01. Ordinance 1574 - Zone Change Request - Hilton Garden Inn - 2nd ReadingREPORT TO:
FROM:
SUBJECT:
MEETING DATE:
City of Kalispell
Planning Department
f- 2"d Street East, Suite 211, Kalispell, Montana. 59901
Telephone: o) 751-1850
Fax: (406) 751-1858
We si e: kalispellplanning.com
Kalispell Mayor and City Council
Sean Conrad., Senior Planner
James H. Patrick, City Manager
Second Reading - Hilton Garden inn and Conference Center Zone
Change and Planned Unit Development
May 15, Zoo
BACKGROUND: This is the second reading for a Zone Change from P-1 (Public) to B-
2 (General Business) and Planned Unit Development (PUD) overlay district on a 3.4
acre lot. The requested PUD overlay district would allow a Hilton Garden Inn and
Conference Center to exceed the permitted building height of 40 feet in the B-2
(General Business) zoning district and place a casino within the hotel/conference
center which is within 300 feet of a City park.
The property is located appro rna.tely boo feet south of the intersection of Highway 93
and 18thStreet West, on the west side of the highway. The property address is 1840
Highway 93 South, (the Armory Building) , and can be descn'bed as Assessors Tract
in Section 20, Township i 28 North, Range 22 West, P.M.M., Flathead County, Montana.
(KPUD-06-0 1)
The Kalispell City Council approved the first reading of the ordinance at their regular
meetin of May 1, 2006. At that time the Council amended one condition of the PUD
prohibiting si na. e for the cas�.r o.
RECOMMENDATION: . motion to approve the second reading of the ordinance for
the zone change and. planned unit development would be in order.
FISCAL EFFECT'S; Positive impacts once fully developed.
ALTERNATIVES.: As suggested by the City Council.
Milton Garden Inn and Conference Center
May 9, 2006
Page 2
Respectfully subrnitted,
Sea. Conrad
Senior Planner
Report compiled: May 9, 2006
e; Therese. White, Kalispell City Clerk
` .. tees H. Patrick
Cif Manager
ORDINANCE No. 1574
AN ORDINANCE TO AMEND SECTION . * 1 , OFFICIAL ZONING MAP, CITY of
KALISPELL ZONING ORDINANCE, (ORDINANCE No. ), BY ZONING CERTAIN
REAL PROPERTY MORE PARTICULARLY DESCRIBED AS 'TRACT I OF
CERTIFICATE OF SURVEY No, 17045, A TRACT of LAND, SITUATED, LYING, AND
BEING IN THE NORTH HALF of THE NORTHWEST QUARTER of SECTION 2
TOWNSHIP 28 NORTH, RANGE 21 WEST, P.M.M., FLATHEAD COUNTY, MON ANA
(PREVIOUSLY ZONED CITY P-1. PUBLIC) TO CITY -2 (GENERAL BUSINESS), WITH
A PLANNED UNIT DEVELOPMENT OVERLAY IN ACCORDANCE WITH THE
KALISPELL GROWTH POLICY 2020, AND TO PROVIDE AN EFFECTIVE DATE.
WHEREAS, Robert Voell er, contract purchaser of the property described above, petitioned the
City of Kalispell that the zoning classification attached to the above described tract o
land be zoned --2, General Business with a Planned Unit Development overlay on
approximately 3.4 acres of land, and
WHEREAS, the property is approximately boo feet south of the intersection of Highway 93 and
l 1h Street East at 1840 Highway 93 South, Kalispell, Montana, and
WHEREAS, the petition of Robert Voelker was the subject of a. report compiled by the Kalispell
City Planning Office, Staff Report KPUD-- -1, in which the Kalispell Panni
Department evaluated the petition and recommended that the property as desert ed
above be zoned B-2, General Business, with a Planned Unit Development overlay,
and
WHEREAS, the Kalispell City Planning Board held a Public Hearing on the natter on April 11,
Zoo , and recommended that the initial zoning be City -2, General Business with a
Planned Unit Development overlay, and
WHEREAS, after considering all the evidence submitted on the proposal to zone the property a
described B -2, General Business with a Planned Emit Development overly, the City
Council fends such zoning to be consistent with the Kalispell Growth Policy 2020
and adopts, based upon the erlterlon set forth in Section 76--60 8, M.C.A., and.State,
Etc. v. Board of C ounty Commissioners Etc. 5 9 o P2d 602,, the findings of fact of the
Kalispell Planning Department as set forth in Staff Report No. KPU --1.
