3. Hockaday Center for the Arts Lease/Development Agreement................... .
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Post office Box 1997 Kalispell, Montana 59 U3 1997 Telephone05) 758-7000 Fax (406) 758-7758
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REPORT TO. Honorable Mayor and City Council.
FROM: James H. Patrick, City Manager
SUBJECT: Hockaday Lease and Development Agreement
MEETING DATE: November 27, 2006
BACKGROUND: The Hockaday Art Museum resides in the City owned Carnegie Building
which is leased to the Museum. The current museum is in dire need of expansion in order to
continue to support the cultural need of the community. The museum is growing, in membership
and in the size of its permanent collection. The Hockaday Board has made a decision to keep the
Art Museum in Kalispell and work with the City to expand the City owned facility. As Council
is aware, $170,000 was approved in this year's budget to assist the Hockaday with the purchase
of adjacent property for the purpose of expansion of the museum. The museum will pay for the
expansion through a major capital fundraising campaign and manage the design and construction
phases of the project. The Hockaday has hired an architect and is in the process of designing and
getting a cost estimate for the full expansion project. To insure that this happens, Council needs
to consider renewing the current Hockaday lease and enter into a development agreement for the
purchase of the adjacent property.
The lease needs to be renewed and extended. The Hockaday requests a thirty year lease much
like the chamber lease agreement with the City. The expansion would be deeded to the City and
be part of the lease terms.
Key to beginning this process was the agreement of the city to assist in the purchase of the
adjacent house and lot. As the Hockaday achieves key fundraising milestones, the City will
forgive the debt over the next four to five years. The proposed milestones would be:
25% of the fund raising goal is met -- City forgives 25% of debt.
50% of the fund raising goal is met and architectural design completed and presented to
Council — City forgives 25% of debt.
Ground Breaking — City forgives 25% of debt.
Grand Opening — City forgives 25% of debt.
For future thought, the Hockaday has also determined that the property south of the "red house"
may also be available for purchase. There has been discussion with the owners and the
Hockaday and the Museum will obtain an appraisal to determine a fair asking price for the
property. If this property could be secured then the projected expansion plans could incorporate
this area for a future building expansion area and additional parking for the museum and for
downtown benefiting both the City and Museum. Hockaday requests Council to consider, in the
next year's budget that the City contributes 2/3 of the asking price and the Hockaday will
contribute 1 /3 . Final terms are being negotiated with the owners and it appears that the owners
may occupy the house for two years.
RECOMMENDATION: Council direct staff to prepare a lease and development agreement for
the Hockaday Art Museum. Council consider the Hockaday request for future property
purchase at the budget meetings.
FISCAL EFFECTS: These funds were budgeted in this year's budget and the concept
discussed at the budget meetings. The overall fiscal effects will be positive once construction is
completed and more of the collected art can be displayed drawing more visitors to Kalispell.
Hockaday Arts Museum recently received a suable grant from the Indian Education Fund for the
purpose of teaching Flathead County residents the history of Indian Art. Hockaday Museum of
Art is currently negotiating the display and restoration of major art pieces from Glacier National
Park lodges. These are all partial reasons for the needed expansion.
ALTERNATIVES: As suggested by the City Council.
Respectfully submitted,
James H. Patrick, City Manager