Agenda - Council - 07/25/2017 - Laserfiche WebLink

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4. WHY SHOULDN'T THE DEVELOPERS PAY FOR EVERYTHING? (How will this arterial infrastructure project effect land values in the business park?) Bunker Lake Boulevard/ Puma Street are considered arterial infrastructure/ trunk infrastructure/ collector roadways. These roadways are a designated Municipal State Aid (MSA) route —much like Alpine, Variolite, Sunwood, or 167th Ave. Bunker/ Puma proposed improvements include "trunk" water/ sewer lines; which are identified in the city's adopted Comprehensive Water/Sewer Plans. In summary, the arterial infrastructure proposed for Bunker/Puma will serve more than just the immediately adjacent parcels. RE THE BUSINESS PARK AREA Market rate asking prices for raw, shovel -ready, industrial land in the Ramsey area is $2.00- $3.50 per square foot. If Hageman Holdings was asked to pay for 100% of all new arterial infrastructure running adjacent to their site, land prices are predicted to range from $2.00-$3.15 per square foot MINIMUM. This price does not include the cost of any needed internal infrastructure, time - value -of -money, broker fees, or profit -margin for Hageman Holdings, etc. Likely, if this was the scenario, asking prices would escalate well over $3.00 psf. Elk River, Ramsey's biggest economic development competitor, has been listing industrial land for $2.50 psf, before use of economic development incentives. In some cases, via use of economic development incentives, said $2.50 psf priced land has been written down to significantly lower prices (less than $1.00 psf), or in some cases, even down to zero. In order to stay competitive, based on asking prices, Ramsey should stay below $3.00 psf, and ideally be closer to $2.00 psf, for asking prices. Additionally, the City should be prepared to use economic development incentives (such as TIF). Hageman Holdings has set their asking prices from $2.25 to $2.75 psf, which includes existing assessments (i.e. 2013 Legacy project assessments are NOT an additional cost to a buyer). Hageman Holdings has also indicated, they understand, that if additional NEW assessments are placed against their property (for this proposed arterial infrastructure project), they will likely need to discount that value from their existing asking prices, in order to stay relevant/ competitive in the marketplace (i.e. take less for the land). Hageman Holdings has indicated they understand that need, and are okay with that approach, and understand they need to stay at the $2.25-$2.75 asking prices. Hageman Holdings has indicated they are willing to sign another Memorandum of Understanding (MOU) outlining that position. Lastly, it should be noted, asking prices are different than what price a deal can be done —likely, Hageman would be willing to sell at a price closer to $2.00 psf (depending on the project/ negotiation). STAFF NOTE: the new Hageman Holdings assessments are estimated to range between $280K to $350K total. If that new assessment is spread across the former school site, it comes out to 10 to 13 cents per square foot, or $4,516 to $5,645 per acre. Page 5 of 8