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Home My WebLink AboutEDA AGN 02-15-05CITY OF COLUMBIA HEIGHTS 590 40th Avenue N.E.. Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692 Visit Our Website at: wwmci.cohtmbia-heights.mn, us EDA COMMISSIONERS Don Murzyn Jr. Patricia Jindra Bruce Kelzenberg Gary L. Peterson Bruce Nawrocki Bobby Williams Tammera Ericson ECONOMIC DEVELOPMENT AUTHORITY REGULAR MEETING 7:00 P.M., TUESDAY, FEBRUARY 15, 2005 CITY HALL, CONFERENCE ROOM 1 AGENDA 1. CALL TO ORDERfROLL CALL 2. PLEDGE OF A!~LEGIANCE.. e CONSENT AGENDA_. (These items are considered to be routine by the EDA Board of Commissioners and will be enacted as part of the Consent Agenda by one motion.) A. MOTION: Move to a rove the consent a enda items as listed below: 1) A rove EDA Meetin Minutes for Janua 25 2005. 2) A rove the Financial Re oft and Pa merit of Bills m PUBLIC HEARING A. Ado t Resolution 2005-03 Condemnation of Certain Pro ert for Redevelo ment MOTION: Move to close the public hearing. MOTION: Move to Adopt Resolution 2005-03, a Resolution Authorizing and Directing the Condenmation ,othf Certain Property lotchat~ed at 3755 University Avenue, 3700 5tb Street, 317 37tb Avenue, 620 39 Avenue and 450 38 Avenue for Redevelopment Purposes. B. Ado t Resolution 2005-04 Condemnation of Certain Pro er for Redevelo ment MOTION: Move to Close the Public Heating. MOTION: Adopt Resolution 2005-04, a Resolution Authorizing and Directing the Condemnation of Certain Property located at 3800 5th Street, 3901 5th Street, 515 38th Avenue and 519 38th Avenue for Redevelopment purposes. 5. ITEMS FOR CONSIDERATION_ A. Mr. Steak Property- 4545 Central Avenue. 6. ADMINISTRATIVE REPORTS. 7. ADJOURNMENT Walter R. Fehst, Executive Director H:\edaAgenda2005X2-15-2005 --------- The EDA does not discriminate on the basis of disability in the admission or access to, or treatment or employment in, its accommodation will be provided to allow individuals with disabilities to participate in all EDA services, programs, and activities. Auxiliary aids for handicapped persons are 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 MINUTES JANUARY 25, 2005 CALL TO ORDERfROLL CALL President, Murzyn called the meeting to order at 9:23 p.m. Present: Don Murzyn Jr., Gary L. Peterson, Bobby Williams, Bruce Nawrocki, Tammera Ericson, and Bruce Kelzenberg Absent: Patricia Jindra PLEDGE OF ALLEGIANCE OATH OF OFFICE Walter Fehst administered the Oath of Office to Gary L. Peterson, Bobby Williams and Bruce Nawrocki. ELECTION OF OFFICERS Motion by Ericson, second by Kelzenberg, to reinstate the current officers; Don Murzyn, Jr. for President; Pat Jindra for Vice President; and Bruce Kelzenberg for Secretary/Treasurer. All ayes. Motion Carried. CONSENT AGENDA Approval of Minutes Financial Report and Payment of Bills Motion by Ericson, second by Kelzenberg, to Adopt the consent agenda items as listed. All ayes. Motion Carried. *Ericson stated items 5B & 5C staff would like to table due to the addition of 5E. ITEMS FOR CONSIDERATION Resolution 2005-02~ Amend and Restate the Bylaws Streetar stated the City Council made a motion at their Januaryl Oth meeting to change the City Council work sessions to the first Monday and the third Tuesday of each month. They also moved the EDA and HRA meetings to the fourth Tuesday of each month. Therefore, the EDA Bylaws need to be amended at this time and stated there is a conflict with the February meeting, which he asked Cher Bakken to explain. Bakken stated in the months of February, March and November the first day of the month starts on a Tuesday. For example, in February the fourth Tuesday would be February 22~'t. The City Council work session would be held one week apart, on the 7th and ]5th, with the 15th falling the night after a City Council meeting. The consensus of the board was to move the EDA meeting in the month of February to the 3rd Tuesday, February 15th and the worksession to be held on the 22na. Economic Development Authority Meeting Minutes January 25, 2005 Page 2 of 5 Motion by Ericson, second by Peterson, to Adopt Resolution 2005-02, a Resolution to amend and Restate the Bylaws of the Columbia Heights Economic Development Authority. All ayes. Motion Carried. Resolution 2005-03~ Condemnation of Certain ProperS, for Redevelopment Item Tabled per the addition of 5E. Resolution 2005-04~ Condemnation of Certain Proper ,ty for Redevelopment Item Tabled per the addition of 5E. Redevelopment Plan for Presentation Streetar stated the block on the west side of Central Avenue includes, from south to north, the Taco Bell, Carwash, Udupi Restaurant, Barbershop, Exotic Pet Store and LaCaberna Bar and Grill. The Welsh Company is representing the owner of the now vacant, Exotic Pet store to redevelop the corner. The owners of the Barbershop and LaCaberna have indicated their desire to sell. Welsh stated a redevelopment would most likely be a three tenant commercial service, retail budding. Welsh asked the City if we are interested in supporting the redevelopment of this corner with financial assistance. This is a good opportunity to improve the look of Central Avenue, as well as preserve the 55 million dollars of investment in housing on the Kmart site. Staff is looking for board approval to direct staff to work with 14/elsh to prepare a redevelopment plan for presentation at a future meeting. Streetar stated the developer has talked about a strip mall, possible city liquor store, etc. Murzyn stated it is a great opportunity for the City and would like to hear more from the developer. Williams stated he would like to see what the developer's ideas are. Nawrocki stated the City bought the homes on 37tn & Central, Burger King, MGS, and the NEI building for redevelopment, but the EDA has no money. Somewhere we need to set some priorities for purchasing property and felt the developer would want a few million dollars from the City to redevelop this area. Murzyn asked would they be asking for some TIF funding if they aren't buying the property. Fehst stated we fund projects under the Pay as You Go TIF financing system, so if they don't generate tax, they don't receive any funds and stated when we have someone that is interested in buying and developing the site, we shouldn 't pass it up. Ericson stated maybe we could send the message to Welsh that we have some mixed feelings and would like to see some plans and ideas for the site. Murzyn requested Streetar to bring the boards comments to Welsh and present the information at the February 15th meeting. Streetar stated staff could arrange this. Economic Development Authority Meeting Minutes Januap~ 25, 2005 Page 3 of 5 Resolution 2005-05, Scheduling a Public Hearing on the use of Eminent Domain Schumacher stated this Resolution will authorize a Public Hearing to be held on February 15th EDA meeting on the use of Eminent Domain Proceedings to acquire property for redevelopment pursuant to the Downtown CBD Redevelopment project in the Industrial Park Redevelopment Area. Motion by Williams, second by Ericson, to Adopt Resolution 2005-05, a Resolution Scheduling a Public Hearing on use of Eminent Domain Proceedings to acquire property for redevelopment pursuant to the Downtown CBD Redevelopment Project. All ayes. Motion Carried. ADMINISTRATIVE REPORTS Industrial Park Redevelopment Schumacher stated the City's application for the Contamination Clean-up Grant in Phase II of the Columbia Heights Industrial Park was approved for funding. Of the twenty-eight applications submitted, Columbia Heights ranked number two with the State and number six with the Metropolitan Council With this it brings the total grant dollars received on this project from the Metropolitan Council and the State of Minnesota in the last two years to over $2,205,000. These dollars will be earmarked for removal and clean up of the old foundry and related out buildings at 3800 5tn Street. Demolition of the buildings in Phase I are proceeding well, with the old Rayco building at 3801 5th Street completely removed, asbestos abatement will be completed by the end of ,lanuary in the Honeywell building and demolition will commence the first week of February. Staff has been working closely with the developer and MN Dot to develop plans and specifications for the parkway system. Preliminary drawings will be available for review within the next 30 days. Kmart Streetar stated the first of three loft condominium buildings are almost fully framed, the developer indicated that 16 of 67 units are sold, with sales between 192,000 and 335,000, the developer and the City's financial consultant, Mark Ruff from Ehlers, met to discuss financing for the second phase that includes the hotel on the current Saver's site. The developer indicated that in order for the hotel to be financially feasible at least five million dollars in public financing would be required, which would include free land with a value of l.5 million, a 200 plus stall parking deck at 2 million, and cash of l.5 million. In addition, the City would be requested to bond for the 5 million. The owner of the Savers site will only sell for 4. 