4.4.
Economic Development Authority (EDA)
- Meeting Date:
- 10/06/2016
- Submitted For:
- Patrick Brama
- By:
- Patrick Brama, Administrative Services
Title:
Begin Discussion RE Strategy for Marketing and Selling City Owned Land
Purpose/Background:
PURPOSE
Begin a preliminary discussion RE the City's strategy for selling city owned land.
NOTE: staff is not looking for any specific/ formal direction from this case. This case is structured as an update and scoping exercise. Staff is looking for preliminary feedback from the EDA, for the EDA to identify questions that need to be answered as discussions unfold in the future, and for the EDA briefly review a list of opportunities for staff to further investigate. This case will come back to the EDA in December/ January--at which time, the EDA/ Council will need to decide (A) if they want to continue their contract with CBRE and/ or (B) if the City should utilize any other strategies to help market/ sell city-owned land.
BACKGROUND
In 2012, the Council completed an exercise to determine Ramsey's inventory of city-owned land. The City of Ramsey owns over 250 parcels city-wide. The majority of these parcels are wetlands, existing or planned trails, existing or future right of ways (ROW) and greenways. About 20 city owned parcels are available for sale and development by the private sector. In 2013, staff was directed to market and sell surplus city owned land.
On January 28, 2014, the City of Ramsey entered into a contract with CBRE to provide professional real estate brokerage services. The contract with CBRE is set to expire January 28, 2017. The CBRE contract includes a six-month carryover commission clause. This contrasts with the former Landform contract that had an 18-month carryover commission clause.
CBRE listed 19 different properties (about 25 parcels). CBRE has placed signs on available properties, and completed professional listing brochures for all 19 properties. Said listings have been placed on CoStar, MnCAR, LoopNet, CBRE's website, and on the City's website. CBRE has shared these listings via email blasts to their contacts on several occasions. CBRE has reached out to a long list of prospects individually RE their listings in Ramsey (roughly XXXX). Periodically, CBRE provides the EDA/ City Council with updates. In late 2015, CBRE worked with staff to create a detailed community profile--that highlights the momentum taking place throughout the community (attached). Additionally, CBRE and staff developed a pricing strategy table for the sale of city-owned properties. CBRE has acted as an advisor to the City's Economic Development and Community Development staff on many occasions. The working relationship between staff and CBRE is positive and professional. CBRE has closed four deals, has two deals under contract (purchase agreement), and are currently working to get two more deals under contract.
NUMBERS
(5) Remaining Opportunity: the City has 17 land listings remaining, totaling about 90 acres of land, with a roughly $19M total asking price.
CHANGES TO CITY STRATEGY, Since 2013
GENERAL UPDATE ON ACTIVITY
Staff has experienced a significant increase in inquires, prospects, and proposed deals over the past 12 months. Generally, it appears the market for development projects in Ramsey is improving. The strongest markets appear to be residential, followed by industrial. The market for office and retail remains soft.
Begin a preliminary discussion RE the City's strategy for selling city owned land.
NOTE: staff is not looking for any specific/ formal direction from this case. This case is structured as an update and scoping exercise. Staff is looking for preliminary feedback from the EDA, for the EDA to identify questions that need to be answered as discussions unfold in the future, and for the EDA briefly review a list of opportunities for staff to further investigate. This case will come back to the EDA in December/ January--at which time, the EDA/ Council will need to decide (A) if they want to continue their contract with CBRE and/ or (B) if the City should utilize any other strategies to help market/ sell city-owned land.
BACKGROUND
In 2012, the Council completed an exercise to determine Ramsey's inventory of city-owned land. The City of Ramsey owns over 250 parcels city-wide. The majority of these parcels are wetlands, existing or planned trails, existing or future right of ways (ROW) and greenways. About 20 city owned parcels are available for sale and development by the private sector. In 2013, staff was directed to market and sell surplus city owned land.
On January 28, 2014, the City of Ramsey entered into a contract with CBRE to provide professional real estate brokerage services. The contract with CBRE is set to expire January 28, 2017. The CBRE contract includes a six-month carryover commission clause. This contrasts with the former Landform contract that had an 18-month carryover commission clause.
