Adopt Resolution #24-061 Approving Purchase Agreement and Right of Re-Entry Agreement for Lot 2, Block 1, COR FOUR; Garage RE LLC (Take 5) (Portions may be closed to the public)

Purpose:
The purpose of this case is to consider entering into a purchase agreement with Garage RE LLC (Take 5) to purchase and develop an oil change business on Lot 2, Block 1, COR FOUR. 

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 closed session, the statute and reason above needs to be referenced along with legal description (Lot 2, Block 1, COR FOUR) and the Anoka County Tax ID number 28-32-25-23-0023.

Background:
City Staff has been working with Take 5 and Valvoline for over 6 months.  Both have expressed interest in developing the 1.16 acre site south of the Aldi under construction.  Staff has reviewed the two proposals and they are similar for the purchase price and the request to discount the purchase price for construction of a required parking lot south of the site of the oil change development.  However, there were significant differences related to the willingness to enter into a Right of Re-Entry Agreement. Take 5 is willing to enter into our standard city Right of Re-entry Agreement for their oil change development and Valvoline is not.  Take 5 has provided a site plan showing the oil change business and a future development of the remnant parcel.  Based on the unwillingness for Valvoline to enter into a typical City Right of Re-Entry Agreement the EDA made a formal recommendation to move forward with the Purchase Agreement with Garage RE LLC (Take 5).   Both parties offered $404,236 ($8.00/SF), full listing price, and asked for a discount for an offsite parking lot that will be required as part of the development of this parcel.

Parking Lot Construction
The First Amendment to Declaration of Easements, Covenants and Restrictions for COR Two requires the City/Future Developer to construct a 20 space parking lot north of Northstar Marketplace when Lot 1, Block 1 COR Two (now generally Lot 2, Block 1, COR FOUR) develops.   Staff received two estimates for this offsite construction and the pricing averaged $125,000 in additional expense for the developer.  Staff has deducted $125,000 from the Purchase Price of $404,236 for a net of $279,236 included in the proposed Purchase Agreement with Garage RE LLC (Take 5). Take 5 has agreed to construct this additional parking lot as part of their 1,800 square foot oil change development. It should be noted that Take 5 is working with multiple users to develop the remnant parcel.

Notification is not required.

Observations:
Key terms for the Purchase Agreement are below:

Real Estate                         Tax ID Number: 28-32-25-23-0023. Lot 2, Block 1, COR FOUR, (Parcel 42a)
Acreage                               Approximately 1.16 acres or 50,529 SF
Asking Price                       $404,236 ($8.00 / SF)
Offer Price                          $404,236 ($8.00 / SF) – Net $279,236 ($5.52/SF) (based on cost estimate of construction of 20 space parking lot on Northstar Marketplace site and connection to Take 5 development)
Earnest Money                 $15,000 Non-refundable upon Notice to Proceed being executed.
Inspection Period            180 days from Effective Date (Date City Council approves) (city requires plat (If needed)/ site plan approval before sale)
Closing                                 Within 30 days of Notice to Proceed.
Commission                       3.5% commission for Jones Lang LaSalle Brokerage and 3.5% to CBRE.
Extensions to Close        Developer will deposit $5,000 in escrow for each 30-day extension (2 extensions allowed) Once extensions are made the money becomes non-refundable. 
City take care of               Provide existing plat information and updated Title Commitment.
Performance                     City to require construction of a minimum 1,800 SF commercial/retail building (Take 5 Oil Change) compliant with COR Zoning requirements and obtain a Certificate of Occupancy 12 months after Closing.  If this is not done, the City may exercise the Right of Re-Entry.  In addition, the Developer will be responsible for construction of 20 space parking lot on Northstar Marketplace site and connection to Take 5 development and future plat (if needed) for Remnant building site.
Right of Re-Entry              A Right of Re-entry Agreement requiring a C/O within 12 months of closing will be required for the Take 5 Oil Change Development. The Right of Re-Entry will not require the developer to develop the remnant parcel.

Site Plan:
This site plan has not yet gone through formal site plan review and shall not be considered as any indication of compliance with Zoning Code.  Planning Staff however, has reviewed the plan, provided input on the plan and is generally happy with it with some minor modifications.  Official site plan review might result in required changes to the attached site plan. 

Alternatives:
1) Recommendation to City Council to approve Purchase Agreement and Right of Re-Entry Agreement with Garage RE LLC (Take 5) (as presented); subject to City Attorney review.
2) Recommendation to City Council to approve Purchase Agreement and Right of Re-Entry Agreement with Garage RE LLC (Take 5) (with changes); subject to City Attorney review.
3) Reject offer from Garage RE LLC (Take 5) and Continue to Market the Property to Other Users.
4) Something else.
 

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

The EDA met on February 8, 2024 and unanimously made the following recommendation:

Motion by Member Stewart, seconded by Member Johnson, to recommend to City Council to approve Purchase Agreement and Right of Re-Entry Agreement with Garage RE LLC (Take 5)(as presented); subject to City Attorney review.
 
Motion carried.  Voting Yes: Chairperson Wiyninger, Members Stewart, Johnson, Howell, Lindahl, MacLennan, and Riley.  Voting No:  None.  Absent:  None.

Motion to Adopt Resolution #24-061 Approving Purchase Agreement and Right of Re-Entry Agreement for Lot 2, Block 1, COR FOUR; Garage RE LLC (Take 5) (as presented); subject to City Attorney review.