4.1.
Economic Development Authority (EDA)
- Meeting Date:
- 11/09/2017
- Submitted For:
- Patrick Brama
- By:
- Patrick Brama, Administrative Services
Title:
Preliminary Deal Structure: Case of National Auto Body & Glass User
Purpose/Background:
PURPOSE
Consider preliminary deal structure for the purchase of a 4.14-acre city-owned property located on the former BA Cylinder Site (CBRE Listing #37).
The purpose of this case is to provide staff preliminary input/ ask questions. The purpose of this case is not to approve the deal. Staff intends to bring back a formal purchase agreement, with a formal EDA case, in December.
BACKGROUND
The proposed users is a national auto body and glass service provider (the end user has asked to remain confidential at this point). The buyer, project manager, and developer is Oppidan--a Twin Cities based development company. Therefore, the purchase agreement is technically with Oppidan. Staff has received a LOI for this project. However, several changes are currently being negotiated. Included in this case is a summary of deal terms. Attached to this case is the CBRE Listing for this site (#37).
Oppidan will be at this meeting.
Consider preliminary deal structure for the purchase of a 4.14-acre city-owned property located on the former BA Cylinder Site (CBRE Listing #37).
The purpose of this case is to provide staff preliminary input/ ask questions. The purpose of this case is not to approve the deal. Staff intends to bring back a formal purchase agreement, with a formal EDA case, in December.
BACKGROUND
The proposed users is a national auto body and glass service provider (the end user has asked to remain confidential at this point). The buyer, project manager, and developer is Oppidan--a Twin Cities based development company. Therefore, the purchase agreement is technically with Oppidan. Staff has received a LOI for this project. However, several changes are currently being negotiated. Included in this case is a summary of deal terms. Attached to this case is the CBRE Listing for this site (#37).
Oppidan will be at this meeting.
Notification:
NA
Observations/Alternatives:
Proposed Preliminary Deal Terms
(1) 4.14 acres of city owned land. Site is the former BA Cylinder Site. Site is currently zoned E2.
(2) Offer Price was originally $400,000. CBRE counter offered at $450,000. Property asking price was $450,000. Both offers are within the City's acceptable deal range.
(3) Earnest money is $20,000.
(4) Due diligence period is six months.
(5) Developer is hoping for 2018 early construction begin/ 2018 completion.
(2) Offer Price was originally $400,000. CBRE counter offered at $450,000. Property asking price was $450,000. Both offers are within the City's acceptable deal range.
(3) Earnest money is $20,000.
(4) Due diligence period is six months.
(5) Developer is hoping for 2018 early construction begin/ 2018 completion.
Important Items Staff would Flag:
(1) Project would require a text amendment to the E2 Employment Zoning District. The current zoning language would not allow this use (existing zoning only allows for partial use of a building for an auto user). Therefore, as part of the inspection period for this project, the developer would undergo a zoning amendment application. Staff would request the Planning Commission review this concept project, to provide some preliminary input, before the EDA approves a purchase agreement (December). Based on very preliminary staff discussion, the proposed zoning amendment request appears to have some merit, and staff would support bringing that discussion forward.
(2) Staff completed a shovel ready application process for this property. Through that process, a couple potential contamination issues were identified. Staff has completed a Phase I ESA and a Phase II ESA. Staff is currently working with the State MPCA and Bruan Intertech to wrap up this site/ obtain a closer letter from the MPCA and complete some final testing. At this point, staff is waiting to hear back from the MPCA and Braun Intertech. It's staff understanding the site will be usable--but, may have some soil vapor lining requirements, and potentially some monitoring requirements. Updates to come on this item. The buyer is aware of this situation.
(3) Infrastructure and access. This site will not be allowed direct access to Ramsey Boulevard. This site will obtain access from Limonite Street. As planned within the City's future public works master planning process, 142nd Ave will be vacated. Limonite Street needs to be extended into this site, including a cul-de-sac (currently terminates into a dirt road just north of this site). This infrastructure improvement (Limonite cul-de-sac) will not only serve the buyer of the 4.14 acre city-owned property (west), it will also benefit the roughly 3.5-acre city-owned property located directly east of this proposed project. Based on preliminary estimations, the cul-de-sac (including utilities) will cost roughly $350,000. Staff would suggest the buyer construct/ pay-for this infrastructure improvement. Then, the city reimburse the developer 50% of said costs (as this improvement is needed to serve the city's parcel as well).
