Howington to Council/Authorization on Airport IssuesCr b City of Kalispell
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Post Office Box 1997 - Kalispell, Montana 59903
Telephone: (406) 758-7701 Fax: (406) 758-7758
MDNT.9 NA .
TO: Mayor Fisher and members of Council
FROM: Jane Howington, City Manager'
RE: Review of Authorization on Airport Issues
DATE: August 16, 2010
Council has requested a review of how various actions related to the airport were conducted and
under what authority. The following is a summary of legislation enacted by Council regarding the
bond authorization and the purchase and leasing of Red Eagle.
Date Legislative Summary of action
Reference
8/2004 R4930
Authorizes purchase of (2) Torgenson parcels
Vests city manager w/ authority to enter into agreement
10/2004 R4941
Standard lease terms for airport specified
Vests city manager w/ authority to execute leases
2/2005 R4976
Intent to bond airport improvements including purchase of Red Eagle
& setting public hearing
Estimate of $600K for Red Eagle
2/2005 R4978
Call for a public hearing to amend redevelop plan
Indentifies Red Eagle purchase as part of phase 1
Repeats cost estimates including Red Eagle
2/2005 R4979
Intent of Declaration to bond
Repeats cost estimates including Red Eagle
3/2005 R4989
Approves phase 1 improvements
Repeats cost estimates including Red Eagle
3/2005 R4990
Authorizes issuance of $2M bond for phase 1(inereased from
estimate of $1.7M)
Delegates certain duties to city manager, mayor, and finance
director
Authorizes city manager and finance director to prepare and negotiate
on behalf of city with final terms and conditions adopted by council
7/2005 01541
Authorizing issuance of $2M bond
8/2005
Purchase and Sale Agreement of Red Eagle signed by mayor
8/2005
FBO lease signed by city manager
9/2005 R5051
Ratifying sale of bonds: form and terms
Vests execution with city officials and specifies Mayor, city clerk,
and finance director
Based on the above legislative actions, it appears the city has followed the prescribed. approval
process for the issuance of bonds, the amendment of the redevelopment plan and the TIF financing,
and the authorization of specific city officials to implement the work associated with these actions.
There are several questions, however, that are difficult to discern from the legal documents of our
public processes.
First is the question of how the purchase of Red Eagle went from $600,000 to $760,000 and
under what authority did this occur.
All legislative records include the estimates up to March of 2005. On March 16, 2005, Barrie
Appraisal & Consulting, LLC submitted an updated appraisal of the Red Eagle property estimating
the market value of the property as $735,000. At that time, the bond issuance increased from $1.7M
to $2M. More specifically, Resolution 4990 spoke of "up to $2M" and stipulated "The form of the
Bonds and the final terms and conditions thereof shall be prescribed by a subsequent resolution to
be adopted by this Council." This implies the final terms (including purchase of Red Eagle) are to
be negotiated by staff and those final terms shall be ratified by Council. The language of "up to
$2M" also implies the estimated costs may vary from the final negotiated costs.
The second question that has been brought up is under what authority did the Mayor sign the
purchase and sale with Red Eagle.
Resolution 4990 delegated certain duties to the mayor, the city manager, and the finance director.
Following the format laid out in Resolution 4990, these city officials would negotiate a purchase
and sale which either the mayor or the city manager would signed on behalf of the city via the
authorization prescribed in Resolution 4990. The terms and conditions of the purchase and sale
would then be included in the final bond package which would be ratified by Council. In this case,
the purchase and sale was signed in August of 2005 and the ratification by Council occurred in
September 2005 via Resolution 5051.
The third question 1 was requested to address pertains to Jim Patrick signing the FBO lease
agreement.
Similarly to the Mayor's signing of the purchase and sale, Resolution 4990 delegated duties of
negotiations to city officials in relation to the bond issuance and the phase I improvements. The
purchase and sale, along with the FBO lease agreement, were tied together with both the bond
issuance and the phase 1 improvements. This is further corroborated as both the lease and the
purchase and sale were signed on the same date: August 26, 2005. As stated above, the FBO lease
was integral to the purchase of Red Eagle and was done in advance of the final ratification by
Council of the sale of the bonds (Resolution 5051).
The last question pertained to the required vote to sell or lease property owned by the city. M.C.A.
7-8-4201, requires a two-thirds vote to lease property.
Resolution 4990 authorizing the negotiation, purchase and sale, and FBO lease agreement with Red
Eagle passed with a vote of eight -to -one on April 4, 2005. Resolution 5051 ratifying the
negotiations and agreements passed with a vote of seven -to -two on September 6, 2005.
I hope this information provides clarification to the process the City went through relative to phase
1 improvements to the City Airport and the issuance of the bonds relative thereto. As always,
should you have any questions on this information, please let me know.