HomeMy WebLinkAboutEDA AGN 06-28-05
CITY OF COLUMBIA HEIGHTS
590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692
Visit Our Website at: www.ci.columbia-heights.mn.us
EDA COMMISSIONERS
Don Murzyn Jr.
Patricia Jindra
Bruce Kelzenberg
Gary L. Peterson
Bruce Nawrocki
Bobby Williams
Tammera Ericson Diehm
ECONOMIC DEVELOPMENT AUTHORITY
REGULAR MEETING
7:00 P.M., TUESDAY, JUNE 28, 2005
CITY HALL, CONFERENCE ROOM 1
AGENDA
1. CALL TO ORDERlROLL CALL
2. PLEDGE OF ALLEGIANCE.
3. 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 approve the consent a!!enda items as listed below:
1) Approve EDA Meetin!! Minutes for April 26. 2005.
2) Approve Resolution 2005-09 for the Financial Report and Payment of Bills for the
months of April and Mav of 2005.
4. ITEMS FOR CONSIDERATION
A. Goal Setting
B. Sarna Agreement for 40th & University Redevelopment
MOTION: Move to Approve the Preliminary Development Agreement with
for the redevelopment of the City owned property at 40th &
University Avenue; and furthermore, to authorize the President and Executive Director to enter
into an agreement for the same.
C. Set Public Hearing for Sale of Property to Huset Park Development Corporation
MOTION: Move to set a Public Hearing for the Sale of Property to the Huset Park Development
Corp. on Tuesday, July 26,2005 at approximately 7:00 pm in City Hall, Conference Room 1.
D. Ryland Homes Marketing and Sales Trailer
MOTION: Move to approve the lease authorizing Ryland Homes to place a temporary sales
trailer at the Burger King site from June through December of2005; and furthermore to
authorize the President and Executive Director to enter into an agreement for the same.
5. ADMINISTRATIVE REPORTS
6. ADJOURNMENT
Walter R. Fehst, Executive Director
H:\edaAgenda2005\6-28-2005
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
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ECONOMIC DEVELOPMENT AUTHORITY (EDA)
REGULAR MEETING MINUTES
APRIL 26, 2005
CALL TO ORDER/ROLL CALL
President, Murzyn, Jr., called the meeting to order at 9:18 p.m.
Present:
Don Murzyn Jr., Patricia Jindra, Gary L. Peterson, Bobby Williams and Bruce
Nawrocki, Tammera Ericson Diehm, and Bruce Kelzenberg
PLEDGE OF ALLEGIANCE
CONSENT AGENDA
Approval of Minutes
Financial Report and Payment of Bills
Nawrocki asked why in the March financial report for Community Development shows we are a
little over budget for personal services. Streetar stated once Walker started managing Parkview
Villa, staff administrative hours are paid back to the City on a quarterly basis.
MOTION by Ericson Diehm, second by Peterson, to Adopt the consent agenda items as listed.
All ayes. Motion Carried.
ITEMS FOR CONSIDERATION
NEI Site Redevelopment Proposal
Streetar stated Legacy and Walker are partnering together and would like to encourage the EDA
to get involved in a Senior Housing Community plan on the northeast corner of the NEI site.
Seniors could sell their home, move into this 66-unit community that would still allow them to
receive a tax base for the unit. There are three concepts: 1) a senior housing community; 2)
library; and 3) a community center on the site. The plan would meet some of the Comprehensive
goals and the goals of the City to develop housing in the City and retain residents. It breaks
down to about 90 cents per sq foot, which is approximately the same as Parkview Villa. Streetar
held up a drawing of the proposed site. In the past the board has not be interested in rental
housing. Mr. Lamb, Legacy Management Corporation and Mr. Koester, the architect, are in
attendance to answer any questions.
There are two primary costs involved: 1) Share Cost- a one-time "down payment" that
purchases a share in the corporation and 2) Monthly Fees-include the mortgage principal and
interest payments, real estate taxes, operating expenses, liability insurance for the building, legal
and accounting services, professional management, lender-required reserves, as well as interior
and exterior maintenance, sewer, water, trash, and recycling. Members would be responsible for
their phone and electricity bills. Interest expensed and real estate taxes incurred on the home
would be tax deductible.
The concept meets three of the housing goals in the Comprehensive Plan; 1) promote a variety of
life-cycle housing, 2) promote medium, density owner-occupied housing, and 3) promotes
Economic Development Authority Meeting Minutes
April 26, 2005
Page 2 of 4
housing that attracts and retains residents. Also in the demand study preformed by Maxfield
indicates a demand between 100 and 125 units of independent senior housing through 2013.
Staff is recommending the EDA enter into a preliminary development agreement with Legacy
that would allow them to prepare a proposal for review and approval before October 28, 2005
with the developer paying $5,000 in escrow to pay for EDA expenses to review the proposal, as
well as $3,000 upon execution of this agreement, with a possible 90 day extension to the
agreement for an additional $3,000.
Ericson Diehm asked what age of seniors would qualify for the units. 0 'Donnell stated it would
be 55 and over, owner occupied units.
Nawrocki asked who is Legacy and are they connected to the Legacy company at 49h & Central.
Mr. Koester stated they have been in business since 1974, owned by the Gibbons family, has
been developing affordable work force housing, they used to own nursing homes in Minneapolis,
which they sold approximately seven or eight years ago, they have built a library in St. Paul, and
they are not connected with Legacy company.
Nawrocki stated 1) until the City has an overall plan for the property it doesn't make sense to
split it up; 2) he's not interested in working with Walker with the experiences from this building;
and 3) we should look at a competitive bid from other companies for this property.
Ericson Diehm stated at some point there was talk of coop units in the Industrial Park, will that
happen. Schumacher stated the industrial park would not have coop units.
Peterson stated he agreed with Nawrocki, that we are a little premature at signing an agreement,
as City Council has not explored the options for the site, would like to have some serious
meetings with the people interested in the community center and library, we need to get on the
same page, make some decisions, there is a group that is working on getting gym space in the
city, he isn't in favor of any gym space made available for other cities. Kelzenberg stated he likes
the plan, but would like to see us go out for bids. Williams stated he agreed with Peterson and
Nawrocki. Murzyn, Jr. stated he has reservations of putting the Community Center on that site,
would like to see the City Council make a decision as to what they want on the site, has heard the
Council is against it and preferred to table this item until a decision is made by City Council.
Ericson Diehm stated she agrees the City Council needs to determine what they want there, but
hopes the developers know that we appreciate the plans they have before us and asked why were
waiting, what do we need to get things going. Fehst agreed the council needs to make a decision,
understand the board has had some issues with Walker staff, but felt Walker has done a lot of
good for the building, and would like to keep Legacy and Walker as a possible developer of the
site.
Streetar asked if the board wants staff to stop marketing the site until after the EDA and City
Council have made a decision. Murzyn, Jr. stated yes, and we should have a joint meeting with
the City Council and the EDA to make some determinations.
Economic Development Authority Meeting Minutes
April 26, 2005
Page 3 of4
Streetar stated on May 17'h the EDA board is invited to attend the council worksession where we
will be presenting all of the options for the community center, which will give them all of the
information that staff and committees have obtained. Nawrocki felt the meeting on the 17'h is
premature, as people he has talked to aren't supportive, Gym's should work in conjunction with
the school district, they should meet with us, give them time to work with the people in the
community to see what the actual desires are, who is going to operate it and pay for it.
Murzyn, Jr. stated this item is tabled until the City Council and EDA meet and come up with
some decisions.
Adopt Resolution 2005-08. First Amendment to Contract for Private Redevelopment
Schumacher stated the EDA entered into a redevelopment agreement in September of 2003 with
New Heights Development LLC (Bruce Nedegaard) for construction of owner-occupied housing
and commercial development at the Kmart site. The last several months, Nedegaard has
attempted to acquire a 60-foot roadway easement to access his development from 4cjh from the
current owner, Mr. Walter Scott that owns the property where the savers building is located, with
no response. Staff has prepared an amendment to the development agreement that would enable
the City to move forward in the process to obtain this needed right-of-way. The developer would
be responsible for all costs associated with this acquisition. Kennedy and Graven prepared the
amendment for board review. Staff is recommending the EDA approve the proposed contract
amendment and request City Council commence with the eminent domain proceedings for the
right-of-way, as this is needed for public purposes.
Nawrocki asked what is the difference between temporary and permanent easement, and stated if
he is correct, doesn't the county need a portion of 49th. Streetar stated that is correct that the
county needs a portion of 49th and in the original agreement the owner of the home next to the
development site, requested a rock wall be put up so that is why the plan shows a temporary and a
permanent easement. The bold line on the map is the center of the road and will be shifted 10 feet
to the west, which isn't shown on the map.
Motion by Ericson Diehm, second by Peterson, to Adopt Resolution 2005-08, a Resolution
Approving a First Amendment to Contract for Private Redevelopment between the Columbia
Heights Economic Development Authority and New Heights Development, LLC; and
furthermore, to direct the President and Executive Director to enter into an agreement for the
same, All ayes. Motion Carried.
Concept Redevelopment Plan for the property located at 40th & University
Schumacher stated this is an introduction and general concept plan only, not a plan review.
Tom and Gordy Solz, real estate advisors for the proposed developer, Jim Sarna, are requesting
feedback from the EDA on a concept plan to construct a 6,000 square foot restaurant on the
southeast corner of 4dh & University. Mr. Sarna has hired SSV Architects to prepare four
alternative site plans for EDA consideration. The proposed restaurant includes rooftop dining, a
lounge and outdoor seating to accommodate approximately 200 patrons. The issue tonight is that
Mr. Sarna is requestingfeedback to see if the EDA is interested in a restaurant on that site. The
EDA has used Community Development Block Grant funds to obtain the properties, so the board
regulates what will be built on the site. The Preliminary Development Agreement would be the
Economic Development Authority Meeting Minutes
April 26, 2005
Page 4 of 4
next step if the board would be interested.
Dave Sarna stated it would be a bar and restaurant, casual dining, similar to Applebee's, but
less noisy, and would cost approximately 1.5 million to develop it.
John Seviola stated he and his son have built many buildings for Mr. Sarna and the Sarna's are
very willing to work with the community.
Nawrocki stated he is concerned with the attached properties and alley access, what happens to
the alley is important, he understood they want to abandon a portion of the alley and the access
from lookout to 4dh Avenue. Peterson stated he has been involved with Mr. Sarna, they will
work with the community, are a good company, produce a good end product, would work with
the City on such things as screening, trees, bushes, lighting, etc., they are willing to provide
these things.
Joyce Shellito stated as a resident in the area, she felt out of the loop of what is happening on the
site, needs to get a 32-foot trailer backed into their yard through the alley. Peterson stated this
is why you were invited hear tonight so you can hear what this concept is. Mr. Shellito stated he
felt the idea of a restaurant on that corner was a good idea.
Mike Gondek stated he needs access from the alley to his business. Streetar suggested Mr.
Gondek and the Shellitols meet with the Sarna's to discuss the issues, if the EDA likes the idea of
the restaurant.
Ericson Diehm stated her initial response to the general concept is in favor of it and suggested
the Sarna's set up meetings with the neighbors.
Murzyn, Jr. felt a restaurant was a good idea for the site and directed staff to work with the
Sarna's to develop documents for review for a restaurant concept.
ADMINISTRATIVE REPORTS- none
ADJOURNMENT
President, Murzyn, Jr., adjourned the meeting at 10:53 p.m.
Respectfully submitted,
Cheryl Bakken
Community Development Secretary
H: \EDAminutes2005\4-26-2005
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Meeting of: June 28, 2005
AGENDA SECTION: Consent Agenda ORIGINATING EXECUTIVE
NO: DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Financial Report and Payment of Bills BY: Cher Bakken BY:
DATE: June 22, 2005
BACKGROUND:
The bound Financial Report for the months of April and May 2005 draft Resolution 2005-09 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 May 31, 2005.
RECOMMENDATION:
Staff will be available to answer specific questions. If the report is satisfactorily complete, we
recommend the Board take affirmative action to receive the Financial Report and approve the payment
of bills.
RECOMMENDED MOTION:
Move to approve Resolution 2005-09, Resolution of the Columbia Heights Economic Development
Authority (EDA) approving the Financial Statement and Payment of Bills for the months of April and
May 2005.
EDAACTION:
H:\EDAConsent2005\Fin Rep 2005 Res. 2005-09
EDA RESOLUTION 2005-09
RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT
AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR APRIL AND
MAY 2005AND PAYMENT OF BILLS FOR THE MONTHS OF APRIL AND MAY 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 months of April and May of2005 and the list of bills
for the months of April and May 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:\Resolutions2005\EDA2005-09
TO:
EDA Commissioners
FROM:
Robert Streetar, Deputy Executive Director
DATE:
24 June 2005
SUBJ:
Goals Setting
At the meeting on the 28th, EDA Commissioners will be discussing the redevelopment
opportunities and challenges facing the City, and how best to address this opportunities
and challenges. There will be a short PowerPoint presentation with discussion to follow.
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
DATE:
June 28, 2005
TO:
EDA
FROM:
Kirsten Partenheimer
RE:
Community visioning for the CBD redevelopment
The purpose ofthis memorandum is to update EDA Commissioners on the status of the downtown
redevelopment and renewal planning process. This includes the stretch of Central Avenue from
37th Avenue to 42nd Avenue. With assistance from the planning consulting firm Dahlgren,
Shardlow, and Uban, Inc. (DSU), the city is moving through the planning process and has been
working with residents, business and property owners to identify issues and concerns, as well as a
vision for the future. DSU's contract is being paid for with a grant from the Met Council.
Back!!round
On May 16 and 19, there were two meetings held at the public library. The first of these visioning
workshops was conducted with 27 business and property owners in Columbia Heights over the
lunch hour, followed by a similar workshop in the evening on May 19 with 30 residents. Those in
attendance discussed their issues, concerns and hopes for this area and the feedback will be used to
identify the prevalent challenges and opportunities to address in the next planning stage, A record
of the comments from the two meetings is attached for your review.
When asked to assess the opportunities within the business district and what role they could play in
a vision for the future, the theme that resonated most with participants was the opportunity to create
a vibrant district with increased employment, small businesses and neighborhood retail, attractions
for families and community gathering spots, such as a community center. Fayade improvements,
street beatification (such as trees and flowers), proper street lighting and measures to increase
safety would create an area residents can be proud of.
While participants had visions of a re-energized business district with higher end retail and
increased foot traffic, safety and crime, both real and perceived, topped the list of the issues and
concerns. They cited blighted buildings, too little visibility on the street and poor visual
appearances as additional concerns. They would also like to address the poor pedestrian
environment and the need for more businesses that serve the community.
Next Steps
The next phase includes preparing redevelopment concepts for the area of 3 9th Avenue and Central
Avenue, which includes the Burger King, Mady's and Columbia Heights Rental properties, which
will be brought back to the EDA at a later meeting. Finally, we are sending out a summary ofthe
meeting to the members ofthe public who participated in our May meetings.
