05. Resolution 5166 - Red Lion/West Coast Contract Fulfillment-.::.:::_::::.:.:.:.::.::::-.:::::::.:.::::_..:_ ::..-_ :::..::_:-:.-.:....... .
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-- Post Office Box 1997
Kalispell, Montana 59903-1997 Telephone (406) 758-7000 Fax (406) 758-7758
REPORT TO: Honorable Mayor and City Council
FROM. James H. Patrick, City Manager
SUBJECT: Kalispell Center Mall
MEETING DATE: December 4, 2006
BACKGROUND: In 1996, the City entered into an agreement with West Coast Hospitality
Group to loan $890,000 for the purpose of purchasing the Equity property and demolishing the
grain elevators and for the purpose of expanding the Kalispell Center Mall. The developers were
to remove the unsightly elevators and expand the mall north of the railroad tracks within 30
months of the agreement. If they did not, the developers were to pay back the loan at 9% interest
until paid off or until there was an investment made on the property which resulted in $6,600,000
increase in assessed taxes. The assumption was that the new taxes would generate the revenue to
pay the loan back. It was also done to insure investment in the downtown and insure that the
mall would remain a viable anchor to the downtown. The taxable value base line in 1996 was
$16513 5, 119 and the owners paid $353,296 in taxes.
Since 1996 the State has modified the way property is taxed. The corporation has made
investments in the mall and property value has increased substantially; however, the 2005 tax
assessment (building, land, and personal) is $14,920,540 or approximately $1,200,000 less than
it was ten years ago but the owner's tax bill increased to $467,993 or approximately $114,700
more in taxes than in 1996. Therefore the intent of the agreement is being met.
The developers/owners have recently invested more than $6,116,981 in the Red Lion Hotel, $1.1
million in the new Heritage Bank project, $644,600 in site improvements to include fagade
improvements, and they plan for a future restaurant and development north of the existing
railroad tracks. Next year's taxes are anticipated to increase by more than $113,000.
The Equity property, purchased with the loaned money, is in the process of being gifted to the
Glacier Performing Arts for a Performing Arts Center. The performing arts center would be a
part of the overall campus.
The developer feels that they have met the intent of the agreement even though the accessed
values may never increase by $6,600,000 due to the valuation method now being used by the
State. The continued urgency to keep the mall a viable anchor in the downtown and see it
expand is vital to the health of the downtown business core.
Staff feels that the tax valuation changes made by the State make it difficult if not impossible for
West Coast Hospitality to increase the assessed value by $6,600,000.
RECOMMENDATION: Staff recommends that the resolution be adopted considering the
agreement between West Coast Hospitality and the City of Kalispell satisfied.
FISCAL EFFECTS: The tax revenue being and anticipated to be generated satisfies the
agreement and offsets the loan payments. The owners have additional incentive for further
expansion of the Kalispell Center Mall.
ALTERNATIVES: As suggested by the City Council.
Respectfully submitted,
James H. Patrick, City Manager
RESOLUTION NO.5166
A RESOLUTION TO DETERMINE THAT THE OBLIGATIONS OF WEST COAST
HOSPITALITY GROUP, SUCCESSORS IN INTEREST TO BARBIERI INVESTMENT
COMPANY, INC. AND THE KALISPELL CENTER LIMITED PARTNERSHIP UNDER
THE TERMS OF ITS DEVELOPMENT AGREEMENT WITH THE CITY OF
KALISPELL DATED THE 21 ST DAY OF DULY, 1997 HAVE BEEN FULFILLED,
WHEREAS, on the 21 st day of July, 1997, the City of Kalispell entered into a development
agreement with Equity Supply Company [Equity], Barbieri Investment Company,
Inc. [Barbieri] and Kalispell Center Limited Partnership [Kalispell Center Mall]
for the redevelopment of blighted property owned by Equity adjacent to and north
of the Kalispell Center Mall property, owned by Barbieri and Kalispell Center
Mall and for the development of improvements to that property; and
WHEREAS, as an integral term of the development agreement and for the purpose set forth
above and to thereby increase the tax base for that property, the City of Kalispell
loaned $890,000 to Barbieri and Kalispell Center Mall, said obligation to be
satisfied upon repayment of the loan according to the teams of the note or upon
the tax assessed value of the total property increasing by the sum of $6,600,000,
the assessment deemed necessary to generate the tax revenue equivalent to the
outstanding principal of the note; and
WHEREAS, subsequent to execution of the development agreement and unanticipated by the
parties to the contract, the State of Montana altered its method of property
valuations resulting in an overall decrease in Kalispell Center Mall property
assessed value by $1,200,000 between the years of 1996 and 2005. However,
over the same period of time the tax revenues from the overall property have
