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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/21/2003 - SECOND READING OF ORDINANCE NO. 187, 2002, AUTHORI AGENDA ITEM SUMMARY ITEM NUMBER: 8 DATE: January 21, 2003 FORT COLLINS CITY COUNCIL FROM: Steve Comstock SUBJECT : Second Reading of Ordinance No. 187,2002,Authorizing the Modification of the Meadow Springs Ranch Grazing Lease With Natural Fort Grazing Association, Inc. RECOMMENDATION: Staff recommends adoption of the Ordinance on Second Reading. EXECUTIVE SUMMARY: The Natural Fort Grazing Association, Inc. ("NFGA") has requested that the City restructure the current lease term(nine years, seven months and 16 days)of its lease with NFGA to a series of one- year terms, renewable annually, for up to a total of ten years. This change was requested due to recent changes in the property tax treatment of publicly-owned property which is leased and used by private parties. Ordinance No. 187, 2002, was unanimously adopted on First Reading on December 17,2002,and authorized the modification of the Meadow Springs Ranch Grazing Lease. Second reading of the Ordinance was postponed from the Council's January 7th meeting to January 21st, in order to clarify the impact of the change on the lease. Staff has prepared an amendment to the Lease that modifies the term of the Lease retroactively to provide for an initial one-year term that will automatically renew for successive terms through the end of the original lease term,unless either party,provides 90-days advance written notice of its intent not to renew. Staff does not anticipate that the proposed modification of the lease will be detrimental to the City as the lessor. ORDINANCE NO. 187, 2002 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE MODIFICATION OF THE MEADOW SPRINGS RANCH GRAZING LEASE WITH NATURAL FOR GRAZING ASSOCIATION, INC. WHEREAS,in late 1990,the City purchased that certain real property commonly known as the Meadow Springs Ranch (the "Property"); and WHEREAS, since purchasing the Property, the City has leased it each year for livestock grazing purposes; and WHEREAS,in October,2000,City staff issued a request for proposals to lease the Property for livestock grazing purposes for a term of approximately ten (10)years, and in response, the City received two proposals which were reviewed,resulting in the proposal of Natural Fort Grazing,Ltd. ("NFG")being selected; and WHEREAS,City staff and NFG representatives have negotiated a Grazing Lease Agreement (the "Lease"), which Lease is on file in the office of the City Clerk; and WHEREAS,the original term of the Lease is for nine years,seven months and sixteen days; and WHEREAS, in January 2001, the City Council adopted Ordinance No. 192, 2000, authorizing the execution of the Lease; and WHEREAS, due to changes in the tax treatment of private leases of public property, NFG has requested that the City agree to a modification of the Lease so as to provide for a series of one- year terms, rather than one term for the entire lease period; and WHEREAS,City staff has prepared an amendment to the Lease that modifies the term,of the Lease retroactively,to provide foil an initial =one-year term that will automatically pettew for successive,;annual teTis through the end of the original lease term,unless eithe;,party provides 90- days advance).yntten=nohca of its intent trot to;renew; and WHEREAS, staff has determined that there will be no detrimental effect on the City as the lessor in making such a change; and WHEREAS, Sections 23-111 and 23-114 of the Code of the City of Fort Collins authorize the City Council to lease, for a definite term of more than two years, any and all interest in real property owned by the City which is part of a City utility system, provided the City Council first finds,by ordinance,that the lease is in the best interests of the City,that the lease will not materially impair the viability of the City's affected utility system as a whole, and that the lease will be for the benefit of the citizens of the City. NOW, THEREFORE, BE IT ORDAINED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the lease of the Property to NFG pursuant to the terms of the Lease, modified as described in this Ordinance,is in the best interests of the City,that the Lease as modified will not materially impair the viability of the City's Wastewater utility system as a whole, and that the Lease as modified will be for the benefit of the citizens of the City. Section 2. The Mayor is hereby authorized to enter into an amendment of the City modifying the Lease so as to provide for a series of annual terms for the remainder of the original Lease term, o eIreh§uch khefiteririnr" '._ '" Manager,in consultation with the City Attorney,determines to be necessa ry or appmpnaty fo protecE the interests of the City. Introduced and considered favorably on first reading and ordered published this 17th day of December,A.D. 2002, and to be presented for final passage on the 21st day of January,A.D. 2003. Mayor ATTEST: City Clerk Passed and adopted on final reading this 21st day of January, A.D. 2003. Mayor ATTEST: City Clerk AGENDA ITEM SUMMARY ITEM NUMBER: 18 FORT COLLINS CITY COUNCIL DATE: Decemberl7, 2002 11 FROM: Steve Comstock SUBJECT : First Reading of Ordinance No. 187, 2002, Authorizing the Modification of the Meadow Springs Ranch Grazing Lease With Natural Fort Grazing Association, Inc. RECOMMENDATION: Staff recommends adoption o .he Ordi nc)opdm� , EXECUTIVE SUMMARY: Natural Fort Grazing Association,Inc. ("NFGA"),has asked if the City is willing to restructure the current ten-year grazing lease toga lease that is year t �e with an ption to renew for the following year up to the ten year term. m While a ten-year term arrangeent is preferred byte City an`d the NFGA, recent changes in the property tax treatment of publicly-owned property that is leased and used by private parties have raised new issues related to the structure of leases such as the grazing lease.Because the value of the grazing lease is assessed as the current value of the entire term, the value of a ten-year lease is high throughout the life of the lease, even though the lease itself is terminable by the parties with notice. at any time. If the grazing lease is not restructured,the value of the last year of a ten-year term lease would be taxed nine times rather thin once a nuall . Given that the current lease is terminable with notice, staff does not believe 3W t mo tWtility co it a series of one-year tetras, as opposed to one ten-year to will rempae to the City as the lessor. The restructuring would continue alloonsh , but would make the lease more financially viable for the lessee.Becauses the continued lease of the property for grazing purposes is beneficial, staff is recommending that the modification of the lease to provide for successive one-year terms, rather than one ten-year term, will result in an overall benefit to the City.