CBRE listed 19 different properties (about 25 parcels). CBRE has placed signs on available properties, and completed professional listing brochures for all 19 properties. Said listings have been placed on CoStar, MnCAR, LoopNet, CBRE's website, and on the City's website. CBRE has shared these listings via email blasts to their contacts on several occasions. CBRE has reached out to a long list of prospects individually RE their listings in Ramsey (roughly XXXX). Periodically, CBRE provides the EDA/ City Council with updates. In late 2015, CBRE worked with staff to create a detailed community profile--that highlights the momentum taking place throughout the community (attached). Additionally, CBRE and staff developed a pricing strategy table for the sale of city-owned properties. CBRE has acted as an advisor to the City's Economic Development and Community Development staff on many occasions. The working relationship between staff and CBRE is positive and professional. CBRE has closed four deals, has two deals under contract (purchase agreement), and are currently working to get two more deals under contract.
NUMBERS
(1) Closed Deals: since 2013, the City has closed on the sale of eight properties, totaling 39.82 acres, and $4.216M. CBRE was involved with four sales. These sites include: the former municipal center site (GS Land), Windsorwood, McDonald's, Common Bond, Casey's, PSD LLC, and Purmort (two deals).
(2) Deals Under Contract: the City (and CBRE) currently have two other purchase agreements executed and in-play, totaling roughly 6.38 acres of land, and about $475,000. These include Aeon and Lifestyle Homes.
(3) Pending Deals: the City (and CBRE) are currently in negotiations over two more purchase agreements, totaling roughly 10.3 acres of land, and about $1.04M. These include OGA and Platinum Properties. Today, staff feels very confident about Platinum Properties, and cautiously optimistic about OGA.
(4) Past Prospects: CBRE brought two deals to the City in 2015 that were eventually turned down, totaling roughly 8 acres. These included Dominium and SCA (both senior apartment projects).
(2) Deals Under Contract: the City (and CBRE) currently have two other purchase agreements executed and in-play, totaling roughly 6.38 acres of land, and about $475,000. These include Aeon and Lifestyle Homes.
(3) Pending Deals: the City (and CBRE) are currently in negotiations over two more purchase agreements, totaling roughly 10.3 acres of land, and about $1.04M. These include OGA and Platinum Properties. Today, staff feels very confident about Platinum Properties, and cautiously optimistic about OGA.
(4) Past Prospects: CBRE brought two deals to the City in 2015 that were eventually turned down, totaling roughly 8 acres. These included Dominium and SCA (both senior apartment projects).
(5) Remaining Opportunity: the City has 17 land listings remaining, totaling about 90 acres of land, with a roughly $19M total asking price.
NOTE: asking price should not reflect expectations for land proceeds--the City of Ramsey established a pricing table that has been discussed in closed session on multiple occasions--which better outlines land sale predictions.
CHANGES TO CITY STRATEGY, Since 2013
(1) Template PA: The City has developed a template purchase agreement and policy for selling City owned land. This has drastically increased the efficiency/ effectiveness of negotiations with prospects.
(2) Pricing Strategy: The City has developed a detailed pricing/ land sales table that clearly outlines all basic data (numbers) needed to make decisions on deals (offers) that come into the city. This table tracks the number of listings, asking prices, deal ranges, actual sales, sales dates, brief site specific notes, etc. This table has drastically increased the efficiency/ effectiveness of negotiations with prospects.
(3) Community Profile: The City has developed a detailed community profile. This profile outlines basic demographic information on Ramsey. Additionally, as suggested by CBRE, this document was created to clearly identify the great momentum taking place in Ramsey--within the development community. This document has helped staff convey basic information on Ramsey quickly and professionally. Additionally, this document helps "sell" the city.
(4) Marketing Materials: The City has completed a basic refresh of all materials/ documents/ marketing materials (2015). This basic refresh has allowed staff to update a handful of basic marketing materials, and make custom marketing materials on-the-fly and as-needed. This has helped staff be more consistent, professional, and efficient with the materials and messages sent to potential customers.
(5) Shovel Ready: The City is in the process of completing MN DEED Shovel Ready Certifications for the majority of city-owned parcels. This process essentially prepares all information needed by a developer to conduct a preliminary analysis of a land purchase--upfront and ahead of time. This increases the efficiency of the city's development team, and makes city-owned land more marketable.
