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Home My WebLink AboutEDA AGN 05-25-04CITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E., Columbia Heights, MN 55421 -3878 (763) 706 -3600 TDD (763) 706 -3692 Visit Our Website at: wmN:ci.columbia- heights.mn.us ECONOMIC DEVELOPMENT AUTHORITY REGULAR MEETING 7:00 P.M., TUESDAY, MAY 25, 2004 CITY HALL, CONFERENCE ROOM 1 AGENDA 1. CALL TO ORDER/ROLL CALL 2. PLEDGE OF ALLEGIANCE. 3. CONSENT AGENDA. (These items are considered to part of the Consent Agenda by A. M 1) 2) MOTION: Move to presented. MOTION: Move to apl Economic Development bills for the month of AT 4. ITEMS FOR CONSIDERATI EDA COMMISSIONERS Don Murzyn Jr. Patricia Jindra Bruce Kelzenberg Julienne Wyckoff Bruce Nawrocki Bobby Williams Tammera Ericson routine by the EDA Board of Commissioners and will be enacted as e motion.) the minutes of April 20, 27 and May 10, 2004 EDA Meetings as ve Resolution 2004 -05, a Resolution of the Columbia Heights xthority (EDA) approving the financial statement and payment of )2004. A. Adopt Resolution 2004 -06, (Approving the Purchase Agreement for acquisition of 3939 Central Avenue MOTION: Move to waive the reading of Resolution 2004 -06, there being an ample amount of copies available to the public, MOTION: Move to Adopt ,resolution 2004 -06, a Resolution Approving purchase of land between the Columbia Heights Economic Development Authority and Nath Property Corporation, L.P., A Minnesota Corporation; and ifurthermore, authorize the President and Executive Director to enter into an agreement for the san>le. 5. ADMINISTRATIVE 6. ADJOURNMENT Walter R. Fehst, Executive H: \edaAgenda2004 \5 -25 -2004 The EDA does not discriminate on the bass of disability in the admission or access to, or treatment or employment in, its accommodation will be provided to allow ndividuals with disabilities to participate in all EDA services, programs, and activities. Auxiliary aids for handicapped persons ar available upon request when the request is made at least 96 hours in advance. Please call the EDA Secretary at 706 -3669 to make arrangements (TDD 706 -2806) for deaf or hearing impaired only. THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES EQUAL OPPORTUNITY EMPLOYER ECONOMIC DEVELOPMENT AUTHORITY (EDA) REGULAR MEETING AND JOINT WORKSESSION MINUTES APRIL 20, 2004 CALL TO ORDER/ROLL CALL President, Murzyn called the meeting to order at 8:29 p.m. EDA Present: Don Murzyn Jr., Patricia Jindra, Julienne Wyckoff, Bobby Williams and Bruce Nawrocki, Tammera Ericson, and Bruce Kelzenberg P & Z Present: Gary Peterson, Marlaine Szurek, Donna Kay Schmitt, and Phil Baker P & Z Absent: Ted Yehle PLEDGE OF ALLEGIANCE CONSENT AGENDA Approval of Minutes Financial Report and Payment of Bills MOTION by Williams, second by Wyckoff, to adopt the consent agenda items as listed. All ayes. Motion Carried. ITEMS FOR CONSIDERATION City Center/Recreation Center Discussion- John Shardlow Streetar stated the purpose of this joint worksession with the Planning & Zoning Commission is to review the set of issues and attempt to reach some kind of consensus about the direction the City should pursue. Both the School Board and the City Council have recognized the need for additional gym space and the City of Minneapolis, the YMCA and the Boys and Girls Clubs are also considering construction of a community center on Central Avenue in the range of $20 million dollars. There have been discussions regarding a new City Center including a City Hall, Library and potentially some senior housing, similar to the City Center by Dunbar Development in Waconia. In 1998 the Minnesota Design Team developed the "Town Square " and "Urban Green Concepts ", which included a Community Center and other Civic facilities. The Comprehensive Plan identifies a Community Center as one of the goals also. John Shardlow, DSU is present to open the discussion. Shardlow stated he would document the answers by the commissioners from the enclosed questionnaire. The following summary was provided by John Shardlow of DSU.- WORKSHEET The following sections are provided to identify the key questions that need to be answered. The questions include the most basic ones, including whether or not you still want to pursue the development of these facilities. They focus on the options related to the program for these facilities, what they should include and why. They also identify potential partners for the city in these ventures to allow a candid discussion of the pluses and minuses associated with each of these alternatives. Question Number 3. If you believe the City should pursue the development of a recreational facility, discuss the pluses and minuses associated with each of the following options: A. City develops its own facility Economic Development Authority Meeting Minutes April 20, 2004 Page 2 of 9 Pluses: City is in control of the process Start with a basic facility and add to it as possible, in the future The City gets to choose the location that works best for Columbia Heights The City can control the appearance of the facility City should take responsibility to satisfy its own recreational needs A City facility would unite the community — It would be a community focal point If the City were to take control, it would send a strong message to the Community — It would be a statement about commitment A City owned facility would allow the Recreation Dept. to better provide for what our kids need and want Tournaments that would be held at the facility would bring outsiders to the City and their experience with a quality facility would also send a positive message to the region about Columbia Heights Negatives It might be harder to sell to the residents and meet community expectations Would it result in higher taxes? The community would be critical of that outcome The facility could be a money loser and will take some stake money If the City goes it alone, there is no opportunity to either share costs, or realize the benefits of joint programs Is the timing right now? Do we really know the right location? We have had inadequate citizen input This should have been done a long time ago The on -going operating expenses and maintenance costs could prove to be a burden If we go it alone, we can't share the risks with another entity and may not be able to meet some community needs A pool could add dramatically to costs B. City collaborates with the School District on a ioint facility Pluses: There would be the ability to share costs and risks — both construction and operating This could prove to be the most cost effective provision of services to more people There would be the opportunity for Synergy (the whole being greater then the sum of the parts) There is a successful precedent for cooperation with the school district, which could lead to the assumption that it would work well this time Tax payers would perceive this collaboration as adding value It is a logical collaboration, — both serve same population This could present the opportunity to use their land This approach would be an easier sale to the public A shared use facility would result in greater efficiency of use — less duplication of services or facilities There would be the opportunity to leverage state money, a 60/40 match for capital investment The School District boundaries extend beyond the City limits, thus broadening the base for funding Negatives: There could be possible arguments about the location and types of facilities to be built There would be a difficult time determining the relative share of costs and there is the potential for on -going conflicts regarding scheduling It would likely hurt the District's pending bond issue, if there were two issues on the ballot We could lose a sense of community ownership, if the facility was located in a school building One group or the other should be in charge The High School is bad location due to parking The school has not served the community well Economic Development Authority Meeting Minutes April 20, 2004 Page 3 of 9 Need to clearly defined use policies on an ongoing basis There is a precedent for failure in past ventures There is a distinct cultural difference between the city and the school board The Schools more possessive about their facilities It would present a challenge to retain Institutional memory regarding responsibilities, rights C. City collaborates with the City of Minneapolis, the YMCA, and the Boys and Girls clubs on a facility in northeast Minneapolis Pluses: Columbia Heights could make a small contribution and secure access to a great facility We could let them handle the expensive elements This is a way to provide access to big- ticket items — we could provide more amenities for our citizens This would present the opportunity for more creative funding, including private sources With a bigger base the costs could be spread more widely This would result in more programs — and more operational efficiency Contributions could be tax deductible There would be an Opportunity /possibility to draw money from a broader area The City could access greater expertise in facilities and program operations It appears that it is going to happen Negatives Many of the same negatives associated with collaborating with the schools, the City would lose control, and lose the opportunity to establish a community focal point Historically residents would resist going to Northeast Minneapolis This solution doesn't necessarily solve the current programming needs and problems Citizens would have concerns about safety; whether this was perception or reality I am afraid that Columbia Heights would receive a low priority for programming and use Question Number 4: Is there a preferred site for a recreational facility? If the answer is yes, please share your thoughts about the relative merits of each of the following potential locations: A. The NEI site This is a wonderful site! The City already controls it, it is large and the current facility can't be reused It is currently tax - exempt It is a centralized location within the community The City could control the facilities It is vacant and ready to be developed I don't believe that re -use has not been explored enough This should be a housing site It has too much potential to be just a recreational facility This is a valuable site and could support tax base This is the best site This site presents the opportunity to build a potential town center Economic Development Authority Meeting Minutes April 20, 2004 Page 4 of 9 B. Huset Park No- although maybe just gyms No — because of inconsistency with the approved master plan Yes, because of the positive relationships with other uses We could tear down some of what is there to make room for the facility It would be compatible with Murzyn Hall It could accommodate parking better If we added more industrial land it could work, otherwise it will be too tight It would conflict with the baseball fields This could be an option — but it really hinges on the NEI Site C. The High School Parking is a very real problem (mentioned multiple times) It is centrally located, but it would be more of an effort to get there The community would not perceive that they owned the facility if it was located at the High School There is inadequate space on the site Seniors would be uncomfortable going there If we moved one of the schools to the NEI site, then there would be enough room D. Valley View Elementary School Parking is really bad Where would you put the building? It would have the same negatives as the High School The location is not as good It could displace some of the existing uses E. Other (please be specific) 39`x' and Central — but I would rather keep the area commercial Question Number 5. Do you believe that the city should pursue the development of a city center? If the answer is no, please explain why not. Yes — we should invest in the City Yes, pending a more detailed review of the financials Yes — Yes No - not at this time, we already have enough proposals to improve community There are several things that should take a higher priority Yes — but the timing is critical Yes — timing critical Yes — but both timing and phasing are critical Yes — but phasing is key Not right now because neither the money, nor the community support is there Definitely yes — but with a phased in approach Economic Development Authority Meeting Minutes April 20, 2004 Page 5 of 9 Question Number 6. If you answered yes to the idea of a new city center, what elements do you believe belong in that center? Please record your thoughts about each of the potential elements listed below, as well as any others that you would like the city council to consider. A. Library Yes — there would be great synergy with a gym Yes Yes Yes — but maybe, but not city run Yes Yes — but timing is critical 4 -5 years Not at this time Definitely yes — with coffee and plenty of couches Yes Yes Yes B. Police /Fire Depends on the evaluation of all of the issues associated with remarketing the existing facilities They are better served where they are Better served where they are; It represents a better use of space Better served where they are Not at this time It could make sense to locate them in the context of a comprehensive city center campus I like them where they are I am open — but they are pretty well served where they are Should be considered as part of a phased plan It would present the opportunity to redevelop the current site It might be possible in future, but it is adequate for now Wouldn't want to keep just for city hall C. Senior Housing Possible — but not too much Yes Yes Yes Yes (Huset Park) May need to take a good hard look at the demand, given everything built and in the pipeline No, not sure Good idea — would help to pay for it, but concerned about market demand Yes, if fire and police underneath it — but I am not really for it I agree with the concern about the lack of demand It might be too crowded Economic Development Authority Meeting Minutes April 20, 2004 Page 6 of 9 D. Other License bureau Community meeting rooms Art space Theater Coffee — plenty of couches Streetar stated staff would compile the results for the board and present them at a City Council worksession. Approve Contract for Asbestos Abatement of NEI Building Streetar stated staff sent out a total of 13 bids, received eight back, the low bidder was Southern Environmental at $48,615, which includes removal of friable asbestos, transite panels in Room 417, but does not include roof patching compound. This element of the asbestos abatement will be addressed before demolition. Anoka County indicated the reallocated CDBG grant funds from the sale of Tyler are available to pay for the asbestos abatement. Depending on the subsequent reuse of the NEI site, a portion of the CDBG funds may have to be repaid and would remain solely for use on other projects in Columbia Heights. Murzyn asked why we delayed this issue until this meeting. Streetar stated the Mayor wanted to explore all other options and per Anoka County we had to have a historical review preformed on the building, which turned out that the building is not historical. Nawrocki stated he was opposed to the motion, as we haven't explored all the options for use of the building, is opposed to building a City Hall or Library, and would like to utilize gym space in the NEI building. Williams agreed with Nawrocki and felt it was a little premature, and we should wait for the Town Meeting on Thursday night or until we have a plan. Ericson stated she likes old building structures, but felt the private sector has explored the options of fixing it up with no results. Murzyn stated the gym floors aren't worth salvaging, it wouldn't be cost effective to save the building and the people in the community deserve a new facility. MOTION by Wyckoff, second by Ericson, to Approve the Asbestos Abatement Contract with Southern MN Environmental for the NEI building at 825 41St Avenue in an amount not to exceed $48,615; pending review and approval by the City Attorney, and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. Upon Vote: Jindra- Aye, Nawrocki- Nay, Ericson- Aye, Kelzenberg- Aye, Murzyn- Aye, Williams - Nay, Wyckoff- Aye. Motion Carried. Economic Development Authority Meeting Minutes April 20, 2004 Page 7 of 9 Approve Contract for Demolition of NEI Building Streetar stated staff sent out nine bids with four responses. F.M. Frattalone was the lowest bidder at $286,500. Bids include demolition of the building, removal of all non friable asbestos, removal and preservation of the front archway and balusters, with demolition to begin after July I". Anoka County indicated the City will receive $284,600 of CDBG grant funds to pay for the demolition, with the remaining $1,900 to come from reallocated CDBG funds from the sale of 4607 Tyler. Depending on the subsequent reuse of the NEI site, a percentage of the CDBG funds may have to be repaid. In that event, the funds would remain solely for use in other projects in Columbia Heights. MOTION by Wyckoff, second by Kelzenberg, to approve the Demolition Contract with F.M. Frattalone for the NEI building at 825 41St Avenue, in an amount not to exceed $286,500 and pending review and approval by the City Attorney; and furthermore to authorize the President and Executive Director to enter into an agreement for the same. Upon Vote: Jindra- Aye, Nawrocki- Nay, Ericson- Aye, Kelzenberg- Aye, Murzyn- Aye, Williams - Nay, Wyckoff- Aye. Motion Carried. Nawrocki asked why we are saving the Baluster's and archways. Wyckoff stated she requested they be saved and possibly reused as they have some architectural history of the City, as it was the original High School. 401h & University Predevelopment Agreement Schumacher stated at the EDA meeting on March 16`h Mr. Peterson asked the board if they were interested in a development from the partnership of Williams - Peterson using the same agreement to market the site as the Haugland Company had with the EDA. The board requested Peterson, to prepare a proposal for this meeting. The agreement attempts to formulate a definitive development contract, addresses the purchase price of the property, satisfactory mortgage, equity financing, resolution of zoning, land use and site design issues, economic feasibility and soundness of the development. The EDA also set four parameters of priority to work with: 1) upscale development with single or multi -use tenants; 2) no fast food restaurants; 3) no auto related activities; and 4) uses that would provide vitality and needed services along University Avenue. If the Williams - Peterson, Partnership, met the requirements of the Predevelopment Agreement, staff will return to the board with a final development contract for consideration. Williams stated he would not be participating in the discussion as he is in the partnership. Ericson stated she did not agree with putting a larger building on the site without it being pre - leased, as Haugland already tried marketing the site with no interested parties and asked what is it about their proposal that would make the board think it would work. Peterson stated he has pursued a business tenant for the project site, but can't go any further with them until he has an agreement. He has been in the construction business for 40 years, has lived in Columbia Heights for 35 years, has built complexes like this before, has never leased out the units, but his partner, Mr. Williams has and felt it was time to invest in our City. Streetar stated Haugland's consensus was to have 80% leased before a development agreement was signed. Economic Development Authority Meeting Minutes April 20, 2004 Page 8 of 9 Murzyn asked staff, with the 120 -day agreement, how long before they have to come back to the board with their status. Streetar stated they would come to City staff within 30 to 60 days with a progress report. Peterson asked how long would it take the City to obtain the MGS building and the street vacated. Ericson stated we don't know at this time. Kelzenberg stated the board shouldn't deny the agreement because one of the partners is a former Mayor and the other owns an automotive business in Columbia Heights. Nawrocki stated the following: we are not ready to develop this site as we cannot vacate the street until we own the MGSproperty, which he understood the property owner isn't ready to sell and that the City may have to use eminent domain to speed the process up, felt we should have gone out for bids, has heard talk about a nice restaurant placed there but, didn't think it is our decision to make as it's what the marketplace allows. Stated he was disappointed this came to the last meeting, which he could not attend, heard something was passed out at the meeting, which he never received a copy of and didn't really know about this until this meeting. However, he would be supportive of this agreement if some of the issues addressed could be taken into consideration. Ericson stated we did go out for developer bids, prior to signing the agreement with Haugland, and therefore, we shouldn't have to do it again. Wyckoff asked what options they have when the plan comes back to the board. Streetar stated they would have three: 1) accept it; 2) reject it; or 3) accept it with modifications. Schumacher stated Williams, would have to sustain from any further discussion, once the agreement was approved by the board. Murzyn requested the City Attorney review the agreement and determine if there were any conflicts of interest that may violate State Statute. Peterson stated he is on the side of the City, excited for