062590 EDA--, Official File Copy
Ageor~m #8
CITY OF NEW HOPE
4401 XYLON AVENUE NOI~I~
H~qNEPIN COUNTY, MINNESOTA 55428
EDA Regular Meeting #8
June 25, 1990
city H~i
President Edward J. Erickson
Commissioner Gary L'Herault
O~,,,,~ssioner W. Peter Enck
Commissioner Gerald Otten
C~,,~issioner Marky Williamson
1. Call to Order
2. Roll Call
3. Approve Minutes of May 29, 1990.
4. Discussion O~cernir~ Pr~ by Autohaus
6. Adj oul~.~nt
4401 ~ A~ ~
~ (I1~[~1~, ~ 55428
May 29, 1990
Cit~ ~11, 8:00 P.M.
MINU~ OF
MAY 14, 1990
~ SITE
It~4
New Hope EDA
Page1
President Erickson called the meeting of the Economic Development
Authority to order at 8:00 p.m.
Present: Erickson, L'Herault, Enck, Williamson
Absent: Otten
Motion by C~m,.~ssioner Williamson, seconded by C~,~,,~ssioner
L'Herault to approve the ~ minutes of May 14, 1990. Ail present
voted in favor.
Mayor Erickson introduced for discussion Item 4, Discussion
Concerning Proposal Regarding M/nneg~co Site (Dick Curry).
Mr. Donahue informed the EDA that Mr. Dick Curry has a proposal
which he would like to explore concern/rig development of part of the
Minne~u~co site. Mr. Donahue stated the proposal involves a
manufacturing company frc~ Crystal which desires to relocate for
expansion purposes.
Mr. Donahue further explained that the request involves tax
increment financing for industrial development on the Minnegaso~
property. If the City were to undertake a tax increment district it
would be called an economic development district as opposed to
redevelopment district. He c~mLented that there have been changes
to state law ~ tax increment financing. He stated he has
spoken to the City's bond counsel as well as individuals from the
State reqard/ng tax increment financing.
Mr. Donahue advised the ~ that he will cc~ment after the
presentation re~ardir~ the bond counsel's rec~r~ation.
Mr. Dick Curry was recognized and introduced Don Hamlin, founder of
Air Quality Engineering, and Heidi Oas, President of Air Quality
Mr. Curry stated Air Quality Engineering is currently located in
Crystal in rented spaoe. He explained that the company wishes to
expand and is proposing a 50,000 s~,~re foot building for
manufacturing purposes. ~e company currently employs 58 people and
over the next five years may employe double this number. Mr. Curry
stated it is a clean operation with no hazardous or toxic waste or
emissions. Mr. Curry showed a sketch of the proposed building and
May 29, 1990
indicated that it would meet the City's code with landscaping,
setback rec~ rements, etc.
Mr. Don Hamlin, owner of Air ~ml ity Engineering, was recognized and
gave a brief s~mt~ry of the company. He stated the business was
.established in 1973 to design, manufacture, and market self-
contained air cleaning devices for the removal of cigarette smoke,
welding fumes, coolant mists and other c~_rcial/industrial
Mr. Hamlin stated AQE was selected in 1974 to manufacture similar
equipment for Honeywell, Inc. He stated the company worked through
a cooperative design program with Honeywell and was a vendor for
Honeywell for 10 years. Mr. Hamlin explained that due to the
increase in volume Honeywell brought the c~m~ercial units in-house.
He credited this endeavor for their gaining involvement in the
industrial air-cleaning business. He cuA~m~nted that a window of
interest in air quality, fueled by OSHA and EPA air quality
regulations.
President Erickson inquired of Mr. Hamlin's plans to relocate. Mr.
Hamlin responded that he would lik~ to relocate as soon as possible.
He stated they have a league ending September 30 which they are able
to extend. He remarked that if allowed the opportunity to become a
member of New Hope's business c~,~unity they would like to be
relocat~d no later than next fall.
