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3. EDSR 08-25-2014 El , Request for Action River To Item Number Economic Development Authority 3.1 Agenda Section Meeting Date Prepared by General Business August 25, 2014 Jeremy Barnhart,Deputy Director, COD Item Description Reviewed by Receive land donation from Tom Hartman,Lots 1 Tim Simon, Finance Director and 2, Block 1, Fox Haven Commercial Reviewed by Cal Portner, City Administrator Action Requested 1. Accept, by resolution, the donation of land from Tom Hartman: Lots 1 and 2,Block 1, Fox Haven Commercial. 2. Approve, by motion, the budget amendment for$83,000 to the 2014 budget. Background/Discussion The city has been approached by the property owner of two 1.5 acre parcels immediately west of Westbound liquor. The property owner wishes to donate the parcels to the EDA in exchange for paying the outstanding property taxes,which have accumulated to $79,387.77. The county estimates the taxable market value of the two parcels to be $261,400. In addition to the payment of the property taxes, there are the typical due diligence costs,including Phase 1 Environmental Site Assessment ($3,400) and title commitment costs ($125) Staff has identified three options: 1. Acquire the parcels for$79,387.77,plus due diligence costs. This gives the EDA options in terms of encouraging commercial growth in this portion of the city. With ownership,we are able to control the pace of a sale and the cost of the land,which are both powerful motivators for new businesses. 2. Not acquire the property,but acquire it when (or if) the parcels are involved in the tax forfeiture process. The challenge with this option is that there are a number of conditions imposed on properties acquired through the tax forfeiture process. The city could not use the property to develop it for commercial purposes without paying the fair market value, or about$261,000. 3. Do nothing. Do not acquire the property now or when it becomes available through the tax forfeiture process. While the acquisition cost is substantially less than the estimated market value, the EDA could expect to hold the property for some time, as the commercial climate in this area is less robust than in other areas, which is in part why the property owner wishes to donate the land. The $82,912.77 is not anticipated to negatively impact other EDA projects or goals. I P O W E R E I 11 Template Updated 4/14 NATUR Through preliminary inspection of the parcels, staff noted that a structure previously on the property was burned down and the rubble backfilled into the basement. This may increase costs associated with development. In addition, there is potential that chemicals and asbestos containing materials are included in the rubble. To finance the acquisition, the EDA will need to amend the budget, adding$83,000 to 2014 expenditure budget. The $83,000 will come out of available EDA fund balance. Financial Impact $83,000 expenditure Attachments • Location map • Resolution • Email history N\Departments\Community Development\Economic Development\EDA\Administrative\Agenda\EDA Agenda Packets\Year2014\8-25-2014 Special I Iartman prop\2.1 sr I lartman donation acceptance docx RESOLUTION NO. ECONOMIC DEVELOPMENT AUTHORITY CITY OF ELK RIVER RESOLUTION ACCEPTING DONATION OF REAL PROPERTY WHEREAS, Thomas E. Hartman and Sara S Hartman are fee owners ("Owners") of real property located within the City of Elk River ("City") described on the attached Exhibit"A" (the "Property"); and WHEREAS, Owners desire to donate the Property to the Economic Development Authority in and for the City of Elk River("EDA");and WHEREAS, the EDA desires to accept donation of the Property by Owners, subject to the conditions set forth below; and WHEREAS, the Property has an outstanding real estate tax liability to Sherburne County in excess of$70,000; and WHEREAS, the Property has an estimated fair market value in excess of $260,000, according to tax records at Sherburne County; and WHEREAS, the parties agree that all costs associated with the transaction, with the exception of legal fees and other costs incurred by Owner,will be paid by the EDA. NOW, THEREFORE, BE IT HEREBY RESOLVED BY THE ECONOMIC DEVELOPMENT AUTHOIRTY IN AND FOR THE CITY OF ELK RIVER, MINNESOTA: 1. The EDA finds that the fair market value of the Property is in excess of the outstanding real estate tax liability. 