Roseville council votes to buy License Center strip mall


file photo • Despite long waits and cramped quarters, Roseville’s License Center just recorded it’s highest grossing year in business. The city is once again looking to revamp the space to increase its efficiency.

$2.3 million purchase contingent on due diligence period

With the goal of shoring up its License Center’s future and addressing long term city storage needs, the Roseville City Council voted Jan. 29 to approve a $2.3 million purchase agreement to buy the strip mall where the center is located.

Barring issues with the building or other circumstances, the agreement becomes official March 30.

What to do with the License Center, located at 2719 Lexington Ave. N. in the Lexington Shoppes strip mall, just north of the Roseville City Hall campus, has been an ongoing discussion on the council since at least late 2016.

Successful despite its cramped, outdated space and long waits for customers, the center was set for expansion and renovation, when, late last year, council members balked at the more than $600,000 price tag for the work.

Though the city just signed a new five-year lease for the center with annual rents topping $100,000 and more through the life of the deal, council members said the cost of improving a space the city does not own was just too high. 

“I just can’t justify those dollars on something like that,” council member Bob Willmus said at the Nov. 27 council meeting, pointing out the city could not rely on a lease renewal being available in a half decade’s time, investment or not.

At that same meeting, the council voted to negotiate with the mall’s owner, Gaughan Properties, about the possible purchase.

The agreement gives Gaughan a one-year, renewable option to purchase the adjacent city-owned Fairview Fire Station property for $867,000, for possible future redevelopment. 

The company would also continue to manage the mall, which currently has four other non-city tenants, for at least a year at a cost of $2,000 a month.

According to Ramsey County property tax records, the county-estimated 2017 market value of the strip mall was $1.58 million.

 

To buy, or not to buy

The council voted 3-2 at the January meeting to approve the purchase agreement, with those in favor — Willmus, Mayor Dan Roe and council member Jason Etten — arguing that buying the building helps the city in a number of ways.

“It’s an opportunity to solve several short- and long-term needs for the city,” Etten said, including ensuring future investment in the License Center is not wasted, providing the city with more space, and further off into the future, providing it with a potential place for a community center.

Etten also pointed out that between cost savings on rent, License Center revenue, and potential rent revenue from mall tenants, the purchase could be made without affecting the tax levy.

“We are not asking the taxpayers to subsidize this purchase,” Roe said, adding that even if the city owns the entire mall, the non-tax exempt parts of the property can remain on the tax rolls.

Prior to the vote and as a backstop against the purchase agreement falling apart, the council passed a resolution to authorize the use of eminent domain to obtain the strip mall. While discussing that resolution, which passed on the same 3-2 vote, council member Tammy McGehee laid out part of her opposition to purchasing the mall.

“It puts us in the position of being business people in the community, which is a role I don’t think we should take,” she said.

Later, despite saying she didn’t think the purchase was a bad idea, McGehee said she didn’t think the city had explored all its options nor had it properly engaged the public in the decision. Nobody spoke during the meeting’s public comment time on the purchase.

Council member Lisa Laliberte agreed that the process leading to the purchase agreement vote could have been better; she said the city “failed” in not bringing in the public for a larger discussion of the move and that the decision could have been more transparent.

“In the long term, I think it is a good piece of property. For me, the time for purchasing it is not now,” Laliberte said.

 

Nearly official

A 60-day due diligence time period is built into the purchase agreement. During that time, which ends March 30, the city will conduct an environmental study of the mall, check the condition of the building and property and examine the building’s title, among other things, according to City Manager Pat Trudgeon.

Trudgeon said if the city finds any problems with the property, it can back out of the agreement. Otherwise, once the due diligence period has passed, the city will close the deal and own the mall.

As of now, Trudgeon said there are no plans to remove the other tenants in the mall, and the city is looking to rebid the License Center renovations this year, though he said when that will happen has yet to be determined. Assuming the deal is closed, he added, the city will begin to use space at the mall for storage.

The License Center opened at its Lexington Avenue location in 1999. The last major renovation of the current 3,300-square-foot space happened in 2003.

It’s a proven money-maker for the city; in 2016, according to city Finance Director Chris Miller, it grossed $1.7 million. After covering center costs, that year there was a surplus of $350,000 that was used to help fund other city programs.

At various council meetings in the past year, Miller, who oversees the center, has said customers are frequently seen turning around and leaving when faced with the long lines at the License Center. He’s also described the center’s interior as “institutional,” and council members have been in agreement that the space is in need of renovation and expansion.

Even with her opposition to the purchase of the strip mall, McGehee has been candid about the License Center’s place in the city. “I think it is important for people to have a good experience coming to the License Center because it is a cash cow for Roseville in many ways,” she said in November 2016.

(CLICK THE IMAGE FOR LARGER VIEW)

 


– Mike Munzenrider can be reached at mmunzenrider@lillienews.com or 651-748-7813

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