4.1.
Economic Development Authority (EDA)
- Meeting Date:
- 12/08/2016
- Submitted For:
- Patrick Brama
- By:
- Patrick Brama, Administrative Services
Title:
Prestmore Academy & Daycare Purchase Agreement for OUTLOT B of COR ONE [PORTIONS MAY BE CLOSED TO THE PUBLIC]
Purpose/Background:
PURPOSE
The purpose of this case is to review the attached draft project concept, the proposed user, and the attached draft purchase agreement. The purpose of this case is not to make any formal decisions. This case is expected to come back to the EDA/ Council in January to be reviewed formally. At that time, staff intends to have a more complete case, and more complete project documents (i.e. site layout, visuals, purchase agreement, etc.). The intent of the case is to provide the prospect with preliminary feedback, identify any major red flags, and to provide a counter offer on any major deal points--if desired.
BACKGROUND
SITE INFORMATION
Outlot B is a roughly 4.95-acre parcel. The user, Prestmore Academy, would like to utilize a roughly 1-acre portion of the property. This site is located in the COR-2 Retail district, on the boarder of the COR-1 Mixed district. The shape of this site is ideal for development (rectangular). This site will require a significant level of fill, which will increase project costs for Prestmore. CBRE is currently listing this site for $5.00 per square foot. This prospect was brought to the City via CBRE (Prestmore found CBRE's number on a real estate sign in The COR).
YOLITE STREET
Development of this site will trigger the construction of a public roadway connection (Yolite Street)--which will connect Sunwood Drive with Veterans Drive. Yolite Street is the only planned public mid-block connection between Zeolite and Sapphire Street in The COR (which are a half mile apart). Staff recommends this previously planned connection be made for various reasons: public safety, traffic flow, and to provide commuters a connection mid-block (which will remove reliance of cutting through private properties--like Residence at The COR).
Attached to this case is a feasibility report from WSB for this project--the WSB report includes road, water, sewer, sidewalks, street lights, and landscaping ($394,900). Staff considers this estimate conservative, and on the higher end. Staff would recommend, if this project moves forward, the design of Yolite be further analyzed for potential cost savings. Staff believes up to $150,000 could potentially be pulled from this project.
Prestmore Academy is proposing to pay for 20% of costs related to Yolite Street. Prestmore would like to use the City's previously utilized cost share arrangement on public roads located in commercial areas in The COR--which is a 60/40 split (60% City, 40% developer). Prestmore is proposing to pay 20%, as they are only utilizing one side of the road. They are proposing the user on the other side of Yolite pay for the remaining share of the 40% developer portion (i.e. 20%).
Staff's proposed funding source for the Yolite Street construction project is TIF District #1--which is also the proposed funding source for Zeolite Street (in The COR).
REMNANT LOT
Development of the Prestmore project will result in highlighting a small, 1/2 acre, remnant, city-owned, lot adjacent to Yolite Street (east side). Please see attached "remnant lot" reference map. Staff believes this remnant lot is the result of two items--(1) the pre-placement of intersections and curb cut outs (on Sunwood and Veterans Drive) and (2) selling Common Bond/ Sunwood Village a lot that didn't extend to Yolite Street.
Staff believes development value still exists for the remnant lot. The COR has favorable building coverage ratios, building setbacks, and storm water regulations that promote development on smaller sites. This sized site is very common in downtowns across the twin cities. It could be home to a small retail/ office shop, fronted against Sunwood, with parking in back. For example, a 4,000-8,000 sq foot building foot print (could be multiple stories). Also, Common Bond/ Sunwood Village may have interest in this remnant lot, in the future, for a potential expansion. Lastly, it is possible the City has interest, in the future, in utilizing this remnant lot (green way, trails, dog park, plaza, etc.).