2. The EDA accepts donation of the Property subject to the outstanding real estate tax liability, and authorizes the EDA President and Staff to execute all documents and take all appropriate measures to accept donation of the Property, subject to the following conditions: (a) EDA determining that it is satisfied with the title to the Property, based on the EDA's review of title matters; and(b) EDA Staff determining that it is satisfied with the results and matters disclosed by an inspection and/or environmental investigation of the Property, at the EDA's cost, conditioned upon the Owner granting a right of entry to the Property for such inspections by the EDA, its employees and contractors. Adopted this 25th day of August, 2014 ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR CITY OF ELK RIVER ,President 2 759152v2 EXHIBIT"A" Lot 1, Block 1, Fox Haven Commercial, Sherburne County, Minnesota Lot 2, Block 1, Fox Haven Commercial, Sherburne County, Minnesota A-1 759152v2 :-.f....7 -------,, .4„, : 11111,.. , i fl mow ' or f of Mk .--,,,, Uronu La/tt •'� ,,�� q River r a -��\. .4 , r Legend• - .\% � � i City Limits a - � �' X14 s'o Ii • Urban Service Area # y y �� s -wr- Parcels(10-1-2013) -. • x r Iva, LT + r Y I 4 y - *t '•'` ' r < y� t a' - ,r cb ..,O �, '�";• "., air ,-r a.., , A * ....� �� ,'e tJe:�' l C1 _ o �t� t a,-• mu. • 1iv � mil CEMTER� * €;1 1 r • 'a."-.r { I f " .—� S_ r 1, i. �` � �� a Lots 1 and 2, Block 1, Fox «-- Haven Commercial Disclaimer. This drawing is neither a legally recorded map nor a survey and is not intended to be used as one.This drawing is a compilation of records,information,and data 0 342 Feet other located in various city,the area and state ni5 offices,and other sources affecting the area shown,and is to be used ©Bolton&Menk,Inc-Web GIS 8/21/2014 12:53 PM for reference purposes only.The City e of Elk River is not neinle mr a���narr��rar�e.nere��rnorained Barnhart, Jeremy From: Matt Ledvina <mledvina @landmarkenv.com> Sent: Thursday,August 21, 2014 10:22 PM To: Barnhart, Jeremy Cc: Jessica Fitzpatrick Subject: RE: Elk River Phase I ESA Hi Jeremy, We will have more info on the location once we review the aerial photos. There is a concern with chemicals and Asbestos containing materials. You may be able to avoid excavation if you place a parking lot over it. If you need to excavate for the future buildings, environmental oversight may be needed to ensure proper offsite disposal. More on this later. Matt. From: Barnhart, Jeremy [JBarnhart@ElkRiverMN.gov] Sent: Thursday, August 21, 2014 4:39 PM To: Matt Ledvina Cc: Jessica Fitzpatrick Subject: RE: Elk River Phase I ESA Thank you Matt, and for the preliminary information. I will note the presence of the old farmhouse foundation and rubble to the EDA. I assume this will require additional development costs, but do you have a concern with old chemicals or similar? Also, do you recall which lot this was on, or was it on both parcels? Best regards, Jeremy Barnhart, AICP I Community Operations and Development-Deputy Director Direct: 763.635.1034 13065 Orono Parkway I Elk River I MN 1 55330 4 Eilo, NATURE liver From: Matt Ledvina [mailto:mledvina@landmarkenv.com] Sent: Thursday, August 21, 2014 3:39 PM To: Barnhart, Jeremy Cc: Jessica Fitzpatrick Subject: RE: Elk River Phase 1 ESA Hi Jeremy, I left you a voicemail concerning my Site visit and interview with Torn Hartman. I have also cced Jessica Fitzpatrick on this email She will be working on evaluating the historic information and environmental databases as part of the report. Thanks, 1