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Home My WebLink AboutCOUNCIL - AGENDA ITEM - 01/16/2018 - RESOLUTION 2018-006 AUTHORIZING THE LEASE OF 11.85Agenda Item 17 Item # 17 Page 1 AGENDA ITEM SUMMARY January 16, 2018 City Council STAFF Mark Sears, Natural Areas Manager Tawnya Ernst, Real Estate Specialist III Ingrid Decker, Legal SUBJECT Resolution 2018-006 Authorizing the Lease of 11.85 Acres of City-Owned Natural Area Property to Hageman Earth Cycle, LLC. EXECUTIVE SUMMARY The purpose of this item is for City Council to consider the proposed lease of approximately 11.85 acres of land to Roger Hageman, Hageman Earth Cycle (HEC). In January 2017, staff asked Council to consider selling 11.85 acres of land; Council did not approve the sale based in part on the Land Conservation and Stewardship Board’s recommendation to not sell the land. Council asked staff to develop land disposition and land-leasing guidelines for its review. Four months ago, staff was directed by the City Manager to seek Council approval of a long-term lease rather than a sale. STAFF RECOMMENDATION Staff recommends adoption of the Resolution. BACKGROUND / DISCUSSION The 15 acres currently being leased to HEC were acquired as part of a 94.82-acre purchase in 1998 from Flatiron Companies as an addition to Running Deer Natural Area. Prior to the City’s purchase in 1998, the 15 acres was leased by HEC for the operation of a yard waste/organic material recycling business. The land has continued to be leased to HEC and the current lease will expire in 2018. The proposed lease area has been reduced to 11.85 acres after the exclusion of a wetland and a boundary adjustment. Per the recently adopted leasing guidelines and as a general practice, the City acquires natural areas and open spaces with no intention to lease the land. However, there are situations where a lease may be in the City’s best interests and that support the core purposes and values of natural areas such as habitat, open space, scenic views, and agriculture. Therefore, the City Manager or City Council may consider leasing property purchased with Natural Areas funds if one or more of the following conditions exist: 1. Land is acquired subject to an existing lease. The lease continues until it can be terminated or until Natural Areas is ready to take over management of the property. 2. A parcel is purchased partly or primarily for its agricultural values, and leasing to a private operator is recommended to maintain that value. 3. Land is acquired that benefits from grazing and/or haying as a vegetation management tool, and a grazing or haying lease is recommended to manage the property. Based upon Item 1 above and the following factors, staff believes the proposed lease is justified: • Given the 20-year tenure of the current lessee. Agenda Item 17 Item # 17 Page 2 • HEC provides an important yard waste recycling service to the community, which is consistent with the City’s zero waste goals and Climate Action Plan. Natural Areas supports and benefits from the City’s climate goals, and this lease lets Natural Areas further contribute to these broader natural resource conservation goals. • The proposed lease restricts the use of the property to its current use. • The long-term lease will provide HEC confidence in making additional investments in the business. • While the 11.85 acres could be fully integrated into the 294-acre Running Deer Natural Area (and that remains a possibility for the future upon termination of the lease) the natural area’s critical conservation, ecological, and recreation attributes will not be substantially impaired by this lease. • Compared to selling the property to HEC as was previously proposed, leasing the property allows the property to remain in the Natural Areas ownership and potentially become part of Running Deer Natural Area in the future, while still providing the other community benefits described above. In order to protect the present and future conservation values on the property, Natural Areas proposes to lease the 11.85 acres of land with the following restrictions and conditions: • Option Period - Prior to the new lease going into effect, Hageman will be expected to complete work described Attachment 2, page 1, and remove all non-saleable and non-process-able piles and items from the leased site, such as trash, trash piles, and waste products. • Construct new earth berms as described in Attachment 2, page 2, within 6 months of the