Introduction: At its July 23, 2015, the City Council approved a purchase agreement between the City of Apple Valley and OneTwoOne Development, LLC, for the acquisition of the 3.65-acre property on the southwest corner of Galaxie Avenue and 153rd Street West, commonly referred to as the “triangle property.” In 2015, the City applied for and was awarded a grant from the Metropolitan Council Livable Communities Demonstration Account Grant to help offset the cost of the purchase of the property. The purchase agreement provided the terms for the acquisition and the transfer of grant funds to ensure the development would be constructed as a mixed-use, walkable, integrated neighborhood with senior-owned housing and commercial retail and office within the same block.
Presales and Market Changes Impact Development Plans: When the developer began presales of the senior cooperative units, OneTwoOne learned that the interested buyers wanted larger units. In response, the developer revised the senior cooperative plans to maintain the four-story building and building design, but to reduce the number of units from 78 to 58. At the same time, two grocery stores opened within walking distance of the site which required the developer to refine the commercial elements of the plan. The revised plans were presented to the Apple Valley Planning Commission in August of 2016.
The revised plan required contacting the Metropolitan Council and updating the terms of the grant agreement to ensure the new plans would not jeopardize the grant funds. The Met Council and City came to terms and the revised grant agreement was approved by the City Council at its July 27, 2017, meeting.
Updated Purchase Agreement: While the terms of the revised grant agreement were under discussion, the previous purchase agreement expired. A new agreement has been drafted providing new terms and new timelines. An important element of the purchase agreement is to ensure that the project moves forward and that the City will not be negatively impacted if the project does not proceed as planned due to the multiple phases. Security, in the form of a promissory note and mortgage in favor of the City and Apple Valley Economic Development Authority (AVEDA) offset the City’s potential risk should the commercial elements not proceed as planned.
The following is a summary of the transaction: the triangle property is purchased for $1,148,639 which is reimbursed through the Met Council grant at $1,148,639. The developer (buyer) enters into an agreement to complete the development in accordance with the approvals and executed agreements. One half of the purchase price ($574,320) is advanced to the developer at closing to offset 1/2 cost of the property. The developer pays cash for the other half at the closing ($574,320). The developer pays one half of the outstanding assessments on the property, approximately $672,385, and agrees to execute an agreement for payment of the second half on the commercial property when commercial development starts. Developer also provides a promissory note in favor of the City for $574,320, and mortgage for the commercial property in the name of the AVEDA as security for buyer’s performance and completion of the project. Construction of the senior housing and commercial must be underway no later than June 2018. The AVEDA releases the second half of cost of purchase and mortgage of the property after confirmation of compliance with all requirements.
Next Steps: The Business Subsidy Agreement will be reviewed and acted upon by the AVEDA at its August 10, 2017, meeting. In the meantime, preliminary land use approvals were obtained at the City Council’s July 27, 2017, meeting. Final approvals are expected to be reviewed in September with construction beginning in September.