5.2 Item 5.2.
ty oflkRiver MEMORANDUM
TO: Planning Commission
FROM: Pat Klaers, City Ad sh rn ist ator
DATE: November 28, 1995 1.
SUBJECT: Cass Property
Attached for your review is the material I provided the City Council for its
discussion on whether or not the city should enter into a Purchase
Agreement for the Cass property. The Council approved this Purchase
Agreement, but the decision on whether or not this purchase should be
finalized has not been made. The City Council is requesting input from the
Planning Commission and public on this proposed purchase. The City
Council will also hold a public hearing on this proposed land purchase at its
• December 18, 1995, meeting.
At this time, I plan on being in attendance at the November 28, 1995,
Planning Commission meeting to help answer questions regarding this
proposed land purchase or the intended uses of the land if it is purchased.
•
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
ty of
MEMORANDUM
AkRiver TO: Mayor & City Council
FROM: Pat Klaers, City Administrator
DATE: October 30, 1995
SUBJECT: Cass Property
The city has had a long-standing goal of obtaining land and developing an
active recreation field complex. The focus has mainly been on youth fields for
soccer and baseball, but the need also includes adult softball. Another
different goal of the city that relates to this proposal is the ultimate need to
obtain more land for the disposal of Wastewater Treatment Plant (WWTP)
sludge material.
The city has been looking for suitable land for the development of youth
recreation fields for a number of years and the city has basically been
unsuccessful in its attempts to locate available land. In the last year or so,
• the Jack Cass property has become available, and this land appears to meet
our needs for the future development of youth recreation fields and for
providing additional land for the disposal of WWTP sludge.
The property under evaluation is 115.65 acres in the southeast part of the
community. This land is directly south of the 120 acres that the city obtained
a few years ago for the disposal of WWTP sludge. It is believed that this site
will be outside of the ultimate city sewer and water district and that Elk
River municipal utilities may very well never reach this property. (Please
see the attached maps.)
The City Council reviewed this proposed land purchase at its 9/25/95 meeting
and directed me to pursue a purchase agreement for its consideration. The
proposed purchase agreement calls for the land to be purchased for $2650 per
acre or $306,472.50. This price is 6 percent higher than the $2500 per acre
market value opinion that is in the appraisal that the city had completed for
this property. This price is also about 2.47 percent above the average of the
adjusted sales rate of$2586 per acre that was used to determine the
recommended value. This appraisal was completed by Riverside Appraisals
in July, 1995.
I had very little chance of getting Mr. Cass to accept the $2500 per acre
. amount, but I believed I had a reasonable chance to get Mr. Cass to accept
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
Cass Property Page 2
October 30, 1995
• the $2586 per acre amount. This belief was in spite of the fact that Mr. Cass
had offered the land to the city for $2650 per acre which was substantially
lower than his original price of$3000 per acre. I was not successful in
getting Mr. Cass to agree with our logic and accept the $2588 per acre
amount, but I was successful in arranging an appropriate timing for payment
of the property. Under the terms of the purchase agreement, the city will pay
$10,000 earnest money in October (50 percent returnable if the project is not
approved), an additional $50,000 at the end of December, 1995, and the
balance of approximately $246,500 to be paid on March 15, 1996. The
payment of the balance in March, with zero interest, will make the city a few
thousand dollars based on the interest revenue we will derive from our
investments on a quarter of a million dollars. Interest revenue for three
months is roughly half the difference between the $2650 asking price and the
$2586 average sales rate that was identified in the appraisal.
In general terms, the city hopes to use approximately 25 acres of the site for
the development of youth recreation fields and parking areas in the next few
years. The fields would be located on the northwestern side of the property.
This area is somewhat limited due to the location of the wetlands and the
abandoned judicial ditch No. 1. Nonetheless, we should be able to get at
least four soccer fields, four youth baseball fields, and parking space into this
area. Also in 1996, we plan to designate approximately 40 acres of the site
• for WWTP sludge disposal. Due again to the location of the wetlands and the
abandoned judicial ditch No. 1., 30 of this 40 acres would be usable for
disposal of sludge. This area is located in the southwest part of the property.
