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06. KDC Site - Approval of SaleAgenda -October 6, 1997 AGENDA ITEM 6 - KDC SITE -APPROVAL OF SALE -AUTHORIZATION FOR CITY MANAGER TO SIGN FINAL DEVELOPMENT AGREEMENT BACKGROUND/CONSIDERATION: Since the September 15 Council Meeting, the staff has met with and discussed the various factors for the sale of this property to Irwin Davis Company. We have been able to agree to terms that should be satisfactory for us. As a summary the m,or deal points are outlined below: 1. The brokerage fee that was discussed at our prior meetings will be paid by the buyer. The City will not be responsible for any of these costs. 2. The project will be built in phases. The first phase of the project shall be no less than 18,000 square feet to be constructed on the southeast corner of the property. Construction shall begin no later than August 1, f998. 3. The second phase of the project shall be no less than 12,000 square feet constructed on the northern portion of the property fronting Center Street. This phase shall commence construction December 31, 1999. If the buyer has not begun construction by that date, the City shall have the right to repurchase the northern portion of the property at the same price ($6.65 psi) within 60 days (commencing on January 1, 2000). If the City does not desire to repurchase the property, the buyer shall have no further development obligation and may sell the property. This parcel of property will be approximately 140 feet by 185 feet or 25,900 square feet. 4. With the exception of the terms outlined above, the buyer shall not transfer or sell any portion Agenda -October 6, 1997 of the property until the completion of the planned Phase I improvements. 5. The buyer shall not rely on the income approach of valuing property when contesting any property taxes or assessments. The National Flood property is not a part of this agreement. However, Irwin Davis Company may bid for this property to improve their holdings. RECOMMENDATION: At this time, I believe all of the concerns voiced by the Council and staff concerning this deal have been addressed in favor of the City. To enable us to fulfill a very long standing goal of the sale and development of the old college property, I highly recommend the approval of the sale and the authorization for the City Manager to sign the development agreement with the deal points outlined above and within the letter of September 11, 1997 from Woods and Water Realty. We have enclosed a "draft" copy of the development/purchase agreement that outlines all of the commitments of the buyer and/or seller (City). This is 90% complete but some language questions remain. There will be no major changes to this agreement or draft. If a major change should come up, we will return to you for discussion of the changes prior to signing the document. ACTION REQUIRED: A MOTION to direct the City Manager and the City Attorney to compile a development agreement for this property with Irwin Davis Company and to authorize the City Manager to sign the agreement when completed to their satisfaction. ADDITIONAL INFORMATION: I have enclosed cost estimates and a memo from Larry Gallagher summarizing the CBD/KDC site improvements that we have anticipated to be done in conjunction Agenda -October 6,1997 with the Irwin Davis project. We budgeted a total of $1,786,000 of infrastructure improvements to this area. The Irwin Davis project does not add any costs with the exception of two concrete driveway approaches at $1,500 estimated costs. The Irwin Davis proposal does increase the need to install the signals at First Avenue and Center Street prior to the project completion since there will be parking lot entrances causing more traffic movements that will require a "platooning" effective for traffic control. By "platooning" the traffic, the vehicles existing or turning into the parking lot will be able to do so under controlled conditions, increasing the safety of the entire block's traffic. Upon signing of the purchase and development agreement, I will be requesting from the Council authorization to proceed with the design of the improvements as outlined in Mr. Gallagher's spreadsheet and as approved within this year's budget. I would anticipate this authorization request to be at the October 20' Council Meeting. 1 1 cll 0 Incorporated 1892 Planning, Economic & 248 Third Avenue East Community Development Department (406) 758-7740 P.O. Box 1997 (406) 758-7739 (office fax) Kalispell, MT 59903-1997 (406) 758-7758 (City Hall fax) To: Clarence Krepps, City Manager From: Larry Gallagher, PECDD Director Subject: Cost Estimates for CBD Public Infrastructure Improvements and Recommendation to Proceed with Design and Engineering and Preparation of Bid Specifications. Date: October 2, 1997 The attached summary spread sheet provides preliminary cost estimates for implementing public infrastructure improvements identified and approved in the City's FY98 Budget. The estimates are preliminary and based on estimates provided to Ross Plambeck by Pacific Power, PTI, TCI, Quantum Electric, and Public Works. They represent the best estimate available at this time and cannot become more accurate until the City enters into a contract for design and engineering, including preparation of cost estimates, and the bid documents are completed. I recommend that you request City Council approval to move forward with this next phase of the work as soon as possible. The estimate includes the cost of engineering and design and a 20% contingency. The 20% contingency has been added to provide a high side estimate because of the complexity of undergrounding utilities. The project is for the entire length of 1It Alley East from Center Street to 4th Street East and there may be additional items to consider including: storm drainage improvements (especially to handle roof drainage and disconnecting them from sanitary sewer), decorative street lights, sidewalk replacement adjacent to the alley driveway approaches; and additional security lighting for the alleys and abutting parking lots. These public infrastructure improvements have been contemplated in the last four City budgets and moving forward with the work now will allow the City a great opportunity, perhaps fleeting, to participate with Pacific Power and PTI in a 50-50 cost sharing of undergrounding their utilities. Utilities (Montana Power) normally do not contribute hard dollars to projects such as this one, but under current PSC rules, Pacific Power must contribute 50% of the eligible cost. The PSC may be asked to modify or eliminate the shared cost requirement in the future. EOUP[ r.OLIV-47 OPPORTUNITY Clarence Krepps, City Manager Page 2 October 2, 1997 Several years ago the City relocated and placed underground the utilities located in 1 st Alley West as part of an overall plan to improve the appearance and parking adjacent to the alley. It succeeded in that objective and improved the function and capacity and overall safety of utilities as well. The City received many compliments for its tax increment participation in the project. This refined, yet still preliminary, total cost estimate is less than the amount budgeted for these activities based on the best guess estimate developed over the years for City budget consideration and approval. The work should be done now to take advantage of utility company participation and cost sharing, to enhance the public investment in its infrastructure, to improve utility company (including the City) capacity to serve its customers with modern equipment capable of handling the loads put on utilities today, to upgrade all utilities to the extent feasible and assuring availability for the continued growth and expansion of the CBD. The reasons are