A-2. Frontier Building Potential RedevelopmentMEMORANDUM
A_C�(
CITY OF CHANHASSEN -
Chanhassen is a Community for Life -Providing for Today and Planning forTomorrow
TO: Mayor & City Council
FROM: Todd Gerhardt, City Manager
V'461
DATE: December 12, 2016
SUBJ: Review Concept Plan for Redevelopment of the Frontier Building and
Request for Tax Increment Financing (TIF) Assistance
Attached is a concept plan by United Properties to redevelop the Frontier building located on
three parcels in the downtown (see Attachment #1). Currently the Frontier building is zoned
central business district. United Properties is proposing to demolish all of the existing buildings
that are located on two of the three lots. In their place, United Properties proposes to build a
18,000 square -foot specialty grocery store and a 130 -unit market -rate apartment complex.
REQUEST FOR ASSISTANCE
The developer is requesting assistance of $1.3 million through a Redevelopment Tax Increment
Financing District (see Attachment #2). An overall assessment of the condition of the buildings
has been completed and it has been determined that it "does meet" the redevelopment district's
criteria for blight standards. The TIF district would exist for 26 years. The total life of the TIF
district is estimated to create $4.2 million (present value) before costs and repayment assistance
(see Attachment #3). The repayment assistance would be given through a pay-as-you-go note
($1.3 million), which means the increment is only disbursed as it is received. The time frame for
the project is that construction will begin by June 1, 2017 with completion no later than August
1, 2018.
The City Council has the power, should it be deemed necessary, to grant tax increment
assistance. In the past, the city has provided TIF assistance to encourage economic development
and a broad range of housing opportunities in the form of affordable housing, senior housing,
and assisted living throughout the community.
This project will promote the redevelopment objective of enhancing the city's tax base by
expanding the market -rate housing opportunities, and increasing the range of goods and services
provided by a specialty grocery business in the core downtown.
PH 952.227.1100 • www.ci.chanhassen.mn.us • FX 952.227.1110
7700 MARKET BOULEVARD • PO BOX 147 • CHANHASSEN • MINNESOTA 55317
Mayor & City Council
Frontier Building Redevelopment
December 12, 2016
Page 2
ANALYSIS OF REDEVELOPMENT
PROS
• It would boost tax revenues (Attachment #3) by five times the amount being paid today.
Additionally, it would enhance the market value by ten times the current value.
• The proposed redevelopment is compatible with the existing transit area.
• Adding 130 housing units to the core downtown will help all retailers in the downtown area.
• The Maxfield Housing Study, funded by the Carver County CDA in 2014, stated that
Chanhassen could support 875 general occupancy rental units between 2014 and 2040.
• The current redevelopment site is underutilized. With this development, the site would meet
its full development potential.
• Improving the aesthetics of the area by introducing quality architecture.
• Promote redevelopment objectives and removal of blight to enhance the tax base.
• Maximize the full utilization of the existing infrastructure improvements made with the
SouthWest Transit Station.
CONS
The project will create additional traffic on Market Boulevard between Highway 5 and
West 78a' Street. This may require that Market Boulevard be upgraded sooner than later.
Some of the costs associated with the upgrade could come from future increment derived
from the TIF district. Roadway improvement costs are estimated at $3.2 million.
Potential loss of existing tenants from the Frontier Building. There are opportunities for
these tenants to relocate in the community, but their rental rates will most likely be higher.
After
Frontier Property
Currently
Redevelopment
Market Value
$2,542,100
$25,050,000
Total Taxes
$95,686
$482,720
City Portion of Total Taxes
$7,540
$75,730
• The proposed redevelopment is compatible with the existing transit area.
• Adding 130 housing units to the core downtown will help all retailers in the downtown area.
• The Maxfield Housing Study, funded by the Carver County CDA in 2014, stated that
Chanhassen could support 875 general occupancy rental units between 2014 and 2040.
