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EDA 06/23/03
OFFICIAL FILE COPY CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North June 23, 2003 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Mary Gwin-Lenth Commissioner Steve Sommer 2. 3. 4. Call to Order Roll Call Approval of Regular Meeting Minutes of May 27, 2003 Joint Development Proposal Concept Consideration and Authorization to Prepare a Purchase Agreement for City-Owned Property at 7500-7528 42r~ Avenue North (Improvement Project No. 665) Discussion Regarding Development Proposal for City-Owned Property at 5501 Boone Avenue North and Direction to Proceed (Improvement Project No. 749) Discussion Regarding Development Proposal for City-Owned Property at 4317 Nevada Avenue North and Private Property at 4301 Nevada Avenue North (Improvement Project No. 734) Motion Acknowledging Expiration of Letter of Intent with Brookstone, Inc. and Agreement to Continue Coordination on Informal Basis 8. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 EDA Minutes Regular Meeting May 27, 2003 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES WEST WINNETKA REDEVELOPMENT Item 4 MOTION Item 4 SECTION 8 HOUSING CONTRACT Item 5 President Enck called the meeting of the Economic Development Authority to order at 10:05 p.m. Present: W. Peter Enck, President Sharon Cassen, Commissioner Don Collier, Commissioner Mary Gwin-Lenth, Commissioner Steve Sommer, Commissioner Motion was made by Commissioner Sommer, seconded by Commissioner Cassen, to approve the Regular Meeting Minutes of May 12, 2003. All present voted in favor. Motion carried. President Enck introduced for discussion Item 4, Motion Approving Sharing of Appraisal Cost with Bear Creek Capital for Potential West Winnetka Redevelopment Project. Mr. Kirk McDonald, Director of Community Development, stated this item is in follow up to the brief presentation made at the May 19 City Council work session by Bear Creek Capital regarding a potential redevelopment in the West Winnetka area of the Livable Communities area. He stated the City Manager is recommending that the EDA approve a motion approving sharing of the appraisal costs or approximately $7,500. He stated details are yet to be worked out regarding the selection of the appraisal firm and would be coordinated with Bear Creek Capital in the furore. The City Manager recommends that the City share in the "up front" costs with the understanding that the City's investment would be recuperated if the development moves forward. President Enck noted the cost of the appraisal should be borne entirely by the developer as part of the proposal. Commissioner Sommer also expressed reluctance of providing city funds towards an appraisal as it appears unlikely that the project will move forward as the school district is not interested in selling any of its property at this time. Commissioner Collier recollected that the EDA previously agreed that the immediate focus would not include the West Winnetka area. Motion was made by Commissioner Collier, seconded by Commissioner Sommer, denying the sharing of appraisal cost with Bear Creek Capital. All present voted in favor. Motion carried. President Enck introduced for discussion Item 5, Resolution Approving Second Amendment to Section 8 Housing Assistance Payments Program Contract No. C- 99-66 for Administrative Services Between the Metropolitan Council and the City of New Hope and Authorizing President and Executive Director to Execute Agreement. EDA Minutes Page 1 May 27, 2003 EDA RESOLUTION 03-05 Item 5 ADJOURNMENT Mr. Kirk McDonald, Director of Community Development, explained that this item formalizes the contract amendment that was discussed at the EDA meeting of April 28, 2003. The contract amendment will shift the 128 Maple Grove client contracts to Metro HRA staff effective July 31, 2003. The city's section 8 housing coordinator will continue to manage 335 contracts. Commissioner Sommer introduced the following resolution and moved its adoption "RESOLUTION APPROVING SECOND AMENDMENT TO SECTION 8 HOUSING ASSISTANCE PAYMENTS PROGRAM CONTRACT NO. C-99- 66 FOR ADMINISTRATIVE SERVICES BETWEEN THE METROPOLITAN COUNCIL AND THE CITY OF NEW HOPE AND AUTHORIZING PRESIDENT AND EXECUTIVE DIRECTOR TO EXECUTE AGREEMENT." The motion for the adoption of the foregoing resolution was seconded by Commissioner Gwin-Lenth, and upon vote being taken thereon, the following voted in favor thereof: Enck, Cassen, Collier, Gwin-Lenth, Sommer; and the following voted against the same: None; Abstained: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. Motion was made by Commissioner Collier, seconded by Commissioner Gwin- Lenth, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 10:13 p.m. Res?ectfully sub .mitted, Valerie Leone City Clerk EDA Minutes Page 2 May 27, 2003 CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North June 23, 2003 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Mary Gwin-Lenth Commissioner Steve Sommer 2. 3. 4. Call to Order Roll Call Approval of Regular Meeting Minutes of May 27, 2003 Joint Development Proposal Concept Consideration and Authorization to Prepare a Purchase Agreement for City-Owned Property at 7500-7528 42nd Avenue North (Improvement Project No. 665) Discussion Regarding Development Proposal for City-Owned Property at 5501 Boone Avenue North and Direction to Proceed (Improvement Project No. 749) Discussion Regarding Development Proposal for City-Owned Property at 4317 Nevada Avenue North and Private Property at 4301 Nevada Avenue North (Improvement Project No. 734) Motion Acknowledging Expiration of Letter of Intent with Brookstone, Inc. and Agreement to Continue Coordination on Informal Basis 8. Adjournment EDA '! REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development 6-23-03 EDA ~.' ~i Item No. By: Kirk McDonald, Director of CD · & Ken Doresk¥, CD Specialist BI/.'- ~,': 4 JOINT DEVELOPMENT PROPOSAL CONCEPT CONSIDERATION AND AUTHORIZATION TO PREPARE A PURCHASE AGREEMENT FOR CITY-OWNED PROPERTY AT 7500-7528 42ND AVE. N. (IMPROVEMENT PROJECT NO. 665) ACTION REQUESTED Staff is requesting concept consideration and authorization to prepare a purchase agreement with the developers for the attached joint development proposal for the City-owned site at 7500-7528 42nd Avenue North. The proposal is for two uses: a Culvers restaurant on the western portion of the site and three (3) office condominium buildings (eight (8) separate ownership units) on the eastern portion of the site. Staff recommends that the City follow the same sale process as when the property at 9200 49th Avenue North was sold to the Plymouth Heights Pet Hospital. The steps are as follows: 1. EDA consideration of development concept, purchase price and direction to prepare a purchase agreement. 2. EDA consideration of purchase agreement, subject to zoning/development approval by the Planning Commission and City Council. 3. Development approval by the Planning Commission and City Council. POLICY/PAST PRACTICE City goal #2 is to pursue the maintenance and redevelopment of commercial and residential properties within the City. The EDA has been addressing the commercial portion of this goal through the City's many development activities, including coordinating with potential developers for the sale and development of City- owned property. In the past, the EDA has provided concept development approval and directed staff to prepare purchase agreements for the sale of City-owned property to private developers. BACKGROUND On March 10, the EDA directed staff to continue working with Retail Site Development Services (RSDS) on a joint development proposal for the City-owned site at 7500-7528 42nd Avenue North. The proposal is for two uses: a Culvers restaurant on the western portion of the site and three (3) office condominium buildings (eight (8) separate ownership units) on the eastern and northern portion of the site. Staff has continued to work with the developers on the items raised at the March 10 EDA meeting. The developers have addressed the following EDA concerns. MOTION BY SECOND BY TO: I:\RFA\PLANNING\Electronic Industries\Q - Development Proposal 2.doc Request for Action Page 2 6-23-03' Purchase Price - The developers are offering a combined $510,000 for the site, or $4.62 sq. ft. The total land area is 109,899.1 sq. ft. or 2.52 acres. Staff, including the Director of Finance believes that this is a reasonable sales price for the property taking into account the location, contamination issues and development restrictions imposed by the MPCA (no residential). According to the Director of Finance, the City considered paying $6 per square foot for the Robbinsdale School District 281 property located at the southeast corner of 42nd and Winnetka Ave. N. Although the subject location is good, it is not as highly desirable as the school district site and has restrictions, therefore staff believes the $4.62 sq. ft. is reasonable. An appraisal completed on 4-22-02, lists the "as remediated" market value at $730,000. The Hennepin County Assessor's Office estimated land value at $600,000. · Brokerage Fee - RSDS, the developer's representative initially proposed a brokerage fee of $40,000 to be paid by the City. Per the EDA's request, the brokerage fee has been eliminated from the proposal. Stormwater Ponding - Due to the groundwater contamination on the site, off-site ponding is required by the Minnesota Pollution Control Agency. The City Engineer has calculated that the fee payment for regional water quality improvements for the site will be $47,100. The City Engineer's recommendation is consistent with the Storm Water Management Plan. The total fee represents the cost that would be realized to construct a pond and the value of land occupied by the pond. Please see the attached City Engineer memorandum. The developers have agreed to pay this fee and have included the payment in the attached Letters of Intent. · Site Plan - The proposed site plan has been modified to address EDA concerns: Screening of the north industrial property: The developers have moved one (1) office condominium building (two (2) units) along the north property line intended to provide screening of the site and 42nd Avenue North from the industrial property to the north. 42nd Avenue North Ingress/Egress: The developers have stated that the access to 42nd Avenue North would be one (1) curb cut with a right-in, right-out arrangement. Hennepin County will require review and approval of an access permit onto 42nd Avenue North and would presumably require and approve the right-in, right-out arrangement. A median exists in the 42nd Avenue North roadway. Staff is supportive of one (1) curb cut with a right-in, right-out arrangement. Overall the curb cuts will be reduced from two (2) that previously existed along 42nd Avenue North to one (1). One (1) access is proposed on Quebec Avenue North. Green area: Due to the contamination on the property and the MPCA's desire to limit infiltration on the site, green area must be kept to a minimum. Landscaping, including sod will be placed around the office units. Landscaping will be a component of the restaurant exterior. Landscape islands will be placed in the parking lot. The majority of the contamination is in the center area of the site. The center area of the site is where the parking lot is located. The location of the parking lot is ideal, based on the fact that a majority of the contamination is located in that area. o Parking: A preliminary review of the proposed parking indicated that it is adequate for the site and combined uses. o Proximity of units to railroad line: The office condominium developer has not indicated any concerns regarding the proximity of the units to the rail line. The units would be in compliance with the Commercial Business (CB) side yard set back of 10'. o Owner's association: The office units would have association documents and bylaws similar to that of a residential development association. o Platting: The development team will be responsible for platting the property. Reqdest for Action Page 3 6-23-03 On March 4, 2003, staff received the original joint development proposal from RSDS for the City-owned site at 7500-7528 42nd Avenue North. As mentioned previously, staff presented the proposal to the EDA on March 10. The EDA directed staff to continue working with the developers. Staff met with the developers on April 7, May 23 and June 6. The City has been working for many years to initiate the environmental cleanup process and subsequent commercial redevelopment of this site. In conjunction with cleanup funding grant applications submitted during the spring of 2002, the Council approved a Request for Proposal (RFP) process for the site. As a result of the RFP, the City received a proposal for the office condominium component of the current proposal. Using the office condominium proposal in the cleanup grant applications, the Department of Trade and Economic Development (DTED) rated New Hope's application #1 in the State of Minnesota due to the economic development and job creation potential. DTED subsequently approved a fully funded grant in partnership with a Hennepin County approved grant. Culver's restaurant/RSDS came later in the process and staff suggested they provide a joint development proposal with the office condominium developer which they have done. Staff has been in contact with DTED regarding the revised proposal. DTED indicated that they did not have any issue with the addition of a Culver's restaurant at the site and it will not affect the cleanup grant. RSDS has submitted Letters of Intent on behalf of each developer. An excerpt of each Letter of Intent is as follows: Letter of Intent: Culver's Restaurant (Attached, please see the entire Letter of Intent) "John Seibert of JCS Development, Inc. has asked Retail Site Development Services to represent him in his search for a Culver's restaurant site in the New Hope area. This letter shall serve to confirm JCS Development, Inc.'s intent to purchase a site on the northeast corner of 42nd and Quebec Avenues as defined on the attached plan and under the terms and conditions outlined below. REAL PROPERTY: Seller will sell to Buyer a 55,500(+-) square foot parcel (buildable) which is of adequate size to construct a building of approximately 4,500 square feet with a minimum of 70 parking stalls ("Real Property"). Seller represents that is will require proper cross easements for parking and access across Real Property. PURCHASE PRICE: Buyer shall pay to Seller the sum of $380,000.00 for the Real Property. Upon execution of the Agreement, Buyer shall deposit with the City of New Hope a non refundable fee in the amount of $500.00. In addition, a "Refundable Fee" of $2,500.00 will be submitted by Buyer to Seller upon execution by both parties of an Agreement. Seller shall provide an accounting of all expenditures from the Refundable Fee fund and Buyer will be billed monthly. The Buyer shall have 120 days after execution of the Agreement to waive all conditions therein and close on the Property. CONDITION OF REAL PROPERTY: Seller shall represent that all utilities are available and adequate at the property line. Buyer acknowledges that they will be responsible for a storm sewer fee that will not exceed $23,550.00. Seller further represents and warrants that the Real Property is zoned and suitable for development of a Culver's drive-thru restaurant with up to 120 seats. ENVIRONMENTAL TESTS: Seller shall make representations as to the present and proposed environmental conditions of the Real Property with respect to the presence of any hazardous substances or unsuitable soils in or about the Real Property. Seller shall also provide VIC Assurance Letters and VPIC Assurance letters stating that a Culver's restaurant can be constructed on the site and that no further action is required. Letter of Intent: Frey Development, Inc. (Attached, please see the entire Letter of Intent) "Bernie Frey of Frey Development, Inc. has asked Retail Site Development Services to represent him in his search for a Culver's restaurant site in the New Hope area. This letter shall serve to confirm Frey Development, Inc.'s intent to purchase a site on the northeast corner of 42nd and Quebec Avenues as defined Request for Action Page 4 6-23-03 on the attached plan and under the terms and conditions outlined below. REAL PROPERTY: Seller will sell to Buyer a 52,400(+-) square foot parcel (buildable) which is of adequate size to construct eight office condominium units with 55 parking stalls ("Real Property"). Seller represents that is will require proper cross easements for parking and access across Real Property. PURCHASE PRICE: Buyer shall pay to Seller the sum of $130,000.00 for the Real Property. Upon execution of the Agreement, Buyer shall deposit with the City of New Hope a non refundable fee in the amount of $500.00. In addition, a "Refundable Fee" of $2,500.00 will be submitted by Buyer to Seller upon execution by both parties of an Agreement. Seller shall provide an accounting of all expenditures from the Refundable Fee fund and Buyer will be billed monthly. The Buyer shall have 120 days after execution of the Agreement to waive all conditions therein and close on the Property. CONDITION OF REAL PROPERTY: Seller shall represent that all utilities are available and adequate at the property line. Buyer acknowledges that they will be responsible for a storm sewer fee that will not exceed $23,550.00. Seller further represents and warrants that the Real Property is zoned and suitable for development of an office condominium project. ENVIRONMENTAL TESTS: Seller shall make representations as to the present and proposed environmental conditions of the Real Property with respect to the presence of any hazardous substances or unsuitable soils in or about the Real Property. Seller shall also provide VIC Assurance Letters and VPIC Assurance letters stating that an office condominium project can be constructed on the site and that no further action is required. Attached, please find previous correspondence dated 10-28-02 from JCS Development, Inc. of Culver's restaurant stating, "1 am proposing to develop a 120-seat Culver's Restaurant in New Hope, MN. It will be a quick service restaurant specializing in burgers and frozen custard. The development will be 52,000 sq. ft. There will be 60 employees - 5 salary employees ranging in salary from $25K - $40K depending on experience, 8-12 other full time employees and the remaining part-time employees paid hourly ranging from $6/hr to $12/hr. The hours of operation will be from 10:30 am - 10 pm seven days a week." Also attached, please find previous correspondence dated 1-24-03 from Frey Development, Inc. of the office condominiums stating, "Please consider this correspondence as notice of our interest in developing