The URL can be used to link to this page

EDA 10/27/03' -'- OFFICIAL FILE COPY ..... CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North October 27, 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 August 25, 2003 Resolution relating to the decertification of a parcel from tax increment financing district no. 02-01 (improvement project no. 727) Discussion and update regarding development proposal for city-owned property at 5501 Boone Avenue North and direction to proceed with financial/tax increment financing analysis (improvement project no. 749) Motion authorizing staff to meet with representatives of Bear Creek Capital and property owners of 7901 Bass Lake Road and 5539/5549 Winnetka Avenue to negotiate potential property acquisition for redevelopment purposes (improvement project no. 754) 7. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 EDA Minutes Regular Meeting August 25, 2003 City Hall CALL TO ORDER ROLL CALL APPROVE MINUTES IMP. PROJECT 729 Item 4 MOTION/APPROVE APPRAISAL Item 4 IMP. PROJECT 751 Item 5 New Hope EDA Page 1 President Enck called the meeting of the Economic Development Authority to order at 8:43 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 Collier, seconded by Commissioner Sommer, to approve the Regular Meeting Minutes of July 28, 2003. All present voted in favor. Motion carried. President Enck introduced for discussion Item 4, Discussion regarding request by Bear Creek Capital and CVS Pharmacy to authorize appraisal of properties by city at applicant's expense (improvement project no. 729). Director of Community Development, Kirk McDonald, explained that CVS Drag Store has proposed to build a store at the Bass Lake Road and Winnetka intersection. They had earlier requested that the city share the cost of an appraisal with them. They have now revised their proposal so the appraisal would be at their expense. Bill Tipman with Bear Creek Capital came forward. President Enck asked if CVS was interested in the Lyndale property, which is now for sale. Mr. Tipman stated that the Lyndale property is not a part of their phase one. President Enck stated that he hoped they would consider it at this time. Mr. Tipman reiterated that he doesn't believe it would be viable at this time and added that they would like to have the store open by end of 2004. Commissioner Sommer stated his concerns that part of the property proposed for redevelopment is owned by the school district and that Sinclair has long term plans to remain there. He asked where CVS is in discussions with them. Mr. Tipman answered that there is a friendly relationship between the city and school district and if the plan moves forward the District would probably cooperate. President Enck asked for confLrrnation that CVS has requested the city to coordinate the appraisal and invoice them. Mr. Tipman responded affLrmatively. Commissioner Cassen expressed support for the redevelopment. She noted her desire to see the full picture of what they and other developers would do in relationship to the total development. Motion was made by Commissioner Collier, seconded by Commissioner Cassen, to approve appraisals at the applicant's expense for the commercial property at 7901 Bass Lake Road and the residential property at 5539 Winnetka Avenue North. All present voted in favor. Motion carried. President Enck introduced for discussion Item 5, Resolution authorizing approval of a term sheet between the New Hope Economic Development Authority and Ryland Homes for the redevelopment of the Winnetka Avenue East property (improvement project no. 751). August 25, 2003 EDA RESOLUTION 03-07 Item 5 ADJOURNMENT Mr. McDonald stated that staff and consultants have continued to work with the redevelopers. The city would be paid a land sale price of $12,500 per finished unit. Mr. McDonald illustrated two concept plans. Mr~ Jim Casserly, Krass Monroe, was recognized. He stated the term sheet is intended to outline basic terms of what the developer and city are trying to put together. This is not final but is the understanding of both parties, including permits and fees. He asked if there is additional direction tonight from the EDA. It was clarified that the association would be responsible for plowing private drives but not 'public streets. He stated the plan is to commence in May 2004 and be completed in 18 to 20 months. Mr. Casserly clarified information in the packet and explained that there are three base prices for each model, exclusive of any add-ons that are usually an additional 10 to 15% of price. The EDA discussed pricing. President Enck stated that they meet the assessment the EDA had in mind. Commissioner Cassen made a number of suggestions regarding the base pricing being flexible. She also requested clearer language regarding the mature trees in the area. President Enck stated that tree removal could be subject to staff approval. Commissioner Cassen continued that the area also needs ponding and the plans need more variety. President Enck stated that once the term sheet is approved and staff and Ryland are moving forward, the EDA will have more input. Commissioner Sommer added that more options are better and he encouraged neighborhood site appeal. He also questioned the developer selling twin homes to another developer to sell. President Enck verified with Mr. Casserly that the city would have one contract with Ryland who will have contracts with other builders. All agreed that the development needs variety and must be attractive. Commissioner Cassen introduced the following resolution and moved its adoption "RESOLUTION AUTHORIZING APPROVAL OF A TERM SHEET BETWEEN THE NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY AND RYLAND HOMES FOR THE REDEVELOPMENT OF THE WINNETKA AVENUE EAST PROPERTY (IMPROVEMENT PROJECT NO. 751)." The motion for the adoption of the foregoing resolution was seconded by Commissioner Sommer, and upon vote being taken thereon, the following voted in favor thereofi 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 Cassen, seconded by Commissioner Sommer, to adjourn the meeting. All present voted in favor. Motion carried. The New Hope EDA adjourned at 9:32 p.m. s~/~//~tpec t ful~.~ubmitte d' Eve Lomaistro Human Resources Coordinator New Hope EDA Page 2 August 25, 2003 · EDA - REQUEST FOR ACTION Originating DepartmentApproved for Agenda Agenda Section Community Development :~,, ~ 10-27-03 EDA ~ Item No. By: Kirk McDonald, Director of By Community Development ' -,~ 4 RESOLUTION RELATING TO THE DECERTIFICATION OF A PARCEL FROM TAX INCREMENT FINANCING DISTRICT NO. 02-01 (IMPROVEMENT PROJECT NO. 727) REQUESTED ACTION Staff requests EDA approval of the attached resolution, prepared by Krass Monroe, the City's redevelopment financial consultant decertifying 9200 49t' Avenue North from Tax Increment Financing (TIF) District No. 02- 01. A resolution must be considered by both the EDA and the City Council to finalize the decertification. Per the attached correspondence from Krass Monroe, the resolution should be approved by the EDA first, and then by the City Council. POLICY/PAST PRACTICE City goal #2 is to pursue the maintenance and redevelopment of commercial and residential properties within the city. In the past, the Council has approved similar resolutions relating to tax increment financing districts. ..BACKGROUND On September 9, 2002, a public hearing was conducted relating to the creation of TIF District No. 02-01 related to the Navarre Corporation expansion project and relocation of the Ahrens Trucking facility to the then city-owned property at 9200 49t' Avenue North. As the EDA is aware, Ahrens Trucking did not relocate to 9200 49t' Avenue North. The EDA eventually sold the property to a separate business, the Plymouth Heights Pet Hospital for the construction of a new pet hospital on the site. The rear portion of the property will be retained by the City and used for storm water management purposes. The approval of this resolution will officially decertify the subject parcel from Tax Increment Financing District No. 02-01. The TIF District that was created for the Navarre/Ahrens project was an economic development district, which is for warehouse type developments. The Pet Hospital is not a qualifying use in this type of district, therefore, it is recommended that the parcel be removed form the district. Per the attached correspondence from Krass Monroe, the resolution should be approved by the EDA first, and then by the City Council. The Plymouth Heights Pet Hospital located on the subject parcel and the Navarre expansion projects are both under construction. (cont.) MOTION BY ~ SECOND BY To: I:RFA\PLANNING\Plannin~}\Q _ EDA decertif¥ 9200 49~' from TIF District 02-01 .doc Request for Action Page 2 10-27-03 Staff recommends approval of the resolution. A'I-I'ACHMENTS · Resolution · Krass Monroe Memorandum, 10-7-03 · Location Map NEW HOPE ECONOMIC DEVELOPMENT AUTHORITY COUNTY OF HENNEPIN STATE OF MINNESOTA RESOLUTION NO. A RESOLUTION RELATING TO THE DECERTIFICATION OF A PARCEL FROM TAX INCREMENT FINANCING DISTRICT NO. 02-1 WHEREAS, the Board of Commissioners (the "Commissioners") of the New Hope Economic Development Authority (the "Authority") has established Redevelopment Project No. 1 (the "Project Area") and within the Project Area further established Tax Increment Financing District No. 02-1 (the "Tax Increment District") and adopted a Tax Increment Financing Plan relating thereto on November 20, 2002, pursuant to Minnesota Statute.% Sections 469.090 to 469.108 and 469.174 through 469.1799, inclusive, as amended and supplemented from time to time. WHEREAS, it has been proposed that the Authority approve the decertification of the parcel legally described as parcel identification number 07-118-21-23-0022 and located at 9200 - 49th Avenue North from the Tax Increment District. NOW, THEREFORE, BE IT RESOLVED by the Commissioners of the Authority that the decertification of parcel identification number 07-118-21-23-0022 located at 9200 49th Avenue North from the Tax Increment District is hereby approved and forwarded to the New Hope City Council for review and approval. Adopted by the Commissioners of the Authority this day of ,2003. -" YES: NO: ABSENT: ATTEST: President Executive Director CERTIFICATION I, , Executive Director of the New Hope Economic Development Authority, County of Hennepin, State of Minnesota, hereby certify that the foregoing is a true and correct copy of Resolution No. passed by the EDA on the ~ day of ,2003. Executive Director G:\WPDATA\N\NEW HOPE\08\TIF\DECERTIFICATION RESOLUTION_EDA.DOC KRASS MONROE, P.A. ATTORNEYS AT LAW Mary E. Molzahn, Sr. Development Analyst Email ma~m~rassmonroe, com Voice Mail (952) 885-4382 James gL Casserly. Esq. £mail. iamesc(.'~krassmom.oe, corn kbice Mail (952~ 855-1296 MEMORANDUM From: Date: Re: City of New Hope At'm: Kirk McDonald, Community Development Director Attn: Ken Doresky, Community Development Specialist Mary E. Molzahn, Sr. Development Analyst James R. Casserly, Esq. October 7, 2003 Proposed Tax Increment Distdct No. 03-1 (Special Law); Our File No. 10048,09 Existing Tax Increment Distdct No. 02-1; Our File No. 10048-08 Attached please find a resolution calling for a public headng on modifications to the Restated Redevelopment Plan and existing Tax Increment Plans, to the creation of Tax Increment Distdct 03-1 (Special Law) and to the adoption of a Tax Increment Plan for the City Council's consideration at its October 13th meeting. The modifications to the Restated Redevelopment Plan and existing Tax Increment Plans cladfy the available sources of revenue and reflect increased project costs and increased bonding authority due to the creation of the East Winnetka/Ryland TIF District. The resolution also addresses the creation of a new tax increment distdct for the East Winnetka/Ryland project and the adoption of a tax increment plan The numbering system for this new tax increment distdct is different than previous districts in that the identifying number (03-1) is followed by the phrase "(Special Law"). This reference is necessary to indicate that the tax increment district is created under the City's special legislation adopted by the Legislature eadier this year. We are also attaching an EDA and a City resolution, both of which decertify PIN 07-118-21-23-0022 from Tax Increment District No. 02-1 (Navarre Project). The order in which these three resolutions have to be adopted are as follows: 1. EDA Resolution relating to the decertification ~2. City Resolution relating to the decertification 3. City Resolution relating to the modifications and creation If you have any questions, please give either of us a call. G:\WPDATAWWEW HOPE~3~C~DONALD DORESKY MEM JRC 1.DOC SUITE 1100 SOUTHPOINT OFFICE CENTER · 1650 WEST 82ND STREET · BLOOMINGTON, MINNESOTA 55431.1447 TELEPHONE 952/885-5999 · FACSIMILE 952/885-5969 3N~ 0 0 0 0 Zzzz CC:CC: EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section Community Development ¥~ 10-27-03 EDA By: Kirk McDonald, Director of CD /? Item No. & Ken Doresk¥, CD Specialist B 5 DISCUSSION & UPDATE REGARDING DEVELOPMENT PROPOSAL FOR CITY OWNED PROPERTY AT 5501 BOONE AVE. N. AND DIRECTION TO PROCEED WITH FINANCIAL/TAX INCREMENT FINANCING ANALYSIS (IMPROVEMENT PROJECT NO. 749) ACTION REQUESTED Staff is requesting EDA discussion and direction to proceed with a financial/tax increment financing analysis relating to the attached development proposal from Project for Pride in Living, Inc. (PPL), for the city-owned site at 5501 Boone Avenue North. The current proposal is for two separate residential buildings on the site one 41-unit market rate condominium building and one 35-unit affordable rental apartment building. The original proposal was for the construction of one 70-unit residential building including 35 owner-occupied condominiums and 35 affordable rental units. Staff believes the proposal is worthy of serious consideration and further analysis because it addresses the following development objectives. 1. Utilizes the entire site (previous proposals have only utilized a portion of the site). 2. Provides 41 units of market rate condominium units, filling an identified housing type need in the city. 3. Meets the CDBG eligibility requirements, enabling the city to retain the $100,000 of CDBG funds it utilized to acquire the property. 4. Provides potential extra off-street parking for the Masonic/North Ridge Complex. 