many and have been discussed by planners and policy makers for many years. If the work is going to get done it should get underway as soon as possible. Please review the estimates and provide your suggestions on how to move forward with this work. Please contact Ross Plambeck with any questions you may have regarding the preliminary estimates. Cost Estimates for Urban Renewal/CBD Off -Site Public Infrastructure Improvements Estimates are preliminary and will be refined when design and engineering are completed. Infrastructure Undergrounding FY98 Improvements: Utilities for Budget Center St. Remaining Utilities & to Liberty 21/2 blocks Traffic Signal Theater (City Share) Undergrounding of Utilities Center Street to SW comer of Liberty Theater (1 112 blocks) Electrical/City's 50% share (per Pacific Power estimate) (PP will pay the other 50% of eligible costs) Conduit Material (City's Responsibility) Installation of Conduit/Labor (City's Responsibility) Electrical Service Change over to adjoining buildings (guestimate made by Quantum Electric per Pacific Power Request) Telephone/City's 50% share (perPTI estimate) (PTI will pay the other 50% of eligible costs) Cable TV (per TCI estimate) Concrete Alley Replacement (450 LF x 20' width) (south 1/2 of alley is badly broken -up and trenching is difficult because alley is 8" thick concrete with rebar) Street AsphalttRemove & Replace (90SY x $18.50) Undergrounding Utilities Total Standard Concrete Sidewalk Replacement (600 LF) excavation of old basement walls will cause extensive damage to the sidewalks. Large sections of existing sidewalks are broken -up, and installation of street trees, antique lights and conduit will require removal of many sections) Concrete Curb & Gutter Replacement (the old driveways were left in place awaiting new development) Concrete Driveway Approaches (KDC site Specific) Street Trees (4) (will continue the theme started in the CBD) Decorative Antique Street Lights (8) (will continue the theme started in the CBD) Traffic Signal - First Ave. East & Center Street Slipline 10" Sewer Total 20% Contingency 15% Engineering Total Project Estimate Combined Project Total - Center St. to 4th St. East. Difference - Incr(Decr) from Budgeted Amount $70,000 $140,000 $31,470 $61,600 $14,820 $36,510 $18,000 $102,000 $36,330 $217,965 $2,040 $3,240 $52,650 $87,750 $1,665 $3,330 $226,976 $652,395 $16,500 $2,000 $1,500 $2,000 $40,000 $1,676,000 $120,000 $110,000 $68,000 $107,730 $476,975 $760,125 $95,395 $152,025 $85,856 $136,823 $658,226 $1,048,973 $1,786,000 $1,707,198 ($78,802) 02-Oct-97 4i 044"ti41v 4,1a THIS AGREEMENT is made and entered into as of , 1997, by and between the City of Kalispell, a municipal corporation, organized and existing under the laws of the State of Montana, hereinafter CITY, and Irwin Davis & Company, a Washington limited liability company, with its principal place of business at 13522 NE 93 Street, Redmond, WA 98052, hereinafter IRWIN. WHEREAS, CITY is the owner of certain real property, described as Lots 1 though 14, Block 36 and Lots 1 through 4 and the North 7" of Lot 5, Block 45, Kalispell, Montana, and WHEREAS, CITY is authorized to dispose of the said property under the Montana Urban Renewal Law for purposes consistent with the Downtown Urban Renewal Plan for the City of Kalispell, and WHEREAS, IRWIN desires to purchase from the CITY said property for the construction of retail/office complex in accordance with Development Agreement, attached hereto and thereby made a part hereof. NOW, THEREFORE, the parties agree as follows: 1. IRWIN agrees to purchase from CITY and CITY agrees to sell to IRWIN certain real estate located in Kalispell, Flathead County, Montana,- described as follows: - Lots 1 through 14, Block 36 and Lots 1 through 4 and the North 7" Block 45, Kalispell, Flathead County, Montana. 2. PURCHASE PRICE. The purchase price to be paid by IRWIN to CITY shall be in the sum of Four Hundred and Nineteen Thousand, Four Hundred and Ninety Three Dollars ($419, 493.00) . 3. PAYMENT OF PURCHASE PRICE. The purchase price shall be paid by IRWIN to CITY in the following manner: A. The sum of Twenty One Thousand Dollars ($21,000.00) as an earnest money down payment, put in escrow upon acceptance of this Purchase Agreement. B. The balance of the purchase price in the amount Three Hundred and Ninety Eight Thousand, Four a:\purcagree.wpd. October 3, 1997 1 Hundred and Ninety Three Dollars ($398,493.00) shall be due and payable to the Sellers at closing. 4. CONTINGENCIES. IRWIN shall have until March 16, 1998 to satisfy itself concerning the following contingencies relating to the purchase of said property: A. Review and approval of all environmental, soils and engineering reports associated with the property; B. Completion of IRWIN'S feasibility analysis in a form acceptable to IRWIN, C. Receipt of financing commitment. IRWIN shall have the right to extend the Contingency Period for an additional ninety (90) days for additional consideration of $10,000.00, non-refundable, presented to the CITY on or before March 16, 1998 In the event the contingencies cannot be satisfied to IRWIN'S satisfaction IRWIN shall have the right to withdraw from this Agreement and CITY shall return the earnest money deposited under 3.A. 5. CLOSING DATE. IRWIN and CITY mutually agree to close said sale within 30 days of the -end of _the Contingency Period, but not later than 5:00 P.M. Mountain Standard Time, April 15, 1998, unless extended a provided under paragraph 4 in which case the closing shall be not later 5:00 P.M. Mountain Daylight Time on June 15, 1998. 6. POSSESSION. Possession of the said property shall be given to IRWIN by CITY at closing. 7. TITLE INSURANCE. CITY agrees to provide to IRWIN, at CITY'S expense, an owner's commitment for title insurance (on ALTA Form 1990-B) insuring said property purchased hereunder for the sum of Four Hundred and Nineteen Thousand, Four Hundred and Ninety Three Dollars ($419,493.00), insuring good and marketable title to be in the CITY'S name; subject, however, to easements and right-of-way for utilities, highways and storm sewers of record. 8. CITY'S REPRESENTATIONS AND WARRANTIES. As a further inducement to IRWIN to enter into this Purchase Agreement a:\purcagree.wpd. October 3, 1997 2 and to consummate the transaction contemplated by this Purchase Agreement, CITY warrants to IRWIN as agree as follows: A. CITY has good and insurable title to the premises and the personal property and all other property to be transferred hereunder. The title to be granted and conveyed shall be merchantable, fee simple title free and clear of all matters except those exceptions described in the Title commitment, if approved, or otherwise waived by IRWIN or provided for herein; B. City has full right, power and authority and have take all requisite actions to enter into this Purchase Agreement and to grant, sell, and convey said property to IRWIN as provided in this Purchase Agreement and to carry out its obligation as set forth in this Purchase Agreement. C. CITY has not received notice from any governmental authority of any violation affecting the premises and the personal property and all other property to be transferred hereunder except as disclosed in writing to IRWIN prior to the execution of this Purchase Agreement, if any; D. There are not pending improvement liens or special assessments to be against the premises by any governmental authority or third party, except as otherwise disclosed in writing to IRWIN prior to the execution of this Purchase Agreement. E. No work has been performed or is in progress by CITY or at the direction of CITY, and no materials have been furnished to the premises or any portion thereof, which might give rise to a mechanic's, materialman's