HomeMy WebLinkAbout4.3 Purchase Agreement for 7470 East Point Douglas Rd.
TO: Economic Development Authority
FROM: Christine Costello, Acting Community & Economic Development Director
DATE: June 12, 2019
RE: Purchase Agreement for 7470 East Point Douglas Road
Background
The property at 7470 East Point Douglas Road, which is located at the corner of Hefner Avenue
and East Point Douglas Road, is vacant and listed for sale. The previous uses at the site included
a gas station and most recently the Village Transmission Shop, which closed the fall of 2018.
The Comprehensive Plan guides the property for commercial land use that would include retail,
service, and office uses. The site is zoned B-2, Retail Business. The purpose of the B-2 District
is to encourage retail sales and services by grouping businesses that minimize the influence on
surrounding residential neighborhoods. Automotive repair is not allowed in the B-2 District, and
the assumption is that at one time (1960-1970s) automotive repair was allowed, so the transmis-
sion shop has been operating as a legal non-conforming use. Minnesota State Statute allows for
the replacement, restoration, or improvement but not the expansion of the nonconforming right.
The right to continue to operate a legal nonconformity is lost if the use is discontinued for more
than one year. City staff was able to establish that the Village Transmission Shop discontinued
their use November 8, 2018. If an automotive use purchased the site before the November date,
they would be allowed to operate under legal non-conforming rights.
The City of Cottage Grove has been a participant in the Red Rock Corridor (Corridor) since it
began in 2016. The Corridor is a proposed 30-mile transitway, connecting the Twin Cities south-
eastern suburbs to St. Paul and Minneapolis. The transitway would originate in Hastings with two
stops in Cottage Grove before continuing towards St. Paul and Minneapolis. Through the Bus
Rapid Transit (BRT) planning for the Corridor, two BRT station areas were identified with one of
the stations near 7470 East Point Douglas Road. A Small Area Plan was also developed to
demonstrate how a BRT Station could potentially stimulate economic development and redevel-
opment. The site is listed as a development opportunity within the Small Area Plan as well. The
Small Area Plan is attached to this report.
Discussion
The property at 7470 East Point Douglas Road was constructed in 1963 and is on approximately
0.54 acres. The former Village Transmission Shop ceased operation in November 2018 and has
been vacant since that time. The site is currently for sale and is listed for $319,900. A Phase I and
Phase II Environmental Site Assessment (ESA) has been completed due to its previous uses that
included underground storage tanks (which have been removed) and a leak from a tank. The
Seller completed the cleanup of the petroleum tank release and received a letter from the Minne-
sota Pollution Control Agency (MPCA) that the tank release was adequately cleaned up and the
Economic Development Authority
June 12, 2019
Page 2 of 2
MPCA has closed the file on the property, thus not requiring any additional investigation or
cleanup work.
City staff received approval from the City Council on April 17, 2019 to submit to the Seller a Letter
of Intent (LOI) to purchase the property. The opportunity for the City/EDA to land bank the site
and make it available for development of a commercial use that is permitted in the B-2 Zoning
District may initiate redevelopment activities in this area. The purchase price offered to the seller
is $315,000 to allow for the potential demolition of the building in the future, which most likely will
make the site more viable for redevelopment. The purchase of the site would be paid from the
EDA Trust. The EDA, at their April 9 meeting, and the City Council, at their April 17, 2019 meeting,
recommended approval (5-to-0 vote) for submittal of the LOI for negotiation and purchase of the
property.
The building located on the site is approximately 3,052 square feet. The Seller will be removing
all of the auto repair equipment including hoists/lifts, leaving the building for demolition. The
reason to demolish the building will allow a retailer to build a building that meets their retail,
marketing, and building requirements for a business. City staff obtained an estimate for the
demolition of the building, which is approximately $38,000. The building could also remain and be
winterized and left for a future developer to demolish as part of their redevelopment of the site.
Recommendation
Authorize the EDA Executive Director to execute a Purchase Agreement to Re/Max Results
Commercial Group for the purchase of 7470 East Point Douglas Road.
Attachments:
Purchase Agreement
Offering Brochure
80th Street Small Area Plan
PURCHASE AGREEMENT
THIS PURCHASE AGREEMENT (“Agreement”) is made as of __________________,
2019 (“Effective Date”), by and between A2Z Commercial Holding, LLC, a Minnesota limited
liability company, 15451 Founders Lane, Apple Valley, Minnesota 55124 (“Seller”), and the Cottage
Grove Economic Development Authority, a public body corporate and politic under the laws of
Minnesota, 12800 Ravine Parkway South, Cottage Grove, Minnesota 55016 ( “EDA”).
RECITALS
A. Seller is the fee owner of real property located at 7470 East Point Douglas Road South in the
City of Cottage Grove, Minnesota, legally described on Exhibit A, attached hereto and
incorporated herein by reference (the “Property”).
B. EDA desires to purchase the Property from Seller, and Seller desires to sell the same to EDA,
all on the terms and conditions of this Agreement.
NOW THEREFORE, for mutual consideration, the Seller and the EDA agree as follows:
1. Sale.
1.1 Sale. Subject to the terms and provisions of this Agreement, Seller shall sell to
EDA, and EDA shall purchase from Seller, the Property on the date of Closing.
1.2 Purchase Price. The purchase price to be paid by EDA to Seller for the Property
shall be Three Hundred Fifteen Thousand and No/100 Dollars ($315,000.00) (the
“Purchase Price”). Ten Thousand and No/100 Dollars ($10,000.00) shall be paid
directly to Seller by depositing same in escrow with DCA Title, 7373 147th Street
West, Apple Valley, MN 55124 (“Title”) within five (5) business days after the full
execution of this Agreement, as earnest money (“Earnest Money”), which Earnest
Money shall be credited at Closing against the portion of the Purchase Price payable
to Seller and the balance of the Purchase Price shall be paid to Seller on the Closing
Date (as defined in Section 7) subject to those adjustments, prorations and credits
described in this Agreement, in cash or certified funds or by wire transfer pursuant
to instructions from Seller. The Closing will occur at Title, unless otherwise agreed
to by the parties. If this Agreement is terminated by EDA as a result of a default
by Seller, then the Earnest Money shall be returned to the EDA and neither Seller
nor the EDA shall be liable to the other for any further obligations under this
Agreement (except for such obligations as specifically survive termination of this
Agreement).
2. Available Surveys, Tests, and Reports. Within five (5) days of the Effective Date, Seller
shall cause to be delivered to EDA to the extent same are in the possession and control of
Seller: (a) copies of any surveys, soil tests and environmental reports previously conducted
on the Property; (b) copies of leases associated with the Property, (c) copies of existing
1
title work for the Property (the “Due Diligence Materials”). Seller makes no representations
or warranties regarding the accuracy or completeness of the Due Diligence Materials. EDA
acknowledges that the sale of the Property is “AS-IS”, “WHERE IS,” and “WITH ALL
FAULTS”, and that it is the obligation of EDA to conduct and complete its due diligence
and investigations relating to the Property.
3. EDA’s Investigations. For a period up to sixty calendar (60) days following the Effective
Date, Seller shall allow EDA and EDA’s agents access to the Property without charge and
at all times for the purpose of EDA’s investigation and testing of the Property, including
surveying and testing of soil and groundwater (“EDA’s Investigations”); provided,
however, EDA shall not perform any invasive testing unless (a) Seller gives its prior
approval of EDA’s consultant that will perform the testing, which approval shall not be
unreasonably withheld, conditioned or delayed, and (b) EDA gives Seller reasonable prior
notice of such testing. EDA shall pay all costs and expenses of the EDA’s Investigations
and shall indemnify and hold Seller and the Property harmless from all costs and liabilities,
including but not limited to mechanics’ liens, relating to activities on the Property related
to EDA’s Investigations, however, EDA shall not be responsible for liens, liability, loss,
expense or costs arising out of the discovery or presence of Hazardous Substances (as such
term is defined in Section 9.1(G)) on the Property or otherwise arising out of Seller’s
noncompliance with any Environmental Law (as such term is defined in Section 9.1(G)) or
other law or regulation. Seller shall have the right to accompany EDA during any of EDA’s
Investigations of the Property. If requested by Seller, EDA shall provide to Seller copies
of all third-party, non-confidential written test results and reports conducted as part of
EDA’s Investigations. EDA shall pay all of the costs and expenses associated with EDA’s
Investigations, to cause to be released any lien on the Property arising as a result of EDA’s
Investigations and to repair and restore, at EDA’s expense, any damage to the Property
caused by EDA’s Investigations. The indemnification obligations set forth herein shall
survive termination or cancellation of this Agreement.
