Economic Development Authority - Erik Thorvig, Community Development Director
Title
Title
Considering Sale of Wetland Credits to the State of Minnesota for the State Emergency Operations Center Facility (SEOC) at 4001 Pheasant Ridge Drive NE
Executive Summary
Consider selling wetland credits to the State of Minnesota for the SEOC project at 4001 Pheasant Ridge Drive NE.
Background
The State of Minnesota identified the need for a new State Emergency Operation Center (SEOC) as part of a bonding request for the 2020 Legislative Session. The current SEOC facility is located in downtown St. Paul and does not adequately serve the operations. Approximately $30M was approved in the 2020 state bonding bill to construct a new facility. The timeline is to identify and design a site in 2021 and begin construction in 2022.
The State of Minnesota proposes to construct a new, approximately 50,000 square foot, two-level facility in the North Metro. The proposed facility would house two main functions - the main offices for the 60 to 80 employees of the State’s Department of Public Safety, Division of Homeland Security and Emergency Management (HSEM) and the State of Minnesota Emergency Operations Center.
The HSEM offices would serve as a headquarters for staff to plan and prepare for emergencies in the state as well as to respond and recover from those emergencies. HSEM staff have connectivity to Emergency Managers in counties and cities across the state and frequently bring outside agencies to the facility for disaster planning.
The SEOC would be the primary location where statewide responses to disasters are coordinated by up to 150 people representing the State, its agencies, and outside stakeholders. The SEOC is mandated by law to serve as the primary response location in the case of an emergency at either one of the State’s two nuclear power plants. Because of the critical nature of the SEOC’s role in emergency management, robust continuity of operations strategies will be employed to ensure that the facility maintains operations even when it is located amid the disaster to which it is responding.
Staff became aware of the interest in Blaine in late 2019. Discussions between city and state staff to find a site in Blaine reinitiated after the funding was approved in 2020.
On July 7, 2021, the Blaine EDA approved a purchase agreement with the State of Minnesota for the property at 4001 Pheasant Ridge Drive NE. The sale is contingent upon language that states “buyer shall have determined in its sole judgment that it is satisfied with all matters related to wetlands on the site, including but not limited to the amount and cost of wetland credits required to be purchased by Buyer to develop the Property. Seller shall assist in determining the wetland impacts and related requirements to develop the Property.”
The land purchase price of the property is $1. The purchase price recognized the costs and challenges in developing the site. The site challenges mainly relate to the need to import fill to bring the property to an elevation where a building could be constructed and correct poor soils. Estimates were completed by the State requiring $750,000 in soil corrections and $50,000 in dewatering as part of the soil correction work.
The State has identified the need to purchase up to 740,520sf. (8.5 acres) of wetland credits for the project. The EDA typically sells credits at a price of $2.50/sf. which would equate to $1,851,300. The EDA has discounted the price for credits for larger, bulk purchases as low as $1.80/sf. The State has offered to pay $1.50/sf. or $1,110,780.
This would bring their overall costs to get the site shovel ready to $1,910,780 (wetland sale price + soil correction costs). The overall site is approximately 20 acres; however, the developer is only impacting approximately 6.5 acres of the site. Shovel ready office/industrial land sells for $4/sf. in the general area. Therefore, if the developer were to purchase approximately 6.5 acres of shovel ready land (no fill or wetland costs needed) at a market rate price of $4/sf. they’d pay approximately $1.17mil.
If the EDA chooses not to sell credits at this price, or proposes a higher price the State is not willing to pay, the State can go to the private wetland bank market to explore whether a private wetland bank seller would be willing to sell credits at a price the State is comfortable with. This could delay the project and/or jeopardize the overall feasibility.
Strategic Plan Relationship
Successful development of the 35W corridor is identified as a desired outcome in the Strategic Plan.
Board/Commission Review
Not applicable.
Financial Impact
The EDA wetland bank is a revenue source for the EDA as credits are sold. The EDA has collected approximately $1.8mil in revenue from sales and has 27.362 acres remaining. The value of the remaining credits at $2.50/sf. is $2,979,721. Any discount in the price of credits reduces the overall amount of revenue the credits generate. If credits for the SEOC project are sold to the State for $1.50/sf., it reduces the overall potential revenue from the sale of remaining credits by $740,520.
The property is currently tax exempt, and would remain tax exempt if sold to the State of Minnesota. If the land sale does not move forward, the State of Minnesota could purchase other land in Blaine that is currently, and projected to be tax generating. By the state purchasing existing tax-exempt land, it is a net zero impact to current tax base. The City would lose potential future tax generation from the site that would otherwise be created by a private party.
Public Outreach/Input
Not applicable.
Staff Recommendation
Consider the request and determine whether to sell credits, and if so, at what price.
Attachment List
Site Location Map
Site Plan
Body
WHEREAS; the State of Minnesota and Blaine Economic Development Authority have entered into a purchase agreement for property at 4001 Pheasant Ridge Drive NE; and
WHEREAS, the State of Minnesota desires to construct an emergency operations center on said property; and
WHEREAS, wetland credits are needed in order to facilitate development; and
WHEREAS, the State of Minnesota has identified the need to purchase up to 740,520sf. of wetland credits; and
WHEREAS, the State of Minnesota has offered to pay $1.50/sf. for wetland credits at a total cost of $1,110,780.
NOW THEREFORE, BE IT RESOLVED, that the Blaine Economic Development Authority hereby approves the sale of wetland credits to the State of Minnesota at a cost of $1.50/sf. and hereby directs the president and execute director to execute all necessary documents.
PASSED by the Blaine Economic Development Authority this 9th day of August, 2021.