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021092 EDA
'-- OFFICIAL FILE COPY CITY OF NEW HOPE EDAAGE#§A EDA Regular Meeting ~2 Agenda #2 President Edward J. Erickson Commissioner W. Peter Enck Commissioner Gary L'Herault Commissioner Gerald Otten Commissioner Narky Wfllfamson February 10, 1992 2. 3. 4. St Call to Order Roll Call Approval of Minutes of January 13, 1992 Discussion Regarding Acquisition of Foremost, Inc. Property, 7528 42nd Avenue North, Improvement .Project No. 474 Adjournment Approved EDA Minutes Meeting #1 CITY OF NEW HOPE 4401Xylon Avenue North Hennepin County, Minnesota 55428 January 13, 1992 CALL TO ORDER ROLL CALL APPROVE MXNUTES CXTY-OWNED PROPERTY AT 7305 42ND AVE. N. Item 4 President Erickson called the meeting of the Economic Development Authority to order at 7:26 p.m. Present: Erickson, L'Herault, Otten, Enck, Williamson Motion was made by Commissioner Enck, seconded by Commissioner L'Herault, to approve the EDA minutes of December 23, 1991. All present voted in favor. Motion carried. President Erickson introduced for discussion Item 4, Discussion Regarding City-Owned Property at 7305 42nd Avenue North. Mr. Donahue reported that the City has received an "offer to negotiate" from Valvoline Rapid Oil, Inc. for the property at 7305 42nd Avenue North. He stated the property is located adjacent to All Star Sports. He stated staff is requesting direction from the EDA. President Erickson suggested sending a formal letter to All Star Sports explaining the situation at this particular time and encouraging them to respond if they are plann~-ng on doing something to the property so that the City may respond to the current offer from Rapid Oil. Commissioner L'Herault conveyed the need for a new appraisal on the property. He also felt All Star Sports should be made aware that the City is seriously considering Rapid Oil Inc.'s offer. Commissioner Enck commented that he believes "informal" discussions with All Star Sports should be sufficient incentive for the owner to act on the property if he has any interest in the property. Commissioner Enck agreed with President Erickson's suggestion to formally correspond to All Star Sports. He stated the dialogue should also be opened with the petitioner for the purchase to determine whether he is interested in purchasing the property for an amount near the last appraisal. He stated Rapid Oil may be wanting to purchase it for an amount totally unacceptable to the EDA New Hope EDA Page I January 13, 1992 and therefore it would not be necessary expend monies in obtaining a new appraisal. The EDA briefly discussed the project timetable. Mr. Donahue stated it could probably be developed sometime this summer. He commented on the easement across the property which may complicate the issue. President Erickson stated he felt it should be left up to staff as to when an appraisal should be obtained. He noted it will probably become necessary at some point in time. Mr. Donahue stated he will inquire of Rapid Oil's proposed. offer. He asked the EDA whether it would be necessary to come back for authorization of an appraisal if staff feels the offer is not in line. President Erickson noted that the comprehensive plan adopted for 42nd Avenue may have to be amended if this type of business is allowed. Commissioner Williamson asked for a brief overview of the proposal submitted by Rapid Oil, Inc. Mr. Donahue stated Valvoline Rapid Oil Change, Inc. would like to build a Rapid Oil Change facility which primarily handles oil changes, lube changes, cooling systems, brake fluids, and other items of that nature. He stated there would be no gasoline or mechanical work involved; it would strictly be the "Rapid Oil Change" operation. He stated the facility would be similar to the one on Hwy. 81 and Bass Lake-Road located in Crystal. Commissioner Williamson felt it will be difficult to negotiate a fair purchase price utilizing a four-year old appraisal. Commissioner Otten asked whether further studies should be undertaken as to the options for uses on that piece of property. Mr. Donahue stated a full-scale marketing study could be obtained, but he felt it would be counterproductive given the studies which have been done to date. He stated the original comprehensive plan identified commercial use as a first choice as opposed to an automobile-oriented use. He stated there has not been much interest in the past several years. He noted the property is small in size {a 1/2 acre). President Erickson informed the EDA that he has suggested New Hope EDA Page 2 January 13, t992 to Colour Lab~that he~work~wi~h the owner of All Star Sports and consider the possibility of having All Star Sports build an addition on their building and allow Colour Lab to lease from All Star Sports. He noted Colour Lab will eventually being moving out of the Autohaus building. He Stated he believes that would be an ideal situation. Mr. Donahue stated he has discussed that option and it was felt to be unworkable. Mr. Donahue stated he will write a letter to All Star Sports indicating that Valvoline Rapid Oil Change, Inc. has contacted the City and is interested in acquiring the vacantcity-owned parcel at 7305 42nd Avenue North. He indicated that he will ask All Star Sports whether they still have intentions to expand their building onto the adjacent vacant property; and if not, the EDA is willing to give serious consideration to the proposal by Valvoline Rapid Oil. He will convey that the EDA wishes to see the property developed within the next year. Mr. Donahue stated staff will begin discussions with Rapid Oil to inquire regarding their offer. He indicated he will wait for Rapid Oil's offer to determine the necessity of a new appraisal. Commissioner Enck noted if the proposal is out of line he feels an appraisal will not be necessary as the EDA can take that to mean Rapid Oil is only trying to get what appears to have been a distressed piece of property for a low price. He commented that if the offer is close to what the EDA would be willing to sell the property for, then an appraisal would be beneficial to determine the current market value. He indicated the EDA could provide authorization at this time for staff to obtain the appraisal based on whether Rapid Oil makes a reasonable offer. President Erickson commented that the land is not a distressed piece of property. Commissioner Enck noted that Rapid Oil may believe the property is distressed and that the City is anxious to sell it. He stated it would not be cost effective to pay for an appraisal now and then have to do so again in a year or two when another offer may arise. President Erickson directed staff to begin an aggressive marketing program in the spring for property on the north side of 42nd Avenue to see if there is any interest. New Hope EDA Page 3 January 13, 1992 AD,~OURN#ENT Mr. Donahue reported that he has met with PRISM since their request to the EDA regarding the vacant city-owned property (north side of 42nd Avenue). He indicated they are continuing their efforts and their latest approach was to contact a number of non-profit organizations to explore the construction of a joint facility. He commented that if they did build at that site it is the City Attorney's opinion that they would probably be required to pay property tax. Mayor Erickson noted that PRISM has requested that the City donate very valuable property. Mr. Donahue stated the City paid half a million dollars for the mentioned parcels. Mayor Erickson stated he could not support asking the taxpayers to donate half a million dollars to PRISM unless a worthwhile program could be developed which would benefit the entire City. Commissioner Enck suggested that marketing also be conducted for the Ardell property. Motion made by Commissioner L'Herault, seconded by Commissioner Otten, to adjourn the EDA meeting as there was no further business to come before the Council. All present voted in favor. The New Hope EDA adjourned at 7:37 p.m. Respectfully submitted, Valerie Leone City Clerk New Hope EDA Page 4 January 13, lg92 REQUEST FOR ACTION Origm~tng Department Approved ~r Agenda Agenda Se~ion EDA Manager 2-10-92 By Kirk McDonald ~ Item No. :Management Assistant By:. 4 '/ DISCUSSION REGARDING ACQUISITION OF FOREMOST, INC. PROPERTY, 7528 -I 42ND AVENUE NORTH, IMPROVEMENT PROJECT NO. 474 Enclosed are materials to facilitate/continue the discussion regarding the possible acquisition of the Foremost, Inc. property at 7528 42nd Avenue North, Improvement Project No. 474. Subsequent to the December 16, 1991, Council worksession on the topic, staff summarizedthe issues that needed to be addressed and the questions that needed to be answered. Staff will be presenting findings on these issues and questions at the February 10, 1992 EDA meeting. Mr. Allan Fredendall, owner of Foremost, Inc., will be present at the meeting. MOTION BY SECOND BY Review: Adrninistra~on: F~ance: RFA-O01 ~ CITY OF NEW HOPE MEMORANDUM DATE: January 6, 1992 TO: Dan Donahue, City Manager Steve Sondrall, City Attorney FROM: Kirk McDonald, Management Assistant/Community Development Coordinator SUBJECT: &CQUZSZTZON OP POR~MOST, INC. PROPERTY, ?S28 42ND&VENUE NORTH (ZMPROV~M~ PROJECT ~474) ® Determine demolition costs for all three buildings (Foremost, Ardell, and Electronic Industries). The cost to demolish the buildings is currently not included anywhere in the purchase price .... should it be? Would the City have to pay relocation expenses for Foremost and Ardell? If so, what are the estimated relocation expenses for each of the businesses? What about Electronic Industries? Could ~he City require Foremost and/or Ardell to waive relocation costs and would the waiver be effective if the land is subject to a development? Instead of an outright negotiated purchase of the property would it be wiser for the City to proceed in a condemnation action, due to a new law which would eliminate the City's liability for acquiring potentially contaminated property? Who exactly would be responsible for cleaning up the Foremost, Electronic Industries and Ardell properties? If EleCtronic Industries has bean identified as the "responsible party", what is the guarantee ~hat ~hey will clean the property up? In the event E.I. would not clean up the property, would the State assume responsibility? Does the City have any exposure for the clean-up? What if ~he City is not satisfied with the rate at which E.I. is cleaning up~ha property (what if it takes another 10 years with the existing clean-up system)? Is there anything the City can do to accelerate the clean-up? What is the status of a "no action" letter being issued on the Foremost property by the MPCA. Does the federal government have any involvement (Super Fund)? After the Foremost building is vacant could the building be utilized for police or fire training purposes to reduce the cost of demolition and/or be used as a tax write-off (similar to Autohaus) and is there some way this cost savings could be incorporated into the purchase price? 