5.6. SR 07-07-2008REQUEST FOR ACTION
To Item Number
Ci Council 5.6.
Agenda Section Meeting Date Prepared by
Administration ul 7, 2008 Lori ohnson, Ci Administrator
Item Description Reviewed by
Authorize Appraisal for Gateway Business Park Property
Reviewed by
Action Requested
Authorization to hire an appraiser to complete an appraisal of the Gateway Business Park property.
Background/Discussion
For the past several years, the City has been preparing for development of the Gateway Business Park.
Most recently, the Council approved a plat for the property that created outlots that can later be re-
platted to accommodate the development proposal(s) the Council accepts. Also, a few inquiries have
been received from developers and adjoining land owners with interest in purchasing Gateway property
or, in the case of the entertainment center, being given property as part of an incentive package.
Staff is requesting that the Council authorize the completion of an appraisal on this property to determine
its market value. The appraisal data will be necessary whether the property is sold or used as an incentive
now or in the future. Completing an appraisal at this time does not in any way mean that the land needs
to be sold now; however, it does bring us once step closer to being prepared to entertain offers for
development proposals, proceeding with requesting RFP's for the entire parcel, or any other method the
Council may want to use to develop the property.
Further, as I said, we've received a few inquiries about purchasing portions of the Gateway property.
Recently, Scott Powell of -Elk River Ford Dodge Jeep submitted a letter expressing his desire to purchase
the northern most five acres of Outlot C. To date, we have not received a site plan from Mr. Powell so
staff can't comment on how this development fits the Council's goals fox Gateway.
Obviously, there are many items that need to be considered before the Council decides whether to sell
property at this time. Gateway is a very important development area that represents an opportunity to
increase the City's future tax base and add livable wage jobs. It's prudent for the Council to wait for the
right development proposal before proceeding. There is no rush to develop this property; it is more
important to get the maximum tax base and highest quality development possible out of the park.
However, that said, we do need to respond to the recent requests to purchase property as they maybe
developments that represent what the Council envisions for Gateway.
The EDA discussed Gateway at a worksession in Apri12007. If the Council concurs, a joint meeting with
the EDA could be scheduled for August 11 to revisit some of the issues brought up at the 2007
worksession and to reaffirm the direction staff should take to market and develop the business park.
S:\Council\Lori\2008\Appxaisal for Gateway.doc
Financial Impact
$1,000 for an appraisal to be paid by the development fund.
Attachments
^ Memo from Cathy Mehelich, Economic Development Director
^ March 12 and Apri19, 2007, EDA Minutes
ACtlon Motion by Second by Vote
Follow Up
S:\Council\Lori\2008\Appraisal fox Gateway.doc
ver
MEMORANDUM
TO: Mayor & City Council
FROM: Catherine Mehelich, Director of Economic Development
DATE: July 7, 2008
SUBJECT: Appraisal Services for Gateway Business Park Property
Attachment
• Nagell Appraisal & Consulting proposal dated June 30, 2008.
Issue
Due to recent interest received for purchase of portions of the City's Gateway Business Park
property, staff solicited quotes fox an appraisal in order to provide the city information
necessary to respond to purchase offers and development proposals.
The following firms were asked to provide a quote fox appraisal service:
• Nagell Appraisal & Consulting
• Meeks Appraisal
• Patchin Messner & Dodd
Two of the firms respectfully declined due to current workload that doesn't allow the firm to
complete the appraisal within a 30-day turnaround. The Council could allow additional time
to complete the appraisal and obtain additional quotes for appraisal services.
Recommendation
Staff recommends the City Council accept the attached Nagell Appraisal & Consulting
proposal for appraisal service of the Gateway Business Park Property in the amount of
$1,000. The appraisal is expected to be complete by August 11, 2008. Both the HRA and
EDA have worked with Nagell Appraisal on recent projects, including appraisal of the
Houlton Buildings downtown and the Post Office property on Line Ave.
S:\EDA\LAND\Gateway Business Center\Appraisal\7.7.08 Council memo.doc
L. AI CONSl1LTiG
7515 Wayzata Blvd. #115
Minneapolis, MN 55426
Established in 1968
Minneapolis: 952-544-8966
St. Paul 651-209-6159
Central Fax 952-544-8969
City of Elk River June 30, 2008
Attn: Catherine Mehelich, Director of Economic Development
13065 Orono Parkway
Elk River, MN 55330
E: ppraisal of land
PID 75-011-2400
Elk River, M
Dear Ms. Mehelich:
Thank you for your interest in obtaining appraisal services regarding the property above. Per our
conversation, you indicated an appraisal report with the following research and analysis is needed.
Report UsetValue Type: The report use is for possible sale. Current market value "as is" as it
relates to Highest and Best Use per Uniform Standards of Professional Appraisal Practice will be
provided.
Property ascription: A 70 acres parcel with about 60 acres usable.
Cr~ntact for access: N/A.
