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Home My WebLink AboutCC RES 02-041 A RESOLUTION APPROVING THE PRELIMINARY PURCHASE AGREEMENT RELATING TO 4004 SILVER LAKE ROAD Meeting Sheet IIIIIIVIIIVIIIVIIIVIIIVIIIIIII IIII 104636 Box: 31 Folder: RES 2002 Document: CC RES 02-041 A RESOLUTION APPROVING THE PRELIMINARY PURCHASE AGREEMENT RELATING TO 4004 SILVER LAKE ROAD CITY OF ST. ANTHONY RESOLUTION 002-041 A RESOLUTION APPROVING THE PRELIMINARY PURCHASE AGREEMENT RELATING TO 4004 SILVER LAKE ROAD WHEREAS, the City of St. Anthony, owners of the property addressed as 4004 Silver Lake Road, desire to sell said property; and WHEREAS, Julie Chien and Steve Sparks, owners of a Culver's Restaurant, wish to purchase said property upon which they propose to build another Culver's Restaurant. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of St. Anthony. hereby approves the preliminary purchase agreement between Julie Chien and Steve Sparks and the City for City-owned property addressed as 4004 Silver Lake Road. BE IT FURTHER RESOLVED, that said authorization be contingent upon the following: 1. Approval of the agreement by the City Attorney; • 2. Approval of the agreement by the St. Anthony Planning Commission and the St. Anthony Housing and Redevelopment Agency; and 3. Proposed buyers adherence to the recommendations as set forth in a memo from Ehlers & Associates, Inc., Financial Advisors, and dated April 9, 2002, and attached hereto. Adopted this Q3 day of h�.Q , 2002. Mayor ATTEST: City Clerk Reviewed for Administration: City Nfanager • EHLERS • & ASSOCIATES INC OTo: Mike Morrison, City Manaager 2 From: Mark Ruff,Financial Advisor W Jim Prosser,Financial Advisor Subject: Culver's Request for Assistance Date: April 9, 2002 Ehlers&Associates has completed a review of the request for assistance with the development of the Culver's restaurant on the site of the former Hardee's restaurant and the Exhaust Pro's building on Silver Lake Road. Julie Chien and Steve Sparks are the applicants and would own the restaurant at this location. They have represented that assistance is necessary due to extraordinary development cost including site acquisition, relocation, site preparation and demolition. These expenses are considered qualified redevelopment expenses. The assistance requested is the sale of the City owned Hardee's site, cleared for development by the City for$5,000. The City has purchased this site for$319,00,000. Culver's has extended an offer to purchase the Exhaust Pro's site for$335,000. • The applicants have provided Ehlers with a project pro forma for this development including estimated land costs. The project pro forma includes estimated land acquisition of$654,000 for a site of 58,750 square feet. This represents a land cost of$11.13/square foot. Project costs appear to be reasonably estimated,based on a review of similar projects by other developers. The applicants report the rate of return for this project without assistance would be 4% and with assistance of$314,000 land write down the rate of return would be 11.6%. A typical rate of return for this type of project would be 12%tol4%. This information and analysis supports the use of assistance. Ehlers did review this information provided by the applicants. However, since the property will be owned by the applicants a typical rate of return analysis Ehlers did not rely solely on this rate of return analysis. As substitute measure on need, Ehlers reviewed the land cost for this type of development with other similar developments. Generally, it appears that businesses of this nature would support a land cost of approximately$5.50 - $6.00/square foot for land. The applicants have provided Ehlers with a project pro forma for this development including estimated land costs. The project pro forma includes estimated land assembly related cost of$654,500 for a site of 58,750 square feet. This represents a land cost of$11.13/square foot which is significantly higher that the typical land cost for this type of development. If assistance is provided the effective cost of land is estimated at$5.79/square foot. Therefore,the assistance requested will provide for a land payment within the range developers typically pay for land for this type of use. • LEADERS IN PUBLIC FINANCE 3060 Centre Pointe Drive 651.697.8503 fax 651.697.8555 Roseville,MN 55113-1105 jimpehiers-inc.com • Page 2 April 9, 2002 It is our understanding that St. Anthony Village purchased the property with TIF generated revenue from an approved budget within an existing pre-1990 district to assist this project. Based on this information Ehlers recommends the following: 1. The Business Subsidy Statutes (I 16J.993 Subd.3.17)provides that financial assistance is not a subsidy when the recipients's investment in the purchase of the site and in site preparation is 70% or more of the assessor's current estimated market value(EMV). The site includes two parcels. The combined EMV for the parcels is $372,100. The investment to purchase and prepare the site clearly exceed 70% of this value. Therefore, the assistance provided would not be subject to the Business Subsidy Statutes. 2. Culver's is responsible for demolition of the Hardee's building. 3. The agreement recording the assistance should include a requirement that Culver's document the expenses including acquisition, demolition and environmental clean up, 4. If the property is sold within one year the full amount of the assistance shall be repaid to the City. 5. In order for the owner to secure construction financing it will be necessary to convey the • land prior to building completion. Therefore, the agreement conveying the land should include some type of security to assure building completion. I • Mike Mornson City Manager Saint Anthony Village 3301 Silver Lake Road St. Anthony, MN 55418 Dear Mike, You will find our purchase offer for the "Hardees" property. We hope this will be accepted by the council. We are very excited about the possibility of a Culver's in St. Anthony. We feel it would be a win/win situation for us, as small business owners,as well as the community. Culver's is a quick serve family restaurant. Several copies of our menu are attached for your disbursement to the appropriate parties. Our hours of operation are 10:30am to 10:pm everyday. We do not serve liquor. Our proposed land and building investment will be approximately$1,250,000, with equipment and inventory accounting for an additional $400,000. We will provide jobs for 60-70 employees, which represents approximately 30 full time job equivalents, not to mention many "first job" opportunities for the area high school aged youth. We are • estimating first year sales of$2,100,000. These are the tangible facts about our Culvers restaurant. In addition, we pride ourselves on our community involvement, including our support of school programs, youth sports, churches, city festivals etc. Community involvement is a very high priority for us. We hope we've provided the initial background information you need. We look forward to working with you. Please contact us with any other information you may need. 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