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4. Resolution 5602 - Kidsports Permanent Easement Purchase`7T1` of City of Kalispell K P - OFFICE OF THE CITY MANAGER MONTANA TO: Mayor Fisher and Kalispell City Council FROM: Doug Russell, City Manager SUBJECT: Resolution 5602 - Authorizing Purchase of a Permanent Easement for Kidsports MEETING DATE: December 17, 2012 BACKGROUND: As has been discussed at previous meetings, Kidsports, the City of Kalispell, and the State of Montana have negotiated the framework that would allow for the acquisition of a permanent easement for the ground which currently hosts the Kidsports facility. Kidsports (through the City of Kalispell) pays an annual lease (approximately $44,000) to the state for the use of the ground. In 2016, the lease payments will likely increase significantly when a new appraisal takes effect. At the previous work session, there was majority direction for acquiring the permanent easement from the state through use of the resources in the Tax Increment Fund. The Urban Renewal Plan for the Airport/Athletic Complex Redevelopment Plan identifies the relocation of the ball fields as being necessary for the redevelopment of the land to its highest and best use. The acquisition of the easement would be used as a relocation. expense to establish permanency to the location for the ball fields. FINANCIAL IMPACT: The cost of the permanent easement will be approximately $2,260,496.00 ($18,515.00 per acre at 122.09 acres). While we will provide payment, or proof of payment prior to December 3 1 " in an attempt to avoid fees associated with options or lease payments, the DNRC may require a prorated payment of $4893.00. While our hope is that this payment will not be required, Council authorization for purchase will also include any additional fees that may be required by DNRC. Through a Memorandum of Understanding that is currently being negotiated, (see attachment), Kidsports is agreeing to engage a capital campaign to match the City's contribution for the permanent easement. Their capital campaign is intended to be used to complete build out of the complex, including the completion of 4 Mile Drive. Additionally, Kidsports will contribute funding toward the maintenance costs for the facility. RECOMMENDATION: It is recommended that Council approve Resolution 5602 authorizing the purchase of the permanent easement by using funds generated by the Airport/Athletic Complex TIF District. Respectfully Submitted, oug 9sseif, City Maq6ger www.kalispell.com RESOLUTION NO.5602 A RESOLUTION AUTHORIZING THE PURCHASE OF A PERMANENT EASEMENT ON STATE OF MONTANA SCHOOL TRUST LANDS FOR PERMANENT YOUTH ATHLETIC FIELD RELOCATION BY USING FUNDS GENERATED BY THE AIRPORTIATHLETIC COMPLEX TAX INCREMENT DISTRICT. WHEREAS, on July 1, 1996, the City Council adopted the Airport/Athletic Complex Redevelopment Plan Analysis as an Urban Renewal Plan with Ordinance 1242; and WHEREAS, this Urban Renewal Plan identifies as an objective and recommends the relocation of youth athletic fields from their location adjacent to and in the vicinity of the Kalispell City Airport (Haven and Daley fields) for the purposes of making this property available for the highest and best use of private development as well as to situate the youth athletic fields away from the potential conflict with air traffic; and WHEREAS, the Urban Renewal Plan identifies using proceeds of land sales and tax increment to implement the objectives of the Urban Renewal Plan; and WHEREAS, Section 7-15-4258 MCA authorizes the City to sell city owned property as well as acquire real property for the purposes of achieving the goals of a duly authorized urban renewal plan and Section 7-15-4288 MCA authorizes the City to utilize tax increment funds for such purposes; and WHEREAS, on March 17, 1997, the City Council adopted Ordinance 1260 to provide for the segregation of and application of tax increment in the Airport/Athletic Complex Redevelopment Plan; and WHEREAS, on May 9, 1997, the City entered into a 40 year lease with the State of Montana on School Trust Lands in Section 36 and thereafter annexed said land into the City, zoned the land P-1, and coordinated with Kidsports, a private nonprofit entity, to construct a youth athletic complex to replace the youth athletic fields lost through the sale of city owned lands by the Kalispell City Airport; and WHEREAS, a price for a permanent easement for the subject real property has been negotiated with the State to be approximately $2,260,496.00, plus potential fees or expenses to complete the transaction; and WHEREAS, based upon the finite and escalating natures of the existing lease, the City Council finds that it is in the best interests of the City and its citizens to complete and accomplish the objective of relocating the youth athletic fields by acquiring a permanent easement upon the subject property from the State of Montana with the purposes of maintaining said youth athletic complex in perpetuity and further finds that the expenditure of tax increment funds from the Airport/Athletic Complex Tax Increment Fund for this purpose is in furtherance of the of the original goals and objectives of the Airport/Athletic Complex Redevelopment Urban Renewal Plan. NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL, AS FOLLOWS: SECTION I. The City Council authorizes the City Manager to enter into the necessary agreements to acquire a Permanent Easement from the State of Montana upon the School Trust Lands in Section 36 and currently under lease by the City and further authorizes such acquisition to be funded from the tax increment fund that has been segregated by the authority of Ordinance 1260. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL, THIS 17TH DAY OF DECEMBER, 2012. Tammi Fisher Mayor ATTEST: Theresa White City Clerk Memorandum of Understanding between CITY OF KALISPELL A Montana Municipal Corporation and KIDSPORTS A Montana Charitable Corporation without Members 1. Purpose and Scope The purpose of this Memorandum of Understanding [MOU] is 1) to procure a permanent easement from the State of Montana Department of Natural Resources and Conservation [DNRC] for real property currently leased by the City of Kalispell [the City] and managed by Kidsports as a youth sports complex; and 2) to further develop a master plan for the completion of the facilities comprising the youth sports complex, including sports fields, parking, transportation and other amenities; and 3) to establish a financing/donation program in which the City and Kidsports cooperate in an effective public/private partnership to accomplish the completion of the master plan developed by the parties. 2. Recital of Facts A. The City entered into a special lease of state lands under MT State Agreement No. 3053189 on May 9, 1997 for the term of 40 years and for the purpose of leasing 138 acres located in the City of Kalispell in the SE1/4 of Section 36, an area bounded by Four Mile Drive, Highway 93 and West Reserve Drive. The sole purpose of the lease is for a youth athletic complex. B. The City entered into an Agreement with Kidsports on December 19, 1997 for the same term of the above described lease and for purpose of defining "the public - private partnership between Kalispell and Kidsports regarding the planning, development, financing, operation and maintenance" of the above -described property. C. The City and Kidsports have negotiated with DNRC for the City to exchange its lease rights in the above described property for a permanent easement, a property right opportunity that was not available when the lease was negotiated. The easement agreement is attached hereto as Exhibit "A" and delineates the new footprint for the athletic complex as well as the funding arrangement decided upon pertaining to the commercial development of property previously leased by the City. Page 1 of 5 3. MOU Term The term of this MOU Agreement is TWENTY (20) years commencing upon the execution of this Agreement. 4. Master Plan of Youth Athletic Complex The parties agree that existing master plan of the youth athletic complex will be amended to reflect the altered footprint of the facility. This master plan shall include full build out of athletic fields with all associated infrastructure, i.e. fencing, irrigation, storm water conveyance, sanitary sewer, electric, telephone and gas utilities, concession and storage facilities, restrooms and seating. It shall also include transportation infrastructure, i.e. parking and roadways (including 4 Mile Drive), required to adequately serve the facility, both inside the facility as well as directly leading to the facility. The parties shall agree upon a reasonable timeline for accomplishing the various phases of the master plan. Representatives of the parties shall meet to draft the master plan which shall be considered and approved by the governing bodies of each party. 5. City Responsibilities The City shall undertake the following activities during the duration of the MOU term: a) The City, as owner of the permanent easement, shall pay the purchase price for the easement. b) The City shall undertake to maintain and repair: a. The athletic fields, including turf and landscaping b. Roads and parking areas c. Sewer, potable and irrigation water distribution systems d. All other ground cover (non -turf) e. Permanent fencing f. Trash collection g. Winterizing of water systems h. Game preparation of fields 6. Kidsports Responsibilities Kidsports shall undertake the following activities during the duration of the MOU term: a) Kidsports shall be the developer of the athletic complex and shall be responsible for the placement and construction of the infrastructure in accordance with the agreed upon master plan to include the fencing, irrigation, storm water conveyance, sanitary sewer, electric, telephone and gas utilities, concession and storage facilities, restrooms and seating. Page 2 of 5 b) Kidsports agrees that its development activities shall be consistent with the master plan and that it will maintain liability coverage covering those activities which names the City as an additional named insured. Kidsports shall ensure that user groups of the athletic complex will also maintain liability insurance for their athletic activities which also names the City as an additional named insured. Coverage amounts will