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011199 EDA Official File Copy CITY OF NEW HOPE EDA MEETING City Hall, 4401 Xylon Avenue North January 11, 1999 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Pat LaVine Norby Commissioner Mark Thompson Call to Order 2. Roll Call 3. Approval of Minutes of December 28, 1998 4. Discussion Regarding Development of City-Owned Property at 9200 49th Avenue North and Authorization to Prepare Purchase Agreement with Contingencies for Consideration at January 25, 1999, EDA Meeting (Improvement Project No. 597) 5. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH NEW HOPE, MINNESOTA 55428 Approved EDA Minutes December 28, 1998 Meeting gl 1 City Hall CALL TO ORDER President Enck called the meeting of the Economic Development Authority to order at 7:42 p.m. ROLL CALL Present: Enck, Cassen, Collier, Norby, Otten Staff Pi'esent: Sondrall, Hanson, Donahue, Leone, McDonald, Henry APPROVE MINUTES Motion was made by Commissioner Otten, seconded by Commissioner Cassen, to approve the EDA minutes of December 14, 1998. All present voted in favor. Motion carried. IMP. PROJECT 597 President Enck introduced for discussion Item 4, Discussion Regarding Item 4 Development of City-Owned Property at 9200 49th Avenue North (Improvement Project No. 597). Mr. Kirk McDonald, Director of Community Development, explained the negotiations to date between the City and Gary Nordness and representatives of Contract Hardware, Inc. Mr. McDonald noted the City anticipated selling the property for $120,000- $130,000. The City has lowered its asking price to $99,500. Contract Hardware's actual need is for a 15,000 square foot building. In order to satisfy the City's goal of maximizing the use of the property, they are willing to build a 26,000 square foot building and lease 11,000 square feet. They have indicated the mitigation ponding is of no benefit to them. They are only willing to purchase 1.85 acres. If the City pays for soil correction, Contract Hardware is agreeable to paying $2.30 per square foot or $185,347 for the property. They indicate that the benefits to the City would include full purchase price, ability to correct soils in conjunction with the pond, maximize the property's buildable area, increase employment, and increase the tax base. Mr. McDonald stated the City Manager's recommendation is to lower the asking price by another $10,000. Discussion ensued regarding the topograPhy of the property, timing of the development, and possible cost savings if the City undertook the soil corrections and ponding improvements together. Mr. Donahue requested the opportunity to further review the proposal and explore the implications if the City makes the soil corrections. Mr. Mark Hanson, City Engineer, indicated the City could submit a plan to the DNR regarding the wetland. MOTION Motion was made by Commissioner Otten, seconded by Commissioner Collier, to Item 4 postpone action regarding the proposal until January 11, 1999. All present voted in favor. Motion carried. New Hope EDA December 28, 1998 Page 1 IMP. PROJECT 493 President Enck introduced for discussion Item 5, Resolution Calling for a Public Item 5 Hearing to Convey Property at 5501 Boone Avenue North to Senior Outreach Services, Inc. (CareBreak) and Authorizing Preparation of Development Contract (Improvement Project No. 493). President Enck reminded the EDA that the item before them concerns CareBreak which is an entity separate from North Ridge Care Center. Mr. Donahue, City Manager, stated the resolution will establish the public hearing on January 25. He stated the EDA will also review a development agreement at the January 25 meeting. President Enck questioned the feasibility of the development as CareBreak's recent findings are that the soils are in worse condition than originally anticipated. He cautioned against conveying the property unless the City is guaranteed completion of the development. Mr. Donahue reported that the public hearing can take place and the actual conveyance can occur at a later date. He stated a draft development agreement will be available in approximately two weeks. President Enck requested that staff disseminate copies of the draft development agreement to EDA members as soon as possible. Commissioner Cassen requested the sixth paragraph of the resolution be amended to state 1.93 acres. RESOLUTION Commissioner Cassen introduced the following resolution (as amended) and moved EDA 98-14 its adoption: "RESOLUTION CALLING FOR A. PUBLIC HEARING TO Item 5 CONVEY PROPERTY AT 5501 BOONE AVENUE NORTH TO SENIOR OUTREACH SERVICES, INC. (CAREBREAK) AND AUTHORIZING PREPARATION OF DEVELOPMENT CONTRACT (IMPROVEMENT PROJECT NO. 493)". The motion for the adoption of the foregoing resolution was seconded by Commissioner Otten, and upon vote being taken thereon, the following voted in favor thereof; Enck, Cassen, Collier, Norby, Otten; 