101491 EDAOFFICIAL FILE COPY
CZTY OF NEW HOPE
EDA AGENDA
Agenda #8
EDA Regular ~leeting #8
President Edward J. Erickson
Commissioner W. Peter Enck
Commissioner Gary L'Herault
Commissioner Gerald Otten
Commissioner Marky Williamson
October 14, 1991
2.
3.
4.
Call to Order
Roll Call
Approval of Minutes of July 22, 1991
Discussion Regarding Acquisition/Relocation of Foremost, Inc., 7528
42nd Avenue North
Discussion Regarding Purchase of Outlot A, Custom Mold Addition, 5430
International Parkway
Other Business
7. Adjournment
Approved EDA Minutes
Meeting #7
CITY OF NEW HOPE
4401Xylon Avenue North
Hennepin County, Minnesota 55428
July 22, 1991
CALL TO ORDER
ROLL CALL
APPROVE HINUTES
FOREMOST, INC.
Item 4
)OTION
AD~OURNNENT
President Erickson called the meeting of the Economic
Development Authority to order at 9:05 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 June
24, 1991. All present voted in favor. Motion carried.
President Erickson introduced for discussion Item 4,
Request Authorization to Obtain Appraisal on Foremost,
Inc. Property at 7528 42nd Avenue North (Improvement
Project No. 474).
Mr. Donahue stated in order to proceed with the
acquisition of the Foremost property and before a grant
application can be submitted, specific costs must be
identified. An appraisal is necessary so the City can
structure an offer to purchase the property at fair market
value. Staff is recommending that the appraisal be
conducted by Brad Bjorklund, BCL Appraisal, Inc. for
$5,000. He stated the appraisal will be funded out of
42nd Avenue tax increment monies.
Motion was made by Commissioner Otten, seconded by
Commissioner Enck, authorizing the appraisal on Foremost,
Inc. Property at 7528 42nd Avenue North {Improvement
Project No. 474).
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 9:10 p.m.
Respectful ly Submitted,
Valerie Leone
City Clerk
New Hope EDA
Page 1
July 22, 1991
-~ kDA
i REQUEST FOR ACTION
Originating Department APproved for Agenda Agenda Section
City Manager Oc~ber 14, 1991 EDA
Kirk McDonald // / Item No.
By:
Management Assistant By:f/ 4
DISCUSSION REGARDING AC~ISITION/RELOCATION OF FOREMOST, INC. , 7528
42ND AVENUE NORTH
The appraisal of the Foremost, Inc. property at 7528 42nd Avenue
North has been completed and staff is continuing discussions with
Foremost regarding the possible acquisition of the property and the
relocation of the business within New Hope. Staff requests to
review the appraisal with the EDA and present an update on the
progress of the discussions.
MO/ION BY SECOND BY
Review: Administration: Finance:
RFA-O01
DATE:
TO:
FROM:
SUBJECT:
CITY OF NEW HOPE
MEMORANDUM
October ll, 1991
Daniel J. Donahue, City Manager
Kirk McDonald, Management Assistant
Summary of Discussion With Foremost, Inc.
This memorandum is intended to briefly summarize our meeting with
Foremost, Inc. held on September 30.
As you are aware, BCL Appraisals recently completed an appraisal on
the Foremost property and the final value estimate on the property
is as follows:
Conclusion without pollution stigma
Less pollution stigma
Final Value Estimate as Allegedly Polluted
$475,000
42,000
$433,000
The appraisal states that:
"The site is stricken with stigma of pollution because of its
proximity to polluted Electronic Industries. As a result of that
stigma the subject owner has had problems marketing and mortgaging.
He has caused 'monitoring wells to be installed to measure onsite
pollution, tried to measure his loss in market value and has sued
Electronic Industries for loss in value. It is the opinion of the
MPCA (Minnesota Pollution Control Agency), that given the current
level of knowledge from the subject and Electronic Industries test
wells, the current regulations and continued voluntary cooperation
between the subject owner and the MPCA a "no action" letter will be
forthcoming for the subject property. A "no action" letter is the
equivalent of the MPCA saying that the subject owner is not a
contributing polluter and is not responsible for any pollution
found on its property. These types of letters are written by the
MPCA when contamination is cleaned up or is in the process of being
cleaned up and is not the problem of the property owner and the
property in question."
Foremost also had an independent appraisal of their property
completed and indicated that the impaired appraised value as
similar to the BCL value, but that their unimpaired value was
significantly higher ($660,000). They were not willing to share
their appraisal with the city.
- 1 -
Foremost indicated that they were interested in an offer being
structured that would address the following areas:
Real Estate
Leasehold Improvements
Moving Expenses
Relocation Costs
Occupying Costs (stay in building until relocate)
Foremost specifically indicated they wanted the following:
$625,000 for land/building and ability to preserve claim
against Electronic Industries.
City commit up to $285,000 or actual cost of leasehold
improvements.
One year rent free in their existing building after the
City purchases it, so they have adequate time to find a
new location.
City assume full bill for Data Engineering (already have
committed to two-thirds of cost).
5. Attorney fees with a cap at $10,000
The City indicated preliminarily that we were willing to discuss
the following terms:
$500,000 for land/building (without stigma and if lawsuit
against Electronic Industries is successful, City cost to
be reduced by award amount.
2. $285,000 in leasehold/moving expenses.
3. Foremost to proceed with SBA (Small Business
Administration) loan.
City pursue and successfully obtain $100,000 Economic
Development Recovery Grant.
Finding a suitable location for Foremost in a new or
existing building (Foremost wants to lease - not own).
Finding a developer for the 42nd Avenue site, if all
three properties are acquired.
7. Foremost must remain/relocate in New Hope.
The staff will be meeting with the City Planning Consultant and
City Attorney to discuss these issues prior to the October 14th EDA
meeting.
- 2 -
CITY OF NEW HOPE
MEMORANDUM
DATE:
TO:
FROM:
SUBJECT:
July 9, 1991
Dan Donahue, City Manager
Kirk McDonald, Management Assistant/Community Development
Coordinator
Outline for Foremost Project
Subsequent to the June 24th EDA meeting where it was determined
that the City should proceed with the Foremost grant application
and the acquisition of the Foremost property, I have met with the
Planning Consultant and we have outlined the sequence of events
that we feel need to be accomplished in order to achieve the goals
of both the City and Foremost· We will be meeting with Mr.
Fredendall on Thursday, July llth at 11:00 a.m. and want to discuss
the outline at that meeting·
TASKS
City have appraisal of Foremost property completed so that an
independent appraisal is available to document price paid for
property', This information is needed both to structure an
offer and to complete the grant application. An appraisal
will answer the questions about the large disparity between
the market value listed and what the owner feels the property
is worth.
Foremost submit appropriate documentation regarding outstand-
ing mortgage and make determination as to whether they would
own new building or lease it from developer. Both of the
items will impact on how grant package is assembled.
city/Consultant complete cost/benefit analysis on acquisi-
tion/redevelopment of Foremost/E.I./Ardel properties and
impact on TIF District.
City st~nlcture offer to purchase property based on completic~
of Tasks I & 2 and address following issues:
A. Purchase price
B. Foremost waiving relocation benefits
c. city assuming costs for demolition
D. Foremost's relocation within City
E. Appropriate adjustments made to purchase price if
Foremost lawsuit against Electronic Industries is
successful.
· --2--
City offer to purchase property - if Foremost accepts, proceed
w~th following steps. If Foremost rejects, renegotiate.
Foremost seeks 504 loan application with private consultant in
conjunction wiSh the City's submittal of the preliminary grant
application. Foremost will need to submit profit/loss
statements and other necessary documentation.
City continue work on condemnation of E.I. property.
Final grant application submitted in conjunction with504 loan
package.
Possible Scenario for
Grant Application/504 Package
for Acquisition o~ Foremost Property
(All figures are estimates for project planning purposes
and are subject to change)
Project Costs - New Building
Moving
Electrical
Overhead Crane
Office Shops
Welding/Dressing Segregation
Miscellaneous Equipment
$ 17,900
146,000
53,000
22,000
14,300
~,8oo
Total Moving/Equipment
$ 285,000
*Building Cost
Land
$625,000
190.000
Total Land/Building
$ 815,000
Total Equipment/Land/Building $1,100,000 .
*(assumes Foremost will own new building)
City purchase Foremost property for $500,000 with TIF funds
Foremost utilizes $300,000 to pay off mortgage and
$200,000 for personal equity in new building.
Loan/Grant structured as follows:
Total Project Costs for New Site
Foremost personal equity
SBA loan
Grant/revolving loan from City
$1,100,000
200,000
800,000
$ 100,000
INCORPORATED
IIII I I I I
7528- 42nd AVENUE NORTH · MINNEAPOLIS, MINNESOTA 55427 · TELEPHONE: (612) 533-0793 · FAX: (612) 533-3087
April 1, 1991
Moving (price good for 30 days)
Electrical
Overhead Crane Cost
Office Shops
W~iding & 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
INCORPORATED
7528 - 42nd AVENUE NORTH MINNEAPOLIS, MINNESOTA 5542'? TELEPHONE: (612) 533-0793 FAX: (612) 533-3087
July 17, 1991
Kirk McDonald, Management Assistant
City of New Hope
4401 Xylon Avenue North
New Hope, MN 55428
Dear Mr. McDonald:
In reply to your memorandum of July 9, 1991 concerning
the Foremost project, please be informed that our
outstanding mortgage on the building is $445,751.00,
plus a second mortgage of $39,211.00 for our addition.
