062491 EDAOFFICIAL FILE COPY
Agenda #6
CITY OF NEW HOPE
EDA AGENDA
EDA Regular Meeting #6
June 24, 1991
President Edward J. Erickson
Commissioner W. Peter Enck
Commissioner Gary L'Herault
Commissioner Gerald Otten
Commissioner Marky Williamson
2.
3.
4.
Call to Order
Roll Call
Approval of Minutes of May 28, 1991
Discussion of Request by Foremost, Incorporated, for Economic
Development Grant Program/Economic Recovery Fund Application (#474)
Other Business
6. Adjournment
Approved EDA Minutes
Meeting #5
CITY OF NEW HOPE
4401Xylon Avenue North
Hennepin County, Minnesota 55428
May 28, 1991
CALL TO ORDER
ROLL CALL
APPROVE MINUTES
GETHSEMANE
CEMETERY PROPERTY
Item 4
President Erickson called the meeting of the Economic
Development Authority to order at 7:50 p.m.
Present: Erickson, L'Herault, Otten, Enck, Williamson
Motion was made by Commissioner Williamson, seconded by
Commissioner Otten, to approve the EDA minutes of April 8,
1991. Voting in favor: L'Herault, Otten, Erickson,
Williamson; Voting against; None; Abstaining: Enck.
Motion carried.
Motion was made by Councilmember Enck, seconded by
Commissioner Williamson, to approve the EDA minutes of
April 22, 1991. All present voted in favor. Motion
carried.
President Erickson introduced for discussion Item 4,
Consideration of Proposal to Prepare Planning Document/
Market Study Regarding Development of a Portion of
Gethsemane Cemetery Property.
Mr. Donahue explained that officials representing
Gethsemane Cemetery have made application for a
conditional use permit to allow a temporary office
structure on the site for the purpose of the sale of
spaces in a proposed mausoleum to be built at the
cemetery. The CUP request is in the Planning Commission
process at this time. In preliminary discussions with
cemetery officials regarding long-range planning for the
entire site, officials indicated to staff that they may
give consideration to selling off a portion of the
property on the westerly portion of the site for
development. The funds would assist them in building the
mausoleum. Staff developed several concept plans for
several different sizes of developments and presented them
to cemetery officials for review.
At this time, staff would like the opportunity to have a
professional planning document and market study prepared
on the 18-20 acres of property to identify the market
conditions that may influence the developmentof a portion
of Gethsemane Cemetery. Such a study would identify
development cost estimates for single family, townhome and
New Hope EDA
Page I
May 28, 1991
MOTION
ADJOURNMENT
multiple-family market opportunities. The development of
a portion of this property would not only coincide with
the City's long-range goals of providing a greater
diversity in housing, but would also maximize property
values by utilizing vacant property. The estimated cost
for the study is $2,250 according to the City's Planning
Consultant. It would be funded by the HRA Redevelopment
fund.
Commissioner Enck expressed the need for quality control
if it is determined that multiple-family housing is the
best use for the land.
Commissioner Williamson commented that it is difficult for
a single-income family to afford a single family house and
there is a need for housing in the $60-80,000 price range
such as a townhomes and condos. President Erickson
commented that in many instances "owned" housing is
maintained better than "rental" units.
Motion was made by Commissioner L'Herault, seconded by
Commissioner Otten, authorizing the market study on
development of a portion of Gethsemane Cemetery. All
present voted in favor. Motion carried.
Motion made by Commissioner Enck, seconded by Commissioner
L'Herault 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 8:00 p.m.
Respectful ly Submi_tted,
Valerie Leone
City Clerk
New Hope £DA
Page 2
May 28, 1991
EDA
REQUEST FOR ACTION
Originating Department Approved for Agenda Agenda Section
City Manager EDA
6-24-91
Kirk McDonald B~:yf-)~F~ORE Item No.
