1. Resolution 5114 - Sale of Armory Property - Hilton Garden InnCity of Kalispell
Charles A. Harball Office of City Attorney
City Attom y 312 First Avenue East
P.O. Box 1.997
Kalispell, MT 99 -1997
MEMORANDUM
TO: Mayor Pamela ela . IZen.nne y
and Kalispell City Council
FROM: Charles HarbalL City .Attorney
James H. Patrick, City Manager
Tel 406.758.7708
Fax 406.758.7771
charbalI@kalispel1.com
SUBJECT: Resolution. No. 511 — A Resolution to Sell the Armory
Property to Gateway Hospitality Group, Inc.
MEETING DATE: Monday, May 1, 2003 — Regular Council Meeting
BACKGROUND: Earlier this calendar year, the Montana National Guard moved
out of the Armory property at 1840 Highway 93 south and ownership of the
property revertod back to the City of Kalispell. The 3.4 acres that comprises this
property has been used as an armory since the .50's and is located within the
Kalispell Airport Tax Increment District and previously found by City Council to be
blighted and in need of urban renewal.
The City obtained an appraisal of the property and determined that the fair market
value gas approximately 1..2 million dollars. Based upon the urban renewal plan
approved y council., a Request for Proposals with specific criteria was then
generated and published to seek interest from the development community to inject
capital into this property.
Gateway Hospitality Group, Inc. [Gateway] was the sole respondent to the RFP, but
submitted a substantial proposal. The proposal meets the criteria of the RFP on
many points. The full. -appraised market value is being offered although Gateway
has no need of the structures on the property. Gateway will invest approximately
15 to is ni.11ion, dollars in the property with i.n.-groun.d improvements expected to be
in the range of 12 million dollars ro it-ing a much needed boost to the tax base
within this TIF district. The proposed 117,300 square foot facility is a Hilton Hotel
and conference center with a full service restaurant and casino. The conference
center meets the RFP criteria by bringing in and circulating out of area dollars into
our local economy. other hotels in the area can expect to benefit from the
conference overflow. Although the facility is in the service industry, it will create a
substantial number of jobs, including some higher management positions. Gateway
desires to be located adjacent to the City Airport as it anticipates benefit from fly-i.n.
Sale of Annor
.April 27, 2006
Page
consumers. The City Airport will also benefit from the additional businessthis may
generate.
RECOMMENDATION: The City Council should consider and pass Resolution No,
o 114 authorizing the sale of the Armory property to Gateway Hospitality Group,
Inc. The property was marketed by the City as a TIF project for the purpose of
attracting investors such as this. As urban renewal is the impetus to this project,
the City should use the statutory tools available to it to make the project happen.
Gateway came to the City with the anticipation that up to 0 of its hard costs
investment could be contributed by the City through its TIT district. It was for this
reason that Gateway responded to the RFP. staff is recommending that the
developer's agreement allow the 0-ty to contribute up to $890,000 on the project,
which is approximately Y2% of the anticipated hard costs that will be invested by
Gateway. Gateway is further offering to enter into a Net Proceeds Agreement of
0% with the City, which gives the City the additional opportunity fox additional
payback of its investment upon the sale, refinancing or exchange of the property.
Staff further recommends that the Council direct that the proceeds of the sale be
held in an interest bearing account until such time as the Community Center
Committee has developed ecommendatio .s for a Community Center and a public
hearing can be held to elicit public comment regarding the use of the sale proceeds
toward the development of a Community Center and the City Council makes its
final determination. It seems appropriate that the matter of the sale of the property
be kept separate from the issue of how the City will best use the proceeds.
FISCAL EFFECTS: It can be anticipated that the fiscal effects to the City from
this sale and agreement will be substantially favorable. The increased tax base will
generate increased tax ever e. The facility will be an anchorto the south entrance
to the City which will likely spur* additional much needed investment and urban
renewal to this part of our City. The additional Jobs created by the facility will
circulate more dollars within the community as will the additional tourist dollars
generated by the conference center.
Respectfully submitted,
,J S
._,.