increased from the annual bill of $353,296 paid in 1996 to $467,993 paid in 2005;
and
WHEREAS, West Coast Hospitality Group, successors in interest to Barbieri and Kalispell
Center Mall are current in payments on the note, and pursuant to the agreement,
the blight on the Equity property has been abated; and
WHEREAS, West Coast Hospitality Group also recently invested $6,116,981 in improvements
to the Red Lion Hotel, an additional $644,600 on other site improvements, and
$1,100,000 in the Heritage Bank Project, all located upon the Kalispell Center
Mall property. It is anticipated that this investment in the site will increase the
annual tax revenues an additional $113,000; and
WHEREAS, West Coast Hospitality Group has further offered to gift the Equity property for
development of a performing arts center as further anchor to the Kalispell
downtown core; and
WHEREAS, West Coast Hospitality Group has met the intent of the agreement by making the
required payments on the note, abating the specific blight identified on the Equity
property, investing capital in the redevelopment of the downtown Kalispell core,
and increasing the tax revenues to the local governments to meet or exceed the
remaining principal of the outstanding note.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
KALISPELL AS FOLLOWS:
:
SECTION I. The City Council hereby finds that based upon the evidence set forth in
the recitals above it concludes that West Coast Hospitality Group has met
the terms of the development agreement dated July 21, 1997 and has
particularly met the investment requirements of the agreement to increase
tax revenues to the local government bodies so as to offset the principal
balance of the outstanding loan amount owed to the City of Kalispell and
the note is therefore determined to be fully paid.
PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF
THE CITY OF KALISPELL, THIS 4th DAY OF DECEMBER, 2006.
Pamela B. Kennedy
Mayor
ATTEST:
Theresa White
City Clerk
DEVELOPMENT AGREEMENT
This Agreement is made as of July 21, 1997, by and between the City of Kalispell, Montana, a municipal
corporation and political subdivision of the State of Montana, ("City"`), Equity Supply Company, a Montana
corporation ("Equity"), Barbieri Investment Company, Inc., a Washington corporafim ("BIC") and Kalispell
Center Limited Partnership, d.b.a. Kalispell Center Mall, with its principal place of business at N. 20 Main,
Kal ispe lL Montana ("Developer").
WITNESSETH:
W EREAS, the City is a general powers city, existing and organized under the constitution and the laws
of the State of Montana; and
WHEREAS, the City has elected to exercise the powers of an urban renewal agency, pursuant to rMe 7,
Chapter IS. Parts 42 and 43, Montana Code Annotated as amended (the "Act') and Ordinance Ito. 933 of the City,
adopted by -the City Council on September 10, 1979, and
WHEREAS, Ordinance No. 933 adopted the Kalispell -Downtown Redevelopment Plan as the wban am
renewal plan (referred to hereafter as the Redevelopment Plan) for the urban renewal area known as the Kalispell
Downtown Redevelopment Area (referred to hereafter as the Redevelopment Area); and
WHEREAS, Ordinance No. 933 states that in order to implement and effectuate the Redevelopment Plan,
it will be necessary for the City to take certain actions with reference to "flue: upgrading and improvement of public
and private utilities within the project area, provisions for public parking, the rehabilitation of residential and
commercial structures, and acquisition of real and personal property, the rekxation of person(s) displaced by
acquisition of real property, the demolition and clearance of structures acquired by the City where necessary, the
provision of public unprovements, providing building or site 'on for disposal for private or public
redevelopment, the rehabilitation and moving of anwhues, the dis ition of acquired fvr public and
private redevelopment and/or rehabilitation"; and
WHEREAS, the Redevelopment Plan, as adopted and implemented co nWw a tax increment financing
provision coextensive with the Redevelopment Area; and
WHEREAS, as the Redevelopment Plan has been amended by Ordinance No. 1065, adopted by the City
Council on November 4, 1985, Ordinance No. 1165 r.. by the City Council on September 3, 1991, and
Ordinance No. 1169 adopted by the City Council on September 3, 1991; and
WHEREAS, Ordinance No. 1248 adopted by the City Council November 4, 1996 approved as an urban
renewal project the Kalispell Center Expansion (defined below) located wWUn the Redevelopment Area,
authorized the use of tax increment revenues to finance certain "isidon and demolition necessary to the
Kalispell Center Expar km, and authorimd the entering into of a devetopment agreement with Developer in order
to accomplish the Kalispell Center Fxpansion, upon teams and consistent with the Act„ the Redevelopment Pfau,
and Ordinance No. 1248; and
WHEREAS, the Developer, Equity and the City desire to encourage the highest and best use of the
property within the Redevelopment Area.
