Consider Purchase Agreement for Parcel 50; Case of Java Properties

Purpose:
The purpose of this case is to consider entering into a Purchase Agreement with Java Properties

Background:
Java Properties has been working with City staff over the past few months to put together a development proposal on Parcel 50 in the COR.  The Development Review Committee has reviewed multiple iterations of the plan and are generally acceptable to the concept included in the packet.  Parcel 50 had originally been guided for an office type use but market conditions and the sale of a parcel to Casey's and Java Properties (O'Reilly Auto Parts) open up possibilities for it to develop in a different way.  The EDA reviewed this concept plan in October 2021 and directed staff to moved forward with a phased purchase agreement approach with Java to allow time for PACT Charter School to evaluate all options in the City of Ramsey.  PACT Charter School notified the city that they no longer had interest in  purchasing Parcel 50.

Based on the decision by PACT Charter School to remove parcel 50 for consideration for their future high school, Java Properties has decided to make an offer to purchase the entire site (Parcel 50) in a phased approach.  The offer price is $4.50 / SF, which is $.0.50/SF less than the asking price for the site.  The offer was slightly reduced based on the fact that the cost for the internal roadways for the site likely will be the responsibility of the Developer.  The attached Purchase Agreement gives Java control of the entire site for a 6 month period to conduct due diligence, develop a detailed development plan and to secure tenants.  The City Attorney has reviewed the attached Purchase Agreement and Term sheet and is comfortable moving it forward to the EDA for consideration; subject to further review.  There still may be some modifications to the specific language to protect the city's interest but the general terms allow for the due diligence period to begin. 

N/A

The proposed development concept from Java includes a car wash and coffee shop in the initial phase.  Future phases, or additions to the first phase, include a restaurant, a general retailer and potentially a grocer.  These uses are subject to change but all buildings constructed in the COR will need to meet COR standards or be granted the approvals necessary to receive site plan approval.  The City has expressed a willingness to consider cost sharing some of the costs of Peridot St and to pay for the Extnsion of Veteran's Drive.  Based on the complexity and timing of this project the below terms are not consistent with a typical purchase agreement. The City attorney has reviewed the term sheet and draft PA and is generally acceptable to moving forward as is. The terms of the purchase agreement are provided below:

Real Estate                         Tax ID Number: Portion of 28-32-25-41-0020. Part of Outlot A, Java Auto Parts (Part of Parcel 50a)

Purchase Structure:          Phase I with an Option on Phase II (see Exhibit A)

Acreage                              Approximately + / -  6.97 acres or (303,613 SF) Subject to Final Plat

Asking Price                      $1,518,065 ($5.00 / SF) (SF Subject to change based on approved Plat)

Offer Price                         $4.50  per SF ($1,366,258) (SF Subject to change based on approved Plat) for both Phase I and                                                        Phase II

Earnest Money                 $10,000 Non-refundable upon Notice to Proceed being executed. Additional Earnest Money will need                                               to be provided for Phase 2.

Inspection Period            180 days from the later of Effective Date (Date City Council approves) or a fully executed PA is                                                           delivered to buyer (city requires plat/ site plan approval before sale)
                                                ***Inspection period will be increase 180 days per Lot closing (see Exhibit A for Lots)

Closing                              Within 30 days of Notice to Proceed.

Commission                      This was a City generated lead for a CBRE Listed property. Per the terms of the listing agreement, the                                                City will pay 3% of gross sales price to CBRE.

Extensions to Close         Developer will deposit $10,000.00 in escrow for each 90-day extension (2 extensions allowed) Once                                                  extensions are made the money becomes non-refundable. 
                                                ***The Developer will be granted 2 additional 90-day extensions per Lot purchase closing with the                                                     terms stated above. (the extra 30 days (60 to 90) is required due to the platting process and the time                                                 it is taking Anoka County to review incoming plats)

City take care of               Provide existing ALTA Survey and updated Title Work. The Developer will contract to plat the property                                                 as part of the site plan process. City will work with Anoka County to secure a Right in, Right out access                                             for Veterans Drive on to Ramsey Blvd as part of the platting process.

Performance                     City to require construction of commercial/retail buildings compliant with COR Zoning requirements and                                             obtain a Certificate of Occupancy one year after Closing of each lot. The inspection period will be                                                       increase by 180 days per Lot/phase closing. The Developer will enter into a Right of Re-Entry                                                             Agreement with minimum building square footage requirements for Lots 1, 2, 3 and 5, which will                                                         establish the time period to close and construct the minimum improvements for each lot.  The City may                                             exercise the Right of Re-Entry if performance requirement is not met.
 
Minimum SF for each lot:
Lot 1                                      6,000
Lot 2                                      550
 Lot 3                                     9,000
Lot 4                                      3,000
Lot 5                                      20,000
Assignment                        Requires city approval if not same owners / company.

Alternatives include:
1) Recommendation to City Council to approve Purchase Agreement on Parcel 50 with Java Properties (as presented); subject to City Attorney Review
2) Recommendation to City Council to approve Purchase Agreement on Parcel 50 with Java Properties (with changes); subject to City Attorney Review
3) Something else.
 

N/A

Recommendation to City Council to approve Purchase Agreement on Parcel 50 with Java Properties (as presented); subject to City Attorney

Motion to recommend to City Council to approve Purchase Agreement on Parcel 50 with Java Properties (as presented); subject to City Attorney