• The current redevelopment site is underutilized. With this development, the site would meet
its full development potential.
• Improving the aesthetics of the area by introducing quality architecture.
• Promote redevelopment objectives and removal of blight to enhance the tax base.
• Maximize the full utilization of the existing infrastructure improvements made with the
SouthWest Transit Station.
CONS
The project will create additional traffic on Market Boulevard between Highway 5 and
West 78a' Street. This may require that Market Boulevard be upgraded sooner than later.
Some of the costs associated with the upgrade could come from future increment derived
from the TIF district. Roadway improvement costs are estimated at $3.2 million.
Potential loss of existing tenants from the Frontier Building. There are opportunities for
these tenants to relocate in the community, but their rental rates will most likely be higher.
Mayor & City Council
Frontier Building Redevelopment
December 12, 2016
Page 3
The developer is requesting $1.3 million of assistance to be used for building demolition, soil
corrections, special assessment write-down, and land write-down. The city's financial
advisor from Ehlers, Inc. has completed a preliminary review of the developer's "But -For
Test" regarding the assistance and whether the criteria satisfies state statute. Based on their
review, they have determined that the project meets the "But -For Test" and would not
happen solely through private investment in the foreseeable future. Staff believes the
redevelopment with public investment will yield a net increase in market value for the site,
and the redevelopment of this site would not occur without TIF.
COUNCIL ACTION
Staff is looking for direction from the City Council to proceed with the negotiation of a private
redevelopment agreement and the creation of a Redevelopment Tax Increment Financing
District. The increment generated from this district will assist the developer with $1.3 million in
TIF assistance to construct a 18,000 square -foot specialty grocery store and a 130 -unit market -
rate apartment complex.
ATTACHMENTS
1. United Properties Concept Plan.
2. Building Blocks of TIF.
3. Frontier Redevelopment Assumptions and Proposed Tax Increment Flow.
4. ULI Analysis.
5. Site Plan Area.
g:\admin\tg\5ontier building redevelopment\memo dated 12-12-16.docx
�1, 1
11'
UNITED PROPERTIES
CREATING DEEP RO015
United Properties — Downtown Chanhassen Mixed -Use
525 W. 78' Street
Redevelopment Summary
December 5, 2016
Introduction
United Properties is pleased to present a mixed-use redevelopment opportunity in downtown
Chanhassen that will include approximately 130 market -rate apartment units and an 18,000 sf
Aldi grocery store. The address for the proposed redevelopment is 525 West 7811 Street and is
bordered by the Chanhassen Movie Theater and Country Inn & Suites to the west, the
Chanhassen Dinner Theater to the East, and the SW Metro Park & Ride to the south. This
location is very appealing for people seeking to live in Chanhassen MN that desire close
proximity to Chanhassen's substantial arts, entertainment, outdoor, civic, and retail offering
while having immediate access to public transit as well has highway 5. The site is approximately
4 acres and currently contains a partially occupied multi -tenant retail building commonly
known as the Frontier Building.
Site Redevelopment
The sites redevelopment will include demolition of the existing Frontier Building and
construction of a new 192,000 sf mixed use building. Due to the existing shared parking and
access easements on the site it is necessary to construct any new building in the same footprint
as the existing Frontier Building. This space constraint posed a significant challenge to our
design effort which was aimed at maximizing the sites use with a high floor to area ratio (aka:
high site density) while offering an excellent place to live along with a new grocery offering to
the downtown Chanhassen marketplace. Through several months of design effort we have
established a design that accepts the sites constraints and meets the design objectives.
Site Uses
At the onset of our redevelopment effort we solicited retail interest in this location from four
different grocers that we believed could be viable for this small footprint site. The four grocers
were Aldi, Whole Foods, Fresh Thyme and Trader Joes. We are fortunate that one of the four
(Aldi) expressed a desire for this location. We were reminded of this good fortune throughout
the design process as we quickly realized that due to the site (easement) constraints, any grocer
over 18,000 sf would be very difficult to spatially accommodate along with an apartment
3600 American Blvd. w. Suite 750 Minneapolis,
MN 55431
T 952.835.5300 uproperties.com
building. The 18,000 sf Aldi grocery store is an ideal size to coexist with a market -rate
apartment building. This compatibility allows the stores primary customer entrance to face W.
