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IP #754KRASS MONROE, P.A. ATTORNEYS AT LAW Mary E. Molzahn Email marym @krassmonroe.com Voice Mail (952) 885 -4382 MEMORANDUM To: City of New Hope Attn: Kirk McDonald, Community Development Director From: Mary E. Molzahn, Senior Development Consultant Date: December 10, 2004 Re: TIF District #03 -1 Modification (CVS) Our File No. 10048 -23 Please find enclosed copies of our correspondence certifying the modifications to TIF District No. 03-1 (Special Law) with Hennepin County and filing the modifications with the State Department of Revenue. This should conclude our activities on this modification. If you find you are missing any documents, please give me a call. Encl. G\WPDATAWWEW HOPE\23 \COR \MCDONALD MEM 2.DOC 8000 NORMAN CENTER DRIVE• SUITE 1000 • BLOOMINGTON, MINNESOTA 55437 -1178 TELEPHONE 952/885 -5999 • FACSIMILE 952/885 -5969 www.krassmonroe.com K R A S S MONROE, P.A. A T T 0 R N E Y S A T L A W December 10, 2004 Ms. Jean Bierbaum Taxpayers Services Department Hennepin County Government Center, A2103 300 South Sixth Street Minneapolis, MN 55487 Re: City of New Hope - Tax Increment Financing District No. 03-1 (Special Law) Dear Ms. Bierbaum: Enclosed please find the following: 1. Resolution No. 2004-22 of the New Hope Economic Development Authority dated June 14, 2004 modifying the Restated Redevelopment Plan for Redevelopment Project No. 1 and the Tax Increment Financing Plans for Tax Increment Financing Districts Nos. 80-2, 81-1, 82-1, 85-1, 85-2, 86-1, 02-1, 03- 1 (Special Law) and 04-1 (Special Law); 2. Resolution No. 2004-116 of the New Hope City Council dated June 14, 2004, modifying the Restated Redevelopment Plan for Redevelopment Project No. 1 and the Tax Increment Financing Plans for Tax Increment Financing Districts Nos. 80-2, 81-1, 82-1, 85-1, 85-2, 86-1, 02-1, 03-1(Special Law) and 04- 1 (Special Law); 3. Modifications to the Tax Increment Financing Plan for Tax Increment Financing District No. 03-1 (Special Law); 4. Modification to Exhibit I-A of the Restated Redevelopment Plan; 5. Original Certification Request Supplement; 8000 Norman Center Drive, Suite 1000 Minneapolis, MN 55437-1178 Telephone 952.885.5999 Facsimile 952.885.5969 Website www.krassmonroe.com 6. Two (2) Certificates as to Original Tax Capacity (please return one executed copy); 7. Two (2) Certificates as to Original Tax Rate (please return one executed copy); and 8. Two (2) Certificates of Filing (please return one executed copy). Please call if you have any questions regarding these documents. Sincerely, KRASS MONROE, P.A. VA I Mary E. Molzahn Senior Development Analyst cc: Z McDonald, City of New Hope G:\WPDATA\N\NEW HOPE\23\TIF\COUNTY TRANSMITTAL.DOC KRASS MONROE, P.A. A T T O R N E Y S A T L A W December 10, 2004 Ms. Jonetta Williams Minnesota Department of Revenue Department of Revenue Building Mail Station 7100 St. Paul, MN 55146 -7100 Re: City of New Hope - Tax Increment Financing District No. 03-1 (Special Law) Dear Ms. Williams: Enclosed please find the following: 1. Resolution No. 2004 -22 of the New Hope Economic Development Authority dated June 14, 2004 modifying the Restated Redevelopment Plan for Redevelopment Project No. 1 and the Tax Increment Financing Plans for Tax Increment Financing Districts Nos. 80 -2, 81 -1, 82 -1, 85 -1, 85 -2, 86 -1, 02 -1, 03-1 (Special Law) and 04-1 (Special Law); 2. Resolution No. 2004 -116 of the New Hope City Council dated June 14, 2004, modifying the Restated Redevelopment Plan for Redevelopment Project No. 1 and the Tax Increment Financing Plans for Tax Increment Financing Districts Nos. 80 -2, 81 -1, 82 -1, 85 -1, 85 -2, 86 -1, 02 -1, 03- 1(Special Law) and 04- 1(Special Law); 3. Modifications to the Tax Increment Financing Plan for Tax Increment Financing District No. 03-1 (Special Law); 4. Modification to Exhibit I -A of the Restated Redevelopment Plan; 8000 Norman Center Drive, Suite 1000 Minneapolis, MN 55437 -1178 Telephone 952.885.5999 Facsimile 952.885.5969 Website www.krassmonroe.com 5. Certification Request Supplement; 6. Two (2) Certificates of Filing (please return one executed copy). Please call if you have any questions regarding these documents. Sincerely, Mary E. Molzahn Senior Development Analyst cc: Kirk McDonald, City of New Hope G:\WPDATA\N\NEW HOPE\23\TIF\STATE TRANSMITTAL.DOC Redevelopment Eligibility Assessment Proposed New Hope TIF District New Hope, MN May 26, 2004 Prepared by: Short Elliott Hendrickson, Inc. (SEH) Butler Square Building, Suite 710C 100 North 6 th Street Minneapolis, MN 55403 Multiclisciplined. Single Source. Trusted solutions for more than 75 years. City of New Hope TIF District May 6, 2004 Short Elliott Hendrickson, Inc. (SEH) was hired by the City of New Hope, Minnesota, to survey and evaluate the properties within the proposed New Hope Tax Increment Financing (TIF) District . The proposed district is generally located on the southwest quadrant of the intersection of Bass Lake Road and Winnetka Avenue. The purpose of our work was to independently ascertain whether the qualification tests for tax increment eligibility, as required under Minnesota Statute, could be met. The findings and conclusions drawn herein are solely for the purpose of tax increment eligibility and are not intended to be used outside the scope of this assessment. The proposed district consists of 6 parcels comprised of the following types of improvements: 2 commercial structures on 2 parcels, 1 single or multi- family structure on one parcel and 3 vacant parcels with no improvements. Within the district are also several accessory structures — for the purposes of this assessment, these are considered `outbuildings' and are not included in the Condition of Buildings Test. IX 81M Interior and exterior inspections were completed for all buildings. 111ue'� Coverage Test — 3 of the 6 properties met the coverage test with a 72.47% area coverage. This exceeds the 70% area coverage requirement. Condition of Buildings Test — 67 percent of the buildings — 2 of the 3 buildings - were found to be "structurally substandard" when considering code deficiencies and other deficiencies of sufficient total significance to justify substantial renovation or clearance (see definition of "structurally substandard" as follows). This exceeds the Condition of Buildings Test whereby over 50% of buildings, not including outbuildings, must be found "structurally substandard." Our surveying and evaluating of the properties within this proposed Redevelopment District render results that in our professional opinion qualify the district eligible under the statutory criteria and formulas for a Redevelopment Tax Increment Financing District (State Statute 469.174 Subd. 10). 2 Site Occupied/Building Substandard Determination table - TIF Assessment maps: Buildings Under Study, Occupied Surfaces, Percent Occupied - Report on Building Condition (one per building) - Individual Building Summary Report (one per building) PROCEDURAL REQUIREMENTS The properties were surveyed and evaluated in accordance with the following requirements under Minnesota Statute Section 469.174, Subdivision 10, clause (c) which states: Interior Inspection — "The municipality may not make such determination [that the building is structurally substandard] without an interior inspection of the property..." Exterior Inspection and Other Means — "An interior inspection of the property is not required, if the municipality finds that (1) the municipality or authority is unable to gain access to the property; and after using its best efforts to obtain permission from the party that owns or controls the property; and (2) the evidence otherwise supports a reasonable conclusion that the building is structurally substandard." Documentation — "Written documentation of the building findings and reasons why an interior inspection was not conducted must be made and retained under section 469.175, subdivision 3, clause (1)." Refer to attached Exhibit A — Documentation of Contacts/Evaluations for documentation for these purposes. The City of New Hope sent letters to all property owners located in the district requesting that an inspection and evaluation be made of their property. SEH conducted assessments on April 27, 2004. Requests for evaluation appointments were made with the building owner or building tenants. An interior inspection and evaluation was completed if consented to by the owner. An exterior inspection and evaluation was made where the owner refused interior access to their property. In all cases, an exterior evaluation was completed. For all subject buildings, the City of New Hope provided copies of all available building permits on record for review by SEH. These permits provide a basic description of type of work completed for each permit (Building, Electrical, or Plumbing, scope of work) and, in some cases, approximate value of work to be completed. Some buildings had no permit records. Additionally, copies of police reports and building inspection reports were also provided for all buildings if available. In some cases, completed and approved corrections are noted on the reports. Additional building data was collected from public taxpayer information available from Hennepin County. Building data from these public records was combined with and reviewed against information gathered in the field. QUALIFICATION REQUIREMENTS The properties were surveyed and evaluated to ascertain whether the qualification tests for tax increment eligibility for a redevelopment district, required under the following Minnesota Statutes, could be met. Minnesota Statute Section 469.174, Subdivision 10, clause (a) (1) requires two tests for occupied parcels: 1. Coverage Test — "parcels consisting of 70 percent of the area of the district are occupied by buildings, streets, utilities, paved or gravel parking lots or similar structures Note: The coverage required by the parcel to be considered occupied is defined under Minnesota Statute Section 469.174, Subdivision 10, clause (e) which states: "For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities, paved or gravel parking lots or other similar structures unless 1570 of the area of the parcel contains buildings, streets, utilities, paved or gravel parking lots or other similar structures." 2. Condition of Buildings Test — " ... and more than 50 percent of the buildings, not including outbuildings, are structurally substandard to a degree requiring substantial renovation or clearance;" The term `structurally substandard', as used in the preceding paragraph, is defined by a two -step test: Conditions Test: Under the tax increment law, specifically, Minnesota Statutes, Section 469.174, Subdivision 10, clause (b), a building is structurally substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." Code Test: Notwithstanding the foregoing, the tax increment law, specifically, Minnesota Statutes, Section 469.174, Subdivision 10, clause (c) also provides that a building may not be considered structurally substandard if it: ". . . is in compliance with building code applicable to new buildings or could be modified to satisfy the building code at a cost of less than 15 percent of the cost of constructing a new structure of the same square footage and type on the site." Based on the above requirements, the substandard determination of a particular building is a two -step process; therefore, the findings of each step are independent of each other and both steps must be satisfied in order for a building to be found structurally substandard. It is not sufficient to conclude that a building is structurally substandard solely because the Code Test is satisfied. It is theoretically possible for a 11 building to require extensive renovation in order to meet current building codes but still not meet the main test of the Conditions Test. Furthermore, deficiencies included in the Conditions Test may or may not include specific code deficiencies as listed in the Code Test. In many cases, specific building code deficiencies may well contribute to the data which supports satisfying the Conditions Test; conversely, it is certainly possible that identified hazards or other deficiencies which could be included in the Conditions Test do not necessarily constitute current building code deficiencies. By definition, the nature of the two steps is slightly different. The Conditions Test is more subjective, whereas the Code Test is an objective test. Conditions Test deficiencies are less technical and not necessarily measurable to the same extent of the code deficiencies in the Code Test. To the end that technical, measurable building code deficiencies support the satisfaction of the less technical Conditions Test, the following code requirements are defined in terms that go beyond the technical requirements of the code and demonstrate their relevance in terms of " ... deficiencies in essential utilities and facilities, light and ventilation, etc..." International Building Code (IBC): The purpose of the IBC is to provide minimum standards to safeguard public health, safety and general welfare through structural strength, means of egress facilities, stability, sanitation, adequate light and ventilation, energy conservation, and safety to life and property from fire and other hazards attributed to the built environment (IBC 101.3). A deficiency in the building code (insufficient number of building exits, insufficient door landing area, etc.) adversely affects one or more of the above standards to safeguard `public health ...and safety to life'; therefore, a deficiency in the building code is considered a deficiency in one or more "essential utilities and facilities, light and ventilation, etc. ". Minnesota Accessibility Code, Chapter 1341: This chapter sets the requirements for accessibility all building occupancies. The Minnesota Accessibility Code closely follows the Americans with Disabilities Act Accessibility Guidelines (ADAAG), which sets the guidelines for accessibility to places of public accommodations and commercial facilities as required by the Americans with Disabilities Act (ADA) of 1990. The ADA is a federal anti- discrimination statute designed to remove barriers that prevent qualified individuals with disabilities from enjoying the same opportunities that are available to persons without disabilities (ADA Handbook). Essentially, a deficiency in the accessibility code (lack of handrail extension at stairs or ramp, lack of clearance at a toilet fixture, etc.) results in a discrimination against disabled individuals; therefore, a deficiency in the accessibility code is considered a deficiency in "essential utilities and facilities ". Minnesota Food Code, Chapter 4626: This chapter is enforced by the Minnesota Department of Health and is similar to the IBC in that it provides minimum standards to safeguard public health in areas of public /commercial food preparation. A deficiency in the food code (lack of non - absorbent wail or ceiling finishes, lack of hand sink, etc.) causes a condition for potential contamination of food; therefore, a deficiency in the food code is considered a deficiency in "essential utilities and facilities ". National Electric Code (NEC): The purpose of the NEC is the practical safeguarding of persons and