H2. Res. 6084, Sale and Lease of Property to Kalispell Lodging LLC_Kalispell City Attoiney's Office
(406) 758-7709
CITY OF P.O. Box 1997, 201 1" Ave. East
ALISPELL Kalispell, Montana, 59903-1997
www.kalispell.com
REPORT TO: Doug Russell, City Manager
FROM: Johnna Preble, City Attorney
SUBJECT: Resolution 6084 - Sale and Lease of Property to Kalispell Lodging, LLC
MEETING DATE: July 18, 2022
BACKGROUND: In 2006, the Montana National Guard moved out of the Armory property at
1840 Highway 93 South and ownership of the property reverted to the City of Kalispell. The City
generated and published a Request for Proposals with specific criteria to seek interest from the
development community to inject capital into the property. Gateway Hospitality Group, Inc.
("Gateway") was the sole respondent to the RFP. Later that year, the City sold a piece of the
property to Gateway and leased the remaining property to Gateway. Gateway then constructed
the Hilton Garden Inn ("Hilton"). Approximately 10,882 square feet of the land previously leased
to Gateway lies underneath the Hilton building.
In early 2022, Kalispell Lodging, LLC assumed the lease and purchased the property from
Gateway. Kalispell Lodging has requested to purchase the area under the hotel and has submitted
an Agreement for Purchase and Sale of Real Estate ("Agreement") that would transfer the
ownership of this land from the City to Kalispell Lodging. The Agreement also grants an
easement from the City to Kalispell Lodging for access and flow of traffic around the northern
perimeter of the Hotel and an easement from Kalispell Lodging to the City for water line, fire
hydrants, and maintenance of the ground water monitoring wells. Additionally, Kalispell
Lodging presented an updated 99-year Lease of Kalispell City Property to Kalispell Lodging for
the parking spaces. Revenue from the lease had always been applied to the operation of the
airport when the airport was managed by the city. When the Airport Users Association began
management and maintenance responsibilities of the airport, the Lease was assigned to the
Association. The sale proceeds and the future lease proceeds will continue to go to the Airport
Association, who has been involved in these discussions.
RECOMMENDATION: It is recommended that the City Council authorize the City Manager to
execute all documents necessary to effectuate the sale and lease of property to Kalispell Lodging,
LLC.
FISCAL EFFECTS: The City will realize the purchase price of the 10,882 square feet of
property in the amount of $59,851.00 or $5.50 per square foot. The City will continue to collect
lease payments beginning at the rate of $0.25 per square foot for 52,341 square feet of leased
property which rate shall increase at a rate of 3% annually and adjust every third year for the term
of the 99-year lease. All proceeds from the sale of the property and the lease will go to the Airport
Users Association.
ALTERNATIVES: Deny authorization to execute all documents necessary to effectuate the sale
and lease of property to Kalispell Lodging, LLC.
ATTACHMENTS:
Resolution 6084
Appraisal Report of Hilton Garden Inn
Amended Plat of Lot 2, Block 1, Airport Addition to Kalispell
Agreement for Purchase and Sale of Real Estate
Lease of Kalispell City Property to Kalispell Lodging, LLC
RESOLUTION NO. 6084
A RESOLUTION APPROVING THE SALE OF CERTAIN REAL PROPERTY
COMMONLY KNOWN AS PORTION A AND PORTION B OF TRACT 1A OF DRAFT
AMENDED PLAT OF LOT 2, BLOCK 1, AIRPORT ADDITION TO KALISPELL TRACT
1, COS 17045 AND PARCEL 1, COS 12729 AND APPROVING THE LEASE OF THE
REAL PROPERTY DESCRIBED IN ATTACHED EXHIBIT A.
WHEREAS, in 2006, the City of Kalispell sold and leased tracts of property located at 1840
Highway 93 South to Gateway Hospitality Group, Inc. ("Gateway") who then
constructed the Hilton Garden Inn ("Hilton") on the property; and
WHEREAS, approximately 10,882 square feet of the land previously leased to Gateway lies
underneath the Hilton building; and
WHEREAS, in early 2022, Kalispell Lodging, LLC assumed the lease and purchased the
property from Gateway; and
WHEREAS, Kalispell Lodging has requested to purchase the area under the hotel and has
submitted an Agreement for Purchase and Sale of Real Estate ("Agreement") that
would transfer the ownership of this from the City to Kalispell Lodging; and
WHEREAS, the Agreement grants an easement from the City to Kalispell Lodging for access
and flow of traffic around the northern perimeter of the Hotel and an easement from
Kalispell Lodging to the City for water line, fire hydrants, and maintenance of the
ground water monitoring wells.
WHEREAS, Kalispell Lodging presented an updated 99-year Lease of Kalispell City Property
to Kalispell Lodging for the parking spaces; and
WHEREAS, the sale proceeds and the future lease proceeds will continue to go to the Airport
Association for the management and maintenance responsibilities of the airport in
accordance with the best interest of the City.
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 documents necessary
to effectuate the sale of real property commonly known as Portion A and
Portion B of Tract IA of Draft Amended Plat of Lot 2, Block 1, Airport
Addition to Kalispell Tract 1, COS 17045 and Parcel 1, COS 12729 and the
lease of the real property described in attached Exhibit A.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, THIS 18TH DAY OF JULY 2022.
Mark Johnson
Mayor
ATTEST:
Aimee Brunckhorst, CMC
City Clerk
EXHIBIT A
KALISPELL CITY LEASE
LEGAL DESCRIPTION
TRACT 1: A PORTION OF LOT 2 OF BLOCK 1 OF AIRPORT ADDITION TO KALISPELL,
A SUBDIVISION RECORDS OF FLATHEAD COUNTY, MONTANA; COMMENCING AT
THE SOUTHEAST CORNER OF SAID LOT 2; THENCE S56°44'00"W A DISTANCE OF
42.60 FEET TO A POINT, SAID POINT BEING THE TRUE POINT OF BEGINNING OF
THE TRACT OF LAND HEREIN DESCRIBED; THENCE CONTINUING S56°44'00"W A
DISTANCE OF 107.54 FEET TO A POINT BEING THE SOUTHWEST CORNER OF SAID
LOT 2; THENCE N32°49'28"W A DISTANCE OF 149.96 FEET TO A POINT BEING THE
NORTHWEST CORNER OF SAID LOT 2; THENCE N56°43'33"E A DISTANCE OF 149.17
FEET TO A POINT ON THE WEST RIGHT OF WAY OF U.S. HIGHWAY NO. 93 BEING
THE NORTHEAST CORNER OF SAID LOT 2; THENCE S33°11'38"E A DISTANCE OF
84.97 FEET ALONG SAID RIGHT OF WAY TO A POINT; THENCE LEAVING SAID
RIGHT OF WAY S56044'00"W A DISTANCE OF 42.60 FEET TO A POINT; THENCE
S33011'38"E A DISTANCE OF 65.00 FEET TO THE POINT OF BEGINNING
THE ABOVE DESCRIBED LEGAL DESCRIPTION IS FOR LEASE PURPOSES ONLY
AND CANNOT BE USED ON DOCUMENTS CONVEYING TITLE.
TRACT 2: BEGINNING AT THE SOUTHWEST CORNER OF LOT 2 OF BLOCK 1 OF
AIRPORT ADDITION TO KALISPELL, A SUBDIVISION RECORDS OF FLATHEAD
COUNTY, MONTANA; THENCE S56046'53"W A DISTANCE OF 149.99 FEET TO A
POINT BEING THE NORTHEAST CORNER OF A TRACT OF LAND AS SHOWN AND
DESCRIBED ON DEED EXHIBIT BOOK 507, PAGE 117, RECORDS OF FLATHEAD
COUNTY, MONTANA; THENCE S56047'26"W A DISTANCE OF 73.33 FEET ALONG THE
NORTH BOUNDARY OF SAID DEED EXHIBIT TO A POINT; THENCE N33016'13"W A
DISTANCE OF 149.72 FEET TO A POINT ON THE SOUTH BOUNDARY OF LOT IA OF
THE RESUBDIVISION OF LOT 1, BLOCK 1 OF AIRPORT ADDITION TO KALISPELL, A
SUBDIVISION RECORDS OF FLATHEAD COUNTY, MONTANA; THENCE N56043'33"E
A DISTANCE OF 224.48 FEET TO A POINT BEING THE NORTHWEST CORNER OF LOT
2 OF BLOCK 1 OF AIRPORT ADDITION TO KALISPELL, A SUBDIVISION RECORDS
OF FLATHEAD COUNTY, MONTANA; THENCE S32049'28"E A DISTANCE OF 149.96
FEET TO THE POINT OF BEGINNING.
