The City owns the east 90 feet of Lots 1-2 and all of lots 3-6, block 184 of the Original Town of Billings (see attachment). All of the lots are vacant and are located on the corner of 6th Avenue South and South 26th Street. The City obtained these lots in 1993-1994 and invested $73,538 in Tax Increment District funds to acquire the property for urban redevelopment purposes.

The South 27th Street Development Incentives (see attachment) were approved by City Council in the late 1980s and were designed to encourage the sale and development of properties along the South 27th Street Corridor. All the incentives are based upon a current appraisal of the land value, including a 10% discount for “cash sales”. Incentives are also contingent on development beginning within six months of sale.

The Community Development Division has received an offer from the 27th Street Partnership, Victor and Todd Reichenbach, to purchase lots 1-6 in order to build a radio shop for the Montana Highway Patrol for $38,191.50 (see attachment):

• East 90 feet of lots 1 - 2 (4,500 square feet): Offer price is $6,691.50; approximately $1.49 / square foot. Offer price includes a 10% cash incentive and allowance for mandatory improvements.

• Lots 3 - 6 (14,000 square feet): Offer price is $31,500; $2.25 / square foot. Offer price includes 10% cash incentive.

The developers are predominantly interested in lots 3-6, but would also be interested in lots 1 and 2 if the price was right. Victor Reichenbach spoke with City staff over the phone on June 21, 2011 and stated he would increase this offer to $3.00 / square foot in light of recent bids on Block 142 at $5.00 / square foot. This would bring the total offer (without cash incentives or improvement allowances) to $55,500 for lots 1-6 and $42,000 for lots 3-6.

The Community Development Division obtained a market analysis for lots 23 and 24 on Block 184 in March 9, 2011 subsequent to an offer letter submitted by the 27th Street Partnership on those lots on March 9th. They subsequently changed their interest in lots 1-6 of the same block, which is thought to better suit their needs.

Selling City property is discretionary. The Council may choose to sell the property or to retain it for future use.

1) Accept the original or revised offer for the property, with or without cash incentives and improvement allowances. This alternative would require City staff to issue public notices regarding the City’s intention to dispose of the land including advertisements and notices by mail. Staff would then set Council dates for both the Resolution of Intent to convey the lots and Council action to convey the lots.

2) Postpone decision on the lots and require staff to post and advertise the property, returning at a later date to Council for decision.

3) Reject the offer and establish an alternative base rate for the property less than $5 / square foot, considering the land is not located on a main thoroughfare and may be valued differently than the market analysis for land located along South 27th Street or 1st Avenue South.

4) Reject the offer and set a standard purchase rate for any combination of lots 1-6 of Block 184 at a minimum of $5 / square foot and apply a 10% cash incentive afterwards. This rate would be based on the market analysis of lots on the same block and a recently considered land deal for Block 142.

• Approving the offer would generate revenue for the General Fund as the original Tax Increment Finance District is no longer in place and the funds cannot be returned to this entity.

• Postponing or rejecting the offer would result in the City retaining the property and continuing to incur minor property maintenance costs such as mowing and snow removal for the sidewalks.

Staff recommends Council establish a standard purchase rate for any combination of lots 1-6 Block 184 at $5 / square foot and apply a 10% cash incentive discount thereafter, contingent on development beginning six months post sale.