HomeMy WebLinkAbout09-323AUGUST 25, 2009 09 -323 RESOLUTION
(CARRIED 7 -0 LOST LAID OVER WITHDRAWN )
PURPOSE: AUTHORIZE BORROWING FROM STATE LAND TRUST FOR
SOUTH SHORE REDEVELOPMENT PROJECT AREA
INITIATED BY: DEPARTMENT OF COMMUNITY DEVELOPMENT
WHEREAS, in 2005 the Common Council entered into an agreement with
Chamco Inc. and the Redevelopment Authority (RDA) regarding the RDA's future
acquisition of 1 E. 8th Avenue within the South Shore Redevelopment Project Area no
later than June 2010; and
WHEREAS, the RDA has been notified that said property will be vacated by
October 2009 and the City /RDA is being requested to implement the terms of the 2005
agreement; and
WHEREAS, the RDA desires to apply for State Land Trust funds for acquisition
and demolition costs of said property, as well as demolition and other associated
redevelopment activity costs for properties currently owned by the RDA within said
South Shore Redevelopment Project Area; and
WHEREAS, this Resolution is a declaration of official intent under Treasury
Regulation Section 1.103 -18, or amendment thereto, and shall be made available for
public inspection pursuant to Chapter 19, Wisconsin Statutes.
The maximum principal amount of the obligation expected to be issued for these
projects is ONE MILLION SEVEN HUNDRED SEVENTY THOUSAND DOLLARS AND
NO /100 ($1,770,000.00).
NOW, THEREFORE, BE IT RESOLVED by the Common Council of the City of
Oshkosh that the proper City officials are hereby authorized and directed to borrow a
sum of up to ONE MILLION SEVEN HUNDRED SEVENTY THOUSAND DOLLARS
AND NO /100 ($1,770,000.00) for purposes of acquisition, demolition and other
associated redevelopment activity costs within the South Shore Redevelopment Project
Area, and to execute any and all documents necessary for purposes of same.
OYHKO
ON THE WATER.
TO: Honorable Mayor and Members of the Common Council
FROM: Jackson Ki
Director of Co unity Development
Peggy Steeno
Finance Direct r
DATE: August 20, 2009
RE: Authorize Borrowing from State Land Trust/South Shore Redevelopment Area
BACKGROUND
Council is asked to approve a borrowing from the State Land Trust to cover the previously
agreed upon cost of the Redevelopment Authority's (RDA's) acquisition of the property at 1 E,
8t Avenue, and other associated redevelopment activities in the South Shore Redevelopment
District. The borrowing would be in the amount of $1,770,000. The funds would be used for:
acquisition of the property at 1 E. 8th Avenue, $750,000; for demolition of the 105,000 square
foot building at 1 E. 8th Avenue, estimated cost $807,500; demolition.of the structure on the
previously acquired property at 37 E. 8th Avenue, estimated cost $43,500; demolition of the
structures at the former Boat Works property, estimated cost $94,000; and a contingency line
item of $75,000.
ANALYSIS
1 E. 8 th Avenue Property
The property at 1 E. 8 Avenue is the site of the former Miles Kimball distribution building
located on the east side of S. Main Street between E. 8 and E. 9 th Avenues. In May, 2005 the
Council passed Resolution 05 -153, which provided a guarantee that the City would fund the
RDA's acquisition of the property from Chamco. Chamco had agreed to purchase the property
that had formerly been owned by Alberta Kimball (and was in the Anhaltzer Trust at the time of
acquisition), to preserve the City /RDA's ability to acquire the property at a future point for
redevelopment, while enabling the property to be used in the short term for industrial purposes
byH &M Commercial (which would be a lessee of Chamco).
State Land Trust Borrowing 1
August 25, 2009 Council meeting
Prior to Chamco's purchase of the property, the City had been approached by representatives of
the Kimball Trust who recognized that the City would possibly be interested in acquiring the
property, given its strategic location in the South Shore Redevelopment Area. Two appraisals
had been prepared on the property: one had set a market value of $1,128,000; while the second
has set a value of $800,000.
Prior to the City /RDA taking action on the possible. acquisition, H &M Commercial approached
Chamco to seek Chamco's assistance in acquiring the property at 1. E. S Avenue as part of
Chamco's Spec Building Program. H &M had previously acquired the former Universal Foundry
property at 43 E. 7 1 Avenue, which is across the street from the building at 1. E. S Avenue.
Chamco, recognizing H &M's purchase of the property at 1. E. S Avenue could negatively
impact the City/RDA's future plans for the area, worked with the City /RDA on a plan to enable
H &M to utilize the property in the immediate term as a lessee of Chamco (to meet short term
needs associated with contracts with Oshkosh Truck), while preserving the City/RDA's ability to
acquire the property from Chamco at a future point at a reasonable cost and without having to
bear significant relocation expenses. The plan agreed to by the City, RDA, and Chamco (as well
as by H &M Commercial), had Chamco purchasing the property for $750,000 and making
$175,000 of improvements based on a four year lease by H &M; and the City/RDA guaranteeing
a buy out of the property at the end of the lease period.
