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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 DI W-1 e ~w-2 ,ADelt, a