78' street but also affords space for the apartment building to have a prominent W. 78th street
entrance that will include the leasing office for prospective tenants. The Aldi customer parking
needs will be met with the northern surface parking lot along W. 7811 while the primary
residential parking needs will be met by the southern surface parking lot and the 134 stall
enclosed and climate controlled parking garage.
Aldi is a leading global supermarket chain with over 10,000 stores in 18 countries. Aldi stores
focus on a select assortment of essentials or "must haves" and offer many name brands as well
as brands that are unique to Aldi. Customers utilize their own reusable grocery bags, and
shopping carts are kept in one convenient location as opposed utilizing eco -unfriendly bags and
parking lot cart corrals that waste a lot of space and often give a parking lot a disorganized
appearance. Aldi's conservative approach allows them to deliver and maintain a quality store
and shopping experience. This conservative approach also affords Aldi to offer a high quality
product at a lower price than their competitors which will provide the Chanhassen shopper a
new alternative.
Public Benefits
In addition to being a great place to live and shop the redevelopment will provide a very visible
and high quality building next to the Landmark Chanhassen Dinner Theater. The six story build
will be visible from highway 5 and help to further establish downtown Chanhassen as a place to
be and live. The 130 residential units will contain a mix of 1, 2, and 3 bedrooms. A resident
population of 250 is likely for a building of this size. Our market study of the area shows strong
demand from the "empty -nester" (55+) and millennial demographic. We anticipate that our
residents will not only be frequent customers of the grocery store at their doorstep but
customers throughout downtown Chanhassen. The location will offer our residents the
convenience to walk or bike throughout Chanhassen if they choose to leave their vehicle in the
garage. The walkability of this site will increase pedestrian presence and activity throughout
downtown Chanhassen.
Another public benefit is the strength and stability of the Aldi grocery chain. There is little
worse for the vibrancy of an area than closed businesses and storefronts. A closed business at
the base of an apartment building would have a very negative impact on residential leasing and
vacancy. Aldi Inc. is one of the world's largest privately owned companies. Their business
model combined with their outstanding and virtually unmatched credit provides great certainty
that an Aldi store within our proposed redevelopment will remain open and thriving for many,
many years.
The public will also benefit financially from this redevelopment. The total redevelopment
budget is in excess of $30 million with a construction cost alone of approximately $25 million.
The design and construction of this redevelopment will create approximately 200 (full time and
part time) new jobs. The grocery store operations and residential management will create
approximately 50 (full and part time) new jobs.
The property location and blighted condition of the existing buildings results in the potential
establishment qualified redevelopment TIF district. The property tax base that is generated by
the redevelopment will exceed the tax base of the existing property by many times. The
increased tax base (or Tax Increment) combined with the establishment of a TIF district will
allow the City to utilized the available tax increment. Due to the high cost of construction in
2017 and market rent achievable within the market we are requesting the City Council to
approve $1.3 million of the available tax increment to offset a portion of redevelopment cost
and make the redevelopment financially viable and achieve the associated public benefit. The
balance of available tax increment could be utilized by the City of Chanhassen for offsite
improvements.
Timing/Phasing
Predicated upon municipal approvals the first half of 2017 we anticipate redevelopment to
commence in summer 2017. The projects construction duration is expected to be
approximately 14 months which will result in a grand opening of the grocery store and
apartment building in fall of 2018.
Conclusion
We are excited to present a redevelopment opportunity that we can deliver and will make a
positive impact on the community. If City support is received, we are prepared and ready to
begin the next phase of the redevelopment effort. We truly believe that this redevelopment
will be a great addition to downtown Chanhassen, is the right use for this location, and we
respectfully request that the Mayor and City Council of Chanhassen provide their support for
the mixed-use redevelopment and tax increment financing described in this memo.
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1111¢2016
EHLERS
taareameuaun
Frontier Redevelopment 2 - No Inflatior
City of Chanhassen
130 units of Mader Rate Apartments (E24MM assessed value)
Base Value Assumptions - Paget
Note:
1. Base values are based upon review of County website on 11.183016.
Base rates for Pay ID16 as applied to property within Cry of Chan has sen. ISD 112, and We 064, Pay 2017 rates will be assigned in Spring 2017.
once -or Ebkna Pamtlme.Inc.-twor.SOnly C curso'Cow."o-na-Eeenomlc. RNwebpme..'re 1 h W roof-maw'—pan ospox.
ASSUMPTIONS
AND RATES
VALUE
DlstridType:
Redevelopment
Tax Rest
Dlslrlot Name/Number:
County DlsVlct 1:
Total
c
Pwenmge
Exempt Clos ReM(ExempO
0.00%
Fent Year Construction or ln6ation on Value
2017
class
Oommerdal lniesM& Relents Clave Raft. (CA Pool
Existing District- Specify No. Years Remaining
Land
Market
Fhst $150.090
1.50%
Inflation Rate -Every Yeer'.
0.00%
Tax
Own $150.000
3.00%
IMount Rate:
660%
Copper Address
Capopmeal lnrreMa Cho Rete(CI)A)
2.00%
Preaes Value Bad,
1 -Aug -17
MaMN Veale
Rena Housing Class Relc(Reral
125%
Flint Period Ending
1 -Feb -18
Orlg.Tax Cap. Maw
AftaeeMg Rental leasers Cleo Rate (AB. Rental)
Bloomberg Co
Tex Year Oicriat aCeNfie1
Pay 2017
1265$00
I'll 5105,Oo0
0.25%
Ceahflow Assumes First Tax Increment For Development:
2019
24,560
Ova $108,00
0.25%
Yearsof Taxlncrement
26
408,000
Nen4mmolaad Reaerated Nan -H Res.I Urn
446,800
Assumes last Year of Tax Increment
20"
Pay 2017
Fast $500.000
1A0%
Racal Diapered. EleNon pholide (A). load. (B), or NAI
Inside(B)
25.2830031
Coal $500.000
125%
Incremental or Tolel Fiscal Disparate
287.600
100%
Homealeed Nonsense Che, Rear, (HIOtd. Real
Pay 2917
Fiscal DispaPoee ColNiocon Rano
36.0559%
Pay2016
First S500.000
1.00%
Fiscal Dnaparinea Metro -Wide Tax Rate
1502620%
Pay 2016
Own $500.000
125%
Marmu"Sood, Local Tax Rate:
108.905%
Pay2016
AgIicWNral N-41ionecknd
1.00%
owned Land Tax Rate (Use higher of Current or Max.)
108.905%
Poy2016
SYxo-vnde Tax Ram(CcmmAnd! only used far WWI town
486410%
Pay 2016
Market Value Tax Rate (Used far total tales)
026845%
Pay 2016
Note:
1. Base values are based upon review of County website on 11.183016.
Base rates for Pay ID16 as applied to property within Cry of Chan has sen. ISD 112, and We 064, Pay 2017 rates will be assigned in Spring 2017.
once -or Ebkna Pamtlme.Inc.-twor.SOnly C curso'Cow."o-na-Eeenomlc. RNwebpme..'re 1 h W roof-maw'—pan ospox.
VALUE
INFORMATIONBASE
Building
Total
c
Pwenmge
Tm Year
Property
Call
class
After
Land
Market
Market
Of Value Used
Original
Original
Tax
Original
After
C.W. AlW
Map # PID
Copper Address
Market Value
Value
Value
forOstrct
MaMN Veale
MarkNValua
Class
Tax Cald ekc
Conversion
Orlg.Tax Cap. Maw
252W0020
Bloomberg Co
477200
788,300
1265$00
100%
1.265,500
Pay 2017
C/I Paid
24,560
Rental
15,819
25.1680031
adomber, Cc
408,000
38.900
446,800
100%
446.00
Pay 2017
CA
8,938
Rental
5,586
25.2830031
DocmbeWCo
287,600
0
287.600
100%
2871800
Pay 2917
WI
5,752
Rental
3,595
20000M
89AN
28,00
Note:
1. Base values are based upon review of County website on 11.183016.
Base rates for Pay ID16 as applied to property within Cry of Chan has sen. ISD 112, and We 064, Pay 2017 rates will be assigned in Spring 2017.
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11/18/2016
EHLERS
rote
Frontier Redevelopment 2p- No Inflation
City of Chanhassen
130 units of Mahn Rate Apartmnms (924MM assessed value)
Base Value Assumptions -Page 2
Note:
1. Market values are based upon average provided by The city.
ioklPm"M TMez
VI
PROJECT
INFORMATION
(Project Tax
Capacity)
(0,70)
InManuel Value Texas
(67,254)
less Bau Value Tues
n
"'Min Omsz TIF
Estimated Taxable
Total Taxable
Pmant,
et
Percentage
Percentage
Percentage
Percentage
First Year
Property
Mallet Value MCMet Value
Tobl
Madded,
Tax
%pled
Project Tax
Completed
Completed
Completed
compiled
FUIITaxes
AeWPM1esa New Uu
Per Sq.FtNnN Per .FlNnit
Sq.FtlUnrts
Value
Class
Tax CapaeRy
CepecByAd
"1?
2018
2019
2010
Payable
AnaNnents
Telling 165,OW
130
21,f5g0
Rental
288125
2.W3
50%
100%
100%
100%
2020
Retail
200 209
18,000
,6600000
CII Ref
16A
50%
100%
100%
1001"
2020
6ubtobl Residential
190
31 00
268136
BUNOW CorrvrercuNnd.
18 00
9600 0
)1 50
Note:
1. Market values are based upon average provided by The city.
nota
1. Taxes and tax increment will vary signficantly from year to year depending upon values, rates, state law, fiscal disparities and other factors
whim canna ce predicted.
ioklPm"M TMez
VI
482,720
TAX CALCULATIONS
(36,66))
Was Fiscal Disp. Adj.
(0,70)
InManuel Value Texas
(67,254)
less Bau Value Tues
n
"'Min Omsz TIF
M r a
et
Tix
DispaMies
Tax
Property
Dispersion
erosion"
Value
Tokl
Tves Per
New Use
Ca a
Moody
Tv Ca5
Ca a
Texas
Taxes
Texas
Taxes
TUM
6 .FWUnX
Aparhnerds
Rebil
868,136
H,R50
0
.T,115
266,1'6
M,136
382,001
48,065
0
40,703
0
36,65)
it".
9,665
366,666
138,130
.,809.15
nota
1. Taxes and tax increment will vary signficantly from year to year depending upon values, rates, state law, fiscal disparities and other factors
whim canna ce predicted.
Pnwasee lakrsseemdess. m.-6niaaweoll nRasawl.emne.waulaeea- twevew- incessamosever's m.e.vwm.,naae.eerm.arware.w amvuwme,Reecewpa.urns, 113 snxaedm.ewme'sur,asan
ioklPm"M TMez
VI
482,720
less Slate-wid.TMes
(36,66))
Was Fiscal Disp. Adj.
(0,70)
InManuel Value Texas
(67,254)
less Bau Value Tues
2/,226
"'Min Omsz TIF
Pnwasee lakrsseemdess. m.-6niaaweoll nRasawl.emne.waulaeea- twevew- incessamosever's m.e.vwm.,naae.eerm.arware.w amvuwme,Reecewpa.urns, 113 snxaedm.ewme'sur,asan
11/102016
Tv Increment CasM1Oow-Page 3
E_HLERS
Frontier Redevelopment 2 - No Inflation
City of Chanhassen
130 units of Market Rate Apartments ($24MM assessed value)
%M
OW
Tu
Taa
[hy
OizOarXRa
Tu
M
iy
R
6reaaTu
Grm Taz
cremeM
Autlitar
am%
rt
14%
NeTx
aremml
PfezeM IENOINe
Velue
Tax PrymeMl
vrs. Year Oah
DLDt/10
0&OI/10
0201119
170%
189,880
125,140,7
(13,55])
131,130
108 905%
142.814
71,403
(25])
(7.115)
61(732
58,010
O1
2019
]1,403
(257)
64,032
114,604
1
O=lM
2019 0211120
100%
338,376
(26.140)
(0],115)
28),280
108905%
34.&0
158420
(583)
155w)
(15,514)
140271
235,5.
1.5
2020 0.1.158420
(5833)
(15,614)
140,271
353,5852
2020 0M 101
100%
338,376
(25,140)
(0,115)
28],214
tOefS
ON.
312,&0
150,420
(543)
(15,563)
140,01
488692
26
2021 08101218MMI
155.420
(59)
(16,503)
140,01
691,011
3
221 0210122
100%
398,3]5
(25,7]0)
(0,115)
207,214
108145%
312,040
156,420
(583)
(15585)
140,271
897,597
35
222 04317122
156,420
(583)
(16.508)
140,271
707,497
4
222 210123
10%
339,3]5
(25 ON)
(27,116)
20],260
10892%
312..0
1`4,420
(663)
(15.589)
1402]1
001,792
45
2023 0&0123
1'56,420
(583)
(16,585)
140.2]1
1,003,552
5
2023 210124
tOD%
339,375
(25,000)
10116)
214.280
106805%
312.140
14.420
(553)
(15,588)
147,01
1,12826
6.5
224 0&21120
156,420
(563)
(15.5%)
140,271
1,168,618
6
2024 0211125
100%
338,3]5
(25,007)
(2],115)
28],260
108905%
312810
155420
(583)
(155.)
140,271
1M1.
65
225 0&11125
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(583)
(15586)
140,271
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7
225 02V128
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339,3]5
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26],280
100.906%
312&D
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(561)
115563)
140,01
1,]]6,291
75
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158420
(583)
(16.606)
140.271
1,584,010
8
2026 21012]
100%
339,375
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(0,116)
207.2.
108.914%
312840
1%420
(.1)
(16,586)
140271
1,649,837
6.5
227 0&0127
158,420
(583)
(16,505)
140,271
1,733,153
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227 =InS
100%
339.375
(2520)
10,115)
287.263
108.905%
312,840
14,420
(Ni)
(16,599)
140,271
1,014,631
9.5
2020 0810128
1.,420
(683)
(15589)
14791
1.694.123
10
2028 020129
100%
339,376
(251030)
(0,115)
207,00
108.05%
312,840
trv',420
(683)
(151500)
140,271
1.1418]5
105
2028 0810128
158420
(583)
(15,614)
140,01
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11
2029 02101130
114%
339,375
(25004)
(27.115)
287,260
106.905%
312010
155.420
(583)
(15,514)
140,01
2,121,152
115
200 08101137
168,420
(5W)
115,50
140,01
2,193,18]
12
220 2101131
107%
339,3]5
(25,000)
(27.115)
2572.
108.905%
312810
168.420
(SW)
(16.566)
140,271
2,283,425
125
2031 00101M
158420
(583)
(15,506)
140.271
2,331870
13
2031 210122
100%
339,375
(25..0)
(27,115)
287,250
1.8905%
34,&0
IY,420
(683)
(16,608)
140,271
2,390,8.
