More than four years have passed since McDonalds first expressed interest in opening a new restaurant in Ramsey but has yet to break ground.
McDonald’s was supposed to open its new restaurant at the southeast corner of Armstrong Boulevard and Sunwood Drive on Feb. 10, according to terms of a development agreement with the city.
McDonald’s never signed the time extension document the Ramsey City Council had approved in February 2016 and did not pay the $5,000 escrow the council had required as a condition of approval, according to City Administrator Kurt Ulrich.
“We’d certainly like to have them come, but we’ve been patient,” said Council Member Melody Shryock.
Ulrich said McDonalds told him on Feb. 23 that it wants to hold on to the property and develop it when there are “more generators and a demand to support our business.”
While the city will give McDonald’s another chance in April to be more specific, the council wants to send a message to the fast-food giant.
The message that was discussed at the March 28 council workshop meeting is removing development restrictions on neighboring properties the city owns. Since McDonald’s bought the 1.36-acre site for $470,000 on March 3, 2014, the city could not market its land on the west side of the Sunwood Drive roundabout to any developer that would bring in a competitor.
The development agreement lists 45 businesses. Burger King, Dairy Queen, Five Guys, Hardee’s and Wendy’s are a few of the more common establishments in the Twin Cities. But the restrictive covenant would also have forbid companies like Apollo Burgers, Jack in the Box and Steak ‘n Shake from moving next door if these companies ever want to move into the Twin Cities market.
Ramsey will file an affidavit with Anoka County to have these restrictions removed from the property records of the neighboring city-owned properties, Ulrich said.
This action does not prevent McDonald’s from building in Ramsey. However, Ulrich said the city could file a motion in Anoka County District Court to take back the property without needing to return any of the $470,000 McDonalds paid for the land.
Sarah Edstrom Smith, an attorney with Briggs And Morgan who negotiated the land deal on behalf of the city, feels the city has a strong case if it chooses to take back the property title through a court action because McDonald’s failed to meet the deadlines for groundbreaking and restaurant opening that were included in the land deed recorded with Anoka County on March 3, 2014.
“The re-entry language does not require the city to compensate McDonalds if one of the conditions subsequent is not met and the city commences an order to re-vest title to the property,” Smith said.
ABC Newspapers asked McDonald’s why there has been a delay, when ground breaking would happen and if it would fight the city on any efforts to remove the restrictive covenants and taking back the property without any compensation.
A McDonald’s spokesperson said the company has no information to share at this time regarding the Ramsey property.
Smith told the council at its March 28 workshop that McDonald’s could sue the city, although she cannot imagine what their main arguments would be.
“I don’t know if they consider this a star site they want to hold on to,” she said. “It’s hard to say where this will end up because I can’t read the other side right now.”
Ulrich said the city has up to six years to file a motion with the district court to take back the property.
With this in mind, Council Member Chris Riley said they should not rush to take back the property since there are no other buyers lined up and the city is still trying to sell other large tracts of land in The COR development north of Highway 10 and between Armstrong and Ramsey boulevards.
“We don’t want the land. We want a building. We’re all in agreement of that,” Riley said.
Council Member Kristine Williams has a different opinion. She called it “a prime retail spot” because of its location and the city already put in the underground utilities so these building pads would be ready for development.
Ramsey spent approximately $40,000 for street, sewer, water and storm water improvements to the McDonald’s site. This was part of a larger $300,000 project to make three sites buildable. The prospective businesses for the other two properties had once been a SuperAmerica gas station and Wiser Choice Liquors.
In addition to the $40,000, Ramsey agreed to pay $30,000 to McDonalds’ broker (Welsh Companies) and up to $51,441 to the city’s land broker (Landform). At the time of the purchase agreement in October 2012, Landform was also receiving $15,000 per month from the city because Landform President Darren Lazan was serving as the city’s development manager. The remaining 20 percent of Landform’s $51,000 fee would come only when McDonald’s opens, but the other 80 percent has been paid out.
The Ramsey HRA had also set aside escrows of $120,000 for signage and $45,000 for soil clean-up. This money has not been spent, Ulrich said.
Beyond these defined costs, Ulrich pointed out there was “two years of negotiation and work” by city staff from the time McDonald’s came to the city and the property sale closed.
“It didn’t happen over night,” he said.
Council Member Mark Kuzma said the city should try one last time to work with McDonald’s and if there is no significant headway, it should go to district court to get the property back.
“I’m done playing around with these guys,” Kuzma said.