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02. Resolution 4669 - Authorizing the Sale of Daley Field Lot 3City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax(406)758-7758 FROM: SUBJECT: MEETING DATE: RECOMMENDATION: The Honorable Mayor Boharski and City Council Susan Moyer, Community Development Manager Chris A. Kukulski, City Manager Sale of Lot 3 November 19, 2001 The City accepts the offer to purchase from Murcon Development, Inc. BACKGROUND: Daley Field was advertised for redevelopment in July 1997 through a formal Request For Proposal (the "July 1997 RFP") procedure. The REP contained the entire site of 15.6 acres (681,758 sq. ft.). Rosauers responded to the proposal to purchase 5.25 acres (228,711 sq. ft.) of what became Lot 2, beginning at the centerline of the new Third Avenue East extensions ("new Private Lane") onto the property and continuing south until adequate site area was achieved. Rosauers offered a minimum price of $743,311 for the 5.25 acres or $3.24 per sq. ft., plus $3.25 for each additional square foot as determined by survey of the final site configuration. As a result of the site acquired by Rosauers, Lot 1 was replatted to contain 2.98 acres (129,808 sq. ft.) and Lot 3 to contain 7.414 acres (303,047 sq. ft.). City Council instructed the City Manager and the Community Development Department to prepare and advertise Requests for Proposals on Lot 1 in April 1999, June 2000, and again in October 2001 with the intent of generating revenue to be utilized for eligible activities within this Urban Renewal District No. 2. Lot 3 was advertised in October 2001. All of the RFP packets requested the same submittal criteria and established ranking criteria as had been done in the July 1997 REP. The City of Kalispell received two responses to the October 2001 RFP, and neither response contained the submittals as requested in the RFP. One response was from Northwest Investments Partnerships, Inc. dba Peak Development and the other was from Doug Denmark of Re/Max Realty on behalf of Murcon Development Inc. Again, staff was not able to evaluate the proposals based on the established ranking criteria DISCUSSION AND RATIONALE: The attached staff comparison of the offers and comments as to the conditions of the offers is attached for Council's review. The staff believes that the salient facts of the two offers highlighted below support a determination that the Murcon Development proposal is in the best interest of the City: 1. Peak Development's offer of earnest money is $5,000 and the offer is really contingent upon several issues. Murcon Development Inc.'s offer is $50,000 and contingent on the successful closing of their property to the south for which financing is in place. 2. Murcon Development hic. is offering $900,000 less the realtor's commission of $50,000 for a net of $850,000 with cash upon closing on or before December 12, 2001. Peak Development's offer is $807,384. Closing and payment would occur when Peak completes the construction of improvements proposed for the site. Peak, as proposed, would not be obligated to begin construction until they have 60% of the total square footage of the improvements under binding lease agreements. 3. Peak Development, again, is requesting that the City subordinate its security interest in the property to a lender who extends a loan to the developer for the purpose of constructing the improvements. FISCAL EFFECTS: The Murcon offer is greater than the Peak Development offer. There is a 160 per square foot difference between the two offers after subtracting out the realtor commission with no risk to the City. The City will receive the full purchase price by December 12, 2001. It is unclear when the City would receive purchase price from the Peak proposal, which results in the present value of Murcon's proposal being even greater. In addition, Peak's proposal would require City expenditures of approximately $68,000. The Peak proposal for Lot 3 presents the same financial risks and legal questions as is presented by their proposal for Lot 1. The Murcon proposal does not use the City's land as security for the project, but results in an immediate disposition of the City's interest in the property at a higher square footage cost, with no risk to the City. ALTERNATIVES: As suggested by the Council. � � QusanMoyer, Director U Community Development Report compiled on November 9, 2001 Comparisons of Proposals For Lot 3 11/9/2001 7,414 Acres - 303,047 sq. ft. Murcon I, Northwest Investments Development Partnerships, Inc. Inc. dba Peak Development Does Proposal Contain Information Requested in RFP7 1 'Site Plandrawn to scale, showing proposed layout of all structures & No No other improvements including driveways, pedestrian walks, landscaped areas, fences, walls, off-street parking & loading areas. j 2 - Architectural drawings or sketches, drawn to scale, including preliminary No No floor plans, with sufficient detail to permit computation of all site development criteria (i.e., setbacks, lot coverage, off-street parking requirements, building heights. Drawings "will show" all elevations of proposed structures & other improvements as they will appear upon completion, including all roof mounted equipment, trash storage areas & utility equipment. 