property from hazards arising from the use of electricity. The NEC contains provisions that are considered necessary for safety (NEC 90 -1 (a) and (b)). A deficiency in the electric code (insufficient electrical service capacity, improper wiring, etc.) causes a hazard from the use of electricity; therefore, a deficiency in the electric code is considered a deficiency in "essential utilities and facilities ". International Mechanical Code (IMC): The purpose of the IMC is to provide minimum standards to safeguard life or limb, health, property and public welfare by regulating and controlling the design, construction, installation, quality of materials, Iocation, operation, and maintenance or use of mechanical systems (IMC 101.3). The IMC sets specific requirements for building ventilation, exhaust, intake and relief. These requirements translate into a specified number of complete clean air exchanges for a building based on its occupancy type and occupant load. A deficiency in the mechanical code adversely affects the `health ... and public welfare' of a building's occupants; therefore, a deficiency in the mechanical code is considered a deficiency in "light and ventilation ". Note: The above list represents some of the more common potential code deficiencies considered in the assessment of the buildings in the proposed district. This list does not necessarily include every factor included in the data used to satisfy the conditions test for a particular building. Refer to individual building reports for specific findings. Finally, the tax increment law provides that the municipality may find that a building is not disqualified as structurally substandard under the Code Test on the basis of "reasonably available evidence, such as the size, type, and age of the building, the average cost of plumbing, electrical, or structural repairs, or other similar reliable evidence. Items of evidence that support such a conclusion [that the building is structurally substandard] include recent fire or police inspections, on -site property appraisals or housing inspections, exterior evidence of deterioration, or other similar reliable evidence." Coverage Test SEH utilized a GIS (Geographic Information Systems) system database, available through Hennepin County and the City of New Hope, to obtain individual parcel information. The GIS system contains graphic information (parcel shapes) and numerical data based on county tax records. This information was used by SEH for the purposes of this assessment. The total square foot area of each property pareeI was obtained from county records (GIS) and general site verification. The total extent of site improvements on each property parcel was digitized from recent aerial photography (Spring, 2000). The total square footage of site improvements was then digitally measured and confirmed by general site verification. The total percentage of coverage of each property parcel was computed to determine if the 15% requirement was met. Refer to attached maps: Occupied Surfaces map and Percent Occupied map. The total area of all qualifying property parcels was compared to the total area of all parcels to determine if the 70% requirement was met. The area occupied by public rights - of -way has not been considered in the coverage test calculations. All of the public rights - of-way are improved. If all of the public rights -of -way were treated as a parcel for the purpose of coverage test calculations, the 70% requirement of the coverage test would still be met. Condition of Building Test Replacement Cost — the cost of constructing a new structure of the same size and type on site: R. S. Means Square Foot Costs (2004) was used as the industry standard for base cost calculations. R. S. Means is a nationally published reference tool for construction cost data. The book is updated yearly and establishes a "national average" for materials and labor prices for all types of building construction. The base costs derived from R. S. Means were reviewed, and modified if applicable, against our professional judgment and experience. A base cost was calculated by first establishing building type, building construction type, and construction quality level (residential construction) to obtain the appropriate Means cost per square foot. This cost was multiplied times the building square footage to obtain the total replacement cost for an individual building. Additionally, to account for regional/local pricing, a cost factor was added to the total cost according to R.S. Means tables. Using R. S. Means, consideration is made for building occupancy, building size, and construction type; therefore, the cost per square foot used to construct a new structure will vary accordingly. Building Deficiencies: Conditions Test (Condition Deficiencies) — determining the combination of defects or deficiencies of sufficient total significance to justify substantial renovation or clearance. On -Site evaluations - Evaluation of each building was made by reviewing available information from city records and making interior and/or exterior evaluations, as noted, sometimes limited to public spaces. Deficiencies in structural elements, essential utilities and facilities, light and ventilation, fire protection including V/ adequate egress, Iayout and condition of interior partitions, or similar factors, were noted by the evaluator. Condition Deficiencies may or may not include Code Deficiencies as defined below. Energy code compliance was not considered for the purposes of determining Condition Deficiencies. Deficiencies were combined and summarized for each building in order to determine their total significance. Building Deficiencies: Code Test (Code Deficiencies) — determining technical conditions that are not in compliance with current building code applicable to new buildings and the cost to correct the deficiencies: On -Site evaluations - Evaluation of each building was made by reviewing available information from city records and making interior and/or exterior evaluations, as noted, sometimes limited to public spaces. On -site evaluations were completed using a standard checklist format. The standard checklist was derived from several standard building code plan review checklists and was intended to address the most common, easily identifiable code deficiencies. Mechanical Engineers, Electrical Engineers, and Building Code Officials were also consulted in the development of the checklist. Deficiencies were generally grouped into the following categories (category names are followed by its applicable building code): • Building accessibility — Minnesota Accessibility Code • Building egress, building construction — International Building Code • Fire protection systems — International Building Code • Food service — Minnesota Food Code • HVAC (heating, ventilating, and air conditioning) — International Mechanical Code • Electrical systems — National Electric Code and Minnesota Energy Code • Energy code compliance — Minnesota Energy Code For the purposes of determining the Code Test (Code Deficiencies), Energy code compliance is relevant because its criteria affect the design of integral parts of a majority of a building's systems. The intent of these criteria is to provide a means for assuring building durability, and permitting energy efficient operation (7676.0100). The energy code addresses general building construction (all forms of energy transmission in an exterior building envelope — walls, roofs, doors and windows, etc.) and energy usage by lighting and mechanical systems. A deficiency in the energy code (inadequate insulation, non - insulated window systems, improper air infiltration protection, etc.) reduces energy efficient operation and adversely affects building system durability; therefore, a deficiency in the energy code is considered to contribute to a condition requiring substantial renovation or clearance. Office evaluations — FolIowing the on -site evaluation, each building was then reviewed, based on on -site data, age of construction, building usage and occupancy, square footage, and known improvements (from building permit data), and an assessment was made regarding compliance with current mechanical, electrical, and energy codes. A basic code review was also completed regarding the potential need for additional egress (basement stairways, for example), sprinkler systems, or elevators. Deficiency Cost — Costs to correct identified deficiencies were determined by using R. S. Means Cost Data and our professional judgment and experience. In general, where several items of varying quality were available for selection to correct a deficiency, an item of average cost was used, as appropriate for typical commercial or residential applications. Actual construction costs are affected by many factors (bidding climate, size of project, etc.). Due to the nature of this assessment, we were only able to generalize the scope of work for each correction; that is to say that detailed plans, quantities, and qualities of materials were not possible to be known. Our approach to this matter was to determine a preliminary cost projection suitable to the level of detail that is known. This process was similar to our typical approach for a cost projection that may be given to an owner during a schematic design stage of a project. Costs to correct deficiencies were computed for each building and compared to the building replacement cost to determine if the 15% requirement was met. The total number of buildings determined to be "structurally substandard" by satisfying both the Conditions Test and the Code Test in this manner was compared to the total number of buildings in the proposed district to determine if the 50% requirement was met. Reports on Building Conditions and Individual Building Summary Reports are available for review at the offices of SEH and the City of New Hope Technical Conditions Resources — the following list represents the current building codes applicable to new buildings used in the Building Deficiency review: 2003 Minnesota State Building Code 2000 International Building Code 2000 International Housing Code MN 1341 — Minnesota Accessibility Code, Chapter 1341 (1999) 2000 Minnesota Energy Code, Chapters 7672, 7674, or 7676 1999 National Electric Code 2000 International Mechanical Code Jason P. Zemke, AIA, Project Architect Leon A. Grothe, AIA, Project Architect W SITE OCCUPIED /BUILDING SUBSTANDARD DETERMINATION CITY OF NEW HOPE WINNETKE WEST RETAIL DEVELOPMENT REDEVELOPMENT ELIGIBILITY ASSESSMENT MAP TYPE OF SITE AREA COVERAGE SITE COVERAGE TOTAL # # ID TAX ID FULL NAME OCCUPATION (s.f.) * % COVERAGE (s.f.) QUANTITY BUILDINGS SUBSTANDARD 1 06- 118 -21 -51 -0005 7901 Base Lake Rd Bldg /Paved 40,434 61.39 24,823 40,434 1 1 2 06- 118 -21 -44 -0002 5549 Winnetka Ave N Vacant 22,148 0.00 0 0 0 0 3 06- 118 -21 -44 -0003 5539 Winnetka Ave N Bldg /Paved 19,094 31.11 5,941 19,094 1 1 4 06- 118 -21 -44 -0004 7940 55th Ave N Vacant 22,428 0.00 0 0 0 0 5 06- 118 -21 -41 -0006 8001 Base Lake Rd Bldg /Paved 102,436 85.84 87,935 102,436 1 0 6 06- 118 -21 -44 -0004 7940 55th Ave N Vacant 1_6,966 0.00 0 0 0 0 , M y M * - Site area taken from the Hennepin County Data ** - Site area is taken from Anderson Engineering estimated land swap. - Additional area taken from Robbinsdale School District No 281 The data contained on this page is derived from a compilation of records and maps and may contain discrepancies that can only be disclosed by an accurate survey performed by a licensed land surveyor. The perimeter and area (square footage and acres) are approximates and may contain discrepancies. The information on this page should be used for reference purposes only. N M N u7 O <Y O O N to N CITY OF NEW HOPE E U 0 0 ca REDEVELOPED ELIGIBILITY ASSESSMENT CVS Pharmacy Buildings Under Study 0 50 10Peet Legend Project Area E Buildings Under Study 0 Parcel Boundaries ® Property Swap Coordinate System: Hennepin County (ft) NAD 83 Source: Hennepin County, and SEH. sh ro N 00 O O N N CITY OF NEW HOPE E 0 0 CL co 2 REDEVELOPED ELIGIBILITY ASSESSMENT CVS Pharmacy Occupied Surfaces 0 50 10Peet Legend Project Area Impervious Flag Yes JU No Property Swap Coordinate System: Hennepin County (ft) Source: Hennepin County, and SEH, sh CITY OF NEW HOPE REDEVELOPED ELIGIBILITY ASSESSMENT CVS Pharmacy Percent Occupied CU 0 50 10Peet Coordinate System: Hennepin County (it) Source: Hennepin County, and SEH. sh SEH Building ID/Business Name /Address: Sinclair Station 7901 Bass Lake Road 11 = 1 Satisfies Conditions Test for Structurally Substandard Building: Y Satisfies Code Test for Structurally Substandard Building: Structurally Substandard Building (Y/N): Conditions Test 1'/ Y Under the tax increment law, specifically, Minnesota Statutes, Section 469.174, Subdivision 10, a building is structurally substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." The above building, based upon actual interior and exterior inspection and review of building permit records, exhibits the following deficiencies that contribute to justifying substantial renovation or clearance: Structural Elements • Defects in exterior building shell: cracks in brick wall, along grout lines; cracks in concrete base, under storefront glass; cracked concrete slab in garage Essential Utilities & Facilities • Deficient in facilities for disabled: deficient in disability parking, signage, accessible entrance to building, and accessible hardware on exterior and interior doors; lack of maneuvering clearance at interior doors; lack of maneuvering clearance and accessible features in toilet room Light & Ventilation • Deficient in meeting Mechanical code: for building construction prior to 1989, mechanical systems do not provide sufficient number of air exchanges Fire Protection/Egress • Deficient exterior door: deficient landing Similar Factors • Defects in exterior building shell: damaged and deteriorating metal panels on north side; deteriorating fascia and roof edge; deteriorating metal doors and door frames at grade in garage area Code Test Notwithstanding the foregoing, the tax increment law also provides that a building may not be considered structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the current building code at a cost of less than 15% of the cost of constructing a new building of the same square footage and type on the same site. Estimated cost of new building of same size and type (Total Replacement Cost): $231,469.20 Estimated cost of correction of code deficiencies (Total Deficiency Cost): $77,547.40 Percentage of Code Deficiency to Replacement Cost: 33.50% Refer to Individual Building Summary Report for documentation of specific code deficiencies. Report on Building Condition Building ID /Business Name /Address: Bauer Residence 5539 Winnetka 3_1 Satisfies Conditions Test for Structurally Substandard Building: Y Satisfies Code Test for Structurally Substandard Building: Structurally Substandard Building (Y/N): Conditions Test Y Y Under the tax increment law, specifically, Minnesota Statutes, Section 469.174, Subdivision 10, a building is structurally substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." The above building, based upon actual interior and exterior inspection and review of building permit records, exhibits the following