HomeMy WebLinkAboutSale of the North Park Property 3-24-14 Memo and Attachments
Memorandum for Provisional Adoption of Ordinance 1885 Page 1 of 8
Commission Memorandum
REPORT TO: Honorable Mayor and City Commission.
FROM: Brit Fontenot, Director of Economic Development.
SUBJECT: Provisional Adoption of Ordinance 1885 – 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: March 24, 2014.
AGENDA ITEM TYPE: Action (4/5 vote of the Commission required for adoption of
Ordinance 1885).
RECOMMENDATION: Staff recommends the Commission hold a public hearing on the
ordinance, consider this, and other related staff memoranda, written and spoken public
testimony, and provisionally adopt by a two-third majority (i.e. four affirmative votes) Ordinance
1885 ratifying the City Manager’s signature, upon expiration of the 30 day effective period, 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”).
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 1885 and findings articulated by the Commission during discussion, I
hereby move to provisionally adopt Ordinance 1885 ratifying the City Manger’s signature on the
Agreement to Sell and Purchase Real Estate, the North Park property, with Micropolitan
Enterprises, LLC and Powder River Company, LLC.
I. AUTHORITY TO SELL REAL PROPERTY
Ordinance 1885 authorizes the sale of the North Park property. (EXHIBITS A, A1 &
A2) The City Commission has authority over 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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II. BACKGROUND:
For a complete history of the North Park project please refer to the January 14, 2013
(EXHIBITS B & B1) 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 May, 2013, the Commission authorized staff to prepare and publish a Request for
Proposals (RFP) for the acquisition of professional realty services and authorized the North Park
Realtor Selection Committee composed of EDC members and City staff (the Committee) to select a real estate broker to negotiate the sale of the property should the Commission make the determination that the North Park property is not needed for public use and that the public
interest is furthered by the sale of the property. Both the Plan and the direction to engage a
realtor were unanimously supported by the Commission.
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, (EXHIBITS C & C1). The
Commission directed staff to hire a real estate professional to list and market the property for
sale. A Committee was formed to produce an RFP. The Committee reviewed the three
proposals submitted and selected CBRE to represent the City in the sale of the North Park
property. On September 25, 2013, the City signed the listing agreement with CBRE for a one-
year term, with an option to renew the agreement for one additional year, (EXHIBIT D). Since the listing agreement was signed, CBRE has actively marketed the property nationwide. To date,
two parties have shown interest in the North Park property but only one has agreed to terms.
In February, 2014, an appraisal was ordered for the North Park property. The appraisal
determined an “as is” market value of $ 10,000 per acre, or $850,000 (EXHIBIT E).
III. THE NORTH PARK PROPERTY
The North Park property was purchased in July 2003 for $3M dollars. The North Park
property consists of approximately 85 acres of unimproved land zoned M-2 (manufacturing and industrial) and within the boundaries of an industrial tax increment finance, or TIF, district.
Currently, the Industrial TIF District fund is experiencing a deficit of approximately $180,000.
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
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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 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, 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. RATIONALE FOR THE SALE OF THE NORTH PARK PROPERTY
In August of 2013, the Commission determined the North Park property was no longer
necessary for the conduct of City business and the public interest findings supported the sale. In doing so, the Commission considered and adopted the following findings:
1. The North Park property, if developed as proposed in the Plan, furthers the City’s
goals of job creation and economic diversification as described in the
Commission’s 2013 – 2014 Priorities; 2. The aggregate costs to date, approximately $5.25M, of the North Park property are high including purchase price, costs of preliminary plat and the MMIA
settlement, with very little return on this investment. The sale of the property
would help recoup some portion of the investment made by the City over the past
decade. Additional value, through private sector job creation and industry diversification, could be realized by the sale of the property; 3. The costs to the City to fund basic infrastructure to facilitate development is
higher than the City is willing to invest to develop the property. According to the
Plan, Phase I development is estimated at $5.4M. Phase I includes the majority of
the City owned portion of the North Park property; 4. The Plan, through local research and data collection, establishes the market viability of developing the property. In addition to the Plan, the partnership has
generated additional documents referenced in this memorandum. Through these
documents, a great deal of value has been created for the North Park that, once the
city-owned portion is sold, can be utilized to execute the development of the property; 5. There is both local and national interest in the sale or lease of the property for
private development. That interest has been generated, primarily, by the Plan;
6. Current commercial real estate market trends demonstrate increasing values of
commercial real estate throughout the Bozeman area;
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7. Sale of the North Park property supports the City’s desire to facilitate the
development of the property without the negative perception that as property
owner, the City may provide itself exemptions or variances to its own regulatory
processes; 8. The City does not have the staff resources or expertise to develop the property without significant outside assistance; and
9. There are significant bureaucratic implications of creating an additional layer of
quasi-governmental administration through the creation of a development
authority structure to manage the sale or development of the property. In considering the above, Staff provided the following additional discussion in support of
the determination that sale of the property furthers the public interest. Primarily, the objective of
the North Park Plan was to raise awareness of the economic development potential, in terms of
job creation and economic diversification, existing at the North Park properties. Additionally, an objective of the Plan was to demonstrate how governmental organizations and the private sector can work together to support a vision greater than any one partner organization. Also, Plan
objectives include provision of locally supportable, market based economic analysis using local
data, codes, standards and regulations, realistic infrastructure cost estimates and timelines
through multiple phases and viable use patterns, all to facilitate informed decision making. Finally, given rapidly changing market conditions and increasing development costs, the Plan established a sense of urgency for the sale and development of the North Park.
Throughout the project, selling all or part of the City-owned portion of the North Park
property at anytime, conditionally or unconditionally, remained a viable consideration. CBRE has marketed the property touting the aforementioned benefits as part of the overall strategy. The buyers have reviewed the North Park material and believe the property does have the
potential set forth in the Plan vision.
Additional rational for the “as is” sale of the North Park property include: 1. The buyer desires to begin development of the property immediately;
2. The property has access limitations;
3. The property has infrastructure limitations; and
4. The City will apply the proceeds to the Landfill Post-Closure Fund. Private ownership of the North Park property will likely result in a more timely and cost
effective development resulting in the catalyst for job creation and industry diversification
originally envisioned by the Commission.
