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CR 91-186 Maetzold Field - Purchase AgreementY O O ,c August 15, 1991 ti° P K X`' Council Report # 91 -186 MAETZOLD FIELD - DEVELOPMENT OF PURCHASE AGREEMENT Proposed Action Staff recommends adoption of the following motion: Move to authorize staff to develop a purchase agreement with Hopkins School District # 270 for the purchase of Maetzold Field. Adoption of this motion will allow staff to prepare a purchase agreement which details the price and conditions upon which Maetzold Field will be purchased from the School District. Overview The City has been negotiating with Hopkins School District on the proposed purchase of Maetzold Field. The City and - School District agreed to using a review appraisal to determine the purchase price. The review appraisal has indicated a value of $280,000. Staff is recommending that.the Council authorize staff to develop a purchase agreement which details the purchase price for the property and also contains necessary contingencies which both the School District and the City need in order to accommodate their respective goals. Primary Issues to Consider o What process was used in determining the value of the property? o What types of contingencies would be addressed in the purchase agreement? o How does this effect the Maetzold Field grant application? o What steps will be followed from this point? Supporting documentation o Staff analysis of issues. S even C. Mielke, City Manager Page 2 Maetzold Field Report 'Council Report # 91 -186 STAFF ANALYSIS OF ISSUES The following represents a response to the primary issues to.consider: o What process was used in developing the value of the property? The School District and the City agreed upon an appraisal process whereby each entity would obtain their own appraisal of the property and would then jointly hire a third appraisal to review the two appraisals and recommend a value based upon that review. The City hired J. Scott Renne to perform its appraisal. Mr. Renne estimated the value of the property to be $280,000. The School. District hired Russell Smith Associates to perform' an appraisal. The Smith - appraisal valued the property at $322,000. The review appraiser which both the City and the School District hired was BCL Appraisals. Mr. Brad Bjorklund of BCL Appraisals reviewed both the Smith and Renne appraisals and concluded that the best estimate of value was $280.000 In Mr. Bjorklund -s appraisal, he noted the strengths and weaknesses of both appraisals but found that the Renne appraisal was the stronger of the two It should be noted that the review appraisal was not required to pick only one value or the other but was given the freedom to estimate a value based upon the conclusions of both appraisals, therefore, an amount between the two appraisals was an option. o What type of a contingencies would be addressed in the purchase agreement? The City is interested in applying for a State Grant to help in the development of Maetzold Field. Acquisition costs are an eligible expense and therefore, the City should not purchase the property until it is confident that it either has or has not secured a grant to help with the development. To purchase the property prior to that point would be to sacrifice the purchase amount in leveraging our funds. Therefore, a contingency within the development agreement will include a method by which we do not purchase the property until a decision is reached on the State Grant The School District, on the other hand, is not interested in selling the property until such time as it has secured adequate funds for the development of their new athletic facility at the new High School. The City and School District have jointly applied for funds to help the School District in'this endeavor and while the possibility of additional funds. appears favorable, it is not yet concluded that the School District will have the necessary funds to accommodate their" Page 3 Maetzold Field Report Council Report # 9'0 -186 move. This contingency must be kept in mind as the development agreement is pursued. There will also be contingencies regarding the existing Maetzold Field condition and facilities. It will be necessary to discuss these details as part of the agreement. o How does this effect the Maetzold Grant application? While it is necessary to develop a purchase agreement, it may not be possible to have the purchase agreement in place prior to the submission of a grant application by the City. We have been informed that a letter of intent to sell will be adequate for the purpose of our State Grant application. I am hopeful that the School District will allow for some form of a letter to be submitted along with our grant application. In so doing, we should be able to meet the State's concern about our ability to obtain the site. o What steps will be followed from this point? At the writing of this report, the School District has not yet reviewed and recommended action on the review appraisal. The School District staff is asking for similar approvals from the School Board so that we may begin the negotiations of a purchase agreement. Assuming both the School Board and City Council authorize staffs to begin, the - negotiations will then be the first step. A letter of intent to sell will be drafted by the School District and presented to the City so that it may be included in 'our grant application which is due on September 1st. I assume that it will take roughly 60 days to resolve necessary issues on the purchase agreement .for Maetzold Field. This agreement, when drafted, will be presented to both the.School Board and City Council for approval. The following steps will be accomplished dependent upon the contingencies laid out within the purchase agreement, however, it is anticipated that the School District and City would be able to begin development of their respective athletic fields in the spring of 1992.