deficiencies that contribute to justifying substantial renovation or clearance: Structural Elements • Defects in exterior building shell: cracks in stucco and brick at various locations, near grade; cracked, missing mortar between bricks near top of chimney; deteriorating wood structure at concrete slab in basement; cracks in concrete blocks, along grout lines on east wall in basement. Light & Ventilation • Deficient in meeting Mechanical code: for residential construction prior to 1980, plumbing systems contain lead soldered connections, which are non - compliant with current building code • Deficient in meeting Electrical code: for residential construction prior to 1980, receptacle locations, receptacle types, and wiring are non- compliant with current building code Fire Protection/Egress • Deficient exterior stairway: lack of handrail at front steps; deficient guardrail at rear steps • Deficient emergency egress: lack of basement and bedroom emergency egress windows • Deficient interior stairway: rise /run dimensions, head height dimension, handrail terminations and guardrail • Lack of smoke detector /detection system on an individual floor Similar Factors • Defects in exterior building shell: moisture damage and mold on east wall in basement; spalling of concrete block face in basement. Code Test Notwithstanding the foregoing, the tax increment law also provides that a building may not be considered structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the current building code at a cost of less than 15% of the cost of constructing a new building of the same square footage and type on the same site. Estimated cost of new building of same size and type (Total Replacement Cost): $156,184.80 Estimated cost of correction of code deficiencies (Total Deficiency Cost): $28,569.16 Percentage of Code Deficiency to Replacement Cost: 18.29% Refer to Individual Building Summary Report for documentation of specific code deficiencies. Building ID /Business Name /Address: Franks Nursery, 8001 Bass Lake Road 5 = 1 Satisfies Conditions Test for Structurally Substandard Building: N Satisfies Code Test for Structurally Substandard Building: Structurally Substandard Building (Y/N): Conditions Test N N Under the tax increment law, specifically, Minnesota Statutes, Section 469.174, Subdivision 10, a building is structurally substandard if it contains "defects in structural elements or a combination of deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate egress, layout and condition of interior partitions, or similar factors, which defects or deficiencies are of sufficient total significance to justify substantial renovation or clearance." The above building, based upon actual interior and exterior inspection and review of building permit records, exhibits the following deficiencies that contribute to justifying substantial renovation or clearance: Structural Elements • Defects in exterior building shell: cracks in concrete block wall, along grout joints; crack in concrete slab in interior of building Essential Utilities & Facilities • Deficient in facilities for disabled: accessible hardware on interior doors; lack of accessible features in toilet rooms Light & Ventilation • Deficient in meeting Mechanical code: for building construction prior to 1989, mechanical systems do not provide sufficient number of air exchanges Fire Protection/Egress • Deficient emergency egress: lack of basement and bedroom emergency egress windows • Deficient exterior door: deficient threshold height Similar Factors • Defects in exterior building shell: peeling paint and spalling of concrete block face on east wall; deteriorating fascia/metal siding on parapet wall on east side; deteriorating wood siding and metal trim on north side of building Code Test Notwithstanding the foregoing, the tax increment law also provides that a building may not be considered structurally substandard if it is in compliance with the building code applicable to new buildings or could be modified to satisfy the current building code at a cost of less than 15% of the cost of constructing a new building of the same square footage and type on the same site. Estimated cost of new building of same size and type (Total Replacement Cost): $810,498.15 Estimated cost of correction of code deficiencies (Total Deficiency Cost): $435,653.20 Percentage of Code Deficiency to Replacement Cost: 5.63% Refer to Individual Building Summary Report for documentation of specific code deficiencies. MAP ID # 1 -1 INDIVIDUAL BUILDING SUMMARY REPORT Pit) # 06- 118 -21 -41 -0005 Parcel Name SINCLAIR STATION, 7901 BASS LAKE ROAD Inspector LAG Inspection Date 4/26/2004 Survey Method INTERIOR Bldg Occupancy B Bldg Type BUSINESS Well Construction MASONRY /MTL Roof Construction STEEL # Stories 1 Basement (Y /N) N Story- Height 14 Floor Area 1440 Building Area 1440 Year Built 1963 Sprinklered N Elevator N Exterior Wall And Frame $134.451 1,440.00 $193,608.00 Story Height Adjustment (Add or Deduct) $7.80 1,440.00 $11,2 Basement 0.00 $0.00 Location Factor" add ( %) 0.13 $26,629.20 Total Replacement Cost $231,469.20 Total Deficiency Cost $77,547.40 Percentage of Code Deficiency To Replacement Cost 1 33.50% Satisfies Step 2 Test (469.174 10 (c)) for Structurally Substandard Building (Y /N) lv "Location Factor varies by location and building type (commercial or residential) Summary of Building Deficiencies (Code Deficiencies) Accessibility (Exterior and Interior) /Building Egress /Building Construction Fire Protection Systems Energy Code Compliance Food Service Areas Heating, Ventilation, and Cooling Systems (HVAC) Electrical Systems Deficiency Cost $20,570.00 $0.00 $42,793.40 $0.00 $14,184.00 $0.00 a Deficiency Area /Number Unit Cost Deficiency Cost of Req'd. Improvements Accessibility (Exterior) -1999 Minneosta Accessibility Code, Ch. 1341 1 No disability parking available - MN 1341.0403; add striping for one stall plus signage N $240.00 $240.00 No van accessible parking available - MN 1341.0403; add striping for one stall plus signage N $250.00 $250.00 Disbility parking space without required signage - MN 1341.0428; add signage each stall 1 $80.00 $80.00 Non - compliant or no curb cut provided for exterior accessible route - MN 1341.0430; remove existing walk and N $500.00 $500.00 curb, provide new pedestrian curb ramp Accessibility (interior) -1999 Minnesota Accessibility Code, Ch. 1341 1 Door on an interior accessible route without required maneuvering clearance at door approach or door opening 2 $250.00 $500.00 is less than 32" clear width - MN 1341.0442; remove existing barriers or wall framing, patch walls Door on an interior accessible route without lever handle or loop -style hardware - MN 1341,0442; replace 2 $175.00 $350.00 existing door hardware Toilet room door opening less than 32" min. clear width - MN 1341.0442; remove existing door, enlarge opening 1 $0.00 $0.00 and provide new door Toilet room door without required maneuvering clearance at (interior) door approach - MN 1341.0442; remove 1 $0.00 $0.00 existing barriers or wall framing, patch walls Toilet room without unobstructed 5' -0" turning radius within room - MN 1341.0460; remove barriers or wall 1 $0.00 $0.00 framing, enlarge toilet room and patch walls Toilet room without 30 "x48" clear space for forward approach at lavatory - MN 1341.0454; remove barriers or 1 $0.00 $0.00 wall framing or modify base cabinet Toilet room without lavatory at 34" max. height and 29" min, clear knee space below - MN 1341.0454; 1 $0.00 $0.00 relocate /adjust height of lavatory and plumbing Toilet room without lever or similar faucet controls for lavatory - MN 1341.0454; replace existing lavatory faucet 1 $0.00 $0.00 Toilet room without plumbing insulation /covering for lavatory - MN 1341.0454; provide plumbing 1 $0.00 $0.00 Insulation/covering Toilet room accessories (soap dispenser, towel dispenser, etc.) that are mounted higher than 40" max. above 1 $0.00 $0.00 the floor - MN 1341.0470; relocate existing toilet accessories Toilet room without clear space for side transfer water closet /toilet stall - MN 1341.0448; remove barriers or wall 1 $0.00 $0.00 framing, enlarge toilet room and patch walls Toilet room without toilet seat at 17 " -19" above the floor - MN 1341.0448; replace existing toilet fixture 1 $0.00 $0.00 Toilet room without horizontal and vertical grab bars for water closet /toilet stall - MN 1341.0448; provide new 1 $0.00 $0.00 grab bars (18 ", 36 ", 42 ") Toilet room accessibility improvments due to noncompliant clearances at fixtures or doors, and heights of 1 $15,000.00 $15,000.00 fixtures - MN 1341.0454; major remodeling: remove barriers or wall framing, enlarge toilet room by relocating one or more walls (affect one or more adjacent spaces) Less than 5% of public /common use sales /service counter /window at 36" max. above the floor or 36" min. width 1 $400.00 $400.00 - MN 1341.0720; relocate /adjust height of counter and base cabinet Building Egress - 2000 International Building Code (IBC) 1 Exterior door landing less than 44" min. in direction of travel (residential exception = 36 ") or greater than 7" rise 1 $500.00 $500.00 for non - accessible exterior doors in groups F, H, R. S, and U - IBC 1003.3.1.5, IBC 1003.3.1.4; assume replacement of exterior stoop required: remove existing stoop, provide new stoop Building Construction - 2000 International Building Code (IBC) 1 Page 2 Occupancy of building requires installation of additional drinking fountain - IBC Chap. 29; provide new 1.00 $1,950.00 $1,950.00 accessible drinking fountain and plumbing Bathroom not provided with means of mechanical ventilation - IBC 1202.4.2.1; provide ceiling exhaust fan, 2 $400.00 $800.00 electric hook -up, and ductwork Energy Code Compliance - 2000 Minnesota Energy Code, Ch. 7672, 7674, or 7676 1 Window exceeds thermal transmittance standards (window glazing is non - insulated) - MN 7672.0800, MN 4 $700.00 $2,800.00 7676.0700; remove existing window assembly, provide new window assembly, replace interior and exterior trim Storefront window /door exceeds thermal transmittance standards (glazing is non - insulated) - MN 7676.0700; 426 $32.50 $13,845.00 remove existing window /door assembly, provide new thermally broken aluminum window /door assembly (estimated s.f. of assembly to be replaced x $32.50) For building construction prior to 1976, foundation wall with less than R -5 insulation - MN 7672.0800, MN 630 $3.28 $2,066.40 7676.0700; excavate foundation wall at perimeter of building, assume add insulation depth to 4' below finished floor (I.f, perimeter x 4' -0" x $3.28 (insulation + excavation)) For building construction prior to 1976, exterior wall area with less than R -11 insulation - MN 7672.0800, MN 2206 $7.00 $15,442,00 7676.0700; residential improvement: assume price for new insulate 2x4 wall w /vinyl siding (s.f. wall surface x $5.50), commercial improvement: assume price for EIFS or interior wall furring and insulation (s.f. wall surface x $7.00) Page 3 For building construction prior to 1976, attic /roof area with less than R -38 insulation (residential) or R -23 1440 $6.00 $8,640.00 insulation (commercial) - MN 7672.0800, MN 7676.0700; residential improvement - assume add 6.5" blown -in cellulose (s.f. x $0.68), commercial improvement - assume total reroof required, 'flat' roof, built -up roofing and roof edge (s.f, roof x $6.00) Heating, Ventilation, and Cooling Systems (HVAC) - Commercial deficiencies 1 For building construction prior to 1989, mechanical systems do not provide sufficient number of air exchanges; 720 $2.00 $1,440.00 upgrade air handling units (cooling and heating coil + controls) for increased air exchanges ((s.f. area x 1.25 cfm /s.f. = additional cfm required) x $2.00 /cfm) For building construction prior to 1989, condensing unit does not provide sufficient cooling for increased air 1.44 $600.00 $864.00 exchanges above; upgrade condensing unit for additional air exchanges ((additional cfm required /500 ton /cfm = additional ton cooling required) x $600 /ton) For building construction prior to 1989, building electrical systems are not sufficient to handle additional 1440 $2.00 $2,880.00 mechanical units associated with increased air exchanges; provide increased capacity to existing electrical system (s.f. x $2.00 /s.f.) For building construction prior to 1989, warehouse or repair garage occupancy, mechanical systems do not 1 $2,000.00 $2,000.00 provide sufficient number of air exchanges; upgrade air handling units (cooling and heating coil + controls, condensing unit) for increased air exchanges (1 ton additional cooling required for every 8 people x $2,000.00 /ton) For building construction prior to 1989, repair garage occupancy, mechanical systems do not provide sufficient 1 $7,000.00 $7,000.00 number of air exchanges for exhaust fumes; provide new engine /tailpipe exhaust system including fans, adapters, and tubing ($4000,00) and new CO detector system including sensor and panel ($3,000.00) Calculated occupancy 12 Calculated loads # Exst. BathsMt. Rms. 1 1 #Exst. Tit. -M /Unisex 1 1 #Exst. Lay. -M /Unisex 1 1 #Exst. Tit. -F 0 1 #Exst, Lay. -F 0 1 #Exst. Drinking Ftn. 0 1 Page 3 MAP ID # 3 -1 PID # 06- 118 -21 -44 -0003 Parcel Name BAUER RESIDENCE, 5539 WINNETKA Inspector LAG Inspection Date 4/26/2004 Survey Method INTERIOR Bldg Occupancy R Bldg Type RESIDENCE Wall Construction WOOD FRAMED Roof Construction WOOD FRAMED # Stories 1 Basement (Y /N) Y Story- Height 9 Floor Area 1420 Building Area 1420 Year Built 1958 Sprinklered N Elevator N INDIVIDUAL BUILDING SUMMARY REPORT Exterior Wall And Frame Story Height Adjustment (Add or Deduct) Basement* Location Factor ** Total Replacement Cost Total Deficiency Cost Percentage of Code Deficiency To Replacement Cost Satisfies Step 2 Test (469.174 10 (c)) for Structurally Substandard Building (Y /N) *Residential Basement- Calculate Percentage of Finished vs. Unfinished * *Location Factor varies by location and building type (commercial or residential) Summary of Building Deficiencies (Code Deficiencies) Accessibility (Exterior and Interior) /Building Egress /Building Construction Fire Protection Systems Energy Code Compliance Food Service Areas Heating, Ventilation, and Cooling Systems (HVAC) Electrical Systems $86,101 1,420.00 $122,262.00 0.00 $0.00 $7.65 1,320.00 _ $10,098.00 add ( %) 0.18 $23,824,80 $156,184,80 $28,569.16 18.29 0% finished Deficiency Cost $6,500.00 $250.00 $21,819.16 $0.00 $0.00 $0.00 y agg Page 1 Deficiency Area/Number Unit Cost Deficiency Cost of Req'd. Improvements Building Egress - 2000 International Building Code (IBC) Exterior stair flight or landing with noncompliant guardrail (42" min. height, 4" or 21" min. spacing between 2 $300.00 $600.00 intermediate rails) (residential exception = 34" - 38" height) - IBC 1003.2.12; provide new guardrail (estimate 5 lin. feet) Bedroom /sleeping room without 5.7 s.f, min, openable window /door area for emergency escape directly to the 3 $1,000.00 $3,000.00 exterior - IBC 1009.1; remove existing window, enlarge opening, provide new window Residential basement without 5.7 s.f. min. openable window /door area for emergency escape directly to the 1 $4,000.00 $0.00 exterior - IBC 1009.1; remove existing window, enlarge opening, excavate for window well, provide new window and window