2017.03.14 CC Minutes - Laserfiche WebLink

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March 14, 2017 Page 4 of 6 improvements on an approximate four -acre site known as Block D in New Brighton Exchange. I Assistant Director Community Assets and Development/Planning Director Gundlach reported TUV SUD is an existing New Brighton business located at 1775 Old Highway 8 NW. TUV SUD wishes to construct and own a new facility in New Brighton Exchange, with Ryan Companies assisting on the development/construction. TUV SUD submitted a cover letter describing their business, space needs, and employment base. The Council will find this proposal will allow retention and expansion of an existing job base of 40, jobs with highly competitive salaries. TUV SUD's move to New Brighton Exchange will also allow opportunities for job growth within the facility they will vacate. Staff offers the following summary points from the term sheet: • The City would sell TUV SUD America approximately four acres of land. • TUV SUD America would hire Ryan Companies to develop and construct the minimum improvements (conceptually depicted on Exhibit B of the term sheet). • Block D would be developed with a 36,500 SF building, which provides for future expansion space of up to 12,000 SF. • The City would sell TUV SUD America the land for $2.75/SF. • All land proceeds would be deposited into an escrow account to pay for extraordinary environmental, public improvement, and building/site enhancement costs. • TUV SUD America would close on the land on or before June 30, 2017. • The City would grant TUV SUD America a feasibility/due diligence period beginning on the effective date of the Term Sheet and ending on June 15, 2017, including providing right -of -entry and environmental testing rights. • Construction would begin on or before August 1, 2017 and be substantially complete on or about April of 2018. • TUV SUD America would pay all taxes and agree to a Prohibition on Tax Exemption through termination of the TIF District. Assistant Director Community Assets and Development/Planning Director Gundlach explained historically, the New Brighton Exchange Financial dashboard has been projecting development of Block D with a 50,000 SF building in 2017 that generates a market value of $100/SF (or approximately $5 million) and TIF estimated at $2,062,555. The proposed development by TUV SUD America will meet timing goals but falls short of the square footage and market value projection. Preliminary estimates by TUV SUD America and Ryan Companies anticipated construction costs of approximately $4 million. Because there isn't necessarily a connection between construction costs and taxable market value, staff has taken a conservative approach and calculated TIF based on a building valued at $3,650,000. Because of existing market conditions, potential development competition, and long term retention of an existing New Brighton business with a competitive job base, staff would recommend the Council proceed with the TUV SUD America proposal. Assistant Director Community Assets and Development/Planning Director Gundlach reported staff, Ryan Companies, and TUV SUD representatives will be available at the Council meeting to address comments and concerns. TUV SUD also provided additional company and building layout information in the attached PowerPoint presentation. The draft term sheet has been reviewed by all parties and the City's redevelopment attorney. Following approval of the Term Sheet, staff would work with TUV SUD America on drafting a Private Contract for Redevelopment, which would require another action by the Council in the coming months. Steve Dykstra, TUV SUD, introduced himself to the Council and discussed the work conducted by his business. He explained TUV SUD does safety testing to ensure products do