construction or other liens against said property. F. No consent or approval of any person, entity or governmental agency or authority is required with respect to the execution and delivery of this Purchase Agreement by CITY and, as of the closing date no unobtained consent or approval will be required with respect to the consummation by CITY of the transactions contemplated hereby or the performance by CITY of its obligations hereunder. a:\purcagree.wpd. October 3, 1997 3 G. CITY shall not grant, sell, convey, or encumber said property prior to closing date. H. Said property is not subject to any leasehold interest and CITY further agrees that CITY will not enter into any lease of said property. I. There are not disputes concerning the lines and corners of said property, which lines and corners are clearly marked and there are no encroachments upon said property. J. There is not indebtedness outstanding and no outstanding or unpaid bills incurred for labor and material in connection with said property, or for service of architects, surveyors, or engineers in connection with said property. K. Said property is served by dedicated public streets and any alley and there are no right of way adjustments pending that will materially affect said property. L. There are no, taxes, assessments or liens against said property for any present or past due taxes or for paving, sidewalk, curbing, sewer, or other improvements of any=kind. M. As of the closing date, there will be no outstanding, pending, or threatened suits, judgments, executions, bankruptcies, condemnation proceedings, zoning changes, or any other proceedings pending or on record in any court of any nature or before or by any governmental or administrative agency which could in any manner now affect IRWIN'S title to, possession of, or use of said property, or which could now or hereafter constitute a lien upon said property or materially or adversely affect or change said property. N. CITY is not surety on any bond or indebtedness wherein through the default thereof, a lien against said property would be created without further legal action. 0. As of the closing date, there will be no recorded or unrecorded liens, security interest, security a:\purcagree.wpd. October 3, 1997 4 agreements, or UCC financing statements against said property. P. Said property is not subject to any federal, state or local "Superfund" lien proceedings, claim, liability or action, or the treat or likelihood thereof, for the cleanup, removal or re -mediation of any "hazardous substance" from said property, and CITY has not cause and will not cause, and to the best of the CITY'S knowledge there never has occurred a release, leak, discharge, spill, disposal, or emission of any "hazardous substance" as of the date hereof. As used in this Purchase Agreement, "hazardous substance" means any substance that is toxic, ignitable, reactive, or corrosive and that is regulated by any local government, State of Montana, or the United States. "Hazardous substance" includes any and all material or substances that are defined that are defined as "hazardous wastes", extremely hazardous waste" or Hazardous Substance" pursuant to state, federal or local governmental law including without limitation CERCL, SARA, RCRA, the Clean Water Act, the OSHA Act, or the Toxic Substance Control Act. "Hazardous Substance" includes but is not restricted to asbestos, petroleum products, nuclear fuel or materials, known carcinogens, urea formaldehyde, foamed -in -place insulation, and polychlorinated - biphenyl (PCB' s) . In the event that any of the representations and warranties set forth in this Paragraph are not true in any material respect as of the closing date or if CITY otherwise defaults hereunder, IRWIN may terminate this Purchase Agreement on or at any time prior to the closing date and the Earnest Money shall be immediately returned to IRWIN. 9. IRWIN'S REPRESENTATIONS AND WARRANTIES. IRWIN represents and warrants as follows: A. That IRWIN has the right, power and authority to purchase said property subject to the terms and conditions as provided under this Agreement, and execute, deliver and perform its obligation under this Agreement. B. To IRWIN'S actual knowledge, there exists no a:\purcagree.wpd. October 3, 1997 5 action, suit, litigation or proceeding which would limit IRWIN'S ability to purchase said property and to perform the terms and conditions of this Agreement. 10. CLOSING DOCUMENTATION. At the closing, the CITY shall deliver to IRWIN, a standard form of Montana Grant Deed conveying title to said property. 11. OPERATING EXPENSES, COST, CHARGES AND PROPERTY TAXES. CITY shall be responsible and shall pay for all operating expenses which have accrued or shall become due prior to the closing date. All operating expenses shall be read and finalized, if reasonably possible, as of the closing date. 12. RISK OF LASS. N/A 13. ZONING. The CITY represents that the property is properly zoned for all uses outlined in the proposal of which the Purchase Agreement is part for the City of Kalispell, Montana. 14. CITY OF KALISPELL. Purchase is subject to satisfactory review by IRWIN of any changes made by review of City of Kalispell or other governing agency. 15. SOIL TESTS. PURCHASE is subject to satisfactory review by IRWIN of soil tests. 16. BROKERAGE FEE. Brokerage fees, if any, shall be the responsibility of IRWIN. 17. SPECIAL PROVISION ON REPURCHASE. Commensurate with the execution of this Agreement IRWIN and the CITY have entered into a Development Agreement for the redevelopment of the said property. With regard to performance under the Development Agreement the parties agree that IRWIN has until December 31, 1999 to commence performance under the Phase II improvements described in said Development Agreement. If the Developer has not commenced construction on or before December 31, 1999, the City may, at City's option, re -purchase the northerly portion of the Project Property designated for Phase 2 (approximately 140' by 1851) for the price of $6.65 per square foot. In the event the City does not re -purchase said property within 60 days, commencing January 1, a:\purcagree.wpd. October 3, 1997 6 2000, then the Developer shall have no further obligations with regard to the Improvements in Phase II, nor will the Developer have any obligation offer the property to the City. 18. NOTICES. Notices shall be given under this Agreement upon delivery to the address set forth below either by certified mail or by delivery from nationally -recognized, overnight delivery service. Notices shall be delivered to the following addresses: To CITY: City Manager City of Kalispell P.O. Box 1997 Kalispell, MT 59901 To IRWIN: Irwin Davis & Company 13522 NE 93rd Street Redmond, WA 98052 19. BINDING EFFECT: This Agreement shall be binding upon the parties hereto, their heirs, successors and assigns. Dated this day of October, 1997. IRWIN DAVIS & COMPANY CITY OF KALISPELL BY: Its: a:\purcagree.wpd. October 3, 1997 i BY: Its: DEVELOPMENT AGREEMENT This Agreement is made as of , 1997, by and between the City of Kalispell, Montana, a municipal corporation and political subdivision of the State of Montana, (the City), and Irwin Davis & Company, a Washington limited liability company (LLC), with its principal place of business at 13522 NE 93 Street, Redmond, WA 98052,( the "Developer"). WITNESSETH: WHEREAS, the City is a general powers city, existing and organized under the constitution and the laws of the State of Montana; and WHEREAS, the City has elected to exercise the powers of an urban renewal agency, pursuant to Title 7, Chapter 15, Parts 42 and 43, Montana Code Annotated as amended (the "Act"), and Ordinance No. 933 of the City, adopted by the City Council on September 10, 1979, and WHEREAS, Ordinance No. 933 adopted the Kalispell Downtown Redevelopment Plan as the urban renewal plan (referred to hereafter as the Redevelopment Plan) for the urban renewal area known as the Kalispell Downtown Redevelopment Area (referred to hereafter as the Redevelopment Area); and WHEREAS, Ordinance No.