3 - Specifications as to type, color & texture of exterior surfaces of the proposed structures, including si6mage, graphics & illumination. No 1 No Can the Council evaluate either proposal as to the impact on the site, the No No surrounding neighborhood and the City's tax base if the award is made based on the current response. Offering Price $900,000 $807,384.00 Earnest Money $50,000 $5,000.00 Price Per Square Foot $2.97 $2.66 Realtor Commission $45,000 $0.00 Adjusted Price Per Square Foot $2.82 $2.66 Acceptance of Offer Deadline 11/7/O1 1 Time is of the Essence Closing Date Required 12/21/2001 11 12/31/2001 Comparisons of Proposals For Lot 3 11 /9/2001 Murcon Northwest Investments Development _ Partnerships, Inc. Inc. dba Peak Development Purchase Money Available When? _ Upon closing I 1 - $5,000 earnest money at closing 12 - $802,384 upon Peak's completion of improvements proposed to be I constructed on the premises. Note: Purchaser not obligated to commence construction of improvements until 60% of the total square footage of the improvements are under binding lease agreements. _1 3 - Purchase price to be adjusted for credits called out in #10 of conditions listed Conditions Attached By Proposed Developers: 1 -_Title Insurance provided by Seller to Purchaser on or before 11/30/01 Standard Standard 2 - Contingent upon purchaser obtaining satisfactory financing for acquisition! In Place Yes 3 - Taxes & Assessments: All property taxes & assessments for 2001 & Standard Standard earlier to be responsibility _o_f_seller. Purchaser responsible for all 2002 & subsequent property taxes. N/A j N/A - Per Amy none exist _ 4 - All SIDs & other assessments due & payable by seller Our closing_ I 5 - Closing fee by closing agent to be shared equally _ Standard Standard 6 - Recording Fee for recording the deed purchases receives at time of closing Yes Yes - See footnote 7 - Seller to pay for any & all recording fees to release liens or other Standard Standard 8 -Each party is responsible for their own attorney fees Yes Yes (Amy advises there are none on this property) 9 - Seller shall be responsible for brokerage fee or commission Yes Yes - See footnote 10 - Credit for survey, paving, curbing & greenbelt No Yes - See footnote 11 - Subordination - Seller to subordinate its security interest in subject property granted by Purchaser to a lender who extends a loan to No j Yes -See footnote Purchaser for purpose of construction of the improvements _ Yes - See footnote 12 - Closing subject to successful closing on the sale of the purchaser's _ _ Yes Yes - See footnote property currently under contract Comparisons of Proposals For Lot 3 11/9/2001 Conditions Attached By Proposed Developers Cont'd.: - 13 - Purchaser acknowledges seller has no responsibility for utility or Yes See Footnote access improvements on the subject property. 14 - Purchaser will be responsible for their obligations on the subject propert} Yes See Footnote as it relates to the development of the frontage road without modifying or changing the existing agreements in place with MDOT, the City & others. 15 - Seller will continue to persistantly and aggressively pursue the installa- Yes Didn't Request ton of a traffic light at Kelly Road & Hwy 93 with MDOT. RESOLUTION NO. 4669 A RESOLUTION AUTHORIZING THE SALE OF A PORTION OF THE NORTHWEST QUARTER OF SECTION 20, TOWNSHIP 28 NORTH, RANGE 21 WEST, FLATHEAD COUNTY, MONTANA KNOWN AS LOT 3, DALEY FIELD SUBDIVISION, TO MURCON DEVELOPMENT INC., A CANADIAN CORPORATION, AND AUTHORIZING THE CITY MANAGER TO ENTER INTO A DEVELOPMENT AGREEMENT WITH MURCON DEVELOPMENT, INC. WHEREAS, the City of Kalispell, a municipal corporation, owns certain real property described in Exhibit "A", attached hereto and thereby made a part hereof, and WHEREAS, by Ordinance No. 1242 the City Council created the Kalispell City Airport/Athletic Complex Redevelopment Plan and approved, as an urban renewal project, the sale of said property to a developer and further authorized the City to enter into a Development Agreement with a developer upon terms and conditions consistent with said Ordinance, and WHEREAS, in April, 1999, the City Council authorized the City Manager to offer said property for sale and redevelopment in accordance with the Plan, and WHEREAS, Murcon Development, Inc. submitted a proposal for the purchase of said property and redevelopment of said property for purposes consistent with Ordinance No. 1242, and WHEREAS, the City and Murcon Development, Inc. desire to enter into negotiations on a Development Agreement which adequately addresses the obligation of Murcon Development, Inc. to redevelop the property, and WHEREAS, the City Council desires to sell said property to Murcon Development, Inc. for redevelopment as specified in the Development Agreement, and WHEREAS, said property is not held in trust for a specific purpose and an election is not necessary to affect its sale, and WHEREAS, the Development Agreement shall comply in all respects with Ordinance No. 1242 and said sale will be in the best interest of the City of Kalispell and its inhabitants, and V:\attsect\wp\res\murcon lot 3.wpd NOW, THEREFORE BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF KALISPELL, AS FOLLOWS: SECTION I. That the City Manager is hereby authorized to enter into negotiations with Murcon Development, Inc. and reduce to writing a Development Agreement consistent with the Airport/Athletic Complex Redevelopment Plan, the Daley Field Offering Document, and the Redevelopment Proposal of Murcon Development, Inc. SECTION II. That upon review and approval of the Development Agreement by the City Council, the Mayor and City Clerk are hereby authorized to execute all legal documents necessary to transfer, by Grant Deed, all the City's right, title and interest in the property described as a tract of land in the Northwest Quarter, Section 20, Township 28 North, Range 21 West, Flathead County, Montana known as Lot 3, Daley Field Subdivision, to Murcon Development, Inc., said sale being contingent on receipt of the sum of not less than $850,000.00 less any amounts previously received. PASSED AND APPROVED BY THE CITY COUNCIL AND MAYOR OF THE CITY OF KALISPELL, THIS DAY OF NOVEMBER, 2001. Wm. E. Boharski Mayor Attest: Theresa White City Clerk V:\attsect\wp\res\murcon lot 3.wpd EXHIBIT "A" The following described land in the City of Kalispell, Montana, more particularly described as follows: Lot 3, Daley Field Subdivision, Northwest Quarter, Section 20, Township 28 North, Range 21 West, P.M.M., Flathead County, Montana according to the plat on file in the Clerk and Recorder's Office, Flathead County, Montana.