Scope of Report: (1) Inspection of the property and view the neighborhood. (2) Report the
physical and/or economic factors that could affect the property. (3) Complete research and
analysis of pertinent market data. The sales approach to value will be applied. (4) Where
appropriate, comparables will be confirmed, viewed and be listed on an adjustment grid with
explanations. (5) Report findings and conclusions.
Report Format: A Summary Report (narrative format) will be used. It has a summary of
statements of the data, analysis and conclusions. Appropriate photos, maps and exhibits are
included. Two hard copies of the report provided.
ee: The fee is 1 000. City named above of responsible for payment.
Due Date: Appraisal report can be completed by 8-11-0$ if signed confirmation is timely
Information needs by the appraiser: Already provided.
Our company has 10 employees and has been in business since 1968 and has sufficient
knowledge, experience, education and resources to competently complete this assignment.
Neither the employment to make the appraisal, nor the compensation for it, is contingent upon the
appraised value of the property. If you agree to the above terms, please sign below and return by
fax or mail. If you have any additional questions, please do not hesitate to contact me.
Sincerely,
~ ~ .
William R. Waytas, SRA, CRP
Certified General 4000813, MN
Signature
Date
www.callnagell.com
Economic Development Authority Minutes
March 12, 2007
Page 2
Ms. Steinmetz stated the city is working with other cities in the county on a project. She
stated the EDA has contributed $500 for the Enterprise Network Regional Analysis (ENSA)
project which is developing a similar cluster program.
5. Consider Recommendation to City Council on Resolution Authorizing Particit~ation in the
Sherburne County Economic Development Authority
Ms. Mehelich introduced Sherburne County Administrator Brian Benson.
Mr. Benson provided information regarding the county's efforts to establish a Sherburne
County EDA and is requesting the City of Elk River EDA participation along with other
cities in the county.
Commissioner Dwyer stated he served on the taskforce that was formed to evaluate the
establishment of the Sherburne County EDA and he felt it would be a complement to the
city EDA.
Commissioner Motion questioned if there were to a conflict with the city EDA and county
EDA, would the city have an option to opt out of participating.
Ms. Mehelich stated the city would be unable to withdraw for at least five years.
MOVED BY COMMISSIONER DWYER AND SECONDED BY
COMMISSIONER MOTIN TO RECOMMEND THE CITY COUNCIL ADOPT
A RESOLUTION AUTHORIZING TH E CITY OF ELK RIVER TO
PARTICIPATE IN THE SHERBURNE COUNTY ECONOMIC
DEVELOPMENT AUTHORITY. MOTION CARRIED 5-0.
,~ 6. Update on Gateway Business Center Project
Mr. Barnhart provided an update on the main findings of the Maxfield Research Study for
the Gateway Business Park development. Mr. Barnhart stated the Study indicated that the
Park was best suited for industrial and limited commercial development and not retail.
Commissioner Motin stated he would like to see the entire Study report as some comments
don't make sense according to what he has heard from developers. He stated that dependent
upon the Study he may disagree with the consultant's opinions. He stated the city should
contact restaurant businesses and promote directly to them and not to developers.
Commissioner Motin questioned who the consultants contacted for the study.
Commissioner Dwyer questioned if the easiest way to market the Park is in the best interest
of the city. He stated there should be "mix uses" in the Park.
Commissioner Tveite stated it may be worthwhile for the city to wait to develop the Park
but the EDA should wait until they see the Study report.
Chair Gongoll stated he was also surprised by the results of the Study. He stated he would
like to see a different name for the Park as Gateway Business Park is being used for another
park along Highway 101.
Ms. Mehelich noted there would be an April 9 worksession discussion for this item. She
stated the Study seems to be in conflict with what the city desires for the Park.
Economic Development Authority Minutes
March 12, 2007
Page 3
Mr. Clark suggested that the EDA send staff emails with photos or locations of the samples
of the "mixed use" they would like to see for the Park.
7. Update on Downtown Redevelopment Plan Taskforce
Commissioner Tveite provided the following update on the Downtown Redevelopment
Plan Taskforce. Some items covered were:
• Alternatives to TH 10
• Visibility to keep TH 10 at grade
• Possible closure of Main Street with Jackson Avenue being a gateway entrance
• Market of two distinct areas (north/south of TH 10 and the railroad)
Commissioner Dwyer questioned if Mn/DOT was part of any Taskforce discussion.
Mr. Clark noted that City Engineer Terry Maurer has had discussions with representatives of
Mn/DOT.
8. Qther Business
A. Consider Micro Loan Request• Mikols River Studio, Inc.
Ms. Steinmetz stated Mikols River Studio has submitted application today for $25,000 from
the Downtown Business Revitalization Loan Program. She stated Mr. Mikols would like to
utilize the funds for upgrading his showroom and purchasing equipment. She stated that
EDA Commissioner Motin proposed the application be considered by the EDA in order to
respond to Mr. Mikol's timing request rather than delaying another month with a Finance
Committee recommendation.