H:lConsent2005\
Feedback from Business Owners and Community Residents
May 16th and 19th, 2005
Visions and Statement Number of
Opportunities Responses
Need good quality stores/Upgrade retail to attract more people 15
Vibrant businesses - good business mix 14
A re-energized community with young families and family-focused
areas such as parks and a community center 14
A viable retail and small business area through increased tax base
and employment opportunities 12
Maintained "old look" in the area, reinforced character and continuity
along the street front 12
Bring nearby residents into the business district 12
Attract people from outside the community- bring pedestrians to
shop/Business that will bring foot traffic shoppers 12
Get rid of duplexes 9
Trees and flowers (beautiful) 9
Attract showers and residents 9
Need family restaurants/coffee shops/bookstore... additional
neighborhood retail 9
Practical stores/trendy restaurant/American type restaurant 9
Building fa~de upgrade/city low interest loan program to improve
facades 8
Safe 7
Street light is better 7
City we can be proud of 6
Ethnic and business diversity 6
Arts - attract 6
Incorporate the design team recommendations 5
Theater with DQ 5
Historical sense 5
Crestview/Bobby Steve/NedegaardNVash. McRevy good 4
Presence of community feel to city 4
Open space - Central 3
Unique experience offered in city 3
Businesses brought up to the street front 3
Defined bike lanes 3
Quaint buildings 2
Specialty shops 2
Strong pedestrian traffic 2
Transit hub - good 2
1 and 2 story shops with side/rear parking 2
Entertainment - family activity 2
Close proximity to downtown 2
No single-family homes on Central 1
Nice clinic 1
Good small businesses 1
New street improvements have reduced traffic accidents (Le. turn
lane) 1
Homes SF that have been removed 1
Streets cape - good 1
Clean 1
Need more jobs 1
Good tenants 1
Quaint buildings 1
Traffic/pedestrian friendly 1
Accessible parking available on 40th and Central 1
Parking is better (I.e. on-street parking and bus cut-outs) 1
High traffic counts and good traffic flow 1
Effective transit (bus service and transit hub) 1
non-ethnic restaurants 1
Issues and Number of
Concerns Statement Responses
Safety 23
* Business mix 23
* Businesses bringing in wrong people 23
* Too little activitylvisibility on the street 23
* Bar at the Mall 23
* Few people/business type 23
* Safety and crime - perceived and real 23
Competition from the Apache businesses (City needs a better image
to compete) 15
Need businesses that service the community (Le. shops, restaurants) 13
Need to improve communication between city and
communitylbusinesses about redevelopment projects 10
Businesses need to improve their physical appearance to increase
their appeal 9
Poor building fa~ade - visual appearance, city assistance 8
Blighted buildings 8
Poor development pattern with single-family uses breaking up
commercial activity on Central Ave. 7
Where is the money going to come from? 7
Apartments - inadequate parking, visual appearance, traffic/Need to
fix up rental properties 6
Poor pedestrian environment/unfriendly sidewalks 6
Safety and crime 6
Redevelopment may force current businesses out 6
Need to attract families to the community 6
Poor foot traffic 5
Negative news media about City 5
Poor signage visibility along Central Ave. 5
Limited left tum lanes on Central 4
Difficult to cross Central Ave. (few pedestrian crossings) 4
Mall 4
Check cashing stores 3
Enough car parts stores 3
New low-income or condo housing is not desired 3
Need community specialty stores 3
Traffic speed 2
Business assistance for fa~ade improvements needed 2
Need a place for families and residents to go (community center) 2
Need better curb appeal 2
Need finanCIal partnerships between the city and the community (Le. a
business revolving fund) 2
Need new businesses that attract new residents and shoppers to the
community 2
Underutilized parking ramp. poor visibility from Central 1
Get rid of mall/Star Bar/pool hall/ethnic restaurant/discount stores 1
Restaurant with party space is no 1
Tall building on street edge 1
Mall 1
Hub transit 1
Need to keep storefronts along the street for consistency 1
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COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
eetmg 0: une ,
AGENDA SECTION: Items for Consideration ORIGINATING EXECUTNE
NO: 4-B DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Sarna Preliminary Development BY: Randy Schumacher BY:
Agreement for 40th & University Redevelopment DATE: June 22, 2005
M
f J
28 2005
BACKGROUND: At the April 26th Economic Development Authority meeting, developer Jim Sarna and
real estate representatives, Tom and Gordy Solz, introduced a general concept plan to construct a 6,000 sq ft
restaurant on the comer of 40th & University that is presently owned by the EDA. The board consensus was
to work with Mr, Sarna in preparing a Preliminary Development Agreement.
The Preliminary Development Agreement that is being proposed by Mr, Sarna is scheduled to run for 90
days. During that period negotiations between the party shall proceed in an attempt to formulate a defmitive
development contract based on the developers proposed documentation regarding economic feasibility and
soundness, equity financing, cash resources, site design and engineering issues.
Based on a request for fmancial documentation from the City's financial advisor, Ehlers & Associates, a
limited evaluation ofthe developer's proforma is enclosed for your review.
In order for the project to move forward, the board must support the following key issues:
1. Is this the type of development that the board wants to see on this development site?
2. Will it be successful?
3. Does it meet the economic feasibility and soundness test?
4. Are the building standards acceptable?
If the board can meet these key issues, the next step would involve the land use, site design and
engineering issues. Included in this technical list would be: street vacation, set backs, parking, screening,
alley realignment, access, surface water management and sidewalks.
However, if the board is not satisfied with the key development issues above, then the technical review is
moved and should not be addressed.
RECOMMENDATION: The EDA board has an option to approve the proposed development agreement,
deny the agreement or request more information for further consideration
RECOMMENDED MOTION: Move to Approve the Preliminary Development Agreement with
for the redevelopment ofthe City owned property at 40th & University
Avenue; and furthermore, to authorize the President and Executive Director to enter into an agreement for
the same.
Attachments
EDA ACTION:
h:\consent Form2004\EDA Sarna Agreement 40<n & Un~v.
8' ~.~t~l~,~
June 12, 2005
Mr. GordY Solz
Real Eswe Property Advisors
3050 Stinson Boule"r'ard
55418-2322
RE: Developmem Pl'oposal ofBarlRcstazurant _40th & University. Columbia Heights
Dear Mr. SoJ.%:
In order for our office to complete a te'\tiew of the financial feasibility of your proposed development
at rhe above referenced localio~ I will need to receive the fullowing information:
VIA. FAX
1. Description ofproposed development including squ.ace footage
2, Detailed SOurces and uses including;
a. Amount, tmn and ~ me ofbank: financing.
b. Amount of equity
c, Proposed rent structure (if applicable)
d. Proposed land acquisition price
e. Detailed construction costs. including tenant improvement allowance
f. Detailed t'ioanci.J18 costs
g. Detailed soft costs and development fee
3. IS-year operating proforma
4. Requested cash-on-cuh return in 1st year
5. Proposed i.,6.l1tlon on exp6n$6S and iDco.a.w (i.e 1 % IlInmtaHy or as otherwise determined)
6. Proposed CAP rate
7. Letter of commitment by bank for financing fur the project
Once I have reuivedthis infonnati<ln I can prooe.ed with completing tM financial review of the
project and 1he proposed purc.base price oflhe land.
Please contact me at 651-697-8506 with my questions.
S~__ _
S~~VilJg)d
Eblers&Associate!
cc; Randy Sr.hnmflt'.h,.,. - City of Columbia Hei~
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Randy'S,chumacher - Randy Schumacher Memo 6-22-05.doc
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EHLERS
& ASSOCIATES !NC
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To: Randy Schumacher - City of Columbia Heights
From: Stacie K vilvang - Ehlers and Associates
Subject: 40th and University Retail Redevelopment
Date: June 22, 2005
Mr. James J. Sarna has submitted a proposal to purchase land from the Economic Development Authority
(EDA) at the above referenced address and is proposing to construct a 12,000 sqlft of restaurant on the
site (6,000 sq/ft basement and 6,000 sq/ft main level) at this site.
You have requested that Ehler's complete a review of the Developer's proforma to assist in determining
what the purchase price of the land should be and if the project is financially feasible. The information
submitted by the developer is not adequate enough to complete a thorough analysis. However, my initial
comments from information that was received is as follows:
1. The developer is proposing to purchase 1.074 acres of land from the EDA for $75,000. This
equates to a per square foot cost of $1.60. This falls exceedingly below the Metropolitan Area
standards of $7 to $15 sqlft for similar restaurant sites.
2. Cost for design, site work and construction are in a lump sum. This needs to be broken out by
category for review against industry standards (i.e. site work, construction, interior build out,
design and engineering, etc).
3. No information was provided on a rental rate to pay off mortgage, taxes and other expenses. This
information will be needed to complete the review.
4. No information was provided on replacement reserves. This will need to be obtained from the
developer.
5. Developer is fmancing 80% of the project and providing 20% in equity. This is a typical
financing split. However, the developer did not provide a rate at which the bank would borrow
the money, or the exact term. This information will be needed to complete the review.
6. Cash-On-Cash (COe) return in the first year of 65% is excessive compared to the industry
standard of 12% (shows they can pay more for land).
7. I could not complete an Internal Rate of Return (IRR) analysis since not all of the necessary,
detailed information was provided.
Recommendation:
Based upon preliminary review, the development can afford a much higher purchase price for land than
proposed. However, in order to complete a thorough review I will need the above referenced information
that was requested.
__~~~~lSc~_~macher - Randy Schumacher Memo 6-22-05.doc
Pag~
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Randy Schumacher
40th and University Retail Redevelopment
June 22, 2005
Page 2
If the EDA is desirous to move forward without further review, they should consider the developer's lack
of experience in owning or running a restaurant. Likewise, I understand that Mr. Sarna owns several
other types of businesses that are successful and the EDA may wish to consider that his success in other
areas may very well equate to success in the restaurant business. However, that being said, most cities
choose to not work with developers who are not experienced in a specific area. In the exception where a
city may look at working with an inexperienced developer, we recommend they provide the city with a
detailed business plan and/or bring in a partner that has the relevant experience. It should be noted that
based upon anecdotal evidence, three out of five restaurants do not "make it" in the industry. With lack
of experience in this area, the ability to succeed may be reduced. The EDA should discuss the possibility
if this project did not succeed, are they okay with a vacant building being located on a site they just
recently cleared for redevelopment.
Please let me know if you need any further analysis completed. Please contact me at 651-697-8506 if
you have any questions or require further information.
DAVID" SAINI JAMES I. SAINI JAMES J. saNA
~~~
2501 UNIVERSITY AVENUE NE
MINNEAPOLIS, MINNESOTA 55418
~
Phone 612-782-6940
'June 15,2005
1. PROPOSED DEVELOPMENT
THE BUILDING WILL BE SITUATED ON A 1.1 ACRE SITE ON THE SOUTHEAST
CORNER OF 40TH AND UNIVERSITY NE IN COLUMBIA HEIGHTS, MINNESOTA AND
WILL HOUSE A 200 SEAT RESTAURANT/COCKTAIL BAR. IT WILL HAVE A
MODERATE PRICED MENU AND WILL HAVE A RECT ANQULAR SHAPED BAR. THE
SOUTHS IDE OF THE BUILDING WILL HA VE AN UPSCALE PATIO DINING AREA
WITH THE SIZE STILL TO BE DETERMINED. THERE IS ALSO THE POSSIBILITY OF
ROOF- TOP DINING WITH A VIEW OF THE MINNEAPOLIS DOWNTOWN SKYLINE
WHICH WILL HELP DECIDE THE SIZE OF THE OUTSIDE PATIO AREA.
THE BUILDING WILL BE APPROXIMATELY 6000 SQUARE FEET WITH A 6000
SQUARE FOOT BASEMENT TO BE USED FOR STORAGE, PREP WORK AND PERHAPS
A FUTURE BANQUET AREA. ABOUT 2000 FEET ON THE MAIN FLOOR WILL BE
USED FOR KITCHEN AND BACKROOM AREAS AND 4000 FOR PUBLIC DINING AND
BAR AREA.
THE KITCHEN WILL BE A COMPLETE FULL SIZED AREA WITH EQUIPMENT
TO PREP ARE ALL TYPES OF FOOD SUCH AS BROILING STEAKS, STEAMING
SEAFOOD AND ALL OTHER FOODS FOR A COMP~ETE MENU.
THE PARKING AREA WILL BE GREENSTRIPED ALL AROUND AND WILL
HAVE APPROXIMATELY 90 PARKING PLACES. ENTRY WILL BE FROM 40TB
A VENUE ONLY.
THE LAND IS TO BE SURVEYED AND PLATTED IN THE NEAR FUTURE.
DAVID SABIA JAMES A. SAINI JAMES J. SAINI
2.501 UNIVERSrry AVENUE NE
MINNEAPOLIS. tvlINNESOT A 5541 g
Phone 612-782-6940
June 15.2005
2. DETAn.ED SOURCES AND USES
a. AMOUNT, TERM INTEREST
$1.7 MILLION 15 TO 20 YEARS AND INTEREST TO BE
NEGOTIATED (SARNA'S HAVE ALWAYS RECEIVED
VERY FAVORABLE RATES.)
20%
TO BE SET UP AFTER CORPORATION IS FORMED FOR
OWNERSHIP OF THE BUSINESS. TENA TIVEL Y TO
INCLUDE A LEASE PAYMENT TO COVER
MORTGAGE, TAXES AND GENERAL UPKEEP OF THE
BUILDING WITH A SPREAD TO BE INSTITUTED
WHEN BUSINESS IS STABLE.
$75,000.00
ON SEPARATE SHEETS SUPPLIED BY SEVIOLA
CONSTRUCTION
SEE a.
APPROXIMATEL Y $25,000 INCLUDING REAL ESTATE
FEES, TESTING, SURVEYS, PLATIING AND COSTS
FOR EDA TRANSACTIONS.
b AMOUNT OF EQUITY
c. RENT STRUCTURE
d. LAND ACQUISITION PRICE
e. CONSTRUCTION COSTS
f. FINANCING COSTS
g, DEVELOPMENT COSTS
3. 15YEARPROFORMA
PLEASE USE PROJECTED SALES AND EXPENSE FROM SEPARATE ENTRY AND USE YOUR
COMPUTER TO ADD APPROPRIATE INFLATION RATES.
4. REQUESTED CASH ON CASH RETURN
SEE TIlE PROJECTED SALES AND EXPENSE SHEETS
5. PROPOSED INFLA nON ON EXPENSES AND INCOME
EXPECTED INFLATION WILL BE INDUSTRY WIDE WITH INCREASED PRICES AS NEEDED TO
MEET EXPENSES
6. PROPOSED CAP RATE
AS THIS IS A ONE OWNER OF BOTH ENTITIES TIlE CAP RATE WILL BE DETERMINED BY
PROFITS FROM TIlE BUSINESS TO INCREASE TIlE RATE TO THE INDfVIDUAL OWNERS.
7. LETTER OS COMMTMENT
PLEASE SEE TIlE THE AITACHED LEITER FROM NORTIlEAST STATE BANK.
P L Statement
Sarna's Bar Grill
Monthly Yearly
Total Sales 151,666.66 1,819,999.92
Food Sales 83,416.66 1,000,999.92
Liquor Sales 68,249.99 818,999.88
COGS 42,845.83 514,149.95
Gross Profit 108,820.83 1,305,849.97
Other Income
ATM 1,800.00 21,600.00
Pull Tabs 1,750.00 21,000.00
Total Gross Profit 112,370.83 1,348,449.97
Expenses
Mortgage 18,000.00 216,000.00
Insurance 2,508.00 30,096.00
Credit Card Fees 2,500.00 30,000.00
Licenses & Permits 750.00 9,000.00
Repairs & Maintenance 1,666.67 20,000.04
Property Taxes 2,500.00 30,000.00
Utilities 4,750.00 57,000.00
Cleaning Supplies 725.00 8,700.00
Janitoral Services 2,083.00 24,996.00
Janitorial Supplies 416.67 5,000.04
Refuse 333.33 3,999.96
Laundry 1,354.17 16,250.04
Silverware/G lassware 433.33 5,199.96
Paper Goods 1,083.33 12,999.96
Office supplies 333.33 3,999.96
TV/Music/Maintenance 166.67 2,000.04
Phone 216.67 2,600.04
Manager Wages 11,000.00 132,000.00
Employee Wages 27,848.00 334,176.00
Payroll Tax 3,405.83 40,869.96
Advertising 1 ,500.00 18,000.00
Total Expenses 83,574.00 1,002,888.00
Net Profit 28,796.83 345,561.97
Depreciation 10,267.50 123,210.00
Net 18,529.33 222,351.97
. NortItmst
.&mk
Strength of a Leader. Hand of a Friend.
77 Broadway Street NE
Minneapolis. MN 55413
Ph 612-379-8811
Fx 612- 362- 3262
June 13, 2005
To Whom It May Concern:
Based upon initial discussions with James Sarna, et aI, Northeast Bank would fund up to
$1.7 Million to build a new restaurant at 40th and University in Columbia Heights.
This letter is for discussion purposes only and shall not be deemed to evidence as a
binding agreement on either the part of the bank or the borrower.
Sincerely,
NORTHEAST BANK
dldQ.~
Michael R. Collins
Executive Vice President
MRC:nad
MN State Lie. #8782
Mpls. City Lie. # 03816
Mprs. City Masonry Lie. # 286
CONSTRUCTION CO
Licensed · Bonded. Insured .
19411 Rochester Sf. N.E. · East Bethel. MN 55011
~~wiilOl~lal
Ph: (763) 434-1169
Fax: (763) 434-1170
Cali: (612) 221-8985
June 16, 2005
Attn.; Bob Streetar
Columbia Heights Economic Development Authoritv
590 - 40th Avenue Northeast -
Columbia Heights, Minnesota 55421
Re: Redevelopment of Property to be located at 40th and University
As Contractor, we Seviola Construction, Inc. are submitting an estimate for the
design and construction of the redevelopment of the above narned property for the
following approximate amount of $1,500,000.00 for the structure of the building,
including finish site work only, exterior and interior finish. This is aD estimated
cost oDly. A firm bid will be submitted upon final approval of plans and
specifications and bids are obtained from sub-contractors.
MN State Lie. #8782
Mpis. City lie. # 03816
Mpls. City Masonry Lie. # 286
CONSTRUCTION CO.
