HomeMy WebLinkAbout9B - Franklin Trl/Park Nicollet Drv. Property
MEETING DATE:
AGENDA #:
PREPARED BY:
AGENDA ITEM:
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16200 Eagle Creek Avenue S.E.
Prior Lake, MN 55372-1714
CITY COUNCIL AGENDA REPORT
May 15, 2006 -;}~
:~nk Boyles, City Manag~
CONSIDER APPROVAL OF A REQUEST FOR TIME EXTENSION FOR THE
EXECUTION OF A DEVELOPMENT AGREEMENT FOR THE FRANKLIN
TRAIL I PARK NICOLLET DRIVE PROPERTY.
Introduction
The purpose of this agenda time is to determine if the City Council would be
willing to authorize an additional extension of time to Dan O'Keefe to enter into
a development agreement for the purchase of a .SS-acre parcel of City-owned
property at Franklin Trail and Park Nicollet Drive.
Historv
The City acquired the .SS-acre T.J. Towing (Kortsch) property in 2001 subject
to an agreement that the owner conduct a Phase I and II on the property and
remove all buildings and storage from the property. Then in 2005,
acknowledging that the property is excess to the City's needs, the City Council
authorized the sale of this property through advertisement and solicitation of
proposals subject to specific criteria to control the property's development.
Only one bid was received, and that was from Dan O'Keefe, in the amount of
$204,000, which was the minimum bid for the property based upon an
appraisal the City had conducted.
Based upon the proposal, Mr. O'Keefe intended to enter into a development
agreement with the City no later than October 7,2005. Because of delays in
the project, Mr. O'Keefe later asked for a six-month extension to April 6, 2006,
to enter into a development agreement. The Council granted that extension.
Current Circumstances
During the last six months, Mr. O'Keefe has remained in contact with me
regarding the status of his project. He has done considerable work on this
project and, in the process, has learned a number of things.
Prior to purchasing the property, Mr. O'Keefe was not aware that this lot, and
the Park Nicollet lot next to it, are not served by the regional pond, which
means that a greater portion of these parcels would have to be devoted to
storm water treatment and storage. Since the lots are narrow to begin with,
the drainage requirements have the effect of significantly reducing the original
building size.
As a result of this information, Mr. O'Keefe spent considerable time over the
last six months evaluating other properties to construct the 30,000 square-foot
building he originally proposed for the City and Park Nicollet properties. After
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ISSUES:
a thorough evaluation of both sites including input from the prospective
building tenants, Mr. O'Keefe has concluded that he desires to proceed with
this project but with a 21,000 square-foot building rather than the original
30,000 square-foot building he proposed to the City Council. Accordingly, he
has made a purchase agreement offer for the Park Nicollet owner parcel
adjacent to this property. Park Nicollet has accepted the offer and they are in
the process of negotiating a final purchase agreement.
To move ahead with the project requires two City Council actions. First, the
City Council would need to authorize revisions to the building proposal Mr.
O'Keefe originally provided. Second, the Council would need to approve
another deadline extension.
The revision to the building proposal amounts to changing the building from
30,000 square feet to 21,000 square feet. Shown below is a comparison of
the original proposal and the revised proposal:
Item
Two-story
Office
Retail
Class A Exterior
Consistent w/City code
Cost
Using Both Lots
(T. J. Towing & Park Nicollet)
Square feet
Builder
Architect
Square feet leased out
Revised
Yes
Yes
Yes
Yes
Yes
$204,000
Yes
21,000
Greystone
Gary Touchie
20,000
The only change from the originally submitted proposal is building size. The
Council should decide if the reduction in size is significant enough to require a
new solicitation of bids.
The second issue has to do with the requested time extension. Mr. O'Keefe
already received a six-month extension. He was not able to execute a
development agreement by the April 7,2006, deadline. If the Council believes
a 45-day extension from today's date is appropriate, they should require a
$15,000 payment from Mr. O'Keefe.
Conclusion
The Council should decide:
1. If the change in building size is acceptable or if re-bidding is necessary.
2. If it is acceptable, is the Council willing to provide another 45-day extension
at the cost of $15,000 to the applicant.
