9.3. SR 09-16-2019 EGty1� ,.,�� Request for Action
River
To Item Number
Mayor and City Council 9.3
Agenda Section Meeting Date Prepared by
Work Session September 16, 2019 Amanda Othoudt,EDD
Item Description Reviewed by
Downtown Development Proposal Cal Portner, City Administrator
Reviewed by
Action Requested
Items presented for discussion purposes.
Background/Discussion
At their September 3, 2019,Work Session, the City Council heard a presentation by Modern
Construction on a high density,market rate,mixed-use development concept in downtown Elk River.
The developer requested the Council consider an option agreement for the property that the city and
HRA own within the project area. Council directed city staff to research other agreements that can
accomplish the developer's objectives,while limiting the risk of the city.
The agreements below are all similar in nature,with the exception that the option agreement is more
favorable to the developer/buyer because the land can be under site control.
Option Agreement: The option agreement is a binding agreement between buyer and seller. It requires
the buyer to pay an option payment in an amount to be negotiated by the parties. The option payment is
nonrefundable under most circumstances and would be applied to the property purchase price purchase
is exercised. An option agreement can have a contingency allowing the city to back out of the sale in the
event the buyer's proposal is not satisfactory to the City Council.
Letter of Intent: This is a nonbinding"agreement"between buyer and seller on the terms of the
purchase of the property. No money is exchanged as it is simply an expression by the buyer of its intent
to purchase the property pursuant to the agreed-upon terms.
Purchase and Predevelopment Agreement: This agreement gives the developer time and access to the
property to inspect, explore development ideas/options, and explore financing options. The city would
agree it would not negotiate with any other developers during the term of the agreement. It would state
the city is willing to sell the property to the developer provided that the developer has the resources and
experience necessary to move forward. The city can request the developer complete certain tasks within
the predevelopment agreement in order to show that the developer is acting in good faith. No money is
exchanged.
The Elk River Vision
A PehoMing community 2a itb revolutionary and spirited resourcefulness, exceptional POWERED By
service, and community engagement that encourages and inspires prosperity INAMIRE1
Preliminary Development Agreement. Similar to the purchase and predevelopment agreement except
it doesn't take into the account the city's willingness to sell the property. The developer is named as the
sole developer of the property during the term of the agreement. The developer explores the idea of
developing the site. The city can ask the developer to complete certain tasks, such as obtaining a traffic
study,housing study, etc., and the developer would be asked to submit a proposal to the city by a certain
date and identify financing. No monetary value is exchanged.
The developer is requesting the Council consider entering into a binding agreement with the ability to
secure site control of the city/HRA properties and allow time for the discovery of a development concept
for downtown Elk River.
Financial Impact
None
Attachments
■ None
N:APublic Bodies\Agenda Packets\09-16-2019\Final\x9.3 sr Downtown Development Concept Updote.docx