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021296 EDA Official File Copy - CITY OF NEW HOPE EDA AGENDA EDA Regular Meeting #3 February 12, 1996 Agenda #3 President Edward J. Erickson Commissioner W, Peter Enck Commissioner Pat la Vine Norby Commissioner Gerald Otten Commissioner Terr/ Weh//ng 1. Call to Order 2. Roll Call 3. Approval of Minutes of January 22, 1996 4. Discussion Regarding Property at 7500 42nd Avenue (Improvement Project No. 474) 5. Adjournment CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 Approved EDA Minutes January 22, 1996 Meeting #2 CALL TO ORDER President Erickson called the meeting of the Economic Development Authority to order at 8:08 p.m. ROLL CALL Present: Erickson, Enck, LaVine Norby, Otten, Wehling Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald, Bellefuil APPROVE MINUTES Motion was made by Commissioner Enck, seconded by Commissioner Wehling, to approve the EDA minutes of January 8, 1996. All present voted in favor. Motion carried. IMP. PROJECT 537 President Erickson introduced for discussion Item 4, Resolution Approving Item 4 Agreements with Key Group Advertising for Billboard Agreements with Naegele Outdoor Advertising for 1996 Shop Neighborly New Hope Campaign (Improvement Project No. 537). Commissioner Enck agreed with the need to reserve billboards for 1996 "Shop Neighborly New Hope" campaign advertisements. He suggested that the February 7th Shop Neighborly New Hope meeting with businesses include an opportunity to evaluate last year's program, the cost to benefit ratio, and projected future benefits. Mr. Steve Sondrall, City Attorney, pointed out that the EDA will be committed to the contract with Naegele Outdoor Advertising Company even if the EDA chooses to cancel the 1996 Shop Neighborly New Hope campaign. EDA RESOLUTION Commissioner Enck introduced the following resolution and moved its 96-02 adoption: "RESOLUTION APPROVING AGREEMENTS WITH KEY GROUP Item 4 ADVERTISING FOR BILLBOARD AGREEMENTS WITH NAEGELE OUTDOOR ADVERTISING FOR 1996 SHOP NEIGHBORLY NEW HOPE CAMPAIGN (IMPROVEMENT PROJECT NO. 537)." The motion for adoption of the foregoing resolution was seconded by Commissioner Wehling, and upon vote being taken thereon the following voted in favor thereof: Erickson, Otten, Enck, Wehling, Norby; and the following voted against the same: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. MHFA President Erickson introduced for discussion Item 5, Resolution Approving Item 5 Submission of the Minnesota City Participation Program (MCPP) Application to the Minnesota Housing Finance Agency (MHFA). EDA RESOLUTION Commissioner Enck introduced the following resolution and moved its 96-03 adoption: "RESOLUTION APPROVING SUBMISSION OF THE MINNESOTA Item 5 CITY PARTICIPATION PROGRAM IMCPP) APPLICATION TO THE MINNESOTA HOUSING FINANCE AGENCY (MHFA)." The motion for New Hope EDA January 22, 1996 Page 1 adoption of the foregoing resolution was seconded by Commissioner Wehling, and upon vote being taken thereon the following voted in favor thereof: Erickson, Otten, Enck, Wehling, Norby; and the following voted against the same: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. SECTION 8 President Erickson introduced for discussion Item 6, Resolution Approving Item 6 First Amendment to Section 8 Housing Assistance Payments Program Contract No. C-94-56 for Administrative Services Between the Metropolitan Council and the City of New Hope and Authorizing President and Executive Director to Execute Agreement. Commissioner Otten questioned the funding for the proposed computer. Mr. Donahue explained that the City requested not only the regular fee per contract but also requested $2,000 for computer equipment, services, and software. However, the Metro HRA has no funding for computer equipment. Mr. Donahue recommended utilizing some of the funds obtained through the additional contracts for computer-related expenses. He stated request for approval of computer equipment will be made at a later date. EDA RESOLUTION