Charles lf r .11, �it� Atto x ey es Patrick, City Manager
Office of City Attomey
City of Kalispell
RESOLUTION No, 5114
A RESOLUTION To SELL CERTAIN REAL ESTATE OWNED BY THE CITY of
K LISPELL AND MORE PARTICULARLY DESCRIBED AS TRACT I OF
CERTIFICATE OF SURVEY NO, 170459 A TRACT OF LAND, , SITUATED, LYING,
AND BEING IN THE NORTH HALF of THE NORTHWEST QUARTER of SECTION
20, TOWNSHIP 28 NORTH, RANGE 21 WEST, P.M.M#, FLATHEAD COUNTY,
'IONT NA To GATEWAY HOSPITALITY GROUP, INC.
WHEREAS, the City of Kalispell owns certain real property commonly known as 1840
Highway 93 South, Kalispell, Montana (the Armory), consisting of approximately
3.4 acres and more particularly described as Tract 1 Of Certificate Of Survey No,
17045, a tract of land., situated., lying, and being in the North Half of the
Northwest Quarter of Section 20, Township 28 North, Range 21 West, '.M.M.,
Flathead County, Montana; and
WHEREAS, the subject property is located within the Kalispell ,Airport Tax Increment District
which has been previously found by the City to be blighted. and in need of urban
renewal; and
WHEREAS, the City obtained are appraisal for the subject property which established a fair
market value for the real property and improvements at the sum o 1,21 ,000;
and
WHEREAS, the City published a request for proposals for the purchase and investment in the
subject property with certain criteria required to meet the reeds of the urban
renewal plan for the Kafispell Airport Tax Increment District; and
WHEREAS, Gateway Hospitality Group, Inc. submitted a proposal that met the criteria set
forth in the City's R P, which included a substantial investment In the property
consisting of the construction of a 117,300 square foot hotel, restaurant and
conference center carrying the franchise of a major hotel chain., and. offered to
purchase the property for the appraised fair market value.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL of THE CITY of
KAL S ELL AS FOLLOWS:
SECTION 1. The City Manager is hereby authorized to eater into a Purchase and Sale
.Agreement with Gateway Hospitality Group, Inc. for the above --described
real property, for the total sum of S 1,216,000 on the conditions that the
property be developed as a hotel and conference center and that the
purchaser complies with all terms of a developer's agreement approved by
City Council.
SECTION 11. The City Manager shall further hold the proceeds of the Sale in are interest
bearing account until such time as the Community Center Committee has
developed comma d a io .s for a Community Center and a public hearing
can be held to elicit public comment regarding the use of the sale proceeds
toward the development of a Community Cantu- and the City Council
makes its final determination.
PASSED AND APPROVED Y THE CITY COUNCIL AND SIGNED BY THE MAYOR O
THE CITY OF KALISPEL , THIS I ST DAY OF MAY, 2006.
Pamela B. Kennedy
Mayor
ATTEST -
Theresa White
City Clerk
AGREEMENT TO SELL AND PURCHASE
DATED this day of May 2006 at Kalispell, Montana.
Gateway Hospitality Group, Inc., an Ohio coTorat.ion, of 8920 Canyon Falls Blvd,
Twinsburg, off 44087, hereinafter called "BUYER" agrees to purchase, and. CAY of Kalispell,
municipalcorporation, of 312 1 st Avenue East, Kalispell, Montana 59901, the undersigned
SELLER., agrees to sell the following described real estate hereinafter referred to as "premises" i
the City of Kalispell, Flathead County of Montana, legally described as:
Tract 1 of Certificate Survey No. 17045, a tract land, situated, lying, and
being in the North HWof the Northwest Quarter of .section 20, Township 28
North, , 21 West, Q.M.M.# Flathead County, Montana.
Total Purchase Price is ONE MILLION TWO HUNDRED SIXTEEN THOUSAND
AND N0100HS 1,2 1 ,000. oo DOLLARS U.S. payable at closing.
SPECIAL PRO VISIONS
Li or Liter Conti n This purchase and sale is contingent upon BUYER
successfully exercising its option on, or in any other way obtaining, a fall service liquor license
for the subject property within the timeframe set forth for the closing of this transaction.
CONVEYANCE
The SELLER shaJJ convey the real property by Warranty .deed, free of a.11 hens and
encumbrances except hose described above or those otherwise acceptable to the BUYER as
described in the title insurance section of this agreeM nt.