LIcensed · Bonded. Insured
19411 Rochester 81. N.E, · East Bethel, MN 55011
~LewiilOJ"lal
Ph: (763) 434-1169
Fax: (763) 434-1170
Cell: (612) 221-8985
June 16, 2005
Attn.; Bob Streetar
Columbia Heights Economic Development Authority
590 - 40th Avenue Northeast
Columbia Heights, Minnesota 55421
Re: Redevelopment of Property to be located at 40th and University
As General Contractor, we Seviola Construction, Inc. can only estimate all phases
of construction from start to finish. At this time we calculate that complete
construction would be from eight to ten months. Once final approval of plans and
specifications and bids are obtained from sub-contractors, we could begin
construction within thirty (30) days. Also, at that time we could produce a final
time schedule for all phases of the redevelopment..
James J. Sarna
clo Sarna's Tobacco Shoppe
4329 Central A venue
Columbia Heights, MN 55421
April 18, 2005
City of Columbia Heights / EDA
590 - 40th Avenue N.E.
Columbia Heights, MN 55421-3878
RE: Potential Redevelopment of 40th and University Avenue, Columbia Heights,
Minnesota ("Property")
Redeveloper: James J. Sarna, James A. Sarna and David M. Sarna, or an entity to be
created for the holding of title to the Property.
Dear Madam or Sir:
The purpose of this letter is to give you an idea of what we propose in connection with the
redevelopment of the Property at 40th and University Avenue.
1. Land Size/Development. We would expect the parcel to be redeveloped to be
approximately 1.074 acres. We assume that the present structures and current concrete located
on the Property would be removed as part of our redevelopment. We would also ask that any
environmental reporting and/or closure letters issued by the Minnesota Pollution Control Agency
in connection with the Property be delivered to us for our review and approval. We have been
advised that all prior contamination located at the Property as a result of the prior use as a gas
station has been removed.
2. Proposed Construction / Buildine. We would propose to construct a building with
6,000 square feet of usable area on the ground level with a 6,000 square foot basement. In
addition to the above, we propose a construction of a roof top dining area on the top of the
ground level ofthe building, which would provide views of the downtown skyline and would be
situated on the west end of the structure to be constructed. We are also anticipating the
construction of an outdoor patio for dining and cocktails to be placed on the west side of the site
which faces University Avenue.
3. Construction Cost / Financine. I would anticipate that the total cost of the building and
fixturing of the business will be anywhere between $1,200,000.00 and $1,500,000.00. Financing
for the construction of this building and all fixtures would be handled privately by a local bank.
/
April 18, 2005
Page 2
4. Description of the Business to be Ooerated. We would expect that the building on the
Property will seat approximately 200 patrons. The outdoor patio seating would be determined
based upon the area available for development. The business will have a full bar and a complete
kitchen on the main floor with storage facilities in the basement of the building. We also
anticipate that the redevelopment of this parcel will have green space area located on the
northwest comer of 40th and University that will beautify the entire redevelopment. We would
expect to have a monument sign fronting 40th and University which notifies the public ofthe
bar/restaurant operation on the Property. We would also expect that the parking lot will hold
between 65-80 cars. More parking may be available if the frontage road which is currently
located adjacent to the Property is vacated.
I hope this information is helpful in connection with your discussion of this project. I am more
than willing to meet with you to provide any further information you may need.
Sincerely,
James J. Sarna
280136_1
Concerned Residents and Property Owners
Of the 40th & University Development
;f-t~
RECEIVED
MAY 2 6 2005
PUBLIC WORKS
May 25, 2005
City of Columbia Heights
Kevin Hansen
Public Works Director
590-40th Ave NE
Columbia Heights MN 55421
763-706-3705 Phone
Dear Kevin:
Twenty-two of the neighborhood residents and property owners that would be affected by the
Sarna's Restaurant project have agreed on the following list of concerns that we believe need to
be addressed before any approval of the Sarna Restaurant project by the Columbia Heights City
Council.
These "Quality of Life" concerns of the residents and property owner that need addressing
with are:
1. Alley between 40th Avenue and Summit Street from 5th Street NE to Lockout Place has
historically severed the residents and businesses whose property borders the alley.
Resident's garages face both East and West, and residents need to enter and exit their
garages from both the East and West without making a u-turn in the ally. Residents and
the businesses require, as they now have, public access to both ends of their alley. Please
note that in the winter, after a snow and before the snow plows get through, cars below
the hill cannot get up the hill and must exit the West end of the alley. This alley must also
continue to serve as a passageway for the city's fire and energy trucks, as well as for
snowplowing and garbage trucks that serve the residents along this alley. Please note that
residents just recently paid to have their alley paved. Those affected are:
a. 334-40th Ave NE
b. 344-40th Ave NE
c. 404-40th Ave NE
d. 418-40th Ave NE
e. 407 Summit Street
f. 3974 5th Street NE
g. 325 Summit Street
h. 341 Summit Street
1. 347 Summit Street
J. 403 Summit Street
k. 407 Summit Street
1. 411 Summit Street
2. Requirement to replace at least one of the two present public sidewalk that allow
residents to walk to the bus stop and convenience store on 40th Avenue, from the
following addresses without walking through private parking lots or cut though private
yards. Those affected:
a. 3923 Lookout
b. 3907 Lookout
c. 3911 Lookout
d. 3915 Lookout (Apartment Building)
e. 3923 Lookout (Apartment Building)
f. 407 Summit Street
g. 403 Summit Street
h. 347 Summit Street
1. 341 Summit Street
J, 325 Summit Street
Without the present sidewalk or street residents will have to walking an extra
2-1/2 blocks down to 5th Street NE and then back to 40th and University or will have to
trespass through private parking lots. Walking though parking lots would be a danger to
young children walking behind parked cars, trucks, and SUV s.
3. An important quality oflife issue is to have a noise abatement buffer zone between any
parking lot and the residential house at 325 Summit Street, or at least 20 feet with a 6'
high brick wall with evergreen trees to buffer the noise from car doors opening and
closing at 1 :30 AM.
4. Environmentally, there should be a water holding pond to keep the rain runoff from
overcoming storm sewers and/or flooding homes and businesses in the neighborhood.
Other Concerns of the prolerty owner and the business at 334_40tb Avenue NE
1. The Business at 334-40 Avenue NE needs to be able to back trailers into the lower level
of the building through the garage door facing Lookout Avenue. To align their truck and
trailer to be square with the garage door opening requires the truck to pull out to the
center on Lookout before backing into the garage. To exit the buildings garage door with
truck and trailer will required an alternative road to Lookout if Lookout will be closed
before the alley entrance. Being able to use the lower level is imperative to the Castle
Distributing and to any future use of the building.
2. The business at 334-40th now has a drive through parking lot on west side of building. To
avoid the need for the cars to have to back out of the parking lot onto 40th Avenue, a main
Columbia Heights roadway, the parking lot needs to be connected to the ally exiting to
Lookout or Summit or the parking lot needs to be made 10' wider at allow cars to turn
around to exit back onto 40th Avenue.
3. There needs to be some planning as to a place to store snow from the parking lots at both
Castle Distributing and the Sarnas Restaurant in the wintertime.
~nc~erel~
~~~ 7j3-788-1970
Michael Go~~8-8200
Of the group of "Concerned Residents and Property Owners"
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUmORITY
PRELIMINARY DEVELOPMENT AGREEMENT
THIS AGREEMENT, dated this _ day of June, 2005, by and between the Columbia
Heights Economic Development Authority, a body politic and corporate under the laws of
Minnesota (the "Authority") and James J. Sarna, James A. Sarna and David M. Sarna
(collectively, the "Developer"):
WITNESSETH:
WHEREAS, the Authority desires to promote redevelopment of certain property within
the City of Columbia Heights, which property is legally described in Exhibit A attached hereto
and depicted on Exhibit A-l attached hereto (the "Property"); and
WHEREAS, the Developer has requested the Authority to explore the use of certain
public assistance, financial and otherwise, to assist with such activities, hereafter referred to as
the "Redevelopment"; and
WHEREAS, the Authority has determined that it is in the Authority's best interest that
the Developer be designated sole developer of the Property during the term of this Agreement;
and
WHEREAS, the Authority and the Developer are willing and desirous to undertake the
Redevelopment if (i) a satisfactory agreement can be reached regarding the Authority's
commitment for public assistance necessary for the Redevelopment; (ii) satisfactory mortgage
and equity financing, or adequate cash resources for the Redevelopment can be secured by the
Developer; and (iii) the economic feasibility and soundness of the Redevelopment; and
(iv) satisfactory resolution of zoning, land use, site design, and engineering issues, and other
necessary preconditions have been determined to the satisfaction of the parties; and
WHEREAS, the Authority is willing to evaluate the Redevelopment and work toward all
necessary agreements with the Developer if the Developer agrees to reimburse the Authority for
its costs relating to the Redevelopment even if the Redevelopment is abandoned or necessary
agreements are not reached under the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and
obligations set forth herein, the parties agree as follows:
1. Negotiations between the parties shall proceed in an attempt to formulate a
definitive development contract ("Contract") based on the following:
(a) the Developer's proposal (when submitted) together with any changes or
modifications required by the Authority;
SJB-260554vl
CL205-30
(b) such documentation regarding economic feasibility of the Project as the
Authority may wish to undertake during the term of this Agreement; and
(c) other terms and conditions of this Agreement.
2. It is the intention of the parties that this Agreement: (a) documents the present
understanding and commitments of the parties; and (b) may lead to negotiation and execution of
a mutually satisfactory Contract for the Redevelopment prior to the termination date of this
Agreement. The Contract (together with any other agreements entered into between the parties
hereto contemporaneously therewith) when executed, will supersede all obligations of the parties
hereunder.
3. During the term of this Agreement, the Developer shall:
(a) By 1,2005, submit a proposal to the Authority, which
proposal must show the location, size, and nature of the proposed Redevelopment,
including sample floor layouts, renderings, elevations, and other graphic or written
explanations of the Redevelopment. The proposal shall be accompanied by a preliminary
schedule for the starting and completion of all phases of the Redevelopment.
(b) Submit an over-all cost estimate for the design and construction of the
Redevelopment.
(c) Submit a final time schedule for all phases of the Redevelopment.
(d) Undertake and obtain such other preliminary economic feasibility studies,
income and expense projections, and such other economic information as the Developer
may desire to further confirm the economic feasibility and soundness of the
Redevelopment.
( e) Submit to the Authority the Developer's financing plan showing that the
proposed Redevelopment is financially feasible.
(f) Furnish satisfactory, financial data to the Authority evidencing the
Developer's ability to undertake the Redevelopment.
4. During the term of this Agreement, the Authority agrees to:
(a) Commence the process necessary to undertake such public assistance as is
necessary pursuant to the terms of the proposal.
(b) Proceed to seek all necessary information with regard to the anticipated
public costs associated with the Redevelopment.
(c) Estimate the Authority's level and method of financial participation, if
any, in the Redevelopment and develop a financial plan for the Authority's participation.
SJB-26D554vl
CUD5-3D
5. It is expressly understood that execution and implementation of the Contract shall
be subject to:
(a) A determination by the Authority in its sole discretion that its
undertakings are feasible based on (i) the projected tax increment revenues and any other
revenues designated by the Authority; (ii) the purposes and objectives of any tax
increment, development, or other plan created or proposed for the purpose of providing
financial assistance for the Redevelopment; and (iii) the best interests of the Authority.
(b) A determination by the Developer that the redevelopment is feasible and
in the best interests of the Developer.
6. This Agreement is effective from the date hereof through 90 Davs ,2005. After
such date, neither party shall have any obligation hereunder except as expressly set forth to the
contrary herein.
7. The Developer shall be solely responsible for all costs incurred by the Developer.
In addition, the Developer shall reimburse the Authority for the following costs:
(a) Upon execution of this Agreement, the Developer has deposited with the
Authority funds in the amount of $3.000, receipt of which the Authority hereby
acknowledges. The Authority may apply such deposit to pay any "Authority Costs,"
which means: reasonable and necessary out-of pocket-costs paid to third parties and
incurred by the Authority from and after May -' 2005, in each case based on actual time
spent in connection with rendering assistance and advice to the Authority as evidenced by
itemized bills and invoices for (i) the Authority's financial advisor in connection with the
Authority's financial participation in redevelopment of the Property, (ii) the Authority's
legal counsel in connection with negotiation and drafting of any related agreements or
documents, and any legal services related to the Authority's or City's participation in
redevelopment of the Property; (iii) any appraiser retained by the Authority in connection
with conveyance of any portion of the Property by the Authority to the Developer or in
connection with determination of the level of public assistance; and (iv) consultants
retained by the Authority for planning, environmental review, and traffic engineering for
development of the Property. At Developer's request, but no more often than monthly,
the Authority will provide Developer with a written report on current and anticipated
expenditures for Authority Costs, including invoices or other comparable evidence.
(b) If at any time during the term of this Agreement the Authority
determines that the amounts deposited by Developer are insufficient to pay Authority
Costs, the Authority shall notify the Developer in writing as to any additional amount
required to be deposited. The Developer may deposit such additional funds within 20
days after receipt of the Authority's notice.
(c) Upon termination of this Agreement in accordance with its terms,
the Authority will return to the Developer the balance of any funds deposited under this
SJB-260554vl
CL205-30
section that are on hand as of the date of receipt of the notice of termination, and less any
Authority Costs incurred through the date of receipt of the notice of termination. For the
purposes of this paragraph, Authority Costs are considered to be incurred if they have
been paid, relate to services performed, or are payable under a contract entered into, on or
before the date of receipt of the notice of termination. If Developer fails to deposit said
funds within twenty (20) days, this Agreement shall be deemed terminated.
This Section 7 shall survive termination of this Agreement and shall be binding on the
Developer regardless of the enforceability of any other provision of this Agreement.
8. This Agreement may be terminated upon 5 days written notice by the Authority to
the Developer if:
(a) an essential precondition to the execution ofa contract cannot be met; or
(b) if, in the sole discretion of the Authority, an impasse has been reached in
the negotiation or implementation of any material term or condition of this Agreement or
the Contract; or
(c) The Authority determines that its Administrative Costs will exceed the
amount initially deposited for such purpose under Section 7(b)' and the Developer does
not deliver additional security to the Authority pursuant to Section 7(b) of this
Agreement.
If the Authority terminates the Agreement under this Section 8, the Developer shall
remain liable to the Authority under Section 7(b) of this Agreement for Administrative Costs
incurred by the Authority through the effective date of termination.
9. The Developer is designated as sole developer of the Property during the term of
this Agreement. The Authority makes no representations or warranties as to control, access or
ownership of any portion of the Property, but agrees that during the term of this Agreement the
Authority will not enter into agreements with any other party to facilitate redevelopment of the
Property.
10. In the event that the Developer, its heirs, successors or assigns, fail to comply
with any of the provisions of this Agreement, the Authority may proceed to enforce this
Agreement by appropriate legal or equitable proceedings, or other similar proceedings, and the
prevailing party in such enforcement action agrees to pay all costs of such enforcement,
including reasonable attorneys' fees.
11. If any portion of this Agreement is held invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining portion of the
Agreement.
12. In the event any covenant contained in this Agreement should be breached by one
party and subsequently waived by another party, such waiver shall be limited to the particular
SJB-260554vl
CL205-30
breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent
breach. This Agreement may not be amended nor any of its terms modified except by a writing
authorized and executed by all parties hereto.
13. Notice or demand or other communication between or among the parties shall be
sufficiently given if sent by mail, postage prepaid, return receipt requested or delivered
personally:
( a) As to the Authority:
Columbia Heights Economic Development Authority
590 40th Avenue NE
Columbia Heights, MN 55421
AUn: Bob Streetar
(b) As to the Developer:
James Sarna
c/o Sarna's Tobacco Depot
2501 University Avenue NE
Minneapolis, MN 55418-3460
14. This Agreement may be executed simultaneously in any number of counterparts,
all of which shall constitute one and the same instrument.
15. This Agreement shall be governed by and construed in accordance with the laws
of the state of Minnesota. Any disputes, controversies, or claims arising out of this Agreement
shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive
any objection to the jurisdiction of these courts, whether based on convenience or otherwise.
16. The Developer hereby agrees to protect, defend and hold the Authority and its
officers, elected and appointed officials, employees, administrators, commissioners, agents, and
representatives harmless from and indemnified against any action by Developer which results in
a loss, cost, fines, charges, damage and expenses, including, without limitation, reasonable
attorneys fees, consultant and expert witness fees, and travel associated therewith, due to claims
or demands of any kind as a result of actions by Developer arising out of (i) the development,
marketing, sale or leasing of all or any part of the Property, including, without limitation, any
claims for any lien imposed by law for services, labor or materials furnished to or for the benefit
of the Property, or (ii) any claim by the state of Minnesota or the Minnesota Pollution Control
Agency or any other person pertaining to the violation of any permits, orders, decrees or
demands made by said persons or with regard to the presence of any pollutant, contaminant or
hazardous waste on the Property deposited on said Property by Developer; and (iii) or by reason
of the execution of this Agreement or the performance of this Agreement. The Developer, and
the Developer's successors or assigns, agree, except for the negligence of the Authority, to
protect, defend and save the Authority, and its officers, agents, and employees, harmless from all
such claims, demands, damages, and causes of action and the costs, disbursements, and expenses
of defending the same, including but not limited to, attorneys fees, consulting engineering
Sffi-260554vl
CL205-30
services, and other technical, administrative or professional assistance incurred by the Authority
as a result of the actions of Developer. This indemnity shall be continuing and shall survive the
performance, termination or cancellation of this Agreement. Nothing in this Agreement shall be
construed as a limitation of or waiver by the Authority of any immunities, defenses, or other
limitations on liability to which the Authority is entitled by law, including but not limited to the
maximum monetary limits on liability established by Minnesota Statutes, Chapter 466.
17. The Developer, for itself, its attorneys, agents, employees, former employees,
insurers, heirs, administrators, representatives, successors, and assigns, hereby releases and
forever discharges the Authority, "and its attorneys, agents, representatives, employees, former
employees, insurers, heirs, executors and assigns, except for gross negligence of the Authority,
of and from any and all past, present or future claims, demands, obligations, actions or causes of
action, at law or in equity, whether arising by statute, common law or otherwise, and for all
claims for damages, of whatever kind or nature, and for all claims for attorneys' fees, and costs
and expenses, including but not limited to all claims of any kind arising out of the negotiation,
execution, or performance of this Agreement between the parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
" 1R-?h()~~4vl
IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed
in its name and behalf and its seal to be duly affixed hereto and the Developer has caused this
Agreement to be duly executed as of the day and year first above written.
[DEVELOPER]
By
By
By
SJB-260554vl
COLUMBIA HEIGHTS ECONOMIC
DEVELOPMENT AUTHORITY
By
Its President- Don Murzyn. Jr.
By
Its Executive Director- Walter R. Fehst
Date:
SJB-260554vl
CL205-30
EXHmIT A
Description of Property
SJB-260554vl
CL205-30
DAVID M. SARNA JAMES A. SARNA JAMES J. SARNA
2501 University Avenue N.E.
Minneapolis, Minnesota 55418
Phone 612-789-6240
June 21, 2005
City of Columbia Heights
Economic Development Agency (EDA)
Attn: Chairman Murzyn
590 - 40th Avenue N.E.
Columbia Heights, MN 55421
RE: Proposed Sports Bar / Restaurant at 40th and University Avenue
Dear Chairman Murzyn and Economic Development Committee Members:
The purpose ofthis letter is to introduce ourselves and give you an idea as to what our proposed
plans are for the redevelopment of the property located 40th and University Avenue. We have
been working with City staff diligently over the past month to arrive an acceptable plan that
meets the EDA's economic redevelopment goals of this parcel and our vision for the
development of this property. Our vision for this comer is the construction of a sports bar /
restaurant that will bring new jobs to the area, increase the tax base, meet the redevelopment
goals of the EDA and result in an aesthetically pleasing project. Our family is committed to the
developing of this site and in connection therewith, we have undertaken a substantial amount of
due diligence.
1. We have hired architects to develop plans and specifications for the
construction/development of our restaurant on the parcel. Our architect is SSV of
Minneapolis.
2. We have hired a contractor, Seviola Construction Company, in connection with the
construction of the proposed restaurantlbar.
3. We have hired a surveyor, Kurth Surveying Company, in connection with the survey of
the entire site.
4. We have contacted our bank, Northeast Bank, for a commitment for financing.
As you may know, the Sarna family has a long history of doing business in the Northeast cu;ea
and family members have lived in the Northeast area for many years. We believe we are well
June 21, 2005
Page 2
known in the community and have made attempts to ensure that the financing, survey work, etc.
is being done by businesses operating in the Northeast area.
In connection with our due diligence, we have submitted letters, drawings and other information
which we believe is necessary to the EDA staff We have also been asked to submit financial
information to Ehlers & Associates to access the economic viability ofthis project. Enclosed is a
copy of our feasibility report. We feel that our projections, in connection with the sales, etc. for
this proposed site, are conservative at best. We have arrived at these numbers by comparison of
other restaurants of similar size in similar cities located in Anoka, Ramsey and Hennepin
Counties. Based upon our analysis, it is our opinion that this restaurant/bar will be a very viable
and profitable business.
On May 18, 2005 we met with approximately 10 neighbors surrounding the proposed
redevelopment site who voiced concerns. We did not hear any opposition to the redevelopment
of this property as a restaurant/bar. One of the issues that were brought up was the status of the
alley on the West side of the property and the City Engineer proposed two options for the
development of this property in connection with the alley. Option A was to take the alley to
Lookout Place and turn the alley southeasterly and have it enter Summit Street. However, this
proposal would take 5400 square feet from the project and give those feet back to the house at
325 Summit which the city had purchased, made the 5400 feet into a separate tract and then sold
325 Summit to a proposed owner- occupant of said property. Option B is to have the alley make
a 90 degree turn and run due south to Summit alongside the house at 325 Summit and exit. It is
our preference to pursue Option B, as Option A would result in the loss of said 5400 feet and our
goal is to keep the proposed parcel at its maximum size to increase the off-street parking area. In
our proposed access plan we have also addressed the issue of Castle Distributions access to its
basement and eight foot overhead door. We believe option (Option B as proposed by the City
Engineer) addresses both the neighbors concerns and the concerns of Castle Distribution plus
makes access for clearing the alley of snow and entry by Fire Department rigs easier because of
the 90 degree right angle turn is easier to make instead of the acute angle in option A which
makes a severe 120 degree turn and would interfere with longer vehicles and trailers.
We are actively pursuing securing all due diligence to get this project underway. However, we
were delayed until we were able to verify that the Minnesota State Transportation Department
(MNDOT) would vacate the frontage road on University Avenue. As you may know, MNDOT
has now agreed to vacate a portion ofthe frontage road on University Avenue. The property
being vacated and added to the site will result in additional parking which is needed for the
redevelopment of the site. However, because of the parking lot configuration, parking, etc., it
appears that the redevelopment of the property may require a variance from the municipal
setback requirement on the West side of the property which faces University Avenue. Currently,
the 15 foot setback for parking results in a loss of about 10 parking spaces. After the vacation of
the road, there would be a 30 foot green space / buffer between our proposed parking area and
the University Avenue right-of-way. We believe this is sufficient green area and setback for the
redevelopment of this property. Further, we will also be requesting a variance from the 15 foot
municipal setback from our proposed building to the parking lot. This is shown on the sketch of
the plans we have provided. We would ask for your consideration in granting the variances as
June 21,2005
Page 3
outlined above. We understand that any variance must be approved by the City council.
However, your insights or thoughts into this would be greatly appreciated.
We would like to take this opportunity to thank the people we have worked with in the City
offices as of this date; Randy Schumacher, Bob Streeter, Kevin Hanson, Jim Molinaro and Cher
Bakken, all of which have been most helpful in directing us through the redevelopment process.
We also appreciate the help that the EDA and its committee members have given us their
thoughts and insights into the redevelopment of this property.
We look forward to the future redevelopment of this property and we are committed to
commence construction as soon as possible. If you require any further information in connection
with the proposed redevelopment of this property, please contact anyone of us at our business in
Columbia Heights, Sarna's Tobacco Depot (763-788-2700).
Sincerely,
David M. Sarna
James A. Sarna
James J. Sarna
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AGENDA SECTION: Items for Consideration ORIGINATING EXECUTIVE
NO: 4-C DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Set Public Hearing for Sale of Property BY: Randy Schumacher BY:
to Huset Park Development Corporation DATE: June 24, 2005
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
M f J 28 2005
BACKGROUND:
The Columbia Heights Economic Development Authority is the owner of real estate acquired through
condemnation located at 450 38th Avenue NE, Columbia Heights, MN (Steel Tech).
The Economic Development Authority has previously agreed in the Contract for Private Development
between EDA and Huset Park Development Corporation, dated October 25, 2004, that the EDA will
convey title of the property to the developer for redevelopment purposes consistent with the contract.
Prior to the approving of the sale, the board of commissioners must hold a public hearing on the question
of whether the EDA should sell the property to the developer.
RECOMMENDATION: Staff recommends the board hold a Public Hearing on July 26,2005 to
determine whether the EDA should sell the property to the developer at approximately 7:00 pm.
RECOMMENDED MOTION: Move to set a Public Hearing for the Sale of Property to the Huset
Park Development Corporation on Tuesday, July 26,2005 at approximately 7:00 p,m. in City Hall
Conference Room 1.
Attachments
EDA ACTION:
h:\consent Form200S\EDA Set Public Hearing Sale of Property-Huset Park Dev.
NOTICE OF PUBLIC HEARING
NOTICE is hereby given that the Board of Commissioners of the Columbia Heights
Economic Development Authority ("ED A") will meet in the Columbia Heights City Hall, 590 - 40th
Avenue N.E., Columbia Heights, Minnesota 55421 at 7:00 p,m. on July 26,2005, to conduct a public
hearing on the question whether the EDA Board should authorize the sale or conveyance of real
estate to Huset Park Development Corporation (''Redeveloper'') for redevelopment in accordance
with the Downtown CBD Redevelopment Project. Said real estate is located at 450 - 38th Avenue
NE in the City. A detailed legal description of said real estate and a map depicting said real estate are
on file in the office of the Executive Director of the EDA and are available for public inspection at the
Columbia Heights City Hall during regular business hours or by contacting Randy Schumacher of the
EDA at 763-706-3675 at City Hall.
Any person wishing to express an opinion on the matters to be considered at the public
hearing will be heard orally or in writing.
BY ORDER OF THE BOARD OF COMMISSIONERS.
Dated:
, 2005 (Date of Publication)
Executive Director
Columbia Heights Economic
Development Authority
RJL-258450v2
CL205-25
RESOLUTION NO.
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY
COUNTY OF ANOKA, STATE OF MINNESOTA
RESOLUTION AUTHORIZING SALE OF PROPERTY
WHEREAS, the Columbia Heights Economic Development Authority (the "EDA") is
owner of real estate acquired through condemnation located at 450 - 38th Avenue N.E., Columbia
Heights, MN, and which is legally described in Exhibit "A" attached hereto ("Property"); and
WHEREAS, the EDA has previously agreed in that certain Contract for Private
Redevelopment between the EDA and Huset Park Development Corporation ("Redeveloper") dated
October 25, 2004, that the EDA will convey title of the Property to the Redeveloper for
redevelopment consistent with said contract; and
WHEREAS, prior to adoption of this resolution, the Board of Commissioners held a public
hearing, after proper notice pursuant to Minn. Stat. S 469.105, at which they provided the
opportunity for public comment on the question of whether the EDA should sell the Property to the
Developer.
NOW THEREFORE, BE IT RESOLVED BY THE BOARD OF COMMISSIONERS OF
THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY, AS FOLLOWS:
1. Conveyance of the Property by the EDA to the Redeveloper in accordance with the
provisions of said Contract for Private Redevelopment is approved.
2. The Executive Director and President of the EDA are hereby authorized and directed
to execute all appropriate documents to convey title of the Property to the Redeveloper in
accordance with the Contract for Private Redevelopment between the EDA and Huset Park
Development Corporation.
3. The Executive Director and President of the EDA, staff and consultants are hereby
authorized and directed to take any and all additional steps and actions necessary or convenient in
order to accomplish the intent of this Resolution.
Adopted this _ day of
,2005.
Don Murzyn, Jr., President
Cheryl Bakken- Secretary
RJL-263516vl
CLZ05-25
EXHIBIT A
PARCEL G (Abstract) (PIN No. 35-30-24-34-0002) (450 - 38th Avenue N.E.)
Property Address: 450 - 38th Avenue NE, Columbia Heights, Minnesota 55421.
Legal Description of Pro pert v to be Acquired:
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
EXCEPT:
That part of Lot 3, Auditors Subdivision Number 50, Anoka County, Minnesota which lies
southeasterly of the following described line;
Said line commences at the northwest comer of said Lot 3: thence south 89 degrees
55 minutes 31 seconds east, on an assumed bearing, along the north line of said Lot
3 a distance of 143.15 feet to the point of beginning of said line; thence
southwesterly on a non-tangential curve a distance of 83.69 feet, said curve has a
radius of 815.00 feet, a central angle of 05 degrees 53 minutes 02 seconds, a chord
length of 83.66 feet and a chord bearing of south 38 degrees 02 minutes 41 seconds
west to the south line of said Lot 3, and there terminating.
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-263516vl
CL205-25
A-I
TO:
EDA Commissioners
FROM:
Robert Streetar, Deputy Executive Director
DATE:
23 June 2005
SUBJ:
Ryland Homes Marketing and Sales Trailer
Ryland Homes would like to place a temporary sales trailer at the Burger King site
beginning in June through December 2005 for purposes of marketing their new home
construction in the Industrial Park, Once a model unit is built, which is expected to be
before December 2005, all sales and marketing will move to that location. The trailer,
landscaping, and parking will be similar to Nedegaard's sales trailer at the Kmart site.
Upon vacancy, Ryland must return the site to its previous condition. Staff recommends
providing this site free of charge because the positive public relations it will have on
Columbia Heights. The City attorney has prepared a short-term lease that is attached.
Also attached is Ryland's site plan. Placing the sales trailer at this location is a great
way to market Columbia Heights and the Industrial Park redevelopment.
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tZ099zzzse YVd tZ:01 SOOZ/Ol/90
LEASE
THIS INDENTURE of lease, dated as of the 29day of June, 2005 by and between the
Columbia Heights Economic Development Authority, hereinafter referred to as "Landlord",
and , hereinafter referred
to as "Tenant".
"Leased Premises" - The land located at 3939 Central Avenue NE in the City of
Columbia Heights, County of Anoka and State of Minnesota,
1. Term. In consideration of Tenant's performance of Ten ant's obligations under this
Lease, Landlord hereby leases the Leased Premises to Tenant for a term commencing on the date
hereof (the "Commencement Date") and expiring on the 31 day of December , 2005(the
"Expiration Date"), unless sooner terminated for Tenant's default as provided for in this Lease.
2. Termination. This Lease may be terminated by the Landlord upon 30 days'
written notice to the Tenant of Tenant's default.
3. Rent. Tenant shall pay rent at the rate of $0 per month. Landlord shall refund
any rent on a per diem basis upon Tenant's early surrender of the Leased Premises, In the event
Tenant holds over, without waiving any other remedy or rights, Landlord shall receive rent at the
rate of $0 per month during such holdover period as Additional Rent.
4, Security Deposit. Tenant shall place a security deposit of $3,000 with the
Landlord upon execution of the Lease.
5. Tenant shall use the Leased Premises for location of a temporary sales trailer as
set forth on Exhibit A attached hereto and made a part hereof and for no other purpose, Tenant
shall comply with all applicable laws, ordinances and governmental regulations affecting the
Leased Premises and the use of the Leased Premises.
6, Tenant shall pay its own charges for telephone service and all other charges for
water and sewer, garbage and refuse removal, electricity, natural gas, fuel oil and any other
utility services furnished to the Leased Premises, and all other costs associated with the use,
operation and management of the Leased Premises during the term of the Lease.
7. Tenant shall not make any additions or improvements in or to the Leased
Premises other than as set forth in Exhibit A without Landlord's prior written consent. Upon its
vacation of the Leased Premises, Tenant shall remove all installations, physical additions or
improvements, leasehold improvements, trade fixtures, equipment, inventory, and materials on
the Leased Premises, which were used or produced by Tenant on the Leased Premises in
connection with Tenant's use.
8. Tenant shall hold Landlord harmless from and indemnify and defend Landlord
against any claim or liability arising in any manner from Tenant's use, improvement or
occupancy of the Leased Premises, or relating to the death or bodily injury to any person or
damage to any Leased Premises present on or located in or upon the Leased Premises, including
the person and Leased Premises of Tenant's employees and all persons in or upon the Leased
Premises at Tenant's invitation or sufferance. All personal property kept, maintained or stored
on the Leased Premises shall be kept, maintained or stored at the sole risk of Tenant. Tenant
agrees to pay all sums of money in respect of any labor, service, materials, supplies or equipment
furnished or alleged to have been furnished to Tenant in or about the Leased Premises, and not
furnished on order of Landlord, which may be secured by any mechanic's, materialmen's or other
lien. Tenant may contest such lien, on the condition that Tenant first provide to Landlord cash,
bond, or other security against such lien which Landlord reasonably determines to be sufficient.
