7.4.
CC Regular Session
- Meeting Date:
- 05/10/2016
- Submitted For:
- Patrick Brama
- By:
- Kathy Schmitz, Administrative Services
Information
Title:
Lifestyle Construction Services LLC Purchase Agreement for OUTLOT A of Ramsey Town Center 8th Addition [PORTIONS MAY BE CLOSED TO THE PUBLIC]
Purpose/Background:
***NOTE: the name of the buyer was recently updated (from Coastal Living to Lifestyle Construction). Coastal Living is a Florida based business. The City Attorney requested a Minnesota entity be utilized. As a result, the buyer is now utilizing their Minnesota registered business to complete this transaction (Lifestyle Construction Services LLC).***
PURPOSE
Lifestyle Construction Services LLC Purchase Agreement for OUTLOT A of Ramsey Town Center 8th Addition [PORTIONS MAY BE CLOSED TO THE PUBLIC]
BACKGROUND
OUTLOT A History
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 $2.44 per square foot. The City purchased The COR with an intent to resurrect the development project and preserve the community's original vision and master plan. The subject property is a 4.38 acre portion of the larger 119.26 acre purchase.
Site Information
The subject property is roughly 3 acres in size and is zoned COR 4 Neighborhood District (Residential). This site is located on the north end of The COR, commonly known as the North Commons Park area. From a development perspective, this site does have various challenges:
(1) shape of this lot is a long narrow u-shape
(2) site includes challenging topography, will likely require significant retaining walls
(3) located against Bunker Lake Boulevard (County Road 116), which presents desirability challenges for residential users
(4) site was visioned for townhomes; neighboring use (on same road) is single family
(2) site includes challenging topography, will likely require significant retaining walls
(3) located against Bunker Lake Boulevard (County Road 116), which presents desirability challenges for residential users
(4) site was visioned for townhomes; neighboring use (on same road) is single family
In late 2015, the City Council reviewed the City's inventory of available City-owned land, and the City's corresponding pricing strategy for each property listing. As part of that discussion, staff was asked to further investigate this particular parcel (including identifying development challenges), and consider alternatives on how to attract private sector interest for the listing (potentially including an adjustment to the asking price). A major reason for that direction was due to the known development challenges listed above. The City did adjust down the pricing for this lot at that time.
Property Listing
The City has officially listed this property with a broker. The City has established an official asking price for this property ($.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 any interest in this particular property listing.
Lifestyle Construction Services LLC
Coastal Living is a Florida based business. In Minnesota, they are affiliated with a business known as Maximum Real Estate (who is in good standing with the State of Minnesota Secretary of State). Coastal Living is operated by Bill Gleason of New Hope, MN. Mr. Gleason most notable experience was developing the Edinburgh golf course community in Brooklyn Park. Currently, Mr. Gleason is working on a townhome development in Otsego. City staff does not have detailed information on or experience with this buyer.
Proposed Project
Mr. Gleason is reviewing several options for the u-shape site at this time. Generally, Mr. Gleason is aware of our Zoning Code and COR Design Standards, and anticipates proposing a project that will comply. At this point, the specific product is unknown. The attached PA includes a provision to have a completed development agreement (and site plan) approved with the City before this PA closes. In other words, the City will have a chance to review the proposed project before closing.
As of 05/05/2016, Mr. Gleason is leaning towards a 12-unit, detached, townhome association, walk-out, product. Attached is a very preliminary rendering--the buyer intends to enhance the product design (especially the view from the backyard).
Coastal Living is a Florida based business. In Minnesota, they are affiliated with a business known as Maximum Real Estate (who is in good standing with the State of Minnesota Secretary of State). Coastal Living is operated by Bill Gleason of New Hope, MN. Mr. Gleason most notable experience was developing the Edinburgh golf course community in Brooklyn Park. Currently, Mr. Gleason is working on a townhome development in Otsego. City staff does not have detailed information on or experience with this buyer.
Proposed Project
Mr. Gleason is reviewing several options for the u-shape site at this time. Generally, Mr. Gleason is aware of our Zoning Code and COR Design Standards, and anticipates proposing a project that will comply. At this point, the specific product is unknown. The attached PA includes a provision to have a completed development agreement (and site plan) approved with the City before this PA closes. In other words, the City will have a chance to review the proposed project before closing.
As of 05/05/2016, Mr. Gleason is leaning towards a 12-unit, detached, townhome association, walk-out, product. Attached is a very preliminary rendering--the buyer intends to enhance the product design (especially the view from the backyard).
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 of $170,000 is a fair price. Because no subsidy is being requested, staff did not check this project against our business or housing subsidy policies.
(2) Offer Price
$170,000.
(3) Earnest Money
$5,000 to become hard after contingency period (3%).
(4) Contingency Period
08/01/2016. Closing takes place 10 days after.
(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.
(6) Construction Deadline
This agreement does include a construction deadline. Three units per year need to be constructed, over the course of three years. If the buyer defaults, the City can either collect a $3,000 payment per unit, or reclaim property.
(7) Development Agreement
This agreement requires the buyer to complete the entitlement process before closing. This ensures the City knows what will be constructed, and that it will comply with zoning code.
CONSIDERATIONS
-development fees will depend on number of units, if 12 units (about $40K in parks and trails, about 40K in other fees)
-tax base (about $2,500 total per single family home, about 1/3 goes to the City)
-consumers (drive traffic to The COR)
-development of challenged site (history of no development interest)
-good sale price ($183,000, less CBRE commission* and closing fees, will result in little land proceeds--about $170,000)
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 of $170,000 is a fair price. Because no subsidy is being requested, staff did not check this project against our business or housing subsidy policies.
(2) Offer Price
$170,000.
(3) Earnest Money
$5,000 to become hard after contingency period (3%).
(4) Contingency Period
08/01/2016. Closing takes place 10 days after.
(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.
(6) Construction Deadline
This agreement does include a construction deadline. Three units per year need to be constructed, over the course of three years. If the buyer defaults, the City can either collect a $3,000 payment per unit, or reclaim property.
(7) Development Agreement
This agreement requires the buyer to complete the entitlement process before closing. This ensures the City knows what will be constructed, and that it will comply with zoning code.
CONSIDERATIONS
-development fees will depend on number of units, if 12 units (about $40K in parks and trails, about 40K in other fees)
-tax base (about $2,500 total per single family home, about 1/3 goes to the City)
-consumers (drive traffic to The COR)
-development of challenged site (history of no development interest)
-good sale price ($183,000, less CBRE commission* and closing fees, will result in little land proceeds--about $170,000)
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:
EDA Review
The EDA reviewed this case on 05/05/2016. Attached are draft/un-edited meeting minutes. The EDA recommends the Council approve the attached Purchase Agreement, subject to: (A) adding a construction deadline, and (B) adding a requirement for a development agreement to be approved by the City, before closing on this PA.
The EDA reviewed this case on 05/05/2016. Attached are draft/un-edited meeting minutes. The EDA recommends the Council approve the attached Purchase Agreement, subject to: (A) adding a construction deadline, and (B) adding a requirement for a development agreement to be approved by the City, before closing on this PA.
Action:
Motion to:
[approve/ amend/ deny] the attached Purchase Agreement with Lifestyle Construction Services LLC, subject to the review and approval of the City Attorney.
[approve/ amend/ deny] the attached Purchase Agreement with Lifestyle Construction Services LLC, subject to the review and approval of the City Attorney.
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Jo Thieling | 05/05/2016 02:25 PM |
- Form Started By:
- Patrick Brama
- Started On:
- 05/05/2016 02:02 PM
- Final Approval Date:
- 05/05/2016