3 million dollars, an amount significantly more than the property is worth. The developer would like to investigate the possibility of building the hotel south of 47tn Avenue, the area that includes BW3, Welle Auto and the small strip mall. Streetar stated the possibility of a hotel on the savers site, has died as they need free land, 1.5 million in cash, 200plus stalls of parking and 4.3 million dollars, which Nedegaard has said no to. He told Nedegaard he would bring to the EDA the possibility of the hotel located south of 47th Avenue. Nawrocki stated if they don't develop the savers site, won't that screw up the access to Grand Central Lofts from 49th. Streetar stated Nedegaard believes he can buy enough property from Economic Development Authority Meeting Minutes January 25, 2005 Page 4 of 5 the owners of the savers site to get the road access. Nedegaard has worked with the City in good faith for the past year to satisfy our needs and he may come to the city for help in obtaining the property for the access or through eminent domain acquire the property. Nedegaard would pay the condemnation amount. Mr. Steak Streetar stated Mr. Steak's owner would like to sell his building and get out of the restaurant business, as the restaurant's concept is worn and the clientele are mostly retired residents. He has been working with Mary and Mickey Rooney, the Real Estate Brokers who are listing the property. At this time he is willing to sell to the City for $600,000. Mr. Steak's owner stated if he didn't sell to the City the property would probably be sold for fast food. The EDA may want to purchase the property, demolish the building and remarket the property for redevelopment purposes. Mr. Rooney stated Mr. Steak has been a great asset to Columbia Heights over the years, there was an appraisal of $750,000, then dropped to $650,000 and would sell it for $600,000 to the City. Mary Rooney thanked the City for the opportunity to present this offer and Mr. Streetar for all his help. Mr. Wolf had an appraisal on his property and with the cold weather he is loosing business and would like to ask the City for help. Streetar stated he has been contacting various companies to see if there is any interest in the property, including Boarder Foods, which was considering redeveloping their Taco Bell restaurant on the corner of 49th and Central. Mickey Rooney stated he talked to the owners of the Northeast Bank about their interest in the site, but they still are under a lease. Williams stated, he would be in favor of Boarder Foods purchasing and developing the site or possibly the site would be large enough for a new liquor store. Fehst stated it was too shallow, which would not allow enough parking spots. Murzyn stated this is a good opportunity for the City and directed staff to continue working on this. 39th & 37th and Central Streetar stated at the October 2003 EDA meeting $5,700 was authorized by the board directing staff to work with DSU on a scope of work for the 37th & Stinson redevelopment site. Planning begins for the area along Central Avenue between 37th and 40th Avenue. The area is ripe for reuse and redevelopment. In the last few years the City has acquired and/or demolished two single-family homes, and two commercial buildings. In addition, the City has improved Central Avenue to include the road, sidewalk, streetscaping and traffic safety. Currently there is a small run down office building, five non-conforming single-family homes, including Michael Anthony 's Salon who has indicated they are willing to sell to the City. Staff has been working with DSU and would like to begin a 90 to 120process to plan for the redevelopment of this area. DSU's cost for services would be paid for using Metropolitan Council grant funds, the City received over two years ago. The outcome would be a 5-7year road map of what the City wants to accomplish along this stretch of Central Avenue. Streetar stated we need a plan for the City, Economic Development Authority Meeting Minutes January 25, 2005 Page 5 of 5 what are we going to do once the business develops the site. He talked to Hoisington Koegler, which is backlogged. Staff recommends DSU as they are working on many of the same type of plans in the downtown area and have time. They are asking for $20, O00 for the plan. Aldi's is interested in the property on the corner of 37th and Central. Streetar stated if we find contamination on the site, we would have Aldi's do the Contamination Clean up. Fehst stated we could get into an agreement with Aldi 's where they pay for so much of the clean up and we pay for anything go over that amount. Motion by Ericson, second by Kelzenberg, to direct staffto enter into an agreement with DSU in the amount of $20,000 for the development of 37th to 40th on Central. All ayes. Motion Carried. ADJOURNMENT President, Murzyn, Jr., adjourned the meeting at 10:48 p.m. Respectfully submitted, Cheryl Bakken Community Development Secretary H:~EDAminutes2005\l-25-2005 COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meeting of: February 15, 2005 AGENDA SECTION: Consent Agenda ORIGINATING EXECUTIVE NO: DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Financial Report and Payment of Bills BY: Cher Bakken BY: DATE: February 7, 2005 BACKGROUND: The bound Financial Report for the month of January 2005 draft Resolution 2005-06 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 January 31, 2005. RECOMMENDATION: Staffwill 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 2005-06, Resolution of the Columbia Heights Economic Development Authority (EDA) approving the Financial Statement and Payment of Bills for the month of January 2005. EDA ACTION: H:\EDAConsent2005\January Fin Rep 2005 EDA RESOLUTION 2005-06 RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR JANUARY 2005AND PAYMENT OF BILLS FOR THE MONTH OF JANUARY OF 2005. 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 January of 2005 and the list of bills for the month of January of 2005 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 ,2005. MOTION BY: SECONDED BY: AYES: NAYS: Don Murzyn, Jr. President Attest by: Cheryl Bakken, Assistant Secretary H:LResolutions2005\EDA2005-06 COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meeting of: February 15, 2005 AGENDA SECTION: Public Heating ORIGINATING EXECUTIVE NO: 4-A DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Adopt Resolution 2005-03, Authorizing and BY: Randy Schumacher BY: Directing the Condemnation of Certain Property located DATE: February 10, 2005 at 3755 University, 3700 5th Street, 317 37th Avenue, 620 39th Avenue and 450 38th Avenue for Redevelopment Purposes BACKGROUND: Prior to taking action on the proposed condemnation re ., Heights Economic Development Authority is required to hold a Public Heating to take input on this issue. The Contract for Private Redevelopment between the Columbia Heights Economic Development Authority, the City of Columbia Heights and Huset Park Development Corporation (Schafer Richardson the Developer), requires the developer to voluntarily acquire each of the parcels in the redevelopment area. I have attached a copy of the developer's letter that summarizes their efforts over the last four months to voluntarily acquire property in the redevelopment area. Unfortunately, despite a good faith effort, they have been unable to acquire several of the necessary properties. Therefore, the developer is requesting that the EDA and the City proceed to acquire all such parcels by means of negotiations or through its powers of eminent domain. Staff is satisfied that the developer has met the intent and conditions of the development agreement and recommend support for Resolution 2005-03. In addition, I have attached the section of the Schafer Richardson Development Agreement that outlines the required acquisition procedure. It also details the process in which the developer is required to pay for the entire taking procedure. RECOMMENDATION: Staff recommends Adoption of Resolution 2005-03, Authorizing and Directing the Condemnation of Certain Property for Redevelopment. RECOMMENDED MOTION: Move to close the Public Hearing. RECOMMENDED MOTION: Adopt Resolution 2005-03, a Resolution Authorizing and Directing the Condemnation of Certain Property located at 3755 University Avenue, 3700 5th Street, 317 37th Avenue, 620 39th Avenue and 450 38th Avenue for Redevelopment Purposes. Attachments EDA ACTION: h:\consent Form2005\EDA Res.2005-03 Condemnation-Ind Pk Schafer · Richardson December 30, 2004 Mr. Randy Schumacher City of Columbia Heights 590 40th Ave NE Columbia Heights, MN 55421-3835 RE: Property Acquisitions Dear Randy: As specified in section 3.2 of the Contract for Private Redevelopment (the "Contract") by and between the Columbia Heights Economic Development Authority ("EDA'), the City of Columbia Heights ("City"), and Huset Park Development Corporation ("HPD"), this letter describes HPD's efforts to voluntarily acquire each of the parcels in the redevelopment area. Table 1 below, and the notes thereto, describe and summarize HPD's efforts in this regard in recent months. Unfortunately however, despite its extensive, good-faith efforts to do so, HPD has been unable to acquire several of the necessary properties. Consequently, and as specified in section 3.2 of the Contract, this letter constitutes HPD's formal request that the EDA (and City, for any parcels or portions thereof needed for Parkway right of way) proceed to acquire all such parcels - whether by means of negotiation or the exercise of its powers of eminent domain. Table 1 Address Property PIN See Note 550 39th Avenue NE CHC bldg 35-30-24-34-0040 1 ~ CHC land 35-30-24-43-0060 1 620 39th Avenue NE Buckles 35-30-24-43-0047 2 3801 5th Avenue NE Rayco bldg 35-30-24-34-0024 3 Rayco land 35-30-24-34-0039 3 515 38th Avenue NE Pearo' 35-30-24-34-0014 4 517 38th Avenue NE Pearo 35-30-24-34-0013 4 3800 5th Street NE Foundry 35-30-24-34-0041 5 3901 5th Street NE Foundry 35-30-24-34-0035 5 { 450 38th Avenue NE Smith 35-30-24-34-0002 6 317 37th Avenue NE Greif 35-30-24-34-0004 7 3700 5th Street NE Greif 35-30-24-34-0003 7 · Real Estatz Devel¢',pment 1~ Construction 500 Banks Buiidi::~ 615 First A'Celltle NE Minneapolis, 3. IN 55413 Phone 612.'