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08/14/97 Schoh/King Management, Inc ProposalThursday, August 14, 1997 Kalispell City Council City Hall Kalispell, MT 59901 Dear Council Members: Included in this package, is a proposal for the development of Daley Field. It is as complete as time would allow. If our proposal is selected, King Management Inc. will promptly provide any financial information or references needed to assure the Council of their ability and willingness to participate in this development. In brief, our proposal offers $1,364,000 for the purchase of Daley Field, including an 8% brokerage fee payable to RE/MAX Land & Lake Realty, Inc. We estimate this development will generate an approximate tax base of $12,000,000 by the year 2000 with additional development beyond that date. We intend to develop the subject property into a first class commercial center that we and the City of Kalispell will be proud to have at the south entrance of the city. If you have any questions or need further information, please contact me. Thank you for your consideration of our proposal. Professionally, Gregg Schoh Buyer's Broker RVAW land & lake realty, inc. hwy. 93 south, p.o. box 582 lakeside, montana 59922 phone: (406)844-3500 Daley Field Kalispell, Montana Proposal This proposal is being presented to the City of Kalispell, Montana, to acquire and develop that certain parcel of land identified as Daley Field (a six field softball complex), comprising of approximately 15.6 acres. King Management, Inc. and other entities would like to make a proposal to the City of Kalispell, Montana, for the acquisition and development of Daley Field into a development complex comprising of one to two hotels, 2 to 3 restaurants, a convenience stare, an automotive service facility and an auto retail center. Additional buildings may be placed on the rear of the property as needed. As is described on the site plan all of the described uses fit nicely on the subject property allowing good viability of each tenant and cross access. Negotiations on the first hotel are in the works. The first hotel will consist of approximately 84 units to be under construction in 1998, with a completion date in the same year. All construction will be predicated on the timely completion of a satisfactory closing of the Purchase and Sale Agreement. Several restaurant companies have expressed interest in the participation of the site plan. These are full service restaurants offering family dining such as, Applebee's or MacKenzie's in Missoula. Please keep in mind that these two services compliment each other and are looking to be constructed and opened at the same time. Negotiations with both the hotels and restaurants are predicated on the successful acquisition of the land. At least one of the restaurants will be completed at the approximate time as the first hotel (1998). Projecting in late 1998 and 19990 is the placement of a second restaurant, convenience storelcasino and automotive service facility. Development of these services will come from the south end of the property, as depicted on the attached site plan. Initial inquiries of interest of this site plan again are predicated on the tenant placement to the north end of the property and timely completion of a satisfactory closing of the Purchase and Sale Agreement. All interested parties have been looking for property in the area or are already operating existing facilities in the Kalispell area and are interested in expansion. Additionally, King Management, Inc. is aware of an interest in establishing a new car dealership at the south entrance of Kalispell. The south end of the subject property would be an ideal location for this use. King Management, Inc. does further express interest in offering to special clientele, access to the Kalispell City Airport. This would include small plane storage with adjacent office or work space. This idea is proposed because of some of the inquiries we have received and also because of the limited building height that is allowed along the west property line. Offering a compliment of services in conjunction with the existing airport in only prudent looking at the location of the land in relationship to the highway access and the airport runways. This proposal is assuming that all correct zoning is in place for the above -mentioned development, and also that all services — i.e., water, sewer, electric, phone, etc. — are either on the property or adjoining the property. King Management, Inc. believes this proposed development fits nicely with the City of Kalispell and enhances the south entrance to the city. Further development of this quality and magnitude encourages additional development within the proposed site plan and surrounding properties further enhancing the City of Kalispell's appeal and projected tax base. It is the intent of the Developer to utilize both proposed highway accesses and provide a cross -easement between the mixed uses within the proposed development. Providing the cross -easements between the adjacent users will eliminate traffic entering and exiting off Highway 93 to get to adjacent tenants. As negotiations for space are determined proposed architectural and landscaping exhibits will be provided to the City of Kalispell for review. At this time it is too premature to provide these schedules. Value of Improvements At this time, placing a value on the improvements can only be a rough estimate. Based on provided information, we anticipate the estimated values attached to the following projects; one single hotel with approximately 80 units to value at $2.9 million including land and FF&E, a single 5,500 S.F. restaurant to value at $1.1 million including land and FF&E, and this initial phase of the project will total $4.0 million in 1998. Should efforts be successful with the convenience store and automotive service facility, we project by late 1998 or early 1999 the subject property's value will increase by $1.5 million including land and FF&E. Additionally in 1999 a second family restaurant will be under construction to be completed late 1999 or first part of 2000. Estimated value will be $1.0 million to include land and FF&E. It is conceivable that within this period or before the year 2000 a second hotel will be under construction, increasing the improvement value by an additional $2.5 to $3.0 million. The automobile dealership, anticipated to be constructed and in use by the end of 1999, will have an estimated value of $2.0 million including land, building and FF&E. In total, King Management, Inc. estimates the taxable value of improvements, land and FF&E to exceed an amount of $12 million by the end of the year 2000. Providing a too aggressive development plan may cause the establishment of a bad tenant mix with in the development parcel and/or poor development judgement by King Management, Inc. The proper development and tenant mix is in the highest and best interest of the Developer and the City of Kalispell. It is in the City of Kalispell's best interest to encourage high sales volume development within its boundaries. All of these projected uses offer the right tenant mix for the south entrance to Kalispell. It has been visible from past development in Evergreen, that the City of Kalispell should be encouraging development within its present boundaries rather than seeing development take place outside city limits. Placing too high of expectations on the properly may discourage development rather than encourage development. Offer King Management, Inc. and assignees would like to offer the City of Kalispell, Montana One Million Three Hundred Sixty -Four Thousand Dollars ($1,364,000.00) cash at closing for that parcel of land known as Daley Fields consisting of approximately 15.6 acres. Broker Fees King Management, Inc. agrees to agency representation, and broker's or agent's fees will be paid at the time of closing from the proceeds placed in escrow by the Buyer for the proposed price of this land. The broker's fees will be paid out of and are included in the total price offered for Daley Fields. - Exhibit "A" Site Plan Exhibit "B" Purchase Agreement Exhibit "C" Legal Description Exhibit "D" Agency Disclosure Statement 300.01' T1 30' ROAD E .A14E141' ------------ 140.831 w -- - ----- � \ t 0 y ru T- II 1! If I I III I11 III III III II 11 Id a� Ic o S 6 � Q I --------- ----------•--------------------a- 30' U111-11Y CASEMENT L V� a !�11 — - 1 K.ELLY ROAD EXEOMIT "B" PURCHASE AGREEMENT THIS AGREEMENT is made and entered into as of this 141h day of August 1997 by and between the City of Kalispell, Montana (hereinafter the "Sellers"), and King Management, Inc. and/or its assignee, a Montana Corporation with its principle office located at 2540 Phyllis Lane, Billings, Montana (hereinafter the "Buyer"). WHEREAS, Sellers are the owners of the subject property which is located in the City of Kalispell, Montana; and WHEREAS, the Buyer desires to purchase from the Sellers the subject property which is located in the City of Kalispell, Montana, for construction of various commercial buildings as outlined in the proposal of which this Purchase Agreement is a part; and WHEREAS, the Sellers and Buyer desire to set forth their understanding with regard to the purchase of the land by the Buyer, NOW, THEREFORE, the parties agree as follows: 1. Sellers agree to sell and Buyer agrees to purchase from Sellers the real estate located in Kalispell, Montana legally described as follows: Parcel 4 as shown on COS #12729, Flathead County, Montana. (see Exhibit "C") (herein sometimes referred to as the "Premises"). 2. Purchase Price. The purchase price to be paid by Buyer to Sellers shall be in the sum of One Million Three Hundred Sixty -Four Thousand Dollars ($1,364,000.00), which purchase price shall include only the Premises. 3. Payment of the Purchase Price. The purchase price shall be paid by Buyer to Sellers at the following times and in the following manner. A. The sum of Sixty -Eight Thousand Two Hundred Dollars ($68,200.00) as an earnest money down payment, put in escrow upon acceptance of this Purchase Agreement. B. The balance of the purchase price in the amount of One Million Two Hundred Ninety -Five Thousand Eight Hundred ($1,295,800.00) shall be due and payable to the Sellers at closing. 4. Default. In the event of any default hereunder by Buyer which is not caged within a period of thirty (30) days following notice from Seller to Buyer that such default exists, Seller's sole remedy shall be to cancel this Agreement and retain all Earnest Money paid hereunder as liquidated damages for Buyer's breach. Sellers and Buyer agree that, in the event of breach by Buyer, the damages to Sellers will be incapable or very difficult of accurate estimation and that there had been a reasonable endeavor by Sellers and Buyer to fix fair compensation and the Sixty -Eight Thousand Two Hundred Dolars ($68,200.00) Earnest Money as liquidated damages to Sellers bears a reasonable relation to probable damages and is not disproportionate to any damages reasonably to be anticipated. Nothing contained herein shall deprive Buyer of the remedy of specific performance. The obligations of Buyer are intended to be non - recourse. Time is of the essence. If a dispute arises between the parties hereto concerning this Agreement or any provision thereof or obligation thereunder, then the non -prevailing party shall pay any and all costs and expenses incurred by the other party in enforcing or establishing its rights hereunder, including without limitation, court costs and reasonable attorney's fees and disbursements, which obligations shall survive the delivery of the Deed. 5. Closing Date. Sellers and Buyer mutually agree to close said sale within ten (10) days of acceptance of offer, unless the parties mutually agree to extend the closing date. 6. Possession. Possession of the Premises shall be given to Buyer by Sellers at closing. 