Water Main Project to Service Commercial Strip Mall at 167th Avenue

The commercial strip mall at 167th Avenue and Hwy 47 (aka Rum River Retail Ventures) is currently not served by City water or sewer.  Presently the commercial property located at 5900 167th Avenue NW is served by a septic system and a small capacity water well (this is true for all the businesses located at that commercial node). This has directly impacted the mall's ability to fill vacant retail/office spaces. One of the tenants in the mall, Hope Fellowship Church, was granted an Interim Use Permit (IUP) in 2008 on the condition that after three years a fire protection system would be installed in their space if the church remained in the building. Such a system is required due to the change of use and the assembly activities. The Hope Fellowship IUP expires at the end of 2011. Additionally, several prospective tenants, including a clinic, have been turned away, due to the requirement to have fire suppression systems in the building. Joel Buttenhoff, owner of Rum River Retail Ventures, acquired the mall in 2007. After he acquired the property, Mr. Buttenhoff has spent an additional $300,000 in build-out, alterations, plumbing, mechanical, fire alarms, landscaping, signage, etc. His investment in the community exceeds $2 million.

On August 23rd the Economic Development/Marketing Manager was invited to a meeting with Mayor Ramsey and Mr. Buttenhoff to discuss the issues related to the mall on 167th and the Hope Fellowship IUP. Mr. Buttenhoff also met with the Ramsey EDA on August 25th. The Economic Development/Marketing Manager toured the mall on September 1st with the building owner and brainstormed ideas on how to address the situation. During September the Economic Development/Marketing Manager participated in various City staff meetings regarding the fire suppression system requirements, water availability, and the IUP. On September 26, 2011, the owner of the commercial strip mall provided a written proposal to the Economic Development/Marketing Manager.  Under his option, if the City would pay for a water main extension along 167th Avenue to his property, the owner would pay the cost of sprinkling that portion of the building as required by code and the connection to the City water main. 

The Economic Development/Marketing Manager responded to the proposal from Joel on October 7, 2011 indicating that the Ramsey EDA would be willing to consider supporting the extension of the City’s water main from Quicksilver Street approximately 750 feet along the 167th Avenue toward the intersection of 167th and Hwy 47. In exchange for the owner's willingness to bear the cost of installing a fire suppression system for that portion of the property required by the City’s building code and the cost of bringing water from the City’s water main to the building, the EDA would propose that the City incur and bear the cost of extending the water main to the commercial property. It is estimated that the owner's costs for installing a water main connection and fire sprinkler system could range from $100,000 to $125,000.

The City's Engineering department provided a site map of the route for the water main extension (See attached Water Main Exhibit) and an estimate for the cost of the City's portion of the project. The cost for the watermain, removals, pavement replacement, control and erosion control was estimated to be $180,324. It is anticipated that the City would use Water Utility Fund and/or EDA funds to pay for the City's portion of the project. The City would oversize the water main to 12 inches so that the City could serve not only the commercial strip mall, but potentially other businesses on the north side of 167th Ave and Rum River Hills Golf Course on the east side of Hwy 47. At this time the City would not be able to extend sewer service due to the distance from the nearest sewer main and lift station. A couple of assumptions—the City would place a “T” connection at a point reasonably close to a direct line to the Hope Fellowship portion of the building (probably near the west entrance) and the City would require utility easements so that we can place the water main on the north side of the property. Also, the EDA would propose a six-month extension of the existing Interim Use Permit (IUP) to ensure a sufficient amount of time for City’s approvals and construction activities.

Water Utility Fund and/or EDA Fund.  Because this water main will likely serve other businesses in this commercial node in the future, it makes sense that the City pay for this trunk line out of the Water Utility Fund, which currently has a $6 million balance.  In addition, the City amortizes all of its trunk lines out of this enterprise fund.

City staff is recommending that the Ramsey EDA accept the proposal from Joel Buttenhoff, owner of the commercial strip mall at 167th Avenue and Hwy 47, that in exchange for the owner's willingness to bear the cost of installing a fire suppression system for that portion of the property required by the City’s building code and the cost of bringing water from the City’s water main to the building, the EDA would propose that the City incur and bear the cost of extending the water main to the property.

Staff further recommends that the cost for the City's water main extension, estimated to be $180,324, be paid for out of the City's Water Utility Fund. It is logical that the City pay for the 167th Avenue trunk line out of the Water Utility Fund because this water main will likely serve other businesses and residential accounts in this area in the future.

The Ramsey EDA recommends that the City accept the proposal from Joel Buttenhoff, owner of the commercial strip mall at 167th Avenue and Hwy 47, that in exchange for the owner's willingness to bear the cost of installing a fire suppression system for that portion of the property required by the City’s building code and the cost of bringing water from the City’s water main to the building, the City would incur and bear the cost of extending the water main to the property.

The EDA further recommends that the cost for the City's water main extension, estimated to be $180,324, be paid for out of the City's Water Utility Fund. It is logical that the City pay for the 167th Avenue trunk line out of the Water Utility Fund because this water main will likely serve other businesses and residential accounts in this area in the future.