an office condominium project on the east half of the subject parcel. Our project is part of a mutual proposal with JCS Development, Inc. JCS Development will construct a 120-seat Culver's restaurant on the west half of the parcel. Our concept would involve the construction of seven (increased to eight with current proposal) office condominium units. These units would be individually owned. This concept is similar to a residential townhome project where the owner owns the land beneath their unit as well as their pro-rata share of the common area. A unit can range from 1,300 to 3,000 square feet. Each unit would have a private entrance, individual signage, custom designed interior plus the convenience of parking at your front door. Many small businesses owners desire the benefits of owning their own business space but financially they cannot afford to build or purchase a single user building. This type of development provides small business owners that opportunity. Typical users may include professional offices, medical offices, financial offices and manufacturing representatives. The number of employees that occupy each space will vary depending on the use. A 1,500 sq. ft. unit will typically provide enough space for a staff of 6 to 8. Individual signs at each entrance will identify each unit. A monument sign identifying the project will be installed along 42"~ Ave. N. Parking provided will be based on the City of New Hope's parking ordinance. Hours for a typical user are 8:00 to 5:00." Site Status Diversified Environmental, the City's environmental consultant has submitted the following information Request for Action Page 5 6-23-03 regarding status of the site. 1. Environmental Restrictive Covenant: The MPCA requires that the City prepare an environmental restrictive covenant (filed with the property deed) relating to future use and development of the subject property. The City Attorney and Diversified Environmental prepared a draft of the covenant. The covenant will be shared with the developer and sent to MPCA and the State Attorney General's office for review and comment. Once comments are received, staff will to present the covenant to the Council for consideration in August. As currently drafted and mandated by the MPCA, the covenant will prohibit any future residential uses. The MPCA has no concerns relating to the uses proposed by the current interested developers. The covenant lists future triggering activities that will need review and approval of the MPCA, as well as lists future triggering activities that will need review and approval of the RCRA group of the MPCA, as well as the City, prior to any construction activities. These activities include excavation and dewatering in certain areas, monitoring well sampling construction and access, active soil vapor venting under all buildings, maintenance of pavement cover, snow storage and direction of all runoff into storm sewers. Monitoring and mitigation plans will need to be submitted to MPCA when site plans are firm. The City will be responsible for development and implementation of these monitoring and mitigation plans. 2. Cleanup activities at the El site: Cleanup activities (subsurface permanganate injections into the shallow ground water) have started. The first two rounds of neutralizing chemical injections and testing took place in May and June. Testing results relating to the effectiveness of the first round of injections are expected by mid- June. Three additional rounds of injections and testing, spaced at 30-day intervals, were funded by DTED and Hennepin County and are planned. Plans for permanganate injection into the deeper aquifer, which underlies both the El site and the Gill Brothers site, are being reviewed. The currently approved MPCA plan contains requirements for over 100 injection points; the plan is being reviewed to determine whether fewer injection points can be utilized to inject larger volumes of permanganate but retain cleanup effectiveness. If this plan is revised and approved by both MPCA and the City, there is potential for considerable cost savings. 3. Cleanup activities at Gill Brothers site: Deeper groundwater contamination (leaching from the El site) is present at the Gill Brothers site, and MPCA has directed El to install new ground water remediation equipment at this site. The new recovery well has been installed, and its discharge pipe tied into the existing sanitary sewer. The concrete slab for the new remediation building is scheduled to be poured in June, with installation of the new remediation building expected to be completed by the end of June. Staff expects that this remediation system will be fully operational in July. Additional Background On May 27, 2003, the Council scheduled a public hearing to initiate the process for vacating a public alley easement at this site. The easement is no longer necessary and vacation of the easement will aid in redevelopment of the parcels. At tonight's Council meeting, a public hearing is being conducted to consider the alley vacation. On January 13 2003, the Council approved a cost-sharing agreement with the Responsible Party (RP), Electronic Industries to facilitate the RP cleanup match funding and outline cleanup responsibilities. Electronic Industries is in the process of obtaining a building permit for the new remediation system and scheduling remediation activities. On April 8, 2002, the City Council approved resolutions authorizing staff to apply for cleanup funding from DTED and Hennepin County for the City-owned site at 7516 42nd Avenue North, the former Electronic Industries site. On July 23, the Hennepin County Board approved funding for the project in the amount of $31,125. In June, DTED approved $217,860 for the project. On July 22, the Council passed a resolution formally authorizing the DTED grant agreement. On August 12, the Council passed a resolution formally Request for Action Page 6 6-23-03, authorizing the Hennepin County grant agreement. As mentioned previously, the City initiated the grant process in order to expedite the cleanup of the site and market the property for commercial redevelopment. In the spring of 2000, the City applied for and received a Contamination Investigation and Remedial Action Plan (RAP) Development Grant from DTED to determine the extent of contamination, develop a RAP and prepare for the submission of the follow-up DTED cleanup grant. The RAP was completed during the fall of 2001. The City was funded by DTED in the amount of $217,860, Hennepin County in the amount of $31,125 and Electronic Industries is responsible for $82,995 (25% match). The total cleanup costs are estimated at $331,980. At the time of grant submission, the City had received a proposal for the office condominiums. Using this development proposal, DTED rated New Hope's application as #1 in the State due to the economic development and job creation potential. Culvers/RSDS came later in the process and staff suggested that they provide a joint development proposal with the office condominium developer which they have done. At the time the contamination was discovered in 1984, the MPCA identified Electronic Industries as the responsible party. With this designation, Electronic Industries became legally responsible for the investigation and cleanup of the contaminants. By the early 1990s, the MPCA and Electronic Industries developed a Remedial Action Plan (RAP) that identified the stages and timeline for the site cleanup. This RAP called for the site to be gradually cleaned over a span of 20-30 years. Now that the additional site investigation is complete and the extent of actual contamination is known, the initial 20-30 year cleanup plan was determined inadequate as it would take many more years to complete in its present state. On February 11, 2002, the Council authorized staff to obtain a property appraisal update for 7516 42nd Avenue North, the former Electronic Industries site for the cleanup grant proposals. Also, the Council authorized staff to obtain an appraisal update of all three accumulated sites, post-cleanup (7500, 7516 and 7528) to be used for discussions with developers regarding the potential sale and redevelopment of the property. The accumulated site appraisal was completed on April 22, 2002 and lists the remediated value at $730,000. Aisc on February 11, in order to continue activities toward the cleanup and redevelopment of'this site, the Council approved an updated Request for Proposals (RFP) for the site and authorized staff to distribute the RFP. The Council approved a similar effort in February 2000. At that time, staff distributed the proposal information to thirty-eight (38) potential developers. The second time, a specific effort was made to target Brownfield developers as RFP recipients. Staff sent the updated RFP to one hundred and eighty-five (185) developers, many with significant Brownfield redevelopment experience. In addition, staff sent the RFP to the original list developed in 2000, for a total of two hundred and twenty-three (223) recipients. The attached development proposal was received as a result of the RFP effort approved in the spring of 2002. Staff coordinated with the Hennepin County Assessor's and Property Tax Offices to obtain a preliminary estimate of taxes for this proposal. The Hennepin County Assessor's Office provided an estimated overall site value with the improvements and environmental remediation at $1.8 million. Using 2003, tax rates, the Property Tax Office estimated that overall property taxes would be $71,000 with the City's share being roughly $12,000 per year. The Sunshine Factory currently has an agreement in place with the City for parking on the site. That agreement can be terminated at any time with a sixty (60) day notice. Currently, staff does not believe that the cleanup activities will interfere with parking on the site. When redevelopment activities near, staff will request a meeting with the Sunshine Factory to discuss future parking and to terminate the agreement. Staff has notified the Sunshine Factory that cleanup grants were funded for the site and that at some point in the near future parking on the site would no longer be permissible. Cleanup activities have started. The first two rounds of contamination neutralizing injections and testing took place in early May and June. The site cleanup should be completed by fall 2003. Redevelopment activities could begin shortly thereafter. Reqdest for Action Page 7 6-23-03 The property is zoned CB, Community Business. The site is properly zoned for both components of this proposed development. Due to the joint development, shared parking and access and individual ownership of the office uses, the City Planner has indicated that a PUD would be appropriate in this case. Although the Council is considering the institution of park dedication fees at tonight's meeting, staff does not believe that this proposal would be subject to those fees due to the fact that the City has been working with the developers for the past several months. Other developments that have started prior to the institution of the park dedication fee that do not require payment include: Woodbridge Senior Cooperative, Plymouth Heights Pet Hospital and St. Joseph Catholic Church. FUNDING The City purchased the three properties including the contaminated property entirely with Acquisition and demolition costs for all three properties equaled $1,091,709. TIF funds. The DTED Contamination Cleanup Grant can pay up to 75% of the cost of cleaning up the contamination. Electronic Industries has agreed to provide the 25% match. The total estimated cost to implement the RAP is $324,218. Clay investigation costs incurred by Electronic Industries have been included in the overall project cost at the request of Electronic Industries in the amount of $7,762, increasing the total cost to $331,980. Electronic Industries is responsible for providing $82,995 in matching funds. DTED has approved $217,860 in cleanup funding. Additional funding in the amount of $31,125 has been approved by Hennepin County. The City is not responsible for contributing funds for site cleanup. RECOMMENDATION Staff supports the development concept and recommends that the EDA direct staff to prepare a purchase agreement with the developers. Staff, including the Director of Finance is supportive of the purchase price. If the EDA directs staff to proceed, staff will bring a purchase agreement back to the EDA for consideration at a later date. ATTACHMENTS · Location Map · Letter of Intent, Culver's Restaurant · Letter of Intent, Office Condominiums · Site Plan · JCS Development, Inc., Correspondence, 10-28-02 · Frey Development, Inc., Correspondence, 1-24-03 · City Engineer Correspondence, 4-28-03 · EDA Minutes 3-10-03 · Diversified Environmental Correspondence, 6-11-03 4425-: '"----'; i 4424 4410 ~ 4$RD AVE N :Oi / ~ .... 4230 , · . , 4116 ~ ~ , : ~ ~ ] · 4124 ~ , ~ · ~ , . . ~Z ---------t ' --.' ' :'*' .~..:'. :- ..., } ~ - , ~ t ~ . ~'~--~' · .; .,. ~}~.~-, ........ .. ,._,;.¢....: ~ .... , , ) · · . ~ ~-~ , .-,-~ -'- ~:,, , ~-~,' ....... ' · ,~, .~ ~, ~, ~o tn .... -- r · t ~.~ { ~I ~ 7~1~ '~I i~' ' ~---- '- -: :-~ RETAIL SITE DEVELOPMENT SERVICES June 17,2003 Mr. Kirk Mc Donald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 RE: LETTER OF INTENT Culver'$ Restaurant John Seibert of JCS Development, Inc. has asked Retail Site Development Services to represent him in his search for a Culver's restaurant site in the New Hope area. This letter shall serve to confirm JCS Development, Inc.'s intent to purchase a site on the northeast comer of 42nd and Quebec Avenues as defined on the attached plan and under the terms and conditions outlined below. PARTIES: City of New Hope ("Seller") and JCS Development, Inc., ("Buyer"). REAL PROPERTY: Seller will sell to Buyer a 55,500(+/-) square foot parcel (buildable) which is of adequate size to construct a building of approximately 4,500 square feet with a minimum of 70 parking stalls ("Real Property"). Seller represents that it will require proper cross easements for parking and access across the Real Property and the adjacent city owned property. AGREEMENTS: Seller and Buyer agree to negotiate in good faith and use their best efforts to enter into a Purchase Contract ("Agreement") and any operation and easement agreement which will set forth the terms and conditions mutually agreeable to Seller and Buyer. PURCHASE PRICE: Buyer shall pay to Seller the sum of $380,000.00 for the Real Property. Upon execution of the Agreement, Buyer shall deposit with the City of New Hope a non refundable fee in the amount of $500.00. In addition, a "Refundable Fee" of $2,500.00 will be submitted by Buyer to Seller upon execution by both parties of an Agreement. Seller shall provide an accounting of all expenditures from the Refundable Fee fund and Buyer will be billed monthly. The Buyer shall have 120 days after execution of the Agreement to waive all conditions contained therein and close on the Property. 5775 WAYZATA BLVD., SUITE 700 / MINNEAPOLIS, MN 952.525.2220 / 763.377.9002 (FAX) RSDSUS@AOL.COM $5416 RETAIL SITE DEVELOPMENT SERVICES' SURVEY: The Seller shall have a registered land surveyor prepare a certified topographical survey of the Real Property in accordance with both the then current Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (the "Survey") at the Sellers sole cost and expense. TITLE EVIDENCE: Seller shall immediately disclose to Buyer all encumbrances, restrictions, easements, and liens which affect the Real Property. Seller shall furnish to Buyer a commitment ("Title Commitment") for an ALTA Form B Owner's Policy of Title Insurance, deleting standard exceptions and including affirmative insurance regarding zoning, contiguity, appurtenant easements and such other matters as may be identified by Buyer, with coinsurance and arbitration provisions deleted, together with legible copies of all documents listed as exceptions to the title. Seller shall transfer the Real Property to Buyer by General Warranty Deed. PRORATIONS: Seller shall pay the costs of the title evidence, state deed tax, and all special assessments levied, pending or constituting a lien against the Real Property as of the closing date including without limitation any installments of special assessments including interest payable with general real estate taxes in the year of closing. Seller will pay general real estate taxes payable in the year prior to the year of closing and all prior years. Buyer shall pay the cost of the owner's title policy and sales tax. Seller and Buyer will pay one-half of customary closing fees. General real estate taxes payable in the year of closing shall be prorated by Seller and Buyer as of the closing date based upon a calendar year. CONDITION OF REAL PROPERTY: Seller shall represent that all utilities are available and adequate at the property line. Buyer acknowledges that they will be responsible for a storm sewer fee that will not exceed $23,550.00. Seller further represents and warrants that the Real Property is zoned and suitable for development of a Culver's drive-thru restaurant with up to 120 seats. ENVIRONMENTAL TESTS: Seller shall make representations as to the present and proposed environmental condition of the Real Property with respect to the presence of any hazardous substances or unsuitable soils in or about the Real Property. Seller shall also provide VIC Assurance Letters and VPIC Assurance letters stating that a Culver's restaurant can be constructed on the site and that no further action is required. REMEDIES: If Buyer defaults under the Agreement, Seller shall have the right to terminate the Agreement by giving written notice to Buyer. If Buyer fails to cure such default within thirty days of the date of such notice, the Agreement will terminate, and upon such termination Seller will retain the $2,500.00 Refundable Fee. If Seller defaults under this Agreement, Buyer shall have the right to seek specific performance and recover as damages from Seller all of Buyer's out-of-pocket costs and fees. It should be understood that this commitment is contingent upon approval of the site by Culver's Franchising Systems, Inc., JCS, Inc. obtaining acceptable financing for the 2 RETAIL SITE DEVELOPMENT SERVICES development of a Culver's, and of the terms and conditions set forth herein and upon the Seller and Buyer negotiating and executing a final Agreement satisfactory to both parties. Sincerely, Dexter J. Marston CC: John Seibert, JCS Development, Inc. Bernie Frey, Frey Development, Inc. 3 RETAIL SITE DEVELOPMENT SERVICES June 17,2003 Mr. Kirk Mc Donald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 RE: LETTER OF INTENT Frey Development, Inc. Bernie Frey of Frey Development, Inc. has asked Retail Site Development Services to represent him in his search for an office condominium site in the New Hope area. This letter shall serve to confirm Frey Development, Inc.'s intent to purchase a site on the northeast corner of 42nd and Quebec Avenues as defined on the attached plan and under the terms and conditions outlined below. PARTIES: City of New Hope ("Seller") and Frey Development, Inc., ("Buyer"). REAL PROPERTY: Seller will sell to Buyer a 54,200(+/-) square foot parcel (buildable) which is of adequate size to construct eight office condominium units with 55 parking stalls ("Real Property"). Seller represents that it will require proper cross easements for parking and access across the Real Property and the adjacent city owned property. AGREEMENTS: Seller and Buyer agree to negotiate in good faith and use their best efforts to enter into a Purchase Contract ("Agreement") and any operation and easement agreement which will set forth the terms and conditions mutually agreeable to Seller and Buyer. PURCHASE PRICE: Buyer shall pay to Seller the sum of $130,000.00 for the Real Property. Upon execution of the Agreement, Buyer shall deposit with the City of New Hope a non refundable fee in the amount of $500.00. In addition, a "Refundable Fee" of $2,500.00, will be submitted by Buyer to Seller upon execution by both parties of an Agreement. Seller shall provide an accounting of all expenditures from the Refundable Fee fund and Buyer will be billed monthly. The Buyer shall have 120 days after execution of the Agreement to waive all conditions contained therein and close on the Property. 