9. Obtain Foremost Soils Report completed by Delta Engineering. 10. Obtain letters from bank (on bank letterhead) regarding Foremost's outstanding mortgage amounts (is it the original mortgage or have there been increases in it?). 11. Determine if 42nd Avenue Redevelopment Plan qualifies as "a development" under thenew law, which would eliminate the City's liability for any contamination on the properties. 12. If the city proceeds with the purchase of the Foremost property, will not a precedent have been set for property values on 42nd Avenue and what impact will that have on the acquisition of the Ardell property? 13. What if the City waits a year before condemning/acquiring the Foremost property...what is the difference in the two values (present and future)? 14. If Foremost Inc. is experiencing financial problems at this point, what is the benefit to the City for getting involved now instead of waiting? 15. The existing proposal between the City and Foremost includes a "payback" to the City if Foremost is successful in their lawsuit against E.I. Should this continue to be a part of the deal or should a price be negotiated excluding the lawsuit, with Foremost pursuing the lawsuit/retaining any awards on their own? 16. Why is the City allowing Foremost to remain in the building for 2 years "rent free" and what would be the taxing situation on the property .... owned by the City, but rented to a private business? 17. What would be the value in the future of the combined 3 parcels with a new development vs. the current combined value of the 3 separate parcels? What would be the impact on the TIF district...any new increment captured or would there be a loss? Please let me know if you think this list covers the issues adequatly or if others need to be added. I will forward this list to the City Attorney along with a draft of the work session minutes and we will proceed to work on answering all of the questions/issues. CITY OF NEW HOPE MEMORANDUM DATE: TO: FROM: SUBJECT: February 7, 1992 Dan Donahue, City Manager Kirk McDonald, Management Assistant/Community Development Coordinator ISSUES REGARDING POSSIBLE ACQUISITION OF FOREMOST, INC. PROPERTY, 7528 42NDAVENUENORTH (IMPRO~PROJECT ~474) This memorandum is intended to address some of the issues and answer some of the questions raised at the December 16, 1991, City Council work session regarding the possible acquisition/redevelopment of the Foremost, Inc. property located at 7528 42nd Avenue North in New Hope. As you are aware, a "summary of issues" was prepared after the work session to try to identify the specific items/concerns that needed to be addressed (attached). Steve and I split the issues between us and this report is intended to address the topics which I researched. 1. Obtain Foremost Soils Report completed by Delta Engineering Attached to this report are excerpts of the Site Investigation Report on the Foremost, Inc. property prepared by Delta Environ- mental Consultants, Inc. dated July 25, 1991. The City paid for two-thirds of the cost of this study to determine if any soil or ground water contamination existed on the site, due to the City's interest in acquiring the property for redevelopment. The objective of the site investigation, as per the report, was to evaluate the potential environmental impacts the adjacent Electronic Industries, Inc. property and Foremost, Inc. may have had on the Foremost site due to past/present industrial activities. Four soil borings were completed as monitoring wells, soil samples from the soil borings were analyzed, groundwater samples from the monitoring wells were collected and analyzed, MPCA documents of the Electronic Industries site were reviewed, and Foremost site activities were discussed with Foremost representatives. In 1983 a complaint was received by the MPCA that the on-site underground wastewater settling tank had corroded at Electronic Industries, where a release of wastewater and solvents had occurred to surrounding soils and groundwater. A groundwater extraction and treatment system was installed in 1986 and recovery efforts are ongoing. Electronic Industries was identified bytheMPCA as a responsible party for the contamina- tion found at the Electronic Industries site and the site is listed as a State Super Fund site by the MPCA. -2- The report concludes that the low levels of compounds detected in the soil samples appear to be unrelated to the Foremost site and do not appear to be related to any identifiable source. The ground- water contamination on the east side of the property (adjacent to Electronic Industries) is a result of the solvent releases/spill from the Electronic Industries site. Obtain letters from bank regarding Foremost's outstanding mortgage amounts The statement from Norwest Bank is attached to this report and shows an outstanding first mortgage of $444,872.50. There is a second mortgage in the amount of $35,020.95 (no statement was obtained for the second mortgage). These amounts are very close to those quoted in the December 9, 1991, EDA packet memo. Determine demolition costs for all three buildings (Foremost, Ardell, and Electronic Industries) - is this cost included in the purchase price? In the February 21, 1991, report from Northwest Associated Consultants, the Planning Consultant had indicated that "according to a qualified demolition service estimator, demolition costs for 1960's type industrial buildings, such as those under study, could be expected to cost approximately 25 cents per cubic foot. Utilizing this standard, anticipated: Unit Total Structure Cubic Feet Cost Cost Foremost Electronic Industries Ardell Engineering/Reger Grinding TOTAL DEMOLITION COSTS the following demolition costs may be 518,400 .25/CF $129,600 (21,600 SF x 24') 230,400 .25/CF 57,600 ( 9,600 SF x 24') 196,000 .25/CF 49,000 (14,000 SF x 14') $236,000 NOTE: Cubic foot allotments are not to be considered exacting or precise measurements and may be subject to change. As shown above, demolition ofthe Foremost, Electronic Industries, and Ardell buildings can be expected to cost approximately $236.200. However, subsequent to the Planner's report, the Building Official contacted Kraus-Anderson Construction Company and requested a "ballpark" estimate to demolish the three buildings. In a letter submitted to the City on March 8, 1991 (attached), Kraus-Anderson indicated that their estimates were as follows: Foremost (21,730 sf) Electronic Industries (9,600 sf) Ardell Engineering (13,524 sf) Total of (3) buildings $45.000.00 21,000.00 29,000.00 $95,000.00 Se -3- Thus, the cost to demolish the buildings is considerably less than originally estimated. It should be pointed out, however, that these costs do not include any special disposal costs if portions of a building's structural components have been contaminated (Electronic Industries). The estimated cost to demolish the Foremost building is $45,000. In regards to the question "Is this cost included in the purchase price?", it is the staffs' and Attorney's opinion that yes, this cost has been taken into account and included in the purchase price and the City would be responsible for demolition. After the Foremost building is vacant could the building be utilized for police or fire training purposes to reduce the cost of demolition and/or be used as a tax write-off (similar to Autohaus) and is there some way this cost savings could be incorporated into the purchase price? After discussing this issue with the City Attorney, the basic answers is no, the City could not use the building for training purposes and receive a tax write-off. In the Autohaus situation the owner of the building was a private party who donated the building to the City for training purposes and received a tax write-off for the donation. In the Foremost case the City would be the owner of the building and if the City used the building for training purposes and then demolished the building the Attorney does not feel we could claim a tax write-off (the City cannot make a donation to itself). The City would realize some benefit or a cost savings simply by having the building available for training purposes once it is vacant and prior to demolition. The cost savings of having a building available for training purposes is difficult to measure. The cost of demolition might also be reduced somewhat if the Fire and Police Departments utilized the building for training purposes (a test burn or bulldozing several walls), but it is doubtful that the reduction would be substantial). What would be the value in the future of the combined 3 parcels with a new development vs the current combined value of the 3 separate parcels? What would be the impact onthe TIF district... any new increment captured or would there be a loss? The 1992 Tax Book lists the following values and taxes for the three properties: Foremost, Inc. 7528 42nd Avenue 17-118-21-22-0008 Electronic Ind. 7516 42nd Avenue 17-118-21-22-0007 Ardell Engineering 7500 42nd Avenue 17-118-21-22-0006 TAXES LAND BUILDING TOTAL GENERATED $85,800 $408,200 $494,000 $27,266.80* $71,800 $200.600 $272,400 $13.970.16, $75,400 $238,200 $313,600 $16,261.54, $57,489.50* *includes assessments Be The 1992 Tax Book shows the same land/building values for Foremost and Ardell, but the value for Electronic Industries dropped due to a reduction in the building value from $200,000 to $1,000 (land remains constant) for a total value of $72,800. In addition, tax rates on commercial/industrial dropped slightly. listed below: Foremost, Inc. Electronic Industries Ardell Engineering The '92 total value and taxes generated are Total Market Taxed Value $494,000 $ 72,800 $313,600 Total Generated $26,664.00 $ 2,758.00 $16,190.00 $45,612.00 C. The March 1991 Planner's Report also addressed this issue based on the development of a shopping center on the site: The redevelopment of the three industrial sites will support a retail shopping center of approximately 15,250 square feet. Using the following assumption, the new shopping center would generate approximately $41,180 annually in taxes. Shopping Center Size: 15,250 sq. ft. Construction Value: Shell construction $35.00/sq.ft. Tenant improvement 15.00/sq.ft. Total Construction Cost $50.00/sq.ft. $762,500.00 Tax Capacity 36,902.00 New Hope Tax Rate 111.594 Estimated Tax Generation $ 41,180.00 Estimated Tax Generation Per Sq. Ft. $2.70 The