~' 1.3000 .:,~ Leasing & .\.lanagement Fax 612.359.5858 www. sr-re.com Mr. Randy Schumacher City of Columbia Heights December 30, 2004 Page 2 1. HPD, or its affiliates, owns this property. Efforts by the EDA and City are not needed to acquire it. 2. HPD had this property appraised early in the fall and sent the owner a Purchase Agreement based on its appraised value on October 13t~. HPD followed up with a second letter sent on November l0th ,which proposed mediation with a neutral mediator. HPD met with Mr. Buckles on November 18th. Following that meeting, HPD made numerous phone calls during this time and sent the owner an updated Purchase Agreement incorporating the appraised value of fixtures and equipment on December 23fa. The owner has not responded. HPD does not believe its efforts to acquire this property_, will be successful, and requests efforts to do so by the EDA and Ci _ty. 3. HPD owns this property. Efforts by the EDA and City are not needed to acquire it. 4. HPD and the owner reached a verbal agreement in principle for the acquisition of the property in late September, and a Purchase Agreement based on that agreement was sent on October 15th. HPD sent the owner a follow-up letter suggesting mediation with a neutral mediator on December 20th. In the meantime, I-IPD and the Owner have also had numerous phone.conversations but have not yet reached agreement. Although we believe HPD's efforts to acquire this property, voluntarily will ultimately be successful, because no binding agreement has been reached to date, we request that the EDA and Ci_ty begin efforts to acquire the Property_. 5. HPD and the owner reached a verbal agreement in principle for the acquisition of the property in late-September, and a Purchase Agreement based on that agreement was sent on October 4th. HPD sent the owner a follow-up letter suggesting mediation with a neutral mediator on December 20th. HPD and the Owner have also had numerous phone conversations during this time. Although we believe HPD's efforts to acquire this property_ voluntarilv will ultimately be successful, because no binding agreement has been reached to date, we request that the EDA and City begin efforts to acquire the Property.. 6. I-IPD had this property appraised early in the fall and sent the owner a Purchase Agreement based on its appraised value on October 13th. HPD followed up with a second letter sent on November 10th, which proposed mediation with a neutral mediator. Although HPD had hoped to Send the owner an updated Purchase Agreement incorporating the appraised value of fixtures and equipment, because the appraiser was not allowed access to the property we were unable to do. HPD also made numerous phone calls during this time, but the owner has not been responsive. HPD does not believe its efforts to acquire this property_ will be successful, and requests efforts to do so bv the EDA and Ci _ty. 7. HPD has had repeated communication with the owner of this property and sent a Purchase Agreement based on a verbal agreement in principle on October 15th. HPD Mr. Randy Schumacher City of Columbia Heights December 30, 2004 Page 3 followed up with a letter suggesting mediation with a neutral mediator sent on December 20th. HPD and the owner have continued to have numerous phone conversations, but an agreement has not yet been reached. Although we believe t-IPD's efforts to acquire this proper _ty voluntarily will be successful, because no binding agreement has been reached to date, we request that the EDA and City be~n efforts to acquire the Property_. Randy, please let me know if I can answer any questions. Sincerely, David R. Frank Project Manager CC: Steve Bubul John He_,:man Evan Rice Mark Ruff Brad Schafer *Schafer Richardson Development Agreement section that o!]t!ines the req,uired acquisition procedure. Section 3.2. Authority Parcels. (a) I£ the Redeveloper notifies the Authority in writing on or after December I, 2004 that it has been unsuccessful in accomplishing acquisition of Parcels D, E, F and G voluntarily after commercially reasonable efforts (such notice to include a detailed description of the Redeveloper's acquisition efforts), then the Authority (and City, for any Parcels or portions thereof needed for Parkway fight of way) will proceed to acquire all such Parcels (hereinafter referred to as "Authority Parcels") through negotiation or the exercise of its powers of eminent domain to the extent permissible under law. The Authority and City will utilize so-called "quick take" powers under Minnesota Statutes Ch. 117 to the extent needed or desirable to allow the redevelopment described in this Agreement to proceed in accordance with the overall schedule. The parties will cooperate and consult with one another on any condemnation actions and specifically on the final price to be paid in settlement of any condemnation action. (b) During the pendency of any Authority actions to acquire any Authority Parcel, the Redeveloper shall be required to promptly pay all expenses incurred by the Authority in connection with the prosecution thereof, including Iegal, survey, rifle, appraisal, relocation, process service, court costs, and similar expenses (subject to reimbursement as a Public Redevelopment Cost in acCordance with Section 3.8). The Authority shall, not more often than monthly during the pendency of the action, furnish the Redeveloper with a written itemized statement of all such expenditures. Redeveloper shall have two weeks from the receipt of such statement to pay its share of the same. (c) Not later than five days prior to any date on which the Authority is required to deposit any amount into court to obtain title and possession to any Authority Parcel, Redeveloper shall deliver to the Authority 100 percent of the amount of any such deposit or payment. The Authority shall then have the right, and subject to the terms and conditions hereof, the obligation to use such funds to make such deposit or such payments. The Authority shall have no obligation to repay such funds received, deposited or paid pursuant to this Agreement should the redevelopment covered by this Agreement not be completed for any reason, except to the extent provided otherwise in Section 3.2(e) hereof. BOARD OF COMMISSIONERS COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY CITY OF COLUMBIA HEIGHTS COUNTY OF ANOKA STATE OF MINNESOTA RESOLUTION NO. 2005-03 RESOLUTION AUTHORIZING AND DIRECTING THE CONDEMNATION OF CERTAIN PROPERTY FOR REDEVELOPMENT PURPOSES WHEREAS, the Columbia Heights Economic Development Authority ("Authority") is a public body corporate and politic established pursuant to Minnesota Statutes, Sections 469.090 to 469.1081 (hereinafter referred to as the "Act"); and WHEREAS, the Board of Commissioners is the official governing body of the Authority; and WHEREAS, the Authority was created pursuant to the Act and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Columbia Heights ("City"); and WHEREAS, the City and the Authority (as successor to the Housing and Redevelopment Authority in and for the City of Columbia Heights) have undertaken a program to promote redevelopment of land that is characterized by blight and blighting factors within the City, and in this connection the Authority administers a redevelopment project known as the Downtown CDB Redevelopment Project ("Project") pursuant to Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA Act"); and WHEREAS, pursuant to the Act and the HRA Act, the Authority is authorized to acquire real estate by exercising the power of eminent domain under and pursuant to Minn. Stat., Ch. 117, and to undertake certain activities to facilitate the redevelopment of real property by private enterprise; and WHEREAS, within the Project, the City and Authority have created the Huset Park Area Tax Increment Financing District ("TIF District") in order to facilitate redevelopment of certain property in the Project; and WHEREAS, the Authority and HUSET PARK DEVELOPMENT CORPORATION, a Minnesota corporation ("Redeveloper") have previously entered into a Contract for Private Redevelopment dated as of October 25, 2004, (the "Contract for Private Redevelopment") regarding redevelopment of the property described in Exhibit A attached hereto and other property; and RJL-256304v2 1 CL205-23 WHEREAS, the Redeveloper, City and Authority have taken various actions in furtherance of the Project, pursuant to the Preliminary Development Agreement and Contract for Private Redevelopment, all of which indicate the Project is feasible and desirable, including, but not limited to, environmental, blight and economic studies, determination of needed public infrastructure, agreements to acquire and acquisition of property, relocation analysis