7. Title Insurance. Sellers agree to provide to Buyer an owner's commitment for title insurance) on ALTA Form 1990-B) insuring the Premises purchased hereunder for the sum of One Million Three Hundred Sixty -Four Thousand Dollars ($1,364,000.00), insuring good and marketable title to be in the Seller's name; subject, however, to easements and rights -of -way for utilities, highways and storm sewers of record. The cost incurred in obtaining the title insurance shall be paid by the Sellers. 8. Sellers' Representations and Warranties. As a further inducement to Buyer to enter into this Purchase Agreement and to consummate the transaction contemplated by this Purchase Agreement, Sellers, and each of them do hereby represent and warrant to Buyer and agree as follows: A Sellers have good and insurable title to the premises and the personal property and all other property to be transferred hereunder. The title to be granted and conveyed shall be merchantable, fee simple title, free and clear of all matters except those exceptions disclosed in the Title commitment, if approved, or otherwise waived by Buyer or provided for herein; B. Sellers have full right, power, and authority and have taken all requisite action to enter into this Purchase Agreement and to grant, sell, and convey the premises and the personal property and all other property to be transferred hereunder to Buyer as provided in this Purchase Agreement and to carry out its obligation as set forth in this Purchase Agreement; C. Sellers have not received notice from any city or other governmental authority of any violation affecting the premises and the personal property and all other property to be transferred hereunder except as disclosed in writing to Buyer prior to the execution of this Purchase Agreement, if any; 2 D. There are no pending improvement liens or special assessments to be made against the premises by any governmental authority or third party, except as otherwise disclosed in writing to Buyer prior to the execution of this Purchase Agreement; E. No work has been performed or is in progress by Sellers or at -the direction of Sellers, and no materials have been furnished to the premises or any portion thereog which might give rise to mechanic's, materialman's, construction, or other liens against the premises; F. No consent or approval of any person, entity, or government agency or authority is required with respect to the execution and delivery of this Purchase Agreement by Sellers and, as of the closing date, no un-obtained consent or approval will be required with respect to the consummation by Sellers of the transactions contemplated hereby or the performance by Sellers of its obligations hereunder; a Sellers are not and have never been a "foreign person", as that term is used in Section 1445 of the Internal Revenue Code of 1954, as amended; H. Sellers shall not grant, sell, convey, or encumber the Premises and the personal property and all other property to be transferred hereunder prior to the closing date; I. The Premises and the personal property and all other property to be transferred hereunder are not subject to any leasehold interest and Sellers further agree that Sellers will not enter into any lease of the Premises and the personal property and all other property to be transferred hereunder or any part thereof, J. There are no disputes concerning the lines and corners of the Premises, which lines and corners are clearly marked and there are no encroachments upon the Premises; K. There is not indebtedness outstanding and no outstanding or unpaid bills inw red for labor and material in connection with the Premises, or for the service of architects, surveyors, or engineers in connection with the Premises; L. All streets necessary to serve the Premises are being installed and will be dedicated and accepted for use and maintenance by the closing date by application to governmental entities and there are no pending street changes that will materially alter such service to the Premises; M. There are no taxes, assessments, or liens against the Premises for any present or past -due taxes or for paving, sidewalk, curbing, sewer, or any other street or other improvements of any kind, with the exception of real estate taxes which are not yet due and payable; N. As of ine closing date, there will be no outstanding, pending, or threatened suits, judgements, executions, bankruptcies, condemnation proceedings, zoning changes, or any other proceedings pending or on record in any court of any nature or before or by any governmental or administrative agency which could in any manner now affect Buyer's title to, possession of; or use of the Premises and the personal property and all other property to be transferred hereunder, or which could now or hereafter constitute alien upon the Premises and the personal property and all other property to be transferred hereunder or materially or adversely affect or change the Premises and the personal property and all other property to be transferred hereunder; O. Sellers are not surety on any bond or indebtedness wherein through the default thereof a lien against the Premises and the personal property and all other property to be transferred hereunder would be created without further legal action; P. As of the closing date, there will be no recorded or unrecorded liens, security interests, security