Tony Mikols, applicant-Stated he has been impressed with the activity downtown and would
like to spruce up his shop.
MOVED BY COMMISSIONER MOTIN AND SECONDED BY
COMMISSIONER TVEITE TO APPROVE A $25,000 LOAN TO MIKOLS RIVER
STUDIO, INC. AT A FIXED INTEREST RATE OF THREE PERCENT TO BE
PAID BACK WITHIN TWO YEARS AND SECURED BY A PERSONAL
GUARANTEE. MOTION CARRIED 5-0.
B. GRE Update
Ms. Mehelich noted the GRE is pursuing legislative appropriation fora $250,000 grant to
the City of Elk River EDA to be provided to GRE for the feasibility study of an RDF to
methanol plant.
9. Adjournment
The meeting of the Elk River Economic Development Authority adjourned at 6:35 p.m.
Tina Allard
City Clerk
Economic Development Authority Minutes
April 9, 2007
Page 2
MOVED BY COMMISSIONER DWYER AND SECONDED BY
COMMISSIONER MOTIN TO ADOPT RESOLUTION 07-O1 APPROVING THE
DECERTIFICATION OF TAX INCREMENT FINANCING DISTRICT N0.15
WITHIN DEVELOPMENT DISTRICT N0.1 IN THE CITY OF ELK RIVER.
MOTION CARRIED 5-0.
6. Qther Business
Mr. Clark noted that information on a proposed road alignment for TH 10 from a
Mn/DOT representative was personal opinions of that person and not what is being
proposed by Mn/DOT.
7. Adjourn to Worksession for Discussion on Gateway Business Center Development
Grant Martin, Maxfield Research, Inc., provided an explanation of the study his firm
completed for the Gateway Business Park. He reviewed the methodology used by his
company. He stated the Park has limited market use for office and retail based on access and
visibility to T'H 10. Mr. Martin stated he found industrial demand for the site. He
recommended 40 acres dedicated to owner-occupied industrial space and 20 acres for multi-
tenant lease space. He stated the focus of the study was for the city-owned property.
Mr. Barnhart stated he is looking for direction on the type of land uses the EDA would like
to see for the Park.
Commissioner Motin stated the access issues for this Park are not any different then the
Wal-mart location.
Mr. Clark stated. there could be some retail in the Park but questioned how much the EDA
would like to see.
Commissioner Gongoll stated the surrounding properties need to be considered for
development of the Park.
Commissioner Klinzing concurred. She stated people shouldn't have to go through industrial
properties to get to commercial properties.
Commissioner Tveite stated if the EDA wants retail it may need to wait until there is more
of a demand.
Commissioner Farber concurred.
Commissioner Dwyer concurred. He questioned if the train station was considered in the
study.
Mr. Barnhart stated he has spoken to a couple of the property owners and they are looking
to put in commercial/retail.
Commissioner Gongoll stated the consensus of the EDA is to see more of a retail
component in the Park. He stated he would like to see a higher level of architectural
standards, some high-tech infrastructure, and a different name for the Park.
Economic Development Authority Minutes Page 3
April 9, 2007
------------------------------------------
Ms. Mehelich questioned the types of retail the EDA would like to see.
Commissioners Motin and Klinzing stated they would like to see a big box retail area similar
to the Wal-mart area in Elk River.
Commissioner Gongoll stated he could see it as a small boutique neighborhood center.
Mr. Barnhart created a sample drawing of the land uses the EDA is requesting.
Mr. Maurer stated there will be some constraints to the site due to wetlands and gas lines.
Ms. Mehelich questioned how Maxfield Research, Inc., considered the viability of developing
retail in this proximity from the rail station.
Mr. Martin stated the key feature they considered for the rail station is walkabiliry. He stated
if a site can be walkable, you will keep people there to utilize the retail; but once they are in
the car they can go anywhere. He stated the city shouldn't count on rail as a draw for retail.
Commissioner Motin disagreed with the walkabiliry component. He stated people coming
home at the end of night don't walk and shop and they don't have time in the morning to
shop. He stated commuters plan their trips to the rail station to within five minutes of an
available train. He stated it is not walkable from the rail station to the Gateway Business
Park.
Ms. Mehelich stated people catching the train will come and go in short time frames limited
to the train's arrival. She questioned the support of retail businesses for the non-commuter
times throughout the day. She noted initially there will be limited train trips from the station.
Mr. Clark noted there will be competition with Elk River Station and their retail
development.
Ms. Mehelich questioned if the study area scope was broadened to include adjacent private
parcels for development, would that improve the market opportunity for retail.
Mr. Martin stated it would but the city would need to improve the access to the southern
portion of the site.
8. Adjournment
The meeting of the Elk River Economic Development Authority adjourned at 6:30 p.m.
Tina Allard
Ciry Clerk