5. Replaces some existing rental units in the city which will be lost with redevelopment of new units. 6. PPL's initial proposal paid the city its original EDA investment ($276,764). Ifthe EDA is agreeable, staff would like to proceed to work with PPL on a financial analysis/tax increment financing analysis requested for the newly discovered increased soil correction costs. PPL has agreed to pay the city's standard fee requested for financial analysis costs. Representation from PPL will be in attendance at the meeting. 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, includin~l coordinating with potential developers on the sale and development of city-owned property. MOTION BY k.~Pqq~Tl//t~ SECOND BY f~,~!/~ TO: (~/~l~X~i ~ '~','qZZ/,~'l~d.~ / 'fZ~ (.~__//~/'~ ~, ' , I:\RFA\PLAN~in~i\5501 Boone\Q - PPL Development Proposal.doc Request for Action Page 2 10-27-0~ BACKGROUND On June 23, 2003, the EDA expressed support for the proposed project and directed staff to continue coordinating with PPL on the project. Since that time, the following actions have occurred: Market Study - PPL hired Maxfield Research to conduct a market study for the proposed development. The study concluded that demand is sufficient to support the proposed condominiums. Also, the study suggested that PPL split the project into two buildings, one ownership and one rental which they have done. In addition to the separate buildings, PPL has also modified the unit mix. Please see the attached "executive summary." The full report is available for review in the Community Development Department. Design - As a result of the market study, PPL has changed the site plan from one building housing both the condominiums and rental units to two separate buildings. Also, they have added six condominium units for a total of 41. The number of rental units has remained at 35. The attached plans have been revised to show the newly proposed configuration. Unit Mix - The market study suggested changes to the unit mix. Four-bedroom condominium units have been eliminated in favor of fewer bedroom units. Also, per EDA comments on June 23, PPL has added six additional ownership units. The number of rental units has remained the same. Soils Analysis - PPL hired STS consultants to further study to soils at the site. Upon review, STS determined that the soils will require substantial correction (pilings) to accommodate the development. PPL has received several estimates on piling costs and believe that pilings will be roughly $600,000 per building or $1.2 million. The soil correction cost was unknown when the EDA last discussed the subject item. Financial/Tax Increment Financing Analysis Request - PPL has requested that the city consider the use of tax increment financing as an additional funding source to help defray the soil correction costs. PPL has agreed to pay the standard financial analysis deposit used to pay consultant fees. Funding Applications - PPL has submitted funding applications to the Minnesota Housing Finance Agency, Hennepin County HOME, Federal Home Loan Bank and the Metropolitan Council for the rental portion of the site. On September 8, 2003, the Council approved a resolution of support for the Met. Council Predevelopment Grant Application. · Northwest Associated Consultants (NAC) Memoradum - NAC, the city's planning consultant, prepared a preliminary evaluation of the proposed project. Please see attached memorandum. On June 17, 2003, staff received the initial development proposal from PPL for the City-owned site at 5501 Boone Avenue North. The EDA expressed support for the proposed project and directed staff to continue coordinating with PPL on the project. Since that time, staff has met with PPL a number of times on the proposal and PPL has prepared revised plans, studied site conditions and obtained a market analysis. 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 Request for Action Page 3 10-27-03 Land Disposition 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. Since the EDA discussed the project on June 23, staff met with Hennepin County and PPL to describe the proposal. Hennepin County indicated support for the project, but will be requesting repayment of the CDBG funds. The funds will be allowed to go back into the project once approved. The revised proposal is as follows: Building One Market Rate For Sale Units / Bedrooms/Square Footage / Sales Price 12 / 1 Bedroom + Den (825 sq. ft.) / $130,000 20 2 Bedrooms (908 sq. ft.) $137,500 9 3 Bedrooms (1318 sq. ft.) $160,000 Building Two Rental Units Bedrooms/Square Footage 2 Bedrooms Rent 17 $75O 9 3 Bedrooms $940 9 4 Bedrooms $1,060 Total Units - 76 (41 ownership & 35 rental) Eight rental units are proposed as Section 8 units. PPL submitted the following narrative (attached) regarding the revised proposal: "New Proposed Pricing: The pricing has changed somewhat based on the market study and changes in the unit design that are discussed below. The for-sale units will be sold at their appraised value (we expect that between 25% and 50% of the units will be affordable to persons at 80% of the area median income, depending on family size). Modifications from Original: The market study conducted by Maxfield Research (please see summary included) and comments by local housing experts, suggested that we create two separate buildings, one rental and one for-sale, that will look similar from the exterior but will have very different unit configurations. The unit design of the rental building will remain substantially the same but the for-sale building has been reconfigured to create units with fewer bedrooms and a more open floor plan. New Bedroom Mix: The bedroom mix of the for-sale side had changed considerably. Maxfield Research feels that there is not a strong market for four-bedroom condominium units (except in the luxury market) and that in order to meet the existing demand we should create units with less bedrooms. Parking: Underground parking for 89 vehicles, surface parking spaces for 114 vehicles. We would like to reduce the number of surface parking spaces to increase the amount of green space. Site Characteristics: To accommodate two buildings, it is proposed that the storm water retention pond will be relocated to the center of the site and the buildings will be oriented and the landscape designed to minimize views (and noise) of the Public Works site. We are working with a geotechnical engineer to verify soil conditions and design a foundation system that will be adequate to build on the existing poor soils. Request for Action Page 4 10-27-0G Increased Costs: Foundation system (pilings, etc.) - approximately $1.2 million. Site work (pond relocation, soil compaction, landscape screening, etc.) - approximately $600,000 Funding Requests: We would like the city of New Hope to consider using Tax Increment Financing (TIF) as an additional funding source to help defray construction costs due to the poor soils. We have submitted funding applications to the Minnesota Housing Finance Agency, Hennepin County, the Federal Home Loan Bank and the Metropolitan Council. Selections will be made by the end of the year. We will also submit an application for HOME funding through Hennepin County in the spring. We anticipate construction to begin within six months of securing the necessary funding." On June 10, 2002 the Council discussed a previous proposal for the site. 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 original purchase price PPL offered was consistent with the appraised value of $662,000, but discounted the purchase price by $285,236 for soil correction and $100,000 for CDBG funds in the project, therefore PPL was offering $276,764, the original city expense. The soil correction cost and CDBG funds was considered "City Contribution" to the project in funding applications completed by PPL. The current attached proforma shows PPL paying $662,000, the appraised value. The final offering price will be determined once the financial analysis is complete. Additional soil correction costs are proposed to be paid for with tax increment financing. 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 2004 tax rates: Ownership Units Unit Value & Size Overall Taxes Generated City Taxes Generated Total CityTaxes 12 1 bdrm - $135,000 $1,756 per unit $548 per unit $6,576 20 2 bdrm - $157,500 $1,878 per unit $587 per unit $11,740 9 4 bdrm - $185,000 $2,248 per unit $705 per unit $6,345 Rental Units 35 $100,000 per unit $78,542 per all units $26,155 per all units $26,155 Total City Taxes $50,816 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 Request for Action Page 5 10-27-03 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 utilize the $100,000 in CBG funds utilized for original land acquisition. · PPL will purchase the property. They are not asking the city to donate the land. Per the EDA's request, the ownership portion of the proposal was increased six units for a total of 41 ownership units, providing additional needed life-cycle housing options per the city's Life Cycle Housing Study prepared in 1997. · The proposal has been modified per the Maxfield Research Market Study. · The 35 affordable rental units will assist in the replacement of existing affordable units that may eventually be displaced as a result of other redevelopment activities in the city. · Estimated city taxes of over $50,000 per year will be generated by this development based on 2004 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 62 off-street surface parking spaces intended to be leased to Northridge Care Center to alleviate their parking problem and parking issues along Boone Avenue. FUNDING Total acquisition cost was $376,764. The city used $100,000 in CDBG funds towards a portion of the acquisition. The original EDA investment as $276,764. ATTACHMENTS · PPL Narrative & Proforma · Maps - Location, Zoning, Plat and Storm Water Improvements · Northwest Associated Consultants Memorandum, 9-4-03 · Maxfield Research Market Study - Executive Summary, 7-22-03 (Complete copy available for review in the Department of Community Development) · Site & Building Plans - Condominium Building · Site & Building Plans-Apartment Building · Land Disposition Agreement · Hennepin County Correspondence, 6-18-03 · Appraisal (Complete copy available for review in the Department of Community Development) · EDA Minutes, 6-23-03 · City Council Minutes, 6-10-02 · Business Journal Article, 8-1-03 Date: Address: October 27, 2003 5501 Boone Avenue, New Hope Developer: Project for Pride in Living, Inc. Original Proposal: 70-units total 35 for-sale condos 35 rental units Original Bedroom Mix: 35-2 bedroom 17-3 bedroom 18-4 bedroom New Proposed Pricing: The pricing has changed somewhat based on the market study and changes in the unit design that are discussed below. The for-sale units will be sold at their appraised value (we expect that between 25% and 50% of the units will be affordable to persons at 80% of the Area Median Income, depending on family size). # Approximate Proposed Proposed Unit Type sq. ft. Sale Price* AMI % Max 12 825 80% to lbdrm + den Condo $130,000 Market Rate 20 908 80% to 2bdrm Condo $137,500 Market Rate 9 1318 80% to 3bdrm Condo $160,000 Market Rate Monthly Rental Rent** 13 2bdrm 957 $750 50-60% 7 3bdrm 1247 $940 50-60% 7 4bdrm 1537 $1,060 50-60% 4 2bdrm - S.8 957 $750 30% 2 3bdrm - S.8 1247 $940 30% 2 4bdrm - S.8 1537 $1,060 30% *For Sale units will be sold at appraised value and rents will be similar to the existing market in New Hope. **Monthly rents are similar to the area market rents. Modifications from Original: The market study conducted by Maxfield Research (please see summary included) and comments by local housing experts, suggested that we create two separate buildings, one rental and one for-sale, that will look similar from the exterior but will have very different unit configurations. The unit design of the rental building will remain substantially the same but the for-sale building has been reconfigured to create units with fewer bedrooms and a more open floor plan. New configuration: New Bedroom Mix: Parking: Site Characteristics: Increased Costs: Funding Requests: We have added 6 ownership units bringing the total number of units to 76-units (41 for-sale condos and 35 rental units) in two buildings. The bedroom mix of the for-sale side had changed considerably. Maxfield Research feels that there is not a strong market for 4- bedroom condominium units (except in the luxury market) and that in order to meet the existing demand we should create units with less bedrooms. This change has resulted in the following mix: For Sale Rental lbdrm + den 12 n/a 2 bedroom 20 17 3 bedroom 9 9 4 bedroom n/a 9 Total 41 35 · Underground parking for 89 vehicles · Surface parking spaces for 114 vehicles · We would like to reduce the number of surface parking spaces to increase the amount of green space To accommodate two buildings, it is proposed that the storm water retention pond will be relocated to the center of the site and the buildings will be oriented and the landscape designed to minimize views (and noise) of the Public Works site. We are working with a geotechnical engineer to verify soil conditions and design a foundation system that will be adequate to build on the existing poor soils. Foundation system (pilings, etc.) - approximately $1.2 million Site Work (pond relocation, soil compaction, landscape screening, etc.) - approximately $600,000 We would like the City of New Hope to consider using Tax Increment Financing (TIF) as an additional funding source to help defray construction costs due to the poor soils. We have submitted funding applications to the Minnesota Housing Finance Agency, Hennepin County, the Federal Home Loan Bank and the Metropolitan Council. Selections will be made by the end of the year. We will also submit an application for HOME funding through Hennepin County in the Spring. We anticipate construction to begin within six months of securing the necessary funding. 