02-25-2004 Council Agenda - Laserfiche WebLink

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Frattalone Building Update: Mr. Frattalone has informed me that he has started to advertise the building for sale. Given the value of this property, he would like to sell the building as soon as possible to convert this value to cash. I have informed him that it is my opinion that we can not justify the acquisition of this space based on his asking price of $2,375,000. He indicated that he is pretty firm at that amount with the possible exception of some allowances for some equipment he could use at his new facility (overhead cranes). I explained that our acquisition would be very speculative given we would need to find a user for the office in addition to subdividing the developable land on the south end of this site. If he is successful in selling his building close to his asking price of $2,375,000, then the property taxes generated by this site will also increase. The County's estimated market value (EMV) for pay 2003 was $831,600. If the property were sold this year, the value would be adjusted on January 2, 2005 for taxes payable in 2006. In talking with County Assessor Matt Zelmer, he indicated it would take a couple of years for the EMV to approach the sales price. This means that the building would generate about 2.5 times the taxes it currently does by 2007. The property paid local taxes of $28,336 in 2003. Of that amount, $8,647 was the State Business Property Tax and $1,729 was the school referendum market value based tax. That leaves $17,960 of property taxes to be divided between the city, county, school, and miscellaneous jurisdictions. If the value were to increase to $2,300,000, the local share of taxes would jump to over $43,000 (versus 2003's $17,960) not including the State Business Property tax and the school referendum tax. One question remaining is what the re -use of the Frattalone site will be if it is sold on the open market. The developed portion of the site is zoned I -1 while the open area to the south is zoned I -P. The outdoor storage related to the principal use in the I -P area would be a lawfully existing non - conforming use and can continue subject to the use not being discontinued for a period of at least six months. A key question in that regard is what used (if the building were sold) would be a lawful continuance of the outdoor storage non - conformity? According to the City Planner, a use that involves the outdoor storage of heavy construction equipment would be allowed to continue. Other outdoor storage options are not likely to be allowed. Examples of uses that would not be allowed would be storage of repairable automobiles, materials storage, etc. In the event the principal building were sold to an auto repair company, outdoor storage may be allowed on the I -1 portion of the property subject to zoning regulations. The remaining portion would likely have to be subdivided and a new use done in compliance with the I -P zoning. Family Academy Proposal: I attended a meeting of the Family Academy's Finance Committee on February 19`h. learned the following at that meeting: ➢ Family Academy estimates their project would require $6.5 million in debt. ➢ They would issue tax exempt bonds to finance their acquisition/building program. These bonds would be similar to Industrial Revenue Bonds that require a conduit issuer (City of LC or Ramsey County HRA). The issuer is not at risk from a debt repayment standpoint. The bonds are secured by a lease payable from Family Academy to a 501c3 corporation they would have to be formed to issue the bonds. -2-