2. Hilton Garden InnCl'o ty of - Kali'*spell
Post Office .fox 1997 - Kalispell, ll, Montana 99 -1997 4 'telephone 4 7 -7 00 Fax - 406
758-7758
REPORT ' TO: Honorable Mayor and City Council
FROM: James H. Patrick,, City Manager
SUBJECT: Hilton Garden Inn
MEETING DATE., April 2 , Zoo
BACKGROUND: The City and Gateway Hospitality Group have been negotiating the
placement of a Hilton Garden Inn, Convention Center, restaurant, and casino on the current
"'Armor �� site. The it is motivation is to further simulate the tourism trace associated with the
convention center and capitalize on the location adjoining the City Airport to provide, among
other things, opportunities for "fly -in" conventions and benefit the airport.
The projected convention center will be large enough to accommodate Boo visitors for a
sit down meal and up to .1,200 visitors in a theater seating arangen ent. There is no similar
facility in Mort vest Montana. The next closest location is in Missoula. A conservative
estimate of the economic impact to the City from the convention guest revenue stream woulde
approximately $1350,000 annually. Assume Soo conference attendees a week for only 30
weeks out of the year and each of those guests only spends $30.00 during their stay on more than
room and .meals. Economists estimate that a dollar imported to the community is turned over by
as much as seven tames — assume these dollars are only turned three times. 5030 x 30 .
This facility is expected to benefit other area hotels as it will not he able to accommodate
all of the convention attendees and guests on site. This will bring additional paying guests to
other area hotels.
The City would like to encourage a hotel and conference center next to the City Airport
for increased airport usage. The idea would be to market the airport as an attraction for "'t -in ."
The developer will lay a lease fee on the land to the airport for parking space.
Development of this location south of the City balances development to the north of
downtown. It brings organ renewal to the south end of the City. It will assist in bringing
additional customers to the downtown businesses. It is well situated to accommodate businesses
in old School Station .industrial .lark by providing guest accommodations.
This, facility will more than double the Lodging Tax Revenue for the funding of the
Visitors and Convention Bureau and assist in further advertising the region.
A national chain, Hilton Hotels, will he involved in actively marketing and hooking
conventions for this facility.
The project is 11. ,00o sq. ft. of which about 1,700 sq. ft. is dedicated to casino. This is
an existing liquor and casino license under the City of Kalispell quota system and therefore, no
additional casino will be coming in to the Kalispell area. It will he a part of the project but not
obtrusive with minimal ;sig age and limited access.
There is a city park within Soo feet of the property boundary. However, there is a five -
lane highway providing separation within that Soo feet. Depot Park is within Soo feet of the
Center Mall[West Coast Hotel and Casino as well as the Magic Diamond Casino. There 1s also a
casino immediately across ffic street from Woodland Park.
The City is proposing a PUD to address the casino issue and the hotel height
issue. The PUD is a legitimate zoning tool to address idiosyncrasies to the zoning code without
adjusting the entire zoning ordinance, which in turn affects the entire City. The Planning Board
considered changing the zoning ordinance to allow casinos within three hundred feet of a park
and it was unanimously defeated since they did not want to control the placement of casinos in
other parts of the City. They directed Planning Staff to return with wording that may exempt
casinos form the three hundred foot from parks rule if they are separated by a substantial man
made or natural bar. `ier. Planning Board unanimous recommends, that Council approve the P I
for this project.
The Armory was appraised in August 2005. The appraised value is $ ,0 '7, 00 for the
land only or $1,21 ,000 to include all the buildings on the property. Using the $1,216,000 price,
this cores out to are estimated . s `. Comparable land sales cited in the appraisal ranged
from a low of S2. 97sf to $1 I .o sf. The mathematical cal mean was 7. sf and the mathematical
median was $ .91.7sf. The developer has no use for the existing buildings every though he
offered the full purchase price.
The City" s Request for Proposal required bidders to submit a bid on the property and
show the economic benefit to the City (taxes, jobs created, payroll, and economic value added
development) derived from the development. Gateway bid the appraised price for the lard and
buildings. He will create 112 jobs with a projected payroll of over $2, 700,000. The projected
property taxes will be approximately $260,000 a year.
