CC 2017 07 24
CHANHASSEN CITY COUNCIL
REGULAR MEETING
JULY 24, 2017
Mayor Laufenburger called the meeting to order at 7:05 p.m. The meeting was opened
with the Pledge to the Flag.
COUNCIL MEMBERS PRESENT: Mayor Laufenburger, Councilwoman Tjornhom,
Councilman McDonald, Councilwoman Ryan, and Councilman Campion
STAFF PRESENT: Todd Gerhardt, Chelsea Petersen, Kate Aanenson, Paul Oehme, Todd
Hoffman, Greg Sticha, and Roger Knutson
PUBLIC PRESENT:
Laurie Susla 7008 Dakota Avenue
Raymond Donohue
Cathie Zimmerman 6291 Near Mountain Boulevard
Randy Cantin 6694 Nez Perce Drive
Ron Kramer 1022 Pontiac Lane
Tom Devine 7640 South Shore Drive
Mayor Laufenburger: Thank you ladies and gentlemen and for the record all the council
members are with us this evening. I want to say welcome to this council meeting. Those of you
that are in the chambers, thank you for coming as well as those who are watching at Mediacom
cable channel at home or through live stream of our website. Just for those of you at home we
have, I’m estimating 35 to 40 people here in the council chambers observing the council
chambers this evening. First of all before we have public announcements I would like to speak
to the agenda. The agenda is printed and given out ahead of time but at this time I would like to
suggest an agenda change and I would like to move item D-9 from the consent agenda and I
would like to move that to Old Business under G-1. So would there be any other agenda
changes this evening? Okay I need a motion to approve that agenda change.
Councilman McDonald: So moved.
Mayor Laufenburger: Thank you Mr. McDonald. Is there a second?
Councilman Campion: Second.
Mayor Laufenburger: Thank you Mr. Campion.
Chanhassen City Council – July 24, 2017
Councilman McDonald moved, Councilman Campion seconded to move item D-9 from the
consent agenda to Old Business under G-1. All voted in favor and the motion carried
unanimously with a vote of 5 to 0.
PUBLIC ANNOUNCEMENTS:
Mayor Laufenburger: I have one public announcement tonight. Chanhassen will be
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participating in the National Night Out on Tuesday, August 1. The Chanhassen Fire
Department and the Carver County Sheriff’s Office along with city officials and staff will be
visiting block parties from 6:00 until 9:00 p.m. National Night Out is an ideal event for
gathering neighbors. This program is meant to be a neighborhood party but also ties into public
safety by reminding residents how they can help to maintain safe neighborhoods. Studies show
that neighbors who know each other are more likely to look out for each other. Consequently
creating safer environments to live in and to raise families. This night also gives city officials
and law enforcement a chance to get out and talk with citizens. I would like to invite residents to
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set aside this night to spend time with your neighbors. This is Tuesday night August 1. We still
have opportunity for neighborhoods to register. You can either register online at the City’s
website or by calling Assistant City Manager Chelsea Petersen at 952-227-1118. Ms. Petersen
we have a number of neighbors already signed up, is that correct?
Chelsea Petersen: That’s correct. I think we just tipped 40 over the weekend. Last year we had
50 total.
Mayor Laufenburger: Alright so we’re looking for more and I know that it’s always a fun event
for kids. Chief Johnson has his fire department out. I think the sheriff’s office even has part of
the posse out, is that right Lieutenant?
Lt. Eric Kittelson: Yes.
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Mayor Laufenburger: So it’s a fun night for everybody. Tuesday night August 1 and Mr.
Gerhardt guarantees good weather. Alright.
CONSENT AGENDA: Councilman McDonald moved, Councilwoman Tjornhom
seconded to approve the following consent agenda items pursuant to the City Manager’s
recommendations:
1. Approve City Council Minutes dated July 10, 2017
2. Receive Park and Recreation Commission Minutes dated June 27, 2017
3. Foxwood Trail Connector: Approve Budget Amendment.
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Chanhassen City Council – July 24, 2017
4. Resolution #2017-50: Approve Resolution Accepting Donation of $2,500 from
CenterPoint Energy.
5. West Park: Approve Final Plat, Development Contract, and Construction Plans and
Specifications.
6. Resolution #2017-51: Approve Collective Bargaining Agreement with IUOE Local 49.
7. Approve Amendment to City Code Sec. 2-20 Allowing City Staff to Enforce State
Statutes.
8. Approval of Retail On-Sale Intoxicating Liquor Sales for Off-Premise Consumption for
Buy Chanhassen’s “Night on the Town” on Thursday, August 3, 2017.
9. Moved to Item G-1.
10. Avienda:
a. Resolution #2017-52: Approve Resolution Removing Property from Rural
Service District.
b. Approve Summary Ordinance for Rezoning.
11. Arbor Glen: Approve Final Plat, Development Contract, and Plans and Specifications.
All voted in favor and the motion carried unanimously with a vote of 5 to 0.
VISITOR PRESENTATIONS.
Mayor Laufenburger: Visitor presentations are used for people wishing to address the council
concerning a matter that is not on the agenda for this evening and if anybody would like to do so
they may step to the podium stating your name and address for the record. We have one
scheduled visitor presentation from CenterPoint Energy. Is Ms. Cherie Monson with us tonight?
Chief do you want to do this one?
Chief Don Johnson: Sure Mayor. Thank you Mayor and council. As you know each year the
fire department will seek grants and grant opportunities to offset some of the costs we have. This
year we did engage with CenterPoint Energy and were awarded a grant to assist with a thermal
imaging camera purchase. I have Cherie Monson here from CenterPoint to talk a little bit about
the grant.
Mayor Laufenburger: Good, welcome. Welcome Ms. Monson.
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Chanhassen City Council – July 24, 2017
Cherie Monson: Thank you. Hello. I’m Cherie Monson from CenterPoint Energy. The
Community Partnership Grant Program offers an opportunity for CenterPoint Energy to partner
with the cities we serve. We have partnered with communities supporting our shared
commitment to safety while delivering safe, reliable natural gas for over 145 years. Since 2003
the program has exceeded $1.5 million dollars in donations and help support the funding of 775
projects in communities throughout the company service area. Through the grant program we
are able to help cities leverage local funds to purchase needed safety equipment or support safety
projects that are important to your community. I am pleased to present the City of Chanhassen
with a Community Partnership Grant for $2,500 that will be used to purchase a thermal imaging
camera. Don.
Mayor Laufenburger: Thank you very much. We can applaud that. Ms. Monson on behalf of
the City Council and the entire city we thank you for your support of Chief Johnson’s fire
department and the public safety of the community and what a great thing. 775 grants. That’s
amazing since, you said since 2003.
Cherie Monson: 2003 so that’s what 14 years.
Mayor Laufenburger: Yeah that’s amazing so we hope you can continue. Chief can you tell us
just a little bit about this thermal imaging device and what, how it will help you?
Chief Don Johnson: Sure Mayor. The equipment that we have now is getting dated. This will
go on our front line engine and assist with fire suppression activities. Search and rescue in fire
situations and looking for hot spots and ballast and things like that that when we’re in looking for
problems in a home so this is going to replace a pretty outdated piece of equipment for us.
Mayor Laufenburger: It sounds high tech to me. Well thank you very much. Anything else?
Chief Don Johnson: Can we get a picture Mayor?
Mayor Laufenburger: Sure. I want to get a picture of that check is what I want. I said thank you
to CenterPoint Energy but I also want to say thanks to Chief for making application for that grant
and being aware of grants like this that become available to us. You’ve also received grants
from the Mdewakanton Sioux community and other grants as well so thank you for watching for
those things.
Todd Gerhardt: Mayor just one point to that. CenterPoint has been gracious enough to give us
grants over the years and this is just another example of their relationship with the City of
Chanhassen and we appreciate it.
Mayor Laufenburger: Good, good. Alright that was part of visitor presentations. If there’s
anybody that would like to address the council on a matter not on the agenda this evening you’re
certainly welcome to step up to the podium. State your name and address for the record please.
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Chanhassen City Council – July 24, 2017
Laurie Susla: Good evening, my name is Laurie Susla. I live at 7008 Dakota Avenue and I
would like to speak just briefly about downtown zoning. I brought this to talk about at the last
meeting but I know that time was short so I brought it again tonight. I am just, I’m very
concerned about the lack of code downtown regarding, well here we have building height. There
is none. Building setback. There is none. Parking setback. None. Hard surface coverage.
None. I built a shed in my back yard a few years back and the code surrounding that was fairly
significant. I had to be under a certain height. Nobody can see this shed but it was very specific
how many square feet it could be. Where it could be located. Setback from the side yard.
Setback from the lake. Setback from wetlands. Setback, I mean height regulations. Square foot
regulations and I’m just, I was really surprised at the complete lack of restrictions of any type
with our downtown area that everybody sees all the time. So I just.
Mayor Laufenburger: Specifically related to height and building setback, is that what you’re
saying?
Laurie Susla: Everything that’s a zero basically at this time. It seems to me that it might be
worth, a worthwhile endeavor for the planning department, the council, the Planning
Commission, those types of agencies that we already have within the city to review this and see
what it is that would be appropriate for downtown and maybe revise these.
Mayor Laufenburger: Okay, thank you for your comments.
Laurie Susla: Thank you.
Mayor Laufenburger: Thank you. Is there anybody else who would like to address the council
at this time? Okay. Oh. State your name and address please.
Ron Kramer: My name is Ron Kramer, 1022 Pontiac Lane. I just want to follow up on what
she, I wasn’t sure if we were going to be talking about this but.
Mayor Laufenburger: What would you like to address the council about Mr. Kramer?
Ron Kramer: About the same thing, the apartment buildings and Aldi’s. There was one thing
that was never discussed. When the developer was doing his presentation everyone asked if
there was going to be, if it was going to be any low income housing. HUD, Section 8, whatever
you want to call it and he said no. Well of course he’s going to say no. He’s a developer. It’s
up to the landlord. I just spoke with the, Friday and today I spoke with CCCDA. The Carver
County Community Development Agency and there’s no obligation restricting any subsidized
housing in a new apartment building. It’s up to the landlord or the manager of the company and
it can be changed at any time. It’s also not mandatory by the Carver County Community, blah,
blah, Development Agency that the City mandates any. They can but it’s not a mandate so I just
want to, everybody was under the assumption that because the developer says there’s, he’s not
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Chanhassen City Council – July 24, 2017
building it for that does not mean that that will not occur down the road because it will be up to
the landlords. Not the developer.
Mayor Laufenburger: Okay.
Ron Kramer: And one other point, is this 134 units with 134 parking spaces, the parking just
seems overwhelming to me where they’re going to put other residents if they only have, if they
have more than one car per unit and with the increased parking at Aldi’s. I wish the council
would do a little more investigation. To me this seems like a first come first serve because it’s
the first developer to come up with a proposal and I think we all need a little more time to you
know cross the T’s and dot the I’s.
Mayor Laufenburger: Thank you Mr. Kramer. State your name and address please.
Tom Devine: My name is Tom Devine. I live at 7640 South Shore Drive and I’ve been a
resident of Chanhassen since 1988. I just, I’ve attended intermittently a little bit about the
project. I haven’t been deeply involved in it.
Mayor Laufenburger: What project are you referring to Mr. Devine?
Tom Devine: Number 9.
Mayor Laufenburger: You want to speak about number 9?
Tom Devine: Yeah.
Mayor Laufenburger: Which is the TIF district, etcetera. Well.
Tom Devine: Are you going to allow for public comment when you get to number 9? Normally.
Mayor Laufenburger: Yeah this, visitor presentation. I welcome your visitor presentation about
an item that’s not on the agenda. That’s all. That’s the guidelines that I would give you.
Tom Devine: Okay, so what I just want to be clear is that when you revisit number 9 on the
agenda will there be an opportunity for public comment or not?
Mayor Laufenburger: Number 9 includes the approval or disapproval by the council for a public
hearing.
Tom Devine: Okay.
Mayor Laufenburger: Okay.
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Chanhassen City Council – July 24, 2017
Tom Devine: I was just going to make a general comment about.
Mayor Laufenburger: Make your general comment Mr. Devine.
Tom Devine: Pardon?
Mayor Laufenburger: Make your general comment.
Tom Devine: Okay, thank you very much Mayor. My general comment was just in the general
direction of the fact that there’s been a lot of discussion about this and a lot of facts have kind of
emerged of late, in the last month or so about the project, much like was mentioned here just a
moment ago and I would make this observation. It is a life altering kind of a project here in
downtown Chanhassen. It is going to change the face of what’s here right now going forward
and I do know that the City is engaged in this process now to evaluate a longer term city plan of
what we want to see the city develop into and I would hope that we have the opportunity to
really look at that. You know the city plan and then look at this in terms of how this drops in in
terms of what it is. The other issues I think that you know is worth noting here is this project is
going to be tight on that site. The issues of where those sites and I’ve been, I’m very familiar
with Frontier Building and the sites. If you look to the east and look to the west, there isn’t like
beautiful views once this building, this new building is completed and they’re looking south.
