4.5. SR 12-21-2015Request for Action
To
Item Number
Mayor and City Council
4.5
Agenda Section
Meeting Date
Prepared by
Consent
December 21, 2015
Amanda Othoudt, EDD
Item Description
Reviewed by
Letter of Intent to Purchase 17565 Tyler Street
Cal Portner, City Administrator
Reviewed by
NW, Elk River, MN
Action Requested
Approve, by motion, the Letter of Intent received for 17565 Tyler Street NW, Elk River, MN.
Background/Discussion
The city received a Letter of Intent to purchase 17565 Tyler Street NW from Robideau Properties, LLC,
to develop a 20,000 sf industrial building with a small amount of outside storage for trailers and
equipment. The letter proposes $2/sf, the previously directed asking price, $10,000 earnest money, and
the seller paying the brokerage fees of 3% of the purchase price at closing. The proposed due diligence
period is 120 days of an executed purchase agreement, which the buyer anticipates a late March/early
April after satisfactory government approvals on subsidy and land use applications. Contingencies
include, environmental testing, land use approvals (site plan/ conditional use permit approval), and
financial incentives from the city. They expect to close within 30 days after satisfaction of all conditions.
The EDA Finance committee reviewed the letter of intent and recommended approval of the terms to
the EDA with the addition of language to clearly indicate a defined duration of the "Non -shop"
provision on the letter of intent as recommended by our legal counsel.
'The provisions of this paragraph shall expire upon the earlier of (i� the date a Purchase Agreement is executed by the
Buyer and the Seller or (ii) 120 days after the date the Seller signs this letter of intent. "
The EDA will have a chance to review the letter of intent and provide a recommendation to the City
Council during their meeting this evening. If requested, staff can provide the City Council with a verbal
update of their recommendation at the meeting.
The request for the seller to pay the buyer's brokerage fees has never been considered in past transactions
and would be considered as part of the complete package, a business subsidy, if coupled with additional
public financing. The buyer has indicated within their letter of intent that they intend to apply for
additional public financing and that amount of financial assistance is unknown.
Based on past practice, staff recommends conveying the property to the buyer at the full market rate of
$2/sf with the buyer paying their broker fees. The EDA should consider business subsidies in their
proper context for the project.
Financial Impact
N/A
paWIREO 0
AfURE
Attachments
■ Letter of Intent to Purchase
■ Site Map
N:\Public Bodies\Agenda Packets\ 1 2-21-2015\LASERFICHE\x4.5 sr Letter of Intent to Purchase 17565 Tyler Street.docx
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COMMERCIAL
PH0PEHTIES
A Real Estate Services Company
6897139'" Lane NW
Ramsey, MN 55303
763.862.2005 Office
763.862.1925 Fax
November 10, 2015
Amanda Othoudt
Economic Development Director
City of Elk River
Re: Proposal to purchase 4.34 acres of land.
Dear Amanda,
This correspondence is to serve as a Letter of Intent (LOI) to enter into a purchase
agreement for 4.34 acres of land in the North Star Business Park. This letter of intent
will allow us to move forward on a layout and to finalize a purchase agreement. The
general terms of the purchase agreement are anticipated to be as follows:
Seller: Elk River Economic Development Authority
Buyer: Robideau Properties, LLC and or / its assigns
Property: 4.34 acres located at: 17565 Tyler ST NW, Elk
River MN
Legal Description: Sherburne County PID# 75-757-0205
Purchase Price: $378,100 ($2.00 per sq. ft.) payable in cash at
closing.
Earnest Money: $10,000.00, to be credited against the Purchase
Price and held in an agreed upon trust account.
Escrow Terms: The Earnest Money is fully refundable to Buyer
through the due diligence period or in the event
of Seller default.
Conditions of Purchase: Buyer requires the following conditions to be
completed or waived within One Hundred
Twenty (120) days of an executed Purchase
Agreement (the "Due Diligence Period").
A. Satisfactory conditions of title approved by Buyer. Seller to provide
title commitment.
B. Satisfactory conditions of an ALTA survey of the Property approved
by Buyer. Seller to provide any existing survey. Buyer to updated
survey.
C. In Buyers sole judgement, satisfactory environmental conditions
(Phase I and II if necessary) and property inspection.
D. Satisfactory governmental approvals for Buyers intended use and
plans. Buyers intended use will need a Conditional Use Permit from
the city of Elk River for outside Storage. Buyer intends on
constructing a +/- 20,000 sf industrial building with a small amount of
outside storage for trailer and equipment storage in a Business Park
Zoning.
E. Buyer to obtain suitable financing in a form and amount acceptable to
Buyer in its sole discretion. Buyer intends to apply for city incentives
through the Elk River Economic Development Authority.
Closing Date: Thirty (30) days after satisfaction of all
conditions.
Seller's Documentation: Seller shall supply, within ten (10) days after
execution of a purchase agreement all
significant documents about the Property,
including but not limited to surveys, plat, civil
plans, soils reports, environmental reports
(including all investigations performed on the
site in the last 5 years), and title work. The Due
Diligence period shall begin after delivery of
such documents.
Non -Shop: The Seller and its principle shareholders or
partners, employees, representatives or agents:
(1) will not initiate, encourage the initiation by
others of discussions or negotiations with third
parties or respond to solicitations with third
parties relating to the purchase of the Property
in whole or in part and (b) will not enter into
agreement with respect thereto with any third
party during the negotiation of the and
execution of the Purchase Agreement. The
Seller hereby agrees that it shall be legally
bound by the provisions of this paragraph and
Seller's violation of this paragraph will cause
irreparable injury to Buyer.
Brokerage: Buyer is represented by Richard Lee of Premier
Commercial Properties, LLC (buyer's broker).
Brokerage fees of 3% of the purchase price shall
be paid to buyer's broker at closing.
Seller and Buyer acknowledge that the proposal is intended as the basis for the
preparation for the necessary purchase documents. Only a fully executed Purchase
Agreement shall constitute a binding agreement of the purchase of the Property. If
the foregoing terms and conditions are sufficient to allow the preparation of the
necessary documents, please sign in the space provided below and Buyer shall
prepare a Purchase Agreement for Seller to review within five business days of a
received signed letter of intent.
Agreed and Accepted: Agreed and Accepted:
BUYER: iz�;�z�t�,�„ �; �t,-c SELLER:
By: By:
Its: 641,I;,= 1-1A"a(,-iti�L Its:
Date: /Tll s— Date:
I r✓
If, "jhy Beaco 1 Sherburne County, MN
Parcel ID
Sec/Twp/Rng
Property
Address
75-757-0205 Alternate n/a
2-32-26 ID
17565TYLERST Class 775 -Municipal Public Service
NW Enterprises
ELK RIVER Acreage 4.34
ELK RIVER CITY
n/a
(Note: Not to be used on legal documents)
District
Brief Tax Description
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Legend
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Owner THE ECONOMIC DEVELOPMENT,
Address AUTHORITY
FOR THE CITY OF ELK RIVER
13065 ORONO PARKWAY
ELK RIVER MN 55330
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Date created: 12/4/2015
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