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. IMP. PROJECT614 Mayor Enck introduced for discussion Item 6, Resolution Approving the Item6 Metropolitan Council's Memorandum of Understanding to Establish and Administer a Waiting List and Grievance Procedure for MHOP Units in the Bass Lake Townhome Project (Improvement project No. 614). Mr. Dona_hue explained that the Metropolitan Council requires the City to utilize procedures established by the Met Council regarding a waiting list and grievance procedure.' The City currently uses these procedures for the Section 8 Housing Program. President Enck pointed out that number 8 on page 4 of the Memorandum of Understanding states "the City and EDA shall share equally with the Met CounCil any costs or expenses...incurred as a result of any claims". He questioned whether the city would be required to pay half of expenses if a grievance was filed against the Met Council. New Hope EDA December 28, 1998 Page 2 City Attorney Steve Sondrall affirmed that the City would be liable for sharing the costs as stipulated in the Memorandum of Understanding. Discussion ensued regarding the City's liability relative to potential claims and awards. Mr. Sondrall stated the City would likely be covered through the LMCIT. Mr. Donahue indicated he would consult the Finance Director to determine whether this type of contract is similar to other contracts entered by the City. RESOLUTION Commissioner Collier introduced the following resolution and moved its adoption: EDA 98-15 "RESOLUTION APPROVING THE METROPOLITAN COUNCIL'S Item 6 MEMORANDUM OF UNDERSTANDING TO ESTABLISH AND ADMINISTER A WAITING LIST AND GRIEVANCE PROCEDURE FOR MHOP UNITS IN THE BASS LAKE TOWNHOME PROJECT (IMPROVEMENT PROJECT NO. 614)". The motion for the adoption of the foregoing resolution was seconded by Commissioner Cassen, and upon vote being taken thereon, the following voted in favor thereof; Enck, Cassen, Collier, Norby, Otten; 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. IMP. PROJECT 614 President Enck introduced for discussion Item 7, Resolution Approving Bass Lake Item 7 Townhome Housing Development Agreement and Regulatory and Operating Agreement and Authorizing the President and Executive Director to Sign Said Agreements (Improvement Project No. 614). Mr. Donahue stated this item is a reaffirmation of the agreements previously approved by the EDA. RESOLUTION Commissioner Collier introduced the following resolution and moved its adoption: EDA98-16 "RESOLUTION APPROVING BASS LAKE TOWNHOME HOUSING DEVELOPMENT AGREEMENT AND REGULATORY AND OPERATING AGREEMENT AND AUTHORIZING THE PRESIDENT AND EXECUTIVE DIRECTOR TO SIGN SAID AGREEMENTS (IMPROVEMENT PROJECT NO. 614)". The motion for the adoption of the foregoing resolution was seconded by Commissioner Cassen, and upon vote being taken thereon, the following voted in favor thereof; Enck, Cassen, Collier, Norby, Otten; 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. ADJOURNMENT Motion was made by Commissioner Otten, seconded by Commissioner Cassen, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 8:31 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA December 28, 1998 Page 3 . ~ EDA ~ i RF UF T FOa ACTION Originating Department Approved for Agenda Agenda Section EDA Community Development 1-11-99 Item No. By, Kirk McDonald ~ 4 DISCUSSION REGARDING DEVELOPMENT OF CITY-OWNED PROPERTY AT 9200 49TM AVENUE NORTH AND AUTHORIZATION TO PREPARE PURCHASE AGREEMENT WITH CONTINGENCIES FOR CONSIDERATION AT JANUARY 25, 1999, EDA MEETING (IMPROVEMENT PROJECT NO. 597) At the December 28, 1998, EDA meeting, the EDA directed staff to continue to coordinate with Gary Nordness, President of Essence Real Estate Services, Inc., and with the owners of Contract Hardware Company, Inc. on the potential purchase and development of the city-owned parcel at 9200 49th Avenue. As staff informed the EDA, the major sticking point in the negotiations has been the soil corrections issue. At that meeting, the City Engineer indicated that there could be a significant savings if the soil corrections and pond were completed at the same time. The idea was raised of having the City complete the soil corrections in conjunction with the pond excavation and selling the developer a buildable lot at the market rate price of $2.30 square foot x 80,586 square feet or $185,347. The developer was agreeable to this idea if the soil corrections could be completed in a timely manner. Subsequent to that .meeting, the City Attorney, City Engineer and Community Development Director met to discuss the potential cost savings on the soil corrections, develop a potential timeline for the project and discuss contingencies that could be included in a purchase agreement. These issues are outlined below: Soil Corrections/Pondin.q Costs Per the City Engineer's correspondence, if ponding