NOWTHEREFORE!, BE IT ORDAINED BY THE CITY COUNC11L OF THE CITY OF
KA .IS ELL, AS FOLLOWS
SECTION 1. Section 2 .o .olo, of the Official Zoning Map of the Kalispell ,honing
Ordinance, Ordinance No. 1 o is hereby amended by designating the
propel described move as -2, General Business with a Planned Unit
Development elopment overlay on approximately 3.4 acres,
SECTION 1 . The Planned Unit Development proposed by Robert Voelker upon the real
l rol er-ty described above is hereby approved, subject to the following
conditiolls
f. The development of the site shall he In substantial compliance with the application
submitted, the site Plan, materials and other specifications and all public
infrastructure shall be designed and installed in accordance with the Kalispell Design
gn
and. Construction Standards as well as any additional conditions associated with the
PUD as approved by the City Council.
2, The developer shall comply with the requirements of the Montana Department o
Transportation in relation to any traffic studies that may he required and obtain any
approach permits and any other necessary permits from. the Montana Department artment o
Transportation.
. The height of the building shall not exceed 56 Feet and in no case shall the height o
the building exceed the applicable maximum height limit within the airport -affected
area..
. Neon lighting shall he prohibited on signs and the building.
g.
5. Entrance to the casino shall he from inside the hotel/conference center. Entrances for
the casino directly from outside the building are prohibited.
. All outdoor sig.a e advertising the casino or gaming activities within the facilities
shall he prohibited.
7. The development shall meet all requirements of the Public works Department e t to
protect the City" s water wellhead adjacent to the pro' ect.
. That a development agreement, substantially in the form of that agreement attached
hereto as Exhibit "A", e drafted by the Kalispell City Attorney between the City o
Kalispell and the developer outlining; and formalizing the terms, conditions and
provisions of approval. The final plan as approved, together with the conditions and
restrictions imposed, shall constitute the Planned Unit Development ment PCzoning
for the site.
. Upon completion of each Phase of the project to which tax increment funds are
provided, the developer shall provide a letter of credit to the City of Kalispell in the
amount of'those tax increment funds expended to insure that the project is completed
as agreed -upon by the parties to this Agreement. In the event that the project is not
completed as agreed upon by the parties, the City of Kalispell shall be entitled to
recovery of all tax increment funds expended from either the developer or the letter
of credit provider.
SECTION 111. The balance of Section 27.02.010, icial Zoning Map, City of Kalispell
Zoning Ordinance not amended hereby shall remain in fall force and effect.
SECTION IV. This Ordinance shall take effect from and after 30 clays of its passage by
the City Council.
PASSED ANC APPROVED Y THE CITY COUNCIL AND SIGNED BY THE MAYOR of THE
CITY of KAISPELL, MONTANATHIS 115TH DAY of MAY, 2006.
Pamela B. Kennedy
Manor
ATTEST:
Theresa White
City C l er
PLANNED UNIT DEVELOPMENT AGREEMENT
HILTON GARDEN INN AND CONFERENCE CENTER
THIS AGREEMENT made as of the day of May Zoo , by Gateway Hospitality
Group, Inc., an Ohio corporation, of 8920 Canyon Falls Blvd, Twinsburg, , off 44087,
hereinafter "GATEWAY", and the City of Kalispell, a municipal corporation, of 312 1 st Avenue
East, Kalispell, Montana 59901, hereinafter CITY;
WITNESSETH
WHEREAS, GATEWAY is the fee owner of certain real property locate. at 1840 Highway 93
South, Kalispell, Flathead County, Montana, which is further described as
follows:
Tract I of Certificate of Survey No. 17045, a tract of land, situated, lying,
and being in the North Ha of the Northwest Quarter of Section o,
Township 28 North, ,range 21 West, ..P.M., Flathead County, Montana
and is hereinafter referred to as "'Subject Property"'; and
WHEREAS, GATEWAY desires to have a Planned d Unit Development overlay upon the
subject property zoned a -2 General Business that would alloy some flexibility
In the height ofthe structure and location of a casino within the 117,300 square
foot facility; and.
WHEREAS, in order to allow the PUD, assure the installation of infrastructure improvements
within the "Subject Property', and prescribe the permitted uses therein, the parties
hereto determine it to be In their interests to enter into this Development
Agreement.
I. GENERAL INTRODUCTION
§ 1.01 General
The use and development of the Subject .property shall substantially conform to and comply with.
the provisions of the PUD Application filed by applicant and the conditions contained within
Kalispell City Resolution No. 5114 approving the sale of the sueet property and. ordinance N.
PLANNED UNIT DEVELOPMENT AGREEMENTIHILTON GARDEN' INN
Page I of 7
1574 approving the development of the subject property to the Hilton Garden Inn and
Conference Center PUD and incorporated fully herein by this reference.
§ 1.02 Relationship to Zoning Ordinance
Except as specifically modified or superseded by this Development Agreement, the laws, rules
and regulations of the City of Kalispell governing the use and development of land and
buildings, including the City ofKalispell Zoning Ordinance, shall apply to the Subject Property.
