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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 09/15/2015 - SECOND READING OF ORDINANCE NO. 111, 2015, AUTHORIAgenda Item 7 Item # 7 Page 1 AGENDA ITEM SUMMARY September 15, 2015 City Council STAFF Mark Sears, Natural Areas Program Manager John Stokes, Natural Resources Director Tawnya Ernst, Real Estate Specialist III SUBJECT Second Reading of Ordinance No. 111, 2015, Authorizing the Conveyance of a Right of First Offer and Right of First Refusal to the City of Loveland for Property at 4200 County Road 30. EXECUTIVE SUMMARY This Ordinance, unanimously adopted on First Reading on September 1, 2015, authorizes the conveyance of a Right of First Offer and Right of First Refusal to the City of Loveland on property located at 4200 County Road 30, in the Fort Collins-Loveland Community Separator. Loveland’s Water & Power Department is purchasing 50 Units of Colorado Big Thompson Project (CBT) water historically associated with the land. In addition, Loveland’s Parks and Recreation Department will contribute funds towards the land. In total, Loveland will contribute $1.5M and Fort Collins will contribute $1.5M towards the purchase price of $3M. STAFF RECOMMENDATION Staff recommends adoption of the Ordinance on Second Reading. ATTACHMENTS 1. First Reading Agenda Item Summary, September 1, 2015, (w/o attachments) (PDF) 2. Ordinance No. 111, 2015 (PDF) Agenda Item 19 Item # 19 Page 1 AGENDA ITEM SUMMARY September 1, 2015 City Council STAFF Mark Sears, Natural Areas Program Manager John Stokes, Natural Resources Director Tawnya Ernst, Real Estate Specialist III SUBJECT Items Relating to the Acquisition of Property at 4200 County Road 30. EXECUTIVE SUMMARY A. Resolution 2015-080 Authorizing the Execution of an Intergovernmental Agreement with the City of Loveland to Acquire and Cooperate Regarding a Parcel of Land and Water Rights at 4200 County Road 30 Within the Fort Collins – Loveland Community Separator. B. First Reading of Ordinance No. 111, 2015, Authorizing the Conveyance of a Right of First Offer and Right of First Refusal to the City of Loveland for Property at 4200 County Road 30. The purpose of this item is to seek Council approval of an Intergovernmental Agreement with Loveland outlining the parties’ rights and obligations with respect to a proposed 113-acre acquisition in the Fort Collins- Loveland Community Separator and approval of the conveyance of a Right of First Offer and Right of First Refusal on the same parcel to Loveland. The City of Loveland’s Water & Power Department is purchasing 50 Units of Colorado Big Thompson Project (CBT) water historically associated with the land. In addition, Loveland’s Parks and Recreation Department will contribute funds towards the land. In total, Loveland will contribute $1.5M and Fort Collins will contribute $1.5M towards the purchase price of $3M. STAFF RECOMMENDATION Staff recommends the adoption of the Resolution and Ordinance on First Reading. BACKGROUND / DISCUSSION The Natural Areas Department has been working for 20 years in accordance with the 1995 Plan for The Region between Fort Collins and Loveland to create a community separator by conserving agricultural lands and open spaces. To date, approximately 5,800 acres of land has been conserved in the separator area; in cooperation with and in partnership with Loveland and Larimer County. (Attachment 4) Natural Areas proposes to partner with Loveland on the purchase of a 113-acre property and associated water rights located at 4300 County Road 30. Natural Areas will contribute $1.5 million to acquire the land and the ditch company water rights associated with the land (comprising 4 shares of the Louden Irrigating Canal & Reservoir Company and 4 corresponding shares of the Louden Extension Canal and Reservoir Company (together, “4 Louden Shares”)). Loveland will contribute $1.5 million to acquire the 50 CBT Units historically associated with the land (which Fort Collins would have difficulties in acquiring because Fort Collins already owns the maximum number of units allowed under current policies of the Northern Colorado Water Conservancy District) and will contribute towards the purchase of the land. Fort Collins will hold the deed to the land exclusively and own the 4 Louden Shares; and Loveland will own the 50 CBT Units outright. Although Loveland’s ultimate long-term use of the CBT Units will be for municipal supply, Loveland has agreed to lease ATTACHMENT 1 Agenda Item 19 Item # 19 Page 2 back the 50 CBT Units to irrigate the parcel. The lease will continue as long as the site remains as irrigated farm land, either owned by Fort Collins or subsequent owner of the land with a conservation easement conserving the land for irrigated farming, and as long as there is no drought or other reason that would require municipal use. Staff explored partnering with Larimer County for this