You’re going to look at Highway 5. The only real views are on the north side of the property on
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78 Street and those views are fairly limited because most of the building is facing the other 3
directions so when we look at this in terms of trying to establish those high rents. Those $1,700-
$1,800-$1,900 rents that we’ve heard the figures on I question whether or not we’re really going
to command the top of the scale rents in terms of what’s been talked about here thus far. The
other issues I guess that you know just quickly I would say that you know much has been said
and obviously I certainly value all the time that all of you, each one of you has spent on the
project and looking at it. The public sector has not really engaged in this until most recently and
I think that as this thing begins to really unfold and people understand the deeper parts of it, it’s
all there. It needs to be, as Chanhassen people always react maybe a little slowly. But the last
comment that I make is this. You know I guess I was told that without the TIF financing that’s
going to be a part of what this project is the project probably wouldn’t go forward and I guess
I’m a little concerned by that because United Properties is, as most of us know owned by one of
the wealthiest families in Minnesota and for one of the wealthiest families not to buy in you
know and to have to use you know in part taxpayer money and support of the public in order to
finish the project or to do the project, I guess that raises an eyebrow for me personally in terms of
what’s going on here. In terms of what it is. So with that and the understanding of what that
greater amounts are, the restrictions that the other gentleman just made and some of those other
issues, those are issues that I’ll just raise questions in my mind about where we’re at right now.
Thank you for the time. Appreciate being recognized.
Mayor Laufenburger: Thank you Mr. Devine. Thank you. State your name and address please.
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Chanhassen City Council – July 24, 2017
Cathie Zimmerman: Hello, I’m Cathie Zimmerman. I live at 6291 Near Mountain Boulevard. I
just have a clarifying question. My understanding is that the site project has been approved and
the only way that it will not go through is if the TIF is not approved and I just would like a
clarification on that. Are there any other contingencies that remain?
Mayor Laufenburger: Ms. Zimmerman I appreciate your questions. This is visitor presentations
where the council listens to and hears presentations from the visitors. If you want to state your
question you’re certainly welcome to state that question and the council will consider that
question.
Cathie Zimmerman: Okay that’s my question then. Are there any contingencies besides TIF
approval that would hinder the progression of this project?
Mayor Laufenburger: Okay your question is noted. Thank you very much. There being no
further visitor comments I will at this time move to our next agenda item which is our monthly
fire department and law enforcement update. Let’s start with Lieutenant Kittelson please.
LAW ENFORCEMENT/FIRE DEPARTMENT UPDATE.
Lt. Eric Kittelson: Good evening Mr. Mayor, council members. I have the monthly law
enforcement update for you this evening. We also have our first month to month comparison
from June 2016 to June 2017 of the new NIBRS format as well as 12 months total in data. The
monthly calls for service summary for June, there was 42 Group A crimes compared to 58 in
2016. There were 18 Group B crimes compared to 19 in 2016. Non-criminal and miscellaneous
we had 546 as compared to 473 in 2016. Total traffic stops in June were 537 compared to 640
last year and administrative functions, those are solicitor permits and things of that nature, there
were 77 as compared to 64 in 2016 for a total of 1,220 June, 2017 and 1,254 in 2016. Arrest,
citations and verbal warnings summary for the month of June, 2017, we had 37 individuals
arrested in 28 incidents and charged with 63 crimes. Last year we had 59 individuals arrested in
34 incidents and charged with 82 crimes in the month of June last year. We had 105 citations
this last month with the majority of those being 50 for speed, 12 for no proof of insurance and 8
for driving after suspension as compared to last year we had 123 citations for similar related
things. We issued 289 verbal warnings last month and 341 in 2016. Now these next numbers
are 6 month to 6 month comparisons but I do have to just state that June to December, 2016 is
not necessarily always directly comparable to January to June because crime tends to follow
warm and cold months but it’s what we have for now. So June through December, 2016
compared to January through June, 2017 we had 274 total Group A crimes in 2017 as compared
to 363 in 2016. We had 81 total Part B crimes in 2017 compared to 109 in 2016 and then the
non-criminal and traffic follow like suit in that they decreased for a total activity in the last 6
months of 6,735 as compared to 8,301 in 2016 so.
Mayor Laufenburger: Those are good things.
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Chanhassen City Council – July 24, 2017
Lt. Eric Kittelson: A long story short is crime is down.
Mayor Laufenburger: Those are nice trends.
Lt. Eric Kittelson: They are very good trends and we’ll look to do the year to year comparison
and compare months to months, 6 month periods at the end of this year. Towards Zero Deaths
speed enforcement results. Deputies participated in increased education and enforcement for
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speed from July 7 through July 23. We had 99 citations county wide and 22 of those
occurring in Chanhassen and deputies will also participate in increased enforcement for impaired
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driving along with many other agencies across the state from August 18 through September 3.
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Deputies were very busy this month with the July 4 festivities July 2 through 4. We assisted
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with the Kiddie Parade, the July 3 festivities and the July 4 parade as well as the fireworks. A
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number of us also attended the Chanhassen City Night at the Red Birds game on June 29 and
we’re currently preparing, as you stated for National Night Out a week from tomorrow. August
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1 and then some of us will also be participating in the Carver County Fair when we’re not
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tending to our duties in Chanhassen and that is in Waconia August 9 through 13. For a
training update for this month, department training for licensed personnel. All licensed sheriff
office staff completed rifle training at the range in July so that concludes my report and I’ll stand
for questions.
Mayor Laufenburger: Okay, council members any comments or questions for Lieutenant
Kittelson? Two comments independent. Lieutenant Kittelson I couldn’t help but notice recently
that there was some burglaries, I think that’s the right term in the part of Chanhassen known as
Lake Riley Reflections.
Lt. Eric Kittelson: Yes.
Mayor Laufenburger: And what I noticed from the crime press release that was sent out, and by
the way those crime alerts are available to anyone is that correct?
Lt. Eric Kittelson: Correct. Yes you can sign up for them on the Carver County website and I
believe there is a link in the Chanhassen website that will direct you to the county website from
there.
Mayor Laufenburger: Okay so I would encourage anyone who’s interested in just being aware
of the significant crime impact that one incident might have but what I noticed was that this
crime was, vehicles were broken into and I think one vehicle was stolen and I was surprised to
see that the vehicles that were broken into weren’t really broken into because the doors were left
unlocked, is that correct?
Lt. Eric Kittelson: Yes and so technically the statutory definition is vehicle tampering.
Mayor Laufenburger: Okay.
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Chanhassen City Council – July 24, 2017
Lt. Eric Kittelson: So the vehicles in, I believe in the press release I wrote most instances and I
went back and checked the reports and it was in every instance, including the vehicle that was
stolen had the keys left in it.
Mayor Laufenburger: So my question is, what can you do to encourage citizens to lock their
vehicles?
Lt. Eric Kittelson: Well every crime involves motive and opportunity and so we can deter crime
through proactive preventative patrol but it would be most helpful if every citizen would
decrease the opportunity the criminals have by locking their cars. Shutting their garage doors at
night. Bringing in valuables from outside. Another tip would be to store your valuables, if you
must leave them in your car and you’re traveling somewhere prior to you getting to your
destination so that someone doesn’t see you putting your purse under your seat or something of
that nature, and it’s not always avoidable. Other things you can do is don’t leave your garage
door opener in your car or if you must again maybe put it in a center console and lock the center
console. And then as you mentioned with National Night Out if you see something say
something. Call us. We’re here 24 hours a day, 365 days a year and we have professional
dispatchers waiting for your call and many, many, many times crime tips from people that see
something that’s out of the ordinary, and you must know what’s ordinary to know what’s out of
the ordinary.
Mayor Laufenburger: Right.
Lt. Eric Kittelson: So by knowing your neighbors and keeping an eye on things you’ll know
when something’s out of place and we welcome those calls.
Mayor Laufenburger: Okay great. Alright Lieutenant Kittelson one more thing too. I’ve served
on the council a number of years and I think it might be worthwhile for you to come next time
with a little bit of an overview covering a couple things. First of all can you, not tonight but can
you come prepared to talk about the qualifications to become a member of the Carver County
Sheriff’s organization. There may be people in our community that are interested in becoming
members of the Carver County Sheriff’s Office. So what are some of those qualifications? And
then also once a member of the organization is hired what kind of training do you provide them
for, I don’t know. You tell us. I think it would be worthwhile for us to learn a little bit about
what it is that Carver County Sheriff’s Office does to prepare all of their deputies, their
lieutenants, their sergeants for doing the job of executing public safety. Would you mind doing
that?
Lt. Eric Kittelson: I would love to and actually it’s something I’m very passionate about as a
former field training officer and coordinator of the unit and Sergeant Anderley is currently our
field training coordinator and so I want you, you might have to give me a time limit because I am
very passionate about that so I could probably talk most of the evening about it. In fact I have
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Chanhassen City Council – July 24, 2017
done a similar presentation to the Senior Center one day when they impromptu asked me for,
asked a few questions. I probably gave them more than they wanted to know but I would be
happy to do so.
Mayor Laufenburger: So I get what you’re saying, be careful what we ask for but I think this
will be valuable not only for the council but also for the community to know that we take great
pride in putting on the street those people who are equipped to do the job of keeping us safe.
Lt. Eric Kittelson: Absolutely.
Mayor Laufenburger: Alright.
Lt. Eric Kittelson: And Sergeant Anderley has utilized technology, or leveraged technology to
increase staff efficiency in putting us into some tablets for record keeping and things like that so
it will be fun.
Mayor Laufenburger: Okay, thank you very much Lieutenant.
Lt. Eric Kittelson: And informative.
Mayor Laufenburger: Alright thank you. Chief Johnson, welcome.
Chief Don Johnson: Mayor, council, good evening again. This is my fire department report for
June. Our staffing is holding at 41 paid on call firefighters. We’ve had one firefighter on
medical leave for a considerable amount of time. We also reluctantly said goodbye to one of our
firefighters Bob Flakne who had served for 5 years of service and was moving onto other things
so. Our 7 new hires are currently in EMR training, Emergency Medical Responder training.
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They’ll be slated to be done with that August 17 and hopefully we’ll be able to get them to
some medical calls before they actually start their academy in the first part of September. In
June we had an extraordinary month for calls. We served 86 calls for service. Our traditional
average is about 55 a month so 86 put a little bit of a strain on us. Right now we’re sitting at
about 375 calls through the end of June which is up about 14 percent from last year. In June 42
of those calls were EMS calls including 3 motor vehicle accidents with injuries. One response to
Eden Prairie for a structure fire and we had 12 storm related calls for that Sunday morning storm.
Dealt with a lot of power lines down on trees and so it was a busy morning. Training included
relay pumping. We did have an aerial apparatus come and do a demonstration during that same
evening. Auto extrication training and residential and commercial first response skills. Through
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July, as you know we’ve been, we were very busy with the 4 of July events. We had a duty
crew standby for the Family Fun event. We had an EMS standby for the street dance. Parade
EMS crew, city wide standby engine company and staffing of 3 fire apparatus for the parade. I’d
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like to thank Councilman McDonald for overseeing our Black Hat ceremony on July 17 and we
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also served the annual Tonka Mud Run on July 22 so we’ve had a very busy month with
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Chanhassen City Council – July 24, 2017
National Night Out right around the corner so we look forward to partaking in that every year as
well so that’s my report and I can stand for questions.
Mayor Laufenburger: Alright, thank you Chief. Any questions or comments from the council
for Chief Johnson?
Chief Don Johnson: Thank you.
Mayor Laufenburger: Very well, thank you Chief. Thank you Councilman McDonald for
attending the Black Hat. I appreciate your doing so in my absence.
Councilman McDonald: My pleasure Mr. Mayor.
CONSENT AGENDA: D-9. DOWNTOWN CHANHASSEN REDEVELOPMENT
PROJECT AREA:
A. APPROVE RESOLUTION DECERTIFYING TIF DISTRICT #10.
B. CALL FOR PUBLIC HEARING ON THE PROPOSED MODIFICATION TO
THE REDEVELOPMENT PLAN AND THE PROPOSED ESTABLISHMENT OF
TAX INCREMENT FINANCING DISTRICT NO. 11.
C. APPROVE RESOLUTION AUTHORIZING AN INTERFUND LOAN IN
CONNECTION WITH TAX INCREMENT FINANCING DISTRICT #11.
Mayor Laufenburger: Is there a staff report?
Todd Gerhardt: Mayor, City Council members. Public please view the monitors. I have a
power point presentation. Tax Increment Financing can be very complicated. I’ve been working
with it for 33 years and our legislators change the rules annually so what you may have heard in
the past is not probably how the rules are written today so I’m going to go through some of the
requested actions that we’re asking the council to do this evening. The first thing we’re going to
ask you to do is decertify Tax Increment Financing District #10 and that is the area that
encompasses the Chanhassen Park and Ride area and the Chanhassen Dinner Theater and an
outlot, or Lot 3, Block 1 in the Frontier Cinema Addition. And then what we’re going to do is
call for a public hearing to establish a new Tax Increment Financing District #11 for the Venue
and Aldi’s development and the Venue and the Aldi’s development will take place in the area
shaded in red. It’s a 3 lot subdivision and basically where you see what is the Frontier Building
on 25.2830020, that is known as the old Frontier Building. It’s a Behlen building and if any of
you are familiar with Behlen buildings, they’re used in farm operations to store farm equipment
and Mr. Herb Bloomberg, the owner of the lumber yard where this lumber yard operated out of
had a relationship with the Behlen family and what he liked about it was it’s a free span building.