At this time we are leaning toward leasing instead of
owning.
If you have any other questions, please call me.
Respectfully,
Allen Fredendall
President
AF:dj
PRECISION SHEET METAL · STAMI~IN(~S ' SILK SCREENING
APPRAISAL
OF
Industri~ Real Estate
Forp_most Incorporated
7528 42nd Avenue North
New Hope, Minnesota 55428
PREPA~ ~
The City of New Hope
c/o Mr. Kirk McDonald
4401 Xylon Avenue North
New Hope, Minnesota 55428
AS OF
7-30-91
The purpose of the appraisal is to estimate the market value of the proper~y
in fee simple.
Market value, accor~rg to Real Estate Appraisal Terminology by The Society
of Real Estate App--, is the most probable price in terms of money which a
pr~ should being in a cc~petitive and open market under all conditions
requisite to a fair sale, the buyer and seller, each acting prudently,
knowledgeably and assuming the price is not affected by undue stimulus.
File Numberg1844
We certify to have personally inspected the subject proper~y with uhe
comptroller, Bill Hall~in after offerir~ the owner, Allen Fredendall, r_he
opport~ty to accompany us. To the best of our knowledge and belief, the
statements contained in this repor~ ar~ upon which the opinions are based, are
t_rue and correct subject to the "Limiting cor~tions" herein set forth. In
s~ition this report conforms with and is subject to requirements of the Code
of Ethics and Standards of Professional Conduc~ of the Appraisal Institute.
Employment in and compensation for making this appraisal are in no ~ay
contingent upon the value reported. We certify to have no interest, either
present or contemplated, in the subject property.
It is our opinion that as of July 30, 1991, the market value of ~he
subject property, given it is allegedly polluted, is:
$433,000
Brad Bjorklund, MAI, SRA
MN LIC. ~4000377
Eric Bj orklund
TABLE OF
PAGE
t~JRPOSE OF APPRAISAL ........ ............. i
CERITFICATION ........................ ii
Ii,GAL DESCRIPITON ...................... 1
HISTORY ............................ 1
CITY AND NEIGHBORHOOD DESCRIPI~ION .............. 2
SITE DESCRIPI~ION ....................... 3-5
IMPRO~ DESCRIPI"ION 6-8
APPRAISAL METHODOLOGY ..................... 9
.................. 10-11
MARKET DATA APPROA(~{ 12-27
IN(/iME []ATA APPROACh{ 28
SUMMARY & CONCLUSION
..................... 29-35
ADDENE~
UNDERLYING ASSUMPI~IONS, O~NTIA~NT, & LIMITING CONDITIONS
APPRAISING QUALIFICATIONS OF BRAD BJORKLUND
S.R.E.A. PAGE
CITY MAP
ZONING MAP
PLAT MAP
~3ILDING SKET(~
LAB ANALYSIS
PHOIC~RA~C VIZWS
The property is legally described as foll~s:
Lot 5, Auditor's Subdivision No. 324, the adjacent vacated alley, subjec~ ~o
street and utility easements, Hennepin County, Minnesota.
Pr~ Identification Number: 17-118-21-22-0008
Assessor's Market Value:
(land) $ 85,800
(bldq) $408,200
Total $494,000
$27,266.80
Unpaid Balance of Special Assessments: Assumed Paid
There has been no reported sale of the subject during the past 5 yea~s. The
normal marketing period for a pr~ of this type is about 12 to 18 m~nths.
New Hope is a second tier westerly suburb of Minneapolis with a current
population of about 22,680. It is approximately seven miles northwest of
Downtown Minneapolis. The community is primarily residential in character.
There are scattered industrial districts and one major concentration of
cc~mercial focused at the intersection of 42nd Avenue North (C.S.A.H.
~9/R~ord R~ad) and Winnetka Avenue (C.S.A.H. ~156). Most development in
Hope has taken place since 1960.
New Hope has a council/manager plan B form of government that provides good
quality municipal utilities and services. Essentially all of the city streets
are paved, have concrete curb and gutter, street lights and service by sanitary
sewer and water. The entire city is located in School District F281. MTC bus
routes serve most of the City including a route on 42nd Avenue North. No
unusual municipal or economic influences are observed that would unduly affec~
the value of real estate in New Hope other than recognized groundwater
pollution caused by Electronic Industries immediately east of the subject.
Major transpo~tion to the City is provided by Highway F169 (formerly
County Road 18) along the westerly City limits; also by Rockford Road (42nd
Avenue North C.S~A.H. ~9), Bass Lake Road (C.S.A.H. ~10), Medicine Lake Road
(26th Avenue/C.S.A.H. #70), and Winnetka Avenue (C.S.A.H. ~156). These county
roads provide good community access. Boone Avenue serves as a collector s~ree~
passing in a north/south direction through the westerly third of the city.
The Zoning Map shows the nature of uses in the immediate neighborhood. Mcs~
of the land east of Quebec Avenue & north of 42nd Avenue North has been
developed with one story concrete block industrial buildings. ~ne Science
L-~ Center Industrial Park, in the northwesterly quadrant of the city, is
the largest ~trial district in New Hope. To the south of the subject
across 42nd Avenue, stands a three level office building. The YMCA building,
sports and recreational activity center, lies southwesterly across the 42nd
Avenue/Quebec intersection. Industrial uses lie farther south from this site.
Cczm~_rcial uses lie both west and farther east of the subject on 42nd
Avenue. ~ne Sunshine Factory, a restaurant and sports bar facility, lies
the west across 42nd Avenue f-~-~ the subject. Beyond it are more store,
restaurant and service station cc~m~_rcial uses that focus upon the 42nd &
Winnetka intersection.
The lay of the land is undulating to gently rolling.
Location
The property is locat_~_ at 7528 42nd Avenue North, New Hope, Minnesota.
Size
According to dimensions on the Plat Map, and on a copy of a Ray Prasch
survey, both of which are copied in t_he Addenda, the property is 125.4' × 350'
equals 43,890 sc~e feet, less a permanent street ~_ment at the south
property line area typically 6' wide and a corner cut totalling about 840
sc~e feet for a final land size estimate of about 43,050 sca]are feet.
Easements
Street easements are considered to be taken in the equivalent of fee for the
purpose of this appraisal. It is highly unlikely that the street ~a~_ment area
will revert to the subject property owner in the foreseeable future.
The Prasch survey in the Addenda shows a narrow three foot wide utility
easement parallel and adjacent to the south pro~ line of the subject. .,o
other easements were reported__ or were observed.
Streets
The property contains about 126' of frontage on the north side of 42nd
Avenue North, also known as Rockford Road or County Road #9. It is a four
lane, two w~y, newer bituminous paved arterial street with concrete curbs,
gutters and sidewaJ3~, newer street lighting, and a semaphore controlled
intersection. ~ne street has been landscaped in recent years and is unified
for a couple of blocks in either ~i~ection from the Winnetka Avenue and 42nd
Avenue intersection.
The property also contains about 334' of frontage on the easterly side of
Quebec Avenue North. It is a wide two lane, no parking, two way, bituminous
paved industrial type side street with good concrete curbs and gutters. It has
no sidewalks.
Utilities
The property is served with all ~unicipal utilities including sanitary
sewer, municipal water, electricity, natural gas, and telephone.
SIT~ ~r<RIPK~N C~T'D
Topography and Soils
The land drops 3 to 4 feet fr~n the south to the north and northeast.
of the dr~p occurs at the centar of the site.
Subsoils are assumed to be cc~ primarily of clay that is assumed to be
relatively stmble for normal building construction.
Subsoils are known to be very slightly contaminateM_ specifically by
methylene chloride, t%Dllution levels, their source, and the estimated cost to
cure the recognized pollution is provided in an Addenda report summary by Del~a
Engineering. The locations of four monitoring wells on the subject prcper~y
were observed. No other contamination from Electi~nic Industries, a polluter
due east of the subject has been observed. They have polluted other proper~y
fart_her east. This has created a stigma of potential pollution for the subjec~
that would ord/narily be recognized in the marketing of the subject real
estate. Drilling and testing of wells on the subject is a result of copir~
with this pollution stigma. The actual methylene ctuloride subject
contamination is minor, commonly found and reportedly commonly and convenien~ls,
dealt with by itself. In contrast trichloroethylene contamination as found cn
Electronic Industries property is a more serious problem.
Accessibility and Identity
The site has access by three curbcuts to Quebec Avenue along the west
property line. The south most curbcut is about 40 feet wide. Access is
considered to be good.
The property's identity is considered to be average to good. The parcel is
readily observed frc~ traffic in both directions on the adjacent streets and iu
is found adjacent to a well identified ~ial district in an average to
fair industrial neighborhood.
Zoning
The property is zoned I-2, General Industrial.
reproduced in the Addenda.
