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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 05/05/2015 - SECOND READING OF ORDINANCE NO. 048, 2015, AUTHORIAgenda Item 3 Item # 3 Page 1 AGENDA ITEM SUMMARY May 5, 2015 City Council STAFF Patrick Rowe, Real Estate Specialist III SUBJECT Second Reading of Ordinance No. 048, 2015, Authorizing the Conveyance of City Property to Walnut Street 354, LLC. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on April 21, 2015, conveys approximately 3,800 square feet of City property to Walnut Street 354, LLC for utilization in the development of a downtown hotel and convention center at 354 Walnut Street, the former location of the Armadillo Restaurant. The property will be purchased by the developer at fair market value, as determined by the City. Additionally, the conveyance will be subject to a public access and utility easement reservation which allows the subject property to continue to be utilized for these purposes, just as it is today. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, April 21, 2015 (w/o attachments) (PDF) 2. Ordinance No. 048, 2015 (PDF) Agenda Item 7 Item # 7 Page 1 AGENDA ITEM SUMMARY April 21, 2015 City Council STAFF Patrick Rowe, Real Estate Specialist SUBJECT First Reading of Ordinance No. 048, 2015, Authorizing the Conveyance of City Property to Walnut Street 354, LLC. EXECUTIVE SUMMARY The purpose of this item is to convey approximately 3,800 square feet of City property to Walnut Street 354, LLC for utilization in the development of a downtown hotel and convention center at 354 Walnut Street, the former location of the Armadillo Restaurant. The property will be purchased by the developer at fair market value, as determined by the City. Additionally, the conveyance will be subject to a public access and utility easement reservation which allows the subject property to continue to be utilized for these purposes, just as it is today. STAFF RECOMMENDATION Staff recommends adoption of this Ordinance on First Reading. BACKGROUND / DISCUSSION The owner and developer of 354 Walnut Street (the Developer) is proposing a 165-room, 85,000 square foot downtown hotel and convention center development on the property, formerly the Armadillo Restaurant. The City owns an adjacent property 20 feet wide and approximately 3,800 square feet in size, which was originally thought to be public right-of-way/alleyway given that its use and function were supportive of this conclusion. Subsequent research by the City confirmed the strip is not public right-of-way, but rather property owned by the City in fee (acquired by deed on August 18,1879). To maximize the use of the Developer’s relatively small site, the Developer will need to construct its project to the edge of the lot (also known as the zero lot line) over a majority of the site. Zero lot line development is permitted by City Code in the Downtown zoning district and is typical of development in downtown. In order to accommodate windows along the side of a building of a zero lot line development, the City Code and practicality dictate a setback from adjacent development so that windows aren’t flush against an adjacent zero lot line development. Windows along all sides of the hotel development are an absolute requirement for the project to remain financially feasible. Given that the adjacent City property is not public right-of-way, coupled with the Developer’s need to maximize use of their relatively small site through a zero lot line development, the Developer has requested to resolve the setback issue by soliciting the City for the acquisition of its adjacent parcel. The Developer would acquire the property at its fair market value and has agreed to a reservation by the City for public access and utilities, which will allow the property to continue to function in the same way it does currently. Additionally, as a negotiated point, the Developer has agreed to assume all maintenance responsibility for the property, which includes maintaining the public access improvements (the City and third party utility providers will remain responsible for any utility improvements). The City’s Real Estate Department has valued the property interests at $124,500. This is based on a land value of $65.50/square foot, subject to a 50% reduction in value to account for the reserved public access and utility easement which substantially limits the use of the property. The value and methodology has been ATTACHMENT 1 Agenda Item 7 Item # 7 Page 2 confirmed with a local commercial (MAI designated) appraiser. In addition to the property value, the City will also collect a typical processing fee of $1,000 to account for staff time on the request. Total compensation will be $125,500. CITY FINANCIAL IMPACTS The consideration for the conveyance is based on the fair market value of the property. The City’s Real Estate Services Department researched downtown sales and relied on several recent appraisal reports of downtown properties to determine the value. Though land sales are nearly non-existent in downtown, there have been several sales which reflect land sale rates given the obsolescence of the improvements. The City’s Real Estate Department has valued the property interests at $124,500. This is based on a land value of $65.50/square foot, subject to a 50% reduction in value to account for the reserved public access and utility easement which substantially limits the use of the property. The value and methodology has been confirmed with a local commercial (MAI designated) appraiser. In addition to the property value, the City will also collect a typical processing fee of $1,000 to account for staff time on the request. Total compensation will be $125,500. Additionally, the Developer has agreed to accept maintenance of the property, including the public access improvements, which relieves the City of this obligation. PUBLIC OUTREACH All property owners contiguous to the proposed conveyance property were contacted. In addition to the owner/developer of 354 Walnut Street, this included one other property owner. With the reservation of public access across the property, the other contiguous property owner did not have any concerns. More extensive outreach was not deemed necessary given that the City's current use of the property will remain through a reserved public access easement. ATTACHMENTS 1. Sustainability Assessment Summary and Tool (PDF) 2. Location Map (PDF) - 1 - ORDINANCE NO. 048, 2015 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE CONVEYANCE OF CITY PROPERTY TO WALNUT STREET 354, LLC WHEREAS, the City is the owner of a parcel of land located in downtown Fort Collins as more particularly described on Exhibit A, attached and incorporated herein by reference (the “City Property”); and WHEREAS, the City Property was acquired by the City by deed in 1879, and is used as a public alleyway; and WHEREAS, Walnut Street 354, LLC (“Developer”) is the owner of property adjacent to the City Property, on which Developer is proposing to construct a hotel and convention center (the “Development Property”); and WHEREAS, to maximize the use of the Development Property, Developer intends to construct its project to the edge of the lot over most of the site, including the side that abuts the City Property; and WHEREAS, in order to provide the setback required to have windows on the side of the hotel facing the City Property, Developer has asked to purchase the City Property; and WHEREAS, as part of the proposed sale of the City Property, the City would reserve public access and utility easements over it so that the City Property could continue to be used for its current purposes; and WHEREAS, the City and Developer have negotiated a price of $124,500 for the City Property, based on its fair market value; and WHEREAS, Developer would also pay an administrative fee of $1000 for staff time to process the purchase request; and WHEREAS, City staff believes that facilitating the development of a downtown hotel in this way is in the best interests of the City, and that the conveyance of the City Property should have no negative impacts on the City as the current use of the City Property will be preserved through the reserved easements; and WHEREAS, Section 23-111(a) of the City Code authorizes the City Council to sell, convey or otherwise dispose of any and all interests in real property owned in the name of the City, provided that the City Council first finds, by ordinance, that such sale or other 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: - 2 - Section 1. That the City Council hereby finds that the conveyance of the City Property to Walnut Street 354, LLC as provided herein is in the best interests of the City. Section 2. That the Mayor is hereby authorized to execute such documents as are necessary to convey the City Property to Walnut Street 354, LLC on terms and conditions consistent with this Ordinance, together with such additional terms and conditions as the City Manager, in consultation with the City Attorney, determines are necessary or appropriate to protect the interests of the City, including, but not limited to, any necessary changes to the legal description of the City Property, as long as such changes to not materially increase the size or change the character of the property interest to be conveyed. Introduced, considered favorably on first reading, and ordered published this 21st day of April, A.D. 2015, and to be presented for final passage on the 5th day of May, A.D. 2015. __________________________________ Mayor ATTEST: _____________________________ City Clerk Passed and adopted on final reading on this 5th day of May, A.D. 2015. __________________________________ Mayor ATTEST: _____________________________ City Clerk EXHIBIT A