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Home My WebLink AboutHEDRA 04-09-09 PacketHASTINGS ECONOMIC DEVELOPMENT & REDEVELOPl\1ENT AUTHORITY Agenda fm• Ap~i19, 2UU9, 6:UU pm. City Hall CYtp Council Chamber I. Quorum. IL Minutes of March 12, 2009 III. Bills and quarterly financial report IV. Business A. Land credit formula -consider adjustment for new land price B. Block 29 -review proposal for preliminary agreement C. Industrial Park -review proposal for preliminary approval ~'. Reports 9. 315 3"~ St E. B. 215 Ramsey St (senior center) C. Updates and information Spiral Boulevard -healing on Apiil 6r~'. 23"~ Street Intersection -next steps. 1\Iidtov~m - P&L Properties Bus Transit Studies -meeting on April 8r~'. Bridge process and Hudson Manufacturing -update. Additional CDBG -tire alarm program -update. Intek Plastics -meeting on .April S~~'. VI. Adjourn AGENDA NOTES 4-9-09 BILLS Wilson Development $1,471.00 Bradley Deike $50.00 Staples $31.69 315 acquisitionhelocation legal sere~ices office supplies Qu:u-terly report -attachment HEDR~ checks will be used for project and program expenses as approved by the Board. City checks will be used for administrative expenses including salaries, in the budget. BUSINESS A. LAND CREDIT FORMULA. See enclosed memo and summary. ACTION: approve program with changes to adjust for land price change from $1.35 to $1.65 B. BLOCK 29. Greg Stotko will deliver a proposal on April 6. It will be sent to the Board by email and paper copies will be available at the meeting. Because this is not in time for the packet, staff will review the proposal at the meeting. ACTION: Comments and questions; recommendations and directions for a preliminary agreement. A preliminary- agreement can be drafted for Bo:u d approval at a future meeting. C. INDUSTRIAL PARK. Red Wing Dental has made a proposal for the purchase of a lot using the land credit program. Staff review of the land credit application is included in the packet. ACTION: Preliminary approval of the application. Preliminary approval means the project appears to meet the criteria and standards at this time. Final approval is contingent on acceptable agreements, city planning approvals and Council approval of the land credit and sale. Depending on Board comments, recommendations and direction, the applicant and staff will take the project through the development process and draft yjr development and business subsidy documents for board and applicant approval. REPORTS 315 E. 3"~. There has been one meeting widt dte realtor. There maybe new information by the meeting. 215 Ramsey. Staff talked to Pat Walker about the purchase. He asked that we hold off on talking to the tenants about relocation until he had completed new leases with both. The next step would be to hire Wilson Development on behalf of Joint Powers to determine the relocation costs. Remodeling costs and a purchase price need to be finned up. UPDATES Any recent developments on these will be provided. The bridge update is emailed by John Hinzman separately. HEDRA Hastings Economic Development and Redevelopment Authority 6:00 p.m. Hastings City Hall Minutes of March 12, 2009 I. Called to order 6:00 HEDRA Commissioners, Ron Toppin, Pam Holzem, Kurt Keena, Danna Elling Schultz, and Bob Hollenbeck present Commissioner Dennis Martodam and Anthony Alongi, absent Staff present: HEDRA Director John Grossman, Planning Director John Hinzman, Community Relations Specialist Shannon Rausch, City Administrator Dave Osberg and City Engineer Nick Egger II. Approval of Minutes Minutes from the February 12, 2009 meeting were presented, one correction was noted. Keena moved to approve the minutes with no changes. Toppin seconded the motion; Motion passed 5-0 III. Bllls Commissioner Toppin moved to pay the bills. Commissioner Keena seconded the motion. Motion passed 5-0 IV. Business A. Spiral boulevard Reconstruction Project, City Engineer, Nick Egger City Engineer Nick Egger Presented information to the Authority regarding the Engineering Departments current plans for improvements to Spiral Boulevard. The Project would include changing the existing separated road and ditch drainage system to a 36 foot wide two lane road which would include curb and gutter and a storm sewer system. A trail would be added on the north side of the Spiral Boulevard from Millard Avenue to Highway 316, and along the east side of Millard Avenue connecting bicyclist and pedestrians to the Vets Park Complex. Also as a part of the improvements a ravine trail and improvement project would be completed to better control the serious erosion issues that currently exist in the ravine. This project is proving to be very costly and many things have already been scaled back or eliminated altogether for the overall project scope. One such item is the directional signage throughout the park as well as the monument sign at the Industrial Park entrance. The monument sign was estimated to be around $30,000, with total signage in the park expected to be around $160,000. HEDRA Director Grossman told the Authority