Purchase / Exchange of Property Outlot A RTC 8th Addition (This discussion may be closed to the public)

A letter of intent, dated May 28, 2013, addressed to HRA Chairperson Backous, was received from the office of Erhart & Elfelt, LLC.  The letter of intent relates to a parcel of property that PSD, LLC is interested in purchasing from Ramsey HRA and exchanging parcels of property.  The letter and exhibits are attached to this case.

The letter states the following:  

1.  Purchase:  That PSD is interested in purchasing a three-acre parcel that is generally described as Outlot A of the Ramsey Town Center 8th Addition.  (See Exhibit A)  The City acknowledges that PSD plans to develop the property - intending to construct 12 twin homes that would consist of 24, one-level ADA residences.  The City acknowledges that it is unaware of any prohibitions of developing the land with the usage as designated.  (See Exhibit B)  The purchase price for the three acres will be $130,680.  The City would agree to complete the second lift on the streets that abut the purchased property.  These streets include Zeolite Street NW, 147th Terrace NW, and Willemite Street NW.  The City agrees there are no outstanding assessments to the properties.

2.  Exchange:  That PSD is the owner of the portion of Outlot A of the RTC 13th that consists of about 3.36 acres. (See Exhibit C).  PSD is also the owner of Outlot B of the RTC 13th.  outlot B is property that will be utilized for a common easement for ingress and egress to adjoining property including Outlot A of the RTC 13th.  The City is the owner of Outlot A of the RTC 7th.  (See Exhibit D)  The intent is that PSD will exchange Outlot A of the RTC 13th for Outlot A of the RTC 7th.  There would be no cash funds transferred.

The letter continues that for both purchase and exchange of property, the parties agree as follows:  The part ending up the owner for any piece of property would be responsible for any WAC and SAC charges for connections.  The party transferring the property will give marketable title.  Both parties warrant that there are no environmental issues and both parties have the right to do environmental studies.  Any title work and closings would occur at Registered Abstracters in Anoka.  any descriptions or civil engineering would be prepared by Bolton and Menk.  The exchange would be handled as to allow PSD to qualify for a like-kind exchange.  The closing would occur before July 1, 2013.

1) Purchase proposal:
-  This land was originally planned for 60 units and the proposal is to construct 24.  The reduction of 36 units would need to be added to other areas of the COR to met housing projections.
-  Sewer and water services have been installed to each of the proposed 60 units in the previous plan.  This will add value to this property for the proposed townhome development, however, it is likely the several service installations will need to be added for the proper alignment with the units.
-  This is a more appropriate area for the type of unit prosed earlier this year by PSD/Mary T. because it would have reduce architectural design requirements.
-  The land is currently not platted and therefore would have development expenses and fees.
-  Funds to construct the final lift of asphalt on the streets are current held in escrow (from the previous developer), so the City will be able to provide that at no additional cost.
-  The proposed purchase price for the 3 acre parcel is about $1 per square foot ($130,680).  Current cost basis in the land, fully loaded, are about $7.16 per square foot ($935,669).  The market value of the property, improved, may be in the $3-5 per square foot range, but staff will need to do additional research.
-  Conclusion: the offer for the property is low for the value of the property.  However, this property has been vacant for a number of years, unsightly, highly visible to Bunker Lake Road, and is difficult to develop with other product types.  The City should consider a counter proposal as it would be a benefit to have this parcel developed.

2).  Land Exchange Proposal:
A)  PSD Parcel (proposed to be given to the City)
-  3.38 acres in size
-  About one-half the site is currently a drainage easement in favor of the City.  The City Engineer has determined that the area is not needed for the current drainage plan and the easement may be vacated and the area filled to make a buildable lot.
-  this parcel is commercial/office land and has exposure to Highway 10.
-  The property is located next to the Medical Examiners Office which may limit some uses.
-  The property is triangular in shape which diminishes its value for development.
-  The site plan for the area surrounding this property is current unknown.
-  This property is planned to have a single-loaded frontage road on the south, and a road on the east side that will be a development expense.
-  The most likely use for this property is as an office building.

B)  City Parcel (proposed to be received by PSD)
-  3.36 acres in size
-  This parcel appears to be at-grade and to have good soil conditions.
-  This parcel is on existing roadways with only minor road modifications needed.
-  The parcel is close to COR amenities such as the Draw Park, Lake Ramsey, and the Parkway.
-  The property is highly visible and and "entry-way" parcel to the development.  Construction of a quality project on this site would be a plus.
-  The City has had strong interest in this site from multi-family developers due to its location to transit and other site amenities.
-  The property is a square-shape which maximizes its use for development.




 

Staff recommends that the HRA offer a counter proposal on the land sales price for purchase and consider other parcels that are more comparable in value for the land exchange.

Not applicable.

Staff recommends a discussion in closed session to consider this real estate negotiation.