Approve Purchase Agreement for 6710 Highway 10 NW; Case of PDKP Properties, LLC

The purpose of this case is to consider the attached purchase agreement for the property (PID# 34-32-25-13-0005) 6710 Highway 10 NW Ramsey, MN.

Sterling Trophy is a trophy business currently operating in Anoka.  They have submitted a Letter of Intent to purchase the property for $125,000, which is $2.30 per square foot.  The property is currently listed by the Anoka County Assessor's Office as having an estimated market value (EMV) of $240,300 (or $4.48 per s.f.). Please note that this is not a market appraisal. The City invested in purchase of this property to remove a blighted commercial building along a highly visible corridor and ensure the removal of lawful, non-conforming rights associated with the previous use.

The City purchased the property, with a business and building, in 2013, and razed the blighted building after purchase.  A previous purchase agreement in 2014 for $170,000 for a garage door expired, when the garage door company purchased an existing building in Ramsey.
 
The Economic Development Authority (EDA) recommended approval of this purchase agreement to PDKP at their meeting of July 12, 2018, subject to including two amendments:

• A Developer requested contingency of project financing 
• The addition of right of re-entry language, as used in other city land sales. 

The attached PA includes the modification for Right of Re-Entry. Currently, the draft does not include the financing contingency as requested by the Buyer. The City Attorney has objected to this language, and feels that this is the intent of the inspection period. Staff will request a written legal opinion on this matter prior to the July 24 Meeting.  

The EDA also discussed appropriate brokerage fees on the project. A section of the PA also addresses the real estate broker obligations that are part of this transaction.  This property is part of the listing agreement with CBRE and the EDA discussed the need to clarify that no other brokers are involved and asked to see activity on the site performed by CBRE.

↵The property is located midway between the proposed Ramsey interchange and the proposed Sunfish lake Boulevard Interchange.  Access to the site will be impacted when Highway 10 is constructed to freeway-like standards, but the timeframe for that work is not known.  The site has city sewer and water available and a storm pond will need to be installed as part of the development.

The applicant wishes to purchase the entire 1.23-acre (53,579 square foot) site for possible future expansion or subdivision. 

The trophy company proposes to construct a 4,000 square foot building that would have a small office and showroom area (1,200 s.f.) with the balance of the building being used for assembly and storage.  The City purchased the property in 2013 using Anoka County HRA funds.  Land proceeds from the sale remain with the city and will be be deposited in the City's Economic Development Fund for future projects.

The applicant also has an interest in applying for a loan from the EDA revolving loan fund to fill any financing gaps not covered by the SBA loan and buyer's equity.  

Please note that the project still needs to go through site plan review with the Planning Commission. The project has indicated an interest in requesting a variance to front yard setback to be in line with existing buildings along Highway 10.

The Council may may accept, deny, or propose amendments to this purchase agreement at this time.  Staff is recommending approval.

Not applicable.

The EDA recommends approval of this Purchase Agreement. The attached Purchase Agreement is consistent with city's polices for selling city-owned land and the proposed sales price is within the acceptable price range.  The proposed use is an acceptable use that will add to the City's tax base and be a benefit to the Highway 10 business corridor.
 

Motion to approve the attached purchase agreement with PDKP Properties, LLC. for the purchase of property (PID# 34-32-25-13-0005), also known as 6710 Highway 10 NW Ramsey, MN.