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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 05/16/2006 - ITEMS RELATING TO LAND CONSERVATION AT SOAPSTONE P ITEM NUMBER: 9 A-B AGENDA ITEM SUMMARY DATE: May 16, 2006 FORT COLLINS CITY COUNCIL STAFF: John Stokes Wally Cameron SUBJECT Items Relating to Land Conservation at Soapstone Prairie Natural Area. RECOMMENDATION Staff recommends adoption of both Ordinances on Second Reading. EXECUTIVE SUMMARY A. Second Reading of Ordinance No. 073,2006,Authorizing the Conveyance of 441 Acres of Land to the State Land Board Subject to a Conservation Easement in Exchange for 3,873 Acres of Land Located Within Soapstone Prairie Natural Area. B. Second Reading of Ordinance No. 074, 2006, Authorizing the Lease of Portions of the Bernard Ranch Property to be Acquired by the City to the Bernards Through 2012. This item includes two ordinances,each of which authorize a real property transaction related to the conservation and use of Soapstone Prairie Natural Area. Both Ordinances were unanimously adopted on First Reading on May 2, 2006. The first transaction entails a trade of 441 acres within the Wellington community separator for 3,873 acres of State Land Board property that lies within the boundary of Soapstone Prairie Natural Area. The City retains a conservation easement on the 441-acre parcel,enforceable by the City,that restricts development to a total of twenty-three home sites. Three of the home sites are already built out and the additional twenty home sites will be clustered on the northwest corner of the property. The State Land Board obtains various water rights associated with the property. In addition to the 3,873 acres of land, the City receives $811,000 in cash to equalize the exchange values. The second transaction entails a purchase of 1,760 acres over a seven-year period for total consideration of$2,000,000. As portions of the`Bernard Ranch"are acquired,they will be leased back to the seller for continued ranching activities. This lease requires City Council approval. Ultimately, the property will be resold to conservation-minded buyers subject to a conservation easement by which the City would limit development on the property. ITEM NUMBER: 23 A-B AGENDA ITEM SUMMARY DATE: May2, 2006 FORT COLLINS CITY COUNCIL STAFF: John Stokes Wally Cameron !t SUBJECT Items Relating to Land Conservation at Soapstone Prairie Natural Area. RECOMMENDATION There are two separate real estate transactions and ordinances for Council's consideration. The first consists of a land exchange between the City and the State Land Board. Staff recommends approval of the exchange. At its April 1 lth meeting, the Land Conservation and Stewardship Board voted unanimously to recommend the proposed exchange for approval. The second transaction to be discussed is an acquisition project with a lease-back component that requires Council approval. Staff recommends the project for Council approval. The Land Conservation and Stewardship Board has not et had a chance to formally make a recommendation on this project, but will do so s y t et g 'o o S and Reading of Ordinance No. 074, 2006 on May 16, 2006. ' u FINANCIAL IMPACT The City's total investment in the exchange project will amount to $4,589,000. Of that amount $2,323,656 is the value of the 3,873 acres (or$600 per acre) and the remainder, $2,265,344, is the value of the conservation easement on the 441-acre community separator parcel(or$5,137 an acre). The per acre cost for all 4,314 acres is $1,064. All funds for the project are derived from sales tax revenues dedicated for natural area purposes. The purchase price for the Bernard Ranch is $2,000,000, or $1,136 per acre. The City's Natural Areas program plans to apply for Great Outdoors Colorado funds to "buy down"the conservation values in the property. If those grants are successful, and if the City is able to resell to a conservation buyer, or buyers, the City's net costs could be lowered by as much as one-half the purchase price. Ongoing costs after a sale would be limited to periodic conservation easement monitoring inspections,or appro ly A ds for the project are derived from sales tax revenues dedic d for al a ses �y any outside grant funding the City is able to garner(in parti ar from reat t ors Colo do). EXECUTIVE SUMMARY A. First Reading of Ordinance No. 073, 2006, Authorizing the Conveyance of 441 Acres of Land to the State Land Board Subject to a Conservation Easement in Exchange for 3,873 Acres of Land Located Within Soapstone Prairie Natural Area. May 2, 2006 -2- Item No. 23 A-B B. First Reading of Ordinance No. 074,2006,Authorizing the Lease of Portions of the Bernard Ranch Property to be Acquired by the City to the Bernards Through 2012. This item includes two ordinanCapsto Gao u rize- al property transaction related to the conservation and use of ArThe first proposed transactio 1 acres thin the Wellington community separator for 3,873 acres of State Land Board property that lies within the boundary of Soapstone Prairie Natural Area. The City will retain a conservation easement on the 441-acre parcel, enforceable by the City, that restricts development to a total of twenty-three home sites. Three