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Memo Neier to Council/Addendum to Dasen AgreementCity of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax(406)758-7758 May 21, 2001 TO: Mayor, City Council and Mana FROM: Glen Neier, City Attorney RE: Addendum to Dasen Agr6 ent I have attached hereto for your review a document entitled "Addendum to Development Agreement" concerning the Southfield Development. You have previously received correspondence regarding a proposal by Mr. Dasen, et al. to negotiate the differences in the Development Agreement executed January 11, 1998. Amended Article 4 contemplates the use of an unplatted/undedicated City easement, commonly known as Lion's Park Street, for parking connected with a major office structure located on a portion of the Dasen property. In exchange for surrender of the easement, Dasen, et al. agree to replace the Lion's Park Street parking area with 10 parallel parking spaces on 3rd Avenue East at Dasen's expense. Amended Article 5 generally requires Dasen to undertake and complete certain development of the property on or before June 1, 2002. § 5.4 requires that the Southfield Towers Development generate $148, 000 per year in tax revenue. § 5.5 recites that Dasen shall pay to the City the sum of $80, 000 on or before September 21, 2001. Amended Article 7 requires that Dasen pay all taxes, etc., when due and to make the payment -in -lieu if construction is not completed by June 1, 2002. Amended Article 8 abrogates the restraint on alienation imposed under the previous Development Agreement. The draft delivered to you by this memo is the first draft received by this office. I am aware that some alterations need to be made prior to Council consideration. Within the next few days this office will be discussing with Dasen's attorneys certain changes in language which more specifically detail the payment -in -lieu of provisions. The previous language left some elements open to debate regarding when the payment would be calculated and made. The second suggestion I have made would make the Addendum attached as a lien on the real property within the Southfield complex. As submitted, the Addendum will provide the City with the same amount of revenue over 8 years as the original Agreement did over 10 years. It will also provide the City with a cash infusion of $80,000 in the airport urban renewal area. With the changes recommended herein, and perhaps others suggested, I feel we may be able to put the Haven Field problem behind us. This Addendum is made this day of May, 2001 by and between the CITY OF KALISPELL, a municipal corporation, hereinafter "City" and RICHARD A. DASEN, with his principal place ofbusiness at 1701 Highway 93 South, Kalispell, Montana, hereinafter "Developer:" WITNESSETH: WHEREAS, the parties entered into a Development Agreement dated February 11, 1998 relative to the development of that tract of land bounded by Eighteenth Street West on the north, Third Avenue East on the east, Lion's Park Street on the south, and U.S. Highway 93 on the west, all within the city limits of the City of Kalispell; and WHEREAS, the referenced real property was not developed as contemplated by the parties' Development Agreement dated February 11, 1998; and WHEREAS, the parties hereto desire to alter the obligations imposed by said Development Agreement dated February 11, 1998 upon Developer; and WHEREAS, the parties intend that the terms of this Addendum take precedence over and supplement the terms contained in the parties' Development Agreement dated February 11, 1998 inconsistent with the terms hereof. NOW THEREFORE, in consideration of the foregoing premises and mutual obligations of the parties, the parties agree as follows: Articles 4, 5, 7 and 8 contained in the parties' Development Agreement dated February 11, 1998 shall be amended and completely restated as follows with the definitions set forth in Article 1 of the Development Agreement having the same meaning as set forth in the Development Agreement. Lion's Park Street The parties acknowledge that the undedicated and undeeded street commonly known as Lion's Park Street is included in the Project Property due to a resurvey of the Project Property near the time said property was conveyed to DEVELOPER. The parties acknowledge that Article 4 contained in the referenced Development Agreement dated February 11, 1998 may be construed as providing the CITY some parking rights on Lion's Park Street. The parties further acknowledge that Lion's Park Street, pursuant to the Site Plan attached hereto as Exhibit A, is proposed to be used by DEVELOPER or his assigns for patron parking associated with the Professional Office Building planned for Lot D of the Amended Subdivision Plat of Lots 1, 2, 3 and 4 of Southfield Park, a copy of which is attached hereto as Exhibit B. The CITY agrees to forego, waive and relinquish any rights it may have had to parking on Lion's Park Street in lieu of DEVELOPER'S construction of Page 1 of 4 ten (10) parking spaces on Third Avenue East substantially as indicated on the Site Plan attached hereto as Exhibit A as "Lion's Park - Additional Parking Plan." The costs associated with the additional parking shall be borne entirely by DEVELOPER, and CITY shall have no financial responsibility for the construction of said ten (10) parking spaces. CITY agrees to execute a formal instrument suitable for recording reflecting the foregoing. Construction of Project Section 5.1. Site Plan and Construction Plans. DEVELOPER heretofore submitted a Site Plan and Construction Plans to the CITY for purposes of obtaining building permits. DEVELOPER'S Site Plan is appended hereto as Exhibit A and by this reference incorporated herein, which plan depicts the entire Project Area and shows the infrastructure improvements to be constructed thereon. The Site Plan appended hereto and the Construction Plans heretofore provided to the CITY are acceptable to the CITY and are in conformity with applicable federal, state and local laws and regulations. The CITY hereby approves the Construction Plans as substantially conforming to the Plans pursuant to this Addendum, conforming to the terms and conditions of the parties' Development Agreement