that there is approximately $70,000 in the Industrial Park Construction Fund. Previously this fund was used for signage and culverts (unclear about culverts?) for operations. Director Glassman suggested if the Authority was interested the Engineering Department could see if the entrance monument sign could be done for $25,000. If so, the Authority could choose to put $25,000 from the construction fund towards the new sign. Other options include repainting the existing sign, which has been done before. The Authority could also choose to remove the sign altogether and not replace it with anything. HEDRA: 02/12/09 Commissioner Toppin asked what the total cost of the Industrial Park Improvement Project was and what businesses within the park were like to be assessed per foot for their property. City Engineer Eg/c~er responded that the overall project was projected to cost around $4.4 million and that an open house was held earlier this evening to discuss with property owners the project. The estimated assessment to property owners is $75/frontage foot. The average assessment was in the range of $18,000. (The lowest is approximately $4,500, while the highest is expected to be around $60,000). Commissioner Elling Schultz emphasized to the authority that the project has been significantly scaled back from its originally proposed scope. Initially there was to be a new entrance to Vets Park from Vermillion Street, additional trail connections had to be eliminated, and some of the smaller streets within the Industrial Park that were initially going to be rebuilt during the project have also been eliminated. This project has been scaled back from the originally proposed $7.34 million project, due to the current City budget the City can only bond for $3 million, which when coupled with other funding sources would allow for a maximum project cost in the $4.5 million range. Commissioner Toppin stated his feeling that if the City was going to spend $4.4 million on the project the least HEDRA could do was contribute $25,000 towards a new monument entrance sign. Commissioner Keena agreed with spending the funds on the monument sign, but not on the directional signs within the Park. Commissioner Toppin moved to approve spending up to $25,000 from the Industrial Park Construction Fund to assist in building the monument sign, Keena seconded the motion. Motion passed 5-0 B. 23'" Street Connection City Engineer, Nick Egger City Engineer Nick Egger presented the possibility of adding a stop light at the intersection of Vermillion and 23r° Street. In order to do so first a true intersection would have to be created at 23r° Street and a backage road would have to be put in behind the businesses on the east side of Vermillion Street. This would provide them better access to their businesses. If HEDRA and the City want to pursue this, Mn/DOT would require the City to conduct an Intersection Control Study, which would cost about $20,000. Plus an additional $20,000 would need to be spent to study the proposed continuation of 23'" Street to 21st Street and the backage road behind the businesses. Commission Keena inquired whether any property would need to be acquired to complete this project? According to City Engineer Egger, Gahnz Furniture may need to be acquired in order to continue 23Y° Street to the east. Some property through the Gemstone site, as well as property for the backage road behind the existing properties would also need to be acquired. Both Commissioner Elling Schultz and Planning Director Hinzman recall Gemstone being agreeable to possibly selling some of their land in order for the city to build 23ftl Street and the backage road, because this would give them better access to their plant from Vermillion Street. Planning Director Hinzman also stated that based on what the EDC learned while developing the Vermillion Corridor Guidelines, a traffic signal at 23r° street would be received positively by the businesses, as well as the residents in the area. HEDRA: 02/12/09 Commissioner Elling Schultz shared with the Authority that there has been talk about adding a traffic signal at 23f° Street for over 10 years. The EDC fully supported this for the past three years, and by doing the proposed study the Authority would have some definitive answers to whether or not it could even be done. Commissioner Toppin asked for clarification that the first $20,000 would be spent to study the intersection and the possibility of the traffic signal then and additional $20,000 would need to be spent to figure out whether the 23~~ Street extension and backage road would work or not. City Engineer Egger said yes, this was correct and that essentially all $40,000 would be "refunded' to HEDRA if the project ended up being completed at some point down the road. HEDRA Director Grossman told the Authority that there is $45,000 in the 2009 budget for studies like this, so if they are interested they do have the funds to spend. Commissioner Elling Schultz moved to allocate $45,000 to prepare an Intersection Control Study as well as