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6.7. SR 05-24-1999 rCI ---\j ( ~ tli{ Item #6.7 MEMORANDUM TO: Mayor & City Council FROM: Pat Klaers, City Adm..}.,~ra~or May 24,1999 1]) ~ DATE: SUBJECT: East Elk River Improvement Project Update I plan on having this topic consistently on future City Council agendas in order to answer questions from the City Council on the overall status of the project and to advise the council of progress on current or new activities. On Monday, I have an update for the council on at least the acquisitions of the Eull right-of-way property, the Kirkeide house and property, and the Brown purchase agreement. . As the council knows, on May 10 authorization was given for acquisition of the Brown property. The attorneys are now finalizing the purchase agreement and clearing up the situation with the farming lease agreement. The city is purchasing the street right-of-way with federal funds and the EDA is purchasing the balance of the Brown property with money coming from the development fund, which the council has approved as the council controls this fund. Mr. and Mrs. Eull have contested their assessment for the trunk sewer and water project. At the same time, discussions were taking place regarding the acquisition of the street right-of-way. These separate issues became interrelated and it was feared that we would have to condemn the right-of- way for the street project. However, it now appears that Mr. and Mrs. Eull are ready to sign the purchase agreement for city acquisition of the right-of- way. The price had previously been agreed to by the City Council. . On May 10, both the EDA and City Council discussed whether or not to pursue the purchase of the Kirkeide property which is in the center of the Brown property and immediately adjacent to the street and utility project. The consensus of both groups was that this property should be acquired if it can be done so at a fair price. On May 10, we did not believe we could reach agreement on a fair price, but through additional discussions, staffis now recommending acquisition of the Kirkeide house and property (approx. 2 13065 Orono Parkway · P.O. Box 490 · Elk River, MN 55330. TDD & Phone: (612) 441-7420 . Fax: (612) 441-7425 . . . acres) for $224,000. This price covers all relocation, housing differential, closing costs on a new house for the Kirkeides, etc., and is a total final number. This amount can be justified based on the appraisal and federal law for acquisition and relocation of properties for public improvement projects. It is recommended that the City Council approve this acquisition using city development funds and then the EDA will hold a special meeting to formally approve this acquisition as they will be the agency that will have ownership of this property as part of our future business park. \ \ elkriver \ sys \ shrdoc \ council \ eerupdat.doc . . . 4Uc! e lDOe - EVERGREEN LAND SERVICES CO. 6110 BLUE CIRCLE DRIVE, SillTE 140 MINNETONKA, MN 55343 Office (612)-930-3100 Fax (612)-935-0862 August 26, 1998 Mr Patrick Klaers City of Elk River 13065 Orono Parkway Elk River, MN 55330-0490 Re: Tyler Street Extension Parcell Roger & Jean Eull I am requesting that we accept an offer by the Eull's of $50,000.00 to acquire in fee the rights needed across their property to construct Tyler Street. Our offer to the Eun's was $38,000.00. This is for 3.65 acres and was based on an appraisal prepared by Patchin Appraisals. The Eun's currently have 79 acres and it is zoned both I-I and R-1a. The taking, the property needed by the City, splits the parcel about in half The greater portion of the taking is on the I-I. The appraisal used an average value of$1O,416.00 per acre. This included a small amount for severance. The Eull's countered with $72,450.00. This was based upon the per acre price of $19,850.00 which the City paid them for 0.68 acres adjacent to 171st and the railroad. The City paid $13,500.00 for the 0.68 acres. Through negotiations I made a counter offer, subject to City approval, of$12,000.00 per acre or $45,600.00. The Eull's then reduced their price to $15,000.00 per acre or $54,750.00. After further negotiations an offer was made by the Eun's to split the difference and settle for $50,000.00 which is $13,000.00 per acre. successfully serving Our clients for 25 years . 1972 _ 1997 . It is my recommendation that this amount be accepted by the City. I submit the following to support my recommendation. Patchins appraisal uses a separate before value for the Industrial and Residential portions with very little damages to severance. The majority of the taking is Industrial and splits the parcel in two. In the appraisal the average value for Industrial property is $12,673.00 per acre. If we were to add severance to thi.~ we would be in excess of $14,000.00 per acre. The Residential taking is small and in the after condition all of the property east of new Tyler Street would be residential. The severance to this portion would be small but could add $3,000.00 to $5,000.00 to the total because a major road is being constructed. If this parcel were to go to condemnation I feel the commissioners would place more weight on the payment the City made to the Eull's at $19,850.00 per acre. I think they would consider higher severance damages. The cost to condemn this parcel could range between $7,000.00 to $10,000.00. This would include attorney fee's, engineers fee's, preparation of exhibits, appraisal update and . testimony, commissioners time and expenses. Based on the above, it is my recommendation that the City accept the settlement amount of $50,000.00. May I have your approval. /iJ;MtnW/~ Stuart "Bud" Storm, SR/W A President .