7.5. SR 04-03-1995~ \\
ity of ~~ •
lk River
Item 7.5.
MEMORANDUM
TO: Mayor & City Council
FROM: Pat Klaers, City Ad
'~
DATE: April 3, 1995
SUBJECT: School Public Works Building
In the late 1980's, the School District was looking at the construction of a
public works building. Eventually an arrangement was made whereby the
City expanded its facility and rented space to the School District. As part of
this agreement, the School helped finance the expansion and, in turn, the
City has to repay the School some funds in the next few years.
In about 1991, the City and School District combined their efforts and
property and constructed recreation fields between the City public works
building and the Community Education building. These fields are the Oak
• Knoll fields. In the development of these fields, a building pad was reserved
for the School public works facility.
The School District is now ready to proceed with the construction of its public
works facility. However, the School District has decided to expand its facility
from the original concept and the building pad size in the Oak Knoll complex
is limited based on the original proposal.
The City has offered the School District a building site that we feel is better
than the Oak Knoll site. This site is better in terms of its expansion
opportunities and is a better overall location for this type of building. The
option suggested by the City was the remaining lot that we have ownership
of in the Industrial Park. (The City at one time offered this site to Tescom for
$60,000 for their expansion. In the end, Tescom selected a different site.)
The City has offered this Industrial Park site to the School District under
what we feel are reasonable conditions. The School District currently has a
free building site in the Oak Knoll complex. The City has indicated that the
School could have the Industrial Park site for whatever "savings" that the
School would realize on its utility and site preparation costs. The Industrial
Park site is "developer ready" (sewer and water stubbed-in and the site
• nearly ready for construction), while the Oak Knoll site is not.
13065 Orono Parkway • P.O. Box 490 • Elk River, MN SS330 • (612) 441-7420 • Fax: (612) 441-7425
. For example, assume it cost the School District $70,000 to prepare its Oak
Knoll site for construction and to extend utilities to this site. On the other
hand, to prepare the Industrial Park site for construction may only cost
$25,000. In this scenario, the City would be asking for $45,000 ($70,000 -
$25,000 = $45,000) from the School for the Industrial Park site. In this
manner, the City captures some funds to pay off our original Industrial Park
purchase.
The concept of what the City is proposing is somewhat difficult to put down
on paper, but it is relatively simple. The School District can construct the
building in the Oak Knoll complex. If it prefers a site in the Industrial Park,
it can have this site from the City, but the City needs to recapture some of its
expenses. What we are looking to recapture is the utility and site
preparation "savings" that the School would realize by going to this developer
ready Industrial Park site.
By offering the School this Industrial Park site, the City is foregoing a
potential increase in its tax base and its employment base provided that the
site would be used for an industrial project. The City would certainly like to
be a good neighbor and simply give this Industrial Park site to the School,
but the City has financial responsibilities and the best it can propose at this
• time is to give the School a good deal on the available lot.
One final note -the City can set a maximum price of $45,000 from the School
for this site. (A $30,000 minimum price should also be set.) It is possible
that the figures in the above scenario could be $80,000 for Oak Knoll and
$20,000 for the Industrial Park whereby the School savings for site
preparation and utilities would be $60,000. The City would only receive
$45,000 of this amount, so the School could actually see a real dollar savings
by selecting the Industrial Park site.
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