on the layout of 2°~'~° Street and the backage road. Commissioner Hollenbeck seconded the motion. Motion passed 5-0 C. Rehab Programs: HEDRA Director John Grossman presented four building rehab loan programs, Residential Owner Occupied, Residential Rental Properties, Commercial Direct Loans, and Commercial Interest Reduction programs, which have been adapted from the HRA programs. The Authority is asked to approve these for use by HEDRA. Commissioner Toppin moved to continue using the Rehab programs for residential and commercial properties as previously run under HRA. Seconded by Keena. Motion passed 5-0 D. Industrial Park Land Cost/Benefits and Land Prices. Planning Director John Hinzman presented information pertaining to the Industrial Park specific to the land prices over the years and amount of money the City has invested into the park. Director Hinzman discussed the cost of the land in the Park and whether or not that price should be adjusted to better fit the current value. Prior to 2006 the land was valued at $1.35/sq ft, in 2006 the EDC approved raising the price to $2.35/sq ft, which is now high in comparison with the can-ent market value. Since the price was increased, there has not been a single sale in the Industrial Park. Commissioner Toppin reminded the Authority that since its beginning the Land Credit Program was meant more as a way to increase jobs in Hastings than it was about the price of the land. Director Hinzman told the Authority that there is a dental manufacturing lab looking at potentially relocating to Hastings. This individual has been inquiring whether there would be any negotiating in the price of the land to get it down to $1.00 - $1.35. Commissioner Toppin moved that HEDRA recommend to City Council that the price of the land be set at $1.65/sq ft in the Industrial Park. Motion was seconded by Elling Schultz. Motion passed 5-0 HEDRA: 02/12/09 V. Reporks A. Updates 1. Downtown Project Area: a. Greg Stotkds proposal for Block 29 is expected by the end of March and may be reviewed at the April Meeting 2. Vermillion Street Project Area a. Ed Peterson is looking into upgrading the facades on his buildings rather than demolition. Right now HEDRA is just waiting to see what he decides on and will offer what assistance it can if he comes back with any requests for the Authority. b. No new up dates on the Jiffy site c. No new updates to report on the Walgreen's area. 3. 61 Bridge Update Planning Director Hinzman is now compiling weekly bridge updates for Council and staff. One of the current items on the latest update includes information about Hudson Manufacturing. The City has approached Hudson to see if they are interested in relocating to the Industrial Park. The City is still waiting for an answer. 4. Housing Updates a. HEDRA Director John Grossman reported to the Authority that he is still working with a home owner on potential housing assistance to pay utility assessment. The home owner is working with a mortgage company to adjust her loan payment. Until this is determined HEDRA will continue to wait and watch. b. CDA will be receiving money from the Federal Government to assist home owners facing foreclosure. Directors Hinzman and Grossman are still learning more about these programs and will keep the Authority informed as they know more. 5. Budget A snapshot of the current financial budget was provided for informational purposes. B. Website City Community Relations Specialist, Shannon Rausch provided an update on the revised HEDRA website and what all can be found on the site. As the site is finalized it will be presented to the Authority for their review. C. 215 Ramsey and 315 East 3i° Street. a. HEDRA Director Grossman reported that the consultant will be meeting with the realtor on the acquisition of 315 East 3`" Street. Also it appears that the relocation cost will most likely be about 50% of what they were initially expected to be. b. Director Grossman updated the Authority regarding 215 Sibley Street (south half of the Senior Center.) At the March 2, 2009 Council meeting the City Council approved starting the process of looking at acquiring the rest of the building with the intent of expanding the Senior Center in cooperation with the School District. Further updates will be provided as this progresses forward. VI. Adjournment: Keena moved to adjourn at 7:42 p. m., Martodam seconded; motion passed 5-0 Next meeting is scheduled for April 9, 2009 at 6:OOpm in the Council Chambers. Shannon M. 