for regional water quality requirements can be incorporated in a portion of the existing wetland east of Englund Graphics (9100 49th Avenue) and mitigation for the wetland encroachment can be satisfied over the northerly one-third of the city-owned property (9200 49th Avenue), then the southerly two-thirds of the property can be preserved for development. The contour drawings dated 1955 for the area including 9200 49th Avenue and the soil borings taken by the City when the Property was acquired by the City suggest that the northerly one-third of 9200 49th Avenue has better soil than the southerly two-thirds. Therefore, if the City were to undertake a public improvement project to construct the regional water quality and the required mitigation over 9200 49th Avenue, the better soil on the northerly one-third of the property could be used to correct the poorer soil over the southerly two-thirds. The estimated cost to construct the water quality pond and provide the required mitigation over the northerly one-third of 9200 49th Avenue including soil correction is summarized as follows: (cont'd.) MOTION BY SECOND BY Request for Action Page 2 1-11-99 Water Quality Pond/Mitiqation (northerly one-third 9200 49th Avenue) 2,300 CY Water Quality Pond Excavation @ $7.00/cy $16,000 14,000 CY Mitigation Excavation @ $7.00/cy 98,000 150 LF Extend Storm Sewer Pipe in 49th Avenue @ $100/If 15,000 2 AC Restoration/Erosion Control @ $2,000/ac 4,000 Subtotal $133,100 Soil Correction (southerly two-thirds 9200 49th Avenue) 12,000 CY Common Excavation @ $4.00/cy $48,000 1,900 CY Granular Borrow @ $6.00/cy 11,400 Subtotal $59,400 The above estimate assumes common excavation for soil correction includes only excavation ($4.00/cy) while the estimate for mitigation excavation assumes excavation and removal off site ($7.00/cy). The above cost estimates assumes the additional cost for soil correction over the southerly two-thirds of 9200 49th Avenue is approximately $60,000 as opposed to $147,500 estimated by the developer. The City Engineer is presently preparing a DNR Permit application to construct the water quality pond in the existing wetland and provide the proposed mitigation. He expects the DNR Permit review will take 30-60 days, however has indicated that it is not certain whether the DNR will approve the Permit. Timeline Based on the DNR Permit approval process, the following timeline was drafted by staff to determine approximately when a buildable site would be available. Projected timeline for DNR approval to construct pond, construction of pond, correcting soils, and Planning Commission/City Council approval for development of property at 9200 49th Avenue North. January 11 EDA Meeting Continue discussion; approve concept purchase agreement, subject to conditions January 15 Make permit application to DNR January 25 Council Meeting Approve plans and specifications for pond and soil corrections; authorize advertisement for bids February 5 Submit Planning application and plans for Planning Commission February 17 Open bids FebrUary 22 Council Meeting Council consider bids; award, subject to conditions March 2 Planning Planning Commission considers/approves plans Commission Meeting March 8 Council Meeting City Council approves plans March 12 Alternate date to submit plans to Planning Commission March 15 DNR permit received; pond construction and soil corrections start April 8 Alternate Planning Planning Commission considers/approves plans Commission Meeting Date April 12 Alternate Council City Council approves plans Meeting May 1 Soil corrections/pond completed; closing on property May/June/July 90 days to construct building Request for Action Page 3 1-11-99 Knowing that Contract Hardware Company wanted to be in its building no later than the end of July and wanted 120 days to construct the building, the variables in the timeline are: 1. Can DNR approval period be shortened so soil corrections can start earlier? 2. Can developer live with less than 120 days to build? 3. Can Contract Hardware extend existing leases for 1-2 months so that they could wait to move into new building until August or September? Purchase Aq reementJContin,qencies Based upon the above factors, the City Attorney prepared the attached correspondence outlining the conditions that could be incorporated into a Purchase Agreement: 1. The buyer must approve and accept the City's plans and specifications for the soil correction project and agree the proposed soil corrections will permit the buyer to utilize the property as intended for construction of its office warehouse facility. 