-933 states that in order to implement and effectuate the Redevelopment Plan, it will be necessary for the City to take certain actions with reference to "the upgrading and improvement of public and private utilities within the project area, provisions for public parking, the rehabilitation of residential and commercial structures, and acquisition of real and personal property, the relocation of person(s) displaced by acquisition of real property, the demolition and clearance of structures acquired by the City where necessary, the provision of public improvements, providing building or site preparation for disposal for private or public redevelopment, the rehabilitation and moving of structures, the disposition of acquired property for public and private redevelopment and/or rehabilitation;" and WHEREAS, the Redevelopment Plan, as adopted and implemented contains a tax increment financing provision coextensive with the Redevelopment Area; and WHEREAS, the Redevelopment Plan has been amended by Ordinance a:\devagrl.wpd October 3, 1997 -1- No. 1243, adopted by the City Council on July 15, 1996; and WHEREAS, Ordinance No. 1243 approved as an urban renewal project the Kalispell Downtown Center (KDC) Development to be located within the Redevelopment Area (referred to hereafter as the Project), authorized the use of tax increment revenues to finance certain infrastructure improvements necessary to the Project, and WHEREAS, Irwin Davis & Company, as the Developer, and the City desire to encourage the highest and best use of the property within the Redevelopment Area, and NOW, THEREFORE, in consideration of the foregoing premises and the mutual obligations set forth in this Agreement, the parties hereto hereby agree as follows: ARTICLE I Definitions Section 1.1. Definitions. In this Agreement, unless a different meaning clearly appears from the context: "Act" means Montana Code Annotated Title 7, Chapter 15, Parts 42 and 43, as amended. "Agreement" means this Development Agreement, - as the same may be from time to time modified, amended or supplemented. "Assessed Valuation" means the value of property as determined by the Department of Revenue in accordance with the Montana Code Annotated. "City" means the City of Kalispell, Montana. "Construction Plans" means the plans, specifications, drawings and related documents for the construction work to be performed by the City and Developer on the Project Property, which (a) shall be at least as detailed as the plans, specifications, drawings and related documents which are submitted to the building official of the City and (b) shall include at least the following: (1) site plans; (2) foundation plans; (3) elevations on all sides; (4) landscape plan; (5) grading plan; (6) utility plan; and (7) Infrastructure plan. "Developer" means Irwin Davis & Company or a new entity to be called Kalispell Center Partners to be formed for the express purpose of development under this agreement. a:\devagr1.wpd October 3, 1997 -2- "Infrastructure Improvements" means the list of improvements and work requirements to be constructed by the City under 2.2.(h). The improvements listed in 2.2 (h) include improvements that are located adjacent to (off -site) the Project Area. "Project" means the Project described in this Agreement. "Project Area" means that tract of land comprising Lots 1 through 14, Block 36, and Lots 1 through 4 and the North 7" of Lot 5, Block 45, Kalispell, Flathead County, Montana, together with the alley adjacent to said property and the right-of-way along Center Street, 1't Avenue East and Vt Street East and Main Street. "Project Property" means the real property in the Project Area on which the Project will be constructed. "Section" means a section of this Agreement, unless used in reference to Montana Code Annotated. "State" means the State of Montana. "Tax Increment" means the collections realized from extending the tax levies, expressed in mills, of all taxing bodies in which the urban renewal area is located against the incremental taxable _ value. "Tax Increment Financing Plan" means Tax Increment Financing Plan for Tax Increment Financing adopted by the City Council dated September 10, 1979 and July 15, 1996. "Time Table" means the schedule of performance dates for certain actions by the City and Developer under this Agreement. "Unavoidable Delay" means a failure or delay in a party's performance of its obligations under this Agreement, or during any cure period specified in this Agreement, which does not entail the mere payment of money, not within the party's reasonable control, including but not limited to acts of God, governmental agencies, or the other party, strikes, labor disputes, fire or other casualty, lack of materials, or delay caused by injunction or other court order, or declaration of invalidity pursuant to Montana law by initiative or referendum provided that within 10 days after a party impaired by the delay has knowledge of the delay it shall give the other party written notice of the delay and the estimated length of the delay, and shall give the other party written notice of the actual length of the delay within 10 days after the cause of the delay has ceased to exist. The parties shall pursue with reasonable diligence the avoidance and removal of any such delay. a:\devagr1.wpd October 3, 1997 -3- Unavoidable Delay shall not extend performance of any obligation under this Agreement unless the notices required in this definition are given as herein required. ARTICLE II Representations and Warranties Section 2.1. By City. City makes the following representations and warranties to Developer: (a) City, under the Act, Ordinance No. 933 and Ordinance No. 1243 has the power and authority to enter into this Agreement and carry out its obligations hereunder. (b) The Project is an "urban renewal project" within the meaning of the Act and has been approved by the City Council in accordance with the terms of the Act, Ordinance No. 933 and Ordinance No. 1243. (c) The Urban Renewal Plan, as approved by Ordinance No. 933, contains a provision for tax increment financing for the Redevelopment Area and since 1980 tax increments have been collected, segregated by the County Treasurer and transferred to the City for the benefit of the Redevelopment Area. (d) The City has on hand, in its Tax. Increment Fund,.or has the authority to borrow, at least sufficient funds to -complete its obligations under this Agreement. (e) The City has determined that the infrastructure improvements described in 2.2 (h) hereto (the "Infrastructure Improvements") are necessary to the development of the Project. (f) The cost of designing, engineering, acquiring and constructing the Infrastructure Improvements are costs that can be financed through tax increments pursuant to Section 7-15-4288 of the Act, and the City Council has authorized the use of tax increments to finance those improvements, subject to Article III. Section 2.2 By Developer. Developer represents and warrants that: a Developer ( ) per is a duly organized under the laws of the State of Washington, is. to do business in the State of Montana, has power to enter into this Agreement, and has duly authorized the execution, delivery and performance of this Agreement. a:\devagr1.wpd October 3, 1997 -4- (b) Developer will purchase from the City Lots 1 through 14, Block 36, and Lots 1 through 4 and the North 7", Block 45, for the sum of Four Hundred and Nineteen Thousand, Four Hundred