5775 WAYZATA BLVD., SUITE 700 / MINNEAPOLIS, MN 952.525.2220 / 763.377.9002 (FAX) RSDSUS@AOL.COM 55416 RETAIL SITE DEVELOPMENT SEEVICES SURVEY: The Seller shall have a registered land surveyor prepare a certified topographical survey of the Real Property in accordance with both the then current Minimum Standard Detail Requirements for ALTA/ACSM Land Title Surveys (the "Survey") at the Sellers sole cost and expense. TITLE EVIDENCE: Seller shall immediately disclose to Buyer all encumbrances, restrictions, easements, and liens which affect the Real Property. Seller shall fumish to Buyer a commitment ("Title Commitment") for an ALTA Form B Owner's Policy of Title Insurance, deleting standard exceptions and including affirmative insurance regarding zoning, contiguity, appurtenant easements and such other matters as may be identified by Buyer, with coinsurance and arbitration provisions deleted, together with legible copies of all documents listed as exceptions to the title. Seller shall transfer the Real Property to Buyer by General Warranty Deed. PRORATIONS: Seller shall pay the costs of the title evidence, state deed tax, and all special assessments levied, pending or constituting a lien against the Real Property as of the closing date including without limitation any installments of special assessments including interest payable with general real estate taxes in the year of closing. Seller will pay general real estate taxes payable in the year prior to the year of closing and all prior years. Buyer shall pay the cost of the owner's title policy and sales tax. Seller and Buyer will pay one-half of customary closing fees. General real estate taxes payable in the year of closing shall be prorated by Seller and Buyer as of the closing date based upon a calendar year. CONDITION OF REAL PROPERTY: Seller shall represent that all utilities are available and adequate at the property line. Buyer acknowledges that they will be responsible for a storm sewer fee, but such fee shall not exceed $23,550.00. Seller further represents and warrants that the Real Property is zoned and suitable for development of an office condominium project. ENVIRONMENTAL AND GEOTECHNICAL TESTS: Seller shall make representations as to the present and proposed environmental condition of the Real Property with respect to the presence of any hazardous substances or unsuitable soils in or about the Real Property. Seller shall also provide VIC and VPIC Assurance letters stating that the office condominium project can be constructed on the site and that no further action is required. REMEDIES: If Buyer defaults under the Agreement, Seller shall have the right to terminate the Agreement by giving written notice to Buyer. If Buyer fails to cure such default within thirty days of the date of such notice, the Agreement will terminate, and upon such termination Seller will retain the $2,500.00 Refundable Fee. If Seller defaults under this Agreement, Buyer shall have the right to seek specific performance and recover as damages from Seller all of Buyer's out-of-pocket costs and fees. It should be understood that this commitment is contingent upon obtaining acceptable financing for the development of an office condominium project, satisfaction of the terms 2 RETAIL SITE DEVELOPMENT SERVICES' and conditions set forth herein and upon the Seller and Buyer negotiating and executing a final Agreement satisfactory to both parties. Sincerely, Dexter J. Marston CC: Bernie Frey, Frey Development, Inc. John Seibert, JCS Development, Inc. 3 I - ~-I .............. ~ ................. ~I ~ II ......... ' .... ~l-f:z:L__ '--~ 42ND AVENUE NORTH 311'-~ 1/2" ~ ~ I~V~, ~T TO m ~ ~ / - ~ ~SOTA ASSOC.,INC. ~ t'Hl~er' s Itestaur;~nl October 28, 2002 City of New Hope To Whom It May Con~n: 1. Proposed Project: A. I am proposing to develop a 120'seat Cuiver's Restaunmt inNew Hope, MN. B. 1 Quick Service Restaurant spec~ in bmgews and frozen custar~ B2 52,000 square feet B$ 60 employes- 5 salary ~nploye~s ranging in ~lnry from $25K-$40K depeading on experience, 8-12 other full time employees and the remaining part-time employees paid hourly ranging ~om $6/hr m $12/hr. B.4 Hoursofopemtion: 10:30am-10pmSevendaysawee~ B.$ Traffi~ needs: Will provide 61 pari~E spaces even though requirement is less. B.6 Min~l l~ B.7 See At~.he~ . 2. Firm Organization: SCS Development has been established ns a developer for 5+ years. 3. Professional Ot~nniznfion: see attached profile 4. Experience A. Cuivers R~t~mnm~s: Plymouth, MN; Forest Lake, MN . AmerieInn Holels: Ankeny, IA; Austin, MN; Bolingbrook, IL; Cedar Falls, IA; Coon Rnpids, MN; Davenlmrt, IA; Eagle, CO; Lincoln, NE; Long Lake, M~; Moose ~ ~; New Londm~ wi; R, meau, MN; rharp, WL B. Projects simfln~ in size and use: Cttlvers of Plymomit, MN and Cntvers of Forest Lake, MN. C. Bmwn6~ld site developmems: Forest Lake, MN Ref~ A. J'nn Goeke 515-964-1587 B. Troy Boelman-Community NafionalBank 319-291-'2000 C. ~Wnldmn-ttttKCon.m. ncfion 952-401-1670 D. GeoffBennedict- Vanguard ConsUucfion 651-248-1510 E. Ion Kennedy- Ame~-jclnn ~nnl 952-294=5000 PO Box 836- Anoka, MN 5'5303 Over eight adcfz~ 1394't Vinewocd Ln Dayton, MN 55327 Ph: (75'3) 421-2335 F:c. ('7S3) 421-05'49 Scope and Cost of Services A. Additioual work rusks Envioramenlal Phase 1 - $3,000 Euvironmenml Phase 2 - $$,000 Oeot~chnical Composition Testing - $2,500 Surv~- $4,000 Soil ~ons - depeudant upon soil ~ r~sults B. Estimate cost of development 7. Additional Information 8. This information is provided in the following profile on SCS Developmc-nt, Inc. Sincerely, John F. Seibert President Frey Developmenf, Inc. Office Condominiums ~ ~,,~^... ~o~. M,,,,~o,,. ,~,~ 5~4~ Frey Development, Inc. 612~27.4201.612.8274~1 ~ February24,2003 Mr. Dexter Marston Retail Site Development Services 5775 Wayzata Boulevard, Suite 700 Minneapolis, MN. 55416 Re: 7500 42nd Avenue North Dear Mr. Marston: Please consider this correspondence as notice of our interest in developing an office condominium project on the east half of the above-mentioned parcel. Our project is part of a mutual proposal with JCS Development, Inc. JCS Development, Inc. will develop a 120-seat Culvers Restatwant on the west half on the parcel. Our concept would involve the construction of seven office condominium units. These units would be individually owned. This concept is similar to a residential townhome project where the owner owns the land beneath their unit as well as their pro-rata share of the common area. A unit size can range from 1,300 to 3,000 square feet. Each trait would have a private entrance, individual signage, custom designed interior plus the convenience of parking at your fxont door. Many small business owners desire the benefits of owning their business space but financially they cannot afford to build or purchase a single user building. This type of development provides small business owners that opportunity. Typical users may include professional offices, medical offices, financial offices and manufacturing representatives. The number of employees that occupy each space will vary depending on the use. A 1,500 s.f. unit will typically provide enough space for a staffof6 to 8. Individual signs at each entrance will identify each unit. A monument sign identifying the project will be installed along 42nd Avenue North. Parking provided will be based on the City of New Hope's parking ordinances. Hours for a typical user are 8:00 to 5:00. The Dunsmore Company of Minnesota and Frey Development, Inc will develop this project jointly. Tom Dunsmore has developed ~md sold over 100-office condominium units in six locations in the Twin Cities metropolitan area in the past three years. I have been involved in the development, construction and marketing of commercial real estate for eighteen. Please see attaches resumes. Attached please find a conceptual site plan as well as plans and elevations of similar office condominium projects in the Twin Cities metropolitan area. We are excited about this site's potential and are confident in its success. Thanks for your time. Sincerely Bernie Frey K i :',k .m. c D o p ~ ] d Ci+.y of Ne~ Hope &4O! XYLON AVE N NE~ HOPE MN 55428-4.898 VOLUME 19, NUMBER 7 ©2003 Law Bulletin Publishing Co. ~,~,¢.~ ~-[~-"~,~,,~,~ ~,..,~4.h .,~: · '~ ~-' c,~ ~; ~ FO CU$: SUBURBAN OFFICE In April Atlas Homes plans to break ground on the two-building Lakeway Office Park in Maple Grove. COURTESY OF ATLAS HOMES Townofli es appear around the metro OFFICE CONDOS OFFER ALTERNATIVE TO LEASES by Iessica Griffith I oOu~t T_r.ombley did not mind working t o~ his Champlin home when he started his machinery sales comnanv tw~ years ago.. But now, with a sale~m~n' o~, board ant a need for administrative he is ready for a more traditional office with room to display his m'oducts It s Ume, says Trombley, president of Focus Die Mold Solutions Inc. Rather than lease space, Trombley prefers to own property, which is an expensive proposition for a small busi- ness owner. His solution was to purchase a 2,500 square foot unit in Ravia Real Estate's upcoming townoffice project, scheduled to break ground in Champlin later this spring. Throughout the suburbs, small devel- opers are building and selling townof- rices to entrepreneurs like Trombley who would prefer to be owners, not tenants. Townoffices, also called office condos, usually resemble townhomes from the outside. But instead of housing a resi- dence, these buildings contain office spaces ranging from 1,000 square feet to 5,000 square feet or larger. Price tags can range from $150,000 to $600,000 per unit. "The small businessman needs a place he can call his own, but to do it on his )wnis prohibitively exoensive" sa,,~ avid Fleck of DaVem In~e. in St.'Paul.''~ In the past five years, Ficek has devel- oped 144 units of townoffices in Inver Grove Heights, Burnsville, Eden Prairie, Roseville, Shoreview and Little Canada. One of his more recent projects is Fem- TOWNOFFICES lo,ex=ge ;0 COl~ ing~ to tl Cit~ a tg ing ele~ StOl' WOti roo! vise rest: suc! saln Il- opel' 15-a an u tion sout. .Wellington Management acauires on t; tion~ :nergy Park's historic Bandana Sauam whe~ II< the ' grapi ~'LANS TO DEVELOP was represented in the transaction by totaling 857,000 square feet in the ny sc PORTION OF SITE Welsh Cos. Welsh officials would not Energy Park submarket. Some of the easy comment on the deal. ]~r-~,- ,'r~,,,~-*;~ :- ~...~ ~-. . ,- , ct~t~ Page 10 "rowno ces opers may not see townoffices as a prof- itable enough business," Gleason says. Small developers also work from small- er offices and therefore are more aware of the need for this type of space, says Tami Rangel, director of marketing and commu- nications at Ravia Real Estate in Bumsville. The townoffice concept has done quite well on the West Coast, Rangel says. That success spurred Ravia to build Minnesota yalley Townoffices on Portland Avenue Just off Highway 13 in Burnsville. The company expects to break ground on addi- tional sites in Champlin and Elk River later this spring and also plans to develop a sec- ond site in Bumsville. "The vision we had is to provide a place for business that does not have so much of a corporate feel, but offers the ability to work almost in the comfort of your own home," Rangel says. Minnesota Valley Townoffices range from 2,800 to 3,800 square feet and are arranged three to a building, so a tenant can buy multiple units and break down walls for more space. Each unit includes a kitchen with refrigerator, dishwasher, instant hot water and other amenities. Sale prices are in the upper $300,000s to upper $500,000s, Rangel says. Townoffice projects tend to appear in suburbs, both inside and outside the Inter- state 494 and 694 loop. "These owners don't live downtown. However, some of our buyers commute to downtown and we provide another alterna- tive to having a large commute:' she says. "We've had a pretty decent rl . that." sponse to Other buyers work in Burnsville or sur- rounding areas but are choosing to relocate in order to own their offices. "We see a true vacuum in the market when it comes to small business owners who want to acquire property for thei[,, busi- ness and add it to the balance sheet,' says Frank Blondetto, vice president of land development at Manley Land Develop- ment, a residential and office development company that is building its first townof- rice project in Apple Valley. Blondetto expects to break ground this spring for Knob Ridge Business Park; west of Pilot Knob Road and adjacent to Coisn- ty Road 42. The development will consist of 11 three- and four-unit buildings with a total of 38 units and 66,000 square feet. Prices will range from the low$200,000s to upwards of $400,000. In addition to offering a space alterna- tive for small business, townoffices also provide a good transition between differ- ent types of land use. The projects usually are built on land zoned for commercial or industrial but often resemble residential developments, says Jenni Tovar, a Burnsville city planner. "We are 97 percent developed," Tovar says. "The townoffices are good uses for more difficult sites to develop, or for rem- nant pieces of land. Some of those lots are smaller -- under two acres -- and this is a way for those sites to become viable com- mercial property." DaVem ~lso [milt a townoffice project in Burnsville, and the city is reviewing plans fmOernt~W.o additional townoffice develop- Tom Link, director of community devel- opment for Inver Grove Heights, agrees townoffices can work well on land that is difficult to develop. For example, DaVeru built its Blackber- ry Townoffice project at Upper 55th Street and Blaine Avenue, just east of Highway March 31, 2003 From page 1 hrook Townoffice Park, north of Highway :;5 on Fembrook Lane in Plymouth. Fernbrook consists of six, three-plex buildings for a total of 18 units. Each unit contains two levels of 1,200 to 1,300 ~quare feet per level, with a full basement walkout. All have sold, and Ficek is proposing a second project in Plymouth. The Plymouth City Council views tnwnoffices as an opportunity for small t~sinesses to grow in the community, says Barb Senness, planning manager for the city. "Not everyone wants to rent," she says. Low interest rates mean cheap mort- gages for those who want to own an office. Townoffice buyers tend to be owners of small, professional businesses. Many are insurance brokers, doctors, attorneys and n,anufacturer's representatives. "Given the mortgage rates today, b,,uying might even be cheaper than leasing, says · )m Stella, vice president with United Properties. "Interest rates are driving the demand." "It's that age-old feeling that you'd rather own real estate;' adds Dan Gleason, also a vice president with United Proper- ties. He says the interest rates are spurrin~ demand for townoffices even though th~ rest of the office market is fiat in terms of development. That does not mean United Properties and other large developers will start build- lng townoffice · "My read onpr°Jeers' it would be that the small, entrepreneurial developers see an opportu- nity to make some money, but larger devel- 52 in lnver Grove Heights. "The site they chose has very smep slopes, and because these townoffices have smaller building pads, they were able to design them in such a way that they are sensitive to the environmental feature:; of the land:' Link says. DaVem also built Blackberry on a cmn- mercial site that abuts a residential devel- opment. "They essentially look like townhomes, which makes them a good buffer to put at the edge of commercial developmeat" Link says. ' Brothers Mark and Michael Way de.zid- ed to branch into townoffice development after they looked at some of the projects and realized they could apply their residen- tial skills to office condos. As Atlas Homes, the Ways have built eight custom houses. They plan to break ground in April on Lakeway Office Park, off Interstate 9,1 on East Fish Lake Road in Maple Grove. The project will consist of two buildings, .each with 20, 1,250 square foot units. Prices will range from $150,000 to $170,000. Michael Way says demand fo'r the townoffices is strong. "Without advertising, we;ve already presold 10 units," he says. adding that he does not think buyers will have a problem reselling the units should they decide to move. The impact of all the new townoffice units is yet to be observed, SteHa says, and it is unclear whether owners will have dif- ficulty selling their offices if their business needs change. ne aowns~de is if you grow or c, on- tract, you are stuck with the building,' he says. Jessica Griffith is a St. Pa"Lhased freelance writer. Engineers & Architects Bonestroo, Rosene, Anderlik and Associates, inc. is an Affirmative Action/Equal Opportunity Employer and Employee Owned Principals: Otto G. Bonestroo, P.E. Marvin L. Sorvala, P.E Glenn R. Cook, P.E Ro0ert G Schunicht, P.E. Jerry A, Bourcion, P.E Mark A. Hanson, P.E Senior Consultants: Roi)ed W. Rosene, P.E. Joseph C. Andedik, P.E Richard E. Turner P.E. Susan M. Ei)edin, Associate Principals: Keith A. Gor<~on, P.E Robert R. Pfefferle, P.E Richard W. Foster P.E David O, Loskota, P.E. Michael T. Rautmann, P.E Ted K Field. P.E Kenneth Anderson, P.E Mark R. Roils, P.E. David A Bonestroo, M.B.A Sioney P. Williamson, P,E, L.S. Agnes M. Ring. M.B.A. Allan RickSchmidt, P.E Thomas W Peterson. P.E James R Maland, P.E. Miles B. Jansen, P.E. L. Phillip Gravel Ill, PE Daniel J. Edger;on. P.E Ismael Martinez. P.E. Thomas A. Syfko. P.E. Sheldon J. Johnson Dale A Grove, Thomas A Roushar. P.E. Robert J. Devery. P.E Offices: St. Paul, St. Cloud, Rochester and Willmar, MN M~lwaukee, WI Chicago, IL Website: www.bonestroo.com TO: FROM: CC: DATE: SUBJECT: Ken Doresky Vince Vander Top Kirk McDonald, Mark Hanson, Guy Johnson April 28, 2003 7500-28 42nd Avenue Water Quality Requirements Our File No. 34-Gen E03-04 This memo outlines a recommended fee for regional water quality improvements for this site. This property will contribute a cash fee toward regional improvements because a water quality pond cannot be constructed on site for environmental reasons. This recommendation is consistent with the Surface Water Management Plan and with past conversations with prospective property developers. The total fee will represent the cost that would have been realized to construct a pond and the value of the land occupied by the pond. Site considerations/Pond Characteristics · The site area is slightly less than 110,000 SF. · A water quality pond for this site would include 16,000 cubic feet of wet volume. · If the pond were 5 feet deep on average and proper sideslopes and benches were included around the pond, 4,900 SF (70' x 70') would be required for the pond. Pond Construction Costs Common Excavation Outlet Structure, Rip Rap, & Pipe Restoration, Landscaping Construction Cost Total Indirect Costs (25%) Land Value Total Contribution 1,500 CYs ~ $10/CY Lump Sum Lump Sum 4,900 SF ~ $4.00/SF $15,000 $5,000 $2,O00 $22,O00 $5,500 $19,600 $47,100 2335 West Highway 36. St. Paul, MN 55113 · 651-636-4600 · Fax: 651-636-1311 The value of this contribution can be adjusted based on the agreed value of the land. $4.00/SF was used based on past discussions. A typical rate of 25% was used for indirect costs. These costs include legal, engineering, and admimstrative costs for easements, design, and other project management activities. 