122391 EDAOFFICICAL FILE COPY
CITY OF NEW HOPE
EDA AGENDA
EDA Regular Meeting #12
Agenda #12
President Edward J. Erickson
Commissioner W. Peter Enck
Commissioner Gary L'Herault
Commissioner Gerald Otten
Commissioner Marky Williamson
December 23, 1991
2.
3.
4.
Call to Order
Roll Call
Approval of Minutes of December 9, 1991
Discussion on Request for Authorization to Obtain Appraisal on Ardell
Engineering and Manufacturing Property at 7500 42nd Avenue North
(Project 474)
Adjournment
Approved EDA Minutes
Meeting #1!
CITY OF NEW HOPE
4401Xylon Avenue North
Hennepin County, Minnesota 55428
December 9, 1991
CALL TO ORDER
ROLL CALL
APPROVE NINUTES
FOREMOST PROPERTY
Item 4
President Erickson called the meeting of the Economic
Development Authority to order at 8:55 p.m.
Present: Erickson, L'Herault, Otten, Williamson
Absent: Enck
Motion was made by Commissioner L'Herault, seconded by
Commissioner Otten, to approve the EDA minutes of November
25, 1991. All present voted in favor. Motion carried.
President Erickson introduced for discussion Item 4,
Discussion Regarding Acquisition of Foremost, Inc.
Property, 7528 42nd Avenue North, Improvement Project No.
474.
Mr. Donahue stated staff would like to discuss the
acquisition of the Foremost, Inc. property at 7528 42nd
Avenue North with the EDA. He stated last June the EDA
gave the City Manager strong direction to pursue the
acquisition of the properties {Foremost, Electronic
Industries, and Ardel) based upon the previously accepted
plan for the development of the properties east of Quebec
on 42nd Avenue (42nd Avenue Redevelopment Plan). The EDA
has pursued a plan where it wishes to look at commercial
development of the properties given the problems
associated with the area including the substantial
pollution allegedly caused by Electronic Industries which
is the property located near Foremost.
He indicated during the past six months City staff has
been working with Mr. Fredendall, owner of Foremost, and
his attorney to negotiate an agreement whereby the City
could acquire the property. He stated the proposal is
comparable to costs the City could expect to pay in a
contested condemnation action. Mr. Donahue referred to
the City Attorney's December 3rd letter which outlined the
City's proposal on the acquisition of the property:
1) A purchase price not to exceed $585,000 (figured
arrived at based on payment of outstanding mortgage
equaling $484,962; payment of unpaid real estate taxes
for years 1990 and 1991 of $64,792; payment of unpaid
special assessments not certified to tax rolls of
$14,692; payment of relocation expenses of $20,000)
New Hope EDA
Page 1
December 9, 1991
2) After acquisition of the property the City would
continue to allow Foremost to operate at the property
without payment of rent for a period not to exceed 24
months. Foremost would pay all operational costs
associated with their use of the property including,
but not limited to, real estate taxes, utility charges
and insurance. Also, they would receive a gO-day
notice provision to vacate the property.
3) Upon their vacation of the property, they would be
allowed to remove all personal property, machinery and
equipment including any item which would be considered
a movable fixture. In other words, they would have
all salvage rights to the building given the fact that
we intend to demolish the building for redevelopment.
4) Foremost would agree to execute an agreement providing
the EDA with an equal share of the judgement collected
on their lawsuit against Electronic Industries after
payment of attorney's fees and not to exceed $50,000.
In other words, there will be the possibility that the
City would receive a $50,000 reimbursement in the
event that Foremost was very successful in their
lawsuit against Electronic Industries.
Mr. Donahue stated a lawsuit has been initiated based upon
the loss of property value. Foremost is claiming there is
a stigma attached to their property in that there is a
loss of market value due to their proximity to Electronic
Industries which allegedly caused substantial pollution to
their property.
He stated the City's appraisal also referred to the
pollution stigma: "the site is stricken with stigma of
pollution because of its proximity to polluted Electronic
Industries". He explained that the Foremost property has
ground water contamination but does not have any soil
contamination. He pointed out that there is protection
under state and federal laws whereby the purchaser of
property does not assume any problems or liabilities.
Mr. Donahue asked the City Attorney to further explain how
the proposed price was reached. He noted the possibility
of $50,000 reimbursement if Foremost is successful in
their lawsuit.
President Erickson stated staff was directed to consider
this and it would relate to the plan to upgrade 42nd
Avenue. However, there are so many influences on the
proposal that he would strongly recommend holding a work
session to discuss the different issues.
Mr. Sondrall stated one qualification he would like to
make is that the $585,000 figure that is quoted in the
New Hope EDA
Page 2
December 9, 1991
letter does not necessarily represent what a court or a
jury or another appraiser might consider to be the market
value of the property. He stated the figures that the
City Manager read were basically utilized to understand
what the property owner at Foremost is facing in regard to
expenses, liabilities, and problems in marketing the
property. It does not represent a "market value" that the
property is worth.
