Consider Recommendation of Approval of Purchase Agreement and Right of Re-Entry Agreement for Part of Outlot D, Waterfront Village: Case of Capital Real Estate, Inc.

The purpose of this case is consider a recommendation to the City Council to execute a purchase agreement and right of re-entry agreement for the sale and development of part of Outlot D, Waterfront Village to Capital Real Estate, Inc.  

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 (Outlot D, Waterfront Village) and the Anoka County Tax ID number 28-32-25-22-0107.

Over the past year, Staff has been working with multiple developers, Anoka County and the City Planning division to develop a site concept that maximizes the development of the northeast corner of Sunwood Drive NW and Armstrong Blvd NW (Outlot D, Waterfront Village). At the October 10, EDA meeting, three proposals were reviewed and direction was given to staff to work exclusively with Capital Real Estate, Inc. on a purchase agreement to develop approximately 3.17 acres that includes a Chipotle restaurant on the corner and other retail / QSR users for the rest of the site.   Staff has worked with the Developer and City Attorney over the past two months on the purchase agreement and right of re-entry agreement and they are presented for review and action by the EDA.

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Staff is excited to announce that a Purchase Agreement and Right of Re-Entry Agreement have been negotiated with Capital Real Estate, Inc.  The Development project requires the construction of a Chipotle Restaurant on the NE Corner of Sunwood Drive and Armstrong Blvd in 2025.  The Developer has indicated they have another Quick Service Restaurant (QSR) lined up for the parcel just north of Chipotle as well to be built at the same time.  The City of Ramsey has prepared the site for development with the COR mass grading project and listed it at $8.00 per square foot.  The triangular site has difficulties being bordered on the east by a large wetland complex and Armstrong Boulevard on the east but it has great visibility and traffic count information (over 10,000 ADT's).     The Site being sold includes land on the southeast corner of Bunker Lake Blvd and Armstrong Blvd to allow for onsite development signage with is required by City Sign Code.  The Developer will work through the formal platting and signage process with the planning commission to ensure compliance.  The acreage of 3.34 acres shown in the Purchase Agreement and graphic includes area to connect the northerly parcel to the corner for a pylon sign for the development.  The area to potentially builds a sign is very small and might not be viable once further research is done.  In the event that this area will not work for a sign there is another 3.17 acre scenario with a reduced price that the buyer would revert to.  The offers range from $6.74 to $7.00 per square foot which are within the approved deal range.   All of the acreages and pricing are subject to Final Plat.  If the EDA chooses to enter into closed session the statute and reason above needs to be referenced along with legal description (Outlot D, Waterfront Village) and the Anoka County Tax ID number 28-32-25-22-0107.

Staff recommend approval of he Purchase Agreement as presented.

Key Items included in the Purchase Agreement and Right of Re-Entry Agreement include:

Real Estate                         Tax ID Number: Part of 28-32-25-22-0107. Part of Outlot D, Waterfront Village, (Part of Parcel 46)
Acreage                               Approximately 3.17 acres (138,085 SF) to 3.34 acres (145,490 SF)
Asking Price                       $1,104,680 to $1,163,920 ($8.00 / SF)
Offer Price                          $966,596 ($7.00 / SF) for 3.17 acres or $981,000 ($6.74 / SF) for 3.34 Acres (Subject to change based on Final Plat and compliance for signage on Southeast Corner of Bunker Lake Blvd and Armstrong Blvd)
Earnest Money                  $25,000. Non-refundable upon Notice to Proceed being executed.
Inspection Period            180 days from Effective Date (Date City Council approves 1-14-25?) (city requires plat, site plan approval before Closing)
Closing                              Within 30 days of Notice to Proceed.
Commission                       5% commission to CBRE. (Estimated to be $48,329.80 to $49,050) No other Commission paid to any other parties.
Extensions to Close        Developer will deposit $10,000 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 site information, plat information in possession of City and updated Title Commitment.
Performance                     City to require construction of a minimum 2,200 SF Chipotle restaurant 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. Buyer will construct turn lane off Armstrong Blvd to Property at Buyer Cost.
Right of Re-Entry             Certificate of Occupancy (C/O) to be obtained for Chipotle Restaurant 12 months from Date of Closing. $50,000 penalty or to right by City to re-acquire Property at a cost less Closing Costs and Commission paid by City.
Assignment                        Requires city approval if not same owners / company.
Contingencies                   Approval of turn lane off Armstrong Blvd NW by Anoka County. 3.34 acre purchase price of $981,000 dependent on viability of signage to be constructed at SE Corner of Armstrong and Bunker Lake Boulevards. If signage not viable the price reverts to $966,596.

Alternatives Include:
1) Recommendation to City Council to Approve Purchase Agreement and Right of Re-Entry Agreement with Capital Real Estate, Inc. (as presented); subject to City Attorney review.
2) Recommendation to City Council to Approve Purchase Agreement and Right of Re-Entry Agreement with Capital Real Estate, Inc. (with changes); subject to City Attorney review.
3) Something Else

Staff is looking for a recommendation from the EDA.

This action is being handled under normal staff duties.

Motion to recommend the City Council Approve Purchase Agreement and Right of Re-Entry Agreement with Capital Real Estate, Inc. (as presented); subject to City Attorney review.