2016.10.25 WS Packet - Laserfiche WebLink

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Community Assets & Development Department MEMORANDUM DATE: October 19, 2016 TO: Manager Lotter Mayor Members of the Council FROM: Janice Gundlach, Asst. Director of Community Assets & Development/Planning Director SUBJECT: APi Option Extension Request The Economic Development Commission (EDC) met on October 5th to discuss a request by APi Group Inc. to extend the option on the northern two acres (Block G), adjacent from their training center and office building that was substantially completed at the end of 2015. The option terms are outlined in the Contract for Private Redevelopment By and Between the City of New Brighton and APi Group Headquarters, LLC. Per the agreement, APi has until December 31, 2016 to exercise the option or it shall automatically terminate. The act of exercising the option means closing on the property on or before December 31, 2016. City staff met with APi representative Don Randall on September 19th. Mr. Randall indicated APi is not ready to construct a third building and requested an extension. Attached is the memo provided to the EDC outlining three main factors in considering an option extension, those being: 1) APi’s Investment into New Brighton Exchange, 2) Financial Impacts of an Extension, and 3) Other Development Interests. After a thoughtful discussion, the EDC made a motion recommending the City Council authorize staff to negotiate with APi on an option extension agreement. More specifically, the EDC recommended staff discuss the following three topics with APi regarding the most favorable terms of an extension: • Length of option extension limited to 2-3 years. • Request payment of cash in lieu of lost increment (Ehler’s has estimated the City will lose $119,432 in projected tax increment by keeping the property undeveloped for three additional years). • The payment of cash in lieu of lost increment shall not be credited toward the land price. Overall, the EDC unanimously recommended the Council consider an option extension with APi. Staff asked Ehler’s to prepare a spreadsheet illustrating the financial impacts of the APi development, as well as two other development prospects for this property (townhomes and apartments). This information was handed out at the EDC meeting and is attached to this memo. Following the initial draft of this spreadsheet, Pulte indicated an ability to construct more units that originally envisioned on the spreadsheet. Ehler’s will incorporate this larger unit count (25 instead of 14) and bring an updated