Commissioner Wehling introduced the following resolution and moved its 96-04 adoption: ,RESOLUTION APPROVING FIRST AMENDMENT TO SECTION Item 6 8 HOUSING ASSISTANCE PAYMENTS PROGRAM CONTRACT NO. C-94- 56 FOR ADMINISTRATIVE SERVICES BETWEEN THE METROPOLITAN COUNCIL AND THE CITY OF NEW HOPE AND AUTHORIZING PRESIDENT AND EXECUTIVE DIRECTOR TO EXECUTE AGREEMENT." The motion for adoption of the foregoing resolution was seconded by Commissioner Enck, and upon vote being taken thereon the following voted in favor thereof: Erickson, Otten, Enck, Wehling, Norby; and the following voted against the same: None; Absent: None; whereupon the resolution was declared duly passed and adopted, signed by the president which was attested to by the executive director. ADJOURNMENT Motion was made by Commissioner Wehling, seconded by Commissioner Enck, to adjourn the meeting. All present voted in favor. The New Hope EDA adjourned at 8:15 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA January 22, 1996 Page 2 ~~(~~~~) REQUF~T FOR ACTION originating Deparhhent Approved for Agenda Agenda Section City Manager EDA 2-12-96 Kirk McDonald ~, '~ Item No. By: Management Assistant By:y/ 4 DISCUSSION REGARDING PROPERTY/4/[T 7500 42ND AVENUE (IMPROVEMENT PROJECT NO. 474) _ / One of the City's long-term economic development goals is the redevelopment of the three properties located north of 42nd Avenue located between Quebec Avenue and the railroad tracks. The goal is to acquire the industrial sites, demolish the buildings, accelerate the ground water clean-up, rezone the property from 1-2, General Industrial, to B-4, Community Business, and market the site for commercial redevelopment. The City has acquired and presently owns two of the three sites. The City purchased the Electronic Industries property, 7516 42nd Avenue in 1993 and demolished the building. The City also purchased the Foremost, Inc. property, 7528 42nd Avenue in 1993, and is currently leasing the building. The owner of the third parcel at 7500 42nd Avenue, where Ardel Engineering is a tenant, has recently placed a "Building for Lease" sign on the building. The City had this property appraised in 1992 and the market value estimate on the property was as follows: Estimated value without pollution stigma $313,000 Less pollution stigma 29,700 Value estimate as allegedly polluted $283,300 In 1993, the City received a letter from the owner stating he would accept the sum of $325,000 for the property. Due to the recent installation of the lease sign, the City Manager has authorized an update of the 1992 appraisal. Staff requests to discuss with the EDA if you are interested in pursuing the acquisition of the property at this time, before the building is leased to another tenant. It is staff's understanding that Ardel Engineering does not currently have a long-term lease with the property owner and staff have received calls from businesses interested in leasing the property. If the EDA did acquire the property, perhaps it could be leased to Ardel Engineering until such time that the demolition of the Foremost property took place so both buildings could be demolished at once. Staff requests direction from the EDA on this issue. MOTION BY SECOND BY t/U ~ Review: Administration: Finance: I RFA-O01 ~ JENSEN & SWANSON, P.A. .ATTORNEYS AT ~W EDINBURGIt E×EeU'rn~. OFFICE PLAZA 8525 EDINBROOK CROSS~G SUrE #201 BROOKLYN PARK. MINNESOTA 55443 Go]~)oN L. JENSEN* WmuaM G. Swanson April 23, 1993 (612)424-8811 ~CHARD D. K~P^. JR. Tvl~ ~N~ Lmm~ F~ (612) 493-5193 D~ J. N~N OF CO~SEL C~ W. R~E~ j~ P. ~EDY City of New Hope c/o Kirk McDonald 4401X¥1on Avenue North New Hope, MN 55428 Re: ~1~- 42nd Avenue North New Hope, Minnesota "Ardel Engineering" Property Dear Mr. McDonald: I represent Mr. and Mrs. Terry Jensen, the owners of the property at 7516 - 42nd Avenue North, New Hope, Minnesota. Significant issues have been raised, discussed and continue to evolve around the contamination and/or apparent contamination affecting property in the neighborhood