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Key Financial Strategy Memo - Navigating the New NormalCITY OF CHMHASSEN 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952.227.1180 Fax: 952.227.1190 Engineering Phone: 952.227.1160 Fax: 952.227.1170 Finance Phone: 952.227.1140 Fax: 952.227.1110 Park & Recreation Phone: 952.227.1120 Fax: 952.227.1110 Recreation Center 2310 Coulter Boulevard Phone: 952.227.1400 Fax: 952.227.1404 Planning & Natural Resources Phone: 952.227.1130 Fax: 952.227.1110 Public Works 7901 Park Place Phone: 952.227.1300 Fax: 952.227.1310 Senior Center Phone: 952.227.1125 Fax: 952.227.1110 Web Site www.ci.chanhassen.mn.us MEMORANDUM TO: Todd Gerhardt, City Manager /U0 + Aeloi, sep C �r&l c.c. FROM: Kate Aanenson, Community Development Director DATE: February 19, 2013 d � If SUBJ: Key Financial Strategy Navigating the New Normal This memorandum is a follow -up to our meeting with Gordon Hughes, the facilitator for "Navigating the New Normal" and to get it on the calendar for the Council and Planning Commission. The workshop is scheduled for Tuesday, April 2 from 5:30 -8:00 p.m. in the Fountain Conference Room. The workshop will be divided into a four parts: • Cathy Bennett with ULI Minnesota will give an overview of national and state trends. • A Profile of Chanhassen will be presented. • Discussion with real estate and development professionals: • Office/Industrial Market • Housing Market • Planning Sector • Financial Sector • Interactive discussion with industry leaders and policy makers. The intended audience is the City Council, including their role as the HRA, and the Planning Commission. Mr. Hughes will provide a summary of the workshop a few weeks after the meeting. gAplan \ka \navigating the new normaRmemo to todd 2- 19- 13.doc Chanhassen is a Community for Life - Providing for Today and Planning for Tomorrow Urban Land Institute Minnesota z • 1 V u{ 33 £y 't � hl avi ati n 13ifv a the I 14. orniol What A two -hour interactive workshop for city officials that provides a practical approach to the new challenges of (re) development. Three-Udrt forrp 1. overview of the New Normal. 2. Profile of community change information. 3. Discussion and dialogue among real estate industry leaders and city policy makers. Audience City councils, planning commissions, economic development and housing committees, and staff. Outcome Develop a better understanding of: • The impact of the New Normal on your city, demographic trends, and market preferences. • The connection between your city's demographics, new market preferences, and future growth patterns. • The importance of partnerships between cities and developers. • Strategies to position your community to be competitive and sustainable, and to attract the best quality development. New Neighbors, New Preferences, New Responses Changing demographics and new market preferences are creating demand for different housing choices. Our region is rapidly getting older. The number of Minnesotans 65 or older will nearly double in the next 20 years. At the same time, generation Y, with 80 million Americans, accounts for a greater percentage of the population than the generation that preceded it (generation X, born between 1965 and 1979, with 46 million Americans). Three - quarters of Minneapolis /St. Paul households are projected to be without children by 2035, and the number of new immigrants has grown an average of 12% since 2000 in Minnesota. These changing demographics bring new market preferences — amenity -rich walkable neighborhoods, rental housing, multi- generational homes, work/live spaces — creating a mismatch between housing inventory and market demand, and a need for different services and amenities. To be competitive, we must offer choices that reflect these shifts in a time of increasing financial constraints. It's about priorities. it's all part of the New Normal. ra fi *Noe ' Gen Y 'I Projected Minnesota V 0 ° �A' Ages 65+ 1,399,960 ,, � 1,133,920 1 947,520 F I I 79I I 2,590 I I 623,241 677,270 "These things usually creep along at the speed of a glacier. Not so with aging. In demographic terms, this is a tsunami. It doesn't get much bigger than this ... " ',:Jtj' 2003 Housing Supply ver 2025 Housing Demand IIIIIIIIIN 2003 supply D 2025 Demand 60 Net new units w�-- -, needed 50 40 30 20 10 0 -10 thousands (< 1/6 ac) (> 1/6 ac) "(i: r'r'n t + !' ; fl,lr /, ( " �£'c ?i!8(Shij) !17 3 /d�'4'U Lrv. ' ,�t71. i t�� fl'k', r1111f(i1;f1r i��i�i i i !'(i AS miafior 2/3 say that living in a walkable community is important ! • • • • • • • t • • • t • • t • • • • • • • • • • • • • • • • • • • • • • • • • • • • 1/3 will pay more to walk to shops, work, and entertainment Born between 1980 and 1996 u Make up 30% of our population AV 80 million Americans Influence as much as half of all Aff spending in the U.S. economy 2005 2010 2015 2020 2025 2030 2035 "As a developer, it is great to have an opportunity to interact with city officials in such an open way. The reality is that we are more often negotiating from opposite sides of the table. In this environment, we are getting to know each other and developing a deeper sense of what is possible. I believe that this is an important investment on both sides." — John Breitinger, Vice President — Retail Advisory