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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 11/16/2021 - FIRST READING OF ORDINANCE NO. 157, 2021, APPROPRI Agenda Item 14 Item # 14 Page 1 AGENDA ITEM SUMMARY November 16, 2021 City Council STAFF Nina Bodenhamer, City Give Director Ken Mannon, Operations Services Director John Duval, Legal SUBJECT First Reading of Ordinance No. 157, 2021, Appropriating Prior Year Reserves from the General Government Capital Expansion Fee Account in the Capital Expansion Fee Fund for the Purchase of the Condominiums in the Civic Center Parking Structure. EXECUTIVE SUMMARY The purpose of this item is to appropriate $975,000 from the reserves in the City’s General Government Capital Expansion Fee Account in the Capital Expansion Fee Fund to be used for the acquisition of the eight condominium units located at 144 North Mason Street and which are on the ground floor area along the western face of the City’s Civic Center Parking Structure (the “Condominiums). The purchase price for the Condominiums is $975,000, which is substantially below their appraised fair market value of $3,700,000. The difference between the appraised fair market va lue and the $975,000 purchase price is being made by the current owner of the Condominiums, Civic Center, LLC, as a charitable donation to the City. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on First Reading. BACKGROUND / DISCUSSION City Give Since its inception in 2018, City Give has facilitated a range of donations of real property from 26 acres of property for the expansion of the Two Trees Natural Areas to water shares; from mineral rights to five acres adjacent to the Southridge Greens golf course. The donation of real property is a tangible investment in the City’s mission, values and services to our residents. Asset-based giving requires strict adherence to IRS guidelines and depends on the staff determination if any potential donation is in the long-term best interests of the City. Per IRS requirements, an appraisal must be performed by the seller within 60 days of closing to substantiate a charitable gift. The Condominiums The Condominiums are in a 15,629-square foot, urban office condominium building located at 144 North Mason, in Fort Collins, Colorado. Constructed in 2001, and renovated in 2014, the Condominiums consist of eight individual commercial condominium units within the City’s Civic Center Parking Structur e. Units 1 and 2 are currently combined for occupancy by Fort Collins Police Services. Units 4, 5, and 6 are combined and operate as an executive office suite facility with private offices and shared conference and reception areas. Units 3, 7 and 8 are each separately leased to businesses. Agenda Item 14 Item # 14 Page 2 The Condominiums are owned by Civic Center, LLC (“Civic Center LLC”). However, the Condominiums are located on real property currently owned by the City, which property is the ground floor area along the western face of the City’s Civic Center Parking Structure (the “Property”). In 1998, the City entered into a ground lease with Phelps Program Management LLC (“PPM”) leasing the Property to PPM for a term ending December 31, 2039, (the “Ground Lease”). The Ground Lease provides that when it terminates in 2039, the City becomes the owner of the Condominiums without any payment obligation to the Ground Lease tenant. In 2003, PPM sold the Condominiums and assigned its rights and obligations under the Ground Lease to Civic Center LLC. Civic Center LLC has owned the Condominiums since then and leased the units to various entities and businesses. As such, Civic Center LLC is also the current tenant under the Ground Lease. Charitable Donation Civic Center LLC and the City have been in negotiations to enter into a Purchase and Sale Agreement (Agreement) under which Civic Center LLC will convey the Condominiums to the City and Civic Center LLC and the City will agree to the termination of the Ground Lease. Civic Center LL C has agreed to do this for $975,000 even though it has an appraisal (Attachment 1) that its interests in the Condominiums and Ground Lease have a fair market value of $3.7 million. Civic Center LLC wishes to donate the difference between this $3.7 million fair market value and the $975,000 as a charitable donation to the City. However, the City’s obligation under the Agreement to purchase the Condominiums is contingent on the City approving this Ordinance appropriating the $975,000 from the reserves in th e City’s General Government