§ 1.03 Drawings
The drawings annexed to this Planned Unit Development Agreement are an integral and essential
component thereof, and they are incorporated by reference herein.
1.0Effectiveness and Cancellation
The provisions of this Plamed Unit Development Agreement shall become effective
immediately and shall terminate contemporaneously with the Net Proceeds Agreement regarding
the Subject .Property. This Development Agreement may be modified or amended only as set
forth in Article VI hereof.
.05 Certification Procedure
Whenever in this Planned Unit Development Agreement ent a certificate by the Director of Public
Worts is required to be given, such certificate shall be given within thirty 3) days of the receipt
of a completed application. Such an application shall be deemed to be complete upon receipt of
such drawings and narrative information as are reasonably necessary for the issuance of such
certification.
H. PARCEL DESCRIPTION
2.01 The Subject Property, dese bed in the recitals above, shall be developed with the
infrastructure improvements as described below.
No building permit shall be issued unless and untli all improvements specified in this Agreement
as well as those infrastr .ct re improvements which may be required by the City of Kalispell 's
Standards for Design and Construction are either constructed or security provided guaranteeing
construction of said improvements for that particular parcel upon which a building per it is
requested.
111. CONDITIONS OF DEVELOPMENT
1. The development of the site shall be in substantial compliance with the application
submitted, the site plan, materials and other specifications and all public infrastructure shall
be designed and installed in actor .ante with the Kahspell .design and Construction
PLANNED] UNIT DEVELOPMENT AGREM N `I tL ON GARDEN IN
Page 2 of
Standards as well as any additional conditions associated with the PUD as approved by the
city council.
2. The developer shall comply with the requirements of the Montana Department of
Transportation ortation in relation to any traffic studies that may be required and obtain any
approach pennits and any other necessary permits from the Montana Department of
Transportation.
. The height of the building; shall not exceed. 56 feet and in no case shall the height of the
building exceed the applicable maximum height limit within the airport -affected area.
. Neon lighting shall be prohibited on signs and the building*
5. Entrance to the casino shall be from inside the hotel/conference center. Entrances for the
casino directly from o tsIde the building are prohibited.
. All outdoor si na e advertising the casino or gaming activities within the facilities shall be
prohibited.
. The development shall meet all requirements of the Public Works Department to protect the
City"s water wellhead adjacent to the project.
. Upon completion of each phase of the project to which tax increment funds are provided, the
developer shall provide a letter of credit to the City of Kalispell in the amount of those tax
increment funds expended to insure that the project is completed as agreed upon by the
parties to this Agreement* In the event that the project is not completed as agreed upon by
the parties, the City of Kalispell shall be entitled to recovery of all tax increment funds
expended from either the developer or the letter of credit provider.
IV, OBLIGATIONS of CITY
The CITY agrees that in consideration of the terms set forth above, the execution of a Net
Proceeds Agreement with GATEWAY (attached hereto) and for the general economic benefits to
be deved by the CITY and its citizens, including the additional tax base to be realized, the
redevelopment of the subject property, which has been determined to be in a blighted area, and
its usage as a conference cuter, which is desired and beneficial to the local economy, the CITY
shall contribute funds in the following; priority order:
1. Demolition of the existing structures on the subject property; and
2. Remedlation of the site as required. by Montana Department of Environmental Quality;
and
3. Development of the public infrastructure on the subject property.
The contribution of the City shall not exceed the total sung of EIGHT HUNDRED NNETY
THOUSAND AND N oo S , oo DOLLARS.
PLANNED UNIT DEVELOPMENT AGREEMENTIHILTON GARDEN INN
'age 3 of
The CITY shall enter into a long-term leasehold agreement with GATEWAY to provide such
additional parking area to GATEWAY as may be required by the CITY and not available on the
Subject Property. This parking area shall be adjacent to the Subject Property and located on
CITY owned City Airport property. The specific tenns of the lease agreement shall be
negotiated between the parties, however the length of the tern shall be of such length as required
for GATEWAY to finance the project and the annual per square foot lease payment shall be
equal to or greater than such payments made by other parties leasing City Airport property,
V. FAXES AND PAYMENT IN LIEU of TAXES
Payment in Lieu of Taxes. It is contemplated that the completed Hilton Garden Inn and
Conference Center Project [Project Property] will generate annual tax revenue to the CITY in the
amount of approximately TWO HUNDRED SIXTY THOUSAND AND NDOLLARS
($260,000-00) upon completion of the Project, exclusive of city or county special assessments.
