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HomeMy WebLinkAboutEDA MIN 08-27-12ECONOMIC DEVELOPMENT AUTHORITY (E,DA) MINUTES OF THE EXEC UTIVE SESSION OF AUGUST 27, 201.2 IN CONFERENCE ROOM 2 The Executive Session meeting was called to order at 7:58, pin by Chair Peterson. Members Present: Bruce Nawrocki, Gary Peterson, Donna Schmitt, Bobby Williams, and Tarnmera Diehm. Mernbers Absent: Gerry Herring er and Marlaine Szurek Staff Present: Walt Fehst, Scott Clark, and Shelley Hanson Nawrocki went on record to obJect to setting up special meetings without calling all the members to find out their availability. He also wanted staff to check out the back of the Mady's building, He said there is a lot of debris and high weeds behind the building that should be cleaned up. 2. Discussion on Mady's Purchase Clark stated that during early 2012 staff negotiated with Doug and Deni Foss for the purchase of the shopping center at 3919-3927 Central Avenue. These negotiations, resulted in an EDA action on May 7, 2012 approving a purchase agreement (the EDA action letter of May 7, 2012 was provided). After that approval the Sellers walked. From the deal and entered into an agreement with another party for a grocery store, which in turn did not come to fruition, The Foss' have now asked the EDA if they would enter into discussions regarding the original deal. Staff is seeking direction from the EDA as to whether they would like to proceed in another attempt at securing this and if so, staff will develop a more formal proposal and research any questions for the September 4, 2012 EDA meeting. Clark explained to members that the person who was trying to purchase the property wasn't able to obtain all the financing he needed to complete the deal. Clark also told members that the issue of possible relocation costs is uncertain at this time since lie is not sure if any formal notice has been given to the tenant in the building based on the previous sale attempt, or if he has given the owners anything in writing stating he is leaving the space. Mrs. Foss said at one point that lie was vacating the space by September 300". Diehm asked if we could request the Foss' provide that in writing to us if they have such a document. Fehst asked if there was a current lease with the tenant. Clark said he thinks the lease has expired and was never re-negotiated, so it is operating, on a month to month basis. However, unless he has given the Foss' written notice of his intentions, it may not alter the fact we could be responsible for some relocation costs. Clark stated that Bob Lindahl gave him a conservative legal opinion that we should assume we will need to pay relocation expenses if we enter into a purchase agreernent with them based on the information we have currently. Clark estimates the relocation expenses could be in the range of $80,0100- S100,000. He went on to tell members that the second issue to consider is that July I st was the cut-off date to file for tax exempt status, so if we purchase this property we would be responsible for all of the 2013 taxes. FDA EXECUTIVE SESSION MINUTES Page 2 August 27, 2012 Peterson stated the reason we are in this position of having to pay taxes for 2013 is due to the Foss' decisions. He strongly felt the price should be reduced to reflect that fact. Clark said another change he would recommend is putting the earnest money in escrow with aTitle Company. fie suggested reducing the price by approximately $15,000 since that is half of the annual taxes that we were willing to pay when the last offer was considered. That reduction would cover the additional tax we would have to pay in 2013 if the purchase proceeds. Diefuri thought we should offer $900,000 based on the additional tax amount plus the expenses we have already incurred when we agreed to their last offer. She also questioned if they are really serious about brokering a deal with the City based on their past actions. Schmitt thinks the property is overpriced. We were willing to pay much more than the Estimated Market Value of $722',000 the last time around. She said she has done some research and only properties that are irlwell maintained condition with everything up to code, are selling for more than the Estimated Market Values-and this property is definitely not in that condition. She is also concerned with the amount it will take to do contamination cleanup in addition to purchasing the property. Schmitt asked if there would be funds available to clean up the property. Clark said we would first need to obtain the parcel, and then establish a vision to shop around. Once we found a developer who is interested then we could work through the DEED process for some clean up funds. She doesn't believe the property is worth this much and there-fore, isn't in the best interest of the City to agree to this deal. Clark responded that this is a bigger policy decision than just the dollars and cents of this particular agreement. He stated this is a big parcel in the heart of our City that has been an eyesore for years. Ile asked the members if they would be satisfied and are willing to risk this property being bought by an outside party that would let the building deteriorate further. He said the most likely people to buy this property would be marginal businesses, such as the one that just attempted to purchase it. It will attract those that don't want to invest anything into the property because if they leave the property "as is" they don't have to deal with the contamination cleanup. Nawrocki also thought it is over-priced. Ile asked if the tax exempt period for the Burger King property and this property would be 9 years, similar to the houses we purchased. Clark thought it. was, but said we have a better chance to market the Burger King site if it can be included with the large Mady"s piece. Nawrocki also had concerns about Heights Rental being a deterrent in marketing the parcel as they seem to have expanded the use of their business onto the parking lot and street surrounding this parcel. Ile also wanted to know where the funds would come from to complete this purchase. Clark, told him about half would come out of the Anoka County Levy money and the specifics of the remaining sources would be discussed at the next meeting. EDA EXECUTIVE SESSION MINUTES Page 3 August 27, 2012 Menibers opinions were as follows: "Schmitt was not in favor of the purchase unless we offered between $800,0004850,000, which is still more than the market value. Williams was in favor of pursuing this again. *Dichm was in favor. *Nawrocki was not in favor. He didn't feel it was beneficial enough to the City. *Peterson is in favor, but the overall expense cannot be any higher. Staff will schedule this item (with a possible need for a special meeting) if sorne preliminary business agreement can be reached with the Foss', 'Fhe next regular EDA meeting will be Tuesday, September 4, 2012 at City Hall at 6:�30 pm, The meeting was adjourned at 8:35 pm. Respectfully submitted, Shelley Hanson Secretary