A copy of the Zoning Map is
SITE r~RIFUI~N C~NT'D
Hiqhest and Best Use
Highest and Best Use is defined as; %he reasonably probable and legal use of
vacant land or an improved property, which is ~hysically possible,
appropriately support__~, financially feasible, and that results in the highest
value.
%he land is of sufficient size for construction with a variety of buildings
in any of several locations on the parcel. Zoning indicatas that industrial
use of the land would be best. ~trial uses lie to the south, north and
east of the subject with ccmm~_r~ial influences on the west.
Economic conditions are favorable for industrial building construction
although some excess industrial vacancy is observed. Mortgage interest rates
are between 9 1/2% and 10%. A new industrial building is being constructed
along block south of the subject on Quebec Avenue. General economic conditions
are still recessionary.
%he recognized adjacent Electronic Industries soil contamination would
likely present a development problem. City and state officials, lenders,
contractors, and labor unions would be reticent to allow construction on the
subject prope~ where contamizlation might adversely affect b~]th, safety and
value. Contaminated sit~s like the subject are rarely developed until either a
"letter of closure" or a "no action letter" are produced by the Minnesota
Pollution Control Agency. After the subject property owner voluntarily
participates in a program to achieve a "no action" letter, does testing over a
period of months, achieves satisfactory results about the level of his own
property's contamination, and pays for MPCA staff time, a letter of "no action"
is likely to result for the subject property.
The highest and best use of the site, as if vacant, is therefore to proceed
in cooperation with the Minnesota Pollution Control Agency and obtain either a
letter of closure or a letter of no action while simultaneously beginning
development with an industrial building. %he existing industrial building
develops the site to its highest and f~_st use, as improved.
?ne land is improved with a one story, concrete block and steel frame
industrial building with onsite paved parking ar~ landscaping.
Size
80' X 87.5' = 7,000
17.5' X 66' = 1,155
40' x 76' = 3,040
120' X 80' = 9,600
Total 20,795
(1,600
sc~,a~e feet GBA
sf office space, or 8% office)
Aqe
The building was reported to have been originally built in 1962, with a 1965
addition and the last rear addition constructed in 1978.
Foundation
A poured concrete and concrete block foundation system is observed. It
appears to be in ~gerage to good condition. Only minor settlement was observed
in some floor cracks and in one series of wall ccacks near the midpoint on
Quebec Avenue.
Concrete block exterior wall and interior steel post and beam~ framing is
observed. It appears to be in average to good condition.
Exterior Walls
Exterior walls are paint_~4_ concrete blocks in all areas except the office
and street front that b~-~ a brick veneer surface. Exterior walls appear to be
in average condition.
Roof
The roof is a steel bar joist structure with metal decking, rigid insulatic~.
and an overlay of built-up asphalt ar~ gravel that is reported to have been
resurfaced 5 to 6 years ago. No roof leaks were report__~_ and the roof is
assumed to be in good condition.
r~AIPIT~ OF ])q~O97~TS CONT'D
Floors
The floors are heavy poured and reinforced concrete. A number of cr~cks
were observed but the floor is generally level and fully usable. Floors in the
offices are covered with vinyl tile.
Interior Walls
Interior walls are primarilypaintedconcreteblockswith average to fair
~,a]ityplywocdpaneling in the offices. Interior walls are in average
condition.
Ceilinqs
Ceilings are open tot he steel frame inthe shop spac~ and droppedto
acoustic tiles with reoessed fluorescent lighting in the offices. 5hare is
att. ached fluoresce_hr lighting in the shop space.
Dcors/Window~
The building has metal frame windows with swing-out opening sections at Lhe
office, single pah~e glazed. There is a glass and metal front entry door, ~e~al
service doors and wood sectional overhead doors for loading at truck bed
height. Doors and windows are in average condition.
Electrical
A 1,200 amp electric main serves the building. There are eight 200 amp
circuits and four 100 amp circuits. Perimeter plug-ins are found in the shop
space and the office appears to have average quality distribution. Hookups to
machinery are not appraised.
Plumbing
~ne office is d{rectly served bytwo, two fixture washroomswith ceramic
tile floor and waincots and the shop has a separate five fixture~oom
including a 360° Bradley hand washer. There is a 30 gallon natuz-al gas fired
water heatarandcopperpipingwas observed. Plumbing is average.
Nea~irq/Coolinq
Heat is supplied by seven ceiling hung Rmznor or Dayton ceiling hung natural
gas fired blower units in the shop space. A Carrier naturaA gas fired furnace
and central air oonditioning unit serves the offices. Supplementary office air
conditioning is provided by one wall air conditioner. ~ne office also has a
smoke eater (air purifier).
Other Equipment
A three ton single rail, rail crane/hoist passes in an east west direction
from the recessed loading dock across the width of the building. No other
personal property, machinery, furniture or related items are included in this
real estat~ apprmisal.
Miscellaneous and Condition
The general layout of the building is shown on the building sketch contained
in the Addenda. The building has a good basic design and layout for ligD~u
manufacturir~ and the modest amount of office usage that usually accompanies
r_hat type of use.~~ The rear shop space is divided into three or four general
use areas some of which are partitioned. There are two sets of smaller shop
offices.
On an overall basis, the building has a good basic design, adequate loadirq,
and is in slightly above average overall condition.
On-Site Improvements
~ne building occupies about half of the site. Sodding occupies about 10% cf
the site lyir~ east and south of the buildin~ with the balance of the site
occtIpied by bittmtinous paved parking lot, drive isle, and loading armm~. The
bituminous paving is aging, somewhat breaking up and considered to be in only
fair overall condition.
General ApDrmisal
%~ne valuation of a typical parcel of r~a] estate is derived principally
through three basic approaches to value:
The Replacement Co~t Approach
From the indication of these analysis and the weight accorded each, an
opinion of value is reached based upon expert judgement within the outline of
the appraisal process. More specifically, the approaches to value are
described as follows:
Replacement Cost Approach
~%is approach recreates that a current estimate of the cost of replacing r_he
improvements be made, from which must be deducted accrued depreciation in
te_rr~ of physical deterioration, functional obsolescence, and economic
obsolescence, if any, and to which is added the estimated value of r_he
as if vacant.
Market Data Approach
%he Market Data Approach or Comparative Approach is based upon the principle
of substitution, that is, when a property is placed on the m~rket, i~s value
tends to be set at the cost of acquiring an equally desirable substitute
property, a_~-uming no costly delay in making the substitution. Since no
properties are ever truly identical, adjustments to the compaz-able are
necessary for differences in location, quality, condition, size, market
appeal, ar~ other matte_rs. ~nese considerations are a function of r_he
appraiser's experience and judgement.
Income Approach
The Income Approach involves an analysis of the property in terms of its
ability to provide a net anm,~l income in dollars over a given economic
life. The estimated net annual income is then capitalized at a rate
c~n~nsur~te with the relative certainty of its continuance and the risk
involved in ownership of the prog~, by utilization of the formula; ~e~
~, divided by Capitalization Rate, equals Value.
Marshall Valuation Service
Section 14, Page 15
Type - Average Class C manufacturin~ industrial building
Basic Unit Cost
Square Foot Refinements
Cold Climate Heat & Office A/C
40% Truck Bed Height
Height and Size Refinements
Wall Height (15.5')
Floor Area/Perimeter
(20,795/732)
$23.94/sq. ft.
$ 1.06
.48
$25.48
1.030
.975
Tem~ral & Locational Multipliers
Current Cost Multiplier
Central USA, Class C, Section 15
Local Minneapolis Multiplier
Application
$25.48 X 1.030 X .975 X .97 X 1.13 =
.97
1.13
$28.05/sq. ft.
!!
Direct Construction Cost
The building contains 20,795 squa'r'e feet and direct
construction cost is calculate_ as follows:
20,795 sq. ft. @ $28.05 = $ 583,300
$583,300
Site Improvements
80' Rail Crane (3 ton) = $ 4,700
15,750 sq. ft. bit. paving @ $1.10 = $ 17,325
Sodding, site lighting &misc. at $ 4,500
To~a] $ 26,525
SAY
$ 26,500
Indirect Construction Costs
Interest and taxes on land during construction and
development period, financing, and misc. expenses at
approximately 3% of direct construction cost and
site i/~provements. (3.0% of $609,800 = $17,964)
SAY
$ 18,300
Total Direct and Indirect Construction Costs
Estimated Accrued Depreciation
Physical
Functional/Economic
35% for general ageing, wear and tear
5% for lack of onsiteparking & storage
& recessionary econc~y.
40% 16-18 y~ar effective age of a
40 year total economic life
$628,100
$251,200
Depreciated Cost Estimate
$376,900
Land Valuation
$ 97,000
To~] Value Indicated $473,900
A number of properties similar to the subject property which were recently
sold, have been checkmd and related to the subject property as to location,
condition, size, age, inomme producing capability, financing, and other matters
influencing market v~lue. A sampling of supportive market data is included cn
the following pages.