There’s not post and beams so you can move around very clearly within that entire space. The
next one is what is a tax increment financing district? Tax increment financing in Minnesota is a
public financing method that is used to subsidize for redevelopment infrastructure, construction
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Chanhassen City Council – July 24, 2017
and other community improvement projects in many countries including the United States and
Canada. So the building blocks for a tax increment financing district is it’s fairly simple. If you
look at the parcel, the Behlen building, the 3 shaded areas it has a value of slightly over $2
million dollars. After Aldi’s and the apartment are built it will have a new market value of
almost $24 million dollars so when it has a higher value it’s going to produce more in taxes and
that’s what we call increment. So it’s the difference between what is the base tax of what they’re
paying today and the taxes that are going to be paid into the future. And in this case the total
property taxes after the redevelopment would be $442,883 but what is changed over the years is
that the State takes $20,000 of that to pay for school property revenues so if you know the
formula for schools. The State funds our school systems and they do that by taking money away
from commercial and industrial property taxes to fund schools. Then they subtract out fiscal
disparities and what fiscal disparities is, a formula that was established boy 45 years ago and to
help communities that do not have a large commercial and office and retail space. So they take
from communities like Chanhassen, Bloomington, Edina, Plymouth, Eden Prairie and give back
to St. Paul, Coon Rapids that don’t have large commercial bases. So $25,241 would be
subtracted out of that $442,000. And then the market value tax, that’s the market value
referendum that the residents in Carver County passed for the school referendum and also for the
library in Chanhassen. And then what is the base value taxes? That is what the property is
paying today in property taxes which is $30,000. So the net number is $309,045 is what we’re
going to call increment so that’s the taxes up and above the numbers that I showed you
subtracting school aid, fiscal disparities, market value referendums, and base value taxes so
$309,000 in increment.
Mayor Laufenburger: Mr. Gerhardt? That $309,000 what you call increment, who will pay that?
Todd Gerhardt: That would be paid by Aldi’s and the apartment complex owners.
Mayor Laufenburger: The property owners right?
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay.
Todd Gerhardt: If the project moves forward. So that’s the gross TIF minus the net base and the
State and the fiscal disparities. This would be a redevelopment district. To qualify as a
redevelopment district we had to do a study to see if the Frontier Building met the criteria as a
redevelopment site.
Mayor Laufenburger: Who establishes that criteria Mr. Gerhardt?
Todd Gerhardt: A private inspection company.
Mayor Laufenburger: Okay.
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: And there’s 2 or 3 that are out there that do an inspection on the life expectancy
of that building when it was originally built. They look at the electrical. They look at the
foundation and the whole infrastructure of the building.
Mayor Laufenburger: Okay.
Todd Gerhardt: And so a redevelopment must have, it cannot last more than 26 years so you get
to collect 26 years of that $309,000. Parcels consisting of 70 percent of the area must be
considered improved. There is sewer and water into this area so we met that criteria. More than
50 percent of the buildings must be deemed substandard. That’s that study I talked about where
they did find the building to be more than 50 percent substandard.
Mayor Laufenburger: You used a different term for that.
Todd Gerhardt: Dilapidated.
Mayor Laufenburger: Or I think did you call it blight?
Todd Gerhardt: Blighted, yeah.
Mayor Laufenburger: Okay.
Todd Gerhardt: Reasonable distribution of conditions. That’s part of the blight, the substandard
of it you know and that it would take quite a bit to bring it up to standards. To today’s building
standards. And 90 percent of the increment used to correct the redevelopment issues so 90
percent of the increment generated from this development would go to help redevelop the
property, enhance the tax base and eliminate the blight.
Mayor Laufenburger: Mr. Gerhardt just, you said that an outside agency is engaged to make
these determinations. Who has the final authority? Is that a City authority or is that a State
authority that determines that the conditions are met?
Todd Gerhardt: It’s a City authority.
Mayor Laufenburger: Okay, alright.
Todd Gerhardt: You do not have to submit it to any State agency. It just the final outcome of
that in the attorney reviews that document for it’s compliance with State statute.
Mayor Laufenburger: Okay.
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: How can the increment be spent? And the increment again is that increase in
taxes. It must meet the policies and objectives of the TIF plan. Tonight what we’re doing is just
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calling for a public hearing on September 11 at 7:00 here in the council chambers but the TIF
plan will talk about land and building acquisitions, site improvements, preparations, utilities,
other qualified improvements that are outlined in the TIF statutes. You are allowed to retain 10
percent of the increment generated from the project for administrative expenses. There’s annual
reports that need to be completed. There’s up front costs of negotiating a private redevelopment
agreement between what would be the EDA, the Economic Development Authority and the City
would approve that private redevelopment agreement and tax increment financing plan. So, and
then we also using our bonding consultant Ehlers and Associates to make sure we follow all the
State statutes.
Mayor Laufenburger: Would administrative costs include legal fees?
Todd Gerhardt: Yes.
Mayor Laufenburger: Okay.
Todd Gerhardt: We’re also the third thing we’re asking for is authorization for a interfund loan
if needed in the future. Sometimes in Minnesota law when you build something new it takes up
to 2 years to get that full increment or full taxes paid so during that period there may be a
shortfall of money and that district would get an interfund loan from one of our other funds in the
City that would have excess money that could loan money to this TIF district and get paid back
through those 10 percent proceeds over the 26 years.
Mayor Laufenburger: So let me stop you a second. So if there are qualified costs, whatever
those might be. Administrative fees. Whatever they might be, if those costs are incurred before
the incremental tax starts coming in essentially this is a provision that makes it possible for those
costs to be covered through a loan from one fund in the City to our general fund, is that correct?
Todd Gerhardt: That’s correct. Now we are able to charge off administrative fees to other TIF
districts so that’s what we’ve been doing to date but as you move along we may not have enough
money in those other districts so we’re just making you aware that we may need an interfund
loan into the future.
Mayor Laufenburger: And you’re estimating that in your view authorizing a maximum up to
$50,000 is sufficient.
Todd Gerhardt: More than sufficient.
Mayor Laufenburger: Okay, alright. Okay.
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: Where can TIF be used and spent? Within the a tax increment financing district,
let’s say number 11, 26 years you get to collect increment. No more than 25 percent of the total
increment generated from that Tax Increment Financing District 11 can be spent within the
downtown Chanhassen redevelopment project area so I’m going to show you a map. And you’ll
see, Chelsea maybe if you could just, yeah. Follow the big district. That’s the redevelopment
project area so no more than 10 percent of the increment generated from TIF District 11 can be
spent outside.
Mayor Laufenburger: You said 10 percent. You meant 25?
Todd Gerhardt: Pardon me?
Mayor Laufenburger: Did you say?
Todd Gerhardt: 25 percent of the total increment so say you create $4 million dollars over the 26
years, you cannot spend more than a million dollars outside of what is Tax Increment Financing
District number 11 and I’ll show you what 11 looks like. Let’s see. Well 11.
Mayor Laufenburger: 11 would be immediately to the left of what’s call Increment Financing.
Todd Gerhardt: There. 11 is the red shaded area, okay.
Mayor Laufenburger: Okay.
Todd Gerhardt: So if the red shaded area is generating $400,000 in increment you cannot spend
more than 25 percent of that million dollars outside of that district. As an example.
Mayor Laufenburger: Okay.
Todd Gerhardt: Everybody understand?
Mayor Laufenburger: Okay, well let’s stop just for a second. Council do you have any
questions based on what you’ve seen so far? Mr. Campion.
Councilman Campion: I have a couple.
Mayor Laufenburger: Your question.
Councilman Campion: Mr. Gerhardt, so based on that calculation then 75 percent of the TIF
proceeds need to be spent where? Within that specific site?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: Correct. And then they have to be for qualified costs and those qualified costs
are public improvements, soil correction, off setting underground parking construction, some
cases environmental and land write down.
Councilman Campion: Okay. And then one more question. So the $309,000 net TIF.
Mayor Laufenburger: That’s the annual number.
Councilman Campion: That’s the annual number but what is the City of Chanhassen’s portion of
that $309,000?
Todd Gerhardt: We get all of it. The EDA collects that $309,000 and working with United
Properties who’s asking for $1.3 million so that’s roughly 5.5 years of increment to help offset
their cost in redeveloping this site for building demolition, underground parking, soil correction
and relocation of utilities.
Councilman Campion: Okay so the County doesn’t take a portion of that?
Todd Gerhardt: We can keep 10 percent for administrative costs. For those annual reports that
go to the State Auditor.
Councilman Campion: Yeah I was asking, I thought there was a County portion.
Todd Gerhardt: We collect the County’s portion and a small portion of the City, or the school
district’s portion of their increase in that increment.
Councilman Campion: So I’m, I guess what I’ve been confused by, is that a part of the $309,000
or is that in excess of the $309,000?
Mayor Laufenburger: Mr. Gerhardt would you go back to your calculation where you showed
how you started with 4, there. Right there.
Todd Gerhardt: So the total property taxes are $442,000 and the annual gross TIF that’s
$309,000. The City’s portion of that is roughly maybe around $60,000. The County’s is
probably $120,000 and then the school district would have a portion in there and then the others.
Councilman Campion: That’s a big difference.
Mayor Laufenburger: But that would be what they would normally collect from this if that was
the property taxes and there was no TIF district. Is that correct Mr. Gerhardt?
Todd Gerhardt: Well right now the County is, I do have a, the County is collecting out of that
$30,000 right now and they’re probably getting close to 40 percent of the $30,000.
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Chanhassen City Council – July 24, 2017
Councilman Campion: Right so they get a big portion.
Todd Gerhardt: And we’re getting you know $6,000.
Mayor Laufenburger: That’s the current tax, property tax portfolio for that product.
Councilman Campion: Right so, we’ve been talking about this for a while and I’m still trying to
get my arms around that fully so that means.
Mayor Laufenburger: Well this is important so ask your questions.
Councilman Campion: So my question is then what would be at the City’s disposal you know
for annual reinvestment within that redevelopment zone would be $60,000?
Todd Gerhardt: No. We get the whole $309,000. We get the County’s portion and a little,
everything but schools are receive their financing from the State so the schools are still getting
their State financing, if you look up at less Statewide taxes of $20,000. They still get
compensated from the State. Schools get $6,000 per pupil and that comes from commercial,
industrial, and retail businesses and I think some cabins.
Mayor Laufenburger: So Mr. Gerhardt who made this calculation of the $442,000 gross and
then the $309,000 net? Who’s calculation is that? Is that our’s?
Todd Gerhardt: Yes.
Mayor Laufenburger: But who made that calculation?
Todd Gerhardt: That’s the State’s formula.
Mayor Laufenburger: Okay.
Todd Gerhardt: And how they calculate property taxes.
Mayor Laufenburger: What role did Ehler’s play in preparing that?
Todd Gerhardt: They contacted the County and got the County’s base value and the new base
value of the $24.3 million.
Mayor Laufenburger: Okay. So one of the questions Mr. Campion may be asking, or in your
mind or other council members, that sounds very precise. Is that a precise number or is that a
best estimate based on what we believe the market value will be? What’s the basis of the
$309,000? How much can we depend on that?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: That is the calculation based on the 2017 tax rate. So what everybody levied for
2017 and so where you would see increases, if the school district, county or city increased their
tax rate additional increment would come into this district.
Mayor Laufenburger: Okay but this $309,000 is the best estimate of what the annual increment
would be for the next, well potentially for however long we.
Todd Gerhardt: 26 years.
Mayor Laufenburger: For however long we determine the TIF district should be in force.
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay. Mr. Campion you may have more questions.
Councilman Campion: That’s it for now.
Mayor Laufenburger: Okay, alright. Just a second. Anybody else what we have so far? Okay,
go ahead Mr. Gerhardt.
Todd Gerhardt: So the benefit of this is that we’re receiving the County’s portion and a portion
of the school districts but they get what they’re getting today so, and they freeze that base value
based on today’s rates and.
Mayor Laufenburger: Today’s market value?
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay.
Todd Gerhardt: Let’s see.
Mayor Laufenburger: Mr. Gerhardt?
Todd Gerhardt: Yep.
Mayor Laufenburger: Now obviously the State of Minnesota has statutes in place on how we
can operate TIF districts, is that correct?
Todd Gerhardt: Yes.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: Okay so we’re doing this in compliance with the State obviously but what
we’re doing here is, we are essentially encouraging the development of an area that will have the
potential of generating incremental revenue. Revenue that would not happen if this development
did not occur. Is that correct?
Todd Gerhardt: Yeah they call that the but for test.
Mayor Laufenburger: Okay so but for this, but for the tax increment financing this development
would not go forward, is that correct?
Todd Gerhardt: That is correct.
Mayor Laufenburger: Okay. And who did that test?