3.1 Extension of EDA’s Investigations. EDA will have the right to extend EDA’s
Investigations, if determined necessary through environmental assessment, for up
to an additional sixty (60) days (“Extension of EDA’s Investigations”) to allow
further testing and analysis. If it is necessary to extend EDA’s Investigations, then
prior to the end of the sixty calendar (60) days following the Effective Date, EDA
will notify Seller in writing that it is extending EDA’s Investigations for an
additional sixty (60) days.
4. Insurance; Risk of Loss. Seller assumes all risk of destruction, loss or damage to the
Property prior to the Closing Date. If, prior to the Closing Date, all or any portion of the
Property or access thereto is condemned, taken by eminent domain, or damaged by cause
of any nature, Seller shall immediately give EDA notice of such condemnation, taking or
damage. After receipt of notice of such condemnation, taking or damage (from Seller or
otherwise), EDA shall have the option (to be exercised in writing within thirty (30) days
of receipt of such notice) either (a) to require Seller to (i) convey the Property at Closing
(as defined in Section 6) to EDA in its damaged condition, upon and subject to all of the
other terms and conditions of this Agreement, without reduction of the Purchase Price, (ii)
2
assign to EDA at Closing all of Seller’s right, title and interest in and to any claims Seller
may have to insurance proceeds, condemnation awards and/or any causes of action with
respect to such condemnation or taking of or damage to the Property or access thereto, and
(iii) pay to EDA at Closing by certified or official bank check all payments made prior to
the Closing Date under such insurance policies or by such condemning authorities, or (b)
to terminate this Agreement by giving notice of such termination to Seller, whereupon this
Agreement shall be terminated and thereafter neither party shall have any further
obligations to the other, except for such obligations and liabilities that specifically survive
termination of this Agreement. If the right to terminate this Agreement is not exercised in
writing within such thirty (30) day period, such right shall be deemed to have been waived.
5. Contingencies.
5.1. EDA’s Contingencies.
A. Unless waived by EDA in writing or waived by the passage of time in the
manner set forth herein, EDA’s obligation to proceed to Closing shall be
subject to (a) performance by Seller of its obligations hereunder, (b) the
continued accuracy of Seller’s representations and warranties provided in
Section 9.1, and (c) EDA’s satisfaction, in EDA’s sole discretion, as to the
contingencies described in this Section 5.1 within the time periods set forth
below:
(1) On or before sixty (60) days following the Effective Date, EDA shall
have determined, in its sole discretion, that it is satisfied with (a) the
results of and matters disclosed by EDA’s Investigations, EDA’s
physical and environmental inspections of the Property (including,
but not limited to surveys, soil tests, engineering inspections,
hazardous substance and environmental reviews of the Property)
and (b) all other inspections and due diligence regarding the
Property, including any Due Diligence Materials. If EDA has not
terminated this Agreement on or before the Contingency Date, the
contingency set forth in this paragraph shall be deemed waived.
If there is an Extension of EDA’s Investigations, then on or before
one hundred twenty (120) days following the Effective Date, EDA
shall have determined, in its sole discretion, that it is satisfied with
(a) the results of and matters disclosed by EDA’s Investigations,
EDA’s physical and environmental inspections of the Property
(including, but not limited to surveys, soil tests, engineering
inspections, hazardous substance and environmental reviews of the
Property) and (b) all other inspections and due diligence regarding
the Property, including any Due Diligence Materials. If EDA has
not terminated this Agreement on or before the Contingency Date,
the contingency set forth in this paragraph shall be deemed waived.
3
(2) On or before sixty (60) days following the Effective Date, EDA shall
have received from Title an irrevocable commitment to issue a title
insurance policy for the Property in a form and substance
satisfactory to EDA in EDA’s sole discretion, not disclosing any
encumbrance not acceptable to EDA in EDA’s sole discretion (the
“Approved Commitment”). If EDA has not terminated this
Agreement on or before the Contingency Date, the contingency set
forth in this paragraph shall be deemed waived.
(3) On or before sixty (60) days following the Effective Date, EDA shall
obtain an ALTA survey for the Property certified to EDA and Title.
(4) On or before the Closing Date, Seller shall have obtained releases of
the Property from any and all mortgages or other monetary liens
affecting any of the Property.
(5) On or before the Closing Date, Seller shall have obtained all valid,
necessary and sufficient waivers, assignments, subordinations, non-
disturbance, attornments, approvals, authorizations, estoppel
certificates and consents of each and every party whose waiver,
subordination, non-disturbance, attornment, approval,
authorization, estoppel certificate or consent shall be required to
transfer the Property and consummate the transactions contemplated
by this Agreement.
(6) On or before the Closing Date, Seller shall execute an assignment
and assumption of surviving contracts, permits and licenses,
warranties, and intangible property conveying to EDA with
warranties the surviving contracts, permits and licenses, warranties
and intangible property, free and clear of all encumbrances, together
with the consent of all parties having the right to consent to such
assignment, if necessary.
(7) On or before the Closing Date, Seller shall execute a Bring-Down
Certificate certifying that all of the warranties and representations
made by Seller in this Agreement remain true as of the date of
closing.
(8) On or before the Closing Date, the termination or elimination of any
and all option to purchase rights, Rights of First Refusal, or Rights
of First Offer related to the Property to the satisfaction of the EDA.
The foregoing contingencies are for EDA’s sole and exclusive benefit and one (1) or more may be
waived in writing by EDA in its sole discretion, or by the passage of time as set forth hereinabove.
Seller shall reasonably cooperate with EDA’s efforts to satisfy such contingencies, at no out of
pocket cost to Seller or assumption of any obligation or liability by EDA. EDA shall bear all cost
4
and expense of satisfying EDA’s contingencies. If any of the foregoing contingencies have not
been satisfied on or before the applicable date, then this Agreement may be terminated, at EDA’s
option, by written notice from EDA to Seller. If EDA terminates this Agreement as a result of a
failure of an EDA contingency prior to the applicable date, the Earnest Money shall be returned to
the EDA and neither Seller nor the EDA shall be liable to the other for any further obligations
under this Agreement (except for such obligations as survive termination of this Agreement). Such
written notice must be given on or before the applicable date set forth herein above for such
contingency, or EDA’s right to terminate this Agreement pursuant to such contingency shall be
waived. Upon termination, neither party shall have any further rights or obligations against the
other regarding this Agreement or the Property, except for such obligations that survive
termination of this Agreement.
B. If EDA elects not to exercise any of the contingencies set out herein, such
election may not be construed as limiting any representations or obligations
of Seller set out in this Agreement.
C. As used in this Agreement, the “Contingency Date” shall mean the first (1st)
business day occurring sixty (60) days following the Effective Date or any
Extension of EDA’s Investigations.
5.2 Seller’s Contingencies. Seller’s obligation to proceed to Closing shall be subject
to the satisfaction, on or prior to the Closing Date, of each of the following
conditions:
A. EDA shall have performed and satisfied all agreements, covenants and
conditions required pursuant to this Agreement to be performed and
satisfied by or prior to the Closing Date.
B. All representations and warranties of EDA contained in this Agreement
shall be accurate as of the Closing Date.
C. On or before the Closing Date, the termination or elimination of any and all
option to purchase rights, Rights of First Refusal, or Rights of First Offer
related to the Property, upon terms and conditions satisfactory to Seller in
its sole and absolute discretion.
Seller may in its sole discretion waive any of the conditions precedent set out in this Section. If
any of the foregoing contingencies have not been satisfied on or before the dates set forth herein,
then this Agreement may be terminated, at Seller’s sole option, by written notice from Seller to
EDA. Upon termination, neither party shall have any further rights or obligations against the other
regarding this Agreement or the Property, except for such obligations that survive termination of
this Agreement.
6. Closing. The closing of the purchase and sale contemplated by this Agreement (the
“Closing”) shall occur on or before June 30, 2019 or on or before the expiration of any
Extension of EDA’s Investigations or unless extended by the parties in writing (the
5
“Closing Date”). Seller agrees to deliver legal and actual possession of the Property to
EDA on the Closing Date. Closing shall occur at Title.
6.1 Seller’s Closing Documents and Deliveries. On the Closing Date, Seller shall
execute and/or deliver, as applicable, to EDA the following:
A. Warranty Deed. A warranty deed conveying title to the Property to EDA,
free and clear of all encumbrances, except the Permitted Encumbrances (the
“Deed”).
B. Assignment and Assumption of Contracts, Permits and Licenses. Seller
shall execute an assignment and assumption of surviving contracts, permits
and licenses, warranties, and intangible property conveying to EDA with
warranties the surviving contracts, permits and licenses, warranties and
intangible property, free and clear of all encumbrances, together with the
consent of all parties having the right to consent to such assignment, if
necessary.
