DNRC Negotiations - Kidsports LeaseCITY QIF �- .��- City of Kalispell
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Post Of sce Box 1997 - Kalispell, Montana 59903
"o 7Al '4 Telephone: (4D6) 758-7701 Fax: (406) 758-7758
REPORT TO: Mayor Tammi Fisher and City Council
FROM. Jane Howington, City Manager
SUBJIECT: DNRC Negotiations — Kid5ports Lease
MEETING DATE: March 1, 2010
BACKGROUND: DNRC, I d ports, and the City of Kalispell have been working on a
project that could provide a revenue strum to offset the lease costs of the Kid ports complex. A
key component of the proposed project plan is the redeveloprnent of the old DNRC facility on the
west side of US Highway 93,
The three partners have drafted a proposal which will be reviewed at the work session Monday
evening. The reason for this review is two -fold. First, it has been some time since this topic was
discussed and second, the partners want to make sure the council is knowledgeable and supportive
of this project approach before an RFP is released to the public.
Attached is summary information concerning the parameters in which DNRC trust lands must
comply: a review of the Kid.Sport's organization; a short history of the project; and the proposed
RFP strategies.
Members fmrn all three parmers will be present to answer any questions.
Respectively submitted,
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Jame Howinglon
City Manager
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. c�naNMandate
DNR ' Trust Lands Mission Statement: Manage the State of Montana's trust land
resources to produce revenues for the gust beneficiaries while considering
en.virortmental factors and protecting the future income -genera ring capacity of the land.
• IES Or' : With the Enabling Act of 1889, Congress esmblishW the Mate of Mommna and granted to the
newly formed state certain lands to be held in trust for "Lhe Nappott of common schools." Over the ensuing
years some of the original lands have been sold and other lands have been purchased or gifted to the Mate, but
the responsibility has always been the same' rrtanW Trust lands Ear the long-term benefit of the 'Dust
benefice wim.
* 'gust Lauds Are Different From Other Public Lands: Ivtontanes Trust lands provide a
variety of benefits For the cccnmunities that surround them, such as wildlife habitat, open space, and recreation
opportunities. lJnMe most other public lands however, Trust lands carry a mandate to generate a
reasonable fimandW return for the desigFated ber>,4daries. What may be viewed as public open space by
some members of a commun ity is also viewed by the Trust beneficiaries as a critical source of mvenve.
# Landmark decisions have occurred at bath the Montana and U.S. Supreme Court levels defining a
state's fiduciary responsibill ty (as trustee) for management of Trust lands throughout both Montana and the U, .
There are sipfflmA legal sideboards on how Trust land can be managed, and haw a fair rate of return for
the Trust lands' beneficiaries is dewrmined.
113 O]Ita i2: The Department of Natural Resources and Conservation (DNRC) has managermnt
responsibility for over 5.1 million acres of Trust land. The Department upholds its fiduciary responsibility to
secure the nest measure of revenue for the Trost beneficiadetis, today and for future generations. The greatest
immediae moixtwy return must be weighed against
the "-term productivity of the land to ensure '.F. TrW leads Cary � rr nd to fo
continued future returns to the Trusts. The decisions
that guide DNRC's management of Tn ,-q lands generate a reasonable financial refurn
continue to be a balancing of long4erm financial, for fhe designgW beneficiaries.
environmental, and social concerns.
• Where Does 'Trust Lands Revenue o:' Prw=ds generated From Ieases, licenses, sales, and
easements are used for many Purposes, from paying for rexthooks and teachers" salaries to funding public
service pmg arras. Rizwealue generated from Trust lands offsets Funds that would otherwise come from tax
revenues paid by residents and busirae ,s in Montana.
The Trust Land Beneficiaries: Public ,Schools - Montana Tech - Stare Normal School - State
Reform School - Montana Stare University a School for the Deaf and Blind - University of Montana
State Veteran's Home " Public Buildings - and others
i:*r1_11iVr7;TiW
Kidsports is a Montana non-profit corporation that was formed in 1996. It has received
tax-exempt status from the Internal Revenue Service and Montana Department of Revenue.
Kidsports mission is to foster amateur athletics, which it achieves by developing youth athletic
facilities in Section 36 on property leased by the City of Kalispell ("City") from the Montana
Department of Natural Resources ("DNRC"), and being a liaison between the organizations
conducting youth athletic programs on Section 36, the City and DNRC.
Board of Directors. Members of the Board of Directors are appointed by the
following user groups: Kalispell Pee Wee Baseball (Dan Johns), Flathead Soccer
Club (Steve Herzog and Rob Riley), Kalispell Babe Ruth League (Roy
Beekman), Kalispell Youth Softball Association (Brian Wiley) and Flathead
Valley Little Guy Football (Mike Rauthe). One member at large (Justin Sliter)
has been appointed by the Board.