THE ABOVE DESCRIBED LEGAL DESCRIPTION IS FOR LEASE PURPOSES ONLY
AND CANNOT BE USED ON DOCUMENTS CONVEYING TITLE.
TRACT 3: COMMENCING AT THE SOUTHWEST CORNER OF LOT 2 OF BLOCK 1 OF
AIRPORT ADDITION TO KALISPELL, A SUBDIVISION RECORDS OF FLATHEAD
COUNTY, MONTANA; THENCE S56046'53"W A DISTANCE OF 149.99 FEET TO A
POINT BEING THE NORTHEAST CORNER OF A TRACT OF LAND AS SHOWN AND
DESCRIBED ON DEED EXHIBIT BOOK 507, PAGE117, RECORDS OF FLATHEAD
COUNTY, MONTANA, BEING THE TRUE POINT OF BEGINNING OF THE TRACT OF
LAND HEREIN DESCRIBED; THENCE S33°16'13"E A DISTANCE OF 278.38 FEET
ALONG THE EAST BOUNDARY OF SAID DEED EXHIBIT TO A POINT; THENCE
S56043'46"W A DISTANCE OF 13.33 FEET TO A POINT; THENCE N33016'13"W A
DISTANCE OF 205.69 FEET TO A POINT; THENCE S56047'24" W A DISTANCE OF 60.00
FEET TO A POINT; THENCE N33016'13"W A DISTANCE OF 72.71 FEET TO A POINT ON
THE NORTH BOUNDARY OF SAID DEED EXHIBIT; THENCE N56047'26"E A
DISTANCE OF 73.33 FEET TO THE POINT OF BEGINNING.
THE ABOVE DESCRIBED LEGAL DESCRIPTION IS FOR LEASE PURPOSES AND
CANNOT BE USED ON DOCUMENTS CONVEYING TITLE.
TRACT 4: BEGINNING AT THE SOUTHWEST CORNER OF TRACT 1 AS SHOWN AND
DESCRIBED ON CERTIFICATE OF SURVEY NO. 17045, RECORDS OF FLATHEAD
COUNTY, MONTANA; THENCE S56052'03"W A DISTANCE OF 13.33 FEET TO A POINT;
THENCE N33016'13"W A DISTANCE OF 144.56 FEET TO A POINT; THENCE N56043'47"E
A DISTANCE OF 13.33 FEET TO A POINT ON THE WEST BOUNDARY OF SAID TRACT
1; THENCE S33016'13"W A DISTANCE OF 144.59 FEET TO THE POINT OF BEGINNING.
THE ABOVE DESCRIBED LEGAL DESCRIPTION IS FOR LEASE PURPOSES ONLY
AND CANNOT BE USED ON DOCUMENTS CONVEYING TITLE
APPRAISAL REPORT
OF
HILTON GARDEN INN
1840 HIGHWAY 93 SOUTH
KALISPELL, MONTANA
U-r 114109I &T/A 1e7_r 01C• I
NOVEMBER 2, 2021
FILE NO.: 161-21
FOR
MR. SHANE PUYEAR
VP/BRANCH MANAGER
STOCKMAN BANK OF MONTANA
590 NORTH MONTANA STREET
❑ILLON, MONTANA 59725
BY
KATIE L. STEVENS, MAI
THOMAS G. STEVENS, MAI, SRA
STEVENS & CO.
P.O. BOX 8287
MISSOULA, MONTANA 59807-8287
,�''TEVENS & (-LIO.
A REAL ESTATE APPRAISING & CONSULTING GROUP
November 15, 2021
Mr. Shane Puyear
VP/Branch Manager
Stockman Bank of Montana
590 North Montana Street
Dillon, Montana 59725
RE: Hilton Garden Inn
1840 Highway 93 South
Dillon, Montana 59901
Our File No. 161-21
Mr. Puyear,
As requested, we have viewed the hotel and convention center, known as the
Hilton Garden Inn, located at 1840 Highway 93 South in Kalispell, Montana. The purpose
of this exercise is to formulate an appraisal report which estimates market value of the
property, as is and as proposed to be completed, as of the effective date of appraisal.
This report is in a format which complies with the reporting requirements set forth
under the 2021 Edition of the Uniform Standards of Professional Appraisal Practice. As
such it contains all the data and reasoning from which the opinion of value is formed, and
the depths of discussions contained in this report are specific to the needs of Stockman
Bank of Montana in gaining an understanding of the current market value of the subject
2
property, as is and as proposed to be completed, as of the effective date of appraisal.
The appraisers are not responsible for the unauthorized use of this report.
The subject property is located on a 4.893-acre or 213,140-square foot parcel that
is irregular in shape. This site has access from and frontage on Highway 93 South. This
parcel has approximately 585 feet of Highway 93 South frontage. This site is level and at -
street grade with the fronting roadway. According to the Montana Department of
Transportation, the subject site has an annual average daily traffic count of 13,064
vehicles. It has all public utilities available to the property.
The building consists of a Hilton Garden Inn hotel and convention center. This
signature improvement is a four-story, Class D orwood-frame building. It was constructed
in 2007, was updated in 2020, and there is a proposed renovation of the facility. This
facility will contain good -quality construction that will be in very -good condition, once
complete.
The hotel improvement is 117,819 square feet in size and has 144 guest rooms in
4 configurations. There are a total of 7 handicap -accessible rooms or suites. The facility's
common area will consist of a guest laundry facility, fitness center, indoor swimming pool
with hot tub, 16,567 square feet of convention center, one breakfast restaurant, one
restaurant/lounge, and one casino. The facility also has two elevators, full heating and
cooling, and vending machine areas.
There is off-street asphalt -paved parking on all sides of the building improvement.
This parking lot accommodates approximately 315 automobiles with numerous handicap -
accessible spaces. The site is nicely landscaped with grass, trees, and shrubs. The
irrigation is accomplished by underground sprinklers.
3
A Phase I Environmental Site Assessment was not provided to us; however, a
visual viewing of the property revealed no on -site contamination, nor did it reveal any
materials stored on site which would constitute hazardous wastes. However, your
appraisers are not experts in this field and if some questions exist a qualified professional
should be contacted.
We have complied with the Competency Provision as required in the Uniform
Standards of Professional Appraisal Practice, based on our education, familiarity with the
Kalispell and Western Montana marketplaces and experience in appraising other
properties of this type.
As a result of our investigations, studies, and analyses, we have formed the
opinion that market value of the subject property, as is and as proposed to be completed,
subject to the Extraordinary Assumptions and Hypothetical Condition, as discussed in the
body of this report, with consideration to cash sale, as of November 2, 2021, is:
NINETEEN MILLION TWO HUNDRED THOUSAND DOLLARS
($19,200,000.00)
"As Is" Value: $15,400,000 (R)
Segregated:
Real Estate, excluding
"previously leased" land: $16,650,000
"Previously Leased" Tracts Value:
63,337 SF x $5.501SF = $ 348,354
$ 350,000 (R)
Furniture, Fixtures,
& Equipment: $ 2,200,000 (R)
(*Estimated @
$15,OOOIRoom)
4
We direct your attention to the data, discussions, and conclusions which follow.
Thank you for the opportunity to be of service.
