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EDA 08/12/02OFFICIAL FILE COPY CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North August 12, 2002 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Mary Gwin-Lenth Commissioner Pat LaVine Norby 2. 3. 4. o Call to Order Roll Call Approval of Regular Meeting Minutes of July 22, 2002 Discussion Regarding Creation of Tax Increment Financing District and City Assistance for Navarre Corporation Expansion and Ahrens Trucking Relocation; Discuss Terms of Agreement and Direct Staff to Proceed with Preparation of Development Agreement (Improvement Project No. 727) Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 Approved EDA Minutes Regular Meeting July 22, 2002 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES CITY CENTER AREA Item 4 New Hope EDA Page 1 President Enck called the meeting of the Economic Development Authority to order at 9:01 p.m. Present: W. Peter Enck, President Don Collier, Commissioner Mary Gwin-Lenth, Commissioner Sharon Cassen, Commissioner Pat LaVine Norby, Commissioner Motion was made by Commissioner Norby, seconded by Commissioner Collier, to approve the Regular Meeting Minutes of May 13, 2002. All present voted in favor. Motion carried. President Enck intxoduced for discussion Item 4, 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. Mr. Kirk McDonald, Director of Community Development, stated city staff and several members of the City Council have met with several developers over the past year in an effort to generate interest in and to pursue the potential redevelopment of the City Center area. The developer that has met with staff on the most frequent and consistent basis over the past six months has been Richard Martens from Brookstone, Inc., the developer of the Golden Valley Town Square project. Staff is recommending that the Economic Development Authority now take steps to formalize this working partnership by approving a resolution and Letter of Intent. Mr. McDonald noted that although staff recently received word from the Met Council that the City Center Opportumties Grant was not funded, staff anticipates that the EDA will want to move forward with forming a task force and undertake the planning study and possibly reduce the cost of study and/or utilize EDA funds to cover the costs of the study. He stated the Letter of Intent from Brookstone, Inc. 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. He reviewed the key points of the agreement: The project area includes the northwest and southeast comers of 42"d and Winnetka. The southeast parcel will be taken out of the letter of intent if another developer moves ahead. 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 agreed upon timeline and w_ork program. July 22, 2002 RESOLUTION 02-04 Item 4 ADJOURNMENT · 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. · 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. Richard Martens, Brookstone, Inc., was recognized. He spoke regarding the location attributes and noted the complexity of redevelopment endeavors. He emphasized the need to make it a pedestrian friendly area. Commissioner Gwin-Lenth complimented Mr. Martens on the Golden Valley project. For the record President Enck reported that he contacted Mr. Marten through a friend, but he has no fmancial relationship with the fm-n of Brookstone, Inc. and there is no conflict of interest. President Enck requested staff to amend the resolution to include the language regarding the southeast parcel (school district site). There were no further questions from the EDA or audience. Commissioner Collier introduced the following resolution and moved its adoption "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". 