4.1. SR 10-16-2000
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City of 1:{
Elk
MEMORANDUM
Item 4.1.
TO:
Mayor and City Council
FROM:
Marc Nevinski, Assistant Director of
Economic Develop~
Michele McPherso~irector of Planning
DATE:
October 16, 2000
SUBJECT:
Holt & Jackson Proposal
Issue
Staff has received a proposal to purchase the Holt & Jackson site in order to
construct a small retail facility. It is requested that the Council consider the
proposed use, site design, and purchase contingencies before further action is taken.
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Attachments
. Letter of Intent
. Site Plan
. Building Material and Design Examples
. Aerial Photo
Background
Mr. Gary Janisch of H.J. Development, LLP has submitted a letter of intent
(Attachment A) to purchase the Holt & Jackson site for $350,000 in order to
construct a 13,000 sf retail facility. _ has committed to leasing
5500 sf of space and will be the building's anchor tenant. The remaining area will
most likely be divided into 1500 sf bays and house complementary businesses
allowed under the C4 zoning. (Please see the site plan in The
building is proposed to be constructed primarily of brick and incor orate
architectural details throughout the design, as illustrated in H.J.
Development has completed a number of similar projects in Burnsville, Maple
Grove, and Anoka. Construction is proposed to start in March/April 2001.
Letter of Intent
The developer has indicated in his letter of intent
contingencies for the purchase of the site:
a number of
1 )
The need to build a minimum of 10,000 sf and construct two
entrances to the site.
That a Phase I environmental assessment be provided by the city.
That the northerly, undevelopable portion of the site be donated to
the city as park or green space.
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2)
3)
13065 Orono Parkway. P.O. Box 490. Elk River, MN 55330. TDD & Phone (763) 441-7420. Fax (763) 441-7425
Memo to the Mayor & City Council
Holt & Jackson Proposal
October 16, 2000
Page 2
. Development Challenges
Holt & Jackson presents a number of challenges for development due to its physical
characteristics as well as the Council's development requirements. In the past
eighteen months, four proposals for the site have been made, includin two
restaurants, an office building and a da care center.
In this case, the developer believes that the project will cash flow
and meet the standards the Counci I has set for the property with the proposed site
design.
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Tree preservation on the site has been a primary concern of the Council's. All of the
proposals submitted in the past eighteen months have required that some tree
removal occur. This proposal is no different. After closer review of the site, staff
has determined that a significant number of trees are actually located within the
Highway 169 right of way and would not be affected by construction (Attachment
D). Staff has worked with the developer to reduce the number of trees located
within the buildable area that would need to be removed and believes that a buffer
of trees can be maintained along the residential portion of the site in order to screen
the building and reduce its impact. It is possible to arrange the site in such a way to
avoid the trees entirely, however, this would require that the building be
constructed with two "fronts", increasing the construction costs and creating a
negative cash flow.
The proposal as revised meets the setback requirements of the C4, Neighborhood
Commercial District. The use also meets the district requirements.
Northerlv Triangle
The developer has requested that he be able to "donate" the northerly, unusable
triangle of property to the City for parkland or permanent open space. He has
indicated that this area poses a liability to him, as it will be difficult to police
unsavory activities that may occur in this area.
In order to "donate" this area to the City, the property would need to be replatted
and need to meet the district's lot area, width, and depth requirements (1 acre, 1 SO
feet, 1 SO feet). Staff does not feel that the area in question would meet the
ordinance requirements. Nor should the City willingly assume the liability issues
associated with such a piece of property. In addition, this property would not serve
a purpose under the Park and Recreation Master Plan.
Phase I Environmental Study
The developer has requested that the City complete a Phase I Environmental Study
. prior to the sale. The cost of completing such a study is estimated to be
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Memo to the Mayor & City Council
Holt & Jackson Proposal
October 16, 2000
Page 3
approximately $5,000. It may be useful for the City to complete this to have on
hand if this proposal is rejected and another is proposed.
Action Requested
This proposal appears to be a good "fit" for the site and the adjacent neighborhood.
Staff recommends that the City Council accept the Letter of Intent from HJ
Development with the following conditions:
1. The City agrees to complete the Phase I Environmental Study.
2. The City wi II not accept the northerly undevelopable property for park or
open space purposes.
3. Successful completion of public hearings on the sale of excess property as
required by Statute.
s:\eda \prospect\holtj ack\memorand .doc
Attachment A
H.l. DEVELOPMENT, L.L.P.
COMMERCIAL REAL ESTATE
MANAGEMENT AND DEVELOPMENT
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LETTER OF INTENT TO PURCHASE
October 12, 2000
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To: City of Elk River, Minnesota
13065 Orono Parkway
Elk River. MN 55330
Ann~ Catherine Mehelich
Director of Economic Development
H.J. Development L.L.P. and/or its assignees, offers to purchase the commercial property
located at the following location (Legal Description to be provided by Seller):
Commercial Lot -- Located at the Northwest comer of the intersection of Jackson
Avenue and Highway 169, Elk. River, Minnesota (the exact area to
be estimated by City and established by survey)--
Purchase price 5350,000. This contract is contingent on the following:
1. Purchaser shall have 30 days after acceptance oftbis contract to examine legal
description, surveys, environmental studies and other documents necessary for a
detennination of purchase of the subject property. Upon review of the requested
information, Purchaser will notifY the City of Elk River of acceptance or rejection of said
information and documents presented.
2. If Purchaser elects to accept, he will then deposit $35,000 earnest money into
Commercial Partners Title (agent for Chicago Title Insurance Company) t~ account to
be held in accordance with Mirmesota Statues Section 82.23 and 82.24 and the regulations
promulgated thereunder.
3. This Letter ofIntent should not be construed to be a bindins agreement of the parties,
but the understanding of the panies in order to commence preparation ofa pW'Chase
agreement for the subject propeny.
Post Office Box 110 · Delano, Minnesota 55328
(612) 498-7616 · Fax (612) 498-7152
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4. The purchase shall include all approvals, documents. reports, etc. pertaining to the
subject property.
5. The SeDer shall pay all Realtors fees ifany in colUlection with the conswmnation of the
transaction contemplated by the purchase agreement.
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6. The Seller shall pay all assessments levied or pending with respect to the subject
property as of the date of closing. Real estate taxes and all utility and other charges with
respect to the subject property shall be prorated as of the date of closing.
7. The purchase oftbe property is contingent on the following:
a. The City approves the design and plans for a retail center with a minimum of 13,000
square feet net rentable space, including two(2) entrances into the site.
b. The property will be conveyed with a clean and insurable title.
c. The city will provide a Phase I enviromnental report attesting to the property being
environmentally clean.
d. The northern part of the property which is not used for development will be
donated to the City or a non-profit organization to be used as green space.
8. This letter of intent will expire November I. 2000 unless countersigned by the seller on
. or before that date.
SELLER:
Dated:
Anticipated date of closing will be on or before March 15, 200 I
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OCT. 11.2000 5:29PM HTG ARCHITECHS
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Attachment C