Agenda - Council - 01/24/2023 - Laserfiche WebLink

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CC Regular Session 7. 1. Meeting Date: 01/24/2023 By: Sean Sullivan, Community Development Information Title: Adopt Resolution #23-034 Approving First Amendment to Purchase Agreement for Ramsey Properties, LLC (A portion of this meeting may be closed to public) Purpose/Background: The City Council may choose to go into closed session pursuant to Minnesota Statutes section 13D.05, subdivision 3(c)(3) to consider offers or counteroffers for the purchase or sale of real or personal property. If the City Council chooses to enter into to closed session the statute and reason above needs to be referenced along with legal description (Part of Outlot A, COR TWO) and the Anoka County Tax ID number 28-32-25-22-0058. The purpose of this case is to consider approval of the First Amendment to Purchase Agreement that involves the sale of Outlot A, COR TWO to Ramsey Properties, LLC (the "Developer"). The EDA and City Council have previously approved a Purchase Agreement to build a 60 unit hotel and a proposed deal structure involving a TIF land cost write -down of $311,454. The EDA reviewed the Business Subsidy Application for this project at the December 9, 2022 meeting and recommended approval of a land cost write down of $311,454 and Pay -Go Site Development Reimbursement of $306,000 totaling $617,454 in TIF Assistance. As mentioned at the previous EDA meeting, the Developer was having some concerns relating to the site size (too small to accommodate 82 unit hotel) and the operational efficiency of the hotel at 82 units and this has led to moving to another site. Change in Development Site and Assistance Request Staff has been working with the developer to address the shortcomings of the small site previously agreed to and has put together a new project proposal on a + / - 2.85 acre site across Sunwood Drive NW. The new Hilton Home 2 project has increased the number of units from 82 to 98. This site is not pad ready like the previous site, so it is estimated that $350,000 of fill and compaction will be needed to bring it up to a buildable site. Total site improvement and TIF eligible site development costs (utilities/foundation,parking) are estimated to be nearly $840,000. Estimated project costs have increased from 15.7M to 18.7M due to the additional site work, increased cost of land and the larger building footprint. It is possible that the site acreage could still be reduced during the site plan process. If so, the Land valuation and Land Cost write -down would need to be adjusted downward. Staff has been working with the Developer and Ehlers to complete the revised Business Assistance application and review. Project costs still are coming in higher than the Developer originally anticipated. The Developer has also adjusted the hotel floor plan/design to add an entrance to Sunwood Drive NW as requested by City planning staff to encourage activity and a connection along Sunwood Drive which have also added to the cost. These additional costs have triggered the request by the Developer for additional TIF assistance which is shown in the attached Business Assistance Application. The proposed assistance consists of $434,511 in TIF Land Cost Write down and $550,000 in Site Development and improvements. Due to the change in site cost, project description and the one -month delay, the Developer has asked the City to enter into a First Amendment to the Development Agreement. City Attorney Knaak has reviewed the first amendment and has approved it as to form. The Developer has also created a new business entity called Ramsey Properties, LLC and has filled it with the Minnesota Secretary of State, so this will be the entity name moving forward. As with any Business Assistance project, both Staff and Ehlers have completed analysis determined if the amount of assistance provided is appropriate. A summary of this analysis is below and attached in a Memo put together by Jason Aarsvold from Ehlers: