8.0. EDSR 02-13-1995 �'.6 -
ELK RIVER HOUSING AND REDEVELOPMENT AUTHORITY
1111
MEMORANDUM
TO: ECONOMIC DEVELOPMENT AUTHORITY
FROM: WILLIAM RUBIN, EXECUTIVE DIRECTO 94,
DATE: FEBRUARY 13, 1995
SUBJECT: PUBLIC/PRIVATE PARTNERSHIP ISSUES
At its December meeting, EDA Commissioners discussed possible
public/private partnership scenarios related to developing the business park
area. This matter was referred to the EDA Business Park Task Force for
further analysis. In its analysis, the Task Force reviewed three issues:
1. Public ownership and development
(see January 9, 1995, letter from Jay Johnson)
• 2. Availability of City funds
($430,000 from the former RDF district and/or $300,000 from
TIF District No. 1 and No. 3.)
3. Defining the public/private partnership
(Underwriting infrastructure costs)
Information on each of these issues is found below:
1. Public Acquisition of B-P Property - One possible option relating
to City/EDA participation in the business park is to publicly
acquire various sites or tracts which would be improved and
held until specific users came forward. EDA Commissioners will
recall that it explored this concept in mid-1994. An appraisal of
Country Ridge's B-P property was authorized, and, although a
specific offer was never tendered, Country Ridge rejected
rounded acquisition estimates as presented by the Task Force:
The issue of pubic acquisition has emerged again as outlined in
Mr. Johnson's letter. Given the limited amount of public funds,
the EDA's acquisition of raw business park property is a low
priority. This endeavor is better served by private sector land
111/ developers rather than an agency like the EDA. However, the
P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330-1743 • (612) 441-7420 • Fax: (612) 441-7425
Equal Opportunity Housing and Equal Opportunity Employment
EDA will likely participate with the land developers in tax
• increment transactions, etc.
2. RDF and/or TIF Funds - The Task Force explored the potential
availability of funds from both the former RDF TIF District as
well as TIF Districts No. 1 and No. 3. The Task Force has
concluded that to the extent the RDF funds must be expended in
the western part of the community, it is more prudent to request
that the City utilize these funds in the business park.
Therefore, funds from TIF Districts No. 1 and No. 3 would not
be requested for the business park at this time.
3. Public/Private Partnerships - Part of the analysis conducted by
the Task Force in December and January included estimating
the infrastructure costs within the property held by Country
Ridge Partnership and Gagne Development Company. Terry
Maurer of MSA Consulting Engineers provided City staff and
the Task Force with these estimated costs - as outlined on a
separate attachment in the agenda packet. Once determined,
these estimates proved helpful in determining the level of
City/EDA assistance in a public/private partnership
arrangement.
•
From the MSA estimates,it is possible to reasonably calculate
the pro-rated share of infrastructure costs attributable to both
Country Ridge and Gagne Development:
Country Ridge $ 868,382.42 (71%)
Gagne Development $ 356,847.15 (29%)
TOTAL $1,225,229.57
Of the infrastructure costs attributable to Country Ridge, it is estimated that
in excess of$410,000 will be borne by"commercial and/or limited retail uses
Deducting this value from the Country Ridge infrastructure estimates, we
now have the revised calculation:
Country Ridge $ 456,797.40 (56%)
Gagne Development $ 356,847.15 (44%)
TOTAL $ 813,644.55
One potential public/private partnership model is that of reducing the land
developer's out-of-pocket costs associated with assessments for roads, water
lines, sewer lines, etc. The assessments could be underwritten by, say, the
• $430,000 in the former RDF TIF District. These funds could be used by the
land developer to pay for street costs, etc., - thereby reducing his/her level of
assessments. As future lots in the business park are sold, the developer
Aft
would be obligated to pay off the lots remaining assessments and repay the
City/EDA on a per acre basis that is reflective of the public assistance
attributable to that site. A nominal interest charge could also be attached to
the City's share. City funds would not be used to help underwrite the
assessments attributable to the lots that may end up with a commercial or a
limited retail use. That is why those estimated costs were deducted from the
Country Ridge estimate, above.
Summary- Putting it all Together
Assuming the $430,000 in RDF TIF funds are available in the business park,
those funds can be pro-rated to the respective land developers so as to
underwrite their level of assessments:
71% of$430,000 = $305,300
29% of$430,000 = $124,700
TOTAL = $430,000
Deducting the level of assessments attributable to commercial/limited retail
uses, the pro-rated breakdown is a follows:
. 56% of$430,000 = $240,800
44% of$430,000 = $189,200
TOTAL = $430,000
Recognizing that a good portion of the costs attributable to Gagne
Development may be paid for through MnDOT funds, perhaps the pro-rated
share to Gagne has been overstated. Utilizing round numbers, let's assume
that $300,000 is available to Country Ridge, This equates to the City/EDA
underwriting, say, 65% of Country Ridge's infrastructure costs ($300,000
$456,797 = 65%). Stated,another way, for every dollar of infrastructure costs
attributable to Country Ridge, the City/EDA would underwrite by two-thirds.
As lots are sold, these funds are recovered, with a nominal interest charge, on
a per acre basis. As security for repayment, it is also suggested that a
mortgage, promissory note,and developer's agreement be executed and filed.
Action Requested
The EDA is asked to:
1. Forego the opportunity to acquire the property as outlined in the
January 9, 1995, letter from Jay Johnson.
•
2. Recommend to the Elk River City Council that it allocate
• $430,000 from the RDF TIF funds toward a public/private
partnership to underwrite the infrastructure costs associated
with the business park.
3. Recommend to the City Council that it allocate up to $300,000
(or 65% of the RDF TIF funds) to Country Ridge Partnership to
underwrite the assessments attributable to industrial sites.
It is understood that these funds would be repaid as lots are
sold, and, that a nominal interest rate would be charged. To
secure repayment, a developer's agreement, promissory note,
and mortgage would be filed against the property. The same
strategy would follow as the Gagne Development Company land
started to develop, too.
•
eda:meetings/pppart
•
m.
- - 95 FRI 13 : 56 MSA ST PAUL P - 02
BUSINESS PARK COSTS
r (ESTIMATED)
' SCHEDULE 1.0 SOUTH FRONTAGE ROAD (STAT.0+00 TO 7+00) - $49,522.15
0SCHEDULE 2.0 SANITARY SEWER-SFR(STAT. 0+00 TO 7+00) $10,020.25
SCHEDULE 3.0 WATERMAIN-SFR(STAT.0+00 TO 7+00) $11,250.25
SCHEDULE 4.0 STORM SEWER-SFR(STAT. 0+00 TO 7+00)
$12 317.25
SOUTH FRONTAGE ROAD(STAT.0+0 TO 7+00)-!T L $83,109.9
canr.mq 14,t D6f� : Lot ( ( Lp C « )
SCHEDULE 5.0 SOUTH FRONTAGE ROAD (STAT.0+00 TO 5+00) $38,449.31
SCHEDULE 6.0 SANITARY SEWER-SFR(STAT. 0+00 TO 5+00)
$7.210.25
SCHEDULE 7.0 WATERMAIN-SFR(STAT.0+00 TO 5+00) $7,489.65
SCHEDULE 8.0 STORM SEWER-SFR(STAT.0+00 TO 5+00) $9.099.25
SOUTH FRONTAGE ROAD(STAT.0+00 TO 5+00)-TOTAL $62,248.46
CoNA/014h4 141(D6- ( Ra.5110els Cs.+
SCHEDULE 9.0 SOUTH FRONTAGE ROAD (STAT.7+00 TO 13+00) $37,959.37
SCHEDULE 10.0 SANITARY SEWER-SFR(STAT. 7+00 TO 13+00) $8,608.25
SCHEDULE 11.0 WATERMAIN-SFR(STAT.7+00 TO 13+00) $7,398.85
SCHEDULE 12.0 STORM SEWER-SFR(STAT. 7+00 TO 13+00)
$13,193.25
SOUTH FRONTAGE ROAD STAT.7+00 TO 13+00)-TOTAL $67,159.72
Cnik►srr),`1 01106E Lot 2
SCHEDULE 13.0 SOUTH FRONTAGE ROAD (STAT. 5+00 TO 13+00) $55.788.61
SCHEDULE 14.0 SANITARY SEWER-SFR(STAT. 5+00 TO 13+00) $11,505.25
• SCHEDULE 15.0 WATERMAIN-SFR(STAT. 5+00 TO 13+00) $11.209.25
S 16.411.25
SCHEDULE 16.0 STORM SEWER-SFR(STAT. 5+00 TO 13+00) ------
SOUTH FRONTAGE ROAD(STAT.5+00 TO 13+00)-TOTAL 594 914.3E
Pi-a)'I 141 MG P,....4..,
SCHEDULE 17.0 SOUTH FRONTAGE ROAD CUL-DE-SAC --
se aQ- :
SCHEDULE 18.0 SANITARY SEWER- SFR CUL-DE-SACS-745.0C
-- -.
______-__
SCHEDULE 19.0 WATERMAIN-SFR CUL-DE-SAC -- -
SCHEDULE 20.0 STORM SEWER -SFR CUL-DE-SAC ---M____:5-5.571.0':
C.d‘1 tiC6Te tu6E SOUTH FRONTAGE ROAD CUL-DE-SAC 5122.788.2'.
SCHEDULE 21.0 SOUTH FRONTAGE ROAD (STAT. 13+00 TO 26+00) -__
5193137.15
45.00
SCHEDULE 22.0 SANITARY SEWER-GAGNE PROPERTY(STAT. 13+00 TO 26+00) �_ 539.245.0C.
.
SCHEDULE 23.0 WATERMAIN-GAGNE PROPERTY(STAT. 13+00 TO 26+00)
534.OSQ.QC
SCHEDULE 24.0 STORM SEWER SFR (STAT. 13+00 TO 26+00) 585.47 5,0
-. ------=
SOUTH FRONTAGE ROAD(STAT 13+00 TO 26+00) -TOTAL 5355.847 15
t"t
565.481 ,
10
SCHEDULE 25.0 183RD NORTH SIDE AGAINST BUSINESS PARK
SCHEDULE 26.0 SANITARY SEWER- 183RD(STAT. 65+77 TO 78+38) __ 56-$35.586.
10
70
3.535.50
• SCHEDULE 27.0 WATERMAIN- 183RD(STAT.65+77 TO 78+38)8+38) _ -_550.871.50
SCHEDULE 28.0 STORM SEWER- 183RD(STAT.65+77 TO 3RD(STAT.65+77 TO 78+38)-TOTAL $169,494.80
$18,712.19
SCHEDULE 29.0 183RD(STAT.78+38 TO 81+33) __
SCHEDULE 30.0 SANITARY SEWER- 183RD (STAT. 78+38 TO 81+33) $12,421.00
19
19.723.00
- 7 - 95 FRI 13 : 57 MSA ST PAUL . P - 03
���Y D 6 183RD(STAT.78+38 TO 81+33)-TOTAL 44 $40,876.19
G Niro S. 6. C
• SCHEDULE 32.0 JOPLIN STREET(STAT 12+78 TO 18+00) $28,534.75
SCHEDULE 33.0 SANITARY SEWER-JOPLIN ST(STAT. 12+78 TO 18+00) - $21,645.60
SCHEDULE 34.0 WATERMAIN-JOPLIN ST(STAT. 12+78 TO 18+00) $10,368.00
SCHEDULE 35.0 STORM SEWER-JOPLIN ST(STAT. 12+78 TO 18+00) $15,632.00
D�� JOPLIN ST(12+78 TO 18+01L2 -3.13Z., $76,180.35
C���q 0-0
BLtS/IuE1M
SCHEDULE 36.0 PROPOSED JOPLIN STREET (STAT. 18+00 TO 23+00) $44,132.52
SCHEDULE 37.0 SANITARY SEWER-JOPLIN ST(STAT. 18+00 TO 23+00) $18,523.35
SCHEDULE 38.0 WATERMAIN-JOPLIN ST(STAT. 18+00 TO 23+00) $9,507.75
SCHEDULE 39.0 STORM SEWER-JOPLIN ST(STAT. 18+00 TO 23+00) $12.542.75
< ,,Icew 0,1D(k JOPUN ST(STAT.18+)TSO + -Q;A� $84,706.37
SCHEDULE 40.0 PROPOSED JOPLIN STREET (STAT.23+00 TO 27+00) • $40,254.34
SCHEDULE 41.0 SANITARY SEWER-JOPLIN ST(STAT. 23+00 TO 27+00) $12,541.55
SCHEDULE 42.0 WATERMAIN-JOPLIN ST(STAT. 23+00 TO 27+00) $9,782.75
SCHEDULE 43.0 STORM SEWER-JOPLIN ST(STAT.23+00 TO 27+00) $4,324.75
����� �(� �� JOPLIN ST(STAT.23+00 TO 27+00)�y $66,903.39
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INFRASTRUCTURE ESTIMATES
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JAN 1 5 1995
s"
TONY EMMERICH HOMES
w. a —
January 9, 1995
William Rubin
Economic Development Coordinator
City of Elk River
13065 Orono Parkway
Elk River, Mn 55330
Bill :
At your request, I have discussed the willingness on the part of
the EDA to participate in the development of the Business Park area
with Tony Emmerich. I have shared with him the information that you
covered with me at our last meeting. We discussed all of the
different combinations that are possible with the funds that are
available.
I have checked with several other Cities who are aggressive in
their efforts to help and invite this type of industrial
development within their Communities. All of them are willing to
• assist the Developer with various incentives in order to attract
new businesses into the City. Most all of the ways you and I
discussed to use EDA or TIF funds and financing are being
implemented, various methods ranging from giving the Developer
monies to do improvements to created "grants" for infrastructure
work. Outright land acquisition by a particular City was among the
top ways used to assure the success of an area designated for clean
Industrial development.
I have sent along a map of the Business Park area. This is the
proposed plat for the Country Crossing Business Center . (There are
only three actual lots identified in the upcoming preliminary plat,
the balance is open to redraw depending on the size of the next
sales. . . ) . I have sold the four parcels not highlighted in yellow.
The balance of the area highlighted is around 21 acres. Tony would
like to propose this to the EDA:
-He will sell the remaining acreage to the City for $300.000.00.
There already is Council approval in this amount for Business Park
land acquisition.
-The City can install the roadways and utilities to service the
entire Business Park area.
The benefits to this proposal , we feel , are many. Tony will
wholesale the property, and concentrate on the residential land to
• the South. i have sold two parcels South of the proposed service
road for $1 .50/sa. ft. , including my 10% real estate commission.
10738 Hanson Blvd. NW • Coon Rapids, MN 55433
Alm11119
*PI = TONY EMMERICH HOMESImnormir
I am working with other potential clients and will no doubt keep
selling this property if it is available for me to sell . ( If the
City does purchase the land, I would like for my Commercial Real
Estate Company, THE LAND PARTNERS, INC. , to have a contract to
continue the work I am doing out here now) .
So, with the established market value per acre, the future sales
will quickly pay the purchase funds back, and will create profit
dollars for the EDA to be applied against any monies spent for
improvements. . . not to mention the return of funds in taxes. Monies
spent should come back reasonably soon to utilize for the land
lying to the West.
Please give immediate consideration to this proposal , with your
response directed to me, and I will meet with Tony.
Sincerely,
Ale roc; 4441C4/
• /Development Manager
i
10738 Hanson Blvd. NW • Coon Rapids, MN 55433