Respectfully submitted,
Katie L. Stevens, MAI
Montana General Certification
REA — RAG — LIC - 9664
Thomas G. Stevens, MAI, SRA
Montana General Certification
REA - RAG - LIC - 151
5
AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE
THIS AGREEMENT FOR PURCHASE AND SALE OF REAL ESTATE (the
"Agreement") is made and entered into by and between, City of Kalispell, Montana whose
mailing address is 201 First Ave. E., Kalispell, Montana 59901 ("Seller") and Kalispell Lodging,
LLC and/or permitted assigns, whose address is 857 W. Washington Street, Suite 301,
Marquette, Michigan 49855 called "Purchaser" as of the later of the dates set forth after the
parties' signatures below (hereinafter referred to as the "Effective Date"). Acceptance by a party
may be accomplished by delivery to the other party of the original or email or facsimile
transmission of the pages of the Agreement having the party's signature and information provided
by thatparty.
RECITALS
A. Seller owns the parcels of real property generally described as Lease Tracts 1 and 2 on the
ALTA/NSPS Land Title Survey, attached hereto as Exhibit A and incorporated herein by
this reference.
B. Purchaser will have closed on the purchase by the time of Closing, the real property and
improvements commonly known as the Hilton Garden Inn, Kalispell, Montana ("Hotel").
C. A portion of the Hotel lies on Lease Tracts 1 and 2.
D. Seller desires to sell to Purchaser and Purchaser desires to purchase from Seller that certain
portion of Lease Tracts 1 and 2 situated immediately below the structural footprint of the
Hotel upon the following terms and conditions.
AGREEMENT
NOW, THEREFORE, in consideration of the sums of money reflected herein, the mutual
covenants herein contained, and other good and valuable consideration, the receipt and sufficiency
of which are hereby mutually acknowledged, the parties hereto agree as follows:
1. The Real Property. Subject to the terms and conditions of this Agreement, Seller
agrees to sell and convey to Purchaser, and Purchaser agrees to purchase from Seller the following
real property, below:
a. That portion of the real property described on the attached Exhibit A as Lease Tract
1 and Lease Tract 2 which is immediately situated under the structural footprint of
the Hotel (the "Real Property"), it being the intent of the parties to purchase and
sell all of that real property immediately situated beneath the Hotel following a
common boundary relocation to be recorded with the office of the Clerk and
Recorder of Flathead County, Montana, TOGETHER WITH the following:
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All appurtenances and easements or other rights benefitting the Real Property
including but not limited to all buildings, structures and improvements attached
thereto, all rights, title and interest, reversionary or otherwise, in and to all roads,
easements, streets, and ways in, upon or bounding the Real Property, and rights of
ingress and egress thereto.
2. Purchase Price. The total purchase price for the Real Property shall be an amount
equal to $5.50 multiplied by the square footage of the Real Property, which totals 10,882 square
feet, for a total Purchase Price of $59,851 (the "Purchase Price"). The Purchase Price shall be
paid in U.S. certified funds at Closing.
3. Earnest Money. Within five (5) business days after the Effective Date, Purchaser
shall deliver the sum of $5,000.00 (the "Earnest Money") to First American Title Company, 219
East Center Street, P.O. Box 1310, Kalispell, MT 59901, 406-752-5388 (the "Title Company" or
"Closing Agent") to hold in escrow for the benefit of Seller. The Title Company shall hold the
Earnest Money until closing of the purchase and sale ("Closing" as defined in Paragraph 4
below) or, if applicable, receipt of Purchaser's timely notice of termination of this Agreement
pursuant to the provisions of this Agreement. For purposes of this Agreement, the term "business
days" shall mean all days except Saturdays, Sundays and Legal Holidays. If any deadline falls on
a day other than a business day, the deadline shall be extended to the next business day. The
Earnest Money shall be credited to the Purchase Price at Closing.
4. Closing. If the Purchaser has not terminated this Agreement in accordance with the
express provisions of this Agreement, the Closing shall be on the Fifteenth (1511) day after
Purchaser's release or deemed waiver of all contingencies, but no sooner than the recording of
the common boundary relocation survey with the applicable governing agency and in no event
prior to Purchaser's closing on the purchase of the Hotel (the "Closing Date" or "Closing"). The
Closing shall take place at the offices of Title Company which shall act as closing agent. Seller
and Purchaser will deposit with the Closing Agent all instruments and monies necessary to
complete the sale and purchase in accordance with this Agreement on the Closing Date. Each of
the parties shall pay one-half of the customary closing fees of the Closing Agent. At the Closing,
Seller shall pay the premium for issuance of a standard ALTA owner's title insurance policy as
required under this Agreement, and Purchaser shall pay the fees for recording and filing the
warranty deed and any increased premium for extended title coverage or any title endorsements
other enhancements requested by Purchaser. Seller and Purchaser shall each pay their own attorney
fees and other costs involved with their performance of this Agreement.
5. Common Boundary Relocation. The parties acknowledge and agree that the Real
Property that is the subject of this Agreement has not been finally surveyed and until a common
boundary relocation survey is filed with the County Clerk and Recorder, title to the Real Property
may not be transferred in any manner. Purchaser has commissioned a common boundary
relocation survey at Purchaser's expense, a copy of which is attached as Exhibit A. Seller agrees
to reasonably cooperate in all aspects with Purchaser in obtaining approval of the common
boundary relocation, including, but not limited to approval from all governing bodies having
jurisdiction over the common boundary relocation survey as well as execution of the common
boundary relocation survey and any other instruments relating to the same. In the event Purchaser
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is unable to obtain requisite approval of the common boundary relocation survey prior to Closing
for any reason, this Agreement shall be terminated and all Earnest Money shall be promptly
refunded to the Purchaser by the Closing Agent without need for further instruction or agreement
by the Seller.
6. Purchaser's Grant of Easement. Subject to satisfaction of all conditions
precedent to Closing, Purchaser shall execute and deliver to Seller at Closing (1) a non-exclusive
perpetual 20' wide easement for access to the underground water line and fire hydrants; and (2) a
non-exclusive perpetual easement for ingress, egress, installation, inspection, repair and
maintenance of the ground water monitoring wells. The location of said easements are depicted
on the ALTA/NSPS Land Title Survey attached as Exhibit B. Purchaser's counsel shall prepare
initial drafts of such easements for Seller's review as soon as reasonably practicable following the
Effective Date of this Agreement and the parties shall work together in good faith to finalize said
easements to the mutual satisfaction of both parties prior to Closing.
7. Seller's Grant of Easement. Subject to satisfaction of all conditions precedent to
Closing, Seller shall execute and deliver to Purchaser at Closing a non-exclusive perpetual
easement for access and flow of traffic around the northern perimeter of the Hotel, in the area
generally shaded in green on the attached Exhibit B. Purchaser's counsel shall prepare initial drafts
of such easement for Seller's review as soon as reasonably practicable following the Effective
Date of this Agreement and the parties shall work together in good faith to finalize said easement
to the mutual satisfaction of both parties prior to Closing.
8. Title Review Period: Title Policy.
a. As soon as reasonably practicable following the Effective Date of this Agreement,
Seller shall furnish to Purchaser a title commitment (the "Commitment"), pursuant
to which the issuing title company is prepared to issue to Purchaser a standard
coverage ALTA Owner's Policy of Title Insurance in the amount of the Purchase
Price for the Real Property (the "Title Policy"), together with copies of all
documents shown as special exceptions in the Commitment, all vesting deeds, and
the most recent real estate tax statements, showing that Seller owns fee simple
marketable title to the Real Property as well as any and all easements benefitting or
encumbering the Real Property.
b. Purchaser shall have Twenty -One (21) days after the Commitment and copies of all
special exceptions are delivered to Purchaser to review the Commitment and all
issues of title to the Real Property (the "Title Review Period"), and Purchaser shall
have the right to approve or disapprove of any aspect of title to the Real Property,
in Purchaser's discretion.
C. At the end of, or at any time during, the Title Review Period:
(1) Purchaser may give written notice to Seller that Purchaser has elected to
terminate this Agreement based upon Purchaser's review of the
Commitment, in which event the Earnest Money shall be immediately
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refunded to Purchaser, and neither party shall have any further obligation
under this Agreement; or
(2) Purchaser may give written notice to Seller of title irregularities which
Purchaser requires that Sellers correct ("Title Objections").
