3. Resolution 5616 - Gateway West Mall Final Transfer ApprovalCity of Kalispell
Charles A. Harball Office of City Attorney
City Attorney 201 First Avenue East
P.O. Box 1997
Kalispell, MT 59903-1997
l/ l � � 1 19 1
Tel 406.758.7709
Fax 406.758.7771
charball@kalispell.com
TO: Doug Russell, City Manager DR
FROM: Charles Harball, City Attorney
SUBJECT: Resolution No. 5616 — A Resolution Approving the Transfer by
the City of Its Interests in Gateway West Property to the
Flathead County Economic Authority and Authorizing the
Mayor to Execute the Interlocal Agreement and Transfer
Documents
MEETING DATE: May 6, 2013 — Regular Council Meeting
BACKGROUND: In 2000 the City and Flathead County Economic Authority [FCEDA]
cooperated in the purchase of approximately 63,000 square feet of the Gateway West
Mall which was then leased to a call center [first to Stream International and then to
Teletech] . The purpose and goal of the transaction was to combat blight in the West Side
Urban Renewal District and to create employment opportunities. The purchase was
financed by an Urban Renewal Bond which was paid off and retired on June 30, 2010
with payments made through funds generated by the West Side Tax Increment District
and from the 2 mill ad valorem property tax levied countywide under the authority of
FCEDA. In 2005 the City and FCEDA also cooperated in the purchase of and
improvement to an additional two acres of property to meet the parking obligations of its
use agreement with Teletech.
On April 3, 2013 the City Council approved a Memorandum of Understanding with
FCEDA which outlined the conveyance by the City of this property and its obligations
thereunder to FCEDA. The basis for this agreement was that the City has met its goals
and purposes of the original acquisition and management of the property, that being to
combat blight and create employment opportunities. Further, as FCEDA was created,
designed and funded for the purpose of generating and maintaining economic
opportunities within Flathead County it may be better positioned going forward to
employ the property to its highest potential.
Resolution No. 5616 Memorandum
May 1, 2013
Page - 2
RECOMMENDATION: It is recommended that the City Council pass Resolution No.
5616 to approve the property transaction with FCEDA and authorize the Mayor to
execute the Interlocal Agreement and transfer documents.
FISCAL IMPACTS: The ongoing fiscal obligations of owning the property will now be
borne by FCEDA. During the remaining term of the West Side TIF District, the City will
continue to receive the TIF revenues generated by the property and thereafter it will
receive the beneficial use tax based on City mills generated by the property. These funds
will only be generated so long as the property, otherwise exempt, is leased by a private
entity. FCEDA shall be entitled to all deficiency tax payments generated until a total
sum of $300,000 has been paid, for the purposes of building up a maintenance reserve for
the property. Thereafter, the City shall receive 25% of all deficiency tax payments paid.
Respectfully submitted,
Charles Harball, City Attorney
Office of City Attorney
City of Kalispell
RESOLUTION NO.5616
A RESOLUTION APPROVING THE CONVEYANCE BY THE CITY OF KALISPELL TO
THE FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY OF ALL OF ITS
PERSONAL AND REAL PROPERTY INTERESTS IN LOT 1 OF AMENDED PLAT OF
THE MALL PORTION GATEWAY WEST ADDITION NO. 34 AND LOT 1 OF AMENDED
PLAT OF NORTHEAST PORTION GATEWAY WEST ADDITION NO. 34 PURSUANT TO
THE TERMS SET FORTH IN THE MEMORANDUM OF UNDERSTANDING OF THE
PARTIES EXECUTED ON APRIL 3, 2013 AND AUTHORIZING THE MAYOR TO
EXECUTE THE PROPOSED INTERLOCAL AGREEMENT AND TRANSFER
DOCUMENTS EFFECTUATING THE SAME.