well Flight of stairs with noncompliant rise /run (7" max. rise /11" min. run) (residential exception: 7.75" max. rise /10" 1 $0.00 $0.00 min. run) - IBC 1003.3.3.3; replace stairs, modify railings and adjacent walls Stairway landing does not extend 36" in direction of travel at top or foot of stairs - IBC 1003.3.3.4; 1 $0.00 $0.00 reconfigure /remodel adjacent walls Stairway flight with less than 6' -8" min. clear headroom - IBC 1003.3.3.2; assume modification of ceiling framing 1 $0.00 $0.00 or structure is required, patch ceiling Stair handrail ends do not return to walls or terminate in newel posts - IBC 1003.3.3.11; modify existing handrail 2 $50.00 $100.00 end Stair flight or landing with noncompliant guardrail (42" min. height, 4" or 21" min. spacing between intermediate 1 $300.00 $300.00 rails) (residential exception = 34" - 38" height) - IBC 1003.2.12; provide new guardrail (estimate 3' -6" lin. Feet) Stairway improvements requried due to noncompliant rise /run, headroom, and landings - IBC 1003.3.3; minor 1 $2,500.00 $2,500.00 remodeling: replace stairs, modify railings, landings, and adjacent walls (considered minimum commercial remodel cost, maximum residential remodel cost) Fire Protection Systems - 2000 International Building Code (IBC) 1 Smoke detector /detection system not provided on each floor (including basement) - IBC 907.2.10; provide a 2 $125.00 $250.00 new hardwired smoke detector Energy Code Compliance - 2000 Minnesota Energy Code, Ch. 7672, 7674, or 7676 1 Window exceeds thermal transmittance standards (window glazing is non - insulated) - MN 7672.0800, MN 17 $700.00 $11,900.00 7676.0700; remove existing window assembly, provide new window assembly, replace interior and exterior trim For building construction prior to 1976, foundation wall with less than R -5 insulation - MN 7672.0800, MN 627 $3.28 $2,056.56 7676.0700; excavate foundation wall at perimeter of building, assume add insulation depth to 4' below finished floor (I.f, perimeter x 4' -0" x $3.28 (insulation + excavation)) For building construction prior to 1976, exterior wall area with less than R -11 insulation - MN 7672.0800, MN 1254 $5.50 $6,897.00 7676.0700; residential improvement: assume price for new insulate 2x4 wall w /vinyl siding (s.f, wall surface x $5.50), commercial improvement: assume price for EIFS or interior wall furring and insulation (s.f, wall surface x $7.00) For building construction prior to 1976, attic /roof area with less than R -38 insulation (residential) or R -23 1420 $0.68 $965.60 insulation (commercial) - MN 7672.0800, MN 7676.0700; residential improvement - assume add 6.5" blown -in cellulose (s.f. x $0.68), commercial improvement - assume total reroof required, 'flat' roof, built -up roofing and roof edge (s.f, roof x $6.00) Calculated occupancy 7 Calculated loads # Exst. Baths/Tit. Rms. 1 Page 2 1 - - CD 0 CD W as CL — — 0 C) (D x x a) 8 LO Ll LL to x x x x x W w Lli LLJ w =m =4z 4 u * MAP ID # PID # Parcel Name Inspector Inspection Date Survey Method Bldg Occupancy Bldg Type Wall Construction Roof Construction # Stories Basement (Y /N) Story- Height Floor Area Building Area Year Built Sprinklered Elevator BUSINESS MASONRY STEEL 1 N 14 8100 8100 1969 Y N Exterior Wall And Frame $88.55 Story Height Adjustment (Add or Deduct) Basement Location Factor" add ( %) Total Replacement Cost Total Deficiency Cos Percentage of Code Deficiency To Replacement Cost Satisfies Step 2 Test (469.174 10 (c)) for Structurally Substandard Building (Y /N) 'Location Factor varies by l ocation and building type (commercial or residential) Summary of Building Deficiencies (Code Deficiencies) Accessibility (Exterior and Interior) /Building Egress /Building Construction Fire Protection Systems Energy Code Compliance Food Service Areas Heating, Ventilation, and Cooling Systems (HVAC) Electrical Systems 0.00 $717,255.00 0.00 $0.00 0,00 $0.00 0.13 $93,243.15 $810,498.15 -- T - $ 45,653,20 5.63/ N Deficiency Cost $2,850.00 $0.00 $42,803.20 $0M $0.00 $0.00 INV INDIVIDUAL BUILDING SUMMARY REPORT Page 1 Deficiency Area /Number Unit Cost Deficiency Cost of Req'd. Improvements Accessibility (interior) -1999 Minnesota Accessibility Code, Ch. 1341 Page 2 Door on an interior accessible route without lever handle or loop -style hardware - MN 1341.0442; replace 2 $175.00 $350.00 existing door hardware Toilet room without plumbing insulation /covering for lavatory - MN 1341.0454; provide plumbing 2 $0.00 $0.00 insulation /covering Toilet room accessories (soap dispenser, towel dispenser, etc.) that are mounted higher than 40" max. above 2 $0.00 $0.00 the floor - MN 1341.0470; relocate existing toilet accessories Toilet room accessibility improvements required due to noncompliant fixture or accessory heights, or lack of 2 $1,000.00 $2,000.00 grab bars - MN 1341,0454; minimum improvements: adjust fixtures /accessories /partitions, provide grab bars Building Egress - 2000 International Building Code (IBC) 1 Exterior door with greater than ?/2" threshold (accessible) - IBC 1003.3.1.6; assume replacement of exterior 1 $500.00 $500.00 stoop required: remove existing stoop, provide new stoop Energy Code Compliance - 2000 Minnesota Energy Code, Ch. 7672, 7674, or 7676 1 Window exceeds thermal transmittance standards (window glazing is non - insulated) - MN 7672.0800, MN 4 $700.00 $2,800.00 7676.0700; remove existing window assembly, provide new window assembly, replace interior and exterior trim For building construction prior to 1976, foundation wall with less than R -5 insulation - MN 7672.0800, MN 1440 $3,28 $4,723.20 7676.0700; excavate foundation wall at perimeter of building, assume add insulation depth to 4' below finished floor (I.f. perimeter x 4' -0" x $3.28 (insulation + excavation)) For building construction prior to 1976, exterior wall area with less than R -11 insulation - MN 7672.0800, MN 5040 $7.00 $35,280.00 7676.0700; residential improvement: assume price for new insulate 2x4 wall w /vinyl siding (s.f. wall surface x $5.50), commercial improvement: assume price for EIFS or interior wall furring and insulation (s.f. wall surface x $7.00) Calculated occupancy 270 Calculated loads # Exst. Baths/Tlt, Rms. 2 2 #Exst. Tlt. -M /Unisex 3 2 #Exst. Lay. -M /Unisex 2 2 #Exst. Tit. -F 2 2 #Exst. Lay. -F 2 2 #Exst. Drinking Ftn. 1 1 Page 2 FDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development 03-08-04 EDA Item No. By: Kirk McDonald By: RESOLUTION AUTHORIZING ACQUISITION OF PROPERTY AT 7901 BASS LAKE ROAD BY DIRECT NEGOTIATION OR EMINENT DOMAIN (IMPROVEMENT PROJECT NO. 754) REQUESTED ACTION Staff recommends that the Economic Development Authority approve the enclosed resolution authorizing acquisition of property at 7901 Bass Lake Road by direct negotiation or eminent domain. The original resolution was prepared on advice of the New Hope city attorney by Peter Coyle, Larkin Hoffman Law Firm, representing Bear Creek Capital/CVS Pharmacy. The resolution was then reviewed and approved by the New Hope city attorney after minor modifications were made. POLICY/PAST PRACTICE The City Council or EDA has approved similar resolutions in the past when businesses are acquired on a voluntary basis by either the city or a developer for redevelopment purposes and the property owner requests a resolution of friendly condemnation for monetary reinvestment purposes. The City Council approved a similar resolution for the acquisition of the office building at 7801 Bass Lake Road in December 2002. BACKGROUND Staff has discussed the potential redevelopment of the southwest corner of Winnetka Avenue and Bass Lake Road parcels by CVS Pharmacy/Bear Creek Capital at the January 26 and February 24, 2004, EDA meetings. At the February 23 EDA meeting, the EDA indicated that it would approve a resolution of friendly condemnation for the CVS Pharmacy acquisition of the Sinclair station located at 7901 Bass Lake Road. The attorney representing CVS Pharmacy has submitted the attached correspondence and resolution for consideration by the EDA relating to this project. The New Hope city attorney has reviewed and slightly modified the resolution and staff is recommending approval of the resolution. The letter states that Bear Creek Capital, on behalf of CVS Pharmacy, has been in direct negotiations with the fee owner of the Sinclair property and that they are optimistic that a negotiated agreement can be reached. Therefore, eminent domain will probably not be necessary, but the passage of the resolution allows Sinclair to utilize some financial reinvestment options that would otherwise not be available. Staff recommends approval of the resolution. ATTACHMENTS: Resolution 3/2/04 Larkin Hoffman Correspondence Map MOTION BY (/� 1" 1, 4 SECOND BY TO: d k I I\rfa Llarming\liv comm. \Q-CVS ac q 7901 3-8-04 EDA RESOLUTION NO. 2004 -12 RESOLUTION AUTHORIZING ACQUISITION OF PROPERTY AT 7901 BASS LAKE ROAD BY DIRECT NEGOTIATION OR EMINENT DOMAIN BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope (EDA) as follows: WHEREAS, the property located at 7901 Bass Lake Road is located within the Winnetka West redevelopment area recently established by the City of New Hope; and WHEREAS, the acquisition of the property at 7901 Bass Lake Road (hereafter Property) is necessary for the successful completion and implementation of the Winnetka West redevelopment area; and WHEREAS, the City has contacted the fee owner of the Property to determine their interest in selling the Property; and WHEREAS, it is uncertain whether the fee owner will sell the Property at its fair market value; and WHEREAS, the EDA has the statutory authority to acquire the Property through condemnation by an Eminent Domain proceeding under Minn. Stat Chap. 117; and WHEREAS, the public purpose for such a taking would be the successful completion of the Winnetka West redevelopment area; and WHEREAS, the New Hope City Council sitting as the governing board of the EDA hereby determines it is necessary to acquire the Property through direct purchase with the fee owner or by condemnation through an Eminent Domain proceeding. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of New Hope sitting as the governing board of the New Hope EDA as follows: 1. Staff is directed to contact the fee owner of the Property to determine whether an agreement can be reached regarding the sale of the Property for redevelopment 2, That the City Manager, in the alternative, is hereby authorized and directed to commence condemnation of the Property through an Eminent Domain proceeding in the event a direct purchase of the Property is unsuccessful. Dated the qth day of March, 2004. c Attest: Daniel J. Donahue, Executive Director W. Peter Enck, President PAAttomey \Cnh Resolutions \CNH99.11289 -001 resolution authorizing condem Sinclair Bass Lake Road.DOC 0 FROM LARKIN HOFFMAN DALY (952)896 - 3265 Larkin U arTOaNEVS (TUE) 3. 2'04 10:14/ST. 10:13/NO. 4260872974 P 2 Larkin Hoffman Daly & Lindgren Ltd. 1500 Wells Fargo Plaza 7900 Xerxes Avenue South Minneapolis, Minnesota 55437 -1194 March 2, 2004 Mr. Kirk McDonald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 GENERAL: 952- 835.3800 Fax: 952.896.3333 wee, www larl:iuhafmanxam Re: Resolution Supporting Use of Condemnation for 7901 Bass Lake Road Dear Mr. McDonald: Attached for consideration and action by the New Hope City Council, if appropriate, please find a draft resolution endorsing direct negotiation for the purchase of the Sinclair property, 7901 Bass Lake Road or, in the alternative, the use of eminent domain proceedings to acquire such property. This resolution is prepared based on the City Council's recent direction to City staff that it is prepared to proceed with condemnation of the Sinclair property in the event a negotiated purchase is not successful. In that respect. Bear Creek Capital, on behalf of CVS/Pharmacy, has been in direct negotiations with the fee owner of the Sinclair property and we are optimistic that a negotiated agreement can be reached. Please call me if you have any questions. c ely, .Peter J. Coyle, for Larkin Hoffinan Daly & Lindgren Ltd, Direct Dial: (952) 896 -3214 Direct Fax: (952) 996 -3265 l;mail; pcoylel?u larkinhoff nan com cc: Bill Tippmann Steven Sondrall, Esq. Dan Beeson, Esq. Enclosure .924917.1 TI, , T o- Sa Mz s Y �'gqs�u��z �§ s ^" N 100 0 100 Feet Anderson Engineering of Minnesota., LLC ,; k j ti. t Winnetka West Retail Development v Boundary Site Plan Property Land Transferedto Development Building Land Transfered to School HAROLD UVANCIER Mr- kirk McDonald 1970 -1992 Community Development Director ARTHUR c,LLEN City of New Hope VIA FACSIMILE RL•TMID City Hall AND U.S. MAIL 4401 Xylon Avenue North ALSO ADMITTED M TISCONNN •A{,SO ADUMMM IN NORT11 pAKuTn New hope, MN 55428 °4UO ADMITTED IN MMSACHVSSFTTs 9 ALSO AOMRTED IN OCI,A11 <rMA RE: Sinclair Oil Corporation v. City of New .Hope and Bear Creek Capital and CVS Pharmacy Redevelopment - Condemnation of Sinclair OR Corporation Station at 7901 $ass Lake Road, New Hope, MN Our File No. 18675.13000 Dear Mr. McDonald: This letter is written, in response to the daft Resolution Authorizing Acquisition of Property at 7901 Bass Lake Road by Eminent Domain prepared by attorney Peter Coyle on behalf of Bear Creels Capital ( "BCC") and CVS Pharmacy ( "CVS"). Sinclair Oil Corporation ("Sinclair ") objects to the form of the Resolution in that it erroneously states that the fair market value of the property is $445,000. Sinclair's consulting appraiser has concluded that the fair market value of the subject parcel is in excess of $750,000, and BCC has submitted a written offer to purchase the subject parcel on behalf of CVS at a purchase price of $750,000. Sinclair vigorously objects to any reference of fair market value of the property being less than $750,000. Therefore, on behalf of Sinclair, I request that the proposed Resolution be revised prior to adoptions by the City Council to entirely delete the third Recital, referencing the City's appraisal "...which appraisal indicates the current market value of $445,000 for the Property." Sinclair is presently reviewing terms with respect to the proposed sale of the property to BCC for the CVS rcdcvClopmcnt. Pending execution of a Purchase Agreement at a sale price of $750,000, or more, and upon acceptable terms of sale. Sinclair specifically objects to the proposed condemnation of the property by the City of New Hope as follows. 