and Ninety Three Dollars ($419, 493.00) s (c) Developer will, subject to the provisions of this Agreement, construct on the Project Property: i) In Phase I, a retail/office complex of at least 18,000 square feet on the Southeast corner of Block 36, together with all related on -site improvements including, but not limited to, off-street parking, landscaping, and on site utilities, with construction to commence on or before August 1, 1998. ii) In Phase II, a retail/office complex of at least 12,000 square feet on the Northerly portion of the property fronting on Center Street, together with all related on -site improvements including, but not limited to, off-street parking, landscaping, and on site utilities, with construction to commence on or before December 31, 1999. (d) Developer estimates that the costs of acquiring the Project Property, designing, -and constructing the retail/office- complexes, as described in subparagraph (c)(i) above will be approximately $1,300,000.00. The parties understand that the actual assessed valuation of the Developer's portion of the real property as determined by the Montana Department of Revenue may be greater or lesser than the estimates. (e) Developer has obtained or has available to it sufficient ig to perform and complete its obligations under-`€+ h t i A r m n (f) Developer is aware of the Infrastructure Improvements which are the responsibility of the City described in 2.2 (h) and the on site improvements associated with this Agreement and represents and acknowledges that the construction of such improvements are necessary to the development of the Project. (g) Developer has requested that the City pay the costs of designing, acquiring and installing the following infrastructure a:\devagr1.wpd October 3, 1997 -5- improvements: under -grounding of all above ground utilities (electrical, telephone and cable TV) in the alley adjacent to Blocks 36 and 45; curbs, gutters, landscaping and decorative lights and street improvements, all within city rights -of -way. ARTICLE III Infrastructure Improvements Section 3.1. Sequence coordinating with the Developer, specifications to be prepared fc and will enter into construction accordance with the competitive law, and will supervise the con improvements in the same manner City. The City may at its opti construction of the Infrastruc personnel. The City will comp: Improvements and commence the con solicitation of bids, public noti of the Agreement, provided that proceeding by court order or c petition. After construction bic budget and time table for the Ir. prepared by the City and then t approval of the Developer. The line items for each of -the itemz based on the actual bids recei.vec anticipate that the City will , commence construction of the Infx than ,1998. The C Improvement bid(s) as soon as pi bidding procedure and require the construction of the Infrastru( of Events. The City, after shall cause construction plans and r the Infrastructure Improvements contracts for such improvements in bidding requirements of Montana struction and installation of the s other public improvements of the )n proceed with the design and/or .ure Improvements utilizing City ete design of the Infrastructure petitive bidding process including ces and advertising upon execution the City is not prevented from .elay occasioned by a referendum s are opened, a final construction frastructure Improvements will be e reviewed by and subject to the construction budget will include shown in 2.2. Ah) and shall .be for each line item. The parties Lccept bid(s) and be prepared to astructure Improvements not later ity shall award the Infrastructure acticable after completion of the successful bidder(s) to complete Lure Improvements on or before , 1998, when Developer plans on opening its retail/office complex for business. Developer will commence construction of its on -site improvements on or before The City will coordinate the design and construction of the Infrastructure Improvements with the Developer and will require its engineers and contractors to coordinate design and construction with the Developer, the engineer and contractors to ensure maximum efficiency to the City and Developer in the construction of the Infrastructure Improvements and the Project. Section 3.2. Limitations on City's Commitment. The City shall use its tax increment revenues to pay for the costs of only a:\devagr1.wpd October 3, 1997 -6- these infrastructure improvements listed in Section 2.2(h). Section 3.3. Developer's Commitment. In the event public infrastructure improvements other than those listed in Section 2.2(h) are required, the Developer and the City shall agree on the extent of Developer's commitment to be responsible for Infrastructure Improvements at the time that the construction budget and time table are received and finalized. The cost of the additional infrastructure improvements exceeding the City's financial commitment described in Section 2.2(h) above shall be satisfied in one or more of the following manners to be agreed upon by the parties: (a) Low priority improvements which are not absolutely essential shall be eliminated as work requirements to reduce overall costs. (b) Developer agreeing to complete specific line items at its own expense with a contractor of its choice. (c) Developer agreeing to deposit sufficient funds with the City Finance Director to pay a certain amount of any shortfall to cover the cost of a specific Infrastructure Improvement. Section 3.4. Developer's Right to Withdraw from Project. Both parties understand and agree that the parties, as a condition precedent to any 'further -obligations of the Developer under this contract and prior to the City accepting any bids, must agree in - writing on the following: (a) Detailed construction plans and specifications describing the work to be performed. (b) Construction budget based on actual bids received. (c) Time Table for construction. (d) Developer's obligations under Section 3.3 above. Developer shall have the right to withdraw from this Agreement and to terminate all obligations hereunder unless written agreement is reached on each of the above items not later than March 16, 1998. Delivery of proceeds of sale and transfer of deed to the property described in Section 2.2(b) shall be no later than 5:00 p.m. MST on April 15, 1998. Section 3.5. Developer shall also have the right to withdraw from this Agreement and to terminate all obligations hereunder if a:\devagr1.wpd October 3, 1997 -7- the City is prohibited from either contributing its share of project costs pursuant to Section 3.2 above or proceeding further with the project because of court order, injunction or by declaration of invalidity or by referendum or initiative, or other lawful excuse. ARTICLE IV Construction of the Project Section 4.1. Site Plans and Construction Plans. Developer shall submit Site Plans to the City prior to obtaining any building Permits. The Site Plans:;:;<r=» shall depict Project Area and shall show the location of the Project, the Infrastructure Improvements and other items required by this Agreement to be shown therein. The Developer shall also prepare detailed Construction Plans and specifications which shall provide for construction of the on site improvements and for construction of its re:stait/offi ce complex, $ in conformity with the Redevelopment Plan, the Site Plan, this Agreement, and all applicable state and local laws and regulations. The City shall approve the Construction Plans in writing if, in the reasonable discretion of the City the Construction Plans: (a) substantially conform to the previous plans and subsequent amendments approved by the City and conformed to, the terms and condition of this Agreements (b) conforL to the terms and conditions