7.2.
CC Regular Session
- Meeting Date:
- 04/12/2016
- By:
- Kathy Schmitz, Administrative Services
Information
Title:
Purmort Purchase Agreement for OUTLOT F of Ramsey Town Center 8th Addition [PORTIONS MAY BE CLOSED TO THE PUBLIC]
Purpose/Background:
PURPOSE
Consider the attached Purmort Purchase Agreement for OUTLOT F of Ramsey Town Center 8th Addition [PORTIONS MAY BE CLOSED TO THE PUBLIC].
BACKGROUND
City Cost Basis on OUTLOT F
The City of Ramsey purchased The COR (formerly Ramsey Town Center) in 2009 for $6.8M, consisting of 119.26 acres of developable property. As part of the purchase, the City pulled back assessments on all City-owned property, totaling $5.9M. The total cost of the land purchase, including the assessments is $12.7M, which breaks down to $2.44 per square foot. The City purchased The COR with an intent to resurrect the development project and preserve the community's original vision and master plan. The subject property is a 4.38 acre portion of the larger 119.26 acre purchase.
Site Information
The subject property is roughly 4.38 acres in size and is zoned COR 4 Neighborhood District (Residential). This site is located on the north end of The COR, commonly known as the North Commons Park area. From a development perspective, this site does have various challenges:
In late 2015, the City Council reviewed the City's inventory of available City-owned land, and the City's corresponding pricing strategy for each property listing. As part of that discussion, staff was asked to further investigate this particular parcel (including identifying development challenges), and consider alternatives on how to attract private sector interest for the listing (potentially including an adjustment to the asking price). A major reason for that direction was due to the known development challenges listed above.
Property Listing
Consider the attached Purmort Purchase Agreement for OUTLOT F of Ramsey Town Center 8th Addition [PORTIONS MAY BE CLOSED TO THE PUBLIC].
BACKGROUND
City Cost Basis on OUTLOT F
The City of Ramsey purchased The COR (formerly Ramsey Town Center) in 2009 for $6.8M, consisting of 119.26 acres of developable property. As part of the purchase, the City pulled back assessments on all City-owned property, totaling $5.9M. The total cost of the land purchase, including the assessments is $12.7M, which breaks down to $2.44 per square foot. The City purchased The COR with an intent to resurrect the development project and preserve the community's original vision and master plan. The subject property is a 4.38 acre portion of the larger 119.26 acre purchase.
Site Information
The subject property is roughly 4.38 acres in size and is zoned COR 4 Neighborhood District (Residential). This site is located on the north end of The COR, commonly known as the North Commons Park area. From a development perspective, this site does have various challenges:
(1) shape of this lot is a long narrow triangle. A portion of this lot is considered non-buildable (roughly two of the 4.38 acres). Single family lots cannot be built with direct access to Bunker Lake Boulevard.
(2) site includes soils unsuitable for building pads. As a result, a portion of soil must be removed.
(3) site is low, and will require fill to bring building pads up to proper elevation.
(4) located against Bunker Lake Boulevard (County Road 116), which presents desirability challenges for residential users.
(2) site includes soils unsuitable for building pads. As a result, a portion of soil must be removed.
(3) site is low, and will require fill to bring building pads up to proper elevation.
(4) located against Bunker Lake Boulevard (County Road 116), which presents desirability challenges for residential users.
In late 2015, the City Council reviewed the City's inventory of available City-owned land, and the City's corresponding pricing strategy for each property listing. As part of that discussion, staff was asked to further investigate this particular parcel (including identifying development challenges), and consider alternatives on how to attract private sector interest for the listing (potentially including an adjustment to the asking price). A major reason for that direction was due to the known development challenges listed above.
Property Listing
The City has officially listed this property with a broker. The City has established an official asking price for this property ($.80 psf or $34,848 per acre). From a market perspective, it's staff experience, that single family residential prices range from $20,000 to $70,000 per acre in Ramsey, depending on a wide variety of factors.
