Agenda - Council - 08/08/1995 - Laserfiche WebLink

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I I I I I I I I I I I I I I I I I I I OLD TOWN HALL By: Ryan R. Schroeder CASE # q Background: As directed by Council, the City has received a market appraisal on the historic Town Hall/Public Woi'ks site. The following are noted in the report. Mr. Ron Erickson of KKE Architects estimates renovation of the Old Town to marketable condition at approximately $90,000, plus a new foundation. * Market value of the building after renovation will be approximately $65,000. ValuatiOn of the Public Works site is at $1.83/square foot, assuming it is vacant and available for development (estimated at $79,000 for 43,108 square feet). Council is reminded that we have received a Minnesota Historical Society grant for $16,000. CounCil has allocated an additional $23,769 toward renovation of the Old Town Hall from CDBG (total of $39,769 in grant funds). Staff is approaching this property as a one-half acre Town Hall site and an approximate one-acre development site. We could demolish or move the Town Hall resulting in a larger development p~rcel. The result would be a loss of the Historic designation and the resultant $16,000 grant. We are unsure of the impact upon the CDBG funds. We have received a purchase agreement in the amount of $1.80/square foot from Isanti State Bank for the north development parcel. It is written in that fashion as we will not be absolutely certaifl of the parcel size until after a survey and site plan approval. A conceptual site plan of the bank proposal is enclosed for your review. For discussion purposes, we think the value of their offer is approximately $80,000, minus costs. Costs include a survey, legal fees, probably a phase 3 environmental, and any remediation and removal of the existing structures. Assuming no remediation and only minor utility work, we could net $50,000 - $60,000. A second option is to require the bank to redevelop the entire site, including the Town Hall, in exchange for lhe north property. The intent is to ensure that both projects conform in design and other;development issues After development, it is estimated by the appraiser that net rents of $8 ~ $10 per net rentable foot is reasonable. A net operating income (NOI) of $6,900 is estimated. At 8 percent, that NOI supports an investment (to break even) of $46,300 over 10 years, or $67,745 over 20 years. Proposed is: 1) The City deed the north land to the bank. 2) The bank be designated as the City's agent to renovate the Old Town Hall using the $39,769 in grant funds. 3) That the bank escrow $80,000 of its funds toward redevelopment of the Old Town Hall with iany unutilized funds being paid to the City. Eligible expenditures from this escrow would be architectural fees and any City expenditure conducted by the bank on behalf of the City (such as surveying, site work and remodeling). The · City woul~l retain the right to design approval. The City would also remain owner of the ToWn Hall site upon development completion.