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2A. KDC ProposalMr. Lawrence Gallagher August 18,1997 Director Planning, Economic & Community Development Dept. City of Kalispell 248 3rd Avenue East Kalispell, MT 59903-1997 RE: KALISPELL DOWNTOWN CENTER KALISPELL, MONTANA Dear Mr. Gallagher: The following letter will serve to outline the terms under which Kalispell Center Partners would purchase the above -referenced property. Buyer: Kalispell Center Partners Seller: The City of Kalispell Property: Lots 1 through 16 and Lot 24 of Block 36, Kalispell, Montana; Lots 1 through 4 and the northerly 7 inches of Lot 5, Block 45, Kalispell, Montana; and all improvements located on said Lots. Purchase Price: $600,000 cash payable at closing Contingency Period: Buyer shall have until March 1, 1998 to satisfy itself of certain conditions of its purchase, including, but not limited to the following: 1. Review and approval of all environmental, soils, and engineering reports associated with the property; 2. Completion of Buyer's feasibility analysis in a form acceptable to Buyer; 3. Receipt of all necessary zoning and planning approvals, building permits, and any other municipal approvals necessary to commence construction of improvements; 4. Receipt of any financing commitments, if necessary; 5. Completion, or in lieu of completion, an agreement setting forth an acceptable completion schedule, for the Project Requirements outlined below as numbers i through 4. 6. Execution of a lease as outlined in number 5 of the Project Requirements. Buyer shall have the right to extend the Contingency Period for an additional ninety (90) days by forwarding a $10,000 non-refundable deposit to the Seller. L�5 2 \I 113rd tiuvrt • Redmond \VA 98052 • 425-739-67-47 •lax 4215-731)-0747 Project The following Project Requirements will be provided by the Seller: Requirements: 1. Delivery of environmental assessments and, if necessary, an asbestos survey for existing buildings, in a form acceptable to Buyer; 2. Relocation of existing above -ground utility lines; 3. Completion of necessary curb, gutter, sidewalk, landscape, and street improvements within City right-of-ways; 4. Approval of any necessary parking variances required for the project; 5. Execution of a lease by the City of Kalispell for office space in the project based upon the following business terms: A. Size: 6,500-8,000 rentable square feet B. Term: 10 Years minimum C. Term Commencement: September, 1998 D. Rental Rate: $14.00 per rentable square foot per annum, with rental increases to be agreed upon by the parties. E. Operating Expenses" In addition to the base rental rate, the tenant shall pay its share of utility and janitorial expenses. F. Tenant Improvement Allowance- The landlord shall provide a tenant improvement allowance of $20.00 per square foot for tenant's space build -out. G. Parking; Landlord shall provide up to 20 parking passes within a designated parking area for tenant's employees at the southwest corner of 1st Avenue East and 1st Street East. Closing: Closing shall occur within 30 days of the end of the Contingency Period. Documentation: Buyer shall prepare a Purchase and Sale Agreement within 15 days of acceptance of this Letter of 'Intent. Buyer and Seller shall negotiate in good faith towards a mutually acceptable agreement. Brokerage Fees: Buyer and Seller acknowledge that Woods and Water Realty (Broker) has been the only agent/broker involved in this transaction and as such, the Broker shall be paid a fee of six percent (6%) of the Purchase Price at time of closing from proceeds placed in escrow by the Buyer for the proposed purchase of the property. The Broker's fees will be subtracted from the total Purchase Price. Acceptance: The acceptance of the above terms and conditions is not intended to bind either the Seller or Buyer. Only a fully -executed Purchase and Sale Agreement will bind the parties. If the Seller is in agreement with the above business terms, please acknowledge below and return one copy of this letter to Buyer by August 22, 1997. We look forward to working with the City of Kalispell toward a successful completion of this project. Very truly yours, s David B Irwin Principal AGREED AND ACCEPTED: By: Its: Date: Mr. Lawrence Gallagher August 28,1997 Director Planning, Economic & Community Development Dept. City of Kalispell 248 3rd Avenue East Kalispell, MT 59903-1997 RE: KALISPELL DOWNTOWN CENTER KALISPELL, MONTANA Dear Larry: I have enclosed for your review the preliminary space plans for the City's office space in Kalispell Downtown Center. These plans are based on the shell building configuration prepared by Gary Bernardo. The space as designed would incorporate Public Works, Parks & Recreation, Planning & Economic Development, and the Building Inspections Department. These departments were included in the project for a variety of reasons: 1. Since Planning, Economic Development, and Building Inspections currently occupy leased space, and that lease term expires next year, the inclusion of those departments was thought