Consent 1.E.
Regular City Council Meeting
- Meeting Date:
- 11/14/2016
- TITLE
- Repurchase of Cottonwood Park
- PRESENTED BY:
- Bruce McCandless
- Department:
- City Hall Administration
Presentation:
PROBLEM/ISSUE STATEMENT
In late October 2002, the Elementary District of School District #2 (SD #2), the City of Billings, Yellowstone County and Westward Ho, Inc., entered into an agreement entitled Charitable Gift and Cottonwood Park Development Agreement (Agreement). A copy of that Agreement is attached to this memo. The Agreement donated approximately 38 acres of land which has been referred to as Cottonwood Park. This land is located on the west side of 54th Street West between Rimrock Road and Grand Avenue in Billings with the legal description contained within the Agreement.
In Section 16 of the Agreement, the City granted to SD # 2 an option to purchase at fair market value up to ten contiguous acres of land within Cottonwood Park for potential future development as an elementary school location. Under Section 16(d) of the Agreement SD # 2 had ten years to commence construction from the date it exercised its option to purchase. Under Section 19 of the Agreement, If SD# 2 exercised its option to purchase from the City, the City was required to deposit the purchase amount in an interest bearing account to be used exclusively for future Cottonwood Park development. However, under Section 17 of the Agreement, the City was required to repurchase the ten acres from SD # 2 at the same fair market value purchase price should SD # 2 exercise its purchase option but then later decide not to develop and construct an elementary school on the ten acres.
SD # 2 did exercise its purchase option in 2007 and completed the purchase transaction in 2009 for the ten acres of land within Cottonwood Park for a fair market value purchase price of $200,000. Since that purchase, SD # 2 has completed an extensive study of this property and has determined that it will not build an elementary school on this property. SD # 2 Board of Trustees has approved a sale of the ten acres back to the City for $200,000. The City therefore has an obligation under Section 17 of the Agreement to repurchase the ten acres.
In Section 16 of the Agreement, the City granted to SD # 2 an option to purchase at fair market value up to ten contiguous acres of land within Cottonwood Park for potential future development as an elementary school location. Under Section 16(d) of the Agreement SD # 2 had ten years to commence construction from the date it exercised its option to purchase. Under Section 19 of the Agreement, If SD# 2 exercised its option to purchase from the City, the City was required to deposit the purchase amount in an interest bearing account to be used exclusively for future Cottonwood Park development. However, under Section 17 of the Agreement, the City was required to repurchase the ten acres from SD # 2 at the same fair market value purchase price should SD # 2 exercise its purchase option but then later decide not to develop and construct an elementary school on the ten acres.
SD # 2 did exercise its purchase option in 2007 and completed the purchase transaction in 2009 for the ten acres of land within Cottonwood Park for a fair market value purchase price of $200,000. Since that purchase, SD # 2 has completed an extensive study of this property and has determined that it will not build an elementary school on this property. SD # 2 Board of Trustees has approved a sale of the ten acres back to the City for $200,000. The City therefore has an obligation under Section 17 of the Agreement to repurchase the ten acres.
ALTERNATIVES ANALYZED
City Council may:
- Approve the repurchase of the ten acres from SD # 2; or
- Disapprove the repurchase of the ten acres however, the City would be in violation of the original donation Agreement.
FINANCIAL IMPACT
The City will be required to submit payment of Two Hundred Thousand ($200,000.00) Dollars to SD # 2 for the repurchase of the property. This amount has been kept in a segregated interest bearing account by the Parks, Recreation and Public Lands Department since the original sale to SD # 2.
RECOMMENDATION
Staff recommends that the Council approve the repurchase of the ten acres of land from SD # 2 for $200,000, accept a quitclaim deed and Realty Transfer Certificate from SD # 2 as part of the Closing transaction and authorize the Mayor to execute any documents necessary to complete the repurchase.