HomeMy WebLinkAbout1998-10-21 PACKET 12.A.REQ�JEST OF CITY COUNCIL ACTION COUNCIL AGENDA
MEETING ITEM #
DATE 10l21l98 /,"a.(�.
PREF'f�RECJ BY:
Administration Ryan Schroeder
ORIGINATING DEPARTMENT STAFF AUTHOR
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COUNCIL ACTION REQUEST
Acquisition of Golf Course Property
BUDGET IMPLICATION: $ $
BUDGETED AMOUNT ACTUAL AMOUNT FUNDWG SOURCE
ADVISORY COMMISSION ACTION
DATE
❑ P�ANNING
❑ PUBLIC SAFETY
❑ PUBLIC WORKS
❑ PARKS AND RECREATION
❑ HUMAN SERVICES/RIGHTS
❑ ECONOMIC DEV. AUTHORITY
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SUPPORTING DOCUMENTS
REVIEWED
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APPROVED
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� MEMO/LETTER: Memo from Ryan Schroeder, dated 10/19/98
❑ RESOLUTION:
❑ ORDINANCE:
❑ ENGIIVEERING RECOMMENDATION:
❑ LEGAL RECOMMENDATION:
❑ OTHER:
ADMINISTRATORS COMMENTS
DENIED
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City Administrator Date
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To: Mayor and City Council
From: Ryan R.Schroeder
Date: 10/19/98
Re: River Oaks Golf Course LeaselPurchase
Council has been informed, and has briefly discussed, the issue of a possible
buyout of the e�cisting leased premises at the River Oaks Golf Course. The
lease, with 3M is for a 59.89-acre parcei. The existing Iease, with e�ension
options, runs through 2025. Presently, the renewai periods are every five
years with the next reassignment of rentai rate for the year 2000. Currentiy,
the City pays an annual lease of $14,972.52.
The Washington County Assessors office has determined that the leased premises wili be taxable for
taxes payabie 1999. It is expected that the taxes on the projected $300,000 value in that year will be
roughiy $6750. It is also expected, however, that the tax bili payable 2000 wiil be $22,500. We project
that the tax bill will continue in that neighborhood from that point forward (with normai inflationary
increases).
As noted to Council i� a September 18, 1998 memorandum the current rental expense at a 5% cost of
money results in a present value of about $193,624 ($3,233/acre). I have been told recently, contrary
to an earlier belief that large parcel ag land in that neighborhood is currently selling in the neighborhood
of $3750/acre. After figuring in the tax exposure the value to the City of buying out this lease is beyond
the market value of neighborhood property as stated here.
The question of Council is to provide direction regarding Iease/purchase discussions. The options
appearto be:
1. Do nothing. This results in a tax payment and a need to negotiate lease term beginning in 2000.
2. Negotiate to purchase. If a purchase is closed and recorded before July 1, 1999, we avoid the
year 2000 tax payment.
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3. Work with the County in an effort to avoid the tax bill. This has already been done at the staff levei.
Therefore, that discussion would need to be a political one.
4. Negotiate for a new lease. 3M would like to do this regardless of the tax biil issu2. We have
several options on how to approach that. 3M wouid like to maintain control given potential uses of
this property over the long haul and their concern for future densities on their property.
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