VI. CONDITIONS OF THE SALE OF THE NORTH PARK PROPERTY
Conditions for the sale of the North Park property as stated in the agreement include:
1. The purchase price for the property is the greater of (i) $1,280,550 or (ii) 100% of appraised value, as determined by an appraisal ordered by Seller,
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said appraisal to have an effective date within one (1) year of the Closing Date. If 100% of the appraised value exceeds $1,280,550 by more than ten
percent (10%), Buyer may, within ten (10) days of its receipt of a copy of the
appraisal elect to terminate this Agreement by giving written notice of such termination to Seller, and upon termination pursuant to this paragraph, the Earnest Money [$10,000] shall be promptly returned to Buyer. If Buyer fails
to give notice of such election within the ten (10) day time period, Buyer will be
deemed to have waived its right to terminate this Agreement for the reasons set
forth in this paragraph, and the Purchase Price shall be 100% of the Property’s appraised value (Exhibit A1, City’s Counter Offer dated February 28, 2014, Section I);
2. The buyer and City, entering into a memorandum of understanding (MOU)
regarding the extension of the existing TIF district and the allocation of TIF funds
for costs resulting from Bozeman Solvent Site contamination including but not limited to those costs associated with the Solvent Site water main improvement payback district (Exhibit A1, Purchase and Sale Agreement dated January 27,
2014, Line 133);
3. This offer is contingent on the City of Bozeman approving a preliminary plat with
conditions acceptable to Buyer prior to the Closing Date. This offer is also contingent on vehicular and pedestrian access that is acceptable to Buyer. Nothing in the previous two sentences, however, shall be construed to require that the City of Bozeman approve any particular conditions or access
proposed by Buyer, it being understood by Buyer that the City will review
Buyer’s application for preliminary plat in its governmental and regulatory capacities, applying its normal development review criteria and procedures as it would in reviewing any other application. Contingency release date for
preliminary plat approval and access approval is 18 months from the date all
parties have executed the Buy-Sell. If the preliminary plat review process is
underway and the Buyer is proceeding diligently, either party may apply to have the contingency release date extended for up to an additional 12 months, and the other party shall not unreasonably withhold consent to such extension request
(Exhibit A1, City’s Counter Offer dated February 28, 2014, Section IV);
4. The City will provide the buyer with a copy of the Phase 1 Environmental Assessment (EA) (Exhibit A1, Purchase and Sale Agreement dated January 27, 2014, Addendum 1, Line 11); 5. The City will provide the buyer with a copy of the Preliminary Engineering
Report (PER) (Exhibit A1, Purchase and Sale Agreement dated January 27,
2014, Addendum 1, Line 15);
6. Leases, both cell tower and agricultural, transfer with the property (Exhibit A1, Purchase and Sale Agreement dated January 27, 2014, Addenda 5 and 6, Lines 11 and 23); and
7. The Commission must ratify the City Manager’s signature on the Purchase and
Sale agreement (Exhibit A1, Purchase and Sale Agreement dated January 27, 2014, Addendum 4, Line 11).
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V. THE DEVELOPMENT PROPOSAL
The buyers, Micropolitan Ent., LLC and Powder River Comp., LLC, have indicated that
they intend to develop the property in phases and are prepared to begin seeking entitlements immediately. Initially, a site, or sites, will be prepared for the construction of one or more buildings compatible with the existing zoning (M-2). On a portion of the property, the buyers
intend to consolidate business activities currently spread about community onto one site for the
purposes of accommodating current and future business growth and increasing efficiencies by
consolidating disparate activities. Other phases may include additional build-out for other compatible M-2 uses.
The North Park concept land use plan anticipated M-2 uses on the city-owned portion of
the site. The Plan sought to take advantage of the existing adjacency to a main-line railroad track
and partnerships with the State, through the DNRC, for improved access to the parcel. The adjacency to rail may be important to the buyer in the future. The buyer intends to work with the DNRC to secure the access required for development.
VI. MONTANA MUNICIPAL INTERLOCAL AUTHORITY SETTLEMENT
On December 10, 2012 the Commission authorized the approval of a settlement with the Montana Municipal Interlocal Authority (MMIA) over coverage of a $3M judgment against the
City regarding the City’s purchase of the Mandeville Farm. The settlement requires the City
reimburse MMIA in the amount of $2M over the next three fiscal years. The City Manager
signed the agreement December 20, 2012. The City has made two payments to the MMIA totaling approximately $1.3M. The final payment of $675,000 is scheduled for July, 2014.
Under section three of the settlement agreement, the City is required to pay additional
money to the MMIA only if the City obtains a “profit” from the sale. Profit is defined as “any
amount Bozeman receives over the $3M purchase price, plus the “costs of development.” A sale for just over $1.2M will not require any profit payment to the MMIA. Section four of the agreement requires notice of the sale to the MMIA. It states that if the property is sold the City
will provide the MMIA, within sixty (60) days of closing, an accounting of all costs of
development which the City believes should be credited against the potential profit. To date,
there are none. Additionally, within 30 days of notifying the MMIA of the sale, the City and the MMIA must meet to confer on the accounting for the effect of the costs of development on the profit. Again, as there will be no profit from the sale (as defined by the settlement agreement)
there will be no payment to the MMIA. After expiration of the 30 day effective period of
Ordinance 1885, the City Manager will contact MMIA informing them of the pending
transaction. VII. UNRESOLVED ISSUES
There are currently no unresolved issues as it relates to the sale of the North Park
property. The property is being sold “as is.” Seasonal water rights are proposed to transfer with the property as are the cell tower and agricultural leases currently in place.
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VIII. ALTERNATIVES
The listing agreement is in effect until August 29, 2014, with an additional one year
option to extend the agreement. An alternative to selling the property to the buyers listed herein is to maintain the listing with CBRE until at least August 29, 2014 and to work with the DNRC to secure access through State property as was attempted several years ago when the transfer
station was under consideration and the property was preliminarily platted for that proposed use.
When the transfer station discussion ended, further negotiations with the State on securing the
access through easements on the DNRC property ceased without executing the easement documents.
If the City were to retain ownership of the property and continue to market it, the
property value may rise due to an overall strengthening of the commercial real estate market.
The value would likely increase further if access easements were in place. While this alternative is feasible, Staff suggests that the timing of such work may not be
in the best interest of the City for the following reasons:
1. Since the initial listing in September of 2013, we have had one (1) signed Purchase and Sale agreement; 2. The current offer [$1.28M] is higher than the current appraisal [$10,000 per acre
or $850,000] and there is no way to predict how the commercial real estate market
may change the sale is delayed;
3. If a new purchase and sale agreement is negotiated with this or another buyer, it will likely be for the appraised value of $10,000 per acre; 4. We do not know the value of access easements needed to secure appropriate
access through the State property;
5. We do not know how long it will take or whether the easements will be granted
by the State Land Board to secure appropriate access through the State property; 6. It will take a considerable amount of staff time to negotiate the easements and achieve approval by the State Land Board;
7. The listing agreement, without extension, terminates in 4.5 months;
8. This effort will further slow the sale of the property to another interested party
and reduce the time it can work for the community creating jobs and diversifying the economy; and 9. Given what we know about the property today, limited infrastructure and access,
it is unlikely that even once the access issues was solved, the value of the North
Park property would likely not reach that of the original purchase price.
IX. 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
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counsel. While the final purchase price is contingent on an appraisal, the established floor for
the sale is $1,280,550. At this price, the City would receive approximately $1,203,00 upon
closing, after realtor commission.
