Loading...
HomeMy WebLinkAbout1988-12-19 NAC Memo to OPH Re Real Estate Journal Article MEMORANDUM TO L.aVonn-> w so " Oavic Licht FROM: 10 Decerrsber a.6��� Northwest DATE: A ssociated RE: Oak Park. Heights - St. Croix 'Mall C onsultants, inc <� -a l (612) 925 - 9420 FILE NO: 7O 3.Uc 'i 4601 Excelsior Blvd. • Suite 410 • Minneapolis, MN 55416 Attached please find an article from the current issue of the Real Estate Journal on the St. Croix Mall. You may want to copy this material and distribute this information to the Ci t.y Coonc i 1 . cc: Lyle Eckberq WHITE - ORIGINAL YELLOW - FILE COPY PINK - C FILE December 19, 1988 'Minnesota Heal Estate Journal Page 7 1 R ETAIL • 4X`; +a s, =r, .; r. .::, , - including those sold for the St. Croix Mall M option J 3 Y " ' } project - should have been "collapsed; or t redeemed, by Dec. 1. m :.: ,ni /�!!D.., Marry bonding authorities coshed during extended =, ARt11X the final days of 1985 to issue tax- exempt IRBs for commercial development projects DEVELOPERS SEEK because the Tax Reform Act of 1986 elim- NEW FINANCING PLAN inated that financing option for such projects ., Balyeat says. Only industrial and manufactur- ing projects are eligible for such bonds under T his month was to be the deadline ,', tax reform, he says. foraSt. Louis Park -based partner- If commercial projects weren't ready to ship to go ahead with plans to acquire, begin at the time the lax- exempt IRBs were renovate and expand St. Croix Mall in Oak issued in 1985, Balyeat explains, the bonds Park Heights. Tax-exempt industrial revenue were " parked:' That means, rather than sell- bonds (IRBs) sold in 1985 had to be used by . , - ing the bonds to long -term individual in- this month, and the partnership's option on LL veslors, the bonds were typically sold as part the retail complex was to expire Dec. 31. g of package purchased by short-term insutu- But the option has been extended and, a '< lional investors, usually at a slightly greater although the IRBs are no longer available to rate of return. If and when the project was set the project, the partners say they are to go ahead, the bonds could be redeemed by negotiating an alternative financing plan with the institutional investors, sold to long -terni the city of Oak Park Heights. individual investors and the proceeds used to "We're still working on it :' Steven Watson, a assist development. The tax- exempt IRBs president of Watson Centers Inc., says of the The option has been extended on St. Croix Mall. continued an nest page St. Croix Mall project. A partnership of Wat- son Centers and Bergeron & Associates Inc., both of St. Louis Park, has had an option on the almost 200000 square foot retail complex since this summer (MREI, 7/4/88). Watson, declining to specify the length of the option extension, says ime only to at the deal S ite s eein g , ners will have "plenty of time to put the a deal together:' They hope to acquire the center and start the renovation and expansion by spring 1989 and to open by spring 1990. The project would add almost 98,000 The following land sites are available through Towle Real Estate Company. square feet, Watson says, including a two- level, 52$)00 square foot Herberger's depart- ment store; about 29,500 square feet of mall Arden Hills • 8.33 acres zoned I -1 Lakeville • 22.54 acres zoned B4, GenBusiness space for smaller tenants; and about 7,800 $1.03 psf • Helen Brooks $1.35 psf • Mark Hotzler square feet of convenience center space. Blaine • 30.62 acres zoned B -1 Mendota Heights • 15.5 acres zoned B -3 & Industrial Arvid Elness Architects, Minneapolis, is $0.75 psf • Brent Nelson $2.50 psf • Jim McCa and Mark Hazier the project architect. Watson Forsberg Co., Bloomington • 10.84 acres zoned FD 2 Mendota Heights • 4.65 acres zoned Industrial St. Louis Park, would be the general $7.50 psf • Helen Brooks $1.97 psf • Ron Scholder contractor. The total cost, including acquisition and Brooklyn Center • 2.16 acres zoned 1 -1 Minneapolis • 25,905 square feet zoned 134, S-2 development, would be about $12 million, $2.50 psf • Steve Rosenberg and John Iamb $40.00 psf • Brea Nelson Watson says. Brooklyn Center • 3.2 acres zoned C -2 Minneapolis • 4.26 acres zoned BI -2 St. Croix Mall and an unnamed peripheral $3.25 psf • Mark Smabv $5.92 psf • Larry Chevalier center occupy 10 contiguous parcels in Oak Burnsville • 25 acres zoned 1 -2 Plymouth • 2.6 acres zoned MPUD Park Hei .