to be a natural fit. 2. All of these departments have a great deal of public interaction during the day (particularly the Building Department and the Parks Department during summer months). Locating these departments in an "annex" location with ample parking and larger public lobbies would take some of pressure off of the existing City Hall. 3. While these departments serve vital City needs, they are perhaps best suited to be housed in an annex location, leaving the City Manager, Mayor, City Clerk, Finance Director, and City Attorney and their respective staffs together at City Hall. The approximately 1,920 square feet vacated by Public Works and Parks & Recreation could be used for the expansion of the remaining city functions, as well as a conference room, break room, and additional storage space. Another option would be to move the Water Department into our location and leave Public Works in their existing location. The department allocation shown on the space plans is as follows: - The Parks & Recreation Department is located on the ground floor since they are the smallest of the departments. This was also done for ease of accommodating the public. They would have two private offices and room for 3-5 staff work stations. - The Public Works Department would be located on the second floor with its own reception counter. The department would have three private offices and five staff work stations. (the reception area would be a sixth work station). - Planning & Economic Development and Building Inspections would occupy the balance of the second floor. They would have a large counter/reception area, four private offices, and nine staff work stations, including the reception counter. There would also be a central file and 1 35Q? M Q.1rd Suret • Redmond WA 98053 • 425-739-6747 • litx 425-7 3,9-n7-17 records room. - Common facilities to be shared by all the departments would include two conference rooms, lavatories, and a break room. Based on these space plans, the total size by department breaks out as follows: DEPARTMENT NET SF SHARED SF TOTAL SF PARKS & RECREATION 1,422 364 1,786 PUBLIC WORKS 1,568 401 1,969 PLANNING & BUILDING 3,094 792 3,886 TOTALS 1 6,084 1 1,557 1 7,641 These departments currently occupy approximately 5,300 square feet. Most of the additional 2,300 square feet is being taken by Parks & Recreation and Public Works, both of which are dramatically undersized in their present state. I look forward to seeing you on Tuesday and discussing the enclosed information in greater detail. Ver truly yours VOW'-' Dav. Irwin Principal IR: et O-Z m m 0 iba 0 Ai Pw FIRS" 9 T E E T EAST Oil 'fl).Y low 1-;- it r� ;Fog "Po I FIRST STREET ..,AS OHE WAY OM -0- .jI to I it D AL- ��� � O1 U �� Incorporated 1892 Planning, Economic & Community Development Department P.O. Box 1997 Kalispell, MT 59903-1997 Q� To: Clarence W. Krepps, City Manager From: Lawrence Gallagher, PECDD Director Subject: KDC Site - Summary of Expenditures Date: August 28, 1997 248 Third Avenue East (406) 758-7740 (406) 758-7739 (office fax) (406) 758-7758 (City Hall fax) As you requested, we have updated the Summary of Expenditures on the Kalispell Downtown Center (KDC) Site. A copy of the August 22, 1997, Summary is attached. The City's investment in this redevelopment project was discussed most recently and extensively during the City's 1997 Fiscal Year Budget Work Sessions as staff prepared dozens of estimates and analyses for the Council as it deliberated the sale of a final tax increment bond to finance urban renewal projects. Concurrently, the Council was entertaining a proposal from L/Abrams Venture, the Irvine, California, firm offering to purchase all of the land the City owned in Blocks 36 and 45 and the remainder of Block 36 to be assembled from private owners for $10.00/SF. L/Abrams proposed to construct a minimum of 70,000 square feet of retail space and construct over 216 stalls of tiered/structured parking to accommodate the development. L/Abrams was considering an office/professional addition to its planned retail space when negotiations ceased because the City would not agree to assemble the privately held parcels in Block 36 which were required for L/Abrams' proposal to proceed. In order to provide an accurate history of the City's involvement in Block 36, a narrative should accompany the simple tabulation of dollars invested to date. According to our records and information from the City's Finance Director, the City's total investment to date is $1,317,373. The expenditures, or investments, have been made for specific reasons. The elimination of blight and dangerous buildings deleterious to the private redevelopment of the CBD has been repeatedly ratified as "necessary and in the public interest." The Downtown Urban Renewal Plan has been challenged and discussed over the years. The City has published Clarence W. Krepps Page 2 August 22, 1997 legal notices, provided written notification to every property owner in the area or proposed expansion area, and conducted public hearings on several occasions. Responsible