agreements, or UCC financing statements against the Premises and the personal and all other property to be transferred hereunder or any part thereof, and Q. The Premises are not subject to any federal, state, or local "Superfund" lien proceeding, claim, liability, or action, or the threat or likelihood thereof; for the cleanup, removal, or re -mediation of any "hazardous substance" from the Premises and Sellers have not caused and will not cause, and to the best of Sellers' knowledge, there never has occurred the release, leak; discharge, spill, disposal, or emission of any "hazardous substance" as of the date hereof. As used in this Purchase Agreement, "hazardous substance" means any substance that is toxic, ignitable, reactive, or corrosive and that is regulated by any local government, the State of Montana, or the United States of America. "Hazardous substance" includes any and all material or substances that are defined as "hazardous waste", "extremely hazardous waste", or a "Hazardous Substance" pursuant to state, federal, or local governmental law including without limitation, CERCL, SARA, RCRA, the Clean Water Act, The OSHA Act, or the Toxic Substance Control Act. "Hazardous Substance" includes, but is not restricted to asbestos, petroleum products, nuclear fuel or materials, known carcinogens, urea formaldehyde, foamed -in -place insulation, and polychlorinated biphenyl (PCBs). In the event that any of the representations and warranties set forth in this Paragraph 8 are not true in any material respect as of the closing date or if Sellers otherwise defaults hereunder, Buyer may terminate this Purchase Agreement on or at any time prior to the closing date and the Earnest Money shall be immediately returned to Buyer. The warranties and representations set forth in this Paragraph 8 shall survive the closing for the benefit of Buyer. Sellers shall defend, indemnify, and hold harmless Buyer, and shall reimburse Buyer for, from, and against each and every demand, claim, loss (including any diminution in value), liability, 4 damage, fine, penalty, cost, expense (including, without limitation, attorney fees and consultant and expert fees imposed on or incurred by Buyer) directly or indirectly relating to, resulting from, or arising out of any material inaccuracy in any representation or warranty set forth in this Paragraph 8. 9. Buyer's Representations and Warranties. Buyer represents and warrants as follows: A That the Buyer has the right, power and authority to purchase the Premises and the personal property subject to the terms and conditions as provided under this Agreement, and to execute, deliver and perform its obligations under this Agreement; B. To the Buyer's actual knowledge, there exists no action, suit, litigation or proceeding which would limit the Buyer's ability to purchase the Premises and the personal property and to perform the terms and conditions of this Agreement. 10. Closing Documentation. A. At the closing, the Sellers shall deliver to the Buyer, a standard form of Montana Warranty Deed conveying title to the Premises; and B. At the closing, the Sellers shall deliver to the Buyer a Bill of Sale transferring to the Buyer all of the Sellers' rights, title and interest in and to the personal property. 11. Operating Expenses, Costs, Charges and Property Taxes: The Sellers shall be responsible and shall pay for all operating expenses which have accrued or shall become due prior to the closing date. All operating expenses shall be read and finalized, if reasonably possible, as of the closing date. All property taxes will be prorated to date of closing. 12. Risk of Loss. Until the closing date, Sellers shall bear the risk of loss to the Premises and to the personal property due to fire or any other casualty. Accordingly, untill said closing occurs Sellers shall keep in full force and effect a policy insuring the Premises and personal property against loss by all risks insured against under a standard form of all risk coverage. 13. Zoning. The Sellers represent that the property is properly zoned for all uses outlined in the proposal of which this Purchase Agreement is a part for the City of Kalispell, Montana 14. Highway Entrance. Purchase is subject to satisfactory review by Buyer of any changes or curb cuts made by review of the highway department. 15. City of Kalispell. Purchase is subject to satisfactory review by Buyer of any changes made by review of City of Kalispell or other governing agency. 5 16. Soil Tests. Purchase is subject to satisfactory review by Buyer of soil test. 17. Condition of Property. Sellers will, prior to closing, remove all improvements on Premises, including but not limited to backstops, bleachers, etc. 18. Representation by Agency. The Buyer agrees to agency representation and is represented by Gregg Schoh, RE)MAX Land & Lake Realty, Inc. 19. Brokerage ]Fees. Broker's or agent's fees will be in the amount of 8.01/o of the total purchase price paid at time of closing from proceeds place in escrow by the Buyer with full disclosure. Brokerage fees are included in and will be paid out of the total price offered. 20. Notices. Notices shall be given under this Agreement upon delivery to the addresses set forth below either by certified mail or by delivery from a nationally -recognized, overnight delivery service. Notices shall be delivered to the following addresses: To Sellers: City Clerk of Council Kalispell City Hall Kalispell, MT 59901 To Buyer: King Management, Inc. 2540 Phyllis Lane Billings, MT 59108 And Gregg Schoh RE/MAX Land & Lake Realty, Inc. 7135 Hwy 93 South Lakeside, MT 59922 21. Binding Effect. This Agreement shall be binding upon the parties hereto, their heirs, successors and assigns. Dated the year and date first above written. SELLERS 6