7. HRSR 06-26-2006item # 7.
C
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MEMORANDUM
TO: Housing & Redevelopment Authority
FROM: Catherine Mehelich, Director of Economic Development/~~
DATE: June 26, 2006
SUBJECT: Consider Acquisition of Properties Described as 716 and 720
Main Street
Attachments
• Correspondence dated June 19, 2006 re: Houlton Investment Co. Property for Sale
• Location Map
Issue
Staff requests that the HRA consider the acquisition of 716 and 720 Main Street, which
includes the former Creative Genius space and the existing O'Reilly Automotive (Bumper to
Bumper) space.
Background
The property owner, Houlton Investment Company, recently contacted staff to discuss the
HRA's interest in the acquisition of the property for the purpose of expanding the City's
public parking lot. The properties include the space currently leased by O'Reilly Automotive
and the space formerly leased by Creative Genius. O'Reilly Automotive has cone-year lease
that expires September 30, 2007. O'Reilly Automotive has indicated their long-term
intentions to relocate into afree-standing building in the community. The adjacent space
has been vacant since its last tenant Creative Genius. The building is located adjacent to the
Elk River Meats building.
The property owner has indicated that there is one interested party for the purchase of both
buildings.
Consider Acquisition of 716 & 720 Main Street
June 26, 2006 Special HRA Meeting
Page 2 of 3
Following is a summary description of the subject properties:
Address 716 Main Street 720 Main Street
Parcel number 75-405-0235 75-405-0230
Parcel size .11 acres .14 acres
Buildin size 3,650 sf; 3,000 sf basement 5,960 sf
Features Retail/office space
Vacant first floor
Current tenant for basement
stora e $7,800 toss Retail space
Existing lease to 9/30/07 with
O'Reilly Automotive
$45,000 net
2006 Market value $241,500 $251,700
2006 Pa able taxes $7,062 $7,428
Analysis
Future Parking Demands
Acquisition of the properties provides an opportunity for the HRA to accomplish both short
term and long term objectives. Upon removal of the buildings approximately 21 new
parking stalls can be added in the short term. Long term the acquisition positions the HRA
the ability to provide deck parking as part of a long-term strategy to accommodate future
public parking demands created by:
• Future redevelopment activities
• New developments currently under construction
• City park development (as a programming destination & related activities)
• Ongoing parking demands created by future expansions of existing business
Demands created by increased employee parking permits that compete with the
availability of customer parking
Staff has had discussions with two downtown property owners that have indicated a strong
interest in seeing their property redeveloped within the next five years. If the properties
were to be redeveloped in a similar density (commercial and/or residential) as the
MetroPlains projects, there is limited area to provide all of the required parking onsite as
opposed to some combination of public and private parking.
Staff is completing an analysis to indicate the required parking demands (existing and future)
in comparison to the amount provided (public and private). The analysis will be presented at
the HRA meeting as staff is refining the calculations and preparing illustrations.
Another factor creating demand for parking is the increasing demand for employee stalls
that compete with the availability of customer parking. The King Avenue parking lot
includes a total of 136 stalls, of which 77 are made available for employee parking with the
balance being for customer parking. To date the Police Department reports approximately
300 valid employee permits have been issued. It is expected that employees of the new
developments will be requesting permits for parking in this lot. While not all employees
have the need to work and park downtown at the same time, there is limited potential for
expanding the employee permitted area without sacrificing customer parking.
S:\Downtown Revitalization\Memos\2006\6.26.06 Houlton buildings.doc
Consider Acquisition of 716 & 720 Main Street
June 26, 2006 Special HRA Meeting
Page 3 of 3
As part of a overall strategy, these properties are the best location for additional parking
since it is fairly central in the core downtown area, located immediately adjacent to the new
King Ave parking lot and provides for greater flexibility in designing a future parking ramp
structure. In addition previous downtown planning studies have indicated this area as
suitable for public parking and a ramp (1986 Governor's Design Team). The buildings were
included in the 2002 Historic Contexts Study which concluded that that the subject buildings
have "no remaining historic integrity due to modernization."
Timing of Acquisition
The purchase of the subject property is more advantages now for the following reasons:
• This is anon-leveraged sale. Typically acquisitions being conducted by the city
through redevelopment can range 30-70 % more than market value, depending on
the situation (e.g. recent building improvements, unmotivated seller).
• Avoids potential future conflicts of eminent domain and need for a public purpose
policy in place.
• Avoids future cost of relocarion. Typically relocation of established businesses can
range $30,000-$70,000 per business depending on the type and unique characteristics
of the business.
Estimated Project Costs
Acquisition: $760,000
Demolition: $ 40,000 (not including undetermined environmental issues)
Site Improvements: 45 000 (to construct the 21 parking stalls)
Total Estimate $845,000
Options for Discussion
• Purchase the buildings on a contract for deed and lease out for a particular period of
time.
• Purchase the buildings; remove and improve for immediate parking addition of
approximately 21 stalls.
• Do nothing.
Recommendation
Staff recommends the HRA consider the acquisition of the properties described as 716 and
720 Main Street. If the HRA wishes to purchase the properties, direction should be given to
staff on negotiation parameters and authorizing completion of an appraisal. Upon the
HRA's direction to proceed staff will present options for financing the project at next
month's HRA meeting.
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Page 1 of 1
Mehelich, Catherine
From: William Houlton [Bill@Houltonlnvestment.com]
Sent: Monday, June 19, 2006 3:00 PM
To: Mehelich, Catherine
Subject: Houlton Investment Co. Property for Sale
Hi Cathy,
This email is to verify the sales price of $760,000 for the two buildings on the north side of Main st in downtown
Elk River. The properties are 720 Main St and 716 Main St. As you know these properties are located side by
side to each other. Both properties are owned free and clear by Houlton Investment Co. No liens or
encumbrances are attached to either properties.
720 Main St is currently leased to O Reilly Automotive. The lease has been recently extended from September
30, 2006 to September 30, 2007. The lease amount for the final year will be $45,000.
716 Main St is currently vacant with the exception of a month to month storage arrangement for the entire 3000
square foot basement, and approximately 225 square feet of storage space on the main floor. The payments are
made semi-annually and for a dollar amount of $7,800 per year. There is no formal agreement for the storage
space and thus could be terminated by either party with a 30 day notice.
Let me know if you require any further information.
Thank you for your interest.
Bill Houlton
Houlton Investment Co
Office: 763-241-3611
Cell: 952-240-4410
Bill@Houlton Investment.com
6/19/2006
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