and land use planning; and WHEREAS, the Authority believes that the environmental remediation and redevelopment of the Redevelopment Property pursuant to the Contract for Private Redevelopment, and fulfillment generally of the Contract for Private Redevelopment, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the real estate described in Exhibit A attached hereto and incorporated herein (collectively, "Subject Property") is located within the Project, as presently constituted, and is among the parcels which are to be redeveloped pursuant to the Contract for Private Redevelopment; and WHEREAS, on October 25, 2004, by Resolution No. 2004-13, the Board of Commissioners approved, established and adopted a Modification (the "Project Plan Modification") to the Downtown CBD Revitalization Plan for the CBD Redevelopment Project (the "Project Area"), found that the adoption of the Plans conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the State of Minnesota which is already built up and that the adoption of the proposed Plans will help provide life-cycle housing for citizens of the City, and to clean up polluted soils, buildings, and groundwater, and thereby serves a public purpose; and WHEREAS, in said Resolution No. 2004-13, the Board of Commissioners found that the Plans will afford maximum oppommity, consistent with the sound needs for the City as a whole, for the development or redevelopment of the Project Area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible; and WHEREAS, in said Resolution No. 2004-13, the Board of Commissioners found that the TIF District portion of the Project Area is a "blighted area" within the meaning of Minn. Stat., §469.02, Subd. 11, and that acquisition, clearance, remediation and related activities to redevelop the TIF District portion of the Project Area in accordance with the Project Plan and the TIF Plan constitute a "redevelopment project" within the meaning of Minn. Stat. §469.002, Subd. 14; and WHEREAS, in accordance with Section 3.2 of the Contract for Private Redevelopment, the Redeveloper has notified the Authority in writing that (a) the Redeveloper has been unsuccessful in accomplishing acquisition of the Subject Property voluntarily after commercially reasonable efforts to do so; and (b) that such efforts included a written offer to owners of all such parcels to acquire such parcels for a price approved by the Authority as reasonable and an offer to mediate; and RJL-256304v2 2 CL205-23 WHEREAS, the Board of Commissioners of Authority hereby finds that the Redeveloper's efforts to voluntarily acquire the Subject Property were reasonable and satisfy the requirements for doing so under the Contract for Private Redevelopment; and WHEREAS, acquisition of the Subject Property by the Authority is essential in order to eliminate blight and implement the Project; and WHEREAS, the Board of Commissioners finds that redevelopment of the Subject Property consistent with the Project is necessary, convenient, desirable, for a public purpose, in the best interests of the citizens of the City and will promote the general health, welfare and safety of the community; and WHEREAS, the City also desires to acquire portions of the Subject Property for street purposes; and WHEREAS, the Board of Commissioners finds that it is in the best interest of both the Authority and the City if the City proceeds to acquire all of the Subject Property and then convey to the Authority the portions thereof not required by the City for street purposes ("Remainder") so that the Authority may redevelop the Remainder pursuant to the Contract for Private Redevelopment; and WHEREAS, the Board of Commissioners finds that the funding and construction schedule for the redevelopment pursuant to the Contract for Private Redevelopment makes it necessary to acquire title to and possession of the Subject Property prior to the filing of the final report of the condemnation commissioners to be appointed by the district court. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that: 1. It is necessary that the Subject Property be acquired in fee simple absolute for the stated public purposes through the exercise of the power of eminent domain. 2. The Authority's Attorney is hereby authorized and directed to take all steps necessary to acquire the Subject Property, including, if necessary, by use of eminent domain proceedings, pursuant to Minn. Stat. § 117.042, prior to issuance of an award of damages by Court-Appointed Commissioners. 3. The City Council is hereby requested to (a) authorize and direct the Authority's attorney to commence eminent domain proceedings to acquire all of the Subject Property in the name of the City; and (b) authorize and direct its officers to convey to the Authority the portion of the Subject Property which is not required for City purposes ("Remainder") so that the Remainder may be redeveloped in accordance with the Contract for Private Redevelopment. RJL-256304v2 3 CL205-23 Adopted by the Board of Commissioners of the Columbia Heights Economic Development Authority, Columbia Heights, Minnesota this __ day of ,2005. ATTEST: Don Murzyn, Jr., President Walter Fehst, Executive Director RJL-256304v2 4 CL205-23 EXHIBIT A Legal Descriptions of Properties To Be Acquired by Eminent Domain Proceedings (collectively, "Subj ect Property") Parcel E Owner: Greif The street addresses of Parcel E are 3755 University Avenue NE, 3700 - 5th Street NE and 317- 37th Avenue NE, Columbia Heights, Minnesota 55421. The property identification numbers for Parcel E are: 35-30-24-34-0003 (3700 5th Street NE) and 35-30-24-34-0004 (317 - 37th Avenue NE) Parcel F Owner: Buckles The street address of Parcel F is 620 - 39th Avenue NE, Columbia Heights, Minnesota 55421. The property identification number for Parcel F is: 35-30-24-43-0047 The legal description of Parcel F is as follows: Lots 1 and 2, Block 3, 2na Subdivision of Block F, Columbia Heights Annex, together with that portion of the North ½ of 38th ½ Avenue Northeast abutting said Lots, heretofore vacated Together with vacated and to be vacated streets and alleys accruing thereto upon vacation and appurtenant easements if any. According to the map or plat thereof on file and of record in the office of the County Recorder in and for Anoka County, Minnesota Parcel G Owner: Smith The street address of Parcel G is 450 - 38th Avenue NE, Columbia Heights, Minnesota 55421. The property identification number for Parcel G is: 35-30-24-34-0002 RJL-256304v2 A-1 CL205-23 The legal description of Parcel G is as follows: Lot 3, Auditor's Subdivision No. 50 Together with vacated and to be vacated streets and alleys accruing thereto upon vacation and appurtenant easements if any. According to the map or plat thereof on file and of record in the office of the County Recorder in and for Anoka County, Minnesota. RJL-25631Mv2 A-2 CI_205-23 COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA) Meetin of: February 15, 2005 AGENDA SECTION: Public Hearing ORIGINATING ' EXECUTIVE NO: 4-B DEPARTMENT: EDA DIRECTOR APPROVAL ITEM: Adopt Resolution 2005-04, Authorizing BY: Randy Schumacher BY: and Directing the Condemnation of Certain DATE: February 10, 2005 Property located at 3800 and 3901 5th Street and 515 and 519 38th Avenue for Redevelopment Purposes BACKGROUND: Prior to taking action on the proposed condemnation resolution, the Columbia Heights Economic Development Authority is required to hold a Public Hearing to take input on this issue. The Contract for Private Redevelopment between the Columbia Heights Economic Development Authority, the City of Columbia Heights and Huset Park Development Corporation (Schafer Richardson the Developer), requires the developer to voluntarily acquire each of the parcels in the redevelopment area. I have attached a copy of the developer's letter that summarizes their efforts over the last four months to voluntarily acquire property in the redevelopment area. Unfortunately, despite a good faith effort, they have been unable to acquire several of the necessary properties. Therefore, the developer is requesting that the EDA and the City proceed to acquire all such parcels by means of negotiations or through its powers of eminent domain. Staff is satisfied that the developer has met the intent and conditions of the development agreement and recommend support for Resolution 2005-04. In addition, I have attached the section of the Schafer Richardson Development Agreement that outlines the required acquisition procedure. It also details the process in which the developer is required to pay for the entire taking procedure. RECOMMENDATION: Staff recommends Adoption of Resolution 2005-04, Authorizing and Directing the Condemnation of Certain Property for Redevelopment. RECOMMENDED MOTION: Adopt Resolution 2005-04, a Resolution Authorizing and Directing the Condemnation of Certain Property located at 3800 5th Street, 3901 5th Street, 515 38th Avenue and 519 38th Avenue for Redevelopment Purposes. Attachments EDA ACTION: h:\consent Form2005\EDA Res. 2005-04 Condemnation-Ind Pk2 · Schafer · · Richardson December 30, 2004 Mr. Randy Schumacher City of Columbia Heights 590 40th Ave NE Columbia Heights, MN 55421-3835 RE: Property Acquisitions Dear Randy: As specified in section 3.2 of the Contract for Private Redevelopment (the "Contract") by and between the Columbia Heights Economic