Developer, therefore, covenants to pay the City any difference between the amount of tax
actually generated by the Project Property, including any portion of the Project transferred to
another owner, and the amount contemplated by this Agreement for a period. of TWO years
commencing with tax payment due November 30, 2007. Payment under the provisions of this
paragraph shall be made directly to the City, after certifying the tax generated by the Project
Property through the City finance department subject to verification, and in accordance with the
following,
For tax year 2007, a copy of the tax bill for the tax year 2007 shall be delivered to the
City finance office on or before November 15, 2007.
2. The City finance office shall calculate the difference between the tax bill for the 2007 tax
year, exclusive of special assessments, and the sun of TWO HUNDRED AND SIXTY
THOUSAND AND NO/100 DOLLARS $260,000.0and invoice the Developer for the
difference.
3. Half of the payment for said amount calculated shall be due and payable, from the
Developer, on or before December 15, 2007. The second half of the payment for said
amount calculated shall be due and payable, from the Developer, on or before May 3 1,
Zoo.
For tax year 2008, a copy of the tax bill for the respective tax year shall be delivered to
the City finance office on or before November 15.
. The City finance office shall calculate the difference between the tax bill for the
respective tax year, exclusive of special assessments, and the sum of TWO HUNDRED
AND SIXTY THOUSAND AND N 100 DOLLARS 2 o,000.o and invoice the
Developer for the difference.
. Half of the payment for said amount calculated shall be due and payable, from the
Developer, on or before December 15, 2008. The second half of the payment for said
amount calculated shall be due and payable, from the Developer, on or before May 3 1,
2009.
In tax years when the tax liability, less special assessments, equal's or exceeds the sung o
2 o,00 . 0, no payment -in -lieu shall be clue from the Developer, however, no credit shall be
given for subsequent tax years.
PLANNED UNIT DEVELOPMENT AGREEMENTMILTON GARDEN INN
Page
Payment of Taxes. Developer and his successors or assigns shall pay when due all real estate
taxes and installments of special assessments payable on the Project Property.
VI. AMENDMENT OR MODIFICATIONS F
DEVELOPMENT AGREEMENT
.01 This Development Agreement may be amended or modified only, by application of the
owner, in accordance with the procedures set forth herein.
.02 Application for amendment or modification may be made only to the City Council of
Kalispell.
v 1. CONSTRUCTION PERMITTING
.01 General Requirements
No buildingpernit In respect to the building in any structure shall be issued by the Building
Department until the Director of Public Works . has certified to the Building Department that
the infrastructure improvements as required herein substantially conform to the Site
Condition requirements contained in this Agreement and that said improvements have been
constructed or security guaranteeing the construction has been received by the City.
. For purposes of this Section, the "'Security"" required shall be in an amount equal to 12 % of
the developer"s Licensed Engineer's estimate of the cost of constructing said improvements.
V111. MISCELLANEOUS
§ 8.01 Effective Date
This Agreement shall be effective immediately and shall remain in full force and effect
until the expiration of the Net Proceeds Sale Agreement.
§ 8.02 Severability
In the event that any provisions of this Agreement ent shall be deemed, decreed, adjudged or
determined to be invalid or unlawful by a court of competent Jurisdiction, such provision
shall be severable and the remainder of this Agreement shall continue to be of fall force
and effect.
§ $.03 Recordation
This Agreement ent shall be recorded along with the Memorandum m of Net Proceeds
Agreement with respect to the subject property.
§ 8.04 Entire Agreement - Primacy
PLANNED UNT DEVELOPMENT AGREMENTMIL ' N GARDEN INN
Page 5 of 7
This Agreement constitutes the entire agreement etween the parties and may only be
amended as set forth herein.
8.05 i .i g Effect
This Agreement shall be binding upon and inure to the benefit of the respective parties
hei s� successors and. assigns.
Dated this ....................... day of May, Zoo,
GATEWAY HOSPITALITY GROUP
by:
Robert Welker, President
CITY of KALISPELL
by:
..................... .
James H.: athek, City Manager
PLANTED UNIT DEVELOPMENTAGREEMENTiHILTON GARDEN INN
Page 6 of 7
STATE OF MONTANA )
)-tss
County of Flathead )
On this day of May Zoo, before me, the undersigned, a Notary Public for the State
of Montana, personally appeared Robert Voelker, in his capacity as President of GATEWAY
HOSPITALITY GROUP, INC:, that executed the foregoing instrument, and acknowledged to
me that he executed the sane.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the
day and year in this certificate first above written.
Notary Public, State of Montana
Residing at
My Commission mission Expires
STATE OF MONTANA )
).-SS
County of Flathead )
On this day of May Zoo , before me, a Notary Public in and for the State o
Montana, personally appeared JAMES H. PATRICK, known to me to be the City Manager of the
City of Kalispell, a municipality, that executed the within. instrument, and acknowledged that
such City Manager subscribed, sealed and delivered said instrument as the free and voluntary act
of said municipality, for the uses and purposes therein set forth, and that he was duly authorized
to execute the same on behalf of said municipality.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal,
the day and year first above written.