Todd Gerhardt: Ehler’s, our bonding consultant reviewed their financial numbers.
Mayor Laufenburger: Okay and that’s a standard test that is given to TIF districts all across the
state and United States?
Todd Gerhardt: Yeah. You want a third party to come in that has our best interest in hand and
review their costs and revenue and expenditure basis and what their return on their investment
would be.
Mayor Laufenburger: Okay.
Todd Gerhardt: And it was below 7 percent.
Mayor Laufenburger: Okay.
Todd Gerhardt: And typically projects like this you would get up closer to double digits.
Mayor Laufenburger: Okay. So this, the $309,000. Round numbers. This $300,000 that we,
that the City receives in property tax, incremental property tax revenue from the development of
this project, that’s the source of money that will then be given to the developer. The $1.3 million
dollars, is that correct?
Todd Gerhardt: That’s correct.
Mayor Laufenburger: Okay. So do I, I want to make sure I understand this. What about other
businesses in the area like Cub Foods or the Cinema or Country Inn and Suites? Will any of
their property taxes go towards paying the $1.3 million to United Properties?
Todd Gerhardt: No it’s just those 3 parcels shaded in the red.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: Okay so, we get the money from, we get the property tax revenue from
the properties.
Todd Gerhardt: As of today what they’re paying today we can get.
Mayor Laufenburger: We get the increment. We get that $309,000. We get that increment for a
period of time yet to be determined. Let’s call it 26 years.
Todd Gerhardt: Yep.
Mayor Laufenburger: And we are essentially giving that money back to the developer as an
incentive to develop this property.
Todd Gerhardt: For 5 ½ years is what we negotiated to date.
Mayor Laufenburger: Roughly, okay. Okay, alright. Thank you for that clarification.
Todd Gerhardt: And I’ll kind of show you.
Mayor Laufenburger: Just a second Mr. Gerhardt.
Todd Gerhardt: Show you where that flows.
Mayor Laufenburger: Councilmember Ryan, your question or comment?
Councilwoman Ryan: Question please. If we could go back to the but for conversation.
Mayor Laufenburger: Oh sure.
Councilwoman Ryan: When you said that, was it Ehler’s said takes a look at and you kept
saying their finances. Their being the developer’s finances?
Todd Gerhardt: Yep.
Councilwoman Ryan: So if the developer isn’t getting TIF this project doesn’t go forward?
That’s what Ehler’s determined based on their financial situation.
Todd Gerhardt: That’s correct.
Councilwoman Ryan: So their financial situation.
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: They would not find a financial institute or a private investor to invest this
amount of money into a private development. Somebody to take on that kind of risk would want
to see a 9, 10 or 11 percent or more return on their dollars if they were to private invest in it.
Councilwoman Ryan: So they consider this is a risky development? Or proposal financially.
Todd Gerhardt: Without the $1.3 million yes.
Councilwoman Ryan: So, okay. So it’s risk, okay I’ll withhold my comment on that. Okay,
thank you.
Mayor Laufenburger: So Mr. Gerhardt when you said that Ehler’s evaluates the financial
situation they’re, what they’re doing is they’re evaluating the financial situation of this project
along is that correct?
Todd Gerhardt: Yes.
Mayor Laufenburger: Okay. So they don’t dig into other elements of the organization?
Todd Gerhardt: Yeah the Aldi’s is not a part of this. They’re not receiving any of the assistance
that we’re talking about. It’s all for the 134 unit apartment and Aldi’s as itself could stand alone
on the site and see a double digit return on their investment.
Mayor Laufenburger: They believe they could, is that right?
Todd Gerhardt: Yes.
Mayor Laufenburger: So this is a, the but for test is not done on the 18,000 or 19,000 square foot
grocery retail. It’s done on the 134 unit apartments.
Todd Gerhardt: Yes but we can collect the increment generated from the Aldi’s to help offset
the subsidy that would go to the market rate apartments which will hurry that along. The
assistance having more assistance available would be less years of increment that they would
need to get to their return on their investment that they feel is appropriate.
Mayor Laufenburger: And we determine this, we determine that the property tax increment for
the retail store is part of the TIF district. We make that determination. The City does, is that
correct?
Todd Gerhardt: Yes.
Mayor Laufenburger: Okay, alright. You have more of your presentation Mr. Gerhardt?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: Yeah I talked about the 26 years. Must meet policy objectives of the TIF plan.
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You’ll see the TIF plan at the September 11 meeting and.
Mayor Laufenburger: That will be part of the packet for that, is that right?
Todd Gerhardt: That’s correct.
Mayor Laufenburger: Okay.
Todd Gerhardt: And there must be a TIF plan budget that outlines the expenditures that the
developer is going to take on. What are the qualified improvements that they’re going to use that
increment for and then also they understand that we can keep up to 10 percent for administrative
costs.
Mayor Laufenburger: Okay.
Todd Gerhardt: And we talked about the interfund loan.
Mayor Laufenburger: Yep.
Todd Gerhardt: We talked about you know where can TIF be used and spent. It’s a 26 years. I
said you can’t spend more than 25 percent outside of that shaded purple area and then as a part of
this development they are receiving $1.3 million dollars worth of assistance but they’ve also
agreed to be assessed $2.1 million dollars for the upgrade of Market Boulevard south of West
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78 Street out to Highway 5 and the reason for that, that allows us to use that increment being
generated from this development to help offset the cost of Market Boulevard because Market’s
going to cost about $3.4 million dollars and I do have a table in here.
Mayor Laufenburger: There it is.
Todd Gerhardt: There it is. So we’re going to assess Venue $2.1 million. Then we are going to
assess the benefiting property owners along Market Boulevard to the tune of about $400,000 and
then Market Boulevard is a state aid highway and then we would use $900,000 out of our
Municipal State Aid Highway Fund which gets you to the grand total of $3.4 million dollars to
see Market Boulevard upgraded to a 4 lane highway with right turns and left turns into Cub. Into
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the movie theater. Left turns into down West 79 Street and right turns into the two entrances
into Cub.
Mayor Laufenburger: Mr. Gerhardt, what’s the source of that $3.4 million dollar estimate?
Todd Gerhardt: That came from Kimley-Horn and Associates.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: So that was a study that we asked them to consider Market Boulevard
right?
Todd Gerhardt: Correct. And I asked them, I said how much would the Venue take on as a part
of this and they came up with the estimate of $2.1 million and that’s something our attorney
would want to use in as a part of that private redevelopment agreement and Tax Increment
Financing Plan that you’ll see in September.
Mayor Laufenburger: So the developers have agreed to accept a $2.1 million dollar assessment
for the work done on Market Boulevard, is that correct?
Todd Gerhardt: They have agreed to accept that as long as that the increment pays for that dollar
amount.
Mayor Laufenburger: Right, right. But that $2.1 million dollar benefit allows money to be spent
outside of the TIF district?
Todd Gerhardt: Correct.
Mayor Laufenburger: That’s what’s important about this.
Todd Gerhardt: Yeah it’s excluded from the 25 percent.
Mayor Laufenburger: Right. The other benefit is that the benefiting property owners on Market
Boulevard, they can know with reasonable certainty that the amount that they will be assessed is
a total of $400,000.
Todd Gerhardt: And the $400,000 isn’t a number we just picked out of the air. That is a typical
mill and overlay. Our typical practice is based on the number of businesses that have access onto
Market will be assessed the cost for a mill and overlay for that area.
Mayor Laufenburger: Okay. Alright. You had some more things you wanted to show us.
Todd Gerhardt: Let’s see, let’s go alright. Okay.
Mayor Laufenburger: Okay go right there.
Todd Gerhardt: Right there. What is the source of the $1.3 million in TIF? The source is that
$309,000 that we talked about over a 5.5, 5 ½ years and over the 26 years this district will create
about $4 million dollars in increment.
Mayor Laufenburger: Is that a net present value number?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: That is a net present value.
Mayor Laufenburger: So it’s not accumulative. I mean simple math, 26 years times $300,000 is
about $7.2 million so this is a net present value number?
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay.
Todd Gerhardt: Now this graph shows you how the increment is paid. Everybody pays their
property taxes in two installments. It’s typically in May and around October and so you’ll see
two numbers associated with each year. Sorry it’s small scale but to make it easier for you I
brought a line over to show you where the $1.3 million is and just to the left you see a 5.5.
That’s 5.5 years and that’s 2025 is when they would hit that $1.3 million so we’ve met our
obligation to them in reimbursing them the cost of redevelopment. Tearing the building down.
Relocating utilities. Underground parking. All the qualified costs under TIF law.
Mayor Laufenburger: But we’re giving them money that we got from them?
Todd Gerhardt: Correct.
Mayor Laufenburger: Thank you.
Todd Gerhardt: It’s a pay as you go notice is the language that the attorneys use so the only time
that we pay them is they have to make their tax payment and then once we receive the tax
payment in July we turn around and reimburse them.
Mayor Laufenburger: For qualified costs.
Todd Gerhardt: For qualified costs.
Mayor Laufenburger: How long will it take them to spend the $1.3 million dollars to do the
improvements that they’re asking?
Todd Gerhardt: The construction of an apartment and Aldi’s would be about 16 months
construction.
Mayor Laufenburger: So they will incur these costs long before they will be reimbursed by the
City?
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay.
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: So there is an interest calculation that we will be paying them because they’re
spending money out of their pocket so interest will accumulate in that note too so they’re getting
reimbursed for up fronting that money. And then if you run down you’ll see the $2.1 million
figure and that’s the assessments that go to 2039 and that will cover the cost for the
improvements to Market Boulevard. And that leaves you roughly 6 years of increment unspent.
Mayor Laufenburger: And that increment unspent, what can we spend that on?
Todd Gerhardt: You can use 25 percent of that outside of the district for whatever you would
modify your tax increment plan for. So if there’s another road you want to do you would have to
modify your plan to use 25 percent of whatever those dollars would be used for.
Mayor Laufenburger: And from a net present value standpoint the calculation of that money if it
were available today is about $528,000 is what will be coming in later on.
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay.
Todd Gerhardt: Some people have called me and asked me has the City ever done tax increment
financing before and we have and the current TIF districts that exist are TIF District number 5
and number 9. Number 5 is Northbay. The City wanted to see affordable housing in an owner
occupied situation so I don’t know if you’ve been down to Northbay. It’s just north of Lake
Riley and there’s 27 units of single family homes that are subsidized for where there’s an
average home value determined on each of those 27 units and that’s the limit that they can go up
each year based on the metro average. So there’s 27 units that are considered affordable
ownership single family homes. And then TIF District number 9 is the Gateway project. That’s
an affordable rental housing project owned by Sands Company. It’s I think 50 some units of
affordable housing that sits at the intersection of Lake Susan Drive and Great Plains Boulevard.
TIF District number 8 is another affordable housing project that we did for Summerwood. It’s
an assisted living. Council was very interested in seeing seniors have affordable housing and so
we provided tax increment financing to that development also. But that one the obligations have
been met and it’s back on the tax rolls. TIF District 5 and 9 will be completed at the end of this
year and will be back on the tax rolls but we will still be monitoring TIF District 5 to make sure
those 27 units stay affordable into the future.
Mayor Laufenburger: Is that an obligation that we as a City have or is that done by some other
agency to insure that they remain affordable?
Todd Gerhardt: That’s an obligation that we had with the developer of that site. With Rottlund I
think it was, who is no longer in business.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: Okay.
Todd Gerhardt: This is kind of an analysis of the redevelopment of the Frontier Building. The
current market value today has a value of $2,193,800. After the redevelopment it will have
$24,338,410. Their total tax is $71,150. A city portion, we just collect barely $6,000 from those
3 properties. After the development the City, after it’s back on the tax rolls will collect over
$70,000 from the apartment and Aldi’s. So.
Mayor Laufenburger: You showed this one before.
Todd Gerhardt: I showed this before. Somebody had also asked me you know who else has
received TIF assistance. Downtown doesn’t, it looks beautiful today but it didn’t always look
this way and Frank Ernst, Vicki Ernst grew up in this area. Frank remembers what downtown
looked like prior to us starting our redevelopment in 1989 where we put extensive landscaping.
Buried all the electrical lines. Put sidewalks in. Sodded the boulevards. There was no curb and
gutter. The watermain, the sanitary sewer lines were barely holding together. There was
infiltration problems into our sanitary sewer. We had fears if there was ever a fire at the Dinner
Theater and one of our pumper trucks would hook up to that hydrant, the pressure from that
pump would just collapse that water line and there were no storm water management at all.
There was periodic flooding throughout the area so we put in the storm water system. The pond
behind Cub is the storm water that comes from all of downtown. Collects there and then it
drains across Market Boulevard into another pond and then it goes into a culvert and heads back
into another system of ponds and ultimately into Rice Marsh Lake and then down to Lake Riley
and then into the Minnesota River. But in downtown to put all of that infrastructure in place it
was quite costly so what we needed to do was entice businesses to come here so Target.
