Consider Approval of Purchase Agreement and Right of Re-Entry Agreement for Lot 1, Block 7, Waterfront Village; Roers Acquisitions LLC

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 1, Block 7, Waterfront Village) and the Anoka County Tax ID number 28-32-25-23-0025.

The purpose of this case is to consider a recommendation to the City Council to sell approximately 3.87 acres of City owned land, legally described as Lot 1, Block 7, Waterfront Village to Roers Acquisitions LLC (the "Developer) to construct a minimum 180-193 unit market-rate apartment project with amenities and minimum 5,000 square feet of street level retail space, compliant with COR Zoning requirements to be further defined by an approved Site Plan.  Roers approached the City and has asked to essentially build the same footprint as the previously approved Northart project on the same site.  The unit count is slightly less due to the unit type, which includes more 2 and 3 bedroom units and less studios and the pool ha been moved to a more favorable location.  Roers is a more experienced developer than Norhart and Staff is confident they have the financial acumen and development expertise to bring this project to the Ramsey Market.  Staff has negotiated a fair purchase agreement and Right Re-Entry Agreement similar to the Norhart project that was previously approved. The City Attorney has reviewed the Purchase Agreement and Right of Re-Entry Agreement and has approved them as to form. 

The Purchase Agreement and Right of Re-entry agreement have provisions similar to the Affinity at Ramsey and the previously approved Norhart Project (174 unit 55+ senior project) that extend deadlines for performance and restricts the city's ability to re-enter the property unless the City is willing to buy back the parcel less Non-refundable Earnest Money and closing costs and commission paid by the City. The Inspection period is 365 days (Norhart was 270) but the total time allotted to complete the project and obtain a C/O is 1155 days which is 127 days less than the agreement that was approved for Norhart.  Staff has discussed this at great length with the City Attorney and the requests by the developer are not uncommon based on the ability to obtain financing for a project of this magnitude.  The City will still have the ability to impose a $50,000 penalty if the project is not completed 24 months after the Closing date.    The negotiated purchase price for the land is $8.00 per square foot ($1,350,000) which is within the City deal range for this parcel.  Roers has also committed to contribute $256,000 toward the construction of Ramsey Parkway (Centra Homes also contributed this amount) which is included in the 1.35M Purchase Price.  When factoring in the contribution of $256,000 for Ramsey Parkway, the net land proceeds are $1,093,400.  The property is zoned properly for the proposed use.  It should be noted that the Developer is not asking for any financial assistance or a reduction in development fees from the city. Staff is supportive of this project and recommends approval as presented.

None required

Staff believes that this project will be a great addition to the COR and will provide a visibly appealing project at the entrance of the COR that contains amenities.  Tenants of the project will increase the local workforce and spending power in the City of Ramsey.  The proposed 193 units of high-end market-rate housing and its proximity to the retail area and future Waterfront Park will provide great synergy and walk-ability.  The property tax revenues for a project of this size help finance past, current and future infrastructure improvements in the COR.

Representatives from Roers will be present to provide more detail relating to the proposed project and to answer questions the EDA may have.

Project Highlights
Project Description - 180 Units - Market-rate, 5,000 Retail Cap on West Side of Building (Mixed Use)
Total Project Costs - 52M
Amenities Roers has implemented in the past - Speak-easy, Sky deck, Pickleball Courts, Fitness Center, Dog Run, Work from Home Space, Outdoor Lounge & Pool, Underground Parking (To be determined by research)
Job Creation - 4-5 onsite
Current Tax Assessed Value - 1.4M
Current Taxes - $0.00 (Tax Exempt)
Tax Assessed Valuation (Estimate) - 30M
Annual Property Tax (Estimate) $410,000
Annual Local (City, School, County Estimate) $351,000
Annual Property Tax - City Portion (Estimate) $140,000
Aids Unit Density Calculations in COR - 48 units/acre

Key Purchase Agreement Terms
Buyer - Roers Acquisitions LLC
Seller - City of Ramsey                                         
Property Address - 7979 Sunwood Drive NW
Legal Description - Lot 1, Block 7, Waterfront Village
Proposed Units - Approximately 180-193
PID# -  28-32-25-23-0025                                    
Acres - Approximately 3.87 acres
Purchase Price - $1,350,000 ($8.00/SF, within Deal range)
Road Contribution - $256,000 to be contributed to road extension costs of Ramsey Parkway (between Sunwood Drive NW roundabout and Zeolite Street) which was also paid by Centra for Waterfront Village.
Earnest Money  - Earnest Money of $50,000.00 
Inspection Period - Buyer shall have three hundred sixty-five (365) days following the "Effective Date" to investigate property. After such time a "Notice to Proceed" must be provided by Buyer to Seller.
Right of Re-entry - Within 24 months from the Closing Date Buyer shall have achieved completion of a ±180-unit market-rate apartment project with amenities and minimum 5,000 square feet of street-level retail space, compliant with COR Zoning requirements to be further defined by an approved Site Plan.  At Closing, a “Right of Re-Entry Agreement” shall be executed and recorded against the Property.   
Closing - Closing shall take place 30 days after Buyer delivers Notice to Proceed to Seller. Two (2) additional thirty (30) day extensions to close can be purchased by the Buyer for a $10,000 earnest money deposit each, that is nonrefundable but applicable to the purchase price.

Alternatives include:
1) Recommendation to the City Council Approval of Purchase Agreement and Right of Re-Entry Agreement (as presented); subject to City Attorney review.
2) Recommendation to the City Council Approval of Purchase Agreement and Right of Re-Entry Agreement (with changes); subject to City Attorney review.
3) Something else.

N/A. There is no assistance being provided.

The EDA should consider the following actions.

1) Recommendation to the City Council Approval of  Purchase Agreement and Right of Re-Entry Agreement (as presented); subject to City Attorney review. (Staff Recommendation)
2) Recommendation to the City Council Approval of  Purchase Agreement and Right of Re-Entry Agreement (with changes); subject to City Attorney review.
3) Something else.