Ramsey off to court to reclaim land it sold to McDonald’s

Staff Writer
I cover the cities of Andover, Blaine and Ramsey. I have worked at ABC Newspapers since August 2007.

With no specific timeline from McDonald’s on when it would break ground on a new restaurant in The COR, the city will seek an Anoka County District Court order to get the property back.

The Ramsey City Council June 27 authorized city staff to file a motion in Anoka County District Court to get back a property it sold to McDonald’s a little over three years ago. McDonald’s failed to meet groundbreaking and restaurant opening deadlines spelled out in a purchase agreement with the city. Courtesy of city of Ramsey
The Ramsey City Council June 27 authorized city staff to file a motion in Anoka County District Court to get back a property it sold to McDonald’s a little over three years ago. McDonald’s failed to meet groundbreaking and restaurant opening deadlines spelled out in a purchase agreement with the city. Courtesy of city of Ramsey

The Ramsey City Council on a 5-0 vote June 27 authorized the city attorney to seek a court order to revest title of a 1.36-acre property from McDonald’s to the city. The land is on the southeast corner of Armstrong Boulevard and Sunwood Drive, just north of the Coborn’s-anchored shopping center.

Mayor Sarah Strommen said it is unfortunate that the council needed to take this step, but she said the city is in a difficult position of not having title to a prime piece of property, and McDonald’s has not been specific on when it would break ground. The mayor said the council’s goal is not only to sell city-owned land, but to see developments.

“We are not encouraging, nor do we want speculation, people holding the land hoping to turn a profit sometime down the road,” she said.
City Administrator Kurt Ulrich has reached out to McDonald’s multiple times this spring after it didn’t meet deadlines to break ground by Sept. 1, 2016, or open by Feb. 10, 2017.

The city offered McDonald’s the opportunity to hold onto the property if it paid a to-be-determined annual fee, but the fast-food giant said it would not pay any such fee.

“They have no definite plans to move forward at all with this site,” Ulrich said. “They tell us they still have interest in retaining the site, but they don’t have a definite time frame. They think it’s at least two to three years away.”

ABC Newspapers reached out to McDonald’s for a reaction and to inquire whether it would challenge the action by either trying to keep the property or trying to get all or some of the $470,000 back it had paid the city. A question was also asked on whether McDonald’s corporate strategy is to spend more money on remodeling existing stores and less on building new restaurants.

“We are aware of the city’s decision and look forward to working with them on this ongoing matter,” said Anne Christensen, field brand reputation manager for McDonald’s Midwest and Greater Chicago Region.

History

There are three undeveloped parcels on the southeast corner of Armstrong and Sunwood. The city of Ramsey owns two of the properties, which were once slated for a SuperAmerica convenience store and a new Wiser Choice Liquors, but these businesses chose to locate elsewhere before any property sale closed.

On March 3, 2014, McDonald’s paid Ramsey $470,000 for the property. The Ramsey Housing and Redevelopment Authority, which consisted of all members of the council, had actually approved the sale in October 2012, and the city subsequently went through a review of signage and a site plan before the property closing happened.

At closing, Ramsey covered the $30,000 fee to McDonald’s broker, Welsh Companies. The city has also paid 80 percent of a $51,441 fee to its previous land broker, Landform. The other 20 percent only comes if McDonald’s opens.

Ramsey also spent approximately $40,000 for street, sewer, water and storm water improvements to the McDonald’s site, which was part of a $300,000 investment for the three undeveloped parcels.

At a Feb. 8, 2016, workshop, a McDonald’s spokesperson told the council that they were looking at building either a traditional freestanding restaurant or a multi-tenant building in which McDonald’s would be the main tenant. Melissa Schmidt, real estate manager for McDonald’s Great Plains Territory, said construction would begin by Sept. 1, 2016.

When Council Member John LeTourneau asked why the project had been delayed, Schmidt responded that McDonald’s knew that additional development would be needed to support the restaurant, but they also wanted to wait for completion of the Armstrong Boulevard interchange.

The Highway 10-Armstrong Boulevard interchange opened to traffic on Dec. 31, 2015.

The council in February 2016 amended the purchase agreement to extend a groundbreaking deadline from Feb. 10, 2016, to Sept. 1, 2016, but kept the original deadline of opening the restaurant by Feb. 10, 2017. McDonald’s never signed the time extension document and did not pay a $5,000 escrow the council required as a condition of approval, according to Ulrich.

The council discussed strategy at a March 28 workshop, and the consensus was to remove restrictive covenants that listed 45 specific competitors that could not come to properties close to the McDonald’s site. This was a condition the city had agreed to when it first sold the property.

Ulrich said the city has already worked with Anoka County’s examiner of titles office to have the restrictive covenants removed and that did not require court action.

The potential of filing a lawsuit in Anoka County District Court was discussed at this March 28 workshop. Sarah Edstrom Smith, an attorney with Briggs And Morgan who negotiated the land deal on behalf of the city, said the city has a strong case because McDonald’s failed to meet deadlines.

The council was informed that the law allowed the city to wait up to six years before filing this motion. Council Members Mark Kuzma and Chris Riley said the city should not rush to take back a property when there are no buyers lined up and should try one last time to work with McDonald’s.

At its June 13 workshop, the city’s real estate broker told the council that the restrictive covenants made it difficult to market properties in this area. He also stated there would be interest immediately if all three properties, including the McDonald’s site, were able to be marketed together.

With this in mind, the council decided on June 27 that it would be best to use the law to take back the property and get it back on the market.

“I feel this is truly unfortunate that we’re at this position. I think as many people know the last thing I want is more land back in the city’s hands,” Riley said.

Ulrich said on June 29 that he has not discussed with the city attorney exactly when this motion would be filed or how long it would take.

The unknown is whether McDonald’s will challenge the city and thus lead to higher legal fees.

“Based on how the contract is written, that risk appears to be fairly small,” Ulrich said.

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