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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/21/2015 - FIRST READING OF ORDINANCE NO. 048, 2015, AUTHORIZAgenda 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 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) SUSTAINABILITY ASSESSMENT SUMMARY DATE: April 8, 2015 SUBJECT: Sustainability Assessment (SA) Summary for Summary: Owner and developer of 354 Walnut Street has requested the purchase of 3,800 sq ft of City owned property that is located immediately adjacent to the owner’s property. The conveyance will be subject to a reservation for public access to ensure that the 20’ wide City owned property continues to function as it does today, providing pedestrian and vehicular access to a rear alleyway. The sale of the property will be valued at current market value. Generally, our group thought the action of selling 3,800 sq ft of City property to the property owner/developer interested in developing a downtown hotel, while retaining a public access easement across the property, was a relatively benign action in terms of its direct impacts socially, economically, and environmentally. That said, we did assess incremental and positive impacts in these same areas relative to the downtown hotel which will be more successful as a result of the conveyance. Please refer to our report for specific conclusions and discussions in these areas. Economic , 2.0 Social , 2.0 Environmental ‐1.5 Rating Average, 1.7 ‐4.0 ‐3.0 ‐2.0 ‐1.0 0.0 1.0 2.0 3.0 4.0 Sustainability Rating Rating without mitigation Rating with mitigation Rating Legend 3 Very positive 2 Moderately positive 1 Slightly positive 0 Not relevant or neutral -1 Slightly negative -2 Moderately negative, impact likely -3 Very negative, impact expected ATTACHMENT 1 *The Fort Collins SAT was developed by modifying the Triple Bottom Line (TBL) Analysis Tool developed by Eugene, Oregon, July 2009. 1 City of Fort Collins SUSTAINABILITY ASSESSMENT TOOL (SAT) (November 2014) Creating a sustainable community Plan Fort Collins is an expression of the community’s resolve to act sustainably: to systemically, creatively, and thoughtfully utilize environmental, human, and economic resources to meet our present needs and those of future generations without compromising the ecosystems upon which we depend. How to use the tool The Sustainability Assessment Tool (SAT) is designed to inform a deeper understanding of how policy and program choices affect the social equity, environmental health and economic health of the community. The City of Fort Collins has developed a Sustainability Assessment Framework that describes the purpose, objectives, and guidelines to assist City Program/Project Managers to determine: • The process for cross-department collaboration in using the SAT • Timing for applying a SAT • When to apply a SAT • How to document the results of the SAT and present at City Council Work Sessions and Regular Council Meetings Further detailed guidance is available at: http://citynet.fcgov.com/sustainability/sustainabilityassessments.php The SAT does not dictate a particular course of action; rather, the analysis provides policy makers and staff with a greater awareness of some of the trade-offs, benefits and consequences associated with a proposal, leading to more mindful decision-making. Brief description of proposal Please provide a brief description of your proposal – 100 words or less Owner and developer of 354 Walnut Street has requested the purchase of 3,800 sq ft of City owned property that is located immediately adjacent to the owner’s property. The conveyance will be subject to a reservation for public access to ensure that the 20’ wide City owned property continues to function as it does today, providing pedestrian and vehicular access to a rear alleyway. The sale of the property will be valued at current market value. Staff lead(s): Please note staff name, position/division and phone number Patrick Rowe, Real Estate Specialist III, x6127 2 Social Equity Described: Placing priority upon protecting, respecting, and fulfilling the full range of universal human rights, including those pertaining to civil, political, social, economic, and cultural concerns. Providing adequate access to employment, food, housing, clothing, recreational opportunities, a safe and healthy environment and social services. Eliminating systemic barriers to equitable treatment and inclusion, and accommodating the differences among people. Emphasizing justice, impartiality, and equal opportunity for all. Goal/Outcome: It is our priority to support an equitable and adequate social system that ensures access to employment, food, housing, clothing, education, recreational opportunities, a safe and healthy environment and social services. Additionally, we support equal access to services and seek to avoid negative impact for all people regardless of age, economic status, ability, immigration or citizenship status, race/ethnicity, gender, relationship status, religion, or sexual orientation. Equal opportunities for all people are sought. A community in which basic human rights are addressed, basic human needs are met, and all people have access to tools and resources to develop their capacity. This tool will help identify how the proposal affects community members and if there is a difference in how the decisions affect one or more social groups. Areas of consideration in creating a vibrant socially equitable Fort Collins are: basic needs, inclusion, community safety, culture, neighborhoods, and advancing social equity. Analysis Prompts • The prompts below are examples of the issues that need to be addressed. They are not a checklist. Not all prompts and issues will be relevant for any one project. Issues not covered by these prompts may be very pertinent to a proposal - please include them in the analysis.  