Memo- Possible Purchase Of Cobblestone BuildingMemorandum
To: The Honorable Mayor and City Council
From: Jim Hartshorn, Economic Development Coordinator
Date: July 3, 1997
Subject: POSSIBLE PURCHASE OF COBBLESTONE BUILDING
I. PURPOSE OF MEMO
To review the positive and negative implications of the City purchasing the
Cobblestone Court building.
II. OVERVIEW
PLANNING &
ECONOMIC DEVELOPMENT
Don Perkl of Perkl -Mason Partnership approached Ted Sauer, director of
Community Education for Hopkins School District 270, to request that the school
district consider purchasing the 5,221 square -foot Cobblestone Court building for
$300,000. The school district currently levies the district to lease this building to
operate the Family Resource Center, but they cannot levy to purchase a building.
In order for the school district to purchase a building, a district -wide special bond
election would be needed, and they are not willing to enter into a special bond
election for only $300,000 (purchase price of the building). Mr. Sauer has
approached staff to request that the City consider purchasing the building and
leasing it back to the school district.
ILI. PRIMARY ISSUES TO CONSIDER
• What is the City's interest in purchasing the Cobblestone building?
• How would the City pay for the building?
How would the City make up the lost revenue from the privately -owned property
that currently generates tax revenue?
• What would happen if the school district did not renew its lease?
• Is the sales price reasonable?
Memo to The Honorable Mayor and City Council, July 3, 1997 - Page 2
IV. PRIMARY ISSUES TO CONSIDER
• What is the City's interest in purchasing the Cobblestone Court building?
• It would serve the public interest by guaranteeing that the property is
available to be leased to the school district for purposes of operating the
Family Resource Center and that the location of the Family Resource Center
would remain the same.
• If the City does not buy the building, it will be sold on the open market and the
new owner may not choose to rent space to the school district for the
operation of the Family Resource Center.
• Gives the City an opportunity to form a partnership with the school district.
• How would the City pay for the building?
One possibility for funding could include the City entering into a five -year
(negotiable) contract for deed to purchase the building, with a balloon payment
after five years.
The advantages of this option include:
• The City would not have to come up with the funds to pay off the building for
five years.
• The City would not pay any funds out -of- pocket for five years, as the school
district would pay the City enough to cover monthly payments.
• How would the City make up the lost revenue from the privately -owned propertv
that currently generates tax revenue?
• What would happen if the school district did not renew its lease?
Since the school district legally cannot financially obligate a future board, they
cannot enter into a Tong -term lease unless the lease agreement contains an
escape clause from year to year; therefore, if the school district decides to no
longer lease this building from the City at any time during the first five years, the
City can give back the building to Perki -Mason and lose nothing.
The lease amount that the City would charge the school district would be enough
to cover not only monthly payments, but also enough to recover the loss in tax
revenue.
Memo to The Honorable Mayor and City Council, July 3, 1997 - Page 3
Is the sales price reasonable?
If the City decides to pursue this project, staff will obtain a professional appraisal
before negotiating the sales price.
V. CONCLUSION
If the Council is interested in this project, they need to advise staff to continue
discussions with both parties and research the advantages and disadvantages.
Staff will then present a more detailed proposal for the project at a future meeting.