(6) Website Upgrade: The City Council has budgeted enough dollars in 2017 to allow for a website revamp. Said redesign could be an opportunity to improve the functionality of the City's economic development pages--including a mobile friendly website. This is an opportunity staff plans to explore with the EDA/ Council in 2017. It should also be noted, in 2014, for the first time, the City began keeping an inventory of available properties within the community online--which has made communications with prospects/ developers much more effective and efficient.
(7) Infrastructure Analysis: Staff is planning to bring a work order request to the EDA/ Council specifically related to The COR. Staff would like to complete a preliminary infrastructure analysis, sign plan, and regional stromwater plan for The COR. For a number of reasons, not having this work completed creates complexities/ ambiguities/ and delays when negotiating land transactions in The COR. Additionally, not having this work completed now could put the city in a disadvantaged position in future (as we may not understand what obligations we are assuming, or pushing off, as master developer, when working on isolated deals today).
(8) 2017 Additional Resources: At this point, it appears the City Council will be approving a 2017 budget that will include a $25,000 increase in the EDA marketing budget and a 20-hour per week position to aid the economic development manager. Although the exact scope of the work to be completed with these additional resources is not 100% finalized today--these resources will certainly put the City is a position to take a stronger, and more pro-active, approach on economic development in 2017.
(2) Pricing Strategy: The City has developed a detailed pricing/ land sales table that clearly outlines all basic data (numbers) needed to make decisions on deals (offers) that come into the city. This table tracks the number of listings, asking prices, deal ranges, actual sales, sales dates, brief site specific notes, etc. This table has drastically increased the efficiency/ effectiveness of negotiations with prospects.
(3) Community Profile: The City has developed a detailed community profile. This profile outlines basic demographic information on Ramsey. Additionally, as suggested by CBRE, this document was created to clearly identify the great momentum taking place in Ramsey--within the development community. This document has helped staff convey basic information on Ramsey quickly and professionally. Additionally, this document helps "sell" the city.
(4) Marketing Materials: The City has completed a basic refresh of all materials/ documents/ marketing materials (2015). This basic refresh has allowed staff to update a handful of basic marketing materials, and make custom marketing materials on-the-fly and as-needed. This has helped staff be more consistent, professional, and efficient with the materials and messages sent to potential customers.
(5) Shovel Ready: The City is in the process of completing MN DEED Shovel Ready Certifications for the majority of city-owned parcels. This process essentially prepares all information needed by a developer to conduct a preliminary analysis of a land purchase--upfront and ahead of time. This increases the efficiency of the city's development team, and makes city-owned land more marketable.
(6) Website Upgrade: The City Council has budgeted enough dollars in 2017 to allow for a website revamp. Said redesign could be an opportunity to improve the functionality of the City's economic development pages--including a mobile friendly website. This is an opportunity staff plans to explore with the EDA/ Council in 2017. It should also be noted, in 2014, for the first time, the City began keeping an inventory of available properties within the community online--which has made communications with prospects/ developers much more effective and efficient.
(7) Infrastructure Analysis: Staff is planning to bring a work order request to the EDA/ Council specifically related to The COR. Staff would like to complete a preliminary infrastructure analysis, sign plan, and regional stromwater plan for The COR. For a number of reasons, not having this work completed creates complexities/ ambiguities/ and delays when negotiating land transactions in The COR. Additionally, not having this work completed now could put the city in a disadvantaged position in future (as we may not understand what obligations we are assuming, or pushing off, as master developer, when working on isolated deals today).
(8) 2017 Additional Resources: At this point, it appears the City Council will be approving a 2017 budget that will include a $25,000 increase in the EDA marketing budget and a 20-hour per week position to aid the economic development manager. Although the exact scope of the work to be completed with these additional resources is not 100% finalized today--these resources will certainly put the City is a position to take a stronger, and more pro-active, approach on economic development in 2017.
GENERAL UPDATE ON ACTIVITY
Staff has experienced a significant increase in inquires, prospects, and proposed deals over the past 12 months. Generally, it appears the market for development projects in Ramsey is improving. The strongest markets appear to be residential, followed by industrial. The market for office and retail remains soft.
Notification:
NA
Observations/Alternatives:
↵↵Over the past few years, City staff has received random feedback from elected officials, the public, and third party professionals related to our strategy for selling city-owned land. Listed below are a handful of opportunities/ alternatives to consider as this discussion unfolds. Staff would like to know if the EDA has interest in further pursuing any of these alternatives (or alternatives not listed).
