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HomeMy WebLinkAbout[09a] Space Needs Study~,`~ MEETING DATE: AGENDA ITEM: SUBMITTED BY: Council Agenda Item 9 a August 21, 2008 Space Needs Study Judy Weyrens BOARD/COMMISSION/COMMITTEE RECOMMENDATION: PREVIOUS COUNCIL ACTION: The Council reviewed the proposal of SEH to complete initial space needs study as it relates to the Kennedy Building. As there was confusion as to what work would be completed and what work was desired, I have asked SEH to prepare a "menu" of sorts for the Council to review. As staff we are trying to determine if the site meets the current and future needs for the City. The site would contain all departments. Please note that the original space needs study indicates an item for other communities experience using spaces to generate income. This is a request of staff as the community is looking for a community center. Cities such as Becker have acknowledged that the community center is not self supporting. I have been made aware of some communities that have partnered with a private enterprise where they operate a community facility. This type of partnership could be cost effective and is worthwhile pursuing. SEH is not pushing any additional work, I have asked them to provide alternatives based on the discussion at the last meeting. I too was uncertain what the Council was actually looking for. Hopefully this will meet all the needs. Note: I have also attached to this portion of the packet the title opinion as prepared by the City Attorney. BUDGET/FISCAL IMPACT: ATTACHMENTS: SEH proposal REQUESTED COUNCIL ACTION: Determine the process for moving forward with a space needs study. <.~. i i August 15, 2008 Ms. Judy Weyrens City Administrator City of St. Joseph 25 College Avenue N. St.Joeseph, MN 56374-0668 Dear Judy: RE: St. Joseph, Minnesota Kennedy School Space/Needs Study Proposal 5EH No. STJOE 104440 14 In an effort to clarify our proposal for the former Kennedy School Space/Needs Analysis, I have listed a menu of potential services to assist the City in determining whether it makes sense for the City to pursue purchase of the building. Our services identified in the original Space/Needs proposal will do the following: • Provide an Architect's review of the building including cursory inspections of the roof and shell for weather tightness, and of the structural, mechanical, and electrical systems. This review will not be in-depth, but it will identify items that we observe that might be of concern. • Analyize the building for Building Code concerns in the area of Life Safety and Accessibility. • Interview staff to determine the current and future programs of the City regarding its use for the building. How much space do those functions require? • Determine that the building has spaces that are suitable for those programs. • Provide other communities experiences at using excess spaces to generate income. Short Elliott Hendrickson, (SEH) proposes to provide this service for $5,000.00 If the City decides that the Space/Needs Study warrants fiirther investigation of the building, the next step would be an in-depth study of the structural, mechanical, and electrical systems. Typically this service would cost $2,500. At the same time as the building systems study, we would recommend that a Hazardous Material Assessment Study be ordered to determine the extent of asbestos and other hazardous materials in the building. This study should cost approximately $8,000 to $12,000. A Phase One Assessment of the property would be in the neighborhood of $4,000. It is possible that the school has already performed the previous two studies, so school staff should be consulted to determine if the studies are available to the City for review. If the City then decides that it wants to continue with the project, SEH would provide a "Concept" package of colored floor plans, two exterior renderings, and three renderings of interior spaces to allow the public to realize the potential of the project. This would cost approximately $8,000. Short Elliott Hendrickson Inc., 1200 25th Avenue South, P.O. Box 1717, St. Cloud, MN 56302-1717 SEH is an equal opportunity employer ~ www.sehinc.com ~ 320,229.4300 ~ 800.572.0617 ~ 320.229.4301 fax Ms. Judy Weyrens August 15, 2008 Page 2 Sincerely, Duane Day Principal in Charge and c: Sam Bontrager, SEH Randy Sabart, SEH document3 MEMO TO: Judy Weyrens FROM: Susan M. Dege DATE: August 6, 2008 RE: Kennedy School Property FILE: City of Joseph I. WHETHER THERE ARE ANY DEED RESTRICTIONS ON THE PROPERTY WHICH WILL AFFECT THE FAIR MARKET VALUE. Short Answer: I have found no restrictions of record on the property which would affect the marketability or the fair market value of the property; however there is no record of the transfer to ISD 742. At the request of the City, I examined the transfer records relative to the Kennedy School Property which are on file with the Office of the Stearns County Recorder and the Stearns County Auditor. I searched the records in the tract index from 1915 to the present day. In 1915, the property was transferred by probate decree to John Lauermann. Mr. Lauermann held the property until 1957, at which time he transferred it to the Sisters of the Order of St. Benedict by warranty deed. The Sisters transferred the property to the Common School District No. 1912 of the Village of St. Joseph in 1966. There is a later deed from the College of St. Benedict to ISD 742 fora .373 acre parcel to be attached to the Kennedy School Property. There are no other recorded deeds relative to the Kennedy School Property. None of the above noted deeds contain any restrictions regarding the use of the property or any rights of reverter if the property is not used for school purposes. There are no separate restrictive covenants or other restrictions recorded against the property. According to the records in Office of the Recorder, the property is still owned by the Common School. There is no record in the tract index of a deed from the Common School to ISD 742. I searched the Grantor Index as well and found no deed from the Common School to ISD 742. The Auditor's Office records indicate that the property is currently owned