the opportunity to work with the City and would hope they would be excited also. MOTION by Kelzenberg, second by Murzyn, to Approve the Predevelopment Agreement with Williams- Peterson Partnership, subject to review and approval by the City Attorney; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. All ayes. Motion Carried. Set Special Meeting to Discuss the Schafer Richardson Predevelopment Agreement Schumacher stated Schafer- Richardson has prepared a Predevelopment Agreement for the EDA's consideration. Staff is recommending holding a special EDA meeting at 8: 00 pm on Tuesday, April 27`h in Conference Room 1 at City Hall to go over the agreement. Economic Development Authority Meeting Minutes April 20, 2004 Page 9 of 9 MOTION by Ericson, second by Williams, to set a Special Meeting of the EDA at 8:00 pm on Tuesday, April 27, 2004 in the City Hall, Conference Room 1, to discuss the Schafer - Richardson Predevelopment Agreement for the Industrial Park Project. All ayes. Motion Carried. ADMINISTRATIVE REPORTS Taco Bell Schumacher stated Border Foods, owner of Taco Bell has been working for the past 2 years on remodeling their building on the corner of 49`h and Central along with purchasing the car wash just to the north of their building. They are currently asking the City to help in TIF or eminent domain to purchase the car wash property. The car wash owner is willing to sell, but wants a large amount for the property. What direction would the board like staff to pursue. Williams stated he was against condemnation, but felt the car wash owner was unrealistic about the cost of their building. The consensus of the board was to direct staff not to get involved in the issue of purchasing the car wash. 4855 University Avenue Schumacher stated the non - conforming single-family home at 4855 University was taken down. ADJOURNMENT President, Murzyn, Jr., adjourned the meeting at 11:15 p.m. Respectfully submitted, Cheryl Bakken Community Development Secretary WEDAminutes2004 \4 -20 -2004 ECONOMIC DEVELOPMENT AUTHORITY (EDA) SPECIAL WORKSESSION MEETING MINUTES APRIL 27, 2004 CALL TO ORDER/ROLL CALL President, Murzyn called the meeting to order at 8:12 p.m. Present: Don Murzyn Jr., Julienne Wyckoff, Bobby Williams and Bruce Nawrocki, Tammera Ericson, and Bruce Kelzenberg Patricia Jindra- arrived at 8:20 pm. PLEDGE OF ALLEGIANCE ITEMS FOR CONSIDERATION COLUMBIA HEIGHTS INDUSTRIAL PARK REDEVELOPMENT Introduction and Opening Remarks Schumacher stated this worksession is to give the board a brief overview of the proposed Industrial Park Project, with no action on this item tonight. Last year Hoisington - Koegler put together two plans for the Industrial Park redevelopment site; one showing the scenario as all housing and the other showing 213 housing with the northerly piece proposed for industrial. After the plan was approved, staff made application to the state for a contamination investigation grant, which was approved, we hired ProSource to perform the investigation, document the types of contamination they found, put a plan together and provide it to the MPCA. Staff made application to Metropolitan Council for a $1.3 million dollar grant, which we received to clean up the contamination, and made application for a predevelopment grant for the engineering and infrastructure, which was also approved. All soil and water testing is complete and have installed five deep -water monitoring wells. The funds received to date are to be used for Phase I only. It will be a total of $4.6 million for the entire 30 -acre project. S.E.H. has completed a preliminary parkway design, and preliminary surface water management model. Over the past 4 to 5 weeks, Steve Bubul, has been working with staff to put together a Predevelopment Agreement. This agreement sets up guidelines for both the City and the developer as they move forward to create a final development contract and will state exactly what the City and developer will be responsible for. The developer would be responsible to build approximately 145 units and approximately 15, 000 square feet in Phase I. Steve Bubul, Kennedy & Graven, stated it is anticipated the City and the EDA would be involved as the City would do the Zoning and Planning documents and the EDA would be responsible for the TIF funding and eminent domain if necessary. Therefore, in the end it will be a three party agreement. HISTORY AND DEVELOPMENT PROPOSAL Brad Schafer, one of the Principals of Schafer- Richardson introduced his partner Kit Richardson, who is the other principal officer and David Frank, project manager. Schafer and Richardson started their company nine years ago, they buy property that someone else hasn't been able to move, they have 12 employees, a subsidiary company which provides management with approximately 60 employees, to date they have done 27 projects totaling about 4 million square feet and valuing in excess of about $140 million dollars, City Business, NEIOP and Minneapolis Historic Preservation has given them awards. Their portfolio has 18 buildings, just Economic Development Authority Meeting Minutes April 27, 2004 Special Worksession Page 2 of 3 over 2 million square feet, with current projects totally 92 units. Schafer showed pictures of the 710 Lofts development, which is a 60 unit building just off Washington and 4`h, market price range of $160 to $350, 000, the smallest unit as 885 sq. ft., and the upper unit has 16 to 17, 000 sq. ft., averaging $250 to $350 per month for association fees. The 720 Lofts development will be 80 to 85 unit building, with similar architecture as the 710 Lofts, they hope to break ground in September of this year. They acquired the Pillsbury A -Mill Redevelopment site last year and are preserving the old limestone A -Mill building as it is a national landmark building. The Phoenix Lofts development will be a 150 unit building, $40 million dollar project that they are waiting for City approval on and hope to start the project at the end of the year. Schafer stated their offices are located in the old bank's building in Minneapolis. They are interested in redevelopment in Columbia Heights as: 1) they like to do redevelopment projects; and 2) because they are a major landowner in the development area. Schafer stated their plans show 250 Town houses, 196 Condominiums, 15, 000 square feet of Commercial on Jefferson and 39th, predominately 70 -80% for sale units, their goal is 100% owner occupied, single family home land would be 1120`h of the development, the total square footage of these buildings is approximately 900, 000 square feet if it was built as drawing, which includes the garages. They work with ESG Architectural firm. Everything East of 5`h is in Phase 1 and everything West of 5`h is in Phase II. They propose to start with Phase I as they are the primary owner of the land. In Phase II area they are in the process of negotiating to purchase the land are having trouble getting together with the owners of Grief as they aren't locally owned, otherwise negotiations are going quite well. At this time there is a lot of mediation, planning, meetings, public hearings, pre - construction planning, etc. to be done. The total project cost is going to be approximately $90 to $100 million dollars. Murzyn asked as they hire out their construction, do they plan to keep the Commercial part of the project. Schafer stated they could rent, sell or lease it out, but he isn't sure at this time. Wyckoff asked if they are anticipating putting in a community center, pool, health club or anything like that and stated she attended a conference recently, where they said a lot of l floor retail or business with rental housing units above owning the building is quit common. Schafer stated they would be putting in a pond to accommodate the park area across the street and yes, the live and work in the building is quite popular today. Wyckoff stated St. Anthony is marketing fiber optics and asked if Schafer- Richardson is considering this option in their project. Schafer stated they are not aware of any residents asking for Fiber Optics at this time, but could certainly work with that option, if requested. Streetar stated as they design the projects, they would have focus group meetings to see what will market. Richardson stated they would. Schafer stated they would have multiple product types for review by the City and residents. Resident, Caroline Bardwell asked if there would be enough parking for the housing development so they won't have to use Huset Park. Schafer stated there would be 17 units per acre with two parking spaces per unit. Nawrocki stated 17 units per acre is pretty high density. Economic Development Authority Meeting Minutes April 27, 2004 Special Worksession Page 3 of 3 Streetar stated Nedegaard's project on Central will be 18 units per acre with 2 garage stalls per unit, and that he has had 80 people call with interest in the homes. Nawrocki asked if they would be willing to put covenants in the agreement so that it would be all owner occupied. Schafer stated he didn't think that he could. Williams stated the board should look at what we have on the site now and what we could have there and also asked what our next step is. Streetar stated the board would review the predevelopment contract. Nawrocki stated we should think about the loss of Industrial land, which would be a loss of jobs in the City. Streetar stated that Dale Glowa from United Properties stated when the industrial park market comes back, Columbia Heights would be fifth on the list, would take all of the risk, and that there would not be enough TIF funding to pay for it. The developer isn't going to spend $100 million if the City isn't ready to work with them to develop the area. Bubul stated it is important to get substantial grants to pay for costs of the project as you go forward. Now is the time to start looking into some of the issues in the Preliminary Agreement. SET NEXT MEETING TO REVIEW PRELIMINARY DEVELOPMENT AGREEMENT Murzyn thanked Schafer- Richardson for their presentation. Nawrocki stated he is opposed to a meeting without bringing this to the public first. Wyckoff stated she would bring the idea to the next Huset Park meeting and the 1 S` Wednesday of the month meeting with the Mayor. Fehst suggested we get the Rising to New Heights group involved also. Murzyn suggested putting this item on the May I8`h regular EDA meeting. Schumacher stated he felt it necessary that Bubul be in attendance and can't be there on the 18'h. Ericson suggested we hold a Special EDA meeting on May 10th at 7 pm in Council Chambers, televised for residents and move the City Council meeting to start immediately after the EDA. Murzyn directed staff to make the arrangements for the special meeting as suggested by Ericson. ADJOURNMENT President, Murzyn, Jr., adjourned the meeting at 9:34 p.m. Respectfully submitted, Cheryl Bakken Community Development Secretary H:\EDAminutes2004\April 27, 2004 Spec. Worksession ECONOMIC DEVELOPMENT AUTHORITY (EDA) SPECIAL MEETING MINUTES MONDAY, MAY 10, 2004 CALL TO ORDER/ROLL CALL President, Murzyn called the meeting to order at 7:00 p.m. Present: Don Murzyn Jr., Patricia Jindra, Julienne Wyckoff, Bobby Williams and Bruce Nawrocki, Tammera Ericson, and Bruce Kelzenberg PLEDGE OF ALLEGIANCE ITEMS FOR CONSIDERATION APPROVE PREDEVELOPMENT AGREEMENT WITH SCHAFER - RICHARDSON Schumacher stated the purpose of this meeting is to discuss entering into a Preliminary Agreement with Schafer- Richardson, a developer that owns 90 percent of the property in the Industrial Park Redevelopment site. The agreement will assure the developer the City and EDA will not negotiate with other parties for the redevelopment site for a period of 180 days, as listed in the Preliminary Agreement. In addition, it also outlines the general terms, major issues, and obligations of the parties while negotiations for a final contract are taking place. In the last year and a half the City has received over $1.5 million dollars in grants for the project site to investigate and clean up hazardous waste. Steve Bubul, Kennedy and Graven will go through a summary of the Preliminary Development Agreement and answer any questions the board may have. Steve Bubul stated the agreement has four major purposes: 1) describes the general terms that will be used in the negotiation of a definitive contract; 2) describes the obligations of the parties, while negotiations are underway; 3) provides security for the City and EDA, by stating the developer will pay for costs incurred by the authority; and 4) provides security for the developer, by stating the City and EDA will not negotiate with any other party regarding development of this property for the term of the Preliminary Development Agreement. The City and EDA will be responsible for initiating Comprehensive Plan amendments, rezoning, accepting the preliminary site plan as framework for the redevelopment site after the execution of a contract, will use eminent domain to acquire property ij'necessary,but only after exhausting all reasonable efforts, provide TIF assistance on a pay-as-you-go basis, start the process to create a redevelopment TIF district, investigate other financial options to help finance public infrastructure and hold any public meetings or hearings deemed necessary. The Developer will be responsible to accept the preliminary site plan as conceptual framework, exhaust all efforts to acquire all property, submit a detailed project schedule with updated site plan and financial proforma, cooperate with the City and EDA in all activities related to land use, TIF and public meetings. The costs are identified as the developer paying for all out -of- pocket costs incurred by the City or EDA since December], 2003. The developer will provide a $25, 000 deposit and will remain Economic Development Authority Special Meeting Minutes May 20, 2004 Page 2 of 4 obligated to pay costs in excess of that up to $100, 000. The City and EDA will provide a budget of expected costs by June 1, 2004. The term of the agreement will be effective for a period of 180 days, can be extended by the City Manager for up to 90 days, any extension after that would require the EDA and City Council approval, and all parties will use their best efforts to enter into a final contract by August 31s, 2004. Nawrocki stated on previous maps of the Industrial area there were industrial sites shown along University Avenue and the maps in this packet are different. Schumacher stated back in June of 2003 the EDA and City Council approved the concept as shown. Nawrocki stated: 1) we need Industrial buildings to provide jobs; 2) is concerned with the ability of the area to absorb that amount of housing; 3) didn 't feel the City Manager should be the only one that would be responsible to extend the agreement, it should be the EDA and City Council; 4) the City won't see the TIF funds for many years, just like the development on the Kmart site; S) asked what the total cost is the City has already spent on the project; 6) was concerned that no meetings have been held with the public; 7) the agreement states the EDA will do the financing and asked where the funds would come from; and 8) is opposed to making a commitment before we have rezoned the property. Bubul stated the City has spent under $10, 000 to date, due to grant funding and that the EDA will use grants, TIF and developer reimbursement funding to finance the project. Nawrocki asked if the board decided not to go forth, would the agreement end. Bubul stated it would. Murzyn, Jr. asked Streetar what would be the best guess on how long before TIF funding would come into the City. Streetar stated I to 5 years. Williams stated the State and Met Council is behind us on this project. This is a slow start to the long process for the development. It is important to work with developers, and stated he was anxious to take the first step in the process. Ericson agreed with Williams and stated it has been a priority of the City to clean up this area long before she ever was on the board. The Preliminary Development Agreement meets all of our expectations, as it is the first step. The goal is to work together quickly to come up with the best possible product. Motion by Ericson, second by Kelzenberg, to Approve the Preliminary Development Agreement between the Columbia Heights Economic Development Authority and Schafer - Richardson, the developer of the Industrial Park Redevelopment Project; and furthermore, to authorize the President and Executive Director to enter into an agreement for the same. Economic Development Authority Special Meeting Minutes May 20, 2004 Page 3 of 4 Wyckoff stated this is a very preliminary agreement, is very excited about moving forward and taking the first step, we will be having public hearings as stated on page 5 of the agreement, reminded the board that after 180 days they would have the option to accept, reject or accept the plans with changes. Fehst stated one of the reasons we are having this special meeting publicized is to convey to the general public this Community Development project, which will generate somewhere in the neighborhood of $90 to $100 million dollars in market values in the City. All of the members of the community need to be aware of this project and will have the opportunity to express their concerns. Joanne Student, 1615 49`h Avenue, stated her father always said, "the biggest spacer for development is between your ears ", and thinks that is still very true. She was very grateful for the time and energy the board has spent to develop an area that she has looked at for over 40 years and was ashamed of. It takes a lot of courage and leadership to do this. With this effort you are really making a statement to do what is right for the community. She had the opportunity to listen to a number of presentations from developers regarding the use any of the property for industrial, with all of them suggesting it was a bad idea as we don't have the space, connections, transportation opportunities and the railroad. Student stated she personally felt this is a wonderful opportunity for the City, has heard the track record of the developer is impressive, as well as the one on Central Avenue and can see people standing in line to live in this community. She has been here long enough to listen to a number of proposals for that property, all of which were legitimate, all of which got sandbagged because people took criticism personally rather than seriously. She hoped that the developer that has spent time, money and energy in good faith, doesn't get discouraged. This project really has merit. Gary Peterson, 3712 Lincoln Street, stated he has been around Columbia Heights for many years and felt this is one of the most exciting projects to come to the City. He was a part of the committee that developed the City Council's Goals a few years ago. Back in 1998 there was an opportunity to redevelop this site, but because of the uproar in the community the board backed down from the development. We need to move ahead with this agreement. Mickey Rooney, 4304 Reservoir Blvd., stated he has been in the area for 40 years, and was excited about this development. People who live in Andover, Forest Lake, or St. Michael would really appreciate living a little closer to Minneapolis. He is very excited about the project. Amended Motion by Nawrocki, to amend Section 7, Term of Agreement to read: with approval by the EDA and City Council not with just the City Manager. Motion failed for a lack of a second. Schumacher stated there would be Public Hearings and public informational meetings with the developer. Upon Vote of the original motion: Jindra -Aye, Nawrocki- Nay, Kelzenberg- Aye, Williams - Aye, Wyckoff- Aye, Ericson- Aye, Murzyn, Jr.- Aye. Motion Carried. Economic Development Authority Special Meeting Minutes May 20, 2004 Page 4 of 4 ADJOURNMENT Motion by Williams, second by Nawrocki, to adjourn the meeting at 7:46 p.m. Respectfully submitted, Cheryl Bakken Community Development Secretary H:\EDAminutes2004\5 -10 -2004 Spec. W 0 Z Q G Z W Q Q O W 0 0 N V d 7 V d L V N d V d d V r A dv N IM CL CL x 8 c �a c m Q Q W v 0 0 v 0 i 0 W x COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meeting of: May 25, 2004 AGENDA SECTION: Consent Agenda ORIGINATING EXECUTIVE NO: DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Financial Report and Payment of Bills BY: Robert Streetar BY: DATE: May 11, 2004 BACKGROUND: The bound Financial Report for the month of April 2004 draft Resolution 2004 -05 is attached for review. The enclosed Financial Report lists the Summary (white), the Check History (Green), the Expenditure Guideline with Detail (blue) and Revenue Guideline with detail (yellow) for each fund and department and the Parkview Villa North and South financials (white). The reports cover the activity in the calendar (fiscal) year from January 1 through April 30, 2004. RECOMMENDATION: Staff will be available to answer specific questions. If the report is satisfactorily complete, we recommend the Board take affirmative action to receive the Financial Report and approve the payment of bills. RECOMMENDED MOTION: Move to approve Resolution 2004 -05, Resolution of the Columbia Heights Economic Development Authority (EDA) approving the Financial Statement and Payment of Bills for the month of April 2004. EDA ACTION: H:N Rep 2004 EDA RESOLUTION 2004 -05 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR APRIL 2004 AND PAYMENT OF BILLS FOR THE MONTH OF APRIL 2004. WHEREAS, the Columbia Heights Economic Development Authority (EDA) is required by Minnesota Statutes Section 469.096, Subd. 9, to prepare a detailed financial statement which shows all receipts and disbursements, their nature, the money on hand, the purposes to which the money on hand is to be applied, the EDA's credits and assets and its outstanding liabilities; and WHEREAS, said Statute also requires the EDA to examine the statement and treasurer's vouchers or bills and if correct, to approve them by resolution and enter the resolution in its records; and WHEREAS, the financial statement for the month of April 2004 and the list of bills for the month of April 2004 are attached hereto and made a part of this resolution; and WHEREAS, the EDA has examined the financial statement and the list of bills and finds them to be acceptable as to both form and accuracy. NOW,THEREFORE BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that it has examined the attached financial statements and list of bills, which are attached hereto and made a part hereof, and they are found to be correct, as to form and content; and BE IT FURTHER RESOLVED the financial statements are acknowledged and received and the list of bills as presented in writing are approved for payment out of proper funds; and BE IT FURTHER RESOLVED this resolution and attachments are to be made a part of the permanent records of the Columbia Heights Economic Development Authority. Passed this _ day of , 2004. MOTION BY: SECONDED BY: AYES: NAYS: President- Don Murzyn, Jr. Attest by: Cheryl Bakken, Assistant Secretary H AReso lutions2004TDA2004-05 COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meetina of: Mav 25. 