Capital Expansion Fee Account in the Capital Expansion Fee Fund (General Government CEF Reserves). Also, Civic Center LLC needs for this transaction be completed by the end of this year for tax reasons. Use of General Government CEF for Acquisition Council will also be considering a Resolution to approve the City’s Civic Center Master Plan (the “Master Plan”) and to adopt the Master Plan as an element of the City’s Comprehensive Plan. The Master Plan identifies the Condominiums as capital improvements within the “Civic Center Area” to be acquired by the City by end of this year to house the offices of the City’s Parking Services Division. Parking Services is currently in the City’s 215 North Mason Street building. Moving Parking Services to the Condominiums will also allow the Municipal Court offices to expand within the Mason Street building. If Council approves Resolution 2021-105, the General Government CEF Reserves may be used to acquire the Condominiums. The City Code authorizes the General Government CEF Reserves to be used to fund the construction or acquisition of capital improvements to be used to provide “general government services,” such as offices for Parking Services, if such improvements are identified in an “applicable capital improvements plan,” such as the Master Plan. Here, the Condominiums have been so identified in the Master Plan. As required by Section 9 in City Charter Article V, the Interim City Manager is recommending this supplemental appropriation and has determined the funds for it are available in and previously unappropriated from General Government CEF Reserves. The management, utilization and operations of the Condominiums will be guided per City strategic priorities and the designation of “public purpose” which defines IRS charitable exemptions and must be used to provide general government services, as opposed to more specific services such as utilities or uses covered by other capital expansion fees. For example, the City collects a capital expansion fee to fund capital improvements to be used for police, fire, community park, neighborhood park and transportation services. CITY FINANCIAL IMPACTS Capital expansion fees are paid by new development to “buy -in” into the estimated value of the capital improvements the City must provide its services related to transportation, fire, police, general government, neighborhood parks, and community parks. The collected fees are then used to fund the acquisition, construction and leasing of future capital improvements to provide such services needed due to new development. The General Government CEF Reserves have a current balance of approximately $12 million. Agenda Item 14 Item # 14 Page 3 This Ordinance, if adopted, will authorize the reduction of the General Government CEF Rese rves by $975,000. ATTACHMENTS 1. Appraisal (PDF) 2. Council Finance Committee Minutes (excerpt) (PDF) CIVIC CENTER CONDOMINIUMS 144 NORTH MASON UNIT 1-8 FORT COLLINS, COLORADO 80524 CBRE FILE NO. 21-224NW-6118-1 CLIENT: POST MODERN DEVELOPMENT APPRAISAL REPORT CBRE VALUATION & ADVISORY SERVICES ATTACHMENT 1 VALUATION & ADVISORY SERVICES 3003 East Harmony Road, Suite 300 Fort Collins, CO 80528 T (970) 372-3872 F (970) 372-3839 www.cbre.com Date of Report: September 20, 2021 Crystal Greylock POST MODERN DEVELOPMENT 144 North Mason Street Unit 4 Fort Collins, Colorado 80524 RE: Appraisal of: Civic Center Condominiums 144 North Mason Unit 1-8 Fort Collins, Larimer County, Colorado 80524 CBRE, Inc. File No. 21-224NW-6118-1 Dear Ms. Greylock: At your request and authorization, CBRE, Inc. has prepared an appraisal of the market value of the referenced property. Our analysis is presented in the following Appraisal Report. The subject is a 15,629-square foot, urban office condominium building located at 144 North Mason, in Fort Collins, Colorado. The improvements were constructed in 2001, and renovated in 2014. The subject consists of eight individual office/retail condominium units attached to the Civic Center Parking Garage. Units One and Two were combined for occupancy by the Fort Collins Police Department. Unit Three is leased to Innop, LLC a local coworking/incubation space. Units Four, Five, and Six were combined and operated as an executive office suite facility with private offices and shared conference and reception areas. The Health District of Northern Larimer County occupies Unit Seven and Thom Kha Thai Bistro occupies Unit Eight. Based on the analysis contained in the following report, the market value of the