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ÜÞæ ïíèòðð ÝÎæ ðòðð ìóðîóîððç èæïè ßÓ Ü Û Ì ß × Ô Ô × Í Ì × Ò Ù ÐßÙÛæ í ÚËÒÜ æ ìðìóØÎß ÎÛÜÛÊÛÔÑÐÓÛÒÌ ßÝÌ×ÊÛ ßÝÝÑËÒÌÍ ÑÒÔÇ ÐÛÎ×ÑÜ ÌÑ ËÍÛæ Ö¿²óîððç ÌØÎË Ó¿®óîððç ÜÛÐÌ æ ëðð ØÑËÍ×ÒÙ ú ÎÛÜÛÊÛÔÑÐÓÛÒÌ ÍËÐÐÎÛÍÍ ÆÛÎÑÍ ßÝÝÑËÒÌÍæ ëððóêððíóêîðï ÌØÎË ëððóêððíóêìëð ÐÑÍÌ ÜßÌÛ ÌÎßÒ ý ÎÛÚÛÎÛÒÝÛ ÐßÝÕÛÌããããããÜÛÍÝÎ×ÐÌ×ÑÒããããããã ÊÛÒÜ ×ÒÊñÐÑñÖÛ ý ÒÑÌÛ ãããããßÓÑËÒÌãããã ããããÞßÔßÒÝÛãããã ëððóêððíóêìëð Ó×ÍÝÛÔÔßÒÛÑËÍ ö ø ÝÑÒÌ×ÒËÛÜ ÷ ö öóöóöóöóöóöóöóöóöóöóöóöóöó ððð ÛÎÎÑÎÍ ×Ò ÌØ×Í ÎÛÐÑÎÌÿ öóöóöóöóöóöóöóöóöóöóöóöóöóö öö ÎÛÐÑÎÌ ÌÑÌßÔÍ öö óóó ÜÛÞ×ÌÍ óóó óóó ÝÎÛÜ×ÌÍ óóó ÞÛÙ×ÒÒ×ÒÙ ÞßÔßÒÝÛÍæ ðòðð ðòðð ÎÛÐÑÎÌÛÜ ßÝÌ×Ê×ÌÇæ îôðíéòíç îïòïìÝÎ ÛÒÜ×ÒÙ ÞßÔßÒÝÛÍæ îôðíéòíç îïòïìÝÎ April 2, 2009 TO: HEDRA Board FROl\I: John Crrossman RE: Land Credit adjustment Hastings established its Land Credit Program in 1996 because competing cities subsidized the cost of their industrial property to attract businesses. The principle of this program is to treat all applicants the same by defining how the land price is "earned". The method is to sell the land for $1.00/acre and defer the balance of the price (like a loan) thereby allowing the business to complete a building and establish a workforce. Five years later the assessor's value of the building, and the value of the annual payroll are credited against the deferred price using a formula. The benefit of this program is its flexibility. It seems to work for a large variety of projects. See the enclosed summary- To secure the desired outcome the formula needs to be adjusted when the land price changes: the combination of building value and payroll is expected to generate credits that equal or exceed the land price. The formula rewards desirable projects by factoring in: 1. The land price. The existing formula was designed for $1.00 sq-ft. The price is now $1.65 sq.ft., requiring this adjustment. 2. The size of the building. The formula rewinds 20% or more lot coverage, which with parking and drives leaves little unused land or "excess" subsidy. 3. The value of the building. The h~pe of building required under the city appearance standards should contribute around 50% of dte credits. 4. Jobs and the wages. The annual payroll is divided by $27,000 ($13.00 an hour - considered living wage). The resulting "job equivalents" is multiplied by a factor. With a factor of $12,000, three jobs per acre should contribute around 50% of the credits. This formula emphasizes job creation a little more than the previous formula. To account for the higher land price while preserving the desired outcome, the multiplier for each job is changed from $5,400 to $12,000. The examples sho~nn on the next page indicate that the change adjusts for the higher land price. .ACTION: Approve the attached Land Credit Program for future use. a N o ~ ~ ~ O O ~ O O ~ O O m ~ ~ ~ ~ ~ EA p~ I I O e O ~ N N O O O ~ o II > CO ~ O ~ ~ ~ ~ ~ EA O II ~, O a (~') X ~ ~ ~ N ~ ~ Eli N ~ U ~ v -6 ~ a Ol ~ N ~ N N U ~p N C O O ~ > U N ~ .~ '6 ~ Q O m Q° ~ O N m ~~ U U ~ a ~ O °"~ ^ ~ o ~ O o U Q rn ~ o o ~ a o ~ 0 W o °o o ~ ~ o~ ~ Eq rn ~ ~ o o p O ~ N W J I~ O 4) o ~r~j ~ II o b9 Q ~ ~ ~ ~ ~ O O ffl ~ ~ N ~ L!J O] II O II W ~ p II > 0] N O o Z W a ~ o II > O O o U O L(] ~ O O U ~ ~ d ~ ~ ~ a O X ~ ~ z ~ ro Y ~ ~ ~ ~ ~ Ff3 N W ~~ X fA D O ~ N fl3 N LL'J N Q~ ~ Q ~ N m W ~ ~ O] Q ~ a~ O ~ y O Y a~ ~> o ~ o ~ m W p m ~> o ~ o Z Q CO Q~ ~ N U 0] Q ~ N m Q N ~ N U W J a Q a 0 m W (D ~ o N O O O ~ ~ O ~ LLJ O O O a ~ ~ N IyJ (D ~ N C7 p~ II o ~ ti ~ O C] EA ~ L7 ~ `~ ~ ~ O ~ ~ O ~ ~ ~ I I d~ ° I I > ~ O O O t a l l ~ N o I I > O ~ E» ~o ° ~ om ~ amino °o ~ ~ "' Q th ~ ~ N ~ Ef3 N ~ W Efl EA N LL'J N X +- > EA ~~ ~~ ~ a~ a ~ ~ ~~ N a~~ ~ m a~ o o m ~~ Y v ~ ~ °c~ o o m ~ asi .N. ~ m ~>°o N~ a m o~ -o>oo ~~ a ~ o ~ ^_ ~ o ~ O Q D7 Q~ ~ N O 0] ~ N 07 Q N ~ o] O O EA N a a~ U t6 f6 0] 0 O SUMMARY OF LAND CREDIT PROGRAM This is a brief outline of the program under which the City (Council and HEDRA) considers a request to sell Industrial Pork land at a price below the market to encourage development. The City has the stahttory authority to do so (465.035; 469.101). The value of dte difference between the market price and the city price is a business subsidy. The Hastings program takes dte form of deferring full payment for the land for five years and deducting credits based on building value, jobs and wages from the deferred land price. A. LOCATION AND TYPE OF BUSINESS. Land credits can be used when the City owns the land as in the Industrial Park. The business has to be permitted in an industrial zone, such as manufacturing, processing or wholesaling. Businesses that need a special use permit to locate in the Industrial Park can be considered for the land price subsidy. B. TYPE OF BUILDING. The Economic Development Commission advises all applicants for the land price program that building has to meet the design standards adopted for the type and location. C. AMOUNT OF SUBSIDY. The price of the land is set by the City Council. At this time it is $1.65 a sq.ft. or $71,874 per acre. The development agreement stipulates that the purchaser will pay a nominal price, $1.00 an acre, and the balance will be deterred for five years. For one acre, flee subsidy would be $71,873. D. BUSINESS SUBSIDY REQUIREMENTS. The City and HEDRA have adopted criteria for the approval of business subsidies, including land price reductions, required by the Business Subsidy Act (1167.933-955). The grant of a business subsidy requires public notice, public hearing and approval at a public meeting. The current threshold of a business subsidy is a value of $150,000. The recipient of a subsidy has