TITLE INSURANCE
SELLER.., at SELLER'S expense, shall famish UYER -ith Title Insurance in the
amount equal to the purchase price, committing to insure merchantable title to the real property
in the BUYER'S name, free and clear of all liens and encumbrances except: zoning ordinances,
building and use restrictions, reservations in federal patents, beneficial utility easements apparent
or of record, easements of record, and any other encumbrances acceptable to BUYER.
1f the SELLER'S tine is not merchantable and cannot be made merchantable before the
stated closing date, 30 ADDITIONAL DAYS SMALL BE ALLOWED FOR THE SELLER To
PURCHASE AND SALE AGREEMENT - 1
MAKE SUCH TITLE MERCHANTABLE. Encumbrances to be discharged by the SELLER
shall be satisfied prior to closing or from SELLER'S proceeds at time of closing.
TAXES AND ASSESSMENTS
SELLER and BUYER agree to prorate taxes and special improvement assessments for the
current tax year, if any, as of the date of closing, unless otherwise agreed.
CLOSING T
The date of closing shall be on or before July 1, 2006 or sooner if BUYER has completed
it financing agreements. 30 ADDITIONAL I' IONA DAYS SHALL ALLOWED FOR. THE BUYER
TO OBTAIN SUCH AGREEMENTS,, IF NECESSARY. The BUYER and SELLER will
deposit with the closing agent all instruments and monies necessary to complete the purchase i
accordance with this agreement.
ADDITIONAL TERMS
If the Seller accepts the offer er contained in this agreement but refuses or neglects to
consummate the transaction within the time period provided in this agreement, the BUYER may:
(1) Demand d that SELLER specifically er `on-n SELLERS
obligations under this agreement; or
(2) Demand monetary damages from. SELLER for SELLER'S
failure to perform the terns of this agreement.
.t.
SELLER'S REMEDIES
If the SELLER accepts the offer contained in this agreement and BUYER. refuses or neglects
to consummate the transaction within the time period provided in this agreement, the SELLER
may-
I Demand that BUYER specifically perform BUYER'S duties and
obligations under this agreement; or
(2) Demand that BUYER pay monetary damages forBUYER'S
failure to perform the terms of this agreement.
UE'S CE. R TIFICA TION
y entering into this agreement, each person or persons executing this agreement as
BUYER represents that he/she is eighteen 1 years of age or older, of sound. mind, and legally
competent t to own real property in the State of Montana; and if acting on behalf of a corporation,
PURCHASE AND SALE AGREEMENT
partnership,.,, or other nonhuman entity that he/she is duly authorized to enter into the agreement
on behalf of such entity.
y entering into this agreement, each person or persons executing this agreement as
SELLER represents thathe/she is eighteen 18) years of age or older, of sound mind, and legally
competent to own real property in the State of Montana.; and if acting on behalf of a corporation,
partnership, or other nonhuman entity that he/she is duly authorized to enter into this agreement
on behalf of such entity.
CONSENT TO DISCLOSE INFORMA TN
BUYER and SELLER hereby consent to the procurement and d1sclos .re by BUYER,
S�, and sales representatives and their attorneys, agents and other parties .having interest
essential to this agreement, of any and all information reasonably necessary to consummate the
transaction described in this agreement,, specifically including access to escrows for review o
contracts, deeds, trust indentures, or sim.11ar documents as prior transactions coneeming this
property of underlying obligation pertaining thereto.
POSSESSION
SELLER shall allow BUYER access to the subject property, pr'or to closing, and shall
allow BUYER to proceed with preliminary construction requirements, including demolition o
the existing structures. In the event that this Purchase and Sale noes not close, for any reason not
attributable to the SELLER, and the structures have been demolished, BUYER agrees that
SELLER is entitled to damages from BUYER in the amount of the fair market value of the
structures demolished. BUYER agrees to hold SELLER harmless and. indemnify SELLER in all
respects for any and all damages or injury suffered by any party on the premises upon the date
BUYER. is given access to the sect property. BUYER agrees to obtain and maintain liability
insurance on the subject property in the amount o 1.5 million aggregate and $ 50,o o per
occurrence and name the SELLER as an additional named insured. Otherwise, SELLER shall
deliver possession and occupancy to the BUYER on the closing date unless otherwise agreed.
SK OF LOSS
All loss or damage to any of the above -described real proper or personal property by
any cause is assumed by SELLER through the tinn.e of closing unless otherwise specified.
TIME IS OF THE ESSENCE
Time is of the essence in this agreement and a-11 clauses hereffi.