The City’s Industrial Tax Increment Finance (TIF) District invested approximately $225,000 in development of the preliminary plat in 2006-2008. The plat is currently active and
the buyers are considering an extension. 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 ($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.
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.
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.
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.
Staff recommends that the proceeds from the sale of the North Park property be deposited in the Landfill Post-Closure Fund, to be used to assist with Landfill site remediation and monitoring.
EXHIBITS:
A Ordinance 1885; A1 Purchase and Sale Contract Documents;
A2 COS 2153;
B August 26, 2013 City Commission Staff Memo;
B1 August 26, 2013 City Commission Meeting Minutes; C January 14, 2013 City Commission Staff Memo; C1 January 14, 2013 City Commission Meeting Minutes;
D CBRE Listing Agreement; and
E North Park appraisal. Report prepared on March 18, 2013
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ORDINANCE NO. 1885
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.
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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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 A1) 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. 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, Two Hundred and Eighty Thousand, Five Hundred
and Fifty US Dollars ($1,280,550) or no more than 10% above the appraised value,
whichever is greater. 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
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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.
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 24th day of March, 2014.
____________________________________
JEFFREY K. KRAUSS Mayor
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 ____ day of
_______________, 2014. The effective date of this ordinance is _________________, __ 2014.
_________________________________
JEFFREY K. KRAUSS
Mayor ATTEST:
_______________________________ STACY ULMEN, CMC City Clerk
APPROVED AS TO FORM:
_________________________________
GREG SULLIVAN City Attorney
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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brit Fontenot, Economic Development Director
SUBJECT: Approval of Resolution 4426 Adopting the North Park Properties Concept Land Use Plan.
MEETING DATE: January 14, 2013
RECOMMENDATION: Approve Resolution 4426 adopting the North Park Properties Concept Land Use Plan and direct Staff on the future of the city-owned North Park property.
RECOMMENDED MOTION: I move to approve Resolution 4426 adopting the North
Park Properties concept land use plan.
OR ALTERNATIVE MOTION: I move to approve Resolution 4426 adopting the North
Park Properties Concept Land Use Plan and direct staff
to pursue one of the following or an alternative option
or options provided by the Commission: 1) Maintain the current status and condition of the North Park property;
2) Sell the property in whole or part,
unconditionally or with conditions to develop
in keeping with the North Park vision; 3) Develop the property in keeping with the North Park vision;
4) Turn the property over to a
management/development authority or entity
to develop and manage the property in keeping with the North Park vision; and/or 5) Alternative option or options provided by the
Commission.
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INTRODUCTION:
Staff recommends adoption of the North Park Properties Concept Land Use Plan (the
“Plan”) through approval of Commission Resolution 4426 (Attachment 1). Adoption of the Plan does not obligate the City to implement any part, or parts, of the Plan. As provided for in the motion and vote language above, adoption of the Plan requires no further action by the
Commission. T he Commission may adopt the Plan and provide no a dditional direction;
however, staff suggests that if the Commission adopts the Plan, direction to staff concerning the
future of the City-owned portion of the North Park properties, be provided. The name of the project was changed from Mandeville Farm Concept Land Use Plan to
North Park Properties Concept Land Use Plan in order to re-launch the project without the
negative history associated with the purchase of the City-owned portion of the property in 2003
and the ensuing litigation. The settlement is now final and the City of Bozeman retains a clean and clear ownership title to the City-owned portion of the North Park properties. In the context of the Plan, “North Park property” refers to the approximately 85 acres city-owned portion of the
property formerly known as the Mandeville farm and “North Park properties” refers to the
combination of the City-owned portion and the approximately 190 acres of State of Montana
owned property managed by the Department of Natural Resources and Conservation (“DNRC”) for the benefit of the Montana public education system. BACKGROUND:
Brief History of the North Park Properties The City-owned portion of the North Park properties was purchased from John and Donna
Mandeville in July, 2003 as a potential future site of a City-owned and operated solid waste
transfer station. By 2003, the approximately 190 acres of the State-owned portion was
aggregated by the State of Montana. Most of the State-owned portion of the North Park properties was acquired at Statehood as part of the Enabling Act of 1889, the remainder was
acquired from the Mandeville family in 2003. Combined both properties total approximately
275 acres and currently support agricultural activities.
The City-owned portion of the property consists of approximately 85 acres, is zoned M-2 (manufacturing and industrial) and is within the boundaries of an industrial tax increment
finance, or TIF, district. The 190 acres of State owned property is zoned M-1 (manufacturing
and industrial). The industrial TIF District, encompassing both parcels, was established in 2006
with a 15 year term. The industrial TIF District is 6 years old and approximately 40% through
its “life”; It sunsets in 2021. Given the 20 – 30 year time horizon of the Plan, consideration should be given to extending the life of the industrial district.
The City-owned portion of the North Park property was subdivided and platted
(preliminary) but due to rising project costs, objections from nearby residents and other related
issues, the transfer station was never constructed. The City’s Economic Development Council (“EDC”) and internal Economic Development Team (“EDT”) have discussed the North Park
properties on several occasions and have suggested the existing preliminary plat design on the
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City-owned 85 acres may not represent the highest and best design for the property today. Given
the amount of money invested in the engineering and preliminary platting of the City-owned
portion of the North Park properties and despite the uncertainty of the applicability of the
existing preliminary plat design, in April, 2012, the preliminary plat on the City-owned portion was extended for two additional years. The original site design and engineering on the City-owned portion of the North Park properties was intended for an entirely different configuration
and mix of uses than being contemplated in the Plan.
Currently, infrastructure resources are limited on the property. There is an absence of a road 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. Please note that a small portion of the State-owned North Park properties, managed by
the DNRC, was identified as a possible location for future Bozeman Fire Station 7 in the Fire Protection Master Plan adopted by the City Commission in August, 2006, see page 170. RATIONALE FOR THE PLAN:
The Commission identified North Park as part of their number one 2012 –2013 Work-Plan goal via implementation of the adopted 2009 Economic Development Plan, integrating economic development principles throughout the organization through the adoption of a North Park Properties Concept Land Use Plan in collaboration with the DNRC.
To assist with the project, the EDC identified several high growth potential sectors
including manufacturing and fabrication, along with the bio-science and bio-technology, high-technology, photonics and the outdoor industry as sectors that the City should encourage and support in an effort to create new, higher paying and skilled jobs while diversifying the local and
regional economies. The North Park properties represent a physical location where these types
of economic activities can be encouraged and supported.