to sign a subsidy agreement stating specific job and wage goals and making a commitment to remain in operation in the Cily for five years or repay a prorated portion of the subsidy. The recipient agrees to report progress to the City annually. Failure to meet the goals requires reimbursement of a prorated amount of the subsidy. E. SECURITY. The purchaser executes a development agreement recorded on the land title. If the developer/owner does not complete construction of the building, meet its job and wage goals as reported to flte state, defaults on the development agreement, or the city credits do not cover the subsidy, a prorated amount of the subsidy will have to be paid to the City. The purchaser's lender will have to acknowledge the purchaser's obligation to the City. The agreement gives the City the right to assess the reimbursement against flte property. F. CALCULATION OF CITY CREDITS. The purchasers propose to construct buildings on the site of a given assessor's value and propose an estimated annual payroll of a given value at the site by a date five years after hansfer of the property. The proposal will be used to estimate the land price credit for the agreement. However, the actual value of the credits will be calculated no later than the "benefit date": the fifth annivers:uy of the release of the Certification of Occupancy. 1. The constuction credit is the value of the buildings on the site, excluding land value. The assessor's market value fiom the January preceding, is divided by 10 for the vuount of the credit. Example: building valued by the county assessor at ~~700, 000 divided by 10 = $7Q 000 credit. 2. The jobs credit is based on the amount of the payroll for the last 12 months or most recent four quarters, documented by the business' 1\IDES-1 forms. Adjustments maybe made for the payroll at the time of the sale and for the owner's compensation. Divide the payroll by $27,000 (a full time job at $13.00 an hour) for the number ofjob equivalents. Multiply job equivalents by $12,000 for the amount of the credit. Example: 1 ~ month payroll of $~OQ 000 divided by $2? 000 = 7job equivale~xts; ZY~'I2,000 = $84,000 credit. 3. The value of both credits is subtracted from the amount of the subsidv. If they exceed the subsidy, and all other terms are met, the City will certify that the purchaser has completed the conditions of the development agreement. Upon certification of construction credits and job credits a satisfaction will be recorded releasing the purchaser from those repayment obligations. Example: The owner received title to two acres. The s~sbsidy is valued at $143, 746. Five years later, the credits shown above total $154, 000. The owner does not owe the Cil_y because Llxe credit exceeds floe land value. 4. If the credits exceed the subsidy, the owner receives a Certification of Satisfaction to be recorded. If the credits do not equal or exceed the value of the land, the prorated balance is due and payable to the City. If the company does not pay the Cily, that balance will be assessed against the properl}- in the same manner as public improvements. The balance would also be due immediately if the owners default on the agreement or sell the property prior to receiving a certification of satisfaction. G. The law also requires that subsidy agreements and the agreed goals are reported to the state. The report will include the number ofjobs created by the purchaser of the land or by the tenants on the site, the hourly wage and the hourly value of medical insurance. The City will provide reporting forms in early February which must be returned by Much 1~ annually until the goals are met. A job is considered a full time equivalent, or 2080 hours of work per year. Landaeditsununan-.doc1-09 7 Compai7son of the Land Credit Program and the Business Subsidy Law YEAR CITY LAND CREDIT STATE BUSINESS PROGRAM SUBSIDY LAW Close land sale -this is the Development Agreement Business Subsidy .Agreement benefit date in the agreement recorded: payment of full recorded: developer commits for the land credits. land value is deferred for five to job & wage goals and years at which time building commits to continue Certificate of Occupancy - and payroll credits u'e operations at the site for five this is the starting date for calculated and subtracted vein's. State wage and job goals. from the balance due on the land. 1st anniversary of benefit nfay have met job & wage date. goals per subsidy agreement. 2°`~ anniversary When the assessor has valued lAfust have met job & wage the new building and the g°als unless request for one business has twelve months ye:u' extension is granted. of payroll records for the uew site, may request the City to calculate whether the credits exceed the subsidy. 3"~ anniversary same as above A,fust have met job & wage goals or pay back pro rata share of land value. 4~~' anniversay same as above Must still be in operation to this date or pay back pro rata share of land value. 