2335 West Highway 36 · St. Paul, MN 55113 · 651-636.4600 · Fax: 651-636-1311 property, they would provide an "Option Agreement" on the property for a maximum term of no more than ninety days. This would allow sufficient time for' them to review documents, prepare plans and obtain the necessary approvals before closing on the property. Mr. McDonald stated the developer would like a tentative agreement from the EDA at this time before they incur additional expenses. Mr. McDonald stated staff is supportive of the development and recommends meeting with the city's financial consultant to discuss the financial implications of the project and taxes that would be generated by the project. He stated representatives of the Plymouth Heights Pet Hospital are in attendance and are available to answer questions. President Enck questioned whether the developer could use the pond for part of their green space requirements. Mr. McDonald responded affirmatively. The EDA expressed support for the project. Con,missioner Cass'en disclosed that she has had past business experiences with Mr. Ludovissie of Quest Real Estate. She also mentioned that she is a pet hospital customer, but there is no conflict of interest. Commissioner Cassen questioned the accessibility of the pond by the city. Mr. McDonald stated the city would require a 20-foot wide access easement between 49a Avenue and the pond. Mr. McDonald pointed out that the property is zoned I-1, Industrial, and pet hospitals and veterinary clinics are not currently listed as permitted or conditional uses in the I District..However, staff and consultants are currently working on a modification to the code to allow animal day cares in the I District and the Planning Consultant believes this use would also be appropriate for that Zoning District. Commissioner Sommer expressed support for the project but acknowledged concern regarding the sales price. He mentioned the city purchased the property six years ago for $195,000, and a higher sales price would recoup some of the city's expense. President Enck pointed out that tonight's action is only the beginning of the process. The EDA unanimously expressed support for the project and directed staff to work with Quest Real Estate on behalf of Plymouth Heights Pet Hospital. IMP. PROJECT 740 m5erly #665) New Hope EDA Page 2 President Enck introduced for discussion Item 5, Discussion Regarding Joint Development Proposal for City-Owned Property at 7500-7528 42nd Avenue North, the former Electronic Industries Site (Improvement Project No. 740). Mr. Ken Doresky, Commtmity Development Specialist, stated staff is requesting EDA discussion and direction regarding a joint development proposal from Retail Site Development Services for the city-owned site at 7500-7528 42~a Avenue North. The development proposal is for two uses: a Culver's restaurant on the western portion of the site and three office condominium buildings (with seven separate ownership units) on the eastern portion of the site. He stated the intention of the presentation is to inform the EDA of the proposal and to seek direction for farther action. He stated representatives from both parties are in the audience. Mr. Doresky stated the City has been working for several years to initiate the environmental cleanup process and subsequent commercial redevelopment of this site. He reviewed costs of $500,000 for the 7540 42~a Avenue property (purchase price of $450,000 plus demolition costs of $50,000); and $71,000 for 7516 42~d March 10, 2003 New Hope EDA Page 3 Avenue (purchase price of $40,000 pins demolition costs of $31,000); and $482,000 for acquisition of 7500 42"a Avenue North. The total cost for the three properties was $1.1 million. Mr. Dan Donahue, City Manager, clarified that these costs were not paid by property tax dollars but rather by the redevelopment tax increment district. Mr. Doresky stated in conjunction with cleanup funding grant applications submitted during the spring of 2002, the Council approved a Request for Proposal (RFP) process for the site. As a result of the RFP, the City received a proposal for the office condominium component of the current proposal. Using the office condominium proposal in the cleanup grant applications, the Department of Trade and Economic Development (DTED) rated New Hope's application #1 in the State of Minnesota due to the economic development and job creation potential. DTED subsequently approved a fully funded grant in partnership with a Hennepin County approved grant. Culver's Restaurant/Retail Site Development Services came later in the process and staff suggested they provide a joint development proposal with the office condominium developer. He reviewed a preliminary site plan showing a Culver's R~staurant on the western portion of the site and the office condominiums along the railroad tracks on the east side of the property. He stated the proposal states: "RSDS will serve as the coordinator of the New Hope project with Dexter Marston acting as the contact person. Dexter Marston is a licensed real estate broker in the State of Minnesota. RSDS's fee will be $40,000 for the services related to the New Hope project. The services include: providing buyers for the site (JSC Development (Culver's) and Frey Development (Office Condominiums)) and overseeing the project through City approvals and closing. The City will be responsible for this fee and should include this cost with their other expenses when determining the value of the land. At this time I expect that the two prospective buyers will represent themselves in negotiations for the site. If either party chooses to have RSDS represent their interests during the negotiations, the City of New Hope will be informed of that change." Mr. Doresky stated staff is supportive pursuing the redevelopment of this site with this development proposal, but has some concern about the fee being requested. Staff recommends that the EDA authorize staff to pursue this matter further and meet with the City's financial consultant and the developer to discuss the financial implications of the project. Staff would propose that the City and the developer split the cost of the financial analysis 50/50 on this site, due to the fact that it is City owned. Staffwill then return to the EDA for further direction. Discnssion ensued regarding the RSDS's proposed fee of $40,000. It was noted that the city has never paid this type of a fee in the past. President Enck expressed concern about three separate buildings. He also expressed his reluctance to approve a $40,000 real estate service fee. Commissioner Cassen pointed out if an agent is representing a buyer/developer, they typically are the ones to pay for the real estate commission; however, it is negotiable. She commented that the $40,000 fee should go into the project cost and if Mr. Marston is representing the developers then he could negotiate it with them. Commissioner Cassen was supportive of the development and layout with three separate buildings for office condominiums. Commissioners Collier and Sommer also expressed support for the project. Commissioner Sommer commented that he likes the ownership option for small bnsinesses. March 10, 2003 ADJOURNMENT President Enck acknowledged agreement to the concept but provided the following concerns regarding the configuration: excessive curbcuts, poor traffic circulation, the three office buildings back up to the railroad tracks with no access to the rear, and lack of green space. He also noted the need for a property owners association similar to a townhome association. The EDA was supportive of staff working with the developers, but clarified that the EDA objects to payment ora $40,000 fee. Mr. Donahue interjected that a current planning study of the 42nd Avenue area includes an office analysis that will determine if there is a need for office space. Mr. McDonald stated the information may be available within two months. Commissioner Cassen noted that Frey Development may have already conducted a survey. Mr. Bernie Frey, Frey Developmem, was recognized. He stated the office condominiums are geared for sn~, lief businesses that may desire to own rather than lease property and cannot financially afford to purchase property and construct a single user building. He stated a unit size can range from 1,300 to 3,000 square feet and the typical users are professional offices. He reported on the successfulness of past projects. He pointed out that a building with three units is the most appealing environment as the middle unit has a balcony and each of the side units has side windows. He stated the average price is $125-130 per square foot. There would be an office association similar to townhome association agreements. Mr. John Seibert, President of JCS Development Inc., was recognized. He stated they are very interested m the site for construction of a Culver's Restaurant. He asked the EDA to reconsider its position on the realtor fee due to the uniqueness of the situation. He noted the city is selling the property and the seller normally pays a realtor commission. The EDA directed staffto proceed to work out issues with the developers. Motion was made by Commissioner Collier, seconded by Commissioner Sommer, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 9:17 p.m. Res ectfully submitted, Valerie Leone City Clerk New Hope EDA Page 4 March 10, 2003 Doresk}/Ken From: Sent: To: Subject: Doug Bergstrom [djb@highstream.net] Wednesday, June 11,2003 2:04 PM Doresky Ken El site status update Ken, > As requested, I have prepared a brief summary of current environmental activities and issues associated with redevelopment of the Electronic Industries site. > 1. Environmental Restrictive Covenant: The MPCA require that the City prepare an environmental restrictive covenant (filed with the property deed) relating to future use and development of the EI property. A draft of the covenant, containing the proposed environmental restrictions, has been developed and reviewed by City staff, and is currently at the City attorney's office for review. Once the City is comfortable with the covenant, it will be sent to MPCA and the State Attorney General's office for their review and comment. At present, we hope to incorporate their comments and present the final covenant to the City Council at the July meeting. As currently drafted, the covenant will prevent any future residential uses; the MPCA has no concerns relating to the uses proposed by the current interested developers. The covenant lists future triggering activities that will need review and approval of the RCRA group of the MPCA, as well as the City, prior to any construction activities. These activities include excavation and dewatering in certain areas, monitoring well sampling construction and access, active soil vapor venting under all buildings, maintenance of pavement cover, snow storage, and direction of all runoff into storm sewers; monitoring and mitigation plans will need to be submitted to MPCA when site plans are firm. It is my understanding that the City will take responsibility for development and implementation of these monitoring and mitigation plans. > 2. Cleanup activities at the EI site: Cleanup activities (subsurface permanganate injections into the shallow ground water) have begun, and the first two rounds of injection and testing took place in early May and early June. Testing results relating to the effectiveness of the first round of injections are expected in mid-June. Three additional rounds of injections and testing, spaced at 30 day intervals, were funded by DTED and Hennepin County and are planned. At this time, we still plan for application to MPCA for approval to decommission existing monitoring wells and remediation equipment at the site in early fall, 2003. If the testing results of the permanganate injections are favorable, it may be possible to make this request earlier. In either event, we expect that MPCA will expedite our request and allow redevelopment to begin in fall, 2003. Plans for permanganate injection into the deeper aquifer, which underlies both the EI site and the Gill Brothers site, are being reviewed. The currently-approved MPCA plan contains requirements for over 100 injection points; the plan is being reviewed to determine whether fewer injection points can be utilized to inject larger volumes of permanganate but retain cleanup effectiveness. If this plan is revised and approved by both MPCA and the City, there is potential for considerable cost savings. > > 3. Cleanup activities at Gill Brothers site: Deeper groundwater contamination (leaching from the EI site) is present at the Gill Brothers site, and MPCA has directed EI to install new ground water remediation equipment at this site. The new recovery well has been installed, and its discharge pipe tied into the existing sanitary sewer. The concrete slab for the new remediation building is scheduled to be poured next week, with installation of the new remediation building expected to be completed by the end of June. We expect that this remediation system will be fully operational in July. > > I hope that this summary is useful to you. If you have any questions, or wish additional information, please contact me at your convenience. TOWN OFFICE DEVELOPMENT NEW HOPE, Mohagen Hanson SITE PLAN Al.0 EDA ACtiON Originating Depa~ment Approved for Agenda Agenda Section Community Development 6-23-03 EDA ~ Item No. By: Kirk McDonald and '~'- . ~ Ken Doresk~ B~: ,~_ 5 DISCUSSION REGARDING DEVELOPMENT PROPOSAL FOR CI~ OWNED PROPERTY AT 5501 BOONE AVE. N. AND DIRECTION TO PROCEED (IMPROVEMENT PROJECT NO. 749) ACTION REQUESTED Staff is requesting EDA discussion and direction to proceed regarding the a~ached development proposal from Project for Pride in Living, Inc. (PPL), for the Ci~-owned site at 5501 Boone Ave. N. The proposal is for the construction of one seven~ (70) unit residential building including thi~y-five (35) owner-occupied condominiums and thidy-five (35) affordable rental units. Staff believes the proposal is wodhy of serious consideration because it addresses the following development, objectives. 1. Utilizes the entire site (previous proposals have only utilized a poAion of the site). 2. Meets the CDBG eligibili~ requirements, enabling the Ci~ to retain the $100,000 of CDBG funds it utilized to acquire the prope~ (and this issue must be resolved by October 2003). 3. Provides potential e~ra off-street parking for the Masonic/Nodh Ridge Complex. 4. Replace some existing rental units in the City which will be lost with redevelopment of new units. 