and considerate community advisory groups (i.e., the KDC, Chamber of Commerce), elected officials, paid staff, professional estimators, consultants, environmental engineers, and others have conscientiously considered each expenditure of public funds for the project. A review of some of the considerations and the reasons for the investment may help remind us why the investment was made and what "public interest" was served by the investment. The initial expenditure of $530,000 was to purchase all of the land and improvements on Block 36 and Block 45 which were owned by Flathead Valley Community College (FVCC). The money was paid directly to FVCC so that it could pay off outstanding mortgages on the property held by Concordia College and use the remainder to provide the initial cash required to purchase land and pay the architect designing the new FVCC campus that has become such a significant community asset and economic stimulus. It would be hard to imagine the college would have received any other cash offers on their property considering the condition of the buildings. Suffice it to say, the entire $530,000 went to FVCC to continue and expand higher education opportunities in the Flathead Valley. Prior to the acquisition, real estate appraisals were required and were completed by Jacobson Appraisal who was paid $9,200 to estimate the fair market value of the property and to later update those appraisals. The City's tax increment fund has been charged $9,405 to date to pay the entire assessment due for decorative street lights, light maintenance, street maintenance and storm sewer assessments. The property, although tax exempt and owned by the City, is assessed at the same rate as any other property located in the CBD. Most people forget that because the property was owned by FVCC it was tax exempt and did not pay ad valorem taxes. The City paid $380,594 to demolish the improvements, remove asbestos and an underground fuel tank, clean up the site, provide test wells to mitigate contamination issues, and document the historical significance of the buildings. The City provided select material and compacted backfill to limit site development costs at a later date. Based on independent evaluations over the years, and also environmental audits of the property, Blake Hall was structurally unsound and was considered a dangerous building with restricted occupancy of the upper floors long before the City purchased the property. It was a public liability and a dangerous building. During demolition, contractors commented about how little structural Clarence W. Krepps Page 3 August 22, 1997 integrity the building actually had. The demolition bid included $84,700 to mitigate asbestos and over $17,000 to pay for removal of a fuel tank, a Phase II environmental audit, and drill test wells and provide groundwater monitoring. None of the clean-up costs were passed back to previous owners. Marketing the property has cost approximately $2,500 over the years just to cover the cost of required legal ads in the Daily Inter Lake and printing offering brochures. Signs have also been placed on the property. The amount does not cover the indirect cost of staff time, long distance telephone, direct solicitation or other related costs difficult to measure but none -the -less real. The City has invested $57,527 to provide 58 stalls of public parking, landscaping, lighting, and striping. It was intended that the investment of only $992.00 per parking stall would provide temporary use and income from the land for the Kalispell Parking Commission. The Parking Commission has not been charged for the improvements or use of the land and so it benefits from the income. Downtown patrons and businesses benefit from convenient parking. All of the income generated from the lots goes to the Parking Commission. Under the current proposal being considered, the Main Street lot will remain usable until the proposed building is constructed in a year or two. The parking next to the Liberty Theatre will remain a parking lot indefinitely under the proposal now before the Council, although it will be privately owned and considered essential to meeting the redevelopments parking requirements. Finally, the City invested $328,147 to purchase the National Flood Services (NFS) real estate, an improved office building on the SE corner of Main and Center, and a separate parking lot. Under the current redevelopment proposal, the NFS building will remain and will be incorporated into the 63,000 square feet of improvements planned for the comprehensive redevelopment of all of the City owned real estate on Block 36. It is important to emphasize that in addition to the NFS building, the City's purchase from NFS included a 50 x 140 improved parking lot (Lots 15 and 16 of Block 36) immediately adjacent to the 7,000 square foot Parcel 1 (Lots 13 and 14, Blake Hall site) already owned by the City. The NFS assemblage provided a 100' window or frontage on Main Street, considered by most developers who seriously considered the site as essential. The