The developer would life to build a hotel In Kalispell. He has several location options
for the hotel. He would prefer to construct a hotel, restaurant, convention center and casino. To
accomplish this he needs to locate the facility on the Armory land due to land costs in the north
and the availability of land In developments like Hutton Ranch Plaza. To facilitate a convention
center of this size, the City needs to participate with the developer on the armory location. The
use of TIF money for the demolition of the buildings, infrastructure improvements, landscaping,
and City well fagade improvements would assist in the attraction of the convention center, The
improvements on the City Airport owned property would consist of paving, lighting, and
landscaping. This parcel would then be leased to the developer for parking space. we would
like to improve the well house facade to make it more attractive and complement the
devel prne .t. The Developer's Agreement places a cap o $890,000. The City will have a
return on this investment ire less than 3 and one-half years. There is no bonding that needs to be
done. The developer has also agreed to reimburse the City 0% of the net proceeds if when the
complex is sold or refinanced. This would be money going back into the general fund at a future
time.
RECOMMENDATION: That Council approve the sale of the Armory property to Gateway
Hospitality Group., approve the Developer's Agreement, and adopt a zoning change. The
Developer must know as soon as possible to close on the liquor license or proceed with another
location for a hotel only.
FISCAL EFFECTS: Approval will allow the sale of City property In the amount o
1,21 ,000, lease of airport property, approximately $260,000 in annual property taxes,
$2,70 ,000 in new payroll and jobs created., approximately $1,350,000 impact to the economic
base of the City, approximately $48.,000 in bedroom taxes, and a yet to be determined amount III
net proceeds if en the complex is sold or refinanced, 1n return the City would pledge up to
S890,000 for demolition, parking, infrastructure improvements, and well facade upgrades.
ALTERNATIVES: As suggested by the City Council,
Respectfully submitted,
James H. Patrick, City Manager
PLANNED UNIT DEVELOPMENT AGREEMENT
HILTON GARDEN INN AND CONFERENCE CENTER
THIS AGRE-F N , 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, ll, a municipal corporation, of 31.2 Ist Avenue
East, Kalispell, Montana 59901, hereinafter CITY
WITNESSETH
WHEREAS, GATEWAY is the fee owner of certain real property located at 1.840 Highway 9
South, Kalispell, Flathead County, Montana, wb.ieb 1s further described as
follows;
Tract f Certificate Surve No. 17045, a tract of land, situ , lying,
and being in the North Half of theNorthwest Quarter of Section 20,
Township 28 .Nor h, Range 21 West, . .M M., Flathead County, Montana.
and is hereinafter .re 'erred to as "S bee Property"; and
WH AS, i GATEWAY desires to have a Planned Unit Development overlay PUD upon
the subject property zoned as -2 General Business zone that would allow some
flexibility in the height of the structure and location of a casino within the
117,300 square foot facility; and
WHEREAS, S, in order to allow the PIED, 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 colaform to and comply with
the provisions of the PUD Application flied by applicant and the conditions contained within
Kalispell City Resolution No. approving the sale of the subject property and
PLANNED UNIT DEVELOPMENT AGREE MEN ' LTON GARDEN INN
Page 1. of 6
esolutlon No. approving the development of the subject property to the Hilton. Garden
Inn and Conference Center PUD and incorporatedfully herein by this reference.
.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 of Kalispell Zone.ng ordinance, shall apply ' to the Subject Property.
..o3 Drawings
The drawings annexed to this Planned Unit Development Agreement are an integral and essential
component thereof, and they are incorporated by reference herein.
1.04 Effectiveness and Cancellation
The provisions of this Planed Unit Development Agreement shall become effective
immediately and shall terminate contemporaneously sly with the Net Proceeds Agreement regarding
the Subject Property. This Development Agreement may be modified or amended only as set
forth in Article V1 hereof.
L05 Certification Procedure
Whenever in this Planned Unit Development Agreement a certificate by the Director of Public;
'Works is required to be given, such certificate ica.te shall be given within thirty 30 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
certifcatxon.
11. PARCEL SCRIP IoN
2.01 The Subject Property, described in the recitals above, shall be developed with the
infrastructure improvements as described below.
No building permit shall be issued unless and until all improvements specified in this .Agreement
as well as those infrastructure improvements which may be required by the City o 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 permit is
requested.
111, CONDITIONS IONS 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
e designed and installed 1n accordance with the Kalispell. Design and Construction
PIANNED UNIT DEVELOPMENT AGREE MENT/H ILON GARDEN INN
Page; 2 of 6
Standards as well as any additional conditions associated with the PUD as approved by the
city council.
2. Prior to issuance of a building permit, the developer shall obtain are approach permit and
any other necessary permits from the Montana Department of Transportation.
3. The height of the building shall not exceed 56 feet and in no ease shall the height of the
building exceed the applicable maximum height limit 1t within the airport -affected area.
Neon lighting shall be prohibited on signs and the building.
