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10. Haven Field/Athletic Complex Offering MemorandumAGENDA ITEM 10 - HAVEN FIELD/YOUTH COMPLEX OFFERING MEMORANDUM BACKGROUND/CONSIDERATION: I have enclosed the offering memorandum, with the changes suggested by the Council/Mayor. Please review and be certain that we have them correct. RECOMMENDATION: Approval of the publication of the offering memorandum is highly recommended. ACTION REQUIRED: A MOTION to proceed with the publication and process for the offering of the sale of Haven Field and Lion's Park Street is required. I N T E R To: Clarence W. Krepps, City Manager From: Lawrence Gallagher, PECDD Director Subject: Haven Field Offering Document Change to Prohibit Billboards and Off -Premises Business Advertising Signs Date: October 4, 1996 As I reviewed the Haven Field Offering Document and the amendments and other changes suggested by the City Council during the September 30, 1996, Work Session, I realized that a redeveloper could submit a proposal to redevelop the site with billboard and other advertising signs for businesses located off -site. Additionally, after the land was sold, portions of it could be leased for billboards or other off -site advertising. I don't believe the City Council, KDC, or citizens of Kalispell would consider a billboard or several signs as enhancing the entrance to the City. Therefore, I am suggesting the City Council consider the following additional language to prohibit, by deed restriction, the display of billboards and/or off -premise signs: The City encourages an attractive, aesthetically pleasing signage plan that shall advertise and promote businesses that are being conducted on said property. The sign(s) shall meet all required setback and size requirements as is set forth in the Kalispell Sign Ordinance. The display of billboards and/or off -premise signs will be prohibited by deed restriction on all of the land that is the subject of this offering. I have visited with Glen Neier regarding his opinion of this suggested language and he has advised me that the City can legally limit permitted uses by deed restriction. This language has been inserted on page 5 under Zoning and also on page 9 under Density & Height Considerations. However, if a majority of the City Council does not approve of this language, it will be taken out of the document before it goes to final printing. HAVEN FIELD Kalispell, Montana 2 Parcels Up to 201,421 Square Feet Available Zoned 132 - Highway Commercial Located at Kalispell's South Entrance U.S. Hwy 93 Frontage and Signalized Controlled Access For Information Contact City of Kalispell Planning, Economic & Community Development Department P. 0. Box 1997 Kalispell, MT 59903-1997 (406) 758-7740 FAX (406) 758-7739 or Any Licensed Real Estate Broker you may wish to engage to represent your interest in the transaction.' REDEVELOPMENT PROPOSALS ARE DUE NOVEMBER 19, 1996, 11:00 a.m. This Presentation Was Prepared October 4. 1996 This presentation is not an offer to sell the property described and is, instead, a solicitation of offers to purchase. Any offer to purchase must be accepted and approved by Resolution of the City of Kalispell and in accordance with disposition procedures specified in the Montana Urban Renewal Law and by the City of Kalispell. Information provided herein is a summary, subject to error and omission, and without any warranty of accuracy. Prospective purchasers should independently verify any information provided herein. No real estate listing or agency agreement is implied directly or indirectly by reason of this presentation. Property Identification: The property is commonly known as Haven Field and Lion Park Street. The parcels are currently in public use as a baseball field and park/street access; however, they have been rezoned General Business, B-2, for sale and private commercial redevelopment. Location: Entering Kalispell, Montana, from the south, the parcels are highly visible, located immediately adjacent to and east of U.S. Hwy 93 South. Parcel 2 has over 650' of highway frontage with Lion Park Street providing an additional 85.51 ' of frontage. The 220 room Best Western Outlaw Inn and Convention Center is located just north of Parcel 2, across 18th Street, providing Signalized Controlled Access and forming the 390.92' northerly boundary of Parcel 2. Lion Park Street, as does 18th Street, currently provides direct linkage between U.S. Hwy 93 South and Third Avenue East, an urban collector street providing linkage to the Minor Arterial Third Avenue East and Fourth Avenue East couplet providing north/south access to Idaho Street (U.S. Hwy 2 East) on the east side of Kalispell. Neighborhood: The subject property and