of the home sites are already built out and the additional twenty home sites will be clustered on the northwest comer of the property. The State Land Board will obtain various water rights associated with the property. In addition to the 3,873 acres of land, the City will receive $811,000 in cash to equalize the exchange values. The second transaction entails a purchase of 1,760 acres over a seven-year period for total consideration of$2,000,000. As portions of the"Bernard Ranch" are acquired, they will be leased back to the seller for continued ranching activities. This lease requires City Council approval. Ultimately, the property will be resold to conservation-minded buyers subject to a conservation easement by which the City would limit development on the property. BACKGROUND C, () PY, The purpose of this background statement is two-fold: (1) to inform Council and the public about the specific transactions before the Council for consideration, and (2) to inform Council and the public of the overall land conservation strategy at Soapstone Prairie Natural Area. It is important to note these transactions are part of a finite action plan for conserving important properties that protect the City's initial Soapstone investment. Several key transactions have already taken place, and several more are contemplated. These transactions will ensure the best possible public access into Soapstone, and they will ensure there are no inholdings within Soapstone that could cause future difficulties. They also ensure that the spectacular viewshed, recreation opportunities, and wildlife qualities of Soapstone will be protected for the future. The City acquired the 12,500-acre Soapstone Prairie Natural Area in 2004. At that time,there were several landowners within the S s ne d ncl g 100-acre ranch owned by the Roman family and the State L Bo s. th oapstone purchase, the Roman family approached the City turaI A s pro ask f the City would be willing to buy its property—a portion of whic imy�ie tel dj en to th indenmieir archaeological site. In 2005, the City acquired the Roman property for$1,260,000, or$600 per acre. In addition to the internal ownerships, there were/are several major land holdings at the northern terminus of County Road 15. These "donut hole" properties are surrounded on three sides respectively by Soapstone,Meadow Springs Ranch to the east,and the County-owned Red Mountain Ranch to the west. County Road 15 represents the most direct access into Soapstone from the city of Fort Collins. Because the status of the road at its terminus has been disputed by some adjacent property owners, staff believes that it is critical to eliminate access issues as much as possible by May 2, 2006 -3- Item No. 23 A-B acquiring rights-of-way as needed. The purchase and resale (with conservation easements) of "donut hole"lands adjacent to County Road 15 will be extremely helpful in resolving these access issues. To date, staff has been succesCp ng t Bu ch within the donut hole. Staff applied for and received a G rs Co r grant the first half of the Round Butte project and has another grant n g. n this p lar property, staff is hopeful that the ultimate net cost of acquiring the property and then reselling it with conservation easements will be close to zero. State Land Board Exchange When the City acquired the Soapstone Prairie Natural Area, it negotiated a short-term agricultural lease of 3,873 acres of State Land Board(SLB)property that lies within the City's deeded acreage. The SLB and Natural Areas Program immediately began to discuss options for conveyance of the SLB land to the City. An exchange of land, rather than a purchase arrangement, is strongly preferred by both parties because it avoids the SLB's uncertain and difficult bidding process for the purchase of SLB lands. There are several motivations for the City and the SLB to exchange parcels: 1. There have beCconflc bet n th Yps. municipal open space programs ando the se d of SLB lands that are being leased bni ' p ace The City's Natural Areas staff wanted to preclude the possibility of any potential future conflict. 2. Acquisition of the SLB lands within Soapstone Prairie Natural Area eliminates all inholdings from within the City's original purchase. This provides strong protection for the City's substantial investments at Soapstone. 3. The SLB was interested in acquiring an income producing property that generated revenues in excess of the$9,409 per year it currently receives from the City. The 441-acre property currently produces $85,000 annually from the sod farm lessee. In Spring 2005, the City's Natural Areas Program purchased a 441-acre parcel located in the southwestern corner of the Wel ' '� co it a T otal purchase price, including land and water rights, was $5. illioil. he p y s 1 back to a sod farm operator and the City receives $85,000 ann ly in a rev a lea is renewable for up to 12 years. After negotiating for over a year with the SLB, Natural Areas staff and the SLB have arranged an exchange transaction that includes the trade of the 441-acre community separator parcel for the 3,873 acres of SLB inholdings. The City will retain a conservation easement on the 441-acre parcel that