NOW, FORE, in consideration of the foregoing premises and the mutual obligations set forth is
this Agreement, the parties hereto hereby agree as follows:
ARTICLE 1
Section 1.1. Definitigns. In this Agreement, unless a different meaning clearly appears from the context:
"Act" means Montana Code Annotated Title 7, Chapter 15, Pages 42 and 43, as amended.
"Agreement" means this Development Agreement, as the same may be f vrn time to time modifsed, amended or
supplemented.
"Assessed Valuation" means the market value of property (real Property and fixtures and equipment) determined
by the Department of Revenue in accordance with the Montana Cods
"Equity " means that real property descnibed in Schedule 1.
*KafispeU Center " means that real property descnibed in Schedule 2.
"Kalispell Center Expansion" means the expansion and improvements Amcd 1'bed in Section 2.3 below.
"Kalispell Center Mall" means all of the mixed use retail mall/restauramUtel improvements subject to Assessed
Valuation located on the Kalispell Center Property
"Payment for Improvements" means that payment by City to Equity in compensation for Equity relinquishing
improvements on the Equity Property under a separate agreement between City and Equity.
"Purchase Agreement" means that certain agreement executed on March 17, 1997 between Equity and BIC, as
amended to conform with this Agreement, under the terms of which Equity has agreed to sell the Equity Property
for redevelopment in conjunction with the Kalispell Center Expansion.
"Project" means the Kalispell Center Expansion project descrnlaed in this Agreement,
Troject Area" means the Equity Property and the Kalispell Center Propinly.
"Section" means a section of this Agreement, unless used in reference to Montana Code Annotated.
"State" means the State of Montana.
"Tax Increment" means the following combination of definitions derived or modified from Montana Code
Annotated Section 7-15-4283 as they apply to the Project Area: a) "Tax hicremeW means the collections realized
from extending the tax levies, expressed in miffs, of all taudng bodies in the Project Area against the incremental
taxable value. b) "Actual taxable value" means the taxable value of t vu" , at any time as calculated
from the assessment roll last equalized. d) "Base taxable value" means the actual taxable vahie of all taxable
propefty within the Project Area prior to the effective date of this A e) "Inc rmental taxable value"
means the amount, if any, by which the actual taxable at any time exceeds the base taxable ►slue of all
within the Project Area subject to taxatkm. f) "Taxes" mesas all taxes kYied by all taxing bodies against
on an ad val wem basis. gj "Tax lnCr provision" memos the collections for the segregadon and application of
tax `mawenmts as authorized by the Act. h) "Taxing body" means any city, town., county, school distract or other
potitical subdivision or governmental unit of the state, inchWing the s which levies taxes against
within the Project Area.
"Tax Increment Financing Plan" means Tax Increment Financing Plan for Tax Increment Financing adopted by
the City Council under the resolutions referred to in the recitations above.
"Unavoidable Delay" means a failure or delay in a party's performance of its obligations under this Agreement, or
during any cure period specified in this Agreement, which does not enter the mere payment of money, not within
the party's reasonable control, including but not limited to acts or fai hays to act of God, governmental agencies,
the other parties to this Agreement, strikes, labor disputes, f m or other casualty, lack of materials, or delay caused
by injunction or other court order, or declaration of invalidity pummt to Montana law by initiative or referendum
provided that within 10 days after a party impaired by the delay has knowledge of the delay it shall give the other
Pay written notice of the delay and the estimated length of the delay, and shall give the other party written notice
of the actual length of the delay within 10 days after the cause of the delay has ceased to exist. The parties shall
pursue with reasonable diligence the avoidance and removal of any sucb delay. Unavoidable Delay shall not
extend performance of any obligation under this Agreement unless the notices required in this definition are given
as herein required.