not be less than $750,000 per occurrence or less than $1.5 million aggregate and shall be written on a "primary —noncontributory basis." Each coverage shall be obtained from an insurance company that is duly licensed and authorized to transact insurance business and write insurance within the state of Montana, with a minimum of "A.M. Best Rating" of A-, VI, as will protect the City and its officers, employees, agents, and representatives from claims for bodily injury and/or property damage which may arise from operations and completed operations under this Agreement. c) Kidsports shall have the primary responsibility for: a. Electric and telephone utilities b. Maintenance of concession stands and restrooms c. Metered water charges (not including irrigation) d. Temporary fencing e. Maintaining clean grounds d) Kidsports may assign or contract out to third parties any of the responsibilities in subparagraph c) above. 7. Funding The City shall provide the funding to accomplish the acquisition of the permanent easement. Kidsports shall maintain a capital campaign in an effort to complete the build out of the master planned athletic complex on the timeline established in the master plan. It is anticipated that the capital campaign will be greater than or equal to the amount contributed by the City for the permanent easement. 8. User Fees. Kidsports may establish fees to be paid to it by users (e.g. associations, tournament participants, individuals etc.), visitors (e.g. admission fees to events, etc.), advertisers (sponsors, fence ads, etc.), or others using or frequenting the complex. Funds raised by Kidsports pursuant to this paragraph may be used toward development and/or maintenance costs associated with Kidsports. The parties recognize that Kidsports and the user groups may engage in fund raising activities (e.g. those just mentioned, plus concession stand sales, etc.), and neither the fund raising activities and the subsequent use of those funds are subject to this agreement. Page 3of5 Kalispell may charge fees to persons or groups not charged fees by Kidsports. City of Kalispell fees on persons or groups charged fees by Kidsports will be implemented only by joint concurrence of Kalispell and Kidsports. It is anticipated that these fees will be utilized only for maintenance or improvements of the complex, and will not be eligible for recreation programs or any other facilities under the jurisdiction of Kalispell's Parks and Recreation Department. If a user or prospective user disagrees with fees established by Kalispell or Kidsports, representatives of Kalispell and Kidsports will confer and agree upon an appropriate fee. Nonpayment of a user fee may be grounds for denial of use of the complex. 9. Maintenance Fees At the last work session, council discussed an annual maintenance payment similar to an arrangement with the golf course. In discussions that have taken place the week of 12110, a couple of substantial questions emerged that will need to be considered by the Kidsports Board and the City: Will the maintenance fees begin this year, or will they begin following the build -out of the master plan? Will the payment be based on their current lease payment with the state, or by a different number? Will there be a credit for pre -approved capital projects Kidsports completes at the facility? 10. Independent Contractor The parties agree and acknowledge that in the performance of this Agreement and the completion of its development responsibilities hereunder, Kidsports shall render services as an independent contractor and not as the agent, representative, subcontractor, or employee of the City. The parties further agree that all individuals and companies retained by Kidsports at all times will be considered the agents, employees, or independent contractors of Contractor and at no time will they be the employees, agents, or representatives of the City. 11. No Third -Party Beneficiary This Agreement is for the exclusive benefit of the parties, does not constitute a third - party beneficiary agreement, and may not be relied upon or enforced by a third party. 12. Modification and Termination a) This agreement may be cancelled or terminated without cause by either party by giving (365) calendar days advance written notice to the other party. Such Page 4 of 5 notification shall state the effective date of termination or cancellation and include any final performance and/or payment invoicing instructions/requirements. b) Any and all amendments must be made in writing and must be agreed to and executed by the parties before becoming effective. 