Once this area has been fully utilized for sludge disposal, the land would
then become available for the development of recreation fields. This would
happen in about 15 to 20 years. Finally, most of the balance of the property
in the northeastern part of the site is proposed to be platted and put on the
market for single family home sites. This area is less usable for sludge
purposes or recreation field purposes, and it is believed that residential sites
could be marketed and sold in order to recapture some of the original
purchase price of the property. (Only the north central part of this future
residential area could be used for recreation fields if the approach to market
residential sites is rejected by the City Council.) The balance of the property,
approximately 10 acres south and east of the recreation fields, would be
retained by the city as wetlands.
If this project moves forward, approximately eight recreational fields will
immediately be developed. Additionally, sludge land is available for eight
more fields in 15 to 20 years. Finally, there is sludge land immediately north
of this site that also will have reached its maximum usage in 15 or 20 years
that also could then be developed into recreation fields. This availability of
• land could give the city an active athletic complex of approximately 25 fields
that could meet our long term needs as a community. Again, this area would
Cass Property Page 3
October 30, 1995
• be outside of the city sewer and water district and therefore would not be
taking prime real estate out of the tax base.
An additional note about this area is that the draft long range transportation
plan calls for a north/south connector in the Jarvis and 165th location to
hook up to Fillmore at 175th Avenue and eventually to County Road 12 and
13. This north/south link would make this area of the community much more
easily accessible to all of our residents.
If this approach for use of this property is accepted by the City Council, it is
planned that the city would finance this purchase with WWTP funds,
revenue from the future residential sites, and park dedication monies. Since
the WWTP is going to use approximately 40 acres of the land for sludge
purposes for 15 to 20 years, this department would pay the going rate or
about $107,700 for this property. The city would then have to use some
internal funds to finance the balance of the purchase, but would hope to
recapture most of this approximately $200,000 through the selling of some
residential building sites. An opinion by local real estate agent Mel Beaudry
indicates that the city could recapture approximately $200,000 through the
selling of six residential properties. This would be an approximately 7 acre
residential site in the corner of Joplin and 165th, an approximately 14 acre
site immediately south of this property, and for residential sites of
IIIapproximately 4 acres each along 165th, immediately west of the 7 acre site.
All of these residential sites would touch on the abandoned judicial ditch and
wetlands area and therefore limits the usability of this property for city
purposes. Please see the attached letter from Mr. Beaudry dated 8/28/95,
and please note that the estimates for lot sizes are low as the total residential
area exceeds 40 acres.
With the selling of some land for residential lots and the funding from the
WWTP, it appears that the city will recapture most of its purchase price. It
may not recapture all of the expenses related to this project due to the cost to
plat the property, sell the land, the environmental analysis, soil surveys, etc.,
and other work that has been and will need to be completed. Nonetheless,
the actual outlay from the city's park dedication fund will be somewhat small
for the obtaining of land for the development of recreation fields. The
expenses related to the development of the recreation fields is another issue
that needs to be explored and analyzed in detail if this project is to move
forward. It is assumed that some of the development activities would be
contracted out while some of the other development work would be completed
by our city park and street crew. The funding for the development of the
fields would have to come mainly from the park dedication fund, but could
also come from the youth organizations that would be utilizing the fields.
•
Cass Property Page 4
October 30, 1995
• The city has had soil borings and the soil analyzed for the future building
sites and every indication is that the six building sites are suitable for the
construction of a home. The city has an appraisal and real estate opinion
completed for this property. The city has a recommendation from the Park
and Recreation Commission from its 4/19/95 meeting that supports this
purchase. The city has had a wetlands analysis completed which shows that
any wetlands impacted by this project can be mitigated on site. The city has
had a phase one and phase two environmental audit completed for this
property and it appears that there are no contaminants or environmental
issues that would restrict the city's use of this property. It should be noted
that the city will request the residential lots to have deep wells constructed
in order to minimize the nitrates that are in the soils from years and years of
farming this area.
The City Council should note the property that the city hopes to sell for real
estate purposes is currently in the 2.5 acre residential zone of the city. This
potentially could change with the adoption of the Comprehensive Plan
update and with any zoning code or subdivision changes that may go along
with the updated Comp Plan. Additionally, if this area is ultimately viewed
as land that may be serviced by municipal sewer and water, this may change
the scenario and the opinion of staff on the desirability of this transaction. If
this project moves forward, the City Council ultimately would have to
4110 approve a plat for this property that may include a service drive or common
driveway easements in order to limit the access onto 165th. Additionally, the
city may want to identify building location pads for the lots to be sold and/or
the type of structures that could be constructed on the property. These are
decisions for the future if this project moves forward. The same is true as to
deciding whether or not the city should be the real estate agent selling these
properties or if we should just contract this out to professionals in the
industry and have them market and sell the sites for the city.
There are many reasons for the city to move forward with this project
including the need for recreation fields, the need for additional sludge land,
and the need for the city to be creative financially so that it is not a burden
on the taxpayers or any of our funds to pursue the development of recreation
fields. Some reasons to not do this project include the concerns over the
future zoning, lot size requirements, and sewer and water in this area. Also,
there is a concern about the city getting into the real estate business, but it
should be noted that this is not the primary purpose for this land acquisition,
but simply a by-product that the city is going to take advantage of in order to
recapture some of its expenditures.
The City Council needs to make a preliminary decision as to whether or not
• we want to pursue this project. By authorizing the execution of the purchase
agreement, the city runs the risk of losing $5,000 if we do not finalize this
Cass Property Page 5
October 30, 1995
• purchase. If we enter into this purchase agreement, the land acquisition is
scheduled for a public hearing before the Planning Commission in November
and the City Council on December 18, 1995. A public hearing for the
acquisition of property by a municipality is required by state law. The City
Council may dispense with this requirement if it finds by a two-third vote
that the proposed acquisition has no relationship to the Comprehensive Plan.
Following the scheduled December 18, 1995, City Council public hearing on
this land acquisition, we will need to reach a final decision on whether or not
this land acquisition and project is worth pursuing and finalizing. The
purchase agreement calls for a decision and the exchange of funds on
December 26 with the balance to be paid on March 15, 1996.
Staff recommends approval of the project as discussed on 9/25/95 and as
outlined above.
III
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White Dove Realty, Inc. 111
A CENTURION*Award Winner Office-1993-1994 ' •.
V.M.458-7125 +1 • ,
__
Fax 441-4699
Business iturgirtf 28, 1995 \tiqc
Pat Klaers
City of Elk River Mel Beaudry
Elk River MN 55330 Discovering the
best move for you!
Dear Pat,
Thank you for the opportunity to do a value opinion on the property at the east end of Elk
River on 165th and Jarvis.
I recommend that the City does not split the land into 2.5 acre lots because they would be too
long and narrow, and because of the proximity to the city sludge area and proposed ballfields.
I feel it would be more appropriate to divide the lots, excluding the 6.85 acre lot, along 165th,
into 4 building sites of approx. 3.75 acres each. These lots have a market value of$29,000 to
$32,000.
The estimate value of the 6.85 acre lot would be$36,000 to $37,500.
• The estimate value of the 14 acre lot would be $43,000- $45,000.
I have also looked at the possibility of 5 lots along 165th (excluding the 6.85 acre parcel). They
would have a frontage of just over 200 feet, but I feel it is not in the best interest of the City to
sell lots with that narrow frontage.
I have enclosed examples of lots sold in the Elk River and western Ramsey area, which were the
basis for my findings.
You may find these lot values more conservative than anticipated. However, I would rather be
conservative than overly optimistic, in which case, the City would not get the return on their
investment that they were expecting.
Yours truly,
\N\0
Mel Beaudry _
Century 21, White Dove
MB/lb
•
Mel Beaudry works with a team of experts to assure the best possible service.
Mel Beaudry, Lucy Boeshans, Mary Leuer, Kathy Tangen
Each Office Is Independently Owned And Operated
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