Kidsports Permanent EasementCity of Kalispell
v — - OFFICE OF THE CITY MANAGER
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TO: Mayor Fisher and Kalispell City Council
FROM: Doug Russell, City Managefp?z
DATE: October 29, 2012 YY
SUBJECT: Kidsports
Kidsports has been working with city staff and the State Department of Natural Resources to
secure an agreement for a permanent easement for the land on which their complex resides. At a
recent meeting of the State Lands Board, a Memorandum of Understanding was approved for the
permanent easement with the,following terms:
• The appraised purchase price is $18,515/acre ($2.29 million for the 123 acre site).
• Kidsports has 5 years to purchase the permanent easement,
• Kidsports can make 5 payments (one per year),
• First payment window is December 31, 2012, thereafter February 28 of each
successive year.
• Minimum payment is $100,000.
• DNRC has required a sliding "option" payment due each year ranging from 1%
the first year to 2% in the final year of the remaining balance over the 5 year
period.
Kidsports will be present at the work session to discuss the Memorandum of Understanding and
its related terms and how securing the permanent easement may fit into their partnership with the
City of Kalispell and their long-term development strategy.
www.kalispell.com
This Memorandum of Understanding (MOU) is entered into this day of October, 2012,
by the STATE OF MONTANA, STATE BOARD OF LAND COMMISSIONERS (hereinafter referred to
as "the State"), by and through the MONTANA DEPARTMENT OF NATURAL RESOURCES AND
CONSERVATION, whose address is P.O. Box 201601, Helena, MT 59620-1601 and THE CITY OF
KALISPELL, whose address is P.O. Box 1997, Kalispell, MT 59903 (hereinafter referred to as "the
City"). This MOU sets forth the conditions, understandings, and procedures by which the City of
Kalispell shall have the exclusive right for a limited period of time in which to make an application, or
applications, to the State for a public park easement, or public park easements under Section 77-2-
101(1)(b), MCA upon all or a portion of the approximately 123.7 acres of State school trust lands located
in the S 1/2 of Section 36, Township 29N, Range 22W, Flathead County, Montana, as is more particularly
described in the attached Exhibit 1 attached hereto and incorporated herein by reference, subject to any
prior existing rights, and subject to all the terms and conditions as hereinafter set forth:
The State of Montana Board of Land Commissioners holds in trust for the financial benefit of
common public schools approximately 134.45 acres of real property located in the S'/z Section 36,
Township 29N, Range 22W, Flathead County, Montana, as is more particularly described as KYAC
Lease Area in the attached Certificate of Survey 17217, Page 1 (Exhibit 2).
The City has leased the approximately 134.45 acres as depicted in Exhibit 2 from the State
pursuant to State of Montana Special Lease No. 3053189 for public recreational purposes. This lease was
issued on May 9, 1997; was amended by Supplemental Lease Agreement dated February 7, 2003, and;
was amended by second Supplemental Lease Agreement dated October , 2012, in which, terms are
specified for the proposed lease boundary and acreage revision per Exhibit 1.
The City wishes to make an exclusive application, or applications, over a period of time for a
public park easement or easements upon all, or a portion of the approximately 123.698 acre parcel
described in Exhibit 1.
The State, through the Montana Department of Natural Resources and Conservation (DNRC)
seeks to commercially develop an approximately 13.5 acre portion of the approximately 134.45 acre lease
area so as to prudently increase the revenue from these lands for the financial benefit of the beneficiary:
Montana's common public schools. Accordingly, the State, through DNRC, will commit to the issuance
of, if necessary, a minimum of three Requests for Proposals -Leasing (RFP), including the current RFP
effort within the term of this agreement. Each of these RFP's will be issued consistent with the
"Sequence and Document Outline" attached to Director Sexton's letter dated September 6, 2011
addressed to the City of Kalispell and Kidsports. The goal of these RFP efforts will be to obtain a
Commercial Ground Lessee who will develop this approximately 13.5 acre parcel, and who will enter into
negotiations with the City of Kalispell for any improvements upon the same.
The City has pursuant to the parties' October _, 2012 Supplemental Lease Agreement agreed to
relinquish an approximately 13.5 acre portion of the approximately 134.45 acre leasehold premises upon
successful conversion to commercial lease.
The City of Kalispell proposes to compensate the State for the exclusive right to submit
application(s) for public park easements upon the above -described approximately 123.7acre parcel,
subject to the terms and conditions of this MOU.
This Agreement is intended to set forth the procedures, conditions, and understandings by which
the City of Kalispell:
may make exclusive applications for public park easements upon the above -described
approximately 123.7- acre parcel;
will compensate the State for this privilege; and,
will, upon successful conversion of the approximately 13.5 acre portion of the existing
lease to commercial lease, relinquish that part from the leasehold premises and waive any
right, title, or interest in the property.
II. Terms, Conditions and Understandings.
A. Term of Agreement. The term of this Memorandum of Understanding is March 1, 2013, through
February 28, 2018.