of my client's property. It is my understanding from news reports, including specifically the New Hope Post, dated April 21, 1993, that the New Hope Economic Development AUthority has acquired neighboring property at 7528 - 42nd Avenue North for a purchase of S450,000.00, with certain other accommodations made to the current owner. My clients are willing at this time to entertain an offer from the New Hope Economic Development Authority for acquisition of their property at 7516 - 42nd Avenue North, New Hope, Minnesota. Further, Mr. Jensen advises me that he would at the present time be willing to accept the sum of $325,000.00, subject to execution within the next thirty days of an acceptable purchase agreement which provides: 1. A mutually acceptable closing date; 2. Continued possession of the property by my clients and the current tenants until December 31, 1995, with no expense to my clients except utilities and general maintenance; 3. A reservation of salvage rights to be exercised at the expiration of the period for possession; *Rcal Estate Specialist CcrtiBcd By Thc Minnesota State Ilar Association Page 2 4. Assumption by the City of all special assessments against the property; 5. Pro ration of the real estate taxes effective as of the date of closing; 6. Acceptance of the property in its "as is" condition effective as of the date rights to salvage expire; 7. Specific acceptance of the property without any responsibility for contamination and/or cleanup costs in regard to the property; 8. Rese~vatlon in the purchase agreement of a right to an exchange pursuant to the provisions of Section 1031 of the Internal Revenue Code. Please advise me as soon as possible as to whether the New Hope Economic Development Authority and/or the City of New Hope wish to present an offer to purchase as we are currently in the process of lease negotiations with a tenant. Your decision will bear on these negotiations in particular as to the length of term we offer for any extension. Thank you. Sincerely, Gordon L. Jensen GLJ/3mb cc: Terry Jensen 281\tlj12-3 We ,oertify to have personally inspected the subject property on February 17th, 1992 with the owner's representative, Frank Pickelman. To the best of our knowledge and belief, the statements contained in this report and upon "Certification, As~ions and Conditions" herein set forth. In addition, this report conforms with and is subject to requ_~-e~-ents of the Code of Ethics ar{d, Sta.ridar'ds of Professional Practice of the Appraisal Institute. Employment in and compensation for making this appraisal are in no way have either present or contempla~, in the subject property. It is our opinion that as of FebDm~y 17th, 1992 the market value of the subject property, given it is allegedly polluted, is: TWO~EIGHTYTHREETHO3~~~I~LIARS $283,300 Brad Bjorklund, MAI, SRA License No. 4000377 Eric Bjorkl&, Appraiser BB/~/~k The property is legally described as folly: The w~_~t 100 feet of the South 350 feet of Lot 5, Auditors Subdivision #324, Hennepin County Minnesota. T~u~s ~iption is subject to a 7.5' wide sanitary s~wer easement along the east property line, and a 5' wide storm sewer ~=ment alor~ the ~orth 227.5' of the east pro~_rty line. Property Identification Number: 17-118-21-22-0006 Assessor's Market Value: $ 75,400 land $238,200 buildir~ $313,600total Curre~tTaxes: $15,077.46base $ 1.183.54 special assess~.nts $16,261.00total Unpaid Balance of Special Assessments: Assumed Paid Insofar as is known t_here bas bee~n no sale of the subject property in the last 3 years. Terry Jensen is the current owner of the buildir~, and Frank Pickelman is the owner of the business. The normal marketing period for a property of the subject type is 12 to 18 months. ~be scope oft_k is appraisal involVed an inspection of the neighborhood, the site, build~ exterior ar~ interior, the c~le sales, and the cc~pletion of three approaches to value if appropriate. Location The property is located at 7516 42nd Avenue North, New Hope, Minnesota. Size