WHEREAS, on the 171h day of February, 2000 the City of Kalispell [the CITY], the Flathead
County Economic Development Authority [FCEDA] and Flathead County entered
into an Interlocal Agreement setting forth the responsibilities and obligations of
each with respect to the acquisition, ownership; management and financing of
certain real and personal property consisting of a 63,101 square foot space in the
Gateway West Mall in the City, including a commercial office facility of
approximately 60,645 square feet, described as Lot 1 of Amended Plat of the Mall
Portion Gateway West Addition No. 34, as well as certain furniture, fixtures and
equipment, then existing, all hereinafter referred to as "the Property"; and
WHEREAS, pursuant to the above described Interlocal Agreement the City and FCEDA are vested
owners in the Property as tenants in common with an undivided 37% interest vested
to FCEDA and an undivided 63% interest vested to the City; and
WHEREAS, on the 7th day of February, 2000, the City, by Resolution No. 4536, authorized the
issuance of West Side District Taxable Tax Increment Urban Renewal Revenue
Bond, Series 2000, in the amount of $2,500,000 for the purpose of financing the
purchase of the Property and which bond was retired in June 30, 2010 with funds
generated by the West Side Tax Increment District as well as funds generated by a 2
mill ad valorem property tax levied under the authority of FCEDA; and
WHEREAS, on the 15th day of August, 2005 the City Council passed Resolution No. 5046 that
authorized the City's 50% participation with FCEDA in the total purchase price of
$312,760.80 for the acquisition of additional real property of approximately 2
acres in area described as Lot 1 of Amended Plat of Northeast Portion Gateway
West Addition No. 34 to provide additional parking for the tenants of the Property
as contractually required and included therefore within all references herein to
"the Property"; and
WHEREAS, the City and FCEDA also shared equally in the costs of improving the purchased
parking lot and each party's vested interest in this property is 50% undivided interest
as tenants in common; and
WHEREAS, on March 1, 2004, the City and FCEDA as Landlord, and Teletech Services
Corporation, [TSC], as Tenant, entered into a Shopping Center Lease with a term of
10 years; and
WHEREAS, on March 1, 2004, the City entered into a Jobs and Use Agreement with TSC in
which the issues of property taxes, jobs and rent reductions are treated; and
WHEREAS, on April 3, 2013 the City and FCEDA entered into a Memorandum of
Understanding in which the parties agreed that it is in the best interests of the City
and FCEDA that the City convey its interests and obligations in the Property, the
Shopping Center Lease and the Jobs and Use Agreement with TSC to FCEDA
and that FCEDA assume such ownership interests and obligations.
NOW THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL, MONTANA, AS FOLLOWS:
SECTION 1. The Kalispell City Council hereby finds that the goals of the City in its
acquisition and management of the above described property have been met
and that it is now in the best interests of the citizens and taxpayers of the City
that the City's interests in the property be conveyed to the Flathead County
Economic Authority pursuant to the terms of the Interlocal Agreement
attached hereto and incorporated herein fully by this reference.
SECTION 2. The Mayor is hereby authorized on behalf of the City to execute the Interlocal
Agreement and all transfer documents for this subject property.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE
CITY OF KALISPELL THIS 6th DAY OF MAY, 2013.
Tammi Fisher
Mayor
ATTEST:
Theresa White
City Clerk
Return to:
City Clerk
P.O. Box 1997
Kalispell, MT 59903-1997
INTERLOCAL AGREEMENT
between
THE CITY OF KALISPELL
and
THE FLATHEAD COUNTY ECONOMIC DEVELOPMENT AUTHORITY
The CITY OF KALISPELL, hereinafter referred to as "the City", a municipal
corporation duly formed and authorized pursuant to Montana state law and with business offices
located at 201 First Avenue East, Kalispell, Montana, and the FLATHEAD COUNTY
ECONOMIC DEVELOPMENT AUTHORITY, hereinafter referred to as "FCEDA" a
corporate public body established pursuant to Montana state law and with business offices
located at 314 Main Street, Kalispell, Montana hereby enter into agreement as set forth below.
