Consider Purchase Agreement with WESTCO Properties LLC (portions may be closed to the public)

PURPOSE
Consider purchase agreement (PA) from WESTCO, Properties LLC. for .95 acres of City owned land located within the City's original business park.
 
BACKGROUND (Subject Property)
The subject property is located at 6590 141st Avenue NW in one of the City's original business parks.  This .95 site is located off Basalt Street and Bunker Lake Boulevard and is currently zoned E-1 Employment District.  This property was purchased by the City in 2006 for redevelopment purposes for a price of $211,200; at which time, existing improvements were removed.  This site has sat vacant, tax exempt, and available for sale since 2006.  This property is currently being listed by CBRE, the City's real estate broker for $105,000.  Attached to this case is the property listing.

BACKGROUND (24 Restore & WESTCO Properties LLC)
WESTCO Properties LLC is a holding company based out of Elk River and Managed by Derek West.  WESTCO Properties would purchase the subject property.  24 Restore, a business owned by Derek West, would operate from the subject property.  Both entities are in good standing with State of Minnesota (business and lien system).

24 Restore was established by Derek West in 1994.  Mr. West originally operated from Blaine; and eventually moved his business to Ramsey in 1998 (his hometown).  Mr. West began in Ramsey by leasing a 5,000 square foot space, which eventually turned into ownership of said space, which eventually turned into a 10,000 square foot space (his current location at 6615 141st Ave NW). 

Mr. West is now out of space at his current location and needs to secure additional space for the growth of 24 Restore.  He is proposing a new 12,000 square foot facility to be constructed on the Subject Property (City owned property).  Mr. West is proposing to both (a) keep his existing facility and (b) construct/operate from the new facility.  24 Restore currently has 29 full time employees.  Mr. West expects 10-20 new employees to be added over the next two years.  Here is a link to the 24 Restore website: http://24restore.com/

BACKGROUND (Purchase Agreement)
Attached to this case is the latest DRAFT version of the purchase offer (Purchase Agreement, PA) from WESTCO Properties LLC.  The buyer is represented by Marty Fisher of Premier Commercial Realty.

NA

OBSERVATIONS

• Zoning/Use: Generally, the proposed development concept fits within the City's existing zoning regulations (will require official site plan review and approval).
• Sale Price: The asking price for the subject property is $2.50 per square foot ($105,000). The offer price is $2.29 per square foot ($95,000).  The offer price is on the "high-end" of the City's adopted "deal-range" for the subject property.  Staff will recommend this offer price be accepted.
• Property Taxes: The proposed development is approximately 12,000 square feet.  This building property will generate about $31,000 in total property taxes (about 25% would be received by the City).
• Earnest Money: This PA does include earnest money ($3,000, 3.1%).  Earnest money will become hard if the initial closing date is extended by the buyer.
• Broker Commission: Commission will be paid to both the buyer's real estate agent and the seller's real estate agent via the seller's (City) land sale proceeds (3.5% or $3,325 each).
• Net Proceeds: sale price less broker commissions results in net proceeds of $88,350.
• Closing Date: Closing is set for June 24, 2015.  Attached to this case is a mock project timeline.
• Land Sale Policy: The attached PA generally meets the intent of the City's draft "Land Sale Policy" and has been reviewed by the City Attorney, the City's real estate broker, and staff.  Several changes (and negotiations) have taken place between staff and the buyer.  The buyer has been willing to make several changes.
• Buyer: The buyer (Derek West of 24 Restore) has a history of providing business services to the City of Ramsey.  City staff has been impressed with the professionalism and reliability of Mr. West's company.

ALTERNATIVES
 

NA

Please see observations section.