Byerly’s. Market Square. Country Suites. The Dinner Theater. Colonial Square. Medical Arts
Phases I and II. Axel’s. Town Square. All the business in Chan Lakes Business Park. Instant
Web. United Mailing. Victory Envelope. All the businesses in those industrial parks. Paisley
Park. And then the Chan Business Center where the National Weather Service sits were all in
tax increment financing districts and they all received some type of tax increment assistance and
that money generated from those businesses helped offset the cost of making the improvements
into the downtown as you see it today. So what we’re requesting the council to do tonight is
decertify TIF District number 10 because no activity has taken place on that district for the past
10 years and then 2 and 3 kind of go in concert with each other. We’re calling for a public
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hearing for September 11 in this council chambers at 7:00 to establish TIF District 11 and then
authorize an interfund loan if needed in the future for TIF District 11 if for any reason we run
short of money in the first couple years of running that District. And I open it up for any
questions that the council may have.
Mayor Laufenburger: Alright so Mr. Gerhardt let me first ask a process question. Could you
leave that up in place there?
Todd Gerhardt: Yeah.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: In our packet you individual this under a single motion. Is there any
reason why we couldn’t deal with this as 3 individual motions?
Todd Gerhardt: Yes you can Mayor. You can do.
Mayor Laufenburger: Legally that’s acceptable?
Todd Gerhardt: You can do them individually. You can do them all as one. You can 1 and 2
together. Whatever.
Mayor Laufenburger: Okay. Okay, alright.
Todd Gerhardt: As Roger would tell you, you can do anything you want to do.
Mayor Laufenburger: And suffer the consequences right?
Todd Gerhardt: Sometimes.
Mayor Laufenburger: So let’s open this to council and I would say I’m prepared to have council
questions on any of these 3 actions that the city staff is asking us to act on tonight. Anybody?
Mr. Campion, go ahead.
Councilman Campion: Mr. Gerhardt, I want to go back to the 25 percent and 75 percent split.
Could we go back to the slide that has the dotted outline of the redevelopment zone?
Todd Gerhardt: That one?
Councilman Campion: Yes. So I’m going back to this for a second time here but so within the
dotted lines in the map in the lower right, that is where 25 percent of the TIF proceeds can be
deployed, is that right?
Todd Gerhardt: 25 percent of the proceeds can be deployed anywhere within the dashed dot
dashed dot dashed lines that, and the reason it goes up 101 is that some day we may want to
redevelop 101 so we created the line to go up there to help offset the local cost of improving 101.
Councilman Campion: Okay.
Todd Gerhardt: So that’s why it follows up to Near Mountain. And then the same thing along
Highway 5 and going south, any public improvements that may take place within those areas.
Mayor Laufenburger: So Mr. Campion that area that looks like, modestly like somebody having
their hand up or their arm up, that is called the redevelopment project area, right?
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Chanhassen City Council – July 24, 2017
Councilman Campion: Right.
Mayor Laufenburger: And the TIF district would be a small portion within the redevelopment
area.
Councilman Campion: Right and so the proposed TIF district would be where 75 percent of the
funds can be deployed over the 26 years right?
Todd Gerhardt: Correct. The shaded, the 3 lots.
Councilman Campion: Right so the, I think the total economic benefit that you calculated was
something like 3.9 in total over the 26 years.
Mayor Laufenburger: Net present value.
Todd Gerhardt: Yep.
Councilman Campion: Net present value and so then 25 percent of that you know would be in
the broader zone so about $975,000.
Todd Gerhardt: Correct.
Councilman Campion: And roughly $3 million would be directed just within that apartment
complex and grocery store?
Todd Gerhardt: You’ve got the 1.3 and then assessing the Venue 2.1 for their portion of the
benefit of Market Boulevard.
Councilman Campion: So you’re saying that effectively comes out of the 75 percent?
Todd Gerhardt: Right.
Councilman Campion: And how much would that 2.1 million be in excess of what they might be
otherwise assessed for the Market improvements?
Todd Gerhardt: Well it would be not much more than the $400,000 going back against the other
benefiting businesses so I would say maybe 10 or less.
Councilman Campion: Okay. That’s it for now.
Mayor Laufenburger: Does that answer your question?
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Chanhassen City Council – July 24, 2017
Councilman Campion: Yes.
Mayor Laufenburger: Do you have other questions or comments with that? You don’t have to.
I’m just giving you the opportunity.
Councilman Campion: Not at this time.
Mayor Laufenburger: Councilmember Tjornhom, you have comments or questions?
Councilwoman Tjornhom: I have a question. This is the first time I’ve seen the diagram of the
dotted lines.
Mayor Laufenburger: The redevelopment project area.
Councilwoman Tjornhom: Well where the money can be deployed.
Mayor Laufenburger: Yeah that’s the, okay.
Councilwoman Tjornhom: Yes.
Mayor Laufenburger: Okay the project area.
Councilwoman Tjornhom: Yes. I understand the 101 improvement possible, which I fully, fully
support. And I’m just wondering why we’re going so far west.
Mayor Laufenburger: On Highway 5?
Councilwoman Tjornhom: (Yes).
Mayor Laufenburger: What’s that road on the west?
Todd Gerhardt: I think you know it was the frontage road on the north and south side of
Highway 5. Not a lot of cities build frontage roads along major roadways like Highway 5 and
what the frontage roads act as is a local street collector. You don’t have to get out onto Highway
5 if you want to go to Kwik Trip or if you want to go to Lake Ann or if you want to, you know
you live south of 5 and you want to go to the Rec Center you can get on Century Boulevard and
go to the Rec Center or go to church. You don’t have to get out. Take Audubon to Highway 5
and then go down to Audubon and around so it was a way to, if there was enough increment to
help offset the costs of those frontage roads. And I should also let you know way back in the day
in ’89 when we first started doing this we got dollar for dollar for tax increment. We got
everybody’s fiscal disparities and we got the school’s portion of the property taxes. Now you’re
working on 50 cent dollars so if you did the math on that you noticed you’re only collecting 50
cents of every tax dollar being generated.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: So that calculation that took us from 442 to 309 where you had all those
minuses, back in ’89 those minuses didn’t exist?
Todd Gerhardt: Right.
Mayor Laufenburger: Okay.
Todd Gerhardt: And so, and nobody ever thought the legislators would change that formula and
that’s when we kind of got in trouble with the TIF districts is we got too far ahead doing too
many projects not knowing that the legislators would change the rules so we had to get special
legislation to exempt us from those new rules for a period of time so we could meet our debt
obligation and they granted us that special legislation.
Mayor Laufenburger: But they don’t grant that anymore?
Todd Gerhardt: Well they don’t allow you to make that mistake. You could probably go ask for
dollar for dollar but you’d better have a good reason to ask to get dollar for dollar.
Mayor Laufenburger: Okay.
Councilwoman Tjornhom: I have something else too.
Mayor Laufenburger: Please continue. I didn’t mean to cut you off.
Councilwoman Tjornhom: No, no, no worries.
Mayor Laufenburger: Councilmember, okay.
Councilwoman Tjornhom: During our conversation you Mr. Gerhardt listed some qualifications
and the fact that Aldi will be, could be built without TIF. They weren’t.
Todd Gerhardt: Correct.
Councilwoman Tjornhom: A qualifying factor but the apartment building was the main driver
for the TIF funding for the district.
Todd Gerhardt: That is correct.
Councilwoman Tjornhom: And then you made a comment or the term was used and I’m not
sure if it was the correct term so that’s why I want to get it clarified. You said it qualified for
TIF because it was risky which kind of makes I think it sound like it’s you know kind of a
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Chanhassen City Council – July 24, 2017
sketchy project or something that’s not a quality or whatever it would be. Can we talk a little bit
about that?
Todd Gerhardt: Sure. You get roughly a $24 million dollar project and so for a bank to loan you
money they typically want to see 50 percent you know, somebody else’s equity into it before the
bank is going to put 50 percent into it so what we are doing is the 1.3 is going to be a part of the
$12 million dollars worth of equity that would go towards them finding private financing.
Councilwoman Tjornhom: And is that because it’s a residential development? If it was a
commercial where it was more businesses that were going to be occupying the building it would
be, they would think differently of it or the numbers would be differently?
Todd Gerhardt: Aldi’s is a little smaller scale. Each of the units in the apartment are $164,000
each to build so, and they’ve got 134 of those to build and for them to get their money and to see
their return they’ve got to have rents of above $1,600 per month and in the, I should also
preference that in the private redevelopment agreement that we’re having with them we are
telling them that there will not be affordable housing or Section 8 housing in this complex.
Mayor Laufenburger: Is that in our authority to stipulate that Mr. Gerhardt?
Todd Gerhardt: Yes it is.
Mayor Laufenburger: Mr. Knutson that’s true?
Roger Knutson: Yes it is. It’s our contract.
Mayor Laufenburger: Okay, thank you.
Councilwoman Tjornhom: Okay, that’s it.
Mayor Laufenburger: Since you have this shirt with the guy’s arm up there.
Todd Gerhardt: Yep.
Mayor Laufenburger: Where do you, see where you have that red dot?
Todd Gerhardt: Yep.
Mayor Laufenburger: Okay. The Tax Increment Financing District #11 is within inside the
redevelopment project area?
Todd Gerhardt: Yes.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: Okay. Is it possible Mr. Gerhardt that in the future some other land that’s
inside this area, the City may choose to offer a or create another TIF district in order to
encourage development somewhere in this redevelopment area? Is that possible?
Todd Gerhardt: Yes.
Mayor Laufenburger: Okay. And if we do then the same 25 percent applies?
Todd Gerhardt: Correct.
Mayor Laufenburger: Meaning you must spend 75 percent of the increment tax in the district
and you can spend up to 25 percent outside of the district elsewhere in the redevelopment area?
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay. Thank you.
Todd Gerhardt: Our practice in the past has been to get the redevelopment projects back on the
tax rolls as soon as possible. Some of them you know just take longer. The affordable housing
project down, the Northbay is taking probably the longest. Gateway I think was done within 5
years. I think Summerwood was done within 3 to 4 years and so it’s, you know we’re not
looking for other projects. We’re looking to enhance our tax base and council may remember
that as we took some TIF districts off it’s looked like new development has occurred so we’ve
taken advantage of that project to help reduce the taxes in the community. Our tax rate has either
been the same or less for the average home increase for the past 15 years and I’m very proud to
sit here and tell you have the lowest tax rate in the 7 county metro area with the exception of
some very small communities like, along the lakes so your tax rate is lower than Eden Prairie,
Minnetonka, Plymouth, Edina, Chaska, Shakopee and it looks like it will probably even go a
little lower again this year.
Mayor Laufenburger: Okay Mr. Gerhardt you said that you, your intent or your interest is to get
something off of a tax increment financing district and back onto the tax rolls where it would be
taxed under normal conditions.
Todd Gerhardt: Yep.
Mayor Laufenburger: That means the County would get their full portion. The school district
get their full portion. City gets our full portion and our full portion based on what you’re saying
is about $70,000 a year instead of the 309. Why, are you proposing a tax increment financing
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district or will you be proposing on September 11 a 26 year tax increment financing district?
Todd Gerhardt: That’s the length of the districts. You may choose not to finance.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: The council could choose to shorten that?
Todd Gerhardt: Yep.
Mayor Laufenburger: Okay so that’s a council decision.
Todd Gerhardt: Yep you could do the 5 1/2.
Mayor Laufenburger: Just to pay the 1.3 and then let the Market Boulevard assessment be
distributed the way we normally would.
Todd Gerhardt: Put it back onto Paul and myself and Greg to find another way to find $2.1
million dollars.
Mayor Laufenburger: Okay, alright. Okay I think there may be other questions. Did you have
other questions Councilmember Tjornhom? Okay. Mr. McDonald did you have any questions at
this time?
Councilman McDonald: Yeah I had a couple questions. Okay if I understand this correctly then
TIF is used for redevelopment. It’s a tool for redeveloping an area. You had mentioned that one
of the things that you want to decertify today is TIF District number 10. What was the purpose
of TIF District number 10?
Todd Gerhardt: TIF District number 10 was created to, the Chanhassen Dinner Theater has
excess land where they could see redevelopment occur and so as a part of building the park and
ride and bringing the frontage road through the council wanted to see the Chanhassen Dinner
Theater have an opportunity to expand to you know maybe sell off a piece of land that would
help their operation to be more successful into the future so you provided that incentive through
creating Tax Increment Financing District #10.
Councilman McDonald: But they chose not to take advantage of any of that, is that correct?
Todd Gerhardt: The Chanhassen Dinner Theater puts on wonderful musicals and knows how to
run the Dinner Theater but from an economic development side they don’t have somebody on
staff that specializes in that and I think they were so worried about just them running the
business they left the redevelopment efforts on the side.
Councilman McDonald: As part of that district were we also looking that maybe with TIF
District #10 we could develop the rest of the area there? The old frontier area and everything?
Todd Gerhardt: Yes.
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Chanhassen City Council – July 24, 2017
Councilman McDonald: So it was an incentive to try to help also that area but because TIF
District 10 didn’t take off no redevelopment.