Is this proposal affected by any current policy, procedure or action plan? Has advice been sought from organizations that have a high level of expertise, or may be significantly affected by this proposal? Proposal Description Owner and developer of 354 Walnut Street has requested the purchase of 3,800 sq ft of City owned property that is located immediately adjacent to the owner’s property. The conveyance will be subject to a reservation for public access so that the 20’ wide City owned property can continue to function as it does today, providing pedestrian and vehicular access to a rear alleyway. The sale of the property will be valued at current market value. The proposal is for the request of the conveyance of 3,800 sq ft of City property subject to a public access easement reservation. This analysis is not meant to evaluate the idea of a downtown hotel, but rather the development opportunities with this sale and without this sale. 1. Meeting Basic Human Needs • How does the proposal impact access to food, shelter, employment, health care, educational and recreational opportunities, a safe and healthy living environment or social services? • Does this proposal affect the physical or mental health of individuals, or the status of public health in our community? • How does this proposal contribute to helping people achieve and maintain an adequate standard of living, including housing, or food affordability, employment opportunities, healthy families, or other resiliency factors? Analysis/Discussion *Conveyance of the City property facilitates a zero lot line development (on the existing site) with windows. Windows are an important construction component (in addition to being a financial necessity for a hotel) allowing for natural daylighting and views into the hotel. *Our group did not believe that the conveyance impacted the likelihood that future development would restrict daylight access to adjacent property owners. *Direct and indirect driver of employment (e.g., hotel staff and additional downtown employment as a result of hotel guests spending money in the downtown area). 2. Addressing Inequities and being Inclusive *Inclusive to public by reserving public access uses as condition of conveyance 3 • Are there any inequities to specific population subsets in this proposal? If so, how will they be addressed? • Does this proposal meet the standards of the Americans with Disabilities Act? • How does this proposal support the participation, growth and healthy development of our youth? Does it include Developmental Assets? • If the proposal affects a vulnerable section of our community (i.e. youth, persons with disabilities, etc.) (i.e., not outright sale of property, the public will still be able to use the 20’ strip for access). 3. Ensuring Community Safety • How does this proposal address the specific safety and personal security needs of groups within the community, including women, people with disabilities, seniors, minorities, religious groups, children, immigrants, workers and others? *May result in public access enhancements (aesthetic, art components, other feature enhancements consistent with an alleyway) as a result of redevelopment of adjacent site. 4. Culture • Is this proposal culturally appropriate and how does it affirm or deny the cultures of diverse communities? • How does this proposal create opportunities for artistic and cultural expression? *Our group did not believe that the conveyance had a direct cultural aspect, but did believe the project was in keeping with downtown uses and would be a welcome addition to the more typical bar and retail developments. 5. Addressing the Needs of Neighborhoods • How does this proposal impact specific Fort Collins neighborhoods? • How are community members, stakeholders and interested parties provided with opportunities for meaningful participation in the decision making process of this proposal? • How does this proposal enhance neighborhoods and stakeholders’ sense of commitment and stewardship to our community? *None – given that property will continue to be used in as an alleyway, just as it does today. 6. Building Capacity to Advance Social Equity • What plans have been made to communicate about and share the activities and impacts of this proposal within the City organization and/or the community? • How does this proposal strengthen collaboration and cooperation between the City organization and community members? *None – given that property will continue to be used as an alleyway, just as it does today. Social Equity Summary 4 Overall, we felt like the conveyance was moderately positive since it will facilitate a more substantial development of the adjacent site while maintaining the public access uses that the site is used for today. Key issues: *Facilitates the full development of an adjacent site into a downtown hotel. Without the site, which is being utilized as a setback, the downtown hotel would need to be significantly smaller (it’s conceivable that such a smaller project may not be financially