4.5. SR 03-20-1995~~r ~~
ITEM 4.5.
(
ity of ~~ MEMORANDUM
River TO: Mayor & City Council
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FROM: William Rubin, Economic Development ~ ~n
Coordinator ~ v1 ~
DATE: March 20, 1995
SUBJECT: Site Acquisition and Relocation Issues
Related to the Custom Motors Site,
13913 Highway 10
Introduction
At its meeting on March 20, 1995, the Elk River City Council will be asked to
finalize its position on a.) public site acquisition opportunities at the existing
Custom Motors site, 13913 Highway 10; and b.) relocation assistance -
particularly fixed-asset financing (land, building, etc.) as it relates to Custom
Motors' potential relocation within the City of Elk River.
Background
The City Council will recall that it adopted Ordinance 94-11 on August 15,
1994. This ordinance rezoned Custom Motors from I1 (Light Industrial) to
Rlb (Single Family Residential). As part of its motion to rezone the Custom
Motors site, the City Council added two other conditions:
1. Staff was directed to initiate a text amendment to the rezoning
ordinance to change the amortization period from five years to ten
years; and,
2. Staff was directed to explore the purchase of the property at 13913
Highway 10 and all other options for assisting the relocation of Custom
Motors within the City of Elk River.
Item No. 1 will be presented to the Elk River Planning Commission on April
25, 1995, and to the City Council on May 15, 1995.
On December 19, 1994, the City Council obtained an update on the status of
Custom Motors from City Planner Steve Ach and the writer of this memo.
• During this discussion, Mr. Joe Roy, owner of Custom Motors, indicated a
desire to obtain some decisions from the City. In addition, Councilmember
13065 Orono Parkway • P.O. Box 490 • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425
• Holmgren requested that the City Attorney explore other communities that
assisted a business with a unique situation such as Custom Motors.
The writer of this memo contacted the following cities as part of the
exploration exercise: Oak Grove, Andover, Ogilvie, Champlin, and Ham Lake.
Oak Grove currently has a moratorium on waste handling companies, the
definition of which includes auto salvage yards. As a result of this
moratorium, such companies are prevented from locating in Oak Grove.
Ogilvie has no recent experience with auto salvage yards. The City Clerk has
been there since 1983 and indicated that an auto salvage business did exist
outside the city limits. This business was subsequently closed by the State.
In Ham Lake, a moratorium has been adopted to prevent other salvage yards
from relocating into the community. In addition, a new ordinance requires
existing yards to achieve environmental compliance. Andover is currently
exploring the possible use of tax increment financing (TIF) funds to purchase
a variety of salvage yards along Bunker Lake Boulevard between Round
Lake Boulevard and Hanson Boulevard. The source of the TIF funds is a
result of most of the commercial development in "downtown" Andover
(intersection of Round Lake and Bunker Lake Boulevards). This TIF District
is generating excess increments which provides the city with an opportunity
to undertake the potential purchase of the salvage yards along Bunker Lake
. Boulevard. Champlin allowed anon-conforming auto yard to construct a
building on its site. In return, both parties executed an agreement that
includes a ten year amortization period. The salvage yard must close its
operations after amortization period expires.
Custom Motors has offered to sell its site to the City on a Contract for Deed.
This would not require a large amount of cash, initially. In addition, Custom
Motors could continue to operate at its current location during the duration of
the Contract for Deed. Presumably, this time period would also give Custom
Motors an opportunity to select, finance, and relocate to a new location. It
should be noted that no public acquisition would occur until a full
environmental assessment is conducted.
City staff prefers that if public acquisition of the existing Custom Motors site
were pursued, the City would immediately resell the site to an end-user. No
such user existed in December when the City Council obtained a status
report, and, no such user exists today. With this void, public acquisition of
the Custom Motors site at 13913 Highway 10 is not recommended.
An opportunity to assist Custom Motors with its relocation to another site
within Elk River does exist. The recommended approach is to provide
supplemental financing from, say, the EDA's micro-loan fund, or, work with
• the owners of Custom Motors to ensure that this project is financed through
conventional means.
• Summary
Given this information, an obligation is owed to Custom Motors regarding the
City's intentions. Public funds are limited for the outright purchase of the
Custom Motors site. An end-user would expect that the site be conveyed free
of environmental concerns.
A better fit in this situation is to continue to work with Custom Motors
regarding its relocation to another site in the community. If an opportunity
exists, supplemental mortgage financing through the EDA, or, other
permanent financing of this expansion can be pursued. Permanent financing
may include conventional means or other public programs.
Action Requested
The Elk River City Council is asked to provide Custom Motors with definitive
direction on the public acquisition of its site at 13913 Highway 10. The City
Council is also asked to affirm the availability of certain public financing
programs to assist with the potential relocation of Custom Motors to another
part of the community.
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