According to dimensi~ on the Plat Map, ard on a copy of a Ray Prasch survey, both of whioh are copied in the Addenda, the prc~ is 100' x 350' equals 35,000 s~m~e feet, less a permanent street ~-~=m~_nt at the south property line area typically 6' wide totallir~ about 600 square feet for a final land size estimate of about 34,400 square feet. ~-~_nts Street easements are considered to be taken in the equivalent of fee for the purpcee of this appraisal. It is highly unlikely that the street easement area will revert to the subject pzupert7 owner in the fo~le future. The Prasch survey in the Adder~a shows a narrc~ three foot wide utility easement parallel and adjacent to the south property line of the subject. 5' and 7.5' storm ar~ sanitary sewer easements lie along the north and east property areas. An alley easement passes west alor~ the north property line line to ~ Avenue. It b~ not been used in many years. No other easements Streets ~he pro~_wty contains about 100' of frontage on the north side of 42nd Avenue North, also known as Rockford Road or County Road #9. It is a four lane, t~o way, newer bituminous paved arterial street with concrete curbs, gutters and sidewalks, newer street lighting, and a ~Dhore controlled lardscaped in reoent years and is unified street bee~_n for a couple of blocks in either 8~ection f~ the Winnetka Averse ~ 42rd A¥~'a.~ in--ion. The property is served with ali ~u~icipal utilities including sanitary 5 SITE [~%It~I~ O2~T'D Topoqraph¥ & Soils The subject is located with/n an area of glacial drift which overlies the St. Peters Sandstone. The glacial drift oor~ists of interlayered and mixed sands, silts, clays, and gravel. Ihe up~er 30 feet of the drift is primarily till which consists of a tight, grayish clay with traces of sar~, gravel, and silt. Information gathered fr~ soil boring logs indicated that an alluvial channel deposit runs u~ erneath the site fr~ the ~est/northwest to ear-t/south_easy-t, and then herds to the northeast further ~c of th~ site. ~he upper portion of the alluvial channel is rather permeable and is the type which has the capacity to conduct significant volumes of ground water across the site. However, accordir~ to Scott Carlst~-~, Hy~logist for the MPCA, the size of the ac~_ mi channel and volume of water it conducts is c~paratively small when viewed with lax~jer, deeper ar~ more significant aquifers in this re~ion. A more dense glacial till, below the chan~el and a~proxiakately 10 feet below grade defines the base of the normal grour~ water table. Sba] low groundwa~ flow follows the contour of the alluvial ~. Since the d~- _~r3uwery in 1983 of a ~ settlir~ taruk on the west side of the subject build/n~ (lying on the neighbor's property), ar~ subsequent later east of the subject, subsoils ber~th the subject are are assumed to be contaminat~ with a number of contaminants. Tb%~ is due to the slow, down gradient flow of groundwater th~ the alluvial cb~runel. ~he contamizmants, which seem to be the most impo~t or most det~ced are trichloroethylene (TCE), dichloroethylene (DCE), chromium, cop~ and lead. It is not known how lor~ the settling tank on the Ele~cr~%ic I~dustries property had been ruptured or how ~h oontaminati~ mterial bad entered the soil previous to 1983. I~ess of past historical data, since the of the site contamination on the El~c Iz~%~ property, efforts have been made to clean up that site, and stop the flow of contaminants to the subject. Numerous monitorin~ and pump out wells have been ins~]l~4 all aruur~ the site, and marked success has been noted in the removal of contaminants trichloroethylene (TCE) and tz-uns-l,2-dichloroethylene (DCE). $~qce the ~ o~ ~-~w~lJ~ action ~n F~~ ~987 (~ ~e ~~ti~ of ~ ~ ~ si~fi~y f~ 290 m~llion ~ ~ b~li~ ~ ~ 30 ~ ~ ~ b~li~. ~~, ~ ~~ti~ of of 30 ~ ~ billi~, ~ ~ahl~ ~ ~ ~t of ~. la~ a~le ~o~ti~ (~ fz~ ~ 1991 ~ ~ for ~~c ~ ~11 V~ ~iet) ~ ~ l~s at 33 ~ ~ ~li~, or 33,000 ~ ~ billi~ ~ ~, 1991. ~le l~s of ~ ~~ti~ ~d ~ ~iv~ at ~ ~t ~~ a~i~ ~ 20 Y~ or ~, ~ ~ ~y ~lf ~t ~ ~ ~ ~ ~~ of "a~ ~~,, or ~ ~~i~ of ~~~ ~il ~ ~ ~ ~ of ~~ti~. It ~ ~~ ~t ~ l~s ~~ ~ si~ ~ ~ ~ ~, ~~ it ~ ~le ~t ~y ~d r~ ~ t~. ~ 1~ ~ ~ ~ ~i~ ~ ~ ~~s ~~ ~ si~ of ~~ti~ ~ ~ ~~ ~~ p~, ~ ~ t~ ~ ~1~ ~i~o~yl~ (~) ~ ~~ ~ i~ ~i~ p~, ~o~yl~ (~). Ta~y, ~ ~ ~ ~ ~i~ of ~ ~~ it ~ ~le ~t ~ will ~ ~ ~ ~ ~. de~ ~y ~ ~ ~ of ~ ~ ~~ ~. ~at~ ~ of ~ ~t~ly ~ ~s, ~ ~ l~ti~ ~ ~~ti~, ~ ~ ~ ~ cl~ ~ ~ ~ve ~ ~ ~~ at ~ ~. At ~ ~, ~ ~ ~ ~ ~y ~ ~t a ~le ~ti~ ~ ~ of ~ ~ ~s will ~ f~ ~ ~ve ~ ~ cl~ ~ ~ ~ ~ ~fo~ ~ 1~ ~i~ of si~ ~ll~i~ will ~ ~~. ~ ~ a ~ ~ ~ ~ on ~e ~~(c ~~ p~, ~ ~y ~~t ~ ~d ~ cl~ifi~ ~ ~ ~ ~ ~~ti~ ~ To~hy & Soils cont'd tb~ subject property at all. Fortunately, these h~avy metals do not seem to be m~bile and are held in place by the soil fabric. In other w~rds, they stay put and should be found only in the areas of direct contamination. The reasonably knc~l~le buyer should also be aware of the fact that they w~uld not be held responsible for clean-up costs of subject site for TCE, DCE and any other Accessibility and Identity The site has average access by a curb cut to 42nd Avenue. The rear alley easement area has not been used in many years. The property's identity is considered to be average. It is observable frc~ traffic in both directions on 42nd Avenue, and is adjacent to a well identified oa:m~rcial district in an average to fair industrial neighborhood. zord 2he p~ is zon~ 1-2, ~ ~±al. 3. ~ of tho Zon.i.r~ Map is Higb~st and best use is defined as the reasonably probable and legal use of vacant land or an improved property, which is ~hysically possible, appropria~-ly supported, financially feasible, and that results in the highest ~ne land is of sufficient size for construction with a ~ariety of buildings in any of several locations on the parcel. Zoning indica~ that industrial use of the land would be best. Ir~k~-trial uses lie to the northwest and west of the subject with ~rcial influences farther east and west. ~c conditions are favorable for ir~ustrial building construction are between 9.5% and 10.5%. A new i~mh~-trial k~ilding has been constructed_ a long block south of the subject at 3988 - 3980 Quebec Avenue. General ~c conditions are still reoessionary. SITE [~II~U/C~ (I~T'D Hiqhest and Best Use cont'd reccgniz~ water and soil contamination would Electronic likely present a development problem. City and state officials, ler~rs, contractors, and labor unions would be reticent to allow ~_~u~ction on the subject property 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 lettel~' are pro~ by the Minnesota not the responsibility of the subject owner. After the subject property owner voluntarily participates in a program to achieve a "no action" letter, does mo~ths, satisfacto~ results about the level a of a~kieves of his c~n property's contamination, ar~ pays for MPCA staff time, a letter of "no action" is likely to result. The highest and best use of the site, as if vacant, is therefore to prooeed in coo~_ration with the Minnesota Pollution Control Az3ency and obtain either a letter of closure or a letter of no action while sim/ltaneously continuir~ the present course of remediation and be~innin~ develc~ with an industrial Mamff~ will 1~ ~ a "No 3~£on" lo~t.o.r t:~ ~ g ~cati.r~ that: ie i~ not: ~ible for t.~ con~t£on on it'~ $±t.~. i ~ne land is improved with a one story masonry and steel fr~m~ industrial bu~ldir~ and mcclest bituminous and crushed rock paving. I Size ~he subject contains (100' x 60') + (99' x 76') = 13,524 square feet of I 9£oss building area. 1,200 square feet is fiDi~ office. The front half of the buildin~ was built in 1961. The rear half of the building was added a few years later. Foundation The buildir~ rests on a concrete slab and concrete blocks. The building is framed with concrete blocks, steel po~ts and _h~m. l c?