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03-11-24 CC Minutes CHANHASSEN CITY COUNCIL REGULAR MEETING MINUTES MARCH 14, 2024 Mayor Ryan called the meeting to order at 7:00 p.m. The meeting was opened with the Pledge of Allegiance. COUNCIL MEMBERS PRESENT: Mayor Ryan, Councilman McDonald, Councilwoman Schubert, Councilman von Oven, and Councilman Kimber. COUNCIL MEMBERS ABSENT: None. STAFF PRESENT: Laurie Rokkanen, City Manager; Matt Unmacht, Assistant City Manager; Eric Maass, Planning Director; Charlie Howley, Public Works Director/City Engineer; Jerry Ruegemer, Parks and Recreation Director; Kelly Grinnell, Finance Director; Samantha DiMaggio, Economic Development Manager; Rick Rice, IT Manager; Andrea McDowell- Poehler, City Attorney; and Rachel Jeske, Planner PUBLIC PRESENT: Liz Williams, 7611 Kowa Avenue Al Sherwood, 2182 Stone Creek Drive Linda Paulson, 7603 Frontier Trail Andrew Klinknerl 7606 Kiowa Avenue George Beniek, 412 West 76 th Street Woodrow Piner, North Central States Regional Council of Carpenters, 700 Olive St., St. Paul Mike Leonard, 8129 Stone Creek Drive Mark Frisbee, 7460 Longview Circle Mark Engebretson, 7605 Iroquois Bill Maloney, 7211 Frontier Trail Sue Ribe, 541 West 78 th Street Anna Erickson,, 18658 Kristie lane, Eden Prairie Bob Loken, ES G Architecture & Design, 500 Washington Avenue S Ste 1080, Minneapolis Joan Demeter, 8203 Marsh Drive Nick Asta, Roers Companies, Two Carlson Parkway, Plymouth Nick Anhut, Ehlers and Associates, 3060 Centre Pointe Drive, Roseville PUBLIC ANNOUNCEMENTS: None. CONSENT AGENDA: Councilman, McDonald moved, and Councilman or over seconded that the City Council approve the following consent agenda 'items 1 through 11 pursuant to the City Manager's recommendations: 1. Approve City Council Minutes dated February 26, 2024 2. Receive Planning Commission Minutes dated February 20,, 2024 3. Receive Park and Recreation Minutes dated January 23, 2024 City Council Minutes—March 11, 202 . approve Claims Paid dated March 11, 202 5. approve 202 liquor.License Renewals . approve Final Plat and Development Contract for 53 Rowhornes located at the Southwest Corner of Powers and Lyman Boulevards 7. City Commission Appointments . Award Low Quote, 2024 4th of July Tents, Tables, and.Chairs . Approve Application for Exempt Permit from St. Hubert Catholic Church to Conduct Lawful Gambling on April 2 , 202 10. Award Bid Package e 1 for the Civic Campus Project 1.1. Maintenance Agreement between the Ailey Purgatory Bluff Creek Watershed District and the City of Chanhassen for the Labe Ann Park Preserve All voted in favor, and the motion carried unanimously with a vote of 5 to 0. VISITOR PRESENTATIONS. Liz Williams, 7611 Kowa Avenue, requested additional communication about ongoing projects. She suggested the city send out additional communication including postcards to help bring awareness to projects. Al Sherwood, 2182 Stone Creep Drive, shared concerns about election integrity issues. He reviewed the current absentee ballot process and stated concerns with the signature process. He requested Carver County to male the ballot boards more transparent and for the State of Minnesota to respect current laves. He stated concerns about voting fraud with the absentee ballot process and with the same-day voter registration process. Linda Paulson, 703 Frontier Trail, reviewed previous voting processes and encouraged the government to return to hand-counting votes. Andrew Klinkner, 7606 Kiowa Avenue, agreed with the concerns stated by Liz Williams. He stated there needs to be additional communication with substantial development occurring in Chanhassen. PUBLIC HEARINGS. 1. Consider Preliminary Flat and Site Play request for Market Street Addition; Redevelopment of the Chanhassen Cinema and Hotel (Planning Case �-01 2 City Council Minutes—March 11, 2024 Mayor Ryan thanked residents and businesses for providing comments regarding this project. She commented that Planning Case 24-01 is focused on the redevelopment project, rather than traffic patterns and road construction. Planning Director Eric Maass presented information about Planning Case 2024-0 1. He shared the redevelopment timeline, communications and publications, and public engagement efforts. He reviewed the preliminary plat, site plan, landscaping plan, and parking considerations. Public Works Director/City Engineer Charles Howley shared the vehicle travel routes, including the commercial traffic flows and residential traffic flows and additional traffic considerations based on a city downtown-wide traffic study. Mr. Maass reviewed the proposed building heights, architecture, building renderings, and building materials. Nick Astal Doers Companies, Two Carlson Parkway, Plymouth, shared the excitement to partner with the City of