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RESOLUTION APPROVING AGREEMENTS RELATING TO THE PURCHASE AND SALE OF TURNBERRY PARCEL O
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Summary and Background Information:
In January, 2015, the City received an unsolicited proposal to purchase the property commonly referred to as Parcel O, Turnberry. After a series of informal discussions, the City reviewed the proposal with the City Council in an executive session.
After a series of negotiations March through May, 2015, the City Council authorized the City Manager to proceed with negotiating a purchase agreement for the property commonly referred to as Parcel O, Turnberry.
Appraisal completed by Commercial Valuation Consultants (CVC) values the property at $790,000 as of February 19, 2015. This includes a $500,000 discounting factor since water and sewer are not immediately available to the property and other properties (comps) in the area are more likely to develop sooner than the subject property, therefore increasing their value above that of Parcel O.
The City intends to utilize the property to construct the Second Creek Recreation Center and has budgeted for $57 million in improvements in the immediate area, with over $22 million of that total estimated for infrastructure outside of the recreation center facility.
The City is proposing two separate agreements which will require action by the City Council and NIGID Board of Directors.
Purchase and Sale Agreement between City of Commerce City, Northern Infrastructure GID, and Catellus CC Note, LLC (3 parties):
At closing, Catellus will sell Parcel O to the City of Commerce City for a total of $1,300,000 cash from the City and the execution of three related agreements (below). This agreement is based on the appraised value and the commitment from Catellus to construct the water line to the intersection of 112th Avenue and Potomac Street by April 1, 2016.
Agreement 1: Option Agreement for Purchase of ERUs (Exhibit B): NIGID will provide an option to sell, and the City will assign, 200 FRICO ERUs based on the varying rate and schedule, due and payable at multiple closings from Catellus. The first 100 ERUs will be purchased at $7,500 each, regardless of when purchased, but the total amount of ERUs that may be purchased will be reduced for options not exercised in a given year.
2016: 50 ERUs at $7,500 each
2017: 50 ERUs at $7,500 each
2018: 50 ERUs at $12,000 each
2019: 50 ERUs at $12,000 each
Note: The purchase price of the ERUs in 2017-2019 would be reduced to $7,500 each if the City does not construct certain improvements on 112th Avenue and regional storm water improvements by June 1, 2017.
Agreement 2: Reimbursement Fee Agreement & Building Permit Restriction (Exhibit C): Catellus will reimburse the City/NIGID for a portion ($649,412.81) of the $844,489 owed for 104th Avenue construction adjacent to the southern frontage of the subdivision. The total amount of the reimbursement included design, mobilization, and construction management costs, as well as actual road construction. Reimbursement will be made by imposing a fee of $844.49 on 769 lots within certain parcels as a condition to issuance of a building permit. The fee equates to $844.49 and shall be collected at the time of building permit. The exhibits detailing the parcels and lots will be generated prior to closing.
Note: Catellus will be able to discount the amount owed for 104th Ave. if the City does not construct certain improvements on 112th Avenue and regional storm water improvements by June 1, 2017, and Catellus opts to perform the work.
Note: As a condition to closing, a related entity (BCX Development LLC) must execute a similar Reimbursement Fee Agreement & Building Permit Restriction (Exhibit E) for the remaining funds owed ($195,077.19). This agreement will impose a fee of $844.49 on up to 231 lots within certain parcels as a condition to issuance of a building permit. The exhibits detailing the parcels and lots will be generated prior to closing.
Agreement 3: Public Improvement and Reimbursement Agreement (Exhibit D): Catellus and the City will each agree to construct certain improvements as follows:
Water Line to Parcel O - Catellus will construct a water line to Parcel O to the southern right-of-way on 112th Avenue and Potomac Street to enable the City infrastructure project to proceed as early as Q1 2016.
Remedy: The agreement sets certain benchmarks that, if missed, will allow the City to complete the work to meet its timeframe and obtain reimbursement from Catellus. If Catellus does not finish the water line, its rights to buy ERUs from the City are paused pending completion or reimbursement of the City’s costs.
112th Avenue - The City will construct, at its own cost, 112th Avenue from Hwy 2 to the eastern Turnberry boundary by no later than June 1, 2017 (including Highway 2 and Potomac Street intersections). The limits of 112th Avenue improvements are currently planned from Chambers Road on the east to Highway 2 on the west. Paved access to the north side of the Turnberry development will provide better access to Buffalo Run Golf Course to the east as well. Normal traffic impact fees will be due at the time of construction for filings/permits in Turnberry which typically only cover 40% of the cost of arterial road construction.