B. Liaisons. For the purposes of this Agreement, the City of Kalispell's liaison/designee is Anne
Moran, (406) 751-2274. DNRC's liaison/designee for the purposes of this Agreement is
(406)
C. Compensation for the Exclusive Right to Apply for Public Park Easements. In order to
compensate the school trust for the exclusive right to make these applications for public park easements,
on or before March 1, 2013, the City shall pay to the State the amount of $22,903.00 or, the amount
equal to 1 % of the appraisal amount of the land subject to the MOU for Year One of the MOU. In
subsequent years of this agreement, the MOU fee will be determined by applying the following
rates to the appraisal amount of the land remaining subject to the MOU:
Year Two 1.0%
Year Three 1.5 %
Year Four 1.5 %
Year Five 2.0%.
To maintain its rights under this MOU, during the term of this MOU, the City shall thereafter annually
pay to the State (addressed to "DNRC, P.O. Box 201601, Helena, MT 59620-1601) the applicable sum on
each succeeding March Is' during the term of this MOU. Should the State fail to receive from the City
any such payment on each successive March 1 st during the term of this MOU, this MOU shall
automatically terminate. Time is of the essence in the performance of this MOU payment. Should the
State grant the City a public park easement upon any parcel described herein, on or before February 28th
of any year during the term of this MOU, the annual MOU fee payable by the City to the State on the
succeeding March 1S` of each year thereafter shall be proportionately reduced by a fraction representing
the acreage of the easement purchased divided by the total acreage originally committed to this MOU
(Approximately 123.7 acres).
D. Exclusive Right to Apply for Public Parr Easement. During the term of this MOU, the City has
the exclusive right to apply for Public Park Easements upon the approximately 123.7-acre parcel
described herein on Exhibit 1, attached hereto and incorporated herein by reference. The City may
exercise this right by submitting a completed easement application to DNRC's liaison. Upon Land Board
approval, final execution and full payment received at the address below would finalize the grant:
Real Estate Management Bureau
Montana DNRC
P.O. Box 201601
Helena, MT 59620-1601
E. Easement Purchase Price.
The purchase price per this agreement is $18,515 per acre or, $2,290,269 for the entire subject area.
In exercising the above -described right during the term of this MOU, the City of Kalispell may apply to
purchase any easement parcel based on the above values subject to the following:
a) The minimum easement parcel value in any single transaction shall be $1.00,000;
b) The deadline for submittal of a complete application that would allow for a reduction in the
subsequent year's lease fee and MOU fee is December 31S
c) One application may be submitted in any given calendar year during the term of this agreement;
d) If purchased incrementally, the easement parcels shall:
i. be acquired generally from the southeast to the northwest;
ii. be contiguous with previously purchased parcels;
iii. be mutually agreed upon by both parties and give consideration to assure each
incremental acquisition can stand alone with respect to utilities, services, access and
would not negatively impact adjacent properties in the case that for any reason future
acquisitions do not occur.
F. Form and Assignability of Easement. The Public Park Easement to be conveyed shall be conveyed
pursuant to the same terms and conditions as are contained in the Department's easement form attached
hereto as Exhibit 3. Any Public Park easement issued under this MOU: must only be assignable to
another governmental entity, must utilize the Department's Assignment form, and can only be assigned
upon the prior written consent of the State Board of Land Commissioners. Any Public Park easement
granted shall be subject to the following conditions and understandings:
a. Public park easements convey limited rights, and do not include any mineral interests
or water rights appurtenant to the property that possessed by the State.
b. No title insurance shall be provided by the State.
c. The City will be responsible for all surveying costs associated with this MOU and the
grant of any easement or easements under this MOU.
d. All recording fees shall be paid by The City.
e. Each party shall bear its own legal and administrative costs.
f. Special Assessments on the approximately 123.7 acres, if any, shall be pro -rated as of
the date of any easement is recorded.
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G. No Warranties by the State. The State does not warrant title to the property, and the City enters into
this MOU solely in reliance upon its own examination of title to the above -described real property. The
State makes no representations to the City as to whether the above -described real property is encumbered
by recorded or un-recorded liens, restrictions, adverse claims or clouds on the title that either individually
or collectively cause the title to be un-merchantable, or which would materially interfere with the City's
intended development and long term use of youth athletic fields and recreational areas, together with
related or supporting improvements (e.g. concession stands, restrooms, roadways, parking areas,
parklands, etc.).
H. Agreement Binding; Entire Agreement; Modification. This agreement represents the full and
entire agreement between the parties with respect to this MOU and supersedes any other agreements,
whether written or oral, regarding the subject matter of this agreement. Any enlargement, alteration or
modification requires a written amendment signed by both parties.
A. Successors. This MOU shall be binding upon and inure to the benefit of the parties' successors in
interest.
B. Resolution of Disagreements. If any dispute arises between the City and the State over matters
covered by this Agreement that cannot be resolved at the project officer/staff attorney level, the
matter shall be referred to the City Manager and the Director of DNRC for an informal dispute
resolution process. To initiate this informal process, each party shall identify and describe the
disputed issues in writing and deliver this explanation to the other party.
C. Termination and Cancellation. The duties of either party to this MOU are wholly contingent
upon the receipt of sufficient dedicated future appropriations for this MOU.
IN WITNESS WHEREOF, the parties have executed this Agreement as set out below:
DATED this Day of October, 2012
Doug Russell, City Manager
Date: By:
Mary Sexton, Director
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