Loading...
082597 EDA Official File Copy CITY OF NEW HOPE £DA A G£NDA EDA Regular Meeting #7 August 25, 1997 Agenda #7 Pres/dent W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Pat La Vine Norby Commissioner Gerald Otten 1. Call to Order 2. Roll Call 3. Approval of Minutes of June 9, 1997 4. Resolution Authorizing Commencement of Eminent Domain Proceedings to Acquire Property at 7500 42nd Avenue North (Improvement Project No. 474) 5. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 Approved EDA Minutes June 9, 1997 Meeting #6 CALL TO ORDER President Enck called the meeting of the Economic Development Authority to order at 8:27 p.m. ROLL CALL Present: Enck, Cassen, Collier, Norby, Otten Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, Olson APPROVE MINUTES Motion was made by Commissioner Collier, seconded by Commissioner Norby, to approve the EDA minutes of April 28, 1997, and May 27, 1997. All present voted in favor. Motion carried. IMP. PROJECT 600 President Enck introduced for discussion Item 4, Discussion Regarding Item 4 Sandpiper Cover Townhome Association Loan Program and Establishment of Housing Improvement Area (Improvement Project No. 600). Mr. Kirk McDonald, Management Assistant/Community Development Coordinator, stated for the past 1-Y2 years, City staff has met on several occasions with representatives of the Sandpiper Cove/Rockford Townhome Association regarding potential City financial assistance to upgrade the exterior of these properties. Sandpiper Cove is a townhouse development located at 8101-8953 42nd Avenue that contains 36 owner-occupied townhomes (four 4-plexes and 10 duplexes). The complex is 20 years old and there are significant exterior deterioration problems. The Association has sought preliminary bids from contractors who estimated that $350,000 is needed to make siding, deck, window and other improvements. Although they have recently taken steps to increase their monthly association dues, they do not have the financial capability to make these improvements. Due to the fact that they are a townhouse association consisting of individual owners, they have been rejected by several banks for loans to make the needed improvements. That is why they have approached the City for assistance. Staff has cooperated with them because it is felt that the City has a vital interest in maintaining multi-family dwellings. Staff and the City Attorney originally explored utilizing the existing multi-family financial assistance policy for apartments for this situation, however, the policy is not applicable because it requires a 50 percent match from the owners. Over the past year, staff has inquired about programs utilized in other cities to address townhome/condominium improvements and became aware of some new legislation that was recently enacted to address these situations. The program involves City- funded loans to property owners unable to obtain financing through private means. Instead of securing the loans as a typical mortgage transaction, the City can assess the benefiting properties similar to a special assessment project. Mr. McDonald stated the new legislation allows the City to define a housing improvement area, make improvements in the area, and assess benefiting properties. First the City must adopt an enabling ordinance New Hope EDA June 9, 1997 Page 1 specifically defining the improvement area and proposed improvements. Before the City adopts such an ordinance, a petition with at least 25% of the owners within the proposed area is required as well as a public hearing. The EDA inquired of financing options. Mr. Steve Sondrall, City Attorney, explained that if the EDA is supportive of the program, he could work with staff and prepare a proposed enabling ordinance defining the project and improvement area. In July staff could make a recommendation to the EDA relative to project costs and financing options. In the interim the homeowners association could contact the remaining six property owners regarding the petition for creation of an enabling ordinance. The petition from the Rockford Homeowners Association containing 30 signatures of the 36 owner-occupied townhomes was presented to the EDA. The petition requested creation of an enabling ordinance and the conception of a special district for a housing improvement area. MOTION Motion was made by Commissioner Collier, seconded by Commissioner Item 4 Norby, to accept the petition and direct staff to further explore the loan program. Voting in favor: All. Motion carried. ADJOURNMENT Motion was made by Commissioner Collier, seconded by President Enck, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 8:43 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA June 9, 1997 Page 2 EDA REQUF. T FOR .aCTION Originating Department Approved for Agenda Agenda Section EDA City Manager ~"~8-2597 Item No. By: Kirk McDonald By:// 4 Management Assistant / RESOLUTION AUTHORIZING COMMENCEMENT OF EMINENT DOMAIN PROCEEDINGS TO ACQUIRE PROPERT~ AT 7500 42ND AVENUE NORTH, IMPROVEMENT PROJECT NO. 474 The City Attorney has prepared the enclosed resolution which authorizes the acquisition of the Ardel Engineering property by direct purchase or eminent domain. The acquisition of this property is necessary to proceed with the redevelopment of the properties north of 42"d Avenue between Quebec Avenue and the railroad tracks. The City currently owns two out of the three parcels and the remaining parcel is located at 7500 42nd Avenue and is adjacent to the railroad right-of-way. The City's most recent appraisal of the property dated May 28, 1997, which was completed by BCL Appraisals, indicated a fair market value of $344,000. If the EDA approves the acquisition, the City's offer by direct purchase would be for the appraisal amount. The EDA would also be required to provide relocation services and pay relocation expenses to Ardel Engineering, the current tenant of the property. Therefore, the enclosed resolution provides authority to retain a relocation expert to determine and pay these expenses as well as reasonable closing costs in the event a direct purchase is successful. A relocation expert is necessary to insure compliance with the Uniform Relocation and Assistance Act. Relocation expenses would be a minimum of $20,000. The resolution also provides for a "quick take" in the discretion of the City Manager. At this time, staff is not recommending the "quick take" procedure, but wanted to include it in the authorizing resolution in the event that the EDA needs this authority at a later date. The acquisition of the property and related relocation expenses would be paid for with 42nd Avenue TIF funds. Staff recommends approval of the resolution. / Review: Administration: Finance: RFA-O01 ~ ~UG-12-9? ?UE 16:88 ?,02/07 Core, rcs: & SO,DP. ALL. P.A. w,au~ C. ~T* SuitC ~203 ~r~kl~ P~k, Minnesota 55443 t~PnO~o ~R N~ T~LEPHONE (612) August. I2, 1997 Kirk McDonald City o¢ New Hope ~401Xylon Avenue North New Hope, MN 55428 RE: ACqUisitiOn Of Property at 7500 49nd Avenue North Ou¢ File: 99.11111 Oear Kirk: Please ~ind enclosed for consideration at the August 25th EPA Meeting a proPOSed resolution authorizing the acquimi%ion of the ArdQ1EngineQrin9 property by dirm¢% purchase or eminenb domain. AS yOU know, our latest appraisal o~ the property dated May 2@~ 1997 done by BCL Appraisals indicated a fair market value of $244,0o0.00. I~ the MOA approves the acquisi~ion, our offer by ~i~ecg purchase would be for the appraisal amount. The ~BA will also bm rmquired to provide relocmtion services and pay relocation expsn~m to Arde~ [ngineerin~ ~he ou~re~b ~nan~ o~ the property, As a result, the en~lomed remolution provides authority t~ re~ain a rQloca~ion mxpert ~o determine and pay the~ ~xpenses as we~ as reamonable olo$img COSTS in the event m direct pur~hame im successful. These expensem c~uld be complicated and mubs%an%iml, therefore a r~looation expert im necessary in thim matter to insure we ~omp~y wi~h Unifo~'m me~ocagion an~ Assistance Act. At a minimum, relocation expenses will be $20,000.00. The resolution a~o p~ovide8 fo~' a "quick-take" in ~he OisGr~t.Jo~ of ~be City Manager. A~ %his time I am not recommending we ume thm 'q~ick-take" procedure but wanted to include i~ in ~he authorizing re~o~u%ion in th~ event w~ decide we need this ~ubhoriby at a later date, P, 03/07 RUG-t2-97 TUE t6:56 Kirk McDonald AUgU$~ 11, 1997 Page 2. Please contac~ me i¢ you have any questions ~bou~ this matter or the enolo~ed re~olution. Very 'truly yours, 8~even A. 8ondral t zltl enclosure va]e~ie Leone Dan Donahue EDA RESOLUTION NO. 97- RESOLUTION AUTHORIZING COMMENCEMENT OF EMINENT DOMAIN PROCEEDINGS TO ACQUIRE PROPERTY AT 7500 42ND AVENUE NORTH BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope, Minnesota as follows: WHEREAS, the Housing and Redevelopment Authority in and for the City of New Hope (hereafter the HRA) was established and organized within the City of New Hope under authorization of New Hope Code §2.30 et. seq. and Minn. Stat. §462.415 et. seq., and' WHEREAS, the HRA, acting pursuant to the authority of Minn. Stat. §462.415 et. seq. established Redevelopment Plan 85-2, Redevelopment Project 85-2 and Tax Increment Financing Plan 85-2 by adoption of HRA Resolution No. 85-08 on December 23, 1985, and WHEREAS, Minnesota Law 1987, C. 291 § 48, which repealed Minn. Stat. §462.415 et. seq. provided that all orders, resolutions, motions, plans and agreements and actions taken by any municipal housing and redevelopment authority organized or purported to be organized under Minn. Stat. §462.415 to 462.705 and Minnesota Law 1959 C. 545 § 1 to 19, and taken or purported to be taken by any governing body, city planning commission or political subdivision of the state or public state body with respect to plans and projects are hereby declared valid and effective, and WHEREAS, the New Hope City Council on December 23, 1985 approved the adoption of Redevelopment Plan 85-2, Redevelopment Project 85-2 and Tax Increment Financing Plan 85-2 by its Resolution No. 85-129, and WHEREAS, the Economic Development Authority in and for the City of New Hope (hereafter the EDA) was organized and established within the City of New Hope by Ordinance No. 89-7 adopted by the City Council on March 27, 1989 under authorization of Minn. Stat. §469.090 et. seq., and WHEREAS, the EDA was transferred control, operation and authority over Redevelopment Plan 85-2, Redevelopment Project 85-2 and Tax Increment Financing Plan 85-2 pursuant to HRA Resolution No. 89-4, City Resolution No. 89-73 and EDA Resolution No. 89-3, and 1 WHEREAS, the property located at 7500 42nd Avenue North hereafter legally described is included in the Redevelopment Plan, Redevelopment Project and Tax Increment Financing Plan area: The East 100 feet of the South 350 feet of Lot 5, Auditor's Subdivision No. 324, Hennepin County, Minnesota except road and alley. PID No. 17-118-21-22 0006, and WHEREAS, the goals and objectives of the Redevelopment Plan and Redevelopment Project include among others the following goals and objectives: a. provide compatible and complementary land uses; b. provide more homogeneous land uses and street treatment along 42nd Avenue in order to unify development and provide a positive image of the City; c. promote and secure development and redevelopment in a manner that allows the most logical and efficient arrangement and intensity of land uses; d. to undertake certain land acquisition, parcel assembly and parcel disposition necessary to eliminate substandard and non-conforming uses and buildings, and to assemble logical conforming and more efficient building sites; e. to promove and secure the redevelopment of non-conforming land uses and substandard buildings in a way which provides a clearer definition of land uses and more efficient utilization of parcels; and WHEREAS, the Economic Development Authority in and for the City of New Hope does hereby determine that the acquisition of this property is reasonably necessary and convenient to the furtherance of the referenced goals and objectives of the redevelopment plan and redevelopment project, and that in its judgment the acquisition of this property will be for the benefit of the public health, welfare and safety of the citizens of New Hope, and WHEREAS, an appraisal of this property has been previously ordered by the EDA and that said appraisal has been completed as of May 28, 1997 establishing a fair market value for the subject property of $344,000.00, and WHEREAS, Minn. Stat. §117.232 authorizes the EDA to acquire the subject property by direct purchase in lieu of eminent domain proceedings, and WHEREAS, Minn. Stat. §469.101, Subd. 4 gives the Economic Development Authority in and for the City of New Hope the authority to acquire property by power of eminent domain under Minn. Stat. Chapter 117, including the power of acquiring possession of the property per the "quick-take" provisions of §117.042, if necessary to carry out the redevelopment plan and redevelopment project, and WHEREAS, the Economic Development Authority in and for the City of New Hope has determined it is necessary to acquire this property by direct purchase or eminent domain proceedings, and WHEREAS, said redevelopment plan and redevelopment project were established under the authority of Minn. Stat. Chap. 462 pursuant to various studies undertaken by the City of New Hope which have shown that certain redevelopment activities in the plan area are warranted and would not have occurred through private development alone. NOW, THEREFORE, BE IT RESOLVEB by the Economic Development Authority in and for the City of New Hope as follows: 1. That the Executive Director is hereby directed and authorized to acquire by direct purchase at the appraisal value of $344,000.00 the property at 7500 42nd Avenue North in the City of New Hope, legally described as follows: The East 100 feet of the South 350 feet of Lot 5, Auditor's Subdivision No. 324, Hennepin County, Minnesota except road and alley. PID No. 17-118-21-22 0006. In addition to this amount, the Executive Director is authorized to pay all reasonable closing costs associated with the purchase of property. Further, the Executive Director is authorized to retain a relocation expert to determine the amount of relocation expenses the EDA must pay by law as a result of this acquisition and pay to the appropriate parties all required relocation expenses as determined. If direct purchase is unsuccessful, the Executive Director is authorized and directed to commence eminent domain proceedings under Minn. Stat. Chapter 117 to acquire the subject property. 