By: Management Assistant 4
DISCUSSION OF REQUEST MOST, INCORPORATED, FOR ECONOMIC
DEVELOPMENT GRANT PROGRAM/ECONOMIC RECOVERY FUND
APPLICATION
City staff and Foremost recently met with representatives of the Minnesota Department of
Trade and Economic Development to discuss an Economic Recovery Fund Application to
assist Foremost in the relocation/expansion of its' business. Estimated costs for land,
building and equipment at the new site total $815,800. These costs do not include the
acquisition of the present Foremost site, which Mr. Fredendall feels has a value of $720,000.
While the grant application could be structured to assist with the acquisition and
development of the new site, the grant funds cannot be utilized by the City for the purchase
of the existing site. While the acquisition price of the Foremost property might be reduced
significantly if Foremost is successful in their suit against Electronic Industries and
awarded damages, some source of revenue for the acquisition of the property (whether it
be $400,000 or $720,000) must be found if the grant application is to proceed.
A cash flow projection for Tax Increment District #8, which includes the loan to Autohaus,
shows that the district is projected to have a cash balance of $3,500,000 at the end of the
district's life in 2004. The cash balance at the end of 1990 was $454,000. While there is
presently not enough cash in the district to purchase the property, the excess cost could be
financed internally and paid back to the district. The basic question is "does the EDA
desire to purchase the Foremost property and draw down the balance of the cash flow so
that the grant can proceed or not?"
(continued)
MOTION BY SECOND BY
Review: Administration: Fin amc e:
RFA-O01 ~
Request for Action
Foremost Grant Application
June 24, 1991
Page -2-
A second alternative that staff has discussed with Foremost, in the event that the City does
not purchase the Foremost property, is that perhaps the City should shift its' focus towards
the acquisition of the Electronic Industries site. This would be less costly and the purpose
here would be to rid 42nd Avenue and Foremost of the building/property from where the
contamination was generated. The building would be demolished and the land possibly
added to the present Foremost site to provide room for expansion and/or to make the
Foremost site more marketable.
In either case, a preliminary decision needs to be made regarding the acquisition of the
Foremost site because this will determine if the grant application proceeds or not. Without
the acquisition of the property, Foremost does not have the equity that is needed to invest
in the grant for the relocation.
Staff requests to discuss these options with the EDA.
U R B P L A N NG · DES I G N M A R K E T
Inc.
RESEARCH
MEMORANDUM
TO:
FROM:
DATE:
RE:
FILE NO:
Kirk McDonald
Alan Brixius
21 June 1991
New Hope - Foremost Redevelopment
131.00 - 91.05
BACKGROUND
Foremost, Inc. is looking to relocate and expand its present
operation within New Hope. Relocation is necessary due to the
limited size of their parcel and the soil and ground water
contamination of the land abutting their site to the east, which
prevents expansion on site. The existing building is
approximately 23,000 square feet in size, plus the Company has an
off-site building of 6,000 square feet. Foremost, Inc.'s
expansion plans call for a parcel approximately two acres in size
and a building about 26,000 square feet designed for future
expansion. Foremost,' Inc. would like to remain in New Hope and
is interested in a site in the 49th A~enue Industrial Park.
Due to the soil and ground water contamination at the Electronic
Industries site, Mr. Fredendall has been unable to sell the
property nor is able to get financing to.help develop a new site.
Foremost, Inc. has filed a lawsuit against Electronic Industries
for the damage to his land and building value.
Due to these financial encumbrances, Mr. Fredendall has requested
assistance from the City to help him relocate.
Acquisition of 42nd Avenue and Quebec Properties
To resolve a larger problem than just Foremost Inc.'s relocation
needs, the City may wish to consider the redevelopment of the
three industrial sites abutting 42nd Avenue between Quebec Avenue
and the railroad tracks. The City could consider the acquisition
of Foremost Inc., Electronic Industries, and Ardel Engineering
and redevelop these three sites as one property.
4601 Excelsior Blvd..Suite 410.Minneapolis, MN 55416.(612) 925-9420. Fax 925-2721
Foremost
income to invest in its relocation site.
would benefit from the sale of their property with
These sites are located in the 42nd Avenue
such, the following TIF impact applies:
TIF District. As
On-Site Tax Increments
Currently, the three industries are generating a frozen tax
base that would make new on-site TIF ineffective.