acquisition. After much discussion, it was determined that there were even higher priority acquisitions for Fort Collins and Larimer County to partner on. These potential projects are good candidates for leveraging local contributions with GOCO grants. The long term use of the 113 acres has not been determined. There are at least three potential uses that would allow the property to serve as a community separator: (1) the land could be leased out for irrigated or dryland farming; (2) the land could be sold with a conservation easement removing development rights and requiring it to remain in farming; and (3) the land could be restored to native vegetation and potentially opened up to the public by constructing appropriate trails and parking. For the foreseeable future Natural Areas plans to keep the land in irrigated agriculture assuming a tenant can be found. As outlined in the IGA, Fort Collins will own, manage and maintain the property. If Fort Collins decides to sell the property with a conservation easement preserving it for agricultural purposes, Fort Collins will receive the entire proceeds from the sale in exchange for co-holding and monitoring the conservation easement and Loveland will co-hold the conservation easement. During negotiation of the IGA, Loveland asked the City to grant it the first right to buy the property. The Right of First Offer and Right of First Refusal (Exhibit A to Ordinance No. 111, 2015,) grants Loveland these rights relative to the purchase of the property in the unlikely event that Fort Collins decided to sell the land without a conservation easement; also if sold in fee Loveland would either receive 22.5% of the proceeds and Fort Collins would receive 77.5% of the proceeds or Loveland could chose to purchase the property for 77.5% of the agreed upon price. CITY FINANCIAL IMPACTS The total purchase price for the 113 acres of land and the associated water rights is $3,000,000. Fort Collins Natural Areas is contributing $1.5 million to purchase the land and 4 Louden Shares. These funds are already appropriated and available to spend. Loveland is contributing $1.5 million: $1.1 million to purchase the 50 CBT Units and a $400,000 contribution to the purchase of the land. Fort Collins will hold the deed and be fully responsible for costs of managing, maintaining and potentially developing trails and parking on the land. BOARD / COMMISSION RECOMMENDATION At its August 12, 2015 meeting, the Land Conservation and Stewardship Board (LCSB) unanimously recommended Council approve the IGA with Loveland and grant Loveland the Right of First Offer and Right of First Refusal. Loveland staff presented this proposed land purchase and partnership to its Open Lands Board on August 12, where it received Board approval and will present the IGA to the Loveland City Council on September 1. ATTACHMENTS 1. Loveland Parks and Recreation Commitment Letter, July 30, 2015 (PDF) 2. Loveland Water and Power Commitment Letter, July 31, 2015 (PDF) 3. 4200 CR 30 Vicinity Map (PDF) 4. Fort Collins-Loveland Community Separator Map (PDF) 5. Land Conservation & Stewardship Board minutes, August 12, 2015 (draft) (PDF) - 1 - ORDINANCE NO. 111, 2015 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE CONVEYANCE OF A RIGHT OF FIRST OFFER AND RIGHT OF FIRST REFUSAL TO THE CITY OF LOVELAND FOR PROPERTY AT 4200 COUNTY ROAD 30 WHEREAS, the City’s Natural Areas Department and the City of Loveland (“Loveland”) have been negotiating to acquire an agricultural property and associated water interests at 4200 County Road 30 (the “Property”); and WHEREAS, by separate resolution the City Council is considering a proposed intergovernmental agreement between the City and Loveland regarding the purchase and future management of the Property (the “IGA”); and WHEREAS, under the terms of the IGA Loveland would provide $1,100,000 to purchase the Colorado-Big Thompson Project (CBT) units associated with the property and $400,000 towards purchase of the land, and the City would provide $1,5000,000 for the purchase of the land and remaining water interests; and WHEREAS, the City would own and manage the Property, and Loveland would own the CBT units and lease them back to the City for irrigation of the Property; and WHEREAS, in the process of negotiating the terms of the IGA Loveland asked that the City grant it a right of first offer and right of first refusal on the Property, so that if the City ever opted to sell all or any portion of the Property (except leases or easements) Loveland would have the opportunity to purchase the Property first; and WHEREAS, a proposed Right of First Offer and Right of First Refusal dated August 19, 2015, is attached and incorporated herein as Exhibit “A” (the “ROFO/ROFR”); and WHEREAS, if approved, the ROFO/ROFR would be conveyed to Loveland when the City takes title to the Property at closing; and WHEREAS, City staff is recommending