Notary Public, State of Montane.
Residing at
My Commission Expires
A NNED UNTtT DEVELOPMENT AGREEMENT/HILTON GARDEN INN
'age 7 of 7
NET PROCEEDS AGREEMENT
This Net Proceeds Agreement e. t (the "'Agreement"") is entered into this day of May,
2006 by and between GATEWAY HOSPITALITY GROUP, INC., [hereinafter referred to as
"'*Owner"] of 8920 Canyon. Palls Blvd, Twinsburg, OH 44087, and the CITY OF KALISPE L, a
municipal corporation of Flathead County, Montana, a, [hereinafter referred to as the "City"] of P.O.
Box 1997. Kalispell, MT 59903-1997.
WHEREAS, Owner and City are parties to a Planned Unit Development Agreement ent dated May
�, 2006 providing for the construction of a 117,300 square foot Hilto.. Garden
Iran and Conference Center (the "Facility") on the real property described on Exhibit
"A" (the "'Subject Property"); and
WH R,E S, pursuant to a Sale and Purchase Agreement dated May , 2006, owner has
acquired by purchase from the City, title to the Subject Property and all rights and
appurtenances es ertaining thereto; and
WHEREAS, as additional consideration for the sale of the Subject Property by the City to Owner,
the Sale and Purchase .reenact provides that owner shall assign and convey the
Net Proceeds Interest (as hereinafter defined) to the City.
NOW THEREFORE in consideration of the mutual promises herein contained and for other good
and valuable consideration, the receipt and sufficiency of which are hereby acknowledged and
confessed, the parties hereto agree as :follows:
Section I Definitions, All capitalized tenus, not other -vise defined herein, shall have the
meanings given to them in the Planned Unit Development Agreem-ent. For the purposes of this
Agreement, the following terms shall have the meanings set Forth below:
(a) "Appraised value"' in the case of an Exchange shall mean the fair market value
of the Subject Property as appraised in accordance with Section 3 of this
Agreement.
(b) `'Base Investment"' shall mean the sum of i owner's Invested Capital, and ii
the principal Pornon of all Permanent Indebtedness.
(c) "Capital Expense Reserve" shall mean that Fordon of the proceeds of a
Refinancing deposited in a bank account in the name of Owner as a reserve for
Capital :Expenses required by the leader in a Refinancing.
(d) ""Capita. Expense" shall mean costs which can't be fully cxpensed in the year
paid under generally accepted accounting principles consistently applied, and
fully deducted in such year from trade or business income under the I .temal
.revenue Code of 1986, as amended.
NET PROCEEDS AGREEMENT Page I of 11
(e) "Exchange"' shall mean a transaction in which the consideration in whole or i
part, to owner for its transfer or conveyance of the Property is the transfer or
conveyance to owner of an interest in real property (the `Exchange property".
(f) "Indebtedness"" shall mean any indebtedness secured by a lien on the Property
for the purpose of providing interim or permanent financing for the project, and
any outstanding equipment loans.
"Owner's Invested. Capital"" shall mean that amount set forth in venture
agreement(s) between the owner and the investor or investors providing the
equity portion of the Financing, to be entered into at the Closing providing for
the investment of such equity capital.
(h) "Owner's Project Loans"' shall mean any of owner's invested Capital booked as
a loan.
W `"Interest on owner's ro eet Loans"' shall mean a sum equal to eleven percent
(11%) per a n m, cumulative, but not compounded.
"Net Proceeds of a Sale"" shall mean gross proceeds from a Sale of the Facility,
less 1 the payment of Transaction Costs, 1 repayment of the principal
'balance of all Indebtedness encumbering the Facility and accrued interest
thereon, 111 return of Owner's Unrecovered Invested Capital; 1v repayment of
the principal balance of Owner's Project Loans and accrued interest thereon,
and v payment of the Return on base investment.
(k) "Net Proceeds of a Refinancing"" shall mean gross proceeds from a Refinancing
of the Facility, less 1 the payment of Transaction Costs, 11 repayment of the
principal balance of the Indebtedness being refinanced a.d accrued interest
thereon, 111 any amounts required by the new lender to establish a Capital
Expenditure Reserve,, 1v return of owner's Unreeovered Invested Capital, v
repayment of the principal balance of owner's Project Loans and accrued
interest thereon, and v1 payment of the Return on Base Investment.
(1) "Net Proceeds of an Exchange" shall mean the gross proceeds from the
Exchange, based on the Appraised value of the property, less ) the payment o
Transaction Costs, 11 repayment of the principal balance of all indebtedness
Encumbering the Facility and accrued interest thereon, 111 return of owner's
Inreeoered Invested Capital, v repayment of the principal balance of
owner" s Project Loans and accrued interest thereon, and v payment of the
Return on Base Investment.
