Consider Exchange of Parcel 45 for Part of Outlot A, Ramsey Town Center 13th Addition

Public Well Background

The City selected the area west of Ramsey Boulevard and generally south of  Bunker Lake Boulevard for siting of new municipal wells in the 1990’s.  Five wells were developed in the area.  The area was also selected for development of the COR (formerly known as Ramsey Town Center in the early 2000’s).  Some development occurred before the recession in the mid 2000’s halted new projects.  The property went into foreclosure and the City purchased the property from the bank. 
 
Stormwater Background

The City is a member of the Lower Rum River Watershed Management Organization, (LRRWMO) a joint powers association  with the Cities of Andover and Anoka.  The LRRWMO is required to update their plan every ten (10) years by state law.  The State of Minnesota updated the requirements for WMO plans prior to preparation of the Third Generation Plan for the LRRWMO.  The change included infiltration of the first inch of runoff from all impervious surfaces in an effort to reduce storm runoff. An exception was granted in public wellhead protection areas to protect water quality of the public supply. The Third Generation plan was updated in 2011 and included the  requirement for infiltration of the first inch of runoff with the exceptions included in the state law.  The infiltration law does allow for creating an infiltration mitigation project outside of the wellhead protection area.  The mitigation project must receive an equivalent amount of runoff as the site being mitigated.
 
Multiple development projects were constructed in the COR after the Third Generation plan was adopted and they needed to provide infiltration, however, infiltration is not permitted on their sites.  Staff conferred with the LRRWMO and determined that an infiltration mitigation basin could be placed in the southeast corner of the COR adjacent to the existing storm water pond.  The City collected an infiltration mitigation payment from this project and all subsequent projects in the COR that are in the wellhead protection area.
 
The proposed mitigation area includes an area that was encumbered by drainage and utility easements on the original Ramsey Town Center Plat.  The original plat included provision for an emergency vehicle access to Ramsey Boulevard. The route of this access is through the proposed infiltration basin.  A full vehicle route was designed in to the mitigation plans.  This route runs along the north edge of the proposed infiltration basin.  This connection will be right in-right out at Ramsey Boulevard. This route will be constructed in the future when warranted.
 
Part of the infiltration basin is on City owned property and the other part is on PSD owned property.   The proposed acquisition will transfer ownership of the portion of the basin on PSD property to the City so that the City can provide perpetual maintenance of the basin.  The transfer also includes the proposed right of way for the future road and a remnant piece south of the Medical Examiners building that is too small to develop.

City staff has been directed to negotiate acquisition of the land needed for for storm water ponding and road right of way south and east of the Medical Examiners office. 

N/A

The City has been negotiating with PSD, LLC to find a solution that both parties can willingly accept.  Staff has received appraisals from Certified Appraisal Services (CAS) for the properties and the values assigned to each parcel are agreed to by both negotiating parties.   The City is sellling Parcel 45 which is approximately 103,857 square feet. The price is $644,952 which is $6.21 / SF which is in the deal range. The City wil be acquiring approximately 124,405 square feet owned by PSD LLC.  The price of acquisition is $635,965 which is at a blended rate of $5.11 / SF.  The proposed net proceeds to the City as a result of this land exchange is $8,987.00 (Subject to actual square footages).  

The complexity of this transaction allows for some flexibility in how the deal will ultimately be structured.  The sale of Parcel 45 does not fit the generic Purchase Agreement template due to it being a land exchange but Staff has worked to find an agreement that will result in the City getting what it needs for public infrastructure (storm water capacity, ROW).  In addition, the proposed terms of the purchase agreement requires the developer to construct one building of a retail development on Parcel 45 (concept attached) which will ultimately result in increasing retail options, increasing tax base and the creation of jobs.  The following items make this proposed purchase agreement unique:

1. The closing for both properties wil occur simultaneously. The City would like to close on this transaction as as soon as possible to begin work on the Storm Water Pond.
2. A site plan and plat will not be approved by Planning Commission or City Council prior to the Sale of the Parcel 45 to PSD, LLC. The Developer understands the risk and must comply with City Standards.
3. The City will execute its typical Right of Re-Entry Agreement with an edit. The developer will have 18 months to complete building one and receive a Certificate of Occupancy.  If this is not done Parcel 45 will be returned to the City.  However, there will not be a financial penalty if building two is not constructed.

A complete summary of the land exchange and the terms sheets for each land transaction are attached to the case.  It should be noted that actual square footages fo the parcels involved in the exchange will need to be verified by both parties and if those numbers fluctuate the net proceeds to either the City or Developer could change. 

Staff believes that it has negotiated a fair deal with PSD LLC and would like the EDA to consider a recommendation to move forward and work with the City Attorney with drafting the documents necessary for the purchase agreements, right of re-entry and ultimately closing documents. Staff is open to suggestions and other considerations that might make the deal better for all parties involved.

N/A. As proposed, there will not be acquisition costs by the City as the value of the City land exceeds the value of the land to be acquired from PSD, LLC. (Subject to square footage calculation by engineering)

Staff requests that the EDA consider the terms of the land exchange and recommend approval to the City Council; subject to City Attorney approval.

Motion to approve the terms of the land exchange and recommend approval to the City Council; subject to City Attorney approval.