Historically, whether it be the City of Ramsey, former owners of Ramsey Town Center, Landform, or CBRE, it has been a challenge to generate interest in this particular property listing. In 2012, the City was able to secure a PA on this property for the sale of one lot at $35K per lot, and the potential for future purchase agreements to sell additional lots to the same developer for a total of $455K total. However, the initial PA required the City to act as developer and produce pad ready sites (remove bad soils, bring in new soils, mass grading, complete sidewalks and street lights, utility stubs, etc.). The City's completion of pro-formas for the previously proposed project produced undesired results. Said PA eventually was terminated.
Historically, whether it be the City of Ramsey, former owners of Ramsey Town Center, Landform, or CBRE, it has been a challenge to generate interest in this particular property listing. In 2012, the City was able to secure a PA on this property for the sale of one lot at $35K per lot, and the potential for future purchase agreements to sell additional lots to the same developer for a total of $455K total. However, the initial PA required the City to act as developer and produce pad ready sites (remove bad soils, bring in new soils, mass grading, complete sidewalks and street lights, utility stubs, etc.). The City's completion of pro-formas for the previously proposed project produced undesired results. Said PA eventually was terminated.
Purmort Homes INC
Purmort Homes is a local housing builder. Purmort has a long history of successful residential projects in the City of Ramsay and neighboring communities. In Ramsey, Purmort built a large portion of homes in Ramsey Town Center 8th and 10th Additions (The COR), and recently the "North Commons Park Lots." Website: http://www.purmorthomes.com/. Purmort is in good standing with the City and the State of Minnesota's Secretary of State.
Proposed Project
Purmort is proposing to complete a project nearly identical to the one reviewed to by the City in 2012 (plans provided by Landform Professional Services). The proposed project includes 13 single family homes. Architectural plans, design, and renderings are not included in the PA process. However, these items will be reviewed during the platting and development agreement process. Attached to this case are engineering plans produced by Landform (COR THREE PLAT).
Regional Storm Water
The proposed project will trigger a regional storm water improvement. Please see attached storm water conceptual map. This PA assumes the City will make the needed regional storm water connection. This regional storm water connection has been included in the City's CIP for the past few years. The cost for that connection will be at the City's expense, and is estimated at $150,000. Purmort is required to grade their site for appropriate storm water drainage, and will be responsible for their share of costs for regional storm water system improvements to The COR (funds collected via storm water credit charges within a future development agreement).
PROCESS
(1) EDA Review, 04/07: This item received unanimous approval by the EDA on April 7 as proposed.
(2) Council Review, 04/12 or 04/26
Purmort Homes is a local housing builder. Purmort has a long history of successful residential projects in the City of Ramsay and neighboring communities. In Ramsey, Purmort built a large portion of homes in Ramsey Town Center 8th and 10th Additions (The COR), and recently the "North Commons Park Lots." Website: http://www.purmorthomes.com/. Purmort is in good standing with the City and the State of Minnesota's Secretary of State.
Proposed Project
Purmort is proposing to complete a project nearly identical to the one reviewed to by the City in 2012 (plans provided by Landform Professional Services). The proposed project includes 13 single family homes. Architectural plans, design, and renderings are not included in the PA process. However, these items will be reviewed during the platting and development agreement process. Attached to this case are engineering plans produced by Landform (COR THREE PLAT).
Regional Storm Water
The proposed project will trigger a regional storm water improvement. Please see attached storm water conceptual map. This PA assumes the City will make the needed regional storm water connection. This regional storm water connection has been included in the City's CIP for the past few years. The cost for that connection will be at the City's expense, and is estimated at $150,000. Purmort is required to grade their site for appropriate storm water drainage, and will be responsible for their share of costs for regional storm water system improvements to The COR (funds collected via storm water credit charges within a future development agreement).
PROCESS
(1) EDA Review, 04/07: This item received unanimous approval by the EDA on April 7 as proposed.
(2) Council Review, 04/12 or 04/26
Notification:
Observations/Alternatives:
OBSERVATIONS
Listed below are terms/ conditions/ observations related to the attached purchase agreement that staff considers important to highlight for potential discussion.