Services, Cushman & Wakefield - Northmarq New responses are needed. The way development is financed has changed, making it harder to complete quality projects. An increase in equity requirements has resulted in fewer developers who have the financial ability and risk appetite to deliver quality development. Local governments that embrace a collaborative approach to problem solving with developers will be more competitive and successful in implementing their vision for a prosperous community. What are the key policies and practices that cities can embrace in times of scarce public resources to attract private investment, create jobs, and build the tax base? An approach that provides clarity, transparency, and efficiency in the development process helps attract investments that create thriving, sustainable communities. Working together to solve problems, identify and pursue new partnerships, and manage development risks will improve key decision - making skills, with the reward of being a competitive community. Navigating the New Normal provides a forum to foster meaningful dialogue between public and private sector leaders and builds trust and collaboration for common goals. Want higher connectivity & more walkable areas . • • • • t • • • • • • • • • • • • • • t • • • t • • • • • • • • Seek active lifestyles, more interaction .r'ael y::bF1`. . 1, -- Awl* �,J)ro aykr Born between 1946 and 1964 75 million Americans ( Re)Development - Ready - Guide Local Government Policies and Practices • Cities can implement (re)development policies and practices that support St rate(]�V " q ualit y , competitive, and sustainable communities. JJ 9 ULI MN provides technical assistance to local g overnment throu the Opportunit Cit and Navi the New Normal pro Establish a vision and clearl articulate development expectations creatin {re }development -read sites. Foster collaborative and inte strate Provide transparenc that clearl defines the development process. Work as a team to coordinate the approval process across all a departments, elected offices, and investment partners, e. plannin en parks, metropolitan council, count state, watershed districts, schools, and private sector, Provide existin due dili information to developers Up-front to increase efficienc and reduce development time and cost. Anal and modif land use re to allow for a compact mix of uses with increased flexibilit that reflects chan market demands. Shift project review and approvals from reactive to proactive; fast track approvals when the project meets certain re be flexible to achieve project goals. About the Urban Land Institute ULI Priorities The mission of ULI is to provide leadership in the responsible use of land and in creatin and sustainin thrivin communities worldwide. Creatin Resilient Communities • What are the best new business models in the real estate and land use industr and how can we support their development? • How can we best adapt and reuse existin real estate while eliminatin obsolete space to create thrivin communities? • How can we influence land use leaders locall and around the world as the reshape the process of communit buildin and developin both social and ph infrastructure? Understandin Demand and Market Forces • How can we best understand the demand (q uantit y , t price, and location of the need for real estate and discover what the market wants short-term versus what it needs lon • How can we help balance local, re national, and g lobal interests, as well as public and private interests, in terms of how the affect land use decisions and development? • How will chan technolo influence buildin and buildin and how will people's use of technolo influence how the interact with the ph environment? Connectin Capital and the Built Environment throu Value • How can we best g enerate value in the built environment that is g reater than its cost? • What are the best wa to ensure the attractiveness of real estate as an investment as institutional capital allocators continue to chan and become more g lobal? • What is the most effective wa to demonstrate and explain the relationship between investment in both public projects ( includin g infrastructure) and amenities and the impact on real estate value? Promotin Intelli Densification and Urbanization • What are the most responsible wa to provide cost-effective housin for a rapidl increasin g lobal population that is becomin increasin urbanized? • How can we advance the understandin of the relationship between a hi q ualit y of life and the built environment in order to promote creation of hi appropriatel priced densit that is attractive to users? • What is the relationship between a thrivin econom and a thrivin cit — between a d societ and the built environment? Inte Ener Resources, and Uses Sustainabl • How can we best reduce the ne impact of the built environment on our natural resources and climate? • What are the best wa to use the world's ener resources and protect the built environment from volatile and unpredictable conditions? • How will trends in ener and resources affect the future best use of land? Urban Land Institute Minnesota Thanks to g enerous financial support from the ULI 75th Anniversar Urban Innovation Fund Grant Pro Famil Housin Fund, Minnesota Housin and the Metropolitan Council.