three industrial sites are currently generating an accumulative tax total of approximately $47,250. This frozen base generates more revenues that the projected taxes. In this case, redevelopment must rely on funds other than TIF funds.generated from the project. The site is located in New Hope's Tax Increment District #8. As such, surplus TIF revenue could be used to finance the project and cover the deficit in the tax question. All three scenarios above indicate that the three properties are currently generating a tax base that would be difficult to exceed even with a new development, which basically means no new increment would be generated unless the assessor reappraised all three properties (based on groundwater contamination). The reappraisal could lower the frozen base to allow a greater tax increment generation. The overall 42nd Avenue Tax Increment District is healthy and excess revenues from the district could be used to off- set the zero (0) increment generated with the redevelopment of these three properties. Why is the city allowing Foremost to remain in the building for 2 years "rent free" and what would bethe taxing situation onthe property...owned by the City, but rented to a private business? According to Glen Busitsky, Senior Appraiser at Hennepin County, a property owned by an exempt entity (the City) can only be considered tax exempt if the property is used for exempt purposes· In other words, if the property was owned by the City but utilized by a private industry for production purposes, it would not be considered an exempt use and taxes would still be due. There is an exception for partial year rentals where 30% of the rent could be paid in lieu of taxes· The City would be allowing Foremost to remain in the building for 2 years to gain equity and to find a new location, salvage equipment from the building, and relocate. The taxes payable would have to be passed through to Foremost. What if the City waits a year before condemning/acquiring the Foremost property...what is the difference in the two values (present and future)? Glen Busitzky from Hennepin County stated that '92 assessed market values (payable '93) for commercial/industrial properties may be reduced anywhere from 3%-4-1/2%, which may make the future value low,r than the present. However, it is important to remember that the two current appraisals on the property are very different (City appraisal = $475,000 or $433,000/impaired value, and Foremost appraisal = $660,000 or $405,000/impaired value) and the current preliminary offer of $585,000 is a negotiation between those two appraisals. If the City waits a year before acquiring the property 'the preliminary offer may or may not be acceptable to Foremost. If Foremost Inc. is experiencing financial problems at this point, what is the benefit to the City for getting involved now instead of waiting? According to the owner of Foremost they are not experiencing financial problems and business is healthy, although they did experience a slowdown earlier in 1991·. As I understand it, their problems with the bank are not due to business problems, they are due to changes being made at Norwest Bank and how the bank deals with its customers. If the City has the impression that Foremost is going to cease operating, I don't think that is an accurate impression, thus there is no advantage/benefit for the City to wait. The owner of Foremost can speak to this issue better than staff. If the Council wants assurance that this is a healthy, viable business, perhaps the City should request a review of financial records. Mr. Fredendall has indicated to staff that he has every intention of remaining in business and wants to relocate within New Hope. -6- 11. 9. Who exactly would be responsible for cleaning up the Foremost, Electronic Industries and Ardell properties? If Electronic Industries has been identified as the "responsible party", what is the guarantee that they will clean up the property? In the event E.I. would not clean up the property, would the State assume responsibility? Does the City have any exposure for the cleanup? The City Attorney answers this question in his letter (attached), however, I contact Ken Haberman of Site Assessment at MPCA to find out if his answer would be the same as Steve's response. It was. Electronic Industries has been identified as the "responsible party" for contamination, but if the City knows the property is contaminated and proceeds to purchase, the City could be named as a responsible party for cleanup if Electronic Industries goes bankrupt. The City would then be responsible for cleanup costs up to $400,000, then the State would assume responsibility. 10. What if the City is not satisfied with the rate at which Elec- tronic Industries. is cleaning up the property (what if it takes another ten years with the existing cleanup system)? Is there anything the city can do to accelerate the cleanup? According to the MPCA, as long as Electronic Industries has submitted a cleanup plan to the PCA (which they have) and the PCA has accepted the plan (which they have) there is nothing the City can do to speed up the process unless the City is willing to contribute financially to accelerate the cleanup. As you are aware, the MPCA recently wrote Electronic Industries the enclosed letter requesting that they incorporate additional technologies/methods into their cleanup plan to accelerate the process. What is the status of a "no-action" letter being issued on the Foremost property by the MPCA? Ken Haberman of the MPCA said that the status of the "no-action" letter is that no party has yet requested a "no action" letter for the Foremost property. A "no action" letter can be requested by any voluntary party willing to investigate and pay for the cleanup of the site. The process is initiated through a request form and could be started by Foremost, the City, or any one else willing to perform the work. If the City requested the "no action" letter we would be responsible for the cleanup and would have to recover our costs either through a lawsuit against Electronic Industries or by deducting the cost of cleanup from the purchase price of the property. Please refer to Steve Sondrall's letter (attached) for the answers to the remaining questions. Attachments: Sondrall 2/6/92 Letter Foremost Soils Report Mortgage Amount Demolition Quote MPCA Letter RE: E.I. Cleanup February e, 1993 Hr. Ktrk NcOonald Hanagemen~ Asste~an~ City of New Hope 4401Xylon Avenue North New Hope~ NN 55428 RE: Forsmoe~ Acquisition Zseuee Our File No. 99.11090 Dear Kirk: Thi. le&~er ia in follow up ~o your January O, 1992 memo· This letter will answer the followin9 questions posed by your memo: What' ts th® Ctty'e obligation for relocation costs euf?ersd by Foremoe~ &nd Ardel if their respective properties ere taken by condemnation? Can the City requlre that relocation cost8 be waived as a condition of a "friendly" condemnation? What te ~he Ct~y'8 financial exposure for eot1 and ground water contaatnatton clean up costa ~nd ta our exposure affected by ~he manner in which we aGqut~e ~he properby, t.o. by condemnation or d~rect purchase? 4. $ttould wl I~e involved in Foremoe='e lawsuit against El~otronto ~ndue~rtee, either directly or indirectly? 5. X~: we Day these properties for demolition and redevelopmen~ will wa be ee~ng a detrimental preGedent for lan~ values that could ~e used against ua ~n other condemnation lawsutte such as the Paro'8 Pub action? Hr, Kirk HcOon&ld February 6, 1992 ~.e_~_t~_ojq_.[, What ie the City'e obligation for relocation are taken by condemnotton? ~!.,D.D~~. t117.52 requlres tho& cna condemning au&hority shall provide asstat~nce, servtcea~ payments and benefits provided under displaced businesses in a condemnation action aa a cos% of ~cqutsitton. The Act provides for two alternative me&hods of paymen~ at the prOperty owner'e discretion: Payment of ac&ual relocation expenses, or $20,000 payment in 1tau of ac&ua1 relocation expenses. Actual relocation expenses can exceed $20,000 if [hey are documented properly, They include such :htnge as transportation costa for reconnectton Co utilities and modifications to personal proporty or topi&cement site for reconnection touttti[ias, storage uostS,' relocation Insurance, costs for new required permlt$ or licenses, required and neceseary professional services, reiettertng of signs and replacement of stationary, actual direct loss of tangible personal property caused by the move. Thts is not an A displaced business may also be entitled to a $10,000 _ reestablishment Cee in addition ~o actual moving expenses. A reestabllshmen~ expense te a cos~ to modt~y &ne replacement locatton to accept the d~aolaced bustnese. This would include 8u(;h things aa bullatng repairs, construction or Ins%alia&ion of n~w repl~cementof c&~etlng or ne~ painting, profess(one1 services tn connecCJon~JCh leasing or buying reglacemenC site. Again, thts Therefore, it mppm&re clear that relocation costs amy be quite expenelve. %t would be impossible for me to accurately estimate the relocation expenees involved, It may be necessary ~o hire a accurate estimate could be provided. However, t~ would nob be unreasonable [o believe [ha& relocation expenees for Foremos~ and Ardel combined could be as much am $100,O00,O0. No relocation costs would be required for ~he Elec~rofltc %ndue~rtes site mtnce the property tS vacant, ~ E ~-- 6--9'2 T H U ~r. Ktrk HcDonald February 6, 1992 Pave 3 I=' . ~4 ~L~_%~qD_J[. Can tho Ctty require that relocat4on costs be waived aa a condition of a "friendly" condemnation? The answer to this 0uestion is no. ~.~.~_~3~. §117.521(3) do~s not a11o~ a waiver of relocation assistance. As a result, any waiver ob[alned t~rough a "friendly" condemnation Nould not be enforceable. The City would have to rely on ~he good faith of [he property owner [o forego hts relocation cos~e because a waiver cf ~.q,.,~.~t~ 3, Nhat is tho Ctty'e financial e~posure for so11 and ground water contaminaLton clean up costa and ia our exposure affected by ~he manner in which we acquire ~he property° i.e. by condemnation or dtrec~ purchase? ~f the City acquires the property ~hroug~ condemner, ion §1158.03(5) will con~le~ely relieve ~he City for any Gle~n up costs due to soil or ground water contamination on the atto. However, ~hie exemption ~s only applicable ti' the City acquires %he proper~y ~hrough an eminent domain action. If the property .t~ acquired by direct purchase without the use of an e~ninent domain action we could ~e exposed to cle~n up co~s if bhe primary reeponsible par%y could not pay or could not be found, Zn ~hts ca~e, ~he reslaonsible party Electronic Zndustrtes is currently remediabtng %he problem. Wa would only be responsible for clean up coats tf Electronic Endus~rtes became tn=olvan~. Under J~_qj~.~._~j~. §115B.04(4), our liability for clean up costs ~ould be limited to $400,000.00. As a result, it ~ould be prudent to tntt~a%e a condemnation for purposes of acquiring [t[le ~o insure avoidance of all liability for contamination clean up However, tf we dt~ ~ot uae condenma[Jon to ac~utre Lhe property we could a~old our obligation for reloc'atton assistance ~[. ~t%7.52 would not be applicable. This doe~ assume we would not be t,~n~ ~ederal money for' acquisition purposes. CJ[~_~~4. Should we be involved ~n Forer~)st'e law~ul~ a~a~na~ Etectronic ~nduetrfe$, either directly or indirectly?* This ia a policy quest'ion more than a legal question. My simple a~swer Je no. [ fins libble If ~ny ~b1'i¢ purpose served by involving ourselve~ In t. he For'e~s[ lawsuiL against Electronic Industries. In ray optnion i~ projec:~ an improper public appear~ce. The Cit~ should ~eve t~o ~[eke ~n ~he l~sutL by t~o pr~vace proper~y o~ners, FE~-- ~--~2 THU Mr, Kirk Mc0onald February 8, 199Z Page 4 CORE I CK $Ci N 1"1 R i~ I_ I_ ~[!.~-P.--~. If we buy ~hose propec['ies for demolition end redevelopm, n%, wtll we be setttng a detrimental precede~ fo~ l~nd values the% co~JJd be used euch es [he Paro'J Pub action? 'land valuea will be se~ in t;h~s ~r~neacC~on. Aa a r-esul~, future redevelopmen~ will not ~,r'ovide damaging evidence of high land values that could be tn[r'odUced by property owners conde~mnaCton ac~Jon8 ~uch as ~he P~ro'e Pub case, However, ! caut.~on the Council that prejudicial end ~nadmts~ib?e evidence does find tis w~y into court proceedi~gs by error and mist,S.e. There ts no ab~olut.e Guar'ant~e that this transaction will not. r'eeult In higher Chart norm~l land values pa~d by the C~t.y at some future date. ~.~].g.~j_~. Tnitiating ~e~t way to insulate ourselves from liaDi~i%¥ for contaminaLton clean up costs. No~ev®r, it do,~ expose the ~i~y for ~otentiall¥ costly reloc&tl.on If we beiieve g..lectronic Tnduatriee wtll continue to a~urno re~po~sibility for clean UP, purchasing the property directly ~rom payment for relocation expe~tsee. Tt doee, however, subj~ec[ us to will shill be exposed to clean up costa under any federal Please contact me if' you have arty further questions. Very truly youre, Steven A. Sondral! sttA cc: Dante1J...Oo~ahue SIT~ ~C. ATION RI~ORT FOREMOST, INC. NEW HOPE, MINNESOTA DELTA NO. 10-89-345 Delta Environmeatal Consultants, lac. 1801 Blghway & Suite 114 St. Paul, ~ (s~2) ~-2427 jury Lq, L~. TABLE OF CONTENTS 1.0 INTRODUCTION ............................................................. 1. I Projec~ Obje~ive ....................................................... 1 1.2 Scope of Work ......................................................... 1 2.O BACKGROUND INFORMATION ............................................... 1 2.1 Area o[ Investigation .................................................... 1 2.2 Foremost Site Background ................................................ 2 2.3 EII Site Background ..................................................... 2 3.0 PRO/ECT RESULTS ......................................................... 3 3.1 Site OeololD, ..................................... ~ ..................... 3 3.2 Site HydrogeololD, ...................................................... 3 3.3 Soil Chemistry .......................................................... 4 3.4 Water Chemistry ....................................................... 4 4.0 DISCUSSION ................................................................ 5 4.1 Soil Contamination ..................................................... 5 4.2 Ground Water Contamination ............................................. $ 5.0 SUMMARY OF GENERAL CONCLUSIONS ...................................... 6 6.0 REMARKS ................................................................. 6 7.0 REFI~RENCE ................... · ............................................ ? Figure 1 Site Location Map Figure 2 Site Map Figure 3 Cross Section A-A' Figure 4 Water Table Contour Map List of Figures AppendLx A Appendix B Appendix C Appendix D List of, Appendices Soil Boring Logs Field Methodologies Laboratory Analytical Reports EII Laboratory Analytical Report SITE I~v'EST~GATIO~ FOREMO~r, I~C, NEW HOPE, MINNESOTA DELTA NO. 10-89.3~ 1.1 P~olect Ob|ect~ ~e obj~e o~ ~e site ~~on ~ to ~[~te ~e ~tenfi~ en~en~ ~pa~ ~e adja~nt Bl~o~c Md~, ~c. (B~, p~ ~d Forem~ ~ (Forem~t), my have ~d on ~e Fo~most site d~ to p~t ~d print ~d~ a~dm. ~ ~ accomp~h~ ~u~ an ~~on o[ ~e subs~ce con--ant conditio~ g~lo~, ~d r~ of ~ ~r~inln~ to ~e Eli site. L2 Scope of Work Delta Environmental Consultants, Inc. (Delta), was authorized to conduct this investigation by Mr. William Skolnick (Foremost) on April 26, 1991. The sewices performed and/or coordinated by Delta included the following: Coordinated and oversaw subcontractor services for the advancement of four soil borings. All borings were completed as monitoring wells (May 23, 1991). Provided on-site monitoring and field screening of the soil samples collected during the advancement of the soil borings. Collected one soil sample from each of the soft borings. Subm/tted samples for laborato~ analysis of volatile organic compounds (VOCs) (May 23, 1991). Collected and analyzed ground water samples from the four site monitoring wells for VOCs (June 3, 1991). Reviewed the Minnesota Pollution Control Agency (M~CA) files and documents of the El1 site provided to Foremost by Eli and discussed Foremost site activities with Foremost representatives (Apra anU May L~I). 2.0 BACKGROUND INFORMATION 2.1 Area of Investiaation The site is located in the Northwest 1/4 of the Northwest 1/4 of Section 17, Township 118 North, Range 21 West of the 7.5 minute Osseo Quadrangle (Figure 1). The facility street address is at 7526 - 42nd Avenue North, New Hope, Minnesota. The land use around the site is comprised of industrial, small business, and residential property. The site is bound on the cast by the EH facility, on the north by a small manufacturing plant, and on the west and south by Quebec Avenue and 42nd Avenue North (Rockford Road), respectively (Figure 2). 2.2 Foremost Site Ba~und Foremost has fabricated sheet metal at this location for the past 25 years. The manufacturing process involves metal bending and joining. P.,'~sently, the following maten~ls are used to clean and prepare metal for fabrication: PF-2688 Alkaline Liquid Nos. NR1719, '/050 multipurpose lubricant and rust inhibitor, and acetone. No other solvents or chemicals are used in the fabrication process. According to Foremost representatives there is no ev/dence of any past or present below ground storage tanks at the site. 2.3 EH Site Backm'ound Eli manufactured printed circuit boards at the facility adjacent to the Foremost site (Figure 2) until the late 1980s. In September i983 a complaint was recorded by the MPCA staff that the on-site underground wastewater settling tank had corrod~L A r~lea.~ of plant wastewater, including proc~s solvents, had occurred to the surrounding soils and the ground water. The soils were s~ained and strong solvent odors were observed. An investigation of the soft and ground 'water was conducted in 198~ and a ground water extraction and treatment system was installed in April 1986. The system became fully operational in February 1987 and recovery efforts are currently ongoing. EH was identified by the MPCA as a responsible party for the contamination found at the Eli site. The Eli site is listed as a State Supeffvnd site on the MPCA Permanent List of Priorities. The subsurface investigation of the EH site concluded that the shallow geology consists of an abandoned river channel deposit trending northwest to southeast across the center of the Eli site. The channel deposit consists of relatively coarse sediments situated within a finely-textured, less permeable glacial till unit. The ground water flow direction beneath the Eli site is generally to the east. Sim ~a~n ~ 3.0 PRO~ECT RESULTS 1.! Site Geolotw The site geology beneath the Foremost site was investigated by advancing four soil borings to a depth of approximately 20 feet below ground surface (bgs) with continuous split spoon sampling through hollow stem augers. All four soil borings were completed as monitoring weLLs (Figure 2). Boring logs describing each sample are provided in Appendix A. Appendix B discusses the methodologies employed in the completion of these borings. The site geology can be divided/nto two units: a gray silty clayey till (till) and a poorly sorted medium to coarse sand (sand). The till unit was encountered in each of the borings. Borings DMW.2, DMW-3, and DMW-4 encountered only the till and weathered tilL Boring DMW-1 encountered the sand unit between 12 and 18 feet bgs. A cross-sectional view of the sand unit is shown in Figure 3. The sand unit appears to follow the west-northwest trend of the sand unit encountered in RW-1 and MW-$ on the adjacent EH property. 3.2 Site H,~lroaeoiosv The site hydrogeology was investigated through the instaUation of four on-site monitoring wells (DMW-1, DMW-2, DMW-3, and DMW-4) and review of the MPCA file on the Eli site. Water level measurements were collected from the four monitoring Wells, and with assistance from Eli, three off-site monitoring wells (MW-l, MW-S, and MW-6) (Figure 2). The Foremost wells were constructed with ten foot stainless steel screens intersecting the water table. Foremost well construc:ion logs are presented in Appendix A. Appendix B discusses the methodologies employed in the installation and completion of the Foremost monitoring wells. Review of the MI*CA file on the EH site did not yield presentable data on the hydraulic parameters at the site. Ground water was encountered under water table conditions at eight to ten feet bgs. Ground water flow is dominated by three factors: 1) regional ground water flow toward the east, 2) the more permeable sand tutit trending east-west across the site, and 3) ground water withdrawal from the recovery well (RW) on the Eli properly. The water table contours are depicted on Figure 4. Regionally,/round water flows to the east tow~ the Mis,si~ppi River in the shallow quaternary wa~er ~able aquifer (Kanive~ky, 1989). The more penn. hie sand unit allows ground wa~,r m flow tluough it more readily relative to the fill un/r. resulting in the westward skew of the water table coatoun. Tiffs skew is accenluar~d by ground water withdrawal from the recovery well which lowers the water ~able in the sand unit faster than the till Under normal uns~res,sed flow condi~iom,/round wa~er would likely flow toward the east across the site with a slighl component of north-south flow in the t/Il un/l near the conma with the sand. 3.3 Soil Chemistr~ One soil sample for laboratory analysis was collected during the advancement of DMW-1, DMW-2, DMW-3, and DMW.4 at 17, 11, 13, and 15 feet b/s, respectively. The samples were analyzed for VOCs using the Minnesota Department of Health (MDH) Method ~C. The results of the soil analysis are presented in Appendix C. Soil samples were also collected by Eli for laboratory analysis bom DMW-1, DMW-2, and DMW.4. The results of the analysis are presented in Appendix D. All of the compounds were below the method detection limits in the soft sample from DMW-1. Ethylbenzene was detected in the soft sample from DMW-2 at a concentration of 0.12 milligrams per kilogram (mi/kg). 