subject is concluded as follows: MARKET VALUE CONCLUSION Appraisal Premise Interest Appraised Date of Value Value Conclusion As Is Leased Fee Interest September 7, 2021 $3,700,000 Compiled by CBRE The report, in its entirety, including all assumptions and limiting conditions, is an integral part of, and inseparable from, this letter. The following appraisal sets forth the most pertinent data gathered, the techniques employed, and the reasoning leading to the opinion of value. The analyses, opinions and conclusions were Crystal Greylock September 20, 2021 Page 2 developed based on, and this report has been prepared in conformance with, the guidelines and recommendations set forth in the Uniform Standards of Professional Appraisal Practice (USPAP), and the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. The intended use and user of our report are specifically identified in our report as agreed upon in our contract for services and/or reliance language found in the report. As a condition to being granted the status of an intended user, any intended user who has not entered into a written agreement with CBRE in connection with its use of our report agrees to be bound by the terms and conditions of the agreement between CBRE and the client who ordered the report. No other use or user of the report is permitted by any other party for any other purpose. Dissemination of this report by any party to any non-intended users does not extend reliance to any such party, and CBRE will not be responsible for any unauthorized use of or reliance upon the report, its conclusions or contents (or any portion thereof). It has been a pleasure to assist you in this assignment. If you have any questions concerning the analysis, or if CBRE can be of further service, please contact us. Respectfully submitted, CBRE - VALUATION & ADVISORY SERVICES Katlyn J Sullivan Jon Vaughan MAI, SR/WA Senior Appraiser Director Certified General Real Estate Appraiser: State of Colorado No. CG20002474 Certified General Real Estate Appraiser: State of Colorado No. CG100000631 Phone: 405-760-0893 Phone: 970-372-3872 Email: Katie.sullivan@cbre.com Email: Jon.vaughan@cbre.com Subject Photog raphs ii Civic Center Condominiums, Fort Collins, Colorado Subject Photographs Aerial View Subject Certification i Civic Center Condominiums, Fort Collins, Colorado Certification We certify to the best of our knowledge and belief: 1. The statements of fact contained in this report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions and are our personal, impartial and unbiased professional analyses, opinions, and conclusions. 3. We have no present or prospective interest in or bias with respect to the property that is the subject of this report and have no personal interest in or bias with respect to the parties involved with this assignment. 4. Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 5. Our compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 6. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice, as well as the requirements of the State of Colorado. 7. The reported analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the requirements of the Code of Professional Ethics and Standards of Professional Appraisal Practice of the Appraisal Institute. 8. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. 9. As of the date of this report, Jon Vaughan, MAI, SR/WA has completed the continuing education program for Designated Members of the Appraisal Institute. 10. Katlyn Sullivan and Jon Vaughan, MAI, SR/WA have made a personal inspection of the property that is the subject of this report. 11. Collin Peterson provided significant real property appraisal assistance to the persons signing this report by way of researching and confirming comparable sales, researching market data and estimating and reconciling values. 12. Valuation & Advisory Services operates as an independent economic entity within CBRE, Inc. Although employees of other CBRE, Inc. divisions may be contacted as a part of our routine market research investigations, absolute client confidentiality and privacy were maintained at all times with regard to this assignment without conflict of interest. 