The analysis indicated that the land, considered as if vacant, would be
market-hie at about $97,000, and the total pr~ (land and buildings) would
be market-hie at about
$475,000, as inclicated below:
LAND ONLY
43,050 sc~mre feet land area @ $2.25 = $96,863
20,7~5 square feet of building area @ $22.85 = $475,166
Discussion of Ccmparable Land Sales
Five land sales are described on following pages. Preceding those is a
cc~le sales adjustment grid showing detailed adjustm~_nts applied to each
cc~le for differences observed in location, date, size, topography/soils,
financing and other matte_rs.
The adjustments applied for location are basically subjective in nature and
depend upon the relative quantifiable differences observed from one
cc~le's location to another where bettar located comparables on high
traffic volume streets with convenient industrial access tend to sell at higher
prices, all other things being equal.
For the date sale, a 5% appreciation rate per year is noted except for Ln
1986 when a 10% rate is observed. In late 1990 and early 1991 when the
recession hit, a dcmavward 5% adjustment. Size differences appear to show a 5%
increase in price for each doubling in size, all other things being equal.
No topogra~y and soils adjustments are made to the comparabl~ since r_he
subject is considered to be nearly immediately developable in this portion of
the appraisal and all of the comparables have similar soils and topography, o~
the cost to make it similar was known and was added to the purchase price, t5
is particularly important that the subject property is assumed to be
uncontaminated and that subsoils are basically sound for this part of the
appraisal.
Most of the ccm%sarables sold on a cash or a cm~h equivalent basis.
Cc~le number two is influenced by a crossing utility easement that tends
to lower its pric~. A 10% upward adjustment is made to the comparable's price
to offset the lower value from that ~ing ~m~m~_nt. The subject and r~s5
of the cc~paz-ables may have ruarrc~ perimeter type utility and drainage
~m~ements that require no adjustment since they are similar in general terms ~z
No. Location D~te
1 .80 1.15
Size Topog/Soils Fin/Other
1.05 1.00 1.10
$/sf
$2.26
Adj. Value
$2.40
2 1.00 1.05 1.15
$2.10
$2.54
3 1.10 1.05 1.15 1.00
$1.49
$1.98
4 1.25 1.15 1.05 1.00
$1.23
$1.86
5 1.35 -- 1.10 1.00
$1.64
$2.44
Subj. Avg/Good 7-91 41,826 sc~e slope CE
$2.24
Type of Property:
I~cation:
Legal Description:
Date of Sale:
Seller/Buyer:
Sale Price:
Land Area:
Unit Price:
Ccmm~nte:
Industrial land sale
5651 International Park%zay, Hew Hope
L2, B1, Science Ir~ Park
P.I.D. #06-118-21-32-0007
I-l, /_ndustrial
April, 1986
Rosewood Properties Inc/Veijo Tarnanen
$175,000
121,856 square feet
$1.44 per sc~e foot, $2.26 per sc~mre foot correctad
Rolling topography. Soil correction costs of $100,000
required.
i6
Type of Property:
Location:
I~ De-$c~iption:
Zoning:
Date of Sale:
Seller/Buyer:
Sale Price:
Tar~l Area:
Uni: Price:
Industrial land sale
S~Q of Hwy 18 Service Road & Science Center Drive, Hew
Hope
L2, B1, Brandell 3rd Addition.
P.I.D. #07-118-21-22-0012
I-l, Light Industrial
April, 1988
Grr Investments/Hoyt Development
$572,095
272,426 square feet
$2.10 per sc~,~re foot
Buyer spent an additional $10,000 in soil correction
costs after the sale. Property previously sold in
April of 1987 for $1.90 per sca,are foot. SiTe is
level and served with all utilities.
L7
CI::]'"[~3AR~]~RT~ ~ ~ #3
Type of Property:
Location:
~ Description:
zoning:
Date of Sale:
Seller/Buyer:
Sale Price:
Unit Price:
Industrial land sale
5300 Boone Avenue North, New Hope
P.I.D. # 07-118-21-12-0002
I-l, Light Industrial
July, 1987
Tri State Land Co/Opus Corporation
$389,100
260,489 square feet
$1.49 per square foot
$11,728.63 special assessments included in sale. Site
is served with all utilities and is adjacent to Soo
Line railroad tracks.
Z
O2t, IPARARIR [AND SALE t~4
Type of Property:
Location:
Legal Description:
zoning:
Date of Sale:
Seller/Buyer:
Sale Price:
Unit Price:
Industrial land sale
c. 4400 Quebec Avenue North, New Hope
P.I.D. ~17--118-21-22-0010
I-2, Industrial
August, 1986
Rc~_ngr~ & Associates Inc/Ronald Van Essen
$94,000 and $121 special assessments
77,700 square feet
$1.23 per square foot
Site is located about one block north of subject and
is served with all utilities.
'. '" ROCKFORD
19
(::[:I~ARARrR LAND SALE ~5
Type of Prope~:
Location:
~ Description:
zonir~:
Date of Sale:
Seller/Buyer:
Sale Price:
Unit Price:
Industrial land sale
3335 Pennsylvania Avenue North, New Hope
Lll, Ro~h~insdale Gardens. P.I.D. $20-118-21-23-0007
I-2, Ir~tustrial
June, 1989
William I~e & Lyle Cashin/Scott Kevi~t
$300,000 and $45,000 soils correction costs
209,449 sc~are feet
$1.64 per sqLk3re foot corrected
Utilities are available. Site is wooded and elevated
with 1.5 acres of low ground that was eliminated.
Discussion of Comparable Building Sales
Six c~t~xrable building sales are described briefly on the following pages.
The nature of the adjustments applied to these comparable sales follows. A
Building Sales Adjustment Grid shows the quantified adjustments considered by
the appraiser. ~ae location of the comparables is plotted on the City Map tn
the A~denda. Each of the cc~le building sales was examined and a
photograph is reprcog~ced in the report.
Locational adjustments are somewhat subjective but are rather mJ_nimal for
the comparables utilized in this report. Four of the six comparables are found
in New Hope and two in nearby Crystal. Comparables with better view and
inferior street front access sell at slightly higher prices requiring 5% to 10%
upward adjustments.
The overall price changes from 1986 to present have been continuously
examined by the appraiser. In the year 1986, a 10% appreciation rate was
observed. In early 1987 recessionary conditions hit that caused modest price
changes to occur for the next three years. However, the subject area witnessed
tgzgr-adirg of streets, utilities and it is believed property values. Therefore,
for 1987 through 1989, a 5% upward adjustment per year was made. In late 1990
and for the first part of 1991, a downward 5% adjustment was made. The
recession and Gulf War made an impact.
The comparables vary slightly f~-~,~ one to another in regard to the size of
the building where smaller size buildings tend to sell at higher prices per
square foot, all other things being equal. This reflects a phenomenon that of
a greater affor~hility due to smaller size. A larger number of buyers are
available to bid on smaller size buildings thereby driving the price up.
C~t~oarable Sales 2, 3, and 4 are about half the size of the subject requiring a
5% downward adjustment.
Land to building~.~ratios on_ each~ of the Cc~ie examined.
Comparable sales with a large amount of extra land~ilitate high quality
parking, onsite storage and potential building ~i~.~ '~;They tend to sell ac
slightly higher prices per sc~,a?e foot of building area, all other things being
equal. Comparables 1, 2, 3, and 6 had significantly greater amounts of land tr.
ratio to building. They required downwa/~ adjustments of 5%.
2!
Disc~sion of Cc~p?~ab!e Building Sales Cont'd
Adjustm~_nts made for differences in age, condition, and the quantity of
office space between the cc~parables and the subject were carefully
considered. C~le No. 1, for example, is in better condition and has 17%
office compared to the subject's 8% office. A downward adjustment of 15% ~
therefore estimat_~_. Similar adjustments were made for observed differences in
the rest of the comparables.
A financing adjustment was requ~ed where core, parables sold with either
significantly large or lower interest rate Contracts for Deed financing.
Co,parables No. 3 and 4 required the largest downwa/~ adjustn~=_nt at 10% due to
both the large size of the Contract for Deed financing and its 10% or 8%
Based upon the above described considerations, strong support is supplied
for a subject value of $22.83 per sc~e foot. Comparables 5 and 6 are the
more recent in time and they adjust to a lower price. ~ne final adjusted value
is rounded to $22.85 per sc~e foot.
B3TLDING S~T~ ADJUSTMEN~ GRID
a ~CA~ON ~TE L~D/B~G. AGE/CO~. nm/OTHER $/SF ~3. V~
1 1.00 1.10 .95 1.10 .85 .95 $23.78 $22.07
2 1.05 1.00 .95 .95 .80 1.00 $31.29 $23.72
3 1.10 1.15 .95 .95 .95 .9 $24.32 $23.74
4 1.10 1.15 1.00 .95 1.00 .9
5 1.10 .95 1.00 1.00 1.10 1.'~~I
6 1.10 .95 .95 1.00
SUBJ.
