11. Resolution 5361 - Amendment - Old School Station Latecomers AgreementRM a FM4�.
Charles A. Harball Office of City Attorney
City Attorney 201 First Avenue East
P.O. Box 1997
Kalispell, MT 59903-1997
TO: Mayor Pamela B. Kennedy
and Kalispell City Council
FROM: Charles Harball, City Attorney
Myrt Webb, Interim City Manager
Tel 406.758.7977
Fax 406.758.7979
charball@kalispell.com
SUBJECT: Resolution No. 5361— Amending the Term of the
Montana Venture Partners LLC (Old School Station)
Latecomers Agreement For Reimbursement For Municipal Water
And Sewer System Extensions
MEETING DATE: Monday, April 20, 2009 — Regular Council Meeting
BACKGROUND: The City Council recently considered and approved two
Developer's Agreements before it with latecomer payment terms that exceeded the
maximum 10 year term called out by the City's extension of services policy. In each
case the Council agreed with the requests based upon the fact that the reasonable
anticipated payback of the investment, given the size of the investment and
projected growth, far exceeded a ten year term. On the 26th day of February, 2008,
the City entered into a developer's agreement with Montana Venture Partners, LLC
in which the term of the agreement ran until December 31, 2018, unless paid out
sooner. Montana Venture Partners, LLC seeks to extend the term of this
agreement of December 31, 2035, unless paid out sooner.
RECOMMENDATION: That Council consider passing Resolution No. 5361
authorizing the City Manager, on behalf of the City of Kalispell, to enter into
Amendment to the Developer's Agreement attached to Resolution extending the
term of the agreement to December 31, 2035 unless sooner paid out.
FISCAL EFFECTS: Extension of the term of the latecomer's payout may assist
the investor in obtaining private capital thereby releasing some of the immediate
cash flow pressures on Old School Station investments.
Respectfully s
Charles Hal, City Attorney
Myrt Webb, Interim City Manager
!1191110WEANVIOCURVA • ! !
•D10!
rIVAT
WITH !
MONTANA VENTURE PARTNERS
WHEREAS, on the 26th day of February, 2008, the City entered into a developer's agreement
with Montana Venture Partners, LLC in which the term of the agreement ran until
December 31, 2018, unless paid out sooner, pursuant to the existing city extension
of services policy that, absent other good reasons, limits the terms of such
payback to ten years; and
WHEREAS, Montana Venture Partners, LLC seeks to extend the term of this agreement of
December 31, 2035, unless paid out sooner for the reason that the reasonable
anticipated payback of the investment, given the size of the investment and
projected growth, far exceed a ten year term; and
WHEREAS, given the recent economic downturn and increasing cash flow pressures on
private and municipal investments, the City has recently approved other developer
agreements with payback terms of up to thirty years.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL AS FOLLOWS:
SECTION I. That the City Manager is authorized to execute the Amendment to the
Latecomers Agreement For Reimbursement For Municipal Water And
Sewer System Extensions With Montana Venture Partners LLC, a copy of
which is attached hereto as Exhibit "A", and incorporated herein by
reference, on behalf of the City of Kalispell.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, THIS 20TH DAY OF APRIL, 2009.
Pamela B. Kennedy
Mayor
ATTEST:
Theresa White
City Clerk
Return to:
Kalispell City Clerk
PO Box 1997
Kalispell, MT 59903
AGREEMENT, made this day of April, 2009, between Montana Venture Partners,
LLC, a Montana Corporation ("Developer") and the City of Kalispell, situated in Flathead
County, Montana ("City") amending that agreement between the parties dated February 26, 2008
and entitled Latecomers Agreement for Reimbursement for Municipal Water and Sewer System
Extensions.
