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HomeMy WebLinkAbout7.b. Update of Repairs, Inc. Repurchase / Consideration of Redevelopment Proposals for the Repairs Inc. SiteS CITY OF ROSEMOUNT EXECUTIVE SMOUkRY FOR ACTION PORT AUTHORITY COMMISSION MEETING DATE: APRIL 6, 1993 AGENDA ITEM: UPDATE OF REPAIRS, INC. AGENDA SECTION: REPURCHASE/CONSIDERATION OF REDEVELOPMENT PROPOSALS FOR REPAIRS, INC. SITE OLD BUSINESS PREPARED BY: JOHN MILLER, ECONOMIC DEVELOPMENT COORDINATOR AGEND)� ^� M 8 ATTACHb1ENTS: MEMO ANALYZING PROPOSALS FOR AP OVE BY• REDEVELOPMENT OF REPAIRS, INC. SITE e U The closing for the repurchase of the Repairs, Inc. site has been moved to April S. I have second-hand information that Repairs, Inc. has chosen not to repurchase the property. In this regard, the commissioners will have at least three options at the April 6 meeting: 1. Acknowledge the repurchase of the property. 2. Consideration of an eviction date for Repairs, Inc. 3. Consideration of a "relocation agreement" with Repairs, Inc., i.e payment to not repurchase. If repurchase does not occur, then the commissioners will have the ability to select one of the two development proposals submitted for the Repairs, Inc. site. The attached memorandum addresses the merits of the proposals. I realize there is some speculation here regarding what actions will be considered and that you will be receiving some information the evening of the meeting. However, there is an important consideration in completing the redevelopment. Please feel free to call me on April 6 before the meeting. RECOMMENDED ACTION: To be presented April 6. &eQ + PORT AUTHORITY ACTION: MEMO TO: Chairperson Dunn Commissioners Anderson, Carroll, Edwards, McMenomy, Sinnwell, Wippermann FROM: John Miller, Economic Development Coordinator DATE: April 1, 1993 RE: Analysis of Proposals for the Redevelopment of the Repairs, Inc. Site The Rosemount Port Authority has received two very good proposals for the redevelopment of land known locally as the Repairs, Inc. site. Development of either proposal would be an improvement to the aesthetic and business climates of the downtown area. Attached for your review is an analysis of the two proposals as they affect the city in several areas. Based on this analysis and the information provided to you in the written proposals and in the verbal presentations made to you on January 19, you should decide which entity, Dakota Central Partners or Ron and Kerry Johnson, you want to redevelop the site. Attached is a financial analysis, RFP checklist, and miscellaneous considerations. ANALYSIS OF PROPOSALS FINANCIAL ANALYSIS JOIiNSONS Private Investment Public Assistance 1. 11,400 square foot office building 1. Repairs, Inc. site $130,500 with improved parking lot with 49 spaces. $513,000 ." 2. 4,770 sq. ft. of parkland @ $2.50 2. Site work and demolition. $ 60,147 'Z' per sq. ft. $ 11,925 «' 3. Park improvements $ 18,516 3. Pay-as-you-go TIF, 6 years @ 4. Indirect costs 61,478 $33,000(l) $198,000 TOTAL $653,201 TOTAL $340,425 Notes: 1. The Johnsons had these numbers reviewed by the Dakota County assessor's office. 2. Kraus -Anderson estimate 3. Kraus -Anderson estimate based on discussions with Rosemount city engineer and park director. 4. Per repurchase agreement in effect to 2-5-93. 5. Staff generated estimate. 1 e DAKOTA CENTRAL PARTNERS Private Investment Public Assistance 1. 8000 sq, ft. office addition 1. Repairs, Inc. site $130,500 (4) to existing Dakota Central Building $400,000 (1) 2. Rental of 4,000 ft. lower level until sq, 2. Waiver of utility privately leased but reimbursement $ 13,375 (2) not beyond 2000 $120,000 (5) with range $0 3. 65 x 120 parcel at 2810 - 145th to $181,722 Street to Port Authority. (6) 7800 sq. ft. @ $2.00 per foot. 15.600(3) 3. Demolition and site work $40,000(7) 4. Parking lot on Repairs, Inc. site $40,000(8) 5. Maintenance of parking lot to 2000. 6 years $1,200 7.200(9) TOTAL $428,975 TOTAL $337,700 Notes: 1. Estimate provided by Reid Hansen on 1-20-93. Letter of 10-26-92 from E. B. McMenomy, Sr. makes reference to a free standing_ building -with a value of $400,000. 2. See letter of 10-15-85 from E. B. McMenomy, Sr. 3. From appraisal completed by Malcomb Allen Jr. for the Port Authority. 4. Per repurchase agreement in effect to 2-5-93: 5. Estimate provided by Anne McMenomy on 1-20-93. 6. Page 2 of proposal states "DCO believes that P/A's rent for the 4,000 square foot lower level will not exceed P/A's tax increment receipts as shown on Exhibits A and B, plus the additional tax increment to be realized by reason of construction of said 8,000 square feet to the existing building" to have a value of 50 percent of the assessor reviewed TIF payment from the Johnson's 11,400 square foot building or $15,500. Adding $14,787 and $15,500 gives an annual TIF contribution of $30,287. With six years remaining in the district, the maximum rent would be $181,722. The minimum rent would be $0 provided the partners found an immediate renter. 7. Estimate (not detailed) provided by SEH at my request. 8. Estimate (not detailed) provided by SEH at my request. Includes Class V, bituminous, curb and gutter, stripping, landscape allowance, two lights, approximately 50 spaces. 