Todd Gerhardt: No. So we started fresh so we could capture the full 26 years but because TIF
District #10 did not see building activity occur within 5 years of the creation of the district State
law kind of forces you to close the district because then they think you’re just capturing the
inflated increases in market value and that was not our intent and so staff is recommending to
decertify that. If for some reason that the Dinner Theater does come up with an idea to do
something we could expand TIF District 11 to encompass that but it has to be done within 5
years.
Councilman McDonald: As part of TIF District 11 did the property owner approach you at some
point and say they were interested in doing redevelopment?
Todd Gerhardt: Which property owner?
Councilman McDonald: Well TIF District 11. The one we’re coming up with today because in
the original TIF District 10 that wasn’t included.
Todd Gerhardt: Correct.
Councilman McDonald: But we were hoping that at some point that would spur development at
that end of the property and the question is at some point did the owner come to you and say you
know even without the Dinner Theater I’m interested in doing development?
Todd Gerhardt: Correct. I worked with Bloomberg Companies, United Properties for going on
2 ½ years on trying to find the right user for the site.
Mayor Laufenburger: But Mr. Gerhardt the Bloomberg Companies they didn’t express an
interest in redeveloping. They expressed an interest in selling the property, is that correct?
Todd Gerhardt: Correct. I call that they had an interest in seeing the site redeveloped but they
knew that that would be the only way that United Properties would maximize the investment into
that property is to develop it and so they became, they bought the property as if it was raw land
and is using the increment to demo the Frontier Building and get the site ready for development.
And as a part of that we worked hard with every specialty grocer that you can think of and over a
2 ½ year period and it was Trader Joe’s, Whole Foods, Fresh Thyme held us for almost a year
and a half saying they were interested and then made the executive decision not to locate at this
site.
Councilman McDonald: Well and that led to my next question. Were there a lot of people
interested in taking this site and redeveloping it? How difficult was it to find someone?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: Very difficult. In today’s market everybody wanted to be on Highway 5 and if
you notice all the development that’s occurred, Chick-fil-A, the two strip retails are both on
Highway 5. They all wanted Highway 5 visibility. Highway 5 creates 55,000 cars per day travel
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up and down Highway 5. West 78 Street I think you’d be lucky if you get 2,000 cars per day so
not having that visibility, Aldi’s does their marketing through fliers and word of mouth.
Councilman McDonald: Okay so as part of all that then are you convinced that at least as far as
getting a developer in there enough due diligence was given, enough notice was given to the
commercial markets that hey there’s property available. Would you be interested in looking at
it? I would have Jonathan Adams who represents the developer give you a list of all the people
they tried to contact. The City was, doesn’t go out looking for users. You know we expressed
an interest in you know if it’s going to be a specialty grocer you know we wanted of course see
Trader Joe’s but Trader Joe’s would not go on this site unless it was on Highway 5. Whole
Foods the same and Fresh Thyme, they never did give us a reason why but Jonathan Adams from
Silverstone Realty here in Chanhassen did a lot of the marketing on the site and he can tell you
the different individuals that they contacted. What we wanted to see was some type of retail with
housing and we had the ULI Group come out and they suggested, who is professionals in the real
estate market and we asked them to do an overview of our downtown and they said you need to
introduce residential, vertical residential into your downtown to have a captured market that will
serve the people, the retail businesses that are in the downtown. If you go to Southdale,
Ridgedale, even Eden Prairie, what makes those centers successful today or starting to make
them successful today is the amount of density of housing that they’ve surrounded those retail
complexes.
Councilman McDonald: Well let me ask you this then. From what you’re saying it’s not the
City’s job to actually develop the property. It’s the City’s job to more or less facilitate
development.
Todd Gerhardt: Correct. You know I think the best example that I’ve heard in my 30 plus years
is to help a business person pull himself up by his boot straps with providing a little assistance in
tax increment financing.
Councilman McDonald: Then the other thing about the property that’s come up, did the City
have anything to do with canceling leases or evicting people out of those businesses?
Todd Gerhardt: We are not in the line of title on the Frontier Building. Our only role is to
provide assistance. Bloomberg Companies owned the complex. They did the property
management and most of the tenants were month to month so as tenants left it was by their
choosing and there are still tenants in the building as of today.
Councilman McDonald: Did the City do anything to help with any relocation activities or
anything for displaced businesses?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: We did not have to because we never took ownership of the building. Once the
City takes ownership or gets in the line of title then we have to provide relocation to the tenants
inside and help them find a new home.
Councilman McDonald: Do you know how many of those businesses are still in Chanhassen?
Todd Gerhardt: I would say probably about 80 percent of them.
Councilman McDonald: Okay. I have no more questions.
Mayor Laufenburger: Okay. Any other questions or comments from council?
Councilwoman Ryan: I do.
Mayor Laufenburger: Alright Councilmember Ryan, go ahead.
Councilwoman Ryan: Just a couple questions. It’s stated that they’re asking for $1.3 million
and understanding that they have to submit their expenses or receipts for, to be reimbursed. Can
they ask for more if they need more than the $1.3?
Todd Gerhardt: No.
Councilwoman Ryan: So that’s the maximum that?
Todd Gerhardt: That’s the maximum.
Councilwoman Ryan: Okay. And then you had stated that you had discussions about the low
income housing.
Todd Gerhardt: Yes.
Councilwoman Ryan: Does that go in a contract or is just a conversation?
Todd Gerhardt: No it will be in your private redevelopment agreement with United Properties or
the LLC that they create. That agreement hasn’t been finalized. I’m hoping that I can present
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that to you at the September 11 meeting along with creating the district.
Councilwoman Ryan: Okay so as part of creating the district that would be a contingency?
Todd Gerhardt: Once you create the district then you have up to 5 years to find people to
redevelop within that district but it’s my goal that same evening, because we’ve been working in
concert with United Properties to get this all done and get the project going so we can maximize
the increment and they can get their project up as soon as possible.
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Chanhassen City Council – July 24, 2017
Councilwoman Ryan: I guess I’m still.
Mayor Laufenburger: Ask your question again.
Councilwoman Ryan: I’m thinking through how to phrase it thanks.
Mayor Laufenburger: Okay, alright.
Councilwoman Ryan: So there’s a contract or what? You’re shaking, there’s a contract that’s
part of the TIF district.
Todd Gerhardt: Yeah you have what’s called your Tax Increment Plan which outlines the goals
that you’re going to create within that district. That you could use $2.1 million dollars to go
towards the reconstruction of Market Boulevard. You’re going to provide $1.3 million dollars to
help offset the qualifying costs to United Properties.
Councilwoman Ryan: Right.
Todd Gerhardt: And then there’ll be the 10 percent administrative costs and then if there’s any
land write down that would have to be spelled out in there.
Councilwoman Ryan: Right.
Mayor Laufenburger: But that’s in the TIF related document.
Todd Gerhardt: That is when you create the Tax Increment Financing Plan. Then the second
item is your Private Redevelopment Agreement which states that they’re going to build 134 unit
multi-family housing unit that’s market rate and in there we are going to say that you cannot
have any of the units affordable or Section 8 housing to be included in your development.
Councilwoman Ryan: And then what happens after the development or the developer is?
Todd Gerhardt: That is recorded against the property which is, as Roger would tell you is the
enforcing mechanism.
Councilwoman Ryan: Okay, and so the fact that we have an opportunity or yeah, an opportunity
to talk about the project itself and put some constraints on it, are there other things that then we
can do even though the project was approved 2 weeks ago, and I’m not even just talking about
the height requirements that I know are concerns but when I was looking into some other TIF
district and some of the language that they use it talks about promoting public purpose with
infrastructure. Specifically you know sidewalks, parking, roads, obviously infrastructure and
then specific to this project is that road width with the alley way so if there are the concerns with
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Chanhassen City Council – July 24, 2017
the parking and some of the surrounding roads at that time including the height requirements or
the height that they’ve proposed is there an opportunity to then change or ask them to make some
changes to make some changes to the project as contingent on approving the TIF district.
Mayor Laufenburger: Let me ask it, can I ask the question just a little bit differently?
Councilmember Ryan has said correctly that the plan has received approval but you’re talking
about a private redevelopment contract. Who approves the private redevelopment contract?
Todd Gerhardt: The EDA.
Mayor Laufenburger: And the EDA, for those who don’t know, the EDA is made up of the 5
council members right here, is that correct?
Todd Gerhardt: That’s correct.
Mayor Laufenburger: Okay so I think the answer to your question, that’s a good question
Councilmember Ryan. The language of the Private Redevelopment Agreement is subject to this
body’s approval. It’s the EDA but it’s, versus the council.
Councilwoman Ryan: Right.
Mayor Laufenburger: That’s an important consideration which means that there can be, what are
some things that could be in a private redevelopment contract? What are some of the things?
Todd Gerhardt: You can have jobs. You know minimum market value for this building. We’re
going to have a minimum market value so we’re guaranteed increment flow.
Mayor Laufenburger: Can landscaping be part of a private redevelopment contract?
Todd Gerhardt: I have, usually when you start getting into architectural statements or
landscaping or other things they’re going to ask for more money and the time to address the
parking, height is through the planning process.
Mayor Laufenburger: Okay which has been, which has already been approved.
Todd Gerhardt: Right and I don’t know if they’re coming back for final plat.
Kate Aanenson: Just for the Registered Land Survey. Just for the plat itself. Not for site plan.
Todd Gerhardt: So they’ve complied with all the land use regulations through the Planning
Commission and City Council. This is not the mechanism, I mean you can if there’s something
that you would like to see done you can ask them if they would make certain changes but it
would be a good faith effort on their side to make those changes. But if you’re going to ask for
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Chanhassen City Council – July 24, 2017
significant architectural changes to the building they’re going to probably say okay we’re going
to do something for you. What are you going to do for us and that’s going to say, we’re going to
want more increment.
Mayor Laufenburger: So I think Elise, I think I’m tracking. Excuse me Councilmember Ryan, I
think I’m tracking with you. Don’t mean to be so informal here.
Councilwoman Ryan: That’s fine. You’re fine.
Mayor Laufenburger: You heard Mr. Gerhardt say that the EDA approves the private
redevelopment contract which means that we can request or we can ask for, and that would be an
EDA action to ask for that, but as Mr. Knutson often tells us we can ask for anything, or we can
do anything we want. We just have to understand that there may be consequences associated
with it so I didn’t mean to interrupt you but I wanted the clarification on who approves
redevelopment contract. Okay.
Councilwoman Ryan: Right.
Mayor Laufenburger: Alright, so continue with your questions.
Councilwoman Ryan: And I did ask at the previous council meeting about some of those
changes and they said that they would consider them but weren’t going to do anything and I
think Mr. Gerhardt said that they wanted approval based on their.
Mayor Laufenburger: The plans.
Councilwoman Ryan: The plan.
Mayor Laufenburger: Yeah right. Right.
Councilwoman Ryan: So I just didn’t know if there was any negotiation left and.
Todd Gerhardt: Well I think there’s got to be some follow up wouldn’t you say Kate on some of
the things they asked?
Kate Aanenson: Yeah there’s a couple minor tweaks that they’re working on but.
Todd Gerhardt: Because I think they have to define the alley way width and I think one of the
things in the alley way width is, you’re going to, if you want a wider alley you’re going to lose a
pedestrian connection and then there’s a sidewalk along one side of the, the west side of the
apartments and Aldi’s and so if you get rid of that width you’re forcing people to walk in the
alley road.
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Chanhassen City Council – July 24, 2017
Councilwoman Ryan: Right but my concern is that those conversations have not taken place and
they weren’t taking place at the Planning Commission and we brought them up at the council
meeting and it was, they were, you know they said that they would consider them and so I’m
concerned. I’m still concerned about that road width. I’m still concerned about the parking and
you know these are all part of approving a TIF district is to promote a public purpose and it
addresses specifically those things and so again that’s why my question is, you know with TIF
don’t we have an opportunity to make, you know in order to get the $1.3 million dollars you can
ask us for more but you’re already asking for $1.3. These are the changes that we’d like to see.
Todd Gerhardt: Yeah and I think you’ve asked for those and I think you need an answer to
those.
Councilwoman Ryan: Right.
Todd Gerhardt: And that’s staff’s job to bring back to you the answers of the options that are
before you. That they come back with.
Mayor Laufenburger: But let’s be clear. The project as presented was given council approval.
Councilwoman Ryan: Yes.
Mayor Laufenburger: Okay.
Councilwoman Ryan: I’m aware of that.
Mayor Laufenburger: Did you have other questions or comments?
Councilwoman Ryan: I’ll wait for other questions and then I will make comments in a little bit,
thanks.
Mayor Laufenburger: Okay. Well anybody else any questions? Mr. Campion go ahead.
Councilman Campion: I have a few additional follow up. So one question is in the 2 ½ years
you know working with United Properties for looking at different retail options, was TIF offered
to any of the other retail companies that we came in contact with?
Todd Gerhardt: They never brought back any other options. Jonathan would you mind standing
up and addressing the retail options you’ve talked and introduce yourself. Give your address.
Jonathan Adam: Jonathan Adam. Address is 7955 Stone Creek Drive, Unit 130, Chanhassen,
Minnesota. We did spend, actually I’ve been on the project for 4 years so United Properties
came in 2 ½ years ago when I brought them in and we’ve spent those 4 years working to try to
find retailers and a project for this site so we’ve approached all the retailers that we can think of
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Chanhassen City Council – July 24, 2017
to bring to this site. The one that stayed and came is Aldi and that’s the one that we pursued and
stuck with so as far as granting TIF to another retailer, it’s not about the money. It was about
they didn’t want to be on the site so whether it was you know given to them at a lower cost or not
would not have made a difference from the standpoint of them being there so hope that answers
the question.
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Todd Gerhardt: And that’s because of the low traffic on West 78.
Jonathan Adam: Right, it’s not as desirable a site for the type of retail use that they have.
Todd Gerhardt: Where did all the retailers want to be?
Jonathan Adam: They all wanted to be on Highway 5 which is where they ended up going if
they could.
Mayor Laufenburger: Property on Highway 5 is pretty scarce.
Jonathan Adam: It is. There’s none left so.
Councilman Campion: Is it a true statement that the Aldi would go forward even without the
TIF? That Aldi would be willing to proceed with the development without that but it is the
apartment development that would not take place without the TIF?
Mayor Laufenburger: Jonathan can you answer that? To the best of your knowledge.
Jonathan Adam: To the best of my knowledge Aldi can stand alone without the TIF.
Mayor Laufenburger: So.
Todd Gerhardt: It’s spelled out in the agreement that Aldi is not receiving any of the tax
increment financing.
Councilman Campion: And.
Mayor Laufenburger: Just a second.
Councilman Campion: Okay.
Mayor Laufenburger: Was your question answered?
Councilman Campion: I believe so yes.
Mayor Laufenburger: Okay. Was it answered to your satisfaction?
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Chanhassen City Council – July 24, 2017
Councilman Campion: It was.
Mayor Laufenburger: Okay good. That’s the important one. You have more?
Councilman Campion: I have one more. So, well two more. For the development did we ever
consider going without a retail option? You know simply the apartment.
Mayor Laufenburger: When you say we what do you mean the we?
Councilman Campion: Alright did the developer, did United Properties, not Bloomberg right
because they’re.
Mayor Laufenburger: Bloomberg is the previous property owner, yeah.
Councilman Campion: Yeah I guess did United Properties consider doing the development with
apartment only?
Jonathan Adam: I think we’ve considered every option and this is the option that made the most
sense for what we had for that site. We’re trying to maximize the potential of the site. We’re
fitting within the same footprint. There’s already retail on the site currently so we were bringing
retail back in and then bringing the housing in to help support the downtown.
Todd Gerhardt: I think he, staff recommended that some type of retail element be included as a
part of this redevelopment. Not just housing.
Councilman Campion: And the reason why I’m asking is, just when you were doing the
calculation of I think it was $164,000 you know of values added for each apartment and you
compare that with the single story Aldi that is adding roughly $2 million dollars to the $24
million dollar development.
Todd Gerhardt: Little higher.
Councilman Campion: Well yeah the 164 times 134 would be 21,976 and you know so roughly
$22 million of the $24 is from the apartments so if there were more apartments wouldn’t that
increase the benefit from the TIF?
Todd Gerhardt: Yeah but you couldn’t fit any more parking on the site.
Kate Aanenson: Right it’s as we said before there’s a nexus between parking and how many
units you can get on there. So if you take this same footprint and putting that in all parking and
that’s what makes it work.
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Chanhassen City Council – July 24, 2017
Councilman Campion: Okay.
Mayor Laufenburger: Your face tells me that you’re not getting the answer.
Councilman Campion: Well the reason why I’m questioning it is, you know how many parking
stalls again are afforded to Aldi?
Kate Aanenson: The parking in front? Yeah, but they have to have underground parking. Each
unit has to have so much underground so.
Todd Gerhardt: I think the question is, is how many stalls are allocated to Aldi?
Kate Aanenson: 92-94 in the front.
Todd Gerhardt: Yeah.
Mayor Laufenburger: But the gating factor we heard Mr. McKelvey say this that they built as
many apartments as they could to be supported by a single parking stall in the basement for each
unit in that footprint of the building. I think that’s what Rick said, is that correct?
Jonathan Adam: That’s correct.
Councilman Campion: And that includes the space under the Aldi?
Jonathan Adam: Correct.
Mayor Laufenburger: That’s correct.
Councilman Campion: Okay.
Mayor Laufenburger: So the 134 is the maximum number of spaces. If the property was larger,
if the buildable property was larger and let’s say it could accommodate 154 parking spaces, then
I think it’s reasonable that United Properties might have come to us with an apartment for 154
units. Or apartment building. And also my guess is if the, again I’m estimating but if the
footprint of the building would have allowed 110 underground parking spaces then the number
of apartments that they would have come forward with was 110 apartments. Now I can’t be sure
about that but that’s what I’ve gained from the conversations that we’ve had with Rick and with
Keith.
Jonathan Adam: Keith.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: At the, when we had work sessions and discussions so clearly, my
perception of this Mr. Campion is they built as large as they could based on what the footprint
would allow. The word they used was we wanted to maximize the opportunity.
Councilman Campion: Right.
Todd Gerhardt: And that’s no different than any other retail development. They’ll build the
building to whatever they can put parking on and the percentage of green space and it’s rare that
somebody’s going to build a building and a parking lot and leave 5 acres of green space that’s
buildable just for green space where they could maximize more money off of that 5 acres or acre
and half acre or whatever it might be.
Councilman Campion: Right. Okay, I appreciate the answer. I guess finally and this would be
more for Mr. Gerhardt. Why not a bigger TIF district? I understand why we’re decertifying TIF
District 10 but what would be the disadvantage of a larger TIF district #11? Is it that there aren’t
contiguous properties that you know would meet the blighted standard or you know why not
make it larger to spur more development downtown?
Todd Gerhardt: Typically we work with people that have an interest in redevelopment. There
are surrounding properties that would like to probably redevelop but they don’t have a project at
this time and but until they’re ready we can still have 5 years to modify this district and/or create
a new one and but there are other opportunities in and around this area that users might not be
there for the long run and where the property becomes more value than the business itself and so,
or somebody may want to expand on their existing use. People we’ve talked to and they’re
doing their due diligence right now in doing market studies and seeing who might be interested
in doing and making that investment.
Councilman Campion: Okay so I’m interpreting that we set the boundaries of the TIF district to
maximize the 26 years that follow the development?
Todd Gerhardt: We created the boundaries of what was going to be redeveloped and for us to go
into the Dinner Theater property and say it’s blighted, you know that’s probably something they
don’t want people knowing if it is such a thing. Same thing if you go west to the movie theater
or the Timber Lounge so that’s the first test they’ve got to get through and so at this point until a
private property owner is interested in redeveloping they know that we’re here to work with
them.
Mayor Laufenburger: Okay, any other questions?
Councilman Campion: That’s it for now.
Mayor Laufenburger: Mr. Gerhardt let’s just hypothesize for a second. We have a very
attractive shopping area called Lund’s and Byerly’s. It’s supported by, on the east side there’s a
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Chanhassen City Council – July 24, 2017
wine store. On the west side there’s a number of things. It goes all the way down to the video so
that’s a, let’s just call that Lund’s and Byerly’s project. At some point in the future somebody
may come along and look at Lund’s and Byerly’s and they may say you know, we’ve got a better
idea and if they came to the City and said we want to tear down the Lund’s and Byerly’s and all
of those stores and we want to build something else. Could we as a City consider using tax
increment financing to help that redeveloper tear down Lund’s and Byerly’s and all of those
other stores and build something new?
Todd Gerhardt: They would have to first go through the blight test.
Mayor Laufenburger: Right.
Todd Gerhardt: And show that the building is substandard.
Mayor Laufenburger: Right.
Todd Gerhardt: Once that’s accomplished what their use would have to be something that the
City would be supportive.
Mayor Laufenburger: Yeah, so they’d have to, it’d have to be a use that would be allowed in
that zone for one thing, right?
Todd Gerhardt: Correct.
Mayor Laufenburger: Alright, okay. But what I’m saying is that, is there any limit to the
number of tax increment finance districts or TIF districts that we can have in our redevelopment
project area?
Todd Gerhardt: No.
Mayor Laufenburger: There’s no limit?
Todd Gerhardt: No.
Mayor Laufenburger: You’re sure?
Todd Gerhardt: Yes. I was asked that question by a legislator.
Mayor Laufenburger: Okay. You gave him the same answer you just gave me.
Todd Gerhardt: Yep.
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: Okay, alright. And is there any limit to how many TIF districts we can
have in place at any one time for us to manage?
Todd Gerhardt: No.
Mayor Laufenburger: Okay. Is this the only redevelopment project area that we have in the city
at the present time?
Todd Gerhardt: Yes.
Mayor Laufenburger: Okay.
Todd Gerhardt: After you decertify 10 yes.
Mayor Laufenburger: Okay. Alright, could you bring back the first slide that you have here.
Okay so.
Councilman McDonald: Excuse me Mr. Mayor before you go back to that to wind up. I wanted
to follow up on something that Mr. Campion had talked about.
Mayor Laufenburger: Okay go ahead.
Councilman McDonald: When, and I’ll address this to either City Manager or the City Attorney
but there were a lot of comments about what the City could do and it was brought up why
couldn’t we just expand this district and you brought up a very good point about you know the
blight test. If we initiate it isn’t that part of a taking on the part of the City if we’re going to
pursue private property and say because of where you’re at we’re going to require
redevelopment?
Todd Gerhardt: No. We were not condemning them out of that property.
Councilman McDonald: Well no if we were to follow through as part of wanting that
redeveloped and they were not in agreement with that.
Todd Gerhardt: Yes. That was in the day back in ’89 we were very aggressive in acquiring
properties and getting the sites prepared for development and then trying to find developers that
would come in to do Medical Arts I. Medical Arts II. Seeing the Town Square happen so at that
time we were very active and then when you do acquire those properties you, if they do have
tenants in there you do have to pay relocation.
Councilman McDonald: Right and at this time that is not the policy of the City to go in and
condemn land for the purposes of redeveloping.
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: That is not the, that is not the practice this council has ever said to me.
Roger Knutson: And there’d be other serious legal problems in trying to do so. The only time
you can go in and tear something down and not pay for it if it meets the condition of a hazardous
building or something like that. Otherwise no you can’t do it.
Todd Gerhardt: Your Best Buy changed that law.
Councilman McDonald: Okay I have to make this statement because I got in a lot of trouble
with the Dinner Theater. We’re not saying that we’re going to condemn the Dinner Theater.
Todd Gerhardt: No.
Councilman McDonald: And we’re not saying that it’s a hazard or that it needs to be torn down.
We were talking hypothetically about it could be any piece of property?
Todd Gerhardt: As a matter of fact they just revamped their fire codes and alarm system and
they have the state of the art alarm system in their Dinner Theater right now.
Councilman McDonald: So that is not a property that is wanting to redevelop which is why it
should not be part of this new TIF district.
Todd Gerhardt: It may be very difficult to define that site blighted because it’s entirely sprinkled
and has a state of the art fire alarm system.
Councilman McDonald: Okay. I just wanted to be clear that what powers the City has and
doesn’t have and we can’t just willy nilly start declaring TIF districts and saying that we’re going
to expand a district into a business area without them right now under policy inviting us in.
Todd Gerhardt: You have very limited power when it comes to eminent domain in acquiring and
redeveloping properties. You’re even limited in buying properties for where infrastructure goes
and Roger would have to give us a lot of advice to see if we even qualify for such a thing.
Councilman McDonald: Thank you Mr. Mayor.
Mayor Laufenburger: Okay you’re welcome. Alright council I don’t want to do anything to
limit questions or conversation or discussion but if there’s anybody that would like to ask more
questions please make that known or make any comments, you’re welcomed to do so. So I’m
looking for a response to the requested action that staff is asking for and that is 3 different things.
Decertification of TIF District #10. That means remove all the restrictions and all the things that
are in place for TIF District 10. That then returns completely to the tax rolls, is that correct Mr.
Gerhardt?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: That is correct.
Mayor Laufenburger: So number one. And then number two is to call for a public hearing to
establish TIF District #11. That’s not establishing it but call for a public hearing. Now can we,
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Mr. Gerhardt can you clarify. If we call for a public hearing could the action on September 11
when you’re asking for that public hearing to come, could the action by the council at that time
be to establish the TIF District 11?
Todd Gerhardt: Yes or can deny it.
Mayor Laufenburger: Or could deny it. So the action at that, you’re saying calling for a public
hearing but you’re saying calling for the establishment of TIF District 11, which includes a
public hearing.
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay.
Todd Gerhardt: And the public would comment on it. And it would also need to go to Planning
Commission to find it consistent with the Comprehensive Plan.
Mayor Laufenburger: Okay, and does that go to the Planning Commission before September
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11?
Todd Gerhardt: Yes.
Mayor Laufenburger: Okay. So this will first go to the Planning Commission and the
determination will be does this plan, and this TIF District plan, is it compatible with and does it
meet the guidelines of the Comprehensive Plan.
Todd Gerhardt: And the uses that you’re proposing to put on there.
Mayor Laufenburger: Okay, alright.
