HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 01/20/2015 - RESOLUTION 2015-008 ACKNOWLEDGING THE CITY'S INTENAgenda Item 8
Item # 8 Page 1
AGENDA ITEM SUMMARY January 20, 2015
City Council
STAFF
Patrick Rowe, Real Estate Specialist
Mark Jackson, PDT Deputy Director
Tawnya Ernst, Real Estate Specialist III
SUBJECT
Resolution 2015-008 Acknowledging the City's Intent to Acquire the Real Property Located at 1300 Hoffman
Mill Road.
EXECUTIVE SUMMARY
The purpose of this item is to acknowledge the City's intent to acquire the property at 1300 Hoffman Mill Road
for multiple City department operations. Staff has negotiated the acquisition of approximately 24 acres near
Prospect Road and Lemay Avenue to meet the needs of multiple City departments. Streets, Forestry, Utilities
and Natural Areas Departments have agreed to partner and contribute funding for the acquisition. The
Departments propose to jointly purchase the property in order to co-locate compatible City operations. These
operations include the continued processing and recycling of concrete and asphalt, which is the primary use of
the site currently (via lease agreement), processing of project spoils for the Utilities Department, wood chipping
and other materials processing for the Forestry Department, and materials storage for the Natural Areas
Department. Additionally, the Natural Areas Department will control and manage approximately 6 acres of the
site that is immediately adjacent to the Poudre River.
City Council approved the funding for the purchase as part of the 2015-2016 Recommended Budget
(Ordinance No. 153, 2014) on November 18, 2014 and no additional authorization is required per City Code.
However, due to the fact that Streets Superintendent, Larry Schneider is related to one of the ten owners
(Larry’s father, Elmer Schneider is a 1/10 owner), City Management felt it prudent to provide more explicit and
public notice of the City’s intention to acquire the property and to disclose the process and efforts that have
taken place to ensure Larry Schneider is not involved in any of the decision making related to this potential
acquisition. To that end, Mr. Schneider was consciously and deliberately removed from participating in any
form related to the City’s interest in the property. All decision making was directed by Planning, Development
and Transportation (PDT) Deputy Director, Mark Jackson and operational information was provided by (then)
Streets Department Crew Chief, Neal Jaspers.
STAFF RECOMMENDATION
Staff recommends adoption of this Resolution.
BACKGROUND / DISCUSSION
The City Streets Department has leased property located at 1300 Hoffman Mill Road since approximately 1990
for its crushing and recycling facility. The property has been owned by the Schneider family since the 1930s.
Ten members of the Schneider family are currently on title, which includes Elmer Schneider, the father of
Streets Superintendent, Larry Schneider. Larry Schneider does not have any direct ownership interest in the
property.
Agenda Item 8
Item # 8 Page 2
In late 2011, the Schneider family expressed an interest to sell the property. In response, the City began to
evaluate a potential purchase of the property in order to maintain the crushing and recycling facility at this site.
Staff was made aware of the potential conflict of interest by Larry Schneider, and at his request and PDT
Deputy Director Mark Jackson’s direction, Larry Schneider was immediately removed from the process. As
part of the City’s purchase consideration, the Finance Department led and contributed analysis to evaluate the
cost of operations and examine potential alternatives, which included working with the Real Estate Services
Department to explore site alternatives. This analysis did not reveal any viable site alternatives, thus the City
resolved itself to continue to explore the acquisition of the Hoffman Mill Road property.
To assist in establishing a purchase price, the Schneider family and City staff jointly hired a third-party
independent appraiser, Shannon and Associates. Don Shannon, owner and principle appraiser of Shannon
and Associates, is a certified MAI appraiser (an Appraisal Institute professional designation) with over forty
(40) years of experience and is viewed as a credible option by the Real Estate Services Department. Shannon
and Associates completed a first appraisal in 2012. The resulting purchase price was far below what the
Schneider family was willing to accept and thus the family discontinued negotiations with the City. In early
2014 in the course of examining a possible lease renewal with the City and in light of an improved commercial
real estate market, the Schneider family expressed a willingness to request a new appraisal from Shannon and
Associates. Shannon and Associates prepared a second appraisal with a report date of April 29, 2014.
Summary of 2014 Appraisal Information
Shannon and Associates relied upon the sales comparison approach to determine the value of the property.
The sales comparison approach involves finding recent and comparable property sales and then applying
adjustments to those sales to account for differences between the comparable sale and the subject property.
Shannon and Associates selected three sales that in their determination were recent and comparable.