(m) "`Net Proceeds Interest" shall mean a ten percent 10% interest 1n the Net
Proceeds of a Sale, Refinancing, or Exchange.
NET PROCEEDS AGREEMENT Page 2 of 11
(n) "Permanent Indebtedness' shall mean any indebtedness secured by lien on the
Property for the purpose of providing Permanent. Financing for the Facility.
(0) "Refinancing" shall mean repayment in fall of the Indebtedness encumbering
the Facility with the proceeds of another loan, regardless of whether repayment
of such loan is secured by a lien on the Facility.
(p) "Return. on Base Investment" shall mean a sum equal to a thirteen percent
(13 %) per ann n, cumulative, but not compounded, return on Owner's .invested
Capital and the principal portion of all Permanent Indebtedness.
(q) "Sale" shall mean the sale, transfer, assignment, conveyance, or other
disposition of all or any portion of the Facility or any interest therein, including
but not limited to i the sale, transfer, assignment or conveyance of more than
fifty percent o% of the partnership or other ownership interests of Owner; ii
a taking pursuant to an eminent domain proceeding or a conveyance in lieu
thereof and lii a master or ground lease.
(r) "Transaction Costs"' shall mean the reasonable, usual and, customary costs of
Owner directly associated with the closing of any Sale, Refinancing or
Exchange and actually paid in cash by owner to persons other than owner,
including by way of example, points, refinancing or commitment fees,
brokerage Fees to bona fide third party brokers, surveying charges,
environmental reports, recording fees, title insurance premiums and attorneys'
Fees, provided that no costs shall be included as Transaction Costs which
represent suns paid to affiliates of owner unless such fees are no higher than
prevailing fees for similar services in the area where the Facility is located.
(s) "Unreeovered Invested Capital" shall meanOwner's Invested Capital, less all
payments received by owner that, according to accepted accounting procedures
are treated as a return of capital.
Section 2. Net Proceeds Interest. owner hereby assigns, conveys, and transfers the Net
Proceeds Interest to the City and agrees to pay or cause to be paid to the City upon consummation
of a Sale, Exchange, or Refinancing, cash or other good funds in an amount equal to the product
obtained by multiplying the Net proceeds by the Net Proceeds Interest.
Section 3. Exean. If Owner should enter into an exchange agreement, which provides that
the Property will be exchanged for Exchange Property, Owner shall pay the City, at closing, the
Net proceeds Interest, based on the Appraised Value of the Property, and this Agreement shall
teninnate. The Appraised value of the Property shall be determined by agreement of the parties
within fifteen 1 days after the City receives notice of the proposed Exchange. If the parties are
-unable to reach agreement, then each shall designate an. MAI appraiser familiar with. Facility
properties in the area of the Property within ten 1 o days, and the two appraisers shall pick a third
appraiser within five 5 days of their appointment. The three appraisers shall determine the
appraised value of the Property as of the date of closing of the Exchange, and shall notify the
NET PROCEEDS AGREEMENT Page 3 of 11
parties in writing of their detennination. The parties shall bear equally the costs and fees of the
three appraisers.
Section 4. No Guarantees. The City and owner acknowledge and agree that a owner does
not warrant or guarantee that there will be any Net Proceeds of any kind with respect to the
Property and b the City has no right to receive any particular sums of money hereunder, but only
such amounts, if any, as may become payabl e by v rt e of the provisions of Section 2 hereina ove.
Section 5. Ri ht .n Pro ert . The City cues not have, and nothing herein contained shall he
construed to grant or to vest in the City, title in or to the Facility nor does the City have any right to
approve or disapprove or participate in any decision with respect to any aspect of the ownership,
management, financing, leasing, Sale, Refinancing or other disposition of the . acl.lity.