dated February 11, 1998 as amended pursuant hereto, conform to all applicable federal, state and local laws, ordinances, rules and regulations, and are adequate to provide for construction of the Project. Section 5.2. Construction of the Project. (a) Subject to unavoidable delays, DEVELOPER will construct the Project without encroachment onto any other property all in accordance with the Site Plan and the Construction Plans. DEVELOPER or his Assignees will be responsible for the supervision of and completion of the on -site improvements. Neither party shall exercise any control over the other regarding their respective areas of work and division of responsibilities although the parties agree to coordinate their activities to assure maximum efficiency of the construction process. (b) All work with respect to the Project shall be in substantial conformity with the Construction Plans approved by the CITY. DEVELOPER shall promptly begin and diligently complete all on -site improvements. DEVELOPER shall make reports, in such detail and at such times as may reasonably be requested by the CITY, as to the actual progress of DEVELOPER with respect to construction of the on -site improvements. (c) DEVELOPER shall not interfere with, or construct any improvements over, any public street or utility easement without the prior written consent of the CITY. All connections to public utility lines and facilities shall be subject to approval of the CITY and any private utility company involved. All street and utility installations, relocations, alterations and restorations shall be made at DEVELOPER'S expense. DEVELOPER, at its own expense, shall replace any public facilities or utilities damaged during construction of the Project. Page 2 of 4 (d) DEVELOPER shall complete construction of the improvements on the Project Property as indicted on the Site Plan attached hereto no later than June 1, 2002. Section 5.3. Certificate of Completion. (a) Promptly after completion of the Project, in accordance with this Agreement, DEVELOPER should apply for a Certificate of Completion. It will be incumbent on DEVELOPER to provide the CITY with a certificate of substantial completion from DEVELOPER'S architect, and the CITY shall furnish DEVELOPER with an appropriate Certificate of Completion as conclusive evidence of satisfaction and termination of the agreements and covenants of this Agreement (excepting those covenants and restrictions which expressly survive the filing of the Certificate of Completion, and except those obligations of the DEVELOPER described in Section 2.2. hereof which pertain to the obligations of DEVELOPER to construct the Project). (b) If the CITY shall refuse or fail to provide a Certificate of Completion, the CITY shall, within 15 days after the DEVELOPER provides the architect's certificate referenced in Section 5.3.(a), provide the DEVELOPER with a written statement specifying in what respect DEVELOPER has failed to complete the Project in accordance with this Agreement, or is otherwise in default, and shall specify what measures or acts will be necessary, in the opinion of the CITY, for DEVELOPER to obtain the Certificate of Completion. Section 5.4. CITY'S Remedv for Failure to Construct. It is contemplated that the Project Property (including without limitation the Southfield Tower Property) will generate annual tax revenue to the CITY in the amount of ONE HUNDRED FORTY-EIGHT THOUSAND AND NO/100 DOLLARS ($148,000.00) upon completion of the Project, exclusive of city or county special assessments. DEVELOPER, therefore, covenants to pay the CITY any difference between the amount of tax actually generated by the Project Property, including any portion of the Project transferred to another owner, and the amount contemplated by this Agreement for a period of eight (8) years commencing with tax year beginning January 1, 2003 in the event DEVELOPER or his assigns do not complete construction contemplated herein by June 1, 2002 as contemplated by Section 5.2(d) hereof. Payment under the provisions of this paragraph shall be made directly to the CITY, after certifying the tax generated by the Project through the CITY finance department subject to verification. Section 5.5. Cash Payment by Developer to CITY. DEVELOPER shall pay the CITY the sum of EIGHTY THOUSAND AND NO/100 DOLLARS ($80,000.00) on or before September 21, 2001. G Weltw Payment of Taxes Section 7.1. Taxes. DEVELOPER and his successors or assigns shall pay when due all real estate taxes and installments of special assessments payable on the Project Property. Page 3 of 4 Section 7.2. In Lieu of Payment. DEVELOPER further agrees to make the payment in lieu of taxes contemplated in Section 5.4 only in the event the construction contemplated herein is not completed by June 1, 2002. ARTICLE 8 Assignment and Transfer Section 8.1. Transfer of Ownership. The CITY acknowledges that DEVELOPER heretofore transferred his interest in and to the subject property to Northwest Investments, LLP, a Montana Limited Liability Partnership in which DEVELOPER is a principal. CITY further recognizes and acknowledges that Lot 5 of the amended subdivision plat of Southfield Park on which Southfield Tower has heretofore been constructed, has been conveyed by Northwest Investments Partnership, LLP to Gene King of Kalispell, Montana. In addition, CITY acknowledges that Lots A, B, C and D of the Amended Subdivision Plat of Lots 1, 2, 3 and 4 of Southfield Park Lots attached hereto as Exhibit B are the subject of a Buy -Sell Agreement executed by and between Northwest Investments Partnership, LLP as Sellers and Gene King and Elsene King as purchasers. The subject Project Property is no longer subject to restrictions on alienabiliity. However, notwithstanding conveyance or assignment by DEVELOPER, DEVELOPER shall remain personally responsible to all obligations hereunder. Date DEVELOPER IIn Richard A. Dasen CITY OF KALISPELL, a Municipal Corporation Chris Kukulski, City Manager Clerk of Council Page 4 of 4 r_i ro ell ------ - --- Cl) c I 10 m —0 II 0 M M m m II DRIVE-IN 862 SF LJ ,PA E 0 > ILP CE P sp c I z _13 • 27 0 p C II II ip HIS WIN n pAK DEVELOPMENT ,� om I 31 R1 Nfilhit HeyI RiN 18 1 �, I a N alp —10 P Z, i