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18. Option on City Owned PropertyKNOW ALL MEN BY THESE PRESENTS: That the City of Kalispell, Montana, a municipal corporation, hereinafter referred to as "Seller", hereby agrees for and in consideration of the sum of Dollars, paid by L/Abrams Venture, a California Corporation, 15751 Rockfield Blvd., Suite 100, Irvine, California, 92618, hereafter referred to as "Buyer", as follows: 1. PROPERTY: Seller hereby gives and grants to Buyer and to his heirs and assigns for period of 6 months from September 9, 1996, hereinafter referred to as "Option Period", the exclusive right and privilege of purchasing the following described real property located at Lots 1 through 14, Block 36; and Lots 1, 2, 3, 4, and Northerly 7" of Lot 5, Block 45, Kalispell Original, Kalispell, Montana. 2. PRICE: The total purchase price for said property is Dollars, payable in lawful money of the United States, strictly within the following times, to -wit: All sums paid for this option shall be first applied on the purchase price, and the balance shall be paid in cash at closing. 3. EXERCISE OF OPTION: This option shall be exercised by written notice to Seller on or before the expiration of this option, as specified herein. Notice to exercise this option, whether personally delivered or mailed to Seller at Seller's address, by registered or certified mail, postage prepaid, and postmarked on or before such date of expiration, shall be timely and shall be deemed actual notice to Seller. 4. EVIDENCE OF TITLE: a. Promptly after the execution of this option, Seller shall deliver to Buyer for examination such abstracts of title, title polices, and other evidences of title as the Seller may have. In the event this option is not exercised by Buyer, all such evidence of title shall be immediately returned without expense to Seller. b. In the event this option is exercised as herein provided, Seller agrees to pay all abstracting expense or at the Seller's option to furnish a policy of title insurance in the Buyer's name. C. If an examination of the title should reveal defects in the title, Buyer shall notify Seller in writing thereof, and Seller agrees to forthwith take all reasonable action to clear the title. If the Seller does not clear the title within a reasonable time, Buyer may do so at Seller's expense. Seller agrees to make final conveyance by Special Warranty Deed. If either party fails to perform the provisions of this agreement, the party at fault agrees to pay all costs of enforcing this agreement, or any right arising out of the breach thereof, including a reasonable Attorney's fee. 5. OTHER PROPERTIES: Parties hereto agree that Seller shall utilize all legally available methods to obtain Lots 15 through 24, Block 36, Kalispell Original, Kalispell, Montana; demolish structures thereon; abandon and/or vacate the alley bisecting Block 36 and 1st Street between Main Street and 1st Avenue East; and to make said property available to Buyer for redevelopment upon such terms as agreed to herein for the sale of Seller owned property. 6. CLOSING ADJUSTMENTS: All risk of loss and destruction of property and expenses of insurance shall be borne by Seller until date of possession. At time of closing of sale, property taxes, rents insurance, interest and other expenses of property shall be prorated as of date of possession. 7. POSSESSION: Seller agrees to surrender possession of the property on or before thirty (30) days following written notice of the exercising of this option by Buyer. 8. COMMISSION: Seller and Buyer represent to each other no brokers or real estate agents exist regarding this Option and that no fee shall be payable to anyone regarding the sale of said property and that this is a principal to principal transaction. 9. If this option be not exercised on or before the date specified herein for exercise of same, the option shall expire of its own force and effect and the Seller may retain such option moneys as have been paid to the Seller as full consideration for the granting of this option. DATED THIS DAY OF AUGUST, 1996. L/ABRAMS VENTURE, a CALIFORNIA CORPORATION LZA Its: CITY OF KALISPELL I� Its: PROFESSIONAA HANDLING OFYOUR REAL ESTATE NEEDS August 12, 1996 ff `�'E.:�--N-CLdilt I. /Z 'fLI d HOMES IV ACREAGE OO& !WaterLOTS RANCHES REALTY BUSINESS BOX 460 • LAKESIDE; MT 59922 PROPERTIES (406) 844-3395 FAX (406) 844-2031 i i Kalispell Ciity Council Kalispell, Montana 59901 Re: Tax Increment District City of Kalispell S ` Mr. Mayor and Members of the City Council: This a formal request to secure $270,000.00 of tax increment financing to purchase and clear improvements located at the corner of Center Street and 3rd Ave E. and east of the Glacier Bank Drive-thru facility. This request is for the benefit of a proposed 24,500 sq. ft. building to house a major retailer. The funds will be used to clear on 24,000. sq. ft. masonry building and two metal buildings on the property. The $270,000.00 is applied to the following: Acquiring the existing improvements.. ........................... $210,000.00 (*At current Flathead County assessed valuation) Demolition and site clearance ........................................ $ 60,000.00 1, as an agent of Woods and Water Realty, represent the major retailer and the owner. We are finalizing lease negotiations between the two parties. It is the intent of the owner to have this new structure in place by June 1, 1997 and the retailer to be open for business by August 1, 1997. As we have mentioned to Mr. Gallagher, in a meeting last week, it is imperative that we receive a favorable vote from the City Council so that we may be able to proceed with final arrangements with our tenants. It is anticipated by all our preliminary figures that the cost of development of this building will run in the range of $1,200,000.00, with tenant improvements of $380,000.00. At this point I would like to finish by saying that a lot of effort was put in to identify this location and it would be a real shame to see a major retailer be force to relocate to a location outside the tax increment district and the city not benefiting from what could be a 30 year tenant. In addition to having a new retail tenant, a new and more attractive building will be incorporated into the downtown area. This always gives existing downtown tenants some security that more consumers will shop the downtown area and not opting to shop elsewhere. It is imparative that we receive the City's acceptance and acknowlegement of this project and tax increment funding during your meeting of August 19th, but no later than September 9th, 1996. Your prompt consideration of this matter is greatly appriciated. OSinc David C. Thornquist Broker Associate Incorporated 1892 fanning, Economic & ommunity Development Department P.O. Box 1997 Kalispell, MT 59903-1997 UV1 rTi5Ci7 248 Third Avenue East (406) 758-7740 (406) 758-7739 (office fax) (406) 758-7758 (City Hall fax) To: Clarence W. Krepps, City Manager - Al Thelen, Interim City Manager From: Lawrence Gallagher, PECDD Director Subject: L/Abrams Venture - KDC Site Option V, Date: August 16, 1996 To aid you in preparing your comments and recommendations and for the City Council to use as it deliberates the deal points and issues involved in negotiations with L/Abrams Venture, I have outlined them below. This is a reiteration of the discussion held with the City Council during the Work Session on August 12, 1996. The Purchase Agreement Mr. Abrams executed prior to the City's August 12, 1996, meeting will be converted by Glen Neier into an Option Agreement for Council action on August 19, 1996. The City Council will be asked to authorize the Mayor's signature on an Option Agreement which will, when exercised, obligate the City of Kalispell to: 1. Sell all of the 63,081.66 square feet of land the City currently owns in Block 36 and Block 45 of the Kalispell Original Townsite to L/Abrams Venture. 2. Agree to make available up to $2,000,000 of City funds from its tax increment revenues to be used by the City to pay the cost of eligible activities it must undertake to provide a cleared site(s) for private redevelopment under the terms of a Development Agreement it will execute with Mr. Abrams. 3. Agree to use "best efforts" and, as required, all of the City's statutory authority to acquire and assemble approximately 31,570 square feet of additional land and improvements owned by others and located in Block 36. It is understood the City has and will, if necessary, exercise the use of eminent domain to assemble the land required for the redevelopment project. The total land area to be sold to Abrams is OPPORTUNITY Clarence W. Krepps, City Manager - Al Thelen, Interim City Manager Page 2 August 16, 1996 estimated to be approximately 104,081.66 square feet which includes all of the public alley located in Block 36. 