2004 AGENDA SECTION: Items for Consideration ORIGINATING DEPARTMENT EXECUTIVE DIRECTOR NO: 4—A Community Development APPROVAL ITEM: Adopt Resolution 2004 -06, Approving BY: Robert Streetar BY: the Purchase Agreement for the acquisition of DATE: May 20, 2004 3939 Central Avenue BACKGROUND: In January 2002, the City Council identified ten areas for redevelopment. The 39th and Central Avenue redevelopment area, one of the ten areas, lies generally east of Central Avenue, south of Gould Avenue, and north of 39th Avenue. The Burger King is one of three parcels located in this area. The Nath Property Corporation, L.P. ( "Seller") has indicated they are willing to sell the property at 3939 Central Avenue. The property is approximately 1.09 acres, and includes the approximately 2,581 square foot Burger King building. The Seller had the property appraised in 2001. See attached appraisal. That appraisal indicated the property was worth $700,000, which includes land and building, as well as $200,000 for the furniture, fixtures and equipment, for a total value of $900,000. The EDA also had the property appraised in 2004. See attached appraisal. That appraisal indicated the property was worth $807,000, which includes land and building. Staff recommends the EDA approve a purchase agreement for $620,000, for the purchase of the Burger King property. This includes all, land, buildings, furniture, fixtures and equipment, as well as any relocation assistance. General Purchase Agreement Terms include: • Purchase price $620,000 • Earnest money $20,000. • Closing to occur in 90 days. Contingencies include: • Complete a phase 1 environmental review. • Secure demolition and asbestos abatement estimates. • Perform tax increment inspection — This has already been completed, and the property qualifies as blighted under the tax increment statute. • Secure financing from City Council Funds to purchase the property will come to the EDA from the City in the form of a loan. The loan will come from Fund 290 — Parking Ramp Fund. The purchase agreement has been reviewed by Mike Norton, an attorney with Kennedy and Graven. RECOMMENDATION: Staff recommends the EDA adopt Resolution 2004 -06, Approving the purchase agreement, subject to final review and approval by legal council, regarding the purchase of the NEI property located at 3939 Central Avenue N.E. RECOMMENDED MOTION: Move to waive the reading of Resolution 2004 -06, there being an ample amount of copies available to the public. RECOMMENDED MOTION: Move to Adopt Resolution 2004 -06, a Resolution Approving purchase of land between the Columbia Heights Economic Development Authority and Nath Property Corporation, L.P., A Minnesota Corporation; and furthermore, authorize the President and Executive Director to enter into an agreement for the same. Attachments: Nath Appraisal and City Appraisal. EDA ACTION: hAconsent Form20MAdopt Res.2004 -06 Purchase Burger King COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY RESOLUTION NO. 2004-06 RESOLUTION APPROVING PURCHASE OF LAND BETWEEN THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY AND NATH PROPERTY CORPORATION, L.P., A MINNESOTA CORPORATION (SELLER) WHEREAS, the City of Columbia Heights (the "City ") and its Economic Development Authority (the "Authority ") have undertaken a program to promote the development and redevelopment of land which is underutilized within the City, and in this connection, the Authority administers Redevelopment Project No. 1 (the "Project ") pursuant to Minnesota Statutes, Sections 469.001 to 460.047 (the "HRA Act "); and WHEREAS, the Authority seeks to purchase property for redevelopment located at 3939 Central Avenue NE, Columbia Heights, and described in the attached Exhibit A (the "Property"); and WHEREAS, the Authority has proposed to acquire the Property from the Seller, and in connection with that proposal the Authority has caused to be prepared a Purchase Agreement between the Authority and Seller (the "Contract"). NOW, THEREFORE, be it resolved by the Board of Commissioners of the Columbia Heights Economic Development Authority as follows: 1. The Authority finds that purchase of the Property from the Seller is in the public interest because it will further the objectives of the redevelopment plans for the Project. 2. The Authority approves the Contract in substantially the form on file in City Hall. The President and Executive Director are authorized and directed to execute the Contract, subject to modifications that do not change the substance of the transaction and are approved by those officials, provided that execution of the Contract by those officials will be conclusive evidence of their approval. 3. The Authority approves purchase of the Property from the Seller, subject to satisfaction of all terms and conditions of the Contract, and authorizes and directs the President and Executive Director to execute all documents necessary to cant' out such real estate transaction. Approved by the Board of Commissioners of the Columbia Heights Economic Development Authority this day of , 2004. President- Don Murzyn, Jr. Executive Director- Walter R. Fehst Attest: Secretary MTN- 248024v 1 CL205 -1 EXHIBIT A Legal Description (SEE ATTACHED) MTN- 248024v1 CL205 -1 PROPERTY IDENTiFICATIOM Address The subject property is located at 3929- 27 -29 -47 Central Avenue N.E. in Columbia Heights, Minnesota. Le4a1 Description The subject property is legally described as: Block 4, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, excepting therefrom, however, the two following described tracts: (1) The -North 150 feet thereof. (2) Commencing at the Southwest corner of Block 4, Walton's Rearrangement of Lots 33 and 34, Block 6,- Reservoir Hills, thence Northerly along the West line of said Block 4, 100 feet thence Easterly parallel with the South line of said Block 4, .183 feet; thence Southerly parallel with the West line of said Block 4, 100 feet to a point within said South boundary line; thence Westerly along the South line of said Block 4, 183. feet to the point of beginning. Also except that part of the above described property as per Document No. 571572: The East 165.00 feet of the South 180.00 feet of the North 330.00 feet of Block 4, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, Anoka County, Minnesota. Real Estate Tax Data Property Identification Humber 36- 30 -24 -33 -0148 Z7 PURCHASE AGREEMENT THIS AGREEMENT, made and entered into this day, of 2004, by and between ( "Seller") the Nath Property Corporation, L.P. and the City of Columbia Heights Economic Development Authority (EDA), a political subdivision of the State of Minnesota ( "Buyer"). WITNESSETH: 1. Description of Land Sold. Seller, in consideration of the covenants and agreements of Buyer hereinafter contained, hereby sells and agrees to convey unto the Buyer, its successors and assigns, by warranty deed, accompanied by a Seller's affidavit, upon the prompt and full performance by the Buyer of its part of this Agreement, the real property, known as the Burger King Site consisting of a parcel of property containing approximately 1.09 acres, and a building of approximately 2,581 square feet, located at 3939 Central Avenue NE, Columbia Heights, Minnesota and legally described in Exhibit A attached hereto (the "Property "); 2. Purchase Price. Buyer, in consideration of the covenants and agreements of Seller, hereby agrees to pay to Seller as and for the purchase price of the Property, Six Hundred and Twenty Thousand and no /Dollars ($620,000.00), subject to adjustment as hereinafter provided, in the manner and at the times following, to wit: $20,000.00 Earnest money, the receipt of which is hereby acknowledged by Seller, but which shall be applied to the purchase price hereunder and said $20,000.00 earnest money shall be non - refundable, all except in the event of termination of this Agreement by Buyer pursuant to paragraph(s) 7, 8, or 10 hereof; and $600,000.00 Cash or immediately available funds at Closing. 3. Deed. It is agreed that the Warranty Deed executed and delivered by Seller to Buyer at the Closing Date (accompanied by all customary affidavits and certificates) shall be subject only to the following exceptions: (a) Building, zoning and platting laws, ordinances and state and federal regulations; (b) Reservation of any minerals or mineral rights to the State of Minnesota; (c) Utility and road easements of record that do not interfere materially with the use or development of the Property by Buyer, as disclosed by visual inspection of the easement on the Survey; (d) The lien of current taxes not yet due and payable, if any; (e) The lien of special assessments of record and all levied MTN- 24009Ov9 CL205 -21 assessments; Said Deed shall be accompanied by all required well disclosures. 4. Taxes and Special Assessments. Seller shall pay all real estate taxes, interest, and penalties, and all installments of special assessments, relating to the Property due and payable in 2004 and the years prior thereto. Provided that the transaction contemplated by this Agreement shall close, Buyer warrants that the Property will be exempt from property taxes upon purchase pursuant to Minn. Stat. §272.02, subd, 39. Seller shall pay all special assessments pending or levied as of the Closing Date. Buyer shall be responsible for all other assessments, levied after closing. 5. Buyer's Undertakings. Buyer represents that it will undertake the following activities at its option, and expense: (a) Complete a current Phase I Environmental report prepared in accordance with ASTM standards E -1527 -000 covering the Property within sixty (60) days after acceptance of this Agreement by Buyer and Seller. Seller will provide soil tests, if available. (b) Complete the process of securing quotations of the cost of demolition of the building on the Property by firms or entities qualified to perform such services, within sixty (60) days after acceptance of this Agreement by Buyer and Seller. (c) Complete the process of securing an asbestos removal estimate for the building on the Property within sixty (60) days after acceptance of this Agreement by Buyer and Seller. (d) Complete the process of securing an engineering inspection and report which documents to Buyer's satisfaction that the structures on the Property are structurally substandard within the meaning of Minn. Stat. § 469.174, subd. 10, within sixty (60) days after acceptance of this Agreement by Seller and Buyer. 6. Preliminary Inspection by Buyer. Upon prior notice and coordination with Seller, Buyer shall have the right, prior to the Closing Date, to enter upon the Property for the purpose of taking soil tests, borings, making surveys and maps and performing other preliminary investigative work, provided, however, that Buyer shall indemnify and hold harmless Seller from any mechanic's liens, claims, injuries or other damages arising out of such preliminary development work by Buyer, including, but not limited to, any environmental liability resulting from Buyer's activities on the Property. Prior to the Closing Date, Buyer shall not construct or cause the construction of any improvements on the Property. 7. Buyer's Conditions Precedent to Closing. The obligation of Buyer to close on the purchase of the Property is subject to and contingent upon the satisfaction prior MT N- 24009Ov9 2 CL205 -21 to the Closing of the following conditions, any of which may be waived in whole or in part by Buyer on or prior to the Closing Date: (a) Buyer, at its option, shall have obtained soil tests, percolation tests, and similar engineering reports that confirm to the Buyer the satisfactory condition of the soils; (b) Buyer shall have obtained assurances satisfactory to Buyer that sewer and water utility services are available to the Property, including necessary easements to provide sewer and water trunk mains to the Property; (c) Buyer shall have obtained at its expense environmental inspection reports and other items described in paragraph 5 of this Agreement, disclosing the satisfactory condition of the Property to Buyer. (d) Buyer shall have obtained financing for the purchase of the Property from the City of Columbia Heights under terms mutually agreeable to Buyer and the City. In the event that Buyer is unable to satisfy any of the foregoing conditions by the Closing Date, or any of the respective reports or tests permitted by paragraphs 5, 6 or 7 of this Agreement disclose a condition or conditions of the Property unsatisfactory to Buyer, Buyer may, by written notice to Seller, either waive such conditions, or at Buyer's option, terminate this Purchase Agreement, whereupon Seller shall refund all earnest money paid by Buyer and neither party shall have any further liability hereunder, provided that Buyer shall deliver an executed quit claim deed to the Property to Seller and further provided that Buyer shall remain liable for matters arising out of Buyer's activities pursuant to paragraph 6 above. Buyer agrees'to diligently proceed to satisfy the conditions of this paragraph. 8. Examination of Title. Seller shall, within fifteen (15) days after the date hereof, furnish Buyer a commitment for an Owner's Policy of Title Insurance ( "Commitment ") covering the Property, which shall include proper searches covering bankruptcies, state and federal judgments and liens. Buyer shall be allowed thirty (30) days after receipt of the Commitment for examination thereof and the making of any objections thereto, said objections to be made in writing or deemed to be waived. The Seller shall use its best efforts to make such title marketable within six (6) months from its receipt of Buyer's written objection. Marketability of title shall be determined according to Minnesota statues, Minnesota case law decisions, and the standards of Minnesota title standards. Pending correction of title, the payments hereunder required shall be postponed, but upon correction of title and within ten (10) days after written notice, Buyer shall perform as provided in this Agreement. If said title is not marketable and is not made so within six (6) months from the date of written objections thereto as above provided, Buyer may either (i) terminate this Purchase Agreement by giving written notice by registered mail to Seller, in which event this Purchase Agreement shall become MTN- 240090v9 3 CL205 -21 null and void and neither party shall be liable for damages hereunder to the other party and the earnest money shall be returned to Buyer following expiration of 120 days after the last work was performed on the Property; or (ii) elect to accept title in its unmarketable condition by giving written notice by registered mail to Seller, in which event the warranty deed to be delivered at Closing Date shall except such objections. 9. Bunten. Buyer may at its option procure, at its sole expense, an ALTA survey of the Property prepared by a registered land surveyor (the "Survey "). 10. Default. If Seller, through no fault of Buyer, defaults in its obligations hereunder in any manner, Buyer may, by notice upon Seller, (i) terminate this Purchase Agreement, in which event all earnest money paid hereunder shall immediately be delivered to Buyer, or (ii) avail itself of an action for specific performance. If Buyer shall default in the performance of any of its obligations hereunder, then Seller shall be entitled to terminate this Agreement upon 30 days written notice to Buyer, pursuant to Minn. Stat. §559.21 and, upon such termination, Seller shall retain all earnest money theretofore paid hereunder, as and for its liquidated damages and sole remedy for said breach, and not as a penalty or forfeiture, actual damages being difficult or impossible to measure, and no party hereto shall have any further claim against the other hereunder. In such event, Buyer shall provide Seller with its quitclaim deed. Nothing herein shall relieve Buyer of any obligation to indemnify or hold Seller harmless as stated herein, including obligations of Buyer arising out of unsatisfied mechanic's liens which Seller would have to pay because of work performed on the Property at the request of Buyer. 11. Representations and Warranties by Seller. Seller represents and warrants to Buyer that: (a) There is no action, litigation, investigation, condemnation or proceeding of any kind pending against Seller or the Property which could adversely affect the Property, any portion thereof or title thereto. Seller shall give Buyer prompt written notice if any such action, litigation, condemnation or proceeding is threatened or commenced prior to the Closing Date. (b) To the best of Seller's knowledge, the Property has not been used for the generation, transportation, storage, treatment, or disposal of any hazardous waste, hazardous substance, pollutant, or contaminant, including petroleum, as defined under federal, state or local law, except farm fertilizer used in the ordinary course of farming. (c) If there is a well located on the Property, Seller will provide at Closing a well disclosure. There are no underground storage tanks located on the Property. To the best of Seller's knowledge, and except as disclosed in Seller's Environmental Documents (a list of which are attached hereto as Exhibit B), there is no septic system located on the Property. MTN- 24009Ov9 4 CL205 -21 (d) To the best of Seller's knowledge, there has been no dumping or placement or burying of trash or construction debris in or on the Property. Seller hereby agrees that each of the foregoing representations and warranties shall survive closing hereunder and that the breach of any thereof shall constitute a default, whether said breach occurs prior to or after Closing, entitling Buyer to exercise any remedy provided to Buyer in this Agreement in the event of a default by Seller or any other remedy allowed by law. 12. Closing Date. The Closing Date of this transaction shall take place no later than ninety (90) days after acceptance of this Agreement by Seller and Buyer. The Closing Date may be accelerated by mutual agreement of the parties if all contingencies contained herein are satisfied prior to conclusion of the 90 day period. At closing, Seller and Buyer shall deliver to one another the instruments specified herein. Subject to the provisions of Paragraph 6 hereof, possession of the Property shall be delivered to Buyer on the Closing Date. All expenses for the operation of the Property shall be prorated between Buyer and Seller as of the Closing Date. Seller shall pay for the preparation of the Commitment and any state deed tax payable in connection with the recording of the deed. Buyer shall pay the premium for a title insurance policy if Buyer elects to obtain such policy, and for the cost to record the deed. Each party will pay its own attorneys' fees and shall split equally any closing fee charged by a title insurance company to close this transaction. 13. Notes. All notices provided herein shall be given in person or be sent by United States mail, either certified or registered, postage prepaid, to Seller at 900 East 79th Street, Bloomington, MN 55420 and to Buyer at 590 40th Avenue NE, Columbia Heights, Minnesota 55421 -3878. If notice is given by registered or certified mail, deposit in the United States mail of said notice on or before the date such notice is to be given shall be deemed timely and acceptable. 14. Broker, Seller and Buyer represent to each that neither has engaged a real estate broker. Buyer shall not be responsible for the brokerage fee or commission due any real estate broker retained by Seller. Seller shall defend, indemnify and hold harmless the Buyer from any claims of any such broker. 15. Condemnation. In the event that during the pendency of this Purchase Agreement the Property or any portion thereof is condemned or taken by a public authority, at Closing, Seller shall assign or deliver to Buyer all proceeds or compensation for such condemnation or taking (and all rights thereto) and Seller shall convey the Property to Buyer subject to such condemnation or taking without any reduction in the Purchase Price. 