Review Status and EDA Involvement in Redevelopment of Parcels in West Armstrong Redevelopment Area

The purpose of this case is to receive direction from the EDA on potential future redevelopment/land acquisition/demolition opportunities in the West Armstrong Redevelopment Area and prioritization of funding for said activities. (Portions of the meeting may be closed to the public under Minnesota Statutes Section 13D.05 Subdivision3(c)(3) to consider the purchase of real property). If the EDA decides to go into closed session, it must identify the specific properties it would be discussing potential offers for or potential projects that could incorporate public assistance. The Tax ID numbers and legals for Parcels 2,3 and 4 are: 
 
Background and EDA Past Actions
On April 8, 2021 and May 13, 2021 the EDA discussed investment, strategic land acquisition and redevelopment in the area known as the West Armstrong Redevelopment Area. Staff identified the following items and the EDA provided consensus to Staff and Council on how to proceed:

Infrastructure: (April 8, 2021 discussion, May 13, 2021 Consensus to prepare plans and specs for Ferret Street and Utilities and fund with TIF - See Attached Minutes)
 -Ferret Street extension and reconstruction and installation of utilities. (Ferret Street Project completed August of 2023 - Funded with TIF 14)

Land Acquisition:(April 8, 2021 discussion, May 13, 2021 Consensus to wait until Ferret Street improvements were made to area and to revisit - See Attached Minutes) 

Purchasing Blighted / Underutilized, /Strategic Properties: (Updates Below)

1. 8100 146th Avenue NW. Anoka County PID is 29-32-25-14-0012. Legal Description is Lot 1, Block 1, Hauser Addition (Purchased and demolished by PSD 3/6/23)
2. 8049 146th Avenue NW. Anoka County PID is 29-32-25-14-0011. Legal Description is Lot 4, Block 2, Hy-10 Ramsey (Unlisted, potentially for sale in future)
3. 8050 147th Avenue NW. Anoka County PID is 29-32-25-14-0008. Legal Description is Lot 1, Block 2, Hy-10 Ramsey (Unlisted, Lease Expiring, potentially for sale in future)
4. 14700 Armstrong Blvd NW. Anoka County PID is 29-32-25-11-0008. Legal Description is Lot 3, Block 1, Hy-10 Ramsey 3rd Add (Under Private Contract part of larger development concept)
5. XXXX Ferret St NW, Anoka County PID is 29-32-25-11-0009. Legal Description is Lot 1, Block 1, Hy-10 Ramsey (a few private purchase agreements, no sales)

Status Update - West Armstrong Redevelopment Parcels

Parcel 1 (No Action)
Parcel 1 was acquired by PSD in 2023.  PSD demolished the building and is currently holding to potentially combine with adjacent parcels if a project warrants it.

Parcel 2 (Potential Acquisition / Demolition)
Parcel 2 is the home of Lawn Monster.  This parcel is one of three parcels with older, unimpressive buildings.  Lawn Monster has periodically looked for alternative locations but has not been able to find anything suitable.  The owner would be willing to talk to potential buyers but the property is not on the open market. Staff is asking the EDA to consider acquiring, or providing demolition assistance if a redevelopment opportunity presents itself, the price is reasonable and there is a willing seller.  This parcel is in TIF 14 and TIF could be used for demolition or acquisition to facilitate development. The estimated cost of demolition of this building is $17,500.  The ability to use TIF ends on November 28, 2026.

Parcel 3 (Potential Acquisition / Demolition)
Parcel 3 is owned by John Leukam and it is currently leased by a limousine company.  This parcel is one of three parcels with older, unimpressive buildings. This lease is coming up and the property could hit the market soon. The owner is willing to talk to potential buyers but the property is not on the open market.  Staff is asking the EDA to consider acquiring, or providing demolition assistance if a redevelopment opportunity presents itself, the prive is reasonable and there is a willing seller.  This parcel is in TIF 14 and TIF could be used for demolition or acquisition to facilitate development. The estimated cot to demolish this building is $20,000.  The ability to use TIF ends on November 28, 2026.

All Day Retail Concept - Development Interest (Parcel 4, 6 and 7) (Potential Demolition Assistance for Parcel 4)
Staff had been working with All Day Retail on a retail development concept for Parcel 4 and land owned by National Growth (Parcel 6 and 7) as depicted on the Site Location Map.  The development has evolved over time and has varied from three to five buildings and acreages. Parcel 4 was identified as a potential acquisition by Staff back in 2021 but now this parcel is still under contract with All Day Retail.  However, All Day Retail has let the Purchase agreement with National Growth terminate but based on the interest and visibility in this area, Staff is not recommending consideration of land acquisitions in this area at this time.  The Developer identified a lack of a Right In Access off of Armstrong as a reason it could not develop the site but there could also be other factors.   Staff would be supportive of the provision of public assistance relating to the redevelopment and demolition of Parcel 4 as a part of a larger development if a need is demonstrated by a future developer.  The estimated cost for demolition of the building on Parcel 4 is $13,000. The ability to use TIF ends on November 28, 2026.