4. Pay the cost of (i) demolition and site clearance, including the removal of all buildings and foundations, and (ii) underground andlor relocate public and private utilities located in the public alley on Block 36 in order to permit construction on the entire 90,000 square foot site. 5. At the time of closing, close and abandon all of First Street East from Main Street through First Avenue West, in exchange for a dedicated and permanent public 24-hour pedestrian access and easement for the entire block, plus an easement which will allow for delivery and emergency vehicular access from Main Street to the public alley and private property owned by others and located in Block 45. Mr. Abrams agrees that he will negotiate in good faith the terms of a Developers Agreement within 30 days of the date the City approves the ordinance designating the project. The Developers Agreement will obligate both parties to perform as well as establish maximum performance dates. Price: Mr. Abrams agrees to pay the City $10.00 per square foot or $900,000 for the 90,000 square feet located in Block 36, and $9.00 per square foot or $126,735, for Parcel 3, the 14,081.66 square feet located in Block 45, for a total purchase price of $1,026,735. In consideration of the Option, Mr. Abrams has agreed to provide a $25,000 earnest money deposit to establish an escrow account. However, the deposit does not become non-refundable until and unless the City is able to meet the maximum performance dates specified in the Developers Agreement as executed by both parties. Mr. Abrams' original offer was to cover the costs of issuing $2 million in bonds and then modified to secure the purchase agreement he executed and offered. This is the third modification necessary to allow continued negotiations with Mr. Abrams. He is sincere in his attempts to purchase the land specified for redevelopment. This list of issues is not necessarily all inclusive and was drafted before I had the opportunity to examine the City Attorney's Option Agreement. I will be available to discuss the project with the City Council and to answer any questions they may have. Mr. Abrams will not be present but expects executed documents to be express mailed to him on August 20, 1996. He has authorized his office personnel to issue the cashier's check when he receives a faxed copy of the executed Clarence W. Krepps, City Manager - AI Thelen, Interim City Manager Page 3 August 16, 1996 documents and will complete his execution of the documents when he returns from his travels August 29, 1996. Mr. Abrams wants assurance that the Kalsipell City Council is sincere in their offering of the property for the redevelopment he has proposed. Finally, I hope to have preliminary site plans available at the Council Meeting on Monday, August 19th, so the Council may see how the First Street access and parking will be considered. EXHIBIT "A" Premises: Real property currently owned by SELLER: PARCEL 1: A 7,000 square foot rectangular parcel of land (140' x 50') beginning at the northeast corner of the intersection of U.S 93 South - Main Street and First Street East. (The SW corner of Lot 13, Block 36, Kalispell, Montana.) Thence northerly on Main Street a distance of 50' to the NW corner of Lot 14, thence easterly a distance of 140' to the NE corner of Lot 14 and a 20' public alley which bisects Block 36. Parcel 1 includes all of Lots 13 and 14 of Block 36, Kalispell Montana. PARCEL 2: A 42,000 square foot rectangular parcel of land (300' x 140') beginning at the southwest corner of the intersection of Center Street and First Avenue East; (The NE corner of Lot 1, Block 36, Kalispell, Montana) thence southerly a distance of 300' paralleling the west side of First Avenue East to its intersection with First Street East; thence westerly 140' to the SW corner of Lot 12 and the 20' public alley which bisects Block 36; thence northerly a distance of 300' to the NW corner of Lot 1; thence easterly to the point of beginning. Parcel 2 includes all of Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, and 12, Block 36, Kalispell Original, Kalispell, Montana, according to the map or plat thereof on file and of record in the office of the Clerk and Recorder of Flathead County, Montana. PARCEL 3: A 14,081.66 square foot rectangular parcel of land (140' x 100.5833') beginning at the southwest corner of the intersection of First Avenue East and First Street East; (The NE corner of Lot 1, Block 45 of Kalispell, Montana); thence southerly 100.5833' to the Northerly seven inches of Lot 5, when measured parallel.to the North boundary of Lot 5; thence westerly along said line a distance of 140' to the 20' public alley which bisects Block 45; thence northerly along said alley to First Street East and the NW corner of Lot 1, of Block 45; thence easterly to the point of beginning. Parcel 3 includes all of Lots 1, 2, 3 and 4, and the Northerly 7" of Lot 5, Block 45, Kalispell, Montana, according to the map or plat thereof on file and of record in the office of the Clerk and Recorder of Flathead County, Montana.