(3) If written objections to the Commitment are received by Seller, Seller shall
have until 5:00 p.m. prevailing Mountain Time on that date which is ten
(10) days prior to the Closing Date to satisfy them. If Purchaser's objections
are not satisfied within such time, this Agreement may be terminated at
Purchaser's election, or Purchaser may elect to waive such objections, in
which this Agreement shall remain in full force and effect. If Purchaser
terminates this Agreement, the Earnest Money, if any, shall be fully and
promptly returned to Purchaser.
(4) If certain easements, covenants, other restrictions or other matters shown
(or not shown) on the Commitment are added or amended prior to Closing
(hereinafter, "Changes") Purchaser shall have fourteen (14) days after
receipt of notice of such Changes to review and approve such Changes. If
written objections to the Changes are received by Seller, Seller shall have
until Closing to satisfy them to Purchaser's written satisfaction. If Seller
cannot (or elects not to) satisfy Purchaser's objections prior to Closing,
Purchaser may terminate this Agreement, in which case any Earnest Money
will be promptly refunded to Purchaser.
d. Within a reasonable time after the Closing Date, the Title Company shall, at Seller's
expense, issue the Title Policy to Purchaser in accordance with the terms of this
Paragraph.
9. Due Diligence Period. Purchaser shall have a due diligence period ending at 5:00
p.m. prevailing Mountain Time on the 30" day after the Effective Date of this Agreement
("Due Diligence Period"), during which time Purchaser shall be entitled, at Purchaser's sole
expense, to conduct and/or review any and all tests, studies, sampling, surveys, inspections,
investigations, documents and information that Purchaser deems necessary or desirable and for
any other purpose of satisfying Purchaser, in its sole discretion, as to the acceptability and
suitability of the Property.
Purchaser shall be allowed access to the Real Property at all reasonable times for the
purpose of conducting the above -mentioned tests and studies. Purchaser shall not damage, destroy
or harm the Real Property or any improvements thereon except as may be reasonably necessary to
perform such tests and studies, and Purchaser shall repair any damage done to the Real Property
so that it is returned to its condition existing prior to the conduct of any tests or studies. Purchaser
shall not permit any construction or materialmen's liens to be filed against the Real Property as a
result of said tests and studies and agrees to indemnify Seller and hold Seller harmless from and
against any and all damage, cost or expense, including reasonable attorney fees incurred by Seller,
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as a result of Purchaser's tests and studies.
On or before the end of the Due Diligence Period, Purchaser shall have the right to either:
(a) terminate this Agreement by a written notice of termination given to Seller if Purchaser, in its
sole discretion, determines for any or no reason that the Real Property is not satisfactory or is not
acceptable to Purchaser; or (b) provide Seller a written list of objections and concerns ("Due
Diligence Objections"). If Purchaser terminates this Agreement as provided in this paragraph
and does not elect to provide Seller with Due Diligence Objections, the Title Company shall
immediately refund the Earnest Money to Purchaser and thereafter the parties shall have no further
obligations under this Agreement. Unless Purchaser either provides Seller a written notice of
termination or its Due Diligence Objections prior to the expiration of the Due Diligence Period:
(a) Purchaser shall accept the condition of the Real Property as is and this Agreement shall continue
in full force and effect; and (b) the Earnest Money shall thereafter be nonrefundable to the
Purchaser, except as otherwise provided herein. If Due Diligence Objections are timely given,
Seller and Purchaser shall have until 5:00 p.m. prevailing Mountain Time on that date which is ten
(10) days prior to the Closing Date (the "Resolution Deadline") to attempt to resolve such
objections. If the Due Diligence Objections are timely given and are not resolved by the Resolution
Deadline, Purchaser may terminate this Agreement by a written notice of termination given to
Seller prior to Closing, in which event, this Agreement shall be terminated, the Earnest Money
shall be fully and promptly paid to Purchaser and the parties shall have no further obligations under
this Agreement. If no such notice of termination is timely given then: (a) any unresolved Due
Diligence Objections shall be deemed waived; (b) this Agreement shall continue in full force and
effect; and (c) the Earnest Money shall thereafter be nonrefundable to the Purchaser, except as
otherwise provided herein and specifically as provided at paragraph 10(b) below.
10. Warranties and Representations of Seller.
a. Seller makes the following representations to Purchaser. All representations are
made to the actual knowledge of Seller without requirement of further investigation.
(1) Seller has duly and validly authorized and executed this Agreement, and has
full right, title, power and authority to enter into this Agreement and to
consummate the transactions provided for herein, and the joinder of no
person or entity will be necessary to convey the Real Property fully and
completely to Purchaser at Closing. The execution by Seller of this
Agreement and the consummation by Seller of the transactions
contemplated hereby do not, and at the Closing will not, result in a breach
of any of the terms or provisions of, or constitute a default or a condition
which upon notice or lapse of time or both would ripen into a default under
any indenture, agreement, instrument or obligation to which Seller is a party
or by the Real Property or any portion thereof is bound; and does not, and
at the Closing will not, constitute a violation of any laws, order, rule or
regulation applicable to Seller or any portion of the Real Property or any
court or of any federal, state or municipal regulatory body or administrative
agency or other governmental body having jurisdiction over Seller or any
portion of the Real Property.
Agreement for Purchase and Sale of Real Estate — Page 5 of 13
{H-Work/63086/024BUYSELL/00383370.DOCX/2/JLF }
(2) Except as specifically disclosed below, during Seller's ownership of the
Real Property, to the Seller's actual knowledge no portion of the Real
Property has been used as a landfill or for the storage or disposal of any
hazardous or toxic materials, and to Seller's actual knowledge, no portion
of the Real Property or the improvements has been used for the storage or
disposal of any hazardous or toxic materials. To the Seller's actual
knowledge, there are no underground fuel tanks presently located under the
Real Property. Seller affirmatively discloses that the Real Property is
subject to continued groundwater monitoring by the Montana Department
of Environmental Quality in connection with the release of hazardous
materials from a 1000-gallon gasoline underground storage tank that was
located at the former Kalispell Armory Facility and which was removed on
November 16, 1991. Seller has accepted responsibility, and agrees that it
shall remain responsible, under state and federal law, for any environmental
contamination on this site. The provisions of this paragraph shall survive
the closing of this transaction.
(3) Seller has no knowledge of any condemnation proceedings affecting the
Real Property.
(4) Seller has no knowledge of any federal, state or local governmental
proceeding or effort claiming or asserting violation of any laws, ordinances,
statutes, or regulations affecting the Real Property, including, but not
limited to, environmental concerns.
(5) Seller has no knowledge of any federal, state, or local proceeding or effort
to close, restrict, or change any highway or road providing access to the
Real Property.
(6) Seller has no knowledge of any current disputes or threatened claims
involving access to the Real Property.
(7) Seller has no knowledge of any claims against the Real Property by any
federal, state or local authority, or any third party.
(8) Seller has no knowledge of any claims by a third party forprescriptive rights
across, through, or on the Real Property.
(9) Seller knows of no boundary, fence, use or other disputes regarding the Real
Property.
(10) Seller represents that execution of this Agreement by Seller will not give
rise to any causes of action on the part of any third parties, or result in breach
of any other agreements to which Sellers are a party.
Agreement for Purchase and Sale of Real Estate — Page 6 of 13
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(11) Seller has no knowledge of any leases or other rights of third parties
affecting the Real Property that have not been disclosed to Purchaser or
referenced in the Commitment.
(12) Seller has not received written notice of any pending or threatened actions,
suits or proceedings against or affecting the Real Property or any portion
thereof, or relating to or arising out of the ownership, operation,
management, use or maintenance of the Real Property.
b. Seller agrees that the warranties and representations set forth above shall remain
true and in effect throughout the term of this Agreement and shall survive the
Closing.