Chanhassen in this redevelopment project. He thanked city staff for their assistance throughout the planning process. Bob Loken, ESG Architecture & Design, 500 Washington Avenue S., Suite 1080, Minneapolis, reviewed the color studies completed, shared the proposed color palettes, and asked for feedback. He explained the architectural design adjustments to date based on staff and public input, including additional stepbacks. Mr. Maass detailed how tax increment financing works to fund qualifying project capital expenditures. He explained the benefits of utilizing tax increment financing for this project. Nick Anhut, Ehlers and Associates, 3060 Centre Pointe Drive, Roseville, shared the tax increment financing plan as requested by Roers. Based on the required analysis, the properties align with the requirements for financial assistance for renovation and renewal tax increment financing. He explained the process for tax increment financing and that the proposed method is the pay-as-you-go option. Mr. Anhut compared the proposed budget with other projects throughout the State of Minnesota. The total development cost is substantial and there is a financing gap of$6.3 million. Tax increment financing can fill the gap in financing needed. He shared the tax capacity of the property prior to redevelopment and following redevelopment. Based on the financial analysis, the tax increment financing would contribute 5.1 percent to the project. This is a relatively low amount, as redevelopments typically have a gap between 8 percent to 12 percent. Mr. Anhut provided an overview of the plan and boundaries for tax increment financing for District 13. The identified tax increment financing would be for the two properties within discussion in the Downtown Redevelopment Project area. He explained that the purpose of the tax increment plan would be to assist with the redevelopment of the designated downtown property between 2026-2041 or until the qualifications were met. Councilman McDonald asked about the ratio of apartments planned and the parking spaces provided. 3 City Council Minutes—March 11, 2024 Mr. Maass explained that there would be 406 structured parking stalls. There was an excess number of structured stalls for the number of apartments proposed. Councilman McDonald asked for the ratio of parking spots per apartment unit. Mr. Maass stated there were 1.56 parking spots per residential unit. Councilman McDonald stated he was informed of a court decision about the counting of parking spaces and that cross-easement spaces could not be counted towards these requirements. He was unsure about the validity of the case but questioned whether it met the requirements. He did not have the court case available. City Attorney Andrea McDowell-Poehler was unaware of this court case. Mr. Maass clarified there would be 1.32 parking spaces per residential unit if they were to eliminate the 45 parking spaces within the easement. Councilman McDonald asked for the ratio at The Venue Apartments. Mr. Maass responded that The Venue Apartments followed the parking study to determine the number of parking spots required. Councilman McDonald shared there would be a lot of traffic at this development and voiced concern about prior development projects that did not provide enough parking for tenants. This redevelopment is retail-focused so residents and patrons both need adequate parking options. Councilman von Oven stated it is unique to bring various options to building design. He questioned whether the architecture of the buildings was finalized. Mr. Cohen responded that the proposal is sensitive and meets development objectives and hopes the City Council agrees. Councilman von Oven asked whether Mr. Loken was seeking feedback on the color choices and how to provide the feedback. Mr. Cohen answered that if there is a strong preference, they could proceed with that option. He was hesitant about opening the options up. He stated each palette stands on its own and should not be mixed. Councilman Kimber questioned if there would be parking on either side of Laredo Drive. Mr. Maass responded that this could be an option for on-street parking. Mr. Howley stated this level of detail has not been determined. As the final details of the design are determined, they will figure out if providing parkin on Laredo Drive is appropriate. 