1. The proposed taking is not authorized by either State or Federal law; 6 33 SOUTH CONCORD STREET " SUITE 400 • SOUTH SAINT PAUL. MINNESOTA 55075 ° 651 451-IS31 • FAx 651- 450-7384 OFFICE ALSO LOCATED IN SPOONER, WISCONSIN Cle 179CLOS l99 - V - d`J 8 TTTPVU 9 1TT0`J 8 pU 8 A 0 1 :Aq ;uaS F '-i ROGER C. MILLER LE i TIMOTHY). KUNT2 GILLEN & OAMEL I BEESON M ILLER, P.A. ao�,c,lrr n. c++n�ronv •KPNNSIIt),ROHLF 'TONETTAT. DOVE ATTORNEYS AT LAW * STEPHEN H. FOCHLER °JAY P. KARLOVICH Bacabliahled in 1929 ANGELA M. LUTZ AMANN 'KORINE L, LAND ANN C. O'MILLY — DONALD L. HOEFT DARCY M. MOH March 8 2004 ROBIN M. HENNIX JON R. STECKLER DAVID S. KENDALL HAROLD UVANCIER Mr- kirk McDonald 1970 -1992 Community Development Director ARTHUR c,LLEN City of New Hope VIA FACSIMILE RL•TMID City Hall AND U.S. MAIL 4401 Xylon Avenue North ALSO ADMITTED M TISCONNN •A{,SO ADUMMM IN NORT11 pAKuTn New hope, MN 55428 °4UO ADMITTED IN MMSACHVSSFTTs 9 ALSO AOMRTED IN OCI,A11 <rMA RE: Sinclair Oil Corporation v. City of New .Hope and Bear Creek Capital and CVS Pharmacy Redevelopment - Condemnation of Sinclair OR Corporation Station at 7901 $ass Lake Road, New Hope, MN Our File No. 18675.13000 Dear Mr. McDonald: This letter is written, in response to the daft Resolution Authorizing Acquisition of Property at 7901 Bass Lake Road by Eminent Domain prepared by attorney Peter Coyle on behalf of Bear Creels Capital ( "BCC") and CVS Pharmacy ( "CVS"). Sinclair Oil Corporation ("Sinclair ") objects to the form of the Resolution in that it erroneously states that the fair market value of the property is $445,000. Sinclair's consulting appraiser has concluded that the fair market value of the subject parcel is in excess of $750,000, and BCC has submitted a written offer to purchase the subject parcel on behalf of CVS at a purchase price of $750,000. Sinclair vigorously objects to any reference of fair market value of the property being less than $750,000. Therefore, on behalf of Sinclair, I request that the proposed Resolution be revised prior to adoptions by the City Council to entirely delete the third Recital, referencing the City's appraisal "...which appraisal indicates the current market value of $445,000 for the Property." Sinclair is presently reviewing terms with respect to the proposed sale of the property to BCC for the CVS rcdcvClopmcnt. Pending execution of a Purchase Agreement at a sale price of $750,000, or more, and upon acceptable terms of sale. Sinclair specifically objects to the proposed condemnation of the property by the City of New Hope as follows. 1. The proposed taking is not authorized by either State or Federal law; 6 33 SOUTH CONCORD STREET " SUITE 400 • SOUTH SAINT PAUL. MINNESOTA 55075 ° 651 451-IS31 • FAx 651- 450-7384 OFFICE ALSO LOCATED IN SPOONER, WISCONSIN Cle 179CLOS l99 - V - d`J 8 TTTPVU 9 1TT0`J 8 pU 8 A 0 1 :Aq ;uaS Mr. Kirk McDonald Page 2 March 8, 2004 2. The proposed taking does not serve a public purpose, 3. The proposed taking is not necessary; '4. The City has failed to meet the. pre - requisites of Minnesota statutory and case law necessary to the lawful exercise of the right of eminent domain; 5. The City has failed to adhere to the mandatory notice and public hearing requirements of Minnesota statutory and case law; 6. The primary purpose of the proposed condemnation is to further the private interests of BCC and CVS; and 7. If approved, the project will involve expenditure of public funds for a predon irately private purpose. Ve truly f . DhIM 1.13 son DJB /so c: Sco Mayeda, Esq. Steve Heil, Real Estate Manager Steven Sondrall, Esq. Peter Coyle, Esq, E/E a V0 /80 /CO E !VBELOSV 99 'b'd ° uaTTTAV'U9TTTD'J8pueAa1 :Aq ;u98 March 9, 2004 Mr. Bill Tippmann Bear Creek Capital, LLC 9549 Montgomery Road Cincinnati, OH 45242 Subject: Potential CVS Pharmacy Development Dear Bill: At the March 8 New Hope Economic Development Authority meeting, the EDA approved a resolution authorizing acquisition of property at 7901 Bass Lake Road by direct negotiation or eminent domain. Please keep the city informed on the progress of the project. Contact me at 763-531-5119 if you have any questions. ince,rely, Kirk McDonald Director of Community Development Cc: Daniel J. Donahue, City Manager Steve Sondrall, City Attorney Improvement Project No. 754 4401 Xylon Avenue North * New Hope, Minnesota 55428-4898 + www. ci.new-hope.mn.us City Hall: 763-531-5100 - Police (non-emergency): 763-531-5170 * Public Works: 763-592-6777 * TDD: 763-531-5109 City Hall Fax: 763-531-5136 + Police Fax: 763-531-5174 * Public Works Fax: 763-592-6776 FDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development 2 -23 -04 EDA Item No. N By: Kirk McDonald By: 5 UPDATE ON POTENTIAL REDEVELOPMENT BY BEAR CREEK CAPITAL AND CVS PHARMACY AND MOTION AUTHORIZING PREPARATION OF RESOLUTION OF FRIENDLY CONDEMNATION FOR PROPERTY AT 7901 BASS LAKE ROAD (IMPROVEMENT PROJECT NO. 754) REQUESTED ACTION Staff requests to give the EDA another brief update on the progress of the potential redevelopment by Bear Creek Capital and CVS Pharmacy at the southwest quadrant of Bass Lake Road and Winnetka Avenue and is requesting that the EDA authorize the preparation of a resolution of friendly condemnation for the property at 7901 Bass Lake Road. POLICY /PAST PRACTICE Staff routinely presents updates to the City Council or EDA on the progress or status of potential redevelopment projects and the City Council has approved similar resolutions in the past when businesses are acquired on a voluntary basis for redevelopment purposes. BACKGROUND The city has been coordinating with Bear Creek Capital /CVS Pharmacy over the past eight months regarding a potential redevelopment at the southwest quadrant of Bass Lake Road and Winnetka Avenue. The redevelopment would be in two phases, with the first phase involving the construction of a CVS Pharmacy store and ancillary retail development. The first phase would include the acquisition by CVS of three parcels in the area: a residential property at 5539/5549 Winnetka and a commercial property at 7901 Bass Lake Road. Appraisals of all three parcels were completed in October 2003, and at the October 27 EDA meeting, the EDA authorized staff to meet with the developers and the property owners to facilitate in the potential property acquisition. At the January 26, 2004, EDA meeting, staff updated the EDA on the status of the project and reported that the acquisition of the residential property by CVS was moving forward, but that there had not been any progress made on the Sinclair site at 7901 Bass Lake Road. Subsequent to that meeting, CVS and Sinclair have been negotiating directly with one another and Sinclair has agreed to a sales price, subject to certain conditions. One of the conditions is that the city approve a resolution of friendly condemnation for the Sinclair site for monetary reinvestment purposes. If the development would move forward, the resolution would be presented for approval at a later date. Per the attached correspondence from Bear Creek Capital, staff is requesting that the EDA authorize the preparation of such a resolution. MOTION BY SECOND BY { I rfa lamm� by comm. \Q-CVS update 2 -23 -04 Request for Action Page 2 2 -23 -04 Other issues that staff continues to work on with the developer related to this development include: 1. Preparing a more detailed site plan and addressing storm water issues. 2. Future meeting with School District officials regarding a potential minor land swap. 3. Developer responsible for all costs, including relocation of existing tenant and soil cleanup issues. 4. Coordination on potential creation of TIF district to benefit other development projects in the area. Staff requests approval of a motion authorizing the preparation of a resolution, which would be presented for approval at a later date if the development proceeds. ATTACHMENTS • 2/9 Bear Creed Correspondence • 2/6 City Attorney Correspondence • Aerial Site Plan • Please refer to other attachments previously distributed Feb 09 2004 12:36PM BEARCREEK 7459741 513.793.1500 I�) Sear Creek Capital, d 513.793.5820 fax Cinc innati, Ohio Mon 12 42 500.5S3.S956 Cincinnati., Ohio X5242 B EAR CREEK C APITAL February 9, 2004 FAX: (763) 531 - 5136 Kirk McDonald City of New Hope 4401 Xylon Avenue Nort New Hope, MN 55429 Subject: Friendly Condemnation of the New Hope Sinclair Property 7901 Bass Lake Road New Hope, MN Dear Mr. McDonald: last week, Bear Creek Capital, the proposed developer of As a follow -up to our meeting In friendl the Winnetka West retail development requests that the Citityenotf New Hope b New Hope condemnation proceedings for the 40,434 s.£ property Y Sinclair at 7901 Bass Lake Road. As you are aw are, Bear Creek Capital intends to enter into a Purchase and Sale- Agreement with Sinclair oil Company for the property in order to facilitate development of the Winnetka West retail development. As per our discussions, it would be Bear Creek p meeting On March 8, 2004 Ho pe City Council pass its resolution at t regularly scheduled Please call if you have any questions- Sincerely, Willi I ip ann Vice ident Cc. Steven Sondrall, New Hope City Attorney Peter Coyle Sandy Bradshaw Tim Baird p.1 U: 41CCOUNIZNGtC r/SICYSMi m,eagolistCVS -ProjaY ra1CYS -Rasa Labe and WymwikaTrienOW CO),,k nnndon - Bass Lake Road u20604,dw JENSEN & SONDRALL, P.A. Attorneys At Law 8525 EDINBROOK CROSSING, STE. 201 BROOKLYN PARK, MINNESOTA 55443 -1968 TELEPHONE (763) 424 -8811 • TELEI;Ax (763) 493 -5193 e -mail law @jensen- sondrall.com DOUGLAS J. DEBNER GORDON L. JENSEN' GLEN A. NORTON STEVEN A.SONDRALL STACY A. WOODS OF COUNSEL LORENS Q.BRYNESTAD 'Real Property Law Specialist Certified By The Minnesota State Bar Association 'Admitted in Iowa Writer's Direct Dial No.: (763) 201 -0211 e -mail sas @Jensen- sondrall.com February 6, 2004 VIA FACSIMILE TO (651) 450 -7384 AND REGULAR U.S. MAIL Daniel J. Beeson Attorney at Law LeVander, Gillen & Miller, P.A. 633 South Concord Street, Suite 400 South St. Paul, MN 55075 Re: Sale of Sinclair Service Station 7901 Bass Lake Road, New Hope, Minnesota Your File No.: 18675.13000 Our File No.: 99.11289 Dear Dan: This letter will confirm our recent telephone conversation concerning a proposed sale of the Sinclair Service Station located at 7901 Bass Lake Road in New Hope, Minnesota to CVS Pharmacy /Bear Creek Capital Corporation. In our conversation, you informed me Sinclair would be willing to sell this property for $750,000.00. Further, you indicated this would be an "as is" sale. Sinclair would not be responsible for any environmental issues, removal of the fuel tanks currently located on the property or demolition of the existing service station structure. You also indicated acquisition of the property would need to be under "a threat of condemnation" to enable Sinclair to receive the maximum tax deferral benefits under existing IRS regulations. It is my understanding you have communicated in some fashion this offer to a Ms. Sandy Bradshaw of Bear Creek Capital. You further indicated Sinclair would not be willing to pay any sales commission to Sandy Bradshaw or Bear Creek Capital in connection with the sale of this property to CVS Pharmacy. I have communicated this information to Kirk McDonald, the New Hope Community Development Coordinator and Mr. William Tippmann of Bear Creek Capital in a recent meeting I had with them on February 4, 2004. If this letter does not correctly indicate our conversation concerning the proposed sale of this property by your client, or if there are any other conditions which need to be addressed, please let me know as soon as possible. The City would like to move this project forward as soon as possible and the Community Development Director is hoping to discuss your offer with the City Council at its February 23, 2004 Council C(07k February 6, 2004 Page 2 Thank you for your consideration in this matter. I will wait to hear from you. Very truly yours, Steven A. Sondrall, City Attorney, City of New Hope cc: mirk McDonald, Community Development Director, City of New Hope [Via E -Mail and U.S. Mail ] William J. Tippmann, Vice President, Bear Creek Capital [Via E -Mail and U.S. Mail] P:\Attorney \SAS \l Client Files \2 City of New Hope \99 - 11289 \CNH99.11289 - 006 -Atty Beeson Ltr.doc Boundary Site Plan Property Land Transfered to Development Building Land Transfered to School Winnetka West Retail Development I 0� February 25, 2004 Mr. Bill Tippmann Bear Creek Capital, LLC 9549 Montgomery Road Cincinnati, OH 45242 Subject: Potential CVS Pharmacy Development Dear Bill: At the February 23 New Hope Economic Development Authority meeting, the EDA agreed to approve a resolution of friendly condemnation for property at 7901 Bass Lake Road in the future if the CVS project proceeds. The next step should be a meeting with School District officials, and a meeting has been scheduled for 3:30 p.m. at New Hope City Hall on March 4, 2004. The city is looking forward to working with you on this project and appreciates your cooperation. Please contact me at 763- 531 -5119 if you have any questions. incerely, r'" 1 Kirk McDonald Director of Community Development Cc: Daniel J. Donahue, City Manager Steve Sondrall, City Attorney Improvement Project No. 754 WO MM=4 4401 Xylon Avenue North + New Hope, Minnesota 55428 -4898 + www. ci.new - hope.mn.us City Hall: 763- 531 -5100 + Police (non - emergency): 763- 531 -5170 + Public Works: 763- 592 -6777 + TDD: 763 - 531 -5109 City Hall Fax: 763- 531 -5136 + Police Fax: 763- 531 -5174 + Public Works Fax: 763- 592 -6776 February 21, 2004 Mr. Ken Doresky Community Development Specialist City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Dear Mr. Doresky: (:j i 7l , RE: City of New Hope Winnetka West TIF Assessments SEH No. P- NEWHPO401.00 #10 Short Elliott Hendrickson Inc. (SEH) is pleased to submit this proposal for professional services for the West Winnetka TIF Assessments. This proposal is for services to determine whether the qualification tests for tax increment eligibility (site coverage, building conditions) can be met. We have reviewed the building and area information you forwarded to us on February 10, 2004 and are confident that we will provide you the documentation necessary to comply with the required statutes (State Statute 469.174, subdivision 10). We have based the Scope of Work on the use of Geographic Information Systems (GIS) as a data resource and data gathering tool. The methodology for determining qualification eligibility has been used by this office for the completion of several other assessments in the metro area. The assessment process, methodology, and final report will closely follow the work completed by SEH for your East Winnetka Property Assessments. SEH staff will perform all on -site evaluations with advisement from City staff as necessary. The scope of work includes assessment of two buildings on three parcels at the southwest corner of Winnetka Ave. and Bass Lake Road. As you requested, we have made a preliminary review of the site coverage test for the proposed area. Based on a brief visual `drive - by' inspection and 'property information available on Hennepin County's web site, our preliminary calculations indicate that the proposed area has approximately 72% total area coverage. This exceeds the 70 % minimum site coverage requirement. The cost for conducting the assessments is estimated to be $3,000. This does not include costs for obtaining tax information from the County (approx. $280.00) as described below — these will be treated as a reimbursable expense if the costs are billed through SEH. Compensation shall be on an hourly basis to the established maximum fee, not including ordinary reimbursable expenses (mileage, reproductions, etc). Specific project completion dates will be negotiated with you. To assist with the inspections, we request the following information from you, as is available: 1. A list of building related permits /public reports issued for each parcel over the life of the building. 2. Authorization from each property owner to complete the inspections (contact information and authorization provided 2/10/04). 3. A parcel map of the area to be inspected (provided 2/10/04). 