Off-Site Tax Increments
The City has existing surplus TIF revenue from the 42nd
Avenue TIF District that could be available to assist in
the redevelopment of the site.
In further investigation of this
were investigated:
project, the
following items
Soil testing to date on the Foremost property has not shown
signs of contamination.
Foremost is continuing their pursuit of a lawsuit against
Electronic Industries for depreciating the value and
marketability of the Foremost site. The schedule for the
processing and completion of this lawsuit remains uncertain.
Foremost estimates that their site is worth approximately
$720,000. This estimate is based on an appraisal for Ardel
Engineering. Mr. Fredendall has indicated that he has a
$400,000 mortgage outstanding on the building.
Foremost has estimated that relocation and construction of a
new building will,cost approximately $1,100,000.
Foremost would like the
the industry to relocate.
concerns exist:
City to acquire their property to allow
Under this scenario, the following
The City presently has approximately $500,000 of TIF surplus
funds in the its 42nd Avenue TIF District. While future
revenue generation will produce additional surplus, the City
currently lacks funds to cover costs that may be associated
with the site acquisition, relocation, and site clearance.
The City would also have to determine if this size
expenditure is beneficial to the City.
2
Loan programs, such as the 504 SBA Program, and the DTED
Economic Development Grant, would provide low interest loans
to the industry, however, each of these programs requires
private equity to leverage the loans and collateral to
guarantee performance.
With the stigma of the contaminated site next to Foremost
property, it is questionable as to whether the company could
secure bank financing or produce the private equity to
complete a successful application for these programs.
An opportunity to assist Foremost does exist for the City.
opportunity involves the following steps:
This
1. Pursue the condemnation of the Electronic
building as a public health hazard.
Industries
Upon the demolition of the building, purchase the Electronic
Industries site.
Remove the contaminated soils from the Electronic Industries
site. Re-establish a finished grade.
Lease or sell the newly acquired site to Foremost and Ardel
Engineering to allow for some on-site expansion. This may
also improve the marketability and the financing
opportunities for these remaining buildings.
cc:
Dan Donahue
Steve Sondrall
INCORPORATED
I II
7528 - 42nd AVENUE NORTH MINNEAPOLIS, MINNESOTA 55427
TELEPHONE: (612) 533.-0793
FAX: (612)
April 1, 1991
Moving (price good for 30 days)
Electrical
Overhead Crane Cost
Office Shops
Welding & Dressing Segregation
Building
$ 17,900.00
146,000.00
53,000.00
22,000.00
14,300.00
625,000.00
Land 190,000.00
PRECISION SHEET METAL. · ST~MPIINGS · SILK SCREENING
Northwest Associated Consultants, Inc.
U R 0 A N p L A N N I N G DE S I G N . M A R K E T R E S E A R C H
MEMORANDUM
TO:
FROM:
DATE:
RE:
FILE NO:
Kirk McDonald
Allan Hunting/Alan Brixius
27 March 1991
New Hope - Quebec/42nd Avenue
131.00 - 91.05
On 14 March 1991, a meeting was held to discuss the redevelopment
options for Foremost, Inc. and for the 42nd Avenue and Quete-
block. Attending the meeting were: Mr. Allen Fredenca!i.
President of Foremost, Inc.; James Lushine, Minnesota Depart~euz
of Trade and Economic Development; Kirk McDonald, Dan Donah'.~{,
City of New Hope; Alan Brixius, Northwest Associated Consultants,
Inc.
Foremost, Inc. is looking to expand and relocate its pres=nt
operation. Relocation is necessary due to the limited stze '~
their parcel and the soil and ground water contamination of thetu~
land, which prevents expansion on site. The existing building [~
approximately 23,000 square feet in size, plus the Company has an
off-site building of 6,000 square feet. Foremost, Inc.'s
expansion plans call for a parcel approximately two acres in size
and a building about 40,000 square feet designed for future
expansion. Foremost, Inc. plans to remain in New Hope and ts
interested in a site in the 49th Avenue Industrial Park.
Due to the soil and ground water contamination at the Electron!
Industries site, Mr. Fredendall has been unable to sell
property nor is able to get financing to help develop a new si~e.