by ISD 742, however they have no documentation of the transfer which triggered the change in the Auditor's records. It is possible and likely that the property was transferred from the Common School to ISD 742, not by deed, but rather by a dissolution of the Common School and attachment to ISD 742 under Minn.Stat. 123A.46. Under the statute, the property and liabilities of the dissolved district then pass to the district to which it is attached. Under the Marketable Title Act, Minn.Stat. Section 541.023, any interests which do not appear in the chain of title within the preceding 40 years are presumed to be abandoned and are extinguished. If there were a reversionary interest in the property, the holder of that interest would be required to record notice of the claim every 40 years in order to keep the claim alive. This Act has been strictly applied. Ina 1962 Opinion, the Minnesota Attorney General opined that the Act negated an express reversionary interest. The 1902 deed to the common school contained the following language: that the above described land shall be used for School House ground... that whenever the school house is removed from said above described land, the same shall be sold back to the owner of the South East Quarter.. . In that case, the common school district was dissolved and the property had passed to the independent school district. The Attorney General stated that the independent school district had unfettered title even though the deed contained an express right of reverter, because the owners of the South East Quarter had not complied with Minn.Stat. 541.023, Subd. 1 to preserve their claim. The Attorney General opinion is consistent with subsequent case law. See for example, Piche v. ISD No. 621, 634 N.W.2d 193, (Minn.App. 2001); State v. Hess, 684 N.W.2d 414 (Minn. 2004). In Piche, the court held that the Act barred a reverter claim by the previous property owners. In that case, the school district obtained the property by condemnation and the final decree contained the language "for the purpose of acquiring a school site". Piche, 634 N.W.2d at 200. The court held that the school district had the authority to acquire fee simple title to the property by condemnation under Minn.Stat. Section 125.06, Subd. 2 (now Minn.Stat. 123B.51, Subd. 1) and that the language merely demonstrated the public purpose for which the property was condemned and not a limitation on their title. The dissolution and attachment process is overseen by the County Auditor. All of the Auditor's records regarding the Common School have been transferred to the Stearns County History Museum. I have emailed an inquiry regarding the documents. Apparently there are two boxes of records concerning the merger of all the different schools districts that merged into ISD 742. Even if there were some agreement between the Common School and ISD 742, restricting the use of the property to school purposes, the agreement maybe of no force and effect today unless it occurred less than 40 years ago because of the Marketable Title Act. If the transfer occurred under the dissolution statute, then .ISD 742 steps into the shoes of the Common School with all of the rights and obligations that the Common School had to the property. As I have found no deed restrictions of record, my opinion is that ISD 742 owns the property in fee simple absolute with no requirements that it be used solely for school purposes. II. WHETHER THERE ARE ANY STATUTORY OR OTHER LEGAL RESTRICTIONS ON THE PROPERTY BASED ON SCHOOL DISTRICT OWNERSHIP. Short Answer: No, there are no statutory or other legal restrictions based upon school district ownership. I have reviewed the title standards and the Minnesota Statutes relative to the school district's authority to own and sell property. The school district has broad authority to buy and sell property under Minn.Stat. 123B.51. This statute has been fairly consistent through its recodifications back to at least 1958. The statute provides that the school board "may sell or exchange schoolhouses or sites, and execute deeds of conveyances thereof." The statutory language contains no restrictions, and there are no cases which would negate this broad language. The school district may, but is not required to sell the property to another public agency. Minn.Stat. 471.64, Subd. 1. This statute provides that a public entity (including school districts) can disregard statutory or charter provisions when selling property to another public agency. This would allow the sale without the necessity of following the open bid laws and so presumably the property could sell for less than fair market value to another public agency or political subdivision. The statute is permissive rather than mandatory. I have found no authority to support an argument that the property must first be offered back to the City or that is must be offered at a reduced price. III. WHETHER THE APPRAISAL DISTINGUISHES BETWEEN VALUE OF THE LAND AND VALUE OF THE IMPROVEMENTS. Short Answer: Yes, the appraiser considered the value of the improvements in their present condition, as well as, the nature of the existing improvements and use of the property. The total appraised value of the property, fee simple absolute, is $3,500,000. Of that value, the estimated land value is $316,000. The valuation is based upon the appraiser's opinion that the highest and best use of the property is public based upon the present use and improvements, the size of the property and the applicable zoning. The appraiser did deduct for depreciation of the improvements, as well as the lack of air conditioning and the possibility of asbestos mitigation. The appraiser observed asbestos wrapped pipes on the property and noted that if mitigation is required, the cost at a minimum would be $100,000. This minimum was factored into the appraised value. I strongly advise that the City have an expert conduct an inspection of the entire building to ascertain the true extent of any necessary mitigation. Any offer to purchase the property should be contingent upon the satisfactory outcome of this inspection and an agreement that the purchase price be reduced in accordance with the cost of mitigation.