4. A list of all parcels including owner, current known business or resident name and address (provided 2/10104). Short Elliott Hendrickson Inc., Butler Square Building, Suite 7100, 100 North 6th Street, Minneapolis, MN 55403 -1515 SEH is an equal opportunity employer ( www.sehinc.com 1 612.758.6700 1 866.8303388 1 611758.6701 fax Mr. Ken Doresky February 21, 2004 Page 2 5. Access to county taxpayer information available in GIS database format. As mentioned above, we utilize GIS as a data resource and data gathering tool. Based on our research, New Hope does have a data sharing agreement with Hennepin County, and currently lists LOGIS as having a third party contract with the County. For SEH to obtain the parcel data and the color aerial photography for this project - it would require SEH signing a third party contract with Hennepin County. This is easily accomplished by having the City write a request to Hennepin County. The typical costs for obtaining the data are as follows: 1. Obtain tax parcel map and aerial photography: $60.00 (approx.) 2. Obtain assessing tax data from the County: $220.00 (approx.) We look forward to working with you again. If you approve of this Scope of Work, please indicate so on the lines provided below and return one copy to this office. Should you have any questions regarding this submittal, please do not hesitate to call me at 612- 758 -6788 or email me at jzemke@sehinc.com. Sincerely, ason P. Zemke, AIA Project Architect documem5 h /A r Approved by: -4 11 " e_ U' Approved for: Date: COMPLETE APPRAISAL SUMMARY REPORT 5549 Winnetka Avenue North New Hope, Minnesota September 24, 2003 03210 -3 Copyright 0 2003 by Shenehon Company. All rights reserved. October 6, 2003 Mr. Kirk McDonald City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 RE: COMPLETE APPRAISAL - SUMMARY REPORT OF THE PROPERTY LOCATED AT 5549 WINNETKA AVENUE NORTH IN NEW HOPE, MINNESOTA Dear Mr. McDonald: In accordance with your request, we have completed an appraisal of the above - referenced property for the purpose of estimating the market value of the fee simple interest. This Summary Report is intended to comply with the reporting requirements set forth under Standards Rule 2 -2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Report. As such, it presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated within. The appraiser is not responsible for unauthorized use of this report. Based on the appraisal investigation summarized herein, it is our opinion that the subject property has a market value, as land for redevelopment, as of September 24, 2003, of: TWO HUNDRED FORTY -FIVE THOUSAND DOLLARS-------------- - - - - -- $245,000 This appraisal does not include any personal property, fixtures or intangible items that are not real property. It is our opinion that a reasonable exposure time of approximately 6 to 12 months is appropriate for the subject property at our estimated market value. Please refer to the Reasonable Exposure Time section of this appraisal for details. Mr. Kirk McDonald October 6, 2003 Page 2 The value indicated has been estimated by means of generally accepted real estate valuation methods. Please contact us if you have any questions or comments. The undersigned appraiser certifies that he has personally inspected the property and has investigated information believed to be pertinent to the valuation of the property, and to the best of his knowledge and belief the statements and opinions expressed herein are correct and reasonable, subject to the limiting conditions set forth herein. Sincerely, SHENEHON COMPANY Certified to this 6th day of October, 2003 Darrell Koehlinger Senior Vice President License No. 4000652 ltlk I certify that, to the best of my knowledge and belief: 1. I have taken into consideration the factors that have an impact on value in my development of the estimate of market value in the appraisal report. I have not knowingly withheld any significant information from the appraisal report and I believe, to the best of my knowledge, that all statements and information in the appraisal report are true and correct. 2. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and are my personal, impartial, and unbiased professional analyses, opinions, and conclusions. 3. I have no present or prospective interest or bias in the property that is the subject of this report, and I have no personal interest or bias with respect to the parties involved with this assignment. 4. My compensation for completing this assignment is not contingent upon the development or reporting of a predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 5. I performed this appraisal in conformity with the Uniform Standards of Professional Appraisal Practice that Were approved and published by the Appraisal Standards Board of The Appraisal Foundation in 2003. I acknowledge that an estimate of a reasonable time for exposure in the open market is a condition in the definition of market value and the estimate I developed is consistent with the marketing time noted in the letter of transmittal of this report, unless I have otherwise stated in the reconciliation section. I have made a personal inspection of the property that is the subject of this report. Rick Brown provided significant professional assistance to the person(s) signing this report. 8. This appraisal assignment was not based on a requested minimum valuation or specific valuation for approval of a loan. Appraisal fees are in no way contingent upon values concluded by the appraisal firm. 9. Shenehon Company and /or the appraisers of the subject property have previously prepared appraisal reports of various types of vacant land properties. Therefore, I have the knowledge and experience to meet the competency provision of the Uniform Standards of Professional Appraisal Practice of the Appraisal Foundation. 10. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representatives. The appraiser will not disclose the contents of the appraisal report except as provided for in the Uniform Standards of Professional Appraisal Practice. Darrell Koehlinger Senior Vice President License No. 4000652 Copyright ° 2003 by Shenehon Company. All rights reserved. CONTINGENT AND LIMMITING CONDITIONS The value estimates and conclusions in the appraisal are made subject to these assumptions and conditions: This is a Summary Report which is intended to comply with the reporting requirements set forth under Standards Rule 2 -2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Report. As such, it presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated within. The appraiser is not responsible for unauthorized use of this report. The property has been appraised as free and clear of all indebtedness, under responsible ownership and good management unless otherwise set forth in the appraisal. No title search has been made, and the reader should consult an appropriate attorney or title insurance company for accurate ownership data. The appraiser assumes that the title is good and marketable and therefore, will not render any opinions about the title. 4. The information contained in this report is not guaranteed, but it has been gathered from reliable sources. The appraiser certifies that, to the best of his /her knowledge and belief, the statements, information, and materials contained in the appraisal are correct. 5. No responsibility is assumed for matters which are legal in nature. The furnished legal description is assumed to be correct. 6. No analysis of soil conditions was required and none has been made. All value estimates in this report assume stable soil, and any necessary soil corrections are to be made at the seller's expense. Estimates herein are based on the present status of the national business economy and the current purchasing power of the dollar. The forecasts, projections, or operating estimates contained herein are based upon current market conditions, anticipated short -term supply and demand factors, and a continued stable economy. These forecasts are, therefore, subject to changes in future conditions. 8. A plot plan may have been provided in this report to assist the reader in visualizing the property. We have made no survey of the property and assume no responsibility for its accuracy. Surveys, plans and sketches may have been provided in this report. They may not be complete or drawn exactly to scale. The market value herein assigned is based on conditions which were applicable at the time the property was inspected and may vary at a later date. 10. The appraiser herein shall not be required to prepare for or appear in court or before any board or governmental body by reason of the completion of this assignment without pre - determined arrangements and agreements. 11. Information in the appraisal relating to comparable market data is more fully documented in the confidential file in the office of the appraiser. All studies and field notes will be secured in our files for future reference. Contingent and Limiting Conditions - Continued 12. It is assumed that all applicable zoning and use regulations and restrictions have been complied with, unless a nonconformity has been stated, defined, and considered in the appraisal report. It is assumed that there is full compliance with all applicable federal, state, and local environmental regulations and laws unless noncompliance is stated, defined, and considered in the appraisal report. It is assumed that all required licenses, certificates of occupancy, consents, or other legislative or administrative authority from any local, state, or national government or private entity or organization have been or can be obtained or renewed for any use on which the value estimate contained in this report is based. 13. This property is appraised in fee simple, assuming responsible ownership and management, unless otherwise indicated. This appraisal recognizes that available financing is a major consideration by typical purchasers of income- producing real estate in the market, and the appraisal assumes availability of financing to responsible and sufficiently substantial purchasers of the property in amounts similar to those indicated or implied in this report. 14. We are assuming that the property has not been the site for the dumping of hazardous substances nor is subject to radon gas. If the above condition exists, this could have a bearing on the market value of the property. 15. The appraiser has noted in the appraisal report any adverse conditions (such as, but not limited to, hazardous wastes, toxic substances, etc.) observed during the inspection of the subject property (or learned of) during the normal research involved in performing the appraisal. Unless otherwise stated in the appraisal report, the appraiser has no knowledge of any hidden or unapparent conditions of the property or adverse environmental conditions (including the presence of hazardous wastes, toxic substances, etc.) that would make the property more or less valuable, and has assumed that there are no such conditions, but makes no guarantees or warranties, express or implied, regarding the condition of the property. (The appraiser will not be responsible for any engineering or testing that might be required to discover whether such conditions exist.) Because the appraiser is not an expert in the field of environmental hazards, the appraisal report must not be considered as an environmental assessment of the property. 16. The client agrees that the appraisal firm does not by performing the services rendered, assume, abridge, abrogate, or undertake to discharge any duty of client to any other entity. 17. Any use of the appraisal report, by the client, is conditioned upon payment of all fees in accordance with the agreed terms. 18. In consideration for performing the services rendered at the fee charged, the appraisal firm expressly limits its liability to five (5) times the amount of the fee paid or $100,000, whichever is less. The appraisal firm expressly disclaims liability as an insurer or guarantor. Any persons seeking greater protection from loss or damage than is provided for herein, should obtain appropriate insurance. The client shall indemnify and hold harmless the appraisal firm and its employees, against all claims by any third party or any judgement for loss or damage relating to the performance or non - performance of any services by the appraisal firm. 19. Unless specifically brought to the appraiser's attention, the appraiser will assume that there are no hidden or unexpected conditions of the asset to be appraised, that would adversely affect or enhance the value. 20. In the future, if the appraisal firm is compelled to produce documents or testify with regard to work performed, the client shall reimburse appraiser for all costs and expenses incurred. 21. In the event of a dispute involving interpretation or application of this agreement, the parties agree that this agreement shall be governed under the laws of the State of Minnesota. Contingent and Limiting Conditions - Continued 22. Shenehon Company and /or the appraisers are not qualified to render expert opinions regarding, environmental assessments (such as mold), land planning, or soil conditions. If requested, Shenehon Company will recommend qualified experts in these fields to assist the client and /or the appraisal process. 23. This appraisal report has been written for the intended use of the City of New Hope for possible acquisition of the property by the City. Possession of this report, or a copy thereof, does not carry with it the right of publication (either in whole or in part), nor may it be used for any purpose other than the one stated in the Letter of Transmittal and the Purpose of the Report, without the express, written consent of the appraiser and client. Authorized copies of this report will be signed in blue ink by the appraiser(s). Unsigned copies or copies not signed in blue ink should be considered incomplete. All unauthorized or incomplete copies of this report should also be considered confidential and as such, must be returned, in their entirety, to Shenehon Company. SUMMARY OF SALIENT DATA Date of Photograph: Type of Property: Location: Land Size: Zoning: Date of Inspection: Effective Date of Appraisal: Date of the Report: Property Rights Appraised: Total 2003 Base Real Estate Taxes: Value Estimate: Reasonable Exposure Time: OePLU111UC1 G'F, L.VVJ Vacant land 5549 Winnetka Avenue North, New Hope, Minnesota 22,148 square feet, or .508 acre C -B, Community Business District September 24, 2003 September 24, 2003 October 6, 2003 Fee Simple Interest $204.90 $245,000 Approximately 6 to 12 months Item i Letter of Transmittal ........... ............................... iii Certification ................ ............................... iv Contingent and Limiting Conditions . ............................... Summary of Salient Data ............................... vii ........ 1 Location Map ................ ............................... 2 Purpose of the Report ........... ............................... 2 Scope of the Appraisal .......... ............................... 3 Property Rights Appraised ........ ............................... 4 Market Value Definition ......... ............................... 