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 thereofi Enck, Cassen, Colher, Gwin-Lenth, Norby, 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 camed. The New Hope EDA adjourned at 9:15 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA Page 2 July 22, 2002 EDA REQUEST FOR ACTION Originating Depa~ment Approved for Agenda Agenda Section Community Development '~"~ 8-12-02 EDA Item No. By: Kirk McDonald By: 4 DISCUSSION REGARDING CREATIO/OF TAX INCREMENT FINANCING DISTRICT AND CITY ASSISTANCE FOR NAVARRE CORPORATION EXPANSION AND AHRENS TRUCKING RELOCATION DISCUSS TERMS OF AGREEMENT AND DIRECT STAFF TO PROCEED WITH PREPARATION OF DEVELOPMENT AGREEMENT (T~ROVEMF. NT PROJF~CT NO. 727) REQUESTED ACTION Staff requests that the Economic Development Authority have a discussion regarding the creation of a Tax Increment Financing District and city assistance for the Navarre Corporation expansion and Ahrens Trucking relocation, discuss the Terms of Agreement, and direct staff to proceed with the preparation of a Development ~ Agreement. Jim Casserly from Krass Monroe, P.A., the city's financial development consultant, will be in attendance to discuss these issues with the EDA. POLICY/PAST PRACTICF In the past, the EDA has created new Tax Increment Financing Districts and provided city financial assistance for the relocation, retention and expansion of businesses in the City. BACKGROUND At the June 10, 2002, New Hope EDA meeting, staff presented a request from Navarre Corporation to relocate Ahrens Trucking from its current location to the city-owned property at 9200 49~h Avenue to facilitate a large expansion at the Navarre site. The EDA directed staff to coordinate with all parties to determine if the plan was financially feasible. Navarre requested city financial assistance in the form of a land write-down gap funding assistance for the Ahrens project and utility relocation at the Navarre site. The EDA saw this initially as a "win- win" for all parties, as Ahrens Trucking would be relocated and retained in the City, Navarre Corporation would undertake a major expansion, and the city property would be developed and regional storm water improvements. Over the past two months, staff has been coordinating with Krass Monroe and Navarre Corporation on details regarding how this project might work and Krass Monroe has prepared the attached documents outlining the scope and financial parameters of the project. If the EDA is agreeable to the terms of the agreement, staff ,~/,./~,( (cont.) MOTION BY //~~ SECOND BY 7-~/~r) To: - ' ~'0' / -, Page 2 8-12-02 Request for Action recommends that the EDA direct staff to continue to coordinate with all parties on the preparation of a Development Agreement. ATTACHMENTS · 8/5 Krass Monroe Memo · Term Sheet · Previous Correspondence · Site Map KRASS MONROE, P.A. ATTORNEYS AT LAW Greg D. Johnson, CPA Email.'gre~Jo'assmonroe. com Voice Mail (952) 885-5994 James R~ Casserly, Esq. Emai! jamesc~krassmonroe, com Voice Mail (952) 885-1296 MEMORANDUM City of New Hope Attn: Kirk McDonald, Comm. Dev. Dir. Daniel Donahue, City Manager. Daryl Sulander, Finance Director From: Greg D. Johnson, CPA James R. Casserly, Esq. Date: August 5, 2002 Re: Navarre Expansion/Ahrens Trucking Relocation Our File No. 10048-8 INTRODUCTION We have prepared a financial and legal analysis for moving Ahrens Trucking to a new site, Navarre constructing a 100,000+ sq. ft. building adjacent to its existing facility and the construction and relocation of vadous public improvements. The financial and legal issues addressed in this memo include the following: Can the City assist in the expansion of Navarre thus allowing an important corporate member of the community to retain its business in the City. How can the City assist Ahrens Trucking to relocate from its current site to a site currently owned by the City. How can the City pay for public improvements in the Navarre expansion area (relocation of utilities) and in the City-owned site (development of stormwater retention area). How can the City minimize its risks while accomplishing its stated goals. SUITE 1100 SOUTHPOINT OFFICE CENTER * 1650 WEST 82ND STREET * BLOOMINGTON, MINNESOTA 55431-1447 TELEPHONE 952/885-5999 · FACSIMILE 952/885-5969 www.krassmonroe.com FINANCIAL ANALYSIS At a meeting on July 3, Bob Glasgow, a consultant for Navarre, identified the costs related to moving Ahrens into a new building on current City owned property. Bob's recommendation is to provide Ahrens with the land for $1.00 and limit their outstanding debt so that their monthly debt service is no more that $600 higher than the current level of $1,187 per month. Ahren's current bank debt service is: Orig. Bal. Int. Rate Orig. Term Monthly Pmt Cur. Bal. Bank Loan 100,000 7.5% 120 months 1,187 80,000 (est.) The total cost of the new Ahrens building is $677,239. Navarre has committed to covering $340,000 in exchange for the current Ahrens property leaving a balance of $337,239 needed for project costs. In addition, Ahrens currently has $80,000 of bank debt outstanding. The remaining project costs and bank debt total $417,239 but there is only $1,787 per month available to pay this balance. Our analysis on the attached page 1 shows that monthly payments of $1,787 for 20 years at 7.5% would support a principal of $221,824. Since the projected debt of $417,239 is greater than the supportable debt of $221,824, there is gap of $195,415. Ahrens appears unwilling to accept any higher level of debt service. Navarre is paying $340,000 to acquire 43,570 sq. ft. from Ahrens ($7.80/sq. ff.) and will not pay any additional amounts. If the City is willing to cover this almost $200,000 gap, then the project will proceed. The City can provide the assistance if it creates a tax increment district(s) to generate the necessary funds. The three parcels to be used for the new Navarre building and the one parcel for the new Ahrens building would not qualify for a 25-year redevelopment TIF district, but it appears a 9-year economic development TIF district could be established. Our projections, on the attached pages 2 & 3, show that approximately $141,000 in tax increment could be generated annually from the new buildings. Total tax increment generated is about $1,100,000 (see column (e) on page 3) and after deducting 10% for admin, and program costs, there remains $1,010,029 (see column (h) on page 3). This $1,010,029 can be allocated for the payment of project expenses. If Navarre pays approximately $445,000 of project expenses, it would then receive a tax increment revenue note for that amount which requires using 70% or $707,021 of the available tax increment (see column (c) on page 4 and the tax increment revenue note amortization schedule on page 5). After payment of the revenue note, there remains approximately $300,000 for the EDA's project expenses (see column (f) on page 4). In 2002 dollars, the amount is worth $223,984 assuming a 5% present value or interest rate (see column (g) on page 4). · Page 2 LEGAL ISSUES To generate the necessary funds to accomplish the City's goals, the following actions are necessary: The City/EDA must establish a non-contiguous economic development TIF district. Both projects must qualify in a non-contiguous district and our initial review suggests that both projects will satisfy the required criteria. The customary public headngs and notices are required. If the City owns the site, then the City should convey to the EDA that portion of the site it owns which it does not need for stormwater drainage. The EDA should enter into a development contract with Navarre which includes the following terms: The EDA will transfer property to Navarre that is needed for the Ahrens relocation (thus allowing for the Navarre expansion). This transfer requires a public headng and notice. Bo Navarre will contract directly with Ahrens which will allow Ahrens to timely relocate to the new site. The EDA will assist Navarre with $200,000 of Navarre's acquisition costs and approximately $245,000 of utility relocation costs by delivering to Navarre a tax increment revenue note payable from the increased value of the projects (the EDA's net cost is slightly more because of the value of the land it is transferring). The revenue note will not be delivered unless the expansion occurs and the City land can revert to the EDA if Ahrens does not actually expand. The EDA can facilitate the necessary public improvements on both sites. It can get appropriate security from Navarre dudng the relocation of the utilities and pdor to the time Navarre actually commences construction (these provisions would be part of the redevelopment contract). The EDA can raise funds for the projects by either selling debt or, if the City's fund balances are sufficient, by borrowing from the City; and, in either case, the EDA would repay the debt by pledging tax increment (an interfund loan. which is specifically authorized by the Tax Increment Act). · Page 3 CONCLUSION With the creation of a single TIF distdct and the construction of the buildings, the City/EDA are able to provide a reasonable amount of assistance