RECITALS
WHEREAS, Title 7, Chapter 11, Part 1, M.C.A., known as the "Interlocal Cooperation Act,"
permits governmental units to make the most efficient use of their powers by
enabling them to cooperate with other local governmental units on a basis of
mutual advantage and thereby to provide services and facilities in a manner and
pursuant to forms of governmental organization that will accord best with
geographic, economic, population, and other factors influencing the needs and
development of local communities; and
WHEREAS, said Act provides that an Interlocal agreement may be authorized and approved by
the governing body of each party to said contract; and
WHEREAS, the City is a municipal corporation of the State of Montana located within
Flathead County, Montana and is duly organized and in existence pursuant to the
terms of MCA Title 7 Chapter 3 Part 43; and
Interlocal Agreement — Page 1
WHEREAS, FCEDA is a corporate public body duly organized and in existence pursuant to
the terms of MCA Title 7, Chapter 14, Part 11 enabling the creation of a Port
Authority and by Resolution No. 1346 of the Flathead County Commissioners for
the stated purposes of stimulating commerce, maximizing employment
opportunities and expanding the tax base; and
WHEREAS, on the 171h day of February, 2000 the City, FCEDA and Flathead County entered
into an Interlocal Agreement setting forth the responsibilities and obligations of
each with respect to the acquisition, ownership, management and financing of
certain real and personal property consisting of a 63,101 square foot space in the
Gateway West Mall in the City, including a commercial office facility of
approximately 60,645 square feet, described as Lot 1 of Amended Plat of the Mall
Portion Gateway West Addition No. 34, as well as certain furniture, fixtures and
equipment, then existing, all hereinafter referred to as "the Property"; and
WHEREAS, pursuant to the above described Interlocal Agreement the City and FCEDA are
vested owners in the Property as tenants in common with an undivided 37%
interest vested to FCEDA and an undivided 63% interest vested to the City; and
WHEREAS, on the 7th day of February, 2000, the City, by Resolution No. 4536, authorized the
issuance of West Side District Taxable Tax Increment Urban Renewal Revenue
Bond, Series 2000, in the amount of $2,500,000 for the purpose of financing the
purchase of the Property and which bond was retired in June 30, 2010 with funds
generated by the West Side Tax Increment District as well as funds generated by a
2 mill ad valorem property tax levied under the authority of FCEDA; and
WHEREAS, on the 15th day of August, 2005 the City Council passed Resolution No. 5046 that
authorized the City's 50% participation with FCEDA in the total purchase price of
$312,760.80 for the acquisition of additional real property of approximately 2
acres in area described as Lot 1 of Amended Plat of Northeast Portion Gateway
West Addition No. 34 to provide additional parking for the tenants of the Property
as contractually required and included therefore within all references herein to
"the Property"; and
WHEREAS, the City and FCEDA also shared equally in the costs of improving the purchased
parking lot and each party's vested interest in this property is 50% undivided
interest as tenants in common; and
WHEREAS, on March 1, 2004, the City and FCEDA as Landlord, and Teletech Services
Corporation, hereinafter referred to as "TSC", as Tenant, entered into a Shopping
Center Lease with a term of 10 years; and
Interlocal Agreement — Page 2
WHEREAS, on March 1, 2004, the City entered into a Jobs and Use Agreement with TSC in
which the issues of property taxes, jobs and rent reductions are treated; and
WHEREAS, on April 3, 2013 the City and FCEDA entered into a Memorandum of
Understanding in which the parties agreed that it is in the best interests of the City
and FCEDA that the City convey its interests and obligations in the Property, the
Shopping Center Lease and the Jobs and Use Agreement with TSC to FCEDA
and that FCEDA assume such ownership interests and obligations.
NOW THEREFORE, IT IS AGREED by and between the City and FCEDA each a local
government agency of the State of Montana, and pursuant to MCA 7-11-104, that it is to their
mutual benefit to adopt this Interlocal Agreement as follows:
PURPOSE: The purpose of this agreement is to set forth the terms of the transfer of the City's
ownership interests in the Property to FCEDA, the assignment by the City and the assumption by
FCEDA of the rights and obligations under the Shopping Center Lease and Jobs and Use
Agreement with TSC.