C. FIRPTA Affidavit. An affidavit of Seller certifying that Seller is not a
“foreign person”, “foreign partnership”, foreign trust”, “foreign estate” or
“disregarded entity” as those terms are defined in Section 1445 of the
Internal Revenue Code of 1986, as amended.
D. Seller’s Affidavit. A standard owner’s affidavit (ALTA form) from Seller
which may be reasonably required by Title to issue an owner’s policy of
title insurance with respect to the Property with the so-called “standard
exceptions” deleted (excluding the survey exception).
E. Settlement Statement. A settlement statement with respect to this
transaction.
F. “Bring-Down” Certificate. A Bring-Down Certificate certifying that all of
the warranties made by Seller in this Agreement remain true as of the date
of closing.
G. General Deliveries. All other documents reasonably determined by Title to
be necessary to transfer the Property to EDA and to evidence that Seller (a)
has satisfied all monetary indebtedness with respect thereto, (b) has
obtained such termination statements or releases from such secured
creditors as may be necessary to ensure that the Property is subject to no
monetary liens, (c) has obtained all consents from third parties necessary to
effect Seller’s performance of the terms of this Agreement, including,
without limitation, the consents of all parties holding an interest in the
Property, (d) has provided such other documents as are reasonably
determined by Title to be necessary to issue policies of title insurance to
EDA with respect to the Property with the so-called “standard exceptions”
6
deleted (excluding the survey exception), and (e) has duly authorized the
transactions contemplated hereby.
6.2. EDA Closing Documents and Deliveries. On the Closing Date, EDA shall
execute and/or deliver, as applicable, to Seller the following:
A. Payment of Purchase Price. The Purchase Price, in accordance with the
terms of Section 1.2.
B. Settlement Statement. A settlement statement with respect to this
transaction.
C. General Deliveries. All other documents reasonably determined by Title
to be necessary to evidence that EDA has duly authorized the transactions
contemplated hereby and evidence the authority of EDA to enter into and
perform this Agreement and the documents and instruments required to be
executed and delivered by EDA pursuant to this Agreement, or may be
required of EDA under applicable law, including any purchaser’s affidavits
or revenue or tax certificates or statements.
7. Prorations. Seller and EDA agree to the following prorations and allocation of costs
regarding this Agreement:
7.1 Commitment and Closing Fee. Seller will pay all costs of the title search and
preparation of the Commitment with respect to the Property. EDA will pay the cost
of all premiums for any title insurance policy it desires with respect to the Property,
and the costs of all endorsements. EDA and Seller shall each pay one half (1/2) of
any reasonable closing fee or charge imposed by Title.
7.2 Transfer Taxes. Seller shall pay all state deed tax regarding the Deed.
7.3 Recording Costs. Seller will pay the cost of recording all documents necessary to
place record title to the Property in Seller. EDA will pay all recording costs with
respect to the recording of the Deed.
7.4 Real Estate Taxes and Special Assessments. General real estate taxes applicable
to any of the Property due and payable in the year of Closing shall be prorated
between Seller and EDA on a daily basis as of 12:00 a.m. CT on the Closing Date
based upon a calendar fiscal year, with Seller paying those allocable to the period
prior to the Closing Date and EDA being responsible for those allocable to the
Closing Date and subsequent thereto. Except as set forth herein with regard to
special assessments associated with EDA’s development of the Property, Seller
shall pay in full all special assessments (and charges in the nature of or in lieu of
such assessments) levied, pending, postponed or deferred with respect to any of the
Property as of the Closing Date. EDA shall be responsible for any special
assessments that are levied or become pending against the Property after the
7
Closing Date. Notwithstanding anything to the contrary set forth herein, in the
event that there are special assessments levied against the Property after the
Effective Date, which special assessment relate to EDA’s development of the
Property, such special assessments shall be assumed by EDA at Closing.
7.5 Environmental Review. EDA shall pay all costs and expenses related to the Phase
I and/or the Phase II Environmental Review of the Property.
7.6 Attorneys’ Fees. Seller and EDA shall each pay its own attorneys’ fees incurred
in connection with this transaction.
7.7 Survival. The obligations set forth in this Section 7 survive the Closing.
8. Survey Examination. Within twenty (20) days following the Effective Date, EDA shall,
at EDA’s expense, order an ALTA survey.
8.1 EDA’s Objections. Within twenty (20) days after EDA’s receipt of the
Commitment and ALTA survey, EDA may make written objections (“Objections”)
to the form or content of the Commitment and ALTA survey (“Title Objection
Period”). The Objections may include without limitation, any easements,
restrictions or other matters. In the event the Commitment discloses, or EDA
becomes aware of, any lien on the Property created by Seller that can be discharged
or satisfied by the payment of money (“Monetary Title Matters”), Seller shall
discharge or satisfy such Monetary Title Matters on or prior to the Closing Date. If
Seller fails to discharge or satisfy any such Monetary Title Matters as aforesaid,
EDA, at its sole option, and in addition to any other rights and remedies it may have
under this Agreement, at law and/or in equity, shall have the right to discharge and
satisfy (or cause the Escrow Agent to discharge and satisfy) the same from the
proceeds of the Purchase Price to be paid to Seller at closing. Any matters reflected
on the Commitment and ALTA survey which are not objected to by EDA within
the Title Objection Period or waived by EDA in accordance with Section 8.2(B)
shall be deemed to be permitted encumbrances (“Permitted Encumbrances”).
Notwithstanding the foregoing, the following items shall be deemed Permitted
Encumbrances: (a) Covenants, conditions, restrictions (without effective forfeiture
provisions) and declarations of record, if any; (b) Reservation of minerals or
mineral rights by the State of Minnesota, if any; (c) Applicable laws, ordinances,
and regulations. EDA shall have the renewed right to object to the Commitment
and ALTA survey as the same may be revised from time to time, as to new items
contained in any revised Commitment and ALTA survey.
8.2 Seller’s Cure. Seller shall be allowed twenty (20) days after the receipt of EDA’s
Objections to cure the same but shall have no obligation to do so. If such cure is
not completed within said period, or if Seller elects not to cure such Objections, the
sole recourse of EDA shall be to do one of the following:
A. Terminate this Agreement by written notice to Seller, to be issued within
8
ten (10) days after the expiration of Seller’s cure period; or.
B. Waive the Objections within ten (10) days after the expiration of the Seller’s
cure period and proceed to Closing, in which event the Objections shall be
deemed Permitted Encumbrances.
If EDA so terminates this Agreement under this Section 8.2, the Earnest Money shall be returned
to the EDA and neither Seller nor the EDA shall be liable to the other for any further obligations
under this Agreement (except for such obligations as specifically survive termination of this
Agreement). If EDA fails to terminate this Agreement under this Section 8.2(A) in the time set
forth therein, EDA shall be deemed to have elected to proceed under Section 8.2(B) and waive
such Objections, in which the Objections shall be considered Permitted Encumbrances.
9. Warranties and Representations.
9.1 By Seller. Seller warrants and represents the following to EDA to be true as of the
Effective Date, and acknowledges that EDA has relied on such representations and
warranties in agreeing to enter into this Agreement:
A. This Agreement has been duly executed and delivered and constitutes the
legal, valid and binding obligation of Seller enforceable in accordance with
its terms. Seller has been duly formed under the laws of the State of
Minnesota and is in good standing under the laws of the jurisdiction in
which the Property is located, is duly qualified to transact business in the
jurisdiction in which the Property is located, and has the requisite power
and authority to enter into and perform this Agreement and the documents
and instruments required to be executed and delivered by Seller pursuant
hereto. This Agreement and the documents and instruments required to be
executed and delivered by Seller pursuant hereto have each been duly
authorized by all necessary action on the part of Seller and such execution,
delivery and performance does and will not conflict with or result in a
violation of Seller’s organizational agreement or any judgment or order.
B. The execution, delivery and performance by Seller of this Agreement will
not (a) violate any provision of any law, statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award of any
court, governmental agency or arbitrator presently in effect having
applicability to Seller, or (b) result in a breach of or constitute a default
under any indenture, loan or credit agreement or any other agreement, lease
or instrument to which Seller is a party or by which it or any of its properties
may be bound.
C. To Seller’s knowledge, except as contemplated herein, no order, consent,
approval, license, authorization or validation of, or filing, recording or
registration with, or exemption by, any governmental or public body or
authority, or any other entity, is required on the part of Seller to authorize,
9
or is required in connection with, the execution, delivery and performance
of, or the legality, validity, binding effect or enforceability of, this
Agreement.
D. To Seller’s knowledge, there are no actions, suits or proceedings pending
or threatened against or affecting Seller or the Property, before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which in any of the foregoing (a) challenges the legality,
validity or enforceability of this Agreement, or (b) if determined adversely
to Seller, would have a material adverse effect on the ability of Seller to
perform its obligations under this Agreement.
