2017.10.03 EDA Meeting PacketAGENDA
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF CRYSTAL
• REGULAR MEETING •
TUESDAY, OCTOBER 3, 2017
7:45 P.M.
CRYSTAL CITY HALL
COUNCIL CHAMBERS
Call to order *
2. Roll call *
3. Approval of minutes from the September 19, 2017 special meeting
4. Consider resolutions pertaining to 5900 56th Avenue North **
a. Resolution authorizing demolition of the existing building
b. Resolution authorizing re -sale of the existing building
5. Other business *
6. Adjournment *
*Items for which no materials are included in the packet
**There will be an opportunity for the public to address the EDA on this item in the
same manner as at City Council meetings.
Minutes of the
Crystal Economic Development Authority
Special Meeting
September 19, 2017
President Kolb called the special meeting of the Crystal Economic Development Authority to
order at 6:45 p.m.
Upon call of the roll, the following members were present: Jim Adams, John Budziszewski,
Elizabeth Dahl, Julie Deshler, Jeff Kolb, Nancy LaRoche and Olga Parsons.
The following staff members were present: Anne Norris, Executive Director, John Sutter,
Deputy Executive Director, and Troy Gilchrist, City Attorney.
Motion by Commissioner Adams (Budziszewski) to approve the minutes of the August 15, 2017
regular meeting.
Motion carried.
The EDA considered a resolution requesting a hold on the auction of tax forfeited property at
5203 Angeline Ave N.
Mr. Sutter presented the staff report and took questions from the Board.
Motion by Commissioner Adams (LaRoche) to recess the EDA meeting until after the City
Council meeting.
Motion carried.
The EDA recessed at 7:01 p.m.
The EDA reconvened at 7:50 p.m. and continued consideration of a resolution requesting a hold
on the auction of tax forfeited property at 5203 Angeline Avenue North.
Motion by Commissioner Deshler (Adams) to not request a hold on the auction of tax forfeited
property at 5203 Angeline Avenue North.
Motion carried 6-1 with Commissioners Adams, Dahl, Deshler, Kolb, LaRoche and Parsons
voting aye and Commissioner Budziszewski voting nay.
Motion carried.
Motion by Commissioner Deshler (LaRoche) to adjourn.
The meeting adjourned at 8:03 p.m.
Page 1 of 2
Motion Carried.
ATTEST:
Olga Parsons, Secretary
Page 2 of 2
Jeff Kolb, President
MY of EDA STAFF REPORT
CRYSTAL, 5900 56th Avenue North
FROM: John Sutter, Community Development Director
DATE: September 28, 2017
TO: Anne Norris, City Manager (for October 3 EDA meeting)
SUBJECT: Consider resolutions authorizing either demolition or re -sale of 4-plex at
590056 th Avenue North
STATUS RECAP
At this time three tenants have relocated and the fourth tenant is expected to relocate within
the next few days. 4-plex expenditures to date are $366,000 which includes relocation of three
of the four tenants. The major remaining expenses are relocation of the fourth tenant,
asbestos abatement, and either demolition (Option A) or parking lot construction (Option B).
SEPTEMBER 19 WORK SESSION DISCUSSION
After the EDA discussion at the September 19 work session, the EDA President asked staff to
present two options for EDA consideration on October 3:
Option A: Demolition of the 4-plex and sale of the lot for new home construction together
with the sale of new home lots at 5612 and 5618 Adair.
Option B: Re -sale of the 4-plex with a new parking lot on some of the vacant Adair land to
the west, together with the sale of a new home lot at 5618 Adair.
Page 1 of 4
ATTACHMENTS
A-1 Resolution authorizing staff to proceed with demolition of the 4-plex (Option A)
A-2 Estimated expenditures and revenues for Option A
A-3 Concept sketch showing three lots with examples of new single family homes recently
built elsewhere in Crystal
B-1 Resolution authorizing staff to proceed with re -sale of the 4-plex (Option B)
B-2 Estimated expenditures and revenues for Option B
B-3 Concept sketch showing the 4-plex with new parking lot on Adair and one lot with an
example of a new single family home recently built elsewhere in Crystal
GENERAL CONSIDERATIONS
• Both options are intended to illustrate a "package deal" that includes not only the 4-plex but
also the Adair land. Therefore the estimated expenditures and revenues related to the
Adair land have been added into both options.
• In both options, because of the overhead power lines running along the north side of 5618
Adair, the lot line between 5618 and 5612 Adair would be shifted 10 feet south so 5618 is
75 feet wide. This still leaves 5612 Adair with plenty of room for a new house (Option A) or
a parking lot for the 4-plex (Option B).