Adjustments were made to the three sales and the appraiser concluded an overall adjusted price per acre of
$37,343 for comparable sale 1, $38,860 for comparable sale 2, and $51,961 for comparable sale 3. The
average of the three sales is $42,721 per acre, but with more emphasis given to the most recent sale
(comparable sale 3 at $51,961 per acre), the appraiser concluded the overall land value to be $45,000 per
acre ($45,000 per acre indicated a land value of $1,055,000). To the $1,055,000 the appraiser added $89,000
to account for the contributory value of the existing improvements, which resulted in an overall value of
$1,144,000.
After analysis and significant negotiations, City staff and the Schneider family ultimately agreed on a purchase
price of $1,169,000. A purchase and sale agreement has been executed by all applicable members of the
Schneider family and awaits City signatures. Closing was initially slated for January 15, 2015 but has been
postponed pending this resolution and additional due diligence activities which are necessary to resolve prior
to City acquisition.
Closing on this property is beneficial to the City from a number of standpoints:
The site is large enough to handle the joint material processing activities of Forestry, Stormwater, and
Streets.
Streets would maintain the crushing facility to recycle asphalt and concrete. (Streets annually
processes and recycles about 80,000 tons of asphalt and concrete and other aggregate materials. As
a result, the City greatly reduces its landfill burden, recovers beneficial materials which are used to
reduce costs of City capital improvement projects, and makes the materials available for sale to the
public.)
Stormwater would utilize space on the site to allow an area for drying out spoils and reclaiming the dirt
once dry.
The imminent Emerald Ash Borer (EAB) infestation will result in a need for a greater than normal
processing area and facility in order to receive and manage waste wood at an unprecedented level for
Agenda Item 8
Item # 8 Page 3
an undetermined amount of time. The site will increase efficiencies and allow Forestry to process ash
material.
Natural Areas will manage the undisturbed portions of property which are adjacent to the river and
ravine and will also utilize a part of the property to store equipment and construction materials
(fencing, gravel for trails, etc.).
FINANCIAL / ECONOMIC IMPACTS
The City’s total outlay for ownership of the property is $1,169,000. The participating Departments agreed to
contribute the following as part of the 2015-2016 budget:
Transportation: $500,000
Utilities: $300,000
Forestry: $250,000
Natural Areas: $150,000
TOTAL: $1,200,000
The owners are actively pursuing the sale of the property. If the City does not acquire the property it is likely
the City’s lease will be terminated at some point in the foreseeable future. With no suitable site alternatives,
the City may need to exit the asphalt and concrete recycling business. Additionally, others sites would need to
be obtained for Utility and Forestry operations.
ENVIRONMENTAL IMPACTS
Provided the City acquires the property, the Natural Areas Department has agreed to restore and maintain the
portion of the site that is immediately adjacent to the Poudre River (an area approximately 6 acres in size).
Additionally, City ownership of this property may provide future open space opportunities elsewhere on the
site. No negative environmental impacts are anticipated from this acquisition.
ATTACHMENTS
1. Location Map (PDF)
ATTACHMENT 1
- 1 -
RESOLUTION 2015-008
OF THE COUNCIL OF THE CITY OF FORT COLLINS
ACKNOWLEDGING THE CITY’S INTENT TO ACQUIRE THE REAL PROPERTY
LOCATED AT 1300 HOFFMAN MILL ROAD
WHEREAS, since approximately 1990 the City has leased the real property located at
1300 Hoffman Mill Road, Fort Collins, Colorado (the “Property”) for the Streets Department’s
concrete and asphalt crushing and recycling facility; and
WHEREAS, the Property is currently owned by ten members of the Schneider family,
who have been marketing the Property for sale; and
WHEREAS, City staff has been negotiating to purchase the Property for joint use by the
Streets, Stormwater, Forestry and Natural Areas Departments; and
WHEREAS, the proposed purchase price of the Property is $1,169,000; and
WHEREAS, the City’s Streets Superintendent, Larry Schneider, is the son of one of the
owners of the Property; but, to comply with the conflict of interest provisions of the City Charter,
Mr. Schneider has been deliberately removed from participating in any discussion or process
related to the City’s interest in the Property, and has not exercised, directly or indirectly, any
decision making authority concerning the sale of the Property to the City; and
WHEREAS, City staff is seeking acknowledgement by the City Council of the City’s
intent to purchase the Property and the steps that have been taken to avoid a conflict of interest
by a City employee.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF
FORT COLLINS that the Council hereby acknowledges the City’s intent to acquire the Property
as described herein.
Passed and adopted at a regular meeting of the Council of the City of Fort Collins this
20th day of January, A.D. 2015.
_________________________________
Mayor
ATTEST:
_____________________________
City Clerk