H &M Commercial is the parent company of Advanced Military Packaging (Ad Inc), which is the
actual tenant in the building.
The four year lease between Chamco and H &M expired in June. An extension was granted to
H &M to continue Ad Inc's occupancy until October 31, 2009, with the extension based on the
City providing funds to the RDA to enable the RDA to complete the acquisition before the end
of October.
While it would have been desirable to locate another short term tenant for the space (while plans
are put in place for redevelopment activities in the area), Chamco has indicated it is not aware of
any businesses looking for short term space for buildings as large as the structure at 1 E. Stn Ave.
Given that, once Ad Inc vacates the premises the RDA will need to proceed with demolition of
the 105,000 square foot structure. I would also note that H &M has acquired another property
elsewhere in the City and as a result they have no continuing need for the building at 1 E. S
Avenue.
Fire Code regulations do not allow manufacturing buildings with functional fire suppression
systems to sit vacant without the fire suppression system remaining active. The system at 1 E. Stn
Avenue is a wet sprinkler system, which means if the building were not demolished, the building
would need to be heated over the Winter to maintain the fire suppression system. Since it would
be cost prohibitive to do so, and to maintain the building for an indefinite period of time into the
future, it is appropriate to proceed with the demolition of the structure this Fall.
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State Land Trust Borrowing
August 25, 2009 Council meeting
37 E. 8 th Avenue
In addition to the demolition of the structure at 1 E. 8 th Avenue, funds are also needed for the
demolition of the building at 37 E. 8 th Avenue, which building is surrounded on three sides by
the structure at 1 E. 8 th Avenue. The property at 37,E. 8 th Avenue was acquired by the RDA in
2004 using CDBG funds. The property had been the site of the former Winnebago Fisheries
business. The property contains an approximate 4,000 square foot concrete block structure that
had been damaged by fire in February 2002.
The acquisition of older industrial properties in this area is setting the stage for development
projects on the south side of the Fox River east of S. Main, and the acquisition of the properties
at 1 E. 8 t11 Avenue and 37 E. 8 th Avenue (as well as a former railroad spur in this general area) is
especially needed for the City to be able to provide for the future extension of E. 9 th Avenue to
Pioneer Drive near the Canadian National Railroad line, which also relates to the future vacation
of Pioneer Drive east of S. Main and development of the riverwalk in that area. The building at
1 E. 8 th Avenue includes a significant number of loading docks on the south side of the structure
adjacent to E. 9 th Avenue, and if that building were being actively used, it would present
significant difficulties for the functionality of an extension of E. 9 th Avenue to Pioneer Drive.
362 Michigan Avenue (the former Boat Works property)
The borrowed funds will also be used to demolish structures at the former Boat Works property
at 362 Michigan Avenue in the South Shore Redevelopment Area. The property was donated to
the RDA in 2005. The Redevelopment Plan calls for the property to be developed for low
density condominium and /or townhouse owner occupied residential development. The RDA
would also hope to find a way to join a portion of the Jeld Wen plant site with the Boat Works
property to provide a larger site for the proposed residential development in that area. While we
believe significant interest will be forthcoming for a residential development that involves the
Boat Works property, the timing for proceeding will largely depend upon improvements in the
overall housing market.
In the meantime, complaints have come from residents along W. 4 th Avenue regarding the vacant
status of the Boat Works property, and as a result we are proposing that the structures on the
property be removed.
Overall Demolition Bids
AECOM has worked with the City /RDA in developing general cost estimates for the demolition
of the above noted structures. Since the exact cost will not be known until the project is bid, we
are including a $75,000 contingency item in the borrowing. If bids come in low, as we hope they
will, any excess funds in the borrowing will be used for other costs for ongoing redevelopment
activities in the South Shore Redevelopment Area (including acquisitions, demolition work,
environmental remediation, public improvements, and legal, engineering /environmental services,
and other administrative support).
State Land Trust Borrowing
August 25, 2009 Council meeting
FISCAL IMPACT
Demolition of the above noted structures will set the stage for new development to be undertaken
in the South Shore Redevelopment Area, which will eventually provide significant property tax
increments to defray the overall costs of redevelopment programming.
By authorizing this transaction, the City is undertaking new debt. This debt will be repaid over
10 years with an annual payment of approximately $223,700 per year, with the first payment
commencing on or about March 15, 2011.
RECOMMENDATION
The Department of Community Development and Finance Department are asking Council for
approval of the State Land Trust borrowing, so the City's obligations under the previously
approved purchase agreement can be met, and the demolition of the older industrial buildings
can proceed.
Approved,
City Manager"'
State Land Trust Borrowing
August 25, 2009 Council meeting
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