force and effect 30 days after final adoption.
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PROVISIONALLY ADOPTED by the City Commission of the City of Bozeman,
Montana, on first reading at a regular session held on the 4th day of April, 2016.
____________________________________
CARSON TAYLOR Mayor
ATTEST:
_______________________________
PEARL MICHAELSON Interim City Clerk
APPROVED AS TO FORM:
_________________________________
GREG SULLIVAN
City Attorney
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