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HomeMy WebLinkAbout10E Possible Acquisition of Property (4580 Dakota)O PKIp� to � 4646 Dakota Street SE Prior Lake. NW 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: June 6, 2011 AGENDA M 10E PREPARED BY: Kelly Meyer, Asst. City Manager PRESENTED BY: Kelly Meyer AGENDA ITEM: CONSIDER APPROVEL OF A REPORT REGARDING POSSIBLE ACQUISI- TION OF PROPERTY (4580 DAKOTA) DISCUSSION: Introduction The purpose of this agenda item is to advise the City Council of an opportunity to purchase the property located at 4580 Dakota Street SE, and asks the City Council to direct staff on how it wishes to proceed. Last summer /fall, the woman living in the property passed away. Patrick Hayes, a son, is representing the estate. The property has reverted to the estate for the benefit of his re- maining siblings. Several years ago when the City Hall was constructed, staff had worked with Mr. Hayes and his mother in addressing their concerns with the construction and the landscape screening that they desired. Approximately one month ago, Mr. Hayes contacted the City to advise that the estate wished to sell the property and was inquiring whether the City would be interested. After some discussion, Mr. Hayes agreed to not list the property with a realtor pending some additional research and a decision by the City. Mr. Hayes also provided the City's appraiser, City Manager and Asst. City Manager access to the property to view. To date, the City has paid for the cost of an appraisal on the property ($375). Current Circumstances The most likely public purpose for the property is for future parking for City Hall. Currently, the City has a collaboration with United Methodist Church to use its parking lot in exchange for snowplowing of the lot. This arrangement has worked out well for both parties. In the future, the Church is planning a redevelopment of their site and the properties it owns along Arcadia between Dakota and CSAH 21. Although this project make take many years to develop, it is likely that at some point in the future, the City's access to the parking lot may change. Staff estimates that there is a potential for 16 stalls on the proposed site. The City would not have an immediate need to construct the parking lot, and does not have the capacity on staff to provide residential building management and maintenance; nor would the City want to incur the unknown costs of management and maintenance. Howev- er, the Scott County Community Development Agency has a program whereby they provide management, maintenance and staff support for properties such as this in order to utilize them to serve their public housing initiatives and offer rents lower than market rate to people in need. Scott County and Shakopee are currently utilizing the program to manage similar properties that they have acquired. The CDA assumes all costs (except insuring the property) and uses the rents collected to cover their costs. Any difference between the rents collected and the actual costs is remit- ted to the City. The CDA cautions that this amount is usually very minimal and that the City should view the CDA's role as a deferral of maintenance and management costs, and a deferral of demolition, rather than a revenue source. City staff has met with the CDA and they appear interested in the property (although they have not been able to view the interior yet). Conclusion Mr. Hayes would like to see the City buy the house for financial reasons, but also to use the property (for sentimental reasons). Staff made a commitment to Mr. Hayes that we would bring this item to the City Council to determine if the City is interested in entering negotia- tions to acquire the property. ISSUES: I have attempted to summarize what the staff sees as benefits and challenges of acquiring the property. Council members may have additional perspective and concerns. BENEFITS CHALLENGES City controls the property long -term until it is Small Lot; limited number of parking spaces for the needed. cost of acquisition and construction ($15,625 per stall largely due to the retaining wall required). Purchase price is reflective of today's market. No lease /rental revenue. Adds parking to downtown area and helps address CDA will not put money into improving the property future City parking requirements, which may affect any re -sale if the City doesn't con- struct the parking lot. Utilize CDA to provide lower than market rental Property is removed from the tax rolls once the City housing — addressing a 2030 Vision goal for hous- no longer rents it. ing diversity for all income levels including entry level renters. Controls the City's costs for carrying the property by utilizing the CDA. Defers demolition and uses the house (which the family will appreciate If the City determines it does not need the property in the future, there is potential to re -sell in future (p resumably better market. 2 FINANCIAL The estimated costs for acquisition of the property and construction of a parking lot are set IMPACT: out below: Purchase Price of Property: $160,000 Demolition of Structures: $ 20,000 Construction of Lot/Retaining Wall: 70,000 $250,000 The funds for the purchase of the property are proposed to be drawn from the General Fund Reserve ($160,000). Future funds required for the demolition of the buildings and construc- tion of the parking lot would be planned into the Capital Improvement Program for a future date. ALTERNATIVES: 1. Motion and Second to direct staff to proceed into negotiations to acquire the property. 2. Take no action (in which case the staff will advise the property owner that the City does not intend to offer on the property). RECOMMENDED MOTION: As the Council deems appropriate.