11. Purchaser's Representations and Warranties. Purchaser hereby represents
and warrants to Seller as of the date of this Agreement and hereby agrees with Seller as follows:
a. Purchaser is a limited liability company duly organized and validly existing under
the laws of the State of Montana.
b. The execution and delivery of this Agreement and the performance of Purchaser's
obligations hereunder have been, or prior to the end of the Due Diligence Period
will be, duly authorized by all necessary action on the part of the Purchaser and its
constituent owners and/or beneficiaries and this Agreement constitutes a valid and
binding obligation of the Purchaser.
C. No consent, waiver, approval or authorization is required from any person or entity
(that has not already been obtained or will be obtained on or prior to the Closing)
in connection with the execution and delivery of this Agreement by Purchaser or
the performance by Purchaser of the transactions contemplated herein.
12. Closing Documents and Purchase Consideration. The following are the
documents required for the Closing.
a. A General Warranty Deed, in a form acceptable to Purchaser and the Title
Company, conveying good, indefeasible and marketable fee simple title to the Real
Property, with all easements, tenements, fixtures, hereditaments and
appurtenances thereunto belonging, to the Purchaser or its assigns, free and clear
of all liens, claims, encumbrances or exceptions whatsoever, except prior mineral
and royalty reservations or conveyances of record, and oil, gas, and mineral leases
of record; real estate taxes and assessments for the year in which Closing occurs
and any other liens, encumbrances or exceptions expressly agreed to herein.
b. At Closing, Seller shall deliver such instruments or documents as are necessary,
or reasonably required by Purchaser and the Title Company, to evidence the status
and capacity of Seller and the authority of the person or persons who are executing
the various documents on behalf of Seller in connection with the purchase and sale
Agreement for Purchase and Sale of Real Estate — Page 7 of 13
{H-Work/63086/024BUYSELL/00383370.DOCX/2/JLF }
transaction contemplated herein.
C. Seller and Purchaser shall also execute such other documents as are necessary to
implement the terms of this Agreement, including, but not necessarily limited to
the common boundary relocation survey. Purchaser shall deliver all purchase
consideration required by this Agreement.
13. Closing Documents. To the extent feasible during the Due Diligence Period, but
at least ten (10) days before the Closing Date, Seller shall provide Purchaser's counsel proposed
form closing documents for review and approval.
14. Taxes, Assessments Prorations. To the extent the Seller is not tax-exempt, the
real property taxes and assessments on the Real Property for the calendar year of the Closing shall
be prorated (based on a 365-day year) as of the Closing Date. If the taxes to be prorated cannot be
determined, an adjustment for prorated real estate taxes will be made by agreement of the parties
based on the principle of proration stated in the preceding sentence. Purchaser's and Seller's
obligations pursuant to this paragraph shall expressly survive the Closing for the period of time
necessary to achieve a final proration of such taxes.
15. Risk of Loss. Risk of loss to the Real Property by fire or casualty shall remain with
Seller until the completion of, and shall be assumed by Purchaser after, the Closing, subject to the
terms of this paragraph. Seller shall promptly notify Purchaser of any material loss or damage to
the Real Property by fire or casualty, or of any condemnation or eminent domain proceedings
threatened or commenced against the Real Property. In the event of any material loss or damage
to the Real Property by fire or casualty, or of any condemnation or eminent domain proceedings
threatened or commenced against the Real Property, Purchaser, in its sole discretion, may deliver
a written notice of termination to the Seller, in which event, all Earnest Money shall be promptly
returned to Purchaser and the parties shall thereafter have no further obligations under this
Agreement.
16. Possession. Possession of the Property shall be delivered to Purchaser on the
Closing Date.
17. Conditions to Purchaser's Obligation to Close. The obligation of Purchaser to
purchase the Real Property is subject to the fulfillment, at or before Closing, of each of the
following conditions, any one or portion of which may be waived in writing by Purchaser:
a. The common boundary relocation survey shall be approved by all governmental
bodies having jurisdiction over the same and duly and properly executed before a
Agreement for Purchase and Sale of Real Estate — Page 8 of 13
{H-Work/63086/024BUYSELL/00383370.DOCX/2/JLF }
notary public by all applicable landowners and governing body officials and in
proper form for recording with the Flathead County Clerk and Recorder's office.
b. The Title Company shall be committed to issue the Title Policy as provided in
Paragraph 8 of this Agreement;
C. At Closing, Seller shall convey all of Seller's right, title and interest in and to the
Real Property;
d. Seller shall have all requisite power and authority to enter this Agreement and
consummate the transactions contemplated herein;
e. At Closing, Seller shall have delivered all documents and taken all other actions
required hereunder and shall not be in breach of any material term or provision of
this Agreement;
f. At Closing, there shall not exist, or Seller shall have delivered or arranged to be
delivered to the Title Company, all documents necessary to remove or release any
encumbrance or title defect disclosed on the Commitment and not accepted or
waived by Purchaser pursuant to Paragraph 8 of this Agreement;
g. The Real Property shall not have been condemned, in whole or in part, at any time
on or prior to the Closing; as of the Closing, there is no material loss or damage to
the Real Property;
h. All of Seller's representations and warranties shall be true and correct as of the
Closing;
i. At the Closing, no suit, action or other proceeding shall have been threatened or
instituted to restrain, enjoin, or otherwise prevent the consummation of this
Agreement or the contemplated transactions; and
As of Closing, Purchaser shall have approved or waived all of the matters set forth
in this Agreement which are expressly subject to Purchaser's approval, or as to
any of the matters to which Purchaser timely objected as provided in this
Agreement, and which Seller has agreed to resolve, and Seller has resolved such
objection or has agreed to resolve such objection in a manner acceptable to
Purchaser.
18. Conditions to Seller's Obligation to Close. The obligation of Seller to
consummate the transactions contemplated by this Agreement is subject to the fulfillment, at or
before Closing, of each of the following conditions, any one or a portion of which may be waived
in writing by Seller:
a. At the Closing, no suit, action, or other proceeding shall have been threatened or
instituted to restrict, enjoin or otherwise prevent the consummation of this
Agreement for Purchase and Sale of Real Estate — Page 9 of 13
{H-Work/63086/024BUYSELL/00383370.DOCX/2/JLF }
Agreement or the contemplated transactions;
b. Purchaser shall have all requisite power and authority to enter this Agreement and
consummate the transactions contemplated herein; and
C. Purchaser shall have delivered all documents, paid such consideration, and taken
all other actions required hereunder and shall not be in breach of any material term
or provision of this Agreement.
19. Remedies Upon Default.
a. If Seller fails to consummate this Agreement in accordance with its terms for any
reason within the control of Seller, then Purchaser shall have the option of any of
the following:
(1) Terminating this Agreement by giving written notice to Seller, in which
event Purchaser shall be entitled to a return of the Earnest Money; or
(2) Enforcing specific performance by Seller of Seller's obligations under this
Agreement.
b. If Purchaser fails to consummate this Agreement in accordance with its terms for
any reason within the control of Purchaser, Seller shall have the option of any of
the following:
(1) Terminating this Agreement by giving written notice to Purchaser, and
retaining the Earnest Money, together with any interest thereon, as
liquidated damages for Purchaser's breach of this Agreement, it being
understood and agreed by the Parties that actual damages for such breach
are uncertain and would be difficult, if not impossible, to determine.
20. Brokers. Purchaser is represented by Broker Robert Mahaney, who Purchaser
hereby expressly discloses is affiliated with the Purchaser, Kalispell Lodging, LLC. No
commission shall be due or owing as a result of this transaction.
21. 1031 Exchanffe Provisions. Each party to this Agreement reserves the right to
engage in an IRC § 1031 tax -deferred exchange. Each party agrees that, notwithstanding any other
provision to the contrary, a parry in an IRC §1031 tax -deferred exchange (the "Exchanging
Party") may assign such party's rights and obligations under this Agreement to facilitate such an
exchange. Each party agrees that it will cooperate with an Exchange Party in any reasonable
manner necessary to enable the Exchanging Party in any reasonable manner necessary to enable
the Exchanging Party to qualify for such exchange, at no additional cost or liability to the party
not engaging in the exchange and without delaying Closing.