9. Waiver of Claims: Tenant hereby waives and releases all claims, liabilities and
causes of action against Landlord and its agents, servants and employees for loss or damage to,
or destruction of, any Tenant improvement located in, upon or about the Leased Premises
resulting from fire, explosion or the other perils, whether caused by the negligence of any said
persons or otherwise,
10. Tenant shall, at its expense during the term of this Lease, keep in full force and
effect a policy or policies of "occurrence" based commercial general liability insurance,
providing coverage for bodily injury, property damage, personal injury, and contractual liability,
on terms and with companies acceptable to Landlord. Such Policy or Policies shall name both
Tenant and Landlord as insured parties and shall have combined policy limits in amounts not less
than $1,000,000,000. Such policy or policies shall provide that thirty (30) days' written notice
must be given to Landlord prior to cancellation thereof. Tenant shall furnish evidence
satisfactory to Landlord at the time this Lease is executed that such coverage is in full force and
effect.
11. Tenant agrees not to further sublet any portion of the Leased Premises or to
transfer or assign this Lease without obtaining the prior written consent of Landlord, which
consent Landlord may grant or deny at Landlord's sole discretion. Landlord's right to assign this
Lease is and shall remain unqualified. Tenant's assignment of this Lease or subleasing of the
Leased Premises shall not relieve Tenant from any of Tenant's obligations under this Lease.
12. If Tenant remains in possession of the Leased Premises after the expiration or
termination of this Lease and without the execution of a new Lease, it shall be deemed to be
occupying said Leased Premises as a Tenant at sufferance, subject to all the conditions,
provisions and obligations of this Lease insofar as the same can be applicable to a tenancy at
sufferance, including but not limited to the duty to pay Additional Rent.
13. Upon expiration or termination of this Lease, Tenant shall peaceably surrender the
Leased Premises, and shall, at its expense, remove all improvements from the Leased Premises
which were installed by Tenant, so long as such removal will cause no injury to the Leased
Premises. Tenant further agrees that upon expiration or termination of this Lease, Tenant shall
return the Leased Premises to its previous condition immediately prior to the Commencement
Date.
2
14. Tenant agrees to permit Landlord and the authorized representatives of Landlord
to enter the Leased Premises at all times, without interrupting or interfering with Tenant's
business activities, for the purpose of inspecting the same as may be desired by Landlord.
15. Events Of Default: The occurrence of anyone or more of the following events
shall constitute an Event of Default:
(1) Tenant's failure to pay rent when due;
(2) Tenant's failure to maintain the insurance required herein, which failure
remains uncured following Landlord's written notice to Tenant of Tenant's failure to
perform such obligation;
(3) Tenant's attempt to sublet any portion of the Leased Premises, or assign its
interest under this Lease, without the prior written consent of Landlord;
(4) Tenant's failure to fully perform any of Tenant's obligations, which failure
remains uncured following Landlord's written notice to Tenant of Tenant's failure to
perform such obligation; or
16. Landlord's Remedies: If an Event of Default occurs, Landlord shall have the
following remedies;
(1) Landlord may terminate this Lease by written notice to Tenant in which
case Tenant shall vacate the Leased Premises in accordance with Section 14. Neither the
passage oftime after the occurrence of an Event of Default nor Landlord's exercise of any
other remedy with regard to such Event of Default shall limit Landlord's right to
terminate the Lease by written notice to Tenant.
(2) Landlord may, whether or not Landlord has elected to terminate this
Lease, immediately commence summary proceedings in Unlawful Detainer to recover
possession of the Leased Premises, In the event of the issuance of a Writ of Restitution
in such proceeding, upon Landlord's reentry upon and repossession of the Leased
Premises, Landlord may remove Tenant and all other persons from the Leased Premises
(subject to Tenant's right to remove its improvements pursuant to Section 14). In the
event Landlord reenters the Leased Premises pursuant to this paragraph and Tenant fails
to remove its improvements, all improvements not removed by Tenant shall be deemed
abandoned, and title thereto shall transfer to Landlord upon Tenant's vacation of the
Leased Premises.
(3) In addition to all other remedies of Landlord, Landlord shall be entitled to
reimbursement upon demand of all reasonable attorneys' fees which Landlord incurs in
connection with any Event of Default.
(4) Landlord may initiate legal proceedings to enforce the provisions of this
Lease.
3
No remedy provided for herein or elsewhere in this Lease or otherwise available to Landlord by
law, statute or equity, shall be exclusive of any other remedy, but all such remedies shall be
cumulative and may be exercised from time to time and as often as the occasion may arise,
17. Landlord's Disclaimer of Warranty: Landlord disclaims any warranty that the
Leased Premises is suitable for Tenant's use.
18. Relationship of Landlord and Tenant: The Lease does not create the relationship
of principal and agent or of partnership or of joint venture or of any association between
Landlord and Tenant, the sole relationships between the parties hereto being that of Landlord and
Tenant under this Lease.
19. Waiver: No waiver of Landlord's remedies upon the occurrence of an Event of
Default shall be implied from any omission by Landlord to take any action on account of such
Event of Default, and no express waiver shall affect any Event of Default other than the Event of
Default specified in the express waiver and such an express waiver shall be effective only for the
time and to the extent expressly stated. One or more waivers by Landlord shall not then be
construed as a waiver of a subsequent Event of Default.
20. Choice of Law: The laws of the State of Minnesota shall govern the validity,
performance and enforcement of this Lease.
21. Time: Time is of the essence in the performance of all obligations under this
Lease.
22, Entire Agreement and Amendment: This Lease and the Exhibit attached hereto
and forming a part hereof, constitute the entire agreement between Landlord and Tenant
affecting the Leased Premises and there are no other agreements, either oral or written, between
them. No subsequent alteration, amendment, change or addition to this Lease shall be binding
upon Landlord or Tenant unless reduced to writing and executed in the same form and manner in
which this Lease is executed.
(signatures on following page)
4
IN WITNESS WHEREOF, the Landlord and the Tenant have caused these presents to be
executed in form and manner sufficient to bind them at law, as of the day and year first above
written.
Dated:
,2005
LANDLORD: Columbia Heights Economic
Development Authority
By:
Walt Fehst, Executive Director
By:
Don Murzyn, President
Dated:
,2005.
TENANT: Ryland Homes
By:
By:
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CITY OF COLUMBIA HEIGHTS
590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692
Visit Our Website at: www.ci.columbia-heights.mn.us
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
DATE:
June 27, 2005
TO:
ALL EDA COMMISSIONERS
Walter R. Fehst, City Manager
Robert Streetar, Community Development Director
Randy Schumacher, Project Manager
FROM:
Cher Bakken, Secretary
RE:
Additional Information for EDA Agenda
The attached supplemental information was received in our office on 6-27-2005. Please attach
this to the EDA agenda item 4-B, Sarna Agreement for 40th & University Redevelopment.
THE CiTY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES
EQUAL OPPORTUNITY EMPLOYER
_... _I.s.. _1'"
......
2501 UNIVERSITY AVENUE NE
MINNEAPOLIS, MINNESOTA 55418
~
Phone 612-789-6240
JUNE 24, 2005
OFFER SHEET 40TH AND UNWERSITY AVE
OFFERING PRICE- $75,000.00
REQUIRED:
PROPERTY BEING SOLD MUST BE INCLUSIVE OF ALL FOOTAGE SHOWN ON THE KURTH SURVEY.
THIS INCLUDES APPROXIMATELY 1112 FOOT BY ALLEYWAY.
"'IISIIM ..ISI.... _1111.
2501 UNIVERSITY AVENUE NE
MINNEAPOLIS, MINNESOTA 55418
Phone 612-789-6240
June 26, 2005
EHLERS MEMO
1.
2. CONSTRUCTION COSTS SUBMlTIED
3. NO RENTAL RATE IS NECESSARY AT 1HIS TIME AS ALL COSTS ARE COVERED ON
THE RESTAURANT PROFIT AND LOSS STATEMENT. THERE WILL BE A PARTNERSHIP
SET UP IN THE FUTURE AND THE MORTGAGE PAYMENTS WILL BE MADE IN THE
PARTNERSHIP'S NAME AND THE P&L WILL CHANGE MORTGAGE TO LEASE PAYMENT.
4 REPLACEMENT RESERVES ARE NOT PART OF SARNA'S BUSINESS ACCOUNTING
SETUP. REPLACEMENTS ARE PAID FOR AS THEY ARE NEEDED.
5. A PRE-APPROVAL LEITER IS BEING OBTAINED FROM NORTHEAST BANK..
6. -----------------
7. -----------------
MN State Lie. #8782
Mpls. City Lie. # 03816
Mpls. City Masonry Lie. # 286
.
CONSTRUCTION CO.
Licensed' Bonded. Insured
Ph: (763) 434-1169
Fax: (763) 434-1170
Cell: (612) 221-8985
19411 Rochester 81. N.E.. _ East Bethel, MN 55011
LAND COSTS:
PROPERTY
TESTS, SURVEYS
BUlLDING COSTS
BUlLDING SHELL (INC. DESGN. ENG.)
INTERIOR FINISHING
CHANGE ORDERS
DEVE:OPMENT COSTS
GOVERNMENT CHARGES
SACIWAC
CLOSING FEES, TAXES
DEVELOPMENT FEE
PROJECT MANAGEMENT
BUlLDING CONTINGENCY
$75.000
8.500
$83.500
$949.500
300.000
25.000
$1,274.500
$12.000
15.000
20.000
25.000
40.000
30.000
$142.000
ESTIMATED BUD..DING AND DEVELOPMENT
$1,500,000
CITY OF COLUMBIA HEIGHTS
590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692
Visit Our Website at: www.ci.columbia-heights.mn.us
EDA COMMISSIONERS
Don Murzyn Jr.
Patricia Jindra
Bruce Kelzenberg
Gary L. Peterson
Bruce Nawrocki
Bobby Williams
Tammera Ericson Diehm
ECONOMIC DEVELOPMENT AUTHORITY
REGULAR MEETING
7:00 P.M., TUESDAY, JUNE 28, 2005
CITY HALL, CONFERENCE ROOM 1
AGENDA
1. CALL TO ORDER/ROLL CALL
2. PLEDGE OF ALLEGIANCE.
3. 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 approve the consent a!!enda items as listed below:
1) Approve EDA Meetin!! Minutes for April 26. 2005.
2) Approve Resolution 2005-09 for the Financial Report and Payment of Bills for the
months of April and Mav of 2005.
4. ITEMS FOR CONSIDERATION
A. Goal Setting
B. Sarna Agreement for 40th & University Redevelopment
MOTION: Move to Approve the Preliminary Development Agreement with
for the redevelopment of the City owned property at 40th &
University A venue; and furthermore, to authorize the President and Executive Director to enter
into an agreement for the same.
C. Set Public Hearing for Sale of Property to Huset Park Development Corporation
MOTION: Move to set a Public Hearing for the Sale of Property to the Huset Park Development
Corp. on Tuesday, July 26,2005 at approximately 7:00 pm in City Hall, Conference Room 1.
D. Ryland Homes Marketing and Sales Trailer
MOTION: Move to approve the lease authorizing Ryland Homes to place a temporary sales
trailer at the Burger King site from June through December of2005; and furthermore to
authorize the President and Executive Director to enter into an agreement for the same.
5. ADMINISTRATIVE REPORTS
6. ADJOURNMENT
Walter R. Fehst, Executive Director
H: \edaAgenda2005\6- 28-2005
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
nnlv
EQUAL OPPORTUNITY EMPLOYER
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
REGULAR MEETING MINUTES
APRIL 26,2005
CALL TO ORDER/ROLL CALL
President, Murzyn, Jr., called the meeting to order at 9:18 p.m.
Present:
Don Murzyn Jr., Patricia Jindra, Gary L. Peterson, Bobby Williams and Bruce
Nawrocki, Tammera Ericson Diehm, and Bruce Kelzenberg
PLEDGE OF ALLEGIANCE
CONSENT AGENDA
Auproval of Minutes
Financial Report and Payment of Bills
Nawrocki asked why in the March financial report for Community Development shows we are a
little over budget for personal services. Streetar stated once Walker started managing Parkview
Villa, staff administrative hours are paid back to the City on a quarterly basis.
MOTION by Ericson Diehm, second by Peterson, to Adopt the consent agenda items as listed.
All ayes. Motion Carried.
ITEMS FOR CONSIDERATION
NEI Site Redevelopment Prouosal
Streetar stated Legacy and Walker are partnering together and would like to encourage the EDA
to get involved in a Senior Housing Community plan on the northeast corner of the NEI site.
Seniors could sell their home, move into this 66-unit community that would still allow them to
receive a tax base for the unit. There are three concepts: 1) a senior housing community; 2)
library; and 3) a community center on the site. The plan would meet some of the Comprehensive
goals and the goals of the City to develop housing in the City and retain residents. It breaks
down to about 90 cents per sq foot, which is approximately the same as Parkview Villa. Streetar
held up a drawing of the proposed site. In the past the board has not be interested in rental
housing. Mr. Lamb, Legacy Management Corporation and Mr. Koester, the architect, are in
attendance to answer any questions.
There are two primary costs involved: 1) Share Cost- a one-time "down payment" that
purchases a share in the corporation and 2) Monthly Fees-include the mortgage principal and
interest payments, real estate taxes, operating expenses, liability insurance for the building, legal
and accounting services, professional management, lender-required reserves, as well as interior
and exterior maintenance, sewer, water, trash, and recycling. Members would be responsible for
their phone and electricity bills. Interest expensed and real estate taxes incurred on the home
would be tax deductible.
The concept meets three of the housing goals in the Comprehensive Plan; 1) promote a variety of
life-cycle housing, 2) promote medium, density owner-occupied housing, and 3) promotes
Economic Development Authority Meeting Minutes
April 26, 2005
Page 2 of 4
housing that attracts and retains residents. Also in the demand study preformed by Maxfield
indicates a demand between 100 and 125 units ofindependent senior housing through 2013.
Staff is recommending the EDA enter into a preliminary development agreement with Legacy
that would allow them to prepare a proposal for review and approval before October 28, 2005
with the developer paying $5,000 in escrow to pay for EDA expenses to review the proposal, as
well as $3,000 upon execution of this agreement, with a possible 90 day extension to the
agreement for an additional $3,000.
Ericson Diehm asked what age of seniors would qualify for the units. 0 'Donnell stated it would
be 55 and over, owner occupied units.
Nawrocki asked who is Legacy and are they connected to the Legacy company at 49th & Central.
Mr. Koester stated they have been in business since 1974, owned by the Gibbons family, has
been developing affordable work force housing, they used to own nursing homes in Minneapolis,
which they sold approximately seven or eight years ago, they have built a library in St. Paul, and
they are not connected with Legacy company.
Nawrocki stated 1) until the City has an overall plan for the property it doesn't make sense to
split it up; 2) he's not interested in working with Walker with the experiences from this building;
and 3) we should look at a competitive bid from other companies for this property.
Ericson Diehm stated at some point there was talk of coop units in the Industrial Park, will that
happen. Schumacher stated the industrial park would not have coop units.
Peterson stated he agreed with Nawrocki, that we are a little premature at signing an agreement,
as City Council has not explored the options for the site, would like to have some serious
meetings with the people interested in the community center and library, we need to get on the
same page, make some decisions, there is a group that is working on getting gym space in the
city, he isn't in favor of any gym space made available for other cities. Kelzenberg stated he likes
the plan, but would like to see us go out for bids. Williams stated he agreed with Peterson and
Nawrocki. Murzyn, Jr. stated he has reservations of putting the Community Center on that site,
would like to see the City Council make a decision as to what they want on the site, has heard the
Council is against it and preferred to table this item until a decision is made by City Council.
Ericson Diehm stated she agrees the City Council needs to determine what they want there, but
hopes the developers know that we appreciate the plans they have before us and asked why were
waiting, what do we need to get things going. Fehst agreed the council needs to make a decision,
understand the board has had some issues with Walker staff, but felt Walker has done a lot of
good for the building, and would like to keep Legacy and Walker as a possible developer of the
site.
Streetar asked if the board wants staff to stop marketing the site until after the EDA and City
Council have made a decision. Murzyn, Jr. stated yes, and we should have a joint meeting with
the City Council and the EDA to make some determinations.
Economic Development Authority Meeting Minutes
April 26, 2005
Page 3 of4
Streetar stated on May I1h the EDA board is invited to attend the council worksession where we
will be presenting all of the options for the community center, which will give them all of the
information that staff and committees have obtained. Nawrocki felt the meeting on the I1h is
premature, as people he has talked to aren't supportive, Gym's should work in conjunction with
the school district, they should meet with us, give them time to work with the people in the
community to see what the actual desires are, who is going to operate it and pay for it.
Murzyn, Jr. stated this item is tabled until the City Council and EDA meet and come up with
some decisions.
Adopt Resolution 2005-08. First Amendment to Contract for Private Redevelopment
Schumacher stated the EDA entered into a redevelopment agreement in September of 2003 with
New Heights Development LLC (Bruce Nedegaard) for construction of owner-occupied housing
and commercial development at the Kmart site. The last several months, Nedegaard has
attempted to acquire a 60-foot roadway easement to access his development from 4cjh from the
current owner, Mr. Walter Scott that owns the property where the savers building is located, with
no response. Staff has prepared an amendment to the development agreement that would enable
the City to move forward in the process to obtain this needed right-of- way. The developer would
be responsible for all costs associated with this acquisition. Kennedy and Graven prepared the
amendment for board review. Staff is recommending the EDA approve the proposed contract
amendment and request City Council commence with the eminent domain proceedings for the
right-of-way, as this is needed for public purposes.