ARTICLE 2
Section 2.1. ft Ciw. City makes the following repcembdons and warranties to Developer.
(a) City, under the Act, Ordinance No. 933 and Onffimm No. 1248, has the power and authority to
enter into this Agreement and carry out its obligations hervander.
(b) The Project is an *urban renewal project" within the meaning of the Act and has been approved by
the City Council in accordance with the terms of the Act and Ordinanot No. 933.
(c) The Urban Renewal Plan., as approved by Ordinance No. 933, contains a provision for tart
increment financing for the Redevelopment Area and since 1980 tax irw rements have been collected, segregaW
by the County Treasurer and transferred to the City for the benefit of the Redevelopment Area.
(d) The City has in its Tax Increment fund, sufficient funds to complete its obligations under this
Agreement.
(e) The City has determined that the obligations undertaken by the City in this Agreement are
necessary to the development of the Project.
(f) The costs of the obligations undertaken by the City under this Agreement are costs that can be
financed through tax increments pusuant to Section 7-15-4289 of the Aax and the City Council has auftwized the
use of tax increments to finance dxw improvements, subject to Section 3 hereof.
Section 2.2 By Equity is .and warrants that~
(a) Equity is a corporation duly organized under the laws of the State of Montana, is licensed to do
business in the State of Montana, has power to enter into this AgreemeK and has duly authodzed the exeartiM
delivery and performance of this Agreement in satisfaction of its contingency under section 3.2 of the Pwrchm
Agreement.
(b) Equity is owner in fee simple of the real and improvements constituting the Equity
Property.
(c) Equity desires to accept the Payment for Improvements from the City and the sale under the
Purchase Agreement of the Equity Property five of known h and wWerground tanks in odes
to facilitate completion of the Kalispell Center Expansion.
Section 2.3 B—� a . Developer represents and wammts ftt:
(a) Developer is a limited partnership duty organised under the taws of the State of Washington, is
licensed to do business in the State of Montana, has the power to enter into this Agreement, and has duty
authorized the execution, delivery and performance of this Agreement BIC is the limited partner beneficial
owner of Developer.
(b) Developer is owner in fee simple of the real property constituting the KalispcU Center Property.
(c) Developer desires to expand the size of the Kalispell Canter Mall in a manner which. `
demolition of existing structures on the Equity Property in accordance with applicable laws and regulations and
construction on the Equity Property of facilities supporting the KalispeG Center Mall, including off-street parking,
landscaping, and on site utilities.
(d) Developer estimates that the Assessed Valuation of the Kalispell Center Mall and Equity Property
(excluding value of existing improvements on the Equity ) will increase by not lew than Six Miffion Six
Hundred Thousand dollars ( ,do4,000) based on increased Assessed Valuation a tflbutable; to the total of A) the
difference betwe m the 1996 assessed value of the Equity Property land and the $4.50 coat of acquisition of the
Equity Property plus adjacent Second Ave. West, and B) the costs of design and construction of the expansion and
improvements to and within the Kalispell Center Mall and Equity Property. The parties understand that the actual
Assessed Valuation as determined by the Montana Department of Revenge may be greater or lesser the
estimates.
g) Developer has reviewed the obligations of the City under this Agreement and represents and
acknowledges that the obligations are necessary to the development of the Project.
(h) Developer has requested that the City enter into this Agreement with Developer and Equity.