Foremost, Inc. has filed a lawsuit against Electronic Industr£es
~or the damage to his land and building value.
~=,-~ ~.....,.,;.,. =~.,~ . ¢~,,i~-- a~c~. ~;.n==nnli= lul~ K~AIfl./R19% 925-~}420' Fax 925-272~
Due to these financial encumbrances, Mr. Fredendall has reques%ez
assistance from the City to help him relocate. The foll3wLn:
options, discussed at the 14 March meeting, are available:
Acquisition of 42nd Avenue and Quebec Properties
To resolve a larger problem than just Foremost Inc.'s relocatiTn
needs, the City may wish to consider the redevelopment of the
three industrial sites abutting 42nd Avenue between Quebec Avenue
and the railroad tracks. The City could consider the acquisi:ion
of Foremost Inc., Electronic Industries, and Ardel Engineering
and redevelop these three sites as one property.
Foremost would benefit from the sale of their property
income to invest in its relocation site.
The three sites are located in the 42nd Avenue TIF District.
such, two revenue sources may be available for the project.
1. On-Site Tax Increments
Currently, the three industries are generating a frozen tax
base that would make on-site TIF ineffective. To imprcve
the TIF effectiveness the City could request that the Ccuntv
Assessor reappraise the industrial properties with the full
understanding of the ground water contamination and
blighted building on Electronic Industries site. This
reappraisal may lower the frozen base to allow a greater tax
increment generation.
2. Off-Site Tax Increments
The City has existing surplus TIF revenue from the 42nd
Avenue TIF District that could be available to assist in
the redevelopment of the site.
If the City is interested in exploring redevelopment,
following should be investigated or required:
:he
The City receive hold harmless agreements from Foremo$:,
Inc., Electronic IndUstries and Ardel Engineering for clean
up of contamination on the site.
Testing be done to identify limits of contamination.
Foremost continue its pursuit of its lawsuit againz:
Electronic Industries for depreciation of their land value.
If Foremost, Inc. is successful in their lawsuit, the City's
acquisition costs should be reflective of compensasicn
received through the lawsuit.
If the lawsuit does show depreciation in value, then
County Assessor should reflect this in the property
assessment, as this may affect tax increment generation.
5. If the City acquires land, Foremost,
their relocation benefits.
Inc. should waive
6. The City should have interested developers on hand
would redevelop and promote the site.
504 Program
To assist in land acquisition, building construction an~
building infrastructure investment, James Lushine, of the
Minnesota Department of Trade and Economic Development,
identified the 504 Plan which is available to small businesses.
The 504 loan consists of 50 percent conventional loan, 40 percent
SBA loan and 10 percent private business investment for equity.
To apply for the 504 plan, Mr. Fredendall will have to file an
application on his company's behalf for the low interest !.oan
through the Small Business Administration. The 504 applicatic~
must be pursued by Foremost, Inc. and will require a monetary an.~
time investment by Foremost, Inc. to complete the applicati~
properly. If Mr. Fredendall is in need of assistance se he'u
fill out the application, professional services should be sough%.
Economic Recovery Fund
This grant is available to the City of New Hope through the
community development grant application. The grant amount can
range from $250,000 to $500,000 and consist of Federal and State
funds. The grant applications are processed through the
Minnesota Department of Trade and Economic Development. The
grants are awarded to the applicant City who in turn offers the
funds as low interest loans to local businesses. Loan paybac~s
are retained by the City as part of a revolving loan fund for
economic development.
A New Tax Incremen~ District
Another means of providing financial assistance to Foremost wcul~
be establishing an economic development TIF district over the new
relocation site. New construction will generate taxes which will
help underwrite land acquisition and site improvements.
It is £mportant to note that under
following implications would occur:
the
new tax laws,
The City would be subject to a State
currently amounts to approximately
increment generated by the district.
aid reduction ~
one-third of the tax
2. The City would have to arrange some type of devetcEer
compensation for the loss of State aid funds.