Nawrocki asked what is the difference between temporary and permanent easement, and stated if
he is correct, doesn't the county need a portion of 49th. Streetar stated that is correct that the
county needs a portion of 4cjh and in the original agreement the owner of the home next to the
development site, requested a rock wall be put up so that is why the plan shows a temporary and a
permanent easement. The bold line on the map is the center of the road and will be shifted 10 feet
to the west, which isn't shown on the map.
Motion by Ericson Diehm, second by Peterson, to Adopt Resolution 2005-08, a Resolution
Approving a First Amendment to Contract for Private Redevelopment between the Columbia
Heights Economic Development Authority and New Heights Development, LLC; and
furthermore, to direct the President and Executive Director to enter into an agreement for the
same. All ayes, Motion Carried.
Concept Redevelopment Plan for the property located at 40th & University
Schumacher stated this is an introduction and general concept plan only, not a plan review.
Tom and Gordy Solz, real estate advisors for the proposed developer, Jim Sarna, are requesting
feedback from the EDA on a concept plan to construct a 6,000 square foot restaurant on the
southeast corner of 4dh & University. Mr. Sarna has hired SSV Architects to prepare four
alternative site plans for EDA consideration. The proposed restaurant includes rooftop dining, a
lounge and outdoor seating to accommodate approximately 200 patrons. The issue tonight is that
Mr. Sarna is requesting feedback to see if the EDA is interested in a restaurant on that site. The
EDA has used Community Development Block Grant funds to obtain the properties, so the board
regulates what will be built on the site. The Preliminary Development Agreement would be the
Economic Development Authority Meeting Minutes
April 26, 2005
Page 4 of 4
next step if the board would be interested.
Dave Sarna stated it would be a bar and restaurant, casual dining, similar to Applebee's, but
less noisy, and would cost approximately 1.5 million to develop it.
John Seviola stated he and his son have built many buildings for Mr. Sarna and the Sarna's are
very willing to work with the community.
Nawrocki stated he is concerned with the attached properties and alley access, what happens to
the alley is important, he understood they want to abandon a portion of the alley and the access
from lookout to 4dh Avenue. Peterson stated he has been involved with Mr. Sarna, they will
work with the community, are a good company, produce a good end product, would work with
the City on such things as screening, trees, bushes, lighting, etc., they are willing to provide
these things.
Joyce Shellito stated as a resident in the area, she felt out of the loop of what is happening on the
site, needs to get a 32-Joot trailer backed into their yard through the alley. Peterson stated this
is why you were invited hear tonight so you can hear what this concept is. Mr. Shellito stated he
felt the idea of a restaurant on that corner was a good idea.
Mike Gondek stated he needs access from the alley to his business. Streetar suggested Mr.
Gondek and the Shellitols meet with the Sarna's to discuss the issues, if the EDA likes the idea of
the restaurant.
Ericson Diehm stated her initial response to the general concept is in favor of it and suggested
the Sarna's set up meetings with the neighbors.
Murzyn, Jr. felt a restaurant was a good idea for the site and directed staff to work with the
Sarna's to develop documents for review for a restaurant concept.
ADMINISTRATIVE REPORTS- none
ADJOURNMENT
President, Murzyn, Jr., adjourned the meeting at 10:53 p.m,
Respectfully submitted,
Cheryl Bakken
Community Development Secretary
H: \EDAminutes2005\4-26-2005
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
Meeting of: June 28, 2005
AGENDA SECTION: Consent Agenda ORIGINATING EXECUTIVE
NO: DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Financial Report and Payment of Bills BY: Cher Bakken BY:
DATE: June 22, 2005
BACKGROUND:
The bound Financial Report for the months of April and May 2005 draft Resolution 2005-09 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 May 31, 2005.
RECOMMENDATION:
Staff will be available to answer specific questions. Ifthe 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 2005-09, Resolution ofthe Columbia Heights Economic Development
Authority (EDA) approving the Financial Statement and Payment of Bills for the months of April and
May 2005.
EDAACTION:
H:\EDAConsent2005\Fin Rep 2005 Res. 2005-09
EDA RESOLUTION 2005-09
RESOLUTION OF THE COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT
AUTHORITY (EDA) APPROVING THE FINANCIAL STATEMENT FOR APRIL AND
MAY 2005AND PAYMENT OF BILLS FOR THE MONTHS OF APRIL AND MAY 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 months of April and May of2005 and the list of bills
for the months of April and May 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 :\Resolutions2005\EDA2005-09
TO:
EDA Commissioners
FROM:
Robert Streetar, Deputy Executive Director
DATE:
24 June 2005
SUBJ:
Goals Setting
At the meeting on the 28th, EDA Commissioners will be discussing the redevelopment
opportunities and challenges facing the City, and how best to address this opportunities
and challenges. There will be a short PowerPoint presentation with discussion to follow.
ECONOMIC DEVELOPMENT AUTHORITY (EDA)
DATE:
June 28, 2005
TO:
EDA
FROM:
Kirsten Partenheimer
RE:
Community visioning for the CBD redevelopment
The purpose of this memorandum is to update EDA Commissioners on the status ofthe downtown
redevelopment and renewal planning process. This includes the stretch of Central Avenue from
37th Avenue to 42nd Avenue. With assistance from the planning consulting firm Dahlgren,
Shardlow, and Uban, Inc. (DSU), the city is moving through the planning process and has been
working with residents, business and property owners to identify issues and concerns, as well as a
vision for the future. DSU's contract is being paid for with a grant from the Met Council.
Back!!round
On May 16 and 19, there were two meetings held at the public library. The first ofthese visioning
workshops was conducted with 27 business and property owners in Columbia Heights over the
lunch hour, followed by a similar workshop in the evening on May 19 with 30 residents. Those in
attendance discussed their issues, concerns and hopes for this area and the feedback will be used to
identify the prevalent challenges and opportunities to address in the next planning stage. A record
of the comments from the two meetings is attached for your review.
When asked to assess the opportunities within the business district and what role they could play in
a vision for the future, the theme that resonated most with participants was the opportunity to create
a vibrant district with increased employment, small businesses and neighborhood retail, attractions
for families and community gathering spots, such as a community center. Fayade improvements,
street beatification (such as trees and flowers), proper street lighting and measures to increase
safety would create an area residents can be proud of.
While participants had visions of a re-energized business district with higher end retail and
increased foot traffic, safety and crime, both real and perceived, topped the list of the issues and
concerns. They cited blighted buildings, too little visibility on the street and poor visual
appearances as additional concerns. They would also like to address the poor pedestrian
environment and the need for more businesses that serve the community.
Next Steps
The next phase includes preparing redevelopment concepts for the area of 39th Avenue and Central
Avenue, which includes the Burger King, Mady's and Columbia Heights Rental properties, which
will be brought back to the EDA at a later meeting, Finally, we are sending out a summary ofthe
meeting to the members of the public who participated in our May meetings.
H:/Consent2005\
Feedback from Business Owners and Community Residents
May 16th and 19th, 2005
Visions and Statement Number of
Opportunities Responses
Need good quality stores/Upgrade retail to attract more people 15
Vibrant businesses - good business mix 14
A re-energized community with young families and family-focused
areas such as parks and a community center 14
A viable retail and small business area through increased tax base
and employment opportunities 12
Maintained "old look" in the area, reinforced character and continuity
along the street front 12
Bring nearby residents into the business district 12
Attract people from outside the community- bring pedestrians to
shop/Business that will bring foot traffic shoppers 12
Get rid of duplexes 9
Trees and flowers (beautiful) 9
Attract showers and residents 9
Need family restaurants/coffee shops/bookstore... additional
neighborhood retail 9
Practical stores/trendy restaurant/American type restaurant 9
Building facade upgrade/city low interest loan program to improve
facades 8
Safe 7
Street light is better 7
City we can be proud of 6
Ethnic and business diversity 6
Arts - attract 6
Incorporate the design team recommendations 5
Theater with DQ 5
Historical sense 5
Crestview/Bobby Steve/NedegaardlWash. McRevy good 4
Presence of community feel to city 4
Open space - Central 3
Unique experience offered in city 3
Businesses brought up to the street front 3
Defined bike lanes 3
Quaint buildings 2
Specialty shops 2
Strong pedestrian traffic 2
Transit hub - good 2
1 and 2 story shops with side/rear parking 2
Entertainment - family activity 2
Close proximity to downtown 2
No single-family homes on Central 1
Nice clinic 1
Good small businesses 1
New street improvements have reduced traffic accidents (Le. turn
lane) 1
Homes SF that have been removed 1
Streetscape - good 1
Clean 1
Need more jobs 1
Good tenants 1
Quaint buildings 1
Traffic/pedestrian friendly 1
Accessible parking available on 40th and Central 1
Parking is better (I.e. on-street parking and bus cut-outs) 1
High traffic counts and good traffic flow 1
Effective transit (bus service and transit hub) 1
non-ethnic restaurants 1
Issues and Number of
Concerns Statement Res Donses
Safety 23
* Business mix 23
* Businesses bringing in wrong people 23
* Too little activity/visibility on the street 23
* Bar at the Mall 23
* Few people/business type 23
* Safety and crime - perceived and real 23
Competition from the Apache businesses (City needs a better image
to compete) 15
Need businesses that service the community (Le. shops, restaurants) 13
Need to improve communication between city and
community/businesses about redevelopment projects 10
Businesses need to improve their physical appearance to increase
their appeal 9
Poor building fayade - visual appearance, city assistance 8
Blighted buildings 8
Poor development pattem with single-family uses breaking up
commercial activity on Central Ave. 7
Where is the money going to come from? 7
Apartments - inadequate parking, visual appearance, traffic/Need to
fix up rental properties 6
Poor pedestrian environment/unfriendly sidewalks 6
Safety and crime 6
Redevelopment may force current businesses out 6
Need to attract families to the community 6
Poor foot traffic 5
Negative news media about City 5
Poor signage visibility along Central Ave. 5
Limited left turn lanes on Central 4
Difficult to cross Central Ave. (few pedestrian crossings) 4
Mall 4
Check cashing stores 3
Enough car parts stores 3
New low-income or condo housing is not desired 3
Need community specialty stores 3
Traffic speed 2
Business assistance for fayade improvements needed 2
Need a place for families and residents to go (community center) 2
Need better curb appeal 2
Need financial partnerships between the city and the community (Le. a
business revolving fund) 2
Need new businesses that attract new residents and shoppers to the
community 2
Underutilized parking ramp, poor visibility from Central 1
Get rid of mall/Star Bar/pool hall/ethnic restaurant/discount stores 1
Restaurant with party space is no 1
Tall building on street edge 1
Mall 1
Hub transit 1
Need to keep storefronts along the street for consistency 1
."
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COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY (EDA)
ee mg 0: une ,
AGENDA SECTION: Items for Consideration ORIGINATING EXECUTIVE
NO: 4-B DEPARTMENT: EDA DIRECTOR
APPROVAL
ITEM: Sarna Preliminary Development BY: Randy Schumacher BY:
Agreement for 40th & University Redevelopment DATE: June 22,2005
-th
M f
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28 2005
BACKGROUND: At the Apnl 26 EconomIc Development Authonty meetmg, developer JIm Sarna and
real estate representatives, Tom and Gordy Solz, introduced a general concept plan to construct a 6,000 sq ft
restaurant on the comer of 40th & University that is presently owned by the EDA. The board consensus was
to work with Mr. Sarna in preparing a Preliminary Development Agreement.
The Preliminary Development Agreement that is being proposed by Mr. Sarna is scheduled to run for 90
days. During that period negotiations between the party shall proceed in an attempt to formulate a definitive
development contract based on the developers proposed documentation regarding economic feasibility and
soundness, equity financing, cash resources, site design and engineering issues.
Based on a request for financial documentation from the City's financial advisor, Ehlers & Associates, a
limited evaluation of the developer's proforma is enclosed for your review.
In order for the project to move forward, the board must support the following key issues:
1. Is this the type of development that the board wants to see on this development site?
2. Will it be successful?
3. Does it meet the economic feasibility and soundness test?
4. Are the building standards acceptable?
If the board can meet these key issues, the next step would involve the land use, site design and
engineering issues. Included in this technical list would be: street vacation, set backs, parking, screening,
alley realignment, access, surface water management and sidewalks.
However, ifthe board is not satisfied with the key development issues above, then the technical review is
moved and should not be addressed.
RECOMMENDATION: The EDA board has an option to approve the proposed development agreement,
deny the agreement or request more information for further consideration
RECOMMENDED MOTION: Move to Approve the Preliminary Development Agreement with
for the redevelopment ofthe City owned property at 40th & University
Avenue; and furthermore, to authorize the President and Executive Director to enter into an agreement for
the same.
Attachments
EDA ACTION:
h:\consent Form2004\EDA Sarna Agreement 400n & Un1v.
81 ~.~t~,~,~,~
June 12, 2005
Mr. Gordy Soh
Real Estate Property Advisors
3050 Stinson Boulevard
55418-2322
RE: De"'olopmc:nt Proposal ofBar/Rcstarurant - 40th & University? Columbia Heights
Dear .Mr. Sol.%:
In order for our office to complete a review of the financial feasibility of your proposed development
at the above referenced loeatio~ I will need to receive the fullowing information:
VIA FAX
1. Description of proposed development including square footage
2. Detailed som-ees and uses including;
a. ~<\mount, tmn m<l interest rate ofbU financing.
b. Amolllli of equity
c. Proposed rent stmcture (if applicable)
d. Proposed land acquisition price
8. Detailed construction oostst including tenant improvement allowance
f. Detailed financing costs
g. Detailed soft CO$tS and development fee
J. 15-yearopemU1gprofonna
4. Requested cash-oD~i) return in 1st year
5. Proposed iDB~OD OD expe83$8S and i.eco.aw (ie 1 % annually or as othenvise ~
6. Proposed CAP rate
7. Letter of oommitmt21t by bank for financing for the project
Once I have received this information I can proceed with completing the financial review of the
project and the proposed ~ price of the land.
Ploase contact me at 651-697-8506 with my questions.
s~
StadeK vilVQl'1g
Ehlers &~.
cc: Randy ~.bnmAChn - City of Columbia Heights
lEAOEI\.$ If( FUBllC FINANCE
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. ~and(~phy~~~~~ - Randy Schumacher Memo 6-22-05.doc
---------~-_._----~----------_._-_.. ~-..,
Page 1
e
EHLERS
& ASSOCIATES INC
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To: Randy Schumacher - City of Columbia Heights
From: Stacie K vilvang - Ehlers and Associates
Subject: 40th and University Retail Redevelopment
Date: June 22, 2005
Mr. James J. Sarna has submitted a proposal to purchase land from the Economic Development Authority
(EDA) at the above referenced address and is proposing to construct a 12,000 sq/ft of restaurant on the
site (6,000 sq/ft basement and 6,000 sq/ft main level) at this site.
You have requested that Ehler's complete a review of the Developer's proforma to assist in determining
what the purchase price of the land should be and if the project is financially feasible. The information
submitted by the developer is not adequate enough to complete a thorough analysis. However, my initial
comments from information that was received is as follows:
1. The developer is proposing to purchase 1.074 acres of land from the EDA for $75,000. This
equates to a per square foot cost of $1.60. This falls exceedingly below the Metropolitan Area
standards of $7 to $15 sq/ft for similar restaurant sites.
2. Cost for design, site work and construction are in a lump sum. This needs to be broken out by
category for review against industry standards (i.e. site work, construction, interior build out,
design and engineering, etc).
3. No information was provided on a rental rate to pay off mortgage, taxes and other expenses. This
information will be needed to complete the review.
4. No information was provided on replacement reserves. This will need to be obtained from the
developer.
5. Developer is fmancing 80% of the project and providing 20% in equity. This is a typical
financing split. However, the developer did not provide a rate at which the bank would borrow
the money, or the exact term. This information will be needed to complete the review.
6. Cash-On-Cash (COe) return in the first year of 65% is excessive compared to the industry
standard of 12% (shows they can pay more for land).
7. I could not complete an Internal Rate of Return (IRR) analysis since not all of the necessary,
detailed information was provided.
Recommendation:
Based upon preliminary review, the development can afford a much higher purchase price for land than
proposed. However, in order to complete a thorough review I will need the above referenced information
that was requested.