22. Indemnity_. Seller agrees that Purchaser does not acquire or become obligated for
any liabilities associated with the Real Property except as expressly set forth herein. Seller
Agreement for Purchase and Sale of Real Estate — Page 10 of 13
{H-Work/63086/024BUYSELL/00383370.DOCX/2/JLF }
indemnifies and holds harmless Purchaser from and against all claims, costs, charges and demands,
including attorneys' fees, pertaining to the Real Property arising from or relating to Seller's
ownership of the Real Property to the date of Closing. Seller further agrees to indemnify and hold
harmless the Purchaser, from and after the Closing Date, from and against all claims, costs, charges
and demands, including attorneys' fees, pertaining to any environmental contamination, ongoing
groundwater monitoring and any environmental remediation, relating to the 1000-gallon gasoline
underground storage tank that was located at the former Kalispell Armory Facility. The provisions
of this paragraph shall survive the Closing.
23. Survival of Agreements. This Agreement and all of the representations,
warranties, covenants, promises, indemnities and agreements of the Parties contained herein or in
documents provided pursuant to this Agreement shall survive the execution and delivery of this
Agreement, the Closing and the consummation of the transactions contemplated hereby.
24. Assignability. Purchaser shall not assign its interest in this Agreement without
Seller's prior written consent; provided, however, that Purchaser shall be entitled to assign this
Agreement without Seller's prior written consent if the assignment is to an entity owned or
affiliated with Purchaser.
25. Notices. All notices or deliveries required under this Agreement shall be given in
writing and directed to Purchaser and Seller as follows:
Purchaser:
Kalispell Lodging, LLC
Attn: Robert Mahaney
857 W. Washington Street, Suite 301
Marquette, MI 49855
Tel: (906) 228-3900
Email: mthomas(c�r�,verideagroup.com
With copy to:
Jennifer Farve, Esq.
Cusick, Farve, Mattick & Michael, P.C.
517 S. 22"d Avenue, Suite 5
Bozeman, MT 59718
Tel: (406) 587-5511
Email: Jenniferkcmrlawmt.com
Seller:
City of Kalispell
Attn: Johnna Preble
201 First Avenue East
Kalispell, MT 59901
Tel: (406) 758-7709
Email: jpreble@kalispell.com
Agreement for Purchase and Sale of Real Estate — Page 11 of 13
{H-Work/63086/024BUYSELL/00383370.DOCX/2/JLF }
All notices so given shall be considered effective, if hand -delivered, when received; if
delivered by facsimile, at the time and date of printed telephone confirmation of successful
transmission; if delivered by email, as of the time and date of transmission as indicated by
sender's computer; if delivered by nationally recognized overnight courier, one (1) business day
after timely deposit with the courier service, charges prepaid; or if mailed, upon the date of
deposit, first class postage prepaid certified mail, return receipt requested, with the United States
Postal Service. Either party may change the address to which future notices shall be sent by
notice given in accordance with this paragraph to the other party.
In the alternative, notice shall be deemed sufficient if given in the manner provided above
solely to a party's attorney at that attorney's regular place of business.
26. Preservation of Real Property/No Further Encumbrances. During the term of
this Agreement, Seller shall not record or allow to be recorded any further liens, easements, or
encumbrances against the Real Property and shall prevent and refrain from using or permitting
others to use the Real Property for any purpose or in any manner or enter into any agreements that
would adversely affect the Purchaser's intended use or condition of the Real Property. In the event
of such materially adverse use or agreement, Purchaser may, without liability, refuse to close the
purchase of the Real Property, in which event the Earnest Money shall be refunded to Purchaser.
27. Miscellaneous Provisions.
Time is of the essence in this Agreement.
b. This Agreement shall be construed in accordance with the laws of the State of
Montana.
In the event of any litigation or other court action, arbitration or similar adjudicatory
proceeding is commenced by any party to enforce its rights under this Agreement
against any other party, all fees, costs and expenses, including without limitation,
reasonable attorneys' fees and court costs, incurred by the prevailing party in such
litigation, action, arbitration or proceeding, including on appeal, shall be
reimbursed by the losing party; provided, that if a party to such litigation, action or
arbitration or proceeding prevails in party, and loses in part, the court, arbitrator or
other adjudicator presiding over such litigation, action, arbitration or proceeding
shall award a reimbursement of the fees, costs and expenses incurred by the party
on an equitable bases. This paragraph shall survive the Closing as well as the
termination of this Agreement.
d. This Agreement shall be binding upon and inure to the benefit of the heirs,
successors and assigns of the parties hereto.
Each party agrees to execute such documents as are necessary to affect theterms of
this Agreement. Each party agrees to supply such information as the Title
Company or other party may require regarding the authority of the parties to act in
this matter.
Agreement for Purchase and Sale of Real Estate — Page 12 of 13
{H-Work/63086/024BUYSELL/00383370.DOCX/2/JLF }
Where duties are assigned to an escrow agent herein, this Agreement shall
constitute escrow instructions that the escrow agent may accept by execution of a
separate document accepting the instructions as contained in this Agreement.
g. This Agreement contains the entire understanding of the parties, and supersedes all
negotiations, term sheets, and other discussions of the parties prior to execution of
this Agreement. This Agreement may be modified only by a written instrument
signed by both parties.
h. Both parties have participated in the drafting of this Agreement and have been
represented by their own counsel and therefore waive the general rule of
construction that an agreement shall be construed against its drafter.
28. Counterparts. This Agreement may be executed in one or more counterparts, such
agreements taken collectively shall be considered an original, valid and binding Agreement.
29. Facsimile / Electronic Execution. The parties agree that a facsimile or other non -
alterable electronic copy (e.g..pdf file) of this Agreement which contains the parties' signatures
may be used as the original.
IN WITNESS WHEREOF, the parties have executed this Agreement effective as of later
of the dates set forth after their signatures below.
PURCHASER:
Kalispell Lodging, LLC
Robert E. Mahaney, Manager
Date:
SELLER:
City of Kalispell, Montana
Name:
Title:
Date:
[Exhibits A and B Follow Immediately]
Agreement for Purchase and Sale of Real Estate — Page 13 of 13
{H-Work/63086/024BUYSELL/00383370.DOCX/2/JLF }
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LEASE OF KALISPELL CITY PROPERTY
TO KALISPELL LODGING, LLC
This Lease Agreement (the "Agreement") entered into as of the day of
, 2022 ("Effective Date"), by and between the City of Kalispell, a body politic and
corporate created by Montana State Statutes ("Lessor"), and Kalispell Lodging, LLC, a Montana
Limited Liability Company, of 857 W. Washington Street, Suite 301, Marquette, MI 49855
("Lessee").
WITNES'S'ETH:
WHEREAS, Lessor now owns, controls, and operates the Kalispell City Airport (the
"Airport") and adjacent real property in the City Kalispell, County of Flathead, State of Montana;
WHEREAS, Lessee is constructing a hotel and conference center facility adjacent to the
Kalispell City Airport and requires parking space that exceeds the amount of land that it owns;
and
WHEREAS, it is in the best interests of the Lessor to lease a portion of its airport property
and adjacent real property to the Lessee for the purposes of fulfilling the Lessee's parking
requirements of the hotel and conference facility.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
TERM
The term of this Agreement shall be for a period of NINETY-NINE (99) years,
commencing on the Effective Date, and continuing for ninety-nine years, unless earlier
terminated under the provisions of this Agreement.
ARTICLE II
LEASED PREMISES
Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor, the following
premises comprising 52,341 square feet, described as shown by maps and legal description
attached hereto as Exhibit "A" and incorporated fully herein by this reference.
ARTICLE III
RIGHTS AND OBLIGATIONS OF LESSEE
A. Required Services. Lessor hereby grants a leasehold to Lessee in the above -described
premises, and Lessee agrees to maintain a hotel, conference center and restaurant facility
consistent with the plans it submitted and were accepted by the City of Kalispell in the Planned
Unit Development Agreement dated May 2006. Lessee further agrees that it and its assigns are
bound to continue to operate the hotel, conference center and restaurant facility during the term of
the lease and that the lease shall terminate if those services are ever discontinued.