• Origin. The formation of Kidsports was prompted by the City's decision to
commercially develop property along Highway 93 South that was occupied by
youth athletic fields.
• Agreement with City. Kidsports and the City embarked on their public/private
partnership in 1997 when the City agreed to commit $1 million to development
of the "Kalispell Youth Athletic Complex" and maintain the fields in "like new"
condition. Kidsports, in turn, committed to funding the annual lease payment
and development funds in excess of the City's initial commitment.
Playing Surfaces. The Complex was inaugurated in 1999 with play on five
Kalispell Pee Wee fields and five Kalispell Youth Softball fields. The Complex
now includes 30 playing surfaces (nine Pee Wee Baseball, seven soccer, seven
softball, four football, two Babe Ruth Baseball, and one adaptive field for
handicapped players), a cross country running course, playground, and Joel
Heuscher Memorial Park. More fields and amenities are planned.
■ Investment. Major funding for the complex has been contributed by the City,
Howard Family Foundation, Rotary Club of Kalispell, The Rotary Foundation,
Terry Pugh, Dennis and Phyllis Washington Foundation, U. S. Soccer, John G.
Harp, John R. Harp, Christie Lee, Plum Creek Foundation, and many local
individuals and businesses.
Usage. In addition to the five regular youth user groups, FIathead High School
(soccer) and Glacier High School (softball) use the Complex, along with the
Miracle League of Northwest Montana (http:llwww.mirac[eleague.com). On
busy week nights approximately 5,000 participants, family members, coaches
and officials are engaging in or enjoying sporting activities. On weekends that
number grows to 7,000. Invitational tournaments bring as many as 3,500 people
per event to the Complex, many of whom come from outside the Flathead
Valley.
Quality. The Complex is recognized as the finest youth outdoor sports facility in
Montana. Its adaptive Miracle Field is the only one of its kind in Montana.
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On May 7, 1997, the City of Kalispell signed a Lease Agreement with the Montana
Department of State Lands for approximately 134 acres located in the SETA, Section 36, to
become the Kalispell Youth Athletic Complex (KYAC). The Lease is for 40 years, which was
the statutory maximum available. The Lease provides for annual payments to the State based on
the appraised value of the land in 1997. In 2009 Kidsports paid $41,651.00 for the annual Lease
payment. In 2016, DNRC has the prerogative to re -set the lease amount.
In an effort to encourage commercial development (e.g. Costco, Lowes, etc.) in Section
36 and other Trust Lands, the Montana Legislature amended the statute to permit 99 year
leases for commercial uses. In addition to leases, Montana statutes allow public entities
(e.g. cities, school districts) to obtain permanent usage easements -on School Trust Land
(e.g. Glacier High School).
The lease operation process provides that representatives of the City (leaseholder) and
DNRC (manages property for owner) will annually review and discuss plans and
activities on the land. These representatives, along with representatives of Kidsports,
meet regularly to discuss KYAC. Given the requirements of how Trust Lands are
managed, securing the long term existence of the complex was a frequent topic, with
serious discussions beginning in 2008. In 2009, DNRC vacated approximately 13 acres
adjacent to the KYAC. We have a unique opportunity with the availability of the DNRC
agency site for commercial occupancy and the potential of "piggy -backing" additional
acreage onto the agency site in support of a good plan and securing permanency of the
sports complex's remaining acres. DNRC anticipates it could incorporate approximately
12 acres reduced from the Lease (located north of the softball fields) that will be offered
along with its vacant office site for commercial development. The City and Kidsports
have expressed willingness to amend the existing lease as part of securing the long term
existence of the youth sports facility. In short order the participating parties anticipate
executing an Agreement to Initate the following process.
The proposed process includes two formal steps:
DNRC will advertise a request for proposals (RFP) that will seek a
developer/designer who will prepare a site plan for the combined acreage of
approximately 22-26 acres. The successful party will work with representatives
of DNRC, City and Kidsports in developing a "plan" that is compatible with both
the needs of the Trust and the sports complex. The parties' objectives in
developing the plan are to (1) benefit the Trust; (2) assist Kidsports in acquiring
long-term entitlements; (3) meet the City of Kalispell's entitlement and
development approval process; and (4) be profitable for the developer. DNRC
will obtain real estate appraisals on its Highway 93 site and the acreage proposed
to be dropped from the Lease. As a separate process, an appraisal will also
eventually be necessary for the balance of the leased land if a permanent usage
easement is sought.