I~~~dy'Sch_~_r:nacher - Randy Schumacher Memo 6-22-05.doc
Pag~
--~.[
Randy Schumacher
40th and University Retail Redevelopment
June 22, 2005
Page 2
If the EDA is desirous to move forward without further review, they should consider the developer's lack
of experience in owning or running a restaurant. Likewise, I understand that Mr. Sarna owns several
other types of businesses that are successful and the EDA may wish to consider that his success in other
areas may very well equate to success in the restaurant business. However, that being said, most cities
choose to not work with developers who are not experienced in a specific area. In the exception where a
city may look at working with an inexperienced developer, we recommend they provide the city with a
detailed business plan and/or bring in a partner that has the relevant experience. It should be noted that
based upon anecdotal evidence, three out of five restaurants do not "make it" in the industry. With lack
of experience in this area, the ability to succeed may be reduced. The EDA should discuss the possibility
if this project did not succeed, are they okay with a vacant building being located on a site they just
recently cleared for redevelopment.
Please let me know if you need any further analysis completed. Please contact me at 651-697-8506 if
you have any questions or require further information.
BlVlD M. SAINI JAMES A. SARNI JII1ES 1 SAINI
~~~
2501 UNIVERSITY AVENUE NE
MINNEAPOLIS, MINNESOTA 55418
~
Phone 612-782-6940
'June 15,2005
1. PROPOSED DEVELOPMENT
THE BUILDING WILL BE SITUATED ON A 1.1 ACRE SITE ON THE SOUTHEAST
CORNER OF 40TH AND UNIVERSITY NE IN COLUMBIA HEIGHTS, MINNESOTA AND
WILL HOUSE A 200 SEAT RESTAURANT/COCKTAIL BAR, IT WILL HAVE A
MODERATE PRICED MENU AND WILL HAVE A RECT ANQULAR SHAPED BAR. THE
SOUTHSIDE OF THE BUILDING WILL HAVE AN UPSCALE PATIO DINING AREA
WITH THE SIZE STILL TO BE DETERMINED. THERE IS ALSO THE POSSillILITY OF
ROOF- TOP DINING WITH A VIEW OF THE MINNEAPOLIS DOWNTOWN SKYLINE
WHICH WILL HELP DECIDE THE SIZE OF THE OUTSIDE PATIO AREA.
THE BUILDING WILL BE APPROXIMATELY 6000 SQUARE FEET WITH A 6000
SQUARE FOOT BASEMENT TO BE USED FOR STORAGE, PREP WORK AND PERHAPS
A FUTURE BANQUET AREA. ABOUT 2000 FEET ON THE MAIN FLOOR WILL BE
USED FOR KITCHEN AND BACKROOM AREAS AND 4000 FOR PUBLIC DINING AND
BAR AREA.
THE KITCHEN WILL BE A COMPLETE FULL SIZED AREA WITH EQUIPMENT
TO PREP ARE ALL TYPES OF FOOD SUCH AS BROILING STEAKS, STEAMING
SEAFOOD AND ALL OTHER FOODS FOR A COMP~ETE MENU,
THE PARKING AREA WILL BE GREENSTRIPED ALL AROUND AND WILL
HAVE APPROXIMA TEL Y 90 PARKING PLACES. ENTRY WILL BE FROM 40TB
A VENUE ONLY.
THE LAND IS TO BE SURVEYED AND PLATTED IN THE NEAR FUTURE.
DAVID SAlBA lAMES A. SAlIA lAMES J. SAlIA
Phone 612-782-6940
250 I UNIVERSrry A VENtiE NE
MINNEAPOLIS. MINNESOTA 55418
June 15, 2005
2. DETAll.ED SOURCES AND USES
3. AMOUNT, TERM INTEREST
$1.7 MILLION 15 TO 20 YEARS AND INTEREST TO BE
NEGOTIA TED (SARNA'S HAVE AL WAYS RECEIVED
VERY FAVORABLE RATES.)
20%
TO BE SET UP AFTER CORPORATION IS FORMED FOR
OWNERSHIP OF THE BUSINESS. TENA TIVEL Y TO
INCLUDE A LEASE PAYMENT TO COVER
MORTGAGE, TAXES AND GENERAL UPKEEP OF THE
BUILDING WITH A SPREAD TO BE INSTITUTED
WHEN BUSINESS IS STABLE.
$75,000.00
ON SEPARATE SHEETS SUPPLIED BY SEVIOLA
CONSTRUCTION
SEE a.
APPROXIMATEL Y $25,000 INCLUDING REAL ESTATE
FEES, TESTING, SUR VEYS, PLATTING AND COSTS
FOR EDA TRANSACTIONS.
b AMOUNT OF EQUITY
c. RENT STRUCTURE
d. LAND ACQUISITION PRICE
e. CONSTRUCTION COSTS
f. FINANCING COSTS
g, DEVELOPMENT COSTS
3. 15 YEAR PROFORMA
PLEASE USE PROJECTED SALES AND EXPENSE FROM SEPARATE ENTRY AND USE YOUR
COrvrPUTER TO ADD APPROPRIATE INFLATION RATES.
4. REQUESTED CASH ON CASH RETURN:
SEE THE PROJECTED SALES AND EXPENSE SHEETS
5. PROPOSED INFLA nON ON EXPENSES AND INCOME
EXPECTED INFLATION WILL BE INDUSTRY WIDE WITH INCREASED PRICES AS NEEDED TO
MEET EXPENSES
6. PROPOSED CAP RATE
AS THIS IS A ONE OWNER OF BOTH ENTITIES THE CAP RATE WILL BE DETERMINED BY
PROFITS FROM THE BUSINESS TO INCREASE THE RATE TO THE INDIVIDUAL OWNERS.
7. LETTER OS COMMTMENT
PLEASE SEE THE THE ATTACHED LETTER FROM NORTHEAST STATE BANK.
P L Statement
Sarna's Bar Grill
Monthly Yearly
Total Sales 151,666.66 1,819,999.92
Food Sales 83,416.66 1,000,999.92
Liquor Sales 68,249.99 818,999.88
COGS 42,845.83 514,149.95
Gross Profit 108,820.83 1,305,849.97
Other Income
ATM 1,800.00 21,600.00
Pull Tabs 1,750.00 21,000.00
Total Gross Profit 112,370.83 1,348,449.97
Expenses
Mortgage 18,000.00 216,000.00
Insurance 2,508.00 30,096.00
Credit Card Fees 2,500.00 30,000.00
Licenses & Permits 750.00 9,000.00
Repairs & Maintenance 1 ,666.67 20,000.04
Property Taxes 2,500.00 30,000.00
Utilities 4,750.00 57,000.00
Cleaning Supplies 725.00 8,700.00
Janitoral Services 2,083.00 24,996.00
Janitorial Supplies 416.67 5,000.04
Refuse 333.33 3,999.96
Laundry 1,354.17 16,250.04
Silverware/Glassware 433.33 5,199.96
Paper Goods 1,083.33 12,999.96
Office su pplies 333.33 3,999.96
TV/Music/Maintenance 166.67 2,000.04
Phone 216.67 2,600.04
Manager Wages 11,000.00 132,000.00
Employee Wages 27,848.00 334,176.00
Payroll Tax 3,405.83 40,869.96
Advertising 1,500.00 18,000.00
Total Expenses 83,574.00 1,002,888.00
Net Profit 28,796.83 345,561.97
Depreciation 10,267.50 123,210.00
Net 18,529.33 222,351.97
eNortIreast
'4t&mk
Strength oj a Leader. Hand oj a Friend.
77 Broadway Street NE
Minneapolis, MN 55413
Ph 612-379-8811
Fx 612-362-3262
June 13, 2005
To Whom It May Concern:
Based upon initial discussions with James Sarna, et ai, Northeast Bank would fund up to
$1.7 Million to build a new restaurant at 40th and University in Columbia Heights.
This letter is for discussion purposes only and shall not be deemed to evidence as a
binding agreement on either the part of the bank or the borrower.
Sincerely,
NORTHEAST BANK
dffi~
Michael R. Collins
Executive Vice President
MRC:nad
MN State Lie. #8782
Mpls. City Lie. # 03816
Mpls. City Masonry Lie. # 286
CONSTRUCTION CO
licensed · Bonded. Insured .
19411 Rochester St. N.E. · East Bethel. MN 55011
S~MilOllllal
Ph: (763) 434-1169
Fax: (763) 434-'170
Cell: (612) 221-.8985
June 16,2005
Attn. ~ Bob Streetar
Columbia Heights Economic Development Authoritv
590 -- 40th Avenue Northeast -
Columbia Heights, Minnesota 55421
Re: Redevelopment of Property to be located at 40th and University
As Contractor, we Seviola Construction, Inc. are submitting an estimate for the
design and construction of the redevelopment of the above named property for the
following approximate amount of $1,500,000.00 for the structure of the building.,
including finish site work only, exterior and interior finish. This is an estimated
cost only. A firm bid will be submitted upon final approval of plans and
specifications and bids are obtained from sub-contractors.
MN State Lie. #8782
MpJs. City Lie. # 03816
Mpls. City Masonry Lie. # 286
CONSTRUCTION CO
Licensed · Bonded. Insured.
19411 Rochester St. N.E. · East Bethel, MN 55011
~te:wiilOl"lal
Ph: (763) 434-1169
Fax: (763) 434-1170
Cell: (612) 221-8985
June 16, 2005
Attn. ; Bob Streetar
Columbia Heights Economic Development Authority
590 - 40th Avenue Northeast
Columbia Heights, Minnesota 55421
Re: Redevelopment ofPropeIty to be located at 40th and University
As General Contractor, we Seviola Construction, Inc. can only estimate all phases
of construction from start to finish. At this time we calculate that complete
construction would be from eight to ten months. Once final approval of plans and
specifications and bids are obtained from sub-contra.ctors, we could begin
construction within thirty (30) days. Also, at that time we could produce a final
time schedule for all phases of the redevelopment..
James J. Sarna
c/o Sarna's Tobacco Shoppe
4329 Central A venue
Columbia Heights, MN 55421
April 18, 2005
City of Columbia Heights / EDA
590 - 40th Avenue N.E.
Columbia Heights, MN 55421-3878
RE: Potential Redevelopment of 40th and University Avenue, Columbia Heights,
Minnesota ("Property")
Redeveloper: James 1. Sarna, James A. Sarna and David M. Sarna, or an entity to be
created for the holding of title to the Property.
Dear Madam or Sir:
The purpose of this letter is to give you an idea of what we propose in connection with the
redevelopment of the Property at 40th and University Avenue.
1. Land Size/DeveloDment. We would expect the parcel to be redeveloped to be
approximately 1.074 acres. We assume that the present structures and current concrete located
on the Property would be removed as part of our redevelopment. We would also ask that any
environmental reporting and/or closure letters issued by the Minnesota Pollution Control Agency
in connection with the Property be delivered to us for our review and approval. We have been
advised that all prior contamination located at the Property as a result of the prior use as a gas
station has been removed.
2. ProDosed Construction / Duildin2. We would propose to construct a building with
6,000 square feet of usable area on the ground level with a 6,000 square foot basement. In
addition to the above, we propose a construction of a roof top dining area on the top of the
ground level of the building, which would provide views of the downtown skyline and would be
situated on the west end of the structure to be constructed. We are also anticipating the
construction of an outdoor patio for dining and cocktails to be placed on the west side of the site
which faces University Avenue.
3. Construction Cost / Finanein2. I would anticipate that the total cost of the building and
fixturing of the business will be anywhere between $1,200,000.00 and $1,500,000.00. Financing
for the construction of this building and all fixtures would be handled privately by a local bank.
/
April 18, 2005
Page 2
4. Description of the Business to be Ooerated. We would expect that the building on the
Property will seat approximately 200 patrons. The outdoor patio seating would be determined
based upon the area available for development. The business will have a full bar and a complete
kitchen on the main floor with storage facilities in the basement of the building. We also
anticipate that the redevelopment of this parcel will have green space area located on the
northwest comer of 40th and University that will beautify the entire redevelopment. We would
expect to have a monument sign fronting 40th and University which notifies the public of the
bar/restaurant operation on the Property. We would also expect that the parking lot will hold
between 65-80 cars. More parking may be available if the frontage road which is currently
located adjacent to the Property is vacated.
I hope this information is helpful in connection with your discussion of this project. I am more
than willing to meet with you to provide any further information you may need.
Sincerely,
James J. Sarna
280136 1
Concerned Residents and Property Owners
Of the 40th & University Development
/I-1f~
RECEIVED
MAY 2 6 2005
PUBLIC WORKS
May 25, 2005
City of Columbia Heights
Kevin Hansen
Public Works Director
590-40th Ave NE
Columbia Heights MN 55421
763-706-3705 Phone
Dear Kevin:
Twenty-two of the neighborhood residents and property owners that would be affected by the
Sarna's Restaurant project have agreed on the following list of concerns that we believe need to
be addressed before any approval of the Sarna Restaurant project by the Columbia Heights City
Council.
These "Quality of Life" concerns of the residents and property owner that need addressing
with are:
1. Alley between 40th Avenue and Summit Street from 5th Street NE to Lockout Place has
historically severed the residents and businesses whose property borders the alley.
Resident's garages face both East and West, and residents need to enter and exit their
garages from both the East and West without making a u-turn in the ally. Residents and
the businesses require, as they now have, public access to both ends of their alley. Please
note that in the winter, after a snow and before the snow plows get through, cars below
the hill cannot get up the hill and must exit the West end of the alley. This alley must also
continue to serve as a passageway for the city's fire and energy trucks, as well as for
snowplowing and garbage trucks that serve the residents along this alley. Please note that
residents just recently paid to have their alley paved. Those affected are:
a. 334-40th Ave NE
b. 344-40th Ave NE
c. 404-40th Ave NE
d. 4l8-40th Ave NE
e. 407 Summit Street
f. 3974 5th Street NE
g. 325 Summit Street
h. 341 Summit Street
1. 347 Summit Street
J. 403 Summit Street
k. 407 Summit Street
1. 411 Summit Street
2. Requirement to replace at least one of the two present public sidewalk that allow
residents to walk to the bus stop and convenience store on 40th Avenue, from the
following addresses without walking through private parking lots or cut though private
yards. Those affected:
a. 3923 Lookout
b. 3907 Lookout
c. 3911 Lookout
d. 3915 Lookout (Apartment Building)
e. 3923 Lookout (Apartment Building)
f. 407 Summit Street
g. 403 Summit Street
h. 347 Summit Street
1. 341 Summit Street
J. 325 Summit Street
Without the present sidewalk or street residents will have to walking an extra
2-1/2 blocks down to 5th Street NE and then back to 40th and University or will have to
trespass through private parking lots. Walking though parking lots would be a danger to
young children walking behind parked cars, trucks, and SUV s.
3. An important quality oflife issue is to have a noise abatement buffer zone between any
parking lot and the residential house at 325 Summit Street, or at least 20 feet with a 6'
high brick wall with evergreen trees to buffer the noise from car doors opening and
closing at 1 :30 AM.
4. Environmentally, there should be a water holding pond to keep the rain runoff from
overcoming storm sewers and/or flooding homes and businesses in the neighborhood.
Other Concerns of the projerty owner and the business at 334_40tb Avenue NE
I. The Business at 334-40 Avenue NE needs to be able to back trailers into the lower level
of the building through the garage door facing Lookout Avenue. To align their truck and
trailer to be square with the garage door opening requires the truck to pull out to the
center on Lookout before backing into the garage. To exit the buildings garage door with
truck and trailer will required an alternative road to Lookout if Lookout will be closed
before the alley entrance. Being able to use the lower level is imperative to the Castle
Distributing and to any future use of the building.
2. The business at 334-40th now has a drive through parking lot on west side of building. To
avoid the need for the cars to have to back out of the parking lot onto 40th Avenue, a main
Columbia Heights roadway, the parking lot needs to be connected to the ally exiting to
Lookout or Summit or the parking lot needs to be made 10' wider at allow cars to turn
around to exit back onto 40th Avenue.
3. There needs to be some planning as to a place to store snow from the parking lots at both
Castle Distributing and the Sarnas Restaurant in the wintertime.