13. Effective Date and Signature This MOU shall be effective upon the signature of the City and Kidsports authorized officials. It shall be in force from January 1, 2013 to December 31, 2033. The City and Kidsports indicate agreement with this MOU by their signatures. Signatures and dates Authorized Signature of the City Authorized Signature of Kidsports Doug Russell, City Manager Date Date Page 5 of 5 We have streets across from our facility (3RD Ave & 18t")that do not- have sidewalks. There is The Outlaw (not in the TIF) that has significant financial and operational challenges ahead, and is possibly not putting Kalispell in the best light to our visitors. Many visitors coming into town are greeted by South Kalispell. First impressions are lasting ones! The airport is now in a state of flux, with potentially significant impact to the businesses surrounding this area, but not limited to just the TIF District. There has been over $60M of new development south of the Courthouse since 2000. You and your former Council Members have done a remarkable job of attracting development and significant tax revenue to fund our schools and infrastucture. We are not done with the South Kalispell corridor; I might suggest we have just'started. DNRC and Goldberg Properties should be able to work out a very favorable offer to Kidsports. The approximately $1.2 mil.lion dollars invested by the sale of the Armory and the TIF paying for the relocation, has allowed the complex to grow from essentially a dirt lot, to now, a very positive place for our kids and a project we can support now and into the future. However, in good conscience., to ask the taxpayers in South Kalispell TIF district only to again participate and pay is not fair or right. In light of the very substantial costs all the taxpayers, may be faced with the airport direction and commitments not finalized, but looming, the TIF will be in those discussions. Please do everything you canto advance and secure.Kidsports, but don't displace the Airport TIF fund to do so. Thank you foryour consideration, e. Shannon P. Nalty Member, Riverview Associates LL.0 Meredith Construction Company November 27, 2012 Kalispell City Council Members 201 1st Ave. East Kalispell, MT 59901 Re: Kidsports Permanent Easement Dear Council Members, I am writing this letter as a show of my support, and to encourage the City of Kalispell to use proceeds from the South Kalispell Tax Increment Finance District, in payment to DNRC for a permanent easement on the Kidsports property. I was and still am involved with both the Kalispell Pee Wee Baseball and Kalispell Babe Ruth Baseball programs, and coached teams that played on the fields where now are located Southfield Tower, The Forum, Frugals, Rosauer's, Jackola Engineering, etc. I am currently the representative for the user group, Kalispell Babe Ruth Baseball to the Kidsports board of directors. I have been involved along with Dan Johns in the development of the Kidsports property since its inception. Through the sale of ball field land south of Kalispell, the city realized $2.8 million of which they contributed $1.3 million for Kidsports to become a reality. These funds paid for infrastructure along with initially five Pee Wee Baseball fields and five softball fields. Kidsports has since raised money to construct seven soccer fields, four football fields, two Babe Ruth fields, two more softball fields, another four Pee Wee fields and an adaptive Miracle League field. Additionally they have funded five concession/restroom facilities, added parking lots and numerous field improvements. In total Kidsports has spent $1.8 million in improvements to the property. All of this has lead to one of the premier youth athletic facilities in the Pacific Northwest. Along with these improvements, Kidsports has paid the lease payment for the City of Kalispell since the beginning which has totaled another $330,000.00 P.O. Box 7128 2564 Highway 2 East Kalispell, MT 59904-0128 (406)752-4200 It is my belief that the intent of the original agreement between the City of Kalispell and Kidsports was to relocate the ball fields. Since the City realized a profit from the sale of ball field property but never spent any money on actual land replacement, it would seem reasonable that the funds realized from taxes of those properties be used at this time to procure the permanent easement, thereby fulfilling the original agreement. Spending of these funds at this time, for this purpose, would not only save Kidsports and the City of Kalispell money in the short term, but give Kidsports the ability to use their user fees for further development of access improvement, parking and field development. The City of Kalispell and Kidsports has enjoyed years of a working relationship that is uncommon between private and public partners. Through both of their efforts, the complex has infused untold dollars into the economy of the City of Kalispell and the city's businesses. That facility has become a "selling point" for neighborhoods and business and one of the points of interest when businesses are recruiting new employees. As a member of the Kidsports board of directors, I look forward to continuing that relationship for our mutual benefit. In closing I would once more encourage you to commit these TIF funds towards the permanent easement. We have worked hard getting and agreement with DNRC and I would hate to see this opportunity slip away. A MOU agreement between the City of Kalispell and Kidsports has been drafted and can be fine tuned even after the easement is purchased. Thank you for your consideration and your past support. Sincerely, Roy Beekman 182 Morning View Dr. Kalispell, MT 59901 cc: file P.O. Box 7128 2564 Highway 2 East Kalispell, MT 59904-0128 (406)752-4200