Parcel 5 (No Action)
Parcel 5 is vacant with no tenants or activity.  A previous leaser that had trouble with code compliance has left the site and it is much more presentable now.  Staff believes this parcel will develop through private investment.  Staff is not recommending the city consider acquiring this property as there are no blighted buildings deterring redevelopment. This parcel is in TIF 14 and TIF could be used for site improvements or acquisition to facilitate development. The ability to use TIF ends on November 28, 2026.

Property Valuation Increases in West Armstrong Redevelopment Area (Summary)
Since 2021, Property values for the parcels identified have increased from $3,369,600 to $5,377,400 ($2,007,800). Attached to this case is a summary of Anoka County tax valuation changes since 2021 and after the investment in Ferret Street extension / reconstruction for reference.

City Property Inventory (not including RALF)
Since 2021, the City has sold 12 properties in the COR and surrounding area totaling 39.20 acres. The sale of these properties has added properties back to the tax rolls, strengthened TIF 14 and brought private investment to the community. Two properties in the COR, not included above, (CorTrust Bank and Roer's Apartments) totaling 4.7 acres are currently under contract and expect to close early in 2026. The City has 8 properties left to sell, mostly in the COR and currently listed, totaling 35.89 acres.  One of these parcels is 15.53 acres and is located between the new Hilton Home2 Suites and Affinity at Ramsey.   The EDA has previously communicated concerns that the City owned too much land and that it was not supportive of adding land to the portfolio to sell.  Based on the recent sale of approximately 40 acres of land inventory, Staff would like the EDA to revisit its willingness to temporarily add land to its portfolio for redevelopment purposes.

EDA Considerations
Staff believes that the acquisition, or facilitating the acquisition and/or redevelopment of Parcels 2, 3 and 4 would be a benefit to the City.  Redevelopment of these sites including the demolition / renovation of buildings would increase the property value and future property taxes.  In the opinion of Staff, if the City were to acquire one or two of these parcels, it would not require a lengthy duration to facilitate redevelopment activities and the City would also recoup most of the acquisition/redevelopment spent through the resale of property and taxes generated by the new development. Staff also believes that Parcels 2 and 3 will not redevelop quickly without City involvement and have the strong potential to have buildings and site conditions to deteriorate over time.

None required.

Based on the above information and EDA discussion, Staff is looking for direction from the EDA to pursue acquisition, or to facilitate redevelopment through incentives, for TIF for Parcels 2, 3 and 4.  This action would only be supported by Staff if the property owners are willing sellers / re-developers. Alternatives (in no particular order) by the EDA could include:

1) Direct Staff to enter into negotiations to acquire and redevelop Parcels 2, 3 and 4 if the property owners are willing sellers and to bring back negotiations to the EDA for future consideration. (Land Acquisition)
2) Direct Staff to work with property owners of Parcel 2, 3 and 4 to facilitate redevelopment utilizing incentives for demolition/acquisition/site improvements. (Land Acquisition/Site Improvements/Demolition/Incentives)
3) Direct Staff to work with property owners of Parcel 2, 3 and 4 to facilitate redevelopment utilizing incentives for demolition only. (Demolition Incentives Only)
4) No Action.
5) Something Else.

In addition to determining what level of activity the EDA feels is appropriate to help facilitate or expedite redevelopment/investment in the area, the EDA should consider how much of the available funding sources (RLF, City HRA (Anoka County), EDA Unencumbered Fund balance, and to a lesser extent TIF 14) could be utilized without impacting the ability to participate in other projects.(i.e. RALF Redevelopment and other larger projects with community-wide impact.

Possible Funding Sources:
TIF 14 until November 28, 2026 (acquisition, site improvements, demolition) - It should be noted that currently there are no TIF Funds available.  Any TIF used will need to be generated by new improvements.
EDA unencumbered Fund Balance (acquisition, site improvements, demolition) - $1,650,000 balance
City HRA allocation from Anoka County (acquisition, site improvements, demolition) - $2,208,514.97
City RLF (acquisition, site improvements, demolition) - $253,000

Based on Discussion

Staff is looking for general direction for level of City involvement in redevelopment activities in West Armstrong Redevelopment Area including but not limited to:

• Identifying and prioritizing redevelopment sites (Parcels 2, 3, 4)
• Identifying possible parcel acquisitions (Parcels 2, 3 and 4)
• Setting Staff negotiation / policy parameters (acquisition / demolition / site improvements)
• Give the private sector more time to redevelop - No City Action
• EDA should consider how much of the available fund sources (RLF, City HRA (Anoka County), EDA Unencumbered Fund balance, and to a lesser extent TIF 14) could be utilized without impacting the ability to participate in other projects.(i.e. RALF Redevelopment, TIF 14 obligations, and other larger projects with community-wide impact. (Opportunity Cost)

 

Based on Discussion