4 Date of Valuation ............. ............................... 5 Community Description ......... ............................... 13 Property Description .......... ............................... 15 Highest and Best Use ....... ............................... .. 16 Sales Comparison Approach to Value ............................... 18 Reasonable Exposure Time ...... ............................... 19 Qualifications of the Appraiser .... ............................... -M 03210 -3 Shenehon Company The purpose of this report is to estimate the market value of the real estate for the sole use of our client, the City of New Hope. The function of this report is to estimate the market value for possible acquisition by the City of New Hope. This appraisal analysis has not been limited in scope, and was based upon the generally accepted appraisal practices in order to comply with current USPAP Standards. Within this valuation analysis, we have completed the following functions and procedures. (Additional details of our research are included throughout the following pages of this report.) - Made an inspection of the subject property; - Familiarized ourselves with the neighborhood, and analyzed the surrounding property trends; - Considered and reviewed the historical market, taking into account stability and /or changes; - Based upon our market research and analysis, we have completed the highest and best use analysis for the subject property; - Gathered comparable land sales to determine the market value of the land in order to calculate the value of the subject property via the sales comparison approach to value; - Developed an opinion of reasonable exposure time of approximately 6 to 12 months for the subject property to effect a sale at our estimated market value. Sources utilized to obtain this information include physical background information provided by the property owner, information contained in our office files, public records, and discussions with other real estate experts, including brokers, other appraisers, buyers, sellers, and developers. 03210 -3 Shenehon Company 2 The subject real estate will be appraised by estimating the market value of the fee simple interest of the real estate. For use in this report, the market value of the fee simple interest in the real estate is subject to the following definition contained on Page 113 of The Dictionary of Real Estate Appraisal Fourth Edition: A fee simple estate implies absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat. 03210 -3 Shenehon Company 3 MARKET VALUE DEFINITION Market value as utilized in this appraisal report conforms to the following definition obtained from Page 177 of The Dictionary of Real Estate Appraisal Fourth Edition, published by the Appraisal Institute. The most probable price, as of a specified date, in cash, or in terms equivalent to cash, or in other precisely revealed terms, for which the specified property rights should sell after reasonable exposure in a competitive market under all conditions requisite to a fair sale, with the buyer and seller each acting prudently, knowledgeably, and for self - interest, and assuming that neither is under undue duress. The corresponding definition, as defined on Page 224 in the Uniform Standards of Professional Appraisal Practice 2003 Edition, has been agreed upon by agencies that regulate federal financial institutions in the United States and is provided below. The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: buyer and seller are typically motivated; 2. both parties are well informed or well advised, and acting in what they consider their best interests; 3. a reasonable time is allowed for exposure in the open market; 4. payment is made in terms of cash in United States dollars or in terms of financial arrangements comparable thereto; and 5. the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. We have developed an opinion of reasonable exposure time within this appraisal. Please refer to that section of the report for details. DA'Z'E OF VALUATION The market value for the subject real estate is estimated as of September 24, 2003. The date of inspection was September 24, 2003. The date of the report is October 6, 2003. 03210 -3 Shenehon Company 4 COMMUNITY DESCRIPTION Located 7.5 miles from Minneapolis (the distance between the middle of New Hope and downtown Minneapolis via major roads), New Hope is an inner ring suburb that is just five square miles in area. New Hope has excellent accessibility to the remainder of the metropolitan area. U.S. Highway #169 travels north /south along New Hope's entire western border. U.S. Highway #169 is a four - lane divided highway in excellent condition. Highway #169 connects with Interstate #94 less than 1.5 miles north of New Hope's city limits. In the southerly direction, U.S. Highway #169 connects with Interstate #394 less than 2.5 miles south of the city limits. Four county highways provide additional accessibility to New Hope. Because the city is almost completely developed, new commercial and retail projects will depend heavily on redevelopment. In the past, New Hope has aggressively used tax increment financing to provide needed infrastructure for commercial /industrial development and to assist senior housing and other residential projects. In 1987, city officials stated no vacant retail zoned land was available for development and only 55 acres of industrially -zoned land remained. Based on the most recent available information, the New Hope Planning Office estimated less than eight acres of industrial land available. Less than one acre of commercial land is estimated to be available for development. Demographics New Hope was a small town of only 3,552 inhabitants in 1960. But by 1970, the population had grown to 23,180. Since 1970, the population has decreased slightly because little land is available for future residential development. Population growth in New Hope, adjacent cities, Hennepin County, and the seven - county metro area are compared in the following table. 03210 -3 Shenehon Company 5 POPULATION GROWTH - 1980 TO 2010 % Change Estimate Projected 1980 1990 2000 1990 -2000 2001 2010 New Hope 23,087 21,853 20,873 -4.5% 20,910 20,600 Brooklyn Park 43,332 56,381 67,388 19.5% 68,070 74,500 Crystal 25,543 23,788 22,698 -4.6% 22,748 22,700 Golden Valley 22,775 20,971 20,281 -3.3% 20,391 20,500 Maple Grove 20,525 38,736 50,365 30.0% 52,350 64,500 Plymouth 31,615 50,889 65,894 29.5% 66,675 73,000 Hennepin County 941,411 1,032,431 1,116,200 8.1% 1,123,420 1,198,800 7 -County Metro Area 1,985,873 2,288,721 2,642,056 15.4% 2,674,838 2,960,000 Source: U.S. Census; Metropolitan Council's Blueprint 2030, adopted December 18, 2002 03210 -3 Shenehon Company 5 Community Description - Continued Demographics - Continued Although New Hope and other inner ring cities have shown negative population growth, these same cities have experienced increases in households. The nationwide trend of fewer people forming a household is also quite evident in New Hope. A major influence of this trend is due to the children born during the "baby boom" period after World War II leaving home to form new households and leaving behind the "empty nester" mother and father, and themselves having fewer children. Other factors affecting the trend to smaller households include delayed marriage for young adults, a declining birth rate for women of child - bearing age and a rising divorce rate. The number of persons per household in New Hope has decreased from 3.03 in 1980, to 2.29 in 2000. The following table depicts household growth since 1980, including projections for 2010. 03210 -3 Shenehon Company HOUSEHOLD GROWTH -1980 TO 2010 % Change Estimate Projected 1980 1990 2000 1990 -2000 2001 2010 New Hope 7,627 8,507 8,665 1.9% 8,691 8,850 Brooklyn Park 15,268 20,386 24,432 19.8% 24,736 28,400 Crystal 8,977 9,272 9,389 1.3% 9,414 9,700 Golden Valley 7,597 8,273 8,449 2.1% 8,528 8,900 Maple Grove 6,239 12,531 17,532 39.9% 18,434 24,500 Plymouth 10,491 18,361 24,820 35.2% 25,159 29,000 Hennepin County 365,536 419,060 456,129 8.8% 459,636 499,920 7- County Metro Area 721,357 875,504 1,021,454 16.7% 1,036,074 1,179,000 Source: U.S. Census; Metro olitan Council's Blueprint 2030, adopted December 18, 2002 03210 -3 Shenehon Company Community Description - Continued Household Income The New Hope area can be considered affluent compared to both the state and the country, according to income data compiled by ESRI, formerly CACI Research Company. ESRI, which publishes demographic data and trends by zip code area, reports that the median household income in the New Hope area is $51,392 for zip code 55428. Income data is summarized in the following table. A map outlining these areas is shown on the following page. 03210 -3 Shenehon Company 7 MEDIAN HOUSEHOLD INCOME - 1980 TO 2001 millillillilli 1, National State % Change Centile Centile 1980 1990 2001 1990 -2001 2001 2001 55428 $21,826 $37,919 $51,392 35.5% 86 85 55369 $26,817 $46,285 $65,224 40.9% 95 95 55422 $22,798 $40,015 $51,624 29.0% 86 85 55427 $25,811 $44,599 $57,884 29.8% 91 91 55429 $22,688 $39,361 $47,838 21.5% 82 81 55441 $24,735 $42,946 $70,537 64.2% 96 97 55442 $26,488 $46,912 $81,371 73.5% 98 99 55443 $22,506 $39,429 $60,846 54.3% 92 92 Minnesota $17,821 $30,772 $48,522 57.7% Source: ESRI (Formerly CACI) 03210 -3 Shenehon Company 7 03210-3 Shenehon Company Ld ZIP CODE MAP Community Description - Continued Economic Base Hennepin County has experienced some negative employment growth according to data provided from the Minnesota Department of Economic Security. This data shows that Hennepin County had a 2000 average employment of 874,603 persons and a 2001 average of 833,218. This represents a loss of 41,385 jobs in a two -year period. Historical data prior to 2000 is not comparable to the current data because of the replacement of the SIC, Standard Industrial Classification with the NAICS, North American Industrial Classification System. Even in this recent period of a soft economy, when many businesses were in contraction mode, both the health care and social assistance and the arts, entertainment, and recreation sectors have experienced moderate increases. Covered employment includes only those workers whose employers contribute to the state unemployment insurance fund and is estimated to include 98% of all workers. The following table shows the changes in employment for 2000 and 2002 by industry classification for Hennepin County. HENNEPIN COUNTY COVERED EMPLOYMENT - 2000 TO 2002 10 1 1 111111111.11 1 1 1 1 mil % Change Industry 2000 2002 2000 -2002 Agriculture, Forestry, Fishing & Hunting 648 626 -3.4% Mining 84 81 -3.6% Utilities 4,785 4,007 -16.3% Construction 34,168 32,590 -4.6% Manufacturing 104,128 91,500 - 12.1% Wholesale Trade 51,243 48,252 -5.8% Retail Trade 85,068 81,609 -4.1% Transportation and Warehousing 49,406 41,456 -16.1% Information 31,977 28,180 - 11.9% Finance and Insurance 67,704 68,678 1.4% Real Estate, Rental, and Leasing 17,545 17,857 1.8% Professional & Technical Services 71,335 66,869 -6.3% Management Companies & Enterprises 39,209 34,309 - 12.5% Administrative and Waste Services 61,100 52,726 - 13.7% Educational Services 48,519 50,423 3.9% Health Care and Social Assistance 87,190 93,432 7.2% Arts, Entertainment, and Recreation 11,667 12,227 4.8% Accommodation and Food Services 57,465 56,356 -1.9% Other Services 28,267 28,362 0.3% Public Administration 23,095 23,678 2.5% Total 874,603 833,218 -4.7% Source: Minnesota Department of Economic Security 03210 -3 Shenehon Company Community Description - Continued Economic Base - Continued The major employers in New Hope are shown in the following table. New Hope provides a diverse core of business and services which offer employment to residents. The largest employers in New Hope are Minnesota Masonic Homes and Egan Companies. A listing of the major employers in New Hope is shown in the following table. MAJOR EMPLOYERS IN NEW HOPE Firm Product /Service Employees Minnesota Masonic Homes North Ridge Skilled Nursing Facility 1,050 Egan Companies Electrical Work 625 Gage In -Store Marketing Signs & Advertising Displays 350 Intermet Aluminum Die - Casting 340 Simon Delivers Direst Selling Establishment 240 Liberty Diversified Industries Stationary Supplies 200 St. Therese Care Center Skilled Nursing Facility 200 Nordic Press & Packaging, Inc. Commercial Printing 175 Waymouth Farms, Inc. Salted & Roasted Nuts & Seeds 175 Paddock Laboratories Pharmaceutical Preparations 165 Ambassador Nursing Home Skilled Nursing Facility 160 InnoFlex Corporation (I -Corp) Manufacturing Industry 150 Navarre Corp Computers, Peripheral & Software 150 Gaine & Hanson Printing Company Commercial Printing 140 Dakota Growers Pasta Company Macaroni and Spaghetti 130 Source: Minnesota Department of Trade and Economic Development 03210 -3 Shenehon Company 10 Community Description - Continued Retail Sales New Hope's major commercial /retail district is at the junction of Rockford Road (County Road #9) and Winnetka Avenue (County Road #156) near the geographical center of the city and close to the high school and City offices. Starting in 1991, retail sales have decreased every year except 1994, even though the number of retail enterprises reporting sales to the Minnesota Department of Revenue has remained essentially unchanged. There were 177 reporting establishments in 1990, and 171 in 1998. However, 2000 retail sales show a 6 % increase over the 1998 figure even though reporting establishments decreased to 145. Retail sales growth in New Hope is shown in the table below. NEW HOPE RETAIL SALES GROWTH 1990 TO 2000 % Change from Year Gross Sales Previous Year ** 1990 $148,668,845 - -- 1991 $171,957,902 15.7% 1992 $137,117,315 -20.3% 1993 $128,767,666 -6.1% 1994 $167,172,210 29.8% 1995 $117,016,197 -30.0% 1996 $101,743,175 -13.1% 1997 * --- 1998 $86,513,667 -15.0% 1999 * --- 2000 $91,583,076 5.9% * Statistics not compiled by the state ** Beginning in 1996 percent change represents a two year period Source: Minnesota Department of Revenue Summary New Hope is a small, inner ring suburb that is well connected to Minneapolis and the remainder of the twin cities metropolitan area via an excellent transportation network. Because the city is almost completely developed it has lost some population. In future years, no significant population growth is forecasted. Because almost no undeveloped land remains in the city, new residential, commercial, and industrial developments will derive primarily from redevelopment of existing properties. 03210 -3 Shenehon Company 11 MA L(m 2.GE VLJOROAN A La : 0 FLAG C I. FLAG C 12.OEIII3 13.INGEYE e 03210 -3 Shenehon Company 12 The subject property is located immediately south of the corner of Winnetka Avenue North and Bass Lake Road. According to the City assessor, the property is 141.64 feet by 166 feet, or .508 acre in size. The property has 141.64 feet of frontage on the western side of Winnetka Avenue. It is generally level with a few scattered trees. The property is generally level, rising slightly from street level on its eastern side. To the immediate south of the property is a small single- family home, and to the north there is a Sinclair gas station. West of the subject property is Winnetka Elementary School. The most current Assessor's Estimated Market Value of the subject vacant land, as of January 2, 2002, is $30,000. 03210 -3 Shenehon Company 13 (9) (B> "�; •\`�� s c ?, pti ti is_j ct � •� %y.�i � err a't' Q 8 ' ` 3 Ao � 1 L24) 1 , ,, 1 i voc ar , sr 733 DOC w 3&x03 }O 220.60 b 1 , i os. 1 � + : 1 . �Iss ---- uj Z u., $ _z l� 1 IeDEPENO SCHOOL DiST .BI 1 'L w , ------- --._. - °.._ sz eI 3' 1 V 1 ♦0 1 a K Ln g o 120) s, C) - - -- PLAT MAPd7*1 03210 -3 Shenehon Company 14 HIGHEST AND BEST USE The highest and best use of the subject real estate as it will be regarded in this report will conform to the following definition found on Page 305 of The Appraisal of Real Estate 12th Edition: Highest and best use is the reasonably probable and legal use of vacant land or an improved property, which is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value. Highest and Best Use of the Land as Though Vacant The highest and best use of the subject property is for assemblage with either the property at 5539 Winnetka Avenue North or 7901 Bass Lake Road, for development of a community- oriented retail business. The parcel is fairly small and would therefore be difficult to develop alone. Assemblage with Winnetka Elementary School property would be unlikely unless the property at 5539 Winnetka Avenue North was included. Assemblage with 7901 Bass Lake Road would be the most desirable due to the corner location of that site, making it accessible from Bass Lake Road as well as Winnetka Avenue North. Highest and Best Use of the Properties as Improved The subject property is an unimproved vacant lot. Given the property's size and location, it is our opinion that the highest and best use of the property is for assemblage with 7901 Bass Lake Road for redevelopment into a community oriented retail business. Assemblage with the property at 5539 Winnetka Avenue North is also an option, however given that property's size, it would be easier and more profitable to assemble the property with 7901 Bass Lake Road. 03210 -3 Shenehon Company 15 SALES COMPARISON APPROACH TO VALUE Comparable land sales useful in estimating the market value for the subject property are summarized below. In order to select comparable sales that were similar to the subject property, we looked in communities similar to New Hope for properties with similar characteristics and current (or possible) uses as the subject property. COMPARABLE LAND SALES FACT CHART 11 IN 1 , = Nffi1111111 I Average 2 11430 Jefferson Court Champlin, MN C -2 (Mobil Gas/ Conv. Store) I -2 (Holiday Gas/Conv. Store) C -2 (SA Gas/ Conv. store) CB (Auto Zone Store) 3/02 68,831 Yes/ 44,050 $832,080 $12.09 Yes 3 NEC Jefferson Hwy. & 85th Avenue N. Brooklyn Park, MN 4 6950 Brooklyn Blvd. Brooklyn Center, MN 5 3601 Winnetka Ave. N. New Hope, MN Sub- 5549 Winnetka Ave. N ject: New Hope, MN - 9/01 62,651 9/02 52,771 9/01 37,365 CB 9/03 (date of 2 <' value) Yes/ 24,100 $700,000 $11.17 Yes Yes/ 34,800 $800,000 $15.16 Yes Yes/ 21,450 $325,000 $8.70 Yes No/ 33,800 Yes - Characteristic differences between a comparable sale and the subject might require adjustments to increase the reliability of a given sale as an indicator of value for the subject. Elements of comparison which may warrant adjustments include date of sale, location characteristics, and various physical characteristics. All of the properties have been adjusted for the passage of time, and differences in buyers' /sellers' attitudes toward the real estate market in general. For this appraisal we have utilized a time adjustment rate of 3 % per year to reflect a general increase in market values. A brief explanation of the adjustments is provided on the following pages. Sale #1 is a current listing located in Crystal. Crystal is a similar community to New Hope, and the comparable property's neighborhood is similar to that of the subject property. The comparable is exposed to a much lower traffic count than the subject property. Therefore, an upward adjustment has been made for location. Since the price shown above is a listing price, it has been adjusted downward. A downward adjustment was also necessary because the subject property is not located directly on the corner. 03210 -3 Shenehon Company 16 Corner Daily Sale Sale Zoning Sale Area Site/ Traffic Sale Price/ No. Location (Intended Use) Date (Sq. Ft.) Signalized Counts Price Sq. Ft. 1 4835 West Broadway B -4 Current 40,000 Yes/ 13,750 $450,000 $11.25 Crystal, MN listing No 2 11430 Jefferson Court Champlin, MN C -2 (Mobil Gas/ Conv. Store) I -2 (Holiday Gas/Conv. Store) C -2 (SA Gas/ Conv. store) CB (Auto Zone Store) 3/02 68,831 Yes/ 44,050 $832,080 $12.09 Yes 3 NEC Jefferson Hwy. & 85th Avenue N. Brooklyn Park, MN 4 6950 Brooklyn Blvd. Brooklyn Center, MN 5 3601 Winnetka Ave. N. New Hope, MN Sub- 5549 Winnetka Ave. N ject: New Hope, MN - 9/01 62,651 9/02 52,771 9/01 37,365 CB 9/03 (date of 2 <' value) Yes/ 24,100 $700,000 $11.17 Yes Yes/ 34,800 $800,000 $15.16 Yes Yes/ 21,450 $325,000 $8.70 Yes No/ 33,800 Yes - Characteristic differences between a comparable sale and the subject might require adjustments to increase the reliability of a given sale as an indicator of value for the subject. Elements of comparison which may warrant adjustments include date of sale, location characteristics, and various physical characteristics. All of the properties have been adjusted for the passage of time, and differences in buyers' /sellers' attitudes toward the real estate market in general. For this appraisal we have utilized a time adjustment rate of 3 % per year to reflect a general increase in market values. A brief explanation of the adjustments is provided on the following pages. Sale #1 is a current listing located in Crystal. Crystal is a similar community to New Hope, and the comparable property's neighborhood is similar to that of the subject property. The comparable is exposed to a much lower traffic count than the subject property. Therefore, an upward adjustment has been made for location. Since the price shown above is a listing price, it has been adjusted downward. A downward adjustment was also necessary because the subject property is not located directly on the corner. 03210 -3 Shenehon Company 16 Sales Comparison Ap proach to Value - Continued Sale #2 is located in Champlin on a signalized corner with a higher traffic count than the subject. After purchase, the property was improved with a modern Mobil gas station with a large convenience store. This comparable property has been adjusted downward due to its superior traffic count. This downward adjustment is slightly offset due to the property's location further away from the core metro area when compared to the subject property. Also, since the subject property is not located on the immediate corner, a downward adjustment has been made. This adjustment is offset by an upward adjustment made for the subject property's smaller size. Sale #3 is located in Brooklyn Park on a signalized corner in an industrial neighborhood. Since the date of sale, the property has been improved with a Holiday gas station and convenience store. An upward adjustment has been made to account for the subject property's superior traffic count and neighborhood. The subject property is not located on the immediate corner so a downward adjustment has been made. This adjustment is offset by an upward adjustment made for the subject property's smaller size. Sale #4 is located in Brooklyn Center and is also located on a signalized corner. The property receives a similar traffic count to that of the subject property, but it is located in a commercially developed area surrounded by newer strip malls and fast -food restaurants, thus making the neighborhood more desirable than the subject property's. Therefore, the sale has been adjusted downward for location. In addition, since subject property is not located on the immediate corner, a downward adjustment has been made. This adjustment is offset by an upward adjustment made for the subject property's smaller size. Since the date of sale, the site has been improved with a Super America gas station and convenience store. Sale #5 is approximately two miles south of the subject property on the (signalized) corner of Winnetka Avenue North and 36th Avenue North. The property experiences a much lower traffic count that the subject property and is therefore adjusted upward. Since subject property is not located on the immediate corner, a downward adjustment has been made. The neighborhood is very similar to the subject property's, with small community- oriented businesses nearby. Before adjustments for differences, the aforementioned sales indicate a range of $8.70 per square foot to $15.16 per square foot for the subject. After analyzing possible adjustments, and placing additional weight on comparable sale #1, it is our opinion that the subject has a market value of approximately $11.00 per square foot, calculated as follows: 22,148 square feet @ $11.00 per square foot $243,628 Rounded to: $245,000 Each of the comparable sales had marketing times of less than 12 months. It is our opinion that 6 to 12 months is a reasonable exposure time to effect a sale of the subject property at the value indicated by the sales comparison analysis. (Please refer to the Reasonable Exposure Time section for details.) 03210 -3 Shenehon Company 17 REASONABLE EXPOSURE TIME Exposure time can be defined as the estimated length of time the property interest being appraised would have been offered on the market prior to the hypothetical consummation of a sale at market value on the effective date of the appraisal; a retrospective opinion based on an analysis of past events assuming a competitive and open market. Reasonable exposure time can differ from actual exposure time. For example, a property may have been exposed at $1,000,000 for two years, which informed market participants considered unreasonable. Then the owner lowered the price to $900,000 and began receiving offers, resulting in a transaction at $800,000 six months later. Although the actual exposure time was 2.5 years, the reasonable exposure time at a value range of $800,000 to $900,000 would be six months. We have researched exposure time for properties similar to the subject property by reviewing national surveys, information gathered through sales verification (if available), and having discussions with various market participants (such as brokers, buyers, sellers, etc.). National Surveys We have consulted published sources for information on exposure periods for national, power center market properties. The KorRacz Real Estate Investor Survey provides an average marketing time of about six months for the first quarter of 2003. It should be borne in mind that the surveys reflect respondents' objectives for prime properties in good locations. Based upon our analysis of the subject property, it is our opinion that the property would require an average exposure period when compared to those of the prime properties in good locations included in the survey. Summary After reviewing the national and local data, and having discussions with brokers in the marketplace, it is our opinion that a reasonable exposure time for the subject property at our estimated market value would be approximately 6 to 12 months. 03210 -3 Shenehon Company 18 BIOGRAPHICAL DATA AND EDUCATION Born in Rochester, New York. Graduated from Penfield Senior High School in suburban Rochester. Bachelor of Arts Bucknell University in Lewisburg, Pennsylvania in History and Economics. Master of Science program University of Wisconsin - Madison in Real Estate and Investment Analysis Completed the following real estate appraisal courses offered by the Appraisal Institute: Real Estate Appraisal Principles Capitalization Theory B Basic Valuation Procedures Standards of Professional Practice Capitalization Theory A Case Studies in Real Estate Valuation Valuation Analysis & Report Writing Easement Valuation Advanced Income Capitalization Advanced Sales Comparison and Cost Approaches PROFESSIONAL QUALIFICATIONS OR ASSOCIATIONS MAI Candidate - The Appraisal Institute (MAI) University of Wisconsin Real Estate Alumni Association Certified General Real Property Appraiser Licensed Appraiser - State of Minnesota, License #4000652, Expires August 31, 2005 Licensed Appraiser - State of Wisconsin, License #1062 -010, Expires December 31, 2003 Licensed Real Estate Salesperson - State of Minnesota, License #RA- 20290732, Expires June 30, 2005 PROFESSIONAL EXPERIENCE Shenehon Company, Minneapolis, Minnesota Senior Vice President - Director of Real Estate since September 2002; Shareholder Vice President - Director of Real Estate 1997 -2002 Senior Appraiser since June 1992 American Appraisal Associates, Minneapolis, Minnesota Senior /Staff Appraiser from March 1988 to June 1992 Towle Real Estate, Minneapolis, Minnesota Senior Finance Analyst from March 1986 to January 1988 Duties and Responsibilities: Prepare professional valuations and market analysis of real estate and intangible property rights. Appraisal assignments have involved numerous types of commercial, multiple family, industrial, and special purpose properties. These assignments have included highest and best use studies, mortgage financing, condemnation, tax abatement proceedings, feasibility analysis, investment counseling, potential sales and purchases, lease and rental analyses, bankruptcy proceedings, charitable donations, internal management decisions, special assessment appeals, allocation of purchase price, and insurance indemnification. Has testified before SEC, FBI and district court regarding valuation issues. AUTHOR /CO- AUTHOR OF: "Business Relocation: Part One - An Overview of the Relevant Law ", Valuation Viewpoint, Spring 2002 "The Analytical Foundation for Tax Increment Financing," Valuation Viewpoint, Summer 2000 "Fundamentals of Special Assessments in Appraisal," Valuation Viewpoint, Spring 1999 "Issues in Appraising High Profile Commercial Properties," Valuation Viewpoint, Summer 1998 "A Perspective on Subdivision Appraisal," Valuation Viewpoint, Winter 1997 "How Residential Properties are Inspected by Adjacent Commercial Users," Valuation Viewpoint, Summer 1997 "Rates of Return: Direct Capitalization Versus Discounting - What's the Difference ?" Valuation Viewpoint, Fall 1996 "Timing Can Be Everything - A Perspective on the Suburban Office Market," Valuation Viewpoint, Fall 1995 PARTIAL CLIENT LIST Anthony Ostlund & Baer Associated Bank BancOne Best Buy Corporation Briggs & Morgan Burger King Cargill, Inc. Carlson Companies Century Bank Citicorp City of Blaine City of Edina City of Fridley City of Minnetonka City of Richfield City of Roseville Connecticut Mutual CSM Dakota County Dorsey & Whitney Fabyanske, Westra & Hart Faegre & Benson First National Bank of Omaha Fredrikson & Byron Hennepin County Henson & Efron Hinshaw & Culbertson Internal Revenue Service J.P. Morgan Leonard Street & Deinard Lindquist & Vennum Lutheran Brotherhood M &I Bank Metropolitan Airports Commission Northland Financial Oppenheimer Wolff & Donnelly Opus Corporation PricewaterhouseCoopers Robins, Kaplan, Miller & Ciresi St. Paul Properties Stearns Bank TOLD Development Towle Financial U.S. Bancorp U.S. Fish & Wildlife U.S. Post Office Union Labor Life Insurance United Properties 19