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A-1. & D-7. Discuss and Adopt Resolution Approving Application for Funding from the Carver County Community Development Agency Community Growth Partnership Initiative Program for the Frontier Redevelopment Site. A/� 04- u--`1 - I l QT c•-• CITY OF CIIANHASSEN Chanhassen isa Community for Life-Providing for Today and Planning for Tomorrow MEMORANDUM TO: Todd Gerhardt, City Manager FROM: Kate Aanenson ACIP, Community Development Director DATE: January 23, 2017 6�. SUBJECT: Carver County Community Development Agency Community Growth Partnership Initiative Program PROPOSED MOTION "The City Council Adopts a Resolution Approving Application for Funding from the Carver County Community Development Agency Community Growth Partnership Initiative Program for the Frontier Redevelopment Site." City Council approval requires a simple majority vote of the City Council Present. BACKGROUND United Properties is pursuing the redevelopment of the Frontier Building. The development includes an 18,000 square-foot specialty grocery store and a 130-unit market-rate apartment complex. ANALYSIS The proposed development involves extensive site work with the removal of the existing building and the construction of underground parking. Staff supported the redevelopment of the site for the following reasons: 1. The existing building has had a useful life cycle and the new buildings will have a higher quality of design. 2. Both uses are permitted in the zoning district. PH 952.227.1100• www.ci.chanhassen.mn.us • FX 952.227.1110 7700 MARKET BOULEVARD • PO BOX 147 • CHANHASSEN • MINNESOTA 55317 Todd Gerhardt Carver County CDA Funding Application January 23,2017 Page2 In order to assist the developer in defraying the unexpected costs,the city will be applying for funding from the Carver County Community Development Agency's (CDA) Community Growth Partnership Initiative Program. This initiative was approved by the CDA in January 2016 with the goals to increase the tax base and improve the quality of life in Carver County. There are three categories for funding: • Affordable Housing • Community Development • Redevelopment The redevelopment program is intended to assist cities with redevelopment plan goals. Blighted and underutilized areas do not maximize their potential economic value and can negatively impact the livability of a community. We are requesting the maximum grant allowed of$60,000. The next funding cycle deadline is February 1St. Staff will be making application on behalf of United Properties. RECOMMENDATION Staff recommends City Council adopt a resolution approving application for funding from the Carver County Community Development Agency Community Growth Partnership Initiative Program for the Frontier Redevelopment Site. ATTACHMENTS 1. Resolution. 2. City Council Work Session Staff Report dated December 12, 2016. g:\admin\tg\frontier building redevelopment\cc cda partnership memo.docx CITY OF CHANHASSEN CARVER AND HENNEPIN COUNTIES,MINNESOTA DATE: January 23,2017 RESOLUTION NO: 2017-XX MOTION BY: SECONDED BY: RESOLUTION APPROVING APPLICATION FOR FUNDING FROM THE CARVER COUNTY COMMUNITY DEVELOPMENT AGENCY COMMUNITY GROWTH PARTNERSHIP INITIATIVE GRANT PROGRAM WHEREAS,the City of Chanhassen has identified a proposed project within the City that meets the Carver County Community Development Agency (CDA) Community Growth Partnership Initiative Grant program's purposes and criteria; and WHEREAS, the City has established a Redevelopment Plan of which the proposed project is a component; and WHEREAS,the City has the capability and capacity to ensure the proposed project be completed and administered within the Redevelopment Initiative Grant program guidelines; and WHEREAS, the City has the legal authority to apply for financial assistance; and WHEREAS, the City is supportive