2. That the City's requirement to make the soil corrections and sell this property to the buyer will be contingent upon DNR approval for the water quality pond to the east and use of the northerly one-third of the subject property for wetland mitigation required by construction of the water quality pond. 3. The DNR approval for the water quality pond may not be received until March 15, 1999. A "drop dead date" for moving forward with this sale and proposed soil correction by the City should be incorporated into the purchase agreement. The buyer may not be able to wait until March 15, 1999, and as a result, an earlier date may need to be negotiated so that either party may void its obligation to perform under the purchase agreement if the DNR is either delinquent in granting its approval or disapproves the proposed water quality pond in the wetland east of the property. 4. The soil project could not realistically be completed prior to May 1, 1999, therefore, the City could not deliver a buildable lot to the buyer prior to that date and a condition indicating same would also need to be incorporated into the purchase agreement. 5. Any damages claim resulting from the City's failure to provide t~e buyer with a buildable lot should be limited to the City's general insurance liability coverage or the statutory liability amount, whichever is greater. Summary The City Attorney and staff discussed all of this information with the developer and they indicated that they thought they could make the timeline work and they were agreeable to the contingencies. Staff is requesting authorization t° meet with the developer and prepare a Purchase Agreement, based upon the above-stated factors, and bring the agreement back to the EDA for approval. JENSEN SWANSON & SONDRALL, P.A. Attorneys At 8~25 gOIN-~aOO~ CRC~Si~C,, STI. 201 BaOo~vn P~m~, ~~ $~43-1999 TgL~.~'aOt~t (612) 4248811 ® TE~.~AX (612) 493-5193 W'IU. JAM G. SWAN~ s'rav~ a. sc~g~tsu., January 7, 1999 MARTIN' P. MAi~L"'HA Kirk McDonald oscoussv.~ Community Developra~nt Director umr~ Q. s~Y~-r^o City of New Hope 4401 Xylon Avenue North New Hope, MN 55428 Proposed 8ale of 9'/.00.4~ Avmme North (Branaell Property), Our File No,: 99.1E217 Dear Kirk: This letter is in follow up ~o our January 4, 1999 meeting with yourself and the City Engineer regarding the referenced matter. Specifically. you asked me to address the various contingencies which we would aeed to include in any purchase agreement with the proposed buyer in light oftl~ information set forth in the City F. ngiaeer'$ January 6, 1999 memorandum ~nd your projected time sc, ha~ule set forth in yoUr !auuary 6, ~999 facsimil~ transmission. However, I would lilm to ~ where we have be~n and where we anticipat~ going relative to thc proposed sale of tiffs pmpe~/,, its future clev¢lopmen~ ami the City's utilizatiou of the property m satisfy its water quality managcn~m plan. Basically, the property is approximately three acres in si~.e. The propos~ buyer wishes to utilize two acres of the property for li~ constrnc~on of a propose~ office warehouse approximately 26,000 square feet in size. As pointed out ia the City Engineer's memo, the City would utiliz~ the northerly 1~3 of ~he property fo~ wetland mitigation purposes resulting from tl~ City's conswaction of a wate~ quality pond in the wetland eas~ of the property subject however to DNR approval. The City desires m convey the entire panel to the proposed buyer subject to a wcttand mitigation easement over the northerly 1/$ of the property. However, thc property owner desires to base its purchas~ offer on t~ acquisition of only the southerly 2J~ of the property with said price adjusted accordingly for soil correction costs. The proposed buyer'ha~ provided the City with a $1~7,000 cos¢ estimate for soil corr~rion on the south 2/~ of thc property. Ail parties agree ~ property is worth at least $2.~0 a square foot if soils are cormcu~L The City Engineer's memo appears to indicate thc City may be able to correct thc soil problem on the subject property fo~ $S9.400 if said correction is done in conj¥_n~_-fion with the constrtu~tion of the water quality pond to the east of the property. Apparently, the City's cost savings is based on our ability to reposition the $ood soil for the bad soil on th~ si~ without a need to remove and replace soils as assumed in ~he proposed buyer's quot~, As ~ r~sult, cost savings to thc City will be significant and basically resul~ in a ne~ salz price of approximately $125,000 azsuming c:~ $185,000 as th~ fair market price of the propt~ with corrected soils. ~anuary 7, 1999 Pago 2 Unfortunately, our ability to implement this plan is conditioned upon the DNR's approval of our proposed water query pond to the east of the property. As a result, any purchase agreement v~ enter into must include the following conditions or contingencies: 1. The buyer must approve and accept our plans and specifications for the soil correction project and agree the proposed soil corrections will permit the buyer to utilize ~he property as intended for construction of its offic~ warehouse facility. 