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HomeMy WebLinkAbout#02 - RFP for City PropertySTAFF REPORT DATE: February 15, 2023 DISCUSSION AGENDA ITEM: Request for Proposals for Purchase of City Land TO: Mayor and Council and Planning Commission SUBMITTED BY: Kristina Handt, City Administrator BACKGROUND: In 2019 as part of the settlement of the City’s lawsuit against 3M related to PFAS contamination and the impact on the city water system, the City received about 180 acres from 3M in lieu of $1.8 million. The 180 acres are located along Ideal Ave near the public works facility and extends both north and south of CSAH 14. The land is an asset of the city water fund since the lawsuit damages were in the city water fund. The City Council’s intention has been to sell the land for development. In 2019, the city received a grant from the Washington County Community Development Authority (CDA) to explore concepts for development of the land and what the cost would be to make it shovel ready. That study completed by HKGI and Focus engineering was shared with the Council in February and June 2020 at work sessions as well as the planning commission in 2020. In 2020, the cities of Oakdale and Lake Elmo agreed to work together to bring sewer to the 180 acres from the lift station on Helmo Ave and Stillwater Blvd. Formal agreements were approved in 2021 and construction was underway in 2022. The City of Lake Elmo has completed the extension of the sewer main up Ideal Ave to approximately 31st St.(just south of the railroad tracks). The City of Oakdale is expected to have the lift station upgrade complete and operational by summer 2023. Approximately $700,000 of Lake Elmo’s ARPA funds have be spent on this project in 2022. The city issued a Request for Proposals (RFP) for the land south of CSAH 14 in 2021 and entered into a purchase agreement in June 2021 which was terminated in 2022. In 2021 the Met Council approved an amendment to the comprehensive plan to guide the land south of CSAH 14 to Business Park (77 acres). In April 2022, the city council adopted an Alternative Urban Areawide Review (AUAR) for the entire 180 acres. The Council also approved a comprehensive plan amendment for the northern portion of the property consistent with the preferred alternative which includes additional land for the public works facility to expand (4 acres), a park (8 acres), commercial along CSAH 14 (4.7 acres), low density residential (LDR) along the north of the parcel (14 acres) and the remaining area of the parcel as Business Park (72 acres). The Met Council approved this new guidance in January 2023. The city has continued to receive numerous inquiries from individuals and organizations expressing interest in purchasing and/or developing some or all of the 180 acres. The next step in the process to sell and develop the land is to issue another RFP. ISSUE BEFORE COUNCIL/COMMISSION: Should the City issue an RFP? Should the 2021 RFP be updated to include the option of purchasing the land north of CSAH 14 in addition to the land south? PROPOSAL DETAILS/ANALYSIS: A copy of the 2021 RFP is included in your packet. Key parts of the proposal include not only the price but also how the applicant would develop the property, when it would be developed, what the increased tax value would be and the number of jobs created. Staff suggested a minimum purchase price of $4.5 million based upon previous offers and to also set realistic expectations for proposers. Since this was just for the south side a new offer came in over $9 million for that, staff would propose updating that number to perhaps a per acre price if the north side is also included as an option in this year’s RFP. The council and commission should provide direction to staff on if the 2021 RFP should be updated to include an option to purchase the land on the north side of CSAH 14 in addition to the land on the south. We would recommend against just selling the land on the north side due to the location of sewer availability south of the railroad tracks. There may be some advantage to having one master developer for the entire area such as more efficient alignment and installation of roads, infrastructure and land uses. The down side is the city may have to accept a lower cost for the land overall. It may take longer to developer with one developer having to do it all. We are required to wait 4 years, per our agreement with Oakdale, before allowing the residential component to be developed. Once the proposals are received, staff would review them for completeness and forward to the EDA for review and recommendation. Then a Council selection would be anticipated in June. Offers are required to be valid for 90 days from the submittal deadline in order to accommodate this schedule. Once a purchase agreement is signed, then the closing must occur within 180 days. FISCAL IMPACT: At an estimated 426 RECs (from 2020 study) for all 180 acres, there would be $1,704,000 each in WAC, SAC, and connection charges collected at development. In addition, whatever sale price (minimally $9 million) is received for the property would be allocated to the water fund since the land is an asset of that fund. Legal fees and closing costs related to the sale would also come out of the water fund. Overall, it is expected that the tax value increase combined with fees and sale price will exceed the costs associated with sale and sewer service. It is likely the water fund (and general fund through tax value increase) will benefit substantially. Since ARPA funds were used for the sewer extension, the sewer fund will see an increase from the SAC and connection fees without the offset of the cost of extending the main. Sewer fund expenses