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

PURPOSE
Consider purchase agreement (PA) from Knoll Properties LLC. for approximately 9.3 acres of City owned land located in Bury and Carlson Addition, west of Molin Concrete.
 
BACKGROUND (Subject Property)
The subject property is located at 7XXX 143rd Avenue NW in Bury and Carlson Addition, just West of Molin Concrete.  This 9.3 site is located at the SE corner of 143rd Avenue NW and Jaspar St NW  and is currently zoned E-2 Employment District.  The entire 19.88 acre property was purchased by the City in 2008 for redevelopment/Public Works purposes for a price of $1,593,500.  The site is vacant, tax exempt, and is available.  The City has the north 9.3 acres property listed on MNCAR through Anoka County for $1,000,000. This is not a CBRE listing.  Proceeds from the sale of this property would go to Public Works. A Sales radiance will need to be adopted prior to the sale of this property.  The draft Ordinance #19-07 is attached to this case.

BACKGROUND (Andersen Dahlen & Knoll Properties, LLC)
Knoll Properties LLC is a holding company based out of Ramsey and managed by Tom and Dave Knoll.  Knoll Properties LLC would purchase the subject property and Anderson Dahlen would operate additional operations from the subject property.  The current campus would also be retained. Both entities are in good standing with State of Minnesota (business and lien system). There is a chance that another holding company could be created for this project but as of now, Knoll Properties, is anticipated to be the buyer/owner.

Anderson Dahlen was founded in the 1940's and was purchased by Richard Knoll in 1978.  In 1984, Tom and Dave Knoll purchased 20% of the company.  Tom and Dave Knoll purchased the remaining 80% of the company and consolidated into a 48,000 facility in Coon Rapids.  In 2000, Anderson Dahlen built a 84,000 SF facility and moved its operations to Ramsey.    In 2018, a 101,000 expansion opened at their Ramsey location.   Currently, Anderson Dahlen employs over 300 employees.  

Anderson Dahlen is now out of space at their current location and needs to secure additional space for the growth of its business.  The development proposal includes commencing construction of 60-75,000 SF of manufacturing space (with the ability to add 40-60,000 SF at a later date) on the Subject Property (City owned property).  The project would be completed no later than July 31, 2020.  The total investment in Phase one of this project is anticipated to be Over $6 Million Dollars.  Anderson Dahlen plans to (a) keep their existing facility and (b) construct/operate from the new facility in Ramsey on the Subject Property.  Anderson-Dahlen currently has over 300 full time employees and plans to add 60 over the next 3 years as a result of this proposed business expansion. 

BACKGROUND (LOI, Purchase Agreement)
Attached to this case is the the Letter of Intent from Knoll Properties, LLC and DRAFT version of the Purchase Agreement (PA). 

N/A

OBSERVATIONS

• Zoning/Use: Generally, the proposed development concept fits within the City's existing zoning regulations (will require official site plan review and approval). The Planning Commission reviewed the concept plan from this perspective and consensus was to move forward.
• Sale Price: The asking price for the subject property is $2.47 per square foot ($1,000,000). The offer price is $1.66 per square foot ($675,000).  The offer price is  "below the mid-range" (but within the total deal range) of the City's adopted "deal-range" for the subject property.  Staff will recommend this offer price be accepted based on the project merits.
• Property Taxes: The proposed development is based on a 75,000 square foot building with the possibility for an additional 40,000 square foot expansion.  Based on an estimated taxable market value of $4,000,000 for Phase 1, this project will generate about $133,000 in total annual property taxes, with the City receiving approximately 25% ($33,250) annually when it hits the tax rolls.
• Earnest Money: This PA does include earnest money ($67,500.00, 10%).  Earnest money will become hard if the initial closing date is extended by the buyer.
• Broker Commission: There is no broker commission for this transaction
• Net Proceeds: $675,000.
• Closing Date: To be determined.  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, and staff.  Several changes (and negotiations) have taken place between staff and the buyer. 
• Buyer: The buyer (Knoll Properties / Anderson Dahlen) has a history of success and delivering on projects in Ramsey as shown by its expansion to its ordinal building onsite and its commitment to creating "living wage" jobs in the community.

ALTERNATIVES
 

This case is being handled as part of normal Staff duties.

Staff recommends approval of the Purchase Agreement as presented.
 

Motion to recommend to the City Council approve the attached purchase agreement with Knoll Properties, LLC, contingent upon final review and amendments from the City Attorney.