With the above information in mind, the option to eliminate this remnant parcel/ issue exists. The City could choose to shift Yolite Street east roughly 85' to better line up with the existing/ proposed development pattern(s). Staff briefly reviewed this option, and believes it would be cost prohibitive. It would require moving/ repairing both existing curb cuts, shifting the intersection on Sunwood Drive, and shifting existing buried storm water utilities located in the future Yolite right-of-way. If desired, staff would be happy to further investigate this option.
The purpose of this case is to review the attached draft project concept, the proposed user, and the attached draft purchase agreement. The purpose of this case is not to make any formal decisions. This case is expected to come back to the EDA/ Council in January to be reviewed formally. At that time, staff intends to have a more complete case, and more complete project documents (i.e. site layout, visuals, purchase agreement, etc.). The intent of the case is to provide the prospect with preliminary feedback, identify any major red flags, and to provide a counter offer on any major deal points--if desired.
BACKGROUND
-Outlot B 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 roughly 1-acre portion of the larger 119.26-acre purchase. COR 1 Plat was recorded as part of the Residence at The COR development in 2011-2012.
-Prestmore Academy-
Here is a link to the Prestmore Academy website http://www.prestmoreacademy.com/. Please see "about" page for details. Mr. Michael and Ms. Michelle Johnson are former Ramsey residents (now Andover residents), and they would like to establish a Prestmore Academy in The COR (a franchise). This would be the first Prestmore Academy in Minnesota (Florida based).
-Proposed Project-
The proposed 9,900 sf, 1-story, Prestmore Academy & Daycare facility will include four class rooms, a gym, and a playground. The academy will be staffed by 15-20 employees (including State certified instructors), and will serve more than 100 children. Mr. and Ms. Johnson have indicated they intend to construct a very nice looking building (brick/ glass) and they generally understand design standards for The COR. Also, they want to create a facility that becomes an asset for the community, interacts with residents, and draws people to The COR.
Mr. and Ms. Johnson reviewed sites in Ramsey and neighboring cities. The COR is their ideal location, and where they are proposing their new facility. They looked at multiple site locations within The COR. This is their most desired site--they like that it is centrally located, is on Sunwood Drive, good access, good visibility, nearby residential development (and future development), and is reasonably priced. At this point, they estimate a need for 1-acre of land. Staff would like to note, it is possible, Prestmore will end up needing slightly less than 1-acre.
Attached to this case is a mock site layout. This layout has not been formally reviewed by staff. Mr. and Ms. Johnson will be at the EDA/ Council meeting to introduce themselves and review their proposal. When this case is reviewed by the EDA/ Council in January formally, it will include a visual rendering and updated site layout.
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 roughly 1-acre portion of the larger 119.26-acre purchase. COR 1 Plat was recorded as part of the Residence at The COR development in 2011-2012.
-Prestmore Academy-
Here is a link to the Prestmore Academy website http://www.prestmoreacademy.com/. Please see "about" page for details. Mr. Michael and Ms. Michelle Johnson are former Ramsey residents (now Andover residents), and they would like to establish a Prestmore Academy in The COR (a franchise). This would be the first Prestmore Academy in Minnesota (Florida based).
-Proposed Project-
The proposed 9,900 sf, 1-story, Prestmore Academy & Daycare facility will include four class rooms, a gym, and a playground. The academy will be staffed by 15-20 employees (including State certified instructors), and will serve more than 100 children. Mr. and Ms. Johnson have indicated they intend to construct a very nice looking building (brick/ glass) and they generally understand design standards for The COR. Also, they want to create a facility that becomes an asset for the community, interacts with residents, and draws people to The COR.
Mr. and Ms. Johnson reviewed sites in Ramsey and neighboring cities. The COR is their ideal location, and where they are proposing their new facility. They looked at multiple site locations within The COR. This is their most desired site--they like that it is centrally located, is on Sunwood Drive, good access, good visibility, nearby residential development (and future development), and is reasonably priced. At this point, they estimate a need for 1-acre of land. Staff would like to note, it is possible, Prestmore will end up needing slightly less than 1-acre.