2. That the City's requirement to make the soil corrections and sell this property to the buyer will be contingent upon DNR. approval for the water quality pond to the east and use of the northerly 1/3 of the abject property for wetland mitigation required by construction of the water quality pond. It is my understanding the DNR approval for the waler quality pond may not be received until March 15, 1999. A 'drop dead date' for moving forward with this sale and proposed soil correction by the City should be incorporated into the purchase agreement. In oth~ words, ~ buyer may not be able to wait until March 15, 1999, and as a result, an earlier dat~ may need to be negofiau~d so that either party may void its oblilation to perform under hie purchas~ agreement if the DNR is either delinquent in granting its approval or disapproves the proposed water quality pond in the wetland east of the property. 4. The City Engineer informed us at the meeting that'the soil project could not realistically be completed prior to May 1, 1999. Therefore, the City could not deliver a buildable lot to the buyer prior to that date and a condition indicadn~ same would also need to be incorporated into the purchase al~reement. 5. Any damages claim resulting from the City's failure to provide the buyer with a buildablc lot should be limited to thc City's general insuranco liability coverage or the statutory liability amount, whichever is greater. I would prefer that our contractor enter into a separate a~reeracnt with the buyer for thc soil correction on ~ soud~rly 2/~ of the lot as proposed in the City Engineer's memo and that the City be relieved of any liability in connection with the soil condition or buildahility of the property. I welcome your comments, suggestions or additional contingencies which I may have missed thai you believe should be incorporated into tho purchase agreement as well. Very truly yours, St~Sondrall $fN$~H SWANSON & SONDRALL, P,A, ~n~ineers_ ~ Architects MEMORANDI~:~I TO: I<~irk McDonald.: Steve Son&all FROM: Mark Hanson SUB,FECT: 9200 49~ Avenue (Brandell PropertT) BRA File No. 34-98-820 DATE: January 6, 1999 On January 4, 1999. we met to review- the potential development for the above property. As previously stated in our December 22, I998 memo, New Hope's Surface Water Management plan provided for a regional pond to satisfy water quality requirements over the entire property, at 9200 49th Avenue. However, in the interest of providing some development on this property, its been proposed that if ponding for water quality requirements can be incorporated in a portion of the existing wetland east of En~and Graphics (9100 49u'' Avenue) and mitigation for the wetland encroachment can be satisfied over the northerly 1/3 of 9200 49'~ Avenue, then the southerly 2/3 of 9200 49th Avenue can be preserved for development. The contour drav, ings dated 1955 for the area including 90_00 49th Avenue and the soil borings taken by the City. when the property, was acquired by the City suggest that the northerly 1/3 of 9200 49th Avenue has better soil than the southerly 2/3. Therefore, as discussed at our meeting. if the City were to undertake a public improvement project to construct the regional wate,r.,quality and the required mitigation over 9200 49~ Avenue, the better soil on the northerly 1/~ of the property could be used to correct the poorer soil over the southerly 2/3. 2335 West Highway 36 · St. Paul, MN 55113 · 612-636-4600 · Fax: 612-636-1311 The estimated cost to construct the water quality pond and provide the required mitigation over the northerly 1/3 of 9200 49th Avenue including soil correction is summarized beloW: Water Quality Pond/Mitigation (northerly 1/3 9200 49th Avenue) 2,300 CY Water Quality Pond Excavation ~ $7.00/cy $16,000 14,000 CY Mitigation Excavation ~ $7.00/cy 98,000 150 LF Extend Storm Sewer Pipe in 49th Avenue ~ $100/If 15,000 2 AC Restoration/Erosion Control ~ $2,000/ac 4,000 Subtotal $133,100 Soil Correction (southerhr 2/3 9200 494 Avenue) 12,000 CY Common Excavation ~ $4.00/cy $48,000 1,900 CY Granular borrow (~ $6.00/cy 11,400 Subtotal 859,400 The above estimate assumes common excavation for soil correction includes only excavation ($4.00/cy) while the estimate for mitigation excavation assumes excavation and removal off site ($7.00/cy). In summary, the above cost estimates assumes the additional cost for 'soil correction over the southerly 2/3 of 9200 49t~ Avenue is approximately $60,000 as opposed to $147,500 estimated by the developer. Presently, we are preparing a DNR Permit application to construct the water quality pond in the existing wetland and provide the proposed mitigation. We expect the DNR Permit review will take 30-60 days. However, its not certain whether the DNR will approve the Permit. I PROPOSED ~ MULTI-TENANT I 9200 49TH AVE. NORTH r ~"~ "'~' . ~ NEW HOPE, MINNESOTA 20.000 .. HOR~ :: finn daniels I 4,, 49th AVENUE NORTH \ ERICK$ON/