will increase with the city paying the City of Oakdale annually based upon usage. This increased expense will be partially offset by the sewer fees the City of Lake Elmo will collect from the new users on the property. ATTACHMENT: • Request for Proposals for Purchase of City Land REQUEST FOR PROPOSALS (RFP) FOR THE PURCHASE OF REAL PROPERTY OWNED BY THE CITY OF LAKE ELMO FEBRUARY 17, 2021 THE PROPERTY IS COMMONLY KNOWN AS: FORMER 3M LAND ON IDEAL AVE, SOUTH OF CSAH 14 Tax Parcel ID 16.029.21.24.0002 (PORTION SOUTH OF CSAH 14 ONLY) All proposals and other communications must be addressed and returned to: City of Lake Elmo Attn: City Administrator 3880 Laverne Ave N, Suite 100 Lake Elmo, MN 55042 PROPOSALS MUST BE RECEIVED NO LATER THAN 3:00 PM LOCAL TIME ON THURSDAY, APRIL 1, 2021 1 REQUEST FOR PROPOSALS FOR CITY OF LAKE ELMO I. PURPOSE OF THE REQUEST FOR PROPOSALS The City of Lake Elmo, Lake Elmo, Minnesota (the “City”) will accept proposals for the purchase of City owned property known as the former 3M land located east of Ideal Ave and South of CSAH 14, a portion of Tax Parcel ID 16.029.21.24.0002 (the “Property”). The property for sale is approximately 75 acres with 55 acres being south of CSAH 14 and north of the railroad tracks and 20 acres being south of the railroad tracks. The City has the right to reject any or all proposals. Responses to this Request for Proposals (“RFP”) must address each component as set forth herein. Proposals must be in writing. II. PROPERTY INFORMATION The Property is approximately 75 acres and is bisected by the Union Pacific Railroad line. The City is in the process of re-guiding the property to be Business Park in the 2040 Comprehensive Plan. The respondent will be required to apply to the City for a rezoning of the Property so that it is consistent with the Business Park guiding in the 2040 Comprehensive Plan during the development process. The respondent will be responsible for seeking any land use or other governmental approvals necessary for its intended use of the Property at its own expense. Municipal water is currently available to the site. Municipal sewer is expected to be available to the site by 2022. The propert y is currently being farmed and has been agricultural for numerous years. A Phase 1 Environmental Assessment was completed in May 2019. A copy is included as Exhibit 3. A listing of the permitted and conditional uses for properties that are zoned as Business Park in the City is attached to this Request for Proposals as Exhibit 2. III. CONDITIONS GOVERNING THE SALE OF THE PROPERTY A. Offer All respondents must complete and submit the Offer to Purchase form (attached as Exhibit 1) to the City indicating the amount being offered for the Property. The offer must not be subject to any type of financing contingency. All offers submitted to the City in response to this RFP shall remain valid for 90 days from the submittal deadline set forth in this RFP. This time period may be extended by mutual agreement of the City and any of the proposer(s). The Property is being sold by the City “AS IS.” B. Purchase Price The minimum purchase price for the Property is $4,500,000. The purchase price must be paid in full to the City either by wire transfer or certified check at closing. 2 C. Closing Fees and Costs The successful respondent will be solely responsible for paying all closing fees and costs, including, but not limited to, a survey, if desired by respondent, any tests desired by respondent, title commitment fees, title search and examination fees, any title insurance premiums or the cost of any endorsements, closing fees charged by the closing company, any brokers’ fees or commissions, respondent’s attorneys’ fees, the state deed tax, the cost of recording the deed, and any escrow fees. The City will be responsible for the cost of making title to the Property marketable and the City’s attorneys’ fees. D. Commission The City agrees and acknowledges that it has not engaged the services of any agent or broker for the sale of the Property. In the event that the successful respondent has engaged an agent or broker, the respondent will be solely responsible for the payment of said agent or broker, and said fees must not be deducted from the purchase price. E. Earnest Money Deposit Within five business days after all parties signing a purchase agreement, the successful respondent will be required to deposit 10 percent of the purchase price, as earnest money, with a title company who will hold the earnest money in escrow. The earnest money will be applied to the purchase price and will be refundable except in the event of a breach of the purchase agreement by the respondent. F. Proposal Submission To be considered, a sealed written proposal must be submitted by the respondent to the City either by mail or personal delivery no later than 3:00 p.m. on Thursday, April 1, 2021. No proposals submitted by electronic mail or facsimile will be accepted. The outside of the envelope must be marked “PURCHASE OF REAL PROPERTY RFP” and delivered to: City of Lake Elmo Attn: City Administrator 3880 Laverne Ave N, Suite 100 Lake Elmo, MN 55042 All submissions are subject to the Minnesota Data Practices Act, Minnesota Statutes Chapter 13. Pursuant to Minnesota Statutes Section 13.591, subdivision 3 (b), data submitted in response to a request for proposals by a government entity are private or nonpublic until the time and date specified in the solicitation that proposals are due, at which time the name of the responder becomes public. All other data in a responder’s proposal are private or nonpublic data until completion of the evaluation process. “Completion of the evaluation process” means that the City has completed negotiating