7.9.
CC Regular Session
- Meeting Date:
- 12/09/2014
- Submitted For:
- Patrick Brama
- By:
- Patrick Brama, Administrative Services
Information
Title:
Consider Offers to Purchase City Owned Property Located at 15153 Nowthen Boulevard (portions of case may be closed to the public)
Purpose/Background:
Purpose:
Consider two separate offers to purchase City owned property located at 15153 Nowthen Boulevard.
Background (site):
The City owns a 20.5 acre parcel of land located at 15153 Nowthen Boulevard. This site is currently located in the Public/Quasi Public Zoning District and is the temporary home of the City's Fire Station #2. The City is in the process of processing a Zoning Amendment this property from the Public/Quasi Public District to the R-1 Residential (MUSA) District. Additionally, the City is in the process of designing a new, permanent, location for Fire Station #2. The City will take action on a potential new Fire Station #2 in February 2015 (i.e. the Council will consider letting bids). The new location of Fire Station #2 is proposed for just northeast of this site.
This site is currently being listed by CBRE, the City's real estate broker. This property is currently listed at $40,000 per acre (about $820,000 total asking price). Development of this site for single family residential will require significant building demolition and site clean up costs (estimated at about $150,000).
Background (offers):
The City has received two offers to develop this property. Staff considers both offers to be informal and in concept-format (sometimes referred to as a letter of intent LOI). The purpose of this case is to receive general/preliminary direction from the Council. Staff would like to identify/recognize that additional negotiation of terms, conditions, and site schematics is required before final direction can be provided by the Council (i.e. before a purchase agreement can be considered). This process may require 1-2 more Council discussions.
Both offers include a two-phased approach. The buyer would purchase all developable land now (about 14 acres of the 20.5 total acres); and lock-in a second purchase agreement for the remaining land (about 6.5 acres). The second purchase would take place when the old municipal center site can be vacated and cleaned up (estimated for summer 2016). Both offers require the City to deliver to the buyer a "clean site" for the second phase; which means: removal of existing structures and improvements at the sole cost of the City.
For the sake of confidentiality, both offers will be reviewed with the Council in closed session.
Consider two separate offers to purchase City owned property located at 15153 Nowthen Boulevard.
NOTE: portions of this case may be closed to the public. Staff will recommend financial details of both offers be disclosed and discussed in closed session. Staff will provide a feasibility analysis in closed session.
Background (site):
The City owns a 20.5 acre parcel of land located at 15153 Nowthen Boulevard. This site is currently located in the Public/Quasi Public Zoning District and is the temporary home of the City's Fire Station #2. The City is in the process of processing a Zoning Amendment this property from the Public/Quasi Public District to the R-1 Residential (MUSA) District. Additionally, the City is in the process of designing a new, permanent, location for Fire Station #2. The City will take action on a potential new Fire Station #2 in February 2015 (i.e. the Council will consider letting bids). The new location of Fire Station #2 is proposed for just northeast of this site.
This site is currently being listed by CBRE, the City's real estate broker. This property is currently listed at $40,000 per acre (about $820,000 total asking price). Development of this site for single family residential will require significant building demolition and site clean up costs (estimated at about $150,000).
Background (offers):
The City has received two offers to develop this property. Staff considers both offers to be informal and in concept-format (sometimes referred to as a letter of intent LOI). The purpose of this case is to receive general/preliminary direction from the Council. Staff would like to identify/recognize that additional negotiation of terms, conditions, and site schematics is required before final direction can be provided by the Council (i.e. before a purchase agreement can be considered). This process may require 1-2 more Council discussions.
Both offers include a two-phased approach. The buyer would purchase all developable land now (about 14 acres of the 20.5 total acres); and lock-in a second purchase agreement for the remaining land (about 6.5 acres). The second purchase would take place when the old municipal center site can be vacated and cleaned up (estimated for summer 2016). Both offers require the City to deliver to the buyer a "clean site" for the second phase; which means: removal of existing structures and improvements at the sole cost of the City.