Attached to this case is a mock site layout. This layout has not been formally reviewed by staff. Mr. and Ms. Johnson will be at the EDA/ Council meeting to introduce themselves and review their proposal. When this case is reviewed by the EDA/ Council in January formally, it will include a visual rendering and updated site layout.
SITE INFORMATION
Outlot B is a roughly 4.95-acre parcel. The user, Prestmore Academy, would like to utilize a roughly 1-acre portion of the property. This site is located in the COR-2 Retail district, on the boarder of the COR-1 Mixed district. The shape of this site is ideal for development (rectangular). This site will require a significant level of fill, which will increase project costs for Prestmore. CBRE is currently listing this site for $5.00 per square foot. This prospect was brought to the City via CBRE (Prestmore found CBRE's number on a real estate sign in The COR).
YOLITE STREET
Development of this site will trigger the construction of a public roadway connection (Yolite Street)--which will connect Sunwood Drive with Veterans Drive. Yolite Street is the only planned public mid-block connection between Zeolite and Sapphire Street in The COR (which are a half mile apart). Staff recommends this previously planned connection be made for various reasons: public safety, traffic flow, and to provide commuters a connection mid-block (which will remove reliance of cutting through private properties--like Residence at The COR).
Attached to this case is a feasibility report from WSB for this project--the WSB report includes road, water, sewer, sidewalks, street lights, and landscaping ($394,900). Staff considers this estimate conservative, and on the higher end. Staff would recommend, if this project moves forward, the design of Yolite be further analyzed for potential cost savings. Staff believes up to $150,000 could potentially be pulled from this project.
Prestmore Academy is proposing to pay for 20% of costs related to Yolite Street. Prestmore would like to use the City's previously utilized cost share arrangement on public roads located in commercial areas in The COR--which is a 60/40 split (60% City, 40% developer). Prestmore is proposing to pay 20%, as they are only utilizing one side of the road. They are proposing the user on the other side of Yolite pay for the remaining share of the 40% developer portion (i.e. 20%).
Staff's proposed funding source for the Yolite Street construction project is TIF District #1--which is also the proposed funding source for Zeolite Street (in The COR).
REMNANT LOT
Development of the Prestmore project will result in highlighting a small, 1/2 acre, remnant, city-owned, lot adjacent to Yolite Street (east side). Please see attached "remnant lot" reference map. Staff believes this remnant lot is the result of two items--(1) the pre-placement of intersections and curb cut outs (on Sunwood and Veterans Drive) and (2) selling Common Bond/ Sunwood Village a lot that didn't extend to Yolite Street.
Staff believes development value still exists for the remnant lot. The COR has favorable building coverage ratios, building setbacks, and storm water regulations that promote development on smaller sites. This sized site is very common in downtowns across the twin cities. It could be home to a small retail/ office shop, fronted against Sunwood, with parking in back. For example, a 4,000-8,000 sq foot building foot print (could be multiple stories). Also, Common Bond/ Sunwood Village may have interest in this remnant lot, in the future, for a potential expansion. Lastly, it is possible the City has interest, in the future, in utilizing this remnant lot (green way, trails, dog park, plaza, etc.).
With the above information in mind, the option to eliminate this remnant parcel/ issue exists. The City could choose to shift Yolite Street east roughly 85' to better line up with the existing/ proposed development pattern(s). Staff briefly reviewed this option, and believes it would be cost prohibitive. It would require moving/ repairing both existing curb cuts, shifting the intersection on Sunwood Drive, and shifting existing buried storm water utilities located in the future Yolite right-of-way. If desired, staff would be happy to further investigate this option.
Notification:
NA
Observations/Alternatives:
OBSERVATIONS
Listed below are terms/ conditions/ observations related to the attached purchase agreement that staff considers important to highlight for potential discussion. At this point, both staff and Prestmore have not had time to thoroughly review the attached purchase agreement. It is being attached for reference purposes only. Staff suggests conversation be concentrated on the items below (i.e. major deal points). If the EDA would like to make a counter offer, staff suggests that be discussed in closed session.