Development Authority ("EDA'), the City of Columbia Heights ("City"), and FIuset Park Development Corporation ("I-IPD"), this letter describes I-{PD's efforts to voluntarily acquire each of the parcels in the redevelopment area. Table 1 below, and the notes thereto, describe and summarize I-{PD's efforts in this regard in recent months. Unfortunately however, despite its extensive, good-faith efforts to do so, HPD has been unable to acquire several of the necessary properties. Consequently, and as specified in section 3.2 of the Contract, this letter constitutes HPD's formal request that the EDA (and City, for any parcels or portions thereof needed for Parkway right of way) proceed to acquire all such parcels -whether by means of negotiation or the exercise of its powers of eminent domain. Table 1 Address Property PIN See Note 550 39th Avenue NE CHC bldg 35-30-24-34-0040 ~ CHC land 35-30-24-43-0060 620 39th Avenue NE Buckles 35-30-2443-0047 2 3801 5th Avenue NE Rayco bldg 35-30-24-34-0024 3 Rayco land 35-30-24-34-0039 3 515 38th Avenue NE Pearo 35-30-24-34-0014 4 517 38th Avenue NE Pearo 35-30-24-344013 4 3800 5th Street NE Foundry 35-30-24-34-0041 5 3901 5th Street NE Foundry 35-30-24-34-0035 5 [ 450 38th Avenue NE Smith 35-30-24-34-0002 6 317 37th Avenue NE Greif 35-30-24-34-0004 7 3700 5th Street NE Greif 35-30-24-34-0003 7 · Real Estatz Develc, pment '~' Construction 500 Banks BuiJdi::: 615 First Avenue NE Minneapolis, .\IN 55413 Phone 612. q ' 1.3000 Leasing & .\lanagement I7:2x (~ ] 21359..{858 xc~'w, sr-re.com Mr. Randy Schumacher City of Columbia Heights December 30, 2004 Page 2 1. HPD, or its affiliates, owns this property. Efforts by the EDA and City are not needed to acquire it. 2. HPD had this property appraised early in the fail and sent the owner a Purchase Agreement based on its appraised value on October 13th. HPD followed up with a second letter sent on November 10t~ ,which proposed mediation with a neutral mediator. HPD met with Mr. Buckles on November 18t~. Following that meeting, HPD made numerous phone calls during this time and sent the owner an updated Purchase Agreement incorporating the appraised value of fixtures and equipment on December 23~d. The owner has not responded. HPD does not believe its efforts to acquire this proper _ty will be successful, and requests efforts to do so bv the ED^ and Ci _ty. 3. HPD owns this property. Efforts by the EDA and City are not needed to acquire it. 4. HPD and the owner reached a verbal agreement in principle for the acquisition of the property in late September, and a Purchase Agreement based on that agreement was sent on October 15th. t-IPD sent the owner a follow-up letter suggesting mediation with a neutral mediator on December 20th. In the meantime, HPD and the Owner have also had numerous phone.conversations but have not yet reached agreement. Although we believe HPD's efforts to acquire this property_ voluntarily will ultimately be successful, because no binding agreement has been reached to date, we request that the EDA and Ci~ begin efforts to acquire the Property_. 5. HPD and the owner reached a verbal agreement in principle for the acquisition of the property in late-September, and a Purchase Agreement based on that agreement was sent on October 4th. t-IPD sent the owner a follow-up letter suggesting mediation with a neutral mediator on December 20th. HPD and the Owner have also had numerous phone conversations during this time. Although we believe HPD's efforts to acquire this property voluntarily will ultimately be successful, because no binding agreement has been reached to date, we request that the EDA and City begin efforts to acquire the Property.. 6. HPD had this property appraised early in the fall and sent the owner a Purchase Agreement based on its appraised value on October 13th. HPD followed up with a second letter sent on November 10th,which proposed mediation with a neutral mediator. Although HPD had hoped to send the owner an updated Purchase Agreement incorporating the appraised value of fixtures and equipment, because the appraiser was not allowed access to the property we were unable to do. HPD also made numerous phone calls during this time, but the owner has not been responsive. HPD does not believe its efforts to acquire this property, will be successful, and requests efforts to do so bv the EDA and Ci _ty. 7. HPD has had repeated communication with the owner of this property and sent a Purchase Agreement based on a verbal a~eement in principle on October 15th. HPD Mr. Randy Schumacher City of Columbia Heights December 30, 2004 Page 3 followed up with a letter suggesting mediation with a neutral mediator sent on December 20t~. HPD and the owner have continued to have numerous phone conversations, but an agreement has not yet been reached. Although we believe HPD's efforts to acquire this property voluntarily will be successful, because no binding agreement has been reached to date, we request that the EDA and City begin efforts to acquire the Propert_v. Randy, please let me know if I can answer any questions. Sincerely, David R. Frank Proiect Manager CC; Steve Bubul John Herman Evan Rice Mark Ruff Brad Schafer *Schafer Richardson Development Agreement section that outlines the require~l ,.acquisition procedure. Section 3.2. Authority, Parcels. (a) If' the Redeveloper notifies the Authority in writing on or after December I, 2004 that it has been unsuccessful in accomplishing acquisition of Parcels D, E, F and G voluntarily after commercially reasonable efforts (such notice to include a detailed description of the Redeveloper's acquisition efforts), then the Authority (and City, for any Parcels or portions thereof needed for Parkway fight of way) will proceed to acquire all such Parcels (hereinafter referred to as "Authority Parcels") through negotiation or the exercise of its powers of eminent domain to the extent permissible under law. The Authority and City will utilize so-called "quick take" powers under Minnesota Statutes Ch. 117 to the extent needed or desirable to allow the redevelopment described in this Agreement to proceed in accordance with the overall schedule. The parties will cooperate and consult with one another on any condemnation actions and specifically on the £mal price to be paid in settlement of any condemnation action. (b) During the pendency of any Authority actions to acquire any AuthoritY Parcel, the Redeveloper shall be required to promptly pa7 all expenses incurred by the AuthoritY in connection with the prosecution thereof, including legal, survey, rifle, appraisal, relocation, process service, court costs, and similar expenses (subject to reimbursement as a Public Redevelopment Cost in accordance with Section 3.8). The Authority shall, not more often than monthly during the pendency of the action, furnish' the Redeveloper with a wr/tten itemized statement of all such expenditures. Redeveloper shall have two weeks from the receipt of such statement to pay its share of the same. (c) Not later than five days prior to any date on which the Authority is required to deposit any amount into court to obtain title and possession to any Authority Parcel, Redeveloper shall deliver to the Authority I00 percent of the amount of any such deposit or payment. The Authority shall then have the right, and subject to the terms and conditions, hereof, the obligation to use such funds to make such deposit or such payments. The Authority shall have no obligation to repay such funds received, deposited or paid pursuant to this Agreement should the redevelopment covered by this Agreement not be completed for any reason, except to the extent provided otherwise in Section 3.2(e) hereof. BOARD OF COMMISSIONERS COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY CITY OF COLUMBIA HEIGHTS COUNTY OF ANOKA STATE OF MINNESOTA RESOLUTION NO. 2005-04 RESOLUTION AUTHORIZING AND DIRECTING THE CONDEMNATION OF CERTAIN PROPERTY FOR REDEVELOPMENT PURPOSES WHEREAS, the Columbia Heights Economic Development Authority ("Authority") is a public body corporate and politic established pursuant to Milmesota Statutes, Sections 469.090 to 469.1081 (hereinafter referred to as the "Act"); and WHEREAS, the Board of Commissioners is the official governing body of the Authority; and WHEREAS, the Authority was created pursuant to the Act and was authorized to transact business and exercise its powers by a resolution of the City Council of the City of Columbia Heights ("City"); and WHEREAS, the City and the Authority (as successor to the Housing and Redevelopment Authority in and for the City of Columbia Heights) have undertaken a program to promote redevelopment of land that is characterized by blight and blighting factors within the City, and in this connection the Authority administers a redevelopment project known as the Downtown CDB Redevelopment Project ("Project") pursuant to Minnesota Statutes, Sections 469.001 to 469.047 (the "HRA Act"); and WHEREAS, pursuant to the Act and the HRA Act, the Authority is authorized to acquire real estate by exercising the power of eminent domain under and pursuant to Minn. Stat., Ch. 117, and to undertake certain activities to facilitate the redevelopment of real property by private enterprise; and WHEREAS, within the Project, the City and Authority have created the Huset Park Area Tax Increment Financing District ("TIF District") in