12/29/08 Byron/Owl Corporation Latecomer's AgreementLAW OFFICE
THORNTON 4 BYRON LLP
TAx < T~Tn rF PLANNING; • BUSINESS • WEALTH PRESERVATION
RiVE.RFRONT PLAZA
3101 W. MAIN, Sh! rE 200
Bois[-, IDAHo 83702-2099
P.O. Box 7156
Bo!sr., IDAI-lo 83707-1156
TrL PI IoNF: 208-344-8600
FACsIma.L: 208-344-8720
December 29, 2008
Charles Harball, City Attorney
City of Kalispell
201 First Avenue East
Kalispell, Montana 59901
Re: Owl Corporation / Latecomers Agreement
Dear Mr. Harball:
D. JOHN THORNTON, P.A.
GREGOKY A. BYRON, LL.M., P.A.
AMBER MYRICK BELEW, LL.M, P.A.
KEVIN C. BELEW, LL.M, P.A.
JOSEPH S. KOZLOWSKI, LL.M.
RICHARD M. WEBER, JR., LL.M.
WILLIAMS. RAMEY, LL.M.
JUSTIN C. JONES, LLM, P.C.
OF COUNSEL
LICENSED TO PRACTICE IN
IDAHO CALIFORNIA, COLORADO,
NEVADA, OREGO.N, WASHI,NGTON
STRATEGIC LEGAL ALLIANCES•
ARIZONA, UTAH
Thank you for returning my telephone call on December 22, 2008, regarding the
Latecomers Agreement between the City of Kalispell and Owl Corporation ("Latecomers
Agreement"). As you are aware, my firm has been requested to consult with Owl Corporation
regarding the Latecomers Agreement, since we helped to coordinate the agreement in 2004.
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the lift station into which the sewer lines flow ghat were extended by Owl Corporation. It is Mr.
Owens' understanding, based upon discussions with Paul Burnam in the Kalispell Public Works
office, that there is still some limited remaining capacity available at the bottlenecked lift station.
From Owl Coiporation's perspective, the success of the Latecomers Agreement is
completely dependent upon both (a) the proper administration of the Latecomers Agreement by
he City of Kalispell. and (b) the existence of capacity in the infrastructure which will allow users
ctn coinicco to the extended lines in order to generate fees to repay Owl Corporation for the cost
of improving the lines. If either or both of these issues fail, then Owl Corporation's ability to
recover its investment will be negatively impacted.
December 29, 2008
Page 2
Although we understand that the City of Kalispell is pursuing a long-term solution to the
bottleneck that exists at the subject lift station, any solution will be complicated by the estimated
$12-15M costs of the required infrastructure. When the Latecomers Agreement was entered into,
Owl Corporation reasonably expected that growth and annexations in Forth Kalispell would be
managed consistent with the available infrastructure and reasonably did not anticipate having to
worry about whether there would be sufficient capacity to accommodate the connections required
for the recovery of its investment.
The most appropriate 'interim andl long-term solution for the remaining capacity at the
bottlenecked lift station, and any additional capacity that becomes available through expiring
preliminary plats or otherwise, is to reserve the capacity for users who hook-up to the sewer line
that was constructed by Owl Corporation. Reserving the capacity to fulfill the Latecomers
Agreement will send a clear message to potential investors that the City of Kalispell will preserve
the expected benefits to those investors who expend their own funds to help the infrastructure
needs of the City of Kalispell. More significantly, preserving the capacity will avoid sending a
chilling message to potential investors regarding the anticipated cooperation from the City of
Kalispell as the guardian of their investment.
Preserving capacity for the Latecomers Agreement is consistent with the expectations of
both Owl Corporation and the City of Kalispell when the Latecomers Agreement was entered into,
and is consistent with the direction that the City Council has provided to Public Works regarding
not over committing the capacity of the infrastructure to potential users. The assessment of
capacity should not just focus on filed preliminary plat applications, but should also take into
account the capacity necessary to fulfill the City of Kalispell's obligations as guardian of the
Latecomers Agreement.
With respect to the delinquent payments owed for the prior hookups to the water line that
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from the users who were not originally assessed hookup fees, and that you anticipate bringing
declaratory actions in the near future regarding the fees. Please keep Owl Corporation informed
of the responses and the status of the declaratory actions.
Unlike other developers, Mark Owens, on behalf of Owl Corporation, has shown great
patience with the City of Kalispell regarding the administration of the Latecomers Agreement.
However, Mr. Owens cannot afford to allow the City of Kalispell to disregard its obligations
under the Latecomers Agreement and must ensure that Owl Corporation's rights are preserved.
As you can appreciate, the matters relating to the Latecomers Agreement and the remaining
capacity at the bottlenecked lift station need to be proactively addressed with the City Council and
Public Works as soon as possible. We look forward to receiving updates regarding your
December 29, 2008
Page 3
recommendations to the City Council and Public Works concerning the remaining capacity and
the City's obligations with respect to the administration of the Latecomers Agreement.
Very truly ours,
Gregory_A_ Byn
GB/gcr
cc: Mark G. Owens