He continued by explaining that if the EDA wishes to
pursue the acquisition of the property, he would recommend
a friendly condemnation action because of the protection
from contamination liability found in chapter 117. The
necessary action if the EDA is desirous of pursuing this
option, would be to pass a resolution authorizing the
condemnation and authorizing a direct purchase of the
property under chapter 117.
Commissioner Otten inquired how unpaid real estate taxes
are normally handled in condemnation actions.
Mr. Sondrall indicated they would be subtracted from the
determination of value that was ultimately arrived at in
the condemnation action.
Mr. Donahue discussed the project time table and commented
that there are some considerations for completing the
matter by January 1, 1992.
Mr. Donahue also noted that the $585,000 would not come
from City funds but would be paid through the
redevelopment district that has been created along 42nd
Avenue. He stated there are excess revenues in TIF
District No. 8.
Mr. Bill Skolnick, Attorney representing Mr. & Mrs.
Fredendall (owners of Foremost), was recognized. He
stated there is a time issue for the matter to get
resolved. He reported their appraisal is at $660,000
unimpaired. Mr. Skolnick stated a contested condemnation
action could exceed $660,000.
He stated Foremost is proceeding with the litigation and
he has obtained a report by their environmental
consultants which clearly demonstrates that Electronic
Industries polluted the Foremost property.
Mr. Skolnick concluded by conveying that he would gladly
furnish any documents requested by the EDA.
Commissioner Otten noted the $585,000 equates to
approximately $27 per square foot.
New Hope EDA
Page 3
December 9, 1991
gORK SESS~Og
ADgOURNMENT
Mr. Sondrall stated the $585,000 price takes into
consideration the relocation costs as well as the market
value of the property (land and building).
Mr. Sondrall stressed the importance of starting a
condemnation action since that is necessary in order to
obtain the benefit covered under chapter 117 relating to
acquiring contaminated property and not being responsible
for clean-up costs. He stated if the EDA does not pursue
under Chapter 117 then it may have to deal 'with
contamination clean-up costs.
He stated the matter was approached with the number one
concern being the acquisition of the property for future
development in accordance with the guidelines for 42nd
Avenue. He noted that while the negotiated price may be
on the high side, it may be a good deal if the property
owner's case is accepted rather than the City's side.
President Erickson stated this is a cooperative effort
between the City and Foremost. He believes the purchase
will be advantageous to both parties.
Mr. Skolnick clarified an item contained in number two in
the proposal which refers to a 90 day notice provision
given by the City. He pointed out that it should be
reversed whereby Foremost may give the City a 90-day
notice. He stated if Foremost finds an alternate site
before expiration of the 24 months, it has the right to
vacate.
Commissioner Otten stated he would like to obtain options
for the two combined properties and agreed that a work
session would be beneficial.
The EDA scheduled a work session for Monday, December 16,
1991, at 6 p.m. to continue discussions regarding the
Foremost property.
Motion made by Commissioner L'Herault, seconded by
Commissioner Otten to adjourn the EDA meeting as there was
no further business to come before the Council. All
present voted in favor. The New Hope EDA adjourned at
9:30 p.m.
Respectful ly submitted,
Valerie Leone
City Clerk
New Hope EDA
Page 4
December 9, 1991
EDA
REQUEST FOR ACTION
originating Department Approved for Agenda Agenda Section
City Manager EDA
12-23-91
Kirk McDonald Item No.
By: Management Assistant By: 4
DISCUSSION ON REQUEST FOR AUTHORIZATION TO OBTAIN
APPRAISAL ON ARDELL ENGINEERING & MANUFACTURING
PROPERTY AT 7500 42ND AVENUE NORTH (PROOECT #474)
Staff requests that the EDA consider authorizing an appraisal of the Ardell Engineering &
Manufacturing property located at 7500 42nd Avenue North. The City has already obtained an
appraisal on the Foremost property and the EDA has authorized an appraisal on Electronic
Industries, which is in process. Any redevelopment at the northeast comer of Quebec and 42nd
Avenues would probably involve all three properties. There is also a cost savings to the City if the
Ardell appraisal is completed within the near future, due to the overlapping nature of the data that
has been gathered on the pollution aspect for the other two properties. The Foremost appraisal
cost $5,000and the cost of the Electronic Industries appraisal was $3,500. BCL Appraisals has
indicated that the cost for an appraisal on the Ardell property would range from $1,200to $1,800
if it was authorized within six months of the Electronic Industries appraisal. Brad Bjorklund
indicated that the cost would probably be on the low end of the quoted range.
Staff is requesting that the F. DA consider authorizing proceeding with the appraisal at this time.
The appraisal would be funded out of 42nd Avenue tax increment monies.
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