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7. EDSR 01-9-2012ITEM # 7. MEMORANDUM 1-~..l.V~'~ TO: Economic Development Authority FROM: Annie Deckert, Director of Economic Development DATE: January 9, 2012 SUBJECT: Crystal Distribution, Inc. (CDI) Expansion Proposal BACKG ROU N D Staff has worked with Crystal Distribution, Inc. (CDI) for the past several months on a proposed expansion of their facility in Northstar Business Park The proposal would expand their facility by approximately 30,000 sq. ft. onto the vacant 12.13 gross acre lot to the north of their existing location. CDI has requested a lot split because their expansion does not require the entire parcel. Splitting the lot would require site improvement`s to northern (unused) portion of the lotto ensure the split resulted in a buildable lot. At the October 10, 2011 EDA meeting, to maintain highest and best use of the property, the EDA directed staff to work with CDI to devise a proposed site plan acceptable to CDI and the city. The EDA also directed staff to obtain a property appraisal to determine the market value and marketability of the entire site, and the proposed northern portion of the lot. Additional background information is outlined in the attached memos to the EDA dated 10- 10-11 and 12-12-11. DISCUSSION After working with CDI on their site plan, staff believes to have devised a plan acceptable to both parties. Property appraisals have been completed Splitting the 12.13 acre lot would result in a 4.8 gross acre lot for CDI's proposed expansion and a 7.3 gross acre lot to market for light industrial Per state statute, appraisals made by personnel of a municipality of property owned by that municipality, are classified as nonpublic data until either 1) a purchase agreement is entered into or 2) the parties negotiating the transaction exchange appraisals. Per staff review of the appraisals, staff is asking the EDA to consider the following actions: • Authorize staff complete administrative lot split • Exercise intent to sell ~ I~ E 1 E 0 6 1 NA~~~ NEXT STEPS With EDA authorization, staff will move forward with the administrative lot split process and work with CDI to negotiate the sale of the land. ATTACHMENTS • Northstar Business Park map • Proposed lot split map • Crystal Distribution, Inc (CDI) proposal memo to EDA dated 10-10-11 • Crystal Distribution, Inc (CDI) proposal memo to EDA dated 12-12-11 N \Departmrrnc\CommiuiityDevelop~rn\Economic Developmein\Industxial Siting\®I\2011 Expansion\1-9-12 EDA consideration of split and intent to selLdoc ,, C C O I--1 ~ Z F~ ~ Q o~ ~ ~ ~~~ ~ ^ ^ ~~ /~ 1 i - U• ~! is ~! S3~/b'7 NlMl ~..- C .u ~ ~ a c ~ ~ ~ W C~ W MEMORANDUM TO: Economic Development Authority FROM: Annie Deckert, Director of Economic Development DATE: 10 October 201 I SUBJECT: Crystal Distribution, Inc. (CDI) proposal ATTACHMENTS • CDI request- dated 9-12-11 • CDI proposed expansion & renovation site plan • CDI option 1-potential lot split • CDI option 2- no lot split BACKGROUND Established in 1994, Crystal Distribution, Inc. (CDI) primarily fabricates sheet metal into custom curb adapters which are used to replace existing roof top equipment with the new roof top equipment. The roof top units are sold to heating, ventilation and air conditioning (HVAC) distributors across the nation and into Canada. The company is owned and managed by Pat O'Brien and his wife, Bobbie Jo. The company currently employs over 100 full-time staff. CDI relocated to a 3.7 acre lot in Northstar Business Park in 2005, building a 30,000 square foot building, with room to expand 12,000 sq. ft.. The lot was purchased at $2/sq. ft for a total of $276,940 (161,172 sq. ft.) which excluded the portion of the property subject to the existing recorded easement for the Northern Natural Gas Company (22,702 sq. ft.). DISCUSSION CDI initially approached staff in February of 2011 with a proposed 60,000-80,000 sq. ft. expansion plan. On 9-12-11, CDI submitted a revised proposa130,000 sq. ft. expansion. This proposal indicates building a portion of the 8.88 developable acre parcel in Northstar Business Park. CDI is requesting to purchase a portion of the 8.88 acre lot. Below are staff comments/issues per preliminary review: rYowEOEO etr A~~~ [I= If the lot is split, access (off of Twin Lakes Road, or a frontage road on the property) sewer and water service will need to be made available