06. National Flood PurchaseAgenda -April 21, 1997
AGENDA ITEM 6 - NATIONAL FLOOD PURCHASE
Currently we do not have the agreement put together with Mr. Dasen.
If it is completed on Monday, you may take action; if not, you will
need'to table this item until the next Council Meeting.
Agenda -April 21, 1997
AGENDA ITEM 6 - NATIONAL FLOOD PURCHASE
BACKGROUND/CONSIDERATION: You may recall that you gave the staff
authority to work with Mr. Mendenhall in a process that would
ultimately make us owners of the National Flood Services building.
The previous agreements and representations were based upon leases,
purchases, needs, and improvements that would:
A. retain National Flood Service in Kalispell;
B. allow National Flood Service to expand it's labor
force to approximately 200;
C. increase the capability of Mr. Mendenhall to grow
and improve the Kalispell Gateway West Mall area
into a new mall or office complex.
Since our last conversations and actions pertaining to the Gateway
West Urban Renewal Area, we have a change in ownership of National
Flood Services and a change in direction of the ownership. Due to
this change, we need to further discuss the purchase of the
property. I have enclosed a letter from the new President and CEO,
Curtis Lund. The letter explains their goals, time frame, options,
and especially their desire to sell the building immediately. We
have held several meetings with Mr. Lund. He is sincere, in my
opinion, about the immediate growth/space needs and that he is
considering several sites in Kalispell. Although from a marketing
perspective, he could and/or should consider other sites. He is
willing to commit to a relocation within the Kalispell City Limits
if we purchase his building as originally planned.
Agenda -April 21, 1997
Time is extremely important to the company. A decision is
necessary on April 21, 1997 (their deadline). If we say no at this
meeting or take no positive action, the potential is good that we
will lose the company to one of the marketing locations listed in
the next to last paragraph of Mr. Lund's letter.
RECOMMENDATION: Our original goal was to retain National Flood
Services within the City. That goal can still be achieved at the
same price as agreed upon before. The down side to moving ahead
with this purchase is it has no positive impact on the Mendenhall
project. We are still and will continue to work with Mr.
Mendenhall.
To enable us to retain the current 70 jobs plus gain approximately
150-180, I recommend that we purchase the National Flood Services
building. We will also continue to work with Mr. Lund to consider
the "college" property as his new site.
ACTION REQUIRED: A MOTION to direct staff (Larry Gallagher, Glen
Neier, and myself) to complete the purchase transaction for
National Flood Services for a $330,000 purchase price plus verified
moving costs not to exceed $30,000. If you desire not to proceed,
a motion to staff directing us to cease processing this transaction
is needed.
NFS
P.O. Box 2057
6spelL MT 59903
-11--,.Done 406n56-8656
Toll Free 800/637-3846
FAX 406/257-2008
NATIONAL FLOOD SERVICES
April 3, 1997
Clarence W. Krepps
City Manager
PO Box 1997
Kalispell, MT 59903-1997
Dear Mr. Krepps:
National Flood Services, Inc. (NFS) has an urgent need for new office space.
This need should have been addressed about one year ago; however, the
former owner's main focus was to sell the company. On February 14, 1997,
100% of the ownership of NFS was sold. As new owners, we are looking to
provide a long-range solution to our office space requirements. We must
have a facility which provides needed efficiencies in the flow of paperwork
and also a facility which can be expanded as we grow.
Currently, our operations are housed in three locations under three separate
leases. These facilities are inadequate in size, are inefficient and provide
poor working conditions for our employees. In two locations, the leases
have buy-out provisions. We intend to exercise these buy-out provisions
and assume that cost as a part of the relocation of our operations. We have
a long-term lease at our main facility (One Main Street,) and it is necessary
to be released from this lease in order to relocate to new space.
Enclosed is a forecast of personnel needs for the next four years. We are
confident that we will meet these forecasts. It is also our desire to house all
of our operations in one location in the same facility.
I am writing this letter to request that you purchase our current building (One
Main Street) under the terms previously discussed. The terms are a
purchase price of $330,000 plus moving costs not to exceed $30,000. In
addition, we will remain in the facility rent-free until a new one is either
rented or built. This would probably be a six to seven month period as
shown by the following time table.
April 21, 1997
-Approval to purchase office building
April 30, 1997
-Acquisition of land for new office building and
purchase of office building at One Main Street
June 1, 1997
-Plans completed for new office building
June-Oct.,1997
-Construction of new office building
Nov. 1, 1997
-Occupancy date for new office building
Clarence W. Krepps
City Manager
4/3/97 - Page 2
The purchase price for the office building at One Main Street is $385,000.
Assuming we have assurances that the City will purchase the office building,
we will purchase the office building for $385,000 and then sell it to the City of
Kalispell under the terms described above. It should be noted that our cost
of vacating the three leases under the terms of this proposal is approximately
$65,000.
Presently, we are considering six or seven potential sites in Kalispell. The
primary reason we need an answer now on the purchase of the existing
office building is that we will need to incur substantial costs from consultants
in determining which site will best work for our long-range plans. We will
consider purchasing the "College" property in downtown Kalispell, but I
cannot make this decision without considerable help from qualified building
and space planning consultants. I am unwilling to spend time and money
considering building sites without the decision to purchase our present
location. Therefore, the purchase of our present facility at One Main Street
cannot be contingent upon a specific site. We will make a commitment to
remain in the city limits of Kalispell.
Kalispell is currently the headquarters for NFS, and it is our desire to remain
in Kalispell. From a labor force standpoint: Kalispell is a good solution for
us. From a marketing perspective, most of our business is in California,
Louisiana, Texas or Florida; and, therefore, we would be better off
strategically to relocate our headquarters in one of these states. Enclosed is
a policy count by state.
We have run out of time in our need for additional office space. I am asking
for a decision by April 21, 1997. If no action is taken by April 21, 1997, 1 will
assume that your answer is "no."
CML:Ih
Enclosures
cc: Lawrence Gallagher, Director
Planning, Economic & Community Development Department
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