13. Katlyn Sullivan and Jon Vaughan, MAI, SR/WA have not provided appraisal services, regarding the property that is the subject of this report, within the three-year period immediately preceding acceptance of this assignment. However, Jon Vaughan, MAI, SR/WA provided appraisal services for subject property just over the three-year period in July of 2018, identified by CBRE file number 18-271PH-1382-1. Katlyn J Sullivan Jon Vaughan, MAI, SR/WAS Senior Appraiser Director Subject Photog raphs iii Civic Center Condominiums, Fort Collins, Colorado Westerly view of the west elevation Northerly view of the west elevation Southerly view of the west elevation Exterior patio Post Modern Development reception Post Modern Development waiting area Subject Photog raphs iv Civic Center Condominiums, Fort Collins, Colorado Rear hallway Additional view of the vacant office space Shared break room for vacant space and Post Modern Development Typical view of Innop LLC Typical view of Innop LLC Health District of Northern Larimer County’s reception / waiting area Subject Photog raphs v Civic Center Condominiums, Fort Collins, Colorado Health District of Northern Larimer County supply’s room Typical Health District of Northern Larimer County’s office Health District of Northern Larimer County’s supply room break room Tom Kha Thai Bistro’s reception/ dining room Tom Kha Thai Bistro’s bar Tom Kha Thai Bistro’s Kitchen Executive Summary vi Civic Center Condominiums, Fort Collins, Colorado Executive Summary Property Name Location Parcel Number(s) Client Highest and Best Use As If Vacant As Improved Property Rights Appraised Leased Fee Interest Date of Inspection Estimated Exposure Time Estimated Marketing Time Primary Land Area 0.38 AC 16,466 SF Zoning Improvements Property Type Office Number of Buildings 1 Number of Stories 1 Gross Building Area 15,629 SF Net Rentable Area 15,629 SF Year Built / Renovated 2001 / 2014 Effective Age 18 Years Remaining Economic Life 32 Years Condition Good Buyer Profile Owner-User Financial Indicators Current Occupancy 64.0% Stabilized Occupancy 95.0% Stabilized Credit Loss 1.0% Overall Capitalization Rate 6.50% Comments (Multi Tenant) Civic Center Condominiums September 7, 2021 Mixed-use Mixed-use 144 North Mason Unit 1-8 Fort Collins, Larimer County County, CO 80524 POST MODERN DEVELOPMENT 9711469901, 9711469902, 9711469003, 9711469004, 9711469005, 9711469006, 9711469007, 9711469008 6 - 12 Months 6 - 12 Months D (Downtown District) by the City of Fort Collins Pro Forma Total Per SF Effective Gross Income $326,771 $20.91 Operating Expenses $87,405 $5.59 Expense Ratio 26.75% Net Operating Income $239,365 $15.32 VALUATION Total Per SF Sales Comparison Approach $3,750,000 $239.94 Income Capitalization Approach $3,600,000 $230.34 CONCLUDED MARKET VALUE Appraisal Premise Interest Appraised Value As Is Leased Fee Interest $3,700,000 Compiled by CBRE September 7, 2021 Date of Value Executive Summary vii Civic Center Condominiums, Fort Collins, Colorado STRENGTHS, WEAKNESSES, OPPORTUNITIES AND THREATS (SWOT) Strengths/ Opportunities • The subject property is attached to the Civic Center Parking Garage • The subject is across Laporte Avenue to the south of the Downtown Transit Center • The subject is located on City-owned land, which substantially reduces property taxes Weaknesses/ Threats • The subject property is situated behind the Larimer Courthouse, which reduces foot traffic on this block • The subject has relatively high vacancy EXTRAORDINARY ASSUMPTIONS An extraordinary assumption is defined as “an assignment-specific assumption as of the effective date regarding uncertain information used in an analysis which, if found to be false, could alter the appraiser’s opinions or conclusions.” 1 • None noted HYPOTHETICAL CONDITIONS A hypothetical condition is defined as “a condition, directly related to a specific assignment, which is contrary to what is known by the appraiser to exist on the effective date of the assignment results but is used for the purposes of analysis.” 2 • None noted 1 The Appraisal Foundation, USPAP, 2020-2021 2 The Appraisal Foundation, USPAP, 2020-2021 Executive Summary viii Civic Center Condominiums, Fort Collins, Colorado OWNERSHIP AND PROPERTY HISTORY OWNERSHIP SUMMARY Item Current Current Ownership Owner:Civic Center LLC Purchase Price:$1,088,647 Transaction Date:Dec 8, 2003 Sale in Last 3 Years?:No Legal Reference:20030156652 County/Locality Name:Larimer County Buyer/Seller Relationship Type:Arm's length and reasonable At / Above / Below Market:At Market Comments:The property was purchased in core-and-shell condition, and all interior finishes were completed subsequent to the 2003 purchase of the property. Pending Sale Under Contract:No Current Listing Currently Listed For Sale:No Compiled by CBRE The property previously sold on Dec 8, 2003 for $1,088,647, or $69.66 per