RECITALS
A. On February 26, 2008, the City and the Developer entered into a latecomers
agreement for reimbursement for municipal water and sewer system extensions, in
which the term of the agreement ran until December 31, 2018, unless paid out sooner,
pursuant to the existing city extension of services policy that, absent other good
reasons, limits the terms of such payback to ten years; and
B. Montana Venture Partners, LLC seeks to extend the term of this agreement to
December 31, 2035, unless paid out sooner for the reason that the reasonable
anticipated payback of the investment, given the size of the investment and projected
growth, far exceed a ten year term; and
C. Given the recent economic downturn and increasing cash flow pressures on
private and municipal investments, the City has recently approved other developer
agreements with payback terms of up to thirty years and it would be in the best
interests of the City to extend of the term of the latecomer's payout in the subject
agreement as it may assist the developer in obtaining private capital thereby releasing
some of the immediate cash flow pressures on Old School Station investments
serviced by the system extensions.
LATECOMERS AGREEMENT P. 1
NOW, THEREFORE, in consideration of the mutual covenants and agreements hereafter
set forth, it is agreed by and between the parties hereto as follows:
1. All of the recitals set forth above are adopted by the parties as material elements
of this Agreement.
2. Paragraph 12 of the Agreement shall be amended to read as follows:
"12. This Agreement became operative on February 26, 2008, and shall
remain in full force and effect until December 31, 2035, or until Developer, or its
successors or assigns, shall have been fully reimbursed as aforesaid, whichever
event occurs earlier; provided, that in the event the Extensions, or any portions
thereof, shall during the term of this Agreement, be rendered useless by the
redesign or reconstruction of a portion of the Extension, or of the City's municipal
water or sewer systems, then the City's obligation to collect for Developer the
Assessment Fees provided pursuant to this Agreement shall cease."
3. To accurately reflect the amendment to Paragraph 12 of the Agreement, Exhibit C
shall be amended to read as attached hereto and incorporated fully by this reference.
4. All other terms of the Agreement shall remain unchanged and fully enforceable as
written.
IN WITNESS WHEREOF, the parties have executed this Agreement on the day and year
above written.
MONTANA VENTURE PARTNERS, LLC
A MONTANA CORPORATION
M.
[NAME]
[TITLE]
DATE , 2009
CITY OF KALISPELL, MONTANA
IM
DATE
[NAME]
[TITLE]
2009
LATECOMERS AGREEMENT P. 2
STATE OF MONTANA )
ss
County of Flathead )
On this day of , 2009 before me, a Notary Public, personally
appeared Andrew J. Miller, President of Montana Venture Partners, LLC, known to me to be the
person whose name is subscribed to the foregoing instrument and acknowledged to me that
he/she executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal,
the day and year first above written.
Printed Name
Notary Public, State of Montana
Residing at Kalispell, Montana
My Commission Expires:
STATE OF MONTANA )
ss
County of Flathead )
On this day of , 2009 before me, a Notary Public, personally
appeared Myrt Webb, Kalispell Interim City Manager, known to me to be the person whose
name is subscribed to the foregoing instrument and acknowledged to me that he/she executed the
same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal,
the day and year first above written.
Exhibit C — ERU determination
Printed Name
Notary Public, State of Montana
Residing at Kalispell, Montana
My Commission Expires:
LATECOMERS AGREEMENT P. 3
EXHIBIT C
COST PER EQUIVALENTRESIDENTIAL 1
The purpose of this exhibit is to document the methodology used to determine the cost
per Equivalent Residential Unit (ERU) for reimbursement to Montana Venture Partners,
LLC as referenced in the Late Comers Agreement for Reimbursement for Municipal
Water and Sewer System Extensions between the Montana Venture Partners, LLC and
the City of Kalispell.
An equivalent residential unit is defined as a single family home. The water demand of
an ERU is defined as the maximum daily demand of a residential single family home.