The general impact of these tax laws would be a reduction in
tax increment benefits to approximately 66 percent of total
revenues.
cc: Dan Donahue
U R B P L A N G O I G N M A R K E R E S E A R C H
MEMORANDUM - Revised
'FO:
FROM:
DATE:
RE:
FILE NO:
Kirk McDonald
Robert Kirmis/Alan Brixius
14 March 1991
New Hope - Quebec/42nd Avenue
131.00 - 91.05
BACKGROUND
Per your request, I have modified the estimates of land
acquisition and demolition costs for the Quebec/42nd Avenue
redevelopment project as we discussed on 13 March. It should De
noted that the following text is basically a ueiteration cf
information contained within a 21 February ~991 memorandum w[%h
simple cost estimate modifications.
ISSUES AND ANALYSIS
Land Acquisition. Redevelopment of the
require land acquisition, the following
based on the County Assessor's estimated
ten percent.
Property
Estimated
Market Value
(plus 10%)
subject parcels will
acquisition costs are
market valuatLon plus
Foremost
(7528 42nd Ave. N.)
Electronic Industries
(7516 42nd Ave. N.)
Ardel Engineering
(7500 42nd Ave. N.)
$ 543,400
$ 299,640
$ 344,960
TOTAL ACQUISITION COST
$1,188,000
4601 Excelsior Blvd.- Suite 410. Minneapolis, MN 55416. (612) 925-9420. Fax 925-2721
The City should investigate flexibility that may be available in
negotiating land acquisition. Any acquisition negotiations
should recognize the Foremost, Inc. has a vital need to relocate
and the Electronic Industries contains a building that is
structurally substandard. Site acquisition offers should reflect
these conditions.
Due to the ground water and soil problems associated with the
Electronic Industries and spreading to impact surrounding lots,
the City must be cautious in any land acquisition efforts. The
first concern would be the City entering a chain of title and
becoming responsible for the site clean-up. If the City pursues
land acquisition, it must receive indemnification from the site
clean-up responsibility and costs.
It should be noted that due to identified ground water pollution
concerns associated with site, the Hennepin County Assessor has
been asked to re-evaluate the market value of the said property.
It is assumed that the pollution concern will lower the
property's land value and subsequently decrease City land
acquisition costs. To date, investigation into this matter is
pending.
The soil and ground water problems must be corrected to allow for
future conveyance of the property to a private developer.
Without a clean site, private financing will be difficult to
obtain.
Relocation. Public acquisition of land for' redevelopment,
entitles the private property owners to receive relocation
benefits. Specifically, owners or tenants may be paid on the
basis of actual reasonable moving costs and related expenses or,
under certain circumstances, a fixed payment.
Actual Reasonable Moving Expenses:
Actual reasonable moving expenses may be paid when the move
is performed by a professional mover or by the owner/tenant.
Related expenses such as personal property losses, re-
establishment costs, and expenses in finding a replacement
site also may be reimbursable.
In calculating relocation costs, two scenarios are offered.
Scenario A anticipates that relocation costs for the Foremost
facility will be incurred, while Scenario B omits relocation
costs for the said business. The relocation cost omission
follows an indication from Foremost property owners that this
element of a potential redevelopment project is considered
negotiable and may be waived.
Scenario A:
Structure
Relocation Costs
Foremost
Electronic Industries
Ardel Engineering
Reger Grinding
$50,000
NA
$30,000
$15,000
TOTAL
$95,000
Scenario B:
Structure
Relocation Costs
Foremost
Electronic Industries
Ardel Engineering
Reger Grinding
NA
NA
$30,000
$15,000
TOTAL $45,000
As shown above, relocation costs for the subject redevelopment
project could range from $45,000 to $95,000 depending upon
whether costs for the Foremost business are waived.
Demolition Costs. Based upon bids reviewed by the City Building
Official, demolition of the three industrial buildings under
study can be expected to cost approximately $95,000. The staked
cost would include the removal of buildings, asphalt and ali
concrete curbing.
Summary of Costs. For ease of reference, tables summarizing
project acquisition, relocation and demolition costs have been
prepared. It should be noted that Scenario A includes relocation
costs for the Foremost business while Scenario B waives the said
costs.
