15. Valley Bank Development Agreement ExtensioniheCiNof Kalispell
Incorporated 1892
Planning, Economic &
Community Development Department
P.O. Box 1997
Kalispell, MT 59903-1997
To: Al Thelen - Interim City Manager
From: Lawrence Gallagher
Subject: Valley Bank - Request to Extend Start of Construction
Date: July 25, 1996
248 Third Avenue East
(406) 758-7740
(406) 758-7739 (office fax)
(406) 758-7758 (City Hall fax)
Attached is a formal request from Valley Bank for a one year extension to its
agreement to begin construction of a new bank facility on land purchased from the
City of Kalispell. The extension date would be December 16, 1997. The reasons
for the Bank's request are clearly stated in Mr. A.J. King's July 1, 1996, letter.
I recommend that the City Council favorably consider and grant the extension and,
at this time, I also recommend against any consideration to repurchase the land
even if Valley Bank elects not to proceed with their construction plans.
Mr. King's letter and request was prompted, in part, by my inquiry for information
needed to respond to questions raised during the City Council review of the
FY 1997 Tax Increment and UDAG Budgets on June 8, 1996. During the meeting,
I was asked why the City had not "taken back" the land the City sold to Valley
Bank, located on the NW corner of Main and 3rd Street West.
The closing on this property took place on December 16, 1994. The sale consisted
of Lots 8, 9, 10, 11, and 12, Block 55, Kalispell Original Townsite. Valley Bank
purchased the 17,500 square foot parcel of land for $160,000, representing $9.14
per square foot, with plans to "construct a new building on the real estate having
not less than two stories with a minimum of 20,000 square feet of floor space."
The offer to purchase was submitted pursuant to the City's Offering Memorandum,
dated June 6, 1994. There were no other offers to purchase the property.
The sale to Valley Bank was authorized by RESOLUTION NO. 4157, dated July 18,
1994. The actual closing and recording of the deed took place on
December 16, 1994, and the property was on the tax rolls as a taxable property as
4?P�ATUhif?Y
Al Thelen - Interim City Manager
Page 2
July 25, 1996
of the January 1, 1995, assessment date. It pays taxes and also allows the
Kalispell Parking Commission to manage and enjoy the income from the lot. I have
attached a "Usage of Revenues" summary furnished by the Parking Commission
showing a gross revenue for FY96 of $11,993.83 with the comment that the
43 stall lot is the third most productive lot managed by the Kalispell Parking
Commission.
If the bank development is delayed, the Parking Commission and the parking public
continue to enjoy the usage and income from the lot and it also contributes to the
tax base of the City. At this time, I cannot recommend that the City of Kalispell
could benefit from taking action to deny the request or to repurchase the land from
Valley Bank.
VALLEY K OF KA L I S P E L L
July 1, 1996
The Honorable Doug Rauthe, Mayor
Members of the Kalispell City Council
City of Kalispell
Honorable Doug Rauthe, Ladies and Gentlemen:
Some time ago the Valley Bank arranged to acquire from the city the
real estate located at the corner of Main and 3rd Avenue West. At
the time, the intent of the Valley Bank was to provide for the
timely construction of a new banking house which would accommodate
our past and future growth.
We have been involved with the architects from Architects Design
Group for approximately one year. During this time, we have arrived
at a floor plan, however, the architectural firm actually has
experienced some upheaval with the exit of the firms leading
architect in this transaction. We understand Mr. Jim Thompson left
Architects Design Group effective January 1, 1996. We were not
apprised for approximately 60 days at which time we were contacted
by members of the firm continuing employment with the firm. A
regular contact was not established until mid -May when we again
commenced working with the firm weekly in hopes of incorporating a
number of needed changes.
We would also wish to point out that effective September 30, 1995,
states rights have again been abridged, by the Congress of the
United States in providing a mechanism to create full "Interstate
Banking".`Through their legislation, a bank or bank holding company
chartered in any state in the Union can purchase the assets of a
commercial bank located within the boundaries of the State of
Montana. To date the. banking industry as a whole has witnessed a
major consolidation with the main emphasis developing out of the
nation's money centers. In.addition, Montana banks could generate
increased competition arising from the establishment of a branch
system created by the Montana Legislature in the spring of 1997.
Many bankers feel this is the way to expand even though local
directorships, local ownership and local management could be
casualties. Obviously, we are interested in seeing if the Montana
Legislature will find there are benefits in following Idaho, a state
which has allowed full Interstate Branch Banking for years. Idaho
now has only six or eight banks which are headquartered within that
state's boundaries.
Should the worst political situation occur for locally owned
community banks, the best business move for the Valley Bank may be
to entirely forego the construction of a new banking house. Under
these circumstances, by December 16, 1997 the City of Kalispell
would certainly be free to exercise it's right of first refusal,
considering the repurchase of the property at Main and 3rd.
MEMBER F.D.I.C. P.O.BOX 48 KALISPELL, MT 59903-0048 406.752.7123 FAX 406.752.7320
U
July 1, 1996
The Honorable Doug Rauthe
Members of the Kalispell City Council
Page -2-
In connection with this request, we hope the council is aware, the
Valley Bank has permitted the city parking commission to continue to
manage the lot as a parking lot, to retain all rents accruing while
the property was returned to the tax rolls and the city has been
able to reinvest the purchase price from December 16, 1994 forward.
We hope an agreement will be forthcoming from you as the Kalispell
City authority to permit the Valley Bank to continue ownership of
the real estate in question for the period from December 16, 1996
through December 16, 1997 at which time the city's option to
exercise it's "right of first refusal" may be reinstated.
Sincerely,
A. J. King
President
Enclosure
AJK:dc
Usage and Revenues of the
First Federal Parking Lot (a.k.a. Valley Bank Lot) @ Third St. W. and Main St.
Ownership: Valley Bank
Parking Lot Management: Kalispell Parking Commission
Number of Parking Stalls: 43 (all stalls are metered)
Permits Available: 40
Permits Sold: 40 in July
The lot has sold out 4 out of the last 7 months (other 3 mos. - 36, 38, 39)
Usage: Even though the lot is sold out with permits, there are 15-20 spaces
available for metered parking at any one time.
Revenue
Meters: $45 to $55 per week (52 weeks x $50 = $2,600/yr)
Permits: 40 permits @ $20/month = $800/month x 12 mos. _ $9,600/year
Gross Revenue: $11,993.83 for FY96
Comment: The First Federal Lot is the third most productive lot managed by the
Kalispell Parking Commission
1 st: KM Lot: $12,700 FY96
2nd: Eagles Lot: $12,400 FY96