square foot. We are unaware of any additional ownership transfers of the property in the last three years. Further, the property is not reportedly being offered for sale as of the current date. The current owner, however, noted intentions to donate the property to the City of Fort Collins. EXPOSURE/MARKETING TIME Current appraisal guidelines require an estimate of a reasonable time period in which the subject could be brought to market and sold. This reasonable time frame can either be examined historically or prospectively. In a historical analysis, this is referred to as exposure time. Exposure time always precedes the date of value, with the underlying premise being the time a property would have been on the market prior to the date of value, such that it would sell at its appraised value as of the date of value. On a prospective basis, the term marketing time is most often used. The exposure/marketing time is a function of price, time, and use. It is not an isolated estimate of time alone. In consideration of these factors, we have analyzed the following: • exposure periods for comparable sales used in this appraisal; • exposure/marketing time information from the PwC Real Estate Investor Survey; and, • the opinions of market participants. The following table presents the information derived from these sources. Executive Summary ix Civic Center Condominiums, Fort Collins, Colorado EXPOSURE/MARKETING TIME DATA Exposure/Mktg. (Months) Investment Type Range Average Comparable Sales Data 3.0 -19.0 6.0 PwC Suburban Office National Data 1.0 -15.0 7.3 Local Market Professionals 6.0 -12.0 9.0 CBRE Exposure Time Estimate CBRE Marketing Period Estimate Various Sources Compiled by CBRE 6 - 12 Months 6 - 12 Months B.Civic Center Parking Structure – Real Estate Opportunity Nina Bodenhamer, Director, City Give Ken Manon, Director Operations Services SUBJECT FOR DISCUSSION Tentative Purchase & Charitable Donation of Civic Center Condominiums EXECUTIVE SUMMARY The purpose of this items is to discuss the tentative purchase by the City of the real property and improvements located at 144 N. Mason St., Units 1 through 8, Fort Collins, Colorado, 80524. The City has negotiated a cash sale price for the property of $975,000, substantially below the property’s appraised market value of $3,300,000. The $2,325,000 difference between the estimated market value in the Appraisal and the $975,000 purchase price will be awarded as a charitable donation to the City. The seller, Civic Center, LLC, provided the City with a written appraisal performed by CBRE, Inc. in July 2018 which estimates the market value of the property at $3,300,000. An updated Appraisal is currently being performed as the Seller’s responsibility and expense per IRS regulation. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED Does Council Finance Committee support an Appropriation of $975,000 from the General Government Capital Expansion Fund for the tentative purchase of the real property located at 144 N. Mason St., Units 1 through 8, Fort Collins, Colorado, 80524? BACKGROUND/DISCUSSION Since its inception in 2018, City Give has facilitated a range of donations of real property: from 26 acres of property toward the expansion of Two Trees Natural Areas to water shares; from mineral rights to five (5) acres adjacent Southridge Greens golf course. The donation of real property is a tangible investment in the City’s mission, values, and service to our residents. Asset-based giving requires strict adherence to IRS guidelines and depends on the staff determination if any potential donation is in the long-term best interests of taxpayers. Civic Center Condominiums is a 15,629-square foot, urban office condominium building located at 144 North Mason, in Fort Collins, Colorado. Constructed in 2001, and renovated in 2014, the building consists of eight (8) individual commercial condominium units attached to the Civic Center Parking Garage. Units l and 2 are combined for occupancy by the Fort Collins Police Department. Units 4, 5, and 6 were combined and operated as an executive office suite facility with private offices and shared conference and reception areas. Ownership of the Civic Center Condominiums provides the City with potential revenue sources as well as options for the expansion of City offices. Per IRS requirements for the donation of real property above $5,000, an Appraisal must be performed by the Seller within 60 days of the signed Purchase and Sale Agreement in order to substantiate the charitable gift. ATTACHMENT 