Avg/Good 8-91 43,080/20,795
$23.21 $25.10
$18.09 $20.79
Avg/Good
8% offices CE ~ = $22.83
.65 1.00 $33.44 $21.5S
Type o~~:
Location:
Le~ Description:
Zoning:
Date of Sale:
Seller/Buyer:
Sale Price:
Land Area:
Building Area:
Unit Price:
Building Description:
IndusUrial building sale
7701-09 42nd Avenue North, New Hope
Auditor's _Oubdivision ~324, Hennepin County,
Minnesota. P.I.D. ~17-1!8-21-23-0005
I-2, Industrial
JaD~a~y, 1987
Gearou & Kubinski/~nomas Boettcher
$410,000
111,513 sc~e feet
15,440 sf industrial; 1,800 sf office
$23.78 per schlage foot GBA
B~ilt in 1962. Concrete block and steel
industrial building with 17,240 square fee~. Brick
exterior in front air conditioned office area, 11 feeu
to roof. 4,800 sc~e foot industrial area in back cf
offices 16 feet tall, and 10,640 sf area ~o back cf
that, 19 feet tall. Building is in average/good
condition.
C/D purchase with $74,353.53 down. Previous sale
in April of 1975.
· (/I,4PARARrF. l~r~nI~gG ~ #2
Type of PropertT:
Location:
Legal Description:
zoning:
Date of Sale:
Seller/Buyer:
Sale Price:
Unit Price:
Building Description:
Industrial buildir~ sale
5401 Boone Avenue, New Hope
Langthy. P.I.D. #06-118-21-34-0008
I-l, Industrial
March, 1989
P~nick, Arnold & Marjorie/CTS Corp
$435,000
60,200 square feet
10,404 sf irzlustrial; 3,500 sf office/mezzanine
$31.29 per sc~are foot GBA
Industrial type building built in 1961. 13,904 square
feet GBA on street grade. ~t below. 14 foou
ceilings, concrete block walls and steel frame.
Building is 100% forced air heated, with air
conditioning. Sprinklers for fire. Building is in
average/good condition.
22% of total space is office mezzanine in fron~. Cash
sale.
~ ~ ~C)~C~ CON'SD
SALE ~3
Type of Property:
Location:
~ Description:
Zoning:
Date of Sale:
Seller/Buyer:
Sale Price:
Land Area:
Building Area:
Unit Price:
Building Description:
Industrial buildirg sale
5417 Boone Avenue North, New Hope
Block 2, Sciance Center Industry.
P.I.D. #06-118-21-34-0009
I-l, Industrial
March, 1986
Wayne Shevi/William Zhomas
$331,070
41,964 sc~are feet
13,613 scot-re feet
$24.32 per sc~]~re foot GBA
Industrial type building built in 1970. "L" shaped,
one story with concrete block/veneer, walls with s~eel
framed ceiling, 14 feet tall. 13,613 gross building
area, includes 1000 sc~re feet office space (7.3%).
Gas forced air h~mring, no air conditioning or
sprinklers. Five restrooms with one loading dock ~
one drive in door. Building is in good ccnditicn.
C/D purchase with $30,000 down, balance due at end of
year. Parking for 50 cars.
Type of Property:
Location:
I~ Description:
Zoning:
Date of Sale:
Seller/Buyer:
Sale Price:
Land Area:
Building Area:
Unit Price:
Building Description:
Industrial building sale
5241 Hanson Court, Crystal
L1, B1, Carlson-St_rom Addition
P.I.D. ~09-118-21-22-0009
I-2, Industrial
July, 1986
Craid Markor/Donald Noonon
$235,000
26,292 sc~mre feet
10,125 square feet
$23.21 per square foot GBA
Industrial type building built in 1960. Concrete block
~alls, with brick on front only. 14 foot tall cei!ir~£
throughout. Building is in avel-age/good conditicn.
C/D purchase with $25,000 down, balance at 8%.
Type of Property:
Location:
Leqal Description:
Zord.ng:
Date of Sale:
Seller/Buyer:
Sale Price:
Unit Price:
Build~ Description:
Industrial building sale
5101 Lakeland Avenue North, Crystal
L1, BI FlemJ_ng. P.I.D. F09-t18-21-24-0025
I-2, Heavy Industrial
August, 1990
Norwest Business Credit Inc/Unknown
$340,000
43,263 sqLu~re feet
18,800 sc~are feet
$18.09 per sc~re foot GBA
Industrial building built in 1953. Steel f~ming wir_h
concrete block walls, c. 800 square foot sh~.~ocm in
front with c. 1,200 scp~are feet of offices included Ln
18,800 square feet GBA. 16 foot ceilings with
sprinkler system included. Building is in average
condition.
Small amount of paved parking in front, with extra
gravel area to side and rear.
Type of Property:
L~cation:
Legal Description:
Zoning:
Dar~ of Sale:
Seller/Buyer:
Sale Price:
Unit Price:
Building Description:
I
Industrial building sale
3501 Nevada Avenue North, New Hope
L3, B1, Stremel ~ition. P.I.D. F20-118-21-21-0011
I-l, Industrial
April, 1990
Edward & Gail Reilly/Marvin Schmidtz
$592,000
72,250 scot-re feet
12,240 sf industrial; 2,160 sf office
$33.44 per square foot GBA
New industrial building built in 1987. Fabricated
concrete w~lls with 16' ceilings. 17,705 square fee~
GBA, 15% office space. Sprinkler system. Bui!dJ_r~ is
in very good condition.
Metal stamping buyer occupant.
2~
The subject property is owner occupied. Most of the small size indusr_rial
buildings found in the neighborhood are owner occupied facilities that are not
rented. Buyers of properties of the subject type purchase them for operating a
business and not for obtaining net rental real estate income. For these
r~a~ons, little rental, expense, or capitalization rate information is
available. An income approach to value was therefore not applied in this
market value analysis.
three approaches to value indicat~ the following:
Replacement Cost Approach
Markmt Data Approach
Income Approach
$473,900
$475,000
Not Applied
All three of the standardized approaches to value were considered in r_he
market value analysis of both the the subject properties. Tne income approach
was deemed to be not applicable due to the cma~_r occupied nature of r_he market
for buildings of the subject type.
The Cost Approach considered the replacement cost of the building
improvements, deducted depreciation and added land value. Its weakness lies in
the large amount of estimated depreciation. Buyers and sellers rely more
strongly on the cost approach when buildings are new and not when they are over
25 years old like the subject.
The Market Data' Approach best illustrates the actions of typical buyers and
sellers of properties of the subject type. Several good quality, nearby
ccmparmbles were found and compared to the subject. Some were older sales.
Newer sales were also found and they supplied additional good quality support
for the subjects market value.
For this value conclusion estimate without a pollution stigma most emphasis
is placed upon the findings of the Market Data Approach with good bu~ secorda~-t
support provided by the Cost Approach.
Conclusion Without Pollution
I~ Pollution Sti~ $19,500 and $22,500
Final Value Estimate as Allegedly Pollut~
$475,000
$ 42,000
$433,000
Pollution Stiqma
~ne site is stricken with the stigma of pollution because of its proximity
to polluted Electronic Industries. As a result of that stigma the subject
owner has had problems marketing and mortgaging. He has caused monitoring
wells to be installed to measure onsite pollution, tried to measure his loss in
market value and has sued Electronic Industries for a loss in value.
It is the opinion of Ken Haberman, of Site Assessment at the MPCA (Minnesota
Pollution Control Agency), that given the current level of knowledge from the
subject and Electronic Industries test wells, the current regulations and
continued voluntary cooperation between the subject owner and the MPCA a "no
action" letter will be forthcxaning for the subject property. A "no action"
letter is the equivalent of the MPCA saying that the subject owner is not a
contributing polluter and is not responsible for any pollution found on its
property. These types of letters are written by the MPCA when contamination is
cleaned up or is in the process of being cleaned up and is not the problem of
the property owner and the property in question.
The Minnesota Pollution Control Agency h~s two principal areas where "no
action" letters at~ produced. The petroleum tank spills area produces many of
these letters but they are primarily for service station properties where
gasoline and diesel petroleum products are the pollutants. The subject
property is polluted by a type of pollution other than that from gasoline and
diesel tank spills. T~e Groundwater and Solid Waste Division handles this kind
of contamination and they have r~ported 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 known or
controlled by a public entity and the balance were reportedly sold or about to
be sold on the open market and the "no action" letter was request_~_ so that the
sale could occur. ~/%irtee~ of these files were examined in some detail in r_he
MPCA offices in St. Pa%~l, Mir~ota. A following listing shows the MPCA file
number, a property name and a~_ss, the generalized nature of the pollution
affecting or alleged to affect these properties, the time period that the
parties sought a "no action" letter in dealing 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
~_~,{~R~ ~ND rY'~II:FI(DN (3~SD
Pollution Stigma Cont'd
8.85 month or approximately 9 months. The various parties probably spent
another 1 to 2 months prior to dealirg with the MPCA in consulting and
developing their strategy for dealing with the contamination problem. Sites
adjacent to large well known polluters like the Riley Tar site in St. Louis
Park had the shortest time periods. The process for getting a "no action"
letter for properties adjacent to a well known polluter that ha~ been well
identified by the MPCA is a rather short one. Even easily cleaned problems
like the excavation of a old septic tank for Pre~ision Electric in Plymouth or
the excavation of allegedly less t_ban 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 required to be installed and the pollution was found to
be minimal, or minimal and generated by others.