2. That the Executive Director is further directed to utilize the "quick-take" procedure per Minn. Stat. §117.042 if in the judgment of the Executive Director it is necessary to acquire possession of the property prior to the conclusion of the eminent domain proceedings. 3. That the Executive Director is hereby directed and authorized to obtain additional appraisals necessary to establish fair market value and just compensation for said property in preparation for said eminent domain proceedings. Adopted by the Economic Development Authority in and for the City of New Hope this 25th day of August, 1997. W. Peter Enck, President Attest: Daniel J. Donahue, Executive Director d :\~p51 \cnh\r eso Jut ien ,750 4. ~UG-12-97 TUE 14:31 P, 02/02 J~N~EN & ~WAN~ON. P.A. ATi~DblNE¥~ ,~r Lf, w 8525 EDI~R00K CRO~INO SAUTE ~201 Baoo~ P~, M~A 55~43 (6121 424-8811 'l~r~ [~1~) 493.5193 Stew Sondrall Corrkk & Sondrall 8525 Edinbrook Cro~sing Brooklyn Park, MN 51/443 Dear Steve: I have now had an opportunity to discuss with Terry Jenscn the possibility of a n~gotiated aCcluisifion by the City of New Hope of h/s prol~rty at 7516 42nd Avenue North. As I indicted W you, once Terry received Bulletin No, t, Project NO. 595 whiCh indicated dmt the City ",.,has no hnmediat¢ plans to redevelop the site and is simply clearing the sim at this time".., he commenced negotiations with the current tenant for extemsion of thc existing Lease. NcgotiaXions have not been completed, although my client has made an offer to the OCCupant for a I_ease Amendment which will cxt~d the term for three to five years. Negotiations are currently taking place in regard to execution of that Extension Agreement and I anticipate Lhat an Amendment to the Lease will be executed in the near future, If the City desires to acquire 7516 42nd Avenue North a written offer should be directed to Terry. Also, although I serve as legal counsel in regard to his properties, you arid the City ar~ certainly aumorized and requested to deal directty with Terry, except as lxe may otherwise direct. Thank you. Sincerely, Oordoa L. ,Iensea JENSEN & SWANSON. P.A. o/_J:sar Terry $cnsen · Real Estate Spcc/alis/Cer[ifie~l By The M/nneaot~ State B/u-A~soc/alion A SLiPL~_ARY APP~AiSAL REPORT - LIMITED APP.~AISAL - An industrial Building 7500 42nd Avenue North New Hope, Minnesota Ardet ~ ~ mng .... ering & Manufacturing PREPARED FOR The City ef New Hepe c/o Kirk McDonald 4401 Xylon Avenue North New Hope, Minnesota 55428 EFFECTIVE DATE OF APPRAISAL May 28, 1997 OUR FILE NUMBER 96467A BCL APPRAISALS BJORKLU~ND, CARUFEL, LACHEN~IAYER, INC. 2852 ,ANTHONY LANE SO., MINNEAPOLIS, MINNESOTA 55418 (612)781-0605 Fax: 781-7826 5rA£. SRA REAL ESTATE APPRAISERS BRAD BJORKLUND. ALCARUFEL. MA~ June 11, !997 & RON LACHENMAYER, s~ CONSULTANTS LESLIE J. (LEE) RACINE, JR., The City of New Hope c/o Kirk McDonald 4401 Xylon Avenue North New Hope, Minnesota 55428 Re: Appraisal of 13,524 sf Industrial Building Ardet Engineering & Manufacturing; 7500 42nd Avenue North, New Hope, PIN Dear Mr. McDonald, In response to your request, I have conducted the required the data, and made certain investigation, gathered necessary analyses 5hat have enabled me to form an opinion of the market value of the fee simple interest of the real property referenced above. It is intended to update our earlier appraisal report dated 2-5-96. Based on an inspection of the property and the investigation and analyses undertaken, I have formed the opinion that as of May 28, 1997, and subject to the assumptions' and limiting conditions sec forth in this report, the subject property has a market value of: THREE HIINDRED FORTY FOUR THOUSAND DOLLARS $344,000 The appraisal report that follows is a Limited Report. At your request, the owner was not contacted for an interior inspection. Furthermore, this is a short form appraisal report which is only a brief recapitulation of the appraiser's data, analyses, and conclusions. More thorough and lengthy supporting documentation is retained in the appraiser's file. If needed, a self contained, complete appraisal report could be prepared for an additional fee at a later date. Respectively submitted, Eric Bjork&und Cert. General Real Property Appraiser Minnesota License ~4003154 EB/rak I MORE THAN 80 YEARS FULL APPRA gAL SERVICES 'FEO/AA ~ I ] ~,~ Appraisal Report - Limited Appraisal This is a Summary Appraisal Report which is intended to comply with the re:erring requirements set forth uncer Standards 2~s~ of the Uniform Standar&s cE Professional AD~raisai Practice for a Summary Appraisal Report. As such, it presents only summary discussions of the reasoning of analyses that were used in ~e appraisal process to develop the appraiser's osznlon of · _~ ~n .... would be used to expand value Sue~orzing documenZation the reeortinc format of this document is retained in the a~praiser's file. The depth of discussion contained in this report is specific te the needs ef the c±_ent'and for the intended use stated below. The appraiser is no~ responsible for unauthorized use of this repot%. This is a limited appraisal which invokes ~he Departure Provision of the Uniform Standards of Professional Appraisal Practice. An interior inspection of the building was not made as of the e ~e~es ~o effective dar of appraisal. This ~ '~ ~ the relevance c S~andard Rule !-2a (data collection process). However, because the interior was inspected several times in the past, most recently on February 5, 1996, the report and opinion of value retains a strong element of creditability. The departure is allowable. Ail approaches to value were applied. PURPOSE OF T~E APPRAISAL & DEFINITION OF VALUE: The of this is to provide a current market appraisal purpose value estimate of the subject real property so that the client may buy it. Any influence on the subject's value caused by a threat of condemnation is disregarded. P~rket value is defined by the federal financial institutions regulatory agencies as follows: P~rket %~lue is the most probable price which a property should bring in a competitive open and market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is net affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: PURPOSE CF THE APPRAISAL & DEFINITION OF VALUE cent: ! buyer and seller are ~ypica!ly mo~ivaued; 2 beth earuies are well informed or well advised, and acUing in what Uhey consider their own best inUerests; 3 a reasonable time is allowed for exposure in zhe open market; (4 payment is made in terms of cash in U.S. dollars or in ~erms of financial arrangements comparable thereto; and {5 the price represents the normal consideration for ~he property sold unaffected by special or creative financing er sales concessions granted by anyone associated with ~he sale. (Source: Office of the Comp~ro[ter of the Currency under I2 CFR, Part 34, Subpar~ C-AppraisaLs, 34.42 Definitions (fi.) INTEREST VALUED: Fee Simple EFFECTIVE DATE OF VALUE: ~a~~ o~ ~ ~ ~on, May 28, ~997 DATE OF REPORT: June 11, 1997 APPRAISAL DEVELOPMENT AND REPORTING PROCESS: In preparing this appraisal, the appraiser: · the subject on Hay 28, 1997. Inspected · Gathered rental, expense, vacancy and cost information, as well as sale data on comparable land and buildings in the subject's and competing neighborhoods. · Discussed perceptions of value for the subject and other industrial properties in the area with the owner, tenant, buyers, sellers and brokers. · Completed ali approaches to value; The Sales Comparison, The Cost, & the Income Approach. To develop the opinion of value, the appraiser essentially performed a complete appraisal process, as defined by the Uniform Standards of Professional Appraisal Practice. Ail approaches to value were completed. However, the Departure Provision was invoked because the building interior wasn't inspected, at least for the present date of value. Therefore, the report is actually a Limited Appraisal. HISTORY OF THE REAL ESTATE APP~AISED: The subject has been owned by Terry Jenson since the mid 1970's. For the past !!+ years, the building has been .occupied by Ardel Engineering and Manufacturing. in early 1996, a 10 year lease ow.~=, renegotia5ed a rental expired. A~parentty,~ the orcp=~tv~ ~ , ~-~ agreement with the tenant because the tenant is still there. ~--~~ ~ ~ ~o.,~ac~ with the G_¥~. ~h~ c lents desire to have limited .... ~_~e~_~¥ owner (or tenant) t~rms of ~ne rental agreement are unknown. The building is not ~ ~=~ offered for sale. The subject is stricken by a po~=~ion stigma. This to an extent affects the highest and best use. In 1983, a ruptured settling tank for various industrial solvents was discovered on the adjacent property to the west. La~e~ tests showed groundwater and soils under the subject, and in the immediate vicinity were contaminated by trichloroethy!ene (TCE) , dichloroethylene (DCE) , chromium, copper and lead. There are presently 15 moni~ ~ ~or_ng wells in the area, and measures are underway to clean up the contaminants. Pollution levels have dropped most notably nearest the source, but apparently the co,~am~n=tion levels are ne longer being effectively reduced in plume areas away from the former "hot spot" where the remediation equipment is located. Higher levels of contaminants still exist under ~he subject building to a depth ef about 15 feet. LOCATION DESCRIPTION: The subject is located in the City of New Hope, a second tier westerly suburb of Minneapolis with a current population of about 21,715. New Hope is approximately seven miles northwest of Downtown Minneapolis. The community is primarily residential in character. There are scattered industrial districts and one major concentration of commercial buildings focused at the intersection of 42nd Avenue North (C.S.A.H. ~9/Rockford Road) and Winnetka Avenue (C.S.A.H. ~156) . Most development in New Hope has taken place since 1960. New Hope has a council/manager plan B form of government that provides good quality municipal utilities and services. Essentially all of the city streets are paved, have concrete curb and gutter, street lights and service by sanitary sewer and water. The entire city is located in School District ~28!. MTC bus routes serve most of the City including a route en %2nd Avenue North. No unusual municipal or economic influences are observed that would unduly affect the value of real estate in New Hope. The economy has recovered from the recession ef 1990 and 1991. Vacancy is low {c.3%) in the industrial market. New leases en warehouse & manufacturing space _ange from $3.50 to $%.oo/sf. LOCATION DESCRIPTION cont: Hajor transportation to the City is provided by Highway along the westerly City limits; also by Rockford Road, Bass Lake Road (C.S.A.H. ~i0) , Medicine Lake Road (26~h Avenue/C.S.A.H. ~0), and Winnetka Avenue These county roads crevice good - ~ ~u~I ~ located on 42nd community ~cc=ss within the city. The ~ ' 'oct _s Avenue. The Zoning Map shows the nature of uses in the immediate neighborhood. The abutting site to the north is improved wiZh a larger s~zed' ~nd~s=r~al' ~' ~ ' building. West is a vacant industrial !o~, then a similar sized_industrial building which is slated for demoii~ion. South of the subject, across 42nd Avenue, is a three s~ory office building. East of the subject across the Soo ;{~.~ Railroad tracks is a funeral home and ax apartment complex. A commercial corridor exists along 42nd Avenue west of Quebec Rv~n~'e The ' ~' of ~he corridor is found at the intersection of, 42nd and ~,~..._~a~. An industrial ~o~r~So~~ ~ _~ . exists alcng Quebec Avenue bo~h nortn anO south of 42nd ....... ~ block away from the intersection. DESCRIPTION OF REAL ESTATE APPRAISED Legal Description: The East IC0 feet of the ~'~ ~ fee of , So~.~ n=0 ~ Lot 5 Auditors Subdivision ~324, Hennepin County Minneso5a except road and a__~y. Parcel Identification Number: 17-118-21-22-0006 Non-homestead taxes: $7,652.38 Assessors ~4arket Value: $105,000 Land + $193,000 Building = $298,000 Total Site Description: Location - 7500 42nd Avenue North, New Hope; in Hennepin County, Minnesota. The zip code for this area is 55427. Size - 100' x 350' = 35,000 feet. square Easements - 7.5' wide sanitary sewer easement along the entire east property line, and a 5' wide storm sewer easement along the north 227.5' of the east property line. Streets - The south edge of the site has i00' of frontage on 42nd Avenue North. 42nd Avenue is a divided four lane road. It has a 90 foot right of way in front of the subject, is asphalt paved, with concrete curbs, gutters, and sidewalks. The pavement is in good condition. The sites northern edge has 100 feet of frontage on an alley. The right-el-way for the alley is 20 feet. Utilities - All municipal utilities are located in the neighborhood and are available to the subject property. These include city water and sewer, electricity, telephone and natural gas. DESCRIPTION OF REAL ESTATE APPRAISED cent: Topography and Soils - The site is generally level and open. There is one nree near the northwest corner. The soils are comprised of a glacial drift interlayed with mixed sands, sil~s, clays, and gravel. They are stable and appear no be free of pea~ or soft soils which would render the site to be difficult to construct a building on. The water table is about 10-!5' below the surface. Groundwater and soils below the site are known to be contaminated with trichloroethylene (TCE), dichloroethyiene (DCE), chromium, copper and lead. The contamination has been caused by an off-site source, upgradient of the site. Measures are presently underway to ue clean the contaminants. Zoning - The current zoning map shows the property to be zoned 1-2, General industrial. Access - The site is accessed by vehicular traffic through one curb cut on west bound 42nd Avenue, and also through the rear alley. Identity The identity of the subject is industrial. It is located on industrially zoned land in an industrially developed corridor that lies west of and parallel to the Soo Line Railroad Tracks. Improvements Description: Size - (100' x 60') + (99' x 76') = 13,524 sf GBA. Age - Front half of bldg. (i00' x 60') constructed in 196i. Rear half of bldg. (99' x 76') added in 1971. Average actual age of just over 30 years. Foundation & Frame - Concrete block exterior walls, metal (webbed) roof joists with "I" beams and support posts. Roof - Flat; metal decking & rigid insulation sealed with a of and gravel. Clearspan height = !2' in front composition pitch manufacturing area, 16' in rear; add 2' for roof joists to equal total wall height in respective areas, i4' average clearspan height. Finish - Vinyl tile floors, wood panel walls, suspended panel ceiling, and recessed florescent lights in !,200 sf front office area. 615 sf shop office has inferior finish. Slide by windows in front, fixed pane industrial sash windows on building sides, two 14' tall overhead drive tl,rough garage doors. DESCRIPTION OF REAL ESTATE APPR.A!SED cent: Improvements Description cont: ==~ cen%ral air. Fo:~r Mechanical - GFWA furnace in o==,ce w/ suspended ~ ~ a!r blower unius in ~"~= ~- ' - no= ' ma£.