9. Estimate provided by city engineer and public works director. Please note no depreciation allowance was included. With proper maintenance, the parking lot can last 20 years. In approximately 2013 Rosemount would be required to replace the parking lot at its expense. Straight-line depreciation would add $2,000 annually or $12,000 total through the year 2000 to the public cost. 2 REQUEST FOR PROPOSAL CHECKLIST Item Dakota Central Partners Ron and Kerry Johnson Five copies yes yes Company qualifications yes yes Company financial no yes Description of proposal yes yes Plan of entire site no yes Sketch of buildings no yes Prospective tenants yes yes Financial pro forma no yes Requests for assistance yes yes Similar projects yes n/a Biographicals yes yes SCELLANEOUS CONSIDERATIONS _ _-_-- 1. Future Tax Collections 'The Dakota Central Partners' project would add $400,000 (their estimate) to the city's total market value after 2000. With the city owning the Repairs, Inc land and building a parking lot that land value would not be part of the city's tax base. " The Johnson's project would add $513,000 to the city's total market value for the building and the _ Repairs, Inc. land would become part of the city's tax base because of private ownership. The county assessor has reviewed the Johnson's proposed building and with the land concluded that $33,000 would be paid annually in taxes. The Dakota Central Partners project would have 30 percent less space and no additional land. _ Assuming the Dakota Central Partners' building paid taxes at 70 percent of $33,000, the annual tax payments would be $23,100. Conclusion: After 2000 the Johnsons' building would pay more in taxes than the Dakota Central Partners building. 2. Aesthetics: With both proposals the two buildings on the Repairs, Inc. property will be moved. The Dakota Central Partners' building is planned so that "exterior appearance and signage will appear similar to the existing DCO building." The Johnsons' building is designed to be compatible with the Loch and Blake building and the Catholic church. The all brick structure would have an accent pitch roof. The adjacent Erickson Park would be given access to T.H. 3 and park gateway would be constructed by the Johnsons. The parking lot would be landscaped. Conclusion: Beauty is in the eye of the beholder. 3. Proposal Submission: The Request for Proposal formulated by the Port Authority asked any interested developer to submit information in ten areas. The Dakota Central Partners' proposal did not include 1) company financial, 2) plan of the entire site, 3) sketch of buildings, or 4) financial pro forma. 3 An RFP is not like a bid proposal for a truck. With the truck any prospective seller must meet all of the specifications or the bid is rejected. Requests for Proposal are much more casual and are not bound by narrow rules for acceptance or rejection. In this regard the Dakota Central Partners' proposal cannot be rejected for being incomplete. The issue of fairness, however, cannot be ignored. A finding that the Dakota Central Partners "materially failed to providethe information and detail requested" can certainly be made. 4. Out -of -Pocket Costs: With the Johnsons' proposal transfer of land and pay-as-you-go tax increment financing are the primary methods of promoting the development by the Port Authority. With the Dakota Central Partners' project, the Port Authority would be required to demolish the existing structures, grade the property, and construct a parking lot. A rough estimate of this cost is $80,000. In addition, the maintenance of the parking lot would be an additional annual expense. There would also be annual rent payments of an undetermined amount to the partners. The Johnson proposal would require a city payment to the Dakota Central Partners not to exceed $13,375. Conclusion: There would be less direct expense to the Port Authority with the Johnsons' proposal. If the Port Authority believes the Johnson proposal best meets the needs of the City, it should approve the following: / S4 vn,, Z OaA, e -P -L Recommended Action: Motion to accept the proposal from Ron and Kerry Johnson for the redevelopment of the Repairs, Inc. site based upon 1) the written proposals, 2) information presented verbally on January 19, 1993, and 3) staff analysis of the proposals and contingent upon City Council approval of a Project Plan and Project Budget for the proposal. Recommended Action: `Motion to direct the Port Authority staff and attorney, upon City Council approval of a Project Plan and Project Budget for the proposal; to draft a Commitment Agreement" with Ron and Kerry Johnson for -redevelopment -of the Repairs, Inc. site to include but not limited to: 1) dates of project start and completion, 2) financial surety for performance, 3) project financial structure, 4) physical detail. Other agreements such as the tax increment finance agreement, land title transfers, and site and building plan review to be handled separately by the Port Authority and other city commissions and boards. 