MPCA Property Time Period Seeking
File # Name & Address Pollution "No Action Letter"
Dixie C~emical Co. Nitrates & sulfites 6-88 to 8-88
E. Corner Hwy 55 at from refiner to south
Pine Bend Road,
Rosemount
1190 2
1270 Cabot CCa__bot & Forbes Chlorc~thelene 8-88 to 6-89 I0
1151 Vernon Dr., in old septic tank
Golden Valley
1280 Prec~ion Electric CD_rc~e 7-88 to 11-89 16
615 Co. Rd. 18, in old septic tank
Plymouth
1540 Multitec_h Trichlor~ethylene 1-89 to 10-89 9
82 2nd Ave. SE., fr~n small spill
New Brighton
32
Pollution Stiqma Cont'd
File ~ Name & Address
1450
Terry Bros. Const.
3320Republic Ave.
St. Inuis Park
Pollution
Reilly Tar
contamination
Time Period Seeking
"No Action Latter"
3-89 to 3-89
Months
1690
John HancockProp.
2265-85 W. Co. Rd. C,
Roseville
Benzene etc. from adj.
Williams & Amaco tank
farms
3-89 to 8-89
1740
1810
RJ::)~:~-zTx:~C Die Casting
(SpectroAlloy's)
13220 Doyle Path E.
Rosemount
7301 W. take Street
St. Louis Park
Monitoring well
contaminated
1974 fire chemical
spill
3-89 to 12-89
2-86 to 9-87
9
19
1920
Allianz Investment
1000 BI. Valley Pk. Dr.
Soil piles contaminated
11-89 to 10-90
tl
2040
1820
Midwest Bank Distrb.
1060 33rd Ave. SE,
Minneapolis
RR & many pollutarm
nearby
Holiday Station Store Buried asphalt chemicals
SWC Broadway & 12th St.
Forest Lake, M~
10-89 to 6-90
9-89 to 12-89
AND (IINCI/3SIf~
Pollution Stigma Cont'd
File ~ Name & A~dress
Time Period Seeking
Pollution "No Action Letter" Months
2450 Hiawatha Metal Craft Trichlorethylene 7-90 to 6-91 1!
2631 31st Ave. So.
1860 Caliber Development Oil spill, land farm 10-89 to 11-90 11
c.2660 FernbrookLane cleanup
Plymouth
Average Months 8.85
The above described study indicates that the marketing period for a proper~y
lik~ the subject that is alleged to be contaminated will be extended by
approximately 10 months. The normal marketing period for a property like the
subject would be ~om 12 to 18 months and that process would to a certain
deqree be able to overlap with a certain amount of the time requ] red to obtain
a "no action" letter or equivalent. It is therefore concluded that the alleqed
pollution of the subject property will cause a six month incr~a-~e in the normal
marketing period by itself.
In addition to the increased marketing time period and the loss of value
that it creates, the subject property c~a%er will be responsible for the costs
to obtain the "no action" letter or its equivalent. For the subject proper~y,
those costs are partially known and can be anticipated as follows:
1)
2)
3)
4)
5)
Owners ti~e spent dealing with alleged pollution problem
hirir~ contractors, appraiser, attorney, and supervising
the testing and the process $ 3,000
Owners consulting attorney to supervise MPCA process $ 5,500
Owners financial consultant/appraisal charges $ 3,000
MI~?A staff charges for prou%/cing "no action" letter or equivalent $ 2,500
Soil/water investigation repor~ production $25,000
Anticipated Owners Costs $39,000
SL~4MARY AND CGNCfUSION (I~T'D
Pollution Stigma Cont'd
Owners charges are expect_ed to total approximately one week of time or 40
hours at,' say, $75.00 per hour eqtuals $3,000.00. The time will be spread over
a series of weeks and months and not concentrat_~4. Legal fees are a rough
approximation of 35 to 40 hours at, say, $150.00 per hour for the supervision
of the process and dealing with the MPCA. Attorneys wrote most of the letters
in the MPCA files for property owners.
Most of the "no action" letter efforts involved a potential sale where
bankers and appraisals were required. Production of an appraisal dealing with
pollution on the subject property is expected to cost at l~-~t another $3,000.
Sc~etimes buyers pay for these types of financial instruments and require the
seller to share the costs. MPCA charges will be levied for staff time spent
producing the "no action" letter. A review of the files indicates that those
charges for a relatively small effort required like the subject should be only
a few thousand dollars and $2,500 is a best estimate. When municipalities 1Lke
St. Louis Park or Minneapolis deal with the MPCA, the process is smoother and
MPCA staff charges are lower. That is not the case with the subject prope~y
at this point. '~
Ta_~tly, the current soil investigation charges are quoted at $22,300 and a
report by Delta Environmental Consultants has been reviewed. It is frequently
the case that an additional round of monitoring well testing will be required
and a slight additional set of charges is anticipat_~d for that possibility
rounding the total to $25,000.
Although the total expected out-of-pocket costs for the subject property
owner are estimated at $39,000, there is sc~e possibility for the subject
property owner to recover a portion of those costs from the alleged polluter,
Electronic Industries, through a law suit. That law suit has already been
engaged and the outccm~ is unknown. The subject property owner would not
report their detailed out-of-pocket charges for the above mentioned items of
owners time, appraisal, attorney and MPCA charges, if any, because of that
pending litigation. Re//~x&rse~e~t for the out-of-pocket expenses from a
successful lawsuit could take several years. The outcome could result in no
rei~gD~rs~e~t or reimbursement greater than the $39,000 projected herein. It
is doubtful that the owner will recover attorney's charges from that pending
Pollution Stigma Cont'd
litigation. Those attorney's fees could greatly exceed the $5,500 estimatea_
above. It is therefore a best estimate that the owner will be out-of-pocket
approximately half of the $39,000 estimated costs or say $19,500 to the real
estate because of the Electronic Industries alleged pollution.
In addition to tb~estimated out-of-pocket costs, the marketing time period
is expect__~4 to be incr~ by 6 months. ~ne market value conclusion w~out
the pollution stigma is estimated at $475,000 on a previous page. The present
value of $475,000 not received for 6 months at a current estimated interest
rate of 10% is $452,381, indicating a loss in market value of $22,619, say
$22,500.
The final value estimate on the subject property as it is allegedly polluted
is estimat_~_ as follows:
Conclusion without pollution stigma
Less pollution stigma- $19,500 and $22,500 ~otals
Final Value Estimate as Allegedly Pollut_~4
$475,000
42,000
$433,000
1,1
I-2
R.4
1-1
I"Zoning Mal~'l
=.g NORTHFIELD'
AVE
;OUTHERN
N
I
I
I
I
I
RAILROAD
CITY OF NEW HOPE
LOT SURVEYS COMPANY, INC.
, [,AND 8URYETOBS
REGISTERED UNDER LAWS OF STATE OF MINN~A
7GOt · 73rd Avenue NoKh ~3~3
Minneipolb, M[~o~ 55428
~u~uur.
,~, L L. E. v
-3ZO .4-
INVOICE NO
F. 8. NO.
SCALE I".
0- OENOTES IRON
~,_)
D
Area in permanent street easement = 727 Sq. Ft.
Area in temporary construction easement = 1,282Sq. Ft.
Area in permanent utility easement = 795 Sq. Ft.
The oely ~te ~,o~fl ~1 from piers of ~ ~ Information pr~vldlcI by
Ydl ~ ewqlll, ~ II'~11 Ii a Iru,e ami eeemct
~~tI ZOrh ~ot February 19 88
Co. R o. No.
TRACT 2S (Her~epm County Auditor)
The ~e~t IZ5.4 fee~ of [l~e east ~ZO.4 leal oE the south 550 Eee[ oE Lot S, Aud[[or's 5ubd[v~s~
~24, fle~epm Co~[y, Mi~esota, excep[ road ~d ~cept ~[ey.
a pem~en~ eas~ent for street ~d utility purposes ~er, ~der ~d across that part of Tract Z5 descr~
able lying south bE Line "G" describ~ below.
a t~porary construction easiest over, under ~d across the s~ 10.~ feet oF that p~t oF Tract 25
descrzbed able lyin{ north bE Line "G" described bei~.
a pem~ent eas~ent for utility purposes over, ~der ~d ~ross the south 3.~ feet bE that p~t of Tr~
2S described above lying north oF Line "G" describ~ be[~.
a pe~ent easement for utility purposes over, ~der ~d across the North'8Z.~ feetrofl:the,~Ob~
~e e~t 5.OU feet bi timt part of l'r~t Z5 describ~ ~e lying north oE Line "G" describ~ below.
k{~ ~'G"' Be~inning at a point on the east line bE Lot 5, Auditor's Subdivis[~ No. ~24, llennepin
' ' Minnesota distant 5.~ feet northerly a[on~ said east line fr~ its intersection with the
line of Uennepin County State ~d tli~h~ay No. 9 as delineat~ in Ill,iN C~ ~ATE AiD
NO. g, PLAT 58; thence South 88 de,tees Z8 ainutes 2q"s~onds West, ass~ bearine, para'.'-
said north line 87.4Z feet; thence South 88 dearees 48 ainutes ~2 s~onds ~est 120.~ feet;
South 88 de,tees Z8 ~inutes 29 second~ west 95.~ feet: thence North 46 de,tees 1~ ainu[es
s~ond~ we~t 14.07 feet: thence s~th 88 de,?es ~8 ainutes 29 secon~ ~est 7.44 .f&et-'to,~,
[inb oE'~ebec Ave, ~d ther~tte~inate.'"' ' ' ~-.ct ':,~..-: .... ~ ' · · '~-~'=:" ' : ':. *' '"
Note: ~etch only, no irons have · set to establish property
8lined
, -- R~/ffmnd A. pi. Minn. Reg. No. e 743
i
''1'
Front Scut_hw~st Elevation
Front Southeast Elevation
~ph Views-~
Rear Northeast Elevation
Interior
Photograph Views ]
View North on Quebec Avenue
I
View East on 42nd Avenue
EDA
E0 ESr O ACrXO "
Originating Department Approved for Agenda Agenda Section
City Manager October 14, 1991 EDA
.... Item No.
