Board will discuss future of ‘land for a dollar’ program
By John McLoone
Hastings is changing the way it markets its industrial land.
The city has a 50acre shovel ready site that it’s been hoping will lure a large development to the Hastings Industrial Park. There’s been no takers, so the Hastings Economic Development and Redevelopment Authority voted 31 July 14 to hire a real estate broker to market the property.
HEDRA also is going to discuss in more detail at its meeting in August the future of its land for a dollar program, where developers get credit for building value and jobs created in lieu of paying market rate for a building site. The city has a few smaller parcels available in the industrial park and will make a decision on how to sell those.
The bigger parcel may have to be marketed in smaller pieces to be more appealing to prospective developers. Economic Development Coordinator Eric Maass presented the proposal to contract with Rokos Advisors, a Minneapolisbased commercial real estate company.
Rokos will receive a 3 percent commission off sale of the parcel that the purchaser would pay. The agreement states it as follows: “Broker’s fee will be added to the purchase price of the real property (if the real property is sold for $3 million the total price the buyer would pay is $3,090,000). The agreement is in place for 18 months.
Maass said Rokos will provide a written update to HEDRA on progress toward a land sale monthly.
HEDRA worked with Xcel Energy to make the parcel shovelready. City staff has attempted to market the property through local and national websites and through signage and advertising to no avail. Xcel Energy data on the industrial park lists the asking price for approximately 50 acres at the corner of Enterprise Avenue and Spiral Boulevard at $1.54/square foot, which puts the value in that $3,000,000 range.
Rokos also has a relationship with the Measure Group, which will help develop tentative site plans for interested
See HEDRA, Page 5 buyers.
“They’re going to put together some conceptual site plans for what could be placed on the site,” said Maass.
That additional service would be at Rokos Advisors’ expense.
HEDRA board member and city councilmember Mark Vaughan questioned if the city will still have to dedicate resources with the broker on board.
“How much do we have to provide for the broker?” he asked, in terms of workforce information or other local data. “I want to know how much work we’re putting into this, and we’re still putting in 3 percent on top of that.”
Maass said that the city has already compiled most of that information in trying to market the parcel. Much of the information is available through the Minnesota Department of Employment and Economic Development.
“It’s not necessarily a big burden on city staff. We do have regional resources. They have the ability to find those data points as well,” he said.
The property will be marketed both nationally and internationally.
HEDRA member Scott Sinclair asked for details on how the site will be marketed. Measure Group owner Josh McKinney attended the meeting.
Sinclair asked, “I’m curious, what are some of those ideas out of the gate that you see as an organization that theoretically someone else has missed? I’m not looking for crystall ball predictions, but you have to have some idea of where you’re going to go with this.”
McKinney said that because of the geographical location of the site, his firm is able to offer conceptual drawings for anyone looking at the site.
“We need to give them an idea of what could locate there,” he said. “Once we have someone interested, we can tailor that plan to them.”
HEDRA members discussed the prospects of the site possibly being broken down into smaller pieces and that when it sells, the city’s available land is virtually depleted.
“I just hate to work on developing it and have someone else leave because they have nowhere to go,” said HEDRA board member Trevor Johnson, who cast the lone vote against the plan.
Maass said that the city hasn’t wanted to divide the parcel up until this point.
“When we do get calls, they’re looking at the one to five acres. Fifty acres is more than any one business in Hastings could take on. We’ve been hesitant to cut it up because of the opportunity of landing the big fish,” said Maass.
Said board chair Bruce Goblirsch, “Maybe it does make sense to look in a different direction. In all reality, it probably will be smaller sites at some point, broken down.”
Maass said HEDRA members were provided with the Rokos analysis of the price the land will be marketed at but said, “We wanted to keep that amongst HEDRA. We might need that for negotiations.”
Land for a dollar The city and HEDRA land for a dollar program has been in place since 2002.
Maass asked that a decision on whether to continue the program should be deferred until August, because only four HEDRA Board members were in attendance.
“We’d like to have this tabled to your next meeting to have discussion among the full board,” he said.
“We want to have a conversation as to the approach of land for a dollar marketing. It’s been in place for some time. There have been many projects that have taken advantage of it over a 25year span. We’ve created a lot of development. We’ve created a lot of jobs,” he said.
The problem is that it’s not generating land sales revenue for HEDRA to further advance its goals.
“It’s just something they can come in and get,” Maass said. “We want to maximize the value of the asset. We want to make sure we’re really juicing this land for all we can so we can continue to do great work.”
He said that the program could be a tool that could be utilized if necessary, as some sales may not require incentives.
Sinclair commented, “If we’ve got land worth $100,000 that we can sell and reinvest like HEDRA was designed to do, in theory that makes sense. In realty, if we can’t sell it for a dollar, I struggle to reach a conclusion that we can sell it for some higher value. How do you balance those two? I’m pretty hesitant to get rid of something that has brought in the development.
Maass answered, “If HEDRA is able to capture that value, there’s a lot of good that can come from that. The “land for a dollar” is a catchy slogan. It does generate some phone calls. I got a call last week. A guy wanted to build a garage with a lift in it to store his boat. That’s not what we’re looking for. When we look at this in terms of trying to maximize the value, I think we’d be able to do that. We can always come back and offer that reduction if we need to.”
An aerial image showing a tract of land that HEDRA has enlisted the help of a real estate broker to market. Image courtesy of Xcel Energy