Adopt Resolution #19-067 Approving Purchase Agreements for Land Exchange; Case of PSD LLC

Public Well Background

The City selected the area west of Ramsey Boulevard and generally south of  Bunker Lake Boulevard for siting of new municipal wells in the 1990’s.  Five wells were developed in the area.  The area was also selected for development of the COR (formerly known as Ramsey Town Center in the early 2000s).   
 
Stormwater Background

The City is a member of the Lower Rum River Watershed Management Organization, (LRRWMO) a joint powers association  with the cities of Andover and Anoka.  The LRRWMO is required to update their plan every ten (10) years by state law.  The State of Minnesota updated the requirements for WMO plans prior to preparation of the Third Generation Plan for the LRRWMO.  The change included infiltration of the first inch of runoff from all impervious surfaces in an effort to reduce storm runoff entering the system. The Third Generation plan was updated in 2011 and included the  requirement for infiltration of the first inch of runoff with the exceptions included in the state law.  The infiltration law does allow for creating an infiltration mitigation project outside of any wellhead protection area.  The mitigation project must receive an equivalent amount of runoff as the site being mitigated.
 
Multiple development projects were constructed in the COR after the Third Generation plan was adopted and they needed to provide infiltration. However, infiltration is not permitted on their sites.  Staff conferred with the LRRWMO and determined that a regional/shared infiltration mitigation basin could be placed in the southeast corner of the COR adjacent to the existing storm water pond.  The City collected an infiltration mitigation payment from this project and all subsequent projects in the COR that are in the wellhead protection area.
 
The proposed mitigation area includes an area that was encumbered by drainage and utility easements on the original Ramsey Town Center Plat.  The original plat included provision for an emergency vehicle access to Ramsey Boulevard. The route of this access is through the proposed infiltration basin.  Since then, a full public roadway has been planned as a result of Highway 10 planning efforts. This route runs along the north edge of the proposed infiltration basin.  This connection will be right-in/right-out at Ramsey Boulevard. This route will be constructed in the future when warranted.
 
Part of the infiltration basin is on City owned property and the other part is on PSD owned property. The proposed acquisition will transfer ownership of the portion of the basin on PSD property to the City so that the City can provide perpetual maintenance of the basin.  The transfer also includes the proposed right of way for the future road and a remnant piece south of the Medical Examiners building that is too small to develop.

Staff has previously been directed by the City Council to negotiate acquisition of the land needed for for stormwater infiltration ponding and road right of way south and east of the Medical Examiner's office. 

Notification is not required.

City Staff presented the details of the proposed exchange at the February 14 EDA meeting.  The City has been negotiating with PSD, LLC to find a solution that both parties can willingly accept.  Staff received appraisals from Certified Appraisal Services (CAS) for the properties and the values assigned to each parcel are consistent with the appraisals and agreed to by both negotiating parties.   The City is sellling Parcel 45 (west of Armstrong Boulevard) which is approximately 103,857 square feet. The Asking Price is $644,952 which is $6.21 per square foot, which is in the City's approved Deal Range. The City wil be acquiring approximately 124,725 square feet owned by PSD LLC.  The price of acquisition is $636,698 which is at a blended rate of $5.10 per square foot.  The proposed net proceeds to the City as a result of this land exchange is $8,254.00 (subject to verification of actual square footages).  

The complexity of this transaction allows for some flexibility in how the deal will ultimately be structured.  The sale of Parcel 45 does not fit the generic Purchase Agreement template due to it being a land exchange.  However, Staff has worked to find an agreement that will result in the City acquiring the necessary land for the proposed stormwater project referenced above.  In addition, the proposed terms of the purchase agreement requires the developer to construct one building of a retail development on Parcel 45 (concept attached). Benefits of the transaction include, but are not limited to increasing retail options, increasing tax base, and the creation of jobs.  

The following items make this proposed purchase agreement unique:

1. The closing for both properties will occur simultaneously. The City would like to close on this transaction as as soon as possible to begin work on the Stormwater Infiltration Pond.
2. A site plan and plat will not be approved by Planning Commission or City Council prior to the sale of the Parcel 45 to PSD, LLC. The Developer understands the risk and must comply with the City Development Process and regulations.
3. The City will execute its typical Right of Re-Entry Agreement with an edit. The Developer will have 18 months to complete the building and to receive a Certificate of Occupancy.  If this is not done Parcel 45 will be returned to the City.  However, there will not be a financial penalty if a second building is not constructed.

A complete summary of the land exchange and the terms sheets for each land transaction are attached to the case.  It should be noted that actual square footages fo the parcels involved in the exchange will need to be verified by both parties through a licensed survey. 

The City of Ramsey has already passed a sales Ordinance authorizing the Sale of Parcel 45.

This case is being handled as part of normal Staff duties. The Stormwater Utility Fee will need to reimburse the EDA for the acquisition of Parcel 45. CBRE does have Parcel 45 listed for sale, and is entitled to a Broker Fee.

Staff recommends adoption of Resolution #19-067 Approving Purchase Agreements for Land Exchange; Case of PSD LLC, subject to review by the City Attorney as to legal form.

Motion to adopt Resolution #19-067 Approving Purchase Agreements for Land Exchange; Case of PSD LLC; subject to City Attorney approval.