H2. Res. 6010, Old School Station Lot TransferCITY OF
KALISPELL
Report To: Doug Russell, City Manager
City of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903-1997
Telephone (406) 758-7700 Fax - (406) 758-7758
From: Katharine King, Assistant Director Community Development
Subject: Old School Station, Lot Transfer of Lot 4 for Lot 15
Meeting Date: January 19, 2021
BACKGROUND: On April 5, 2015, by means of Resolution 5710, the City Council elected to
take assignment from Flathead County of its tax lien on six parcels of Old School Station by paying
the past due taxes and assessments. On April 20, 2015, City Council passed Resolution 5712 in
which Council stated its intention to retain and sell the properties and to set the concluding date
and time of the period of redemption for May 4, 2015, at 7 pm. By Resolution 5717 on May 4,
2015, Council determined to retain and sell all interests in the Old School Station lots under its
ownership. The six properties were appraised by Clark Real Estate Appraisal in 2015 to establish
listing prices for each lot. In April 2017, the City of Kalispell listed the properties for sale through
Flathead Valley Brokers at the appraised values with the potential off -set of reduced Special
Improvement District bond payments as calculated for each lot.
Lot 4 sold to Edge, LLC May 1, 2020. Since that time Edge, LLC has determined that Lot 15 in
Old School Station would better fit its business needs and has requested an exchange or land
transfer of Lot 4 for Lot 15 where Lot 4 would return to City ownership. Edge is asking that their
payments and taxes paid to date for Lot 4 be credited to a purchase of Lot 15 and that a similar
Developer's Agreement be entered into with a new date set for completion of capital improvements
set to 18 months from closing on Lot 15.
Note that Lot 4 is in the Old School Station Tax Increment Finance (TIF) Technology District and
Lot 15 is in Old School Station Industrial Tax Increment Finance District. The proposed use for
Lot 15 is for an electrical contractor and thus fits with the requirements for TIF eligibility at the
site.
RECOMMENDATION: Motion to approve Resolution 6010, a resolution approving the sale of
certain real property commonly known as Lot 15 of Old School Station Subdivision by means of
a land exchange for Lot 4 of Old School Station Subdivision, previously purchased on contract by
the buyer from the City.
FISCAL EFFECTS: If exchange of Lot 4 for Lot 15 is approved, Edge would purchase Lot 15
at listing price of $201,000 with credit given for funds paid to date on the purchase of Lot 4, which
includes the down payment, subsequent loan payments and taxes paid. Therefore, Edge's note
amount would be approximately $98,500 for Lot 15. It should be noted that the final amount may
change slightly depending on the timing of closing. Similar to the previous Developer's
Agreement associated with Lot 4, tax increment will be applied to reimbursement of SID payments
if the purchaser completes planned capital improvements to the property within 18 months of new
closing. Additionally, if capital improvements to the property are completed within 18 months of
new closing, note will be reduced by $29,547.00 to $171,453.00. Terms of the loan on Lot 15 are
to continue those in place for Lot 4 such that buyer will make monthly payments to the City on an
interest only note (5% annual rate simple interest) and contract for deed to the City over the original
five-year term with balloon payment due at the end of the term.
ALTERNATIVES: Do not proceed with land exchange as proposed.
ATTACHMENTS: Resolution 6010
Map of Old School Station
RESOLUTION NO.6010
A RESOLUTION APPROVING THE SALE OF CERTAIN REAL PROPERTY COMMONLY
KNOWN AS LOT 15 OF OLD SCHOOL STATION SUBDIVISION BY MEANS OF A LAND
EXCHANGE FOR LOT 4 OF OLD SCHOOL STATION SUBDIVISION, PREVIOUSLY
PURCHASED ON CONTRACT BY THE BUYER FROM THE CITY.
WHEREAS, in April and May of 2015, the City of Kalispell, by a series of resolutions, purchased
six lots in the Old School Station Subdivision from Flathead County in a delinquent
tax sale for the purpose of salvaging the special improvement district bonding taken
out by the City and supporting the tax increment districts in the subdivision through
marketing and resale of the properties subject to development agreements; and
WHEREAS, on May 1, 2020 the City sold Lot 4 of Old School Station to purchaser, Edge LLC, on
contract and subject to the terms of a development agreement; and
WHEREAS, since the time of the sale of Lot 4 to the purchaser, it was determined by the purchaser
that Lot 15 will better suit its needs which have changed in the interim; and
WHEREAS, it is in the best interests of the City and its purposes in acquiring and reselling the
parcels, to enter into a land exchange with the purchaser, in which Lot 4 is reconveyed
back to the City at its original purchase price and the City conveys Lot 15 to the
purchaser at its offered market price, giving the purchaser credit for the consideration
it has already paid for Lot 4 and entering into another contract and development
agreement for Lot 15.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL AS FOLLOWS:
SECTION 1. The City Manager is hereby authorized to execute all the necessary
documentation to enter into a land exchange with Edge LLC, in which Lot 4 of
Old School Station Subdivision is reconveyed back to the City at its original
purchase price and for the City to convey Lot 15 of Old School Station to Edge
LLC at its offered market price, giving Edge LLC credit for the consideration
it has already paid for Lot 4 and entering into another contract and development
agreement with Edge LLC for Lot 15.
PASSED AND APPROVED BY THE CITY COUNCIL BY A 2/3RD MARGIN AND SIGNED BY
THE MAYOR OF THE CITY OF KALISPELL, THIS 19TH DAY OF JANUARY, 2020.
Mark Johnson
Mayor
ATTEST:
Aimee Bnmckhorst, CMC
City Clerk