of affordable housing and of the CDA's mission, to improve the lives of Carver County residents through affordable housing and community development. NOW THEREFORE, BE IT RESOLVED by the City Council of the City of Chanhassen that the City of Chanhassen approves the application for funding from the Carver County CDA Community Growth Partnership Initiative Grant program. BE IT FURTHER RESOLVED that upon approval of its application by the Carver County CDA, Mayor Denny Laufenburger is hereby authorized to execute such agreements as are necessary to receive and use the funding for the proposed project. Passed and adopted by the Chanhassen City Council this 23rd day of January, 2017. ATTEST: Todd Gerhardt, City Manager Denny Laufenburger, Mayor YES NO ABSENT g:\admin\resol\2017\1-23-17\cda funding.docx Y � CITY OF CHANIIASSEN � w 9 S Chanhassen isa Community for Life-Providing for Today and Planning for Tomorrow H k MEMORANDUM TO: Mayor& City Council FROM: Todd Gerhardt, City Manager 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. SCANNED 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. 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 culTent 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 78th 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\frontier building redevelopment\memo dated 12-12-16.docx Al UNITED PROPERTIES CREATING DEEP ROOTS United Properties— Downtown Chanhassen Mixed-Use 525 W. 78th 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 78th 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. 78th 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. 78th 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. 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Existing District-Specify No.Years Remaining First 5150,000 1.50% Inflation Rate-Every Year: 0.00% Over $150,000 2.00% Interest Rate: 6.00% Commercial Industrial Class Rate(C/I) 2.00% Present Value Date: 1-Aug-17 Rental Housing Class Rate(Rental) 125% First Period Ending 1-Feb-18 Affordable Rental Housing Class Rate(Aft.Rental) Tax Year District was Certified: Pay 2017 First $106,000 0.75% Cashflow Assumes First Tax Increment For Development: 2019 Over $106,000 025% Years of Tax Increment 26 Non-Homestead Residential(Non-H Res.1 Unit) Assumes Last Year of Tax Increment 2044 First $500,000 1.00% Fiscal Disparities Election(Outside(A),Inside(B),or NA] Inside(B) Over $500,000 125% Incremental or Total Fiscal Disparities Homestead Residental Class Rate(Hmstd.Res.) Fiscal Disparities Contribution Ratio 38.0559% Pay 2016 First 5500,000 f A0% Fiscal Disparities Metro-Wide Tax Rate 150.2620% Pay 2016 Over $500,000 1.25% Maximum/Frozen Local Tax Rate: 108.905% Pay 2016 Agricultural Non-Homestead 1.00% Current Local Tax Rate:(Use lesser of Current or Max.) 108.905% Pay 2016 State-wide Tax Rate(Comm./Ind.only used for total taxes) 48.6410% Pay 2016 Market Value Tax Rate(Used for total taxes) 026848% Pay 2016 BASE VALUE INFORMATION (Original Tax Capacity) Building Total Percentage Tax Year Property Current Class After Land Market Market Of Value Used Original Original Tax Original After Conversion Area/ Map# PID Owner Address Market Value Value Value for District Market Value Market Value Class Tax Capacity Conversion Orig.Tax Cap. Phase 25.2830020 Bloomberg Co 477,200 788,300 1,265,500 100% 1,265,500 Pay 2017 C/I Pref. 24,560 Rental 15,819 25.1680031 Bloomberg Co 408,000 38,900 446,900 100% 446,900 Pay 2017 C# 8,938 Rental 5,586 25.2830031 Bloomberg Co 287,600 0 287,600 100% 287,600 Pay 2017 C/I 5,752 Rental 3,595 2,000,000 39,260 26,000 Note: 1.Base values are based upon review of County website on 11.18.2016. Base rates for Pay 2016 as applied to property within City of Chanhassen,ISD 112,and WS 064.Pay 2017 rates will be assigned in Spring 2017. Prepared by Ehlers S.Associates,Inc.