(4) Design/ layout is important. Staff has made the buyer aware the city needs a concept layout for this project before a purchase agreement will be approved (December). The city will require a quality building (including glass/ stone) that shields/ screens the site from Ramsey Boulevard. Any outside storage must be enclosed, screened, secure, and setback from Ramsey Boulevard. Buyer understands this site is the entrance to The COR and is important to the City.
(5) Broker Commission Payments. The original purchase agreement (offer from the buyer) called for a $400,000 price. However, it included a $40,000 broker payment, for the buyer broker. This $40,000 payment was above and beyond the city's standard commission payment/ policy for CBRE (5% for single broker, and 7% for co-broker). In response to this request, CBRE is suggesting the City increase the price for the land transaction from $400,000 to $450,000, and have the buyer cover this extra broker commission. The buyer broker also works for CBRE (they are contracted to the end-user).
(2) Staff completed a shovel ready application process for this property. Through that process, a couple potential contamination issues were identified. Staff has completed a Phase I ESA and a Phase II ESA. Staff is currently working with the State MPCA and Bruan Intertech to wrap up this site/ obtain a closer letter from the MPCA and complete some final testing. At this point, staff is waiting to hear back from the MPCA and Braun Intertech. It's staff understanding the site will be usable--but, may have some soil vapor lining requirements, and potentially some monitoring requirements. Updates to come on this item. The buyer is aware of this situation.
(3) Infrastructure and access. This site will not be allowed direct access to Ramsey Boulevard. This site will obtain access from Limonite Street. As planned within the City's future public works master planning process, 142nd Ave will be vacated. Limonite Street needs to be extended into this site, including a cul-de-sac (currently terminates into a dirt road just north of this site). This infrastructure improvement (Limonite cul-de-sac) will not only serve the buyer of the 4.14 acre city-owned property (west), it will also benefit the roughly 3.5-acre city-owned property located directly east of this proposed project. Based on preliminary estimations, the cul-de-sac (including utilities) will cost roughly $350,000. Staff would suggest the buyer construct/ pay-for this infrastructure improvement. Then, the city reimburse the developer 50% of said costs (as this improvement is needed to serve the city's parcel as well).
(4) Design/ layout is important. Staff has made the buyer aware the city needs a concept layout for this project before a purchase agreement will be approved (December). The city will require a quality building (including glass/ stone) that shields/ screens the site from Ramsey Boulevard. Any outside storage must be enclosed, screened, secure, and setback from Ramsey Boulevard. Buyer understands this site is the entrance to The COR and is important to the City.
(5) Broker Commission Payments. The original purchase agreement (offer from the buyer) called for a $400,000 price. However, it included a $40,000 broker payment, for the buyer broker. This $40,000 payment was above and beyond the city's standard commission payment/ policy for CBRE (5% for single broker, and 7% for co-broker). In response to this request, CBRE is suggesting the City increase the price for the land transaction from $400,000 to $450,000, and have the buyer cover this extra broker commission. The buyer broker also works for CBRE (they are contracted to the end-user).
Funding Source:
NA
Recommendation:
Staff is looking for any preliminary direction, input, questions, etc. No formal direction requested.
Below are some preliminary staff comments (from an Economic Development perspective)
Below are some preliminary staff comments (from an Economic Development perspective)
- Appears to be a quality building/ user that will create jobs and drive traffic to The COR
- Appears to be a good offer price
- Appears project will result in the construction of needed Limonite Street cul-de-sac
- Appears to be a good developer, willing to work with city on design
- Project will require a text zoning amendment
- No subsidy requested
- This site has challenges (odd shape, setback to BNSF, and Phase II ESA) that have made it hard to sell/ market for traditional economic development (manufacturing)--this project appears to be a good use of this site
- When project comes back in December, as a formal purchase agreement, staff will include more detailed information
Action:
Staff is looking for any preliminary direction, input, questions, etc. No formal direction requested. This case will come back as a formal purchase agreement in December.
Attachments
Form Review
| Inbox | Reviewed By | Date |
|---|---|---|
| Kurt Ulrich | Kurt Ulrich | 11/06/2017 03:24 PM |
- Form Started By:
- Patrick Brama
- Started On:
- 11/05/2017 05:28 PM
- Final Approval Date:
- 11/06/2017