1,1-Dichloro-l-propene (0.021 mi/kg) and 1,3-dichlorobenzene (0.084 mi/kg) were · detected in the soft sample from DMW-3. The soil sample from DMW-4 showed low levels of chlorobenzene and ethylbenzene (0.033 and 0.051 mg/k& respectively). All other compounds analyzed for in the samples from DMW-~ DMW.$, and DMW-4 were below their respective method detection limits (Appendix C). Ail the samples collected by HII were below method detection limits for all compounds analyzed except methylene chioride., which was detected in all three samples ranging from 0.412 to 0.$2 rog/kg. 3.4 Water Chem,~U? Ground waler samples were collected for laboratory analysis from each of the on-site monitoring wells along with a duplicate sample from DMW. L The samples were analyzed for MDH Method 455C. No VOCs were deteaed above the method deteoion limits in DMW-2, DMW-3, and DMW-4. The ground water sample from DMW-1 showed detectable levels of vinyl chloride (8.$ micrograms per liter (ug/1)) cis-l,2-dichloroethene (1,2 DCE) (120 ug/1), and tewachloroethane (PC'E) (1.2 ug/l). The analysis of the duplicated sample from DMW-I/ave similar results and detected trichloroethene ('rcE) (2.1 u~/l) as well lmm No. 10.~-34~ Ptgo ~ DtSCUSStO 4.1 Soil Contaminatiou The low levels of VOCs detected in the soil samples collected from DMW.2, DMW-3, and DMW-4 do not appear to be related to any identifiable source. Foremost's records indicate that none of these compounds were ever used on site. The site records also indicate that no underground storage tanks have existed at the site. The methylene chloride detected in the soil samples collected by ElL based on the comistency of the levels detected and the lack of detection in samples collected by Delta, is likely a result of laboratory contamination and/or error. ,$.2 Ground Water Contamination The VOC.s detected in DMW-1 are related to the PCE spill documented on the adjacent EH property. Vinyl chloride, TCE, and 1,2 DCB are degradation products of PCE. Identical compounds at similar or higher levels have been detected in monitoring wells on the EH site as documented in the Eli file. Foremost's records indicate that none of these compounds have been used on their site. The ground water contamination present .at DMW-1 is a result of the solvent release(s) from the EH site. Although Foremost property lies hydraulically upgradient of the Eli property, the VOC..s detected in DMW-1 on the Foremost property are due to the following factors. FL-st, thc Foremost property (DMW-1) lies less than 100 feet from the release area(s) at ElL Second, during the time of the spill the hydraulic gradient was lower than at present since the recovery well on the IEFI property did not exist. Third, generally by dispersion through a sand unit, low levels of dissolved contamination would move the short distance upgradient. · 0 SUMMARY OF GENERAL CONCLUSION~ The following conclusions based on the available information represent Delta's findings at the Foremost $i~s: The ground water flow at the site is genernlly to the east. The compounds detected in the soil samples appear to be unrelated to the Foremost site. There is no record of the use of these compounds at the site or in the Foremost metal f~brication proce~___; Thc ground water analytical results for the upgrndient and lateral monitoring wells are below the method detec~on limits. The ground water contamination present at DMW-1 is a result of the solvent release(s) from the Eli site. ~.0 REMARKS The conclusions contained in this report repr'-,~nt our professional opinions. These opinions are based on currently available in~rmation and are arrived at in accordance with currently accepted hydrogeologic and engineering practices at this time and location. Other than this, no wnrranty is implied or intended. This report was prepared by DELTA EN~_. ONMENTAL CONSULTANTS, INC. "///_ _ _ Date: a ! Hydrogeologist Paul A. Durkee Project Manager David S/. Ronnei Hydrogeology Department Manager jm~.708 Kanive~, Roman. lg79. 'Quaterna.sr Hyd~geology'/n Balaban, N.H. (ed.). Geoloz/c Atlas. Hinnepin Couatv. ~i..~sota. U~venity of ~i..,mom, St. Paul, pit. $. - LOADING DOCKS i,i OMW- 1 FOREMOST, INC. BURIED EU[CTRIC ASPHALT (COMES INTO ,.3 TRANSFORM! LEGEND: EXISITNG MONITORING WELL LOCATION ID(ISTING RECOVERY WELL LOCATION MW-6O ELECTRONIC INDUSTRIES, INC. ~MW-5 (~RW- 1 '" I SHRUB AREA ROCKFORD ROAD FIGURE 2 SITE MAP FOREMOST INC. NEW HOPE, MINNESOTA 7--10-91 89345~1 , ~n~i~nm, Ina. DMW-4. DIdW-2 lOADING BURIED ASPHALT (:COMES DMW-1 BUSHES · " DMW-3 · ,,,',' (895.37) " ,,, GRASS SIDE=WALK 0 NORTH 50 SCALE IN FEET I..EGEND: E~ISITNG MONITORING WELL lOCATION EXI.~'T'ING RECOVE]~Y WE'LL LOCATION (895.37) WATER TABLE ELEVATION (IN ~ 892' WAT~ TABLE: CONTOUR LJN£ (B94,901)e E'~EC'TEONIC INDUSTRIES, INC. _MW-5 ~-le e(891.01) (8~.22) I -- SHRUB AREA ROCKFORD ROAD FIGURE 4 WATER TABLE CONTOUR MAP JUNE 3, 1991 FOREMOST INC. NEW HOPE, MINNESOTA 1o-89-~ ~-/~ ,~, k Della OAI~ ~ ~ ~ ~ [~m~l 7--10--91 89345--1 ' ~.~, In~. CENTRAL OFFICE NW 9445 PO OOX 1450 MINNEAPOLIS HN 53~d5 ~LLEN FREOE~ORLL 4045 ~LD KEN[ EXCELSIOR MN PAY THIS AMOUNT O71 ,i BR/DIV ']$i0',J52 I gU ACCOUNT COMM TOP PORTION MUST ACCOMPANY PAYMENT dO0 C'?Z O1 Ol NOTE NOTE FACE AM©UNT DI_:._..~E ....... DATE _ li.25do BALANCE BROUGHT FORWARD PRINCIPAL DUE INTEREST DUE MISC DUE EFFECTIVE DATE TGTAL$ TRANSACTION AMOUNT 44'~,872.50 444,872.50 INTEREST AMOUNT .0C PF41NCIPAL AMOLJNT 444,872.50 KRAUS-ANDERSON CONSTRUCTION COMPANY CONTRACTORS & CONSTRUCTION MANAGERS March 8, 1991 City of New Hope 4401 Xylon Avenue N. New Hope, MN 55428 Atto: Mr. Doug Sandstad Re: Winnetka West Housing New Hope, Minnesota Gentlemen: Per the enclosed layout the following is a "ballpark" budget figure to demolish the (3) buildings. Building A (21,730 sD $ 45,000.00 Building B (9,600 sf) 21,000.00 Building C (13,524 sf Total of (3) buildings $ 95,000.00 I hope this will be of some help in determining costs for your budget. If you have any questions please feel free to contact me at your earliest convenience. Very truly yours, KRAUS-ANDERSON CONSTRUCTION COMPANY Jeffrey E. Kast JEK/sla St. Paul Division 200 Grand Avenue, St. Paul, MN 55102 Phone: (612) 291-70138 FAX: (612) 224-1102 Equal Opportunity Employer Minnesota Pollution Control Agency 520 Lafayette Road, Saint Paul, MinneSota 55155-3898 Telephone (612) 296-6300 January 3, 1992 Mr. Robert J. Prairie, President Electronic Industries, Incorporated 400 Commerce Court Vadnais Heights, Minnesota 55127 Dear Mr. Prairie: RE: Meeting Beld December 19, 1991, at Electronic Industries, Incorporated to Discuss the Adequacy of Present Ground Vater Remediation Techniques and the Future Course of Remediation at the Former New Hope Location At the present time Minnesota Pollution Control Agency (MPCA) staff considers the ground water remediation system at the New Hope site to be adequate. This system which consists of two remedial wells is slowly removing contaminants from the soil and ground water and is preventing the further spread of TCE and its decomposition products in the alluvial aquifer. However, as is the case with all pump and treatment systems, the removal of chlorinated compounds, such as TCE, is slow and it could conceivably take 20 years or more for the levels of TCE at all the monitoring wells to drop below the Minnesota Health Department's "Recommended Allowable Limit" of 30 parts per billion for TCE. As a result of the inherently slow rate of decontamination of soil and ground water with this pump and treat sys_tem, MPCA thinks that it would be in the Company's best interest to investigate and apply some of the new and innovative technologies that are available to enhance the effectiveness of pump and treat systems. Two such methods that appear to be well suited to this site are: vacuum extraction of unsaturated soil near the source area of contamination, and "air sparging" down gradient of the source area. These methods should act to mobilize TCE and its decomposition products and enable the removal of the chlorinated compounds as vapor. I suggest that you contact Mike Scott at 612/296-7297 regarding the above mentioned techniques as well as other plausible technologies. Mike is an engineer whos~'primary function in the MPCA is to provide assistance with, and keep abreast of, the numerous ground water and soil remediation technologies that are available. At the time of the installation and design of remedial well 1 (RW-1), pump and treat systems were thought of as a complete solution to soil and ground water contamination at many sites throughout the country. The MPCA is currently evaluating some other sites that have similar pump and treat systems in an effort to expediteremediation. Regional Offices: Duluth · Brainerd · Detroit Lakes · Marshall · Rochester Equal Opportunity Employer · Printed on Recycled Paper Mr. Robert J. Prairie Page 2 The MPCA recommends that the Company retain a consultant to design an additional system or systems at the New Hope site to augment the existing pump and treat system. The MPCA will provide the Company with information concerning some possible methods to apply at this site, but it will be the Company's decision as to what method is most suitable. Furthermore, it appears that the Company could realize cost savings in the current ground water monitoring program by eliminating or reducing monitoring at selected wells. In concept, this should release more funds for remediation efforts. During the course of the meeting, we neglected to mention that monitoring wells 1, 5, 7, 8 and 9 should be measured for elevation at the top of the risers. This information is unavailable for some of these wells, and questionable for others, and is important for determining the direction and magnitude of ground water flow at this site. In summary, MPCA requests that the Company: 1) Obtain a qualified consultant to investigate available remediation techniques to supplement the existing pump and treat system, recommend a system and provide necessary design documents. Submit a work plan with a time schedule to MPCA by February 15, 1992, for investigation, design and implementation of the new remedial system or systems. 