2 At this time, a Purchase & Sale Agreement has not been finalized. However, if the final terms and current Appraisal satisfy staff’s decision points, a closing date must be met no later than 10/15/2021. Hence, the need an Appropriation of $975K from the General Government Capital Expansion for the tentative purchase. Capital expansion fees are paid by new development to underwrite a proportionate share of infrastructure costs to “buy-in” to the level of service the City of Fort Collins provides for Fire, Police, General Government facilities, Neighborhood Parks and Community Parks. The current General Government Capital Expansion Fund has a current balance of $12M. Authorized expenditures include, but are not limited to, the cost of purchasing or leasing real property; construction, acquisition or expansion of capital improvements or assets. DISCUSSION / NEXT STEPS: Ken Mannon; The city has spent over $60K per year in rent for Police D1 space in the building - they have been in this building for 10+ years Nina Bodenhamer; $975K - appropriation out of General Government Capital Expansion Fund Current fund balance is approximately $12M – this falls within the authorized expenditures There is still an opportunity to walk away if the deal becomes unattractive / not viable. Kelly Ohlson; it seems like there is more to this story - Are we going to have eyes on the appraisal? The deal makes sense to me – Let’s make sure the appraisal passes the straight face test and is fair Nina Bodenhamer; that is a huge concern – IRS rides herd very carefully because of that potential - we are talking about a property that will be appraised at $3.3M with a large charitable contribution. Ken and his team reviewed an extensive appraisal that was done in 2018 by TBRE – was done by a gentleman who we have worked with on other charitable contributions - he understands the IRS law / guidelines as well as the city’s vulnerability in that space – they have launched a new appraisal and we have accepted terms based on Ken and his team’s review of the appraisal. Kelly Ohlson; I just want to make sure we are trying to do the right thing. As long as the city staff will put eyes on it and make sure we are close. Keith Hanson; we will enter into a purchase and sale agreements where there is a time frame for our due diligence - we will look at everything - I will review it from cover to cover - we have a good idea of the market – we will double check to make sure it conforms to what we need Nina Bodenhamer; per IRS guidelines, the selling party initiates the appraisal – the City can’t initiate or be a part of the appraisal. Emily Francis; why didn’t it go forward when it came to Council before? Nina Bodenhamer; I think the seller approached the city in the past with different configurations, but I don’t think it made it to Council before. This is the first time it has come forward to my knowledge under the charitable giving umbrella and as a deal whereby Keith and Ken were both interested in moving forward. Ken Mannon; earlier he was trying to swap for water shares - It did not go to Council previously. He first approached Darin on this - reevaluating his assets (looking to retire some assets) which no longer fits his portfolio, and he is ready to get rid of it. Emily Francis; How are we able to use the Governmental Capital Improvement Fund for this since it is not new development? Travis Storin; the fees are collected from new development - the need to be used for expansion of governmental facilities but not necessarily newly development of governmental facilities. This is the overall structure of ‘development pays its way in Fort Collins’ we collect general government, fire, police and the two types of parks. That comment is really on how fee is generated not applied. Nina Bodenhamer; It includes the cost of purchasing or leasing real property, construction, acquisition, or expansion of capital improvement. Those are the parameters of how the Capital Expansion Fund can be used. Emily Francis; I am supportive – if this comes to Council, I would request that we put a requirement on the city that the space has to be leased by a nonprofit or a disadvantaged business added to the agreement if we move forward. Nina Bodenhamer; Let me check into his – due to IRS contribution guidelines, I am not sure we can bolt it to a designated purpose. Needs to fall into general purpose for the IRS to recognize the charitable gift but let me have a conversation with Travis. Emily Francis; the city can internally