10-07-2002 Council Special Minutes

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MINUTES CITY COUNCIL OCTOBER 7, 2002 The Administrator informed the Council of the details of the purchase agreement that Sherman Associates has with Ultimate Golf for the back half of their property at a purchase price of approximately $5.00 per square foot. The Administrator stated that this price is not in line with market rates and is not supportable from the TIF district. Given the City's position, Sherman will be canceling this purchase agreement. Scalze noted that the entire Ultimate Golf property is for sale and asked what the asking price is. The City Administrator reported that he has been told the range is between $ I.1 and $1.3 million. He noted that Ultimate Golf recently moved out of the building. The building still houses the Mach One business and there is an illegal business operating from the back of the property. The Administrator noted that should the City pursue the acquisition of this property, relocation expenses would likely be due only the Mach One business. Ruff noted that the bigger risk for the City is that the public purpose could be challenged. The City Administrator indicated that his hope would be that Ultimate Golf would consider a more realistic price for the property in light of the potential for eminent domain action. Fahey noted that Ultimate Golf would likely use the cancelled purchase agreement with Sherman Associates as supporting evidence for their $1.3 million asking price. The City Attorney agreed that that purchase agreement will be used one way or the other. The City Administrator noted that Sherman Associates negotiated this purchase agreement because they wanted the certainty that this blighted area would be cleaned up. He further noted Mr. Sherman's desire for the property from a layout standpoint and that Mr. Sherman was not concerned about price because he felt he could get the higher value reimbursed through TIF. The City Administrator recommended that the Council proceed with the purchase agreement and development agreement for the Lodge at Little Canada senior project this evening. However, no action should betaken as yet on the townhome project. The Administrator noted that Sherman Associates has to first cancel the purchase agreement with Ultimate Gol£ He noted that the City would then have the ability to proceed with eminent domain on this property. The Administrator also recommended that the townhome project and the commercial project be linked otherwise the incentive to develop the commercial piece will be lost. The Administrator also noted the additional $100,000 in cash needed for the townhome project by the developer which could be offset using SAC credits coming from The Venetian site. The City Administrator reviewed financial analysis information for the townhome development as a stand-alone project as well as linking the townhomes with the commercial development utilizing the pay-as-you-go note versus tax-exempt bonds. The Administrator noted that he has factored in $20,000 per townhome unit land costs. Sherman is not comfortable paying that level of land costs unless the Ultimate Golf property is included in the project due to concerns with layout and aesthetics.