the purchase agreement with the selected respondent. After the City has completed the evaluation process, all remaining data submitted by all responders are public with the 3 exception of trade secret data as defined in Minnesota Statutes Section 13.37. If all proposals are rejected prior to completion of the evaluation process, all data, other than the names of the responders, remain private or nonpublic until a resolicitation of the request for proposals results in the completion of the evaluation process or a determination is made to abandon the sale. If a resolicitation of proposals does not occur within one year of the proposal opening date, the remaining data become public. H. Provision of Contact Information Those interested in submitting a proposal are encouraged to provide contact information to Kristina Handt, City Administrator at: khandt@lakelemo.org. This will allow the City to contact interested parties in the event that there are any addenda or changes to this RFP. Individuals who do not submit contact information to the City shall be solely responsible for independently verifying if any addenda or other changes have been issued for this RFP by contacting the City in writing prior to the submission deadline. I. Selection The City will select the proposal that is in the best interests of the City and will support the best use of the Property in the City’s sole discretion. The sale of the Property is subject to the approval of a purchase agreement between the successful respondent and the City Council. The City reserves the right to negotiate with respondents and to reject any and all offers. J. Schedule February 17, 2021 Request for Proposals Issued April 1, 2021, 3pm Proposals due April/May 2021(estimate) Economic Development Authority Review of Proposals and Recommendation to the City Council May 18 or June 1, 2021(estimate) City Council Selection K. Questions All questions or requests for clarification should be submitted in writing via email to khandt@lakeelmo.org. The City shall not be responsible for the delay in the transmission of any request for clarification or other communication. The City will make all questions and answers available to all interested parties. L. Conflict of Interest Any respondent who has a conflict of interest or potential conflict of interest shall disclose the same in its offer. The City will review any potential conflicts of interest in its evaluation of the proposals. 4 IV. SUBMISSION REQUIREMENTS A. Required Content At a minimum, the following information must be included in all proposals: 1. Cover Letter The respondent must submit a cover letter committing the respondent to purchasing the Property on the terms and conditions set forth in this RFP and providing information regarding the respondent’s intended use of the Property. 2. Offer to Purchase The respondent must complete the Offer to Purchase Property form as is with no changes or alterations (attached as Exhibit 1). In addition to purchase price, all proposals must include information related to: a. How the property is intended to be developed? b. When does the respondent intend to develop the property? c. How much will the proposed development increase the taxable value of the property? d. How many jobs (both permanent and construction jobs) will be created by the proposed development? What are the anticipated wages/salaries of those jobs? V. EVALUATION CRITERIA The City reserves the right to contact some or all of the respondents to clarify non-material aspects of their offers. In evaluating the proposals, the City’s selection will be based upon those factors deemed necessary to promote the best interests and welfare of the City, the neighborhood, and the community, including, but not limited to, the best use of the Property, change in tax valuation, and quantity/quality of jobs created. VI. REJECTION OF PROPOSALS A. Selection does not Guarantee a Purchase Agreement This RFP shall not create any legal obligation of the City to evaluate any proposal that is submitted or to enter into any purchase agreement with a respondent who submits a proposal except on terms and conditions that the City deems, in its sole and absolute discretion, to be satisfactory and desirable. All proposals should contain an affirmative statement regarding whether there is any “conflict of interest” with the City, its elected and appointed officials, and the respondent. The City reserves the right to reject any and all proposals received and the right to waive non-material formalities and technicalities according to the best interests of the City. The 5 City reserves the right to select a respondent or multiple respondents for the purchase of the Property. The City is not obligated to select the proposal with the highest offering price, as it is considering other factors that are outlined in this RFP in addition to price. By submitting a proposal, the Respondent acknowledges its understanding of the requirements of this RFP and agrees to be bound to the s ame when negotiating the purchase agreement, if its proposal is selected by the City. B. No Liability for Expenses or Costs The City is not responsible for expenses or costs incurred by respondents in connection with this RFP process and submitting a proposal. This includes, but is not limited to, costs associated with preparing the proposal and of participating in any site visits, or al presentations, or negotiations. VII. SELECTION A. Completion The Respondent’s proposal must be complete in order to be considered by the City for selection. Proposals will be reviewed by the City Administrator for completeness in addressing the five criteria listed in the submission requirements set forth in Section IV (A)(1) of this RFP and Exhibit 1. The Lake Elmo Economic Development Authority will review all complete proposals and make a recommendation to the City Council as to which proposal should be selected. B. Purchase Agreement The selected proposer will be required to enter into a purchase agreement with the City for the purchase of the Property. The purchase agreement is subject to the approval of the City Council. 