commencement date. • Deposit $10,000 in escrow on the commencement date as a security for successful establishment of the vegetation on the new berms within five years or forfeit the $10,000. • The 11.85 acres of land can only be used for recycling yard waste and other organic materials and no permanent structures can be constructed. • After the termination of the lease, the property must be left in a clean and well-graded state, more specifically described as: no hazardous materials left onsite; no environmental remediation needed per the City’s Phase I and/or Phase II reports; all stock piles of materials removed; all berms removed; and all Owner’s equipment and materials removed. • Natural Areas will reseed disturbed areas on retained City property. • Natural Areas will construct a double-rail wooden fence along certain boundaries to define the boundary, to minimize trespassing, and to help catch blowing trash. • Natural Areas will install carsonite boundary markers every 40 feet and at corners in certain areas to define the boundary. CITY FINANCIAL IMPACTS The proceeds from the lease of any natural area must be reinvested by the City in natural area initiatives; the proceeds may not be diverted to another purpose. Hageman Earth Cycle will pay Natural Areas $1,763.81/month ($21,165.72 per year) to lease the approximately 11.85 acres of land; which is the current lease rate. The recently appraised value of the 11.85 acres with the restrictions as described above was $21,610 per acre or a total of $255,000. Based upon the appraised value, the lease rate is 8.3 percent; which staff believes to be a fair lease rate. The lease rate will be adjusted annually in accordance with the Denver- Boulder-Greeley CPI-U. BOARD / COMMISSION RECOMMENDATION The Land Conservation and Stewardship Board voted unanimously, at its regular meeting on November 8, 2017, to recommend that City Council approve the 20-year lease of approximately 11.85 acres of land that was originally purchased for Running Deer Natural Area. PUBLIC OUTREACH There was no public outreach regarding the proposed lease. Agenda Item 17 Item # 17 Page 3 ATTACHMENTS 1. Running Deer Vicinity Map (PDF) 2. Work to be completed prior to commencement of lease (PDF) 3. Land Lease Guidelines (PDF) 4. Land Disposition Guidelines (PDF) 5. Land Conservation and Stewardship Board minutes, November 8, 2017 (PDF) E Prospect Rd S County Road 9 ke Rd !"`$ !"`$ ExisƟng lease area (14.828 acres) ConservaƟon easement Environmental Learning Center Running Deer CoƩonwood Hollow Natural Area Riverbend Ponds Natural Area Running Deer Vicinity Map Hageman’s properƟes ATTACHMENT 1 0 50 100 200 400 feet 50’ STREAM BUFFER + 100’ WETLAND BUFFER N. PROSPECT RD. POTENTIAL PROSPECT RD. WIDENING ROW: WIDTH TBD BY CITY ENGINEERING LEGEND HAGEMAN PARCEL WETLANDS + WATER BODIES WETLAND | STREAM | DITCH BUFFERS: 50’-100’ EXISTING TOP OF BERM AREAS TO REMAIN IN LESSOR’S MANAGEMENT 2.73 acres have been extracted from the parcel in question and will remain in Lessor’s management. The areas are comprised of a combination of buffers of various types that are annotated on the map. RUNNING DEER NATURAL AREA EXHIBIT D: PAGE 1 OF 4 | WORK TO BE COMPLETED PRIOR TO COMMENCEMENT DATE OF LEASE APPROXIMATE DIMENSIONS+ AREA OF POTENTIAL REDEVELOPMENT: HAGEMAN OWNED (FENCE POST PROPERTIES OR BIGFOOT PROPERTIES) All setbacks, buffers and building envelopes to be set during the development review process. Potential improvements may include the relocation of the main office, the relocation of the scale, and the reconfiguration of site circulation. Future City projects (such as the widening of Prospect Rd.) may impact site development. AREA TO BE LEASED TO LESSEE 11.85 acres available to be leased by Lessee to support materials processing. To facilitate future management, selected buffer zones have been extracted from the parcel and will remain in the Lessor’s management. + Diagram only: not to scale. ++ Survey required. 299’ 456’ 452’ 253’ 115’ 100’ 65’ 400’ fence start switch to carsonite fence end 452’ 2.30 ACRES .43 ACRES 11.85 ACRES 14.58 TOTAL ACRES 393’ 15’ 50’ CONVEYANCE BUFFER Proposed property line to be surveyed; Lessee to relocate and reconstruct berms off Lessor's retained property prior to closing. 