Agenda - Economic Development Authority - 08/08/2019

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Attached to this case is the proposed Right of Re -Entry Agreement with language pertaining to the extension of the Certificate of Occupancy date from July 31, 2020 to December 31, 2020 and the reimbursement of the $675,000 purchase price if construction does not commence, less City costs incurred related to the Purchase Agreement. Notification: Notification is not required. Observations/Alternatives: OBSERVATIONS • Zoning/Use: The proposed development concept fits within the City's existing zoning regulations and the Site plan was approved on June 25, 2019 • Sale Price: The asking price for the subject property is $2.47 per square foot ($1,000,000). The offer price is $1.66 per square foot ($675,000). The offer price is "below the mid -range" (but within the total deal range) of the City's adopted "deal -range" for the subject property. • Property Taxes: The proposed development is based on a 75,000 square foot building with the possibility for an additional 40,000 square foot expansion. Based on an estimated taxable market value of $4,000,000 for Phase 1, this project will generate about $133,000 in total annual property taxes, with the City receiving approximately 25% ($33,250) annually when it hits the tax rolls. • Earnest Money: This PA does include earnest money ($67,500.00, 10%). Earnest money will become hard if the initial closing date is extended by the buyer. The Developer has provided a down payment of $67,500 to the title escrow company according to the terms of the purchase agreement. • Broker Commission: There is no broker commission for this transaction • Net Proceeds: $675,000. • Closing Date: To be determined. Developer has expressed interest to close in August 2019. • Land Sale Policy: The PA meets the intent of the City's draft "Land Sale Policy" and has been reviewed by the City Attorney, and staff. Several changes (and negotiations) have taken place between staff and the buyer. • Buyer: The buyer (Knoll Properties / Anderson Dahlen) has a history of success and delivering on projects in Ramsey as shown by its expansion to its original building onsite and its commitment to creating "living wage" jobs in the community. • Right of Re -Entry Agreement: A draft Right of Re -Entry Agreement is attached. Certificate of Occupancy date has been moved from July 31, 2020 to December 31, 2020. A clause was added to allow for partial reimbursement of the $675,000 purchase price if the project does not move forward. ALTERNATIVES 1. Approve The EDA could recommend the proposed change to Certificate of Occupancy date from July 31, 2020 to December 31, 2020 is to account for the potential of a late project finish date if the project starts later than originally anticipated by the Developer and to allow for reimbursement of the Sale Price less City costs incurred relating to the Purchase Agreement. 2. Deny The EDA could recommend no changes to the Standard template Right of Re -Entry Agreement . Funding Source: This case is being handled as part of normal Staff duties. Recommendation: Staff recommends that the EDA recommend to the City Council adoption of Resolution # 19-188 Approving Right of Re -Entry Agreement for Lot 1, Block 1, Anderson Dahlen South Addition; subject to City Attorney review and approval. Action: