HomeMy WebLinkAboutC3. Ordinance 1941
Memorandum for Final 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: Final 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 18, 2016
AGENDA ITEM TYPE: CONSENT - Requires a 4/5 vote of the Commission required
for adoption of Ordinance 1941).
RECOMMENDATION: Staff recommends the Commission finally adopt, by at least 4/5
vote, Ordinance 1941 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. If approved, the effective date of Ordinance 1941 is May 18, 2016.
RECOMMENDED MOTION LANGUAGE: I move to finally adopt Ordinance 1941
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.
. I. PROVISIONAL ADOPTION OF ORDINANCE 1941
On April 4, 2016 the City Commission, by a vote of 4 – 0, unanimously approved the
provisional adoption of Ordinance 1941 and directed staff to return to the Commission for a
second reading of Ordinance 1941 on the April 18, 2016 Consent agenda.
II. 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).
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Memorandum for Final Adoption of Ordinance 1941 Page 2 of 6
III. 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)
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
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Memorandum for Final Adoption of Ordinance 1941 Page 3 of 6
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.
IV. NORTH PARK APPRASIALS
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.
V. 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.
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Memorandum for Final Adoption of Ordinance 1941 Page 4 of 6
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.
VI. THE NORTH PARK PROPERTY
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.
VII. 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.
VIII. 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
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Memorandum for Final Adoption of Ordinance 1941 Page 5 of 6
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.
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. IX. 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.
X. 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.
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Memorandum for Final Adoption of Ordinance 1941 Page 6 of 6
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.
XI. ATTACHMENTS:
1) Ordinance 1941; and 2) Purchase and Sale Agreement for the Sale of the North Park Property.
Report prepared on April 6, 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
GENERAL 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.
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
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Ordinance 1885, Purchase and Sale Agreement, North Park Property
Page 2 of 4
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 General 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
of the City of Bozeman not in conflict with the provisions of this ordinance shall remain in full
force and effect.
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Ordinance 1885, Purchase and Sale Agreement, North Park Property
Page 3 of 4
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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Ordinance 1885, Purchase and Sale Agreement, North Park Property
Page 4 of 4
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
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 18th day of April,
2016. The effective date of this ordinance is May 18, 2016.
_________________________________
CARSON TAYLOR
Mayor
ATTEST:
_______________________________
PEARL MICHAELSON
Interim City Clerk
APPROVED AS TO FORM:
_________________________________
GREG SULLIVAN
City Attorney
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