that Loveland not be required to pay the City additional consideration for the ROFO/ROFR because of the public benefit provided by the collaboration between the City and Loveland to purchase and manage the Property; Loveland’s investment in the Property; the shared interest of the City and Loveland in preserving the Property as a community separator; and the difficulty in calculating a fair market value for a right of first refusal; 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 finds, by ordinance, that such sale or other disposition is in the best interests of the City; and - 2 - WHEREAS, Section 23-411 of the City Code requires that the conveyance of a property interest by the City be for fair market value unless the City Council determines that the sale serves a bona fide public purpose. 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 conveyance of the ROFO/ROFR to Loveland as provided herein is in the best interests of the City. Section 2. That the City Council additionally finds that conveyance of the ROFO/ROFR to Loveland without additional compensation serves a bona fide public purpose because: (a) Loveland is making a significant contribution to the purchase of the Property, the intended use of which supports the general welfare, benefits a significant segment of the citizens of the City, and supports the City’s plan to create community separators; and (b) Conveyance of the ROFO/ROFR for less than fair market value will not result in a direct financial benefit to any private person or entity, and will not interfere with current City projects or work programs, hinder workload schedules, or divert resources needed for primary City functions or responsibilities. Section 3. That the Mayor is hereby authorized to execute the Right of First Offer and Right of First Refusal in substantially the form attached as Exhibit “A”, with such modifications or 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 Property, as long as such changes do not materially change the character of the interests to be conveyed. Introduced, considered favorably on first reading, and ordered published this 1st day of September, A.D. 2015, and to be presented for final passage on the 15th day of September, A.D. 2015. __________________________________ Mayor ATTEST: _____________________________ City Clerk - 3 - Passed and adopted on final reading on this 15th day of September, A.D. 2015. __________________________________ Mayor ATTEST: _____________________________ City Clerk DRAFT 8-19-15 RIGHT OF FIRST OFFER AND RIGHT OF FIRST REFUSAL 4200 County Road 30 THIS RIGHT OF FIRST OFFER AND RIGHT OF FIRST REFUSAL (“Agreement”) is made and entered into this _______ day of ____________, 2015 (“Effective Date”), by and between THE CITY OF FORT COLLINS, COLORADO, a municipal corporation (“Fort Collins”) and THE CITY OF LOVELAND, COLORADO, a municipal corporation (“Loveland”). RECITALS A. Fort Collins is the owner of a parcel of real property as more particularly described in Exhibit A attached hereto and incorporated herein by reference (the “Property”). B. The Property and associated water interests were purchased by Fort Collins and Loveland in accordance with an Intergovernmental Agreement between the parties dated September ____, 2015 (the “IGA”). C. Fort Collins has agreed to grant to Loveland a right of first offer and a right of first refusal to purchase the Property, subject to the terms and conditions set forth below. NOW, THEREFORE, in consideration of the terms and conditions of the IGA, and for the further consideration of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and adequacy of which are hereby confessed and acknowledged by Fort Collins, the parties hereto agree as follows: 1. Term. All rights and interests created and set forth in this Agreement shall remain in existence and shall constitute a valid encumbrance upon the Property; except that such rights and interests shall be extinguished by the occurrence of any one or more of the following events: (a) a sale of the entire Property to Loveland, its successor in interest or assignee, upon compliance by Fort Collins with all of the terms and conditions of this Agreement; or (b) a sale of the entire Property to any person other than Loveland or its successor in interest or assignee, pursuant to and upon compliance by Fort Collins with all of the terms and conditions of this Agreement. 