Agenda - Council Work Session - 02/15/2011

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CC Work Session Date: 02/15/2011 By: Aaron Backman Administrative Services Funding Source: Information Title: Bury & Carlson Parcel - Sale Opportunity for Prospective Business Item #: 2. 2. Background: During the last week of January the Community Development Department for the City was contacted by a significant manufacturing company in Minneapolis indicating that it was looking for an additional industrial site. The company needs to add capacity to meet customer demand. It is seeking an expansion site of approximately 15 to 20 acres. They would have a high demand for electricity and natural gas. Since initial contact the Economic Development/Marketing Manager has undertaken the following: 1. The next day the Econ. Dev./Marketing Mgr met with Jeff LaFavre (Integrust Advisory Group) and Doug Johnson (Oliver Real Estate) re building opportunities and real estate services they might be able to provide the Ramsey project. (Mr. LaFavre has a strong background in land sales negotiations, has industry credibility when working with other brokers representing prospective clients (in this case, the other broker is CB Richard Ellis), and has good contacts with investors and developers in the Twin Cities that can build industrial buildings. 2. On 1/28/11 the Econ. Dev. /Marketing Mgr held a meeting with Connexus Energy and Mike Mulrooney, CMDC, re this manufacturing company and discussed location options. Several sites discussed were the Molin Concrete location and the Connexus Outlot A location. 3. During early February the Econ. Dev. /Marketing Mgr provided real estate and tax info to Connexus, and had several TIF runs accomplished re the Molin and Connexus properties. Subsequently the Bury and Carlson location was also added for consideration. 4. On 2/4/11 there were five of us that met with senior management of the company in Minneapolis, including the President, VP of Ops, Dir. of Engineering, CFO and the Plant Manager. The meeting was very positive. Management indicated that their preference was for an existing building, but if that was not available then a new 100,000 sq. ft building would be built. Their timeline is aggressive —they want to be operational by the end of summer and they have already ordered production equipment. The Ramsey sites in order of their preference: Molin, Bury & Carlson, Connexus. 5. Mr. Lafavre contacted the owner of the Molin property yesterday. It's not for sale even though there is no production at the present time. Mr. Molin indicated that that Molin Concrete wants to restart production at that location in the near future (possibly by late 2011). 6. Moving to Plan B on 2/7/11, the Econ. Dev. /Marketing Mgr talked with the manufacturing company re the Bury & Carlson site. They are appreciative of the interest we have shown them and they would be very interested in that location. 7. To meet the timelines, the City needs to show the company that we have a workable site available to them in Ramsey. At the City Council Work Session on 2/8/11, the Econ. Dev. /Marketing Mgr asked whether the City Council would consider selling the Bury & Carlson site for a new business. The consensus of the councilmembers was affirmative. 8. To keep the process moving the Econ. Dev. /Marketing Mgr is recommending that we have an agreement with Jeff LaFavre of Integrust Advisory Group to provide real estate services for this project. Mr. Lafavre has extensive real estate experience - -he was co- founder of the United Properties Corporate Services Division, and principal with Colliers Turley Martin tucker (now Cassidy Turley). Mr. LaFavre would be representing the City. What is proposed is an exclusive listing agreement. The brokerage fee would be 5% (if there is a cooperating broker, the 8% fee would be split 50 -50), see attached agreement.