_rior alls The walls of the subject are paint_~ cor~x~te blocks. They appear to be in average condition. Sc~e cracks in the morea~ were noticed where the newer ~(tion joim~ the original build(rig, and in a few additional places. Sc~e paint w-us also chip~in~ off tb~ walls. This is typical. %~e front of the subject is faced with brick. Roof The roof is that of a typical industrial building. It is framed with steel open web joists, below co--ted me~a] decking, rigid insulation, and a ccverir~ of built up as~t and gravel. It is in average cor~lition. There are six skylights in the r~ar ~tion of the building. It was repor~4 that sc~e leaking occurs around these. The roof was repaired two y~a~s ago. It has water runoff down spouts. Floor~ Vinyl tile cover~ the floor in the finished office area. ~ne tile is in average condition. The floor in the shop areas behind the office are s~a] ed concrete in average to good condition. 10 In~erior Walls ~]%e interior walls in the front office area of the subject are finished with wood panelir~. ~he interior walls in the shop ar~a are painted concrete block. The interior walls of the subject are in average to good cc~tion. Ceilir~s ~he ceiling in the front office area of the subject is dropped aooustical tiles with recessed fluorescent lighting in average oomdition. The ceiling of tb~ shop in the original buildir~ has a clear span height of about 12 feet. Ceilir~ height is about 16 feet in the r~=wer ~itic~%. Fluorescent light fixtures, b~ting and cooling units, air ducts, air filters, electrical buss ~he front entry door is plate glass with metal frame. Interior office doors are hollow core wood. The office/shop entry door is metro! with a wire glass wirmk~. There is omc metal service door at th~ rear of t_he shop, ar~ one over~, metal panel garage door. The garage door clearance is about 14'. Exterior a~ int~ior doors are in aver~ to good condition. W~ on the front of t_he bHlding are mmtal frame slid-rs. Wir~ows ar~ the shop area are standard industrial sash type with single pane glass and ~lltiple panels. Their insulation capacity is poor. ~hey were ~m]ed with a translucent plastic m~. Wir~ of the subject are standard for ~ial buildir~s, arm1 are in average co~zlition. Electrical 1,200 amp service is provided to the building. Service am~ d~cribution is average to good. 11 Plumbinq There is a two fixture fj_n~ washro~ in the office area, and a four fixture w-dshro~ open to the shop area. ~he fixtures are in average oondition and function adequately. Heatir~/Cool ir~ suspended fr~ the ceiling in the shop. ~here are four hot air blower units, and three air conditioner units. Cc~p~~ for the short duct air conditioners are found on the roof. Seven ceilir~ far~ help to distr~ the air. A combination heat and air conditioning unit serves the offices. ~ne equilm~_nt is in average condition. Sixty feet of electrical buss ~t, about 100 feet of light weight rail for crane operation, a~d three electronic air filters are suspended fr~ the Mi~:~_ll~n~:~u~ d Condition Any property such as milling machines or lathes are personal property ar~ are not appraised. The building is in slightly above average overall On-Site Improvements An as~t paved parkin~ area lies in the front of the building. It measures 42' x 90'. It is in fair to poor oondition. Class five gr~vel, sand ar~ crushed rock cover the ground on the east side and rear of the buildir~. ~ere are two high intensity parkir~ lights anchored to a telephone pole at the rear of the lot. One of these illuminates the parkir~ area at the rear of the building. Az~=]] Enqin~_ ~rir~ & Mar~f~ pays for its use, but these lights are the property of NSP. The three approa~ to value indicat~d the foll~wir~: Replacement Co~t ~~ $332,700 ~t ~ ~~ $306,3~ ~t ~ ~ys~ of ~ ~ ~ ~j~ p~~. ~ ~ ~ d~ ~ ~ ~ a~li~le ~ ~ ~ ~ ~i~ ~ of ~ ~t for ~l~s of ~ ~j~ ~. 