all of the airport property is included within the boundaries of the "KALISPELL CITY" AIRPORT/ATHLETIC COMPLEX REDEVELOPMENT PLAN (the. "Plan"). The Plan is a comprehensive Urban Renewal Plan adopted by the City Council, Ordinance No. 1242, on July 1, 1996, to implement the Airport Neighborhood Plan adopted in 1993. A map of the Urban Renewal Plan area and adjacent neighborhoods is attached as Exhibit A. The 220 room Outlaw Inn and Convention Center is located north of the subject. Ace Home Hardware is located at the NE intersection of 18th Street and Third Avenue East, the subject's easterly boundary. Lion's Park is south, forming an attractive landscaped triangle at the intersection of Third Avenue East and U.S. Hwy 93 South. The Montana Department of CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 Transportation (MDT) is currently designing a new T-intersection for Third Avenue East and U.S. Hwy 93 South which can be signalized to provide controlled access to Daley Fields, a 17 acre parcel scheduled to be offered for private redevelopment in 1997 and located to the west of U.S. Hwy 93 South. This new signalized T-intersection at Third Avenue East and U.S. Hwy 93 South will provide yet another controlled highway/arterial access for the subject. Kalispell City Airport, Montana's busiest general aviation airport, is located west of the subject and is the focus of the City's plan to redevelop the area and the Airport into an FAA approved general aviation field. The Plan calls for extension of the runway to 4700', fencing, lighting, and other safety improvements. The City intends to form an Airport Authority to manage the facility and to attract. users, provide more general aviation facilities and hangers, and, in general, enhance its use as a publicly owned general aviation filed. Site Description, Shape and Size: PARCEL 2: A 178,596 square foot rectangular parcel of land (4.100 acres) beginning at the southeast corner of the intersection of 18th Street East and Hwy 93 South; thence along said northeasterly right-of-way line of U.S. Hwy 93 South 33004' 19" East 650.27 feet to the northwesterly right-of-way line of Lion Park Street; thence along said northwesterly right-of-way line of said Lion Park Street, North 63012'02" East 281.20 feet to the southwesterly right-of-way line of Third Avenue East, thence northwesterly along the curve and along the southwesterly right-of-way line of Third Avenue East, through a central angle of 19'24' 19", an arc distance of 471.62 feet to the southerly right-of-way line of Eighteenth Street East; thence along said southerly line of said Eighteenth Street East, North 89°52'30" West 390.92 feet to the Point of Beginning. Lion Park Street: A 22,825 square foot rectangular parcel of land (.524 acres) beginning at the southwest corner of said Parcel 2, thence along said northeasterly CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 right-of-way line of U.S. Hwy 93 South 33004119" East 85.51 feet to the northwest corner of said Parcel 3, South 63' 12'02" West 255.29 feet to. the northeast corner of said Parcel 3, northwesterly along the curve 86.61 feet to the southeasterly corner of said Parcel 2, thence along the southerly line of said Parcel 2 to the point of beginning. A Parcel Map is attached as Exhibit B. K11iTAI►rT_ WA&J -A Parcel 2 Lion Park Street 178,596 Sq ft 22,825 Sq ft 201,421 Sa Ft Record Owner: FEE SIMPLE ESTATE held by THE CITY OF KALISPELL, MONTANA, a body politic. Access and Streets: U.S. Hwy 93 South, 18th Street, Third Avenue East, and Lion Park Street all abut the property. U.S. Hwy 93 South is scheduled for reconstruction in 1998/1999 along with a new configuration of a signalized Third Avenue East/U.S. Hwy 93 South T-intersection. Visibility & Traffic: This site is highly visible from all access points. Recent traffic counts from the MDT indicate approximately 16,000 ADTs along this stretch of U.S. Hwy 93 South. MDT has estimated an approximate 27,000 ADTs per day within 20 years. Topography: All sites are level or gently sloping .and at street grade. Soils: No subsoil information or investigation has been conducted by the City other than a Phase I environmental audit of the subject, a copy of which will be made available to interested redevelopers. Utilities: The site is served by a City of Kalispell 8" sanitary sewer and a 12" water ,main. Pacific Power and Light furnishes overhead electrical service to the site. Montana Power Company has a 2" natural gas main on 3rd Avenue East CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 a that meets U.S. Hwy 93 South and it has a 4" natural gas main on 18th Street. PTI Communications provides telephone service. TV cable service is provided by TCI