E. To Seller’s knowledge, there are no wells or sewage treatment systems
located on any portion of the Property. To Seller’s knowledge, there has
been no methamphetamine production on or about any portion of the
Property. To Seller’s knowledge, the sewage generated by the Property, if
any, goes to a facility permitted by the Minnesota Pollution Control Agency
and there is no “individual sewage treatment system” (as defined in
Minnesota Statutes § 115.55, Subd. 1(g)) located on the Property.
F. Seller is not a “foreign person,” “foreign corporation,” “foreign trust,”
“foreign estate” or “disregarded entity” as those terms are defined in Section
1445 of the Internal Revenue Code.
G. To Seller’s knowledge, except as may be disclosed as part of the Due
Diligence Materials, (i) no condition exists on the Property that may support
a claim or cause of action under any Environmental Law (as defined below)
and there are no Hazardous Substances (as defined below) on the Property,
(ii) there has been no release, spill, leak or other contamination or otherwise
onto the Property, and (iii) there are no restrictions, clean ups or remediation
plans regarding the Property. To Seller’s knowledge, except as may be
disclosed as part of the Due Diligence Materials, there is no buried waste or
debris on any portion of the Property. “Environmental Law” shall mean (a)
the Comprehensive Environmental Response Compensation and Liability
Act of 1980, 42 U.S.C. § 9601-9657, as amended, or any similar state law
or local ordinance, (b) the Resource Conservation and Recovery Act of
1976, 42 U.S.C. § 6901, et seq., (c) the Federal Water Pollution Control
Act, 33 U.S.C. § 1251 et seq., (d) the Clean Air Act, 42 U.S.C. § 7401, et
seq., (e) the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq., (f) the
Safe Drinking Water Act, 42 U.S.C. § 300(f) et seq., (g) any law or
regulation governing aboveground or underground storage tanks, (h) any
other federal, state, county, municipal, local or other statute, law, ordinance
or regulation, including, without limitation, the Minnesota Environmental
Response and Liability Act, Minn. Stat. § 115B.01, et seq., (i) all rules or
regulations promulgated under any of the foregoing, and (j) any
amendments of the foregoing. “Hazardous Substances” shall mean
10
polychlorinated biphenyls, petroleum, including crude oil or any fraction
thereof, petroleum products, heating oil, natural gas, natural gas liquids,
liquefied natural gas or synthetic gas usable for fuel, and shall include,
without limitation, substances defined as “hazardous substances,” “toxic
substances,” “hazardous waste,” “pollutants or contaminants” or similar
substances under any Environmental Law.
H. There are no unrecorded contracts of any nature or type relating to, affecting
or serving the Property, to which the Seller is a party.
I. There will be no indebtedness attributable to the Property which will remain
unpaid after the Closing Date.
The representations, warranties and other provisions of this Section 9.1 shall survive Closing for
a period of one (1) year from the Closing Date; provided, however that Seller shall have no liability
with respect to a breach of the representations and warranties set forth in this Agreement if EDA
has actual knowledge of Seller’s breach thereof prior to Closing and EDA consummates the
acquisition of the Property as provided herein.
EDA acknowledges and agrees that, except as expressly specified in this Section 9 of this
Agreement, Seller has not made, and Seller hereby specifically disclaims, any representation,
warranty or covenant of any kind, oral or written, expressed or implied, or rising by operation of
law, with respect to the Property, including but not limited to, any warranties or representations as
to the habitability, merchantability, fitness for a particular purpose, title, zoning, tax consequences,
physical or environmental condition, utilities, valuation, governmental approvals, the compliance
of the Property with governmental laws, the truth, accuracy or completeness of any information
provided by or on behalf of Seller to EDA, or any other matter or item regarding the Property.
EDA agrees to accept the Property and acknowledges that the sale of the Property as provided for
herein is made by Seller on an “AS IS,” “WHERE IS,” and “WITH ALL FAULTS” basis. The
limitations set forth in this paragraph shall survive the Closing and shall not merge in the deed.
9.2 By EDA. EDA warrants and represents the following to Seller, and acknowledges
that Seller has relied on such representations and warranties in agreeing to enter
into this Agreement:
A. EDA has all requisite authority to enter into this Agreement and to perform
all of its obligations under this Agreement.
B. The execution, delivery and performance by EDA of this Agreement will
not (a) violate any provision of any law, statute, rule or regulation or any
order, writ, judgment, injunction, decree, determination or award of any
court, governmental agency or arbitrator presently in effect having
applicability to EDA, (b) violate or contravene any provision of the articles
of incorporation or bylaws of EDA, or (c) result in a breach of or constitute
a default under any indenture, loan or credit agreement or any other
agreement, lease or instrument to which EDA is a party or by which it or
11
any of its properties may be bound.
The representations, warranties and other provisions of this Section 9.2 shall survive Closing;
provided, however, EDA shall have no liability with respect to any breach of a particular
representation or warranty if Seller shall fail to notify EDA in writing of such breach within one
(1) year after the Closing Date.
10. Additional Obligations of Seller.
10.1 Condition of Property at Closing. Prior to Closing, the Property shall be operated
in the ordinary course consistent with previous practice. On the Closing Date, Seller
shall deliver to EDA exclusive possession of the Property. Seller, at Seller’s sole
discretion, may leave or remove any personal property from the Property, however,
Seller shall not remove the items identified on Exhibit B.
10.2 Further Assurances. From and after the Closing Date, Seller agrees to execute,
acknowledge and deliver to EDA such other documents or instruments of transfer
or conveyance as may be reasonably required to carry out its obligations pursuant
to this Agreement.
10.3 Licenses and Permits. Seller shall transfer to EDA all transferable rights, if any,
in any permits or licenses held by Seller with respect to the Property. Seller shall
execute all applicable transfer forms and applications to facilitate and affect any
such transfer and to cooperate fully with EDA in its efforts to obtain all of the
necessary licenses and permits for the Proposed Use.
10.4 Further Assurances. From and after the Closing Date, Seller agrees to execute,
acknowledge and deliver to EDA such other documents or instruments of transfer
or conveyance as may be reasonably required to carry out its obligations pursuant
to this Agreement.
10.5 Non-Assumption of Contracts or Other Obligations. The parties understand
and agree that EDA is only acquiring certain of Seller’s real property assets and
that this Agreement and any related agreements shall not be construed to be in any
manner whatsoever an assumption by EDA of any agreements, indebtedness,
obligations or liabilities of Seller which are owing with respect to the operation of
the Property prior to the Closing Date.
10.6 Mortgages. On or before the Closing Date, Seller shall satisfy all mortgage and/or
lien indebtedness with respect to all or any portion of the Property and shall obtain
recordable releases of the Property from any and all such mortgages or other liens
affecting all or any portion of the Property. Notwithstanding the foregoing, Seller
shall not be obligated to satisfy any liens that result from the EDA’s Investigations.
10.7 Marketing. At all times prior to the Closing Date, Seller shall not negotiate in any
manner for the sale or transfer of the Property with any third party.
12
11. Broker. It is acknowledged that there is not a broker for EDA. Seller has a broker and all
fees to the broker will be paid by Seller.
12. Notice. Any notice to be given by one party hereto shall be personally delivered (including
messenger delivery) or be sent by registered or certified mail, or by a nationally recognized
overnight courier which issues a receipt, in each case postage prepaid, to the other party at
the addresses in this Section (or to such other address as may be designated by notice given
pursuant to this Section), and shall be deemed given upon personal delivery, three (3) days
after the date postmarked or one (1) business day after delivery to such overnight courier.
If to EDA: Cottage Grove Economic Development Authority
Attn: Jennifer Levitt, Executive Director
12800 Ravine Parkway South
Cottage Grove, MN 55016
with a copy to: Korine L. Land
LeVander, Gillen & Miller, P.A.
633 South Concord Street, Suite 400
South St. Paul, MN 55075
If to Seller: A2Z Commercial Holding, LLC
Attn: Joshua S. Collier
15451 Founders Lane
Apple Valley, MN 55124
with copy to:
13. Default; Remedies. If either Seller or EDA fails to perform any of its obligations under
this Agreement in accordance with its terms, and such failing party does not cure such
failure within thirty (30) days after written notice thereof from the other party (provided
that no notice or cure period shall be required for obligations to be performed at Closing),
then the other party shall have the right to terminate this Agreement by giving the failing
party written notice of such election. In the case of any default by EDA, Seller’s sole and
exclusive remedy shall be the termination of this Agreement as provided above and, upon
any such termination, the Earnest Money shall be forfeited to Seller as the full and final
liquidated damages, with the exception of any liens arising out of EDA’s Investigations,
the obligations and liability for which shall survive the termination of this Agreement and
the release of the Earnest Money to Seller. In the case of any default by Seller, EDA’s sole
and exclusive remedy shall be to terminate this Agreement, in which case the Earnest
Money deposit shall be returned to EDA. In no event shall EDA be entitled to record a
notice of Lis Pendens against the Property.
13
14. Cumulative Rights. No right or remedy conferred or reserved to Seller or EDA is intended
to be exclusive of any other right or remedy herein or by law provided, but each shall be
cumulative in and in addition to every other right or remedy existing at law, in equity or
by statute, now or hereafter.
15. Entire Agreement; Modification. This written Agreement constitutes the complete
agreement between the parties with respect to this transaction and supersedes any prior oral
or written agreements between the parties regarding this transaction. There are no verbal
agreements that change this Agreement and no waiver of any of its terms will be effective
unless in writing executed by the parties, except as specifically set forth herein with regard
to items waived as a result of passage of time.
16. Binding Effect; Survival. This Agreement binds and benefits the parties and their
respective successors and assigns. All representations and warranties, and indemnification
obligations of the parties hereto shall survive the Closing.
17. EDA’s Assignment. Following the occurrence of the Contingency Date, EDA may assign
this Agreement without the prior written consent of the Seller (but with written notice to
Seller). No assignment shall relieve EDA from its obligations under this Agreement.
18. Governing Law. The provisions of this Agreement shall be governed by and construed in
accordance with the laws of the State of Minnesota, County of Washington.
19. Counterparts; Facsimiles. This Agreement may be executed in any number of
counterparts, and all of the signatures to this Agreement taken together shall constitute one
and the same agreement, and any of the parties hereto may execute such agreement by
signing any such counterpart. Facsimile or “PDF” signatures on this Agreement shall be
treated as originals until the actual original signatures are obtained.
20. Represented by Counsel. Each party has been represented and advised by counsel in the
transaction contemplated hereby.
21. Time of the Essence. Time is of the essence of this Agreement.
\[Remainder of page intentionally left blank\]
14
IN AGREEMENT, the parties hereto have hereunto set their hands as of the date
hereinbefore first written.
COTTAGE GROVE ECONOMIC
DEVELOPMENT AUTHORITY
By ________________________________
Myron Bailey
Its President
By ________________________________
Jennifer Levitt
Its Executive Director
15
A2Z COMMERCIAL HOLDING, LLC
By:__________________________________
Name: ____________________________
Its: _______________________________
16
EXHIBIT A
LEGAL DESCRIPTION OF THE PROPERTY
Real property located in the County of Washington, State of Minnesota, legally described
as follows:
th
Lot Eight (8), Block Ten (10), Thompson Grove Estates 8 Addition
Abstract
PID: 17.027.21.24.0027 (7470 East Point Douglas Road South, Cottage Grove, MN 55016)
\[Title Commitment legal description to govern\]
A-1
EXHIBIT B
ITEMS SELLER IS TO LEAVE ON PREMISES
B-1
EXHIBIT B
CONT.
B-2
EXHIBIT B
CONT.
B-3
EXHIBIT B
CONT.
B-4
JANUARY 2018
TH
80 STREET
SMALL AREA PLANSMALL AREA PLAN
Prepared for: Prepared by:
Kimley-HornPerkins + Will
City of Cottage Grove
Michael Lamb Consulting, LLC. Tangible Consulting Services
Washington County
Table of Contents
Existing Conditions Analysis ............................................................................................................................................................
2
Overview of Conditions...............................................................................................................................................................
3
Highlights of Previous Plans and Studies....................................................................................................................................3
Small Area Observations .............................................................................................................................................................
4
Market Analysis ..............................................................................................................................................................................
4
Review of Socioeconomic Data ................................................................................................................................................... 4
Review of Existing Markets ......................................................................................................................................................... 5
Developer Interviews ..................................................................................................................................................................
6
Key Findings and Conclusions ..................................................................................................................................................... 6
Transit-Supportive Principles ..........................................................................................................................................................
7
Small Area Vision ............................................................................................................................................................................
7
Development Scenarios ..................................................................................................................................................................
8
School District Site ....................................................................................................................................................................
11
Mobility Improvements ................................................................................................................................................................
13
Priority Corridors ......................................................................................................................................................................
13
Implementation Strategies ...........................................................................................................................................................
13
General Strategies ....................................................................................................................................................................
14
Implementation Challenges ...................................................................................................................................................... 14
Overcoming Challenges ............................................................................................................................................................ 15
Site Specific Strategies: School District 833 Offices, 7362 East Point Douglas Road ................................................................ 15
Acknowledgments
CONSULTANT TEAM
PROJECT ADVISORY TEAM
Kimley-Horn
John Burbank, City of Cottage Grove
Michael Lamb Consulting, LLC
Lucy Galbraith, Metro Transit
Perkins + Will
Emily Jorgensen, Washington County
Tangible Consulting Services
Daniel Peña, Metropolitan Council
Will Schroeer, East Metro Strong
Nate Sparks, City of St. Paul Park
Scott Thompson, Metro Transit
Hally Turner, Washington County
Kevin Walsh, City of St. Paul Park
Corrin Wendell, Metropolitan Council
January 31, 2018
Њ
Figure 1: 80th Street Small Area
The following small area plan was developed for the City of Cottage Grove with support from Washington County Regional
Railroad Authority. This planning process was an outcome of one of the recommendations from the Red Rock Corridor
Implementation Plan to work with cities along Highway 61 to update comprehensive plans with consideration given to
increasing population and employment density within the proposed station areas.
The goals for this small area planning process were to:
Support the comprehensive plan process
Support the character and vision of the community
Stimulate economic development and redevelopment
Improve connection through the community
Identify transit-supportive strategies to build potential ridership
Existing Conditions Analysis
th
The existing conditions analysis provides an overview of the plans and studies that have been done to date in the 80 Street
small area and documents the existing urban landscape of the small area. This information provides the foundation upon which
the small area plan was built. While highlights of the existing conditions analysis are found in this plan, more detailed
January 31, 2018
Ћ
information can be found in the Cottage Grove & St. Paul Park Existing Conditions Memo posted on the Red Rock Corridor
website.
OVERVIEW OF CONDITIONS
th
The 80Street small area includes a mix of residential and commercial uses, as well as some parkland in the northern part of
the small area. The area also includes some undeveloped parcels and vacant buildings. Senior housing is currently located in the
northwestern part of the small area, single-family housing is currently located in the southeast, and higher density housing is in
the northeast. The center of the small area is occupied by a variety of stand-alone businesses as well as a large shopping
development.
The 80th Street small area is fairly well-connected given its suburban context. The building pattern and elevations are related,
with little development existing in areas of steeper grade to the northwest of the small area. Parcel sizes in the area are medium
th
to large, and traffic counts were approximately 17,500 vehicles per day along 80 Street in 2015.
HIGHLIGHTS OF PREVIOUS PLANS AND STUDIES
Plans and studies reviewed include steering committee minutes, a community survey, and two background reports for the 2040
comprehensive plan; the East Ravine Master Plan; omprehensive Housing Needs Assessment Update;
and the Red Rock Corridor Implementation Plan.
Washington County Comprehensive Housing Needs Assessment Update, 2017
ensive Housing Needs Assessment Update, produced by Maxfield Research and Consulting in
March 2017, projects housing demands for submarkets in Washington County from 2017-2030 and provides recommendations
on the amount and types of housing that need to be built to satisfy demand. The study also identifies areas for potential
housing development.
Cottage Grove Steering Committee Documents, 2016
Notes from the Cottage Grove Comprehensive Plan Steering Committee include a discussion of key opportunities and challenges
in the city as well as some of the priorities of those in leadership within the city.
Talk About Cottage Grove! Survey Results, 2016
This survey, conducted in the fall of 2016, was part of the 2040 comprehensive plan update and was used to gauge perceptions
of community strengths and opportunities and challenges around healthy living and food access in the city. The survey indicates
(among other things) that retail and employment should be areas of focus in the small area plan.
Cottage Grove 2040 Comprehensive Plan: Background Report, 2016
The Background Report prepared by Stantec for the City of Cottage Grove serves as an overview of historical and existing
conditions in the city. The report documents the small area demographic and land use changes and provides insight into how
the areas may continue to change in the future.
Cottage Grove Background Report: Market and Development Context, 2016
The Market and Development Context Report, prepared by Stantec and Tangible Consulting Services in 2016, outlines the
market and development context that will shape the future growth of Cottage Grove. This report provides a more in-depth look
at the economy and market dynamics of the city.
Red Rock Corridor Implementation Plan, 2016
High-level station area plans were developed as part of the Implementation Plan to help identify station area land uses that
could support improved transit ridership. The Cottage Grove Station Area Planning Report suggested increasing the mix of uses
th
within the 80 Street small area.
East Ravine Master Plan, 2005
East Ravine is the latest section of the city to be open for urban development. A master plan was completed in 2005 that
describes land use designations, major roadway alignments, park and open space locations, and the types of utility extensions
January 31, 2018
Ќ
necessary to serve the area. Development occurring in East Ravine may impact the demand for certain types of elements in the
th
80 Street small area.
SMALL AREA OBSERVATIONS
Accessibility
th
Highway 61 and 80 Street are the prominent transportation features in the small area. Highway 61, though it connects the
small area to the remainder of the metropolitan area, is a barrier within the small area, since there are few places to cross it,
th
and crossing freeways can be uncomfortable as a pedestrian. 80 Street is a major east-west arterial that connects the eastern
parts of Cottage Grove to Highway 61.
Local vehicular access to most sites within the small area is good, which is supportive of development. The roadways generally
accommodate a high volume of vehicle traffic for those traveling to or from the area by car. East Point Douglas Road and
Hardwood Avenue serve as frontage roads to improve accessibility within the commercial areas.
th
While there are trails along East Point Douglas Road and 80 Street, access for bicyclists and pedestrians in the small area can
be a challenge, since the businesses in the area have large setbacks and there are not pedestrian connections from the street to
the door of the businesses in the small area. While the connections from the neighborhood to the south to the Hy-Vee and
Home Depot commercial area via Harkness Road and Hearthside Road are beneficial, these entrances lead people to the loading
area of the commercial area and the pedestrian infrastructure ends. Continued pedestrian infrastructure and a more welcoming
pedestrian entrance with wayfinding would improve the bicycle and pedestrian accessibility of this area.
th
Additionally, while there are signalized pedestrian crossings on East Point Douglas Road south of 80 Street and at the
th
intersection of East Point Douglas Road and 80 Street, they are not the most comfortable crossings due to the amount of
traffic and the width of the roadways.
Visibility
th
Some of the parcels in the 80 Street small area are visible from Highway 61. This is one of the reasons why a retail district
th
exists at this location. In this stretch of Highway 61, daily traffic volumes are 38,000 vehicles per day (2016 traffic count). 80
Street is an A-Minor Expander with 17,500 vehicles per day (2015 traffic count).
th
The topography south of 80 Street, especially closer to Highway 61, tends to be flat, which provides maximum visibility from
the highway in both directions. This is the area where retail uses tend to be the most concentrated. Retail uses located along
thth
the north side of 80 Street have good visibility to and from 80 Street. However, they do not have good visibility to and from
Highway 61 due to the topography.
Neighborhood Amenities
thth
Oakwood Park and Hearthside Park are located in the 80 Street small area. The commercial core of the 80 Street small area
includes a variety of businesses that provide a range of goods and services that would be attractive for many types of
households to live nearby.
Market Analysis
Themarket analysis informs the planning process and provides stakeholders with data and analysis of the short- and long-term
th
market trends that will shape and shift opportunities in the 80 Street small area. Important market factors related to
demographic trends, economic trends, real estate supply and condition, and the opinions of real estate experts were evaluated
and used to identify key findings and draw conclusions. While highlights of the market analysis are found in this plan, more
detailed information can be found in the Cottage Grove & St. Paul Park Small Area Plans Market Analysis Report posted on the
Red Rock Corridor website.
REVIEW OF SOCIOECONOMIC DATA
With substantial tracts of undeveloped land, Cottage Grove has grown at a consistent rate for decades. This pattern is expected
to continue into the foreseeable future in which the population will grow between 10 percent and 12 percent each decade
January 31, 2018
Ѝ
through 2040. This will translate into approximately 3,800 to 4,800 new persons every decade. This amount of forecasted
growth will require new residential and commercial development to support this growth.
th
The 80Street small area experienced a sharp increase in its median age between 2000 and 2010 (28.5 to 32.5), which was
th
likely due to the construction of new senior housing. Despite this increase, the median age in the 80 Street small area remains
th
relatively young and homeownership remains relatively high. The 80 Street small area also has a higher proportion of young
households, renters, and single-parent families than the 7-County Twin Cities Metropolitan Area.
th
The 80Street small area has a 2015 median income of $79,500, which is relatively close to the Cottage Grove median, and is
somewhat counterintuitive to the fact that it has a higher proportion of young households, renters, and single-parent families,
all of which tend to have lower incomes. This is because median income, by definition, means half the number of households
above and half below. Thus, if the small area has a larger number of higher income households, this will mask the presence of
lower income households.
REVIEW OF EXISTING MARKETS
The current and foreseeable conditions of the housing, retail, and office markets in and near Cottage Grove were reviewed to
determine the ability of the current supply to meet market demand in each of these sectors.
Housing Market
Residential development in Cottage Grove has been dominated by single-family housing. Senior housing has also played a
growing role in residential development since 2007; however, there has been little non-senior multifamily development in the
last 20 years.
The Cottage Grove submarket (which includes the communities of Cottage Grove, St. Paul Park, Newport, and Grey Cloud Island
Township) has a calculated need of nearly 7,800 housing units through 2040. Over 63 percent, or roughly 4,900 of those units,
would be considered transit-supportive. While adding this housing, it will be important to provide a variety of housing styles at
various price points that appeal to a range of household types.
Retail Market
th
The 80Street small area includes a strong complement of different retail and service-retail businesses (located primarily on the
strong traffic counts, good visibility, higher incomes, flexible building
th
layouts, and a complementary mix of existing stores. Currently, the 80 Street small area has 34 retail properties with a
-Vee are the anchor businesses that serve to draw traffic into the district.
According to CoStar, an American commercial real estate information provider, vacancy remains high at 25 percent due to a
vacant former Home Depot store; however, plans to repurpose the vacant building are progressing and will likely result in a new
occupant in the near future. Average quoted rent for all available spaces in the district is currently just over $15 per square foot.
This is consistent with the average rent per square foot for South Washington County.
Constraints to future retail market include surrounding residential uses, steep slopes, poor access, and conserved land.
Significant retail opportunities will generally involve redevelopment of existing properties.
Office Market
While job growth in the Cottage Grove and St. Paul Park area has consistently outpaced that of the metropolitan area and the
United States over the last 15+ years, there are only 0.04 knowledge sector jobs for
th
every household (jobs in the knowledge sector typically contain the most office-based jobs). The 80 Street small area has
roughly 140,000 square feet of office space spread across 13 properties. The vacancy rate is low at just over two percent.
Average quoted rent is $13.55 per square foot, below the South Washington County average lease rate. Much of the office
th
space in the 80 Street district is integrated among retail properties.
Office demand in the Red Rock Corridor is closely related to the needs of the local household base. Therefore, it is assumed that
as the local household base in the Red Rock Corridor increases so will the demand for small office space. Currently, there is
approximately 21 square feet of office space in the corridor for every household in Cottage Grove and St. Paul Park. Assuming
the amount of office square feet per household will decline over time, and assuming a future household base of 20,600, this will
January 31, 2018
Ў
translate into a need for roughly 350,000 total square feet of office space an excess demand for 48,000 square feet over the
next 25 years or so. In other words, this would be equivalent of three new small office buildings (16,000 square feet) every six to
eight years.
DEVELOPER INTERVIEWS
Five real estate professionals familiar with Cottage Grove and St. Paul Park were interviewed for their perspective on the market
th
for housing, retail, and office uses both at a macro level as well as specifically within the 80 Street small area.
There was agreement among those interviewed that there is demand for affordable and senior housing, although interviewees
felt that public financial support would be required for affordable housing development.
th
There was general agreement that the existing retail in the 80 Street small area has good anchors, which is contributing to an
overall healthy level of interest by retailers and should help the areas remain viable for retail into the foreseeable future. It was
stated that there is demand for one or more dining or entertainment destinations, which is hampered somewhat by the limited
amount of available and adequate sites.
Interviewees felt that the small areas of the Red Rock Corridor are not a market for office space, but that it might be possible in
the short-term to support pedestrian-oriented retail areas on a small scale.
KEY FINDINGS AND CONCLUSIONS
The following are key findings and conclusions regarding the short- and long-term market opportunities for transit-supportive
th
development in the 80 Street small area.
Overall Factors Influencing Market Demand
th
The 80Street small area is currently experiencing development momentum. Hy-Vee recently opened a new store on the site of
a former Rainbow Foods, and a development project is being planned for the vacant Home Depot property. Moreover, two
large senior housing developments are underway in the small area. This development energy is an indicator of not only the
strength of the overall market for different types of real estate but has raised the character of the small area to one with vitality
and optimism.
th
Commercial expansion is limited, however, by the surrounding residential uses and the topographic change north of 80Street
th
and further east along 80 Street in which steep slopes and poor visibility impact retail viability.