5501 Boone Ave, New Hope October 27, 2004 USES Rental (35 units) Acquisition Construction Soil Corrections: Piling/Grade Beams Construction Contingency Per sf construction cost (74,077 s.f.) Per unit construction cost a) Architect's Fee - Design (75%) b) Architect's Fee - Supervision (25%) c) Marketing d) Surveys and Soil Borings e) Payment and Performance Bond Pr~ g) Sewer-Water Access Charge h) Appraisal Fee i) Energy Audit j) Environmental Assessment k) Cost Certification/Audit I) Market Study m) Tax Credit Fees n) Compliance Fees o) Furnishings and Equipment p) Legal Fees q) Other - Architectural Reimb, etc. rl) Other - Holding Costs r2) Other Fees - Specify: Soft Costs Sub Total Developer's Fee Tax Credit Syndication Fees Financing Costs Lease Up Reserve Operating Reserve Total Development Cost Per Unit Cost Per Square Foot Development Cost SOURCES Equity: Syndication Proceeds Hennepin Co. HOME/AHIF MARIF New Hope: CDBG New Hope First Mortgage MHFA AHP TIF Total Sources gap $331,000 $4,555,621 $6O2,O0O $250,000 $73 $154,503 $150,000 $50,000 $2,000 $15,000 $32,000 $54,625 $5,000 $5,000 $20,000 $0 $20,000 $3,000 $4O,OOO $14,000 $5,OOO $415.625 $450.000 $22 000 $168 500 $5 000 $80 000 $6,879 746 $196,564 $93 $3,114,070 $700,0O0 $800,000 $100,000 $285,236 $630,000 $241,798 $105,000 $903,642 $6,879,746 $0 USES Ownership (41 units) Acquisition Construction Soil Corrections: Piling/Grade Beams Construction Contingency Per sf construction cost (73,883 s.f.) Per sf construction cost a) Architect's Fee - Design ( 75% of To b) Architect's Fee - Supervision ( 25% c) Marketing d) Surveys and Soil Borings e) Payment and Performance Bond Pr( g) Sewer-Water Access Charge h) Appraisal Fee i) Energy Audit j) Environmental Assessment k) Cost Certification/Audit I) Market Study m) Tax Credit Fees n) Compliance Fees o) Furnishings and Equipment p) Legal Fees q) Other - Architectural Reimb, etc. rl ) Other - Holding Costs r2) Other Fees - Specify: Soft Costs Sub Total Developer's Fee Marketing Financing Costs Lease Up Reserve Operating Reserve Total Development Cost Per Unit Cost Per Square Foot Development Cost SOURCES 1 BP/Den (12) @ $130,000 2 BR (20) @ $137,500 3 BR (9) @ $160,000 New Hope HOME Total Sales Proceeds TIF Total Sources gap $331,000 $4,700,000 $602,0O0 $250,000 $75 $135,415 $150,000 $50,000 $2,OOO $15,000 $32,000 $62,275 $5,000 $5,000 $20,000 $0 $20,000 $3,000 $4O,00O $14,000 $5,0O0 $423,275 $450,OOO $266,382 $168,500 $0 $0 $7,191,157 $175,394 $97 $1,560,000 $2,750,00O $1,440,000 $0 $540,000 $5,750,000 $901,157 $7,191,157 $0 59oo ~ 5901 i 590o ~ 5901 : ~ 5900' 5~01 ........ ~ 5828 ~ 5901 9101 8901 ' 8801 ~oo PUBLIC WORKS --, GARAGE t 8701 'Z · 8511 ' 5601 8748 ~ i 8420 ' 56~6 · 80078009 87oo ~ 56TH AVE N ..................................................................................... CENTER EAST ~-' i ~ HOSTERMAN .o, ~ ! ~ ~ JR HIGH SCHOOL ~ ~ ! RIDGE i i APART- ~ i ' 5410 9101 ' ' ' 8821 8801 ~ 54~ ~5437 ;54~ !5437 I .'. 54~0 ~5431 '~,430 i5431 ; 5450 , .................. ~- ............ ! NORTH : ~5,426 ~5427 ~ !5426 15427 ~ ~ RIDGE ~ z ?~i~o--~ .~i';"- ! z i.~-~-~ -'?~,-~ -~ z i CARE ; ~,'"~5410 t5411 ',5410 !5411 ~ CENTER z~ ........ .... ; 5400 5401 5400 ~401 54TH AVE N 55TH AVE N 5426 i s4~ i : ~4: 5420 ! o421 ~ 5300 8501 8201 C. P. RAIL SYSTEM BROOKLYN PARK HOSTERMAN JR HIGH SCHOOL , - . i~' :2-~...-- ?, COOPER ~o ~- . ~ .ou~o~ HIGH SCHOOL WINNETKA R-2 ELEMENTARY - sT SCHOOL '-- C~IU~CH 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 '~n-OZ-ZOOZ ;2:OZMA From-CITY OF NEW HOPE ?E353JS136 ~, ~ ~ -' ', I 1 I I T-Z3T Co~t:y, =r~o: F~ ~ve be~, pe.~C for &m~; ~es~r£i~er2 .___, 19.c . I) Jan-02o2O02. I2:02pm From-CIT~O~ ~£W FLOP[ Beone Av~nve North NORTHWEST ASSOCIATED CONSULTANTS, INC. Telephone: 952.595.9636 Facsimile: 952_.595.9837 plar-~ners,:~,nacplanninEl.com MEMORANDUM TO: Kirk McDonald FROM' Michael Darrow / Alan Brixius DATE: September 4, 2003 RE: New Hope- PPL Condominiums- Review Comments NAC FILE' 131.01 -03.14 We have prepared a preliminary review of the proposed PPL apartment/condominiums development. The applicant is proposing to develop a 35-unit apartment complex and a 41-unit condominium complex on the 5600 block of Boone Avenue North. Below are preliminary comments. Comprehensive Plan. The site falls within Planning District 3 of the Comprehensive Plan. The primary goal of Planning District 3 is the preservation and enhancement of industrial land uses. The vacant site along Boone Avenue is recommended for a change of land use from industrial to residential in order to accommodate a senior center. In order for the development of a multi-family complex as proposed, the City will need to amend the Comprehensive Plan. The City will need to make the determination as to the benefits of this type of development compared to the anticipated need of future industrial areas, particularly public works areas. Zoning and Density. The applicant is proposing to develop on 168,720 square feet or 3.8 acres. In order for the development of this type of housing, the site would need to be rezoned from Industrial to R-4 District. This zoning classification would be consistent with the R-4 and R-5 Districts east of Boone Avenue North, however, because of the proximity to indUstrial uses to the north and the public works operation to the west, additional design standards and buffer areas may be appropriate. Apartment complexes are a permitted use within the R-4 District. A CUP/PUD will be necessary in order to place two principle structures on one parcel. The developer is proposing 17 two-bedroom, 9 three-bedroom, and 9 four-bedroom apartments. The floor area for each unit should be submitted to the City for review. According to the Ordinance, 2,200 square feet is required per unit for multi-family units. For the affordable housing complex, 77,000 square feet is required. The condominiums require 90,200 square feet. meets this requirement. - Combined, 167,000 square feet is required. The applicant Lot Design and Building Layout. It is not clear if the developer wishes to subdivide the parcel for two lots or if the entire area will be part of the plat. If the developer subdivides the parcel, a PUD will not be necessary. The public works operation yard to the west of the proposed site is currently used for sand storage, snow plows, and equipment storage. The public works operation yard has early morning and late evening operations as well as back up beepers from larger trucks and the view of sand storage which would abut the proposed development. The current layout for both buildings will not allow a great degree of buffer space between the public works area to the west. As an option, the buildings could be rotated so that the current depth of the building runs parallel to Boone Avenue. This would allow a greater street presence along Boone Avenue as well as to provide additional buffer areas west of the buildings. The ponding area could be placed on the western edge of the development and would act as an additional buffer area. The planting of intensive landscaping behind the principal structures would also assist in providing greater buffer areas and natural screening. Setbacks. Below are the setback requirements for the R-4 District. Lot Width Front Yard Setback East Required 80 Feet 30 Feet Proposed Meets Requirement 35 Feet Side Yard Setback 20 Feet 85 Feet Rear Yard Setback 30 Feet 30 feet 6 stories or 72 feet Building Height 4 stories or 40 feet Parking. According to the Ordinance, at least 1 enclosed and 1 ¼ open spaces are required per unit. According to the proposed plan 35 underground spaces and 44 surface spaces are required for the affordable housing complex or a minimum of 79 spaces. The developer is proposing 44 underground spaces and 62 surface spaces or 106 spaces (27 spaces over the requirement). Requirements for the condominiums are 41 underground and 51 surface spaces or 92 total spaces. The applicant is proposing 52 surface spaces and 45 underground spaces (5 spaces over the requirement). Parking above the required amount is being sought near the affordable housing complex for the purpose of creating shared parking with the North Ridge Care center south of the proposed development. If shared parking doesn't occur, staff recommends that 18 surface spaces be eliminated on the affordable housing complex. This would allow for additional green space and buffer areas. On the condominium side, five spaces could be eliminated on the northeastern corner to allow for increased buffer areas. Drainage. Because of the-buildings close proximity to the ponding area between the buildings, the City Engineer should make the determination if there is adequate bounce in the ponding area as well as other flood/soil concerns. Screening and Landscaping. Because of the current industrial zoning classification as well as the proximity to industrial uses and the public works area to the west, a green belt will be required where differing uses abut each other. This should also include intensive landscaping in the form of mature evergreens and other larger species of trees and shrubs. The possible reduction of parking within the affordable housing component would allow for the reduction of impervious surface coverage and an increase in green space on the southern and eastern portion of the affordable housing complex. Additional plantings will be required along Boone Avenue North. Recreational Areas. Section 4.033 of the Ordinance states that multiple family buildings will require a minimum of 2,000 square feet plus 50 square feet per unit over 20 units for recreational purposes. The applicant is proposing a 1,540 square foot recreational area on the western side of the affordable housing complex. A minimum of 2,750 square feet of recreational area is required. Staff recommends that the recreational area be placed on the southern side of the building (if parking spaces are eliminated). The recreational area could include picnic tables, playground equipment, and/or a central gathering area. Conclusion The City will need to make a determination as to the redevelopment of a marginal site. The Comprehensive Plan anticipated redevelopment from industrial to residential in order to accommodate a senior housing center. Redevelopment from industrial to residential to allow for the construction of a multi-family apartments and condominiums would need to be designed to mitigate potential impacts caused by the public works operations west of the proposed site. These impacts include noise, lighting, as well as ongoing early morning and evening operations. The proposed development should incorporate building layout, design, buffer areas and intensive landscaping that will reduce impacts caused by the location of differing uses. July 22, 2003, Mr. Chris Dettling Project for Pride in Living 1925 Chicago Avenue South Minneapolis, MN 55404 Dear Mr. Dettling: We are pleased to present a draft copy of our study titled "A Market Feasibility Study for Con- dominium Housing in New Hope, Minnesota." Based on an analysis of household growth and income trends and an analysis of the current and active supply of for-sale multifamily housing in the New Hope Market Area, we believe demand is sufficient to support a 40-unit condominium building on the subject site. We have enjoyed completing this study and are available should you have any further questions or require additional information. Sincerely, MAXFIELD RESEARCH INC. Mary Bujold President Attachment Matt Mullins Research Analyst 612.338.0012 (fax) 612.904.7979 615 First Avenue NE, Suite 400, Minneapolis, MN 55413 EXECUTIVE SUMMARY Study Impetus Maxfield Research Inc. was engaged by Project for Pride in Living of Minneapolis, Minnesota to study the market feasibility of a condominium building on a site located just south of the Boone Avenue and Bass Lake Road intersection in New Hope, Minnesota. The scope of this study includes an evaluation of the site; a review of demographic trends and characteristics; the collection and analysis of competitive market data; an estimation of demand for multi-family ownership housing at the site, and penetration and absorption rates for the proposed project. This report includes both primary and secondary data. Secondary data is credited to the source when used and, in most cases, is U.S. Census data. Data on existing senior housing facilities as well as proposed competitive developments was collected by Maxfield Research Inc. and is accurate to the best of our knowledge. Site Analysis The site of the proposed project is located just south of the Bass Lake Road and Boone Avenue intersection, between Science Center Drive and East Research Center Road. The 3.04 acre parcel has frontage on Boone Avenue. The site of the proposed project is located in a mixed use neighborhood; surrounded by multifamily, light industrial, and public uses. Overall, the site should be well received by prospective purchasers seeking an affordable housing ownership alternative. Demographic Review The primary draw area (the "Market Area") for the proposed project consists of New Hope, Crystal, Robbinsdale, and census tracts from Brooklyn Center, Brooklyn Park, Maple Grove, and Plymouth. The Market Area had an overall population of 145,135 persons in 2000. This population was an increase of 2,102 persons (a 1.5% increase during the 1990s) from 1990. It is anticipated that the Market Area will add at least another 4,278 people by 2010 (a gain of 2.9%). There were 57,918 households in the Market Area in 2000, an increase of approximately 3,000 households (5.5%) from 1990. Year 2010 estimates show an increase of 3,800 house- holds over the next decade, an increase of 6.6%. The average household size in the Market Area decreased from 2.61 persons per household in 1990 to 2.51 persons per household in 2000. MAXFIELD RESEARCH INC. I EXECUTIVE SUMMARY Between 1990 and 2000] the Market Area added 11,136jobs, an 11.7% increase. It is estimated the Market Area will add over 15,000 jobs between 2000 and 2010. In 2002, the median household income was $65,978. A household earning the median income could afford to make a monthly house payment of $1,650, allocating 30% of their income to housing. With today's historic low interest rates, a householder could afford a home valued up to $260,000 earning the median income. Homeownership in the Market Area increased from 66.5% in 1990 to 68.1% in 2000. It is estimated to increase to 69.2% in 2007. According to the 2000 Census, homeownership in the Market Area was highest in the 65 to 74 age cohort. Competitive Market Review Resale values for townhomes and condominiums in the Market Area cities increased from a median price of $106,558 in 1999 to $165,595 as of June 2003, a gain of 55.4% in less than four years. New Hope multifamily resales are significantly lower than those found in the