Plan Objectives
Primarily, the objective of the Plan is to raise awareness of the economic development
potential in terms of job creation and economic diversification that exists in the North Park
properties. Additionally, an objective of this Plan is to demonstrate how governmental organizations and the private sector can work together to support a vision greater than any one
partner organization. Also, an objective of the Plan is to provide a locally supportable, market
based economic analysis and feasibility study and concept land use plan using local data, codes,
standards and regulations and adding realistic infrastructure cost estimates through multiple
phases to establish viable use patterns, timelines and costs to inform decision making and decision makers. Finally, given market conditions and development costs, the Plan establishes a
sense of urgency for the development of the North Park.
Specific objectives for the North Park project are shown below in long, medium and short
term time horizons. The total build-out time frame for the entire North Park properties is 25- 30 years. Please note that many of the medium and short term objectives are complete or are
currently underway.
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Long term objectives (present – 25 to 30 years) 1) In partnership with the DNRC, create a place (and space) where, once developed, high
growth potential businesses including manufacturing and fabrication, bio-science and
bio-technology, high-technology, photonics and the outdoor industry and others, can
start, grow or relocate to North Park, resulting in the creation of new jobs and increased economic diversity (Underway); and 2) Continue with infrastructure improvements for undeveloped phases.
Medium term objectives (present – 12 to 24 months)
1) Identify and seek funding sources for the preliminary engineering report and Phase I infrastructure development (Underway);
2) Create and/or adopt a management and operational structure that will manage the
development of the North Park properties (Underway);
3) Identify and/or secure an anchor tenant or tenants (Underway); and 4) Commence Phase I infrastructure improvements. Short term objectives (present 3 to 6 months)
1) Complete the North Park Properties Concept Land Use Plan and the North Park Properties Marketing Brochure (Completed); 2) Commission approval of the North Park Properties Concept Land Use Plan (Underway);
3) Add the North Park Phase 1 infrastructure improvements to the CIP (Completed);
4) Identify capacity expanding, off-site improvements that may aid in the development of the
North Park properties, i.e. intersection control device at the intersection of North 7th Avenue and Griffin Drive (Completed); 5) Re-name and re-brand the project from Mandeville Farm to North Park (Completed);
6) Recreate/extend the life of the industrial TIF district;
7) Phase 1 Environmental Site Assessment (Completed);
8) Low to moderate income study, or LMI, to support a State of Montana Department of Commerce economic development public infrastructure grant application (Underway);
9) Preliminary engineering report or PER, to support a State of Montana, Department of
Commerce, CDBG for public infrastructure application (Underway);
10) Install appropriate signage at key locations on the property representing the vision of
North Park; 11) Property appraisal; and
12) Phase 1 preliminary platting.
Selling all or part of the City-owned portion of North Park at anytime, conditionally or
unconditionally, as allowed in §§ 2.06.880 through 2.06.910 of the Bozeman Municipal Code, remains an option.
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THE NORTH PARK PROPERTIES:
North Park Properties Physical Adjacencies and Geographical Assets Its size, approximately 275 acres within Bozeman city limits, as well as North Park’s
existing zoning designations (M-1 and M-2), current inclusion in an industrial TIF district,
potential as a Foreign Trade Zone (FTZ), proximity to, and frontages on, Interstate 90, interchanges at North 7th Avenue, North 19th Avenue and a future interchange near Belgrade at
the Bozeman Yellowstone International Airport, the existing rail corridor and possible rail spur
and proximities to North 7th Avenue, Griffin Drive, Frontage Road, and Bozeman Yellowstone
International Airport, collectively support the concept of the North Park properties as an ideal
location for the development of a mixed use, light manufacturing/fabrication and/or distribution centers, commercial and/or hospitality center(s), flexible, unique and specialized office and hi-
tech facilities (technology, biosciences, etc.) with the vision of creating new job opportunities
and increasing the economic diversification in southwest Montana. The North Park vision is
supported by local market data research and feasibility studies conducted by the consultants in
preparation of the final Plan.
Please note that a significant connectivity improvement suggested in the preferred option
identifies a possible overpass spanning Interstate 90 and linking Baxter Lane and Mandeville
Road. This connection is identified in the Greater Bozeman Area Transportation Plan (2007 update), p. 3-38. PARTNERSHIPS:
In the early stages of the project (2011) it became clear that the City of Bozeman and the
State of Montana, through the DNRC, would benefit by working collaboratively on the North Park project. Each piece of property has inherent advantages and disadvantages. When considered and planned separately, many of the inherent disadvantages remain, i.e. size,
transportation connections, land features (grade, creeks etc.). When aggregated, the properties
may still have certain disadvantages like access and connectivity; however, the overall benefit of
working in cooperation with the DNRC on N orth Park begins to mitigate some of the disadvantages outlined above. T he City and the DNRC are an example of an effective partnership. With the assistance of our consultants, we have jointly brought the North Park
Properties Concept Land Use Plan to life. Both organizations agree on the overall vision of the
North Park project as a place where job creating and industry diversifying businesses can come
to start, grow or relocate operations adding value to the property, the community and the region. The North Park properties and associated plans and projects represent an important piece
of the City’s economic development strategy and works in cooperation with many other
economic development projects currently underway, i.e. the MSU Innovation Campus, Gallatin
College Programs and overall cluster support and development.
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It is important to note that as the MSU Innovation Campus begins campus expansion
within the recently established South Bozeman Technology District, there will likely be
opportunities to work together to facilitate the success of each site, the Innovation Campus and
North Park, by collaborating on t he most appropriate locations for new and expanding businesses. THE NORTH PARK PROPERTIES CONCEPT LAND USE PLAN:
North Park Properties Concept Land Use Plan The North Park Properties Land Use Plan was a cooperative effort between the City, the
DNRC, CTA Architects Engineers, MXD Development Strategists, City of Bozeman Planning
Department and Grants and Engineering Divisions, the Northern Rocky Mountain Economic
Development District (the “NRMEDD”), the Prospera Business Network (“Prospera”), The Bozeman Area Chamber of Commerce (the “BACC”) and local business owners and real estate and development professionals.
As discussed above, the goals of the Plan are to recognize the community value, in terms
of job creation and economic diversification, in developing the North Park properties in some form or iteration using the Plan as a framework for development. Also, the Plan demonstrates
effective intergovernmental partnerships. Additionally, the Plan establishes the uses of the North
Park properties based largely on local sources of information, i.e. local codes and requirements,
building data, real estate market data and trends etc., while factoring in regional and national
trends and sources. While the Plan has a 25- 30 year outlook, the father away from the data collection the less reliable are the assumptions. Lastly, given market conditions, bare ground
development costs and time lines, the Plan establishes a sense of urgency.
The Planning Process
This section of the memo describes the process for creating the DNRC partnership and getting the North Park project underway.