to the remaining portion of the parcel. o From an engineering standpoint, City Engineer does not recommend an access off of Twin Lakes Road. Access spacing guidelines identified in the City of Elk River's transportation plan do not permit an access onto Twin Lakes Road. The City Engineer has no problem with a frontage road on the property to provide access to the remainder of the lot • Based on the proposed addition, a storm sewer line that exists along the current north property line will need to be relocated around the north side of the building. • The proposed plan shows dock doors adjacent to a public street which would require a conditional use permit and extensive screening. This typically takes about 6 weeks from the date of complete application to City Council review • The property is owned by the EDA, therefore, before the CUP application would be considered complete, CDI must purchase the property or the EDA must provide written support for the application/sign the application Should the EDA choose to move forward with the sale of a portion of the lot, the costs below should be discussed with the EDA and negotiated with the applicant: ^ Relocation of storm sewer line- $50,000 ^ Water Service- $3,900 ^ Sanitary Service - $12,000 ^ Turn Lane and entrance (off Twin Lakes Road)- $29,000 ^ Frontage road on property- $102,000 (approximately 450 ft. at $267.00/ft.) At their meeting on July 11`'' 2011, the EDA discussed their intentions with the lot in question as it pertained to Spectrum Charter School's request to place a dome on a portion of the lot. It was the consensus of the EDA that this lot was intended for industrial development, higher design standards and that the dome would decrease visibility, therefore bringing development down. Additionally, at their July 18`'', 2011 Council meeting, the City Council expressed their desire to hold the lot for future industrial development and indicated splitting the lot was not an option because of the lack of City owned property, with utility access available for industrial development. Staff is seeking direction on how to proceed. Options for consideration include: Purchase lot at $2 sq/ft for a total of $773,625.60 (12.13 acre lot for net price of $1.46 sq/ft) Purchase lot at fair market value; may be determined by appraisal • Lot split P D M" E fl E 0 9 C ~~~~~ o Costs associated with lot split, including but not limited to future development on remaining parcel (extension of frontage road, etc. to be determined by EDA. The first map attached to the memo depicts CDI's proposed expansion if the lot were split, showing access options and speculative development on the remainder of the parcel. The second map depicts CDI's proposed expansion in addition to future expansion opportunities should CDI decide to purchase the entire lot. PONEflE''Ott 8T ~~~V~~ MEMORANDUM TO: Economic Development Authority FROM: Annie Deckert, Director of Economic Development DATE: December 12, 2011 SUBJECT: Crystal Distributions Inc. update At their October 10`" EDA meeting, the EDA discussed proposed expansion for Crystal Distribution Inc. (CDI), located in Northstar Business Park. CDI expressed their desire for a potential lot split because their expansion did not require the entire parcel. Splitting the lot would leave the northern portion of the lot inaccessible. In addition, sewer and water service would need to be made available to the remainder of the parcel. At their October EDA meeting, the EDA directed staff to work together to come up with a proposed site plan acceptable by both CDI and the city. In addition, the EDA directed staff to obtain appraisals on the property in its entirety, and the two separate parcels should the lot be split. This is to determine the market value and the marketability of the northern portion of the parcel should the lot be split. Staff has been working with CDI on their site plan and believes to have devised an acceptable plan by both parties. Staff obtained quotes and is working with the appraiser to complete the appraisals. These appraisals take roughly 3-4 weeks to complete. CDI is a highly valued quality employer and growing manufacturer in the City of Elk River. It is in the City's best interest to retain CDI and assist in their growth and success in Elk River. CDI Staff is anticipating bringing this information back to the EDA at its January meeting.