DEFINITIONS: The following terms shall be defined within this document as set forth below:
"Base Portion"- Pursuant to the terms of MCA 7-15-4283 the Base Portion shall be the tax
revenue generated upon actual taxable value of all taxable property within the urban renewal area
prior to the effective date of a tax increment financing provision.
"Beneficial Use Tax" - Pursuant to MCA 15-24-1203 there is imposed and must be collected a
tax upon the possession or other beneficial use for industrial, trade, or other business purposes
enjoyed by any private individual, association, or corporation of any property, real or personal,
that for any reason is exempt from taxation.
"Deficiency Tax Payment" - Pursuant to the Jobs and Use Agreement entered into between the
City and TSC on March 1, 2004, at Paragraph 4.4, the Deficiency Tax Payment is calculated to
be the difference between $140,000 and TSC's actual Property Tax Obligation. In the event that
FCEDA and TSC or future Lessee enter into an agreement that amends or otherwise changes the
$140,000 ceiling, the resulting difference between that amount and the actual property tax
obligation shall be considered as the Deficiency Tax Payment for the purposes of this agreement
and regardless of the term used between FCEDA and the Lessee to name any payment obligation
of Lessee to FCEDA that is above and beyond the Lessee's Property Tax Obligation.
"Increment Portion" - Pursuant to the terms of MCA 7-15-4283 the Increment Portion shall be
the revenues realized from extending the tax levies, expressed in mills, of all taxing bodies in
which the urban renewal area is located against the incremental taxable value.
"Incremental Taxable Value" - Pursuant to the terms of MCA 7-1.5-4283 the Incremental Taxable
Value means the amount, if any, by which the actual taxable value at any time exceeds the base
taxable value of all property within an urban renewal area subject to taxation.
Interlocal Agreement — Page 3
"Property Tax Obligation" - Total annual property tax paid by Lessee of the Property, including
all Beneficial Use and Personal Property Taxes.
"The Property" - The Property is described in the Grant Deed in the form attached to this
agreement and includes such furniture, fixtures and equipment as existed within the Property and
leased to TSC as of March 1, 2004.
CONSIDERATION. The consideration exchanged by the parties for this agreement is as
follows:
1) So long as the Property is subject to a lease and is within the West Side Tax Increment
Financing District, the Tax Base Portion of the Beneficial Use Tax and Personal Property
Tax paid by TSC or any future Lessee shall continue to be paid out to the various taxing
entities otherwise entitled to such revenues. Upon the sunset of the West Side Tax
Increment Financing District all Beneficial Use Taxes and Personal Property Taxes paid
by TSC or any future Lessee shall be paid out to the various taxing entities otherwise
entitled to such revenues.
2) So long as the Property is subject to a lease and is within the West Side Tax Increment
Financing District, the Increment Portion of the Beneficial Use Tax and Personal
Property Tax paid by TSC or any future Lessee shall be paid into the West Side Tax
Increment Financing District so long as such district is in existence.
3) So long as the Property is subject to a lease and is within the West Side Tax Increment
Financing District, FCEDA shall be entitled to receive all Deficiency Tax Payments paid
by TSC or any future Lessee until such time as FCEDA has received a total of $300,000
from such payments which it shall use to build up its maintenance reserve account.
Thereafter, and in consideration to the City for this agreement, FCEDA shall remit to the
City 25% of all funds it receives from TSC or any future Lessee as Deficiency Tax
Payments.
4) The parties understand and agree that in the event the Property is not under lease there
will be no tax revenues generated by the Property.
TRANSFER OF REAL ESTATE OWNERSHIP: The City shall transfer its ownership in the
Property, including the parking lot, to FCEDA in the form of a Grant Deed as attached hereto as
Exhibit "A".
ASSIGNMENT OF SHOPPING CENTER LEASE: The City shall transfer its interests and
obligations in the Shopping Center Lease with TSC to FCEDA in the form of an Assignment of
Shopping Center Lease as attached hereto as Exhibit `B".
