031212 EDACITY OF NEW HOPE
4401 XYLON AVENUE NORTH
NEW HOPE, MINNESOTA 55428
EDA Minutes March 12, 2012
Regular Meeting City Hall
CALL TO ORDER President Hemken called the meeting of the Economic Development
Authority to order at 7:59 p.m.
ROLL CALL Present: Kathi Hemken, President
John Elder, Commissioner
Andy Hoffe, Commissioner
Eric Lammle, Commissioner
Daniel Stauner, Commissioner
Staff Present: Kirk McDonald, City Manager
Curtis Jacobsen, Director of Community Development
Guy Johnson, Director of Public Works
Valerie Leone, City Clerk
Chris Long, City Engineer
Steve Sondrall, City Attorney
APPROVE MINUTES Motion was made by Commissioner Stauner, seconded by Commissioner
Hoffe, to approve the Regular Meeting Minutes of January 9, 2012. All
present voted in favor. Motion carried.
IMP. PROJECT 893 President Hemken introduced for discussion Item 4, Resolution authorizing
Item 4
entering into a purchase agreement with Gator New Hope, LLC, and Gator
New Hope Two, LLC, for the purchase of the Kmart property at 4300 Xylon
Avenue North and the Wells Fargo Bank property at 4200 Xylon Avenue
North. (Project No. 893).
Mr. Curtis Jacobsen, director of community development, reported at the
February 21 work session the acquisition of the Kmart property was
discussed. He stated at that time there were seven items of concern regarding
the purchase agreement. Mr. Jacobsen stated six of the 7 items have been
resolved. He stated the final item revolves around requiring Gator to provide
a $90,000 escrow, to be held for one year, to protect the city from any potential
relocation claims from the sub-tenant in the property, Integrity Automotive.
Mr. Jacobsen indicated the seller is unwilling to provide an escrow for this
purpose and reminded Council that this was not a part of the discussions for
the first six months nor part of the original agreement to sell the property to
the city.
Mr. Jacobsen acknowledged there is some inherent risk in all major
acquisitions of this type, and in an effort to minimize the risk the non-
refundable escrow has been removed, provisions have been made for
inspection of the property, the escrow amount has been reduced, there will be
no additional escrow for the Wells Fargo parcel, provision of an estoppel
EDA Meeting
Page 1March 12, 2012
certificate (although probably not with waivers included) and closing on July
2, 2012. He stated the EDA can decide to walk away from this property up to
the closing date.
Mr. Jacobsen recommended approval of the purchase agreement. He stated
the cost is $4.5 million for the Kmart property, $125,000 for the Wells Fargo
property, and a maximum of $10,000 for out-of-pocket expenses.
Mayor Hemken inquired whether the escrow is refundable. Mr. Jacobsen
responded that it would be refundable in most circumstances.
Council Member Hoffe inquired whether 15 days is adequate for an
inspection. Mr. Jacobsen indicated the building official can conduct the
inspection within 4 hours. Council Member Stauner noted he believes the 15-
day period begins as soon as the agreement is executed. Mr. Sondrall pointed
out the city would have the right to notify Gator if Kmart would refuse to
allow the inspection. He also pointed out Gator would be entitled to 30 days
to deal with any holdover tenant and that tenant must vacate by August 2.
Council Member Stauner expressed concern regarding Gator’s unwillingness
to hold $90,000 in escrow to protect the city from potential relocation claims
from the sub-tenant. He also asked that item 5j (seller’s knowledge) of the
agreement be amended.
Mr. Sondrall and Mr. Jacobsen pointed out the risk for relocation benefits is
minimal. Mr. Sondrall suggested asking Gator to split the difference by
reducing the purchase price by $45,000. Mr. Jacobsen expressed his doubt that
Gator would agree to such terms. He pointed out the parcel is one the city
would like to acquire in order to attract a developer. Mr. Sondrall noted the
purchase price is less than the appraised amount.
Council Member Lammle stated he trusts the opinion of legal counsel and
staff. He pointed out if it was certain that the auto shop would exercise
relocation benefits the city would likely still agree to the purchase. He stated
staff understands what the seller is willing to give. He recommended the city
accept the risk of potential relocation as it can still walk away from the
transaction on July 2 or August 2 as the case may be.
Mr. Sondrall discussed the effective date of the agreement. It was noted that
the Council would be meeting again on March 26 to consider the results of the
property inspection.
RESOLUTION 2012-01 Commissioner Elder introduced the following resolution and moved its
Item 4 adoption subject to amendment of item 5j: “RESOLUTION AUTHORIZING
ENTERING INTO A PURCHASE AGREEMENT WITH GATOR NEW
HOPE, LLC, AND GATOR NEW HOPE TWO, LLC, FOR THE PURCHASE
OF THE KMART PROPERTY AT 4300 XYLON AVENUE NORTH AND
THE WELLS FARGO BANK PROPERTY AT 4200 XYLON AVENUE
NORTH. (PROJECT NO. 893)”. The motion for the adoption of the foregoing
resolution was seconded by Commissioner Stauner, and upon vote being
taken thereon, the following voted in favor thereof: Hemken, Elder, Hoffe;
EDA Meeting
Page 2March 12, 2012
and the following voted against the same: None; Abstained: None; Absent:
Lammle, Stauner; whereupon the resolution was declared duly passed and
adopted, signed by the president which was attested to by the executive
director.
ADJOURNMENT Motion was made by Commissioner Hoffe, seconded by Commissioner
Lammle, to adjourn the meeting. All present voted in favor. Motion carried.
The New Hope EDA adjourned at 8:31 p.m.
Respectfully submitted,
Valerie Leone, City Clerk
EDA Meeting
Page 3March 12, 2012