Agenda - Economic Development Authority - 07/12/2018

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Economic Development Authority (EDA) Meeting Date: 07/12/2018 By: Tim Gladhill, Community Development 4. 2. Title: Consider Amendment to Purchase Agreement for Harvest Estates; Case of GS Land, LLC (Portions may be closed to the Public) Purpose/Background: The purpose of this case is to consider an amendment to the Purchase Agreement for Harvest Estates, the site of the former municipal center. The Buyer (G S Land) has received preliminary Engineer's Estimates for Phase 2. The Buyer has noted that they do not believe the project is financially feasible with the current purchase price. Notification: Notification is not required. Observations/Alternatives: The buyer is proposing a revised asking price for Phase 2 of $5,000 (originally $279,270). The Buyer has obtained actual construction estimates, which were higher than the Buyer had anticipated (estimates attached). The reduced price is consistent with the approach used with the COR Three North Commons (Purmort Homes) which also had a high cost of development due to fill and soils correction. In the example of Harvest Estates, it's not soil correction, but the large amount of fill required to make the site developable. While Staff believes it noted this as a potential concern to the Developer (originally NIK Management) in 2015, the fact remains that this is now a true cost to the proj ect. The cost of fill/import is a real cost to the project that any future developer is going to need to encounter. This issue is not likely to be solved by finding another developer. Discounting the land makes it feasible to develop, generating additional fees and tax base for the city, and completing the road system for this neighborhood. If not developed in some fashion, this large vacant parcel will continue to be a maintenance concern for the city. Additionally, this project was split into two phases due to the need to retain the previous municipal center building that housed Fire Station No. 2 at the time. Fire Station No. 2 has since been replaced and the former municipal center has been demolished. Had this project been a single phase, it is likely that the overall purchase price would have been adjusted to reflect actual construction costs, once known. Funding Source: This case is being handles as part of Normal Staff duties. The fiscal implications to the City are a reduction in revenue generated from the sale of the former municipal center site. Recommendation: Staff recommends approval of Amendment 3 to the Purchase Agreement with GS Land. Action: Motion to recommend that the City Council approve Amendment 3 to the Purchase Agreement with GS Land. Attachments Site Location Map