• The estimated costs assume none of the work being done in-house. However, demolition
of the 4-plex (Option A) and some of the parking lot prep work (Option B) would likely be
done in house. To keep the two scenarios "apples to apples", the estimated costs assume
contracting out all work.
THE OPTIONS IN DETAIL
OPTION A: Demolition of the 4-plex and sale of the lot for new home construction
together with the sale of new home lots at 5612 and 5618 Adair.
• Estimated net expenditure is $321,000.
• The three new homes in the concept sketch are based on the following new
homes recently built in Crystal:
— 5618 Adair: Novak Fleck home at 5209 49th (but reverse plan)
— 5612 Adair: Novak -Fleck home at 4553 Hampshire (but reverse plan +
three car garage)
— 5607 Zane: Tollberg home at 5924 Elmhurst
• Lot prices are estimated at $50,000 each. All three lots have different positive
and negative attributes that roughly balance each other out. Given the
strength of the single family residential market, staff would not recommend
selling the lots for less than $50,000 each.
• Option A could be chosen if the EDA believes that the 4-plex has not
been and never will be a good fit for this location, the addition of a
parking lot and more green space around the building will not change
that, and single family homes are the right land use on these lots.
Page 2 of 4
OPTION B: Re -sale of the 4-plex with a new parking lot on some of the vacant Adair
land to the west, together with the sale of a new home lot at 5618 Adair.
• Estimated net expenditure is $119,000.
• The new home shown at 5618 Adair is the same as in Option A.
• The new parking lot's curb & gutter and bituminous paving would have to be
contracted out, as would the 6' high screening fence on the Zane side of the
4-plex . The cost estimate assumes we have to pay a premium to get this
work done before the end of the season (early -mid November).
• Staff estimates that, after making these site improvements, we would re -sell
the 4-plex for $330,000. We recognize that this is not much more than the
$295,000 the EDA paid for it in May and other offers may have been higher.
Staff opinion is that $330,000 is the right price point to use in the decision-
making process for the following reasons:
— The seller told us that most of the other offers did not assume the special
assessment for the street project — the seller would have had to pay that.
— Other buyers may not have been concerned about the site issues like the
bad parking layout. The full cost of the new parking lot won't be recouped
in the sale, just as most home improvement projects don't result in an
immediate dollar -for -dollar increase in your property value. The benefit of
the new parking lot, and the reason for the EDA to do it, is to improve the
function and appearance of the site and traffic safety on Zane.
— Rents for 2BR 1BA units in this area range from $1.08 to $1.29 per sq. ft.,
and average $1.16 psf. All of these units are in larger buildings and some
have garages, pools and balconies in addition to off-street parking. At
$1.16 psf the 4-plex would rent for $835/month. Even using the highest
comp ($1.29 psf) the 4-plex would rent for $930/month. $900/month
seems like a fair figure for these units after they are cosmetically
renovated. Using a reasonable cap rate of 6.8%, the after -renovation
value of the 4-plex probably would not exceed $380,000.
— The best comparable sale for the 4-plex is a similar building at 4733
Welcome which sold for $395,000 in early 2017. But the apartments in
that building were all renovated right before the sale. Also, the site and
location are better (no busy street, nice big backyard, etc.) Again,
$380,000 for an after -renovation value for the 4-plex seems about right.
— The EDA will be selling the building "as -is" and the new owner will have to
make investments in the building on top of their purchase price. In the
short term, at minimum, the apartments will need cosmetic renovations.
$330,000 is a conservative estimate for a before -renovation sale price.
— The EDA may not want to take the highest offer. You may also want to
consider a buyer's track record and ability to make needed improvements
to the building. If the EDA sells it to a buyer who doesn't have the
experience or resources to take better care of the 4-plex than the previous
succession of owners, then the downward spiral could begin anew.
Page 3 of 4
• Option B could be chosen if the EDA believes that the 4-plex's main
problems have to do with the existing site improvements which would
be corrected by Option B, and also because of its estimated $202,000
lower cost than Option A.
STAFF RECOMMENDATION
Staff recommends Option A for demolition of the 4-plex and sale of the lot for new construction
together with the sale of new home lots at 5612 and 5618 Adair.
REQUESTED EDA ACTION
Adoption of either resolution (Option A or Option B).
Page 4 of 4
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF CRYSTAL
HENNEPIN COUNTY
STATE OF MINNESOTA
RESOLUTION NO. 2017 - 12
RESOLUTION AUTHORIZING DEMOLITION OF 5900 56TH AVENUE NORTH
WHEREAS, the Economic Development Authority of the City of Crystal (the "EDA") has
purchased the property at 5900 56th Avenue North ("the Property"); and
WHEREAS, the EDA has evaluated several options for the disposition of the property; and
WHEREAS, the EDA has concluded that the existing building is a blighting influence on the
neighborhood and demolition is the best course of action, as described in Option A presented in
the staff report dated September 28, 2017.
NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority of the City of
Crystal that staff is directed to proceed with demolition of the existing building and marketing the
lot for construction of a new single family home at the earliest practicable opportunity.
Adopted this 3rd day of October, 2017.
Jeff Kolb, President
Anne Norris, Executive Director
A -I
4-PLEX AT 5900 56TH AVENUE NORTH (BASS LAKE ROAD)
OPTION A: DEMOLITION OF 4-PLEX
ESTIMATED EXPENDITURES
$15,000
Acquisition - Adair land (2015)
$295,000
Acquisition - 4-Plex $295,000 list price $310,000 2017 EMV
$9,100
Special assessment for street reconstruction
$3,600
Legal services, title insurance & closing costs to acquire property
$60,000
Tenant relocation - rent differential
$77,900 Tenant relocation subtotal
$5,400
Tenant relocation - moving expenses
$12,500
Tenant relocation - consultant
$2,500
Other professional services (property survey, asbestos survey/testing)
$27,500
Demolition & site clearance
$12,000
Water & sewer services for 5618 Adair
$12,000
Water & sewer services for 5612 Adair
$3,000
Transaction Costs
$13,850
Contingency for unforeseen (10% of above items except acq. & spec. asmt.)
$471,450 Total Estimated Expenditures
Sale Price
($50,000) 5618 Adair (for new home construction)
Sale Price
($50,000) 5612 Adair (for new home construction)
Sale Price
($50,000) 5607 Zane (for new home construction)
$321,450 Net Expenditure by EDA (to be paid from EDA cash balance)
A-
2
CITY OF CRYSTAL
873.5
Pole
e,IA
� Res/dente
673.8
Garage
verhead Wires
Property located in Section 4, Township 118, Range 21,
Hennepin County, Minnesota.
Property Address:
5926 56th Ave. N., Crystal, MN (PID No. 04-118-21-32-0088)
5612 Adair Ave. N., Crystal, MN (PID No. 04-118-21-32-0089)
5618 Adair Ave. N., Crystal, MN (PID No. 04-118-21-32-0090)
Benchmark: Hennepin County Geoid Model
Basis for
bearings is
assumed
I
I
I
I I
he
871.9 I I
71,9-
- - - - - - I
Power - - - - -
I I Po% I
I�
Chain link fence south of line 0.5 1 , I I
31' I
`' ice, I �ijhed I
1 .) I 871.5
i` rs
873.4 75 ,' I
0
I 5 ma le
YvO<ICr
� I
o�
5 U o I
I---- 8^�
872.7 --- I
I O -
I
CV
1972.89
2"tree I CO I
873.3 i I
16' O > t
873. l I 0 ♦ i
1
I I I `. Fence No th of 0.9' 29.8
I 8 aple 1 Residence � � --� -�
8 I 873.3 872.0= 87. / I ante 5e1th hne 0.9'
'
111f1fe5 e' � � �
3'Eree I Garage Overh w�#
I°
873.3 �� I a lW✓ : Cod ° da+°
I � 7 .6 I ar. con clear O. 2 'tree � me r e . 9 � _ d : ° .I• ° .
L------ -----_---- - I F m =MF 41 82. 87f3 571.2
Catch Basi 872.52 Ll.l - vd� 3 ° 2 ee am Bnk u
870.8
- I S 89°43'55" E 133.67 Mea h
w p, 133.9 Pat \ 871 J osure -..
I I x
-IV ;:-;-:;;�:':metalanchor;. :•:.:: s,
I I O ° I i 873.1 \w w�wtiy w `Wc meter as
Si9P Z to birch I I 873. 872.7
I b 873.52.2
co:' m o
"tPea 1 1 1
115 I mnc eteppe -..:.'� p
3. �� p) �; r. �':.: a....'.:.
Utility Easements yl I, I I ❑ N t 7 m
yTr `�- I I 873.0 _ .. , q 1... ?: 871.7 Opp
I �O II � I doer sdl }� 'g .: •`�:;� c:..: �� C7 K
/ I No. 590 docr a/[ Y : ;{;r; O
873./ 57 '. ee 873.0 �T
`` I door sdl .±�.; :.`•!: �.:
7� 7P. 7 Y ,I I 872.9 w._u:...,..rq :'`'$; ,
l I I 62.2 I
L=66.97
A=03'
872.6
R=1038.00 r
m I I :.0 ncr Lonc_e°Ee... _.j:.v.'•
C? A=03°41'48. I = I
873.4 Lght Po/e ,_I \ I I Power Pole <�'•',:`.,..'.,.; .."...: .
w/anchor ..71.:', �O�
° e .. a 873.3 e .......\`...... _ - 871.1.