ARTICLE 3
Immediately upon removal of the final contingencies described in Section 3 of the Ptmhase Agreement
("Notice Date"):
a) As part of the Project, the City and Equity Shall accomplish the closing, abandoning and
vacating of the portion of Second Avenue West which is bounded by the Equity Property,from the railroW
right of way to Montana Street at no charge to Equity. The des lxd vacated right of way shall be pert of
the Equity Property which is the subject of the Purchase Agreemem The valuer of the vacated right of way
has been agreed to be $4.50 per square foot (estimated to be Eighty Dine Thousand One Hundred Dollars
(g9,1 ), to be: confirmed prior to Closing of the Purchase AVOUMent) which amount has been reflected
in a deduction to strive at the Payment for Improvements and an increase in the purchase price under the
Purchase Agreement.
b) The City and Equity shall implement the Payment far Improvements pumant to the agreement
between Equity and the City in the amount of Eight Hundred N"mrety Thousand Nine Hundred Dollars
($890,900) (plus or minus any variation in the value of the vacated street based on actual square footage).
c) Within 120 days of the Notice Date, Equity shall remove all improvements on the Equity
Property which Equity desires to salvage and all rcmami ng improvements in compliance with all
applicable laws and regulations, including those relating to terminating any public .. .
d) within 120 days of the Notice Date, Equity shall complete removal fim the Equity Property of
any underground tanks and associated contamination and any other hazudous substances (excluding any
asbestos as des abed in the Purchase Agreement, amended as deKribW in Artie 3 below) of which it has
knowledge:, in compliance with all applicable laws and regulations.
e) Upon completion of the foregoing, the sale of the Equity Property will close with 45 days under
the terms described in the Purchase Agreement as amended.
After closing of the sale of the Equity Property under the Purchase Agreement, Equity is responsible for any
remaining improvements on the Equity Property only to the extent of its warranties under the Purchase Agreement
The City is not responsible for demolition of any improvements on the Equity Property.
Article 4
In the event the City is unable to Complete its obligations under this Agreement in a timely manner as a
result of legal challenge resulting in a court order preventing City particil*on in the Project or declaration of
invalidity pursuant to; Montana taw by initiative or referendum, all parties to this Agreement shall have the right to
withdraw fix= this Agreement In addition, the obligation of all parties to this Agreement is contingent upon
execution by Equity and Developer of an amendment to the Purchase Agreement, prior to expiration of the
Contingency Period descn-bed in Section 3 of the Purchase Agreement, reflecting the changes required by this
Agreement
ARTICLE 5
The final configuration of the Kalispell Center Expansion will require the agreement between Developer
and third party users upon both the configuration and the dates for completion of the expansions. As those
configurations are finalized, Developer shall apply for all building in conformity with all applicable state
and local laws and regulations. Subject to Unavoidable Delays, Developer will complete the Kalispell Center
Expansion on or before thirty (30) months frorn the using of the sale of the Equity Property under the purchase
Agreement to a degree which allows the ` in the Assessed Vahmaion descnibed in Section 2.3 (d) above. The
obligations of Developer in connection with compWon of the Kalispell Center Expansion inchx1e:
a] The location of City utilities over various portions of the Kalispell Center Property shall be
recorded to the extent not yet accomplished.
b) The sewer main on the easterly portion of the ll Center Property (in the area of the
former location of the alley between First and Main sbwft) w remain unless removal is approved by the
City. One of the two storm sewer lines and the water line on the westerly portion of the Kalispell Centex
Property may be abandoned at the option of Developer so long as water preumm requirements continue to
be met; or may be moved by Developer at cost of Developer.
c] Developer will accept a pedestrian cross waMk to be kstalled at the cost of the City on the east
side of Third Avenue west where it crosses Center Suva Developer will pay for its costs of adjusting its
plantings and parking configuration to accept the cross walla.
d) Developer will cap all public utilities removed by Developer as part of demolition by
Developer of remaining improvements on the Equity Property, to the extent not capped by Equity in the
course of salvage by Equity of improvements prier to closing of the Purchase Agent
e) Developer will comply with and pay the normal fees to the City in conjunction with the
Kalispell Center Project (not including the street vacation desaibed in Article 3).