Council's decision not to pursue acquisition of the remaining parcels nor form a downtown parking district were major stumbling blocks to the sale and redevelopment of the KDC Site. Also, the Clarence W. Krepps Page 4 August 22, 1997 purchase of the NFS real estate enabled NFS to proceed with development of a new $2.3 Million building now under construction on Corporate Way allowing the company to grow to over 200 employees in Kalispell by the turn of century. The new NFS site will provide 215 stalls of parking for its employees and customers. Also, the new NFS project is within the boundaries of the City's West Side Tax Increment District and, therefore, the ad valorem tax generated will contribute an estimated $46,000 annually to the tax increment district if the tax base is stabilized throughout the district. The new NFS project will not impact schools or county services and will more than likely pay back the entire City investment in approximately 7 years. The annual tax bill downtown was $6,080 and even though the property became tax exempt after the City's purchase, taxes estimated at $6,080 for the entire 1997 calendar year were deducted from the purchase price at closing. According to the President and CEO of NFS, without the City's acquisition of the NFS real estate on Block 36, it would have moved its operations outside of Kalispell or possibly outside of the State of Montana. One could consider the investment of only $1,641 per job as an economic development incentive with the side benefit that the City will enhance its tax base by at least $2.3 Million while also eliminating another major impediment to the sale of the KDC site. (Note: The $328,147 price tag for the NFS acquisition includes $2,000 for appraisal services and another $2,147 for an essential environmental audit and a structural analysis of a party wall.) A simple tabulation of the City's current investment in this urban renewal project does not tell the full story of how the expenditure of public funds has been carefully considered by wise, informed, and well intentioned community leaders and has already paid significant long term and lasting dividends to this community. Allow me to reiterate: I believe all expenditures to date are investments to implement an urban renewal plan and project that has been declared "necessary and in the public interest." Already, the City's investment has produced significant beneficial dividends as partially described above and now the City can decide how in the future "public benefit" can best be assured as it considers the proposal from Irwin Davis & Company now before it. Finally, to provide an accurate recollection of redevelopment proposals formally and informally considered by the City Council over the years, I will summarize some of those considered. Many of the proposals received involved site and building schematic plans, market analysis, and an investment of both time and money by Clarence W. Krepps Page 5 August 22, 1997 the developer but were withdrawn prior to a request for formal Council consideration for many reasons. The following is representative of proposal descriptions included in our files and is by no means an all inclusive representation of the number or serious and qualified developers the staff has worked with over the years: 1. A 1991 informal proposal from Architects Design Group on behalf of clients considering a 3-story 34,000/SF office building located on the SE corner of Main and Center and a 4-story 100 unit hotel/motel located on the NW corner of First Ave East and 1" Street East with only 161 stalls of parking including a lot on Parcel 3 (Liberty Theater - Glacier Hall site). The proposal was never formally presented because of the lack of financing for a hotel/motel, the uncertainty of acquisition of the remaining private holdings, and the limited parking. 2. A March 1991 informal proposal for a $5.94 Million, 65,000/SF 4-story office building from a Spokane, Washington, developer. The developer's representative conducted extensive market analysis and withdrew the proposal because he was unable to find enough professional office tenant users willing to consider the economic rent or cost of occupancy necessary to profitably develop the building. Additionally, the project required assemblage of the remainder of Block 36 and consideration of a public parking district. 3. A fall 1990 - spring 1991 consideration of a Hardy Inn Apartment Hotel - General Offices Headquarters which later evolved into a proposed Hilton Inn. The project was abandoned due to lack of financing and a nationally and regionally depressed market for hotel/motel investments. 