Cablevision of Montana, Inc. Zoning: The site is governed by the CITY OF KALISPELL Zoning Ordinance, with an effective date of March 19, 1992. A complete copy of the Zoning Ordinance is available from the City's Department of Planning, Economic and Community Development Office. Both of the parcels are zoned General Business, B-2. According to CHAPTER 27.14. B-2 GENERAL BUSINESS, Section 27.14.010 Intent, the B-2 designation is: "A business district to provide areas for those retail sales and service functions and businesses whose operations are typically characterized by outdoor display, storage and/or sale of merchandise, by major repair of motor vehicles, and by outdoor commercial amusement and recreational activities. This district would also serve the general needs of the tourist and traveler." For planning purposes, copies of the appropriate sections of the Kalispell Zoning Ordinance are attached as EXHIBIT C. These include: Sections - 27.14.020: Permitted Uses; 27.14.030: Uses Which May Be Permitted By Conditional Use Permit; and 27.14.040 Property Development Standards (pages 26, 27, and 28 of the Kalispell Zoning Ordinance). Note: The City encourages an attractive, aesthetically pleasing signage plan that shall advertise and promote businesses that are being conducted on said property. The sign(s) shall meet all required setback and size requirements as is set forth in the Kalispell Sign Ordinance. The display of billboards and/or off -premise signs will be prohibited by deed restriction on all of the land that is the subject of this offering. Parking: Parking requirements are governed by Chapter 27.26 of the Kalispell Zoning Ordinance. CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 lJ Tax Information and Assessment The real estate has been "tax exempt" because the City of Kalispell, its current owner, is a public entity exempt from taxation. Now, it is the City's goal to encourage the private redevelopment of the site to its highest and best use, thereby generating substantial ad valorem taxes for the tax increment district and eventually all taxing jurisdictions. In Montana and in Kalispell, both real and personal property are subject to property (ad valorem) taxation, except as provided otherwise. It is anticipated that the subject real estate and improvements and personal property will be classified and taxed as: Section 15-6-134, MCA, 1995: Class four property - description - taxable percentage. (1) Class four property includes: (a) all land, except that specifically included in another class; (b) all improvements except those specifically included in another class. (2) Class four property is taxed as follows: (a) Except as provided in 15-24-1402 or 15-24-1501, property _ described in subsections (1)(a), (1)(b), and 1(e) is taxed at 3.86% of its market value. Section 15-6-138, MCA, 1995: Class eight property - description - taxable percentage. (1) Class eight property includes: (h) furniture, fixtures, and equipment, except that specifically included in another class, used in commercial establishments as defined in this section; (3) "Commercial establishment" includes any hotel; motel; office; petroleum marketing station; or service, wholesale, retail, or food - handling business. (4) Class eight property is taxed at: (a) 9% of its market value for tax years ending on or before December 31, 1995; (b) 8% of its market value for tax year 1996; (c) 7% of its market value for tax year 1997; CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 { 0 (d) 6% of its market value for years beginning after December 31, 1997. Tax liability for business property is determined in the following way: Market Value x Classification Rate = Taxable Value Taxable Value x Mill Levy = Property Tax Liability The mill levy is an aggregate of state and local mill levies imposed annually for the purpose of funding city and county governments, schools, and the university system. The Property Assessment Division of the Montana Department of Revenue is responsible for ensuring that all property in the state is treated equitably. County appraisers (as employees of) and assessors (as agents of) the Montana Department of Revenue are responsible for valuing property. Market Value is based on (1) replacement value, (2) depreciation factors, and (3) selling prices in Kalispell. Thus, to determine the value of commercial property, the appraiser uses two methods of appraisal: the market approach and the cost approach. The market approach compares fair market sales of similar properties (land and improvements) when sold on the open market. The cost approach estimates the cost of material and labor to replace the improvements, less depreciation, if any, for physical deterioration, age, and