Kirk McDonald /~
By: Management Assistant By: 5
DISCUSSION REGARDING PURCHASE OF OUTLOT A, CUSTOM MOLD ADDITION,
5430 INTERNATIONAL PARKWAY
Staff requests to discuss the consideration of the purchase of
Outlot A, Custom Mold Addition, 5430 International Parkway with the
EDA.
MOTION BY SECOND BY
TO:
Review: Administration: Finance:
RFA-O01 ~
CITY OF NEW HOPE
MEMORANDUM
DATE:
TO:
FROM:
SUBJECT:
October 11, 1991
Daniel J. Donahue, City Manager
Kirk McDonald, Management Assistant
Discussion Regarding Purchase of Outlot A, Custom Mold
Addition, 5430 International Parkway
As per Planning cases 91-28 and 91-30, Custom Mold and Design,
Inc., located at 5420 International Parkway, is proposing to expand
their existing facility to the north and is acquiring and platting
the property at 5430 International Parkway to accommodate the
expansion. The New Hope Public Works Garage is located directly
north of this site and Public Works currently utilizes the northern
portion of the vacant property. Custom Mold is acquiring the two
(2) acre site and proposing to plat it so that 1.12 acres would be
combined with their existing property and .88 acres would be
platted as an outlot, with an understanding that the City may have
an interest in purchasing the property to expand the public works
site and/or to continue utilizing the property as they have in the
past. The City has informally discussed the acquisition of the
property with'Custom Mold. At the October 8th Planning Commission
meeting the Custom Mold plat was approved subject to the City
making a final determination as to whether we were going to
purchase the property or not prior to final plat approval; if not,
the outlot should be combined with the Custom Mold property.
The owner of Custom Mold acquired the two (2)acres of property at
5430 International Parkway for $179,000 or $~9,500 per acre. The
outlot contains .88 acres and the asking pri~e is (.88 x $89,500)
$?8,760 approximately.
In 1990 BCL Appraisals conducted an appraisal of the vacant
industrial property at 5501 Boone Avenue, just east of the Custom
Mold site. Based upon the Market Data Approach, comparing the cost
of acquiring an equally desirable substitute property based on land
sales, and based upon the assumption that the subsoils were stable
and not contaminated, that property was appraised at $1.95 per
square foot. If that square foot appraisal price of $1.95 was
applied to the .88 acres (or 38,332 square feet) contained in the
outlot, the cost would be (38,332 square feet x 1.95) $74,747.
Thus, the asking price on the property is very similar to the
appraised square foot value of the vacant industrial land on Boone
Avenue.
The owner of Custom Mold would like to see the city structure an
offer based on a flat price for the land and the~address two other
items: 1.) a plan for the site and 2.) excess fill material.
1).
Plan: The owner of Custom Mold has requested that the City
develop a plan for the use of the property so he knows exactly
how the land will be utilized immediately north of his
business. If the property is to be used as a staging or
stockpiling area, said area should be shown on a plan and
located at the rear of the property. He desires a specific
stipulation regarding the height of any stockpiles. If a
salt/sand storage building is to be constructed on the site,
it should be shown on the plan. Some type of screening,
landscaping and/or berming between the two sites is also
desirable and could be depicted on a plan. If the EDA is
receptive to negotiating on the purchase of the property, I
would recommend that the City Engineer and Superintendent of
Public Works develop a concept plan for the use of the site.
2).
Excess Material: Custom Mold will need to excavate about
4,000 cubic yards off of the Site to accommodate their
expansion and to remove a hill at the northeast corner of the
site. They are currently planning on depositing excess fill
on the outlot. They have estimated that it will cost
approximately $15,000 to truck the excess material off of the
site.
The City Engineer has indicated that if the outlot is to be
combined with Public Works, that the excess material proposed
to be placed on the outlot will not benefit Public Works. The
present grade of the existing site is adequate for Public
Works use, therefore it would be more desirable from the
Public Works standpoint for excess material from grading to be
removed from the site.
Another factor to take into consideration is that the fill
might be needed if development takes place in the near future
at 5501 Boone Avenue North (North Ridge development). This
property is low on the south and soils tests indicate
unsuitable and unstable soils for building. If development
does take place, it is likely that some of the poo~ soils may
need to be removed and replaced with good soils. Other
possible uses for the excess material are a small berm on the
Public Works site and/or possible use on the 36th Avenue
railroad bridge project.
Anyway, this is one issue that will need to be resolved. The
owner of Custom Mold bought the property with a desire to sell
that portion to the City that we have utilized in the past,
however, he also can save $15,000 by depositing excess fill on
the site instead of hauling it away. The City has no
immediate need for the fill and does not want it spread on the
- 2 -
outlot site. If the City would assume the responsibility for
the fill and stockpile it, perhaps Custom MSld would consider
a reduction in their asking price for the outlot property. On
the other hand, if the City does not desire to stockpile the
dirt, Custom Mold may expect extra compensation because they
will have to haul the fill off of the site, as the City will
have acquired their excess fill area.
If the EDA is interested in acquiring the property they may want to
authorize the staff to negotiate with Custom Mold on the land price
and excess fill issue and also to develop a concept plan regarding
how the land would be utilized.
Attachments:
Section/Zoning Map
Plat
Site Plan
Custom Mold Letter
Engineer's Letter
Excerpt Planning Commission Minutes
- 3 -
PARK
PUBLIC
WORK S ~o ~
GARAGE
SCIEI~ICE
ST
CENTER
'' SAUL. T SAINT[ MARIE
PAL,It. & '' '-
~j IOI
NOR,H R'DGE
C/~RE
~-~3o 2, ENTER
54
~'lOO
H(
JR Hi
55TH
PRELIMINARY PLAT
OF
CUSTOM MOLD ADDITION
ACKERBERG AND ASSOCIATES INC Architects Planners Engineers 4201 Excelsior Boulevard Minneapolis MN 55416 (612) 920~-9020
SeptemberFi fth
Mr. Doug Sandstad
Building Official/Zoning Administrator
City of New Hope
4401Xylon Avenue North
New Hope, Minnesota 55428
RE: Custom Mold and Design, Inc.
Preliminary Plot/Building Expansion
Dear Mr. Sandstad:
SEP 6 1991
Sanders M. Ackerberg
Douglas P. Watschke
As you know, we have been working with Custom Mold and Design, Inc. and the
City staff throughout the last few months with regard to their proposed build-
ing expansion and requirements to meet City Ordinances.
Custom Mold and Design, Inc. is planning to more than double the size of their
existing building. In order to expand the facility, additional land, located
immediately north of their existing property will be purchased. You will
notice that an "outlot" is being created, which "outlot" is excess property
not required to meet the parking and green space requirements. This approach
will allow the property owner some flexibility with respect to the future use
of the excess land.
Custom Mold and D6sign, Inc. and their civil engineer have met with City staff
and the City Engineer regarding site drainage. Since there is no available
storm sewer, on grade sheet drainage onto International Parkway has been ap-
proved as delineated on the attached drainage and grading plan. In conjunc-
tion with this grading plan, excess fill will be deposited on the "outlot".
The design of the building addition will continue to reflect the existing
building design and color, utilizing various types of decorative concrete
block. Parking lot lighting will be provided by lights mounted on the build-
ing wall similar to the existing lighting.
A new main entrance will be developed at the northwest corner of the new addi-
tion, directly accessible from the new north parking lot. The existing front
door will continue to serve as an exit and access to the engineering depart-
ment.
A refuse dumpster will be provided inside the building and will be rolled out-
side through an overhead door on pick-up day.
Mr. Doug Sandstad
September 5, 1991
Page 2
Existing landscaping will be maintained and additional landscaping will be in-
cluded. The parking lots will be defined by concrete curb and gutter.
With this letter we are submitting the Application to Planning Commission and
City Council, a $600 check for the required Basic Zoning Fees, and supporting
drawings as required for the application.
Sincerely,
ACKERBERG AND ASSOCIATES, INC.