for Navarre to purchase the Ahrens land and relocate Ahrens to a parcel currently owned by the City. The EDA does not have to have a direct contractual relationship with Ahrens; however, it must facilitate the appropriate result for Ahrens. With the financial plan described in the memo, the EDA should also have the resources necessary to construct the public improvements. We think the approach outlined meets the goals of the City/EDA and the impacted companies and further provides for a proper allocation of risk. We look forward to a further review of this project with the City. G:\WPDATA~'~NEW HOPE~08\CORRVvlCDONALD-OONAHUE-SULANDER 2.DOC · Page 4 CITY OF NEW HOPE - Navarre Ahren's Trucking Debt Service Current Debt I Bank Loan . IOriginal Loan $ 100,000 . t Interest Rate 7.50% i Term 120 months Payment 1,187 per month TOTAL CURRENT MONTHLY DEBT SERVICE ' 1,187 Iper month New Debt + Restructured Bank Loan Construction & Soil Correction 596,423 bid Soft Costs 64,298 Contingency 2.5% 16,518 City Land Payment 0 City Assistance To[al Cost for New Building 677,239 Payment by Navarre (340,000) City Assistance (195,415) City Assistance i , , Remaining amount to finance 141,824 Ahrens current bank debt balance 80,000 Total Debt to finance 221,824 Interest Rate 7.50% i Term l 240 months ~TOTAL NEWMONTHLYDEBTSERVlCE I 1,787 per month Navarre - Ahrens debt 2.xls Prepared by Krass Monroe, P.A. 8/5/2002 CITY OF NEW HOPE Navarre Expansion & Ahrens New Site ASSUMPTIONS Original Market Values Navarre I Navarre Parking lot 08-118-21-24-0005 2 Ahrens Trucking 08-118-21-23-0006 30utlot 08-118-21-23-0008 Ahrens 1 9200 49th Ave N. 07-118-21-23-0022 Totals Original Tax Capacity <= 150,000 1.50% > 150,000 2.00% Estimated Market Value Navarre warehouse 100,000 Ahrens Building 4,800 Estimated Tax Capacity Navarre warehouse Ahrens Building <= 150,000 1.50% > 150,000 2.00% sq. ft. @ $ sq. ft. @ $ Estimated Taxes Navarre warehouse 100,000 sq. ft. @ $ Ahrens Building 4,800 sq. ft. @ $ Estimated Tax Increment -Annual Area of Parcel 112/2001 Market Value (Pay 2002) (Acres) (Sq. Feet) Land Building Total 7550 49th Ave. 0.98 42,675 108,000 108,000 7600 49th Ave. 1.00 43,570 109,000 42,000 151,000 3.73 162,280 186,000 186,000 "% of Site 66.7% 1.90 82,724 82,724 82,724 7.60 331,249 $ 485,724 $ 42,000 $ 527,724 4,891 50.00 persq, ft. = 5,000,000 60.00 persq, ft.= 288,000 99,250 5,010 1.47 per sq. ft. of Land 2.10 per sq. ft. = 200,262 2.11 per sq. ft. = 10,109 5,288,000 104,260 140,881 210,371 67.0% of total taxes paid Local Tax Rate - Pay 2002 estimate State Tax Rate - Pay 2002 estimate 0.60000 Combined Tax Rate - C/I Property Only 2.01775 used for tax increment calculations Admin Fees State Auditor Fee Inflation (after 2 yrs of full value) PV Rate - Rev. Note 12/1/2002 PV Rate - City 12/1/2002 1.41775 * (C/I only) 10.00% 0.425% 0.00% 7.00% 5.00% Navarre - Ahrens TI Combined 2.xls Prepared by Krass Monroe, P.A. 8/5/2002 CITY OF NEW HOPE Navarre Expansion & Ahrens New Site CASH FLOW AND PRESENT VALUE ANALYSIS 1 2 3 4 5 6 7 8 9 (a) Date 06/01/02 .12101/02 06/01/03 12101/03 06/01/04 12/01/04 06/01/05 12/01/05 06/01/06 12/01/06 06/01/07 12/01/07 06/01/08 12/01/08 06/01/09 12/01/09 06/01/10 12/01/10 06/01/11 12/01/11 06/01/12 12/01/12 < ANNUAL ............. > <, (b) (c) (d) (e) (f) Original Estimated Captured Est. T.I. Less: Tax Tax Tax (d) x Admin Capacity Capacity Capacity 1.41775 Fees (see assumptions) (c) - (b) St. Aud. Fee (e) x 0.0% Inflation (prey. 0.425% 10.00% 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 4,891 104,260 104,260 104,260 104,260 104,260 104 260 104 260 104,260 104 260 104 260 104,260 104,260 104,260 104,260 104,260 104,260 104,260 104,260 0 0 0 0 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 99,369 SEMI - ANNUAL (g) Available Tax Increment (e)- (f) (h) Cumulative Avail. Tax Increment Total of (g) 70,141 70,141 70,141 70,141 70,141 70,141 70,141 70,141 70,141 70,141 70 141 70 141 70 141 70,141 70 141 70 141 0 0 0 0 0 0 0 0 0 0 0 0 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 7,014 0 0 0 0 0 0 63,127 63.127 63 127 63 127 63 127 63 127 63 127 63.127 63.127 63 127 63 127 63 127 63 127 63 127 63.127 63.127 0 0 0 0 0 0 63,127 126,254 189,381 252,507 315,634 378,761 441,888 505,015 568,142 631,268 694,395 757,522 820,649 