5. Entrance to the casino o shall be from inside the hotel/conferencehotel/conference center. Entrances for the
casino directly from outside the building are prohibited.
The signage advertising the casino shall be prohibited from using the following:
Any terms such as gaming, gambling, cards, dice, chance, etc.
Any reference to any associated activity or any symbols or words commonly associated
with gaming.
Any words, terms, figures, artwork, or features intended or designed to attract attention
to the fact that a casino is on. site.
. The development shall meet all requirements of the Public Worts Department to protect the
C ity ' s water wellhead adjacent to the project.
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 derived 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 center, which is desired and beneficial to the local economy, the CITY
shall contribute funds for the following:
.. Demolition of the existing structures on the subject property; and
2, Development of the public infrastructure on the subject property, or on the adjacent City
.Airport property to be leased, which could Include parking lot and landscaping
development; and
3. Faga.de or other improvements to the City pump house adjacent to the subject property.
The contribution of the City shall not exceed the total sum of EIGHT HUNDRED NINETY
THOUSAND AND NO/100 HS $890,0o DOLLARS.
PLANNED UNi' ` DEVELOPMENT AGREE MEN ILTON GARDEN INN
Page _3 of
V. AMENDMENT OR MODIFICATIONS OF
DEVELOPMENT AGREEMENT
5,01 This Development Agreement may be amended or modified only, by application of the
owner, in accordance with the procedures set forth herein.
5.02 ,Application for amendment or modifi atton may be made, to the City of Kalispell Site
Review Committee.
5.03 .modifications of this Development Agreement which are determined by the SiteReview
Committee to be minor modifications shall require only the consent of the Site Review
Committee, and shall not require the consent or approval of the City Council or any other public
agency. All amendments and modifications to this Development Agreement other than minor
modifications shall require the approval of the City Council of the City of Kalispell.
5.04 All applications for modification or amendment of this Development Agreement shall be
filed with the Site .review Committee and the Site Review Committee shall promptly determine
whether the modification is minor or major.
5.0The Site Review Committee shall make its determination with respect to any application
for a minor modification subject to this Section within fifteen. (1.5) days after it determines the
application to be subject to said minor modification.
.06 If the amendment or modification requested is of such a nature as to .require approval of
the City Connell, the Site Review Committee shall refer the .matter to the City Council within
fifteen 15 clays after it determines the matter requires Council review.
5.0`he owner may appeal any decision of the Site Review Committee to the City Council,
who may affirm, reverse or modify the Site Review Committee decision.
V . CONSTRUCTION PERMITTING
6.01 General Requirements
1. No bildi.n permit in respect to the building In any structure shall b 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 ments .have been
constructed or security guaranteeing the construction has been received by the City.
11. For purposes of this Section, the "S c rity*' required shall be in an amount equal to 1.2 0 of
the developer's Licensed Engineer #s estimate of the cost of constructing said improvements.
PLANNED UNITDEVELOPMENT AGREEMENTMILTON GARDEN INN
Page 4 cat'
V11, MISCELLANEOUS
7.01 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.
.t.
7.02 Sever b.11ty
In the event that any provisions of this Agreement shall be deemed, decreed, adjudged o
determined to be invalid or unlawful by a court of competent i urisd etlon, such provision
shall be severable and the remainder of this Agreement shall continue to be of full force
and effect.
7.03 Recordation
This Agreement shall be recorded along; with the Net Proceeds Agreement with respect t
the subject property.
7.04 Entire Agreement - Primacy
This Agreement constitutes the entire agreement between the parties and may only be
amended as set forth herein.
7.05 Binding Effect
This Agreement shall be binding upon and in -are to the benefit of the respective parties
heirs., successors and assigns.
Dated this day of May, Zoo,
GATEWAY HOSPITALITY GROUP
by:
Robert voell er, President
CITY of RAL SPEL
by:
James H. Patrick, City Manager
LA,N'NED UNIT DEVELOPMENT AGREEMENT/11ILTON GARDEN IN'N
Page 5 of
STATE of MONTANA
County of Flathead
On this day of May, Zoo , before me, the undersigned, a Notary .public for the State
of Montana, personally appeared Robert Vo lker, in his capacity as President of GATEWAY
HOSPITALITY GROUP, INC., that executed the foregoing instrument, and acknowledged t
me that he 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 of
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, a d acknowledged that
such City Manager subscribed, sealed and delivered sa .d 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.
N 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 Commission Expires
PLANNED Nt DEVELOPMENT AGREEMENT/HILTON GARDEN INN
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