Ramsey officials have finally settled the protracted lawsuits that stalled the city's Town Center project since the original developer went broke in 2006.
The city will pay $6.75 million for the remaining 148 acres of undeveloped land to a bank group that had foreclosed on a $35 million loan.
"At this price it was a good deal for the city," Mayor Bob Ramsey said. "With the city's action, we ensure there is opportunity for private entities to develop our Town Center and protect the city's previous investments."
The City Council approved the deal Tuesday night by a 6-0 vote, with one member absent, the mayor said. The council also sits as the Housing and Redevelopment Authority that will own and help develop the land.
The agreement settles disputes with MinnWest Bank Central and about 20 banks it represents. The banks had sued to loosen city development restrictions on the land.
"I am pleased," said Russ Bushman, MinnWest's chief credit officer. "It's something that we have worked on with the city for the past five months. We are glad to see it come to a conclusion."
The banks will buy the property at a sheriff's foreclosure sale Friday and then sell it to the city, probably at a June closing, Bushman said. He said the banks will have to write off the balance of the foreclosed loan or seek recovery, possibly from the estate of developer Bruce Nedegaard.
The banks foreclosed after Nedegaard filed for bankruptcy in 2006 and died shortly afterward. A few developers have talked to the city since the project stalled, City Administrator Kurt Ulrich said. Once the city has clear title to the land, developers will be sought to buy part or all of the site and get it back on tax rolls, he said.
"It's an investment in the community," Ulrich said. "The city believes the project can be successful and establish an identity for Ramsey for many years to come."
The $6.75 million price will be reduced by $1.5 million remaining in a letter of credit that Nedegaard provided to cover city-paid sidewalks, landscaping and other improvements. The banks also will pay $1.35 million in back taxes, interest and penalties, of which the city's share is about $540,000, Ulrich said.
That leaves a cost to the city of about $4.8 million, which the city will borrow from its sewer and water utility funds.
"We will pay that back as soon as we sell the land," Ramsey said. He said the financing shouldn't strain city utility improvements because the utility fund has a balance of about $9.5 million.
Town Center's original vision in 2003 was to have a downtown sprinkled with fountains and about 40 acres of parks or wetlands near more than 2,000 housing units within walking distance of small shops and commuter rail. Residents reaffirmed those themes last year during comprehensive plan meetings, Ulrich said.
More than half of the 322-acre Town Center is developed, with townhouses, a small shopping center and several office buildings.
Jim Adams • 612-673-7658