4. In the summer of 1992 staff began meeting with Ken Yachechak Investments. In September 1992, Mr. Yachechak wrote "...The FVCC site currently being offered for sale by the City of Kalispell is still our top preference, however, several constraints make the site difficult to develop as my client wishes to proceed... My recommendations have been submitted for review by my client and I anticipate some type of decision in the near future..." On August 24, 1993, almost a year later, Mr. Yachechak submitted an Offer to Purchase 42,000 square feet of the 63,083 square feet of City Clarence W. Krepps Page 6 August 22, 1997 owned property offered for redevelopment. The offer was for Parcel 2 only, the easterly %z of Block 36, for $336,000 or $8.00/SF. Because the redevelopment proposal did not meet the minimum requirements for Offers To Purchase and the developer would not disclose the intended use of the property or the type or size of building to be constructed and a myriad of other reasons, both the KDC and the City Council rejected the "Offer to Purchase" as submitted by the developer and asked the City Manager to do what he could to encourage a proposal that would comply with the Minimum Requirements established by the City Council. A copy of the City Manager's August 30, 1993, letter to Mr. Yachechak is attached. Mr. Yachechak has never formally responded to Mr. Williams' letter nor has he called me for assistance about this or any another proposal. 5. During 1992 and throughout the spring and early summer of 1993, staff worked with Anderson Theatre Company, owner of the Strand, Liberty, and Gateway Cinema for the redevelopment of "Liberty Square," a multiplex addition to the existing facility. All parties were confident there was a way to bring this project on line and the City Council had enthusiastically endorsed the project. Anderson Theatre Company engaged an architect to proceed with working drawings and bid the project and also ordered a full real estate appraisal as part of a loan package it was negotiating with a local lender. Best efforts could not bring this project to fruition and on July 28, 1993, Thomas E. Hines, Anderson Theatre Company's General Manager, wrote Mayor Rauthe a letter withdrawing its proposal and to "publicly state the reasons why we had to chose another alternative." A copy of Mr. Hines' letter is attached. 6. During 1994 and 1995 many developers considered the KDC site and awaited resolution of the debate over formation of a public parking improvement district —with participation in a parking SID as their preferred method of meeting their parking requirements. Some awaited a clear indication of market demand for Class A professional office space or small, quality CBD oriented retail. Limited Main Street access and/or frontage was always a concern for the large developer but economics and an almost unlimited supply of relatively inexpensive land and/or buildings distracted developers with an eye only to the bottom line and a quick return on investment. Clarence W. Krepps Page 7 August 22, 1997 During this period Bee Broadcasting, Inc., represented by Mike Stocklin, began negotiations and finally settled on Parcel 3, the 14,800 square foot SW corner of First Avenue East and 1" Street East. Bee offered to pay $105,612 or $7.50 per square foot for the land and to construct a 3-story building with a value of approximately $1.3 Million and to provide 28 on -site parking stalls. The deal was secured with an earnest money deposit on March 5, 1995, and within minutes of the City Council's adoption of a resolution authorizing the sale, Benny Bee made an appearance before the council and withdrew his offer stating parking and timing delays as the reason but later acknowledged that his low offer to purchase a building in Evergreen had just moments before the meeting been accepted by the seller. Today there are many versions of what happened with the Bee Broadcasting proposal. This version is a matter of record. 7. In January - February 1996 the City Council entertained an informal proposal for "Depot Square," indicating "strong support and encouragement" for a redevelopment of Block 36 as a multi -story multi- million dollar development by an informal partnership of Kalispell business leaders. The Depot Square partners enthusiastically and aggressively pursued and marketed their project through the spring and early summer of 1996 scaling back and modifying the original proposal as they went. Finally, they informed the City that they lacked the financial commitment necessary to proceed with the project and it also appeared that assemblage of the remaining privately held property on Block 36 was a stumbling block. 8. in May - June 1996 the City was approached by L/Abrams Ventures of Irvine, California, indicating an interest in working with Jackola Engineering Co., Meredith Construction Co., Goodman Real Estate, and Marshall Murray, the Depot Square Partners, or developing the property on its own account for retail tenants it represented. The L/Abrams proposal replaced the Depot Square proposal by June 1996 and was the subject of much debate during the preparation of the FY 1997 City Budget and public meetings. I have attached an August 16, 1996, Memo outlining the project and issues to be considered by the City Council on August 19, 1996. Land assemblage, the use of eminent domain, parking, street closures and even the future of the tax increment program itself were hotly debated. There