5. Pays the Ci~ market value for the prope~, less soil correction costs. If the EDA is agreeable, staff would like to proceed to work with PPL to be~er define the project and to present a more detailed proposal later this summer. pOLICY/PAST P~CTICF City goal ~2 is to pursue the maintenance and redevelopment of commercial and residential propedies within the City. The EDA has been addressing the residential podion of this goal through the City's many housing activities, including coordinating with potential developers on the sale and development of City-owned prope~. BACKGROUND On June 17, 2003, staff received the a~ached development proposal from PPL for the Ci~-owned site at 5501 Boone Avenue Nodh. The proposal is for the construction of one seven~ (70) unit residential building including thi~y-five (35) owner-occupied condominiums and thiAy-five (35) affordable rental units. Staff ~reviousl~ met with PPL on April 28 and June 11 regarding this proposal. MOTION BY SECOND BY I:~RFAXP~NNING~Housin ~5501 Boone~Q - PPL Develo ment Pro osal.doc Request for Action Page 2 6-23-03 The EDA acquired 5501 Boone Avenue and a portion of the property at 5425 Boone Avenue in 1993, through eminent domain proceedings, with the intent to convey the property to CareBreak for the construction of an adult day care facility on the site. The total acquisition cost was $376,764 and the City used $100,000 in CDBG (Community Development Block Grant) funds towards a portion of the acquisition. In 1995, the City approved a plan for the construction of an adult day care center on the site and approved a rezoning of the property from I-1 to R-5, subject to the project proceeding. The project did not proceed, the rezoning did not take effect, and the land was not conveyed to CareBreak. In 1997, the City executed a Land Disposition and Third Party Agreement with Hennepin County. The Third Party Agreement shifted the responsibility/authority for developing the site from the City to the EDA. The LandDisposition Agreement states that the property must be utilized for the development of an adult day care facility or some other "CDBG eligible" use. If the property is not utilized for a "CDBG eligible" use, the CDBG funds must be repaid to the County or a portion of the land's sale price must be paid to the County. In 1999, Minnesota Masonic Homes, Inc. purchased the North Ridge Care Center and CareBreak was impacted by the acquisition. In 2000, a three-year extension was granted on the Land Disposition Agreement. The extension expires in October 2003, CareBreak since indicated that they would not be proceeding with the development of an adult day care center on the site. The EDA needs to find a suitable use for this property and ideally it would be a use that qualified under CDBG guidelines so that those funds could remain in the project. Staff has contacted Hennepin County and determined that this development, as proposed would quality as CDBG eligible. The PPL proposal is as follows: The proposal is for one seventy (70) unit residential building including thirty- five (35) owner-occupied condominiums and thirty-five (35) affordable rental units. "Proposed Development/Pricinq: Ownership/For Sale Units 18 8 9 Bedrooms/Square Footage 2 Bedrooms (910 sq. ft.) 3 Bedrooms (1200 sq. ft.) 4 Bedrooms (1490 sq. ft.) Sales Price $135,000 $157,500 $185.000 Rental Units 17 9 9 Bedrooms/Square Footage 2 Bedrooms (910 sq. ft.) 3 Bedrooms (1200 sq. ft.) 4 Bedrooms (1490 sq. ft.) Rent $7O0 $82O $1,036 Total Units - 70 (35 ownership & 35 rental) Parkin.q: Underground parking will be provided for 94 vehicles. Surface parking spaces for 102 vehicles (including 63 off-street surface parking spaces to accommodate North Ridge's overflow parking needs). Each unit will have at least one underground parking space and some of the larger units will have access to two spaces. Design Elements: Although the exact configuration of the building has not yet been determined, the preliminary design is for a 3-story building with two separate wings (or possible two buildings), one side for renters and the other for owners. The two sides of the building will share a common lobby, elevator and management office. Each side will have its own community room on the main level. Universal design techniques will be employed so that units can be made accessible for people with disabilities. Site Characteristics: The development will, in its design, incorporate the storm water retention pond in a way that will create an amenity for the site. Although this site is surrounded primarily by Industrial/Manufacturing uses and is adjacent to the Public Works salt dome, we feel that these challenges can be overcome through careful planning and analysis and believe that it is appropriate for the proposed use given the proximity to Reqbest for Action Page 3 6-23-03 other high-density residential uses, access to transit, and its proximity to sources of employment, shopping, parks, and schools. Management PPL would manage the rental component of the project, the Homeowner Association will ultimately be responsible for selecting a management company for the ownership units. Marketinq: PPL will pre-sell 50% of the for-sale units prior to the start of construction. During construction there will be an on-site marketing office with information on the units, financing options, and down-payment and closing cost assistance. Homeownership Financin.q: Development costs for the for-sale units will be covered by proceeds from the sale of units. Actual sales prices for the homeownership units will be determined by the appraised value. Additional assistance may be available to close affordability gaps and will be secured by subordinate mortgages. Rental Financing: Funding sources for the rental portion of the project are proposed to include tax-exempt mortgage financing, Low-Income Housing Tax Credit proceeds, State and County deferred loans, and possibly other public/private funds. Land Price: PPL intends to buy the land for the appraised value minus the soil corrections (this will be considered by the funders as a contribution by the City). It is envisioned that the City's CDBG contribution will stay in the project and the City would recover its investment. Current Status: Maxfield Research is currently completing a market study. Also, design modifications can be incorporated into the plan. Summary: We (PPL) feel that this development will support the City's redevelopment efforts in a number of ways: by enabling the City to fulfill CDBG requirements, by assisting the City recoup its investment and by providing quality affordable replacement housing for units that may be displaced near the New Hope Golf Course." The Council last discussed this site on June 10, 2002. At that time, LivingWorks Ventures was proposing to construct a 12-unit supportive housing facility for people with disabilities on this property. The Council acknowledged the many benefits of the proposal, but due to the fact that it did not utilize the entire site, the Council suggested that LivingWorks Ventures find a more suitable development site and voted to not proceed with the project. The June 10, 2002 Council minutes are attached. On February 11, 2002, the EDA discussed the LivingWorks Ventures concept proposal and directed staff to update the property appraisal and contact other agencies for interest in the site in combination with LivingWorks. As stated previously, no additional agencies were interested in the property at that time, therefore the Council voted to not proceed with the project. The appraisal was updated by Patchin Messner & Dodd and the market value of the property as of April 16, 2002, was estimated at $662,000, based on two important conditions: 1. The property is zoned R-5 "Senior/Disabled" Residential 2. The site is not affected by unstable soil conditions The purchase price that PPL is offering is consistent' with the appraised value of $662,000, but discounts the purchase price by $285,236 for soil correction and $100,000 for CDBG funds in the project, therefore PPL is offering $276,764, the original City expense. The soil correction cost and CDBG funds will be considered "City Contribution" to the project in funding applications completed by PPL. Staff coordinated with the Hennepin County Assessor's and Property Tax Offices to obtain a preliminary estimate of taxes for this proposal. Please see the following table showing estimated taxes using 2003 tax rates: Request for Action Page 4 6;23-03, Ownership Units Unit Value & Size Overall Taxes Generated City Taxes Generated Total City Taxes 18 2 bdrm - $135,000 $1,851 per unit $582 per unit $10,467 8 3 bdrm - $157,500 $2,222 per unit $701 per unit $5,608 9 4 bdrm -$185,000 $2,675 per unit $847 per unit $7,623 Rental Units 35 $100,000 per unit $78,542 per all units $26,155 per all units $26,155 Total City Taxes $49,853 Ponding has been completed on the northern portion of the site. Ponding requirements could be satisfied using the existing pond. According to the City Engineer the pond was sized to serve both the Public Works facility and 5501 Boone Avenue North. Final ponding requirements would need to be resolved. The property is currently zoned I, Industrial. Surrounding zoning includes: Industrial to the north and south, public space to the west (Public Works facility), R-5, "Senior/Disabled" Residential to the east and R-4 High Density Residential to the southeast. Rezoning to R-4 or similar high-density zoning would be required to facilitate this proposal and would be consistent with the surrounding zoning. As stated previously, in 1995, the City approved a plan for the construction of an adult day care center on the site and approved a rezoning of the property from I-1 to R-5, subject to the project proceeding. The project did not proceed and the rezoning did not take effect. Staff recommends that the EDA direct staff to continue working with PPL on this proposal for the following reasons: The PPL proposal is a CGBG eligible use and Hennepin County would allow the City to retain the $100,000 in CBG funds utilized for original land acquisition. If a CDBG eligible project is not solidified by October 2003, the City will be required to pay back the CDBG funds to the County. · PPL will purchase the property for the City's original purchase expense. PPL is not asking the City to donate the land. · The proposal includes thirty-five (35) ownership units, providing additional life-cycle housing options per the City's Life Cycle Housing Study prepared in 1997. The thirty-five (35) affordable rental units will assist in the replacement of the sixty (60) existing affordable units that may eventually be displaced at the Livable Communities Area redevelopment site adjacent to the City's Golf Course. Affordable rental replacement units will be looked upon favorably by the Metropolitan Council in upcoming grant applications. · Estimated City taxes of $50,000 per year will be generated by this development based on 2003 tax rates. Currently, the property is tax exempt. · The proposed use is compatible with the zoning of the property to the east and rezoning of the property would be justifiable. The proposal includes an additional sixty-two (62) off-street surface parking spaces intended to be leased to Northridge Care Center to alleviate their parking problem and parking issues along Boone Ave. N. FUNDING Total acquisition cost was $376,764. The City used $100,000 in CDBG funds towards a portion of the acquisition. Reqaest for Action Page 5 ATTACHMENTS · Location, Topographic and Zoning Map · Plat Map · Pond Location Map/Bonestroo Exhibit · Development Proposal, June 17, 2003 · Site Plan · Building Plans Proforma · Land Disposition Agreement · Hennepin County Correspondence, June 18, 2003 · City Council Minutes, June 10, 2002 · Appraisal (Complete copy available for review in the Department of Community Development) 6-23-03 BROOKLYN PARK HOSTERMAN JR HIGH SCHOOL WINNETKA R-2 ~ ELEMENTARY ~ sT RAP~IAEL SCHOOL --- c.ul~cl~ ..... .m~ ZONING DISTRICT MAP R-1 Single Family Residential R-2 Single and Two Family Residential R-3 Medium Density Residential ~J~ R-4 High Density Residential R-5 "Senior / Disabled" Residential R-O Residential Office R-B Residential Business LB Limited Business ~ CB Community Business I Industrial Open Space / Public 8748 I.d Z 810~ 87OO PUBLIC WORKS GARAGE 9101 " 5417 : ~401 5410 Thru ~ ............ ~ .......... ~ :z ~ ................. '~ ~ ~0 NORTH . ....... ~ HOSTERMAN ~ ~ JR HIGH SCHOOL RIDGE : APART- : NORTH ;Z ......... ~ .... ' CARE -~- CE~ER z ................... z ....... · A~ N 9t01 ~ ' C. P. RAIL SYSTEM ~201 9:g.2 \ \ ,, \ / ! t ~ I j · N~ UN~ Or L~ 2 ' I I~ , ~ ' "~HLINE ~T 2 BLK.2 County, Hi~es~r.a Dr/or years nave b~ p~g for 1~ Oes=ri~ ~ ~i~ plat. ~, lg~_ · Fr0m-CITY 0~ NEW 7635315138 F-SSO Z~ ,/ NEW HOPE, MINN~-A PU~LJC W0I~S ST0~m w~IL~ &4eR~.ul:K/s \ ',% %. Boone Avenue North Address: Developer: Proposed Development: Bedroom Mix: Parking: Proposed Pricing: Design Elements: Site Characteristics: 5501 Boone Avenue, New Hope Project for Pride in Living, Inc. 70-units total 35 for-sale condos 35 rental units 35-2 bedroom 17-3 bedroom 18-4 bedroom · Underground parking for 94 vehicles. · Surface parking spaces for 102 vehicles (including up to 63 off- street surface parking spaces to accommodate North Ridge's overflow parking needs). · Each unit will have at least one underground parking space and some of the larger units will have access to two spaces. For Sale Sale Price 2bdrm (910 sf) $135,000 3bdrm (1200 sf) $157,500 4bdrm (1490 sf) $185,500 Rental Monthly Rent* 2bdrm (910 sf) $700 3bdrm (1200 sf) $820 4bdrm (1490 sf) $1,036 Rents will be similar to the existing market in New Hope. Although the exact configuration of the building has not yet been determined, our preliminary design is for a 3-story building with two separate wings (or possible two buildings), one side for renters and the other for owners. The two sides of the building will share a common lobby, elevator and management office. Each side will have its own community room on the main level. Universal design techniques will be employed so that units can be made accessible for people with disabilities. The development will, in its design, incorporate the storm water retention pond in a way that will create an amenity for the site. Although this site is surrounded primarily by Industrial/ Manufacturing uses and is adjacent to the Public Works salt dome, we feel that these challenges can be overcome through careful planning and analysis and believe that it is appropriate for the proposed use given the proximity to other high-density residential uses, access to transit, and its proximity to sources of employment, shopping, parks, and schools. Management: PPL would manage the rental component of the project, the Homeowner Association will ultimately be responsible for selecting a management company for the ownership units. Marketing: PPL will pre-sell 50% of the for-sale units prior to the start of construction. During construction there will be an on-site marketing office with information on the units, financing options, and down- payment and closing cost assistance. Financing Homeownership: Development costs for the for-sale units will be covered by proceeds from the sale of units. Actual sales prices for the homeownership units will be determined by the appraised value. Additional assistance may be available to close affordability gaps and will be secured by subordinate mortgages. Rental: Funding sources for the rental portion of the project are proposed to include tax-exempt mortgage financing, Low-Income Housing Tax Credit proceeds, State and County deferred loans, and possibly other public/private funds. Land Price: PPL intends to buy the land for the appraised value minus the soil corrections (this will be considered by the funders as a contribution by the City). It is envisioned that the City's CDBG contribution will stay in the project and the City would recover its investment. Current Status: · marketing Study by Maxfield Research in progress · design modifications will be incorporated Next Steps: · Financing Applications · Determine Market and Financial Structure · Development Agreement · Revisit in August or September · Neighborhood/PublicApproval Process Summary: We feel that this development will support the City's redevelopment efforts in a number of ways: by enabling the City to fulfill CDBG requirements, by assisting the City recoup its investment, and by providing quality affordable replacement housing for units displaced at the Golf Course. ~90.g 'tfATER 51TE NO~E~ 441;0' ~ 3CX2~' 132,00( 3.04 AC - 5111~ DENSITY 2,~00 ,~ CP~DIT POR UNDeI~GRD rr,~.; - 30O ~ .. - ICUMB~R. OF UNfl'5 i 32.000~1,900 70 UI~IT - 3 B.R. UNIT5 I G - 4 B.R, UNIT5 BUILDING AREA 39.0EX~ x 3 - PARKJNG I~QUIP-,~D 70x 2.25 - PARIqNG PEOVIDED UI~)EEGRD PAP. J~JNG 5URJ'ACE PARJ~NG TOTAL PARFJ~ 158 7O i'c~ - AVENUE N. DITI PLAN/DURVL=Y C i& C C ,51TE NOTE5 5501 BOOI~ AVENU~ NORTH $501 BOONE AVE NORTH ~ HOPE, SITE PtAN MAJN LEVEL FLOOR PLAN A1 ! $$01 ~ AVENUE NORTH HOUSIh~ $501 BOONE A~ N~ ~p~, ~N~TA IYP~ UP~R ~L FLOR p~ A2 Blumentals rchltect~re Inc $50! ~ AVEHU~ NORTH HOU$11~IC~ $$01 ~ AYE I'~)llTH NEW HOP~.~ AAINN~SOTA PARKII'~IG LEVEL PLAN ^3 () tWO I~DP, OOM UNIT - ~PF'OP~DAIN..E UNIT 5501 ~X)NE AVENUE NORTH HOI. JSlN~ 5501 BOONE AVE NOI~H NEW HOPE, MINNF..SOI'A Ut~T PLANS A4 Blumenta. rchitecture Inc s/30/o3 5501 BOONE AVENUE l'~ORlfl HOUSING 5501 BOONE AVE NORTH NEV~ HOPE, ,~INNESOTA BUILDING ELEVATIC)f4 ^$ 5501 BOONE AVENUE NORTH HOUSING 5501 BOONE AVE NC~TH hlL~V HOPE, MINNESOTA OVERALL BUILDII'x~ PERSPECTIVE P...~PECTIVl~ ~ BUILDING I~Np 5501 BOONE AVENUE NORTH HOUSING 5501 BOOf, IE AVE NOI~H NEW' HOPE, MINNESOTA BUILDING PERSPECTIVES A7 Debt Servfce Debt Service-Mortgage Debt Sennce Factor Max supportable mortgage (5.25% 30yr) Subtotal #2 - Effective Gross Ex~ensee Effective Gross Expenses Per Unit Per Month NET OPERATING INCOME Development Cost For Sale Development Cost AcquisipOn Discount for Soil Corrections New C~'~=*ir dctiol'~ CO.sirUCtion Contir~enc¥ Total Per Sq. Ft. Construction Cost $108,457 0.06626~,f ~~. Sl,636,731 S631 $~6,2S9 S331.00~ -$142,618 $4,000,00(; $200,000 $77 $120,000 $292,50(; Per unit Const cost Soft Costs JTMarketi"V Developer Fee S~/ndication Fees F;ne.c;~ Costs DCE DC Total Basis [Per Unit TDC $266,00C $400,000 $12.500 R~; Deve;o~,.ent Cost Discount for Soil CorFe¢ilons New Cu.=[~uCtion $153,125 $331,000 -$142,618 $4.000,000 Constmct=nContin~enc¥ Total $200.00C Per ,Sq. Ft. Co.abuctJon Cost Per unit Const Cost Soft Costs larketin~ eveloper Fee ,nd~ca[iun Fees ~nancin~l Costs CE YDC Total Basis 15er Unit TDC Sources or Sale 1st rc.~r~=ge (5.25% 30~r) General Pc-ri~er Cash - ' $77 $120,000 $317 $0 $400,000 $45.0O0 $12 $29 $148,357 FHF LCDA MHFA other Sale P--~; 2~,7,, (910 3~, (1200 oral Sale Prc. c~s .;;.-~m, (1490 sf~ Otal Sources ap $2.430.00u $1,260,00 $1,665,~ $5,355,0( $5,359,3~ 70% PV Basis $o $o $317.50~ $4,917 $135,00~ SC $0 $4,00~ $200,000 Income and Operating Expenses Detail Boone Ave Revenue 1.0 INCOME 1.1 Apartment Income 1.2 Parking Income 1.3 Laundry Income 1.4 Other Tenant Charges Other Income Gross Income 1.6 Vacanc7 & Collection Loss Factor (7%/ 1-bdrrr 2-bdrrr 4-b~tm' 1-bdm' 2-bdm* 3-bOm' 4-balm' 35 rantaE35 toraale condo unite rent 0 0 17 $700 9 $820 9 $1,036 0 0 18 $o 9 7o $343.248 $0 $o SO $o $343,248 .$24.o27 Expenses 1.00 Administration Expenses 1.01 Advertising and marketing 1.02 Management fee 1.03 Legal 1.04 Auditing 1.05 Telephone 1.06 On-site Management Payroll 1.07 Other Administration Total Administration 2.00 Maintenance expenses 2.01 Elevator Maintenance/Contract 2.02 Exterminating 2.03 Rubbish Removal 2.04 Caretaker Rent Credit 2.05 Janitor Supplies (Incl, In 2.06) janitor payroll 2.06 Maintenance supplies (i.e. Repair Materials) maintenance payroll maintenance contracts 2.07 Grounds contracts grounds supplies 2.08 Snow Removal 2.09 Repairs - HVAC & Other contractor Services 2.11 Paint/Decorating Materials 2.12 Capital Expenditures 2.13 Other: $500 $18,900 $2,100 $4,000 $600 $10,500 $3,500 ~40,100 $2,00O $1,000 $1,000 $o $70 $1,500 $1,000 $6,000 S0 $3,500 $0 $3,500 $22,000 $700 $0 $0 2.14 Other. Unit Cleenln~l ~ Turnover & Carpet Replacement Total Maintenance 3.00 Utilities 3.01 Electricity 3.02 Water & Sewer 3.03 Gas and Oil Total Utilities 4.00 Taxes, Ineuranco and Interest 5.01 Real Estate Taxes insurance Interest.note Interest-sec dap Total Taxes, Insurance and Interest Non-relmburaablo expenses Total Non-mlmburaable expenses S.O0 Reserves and ElCrOws 5.02 Replacement Reserve 5.03 Painting and Decorating Resorve (Included in 5.02) 5.04 Misc. Reserves Total Reserves and Escrows Total Mgmt end Operating Expenses Per Unff/Mo. Debt service factor (1. $2,100 $2,000 $17,500 $1,400 $20,900 $40,000 $33,000 $0 $1,000 $74,000 $0 So $5,250 $7,875 $2,000 $15,125 $108,457 Contract No A2056- TJ-[[$ AGRE~%IEI%'T made and entered into by and between the County of Hen. n...-pm. Stat.- of Minnesota. hereinafter referred to as the 'Count)" throu.