This demand is calculated as follows:
Total people per home (ERU) = 2.31 (Ref. 2000 Census Data)
Average Day Water Demand = 145 gallons per person per day (0.10 gallons per person
per minute) (Ref. City of Kalispell Water, Wastewater, and Storm Drainage Facility Plan,
January, 2002, Page 3-6)
Average Day/Maximum Day Peaking Factor = 2.7 (Ref. City of Kalispell Water,
Wastewater, and Storm Drainage Facility Plan, January, 2002, Page 3-6)
Maximum Day Demand per ERU = (2.31 people/ERU)x(0.10 gpm/person)x(2.7)= 0.62
gpm per ERU
The Montana Venture Partners, LLC water main has been oversized in accordance with
the City of Kalispell requirements in order to serve future growth in the area. Since
capacity of a water main varies with pressure (and elevation), and since use of capacity is
how reimbursement will be based, it is necessary to establish a point on which capacity
for the Late Comers Agreement will be based. This point will be the entrance to Old
School Station Subdivision. It is important to note this flow establishes the base point for
the reimbursement to Montana Venture Partners, LLC. However, this flow does not
necessarily define the actual capacity of the water main as capacity may change
depending on the location along the water main (e.g. capacity is greater at lower
elevations) or future improvements to the water main.
According to the Basis of Design Report for the Old School Station project, the capacity
of the water main at the entrance of Old School Station Subdivision is 2,960 gallons per
minute (gpm) at a residual pressure of 20 psi not including the additional capacity of the
well that was constructed as part of the Old School Station project. The base minimum
fire flow for any development is 1,000 gpm in therefore this fire flow will be considered
an equal benefit to everyone served by the pipeline. Therefore, the leftover domestic
capacity of the main is 1,960 gpm. The maximum number of ERU's that can be served
with this capacity is figured by dividing this capacity by the Maximum Day Demand per
ERU, which gives a total number of 3,161 ERU's that can be reimbursed by this
agreement.
Dividing the total project cost by the maximum number of ERU's the main can supply
results in a cost per ERU reimbursable to Montana Venture Partners, LLC. With a total
project cost of $1,358,412.91 and the total ERU's served of 3,161, the base cost per ERU
is $429.70.
Per Section 5.0 in the Late Comer's Agreement, the annual reimbursement fee will be
increased annually based on the U.S. Treasury Note Rate plus 1.5%. The following table
summarizes the yearly reimbursement costs per ERU based on a Treasury Note Rate of
4.6%, giving an annual interest rate of 6.1 %:
Table 1
Yearly Reimbursement Costs/ERU - Water
Reimbursement Amount Per
Year
Reimbursement Factor
ERU
2009
1.12
$
481.26
............... 2010
1.19
$
510.14
_._........ ....... __........
2011
... ._.................... __....... ... ___........... ............... ............ _..... _._.............. .....................
1.26
_...... .......... _.......... _.._............................ _..................
$
_.._.......... _............. _... _...............
540.75
2012
--........ _........... ...... ......
1.33
$
573.19
...
2013
._..._..........._.............................. --- _....... ....... ..........._...................... ......................
1.41
_.._......... __... _....
$
............... ........_...._.....................
607.58
........... 2104
1.50
$
644.04
_...._._........... ___......
2015
..._.._...._..._....._........._... _................... _._.._.._...___.......... _......................... ......................
1.59
_.... _--................ ........ _................................... ................
$
_... ............ ............ _..................
682.68
2016
1.68
$
723.64
... ........... _.............. _....... _............
2017
......... _........ _...... _...... _...... ....... ._...... _....... __..... __....... _............ _...... _...................
1.79
__........... _-_..._._.._._------ _..... .................
$
_......... _............. _.._............... _......
767.06
2018
1.89
$
813.09
_..................................... _........._...._...__.._.
2019
.... _......... ...... ......._._........._.._........_.......... ...... ..._......
2.01
$_....__........................................................................................._......
861.87
2020
2.13
$
913.58
_..._........_............ _.
2021
.... ..._.... _...... _........ _._..__..._._....__...... _... -......... ... _............
2.25
..... ___........... __
$
............. _.... -....... _................--
968.40
2022
....... _.._...................................... _... _...........
2.39
._ ..__....__...._......... ..... _.... .............. _.............................. _..._....._........................__.......__..................................................
$ _.....................
1,026.50
_..... _.............. _..... _.....................
2023
2.53
$
1,088.09
2024
_......_.__.
2.68
... ._........ --.... ....... _...... _........................ _........................ __._.... _....._.._._.._.
