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12/15/97 Gallagher/Review of Purchase Agreementinteroff ice M E M O R A N D U M To: Clarence Krepps, City Manager From: Lawrence Gallagher, PECDD Director,_ Subject: Review of Purchase Agreement and Development Agreement Drafts dated December 11, 1997 Date: December 15, 1997 This morning I reviewed the Rosauers documents and have several concerns and observations. I spoke with Glen Neier this morning regarding a major concern under obligations contained in Sections 2.2(g) and 3.1 of the Development Agreement. I will list my concerns by page and section numbers. Purchase Agreement Page 2 The survey indicates that 5.257 acres will be conveyed. This represents 228,994.92 sq ft at $3.50 per sq ft representing a purchase price of $801,482.22. After deducting $37,166 for the earnest money down payment, the balance remaining will be $764,316.22. Page 3 6. TITLE INSURANCE. Purchase price should be changed to reflect the correct amount: $801,482.22. 7.D. The last sentence could be changed to insert the words urban renewal area assuming that there may be a time in the future there will be city specials for future drainage, street maintenance, etc., unique to portions of South Kalispell, not city wide. Page 4 K. This paragraph should acknowledge that there are city/county special assessments already in place on the parcel and there will be in the future. Page 5 Question: Does the language in paragraph O and P negate the purchaser of issuing a special grant deed? Clarence Krepps, City Manager Page 2 December 15, 1997 Page 6 Please explain the meaning of paragraph D to me. Page 7 10. The last sentence of this paragraph obligates the City of Kalispell to pay an estimated $11,000 in property taxes for 1998. This is an 8 month proration of the estimated tax to be assessed on an $800,000 land value. We have not budgeted nor has Kidsports for this expenditure and I don't believe Rosauers objected to paying the full tax due for 1998 based on land value. Development Agreement Page 2 "Construction Plans" definition., Should infrastructure plan be defined better? Page 3 Definition of "Redevelopment Plan" should only refer to this urban renewal project area not areas which could include the downtown and westside projects. The definition of "Tax Increment" should refer to taxes remitted to the County Treasurer, not the City of Kalispell. The City has no tax collection authority with the exception of the shortfalls covered later in the agreement. Page 5 2.2(c). This is the first time that I have noticed that the developer is allowed changes in both timing and occupancy. I object to allowing a change in occupancy which could allow any permitted use in a B2 zone. A casino is an example which may eventually be the highest and best use in terms of dollar return. Page 6 2.2(g) and 3.1. Both of these sections, including later references in Sections 4.3, 5.2(a), 5.4 and 7.1, must accurately state what is intended as the City's obligation regarding the traffic signals. It is my understanding that in the event the highway department should never build Hwy 93 South or develop any federal/state funds for the highway or signalization of intersection improvements, all the City guaranteed is that Clarence Krepps, City Manager Page 3 December 15, 1997 there would be a highway access where the 3`d and Kelley intersections are proposed and, if necessary, temporary traffic signal installation only at 3`d and not at Kelly Road (unless warranted or the sale of the southern parcel remaining). It is clear that the State of Montana will design and construct the full blown intersection not the City of Kalispell. The way this is worded it would appear to me that the City of Kalispell could be obligated to reconstruct and realign 3' Ave East where it enters Hwy 93 South in the event the highway department abandons the project or is unable to finance the improvements. Again, this was not the intent but we did agree that we would in conjunction with highways provide a temporary intersection or access on the west side of Hwy 93 South so that Rosauers would have at minimum a signalized t-intersection ingress and egress to the property. Rosauers representatives sat in on discussions and negotiations with highway officials regarding these intersections and signals and understand that the City anticipates spending approximately $89,000 to $110,000 maximum per intersection or per signal and obligating funds for the Kelly Road intersection only when warranted (more than likely in conjunction with the sale and development of the southern portion of Daley field). We may consider language for a sharing of the cost of a full blown intersection in the event MDOT and federal funding disappears or is not available for these projects. As written, the City could be obligated for several hundred thousand dollars to develop full 4-way intersections at both locations which was never intended nor negotiated. I cannot recommend the City agree to the language in Sections 2.2(g) and 3.1. Page 7 3.2(d). Should we mention that the City reserves the right to do the work and assess the developer? Page 8 4.3. The word southern should be corrected in the fourth line from the bottom of the paragraph. Should a reference be made to the obligations in Section 3.1? Page 9 5.2. In last sentence of the paragraph, the word new Plan should be corrected to read new plans. Page 10 5.4. Reference to City's obligations under Section 3.1 and 5.1 . Clarence Krepps, City Manager Page 4 December 15, 1997 Page 12 7.1. Question: Does this mean that the property is forever excluded or exempt from future participation in beneficial SIDs or BIDs