RACINE — City officials are moving toward cementing a purchase agreement and developer’s agreement for the future @North Beach, a more than $50 million residential project at the former Walker Manufacturing site along Lake Michigan.
The city’s Finance and Personnel Committee on Monday unanimously recommended approving both a purchase agreement and developer’s agreement with Royal Capital Group of Milwaukee for its planned 247-unit apartment project.
The 9.5-acre, city-owned property lies between: Pugh Marina, 1001 Michigan Blvd.; the city water treatment plant at 100 Hubbard St.; and the lake. It is considered the city’s prime development opportunity, and Mayor Cory Mason has called @North Beach the city’s biggest redevelopment project in a generation.
Under the terms of the purchase agreement, Royal Capital will buy the property at 1129 Michigan Blvd. for $3,250,864 with $10,000 earnest money due within five days of acceptance, City Development Director Amy Connolly explained to the committee.
There is a 30-day contingency period after the acceptance date, she continued, and the transaction is to close by May 1. The developer can extend that closing date by up to 150 days but no later than Oct. 1.
Terrell Walter, Royal Capital’s development manager for multifamily housing, has said the company wants to start construction in May.
A promissory note between the city and Royal Capital’s Racine Harborside LLC will call for installment payments to the city of $160,776 from Dec. 1, 2020, to Dec. 1, 2033; and one balloon payment by Dec. 1, 2034 of $1 million.
The city will hold a mortgage lien against the property until Royal Capital has fully paid for it. However, that lien will be subordinate to the construction loan which then becomes the project’s permanent financing, Connolly said; that is senior to the mortgage debt.
Connolly said if Royal Capital’s financing does not come to be, there is a contingency that allows the company to not move forward with the purchase or the development.
During the contingency period, Connolly said, the developer has the right to do environmental testing and other such work on the property.
An addendum to the purchase agreement also says this is an “as is” sale, in its present condition, and the city has no further responsibilities for environmental cleanup, Connolly continued. The city previously brought the formerly contaminated site up to industrial standards, but Royal Capital will have to take it to residential standards. Walter confirmed to the committee that that is their agreement and said Royal Capital is working with the Wisconsin Department of Natural Resources to accomplish that.
On-site public infrastructure
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The development agreement, Connolly also explained, requires the developer to meet city standards in such public infrastructure categories as city streets, lighting in the public right of way, sanitary and storm sewers and public right-of-way landscaping such as street trees. Royal Capital must also install of that infrastructure according to their approved plans which are working their way through the various city departments.
After that work has been completed, inspected and accepted by the city, Royal Capital must guarantee it for two years, Connolly added.
“(The agreement) does say that the city is waiving all fees — costs to inspect, dedicate and accept the infrastructure,” she said, “as part of our incentive to the developer.”
However, that does not pertain to Racine Water Utility inspection fees related to the installation of water lines, Connolly said.
There are also certain requirements in the document that the developer must meet before occupancy permits will be issued, she said.
There are also maintenance requirements for the vacant portions of the property during the phased development.
The agreement, Connolly said, also contains a provision for “extraordinary costs,” which are designed infrastructure features that will benefit the public — such as concrete streets instead of asphalt ones, and an enlarged or looped water line to serve fire hydrants for the entire area.
Connolly said, “We want to make sure to get the infrastructure in this entire area done correctly.” And the city would pay those extra costs.
She and Walter also mentioned that Royal Capital plans to build two underground chambers that will help settle out some of the sediments in stormwater on its way to the lake.
The purchase and developer’s agreements still require full City Council approval; the next council meeting is at 7 p.m. April 3 at Racine City Hall, room 205.
“(The developer’s agreement) does say that the city is waiving all fees — costs to inspect, dedicate and accept the infrastructure, as part of our incentive to the developer.” Amy Connolly, city development director