feasible, though such a conclusion is beyond the scope of this analysis). *Public access is being maintained across the site. Potential mitigation strategies: Overall, the effect of this proposal on social equity would be: Please reach a consensus or take a group average on the rating, enter an “x” in one of the following boxes and indicate the overall rating. Rating represents group consensus Yes Rating represents group average Yes +3 +2 +1 0 ‐1 ‐2 ‐3 Very positive Moderately positive Slightly positive Not relevant or neutral Slightly negative Moderately negative, impact likely Very negative, impact expected X Environmental Health Described: Healthy, resilient ecosystems, clean air, water, and land. Decreased pollution and waste, lower carbon emissions that contribute to climate change, lower fossil fuel use, decreased or no toxic product use. Prevent pollution, reduce use, promote reuse, and recycle natural resources. Goal/Outcome: Protect, preserve, and restore the natural environment to ensure long-term maintenance of ecosystem functions necessary for support of future generations of all species. Avoid or eliminate adverse environmental impacts of all activities, continually review all activities to identify and implement strategies to prevent pollution; reduce energy consumption and increase energy efficiency; conserve water; reduce consumption and waste of natural resources; reuse, recycle and purchase recycled content products; reduce reliance on non-renewable resources. Analysis Prompts • The prompts below are examples of issues that need to be addressed. They are not a checklist. Not all prompts and issues will be relevant for any one project. Issues not covered by these prompts may be very pertinent to a proposal - please include them in the analysis. • Is this proposal affected by any current policy, procedure or action plan? Has advice been sought from organizations that have a high level 5 of expertise, or may be significantly affected by this proposal? 1. Environmental Impact • Does this proposal affect ecosystem functions or processes related to land, water, air, or plant or animal communities? • Will this proposal generate data or knowledge related to the use of resources? • Will this proposal promote or support education in prevention of pollution, and effective practices for reducing, reusing, and recycling of natural resources? • Does this proposal require or promote the continuous improvement of the environmental performance of the City organization or community? • Will this proposal affect the visual/landscape or aesthetic elements of the community? Analysis/Discussion *Refer to section summary. 2. Climate Change • Does this proposal directly generate or require the generation of greenhouse gases (such as through electricity consumption or transportation)? • How does this proposal align with the carbon reduction goals for 2020 goal adopted by the City Council? • Will this proposal, or ongoing operations result in an increase or decrease in greenhouse gas emissions? • How does this proposal affect the community’s efforts to reduce greenhouse gas emissions or otherwise mitigate adverse climate change activities? *Refer to section summary. 3. Protect, Preserve, Restore • Does this proposal result in the development or modification of land resources or ecosystem functions? • Does this proposal align itself with policies and procedures related to the preservation or restoration of natural habitat, greenways, protected wetlands, migratory pathways, or the urban growth boundary • How does this proposal serve to protect, preserve, or restore important ecological functions or processes? *Refer to section summary. 4. Pollution Prevention • Does this proposal generate, or cause to be generated, *Refer to section summary. 6 waste products that can contaminate the environment? • Does this proposal require or promote pollution prevention through choice of materials, chemicals, operational practices and/or engineering controls? • Does this proposal require or promote prevention of pollution from toxic substances or other pollutants regulated by the state or federal government? • Will this proposal create significant amounts of waste or pollution? 5. Rethink, Replace, Reduce, Reuse, Recirculate/Recycle • Does this proposal prioritize the rethinking of the materials or goods needed, reduction of resource or materials use, reuse of current natural resources or materials or energy products, or result in byproducts that are recyclable or can be re-circulated? *Refer to section summary. 6. Emphasize Local • Does this proposal emphasize use of local materials, vendors, and or services to reduce resources and environmental impact of producing and transporting proposed goods and materials? • Will the proposal cause adverse environmental effects somewhere other than the place where the action will take place? *Not applicable/no change (conveyance will result in change of ownership, though City will reserve public access rights so property can continue to operate in same manner as it does today). Environmental Health Summary Primarily our group did not feel that the conveyance of the property would result in noteworthy environmental impacts given that the function of the strip of property would be maintained through the City’s reservation of an access easement. We agreed as a group that to the extent that the conveyance makes it more likely that the adjacent property redevelops into a