Todd Gerhardt: And notice also is given to the school district and the county of our efforts.
Mayor Laufenburger: Alright. Okay. And then the third thing is to authorize this, if needed, a
$50,000 interfund loan to cover qualified costs prior to increments coming from property taxes.
Todd Gerhardt: Yes. And I would even preference that if you wanted to wait until such a need
comes as staff could bring it back at a later time but.
Mayor Laufenburger: But if council wanted to authorize that tonight they could.
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: They could.
Mayor Laufenburger: Okay, alright.
Todd Gerhardt: You have a nervous Finance Director.
Mayor Laufenburger: He’s always nervous Mr. Gerhardt.
Todd Gerhardt: I know.
Mayor Laufenburger: Okay.
Councilwoman Ryan: Mr. Mayor?
Mayor Laufenburger: Councilmember Ryan.
Councilwoman Ryan: So two questions. Or one question and one request. So in looking at the
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schedule of events I don’t see this, us meeting as an EDA before September 11 in conjunction
with the City Council meeting so will we not have an opportunity then as a separate board to
discuss those?
Todd Gerhardt: I don’t have my schedule in front of me but.
Greg Sticha: That’s the only one.
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Councilwoman Ryan: That’s the only one on September 11?
Greg Sticha: Yeah. That’s the only time EDA will.
Mayor Laufenburger: So the EDA convenes actually for a period of time just prior to the council
meeting is that correct?
Todd Gerhardt: Correct.
Mayor Laufenburger: Okay. And will a public hearing be part of the EDA or part of the council
meeting?
Todd Gerhardt: The EDA would act as a separate group. So we may have to do it a little ahead
of the council meeting.
Mayor Laufenburger: Okay. Is the EDA meeting open to the public?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: Yes.
Mayor Laufenburger: Will the public hearing be part of the EDA meeting or will it be part of the
City Council meeting?
Todd Gerhardt: City Council meeting.
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Mayor Laufenburger: Okay. So what would the EDA be asked to decide on September 11?
Todd Gerhardt: Direct staff to present the Tax Increment Financing District to the City Council
and then approve the Private Redevelopment Agreement.
Mayor Laufenburger: Okay. And the EDA decision of directing staff, essentially staff assumes
that the approval will be there and the staff would then be prepared by present that at the council
level, is that correct?
Todd Gerhardt: That is correct.
Mayor Laufenburger: Okay. And is the EDA, what’s the decision that, what’s the, is it a simple
majority decision from the EDA?
Todd Gerhardt: Yes.
Mayor Laufenburger: Okay, alright. Is that answering your question Councilmember Ryan?
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Councilwoman Ryan: Right no I mean I’m reading this that it’s September 11 so I would like
to have it before. I mean before the council meeting.
Mayor Laufenburger: It will meet before the council meeting.
Councilwoman Ryan: Right in a work session right before?
Mayor Laufenburger: No it will meet, we will convene right here as an EDA and we will then
act on that business and then we will adjourn and then we will convene the City Council
meeting.
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Councilwoman Ryan: And so between now and September 11 we’re going to have no
opportunity to ask the developer to make changes?
Todd Gerhardt: We’ll try to schedule something in our meeting in August or the second meeting
in August to address those issues that you raised regarding parking, building height and roadway
width between the alley just so that’s squared away before we go to the public hearing so council
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Chanhassen City Council – July 24, 2017
has a full understanding of that. We may do it under a work session and but formal decisions
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may need to be done at the 11.
Councilwoman Ryan: Okay. Okay, thank you. That was one and then Mr. Mayor I know you
had asked for this or talked about it at the beginning but if we could have, I would request that
those actions be separate motions.
Mayor Laufenburger: I’m ready for any motion that comes forward.
Councilwoman Ryan: Okay, okay. Okay. Alright.
Councilman McDonald: Mr. Mayor?
Mayor Laufenburger: Mr. McDonald yes.
Councilman McDonald: I’d like to make a motion but I will say that I do want to combine
everything so I will propose the motion that the City staff has before us and that is, the City
Council approves the attached resolution authorizing the decertification of Tax Increment
Financing District #10, calling for a public hearing to establish Tax Increment Financial District
#11, and the authorization for an interfund loan in the future if needed.
Mayor Laufenburger: Okay. Mr. Knutson do we have a valid motion?
Roger Knutson: Mayor you do.
Mayor Laufenburger: Alright. Is there a second to that motion?
Councilwoman Tjornhom: Second.
Mayor Laufenburger: Alright thank you Councilmember Tjornhom. We have a valid motion
and a second. Is there any discussion?
Councilman Campion: Yes.
Mayor Laufenburger: Mr. Campion.
Councilman Campion: So comments. You know I appreciate all the effort that has gone into
putting this development together and I also appreciate the benefit that the proposed TIF offers to
the community. But I’d like to urge my fellow council members to vote against this right now
and instead table this decision until we’ve had a chance to complete the downtown vision study.
The time period in that contract for completing that vision study was supposed to be 3 to 4
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months. If we could accelerate that vision study to 3 months that’s not long after September 11,
the proposed schedule for this TIF hearing. To at least take a step back and take a broader look
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Chanhassen City Council – July 24, 2017
at this developer if there are other nearby properties that might look at redevelopment that might
want to be part of a TIF district. This opportunity to solicit public input and make a broader
decision just seems like an opportunity that I would hate to miss. So that’s my comment.
Mayor Laufenburger: So Mr. Campion you understand that we are not establishing the TIF
district this evening. You understand that?
Councilman Campion: I understand that but if we follow the schedule that’s laid out we likely
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will be on September 11 and the downtown vision study will not be complete by then based on
the schedule that we’ve been told and we’re spending money on that study and if we’re spending
money on that study I’d like it to have true value.
Mayor Laufenburger: Okay. Thank you for your comments Mr. Campion. Anybody else?
Councilwoman Ryan: Mr. Mayor?
Mayor Laufenburger: Councilmember Ryan.
Councilwoman Ryan: Thank you. There are four things that are holding me up against this.
One is very similar to Councilman Campion’s comments about the vision study. We haven’t had
an opportunity to review that. We haven’t had enough of an opportunity to hear from the public
or public comment on a vision study because we haven’t received it. We’d like to have that
before we establish any kind of a district for development. Again when I was looking through
cities across the country and some of their terminology and language that they’re using around
TIF districts. Another statement that you see over and over again is that TIF districts are
established. Excuse me, I’m sorry. They are not set up for one developer but they are to
encourage maximum growth and my concern is that we are doing this for one developer and
we’re limiting the opportunity for growth. We talk about enticing businesses to come here.
Target down, all the way down that list to Town Square. We are doing this for one apartment
building and I understand Aldi’s isn’t a part of that but just for one apartment building with 134
units. I’m not so sure that’s encouraging maximum growth. The third thing is too, as I had
stated a couple times tonight is to promote public purpose and reviewing sidewalks, parking,
roads and overall infrastructure. And again I can’t emphasize this enough when I asked staff to
speak with the developer to come back with a better plan when it comes to the parking. When it
comes to the roads. When it comes to the height. I know we don’t have anything set up in our
downtown area right now with code restrictions but that is something that needs to be
reconsidered. And then fourth, when we were talking getting the tutorial on what TIF district is
and you said risky development and I know you explained it and why we shouldn’t be concerned
but when you say risky development I am concerned because risky development talks
specifically about return on investment and if it isn’t, if the return on investment isn’t right for a
private developers than why would it be right for the City to put taxpayer dollars behind a project
like this? I don’t think we’re ready for it and I’d like us to hold off on a public hearing to
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Chanhassen City Council – July 24, 2017
review those items that I stated and to be better prepared for what this TIF district will mean.
Thank you.
Mayor Laufenburger: Mr. Knutson I heard you saying something. Did you want to make a
comment?
Roger Knutson: Just to be clear, when we talk about risk it’s the but for test. But for financing it
would not go through. There’s no financial risk to the City. They don’t build the project they
don’t get the increment. They only get the increment as they go.
Mayor Laufenburger: So the risk is entirely born by the developer?
Roger Knutson: Yes.
Mayor Laufenburger: And in this case the developer and the retail grocer. Okay. Alright, any
other comments? Thank you Councilmember Ryan.
Councilwoman Ryan: If I could just follow up on that.
Mayor Laufenburger: Sure, go ahead.
Councilwoman Ryan: I understand that there isn’t risk to the City but when they assess risk or
they’re looking at risk they’re saying to the developer you’re not going to get your money back if
you go in and just spend the money that, the $2 million dollars or whatever to redevelop this land
and so my concern as the City is this, are we evaluating this properly to make sure this is a viable
option or opportunity for our city so I understand the difference of risk to a private investor
versus a risk to the city so I just wanted to make sure that I was clear that I understand the
difference of risk. Thank you.
Mayor Laufenburger: Okay, anybody else? I have a question for member Campion. Do you
believe that there is a vision in place for the City of Chanhassen?
Councilman Campion: I do.
Mayor Laufenburger: And why do you believe that?
Councilman Campion: I understand that we have a Comprehensive Plan in place that lays out a
vision for the city. I understand that that plan is being updated currently. I also understand that
we’ve decided to pay a consultant to perform this downtown vision study and if there’s no need
for that I don’t know why we approved it.
Todd Gerhardt: Mr. Mayor?
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Chanhassen City Council – July 24, 2017
Mayor Laufenburger: Mr. Gerhardt.
Todd Gerhardt: The vision study is, it’s more than a snapshot of one little area. It’s a snapshot
of the entire area that surrounds the downtown area. You know what’s the future for Market
Square? What’s the future for Lund’s and Byerly’s? The market in those areas are changing
daily so you know you’ve seen it with the enclosed malls. They started opening them up by
putting strip retail around the outside to show that hey we’re open for business. Come in here
and then they surrounded that with apartments. The Eden Prairie Center took off as soon as they
built all the apartments and the townhomes that were on the property over by Pet Smart in the
kind of the east end of the mall. Put high density residential in there to create a market that’s
within a mile of the Eden Prairie Center and so you know it’s ever changing. Just watch
Southdale and what they’re proposing with large office buildings and condos and hotels trying to
bring people to that Southdale market.
Mayor Laufenburger: Okay, is there any other comment? There being none we have a motion
to, as stated by Mr. McDonald. Let me just pull it up here for a second. It’s a single motion to
approve these 3 actions. The decertification of TIF District 10, call for a public hearing during
which time we will consider establishing a TIF District 11, and also authorize an interfund loan
of up to $50,000 as needed. There being no further discussion.
Resolution #2017-53: Councilman McDonald moved, Councilwoman Tjornhom seconded
that the Chanhassen City Council approves the attached resolution authorizing the
decertification of Tax Increment Financing District No. 10, calling for a public hearing to
establish Tax Increment Financing District No. 11, and the authorization for an interfund
loan in the future if needed. All voted in favor, except Councilman Campion and
Councilwoman Ryan who opposed, and the motion carried with a vote of 3 to 2.
Mayor Laufenburger: Thank you very much council. And Mr. Gerhardt you are directed to
insure that council is given ample time to review as appropriate the redevelopment contract, the
private redevelopment contract between the City and the developer and that that be done in
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advance of the September 11 meeting.
Todd Gerhardt: Okay.
Mayor Laufenburger: Okay? Alright. At this time we will move to council presentations.
COUNCIL PRESENTATIONS. None.
ADMINISTRATIVE PRESENTATIONS.
Mayor Laufenburger: Mr. Gerhardt any administrative presentations?
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Chanhassen City Council – July 24, 2017
Todd Gerhardt: Chelsea Petersen, the Assistant City Manager, Jerry McDonald and myself did
attend the Firemen’s Black Hat Ceremony and it was very well organized. Don did a great job of
making those 2 new volunteer firefighters feel special. To go from probationary employee into a
full time firefighter is something special. You’re part of a team and I know Keagan personally.
I’ve known him for the last 10 years. His dad’s been on the volunteer fire department for over
20 years. I’ve watched him work at Menard’s. I’ve watched him work at Life Time Fitness and
he’s the only kid I’ve ever seen not stand around and talk and just stay busy so he is also a
serviceman and he’s serving our country so we’ve got a great volunteer firefighter. Just like his
dad who was a Chief for the Chanhassen Volunteer Fire Department. Cody, I spent some time
with him before he even thought about being a volunteer firefighter. Ice fishing with him.
Working hard. Never done it before. Wanting to learn. Being eager and just recently being
married. Has a huge goal in front of him of wanting to be a leader in the fire department so
we’ve got 2 great volunteer firefighters for us.
Mayor Laufenburger: I would agree. Thank you Mr. Gerhardt. Any other administrative
presentation?
Todd Gerhardt: That’s all I have.
Mayor Laufenburger: Alrighty. Any comment from the council on the correspondence packet?
Alright. Is there a motion to adjourn?
Councilwoman Ryan moved, Councilwoman Tjornhom seconded to adjourn the meeting.
All voted in favor and the motion carried unanimously with a vote of 5 to 0. The City
Council meeting was adjourned at 9:35 p.m.
Submitted by Todd Gerhardt
City Manager
Prepared by Nann Opheim
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