Consider Amendment to Form of Right of Re-Entry Agreement for Lots 1 and 3, Block 1, Riverside West Rearrangement; Case of Reliable Holdings LLC (Portions may be closed to the public)

The EDA may choose to go into closed session pursuant to Minnesota Statutes section 13D.05, subdivision 3(c)(3) to consider offers or counteroffers for the purchase or sale of real or personal property.  If the EDA chooses to enter into to closed session the statute and reason above needs to be referenced along with legal description (Lots 1 and 3, Block 1, Riverside West Rearrangement) and the Anoka County Tax ID number is 34-32-25-13-0005 (prior to the new plat).

The City of Ramsey and Blue Line Collision (Reliable Holdings, LLC) have been in discussions over the past 3 years regarding the future of their company in Ramsey.  We have reviewed renovation and redevelopment options on his site and other future locations.  Staff is excited at the possibilities of helping an existing Ramsey business to grow in our community. Blue Line Collision proposes to purchase 6710 Hwy 10 NW (former Bookstore site) and to construct a new 12,320 square foot autobody repair center.  The offer for the platted 1.46 acre site is $200,000 ($3.12/SF)  and the City has accepted the offer.  The City and Blue Line Collision have entered into a Purchase Agreement and a "Notice to Proceed" has been provided by the Buyer to expedite the closing on the land. Blue Line has submitted a formal site plan Application to be acted upon by the Planning Commission and City Council in August. The Buyer is asking the City to close on the land prior to Site Plan approval so he can lock in construction financing during this volatile rate environment.

Notification is not required.

Observations:  The proposed site is 1.46 acres, as confirmed by the newly filed West Riverside Rearrangement plat of record.  The purchase price is $200,000 ($3.12 / SF). This price is within the approved "deal range".   A copy of the submitted site plan is attached.  This was a city generated lead for a city listed city parcel.  There is no commission for this transaction.

The following items are worth highlighting:
 

Earnest Money	$20,000, Nonrefundable after a Notice to Proceed has been given by the Buyer.
Inspection Period	180 days from Effective Date (Date City Council Approves) (city requires plat/ site plan approval before sale).
Closing	Within 30 days of Notice to Proceed.
Extensions	Developer will deposit $10,000 in escrow for each 60 day extension (2 extensions allowed) Once extensions are made the money becomes non-refundable.
Performance	City to require construction of a minimum 10,000 SF building and obtain a Certificate of Occupancy 16 months  after Closing.  If this is not done, the City may exercise the Right of Re-Entry.

Request to Close on Land Prior to Site Plan Approval
The request to close on the land prior to site plan approval is atypical and risky for the Buyer.  The Buyer will not have City approvals prior to the land closing.  The City will still require Blue Line Collision to enter into a Right of Re-Entry Agreement and have it filed as part of the land closing.  This agreement will ensure the City that the development project is completed to the City's satisfaction within 16 months after closing. In the event that the Buyer does not perform, the City has the right to take back the land at no cost to the City and retain the land transaction proceeds or impose a special assessment of $50,000. The amendment to the Right of Re-entry Agreement replaces the typical reference to formal site plan approval and the development permit and replaces it with the submitted site plan project description subject to satisfactory City approval.  City Attorney Knaak has reviewed the amended Right of Re-entry Agreement and has confirmed that it provided the same protections for the City as the original version.

Alternatives:

1. Recommendation to City Council to approve Amended form of Right of Re-Entry Agreement as presented. (Staff recommendation)
2. Recommendation to City Council to approve Amended form of Right of Re-Entry Agreement with changes.
3. Something else.

This case is being handled as part of normal Staff duties.

Staff recommends a recommendation to the City Council of the attached Amended form of Right of Re-Entry Agreement as presented, subject to City Attorney review.

As noted above. Planning Commission has yet to review this site concept so this will be handled during the site plan application process and could be modified.

Motion to recommend that the City Council approve the attached Amended form of Right of Re-Entry Agreement  for  Lots 1 and 3, Block 1, Riverside West Rearrangement, subject to City Attorney review.