02-11-2004 Council Agenda - Laserfiche WebLink

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Frattalone Building: Pros: + Larger Shop Area + Room for outdoor storage + Includes 3,000 sq. ft. storage build Cons: - Need to find user for office space - Some speculation on sale of remaining parcel g 2+ acres on corner of Spruce &Owasso - Fuel tanks may not have value to us (too large) - Added costs to make ready for use - Re -use of existing PW Building ? ?? The acquisition of the Frattalone property at 3066 Spruce Street may be an excellent option in resolving our public works garage building needs. The primary concern with this option is the disposition of the office space at an amount that makes the deal workable from the City's standpoint. In my opinion, this option should result in less out -of- pocket costs than construction of our own building to make it more attractive. If you allow about $100,000 for refurbishing, surveying, legal, etc., then it is virtually the same cost as building new, based on my rough estimates. To make it more attractive, the acquisition cost would need to drop, the re -sale of the office or excess land would have to generate a higher amount, or some combination of the above. Dave Rustad has expressed interest in our existing building. (He has an existing Little Canada business that he is trying to retain in the community. This company is close to a deal to move to Arden Hills.) I have told him that I believe we need to sell that property for at least $400,000. (This figure is the estimated market value assigned by the County.) An appraisal could be conducted if we wanted to get a better estimate of the building's value. With a solid purchaser, it may make sense for us to offer some type of financing (contract for deed). I believe we will also want to make certain conditions (deed restrictions) associated with the sale to address improvements to the property and limitations of its use to address outdoor storage, additions, etc. Mr. Rustad and Gordie Howe have also reviewed the possible acquisition of the existing Frattalone office space if we were to acquire that property. Mr. Rustad would do so speculatively which means he will not want to pay a premium for the space. Gordie Howe was looking at it for his own use, but has since cooled on the idea. Both parties have mentioned their concern with converting that office to a multiple user status given its current configuration and no elevator. Neither is very excited about this option. Another option for your consideration is the Family Academy Charter School. I talked with Ms. Anne Hennessey about their interest today. They currently have 250 students and are looking for a new home. The concept she put forth would involve them purchasing the entire site.. They would use the existing offices for administrative purposes, build a 35,000 square foot school on the subdividable two plus acre portion, and give the shop and related land to the City as an offset to the property becoming tax - exempt. From a tax standpoint, that property paid total real estate taxes of $28,336 in 2003. Of that amount, $8,647 was the State 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 one assumes we are 25% of the tax rate, $4,490 of that amount would come to the City. (Keep in mind that this calculation is more complicated than that when one factors in fiscal disparities.) If you assume that we save $1,000,000 in this option (money we did not spend), one percent interest per year on that amount is $10,000. That more than offsets the tax loss to the City by having this property become tax - exempt. Another way to look at it is the $4,490 loss times 100 years equals $449,000! (That over simplistic calculation does not account for the loss of county and school taxes. Nor does it assume any increase in taxes from 2003 for the 100 years in question.) The overall viability of the Charter School option has not yet been determined. If the Council feels this warrants further evaluation, we would have to conduct the proper due diligence and ensure the transaction would work the way we desired. Some key considerations would be that the City is given fee title to the property we desire, appropriate subdivision and zoning actions are undertaken, Family Academy's financing program is realistic, and 2