Prestmore believes their asking price is justified because (1) the site will require a significant level of fill, (2) they are proposing a very nice looking/ high-quality designed building, (3) their building is office space, which is very expensive to construct, (4) a children's academy requires significant staffing and operating costs, (5) Prestmore will be a destination user for The COR, (6) this is Mr. & Ms. Johnson's first project--and need to come up with a lot of equity, due to bank requirements, (7) a children's academy requires a high-quantity of high-quality non-construction items; such as class rooms, gym space, enhanced security sytems, and a playground.
Prestmore originally approached staff about getting land for free. Staff and Prestmore negotiated to $2.50 psf offer price. Staff indicated that anything less than $2.50 psf would be considered a formal business subsidy request--and would require underwriting of this project, credit analysis, and a $7,500 fee.
(2) Earnest Money
$10,000 or 5% (whichever is more). Prestmore has agreed to this.
(3) Contingency Period
07/01/2017. Closing takes place 10 days after.
(4) 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, maximum two extensions.
(5) Construction Deadline
This agreement does include a construction deadline. 9,900 sf commercial building must be constructed by 08/01/2018. If the buyer defaults, City can either collect a $25,000 payment or reclaim property.
(6) Assignment
The buyer intends to establish a new entity to own/ manage this project. The principals of that new entity will be Mr. and Ms. Johnson. Therefore, staff expects this agreement to be reassigned at some point. We intend to include language in this agreement that allows.
(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.
(8) Yolite Street
This agreement will need to address construction of Yolite Street. It should cover two items: (1) the cost share and (2) who will manage the design and construction.
The informal policy historically implemented in The COR for cost-sharing public roads is a 60-40 split (60% city). It should be noted, public roads are typically designed at a much higher level than private drives (width, load capacity, landscaping, utilities, etc.). Prestmore is proposing that the 60/40 cost share be used on this public road project. Prestmore has indicated that the 40% "developer" share should be split between Prestmore and the other property that will have direct access of Sunwood Drive. Therefore, effectively, Prestmore is proposing a 20% share of costs associated with Yolite.
Staff has not had time to review the design and construction management for this project. At this point, it is assumed Prestmore doesn't have the desire to manage said construction project. This item will be resolved before the next EDA/ Council meeting.
CONSIDERATIONS
Listed below are terms/ conditions/ observations related to the attached purchase agreement that staff considers important to highlight for potential discussion. At this point, both staff and Prestmore have not had time to thoroughly review the attached purchase agreement. It is being attached for reference purposes only. Staff suggests conversation be concentrated on the items below (i.e. major deal points). If the EDA would like to make a counter offer, staff suggests that be discussed in closed session.
(1) Offer Price
$2.50 per square foot is being offered by Prestmore. Asking price is $5.00 per square foot. They expect to purchase about 1-acre, @ $2.50 psf = $108,900.
$2.50 per square foot is being offered by Prestmore. Asking price is $5.00 per square foot. They expect to purchase about 1-acre, @ $2.50 psf = $108,900.
Prestmore believes their asking price is justified because (1) the site will require a significant level of fill, (2) they are proposing a very nice looking/ high-quality designed building, (3) their building is office space, which is very expensive to construct, (4) a children's academy requires significant staffing and operating costs, (5) Prestmore will be a destination user for The COR, (6) this is Mr. & Ms. Johnson's first project--and need to come up with a lot of equity, due to bank requirements, (7) a children's academy requires a high-quantity of high-quality non-construction items; such as class rooms, gym space, enhanced security sytems, and a playground.
Prestmore originally approached staff about getting land for free. Staff and Prestmore negotiated to $2.50 psf offer price. Staff indicated that anything less than $2.50 psf would be considered a formal business subsidy request--and would require underwriting of this project, credit analysis, and a $7,500 fee.