16. Waiver of Relocation B .n .fits. Seller represents that it has requested that the Property be acquired by Buyer, that it is willing and eager to sell the Property to Buyer, that it has voluntarily negotiated this Agreement with Buyer, and that therefore, Seller specifically waives any claim to relocation benefits otherwise permitted by state or federal law described in Minn. Stat. § 117.52. Seller further warrants that at or prior MTN- 24009Ov9 5 CL205 -21 to the Closing Date, Seller shall deliver to Buyer a waiver of relocation benefits agreement meeting the requirements of Minn. Stat. § 117.521, subd. 1, in a form to be approved by Buyer in its sole discretion. 17. IV16s _Ilan o ►s. The terms, covenants, indemnities and conditions of this Purchase Agreement shall be binding upon and inure to the benefit of the successors and assigns of the respective parties hereto, and shall survive the Closing Date. Time is of the essence of this Agreement. IN WITNESS WHEREOF, the parties have hereunto set their hands the day and year first above written. SELLER: Nath Companies, Inc. By Date MTN- 240090v9 6 CL205 -21 BUYER: City of Columbia Heights Economic Development Authority Don Murzyn, Jr. Its: President Date By _ Walter R. Fehst Date Its: Executive Director EXHIBIT A LEGAL DESCRIPTION OF THE PROPERTY (SEE ATTACHED) WN- 2400900 CL205 -21 PROPERTY-10NUTITEICATION Address The subject property is located at 3929- 27 -29 -47 Central Avenue N.E. in Columbia Heights, Minnesota. Legal DeacriRtion The subject property is legally described as: Block 4, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, excepting therefrom, however, the two following described tracts: (1) The -North 150 feet thereof. (2) Commencing at the Southwest corner of Block 4, Walton's Rearrangement of Lots 33 and 34, Block 6,-Reservoir Hills, thence Northerly along the West line of said Block 4, 100 feet thence Easterly parallel with the South line of said Block 4, .183 feet; thence Southerly parallel with the West line of said Block 4, 100 feet to a point within said South boundary line; thence Westerly along the South line of said Block 4, 183. feet to the point of beginning. Also except that part of the above described property as per Document No. 571572: The East 165.00 feet of the South 180.00 feet of the North 330.00 feet of Block 4, Walton's Rearrangement of Lots 33 and 34, Block 6, Reservoir Hills, Anoka County, Minnesota. Real tate Tax Data Property Identification Number 36- 30 -24 -33 -0148 PREPARED FOR W. _Atth Robert tre etat ' owmufflo'Deie Opaeot,Dlre _ enue" �90_��'40 A Colum,61i eighfi AW I M� PROPERTY" iJ A IT L Y'. A 9C- e n . t j venue NE r , m in U 554 eig i-TED REPUR` _ .., RET'I ik -11 1. ar PREPARED FOR W. _Atth Robert tre etat ' owmufflo'Deie Opaeot,Dlre _ enue" �90_��'40 A Colum,61i eighfi AW I M� PROPERTY" iJ Y'. A 9C- e n . t j venue NE r , m in U 554 eig .., ,urger King T6i&Wood-Ti-r.o'p4 c � PREPARED FOR W. _Atth Robert tre etat ' owmufflo'Deie Opaeot,Dlre _ enue" �90_��'40 A Colum,61i eighfi AW I M� JK iJ W laoj� oyt # s, Appraiser ik ITJO� 75 W "ZATA:,BOVLjEV S] LJ .t 17 04 N E 1�640 1090 FU61, %! NA.GELL APPRAISAL & CONSULTING 7515 Wayzata Boulevard Suite #115 Minneapolis, MN 55426 Established in 1968 City of Columbia Heights Attention: Robert Streetar 590 — 40`h Avenue NE Columbia Heights, MN 55421 -3878 Dear Mr. Streetar: Minneapolis: 952 - 544 -8966 St. Paul 651- 209 -6159 Central Fax 952- 544 -8969 May 10, 2004 In accordance with your request, a Limited Appraisal, Restricted Use Report, has been made on the following described property: Subject Property: 3939 Central Avenue NE Columbia Heights, MN 55421 The property is legally described herein. The appraisal assumes that the property meets all current environmental standards. The appraisal analysis and conclusions are subject to certain limiting conditions and assumptions described herein. As a result of our appraisal and experience, it is our opinion that the current market value of the subject property, as -is condition in fee simple interest, as of April 19, 2004, is: TOTAL MARKET VALUE: ............................................................. $807,000 *For comments regarding land value, see Page 24. The accompanying report contains data secured from our personal investigation and from sources considered to be reliable; however, correctness is not guaranteed. To the best of our knowledge and belief, the statements contained in this report are true and correct. Neither our employment to make this appraisal, nor the compensation, is contingent upon the value reported. This report has been prepared in conformity with the code of professional ethics and standards of professional appraisal practice of the Appraisal Institute and appraisal standards set forth by Uniform Standards of Professional Appraisal Practice Sincerely, William R. Waytas, SRA /tRP Certified General MN 4000813 Molly J. Lewis, Appraiser Certified Residential MN 20391975 www.nagellappraisals.com iii TABLE OF CONTENTS General Information Pa 2e # Certification 1 Summary of Important Facts and Conclusions 2 Identification of Type of Appraisal and Report Format 3 Extraordinary Assumptions 3 Assumptions and Limiting Conditions 3 Introduction, Purpose of The Appraisal, Intended Use of Report 6 Property Rights Appraised, Personal Property 7 Market Value Defined, Dates of the Appraisal 8 Scope of the Appraisal 9 Property Identification 10 Descriptive Data City & Neighborhood Description 11 Location Map 11 Site Description, Improvements Description 12 Zoning, Environmental Issues, Highest and Best Use 13 Plat Map 14 Aerial Photograph 15 Subject Photos 16 Valuation Sales Comparison Approach 20 Income Approach 22 Reconciliation & Final Value Estimate 24 Land Value 24 Expected Exposure & Marketing Period & Trends 24 Qualifications 25 Addenda 28 CERTIFICATION We certify that, to the best of our knowledge and belief: tnp 1) The statements of fact contained in this report are true and correct. 2) The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and our personal, impartial, and unbiased professional analysis, opinions, and conclusions. 3) We have no (or specified) present or prospective interest in the property that is the subject of this report, and no (or the specified) personal interest with respect to the parties involved. 4) We have no bias with respect to the property that is the subject of this report or to the parties involved with this assignment. 5) Our engagement in this assignment was not contingent upon developing or reporting predetermined results. 6) Our compensation for completing this assignment is not contingent upon the development or reporting of predetermined value or direction in value that favors the cause of the client, the amount of the value opinion, the attainment of a stipulated result, or the occurrence of a subsequent event directly related to the intended use of this appraisal. 7) Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice and the Appraisal Institute. 8) William R. Waytas and Molly J. Lewis made personal inspections of the property that is the subject of this report. (If more than one person signs the report, this certification must clearly specify which individuals did and which individuals did not make a personal inspection of the appraisal property). 9) No one provided significant professional assistance to the person signing this report. (If there are exceptions, the name of each individual providing significant professional assistance must be stated.) William R. W� Certified Gene Molly J. Lewis Certified Resid Date U )ate -1��-DL/ SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS View of Subject Subject Property: City / County: Appraisal Report: Special Assumptions: Building Improvements: Highest and best use: Property rights appraised: Personal Property: 3939 Central Avenue NE Columbia Heights / Anoka Limited Appraisal (restricted use report) See assumptions and conditions Burger King, 2,656 SF Current Use Fee simple interest No Business Value or FF &E Included Cost Approach: N/A Sales Comparison Approach: $810,000 Income Approach: $803,000 Final Value: 4 $807,000 IDENTIFICATION OF TYPE OF APPRAISAL AND REPORT FORMAT To develop the opinion of value, the appraiser performed a Limited Appraisal process, as defined by USPAP. Departure is permitted from those specific requirements that are applicable to a given assignment but not necessary in order to result in opinions or conclusions that are credible. In this situation The Departure Rule is invoked under Standard Rule 1 -4a, given the scope and nature of this assignment. Less extensive collection, verification and analyzing of the data has been made in the Sales Comparison and Income Approaches. The degree of precision is considered appropriate given the purpose and intended use of the report. See Scope of Appraisal for approaches used, property inspection, extent of data collection, reporting and analysis. The format used is a Restricted Use Report (short statements), which is intended to comply with the reporting requirements set forth under Standards Rule 2 -2(c) of USPAP. Comparable sales data is retained in the appraiser's files. EXTRAORDINARY ASSUMPTIONS & HYPOTHETICAL CONDITIONS No extraordinary assumptions or hypothetical conditions. ASSUMPTIONS AND LIMITING CONDITIONS 1. The appraisers assume no responsibility for matters of a legal nature affecting the property appraised or the title thereto, nor do the appraisers render any opinion as to the title, which is assumed to be good and marketable. The property is appraised as though under responsible ownership and good management. 2. The furnished legal description is assumed to be correct. 3. Any sketch in the report may show approximate dimensions and is included to assist the reader in visualizing the property. The appraiser has made no survey of the property. It is assumed unless otherwise noted that no surrey has been viewed and that all improvements are located within the legally described property. 3 Assumptions and Limiting Conditions -- continued 4. The appraisers are not required to give testimony or appear in court because of having made the appraisal with reference to the property in question, unless arrangements have been previously made therefore. 5. The distribution of the total valuation in this report between land and improvements applies only under the reported highest and best use of the property. The allocations of value for land and improvements must not be used in conjunction with any other appraisal and are invalid if so used. 6. The appraisers assume that there are no hidden or unapparent conditions of the property, subsoil, or structures, which would render it more or less valuable. The appraisers assume no responsibility for such conditions, or for engineering, which might be required to discover such factors. 7. Unless otherwise stated in this report, the existence of hazardous material, which may or may not be present on the property, was not observed by the appraiser. The appraisers have no knowledge of the existence of such materials on or in the property. The appraisers, however, are not qualified to detect such substances. The presence of substances such as asbestos, urea - formaldehyde foam insulation, radon gas, or other potentially hazardous materials may affect the value of the property. The value estimate is predicated on the assumption that there is no such material on or in the property that would cause a loss in value. No responsibility is assumed for any such conditions, or for any expertise or engineering knowledge required to discover them. The client is urged to retain an expert in this field, if desired. 8. Information, estimates, and opinions furnished to the appraiser, and contained in the report, were obtained from sources considered reliable and believed to be true and correct. However, no responsibility for accuracy of such items furnished to the appraisers can be assumed by the appraisers. 9. Disclosure of the contents of the appraisal report is governed by the Bylaws and Regulations of the professional appraisal organizations with which the appraiser is affiliated. No part of the contents of this report, or copy thereof (including conclusions as to the property value, the identity of the appraiser, professional designations, reference to any professional appraisal organizations, or the firm with which the appraiser is connected), shall be disseminated to the public through advertising, public relations, news, sales, or any other public means of communications without the prior written consent and approval of the appraisers. 10. The appraisers have no present or contemplated future interest in the property appraised; and neither the employment to make the appraisal, nor the compensation for it, is contingent upon the appraised value of the property. The appraisers have no personal interest or bias with respect to the parties involved. 4 Assumptions and Limiting Conditions — continued 11. The appraiser has personally inspected the subject site. To the best of the appraiser's knowledge and belief, all statements and information in this report are true and correct, and the appraisers have not knowingly withheld any significant information. 12. The reported analyses, opinions, and conclusions are limited only by the reported assumptions and limiting conditions, and our personal, unbiased professional analyses, opinions, and conclusions. Our analyses, opinions, and conclusions were developed, and this report has been prepared, in conformity with the Uniform Standards of Professional Appraisal Practice. 13. The Americans with Disabilities Act ( "ADA ") became effective January 26, 1992. We have not made a specific compliance survey and analysis of the property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey of the property, together with a detailed analysis of the requirements of the ADA, could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have no direct evidence relating to this issue, we did not consider possible non - compliance with the requirements of ADA in estimating the value of the property. 14. This appraisal assignment was not based on a requested minimum valuation or specific valuation or approval of a loan. 15. In accordance with the competency provision of the USPAP, I have verified that my knowledge, experience and education are sufficient to allow me to competently complete this appraisal. See attached qualifications. 16. As of the date of this report, William R. Waytas has not completed the requirements of the continuing education program of the Appraisal Institute. 17. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representative. 18. To the best of our knowledge and belief, the reported analysis, opinions, and conclusions were developed, and this report was prepared in conformity with the requirements of the Code of Professional Ethics and the Standards of Professional Appraisal Practice of the Appraisal Institute. W1 INTRODUCTION This appraisal report reflects the data found and the conclusions estimated from an appraisal of a commercial property (currently used as a Burger King) located at 3939 Central Avenue NE, Columbia Heights, MN. PURPOSE OF THE APPRAISAL The purpose of this appraisal is to render an opinion of the approximate market value of the subject property as of the date given. The function of the appraisal is to be used by the city as an aid to negotiations for the acquisition. INTENDED USE OF REPORT This appraisal assignment was requested by the client for their sole use. No party, other than the client may use or rely upon any part of this report without the prior written authorization of both the named client and the appraisers. This report is not valid unless it contains the original signatures in blue ink. Any unauthorized third party relying upon any portion of this report does so at its own risk. n PROPERTY RIGHTS APPRAISED Real property ownership consists of a group of distinct rights. There are two primary property rights, Fee Simple and Leased Fee. Fee simple estate is defined in The Dictionary of Real Estate Appraisal, 3rd Edition as: "Absolute ownership unencumbered by any other interest or estate, subject only to the limitations imposed by the governmental powers of taxation, eminent domain, police power, and escheat." This would typically reflect an owner-occupied property. Leased Fee interest is defined in The Dictionary of Real Estate Appraisal, 4th Edition as: "an ownership interest held by a landlord with the right of use and occupancy conveyed by lease to others. The rights of the lessor (the leased fee owner) and the lessee are specified by contract terms contained within the lease." This would generally reflect a tenant - occupied property. The property rights appraised are the unencumbered fee simple interest of the real estate, subject to normal easements for drainage, public streets and utilities, if any. The effect of any existing mortgage or delinquent taxes on the subject property has not been considered in this appraisal. PERSONAL PROPERTY Appraised value reflects real estate only. No personal property, FFE, or business value have been included in the appraised value. 7 MARKET VALUE DEFINED MARKET VALUE - The most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgeably, and assuming the price is not affected by undue stimulus. Implicit in this definition are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (A) buyer and seller are typically motivated; (B) both parties are well informed or well advised, and each acting in what they consider their own best interest; (C) a reasonable time is allowed for exposure in the open market; (D) payment is made in terms of cash in U.S. dollars or in terms offinancial arrangements comparable thereto; and (E) the price represents the normal consideration for the property sold, unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. USPAP DATES OF APPRAISAL The appraisal dates are as follows: o The effective date and inspection date is April 19, 2004. o The date of the report is April 19, 2004 — May 10, 2004. 0 SCOPE OF THE APPRAISAL REPORT "The term scope of the appraisal refers to the extent of the process of collecting, confirming, and reporting data. The standards clearly impose a responsibility on the appraiser to determine the extent of the work and the report required in relation to the significance of the appraisal problem ", 12th Edition of The Appraisal of Real Estate, The Appraisal Institute. The scope of work is all the steps an appraiser takes (or does not take) to arrive at a value opinion that is credible given the nature, purpose, use and scope of the assignment. As noted earlier, the purpose of this appraisal is to get an approximate idea of value. Therefore, the appraiser performed a limited degree of research and analysis. See below. The scope of this appraisal included: • An inspection of the subject property and neighborhood by the appraiser. • Gathering of information from city and/or county offices regarding the zoning, utilities and any pending projects in the area, which might affect the subject property. • Gathering data regarding location, neighborhood and community. • Analysis of the subject and competitive market rental occupancy data. • Research and analysis of pertinent market sales and rental data as they relate to and may affect the value aspects of the subject property. • Given the purpose and intended use of the report, only a brief Sales Comparison and Income Approach are used. Per client request, the Cost Income Approach is not used. • Sources included appraiser data files, Assessor, MnCAR, and Plat Systems. The most relevant data is used in this report. The appraiser has not confirmed the sales used in this report. • The appraiser has not driven by the comparables used for this report. • Sales data is listed, but no adjustment grid has been utilized. No detailed analyses are performed. The appraiser accepts full professional responsibility for all of the analyses and conclusions contained within this report. The data used was obtained from sources considered credible, yet its accuracy is not guaranteed. 9 PROPERTY IDENTIFICATION Street Address: 3939 Central Avenue NE Columbia Heights, MN Legal Description: THE S 180 FT OF THE N 330 FT OF BLK 4 WALTONS REARRANGEMENT OF LOTS 33 & 34 BLK 6 RESERVOIR HILLS EX THE E 165 FT THEREOF SUBJ TO EASE OF REC, ANOKA COUNTY, MINNESOTA. The County PID #s: 36- 30 -24 -32 -0252 The Fee Owners: Torchwood Property Co., LP Census Tract #: 515.01 Real Estate Taxes: 514,692.54 Sales History: No other sales were found on public record or known within the past three years. 10 CITY & NEIGHBORHOOD DESCRIPTION The City of Columbia Heights is a suburban community located about 20 minutes north of Downtown Minneapolis /St. Paul. The population of Columbia Heights in 2000 was 18,520, just down from the 1990 population of 18,910, a 2% decrease. The city is going through a period of redevelopment. The subject is located near the central portion of the city in the downtown area. Access to the Metropolitan Area and other surrounding communities is generally good. The housing and commercial markets are continually developing with urban expansion. No apparent adverse influences were noted during the inspection. LOCATION MAP �.. J Z Hit .ems - 4&th Ave NE- - - D _ ` - - -�- 46th Ave..t�iE -_ _ -. q� m A St---- B - m - Ke" New St I 45th -AVC 45th ntE m I _ - - Ave H� -��¢, .. s rg n 'in Avls NE - ._44h Ave NEB, m' -0::. ` '44tfi Ave NE - -- m m A ° t= m 43 -V2 Ave NE a � I c Card Av# NE 43rd Ave NE Fr 'z � N 42tf2AveNE' M y z s I Z�Z yj L i'21i , M -NE 3 7 LX� Le Deft )a �g hrsr Ave _-41 Ave �tE _ , i . 