In August, 2011, City staff was contacted by Mr. Craig Campbell, Unit Manager for the
DNRC’s Bozeman Field Office to discuss City plans for the Mandeville [North Park] property. Mr. Campbell was informed that our EDT was working on the issue and was exploring how an FTZ might function on the property. The EDT quickly entered into discussions with the DNRC
about the 200 + acres of State public school trust land. It was during those discussions that the
DNRC was informed of the availability of Community Development Block Grant (CDBG)
economic development planning grant and the City’s desire to apply for the grant in order to produce a workable plan for the City-owned 85 acres of North Park. Recognizing that the DNRC has similar goals for maximizing the economic output of the State’s school trust lands,
they were invited to join the City’s effort to seek the grant in partnership.
The DNRC manages approximately 190 acres known as the State [of Montana] school trust lands to the south, south-east, and contiguous with the City-owned North Park property. The stated goal of the DNRC is “manage the State of Montana's trust land resources to produce
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revenue for the trust beneficiaries while considering environmental factors and protecting the
future income-generating capacity of the land.” Rather than simply plan for the City-owned
portion of the North Park property, we endeavored to plan for the approximately 275 acres of
City and State-owned property. A dditionally, the DNRC matching funds in the amount of $12,500 offset the total required grant match of $25,000 by one-half.
The CDBG Economic Development Planning Grant presented a unique opportunity to
partner with the State of Montana through the DNRC and collectively plan both properties to
work together on one site. The North Park vision is to create a place in southwest Montana wherein manufacturers of products, i.e. textiles, vaccines, lasers, informatics, etc., can realize cost savings, increase efficiencies or take advantage of the existing TIF or future FTZ and/or
proximities to transportation corridors and air services by strategically locating, re-locating or
expanding operations into an area supportive of efforts to encourage job growth and increase the
economic diversity of southwest Montana. These efforts support Commission goals of creating jobs and diversifying the local and regional economies. The North Park properties represent the garden in our economic gardening strategy, a physical space where businesses can germinate,
grow, or become transplanted.
The City successfully negotiated, and the Commission approved, a Memorandum of Agreement (MOA) with the DNRC in September, 2011 to collaborate on a land use plan for the properties now collectively known as the North Park properties.
On September 19, 2011, the Commission authorized the City Manager to sign and submit
the grant application for the Montana Community Development Block Grant (CDBG), Economic Development Program 2011 Planning Grant, in partnership with the DNRC.
In November, 2011, The City received the $25,000 C DBG grant for economic
development from the Montana Department of Commerce. As outlined in the MOA, the City
and the DNRC agreed to equally divide the match requirement in the amount of $12,500 each. In January – March, 2012, the City and DNRC proceeded to draft and publish an RFP for
professional services to produce a joint land use and marketing plan for the North Park
properties. The City and the DNRC received five (5) proposals, interviewed four (4) respondents
and chose CTA Architects Engineers and MXD Development Strategists as project consultants. On April 9, 2012 t he Commission authorized the City Manager to sign a contract for
services with CTA Architects Engineers (CTA) for the commencement of the North Park
Properties Concept Land Use Plan.
On April 23, 2012 C TA provided the Commission with a special presentation outlining the goals and strategies of the project and plan. Additionally, CTA organized two public
stakeholder meetings designed to open the public discussion on t he use of the North Park
properties and identify opportunities for sustained economic development on the site. In addition
to the public stakeholder meetings and in conjunction with the Plan development, staff, Prospera, the NRMEDD, and the BACC organized and/or attended several developer and anchor tenant meetings. The goal of these meetings was twofold. First, the team intended to generate interest
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in the project. Second, we sought to listen and understand the needs of interested developers and
potential anchor tenants. We also met with private and public sector leaders. Many of whom
maintain a high level of interest in the North Park project.
Project Funding
We continue to discuss Phase I development funding. The estimated Phase I development
costs associated with the preferred development option, Option D, page 91 of the Plan, is
approximately $5.4m. With Plan completion, we have expended all the funds available from the Department of Commerce for the original planning grant.
If the Plan is approved and direction to move forward provided by the Commission, we
intend, in cooperation with the DNRC, to seek additional funding to complete the Preliminary
Engineering Report (PER). Possible sources for PER funding include the City’s General Fund, the State’s Big Sky Trust Fund and/or the U.S. Economic Development Administration. O n
December 3, 2012 t he Commission approved the Capital Improvement Plan (CIP) which
includes North Park Phase I improvements (GF185) broken down over three fiscal years:
1) Scheduled in FY 14 – $150k (for partial Phase 1 de velopment including preliminary engineering, site, geo-technical and platting work);
2) Scheduled in FY 15 - $4.6m (for partial Phase 1 development including completing the
geotechnical and platting work, if necessary, and major Phase I infrastructure
improvements);
3) Scheduled in FY 16 - $550k (for completion of the Phase 1 development)
It should be noted that the CIP process was completed prior to the North Park Properties
Concept Land Use Plan review or adoption by the Commission. North Park Phase I
improvements shown on the CIP in FY 14 – 16 will be adjusted based on Commission direction
for Plan implementation.
Also in 2012, the Commission approved adding an intersection control device(s) at the
Griffin Drive/Mandeville Road and North 7th Avenue (south and east of the North Park
properties) intersection to the CIP as unscheduled items in the amount of $500k from street
impact fees (SIF33). Public/private partnership arrangements should also be considered as a potential source of funding for Phase I infrastructure improvements.
Additionally, we are aware of a State of Montana, Department of Commerce, CDBG for
public infrastructure in the amount of $400k ($400k match required). Grant applications are due
in May, 2013 and require and completed PER and LMI referenced above.
During plan development we discussed and researched the concept of establishing a
development entity or authority that would be contractually responsible for the development of
North Park. If the Plan is adopted and implementation follows, we should be prepared to discuss
management and ownership alternatives to the City as property owner, property developer and development regulator. A s part of our research and investigation into development
authorities/entities we traveled to Great Falls, Montana to discuss the success of the Great Falls
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Development Authority (GFDA) managed by Mr. Bret Doney. The Great Falls model may be
transferable to Bozeman. If directed to do so, staff will return to the Commission in the future to
discuss specific models and options for the structure of ownership, management and operations
of North Park. The Marketing Brochure
North Park Properties Marketing Brochure
The North Park Properties Marketing Brochure was created along with the Plan using the information and graphics provided by the consultants for generating interest in the North Park
project to Bozeman residents and business owners, the wider southwest Montana community,
potential anchor tenants, development and real estate professionals and public officials.