Scenario
Property
TOTAL COST
Acquisition
$1,188,000
Relocation
$ 95,000
Demolition
$ 95,000
Total
$1,378,000
Scenario B:
Property
TOTAL COST
Acquisition
$1,188,000
Relocation
$ 45,000
Demolition
$ 95,000
Total
$1,328,000
As shown above, redevelopment costs for the three parcels of
located north of 42nd Avenue between Quebec Avenue and the
Line Railroad may be expected to range between $1,328,000 ant
$1,378,000, depending upon whether the Foremost faci!itv
subject to relocation payment. It should be noted that tke
aforementioned estimates of cost should be construed as
generalized figures which attempt to provide an idea as
expectant costs. The said figures should in no way be considered
finalized or fixed and should be subject to more detailed
investigation upon redevelopment action.
Groundwater Contamination. The costs summary also does not
include any estimate of cost for the groundwater cleanup. We are
attempting to determine the extent of cleanup and time frame that
the PCA is requiring. To date, we have not been able to identify
all the conditions influencing the site groundwater cleanup.
This issue affects the potential redevelopment project
following manner:
in the
Without indemnification of the City for cleanup costs, the
City may become responsible for a portion of the cleanup if
it acquires the property.
o
Total cleanup will be
potential developer.
necessary to sell the property to a
COSTS/REVENUES ANALYSIS
Total Project Costs
Revenues: Land Sale
Existing Cumulative TIF #8
Surplus
Remaining Project Costs
Capitalized (8% @ 2.5 years)
Bond Discount (2%)
Administration/Bond Sale/Bond Counsel
Bond Amount
Annual Payment at 15 Year Term at
8% Interest Rate
$1,328,000
316,000
500,000
512,000
137,000
13,700
22,300
$ 685,000
86,670
R B A P L A N N G D E S N M A R K E T R E S E A R C H
MEMORANDUM
TO:
FROM:
DATE:
RE:
FILE NO:
Kirk McDonald
Alan Brixius
21 February 1991
New Hope - Quebec/42nd Avenue
131.00 - 91.05
The redevelopment of three industrial sites in the corner of
Quebec and 42nd Avenue of the City offer the opportunity to
sccomplish the following objectives:
Promote economic development through the relocation and
expansion of Foremost Industries in another part of ~ew
Hope.
Promote the redevelopment of a highly visible site that is
characterized by nonconforming over-utilized industrial
sites and a building that has structurally deteriorated.
Promotion of commercial redevelopment along 42nd avenue
that promotes a cohesive and defined shopping environment in
New Hope.
Clean up of contaminated soils and ground water that has
impacted surrounding properties.
The aforementioned objectives provide the emphasis for pursuing
th£s redevelopment project. Investigation of the various
elements of the project raises a number of concerns that require
attention.
4601 Excelsior Blvd.. Suite 410.Minneapolis, MN 55416. (612) 925-9420. Fax 925-272t
Land Acuuisition. Redevelopment of the subject parcels will
require land acquisition. The following acquisition costs are
based on the County Assessor s estimated market valuation plus
fifteen percent.
Property
Estimated
Market Value
(Plus 10%)
Foremost (7528 42nd Avenue No.
Electronic Industries (7516 42nd Ave No.)
Ardel Engineering (7500 42nd Ave No.)
$ 568,100
$ 301,300
$ 346,840
TOTAL ACQUISITION COST
$1,216,240
The City should investigate flexibility that may be available in
negotiating land acquisition. Any acquisition negotiatic~s
should recognize that Foremost, Inc. has a vital need to relocaze
and the Electronic Industries contains a building that is
structurally substandard. Site acquisition offers should reflect
these conditions.
Due to the ground water and soil problems associated with the
Electronic Industries and spreading to impact surrounding !ozs,
the City must be cautious in any land acquisition efforts. The
first concern would be the City entering a chain of title a~t~
becoming responsible for the site clean-up. If the City pursues
land acquisition, it must receive indemnification from the size
clean-up responsibility and costs.
The soil and ground water problems must be corrected to allow for
future conveyance of the property to a private develODer.