~nc_erel~
~~/~ 7]3-788-1970
Michael Go~~8-8200
Of the group of "Concerned Residents and Property Owners"
COLUMBIA HEIGHTS ECONOMIC DEVELOPMENT AUTHORITY
PRELIMINARY DEVELOPMENT AGREEMENT
THIS AGREEMENT, dated this _ day of June, 2005, by and between the Columbia
Heights Economic Development Authority, a body politic and corporate under the laws of
Minnesota (the "Authority") and James J. Sarna, James A. Sarna and David M. Sarna
(collectively, the "Developer"):
WITNESSETH:
WHEREAS, the Authority desires to promote redevelopment of certain property within
the City of Columbia Heights, which property is legally described in Exhibit A attached hereto
and depicted on Exhibit A-1 attached hereto (the "Property"); and
WHEREAS, the Developer has requested the Authority to explore the use of certain
public assistance, financial and otherwise, to assist with such activities, hereafter referred to as
the "Redevelopment"; and
WHEREAS, the Authority has determined that it is in the Authority's best interest that
the Developer be designated sole developer of the Property during the term of this Agreement;
and
WHEREAS, the Authority and the Developer are willing and desirous to undertake the
Redevelopment if (i) a satisfactory agreement can be reached regarding the Authority's
commitment for public assistance necessary for the Redevelopment; (ii) satisfactory mortgage
and equity financing, or adequate cash resources for the Redevelopment can be secured by the
Developer; and (iii) the economic feasibility and soundness of the Redevelopment; and
(iv) satisfactory resolution of zoning, land use, site design, and engineering issues, and other
necessary preconditions have been determined to the satisfaction of the parties; and
WHEREAS, the Authority is willing to evaluate the Redevelopment and work toward all
necessary agreements with the Developer if the Developer agrees to reimburse the Authority for
its costs relating to the Redevelopment even if the Redevelopment is abandoned or necessary
agreements are not reached under the terms of this Agreement.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and
obligations set forth herein, the parties agree as follows:
1. Negotiations between the parties shall proceed in an attempt to formulate a
definitive development contract ("Contract") based on the foUowing:
(a) the Developer's proposal (when submitted) together with any changes or
modifications required by the Authority;a
SJB-260554vl
CL205-30
(b) such documentation regarding economic feasibility of the Project as the
Authority may wish to undertake during the term of this Agreement; and
( c) other terms and conditions of this Agreement.
2. It is the intention of the parties that this Agreement: (a) documents the present
understanding and commitments of the parties; and (b) may lead to negotiation and execution of
a mutually satisfactory Contract for the Redevelopment prior to the termination date of this
Agreement. The Contract (together with any other agreements entered into between the parties
hereto contemporaneously therewith) when executed, will supersede all obligations of the parties
hereunder.
3. During the term of this Agreement, the Developer shall:
(a) By 1,2005, submit a proposal to the Authority, which
proposal must show the location, size, and nature of the proposed Redevelopment,
including sample floor layouts, renderings, elevations, and other graphic or written
explanations of the Redevelopment. The proposal shall be accompanied by a preliminary
schedule for the starting and completion of all phases of the Redevelopment.
(b) Submit an over-all cost estimate for the design and construction of the
Redevelopment.
(c) Submit a final time schedule for all phases of the Redevelopment.
(d) Undertake and obtain such other preliminary economic feasibility studies,
income and expense projections, and such other economic information as the Developer
may desire to further confirm the economic feasibility and soundness of the
Redevelopment.
( e) Submit to the Authority the Developer's financing plan showing that the
proposed Redevelopment is financially feasible.
(f) Furnish satisfactory, financial data to the Authority evidencing the
Developer's ability to undertake the Redevelopment.
4. During the term of this Agreement, the Authority agrees to:
(a) Commence the process necessary to undertake such public assistance as is
necessary pursuant to the terms of the proposal.
(b) Proceed to seek all necessary information with regard to the anticipated
public costs associated with the Redevelopment.
(c) Estimate the Authority's level and method of financial participation, if
any, in the Redevelopment and develop a financial plan for the Authority's participation.
SJB-260554vl
CL205-30
5. It is expressly understood that execution and implementation of the Contract shall
be subject to:
(a) A determination by the Authority in its sole discretion that its
undertakings are feasible based on (i) the projected tax increment revenues and any other
revenues designated by the Authority; (ii) the purposes and objectives of any tax
increment, development, or other plan created or proposed for the purpose of providing
financial assistance for the Redevelopment; and (iii) the best interests of the Authority.
(b) A determination by the Developer that the redevelopment is feasible and
in the best interests of the Developer.
6. This Agreement is effective from the date hereof through 90 Davs ,2005. After
such date, neither party shall have any obligation hereunder except as expressly set forth to the
contrary herein.
7. The Developer shall be solely responsible for all costs incurred by the Developer.
In addition, the Developer shall reimburse the Authority for the following costs:
(a) Upon execution of this Agreement, the Developer has deposited with the
Authority funds in the amount of $3.000. receipt of which the Authority hereby
acknowledges. The Authority may apply such deposit to pay any "Authority Costs,"
which means: reasonable and necessary out-of pocket-costs paid to third parties and
incurred by the Authority from and after May -,2005, in each case based on actual time
spent in connection with rendering assistance and advice to the Authority as evidenced by
itemized bills and invoices for (i) the Authority's financial advisor in connection with the
Authority's financial participation in redevelopment of the Property, (ii) the Authority's
legal counsel in connection with negotiation and drafting of any related agreements or
documents, and any legal services related to the Authority's or City's participation in
redevelopment of the Property; (iii) any appraiser retained by the Authority in connection
with conveyance of any portion of the Property by the Authority to the Developer or in
connection with determination of the level of public assistance; and (iv) consultants
retained by the Authority for planning, environmental review, and traffic engineering for
development of the Property. At Developer's request, but no more often than monthly,
the Authority will provide Developer with a written report on current and anticipated
expenditures for Authority Costs, including invoices or other comparable evidence.
(b) If at any time during the term of this Agreement the Authority
determines that the amounts deposited by Developer are insufficient to pay Authority
Costs, the Authority shall notify the Developer in writing as to any additional amount
required to be deposited. The Developer may deposit such additional funds within 20
days after receipt of the Authority's notice.
(c) Upon termination of this Agreement in accordance with its terms,
the Authority will return to the Developer the balance of any funds deposited under this
SJB-260554vl
CL205-30
section that are on hand as of the date of receipt of the notice of termination, and less any
Authority Costs incurred through the date of receipt of the notice of termination. For the
purposes of this paragraph, Authority Costs are considered to be incurred if they have
been paid, relate to services performed, or are payable under a contract entered into, on or
before the date of receipt of the notice of termination. If Developer fails to deposit said
funds within twenty (20) days, this Agreement shall be deemed terminated.
This Section 7 shall survive termination of this Agreement and shall be binding on the
Developer regardless of the enforceability of any other provision of this Agreement.
8. This Agreement may be terminated upon 5 days written notice by the Authority to
the Developer if:
(a) an essential precondition to the execution of a contract cannot be met; or
(b) if, in the sole discretion of the Authority, an impasse has been reached in
the negotiation or implementation of any material term or condition of this Agreement or
the Contract; or
(c) The Authority determines that its Administrative Costs will exceed the
amount initially deposited for such purpose under Section 7(b), and the Developer does
not deliver additional security to the Authority pursuant to Section 7(b) of this
Agreement.
If the Authority terminates the Agreement under this Section 8, the Developer shall
remain liable to the Authority under Section 7(b) of this Agreement for Administrative Costs
incurred by the Authority through the effective date of termination.
9. The Developer is designated as sole developer of the Property during the term of
this Agreement. The Authority makes no representations or warranties as to control, access or
ownership of any portion of the Property, but agrees that during the term of this Agreement the
Authority will not enter into agreements with any other party to facilitate redevelopment of the
Property.
10. In the event that the Developer, its heirs, successors or assigns, fail to comply
with any of the provisions of this Agreement, the Authority may proceed to enforce this
Agreement by appropriate legal or equitable proceedings, or other similar proceedings, and the
prevailing party in such enforcement action agrees to pay all costs of such enforcement,
including reasonable attorneys' fees.
11. If any portion of this Agreement is held invalid by a court of competent
jurisdiction, such decision shall not affect the validity of any remaining portion of the
Agreement.
12. In the event any covenant contained in this Agreement should be breached by one
party and subsequently waived by another party, such waiver shall be limited to the particular
SJB-260554vl
CL205-30
breach so waived and shall not be deemed to waive any other concurrent, previous or subsequent
breach. This Agreement may not be amended nor any of its terms modified except by a writing
authorized and executed by all parties hereto.
13. Notice or demand or other communication between or among the parties shall be
sufficiently given if sent by mail, postage prepaid, return receipt requested or delivered
personally:
(a) As to the Authority:
Columbia Heights Economic Development Authority
590 40th Avenue NE
Columbia Heights, MN 55421
Attn: Bob Streetar
(b) As to the Developer:
James Sarna
c/o Sarna's Tobacco Depot
2501 University Avenue NE
Minneapolis, MN 55418-3460
14. This Agreement may be executed simultaneously in any number of counterparts,
all of which shall constitute one and the same instrument.
15. This Agreement shall be governed by and construed in accordance with the laws
of the state of Minnesota. Any disputes, controversies, or claims arising out of this Agreement
shall be heard in the state or federal courts of Minnesota, and all parties to this Agreement waive
any objection to the jurisdiction of these courts, whether based on convenience or otherwise.
16. The Developer hereby agrees to protect, defend and hold the Authority and its
officers, elected and appointed officials, employees, administrators, commissioners, agents, and
representatives harmless from and indemnified against any action by Developer which results in
a loss, cost, fines, charges, damage and expenses, including, without limitation, reasonable
attorneys fees, consultant and expert witness fees, and travel associated therewith, due to claims
or demands of any kind as a result of actions by Developer arising out of (i) the development,
marketing, sale or leasing of all or any part of the Property, including, without limitation, any
claims for any lien imposed by law for services, labor or materials furnished to or for the benefit
of the Property, or (ii) any claim by the state of Minnesota or the Minnesota Pollution Control
Agency or any other person pertaining to the violation of any permits, orders, decrees or
demands made by said persons or with regard to the presence of any pollutant, contaminant or
hazardous waste on the Property deposited on said Property by Developer~ and (iii) or by reason
of the execution of this Agreement or the performance of this Agreement. The Developer, and
the Developer's successors or assigns, agree, except for the negligence of the Authority, to
protect, defend and save the Authority, and its officers, agents, and employees, harmless from all
such claims, demands, damages, and causes of action and the costs, disbursements, and expenses
of defending the same, including but not limited to, attorneys fees, consulting engineering
SJB-260554vl
CL205-30
services, and other technical, administrative or professional assistance incurred by the Authority
as a result of the actions of Developer. This indemnity shall be continuing and shall survive the
performance, termination or cancellation of this Agreement. Nothing in this Agreement shall be
construed as a limitation of or waiver by the Authority of any immunities, defenses, or other
limitations on liability to which the Authority is entitled by law, including but not limited to the
maximum monetary limits on liability established by Minnesota Statutes, Chapter 466.
17. The Developer, for itself, its attorneys, agents, employees, former employees,
insurers, heirs, administrators, representatives, successors, and assigns, hereby releases and
forever discharges the Authority, "and its attorneys, agents, representatives, employees, former
employees, insurers, heirs, executors and assigns, except for gross negligence of the Authority,
of and from any and all past, present or future claims, demands, obligations, actions or causes of
action, at law or in equity, whether arising by statute, common law or otherwise, and for all
claims for damages, of whatever kind or nature, and for all claims for attorneys' fees, and costs
and expenses, including but not limited to all claims of any kind arising out of the negotiation,
execution, or performance of this Agreement between the parties.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
" 1R_?hn~~.:lvl
IN WITNESS WHEREOF, the Authority has caused this Agreement to be duly executed
in its name and behalf and its seal to be duly affixed hereto and the Developer has caused this
Agreement to be duly executed as of the day and year first above written.
(DEVELOPER]
By
By
David M. Sarna
SJB-260554vl
COLUMBIA HEIGHTS ECONOMIC
DEVELOPMENT AUTHORnY
By
Its President- Don Murzyn, Jr.
By
Its Executive Director- Walter R. Fehst
Date:
SJB-260554vl
CU05-30
EXHmIT A
Description of Property
SJB-260554vl
CL205-30
DAVID M. SARNA JAMES A. SARNA JAMES J. SARNA
2501 University Avenue N.E.
Minneapolis, Minnesota 55418
Phone 612-789Y5240
June 21, 2005
City of Columbia Heights
Economic Development Agency (EDA)
Attn: Chairman Murzyn
590 - 40th Avenue N.E.
Columbia Heights, MN 55421
RE: Proposed Sports Bar / Restaurant at 40th and University Avenue
Dear Chairman Murzyn and Economic Development Committee Members:
The purpose of this letter is to introduce ourselves and give you an idea as to what our proposed
plans are for the redevelopment of the property located 40th and University Avenue. We have
been working with City staff diligently over the past month to arrive an acceptable plan that
meets the EDA's economic redevelopment goals of this parcel and our vision for the
development of this property. Our vision for this corner is the construction of a sports bar I
restaurant that will bring new jobs to the area, increase the tax base, meet the redevelopment
goals of the EDA and result in an aesthetically pleasing project. Our family is committed to the
developing of this site and in connection therewith, we have undertaken a substantial amount of
due diligence.
1. We have hired architects to develop plans and specifications for the
construction/development of our restaurant on the parcel. Our architect is SSV of
Minneapolis.
2. We have hired a contractor, Seviola Construction Company, in connection with the
construction of the proposed restaurant/bar.
3. We have hired a surveyor, Kurth Surveying Company, in connection with the survey of
the entire site.
4. We have contacted our bank:, Northeast Bank:, for a commitment for financing.
As you may know, the Sarna family has a long history of doing business in the Northeast ar;ea
and family members have lived in the Northeast area for many years. We believe we are well
June 21, 2005
Page 2
known in the community and have made attempts to ensure that the financing, survey work, etc.
is being done by businesses operating in the Northeast area.
In connection with our due diligence, we have submitted letters, drawings and other information
which we believe is necessary to the EDA staff We have also been asked to submit financial
information to Ehlers & Associates to access the economic viability of this project. Enclosed is a
copy of our feasibility report. We feel that our projections, in connection with the sales, etc. for
this proposed site, are conservative at best. We have arrived at these numbers by comparison of
other restaurants of similar size in similar cities located in Anoka, Ramsey and Hennepin
Counties. Based upon our analysis, it is our opinion that this restaurant/bar will be a very viable
and profitable business.
On May 18, 2005 we met with approximately 10 neighbors surrounding the proposed
redevelopment site who voiced concerns. We did not hear any opposition to the redevelopment
of this property as a restaurant/bar. One of the issues that were brought up was the status of the
alley on the West side of the property and the City Engineer proposed two options for the
development ofthis property in connection with the alley. Option A was to take the alley to
Lookout Place and turn the alley southeasterly and have it enter Summit Street. However, this
proposal would take 5400 square feet from the project and give those feet back to the house at
325 Summit which the city had purchased, made the 5400 feet into a separate tract and then sold
325 Summit to a proposed owner- occupant of said property. Option B is to have the alley make
a 90 degree turn and run due south to Summit alongside the house at 325 Summit and exit. It is
our preference to pursue Option B, as Option A would result in the loss of said 5400 feet and our
goal is to keep the proposed parcel at its maximum size to increase the off-street parking area. In
our proposed access plan we have also addressed the issue of Castle Distributions access to its
basement and eight foot overhead door. We believe option (Option B as proposed by the City
Engineer) addresses both the neighbors concerns and the concerns of Castle Distribution plus
makes access for clearing the alley of snow and entry by Fire Department rigs easier because of
the 90 degree right angle turn is easier to make instead of the acute angle in option A which
makes a severe 120 degree turn and would interfere with longer vehicles and trailers.
We are actively pursuing securing all due diligence to get this project underway. However, we
were delayed until we were able to verify that the Minnesota State Transportation Department
(MNDOT) would vacate the frontage road on University Avenue. As you may know, MNDOT
has now agreed to vacate a portion of the frontage road on University Avenue. The property
being vacated and added to the site will result in additional parking which is needed for the
redevelopment of the site. However, because of the parking lot configuration, parking, etc., it
appears that the redevelopment of the property may require a variance from the municipal
setback requirement on the West side of the property which faces University Avenue. Currently,
the 15 foot setback for parking results in a loss of about 10 parking spaces. After the vacation of
the road, there would be a 30 foot green space / buffer between our proposed parking area and
the University Avenue right-of-way. We believe this is sufficient green area and setback for the
redevelopment of this property. Further, we will also be requesting a variance from the 15 foot
municipal setback from our proposed building to the parking lot. This is shown on the sketch of
the plans we have provided. We would ask for your consideration in granting the variances as
June 21,2005
Page 3
outlined above. We understand that any variance must be approved by the City council.
However, your insights or thoughts into this would be greatly appreciated.
We would like to take this opportunity to thank the people we have worked with in the City
offices as of this date; Randy Schumacher, Bob Streeter, Kevin Hanson, Jim Molinaro and Cher
Bakken, all of which have been most helpful in directing us through the redevelopment process.
We also appreciate the help that the EDA and its committee members have given us their
thoughts and insights into the redevelopment of this property.
We look forward to the future redevelopment of this property and we are committed to
commence construction as soon as possible. If you require any further information in connection
with the proposed redevelopment of this property, please contact anyone of us at our business in
Columbia Heights, Sarna's Tobacco Depot (763-788-2700).
Sincerely,
David M. Sarna
James A. Sarna
James J. Sarna
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