of the Redevelopment Plan; (c) conform to all - applicable federal, state and local laws, ordinances, rules and regulations; (d) are adequate to provide for construction of the Project; and (e) no Event of Default has occurred. No approval by the City of the Construction Plans shall relieve Developer of the obligation to comply with the terms of this Agreement, the terms of the Redevelopment Plan, applicable federal, state and local laws, ordinances, rules and regulations, or to construct the Project as provided in this Agreement subject to the Developer's right to withdraw. No approval by the City shall constitute a waiver of an Event of Default. Any disapproval of the Site Plans and Construction Plans shall set forth the reasons therefore, and shall be made within 10 days after the date of their receipt by the City. if the eity rejects the Site P±a new or revised S±te Plans or eonstruction Plans not ±ater than. 3& days 6fter wr±tten not±ficativn to Developer of the rejection. Th k'- sions of this Section relating to approval, rejection and cont±nte to apply unti± the Site Pians and eonstruction Plana ha a:\devagr1.wpd October 3, 1997 -8- Section 4.2. Construction of the Project. (a) Subject to Unavoidable Delays, Developer and the City will construct the Project without encroachment onto any other property all in accordance with the Site Plan, the Construction Plans and the Time Table. The City will be responsible for the proper supervision of and completion of construction of the Infrastructure Improvements in 2.2.(h) and the Developer will be responsible for the supervision of and completion of the on -site improvements listed on Schedule 2. Neither party shall exercise any control over the other regarding their respective areas of work and division of responsibilities although the parties agree to coordinate their activities to assure maximum efficiency of the construction process. (b) All work with respect to the Project shall be in substantial conformity with the Construction Plans approved by the City. Developer shall promptly begin and diligently complete all on -site improvements. Developer shail make reports, in such det and at such times as may reasonably be requestA eity, as to the actuai progress of Developer with respect to construction o-f, the on site listed on Schedule 4'. (c) Neither the City's contractors nor the Developer will interfere with, or construct any improvements over, any public street or utility easement without the prior written approval of the City. All connections to public.. utility lines. and facilities shall be subject to approval of the City and any private- utility company involved. Developer at its own expense shall replace any public facilities or utilities damaged during the construction of the Project within the scope of the Developer's work. Any work by the City or its contractors that causes damage to public facilities or utilities .._:.�r::::.t€�:::::Iv�l:� �r>:<:>�ta:�::le:->:=:-a�:�:�:t<�:�»:::��°>:::-. .'>��> =�'�: -�<•.:: will be repaired by the City at its own expense. Section 4.3. Certificate of Completion. (a) Promptly after completion of the on site improvements � }� in accordance with this 3't::::��::.:'?*.:. :•.r:'�Pyasp::%`:�!�...:....:....,.:............`.!:t.,..:.::.:. ..::...:...:::. _,.f �'3±;i�:� Agreement, Developer will provide the City with a certificate of substantial completion from Developer's architect, and the City will then furnish Developer with an appropriate Certificate of Completion as conclusive evidence of completion of the Developer's obligations under this Agreement. (b) If the City shall refuse or fail to provide a Certificate of Completion, the City shall, within 10 days after the Developer provides the architect's certificate referenced in Section 4.3(a), provide Developer with a written statement specifying in what a:\devagrl.wpd October 3, 1997 -9- respects Developer has failed to complete the on -site improvements in accordance with this Agreement, or is otherwise in default, and what measures or acts will be necessary, in the opinion of the City, for Developer to obtain the Certificate of completion. Defense of Claims: Insurance: Developer's Risk Section 5.1. Defense of Claims. Developer shall indemnify and hold harmless the City and its respective officers, employees and agents for any loss, damages and expenses (including attorneys' fees) in connection with any claims or proceedings arising from damages or injuries received or sustained by any person or property by reasons of any actions or omissions of Developer or its contractors, agents, officers of employees under this Agreement, other than claims or proceedings arising from any negligent or unlawful acts or omissions of the City or its contractors, agents, officers or employees. Promptly after receipt by the City of notice of the commencement of any action in respect of which indemnity may be sought against the Developer under this Section 5.1., the City will notify the Developer in writing within 10 days of the commencement thereof, and, subject to the provisions hereinafter stated, the Developer shall assume the defense of such action (including the employment of counsel, who shall be counsel satisfactory to the City and the payment of expenses) insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the Developer. The City shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the Developer unless the employment of such counsel has been specifically authorized in writing by the Developer. City shall indemnify and hold harmless the Developer and its respective officers, employees and agents for any loss, damages and expenses (including attorneys' fees) in connection with any claims or proceedings arising from damages or injuries received or sustained by any person or property by reasons of any actions or omissions of City or its contractors, agents, officers of employees under this Agreement, other than claims or proceedings arising from any negligent or unlawful acts or omissions of the Developer or its contractors, agents, officers or employees. Promptly after receipt by the Developer of notice of the commencement of any action in respect of which indemnity may be sought against the City under this Section 5.1., the Developer will notify the City in writing within 10 days of the commencement thereof, and, subject to the provisions hereinafter stated, the City shall assume the defense of such action (including the employment of counsel, who shall be a:\devagr1.wpd October 3, 1997 -10- counsel satisfactory to the Developer and the payment of expenses) insofar as such action shall relate to any alleged liability in respect of which indemnity may be sought against the City. The Developer shall have the right to employ separate counsel in any such action and to participate in the defense thereof, but the fees and expenses of such counsel shall not be at the expense of the Developer unless the employment of such counsel has been specifically authorized in writing by the City. Section 5.2. Insurance. (a) Developer will provide the following insurance for the Project and will maintain such insurance at all times during the process of constructing the Project, and at the request of the City will furnish the City with copies of policies and proof of payment of premiums on the following insurance: (i) Builder's risk insurance, written on the so-called "Builder's Risk --Completed Value Basis," in an amount equal to 100% of the replacement costs of the Project at the date of completion, with coverage on the so-called "all-risk," nonreporting form of policy; (ii) Comprehensive general public liability insurance, including personal injury liability (with employee exclusion deleted) and automobile insurance, including owned, non -owned and hired automobiles, against liability for injuries to -persons and/or -- property caused by the Developer or the Developer's agents or contractors in the minimum amount for each occurrence in the amount of $1, 500, 000; and (iii) worker's compensation insurance in compliance with all statutory requirements. The policies of insurance required under clauses (i), (ii) and (iii) above shall be in a form and a content satisfactory to the City and shall be placed with financially sound and reputable insurers licensed to transact business in the State of Montana. The policies shall contain an agreement of the insurer to give not less than 30 days' advance written notice to the City in the event of cancellation of such policy or change affecting the coverage. (b) The provisions herein with respect to Developer's maintaining insurance of the Project shall terminate at such time as the Developer has received a Certificate of Completion under Section 4.3. (c) The City shall maintain corresponding insurance coverage a:\devagr1.wpd October 3,1997 -11- for its portion of the project and will provide written proof of such insurance to the Developer. Section 5.3. Developer understands and accepts certain risks associated with proceeding with the Project. The City shall act in good faith and shall use its best efforts to assure completion of the Infrastructure Improvements in accordance with this Agreement and Ordinance No. 1243. In the event the City is unable to complete the Infrastructure Improvements in a timely manner as a result of legal challenge resulting in a court order preventing City participation in the Project or declaration of invalidity pursuant to Montana law by initiative or referendum, Developer shall have the right to withdraw from this Agreement pursuant to Section 3.5. ARTICLE VI Payment of Taxes Developer shall pay when due all real estate taxes and ti installments of special assessments payable on the Project Property. Developer and the City recognize that the State of Montana, Department of Revenue shall utilize calculator or segregated cost methods to determine the Assessed valuation of the improved real property and the Developer shall not utilize an income approach to value to protest the Assessed Valuation of said property for a period of five (5) years from the date of this agreement. ARTICLE VII Prohibitions Against Assignment and Transfer Section 7.1. Transfer of Propertv and Assignment. Developer has not made and will not make, or suffer to be made, any total or partial sale, assignment, conveyance, or other transfer of any interest in the Project or. Project Property or any part thereof or any contract or agreement to accomplish any transfer, prior to the completion of the Improvements contemplated in Section 2.2. (c) (i), (except any transfer or assignment to any related entity in which the Developer is a part) without the prior written approval of the Citv, which approval shall not be unreasonablv withheld. The City shall be a:\devagrl.wpd October 3, 1997 -12- entitled to require as conditions to any such approval of a transfer of a substantial portion of the property occurring before completion of the Project as follows: (a) the proposed transferee have the qualifications and financial responsibility, 'as reasonably determined by the City, necessary and adequate to fulfill the obligations undertaken in this Agreement by Developer, (b) the proposed transferee, by recordable instrument satisfactory to the City shall, for itself and its successors and assigns, assume all of the obligations of Developer under this Agreement. No conveyance or change of ownership of the Project Property or any part thereof, or any interest therein, however consummated or occurring and whether voluntary or involuntary, shall operate legally or practically, to deprive or limit the City's rights or remedies or controls provided in or resulting from this Agreement that the City would have had, had there been no such transfer or change. There shall be submitted to the City for review all legal documents relating to any transfer. The obligations imposed by this Agreement are covenants which run with the land so long a performance remains executory. In the absence of specific written agreement by the City to the contrary, no conveyance or approval by the City thereof shall be deemed to relieve Developer, or any other party bound in any way by this Agreement or otherwise with respect to the construction of the Project, from any of its obligations with respect thereto. Section 7.2. Termination of Limitations on Transfer. All provisions contained in this Article:7 with respect to limitations on the ability of the Developer to transfer the Project Property or the Project, or any portion thereof, shall terminate at such time as a Certificate of Completion has been issued by the City under Section 4.3 of this Agreement with respect to the Project. ARTICLE VIII Events of Default Section 8.1. Events of Default. The following shall be "Events of Default" under this Agreement and the term "Event of Default" shall mean, whenever it is used in this Agreement (unless the context otherwise provides), any one or more of the following events which occur prior to the issuance of the Certificate of Completion by the City under Section 4.3 of this Agreement with respect to the Project and continues for more than 30 days after notice by the City to Developer or from Developer to the City, as the case may be, of such default (and the term "default" shall mean any event which would with the passage of time or giving of notice, or both, be an "Event of Default" hereunder): a:\devagr1.wpd October 3, 1997 -13- (a) Failure by the Developer or the City to properly and timely construct or reconstruct the Improvements as required under this Agreement. (b) Failure of Developer to furnish the Site Plans or Construction Plans as required hereunder. (c) Failure by either party to comply with Section 3.1. (d) Failure by Developer to pay real estate taxes as required hereunder. (e) Failure by Developer or the City to observe or perform any other duty, covenant, condition, or obligation required by this Agreement. (f) If Developer or the City shall admit in writing its inability to pay its debts generally as they become due, or shall file a petition in bankruptcy, or shall make an assignment for the benefit of creditors, or shall consent to the appointment of a receiver of itself or of the whole or any substantial part of the Redevelopment party. (g) If Developer or the City shall file a petition or answer seeking reorganization or arrangement under the federal bankruptcy laws. (h) If Developer, on a petition in bankruptcy filed against it, be adjudicated a bankrupt, or a court of competent jurisdiction shall enter an order or decree appointing, without the consent of the Developer, a receiver of all or substantially all of its property, or approve a petition seeking reorganization or arrangement under the federal bankruptcy laws, and such adjudication, order or decree shall not be vacated or set aside or stayed within 60 days from the date of entry thereof. (i) If Developer is in default under any Mortgage recorded against the Project Property and fails to cure any such default within the time period provided for in the Mortgage. Section 8.2. Remedies on Default. Whenever any Event of Default referred to in Section 8.1 occurs the party not in default may take one or more of the following actions: (a) Suspend its performance under this Agreement until it receives satisfactory assurance from the other party that the defaulting party will cure its default and continue its performance under this Agreement. a:\devagr1.wpd October 3, 1997 -14- (b) Rescind this Agreement, refund moneys paid less deposit