883,776 946,903 1,010,029 1,122,255 112,225 1,010,029 1,010,029 Navarre - Ahrens TI Combined 2.xls Prepared by Krass Monroe, P.A. 8/5/2002 CITY OF NEW HOPE Navarre Expansion & Ahrens New Site PRESENT VALUE ANALYSIS FOR CITY AND REVENUE NOTE (a) (b) (c) (d) (e) (f) (g) (h) (i) (j) Available for P.V. IRate 'P. V. Rate Total Total Available Revenue Semiannual Cumulative Available for 8emiannual Cumulative Semiannual Cumulative Date Tax Increment Note Balance Balance Authority Balance Balance Balance Balance (from Cash (b) x P.V. of (c) Total of (d) (b)- (c) P.V. of (f) Total of (g) (d) + (g) (e) + (h) Flow Analysis) 70,00% 7.00% 30.00% 5.00% 06/01/02 0 0 0 0 0 0 0 0 0 1~01/02 0 0 0 0 0 0 0 0 0 06/01/03 0 0 0 0 0 0 0 0 0 12/01/03 0 0 0 0 0 0 0 0 0 06/01/04 0 0 0 0 0 0 0 0 0 12/01/04 0 0 0 0 0 0 0 0 0 06/01/05 63,127 44,189 37,206 37,206 18,938 16,738 16,738 53,944 53,944 12/01/05 63,127 44,189 35,948 73,153 18,938 16,330 33,069 52,278 106,222 06/01/06 63,127 44,189 34,732 107,885 18,938 15,932 49,001 50,664 156,886 12/01/06 63,127 44,189 33,557 141,443 18,938 15,543 64,544 49,101 205,987 06/01/07 63,127 44,189 32,423 173,866 18,938 15,164 79,708 47,587 253,574 12/01/07 63,127 44,189 31,326 205,192 18,938 14,794 94,503 46,121 299,694 06/01/08 63,127 44,189 30,267 235,459 18,938 14,434 108,936 44,700 344,395 12/01/08 63,127 44,189 29,243 264,702 18,938 14,081 123,018 43,325 387,720 06/01/09 63,127 44,189 28,264 292,957 18,938 13,738 136,756 41,993 429,712 12/01/09 63,127 44,189 27,299 320,256 18,938 13,403 150,159 40,702 470,414 06/01/10 63,127 44,189 26,376 346,631 18,938 13,076 163,235 39,452 509,866 12/01/10 63,127 44,189 25,484 372,115 18,938 12,757 175,992 38,241 548,107 06/01/11 63,127 44,189 24,622 396,738 18,938 12,446 188,438 37,068 585,175 12/01/11 63,127 44,189 23,790 420,527 18,938 12,142 200,580 35,932 621,107 06/01/12 63,127 44,189 22,985 443,512 18,938 11,846 212,427 34,831 655,939 12/01/12 63,127 44,189 22,208 465,720 18,938 11,557 223,984 33,765 689,704 1,010,029 707,021 465,720 465,720 303,009 223,984 223,984 689,704 689,704 Utility Relocation Costs 244,750 0 0 Ahrens' Trucking 200,000 Total Revenue Note 444,750 Navarre - Ahrens TI Combined 2.xls Prepared by Krass Monroe, P.A. 8/5/2002 CITY OF NEW HOPE Navarre Expansion & Ahrens New Site TAX INCREMENT REVENUE NOTE Principal Amount Interest Rate Number of Payments Payment Amount Interest Start Date Term of Note 465,720 7.00% 16 semi-annual payments Available Tax Increment 12/01/02 10.0 years 2 3 4 5 7 8 9 10 Date 12/01/02 06/01/03 12/01/03 06/01/04 12/01/04 06/01/05 12/01/05 06/01/06 12/01/06 06/01/07 12/01/07 06/01/08 12/01/08 06/01/09 12/01/09 06/01/10 12/01/10 06/01/11 12/01/11 06/01/12 12/01/12 Capitalized Interest Payment Interest Principal Balance 465,720 16,300 0 0 482,020 16,871 0 0 498,891 17,461 0 0 516,352 18,072 0 0 534,424 0 44,189 18,705 25,484 508,940 0 44,189 17,813 26,376 482,565 0 44,189 16,890 27,299 455,265 0 44,189 15,934 28,254 427,011 0 44,189 14,945 29,243 397,768 0 44,189 13,922 30,267 367,501 0 44,189 12,863 31,326 336,174 0 44,189 11,766 32,423 303,752 0 44,189 10,631 33,557 270,194 0 44,189 9,457 34,732 235,462 0 44,189 8,241 35,948 199,515 0 44,189 6,983 37,206 162,309 0 44,189 5,681 38,508 123,801 0 44,189 4,333 39,856 83,945 0 44,189 2,938 41,251 42,694 0 44,189 1,494 42,694 0 707,021 0 172,596 534,424 68,704 Navarre - Ahrens TI Combined 2.xls Prepared by Krass Monroe, P.A. 8/5/2002 08/09/02 FRI 12:49 FAX 952 885 5969 KRASS ~ONRO~ TERM SHEET Navarre (August 9, 2002) Redeveloper: Navarre Corporation, a Minnesota corporation City: City of New Hope, Minnesota EDA: New Hope Economic Development Authority Redevelopment Property: The Redeveloper's Property, adjacent Ahrens Trucking Property and City Property on which Ahrens Trucking is being relocated, all as described below. Redeveloper's Property: The approximately 4.7 acres shown on the attached Site Plan and currently owned by the Redeveloper. City Property: The approximately 3.0 acres shown on the attached Site Plan and currently owned by the City of New Hope. The new Ahrens Trucking development will occur on the front 2/3rd of the property facing 49o` Ave. N. The back 1/3Td of the property will be used for a regional storm water pond. The City will provide Navarre with the required amount