President Erickson informed Mr. Hamlin that his business appears to
be one that the EE~ would favor. He stated_ there is a new TIF bill
in place and no city at this time knows the actual cost to the City
as far as penalties frum loss of state aids. Mr. Erickson stated he
would have no objections to using TIF if it is available and this
proves to be a viable project. He stated it is difficult to
to the use of Tax ~ Financing until the changes are fully
Mr. Hamlin responded that he is aware that the situation is
uncertain at this time, but he wants the EDA to know that his
company wuuld like to be a part of the c~,,L~nity if TIF is made
available to them.
Mr. Hamlin p~y introduced his daughter, Heidi Oas, and stated
she is the President of Air Quality Engineering.
C~,m,~ssioner Enck asked whether the exterior surface of the units
are paint~d_ after assembly. Ms. Oas stated the units are spray
painted but not in their facility.
Mr. Donahue stated the City's bond counsel, Jerry Gilligan, does
not have enough information at this time to base an opinion. He
c~,,t~nted that one option tentatively proposed would be that the
May 29, 1990
developer or owner would pay back to the City an impact fee or a fee
equivalent to what is lost in revenue. Mr. Donahue indicated there
is sc~e skepticism relating to the legality of such fees. He
questioned the EDA whether it desires to be the first to endeavor.
President Erickson c~m~ented that he is unwilling to proceed unless
he is absolutely sure that it is legal and safe for tb~ City. He
remark~ that bond counsels will have to examine this bill and
determine what the alternatives are and how cities can adhere to the
law but still assist with developments.
C~/,dssioner Enck c~u~ted that there may also be expensive legal
costs involved.
President Erickson stated he believes there may be something defined
within 30-60 days.
Mr. Donahue stated there is a policy in place regarding TIF and the
proposal would have to submit a statement of r~. If the City were
to proceed, the developer would have to demonstrate that there is in
fact a need, and that the financial nccds can only be met through
the City's assistance.
Mr. Curry inquired whether the EDA is willing to consider the
project.
President Erickson reported that it appears to be the type of
business which the E~A would endorse since it is a clean operation
and would create jobs.
Motion was made by C~m,dssioner L'Herault, seconded by C~,,L,~ssioner
Enck to adj'ourn the meet/r~. All present voted in favor. The New
Hope E~A adjourned at 8:35 p.m.
Valerie Leone
City Clerk
New Hope EDA
May 29, 1990
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
City Manager 6-25-90
Item No.
By: By:. 4
DIS~3SSION CDNCERNING PRDPOSAL BY AUTOHAUS
~US has been discussing with the EDA the proposal to assist them with
the development of their property.
~e current proposal is to acquire the former An/real Hospital Property and a
piece of property f;~. the School District with the City assisting in the
financing by offering low interest loans. The Executive Director of the FDA
has exam/ned the proposal by Aut~haus and will report to the EDA Board.
MOTION BY SECOND BY
TO:
Review: Administration: Finance:
RFA-O01 ~
LEA~ING & SALE~ / FOREIGN AND DOMESTIC AUTOMOBILES
JAGUAR
3une 7, 1990
Mr. Dan Donahue
City Manager
CITY OF NEW HOPE
4401 Xylon Avenue North
New Hope, MN 55428
Dear Dan,
It appears, Dan, that we may be able to finalize the purchases
of the School District land and the New Hope Animal Hospital's
land if certain conditions can be agreed to. Randy Herman has
indicated to me that his payoff on his building is $140,000.00.
He is willing to sell it for the payoff. Our latest offer of
$35,000.00 and finance terms with the School Board on the rear
property has been turned down. I put in a call to .pave
Southward to find OUt what price they would finally' settle on,
he said to submit an offer of $45,000.00 with no financing
request. Based on that, the total cost is higher than antici-
pated so if the following can be agreed to, we can move forward
1) The total purchase price of both parcels would be $140,000.0.
