Agenda - Council Work Session - 02/26/2008

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CASE # CONSIDER PURCHASE OF BURY AND CARLSON PROPERTY FOR FUTURE PUBLIC WORKS FACILITY By: Brian E. Olson, Director of Public Works 1 Principal City Engineer Background: As the Council is aware, on October 9, 2007, Staff was given authority to negotiate with Norman . Bury for the purchase ofthe Bury and Carlson parcel ofland lying east of Jaspar Street and south of l43rd Avenue NW for use as a future Public Works facility. The parcel is located at 14251 Jaspar Street and is approximately 21.14 acres in size. The property is occupied by an aggregate business. On January 8, 2008, City Council met in closed session to discuss the terms of the proposed acquisition. At this meeting, the three prililary concerns expressed from the City Council revolved around the leaseback provisions, environmental concerns, and the verbal lease agreements with two dumpster companies. On February 12, 2008, City Council met in closed session to discuss the terms of the proposed acquisition. Staff explained that if the City was to require an early acquisition of the property, Mr. Bury would need an additional sum of money ($78,000 per year for the entire property and $58,000 per year for the remaining ~ 1 0 acres). Attached to the case is a spreadsheet representing this issue. Staff also explained that the lease would include provisions to require Bury and Carlson to perform a Phase I environmental when the City takes possession of the property to address' the environmental concerns expressed. And finally, Bury and Carlson would be required to enter into a written lease with the tenants and be wholly responsible for the relocation benefits. This would be accomplished by $125,000 of the purchase price being put into escrow by Bury and Carlson to cover these relocation benefits and Phase I clean-up costs, if any. .'~ At the Special City Council meeting on Feb 19, 2008, a motion was made directing Staff to continue negotiating the terms for the final purchase and leaseback agreement with Bury & Carlson for the purchase ofthe Bury and Carlson 8ite for a price not to exceed $1,753,500 or approximately $1.90/sq. ft. Staff waS directed to use its best efforts to present final documents for review by the City Council at a Work Session on Febru~ 26,2008 and to consider final approval at the regular meeting later that evening. . Funding Source: TIF #2: $1.90/s.f. x 1.63 acres x 43,560 s;f = $134,905 ($1,753,500/21.14 acres/43,560 s.f. = $1.90/5.1) Water Enterprise: $1,753,500 x 50% / 3 enterprises = $292,250 Sewer Enterprise: $1,753,500 x 50% / 3 enterprises = $292,250 Storm Sewer Enterprise: $1,753,500 x 50% / 3 enterprises = $292,250 General fund (Parks, Streets): $741,845/2 =$370,923 each It is proposed that the above amounts be financed over 20 years, utilizing internal borrowing. Attached to the case is a spreadsheet indicating the impact to each of the funds that was handed out at the February Ith closed work session.