*hts, immediately south across Min- $2.25 psf • Steve Larson and Larry Chevalier $3.75 psf • John Levvntan nesota Highway 36 from Stillwater. Eight of Burnsville • 22.5 acres zoned B3 Plymouth • 32.5 acres zoned Industrial the 10 parcels are owned by Norris M. and $2.16 psf • Jim McCaffrey $2.95 psf • John Lamb Norvin L. "Red" Swager's Oak Park Burnsville • &4 acres zoned R3B Plymouth • 1.1 acres zoned B-3 Development Co. Inc. One of the remaining $1.36 psf • Jim McCaffrey $6.47 psf • Helen Brooks two parcels is owned by Swager Bros. Inc. F agg • &93 acres zoned Industrial Plymouth • 186 acres caned B-1 and the other is owned by K mart Corp., which owns the discount department store $1.20 psf • John Lamb $3.00 psf • Helen Brooks that anchors the mall. Eagan • 52.36 acres zoned GenBusiness Plymouth • 3.9 acres zoned MPUD The properties Watson and Bergeron seek $2.85 psf • Helen Brooks $3.16 psf • John Lenvman to acquire have a total estimated market value Fagan • 17.24 acres zoned C5C,A,R -1 Plymouth • 7.44 acres zoned B -1 exceeding $3 million, according to the $2.45 psf • Ron Scholder $6.00 psf • Helen Brooks Washington County Assessor's Office. Eden Prairie • 10,98 acres zoned Office Plymouth • 6 acres zoned Retail Several other outlots have been sold over $3.65 psf • Fred Lamb $5.25 psf • John Lamb the years to single -users including Pizza Hut, Eden Prairie • 30 acres zoned RM-&5 Plymouth • 7 acres zoned Multi - family Dairy Queen, Kentucky Fried Chicken, $1.15 psf • Jim McCaffrey $4,500 /unit • John Lamb Goodyear and Champion Auto Parts. The Washington County Housing and Eden Prairie • 11.9 acres zoned Reg. Commercial Plymouth • 9.5 acres zoned Retail Redevelopment Authority (HRA) issued $4.3 $5.50 psf • Jim McCaffrey $3.00 psf • John Lamb million in tax - exempt IRBs to help finance Eden Prairie • 4.9 acres zoned CompPlan or Neigh. Com Plymouth • 24 acres zoned Commercial completion of the third phase of an expansion $4.50 psf • Jim McCaffrey $4.25 psf • John Lamb begun by the Swagers in 1984. Herberger's, Eden Prairie • 2.3 acres zoned Commercial Plymouth • 3.8 acres zoned Industrial which signed a lease for 42,120 square feet in $5.50 psf • Jim McCaffrey $1.75 psf • Kay Harris January 1986, was to anchor the new space. Eden Prairie • IDI acres zoned Commercial Richfield • 13.25 acres zoned Commercial But delays in refinancing the mall put the $6.95 psf • Linda Zebn $10.75 psf • Jim McCaffrey project behind schedule, and Herbetger s was Eden Prairie • 8.1 acres zoned Office Shakopee • 19 acres zoned B -I able to exercise its right to terminate the lease. $3.55 psf • Mark Smaby $3.50 psf; 4.75 psf • Fred Lamb Officials of the St. Cloud -based retail chain Eden Prairie • 2.7 acres zoned Rural St. Paul • 10$00 square feet zoned B-4 (CBD) square signed a lease Sept. 1987, for 62.400 Robert $2.50 psf • Julie Bauch $105.00 psf • Chuck Hall and Fred Lamb s Scott Holdings in rival development, velopment, RoRobert Ines proposed Woodland Fridley • 2.43 acres zoned M2 St. Paul • 32,812 square feet zoned B-0 Lakes. But that proposal, a retail and hotel $3.12 psf • Kay Harris $6 &57 psf • Chuck Hall development northeast of the intersection of Golden Valley • 4.34 acres zoned Industrial West St. Paul • 1.48 acres zoned B -3 GenBusiness Highway 36 and County Road 5 in Stillwater, $3.40 psf • Kay Harris $3.25 psf • Priscilla Faris never got off the ground due to the Golden Valley • 15.56 acres zoned Ind /Lt. Ind. West St. Paul • 5.23 acres zoned B-I & R developer's financial difficulties. $2.50 psf • Kay Harris $215 psf • Priscilla Faris Herberger's officials have said they remain interested in the Stillwater /Oak Park Heights retail market, and Watson says the partner- For infol7)1adon ab out these and o#ter properdeS, ship has a verbal commitment from the chain call A' to anchor the St. Croix Mall expansion. 0,._ /Nkmkr l 41 • There are no new signed tenants, he says, but 1�S several of "the key ladies ready -to -wear CS .I ,t E u•..,maaa•s..n c�.. stores' have been "very positive :' Bergeron & Associates is handling leasing. Although the tenant picture might be pro- mising, tax- exempt IRB financing is no longer available. Dennis Balyeat, executive director of the Washington County HRA, says all unused tax- exempt IRBs sold in 1985 x Minnesota Real Estate Journal December 19, 1988 Page 8 � RETAIL CONT. continued from previous page Institutional investors earned three years of rely on the tax- exempt IRBs for financing ment would help pay the partners' conven could be parkedfor amaximum ofthree years almost risk -free, tax- exempt investment in- assistance, Watson says, they are seeking tax tional mortgage. "We're working with several in most instances. come; the bonding authority didn't lose much increment financing (TIF) assistance from lenders right now;' he notes. Such was the case with the IRBs sold for other than an economic development oppor- the city of Oak Park Heights. Under the "pay City officials appear receptive to the plan, St. Croix Mall. The Washington County [unity; and the federal government collected as- you go" TIF plan being pursued, Watson Watson says. "There seems to be... a general HRA hurried to issue the bonds in the wan- any arbitrage income gene rated. says the partners would shoulder the up -front enthusiasm as to the prospects of getting it ac- ngdays of 1985, Balyeat says. In fact he says In the case of the St. Croix Mall IRBs, costs of acquisition, renovation and