Interlocal Agreement — Page 4
TRANSFER OF RIGHTS AND OBLIGATIONS UNDER THE JOBS AND USE
AGREEMENT: The City hereby transfers all of its remaining rights and obligations under the
Jobs and Use Agreement dated March 1, 2004, with TSC to FCEDA and hereby represents that
its obligations under the CDBG Grant and parking requirements have been fulfilled. FCEDA
hereby assumes any of the City's remaining obligations under the agreement with TSC.
EFFECTIVE DATE: The effective date of this agreement shall be upon the execution of this
document as authorized by the governing bodies of each party.
SEVERABILITY. If any portion of this Agreement is held to be void or unenforceable, the
balance thereof shall continue in effect.
APPLICABLE LAW: The parties agree that this Agreement is governed in all respects by the
laws of the State of Montana and the parties expressly agree that venue will be in Flathead
County, Montana, and no other venue.
AMENDMENTS: This Agreement may not be modified, amended, or changed in any respect
except by a written document signed by all parties.
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.
COUNTERPARTS: This Agreement may be executed in counterparts, which together constitute
one instrument.
AUTHORITY. Each party represents that it has full power and authority to enter into and
perform this Agreement and the person signing this Agreement on behalf of each party has been
properly authorized and empowered to sign this Agreement.
Dated this day of May, 2013.
3411WK6]0CI,11a&4091
FLATHEAD COUNTY ECONOMIC
DEVELOPMENT AUTHORITY
By: By:
Tammi Fisher, Mayor
Turner Askew, Chairman
Interlocal Agreement — Page 5
STATE OF MONTANA
ss.
County of Flathead
On this _ day of May, 2013, before me the undersigned, a Notary Public for the State of
Montana, personally appeared TAMMI FISHER, known to me to be the person whose name is
subscribed to the foregoing instrument and acknowledged to me that she executed the same in
her authorized capacity as Mayor of the City of Kalispell.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the date and
year first above written.
STATE OF MONTANA
. ss.
County of Flathead
Printed Name:
Notary Public for the State of Montana
Residing at
My Commission expires:
On this _ day of May, 2013, before me the undersigned, a Notary Public for the State of
Montana, personally appeared TURNER ASKEW, known to me to be the person whose name is
subscribed to the foregoing instrument and acknowledged to me that he executed the same in his
authorized capacity as Chairman of the Flathead County Economic Development Authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the date and
year first above written.
Printed Name:
Notary Public for the State of Montana
Residing at ,
My Commission expires:
Interlocal Agreement — Page 6
Exhibit "A"
Retnr. n to:
City Clerk
P.O. Box 1997
Kalispell, MT 59903-1993
GRANT DEED
FOR A VALUABLE CONSIDERATION, receipt of which is hereby acknowledged, the
CITY OF KALISPELL, a municipal corporation duly formed and authorized pursuant to
Montana state law and with business offices located at 201 First Avenue East, Kalispell,
Montana, hereby grants to FLATHEAD COUNTY ECONOMIC DEVELOPMENT
AUTHORITY, a corporate public body established pursuant to Montana state law and with
business offices located at 314 Main Street, Kalispell, Montana the following real property
located in the SEl/a, Section 12, Township 28 North, Range 22 West, P.M.M., in the City of
Kalispell, County of Flathead, Montana and more particularly described as:
Lot I of Amended Plat of the Mall Portion Gateway West Addition No. 34 according to
the map or plat thereof on file at Clerk and Recorder of Flathead County, Montana;
and
Lot I of Amended Plat of Northeast Portion Gateway West Addition No. 34 according to
the map or plat thereof on file at Clerk and Recorder of Flathead County, Montana.
Dated this day of May, 2013.
STATE OF MONTANA )
ss.