Section 6. Covenants of owner. owner represents, warrants, covenants and undertakes that
during the teru of this Agreement, owner will
(a) observe and perfrn each and every provision of any deed of trust which relates
to the Property and will promptly notify the City if owner receives a notice of
default or a notice which gives owner an opportunity to cure a default under or
pursuant to such deed of trust, and owner agrees to cure any default under such
deed of trust within the time periods required therein;
(b) allow the City, at City's election and in its discretion, to cure any default -under
any Permanent Indebtedness, or other debt secured by a lien on the Property
(provided the City shall have no obligation to do so) and any advances made by the
city to cure any default shall bear interest from the date of such advance at the
highest rate permitted by applicable law and shall be repayable to the City on
demand by the City;
(c) not take any action that would cause the Facility to decrease in value, or fail to
take any action that would prevent the Facility from decreasing in value;
(d) give the City written notice of a proposed Sale, Refinancing, Exchange or other
disposition of the Facility at least thirty 3 days prior to the consummation of the
respective transaction, which notice shall include a copy of the executed contract of
Sale or Exchange in the event of a Sale or Exchange of the Property) or a copy of
the commitment in the event of a Refinancing);
(e) give the City notice that eminent domain proceedings have been commenced or
the threat of eminent domain proceedings has been asserted within five (5) days
after Owner has been notified thereof; and
(f) maintain insurance upon and relating to the Facility insuring against loss by fire
and such other hazards and casualties and contingencies as are normally and. usually
covered by extended coverage policies in effect in Flathead County, Montana, such
policy to be on a replacement cost basis in an amount not less than that necessary to
ET PROCEEDS ,AGREEMENT Page 4 of 11
comply with any co-insurance percentage stipulated in the policy but not less than
one hundred percent 100% of the insurable value (based upon replacement cost) o
the Facility.
Section 7. Assignment. The City may assign or encumber its rights under this Agreement
without the prior written consent of Owner.
Section 8. No Partnership; * .deco y. Nothing contained in this Agreement is intended. nor
shall it be construed, to create a. partnership or joint venture between the parties hereto or to reader
either of the parties liable or responsible for the debts or obligations s of the other, including, but not
limited to, interest, taxes, losses or any other liability. Owner shall indemnify and hold the City
ann ess from and against any and all liabilities and obligations incurred in connection with the
Facility.
Section 9. Default. Upon any default by Owner hereunder, in addition to any other remedies
which the City may have at law or in equity, the City shall have the right to bring suit for specific
performance against Owner.
Section 10. Notices. All notices or other communications required or desired to be given with
respect to this Agreement sall be in writing and shall be delivered by hand or by courier service,
sent by registered or certified mail, return receipt requested, bearing adequate postage, or seat by
nationally recognized oversight delivery service, or sent by facsimile, and properly addressed as
provided below. Each notice given by mail shall be deemed to be given by the sender when
received or refused by the party intended to receive such notice; each notice delivered by hand or
y courier service shall he deemed to have been gwen, and received when actually received by the
party intended to receive such notice or when such party refases to accept delivery of such notice;
each notice given by overnight delivery service shall be deemed to have been given and received
on the next business day following deposit thereof with the overnight delivery company; and each
notice given by facsimile shall be deemed to have been given and received upon transmission,,
provided confirmation of receipt is received back by the sending facsimile prior to 5:00 pm local
time at the sending location, or on the next business day if after 5:00 l .m. local time at the sending
location. Upon a change of address by either party, such party shall give written notice of such
change to the other parties in accordance with the foregoing. Inability to deliver because of
changed address or stags of which no notice was given shall be deemed to be receipt of the notice
sent, effective as of the date such notice would otherwise have been received.
o the City:
City of Kalispell
City Manager
P.O. Box 1997
Kalispell, MT 59903
FAX: (406) 758-7758
To owner;
Gateway Hospitality Group
Bob Voelker
$920 Canyon Falls Blvd
Suite # 25
Twinsburg, OH 44087
FAX (330) 405-9898
NET PROCEEDS AGREEMENTPage 5 of 11
Section 11. Goveminy, Law and Venue. The laws of the State of Montana and the United States
of America shall govern the validity, enforcement and interpretation of this Agreement. The
obligations of the parties are performable and venue for any legal action arising out of this
Agreement shall lie In Flathead County Montana.
Section 12. Integration, odlcatlon. and Waiver. This Agreement constitutes the complete and
final expression of the agreement of the parties relating to the subject natter hereof, and. supersedes
all previous contracts,, agreements and understandings of the parties, either oral or written, relating
to such subject matter. This .Agreement cannot be modified, ed, nor any of the terms hereof waived,
except by are instrument In writing (referencing specifically to this Agreement) executed by the
party against whom enforcement of the Modification or waiver is sought.
Section 13. Counterpart Execution. This Agreement may be executed In several counterparts,
ft
each of which shall be fully effective as an original and all of which together shall constitute one
and the same instrument.
Section 14. Construction. The headings, which have been used throughout hout this Agreement,
have been inserted for convenience of reference only and do not constitute natter to be construed
In interpreting this Agreement. Words of any gender used in this A Te n ent shall be held and
construed to include the plural and vice versa, unless the context requires otherwise. The words
"herein", "hereof , hereunder"' and other similar compounds of the word `'here"', when used in this
Agreement shall refer to the entire Agreement and not any particular provision or section. If the
last day of any time period stated herein shall Fall on a Saturday, Sunday or legal holiday, then the
duration of such time period shall be extended so that it shall end on the next succeeding clay which
is not a Saturday, Sunday or legal holiday.