hotel site, brings several positive environmental benefits (this is straying into evaluating the hotel rather than the proposed conveyance, but we felt this was appropriate for this section given that the proposal itself doesn’t result in any changes in the current use/function of the property): *Hotel in an urban environment cuts down on vehicle traffic as guests can utilize other modes (public transportation, walking, etc.) *Positive environmental impact to redevelop vacant (perhaps even blighted site to some) urban site versus the development of a green site (i.e., vacant land). Key issues: Potential mitigation strategies: 7 Overall, the effect of this proposal on environmental health would be: Please reach a consensus or take a group average on the rating, enter an “x” in one of the following boxes and indicate the overall rating. Rating represents group consensus Yes Rating represents group average Yes +3 +2 +1 0 ‐1 ‐2 ‐3 Very positive Moderately positive Slightly positive Not relevant or neutral Slightly negative Moderately negative, impact likely Very negative, impact expected X Economic Health Described: Support of healthy local economy with new jobs, businesses, and economic opportunities; focus on development of a diverse economy, enhanced sustainable practices for existing businesses, green and clean technology jobs, creation or retention of family waged jobs. Goal/Outcome: A stable, diverse and equitable economy; support of business development opportunities. Analysis Prompts • The prompts below are examples of the issues that need to be addressed. They are not a checklist. Not all prompts and issues will be relevant for any one project. Issues not covered by these prompts may be very pertinent to a proposal - please include them in the analysis • Is this proposal affected by any current policy, procedure or action plan? Has advice been sought from organizations that have a high level of expertise, or may be significantly affected by this proposal? 1. Infrastructure and Government • How will this proposal benefit the local economy? • If this proposal is an investment in infrastructure is it designed and will it be managed to optimize the use of resources including operating in a fossil fuel constrained society? • Can the proposal be funded partially or fully by grants, user fees or charges, staged development, or partnering with another agency? • How will the proposal impact business growth or operations (ability to complete desired project or remain in operation), such as access to needed permits, infrastructure and capital? Analysis/Discussion *Economic Health Impacts discussion spanned several areas. Please refer to section summary. 2. Employment and Training • What are the impacts of this proposal on job creation within Larimer County? • Are apprenticeships, volunteer or intern opportunities *Economic Health Impacts discussion spanned several areas. Please refer to section summary. 8 available? • How will this proposal enhance the skills of the local workforce? 3. Diversified and Innovative Economy • How does this proposal support innovative or entrepreneurial activity? • Will “clean technology” or “green” jobs be created in this proposal? • How will the proposal impact start-up or existing businesses or development projects? *Economic Health Impacts discussion spanned several areas. Please refer to section summary. 4. Support or Develop Sustainable Businesses • What percentage of this proposal budget relies on local services or products? Identify purchases from Larimer County and the State of Colorado. • Will this proposal enhance the tools available to businesses to incorporate more sustainable practices in operations and products? • Are there opportunities to profile sustainable and socially responsible leadership of local businesses or educate businesses on triple bottom line practices? *Economic Health Impacts discussion spanned several areas. Please refer to section summary. 5. Relevance to Local Economic Development Strategy *Economic Health Impacts discussion spanned several areas. Please refer to section summary. Economic Prosperity Summary As stated in prior sections, the proposal to convey property helps to facilitate the development of an adjacent property as a downtown hotel. Without the conveyance it’s possible the hotel would not be feasible or would have to be reimagined in size and scope. Viewed from that lens, the incremental economic impact associated with selling 3,800 sq ft and reserving a public access easement across the property, is a significant positive. Our group’s shared consensus was that a more successful hotel project would result in an increase in the following economic impacts: -increased direct and indirect employment -increased tax generation -compensation for conveyance will go into the general fund and can be utilized for future value added City activities Key issues: Potential mitigation strategies: 9 Overall, the effect of this proposal on economic prosperity will be: Please reach a consensus or take a group average on the rating, enter an “x” in one of the following boxes and indicate the overall rating. Rating represents group consensus Yes Rating represents group average Yes +3 +2 +1 0 ‐1 ‐2 ‐3 Very positive Moderately positive Slightly positive Not relevant or neutral Slightly negative Moderately negative, impact likely Very negative, impact expected X ATTACHMENT 2 - 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