{Animal Hospital) and $45,000.00 {School Board. property) -
Total $185,000.00 . Thomas W. Boettcher would purchase
the properties personally, putting $25,000.00 down, and
needs an.8 year amortized mortgage at 8% interest on the
balance of $160,000.00 . The City would hold title to
both parcels~with no prepayment penalty. Autohaus would
pay for all paving, curbing and landscaping to the parcels
2)
As you are aware, the drainage on both these parcels is very
bad. We are requesting the City .to provide engineering
for drainage on the School Board parcel, all fill necessar
to achieve proper grade and meet water flow requirements,
due to the fact that the bus garage's lot drainage dumps
on our land from the East property line of the bus garage.
The Herman property would require only moderate amounts
of fill and engineering to make ready for curbing, paving
and landscaping.
3) As we have discussed previously, we need the City to remove
the Animal Hospital's exsisting building. That building
then could provide some of the fill needed in the back
property
continued
7709 42nd A~,enue North 'te Minnespolis, MN 55427 * (~12) 555.5707 ,
Page 2
4) Finally, in order for Randy Herman to sell us his property
for $140,000.00 , he would need to finance the remaining
special assesments now left on the old property and he has
iddicated to me that they could be put against his new
building if the City is willing to make that change.
Dan, please give the above your prompt attention and get back
to me at your earliest convenience with an answer ont these
requests.
~Tb/x~ma~ W. B°ettcher
President
AUTOHAUS OF MINNEAPOLIS, INC.
TWB/raj
CC:
Members of the School Board
Members of the City Councel
Ed Erickson - Mayor
CITY OF NEW HOPE
MEMORANDUM
DATE:
TO:
FROM:
SUBJECT:
June 12, 1990
Daniel J. Donahue, City Manager
Kirk McDonald, Management Assi_s~t~nt~Community
Development Coordinator~t~.
Autohaus Proposal
This' memo is intended to compare the current Autohaus proposal
with the proposal made in November/December of 1989, which was
analyzed by Rebecca Yanisch of Public Financial Systems. A
number of other factors need to be taken into consideration with
the new proposal including the purchase price of the school
property, engineering, and fill costs incurred by the city,
unpaid special assessments on the Animal Hospital property, etc.
Original Current
Proposal Proposal
Animal Hospital Acquisition
$157,000 $140,000
School Board Property Acquisition
45,000
$157,000 $185,000
Initial Lease Payment
20°000 25,000
Amount to be Financed
$137,000 $160,000
Oriqinal Proposal
The original proposal was to finance the $137,000 over either a
10 or 15 year period. The lease term was to include an option
to Mr. Boettcher to purchase the site at the end of the lease
term. The option price was to be equivalent to the cost of
demolishing the existing building on the site, plus accrued
interest. Also Autohaus would pay property taxes on the site as
lease holder.
The financial exposure to the City of New Hope is measured by the
amount of financing requested, plus the cost of demolitioD, less
the current value of the land. Assuming the following:
- I -
Financing amount
Demolition costs
Current value of land
$137,000
+ 8.600
$145,600
- 55.000
$ 90,600
the financing gap or exposure to the City would be $90,600.
Current Proposal
The current proposal contains several new factors which need to
be incorporated into the equation, besides the acquisition of the
school property, as follows:
1. SDecial Assessments
The owner of the Animal Hospital would sell his
property for $140,000 if the remaining special
assessments on the property could be financed or
transferred to the new building. The total amount of
assessments owed from the 42nd Avenue Street Improve-
ment Project is $4,369.34. Of that amount, $703.67 is
due in 1990 and must be paid through the tax statement-
it cannot be paid directly to the City. The remaining
amount, $3,665,67, is due in 1991 and thereafter. It
could be paid in full up front to the City prior to
November 15th or remain specially assessed over a
number of years.