Short-Term (Less than Five Years)
Although the market for market rate rental housing is unproven in the Cottage Grove area, the current housing demand,
growing development momentum, potential for a walkable location, and possibility of a strategic redevelopment site suggest
that the development community may be in a position to test the market.
More households will drive demand for more neighborhood retail space. The redevelopment of the Home Depot space will
presumablysatisfy a large portion of the near-term demand if the uses are primarily focused on the local household base.
Calculated short-term demand for office space is limited; however, existing space is very tight with vacancy throughout the Red
th
Rock Corridor extremely low. In the 80 Street small area, office users are heavily skewed toward the niche market of medical
office space and the opportunity exists to brand the area as a medical district, potentially increasing the demand for office
space.
Long-Term (More than Five Years)
th
Long-term potential for housing in the 80 Street small area will be driven by strong demand. The central location, access to
retail amenities, medical offices, and transit enhancements will make this a desirable location for housing, resulting in its
likelihood of capturing a high proportion of future multifamily demand. The challenge will be whether land can be identified and
planned to easily accommodate future development.
Given the constraints on land needed for expansion, most new retail space will likely be the result of redevelopment, which may
yield new and improved spaces but not necessarily result in a net increase in additional retail space.
January 31, 2018
Џ
Similar to the long-term prospects of retail space, land constraints will limit the ability to easily add office space. In addition,
based on the amount of household growth projected for Cottage Grove through 2040, it would not appear that even long-term
office demand would be sufficient to reach levels to justify redevelopment at significantly higher densities.
Transit-Supportive Principles
Based on the existing conditions and market analysis of the small area, as well as engagement with the public and stakeholders,
th
the transit-supportive principles found in Table 1 were developed to guide the 80 Street small area.
Table 1: Transit-Supportive Principles for the 80th Street Small Area
Create a safe and inviting pedestrian network between destinations in the small area
Ǥ
Ʒ
ź
ε
Increase pedestrian connections between the residential and commercial areas of the small area
ǝ
Ǥź
ƷƷ
ź
ĭ
ƌ
ź
Ļ
Ĭ
Prioritize pedestrian connections from streets to the doors of commercial developments
Ɠ
ƚ
Ɠ
ƚ
a
/
Increase bicycle connections within the small area
Encourage parking to be organized secondary to the pedestrian environment
ŭ
Ɠ
ź
Support shared parking agreements
Ɖ
Ʃ
ğ
t
Encourage bicycle parking to be included with new developments
Increase the diversity of housing options in the small area through the support of market rate and
Ǥ
Ʒ
ķ
ź
ƭ
Ɠ
ƭ
affordable multifamily housing
Ļ
Ʃ
ğ
ƭ
\[
Ļ
ǝ
Ņ
Encourage horizontal mixed-use developments within the small area
ź
ƚ
5
Allow for densities of at least 40 units per acre within the small area (currently ranges from 1-4 to 24
Ǥ
Ʒ
ź
ƭ
units per acre)
Ɠ
Ļ
5
Introduce pedestrian-scale lighting, wayfinding, plantings, and street furniture in the small area
Increase street connectivity as large sites redevelop
Ɠ
ŭ
ź
ƭ
Ļ
Encourage pedestrian-oriented site designs
5
Introduce public gathering spaces
Small Area Vision
th
The following vision was written for the 80 Street small area based on public and stakeholder input:
th
The vision for the 80 Street small area is to diversify land uses within this established retail district with
new commercial types and housing options. Current pedestrian and bicycle infrastructure will be
supplemented with improvements connecting bicyclists and pedestrians to the doors of residential and
th
commercial developments. The 80 Street small area will be a vibrant place where people can comfortably
walk and bike from their homes to surrounding retail and recreational destinations.
January 31, 2018
А
Development Scenarios
As part of the market analysis for the plan, the assessed property value per square foot was investigated for the parcels within
th
the small area. This information is displayed for the 80 Street small area in Figure 2.
th
Figure 2: Assessed Property Value per Square Foot by Parcel in the 80 Street Small Area
January 31, 2018
Б
th
The existing conditions and market analysis was used to identify potential opportunity areas within the 80 Street small area.
These areas are shown in Figure 3. The purpose of this analysis was to identify potential project areas that may be of interest to
developers in the near- to medium-term. It is important to note that the participation of existing property owners, through sale
of the property or some other form of collaboration, is a critical condition for any new development to proceed. This analysis
did not evaluate the views of existing property owners and does not imply that identified development opportunity sites will be
redeveloped or should be redeveloped. It does not take away or diminish the rights of property owners to keep ownership of
their properties or to sell their properties to whomever they choose. Talking to existing property owners would be an important
early step in further exploring the development potential of any of these sites.
th
Figure 3: 80 Street Small Area Potential Opportunity Areas
January 31, 2018
В
The potential opportunity areas were then further classified as areas likely to change and areas to possibly change. The areas
identified as likely to change are those that developers would likely be interested in first. These classifications are depicted in
Figure 4.
Figure 4: 80th Street Small Area Opportunity Area Classifications
The potential opportunity areas were further thought out into development scenarios to visualize how such developments
could look in the community, prThe development
th
scenario created for the 80 Street small area is located on East Point Douglas Road at the South Washington School District 833
site between the Hy-Vee and Hillside Trail.
January 31, 2018
ЊЉ
SCHOOL DISTRICT SITE
th
A likely candidate for redevelopment in the 80 Street small area is the school district property on East Point Douglas Road. This
site is located south of the Hy-Vee site and is shown to accommodate a range of commercial, retail, and residential uses (shown
in Figures 5 and 6). Full mixed-use buildings front onto East Point Douglas Road, and multifamily buildings are organized around
a prominent common green space. The development also includes townhouse and quadplex residential uses that provide
another housing choice in scale with the surrounding single-family neighborhood.
Site: 7.25 acres
Commercial/Retail: 17,800 square feet
Multifamily Units: 110
Townhouse Units: 16
Big House Units: 28
The gateway site into the neighborhood is shown (also in Figures 5 and 6) supporting two smaller mixed-use buildings that are
more in scale and character with the adjacent neighborhood. The buildings include ground floor commercial, service, or both
uses with rental units above.
Site: 1.45 acres
Commercial/Retail: 20,000 square feet
Multifamily Units: 50
Figure 5: Development Scenario Between Hy-Vee and Hillside Trail
January 31, 2018
ЊЊ
Figure 6: Rendering of the development scenario between Hy-Vee and Hillside Trail
January 31, 2018
ЊЋ
Mobility Improvements
th
Mobility improvements within the 80 Street small area would be beneficial for those walking and bicycling throughout the
small area as well as for connections to the proposed Red Rock Corridor bus rapid transit (BRT) station. As indicated in Figure 7,
mobility improvements are identified throughout the small area.
Figure 7: Proposed Mobility Improvements within the St. Paul Park Small Area
PRIORITY CORRIDORS
th
While there is fairly significant bicycle and pedestrian infrastructure throughout the small area, the neighborhood south of 80
Street currently has minimal connections to the north and south other than East Point Douglas Road. As redevelopment occurs
th
near 80 Street, the connections from the neighborhood to the residential and retail area to the northwest will be increasingly
th
important. Additionally, bicycles and pedestrians can currently only cross Highway 61 on the south side of 80 Street, and the
thth
sidewalk on the north side of 80 Street ends abruptly east of the bridge. When the 80 Street bridge over Highway 61 is
reconstructed, shared use paths should be included on both the north and south side of the bridge.
Implementation Strategies
th
The 80Street small area presents opportunities for placemaking (creating a unique identify for the area) and development that
would increase the vibrancy of the area around the station, enhance its value to the community, and build population and
transit ridership. This section of the plan offers implementation strategies for proposed improvements to move this plan to
actionable change.
January 31, 2018
ЊЌ
The recommended implementation strategies build on research, analysis, and engagementincluding market research,
observations of development trends, interviews with developers, and discussions with the project steering committee and the
public.Site-specific recommendations also draw on the outcomes of the December 5, 2017 Implementation Workshop, which
gathered implementation leadership at the city and county levels to brainstorm how to implement development concepts for
Cottage Grove and St. Paul Park small areas.