5~~' anniversary Credits must be calculated as lAfust still be in operation to of this date if not already this date or pay back pro rata done. If credits do not sh:n'e of land value. exceed the full value of the land, developer must pay back the balance. SUMMARY: Fulfilling the conditions of the land credit program does not exempt the developer from the conditions of the business subsidy act, or vice-versa. The terms of both agreements have to be met or a prorate Share of the land value will have to be paid to the City. 4 1303 Eddy Street Hastings, MN 55033 P: 651-480-0055 F: 651-480-0079 www.stotkospeedling.com John Grossman City of Hastings th 101 4 Street East Hastings, MN 55033 Dear John, Stotko Speedling Construction is pleased to present a proposal to purchase Lots 1 & 2, Block 29. Based on the information supplied in the Request for Proposal we propose that the purchase price be $1.00. This is due to the cost of constructing a new building of approximately 6,500 square feet along with site improvements. The costs involved with constructing and financing a project of this type compared to the lease rates required to support this facility make the project extremely risky. We are also requesting that this offer be valid for a minimum of three years from the date of acceptance until the land closing. The building will consist of two to four office suites depending on final layout of floor plans. It will be a slab on grade, wood framed structure with a brick, hardie-plank siding and shingled roof. There will also be some standing seam roofing at shed roof areas. This is a preliminary design for your consideration and discussion. The schedule is determined on tenant interest and financing. Once these are achieved the project duration will be approximately six months. As another option to this proposal would be to consider negotiating a land swap with the property we own at the corner of Westview Drive and South Frontage Road. Thank you for consideration of this proposal and look forward to hearing from you after you have met to discuss with the HEDRA. Sincerely, Greg Stotko RFP for Lots 1 and 2, Block 29 Hastings, MN Project CostsPaid Hard Costs Shell Construction Costs (6500 sf X $125)812,500 Interior Build-out Costs (6500 X $25)162,500 Land1 SAC/WAC (2 Units @ $4,500 ea)9,000 Total Hard Costs$984,001 Soft Costs Architect & Structural Fees30,000 Civil Engineering Fees10,000 Levied Assessment0 Sewar Intercepter Fees ???0 Park Dedication Fees ???0 Testing5,000 Marketing Costs5,000 Legal Fees10,000 Consulting Fees0 Broker Fees (6500 x $3)19,500 Appraisal5,000 Environmental (Soil Borings)5,000 Inspecting Architect ($200 Each Visit)1,000 Origination Fees 1%7,000 Title Fees 1.5%11,000 Interest Reserve15,000 Sub-Total123,500 Contingency 5% of soft costs6,175 Total Soft Costs$129,675 Total Project Costs$1,113,676 Down Payment 20%222,735 Loan Amount$890,941 Total Cost with Land for $140,400$1,259,325 Down Payment 20%$251,865 Loan Amount$1,007,460 04/07/2009 Stotko Speedling Construction, Inc. ~,. , . i 1 0 `-,--.~_:~., ;1 QA'W ~ . 'SV-. W v4U'EA:4 ~ _ a.L4~66',1x76 ~ . [~I ~~ it ~ - n N __ S ~~ t ^~ ~ ~~ ~ ` ~, ~ ~ ~~ ~~ ,~ I~ n _. ~3 ~ N 1, i ~ m ` [ ,y R .. ~ ~ (11 f„ ~ 7 :~, ~ ~~ :~ ~~ ~ ~~- ~ i - ~ iaaai.s wa~e~s I '~ •. lb 00'Ob4, Bti3W 96'6EL 3~~Lb,6bedOS . ~ •. ' w ~ ~ ~~ ~ ~4 zz ~ N ~~ ~ w\ z ~ N _ J o ~ ~ ~ a =' a ~ m I ~ ~ ~ °~? a x ' N ~ __®__ ________ ~ Z ~ - _ ~ ~ I~ ., ~ ,`~•. s ~ c z g ~~ om _ I 0 W ~ ~ I m LO'Obl M~~LQ,Lb,00N m {7 0 ~ a Z Z 12' ~~ In ~ u~m ~ ~ ~ ~~'ob~ M.se~sbemN - - - - 1~4' ~~u ^I ..- ~' ~" Memo To: Hastings Economic Development and Redevelopment Authority From: John Hinzman, Planning Director Date: April 9, 2009 Subject: Preliminary Land Credit Sale and Concept Plan -Red Wing Dental Arts -Lot 7, Block 2, Hastings Industrial Park No. 7 -Lightbourn Court REQUEST Gary lotto of Red Wing Dental Arts seeks to acquire Lot 7, Block 2, HASTINGS INDUSTRIAL PARK NO. 7. The 1.0 acre property is located on the northwest corner of Lightbourn Court and 315 Street East. The following HEDRA actions are requested: 1) Preliminary approval of a land credit for property acquisition. Land credits would exceed the cost of the property (using either the existing or proposed amendment), allowing the land to be sold for one dollar. Preliminary approval will set the property aside while complete plans and a development agreement are drafted and submitted for final approval. 