County of Flathead
CITY OF KALISPELL
By:
Tammi Fisher, Mayor
On this _ day of May, 2013, before me the undersigned, a Notary Public for the State of Montana, personally
appeared TAMMI FISHER, known to me to be the person whose name is subscribed to the foregoing instrument
and acknowledged to me that she executed the same in her capacity as Mayor of the City of Kalispell.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the date and year first above
written.
Printed Name:
Notary Public for the State of Montana
Residing at
My Commission expires:
Return to:
City Clerk
P.O. Box 1997
Kalispell, MT 59903-1997
ASSIGNMENT OF SHOPPING CENTER LEASE
For valuable consideration, the receipt of which is hereby acknowledged, CITY OF
KALISPELL, hereinafter referred to as "the City", a municipal corporation duly formed and
authorized pursuant to Montana state law and with business offices located at 201 First Avenue
East, Kalispell, Montana, hereby assigns to FLATHEAD COUNTY ECONOMIC
DEVELOPMENT AUTHORITY, hereinafter referred to as "FCEDA", a corporate public body
established pursuant to Montana state law and with business offices located at 314 Main Street,
Kalispell, Montana, all of its rights, interests and obligations as Lessor in the leasehold estate as
fully described below.
The subject agreement of this assignment is entitled, "Shopping Center Lease by and
between the City of Kalispell, a body politic and the Flathead Economic Development Authority,
a body politic, as Landlord and Teletech Services Corporation, a Colorado corporation doing
business in Montana as Teletech Services Montana as Tenant," entered into by the named parties
on the lst day of March, 2004 a copy of which is on file in the office of Kalispell City Clerk.
ASSUMPTION OF LEASE AND INDEMNIFICATION: FCEDA hereby agrees to assume all of
the responsibilities and obligations of the Lessor in the lease identified above and therefore also
agrees to defend, indemnify, and hold the City harmless against claims, demands, suits, damages,
losses, and expenses connected therewith that may be asserted or claimed by the current or any
future Lessee against, recovered from or suffered by the City but -only to the extent that such
claims accrue after the execution of the Assignment.
SURVIVAL: The parties' indemnification obligations shall survive the termination or expiration
of this Agreement for the maximum period allowed under applicable law.
SEVERABILITY. If any portion of this Agreement is held to be void or unenforceable, the
balance thereof shall continue in effect.
APPLICABLE LAW.• The parties agree that this Agreement is governed in all respects by the
laws of the State of Montana and the parties expressly agree that venue will be in Flathead
County, Montana, and no other venue.
AMENDMENTS: This Agreement may not be modified, amended, or changed in any respect
except by a written document signed by all parties.
Exhibit "B"
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.
COUNTERPARTS: This Agreement may be executed in counterparts, which together constitute
one instrument.
AUTHORITY: Each party represents that it has full power and authority to enter into and
perform this Agreement and the person signing this Agreement on behalf of each party has been
properly authorized and empowered to sign this Agreement.
Dated this day of May, 2013.
CITY OF KALISPELL
By:
Tammi Fisher, Mayor
FLATHEAD COUNTY ECONOMIC
DEVELOPMENT AUTHORITY
LM
Turner Askew, Chairman
Exhibit "B"
STATE OF MONTANA
. ss.
County of Flathead
On this _ day of May, 2013, before me the undersigned, a Notary Public for the State of
Montana, personally appeared TAMMI FISHER, known to me to be the person whose name is
subscribed to the foregoing instrument and acknowledged to me that she executed the same in
her authorized capacity as Mayor of the City of Kalispell.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the date and
year first above written.
STATE OF MONTANA
ss.
County of Flathead
Printed Name:
Notary Public for the State of Montana
Residing at
My Commission expires:
On this _ day of May, 2013, before me the undersigned, a Notary Public for the State of
Montana, personally appeared TURNER ASKEW, known to me to be the person whose name is
subscribed to the foregoing instrument and acknowledged to me that he executed the same in his
authorized capacity as Chairman of the Flathead County Economic Development Authority.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official seal the date and
year first above written.
Printed Name:
Notary Public for the State of Montana
Residing at ,
My Commission expires: