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6.0. EDSR 12-13-2004 Item # 6 • City of Elk -�-� River MEMORANDUM TO: Economic Development Authority FROM: Catherine Mehelich, Director of Economic Development DATE: December 13, 2004 SUBJECT: Industrial Land Development Strategy Attachments • Location Maps of EDA and City Properties • Article "Elk River Seeks More Industrial Parks",The Business Journal, 11-29-04 • Memo from Sid Inman, Ehlers &Associates dated December 10, 2004 • Background The recently adopted Economic Development Strategic Plan identifies Industrial Development as a priority goal. In order to meet the goal the Plan calls for the City's consideration of providing city-owned site options for development, in addition to privately- owned sites. On November 8, 2004 the EDA participated in a joint work session with the City Council to discuss its Business Park/Light Industrial sites and development options. The EDA and Council provided staff direction to proceed in developing a plan for Phase I improvements and development of the following areas: • City-owned Cargill land—60 net acres,Light Industrial and Highway Business • EDA-owned Brown land—45 net acres, Business Park The goal is to encourage industrial development in the City of Elk River. The objective is to put all industrial land in Elk River on a level playing field in price and financing assistance, allowing the end user/manufacturer to select a site based on the site location and its amenities rather than on price. Recent Activities Since the EDA and Council direction staff has been evaluating the opportunities and constraints of each site and is developing a Phase I concept option for the EDA and Council's future consideration. • Industrial Land Development Strategy EDA Meeting December 13,2004 Page 2 of 2 Staff has prepared the table below which indicates industrial/business park land prices in the • area as it compares to Elk River. The information was provided by neighboring communities. With the exception of Maple Grove,all communities listed provide a land write down to the end user/buyer Market Summary Industrial/Business Park Land City Land Ownership SF Land Price Special Assessments Total Price Ramsey Public $2.25-2.50 included 2.25-2.50 Brooklyn Park Private $2.75-3.50 included 2.75-3.50 Maple Grove Private $1.75-2.75 not included 3.00+ Big Lake Private $1.80-2.40 included 1.80-2.40 Becker Public $0.61 included 0.61 St. Cloud Public $0.75 included 0.75 Monticello Public $3.00 included 3.00 Elk River Elk Path Private $1.50 estimate 0.50 2.00+ Elk River Business Park -Private $1.25 estimate 0.45 1.70 In addition, staff has received several inquiries from developers and brokers with interest in the new development areas, following an article that appearing in The Business Journal. Staff has met with the City's financial advisor, Sid Inman of Ehlers &Assoc. to develop a 4111 marketing strategy for the development of the EDA Brown Property. The strategy includes a request-for-proposals process that is outlined in the attached memo from Mr. Inman. Requested Action Following presentation and discussion of the issue, staff requests the EDA's feedback on the proposed marketing strategy for the development of the EDA Brown property. r ��L`• nm rr., onyls as/ M �e�.aw r1 1111111griikWV - ,(F_.'.`.p�II ,i0,..11 ...�_MU / ►idimh 1.10M. IA r Rte©I maw ai • k—'�-lii, ��a —>t©' �p�' \ ='/ ���•��1 I !.I •i of m ,. .4.15�40 �� Ire 'ik '' IIII;I�Gial r,..AUMK � `�.� •�/!� .0y 0'0er tai, `�m1 �ah ‘71"1"414" n 11e sem:�. karlilitaillirgriBilliAllitMVAIIIIMalittirriltitilill \ �� -��\ \�Inom,PARi ilill\` �1 L -��\1\111 RWM- ,��C lJ � gr l ._Ir_inm►.;, u� Ti\ Nip wiwansi_____,... , ti grippMermaq 4.; . ik\ 1 j�' 4ii���� �� yid _�� �i ��\,I�� Li1 lfi,� `�` !1 +!IJY1t$iJ1 CITY A H y r�� SITF, 76TH / , , 0 A� \glow ►. ►MEIifiPiest_ ce . 11111 '\\Tr ,• 174TH _, k Ali"Fr-dr iii E ............A....., .. al A.,.. . ,,$)._:„.=, ok, I`\ •. AVENUE 11 AEI 11) 173R �` I Ela �► I, R SER 7z 'F1 Will t `� .;II ELK IpN O ,IN SiG�p�t ,�, IA !�, tWAIMIN 171ST ' �-��17 TH 1111121;1"r ar oR�w \// Yra/ ,�90 �j16 THNM t�II� ``, MEW WIIIIIRO 16:TH =IM mi % 1 MEM MRS J Location Map N of X11 . River Case Number: EDA BROWN PROPERTY r;(ø � sTATI°N lie , N B1DE 'Al*Ai BBt� LEFEBVRE 47..::0:01H411,:iw lis. D e SEC,ArDI�1oN ,`. - I�� 171ST VEN ��1� �I 11 Mil I _ , 1�i IN r�'TH AVE. II �RRy MORRELL u �w 114 I \ ADDITION , iIIIINIIII M.A.Aa.fi tM\INAA\ \ \\ i i r � \ I. .E/ - — �, ( SITE ,h""i. 167Tf- A ENUE \ \ 1 ) / 'DE PLANT I I 165TH I AVE ,\ -1,/, + ti Location Map N , River Case Number: CITY CARGILL PROPERTY Elk River seeks more industrial parks - 2004-11-29 - The Business Journal (Minneapolis/... The Business Journal (Minneapolis/St.Paul)-November 29,2004 http://twincities.bizjournals.com/twincities/stories/2004111/29lstory7.html DIE• ti ,St.phi BUSINESSAPO OURNAL EXCLUSIVE REPORTS From the November 26.2004 print edition Elk River seeks more industrial parks Scott D.Smith Staff reporter Elk River city officials plan to open about 100 acres of city-owned land for industrial development. Leaders say they need more business parks to accommodate a heightened interest in industrial development in Elk River. In particular, an unnamed Elk River manufacturer is searching for a site to build a 100,000-square- foot facility. Some city leaders fear Elk River may lose the manufacturer