(1) Traditional Broker (current method)
Broker creates professional listings, lists properties on websites, places real estates signs, sends email blasts, connects with networks/ contacts, and provide market updates to city. A traditional real estate typically gets paid a commission between 5-7% on land sales. This option is typically the most cost-effective, and requires the least amount of exposure to the city financially, in terms of upfront expenses. Staff believes CBRE is a great fit for this particular strategy.
(2) Value-added Broker
Organizations that provide traditional brokerage services, along with additional value-added services. For example, some firms provide professional engineering and land use services, along with land sale services (i.e. Landform). Another example is a firm that provides land sale services with a more robust marketing, public relations offering, and consulting (i.e. IAG, Jeff Lafavre). Typically, these firms cost more than a traditional broker--and often times include a combination of both commission payments and regular payments. These firms would be a little more "hands on" with staff and our elected officials. The scope of their work is variable, and highly customizable.
(3) Public Relations/ Marketing Firms
Private organizations that specialize in providing detailed/ specific marketing for real estate--including in-depth targeted marketing campaigns. This could be useful for Ramsey in the areas of retail (restaurants and shopping), anchor users (theaters), hotels, and office users. This could also be useful in aiding staff with keeping our content/ data fresh and out in the public eye (i.e. more press releases, facebook posts, etc.).
(4) Private Economic Development Services
Organizations that specialize in aiding government agencies (and large utility companies) in maximizing the effectiveness of their economic development departments. Range of services is highly variable. Often times, these agencies have a plug-in to a base of traditional economic development prospects/ contacts (i.e. manufacturing). Additionally, these agencies typically target website improvements and advertising campaigns.
Examples: goldenshovelagency.com/gsa, wedaconnect.com/
(5) Event Attendance & Networking
The development world is a relationship business. The city could put more of an emphasis on staff attending various networking events, trade shows, etc. Below are some good examples (site selectors events, commercial real estate development association, and the global retail convention).
(1) Traditional Broker (current method)
Broker creates professional listings, lists properties on websites, places real estates signs, sends email blasts, connects with networks/ contacts, and provide market updates to city. A traditional real estate typically gets paid a commission between 5-7% on land sales. This option is typically the most cost-effective, and requires the least amount of exposure to the city financially, in terms of upfront expenses. Staff believes CBRE is a great fit for this particular strategy.
(2) Value-added Broker
Organizations that provide traditional brokerage services, along with additional value-added services. For example, some firms provide professional engineering and land use services, along with land sale services (i.e. Landform). Another example is a firm that provides land sale services with a more robust marketing, public relations offering, and consulting (i.e. IAG, Jeff Lafavre). Typically, these firms cost more than a traditional broker--and often times include a combination of both commission payments and regular payments. These firms would be a little more "hands on" with staff and our elected officials. The scope of their work is variable, and highly customizable.
Examples:iagcommercial.com, landform.net
(3) Public Relations/ Marketing Firms
Private organizations that specialize in providing detailed/ specific marketing for real estate--including in-depth targeted marketing campaigns. This could be useful for Ramsey in the areas of retail (restaurants and shopping), anchor users (theaters), hotels, and office users. This could also be useful in aiding staff with keeping our content/ data fresh and out in the public eye (i.e. more press releases, facebook posts, etc.).
(4) Private Economic Development Services
Organizations that specialize in aiding government agencies (and large utility companies) in maximizing the effectiveness of their economic development departments. Range of services is highly variable. Often times, these agencies have a plug-in to a base of traditional economic development prospects/ contacts (i.e. manufacturing). Additionally, these agencies typically target website improvements and advertising campaigns.
Examples: goldenshovelagency.com/gsa, wedaconnect.com/
(5) Event Attendance & Networking
The development world is a relationship business. The city could put more of an emphasis on staff attending various networking events, trade shows, etc. Below are some good examples (site selectors events, commercial real estate development association, and the global retail convention).
Funding Source:
NA
Recommendation:
NA
Action:
NA
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 09/30/2016 11:47 AM |
- Form Started By:
- Patrick Brama
- Started On:
- 08/31/2016 12:28 PM
- Final Approval Date:
- 10/04/2016