was even a news Clarence W. Krepps Page 8 August 22, 1997 story about L/Abrams' California redevelopment projects on the front page of the Sunday, September 1, 1996, Daily Inter Lake. Still L/Abrams persisted with its proposal. Finally, after lengthy consideration and discussion, the City Council elected not to exercise eminent domain or to close 1" Street East. Suffice it to say, L/Abrams withdrew and abandoned its plans for Kalispell and the KDC Site. The quest for a developer continued, including discussion of selling the pieces or parcels or portions of the site rather than the entire site. This possibility was discussed with several individuals who had expressed interest in the past for less than the total offering including National Flood Services. By the spring of 1997, it was determined that National Flood Services, under new ownership and management, was willing to sell its real estate and consider the site or others within the City of Kalipell to accommodate expansion plans. However, NFS' expansion plans exceeded earlier expectations and could not be accommodated on the KDC site without additional land and low cost parking. Concurrently, and independently, staff was working with David Irwin of Irwin Davis & Company and others. This brief history of the KDC Site may be of interest to you and newer members of the City Council less familiar with what actually took place and why the City invested in the property in the first place and then established clear policy and acted on decisions to guide and direct its staff. The City's public record and files reflect the accurate history and expenditures of the KDC site. I will be glad to answer any questions you may have or to furnish copies of the correspondence from developers. 4 Atchs 1. Summary of City Expenditures - Kalispell Downtown Center (KDC) Site 2. Ltr from Bruce Williams to Ken Yachechak, dated August 30, 1993 3. Ltr from Thomas E. Hines to the City of Kalispell, dated July 28, 1993 4. Memo dated August 16, 1996, Re: L/Abrams Venture - KDC Site Option cc: KDC Executive Board Members Summary of City Expenditures Acquisition of Property (4190) $530,000 Money from a Tax Increment Bond (11/85) Sale of $2.1 M Bond of which $1 million was used to purchase and demolish. Two years free rent to FVCC Property Appraisal $9,200 Original Appraisal $4,200 Update by Jacobson (9/90) $5,000 City Assessments Paid by TIF $9,405 Decorative Street Light $3,131 Street Light $539 Street Maintenance $3,697 Storm Sewer $2,038 Demolition (7191) $380,594 Historical Photo Documentation $1,133 Printing of Demolition Specs $175 Relocate Street Light Electrical Service $2,255 Base Bid for Demolition $246,500 Asbestos Testing/Melton Hall Roof $112 Engineering Analysis on Common Wall/Liberty Theater $1,500 Asbestos Removal Bid $84,700 Site Restoration after Demolition (fill & compaction) $25,400 Removal of underground fuel tank $5,003 TetraTech Investigation for UST $2,463 Test Wells & Groundwater Monitoring $9,800 Dust Control Spray $1,553 Marketing $2,500 Offering Documents, Advertising Parking Lot Improvements On the KDC Site $57,527 Liberty Parking Lot (35 spaces) $43,866 First Street East & Main Street Lot (23 spaces) $13,661 Purchase of National Flood Property & Improvements $328,147 Appraisal/Gary Ryan $2,000 Phase 1 Environmental Auditll etraTech $1,577 Common Wall Structural Analysis/Gordon'Prill" Drapes $570 Purchase of Land & Improvements $324,000 Total Estimated Costs to Date: $1,317,373 22-Aug-97 7"elephone (406) 752-6600 P.O. Rox 1997 Zip 59903-1997 August 30, 1993 Mr. Ken Yachechak Ken Yachechak Investments Montana Building, Suite 11 33 2nd Street East Kalispell, Montana 59901 Dear Mr. Yachechak: The Gly oi Kalispell - J Incorporated 1892 This is to acknowledge your OFFER TO PURCHASE Parcel 2, approximately 42,000 square feet including all of Lots 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11 and 12, Block 36, Kalispell Montana. Parcels 1, 2 and 3 are all the subject of a "solicitation of offers to purchase" dated March 2, 1992, which establishes the Minimum Requirements of OFFERS TO PURCHASE on pages 14 through 16. The Minimum Requirements set forth by the City are the statutory requirements of the Montana Urban Renewal Law; and, because the City has not published a legal "public notice" inviting proposals, and your OFFER TO PURCHASE does not comply with the Minimum Requirements of Offers To Purchase, the City of Kalispell is unable to comply with item 3. (F) of your OFFER TO PURCHASE. Your cashier's check for $10,000 as earnest money is returned herewith. While we are unable to accept your OFFER TO PURCHASE at this time, I would like to assure you that the City wants to encourage you to proceed with your consideration and plans for the redevelopment of the property. i have forwarded your OFFER TO PURCHASE to our Planning, Economic and Community Development Department Director, Larry Gallagher. Larry is the person responsible to assist you with your proposal so that it will comply with the Minimum Requirements. On behalf of the City, i