HomeMy WebLinkAbout01 22 2013 EDA 4A Downtown Property Acq Opp O � PRIp
N � v 4646 Dalcota Street SE
Prior Lake. MN 55372
A
ECONOMIC DEVELOPMENT AUTHORITY AGENDA REPORT
MEETING DATE: January 22, 2013
AGENDA #: 4A '
PREPARED BY: Dan Rogness, Community & Economic Development Director
AGENDA ITEM: DOWNTOWN PROPERTY ACQUISITION OPPORTUNITIES
DISCUSSION: Introduction
City staff was asked by the EDA to evaluate the potential acquisition of the
downtown Professional Building on Main Avenue. The primary reason for this
consideration relates to the "squaring off' of city-owned property to help facilitate
a potential future redevelopment project. This item was previously reviewed by
the EDA on November 20 and December 17, 2012.
Histo
In April of 2008, Prior Lake distributed a RFQ/RFP to developers that may con-
sider redevelopment opportunities in the downtown area. Only one response
came from the Scott County CDA for a mixed-use development at the northwest
corner of Main and CR 21. Their proposed area to redevelop included city prop-
erty with the exception of land currently occupied by the Professional Building.
The Professional Building was constructed in 1920 and is currently for sale at a
price of $499,000; the county's estimated market value is $360,000 for taxes
payable 2013. The county's value is divided between $100,000 for land
($10.20/SF) and $260,000 for the building. Therefore, the asking price is 39%
higher than the county's estimated market value. Property taxes equal $1.80
per square foot (building space) for payable year 2012. The staff memo as-
sumes an acquisition price midway between the asking price and county value at
$429, 500.
Conclusion
At the December EDA meeting, the commissioners asked city staff to contact
the broker/owner of the Professional Building. Staff should inquire whether the
owner is open to having the EDA complete an independent appraisal on the
property. In addition, staff should inquire as to the owner's acceptance to an
offer based on the EDA's appraisal. The owner's response was that he would
allow an appraisal, but only after the property is under a signed purchase
agreement. Therefore, the EDA would need to execute a purchase agreement
for the asking price, and then include a contingency that states the purchase
price is conditioned on an independent appraisal supporting the purchase price.
If the appraisal supports that price, or something close to it, the EDA would be
obligated to proceed with a closing (assuming other contingencies have been
satisfied, such as a property inspection).
ISSUES: The EDA must be comfortable at this time with a purchase price of $499,000
since the owner is not interested in a lower offer. This value appears to be far
above the fair market value, at least in relationship to the county's estimated
value. In addition, the EDA does not currently have access to the amount of
funds necessary to fully acquire the property.
FINANCIAL The TIF 1-1 fund balance of approximately $200,000 could potentially be used
IMPACT: toward the acquisition of downtown properties. The remaining $300,000+ need-
ed for the Professional Building would need to be secured from some other
funding source.
ALTERNATIVES: 1. Authorize staff to explore funding sources in order to execute a purchase
agreement for $499,000 and proceed to draft a purchase agreement.
2. Table this item in order to get further information.
3. Terminate any further discussions on the purchase of this property due
to the high asking price.
RECOMMENDED Staff supports Alternativ� #3.
MOTION:
2