2. Applicability/Exclusions. The right of first offer and right of first refusal described in this Agreement shall apply to all transactions involving a conveyance of title to the Property, or any portion thereof, including but not limited to a purchase, an exchange, or any other transfer of interest in the Property for consideration, other than leases, easements and rights of way. EXHIBIT A DRAFT 8-19-15 3. Right of First Offer. (a) If at any time during the Term Fort Collins decides to offer for sale all or any interest in the Property (the “Sale Property”), Fort Collins shall submit a contract offering to sell the Sale Property to Loveland at the price (“Sale Price”) and on the terms set forth in the proposed contract (the “Sale Offer”). The Sale Price shall be stated as Fort Collins’s asking price for the Sale Property (“Asking Price”) less twenty two and 5/10 percent (22.5%) in accordance with Loveland’s contribution to the land purchase as described in the IGA. (b) Loveland shall have thirty (30) days after receipt of the Sale Offer (the “Offer Period”) within which to accept the Sale Offer. Acceptance shall be made, if at all, by Loveland executing the Sale Offer and returning an executed copy to Fort Collins within the Offer Period. (c) If Loveland accepts the Sale Offer, Fort Collins and Loveland shall proceed to close the sale and purchase of the Sale Property on the terms and conditions set forth in the Sale Offer, along with such other terms and conditions as the parties may agree to in writing. Notwithstanding the foregoing and notwithstanding anything to the contrary contained in the Sale Offer, such closing shall occur within sixty (60) days, but not sooner than thirty (30) days, after the date of acceptance by Loveland of the Sale Offer, at a time and place mutually acceptable to Fort Collins and Loveland. (d) If Loveland does not accept the Sale Offer within the Offer Period, then for a period of two (2) years after the date the Sale Offer was given to Loveland (the “Sale Period”), Fort Collins shall have the right to sell the Sale Property at a price not less than 90% of the Asking Price set forth in the Sale Offer, on terms and provisions materially similar to those set forth in the Sale Offer. On expiration of the Sale Period Fort Collins may not sell the Sale Property without once again offering the Sale Property to Loveland pursuant to the foregoing right of first offer. (e) Upon the closing of the sale pursuant to the terms of subsection (d), Loveland’s rights under this paragraph 3 and paragraph 4 below shall automatically terminate as to the Sale Property, without need for further action by any party. (g) If, during the Sale Period, Fort Collins desires to sell the Sale Property at a price less than 90% of the Asking Price set forth in the Sale Offer, or on terms materially different from the terms set forth in the Sale Offer, then Fort Collins shall once again offer the Sale Property to Loveland in the manner set forth above, which offer shall remain open for thirty (30) days. (h) The right of first refusal hereinafter set forth shall not apply to any offer received by Fort Collins during the Sale Period so long as the offer is at a price at DRAFT 8-19-15 least 90% of the Asking Price and on terms which are not materially different from the term set forth in the Sale Offer. 4. Right of First Refusal. (a) If during the Applicable Term Fort Collins receives a bona fide written offer to purchase (“the Purchase Offer”) all or any portion of Fort Collins's interest in the Property (“the Purchase Property”), which Fort Collins is willing to accept, Fort Collins shall deliver to Loveland a copy of the Purchase Offer signed by the purchaser and shall indicate to Loveland, in writing, that Fort Collins is ready, willing and able to accept the Purchase Offer. (b) Loveland shall have thirty (30) days after receipt of the Purchase Offer (the “Offer Period”) within which to notify Fort Collins in writing that Loveland will purchase the Purchase Property at the price and on the terms and provisions set forth in the Purchase Offer, which notice shall be accompanied by cash or certified funds payable to Fort Collins in the amount of the earnest money deposit, if any, required by the terms of the Purchase Offer. (c) If Loveland notifies Fort Collins of Loveland's intent to acquire the Purchase Property on the terms and conditions set forth in the Purchase Offer, then Fort Collins and Loveland shall, within fifteen (15) days after such notice, execute an agreement of purchase and sale at the price, less twenty two and 5/10 percent (22.5%) in accordance with Loveland’s contribution to the land purchase as described in the IGA, and on the terms and conditions set forth in the Purchase Offer, along with such other terms and conditions as the parties may agree in writing. Notwithstanding the foregoing and notwithstanding anything to the contrary contained in the Purchase Offer, such closing shall occur within sixty (60) days, but not sooner than thirty (30) days, after execution of the purchase and sale agreement, at a time and place mutually acceptable to Fort Collins and Loveland. (d) If Loveland fails to notify Fort Collins of Loveland's intent to acquire the Purchase Property within the Offer Period, then Fort Collins may sell the Purchase Property in accordance with the terms of the Purchase Offer, and Loveland shall have no