would like to offer some suggestions which may help facilitate review of your redevelopment proposal. First, while the price you have offered for the property is within the "suggested price range" per square foot, we have no way of evaluating the full impact of your offer without a more complete description of the total redevelopment project proposed and its cost. Before it sells land, the City must have a complete description of the redevelopment project proposed. The City must consider not only the purchase price offered, but such other factors as: potential to further the goals and objectives of the Douglas Roulhe Mayor Bruce Williams Cify Manager CH, Council Members: Gary W. Hysrul Ward I Cliff Collins Ward I Barbara Moses Ward 11 Fred Buck Ward iI Jim Minson Ward iII touren Granrno Ward III Parnela B. Kennedy Ward IV M. Duane Larson Ward IV Mr. Ken Yachechak August 30, 1993 Page 2 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. Your Offer to Purchase is silent on Parcel 1, the 7,000 square foot corner of Main Street and First Street East. The City must also evaluate the impact your offer will have on Parcel I if it is not purchased and developed in conjunction with Parcel 2. Parcel I could become an uneconomic remnant, usable only for park or parking if it is left to be sold on a stand alone basis because of anticipated off-street parking requirements. More than likely, the City will require that Parcel 1 be incorporated into any redevelopment proposal for Parcel 2 of Block 36; thus, I urge you to consider how your redevelopment plans may incorporate Parcel I or at least suggest how it may be developed singly and still meet off-street parking requirements. The City is in the process of updating July 1992 cost estimates for aerial to underground utility relocation. The 1992 estimate was $165,445. It probably is more today. This cost, if incurred by the city, must be evaluated with the overall redevelopment proposal and the estimated "tax increment" the project will generate. The City has complied with all of the "Corrective Action for Petroleum Release" required by the State of Montana Department of Health and Environmental Sciences. We believe that the MDHES "confirmed release" should be sufficient for any lender and/or purchaser considering redevelopment of the site. Further, the City will furnish all of the information it has regarding environmental contamination to prospective purchaser(s) enabling them to conduct their own environmental audit of the site(s); however, it will not warrant against environmental contamination. Brian J. Wood, our Zoning Administrator has addressed your contingencies 3.(B) and (D) in a Memorandum dated August 30, 1993. Both Mr. Gallagher and I sit on the Site Review Committee and can assure you that all proposals for redevelopment of the KDC site will be expedited. The parking requirements of the City of Kalispell Zoning Ordinance should be amended by the end of September 1993. With regards to your Contingency 3(E), it is unlikely the City would commit to a sale of the parcel(s) until it could evaluate all aspects of the redevelopment proposal and the financial and legal ability of the persons making such proposals to carry them out. Before the City could obligate itself to undergrounding of utilities or other considerations, it would require a formal Redevelopment Agreement between the parties. The Redevelopment Agreement would then bind the parties to specific performance including initiation of construction. This is particularly important when the City considers its capacity to issue a final tax increment bond before September 1996, the "sunset" date for the project. Mr. Ken Yachechak August 30, 1993 Page 3 Finally, I want to assure you the City of Kalispell is encouraging you to proceed with your redevelopment plans for the area. Please feel free to call on Larry Gallagher, to assist you with your proposal and to meet the Minimum Requirements of OFFERS TO PURCHASE as set forth in the City's solicitation of offers to purchase. The document will be updated as soon as the City Council has taken formal action to amend the parking requirements. We look forward to working with you in a public/private partnership to encourage your redevelopment proposal. Sincerely, CITY OF KALISPELL Bruce Williams, City Manager cc Kalispell City Council Larry Gallagher Glen Neier Kalispell Development Corporation t if, NL=ETIr Wednesday July. 28, .1993 iU L 2 c f The Honorable'Doug Rauthe City. Hall ry Kalispell,,•• MT Mr. -Mayor,, I .regret that . _must formally .inform the City of . Kalispell , that -I must ..withdraw our proposed "Liberty Square" project..I do this with a great,•sense of . oss personally and also a feeling of loss for the , °Uptown" area and for the city. .1 feel it, -proper in light of the'negative street talk to, publicly state the reasons why we.had to'chose another alternative. _TIME and MONEY! Because of the relatively short_ construction season in .the Flathead . we felt °.that we had to start an expansion pro7ecf no .later than duly .l . of this, year::.. f In August of'.1992.we received -the appraisal on the Gateway Cinema; . to -gay the 'least we were disappointed. It would allow. us to raise the capital for -only about..600. of -the Liberty Square project.