sur- rounding communities, having a median sales price of $66,000 in 1999 increasing to $93,900 in 2003, an increase of 42.2%. The average time on market for multifamily ownership listed for sale was 32 days in 2002, slightly slower than 25 days in 2001. Through June 2003, the days on market have increased to 38 days. There are four condominium and townhome projects located in the City of New Hope. The newest condominium product to come online in New Hope was Valley Wood, which was constructed in 1986. Combined, there are a total of 283 units located in New Hope, indicat- ing a very low percentage ofmultifamily ownership projects existing in the City. Currently there are three active multi-family developments marketing in the Market Area, combining for a total of 105 units. Of these units, approximately one-half of the units have been sold. Although there are no for-sale multifamily developments under construction at this time in New Hope, the City is working with two other developers on potential projects. Ryland Homes has plans to construct 168 to 180 for-sale units, targeting middle income households. Preliminary plans call for townhomes starting at $149,000 to $200,000 with 1,200 to 1,900 square feet. Ryland anticipates breaking ground in the Spring of 2004 with construction over a two-year period. Additionally, the Boisclair Corporation has signed a letter of intent to re- develop a site just west of the New Hope Golf Course. The site currently includes 60 afford- able units which would be redeveloped to include 112 owner-occupied townhome housing MAXFIELD RESEARCH INC. 2 EXECUTIVE SUMMARY units. The townhomes ~v°uld start at $199,000 and have 1,410 square feet. The average priced unit would be approximately $235,000. Conclusions and Recommendations Maxfield Research calculated demand for-sale multifamily housing on the site in New Hope. According to demand estimates, there is an unmet demand of 694 units of for-sale multifam- ily housing in the Market Area. The preliminary design concept includes a 35-unit condominium and 35-unit affordable housing portion all included in the same building. However, we recommend separate build- ings for each housing component. The preliminary condominium design concept includes 18 two-bedroom units (51% of units) with 957 square feet, 8 three-bedroom units (23% of units) with 1,250 square feet, and 9 four-bedroom units (26% of units) with 1,540 square feet. The table below presents our recommended unit mix, sizes, and purchase prices. We rec- ommend one-bedroom den units ranging from 850 to 900 square feet, priced at $127,500 to $133,000, or $148 to $150 per square foot. The two-bedroom units would range from 950 to 1,000 square feet, priced from $135,000 to $140,000, or $140 to $142 per square foot. Fi- nally, the three-bedroom units would range between 1,250 to 1,300 square feet and priced from $157,500 to $162,500, or $125 to $126 per square foot. PRELIMINARY RECOMMENDED UNIT MIX AND SALE PRICES PPL CONDOMINIUMS - NEW HOPE July 2003 ,,,Unit Type 1 BR/Den 2 BR 3 BR No. of Proposed Units Square Feet ,, Base Sale Price Base Price / Sq. Ft. 12 850 - 900 $127,500 ~ $133,000 $148 - $150 20 950 - 1,000 $135,000- $140,000 $140- $142 8 1,250 - 1,300 $157,500- $162,500 $125- $126 40 Note: Pricing is in 2003 dollars Source: Maxfieid Research Inc. More detailed recommendations, including recommendations on building amenities and features can be found in the Conclusions and Recommendations section at the end of this re- port. ~IAXFIELD RESEARCH INC. 3 EXECUTIVE SUMMARY Projected Absorption End Marketing Considerations For a project of 40 units, we project a 13-to 14-month absorption period for the development, based on our recommended pricing. This assumes that marketing will begin at or prior to groundbreaking, with 80% of the units being sold during construction. This translates into an average of 3.0 sales per month. The absorption estimate also assumes the units will be available for occupancy during the spring or summer months, the peak home selling period. Absorption could be extended somewhat if initial occupancy takes place in the fall or winter months. MAXFIELD RESEARCH INC. 4 ~J~ ~ PPL CONDOMINIUMS. 5501 BOONE AVE N NEW' HOPE, MINNESOTA JLH 603-12 8/20/03 Slu mentals/Architecture Inc PPL AFFORDABLE APARTMENTS - 5501 BOONE AVE N NEW HOPE, MINNESOTA JLH 603-12 8/20/03 PPL AFFORDABLE APARTMENTS. ,5501 BOONE AVE N NEW HOPE, ,MINNESOTA JLH 603-12 8/20/03 Slumentals/Architecture Inc PPL CONDOMINIUMS. 5501 BOONE AVE N NEW HOPE, MINNESOTA JLH 603-12 z~ 8/20/03 PPL CONDOMINIUMS . 5501 BOONE AVE N NEW HOPE, MINNESOTA JLH 603-12 Zh 8/20/03 / r Humen ure In¢ PPL CONDOMINIUMS. ,5501 BOONE AVE N NEW HOPE, MINNESOTA 603-12 8/20/03 ~lumental----s/'Architecture Inc PIO~Ec'r ~ / PPL CONDOMINIUMS _ 5501 BOONE AVE N NEW HOPE, MINNESOTA JLH 603-12 ~ 8/20/03 $1umentals /Architecture Inc PPL AFFORDABLE APARTMENTS - 5501 BOONE AVE N NEW' HOPE, MINNESOTA JLH fltOJ. NO, 603-12 8/20/03 PPL AFFORDABLE APARTMENTS . 5501 BOONE AVE N NEW HOPE, MINNESOTA JLH 603-12 z~ 8/~o/o:3 Blumentals./Architecture Inc PPL AFFORDABLE APARTMENTS - .5501 BOONE AVE N NEVV HOPE, MINNESOTA JLH 603-12 z~ 8/20/03 I'1 __ n PPL AFFORDABLE APARTMENTS . 5501 BOONE AVE N NEW HOPE, MINNESOTA JLH 603-12 z~ 8/20/03 -0 ~0 ×~ Lr 27'-5" PPL AFFORDABLE APARTMENTS - 5501 BOONE AVE N NEW HOPE, MINNESOTA JLH 603-12 8/20/03 ~lumental__~s Inc PPL AFFORDABLE APARTMENTS . 5501 BOONE AVE N NEW HOPE, MINNESOTA JLH 603-12 8/20/03 ~lumentals/Architecture Inc / PPL AFFORDABLE APARTMENTS - 5501 BOONE AVE N NEW HOPE,/~INNESOTA JLH 603-12 8/20/03 Contra=t No A20~6' LA~¥D DISPOSITION AGREEAt~.,~'r ~ AGRE~%rgNT made and entered into by and between the County of Hen:::pm. Stat: of Minnesota. hereinafter referred to as the 'County' tttrou.eb its Offi=e of Plannzn.~ and Development. hereinafter referred to as "OPD' and the Economj: Developmen: ..~,utnorzt~. zn and to: the City of New Hope. a Minnesota Municipal Corporation. heretrtafter referred to as tn.-' "ED.A ". each of which panics ts a governmental unit for the State of Minnesota pursuant to hhnnesota Statutes. Section 471.59 W'/t~, the County through OPD is a duly designated Urban County Comrnumtx. Development Block Grant entitlement recipient pursuant to the provisions of the Housme and' Community Development Act of 1974. Title I of Public Law g3-383, as amended. (42 ~$C 530! seq). ~ %VHEREAS. the city of New Hope ts an authorized 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 .$9. and WH:EREAS. as Third Part)' Agreement has been executed between the city of New Hope and the EDA for purposes of implementing this CDBO funded activity, and WHEREAS, the Urban Hennepin County 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 daycare and/or senior center public facility, and WHER.EAS. the F, DA has acquired through its power of eminent domain property located az 550! and 5425 Boone Avenue Not-,h. in the City of New Hope. for an adult daycare and/or semor center public facility. That said properties ~ legally described in paragraph I of the hereto agreement. Further. the award of damages paid to the fee owners of the subject property totaled S376.764.00. For the Pm'poses of this agreement, the parties hereto agree that this amount equals thc purchase price paid by the EDA for the property. NOW ~ORK, in consideration of the mutual covenants and promises contamed in this agreement, the pames hereto mutually agree to the following tert~ and condmons: I. The ED A aclmowled~s fete' t o Urban Hennepin Ce,,,,,,, ,-.- . ~P f the sum of $100.000 00 d-"' ....... pro e ---~ ~,.ammmmty Develo men · ~,,uu-a provmea tt~rou _, [~. ny at 550! and 5425 Ib~ .... P t Block Grant erot, ram .... gh the uz w~mnesota ~.-~-_~ .,~ .,~venue r~onh in the ' ,,-_' e.--,, ,u_purcnase anti ac · leLeaJiy det~'ribed oetow C~ty of New H qmre the foilowi,o des-.:~.__. · The Pm'ties --~. ....... ope. County of Henn--:- ,* --~ ~a propemes was $376 764 ~_-,-~.uw~eage and agree the total - __ ~,'~. · .uu. purr. g~,ue price for Boone Avenue North That pan of, Lot 2. Block :. ly,2g North of the North hne of th: South ~'.,9.g$ i-,-,t of sa~ Lo~ 2. Block 2. ~ meMured along the ~ ~ West lines thereof, c~:tp: t~t N~nh 150 fit: thereof.. Scien~ Indus~ Center. according to thc plat thereof on flit or of rtcor~ m :he O~ce of the R~eis~r of Tides m and for He~n CounE~-. Mi~esoa Subject to utility easemenu shown on plat; Subject to an overhead ea~ement tn iaror of Northern States Power Company as set forth Xn Document No. 109&I?$. Files of Regis:rat o£ Titles: Subject to the storm sewer casement as set forth in the Notice of Subsequent Ad~'trst Claim. Document No. 2058134. Files of the Registrar of' Title. 542i 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 ltennepm Count}.. Minnesota. Subject to utility easements as shown on plat. o-./~ Il. In consideration for the receipt of the $100.000 Development Block Grant. the EDA coy ....... .00 .Urban Hermepin County Commu , acquisition of said nm,--,,.-., ~- · .....chants anti__thct the ou,',',ose of su-'- _ mr} ent ."n . en!"__nted not thr-- ,,, ...... er d aft~-r ,peno ted ar ,period III. If at the end of the initial period of three (3) years or during the second three 1'3) year period if the initial period should be so ~. 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 ~ll force and ef£ecK trod] mc Project is compteKed/" t~e the ]~ U sold or approved for ~ a]te~te ~e in accor~ce with ~graph ltl above or at the expiation of ~ y~. whichever set of evenu o~urs first. PP p pe (-oun.n, omma~s having sLenecl bound by the ptovJsio~ herein set fonh. COUNTY OF HENNEPIN E DEVELOPM~ENT AUTHORiTy in and for thc CITY OF W. ^'T'T~: ~ NO. 1 TO AGI~]~3ki]~3V~, CONTRA~ NO..40.0867 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 Pin,tuning 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 panics is a govenunental unit for the State of Minnesota pursuant to Minnesota Statutes, Section 471.59: 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: Ankles I1 and V of the Agreement shall be amended to read as follows: 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. 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 havigg signed this Amendment, and the Hcnnep'.m, Count~' B rd of Commissioners having duly approved this Am~ndmem on this / ~ of_ ~~I, 2000. and pursuant to such approval and the proper Coun~ officials having signed this Amendment. the panics agree to be bound by the provisions herein set forth. APPROVED AS TOff..ORM /7 --"-t COUNTY OF HENNEPIN, STATE OF MINNESOTA Chair of i~s County Board ...... /Affsi~'r~nt/DepUly/Counly ,Ad_d~nimstrator ep~/Clerk of the County Board / ¢ ECONOMIC DEVELOPMENT AUTHORITY in and for the CITY OF NEll/HOPE Citair/Presid~-nt ~ EDA RESOLUTION NO. 2000- oz. RESOLUTION APPROVING EXTENSION TO LAND DISPOSITION AGREEMENT RELATING TO DEVELOPM]ENT OF 5501 BOONE AVENUE NOR'Itt BE IT RESOLVED by the Board of Commissioners oftbe Economic Development Authority in and for the City of New Hope as follows: WItFJ~EA$, the Econom/¢ Development Authority/n and for the City of New Hope (hereafter EDA) and the County of Hennepin (hereafter County) have entered into a Land Disposition Agreement (hereafter Contract) relating to the development of $$01 Boone Avenue North as an adult thy care facility, and WHEREAS, specifically, the County has pmv/ded thc FDA w/th 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 extex~ion period, and WHEREAS, Minnesota Masonic Homes remains interested in the property at 550l 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 Conlract evidenced by its September 8, 2000 letter attached as Exhibit B, and WI1ERE.4~, the County has prepared an addendum to the Contract, attached as Exhibit C titled Amendment No. I To Agreement, Contract No. A20867, which provides for an extension of the Conuact to October 1, 2003. NOW THEREFORE BE IT RESOLVED by the Economic Development Author/r)., of the City New Hope as follows: That Amendment No. 1 To Agreement, Corm'act No. A20867 attached as Exhibit C, is hereby approved. That the President and Executive Director are hereby authorized and directed w sign Amendment No. I To Agreement, Contract No. A20867. Attest: Dated the 25" day of September, 2000. Daniel J. Dozili~ue, Execm/ve 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 '1 PATCHIN MESSNER &'DODD VALUATION COUNSELORS (952) 895- ! 205 Fax (952~ 89.~.1521 May 9, 2002 City of New Hope 4401 Xylon Avenue North New Hope, MN 55428-4898 A'I-fN: Mr. Kirk McDonald Dear Mr. McDonald: RE: Complete Appraisal, Summary Report Vacant Multi-family Land at 5501 Boone Avenue North New Hope, Minnesota At your request, I have made a Complete Apl:Jraisal 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. T~/IN CITIES OFFICE: Skyline Square Building, Suite 220 12940 Harriet ^venue $Oub'q Burnsville, MN 55337 ROCHESTER OFF/CE: [S07J 252-161S P.O. Box 7343 Rochester, MN 55903 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 PATCHIN lVlESSNF~ & DODD The EDA expressed support for the joint development proposal, and directed staff to pursue a purchase agreement. IMP. PROJECT 749 Item 5 IMP. PROJECT 734 Item 6 President Enck introduced for discussion Item 5, Discussion Regarding Development Proposal for City-Owned Property at 5501 Boone Avenue North and Di~Ction to Proceed (Improvement Project No. 749). Mr. Kirk McDonald, Director of Community Development, indicated staff is requesting EDA discussion and direction to proceed regarding a development proposal from Project for Pride in Living (PPL), for the city-owned site at 5501 Boone Avenue North. The proposal is for the coustmction of a 70-urfit residential building split between owner-occupied condominiums and affordable rental units. He expressed support for the proposal based on the following reasons: the proposal utilizes the entire site, meets the CDBG eligibility requirements, provides potential extra off-street parking for North Ridge Care Center, replaces some existing rental units in the city which will be lost due to redevelopment efforts, and pays the city market value for the property, less soil correction costs. The EDA expressed concern with combining owner-occupied units with rental units, and questioned whether PPL would provide assurance that at least 50% of the units would be owner occupied. Mr. Chris Wilson, Project for Pride in Living, was recognized. He stated 50% of the units would be owner-occupied and covered by a separate homeowners association. He noted PPL is undertaking a marketing study to determine the market for the proposed owner and rental units. The EDA held a brief discussion regarding the soils. Mr. Wilson noted his intention of installing pilings and underground parking. The EDA expressed support for the proposed project at 5501 Boone Avenue North, and directed staff to continue coordination regarding the potential redevelopment of the property. President Enck introduced for discussion Item 6, Discussion .R)egarding Development Proposal for City-Owned Property at 4317 Nevada Av~mf~ Nc;rrb and Private Property at 4301 Nevada Avenue North (Improvem~t No. 734). K~r.'k McDonald, Director of Community Deveqopment, requested EDA and direction regarding a developmepI.