restricts development to a total of twenty-three home sites. Three of the home sites are already built out,the additional twenty home sites will be clustered on the northwest corner of the property. The SLB will obtain various water rights associated with the property. In addition to the 3,873 acres of land, the City will receive $811,000 in cash to equalize the exchange values. May 2, 2006 -4- Item No. 23 A-B Importantly,the conservation easement on the 441-acre parcel will not preclude the City's Utilities Department from rehabilitating an existing ditch on the western side of the property, or from detaining historic, and possibly additional,flood flows from the Upper Cooper Slough Basin on the southwestern corner of the prop I Acquisition of Bernard Ran OP'Y Staff has now been successful in placing another"donut hole"property under contract. The 1,760- acre Bernard Ranch comprises a major portion of the County Road 15 terminus, as well as a very important part of the spectacular viewshed from Soapstone. The City would acquirel,760 acres in seven specific parcels over a seven-year period for total consideration of$2,000,000. As each parcel of the Bernard property is acquired, it will be leased back to the seller for continued ranching activities until all parcels are acquired. This lease requires City Council approval. Ultimately, the property would be resold to conservation-minded buyers who would agree to limit development, precluding the possibility that the property would ultimately be sold in 40-80 acre parcels. Moreover, the acquisition and resale of the Bernard property would resolve access issues that have been raised regarding the use of the terminus of County Road 15 for public access into Soapstone. Conclusion Staff strongly recommends the Ctect)Tets d roposed Bernard lease-back. Because the outright purchase SLB ul exchange represents an unusual and highly leveraged opport 'ty to in stment at Soapstone, while also conserving an important parce1tje m separator. The acquisition (and ultimate resale) of the Bernard Ranch enables the City to utilize the best public access into Soapstone, while also conserving a wonderful viewscape and wildlife habitat. ATTACHMENTS 1. General Map of the Soapstone Prairie Natural Area and surrounding property 2. Map of location of Sod Farm. 3. Powerpoint presentation slides COPY ORDINANCE NO. 073, 2006 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE CONVEYANCE OF 441 ACRES OF LAND TO THE STATE LAND BOARD SUBJECT TO A CONSERVATION EASEMENT IN EXCHANGE FOR 3,873 ACRES OF LAND LOCATED WITHIN SOAPSTONE PRAIRIE NATURAL AREA WHEREAS,the State Board of Land Commissioners(the"State Land Board")is a political subdivision of the State of Colorado that manages State trust lands in order to produce reasonable and consistent income from such lands and to preserve their economic values while protecting environmental and natural resource values; and WHEREAS,the State Land Board manages 3,872.76 acres of State trust land located within the external boundaries of the City's 12,500-acre Soapstone Prairie Natural Area,more particularly described on Exhibit "A", attached hereto and incorporated herein by this reference (the "SLB Inholdings"), which the City currently leases from the State Land Board; and WHEREAS,the City in 2005 acquired a 441-acre property located in the southwestern corner of the area that has been identified as the Wellington community separator, together with related water rights, for a total purchase price of$5.4 million, which property has been and continues to be used as a sod farm and is more particularly described on Exhibit `B", attached hereto and incorporated herein by this reference(the"Sod Farm"); and WHEREAS, the acquisition by the City of the SLB Inholdings would allow the City to consolidate its ownership within Soapstone Prairie Natural Area, and would eliminate related problems as the City proceeds to plan and prepare for public use and enjoyment of,and preservation of, that Natural Area; and WHEREAS, the Sod Farm is an income-generating property, and continued use of the Sod Farm for its current purpose or for other agricultural uses is consistent with the continued preservation of the property for community separator purposes; and WHEREAS, in light of the mutual benefits of an exchange of these properties, the staff of the City and the State Land Board have negotiated an exchange agreement, a copy of which, dated April 28, 2006, is on file and available for public inspection in the Office of the City Clerk (the "Exchange Agreement"), which agreement calls for the State Land Board to convey to the City the SLB Inholdings and pay to the City cash in the amount of$811,344,in exchange for the conveyance by the City to the State Land Board of the Sod Farm and related water rights, subject to a conservation easement enabling the City to preserve and protect the Sod Farm as open space in the Wellington Community Separator; and WHEREAS, the form of the conservation easement by which the City will be empowered to restrict development on the Sod Farm after title to that property has been provided to the State Land Board, dated April 28, 2006, and is on file and available for public