~za~ur!ng areas wish iour suspended A/C un!ts. 1,200 ampere eiectrlc to Other - Two fixture bathroom in fronu office, with adjoining four fixture bath accessed from manufacturing area. 60' of electrical BUS tr~su~on Duct 100' '~ ~ - , l!~n~ weigh~ rail on ceiling for crane operaSion. On-site improvements include 3,780 sf asphalt paving and 14,196 sf crushed rock paving. Furniture, Fixtures & Equipment - Not included in appraised value. Items include air cleaners, 3 ton crane, 400 amp electric to serve 3 ton crane all lathes & milk'nc machines Condition Average overall. 20 year effective age of a 40 year economic life. HIGHEST ~NID BEST USE Highest and best use is defined as the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and ~hat results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability. AS vacant land, the site is of sufficient size for construction with a variety of buildings in any of several locations on the parcel. Zoning indicates that industrial use of the land would be best. Industrial uses lie immediately to the north and west of the subject. Commercial and residential uses are segmented from the subject by railroad tracks, a divided 42nd Avenue and distance. The recognized groundwater and soil contamination of the subject site caused by the demolished Electronic Industries building to the west would likely present a development problem. City and state officials, lenders, contractors, and labor unions would be reticent to allow construction on the subject site where contamination might adversely affect health, safety and value. Contaminated sites like the subject are rarely developed until either a "letter of closure" or a "no action letter" are produced by the Minnesota Pollution Control Agency (MPCA) . Even though suspended .... air blower unizs in manufazzurlng areas wizh Esur =.=~.ended ../,~ ~nl~s. 1,2~'* O~her ~wo =ixzure hat~ fixzure bazh accessed from manufa ~,,~-~ribuziox Duc~, !O0' ~ ~'~- we'~' ooera~{ ....' -site ime~~o~-,-~..--' ..... -= include 2 780 sf asuhaiz earing and !4,196 sf crushed rock paving. Furxiuure, ~ ...... Equiemenz - ==.~=~_es & _ No~ included in appraises value i~ems include ~ ~i . a_. ~_~a .... ~, ~ con crane, _~: , ..... ]~ ~ .... ~o serve 3 uon crane, a_. =azxes & m%!!ing macn2nes. Condition - Average overall° 23 year eflective a%e cf a 40 year HIGHEST ~© BEST USE .... sc.~,y or.$babie and Highest ani ses~ use is dez~nee as ~he rea legal us~ off vacann land or an i~p~ -~ orooer~v, physically possible, appropria~e!y supported, flnaxcia!!v feasible and that ~ '~'~ ' , ~es~=~s ~n the highesz value. The fo'~. criteria ~he highest and best use mus~ mee~ are legal permissibility, physical possibi~ity~ financial ~=~{biii~v, and maximum profitabili~yo As vacan~ land, the si~e is of sufficient size for construction with a variezy of buildings in any of several locations cn the · ' ' = ~e~ land would parcei~ Zoning indicates that ~nousZr~al use be bes~. industrial uses lie immedia~eiy us ~he norzh and wes~ ef the subjects Commercial and residential uses are segmenzed from the subject by railroad tracks, a divided 42nd Avenue and distance~ The recognized groundwater and soil contamination of ~he subjec~ si~e caused by ~he demolished Electronic Industries building to the west would likely present a developmen~ problem. City and sta~e officials, lenders, con~rac~ors, and labor unions would be reticen~ ~o allow construczion on the subjec~ site where contamination might adversely affec~ health, safe~y and value. Contaminated sites like the subjec~ are rarely developed until either a 'lazier ef closure' or a "no action !e~er' are produced by the Minnesota Peilu~ion ConZro! Agency (HPCA) . Even though sheccx_~,~---~---~__~ ...... ~ ,~_- ~..R~- ~s .... '~ ~-~- ~-v ~ ~-s_ owner, a ~xe acziex ietZer~ is szi!! nesessarv~ =~_zer ~_~j~- ~ ~_~=rzy o~_er vo '~- ~i!y zarZ~cie~zes ! .... ~__~_am r~cxzks, ashzeves sa~isfaszorv ~izs abouz one level zf his s. wR si ~no aczisr_~ is likely ~o resui-~ ....... ~ .... ~- w{ zhix ~ ~-s ..... ~-~ markez vacancy is lev: {lcwes~ iR mew bu~idins~/ axl~--~ ~--=~ slowly r!slxg~ iins~xc~=ng is readily av~iiabie _o cuaz_~_ ~ .... ~ ','--~, va!ue~' dowR P-i~/-~-, in~eresz r~z~s~ between ~o-18%, and a loan _e ..... 15 ','ears wlzh a balloon paymex~ afuer five · __ne max~mazz'-,/ produczive use of ~h~ ..... si~e., csnsiX=~6 as vacax is ~o proceed in cooperaiion w!~h ihe P{inneso~a Po!!u~ien Acexcv and obzaix ~~ a !e'~=~ of closure or a ~o aczicx !e~~__~ ...... wxzi~ s~!taneousiy__ com~u_u~ng ~he presenz ~ourse ~.~ i d~ ~g~ As imnroved, zhe buiidixg either conforms or is ieee!!F c~ .... u zo~lnc orGlxaNce for cNei Ax!! non-compliances have been broughh abou~ by chances in zonixg stnce the~u ~q ....... ~ s~ was cons~ruc~ed~ _~..D~,/~caiiv~ ~ , lhe ~mu{lding_ shows much deteriorations- _ _ ~ >{os~ is incurable (long and short lived) ~ There are probably a few ou~zding components that need repair {deferred mainnenance; oozen~ia! leaks ox the skylights, and a crack bezween the bul. iding adii%ions} ~s of UNo da~e of appraisai~ buu in is - -- ~s flecz ' in an equal or do,ab~f~i lhe ~uil reoair costs wou~ be re greamer Lncrease in property value as a result of zhe ~ Reoairs are needed more to keep zhe tenant happy~ amd ix buiiding ~ Aspects of the building also reflect functional obsolescence ~ch is a less ~n value resulting from defects in des~ Aizhough Zhe buildiP~g i~se!f is constructed~ q~ average ~uali~y ~--~ ~ which function adeGuateiy for its use uhere is some excessive ceiling hei~h~ above ~he office, amd some iigh~ weight crane ra~ in ~he suiiding which isn~ u used and hasn~ ~ been years~ 5as~i!~, the building is a bit large for ~he siZe~ Parking space for employee cars amid maneuvering space for u_uc~s is iimited~ HiGEEST ~N/D BEST USE cont: A!though the subject and the industrial market does not suffer from economic obsolescence, the building is stricken by a pollution snlgma. Disregarding this problem for a moment, there is a kea!thy market for this tlrpe of building (buildings exist, is fairly low a5 abouZ 3%, and those for sale the vacancy supply - are matched by their demand). Values are slowly increasing. Most buildings of tko subject's size are owner occupied, but there is much rented space in larger, multi-tenant nu~_d~ngs ~.~a~ ~s comparabl~ to the subject. s~es_n~ly, market ren~s for similar warehouse space is between $3.50 & $4.00/sf, and $6.50 to $8.00/sf for office space, triple net. The building should be able to generate rents within this range ~e ~=-leased at market rents. After 5he long term lease expired in early 1996 with the present tenant, the subject was generating a blended rental rate of $3.00/sf for all GBA until a more formal agreement was reached. The property owner was seeking to increase ~his rate, and probably did. The tenant reported finding almost nothing in the area for $3.00/sf. The presence of a successful business in the building, and several sales shows that there is a market for buildings like the subject. Furthermore, it is expected there should be a viable market for the subject in the foreseeable future. The industrial market is healthy. The pollution stigma affects the subject in that the contamination will deter most buyers and lenders until the property owner obtains either a "letter of closure" or a "no action letter" from the Minnesota Pollution Control Agency (MPCA) . Even though the building is not new and reflects physical deterioration and functional obsolescence, the maximally productive use ef the property is the present use. Based on the buildings use (occupied by a viable business}, the market of similar buildings and the subjects condition, there is remaining economic life in the improvements. According to the Marshall & Swift Cost Guide, a light industrial building like the subject has an economic life of about 40 years. The effective age is about 2! years. The site contamination will act to discount the market value of the subject based on the costs to obtain a "no action letter" or "letter of closure." SUMMARY OF VALUATION AND RECONCILIATION Ynder ap. ~' ~ ~ ~ ~ ~.~=_a± assumption ~ha~ the subjec~ is unconuaminated, uhe ~hree aeeroaches to value indicate the Replacemen~ Cos~ Approach $347,500 Sales CocDarison Approach $365, !00 income Approach $385,200 The Sales Comparison Approach is tb.e bes~ approach ~o v~!ue and ~he indication i~ ~rovides is given a 60% w=l~.~. TRe Income Approach is considered the next bes~ _2~ ~' _ a~a~n. The ~ndica5ien it ~rcvides is given a 30% weight. The ~ ~ ~= r. ep~a~_,;~n~ Cos~ A~oroa~h is ~he ieas~ ~ q eb!e approach. The indication i5 provides is given a 10% ~'=~ ~ .~g~ w!~n ~nese assigned ~ <~h~ . w~_g..~e to h~= respec~lve indications, lke reconciled value of 5he subjec5 is caiculaled as follows: $3{7, 500 X 0. 1 = $ 34, 750 $365,100 X 0.6 = $219,060 $385,200 X 0.3 = S!15,560 $369,370 VALUE ESTiP!TE AS ~CONTA~[INATED $369 000 in reality, the groundwater and soils beneath the building are contaminated. The contamination is the result of downgradient migration of various materials under the soils, emitted from the abutting property to the west. The property owner or tenant of the subject building is not responsible for the contamination. None-the-less, the subject is stricken with a pollution s~igma. It will be difficult to sell the property without obtaining at least a "No Action" letter and possibly an "Off Site Determination" letter from the Minnesota Pollution Control Agency. It is assumed the subject owner does not have either letter. i S~Y OF VALUATION~ND RECONCILIATION co~t: in order to obtain such letters, the property owner must voluntarily enter the property into a Voluntary Clean Up Program _ ~ ........ t party is a res~onsib!e with the MPCA, regardless ce , ~=~ he ~ person or not. A "No Action" letter will list the specific re~orts or _nfo~marion that are the basis Eot issuing thez_~tter. it will then state that, based on the review of the above referenced materials (and perhaps site visits and representations = ~ ~ronmenta! consultant) the MPCA made by the voluntary party or Commissioner will ~=~ ' _~z~azn ~,om taking specific administrative or enforcement ac5ion in general, the MPCA Commissioner '~ refrain from taking administrative action, provided voluntary investigation and cleanup activities are being or have been completed to the satisfaction of the MPCA staff and in a timely matter. After obtaining a "No Action" letter, the subject thenceforth should be capable of being sold and financed by most commercial lenders, if needed. It has been the NPCA staff's (and the appraisers) experience, that these letters have been sufficient to allow property transactions to occur. Based upon a study of MPCA files of contaminated properties which have applied for and received Action" letter, it will take approximately three months for the subject to get a similar letter. The normal marketing period for an industrial building like the subject is about six months. Tea certain degree, the process of obtaining a "No Action" letter and the listing period could overlap should the owner wish to sell the property. However, it is probable that the owner would get the letter before the listing. Therefore, the alleged pollution of the subject should cause about a three month increase in tko normal marketing period. The penalty against the subject's value is the difference between the value of the subject as uncontaminated; $369,000, and the present value of $369,000 not received for three months at 11.5%, or $358,600. This difference is $10,400. In addition to the increased marketing period, the subject property owner will also be responsible for the costs to obtain the "No Action" letter, costs are payment Such associated with for the owners time (dealing with the pollution problem, hiring contractors, an appraiser, attorney, supervising the testing and clean up process), and also paying for others time including their own attorney to write the request for a "Ne Action" letter, an appraisal, and MPCA staff charges te actually produce the letter. The total costs out cf the owners pocket are estimated to be about $16,000. SUiWiZA~Y OF VALUATION AND RECONCILIATION cont: The ~,~ _ penalty against the value of ~he subjec~ ~o~ the eoliution stigma is therefore the addition of $!0,400 + $16,000 = $2~,4oo. The final value es~zm~e of the subject proper:y as i: is allegedly po_~uted is estimated as follows: Estimated value without pollution stigma $369,000 Deduction for pollution stigma ($ 26,400) Value as allegedly postured $344,4,30 FINAL VALUE ESTIMATE AS ALLEGEDLY POLLUTED $344,000 Plat Map ) i I Warehouse/Manufacturing ~¢ 1~ ' 16' 0 o f North e Area Caleula[ion Manufacturing 76 x 99 = 7,52~ 60 x 100 = 6~000 13,524 sq. ft. GBA 10)' Office Area 60 x 20 = 1,200 sq. ft. or 9,% o f GSA ~h I Recpt. I 42nd Avenue North I [ euildi.g Sketch Official File Copy CITY OF NEW HOPE EDA AGENDA EDA Regular Meeting #7 August 25, 1997 Agenda #7 President W. Peter Enck Commissioner Sharon Cassen Commissioner Don Collier Commissioner Pat La Vine Norby Commissioner Gerald Otten 1. Call to Order 2. Roll Call 3. Approval of Minutes of June 9, 1997 4. Resolution Authorizing Commencement of Eminent Domain Proceedings to Acquire Property at 7500 42nd Avenue North (Improvement Project No. 474) 5. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 Approved EDA Minutes June 9, 1997 Meeting #6 CALL TO ORDER President Enck called the meeting of the Economic Development Authority to order at 8:27 p.m. ROLL CALL Present: Enck, Cassen, Collier, Norby, Otten Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, Olson APPROVE MINUTES Motion was made by Commissioner Collier, seconded by Commissioner Norby, to approve the EDA minutes of April 28, 1997, and May 27, 1997. All present voted in favor. Motion carried. IMP. PROJECT 600 President Enck introduced for discussion Item 4, Discussion Regarding Item 4 Sandpiper Cover Townhome Association Loan Program and Establishment of Housing Improvement Area (Improvement Project No. 600). Mr. Kirk McDonald, Management Assistant/Community Development Coordinator, stated for the past 1-¥2 years, City staff has met on several occasions with representatives of the Sandpiper Cove/Rockford Townhome Association regarding potential City financial assistance to upgrade the exterior of these properties. Sandpiper Cove is a townhouse development located at 8101-8953 42nd Avenue that contains 36 owner-occupied townhomes (four 4-plexes and 10 duplexes). The complex is 20 years old and there are significant exterior deterioration problems. The Association has sought preliminary bids from contractors who estimated that $350,000 is needed to make siding, deck, window and other improvements. Although they have recently taken steps to increase their monthly association dues, they do not have the financial capability to make these improvements. Due to the fact that they are a townhouse association consisting of individual owners, they have been rejected by several banks for loans to make the needed improvements. That is why they have approached the City for assistance. Staff has cooperated with them because it is felt that the City has a vital interest in maintaining multi-family dwellings. Staff and the City Attorney originally explored utilizing the existing multi-family financial assistance policy for apartments for this situation, however, the policy is not applicable because it requires a 50 percent match from the owners. Over the past year, staff has inquired about programs utilized in other cities to address townhome/condominium improvements and became aware of some new legislation that was recently enacted to address these situations. The program involves City- funded loans to property owners unable to obtain financing through private means. Instead of securing the loans as a typical mortgage transaction, the City can assess the benefiting properties similar to a special assessment project. Mr. McDonald stated the new legislation allows the City to define a housing improvement area, make improvements in the area, and assess benefiting properties. First the City must adopt an enabling ordinance New Hope EDA June 9, 1997 Page 1 specifically defining the improvement area and proposed improvements. Before the City adopts such an ordinance, a petition with at least 25% of the owners within the proposed area is required as well as a public hearing. The EDA inquired of financing options. Mr. Steve Sondrall, City Attorney, explained that if the EDA is supportive of the program, he could work with staff and prepare a proposed enabling ordinance defining the project and improvement area. In July staff could make a recommendation to the EDA relative to project costs and financing options. In the interim the homeowners association could contact the remaining six property owners regarding the petition for creation of an enabling ordinance. The petition from the Rockford Homeowners Association containing 30 signatures of the 36 owner-occupied townhomes was presented to the EDA. The petition requested creation of an enabling ordinance and the conception of a special district for a housing improvement area. MOTION Motion was made by Commissioner Collier, seconded by Commissioner Item 4 Norby, to accept the petition and direct staff to further explore the loan program. Voting in favor: All. Motion carried. ADJOURNMENT Motion was made by Commissioner Collier, seconded by President Enck, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 8:43 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA June 9, 1997 Page 2 EDA REQUEST FOR ACTION Originating Department Approved for Agenda Agenda Section EDA City Manager ~ 8-2597 Item No. By: Kirk McDonald By:// 4 Mana.qement Assistant RESOLUTION AUTHORIZING COMMENCEMENT OF EMINENT DOMAIN PROCEEDINGS TO ACQUIRE PROPER'I-~' AT 7500 42ND AVENUE NORTH, IMPROVEMENT PROJECT NO. 474 The City Attorney has prepared the enclosed resolution which authorizes the acquisition of the Ardel Engineering property by direct purchase or eminent domain. The acquisition of this property is necessary to proceed with the redevelopment of the properties north of 42"d Avenue between Quebec Avenue and the railroad tracks. The City currently owns two out of the three parcels and the remaining parcel is located at 7500 42°d Avenue and is adjacent to the railroad right-of-way. The City's most recent appraisal of the property dated May 28, 1997, which was completed by BCL Appraisals, indicated a fair market value of $344,000. If the EDA approves the acquisition, the City's offer by direct purchase would be for the appraisal amount. The EDA would also be required to provide relocation services and pay relocation expenses to Ardel Engineering, the current tenant of the property. Therefore, the enclosed resolution provides authority to retain a relocation expert to determine and pay these expenses as well as reasonable closing costs in the event a direct purchase is successful. A relocation expert is necessary to insure compliance with the Uniform Relocation and Assistance Act. Relocation expenses would be a minimum of $20,000. The resolution also provides for a "quick take" in the discretion of the City Manager. At this time, staff is not recommending the "quick take" procedure, but wanted to include it in the authorizing resolution in the event that the EDA needs this authority at a later date. The acquisition of the property and related relocation expenses would be paid for with 42n" Avenue TIF funds. Staff recommends approval of the resolution. =ON SSCONn ¢7-r 7 / Re,clew: AdmL~stratlon: FL~ance: RFA-OO I ~ ~UG-12-97 TUE 16:56 ?,02/07 Com~tc~ & So:~DmUZ., P.A. wr~,.,,a~ ..x. ~o~ A~O~N~ AT LAW ~,~=~ ~. ~r~ Edinbur~l Executi~ or,ce PI~ Br~kl~ P~k, Mlnne$o~ 55443 August 12, 1997 Kirk McDonald City oF New Hope 4401Xylon Avenue North New Hope, MN 55428 RE: Acquisition DY Property at 7500 ~Pnd Avenue North Our File: ~9.11111 dear Kirk: Please ?ind encloseQ for consideration at %he August 25%h EPA Meeting a proposed resolution 0uthorizing the acquisition of the Ardel Engineerin~ proper~y by direc~ puroha~e or eminen~ domain. AS yo~ know, our lata$% appraisa~ nE the property dated May 1997 dona by BCL Appraieals indicated ~ ~ir m~rket ¥~lue $344,0o0.00. IF the EDA approves the acquisition, our o~?er by dlrec~ purchase would be for ~he appraisa~ amount. The EDA &~o be required ~o provide re~ocation service~ ~nd p~y re~oc&~ion expen~oo %o Ardel Engineerin~ ~he cur~er~b ban~n~ o~ ~he proper=y, As a result, the enclosed rn~o~[~tion providea authority ~o re~in a re~oca~ion exper~ ~o de~ermine ~nd pn¥ these e×pense$ as wel~ as ~easonable closin~ costs in ~he event a direc% p~rchase successful. These expense8 could be complicated and ~ub~%an~iel, there?ore a re,dCa%ion expert i~ necessary in ~his ma%~er to insure we comply with Unifor'm Relocation an~ Assistance Act. At a mini~num, relocation expenses w~]l be $20,000.00. The re$olu~ion also provides ~ur' ~ "quick-~&ke" in ~he discre%ion o~ ~e Ci~¥ Manager. A~ th~s ti~e I am ~ot recommending we use the "quick-take" procedure bu~ wanted to include i~ in ~he au%horizing re~olu~ion in %he event we decide we need %his ~ubho~ity a~ & , P. 03/O? AUG-t2-9? TUE 16:56 Kirk HcDonatd AU§uS1; 11, 1997 Page Please contac~ me if you ~he enol~ed resolution. Very %ruly 8~even A. 8ondral z1%1 enclosure Dan Donehue EDA RESOLUTION NO. 97- RESOLUTION AUTHORIZING COMMENCEMENT OF EMINENT DOMAIN PROCEEDINGS TO ACQUIRE PROPERTY AT 7500 42ND AVENUE NORTH BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope, Minnesota as fol]ows: WHEREAS, the Housing and Redevelopment Authority in and for the City of New Hope (hereafter the HRA) was established and organized within the City of New Hope under authorization of New Hope Code §2.30 et. seq. and Minn. Stat. §462.415 et. seq., and' WHEREAS, the HRA, acting pursuant to the authority of Minn. Stat. §462.415 et. seq. established Redeve]opment Plan 85-2, Redevelopment Project 85-2 and Tax Increment Financing Plan 85-2 by adoption of HRA Resolution No. 85-08 on December 23, 1985, and WHEREAS, Minnesota Law 1987, C. 291 § 48, which repealed Minn. Stat. §462.415 et. seq. provided that all orders, resolutions, motions, plans and agreements and actions taken by any municipal housing and redevelopment authority organized or purported to be organized under Minn. Stat. §462.415 to 462.705 and Minnesota Law 1959 C. 545 § 1 to 19, and taken or purported to be taken by any governing body, city planning commission or political subdivision of the state or public state body with respect to plans and projects are hereby declared valid and effective, and WHEREAS, the New Hope City Council on December 23, 1985 approved the adoption of Redevelopment Plan 85-2, Redevelopment Project 85-2 and Tax Increment Financing Plan 85-2 by its Resolution No. 85-129, and WHEREAS, the Economic Development Authority in and for the City of New Hope (hereafter the EDA) was organized and established within the City of New Hope by Ordinance No. 89-7 adopted by the City Council on March 27, 1989 under authorization of Minn. Stat. §469.090 et. seq., and WHEREAS, the EDA was transferred control, operation and authority over Redevelopment Plan 85-2, Redevelopment Project 85-2 and Tax Increment Financing Plan 85-2 pursuant to HRA Resolution No. 89-4, City Resolution No. 89-73 and EDA Resolution No. 89-3, and 1 WHEREAS, the property located at 7500 42nd Avenue North hereafter legally described is included in the Redevelopment Plan, Redevelopment Project and Tax Increment Financing Plan area: The East 100 feet of the South 350 feet of Lot 5, Auditor's Subdivision No. 324, Hennepin County, Minnesota except road and alley. PID No. 17-118-21-22 0006, and WHEREAS, the goals and objectives of the Redevelopment Plan and Redevelopment Project include among others the following goals and objectives: a. provide compatible and complementary land uses; b. provide more homogeneous land uses and street treatment along 42nd Avenue in order to unify development and provide a positive image of the City; c. promote and secure development and redevelopment ~n a manner that allows the most logical and efficient arrangement and intensity of land uses; d. to undertake certain land acquisition, parcel assembly and parcel disposition necessary to eliminate substandard and non-conforming uses and buildings, and to assemble logical conforming and more efficient building sites; e. to promove and secure the redevelopment of non-conforming land uses and substandard buildings in a way which provides a clearer definition of land uses and more efficient utilization of parcels; and WHEREAS, the Economic Development Authority in and for the City of New Hope does hereby determine that the acquisition of this property is reasonably necessary and convenient to the furtherance of the referenced goals and objectives of the redevelopment plan and redevelopment project, and that in its judgment the acquisition of this property will be for the benefit of the public health, welfare and safety of the citizens of New Hope, and WHEREAS, an appraisal of this property has been previously ordered by the EDA and that said appraisal has been completed as of May 28, 1997 establishing a fair market value for the subject property of $344,000.00, and WHEREAS, Minn. Stat. §117.232 authorizes the EDA to acquire the subject property by direct, purchase in lieu of eminent domain proceedings, and WHEREAS, Minn. Stat. §469.t01, Subd. 4 gives the Economic Development Authority in and for the City of New Hope the authority to acquire property by power of eminent domain under Minn. Stat. Chapter 1t7, including the power of acquiring possession of the property per the "quick-take" provisions of §117.042, if necessary to carry out the redevelopment plan and redevelopment project, and WHEREAS, the Economic Development Authority in and for the City of New Hope has determined it is necessary to acquire this property by direct purchase or eminent domain proceedings, and WHEREAS, said redevelopment plan and redevelopment project were established under the authority of Minn. Stat. Chap. 462 pursuant to various studies undertaken by the City of New Hope which have shown that certain redevelopment activities in the plan area are warranted and would not have occurred through private development alone. NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City of New Hope as follows: 1. That the Executive Director is hereby directed and authorized to acquire by direct purchase at the appraisal value of $344,000.00 the property at 7500 42nd Avenue North in the City of New Hope, legally described as follows: The East 100 feet of the South 350 feet of Lot 5, Auditor's Subdivision No. 324, Hennepin County, Minnesota except road and alley. PID No. 17-118-21-22 0006. In addition to this amount, the Executive Director is authorized to pay all reasonable closing costs associated with the purchase of property. Further, the Executive Director is authorized to retain a relocation expert to determine the amount of relocation expenses the EDA must pay by law as a result of this acquisition and pay to the appropriate parties all required relocation expenses as determined. If direct purchase is unsuccessful, the Executive Director is authorized and directed to commence eminent domain proceedings under Minn. Stat. Chapter 117 to acquire the subject property. 