TUV SUD America poised to expand in New Brighton

The New Brighton City Council has approved a term sheet and right-of-entry agreement with TUV SUD America to redevelop land in the New Brighton Exchange.

The term sheet and right-of-way agreement outlines the general deal parameters regarding the redevelopment proposal and allows TUV to perform due diligence at the site.

TUV SUD America is a German-based business-to-business engineering firm that provides international safety testing, auditing, inspection and certification services. With 850 locations worldwide, TUV has been in New Brighton since 1992 with a facility currently located at 1775 Old Highway 8 NW.

The New Brighton site currently employs 44 employees with an average salary of $79,150.
“This proposal specifically addresses job retention and expansion opportunities within the community,” said Asssistant Director of Community Assets and Development Janice Gundlach.

The proposal

TUV is proposing to construct a 36,500-square-foot building for office testing and certification activities in Block D of the New Brighton Exchange.

The proposed building, which will sit on a 4-acre lot, will be equipped with a soil gas venting system, enhanced landscaping, a patio amenity, ample exterior architectural glass, upgraded architectural panels and a sidewalk extension.

“The proposal also includes an option at a future date for a 12,000-square-foot expansion,” said Gundlach. “I want to say it is an option in that they will already own the land and that they are designing the site plan to accommodate that on their own in the future.”

Along with the building, surface parking and utility improvements will also be included.
TUV will work with Ryan Companies on development and construction.  Familiar with the New Brighton Exchange, Ryan Companies built Cardiovascular Systems’ headquarters in 2014.

Financing

It is expected that TUV SUD America is will pay $2.75 per square foot for an approximate total of $479,160 and the city will pay for extra-ordinary costs via the land sale proceeds.

“Like previous deals, the city will deposit the land sale proceeds in an escrow account with the title company and then the applicant and their agents will withdraw from that escrow account to be approved by city staff pay for predetermined expenses,” said Gundlach.

These expenses include environmental costs, public improvement costs and other amenities that would not otherwise be included in a traditional industrial development.

The purchase price will be adjusted prior to closing based on the actual square footage.
This proposal is estimated to generate approximately $1,2 million in TIF, which is $798,232 less than the projection in the New Brighton Exchange Dashboard.

Although the building is projected to below proposed market value and the TIF generation less than what was originally envisioned, City planners believe there are a variety of factors that justify moving forward.

The New Brighton Exchange Financial dashboard projected a 2017 development of Block D with a 50,000-square-foot building to generate a market value of $100 per square foot and TIF estimate of $2.062 million. TUV SUD America’s proposal will meet timing goals but doesn’t align with the expected square footage and market value projections.

Preliminary estimates made by TUV SUD America and Ryan Companies anticipated construction costs to be approximately $4 million but because there is not a firm connection between constriction costs and the taxable market value, city staff calculated TIF based on a building valued at 3.65 million.

“There is development competition coming online and the market in general in the northeast metro is very slow to nonexistent so we think that this is a good project to move forward,” said Gundlach.

The city council is expected to approve a final redevelopment contract during the May 23 council meeting.

If approved, construction will begin in August 2017 and be substantially complete by April 2018.

Contact Sam Lenhart at [email protected]