0 50 100 200 400 feet 50’ STREAM BUFFER + 100’ WETLAND BUFFER N. PROSPECT RD. POTENTIAL PROSPECT RD. WIDENING ROW: WIDTH TBD BY CITY ENGINEERING LEGEND HAGEMAN PARCEL WETLANDS + WATER BODIES WETLAND | STREAM | DITCH BUFFERS: 50’-100’ EXISTING TOP OF BERM AREAS TO REMAIN IN LESSOR’S MANAGEMENT 2.73 acres have been extracted from the parcel in question and will remain in Lessor’s management. The areas are comprised of a combination of buffers of various types that are annotated on the map. RUNNING DEER NATURAL AREA EXHIBIT D: PAGE OF 4 | WORK TO BE COMPLETED AFTER COMMENCEMENT DATE OF LEASE APPROXIMATE DIMENSIONS+ AREA OF POTENTIAL REDEVELOPMENT: HAGEMAN OWNED (FENCE POST PROPERTIES OR BIGFOOT PROPERTIES) All setbacks, buffers and building envelopes to be set during the development review process. Potential improvements may include the relocation of the main office, the relocation of the scale, and the reconfiguration of site circulation. Future City projects (such as the widening of Prospect Rd.) may impact site development. AREA TO BE LEASED TO LESSEE 11.85 acres available to be leased by Lessee to support materials processing. To facilitate future management, selected buffer zones have been extracted from the parcel and will remain in the Lessor’s management. + Diagram only: not to scale. ++ Survey required. 299’ 456’ 452’ 253’ 115’ 100’ 65’ 400’ fence start switch to carsonite fence end 452’ 2.30 ACRES .43 ACRES 11.85 ACRES 14.58 TOTAL ACRES 393’ 15’ 50’ CONVEYANCE BUFFER No berm required. Existing fence to be removed by Lessor in cooperation with Lessee. A double rail fence to be installed BOUNDARY DEMARCATION | PLANTED BERMS 4:1 SLOPE | 5’ TALL 4:1 SLOPE | 2’-6” TALL 20’ 10’ 2’-6” 5’ LESSOR’S RETAINED PROPERTY | LESSEE’S PROPERTY BOUNDARY LESSOR’S RETAINED PROPERTY | LESSEE’S PROPERTY BOUNDARY PERFORMANCE STANDARD FOR THE ESTABLISHMENT OF VEGETATION ON THE BERMS: The vegetation will be considered established when native vegetation represents > seventy percent (70%) of the vegetation on site, and no bare spots larger than one square meter are present. The adequacy of foliage and ground cover shall be determined by the Natural Areas Environmental Planner. For seeding, the attached custom seed mix is recommended by the Natural Areas Department and is to be hand-broadcast. The mix can be acquired from: Granite Seed | Contact: Miranda McCutchen E-mail: miranda@graniteseed.com Direct: 720-496-0592 Cell: 720-541-0860 For shrub establishment, Natural Areas recommends that seed from naturally occurring Rubber Rabbitbrush (Ericameria nauseosa) be collected from adjacent specimens at Running Deer Natural Area and hand-broadcast on berms. Natural Areas will assist with seed collection and broadcasting. To support vegetation establishment, the Natural Areas Department recommends seasonal mowing. Broadcast spraying is discouraged to protect water quality, and spot spraying is recommended only in limited applications where species can be appropriately identified as noxious weeds. EXHIBIT D: PAGE 3 OF 4 | BOUNDARY DEMARCATION | PLANTED BERMS Salt and pepper grass Deschampsia caespitosa 0.02 Inland Saltgrass Distichlis stricta 0.09 Canada Wild Rye Elymus canadensis 0.41 Bottlebrush squirreltail Elymus elymoides 0.25 Needleandthread Hesperostipa comata 0.41 Prairie Junegrass Koeleria macrantha 0.02 Green Needlegrass Nassella viridula 0.26 Switchgrass Panicum virgatum 0.18 Western Wheatgrass Pascopyrum smithii 0.41 Marsh bluegrass Poa palustris 0.05 Little Bluestem Schizachyrium scoparium 0.18 Yellow Indiangrass Sorghastrum nutans 0.35 Alkali Sacaton Sporobolus airoides 0.03 Sand Dropseed Sporobolus cryptandrus 0.01 Mix Total 8.35 Contractor is responsible for providing seed tags. This mix includes Pure Live Seed (PLS); contractor must order it that way. All materials furnished shall be free of Colorado State noxious weeds as defined in Article III, Section 21-40 of the Code of the City of Fort Collins. For questions or concerns, please call: Crystal Strouse Natural Areas Technician/Botanist Cell – 970-402-6385, Office – 970-416-2133 CUSTOM SEED MIX EXHIBIT D: PAGE 4 OF 4 | CUSTOM SEED MIX ATTACHMENT 3 ATTACHMENT 4 Land Conservation & Stewardship Board November 8, 2017 Meeting Minutes Excerpt Proposed Lease of 11.85 acres of Running Deer Natural Area to Hageman Earth Cycle Mark Sears, Natural Areas Manager reviewed the proposed 20-year lease agreement with Board members for the Hageman Earth Cycle lease of 11.85 acres located within Running Deer Natural. Mark explained restrictions and conditions that would have to be met prior to the signing of the agreement including the removal of some existing stockpiles, construction of new earth