ARTICLE 6
6.1 . In conjunction with the financing for the original construction
of Kalispell Center, Developer executed a Secondary Loan Agreement vrthe City dated June 29, 1984, which
was incorporated by reference into a Second Note and Second Mortgage dated December 17, 1984, as subsequently
amended by addenda dated December 14, 1984, February 28, 1985, and April 18, 1994. In consideration of the
obligations undertaken in this Agreement, and without further charge to Developer (including but not limited to
under Section 10 of the Secondary Loan Agreement), City and Developer agree that Developer may pay in full the
Second Note and Second Mortgage, on or before the expiration of the time period described in Article S above, by
payment in full of the then unpaid principal balance of the Note together with all accrued interest and City
participation in net cash flow in the amounts required by Sections 6 and 8 of the Secondary Doan Agreement
prorated to date of payment. City participation in net cash flow will be prorated to the date of payment of the
principal balance of the Second Note by basing the prorated payment on the City participation for the prior fiscal
year and adjusting the payment at the time of the annual accounting for the current fiscal year.
61 Cabot N& to Crtv. At the closing of the purchase of the Equity Propaty, BIC shall execute
a note in the foam attached as Schedule 3 to this Agreement.
ARTICLE 7
Developer shall pay when due all real estate taxes and installments of special assessments payable on the
Kalispell Center Property and, following its purchase, the Equity Property (including adjacent vacated sava).
Developer and the City recognize that the State of Montana, Department of Revenue shall utilize calculator or
segregated cost methods to determine the Assessed Valuation of the improved real property. Except in the event of
substantial destruction of the Kalispell Center Mall, Developer will not appeal, for a period of ten (10) years fi om
the date of this Agreement an Assessed Valuation of the Project Area which totals the current 1996 Assessed
Valuation of the Kalispell Center Property and Equity Property (excluding the value of improvements on the Equity
Property as of the date of this Agreement and to -be -vacated Second Ave. West) plus Six Million Six Hid
Thousand Dollars ( ,f 3,W).
ARTICLE 8
Section S. I Eycals of N The fallowing shall be "Events of Default" under this Agreement and the
term "Event of Default" mean, whenever it is used in dais Agent {unless the content otherwise pmvidesl
any one or more of the following events which continues for more than 30 days after notice by one party to the
others of such default (and the term "default" shall mean any event which would with the passage of time or giving
of notice, or both, be an "Event of Default" ):
(a) Failure by either party to cooperate in completing the requirements of Article 3 above.
(b) Failure of Developer to cainpiae the Kalispell Center Ecpamion as requirod hereunder.
(c) Failure by Devetoper to pay real estate taxes as required hercunder.
(d) Failure by Developer, Equity or the City to observe or perform any other duty, covenant,
condition, or obligation required by this Agreement.
Section 8.2. Remedia on DtfaulL Whenever any Event of Default referred to in Section S. I occurs,
the party not in default may take one or more of the followingactions:
(a) Suspend its performance under this Agreement until it rrviceeives satisfactory assurance from the
other party that the defaulting party will cure its default and continue its performance under this Agreement.
(b) Take whatever action at law or in equity which may appear necessary or desirable to the
non -breaching party to enforce performance and observance of any obligation, agreement, or covenant of the
party in default under this Agreement.
Section 8.3. No Remedv clusi�re .Igo remedy herein cm&wed upon or reserved to either party is
intended to be exclusive of any other available remedy or remedies, but each and every such remedy stall be
cumulative and shall be in addition to every other remedy given under this Agreement or` now or heradter
existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any
default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and
power may be exercised from time to time and as often as may be deemed expedient. In order to entitle a party
to exercise any remedy reserved to it, it shall not be necewary to give nonce, other than such nodee as may be
required under this Agreement
Section 9.4. . All waivers by a party must be in writing to be enforceable. If any provision of
this Agreement is breached by a party and there&er waived by the other party, such waiver shall be limited to
the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent
breach hereunder.
Section 8.5. Jurisdi . in the event that a dispute should arise under this Agreement, jurisdiction shall
lie in the Eleventh Judicial District Court of the State of Montana.
