Maple Investments LLC (dba Sharp & Associates) Purchase Agreements [portions of this case may be closed to the public]

INTRO
In June 2017, the EDA and City Council approved the attached $606,622 Purchase Agreement (A) from Maple Investments LLC (dba Sharp & Associates). for a 9.33-acre City-owned property located just south of Vision Ease Lens for an industrial development project, which included the immediate construction of a 50,000 square foot speculative industrial building.

Based on the original project proposal, the entire 9.33 acre parcel was to be purchased upfront.  However, only about half of the 9.33 acre site was to be developed immediately.  The remaining portion of the site would be platted as an outlot, and would be utilized by the developer for future speculative development projects.

Maple Investment is making significant progress in the entitlement process (recently reviewed preliminary plat with Planning Commission).  With that in mind, as the budget picture for this development has become clearer for Maple Investments, they have run into some issues (with cost overruns).  As a result, and in attempt to make the project budget work, Maple Investments would like to split this project into two phases (i.e. two purchase agreements).  Maple Investments has stated, this move will reduce upfront project costs by nearly $400,000.


PURPOSE
Split the the attached original purchase agreement (A) into two separate purchase agreements.  The City Attorney is suggesting amending the original agreement (A) to ONLY include the first half of the development (4.74 acres, $309,711), which is only the land needed for the proposed 50,000 square foot building.  Secondly, the City Attorney is suggesting a new purchase agreement (B) for the remaining portion of the 9.33 acre city-owned site (4.57 acres, $298,603).


BACKGROUND
Please see 06/13/2017 City Council Regular Session Case for background information or contact staff.  Said case includes information on the developer, the site, and the proposed project.
 

OBSERVATIONS
Terms and conditions for the original purchase agreement (A) and new purchase agreement (B) are nearly identical as the originally discussed/ reviewed by the EDA/ Council.  Please see 06/13/2017 Council Case for details and staff summary.  Listed below are changes:
 

Original purchase agreement was split into two purchase agreements.  As a result, the pricing was pro-rated accordingly.  The original price per square foot remains.

The original deal didn't include minimum development timelines/ performance measurements for the outot.  It was being purchased upfront purely on speculation.  This new arrangement does add in a construction deadline for the outlot (purchase agreement B).  Said new purchase agreement requires the construction of a minimum 20,000 square foot building and also requires a letter of credit guarantying said development.  Platting and site plan must occur before closing.  Certificate of occupancy must be obtained by July 01, 2019.  Inspection period ends for the second purchase agreement (B) on October 01, 2018.

 

NA

Staff is comfortable with the proposed arrangement.  Please see 06/13/2017 City Council Case for previous detailed recommendations/ comments (including EDA direction).

Although the original purchase agreement (A) was approved in June, the EDA did express concern about the second half of the project not including any construction deadlines/ performance guarantees from the developer (i.e. it was purely speculative).  Staff believes said EDA concern is addressed with this new arrangement, as the new purchase agreement (B), which covers the second half of the development, does include construction deadlines/ performance guarantees.

Staff is not requesting to go into closed session.  The price of this purchase agreement has not changed from the original discussion/ approval ($1.50 per square foot).

Motion to recommend the City Council approve the attached:
Purchase agreement amendment and second purchase agreement, between the City of Ramsey and Maple Investments LLC; subject to final review and amendments by the City Attorney.