Remedy: If the City does not finish the improvements on time, Catellus may complete the work to meet its timeframe and obtain reimbursement from the City or offset the cost against the reimbursement owed for the 104th Avenue improvements. In addition, the purchase price of the ERUs in 2017-2019 would be reduced to $7,500.
Regional Storm Water Improvements - The City will design and construct regional storm water improvements under Highway 2 in two specific locations that will benefit the Turnberry development by no later than June 1, 2017. Normal regional drainage impact fees will be due at the time of construction for filings/permits in Turnberry.
Remedy: If the City does not finish the improvements on time, Catellus may complete the work to meet its timeframe and obtain reimbursement from the City or offset the cost against the reimbursement owed for the 104th Avenue improvements
Summary of Public Improvements
City Obligations
112th Avenue shall be constructed from Highway 2 to the eastern Turnberry boundary by June 1, 2017
Regional storm water improvements shall be constructed under Highway 2 by June 1, 2017
Remedies (for failure of City to perform):
Catellus may complete work and be reimbursed by the City
Catellus may offset cost against 104th Avenue reimbursement agreement
Catellus may purchase final 100 ERUs for a reduced price of $7,500 (originally $12,000)
Catellus Obligations
Water line shall be constructed to intersection of 112th Avenue and Potomac Street
Permit by October 1, 2015
Commence construction by February 1, 2016
Obtain preliminary acceptance by April 1, 2016
Remedies (for failure of Catellus to perform):
City may complete construction for failure to meet any milestone/deadline
Failure to obtain acceptance by May 15, 2016 or reimburse the City for direct costs of this improvement all ERU rights are tolled pending completion of work or reimbursement of City.
Staff Responsible (Department Head): James A. Hayes
Staff Member Presenting: James A. Hayes
Financial Impact:
City Expenditure: $1,300,000
NIGID Revenue:
$750,000 - sale of 100 ERUs in 2016/2017
$1,200,000 - sale of 100 ERUs in 2018/2019
$844,489 - collection of reimbursement agreement fee commencing in 2015 and estimated over 10 years
Total NIGID Revenue: $2,794,489
Funding Source: 2K Sales and Use Tax (1%)
Staff Recommendation: Approval of the resolutions authorizing the agreements
Suggested Motion: Motion to approve Resolution 2015-49 authorizing the Turnberry Parcel O Purchase and Sale Agreement.
Subsequent Suggested Motion by NIGID: Motion to approve Resolution 2015-03 authorizing the Turnberry Parcel O Purchase and Sale Agreement and associated agreements.
Attachments:
Purchase and Sale Agreement for Turnberry Parcel O
Special Warranty Deed - Exhibit A
Contract and Options to Buy and Sell FRICO ERU Water and Option Credits - Exhibit B
- Exhibit 1 - Revised Plan B Project Participant Water Resources Agreement
- Exhibit 2 - Revised Plan B Project Participant Water Resources Agreement
- Exhibit 3 - Draft Assignment
- Exhibit 4 - Draft Assignment
Reimbursement Fee Agreement and Building Permit Restriction (Catellus - 104th Ave.)- Exhibit C
- Exhibit A - Turnberry Overall Illustrative Map (draft)
- Exhibit B - Parcel Descriptions (to be provided prior toclosing)
- Exhibit C - Proposed Parcel Lot Count (to be provided prior toclosing)
Public Improvement and Reimbursement Agreement - Exhibit D
- Exhibit A - Service Line Description (SACWSD water line map)
- Exhibit B - Regional Storm Water Infrastructure Improvements Maps
Reimbursement Fee Agreement and Building Permit Restriction (BCX Development - 104th Ave.)- Exhibit E
- Exhibit A - Turnberry Overall Illustrative Map (draft)
- Exhibit B - Parcel Descriptions (to be provided prior toclosing)
- Exhibit C - Proposed Parcel Lot Count (to be provided prior toclosing)
Other agreements and information (not noted as exhibits in purchase and sale agreement)
104th Avenue - Turnberry Reimbursement Summary
Turnberry Parcel O Final Plat - sheet 3 only
Turnberry Master Plan
Turnberry H1 and H2 lot layout
Turnberry K, L, M, and N lot layout
Water line construction schedule
SACWSD water line map
SACWSD sewer line map