Section 8.6 AttoMeY Fees. if by reason of any default on the part of a party it becomes necessary for the
other party to employ an attorney to pursue or enforce its rights under this Agreement, the non-prevaifing party
shall pay to the prevailing party a reasonable attorneys fees and all costs and expenses incurred in enforcing its
rights under this Agreement,
ARTICLE 9
Additional
a a •
Section 9.1 ■ jam. No member, official
employee, or consultant or employees or the consultants of the City shall have any personal interest, dixea or
indirect ' in this Agreement, nor shall any such mernber, official, conmAtant or the consukors employees or
employee participate in any decision relating to this Agreement which affects his or her personal interests or the
interests of any corporation, partnership, or association in which he or she is directly or indirectly intereae& No
member, official,
consultant or the consultant's employees, or employee of the City shall be permnally liable to a party, or any
succesw in interest, in the event of any defauft or brea6 by the City or for any amount which may become due to a
party or successor or on any obligations under the terms of this A
Section 9.2. . Developer, for itself and its successors and assigns, agrees
that during the construction of the Kalispell Center Expansion it willcomply with any applicable ative action
and non-discrinnination laws or regulations.
w
Section 9.3. . Developer agrees that it shalt not discriminate upon the basis of race,
color, creed, sex or national origin in the sale, lease or rental or in the use or occupancy of the Project Propaty or
any improvements erected or to be erected thereon, or any party thereof:
Section 9.4. Thla QL-A=*Any titles of the several parts, Articles, and Sections of this
Agreement are inserted for convenience of reference only and shall be diuregarded. in construing or interpreting any
of its provisions.
Section 9.5. hlQtim and Dmwuh. Except as otherwise exprmsly provided in this Agreement, a notice,
demand, or other communication under this Agreement by either party to the other shall be sufficiently given or
delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered
personally; and (a)in the case of the Developer, addressed to or delivered personally to Developer attention Thomas
Barbieri at 201 W. North River Drive Suite 100, Spokane, WA; (b) in the case of Equity, addressed to or delivered
personally to Equity at PO Box 5791, Kalispell, MT 59903-0579; and (c) in the case of the City, addressed or
delivered personally to the City Manger, City of Kalispell, PO Box 1997, Kalispell, Montana 59903-1991, or at
such other address with respect to either such party as that party may, fivm time to time, designate in writing and
forward to the other as provided in this Section.
Section 9.6. CQu= This Agreement is executed in any number of counterparts, each of which shall
constitute one and the same instrument.
Section 9.7 Entire Awment. All understandings and agr Dernes s previously existing between the parties,►
if any, except for the Purchase Agreement and Payment for Improvements agreement referred to above, are merged
into thb Agreement including all schedules and exhibits, which alone fiMy and completely exprewes the*
agreement, and the same is entered into after full investigations, neither party relying upon any statema t or
representations made by the other not embodied herein. This Agreement may not be changed or terminated orally.
This Agreement shall inure to the benefit of and be binding upon all succewxv, heirs or assigns.
Section 9.9 G2yerniraLm. This Agreement shall be deemed to have been made in, and conmed in
accordance with, the taws of the State of Montana.
Section 9.9 TIME IS OF THE ESSENCE of this Agreement,
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as of the date first
above written.
CITY OF KALISPELL
KALISPELL CENTER LUMTED PARTNERSHIP
by Goodale d Barbieri Companies, ' sole general Partma
by j3
ey, its Vice President
r
C-
EQi3ITY SUPPLE COMPANY BARBIERI7COMPANY
by 4b
Brent E. Johnson r '.
r ►A
its President its Vice President
Schedule I
(Legal Description of Equity )
All of Bloch 27 and Lots I through b inclusive of Block 29 or KgispeU Original acconfing to the map or plat
thereof on file and of record in the office of the Cleric and Recw4a of Fladmad County, Monum a, togetber with all
rights to vacated streets or alleys, including but not limited to all of vacated Second Avenue West from the railroad
right of way to Montana Street, all located in Flathead County, Montana.
to
(�t�► of
2 C�oeat Pry)
ik tract of land situated, lying and being in the South Ralf
of the South Ralf (SkSh) of Section 7 , Township 28 Worth j
age 21 West, M. P . N. , Flathead County, Montana; and more
p* rticularly described as follows to -grit:
S ginning at the Southwest comer of dock 30 of Kalispell
. original, according to the asap or plat thereof on file
and of record in the office of the Clerk and Recordtr
of Flathead county. Montana l
thence
North 76 * 1 D ' 16 0 East and along the Northerly Right of Way of
Burlington Northern Railroad and also along the South
boundary of Block* 30, 2 9. 2 6. 27 and 26 of said
Kalispell original a distance of 1778,06 foot to a
point on the Westerly Right of Way of Main Stroat (U.S.