25 y~ old 1~ ~ ~j~. ~he Market Data Approach best illustra~ the actions of typical buyers ar~ sellers of pruperties of the subject type. Several good quality, nearby co,parables wer~ found and cc~ to the subject. ~ ~ older sales. for the subjects market value. For this value conclusio~ estimate without a pollution stigma mo~t em~is is place~ upon tbm fir~s of the Market Data Approach with good but (km~.lusic~ of value without poLlutic~ stigma $313,000 Pollutic~ Stiq~a. of $14,500 a~d $14,700 ~ $ 29,700 Value EsT~mmte as Allegedly Polluted $283,300 Pollution Stiqma ~he site is strickan with the stigma of pollution because of its proximity to pollut~9 Electronic Industries. As a result of that stigma the subject present occupant Frank Pick~lm~n and ~ Er~i~eezir~ & F~aLfm~ur~q. Frank Piak~-lm~n, a possible buyer of the real estate relays the typical concerns of a prudent and knowled~le buyer of a oog~m{~at~ site. As a resallt of the pollution stigma, a fxfo/re cmaler will have problems marketing and mortqaging the property. Cr~atir~ a "no action" letter for the subject is the equivalent of the MPCA sayin~ that a future owner (or the present one) or buyer is not a contributir~ polluter and is not responsible for any pollution found on the proE~rty. These types of. letters are written by the MPCA when contamination is cleaned up or is in the process of being cleaned up and is not the prubl~ of the current property owner. action" letters are pro~_ ~. The petroleum tank spills area produces many of these lettez~ but they are primarily for service station proE~rties where prope~ is pollut~4 by a type of pollution other than that ~ gasoline ar~ diesel tank spills. The ~ter and Solid Waste Division handles this kind of contamination and the~y have report~ as of the date of this app~isal a listing of 25 sites in the metropolitan area where "no action" letters have been written in the past four y~rs. Five of these sites are known or controlled by a, public entity and the balance were repo~y sold or about to be sold on the open market and the "no action" letter was requested so that the sale could occur. ~ of these files were ewam(~d in sc~e detail in the MPCA offices in St. Paul, Minnesota. A followir~ listin~ sho~s the MPCA file number, a property name and ~ress, the generalized nature of the pollution affecting or alleged to affect these pro~.rties, the time period that the parties sought a "no action" letter in deal~ with the MPCA and the approximate number of months that were involved in that process. The average amount of time involved with the MPCA in obtai~ a "no action" letter was Pollution Stigma Oont'd 8.85 months or approximately 9 months. ~he various parties probably spent another 1 to 2 mon__ ths prior to dealing with the MPCA in oonsulting a~i developirg their strategy for dealin~ with the contamination problem. Sites adjacent to large well known polluters like the Riley Tar site in St. ~ Park had the shortest ~i~ periods. The prooess for getting a "no action" letter for pruperties adjacent to a ~ k~own polluter that has been well identified by the MPCA is a rather short one. Even easily cleaned problems like the excavation of a old septic tank for Precision Electric in Plymouth or the excavation of allegedly less than a gallon of trichloroethylene spilled at Multiteoh's facility in New Brighton took 16 and 9 months respectively. These minor contamination problems should equate very well to the subjects. M CA Prq -- 7 Time eriod File # Name & Address Pollution "No Action I~tt~' Months 1190 Dixie Chemical Co. Nitrates & sulfites 6-88 to 8-88 2 E. Corner Hwy 55 at f~--,, refiner to south Pine Bend Poad, Rosemount 1270 c~ ~h~t ~h~t & Forbes C]%loroethelene 8-88 to 6-89 10 1151 Vernon ~r., in old septic tar~ Golden Valley 1280 Precision Electric Ch~-c~e 7-88 to 11-89 16 615 Co. Bd. 18, in old septic tank Ply x h 1540 F~Lltitech Trichloroethylene 1-89 to 10-89 9 82 2nd Ave. SE., f~ small spill 37 Pollution Stiqma Cont'd MPCA Property T~w~ Period Seekin~ m File # Name & Address Pollution '9~o Action Letter~' Months 1450 Terry Bro~. (kalst. Reilly Tar 3-89 to 3-89 1 m 3320 P~lic Ave. con~tion m 1690 Jc~n Hancock Pr~. Benzene etc. ~ adj. 3-89 to 8-89 5 2265-85 W. CD. Rd. C, Williams & Amaco ~ I ' R~seville farms m 1740 Rosemount Die C~sting Monitorin~ well 3-89 to 12-89 9 (Spectro Alloy's) contaminat~ m 13220 Doyle Path E. I 1810 Androc Products 1974 fire Chemic1 2-86 to 9-87 19 7301 W. Tak~ Street spill 1920 Allianz Investment Soil piles contaminated 11-89 to 10-90 11 1000 B1. Valley Pk.