functional or economic obsolescence. The Montana Department of Revenue has been encouraged by courts, legislators, and property owners to consider income producing capacity when determining the market value of commercial real estate. The state has reappraised commercial properties for 1993 and is currently utilizing data on the income capacity of commercial buildings. It intends to utilize this data for future property reappraisals to aid in determining a commercial. property's income approach to market value. City/County/School Mill Levies: The county taxable value is utilized to determine the mill levy level necessary to meet operating budgets for city, county and public school operations. Once the mill levies are established, the county assessor computes the property taxes, and the county treasurer becomes responsible for billing and collecting property taxes. CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 One mill is 1 /10th of a cent - computed as $1 tax on every $1,000 of taxable value. The rate is determined by comparing the local budget requirement against the taxable value for a particular taxing district. For example, if a school district needs $4 million from property taxes for its budget (and if the total taxable value in the county is $10 million), the mill levy would be determined as follows: $ 4,000,000 (money needed) $10,000,000 (taxable value) x 1,000 = 400 mills (Mills most often appear as a decimal. Thus, 400 mills would be expressed as .400.) For Class 4 property located within the City of Kalispell, the 1995 Combined Mill Levy for all taxing jurisdictions is: .498078 To estimate the ad valorem tax for a commercial building and land located within the City of Kalispell use the following example: Market Value Land Market Value Building TOTAL MARKET VALUE Class Four Classification TAXABLE VALUE Market Value of Personal Property Class Eight Classification TAXABLE VALUE TOTAL MARKET VALUE Combined Mill Levy 1995 $ 800,000 (market approach) $2,200,000 (cost approach) $3,000,000 x .0386 $ 115,800 $ 200,000 x .08 $ 16,000 $ 131.800 x .498078 Ad Valorem TAX DUE 1995 $ 65.646 CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 DRAFT 9 In the example, a new development with a total land and improvement market value of $3 million and $200,000 in market valued personal property would pay $65,646 in total Ad Valorem Tax. Density & Height Considerations: The Kalispell City Council encourages redevelopment proposals that will take maximum advantage of the parcel's potential for highest and best use and urban density redevelopment. It wants to encourage construction of high quality and high value building(s). The subject real estate has not previously been available for redevelopment and has in the past provided both open space and an attractive landscaped entrance to the community; therefore, the City wants to encourage redevelopment that will enhance the south entrance to Kalispell as well as meet other objectives of the Plan. The City does not encourage redevelopment proposals or offers to purchase from developers desiring to purchase the land for speculation or for future unspecified redevelopment phased over a long period of time or to construct only one or a few single -story low density buildings. While the City does not have a minimum density development standard or requirement, the Kalispell City Council will carefully evaluate all proposals and how it impacts the site, the surrounding neighborhood, and the City's tax base. Note: The City encourages an attractive, aesthetically pleasing signage plan that shall advertise and promote businesses that are being conducted on said property. The sign(s) shall meet all required setback and size requirements as is set forth in the Kalispell Sign Ordinance. The display of billboards and/or off -premise signs will be prohibited by deed restriction on all of the land that is the subject of this offering. Proposals that represent architectural and site planning excellence will be given preference in the selection process. Objectives and purpose for the evaluation include: (a) Originality, flexibility, and innovation in site planning and development, including architecture, landscaping, and graphic design of the proposed development. (b) Protect and enhance the south entrance to the City and appeal to residents and visitors and, thus, support and stimulate business and CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 10 industry and promote the desirability of investment and occupancy in business, commercial, and industrial properties. (c) Stabilize and improve property values and prevent blighted areas and, thus, increase tax revenues. Criteria for evaluation of the proposals will be