inspection in the Office of the City Clerk (the"Conservation Easement'); and WHEREAS, the acquisition of the SLB Inholdings would be consistent with the Land Conservation and Stewardship Master Plan adopted by the Council in Resolution 2004-092 on July 20, 2004; and WHEREAS, under Section 23-111 of the Code of the City of Fort Collins, the Council is authorized to sell or otherwise dispose of any and all interests in real property owned in the name of the City, provided that Council first finds by ordinance that the sale or disposition is in the best interests of the City. NOW,THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the conveyance of the Sod Farm to the State Land Board, subject to the Conservation Easement, as described herein, is in the best interests of the City of Fort Collins. Section 2. That the Mayor is hereby authorized to execute the Exchange Agreement, in substantially the form for the same dated April 28, 2006,and on file in the Office of the City Clerk, subject to such modifications, amendments or additions thereto as may be determined by the City Manager, in consultation with the City Attorney, to be necessary or appropriate to protect the interests of the City,including any necessary corrections to the legal descriptions shown thereon that do not result in a material increase or change in character of the intended properties to be exchanged. Section 3. That the Mayor is hereby authorized to execute the Conservation Easement in substantially the form for the same dated April 28, 2006, and on file in the Office of the City Clerk, subject to such modifications in form or substance as the City Manager,in consultation with the City Attorney,may deem necessary to effectuate the purposes of this Ordinance or to protect the interests of the City,including any necessary corrections to the legal description shown thereon that do not result in a material increase or change in character of the intended easement area. Introduced,considered favorably on first reading,and ordered published this 2nd day of May, A.D. 2006, and to be presented for final passage on the 16th day of May, A.D. 2006. May ATTEST: k 'e City Clerk Passed and adopted on final reading on the 16th day of May, A.D. 2006. Mayor ATTEST: City Clerk ORDINANCE NO. 074, 2006 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE LEASE OF PORTIONS OF THE BERNARD RANCH PROPERTY TO BE ACQUIRED BY THE CITY TO THE BERNARDS THROUGH 2O12 WHEREAS, the City of Fort Collins has been negotiating to acquire certain real property in Larimer County and adjacent to the City's Soapstone Prairie Natural Area ("Soapstone") consisting of a total of approximately 1,760 acres,commonly known as the Bernard Ranch and more particularly described on Exhibit "A" attached hereto and incorporated herein by this reference (`Bernard Ranch"), in light of the value of the same for open space and the access opportunities presented by the same, given its proximity to Soapstone; and WHEREAS, under the proposed agreement for the acquisition of Bernard Ranch, the City will acquire that property by the exercise of a series of options over the course of up to seven years, with the total amount of consideration to be paid by the City for all options and purchase tracts to be in the amount of$2,000,000; and WHEREAS, the Bemards have conditioned their agreement to convey the Bernard Ranch to the City upon the City's willingness to lease that property back to the Bemards for nominal rent until completion of the acquisition by the City; and WHEREAS, in order to meet the foregoing condition, the City will need to execute a lease of the Bernard Ranch as part of the closing of the acquisition; and WHEREAS,the acquisition of Bernard Ranch is consistent with the Land Conservation and Stewardship Master Plan adopted by the Council in Resolution 2004-092 on July 20, 2004; and WHEREAS, Section 23-114 of the City Code provides that the City Council is authorized to lease any and all interests it may have in non-utility real property owned by the City, provided the Council first finds by ordinance that the lease of that real property interest will be in the best interests of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby finds that the lease of the Bernard Ranch to the Bernard family, all as described hereinabove,is for the benefit of the citizens of Fort Collins and in the best interests of the City of Fort Collins. Section 2. That the Mayor is hereby authorized to execute such lease documents and other documents as may be necessary to carry out the terms of this Ordinance, on such terms and conditions as the City Manager, in consultation with the City Attorney, determines to be necessary or appropriate to protect the interests of the City, including any necessary corrections to the legal descriptions shown thereon that do not result in a material increase or change in character of the intended lease property. Introduced, considered favorably on first reading, and ordered published this 2nd day of May, A.D. 2006, and to be presented for final passage on the 16th day of May, A.D. 2006. Mayor ATTEST: 4a� City Clerk Passed and adopted on final reading on the 16th day of May, A.D. 2006. Mayor ATTEST: City Clerk