~r. 2040 Midwest Bank Distrb. RR & ~any polluters 10-89 to 6-90 8 1060 33rd Ave. SE, nearby 1820 Holiday Station Store Buried a~Dh~lt c~i~--~ls 9-89 to 12-89 3 SWC Broadway & 12th Sro Forest Lake, Mn Pollution Stiqma .Cont'd MPCA Property Time Period Seeking File, ~ Name & N~. ~ess Pollution '~o Action Lette~' ~nths 2450 Hiawatha Metal Craft Trichloroethylene 7-90 to 6-91 11 2631 31st Ave. So. 1860 Caliber Development Oil spill, land farm 10-89 to 11-90 11 c.2660 Fernbrook ?a~e clear~p ~be above described study i~licates that the ~st/r~ period for a like the subject that is alleged to be contaminat~_ will be ~ by approximately 10 months. ~he normal marketing period for a pro~ like the subject wuuld be frcm 12 to 18 months and that process wuuld to a certain deqree be able to overlap with a oertain amount of the ~ required to obta/n a "no action" letter or equivalent. It is therefore omlcluded that th~ alleged pollution of the ~ubject prc~ will cause a six month increase in the normal marketing period by itself. that it creates, the subject pro~ ~ will be respom~ible for the ousts to obta/n the "no action" letter or its equivalent. For the subject property, those c=~ts are partially known and can be anticipated as follows: 1) Owners time spent dealir~ with alleged pollution prubl~ the testin~ and the process $ 3,000 2) Owners oonsult/r~ attorney to supervise MPCA process $ 5,500 3) Owners finm~i~ conmn~/~~ cha~es $ 3,000 4) MPCA staff charges for producir~ "no action" letter or equivalent $ 3,000 Total Anticipated Owners Costs $14,500 39 S~4ARY AND ~!tcIIC~I CG~T'D Pollution Stiqma Cont'd Owners charges are ex[~ to total approximately c~e week of time or 40 hours at, say, $75.00 per hour equals $3,000.00. The time will be spread ~ver a series of weeks and months am~ not conoentrated. Legal fees are a rough approximation of 35 to 40 hours at, say, $150.00 per hour for the supervision of the process and dealing with the MPCA. At~ wrote most of the letters in the MPCA files for pro~ owners. ~ of the "no action" letter efforts involved a potential sale where bankers and appr~i~!s were re~,ired. Production of an appraisal doalirg with pollution on the subject pr~ is ex~ to cost at least another $3,000. Sometimes k~yers pay for these types of financial ir~-tlnm~nts ar~ require the seller to shar~ the costs. MPCA charges will be levied for staff time spent producirg the "no action" letter. A revie~ of the files imalcates that those charges for a relatively small effort required like the subject should be only a fe~ thousand dollars and $3,000 is a best estimate. %~en ~unicipalities like St. Im, i~ Park or Minneapolis deal with the MPCA, the prooess is smoother and MPCA staff d~rges are lower. That is not the case with the subject prop~ at this point. th~ pollution stigma is estimated at $313,000 on a previous page. ~e present value of $313,000 not received for 6 months at a current estimated interest rate of 10% is $297,797, indicat/rg a lo~s in market value of $15,203, say $15,200. ~he final value estimate on the subject property as it is allegedly pollue~ is estimated as foll~s: Est- i mat,:,,-] value without pollution stigma $313,000 Less pollution stigma- $14,500 ~ $15,200 totals $ 29,700 Final Value Estimate as Allegedly Polluted $283,300 76' SHOP 99 ' 199' 16' o NORTH h ~ o ± I 00' SHOP 42 ND AVENUE NORTH ~Bu~ing Sketch [" I Photograph Views View East on 42nd Photograph Views ] Agenda #3 Synopsis February 12, 1996 NEW HOPE EDA MEETING UNOFFICIAL SYNOPSIS 1. Call to Order 9:18 p.m. 2. Roll Call Present: Erickson, Enck, Otten Absent: Norby, Wehling Staff Present: Sondrall, Hanson, Donahue, Leone, McDonald 3. Approval of Minutes of January 22, 1996 Otten/Enck 4. Discussion Regarding Property at 7500 42nd Avenue Directed staff (Improvement Project No. 474) to proceed with negotiations 5. Adjournment 9:20 p.m. Enck/Otten