berms and the deposit of $10,000 in escrow to cover restoration costs, if needed. The Natural Areas Department will also have lease conditions such as reseeding, installing a wooden fence or other boundary markers along the boundaries of the lease area. Mark explained that the lease rate will be adjusted annually in accordance with the Denver-Boulder-Greeley CPI-U. Both parties have the ability to terminate the lease over the 20- year term; otherwise the lease provides Hageman Earth Cycle assurance to invest in more infrastructures on the property. The lease has not been finalized and Hageman Earth Cycle has the option to come back with changes, but as of this Board meeting, there haven’t been any proposed changes. NAD will present the lease agreement to City Council on December 19th, for their approval. Kelly Ohlson asked that if Hageman Earth Cycle had any recommended changes to the current lease and those changes were significantly different than the current lease would Board members be allowed to review those changes. Mark assured Kelly and board members that those changes would be brought back to the board for discussion. Mark explained that Hageman Earth Cycle has had the lease agreement for over two weeks to review. John did notify that if City Council were to make any changes, those changes may not make it back to the Board for approval. That would be the only difference. Vicky McLane made a motion that the LCSB recommend that City Council approve the 20-year lease of approximately 11.85 acres of land originally purchased for Running Deer Natural Area. Andrea Elson seconded the motion. The motion was unanimously approved. ATTACHMENT 5 -1- RESOLUTION 2018-006 OF THE COUNCIL OF THE CITY OF FORT COLLINS AUTHORIZING THE LEASE OF 11.85 ACRES OF CITY-OWNED NATURAL AREA PROPERTY TO HAGEMAN EARTH CYCLE, LLC WHEREAS, the City is the owner of a parcel of land located in northeast Fort Collins known as Running Deer Natural Area (the “City Property”); and WHEREAS, the City acquired the City Property from Flatiron Companies in 1998 for Natural Areas purposes; and WHEREAS, when the City acquired the City Property Flatiron Companies was leasing a 15 acre portion of the property (the “Old Lease Parcel”) to Hageman Earth Cycle, Inc. (“HEC”) for uses related to a yard waste recycling business operated by HEC on adjacent property; and WHEREAS, in 2001 the City Council adopted Ordinance No. 085, 2001, authorizing the lease of the Old Lease Parcel to HEC for up to five years; and WHEREAS, in 2006 the City Council adopted Resolution 2006-048 extending the lease for an additional two-year period; and WHEREAS, the purpose of the initial lease and the extension was to allow HEC to find and move its operations to a new location; and WHEREAS, in 2008 HEC requested an additional ten-year extension on its lease, which the City Council approved by Ordinance No. 048, 2008, directing the City Manager to report annually on HEC’s compliance with regulatory requirements and efforts to relocate its business; and WHEREAS, HEC has not found a suitable property for relocation, and in 2016 Natural Areas staff and HEC negotiated a potential sale of a portion of the Old Lease Parcel to Fence Post properties, LLC (“Fence Post”), a limited liability company owned by Roger Hageman, the owner of HEC; and WHEREAS, on January 17, 2017 the City Council considered on first reading Ordinance No. 020, 2017, which would have authorized the sale to Fence Post, but postponed it until City staff could complete work to explore other options such as another long-term lease; and WHEREAS, since that time, Natural Areas has developed guidelines for leasing Natural Areas property that, among other factors, takes into consideration whether the property was being leased at the time the City acquired it; and WHEREAS, City staff and HEC have negotiated a proposed new lease agreement (the “Lease”) for a portion of the Old Lease Parcel comprising approximately 11.85 acres, as shown on Exhibit “A”, attached and incorporated herein by reference (the “New Lease Parcel”); and -2- WHEREAS, if the Lease is approved, the depiction in Exhibit A will be replaced with a surveyed legal description prior to execution of a lease agreement; and WHEREAS, the terms and conditions of the Lease would include the following: • During an option period before the Lease starts, HEC would complete cleanup work on the property; • The term of the Lease would be twenty years; • Rent payments would