00-047-O

ORDINANCE NO. __________

AN ORDINANCE AUTHORIZING AMENDMENT TO CONTRACT NO. 18154 WITH AND SALE OF CERTAIN PROPERTY IN LINCOLN PARK TO DULUTH BUILDING LIMITED LIABILITY COMPANY.

BY COUNCILOR STOVER:

The city of Duluth does ordain:

        Section 1. That the proper city officials are hereby authorized to enter into an addendum to City Contract No. 18154 with Duluth Limited Liability Company, L.L.C., a copy of which addendum is on file in the office of the city clerk as Public Document No. ______________________, to modify some of the terms for sale and development of property in Lincoln Park in said contract, to sell and convey the property in St. Louis County, Minnesota, described on Public Document No. ___________________, by quit claim deed, to said company and to execute all documents necessary with regard to said addendum and conveyance.

        Section 2. This ordinance shall take effect 30 days from and after its passage and publication.


STATEMENT OF PURPOSE:  The purpose of this ordinance is to authorize the execution of an addendum to the existing development agreement between Northstar Ford's property-holding entity, Duluth Building Limited Liability Company, L.L.C., and the city to adjust some of the terms regarding the sale and development of property in Lincoln Park and to authorize the sale of an additional small strip of property to that company. For the purposes of simplicity, both the L.L.C. and Northstar Ford itself will be referred to collectively as "Northstar."

Under the existing agreement, the city committed itself to acquire the so-called "Baxter building" lying southeast of old Michigan Street and southwest of the Garfield Avenue viaduct, to demolish the building, to construct a new connector road from then-to-be-constructed Lower Michigan Street and to sell the remaining Baxter building property to Northstar for $0.49 per square foot. In addition, if Northstar committed to spend at least $750,000 improving the property it owned in Lincoln Park, the city committed to sell other property to Northstar at that price including all city-owned property lying southeast of old Michigan Street, southwest of the M&C Gas Station, northwest of I-35 and northeast of the city's sign shop (located just northeast of the Garfield Avenue viaduct between old Michigan Street and Lower Michigan Street).

The lower level of the sign shop building (one floor below old Michigan Street) has historically been used for vehicle and materials storage and, to that end, has multiple large garage doors located on its southeast side to provide access to the building. There is also a loading dock on the northeast side of the building used for transferring materials to and from trucks. In addition, the surrounding area was used for vehicular parking and storage. The only vehicular access to this area and to this level of the building was by driving northeast along old Michigan Street far enough past the building so that the topography allowed easy vehicular access down a "natural" driveway to an elevation equal to the lower level of the building.

When development staff negotiated the development agreement, it was assumed that, because the new Lower Michigan Street was to front on the southeast side of the sign shop building, access could be easily had from that street and no need was seen to preserve access to that level from old Michigan Street. However, the design of Lower Michigan Street was in its early stages at that point in time and, as that design progressed, the engineering staff determined that safety and traffic flow considerations mandated that no curb cuts, other than cross streets, should be allowed in Lower Michigan Street as it passed through Lincoln Park. With no access from Lower Michigan Street, the exercise of Northstar's option to purchase the property east of the sign shop would have left the city with no vehicular access to the lower level of that building, which would have greatly hampered the city's use of that facility. And Northstar has indicated their intent to exercise their option.

In addition, upon completion of the design of Lower Michigan Street, it was determined that there would be a strip of city-owned property some ten to 20 feet wide remaining between the northwesterly right-of-way line of Lower Michigan Street and the southeasterly line of Northstar's "Baxter building property" when street construction was completed which would be useful only to Northstar and be a maintenance headache to the city.

City staff and representatives of Northstar met to resolve these issue and the result is this addendum to the development agreement which provides that, if Northstar exercises its option to purchase the city-owned property northeast of the sign shop building, Northstar will waive its right to purchase the west 1/2 of the lot immediately to the northeast of the building, thereby preserving to the city the load dock and access to and around that facility. In addition, the city will retain an easement for driveway purposes over the rest of that lot and Northstar agrees that it will construct a driveway for the joint use of itself and the city over the easement area; the city will contribute 1/2 of the cost of constructing the driveway up to $4,000. For the first five years of use, the joint-use drive way will be substantially maintained by the city with some specific assistance from Northstar. After that term, the parties will enter into a maintenance agreement for the joint maintenance of the driveway. Finally, the city will convey the narrow strip of property between the Baxter building parcel and Lower Michigan Street to the developer at no cost.