~h its Office oF Plannm.c and Development. hereinafter referred to az "OPD' and the Economic DeYelopmen: Authority, tn and fo: the City of New Hope. a Minnesota Municipal Corporation. hereinafter referred to as th-, "EDA ", each of which patties is a governmental unit for the State of Minnesota pursuant to ~l~nnesota Statutes. Section 471.59 WHEREAS, the County through OPD is a duly designated Urban Count)' Commumtv Development Block Grant entitlement recipient pursuant to the provisions of thc Housmc and' Community Development Act of 1974. Title I of Public Law 93-383. az amended. (42 I~SC 5301 et seq). and %VHEREAS. the city of New Hope is an authorLT, ed subgrantee participant in the Urban Hennepin County Community Development Block Grant program by virtue of a Joint Cooperation Agreement executed between City and County through OPD pursuant to MSA 471.;59. and WHEREAS. as Third Pan). Agreement has been executed between the city of New Hope and the EDA for purposes of implementing this CDBG funded activity, and WHEREAS, the Urban Hennepin Coun .ty Community Development Block Grant program permits the City to use Community Development Block Grant funds to acquire lands for the purpose of assisting in the development of an adult daycarc and/or senior center public facility, and %VttEREAS. the EDA has acquired through its power of eminent domain property located at 5501 and 5425 Boone Avenue North, in the City of New Hope. for an adult daycare and/or senior center public facility. That said ptopenies ate legally described in paragraph I of the hereto agreement. Further, the awatcl of damages paid to the fee owners of the sub)cci property totaled S376.764.00. For the purposes of this agreement, the parties hereto agree that this amount equals the purchase price paid by the EDA for the property. NOW THEREFORE, in consideration of the mutual covenants and promises contamed in this agreement, the parties hereto mutually agree to the following terms and conditions: I. The EDA acknowledges receipt of the sum of $100.000.00 dollars provided through the Urban Hennepin County Community Development Block Grant Program to purchase and acquzre property at 5501 and 5425 Boone Avenue North in the City of New Hope. County of Hennepin. State of Minnesota, legally described below. The parties acknowledge and agree the total purchase price for the following described Properties was $376.764.00. 5501 Boone Avenue North That pan of Lot 2. Block 2. lying Norfl'~ of the North hne of the South 6.=9.85 ire.'~ of said Lot 2. BloCk 2, as measured along the East and West lines thereof, ext.-p: thereof. Science lndust~ Center. accordin~ to the plat thereof on file or of record m th~ Office of the Registrar of Titles in and for He.cpm Count)'. SubJect to utility easements shown on plat; Subject to an overhead easement m ~avor of Northern States Power Company as set forth in Document No. 1098.t75. Files of Reg,strar of Titles; SubJect to the storm sewer easement as set forth in the Notice of Subsequent Adverse Claim. Document No. 2058134. Files of the Registrar of Titles. 5425 Boone Avenue North The North 75 feet of the following described property: The North 300 feet of the South 639.88 feet (as measured along the East and West lines thereof) of Lot 2. Block 2. Science Industry Center. according to the plat thereof on file or of record in the Office of the Registrar of Titles in and for Hetmepin Count)'. Minnesota. Subject to utility easements as shown on plat. II. In consideration for the receipt of the SI00.000.00 Urban Hermcpin County Community Development Block Grant. the EDA covenants and_agrees that the purpose of _~uch purchase ~d ro is for the develovment of an adult davcate ~~..---_..___ facility and/or senior ce r tJ~t .,,,,, u uac $ . - ....... ---_.___ .._____. nee_ nail De im lenlcnted ------ e.,m !,,.___, ,..nao, later three year, BG retmbursement w ' -- from and after o the EDA from ----- the Coum..~q~.lf at me end of such three r,o - III. If at the end of the initial period of three (3) years or during the second three (3) year period if the initial period should be so extended, it appears to the County through OPD that the said prOject proposed is no longer viable ot feasible so that the EDA could not develop the project on the site. then. in such event, the County through OPD may, 2 and shall continue in full force and effect until theProject is completed~h the ctescrtiaed site or untie the land is sold or approved for an alternate use in accordance with Paragraph H! abov.- or at th.- expiration of three years, whichever set of events occurs first. The EDA having signed this Contract. anl~ the Hermelaaa. County Board of Commissioners having duly approved this Contract on the I '97-"~dav of "\" ~ '- ~ o r.7'7 ....... such approval and the proper County officials having signed this Contract. the parties acre.- to bt bound by the provisiorts herein set forth. Date: COUNTY OF HENNEPIN Ass~C6~t~ Ad~tn~ '~ Cier~f the Coum~ ~oar~ ECO~OM~ DE~LOPME~ AUTHO~y in and for the CITY OF W. Peter Enck, idem A~d Daniel J. Donut. ~utiv~ D~r~cmr ~ AMENDMENT NO. 1 TO AGREEMENT, CONTRACT NO. A20867 THIS AGREEMENT made and entered into by and between the COUNTY OF HENNEPIN, STATE OF MINNESOTA, hereinafter referred to as the "County,' through its Office of Planning and Development, hereinafter referred to as "OPD," and the Economic Development Authority in and for the City of New Hope, a Minnesota Municipal Corporation, hereinafter referred to as the "EDA", each of which parties is a governmental unit for the State of Minnesota pursuant to Minnesota Statutes, Section 471.59: WlTNESSETH: WHEREAS, the EDA and the County have previously entered into Agreement, Contract No. A20867, and WHEREAS, under the provisions of Paragraph II, the EDA wishes to exercise its option to extend the period during which it may hold the land, which it purchased with Community Development Block Grant funds provided through a third party agreement with the city of New Hope, for an additional three (3) year period, and WHEREAS, the EDA has demonstrated that the purpose for which the land was purchased, namely the development of an adult day care facility and/or senior center public facility, is still viable and feasible: NOW, THEREFORE, in consideration of the mutual terms herein set forth, the parties agree as follows: Articles II and V of the Agreement shall be amended to read as follows: II. The EDA covenants and agrees that the purpose of such purchase and acquisition of said property is for an adult day care facility and/or senior center public facility and that such development shall occur not later than three (3) years from and after the date of this Agreement as specified in Paragraph V. Fo This Agreement is effective as of October 1, 2000 and shall continue in full force and effect until an adult day care facility and/or senior center public facility is completed on the site or until the land is sold or approved for an alternate use in accordance with Paragraph HI above, whichever of said events occur first. The EDA having signed this Amendment, and the Hennep'.m, Count)' B rd of Commissioners having duly approved this Amendment on this / ~ of_ ~, 2000, and pursuant to such approval and the proper County officials having signed this Amendment, the parties agree to be bound by the provisions hereto set forth. APPROVED AS TO~..ORM Assistant. Cdan/~ Attorney //~ /'~ .-) ,,'4/~ Date / . _ , .;. · COUNTY OF HENNEPIN, STATE OF MINNESOTA Chair of its County Board ~A?;' ' Dep-ty ty ~d.~nimstrator Dep~/C-lerk of the County Board Da,e: / ECONOMIC DEVELOPMENT AUTHORITY in and for the CITY OF NEW HOPE c:hair'/Presid~'nt ~ ~:e,.~. Executive Dir~5'f - City Clerk EDA RESOLUTION NO. 2000- 04 RESOLUTION APPROVING EXTENSION TO LAND DISPOSITION AGREEMENT RELATING TO DEVELOPMENT OF 5501 BOONE AVENUE NORTH BE IT RESOLVED by the Board of Commissioners of the Economic Development Authority in and for the City of New Hope as follows: WHEREAS, the Economic Development Authority in and for the City of New Hope (hereafter FDA) and the County of Hermepin (hereafter County) have entered into a Land Disposition Agreement (hereafter Contract) relating to the development of 5501 Boone Avenue North as an adult day care facility, and WHEREAS, specifically, the County has provided the F..DA with a $100.000.00 grant provided through the Urban Hennepin County Community Development Block Grant Program, and WHEREAS, the Contract requires the EDA to refund the $100,000.00 grant if the property at 5501 Boone Avenue North is not developed with an adult day care facility by October, 2000 unless said deadline is extended, and WHEREAS, the Contract provides that the use deadline may be extended for an additional three (3) years provided it appears reasonably feasible the adult day care development will occur during the extension period, and WHEREAS, Minnesota Masonic Homes remains interested in the property at 5501 Boone Avenue North for an adult day care facility and has requested that the EDA seek an extension to the Contract evidenced by Exhibit A attached, and WHEREAS, the County, based on Minnesota Masonic Homes expressed interest to develop 5501 Boone Avenue North as an adult day care facility, is willing to provided a three-year extension to the Contract evidenced by its September il, 2000 letter attached as Exhibit B, and WHEREAS, the County has prepared an addendum to the Contract, attached as Exhibit C titled Amendment No. 1 To Agreement, Contract No. A20867, which provides for an extension of the Contract to October 1, 2003. NOW THE~FORE BE IT RESOLVED by the Economic Development Author/D' of the City New Hope as follows: That Amendment No. I To Agreement, Contract No. A20867 attached as Exhibit C, is hereby approved. That the President and Executive Director are hereby author/zed and directed to sign Amendment No. I To Agreemmt, Contract No. A20867. Attest: Dated the 25" day of September, 2000. D~z~-Collter, ~~nt r.o rem Daniel J. Dorl~ue, Executive Director 2 Doresk¥ Ken From: Sent: To: Subject: Mark. Hendrickson@co.hennepin.mn.us Wednesday, June 18, 2003 5:33 PM Doresky Ken 5501 Boone Ave. Ken, I reviewed the information you provided on the PPL proposal for 5501 Boone Ave. Since the proposed project would be built on property previously acquired with CDBG funds for a non-housing purpose you want to know if the current proposal would meet CDBG requirements for a housing project. As we discussed earlier the project appears to meet CDBG low/mod income benefit requirements. To be considered CDBG eligible, at least 20% of the rental units and 51% of the owner units need to affordable to households at or below 80% MFI. Further, some of rental units need to affordable to households below 60%. The Consolidated Plan, as applicable to CDBG resources, established a high priority for new rental units for households below 50%MFI and targets some of the unit goal for homeownership households between 50% and 80% MFI. Based on the information provided it appears all 35 rental units have proposed rents that would be considered affordable to households at 60% MFI and all 35 ownership units would be affordable to households at 80% of MFI. However, none of the rental units appeared to be affordable to households with income below 60%MFI. The final eligibility determination will need to be made based on actual figures in a development agreement. The development agreement needs to establish unit rent and unit sale prices, and income eligibility for renters and owners by household size. The final CDBG L/M income benefit determination will be made within 1 year after initial occupancy of the units. As you know, the property at 5501 Boone is currently subject to a Land Disposition Agreement between the city and the county. This agreement, which was extended for an additional 3 year period, is set to expire in October 2003. To avoid repayment of CDBG funds it will be necessary to have approved a CDBG eligible project on this site by this date. Let me know if you have any questions or need additional information. Mark RESOLUTION 02-93 Item 6.4 RESOLUTION 02-94 Item 6.7 IMP. PROJECT 715 Item 6.8 IMP. PROJECT 713 Item 8.1 New Hope City Council Resolution Relating to Local Government Information Systems; Authorizing the Execution and Delivery of Second Amendment to the Joint and Cooperative Agreement. Resolution Approving Change Order No. 2 ia the mount of $37,445 to Contract with Dave Perkin~q Contracting, Inc., Improvement Project No. 706 (2001 Backyard Drainage and Utility Improvements). Motion Authorizing Staff to Proceed with a Written Offer to Purchase the Property Located at 5518 Winnetka Avenue North for its Appraised Value of $159,000 (Improvement Project No. 715). Mayor Enck introduced for discussion Item 8.1, Discussion Regarding Status of LivingWorks Ventures Proposed Project on City-Owned Properly at 5425/5501 Boone Avenue North (Improvement Project No. 713). Mr. Kirk McDonald, Director of Coauutmity Development, acknowledged the presence of Duane Reynolds representing LivingWorks Ventures. Mr. McDonald explained that at the February 11, 2002, Economic Development Authority meeting, staff discussed a concept proposal where LivingWorks Ventures would develop a portion of the city-owned property at 5425/5501 Boone Avenue North, possibly in conjunction with several similar or housing-related agencies. The EDA directed staff to proceed to have the appraisal updated and to meet with specified agencies to determine their potential interest in development on the property. The EDA indicated that they would like a development for the total site, as opposed to a piecemeal development of only a portion of the site. At the March 25, 2002, council meeting the City Council approved a Resolution Establishing an Understanding of Agreement Between LivingWorks Ventures and the City for the sale and development of the property at 5501 Boone Avenue North. The City Council approved the resolution because LivingWorks Ventures needed some type of written understanding with the City in place by March 30 in order to meet HUD's requirement of continuous site control or they would forfeit $572,900 from HUD. The resolution was non-binding on the City, however, it did provide LivingWorks Ventures the documentation they needed to retain their funding from HUD as they explored the development process with the City. Mr. McDonald reviewed the status of the actions taken to date and responses from several parties as follows: Appraisal Update - The appraisal update has been completed by Patchin Messner & Dodd and the market value of the property as of April 16, 2002, is est/mated at $662,000, based on two important conditions: The property is zoned R-5 "Sen/or/Disabled" Residential The site is not affected by umtable soft conditions (it has been determined in the past that soil correction measures will be needed to build on the site.) Meet with Greater Metropolitan Housing Corporation (GMHC) - A meeting was conducted with Carolyn Olson, President of GMHC, and they initially indicated an interest in developing the remaining property with housing units (condorniniulI1, townhomes, etc.). They requested that more detailed information be sent to them regarding soil issues, density requirements, etc., and that information was sent. After analyzing the information, they have responded that the workload for their architects on other projects and the unknown costs of soil corrections or pilings for this site make it difficult to June 10, 2002 New Hope City Council Page 3 pursue this project at this time. Meet with Tasks Unlimited - A meeting was initially conducted with representatives from Tasks Unlimited regarding the potential development of a retirement lodge on the site in conjunction with other organi?afions and Tasks have submitted a proposal to outline their iaitial plans for the project. Tasks would construct an eight-unit, single room occupancy supportive housing facility for retirement age people who have been diagnosed with serious and persistent mental illness. The proposal states that assuming that Tasks and the City could come to terms on the price of the land, a PILOT agreement, and any other financial considerations, and consmaction could begin within several months after other issues have been resolved. No further discussions have been held with Tasks, pending proposals for the remainder of the property. Meet with Masonic/North Ridge - A meeting was conducted with representatives from Masonic/North Ridge regarding parking issues and the possibility of utilizing the site for interim surface parking. They agreed to develop a detailed short and long-term parking plan for their property, but were not overly supportive of utilizing the property currently owned by the City to address their parking needs due to the distance from their facilities. No information has been received from Masonic/North Ridge to date and staff has sent a letter to follow up the initial meeting and requesting parking plan information. Mr. McDonald pointed out that within the past month, a large local manufacturer who is looking for property to conslruct a new facility has contacted the City about the potential of acquiring the city site and adjacent sites for a new facility. Mr. McDonald requested direction from Council as to how the Council wants to proceed on this property and project. He stated Vinland is ready to move forward, but staff has not been successful in securing a development plan for the entire site. GMHC has indicated they are not interested at this time and Minnesota Masonic/North Ridge also does not seem interested in the site. Options that staff would suggest include: · Consider a different site for LivingWorks Ventures, such as the city-owned property on 62na Avenue or another site. (LivingWorks Ventures has viewed and is interested in the property on 62na Avenue.) · Proceed with developing only a portion of the 5501 Boone site with the Vinland and Tasks projects. · Continue to try and solicit interest from other housing organizations for total development of the site. · Continue to coordinate with Minnesota Masonic/North Ridge on utilizing the remainder of the site for off-street parking purposes. · Potentially utilize the property for industrial development. Mayor Enck suggested exploring an industrial development for the site. He noted the benefits offered by LivingWorks Ventures if they could secure an ideal site. Councilmember Cassen pointed out that an industrial zoning classification is the highest and best use for the property. Councilmember Gwin-Lenth favored the development only if the entire site could be utilized. She suggested that staff work with LivingWorks Ventures to locate an alternate suitable site. Councilmember Collier concurred with Councilmember Gwin-Lenth's comments and pointed out that soil issues could limit future industrial