order to facilitate redevelopment of certain property in the Project; and WHEREAS, the Authority and HUSET PARK DEVELOPMENT CORPORATION, a Minnesota corporation, ("Redeveloper") have previously entered into a Contract for Private Redevelopment dated as of October 25, 2004, (the "Contract for Private Redevelopment") regarding redevelopment of the property described in Exhibit A attached hereto and other property; and RJL-257983v2 CL205-23 WHEREAS, the Redeveloper, City and Authority have taken various actions in furtherance of the Project, pursuant to the Preliminary Development Agreement and Contract for Private Redevelopment, all of which indicate the Project is feasible and desirable, including, but not limited to, environmental, blight and economic studies, determination of needed public infrastructure, agreements to acquire and acquisition of property, relocation analysis and land use planning; and WHEREAS, the Authority believes that the environmental remediation and redevelopment of the Redevelopment Property pursuant to the Contract for Private Redevelopment, and fulfillment generally of the Contract for Private Redevelopment, are in the vital and best interests of the City and the health, safety, morals, and welfare of its residents, and in accord with the public purposes and provisions of the applicable State and local laws and requirements under which the Project has been undertaken and is being assisted; and WHEREAS, the real estate described in Exhibit A attached hereto and incorporated herein (collectively, "Subject Property") is located within the Project, as presently constituted, and is among the parcels which are to be redeveloped pursuant to the Contract for Private Redevelopment; and WHEREAS, on October 25, 2004, by Resolution No. 2004-13, the Board of Commissioners approved, established and adopted a Modification (the "Project Plan Modification") to the Downtown CBD Revitalization Plan for the CBD Redevelopment Project (the "Project Area"), found that the adoption of the Plans conform in all respects to the requirements of the Act and will help fulfill a need to develop an area of the State of Minnesota which is already built up and that the adoption of the proposed Plans will help provide life-cycle housing for citizens of the City, and to clean up polluted soils, buildings, and groundwater, and thereby serves a public purpose; and WHEREAS, in said Resolution No. 2004-13, the Board of Commissioners found that the Plans will afford maximum oppommity, consistent with the sound needs for the City as a whole, for the development or redevelopment of the Project Area by private enterprise in that the intent is to provide only that public assistance necessary to make the private developments financially feasible; and WHEREAS, in said Resolution No. 2004-13, the Board of Commissioners found that the TIF District portion of the Project Area is a "blighted area" within the meaning of Minn. Stat., {}469.02, Subd. 11, and that acquisition, clearance, remediation and related activities to redevelop the TIF District portion of the Project Area in accordance with the Project Plan and the TIF Plan constitute a "redevelopment project" within the meaning of Minn. Stat. {}469.002, Subd. 14; and WHEREAS, in accordance with Section 3.2 of the Contract for Private Redevelopment, the Redeveloper has notified the Authority in writing that (a) the Redeveloper has been unsuccessful in accomplishing acquisition of the Subject Property voluntarily after commercially reasonable efforts to do so; and (b) that such efforts included a written offer to owners of all such parcels to acquire such parcels for a price which the Authority finds to be reasonable and an offer to mediate; and RJL-257983v2 2 CL205-23 WHEREAS, the Board of Commissioners of Authority hereby finds that the Redeveloper's efforts to voluntarily acquire the Subject Property were reasonable and satisfy the requirements for doing so under the Contract for Private Redevelopment; and WHEREAS, acquisition of the Subject Property by the Authority is essential in order to eliminate blight and implement the Project; and WHEREAS, the Board of Commissioners finds that redevelopment of the Subject Property consistent with the Project is necessary, convenient, desirable, for a public purpose, in the best interests of the citizens of the City and will promote the general health, welfare and safety of the community; and WHEREAS, the Board of Commissioners finds that it is in the best interest of the Authority if the Authority proceeds to acquire the Subject Property for redevelopment pursuant to the Contract for Private Redevelopment; and WHEREAS, the Board of Commissioners finds that the funding and construction schedule for the redevelopment pursuant to the Contract for Private Redevelopment makes it necessary to acquire title to and possession of the Subject Property prior to the filing of the final report of the condemnation commissioners to be appointed by the district court. NOW, THEREFORE, BE IT RESOLVED by the Board of Commissioners of the Columbia Heights Economic Development Authority that: 1. It is necessary that the Subject Property be acquired in fee simple absolute for the stated public purposes through the exercise of the power of eminent domain. 2. The Authority's Attorney is hereby authorized and directed to take all steps necessary to acquire the Subject Property, including, if necessary, by use of eminent domain proceedings, pursuant to Minn. Stat. § 117.042, prior to issuance of an award of damages by Court-Appointed Commissioners. 3. The Authority's Executive Director is authorized and directed to determine the Authority's approved appraisal of value for each of said properties in accordance with Minn. Stat. § 117.042 prior to the need to pay or deposit such amount if required in said condemnation proceeding. RJL-257983v2 C1205-23 3 Adopted by the Board of Commissioners of the Columbia Heights Economic Development Authority, Columbia Heights, Minnesota this day of ,2005. ATTEST: Don Murzyn, Jr., President Walter Fehst, Executive Director RJL-257983v2 CL205-23 4 EXHIBIT A Legal Descriptions of Properties To Be Acquired by Eminent Domain Proceedings: ~collectively, "Subject Property,) Parcel C Owner: 3800 5th Street LLC The street addresses of Parcel C are 3800 5th Street NE, and 3901 5th Street NE, Columbia Heights, Minnesota 55421. The property identification numbers for Parcel C are: 35-30-24-34-0035 and 35-30-24-34-0041 Parcel D Owner: JR Properties The street addresses of Parcel D are 515 and 519 38th Avenue NE, Columbia Heights, Minnesota 55421. The property identification numbers for Parcel D are: 35-30-24-34-0014 and 35-30-24-34-0013 RJL-256304v2 A-1 CL205-23 NAGELL APPRAISAL & CONSULTING 7515 Wayzata Blvd. #115 Minneapolis, MN 55426 Established in 1968 Minneapolis St. Paul Central Fax 952-544-8966 651-209-6159 952-544-8969 City of Columbia Heights Attention: Robert Streetar, Community Development Director 590 - 40th Avenue NE Columbia Heights, MN 55421 February 15, 2005 Dear Mr. Streetar: In accordance with your request, a Limited Appraisal, Restricted Use Report, has been made on the following described property: Subject Property: Vacant Building (formerly Mr. Steak) 4545 Central Avenue NE, Columbia Heights, MN It 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 my appraisal and experience, it is my opinion that the current market value of the subject property, as of February 9, 2005, is: Market Value Site Value (land only) $530,000 $346,000 The accompanying report contains data secured from my personal investigation and from sources considered to be reliable; however, correctness is not guaranteed. To the best of my knowledge and belief, the statements contained in this report are true and correct. Neither my 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, Certified General000813 Molly J. Lewis Registered Appraiser MN 20391975 www.nagellappraisals.com TABLE OF CONTENTS General Information Summary of Important Facts and Conclusions Introduction, Purpose of The Appraisal, Intended Use of Report Market Value Defined, Date of the Appraisal Property Rights Appraised, Personal Property Scope of the Appraisal Property Identification Page Descriptive Data City & Neighborhood Description Location Map Site Description Improvement Description Zoning, Environmental Issues, Highest and Best Use Plat Map Aerial Photo Sketch Subject Photos 7 7 8 9 10 11 12 13 14 Valuation Sales Comparison Approach Income Approach Reconciliation & Final Value Estimate Land Value Expected Exposure & Marketing Period & Trends Certification Identification of Type of Appraisal and Report Format Extraordinary Assumptions & Hypothetical Conditions Assumptions and Limiting Conditions Qualifications Addendum 20 22 24 24 24 25 26 26 26 29 32 SUMMARY OF IMPORTANT FACTS AND CONCLUSIONS General Description: Appraisal Report: Current Use: Special Assumptions: Site Size: Building Size: Age: Quality/Condition: Zoning: Highest and Best Use: Property Rights Appraised: Personal Property: Cost Approach: Sales Comparison Approach: Income Approach: Final Value: View of Subject Vacant Building Limited Appraisal, Restricted Use Vacant Building (formerly Mr. Steak) See report for standard assumptions 34,560 SF 3,519 SF GBA 1966 Average/Average GB, General Business District Current Use& Speculation for Redevelopment Fee Simple Interest No business or FFE included N/A $545,000 $515,000 $530,000 INTRODUCTION This appraisal report reflects the data found and the conclusions estimated from an appraisal of a vacant building (formerly used as a Mr. Steak restaurant), located at 4545 Central Avenue NE, Columbia Heights, MN. The City of Columbia Heights is working towards redeveloping the properties along the Central Avenue corridor--the subject property lies within this area. The subject could maintain a continued restaurant use, although it would probably require some updated kitchen equipment and interior updates. In addition, a retail or office use would be a viable alternative and would require only minor renovations. The site has good frontage on Central Avenue, therefore a number of commercial uses are feasible. PURPOSE OF THE APPRAISAL The purpose of this appraisal is to estimate the market value of the subject property before and after the acquisition by the city as of the date given. The function of the appraisal is to serve as the basis of the city's offer for possible acquisition. INTENDED USE OF REPORT This appraisal assignment was requested by the named client/owner for its 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 appraiser. 