- So with a good idea of how mucap�tal we could raise we looked at out alternatives : The only -alternative that appeared within budget was to expand at the Gatetiia� To, try to blame anyone q any en , t _`fOt the demise of "Liberty �r r y Square.!,- is napproprrae..;. Tiiepp�rase dxd his job to the best of • his ability; the bankers, dicever thing.;they could within -the limitations imposed on them. 77 f And the city. people, Laro ' St Glenn and the City Council were . all, supportive and, nette� in a , ,very, . 'positive manner, they.. wanted: a�i`iss,;ar�c+_--� F-'Ppei too .> To make ..it possible : " we had. to provdeuax"n Inc the- taxpayers 'had to be :paid .for their. land.. For anyon e.�I s. -the city..-fo give, us .the a-. taxpayers;' .land � n th� .politic;al atmosp_ ere that ,pervades this county;-. is -in 'La- La Land. The if6df welhad .-negotiated; with the City on arki n ut them in" or ation o p ,. g p p providing us -with �-at least $3-00; 000 of parking .for'anh, 67 o00 i, _ hey. dicinit :get; the' parking -problem resolved. If `they did g :^ s�resolved we`.would have .gotten our. $67., G00 back and ,.paid' 'into --parking district, along with everyone : else'.'. on -that par, of -the deal I felt that every. "Uptown" business person would. have ` won had the parking problem been solved; . and there was no way I could lose.:>: P.O..Box.9?7 Kalispell, MT 59901 (406) 755®8428. - R` . r . ., _.4' - 0- To say that any one fumbled the.:ball is, just not appropriate;':" ,felt a .compelling need_ to make -:a move this constrr Otio, season and' - the only real choice we., ad,i we moved on. : - ,. S i .a I personally want to thank every, -ong Involved with "Liberty Square". • -It was''a positive fearn'n( experience` -,for -most of .us. r -,i.7 , r .. . Y i Y Sincerely , , - � . _: — � C I . — — .;i I — �-- -- , "' , , _,�','v , ­­ -- — — � , . , - .--- ,- � 11� 1, - - Thomas.= E ' :Hines : a �i ' ` s t General: Manager r � �` F rt,` 4 r I 1 az,- r 1 x ` �•� r _ ti� t A y 7; K s s b } ,x Lk a Y `F - °c- 3 1. CC. N_ r `, y , v i 4 T .,f . - 1 Mayor Rauthe '.t ,'' ". /C'►i//t1�y,.Manager . ' ' ; --'� s 'z _ -� - . CDC r 41 k x 7 n _. fi. � T tl1. S T y i G < i;. i .,' J.r •. 1 ^'ems t - t .k - 1 L - p v �'.: - 4 1 r -3.y-} z. �,r fit, i.. .. .T J r� r b _ t, aL r,- .y., .j f K „ ti .1 r- "� , * 'i r r �.�.' a.�k '��.•�. buy s - c�, 2 r { r i3 r Kr . ! . 'S 'r-Jl : t i r'' _S . - y, L "ti K d ..: µ f {r v-. 7 S ti r 'J i. t - - R t i { .k t 9 H r .- _ _ a F Y C j l f 1 t i. :} N I . - - F 2 -i j X . 4 7 . . a . " 1 S i _ _. .. . -- J' _ R .. '_ . r . i . s ` P. , a R .� . .. . . r �. - .. , . w . . ... ... :. . :. - ., f , . - F - l h0 cif of UNd Incorporated 1892 Planning, Economic & Community Development Department P.O. Box 1997 Kalispell, MT 59903-1997 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 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 Clarence W. Krepps, City Manager - Ai 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 and/or 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 - Al 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. 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: 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 0 40' 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 a 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. Larry Gallagher City of Kalispell RE: Resume' of Real Estate Development Experience King Management/Bert E. Arnlund Development 1). 1972 - Purchased raw land at 2506 Phyllis Lane, Billings, MT. Built a Mazda Dealership. 2). 1976 -Expanded Mazda Dealership to include American Motors franchise and additional new car and used car display area. 3). 1980 - Purchased property. Built a new car dealership for Chrysler Plymouth at 2540 Phyllis Lane, Billings, MT. 4). 1983 - Purchased additional property. Expanded Chrysler Plymouth Dealership to include additional showroom and an 82000 sq. ft. facility to accommodate automobile reconditioning, leased to CarNu, i.e. Don Davidson. 5). 1985 - Purchased Carbon Implement at 1838 King Ave. West, Billings, MT. Did a $600,000 renovation and addition converting it to an automobile dealership. 6). 1989 - Purchased Red Gables Motel at N. 15' St. & I" Ave. N., Billings, W. Removed motel, converted property for automotive display purposes and leased on a long term basis. 7). 1.994 - Purchased 12 lots in Phoenix, AZ. Built 12 townhouses over a period of 2 years and marketed the final unit in September of 1996. 8). 1996 - Purchased 40 acres in north Scottsdale, AZ. Subdivided to 46 lots and currently installing infrastructure to be completed by year end to begin marketing building sites. 9). 1997 - Purchased property in Scottsdale, AZ, i.e. Via Vista to build a spec house, currently under construction, to be completed in September 1997. This is a $700,000 project.