For the sake of confidentiality, both offers will be reviewed with the Council in closed session.
Offer #1
The first comes from NIK Management Group (management arm for Bridgeland Development INC). NIK Management Group would act as the developer. NIK Management Group would enter into a LLC Partnership with Rice Creek Building for this specific project. Rice Creek Building's web address is: ricecreekbuildingandremodeling.com. NIK Management Group has completed several projects in Minnesota, Wisconsin and the Dakotas. Attached is background information on NIK Management Group, and their previous projects.
Offer #2
The second offer comes from D.R. Horton. This company is a large, nationally recognized, quality, home builder. D.R. Horton would act as both the developer and builder. Attached to this case is background information on D.R. Horton. The following is a link to their website: www.drhorton.com.
The offer from D.R. Horton is unique--they are requesting that a portion of the deal include a land swap. The City would receive about 4.86 acres of D.R. Horton owned land located within The COR in exchange for a discount on the purchase of City owned property.
The first comes from NIK Management Group (management arm for Bridgeland Development INC). NIK Management Group would act as the developer. NIK Management Group would enter into a LLC Partnership with Rice Creek Building for this specific project. Rice Creek Building's web address is: ricecreekbuildingandremodeling.com. NIK Management Group has completed several projects in Minnesota, Wisconsin and the Dakotas. Attached is background information on NIK Management Group, and their previous projects.
Offer #2
The second offer comes from D.R. Horton. This company is a large, nationally recognized, quality, home builder. D.R. Horton would act as both the developer and builder. Attached to this case is background information on D.R. Horton. The following is a link to their website: www.drhorton.com.
The offer from D.R. Horton is unique--they are requesting that a portion of the deal include a land swap. The City would receive about 4.86 acres of D.R. Horton owned land located within The COR in exchange for a discount on the purchase of City owned property.
Observations/Alternatives:
Alternatives:
(1) Pursue one specific offer
If the Council feels comfortable with pursuing one specific offer, Staff will work with the desired prospect to draft a preliminary purchase agreement for Council review. This agreement will include detailed terms, conditions, etc. Staff will sit down with the prospect to further discuss land use regulations, development layouts, City expectations, and project timelines (i.e. Fire Station #2).
(2) Do not pursue either offer
If the Council is not interested in pursuing either offer, Staff will notify both prospects and end negotiations.
(3) Request additional information before providing direction
As mentioned in the background section of this case, both of these offers are preliminary. The Council may require additional information before providing direction (e.g. the Council may require a formal presentation from both prospects).
If the Council feels comfortable with pursuing one specific offer, Staff will work with the desired prospect to draft a preliminary purchase agreement for Council review. This agreement will include detailed terms, conditions, etc. Staff will sit down with the prospect to further discuss land use regulations, development layouts, City expectations, and project timelines (i.e. Fire Station #2).
(2) Do not pursue either offer
If the Council is not interested in pursuing either offer, Staff will notify both prospects and end negotiations.
(3) Request additional information before providing direction
As mentioned in the background section of this case, both of these offers are preliminary. The Council may require additional information before providing direction (e.g. the Council may require a formal presentation from both prospects).
Funding Source:
NA
Recommendation:
Staff and CBRE will provide a recommendation to the Council in closed session.
Action:
Provide staff preliminary direction to:
(1) Pursue one specific offer
(2) Do not pursue either offer
(3) Request additional information before providing direction
(2) Do not pursue either offer
(3) Request additional information before providing direction
Attachments
- NIK Background (prospect 1)
- DR Horton Background (prospect 2)
- DR Horton Land in The COR
- Example Two Phased Deal (both offers)
- CBRE Listing
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Brian Hagen | Tim Gladhill | 12/04/2014 12:53 PM |
| Kurt Ulrich | Kurt Ulrich | 12/04/2014 01:37 PM |
- Form Started By:
- Patrick Brama
- Started On:
- 11/17/2014 08:19 AM
- Final Approval Date:
- 12/04/2014