$ _
.............. _................ _......... _.._............ --......
1,153.38
__...
2025
2.85
$
1,222.58
2026
........... _..__.._.._........ _............ _.... __.._.
3.02
..... _........................... _........._... ............................... ........ ...... _....... _..... ...._........
$
___.............. ........................ _............................... _................
1,295.93
_.................. _.....................
2027
3.20
$
1,373.69
2028
3.39
_.._..___._......_._........... _.___._.._......._._...... __........................................................
$ _____....__..___-.___._....._.___._...._._.
1,456.11
.... .......... _............ _..... _..
2029
3.59
$
1,543.48
2030
3.81
$
1,636.09
2031
4.04
$
1,734.25
2032
4.28
$
1,838.31
.............. . . . . ............... . _ ...... . ...... . . .
2033
.. . .......... . ........... . ... ........ ... ..... ... . .. . ..............
4.53
--- - — - ------- .. . ..... . ... . ...... . .................................. .................... . ...... I------
$ 1,948.61
2034 .........
4.81
. ........ .................... . .. . ........ . ....... . .......... . . ... . . . ............
$ 2,065.52
....... . . . ...................... . _.__, .. . . .......................
2035
5.10
$ 2,189.45
The City of Kalispell ERU Determination Schedule for Impact Fees (attached) will be
used to determine the number of domestic ERUs for non-residential projects. The City
may update this schedule at any time and will utilize the most current schedule for the
calculation of ERUs.
The Montana Venture Partners, LLC water main has also been oversized to provide fire
flow in excess of the 1,000 gpm minimum. The late comers fee for all projects that
require a fire flow in excess of 1,000 gpm shall be based on the following schedule:
Table 2
Fire Flow Reimbursement Schedule
Fire Flow
Cost per Square Foot of
Structure
1,000 - 1,500
$2.00
1,501 - 2,000
$2.50
2,001 - 2,500
$3.00
2,501 - 3,000
$3.50
3,001 - 3,500
$4.00
3,501 - 4,000
$4.50
> 4,000
$5.00
Total reimbursement to Montana Venture Partners is based on the total number of ERUs
that can be sold (3,161). In order to keep track of the total number of ERUs sold the fire
flow fee that is paid to the developer will need to be converted to ERUs by dividing the
total fire flow fee by the $/ERU from Table 1. For example, if a project in 2010 had a
$25,000 fire flow fee, the number of equivalent ERUs would be $25,000/($511.35/ERU)
= 48.9 ERUs.
An equivalent residential unit for wastewater is also defined as a single family home.
The maximum wastewater flow per ERU will be defined as the peak hourly flow from a
residential single family home. This demand is calculated as follows:
Total people per home (ERU) = 2.31 (Ref. 2000 Census Data)
Average -Day Wastewater Demand = 100 gallons per person per day (0.07 gallons per
person per minute) (Ref. Montana Department of Environmental Quality)
Average-Day/Peak Hour Factor = 2.75 (Ref. Montana Department of Environmental
Quality, equation for peak hourly flow based on population)
Maximum Peak Hour Flow per ERU = (2.31 people/ERU)x(0.07 gpm/person)x(2.75)=
0.45 gpm/ERU.
The sewer main has been oversized in accordance with the City of Kalispell requirements
in order to serve future growth in the area. Sewer main reimbursement costs are also
based on the capacity of the system. The system currently is most limited by the size of
the sewage lift station which has a capacity of 500 gpm. Using a Peak Hour flow of 0.45
GPM per ERU, the total number of ERU's that can be reimbursed by this agreement is
1,111.
Dividing the total project cost by the maximum number of ERU's the sewer system can
supply results in a cost per ERU reimbursable to Montana Venture Partners, LLC. With
a total project cost of $2,605,135.35 and the total ERU's served of 1,111, the cost per
ERU is $2,344.62.