4 REPAIRS INCORPORATED OFFICE/RETAIL COMPLEX BUILDING DEVELOPMENT PROJECT REQUEST FOR PROPOSALS ROSEMOUNT PORT AUTHORITY I. Introduction The Rosemount Port Authority through the actions of predecessor agencies has acquired a parcel of land near the intersection of 145th Street West and T.H. 3. The address of the property is 14390 South Robert Trail (T.H. 3). The area of the parcel is approximately .42 of an acre with approximate dimensions of 110 x 166 feet (see attached map). The parcel is presently occupied by a business known as Repairs, Incorporated. The Rosemount Port Authority has completed a phase 1 environmental assessment of the property and the complete report is available upon request. At this time the Port Authority wished to identify developers interested in redeveloping the parcel and assisting the commissioners by replacing this blighted area with a project that would be an amenity to the downtown business district and the community -at -large. Proposals must be conceptually and aesthetically consistent with city ,land use plans and the Port Authority's end-use concepts. H. Final Development The final development of this property should be an office or office/retail combination. III. General Provisions A. The development must meet the City of Rosemount zoning requirements. The usual and customary development procedures used by the City of Rosemount and the Rosemount Port Authority shall govern the development process of this project. B. A development agreement must be signed before the property is sold to ensure the type and quality of development after ownership of the property has been relinquished by the Port Authority. C. The total value of the parcel of property based on sale to the Rosemount Economic Development Authority is $130,500. According to state law, the property cannot be sold for less than it was acquired. The Port Authority wishes to sell or trade the property. If a land trade is proposed, the traded property must be in the 1979 Redevelopment District boundaries as amended. D. The property is located near an at -grade intersection in Dakota County with average daily trip counts on T.H. 3 and 145th Street 8,700 vehicles and 7,600 vehicles respectively. E. The property is located in a Tax Increment District and tax increment revenue derived from this specific project is available for this project on a pay-as- you-go basis. The district expires in 2000. F. Special assessment financing with a term of 10 years would be the primary financing tool for infrastructure improvements. G. The design of the development must include some provision for shared parking with the adjacent Erickson Park. H. The design is to emphasize a facade and sign package compatible with adjacent and nearby structures. I. The awarded developer should expect to work closely with the Port Authority and city development staff for the entire duration of this project. J. Upon award of the project, the developer has one year to demonstrate significant progress toward completion of the project satisfactory to the Port Authority. If the Port Authority deems insufficient progress has been made, it may re -issue RFPs for a new development project. This solicitation provides broad outlines for the development in order to allow each developer maximum latitude for creativity and innovation in each proposal. The Port Authority intent is that this process will heighten the competition and yield the best possible development. IV. Presentation and Award A. Timeline: The Request for Proposals will be Approximately mailed and advertised November 10, 1992 Deadline for accepting proposals January 5, 1993 Interviews for finalist proposals Mid -January, 1993 B. Selection Criteria: The awarded proposal will be based upon: (1) The compatibility of development plans with the Port Authority's wishes for the downtown. (2) Developer qualifications best -suited to develop the proposed project. (3) Financial backing and strength best -suited to develop the proposed project. (4) Demonstrated ability and knowledge of development procedures. (5) History and experience of developing similar projects. The Port Authority reserves the right to reject any and all proposals for any reasons. 2 C. Instructions to proposers: (1) Five (5) copies of the development proposal must be received by the Port Authority by January 5, 1993. Proposals received after this date will be returned unopened. (2) Proposals must be addressed to: Mr. Stephan Jilk Executive Director Port Authority City of Rosemount 2875 - 145th Street West Rosemount, MN 55068 Proposals should be clearly marked "Repairs, Inc. Redevelopment Project." (3) Questions about this RFP may be directed to Mr. John Miller, .Economic Development Coordinator, by calling 322-2004 during regular business hours. Questions will be taken until 4:00 p.m., January 4, 1992. (4) Contents of the proposal should include: a) General statement of qualifications of the company. b) General statement of company's financial health. c) General description of the development proposal. d) Preliminary sketch plan drawings showing the entire site. e) Preliminary sketch plans of all buildings. f) Potential listing of prospective tenants for the development project. g) Financial proforma for the project. h) Specific requests of assistance from the Port Authority or city, if any. i) Description of other similar projects undertaken by the developer. j) Biographical information of the principals of the fur who would be working with the Port Authority and city staff on this project. 3