based upon the documents submitted in the proposal. All proposals shall include the following information: (a) A site plan drawn to scale, showing the proposed layout of all structures and other improvements including driveways, pedestrian walks, landscaped areas, fences, walls, off-street parking, and loading areas. The site plan shall indicate the location of entrances and exits and the direction of traffic flow into and out of off-street parking and loading areas, and indicate how exterior lighting, utility service, and drainage will be provided. (b) Architectural drawings or sketches, drawn to scale, including preliminary floor plans, with sufficient detail to permit computation of all site development criteria (i.e. setbacks, lot coverage, off-street parking requirements, building heights). The drawings will show all elevations of the proposed structures and other improvements as they will appear upon completion, including all roof mounted equipment, trash storage areas, and utility equipment. (c) Specifications as to type, color, and texture of exterior surfaces of the proposed structures, including signage, graphics, and illumination. The Kalispell City Council and its advisory board, the Kalispell Development Corporation, understands redevelopment incentives, the land write -down process, return on investment, and the difficulty developers may have in securing firm financial commitments and financing for significant commercial projects. Therefore, the City will carefully and promptly evaluate all reasonable developer requests for City participation, to the extent permitted by the Montana Urban Renewal Law, for assistance with off -site improvement(s), relocation(s), the closure, abandonment or vacation of Lion Park Street, and the provision of off -site public improvements necessary to facilitate the project. CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 11 Suggested Sales Price: The City of Kalispell has determined, through the review of several real estate appraisals and multiple market comparables, that the real estate offered has a range of value from: Parcel 2: $800,000 ($4.48/SF) to $892,980 ($5.00/SF) Lion Park Street: $4.48 - $5.00 per square foot Although the City is free to entertain a higher offer for the property, its objective is to encourage highest and best use, excellence in design and siting, employment or job creation, and the highest possible market valuation for ad valorem tax purposes. Proposals may include all or part but only contiguous portions of Lion Park Street required to enhance the redevelopment of Parcel 2, provide ingress, egress, landscaping, or to increase density and value of the redevelopment project. Additionally, proposals to purchase all or portions of Lion Park Street must incorporate in the redevelopment plan, both public parking and pedestrian access to encourage the passive recreation use of Lion's Park and indicate how the Park will be incorporated into the comprehensive redevelopment plan of the area. The seller, the City of Kalispell, is interested in receiving offers for ALL CASH ON CLOSING. Selection - Determination of Fair Value: The City may select the redevelopment proposal and base its final determination of the fair value for the land not only on the purchase price offered but also on criteria discussed in this document, the Goals discussed in the KALISPELL CITY AIRPORT NEIGHBORHOOD PLAN (Chapter 6, attached as EXHIBIT D), and the "KALISPELL CITY" AIRPORT/ATHLETIC COMPLEX REDEVELOPMENT PLAN (Ordinance No. 1242, attached as EXHIBIT E). The Kalispell City Council may select the redevelopment proposal that offers the minimum price and best addresses.the goals and objectives of the Plan and offering criteria vs. a redevelopment proposal offering a higher purchase price yet failing to or only minimially addressing offering criteria. Actual sale of any property subject to this solicitation of offers to purchase real estate may only be accomplished in accordance with Section 7-15-4263, Montana Code Annotated. The City will begin legally advertising the property on CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 1 uRAF407 m October 27, 1996, and again on November 3, 1996, and November 10, 1996, so that redevelopment proposals will be accepted at 11:00 a.m. Mountain Standard Time, November 19. 