I do not believe that the County will allow the
transfer of special assessments from one property to
another after they have already been levied, so I am
assuming the $3,665.67 amount would need to be financed
and I have added that amount to the acquisition cost
of the Animal Hospital. This assumes that the $703.67
will be paid on the tax statement this year. Total
cost of Animal Hospital property would equal
$143,665.67 including special assessments.
2. Engineering and Fill Costs
Autohaus is requesting that the City provide:
A. Engineering for drainage on School Board
parcel,
B. Ail fill necessary to achieve proper grade
for drainage on School Board property,
C. Engineering on Animal Hospital property, to
make ready for curbing, paving and land-
scaping, and
D. Moderate amounts of fill for Animal Hospital
property.
- 2 -
I have contacted the City Engineer for specific costs on
these items and his estimates are as follows:
Grading/Retaining Wall Improvements
Storm Sewer Improvements
Engineering Services
Soil Borings
$18,000.00
10,000.00
4,500.00
2,500.00
$35,000.00
Engineering services assume a grading plan would be developed
incorporating a public storm sewer system discharging to the
ponding area. Grading/retaining wall costs assume the necessary
construction to grade the site to grade the site to subgrade
elevation while storm sewer costs assume a lateral storm sewer
constructed between Autohaus and school property to the ponding
area. It should be noted these are estimated costs and could
vary dependent on more detailed information during the planning
process.
The Engineerts estimate of $35,000.00 has been added to the
equation as "Extra Costs to the City" and his correspondence is
attached for reference.
3. School Board Property Land Value
The original analysis included a land value in the
amount of $55,000 for the Animal Hospital property,
which is deducted before the gap is determined. A
similar value needs to be established for the School
Board property. The area contains 40,003 square feet.
An appraisal in 1989 by Shenehon Associates stated that
the parcel had a market value of $1.00 per square foot
standing by itself, or a value of $40,000. As part of
a larger parcel, in conjunction with the Autohaus site,
the appraisal gave an estimated market value of $2.00
per square foot or $80,000. This $80,000 figure has
been incorporated into the formula.
Current proposal - Ail Factors Considered
Animal Hospital Acquisition
$140,000.00
1) Remaining Special Assessments
+ 3,665.67
Total Animal Hospital Costs
School Board Property Ac~isition
Total Acquisition Costs
$143,665.67
+ 45,000.00
$188,'665.67
2) Extra Costs to City (Eng. & Fill) + 35,000.00
- 3 -
Total Acquisition + Extra Costs
$223,665.67
Initial Lease/Down Payment
- 25.000.00
Cost to be financed
$198,665.67
Using the original analysis, the financial exposure to
the City of New Hope is measured by the amount of
financing requested, plus the cost of demolition, less
the current value of the land.
Financing amount
$198,665.67
Demolition cost
+ 8,600.00
$207,265.67
Current Land Value (Animal Hosp.) - 55,000.00
3)
Summary
Current Land Value (School Board)
$152,265.67
The amount to be financed by the City up front would increase
from the Original $137,000 to $198,665.67, due to the addition of
school property, special assessments, and engineering costs.
However, the financing gap or exposure to the City would decrease
(from $90,600 to $72,265.67) due to the increased land value with
the addition of the school property. The decrease would be even
greater if engineering/drainage expenses were not so costly.
The City would hold title to the property and lease to Mr.
Boettcher. The remaining $198,665.67 would be financed over an
8-year period. The City would offer Boettcher an option to
purchase the site at the end of the lease term. If Boettcher
defaults on the base payments, the first step would be to call on
the personal guarantees. The next option could be for the City
to sell the site or to use additional increments to pay the
bonds.
There seems to be a difference of opinion on whether additional
increment would be generated. The Public Financial Systems
November 8th memo states that "while the Autohaus expansion lies
within the 42nd Avenue tax increment redevelopment district, the
expansion itself will not generate additional increment. Due to
the demolition of the existing building, initially the value of
the district will be decreased." However, in Dunn's memo dated
January, 1990, an annual increment ranging up to $14,038 is
- 4 -
estimated. This point needs to be clarified, even through the
additional incrementwould only be used as a backup.