Without a clean site, private financing will be difficult to
obtain.
Relocation. Public acquisition of land for redevelopment,
entitles the private property owners to receive relocation
benefits. Specifically, owners or tenants may be paid on the
basis of actual reasonable moving costs and related expenses or,
under certain circumstances, a fixed payment.
Actual Reasonable Moving Expenses:
Actual reasonable moving expenses may be paid when the move
is performed by a professional mover or by the owner/tenann.
Related expenses such as personal property losses,
establishment costs, and expenses in finding a replacement
site also may be reimbursable.
Specifically, actual reasonable moving costs include:
Personal property losses.
Expenses in finding a replacement site
to $1,000.
Re-establishment expenses up to $10,000.
or bui!dinu
Fixed Payment:
The owner/tenant may be eligible to receive a fixed pa .... ~
from $1,000 to $20,000. This payment is based on the annuai
net earnings of the business, not to exceed $20,000. Tc
qualify for a fixed payment, certain conditions must be met.
In calculating relocation costs, sensitivity toward business type
and facility machinery must be taken under consideration.
Foremost Metal Specialties is a business which conducts metal
stamping and precision tooling. This industry is characterized
by heavy equipment and building infrastructure unique to this
type of industry. Consequently these characteristics will
increase relocation costs. Taking these considerations into
account, relocation costs could reach $50,000 or more. We note
that this only represents a conservative estimate for the purpose
of this preliminary study. Actual relocation costs can only be
identified through a more detailed inspection of each industry.
It should be noted that the Foremost property owners have
approached the City in pursuing the redevelopment of their size.
They have requested assistance through land acquisition and
relocation. The City may be in the position to negotiate having
Foremost waive their relocation benefits.
The Electronic Industries structure, which lies east of the
Foremost building, currently lies vacant and has been subject to
condemnation. Consequently, the property is not considered
eligible for relocation expenses.
The Ardel Engineering building, which lies adjacent to the Soo
Line Railroad, currently houses two industrial type businesses,
the Ardel machine shop operation and Roger Grinding. The Ardel
facility, while smaller in scale than the Foremost business, may
also require the relocation of heavy machinery. For the purpose
of this feasibility study, we have allocated a relocation expense
of $30,000.
The Roger Grinding facility is relatively small in scale and we
have allocated approximately $15,000 for relocation.
These costs offer only a conservative estimate for the purpose of
this study. More detailed relocation costs may only be available
upon an inspection of the premises.
In calculating relocation costs, two scenarios are offered.
Scenario A anticipates that relocation costs for the Foremosz
facility will be incurred, while Scenario B omits relocan!cn
costs for the said business. The relocation cost omission
follows an indication from Foremost property owners that tkis
element of a potential redevelopment project is considered
negotiable and may be waived.
Scenario A:
Structure
Relocation Costs
Foremost
Electronic Industries
Ardel Engineering
Roger Grinding
$50,000
NA
$30,000
$15,000
TOTAL
$95,000
Scenario B:
Structure
Foremost
Electronic Industries
Ardel Engineering
Roger Grinding
Relocation Costs
NA
NA
$30,000
$15,000
TOTAL $45,000
As shown above, relocation costs for the subject redevelopment
project could range from $45,000 to $95,000 depending upon
whether costs for the Foremost business are waived.
Demolition Costs. According to a qualified demolition service
estimator, demolition costs for 1960s type industrial buildings,
such as that under study, can be expected to cost approximately
25 cents per cubic foot. Utilizing this standard, the following
demolition costs may be anticipated.
Structure
Foremost
Electronic Ind.
Arde! Engineering/
Reger Grinding
Cubic Feet
518,400
(21,600 SF x 24
230,400
(9,600 SF x 24'
196,000
(14,000 SF x 14')
TOTAL DEMOLITION COSTS
Unit
Cost
.2S/CF
· 25/CF
· 25/CF
Total Cost
$ 129,600
$ 57,600
$ 49,000
$ 236,200
NOTE:
Cubic foot allotments are not to be considered exacting
or precise measurements and may be subject to change.
