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Date
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December 21,
2009
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Agenda
Item No. 38 Roll
Call No. 09-
Communication No. 09-890 Submitted by:
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AGENDA
HEADING:
Resolution approving the City Manager’s
recommendation regarding the redevelopment of 801 University Avenue.
SYNOPSIS:
The City
is the owner of the property at 801 University Avenue (formerly occupied by Top
Value Foods). This property is assisted
by a Section 108 Loan Guarantee Assistance and Note with the U.S. Department of
Housing and Urban Development (HUD).
The City
has received Letters of Intent to Redevelop Property from two parties
interested in redeveloping the property.
After review of the two proposals by City staff, and consultation with
leadership from the neighborhood associations comprising the Enterprise
Community, the City Manager recommends:
(1)
the City select the group comprised of
the Community Foundation of Greater Des Moines, Des Moines Area Community
College (DMACC) and Save Stores, LLC (owners Ray Brown and Harold Lovelady,
both City of Des Moines residents) as the Preferred Redeveloper of the Property;
and
(2)
authorize the City Manager or his designee over a 60
day due diligence period to negotiate a contract for the sale and redevelopment
of the property with the Preferred Redeveloper, subject to final approval by the
City Council. During the due diligence
period:
(a) Preferred Developer will
consummate its financial arrangements and provide the City with evidence of
financing commitments to complete their redevelopment proposal;
(b) City will provide the
Preferred Developer access to the property as needed; and
(c) City agrees not to enter into
negotiations for the lease or sale of the redevelopment site with other
Redevelopers;
If
at the end of the 60 day due diligence period, a Redevelopment Agreement for
the disposition and redevelopment of the Property is not reached with the
Preferred Redeveloper, then the City is open to entertain and negotiate with
other Redevelopers.
FISCAL
IMPACT:
The recommended proposal will fully pay the outstanding
balance ($1,780,957) of the HUD Section
108 Loan Guarantee Note within 60-90
days after acceptance of the Intent to Redevelop Property. Additionally, upon completion of the
disposition of the property to the Developer, the portion of the site that
contains retail uses will become taxable.
ADDITIONAL
INFORMATION:
City staff has been in discussions with three
separate groups regarding the redevelopment of the property at 801 University
Avenue, which was formerly occupied by Top Value Foods. In late November, the City received three
letters of intent to redevelop this property.
To evaluate the proposals, letters were sent to the three groups
outlining the City’s goals for redevelopment of the site (attached Exhibit A)
and inviting them to re-submit development proposals in a standard format.
Two proposals were received (attached as Exhibit B
and C) and reviewed in terms of the City’s goals for redevelopment of the
site. Additionally, staff solicited
feedback on the proposals from the leadership of the five neighborhood associations
comprising the Enterprise Community.
Both proposals contain market risks and fulfill, to varying degrees, the
City’s redevelopment goals for the site.
Staff’s recommendation to select the group comprised of the
Community Foundation of Greater Des Moines, DMACC and Save Stores, LLC as the
Preferred Redeveloper of the Property is based on the evaluation that their
proposal most closely fulfills the City’s goals for redevelopment of the
site.
The recommended
proposal provides that 66% of the building will be dedicated to retail services
by providing:
(1)
an 18,000 square foot Save-A-Lot grocery store offering fresh meats, breads,
dairy, frozen and fresh fruits and vegetables, private and national label non-perishable
goods and general household items; and
(2)
a 5,000 square foot Dollar Plus Store offering housewares,
baby supplies, health and beauty, and office and school supplies.
Both
of these retail outlets will be owned and operated by Save Stores, LLC, with
Ray Brown as general manager.
The
remaining 12,000 square feet will house the Evelyn Davis Workforce/Re-engagement
Center. The Evelyn Davis Center will be
administered by DMACC as a one-stop workforce center delivering enhanced
services and supplemental wrap-around support.
Services to be provided include: Workforce Center, Education
Re-engagement Center and connections to job opportunities.
Both
the retail operator and the
Their
proposal indicates that within 60-90 days of acceptance of the Intent to
Redevelop Property that the Preferred Redeveloper will be prepared to close on
the purchase of the site in the amount necessary to fully pay off the City’s remaining
obligation under the HUD Section
108 Loan Guarantee, which is estimated at $1,780,957. Upon
conveyance of the property, building portions occupied by the retail operations
will become taxable, while the Evelyn Davis Workforce/Re-engagement Center portion
would remain exempt from property taxes.
In the
recommended proposal, DMACC has expressed its interest to purchase any vacant
space that may come available, if the retail ventures are not successful. Further, DMACC commits to make every attempt
to seek out and occupy that space with new commercial retail outlets.
PREVIOUS
COUNCIL ACTION(S): NONE
BOARD/COMMISSION
ACTION(S): NONE
ANTICIPATED
ACTIONS AND FUTURE COMMITMENTS:
Approval of the Redevelopment Agreement stipulating
the terms and conditions required to convey title to the property at 801
University Avenue.
For more information on this and other agenda items,
please call the City Clerk’s Office at 515-283-4209 or visit the Clerk’s Office
on the second floor of City Hall,