Consider Purchase Agreement and Right of Re-Entry Agreement for B & A Cylinder site (37a); Case of CBN Enterprises LLC (Jam Hops)
(Portions may be closed to the public)

The EDA may choose to go into closed session pursuant to Minnesota Statutes section 13D.05, subdivision 3(c)(3) to consider offers or counteroffers for the purchase or sale of real or personal property.  If the EDA chooses to enter into closed session, the statute and reason above needs to be referenced along with legal description (Part of Southwest Quarter of the Southwest Quarter of Section 27, Township 32, Range 25) and the Anoka County Tax ID number 27-32-25-33-0006.

The City of Ramsey and CBN Enterprises. LLC (Jam Hops) have been in discussions to develop a recreational facility in Ramsey. Activities to be conducted in this building include: pre-school and school-age gymnastic and Ninja classes.  They also will have open gym (trampolines), birthday parties, field trips and a theater program.  The Developer has interest in a 4.14 acre site south of Soderholm and Associates and west of the old Public Works site.  This property was not on the market but based on recent discussion with Anoka County it has been determined that none of this parcel is needed for highway purposes.  As such, Staff was comfortable entering into negotiations for development of this site.  The proposed project would be the construction of a 22,000 square foot facility with the ability to add 8,000 or more square feet at a later date.  The project would be a relocation of the Anoka facility off of Bunker Lake Boulevard to Ramsey.  Staff has received a preliminary sketch identifying the location of the proposed building and a generic site layout.  Staff has reviewed the proposed layout and has requested more detailed information relating to building footprint (and expansion), materials and some preliminary building elevations. Staff is generally acceptable to the site plan and use and has communicated the need for compliance with City Code when constructing the building.  Part of this project will require the extension of City Sewer and Water to the site (estimated to be about 100-200 feet).  Being that this is City owned land and we are a quasi-developer, it is not unreasonable share in some of the cost of bringing utilities to the site.  There is an expansion project for Soderholm and Associates that will likely occur this year which could lead to some cost savings for the extension of City Sewer and Water.  The City has received a Retroactive No Association Determination letter from the MPCA which helps clear the way for development on this site.  The Buyer will need to have its bank sign off on the environmental work and RNAD letter the City has completed.  The Buyer has requested that the City give site control through execution of a Purchase Agreement so it can start "spending money" on building design, site engineering and project costs to further define the project.  No incentives are being asked for by the Developer on this project.

The Planning Commission will still need to review the formal site plan to ensure the layout is consistent with City zoning and code.  The time periods, and extensions outlined in the term sheet and PA are consistent with recent PA templates aside from the requirement for a Certificate of Occupancy being 16 months rather than the usual 12.  The change is due to the longer timeframes the construction industry is seeing for obtaining building materials.

Notification is not required.

Observations:  The proposed site (27-32-25-33-0006) will be  +/- 4.14 acres upon completion of the Final Plat.    The purchase price is $600,000 ($3.32 / SF). This price per/SF is within the approved "deal range".   Staff understands that the square footage of building does not maximize the site potential.  However, the developer is asking to be able to put in excess parking so that it can accommodate multiple events and keep all its customers onsite.  A copy of the preliminary site concept plan is attached but will likely be modified.  This was a city generated lead for a city un-listed parcel, so only Premier Commercial Properties (Buyer Broker) will receive 3% commission.  

The following Purchase Agreement items are worth highlighting:
 

Earnest Money	$10,000, Nonrefundable after a Notice to Proceed has been given by the Buyer.
Inspection Period	180 days from Effective Date (Date City Council Approves) (city requires plat/ site plan approval before sale).
Closing	Within 30 days of Notice to Proceed.
Extensions	Developer will deposit $10,000 in escrow for each 60 day extension (2 extensions allowed) Once extensions are made the money becomes non-refundable.
Performance	City to require construction of a minimum 22,000 SF building and obtain a Certificate of Occupancy 16 months  after Closing.  If this is not done, the City may exercise the Right of Re-Entry Agreement.

Project Profile:
Acreage: 4.14 Acres
Use: Indoor Recreation
Customer Count: 400-500 per week
Building Size: 22,000 SF with 8,000 or more SF expansion
Project Budget : 5M
Estimated Tax Assessed Project Valuation: 3.5M-4.5M
Tax Estimate: $98,000 - $127,000
City Portion: 15K - 19K (not including fiscal disparities)
Jobs On Site: 3-4 FT and 15-20 PT

Alternatives:

1. Recommendation to City Council to approve Purchase Agreement and Right of Re-Entry Agreement as presented. (Staff recommendation)
2. Recommendation to City Council to approve Purchase Agreement and Right of Re-Entry Agreement with changes.
3. Something else.

This case is being handled as part of normal Staff duties.

Staff recommends a recommendation to the City Council of the attached Purchase Agreement and Right of Re-Entry Agreement as presented, subject to City Attorney review.

As noted above. Planning Commission has yet to review this site concept so this will be handled during the site plan application process and is likely to change.  

Motion to recommend that the City Council approve the attached Purchase Agreement and Right of Re-Entry Agreement for B & A Cylinder site (37a), subject to City Attorney review.