1 i� rn i L ...'Ai. � . W . -.. Mh` Ave NE. -ti `•ts]ECT a PWk N "• 3 r rn 39th -An NE.__— xx. r--I __Q _ ". 7 _ 39ti11 of _... _ r tR N [- 1ae x _ a za mh`AQ N$ i 36th aw NCE (-( �> Loh NEI. -- 1 Mfnr • i r - _ — k 27 W �Alt 11 Site Size: Topography: Utilities: Street: Access to Site: Flood Hazard Zone: Soil Conditions: SITE DESCRIPTION 46,800 +/- SF, per county Level City sewer and water Central Avenue, paved Average, off Central Avenue No (Zone C, 270010005 B, 9/29/78) Assumed to be stable Comments: The subject site is located on busy Central Avenue in Downtown Columbia Heights. Central Avenue maintains an above average level of traffic creating good exposure. Surrounding properties include commercial to the north, south and west and multi - family to the east. No apparent unusual conditions, adverse easements or encroachments are noted. IMPROVEMENTS DESCRIPTION Type of Building: Fast Food Restaurant, Burger King Year Built: 1965 Gross Building Area: 2,656 SF Basement: None Restroom: 2, men's /women's, ceramic tile Style: One -Story with drive - through Parking: 68 parking spaces per aerial photograph Exterior: Built -up, pitch and gravel roof Flat -paned windows Brick exterior Concrete sidewalk Heating /Cooling: Forced Warm Air/ Central Air Comments: The building is rated to be in average to good condition. Updates include a newer roof and updates to the dining area approximately 10 years ago. The property also features an outdoor, fenced playground area and a 12 x 12 brick outbuilding. No other noted updates. 12 ZONING i The subject property is zoned CBD, Commercial Business District. The current use is a legal use. ENVIRONMENTAL ISSUES Adverse environmental conditions (such as, but not limited to, hazardous wastes, toxic substances, mold, etc.) present in the improvements, on the site, or in the immediate vicinity of the subject property: None apparent, however, appraiser is not an expert in this field, value assumes no hazardous conditions. Value assumes any abandoned wells will be properly sealed. HIGHEST AND BEST USE The Highest and Best Use is estimated to be the current commercial use. 13 PLAT MAP ° GOU_ LD s; 2 p e bo ., rM rrI /¢ / 0 60 �. �l � ` ' uj Zajf� Y � Yxoial,v� A T' �p ¢ 39 too Ad �P Aaiftw a Q 02 o $ 0 39 'T N8 (V-63 14 ii Al� 4LL ........... SUBJECT PHOTOS Front View of Subject Rear View of Subject 16 ASA- ■r��I�lai��'�••�i.�r.ri7litm '7ii��a'7[aa�rrrs al ali ..e x t. w � ASA- ■r��I�lai��'�••�i.�r.ri7litm '7ii��a'7[aa�rrrs al ali SUBJECT PHOTOS View of Front Area View of Drive - Through Window from Interior 18 SUBJECT PHOTOS View of Kitchen View of Dining Area 19 i a y View of Kitchen View of Dining Area 19 SALES COMPARISON APPROACH Listed below are sales in the subject marketing area. Comparables used bracket the subject regarding overall appeal and are rated to be the best available data. Address 3939 Central Ave NE, Columbia Hts 5060 Central Ave NE, Columbia Hts 1889 W Perimeter Rd, Roseville 3385 124th Avenue NW, Coon Rapids 409 Old Highway 8, New Brighton H Proximity Subject 1.5 miles N 4 miles SE 10 miles NW 2 miles NE E-.. 2 .,. -... it "- � _. ..._we.... - xa: ..__:.._,e,,,,,,•„e „ v,M „- .- .� tt Avg/Good Avg/Good - - [WE Avg/Good Average Avg/Good Site Size SF - O _vi'- GIN GrK Nh GNY {IIr. .. ft 10,440 Zone /Use Commercial/ Burger King ioj I uwN�,N. s Commercial/ Taco Bell ....... _ - .. rf WWI” M, M�r�n►�4M:w _ 'Y,NN � Rra4 'Me _ � 1965 2002 n 1999 � 1978 Quali Av /Good * 4 ELr A"-N: '...ASwvs li Ava /Good I Averaoe r4IIh m:r A0 01. _ WkN gtod'' 0,4 MO1��°r'. PQrIC.M I .3 Pw�Mf llb My ��-(, [gy �_ ` •1� .�. el. - 'Prom "' i .. I i { �.. � 95 ` � YAOIbE� – +i,-1– RSIfMY 'iMf _ f/I Ekpr LrN • �. tiW �__ _R71'O A 6Wkb11 i A � / i I / WE I wAr. /N�n �!'� ' *e... IrYb 4bau � � ix ELY E E `-}-- I ; �` •_ � �„ Gw la1w � SNES�}- j{ ti IYel�us „i rwr.aae _�- !1 ... -- § �N " !•.^CCJ otoh b'6dhr .esenedv ~~ Listed below are sales in the subject marketing area. Comparables used bracket the subject regarding overall appeal and are rated to be the best available data. Address 3939 Central Ave NE, Columbia Hts 5060 Central Ave NE, Columbia Hts 1889 W Perimeter Rd, Roseville 3385 124th Avenue NW, Coon Rapids 409 Old Highway 8, New Brighton 1300 West Broadway, Minneapolis, Proximity Subject 1.5 miles N 4 miles SE 10 miles NW 2 miles NE 4 miles SW Location Avg/Good Avg/Good Good Avg/Good Average Avg/Good Site Size SF 46,800 33,600 30,348 65,340 15,000 10,440 Zone /Use Commercial/ Burger King Commercial/ KFC & A &W Commercial/ Taco Bell Commercial/ Arby s Commercial/ Dairy Queen Commercial/ Pizza Hut Age 1965 2002 1977 1999 1953 1978 Quali Av /Good Good Avg /Good Good Ava /Good I Averaoe Sale Date Current Au -03 Jun -03 Aug-01 Mar -03 Feb -01 Sale Price N/A $1,000,000 $885,000 $1,501,000 $290,000 $460,701 GBA SF 2,656 2,835 2,048 4,178 684 1,312 Price per SF w /FF &E - $353 $432 $359 $424 $351 Adjusted Pricy nor CF _ $265 $324 $269 $318 $263 20 Sales Comparison Approach — continued *Note: Sales above appear to include business value and FFceE. For valuation purposes, the sales have been adjusted to reflect the sale price excluding business value and FFd.E. Business value and FF&E o picalh• make up about 20% to 30% o_f the total value and have been appropriately adjusted in the grid (at a rate of 75'%). Comparable 1: Comparable 2: Comparable 3: Comparable 4: Comparable 5: Conclusion Newer building. Competing use and location on Central Avenue. Similar condition. Superior location due to better visibility and exposure. Newer building. Superior location due to better visibility and exposure. Small building in similar condition. Used to bracket subject's age. Small building in similar condition. Used due to proximity and frontage. Sales above range from $265 to $324 per SF. All comparables given equal weight. Considering the above discussion and overall subject property, along with site size, traffic road, and surrounding development, etc., a value range of $300 to $310 per SF is deemed appropriate, correlated at a mid range of $305per SF is concluded. The Sales Comparison Approach is deemed a reliable indicator of value because it represents the actions of buyers and sellers in the area for competing properties. The derived market value estimate for the subject site (reflects normal marketing time under one year) is: 2,656 SF x $305.00 per SF 21 $810,000 (rnd) INCOME APPROACH Subject & Rents: The subject is owner- occupied. Comparable data from competing locations and competing uses will be used to determine an approximate net rent for the subject property. Qesoription :- - Sub ect O :::',Comp 1.,, - > , . Comp 2> ,; ;: Comp 3 :,,. < .:,Comp 4.;y�� N, k; CoMP, �. �• Address 3939 Central Ave NE, Columbia Hts 1717 Central Avenue, Minneapolis 289 57th Avenue NE, Fridle 1500 Stinson Blvd. NE, Minneapolis 1131 Broadway, Forest Lake 12730 Elm Creek Blvd, Maple Grove Location Av /Good Av /Good Avg/Good -Avg/Good Avg/Good Good Proximity Subject 2.5 miles S 2 miles NW 3 miles SE 20 miles NE 8 miles NW Use Burger King Burger Kin Burger King Bur er Kin Burger King Ground Round Tenant Single Single Single Single Single Single Age 1965 1973 1971 1997 1984 2000 Condition Avg/Good Av /Good Avg/Good Avg/Good Avg/Good Good GBA 2,656 2,278 3,377 3,100 3,000 5,498 Rating Avg /Good Avg/Good Av /Good Avg/Good Av /Good Good Net Ret/SF Owner- Occupied $46.73 $27.81 $23.23 $23.42 $40.00 Comparable 1: Close proximity to subject and competing location on Central Avenue. Similar condition. Comparable 2: Close proximity to subject and competing location on University Avenue. Slightly better condition with newer indoor play area. Comparable 3: Newer building. Used due to proximity. Competing location on Stinson Boulevard. Comparable 4: Similar condition. Used due to Burger King tenant. Comparable 5: Newer building. Although not a fast food restaurant, still considered a competing use. Superior location due to better exposure. Conclusion: Due to limited available rental data for fast food restaurants, market area was expanded. Market rents are typically on a net basis and generally range from 5 to 10 years. Business value and FF &E not included. The above base rents range from $23.23 to $46.73 per SF for similar restaurant space. All comparables given equal weight. Given the above 22 Income Approach — continued Vacancy for fast food restaurants in the market area is around 5 %, which will be used to determine Net Operating Income (NOI). Operating Expenses: The rental rate is based on a net basis where the tenant pays for taxes, insurance, utilities, and minor repairs. Expenses are typically paid by the tenant and are around 4% in the market area. Vacancy Expenses are for operating costs incurred when the building is vacant (taxes, insurance, utilities, maintenance). Estimate based on market area expenses and overall vacancy rates. Reserves for replacement are an allowance for, or an annual average amount needed, to make long and short-term improvements. Ideally, and based on the market, $0.15 per SF GBA is allocated for reserves. Considering the current market, these rates are considered appropriate for the subject. Overall Capitalization Rate: A review of similar transactions that include income data indicates a typical capitalization rate range between 8% and 10 %, correlated at 9 %. ESTIMATED VALUE BY INCOME APPROACH $803,000 (rnd) 23 Income Statement - Fee Simple (Market Rate) Annual Tenant Unit Size Rent/SF RentlMo Income Subject 2,656 $30.00 $79,680 Vacancy & Collection 5.0% (3,984) Effective Gross Income $75,696 Less:Expenses Operating Tenant Management 4% (3,028) Reserves $0.15 -0.53% (398) Total: 3,426 Net Operation Income $72,270 Capitalization Rate 9.0% Value, as if Stabilized $802,997 ESTIMATED VALUE BY INCOME APPROACH $803,000 (rnd) 23 RECONCILIATION & FINAL VALUE ESTIMATE IndicatedValue by Cost Approach: ................................................ ..................... N/A Indicated Value by Sales Comparison Approach: ....................................... S810,000 IndicatedValue by Income Approach: ......................................................... S803,000 Conclusion: Per request, the Cost Approach was not used. Brief Sales Comparison and Income Approaches were used in the analysis. Both approaches are given equal consideration. Sales and rental data for the subject property were felt to be relatively average to good. The derived market value estimate for the subject property, as of April 19, 2004, is: FINAL ESTIMATE OF MARKET VALUE: $807,000 As per request, this is a Limited Appraisal. Restricted Report with minimal documentation and analysis. This report and value is intended to give the user an idea of the approximate value of the property and it should not be used for the sole value basis for the acquisition of the property. LAND VALUE Per client request, market land values for the area have been included. Correlated at a $9.00 per SF: 46,800 SF x $9.00 per SF = $421,000 rnd EXPECTED EXPOSURE & MARKETING PERIOD & TRENDS Exposure & Marketing Time & Trends: Exposure (prior to appraisal date) and marketing time (after appraisal date) are both estimated at about one year. 24 Address 3939 Central Avenue NE, Columbia Hts 5060 Central Avenue NE, Columbia Hts 4004 Silver Lake Road, St. Anthon 2650 Central Avenue NE, Minnea olis 4747 Central Avenue NE, Columbia Hts Location Av /Good Av /Good Av /Good Good Av /Good Zoning Commercial Commercial Commercial Commercial Commercial Sale Date - May-02 Aug-02 Aug-03 Pendin Sale Price - $275,000 $319000 $95,000 $553,000 Site Size 46,800 33,600 40,000 9,597 89,342 Ratin AI /Good Avg/Good Av /Good Good Average Correlated at a $9.00 per SF: 46,800 SF x $9.00 per SF = $421,000 rnd EXPECTED EXPOSURE & MARKETING PERIOD & TRENDS Exposure & Marketing Time & Trends: Exposure (prior to appraisal date) and marketing time (after appraisal date) are both estimated at about one year. 24 QUALIFICATIONS OF MOLLY J. LEWIS Education: Graduate of Northwestern College, St. Paul, MIST. B.S. Degree in Bus. Admin. Prosource Educational Services • Appraisal 100 Introduction to Construction Principles • Appraisal 101 Introduction to Appraisal Principles I Appraisal 102 Introduction to Appraisal Principles II • Appraisal 103 Introduction to Appraisal Practices I • Appraisal 104 Introduction to Appraisal Practices II • Appraisal 105 Introduction to Appraisal Standards and Ethics Licenses Held: Minnesota Registered Real Property Appraiser License #20391975 . Appraisal Experience: • Commercial Appraisal o Office Warehouse o Vacant Land o Subdivision Analysis Appraisals Performed: • Commercial Appraisal o Commercial Land o Agricultural Land o Retail o Office o Marina o Residential Subdivision o Golf Dome • Residential Appraisal • Single Family • Two - Family • Multi Family 25 QUALIFICATIONS OF WILLIAM R. WAYTAS Appraisal Experience Presently and since 1985, William R. Waytas has been employed as a full time real estate appraiser. Currently, a partner and President of the Nagell Appraisal & Consulting, an independent appraisal firm. The firm annually prepares in excess of 1,500 appraisal reports of all types. Mr. Waytas was employed with Iver C. Johnson & Company, Ltd., Phoenix, AZ from 1985 to 1987. Properties appraised: Residential — single - family residences, hobby farms, lakeshore, condominiums, townhouses, REO, land and condemnation, Commercial - low and high- density multi - family. retail, office, industrial, restaurant, church, strip -mall and subdivision analysis and condemnation. Review - single family and subdivision analysis. Clients served include banks, savings and loan associations, trust companies, corporations, governmental bodies, relocation companies, attorneys, REO companies, accountants and private individuals. Area of Service, most appraisal experience is in the greater /metro area of Minneapolis /St. Paul, MN. Professional Membership, Associations & Affiliations License: Certified General Real Property Appraiser, MN License #4000813. Appraisal Institute: SRA Senior Residential Appraiser designation, currently certified. MAI Candidate Affiliate Employee Relocation Council: CRP Certified Relocation Professional designation. International Right -Of -Way Association: Member HUD /FHA: On Lender Selection Roster DNR: Approved appraiser for Department of Natural Resources 26 Qualifications -- continued Testimony -- Court, deposition, commission, arbitration & administrative testimony given. Committees -- President of Metro/Minnesota Chapter, 2002, Appraisal Institute. -- Chairman of Residential Admissions, Metro/MN Chapter, 1995 -97, Al. -- Chairman 1992 -4, Residential Candidate Guidance, Metro/Minnesota Chapter, Al. -- Elm Creek Watershed Commission, Medina representative 1993 - 1995. Education -- Graduate of Bemidji State University, Minnesota in 1980. B.S. degree in Bus. Ad. -- During college, summer employment in building trades (residential and commercial). -- Graduate of Cecil Lawter Real Estate School. Arizona Real Estate License, 1981. General & Professional Practice Courses -- Course 101 - Introduction to Appraising Real Property, 1982 at ASU, SREA, 60 hours. -- Professional Practice Seminar, 1989, SREA, 7 hours. -- Standards of Professional Practice, Part A, 1991, Al, 15 hours. -- Standards of Professional Practice, Part B, 1996, AI, 10 hours. -- Fair Lending Seminar, 1995 Al, 7.5 hours. -- Eminent Domain & Condemnation Appraising, 1997, 7 hours. -- Standards of Professional Practice, Part C, 1999, 15 hours -- Eminent Domain (An In -Depth Analysis), 2000, 5.5 hours -- Property Tax Appeal, 2001, 5 hours -- Eminent Domain, 2002, 6 hours CommerciaPIndustrial/Subdivison Courses -- Capitalization Theory & Techniques, Parts 1 B 1 & 1B2, 1983, ASU, AIREA, 68 hours. -- Highest & Best Use Seminar, 1986, AIREA, 7 hours. -- General & Residential State Certification Review Seminar, 1991, Al, 14 hours. -- Subdivision Analysis Seminar, 1994, Al. 7 hours. -- Narrative Report Writing Seminar (general), 1995, AI, 14 hours -- Advanced Income Capitalization Seminar, 1997, Al, 7 hours -- Advanced Industrial Valuation, 1997, Al, 7 hours -- Appraisal of Local Retail Properties, 1999, AI, 7.5 hours Residential Courses -- Course 102 - Applied Residential Appraising, 1986, ASU, SREA, 34 hours. -- Narrative Report Writing Seminar (residential), 1989, SREA, 14 hours. -- HUD Training session local office for FHA appraisals 11- 23 -94, 3 hours. -- Familiar with HUD Handbook 4150.1 REV -1 & other material from local FHA office. -- Appraiser/Underwriter FHA Training, 1997, 3 hours. -- Numerous continuing education seminars for state licensing & AI 27 ADDENDA TO APPRAISAL REPORT 28 NAGELL APPRAISAL & CONSULTING 7515 Wayzata Blvd. #115 Minneapolis: 952 -544 -8966 Minneapolis, VIN 55426 st. raul 651 -209 -6159 Established is 1968 Central Fax 952 -544 -8969 City of Columbia Heights March 29, 2004 Attn: Robert Streetar, Community Development Director, 590 40th Avenue N.E. Columbia Heights, MN 55421 RE: Appraisal of a Burger King (Real Estate Only) 3939 Central Avenue Columbia Heights, MN Dear Mr. Streetar: Thank you for your interest in obtaining appraisal services regarding the property above. Purpose: As noted you would like a preliminary market value appraisal for acquisition purposes. Property Description: Burger King Restaurant. Contact for access: Rick Bentz 612- 306 -6001. Report Type: Given the nature and scope of this assignment, you indicated a Limited Appraisal per Uniform Standards of Professional Appraisal Practice would be appropriate for your needs. A Limited Appraisal typically has less extensive documentation and analysis and can be somewhat less reliable than the Complete Appraisal. The necessary approaches to value will be applied. Report Format: A Restricted Use Report (short narrative format) data is listed on a qualitative Z-nd, but not adjusted, it is correlated into a final value. The report will include subject photos (no comparable photos) site and subject location map exhibits. Data is retained in the appraiser's file. The report is intended for the sole use of the client. In addition to the market value a land value based on current zoning will be included. Fee: The fee is $1,000. Should it be necessary to do a Complete Appraisal the fee would be extra. Any testifying. meetings and/or preparation (including report review /revision) would be $100 per hour. Due Date: The report can be completed in about 2 -4 weeks, from the date of signed confirmation. Information needed by the appraiser at inspection: Any site or building sketch if available. You also noted you will be mailing an appraisal you have on the property. Our company has 8 appraisers and has been in business since 1968. Neither the employment to make the appraisal, nor the compensation for it, is contingent upon the appraised value of the Property. If you agree to the above terms, please sign below and return by fax or mail. If you have any additional questions, please do not hesitate to contact me. Sincerely, Signature 41J,17" .'