2. That the Executive Director is further directed to utilize the "quick-take" procedure per Minn. Stat. §117.042 if in 3 the judgment of the Executive Director it is necessary to acquire possession of the property prior to the conc]usion of the eminent domain proceedings, 3. That the Executive Director is hereby directed and authorized to obtain additiona] appraisals necessary to establish fair market value and just compensation for said property in preparation for said eminent domain proceedings. Adopted by the Economic Deve]opment Authority in and for the City of New Hope this 25th day of August, 1997. W, Peter Enck, President Attest: Daniel J. Donahue, Executive Director d: \~p51 \cn~\ r~so] ~t ion, 75{3 AUG-12-9? TUE 14:31 P, 02/02 Corrick & $ondrall 8525 EAinbrook Crossing Brooklyn Park, MN 554~3 Dear Stye: I have now had an opportunity to discuss with Terry Jenscn the possibility of a negotiated acquisition by the City of New Hope of hiz property at 7516 42nd Avenue North. A~ I indicated to you, once Terry received B~letin No, 1, Project No. 595 which indicated that the City ~...has no immediate plato w redevelop the sit~ and is simply clearing the sim at this time*.., he comm~need r~gotiations with the current tcnam for cxteamion of the existing Lease. Negotiations trove not be~n completed, although my client has made an offer to the occupant for a Lease Amendment which will extend the term for t~ee to five years. Nesotiatio~ are currently takhag place in regard to execution of that Extension Agreemem and I anticipate tlmt an Am~ndnvent to tim Lease will be ex~zuted in tl~ Imar futura. If the City desiros to acquire 7516 4~.nd Avenu~ North a written offer should be directed to Terry. Also, although I serve as legal counsel in regard to his properties, you and the City are certainly authorizexl and requested to dead directly with Terry, except as he my otherwise airect. Thank you. Sincerely, Oordon L. Semen SENSEN & SWANSON. P.A. GLJ:sar cc: Terry Season *Real Estate Spcc/alist Certifiv~ By The Minnesota State Bar.am~oc/a~/on ! ! A SUI~VLAR¥ APPRAISAL REPORT - LIMITED APPP~XISAL - An industrial Building 7500 42nd Avenue North New Hope, Minnesota Arde! Engineering & Manu=ac=.~r_~.g PREPARED FOR The City of New Hope c/o Kirk McDonald 4401 Xy!en Avenue North New Hope, Minnesota 55428 EFFECTIVE DATE OF APPRAISAL Hay 28, 1997 OUR FILE NI3MBER 96467A BCL APPRAISALS BJORKLU~-D, CARUFEL, LACHEN~IAYER, INC. 2852 ANTHONY LANE SO., MINNEAPOLIS, MINNESOTA 55418 (612)781-0605 F~x: 781-7826 MAI. spo, REAL ESTATE APPRAISERS BRAD BJORKLUND. ALCARUFEL. MA~ June I!, 1997 & RON LACHENMAYER, s~4 CONSULTANTS LESLIE J. (LEE) RACINE, JR., s~ The City of New Hope c/o Kirk McDonald 4401 Xy!on Avenue North New Hope, Minnesota 55{28 Re: Appraisal of 13,524 sf Industrial Building Afdc! Engineering & Manufacturing; 7500 42nd Avenue North, New Hope, MN Dear Mr. McDonald, In response to your request, I have conducted the required investigation, gathered necessary data, analyses the and made certain that have enabled me to form an opinion of the market value of the fee simple interest of the real property referenced above. It is intended to update our earlier appraisal report dated 2-5-96. Based on an inspection of the property and the investigation and analyses undertaken, I have formed the opinion that as of May 28, i997, and subject to the assumptions' and limiting conditions set forth in this report, the subject property has a market value of: THREE HI/NDRED FORTY FOUR THOUSAND DOLLARS $344,000 The appraisal report that follows is a Limited Report. At your request, the owner was not contacted for an interior inspection. Furthermore, this is a short form appraisal report which is only a brief recapitulation of the appraiser's data, analyses, and conclusions. More thorough and lengthy supporting documentation is retained in the appraiser's file. If needed, a self contained, complete appraisal report could be prepared for an additional fee at a later date. Respectively submitted, Eric Bjork-lund Cert. General Real Property Appraiser Minnesota License #4003154 EB/rak I MORE THAN 80 YEARS FULL APPRA ~AL SERVICES 'FEO/AA I IIII Ill II [~5~ Su~ary Appraisal Report - Li~.ited Appraisal This is a Summary Appraisal Report which is intended to ccmp!y with the reporsing requiremenSs set forth under Standards Rule 2- 2(b) of the ~n_~form Standards of Professional ADeraisa!.~ Practice for a Summary Aspraisal R_po~ As such, ~t presents only summary discussions of the reasoning of analyses that were used -_. ~ne a~erazsal process to ceveioD the appraiser's opinion of value. Supporning documenta%ion ~h .... would be used to expand hHe re~ort~n~ format of tkis documen5 is retained in tko appraiser's file. The depth of discussion contained ix this report is specific to the needs of the client-and for the intended use stated below. The appraiser is not responsible for unauthorized use of this report. This is a limited appraisal which invokes the Departure Provision of Uhe Uniform Standards of Professional Appraisal Practice. An interior inspection o= t building was not made as of the effective date of appraisal. This relates to the relevance of S5andard Rule !-2a (data coltecuion process). However, because the in~erior was inspected several times in the past, most recently on February 5, 1996, the report and opinion of ~ ~ vamu~ retains a s~rong element of Creditability. The d~pa_~ure is allowable. Ail approaches to value were applied. PURPOSE OF THE APPP~A!SAL & DEF!NiTIO~ OF VALUE: purpose appraisal to provide a current The of this is market value estimate of the subject real property so that the client may buy it. Any influence on the subject's value caused by a threat of condemnation is disregarded. PArker value is defined by the federal financial institutions regulatory agencies as follows: P~rket value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus, implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: PURPOSE OF THE APPRAISAL & DEFINITION OF VALUE cont: ! buyer and seller are typically motivased; 2 both par~ies are well informed or well advised, and ac~ing in what they consider their own best interests; 3 a reasonable time is allowed for exposure in the open marke~; 4 payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and 5 the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. (Source: Office of the ComptrolLer of the Currency under 12 CFR, Part 34, Subpart C-Appraisals, 34,42 Definitions [fi.) INTEREST VALUED: Fee Simple EFFECTIVE DATE OF VALUE: ~a~e of inspection; May 28 1997 DATE OF REPORT: June 11, 1997 APPRAISAL DEVELOPMENT AND REPORTING PROCESS: In preparing this appraisal, the appraiser: · Inspected the subject on May 28, 1997. · Gathered rental, expense, vacancy and cost information, as well as sale data on comparable land and buildings in the subject's and competing neighborhoods. · Discussed perceptions of value for the subject and other industrial properties in the area owner, tenant, with the buyers, sellers and brokers. · Completed all approaches to value; The Sales Comparison, The Cost, & the Income Approach. To develop the opinion of value, the appraiser essentially performed a complete appraisal process, as defined by the Uniform Standards of Professional Appraisal Practice. Ail approaches to value were completed. However, the Departure Provision was invoked because the building interior wasn't inspected, at least for the present date of value. Therefore, the report is actually a Limited Appraisal. HISTORY OF THE REAL ESTATE APP~ISED: The suDject has been owned by Terry Jansen since tko mid 1970's. For the past !I+ years, the building has been occupied by Arde! Engineering and Manufacturing. In early 199~, a t0 year lease expired. Apparently, the property owner renegotiated a rental agreement with the tenant because the tenant is still there. Given the clients desire to have limited contact with the property owner (or tenant), terms of the rental agreement are . ~ o~_r~d for sa unknown The building is not being === = !e. The subjec~ is stricken by a pollution stigma. This to an extent affects the highest and best use. in 1983, a ruptured settling tank for various industrial solvents discovered the was on adjacent property to the west. Later tests showed groundwater and soils under the subject, and in the immediate vicinity were contaminated by trichioroethy!ene (TCE) , dichloroethylene (DCE) , chromium, copper and lead. There are presently 15 monitoring wells in the area, and measures are underway to clean up the contaminants. Pollution levels have dropped most notably nearest the source, but apparently the contamination levels are no longer being effectively reduced in plume areas away from the former "hot spot" where the remediation equipment is located. Higher levels of contaminants still exist under the subject building to a depth of about 15 feet. LOCATION DESCRIPTION: The subject is located in the City of New Hope, a second tier westerly suburb of Minneapolis with a current population of about 2!,715. New Hope is approximately seven miles northwest of Downtown Minneapolis. The community is primarily residential in character. There are scattered industrial districts and one major concentration of commercial buildings focused at the intersection of 42nd Avenue North (C.S.A.H. ~9/Rockford Road) and Winnetka Avenue (C.S.A.H. ~!56) . Host development in New Hope has taken place since 1960. New Hope has a council/manager plan B form of government that provides good quality municipal utilities and services. Essentially all of the city streets are paved, have concrete curb and gutter, street lights and service by sanitary sewer and water. The entire city is located in School District ~281. MTC bus routes serve most of the City including a route on 42nd Avenue North. No unusual municipal or economic influences are observed that would unduly affect the value of real estate in New Hope. The economy has recovered from the recession of 1990 and 1991. Vacancy is iow (c.3%) in the industrial market. New leases on warehouse & manufacturing space ,_ange from $3.50 to $4.00/sf. LOCATION DESCRIPTION cont: Major trans_~ortation to the City is provided by Highway ~i69 along the wesUeriy City limiUs; also by Rockford Road, Bass Lake Road {C.S.A.H. ~i0) , Medicine Lake Road (26th Avenue/C.S.A.H. ~70), and Winnetka Avenue. These county roads provide good community access within the city. The subject is located on 42nd Avenue. The Zoning Map shows the nature of uses in the immediate neighborhood. The abutting site to Uhe north is improved with a West is a vacant industrial larger sized industrial building. lot, then a similar sized_industrial building which is s±a~e~ for demolition. South of the subject, across 42nd Avenue, is a three office building. East of the subject across the Soo Line story Railroad tracks is a funeral home and an apartment complex. A commercial corridor exists along 42nd Avenue wes~ of Quebec ~ .... . The ~' ~ .e;~,u~ hUm o~ the corridor is found at the intersection of, ~x~sts azcng Quebec 42nd and Winnetka. An industrial corridor ~' ~ ~ Avenue~ both north and south of 42nd Avenue beginning about a block away from ~he intersection. DESCRIPTION OF REAL ESTATE APPP~AISED Legal Description: The East lC0 feet of the South 350 fee5 of Lot 5, Auditors Subdiviszon ~324, u~ ~ County ~ ..... ~= ' ~...ep ........ ~_~ excep~ road and alley. Parcel Identification Number: 17-118-21-22-0006 Non-homestead taxes: $7,682.38 Assessors Market Value: S105,000 Land + $i93,000 Building = $298,000 Total Site Description: Location 7500 42nd Avenue North, New Hope; in Hennepin County, Minnesota. The zip code for this area is 55427. Size - !00' x 350' = 35,000 square feet. Easements - 7.5' wide sanitary sewer easement along the entire east property line, and a 5~ wide storm sewer easement along the north 227.5' of the east property line. Streets - The south edge of the site has i00' of frontage on 42nd Avenue North. 42nd Avenue is a divided four lane road. It has a 90 foot right of way in front of the subject, is asphalt paved, with concrete curbs, gutters, and sidewalks. The pavement is in good condition. The sites northern edge has 100 feet of frontage on an alley. The right-of-way for the alley is 20 feet. Utilities - All municipal utilities are located in the neighborhood and are available to the subject property. These include city water and sewer, electricity, telephone and natural gas. DESCRiPTI©~ ©? REAL ESTATE APPRAISED cont: Topography and Soils - The site is generally level and open. There is one 5ree near 5he northwest corner. The soils are comprised of a glacial drift interlayed with mixed sands, silts, clays, and gravel. They are s~ab!e and ~o be free of appear peat or soft soils which would render the site to be difficult to construct a building on. The water table is about 10-!5' below the surface. Groundwater and soils below the site are known to be contaminated with trichloroethylene {TCE), dichlcroethylene (DCE), chromium, copper and lead. The contamination has been caused by an off-site source, upgradient of the site. Measures are presently underway to clean 'ap the contaminants. Zoning - The current zoning map shows 5he proper%y to be zoned 1-2, General industrial. Access - The site is accessed by vehicular traffic through one curb cut on west bound 42nd Avenue, and also through the rear alley. Identity - The identity of the subject is industrial. It is located on industrially zoned land in an industrially developed corridor that lies west of and parallel to the Soo Line Railroad Tracks. Improvements Description: Size - (!00' x 60') + (99' x 76') = 13,524 sf GBA. Age - Front half of bldg. (100' x 60') constructed in 1961. Rear half of bldg. (99' x 76') added in 1971. Average actual age of just over 30 years. Foundation & Frame - Concrete block exterior walls, metal (webbed) roof joists with '~I" beams and support posts. Roof - Flat; metal decking & rigid insulation sealed with a of and Clearspan height = 12' in front composition pitch gravel. manufacturing area, 16' in rear; add 2' for roof joists to equal total wall height in respective areas. 14' average clearspan height. Finish - Vinyl tile floors, wood panel wails, suspended panel ceiling, and recessed florescent lights in 1,200 sf front office area. 615 sf shop office has inferior finish. Slide by windows in front, fixed pane industrial sash windows on building sides, two 14' tall overhead drive tl,rough garage doors. DESCRIPTIO~ OF REAL ESTATE APPraISED cont: Improvements Description cont: Mechanical - GFWA furnace in office w/central air. Four suspended hot air blower uniSs in manufacsuring areas with four suspended A/C units. 1,200 ampere electric to building. O~he~~ - Two fixture bathroom in front office, with adjoi~.~ four fixture bath accessed from manufacturing area. 60' of electrical Bus-tribution Duct, 100' light weight rail on ceiling for crane opera~ion. On-site improvements include 3,780 sf asphalt paving and 14,196 sf crushed rock paving. Furniture, Fixtures & Equipment - Not included in appraised value. Items include air cleaners, 3 ton crane, %00 amp electric to serve 3 ton crane, all lashes & milling machines. Condition - Average overall. 