(1) Policy Compliance
The attached PA is simply an edited version of the City's adopted "template PA." Therefore, appears to be in compliance with City's Land Sale Policies. The attached offer is low at $5,000. From a 'business subsidy' perspective, assistance for housing projects are exempt from State Statute (116J.993, Sub 3). Staff did consider evaluating this project against the City's Housing Assistance Policy. However, staff considers the low transaction price proposed on this particular PA a result of the development challenges associated with this site-- a scenario that is not contemplated in the City's Housing Assistance Policy. This position will require policy discussion by the EDA.
(2) Offer Price
$5,000.
(3) Earnest Money
$2,500 to become hard after contingency period.
(4) Contingency Period
120 days, 08/12/2016. Buyer has indicated they intend to close in 60-90 days.
(5) Extension Option
If the buyer decides to extend the PA, they will be required to place $2,500 of additional non-refundable dollars in earnest for each 30 day extension.
CONSIDERATIONS
-development fees ($35,100 parks, $9,425 trails, $21,814 water, $14,638 sewer, $5,967 stormwater)
-tax base (about $2,500 total per home, about 1/3 goes to the City, 13 homes)
-consumers (drive traffic to The COR)
-development of challenged site (history of weak or no development interest)
-City's completion of regional storm water connection will be triggered
-low price ($5,000, less CBRE commission* and closing fees, will result in little land proceeds)
*CBRE has agreed to waive payment of a commission on this parcel until the sale of the parcel to the east, which is part of this listing, but will be sold separately. At that time, both sales will be considered as one transaction relative to the real estate commission.
Alternatives
The City Council may approve, modify, or reject this proposed Purchase Agreement. Discussion of the price for the property can occur in closed session.
Listed below are terms/ conditions/ observations related to the attached purchase agreement that staff considers important to highlight for potential discussion.
(1) Policy Compliance
The attached PA is simply an edited version of the City's adopted "template PA." Therefore, appears to be in compliance with City's Land Sale Policies. The attached offer is low at $5,000. From a 'business subsidy' perspective, assistance for housing projects are exempt from State Statute (116J.993, Sub 3). Staff did consider evaluating this project against the City's Housing Assistance Policy. However, staff considers the low transaction price proposed on this particular PA a result of the development challenges associated with this site-- a scenario that is not contemplated in the City's Housing Assistance Policy. This position will require policy discussion by the EDA.
(2) Offer Price
$5,000.
(3) Earnest Money
$2,500 to become hard after contingency period.
(4) Contingency Period
120 days, 08/12/2016. Buyer has indicated they intend to close in 60-90 days.
(5) Extension Option
If the buyer decides to extend the PA, they will be required to place $2,500 of additional non-refundable dollars in earnest for each 30 day extension.
CONSIDERATIONS
-development fees ($35,100 parks, $9,425 trails, $21,814 water, $14,638 sewer, $5,967 stormwater)
-tax base (about $2,500 total per home, about 1/3 goes to the City, 13 homes)
-consumers (drive traffic to The COR)
-development of challenged site (history of weak or no development interest)
-City's completion of regional storm water connection will be triggered
-low price ($5,000, less CBRE commission* and closing fees, will result in little land proceeds)
*CBRE has agreed to waive payment of a commission on this parcel until the sale of the parcel to the east, which is part of this listing, but will be sold separately. At that time, both sales will be considered as one transaction relative to the real estate commission.
Alternatives
The City Council may approve, modify, or reject this proposed Purchase Agreement. Discussion of the price for the property can occur in closed session.
Funding Source:
NA
Recommendation:
Authorize staff to execute a Purchase Agreement with Purmort Homes, Inc., for OUTLOT F of Ramsey Town Center 8th Addition, as outlined above, subject to the review and approval of the City Attorney.
Action:
Authorize staff to execute a Purchase Agreement with Purmort Homes, Inc., for OUTLOT F of Ramsey Town Center 8th Addition, as outlined above, subject to the review and approval of the City Attorney.
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 04/08/2016 12:45 PM |
- Form Started By:
- Kathy Schmitz
- Started On:
- 04/08/2016 12:02 PM
- Final Approval Date:
- 04/08/2016