total $21,165.72 per year, which staff believes is a fair-market rent, with an annual adjustment based on the consumer price index; • Restrictions on the use of the property to help protect the environment and conservation values on the property; and • Construction of berms and establishment of vegetation on the berms within five years of commencement of the Lease, with funds deposited in escrow by HEC to assure successful completion of the work; and WHEREAS, Section 23-113(b)(1) of the City Code authorizes the City Council to lease any and all interests in real property owned in the name of the City if the City Council first finds that the lease is in the best interests of the City, with such approval being by resolution unless the proposed term of the lease exceeds twenty years; and WHEREAS, HEC provides an important yard waste recycling service to the community, consistent with the City’s zero waste goals and Climate Action Plan; and WHEREAS, the Natural Areas Department supports and benefits from the City’s climate goals, and this Lease would let Natural Areas further contribute to these broader natural resource conservation goals; and WHEREAS, leasing the New Lease Parcel rather than selling it allows the property to remain in Natural Areas ownership and potentially become part of Running Deer Natural Area in the future, while still providing other community benefits; and WHEREAS, at its regular meeting of November 8, 2017, the Land Conservation and Stewardship Board voted unanimously to recommend approval of the Lease. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS as follows: Section 1. That the City Council hereby makes and adopts the determinations and findings contained in the recitals set forth above. Section 2. That the City Council hereby finds that the lease of the New Lease Parcel -3- to HEC as provided herein is in the best interests of the City. Section 3. That the City Manager is hereby authorized to execute a lease agreement to lease the New Lease Parcel to HEC 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 New Lease Parcel, as long as such changes do not materially increase the size or change the character of the property to be leased. Passed and adopted at a regular meeting of the Council of the City of Fort Collins this 16th day of February, A.D. 2018. __________________________________ Mayor ATTEST: _____________________________ City Clerk 0 50 100 200 400 feet N. PROSPECT RD. POTENTIAL PROSPECT RD. WIDENING ROW: WIDTH TBD BY CITY ENGINEERING PROPOSED LEASE BOUNDARY PROPOSED LEASE BOUNDARY PROPOSED LEASE BOUNDARY LEGEND DEPICTION OF THE PREMISES WETLANDS + WATER BODIES RUNNING DEER NATURAL AREA EXHIBIT $: PAGE 1 OF 1 | DEPICTION OF THE PREMISES AREAS TO REMAIN IN LESSOR’S MANAGEMENT PROPOSED LEASE BOUNDARY + Survey required to determine official property boundaries. EXHIBIT A along the boundary by Lessor. A single block wall (2.5' tall) to be installed with a 4:1 sloped berm; results in a 10' wide planting strip from the top of berm to the property boundary (toe of berm). Existing fence to be removed by Lessor in cooperation with Lessee. Double rail fencing to be installed along the property line (at the toe of the slope) by Lessor. No berm modification required. Existing fence to be removed by Seller in cooperation with Purchaser. A double rail fence to be installed along the boundary by Seller. Berm to remain where it is. Lessor to put in carsonite markers ~ every 40 feet and at all corners. Berm to remain where it is; property line is not shared with Lessor. A double block wall (5' tall) to be installed with a 4:1 sloped berm; results in a 20' wide planting strip from the top of berm to the Lessor's property boundary (toe of berm). Existing fence to be removed by Lessor in cooperation with Lessee. A double rail fence to be installed along the boundary by Lessor. Lessor to put in carsonite markers ~ every 40 feet and at all corners. Berm to remain where it is. Lessor to put in carsonite markers ~ every 40 feet and at all corners. Berm to remain where it is; property line is not shared with Lessor. Existing block wall, berm and stock piled materials will need to be removed from Lessor's retained property prior to commencement date of lease +If the survey reveals encroachment of existing berms onto Lessor's retained property, berms will need to be removed from Lessor's retained property and reconstructed on the adjacent property prior to commencement date of lease. ATTACHMENT 2