further right to purchase the Purchase Property pursuant to the terms of this right of first refusal or the foregoing right of first offer. Loveland’s failure to exercise its right to purchase with respect to any transfer of less than all of the Property shall not be deemed a waiver of such right with respect to that part of the Property owned by Fort Collins after such transfer. (e) If Fort Collins does not sell the Purchase Property pursuant to the Purchase Offer, then the right of first refusal shall not be deemed waived or cancelled but shall remain in full force and effect. Upon receipt of any subsequent Purchase Offer, Fort Collins shall once again offer the Purchase Property to Loveland in the same manner DRAFT 8-19-15 as hereinabove provided, and Loveland shall have an additional thirty (30) days within which to accept such subsequent Purchase Offer. 5. Disposition of Sale Proceeds. If Loveland declines to purchase the Property or portions of the Property pursuant to its rights listed in paragraphs 3 and 4 above and Fort Collins sells such interest in the Property or any portion of the Property to a third party, the proceeds of such disposition shall be divided between Fort Collins and Loveland in accordance with paragraphs 3.b and 1.e of the IGA. 6. Notice. Any notice required or desired to be given by any party pursuant to this Contract shall be in writing and may be personally delivered; mailed, certified mail, return receipt requested; sent by telephone facsimile with a hard copy sent by regular mail; or sent by a nationally recognized, receipted, overnight delivery service. Any such notice shall be deemed given when personally delivered; if mailed, three (3) delivery days after deposit in the United States mail, postage prepaid; if sent by telephone facsimile on the day sent if sent on a business day during normal business hours of the recipient (8:00 a.m. - 5:00 p.m.) or on the next business day if sent at any other time; or if sent by overnight delivery service, one (1) business day after deposit in the custody of the delivery service. The addresses and telephone numbers for the mailing, transmitting, or delivering of notices shall be as follows: If to Loveland, to: Parks and Recreation Open Lands Manager 500 E. Third Street, Suite 200 Loveland, CO 80537 With a copy to: City Attorney’s Office 500 E. Third St. Loveland, CO 80537 If to Fort Collins, to: City of Fort Collins Attn: City Manager 300 LaPorte Ave. P. O. Box 580 Fort Collins, CO 80522 With a copy to: City of Fort Collins DRAFT 8-19-15 Attn: Real Estate Services 300 LaPorte Ave. P. O. Box 580 Fort Collins, CO 80522 Notice of a change of address of any party shall be given in the same manner as all other notices as hereinabove provided. 7. Assignment. This Agreement may not be assigned by Loveland without the prior written consent of Fort Collins. 8. Binding Effect. This Agreement shall run with the land and shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns. 9. Notice to Buyers. Loveland shall cause this Agreement to be recorded in the real property records of Larimer County, Colorado, promptly upon execution and delivery of the same. Fort Collins shall further provide actual notice of the terms of this Agreement to any party seeking to acquire any interest in or rights to the Property. 10. Remedies. In the event of default by Fort Collins in the performance of its obligations under this Agreement, Loveland shall have the right to an action for specific performance or damages, or both. In the event of any litigation arising out of this Agreement, the court shall award to the party that substantially prevails in such litigation, all costs and reasonable attorneys' fees. IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day and year first above written. [Signature pages follow] DRAFT 8-19-15 THE CITY OF FORT COLLINS, COLORADO a Municipal Corporation Date: By: Wade O. Troxell, Mayor ATTEST: City Clerk APPROVED AS TO FORM: Assistant City Attorney STATE OF COLORADO ) ) ss COUNTY OF ____________ ) The foregoing instrument was acknowledged before me this day of __________________ , 2015, by Wade O. Troxell as Mayor of the City of Fort Collins. Witness my hand and official seal. My Commission expires: ______________ ____ Notary Public DRAFT 8-19-15 THE CITY OF LOVELAND, COLORADO a Municipal Corporation Date: By: ATTEST: City Clerk APPROVED AS TO FORM: Assistant City Attorney DRAFT 8-19-15 EXHIBIT A Legal Description The W1/2 of the SW1/4 and the SW1/4 of the NW1/4 of Section 22, Township 6 North, Range 68 West of the 6th P.M., County of Larimer, State of Colorado EXCEPTING THEREFROM the right of way for County Road as established and/or used; ALSO EXCEPTING THEREFROM those parcels described in Deeds recorded December 11, 1985, at Reception No. 85062821 and August 20, 1991, at Reception No. 91039306. (Street Address: 4200 East County Road 30, Fort Collins, Colorado)