-Estimates Only N''Minnsota\Chanhassen\Housing-Economic-Redevehpmentpending Projects\Frontier RedevelopmenhAparnanl Ordffrontier Redevelopment TIF Run 11.16.16(130 market value apartments)xk 11/18/2016 Base Value Assumptions-Page 2 0 EHLERS LEADERS IN PUBLIC FINANCE Frontier Redevelopment 2-No Inflation City of Chanhassen 130 units of Market Rate Apartments(524MM assessed value) PROJECT INFORMATION(Project Tax Capacity) Estimated Taxable Total Taxable Property Percentage Percentage Percentage Percentage First Year Market Value Market Value Total Market Tax Project Project Tax Completed Completed Completed Completed Full Taxes ArealPhase New Use Per Sq.Ft./Unit Per Sq.Ft./Unit Sq.FtJUnbs Value Class Tax Capacity CapacitylUnit 2017 2018 2019 2020 Payable Apartments 165,000 165,000 130 21,450,000 Rental 268.125 2,063 50% 100% 100% 100% 2020 Retail 200 200 18,000 3,600,000 C/I Pref. 71,250 50% 100% 100% 100% 2020 TOTAL 25,050,000 339,375 Subtotal Residential 130 21,450,000 268,125 Subtotal Commerciaalnd. 18,000 3,600,000 71,260 Note: 1.Market values are based upon estimate provided by the city. TAX CALCULATIONS eta Isca oca oca 'sea tate-vi.e 'a et Tax Disparities Tax Property Disparities Property Value Total Taxes Per New Use Capacity Tax Capacity Capacity Taxes Taxes Taxes Taxes Taxes Sq.Ft./Unit Apartments 268,125 0 268,126 292,001 0 0 57,589 349,689 2,689.10 Retail 71,250 27,116 44,135 48,065 40,743 34,667 9,665 133,130 TOTAL 339,375 27,115 312,260 340,066 40,743 34,667 67,254 482,720 Note: 1.Taxes and tax increment will vary signficantly from year to year depending upon values,rates,state law,fiscal disparities and other factors which cannot be predicted. WHAT IS EXCLUDED FROM TIF? Total Property Taxes .;2,20 less Statewide Taxes (34,667) less Fiscal Disp.Adj. (40,743) less Market Value Taxes (67,254) less Base Value Taxes 27,226 Annual Gross TIF Prepared by Ehlers 8 Associates,Inc.-Estimates Only N:Ulinnsota\Chanhessenatousing-Economic-Redevelopmentd'ending ProtectsAronfer Redevelopment\Apartment only\Frontier Redevelopment TIE Run 11.1616(130 market value apaaments).xls • 11/182016 Tax Increment Cashlow-Page 3 EHLERS Frontier Redevelopment 2-No Inflation City of Chanhassen 130 units of Market Rate Apartments($24MM assessed value) TAX INCREMENT CASH FLOW Project Original Fiscal Captured Local Annual Semi-Annual State Admin. Semi-Annual Semi-Annual PERIOD %of Tax Tax Disparities Tax Tax Gross Tax Gross Tax Auditorat Net Tay Present ENDING Tax Payment OTC Capacity Capacity Incremental Capacity Rate Increment Increment 0.38% 10% Increment Value Pm. Year Date - - 02/01/18 - - - - 08/01/18 - - - 02/01/19 100% 169,888 (25,000) (13,557) 131,130 108,905% 142,807 71,403 (267) (7,115) 84,032 58,010 0.5 2019 08/01/19 71,403 (257) (7,115) 64,032 114,604 1 2019 02/0120 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 235,560 1.5 2020 08/0120 156.420 (583) (15,586) 140,271 353,565 2 2020 02/01/21 100% 339,375 (25,000) (27,115) 287,260 108.905% 312.840 156,420 (563) (15,586) 140,271 468,692 2.5 2021 08/0121 100% 339,375 (25,000) 156,420 (563) (15,586) 140,271 581,011 3 2021 02/0122 (27,115) 287,260 108.905% 312,840 156,420 (583) (15,586) 140,271 690,590 3.5 2022 08/0122 100% 339,375 (25,000) 156,420 (563) (15,586) 140,271 797,497 4 2022 02/0123 (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 901,797 4.5 2023 08/01/23 156,420 (563) (15,586) 140,271 1,003,552 5 2023 02/0124 100% 339,375 (25,000) (27,116) 287,260 108.905% 312,840 156,420 (583) (15,586) 140,271 1,102,826 5.5 2024 08/0124 156,420 (563) (15,586) 140,271 1,199,678 8 2024 02/01/25 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (583) (15,586) 140,271 1,294,188 6.5 2025 08/01/25 100% 339,375 (25,000) ) 156.420 (563) (15,588) 140,271 1,386,354 7 2025 02/0126 (27,116 287,260 108.905% 312,840 156,420 (563) (15,588) 140,271 1,476,291 7.5 2026 08/01/26 156,420 (583) (15,586) 140,271 1,584,034 8 2026 02/0127 100% 339,375 (25,000) (27,116) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 1,649,637 8.5 2027 08/0127 156,420 (583) (15,586) 140,271 1,733,153 9 2027 02/0128 100% 339,375 (25,000) (27,116) 287,260 108.905% 312,840 158,420 (563) (15,586) 140,271 1,814,631 9.5 2028 08/0128 156,420 (563) (15,586) 140,271 1,894,123 10 2028 02/0129 100% 339,375 (25,000) (27,115) 287,280 108.905% 312,840 156,420 (583) (15,586) 140,271 1,971,675 10.5 2029 08/01/29 166,420 (563) (15,586) 140,271 2,047,336 11 2029 02/01/30 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 2,121,152 11.5 2030 08/01/30 156,420 (583) (15,586) 140,271 2,193,187 12 2030 02/01/31 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 2,263,425 12.5 2031 08/01/31 156,420 (563) (15,586) 140,271 2,331,970 13 2031 02/01/32 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 158,420 (583) (15,586) 140,271 2,398,844 13.5 2032 08/01/32 156,420 (563) (15,586) 140,271 2,464,088 14 2032 02/01/33 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 2,527,737 14.5 2033 08/01/33 156,420 (563) (15,586) 140,271 2,589,835 15 2033 02/01/34 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 2,650,419 15.5 2034 08/01/34 156,420 (563) (15,586) 140,271 2,709,525 16 2034 02/01/35 100% 339,375 (26,000) (27,115) 287,260 108.905% 312,840 156,420 (583) (15,586) 140,271 2,787,190 16.5 2035 08/01/35 156,420 (563) (15,586) 140,271 2,823,448 17 2035 02/01/36 100% 339,375 (25,000) (27,116) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 2,878,334 17.5 2036 08/01/36 156,420 (563) (15,586) 140,271 2,931,881 18 2036 02/01/37 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 158,420 (563) (15,586) 140,271 2,984,122 18.5 2037 08/01/37 100% 339,375 (25,000) ) 156,420 (563) (15,586) 140,271 3,035,089 19 2037 02/01/38 (27,116 287,260 108.905% 312,840 156,420 (583) (15,586) 140,271 3,084,813 19.5 2038 08/01/38 156,420 (583) (15,586) 140,271 3,133,324 20 2038 02/01/39 100% 339,375 (25,000) (27,116) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 3,180,652 20.5 2039 08/01/39 156,420 (563) (15,586) 140,271 3,226,828 21 2039 02/01/40 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 3,271,874 21.5 2040 08/01/40 156,420 (563) (15,586) 140,271 3,315,822 22 2040 02/01/41 100% 339,375 (25,000) (27,116) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 3,358,699 22.5 2041 08/01/41 156,420 (583) (15,586) 140,271 3,400,530 23 2041 02/01/42 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 3,441,341 23.5 2042 08/01/42 156,420 (563) (15,586) 140,271 3,481,156 24 2042 02/01/43 100% 339,375 (25,000) (27,115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 3,520,001 24.5 2043 08/01/43 156,420 (563) (15,586) 140,271 3,557,897 25 2043 02/01/44 100% 339,375 (25,000) (27.115) 287,260 108.905% 312,840 156,420 (563) (15,586) 140,271 3,594,870 25.5 2044 08/01/44 156,420 (563) (15,586) 140,271 3,830,941 26 2044 02/01/45 Total 7,963,800 (28,670) (793,513) 7,141,617 Present Value From 08/01/2017 Present Value Rate 5.00% 4,048,955 (14,578) (403,438) 3,630,941 Prepared by EhNrs 8 Associates,Inc-Estimates Only N:l 1nnsotalChanhassen'Jious IAO-Ewnomk•Retlewlopment.PontlmB Paojwte1Faontsa RetlesebpmenlNpadmenl onlyFiontkr Redevelopment TIF Run 11.18.18(130 market value aparlmanls).ds 11111 Co Council of ;li�inncr�,; vowMayors 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 UL1 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 yearn 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 1 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 arc 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 arc 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. 3 ----------- .4" t". r .* -Nic i ,„„, , , Market Blvd , P j i ` iii. ► __- - .. a / i Ili I 1 i ' • II,, �. 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