NEXT STEPS IN COOPORATION AND COORDINATION WITH THE DNRC: If the Plan is adopted, the next most critical next step in the North Park project includes
Commission direction on the goals with, and future of, the City-owned North Park property. The
Commission may have additional options not listed below. Some options include: Determining the North Park Vision
1) Maintain the current status and condition of the North Park property;
2) Sell the property in whole or part, unconditionally or with conditions to develop in keeping with the North Park vision; 3) Develop the property in keeping with the North Park vision;
4) Turn the property over to a management/development authority or entity to
develop and manage the property in keeping with the North Park vision; and/or
5) Alternative option or options provided by the Commission. If direction is given on which path to pursue any number of next steps are required. The
list of “next steps” below assumes the Plan is approved and the North Park project is directed
toward options 2), 3) and/or 4) listed above. Some or all of the steps may be required as the
North Park direction is refined. Any action will have associated costs. Possible Next Steps
1) Add signage at the appropriate areas to encourage interest;
2) Preliminary Engineering Report (approximately $100k) March 1st, 2013. Possible funding sources include:
a. BSTF Planning Grant – $50k (inc. $12.5k match from each City and
DNRC);
b. EDA Grant - $50k ($50k match with CDBG and COB/DNRC funding);
c. City’s General Fund, see CIP, FY 14 - 16. 3) Identify an ownership, management and operational structure for North Park;
4) Secure a property appraisal;
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5) Begin preliminary platting process; and
6) Re-establish industrial TIF district.
UNRESOLVED ISSUES: The most substantial unresolved issue is that of the vision and direction of the North Park project. Once the North Park vision is established by the Commission there are many additional
unresolved issues to consider. If job creation and industry
diversification are cornerstones of our economic development
strategy and if the North Park vision represents an opportunity to strengthen these economic cornerstones, and in order to move the project forward past the planning stage into the implementation
stage we will require more leadership, more hard work and more
commitment. Additionally, we must move forward on answering
the following questions: 1) Who is interested in becoming the anchor tenant or tenants? 2) What incentives will be necessary to secure commitments
for anchor tenants?
3) Where will Phase I infrastructure funding come from?
4) When will Phase I infrastructure funding be available? 5) How will the ownership, management, development and operational structure function at North Park?
ALTERNATIVES: As determined by the Commission.
FISCAL EFFECTS: The direction on t he future of the North Park project will determine the ultimate fiscal effects. If the status quo is
maintained, the fiscal effects will continue to be minimal. If the
Commission directs something other than that, the costs will rise
commensurate with the scale and scope of the project. It should be noted that the fiscal effects have the potential to be significant. Specific effects are undetermined at this time.
Attachments:
1. Resolution 4426 adopting the North Park Properties Concept Land Use Plan.
Report prepared on December 27, 2012
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RESOLUTION NO. 4426
A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA, ADOPTING THE NORTH PARK PROPERTIES CONCEPT LAND USE
PLAN.
WHEREAS, job creation and industry diversification are critical to the long-term
economic vitality of Bozeman; and,
WHEREAS, the City wishes to stimulate, encourage and support the attraction, retention
and growth of jobs and industry in a variety of high growth potential sectors. The number and
diversity of jobs created in a variety of sectors including manufacturing and fabrication, bio-
science and bio-technology, high-technology, photonics and the outdoor industry have high
growth potential and support moderate to high income employment; and,
WHEREAS, the City of Bozeman’s 2012 – 2013 adopted Work-Plan includes the implementation of the adopted economic development plan, integrating economic development
principles throughout the City of Bozeman organization which includes the adoption of a North
Park properties [formerly Mandeville farm] concept land use plan in collaboration with the
Montana Department of Natural Resources and Conservation (“DNRC”); and,
WHEREAS, the City of Bozeman and the DNRC have collaborated on the North Park
Properties Concept Land Use Plan (the “Plan”) which includes contiguous property owned by
the City of Bozeman (85.34 acres) and the State of Montana (189.66 acres) and entirely within
the Bozeman city limits, and,
WHEREAS, when combined, the North Park properties represent the largest contiguous
M-zoned parcels adjacent to a rail line within the Bozeman city limits; and,
WHEREAS, the North Park properties are entirely included in an established (2006)
industrial tax increment finance district; and,
WHEREAS, the North Park properties site is zoned M – 1 and M – 2, the highest
intensity zoning districts allowed, and could support the uses identified in the Plan; and,
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WHEREAS, the Plan suggests reasonable development patterns, configurations and
timelines based on locally, regionally and nationally acquired market and feasibility data; and,
WHEREAS, the Plan provides cost estimates on infrastructure requirements for North
Park Phases I – IV; and,
WHEREAS, the Bozeman City Commission did, on the 7th day of January, 2013,
conduct a public hearing to consider the proposed Plan.
NOW, THEREFORE, BE IT RESOLVED by the City Commission of the City of
Bozeman, Montana, that:
Section 1
That the North Park Properties Concept Land Use Plan, attached hereto as Exhibit A, is
hereby adopted.
Section 2
That the North Park Properties Concept Land Use Plan includes a marketing brochure for
the site and is attached hereto as Exhibit B. Exhibit B is hereby incorporated herein and made a
part hereof.
This resolution shall be in full force upon passage and approval.
PASSED AND APPROVED by the City Commission of the City of Bozeman, Montana at a
regular session thereof on the ___ of ____________________, 2013.
_________________________________
SEAN A. BECKER
Mayor
ATTEST:
_______________________________
STACY ULMEN, CMC
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City Clerk
APPROVED AS TO FORM:
_________________________________
GREG SULLIVAN
City Attorney
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Commission Memorandum
REPORT TO: Honorable Mayor and City Commission
FROM: Brit Fontenot, Economic Development Director
SUBJECT: Public hearing to determine whether real property owned by the City of
Bozeman, known as the North Park property, is needed for public use or
that the public interest may be furthered by the sale of the property as
provided for in §§ 2.06.880 through 2.06.910 of the Bozeman Municipal
Code. (2/3 vote of Commission required)
MEETING DATE: August 26, 2013
RECOMMENDATION: Conduct a public hearing and by a 2/3 vote of the Commission,
determine that the city-owned portion of the North Park
property is not needed for public use and that the public
interest will be furthered by the sale of the property.
PROPOSED MOTION: Having considered the information presented by staff, I hereby
move to adopt the findings included in the staff memorandum and
conclude the City-owned portion of the North Park property,
described in Section II of the staff memo, is 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 direct 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.
I. INTRODUCTION
For a complete history of the North Park project please refer to the January 14 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
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Marketing Brochure, Phase 1 Environmental Site Assessment and the North Park Economic
Impact Study and Job Benefit Analysis.
In May, 2013 the Commission authorized staff to prepare and publish a Request for
Proposals (RFP) for the acquisition of professional realty services and authorized the North Park
Realtor Selection Committee composed of EDC members and City staff (the Committee) to
select a real estate broker to negotiate the sale of the property should the Commission make the
determination that the North Park property is not needed for public use and that the public
interest is furthered by the sale of the property. Both the Plan and the direction to engage a
realtor were unanimously supported by the Commission.
The Committee produced an RFP, reviewed the three proposals submitted and selected
CBRE to represent the City in the sale of the North Park property. The City has not yet signed a
listing agreement with CBRE. The City will not execute the listing agreement until the
Commission determines the City-owned portion of the North Park property is not needed for
public use and the public interest will be furthered by the sale of the property.