3) Determine the elevations of.the, foregoing wells by March 1, 1992. If you have any questions concerning this letter, please contact me at 612/297-8476. Scott Carlstrom Hydrogeologist Permit and Review Unit Regulatory Compliance Section Hazardous Waste Division SC:rg CC: Wendell Van Vliet, Electronic Industries, Incorporated, Vadnais Heights Kirk McDonald, City of New Hope Doug Sandstad, City of New Hope City Council Worksession 911 CITY OF NEW HOPE 4401 XYLON AVENUE NORTH HENNEPIN COUNTY, MINNESOTA 55428 December 16, 1991 City Hall, 6:00 p.m. ~ TO ORD~I ROLL DZSCUSSZON OF ACQUISITION OF FOREMOST, ZNC. PROPBRTY, 7S28 42ND AV~ NORTH (PROJECT 474) New Hope City Council Page 1 The New Hope City Council met in special work session .pursuant to due call and notice thereof; Mayor Erickson called the meeting =o order a= 6:35 p.m. Present: Erickson, L'Herault, Often, Enck, Williamson. Staff present: Dan Donahue, Kirk McDonald. Also present: Steve Sondrall, City Attorney and Brad Bjorklund, appraiser. Mayor Erickson called for discussion on the acquisition of Foremost, Inc., 7528 42nd Avenue North. Discussion was held among the Councilmembers and the City Attorney regarding the negotiations with Foremost on the acquisition of their property by the City. City Manager Donahue suggested that the discussion be initiated by looking at the plan for 42nd Avenue. The City Manager read from the 42nd Avenue plan that stated the three lots the City is looking at are overcrowded and are characterized by the following conditions: substandard by the lot area requirement; center lot does not meet required I-2 lot width requirements; the lots contain large buildings too close to each other. In terml of the zoning code there are a lot of problems that the plan has identified. Mayor ErickSon opened the discussions for questions from Council. Mayor Erickson stated he has not seen any costs for demolition of the building. Brad Bjorklund, appraiser, stated a rough estimate of $2.50 per square foot is the price typically attached to demolish the building. City attorney Sondrall asked Mr. Bjorklund what value he at=ached to the building. Mr. Bjorklund replied that $375,000 is the figure he evaluated Lt at without the land. He stated that the land is valued at $97,000. City attorney Sondrall stated that one of the problems that the City has is the relocation costs could be horrendously h=gn because we could require him to waive relocation expenses Du~ the waiver probably would not be effective because under state statute if land is subject to or within a development, ~he relocation waiver conditions of Chapter 117 do not apply. Foremost may come back later and argue that they are entitled to relocation expenses in the event that he relocates. Mr. Sondrall said that one of the things that he feels the Council has to consider is whether they can afford the cost to be December 16, 1991 New Hope City Council Page 2 involved with that property. Mr. Sondrall Haid if the City buys the property for $585,000, and if the attorney for Foremost wants to express things in terms of relocation expenses versus actual land value is because the lower he can show the land value was that they were a~le =o sell the property for, the bigger case he has for damages in his lawsuit against the City. It is beneficial for him to say "I sold the property to the City for $405,000 (which is Foremost's appraised value of the land) and the additional money the city gave me was for the re~ocation expenses to move me to a different location". Attorney Sondrall stated the reason he feels that the City should proceed in a condemnation ac=ion iH that there is a new law which eliminates the City's liability for acquiring ~o=entially contaminated property. Councilmember Enck asked who would be responsible for cleaning up the property. Mr. Sondrall stated that Electronic Indus=riss would be responsible, but he said he thinks the state would accept that responsibility. Attorney Sondrall stated that in order =o get the property marketable and saleable, the City would have to get a no-ac=ion or closure letter from the state, and as he understands the state is very close to issuing a no- action let=er. The no-ac=ion or closure letter means that =he state is not going to hold Foremost responsible for any clean up of the con=amine=ion a= that site. Mayor Erickson stated that the City Council must be totally convinced and comfortable with the fact that if the City buys that property there is no exposure for clean-up. It should also consider available options to get monies for the project. He commented that if the City purchases the property and it's not marketable, the Council will have to live with that decision for years. City attorn'ey Sondrall said that another thing to consider =s that the City is buying this property as an improved site, but se=ting a precedent for land values on 42nd Avenue because the site will be demolished for redevelopment which says that New Ho~e is putting a value on this property as vacant land and considering the value of the building to be zero. Coun¢ilmember Otten inquired of the benefit to the City %= become involved at this particular pein= in time if Foremost ~ 'experiencing financial problems. City attorney Sondrall repl=e~ that the only benefit he could come up with is that Foremost naa an appraisal that says if the property is uncontaminated and marks=ed as an industrial site, it is worth $660,000; whereas, =he City's appraisal mays it is worth $475,000 so there is a huge discrepancy. CouncilmemberO~ten said if we could benef=t financially, then that would be a good motive=ion for buying the property now. But, he felt it doesn't seem like the City is benefit=lng that much financially by moving now and not waiting for Foremost to resolve their situation. December 16, 1991 Mayor Erickson stated he felt it very important that the City keeps up its redevelopment program on 42nd Avenue and buy these three buildings. city Attorney Sondrall stated that the worst case scenario would be to buy the property that can't be marketed due to contamination or recession. The City Manager stated that based upon the land use study done this past year, in order to do a commercial project, you have to assemble all three properties. He commented that there is potential for good commercial use on the propmrtiil. Councilmember Enck asked if the money to purchase the property would come from the tax increment district. Mr. Donahue replied, yes, and the district runs along 42nd Avenue. Councilmember Enck stated that what the City has to determine if they really want to enter into a redevelopment, is how much the City is willing to spend, and what affect, if any, it will have on the Ardell property. Mayor Erickson stated another concern is the contamination of the property and if the City can be guaranteed that it will not own a piece of property which cannot be sold and the City will not have the money to clean it up. Attorney Sondrall stated that the City should re-visit the MPCA and find out what the situation is with the remediation at Electronic Industries. Councilmember Enck stated he would like to see that corner improved and he feels it is an eyesore. He went on to say he does not feel it is appropriate for a strip mall, but a good, clean industrial building would be compatible to what is immediately to the north of it. Attorney Sondrall stated that this process would take a little time and one thing that should be kept in mind is that the whole topic may be moot because he does not know how much time Foremost has. He went on to say that he was not suggesting that the City rush into acquiring the property but Foremost seems anxious. Councilmember Enck said that as a business decision, if Foremost discontinues operations or if they are going to make it governmental intervention, and if the property is available, ~f the City feels the price is fair and reasonable, it should proceed and buy it. He commented that if Foremost discontinues operating, and someone else goes in there, he doesn't feel that the City will be much worse off because they don't have a letter of no-action, and the City would not have to urge the MPCA to illUt one immediately for Foremost. Mr. Enck also stated the City might have to do some rezoning. New Hope City Council Page 3 December 16, 1991 Steve Sondrall said that if the bank does end up with the property, we can always condemn it and take the property by eminent domain. Councilmember Williamson laid she is real uncomfortable about proceeding at chis ~oint. She laid she sees no advantage to us to do i= now but wait until things change for Foremost. Councilmember Enck inquired of appraiser Brad Bjorklund'what if the City decides to wait until next year to condemn the property and if it cannot be iold, what il the difference in the two values. Mr. Bjorklund stated that values are going down and if you can pay lees by waiting, that's a decision you have to make. Mr. Bjorklund reported that he had gone to Foremost and visited with the machinists and found that the company has a small office area and staff,' which is run by the owner who was absent on the day of the visit. He also noted the machinery is dated, but adequate and that the building functionally serves its purpose al a manufacturing facility, but has no frills. City Manager Donahue recapped the direction that Council wanted staff to pursue. City Attorney Sondrall stated he would put together a memo spelling out the legal concerns from the condemnation and value point of view of the acquisition. Councilmember Enck asked the attorney to check with the MPCA on the status of Foremost and the reclamation for Electronic Industries and research what the federal government would do if the City should end up with both parcels of land, and also contact the bank for a mortgage statement and see if it is the original mortgage or if there has been any increases in it. City Attorney Sondrall suggested that an appraisal be made on the Ardell property as well if the intent of the City is to acquire all three properties. Mayor Erickson stated that Council wants staff to go slowly with the acquisition at the City'l timetable. The Council decided to take their time in making a decision on the acquisition and convey that message to Foremost. Motion by Councilmember Williamlon, seconded by Councilmember L'Herault to adjourn the New Hope City Council worksession. Voting in favor: All. The worksession adjourned at 8:12 p.m. RelpeCtfully submitted, Valerie Leone City Clerk New Hope City Council Page 4 December 16, 1991 December 3, 1991 He. Daniel J. Oonahue City Hah&get City of New Mope 4401Xylon Avenue North New Hope, MN 55426 Foremost Proper~¥ Acqutaitton Our File No: gg.110gO Dear Dan: This letter will confirm our discussions with Foremost, Inc. regarding the acquisition of their property located at the Corner of 42nd Avenue North and Quebec Avenue North. Said meeCtn~ occurred on November 27%h, 1991, 1. A purchase price not to exceed $566,000.00 (this figure was arrived at ~aaed on the following: payment of outetandin~ mortgage equaling $4&4,$el,00; payment of unpaid real estate taxes for years 1990 and 1991 of $64,792.00; payment of unpal~ specia! assessmente not certified to tax rolls of $14,662.00; payment ~r relocation expensel of $20,000.00). 