13.5
2032 0&➢122
IW420
(583)
(16,588)
140,271
2,464,086
14
2032 210143
100%
339.3]5
(25,.0)
(0.115)
207,2.
108905%
312,040
156420
(563)
(15.588)
14001
250,937
145
2033 0&0123
159,420
(563)
(15,506)
140,271
2,589.835
15
2033 02101(10
100%
392376
(25140)
(0,115)
207,267
108.914%
312,940
1`00.420
(583)
(155.)
140,271
2850,419
155
2141 MIM
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(563)
(15506)
140,01
2,709,525
16
204 210196
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338,3]6
(DO NO)
(27,115)
287,260
108.905%
312,840
1`4.420
(583)
(15.505)
140,271
2,]14,190
165
2035 08101136
im..
(561)
(16.505)
140,271
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(2],115)
287260
108.905%
312 ON
150,420
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(16,586)
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2,078,334
1].5
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156420
(583)
115,586)
140,271
2,831,001
18
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312,840
156,420
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115,588)
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156,420
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(15614)
140271
3145.9
19
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390375
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20],26)
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312,040
1.,420
(563)
(155.)
140,271
3084613
19.5
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155.420
(514)
(165W)
140,01
3,133,324
20
2038 0201139
100%
339,3]5
(25,0001
(0115)
287,2.
108.905%
312,640
156.420
(563)
(15 585)
140,01
3,160852
205
2039 08'01139
155.420
(514)
(15,509)
140,271
3,228,828
21
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100%
339,375
(250.)
(27,116)
287,260
108.905%
312640
1Y,420
(563)
(16,514)
140,271
3,01,874
215
2040 08101/40
156,420
(563)
(16,589)
140,271
3,315,022
22
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100%
339.376
(25,000)
(2],115)
287,2.
108.905%
312040
156,420
(583)
(15,588)
140,271
3,358,614
22.5
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158420
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(15,514)
140,271
3,400,530
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338,376
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28703
108905%
312,840
1W.420
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(15550)
140,01
3W.1
23.5
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114,420
(563)
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140,01
3,4611.
24
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339,375
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(0115)
207,2.
106..%
312,840
168,420
(563)
(15 5W)
140171
3,520,001
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153,420
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(15566)
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25
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339,375
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(0,115)
287.260
108.905%
312010
150,420
(563)
(15.509)
140,91
3,594,870
255
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156,420
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Regional
Cou..H of
Mayors Minnesota
MEMORANDUM
TO: Todd Gerhardt, City Manager
Kate Aanenson, Community Development Director
FROM: Gordon Hughes and Cathy Bennett, ULI Minnesota
DATE: April 11, 2012
SUBJECT: ULI Minnesota Navigating the New Normal Workshop
On behalf of ULI Minnesota, thank you for the opportunity to meet with you, the City Council,
Planning Commission and staff on April 2, 2013. Our ULI MN workshop team enjoyed our
dialogue with you and appreciated your hospitality. We also appreciated the time that you spent
with us in preparation for this workshop.
As a follow up to the workshop, we would like to take a moment to summarize some of the key
observations expressed during our dialogue and panel discussion.
Data on demographics, employment and jobs in Chanhassen, presented at the workshop,
offered a point of reference for trends that will affect the City in coming years. Please
feel free to contact us if you have any follow up questions on the data presented at the
workshop.
• Chanhassen has a number of key strengths and assets. It has two excellent school
districts, a healthy tax base, strong market acceptance and long-term, committed elected
and appointed officials. In addition, Chanhassen benefits from an authentic downtown
that virtually all cities yeam for and try to replicate. These assets position the City to be a
very desirable development/redevelopment location.
• The Next Generation is not just looking for a community, but also a sense of place which
includes jobs, social and technological connectedness, restaurants, diversity, quality
housing at affordable price and access to state of the art technology. Density,
walkability, creativity and access to services such as recreation and fitness facilities are
key desires of this group. These characteristics are also important to Boomers in their
selection of communities for the next phase of their lives. As the Next Generation ages,
their interests expand to include quality schools, safe neighborhoods and quality housing
at an affordable price.