Enclosure
cc: Duane Treiber
Bonestroo
m-m Rosene
Anderlik &
Associates
Engineers & Architects
September 26, 1991
Otto (~. 8orlesa130. EE. Keit/3 A. Go~::~n, EE.Ma~ R. ~, ~E.
~ ~ ~, EE. R~haffi ~ ~er. ~E. ~n C. Rus~. AJ.A. ~nes M. Ring,
Jo~ C, An~fli~ ~E. ~na~ C. Bu~ RE. Thomas E. Angu~ RE. fle~ O. ~. PE
Me,in L. ~ala, RE. Je~ A. ~u~n, RE. H~a~ A. ~n~,
R~ha~ E. Tu~r. ~E. Ma~ A. Han~n, ~E. Oan~l J. Edison, EE.
G~nn R. C~ ~E. Ted K. FieU. PE. Ma~ A. ~i~ ~E.
Thomas E. N~S, ~E. M~h~ T. ~u~ann, ~E. P~ip J. Ca~l, RE. ~mn L.
~n M. E~din, C.FA. D~M Q ~. FE. Ma~ Q ~lli[ ~E. Chades A. Enc~n
Thomas ~ ~te~n. PE. Thomas R. An~n, A.I.A. ~ M P~lsky
M~h~l C. Lynch. RE. Ga~ F ~an~r, ~E. Hadan M.
Ja~ R. MalaY. RE. Miles E Jen~n, ~E.
~ ~ An~n, RE. L. Phillip G~I IlL
City of New Hope
4401 Xylon Avenue N.
New Hope, MN 55428
Attention: Mr. Kirk McDonald
Re: Custom Mold Addition
Our File No. 34-gen
Dear Kirk:
We have reviewed the above plat and recommend the follow~mg:
Drainage and utility easements 10' wide shall be showm along at: ;3t lines,
including the interior lot line between Lot ! and Outlor A~
The drainage ~xom the site will be directed on the '-~ !o
su~ ,,,,~,. Internatiom, l
Parkway, which is acceptable.
The City should determine if they are going to purchase Out!ot A before the
project begins. If' Outlot A is to be comb~ed with Public Works, the excess
material proposed to be placed on Outlot A will not benefit Public Works.
Presently, the grade of the existing site is adequate for Public Works use.
Therefore, it would be more desirable from Public Works standpoint that the
excess material from the grading be removed from the site.
If you have any questions please feel free to contact me at this office.
Yours very truly,
BO~N/~STR~O, ~/~ENE, ANDERLIK & ASSOCIATES, INC.
/~MarkX.H~~-~
MH:lk
2335 ~fest Highway 36 · St. Paul, Minnesota 55113 · 612-636-4600 · 3Sth Anniversary
(5)
3
~9. 75
59~. 49 N89"OZ'~
PT OF
LOT 4
40
SW
I/4
SEC.
MOTION
PC 91-30 (3.7)
REQUEST FOR
PRELIMINARY
PLAT APPROVAL
AT 5420/5430
INTERNATIONAL
PARI~AY
New Hope Planning Comission
Commissioner Gundershaug ques~ioned if lighting would be down-
lighting and Mr. Trieber confirmed it would be and added that the
parking has been moved against the building so there will be
adequate lighting for parking. ~
Mr. Trieber presented some drawings to show what the building will
look like when the addition is completed.
Commissioner Gundershaug asked for confirmation of hours of
operation and was informed they operate from 7:00 a.m. to 6:00
p.m., no extra shifts, and only a couple persons that may come in
and check on things at night.
Commissioner Gundershaug asked if new signs were planned and the
response indicated there were none planned, but they were aware of
the sign ordinance and if the need arose they would file the proper
request.
Commissioner Gundershaug questioned if the landscaping would be
sprinkled, if rooftop equipment is planned, and where trash storage
would be located.
The petitioner pointed out their sprinkling plan and the basic
rooftop air conditioner painted to match the building, and he
indicated that trash storage and other storage of pallets and
crates would be in the back of the inside loading dock.
Commissioner Cassen called attention to the reduction in parking
spaces and the two foot extension to the roof.
Mr. Trieber pointed out they had removed 4 parking spaces and
expect that will be adequate even when the addition is completed.
He explained the roof extension is necessary because of the nature
of the tooling process.
Motion by Commissioner Gundershaug, second by Commissioner Cassen,
to approve the Site/Building Plan Review to Allow Expansion of
Existing Office and Manufacturing Facility with the conditions that
signage establishing one-way truck flow be installed at driveway
entrances and curbing be installed on the north side.
Vo%ing in favor: Zak, Cassen, Cameron, Sonsin, Gundershaug
Voting against: None
Not voting: Watschke
Absent: Friedrich
Motion carried.
The Chairman called on Mr. McDonald to introduce the preliminary
plat request in Planning Case 91-30 which is for the property
relating to Planning Case 91-28.
Mr. McDonald reviewed the need for the acquisition of the property
and outlined the plan for the addition of 3 acres to the north of
Custom Mold, with 2 acres added to the existing site to accommodate
the building addition, additional parking, and green space
requirements, and the remaining .88 acre platted as an outlot,
basically because it is excess property. He noted that the City
has entered into discussions with Custom Mold about the possible
future acquisition of the outlot to be added to the Public Works
site. He called attention to a request by the petitioner that the
Planning Commission waive review of the final plat so that
construction can start this Fall. He added that comments from
parties that reviewed the preliminary plat were minor in nature;
the City Attorney requests the legal description be revised to
include dedication of streets, to include dedication clause for
utilities and easements, and evidence of title of ownership of land
needs to be provided; the City Engineer requests that a 10'
utility easement be added dividing Block 1 and the outlot. He
noted that the City Engineer has approved sheet drainage onto
International Parkway. The remaining concern is where the excess
fill will go, but that will be resolved if the City proceeds with
the acquisition of the outlot as they have a place where fill can
be used.
-4- October 8, 1991
MO~ION
Chairman Cameron questioned the reason for the waiver of the final
plat and the creation of .88 acre outlet.
Mr. Trieber explained that their plan is to.get the trees removed
and grading started before it freezes givin~ them a better chance
for starting construction early in the Spring, but it mainly hinges
on what the City will do about the outlet and at this point that is
uncertain. He added that if the City does not act on the purchase
of the outlet, he will incorporate it into the existing property.
Alan Brixius suggested the preliminary plat be approved subject to
the City Council approval of the purchase of the outlet and if they
choose not to proceed on it, an amendment to the final plat can
consolidate the outlet into the existing lot thus avoiding further
delay in approval of the final plat.
Motion by Commissioner Cassen, second by Commissioner Gundershaug,
to approve the preliminarF plat and waive final plat review by the
Planning Commission subject to the conditions that the concerns of
the City Attorney, City Engineer, and Building Official are
corrected on final plat; and City make determination as to purchase
of Outlet A prior to final plat approval, and in the event the City
does not purchase the subject Outlet the plat be amended to include
Outlet A as part of Lot 1, Block I on the final plat.
Voting in favor: Zak, Cassen, Cameron, Sonsin, Gundershaug
Voting against: None
Not voting= Watschke
Absent: Friedrich
Motion carried.
Commissioner Watschke rejoined the Commission at this time.
PC 91-29 (3.8) Chairman Cameron introduced the next planning case. Mr. McDonald
REQUEST FOR outlined the request for a conditional use permit to allow a
CONDITIONAL USE commercial recreational use in the currently vacant Chicago Cutlery
PEI~MIT TO AT~W building. He explained that the planned use will be geared to the
A COMMERCIAL youth of the community with indoor batting cages, miniature golf
RECREATIONAL course, video arcade, weight room, basketball court, children's
USE AT 5420 safari and adventureland, pro shop, concessions, non-alcoholic
HWY 169 NORTH sports lounge, and a party room. He noted that the petitioner is
planning to occupy 42%, or 27,000 square feet in the center of the
65,276 square foot building, with a 27,000 square foot bakery
warehouse in the east end and a 10,000 square foot warehouse in the
west portion (facing Highway 169). He added that the proposed use
meets all the I-1 requirements, revised plans were submitted sub-
sequent to meeting with Design & Review, and the Planner has also
submitted a report, but staff has a number of concerns even though
they are recommending approval. He listed the concerns and made
recommendations for correction as follows:
1. Compatibility: location of a recreational facility between
two industrial sites making it necessary for its patrons to
cross industrial traffic is a concern, therefore staff is
recommending petitioner shift west to the front of the
building thereby keeping the recreational use in front and the
idustrial use in the back of the building.
2. Parking lot improvements: needs resurfacing, stalls for
handicapped parking, and curbing needs to be discussed.
3. Parking requirements: Planner has determined that 33 spaces
are needed for the two warehouse uses, but there is not a
category that addresses sports and entertainment uses,
therefore an other uses category is used to make a
determination on an individual basis. The Planner has
researched American Planning Association Standards and
recommends one space per 200 square feet of floor area for the
sports and recreation complex, therefore Grand Slam would need
to provide 135 spaces, so combined with the 33 industrial a
total of 168 spaces are needed on the site.
4. Curb cuts: a minor shift in the northerly access will
accommodate the revised parking lot configuration.
New Hope Planning Commission -5- October 8, 1991