that may be created? i me roff ice M E M O R A N D U M To: From: Subject: Date: Clarence Krepps, City Manager Lawrence Gallagher, PECDD Director Review of Purchase Agreement and dated December 11, 1997 December 15, 1997 Deve opment Agreement Drafts This morning I reviewed the Rosauers documents and have several concerns and observations. I spoke with Glen Neier this morning regarding a major concern under obligations contained in Sections 2.2(g) and 3.1 of the Development Agreement. I will list my concerns by page and section numbers. Purchase Agreement Page 2 The survey indicates that 5.257 acres will be conveyed. This represents 228,994.92 sq ft at $3.50 per sq ft representing a purchase price of $801,482.22. After deducting $37,166 for the earnest money down payment, the balance remaining will be $764, 316.22. Page 3 6. TITLE INSURANCE. Purchase price should be changed to reflect the correct amount: $801,482.22. 7.D. The last sentence could be changed to insert the words urban renewal area assuming that there may be a time in the future there will be city specials for future drainage, street maintenance, etc., unique to portions of South Kalispell, not city wide. Page 4 K. This paragraph should acknowledge that there are city/county special assessments already in place on the parcel and there will be in the future. Page 5 Question: Does the language in paragraph O and P negate the purchaser of issuing a special grant deed? Clarence Krepps, City Manager Page 2 December 15, 1997 Page 6 Please explain the meaning of paragraph D to me. Page 7 10. The last sentence of this paragraph obligates the City of Kalispell to pay an estimated $11,000 in property taxes for 1998. This is an 8 month proration of the estimated tax to be assessed on an $800,000 land value. We have not budgeted nor has Kidsports for this expenditure and I don't believe Rosauers objected to paying the full tax due for 1998 based on land value. Development Agreement Page 2 "Construction Plans" definition. Should infrastructure plan be defined better? Page 3 Definition of "Redevelopment Plan" should only refer to this urban renewal project area not areas which could include the downtown and westside projects. The definition of "Tax Increment" should refer to taxes remitted to the County Treasurer, not the City of Kalispell. The City has no tax collection authority with the exception of the shortfalls covered later in the agreement. Page 5 2.2(c). This is th first time that I have noticed that the developer is allowed changes in n both -timing and o cupancy. I object to allowing a change in occupancy which could ow any permitted use in a B2 zone. A casino is an example which may eventually be the highest and best use in terms of dollar ter urn. -.- Page 2.2(g) and 3.1. Both of these sections, including later references in Sections 4.3, 5.2(a), 5.4 and 7.1, must accurately state what is intended as the City's obligation regarding the traffic signals. It is my understanding that in the event the highway department should never build Hwy 93 South or develop any federal/state funds for the highway or signalization of intersection improvements, all the City guaranteed is that � _ � � ( �� �,••"may"'"� ��r�. t='�' �° � Yr4 ol Clarence Krepps, City Manager �Gn (� Page 3 ; December 15, 1997 �- there would be a highway access where the 3rd and Kelley intersections are proposed and, if necessary, temporary traffic signal installation only at 3rd and not at Kelly Road (unless warranted or the sale of the southern parcel remaining). It is clear that the State of Montana will design and construct the full blown intersection not the City of Kalispell. The way this is worded it would appear to me that the City of Kalispell could be obligated to reconstruct and realign 3,d Ave East where it enters Hwy 93 South in the event the highway department abandons the project or is unable to finance the improvements. Again, this was not the intent but we did agree that we would in conjunction with highways provide a temporary intersection or access on the west side of Hwy 93 South so that Rosauers would have at minimum a signalized t-intersection ingress and egress to the property. Rosauers representatives sat in on discussions and negotiations with highway officials regarding these intersections and signals and understand that the City anticipates spending approximately $89,000 to $110,000 maximum per intersection or per signal and obligating funds for the Kelly Road intersection only when warranted (more than likely in conjunction with the sale and development of the southern portion of Daley field). We may consider language for a sharing of the cost of a full blown intersection in the event MDOT and federal funding disappears or is not available for these projects. As written, the City could be obligated for several hundred thousand dollars to develop full 4-way intersections at both locations which was never intended nor negotiated. I cannot recommend the City agree to the language in Sections 2.2(g) and 3.1. Page 7 3.2(d). Should we mention that the City reserves the right to do the work and assess the developer? 4.3. The word southern should be corrected in the fourth line from the bottom of the paragraph. Should a reference be made to the obligations in Section 3.1? Page 9 5.2. In last sentence of the paragraph, the word new Plan should be corrected to read new Ip ans. Page 10 5.4. Reference to City's obligations under Section 3.1 and 5.1 . Clarence Krepps, City Manager Page 4 December 15, 1997 Page 12 7.1. Question: Does this mean that the property is forever excluded or exempt from future participation in beneficial SIDs or BIDs that may be created?