2. After acquisition QP the proper~y we would continue t; allow Foremoa~ to operate e~ the property wi~hou~ payment of reft eot a period not ~o exceed twenty-~our months. Foremoe~ would pay all operational comte associated with their use of the Dro~ert/ including, bu~ no~ limited to, real estate ~axe=, utility charges an~ insurance. Also, they would receive & 90 day no~i¢l ~rovi$ion to vacate the ~roDert¥. 3. Upon their vacation of She property, they would be allowed to remove all personal property, machinery and equipmen~ Hr. Oaniel J. Oonahue December 3, 1991 Page 2 including any item which would be considered a movable fixture. In other words, they would have all salvage rights to the building given the fact that we intend to demolish the building for redevelopment, 4. Foremost would agree to execute an agreemanb providing the EPA wtCh an equal snare of t~a judgment collected on =heir lawsuit against Electronic Zndustriea after payment fees and not [o exceed $$0,000.00. [n other words, there will be ~he possibility that ~he City would receive a $50,000.00 reimbursement in the event that Foremost was very ~neir lawsui~ against Electronic Zndus%rte$. Naturally, the acquisition would be effectuated aa p&r~ of an eminen~ domain action. The negotiated agreement ia relatively comparable [o [he coats we could exoect in a contested condemnation action. Assuming Foremos% could deliver an uncontaminated property, our appraisal eatabllshea the properZy value aC $475,000.00. A contaminated or impaired properly value per our appraisal ia $433,000.00. ACtually, X think ~lectroni¢ Industries is doing a fairly good job of cleanup and t[ would be prudent to analyze a negotiated settlement based on an uncontaminated assumed that I condemnation commission would accept the $475,000.00 value. Further, ! thtnW it would not be unrealistic to believe that Foremost would be entitled to $3a,000.00 in moving and establishment expenses. Finally, ! think attorney's fees, appraisal ~eea and court 00~[~ associated wt~h the acquisition of this property may be in the range of $30,000.00. Aa a result, =he total coot ~o the City in a contested condemnation io~ton would be somewhere between $S40,000 to $SS0,000. Zf Foremost te successful in their laweui~ against Electronic Industries, the ¢t~y'l final co$~ baaed on our nego[iate~ settlement migh~ be aa low aa $$35,000.00. Of course, Chis assumes the risk ~hat [heir litigation will be successful. !n speaki~ wt~h the a~l~lrney for Foremost, they are very conftden% about the litigation &n~ have no intention of acGe~ttng a "low ball" offer simply to obCatn a settlement. They are basically oroeeedtng on an ali ,~r nothing basts. Since ! am no~ privy to the nuances of the law~ai~, it would be inappropriate fo~ mi %o give an opinion regarding the probability of a successful verdt¢~, however Z thin~ we can be optimistic about a successful outcome in light of the vigor and zealousness ~hat Forem~s['s a~orney hal shown with Mr. Daniel J. Donahue December 3, 19~1 Page 3 regard to the lawsut~. In that regard, ~ certainty ~eel Electronic Indu$~rie. will Uefinttel¥ have their hands full in Uefen~ing this case. Beeidem, any ~ime you do go into cour~ you ~ave & 50/50 chance &hQ this case appears ~e i~ i~ is goln~ ~o co,rt. Please con~ac~ me if you have any further questions. Very truly your$, Steven A. $ondrall $1~3 cc: Kirk McDQn&ld, Man&gemen~ Asst. E~A FOR ACTION Approved for A~enda Agenda Section EDA .~ 12-9-91 Item No. Or~tnatln~ Deparunent City Manager K/rk McDonatd Man~ement Assistant / DISCUSSION REGARDING ACQUISITION OF FOREMOST, INC. PROPERTY, 7:528 42ND AVENUE NORTH, IMPROVEMENT PROJECT NO. 4'/4 Staff requests to discuss the acquisition of the Foremost, Inc. property at 7528 42nd Avenue North with the EDA. In previous meetings the EDA gave direction to proceed to acquire all three properties in the area (Foremost, Electronic Industries, and Ardel), clear them and work tow~as redevelopment, so a.s to comply with the intent of the 42nd Avenue Redevelopment Project which is to improve the neighborhood. At the October 14th EDA meeting staff indicated that '.he appm~ of the Foremost property had been completed and discussions were continuing the possible acquisition of the ~ and the relocation of the business m the City.. determined that the Foremost Project should be separated into two issues with the t~st being the acquisition of the property/redevelopment of 42nd Avenue and the second pnori~, the relocation of the business within New Hope. Staff met with the owner of Foremost Inc., Mr. Fredendall, and his attorney on November _'-'- and negotiated an a~reement whereby the City could acquire the property. Said agreeme.~: outlined in the attached ~ from the City Attorney and staff requests to discuss the agree ~-c ~ with the EDA. The negolia~d purchase price, not to exceed $585,000, is based on payme~: outstanding mor4a~es, reml esme taxes, assessments, and relocation costs, and is comparac ~ costs the City could expect to troy in a contested condemnation action. The a/reement reached on November 2?th was based on the outstanding monga/e amo~~ of luty 17th and the attorney representing Foremost has provided updated mortgage subsequent to the City Attorney's letter, ~s follows: MOTION BY SECOND BY Ftnance: Request for Action FDA December 9, 1991 Page -2- P~vious Cra"rant Mortgage Mortgage Outstanding Morti~e on nuilding Outstn, nding Mortgage on Addition S4~5,751.00 ~57,4~0. iS ~ 36.761.74 $494,201.92 Unpaid Real E~tate Taxes Unpaid Special Assessments Relocation Expenses 64,792.00 64,792.00 14,682.00 14.682.00 $584,436.00 $593,675.92 Staff has indicalal to Foremost that the offer on the property, not to ex¢_,~__ $585,000, stands anti would not be increased to cover the u~increased outstand'mg mortgage amounts. A cash flow projection for Tax Increment District #8, which includes the loan to Autohaus, sho~. that the district is projected to have a cash balance of $3,$00,000at the end of the district's iifc in 2004. The cash balance projectmt for the end of 1991 is $615 , 831, but the Director of Finance Administration indicates that the balance at the end of the year will most likely be $626,3?7 a~cl exceed the projected amount. Mr. Freden4all has indicated that if the City does acquire his p~ he is willing to work the City and State on economJ~ development programs that would allow him to relocate business in the City of New Hop~. Previous EDA Minums, memos, correspondence, and a copy of the Foremost appraisal ~: attached for your information. AUachments: Atmm~ C~dence 12/3 ~ Distriot g Cash Flow Projection Foremost 7/17 Con'es~ndence - Outstanding Mortgages EDA lVfinut~m lO/t4 EDA Minutes 7/22 EDA Minu~ 6/24 StaYf M~mos Foremost Appt-aisai CiTY OF NE~ HOPE CASN FLOl~ P~O~EClIOll TIF DISi NO. B II~GiliNIIIG CASN 199~ 1991 1992 1993 199~ 199~ 1996 1997 1998 450,0(]0.00 45&, li)9.31 615,8.~0.87 ?M),&30. ?~) 9/2,969.56 1,165o636.73 1,370,878.9~ 1,589,905.67 I, ?~., ?lg.&l liEVENL~: 1AX INCIIEHEltT 1~2,10Q.31 2BO,O00.O0 IIIIEIIESI 62,Q00.00 27,246.56 ~6,g4,9.85 47,209.84 58,378.11 69,9:38.20 82,252.74, 95,396.74 106,963.17 LOAN IIEPAYNEMI 41,435.00 41,435.00 41,435.00 41,435.00 41,435.00 41,435.00 IOTAL REVEliJ~ EXP£NI)ITLJ~ES: BONO PRIN BONI) INl FISCAL AGi~N! FEES COIISI#UCIiOIi C0SI$ 204,109.31 ~4,8,681.56 358,384.85 368,644.84 379,813.17 391,373.20 40~,687.74 375,396.74 386,963.17 109,960.00 105,385.00 100,506.00 95,146.00 ag, 131.00 8~,621.00 75,623.00 67,975.00 2,000.00 2,000.00 2,000.00 ~,000.00 2,000.00 2,000.00 2,OO0.O0 2,0OO.O0 200,000.00 186,960.00 187,385.00 182,506.00 167,146.00 la6,131.00 184,621.00 182,623.00 184,975.00 CASH BALANCE 454,109.31 615,830.87 766,830.72 972,969.56 1,165,6.16.73 1,370,878.95 1,569,945.67 1,782,719.41 1,964,?07.5a CII¥ OF li~la liQPE CASH fLOId PRO.AL(,~Y ~ull Tlr DIS! ~. 8 IEGIIIiliG C~,$N REVENUE: lJUI I IICIf. l(t I INIEIES! LOAII Itl;PAYNtlt! TOTAL EXPEND I TIJES: 8OIW PIi III BOld) IHl FISCAL AGI~N! FEES COIiSIIIIJC! loll CC)SIS OlliEII COSIS CASH BALANCE 1999 2000 2001 2002 200] 1,905,707.58 2,202,100.04, 2,/0]1,&76.0~ 2,67/0/64A.00 2,9~S2,568.M 280,Q00.00 280,000.00 280,00Q.00 2ao,ooo.oo 119,082.~6 1~2,126.00 145,Ma.56 160,4~.28 175,95~.13 192,4,66.~ 399,082.~,6 412,126.00 &25,aa8.56 440,4,6~.28 &55,95~. 13 120,0Q0.00 1]O,OOO.OO 140,Q4X).O0 150,04)0.00 IO0,QQO.O0 170,000.00 59,690.00 50,750.00 40,960.00 30,]00.00 18,750.00 6,375.00 2,000.00 2,000.00 2,000.00 2,OOO.O0 2,04X).00 181,690.00 182,750.4)0 182,960.00 182,300.00 180,750.00 170,]75.0G 2,202,100.0/o 2,431,476.(~ 2,674,40~.60 2,932,56~.~ 3,207,7T~.01 3,501,a45~.39 CITY OF NEW HOPE MEMOPJ~DUM DATE: TO: FROM: SUBJECT: Oc=o~er 11, 1991 Su~maz.fof Discussion Wi~A Foremoe=, Inc. Tl~ie memorandum is in~ended =o briefly summarize our mee=inq w~=n Foremoe=, Inc. ~eld on September 30. As you ars aware, BCL Appraisals recently completed an appraisal on is as follows: Conclusion wi~.