2) Concept plan review to construct a +1.6,048 manufacturingloffice building. Mr. lotto has provided preliminary floor plans and elevations. Final Site Plan approval will be necessary prior to execution of the land credit agreement. RECOMMENDATION Approval of the preliminary land credit and property sale is recommended. BACKGROUNDINFORMATION Red Wing Dental Arts Red Wing Dental Arts is afull-service dental laboratory, with facilities in Red Wing and Cottage Grove. The laboratory produces dentures, partials and restorations. Gary lotto serves as President of Red Wing Dental Arts as well as Managing Partner of Labboy Enterprises, LLC the proposed property owner. Please see their web site http://www.labboy.com for further information. Red Wing Dental Arts- Land Sale\Conceptual Site Plan Review HEDRA Meeting-April 9, 2009 Page 2 Comprehensive Plan Classification The use conforms to the 2020 Comprehensive Plan. The subject property is classified I, Industrial. Zoning Classification The subject property is zoned I-1, Industrial Park. Manufacturing and offices are permitted uses in the I-1 district. Adjacent Zoning and Land Use The following land uses abut the property: Direction Existing Use Zoning Comp Plan North Vacant I-1 -Industrial Park I -Industrial East Lightbourn Court Vacant I-1 -Industrial Park I -Industrial South 315 Street DNR Land Marshan Twp Marshan Twp West Midwest Products I-1 -Industrial Park I -Industrial Existing Condition The existing site is flat and treeless. The lot was rough graded for development as part of the Lightbourn Court improvements in 2006. BUSINESS SUBSIDY ANALYSIS Summary Land credit for 1.0 acres valued at $295,833 to construct a 6,048 s.f. manufacturing and office building at a cost of $425,OD0 and create 14 jobs at no less than $13.00 per hour. Market price of land is $71,874 (1.0 acres x $1.65 per s.f.). Land could be sold for one dollar subject to meeting land credit requirements within five years. Justification for Subsidy • Increase tax base by selling currently tax exempt property owned by the City to a private entity. • Creation of 14 new living wage jobs. • Promised jobs equate to 14 jobs per acre, exceeding the minimum benchmark of 3 jobs per acre. • Building coverage and parking will exceed the 20 percent minimum lot coverage objective. • Proposed use serves as a good transitional use between more intensive industrial development and nearby residential areas. Red Wing Dental Arts- Land Sale\Conceptual Site Plan Review HEDRA Meeting-April 9, 2009 Page 3 Land Credit Calculation The new proposed land credit calculation was used to determine credits as follows: • Amount of Subsidy: $71,873 (value of 1.0 acres less $1.00) • Estimated Building Credit in Five Years: $42,500 = ($425,000 * 10%) • Estimated Payroll Credit in Five Years: $253,333 = ($570,D00 payroll / $27,000) $12,DDD • Total Estimated Credits: $295,833 = ($42,5DD + $253,333) • Estimated Balance Due in Five Years = $0 Land Credit Requirements 1) Complete a 6,048 s.f. building with an estimated cost of $425,000 within one year of executed agreement. 2) Create 14 new jobs at no less than $13.00 per hour within five years of receiving a certificate of occupancy for the building. 3) Remain in business in Hastings for at least five years from date of occupation. 4) If the above requirements are not met, the owner has to repay the City a prorated share of the subsidy. CONCEPTUAL SITE PLAN REVIEW Red Wing Dental has submitted a floorplan and architectural elevations. A concept site plan has yet to be submitted. The following comments serve to guide future site plan development and are based on the information received and property characteristics. Site Plan Approval Site Plan approval through the Planning Commission and City Council will be necessary prior to execution of the Land Credit agreement. Use Construction of a +/- 6,048 s.f. manufacturing\office facility for manufacturing of dental products and associated office space. Red Wing Dental Arts- Land Sale\Conceptual Site Plan Review HEDRA Meeting-April 9, 2009 Page 4 Zoning Setbacks Setbacks in the I-1 District are not specified. It appears the lot provides adequate room for construction of the proposed building and associated parking consistent with adjacent setbacks. Access and Circulation The property is located at the corner of Lightbourn Court and 315 Street. Mr. locco has indicated a preference fora 315 Street entrance. Adjacent properties have multiple accesses on different streets. Parking The site must provide 21 parking spaces based on preliminary estimates. Parking for office uses is calculated at 1:300 s.f. All parking and driveway areas must be constructed of bituminous surfacing and concrete curb and gutter. Parking Lot Setback Parking lot setback will need to be further examined upon site plan submittal. Architectural Building Elevations Architectural elevations need further examination. Industrial warehouse and manufacturing buildings require a combination totaling 75% of Class 1 and 2 materials (per the zoning ordinance) on front facades. The proposed brick and glass are listed Class 1 materials, the proposed Smartside Siding (a treated engineered wood siding) might not be considered as a Class 1 or 2 material. Landscape Plan & Berming A landscaping plan will need to be submitted Grading and Utility Plans A grading and utility plan will need to be prepared as part of Site Plan approval. Stormwater Drainage A Stormwater drainage plan will need to be prepared as part of Site Plan approval. ATTACHMENTS Location Map Site & Building Plans Application for Land Credit Print Preview Dakota County, MN Page 1 of 1 1= 1" ~~ _. 1 ~ ~ ~ _ ~ ~~~ _ - ~. f., ~ fl' , r- ~j ~ iw9 ` {.'. ~. ~j ~ f' ~~ ' .:~ ~ 'rF'.i _ 4 Proposed Site ~~ _ gl. *~ "C k' ; o- .y~ ~ qgy~~~ 3 J+~ ,: • ~~ ~~- *~i '~ iqh !