This request raises a number of issues. Given that over a year has elapsed
since the original RFP was requested, does the Council wish to solicit
additional proposals? It could be argued that the value of the City land has
increased over this time period. The City would have to request another
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FINANCIAL
IMPACT:
ALTERNATIVES:
RECOMMENDED
MOTION:
appraisal to determine how much. The appraisal would consume additional
time and expense to the City. It could be argued that the setbacks and
drainage challenges to these parcels that were not known at the original time
of proposal could affect the increase in property value.
To be sure, the project has taken longer than the Council would like to see. In
the Rock Creek building, the developer had to pay $15,000 for each 45-day
extension. To be consistent with the way the Council handled requests for
extensions by Rock Creek, they should condition any extension(s) granted to
such a payment.
The Council also needs to determine if a 21,000 sq. ft. building is substantially
equivalent to the 30,000 square-foot project. All other project details are "as
originally proposed." The reason for the reduction in building size is solely due
to the storm water requirements, which were not known at the time of bidding.
Finally, The Council may wish to consider the issue of time. It is probable,
given the fact that Mr. O'Keefe has lease commitments in excess of 50% of
the building, a verbal purchase agreement with the adjacent property owners,
and has been working with an architect and engineer, that he would be
capable of developing the property most expeditiously. A re-bidding process
would be 30-45 days following an additional 30-45 days for a new appraisal.
The City will receive an additional $15,000 to compensate for any land value
increase and additional costs the City has incurred. The City will also receive
$204,000 when the sale of the land is consummated. Since this building will
receive no public assistance, the City will receive property taxes from the
development. Finally, the businesses to be housed in this building will add to
the vitality of the area.
1. Adopt the attached resolution authorizing modification to the project to
construct at 21,000 square-foot, rather than 30,000 square-foot building,
authorizing an extension of 45 days subject to the payment of $15,000.
2. Adopt the attached resolution rejecting the modification of the building size
and calling for the solicitation of proposals for the development of this
property.
Alternative #1.
-'c'I-~'c,r.
A RESOLUTION AUTHORIZING A MODIFICATION TO THE PROPOSAL TO DEVELOP
EXCESS CITY PROPERTY AT PARK NICOLLET DRIVE AND FRANKLIN TRAIL,
ALLOWING FOR A 45-DA Y TIME EXTENSION TO EXECUTE A DEVELOPMENT
AGREEMENT AND REQUIRING A $15,000 PAYMENT TO THE CITY.
Motion By:
Second By:
WHEREAS, On May 27,2005, Daniel O'Keefe, pursuant to a request for proposals to
purchase an option to purchase City property for development, was the only
person to submit a proposal on the T. J. Towing (Kortsch) property; and
WHEREAS, The City Council considered and accepted the proposal including the
description of the building to be constructed and the timelines for development
proposed; and
WHEREAS, On October 7, 2005, Mr. O'Keefe requested and was granted a six-month
extension to April 7, 2006, to enter into a development agreement with the City;
and
WHEREAS, Mr. O'Keefe has learned that due to storm water constraints he cannot build a
30,000 square-foot building on the property as originally proposed and,
therefore, has modified his proposal to include a 21,000 square-foot building
instead; and
WHEREAS, Mr. O'Keefe has obtained a verbal agreement from Park Nicollet to purchase
the adjacent one-acre parcel which is to become part of this development; and
WHEREAS, Mr. O'Keefe is now asking the City Council for a 45-day extension to execute a
development agreement acceptable to the City.
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 modification of the development proposal only with respect to building size from
30,000 to 21,000 square feet is hereby accepted.
3. The request to extend the deadline for the execution of a development agreement for 45
days from the date of this resolution is hereby approved conditioned on:
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Phone 952.447.4230 / Fax 952.447.4245
a. Receipt of a $15,000 certified check surrendered to the City of Prior Lake no later
than Monday, May 22, 2006, and
b. Confirmation and receipt by the City of a written purchase agreement between Mr.
O'Keefe and Park Nicollet for the adjacent parcel no later than the last day of the
45-dayextension.
4. In the event that Mr. O'Keefe fails to perform as set forth above in any way, the city will
cancel the proposal and retain both the $15,000 deposit received with the proposal in 2005
and the deposit provided by May 22, 2006; and solicit new proposals for the development
of this property.
PASSED AND ADOPTED THIS 15th DAY OF MAY 2006.
YES
NO
Haugen
Dornbush
Erickson
LeMair
Millar
Haugen
Dornbush
Erickson
LeMair
Millar
Frank Boyles, City Manager
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