..am R. Waytas, SRA, CRP / Ceni ied General 4000813, MN Date www.nagellappraisals.com BURGER KING - COLUMBIA HEIGHTS, MN #210 SUMMARY OF SALIENT FACTS Property Name: Location: Property Description: Assessor's Parcel Number: Interest Appraised: Date of Value: Date of Inspection: Ownership: Current Property Taxes Property Assessment: 2001 Property Taxes: Ti9 Highest and Best Use If Vacant: ape s c;7 As Improved: Site & Improvements Zoning: Land Area: Number of Stories: Year Built: Type of Construction: Gross Building Area: Condition: Parking: Burger King - Columbia Heights, MN #210 3939 Central Avenue Columbia Heights, Anoka County, MN 55428 The site is located on the west side of Central Avenue between 39th Avenue NE and Gould Avenue in the City of Columbia Heights. The property consists of a 1- building, 1 -story single - occupant fast food facility containing 2,581 square feet of net rentable area on a 1.09 -acre parcel of land. .36-30-24-32-0252. Fee Simple Estate November 9, 2001 November 9, 2001 Nath Property Co Ltd _ $379,100 $13,246 Retail or commercial development such as the subject restaurant to the highest density possible As it is currently employed B -1 Commercial 1.0900 acres or 47,340 square feet 1 1955 Masonry and steel construction 2,581 square feet Good 48 cars Burger King - Columbia Heights, MN #210 Page 1 BURGER KING - COLUMBIA HEIGHTS, MN #210 SUMMARY OF SALIENT FACTS VALUE INDICATORS Land Halve $33(5,000 Per Square Foot: $6.97 Per Acre: $303,650 Market Value Cost Approach Indicated Value: $675,000 -Per Square Foot (NRA : -$261.53 Sales Comparison Approach N/A Income Capitalization Approach Net Operating Income: $58,847 Capitalization Rate: 8.5% Indicated Value: $700,000 Final Value $700,000 FF&E $200,00 0 Exposure Time: 9 to 12 months Appraiser's Name: Christopher F. Casazza -t Appraiser's Name: Robert S. Nardella, MAI u;a :a Extraordinary Assumptions and Hypothetical Conditions Extraordinary Assumptions This appraisal employs no extraordinary assumptions. Hypothetical Conditions This appraisal employs no hypothetical conditions. .J Burger King - Columbia Heights, MN #210 Page 2 SUBJECT PHOTOGRAPHS SJ tl ii I Front view of subject property. Alternate exterior view of subject property. Burger King - Columbia Heights, MN #210 Page 3 SUBJECT PHOTOGRAPHS interior view or supiect. Burger King - Columbia Heights, MN #210 Page 4 AREA MAP ;j Burger King - Columbia Heights, MN #210 Page 5 V LOCAL AREA ANALYSIS Regional Analysis The subject is located in the City of Columbia Heights which is a suburban community in the northern region of the Minneapolis /St. Paul MSA. The region has experienced population growth over the past decade. Employment in the Minneapolis MSA is dominated by the service sector, with the retail, manufacturing and government sectors also being significant sources of employment. Total employment is anticipated to continue to grow in the region over the next five years in all sectors of the economy. The Minneapolis/ St. Paul MSA had an unemployment rate of 3.4 percent as of September, 2001 which compares favorably to the national average. We refer the reader to the following page where local and regional demographics are found. Local Market Trends Characteristics The site is located on the west side of Central Avenue between 39th Avenue NE and Gould Avenue in the City of Columbia Heights. The area is dominated by commercial uses, with residential areas being located off of the major local arterials. An examination of local demographic trends reveals that the immediate area is projected to experience a slight population decrease of (0.12% per annum) over the next five years, while moderate household growth is projected over the same time period. The local market is considered to be a middle income area, with those communities within one mile of the subject having an average income level of approximately $43,200 and those areas within a three mile radius having an average income level of over $55,500. The subject is a freestanding fast food restaurant with good access and exposure from Central Avenue. This is a relatively stable area of the city with relatively dense commercial and residential development. Surrounding Land Uses The subject sits on the east side of Central Avenue in the City of Columbia Heights. To the north of the subject site is a freestanding retail building and to the south is a small retail strip center. Located to the west of the subject is a small apartment building and to the east is an apartment building. There is a concentration of fast food operators along Central Avenue, mostly to the north of the subject. Overall the predominant land use is small scale retail that contains convenience shopping and dining. Special Benefit of Location The subject's location on the east side of Central Avenue provides good access and visibility from both the local area. Central Avenue, (Route 65) is a high traffic route which connects the northern suburbs with Downtown Minneapolis /St Paul. This location is within a casual dining and fast food destination area. Burger King - Columbia Heights, MN #210 Page 6 Drinldng R 159.913.9641 $432.573.17 l $18.570.356 53,630.535.008 204,479,379_: I �-- - - I . $530,420.800 533.144,922 $4.273.279.720 Burger King - Columbia Heights, MN #210 Page 7 .. . ......... . 3939 CENTRAL AVE NW - ....... ..... . - ...... -1-0 MILES . t WAkAjid'Lfs.STipA* 5'.0. UL. MN-WI MINNESOTA . ...... 1990 Population ,• 112 509 296 937 18 910 8,834 4,375,099, .2001 Population is. 79: 8 115,246 3,001,579 4961.083. '%Changs 306: 1 B 392 3160 587 5.161 155 1990102001 -0.12%. 0.24% 0.34 %: -0.16%: 1.69% 1.26% q�nqe �qoi !q_:L008 0.69v 0.20% -0.23%: 1.04% 0.79%� Per Capita Personal Fnc'ome qqq.fe�-Cf, Rwerso-nal ln*come ;l 438 3 $ 4,570 $11408 .. . ........ 3.915 . ... .... $16,721 ----- -- 2001 Per Capda Personal income 519 965 523 799 524 420 9 364 $29.645 $25,479 Per Capdil Personal Income--- ---- _ 521,744 $37.391 $32,108 % ChangiLl gg 5.03%; 5.42%, 4 iii- % Change 2001 to 2006 2.84%: 3.93* 4.22% 2.35% 4.761 Households 1990 No. HOUSehc�lcls n0i No. Households T121 47 .09 . 3 . ............ . ... . ....... . . ...... . . 1�64 PP7 .. . .. . .......... - 8,213 1,141,05 1,993.998 2006 No. Households - 12 169 8,277- 1. 03.952 . . ......... 1.978,646 %Lqhange 1990 to 2001 0A3 %. 0.43% 6.58 ilko' 0 56% 1.74% 1.40W % Change 2901 to 2006 .12V 0.18V 0.34% 0.16%; 1.08% 0.88%, Persons Per Household 1990 Persons Per Household- 2.34 2.36, 2.38: 2.42� 2.59 2.58 2001 Persons Per-H,ousehold 11---,...-.-.--.,-.--.-, 2.21: . . ....... 2.32 1 2. 1. 24 . . ... .. - . . - 2.58 2.56 .200 �ersonsPbr---- Household 2.18 2.31. 2.32: 2.2; . ....... 2.58, 2.55 n %C a 991990to2001 -0.57% -0.19% -0.22% -0.75% -0.10%; :%Cha nge 2001 to 2006 -0.31 % ................ -.0.1 3V -0.38W . .. ... 0 02% 0.07% Average Household . .... . ..... . .. ...... . ...... .. *1990 Avg Household Income $31.886 $34.735 $35,276 $33,743 $43.780 $37,718 2001 Avg House.h9-1d-Iqcom!----. -$43.21-3-- $55,479 $58,4421 543 273 $77.215 $65,916 .2006 Avg Household income $66,658 $71,600 47520 Change 1990 to 2001 3.15% 4.79% 5.18%, .. ........... 2.52% _597.223 5.84% 04% 'kChange 2001 to 2006 248%: 3.74% 4.14W 1.89%. 4.72% 4.65% Income Ranges Median Income .......... . . ....... 545 708 . . .... ... ......... 547,040 .. 537,922 550 827 or more 0.60%. 3.54% 4.79%: 1.10%! .... ..... .. 9.54% 'V 00,000 to $149.000 . . ... ... 4,06% 7.1 3.30%. USA 575000tqA99,999 11.58%: 12.76W 6.49% 16.48% 13.50%. $56.000 to $74,994 '5.35.000 21.631%. 22.58%: 20.85 %; 22.21 V: 22.81% 21,62% to 549,999 . ...... 20.38% 16.00%� 20.99%z 14.23%' 15.50 %; 12.5,00.0 tol$34.999 -14.07%, 12.50%. -12.51% AAL--- .... . .. .................. ... 10.85W IV 5,000 to.$24,9�� 15.29%4 7 . . . ...-- ......... . 8.39%, - * " -- .- 11.37% �$5,000 to 514,999 13.43%. 9.97% 13.60% 6.42% 9.30% r S5.000 _Mnde_ 2.02 % -. 1.84% .10.40% 2.65%, 2.02%: 1.49% 2.18%' A Occupancy __ -_ .1990 occupied Housing Unii '.Owner 7,213] 47,093 118,980 ...... ... . ....... 7 768 960.170 Occupied 71.94% 64.76%' 58.68W 70.37%: 68.85% 71.83% 'Rerder:gcqupfed is-.0-k-- ---3-52-4-%-7-- 63W 29. - Education _19.90, Population 25-byEducabon' Level '•- 11,933 76,593 i 13,060: 1,612,690 2.770,562: i4%' 13.58%. 16.10% 9.43%; 19.21% Ontluate Degree _ w --- 3.05 %; 1.81 V 7.51 %' 3.13% 7.6➢96 6,25 %' T�tll Retail Data :Total Retail Sales :General Merchandise ------- 31,691,616,410 84,438,534,867 $247,11 0 0] $38 8. 989 088 560 423 811 072 A? ... L21:�969.564 i $604,61&573 i $37 04,958 302.,666 752; S7 878,41461048 .Apparel Accessory iftrniturs $7 q06.1 17 1 - _Alk,�q4,523 $213,265.664 $8,280.696 $1,620,504,672 :- 52,292,11 4,432 Home Fum. j:9 $1 50.042 $106.320.02: 2--- ---- 84.070.573 --------- 1113.862.582 117 A gn!) AiA t-1 nQA 49 . I AAG Drinldng R 159.913.9641 $432.573.17 l $18.570.356 53,630.535.008 204,479,379_: I �-- - - I . $530,420.800 533.144,922 $4.273.279.720 Burger King - Columbia Heights, MN #210 Page 7 RESTAURANT MARKET ANALYSIS 71 Competitive Trade Area The subject competes within the City of Columbia Heights trade area. The trade area is situated at the lower part of the City of Columbia Heights, just north of the City of St Paul. The A subject's location on Central Avenue is located at the center of the local fast food development. The trade area is generally considered to be a three -mile radius. j Competing Restaurants Within a 1.0t mile radius of the subject there is a moderate number of full service restaurants. There are also a number of local restaurant formats, along with several national fast food restaurant chains. The primary competition is generally located along Central Avenue. The following are the most competitive fast food concepts located within the subject's potential trade area. ti Major Competitors lkz A Restaurant Distance , Location T McDonalds 0.2 Miles 4605 Central Ave NE Hardees 0.4 Miles 5280 Central Ave NE Arby's 0.3 Miles 4707 Central Ave NE KFC 0.3 Miles 4905 Central Ave NE Taco Bell 0.3 Miles 14900 Central Ave NE Traffic Generators • Listed below are traffic generators within the immediate trade area 1. Commercial development in immediate neighborhood 2. Other restaurant competition 3. Commercial Back -up 4. Residential Back -up Burger King Concept and Subject Historical Sales Volume Based in Miami, Florida, Burger King operates approximately 11,373 restaurants worldwide, comprised of 8,307 restaurants in all 50 United States and 3,066 international units in 58 countries, with approximately 92 percent of the restaurants owned and operated by. franchisees. Burger King is ranked 2t' in domestic sales volume for chain restaurants behind McDonald's. The FFCA 2001 Chain Restaurant Industry Review & Outlook reports that the average unit produces $1,200,000 in store sales. Fiscal 2000 sales were $11.4 billion which is up from 10.9 billion in fiscal 1999 and $10.3 billion in fiscal 1998. Their average land acquisition cost is $450,000 and the building costs are $665,000 (not including equipment of approximately $300K). The average unit size is 3,500 square feet and is situated on 45,000 square feet. The chain is in a major revitalization program with a plan to remodel all of their restaurants by 2002. Currently 600 restaurants have been remodeled. We have analyzed per -unit sales based on annual sales volume data provided by the client and owner. Burger King - Columbia Heights, MN #210 Page 8 :a RESTAURANT MARKET ANALYSIS SALES VOLUME Burger King - Columbia Heights, MN #210 Year Sales Volume Bldg. Size (SF) Sales /SF %Change 1998 $634,797 2,581 $245.95 — 1999 $807,917 2,581 $313.02 27.27% 2000 $785,588 2,581 $304.37 - 2.76% 2001• $732,231 2,581 $283.70 -6.79% "Annualized using 1st nine months of 2001 Over the recent past, the sales volume at the subject store has exhibited a decrease of 6.79 !� percent using annualized sales for 2001. This data suggests that the sales performance of the subject is still strong, as compared to local and storewide averages, though a declining sales -, trends exist. It is our understanding that Burger King is experiencing rising sales on a corporate level as well. As such, we are cautiously optimistic about future sales trends. Reconciling the information provided, other restaurant franchisees and the appraisers' industry r; experience, it is our opinion that stabilized sales volume for the subject will average $300 per square foot. Applying this unit value to the subject's 2,581 square feet develops a total estimated sales volume of $775,000, rounded. This figure is well supported by past performance and the chain and the division averages. Our forecasted figure will be utilized in our cash flow projections. We believe this stabilized sale figure is reasonable. J a _;,, Burger King - Columbia Heights, MN #210 Page 9 :a SITE DESCRIPTION Location: 3939 Central Avenue Columbia Heights, Anoka County, MN 55428 The site is located on the west side of Central Avenue between 39th Avenue NE and Gould Avenue in the City of Columbia Heights. Shape: Rectangular Topography: Level Land Area: 1.0900 gross acres (1.0868 net) 47,340 gross square feet (47,340 net) Frontage, Access, Visibility: The subject property contains approximately 200 feet of frontage along Central Avenue. There are two curb cuts along this frontage. It's access and visibility is rated- as good. Soil Conditions: We did not receive nor review a soil report. However, we assume that the soil's load- bearing capacity is sufficient to support existing and /or proposed structure(s). We did not observe any evidence to the contrary during our physical inspection of the property. Drainage appears to be adequate. Utilities All municipal and public utilities are assumed to be available and provided to the site. Site Improvements: The site improvements include asphalt paved parking areas, curbing, signage, landscaping, yard lighting and drainage. Land Use Restrictions: We were not given a title report to review. We do not know of any easements, encroachments, or restrictions that would adversely affect the site's use. However, we recommend a title search to determine whether any adverse conditions exist. Flood Risk: The subject site is not located in a flood zone as indicated on FEMA map no. 270010 0005B dated September 29, 1978. Wetlands: We were not given a Wetlands survey. If subsequent engineering data reveal the presence of regulated wetlands, it could materially affect property value. We recommend a wetlands survey by a competent engineering firm. Hazardous Substances: We observed no evidence of toxic or hazardous substances during our inspection of the site. However, we are not trained to perform technical environmental inspections and recommend the services of a professional engineer for this purpose. Burger King - Columbia Heights, MN #210 Page 10 aj -1 ."A JI Burger King - Columbia Heights, MN #210 Page 11 IMPROVEMENTS DESCRIPTION The following description of improvements is based upon our physical inspection of the improvements along with our discussions with the restaurant manager and public record. General Description Use Type: Fast food Year Built: 1955 Number of Buildings: 1 Number of Floors: 1 Gross Building Area: 2,581 square feet Net Rentable Area: 2,581 square feet Construction Detail Entrance: Two sets of double doors Foundation: Poured reinforced concrete. Framing: Structured steel Fagade: Combination of brick facing and stucco finish with mansard roof. Roof Structure: A steel truss system with corrugated metal decking. Roof Cover: Flat roofing system consisting of rubber membrane material. Mechanical Detail Heating: HVAC is provided by individual roof-mounted units which are as ired. gas -fired. Plumbing: The plumbing system is assumed to be adequate for existing rt use and in compliance with local law and building codes. Electrical Service: Electricity for the building is obtained through high voltage power lines. We assume the electrical system:is adequate for the existing use. Fire Protection: The building is not sprinklered which we assume is in accordance with local regulations. Fire hydrants are located Jv near the property. Security: Alarm system -1 ."A JI Burger King - Columbia Heights, MN #210 Page 11 IMPROVEMENTS DESCRIPTION Interior Detail Entry and Cashier Area: Two sets of double doors exists from the front and side of the Effective Age: subject property. The front entry flows into the counter area Expected Economic Life: where the cashier stations are located. Dining Area: Separated as one open space in the front of the building with interior tables and perimeter booths. The floor consists of ceramic tile and carpet and walls are finished with commercial wallpaper. There is a finished ceiling with acoustic-tiles. Lighting generally consists of fluorescent fixtures. Kitchen Area: Tiled floor, plastic and stainless steel paneled and painted sheet - rock walls, acoustic tile ceiling, and fluorescent lighting. The kitchen also contains a walk -in refrigerator and a walk -in freezer. There is a small manager's office. A food prep area is located directly behind the counter. Additional rear kitchen space is utilized for dry food storage and equipment storage. The kitchen is generally rectangular in shape and contains a rear door leading to the drive —up order station and waste area. Restrooms: There is one men's and one women's restroom for patrons. Ceramic tiled walls and floor, porcelain fixtures and sinks and fluorescent lighting. Site Improvements Parking: 48 cars Onsite Landscaping: Low maintenance trees, bushes, plantings and grasses are situated around the perimeter of the site. Other: There is drive -up window service along the east side of the property with a food order station in the rear of the property. Concrete curbs and walkways. There is also the previously described small concrete block storage building adjacent to the dumpster area. Summary Condition: Good Quality: Good Layout & Functional Plan: Good Actual Age: 46 years Effective Age: 15 years Expected Economic Life: 35 years Remaining Economic Life: 20 years Burger King - Columbia Heights, MN #210 Page 12 .,y IMPROVEMENTS DESCRIPTION Furniture Fixtures and Equipment (FF&E) The subject fast food restaurant contains furniture fixture and equipment that were specifically purchased for the subject use. These items include but are not limited to kitchen equipment and fixtures, trade fixtures and diming room furniture. These items do not typically include such _ "carry -out" equipment such as cash registers or computers, rather they pertain to larger more permanent items like kitchen cooking equipment. To provide an estimate of FF &E contained >a within the subject we have researched industry sources such as the Chain Restaurant Industry Review and Outlook written by the Franchise Finance Corporation of America. They estimate T; that typical Burger King restaurants contain an initial FF &E investment of $300,000. Ownership provided us with their specific FF &E capital investment of $310,604, which apparently includes other items as well. For the purpose of this exercise we estimate that FF &E within the subject is valued at $200,000 which accounts for depreciation using an average life expectancy of 15 years and an effective age of 6 years, and also salvage value. Furniture, Fixtures and Equipment Replacement Cost New $310,604 Less salvage value 10% $31,060 Depreciable Cost $279,544 Less: Depreciation 40% $111,817 Subtotal $167,726 Plus salvage value $31,060 Total $198,787 Total (rounded) $200,000 Americans With Disabilities Act The Americans With Disabilities Act (ADA) became effective January 26, 1992. We have not made, nor are we qualified by training to make, a specific compliance survey and analysis of this property to determine whether or not it is in conformity with the various detailed requirements of the ADA. It is possible that a compliance survey and a detailed analysis of the requirements of the ADA could reveal that the property is not in compliance with one or more of the requirements of the Act. If so, this fact could have a negative effect upon the value of the property. Since we have not been provided with the results of a survey, we did not analyze the results of possible non - compliance. Hazardous Substances We are not aware of any potentially hazardous materials (such as formaldehyde foam insulation, asbestos insulation, radon gas emitting materials, or other potentially hazardous materials) which may have been used in the construction of the improvements. However, we a.3 are not qualified to detect such materials and urge the client to employ an expert in the field to determine if such hazardous materials are thought to exist. Burger King - Columbia Heights, MN #210 Page 13 ;.o IMPROVEMENTS DESCRIPTION Physical Condition The building has been well maintained and provides an average appearance relative to competing buildings within its submarket. Although it is designed in a fast food Burger King theme, the building has the potential to be converted to an alternate fast food restaurant concept. We did not inspect the roof of the building or make a detailed inspection of the mechanical systems. The appraisers, however, are not qualified to render an opinion as to the adequacy or condition of these components. The client is urged to retain an expert in this field if detailed information is needed about the adequacy and condition of mechanical systems. Burger King - Columbia Heights, MN #210 Page 14 REAL PROPERTY TAXES AND ASSESSMENTS Current Property Taxes The property is subject to the taxing jurisdiction of Anoka County. The assessors' parcel identification number is 36- 30 -24 -32 -0252. PROPERTY TAX DATA (2001) Assessor's Market Value: Land: $198,800 Improvements: +180,300 Assessor's Market Value: $379,100 Equalization Rate: x 100% Assessed Value $379,100 Total Property Taxes $13,246 Based on our knowledge of local real estate taxes, it is our opinion that the subject's real estate taxes are reasonable. We do not anticipate any significant changes into the foreseeable future. ZONING The property is zoned B -1 Commercial by the City of Columbia Heights. Permitted uses within this district include fast food restaurant uses. We also assume it is a legal use based on the fact that the subject was recently constructed and it was built in the neighborhood character that includes multiple casual dining restaurants. We are not experts in the interpretation of complex zoning ordinances but the property appears to be a conforming use based on our review of public information. The determination of compliance is beyond the scope of a real estate appraisal. We know of no deed restrictions, private or public, that further limit the subject property's use. The research required to determine whether or not such restrictions exist, however, is beyond the scope of this appraisal assignment. Deed restrictions are a legal matter and only a title examination by an attorney or title company can usually uncover such restrictive covenants. Thus, we recommend a title search to determine if any such restrictions do exist. Burger King - Columbia Heights, MN #210 Page 15 HIGHEST AND BEST USE Definition Of Highest And Best Use According to The Dictionary of Real Estate Appraisal, Third Edition (1993), a publication of the Appraisal Institute, the highest and best use is defined as: The reasonably probable and legal use of vacant land or an improved property, which is physically possible, appropriately supported, financially feasible; and that results in the highest value. The four criteria the highest and best use must meet are legal permissibility, physical possibility, financial feasibility, and maximum profitability. �' Highest and Best Use of Site As Though Vacant ,TI Considering the subject site's size, configuration and topography, location among other fast food properties and state of the local fast food market, it is our opinion that the Highest and Best Use of the subject site as though vacant is retail or commercial development such as the Pq subject restaurant to the highest density possible. Highest and Best Use of Property As Improved According to the Dictionary of Real Estate Appraisal, highest and best use of the property as improved is defined as: 1 The use that should be made of a property as it exists. An existing property should be renovated or retained as is so long as it continues to contribute to the total market value of the property, or until the return from a new improvement would more than offset the cost of demolishing the existing building and constructing a new one. ,,� J;"Ffy0„eA't:- It is our opinion that the existing building adds value to the site as if vacant and would dictate a continuation of the current use. Therefore, it is our opinion that the Highest and Best Use of the subject property as improved is as it is currently employed. 