20 year effective age of a ~0 year economic life. HIGHEST ~NID BEST USE Highest and best use is defined as the reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible, and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability. As vacant land, the site is of sufficient size for construction with a variety of buildings in any of several locations on the parcel. Zoning indicates that industrial use of the land would be best. Industrial uses lie immediately to the north and west of the subject. Commercial and residential uses are segmented from the subject by railroad tracks, a divided ~2nd Avenue and distance. The recognized groundwater and soil contamination of the subject site caused by the demolished Electronic Industries building to the west would likely present a development problem. City and state officials, lenders, contractors, and labor unions would be reticent to allow construction on the subject site where contamination might adversely affect health, safety and value. Contaminated sites like the subject are retell, developed until either a "letter of closure" or a "no action letter" are produced by the Minnesota Pollution Control Agency (MPCA) . Even though  ..~ : ~n : ,~ ~:: :..iin{: ~) a:~J. r~:nts aue l.~k - w'~- ~ s:.~': I 'Anew: :sly conlixkk::.n:! ~he ~'< :~bl~ ~ :ig _: ~ sh<:rt lived). The:re :lc ..... al ~P ks ' ~he ~kyllghts, arid a  a :: ::.,::: ~, as appra'k~al :_ilo Df the date i,', :i:kl ~::i.~ lull repa:.~ costs wouli ~:e '~ ~:: ..l':: .!s~ ]::~ pr:)~erzl/ value ~s a. I :,~:~ : :~:s d, ff ~ .a h :J ]_din~ als:) ref!ec~: fu:nczi:]aa- ~,~:.: ,. is a . .~s _r value resu!~ing fz'cm ~- ~ ~ 2~N u}:::: su:_ c ing i_tsel~: is :r~( : 'i~is ,,~ rh {t :xcticn adequately for I :: . mit l HIGHEST ~NID BEST USE cont: Although the s~bject and the industrial market does not suffer from economic obsolescence, the building is stricken by a pc!tuticn stigma. Disregarding this problem for a moment, there is a healthy market for this type of building (buildings exist, vacancy is fairly low at about 3%, and those for sale - the supply are matched by their demand). Values are slowly increasing. Most buildings of the subject's size are owner occupied, but there is much rented space in larger, multi-tenant ' ~ ~m ~ is omoa~aole to the subject. Presently, market rents for similar warehouse space is between and to $$.00/sf for office triple $3.50 & $4.00/sf, $6.50 space, net. The building should be able tc generate rents within this range if re-leased at market rents. After the long term lease expired in early 1996 with the present tenant, the subject was genera~in~' ~ a blended ren=a!~ rate of $3.00/sf for all GBA until a more formal agreement was reached. The property owner was seeking to increase this rate, and probably did. The tenant reported finding almost nothing in the area for $3.00/sf. The presence of a successful business in the building, and several sales shows that there is a market for buildings like the subject. Furthermore, it is expected there should be a viable market for the subject in the foreseeable future. The industrial market is healthy. The pollution stigma affects the subject in that the contamination will deter most buyers and lenders until the property owner obtains either a "letter of closure" or a "no action letter" from the Minnesota Pollution Control Agency (MPCA) . Even though the building is not new and reflects physical deterioration and functional obsolescence, the maximally productive use of the property is the present use. Based on the buildings use (occupied by a viable business), the market of similar buildings and the subjects condition, there is remaining economic life in the improvements. According to the Marshall & Swift Cost Guide, a light industrial building like the subject an years. has economic life of about 40 The effective age is about 21 years. The site contamination will act to discount the market value of the subject based on the costs to obtain a "no action letter" or "letter of closure." SU/~SiARY OF VALUATION A~NID RECONCILIATION Under an initial assumption that the subject is uncontaminated, 5he three approaches 50 value indicaUe the following: Replacement Cost Approach $347,500 Sales Comparison Approach $365,100 income Aeeroach ~385 200 The Sales Comparison Approach is the best approach to value and the indication it provides_ is civen~ a 60% w=z~.~^'~. The Income Approach is considered the next best approach. The indicaEion it provides is given a 30% weight. The Reeiacement Cost Approach is ~he least ~iab!e =eproach given The indica5ion it srovides ~s a 10% weight. With 5hose assigned weights' ' ~ to t..~R~ respective is!~cations, ~ ~= ' ~.= subj~ ca a ..... e ~cenc~!ed value of ~ ~c~ is icul ~ed as follows: $347,500 x 0.i = $ 3%,750 $365,100 x 0.6 = $2!9,060 $385,200 x 0.3 = $!15~560 $369,370 VALUE ESTIP,~TE AS UNCONTA~IiNATED $369,000 In reality, the groundwater and soils beneath the building are contaminated. The contamination is the result of downgradient migration of various materials under soils, the emitted from the abutting property to the west. The property owner or tenant of the subject building is not responsible for the contamination. None-the-less, the subject is stricken with a pollution stigma. It will be difficult to sell the property without obtaining at least a "No Action" letter and possibly an "Off Site Determination" letter from the Minnesota Pollution Control Agency. It is assumed the subject owner does not have either letter. SUMMARY OF VALU.~TIONA~ND R~CONCILIATION cont: In order to obtain such ietterst ~u= =~ property owner must voluntarily enter the property into a Voluntary Clean Up Program _ t~._ party is a responsible with the MPCA~ regardless of whethe~ ~ person or not k "No Action" letter wil~ ~ ist h ~ ific reports or ~= ~ ~ ' z~_~. ~..~o_ma=ion that are the basis for issuing the ~=~ in will then state that, based on the review of the above referenced materials (and perhaps site visits and representations made by the voluntary party or environmental consultant) the MPCA Commissioner will refrain from taking specific administrative or enforcementa~=_on~ . in general, the MPCA Commissioner will refrain from taking administrative action, provided voluntary investigation and cleanup activities are being or have been completed to the satisfaction of the PIPCA staff and in a timely matter· After obtaining a "No Action" letter, the subject thenceforth should be capable of being sold and financed by most commercial lenders, if needed. It has oee~. the MPCA staff s (and the appraisers) experience, that these letters have been sufficient to allow property transactions to occur· Based upon a study of MPCA files of contaminated properties which have applied for and received Action" it will take three letter, approximately months for the subject to get a similar letter· ~n~ normal marketing period for an industrial building like the subject is about six months. To a certain degree, the process of obtaining a "No Action" letter and the listing period could overlap should the owner wish to sell the property· However, it is probable ~hat the owner would get the letter before the listing. Therefore, the alleged pollution of the subject should cause about a three month increase in the normal marketing period. The penalty against the subject's value is the difference between the value of the subject as uncontaminated; $369,000, and ~he present value of $369,000 not received for three months at !i.5%, or $358,600. This difference is $10,400. In addition to the increased marketing period, the subject property owner will also be responsible for the costs to obtain the "No Action" letter. Such costs are associated with payment for the owners time (dealing with the pollution problem, hiring contractors, an appraiser, attorney, supervising the testing and clean up process), and also paying for others time including their own attorney to write the request for a "No Action" letter, an appraisal, and MPCA staff charges to actually produce the letter· The total costs out cf the owners pocket are estimated to be about $t6,000. SUb!MARY OF VALUATION A/qD I~ECONCILIATION cont: The ~cta! penalty agains~ the value of ~h~ subjec~ for the pollution stigma is therefore the addition of S!0,400 + $16,000 = $2~,~00. The final value estimate of the subj ecu property as it is allegedly polluted is estimated as follows: Estimated value without pollution stigma $369,000 Deduc5icn for pollution stigma ($ 26r400) Value as allegedly polluted $344,400 FINAL VALUE ESTIP[ATE AS ALLEGEDLY POLLUTED $344,000 Warehouse/Manufacturing )z 19 ~' 16' 0 Sf o i North Area Caleulal±on Manufacturfng 76 X 99 = 7,52d 60 X 100 = 6~000 13,524 sq. Ft. GBA 1C )' OriFice Area 60 x 20 = 1,200 sq. ft. or 9,*~ o f GBA Bath t Recpt. ] 42nd Avenue North I [ Buildin~ Sketch ) , Official File Copy CITY OF NEW HOPE EDA AGENDA EDA Regular Meeting #7 August 25, !997 Agenda #7 President Wo Peter Enck Commissioner Sharon Cassen Commissioner Don Co/tier Commissioner Pat La Vine Norby Commissioner Gerald Otten Call to Order Approval of Minutes of June 9, 1 997 Resolution Authorizing Commencement of Eminent Domain Proceedings to Acquire Property at 7500 42nd Avenue North (Improvement Project No, 474) Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 Approved EDA Minutes June 9, 1997 Meeting #6 CALL TO ORDER President Enck called the meeting of the Economic Development Authority to order at 8:27 p.m. ROLL CALL Present: Enck, Cassen, Collier, Norby, Otten Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, Oison APPROVE IVIINUTES Motion was made by Commissioner Collier, seconded by Commissioner Norby, to approve the EDA minutes of April 28, 1997, and May 27, 1997. All present voted in favor. Motion carried, ~MP. PROJECT 800 President Enck introduced for discussion Item 4, Discussion Regarding item 4 Sandpiper Cover Townhome Association Loan Program and Establishment of Housing Improvement Area {Improvement Project No. 600). Mr. Kirk McDonald, Management Assistant/Community Development Coordinator, stated for the past !-1/2 years, City staff has met on several occasions with representatives of the Sandpiper Cove/Rockford Townhome Association regarding potential City financiaf assistance to upgrade the exterior of these properties, Sandpiper Cove is a townhouse development located at 8101-8953 42nd Avenue that contains 36 owner-occupied townhomes {four 4-piexes and 10 duplexes), The complex is 20 years old and there are significant exterior deterioration problems. The Association has sought preliminary bids from contractors who estimated that 8350,000 is needed to make siding, deck, window and other improvements, Aithough they have recently taken steps to increase their monthly association dues, they do not have the financial capability to make these improvements. Due to the fact that they are a townhouse association consisting of individual owners, they have been rejected by several banks for loans to make the needed improvements. That is why they have approached the City, for assistance, Staff has cooperated with them because it is felt that the City has a vital interest in maintaining multi-famiiy dwellings. Staff and the City Attorney originally explored utilizing the existing multi-family financial assistance policy for apartments for this situation, however, the policy is not applicable because it requires a 50 percent match from the owners. Over the past year, staff has inquired about programs utilized in other cities to address townhome/condominium improvements and became aware of some new legislation that was recently enacted to address these situations. The program involves City- funded loans to property owners unable to obtain financing through private means. Instead of securing the loans as a typical mortgage transaction, the City can assess the benefiting properties similar to a special assessment project. Mr, McDonald stated the new legislation allows the City to define a housing improvement area, make improvements in the area, and assess benefiting properties. First the City must adopt an enabling ordinance New Hope EDA June 9, 1997 Page 1 specficaiy defining the improvement area and p,~ocosed improvements, Sefo~a the City adopts such an o~dinance, a pet'don 'with at least 25% of the owners ,within the ~roposed area is re~u~red as web es s The EDA ~nquffed of fin¢~c)n9 opdons~ ;V~ Steve Sond~aa, vW Attorney, explained that ~f tqe EDA supportive o¢ the p~og~am, ne could work w~th st~ff and o~epa~e 0~oposed ensb~n9 ordinance defin~9 the p~o~ect and ',mp~ovement ~ Ju~y st~ff could make 8 Cecommendat~on to the EDA ~eat~ve p~o~ect costs and financ~n¢ options, ~n the ~ntedm the homeowners association coutd contact the remainin~ s~x ~ope~ty owners the petW. on fo~ c~eatio~ of s~ enabling o~d~nance. The ~edt~o~ f~om the Rockford Homeowners Association conte~n~n~ s~natu~es of the 38 owne~-occupied townhomes wss ~esented to the EDAo The petition ~equested c~eadon of an enab~n¢ o~d~nance and the conception of 8 spec~a~ d~stfict fo~ 8 hous~n9 ~mp~ovement ~ot~on was made bv Commissioner CoBer, seconced by Commiss~one~ ~o~by, ~o ~ccept the pedt~o~ ¢~d d~ect staff to ~uAhe~ ex¢o~e the Motion was made by Comm ssioner Coilie~, seconded by P~es~dent ~nck, to adjourn the meetJng. AI~ p~esent voted in favo~ The New ~Jope EDA adjourned at 8:43 p.m~ Respectfully subm~tted, Valede Leone C~ty Clerk New Hope EDA June 9, 1997 Page 2 ~-L)A Ortg~attng Dep~ent Approved for ~enda ~enda Section 8-2597 Item No. By: K~rk McDonald ~: ? 