-'i~roposaI submitted by Master teflon Engineering for the city-/o(vned site at 4317 Nevada Avenue North private property at 4301 N~.ada Avenue North. The development proposal the replacement of tw~xisting single-family homes with twelve units of townbomes. Tl~developer is also desirous of acquiring 4415 Nevada Avenue to the north) for the construction of six additional units. BROOKSTONE, INC. Item 7 EDA Minutes Page 2 Following declined pursuing the proposal due to the city assistance requestS'and the density. The EDA indicated support for a lower de.ns~6., ject. at the lo out city financial assistance. · Pr~e~de~n_ck introduced for discussio . Motion Acknowledging Expiration _o~ _~_cr _of~intc. nt~wi? Brookst. onc, Inc. and to Continue Coordination o~mormat ~ams t0r me redevelopment of the area. ~Mayor Enck reported that Brahrn Akradi, co-owner of Ne~h~gpe Mall, has agreed to serve on the City Center Task Force as Robert Rappaport's replacement (owner of Winnetka Center). June 23, 2003 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 Page 2 Resolution Relating to Local Government Information Systems; Authorizing the Execution and Dehvery of Second Amendment to the Joint and Cooperative Agreement. ReSolution Approving Change Order No. 2 in the amount of $37,445 to Contract with Dave Perkin~ Contracting, Inc., Improvement Project No. 706 (2001 Back'yard 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 Property at 5425/5501 Boone Avenue North (Improvement Project No. 713). Mr. Kirk McDonald, Director of'Community 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: Am~raisal Uvdate - The appraisal update has been completed by Patchin Messner & Dodd and the market value of the property as of April 16, 2002, is estimated at $662,000, based on two important conditions: The property is zoned R-5 "Senior/Disabled" Residential The site is not affected by unstable soft conditions (it has been determined in the past that soil correction measures will be needed to build on the site.) Meet with Greater Me~opolitan Housing Corporation (GM3IC) - A meeting was conducted with Carolyn Olson, President of GMHC, and they initially indicated an interest in developing the remeinlng property with housing units (COndOminium, townhomes, etc.). They requested that more detailed information be sent to them regarding soft 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 Suae i0, 2002 · 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 organiTations and Tasks have submitted a proposal to outhne their initial plans for the project. Tasks would construct an eight-unit, single room occupancy suppomve housing facility for re6rement 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 construction 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 Mason/c/North Ridge - A meeting was conducted with representatives from Mason/c/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 Mason/c/North Ridge to date and staffhas 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 constxuct-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 entre site. GMI-IC has indicated they are not interested at this time and Minnesota Mason/c/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 62"~ Avenue or another site. (LivingWorks Ventures has viewed and is interested in the property on 62"a 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 Mason/c/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. Councilm~z~ber Cassen pointed out that an industrial zoning classification is the highest and best use for the property. Councilm~.mber Gwin-Lenth favored the development only if the entire site could be utilized. She suggested that staff work with LivingWorks Ventures to locate an altenmte suitable site. New Hope City Council Page 3 Councilm~mber Collier concurred with Councilrnember Gwin-Lenth's comments and pointed out that soil issues could limit future industrial development on the pix~'~P 'i'~'fight~ agai~t financial crime. The Edina-based association has joined FinCrime, a crime-fighting network of banking associations in 10 states. The Iowa Bankers .Association established FinCrime several years ago as a way of sharing information about finan- cia] criminals on an Intemet database. The nearly 500 members of the Minnesota Bankers Assodation will be able to access a data- base containing searchable information about people who have committed identity theft and other financial crimes in the 10-state region. Subscribers can add their own data to the net- work or search the database using various fields, said Joe Witt, executive vice president and CEO of the Minnesota Bankers Assodation. '~s a trade group we are always responding to our members' needs," he said. "We really think this is going to be a plus." The venture was scheduled to be unveiled Thursday (after press time) at the Bremer Service Center in Lake Elmo. It coincides with National Fraud Awareness Week, August 3-9, as recognized by Gov. Tim Pawlenty. The bankers' anti-fraud database has simi- lar goals to that of the Retailers Protection Association fRPA), which was organized six years ago. RPA, which doesn't disclose its headquar- ters location for security reasons, works with law-enforcement officials and retailers in seven states to track finandal crime trends. The organization has over a half-million The average scheme goes undetected for 18 months. Between 500,000 and 900,000 Americans have their identity stolen annually, In mom than 90 percent of fraud schemes, cash is the targeted asset. Small businesses are the most vulnerable to fraud and abuse, losing $127,500, on average, per scheme. i Source: M~nnesota Ba~kers Association ~ records in its database, said John McCullough, executive director. McCullough would like to see the organiza- tions find a way to merge their information. As it stands now, the RPA and the bankers will be overlapping each other's efforts. "We're far more mature with our database," he said. "It's going to take them two to tl~ee years before they have a sizable database." Witt and McCunough both said the organi- zations are looking at ways to work together. Buzz Anderson, president of the St. Paul- based Minnesota Retailers Assodation, credit- ed the Minnesota Bankers Association for focusing on the growing problem. "There's people that are very bright and very ingenious and [financial crime] is all they spend their time doing," he said. "You can't be too safe." REAL ESTATE Nonprofit proposes S11M project to mix affordable housing with condos BY SCOTr D. SMITH STAFF REPORTER Developers usually avoid pairing affordable apartments with condos, but Project for Pride in Living plans to give it a try. Minneapolis-based PPL, a nonprofit that assists low- and moderate-income people, has submitted a preliminary plan to the dty of New Hope for building an $11 million residen- tial project. The 76-unit project would be split between two buildings, one housing apart- ments, the other containing condos. The vacant three-acre site, located at 5501 Boone Ave., is owned by the city, which intends to clean up soil contamination from previous industrial uses of the land, said Christopher Wilson, development manager for PPL The organization has yet to secure the site, but so far city officials like the concept, Wilson said. He hopes to start the project in the spring of 2004. Whether it moves forward depends on PPL get- ting a low-income housing tax credit for the rental portion. Wilson believes the combination of con- dos and apartments will work because they will be separated by a small retention pond. Also, the for-sale homes would be rela- tively affordable, start- ing at about $120,000. If the project succeeds, Wilson wants to develop others with a mixture of for-sale and rental homes because such developments would help prevent concen- trating too many low-income people in one housing project. I. Neg opportunity t system for sales nego You Will · Learn about the different stages · Understand who influences the · Learn what it takes to "close a ( · Develop high performance nego~ · Develop planning strategies and Wednesday Augu 6:30-9:30p.m. Minnea Jolis Conve Paul Goldn Paul is an author, speaker and entrel "Red Hot Cold Call Selling, Prospecting sales and motivational programs have e, the world. Paul has appeared on Ct Business," and has been quoted il P[RFORlli ~T-W0 952.345. www. ppnliv media spo c~orporate spt EDA -' rOl Originating Department Approved for Agenda Agenda Section Community Development ~,~, \~ · 10-27-03 EDA Item No. By: Kirk McDonald B 6 MOTION AUTHORIZING STAFF TO MEET WITH REPRESENTATIVES OF BEAR CREEK CAPITAL AND PROPERTY OWNERS OF 7901 BASS LAKE ROAD AND 5539/5549 WINNETKA AVENUE TO NEGOTIATE POTENTIAL PROPERTY ACQUISITION FOR REDEVELOPMENT PURPOSES (IMPROVEMENT PROJECT NO. 754) REQUESTED ACTION Staff is requesting that the EDA approve a motion to authorize staff to meet with the property owners of 7901 Bass Lake Road and 5539/5549 Winnetka Avenue in conjunction with representatives of Bear Creek Capital regarding negotiation and potential acquisition of the properties for redevelopment purposes. POLICY/PAST PRACTICF In the past, the EDA has authorized joint negotiations between the developer, property owners, and the city to facilitate potential redevelopment projects. ,.BACKGROUND At the August 25, 2003, EDA meeting, the EDA reviewed correspondence from Bear Creek Capital and CVS/ Pharmacy regarding their continued interest in the sites at the southwest quadrant of Bass Lake Road and Winnetka Avenue. Bear Creek had requested that the city retain a qualified appraiser to complete appraisals on the three properties, at the expense of the developer. The EDA approved moving forward with the proposal. The developer submitted the appropriate fees to the city and over the past several months Shenehon Company completed the appraisals. When the appraisals were completed, city staff and the city attorney met with the developer to review the appraisals and discuss the next appropriate steps. It was the consensus of the developer and city staff/consultants that the next recommended step would be for both the developer and city representatives to meet together with each individual property owner to determine their interest in cooperating on a potential redevelopment project. Staff is requesting authorization to assist with the coordination of such a meeting and to participate with the developer in a negotiation meeting. Excerpts from the three appraisal reports are attached for informational purposes and complete copies of the appraisals are available at city hall for review. The estimated market values for the parcels are as follows: I:\RFA\PLANNING\Livable Communities\Q-CVS nego prop purchase.doc Page 2 10-23-03 Request for Action Property Address 5539 Winnetka 5549 Winnetka 7901 Bass Lake Road Total Description Single family home Vacant parcel Service station Market Value $220,000 $245,O00 $445,000 $910,000 All three parcels are zoned CB, Community Business, zoning district. The purpose of the meetings with the property owners would be to determine if the properties could be acquired on a willing seller basis or not and to emphasize the city's interest in seeing this potential redevelopment project move forward. The results of those meetings would be brought back and presented to the EDA to determine the future action steps. Information presented to the EDA at the August 25, 2003, EDA meeting stated that: "Bear Creek Capital and CVS/Pharmacy have submitted the attached correspondence regarding their continued interest in the sites at the southwest quadrant of Bass Lake Road and Winnetka Avenue." Peter Coyle from Larkin Hoffman has submitted the attached correspondence outlining a revised proposal. The correspondence states "Thank you for meeting with Bill Tippmann and me regarding a redevelopment proposal to construct a CVS/Pharmacy in the southwest quadrant of Winnetka and Bass Lake Road. On behalf of Bear Creek Capital and CVS/Pharmacy, I am writing to formalize their request that the city of New Hope enter into a preliminary development contract relating to this proposed redevelopment and authorize the competition of an appraisal of the affected properties in this quadrant. The redevelopment would, at a minimum, require the purchase and removal of the existing Sinclair gas station and certain residential structures. In addition to the proposed use, the redevelopment would enable the city to site much-needed ponding facilities to alleviate serious drainage problems being experienced by residents. The appraisal would enable the city and Bear Creek/CVS to better analyze the feasibility of this undertaking before committing to the formal process. "CVS/Pharmacy will commit to reimburse the city for the cost of engaging a qualified appraiser, plus reasonable city costs incurred, subject to review of estimates." The city manager, city attorney and community development director met with the representatives and indicated that the revised proposal would be submitted to the EDA for discussion purposes. In the long-term, staff is supportive of a commercial redevelopment in this area that is consistent with the concepts endorsed by the Livable Communities Task Force. FUNDING The applicant has submitted the appropriate fees for appraisal costs and has agreed to reimburse the city for consultant expenses (city attorney, etc.) related to this project. ATTACHMENTS · Address/Zoning/Topo Maps · Appraisal Excerpts · CVS Redevelopment Schedule · Previous Correspondence · Concept Plans I:\RFA\PLANNING\Livable Communities\Q-CVS nego prop purchase.doc NURSING 6~30 HOME 8008 8000 5704 5716 5641 56~5 5629 5621 5619 5615 5605 8119 565O 5618 5610 TO 56OO 8100 ,5620 7910 7900 56OO 7800 DOL Z LU 8001 8011 8009 8OO7 N 5539 5532 5531 5~24 5519 55~8 5509 5512 ~Ol / I 5520 762~ -----I RI ~/ 55TH MEADOW LAKE ELEMENTARY · i ' ~ MEADOW-i: ,,' HOSTERMAN JR HIGH ' SCHOOL WINNETKA ................ ELEMENTARY ............ SCHOOL -- ~ > ~ · ~ . -'' < .......... 1< ~ .............. ->~ ,~ · . ~ ,~1;~-- .......~ ............... ' .............. ' ........ :" ......... filTH flip N --~ ~ ............... . .. R-2 ST. RAPHAEL --C~T HOLIC CHURCH / 901 .8 × LIMITED APPRAISAL SUIVlhrl_adt"lr-REp ORT 7901 Bass Lake Road New Hope, Minnesota September 24, 2003 03210-1 Copyright © 2003 by Shenehon Company. Al! rights rese~ed. October 6, 2003 Mr. Kirk McDonald City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 LIMITED APPRAISAL - SUMMARY REPORT OF ~ NEW HOPE SINCLAIR PROPERTY LOCATED AT 7901 BASS LAKE ROAD IN NEW HOPE, MINNESOTA Dear Mr. McDonald: In accordance with your request, we have completed a limited appraisal of the above-referenced property for the purpose of estimating the market value of the fee simple interest. Our report is the result of a limited appraisal process in that certain allowable departures from specific guidelines of the Uniform Standards of Professional Appraisal Practice were invoked. The intended user of this report" is warned thai Re reliability of the value conclusion provided may 'be impacted to the degree there is departure from specific guidelines of USPAP. This Summary Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2(b) of the Uniform Standards of Professional Appraisal Practice for a Summary Report. As such, it presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated within. The appraiser is not responsible for unauthorized use of this report. Based on the limited appraisal investigation summarized herein, it is our opinion that the subject property has a market value as land for redevelopment, as of September 24, 2003, of: FOUR HUNDRED FORTY-FIVE THOUSAND DOLLARS ................ $445,000 This appraisal does not include any personal property, fixtures or intangible items that are not real property. Mr. Kirk McDonald October 6, 2003 Page 2 It is our opinion that a reasonable exposure time of approximately 6 to 12 months is appropriate for the subject property at our estimated market value. Please refer to the Reasonable Exposure Time section of this appraisal for details. The value indicated has been estimated by means of generally accepted real estate valuation methods. Please contact us if you have any questions or comments. The undersigned appraiser certifies that he has personally inspected the property and has investigated information believed to be pertinent to the valuation of the property, and to the best of his knowledge and belief the statements and opinions expressed herein are correct and reasonable, subject to the limiting conditions set forth herein. Sincerely, SHENEHON COMPANY Certified to this 6th day of October, 2003 .- ~ ./ ~ ' Darrell Koehlinger Se~or Vice President Liceme No. 4000652 /tlk SI'.M.MARY OF SAI.IENT DATA Date of Photograph: Type of Property: Location: Land Size: Zoning: Date of Inspection: Effective Date of Appraisal: Date of the Report: Property Rights Appraised: Total 2003 Base Real Estate Taxes: Date of Construction: Value Estimate: Reasonable Exposure Time: September 24, 2003 Sinclair Gas Station 7901 Bass Lake R_oad. New Hope. Minnesota 40.434 square feet, or .928 acre C-B. Community Business District September 24, 2003 September 24.2003 October 6. ~00.., Fee Simple Interest S10,601.36 1963 S445,000 Approximately 6 to 12 months PURPOSE OF THE REPORT The purpose of this report is to estimate the market value of the real estate for the sole use of our client, the City of New Hope. The function of this report is to estimate the market value for possible acquisition by the City of New Hope. SCOPE OF THE APPRAISAL This appraisal analysis is limited in scope, but was based upon the generally accepted appraisal practices. Per prior agreement with the client, the appraiser did not use the cost or income capitalization approaches to value. Although these approaches would generally be considered meaningful in appraising a property of this type, the appraiser believes the primary approach to value is the sales comparison approach. The appraisal process therefore involved departure from Standards Rule 14Co) and 14(c). Within this valuation analysis, we have completed the following functions and procedures. (This Summary Report is a brief recapitulation of the appraiser's data, 'analyses, and conclusions. Additional details of our research and other supporting documentation are retained in the appraiser's file.) - Made an inspection of the subject property, reviewed building sketches and relied on measurements of the subject structure obtained from public records; Familiarized ourselves with the neighborhood, and analyzed the surrounding property trends; Considered and reviewed the historical market, taking into account stability and/or changes; - Based upon our market research and analysis, we have completed the highest and best use analysis for the subject property; - Researched comparable land sales and analyzed their applicability to the subject, as a means of estimating the market value via the sales comparison approach to value; - Developed an opinion of reasonable exposure time of apprOximately 6 to 12 months for the subject property to effect a sale at our estimated market value. Sources utilized to obtain this information include physical background information provided by the property owner, information contained in our office files, public records, and discussions with other real estate experts, including brokers, other appraisers, buyers, sellers, and developers. 03210-1 Shenehon Comran:v 2 PROPERTY DESCRIPTION The subject site is located on the southwest corner of Bass Lake Road and Winnetka Avenue. The irregular-shaped site was improved approximately 30 years ago with a Sinclair gas station. The gas station is an old-styl~service station, with no full-size convenience store or car wash. The property is zoned Community BuSiness. Immediately to the south of the station is a small, vacant lot and Winnetka Elementary School. Abutting the property to the west is Lyndale Garden Centers. Across Bass Lake Road to the North is a small retail building and an Amoco gas station. The pumps are old and do not have card readers for pay-at-the-pump capability. The station is not convenience store-style and has minimal retail items. There is a single-bay service garage attached to the main building on the western side used for repairs. Above the pumps are overhead lights but no awnings or covering for protection from the weather. 'According to the assessor, the building was constructed in 1963 and the lot size is 40,434 square feet, or .928 acre. Please note we did not inspect the interior of the station. The most current Assessor's Estimated Market Value of the subject property, as of January 2, 2002, is $300,000. 03210-1 ,.g~enehon Cort~patty 13 PLAT MAP ~ 03210-I Shenehon Co ,,m~,,y 14 HIGHEST AND BEST USE The highest and best use of the subject real estate as it will be regarded in this repor~ will conform to the following definition found on Page 305 of The Appraisal of Real Estate, 12th Edition: Highest and best use is the reasonably probable and legal use of vacant land or an improved property, which is physically possible, legally permissible, appropriately supported,financially feasible, and that results in the highest value. Highest and Best Use of the Land as Though Vacant 7901 Bass Lake Road is located on the southwest comer of Bass Lake Road and Winnetka Avenue North, with all of its frontage on Bass Lake Road. The property is roughly triangular, narrowing to the south, away from Bass Lake Road. The property's highest and best use, as vacant, is for development with a community-oriented retail business, assuming build-to-suit or significantly pre-leased user can be secured. Highest and Best Use of the Properties as Improved The property located at 7901 Bass Lake Road is currently a Sinclair service station. Based on previous knowledge of operations of similar Sinclair service stations, we determined that the highest and best use of the property, as improved, is for redevelopment with a community- oriented retail business. Older service stations similar to the subject property do not have the same revenue generating potential as modem stations, and are therefore becoming economically obsolete. The improvements on the property do not add any contributory value, as we have found in many similar outdated stations. The property is located on the comer of a highly-traveled intersection which is very desirable for community-oriented business. In conclusion, the underlying land value is worth more than the value of the property as improved with the current use as a gas station. 03210-1 Shenehon Company 1 5 SALES COMPARISON APPROACH TO VALUE Comparable land sales useful in estimating the market value for the subject property are summarized below. In order to select comparable sales that were similar to the subject property, we looked in communities similar to New Hope for properties with similar characteristics and current (or possible) uses' as the subject property. COMPARABLE LAND SALES FACT CHART Average Corner Daily Sale Sale Zoning Sale Area Site/ Traffic Price/ No. Location (Intended Use) Date (Sq. Ft.) Signallzed Counts Sale Price Sq. Ft. I 4835 West Broadway B-4 Current 40,000 Yes/ 13,750 $450,000 $11.25 Crystal, MN listing No 2 11430 Jefferson Court C-2 3/02 68,831 Yes/ Champlin, MN {Mobil Gas/ Yes Cony. Store) 3 NEC Jefferson Hwy. & I-2 9/01 62,651 Yes/ 85th Avenue N. (Holiday Yes Brooklyn Pork, MN Gas/Cony. Stor~) 4 6950 Brooklyn Blvd. C-2 9/02 52,771 Yes/ Brooklyn C~nt~r, MN (SA Gas/ Yes Cony. store) 5 3601 Winnetka Ave. N. CB 9/01 37,365 Yes/ New Hope, MN (Auto Zone Yes 44,050 S832,080 $12.09 24,100 S700,000 S!1.17 34,800 S800,000 S15.16 21,450 $325,000 $8.70 3~,800_ ' Characteristic differences between a comparable sale and the subject might require adjustments to increase the reliability of a given sale as an indicator of value for the subject. Elements of comparison which may warrant adjustments include date of sale, location characteristics, and various physical characteristics. All of the properties have been adjusted for the passage of time, and differences in buyers'/sellers' attitudes toward the real estate market in general. For this appraisal we have utilized a time adjustment rate of 3 % per year to reflect a general increase in market values. A brief explanation of the adjustments is provided on the following pages. Sale #1 is a current listing located in CrYstal. CrYstal is a similar community to New Hope, and the comparable property's neighborhood is similar to that of the subject property. The comparable is not located on a signalized comer and is exposed to a much lower traffic count than the subject property. Therefore, an upward adjustment has been made for location. Since the price shown above iL a listing price, it has been adjusted downward. A downward adjustment was also necessarY due to the subject property's inferior, triangular shape. 03210-1 Shenehon Comoa.y 1 6 Sales Comparison Approach to Value - Continued Sale #2 is located in Champlin on a signalized corner with a higher traffic count than the subject. After purchase, the property was improved with a modem Mobil gas station with a large convenience store. This comparable property has been adjusted downward due to its superior traffic count and utility due to its rectangular shape. This downward adjustment is slightly offset, due to the property's location further away from the core metro area as compared to the subject property. Sale #3 is located in Brooklyn Park on a signalized comer in an industrial neighborhood. Since the date of sale, the property has been improved with a Holiday gas station and convenience store. An upward adjustment has been made to account for the subject property's superior traffic count and neighborhood. This adjustment is offset slightly by a downward adjustment made for the comparable property's superior shape as compared to the triangular shape of the subject property. Sale #4 is located in Brooklyn Center and is also located on a signalized comer. The property receives a similar traffic count to that of the subject property, but it is located in a commercially developed area surrounded by newer strip malls and fast-food restaurants, thus making the neighborhood more desirable than the subject property's. Therefore, the sale has been adjusted downward for location. The sale has also been adjusted downward for its superior shape as compared to that of the subject property. Since the date of sale, the site has been improved with a Super America gas station and convenience store. Sale #5 is approximately two miles south of the subject property on the (signalized) comer of Winnetka Avenue North and 36th Avenue North. The property experiences a much lower traffic count that the subject property and is therefore adjusted upward. Again, a downward adjustment ...... is-a/so-necessary for the comparable property's superior shape. The neighborhood is .very similar to the subject property's, with small community-oriented businesses nearby. Before adjustments for differences, the aforementioned sales indicate a range of $8.70 per square foot to $15.16 per square foot for the subject. After analyzing possible adjustments, and placing additional weight on comparable sale gl, it is our opinion that the subject has a market value of approximately $11.00 per square foot, calculated as follows: 40,434 square feet @ $11.00 per square foot $444,774 Rounded to: $445,000 Each of the comparable sales had marketing times of less than 12 months. It is our opinion that 6 to 12 months is a reasonable exposure time to effect a sale of the subject property at the value indicated by the sa/es comparison analysis. (Please refer to the Reasonable Exposure Time section for details.) 