Consider Offers to Purchase and Develop a Portion of Outlot A, COR TWO (Updated)

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 Outlot A, COR TWO and the Anoka County Tax ID number 28-32-25-22-0058.

The purpose of this case is to review two offers to develop a portion of Parcel 46 for a single family townhome development.  Both Centra Homes and Capstone Homes have been working with City staff on development proposals for approximately 16 acres of land north of the future West Ramsey Parkway.  Both developers will make a presentation for their projects and be available for questions. 

It should be noted that both of the offers are at the low end or below the deal range for Parcel 46.  The City will also be spending additional funds for tree removal, grubbing, incidental wetland filling, soil importing and compaction on Parcel 46 to prepare it for development (~ $1,145,800). Zeolite Street NW and W. Ramsey Parkway adjacent to the site will also need to be constructed to bring this project to market. (~ $2,368,000)  Based on the offers, it is clear that the purchase price alone will not cover the cost of these improvements. However, when you consider the purchase price and expected TIF generation for each project, the projected revenue exceeds the expenditures in most cases.  Each project also generates over 1 Million in development fees. Both properties will require a re-zone to a residential district.  The Centra project meets COR Framework Design standards and would require a rezone to COR 4A or COR 4B.  The Capstone project is not compliant with COR Framework design standards and they are requesting a rezone to R-2 which does not have the higher COR Framework standards. The addition of 103-130 new housing units will result in a significant population increase that helps draw interest in retail and restaurants. It should also be noted that both developers expressed an interest in developing the three acre commercial site on the Northeast corner of Sunwood Blvd and Armstrong Blvd residentially but this was not included in the analysis based on the EDA and Council preference to see commercial development on that corner.

Staff suggests going into closed session after the presentations have been completed by both developers to further evaluate the proposals and to consider offers and counter-offers.

N/A

The economics outlined above and on the attached exhibits show all proposed projects and the potential financial impacts for the City of Ramsey.   Staff has put together an additional Capstone scenario that assumes that Wetland 2 is not able to be filled and it includes 115 units to mirror the previous density.  All of these projects do not maximize the land sale revenue for the north portion of Parcel 46 but the tax revenue does make up some of that gap.  A large format retail user, other commercial uses and apartment projects will likely command a higher per square foot cost.  However, both the City Council, Planning Commission and the EDA have been supportive of single family, owner-occupied, housing developed on this site and the City has been unsuccessful in attracting a big box retailer to this location.  Both Capstone and Centra are proposing quality products that will generate significant tax revenue and will result in an increase of population density in the COR.

Staff believes that both developers have brought forth complete, competitive proposals.  Staff (including Planning Staff) does have some concerns with the request by Capstone Homes for reduced Park Dedication Fees and a housing product that is not compliant with the COR Framework standards.  Staff also has some concerns with the ability to get Wetland 2 declared incidental which would reduce the amount of units in the Capstone 130 unit development.

The EDA should consider the following questions and formulate a recommendation to the City Council:

1) Is the EDA supportive of the proposed single family residential development on Parcel 46 instead of waiting for a large format commercial user or other development type?
2) Does the EDA like the housing product and layout that is being proposed in the COR?
3) Is the EDA supportive of a zoning change from a COR Zoning District to COR 2A, COR 2B or R-2?
4) Is the EDA supportive of a housing product that is not compliant with COR Framework?
5) Is the EDA supportive of a reduction in Park Dedication Fees to support affordability as referenced in the Capstone proposal?
6) Are the economics of each project sufficient to make a recommendation to the City Council?
7) Are there any counter offers the EDA are willing to make?
8) Is the EDA comfortable with Staff drafting a Purchase Agreement using the terms included in the packet with the selected developer(s) for City Council consideration without bringing it back to the EDA?

If the EDA is comfortable moving a housing project forward, Staff would like to see a recommendation by the EDA to select a developer and project and make that recommendation to the City Council. In the event that a decision cannot be made to select one developer, Staff would ask the EDA to provide detailed comments/suggestions for the City Council to consider at Work Session to help select a developer.

Alternatives:
1) Motion to recommend to the City Council to select (Insert Developer) and execute a Purchase Agreement with the terms included in the Developers proposal
2) Motion to recommend to the City Council to select (Insert Developer) and execute a Purchase Agreement with negotiated terms recommended by the EDA 
3) Motion to recommend rejection of the attached offers and hold the land for future development
4) Motion to provide comments and recommendations on each proposal to the City Council to be further discussed at a City Council Work Session
5) Something else

N/A

Based on discussion

Alternatives:
1) Motion to recommend to the City Council to select (Insert Developer) and execute a Purchase Agreement with the terms included in the Developer's proposal
2) Motion to recommend to the City Council to select (Insert Developer) and execute a Purchase Agreement with negotiated terms recommended by the EDA 
3) Motion to recommend rejection of the attached offers and hold the land for future development
4) Motion to provide comments and recommendations on each proposal to the City Council to be further discussed at a City Council Work Session
5) Something else