HomeMy WebLinkAbout2002-10-15 02-378 ORDERItem No.02-338
Date: 10-16-02
Item/Subject: Order, Amending Guidelines for Leasing and Disposition of Property In City of
Bangor Business and Industrial Parks, Sale of Developed Sites Currently Leased bran the City.
Responsible Department Gty Council
Commentary: The Council has been engaged for same time now in considering the City's policy
on selling land that is currently leased. As a result of these discussions, a consensus emerged that
we revisit our current policy in an effort to determine how we will proceed, not only on the currently
pending requests, but on any other requests which might be received in the future. The desire is
that all such requests be handled in the same fashion.
Attached please find a proposed revision of our policy dealing with sale of currently leased land.
Uncer Nis proposal, the Dry would consider selling such land where the value of the building or
buildings on the property is in excess of $350,000 per ane and the use of the property is consistent
with the overall City development plans for the area in which it is looted. In cases where this value
Is lower than $350,000, the dry will consider sale If the lessee agrees to improve or intensify the
development on the property m this level.
In terms of the sale price, the Business and Economic Development Committee recently discussed
three options. These were: the fair market value of the land; an amount which will produce annual
revenues equal to estimated future lease payments for a period of twenty, years; and an amount
which will produce annual revenues equal to estimated lease payments for a period of forty years.
In both of these letter cases, the sale pdce would then also produce continuing fiat payments
beyond the twenty or forty -year period equal to the final year's estimated lease payment.
After considerable discussion of these options, the Business and Economic Development Committee
recommended that the price for the sale of currently developed lease property should be based on
the forty year option. The Committee did, however, request that staff develop some additional
Information on the financial impact of both the twenty and font year options for Council
consideration as this policy is reviewed. This information will be available prior ro Tuestlay's
meeting.
Department Head
Manager's Comments: MED recommends your approval.
City Manager
Associated Information: Current policy; Value of Current Improvements on Leased! Land
Budget Approval:
finance Director
Legal Approval:
City SoRater
Introduced for
X passage
FIM Beading page_ of
Referral
02-3)8
AssiHned toCWncilw Aabmav October 15. 2002
CITY OF BANGOR
(Wn-E.) Order, Amending Guidelines for Leasing and Disposition of Property in Cily of Bangor
Business and Industrial Parks, Sale of Developed Sites Currently Leased From qty.
By Bre Ory Council of Bre CRY of &Wcr
ORDERED,
That Section V. D. of the Guidelines for Leasing and Disposition of Property in City of Bangor
Business and Industrial Parks Is hereby repealled in Its entirely and replaced with the
following:
D. Sale of Sites Leased from City on or Before October 1, 2002
(1) The City Council may consider, on a use by rase basis, the sale of sites currently
leased from the City. In general, the City shall not consider such a sale unless the
assessed value of bullding(s) on the property is In excess of $350,000 per acre of
Ii land and the use of the property is consistent with overall City development
plans for the area.
(2) In the case of properties with a value of less than $350,000 per acre, the City may
consider entering into an agreement to sell the property upon a binding commitment of
the lessee to Improve or expand the Intensity of development on the property to meet
or exceed this value level within eighteen months of the date of such agreement, with
the actual sale to occur after such Improvements have been cornplacetl.
(3) The established building value per acre shall be annually adjusted beginning on July 1,
2003 and each year thereafter based upon the annual change in the total assessed
value of the City of Bangor. Periodically, the City may undertake a review of actual
development on City -owned or prevl u ly owned property and further adjust this figure
with the concurrence of the appropriate Council Committee.
(4) If sold, the compensation for the sale shall be an amount which, if Invested at the
CWs ten year average rate of investment return, will produce annual revemms equal
to those estimated to be produced by the lease for a period of forty -years and which
Will permit annual on -Ong revenues beyond year forty equal to the estimated annual
lease payment anticipated in year forty.
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(5) For purpose of computing this amount, the following assumptions will be used:
a. the terms and conditions of the current lease shall apply except that It shall be
assumed that the lease will be brought into conformity with the City's current lease
policy at the first extension or option date where such charges are possible;
b. For projection purposes, it is assumed that the current value of property will
Increase 2% per year;
c, The current ten year average rate of return on City investments is 5.9%. The
finance Director shall periodically update this rate as necessary.
(6) Where a lessee proposes an expansion of the level of investment on the property in
order to meet the value requirements outlined above and such expansion will add to
the area's employment base or assist in the retention of existing jobs which might
otherwise be lost to the labor market area, the City may consider providing other
development incentives in accordance with City policy and general practice. Such
Incentives will not, however, Include a reduction in the sale compensation to be paid to
the City, although they may be used as a source to provide such cornpensation. For
example, if the project qualifies for a tax Increment firwncirg program, the proceeds of
the TIF may be used to compensate the City, in whole or in part, for the property as
outlined in a development agreement
IB CITā¢ fDBBCTL
oeto6 r 15, 2002 02-378
Postponed #
CLffi
(TITLE,)nocndm8 e,.iaelmes forr Ieanin8 ancE
Bispositi of property in City of Bsogor
Business and Iodvarrial Perics, Sale of
Asslgnecl M Councilor