1996, at Council Chambers, Kalispell City Hall. All proposals will be considered for approval and passage of a resolution authorizing the sale of the property on December 2, 1996, but in no event later than December 16, 1996. The selected redeveloper must be willing to execute a Developers Agreement demonstrating both financial and legal ability to complete the proposed redevelopment within the agreed time and for the amount specified in the redevelopment proposal. Section 7-15-4263, MCA, 1995, states as follows: Procedure to dispose of property to private persons. (3) The municipality shall consider all redevelopment or rehabilitation proposals and the financial and legal ability of the persons making such proposals to carry them out. The Municipality may accept such proposals as it deems to be in the public interest and in furtherance of the purposes of this part and part 43. Thereafter, the municipality may execute, in accordance with the provisions of Section 7-15-4262 and Section 7-15-4264, and deliver contracts, deeds, leases, and other instruments of transfer. E r. The City, in considering competing proposals received as result of the published -' notice, shall consider the purchase price offered by the respective respondents. However, the purchase price shall not be the sole factor in disposing of the property to a successful purchaser. The City shall consider such other factors as: proposal's potential to further the goals and objectives of the Urban Renewal Plan, background of potential developers, financial ability of potential developers to perform under the proposal, benefit to the City in general and benefit to the Urban Renewal Area in particular. The decision on disposing of the property will ultimately be based upon a broad evaluation of the proposals submitted and how the proposals individually serve the public interest. After the proposals have been evaluated, the City Council shall be presented with a resolution authorizing the sale of the property and authorizing the City Manager to execute a deed to the property. The resolution when passed by the City Council takes effect immediately. Developers desiring to avail themselves of City participation in a proposed development should be aware that additional public hearings and action by the Council may be required prior to or after the purchase. CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996 13 An urban renewal project involving an amendment to the Plan requires, under Section 7-15-4213, MCA, that the City submit, by resolution, a proposed Urban Renewal Project Plan to the City -County Planning Board for their review. The City - County Planning Board has sixty (60) days in which to receive comment on the proposed plan and make a recommendation to the City. Once a recommendation is received, or after sixty (60) days if no action has been taken, the City schedules a public hearing on the plan after public notice. The City notices the resolution by publication in the Daily Inter Lake and by mailing of notice to all property owners in the Airport Neighborhood Plan area. Publication and mailing must be accomplished in a window between not less than ten (10) nor more than thirty (30) days prior to the hearing. After the public hearing, the City Council shall be presented with an ordinance amending the Urban Renewal Plan to accommodate the project and its particulars. Under normal procedure, the Council has two readings of the ordinance, at least twelve (12) days apart, and the ordinance becomes effective thirty (30) days after its final passage. This synopsis of the requirements of the Urban Renewal Law is not intended to be an indepth analysis of the procedures, but an outline of the basic requirements. Any developer desiring to present a proposal should retain legal counsel to evaluate the developer's position in the process. 1. Representation by a Licensed Real Estate Broker: The City of Kalispell (seller) is represented by its employees in any real estate offering, negotiation, or transaction. In the event the buyer is interested. in making an offer to purchase the property, it may employ its own agent to review the transaction, represent it, and the buyer should pay its agent's fee. The basis of the fee is a matter between the buyer (redeveloper) and its agent. Buyers are encouraged to consider the advantages of engaging a Licensed Real Estate Broker to act as their exclusive agent, providing professional representation CITY OFKALISPELL REAL ESTATE OFFERING • t s s MI and legally negotiating for their interests in areas of: price, special conditions, dates of possession/project completion, participation in off site development costs, or generally representing the interest and objectives of the Buyer. Agency representation must be disclosed in writing by both the buyer and agent. If the buyer's agent's fee is to be paid at the time of closing from proceeds placed in escrow by the buyer, such information must be disclosed and included in the buyer's Offer to Purchase. THE BUYER MAY, OF COURSE, ELECT TO PROCEED WITHOUT REPRESENTATION. CITY OF KALISPELL REAL ESTATE OFFERING October 4, 1996