of City Property needed for the Ahrens relocation. Ahrens Trucking Property: The approximately 1.0 acres shown on the attached Site Plan and currently owned by Ahrens Trucking. Minimum Improvements: The Redeveloper shall construct or cause to be constructed the following minimum improvements to the Redevelopment Property: II: A warehouse of approximately 100,000 square feet on the Redeveloper's property and Ahrens Trucking Property An approximately 4,800 square foot building for Ahrens Trucking on the City Property 08/09/02 FRI 12:49 FAX 952 885 5969 1/I~55 ~O~ROk ~. Timing: Navarre Warehouse: Begin on or about January 1, 2003 Complete on or about September 1, 2003 Ahrens Trucking Building: Begin on or about September 15, 2002 Complete on or about January 1, 2003 Redevelopment Costs: The Redeveloper shall pay for all environmental remediation, site preparation including soil correction, public improvements, demolition, relocation, plat and plat amendment (except for the City Property), survey (except for the City Property), PUD and other development costs. This includes the utility relocation costs needed for construction of the Navarre warehouse. In the event environmental remediation is required, the City will diligently pursue any eligible programs for reimbursement of such costs. Also included are the costs for the Ahrens Trucking building as shown on the construction proforma attached. Environmental issues on the City Property will require further discussion. Revenue Note: To defray the Redevelopment Costs the EDA will issue a Revenue Note to the Redeveloper in the amount of $200,000 plus the cost of relocating the utilities on the Redevelopment Property in an amount not to exceed $250,000 for a total principal amount of the Revenue Note not to exceed $450,000. The Revenue Note shall be paid from tax increment generated by the Minimum Improvements on the Redevelopment Property. Security: As security for the construction of the Navarre warehouse, Navarre shall provide the EDA with a note in the amount of $250,000, or equivalent security acceptable to the EDA, secured by a mortgage on that portion of the Redevelopment Property which includes the Redeveloper's Property and the Ahrens' Trucking Property. After construction has been commenced on the Navarre warehouse, the EDA shall provide a Satisfaction of the Mortgage and return the Note. Business Subsidy Act: The Redeveloper shall set wage and job goals in connection with the Business Subsidy Act, if applicable. If such goals are not required by the Act, the Redeveloper agrees to co~-aply with any of 2 08/09/02 FRI 12:50 FAX 952 885 5969 KRASS MONROE the Act's reporting requirements that may nonetheless be applicable to the project This Term Sheet outlines the terms under which the parties are willing to enter into a Contract for Private Redevelopment, but does not constitute an offer or acceptance on either party's part. All fights and obligations with respect to the Redevelopment Property shall only be as provided for in a Contract for Private Rcdevelopment approved by the City Council. Attachment G:\WPDATAh'~NEW }IOP~0g\DOC\TERM SHEET 8-9-02 CLEAN.DOC 3 0~/06/02 Tbk 14:42 PAX 952 885 5969 KRASS MONROE ./ H.L~ON ,09'09a ]nN:a^v ,U OO5 ,SITE DATA Total Site Area = 243,770 $.F. o~' 5.6 acres Total Buildi~:j Area = lOO,O00 S.F. Tolal Green Area = 6'1,350 S.F, or 25% Parking Required = 158 slalls Provided = 158 stalls WC;L AS$OCIAIES, INC. CD 08/06/02 TUE 14:43 FA~ 952 885 5969 KRASS ~IONROE Anrens Relocal~on 9200 49ih Ave N. C70 Prelimina~ Bids 7/2/112 1.9 acre iProject Summary i I I I I I / ! / , Project Detail i :Unils U cosI ~xV, nded Cos~ ps[ Correc~or~ __ FoundaUon -~ ....... ......... $ 47 3~5 Exmna*'W~ ........... ~65:~- I~- ...... -- st~l*oolings-&foL~ndali°n t----*~'-310 $ 45J30 $ ~-~,-9-~ .............. FoundntionWall 69.63 1' dock foundalJon & r~i*~-n~-v~fl'~l~i 6-6 '-$ le 00 $ 1,188 --' -- ~{ ........... 120,00 50~ excavalion and backfill ................ '' '~8(~T 1.20 $ 6,336 ----- F-~r- ..... 168.00 70# ~ s/abDngrade&pads ........... 5280 $ 7.00 ~ .... ~ -- 523.07 .......... ! stzuctural sMb ad(~ . '.:. ~4~0-0 $ .... ~::'~ s 36,~60 ......... LOad iin-~ / pi"-~ 60.00 stairs Deplh 65.90 Exte~'~* ................. $ ......................... ¥0~1 Footage 566.66 L.u[icre~ block & insulalion 20 6200 $ 9.00 "$ 55,800 ............... exleno.r u_~p~.rade fronl -- overhead aoors I 5 S 2,000 $ IOTO-~- persnnne~ doors ........ 