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Home My WebLink About9B Purchase Agreement 16328 Main Ave (MN Nails) MEETING DATE: AGENDA #: PREPARED BY: AGENDA ITEM: DISCUSSION: June 2,2008 9B Paul Snook, Economic Development Director CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING THE MAYOR AND CITY MANAGER TO EXECUTE A STANDARDIZED PURCHASE AGREEMENT FOR PROPERTY AT 16328 MAIN AVENUE SE Introduction City Council is asked to consider approval of a resolution acquiring property located at 16328 Main Avenue SE, commonly referred to as the Minnesota Nails property. Historv The City Council has sought to acquire property to provide additional public parking and facilitate long term redevelopment in the downtown area. This is supported by the City's 2030 Vision and Strategic Plan and Comprehensive Plan. Since 2001, staff and council members have met at various times with the owners of property located at 16328 Main Ave SE, Prior lake, commonly known as the MN Nails building. Over that past six months staff has met with the property owners three times and a purchase agreement has been negotiated for the property. Current Circumstances The subject property is 107' x 83' and contains a 900 square foot one-story slab on grade commercial building. At one time the property housed a gas station. In 1993, a report was prepared by an environmental consulting firm which addressed a 1,000 gallon heating oil tank that existed on the property at that time. In addition, there were two 10,000 gallon gas/diesel tanks on the property. All tanks were removed and the environmental report addressed these tanks. Building Inspector Bob Hutchins conducted an inspection of the building for purposes of qualification as substandard for a tax increment financing redevelopment district. This property will be included in a TIF district if and when the time warrants. Scott County tax records indicate the estimated market value of the land and building to be $115,400. The City had an appraisal done on the property on March 27, 2007 and an appraisal update report again on February 1, 2008. The resulting as-is market value identified in the report is $112,000. Conclusion After numerous meetings over the last four months, we have negotiated an agreement with the property owners. The purchase price is $135,000 payable at closing which is on or before June 30, 2008. There are no special assessments due on the parcel. Real estate taxes due and payable for the www.cityofpriorlake.com ql'.h~~~44'Y1~~ 1J3~A)S2~4PEl245~AL.DOC second half of 2008 will be prorated between the current owners and the City and collected at the time of closing. ISSUES: This property was once occupied by a gas station, so there have been questions in the past as to the environmental integrity of the site. Based on review of the file on this property, we are confident that actions taken in the early 1990's provide reasonable assurance of a safe site. The County Assessor has an estimated market value of $115,400 on the property. The City attained an appraisal which identified an appraised amount of $112, 000. The negotiated sales price is $135,000. Staff believes the purchase price to be reasonable because: 1. Several costly improvements were made to the property by the owner. 2. The potentially high cost of eminent domain will be avoided once this sale is closed. 3. A potentially protracted eminent domain process will not be needed once both parties sign the agreement and the sale is closed. 4. The acquisition of this property allows the city to demolish both the MN Nails and Joe's Pizza buildings without liability concerns created by the common wall agreement. 5. Both properties can now be used in the short term for needed parking and in the long term for downtown redevelopment as guided by the 2030 Vision and Strategic Plan. Resolution 08-056, adopted by City Council on April 7, 2008 authorized the acquisition of the property by eminent domain after previous attempts at acquiring the property by purchase failed. The City Attorney is directed to not do any further work on the eminent domain action. If the property closes, as it is scheduled to on or about June 30, 2008, the City Council shall consider Resolution 08-056 null and void. If the acquisition by purchase does not occur; because of some impediment created by the seller, the City Attorney shall proceed to acquire the property through eminent domain. FINANCIAL IMPACT: The purchase price of $135,000 together with all costs as identified in the Purchase Agreement, are to be drawn from the Transit Fund. ALTERNATIVES: 1. Adopt the attached resolution approving the purchase and authorizing the Mayor and City Manager to enter into the city's Standard Standardized Purchase Agreement. 2. Take no action. RECOMMENDED MOTION: Alternative 1. ReVi~:J ~ Frank Boyles, llanao'er R\Council\2008 16328 Main Ave SE - FINAL.DOC ~o~ PRl~ u ~ h'J ~ESO~ 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 RESOLUTION OS-xx A RESOLUTION APPROVING THE PURCHASE OF PROPERTY LOCATED AT 16328 MAIN AVENUE S.E. AND AUTHORIZING THE MAYOR AND CITY MANAGER TO EXECUTE THE PURCHASE AGREEMENT Motion By: Second By: WHEREAS, The Downtown Area Parking Study was completed in 2004, and demonstrated a need for an additional 400-600 parking spaces in the Downtown area by the year 2025; and WHEREAS, Redevelopment in Downtown Prior Lake is supported and called for in various policy and planning documents of the City, including the 2030 Vision and Strategic Plan; Comprehensive Plan; The Prior Lake Downtown Development Guide; Development Potential Study; and Downtown Building Design Guidelines; and WHEREAS, The City Council desires to acquire certain parcels to promote expanded parking and redevelopment in the Downtown area; and WHEREAS, Since 2001, City Staff has communicated to the property owners the City's desire to acquire property at 16328 Main Avenue S.E.; and WHEREAS, Negotiations have occurred over the years toward this end; and WHEREAS, The City has successfully negotiated a purchase agreement to acquire the property by purchase. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. The purchase price of $135,000, together with all costs as identified in the purchase Agreement, are to be drawn from the Transit Fund. 3. The Mayor and City Manager are hereby authorized to execute the Standardized Purchase Agreement and any documents necessary to close the transaction. 4. Resolution 08-056 authorized the acquisition of the property by eminent domain after previous attempts at acquiring the property by purchased failed. The City Attorney is directed to not do any further work on the eminent domain action. If the property closes, as it is scheduled to on or about June 30, 2008 the City Council shall consider Resolution 08-056 null and void. If the acquisition by purchase does not occur; because of some impediment created by the seller, the City Attorney shall proceed to acquire the property through eminent domain. R~C:f"1ltih{',n P!ii'rhJ:l::,pH~'<,?R r\/qi,l.t.V',,;"~ SF www.cityofpriorlake.com Phone 952.447.9800 / Fax 952.447.4245 PASSED AND ADOPTED THIS 2nd DAY OF June, 2008. YES Haugen Erickson Hedberg LeMair Millar Haugen Erickson Hedber9 LeMair Millar Frank Boyles, City Manager R:\Council\2008 Agenda Reports\06 02 08\Resolution - Purchase 16328 Main Ave SE - FINAL.doc NO