~ Disclaimer: Map and parcel data are believed to be accurate, but accuracy is not Map Scale guaranteed. This is not a legal document and should not be substituted for a title search, ~ inch = 378 feet appraisal, survey, or for zoning verification. http://gis.co.dakota.mn.us/wehsite/dakotanetgis/printPreview.aspx'?PrintOptData=Dakota C... 4/3/2009 ,k -~ - 4 .. ,~ ~ _ r ~ ~' i ~ ~ ~ ~ ~ h ~ t ~ I i ~ o 3 - ~ ~ X -m ~ 'I x ~ K I .. r ~ c / n 7 5 I X I ~ ' __ ~ ~ i w ~~ v Y i ~ ~ 1~ ' ~ {' 2 I~ ~ i Y .. + f2 s i. ~ ._ _~1 t. ~ V I } ~ V ' I. ~ ~ a * __.._ ~ ~ ~ (~ I _ A P x I // t '~ ( !~~ j\ , ~, T itl~~ 1 t 'v 1 !^ l ./~. 'Y ~~ ~_. "" ~ ~ - ~ S a' _,..<_ I ~ :~ '~ ` ~ ~~ 3 w 7 d i~ April 2, 2009 John Hinzman City Of Hastings Dear John, Enclosed please find our land needs some areas filled in wit of the land. We are looking at Please contact me with any questions you, As we discussed on the phone, it e as of yet, such as legal description Court. ~Empress~`'e~~~;I.abm r~dit~ provisional & diagnostic resin ESTHETIC ,..~-- E'I~BCISI011 S~:~Iliti~~ns a w is a A INFORMATION FOR LAND PRICE SUBSIDY AGREEMENT 1. Name, address, phone of developer (the persons or entity that will he the owner of the land) Gary Iocco Labboy Enterprizes, LLC 1434 Old West Main Street, Red Wing, MN 55066 651-388-4464 2. Developer's type of entity (corporation, partnership} recorded with the Secretary of State Limited Liability Corp. 3. Developer's Federal Tax ID number 4. Full names and title (president, etc.) of those signing agreement for the developer Gary Iocco, Managing Partner 5. Property: the acreage and legal description of Che city property to be sold (2.1): 6. The market value of the property to be acquired (3.2) 7. The agreed purchase price -(3.2) 8. Difference between purchase price and market value of the property, the subsidy (3.8}: 9. Date to which payment is deferred (3.8) 10. Costs Co be paid before or at closing (3.4, 3.5) (examples listed, note any changes) a. By City: Title update or abstract continuation Boundary survey of parcel Deed Tax Conservation Fee b. By developer: 4 Purchase price Title insurance commitment Survey far elevations & site plan Environmental phase I if required Attorney and consultant fees for agreements, financial reviews and applications Recording fees for deed mortgage & development agreement 11, Proposed size and markeC value of buildings to be constructed on the property(2.2) 6048 Square Feet, $425,000.00 12, Proposed annual payroll (increase over existing) an the property in five years (2.2} $s~a,ooo.oo 13. Estimation of credits (3.8} See examples in summary. a. construction credit example b. jobs credit example 14. Job and wage goals to be reported to Minnesota Department of Trade & Economic Development. (3.9) to comply with Business Subsidy Act. a. Number of new jobs created by the business two years from occupancy: 12 b. Hourly wage of new jobs ro be no less than: Entry level $10.00 We farely hire entry level, other wages $15.00-24.00 per hour i 15. Construction (4.3) a. Building construction costs (include parking lots, not land): $425,000.00 b. Approximate beginning and completion dates of construction and all site work: We would hke to start constmction by June 1, 2009 if all permits have been obtained 16. If the d~veloper is not the same entity as the business which will occupy the building and provide Che job creation, provide the following for each tenant: a. Business name Red Wing Dental Arts b. Address and phone Same as developer c. Names and titles of owners of the business Same d. Type of entity recorded with state e. Tax ID number of business. 41-1.314441 f. Nature of the business (what product, process, material) Dental laboratory g. Percent of building space to be occupied by business 100 h. Number of the jobs given above (14) that this business be responsible for: 17. Recent history of the business or if new, the owner's experience in the business and/or resume (Use separate page and business letterhead if available}. 18. Business references, contact person and phone number: a. banker Bruce Downey, Gateway Bank, Mendota Heights, MN 651-209-4800 b. supplier c. customer 20. Project finances a. Uses of funds b. Sources of funds 6 fees $ soft costs $ construction $ equipment $ developer's cash loans (by lender) public funds (not land) Totals: $ $425,000.00 21. List all lenders, contact persons, phone numbers Bruce Downey, Gateway Bank 651-204-4800 $ $ 22. List all sources and amounts of public assistance including land, government loans and grants (including those you have or may apply for} Hastings Land subsidy program 23. The developer will have to provide business financial records to a consultant hired by the City. The information will be confidential to full extent the law provides. 24. Any lawsuits or actions pending against the developer, busines(s) or partners? No 25. Name, title, signature of person providing the above information. Gary Iocco , N~anaging partner Labboy, LLC and President Red Wing Dental Arts date