02/23/98 Gallagher/Haven Field Development AgreementInteroffice
M E M O R A N D U M
To: Clarence W. Krepps, City Manager
From: Lawrence Gallagher, PECDD Director
Subject: Haven Field - Dasen/City DEVELOPMENT AGREEMENT
Date: February 23, 1998
CC: Haven Field Disposition File
On the afternoon of February 19, 1998, after a Site Review Committee discussion of
the Haven Field Development Agreement, PECDD Secretary Debbie Woodham
picked up an executed copy of the DEVELOPMENT AGREEMENT between the
City of Kalispell and Richard A. Dasen, dated February 11, 1998. No one in this
office reviewed this final version of the document before it was executed nor was a
copy or draft made available to PECDD for comment. The final and executed
version of the DEVELOPMENT AGREEMENT contains substantive modifications
to the original intent and modified draft version of the DRAFT Development
Agreement I hand delivered to your office and to Glen Neier on or about May 13,
1997. The comments and suggestions I offered at that time, in the form of
highlighted sections and hand-written margin notations for suggested changes were
not, for the most part, incorporated into the final version this office received on
February 19, 1998.
The changes or modifications incorporated into the final document alter the original
intent and reasons why the Dasen/Outlaw proposal was selected over the competing
offer to purchase the Haven Field property; and, also obfuscate how the City
measures the financial impact of the (unspecified) project on the tax increment.
Outright, the executed AGREEMENT, as modified, eliminates the guarantee of either
the tax revenue and/or an in lieu of payment that would be generated on
$6,229,700.00 of assessed valuation, estimated to be at least $124,000.00 in
calendar year 1998. Section 5.5 of the executed Agreement changed the tax/in lieu of
payment commencement date from January 1, 1998, to January 1, 1999. In other
words, instead of the anticipated guaranteed minimum of $124,000 for 1998, the
Kalispell City Airport/Athletic Complex Urban Renewal project will be credited with
only the actual ad valorem tax revenue generated on the assessed/taxable value of the
land conveyed to Mr. Dasen on July 15, 1997. According to the Classification and
cues W. xreM
Pale 2
Febnwy 23,1998
Appraisal Office it has not completed the valuation of the parcel yet but it is
anticipated that after adjustments back to 1992 levels as mandated by SB 195, it will
be assessed in the $742,000 range which would generate only $14,900 in ad valorem
taxes based on the current all purpose levy of .520252. Thus, in 1998 the City can
expect $109,100 less than it negotiated when the City Council approved the sale.
There are other concerns: (1) Section 5.1 includes the language "If the CITY rejects
the corrected Site Plans or Construction Plans, then the Developer shall have the
right to withdraw from this contract and to fully terminate all of its duties and
obligations under this Agreement." Both you and I have objected to this language in
previous drafts of the agreement and each time it was included or added by the
Developer's attorney. I was alarmed to see it in the final document. (2) Section 7.1
allows the Developer to contest taxes after the first 5 years after completion instead
of the 10 years suggested in PECDD comments on previous drafts. The inclusion of
5 instead of 10 years seems to contradict Section 5.5 wherein the Developer agrees to
pay the amount ($124,000) for 10 years. (3) Significant new language has been
added to Article 8. The original intent and language bound the Developer to perform
what it said it would do in the original Development Agreement prior to any
conveyance and that any conveyance, if approved by the City, bound the subsequent
purchaser(s) or lessee(s) as well as the Developer to the same performance standards
and tax or in lieu of payments. If the new language accomplishes that objective then
it is okay. Will the AGREEMENT or abstract summary be recorded so that its
existence will be referenced and made part of any future title reports and conveyance
documents for the next 10 years?