Per Section 5.0 in the Late Comer's Agreement, the annual reimbursement fee will be
increased annually based on the U.S. Treasury Note Rate plus 1.5%. The following table
summarizes the yearly reimbursement costs per ERU based on a Treasury Note Rate of
4.6%, giving an annual interest rate of 6.1 %:
Table 3
Yearly Reimbursement Costs/ERU - Sewer
Reimbursement Amount PerERU
Year
Reimbursement Factor
2009
1.12
$
2,625.97
2010
.......... _._..... ............... _........
1.19
......................... --- .................... --- ..........................................__............._.........._........_..........._.................._........._......................_......................................................._.._.._..._
$
2,783.53
2011
1.26
$
2,950.54
2012
_.......... .... _._............... ........
1.33
..... ........... ......... ..... ...................... _.__..._............................................................ ............
$
... _... _._.___...__.......... ......................................................................................................
3,127.58
2013
1.41
$
3,315.23
2104
. .................................................. ........... --
1.50
_........ ._._....................... ........ .......... _... _...... _-_.............. ........
$
..-................. ........................................................ .._............
3,514.15
.... ..... ............. _..._..._._._....._
2015
1.59
$
3,724.99
2016
............ _..._.... ...............................................
1.68
... ......... ___................... __-._.................. _............. _.......... _......... _................. ....
$
....._...._.................................. _....... _......... _............ _.._...........
3,948.49
_.__.........._- ...
2017
1.79
$
..._._.......... _........
4,185.40
2018
.._..._............................ _..........._........... ......
1.89
_.......... ......................._...._.................................................._..___...._..-..-._.........._...._._....._....................................................
$ _......_........
4,436.53
__.... ......... __......... _........ ............ _..
2019
2.01
$
4,702.72
2020
..... _._.... _.................. _...__.._.__...._.
2.13
..... ........ _._............... _...... _.............. _.............. _______.... _............ .............................._......._.._..........._........._.._...__.._...
$ ..... _._...........
4,984.88
...... _................... _............................ _...
2021
2.25
$
5,283.98
2022
_.._._....._....._.._._............
2.39
....... ___............... _.__........ __._-_.... ............................. ....._._...._.__.._..._._..._._.__._._.
$ .......................... ........................
5,601.02
_.... _......... _.............. _......... _....... __...
2023
2.53
$
5,937.08
2024
................................ ..........-----..__........
2.68
. ................ ............................... ..... __.......... _... .... _........ _._.............. ..._
$
............................................. __....... ..._...... -........ _..............................
6,293.30
_.... _.......... _............. _...
2025
2.85
$
6,670.90
2026
_.............................. _.__......__..__......._._..._
... 3.02
......................... ...... ............... ____......... ......... __...-...................__................_.._._._..
$ _........... ............. __-.......................
7,071.15
_...._..................._.._..._._...........
2027
3.20
$
7,495.42
2028
.-_............... __._..._._..._....... .... _..........
3.39
.._.................. ........ ............... .................. _.__.._....._... _._-_.......
$
..._.................... _...... __....... _............. _............ ...m.__
7,945.15
.......... _........ __...... _....... _._.....
2029
3.59
$
8,421.86
2030
.......... _..__... _........ _......... __.._...........
3.81
...._....._...................... _.................. _..... _............. _... __.......... _.... _..._............................................
$ _....... __......... _..... _................_-.....................
8,927.17
....................... __.............. _...... _.._..
2031
4.04
$
9,462.80
2032
. ... ---.._......_............_......._._.__..._.._._..._.._.................._...._................_..............._...---.._._..............._._....._.._._..._......_............................_..................._.__......_._...
4.28
$
10,030.56
.... .... _._..... ..............
2033
4.53
$
10,632.40
2034
_.__...._.._...._..
4.81 _.___....._.__..__...-_-...........
---- _...._..---------------- _.._.._....................... _..........
$ ........._............
...................--__...
11,270.34
2035
5.10
$
11,946.56
As with the water, the City of Kalispell ERU Determination Schedule for Impact Fees
will be used to determine the number of ERUs for non-residential projects. The City may
update this schedule at any time and will utilize the most current schedule for the
calculation of ERUs.