HomeMy WebLinkAbout15.F.13. SPUC Building-Purchase Agreement
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CITY OF SHAKO PEE
Memorandum
TO: Mayor and City Council
FROM: Mark McNeill, City Administrator
SUBJECT: SPUC Building - Purchase Agreement
DATE: December 12, 2003
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INTRODUCTION:
The Council is asked to approve transmittal of a purchase agreement for the existing
SPUC building to SPUC.
BACKGROUND:
Shakopee Public Utilities is anticipated to vacate their headquarters building on Fourth
Avenue in Summer, 2004. The Council has been made aware that the 3.9 acres upon
which the current building sits would work well if acquired by the City of expansion of a
City facilities "campus". The current site would be an ideal location for a future Public
Works facility.
As such, the Council directed that Councilors Helkamp and Link, along with City staff,
meet with SPUC to negotiate a purchase price. SPUC also appointed two oftheir
Commissioners and staff; on December 11 th, the two sides met. They reviewed an
appraisal which had been performed by Patchin Messner Appraisals.
As a result ofthe negotiations, the sides tentatively agreed to the following:
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1. A purchase price of $725,000. This includes the building, land upon which it is
located, and also a one acre "orphan" parcel owned by SPUC which is located
along the south side of the current Public Works maintenance yard.
2. City would do demolition.
3. SPUC is responsible for all environmental clean-up.
4. The City retains any salvage rights for the building after demolition.
It should be noted that the one-acre "orphan" parcel, while not on the original discussion
list, makes sense for the City to acquire (and conversely, for SPUC to sell). Ifnothing
else, it can be a buffer between future Public Works use ofthe maintenance yard, and
adjacent properties.
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There had been some questions as to the ownership of the two parcels being negotiated.
Technically, they are in the title of the City of Shako pee. Until a very few years ago, all
SPUC property was owned by the City; however, a recent legal interpretation now
indicates that SPUC can own its property in title. Most property was transferred from
City ownership to SPUC several years ago; however, the SPUC headquarters building
and this orphaned parcel were not.
There was also a question as to the original payment - if the City acquired the parcel
upon which the SPUC building is situated, why should it purchase it back from SPUC?
After extensive research, however, it was determined that in 1969, SPUC paid $15,000 to
the City for this four acre parcel. Therefore, I feel satisfied that SPUC did make payment
for the original building site, even though it may not technically own it in title.
If the property sale is approved by both SPUC and the City, it is likely that the City
would be able to demolish it (ifthat is the decision) shortly after SPUC vacates.
Alternatively, it could be used for cold storage by the City for a short period oftime.
RECOMMENDATION:
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The Committee recommends that the Council direct a purchase agreement be drawn up
by the City Attorney, and that that be offered to SPUC.
ACTION REQUIRED:
If the Council concurs, it should, by motion, direct that a purchase agreement be drafted
by the City Attorney, and that that be presented to Shakopee Public Utilities for formal
acceptance for the purchase of the headquarters building (4.9 acre site) for the purchase
price of $725,000 located at 1030 East Fourth Avenue.
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Mark McNeill
City Administrator
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