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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. · to: / / Review: Administration: Finance: RFA-O01 ~