WORKSHOP ITEM - Erik Thorvig, Economic Development Coordinator
Title
CONSIDER FINANCIAL ASSISTANCE REQUEST FOR DEMOLITION OF STRUCTURES FOR THE SOUTHEAST CORNER OF LEXINGTON AVENUE AND MAIN STREET (SHELL GAS STATION)
Background
The property at 12475 Lexington Ave has been used a gas/convenience store since the building was built in 1988. The business/property owner has had the property for sale off and on for several years however has not found a buyer. With the new Kwik Trip opening to the south, the owner is looking at redevelopment options for the site and changing the use to retail/restaurant. The site is 1.39 acres and the owner wants to purchase the vacant lot to the east which would create a 2.31 acre site. The existing building is approximately 3,500 sf. and redevelopment of the site would allow for a building to be better oriented and positioned on the site to maximize parking, exposure, building square footage and site access. The owner would act as the developer and landlord for a future project.
The owner is currently in negotiations with several potential tenants and the financial pro-forma for the project and finish of the building dictates potential rent and the quality of tenant the owner can attract. The owner is requesting EDA financial assistance for the building demolition, tank removal and acquisition of the site to the east. The owner has indicated a desire to have a higher finish building and financial assistance will help the owner use dollars that otherwise would have been spent on demolition towards the quality of the building (included are several examples of buildings the owner provided for quality of building he’d like to construct). The owner has received two quotes for demolition, tank removal and acquisition of the adjacent parcel. The lowest quote was $158,464. The breakdown is $51,008 for demolition, $27,456 for tank removal and $80,000 for land acquisition. In recent years the EDA has assisted developers in demolition either through a loan or tax increment financing (TIF). In this particular instance staff would be comfortable providing $51,008 towards demolition. Funds would come from the EDA general redevelopment fund for this project. Staff believes the benefit to the City is a new building and not just demolition of the existing building. Therefore, staff would propose entering into a development agreement with the developer that outlines payment occurring only when a building permit is obtained for a new building. The EDA would not be responsible for any contamination found with the tank removal. Funds are available from the MPCA that reimburses up to 90% of any contamination remediation costs associated with tank removal.
If the EDA is open to assistance, a formal action item could be brought forward sometime in April.
Recommendation
Discuss the request and provide staff direction.