B. Wellhead Protection. The City of Kalispell owns and operates a water well site
contiguous to the above -described leased premises. The City completed a Source Water
Delineation and Assessment Program designed to protect a portion of the underground aquifer
that provides potable water to the City's five groundwater wells. The program reduces the threat
of groundwater contamination by controlling the type of uses that can occur within a 100-foot
LEASE OF KALISPELL CITY PROPERTY
Page I
{H-Work/63086/024/LEASE/00374662.DOC/2/JLF}
radius of each well (i.e., the CONTROL ZONE). The following is a list of uses that the Lessee is
not permitted within the CONTROL ZONE.
1. Discharge. Lessee shall discharge, or cause, or permit the discharge of regulated
substances to the groundwater or surface water that may have a deleterious affect on the
groundwater in the City, unless the discharge complies with federal, state, and local regulations.
2. Septic Tank Systems. No septic system, wastewater disposal system, sewer pipe,
sewage lift station, French drain, or class V injection well, shall be located within the CONTROL
ZONE.
3. On -Site Sewage Disposal. Lessee shall not place, maintain, or operate on -site sewage
disposal from a septic tank or wastewater treatment plant within the CONTROL ZONE upon any
lot abutting any portion of any public street in which such portion of such street a public sewer is
laid. Lessee shall not place, maintain, or operate on -site sewage disposal such as a septic tank
system within the CONTROL ZONE.
4. Petroleum Products. Lessee shall not discharge any petroleum product(s), treated or
untreated, in the CONTROL ZONE.
5. Underground Storage Tanks. No underground storage tanks used to store regulated
substances may be installed in the CONTROL ZONE for any type of purpose.
6. Dry Wells and/or Storm Water Detention Ponds. Lessee shall not direct the
discharge of any regulated substance, directly or indirectly, into the groundwater by the use of a
dry well, detention pond, retention pond, or storm water Swale.
7. Solid Waste Disposal. It shall be unlawful to place or maintain any solid waste
disposal, transfer, or processing facility, or any hazardous material waste disposal, transfer, or
processing facility within the CONTROL ZONE.
8. Storage Containers. All regulated substances outside of the CONTROL ZONE shall
be stored in suitable containers to reduce the chance for the substances to be accidentally
introduced into the environment. These storage containers shall be product -tight and shall be
provided with secondary containment. Defective storage containers shall be removed from
service for repair or disposal in accordance with local, state, and federal standards.
9. Secondary Containment. Where secondary containment is required, it shall be
constructed of a material of sufficient structural integrity and composition to contain the required
capacity of liquids and not be structurally weakened because of contact with the discharge of the
regulated substance to be contained. The material shall be free of cracks, joints, gaps, or other
imperfections, which would allow leakage through the containment material. This containment
can take many forms such as trays under containers, floor curbing or other systems designed to
hold materials or liquids that may discharge from containers holding regulated substances.
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C. Compliance with Laws. Lessee shall comply with all federal, state and local laws, rules
and regulations which may apply to the conduct of the business contemplated, including rules and
regulations promulgated by Lessor, and Lessee shall keep in effect and post in a prominent place
all necessary and/or required licenses or permits.
D. Maintenance and Repair. Lessee shall be responsible for the maintenance and repair of
the leased premises and shall keep and maintain the leased premises in good condition, order and
repair, and shall surrender the same upon the expiration of this Agreement, in the condition in
which they are required to be kept, reasonable wear and tear and damage by the elements not
caused by Lessee's negligence excepted.
E. Parking and Access for Red Eagle Aviation. Until such time as the airport expansion is
completed and the business known as Red Eagle Aviation is moved from its present location next
to the subject premises, ten parking spaces within Tract 4 of the leased premises shall be
designated as daytime (6:00am to 6:00pm) reserved parking for employee and guest parking of
Red Eagle Aviation and used by Red Eagle Aviation for fuel truck access to its leased premises.
ARTICLE IV
APPURTENANT PRIVILEGES
Use of Airport Facilities. Lessee shall be entitled, in common with others authorized, to the use
of all facilities and improvements of a public nature which now are or may hereafter be connected
with or appurtenant to the Airport, including the use of landing areas, runways, taxiways and
aircraft parking areas designated by Lessor.
ARTICLE V
PAYMENTS
A. Lease Rate. In consideration of the rights and privileges granted by this Agreement, Lessee
agrees to pay to Lessor during the first year of the term of this Agreement the sum equal to $.25
per square foot per year.
B. Payments. The annual lease payment specified above shall be paid annually no later than the
1st day of July, the first payment, being prorated and paid in advance on the Effective Date of this
Agreement.
C. Lease Rate Escalation. Commencing on July 1, 2024, the Lease Rate shall be increased to
reflect a three percent annual increase in the lease rate with the annual per square foot rate
rounded to the nearest penny. The first Lease Rate Escalation shall occur on July 1, 2024 and
shall increase the Lease Rate to ($.2652 basis) $.27 cents per square foot per year. The Lease
Rate shall thereafter increase on July 1st on the third year of every year thereafter to reflect a three
percent annual increase in the lease rate with the annual per square foot rate rounded to the
nearest penny. For purposes of clarity, the second Lease Rate Escalation will occur on July 1,
2027, and every third year thereafter until the expiration of this Lease. The annual lease rates and
lease escalation is set forth on the Land Lease Schedule attached hereto and incorporated herein
by this reference.
D. Delinquency Charge. A delinquency charge of 5% per month shall be added to payments
required which are rendered more than ten (10) days delinquent.
E. Place of Pam. All payments due Lessor from Lessee shall be delivered to the City of
Kalispell at P.O. Box 1997, Kalispell, MT 59903-1997.
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ARTICLE VI
UTILITIES
Lessee shall have the right to use the utility service facilities located on the Premises at
the commencement of the term of this Agreement. In the event Lessee fails to pay any utility
bills when due, Lessor may, at its option, pay the same and collect from Lessee the amounts so
disbursed, plus interest at the rate of 1% per month or fraction thereof.
ARTICLE VII
INSURANCE
A. Required Insurance. Lessee shall obtain and maintain continuously in effect at all times
during the term of this Agreement, at Lessee's sole expense, General Liability coverage on the
premises in the minimum amount of $750,000 per occurrence and $1,500,000 aggregate which
policy shall name the City of Kalispell as an additional named insured. These minimums shall be
adjusted accordingly in the event Montana Law is amended to increase the liability limits of local
governments.
B. Notice. Lessor agrees to notify Lessee in writing as soon as practicable of any claim, demand
or action arising out of an occurrence covered hereunder of which Lessor has knowledge, and to
cooperate with Lessee in the investigation and defense thereof.
ARTICLE VIII
INDEMNIFICATION
To the extent not covered by insurance carried in favor of Lessor, Lessee shall keep and
hold harmless Lessor from and against any and all claims, demands, suits, judgments, costs and
expenses asserted by any person or persons, including agents or employees of Lessor or Lessee,
by reason of death or injury to persons or loss or damage to property, resulting from Lessee's
operations; or anything done or omitted by Lessee, under this Agreement except to the extent that
such claims, demands, suits, judgments, costs and expenses may be attributed to the acts or
omissions of Lessor or its agents or employees.
ARTICLE IX
ASSIGNMENT
This agreement, or any part thereof, may not be assigned, transferred or subleased by
Lessee, by process or operation of law or in any other manner whatsoever, without the prior
written consent of Lessor, which consent shall not be withheld unreasonably.
ARTICLE X
NON-DISCRINHNATION
Notwithstanding any other or inconsistent provision of this Agreement, during the
performance of this Agreement, Lessee, for itself, its heirs, personal representatives, successors in
interest and assigns, as part of the consideration for this Agreement, does hereby covenant and
agree, as a covenant running with the land, that:
A. No person on the grounds of race, color, religion, sex, or national origin shall be
excluded from participation in, denied the benefits of, or otherwise be subjected to discrimination
in; the use of the Premises.