03210-1 Shenehon con. any 17 CO1VIPLETE APPRAISAL --SIOMMARY REPORT 5549 Winnetka Avenue North New Hope, Minnesota September 24, 2003 03210-3 Copyright © 2003 by Shenehon Company. All rights reserved. October 6, 2003 Mr. Kirk McDonald City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 COMPLETE APPRAISAL - SUMMARY REPORT OF THE PROPERTY LOCATED AT 5549 WINNETKA AVENUE NORTH IN NEW HOPE, MINNESOTA Dear Mr. McDonald: In accordance with your request, we have completed an appraisal of the above-referenced property for the purpose of estimating the market value of the fee simple interest. This Summary Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2Co) of the Uniform Standards of Professional Appraisal Practice for a Summary Report. As such, it presents only summary discussions of the data, reasoning, and analyses that were used-in the appraisal proces~ to develop the appraiser's opinion of--value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated within. The appraiser is not responsible for unauthorized use of this report. Based on the appraisal investigation summarized herein, it is our opinion that the subject property has a market value, as land for redevelopmem, as of September 24, 2003, of: TWO HUNDRED FORTY-FIVE THOUSAND DOLLARS .................... $245,000 This appraisal does not include any personal property, fixtures or intangible items that are not real property. It is our opinion that a reasonable exposure time of approximately 6 to 12 months is appropriate for the subject property at our estimated market value. Please refer to the Reasonable Exposure Time section of this appraisal for details. Mr. Kirk McDonald October 6, 2003 Page 2 The value indicated has been estimated by means of generally accepted real estate valuation methods. Please contact us if you have any questions or comments. The undersigned appraiser certifies that he has personally inspected the property and has investigated information believed to be pertinent to the valuation of the property, and to the best of his knowledge and belief the statements and opinions expressed herein are correct and reasonable, subject to the limiting conditions set forth herein. Sincerely, SHENEHON COMPANY Certified to this 6th day of October, 2003 Darrell Koehlinger Senior Vice President License No. 4000652 /tlk SI~MMARY ()F SAI,IENT DATA Date of Photograph: Type of Property: Location: Land Size: Zoning: Date of Inspection: Effective Date of Appraisal: Date of the Report: Proper~y Rights Appraised: Total 2003 Base Real Estate Taxes: Value Estimate: Reasonable Exposure Time: September 24, 2003 Vacant land 5549 Winnetka Avenue North, Neg' Hope, Minnesota 22.148 square feet, or .508 acre C-B, Community Business District September 24. 2003 September 24, 2003 October 6, 2003 Fee Simple Interest S204.90 $245.000 Approximately 6 to 12 months PURPOSE OF THE REPORT The purpose of this report is to estimate the market value of the real estate for the sole use of our client, the City of New Hope. The function of this report is to estimate the market value for possible acquisition by the City of New Hope. SCOPE OF THE APPRAISAL This appraisal analysis has not been limited in scope, and was based upon the generally accepted appraisal practices in order to comply with current USPAP Standards. Within this valuation analysis, we have completed the following functions and procedures. (Additional details of our research are included throughout the following pages of this report.) - Made an inspection of the subject property; Familiarized ourselves with the neighborhood, and analyzed the surrounding property trends; Considered and reviewed the historical market, taking into account stability and/or changes; - Based upon our market research and analysis, we have completed the highest and best use analysis for the subject property; Gathered comparable land Sales to determine the market value of the land in order to calculate Ibc.value oflhe subject property via the sales c~mparison approach to value; Developed an opinion of reasonable exposure time of approximately 6 to 12 months for the subject property to effect a sale at our estimated market value. Sources utilized to obtain this information include physical background information provided by the property owner, information contained in our office files, public records, and discussions with other real estate experts, including brokers, other appraisers, buyers, sellers, and developers. 03210-3 Shenehon courtly 2 PROPERTY DESCRIPTION The subject property is located immediately south of the corner of YVinnetka Avenue Nerth and Bass Lak: Road. According to the City assessor, the property is 14! .6.1' feet bv 160 t':ze:, er .508 acre in size. The property has 141.64 feet of frontage on the western side of Wirmetka Avenue. It is generally level with a few scattered trees. The property is generally level, rising slight(,, from street level on its eastern side. To the immediate south of the properly is a small single-family home, and to the north there is a Sinclair gas station. West of the subject property is Winnetka Elementary School. The most current Assessor's Estimated Market Value of the subject vacant land, as of January 2. 2002, is $30,000. 03210-3 Shtnehon Company 1 3 PLAT MAP ~ HIGHEST AND BEST USE The highest and best use of the subject real estate as it will be regarded in this report will conform to the following definition found on Page 305 of The Appraisal of Real Estate, 12th Edition: Highest and best use is the reasonably probable and legal use of vacant land or an improved property, which is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value. Highest and Best Use of the Land as Though Vacant The highest and best use of the subject property is for assemblage with either the property at 5539 Winnetka Avenue North or 7901 Bass 'Lake Road, for development of a community-oriented retail business. The parcel is fairly small and would therefore be difficult to develop alone. Assemblage with Winnetka Elementary School property .would be unlikely unless the property at 5539 Winnetlm Avenue North was included. Assemblage with 7901 Bass Lake Road would be the most desirable due to the corner location of that site, making it accessible from Bass Lake Road as well as Winnetka Avenue North. Highest and Best Use of the Properties as Improved The subject property is an unimproved vacant lot. Given the property's size and location, it is our opinion that the highest and best use of the property is for assemblage with 7901 Bass Lake Road for redevelopment into a community oriented retail business. Assemblage with the property at 5539 Winnetlm Avenue North is also an option, however given that property's size, it would be easier and more profitable to assemble the property with 7901 Bass Lake Road. 0'1210-3 Shenehon Company 15 SALES COMPARISON APPROACH TO VALUE Comparable land sales useful in estimating the market value for the subject property are summarized below. In order to select comparable sales that were similar to the subject property, we looked in communities similar to New Hope for properties with similar characteristics and current (or possible) uses as the subject property. COMPARABLE LAND SALES FACT CHART Average Corner Daily Sale Sale Zoning Sale Ar~a Sit*./ Traffic Sale Price/ No. Location (Intended Use) Date (Sq. Ft.) Signalized CounU Price Sq. Ft. I 4835 West Broadway B-4 Curr~nt 40,000 YeaS 13,750 $450,000 $11.25 Crystal, MN listing No 2 11430 Jefferson Court C-2 3/02 68,831 Yes/ 44,050 $832,080 $12.09 Champlin, MN (Mobil Gas/ Yes Conv. Store) 3 NEC Jefferson Hwy. & I-2 9/01 62,651 YeaS 24,100 $700,000 $11.17 85th Avenue N. (Holiday Yes Brooklyn Park, MN Gas/Cony. Stor~) 4 6950 Brooklyn Blvd. C-2 9/02 52,771 Yeas 34,800 $800,000 $15.16 Brooklyn Center, MN (SA Gas/ Yes Conv. 5 3601 Winnetka Ave. N. CB 9/01 37,365 Yes/ 21,450 New Hope, MN (Auto Zone Yes Store) sub, :. 5549 winnetka Ave. N.' CB 9/03 No/ 33,800 jeer: Ne~ Hope, MN : ' (date of ' 22,148 . Yes 'i i : .', · v~lue) $325,000 $8.70 Characteristic differences between a comparable sale and the subject might require adjustments to increase the reliability of a given sale as an indicator of value for the subject. Elements of comparison which may warrant adjustments include date of sale, location characteristics, and various physical characteristics. All of the properties have been adjusted for the passage of time, and differences in buyers'/sellers' attitudes toward the real estate market in general. For this appraisal we have utilized a time adjustment rate of 3 % per year to reflect a general increase in market values. A brief explanation of the adjustments is provided on the following pages. Sale #1 is a current listing located in Crystal. Crystal is a similar community to New Hope, and the comparable property's neighborhood is similar to that of the subject property. The comparable is exposed to a much lower traffic count than the subject property. Therefore, an upward adjustment has been made for location. Since the price shown above is a listing price, it has been adjusted downward. A downward adjustment was also necessary because the subject property is not located directly on the comer. 03210-3 ShenehonCompany 16 Sales Comparison Anproach to Value - Continued Sale #2 is located in Champlin on a signalized comer with a higher traffic count than the subject. After purchase, the pr~p~ Was improved wi~ a modem Mob'il gas station with a large convenience store. This comparable property has been adjusted downward due to its superior traffic count. This downward adjustment is slightly offset due to the property's location further away from the core metro area when compared to the subject property. Also, since the subject property is not located on the immediate comer, a downward adjustment has been made. This adjustment is offset by an upward adjustment made for the subject property's smaller size. Sale//3 is located in Brooklyn Park on a signalized comer in an industrial neighborhood. Since the date of sale, the property has been improved with a Holiday gas station and convenience store. An upward adjustment has been made to account for the subject property's superior traffic count and neighborhood. The subject property is not located on the immediate comer so a downward adjustment has been made. This adjustment is offset by an upward adjustment made for the subject property's smaller size. Sale #4 is located in Brooklyn Center and is also located on a signalized corner. The property receives a similar traffic count to that of the subject property, but it is located in a commercially developed area surrounded by newer strip malls and fast-food restaurants, thus making the neighborhood more desirable than the subject property's. 'Therefore, the sale has been adjusted downward for location. In addition, since subject property is not located on the immediate comer, a downward adjustment has been made. This adjustment is offset by an upward adjustment made for the subject property's smaller size. Since the date of sale, the site has been improved with a Super America gas station and convenience store. Sale #5 is approximately two miles south of the subject property on the (signalized) comer of Winnetka Avenue North and 36th Avenue North. The property experiences a much lower traffic cmmt-that-the: subject property and is therefore adjusted-upward. Since subject property is not located on the immediate comer, a downward adjustment has been made. The neighborhood is very similar to the subject property's, with small 'community-oriented businesses nearby. Before adjustments for differences, the aforementioned sales indicate a range of $8.70 per square foot to $15.16 per square foot for the subject. After analyzing possible adjustments, and placing additional weight on comparable sale #1, it is our opinion that the subject has a market value of approximately $11.00 per square foot, calculated as follows: 22,148 square feet @ $11.00 per square foot $243,628 Rounded to: $245,000 Each of the comparable sales had marketing times of less than I2 months. It is our opinion that 6 to 12 months is a reasonable exposure time to effect a sale of the subject property at the value indicated by the sales comparison analysis. (Please refer to the Reasonable Exposure Time section for details.) 03210-3 Shenehon Comloony 17 LIMITED APPRAISAL SUMMARY REPORT 5539 Winnetka Avenue North · New Hope, Minnesota September 24, 2003 03210-2 Copyright © 2003 by Shenehon'Company. All fights reserved. October 6, 2003 Mr. Kirk McDonald City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 LIMITED APPRAISAL - SIYMMARY REPORT OF THE PROPERTY LOCATED AT 5539 WINNETKA AVENUE NORTH/N NEW HOPE, MINNESOTA Dear Mr. McDonald: In accordance with your request, we have completed a limited appraisal of the above-referenced property for the purpose of estimating the market value of the fee simple interest. Our report is the result of a limited appraisal process in that certain allowable departures from specific guidelines of the Uniform Standards of Professional Appraisal Practice were invoked. The ._.intended user of this report is warned that-the reliability of the value conclusion provided may be impacted to the degree there i-s-~ei~arture-fr~TM specific guidelines of USPAP. This Summary Report is intended to comply with the reporting requirements set forth under Standards Rule 2-2Co) of the Uniform Standards of Professional Appraisal Practice for a Summary Report. As such, it presents only summary discussions of the data, reasoning, and analyses that were used in the appraisal process to develop the appraiser's opinion of value. Supporting documentation concerning the data, reasoning, and analyses is retained in the appraiser's file. The depth of discussion contained in this report is specific to the needs of the client and for the intended use stated within. The appraiser is not responsible for unauthorized use of this report. Based on the limited appraisal investigation summarized herein, it is our opinion that the subject property has a market value as single-family residence, as of September 24, 2003, of: TWO HUNDRED TWENTY THOUSAND DOLLARS $220,000 This appraisal does not include any personal property, fixtures or intangible items that are not real property. Mr. Kirk McDonald October 6, 2003 Page 2 It is our opinion that a reasonable exposure time of approximately zero to three months is appropriate for the subject property at our estimated market value. Please refer to the Reasonable Exposure Time section of this appraisal for details. The value indicated has been estimated by means of generally accepted real estate valuation methods. Please contact us if you have any questions or comments. The undersigned appraiser certifies that he has personally inspected the property and has investigated information believed to be pertinent to the valuation of the property, and to the best of his knowledge and belief the statements and opinions expressed herein are correct and reasonable, subject to the limiting conditions set forth herein. Sincerely, · SHENEHON COMPANY Certified to this 6th day of October, 2003 Darrell Koehlinger Senior Vice President License No. 4000652 /tlk ~I'.MMAR4' ¢)F SAIAENT DATA Date of Photograph: Type of Property: Location: Land Size: Zoning: Date of Inspection: Effective Date of Appraisal: Date of the Report; Property Rights Appraised: Total 2003 Base Real Estate Taxes: Date of Construction: Value Estimate: Reasonable Exposure Time: September 24. 