set its own policy for how we use the building - this is a perfect opportunity – we will acquire these spaces and we will earmark them for what we are hoping to do / serve Ken Mannon; it will impact our repayment to the fund – impact the payback - if we keep spaces rented as they are our payback is 6 years but beyond that I would say fair game Emily Francis; we could figure out how to do that - I understand it would take longer for a payback, but we have a commitment to our community Julie Pignataro; It seems like a great deal – I am cautiously curious as to why he would be doing this Insight into why - retiring his portfolio but this is huge - can you give insight into why - tax kickbacks from this donation? Nina Bodenhamer; it is about taxes – it is a reflection of what their tax debt is for any given year – based on short- or long-term depreciation, capital gains. There is an incredible financial interest to take the tax deduction and what we see with donors is that they typically try to buckle them to a deal they are making where they take in a lot of cash –maybe he is making a sale on another property, so he is looking for a deduction to relieve his overall tax debit – it does seem enormous, but it does makes sense. We aren’t responsible ultimately for what a donor does afterwards - our job is to certify the charitable contribution up to the 82 83 IRS filing then they apply it – that is not our responsibility – we just accept and certify the donation. It is often why these come up at certain times -They were looking at their tax debt - For that reason, the IRS doesn’t like these types of deals that are structured in December. Kelly Ohlson; choice between retail to offset the debt and to help legitimate appropriate non-profits – I am open to that - First consideration might be for city offices – if that is where they make sense – that location has had challenges due to geography – design – location – not a lot of foot traffic – a natural for appropriate offices – maybe we can write it in such a way to allow some flexibility – but seriously not pretending to benefit nonprofits Emily Francis; if we need it for city office space – sure - Who are we leasing it to? What is our priority there? Affordable space is an issue and is really hard to come by Nina Bodenhamer; overall portfolio of city leasing – I hear from nonprofits - who gets that cheap space - rumbling of city favorites - we would be wise to develop a large policy portfolio? The who and why and what rates so there is equity among nonprofits who want to step forward. I will work on that wording in terms of how we encourage a larger vision for that rental space to non-profits – who gets that space? What are the metrics? Is it the first person who knows about it and applies which doesn’t seem like an equitable process – look at a process to triage that. Kelly DiMartino; we did go through a process a couple years ago to really look at how we determine how we apply discounts to our nonprofit community - we do have a process and a rubric in place and this gives us an opportunity to continue to expand on that and provide a bit more equity and objectivity in how we are doing that so there is a rubric and some scoring in how we award those spaces. GENERAL DIRECTION SOUGHT AND SPECIFIC QUESTIONS TO BE ANSWERED Does Council Finance Committee support an Appropriation of $975,000 from the General Government Capital Expansion Fund for the tentative purchase of the real property located at 144 N. Mason St., Units 1 through 8, Fort Collins, Colorado, 80524? Result; Travis Storin; I am hearing support for deal itself. We will schedule an appropriation for First Reading with the Council. We will incorporate in the agenda materials, an order of operations for city office facilities and for non- profit or disadvantaged enterprises. We will consult with the CAO on the best way to document and reflect those intentions. Some additional description around the appraisal selection process would be appreciated. -1- ORDINANCE NO. 157, 2021 OF THE COUNCIL OF THE CITY OF FORT COLLINS APPROPRIATING PRIOR YEAR RESERVES FROM THE GENERAL GOVERNMENT CAPITAL EXPANSION FEE ACCOUNT IN THE CAPITAL EXPANSION FEE FUND FOR THE PURCHASE OF THE CONDOMINIUMS IN THE CIVIC CENTER PARKING STRUCTURE WHEREAS, located at 144 North Mason in Fort Collins are eight condominium units built within and located on the ground floor of the western face of the City’s Civic Center Parking Structure (“Condominiums”); and WHEREAS, the Condominiums are currently owned