Section 15. Invalid Provisions. If any one or more of the provisions of this Agreement, or the
applicability of any such provision to a. speci.fic situation, shall he held invalid or unenforceable,
such provision shall be modified to the minimum extent necessary to make it or its application
valid and. enforceable, and the validity and enforceability of all other provisions of this Agreement
and all other applications of any such provision shall not be affected thereby.
Section 16. Memorandum of Net Proceeds Agreement. Upon the request of either party, both
parties shall execute a Memorandum o A. Net Proceeds reement in the dorm attached hereto s
Exhibit (the "Memorandum"') shall he filed in the office of Clerk and Recorder for
Flathead County, Montana.
NET PROCEEDS AGREEMENT Page 6 of 11
EXECUTED on the date first above written.
OTTER
GATEWAY HOSPITALITY GROUP, INC.
By:
Bob Voelker, President
CITY OF KAI S PE L
James H. Patrick, City Manger
NET PROCEEDS AGREEMENT Page 7 of 11
STATE OF MUNTANA )
)-ss
County of Flathead )
On this clay of May, Zoo, before me, the undersigned, a Notary Public for the State o
Montana, personally appeared. Robert Voelker, in his capacity as President of GATEWAY
HOSPITALITY GROUP, INC., that executed the foregoing instrument, and acknowledged to me
that be executed the same.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal the
day and year in this certificate first above written.
Notary Public, State of Montana
Residing at
My Commission Expires
STATE OF MONTANA )
)..Ss
County of Flathead )
On this day of May Zoo, before me, a Notary Public in and for the State o
Montana, personally appeared JAMES . . I A RIC , known to me to be the City Manager of the
City of Kalispell, a municipality, that executed the within instrument, and acknowledged that such
City Manager subscribed, sealed and delivered said instrument as the free and voluntary act of said
municipality, for the uses and purposes therein set forth, and that he was duly authorized to execute
the same on behalf of said municipality.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my Notarial Seal, the
day and year first above written.
Notary Public, State of Montana
Residing at
My Commi.ssion Expires
NET PROCEEDS AGREEMENT Page 8 of 11
EXHIBIT "A"
Tract I of Certificate of Survey No. 17045, a tract of land, situated, lying, and being
in the North Ha he Northwest Quarter of Section 20, Township 28 North, Range
21 West, P.MM, Flathead County, Montana.
NET PROCEEDS AGREEMENT Page 9 of 11
EXHIBIT "B"
MEMORANDUM of NET PROCEEDS AGREE EN
A Net Proceeds Agreement va.s entered into on the � day of May 2006 by and between
GATEWAY HOSPITALITY GROUP, INC., of 8920 Canyon Falls Blvd., Twinsburg, off 44087,
and the CITY of KALISPELL, a municipal corporation of Flathead County, Montana, of P.O.
Box 1997, Kalispell, MT 59903-99 . Said Agreement affects the rights of the parties upon the
sale, refinancing or exchange the following described real property:
Tract I of Certificate of Survey No. 17045, a tract of land, situated, lying, and being
in the North Ha ' of'the .northwest Quarter of Section 20, Township 28 North, Range
21 West, . .M.M , Flathead County, Montana.
copy of said Agreement may be obtained from either of the parties at the addresses set
forth above.
EXECUTED on the date first above written.
OWNER
GATEWAY HOSPITALITY GROUP, INC.
0
Bob Welker, President
CITY OF KALISPELL
0
James H. Patrick, City Manager
NET PROCEEDS AGREEMENT Page 10 of 11
STATE OF MONTANA }
).SS
County of Flathead }
On this day of May 2006, before me, the un
dersigned, ed, Public b ie for the State of
Montana, personally appeared Robert Voe ker, in his capacity as President of GATEWAY
HOSPITALITY GROUP, INC., that executed the foregoing instrument, and acknowledged to me
that he executed ute the same.
IN WITNESS SS WHEREOF, I have hereunto set my hand and affixed. my Notarial Seal the
day and year in this certificate first above written.
Notary Public, State of Montana
Residing at
My Commission Expires
STATE OF MONTANA )
)-*ss
County of Flathead )
On this day of May 2006, before me, a Notary Public in and for the State of
Montana, personally appeared JA_MES H. PATRICK, known to me to ' e the City Manager of the
City of Kalispell, a municipality, that executed the within instrument, and acknowledged that such
City Manager subscribed, sealed and delivered said instrument as the free and voluntary act of said
municipality, for the uses and purposes therein set forth, and that he was duly authorized. to execute
the same on behalf of said municipality.
D;, WITNESS WHEREOF, I have hereunto set my band and affixed my Notarial Seal, the
day and year first above written.
Notary Public, State of Montana
Residing at
My Commission Expires
NET PROCEEDS AGREEMENT Page 11 of 1