~ou= poilu=ion s=iqma $475,000 Final Value El=ima=e as Allegedly Pollu=ed $43~,000 T~e appraisal sos=es ~Aa~: "T~e li~e ia s~r£cken wi~h s~i~na of pollution because of proximl=¥ =o polluted Electronic Indus=riss. As a resul= of He has caused'moni=oring wells =o ~e ifls=alled =o measure pollution, ~ri~ ~o measure ~s Xoss ~n mar~e~ va~ue and has sue: Elec==on~c Indus=Flee fo= loss ~n value. I= is =Aa op~flion ~ (Mi~eso=a Poilu=ion Con=Fo1Aqency), =Aa= q~ven =Aa ~eve~ o~ ~ow~ge fr~e su~Jec~ and Electronic Zndus~ries wells, ~e ~en~ r~la~ions and continued vol~a~ coopera=~:: ~e=ween~e s~3~~e= and =Ae~CA a "no ac=ion' la=re= will for~couing ~or ~e s~J~ proper~. A ".o ac~on' le~e= e~ivalen= of ~e ~ sayin~ =Aa= ~e s~ec= o~er is con~r~u~ing ~lu~ ~d is no~ responsible ~or an~ ~o~d on ica pro~y. ~ese c~eo of lectors are ~i~cefl ~v~concuAnac~on is c~eaned up or is ~n~e process o~ clean~ up and is no~ C~e proU~em of Che proper~y o~er and prope~y in~es~on.' Forenoo~ also had an ifldependen~ appraisa~ o~ ~eir proper~ comple~ a~ ind~ca~ ~Aa~ ~ne impa~r~ appraised va~ue s~n~la~ ~o ~e ~ va~ue, ~u~ ~Aa~ ~eir ~i~aired va~ue si~fican~Xy milner ($660,000). T~ey were .o= w~llin~ =o ~eA~ appra~saX w~ ~e CiW. - 1 - indic&Ced c~ac c~ey were £n~eresCed in an offer ~e:~g would address cae following steM: Real Lease~old ZmprovemenCs Moving Relocation CoeC~ Occupying Coa~s (s~a¥ £n ~uild£ng unC£1 relocate) Forenos~ speci££call~ £nd£caCed $~2S,000 ~or land/building and ability ~o presezwe cla~ aqains~ Electronic Zndus~ries. CiC¥ conul~ up ~o $285,000 or actual coa~ of leaseAoL~ improvements. One ~ear reno free £n ~eir existing building a~Cer ~e city pm~cAaeee i~, so ~me¥ ~ave adequate ~ime Co ~ind a new ~oca~ion. City aesv~e ~ull bill ~or Oa~a Engineering (already ~ave committed ~o ~wo-~Airds o~ cos~). Attorney ~ees wi~h a cap aC $10,000 The ¢1~¥ ind£ca~ed preliminaril~ CAa~ ye were willing ~o discuss $SO0,0OO ~or land/building (vitA.ut sCiqua and aga£nl~ EleCtronic Xndus~ries ia successful, City cos~ ~e reduced by award amoun~. $28S,000 in lease,,id/moving expenses. 3. Foreaoe~ Co proceed wi~m SBA ($nal~ ~us£nes~ AdnAnAs~aC~on) Xoan. 4. CiC¥ p~sve and successfully ob~a£n $X00,000 mevelopuent Recover/ S. F~ndin~ · sv£Cab~e location for ForeuosC in a new exis~n~ buX~d~n~ (Forenos~ wan~s ~o lease - 6. F£ndin~ a developer for ~Ae 42nd Avenue si~e, taxes properC~es are accpAired. 7. Foromos~ nus~ remain/relocate in ~ew Hope· ClCyACCorney co discuss C~ese issues prior cache OcCo~er neeCing, - 2 - DATE: TO: FROM: Daft OoniAue, CiC¥ Manager Coordinate= Subie(rven= Co CAe Jtute 24tit EDA meeting where LC c~a~ chi C~c¥ s~ould p~oceed w~c~ *~Ae For&uccc graflc and cae acquisition of CAe Forenoe~ proper~¥, ~ have plamnXng console&nc and we have ~cXin~ cae se~ence c~ac we ~ee~ ne~ co ~ accomplished Ln oFdeF Co ack,eve o~ ~o~ ~me CX~y and FoFeuoa~. ~e w~XX ~e needing r~edendall on~sday, ~u~y ~cn ac ~:OO a.m. and vanc one ou~ne a~ Ua~ needing. L. City,ay&appraisal o£ foFenoe~ pFopeL"Cy co&pieCed p~ope~y-, ~s ~flfo~c~on Lo ne~ed ~oC~ co ~er and Co co~eCe cae gran~ application. w~ll anoweF ~e ~eoc~ons a~uc ch& ~arge ~spir~y CAe ~=~eC value lilC~ and whaC ~e o~e= feels 2. For~e~ o~i~ appropc~ace do~encacion reqa:~iflg e ~ ~e ~e=e~xna=~on as =o w~e=Ae= ~ ~M~ ~ X~ ~e ~rou deve~ope=. c:l, oa/rldlvelolloln~ City o£ TaIILS ~. & 3 and &dd~ese ~ollov~.n~ ~seuee: A. P~rcAale price B. .goreBoe~ v&~vinq relocation ~ene~iCo c. c~y aee~u~nq coe~s ~or o. roreuce~', re~oca~on ~c~n c~y E. Appropr~&~e &d3~scnencs ma~e co p~crmse pr:ce Fo~tuoec lawsuit aga~flsc E~ecc~onzc Iflduocr~es The three approaches to value indicated the following: $473,900 $475,000 Not Applied All three of the sT~r~zed approaches to value were considered in r_he market value analysis of both ~he the subject properties. The income approach was deemed to be not applicable due to tb~ owner occupied nature of r_he marke: for build/n~s of the subjec~ type. The Cost Approach considered the replacement cost of the building improvements, deducted depreciation and added land value. Its weakness lies in tb~ large amount of estimate~_ depreciation. Buyers and sellers rely more stxongly on the ~ approach when buildings are new and not when r_hey are over 25 years old like the subject. ~ Market Da~a A4:~oach best illustrates the actions of typical buyer~ and sellers of properties of the su~..~ect type. Several good quality, nearby o~oarables were fcur~ a~d compared to tb~ subject. Sc~e were older sales. Newer sales were also found and tb~y sup[olied additional good quality suppor~ for the subjects market value. For this value conclusion estimate without a pollution s~igma most is placed up0~ the fir~s of the Market Data Approach with good but secondarf $433,000 Pollution Stiqma The sit~ is sr. ricken with the stigma of pollution becaus~ of its proximity to polluted Electronic Irdustries. As a result of that stigma r_he subject owner has had problems marketing and m~rtgmging. He has caused monitoring wells to be installed to m~ttre onsite pollution, tried to measure his loss market value and has sued Electronic Industries for a loss in value. It is the opirtic~ of ~ Haberman, of Sit~ A.~es~ment at the ~ (Minneso%a Pollution ~1 A~ency), that given t. he current level of knowledge from r~e subjec~ and Electronic Industries test wells, the current requlations and oon~inued voluntary cooperation between the subjec~ owner and the MPCA a "no action" let~.r will be fo~ for the subject p~. A "no action" let--~_r is the equivalent of the MlkTA saying that the subject owner is not a contributir~ polluter ar~ is not respons~le for any pollution found on its prop~. These t%;pes of letters are written by the ~ when contamination is cleaned up or is in the proces~ of being cleaned up and is not the problem of r_he property owner ar~ the property in question. The ~ta Pollution Control A~ency has two principal areas where "no action" lettars are produced. The petroleum tank spills area produces many cf these letters but they are primar, ily for service station properties where gasoline and diesel petroleum pm:ducts are the pollutants. The subjec~ property is polluted by a type of pollution other than that frcm gasoline and diesal tank spills. The Groundwater and Solid Waste Division handles this of contamination an~ they have report~ as of the date of this appraisal a listing of 25 sites in the metropolitan area where "no action" letters have been written in the past 3 1/2 years. Five of these sites are knc~. or controlled by a lmablic entity and the balance were reportedly sold or about be sold on ~hm ~ ~rket ar~ the "no action" letter ~ reques~_~ so r~at sale oould occur. Thir?~n of ~ files w~re ey~ad.ne~ in sc~e detail in r_he ~ offices in ~:. Paul, ~. A followir~ listir~ ~ r-he MPCA file number, a pr~ naa~ an~ ~~, ~he generalized nat%~-e of the pollution affectir~ or alleged to affec~ these p~ies, the time period that the parties sought a "no action" letter in d-~lin~ 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 obtaining a "no action" letter 31 Pollution Stic~a Cont'd 8.85 month or approximately 9 months. The various parties probably spen~ another 1 to 2 months prior to dealing with the MPCA in consulting and develc~ing their strat_~3y~ for dealing with the contamination problem. Sites adjacent to large well known pollu~_e~s lik~ the Riley Tar site in St. i~uis Park had the shortest time periods. T~e process for getting a "no action" letter for properties adjacent to a well known polluter that has been well identified by the MPCA is a ra~ber 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 t~an a gallon of trichloroeylene spilled at Multitech's facility in New Brighton took 16 and 9 month respectively. These minor contamination problems equate very well to the subjects where four monitoring wells were requi~ed to be installed and the pollution was found to be minimal, or minimal and generat~ by others. MPCA File 1190 Na~e & Address Dixie ~hemical Co. E. Corner Hwy 55 at Pine Bend Road, R~semount Pollution "No Action Letter" Nitrates & sulfites 6-88 to 8-88 frc~ refiner to south 2 1270 1280 - 1540 Cabot Cabot & Forbes 1151 Vernon Dr., Golden Valley 615 Co. B~. 18, MUlti~ 82 2nd Ave. SE., New BrighUm in old septic tank in old septic tank Trichloroethylene small spill 8-88 to 6-89 7-88 to 11-89 1-89 to 10-89 10 i6 Pollution Stigma C~nt'd File # Name & ~kress 1450 1690 Terry Bros. Const. 3320 R~lic Ave. St. Louis ~k 2265-85 W. Co. Rc~. C, Roseville Pollution RaillyTar contamination "No Action Latter" 3-89 to 3-89 B~nzene etc. frc~ adj. Williams & Amaco tank farms 3-89 to 8-89 Mon~s 1740 P~sem~unt Die C~sting (Spot, Alloy's) 13220 Doyle Pat_hE. Honitorin~ well contamina~ 3-89 to 12-89 1810 ~ Products 7301 W. Lak~ Street St. 5~ts Park 1974 fire chemical spill 2-86 to 9-87 19 1920 2040 1820 Allianz Investment 1000 B1. Valley Pk. Dr. Soil piles contaminatad Mid,mst ~ank Distrb. 1060 33z~ Ave. RR & many pollutars Holiday Station Store Buri~ a.~t chemicals SWC B~y & 12th ~. Forest Laka, Mn 11-89 to 10-90 10-89 to 6-90 9-89 to 12-89 11 Pollution Stic~ma Cont'd Pollution "No ~-tion Letter" 2450 Hiawatha Metal Craft Trichlor~thylene 7-90 to 6-91 11 2631 31.~ Ave. So. 1860 Caliber Develo~t Oil spill, land farm 10-89 to 11-90 11 c.2660 FernbrookLane cleanup Average Months 8.85 The above described study indicates that the marketing period for a proper~y like the subject t_hat is alleged to be cont~%mina~ed will be extended by approximately 10 months. The normal marketir~ period for a proper~y like the subject would be £~,, 12 to 18 months and that process would to a certain deqree be able to overlap with a. certain amount of the time requ~ed to obtain a "no action" lett~_r or equivalent. It is therefore concluded that r_he alleged pollution of t-he subject pro~ will cause a six month increase in the normal In ~ition to =DE ~~ marketin~ time period and the loss of value that it creates, t_he subjec~ pz~ owner will be responsible for the costs to obtain the "no acrid" letter or its equi%-=lent. For the subjec~ proper~y, those ~ are par~a]ly kr~wn and can be anticipated as follows: l) 2) 3) 4) 5) Owners t~me s~ dealir~ with alleged pollution problem hirin~ ~~, ~~, a~y, ~ ~is~ ~ ~~~~~ $ 3,000 ~ ~~ a~y ~ ~~ ~ p~ $ 5,500 ~ f~~ ~~/a~~ ~~ $ 3,000 ~ ~f ~~ for p=~ "~ a~i~" le~ or ~~ $ 2,500 ~il/~ ~i~=i~ ~ p~ion $25,000 ~=ici~t~ ~ ~ $39, AND _~_ r~(~I (33~D Pollution St%~ma Cont'd Owners chaz~es ar~ ex~ctsd tx) total ~~~ly ~ w~ of t~ or 40 a ~i~ of ~ ~ ~ ~ ~ ~~. ~ f~ ~ a ~u~ ~~ti~ of 35 ~ 40 h~ a=, ~y, $150.00 ~ ~ for ~ ~ision of ~ p~ ~ ~~ wi~ ~ ~. A~ys ~ ~ of ~e le~ a f~ ~~ ~11~ ~ $2,500 ~ a ~ ~~. ~ ~ci~li=i~ 1~ ~~ liti~ti~. ~~= for ~ ~=~f-~= ~ f~ a Pollution Stigma Cont'd litigation. Those atTxmv~y's fees could greatly exceed the $5,500 estimated above. It is t. hereform a bmoc e~cima~e that t_he owner will be out-of-pocket approximately half of the $39,000 e~ci~a~ costs or say $19,500 to r_he real estate becau.~e of the El~c ~ies alleged pollution. In addition to t~he e~cimat~ out-of-pocket costs, the markmtin~ time period is ex~ to be ~~d by 6 months. The market value conclusion without the pollution s~igma is estimated at $475,000 on a previous page. ~ne present value of $475,000 not _r~3c~__ived for 6 months at a current estimated interest ra~e of 10% is $452,381, ir~lica~r~ a lo~s i~ ~arket value of $22,619, say $22,500. The final value estimate on the subject prc~ as it is allegedly pollut~ Conclusion without pollution s~ig~a Less pollution s~igma- $19,500 and $22,500 totals Final Value Estimate as Allegedly Polluted $475,000 42.000 $433,000 d 8*4 I Zonint; Map~