It is important to note that the Commission’s determination that the North Park
property is not needed for public use and the public interest is furthered by its sale is not
the final decision on the actual sale of the property. The sale process will require
additional step including the Commission’s adoption of an ordinance approving a purchase
and sale agreement with the corresponding opportunities for public involvement.
II. THE NORTH PARK PROPERTY
The North Park property was purchased in July 2003 for $3M dollars. The North Park
property consists of approximately 85 acres of unimproved land zoned M-2 (manufacturing and
industrial) and within the boundaries of an industrial tax increment finance, or TIF, district.
Currently, the Industrial TIF District fund is experiencing a deficit of approximately $180,000.
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 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 State of Montana owned properties.
Currently, public infrastructure is limited on the property. There is an absence of a road
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.
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III. MONTANA MUNICIPAL INTERLOCAL AUTHORITY SETTLEMENT
On December 10, 2012 the Commission authorized the approval of a settlement with the
Montana Municipal Interlocal Authority (MMIA) over coverage of a $3M judgment against the
City regarding the City’s purchase of the North Park property. The settlement requires the City
reimburse MMIA in the amount of $2M over the next three fiscal years. The City Manager
signed the agreement December 20, 2012. The City has made two payments to the MMIA
totaling approximately $1.3M. The final payment of $675,000 is scheduled for July, 2014.
IV. FINDINGS TO DETERMINE THE NORTH PARK PROPERTY CAN BE SOLD
OR THAT THE SALE FURTHERS THE PUBLIC INTEREST
Prior to finalizing a sale, the Commission must determine the North Park property is no
longer necessary for the conduct of City business, or, that the public interest may be furthered by
disposing of the property. The conclusions above are distinct. Therefore, for purposes of this
memorandum, Commission findings are provided below.
First, the North Park property has been identified in the past as a possible location for
several City facilities; however, the property is no longer necessary for the conduct of the
City’s business for the following reasons:
A. Solid Waste Transfer Station
The original intent for the purchase of the North Park property in 2003 was for the future
site of a solid waste transfer station. Due to rising project costs and other related issues, a
transfer station was never constructed. Now, because of the City’s current participation in the
Gallatin Solid Waste Management District, the City has no current plans, or need, to construct
such a facility.
B. The Mandeville Subdivision Preliminary Plat
On December 1, 2008 the City Commission held a public hearing to discuss the approval
of the Mandeville Major Subdivision preliminary plat, #08008. The meeting minutes are linked
here. During the hearing, there was discussion and public comment regarding the original intent
of the purchase of the North Park property for the location of a solid waste transfer station. It
was explained that while the property was originally purchased for that purpose, the City had
joined the Gallatin Solid Waste Management District and a transfer station on the North Park
property was no longer necessary. The purpose of the preliminary plat therefore was primarily to
create 22 lots for M-2 (manufacturing and industrial zoning district) development, rather than
further consider development of the transfer station. Based upon that premise, the preliminary
plat was approved by the Commission. In 2010, and again in 2012, the City approved extensions
of the preliminary plat.
Given the funds invested in the engineering and preliminary platting of the City-owned
portion of the North Park properties, approximately $225,000, and despite the uncertainty of the
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applicability of the existing preliminary plat design with the North Park design, the Mandeville
Subdivision preliminary plat (File # P-0808) was extended for two years on April 12, 2012 in
order to provide the maximum amount of flexibility available for the development of the
property. The existing preliminary plat expires on April 6, 2014.
It is clear that while a preliminary plat remains active on the property, the existence of the
entitlement does not affect, nor is it directly relevant, to whether the property is necessary for the
conduct of City business.
C. Solid Waste Consolidation Station
In July, 2013, in a presentation to the City Commission regarding the possibility of a
consolidation station at the existing City landfill site, the North Park property was mentioned by
members of the public and Commissioners as an alternative to the proposed landfill location.
After discussions with Public Works Director Craig Woolard and Solid Waste Superintendent
Kevin Handelin it became clear the cost to construct a consolidation station facility on the North
Park property is not financially feasible given the amount of infrastructure and other necessary
improvements required for the development of the North Park property and the costs of
additional staffing required to operate such a facility if located separately from other solid waste
operations. Additionally, use of the property as a publicly operated solid waste consolidation or
transfer station is incompatible with the vision of the North Park property as a catalyst for private
sector job creation and economic diversification and, in fact, would negatively impact the North
Park properties for future development as identified in the Plan. As such, the North Park property
is not needed for development of solid waste facilities. Director Woolard will be in attendance
during this agenda item to answer any questions.
D. Location of Future Fire Station 7
The 2006 Fire Protection Master Plan (see pages 131 – 134) recommends a future fire
station, Station 7, be located near the intersection of North 7th Avenue and Flora Lane, as future
growth and response times dictate. Any future annexations that may occur in this area will affect
response times and thus the need for a station in this part of the City. However, the projected
need for a fire station in this general area of Bozeman, and specifically when to construct it, is
undetermined at this time but the need may arise at some point in the distant future. The
Bozeman Fire Department currently operates three fire stations located on South Rouse Avenue,
South 19th Avenue and Vaquero Parkway. Prior to the purchase of North Park property in 2003,
the City did not own property in the general location recommended for future fire station 7. In
order to provide for future expansion of the City’s fire station network in this area of Bozeman,
the Commission included Condition 5 in the April 6, 2009 Findings of Fact and Order (#P-
08008):
Lot 11, or another lot suitable to the City of Bozeman Fire Department, shall be reserved
for the site of a future fire station.
Bozeman Fire Chief Jason Shrauger now indicates a need may exist for a station in the
northeast area of Bozeman in the distant future; however, the Chief believes the majority of
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growth in the City is currently occurring to the west and has affirmed that there are other sites in
the northeast section of Bozeman that could accommodate a future fire station when the need
arises. Chief Shrauger will be in attendance during this agenda item to answer any questions. At
this time, it is clear the North Park property is not needed for the development of a future fire
station.
Finally, there are no other City purposes currently identified by City staff for which
the North Park property may be used.
