5.2.
HRA Regular Session
- Meeting Date:
- 02/14/2012
- By:
- Heidi Nelson, Administrative Services
Title:
Consider Process for Acquisition of Parcel owned by M & W Holdings - Jeff Wise (14590 Armstrong Blvd NW)
Background:
The HRA has directed and authorized the development team to approach three property owners on the west side of Armstrong Boulevard to discuss acquisition of their properties as part of the Armstrong Interchange and Sunwood realignment projects. All three properties are affected in some degree by the current project to realign Sunwood Drive, or the Armstrong overpass currently under preliminary design.
The three properties involved are highlighted on the attached exhibit. Together with the Oasis Market site acquired previously, the properties represent the majority of the Right-of-Way north of Hwy 10 necessary to construct the Armstrong Interchange and Sunwood Realignment.
One parcel owned by M&W Holdings, LLC (Wiser Choice Liquors) is owned by Jeff Wise, a seated City Council and HRA Member. This situation creates a situation of real and/or perceived conflict of interest in negotiating this acquisition. Additionally, the actions of the City and the HRA in the realignment of Sunwood Drive and the plans for the Armstrong Interchange, have significant impacts to the private business owned by Mr. Jeff Wise. Based upon discussion at the February 6th HRA work session, it is the desire of the HRA and the City Council to define the process for negotiations with Mr. Wise to ensure transparency and fair treatment of all parties. To that end, a resolution define the process for negotiations is attached to this case for consideration.
Preliminary appraisal valuations have been determined and the development team, along with the city attorney, are in the process of approaching the three owners with offers to purchase either the entire property, or the portions of the properties necessary to construct Armstrong Boulevard. The feasibility of which will be evaluated based on discussions.
The evaluation method used to assess the two northerly parcels was based on their value as raw land, which was the highest value as determined by the appraiser. While those parcels do have existing structures, and one has an operating business, the value of the land as a development opportunity exceeds that of the structures or business.
The southern parcel is owned by M&W Holdings, LLS whose sole member is Jeff Wise. Unlike the other two parcels, The highest value for this parcel, as determined by the appraiser, is in the structure and business located there today. This makes the negotiations on this parcel a broader discussion than the other two parcels.
The three properties involved are highlighted on the attached exhibit. Together with the Oasis Market site acquired previously, the properties represent the majority of the Right-of-Way north of Hwy 10 necessary to construct the Armstrong Interchange and Sunwood Realignment.
One parcel owned by M&W Holdings, LLC (Wiser Choice Liquors) is owned by Jeff Wise, a seated City Council and HRA Member. This situation creates a situation of real and/or perceived conflict of interest in negotiating this acquisition. Additionally, the actions of the City and the HRA in the realignment of Sunwood Drive and the plans for the Armstrong Interchange, have significant impacts to the private business owned by Mr. Jeff Wise. Based upon discussion at the February 6th HRA work session, it is the desire of the HRA and the City Council to define the process for negotiations with Mr. Wise to ensure transparency and fair treatment of all parties. To that end, a resolution define the process for negotiations is attached to this case for consideration.
Preliminary appraisal valuations have been determined and the development team, along with the city attorney, are in the process of approaching the three owners with offers to purchase either the entire property, or the portions of the properties necessary to construct Armstrong Boulevard. The feasibility of which will be evaluated based on discussions.
The evaluation method used to assess the two northerly parcels was based on their value as raw land, which was the highest value as determined by the appraiser. While those parcels do have existing structures, and one has an operating business, the value of the land as a development opportunity exceeds that of the structures or business.
The southern parcel is owned by M&W Holdings, LLS whose sole member is Jeff Wise. Unlike the other two parcels, The highest value for this parcel, as determined by the appraiser, is in the structure and business located there today. This makes the negotiations on this parcel a broader discussion than the other two parcels.
Observations:
Acquisition of the Wiser Choice parcel can be comprised of three parts - Building, Land, and Business (relocation, fixtures, etc.)
The valuation of the building and land were determined by the independent appraisal and are likely to be items with little room to negotiate. State statute governs the amount a municipality can pay for acquisition relative to an appraisal, and the values considered are in the range acceptable not only to the seller, but similar to those contemplated for the sale of land to Mr. Wise for his proposed project in The COR. It is likely that the valuation agreed to for the acquisition of his parcel will be the same as that used for the sale of the property in The COR. Per direction at the February 6th HRA work session, a reveiw appraisal will be conducted utilizing a review appraiser that the City has utilized in the past for acquisitons in the US10 corridor.
At the February 6th HRA work session, Attorney Goodrich discussed with the HRA the implications of the relatively new state legislation relating to minimum compensation when a property owner is forced to relocate. This law essentially requires that, notwithstanding the land/building appraisal amount, the damages paid must compensate the owner with an amount sufficient for the owner to purchase a comparable property in the community. This is a complex statute requirement and there is little reported law for guidance. Specifically, this statute provides as follows:
The valuation of the building and land were determined by the independent appraisal and are likely to be items with little room to negotiate. State statute governs the amount a municipality can pay for acquisition relative to an appraisal, and the values considered are in the range acceptable not only to the seller, but similar to those contemplated for the sale of land to Mr. Wise for his proposed project in The COR. It is likely that the valuation agreed to for the acquisition of his parcel will be the same as that used for the sale of the property in The COR. Per direction at the February 6th HRA work session, a reveiw appraisal will be conducted utilizing a review appraiser that the City has utilized in the past for acquisitons in the US10 corridor.
At the February 6th HRA work session, Attorney Goodrich discussed with the HRA the implications of the relatively new state legislation relating to minimum compensation when a property owner is forced to relocate. This law essentially requires that, notwithstanding the land/building appraisal amount, the damages paid must compensate the owner with an amount sufficient for the owner to purchase a comparable property in the community. This is a complex statute requirement and there is little reported law for guidance. Specifically, this statute provides as follows:
Minn Stat. §117.187. Minimum compensation.
When an owner must relocate, the amount of damages payable, at a minimum, must be sufficient for an owner to purchase a comparable property in the community and not less than the condemning authority's payment or deposit under section 117.042, to the extent that the damages will not be duplicated in the compensation otherwise awarded to the owner of the property. For the purposes of this section, "owner" is defined as the person or entity that holds fee title to the property.
When an owner must relocate, the amount of damages payable, at a minimum, must be sufficient for an owner to purchase a comparable property in the community and not less than the condemning authority's payment or deposit under section 117.042, to the extent that the damages will not be duplicated in the compensation otherwise awarded to the owner of the property. For the purposes of this section, "owner" is defined as the person or entity that holds fee title to the property.
Recommendation:
The Development Management Team recommends that the City Attorney, Development Manager and HRA Executive Director proceed with the negotiations on land and building owned by Mr. Jeff Wise as outlined in the background and observation sections fo this case and in the attached resolution.
Funding Source:
Funding source for the construction of the Sunwood Realignment and property acquisition is currently under review based upon discussion at the January 24th City Council meeting. Final funding plan for the project will be brought forward to the City Council in the next 30-45 days. Sources to include LCA grant fudning, TIF 14 proceeds, land sale proceeds, and undesignated reserves.
Council Action:
Provide consensus direction on the process in acquiring property owned by M&W Holdings, LLC - Jeff Wise
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 02/09/2012 04:23 PM |
- Form Started By:
- hnelson
- Started On:
- 02/09/2012
- Final Approval Date:
- 02/09/2012