As shown above, demolition of the Foremost, Electronic Industries
and Ardel building can be expected to cost approximately
$236,200.
Summary of Costs. For ease of reference, tables summarizinc
project acquisition, relocation and demolition costs have been
prepared. It should be noted that Scenario A includes re!ocatLcn
costs for the Foremost business while Scenario B waives the saLfi
costs.
Scenario A:
Property
Foremost
Acquisition Relocation
$ 568,100 $ 50,000
Demolition Total
$ 129,600 $ 747,70?
Electronic
Industries $ 301,300 NA $ 57,600 $ 358,900
Ardet Eng./
Roger $ 346,840 $ 45,000 $ 49,000 $ 440,840
TOTAL
PROJECT
COST $1,216,240 $ 95,000 $ 236,200 $1,547,440
5
Scenario B:
Property
Foremost
Electronic
Industries
Ardel Eng./
Reger
Acquisition Relocation
$ 568,100 NA
Demolition Total
129,600 $ 697,700
301,300 NA $ 57,600 $ 358,900
$ 346,840 $ 45,000 $ 49,000 $ 440,840
TOTAL
PROJECT
COST $1,216,240 $ 45,000
$ 236,200
$1,497,440
As shown above, redevelopment costs for the three parcels of land
located north of 42nd Avenue between Quebec Avenue and the
Line Railroad may be expected to range between $1,497,440 and
$1,547,440, depending upon whether the Foremost facility is
subject to relocation payment. It should be noted that the
aforementioned estimates of cost should be construed as
generalized figures which attempt to provide an idea as
expectant costs. The said figures should in no way be
finalized or fixed and should be subject to more detailed
investigation upon redevelopment action.
Groundwater Contamination. The costs summary also does non
include any estimate of cost for the groundwater cleanup. We are
attempting to determine the extent of cleanup and time frame tha%
the PCA is requiring. Todate, we have not been able to identify
all the conditions influencing the site groundwater cleanup.
This issue affects the potential redevelopment project in the
following manner:
Without indemnification of the City for cleanup costs, the
City may become responsible for a portion of the cleanup if
it acquires the property.
o
Total cleanup will be necessary to
potential developer.
sell the
property to a
Revenues
Land Sale. The City involvement in the redevelopment of
site will be contingent on having a developer for the site. This
will allow for the City t generate some of the revenue throuch
the sale of the land and guarantee new construction. The tctaL
redevelopment site is approximately 2.4 acres in size.
City can sell the land at $3.00 per square foot, the site will
generate $316,000 in proposed revenue.
The City may investigate the vacation and sale of the 20 fcc%
alley abutting the site on the north side of the site. The area
of the alley amounts to 6,600 square feet. This could genera%e
another $19,800 if the alley right-of-way is sold with the
balance of the redevelopment site.
Tax Increment Financinq. The
industrial sites will support a retail
approximately 15,250 square feet.
assumption, the new shopping center would
$41,180 annually in taxes.
shopping Center Size:
Construction Value:
Shell Construction $35.00/sq.ft.
Tenant Improvement $15.00/sq.ft.
redevelopment of the three
shopping center of
Using the following
generate approximately
15,250 sq.ft.
Total Construction Cost
Tax Capacity
New Hope Tax Rate
$50.00/sq.ft.
$762,500.00
36,902.00
11!.594
Estimated Tax Generation
Estimated Tax Generation Per Sq. Ft.
41,180.00
.7O
The three industrial sites are currently generating an
accumulative tax total of approximately $47,250. This frozen
base generates more revenues than the projected taxes. [n 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
generation.
TOTAL PROJECT COSTS
REVENUES
Land Sale
Existing Cumulative TIF ~8 Surplus
TOTAL PROJECT COST TO BE BONDED
TOTAL BOND AMOUNT
Project Cost
Capitalized Interest (8% @ 2.5 years
$1,550,000
316,000
500,000
734,000
1,020,000
734,000
203,900
Bond Discount
Administration/Bond Counsel
Bond Sale
20,400
61,700
$1,020,000
ANNUAL PAYMENT AT 15 YEAR TERM,
8% INTEREST RATE
$ 129,052
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