by Civic Center, LLC (“Civic Center LLC”), but the City owns the real property on which the Condominiums sit (the “Property”); and WHEREAS, the City is the lessor and Civic Center LLC is the lessee under a 1998 ground lease that authorizes the Condominiums to be located on the Property for a term ending December 31, 2039 (the “Ground Lease”); and WHEREAS, the Ground Lease provides that when the Ground Lease terminates at the end of 2039, the City becomes the owner of the Condominiums without any payment obligation to Post Modern; and WHEREAS, Civic Center LLC wishes to convey the Condominiums to the City now and agree with the City to the termination of the Ground Lease; and WHEREAS, Civic Center LLC has obtained a formal appraisal of its ownership interests in the Condominiums and the Ground Lease that appraises them as having a total fair market value of $3.7 million; and WHEREAS, Civic Center LLC has, however, agreed to convey the Condominiums to the City and to the termination of the Ground Lease in return for the City paying Civic Center LLC only $975, 000, and thereby making a charitable donation to the City for the difference between the $3.7 million appraised value and the $975,000 payment; and WHEREAS, Civic Center LLC and the City intend to enter into a Purchase and Sale Agreement memorializing their agreement for this purchase, the termination of the Ground Lease and the charitable donation (the “Purchase Agreement”), which transaction Civic Center LLC needs to be completed by the end of this year for tax reasons; and WHEREAS, the City’s obligations under the Purchase Agreement to purchase the Condominiums for $975,000 and agree to the termination of the Ground Lease, will be subject to and contingent upon the City Council adopting this Ordinance on second reading and it becoming law 10 days after such adoption, as provided in the City Charter; and -2- WHEREAS, the purchase is proposed to be funded with this appropriation from the prior year reserves in the City’s general government capital expansion fee account in the capital expansion fee fund (“General Government CEF Reserves”); and WHEREAS, City Code Section 7.5-22(a) provides that General Government CEF Reserves may be used for the acquisition of capital improvements to be used to provide general government services if such improvements are identified in an applicable capital improvements plan that is part of the City’s Comprehensive Plan; and WHEREAS, on November 16, 2021, the City Council adopted Resolution 2021-105 which adopted the 2021 Civic Center Master Plan as an amendment to the City’s Downtown Plan, which Downtown Plan is an element of the City’s Comprehensive Plan (the “Civic Center Master Plan”); WHEREAS, the Civic Center Master Plan identifies the Condominiums as buildings to be acquired by the City for use by it in the near future as offices to provide general government services, thereby making the General Government CEF Reserves available for use to acquire the Condominiums; and WHEREAS, this appropriation benefits the public health, safety and welfare of the residents of Fort Collins and serves the public purpose of facilitating the acquisition of City offices to provide general government services; and WHEREAS, Article V, Section 9 of the City Charter permits the City Council, upon the recommendation of the City Manager, to appropriate by ordinance at any time during the fiscal year such funds for expenditure as may be available from reserves accumulated in prior years, notwithstanding that such reserves were not previously appropriated; and WHEREAS, the Interim City Manager has recommended the appropriation described herein and determined this appropriation is available and previously unappropriated from the General Government CEF Reserves. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That there is hereby appropriated from the General Government CEF Reserves the sum of NINE HUNDRED SEVENTY-FIVE THOUSAND DOLLARS ($975,000) to be expended for the acquisition of the Condominiums as provided under the Purchase Agreement. -3- Introduced, considered favorably on first reading, and ordered published this 16th day of November, A.D. 2021, and to be presented for final passage on the 7th day of December, A.D. 2021. __________________________________ Mayor ATTEST: _______________________________ Interim City Clerk Passed and adopted on final reading on the 7th day of December, A.D. 2021. __________________________________ Mayor ATTEST: _______________________________ Interim City Clerk