1 Burger King - Columbia Heights, MN #210 Page 16 VALUATION PROCESS Methodology There are three generally accepted approaches available in developing an opinion of value: the Cost, Sales Comparison and Income Capitalization approaches. We have considered and analyzed each in this appraisal to develop an opinion of the market value of the subject property, because this is a complete appraisal. In appraisal practice, an approach to value is included or eliminated based on its applicability to the property type being valued and the quality of information available. Summary nM This appraisal employs all three typical approaches to value: the Cost Approach, the Sales Comparison Approach and the Income Capitalization Approach. Based on our analysis and knowledge of the subject property type and relevant investor profiles, it is our opinion that all h approaches would be considered meaningful and applicable in developing a credible value conclusion. The valuation process is concluded by analyzing each approach to value used in the appraisal. When more than one approach is used, each approach is judged based on its applicability, reliability, and the quantity and quality of its data. A final value opinion is chosen that either corresponds to one of the approaches to value, or is a correlation of all the approaches used in # the appraisal. M Burger King - Columbia Heights, MN #210 Page 17 LAND VALUATION We used the Sales Comparison Approach to form an opinion of land value. In this method, we analyzed prices buyers have recently paid for similar sites in this area, as well as examined current offerings. In making comparisons, we adjusted the sale prices for differences between this site and the comparable sites. We present on the following pages a summary of pertinent details of sites recently sold that we compared to the site appraised. In the valuation of the subject's fee simple interest, the Sales Comparison Approach has been used to establish prices being paid for comparably zoned land. The most widely used and market oriented unit of comparison for properties with characteristics similar to those of the subject is the sale price per square foot of land area. All transactions utilized in this analysis are computed on this basis. Real estate developers make qualitative and quantitative judgments in the acquisition of a site with development potential such as the subject property. Subjectively, a developer considers the nature of surrounding land uses and proximity to complimentary services to a potential project. Objectively, the physical and functional attributes of the site, and the cost of preparing it for construction must be calculated. Lying between these two considerations are the many -� aesthetic -and economic factors which come to influence the final product. : The major elements of comparison for analysis of this type include the property rights conveyed, the financial terms incorporated into a particular transaction, the conditions or motivations surrounding the sale, changes in market conditions since the sale, the location of the real estate, its utility and the physical characteristics of the property. Summary of Sales and Opinion of Site Value Based on our analysis of the comparable sales and adjustments on the following pages, we conclude an adjusted range of value for the subject of $5.67 to $9.30 per square foot of land area ($246,907 to $405,117 per acre). We have elected to conclude within this range and our opinion of land value indicated by the Sales Comparison Approach is: Burger King - Columbia Heights, MN #210 Page 18 Square Feet Acres Land Area: 47,340 1.0868 Indicated Value: X $7.00 X $304,920 Indicated Land Value: $331,380 $331,380 Rounded Land Value: $330,000 $330,000 Burger King - Columbia Heights, MN #210 Page 18 G O I a J r. O 0114 a �N O r 0 tq Q¢ f`J Q tC �49�N 2 . � z z W r r H V � [T C C O N CA 1ZZZZZZ N q 8 N 3 �r N Q LL 1L LL L7 L7 t) V V Q Q ¢ m V C O p Ln O O M r- - N N t0 W g o Go y ul O n N i a n a o o, CL y Z N d q U .� p 0 W N CO (pa OC y a` c N �. r s o CL N� N� I d m to m 7 > > w C7 7 7 > to Q 3 N > E > E > a > E LL cri m C N O G N N C N O O �V O tq V Q tC m t6 v n �! to V►IM► W N N 69 m to W to to d9 V! 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LL cr h to O O N \° °O N M \° O M e O Q V w LO w O m w° P w ° 0; w L(i O 0 L E °• E° o E o > At O N o o N o N N c e C a N C c n o m d C w = Of N 7 Q v 4) •� 2 W — 2 v �= } c 'E o '� o 'E o ns Cp 'p0 rr U v, ` Q 3 Lm N U in ° iii o � r ~O l_`C c � o C w a mu ° E °• E °• ma J = .E 6 o to °� O N A O •' O M o O N It N r) e o 7 p M '% p N N U w 4 N N h 1 N C :+ d 0 0 O ° O o O .0 �e o C IW C d C c0 C) N C N a C N U m m .. y m ° o C e C ° �j k= z o Z o Z c Z c H W a. c d E oD yr L r L r �p C C m IC c 47 o o C d e e C N o o C o Q � V 'O N �i O O J O V 1Cp C 0 O O O 0 o E _C LL V Q Q Q Q C 0 U LL Y Y SY SYS m F- d t aTi a� a e a� Q• ;e z o 0c E 0 E 0 E 0 E 0 w a p to o o y o 0 0 co LL LL LL °Q W LL w o o 0 0° 0 00 O Q co N {p W O N za J Z N M 'ar a o 00 N �- v Z N c O - C U O m� c � o c c rn E m Q C7 7 C C U t6 L .2 p N co c v c to U c m c Y d O �. d E m « U 0 m O - tN U 01 r N w vs w LL to CD C°7 r Q N f09 H m N C*4 .pp O I Ln Q cMO o °m N (O Cl) vi vi w m Q LL V► O 00 10 00 N (p O O In cr C6 O CO M O l0 O Cl) e- cr) M cn GO). x 44 409, w 0 0 0 0 r-_ M '(11 O x � 4.). 0 N O (II m L m LL C H •p O co O 0 N O° (G 'a N CD O ci ? r O O u O 0 C N N a N m d C w = Of £ 2 W — 2 } A Of 3 cm ns Cp 'p0 rr m; v, o Q 3 Lm U 1 C Y m L m COST APPROACH Methodology The Cost Approach is based on the principle of substitution which states that no prudent person will pay more for a property than the cost of acquiring a site and constructing, without undue delay, an equally desirable and useful property. The steps have been outlined under the Valuation Process section of this report. We have previously estimated land value at $330,000. Replacement Cost New (RCN) Our opinion of replacement cost new is based on the Calculator Section in the Marshall Valuation Service, a nationally recognized publication containing construction costs for all types of improvements. Base costs are revised monthly and adjustment factors are provided to reflect regional and local cost variations. Base Building Costs The published costs include all direct costs for the base structure and tenant improvements, and the following indirect costs: 1. Plans, specifications, and building permits, including engineer's and architect's fees; 2. Normal fees and interest on construction funds during the construction period; 3. Sales taxes on materials; and 4. Contractor's overhead and profit, including worker's compensation, fire and liability insurance, unemployment insurance, etc. These base building costs, adjusted for any unique building characteristics and cost multipliers, are presented in the cost summary chart following this section. Site Improvement Costs Site improvement costs are not included in our Base Building Cost estimate. These include landscaping, asphalt paving, walkways, etc. Site improvement costs are presented in the cost summary chart following this section. Other Indirect Costs Other indirect costs not included in the RCN of building and site improvements are developer overhead, property taxes, permanent loan fees, legal costs, developer fees, contingencies, and lease -up and marketing costs. Research into these costs leads to the conclusion that an average property requires an allowance for other indirect costs of between 10.00 percent and 20.00 percent of RCN of building improvements plus site improvements. We have chosen to use 15.00 percent in our analysis. Entrepreneurial Profit Entrepreneurial profit represents the return to the developer for taking the construction and lease -up risk. Based upon our discussions with developers in the local market, this figure tends Burger King - Columbia Heights, MN #210 Page 21 COST APPROACH A., to range between 10.00 percent to 20.00 percent of total direct and indirect costs. We chose to use 15.00 percent. n Accrued Depreciation There are three sources of accrued depreciation: 1) Physical We have used the economic age -life method to estimate physical Deterioration: deterioration. In the Improvements Description section of this report, we $258.84 estimated the effective age of the subject to be 15 years and the $675,000 economic life to be 35 years. This results in a physical deterioration of 42.86 percent (effective age divided by economic life). 2) Functional Due to the fact that our RCN estimate considers the construction of the Obsolescence: subject improvements utilizing modern materials and current standards, design and layout, functional obsolescence is not applicable. Therefore, functional obsolescence is estimated to be .00 percent. 3) External Based upon a review of the specific location of the subject as well as the Obsolescence: local fast food market, external obsolescence is .00 percent. Total Depreciation: The sum of these elements of accrued depreciation is 42.86 percent. Conclusion Please refer to the following page for our Cost Approach summary which concludes to a market value estimate as follows: 1 d s �l :3 4 Value $NSF (NRA) Cost Approach Conclusion $668,078 $258.84 Rounded $675,000 $261.53 Burger King - Columbia Heights, MN #210 Page 22 z, , A I COST APPROACH II COST APPROACH SUMMARY II Replacement Cost New (RCN) Building Improvements Base Cost HVAC Sprinklers Subtotal Multipliers Current Cost Local Area Perimeter Building Height Product of Multipliers Adjusted Base Cost Total Site Improvements Total Direct Costs Plus Other Indirect Costs ( %of Direct Costs) Subtotal Replacement Cost New( RCN ) Plus: Entrepreneurial Profit (% of RCN) Total Replacement Cost New ( RCN ) Per Square Foot (based on gross area) Less Accrued Depreciation Physical Deterioration Effective Age (Years): Total Economic Life (Years): Total Physical Depreciation: Functional Obsolescence External Obsolescence Total Depreciated Value of the Improvements Per Square Foot (based on gross area) Plus Land Value Indicated Value by Cost Approach Rounded to nearest $25,000 Per Square Foot (based on gross area) Source: Marshall Valuation Service GBA $ /GBA Total Cost 2,581 $103.32 $266,669 $253,559 2,581 0.00 0 $130.99 2,581 0.00 0 $668,078 2,581 $103.32 $266,669 $261.53 1.02 1.13 1.00 1.00 x 1.153 $307,363 $140,000 $447,363 15.0% 67,104 $514,467 15.0% 77,170 $591,637 $229.23 15 Years 35 Years 42.9% $253,559 0.0% 0 0.0% 0 42.9% $253,559 $338,078 $130.99 $330,000 $668,078 $675,000 $261.53 aecuon: i3 Quality: Good Page: 17 Class: C Date: 5100 Type: Fast Food Restaurant �t 3 Burger King - Columbia Heights, MN #210 Page 23 SALES COMPARISON APPROACH Methodology In the Sales Comparison Approach, the appraiser estimates the: value of a property by comparing it with similar, recently sold properties in the surrounding or competing area. Inherent in this approach is the Principle of Substitution, which holds that when a property is replaceable in the market, its value tends to be set at the cost of acquiring an equally desirable substitute property, assuming that no costly delay is encountered in making the substitution. By analyzing sales that qualify as arm's length transactions between willing and knowledgeable buyers and sellers, we can identify market value and price trends. The sold properties must be comparable to the subject in physical, location and economic characteristics. The basic steps of this approach are: 1. Research recent, relevant property sales and current offerings throughout the competitive area; 2. Select and analyze properties that are similar to the subject, giving consideration to the date of sale, any changes in economic conditions that may have. occurred between the sale date and the date of value, and other - physical, functional, or location factors; 3. Identify sales that include favorable financing and calculate the cash equivalent price; 4. Reduce the sales price to a common unit of comparison such as price per square foot of building area; 5. Make appropriate adjustments to the prices of the comparable properties; and 6. Interpret the adjusted sales data and draw a logical value conclusion. Analysis of Sales The most widely used and most market - oriented unit of comparison for fast food properties such as the subject is the sale price per square foot of building area. All of the comparables have been analyzed on this basis. All of the comparables sold with no unusual conditions of sale. To the best of our knowledge the sales involve transfers of fee simple interests. In addition, none of the sales involved atypical financing and were all cash purchases. Purchasers motivations in fast food transactions vary a great deal. Due to the fact that comparable local sales are difficult to find, the appraisers have included a selection of regional fast food comparables. Buyers typically do not place primary emphasis on this approach in dealing with this property sector. As such, the Sales Comparison Approach is considered a less reliable valuation process for fast food properties. However, we believe this approach is very useful in providing a value range that tests the reasonableness of the conclusions in the Cost Approach and the Income Capitalization Approach conclusions. The comparable sales included various fast food concepts that produced varying store sales. All other things being equal, one would expect the subject to sell at the lower end of the range. Charted below are the comparable sales utilized in our analysis. These sales are being provided for informational purposes. An adjustment process is considered to be too subjective and unreliable to complete. As can be seen, the range of unadjusted sales prices is from$131.67 to $303.27 per square foot of gross building area. This clearly supports the conclusions reached in the other two approaches. Burger King - Columbia Heights, MN #210 Page 24 w LL f0 N N plo �N 3 N N N _ r+ O �'O Rim aaa�mc $ COD odd �zz3mr1^1 U. LL Q'N cr N t0 M V O N P C Y l7 w N 001 Y N O t7 tV N m m �+ Ln A 8 a a R Z N N N E E u E E E E E E m CL u N N f0 d O r N Z 2 v� s LO E 0 U L. W O L m M _ a m 3 3 m c 3 a a ' c m m,� c t0 N m N - C m 0 W oh W m a `o y U `0 U. Y m u m 0 w e 5 3 a 7 ,L° E c CC C d U Mu 3 W o W 0 3 3 y° to c m � O v � a ° � m e. ° r W` M tr $ m o a LL $ 1b W w LL Q Q N 01 t0 < °v N t9 OI t.. t0 n t7 n tV f- N vi e g 12 O N N Z N r t2 N C N N h 49 N O C �I3 0 o m m = m C7 c0 m 0 m o LL ILL a I O W Ln vi w001 CO N Q V N 10o N -� M W N N S M h N N 0 N m O .V d O 8 p $ t[f R N O c N v1 P 6/ 0 O_ co a c O A n R n N N N fD � to H N N m C N p L m N y m N a U. C N C G O d O Tn N G W N H ° E �t io LL m LL- W cr m 41 LL c m 1- LL � j� M ca u3 Y � a Z m m oz Q ui E R O ° 5u w 10� 'm� cuz >� a2 �a �Z Z2 2 d L IL m � �a� to o� gym= � O O �� wv °L�r °. aoN cc CL YZ„ v838 N= U. ayeay S W U. G co 0 p y O Td r J 3 �i ;§ N Qco to U. Si (7 8 3N2 mtow .5 aar2 .6 {L 11 r2 Z u- v H tm w LL f0 N N plo �N 3 N N N _ r+ O �'O Rim aaa�mc $ COD odd �zz3mr1^1 U. LL Q'N cr N t0 M V O N P C Y l7 w N 001 Y N O t7 tV N m m �+ Ln A 8 a a R Z N N N E E u E E E E E E m CL u N N f0 d O r N Z 2 v� s LO E 0 U L. W O L m INCOME CAPITALIZATION APPROACH Methodology The Income Approach is a method of converting the anticipated economic benefits of owning property into a value estimate through capitalization. The principle of "anticipation" underlies this approach in that investors recognize the relationship between an asset's income and its value. In order to value the anticipated economic benefits of a particular property, potential income and expenses must be estimated, and the most appropriate capitalization method must be selected. The two most common methods of converting net income into value are direct capitalization and discounted cash flow analysis. In direct capitalization, net operating income is divided by an overall rate extracted from market sales to indicate a value. In the discounted cash flow method, anticipated future net income streams and a reversionary value are discounted to an estimate of net present value at a chosen yield rate (internal rate of return). In our opinion the direct capitalization method is most appropriate, as most of the marketplace utilizes this technique in their analyses. Potential'Gross Income Market Rental Rates Based on Comparable Leases The subject property is presently owner occupied. The application of this methodology assumes that a tenant is in place and paying rent. The potential gross income is the economic rent obtainable for the subject property in the open market. We have investigated the local and regional market in order to develop comparable rentable data for utilization in formulating a potential gross income estimate for the subject property. We have researched and analyzed several fast food leases of "like kind" space. The quantity of income which an informed investor is warranted in assuming the subject property will produce, reflects a review of the rent currently being paid for comparable space, in terms of locality and size. We have limited our search to fast food restaurant leases. Again, we have considered adjustments for location and size as well as the physical and economic characteristics of the subject property. These leases imply a market or imputed rent for the subject owner - occupied facility. The comparables may be summarized as follows: Burger King - Columbia Heights, MN #210 Page 26 INCOME CAPITALIZATION APPROACH Rent Comparables Lease Size Term Rent/ Rent No. Property Location Date Tenant Name (Sq. Ft) (years) Sq. Ft Steps Comments 1 140 Blake Road Feb -01 Arby's 3,888 20 $2297 Level . Arby's restaurant Mat was Constructed in Hopkins, MN 1979. One percent annual increases year 5. 2 4135 Division Street May -01 Fazzoli's 3,606 20 $35.47 10% inc. Lease of former Hardees Restaurant that SL Cloud, MN every 5 was converted taFoa�ns . There are yrs Ive 3 10 8th Avenue, SE Nov -99 Taco Bell 1,974 20 $27.86 None Loral restaurant lease of a year old St Cloud, MN building. Modiaed not der with landlord absorbing insurance and common area maintenance. 4 1690 Park Place Blvd Feb-01 Arby's 4,629 20 $21.60 Level Arby's restaurant that was constructed in St Louis Park, MN 1997. One percent annual increases aft year 5. 