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. 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 is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: 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 of financial 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 sala USPAP [ DATE OF APPRAISAL The effective date is: - The effective date and inspection date is February 9, 2005. - The date of the report is February 8 - February 15, 2005. 3 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 used and occupancy conveyed by lease to others. The fights 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. Due to the nature of the assignment, 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 has been included in the appraised value. 4 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. Given the purpose of this report, a less extensive collection, verification and analyzing of the data has been made in the Sales Comparison and Income Approaches (Cost Approach not used). 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. · 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 is used. Cost Approach 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 necessarily 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. PROPERTY IDENTIFICATION Street Address: '4545 Central Avenue NE Columbia Heights, MN 55421 Legal Description: LOTS 23 THRU 30 INCL BLK 4 SHEFFIELDS 2~I~ SUB, SUBJ TO EASE OF REC, ANOKA COUNTY, MINNESOTA. The County PID #s: 25-30243-30-066 The Fee Owners: Robe~W. Wolff Census Tract #: 515.01 Sales History: No sales were found on public record or known within the past three years. The subject is currently listed for $649,000 (per owner). The original list price was $750,000. Real Estate Taxes: Assessed Value Land $179,000 Building $200,500 Total $379,500 RE Tax $12,256.12 ($3.48/SF) 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 7 SITE DESCRIPTION Site Size: 34,560 SF, per county Topography: Level Utilities: City sewer and water Street Frontage: Central Avenue NE & 46th Avenue NE (320' frontage on Central Avenue NE) Access to Site: Average, off Central Avenue & 46th Avenue (alley south of site, but no access from it)' Flood Hazard Zone: No (Zone C, 270010005 B, 9/29/78) Soil Conditions: Assumed to be stable Excess/Surplus Land: None 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. Daily Traffic Count for Central Avenue is approximately 26,000 (2001). Surrounding properties include a mobile home park and commercial to the west, multi-family to the east, McDonald's and Cousins Subs to the north and auto-related commercial to the south. No apparent unusual conditions, adverse easements or encroachments are noted. IMPROVEMENTS DESCRIPTION Type of Building: Mr. Steak Restaurant Year Built: 1966 Gross Building Area: 3,519 SF Basement: None Restroom: 3, men's/women's/unisex (ceramic tile) Style: One-story (seating capacity = 156) Parking: Exterior: 75 + parking spaces, per owner Built-up, pitch and gravel roof Flat-paned windows Brick exterior Concrete sidewalk Heating/Cooling: Forced Warm Air/Central Air (3 rooftop units) Comments: The building is rated to be in average condition. Although the building is older and somewhat dated, the furniture has been well maintained. Kitchen equipment is dated with no dishwasher. Per owner, roof requires repair approximately once a year to fix leaks that develop around the rooftop HVAC units and exhaust. Roof was replaced and a small addition was built in 1977. Two of the rooftop I-IVAC units are approximately 7 years old. The property also features an attached shed (150 SF) used for storage. The shed also houses the 2 compressors for the walk-in cooler & freezer. ZONING The subject property is zoned GB, General Business District, which allows for a variety of commercial uses (clinic, bank, restaurant, office, retail, service, auto). 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 use, conversion to retail or office or future speculation for redevelopment. 10 PLAT MAP 46 TH. *Red outline represents approximate site area. Plat map does not account for 17' easement along the western edge of the subject property--see Addendum for certificate of survey. 11 AERIAL PHOTOGRAPH *Red outline represents approximate site area. 12 SKETCH 46th Avenue NE Pa~ing 13 SUBJECT PHOTOS Front View Rear View 14 SUBJECT PHOTOS Reception Area Dining Area 15 SUBJECT PHOTOS Kitchen Area Grills t6 SUBJECT PHOTOS Office Restroom 17 SUBJECTPHOTOS Mechanicals Walk-in Cooler 18 SUBJECT PHOTOS I Looking South on 46th Avenue NE Looking East on Central Avenue NE 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. 4545:Central:: !4111 Central 585 - 40th :5905 university 765,769,53rd 4905:Central 3939 Central Address AvenUe:NE;:: Avenue NEi i Avenue NE,: AvenUe NE, Avenue:NE; AVenUe NE, Avenue NE. Columbia HtS Columbia Hts Columbia Hts Fridley :;: Fridley ColUmbia Hts Columbia Hts Proximit7 Subject .5 miles S .75 miles SW 1.5 miles NW 1 mile NW .5 miles N .75 miles S Location Good Good Av~/Good Good Av~I/Good Good Good Site Size SF 34,560 34,778 14,577 11,700 22,500 30,600 46,800 LandlBId Ratio 9.82 27.41 5.75 6.63 5.05 11.09 17.62 Restaurant/ Commercial/ Commercial/ Commercial/ Commercial/ Commercial/ Commercial/ Zoning/Use Retail/Office Office Dental Office Office Retail Restaurant Burger King A~le 1966 1986 1941 1973 1985 1981 1965 Quality Average Avg/Good Average Av~l/Good Avg/Good Avera(je Avera~le ~L~i~ ~Condition Avera~le Av~l/Good Avera~le Av~l/Good Ave, l/Good Avera~le Av~,l/Good Sale Date Current Audi-04 Mar-04 Jun-04 Apr-03 May-02 Jan-05 Sale Price N/A $154,500 $390,000 $225,000 $535,000 $465,000 $736t273 GBA SF 3,519 1,269 2,535 1,764 . 4,455 2,759 2,656 $121.75 $153.85 $127.55 $120.09 $168.54 $277.21 2O Sales Comparison Approach - continued Comparable 1: Comparable 2: Comparable 3: Comparable 4: Comparable 5: Comparable 6: Newer building appears to be in superior condition. Competing Central Avenue location. Similar condition. Inferior location due to less visibility and exposure. Newer building with recent updates. Competing location on University Avenue. Newer building appears to be in superior condition. Inferior location due to less visibility and exposure. Used to bracket subject's size. Newer building in similar condition. Competing Central Avenue location. Used due to recent sale date and competing Central Avenue location. Sale price higher due to Burger King national franchise, operating at time of sale (not vacant), and recent updates within last 10 years. Conclusion Sales above range from $120.09 to $277.21 per SF. Comparables 1 through 5 given most weight as they are most similar. Considering the above discussion and overall subject property, along with site size, traffic road, and surrounding development, etc., a value range of $150 to $160 per SF is deemed appropriate, correlated at a mid range of $155.00 per 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: 3,519 SF x $155.00 per SF $545,000 (rnd) 21 INCOME APPROACH Subject & Rents: The subject is considered owner-occupied since the tenant is in the process of buying the building. Comparable data from competing locations and competing uses will be used to determine an approximate net rent for the subject property. 4545 Central 5696 University 5810 Shingle 8216 Lakeland 4011-4059 4300 Central Avenue NE, Avenue NE, Creek Pkwy, Avenue North, Central Ave NE, Avenue NE, Columbia Hts Fridley Brooklyn Ctr Brooklyn Park Colubia Hts Columbia Hts Good Good Av~/Good Av~/Good Good Good IProximity Subject 1.5 miles NW 3 miles W 7 miles NW .5 miles S .25 miles S lUse Restaurant Restaurant Restaurant Restaurant Strip Mall/Retail Strip Mall/Retail Tenant Single Sin[tie Sin[lie Sin[lie Multi Multi IAge 1966 1984 N/A 1983 1978 1968 ICondition Averacje Av[t/Good Avg/Good Avg/Good Avg/Good Avg/Good Unit Size 3,519 9,700 8,100 6,800 4,000 1,314 Rating Average Av~/Good Av[~/Good Av~/Good Avco/Good Good INetRet/SF $22.50 $15.00 $22,00 $1 ZOO $1 9.00 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 restaurants, market area was expanded and retail comparables were used. 