expan- complished;' he says. the time crunch forced him and the HRA Balyeat says, Oak Park Development Co. had Sion. The work would increase the value of Although Oak Park Heights officials have board chairman to spend part of Christmas to cover costs of perhaps $50,000 associated the property, which would increase the traditionally turned a deaf ear to developers' bond Eve 1985 personally signing about 2,000 of r a of about $6000 during the final six The city wot then the inc u eaed reve� nu they might be more receptive n the ca a of the bonds. g tax reven In instances in which the IRB proceeds months that the developers must pay to the to reimburse the partners for such things as Alex constitutes a l maj j or p ar of the city's tax weren't used, Bal says, everyone except federal government. property acquisition and site work. p — Murray A61J the developer typically at least broke even. Since Watson and Bergeron can no longer In effect, Watson says, the TIF reimburse- base. j STATE /WRAP -LIP �•� study for the development might be in light of the beating the local tourist Ryan signed the loan papers Dec. 5, accor- D e j a vu ty brought to the Grand Marais City Council in determined took early in the spring. Fires, later ding to New Ulm Assistant City Manager January, Lyle says. dined to be caused by arson, on May 8 Thomas MacAulay. • "The city council there did give us the destroyed the popular Lake Superior Trading The loan helps complete the $8 million ll1 h ar bor? green light to at least take this step, the Post and on May 9 damaged the Harbor Light development package for the downtown redevelopment, which will front on German feasibility study,' he says. Supper Club. p Street. The MILWAUKEE GROUP The study would seek to determine the size Another fire, apparently accidental, in project includes construction, PLANS LUXURY HOTEL o ads out ovePthe says.h tt t on, a populs the for�tourstsin need of edgtokeeplall er this ear, of a shopslevelwith He would not speculate on any benchmark fishing and boating supplies. Besides the $4 million TCF loan, financ- Milwaukee investment group is market figure that would satisfy the develop- Shortly afterward, on Jan. 27, the city ing includes $1 million in developer equity proposing development of a ment group. But the group would not proceed council voted to reject three hotel develop- and $3 million in city money, MacAulay says. multi- million dollar, 65 -room luxury inn and with the project, Lyle says, if "the market did ment proposals and to not pursue other The city's share is split between a $1.2 million condominium project for the west side of not justify the kind of quality development de Peet l of Grand Marais Hotel Inc.; Economic Economic opDep t 675 n tax i re- Grand Marais harbor. that we want to make:' Barney y The proposal is for city owned land across Lyle, who has spent both summer and Craig Schulte, who built the Grand Marais merit financing bonds and $100,000 from the the harbor from a site that saw a similar pro- winter vacations in the Grand Marais area for Best Western; and John Holland, current city's coffers. posal earlier this year. That proposal, for some 20 years, says he has not been involved owner of the Best Western, all had proposed The mall includes 69,205 square feet of Coast Guard Point, died because of citizen in such a development before, "but others in a high end hotel and conference fa � ciwry�ord 1q uare l feet that will be by St Cloud- 00 ouud- and business opposition (MREJ, 2/15/88). our group have." He declines to identify other the site. ba Herberger's department store, which is But Cy Lyle, who heads the Milwaukee partners to the venture or to describe their to expand its existing German Street store into group, believes Grand Marais will approve backgrounds, but says "there are about half the mall. the latest proposal. "..That city is ripe, we a dozen of us in the group. Ryan Development Co. Leasing for New Ulm Mall is being handl- believe, for some quality lodging develop- "Basically, I am a manufacturer; he says gets New Ulm financing ed by Security Development Co. Inc., Eden ment; Lyle says. "But we won't really know "and for quite some years was a division i until the current research is completed" manager for Briggs & Stratton, (the) small New Ulm — Construction of the 85,200 Prairie. Grand Marais is about 110 miles northeast engine maker, and have had other manufac- square foot (gross) New Ulm Mall can com- ecths I) . It 1989, ccording to MacAulay. of Duluth on Ujahway 61 along Lake Super- turtng as thence in earnest now that Eden Prairie -hoed j ior's North SlTore. While community opposition last January Ryan Development Co. has secured a $4 Details about the proposal are scant. A killed plans for a luxury hotel on Coast Guard million loan from Twin City Federal Savings preliminary report on the results of a feasibili- Point, this latest proposal could be welcome and Loan Association (TCF).