5 5990 Neal Avenue North Feb-01 Arby's 4,178 20 $22.09 Level Arby's restaurant that was constructed in Oak Park, MN 1998. One percent annual increases aft year S. 6 800 West Main Street Nov-01 Currrent Offering 3,000 Neg $12.00 Neg Current listing of a vacant fast food Anoka, MN restaurant located on Hwy. 10 in Anoka 7 14430 N. 60th Street Nov -01 Currrent Offering 3,240 Neg $14.00 Neg Currant listing of a former Burger King . Stillwater, MN restaurant located on HWY 28. Survey Low: 1,974 20 $1200 Survey High: 4,629 20 $35.47 Survey Mean: 3,502 20 $22.28 The comparable rents range from a low of $12.00 per square foot to a high of $35.47 per square foot. Most of the comparables indicate expenses are generally on a triple net basis with all expenses applicable to the property being paid by the tenant. Upward adjustments were made for modified leases that require the landlords to absorb some expenses. Their sizes range from a low of 1,974 square feet to a high of 4,629 square feet. Appropriate adjustments are warranted for the various sizes of the comparables in relation to the subject property. Adjustments are also warranted to the comparables for location and visibility, condition of the buildings and the tenant use. After considering all of the above, we are of the opinion that the subject should lease for an initial base rent of between $24.00 and $26.00 per square foot. Based on the subject's building area of 2,5811 square feet and a point value of $25.00 per square foot, the resulting market rent via the rent comparables above is $64,525 per annum. Market Rent as a Percent of Sales Retail industry practices are known to incorporate the methodology of determining appropriate rents based upon a percentage that is tied to a level of sales performance. In some instances the rental income is derived by a percent of sales over a natural breakpoint. Generally, the greater of the sales volume or level of performance achievable for a retail facility, the greater the strength of the marketplace and the ability to pay higher rents. Rent as a percentage of sales ranges anywhere from 4 to 12 percent dependent upon its use and location. Dollars & Cents of Shopping Centers: 2000 published by the Urban Land Institute surveys shopping center owners and tenants every three years for occupancy information. According to their most recent survey ULI reports that, nationally, restaurant (without liquor license) tenant leases have median percentage rent clauses ranging from 5.9 to 9.0 percent. The median size Burger King - Columbia Heights, MN #210 Page 27 INCOME CAPITALIZATION APPROACH of the stores range from 2,745± to 5,911± square feet. The survey is also categorized between national and local restaurants within regional and community sized centers. In our selection of a percentage rental rate for the subject property, we have given consideration to property characteristics including location, condition, age, character and position within the local marketplace. We have concluded that 8 percent of sales, as -a market real estate rent (exclusive of FF &E), is deemed reasonable in light of the subject property's economic characteristics and also considering the rental information discussed. Our selection is based upon comparable information, discussions with retail and restaurant chain operations, and local market information. We have previously selected $300.27 per square foot as the average stabilized sales volume for the restaurant in the "Market Analysis" section. Based on the building's size of2,581± square feet, the potential gross income as a percent of sales $775,000, rounded) is developed as follows: Market Rent as a Percent of Project Cost It is also common to see rents established as a percent of project costs. Many fast food property transactions involve passive investors such as REIT's in sale leaseback transactions where the rent (or return on investment ) is a percent of project cost (value). Our research suggests that an appropriate rate of return for the subject property would be approximately 9 to 12 percent. Considering the various location, physical and economic characteristics of the subject property , we believe that an appropriate return on cost would be 11 percent. In reconciling these three projected potential gross incomes, we have once again considered the specific attributes of the subject property. Considering the location and economics of the subject property, we believe the appropriate rent on a square foot basis to derive the potential gross income should be $25.00 per square foot, or $64,525 per annum. This figure will be considered in the projection of stabilized income. Burger King - Columbia Heights, MN #210 Page 28 INCOME CAPITALIZATION APPROACH :i :a Market Rent Summary and Conclusion �r Potential Gross Income Rent/SF a ,5 Rent Comparables $64,525 $25.00 v Percent of Sales $62,000 $24.02 Percent of Project Costs $74,250 $28.77 Market Rent Conclusion $64,525 $25.00 ;a Vacancy and Collection Loss 3 Based upon the historical occupancy of the subject, the current vacancy in the a narket, and our perception of future market vacancy, we have projected a global stabilized vacancy and collection loss rate of 5.00 percent. Operating Expenses Net leases require that tenants pay there pro rata share of all reimbursable fixed and operating expenses. Since the subject property would likely be leased on a triple net basis, all operating expenses, taxes and maintenance are the responsibility of the tenant. The landlord would incur expenses for structural maintenance reserves, some insurance and a small management fee which we estimate to total 4 percent of the effective gross income. 1 Burger King - Columbia Heights, MN #210 Page 29 �a INCOME CAPITALIZATION APPROACH Income and Expense Summary We have discussed our projections of income and expenses for the subject property. On the following chart we present our opinion of income and expenses for the following year. I SUMMARY OF REVENUE AND EXPENSES $1SgFt POTENTIAL GROSS REVENUE Base Rental Revenue $64,525 $25.00 TOTAL POTENTIAL GROSS REVENUE $64,525 $25.00 Vacancy & Credit Loss (5.00 %) (3,226) (1.25) EFFECTIVE GROSS REVENUE $61,299 $23.75 OPERATING EXPENSES Strucural Maintenance, Insurance and Management (4 %) 2,452 - 0.95 TOTAL EXPENSES $2,452 $0.95 NET OPERATING INCOME $58,847 $22.80 Capitalization Rate Selection The following represents our opinion of the appropriate going -in capitalization rate for the subject property. Our national database of Burger King restaurant sales develop a narrow range of capitalization rates of approximately 8.0 to 9.0 percent. These sales have been retained in our files. In addition, we have considered Investor Surveys published by Korpacz and Cushman & Wakefield, Inc. for competitive national net lease fast food properties. Going -In Going -In Terminal Terminal Survey Date Cap Rate Cap Rate Cap Rate Cap Rate Range Average Range Average Korpacz Q3 -2001 8%_11% 9.41% 8 % -10% 9.41% C &W Real Estate Outlook Winter 2000 -2001 8.3 % -9.8% 8.8%-9.1% NA NA Our observations and analysis suggest that a going -in capitalization rate of 8.50 percent represents reasonable investor criteria under current market conditions. Burger King - Columbia Heights, MN #210 Page 30 INCOME CAPITALIZATION APPROACH Direct Capitalization Method Conclusion In the Direct Capitalization Method, we developed an opinion of market value by dividing year 1 net operating income by a 8.50 percent overall capitalization rate. Our conclusion via the Direct Capitalization Method is as follows: F ect Capitalization Method NET OPERATING INCOME $58,847 $22.80 Sensitivity Analysis (0.50% OAR Spread) Value $ /SF NRA Based on Low -Range of 8.00% Based on Most Probable Range of 8.50% Based on High -Range of 9.00% $735,585 $692,315 $653,853 $285.00 $268.24 $253.33 Reconciled Value Rounded to nearest $25,000 $692,315 $700,000 $268.24 $271.21 :r .s Burger King - Columbia Heights, MN #210 Page 31 RECONCILIATION AND FINAL VALUE OPINION Valuation Methodology Review and Reconciliation This appraisal employs all three typical approaches to value: the Cost Approach, the Sales Comparison Approach and the Income Capitalization Approach. Based on our analysis and knowledge of the subject property type and relevant investor profiles, it is our opinion that all approaches would be considered meaningful and applicable in developing a credible value conclusion. The approaches indicated the following: Cost Approach: $675,000 Sales Comparison Approach: N/A Income Capitalization Approach: $700,000 We are of the opinion that the Cost Approach and the Income Approach are applicable in valuing the subject property. 'Specialty use properties such as the subject fast food restaurant use are .particularly well supported by the Cost Approach. Due to the fact that fast food restaurants are commonly viewed as income producing properties,- investors are primarily concerned with their return on equity. Therefore, the Income Capitalization Approach was given most weight in our final value conclusion. The Sales Comparison Approach provides a reasonable check on the value derived via the Cost Approach and Income Capitalization Approach. Based on our Complete Appraisal as defined by the Uniform Standards of Professional Appraisal Practice, we have developed an opinion that the °as -is" market value of the fee simple estate of the referenced property, subject to the assumptions, limiting conditions, certifications, and definitions, on November 9, 2001 was: SEVEN HUNDRED THOUSAND DOLLARS $700,000 Burger King - Columbia Heights, MN #210 Page 32 Industrial Park Redevelopment On May 10, 2004 the EDA and City Council approved the Schafer - Richardson, Predevelopment Agreement for the exclusive development rights in the Industrial Park. City staff has been meeting on a weekly basis with the Schafer - Richardson development team in order to keep all aspects of the project moving forward. The key issues that are presently being processed are: • Comprehensive Plan Amendments with Met Council • Process Environmental Assessment Worksheets • Initiate Rezoning • Parkway Design/Options • Sewer and Water needs analysis • Surface Water Management Modeling • Traffic Study • Complete Detailed Site Plan Drawings • Begin Tax Increment Financing Analysis Per the Predevelopment Agreement, the developers escrow, will be used for the payment of these development steps. An issue of major significance, Schafer - Richardson has just obtained a purchase agreement on the 10 %2 acre foundry site located at 3800 5th Street. RICHARD A. MERRILL DARRELL A. JENSEN JEFFREY S. JOHNSON RUSSELL H. CROWDER JON P. ERICKSON THOMAS P.MALONE MICHAEL F. HURLEY DOUGLAS G. SAUTER HERMAN L. TALLE CHARLES M. SEYKORA DANIEL D. GANTER, JR. BEVERLY K. DODGE JAMES D. HOEFT JOAN M. QUADE JOHN T. BUCHMAN SCOTT M. LEPAK Barna, Guzy & Steffen, Ltd. ATTORNEYS AT LAW 400 Northtown Financial Plaza 200 Coon Rapids Boulevard Minneapolis, MN 55433 -5894 (763) 780 -8500 FAX (763) 780 -1777 1- 800 - 422 -3486 www.bgslaw.com MEMORANDUM TO: Randy Schumacher, City of Columbia Heights FROM: Jim Hoeft, City Attorney RE: Conflict of Interest DATED: May 14, 2004 STEVEN G. THORSON ELIZABETH A. SCHADING WILLIAM F. HUEFNER BRADLEY A. KLETSCHER KRISTI R. RILEY WILLIAM D. SIEGEL JENNIFER C. THULIEN SMITH KARIN E. SIMONSON MATTHEW A. KOROGI EDWARD (TED) P. SHEU Retired ROBERT A. GUZY BERNARD E. STEFFEN 1931.2002 If a member of the decision - making body has a direct or indirect financial interest in the project or contract being considered, that member must abstain from voting. The member is not precluded from discussing the project or contract, but prior to any such discussion, the "interest" must be disclosed. Sometimes in this type of situation said member will actually step down from the body and participate in the discussion from the audience /podium. This is not required, but can be helpful to avoid confusion and keep the rolls clear. Applying the above to your specific situation: based upon my understanding that Council/EDA member Williams does have a financial interest in the proposed project, he must disclose his interest prior to any discussion and abstain from voting. How he participates in the discussion is open for consideration between the body and Mr. Williams. Please let me know if you have any further questions related to this matter. Thank you. Established 1938 -An EOE /AA Employer WORKSHEET The following sections are provided to identify the key questions that need to be answered. The questions include the most basic ones, including whether or not you still want to pursue the development of these facilities. They focus on the options related to the program for these facilities, what they should include and why. They also identify potential partners for the city in these ventures to allow a candid discussion of the pluses and minuses associated with each of these alternatives. Question Number 1. After reviewing the sections in the current comprehensive plan, do you believe that they are still an accurate representation of your goals and policies regarding the Community Center complex, and working relationships with the identified partners? If the answer is no, please jot down the points you disagree with and come prepared to share your opinions about how these goals and policies should be updated. Question Number 2. Do you believe that the city should pursue the development of a recreational facility? If the answer is no, please explain why not. If the answer is yes, please jot down the components, features and services that should be provided in such a facility. From the Desk of.... John W. Shardlow • President* 300 1" Ave. N. ' Suite 210 • Minneapolis., MN 55401 612- 339 -3300 • fax-612-337-5601 Question Number 3. If you believe the City should pursue the development of a recreational facility, discuss the pluses and minuses associated with each of the following options: A. City develops its own facility Pluses: City is in control of the process Start with a basic facility and add to it as possible, in the future The City gets to choose the location that works best for Columbia Heights The City can control the appearance of the facility City should take responsibility to satisfy its own recreational needs A City facility would unite the community — It would be a community focal point If the City were to take control, it would send a strong message to the Community — It would be a statement about commitment A City owned facility would allow the Recreation Dept. to better provide for what our kids need and want Tournaments that would be held at the facility would bring outsiders to the City and their experience with a quality facility would also send a positive message to the region about Columbia Heights Negatives: It might be harder to sell to the residents and meet community expectations Would it result in higher taxes? The community would be critical of that outcome The facility could be a money loser and will take some stake money If the City goes it alone, there is no opportunity to either share costs, or realize the benefits of joint programs Is the timing right now? Do we really know the right location? We have had inadequate citizen input This should have been done a long time ago The on -going operating expenses and maintenance costs could prove to be a burden If we go it alone, we can't share the risks with another entity and may not be able to meet some community needs A pool could add dramatically to costs B. City collaborates with the School District on a joint facility Pluses: There would be the ability to share costs and risks — both construction and operating This could prove to be the most cost effective provision of services to more people There would be the opportunity for Synergy (the whole being greater then the sum of the parts) There is a successful precedent for cooperation with the school district which could lead to the assumption that it would work well this time Tax payers would perceive this collaboration as adding value It is a logical collaboration, — both serve same population From the Desk of.... John W. Shardlow ' President • 300 1" Ave. N. • Suite 210 • Minneapolis., MN 55401 612- 339 -3300 • fax - 612- 337 -5601 This could present the opportunity to use their land This approach would be an easier sale to the public A shared use facility would result in greater efficiency of use — less duplication of services or facilities There would be the opportunity to leverage state money, a 60/40 match for capital investment The School District boundaries extend beyond the City limits, thus broadening the base for funding Negatives: There could be possible arguments about the location and types of facilities to be built There would be a difficult time determining the relative share of costs and there is the potential for on -going conflicts regarding scheduling It would likely hurt the District's pending bond issue, if there were two issues on the ballot We could lose a sense of community ownership, if the facility was located in a school building One group or the other should be in charge The High School is bad location due to parking The school has not served the community well Need to clearly defined use policies on an ongoing basis There is a precedent for failure in past ventures There is a distinct cultural difference between the city and the school board The Schools more possessive about their facilities It would present a challenge to retain Institutional memory regarding responsibilities, rights C. City collaborates with the City of Minneapolis, the YMCA, and the Boys and Girls clubs on a facility in northeast Minneapolis Pluses: Columbia Heights could make a small contribution and secure access to a great facility We could let them handle the expensive elements This is a way to provide access to big- ticket items — we could provide more amenities for our citizens This would present the opportunity for more creative funding, including private sources With a bigger base the costs could be spread more widely This would result in more programs — and more operational efficiency Contributions could be tax deductable There would be an Opportunity /possibility to draw money from a broader area The City could access greater expertise in facilities and program operations It appears that it is going to happen Negatives: Many of the same negatives associated with collaborating with the schools, the City would lose control, and lose the opportunity to establish a community focal point Historically residents would resist going to Northeast Minneapolis From the Desk of.... John W. Shardlow • President • 300 ls` Ave. N. • Suite 210 • Minneapolis., MN 55401 612- 339 -3300 • fax-612-337-5601 This solution doesn't necessarily solve the current programming needs and problems Citizens would have concerns about safety; whether this was perception or reality I am afraid that Columbia Heights would receive a low priority for programming and use Question Number 4: Is there a preferred site for a recreational facility? If the answer is yes, please share your thoughts about the relative merits of each of the following potential locations: A. The NEI site This is a wonderful site! The City already controls it, it is large and the current facility can't be reused It is currently tax- exempt It is a centralized location within the community The City could control the facilities It is vacant and ready to be developed I don't believe that re -use has not been explored enough This should be a housing site It has too much potential to be just a recreational facility This is a valuable site and could support tax base This is the best site This site presents the opportunity to build a potential town center B. Huset Park No- although maybe just gyms No — because of inconsistency with the approved master plan Yes, because of the positive relationships with other uses We could tear down some of what is there to make room for the facility It would be compatible with Murzyn Hall It could accommodate parking better If we added more industrial land it could work, otherwise it will be too tight It would conflict with the baseball fields This could be an option — but it really hinges on the NEI Site C. The High School Parking is a very real problem (mentioned multiple times) It is centrally located, but it would be more of an effort to get there The community would not perceive that they owned the facility if it was located at the High School There is inadequate space on the site Seniors would be uncomfortable going there If we moved one of the schools to the NEI site, then there would be enough room From the Desk of.... John W. Shardlow • President • 300 1" Ave. N. • Suite 210 • Minneapolis., MN.55401 612 - 339 -3300 • fax - 612- 337 -5601 D. Valley View Elementary School Parking is really bad Where would you put the building? It would have the same negatives as the High School The location is not as good It could displace some of the existing uses E. Other (please be specific) 39`" and Central — but I would rather keep the area commercial Question Number 5. Do you believe that the city should pursue the development of a city center? If the answer is no, please explain why not. Yes — we should invest in the City Yes, pending a more detailed review of the financials Yes — Yes No - not at this time, we already have enough proposals to improve community There are several things that should take a higher priority Yes — but the timing is critical Yes — timing critical Yes — but both timing and phasing are critical Yes — but phasing is key Not right now because neither the money, nor the community support is there Definitely yes — but with a phased in approach Question Number 6. If you answered yes to the idea of a new city center, what elements do you believe belong in that center? Please record your thoughts about each of the potential elements listed below, as well as any others that you would like the city council to consider. A. Library Yes — there would be great synergy with a gym Yes Yes Yes — but maybe, but not city run Yes Yes — but timing is critical 4 -5 years Not at this time Definitely yes — with coffee and plenty of couches Yes Yes From the Desk of.... John W. Shardlow • President • 300 1" Ave. N. • Suite 210 • Minneapolis., MN 55401 612- 339 -3300 • fax - 612- 337 -5601 Yes B. Police /Fire Depends on the evaluation of all of the issues associated with remarketing the existing facilities They are better served where they are Better served where they are; It represents a better use of space Better served where they are Not at this time It could make sense to locate them in the context of a comprehensive city center campus I like them where they are I am open — but they are pretty well served where they are Should be considered as part of a phased plan It would present the opportunity to redevelop the current site It might be possible in future, but it is adequate for now Wouldn't want to keep just for city hall C. Senior Housing Possible — but not too much Yes Yes Yes Yes (Huset Park) May need to take a good hard look at the demand, given everything built and in the pipeline No, not sure Good idea — would help to pay for it, but concerned about market demand Yes, if fire and police underneath it — but I am not really for it I agree with the concern about the lack of demand It might be too crowded D. Other License bureau Community meeting rooms Art space Theater Coffee — plenty of couches Please bring your worksheets to the meeting to support the discussion. Following the workshop on the 20'', the city staff will gather whatever additional information is relevant, given the direction provided at the meeting. We will also advise the council about opportunities for public input, tailored to the council's direction. From the Desk of.... John W. Shardlow • President • 300 1" Ave. N. ' Suite 210 • Minneapolis., MN 55401 612- 339 -3300 • fax-612-337-5601 From the Desk of.... John W. 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