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AN ORDINANCE AMENDING THE 2012 BUDGET OF THE CITY OF COMMERCE CITY, COLORADO, BY APPROPRIATING A PORTION OF THE UNENCUMBERED FUND BALANCE OF THE PARK IMPACT FEE FUND IN THE AMOUNT OF $947,745, FOR THE VAUGHN PROPERTY PURCHASE AND AUTHORIZATION THE EXPENDITURE THEREOF.
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Summary and Background Information:
This site of approximately 108 acres is under contract and scheduled for closing November 30, 2012. An appraisal, phase one environmental assessment and boundary survey have been completed. The estimated purchase price is $917,745 and could be funded from the Park Impact Fee account. An additional $30,000 is needed for due diligence items. Staff has applied for an Adams County Open Space Grant in the amount of $440,000. If successful, this grant would reduce the City's cost to approximately $507,745. The Adams County Open Space Board recommended approval of the grant to the County Commissioners. It is anticipated County Commissioners will approve the grant in mid November 2012.
A portion of this property is needed for the Second Creek Outfall drainage improvements that have been identified as a Recovery Fund project for the Northeast Greenway Corridor (NGC)/Natural Resource Damage Settlement (NRDS) funding. The remainder of the site is needed for the future Second Creek Community Park site, as identified in the Prairieways Action Plan.
Initial discussions on this matter were previously discussed with City Coucil when staff presented it on September 10, 2012 study session.
Q: Was there earnest money pledged?
A: The purchase contract stipulates earnest money in the amount of 10% of the purchase price as requested by seller ($86,700). The Finance Director and the City Attorney determined that a separate escrow account was not necessary given adequate funding to cover the earnest amount existed and was appropriated in the Second Creek Drainage Basin fund, as such, a memo indicating the funds availability was provided.
Q: Was an appraisal completed for the property?
A: A professional appraisal using the comparable sales method was performed by Mr. Douglas Nitzkorski of Associated Value Consultants. The appraisal supported the negotiated sales purchase price of $8,500 per acre. The appraisal value of $9,000 per acre exceeds the negotiated purchase price.
Q: What is the situation with the Mineral Rights on this property?
A: The property owner chose to retain the mineral rights for the property, as such, Parks staff and the City Attorney's Office are working with the City's Oil and Gas Attorney (Phil Barber) to draft and execute a Surface Use Agreement with the owners that will allow the City to design, construct and operate a Park/Open Space facility on the site in perpetuity while also allowing the mineral rights owner to conduct activities related to the mineral rights within the provisions of the Surface Use Agreement and the City's Land Development Code.
The 108 acre site is approximately 95% floodplain - the newly passed regulations related to oil and gas operations in the Land Development Code prohibits oil and gas drilling/extraction operations within a floodplain. Should the property be purchased and annexed in to the City, any oil and gas operations would be limited to a very small portion of the overall site (approximately 5 acres) in the extreme northwest corner of the property.
If the property is not purchased and annexed into the City and remains in the County, oil and gas operations could be allowed throughout the entire site as there are no restrictions on floodplain drilling/extraction in the County. Additionally, if the property were not purchased, and oil and gas operations were approved/permitted by the County within the floodplain, and the City subsequently purchased the site, the existing oil and gas operations would be "grandfathered in" and allowed to continue to operate within the floodplain (which may or may not be compatible with the City's future planned uses/design for the site). Moreover, if, at the time of annexation by the City (1) an operator had already received a permit from the COGCC to conduct oil and gas activities (in the floodplain or otherwise); or (2) development rights to engage in such activities (in the floodplain or otherwise) had "vested" under state law, then the permitted/vested oil and gas activities/rights may still be "grandfathered" - even if no such activities had actually been commenced by the date of annexation.
The purchase of the property is contingent upon the successful execution of a Surface Rights Agreement that meets the City's future need for the site.
Staff Responsible (Department Head): Carolyn J. Keith
Staff Member Presenting: Mike Brown
Financial Impact: $947,745
Funding Source: Park Impact Fee Fund / Possible ACOS grant
Staff Recommendation: Pass Ordinance on Second Reading
Suggested Motion: I move to introduce Ordinance 1936 by council as seated and approve the ordinance on second reading.