development on the IMP. PROJECT 597 Item 8.2 property. Councilmember Colher initiated discussion regarding the unsafe on- street parking conditions near North Ridge Care Center. Mayor Enck expressed his disappointment in the NorthRidge administration for failure to take action regarding the on-street parking situation on Boone Avenue. He directed staff to contact them again. Mr. Duane Reynolds, LivingWorks Ventures, was recogn/zed. He thanked the City Council and staff for considering the proposed development. Mayor Enck introduced for discussion Item 8.2, Discussion Regarding Preliminary Development Proposals for City-Owned Property at 9200 49t~ Avenue North (Improvement Project No. 597). Mr. McDonald, Director of Community Development, stated within the past x., several weeks, staff has been contacted by and met with two differoni parties who ,, are interested in potentially developing the city-owned propertY at 9200 49e ~., venue North. Both parties have submitted letters of interest and concept plans for the development of the site. Staff requests to discuss these~i~relimmary proposals wifll the Council and receive direction from the Council as'to how to proceed. He stated the property is located on the north sid~ of 49'~ Avenue, is zoned I Industrial, and is surrounded on the west, north a~d east sides by industrial zoned property. XThe property located south of the s~t~, across 49t~ Avenue, is zoned R-1 Single Fazhily Residential. The property was purchased by the City because a portion of 'the property was identified in the New Hope Surface Water Management Plan as a future potential site for water quality pond to help improve the water qualitY\°fthe large wetland north of, and adjacent to, the site. Mr. McDonald '!eviewed the townhomes proposal submitted by SVK Development, Inc. Fie noted SVK Development has indicated that they would be interested in some f~lma ofpurchase of the city property for a small townhome project. SVK has prepared several concept plans for townhomes on the site, with an intent to provide as mag,? ponding as practical. \ Mr. McDonald stated staffx~grees that there is a need for the development of townhomes in the City, however, staff does not necessarily feel that a site currently zoned for and surrounded by ~duslrial uses on three sides is appropriate for a housing devtlopment. SVK has'indicated that they have completed projects such as this on similar sites (in St. Lo.ut~ Park) with success. The developer also has the capability to complete constmctionxon sites with poor soil conditions. No specific disCUSSions have been held on the co,of the land. He estimated that each townhome woul&{enerate $1,075 in city taxes per year. ..." Next, Mr. McDOnald reviewed the exp~lasion proposal submitted by Navarre Corporation, 7400 49a Avenue. Navarre C&[poration has submitted concept plans reg.arding their desire to acquire the city prop~Cy at 9200 49~ Avenue. Navarre has des]red to construct a second building west of~heir current site for the last several years and has been~negotiatmg with Ahrens Tr~cking for the acquisition of thek property at 7600 49' Avenue. The purpose of acq~firing the city property would be to relocate Ahrens Tracking to that site and consi~-uct a new facility for Ahrens, and Navarre would then proceed to construct a newXl00,000 square foot building west of their current facility. Navarre would coordinate with the city on ponding for the 9200 49th Avenue site. Per the developer's correspondence, the scope of the proposed work is to relocate Ahrens Tracking from its present location at 7600 49a Avenue North to a new, New Hope City Council Page 4 Jtnl~ ~ r~ · u, 2002 PATCHIN MESSNER & DODD VALUATION COUNSELORS (952) 895-! 205 Fax (952) 895-152 ! May 9, 2002 City of New Hope 4401 Xylon Avenue North New Hope, MN 55428-4898 ATTN: Mr. Kirk McDonald RE: Complete Appraisal, Summary Report Vacant Multi-family Land at 5501 Boone Avenue North New Hope, Minnesota Dear Mr. McDonald: At your request, I have made a Complete Appraisal of the above captioned property for the purpose of estimating its market value. The function of this appraisal is to provide the City of New Hope, valuation guidance for the sale and development .of the subject. This Complete Appraisal is intended to comply with the Uniform Standards of Professional Appraisal Practice, (USPAP), of the Appraisal Foundation. This appraisal is presented in a summary reporting format, as described in USPAP Standards Rule 2 - 2(b). As such, this report presents only summary discussions of the data and analyses used in the appraisal process. Additional information and documentation concerning the data and analyses of this appraisal have been retained in our files. The subject property was inspected on April 16, 2002. Based upon this inspection of the property, and after consideration of the many factors influencing market value, the market value of the subject, as of April 16, 2002, is estimated at $662,000. SIX HUNDRED SIXTY TWO THOUSAND DOLLARS The above opinion of value assumes two very important conditions as follows; 1) The property is zoned R-5, "Senior/Disabled" Residential. 2) The site is not affected by unstable soil condition. 'I'~IN CITIES OFFICE: ROCHE.~ 1 ~ OFFICE: Skyline Square Building, Suite 220 ! 2940 Harriet Avenue $oubh Burnsville, MN 55337 (507) 252-! 615 P.O. Box 73e,3 Rochester, MN 55903 ii Moreover, it should be noted that this letter does not qualify as an appraisal, and that the reader is directed to the following report for the data, analyses and conclusions that support this value estimate. The appraisal report is contingent upon the assumptions and limiting conditions submitted within the report as well as those for the zoning and soil conditions. This report has been made in conformity with accepted professional, ethical and performance standards of real estate appraisal practice. The "Contingent and Limiting Conditions" section of this report should be thoroughly read and understood before relying on any information or analysis presented herein. If you have any questions or comments after reading the appraisal, please contact the firm. Certified to this 9th day of May, 2001 PATCHIN MESSNER & DODD Eric Bjorklund, ~ Minnesota Certified General Real Property Appraiser License #4003154 P^TCH~ MF_.~SN~ & DODD EDA rt Qu s? AC? OS Originating Department Approved for Agenda Agenda Section Community Development 6-23-03 EDA By: Kirk McDonald, Director of CD ~,/_.~,' Item No. & Ken Doresk¥, CD Specialist By:, 6 DISCUSSION REGARDING DEVELOPMENT PROPOSAL FOR CITY OWNED PROPERTY AT 4317 NEVADA AVE. N. AND PRIVATE PROPERTY AT 4301 NEVADA AVE. N. (IMPROVEMENT PROJECT NO. 734) ,ACTION REQUESTED Staff is requesting EDA discussion and direction regarding the attached development proposal from Master Civil & Construction Engineering, Inc., for the City-owned site at 4317 Nevada Ave. N. and the private property at 4301 Nevada Ave N. The development proposal is for the replacement of two (2) existing single-family homes with twelve (12) units of market-rate townhomes. Also, the developer is desirous of acquiring the property to the north, 4415 Nevada Ave. N. for the construction of six (6) additional units. Staff is supportive of pursuing this proposal in more detail and have indicated to the developer that the next appropriate steps are: 1. Present concept to EDA for feedback. 2. Deposit the appropriate fees with the City to cover outside consultant expenses. 3. Have Financial Consultant meet with City staff and developers discuss project in more detail and prepare financial analysis and recommendations. The developer is agreeable to paying the appropriate fees for a consultant financial analysis. POLICY/PAST PRACTICF City goal #2 is to pursue the maintenance and redevelopment of commercial and residential properties within the City. The EDA has been addressing the residential portion of this goal through the City's many housing activities, including coordinating with potential developers on the sale and development of City-owned property in areas designated for redevelopment in the Comprehensive Plan. The EDA often directs staff to coordinate with potential developers and the City's financial consultant to investigate feasibility of redevelopment. BACKGROUND On May 22, 2003, staff received the attached development proposal from Master Civil & Construction Engineerin~h Inc., (formerly GSR Development, preferred Livable Communities developer for the Frank's MOTION BY SECOND BY TO: I:\RFA\PLANNING\Housin \4317\O-Develo ment Pro osal.doc Request for Action Page 2 6-2'3-03 Nursery site) for the City-owned site at 4317 Nevada Ave. N. and the private property at 4301 Nevada Ave N. The development proposal is for the replacement of two (2) existing single-family homes with twelve (12) units of market-rate townhomes. Also, the developer is desirous of acquiring the property to the north, 4415 Nevada Ave. N. for the construction of six (6) additional units. The developer agreed to pay the appropriate fee to explore the proposal with Krass Monroe, the City's Financial Consultant. On April 28, the Council approved the purchase of 4317 Nevada Ave. N. for the agreed upon price of $83,000. The Council approved the purchase of the property for residential redevelopment purposes. Currently, staff and the City Attorney are coordinating with the owner of 4317 Nevada Ave. N. to remedy title issues and close on the property. Staff expects to close on the property in July or as soon as the owner can remedy title issues. On November 25, the Council authorized staff to obtain an appraisal of the 4317 Nevada Ave N. Also on November 25, the Council requested that staff to contact the adjacent south (4301 Nevada Ave. N.) and north (4415 Nevada Ave. N.) property owners to determine if they were interested in exploring the possibility of voluntarily selling their homes to the City for future residential redevelopment of the combined properties. Up to this point, staff has not had direct contact with either owner. The properties are currently zoned R-l, Single Family Residential. Surrounding zoning includes: R-4 High Density Residential to south and west, R-1 Single Family Residential to the north, Open Space/Public to the east (Fed Sims Park) and R-1 and R-4 to the southeast. Rezoning to R-4 or similar high-density zoning would be required to facilitate this proposal and would be consistent with the surrounding zoning. On April 7, Master Development informed staff that Mr. Doug Gossard, partial owner of 4301 Nevada Ave. N. recently passed away. Apparently, the developers have a family connection to the owners of the property. Family members told the developers that the City had requested to purchase property in the area for redevelopment. Master indicated to staff that they would attempt to work on the acquisition of both 4301 and 4415 Nevada Ave. N., and then come to the City with a development proposal for owner-occupied townhomes on the site. Staff conveyed to the developers that the City would be interested in working with them on an owner-occupied residential redevelopment project in this area. On May 15, staff met with the developer to discuss a preliminary plan. On May 22, 2003, staff received the attached development proposal and site plan. The proposal is as follows: "Thank you for taking the time to meet with our team from Master Development Services and our partner Armory Development. As you know, we have an interest in developing property in the City of New Hope and continue to look for opportunities that benefit all parties. Based on our meeting on May 15, 2003, Master requested a revised plan from our architect. From that plan, we have developed our financial pro-forma. The revised plan that has been developed only reflects construction on the parcel of land owned by the Gossard family, 4301 Nevada Ave. N. and the parcel the City is acquiring, 4317 Nevada Ave. N. (The Developer's plan would include private acquisition of the Gossard property in exchange for a new townhome unit for Mrs. Gossard.) While we would welcome the opportunity to acquire the third parcel, there does not seem to be an interest in selling from the current owner at this time. The revised plan would allow the development to proceed this calendar year and would be comprised of 12 units of market-rate townhomes that range from 1300SF-1700SF. We expect the price points for these units to be approximately $165,000-$215,000. While a zoning change would be necessary due to the City's current zoning code, the project would meet all the necessary setback and site requirements. If at some time in the future, the third parcel would become available, we could build an additional 6 units of housing. At this time, the development team would like to proceed on the project but anticipate the need for City assistance in the process. Due to the cost of land acquisition, demolition and site work, we would need an anticipated $200,000.00 in City assistance. This cost reflects the development team purchasing the City- owned parcel for $86,000. , Rbqaest for Action Page 3 6-23-03 We believe the proposed project has tremendous value for the City and the surrounding neighborhood. The 12 units of housing can be expected to produce approximately $30,000 per year in property taxes compared to the current property taxes of $2,500. We would welcome the opportunity to meet with you and review our proposed plan and to develop a design development and financial plan that works for all parties." In 1998, the Council passed a resolution approving the City of New Hope Comprehensive Plan Update. In 1999, the Metropolitan Council approved the Comprehensive Plan Update. In the Plan, the City was broken down into several planning districts. The subject property is located in Planning District 10 - east central New Hope bordered by the rail system to the west and north, 42nd Avenue to the south and the City of Crystal to the east. Recommendations for Planning District 10 include: (a) promote property maintenance through private reinvestment, the City's Dwelling Maintenance Code and Scattered Site Housing Program, and (b) actively pursue the redevelopment of the poor condition, Iow-density residential land along Nevada Avenue between 42nd Avenue and 45th Avenue. Staff is supportive of pursuing the redevelopment of these properties with this development proposal, but would like to review the requested City assistance with Krass Monroe, the City's Financial Consultant. Staff recommends that the EDA authorize staff to pursue this matter further and meet with Krass Monroe and the developer to discuss financial implications of the project. The developer has agreed to pay the standard City financial analysis fee. After review, staff would return to the EDA for further direction. FUNDING At this point, staff is considering three options to fund the potential gap request: 1. CDBG: CDBG funds will be used for the acquisition of 4317 Nevada Ave. N. The CBDG funds could be contributed to the project if the developer were to complete one of the units as affordable to households at 80% median income or below ($56,500 family of four). Total CDBG funds in the project could reach $100,000 with demolition and site restoration costs. The City could declare the building as a blighted structure and contribute the CDBG funds to the project without requiring that one of the units be affordable. Staff will verify the proper use of CDBG funds with Hennepin County. 2. TIF: Staff will also investigate the possibility of extending the 42nd Avenue North TIF district to include the subject properties. 3. Loan: Staff will investigate loan and mortgage options for repayment. A'I-rACHMENTS · Location Map · Topographic Map · Zoning Map · Development Proposal, May 22, 2003 · Site Plan · Comprehensive Plan References /' 4748 ~ 4749 ,~=s ~- ................... ~ -' 4717 *Z 471~ · 4717 '~,Z 4701 ' 47~ · 4701 ,--~ ............. ~7 ' ~ 4655 a$57 :Z~ 4652 ; 4641 4552 4657 ................. . 4624 4625 : 4~ ~ 46~ ~ . o ~ 4510 4425 4401 4750 4700 4650 AVE N ~ i 4~oo 4215 ~ ~i 7600 i ~ 7~28 75t6~ 47'tH AVE N <. 0 AVEN '"""~'i'"'"": i ............ : .......... i -' :! 45TH AVE N ; 4425 : ...... : .......... 4424 ~ ..... ~ : 4421 ~ '.,o':; ~( i~ ........... i 43RD AVE N ..... .. , i ....... ,' 4230 ............ g. _ ! 4225 ~ ! 4224 '! 42~s ! i :. ............. ! ! ............. ; 72~o ~45RD AVE N u ........... ~..~..~ 4221 ~ ~ II ~ : .............. -~ ~ 4220 '-- ~ 't.217 ': 7220 4215 ! .'7 L ..... ~ .......... :: i 4216 7200 : 4229 Ii ~' ................................... ~ / i ; 42'15 --~ 0 897.4 , 42ND / / I / "AVENUE 906.2 ~03.; × NORTH 9** ZONING DISTRICT MAP R-1 Single Family Residential R-2 Single and Two Family Residential R-3 Medium Density Residential R-4 High Density Residential R-5 "Senior / Disabled" Residential R-O Residential Office R-B Residential Business LB Limited Business CB Community Business I Industrial Open Space / Public ::.~ City Size = 3267. Ac. (5.1 Sq. Miles) CB'l~~lii':?~ -¢~" REALTOR ENGINEERING DEVELOPMENT SERVICES CONSTRUCTION SERVICES PROPERTY MANAGEMENT Phone (612) 872-9200 Fax (612) 872-9201 www. masterengr, com Master Engineering * Development · Construction May 22. 2003 Kirk Mcdonald Director of Economic Development City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Kirk: Thank you for taking the time to meet with our team from Master Development Services and our parmcr Armory Development. As you know, we have an active interest in developing property in the city of New Hope and continue to look for opportunities that benefit all parties. Based on our meeting on May 15t~, 2003, Master requested a revised plan fi.om our architect. From that plan, we have developed our financial pro-forma. The revised plan that has been developed only r,.eflc_cts construction on the parcel of land owned by the Gossard family and the parcel the City is acquiring. While we would welcome the opportunity to acquire the third parcel, there does not seem to be an interest in selling fi'om the current owner at this time. The revised plan would allow the development to proceed this calendar year, and would be comprised of 12 units of market-rote town homes that range from 1300SF-1700SF. We expect the price points for these units to be approximately $165,000- $215,000. While a zoning change would be necessary due to the city's current zoning code, the project would meet all of the necessary setback and site requirements. If at some time in the future the third parcel would become available, we could build an additional 6 units of housing. At this time, the development team would like to proceed on the project but anticipate the need for city assistance in the process. Due to the cost of land acquisition, demolition, and site work, we would need an anticipated $200,000.00 in city assistance. This cost reflects Master Civil & Construction Engineering, Inc. 2104 Fourth Avenue South, Minneapolis, MN 55404 the development team purchasing the city, owned parcel for $86,000.00. We believe that the proposed project has tremendous value for the city and for the surrounding neighborhood. The 12 units of housing can be expected to produce approximately $30,000.00 per year in property taxes compared to the current property taxes of $2.500.00. We would welcome the oppommity to meet with you and review our proposed plan and to develop a design development and financial plan that works for all parties. Please feel flee to call me at your earliest convenience at 612-872-8497. Sincerely, ~~~ Charlie Nestor Director of Real Estate TUSH! E MBNTGOMER¥ L~'N I'T E! ~L~Il/'" & UNIT u~rlr· I U~IIT C UNIT' A L/NIT I J I J I I I I I I J / I l.i.! Z >. .