A-3. Review of Private Redevelopment Agreement for Venue/Aldi lz Y A - 3
C>@ 9CITY OF ClIANHASSEN
S Chanhassen is a Community for Life-Providing for Today and Planning for Tomorrow
NH AS
MEMORANDUM
TO: Mayor& City Council
FROM: Todd Gerhardt, City Manager
DATE: August 28, 2017 OOP'
SUBJ: Overview of Private Redevelopment Agreement with Chanhassen Frontier, LLC
Attached is the Private Redevelopment Agreement with Chanhassen Frontier, LLC. The
agreement calls out that the Economic Development Authority(EDA) finds it is in the public's
best interest to see property improved to enhance the tax base, and as a whole to remove a
structurally substandard building and replace it with a new commercial user and a market-rate
apartment building. The EDA also intends to establish Tax Increment Financing(TIF) District
No. 11, a redevelopment district within the Downtown Chanhassen Redevelopment Project Area.
The redeveloper will demolish the existing building which is structurally substandard and replace
it with a 19,000 square-foot specialty grocery store (Aldi) and a 134-unit market-rate apartment
building(Venue) with underground parking. In consideration of the redevelopment,the EDA
will reimburse Chanhassen Frontier, LLC the qualifying costs listed below while constructing
the "mixed-use development"in the principal loan amount of$1,300,000,the entire amount of
which is designated for the residential component only. The redeveloper must submit evidence,
including paid receipts and lien waivers, for all qualifying costs in the amount not less than
$1,300,000.
Examples of qualified costs Estimates
Cost of demolition $100,000
Utilities $500,000
Earthwork/grading $480,000
Parking structure $3,400,000
Surface Parking $200,000
Principal and interest payments will be paid on August 1, 2020, and each February 1 and August
1 thereafter until the note has been satisfied. Based on Ehlers' proposed schedule,the note
should be satisfied by February 1, 2025. This note is only payable from "Available Tax
Increment,"which means the developments must pay their annual taxes in order to receive 95%
of the Tax Increment attributable to the Redevelopment Property, which will have a minimum
PH 952.227.1100• www.Ci.Chanhassen.mn.us • FX 952.227.1110
7700 MARKET BOULEVARD • PO BOX 147 • CHANHASSEN • MINNESOTA 55317
Mayor& City Council
Chanhassen Frontier, LLC Private Redevelopment Agreement
August 28, 2017
Page 2
market value agreement of$22,058,410 as of January 2, 2019 for taxes payable beginning in
2020. Annual increment is estimated at $294,468. If the developer does not make this annual
tax payment they will not receive the increment to reimburse themselves for the qualified costs
that they have made to the development. This is known as a"pay-as-you-go"note. Once the
taxes are paid, then the qualified costs outlined in this agreement are reimbursed.
The developer is also agreeing to be specially assessed in the amount of roughly$2,100,000 for
Market Boulevard improvements. The amount of the special assessments is further restricted to
an amount not to exceed the tax increment dollars received by the property owners. This is
outlined in both the Private Redevelopment Agreement under"Note B" and the "Special
Assessment Agreement" (see attachment#4). These Market Boulevard improvements are needed
to accommodate additional traffic solely attributable to the new apartment building and site
improvements.
This is a short summary highlighting the intent behind the agreement. Staff will be prepared to
answer any further questions regarding the agreement at the August 28th Work Session.
ATTACHMENTS
1. Private Redevelopment Agreement between the EDA and Chanhassen Frontier, LLC dated
July 19, 2017.
2. Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area and the
establishment of Tax Increment Financing District No. 11.
3. Letter to School District 112 and Carver County on the city's intent to create TIF District No.
11.
4. Assessment Agreement for Market Boulevard Improvements.
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