6 EXHIBIT 1: OFFER TO PURCHASE REAL PROPERTY SUBMITTAL: To ensure proper identification and handling, submit your offer in a sealed envelope. This Offer must be submitted by 3:00 pm on Thursday, April 1, 2021 to: City of Lake Elmo Attn: City Administrator 3880 Laverne Ave N, Suite 100 Lake Elmo, MN 55042 Timely delivery of the offer is the sole responsibility of the Respondent. The offer must be submitted by personal delivery or mail. Late offers will not be accepted. All offers shall remain valid for a period of 90 days from the RFP submittal date. The time period may be extended by mutual agreement of the City and the proposer. TO: City of Lake Elmo Attn: City Administrator 3880 Laverne Ave N, Suite 100 Lake Elmo, MN 55042 _______________________________________, herein called the “Buyer,” hereby offer and agree to purchase the Property known as the former 3M land located east of Ideal Ave and South of CSAH 14, a portion of Tax Parcel ID 16.029.21.24.0002 (the “Property”) from the City of Lake Elmo (“City”) subject to the terms and conditions contained in this Offer and the City’s Request for Proposals dated February 17, 2021 at the price set forth below: $__________________ The proposed use of the property will be: ___________________________________________________ ____________________________________________________________________________________ How is the property intended to be developed? _______________________________________________ ____________________________________________________________________________________ When do you intend to develop the property? _______________________________________________ How much will the proposed development increase the taxable value of the property? _______________ ____________________________________________________________________________________ How many jobs (both permanent and temporary construction jobs) will be created by the proposed development? 7 Temporary Construction Jobs: ____________________ Permanent Jobs: ___________________ Anticipated Annual Salaries/Wages of Jobs:___________________________ I understand that possession of the Property will be granted upon closing. Transfer of the Property will be by quit claim deed. I also understand that closing shall be within 180 days of approval of a purchase agreement by the City Council, unless otherwise agreed to by the parties. This purchase is subject to approval by the City Council and the City reserves the right to reject any and all offers. I am aware/not aware of any potential conflict of interest with respect to my purchase of the Property. If there is a potential conflict of interest, please state the potential conflict of interest here: _________________________________________________________________________________. I understand and agree to the terms set forth in this offer and also in the City’s Request for Proposals. Date:_____________________ By: ____________________________ Its: ____________________________ 8 City of Red Wing Zoning Regulations C EXHIBIT 2 – City of Lake Elmo Zoning Regulations for Business Park Zoning District: BP Business Park/Light Manufacturing District. The purpose of the BP District is to provide areas for attractive, high quality business park development primarily for office, high quality manufacturing and assembly, and non-retail uses in developments which provide a harmonious transition to residential development and neighborhoods by: 1) Conducting all business activities and essentially all storage inside buildings; 2) Consisting of high quality and attractive buildings which blend in with the environment; 3) providing open space, quality landscaping and berming; 4) including berming an d buffering of parking, loading docks and other similar functions; and 5) protecting and enhancing the natural environment; and 6) providing users with an attractive working environment that is unique in the eastern metropolitan area with immediate access to I94. Permitted Uses: 1. Business Services 2. Business Center 3. Offices 4. Communication Services 5. Educational Services 6. Financial Institution 7. Parks and Open Areas 8. Wayside Stand Accessory Uses: 1. Parking Facility 2. Solar Equipment 3. Other Structures typically incidental and clearly subordinate to permitted uses Conditional Uses, Not Inclusive: (all conditional uses require a conditional use permit that must be reviewed and approved by the City Council and reviewed by the Planning Commission) 1. Colleges and Universities 2. Community Service 3. Day Care Center 4. Schools, public and private 5. Local Transit 6. Public Assembly 7. Lodging 8. Medical Facility 9. Transportation Services 10. Veterinary Services 11. Standard Restaurant 12. Fast Food Restaurant 13. General Retail Sales 14. Adult indoor recreation/entertainment 15. Indoor athletic facility 16. Light Industrial 17. Non-production industrial 9 18. Motor Freight and Warehousing 19. Research and Testing 20. Broadcasting and Communications 21. Wind Generator Further information on setbacks and other regulatory requirements may be found on the City’s website www.lakeelmo.org, Planning and Zoning, Municipal Code Sec. 154.550-154.555 (Article XIV) or by contacting the Planning Department at 651-747-3912. 10 EXHIBIT 3 – Phase 1 Environmental Assessment by Barr Engineering May 2 019 [to be added]