2 $ Z00 $ 1.400 ...... glazing 4~00 $ 2.10 $ 10.0~0 ~ insub~uon 4800 -~ ...... i.~4'~)- $ ~,720 ! m~s~'aou~ 4~00 $ o.so $ 2.eso ............................... ! sheetrock walls 360 $ 3.00 $ 1.0~0 ................................. cacpet & ba~e 244 $ t.75 I $ 427 .................................... elevator ~, ....... * slairs .................... i Mechanical ~ $ - fire ~'olection .......... .... 11 LS i $ 2,500 ............. ~oo~ s oso i s 2,400 -m-'!~!ng Total S 260 __ Cfly C~sts - I $ (87,4_22_~ ........ ;s~od ...... 35,4~0 $ 0 RO $ 28.3B4 Cfl)~ Costs :-I-I ..... "~ ........... trees & shru~s (~ea) 30 $ 200.oo- -~---' 6.--0-0~ .................... excavate Beo fabr/c /'ill, com-~?cl ~-'---'~=~ --. Nel Value $ (87,422). $ ~[1.051 Profil and Ovemead i i 4.,% $ 20,493 I ]$ -%816 i ia.brans R~,.": ...... ? .......... i .... Total Corlltr. & ~oil ¢orrecUon i ................... ) ............... I ......... ..... Se#£~llMee(f~R .......... ~ ..... 2,000 $ 8,000 I Sublolali T 577,239 Acqui$ilion Fag .................. 10.0%'~ I...-- Project Managemenl 3.0%i ...... ~:~ la, sas Flxecl Cun'em Debt Pa]/off~'-$'-' ~'~)i00¥ -$-(:1~' Misc. EKoer~ ..................... 100.0% i ,S 3,000 ~ $ 3,OOO ....................... ....... ' ...... {ncr. DebS.Land S . ;Interim Financing cj,0% 9 $ 2,013 -- N~va/e'-(~c~i~:)-~ '$--'(340,00n !Pemlanenl Loan-f~ .................. 3.0% S 150,00D; $ ---~,~-: iSoff Cotls Tolal rolal Debt Req'd S 467,239 $ (65.c N~3~Y Jme 3, 2002 Mr. Kirk McDonald Director ofCommtmity Dev~lopmc~n Cily of New Hope 5501 Xyion Avenue No. New Hope, Mn. 55428-4898 Re: Navarre Expansion Dear Mr. McDonald: I am writing this letter to you on beha/f of Navarre, Inc.. The purpose of this letter is to acknowledge Navarre's respom~ility and commitmerg to improve the t~mpomry parking situation. Secondly, to reasonably request your assistance in making it possible to expand their presence in New Hope. Background: It is Navarre's sincere desire to expand in the city of New Hope on a consol/r~t~,~:l site adjacem to the Navarre headquanem Fortuml~ly, we have been able to assemble most office adjacent site necessary to make this happen. It is however limited by various utility easemeras. In order for us to proceed, we need to comml the Ahren's site (See attached site plan). We have been pursuing an acquisifiou of the site at above market mtes for ff~e past 3.½ years. However the owner/occupant (Ahren) is unwilling to sell unless we are able to meet the/r business cr/ter/a. They have been reasouably cooperative but firm in their sumce. We need to meet their requirements to proceed, they are: · location, location, location (convenient to Hwy 169 & Nevada Ave) · replacemem of facility (2x cm~t size) · use / ou~ide storage ofiruck trailers ° no new debt or ~ debt servic, e incurred by Ahrens Timing is important to us. If Navarre can not expand adjacent, they must consider other alternatives that may include an eventual relocation of the entire business operation. The c~sts / restrictions of dealing with th~ utility ea.seme~ on the Navarre expansion site are additionally burdensome. impending site development. June 3, 2002 1. TheCityis owner ofa 2'85 acre parcel l°cated at 9200 49~' Ave' N'' We request the city to sell this parcel per the attached concept plan. Navarre will pay the city $1.00 for U~e site. Costs to stabilize the soil and support ~he building will be paid for by Navarre. An easement will be cr~_~,~l in the rear l~rtion for New Hopes ~ional watershed cor~rol project. The CRy will relocate the sanitary & storm sewer lines on the development site to a munally agreeable locatior~ To meet Ahrens criteria for no new / increased debt, we request financial assistance in strucuafng this debt. ~ener~ Timecable: Task 1. ~eliminaty agr~aem of concept between City & Navarre 2. Developmem & Sales Agreemems between a) City & Navarre and b) Navarre & ~: 3. prepare concept drawings & verify cost~ 4. Application submissions for Staffr~view 5. Planning Conun~ion 6. City Council 7. Replat 9200 49a Ave 8. Ahrens Constm~on 9. Relocate Utilities on Navarre Site 10. Navarre ~on May, 2002 June June ju~ August August August August- December, Aim'i{ August- ~ November- August, 2003 Navarre will commit to the following.. 