After researching the current market values and taxes, discussing
this proposal with the County Assessor to develop a new market
value for the entire parcel, and having the County calculate tax
projections, I would offer the following as a possible scenario:
Present Market Values
Taxes Generated
School Property
Animal Hospital
Autohaus
0 0
$141,700 $ 7,582.74
452,400 22,'347.44
$594,100
$29,930.18
Estimated Market Value
After Combination
$868,000
$44,588.09
Possible Annual Increment
$14,657.91
Note:
Taxes generated exclude special assessments for
street project.
Estimated Market Value after combination is based
on commercial property non-homestead (property is
currently zoned industrial).
This analysis is based on the.model first submitted by Public
Financial Systems and is for discussion purposes only. I would
recommend that a finance expert review the concept if the City is
to proceed with this project. A new lease payment schedule
should be developed to coincide with the new amount, interest
rates, and number of years of the lease.
Attachments-.
.Public Financial Systems Memo
Dunn Memo
Shenehon Appraisal
- 5 -
Bonestroo
Rosene
Ander?k &
^SS°Dates
Engineers & Architects
Otto G. 8ones[roD, PE.
Robert W. Rosene, PE.
Joseph C, Anderlik. PE.
Marvin L. Sorvala, PE.
Richard E. Turner.
James C. Olson.
Glenn R. Cool~ RE.
Thomas E. Noyes. PE.
RoOert G.
Susan M. Ebetlin, C.PA.
Keith A. Gordon. PE.
Richard V~ Foster. RE.
Donald C. 8urgardt
Jerry A. Bourdon,
Mark ^. Hanson,
Ted K. Field, RE
Michaet[ ~autmann.
Robert R. Pre,de.
David O Loskota. RE.
James R. Maland. RE
Kenneth R Anderson.
Mark R. Rolls. RE.
Robert C. Russek, A.LA,
Thomas E. Angus,
Howard A. ~an~rd, RE.
Daniel J. Edwin, RE
Mark A. ~ip. ~E.
Philip J. Cas~ll, RE.
Thomas '~ Peterson, RE. ' I~ma~l Martinez, RE.
Michael C. Lynch, RE. Marl( D. VL,'~lli~. RE.
Thomas ~. Anderson, A ! A
Gary F Rylande'~ PE,
Miles 8. Jensen, PE
L. Phillip Gravel IlL PE
Rene C. Plumart. AIA.
Agnes M. Ring, ^.I.C.P
Jerry D. ~sch, PE.
CeCilio OJivie[
thanes A. Enckson
Ha~an M.
Sune 18, 1990
City of New Hope
4401 Xylon Avenue No.
New Hope, Minnesota 55428
Attn: Kirk McDonald
Re: Autohaus Drainage Improvements
Our File No. 34-Gen.
Dear Kirk:
Per your request we have reviewed the engineering and drainage requirements as
outlined in Thomas Boer/chef's letter (Autohaus of Minneapolis, Inc.) June 7,
1990. Listed below are the estimated engineering and construction costs.
Grading/Retaining Wall Improvements
Storm Sewer Improvements
Engineering Services
Soil Borings
$18,000.00
10,000.00
4,500.00
2t500.00
$35,000.00
Engineering services assume a grading plan would be devel'oped incorporating a
public storm sewer system discharging to the ponding area. Grading/retaining
wall costs assume the necessary construction to grade the site to subgrade
elevation while storm sewer costs assume a lateral storm sewer constructed
between Autohaus and school property to the ponding area. It should be noted
these are estimated costs and could vary dependent on more detailed
Information during the planning process.
If you have any questions please contact this office.
Yours very truly,
INC.
mah/35
233S ~IVest Highway 36 · St. Paul, Minnesota 55113 · 612-636-4600