Highway No. 9 3) j thence
South 130491570 East and along the Westerly Right of Way of
said Main Street, a distance of 550.00 feet to a point
on the Southerly Right of Way of Burlington Northern
Railroad; thence
South 760101160 west and along the Southerly Right of Way of
said Burlington Northern Railroad and also along the
Northerly Right of Tray of Center Street a distance of
1778. 0Z feet to a point on the Easterly Right of Way
of Fifth Avenue west; thence
North 13 0501120 West and along the said Easterly Right of
Way of Fifth Avenue West, a distance of SS0.00 feat to
the Plac* of baging.
I
AS SHOWN ON CERTIFICATE of SURD No . 6921.
Schedule 3
(Form of Contingent Note)
CONTINGENT NOTE
FOR VALUE RECEIVER, Barbieri Investment Company, or its assignee as beneficial owner of the
Kalispell Center Property, (hereafter "Borrower") promises to pay the City of Kalispell (hereafter "City"), the
amounts described and on the schedule described as follows. Except where a different meaning clearly appears
from the context, all capitalized terms shall have the definitions set forth in that Development Agreement among
City, Equity, and Developer dated July 21, 1997 (hereafter "Agreement" ) and all references to section numbers are
to the Agreement.
In the event that the Developer does not complete the Kaliell Center Expansion within the time frame
descried in Article S of the Agreement, Borrower shall pay the City that amount which results from the following
formula,
$890,900 multiplied by [("e-"b") divided by "a"]
where "a" is $6,6 0,000, and "b" is the iricrease in Assessed Valuation attrilwtable to the factors descry'bed in
Section 2.3(d) actually completed within the time period required by Article S of the Agreement [By way of
example only, in the event "b" was $5,600,000, the amount owed the City would be $890,900 multiplied by 14.49%
(S 1,000,000 divided by S6,600,000) which equals S 1291,115.94.]
The amount descn*bed in the preceding paragraph shall be amortized in 144 equal monthly payments
including interest at 9 % per annurn commencing the first day of the first month following the completion date
required by Article S; provided, however, that this Contingent Note shall be forgiven at such time as the Kalispell
Center Expansion does achieve the increase in Assessed Valuation required by Section 2.3.
If any installment under this Contingent Note is not paid when due and remains unpaid after 30 days,
the entire principal amount outstanding and accrued interest thereon shall at once become due and payable at the
opdo n of City. In the event charge or interest rate imposed by the term of this Note would exceed the Mount
allowed by the than applicable law, the charge or interest rate shall be reduced to the highest amount or rate which
is allowed to be imposed on Borrower umrder the then applicable law.
From time to trove, without affecting the obligation of the Borrower or the successors or assigns of the
Borrower to pay the outstanding principal balance of this CauhMpm Note and observe the covenants of the
Borrower, without the of any person, corpo�, or other entity for
` of
the oultst- balance of this Contingent Note, widxxx v" mg notice to or obtaining the of the
Borrower,, the successors or assI of the Borrower or puantors, and without liabffity on the pant of the City,
the City may, at the option of the City, extend the time for payment of said outstanding principal xwe or any
part thereof, reduce the payments thereon, release anyone liable on any of said outstanding prmcipal ,
accept. a renewal of this Note, modify the terms and tinge of payment of said ' Prutcipal , jona
in any extension of subordination agreement, release any security given for this Note, talre or release other or
additional, and agree in writing with the Borrower to modify the rate of interest or period of
amordzadm of this Note or change the amount of the installments payable under this Note.
Presentment, nice of , and protest are hereby waived by all makers, sureties, guarantors and
endorsers hereof. This Nate shall be the joint and several obligation of all makers, sureties, guarantors and
endorsers, and shall be binding upon them and their rs and assirgm�.
Any notice to Borrower provided for in this Notre shall be given by such notice by certified mail
OA
to Borrower at the address stated below, or to such other Borrower may desigaate by notice
to the City. Any notice to the Lender shall be given by mailing lurch notice by certified mail, return receipt
requested, to the City at the address stated below, or at such other address as may have been designated by
notice to Borrower. I]isputes shall be resolved as described in Sectkm 8.5 of the Agreement.
[SIGNATURES)