~rrong par~ arneni~ ~clential area / r~development ~od Pt~in (~ss Noise Industrial Issues 1. In place ~panslan 2. ~or ~age ~elop~ Opp~ni~es 5. N~ P~ble~ 5ingle ~mily ~ o~hom~ T~c, T~, ~d~, ~ng. ~ainage issue~ PemdLeh old ~re buil&ng -- Ndse ~all X'~./42~ Ave Im~rseati~ improvement E~ass L~e Read Intersection Realignment L~ -- He,urn de~s~ redevelopment ~ond Race devdopment opparmn'~es ) turno~ound A~enue. XyJon ~ 45 sc~pe opportunity CTwin Homes) Helium der~it? housing 5tr~ l~r~ ame~es Noise wall co~ration -- __ In place ir~ustrlal Issues e issue Orainag, Camme'dal M~ density redevebpment VALLE~ Ird~on improvement City of New Hope outdoor storage issue .. issue 0 1000 2000 SCALE IN FEET Comomhen$~ Plan U~at~ 7 Development Framework Polic P. Z..~r Accomplish transitions between distinctly differing types of land uses in an orderly fashion which does not create a negative (economic, social or physical) impact on adjoining developments. Infill development of compatible land uses shall be strongly encouraged. Where practical, conflicting and non-complementary uses shall be eliminated through removal and relocation. Bo RESIDENTIAL GOALS Goal 1: Policies: Provide a vadety of housing types, styles and choices to meet the needs of New Hope's changing demographics. Ao Through ir'fill development and redevelopment efforts, increase life cycle housing opportunities not currently available within the City (i.e., high value housing, townhomes). Promote medium density attached housing to address the needs of an expanding empty nester or independently living elderly population. Continue the City's efforts to provide special needs housing for people with various types of disabilities. Co Goal 2: Policies: Maintain and enhance the strong character of New Hope's single family residential neighborhooas. Promote private reinvestment in the City's single family housing stock. Examine City development regulations to provide greater development flexibility for single family homeowners. Prevent the intrusion of incompatible land uses into Iow density single family neighborhoods. City of New Hope 12 Com~p_r.e.h_,e_n_flve .Plan Update Development Framework Policy Plan D. Aggressively enforce the City's housing maintenance regulations. E. Provide community education and information to local property owners on home maintenance, repair, and assistance opportunities. mt'~e redevelopment of substandard single family homes when it is judged not ically feasible to correct the deficiencies. ~ Encourage neighborliness through block clubs, block parties or neighborhood associations. Goal 3: Policies: Ao Promote multiple family housing alternatives as an attractive life cycle housing option. Do Eo Redevelop substandard multiple family properties that display deteriorated building conditions, no site amenities, poor site design, or incompatible land use patterns when it is judged not economically feasible to correct the deficiencies. Adhere to the highest community design and construction standards for new construction and redevelopment projects.. Accompany medium and high density development with adequate accessory amenities such as garages, parking, open space, landscaping, and recreational facilities to insure a safe, functional, and desirable living environment. Consider mixed land uses as an alternative land use option in planning and redevelopment of obsolete commercial or industrial sites. Encourage neighborliness through block clubs, block parties or neighborhood associations. , City of New Hope 13 Comprehensive Plan Updal, , Development Framework PLANNING DISTRICT 10 Plannin~ Districh~ ¸3. ,, This district is located in the east central portion of New Hope with the Soo Rail System to the west and north. Other borders include 42nd Avenue to the south and Crystal to the east. The primary land uses within this district are Iow density residential, and park/recreation. The following recommendations are offered for District 10. The Iow density residential neighborhoods are ~eneralty in--,qood condition, l"-The City has f-identified areas of single family homes along Nevada as a target area for redevelopment. The following strategies will be implemented to address the Iow density residential areas of District 10: Promote property maintenance through private reinvestment, the City Housing Maintenance Code and scattered site housing programs. b. Actively pursue the redevelopment of the poor condition, Iow density residential land along Nevada Avenue between 42nd Avenue and 45th Avenue. Medium density residential alternatives are suggested for this area. The City will actively promote the maintenance of the existing multiple family residential properties through the Housing Maintenance Code. Storm water improvements will be pursued to alleviate flooding at the intersection of 46th Avenue and Oregon Avenue. The City will undertake efforts to improve parking and vehicle access to Fred Sims Park. 94 Development Framework · EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ~--.. 6-23-03 EDA · , ~ Item No. By: Kirk McDonald By:,~ ~..,~../r 1 7 MOTION ACKNOWLEDGING EXPIRATION OF LETTER OF INTENT WITH BROOKSTONE, INC. AND AGREEMENT TO CONTINUE COORDINATION ON INFORMAL BASIS REQUESTED ACTION Staff recommends that the Economic Development Authority approve a motion acknowledging the expiration of the Letter of Intent with Brookstone, Inc. and agree to continue coordination with them on an informal basis for the potential future redevelopment of the City Center Area. POLICY/PAST PRACTICE In the past, the Economic Development Authority has approved letters of agreement to coordinate with specific developers on specific sites. BACKGROUND At the July 22, 2002, New Hope Economic Development Authority meeting, the EDA passed a resolution approving a Letter of Intent to work collaboratively with Brookstone, Inc. on the potential redevelopment of the City Center area. The Letter of Intent included the following key points: · The Letter of Intent requires no payment from the city to the developer and simply states that the two parties agree to work together over the next 12 months to develop plans, in conjunction with a task force for the potential redevelopment of the City Center area. · The New Hope Economic Development Authority hereby grants Brookstone, Inc. an exclusive right to negotiate with the city for the redevelopment of all or a portion of the City Center area for a period of 12 months, based upon moving forward collaboratively on the attached timeline and work program. · It is understood that if the parties are reasonably satisfied at the end of one year that the Letter of Intent may be extended or a formal agreement entered into, if appropriate. · The specific goal for redevelopment will be a broadly based mixed use project, including a variety of housing types and mixed use commercial, and to establish an inviting pedestrian friendly, village environment that has a strong gathering place attraction. · Both parties agree that they will work together in a collaborative manner, but have distinct responsibilities within the joint venture effort. (cont.) MOTION BY SECOND BY TO: hRFA\planning\city center~q-brookstone Loft exDire Request for Action Page 2 6-23-03 · It is understood and agreed that the city will take financial responsibility to initiate the items included in the workplan. · It is understood that Brookstone will be responsible for providing input on planning and financial matters, will have no direct financial responsibility and will be paid no fees for their effort. Since the Letter was executed, the City Center Task Force was appointed and Brookstone, Inc. has served as an unpaid consultant on the "staff/consultant team" assisting the task force. Brookstone has provided valuable assistance in giving the "developers perspective." Both Brookstone and city staff are aware that the current letter will expire in July. Both realize that the redevelopment process will be complicated and involve many parties. While both staff and Brookstone desire to continue the cooperative working relationship on potential redevelopment opportunities, neither feel it is necessary to extend the current Letter of Intent. Brookstone has submitted the attached letter stating: "1 am writing with reference to our June 7, 2002, Letter of Intent with regard to working together on the redevelopment of 42nd and Winnetka. I am pleased to have had the opportunity to work with the city over this period of time and have enjoyed providing input and being a collaborative part of the efforts to define this project in more exact terms and to create the opportunity for this major redevelopment to move forward. I understand that these kinds of processes are extremely complex and often take longer than anticipated and wish to continue to work together to bring something to fruition. At this point rather than extending the Letter of Intent I would simply request a good faith understanding that Brookstone, Inc. will be given the first opportunity to negotiate with the city on some kind of development position with regard to a part or all of the redevelopment depending upon its makeup at a future date. It is my very clear understanding that for the development to be successful it will require the involvement of a number of developers and so my exact future role is very difficult to pinpoint at this time. I simply want to move forward with flexibility in mind and ultimately do what is in everyone's best interest. I would appreciate your response. A simple letter indicating your concurrence would be appreciated and we can move forward working together in the same manner that we have." Staff recommends that the EDA approve a motion acknowledging the expiration of the Letter of Intent and agree to continue to coordinate on an informal basis with Brookstone, Inc. on potential redevelopment opportunities in the City Center area. ATTACHMENTS · 6/17/2003 Brookstone Correspondence · Original Letter of Intent and Resolution · City Center Map June 17, 2003 Kirk McDonald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 BROOKSTONE, INC. 7400 ["letro Blvd., Suite 212 Edina, hlinnesota 55439 612.837.9167 phone 612,837.8010 fax Dear Kirk, I am writing with reference to our June 7, 2002 letter of intent with regard to working together on the redevelopment of 42na and Winnetka. I am pleased to have had the opportunity to work with the city over this period of time and have enjoyed providing input and being a collaborative part of the efforts to define this project in more exact terms and to create the opportunity for this major redevelopment to move forward. I understand that these kinds of processes are extremely complex and often take longer than anticipated and wish to continue to work together to bring something to fruition. At this point rather than extending the letter of intent I would simply request a good faith understanding that Brookstone, Inc. will be given the first opportunity to negotiate with the city on some kind of development position with regard to a part or all of the redevelopment depending upon its makeup at a future date. It is my very clear understanding that for the development to be successful it will require the involvement of a number of developers and so my exact future role is very difficult to pinpoint at this time. I simply want to move forward with flexibility in mind and ultimately do what is in everyone's best interest. I would appreciate your response. A simple letter indicating your concurrence would be appreciated and we can move forward working together in the same manner that we have. Please call should you have any questions on this. (~~,,o~ery Truly, Richard V. Martens President Cc: Cary Lyons, Vanman Companies REAL ESTATE ADVISORY SERVICES, INVESTtqENT AND DEVELOPI~IENT ;June 7, 2002 Mr. Kirk McDonald Community Development Director City of New Hope 440] Xylon Avenue North New Hope, MN 55428 BROOKSTONE. INC 7400 Metro Blvd.. Sure 212 E0,na. M~nneso~a 55439 612.837.9167 phone 612.837.8010 f~, Dear Kirk: I am very pleased to have the opportunity to work with the City of New Hope on the potential re- development of42'~ and Winnetka. While redevelopment of this type, in it's very nature, is extremely complex, I believe that the location, attributes of the area, and timing make this a potentially strong opportunity. This letter is being written to serve as a letter of intent between the City of New Hope and Brookstone, Inc. to collaboratively work together to bring this redevelopment to fruition. From our discussions, the salient issues I believe we should agree upon are outlined below: I. Project area - As shown on the attached plan, this includes both the northwest and southeast comers 42~ and Winnetka. We recognize that the city is in discussion with a potential developer for the southeast comer, and it our clear understanding that the southeast parcel will be taken out oftbe letter of intent, fi.another developer moves ahead. 2. Letter oflntent Terms - The City of New Hope hereby grants Brookstone, Inc. an exclusive right to negotiate with the city for the redevelopment of this area for a period of twelve months from the date that both parties have entered into the letter of intent. It is our understanding that this will be based upon the patties collaborately moving forward on the established timeline, and that if both patties are reasonably satisfied at the end of one year, and the timelines have been reasonably met, the letter of intent will be extended or a formal agreement entered into if appropriate. 3. Goals - It is our goal to achieve the items listed in the timeline within the one year time period, and prior to the expiration of the one year, to establish other items that will be necessary to move forward with development and construction. While a master plan is part of the one year timeline, the vision we will be working encompasses a broadly based mixed use project including for sale and rental housing of medium to high density with mixed use commercial involving both for rent retail and office space, and some free standing retail uses, particularly in the retail food area. The goal will be to establish an inviting, pedestrian friendly, village environment, creating a gathering place that will put this comer on the Twin Cities map and be · a strong attraction both for area and regional residents. REAL ESTATE ADVISORY SERVICES. INVESTMENT AND DEVELOPMENT 4. During the ensuing year, both parties acknowledge that they will work together in a very collaborative manner, but that each will have separate and distinct responsibilities within that joint venture effort: a. City of New Hope i. Take financial responsibility and to initiate all items under the timeline. ii. Negotiate with the potential developer on the southeast comer. b. Developer i. The Developer will be responsible for providing input during the master planning, further financial analysis, tenant relocation efforts, etc. and to selectively participate in direct efforts such as meeting with tenant groups with regard to relocation matters. The Developer will have no direct financial responsibilities, but will be paid no fees for their effort. Again, we are excited about the opportunity to work together with the City of'New Hope on this project. We would appreciate each party signing a copy of this letter below to serve as our agreement. Yours very truly, Richard Martens President Hr. Daniel J. Donahue By: ~ For the City of New Hope ('Sign he~e) Date: By: Richard Martens Brookstone, Inc. Date: EDA RESOLUTION NO. 2002- RESOLUTION APPROVING LETTER OF INTENT TO WORK COLLABORATIVELY WITH BROOKSTONE, INC. ON POTENTIAL REDEVELOPMENT OF CITY CENTER AREA AND AUTHORIZING EXECUTIVE DIRECTOR TO EXECUTE AGREEMENT WHEREAS, the City has been coordinating over the past six months on an informal basis with Brookstone, Inc. regarding the potential redevelopment of the City Center area; and WHEREAS, the City desires to formalize this working relationship with Brookstone, Inc. as it moves forward to create a citizen's task force to study redevelopment options at 42~ and Winnetka Avenues; and WHEREAS, Brookstone, Inc. has successfully coordinated with other nearby cities in the past to accomplish mixed use redevelopment, such as the Golden Valley Town Square project in Golden Valley; and WHEREAS, the New Hope Economic Development Authority hereby grants Brookstone, Inc. an exclusive right to negotiate with the City for the redevelopment of all or a portion of the City Center area for a pedod of 12 months, based upon moving forward collaboratively on the attached timeline and work program; and WHEREAS, it is understood that if the parties are reasonably satisfied at the end of one year, that the Letter of Intent may be extended or a formal agreement entered into, if appropriate; and WHEREAS, the specific goal for redevelopment will be a broadly based mixed use project, including a vadety of housing types and mixed use commercial, and to establish an inviting, pedestrian friendly, village environment that has a strong gathering place attraction; and WHEREAS, both parties agree that they will work together in a collaborative manner, but have distinct responsibilities within the joint venture effort; and WHEREAS, it is understood and agreed that the City will take financial responsibility to initiate the items included in the workplan; and WHEREAS, it is understood that Brookstone will be responsible for providing input on planning and financial matters, will have no direct financial responsibility and will be paid no fees for. their effort. NOW, THEREFORE, BE IT RESOLVED by the New Hope Economic Development Authority that the Letter of Intent to coordinate with Brookstone, Inc. on a potential City Center redevelopment is hereby approved and the Executive Director is authorized to execute the agreement. Adopted by the Economic Development Authority of the City of New Hope, Hennepin County, Minnesota, this 22"d day of July, 2002. President Executive Director .ir NEW HOPE CITY CENTER STUDYAREA. C®rns~a~j ?