.34
3 ` - Chd. Br9-=N86°2043°W ° / Ir-� C 7/.2
_on
ca c t e a -,; B7zi B L=113.89 R=982.00 p=06°4T00"N89°44'13" >.
9 T.' --
I
- -------------------I a4•' Concr'e to �l'Ya.lk tie cb° ^'� ,
5 �
` �-/ /j A - - \� - - - Concrete Curb
(7 T / VE N° \ � onion ofLot 9 condemned for Road purposes
o� per doc, no. 4688945 & 5185632 3E CORNER OF LQT 9 p m
(County road No. l OJ 56TH AVE N.
/ Manhcle�87f•3 ' O
1Y
A-3
ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF CRYSTAL
HENNEPIN COUNTY
STATE OF MINNESOTA
RESOLUTION NO. 2017 - 12
RESOLUTION AUTHORIZING RE -SALE OF 5900 56TH AVENUE NORTH
WHEREAS, the Economic Development Authority of the City of Crystal (the "EDA") has
purchased the property at 5900 56th Avenue North ("the Property"); and
WHEREAS, the EDA has evaluated several options for the disposition of the property; and
WHEREAS, the EDA has concluded that installation of certain site improvements will improve
the long-term prospects of the building and desirability on the open market, as described in
Option B presented in the staff report dated September 28, 2017.
NOW, THEREFORE, BE IT RESOLVED by the Economic Development Authority of the City of
Crystal that staff is directed to proceed with site improvements including construction of a new
parking lot for the Property on adjacent land and to begin marketing the Property together with
said adjacent land for sale on the open market at the earliest practicable opportunity.
Adopted this 3rd day of October, 2017.
Jeff Kolb, President
Anne Norris, Executive Director
B-1
4-PLEX AT 5900 56TH AVENUE NORTH (BASS LAKE ROAD)
OPTION B: RE -SALE OF 4-PLEX
ESTIMATED EXPENDITURES
$15,000
Acquisition - Adair land (2015)
$295,000
Acquisition - 4-Plex $295, 000 list price $310,000 2017 EMV
$9,100
Special assessment for street reconstruction
$3,600
Legal services, title insurance & closing costs to acquire property
$60,000
Tenant relocation - rent differential
$77,900 Tenant relocation subtotal
$5,400
Tenant relocation - moving expenses
$12,500
Tenant relocation - consultant
$1,500
Other professional services (property survey)
$44,660
Parking lot, fence and other site preparation costs
$12,000
Water & sewer services for 5618 Adair
$19,800
Realtor Commission
$4,000
Transaction Costs
$16,346
Contingency for unforeseen (10% of above items except acq. & spec. asmt.)
$498,906 Total Estimated Expenditures
($330,000) Sale Price (Note: Sale will include new parking lot and approx. 9,700 sq. ft. of land west
4-Plex of the 4-plex)
Sale Price
($50,000) 5618 Adair (for new home construction)
$118,906 Net Expenditure by EDA (to be paid from EDA cash balance)
g-2
CITY OF CRYSTAL
Property located in Section 4, Township 118, Range 21,
Hennepin County, Minnesota..
Property Address:
5926 56th Ave. N., Crystal, MN (PID No. 04-118-21-32-0088)
5612 Adair Ave. N., Crystal, MN (PID No. 04118-21-32-0089)
5618 Adair Ave. N., Crystal, MN (PID No. 04118-21-32-0090)
Benchmark: Hennepin County Geoid Model
Basis for
bearings is
I
73.2 873 � V
�J � 5inaple
31tree �
573.7 I
I - I
I
11 72.63 � 1
I` 2'Yree I
A if I
I o ! ! 16 teapl§
873.1 1
I LL� I
L1 i
1 ap!
1
76
I 873.3
I — 73.6r
Catch 3,5, 672. �2 LU J — — — —' — — — — — — — -
I � r
I �
` iP Z
I � 6
3. r
I tiQ
�o I i
673./. QQ, ee pI�
57-13.7 � II
/I
li
L=66.97 m
R=1038.00A=03-41-4
673.4 ' Lght pole 8"
° 673.3 G .........
<Concrdte. d l87,'
concrete curb e °
L---------------------
56TH aVE -/vo ----
(County Road No. l O)
assumed
I
I
I
i I
I I
I I
—
�w
�---
Plower
Pale I
I
I
�i5hed I
871.5 I
F7
7.0
11' (Lot If'o- mvv.J,
I
1of
�a I
672.7 ----
— — — — — — — — — — — —
m
CV
� I
CO I
M I
� I
r�
7aoflfon ofLot 9 condemned for Road purposesW
per'doc. no. 4686945 & 5185632-91, CORMPR OF LQT 9 o m
Manhole � �
56TH A VE N. 0
34W3)