GENERAL STRATEGIES
th
Some general implementation strategies for encouraging transit-supportive development in the 80 Street small area are as
follows:
Financial Strategies
Create tax increment financing (TIF) districts as requested by developers for sites within the small area
Bond to help developers secure a low interest rate
Dedicate resources to help secure land for transit-supportive developments
Regulatory
Amend zoning or create zoning overlays that allow for mixed uses and at least 40 units per acre in the small area
Create or amend site plan regulations to require developers to construct pedestrian infrastructure from the door
of their building to the sidewalk or trail along the street
Require bicycle parking at new developments within the small area
Create design guidelines for the small area so that development and redevelopment maintains the character
desired by the community
Encourage parking to be oriented second to the pedestrian environment with the small area
Policy
Establish economic development as a priority and share this priority with other departments
Connect small area plans and economic development chapter of the comprehensive plans
Make transit-
comprehensive plan and specifically refer to the Red Rock Corridor and building ridership in the corridor
Review role of and potentially expand responsibilities for Economic Development Authority
Promotion
Identify advocates for transit-supportive developments and communicate consistently
Participate in a corridor-wide economic development strategy
Educate the public and city councils regarding transit-supportive development
Host developer panels to discuss development opportunities within the small area
Advertise potential development or redevelopment opportunities
Land Assembly
Support land acquisition for transit-supportive developments
Public Improvements
Fund enhanced streetscaping, public art, or community spaces within the small area
Maintain infrastructure to quality standards to entice continued and additional development
Create a consistent pedestrian network throughout the small area
IMPLEMENTATION CHALLENGES
th
Our market and development research found market support for both retail and residential development in the 80 Street
small area. Nevertheless, development in the small area will face challenges, particularly where it entails redevelopment of
already developed property. Among them are the following:
{źƷĻ ğƭƭĻƒĬƌǤ͵ Acquiring property for redevelopment in the small area adds a cost premium compared with greenfield
development (building on undeveloped land). It also extends the development timeline and introduces holdout risks.
\[ğĭƉ ƚŅ ƦƩĻĭĻķĻƓƷƭ͵ The multifamily housing and retail formats as envisioned would be pioneering in the small area.That
introduces uncertainties for developers because there are not rent precedents that developers can use to estimate their
future rental income.
January 31, 2018
ЊЍ
th
tǒĬƌźĭ ƩƚƌĻ͵ While Cottage Grove has a history of taking action to attract development, implementing the 80 Street small
area plan will require new types of actions, with implications for staffing, financial planning, and communication.
OVERCOMING CHALLENGES
th
The following are some approaches that may be used to pursue the development vision in the 80 Street small area:
th
LƓƷƩƚķǒĭĻ ƓĻǞ ŷƚǒƭźƓŭ ğƓķ ƩĻƷğźƌ ğƷ ƷŷĻ ĭƚƩĻ ƚŅ ƷŷĻ ƭƒğƌƌğƩĻğ͵There are many benefits to redevelopment in the 80
Street small area at the South Washington County School District 833-owned property at the core of the small area. Being
largelyin public ownership, it presents fewer site assembly challenges than most of the other redevelopment sites. The
large size of the site means that it offers the opportunity to provide something new and special for Cottage Grovea high-
quality environment with transit-supportive forms of housing and retail and opportunities for placemaking and identity-
building. New housing and retail at the site will also build the market for subsequent transit-supportive projects and provide
rent comps to reduce developer uncertainties for future projects.
th
ağƩƉĻƷ ƷŷĻ ƚǒƷƌǤźƓŭ ƚƦƦƚƩƷǒƓźƷǤ ƭźƷĻƭ͵ The development sites north of 80 Street have an important role to play in
diversifying the and increasing the number of households that can support the c
businesses and transit service. However, developers tend to specialize in particular styles of development, with most
suburban housing developers focusing on lower density housing formats. To attract high quality multifamily housing
development to the outlying development sites, the City of Cottage Grove should plan on investing time and energy in
marketing the sites to the development community.
ağƉĻ ƦǒĬƌźĭ ƩĻğƌƒ źƒƦƩƚǝĻƒĻƓƷƭ͵ Every action that increases the comfort for pedestrians will improve the attractiveness
of the area for redevelopment. Implementing plan recommendations related to bicycle and pedestrian connectivity,
intersection improvements, and wayfinding (directional signage) will improve the attractiveness of the area to prospective
developers.
{ĻƷ ŷźŭŷ ķĻƭźŭƓ ƭƷğƓķğƩķƭ ŅƚƩ ƓĻǞ ķĻǝĻƌƚƦƒĻƓƷƭ͵ New development has a visual impact for a long time. It is important to
put high design standards in place to ensure that it benefits the community and sets a high bar for subsequent
development projects. The standards may differ for different subareas within the small area. Setting standards may entail
changes to the zoning code, map, or both and may be supplemented by the creation and adoption of development
objectives or design standards documents.
tƩĻƦğƩĻ Ʒƚ ƦƌğǤ ğ ŅźƓğƓĭźğƌ ƩƚƌĻ źƓ ƭǒƦƦƚƩƷźƓŭ ƓĻǞ ķĻǝĻƌƚƦƒĻƓƷ͵ Public financial support is expected to be required for
redevelopment projects in the small area. Some level of financial support may also be required for development of
undeveloped land, where proposed development types are pioneering for Cottage Grove. Specific steps that could be taken
to prepare for playing an appropriate development finance role include:
Evaluating the likely public sector costs for development through a pro forma analysis
Preparing a development finance toolkit in anticipation of development
Evaluating and deciding on a reasonable pace of public sector development and placemaking investment that can
be sustained over the next couple of decades
Adopting a communication strategy about development-related goals and the public sector actions that may be
required to attract and shape development. Cities need to invest in themselves over time, but public
understanding of that reality requires ongoing communication.
SITE SPECIFIC STRATEGIES: SCHOOL DISTRICT 833 OFFICES, 7362 EAST POINT DOUGLAS ROAD
A new mixed-use community is proposed for this site, with residential and retail elements. It would offer retail businesses that
have a more walkable character than what is already available in Cottage Grove. It would also provide housing options to
residents that are not currently available in the city.
New households would support nearby businesses and contribute to ridership for the future transit service. With high-quality
design, it can be visually attractive and establish a sense of positive momentum. It can also serve to attract subsequent
development and additional investment in the community. The proposed development of this site would increase the taxable
value of the property.
January 31, 2018
ЊЎ
{źƷĻ ĭŷğƩğĭƷĻƩźƭƷźĭƭ͵ The land area is around 308,000 square feet. The cumulative assessed value is approximately $5,200,000, or
$16.70 per square foot. The site comprises two parcels. Most of the site is owned by Washington County School District 833 and
used as the district headquarters. A smaller, privately owned commercial property is situated at the intersection of East Point
Douglas Road & Hillside Trail intersection. Each of the properties has a building on it.
The site is visible from Highway 61, in an area that is anchored by a strong set of retail businesses, including the new Hy-Vee
store. The freeway exposure is appreciated by some housing developers because it contributes to the marketing of a
development.
CƚǒƓķğƷźƚƓ ŅƚƩ ƭǒĭĭĻƭƭ͵ Site assembly is potentially simplified by public sector (school district) ownership of most of the site.
The large site allows for staging implementation over multiple phases and for building amenities into the development.
Proximity to the new Hy-Vee grocery store would be attractive for future households and retail businesses.
/ŷğƌƌĻƓŭĻƭ͵ Sanitary sewer capacity in this area is constrained and may need to be addressed in the future. Additionally, public
financial support is likely to be needed in order to attract development. Further, the views of nearby residents and business
owners are still unknown.
LƒƦƌĻƒĻƓƷğƷźƚƓ ƭƷƩğƷĻŭǤ͵ With an uncomplicated ownership pattern, there are two approaches to site assembly. The city could
take on site assembly for redevelopment, or the property could be marketed to and purchased by a developer partner directly.
One approach is to initially work to attract a developer to purchase the site. If, for timing or other reasons, there is a risk of
losing the property to a reuse or redevelopment that is not in the public interest, city site acquisition could serve as the
contingency plan.
Information development and communication with property owners are first steps. Property information should be assembled
and pursued, including appraisal of the market value of the two properties, title research, and assembling of what is known
about potential environmental contamination. A concept level financial analysis of the desired development concept can
provide a clearer sense of the public financial support that will be required. Workforce and senior housing may also be explored
for the alternative channels of development finance they might unlock and the community needs they may meet. Lines of
communication should be opened with the two property owners in order to understand their short- and long-term goals and
their potential willingness to sell or relocate.
Attracting developer interest comes next. If the city and school district decide that they have compatible goals, and when the
timing is right for the school district, they can work together to market the development opportunity to developers. A selected
developer should provide a concept plan for the entire site that is compatible with public goals and offer a more detailed
development plan for a first phase of the development. A first phase that includes some of the important site amenities will
make it easier to complete subsequent phases.
Readiness for development also entails:
Rezoning property, and otherwise establishing clear guidance for development, in support of plan goals
Doing additional community outreach, including with neighbors of the future development
January 31, 2018
ЊЏ