• Chanhassen is a "seller community", i.e. a community that is well -situated with strong
demographics and market. Notwithstanding this strong position, the City should realize
that the Great Recession has seriously affected the development community. Qualified
developers who remain in business are selective about the communities in which they
work and are looking for predictability and flexibility during times of scarce resources.
Cities which embrace collaborative approaches to solving problems, identify and pursue
partnerships, manage development risks, improve decision making skills and develop
clear expectations will rise to the top during difficult economic times.
• Difficulties with accessing private capital have increased the complexity of development
deals. It will be critical that the City's response to private development and
redevelopment remains collaborative while reasonable risks are considered to achieve
community goals. A risk position on the part of the City is not necessarily a bad thing as
long as the City evaluates its risk tolerance and plans accordingly. To that end, it is
important for the City to prioritize its wants and needs and its willingness to be a
financial participant if the deal advances the City's goals. .
• Successful communities develop a clear vision, react appropriately to opportunities,
create innovative financial tools and leverage their key assets. Leadership and
"consistency of vision" are keys to successful communities, especially the alignment of
policy direction between elected officials and staff. Developers' greatest enemies are
uncertainty and risk. Both developers and lenders are even more risk averse now due to
steeper equity requirements and higher tenant commitments, so communities that can be
very clear about their expectations and have policies and procedures that expedite
approvals for projects that are consistent with their vision will prevail. This starts by
having a council that is all on the same page. Communities led by divided councils do not
create atmospheres that are conducive for investment. This is not the case in Chanhassen.
• Successful communities are smart about community engagement. The city may be better
served by involving the community more in the planning and policy development stage
(creating the standards) and less at the project approval stage. The development
community also values cities which "own their process", i.e. do not abdicate their
leadership role and decision making to neighborhood groups and naysayers.
• Successful communities maintain a strong mutually respectful relationship with their
staff. Staff members are usually the first people to meet with developers and other
prospective investors. Those investors need to know that the staff understands what the
Council wants and expects so they can respond accordingly.
• Chanhassen has done a great job in positioning itself as a successful community due
principally to the commitment of its elected and appointed officials and staff.
2
Based on these observations, Chanhassen may wish to pursue the following ideas:
Chanhassen enjoys the many benefits afforded by an "authentic" downtown. The
incorporation of higher density, mixed income housing in potentially taller buildings in
the downtown core may be a great approach for attracting new younger residents and
retaining existing residents (primarily Boomers) who are looking for a different style of
housing in close proximity to the amenities offered downtown.
Chanhassen has done a good job in aligning City financial resources with the needs of
particular development and redevelopment initiatives. Nevertheless, Chanhassen should
revisit the financial role the City would consider for future development and
redevelopment opportunities. As noted earlier, quality developers will continue to seek
out communities that have crafted a well -reasoned and predictable partnership model
with respect to public/private ventures — especially those cities which are viewed by
private lenders as being committed to the ultimate success of a project.
The City should evaluate a plan to improve the sidewalk and trail system not only within
neighborhoods but as connectors to important community assets such as downtown.
Walkability is highly valued by both the Next Generation and Boomers. Improvements to
the sidewalk and trail system will provide an excellent return on investment for the City.
• The City should review providing programs and/or partnerships that support affordable
workforce housing to diversify the housing stock and increase the availability of options
for younger families and children of the Boomers in your City.
We provided copies of ULI MN (Re)Development-Ready Guide - a tool to establishing
(re)development policies and practices that use scarce public dollars to attract private
investment, grow jobs, and build tax base for the well-being of your city. We encourage
you to consult this guide as a way to evaluate your policies and practices.
On behalf of ULI MN, thank you again for hosting this workshop.
c
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