PURCHASE AND SALE AGREEMENT
BINDING EFFECT AND NON -ASSIGNABILITY
This agreement ent is binding porgy the heirs, successors, and assigns of each of the parties
hereto; however, BUYER'S rights under this agreement are not assignable without the SELLERS
express written. consent.
. TTORNE Y FEES
In any action brought by the BUYER or the SELLER to enforce any of the terms of this
agreement, the prevailing party in such action shall be entitled to such. reasonable attorney fees as
the court or arbitrator shall determine Just.
BUYER acknowledges that be :has examined the real and personal property, the BEER
eaters into this agreement ent full reliance upon his independent investigation and judgment, that
prior verbal representations by the SELLER or SELLER'S agents or representatives do not
modify of affect this agreement, and that by silting this agreement BUYER acknowledges
having read and understood this entire agreement, including the Additional 'berms above.
We agree to purchase the above -described property on the tens and conditions set Forth
in the above offer.
FWE HEREBY ACKNOWLEDGE receipt of a copy of this AGREEMENT TO SELL AND
PURCHASE bearing my/our signatures
BUYER:
y: Robert Voelker for
Gateway Hospitality Group, hie.
PURCHASE AND SALE AGREEMENT
SELLER'S COMMITMENT
UWe agree to sell and convey to BUYER the above -described property on the terms and
conditions hereinabove stated. UWe acknowledge receipt of a copy of this agreement fearing
my/our signatures) and that of the BUYER named above.
Dated this day of 120
SELLER.:
By: James H. Patrick, City Manager
PURCHASE AS AND SALE AGREEMENT
Kalispell o vn.to m Association
17 Main Street
Kalispell, MT 5990 1.
(406) 7 -700
April 26, 200
Mayor Pan- Kennedy and
Kalispell City Council
P. o. Box 1997
Kalispell, MT 50-97
RE: Hilton Garden Inn Proposal
Ladies and Gentlemen
'lease he advised that the Kalispell Do vntown Association Board of Directors, at its
meeting held April 10, 2006, enthusiastically and unanimously passed a resolution
supporting and encouraging all appropriate actions by the Kalispell City Commission for
the development of the "Armory Property"' as a hotel and convention facility and
specifically to support the Hilton Garden Inn proposal as presented to the meeting by City
Manager Jinn Patrick.
It was the consensus of the directors present and commenting that the proposed facility
would help the overa.11 fiscal vitality of the Flathead Valley and the Kalispell Downtown
area, that It has the potential to help sustain businesses during the so-called ""shoulder
s asons�� and to improve the tax base without significant, additional infrastructure costs.
The hotel by itself would present a. competitive challenge to some of our members, while
a hotel with a convention center would actually complement those members because o
the overflow from. meetings (conventions) exceeding the Hilton's available sleeping
rooms.
Please add this letter to the official records supporting your approval of the Planned Unit
Development and taking such other actions necessary to meet the developers' time frame
and move the project forward as expeditiously as possible.
Thank you for the opportunity to comment.
Sincerely Y-ours, : x
Thomas o. McElwain
CC: KDA Board of Directors
M"
FlatLead Convention 6 Visitor Buren.
April 2, 200
ilm Patrick
City of KaRspell
PO Box 1997
KaPeR, MT 59903-1997
Dear Jim,
On ealf of the Flathead Convention Visitor Bureau CVand its Board of Directors, I would
hke to provide you ffiis letter of support for the Hilton Garden project that is proposed at the
site of the current Armory Building in downtown Kahse ..
Tourism is vital to the econonucs of the Flathead VaRey. The proposed project will provide a
much needed convention center which will draw larger groups to our area and provide over-
flow lodging to established hotels in downtown KLSeR.
recently had the opportunity to see the property that GHG just built M Missoula and it is
fabulous! The quality and ambiance that such a project would big to KahspeR is much
needed.
'lease let me know what more the FCVB can do in suppoirt of this project. If s a wm-w-in for our
ommunity
Sincerely,
j,Q, \ 4-rt, �
Dori Halton
Executive Director
Flathead Convention & visitor Bureau
170 US H,7, Eiist, # 1.4 Kah8pell, MT 5 01 -54 - 1 5 €� Y7 0-� 1 Fax �)6-2�7-2500 1LAC LvLorg www n�O otai1as flatheabaIley, COM