(2) Earnest Money
$10,000 or 5% (whichever is more). Prestmore has agreed to this.
(3) Contingency Period
07/01/2017. Closing takes place 10 days after.
(4) 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, maximum two extensions.
(5) Construction Deadline
This agreement does include a construction deadline. 9,900 sf commercial building must be constructed by 08/01/2018. If the buyer defaults, City can either collect a $25,000 payment or reclaim property.
(6) Assignment
The buyer intends to establish a new entity to own/ manage this project. The principals of that new entity will be Mr. and Ms. Johnson. Therefore, staff expects this agreement to be reassigned at some point. We intend to include language in this agreement that allows.
(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.
(8) Yolite Street
This agreement will need to address construction of Yolite Street. It should cover two items: (1) the cost share and (2) who will manage the design and construction.
The informal policy historically implemented in The COR for cost-sharing public roads is a 60-40 split (60% city). It should be noted, public roads are typically designed at a much higher level than private drives (width, load capacity, landscaping, utilities, etc.). Prestmore is proposing that the 60/40 cost share be used on this public road project. Prestmore has indicated that the 40% "developer" share should be split between Prestmore and the other property that will have direct access of Sunwood Drive. Therefore, effectively, Prestmore is proposing a 20% share of costs associated with Yolite.
Staff has not had time to review the design and construction management for this project. At this point, it is assumed Prestmore doesn't have the desire to manage said construction project. This item will be resolved before the next EDA/ Council meeting.
CONSIDERATIONS
(A) An acre of development fees is estimated at about $60,000 (2016): $3,966 park, $1,090 trail, $6,131 water, $3,391 sewer, $4,577 storm water management, $40,000 COR storm water.
(B) Tax base is estimated at about $45,000 per year gross. Typically, the city receives about 1/4 of property taxes. However, in this particular scenario, the project is located in an existing TIF District (#14). Therefore, the City would collect roughly just over 50% of the tax base via TIF. This tax base is helpful for the city--as their is need to develop funding sources for other improvements in The COR.
(C) Prestmore believes this project will drive 100+ families to The COR on a daily basis (2x). Increased traffic counts help drive retail and restaurants.
(D) Prestmore has indicated this project will create 15-20 new jobs.
(E) Prestmore has indicated they intend to construct an impressive looking building that will fit in well with The COR.
(F) Prestmore has indicated they intend to become engaged in the community and The COR--and would like to develop relationships with organizations such as PACT Charter School.
(B) Tax base is estimated at about $45,000 per year gross. Typically, the city receives about 1/4 of property taxes. However, in this particular scenario, the project is located in an existing TIF District (#14). Therefore, the City would collect roughly just over 50% of the tax base via TIF. This tax base is helpful for the city--as their is need to develop funding sources for other improvements in The COR.
(C) Prestmore believes this project will drive 100+ families to The COR on a daily basis (2x). Increased traffic counts help drive retail and restaurants.
(D) Prestmore has indicated this project will create 15-20 new jobs.
(E) Prestmore has indicated they intend to construct an impressive looking building that will fit in well with The COR.
(F) Prestmore has indicated they intend to become engaged in the community and The COR--and would like to develop relationships with organizations such as PACT Charter School.
Funding Source:
NA
Recommendation:
NA
Action:
Staff will recommend this case be discussed in closed session. Staff is not requesting any final/ formal decisions be made. This case will be coming back to the EDA/ Council for a formal review in January. The purpose of this case is to introduce the project (Mr. and Ms. Johnson will be at the meeting), identify any major red flags, and develop a counter-offer if the EDA/ Council wishes.
Attachments
- Prestmore Academy PA 12042016
- Site Concept 12012016
- Remnant lot Ref Map 12052016
- Yolite Feasibility 12032016
- Distance of Road Connections
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 12/07/2016 02:03 PM |
- Form Started By:
- Patrick Brama
- Started On:
- 12/06/2016 11:25 AM
- Final Approval Date:
- 12/07/2016