1. Enter into a ~on with Ahrens to exchange their existing property upon completion of replacement facilities .at 9200 49~ Ave. N. at an above ~ price. 2. Build Ahrens a replacement facilityat 9200 49~ Ave' N' 3. Build a 70,000 sq. fl. + facility to open in August, 2003 including parking facilities. Information you may find helpful in evaluating this proposal includes: · Navarre anticipates its New Hope employment will increase by 80 people upon completion of the facility and will increase to 100 people over lime. · The preliminary estimate of consuucfion cost for the Ahrens replacement facility, exclusive of land cost and ~ soil correction is approximately $530,000. · The prelimnmy estimate of construction cost for the Navarre facility is, exclusive of Ahrens site acquisition and relocation of utilities is in the rang~ of $3 million. I appredate the oppommity to present this letter of request to you on behaffofNavarre, Inc.. ff you have questions or would like to discuss these developments further, I can be reached at 612-339-5680. Sincerely, 9200 49th Ave- Proposed relocntion site for Ahtvns 7600 49th Ave - Ahtem current location / Navarre ext~msion plan Cc: Mr John Turner, Sr. V. P., Navarre, Inc. Page 2 June 4, 2002 Mr. Kirk McDonald Director of Community Development City of New Hope 5501 Xylon Avenue North New Hope, MN 55428-4898 Re: Navarre Expansion and Ahrens Relocation WCL ASSOCIATES INC. Architecture Interiors Dear Kirk: Please find attached our preliminary submittal for the Navarre Corporation to be heard at the June 10r~ City Council meeting. Project Narrative The scope of the proposed work is to relocate Ahrens Trucking from its present location at 7600 49"` Avenue North to a new, city owned property at 9200 49"' Avenue North. Navarre Corporation will demolish the existing Ahrens facilities and construct a new 100,000 s.f. building to expand existing operations and parking. 1. 9200 49"' Avenue North Sitn This city owned site will be the new home of Ahrens Trucking and a Regional pond for the watershed district. The pond is expected to cover about 1/3 of the entire site. The new building is 4,800 s.f. in area for Phase I and is designed for an additional 6,000 s.f. in the future. Uses include offices, storage and an area to transfer goods from truck to truck for shipping. B~uildinq Architecture and Matedal,~. The building will be a I story colored concrete block or bdck with anodized aluminum window frames and clear glass. The roof will be fiat and will complement the existing commercial and office buildings located to the east and west of the site. Site Development Special care has been taken to minimize the visual impact of the building from the street and the neighbors. Berms and street trees are proposed along 49t~ Avenue North. Evergreen trees are proposed along the west and east property lines to screen the trailer storage area form the street and the neighboring commercial properties. 2. 7600 49~ Avenue North Site After building demolition and relocation of existing sanitary and storm sewer lines, a new 100,000 s.f. building will be erected for Navarre Corporation. New ponds located in city drainage easements will also be constructed at the rear of the existing Navarre building and to the west of the new building. The new building will provide additional office, repackaging and warehouse space. Buildin.q Architecture and Materials The building will be 2 stodes in height with a fiat roof. The materials and shape of the new building will mimic the existing facility. Materials include precast concrete panels, painted, green window frames and green metal wall panels at the curved front comers. Site Development The site will provide 158 new parking stalls and approximately 25% green area. If I can be of any further assistance, do not hesitate to contact me. Very truly you~, Gary E. De~n, ale, AIA WCL Asso~ates, Inc. Attachment (G:~002~48_navarre~01 _navarre~_0604km.wlxl) 16:07 F~ 952 885 5969 / j o° /' i-; · ,'..' ~ I." ' .'!. "i t ; f : KRASS ~ONROE ~ 006 EXHIBIT XX-B I 1 # Illilll'JJl IlJlllJ Jfl Jill IIII i.,, DRAFT 2 SUBJECT AREAS COMPRISE TAX INCREMENT FINANCING DISTRICT NO. 02-1 II-B-1