B. In the construction of any improvement on, over or under the Premises, and the
furnishing of services therein or thereon, no person on the grounds of race, color, religion, sex or
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national origin shall be excluded from participation in, denied the benefit of, or otherwise be
subjected to discrimination;
C. Lessee shall use the Premises in compliance with all other requirements imposed by
pursuant to Title 49, Code of Federal Regulations, Department of Transportation, Subtitle A,
Office of the Secretary, Part 21, Nondiscrimination in Federally Assisted Programs of the
Department of Transportation -Effectuation of Title VI of the Civil Rights Act of 1964, and as
said regulations may be amended.
D. In the event of breach of any of the above non-discrimination covenants, Lessor shall
have the right to terminate this Agreement and to reenter and repossess the Premises and hold the
same as if said Agreement had never been made or issued. This provision does not become
effective until the procedures of 49 CFR Part 21 have been followed and completed, including
expiration of appeal rights.
ARTICLE XI
REQUIREMENTS OF THE UNITED STATES
This Agreement shall be subject and subordinate to the provisions of any existing or
future agreement between Lessor and the United States, or any agency thereof, relative to the
operation or maintenance of the Airport, the execution of which has been or may be required as a
condition precedent to the expenditure of federal funds for the development or operation of the
Airport provided, however, that Lessor shall, to the extent permitted by law, use its best efforts to
cause any such agreements to include provisions protecting and preserving the rights of Lessee in
and to the Premises, and to compensation for the taking thereof, interference therewith and
damage thereto, caused by such agreement or by actions of Lessor or the United States pursuant
thereto.
ARTICLE XII
DEFAULT AND TERNIINATION
A. Termination by Lessee. This Agreement shall be subject to termination by Lessee in the event
of anyone or more of the following events:
1. The default by Lessor in the performance of any of the terms, covenants or conditions
of this Agreement, and the failure of Lessor to remedy, or undertake to remedy, to Lessee's
satisfaction, such default for a period of thirty (30) days after receipt of notice from Lessee to
remedy the same.
2. Damage to or destruction of all or a material part of the Premises necessary to the
operation of Lessee's business.
3. The lawful assumption by the United States, or any authorized agency thereof, of the
operation, control or use of the Airport, or any substantial part or parts thereof, in such a manner
as to restrict substantially Lessee from conducting business operations for a period in excess of
ninety (90) days.
B. Termination by Lessor. This Agreement shall be subject to termination by Lessor in the event
of anyone or more of the following events:
1. The default by Lessee in the performance of any of the terms, covenants or conditions
of this Agreement, and the failure of Lessee to remedy, or undertake to remedy, to Lessor's
reasonable satisfaction, such default for a period of thirty (30) days after receipt of notice from
Lessor to remedy the same.
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2. Lessee files a voluntary petition in bankruptcy, including a reorganization plan, makes
a general or other assignment for the benefit of creditors, is adjudicated as bankrupt or if a
receiver is appointed for the property or affairs of Lessee and such receivership is not vacated
within thirty (30) days after the appointment of such receiver.
C. Exercise. Exercise of the rights of termination set forth in Paragraphs A and B, above, shall be
by written notice to the other party within thirty (30) days following the event giving rise to the
termination.
D. Removal of Property. Upon termination of this Agreement for any reason, Lessee, at its sole
expense, shall remove from the Premises all signs, trade fixtures, furnishings, personal property
equipment and materials, which Lessee was permitted to install or maintain under the rights
granted herein. If Lessee shall fail to do so within thirty (30) days, then Lessor may effect such
removal or restoration at Lessee's expense, and Lessee agrees to pay Lessor such expense
promptly upon receipt of a proper invoice therefore.
E. Causes of Breach: Waiver.
1. Neither party shall be held to be in breach of this Agreement because of any failure to
perform any of its obligations hereunder if said failure is due to any cause for which it is not
responsible and over which it has no control; provided, however, that the foregoing provision
shall not apply to failures by Lessee to pay fees, rents or over charges to Lessor.
2. The waiver of any breach, violation or default in or with respect to the performance or
observance of the covenants and conditions contained herein shall not be taken to constitute a
waiver of any such subsequent breach, violation or default in or with respect to the same or any
other covenant or condition hereof.
ARTICLE XIII
ARBITRATION
Except as provided in Paragraph I of Article V of this Agreement, all claims or disputes
arising out of or relating to this Agreement shall be settled by arbitration in accordance with the
Commercial Arbitration Rules of the American Arbitration Association then obtaining. Notice of
the demand for arbitration shall be filed in writing with the other party to the Agreement and with
the American Arbitration Association and shall be made within a reasonable time after the claim
or dispute has arisen. The award rendered by the arbitrators shall be final, and judgment may be
entered upon it in accordance with applicable law in any court having jurisdiction thereof.
Except by written consent of the person or entity sought to be joined, no arbitration
arising out of or relating to the Agreement shall include, by consolidation, joinder or in any other
manner, any person or entity not a party to the Agreement, unless it is shown at the time the
demand for arbitration is filed that (1) such person or entity is substantially involved in a common
question of fact or law; (2) the presence of such person or entity is required if complete relief is
to be accorded in the arbitration; and (3) the interest or responsibility of such person or entity in
the matter is not insubstantial.
The agreement of the parties to arbitrate claims and disputes shall be specifically
enforceable under the prevailing arbitration law.
Pending final decision of the arbitrator or arbitrators, the parties shall proceed diligently
with the performance of their obligations under this Agreement.
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ARTICLE XIV
NIISCELLANEOUS PROVISIONS
A. Entire Agreement. This Agreement constitutes the entire understanding between the parties,
and as of its Effective Date supersedes all prior or independent agreements between the parties
covering the subject matter hereof, including, without limitation, that certain Lease Agreement
entered into July 12, 2006 by and between the City and Kalispell Hotel, LLC, recorded on
December 1, 2005 as Instrument No. 2006-192-08460, records of Flathead County, Montana.
Any change of modification hereof must be in writing signed by both parties.
B. Severability. If a provision hereof shall be finally declared void or illegal by any court or
administrative agency having jurisdiction, the entire Agreement shall not be void, but the
remaining provisions shall continue in effect as nearly as possible in accordance with the original
intent of the parties.
C. Notice. Any notice given by one party to the other in connection with this Agreement shall be
in writing and shall be sent by registered mail, return receipt requested, with postage and
registration fees prepaid:
1. If to Lessor, addressed to:
City Manager
P.O. Box 1997
Kalispell, MT 59903-1997
2. If to Lessee, addressed to:
Kalispell Lodging, LLC
Attn: Robert Mahaney
857 W. Washington Street, Suite 301
Marquette, MI 49855
Notices shall be deemed to have been received on the date of receipt as shown on the
return receipt.
D. Headings. The headings used in this Agreement are intended for convenience of reference
only and do not define or limit the scope or meaning of any provision of this Agreement.
E. Governing Law. This Agreement is to be construed in accordance with the laws of the State
of Montana.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and
year first above written.
LESSOR:
CITY OF KALISPELL
LESSEE:
KALISPELL LODGING, LLC
a Montana limited liability company
City Manager Robert Mahaney, Manager
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STATE OF MONTANA )
) ss.
County of Flathead )
On this day of , 2022, before me, a Notary Public for the State of
Montana, personally appeared , City Manager of the City of Kalispell
and proved to me to be the person whose name is subscribed to the within instrument, and
acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year hereinabove first written.
STATE OF
ss.
County of
NOTARY PUBLIC State of Montana
Residing at:
My Commission expires:
On this day of , 2022, before me, a Notary Public for the State of
, personally appeared Robert Mahaney, as Manager of Kalispell Lodging, LLC, a
Montana limited liability company, proved to me to be the person whose name is subscribed to
the within instrument, and acknowledged to me that he executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the
day and year hereinabove first written.
NOTARY PUBLIC State of
Residing at:
My Commission expires:_
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