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 $12.00 to $22.50 per SF for similar restaurant/retail space. All comparables given equal weight. Given the above data, a value range orS10 to $20 per SF is deemed appropriate, correlated at a mid range of $15 per SF is concluded. 22 Income Approach - continued Expenses typically range from $5.00 to $7.00 per SF for properties like the subject. RE taxes are $3.48/SF. Operating expenses were not provided to the appraiser and are assumed to be in line with the market; $6.00 per SF is considered appropriate for the subject. Vacancy for properties like the subject in the market area is around 8%, 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. 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 9.0°,4. Income Statement - Fee Simple (Market Rate)' Unit Size Rent/SF Rent/Mo Subject 3,519 $15.00 Vacancy & Collection Effective Gross Income 8.0% Less: Expenses Vacancy Reserves Total: Net Operation Income Tenant $6.00 -3.48% (1,689) $0.15 - 1.09% (528) Capitalization Rate Value, as if Stabilized 9.0% Annual Income $52,785 $48,562 $46,345 *Slight deviations may exist due to rounding. ESTIMATED VALUE BY INCOME APPROACH $515,000 (rnd) 23 RECONCILIATION & FINAL VALUE ESTIMATE Indicated Value by Cost Approach: ...................................................................... N/A Indicated Value by Sales Comparison Approach: ....................................... $545,000 Indicated Value by Income Approach: ......................................................... $515,000 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 February 9, 2005, is: FINAL ESTIMATE OF MARKET VALUE: $530,000 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. 4545 Central 5025 Central 5060 Central 4747 Central 5057 University Avenue NE, Avenue NE, Avenue NE, Avenue NE, Avenue NE, Avenue NE, Columbia Hts Columbia Hts Columbia Hts Columbia Hts Columbia Hts Minneapolis I~roximi~ Subject 1 mileN I mileN .5milesN 1 mileNW 4milesS I I Lo aaon Good Good Good Good Good 9G, 59°~7 ISite Size SF 34,560 63,480 33,600 614,196 26,000 IPhys Char Rectangular Rectangular Rectangular Irregular Rectangular Rectangular I Intended Commercial/ Commercial/ Commercial/ Commercial/ Use/Zoning Commercial Restaurant Restaurant Hotel Commercial Car Lot I Imilities Public Public Public Public Public Public I ISale Date Current Jul-02 Mar-02 May-04 Nov-03 Aug-03I ISale Price N/A $650,000 $275,000 $4,060,000 $204,000 $95,000 I Correlated at a $10.00 per SF: 34,560 SF x $10.00 per SF = $346,000 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 CERTIFICATION We certify that, to the best of our knowledge and belief: 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 t° 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 have 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 professional assistance must so be stated.) WilliamR. Waytas, SRA, CRP ~~ Date ~-'7't~S Certified General, MN 4000813 Molly J. Lewis ]I/'/~~'~'"L/\ Date Registered Appraiser, MN 2039..~75 25 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 AND 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 survey has been viewed and that all improvements are located within the legally described property. 26 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 tree 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 govemed 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. 27 Assumptions and Limiting Conditions -- continued 10. The appraisers have no present or contemplated future interest in the property appraised; and neither the emplo,vrnent 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: 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. No one provided significant professional assistance to the person signing this report. 15. This appraisal assignment was not based on a requested minimum valuation or specific valuation or approval of a loan. 16. 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. 17. As of the date of this report, William R. Waytas has not completed the requirements of the continuing education program of the Appraisal Institute. 18. The use of this report is subject to the requirements of the Appraisal Institute relating to review by its duly authorized representative. 19. 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. 28 [ 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 29 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, AI. -- 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, Al, 10 hours. Fair Lending Seminar, 1995 AI, 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 Commercial/Industrial/Subdivison Courses Capitalization Theory & Techniques, Parts lB1 & lB2, 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, AI. 7 hours. Narrative Report Writing Seminar (general), 1995, AI, 14 hours Advanced Income Capitalization Seminar, 1997, AI, 7 hours Advanced Industrial Valuation, 1997, AI, 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. HLrD 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 30 QUALIFICATIONS OF MOLLY J. LEWIS Education: Graduate of Northwestern College, St. Paul, MN. 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 #2039 ! 975 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 GolfDome Residential Appraisal o Single Family o Two-Family Multi Family 31 ADDENDA TO APPRAISAL REPORT 45 TH ,ii VENUE N.E. (50'R\t¢} "~ .... '"' 108 ~ ~'i PARK/NG ~ ~ ~ s, o BL ~ ,~ BUILDING 33 NAGELL APPRAISAL & CONSUl,TING 7515 Wayzata Blvd. gl 15 Minneapolis, MN 55426 Estctbli. thed in 1968 Minneapolis: St. Paul Central Fax 952-544-8966 651-209-6159 9~2-544-8969 City of Columbia [ ieights Altn: Robert Streetar, Community Development Director, 590 40'h Avenue N.E., Columbia'Heights, MN 55~21 RE: Appraisal of a vacant Mr. Steak (Real Estate Only) 4545 Central Avenue, Columbia ilelghts. MN Dear Mr. Streetar: February 2, 2005 Thank you £o,' your interest in obtaining appraisal services regarding the property above. Purpose: As indicated you would like a short report to 'get an approximate idea of thc cu:rent market value for negotiation for possible acquisition by the City of Columbia Heights i%r possible site redevelopment. Property Description: A vacant Mr. Steak Restaurant on a 34,560 SF site. Contact for accen'x: Mickey Rooney ar 612-554-5542. Repor~ Type: Given the nature and scope of this assignment, you indicated a Limited Appraisal per Unifbrm Slandards of'Professional Appraisal Practice would be appropriate for your needs. A Limited Appraisal typically has less extensive documentation and analysis trod can be somewhat le~ reliable than the Complete Appraisal. The necessary approaches to value will be al~plicd. You also indicated a land value c~timate is desired. Report Format: A Restrict[ed Use Report (short narrative format) data is listed on a qualitative grid, but not adjusted, it is correlated into a final value. The report will include subject photos (no comparable photos) site and subj~t location map exhibits. Data is retained in the appraiser's file. The report is intended for the sole use of the client. Fee: The t'ec is $800 * $200 for land value, total $1~000. Should it bc necessary to go to hearing. any meetings and/re' (including report review or revisions, updates or report up~m"ade to a Con:piete Appraisal) would be extra and billed at $75 per hour. Any hearing preparation and/or testifying would also be exits and would be billed at $1tY0 per hour. Due Date: Report can be done by 2-15-05, provided signed confirmation is prompt. Information needed by the appraiser at inspection: Any site, building plans, leases, or operating expenses on the building in the past 3 years iFavafiable. Our company has 8 appraisers and lms been in business since 1968. Neifi~er the employment to make the appraisal, nor the conhuensation for it, is contingent upon the appraised value nf lhe property. If you agree to the above terms, please sign below and return by f, tx m mail. if you have any additional questions, please do not he~itate to contact me. Sincerely, William R. Waytas, SRA, CRP Certified General 4000813, MN www.nagella pprais als.corn 34 TO: FROM: DATE: SUB J: EDA Commissioners Robert Streetar, Deputy Executive Director 9 February 2005 Monthly Update Kmart The first of the three loft condominium buildings is almost fully framed. The developer indicates that 16 of 67' units are sold, with sales prices between 192,000 and $$5,000. In addition, the footing and foundations have poured on the first four townhomes. The developer is working to acquire the necessary road right-of-way for the access onto 4@th as well as the right turn lane on 49th. If he is unsuccessful the the developer will ask the [::DA in the next 30 to g0 days to used it's powers of eminent domain to acquire the road right-of-way on the developer's behalf. Central Business District In January the EDA approved the planning process for the area along Central, from 37th to 40th Avenue. Staff is currently performing the first step, which in an inventory of the area to include parking supply and other traffic concerns, stormwater, other public infrastructure, property inventory, building quality and maintenance. The next step will be to meet with the property owners in the area and discuss their issues and concerns. This meeting will be held in March. Staff will notify the Commissioners of the exact date when it has been established.