due to a lack of available land, said Cathy Mehelich, Elk River's director of economic development. "Our goal since 2000 has been to be the light- industrial hub in the northwest metro." Existing Elk River industrial parks include Elk Path Business Center, Sandpiper Business Park and Elk River • Business Park, which comprise more than 120 acres. City officials hope to have the raw land available for development in the spring, Mehelich said. Sewer lines already run through the areas. One site, known as the Brown property,is located north of 173rd Avenue near Twin Lakes Road. It includes 90 acres, 45 of which are developable. The other site, known as the Cargill property since it was bought from Minnetonka-based Cargill Inc.,includes about 60 acres next to Highway 10 north of 171st Avenue. The city would sell land in the parks for the market rate of$2.25 to $3 a square foot, Mehelich said. However, the city also would consider tax abatement or tax increment financing deals to entice businesses, she said. Municipal business parks typically "work out well for users,but arguable not so well for competing developers," said John Ryden, first vice president in the Bloomington office of CB Richard Ellis. Other cities, such as Anoka and Ramsey, essentially offered free land to entice large businesses to their parks,he said. However, demand has increased for Elk River industrial land as parks in Ramsey and Anoka are becoming full. "I would say the timing is real good on the city's part." Ryden also noted that most communities south of Elk River have started requiring more attractive exteriors on industrial buildings. "So for your basic, vanilla industrial building, Elk River is about as close in as you can get." ssmith@bizjournals.com I (612) 288-2107 • ©2004 American City Business Journals Inc. http://www.bizj ournals.com/twincities/stories/2004/11/29/story7.html?t=printable 12/10/2004 EHLERS • &. , , SOC ,, - ES MEMORANDUM DATE: December 10, 2004 TO: Catherine Mehelich, City of Elk River FROM: Sid Inman, Ehlers and Associates Inc RE: City-Owned Industrial/Business Park Development Options This memo is regarding the EDA and the City owned industrial/business park land. The EDA/City are considering developing the parcels they both own into industrial park uses and are beginning a process to determine the best way to proceed. It has been our experience that to insure that the EDA/City achieve there goals for development, a request-for-proposals (RFP)process works best. Using a RFP process insures that the EDA/City will receive the highest price for the property, development to the highest and best uses and allow the EDA/City to control the process. Further, if business assistance is needed this process will insure that any assistance will be given with the minimum needed to make the project financially feasible. The EDA/City would prepare RFP materials giving the developers some general information regarding • the sites and also includes the EDA/City goals for the type and quality of development they want. Items could include: 1. Maps of the two areas 2. Zoning code for the area 3. City/EDA's development goals for the area. i.e. size of buildings,types of buildings, quality of material. 4. Public improvements that are currently in both areas 5. An estimate of future public improvement needs. 6. Public Improvements may include City assessment bonds. 7. A schedule of Sac Wac and Park dedication fees. 8. A copy of the City business subsidy policy. 9. A copy of the City tax increment/abatement policy. We would then ask the developer to give us their view of the market place. 1. A description of the types, sizes and usage of the buildings they think they can market. 2. An estimate of the assessor's market value of buildings when completed. 3. An estimate of the build-out of the two areas by year. 4. When adding in Sac,Wac,Park dedication fees, current special assessments and future public improvements,what is the developers estimate of the amount a third party would or could pay for sq. ft. of land. 5. What would their development fee and overhead expenses be. • The EDA/City could review the RFPs and,if necessary,have interviews with the developers that seem to achieve the goals of the EDA/City. Once a developer is selected the EDA/City could begin to negotiate a master development agreement that would be the controlling legal document for the entire site. It would contain all of the details as to price paid for land, what would be build,timing on phases, and amount and method of delivery of assistance(if any is needed). We would suggest that as part of the agreement the EDA/City would not sell any parcels until the parcel is developed by a third party. This way the EDA/City will be able to control the process and progress of the development. Further,we suggest that the agreement have very well defined goals and dates for • developer performance and that the EDA/City can terminate the agreement and select another developer if these performance goals are not met. In general, we think that using a very controlled RFP process will insure that the EDA/City will have the most successful development and is the best method to achieve their development goals. I hope this helps the EDA/City with their first steps in the process and look forward to working with you in the future. Please let me know if you have questions or comments. • •