Next, the sale of the North Park property furthers the public interest for the following
reasons:
1. The North Park property, if developed as proposed in the Plan, furthers the City’s goals
of job creation and economic diversification as described in the Commission’s 2013 –
2014 Priorities;
2. The aggregate costs to date, approximately $5.25M, of the North Park property are high
including purchase price, costs of preliminary plat and the MMIA settlement, with very
little return on this investment. The sale of the property would help recoup some portion
of the investment made by the City over the past decade. Additional value, through
private sector job creation and industry diversification, could be realized by the sale of
the property;
3. The costs to the City to fund basic infrastructure to facilitate development is higher than
the City is willing to invest to develop the property. According to the Plan, Phase I
development is estimated at $5.4M. Phase I includes the majority of the City owned
portion of the North Park property;
4. The Plan, through local research and data collection, establishes the market viability of
developing the property. In addition to the Plan, the partnership has generated additional
documents referenced in this memorandum. Through these documents, a great deal of
value has been created for the North Park that, once the city-owned portion is sold, can be
utilized to execute the development of the property;
5. There is both local and national interest in the sale or lease of the property for private
development. That interest has been generated, primarily, by the Plan;
6. Current commercial real estate market trends demonstrate increasing values of
commercial real estate throughout the Bozeman area;
7. Sale of the North Park property supports the City’s desire to facilitate the development of
the property without the negative perception that as property owner, the City may provide
itself exemptions or variances to its own regulatory processes;
8. The City does not have the staff resources or expertise to develop the property without
significant outside assistance; and
9. There are significant bureaucratic implications of creating an additional layer of quasi-
governmental administration through the creation of a development authority structure to
manage the sale or development of the property.
In considering the above, Staff provides the following additional discussion in support of
the determination that sale of the property furthers the public interest. Primarily, the objective of
the Plan is to raise awareness of the economic development potential, in terms of job creation
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and economic diversification, existing at the North Park properties. Additionally, an objective of
the Plan is to demonstrate how governmental organizations and the private sector can work
together to support a vision greater than any one partner organization. Also, Plan objectives
include provision of locally supportable, market based economic analysis using local data, codes,
standards and regulations, realistic infrastructure cost estimates and timelines through multiple
phases and viable use patterns, all to facilitate informed decision making. Finally, given rapidly
changing market conditions and increasing development costs, the Plan establishes a sense of
urgency for the sale and development of the North Park. Throughout the project, selling all or
part of the City-owned portion of the North Park property at anytime, conditionally or
unconditionally, remained a viable consideration.
In addition to the Plan, the City and the Department of Natural Resources and
Conservation (the DNRC) partnership produced the following supporting material – all of which
will be valuable to a purchaser:
1. North Park Properties Marketing Brochure;
2. North Park Phase 1 infrastructure improvements added to the Capital Improvements Plan
or CIP, (CIP FY 14 – 18, GF 185, p. 54);
3. Identification of capacity expanding, off-site improvements that may aid in the
development of the North Park properties, i.e. intersection control device at the
intersection of North 7th Avenue and Griffin Drive (CIP FY 14 – 18, SIF 33, p. 157);
4. Completed of a Phase 1 Environmental Site Assessment;
5. Completed of a Economic Impact and Job Benefit Analyses; and
6. Preliminary Engineering Report (PER). CTA has started the work on the PER. Expected
completion of the PER is the end of September, 2013.
The Commission identified North Park as part of their number one 2012 –2013 Work-
Plan goal via implementation of the adopted 2009 Economic Development Plan. In addition to
these goals, the City identified several high growth potential sectors ideally suited for location in
the North Park including manufacturing and fabrication, bio-science and bio-technology, high-
technology, photonics/optics and the outdoor industry sector. It is these industries the City
encourages and supports for the creation of new, higher paying and skilled jobs which add
diversity to the local and regional economies. The North Park property represents a physical
location where these types of economic activities can be encouraged and supported. In addition,
the development of the North Park property represents an important piece of the City’s economic
development strategy of working in cooperation with other economic development projects and
agencies such as the MSU Innovation Campus, Gallatin College, the Prospera Business Network
and the Northern Rocky Mountain Economic Development District. Sector support and
development, especially in photonics/optics and the outdoor industry is in accordance with the
City’s funded FY 14 economic development initiatives.
Next, the sale of the property is in the public interest because the partnership that existed
with DNRC to create the Plan could still exist with a private purchaser and developer. In the
early stages of the project (2011) it became clear that the City and the State of Montana, through
the DNRC, would benefit by working collaboratively on the North Park project. Both
organizations agree on the overall vision of the North Park project as a place where job creating
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and industry diversifying businesses can come to start, grow or relocate operations adding value
to the property, surrounding properties, the community and the region.
Each entity’s property has inherent advantages and disadvantages for development in
terms of size, location, land features (grade, creek, etc.), ingress and egress and infrastructure.
When development is planned separately, many of the inherent disadvantages remain or are
exacerbated. However, when jointly planned and developed, while certain disadvantages may
remain, the overall benefit of working in cooperation with the DNRC on North Park mitigates
some many of the disadvantages.
This proven partnership can continue with a private owner and may, in fact, result in
more timely and cost effective development of the property. As such, once sold, the City will
evolve its role from property owner and DNRC partner to that of development facilitator to work
with the new property owner and the DNRC to explore and encourage a new partnership to
further the North Park guiding vision of the North Park as a catalyst for job creation and industry
diversification.
V. UNRESOLVED ISSUES
Sale of the property to a private owner has risks in terms of the fulfillment of the vision
through implementation of the North Park Plan. The City Commission determined that the
North Park property should be a catalyst for job creation and industry diversification in
furtherance of the City’s broad economic development strategy. The City may find a buyer for
the City-owned portion of the North Park properties that believes in the vision created by the
City and the DNRC and the data supporting that vision, but there is no certainty that
development will come to fruition in the manner called for by the Plan.
Despite the effort at creating a vision for the North Park properties, a buyer may not see
the North Park as an economic development catalyst and may not share the City’s vision for
North Park as a stimulator to economic growth. There is a risk that with a new owner the
property remains undeveloped, underdeveloped, or that the property develops in a manner
inconsistent with the City’s economic development goals.
Considering the above, the only way to mitigate that risk is to place binding expectations
on the buyer for the development of the City-owned portion of the North Park property. The
Commission should carefully consider the pros and cons of a restrictive buy-sell agreement as
opposed to selling the property unconditionally while encouraging and supporting the use of the
Plan and associated documents as a framework for development. Staff recommends the
Commission refrain from imposing direct obligations on a purchaser to develop the property in
compliance with the Plan as this may negatively impact interest in purchasing the property.
Alternatively, staff pledges to remain proactively involved with the new owner, creating a
conduit to the DNRC to facilitate development of the property in conformance with the Plan.
VI. ALTERNATIVES
As determined by the Commission.
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VII. FISCAL EFFECTS
The North Park property was purchased in 2003 for $3M dollars. Pursuant to the
requirements of the Bozeman Municipal Code, the property must be appraised prior to sale and
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 possibly expenses related to
outside counsel.
The City invested approximately $225,000 in development of the preliminary plat.
The City receives revenue from an agricultural lease and cell tower lease on the property.
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.
Attachments:
None - all supporting documentation is hyperlinked in this memo.
Report prepared on August 15, 2013
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Tuesday, February 18, 2014
The North Park Appraisal
The final appraisal document was not finalized
at the time of printing. Once received, the
final appraisal document will be added to the
packet materials.
The “as is” appraisal value is $10,000 per acre.
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