and return property to City. (c) Withhold the Certificate of Completion. (d) Take whatever action at law or in equity which may appear necessary or desirable to the non -breaching party to enforce performance and observance of any obligation, agreement, or covenant of the party in default under this Agreement. Section 8.3. No Remedy Exclusive. No remedy herein conferred upon or reserved to either party is intended to be exclusive of any other available remedy or remedies, but each and every such remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or now or hereafter existing at law or in equity or by statute. No delay or omission to exercise any right or power accruing upon any default shall impair any such right or power or shall be construed to be a waiver thereof, but any such right and power may be exercised from time to time and as often as may be deemed expedient. In order to entitle the City or Developer to exercise any remedy reserved to it, it shall not be necessary to give notice, other than such notice as may be required under this Agreement. Section 8.4. Waivers. All waivers by either party must be in writing to be enforceable. If any provision of this Agreement is breached by either party and thereafter waived by the -other party, such waiver shall be limited to the particular breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent breach hereunder. Section 8.5. Attorney Fees. If by reason of any default on the part of either party it becomes necessary for the other party to employ an attorney to pursue or enforce its rights under this Agreement, the non prevailing party shall pay to the prevailing party reasonable attorneys fees and all costs and expenses incurred in enforcing its rights under this Agreement. ARTICLE IX Additional Provisions Section 9.1. Conflict of Interests: the City Representatives Not Individually Liable. No member, official, employee, or a:\devagrl.wpd October 3, 1997 -25- consultant or employees or the consultants of the City shall have any personal interest, direct or indirect, in this Agreement, nor shall any such member, official, consultant or the consultant's employees or employee participate in any decision relating to this Agreement which affects his or her personal interests or the interests of any corporation, partnership, or association in which he or she is directly or indirectly interested. No member, official, consultant or the consultant's employees, or employee of the City shall be personally liable to Developer, or any successor in interest, in the event of any default or breach by the City or for any amount which may become due to Developer or successor or on any obligations under the terms of this Agreement. Section 9.2. Restrictions on Use. Developer agrees that it shall not discriminate upon the basis of race, color, creed, sex or national origin in the sale, lease or rental or in the use or occupancy of the Project Property or any improvements erected or to be erected thereon, or any party thereof. Section 9.3. Titles of Articles and Sections. Any titles of the several parts, Articles, and Sections of this Agreement are inserted for convenience of reference only and shall be disregarded in construing or interpreting any of its provisions. Section 9.4. Notices and Demands. Except as otherwise expressly provided in this Agreement, a notice, demand, or other communication under this Agreement by either party to the other shall be sufficiently given or delivered if it is dispatched by registered or certified mail, postage prepaid, return receipt requested, or delivered personally; and (a) In the case of the Developer, addressed to or delivered personally to Developer at 13522 NE 93 Street, Redmond, Washington, 98052, Attention: David Irwin. (b) In the case of the City, addressed or delivered personally to the City Manger, City of Kalispell, P.O. Box 1997, Kalispell, Montana 59903-1997, or at such other address with respect to either such party as that party may, from time to time, designate in writing and forward to the other as provided in this Section. Section 9.5. Counterparts. This Agreement is executed in any number of counterparts, each of which shall constitute one and the same instrument. Section 9.7. Entire Agreement. All understandings and agreements previously existing between the parties, if any, are a:ldevagr1.wpd October 3, 1997 -16- merged into this Agreement including all schedules and exhibits, which alone fully and completely expresses their agreement, and the same is entered into after full investigations, neither party relying upon any statement or representations made by the other not embodied herein. This Agreement may not be changed or terminated orally. This Agreement shall inure to the benefit of and be binding upon all successors, heirs or assigns. The executory terms of this Agreement shall not be extinguished by or merged upon sale of the property described h e r e in Section 9.8. Governing Law. This Agreement shall be deemed to have been made in, and construed in accordance with, the laws of the State of Montana. Section 9.9. TIME IS OF THE ESSENCE of this Acreement. IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed as the date first above written. "DEVELOPER" "CITY" IRWIN-DAVIS & COMPANY CITY OF KALISPELL By: By: City Manager By: Finance Director a:\devagr1.wpd October 3, 1997 -17- S`,D eS12ecta&ts_qn <-REciza&onaf & _Pjej" E)- w/V%&z!j • PROFESSIONAL HOMES HANDLINGWoo& (24id 'Wateto ACREAGE OF YOUR v� LOTS RANCHES REAL ESTATE NEEDS REALTY BUSINESS BOX 460 - LAKESIDE, MT 59922 PROPERTIES (406) 844-3395 FAX (406) 844-2031 September 11, 1997 Mr. Lawrence Gallagher Director Planning, Economic & Community Deve►opment 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 and conditions under which Kalispell Center Partners would purchase the above -referenced property: Buyer: Kalispell Center Partners Seller: The City of Kalispell Property: Parcel 1 consisting of 7000 s.f., all of lots 13 & 14 of Block 36 Parcel 2 consisting of 42,000 s.£, all of lots 1 thru 12 of Block 36 Parcel 3 consisting of 14,081.66 s.£, described as 140' x 100.5833', consisting of lots 1,2,3, -4 and the northerly 7" of lot 5. Purchase Price: $419,493.04 cash payable at closing (less earnest money deposit). Earnest Money: $21,000.00 refundable up until Bayer's removal of all contingencies. Contingency Period: Buyer will 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 planting 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 agroement setting forth an acceptable completion schedule, for the Project Requirements outlined below as numbers 1 through 4. Buyer shall have the right to extend the Contingency Period for an additional sixty (60) days by forwarding a $ 10,000.00 non-refimdable deposit to the Seller. Project Requirements: The following Project Requirements will be provided by the Seller: 1. Delivery of all environmental assessments for the subject property; 2. Relocation of all existing above -gm and utilities (electrical and phone); 3. Completion of necessary curb, gutter, sidewalk, landscape, and street improvements` within City right-of-ways. Closing: Closing shall occur within 30 days of end of Contingency Period. Documentation: Seller 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 (61/6) 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 term and conditions is not intended to bind either the Seller or Buyer. Only a fiilly-exocuted 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 September 30, 1997. We look forward to working with the City of Kalispell toward a successful completion to this project. Z y yours, David C. Thomquist Broker Associate AGREED TO AND ACCEPTED: M Its: Date: AGREED TO AND ACCEPTED: By: David B. Irwin Its: Principal Date: September 11, 1997