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HomeMy WebLinkAbout#03 - Development of 180 Acres1 STAFF REPORT DATE: 09/08/2020 REGULAR ITEM #: TO: City Council FROM: Ken Roberts, Planning Director AGENDA ITEM: City owned property – County Road 14 and Ideal Avenue REVIEWED BY: Ben Prchal, City Planner Jack Griffin, City Engineer BACKGROUND: On June 2, 2020, the City Council considered Comprehensive Plan Amendments including a MUSA Boundary Change, an update to City’s Wastewater Facilities and Land Use Plans for the City-Owned Property located County Road 14 and Ideal Avenue. This discussion also included a Sanitary Sewer Service Area Extension and Re-guidance of the property to BP (Business Park). After some discussion by the City Council, they tabled action on the proposed amendments to allow for more study about having sanitary sewer or not to serve the properties. On June 9, 2020, the City Council reviewed a high level sanitary sewer report for the area. A possible option to serve this area with sanitary sewer would be to extend a sewer force main north from 10th Street generally along Inwood Avenue to this part of Lake Elmo. City staff has included the Inwood Avenue force main sanitary sewer project in CIP for 2023. It was noted that the City will need a more detailed sanitary sewer study (scope, areas to include, number of REC units, costs) to complete the proposed Comprehensive Plan Amendment. On August 12, 2020, the City Council discussed what the City should do with the undeveloped property at County Road 14 and Ideal Avenue. It was the consensus of the City Council to have the City explore land use scenarios and estimated land values for the area south of County Road 14 (those with sanitary sewer and those without sanitary sewer) with brokers. I also have include more of the project review history on Page 3 for your reference. ISSUE BEFORE CITY COUNCIL: City staff is looking for direction from the City Council as to what next steps the City should take with the marketing and/or development of City-owned property located south of County Road 14 and east of Ideal Avenue? PROPOSAL DETAILS/ANALYSIS: The Mayor and I recently met with a broker to discuss the City-owned property on the south side of County Road 14 at Ideal Avenue. We reviewed the land use and development options for this property with sanitary sewer and those without having sanitary sewer. It was the broker’s opinion that there could be a market for the property without sewer for small businesses in buildings of 8-10,000 square feet. The types of businesses that could use such a setup are smaller business looking for their first property to own versus renting property elsewhere that would have little visitor traffic. These would include contractors or small assembly and storage facilities with few employees on site. He estimated the value of the property without City sanitary 2 sewer to be $1.50 - $2.00 a square foot. For 75 acres, that could mean the property would yield a sale price of $4.9 million - $6.5 million. He noted that if the property had sanitary sewer, he would expect the sale price would be in range of $3.00- $5.00 a square foot. At that price range, the sewered 75 acres would yield a sale price of $9.8 million- $16.4 million. The sale price difference between sewered and unsewered for the property: $4.9 - $9.8 million making median difference in sale price (between unsewered and sewered) $7.4 million. The estimated cost to bring sanitary sewer up Inwood Avenue to the parcel is $6.8 million. So for estimating purposes, the net difference between sewered and unsewered for the property is about a wash when only considering the sale price and cost to provide sewer to the property. If the City Council was to include in their consideration the increased tax value of the property when sewered versus unsewered and the WAC, SAC and connection charges, overall the City gains more financially by investing in sanitary sewer. Having sanitary sewer in the area (if planned and designed accordingly) also would provide the City the option to have sewered development on the City-owned property on the north side of County Road 14. Having sanitary sewer available would allow for more of variety and intensity of development on the north side of County Road 14 and would increase the value of that property. FISCAL IMPACT: The City has not yet made a final determination as to the best way to provide sanitary sewer service to this area of Lake Elmo. As part of any feasibility study for the sanitary sewer, the City would review design and funding options and determine how to pay for the sewer project. This might include assessing the full cost (100%) of the sanitary sewer extension project to all the benefitting properties. Any additional properties that would be added to the City sanitary sewer system also will generate additional Sewer Access Charge (SAC) fees to the Sanitary Sewer Enterprise Fund. OPTIONS 1. Market the property for sale as is. 2. Direct staff and/or Councilmembers to meet with other broker’s to get their opinions about the value of the property and land use and development options for the property. 3. Direct staff to prepare a cost estimate for preparing a detailed sanitary sewer feasibility study to bring sewer to the City-owned property at County Road 14 and Ideal Avenue (to include all the 180 acres). 4. Market the property for sale for sewered development contingent on the outcome of a sanitary sewer feasibility study. 5. Others? RECOMMENDATION: Provide City staff with direction as to what next steps the City should take with the marketing and/or development of City-owned property located south of County Road 14 and east of Ideal Avenue. ATTACHMENTS: Location Map Property Line Map City Land Use Concept Plan A 3 Review History On February 11, 2020, the City Council reviewed and discussed three concept plans and potential land uses for the 180 acres of city-owned property located at County Road 14 and Ideal Avenue. This is land the City received from 3M in 2019 as part of the legal settlement. From this review and discussion, it was the consensus of the City Council that: o The area south of County Road 14 (old Highway 5) be planned for Business Park/Warehouse land uses. o The area north of County Road 14 should have a variety of land uses and that Concept A was the plan that came closest at this point in the planning process to accurately reflect those potential land uses. While reviewing Concept Plan A, the Council discussed the proposed location of the ball fields, the potential City Hall site, the access road from Ideal Avenue, the inclusion of low-density housing and the need for storm water ponding in that area. o The City should reach-out to nearby property owners to give them the opportunity to provide their comments and input about the land uses for the area north of County Road 14. In response to that directive, staff sent public meeting notices to 70 nearby property owners (those to the north and east) about the land use planning for the area and inviting them to the March 9, 2020 Planning Commission meeting. The Planning Commission reviewed these items during their meeting on March 9, 2020. The Commission took comments from nearby property owners about Concept A and discussed the land uses they thought would best fit in this part of Lake Elmo. The direction of the City Council to City staff was for the City to amend the Comprehensive Plan for the area south of County Road 14 and east of Ideal Avenue (approximately 65 acres) from RAD (Rural Area Development) to BP (business park) to accommodate a possible office warehouse development similar to what is shown on Concept Plan A. (Please see the attached maps showing this area). The goal of the City Council is to get as much of this property on the tax rolls with development in a style or form similar to the office-warehouse plan shown on Concept A. These properties in Lake Elmo do not currently have access to municipal sanitary sewer and all existing developed parcels in the area are now served by on-site sanitary sewer (septic) systems. The Concept Plans being considered by the City are likely only achievable if the land areas are served by municipal sanitary sewer that will allow for the intended development use and densities. To serve this area with municipal sanitary sewer to support this type of development, the City will need to develop a plan for extending sanitary sewer service to the property. Once the sewer plan is known, the City will need to amend the MUSA (Metropolitan Urban Service Area) boundary and associated maps and tables in the Wastewater Services Chapter (Chapter 9) of the Comprehensive Plan. These land use and sewer plan changes, however, require City Council and Metropolitan Council approval of several changes to the recently adopted 2040 Comprehensive Plan. The changes are required because this part of Lake Elmo is not included in the MUSA nor had the City included this area in the Wastewater calculations in the 2040 Comprehensive Plan. The proposed comprehensive plan amendments require a 4/5th affirmative vote by the City Council and approval by the Metropolitan Council. The Planning Commission held a public hearing about these Comprehensive Plan Amendments on May 11, 2020. After some discussion, the Planning Commission recommended approval of the proposed amendments and changes.