4 Management Assistant I / RESOLUTION AUTHORIZING COMMENCEMENT OF EMINENT DOMAIN PROCEEDINGS TO ACQUIRE PROPER~ AT 7500 42ND AVENUE NORTH, iMPROVEMENT PROJECT NO. 474 The City Attorney has prepared the enclosed resolution which authorizes the acquisition of the Ardei Engineerin~ propeAy by direct purchase or eminent domain. The acquisition of this propeAy ~s necessa~ to proceed with the redevelopment of the propeAies no~h of 42~d Avenue between Quebec Avenue and the railroad tracks. The City currently owns two out of the three parcels and the remaining parcel is located at 7500 42nd Avenue and is adjacent to the railroad right-of-way. The City's most recent appraisal of the prope~y dated May 28, 1997, which was completed by BCL Appraisals, indicated a fair market vaiue of $344,000. if the EDA approves the acquisition, the City's offer by direct purchase would be for the appraisa~ amount. The EDA would also be required to provide relocation se~ices and pay relocation expenses to Ardel Engineering, the current tenant of the prope~y: Therefore, the enclosed resolution provides authority to retain a reiocation expeA to determine and pay these expenses as well as reasonable closing costs in the event a direct purchase is successful. A relocation expe~ is necessa~ to insure compliance with the Uniform Relocation a~d Assistance Act. Relocation expenses would be a minimum of $20,000. The resolution also provides for a "quick take" in the discretion of the City Manager. At this time~ staff is mot recommending the "quick take" procedure, but wanted to include it in the authorizing resolution in the event that the EDA needs this authority at a later date. The acquisition of the properly and related relocation expenses would be paid for with 42® Avenue TIF funds. Staff recommends approval of the resolution. MORON BY / /<':'~ ~ SECO~ BY , ..~ ..... "~ Renew: ~stratlon: F~ce: ~A-O0 I ~ August ~2~ !997 O'~%y 04? Hew 4:~0I Xyt©n Avenue Hew Hooe~ HH Aeeu~si%i of P~OBe '~,~eese ¢~nd enclosed fen consideration a% %n~ August 25~h Heet~B9 a proposed reaol{~%inn at~thorizin~ %he acquisition ?alcoa%Jan ex}enses w~]l be of %he O~%y ~anagec~ AC %h~s %~me ! am es% neeo~endin~ we use 'aha ~8: au~-~o-a7 TUE i 58 P~03/07 AUgust 1!, t997 Page 2. Please contac1; me if you h~¥e any questio,q$ ~ou% %~qi8 matter or Very truly yours, Steven A. $ondrsll zlt! EDA RESOLUT20N hOc 97- T© ACQUZRE PROPERTY AT · ~' ' by ~he romic BE iT RESv~¥ED ; Eco Development Authority in and .~, x e~,ty o} Hew Hope~ Minnesota as foi]ows: WHEREAS~ the Housing and Redevelopment Authority in and for the City of Hew Hope {he?eaCte;~ the HRA) was est§bi ished and organized w~thi~ the C{ty of Hew Hope under authorization of New ~,o,~e Code §2 3,0 et seq. and Minn~ Stat~ ~¥62.415 et~ seq ~nA~ acting p~rs~a~t to t~ ~ s~eho~ ~ W;HEREAS~ th~ H~ ~ of ~ .... n~ ,ty M nn Stat° ~¥e2~415 eto seq, established Redevelopment ~lan 85-2~ Redevelopment P'~,~+~ ~=,~ 85=P_ and Tax ~nc~ement Finan,s~9~ Plan 85=2 by ~s~Stion' of, ~a .... Resoluti on Ho 85-08 on Decembe~ 23 ~,985 ars' wHERbA~, Minnesota Law !987, C 291 § 48, ~;~c* *epee,ced M; Sts+~ §462.4~, et o ~ ~oe~G provided that a~l~ orders~ ,~eolutioiqs~ motions~ plans and agreements and actions taken by any muni,cisai organized under Minn= Stat. §482~¥!5 to 482.705 and Minnesota Law '!959 Co 545 § I to !9~ and taken or purported to be taken by any ...... ~o~z~ c~ty clann~n~ commission or polit4ca! subd]v:s~on of the stat~ .... on ~uoldc asa oody ~'~h correct to ~lans and >~,jects asa hereby declared va~i4 and effective, and WHEREAS~ ?~,¢ Hew Ho~e C{ty Council en ~,~emee, 23, 1985 ac©nevada, the §,soppier" e o~ Redeve~opment ~ ,Slan n5~2~ eedeve]opment Project 85-2 and Tax ~ncnement Financing Plan 85~2 by {ts Resol,utfon Nec 85-12e~ and ~¢/HEREAS~ t(ce Economic Development Authority in and fo? the ~,~ He~ Holse ~e~a~¢te~ abe EDA) xes organize§ and established wlt~hin c:~ City o? Hew Hope by ~, din§nde No 89-7 adopted by ehe City ,uoun~i~ ore March 27~ ~989 under,, authorization of M~nn.~ Stat, ~nEREAS~ th~ EDA was ~ransferred controi~ operation and authority over i~edeveio~ment. , ,~aan 85-2, Redeveloamenet ..... Ppoj~c~ ~ 85-2 end Tax~T~, .... ~,..~,~ma~t Financing. ,,~an, 85-2 pursuant to HRA Resoiueaon~, Nco S8=¥, City Resolution Hoc 89-73 and E©A Resolution Ho~ 89-3~ WHEREAS, the property located at 7500 42nd Avenue North hereafter legally described is included in the Redevelopment Plan, Redevelopment Project and Tax Increment Financing Plan area: The East 100 feet of the South 350 feet of Lot Auditor's Subdivision Not 324, Hennepin County, Minnesota except road and alley. PZD No. t7-118-21-22 0006, WHEREAS, the 9oals and objectives of the Redevelopment Plan and Redevelopment Project include among others the following goals and objectives: a. provide compatible and complementary land uses; b. provide more homogeneous land uses and street treatment along 42nd Avenue in order to unify development and provide a positive image of the City; promote and secure development and redevelopment i~ a manner that allows the most logical and efficient arrangement and intensity of land uses; d. to undertake certain land acquisition, parcel assembly and parcel disposition necessary to eliminate substandard and non-conforming uses and buildings, and to assemble logical conforming and more efficient building sites; to promove and secure the redevelopment of non-conforming land uses and substandard buildings in a way which provides a clearer definition of land uses and more efficient utilization of parcels; and WHEREAS, the Economic Development Authority in and for the City of New Hope does hereby determine that the acquisition .of this property is reasonably necessary and convenient to the furtherance of the referenced goals and objectives of the redevelopment plan and redevelopment project, and that in its judgment the acquisition of this property will be for the benefit of the public health, welfare and safety of the citizens of New Hope, and WHEREAS, an appraisal of this property has been previously ordered by the EDA and that said appraisal has been completed as of May 28, 1997 establishing a fair market value for the subject property of $344,000.00, and WHEREAS~ Minn: Stat° §!17:232 authorizes the EDA to acquire the subjest property Dy direct purchase in lieu of eminent domain oroceedings, and WHEREAS~ Minn~ Stat, §489~!01, SUbdo 4 gives the Economic Development Authority in and for the City of New Hope the authority 'to acquire prooerty by power o¢ eminent domain under Minn~ Stat~ Chapter 1!7, including the power of acquiring possession of the sroperty per the "quick=take" Srovisions of §1!7=O42¢ if necessary co carry out the redevelopment ~lan and redevelopment ~o~ect, and WHEREAS; the Economic Development Authority in and for the City of New Hope has determined it is necessary to acquire this 3ro~erty by direct purchase or eminent domain proceedings, and ~HEREAa, said redevelopment ptan and redevelopment project were estab]ffshed under the nut* *~ ~ Ch ,,~o, ~ty ,of Minn Stat~ ap~ pursuant to various studies undertaken by the City of New Hope whioh have shown that certain redevelopment activities in the plan area are warranted and would not have occurred through private eevelopment alone~ NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority in and for the City o~ New Hope as follows~ io That the Executive Director is hereby directed and authorized to acquire by direct purchase at the appraisa7 value 8344~000~00 the property at 7500 42nd Avenue North in the City of New Hope~ lega!ly described as follows; The East !00 feet of the South 350 feet of Lot Auditor*s Subdivision Nco 324, Hennepin County~ Minnesota except road and ?ZD NCo !7=!!8-2I~22 In addition to this amount, the Executive Director is authorized pay ail reasonable closing costs associated with the purchase property° Further~ the Executive Director is authorized to retain a re!ocation expert to determine the amount of reiocatio~ expenses the EDA must pay by ]aw as a reeu]% of this acquisition and pay to the appropriate parties all requffred reloca%ion expenses as determine~= ~f direct purchase is unsuccessful, the Executive Director is authorized a~d directed to commence eminent domain proceedings under Minno Stat, Cha~ter 117 to acquire the subject 2: That the Executive Director is further directed to ut~ ~ize the ~ui~i -+ ~ ~ o , , "~ ,~x ~ax~ procedure per Minn, Stat ~1!7 042 if the judgment of the Executive Director it is necessary to acquire possession of %he property prior to the conclusion of the eminent domain proceedings. 3. That the Executive Director is hereby directed and authorized to obtain additional appraisals necessary to estabtis~ fair market value and just compensation for said property in preparation for said eminent domain proceedings. Adopted by the Economic Development Authority in ~d for the City of New Hope this 25th day of August, 1997. Peter Enck, President Attest: Danie~ J. Donahue, Executive Director d: \~p51 \Chh\ r eso l ut ion, T 50 ED:N'BROOK C:~OSS:NO new had an oi~porr~n~ty ~o disc~s with T~ J~n ~ possibili~ of a ~go~ ~ui~ition by C~ of N~w Hop~ of h~ pro~ ~ 75~6 42nd Av~ No~ Ag: ~di~ ~ you~ one~ T~ :':~orlzed ~ r~es~ :o d~ dire~iy w:~: Ter~ ex.p: ~ he ~y o~i,e d~ A S%.-N2~-~RY APPP. AiSAL REPORT - LIMITED APPR~.!SAL - 7500 42nd ~.'~.~ ~;~.R New Hose, Minnesota Arde~ Exc!xeerinc & ~.~=~_=c=~r~ PREPARED FOR The City of New Hope c/o Xirk McDena!d 4401 Xylon Avenue North New Hoee, :¥[inneso~a 55428 EFFECTIVE DATE OF APPRAISAL May 28, 1997 OUR FILE NL~BER 96467A CL, APPRAISALS BRAD BiORXLUND. X~AL $'~ Xm&m~ ~ ~ sa ~ AT~ APPRAISER5 ~uRe i!~ 1997 RON LACHEN~[AYER. s~ CONSULTANT5 The City of New Hose c/c Kirk HcDonald a~.C,i Xy!on Avenue x New Hose, MinnesoZa 55%28 Re; Appraisal ~: ~ ~ :3,5~4 sf industrial Building Arde! Engx.~_~{~ & Hanufac~uring/ 7500 42nd Avenue Nerzh, New Hope, MN in response %0 your requesz, ! have conducted the required inveszigahion, gaOhered 2he necessary data, and made cerzain analyses zhaz Nave enabled me :zo form aR oeiniox of Zhe markeZ value off tNe fee simple inzeres% of zhe real properzy referenced above~ !z is inzend:d zo uedate our earlier appraisal report dated 2-5-96~ ~ "ion of '' proper~y and ~he investigation and Based on aR ~nspec~ analFses underzaken,~ have formed 2he opinion eh~e~ .~ as of Hay 28, 1991, ani subject to %he assume~ions~ and limiting cone~zzons se~ forz. h t~'~ ~ -~port, hhe subject ~eroperty has a market value of: ~H~ H~ED FORTY POUR THO~S~ DOLLARS The ~ ~ ~ ' ~pp~a~saa report 2hat follows is a Limited Report A2 your req~, ihs owner was not centacZed for an interior inspectien~ Fu. rtitermore, Zhis is a short fform appraisal report which is briel recapi'-''~'~ ~ of ~ ~~o.~ ~he aopraiser~s da~a analyses, and conclusions~ More thorough and lengthy supporting documentation is ~e_~.~n~e ~he ~pp~aiser~s fileo If needed a self contained, comp!eno appraisal report could be prepared for an additional fee at a !aZer date o Respectively submitted, Eric Bjork-Zund Cert. General Real Preperz_y Appraiser Minnesota License EB/rak 1, Pi-ORE THAN ,SO YEARS P~rLL APPRS ~4~ SERWCES {mEO/~. S,a~.ary Appraisal Report - Li?..ited Appraisal This is a Summary Appraisal Repor~ which is intended to comply wilh the ...... ~ recui~=~-s se~ foruh under Szaxda~S~ s'~ 2 2 "-'~,' ~= ~¼=~.~ U~=C~m ..... Szanlards of Professional Appraisal Prasuice for a Summary Aseraisai ReoorZ As skch i% .... serius on!v summary discussions of the reasoning ol anaivses zhaz ~'=~=~ used ~ the asora!s~r~s o81nlOn o ~ ' ' ~ would be ~=~ -= c ...... ~-~n~ .documex~al~o~ which ' the reperzi~.~ l~_mat of ~his documenm is retained in the appraiser's file~ The depzh o= discussion contained i.~ this reoorZ is soecific te ~he needs of the c!ienz-and for intended use slated below~ 'The appraiser is not resecnsi~ie for ............. aserazsai which znvoxes .... separn, .... ~ovision c~ ..... ~ Uniform Stazzdards of Professional ~pp~a~sai ~rac~zce~- ~' . An inlerior x ..... =n~?~,_ion of .x~ building was xo~ made as of ~=~ This -aues mhe reievaxc~ ~--~ .... da~e of a~s~sa! ret to Snand=~s ~ule i-2a ,{data coi!ec~iox process) . However, because h½~ .......... interior was inseec=~d several times ix h¼~ sas~,~ ~ most recenn!y on February Z, 1996, the reeern and opinion of value retains a strong element of credi~abiiity. The deparmure is a!lowab!e~ Ail approaches to value were applied. PURPOSE OF T~E APPPuliSAL & DEFINITION OP VALUE: The .... ~ purpose of uhis ~pN=~=sai 's %o provide a curren~ marke~ value estimaUe of the subjec~ real properuy so thah the c!ien~ may buy iUo Any influence on Uhe subject's value caused by a threat of condemnation is disregarded. }'l~rke t -TM~ ' ' ' v~±u~ is defined by ~he federal financial znst, tutaons regu!a~ory agencies as =o=lows: ~hrket value is nhe nose probable price whick a property should o .... ~ in a com~etztive and open market under all con~z~zons requisite to a fair sale, the buyer and seller each acting prudently and knowledgeably, and assuming the price is not affected by undue stimulus, implicit in this definition is the consummauion of a sale as of a specified date and ~he ~assing of title from seller to buyer under conditions whereby: .......eT'Roeq~ OP ~-~=~ APeR~mSAL & DEFiNiTiON OF VAL%~E ~o~x Term!es are well ~=e~os or well aov~s in wh~t ihey consider ~heir own bes~ !x%erests2 a reason~h!e lime is allowed !er exposure markel ~ ~eaymexi~ is made __~ h~rms~ ~=~_ casa in U~c~ sales soncessions granZed by anyone asseciazed Oef~nft{ons~t~ EFFECTIVE D~mE OF VAAUE~ Da~e of inscec~ion~ },ia,/ 28 1997 DATE OF REPORT~ J,ane ii, 19}q APPRAISAL DEVELOPMENT R~ND REPORTING PROCESS~ in oreDarino lNis appraisal, the appraiser: 0 inspectel the subject on Nay 28, i997~ Gathered ren~al~ expense, vacancy and cos~ information, as well as sale data on comparable !and and buildings in the ' ~ ~ ~e_gnbo~.o~ sublec~ s and competing 0 Discussed Derceptions e~ valu~ for ~¼~ ~ub~ec~ and other indusErial properties in the area wiEh the owner, tenant~ buyers~ sellers and brokers° ~emp=~t amL aesroaches to va!ue; The Sales Comnarison~ The CosE, & ~ ~ Apprea To deveiee Eke o~ixion ef value~ the appraiser essentially Derformei a com~ieEe appraisal precess~ as defined by ~he Uniform SEandards of Professional Appraisal Practice~ Ail approaches to value were cempieted~ However, the Departure Provision was invoked because ~he building interior wasn~E inspecned, at least for .... presenu date of vaiue~ ~n~re=ore~ the report is actually a Limited Appraisal° HISTORY OE THE REAL ESTATE APPP~iSED: m¼~ subiec~ has been owned by Terry 7= .... since ~_~e mid 1970~s ~ ~ne pas~ ~ ~ ~ years, tN~ oULi.~nc has been cccup~e b?' Ariel Ensixe=rixc and MaxufacZurinc ix early 1996 e i0 v~=r leas= =~==~me~= s=~ ........... is still ~nere n~ .... ~R= clients desire uo h~ve !!mi~,s .... ecl wi%h ~.~.{..~.~ ....... ~u .... ng is nou seir_g offerei for sale. The subjecE is stricken by a eo!luZion stigma~ This affecus the highes~ and best us~ In 1983 a =~e~u_~d se~iixg uaxk for various industrial so!vexes was discovered on adjacent proper~y ~o ute wesu~ Later ueszs showed grouxdwaler and soils '~S~r~.