2003 Single-family home 5539 Winnetka Avenue North -New Hope. Minnesota_ _ 16,743 square feet. or .384 acre C-B, Community Business District September 24. 2003 September 24.2003 October 6. 2003 Fee Simple Interest $1.730.16 1958 S220,000 Approximately zero to three months PURPOSE OF THE REPORT The purpose of this report is to estimate the market value of the real estate for the sole use of our client, the City of New Hope. The function of this report is to estimate the market value for possible acquisition by the City of New Hope. SCOPE OF THE APPRAISAL This appraisal analysis is limited in scope, but was based upon the generally accepted appraisal practices. Per prior agreement with the client, the appraiser did not use the cost or income capitalization approaches to value. Although these approaches would generally be considered meaningful in appraising a property of this type, the appraiser believes the primary approach to value is the sales comparison approach. The appraisal process therefore involved departure from Standards Rule 14(b) and 1-4(c). Within this valuation analysis, we have completed the following functions and procedures. (This Summary Report is a brief recapitulation of the appraiser's data, analyses, and conclusions. Additional details of our research and other supporting documentation are retained in the appraiser's file.) - Made an inspection of the subject property, reviewed building sketches and relied on measurements of the subject structure obtained from public records; - Familiarized ourselves with the neighborhood, and analyzed the surrounding property trends; Considered and reviewed the historical market, taking into account stability and/or changes; - Based upon our market research and analysis, we have completed the highest and best use analysis for the subject property; - Researched comparable sales and analyzed their applicability to the subject, as a means of estimating the market value via the sales comparison approach to value; Developed an opinion of reasonable exposure time of approximately zero to three months for the subject property to effect a sale at our estimated market value. Sources utilized to obtain this information include physical background information provided by the property owner, information contained in our office fries, public records, and discussions with other real estate experts, including brokers, other appraisers, buyers, sellers, and developers. 03210-2 Shenehon Con. any 2 PROPERTY DESCRIFI2ON According to the City assessor's office, the single-family residence has three bedrooms and two bathrooms. The house has approximately 1,430 square feet of finished space above ground, and was built in 1958. The property is approximately 100 feet by 166 feet, or .38 acre in size. The property has approximately 100 feet of frontage on Winnetka Avenue North, and the southern and western boundaries are shared with Winnetka Elementary School. The northern boundary is the vacant lot at 5549 Winnetka Avenue North. Since this property is zoned as Community Business, the single-family residence is a legally non-conforming use. The land is generally level with scattered trees across it. The house is one-story, with a partially finished basement. There is a two-car detached garage which is situated to the west of the house. Overall, the house is similar to other homes in the neighborhood in age and quality, but we did not inspect the inside of the house. The most current Assessor's Estimated Market Value of the single-family residence, as of January 2, 2002, is $143,000. 03210-2 Shenehon Company 13 PLAT MAP'~ 03210-2 Shenehon Co,,v,any ] 4 HIGHEST AND BEST USE The highest and best use of the subject real estate as it will be regarded in this report will conform to the following definition found on Page 305 of The Appraisal of Real Estate, 12th Edition: Highest and best use is the reasonably probable and legal use of vacant land or an improved property, which is physically possible, legally permissible, appropriately supported, financially feasible, and that results in the highest value. Highest and Best Use of the Land as Though Vacant Given the current zoning, size, and shape of the property, the highest and best use of the single- family residence, as vacant, is for assemblage 'with the vacant lot at 5549 Winnetka Avenue North for development with a community-oriented retail business. The size of the parcel is small, making it difficult to develop the site on its own. Assemblage with Winnetka Elementary School is another possible use if zoning would permit. However, the land would be more valuable to a retail business on this highly visible comer. Our land analysis shows that the value of vacant land in the area, for commercial development, is approximately $11.00 per square foot, making the land value of the subject property approximately $185,000, as vacant. Highest and Best Use of the Properties as Improved After reviewing land and single-family home sales in the area, it is our opinion that, despite the legally non-conforming use, the property's highest and best use, as improved, is its continued use as a single-family residence. Obtaining permits for future renovations or improvements is one possible issue a homeowner might find due to the non-conforming use. However, this would not have"a measurable impact on value. After doing a survey of single-family home sales in the area, we found that this house would sell for between $150.00 and $160.00 per square foot of above ground finished square feet, or about $215,000 to $230,000. A more detailed description of this analysis is outlined in the sales comparison approach section of this report. Summary Since the value of the property, as improved with a single-family residence, is significantly greater than its value as vacant land, we determined that the highest and best use of the subject property is its current use as a single-family residence. 03210-2 ~ene~on Con,party 15 SALES COMPARISON APPROACH TO VALUE To address the subject single-family residence located at 5539 Winnetka Avenue North, we have compiled a list of comparable, single-family homes that have sold since January 1, 2003. We were unable to properly inspect the interior of the house, but received pertinent information from the City assessor. To determine the sale Price, we used above ground finished square feet as our unit of measure. A summary of the data is listed in the table below. COMPARABLE RESIDENTIAL SALES FACT CHART Above Price/ Sale Date Days on Bed- Bath- Ground Year Above Lot Size No. Location Closed Market Price rooms rooms Finished S.F. Built Ground S.F. IAcres! I 5349 Oregon Ave. N. 6/03 I0 $162,900 3 2 1,012 1952 $160.97 0.29 2 5343 Pennsylvania Ave. N. 4/03 38 $161,500 3 I 1,200 1952 $134.58 0.23 3 5433 Quebec Ave. N. 8/03 16 $167,400 3 I 1,075 1956 S155.72 0.22 4 5218 Oregon Ave. N. 7~03 55 $165,500 3 2 1,095 1952 $151.14 0.31 5 5841 Decatur Ave. N. 2~03 25 $179,000 3 2 1,040 1960 $172.12 0.22 6 5828 Boone Ave. bi. 3/03 45 $190,722 3 2 1.056 1959 $180.61 0.21 7 5901 Virginia Ave. N. 5/03 123 $199,900 3 2 1,252 1958 $159.66 0.37 8 4949 Yukon Ave. N. 8/03 26 $223,500 3 2 1,716 1968 $130.24 -- Average: 5103 42.25 $181,303 3 1.75 l,lSl 1957 $155.63 0.26 ;ubject: ,5539 Winnetka Ave. N.' · :' 9~03 -- :m i, ". i:' :: 3 ~" ' 2 1,428 · 11958 -- 0.38 'The sUbject. Property lias a larger lot size and larger ab__ove g~oun~d squa__re_f_o_0~ge than all of the comparables. The larger above ground finished square footage would result in a sl~ghtl~-ower price per square foot, however we feel this is offset by the subject's larger lot size. These sales indicate a market price of approximately $155.00 per above ground finished square foot. 1,428 square feet @ $155.00 per square foot $221,340 Rounded to: $220,000 03210-2 Shenehon Co,~,,y 16 CVS- New Hope Predevelopment Schedule New Hope, MN Bear Creek Capital Task Name Duration Order Appraisal Complete Appraisal Approve Appraisal City Council Approves Appraisal Serve Notice of Intent to Take Property Public Purpose Court Hearing Public Headng, Approve CVS Plan City Takes TiUe and Reconveys to CVS Fina! Approva of CVS Development ~and Acaui~ltlon proce.~e Contact Sinclair to Negotiate Contact Homes to Negotiate Contact School. Land Swap Friendly Land Purchase Agreements Land Closing - Fdendly S~lte Plan Approval Proce$~ Meet City Staff to Negotiate Site Plan PUD Zoning andSite Approvals Boundary and Topo Survey Concept Grading and Engineering Plan Site Engineering Architectural CDs Bldg Plan Exam Building Permit 0 days 3 wks 1 wk 3 wks 2 wks 4 wks 0 days I wi 0 days 85 days 4 wks 4 wks 8 wks 0 days 0 days 60 days 0 days 12 wks 90 d~y,F 2 wks 1 wk 3 wks 8 wks 4 wks, 0 days Au ust Se tember · 9/19 9119 ~1 10117 November ~19 I 10/16 ~ 1116 11/7 ~ 11/20 11/21 ~ 12/1; 11/28 '"-'-'-"-'- ........... '~'"""'~ 12/25 11/28 ~ 1~/25 · 12/25 · 12/4 12/191 March 2/13 I~ 2/19 · 2/19 · 2/19 2/12 2/13 ~ 3/11 · 3111 PETER J. COYLE DIR. DIAL (952) 896-3214 E-MAIL ix::oyle~l~x~l.com August 4, 2003 LARK~', HOFFMA~, DALY & LINDGREN, LTD. ATTORNEYS AT LAW 1500 WELLS FARGO PLAZA 7900 XERXES AVENUE SOUTH BLOOMINGTON. MINNESOTA 55431-1194 TELEPHONE (g52) ~ FAX (952) 896--~33 Mr. Kirk McDonald Community Development Director City of New Hope 4401 Xylon Avenue North New Hope, Minnesota 55428 Re: Proposed Evaluation of Redevelopment Dear Kirk: Thank you for meeting with Bill Tippmann and me regarding a redevelopment proposal to construct a CVS/Pharmacy in the southwest quadrant of Winnetka and Bass Lake Road. On behalf of Bear Creek Capital and CVS/Pharmacy, I am writing to formalize their request that the City of New Hope enter into a preliminary development contract relating to this proposed redevelopment and authorize the completion of an appraisal of the affected properties in this quadrant. The redevelopment would, at a minimum, require the purchase and removal of the existing Sinclair gas station and certain residential structures. In addition to the proposed use, the redevelopment would enable the City to site much- needed ponding facilities to alleviate serious drainage problems being experienced by residents. The appraisal would enable the City and Bear Creek/CVS to better analyze the feasibility of this undertaking before committing to the formal process. CVS/pharmacy will commit to reimburse the City for the cost of engaging a qualified appraiser, plus reasonable City costs incurred, subject to review of estimates. Our goal is to have the appraisal in hand in order to make a firm decision for proceeding by the end of September 2003. Please call me to confirm when this will be scheduled for action by the City's Economic Development Authority. Sincerely, Peter J. Coyle, for LARKIN, HOFFMAN, DALY & LINDGREN, Ltd. Cc: Bill Tippmann Tim Baird Morry Silverman Steven Sondrall, Esq. 873951.1 Play 1~ SOD3 ~:~?RM BERRCREEK 51 ].79].~10 fax 80D~83.8956 BF. AR CR£E~ C. API]AI. May 15, 2003 Mz. Kirk Director of Commun/ty Development City of New Hop= 4401 Xylon Ave North N~, Hope, MN 55428 Bm Crt. m~ C.~m,~. LLC ]~: co--,-=z~MJ i:)ev~iopmen%, w*,,wer, im Avenue W=mt Dear K/rk: .aummary of project. It is ~s,,~ +~- --~-~ ~- ' ~w ~u w con~ Phase One of ~e ~ ~ mg~d ~mp~ for ~ One ~ ~udc- · .92 ~:z',m cun"=~tly ~ed by' ~e ~tne. ln~ ~m"lmttn~ gas fac/Lity · .90 me=u ~tly owned by. J. ~. Barn. L~.AL at 5549 Winnetka Avenue * 1.12 m~'es of m'~ ur~im~ pc~l:ion ~ the Winnetka gleme=tary Sohool cn 'r.~.t Phaae ~ ,.,~,., ~ _~]_~-"~. "~.. uunscruct Ptmse One of +~- ..... owned h~, Oercl-- "--' T-" ~ ~/n the event the 2.86 creek cap/~ .nd the ------- ----c~--~' .]:u-cus=ons ~ da~ b=t-.,~_,, ~... ~'.~S_ ~e ~ the own~ that wo,,,~ -----~-~- property have 9roduccd flea~. Creek Capital has aco. Lured ma.ny pz'apm't/es ~ r~ s,h, ~,..,.,~.;. acq~m~on for ~c ~~ ..... ,--: ..... ~ ~- pro~ss for ca~ ~ac on~ ~hasc One c =~a on a mcndly basis. Wc proj=~ as ~ ~ ~e =~= ~lm~e_~'~'~ ~ ~,~ ~mne~ A~nue West ~ or Be~ Cr~k ~..~ ._ ~.~~ ~ cnmr mm serious ncgofiafions w' C_~ ~ ,~~ a n~-~, .... ~_, _- . '~' ~ ~~ Ol 0~~ ~ ~YZ~2?~ ,~-.- -. ~d ~. ~ .~ ~ _, ...... - E~ '~ ~uum ~~a ~ es~h *~- ~--~-~ . ~ ~e cost of ~rect do~en.~ '~ "~g~ ~e ..... ~ '~ s~l bo~d. ' .... ~=~ ~en~ School Upop co~.~on ~ ~e ~.~ Ph I The~.~aP~~be~ - ' ~ E. ~e ~ - ~d; ~ ~~ ~ve not ~ · '" -a'~eted ~__.14.l c__ __~ ~e fo~~u~es B~ ~1o~t ~~ _ C~ Ca~,a __ . ~Ly ~ne 15, 2003 2 .Quick: Trine bsear~h Phase: The cji-wilis cor~w~mslon n~ce-qsary ~egal r~search and Lanc~ apFraisais o£ tbs u=~eced prop=rOles. 60 da:Fa, cnHm~ Au~'ua: !5. 2003 · (~ui~ Tm~ Z~,oess fl~ zequu~d) · Preliminary Projset Design and City ]leview Sufficient to obCazn !oreliminar? plan aPlorovaJ · ~qnnl Bite l~n."tnoerinf sad ~a~ceeeaml Dnat&,n 91) daFa, cncl~g 30 el. Fa, cnciinl: Dcccrnb=r 15, 2003 August 15, 2003 lid ¢ln~za, ending Ocu~bcr 15, 2003 60 days, ending December 15, 2003 --'- -----, ~vc~z~T,. acl)e~z ]'o1~. IArinnetka Avenue · l~ublic Roadway access to fuoare.s'~ern aires :from Baas Lake Rd. · netl~ Avenue.- .... ~' ~ at the i~~n of'~ass Lake Roacl and BE~EEK J., aa previouaIy clisciomed to thru ci a ' .re. fa,il us= shown ac the eamtern ,',orti--- -,' -,- -- t_t3,' raft the :dmntarv of th~ r-mac, we continue to re r _~;_, .~- m= ~'tlaa= L/ne gropert3, A ' ' cites ---~,-'- quest t~te uae~ ~ zden~ ...... ' t tt~s [f.U ?_~_~o,,= ~o...~ss. o~ ~t ~-mams c,,~." -.'---~:~ C.~'~°enu°~ though th~ st~ s~-- ,_~ . P~~. The ~-- ~ ....... ' - * ' ~~ ~' ~ ~"~ ~ ~cco~od mco~oratcd m~ ~c ~ ~s ~ mple P~ng ~d beena~ .3~rk, thaak Fou again for your hal mterestto~eciw,~~ . i p ' '~' AnS~g~s_~ o ' ~mc~, ... .... cc: Timothy Baird 4 ! ? II / CONCEPT 1 C.ONCE~ 3 IIlII ' SToi~ CONCEPTUAL