~ ~n~ subject, and ~ ~h~- ~ lmmes{=~_~ vicinity ~on=a~z~.~=e~ by trichloroethyle~= (TCE) , ~,~ ~hyi=n chromium, coppe~_ and lead. 2here_ are ~eresen~!Y 15 ~ ~or!xc' ',~z=s~ ~ in %he area, ani measures are underway. Ee clean ue_ the conZaminanus. Poilu~ion levels have dropped most nsuab!v neares~ ~he source, bu~ apparen~!y ~he contamination levels are ne longer being effec~iveiy reduced in plume areas away from ~he former 'hot spot" where ~he ~ ~s{ ~ iemen { r=m=u~a=~on equ ~ ~ ~s zocated. Nigher levels of conuam_n~nus s~ill exisl under the skbjecu bu~idin a depth ef abeu~ i5 fee~. LOCATION DESCRIPTION: The subjecE is located in the City of New Nope, a second tier westerly suburb of Minneapolis with a current population of about 21,715o New Hope is approximately seven miles northwest of Downtown Minneapolis. The community is pr~ma~=y residential in character. There are scattered indus~riai districts and one major concentration of commercial buildings focused at the intersection of 42nd Avenue North {C.S~A.H. {~9/Rockford Road) and Ninne~ka Avenue (C.S.A.H. ~iS6) . Mos~ development in New Nope has ~ ~m~n place since 1960. New Hope has a council/manager plan B form of government tha~ provides good quality municipal utilities and services. mssen~aily all of the city streets are paved, have concrete curb and gu~ter, street lights and service by sanitary sewer and wa~er~ The entire city is located in School Distric~ ~281. MTC bus routes serve most ef the City including a route on 42nd Avenue North. Ne unusual municipal er economic influences are observed that would unduly affect the value ef real estate in New Hope~ The economy has recovered from the recession ef 1990 and !99!o Vacanct~ is low (c.3%) in the indus~riai market~ New leases on warehouse & manufacturing space ange from $3.50 te $4.00/sfo ~v~z~ DESCRiPTIOn cent: ~ .... y ~iso h': Rockfori Rca6 ~ass Lake 87,3) ~ and Winnetka Avenue~ mR~q~ ...... co2nly rca!s F~ community access wilhin uhe czly. The s~''~.~ is ioca~ed AveRue ~ m~ Zoxi~ Nee shows Ehe ~ature of us~ ~ the bui~dir, g Eas~ of ~ee subie~t across szory o~ice .... ~ u=q ~ roai tresks is a funeral hcm. e and an aparumenu ccmo!ex~ A ssmr~erciai~s~ .... exisEs along 42ni Avenue ~:=~'~_~ of Avex'ae~ The hub of lhe corridor is fo'ani al ~ {~=~==~uion of %2ni ani Nixxelka: Ax ixlusuria! cerridor exists alcn~ sou~n of 4 ~ ........ loc!< away from kh= ixtersec~~ - DES~R~r~±~N OF REAL m~zA~E APPRAISED Legal Description: The Eas~ !08 f=~ ....... of ~ Co~...~ ~O =~ ~ Lo5 5, Aui~t©rs' Subdivision ~32%, r~ ..... CounlF Ninxeso2a except read Parcel ~_e.,~~~ =ication !7 ~$ 21 22 Non-homestead taxes: Assessors l,iarket Value: ~C~05,O0O. Lani + $193,000 Bui~ding~ = $298,000 Total Site Description: Location - 7500 ~2nd Avenue North, New ~o~e; in Hennepix County, Minnesota° The zip code for this area is 55A27~ '00~ x 350' 35,0'00 scuare feen Easements - 7°5' wide sanilary sewer easement along the entire ~ ~ ~ oasem~n~ alone ~he east property line, and a 5' wide storm se.{ north 227.5~ of the east property line~ Streets - The? south edge ef the s~te_ has 100' of~on~ag~~ h ~ on A2nd Avenue North~ %2nd Avenue is a divided four lane road. It has a 90 loon right ef way in front e~ the subject, is asphalt Fav~,~ ~s with concrete curbs, g~ters, and sidewalks . The pavemen~ is in good ~s4~4 ~. The si:es northern edco has !00 fee~ cf frontage on an alie~. The right-of-way fer the alley is 20 feet~ Utilities - Ail municipal utilities are located in the neighborhood and are available to the subject property° These include city water and sewer, electricity, telephone and natural gas° ~ ~ ~ OF ~c APP~qAiSED co~t BES~R~P~ON RERi ~TATE -~ ~=i and csen ~ee~ is one ..... ~ tke ~ .... ~ ~h~ soils are cemsrised cf a c!aciai drift in~Tav=S wizh mixed ~-i~ s cl~vs,~ axl ,s_~_l . They~ are slao~' __ ~=~s ......... ~m~e=~_. -o be :~== of or sofl soils which we,all renler ~he ~-= 2e be dl~'~'~ coxszruc2 e blilding cx~ The water 2ah!e is abou2 i0-15~ below the surface~ ~.~.~2er ~ s~.m~ oe~ow nba silo are ~nswx (s~m), cnrom~,.~, copper and !eai~ ~>= ~ ' ~ , ~- , .... s{~ the si~e .... a caused Dy ax cEE-sine source, ~g=~=~-~ of },~ sures are eresextil ..... x~.. ~ ~ - ~.~ a,~=~~x~_ ~'m= .... current zox~'~ ~o,,.~ shows mhe _orooerzv_ ~ 2o 1-2, General i~d,,-~ ' Access - Uhe sine is accessei by vehicular Uraffic nhrouoh one curb cut ox wesz bound 42nd Avenue, ani also through ~he rear a i ! ey~ idextiTw- ~=. ......... ~denlity of ~he subj~ is indus~-~ I~ is !ocaned on indusnria!iy zoned !ani in an inius?~;~!y deve!eped corridor that ~ les wes~ of ami sara!lo! Zo the Soo ;,~= Raj Tracks ~ _mp~vem~n.~ Description~ Size - {!00~ x 60~) + (99: x 76:} = i3~524 sf GBA~ A~e - Front ma-~ of bidg {i00~ x 60~) censtruc~ei in 1961 Rear half of bidg~ {99~ x 16~) added in !971~ Average acEuai age of jus~ over 30 years~ Foundaz~on & Frame Concrete m~P exterior wails (webbed) roof joists w~~m 'T' beams and support Doses Roof Fiaz; ..... a! decking & ~_u~o l~:u~;vlON sealed a composition of pzncn and gravel Clearspan height = 12 in ~-= ~-hurino area 16~ {~- rear~ add 2~ for roof lois~cs to ecuai ~o~aa! wa=~. height in respective areas~ i%~ average clearspan heigh~ ~ Finish - Vizy! ~ile f!oors~ wood panel wails~ suspended panel ceiling, and recessed florescen~ lights in i~200 sf fron~ office area~ 615 si shop office has ixferior finish~ Slide fy windows ix front~=~ixed ea~ _ _~ndus~ri~l sash windows on building sides~ two i.d~ ta~z overhead drive t' rough garage doors~ Improve.?~ents Descripticn cont: - ,=rP~A ~urnace ix o w/ .... Four suspended A/C unL~ i 200 ampere eiec~ri~ zo ~uildixc. O~her - Two flx~ure bathroom in ircnz office, v;izh aijoinix~ four fixzure R~h accessed ~ ~- - ~n' ~ ~: :rice! ~ ~r~.~ F, aF.~i:~r'~ri..~ area. ~ ~. ~ ~c Bus-~r~ou~ox'' ' D~,c~ ~, .... ~ n0' ~ ~:~- weighl rail ox cei!ix~ =~ crane coera~icn_ .~.,~--site _mp~{ -~O~'~m-r-~ ~.~ ..... ~U.~'s~ 3,78:3. Si asphalt paving and : ~ 196 si c~ushed rock paving surnLture, Fir<tufas & ~UlF~e.~ - NO~ znczuce.c in sppraised value. 15ems include air cleaners, 3 zon crane, %30 ar, o electric ~o serve 3 ~cn crane all !a=b~= & milling mac~: Condition Average ov~ra~. 2C veer. ez:*~ve~ ace~ o= a ='0 year .... ~ ..... c life. HIGHEST ~N~ BEST USE Highest and best use is defined as zhe reasonab!v p~ a~s legal use of vacant land or an improved proper~y, which is physica±±y possible, appropriately supported, feasible and that results in the ' ~ ' ~" , n-gn~o~ value. The ~our criteria the highest and best use must mee~ are legal permissibiiisy, physical possibility, financial feasibility, and maximum profitability. As vacan~ ]and, the site is of sufficient size for _ ~on~.u~tion with a variety of buildings in any of several locations on the parcel. Zoning indicates that indus~riai use of the land would be best~ industrial uses lie immediately to ~he north and wes~ of the subject. Commercial and residential uses are segmented from the subjec~ by railroad tracks, a divided 42nd Avenue and distance. The recognized groundwater and soil contamination of the subject site caused by the demolished Electronic Industries building to the west would likely present a development problem. City and sta~e officials, lenders, contractors, and labor unions would be reUicent to allow construction on the subjec~ siUe where contamination might adversely affect hea!th~ safety and value. Contamina5ed sites like ~' ~ subjec~ are rarely '~ ~ ~e~oped until either a "letter ef closure" or a 'no action letter" are produced by the Minnesota Pollution Control Agency (HPCA) o Even though ~zzoce rt,/: of 'to a:::: : '~ i.: .ke'~ :c) resuk: ~co:icFli. c {c .s it:i<-: ar:, f:vc:rab!: ~:5:: kui!c :_: g, Phys: bui !c As~e{:l~ CFi !i ,e b' ,i ]LiiN: ais::, ref! ::::11: w:iL cl~ -s Alt h~r~::h . year;:. Park .:!~ i,s HIGHEST A~ BEST USE cont: Although ute sublect and the industrial ~ ma_~e~ does net suffer =rom eccxor, ic cbso!escence, the building is stricken ~y a ...... Lox s~Lgr, a Di .... ~ ''~{~_ ~_ a moment, ~here is~= tea!thy market_=o~_ ~his tv~e~ of b,,~lding~ .... ,,~u~~~'~ ' ~ ex~ ~ ...... y is zaLr!y iow at about 3%, axe those ~or = - sale - the supply - are matched by ~heir demaxd). Values are slowly ixcreasixg, l{ost buildincs of th~_ ~_='~biect's~ size are owxer occuei~s bun there is muck rented seace in !~e~ mulni-texann S~lOlRCS .~Xa~ is cor. saraoie~ Ec nR~._~ s~*~ ~ec~ Presently, ~ ~ = nfs for simila ..... ,~a_x~t re _ _ ,s~=~house space is be~ ~ $3 50 6 $4o00/s~ and $6.53 zo S~ 00/sf of=~ce space for ~ The ~"~ding should be able Eo 2 ..... ~ rent within Enms range i= ~-'=ased at marken renns. After the long ~erm lease w_~h ~¼~ eresext =enan~ subjecm was ~ ~red in early 1996 4~ ~ the .... ra~ing a blended rental rat~ of $3 Su/sf for a£~ GBA until a ~ ....~ formal ~ ~=~ ~ ....... g~, ...... was reached. The sroeerty owner was seeking to increase Skis rate, and probably did. The texans ~orx~.s finiinc ~imos~ nothinc in ~ area for Ss 00/sf '?he presence of a successful business in the kuildixg, and several sales shows that ~ha~e {s a market =or buildings subjec%~ Furthermore, ~ xa expected there should be a viable ~ =~ the subject {n the foreseeable future m~k~ for - . The industrial market is healthy. The pollution stigma affects ~he subjecs in tha~ the contamination will deter most buyers and lenders until the property owner obtains eiEher a "letter ef ciesure~ or a action !ether" from ~he Minnesota Pollution Control Agency (MPCA) ~ Even though the building is noz new and reflects physical deterioration and functional obsolescence~ Ehe maximally ercduc~ive ,'se ef the p~ou~,, is the presenu use Based ox the buildings use (occupied by a viable business , uhe markeu of similar buildings and the subjects condi~ion there is remaininc economic ~i~= in the imerevements According ~o ~he Marshall & Swift Ces~ Guide a light industrial building like the subjec~ has an economic of about 40 years~ life The effective age is about 21 years. The site contamination will act te discount the market value ef the subject based on the costs te obtain a "no action letter" er "letter ef closure,n S.~LALey OP ~,7~ ~ ...... ~=~ ~ 2~%~ RECONCiLiAT!OH Under an ixi~iel assumeziox ~haz ~he subjec~ is unccxz~mlxaled, -iee~ac~.~.en~ ,~osz ~ ..... a~.~ $3{,,, 5'2,2 ~.~"~ .... Approach $386,2.30 ~~R is -R~ X.~s~ approach ~s v~zue axe ~ne Sales Comparison ~s~=~ ........ - ur~,=~s is given a 60% weighz~ The ixco~e a !C% weiihz~ Nizh Zhese assigned welches ix!icsziens, .u ..... -o~os value ~,l tk~ subje:cz is calculated as iailsws ~ $;a~ 500 x 0 ~ c ~a 750 S36~ i 8~u x 8 e = S2!9~ 060 $369,370 VALUE ES ...... '~ AS ~ .... ~ v~'~'~un '~ b .... ~ iiding reai~l, the groundwater and soils ..... ~h Ehe bu are con~amina~ed~ The contamination is the result of downgradien~ various ~ m~cra~ion of ma=e~as unoer the soils, emitted from the property ~o the west° The proper~y owner er ~ ~a~ of subjec~ building is not responsible for the centamina~iono _ ~ w~h a po!lu~!o~ s~igma~ ~e-~he-le~ ~ne subject is s~ricken ~ ~- be di==icuit~ to se~]~ tN~.~ property wi~kout obtainins at No Action" ±~~~ and possibly an "Off Sine Determination' letter from ~he Minnesota Poliu~ien Con~rol _~ is assumed the subi~ ~= owner does not have S~_AI~Y OF VALUATION ~=~ ~=LECONCILIATION cont: in ~_~ to oblain suc¼.~ __~ters, .u~ .... property owner mus~ ~ _ ~ !x~o Voluntary Clean Ue volux~ariiy enler the eroeerty ~ - a wi~h~.~ ~r~.~,v~= regardless of ~~*~-~- the par~y is a res .... sib! ~ersox or not m ,,v~~.~n~ " !et~=~ w~''I lis! the se. ecif~c ~ ...... tna~ are ~ hasas ~or mssumxg lhe !el~er '"' ~ base! on ~¼= ~=v~=w ~= the above iZ Wli! then snare =~, ......... referenced materials {and perhaps size visits and represenla~icns made by the voluntary par~y or ~- ~n ..... ~i ...... , ,Commissioner will refrain from faking s~_~fic adminis'~a~-~ ~s~ or enforcement action° in general, the NPEA Commissioner will =~ain ~rom taking -4~ ~r ~ive -~_~ ...... ~ ~,~ ....... s__a~ aclion, provided vol,,~ investigation and cleanup activinles are be!nc or have been csmoz_zeo to ~ satisfaction cf ~he ,;s~ ~laif s~s i~ a timely r~aE ter ~ After ' ~ ~ ±eft~ the subject ~ .... oo=a±~.~ a 'No Action" ' ~, u.~=~ ' - ~ ........ a .... c by most commercial should be capable of ¼e~ng =old and g~ .... · lenders, ~= ~ ' (and the =z needed. ~ has o~ the NPCA staff's appraisers) experience, that these letters have been sufflcienz to allow property transactions to occur. Based upon a study of MPCA files ef contaminated properties which have ase!ied_~ for and ' ~ ~ake ao~roximate!¥ received a "No Ac~zon" letter, ~ will ' ' msntks for the subject to c=~ a similar leC~=~ The normal marketing period for an industrial building like the ~,,bqecc is about six months To a certain decree tko mrocess of obtaining a "No Action" letter and the !{sting period could overlap should the owner wish to ~=~1 tke property However, is probable that the owner would get the letter before the iisting~ Therefore, the alleged pollution of the subject should cause about a three month increase in the normal marketing ~r~od. The ~ena!ty against ~h~ subject s value is the difference between the value of the sublecc as uncontaminated; $369,000, and che present value of $369,000 not received for three months at !1~5%, or $358,600~ This difference is $10,400. In addition to the increased marketing period, the subject property owner will also be responsible for the costs to obtain the "No ~ ~'~ A~=~o~ tetter~ Such costs are associated with eayment for the owners time (dealing with the pollution problem, hiring contractors, an appraiser, attorney, supervising the testing and clean up process), and also paying for others time including their own attorney to write the requesc for a 'No Action" letter, an appraisal, and MPCA suaff charges to actually produce the letter. The total costs out of the owners socket are estimated to be about $16,000. ,~ ~ ~,,~_'% ~ V~UAT!ON -~_~_ -,~ zal .... ~zy acainsz_ ~he value of '~=~_ sub~ec~ for ~he l'he final va~ue esz~.~,~e cf a~~y poi ~ is estimated as fo!!ows~ Es~=ma~ec~ ~=4 .... ~ So~ coi~,~on s%icma ?q 9~ 4OO~ Value as allegedly~.~~'~ $~az, 430 ~-,~{- ~ AS _r000 FiiqAL VALUE ESzI~Le~E ALLEGEDLY POLLUTED 834a Warehouse/Manufacturing 19~ ~6' ~ 0 o i North Area CaleulaLion Manufacturing 76 x 99 = 7,52~ 60 x 100 = 6~000 13~524 sq. ft. GBA Office Area 60 x 20 = 1,200 sq. FL, or 9% of GSA 42nd Avenue North ! [ Buiidin~ Sket_~~ ,