4 City Council Minutes—March 11, 2024 Councilman Kimber asked about the meeting held with Kraus-.Anderson. He questioned whether they had concerns about individuals parking in their large parking lot with additional retailers in the area. Mr. Maass explained that Kraus-Anderson shared concerns about the city condemning land to expand Laredo Drive. This is not the intention of the city. Any additional extension of Laredo Drive would occur with Kraus-Anderson choosing to redevelop their property. As for parking in an adjacent parking lot and walking around downtown to visit commercial businesses, Mr. Maass did not see this as an issue as there is adequate parking on-site to support the commercial and residential properties. The goal is to promote walkability downtown. Mayor Ryan inquired about the future of Laredo Drive. She clarified that the expansion was not the decision of the city or Roers Development but of Kraus-Anderson. Mr. Mass confirmed this information. Mayor Ryan asked if the parking stall requirements do not meet the requirements with the cross- access easement and if there would be an opportunity to approach Kraus-Anderson and purchase parking spots within that development. Mr. Maass responded that private cross-access easements would be negotiated privately between the two private entities if there was a need for additional parking needs. Mayor Ryan stated she was uncomfortable with moving forward if the city was unaware of the lawsuit mentioned by Councilman McDonald. Ms. McDowell-Poehler answered that the City Council would want to research the issue and evaluate the parking needs. Mayor Ryan opened the public hearing. George Beniek, 412 West 76t" Street,, questioned bow many units there would be in this redevelopment and the clientele that they are planning to attract. Woodrow Piner, 700 Olive Street, St. Paul, a business representative with the North Central States Regional Council of Carpenters, shared concerns on behalf of contractors around the Twin Cities. He stated that Roers Companies has been developing multi-family projects over the last eight years. He claimed they have hired contractors with a public record of exploitive and law- breaking practices. He provided examples of these concerns, such as the project of Haven wood of Richfield. He claimed CBS Construction hired Wolfe Construction Company Inc. for the wood framing work of the project. Under the supervision of Wolfe Construction Company Inc., MO Framing LLC was charged with a licensing order from the Minnesota Department of Labor and Industry due to misclassification. He provided another example of apartments in Northeast Minneapolis, where Mayer Drywall was hired to perform drywall work. The defendants had misclassified employees and employment relationships with their insurance company. Another example includes apartments constructed in Maple Grove, where Wolfe Construction Company Inc. was hired. A labor broker working under the direct supervision of Wolfe on this project was 5 City Council Minutes—March 11, 2024 charged with insurance fraud. He provided another example of a complaint handed down in Hennepin County for property maintenance on two projects developed by Roers Companies. The defendant received a complaint for non-payment of wages owed, including overtime. Two other subcontractors with child labor violations and unpaid overtime worked on recent projects for Roers Companies. Mr. Piner stated Roers Companies is the general contractor and is responsible for hiring contractors. He claimed there is a large trail of contractors with red flags who work on Roers Companies projects. He encouraged the city to make sure these exploitive practices do not happen on this project. Linda Paulson, 7603 Frontier Trail, shared the Chanhassen code for parking before November 2023. For one- and two-bedroom housing, the required ratio was 1.5 parking spots per unit. The code was updated to 1.25 parking spots per unit after November 2023 under Ordinance 719. She stated there was a deficit of parking spots and there was an easement issue at the state level. She shared that the difference was 41.25 spots. The City Council adopted new parking requirements in November 2023 after Roers Companies submitted their project plans. She claimed the reduction of required parking spots saves Roers Companies money. She questioned whether the code was changed to accommodate the developer. Liz Williams, 7611 Kowa Avenue, stated there was already a shortage of parking spots. She shared that if there were events or retail along with overnight parking, there would not be enough spaces, which would not encourage individuals to visit the downtown. She questioned how the residents would park in the correct spots rather than other parking spots. She questioned the charge for the covered parking spots and whether it was supposed to be a part of the rent. She stated concerns with residents parking outside because it is free rather than in the covered parking spaces. She encouraged considering additional parking spaces for the downtown area. Mike Leonard, 8121 Stone Creek Drive, shared concerns about Chanhassen becoming a labyrinth. He encouraged connecting Laredo Drive to Market Street. He shared concerns about the tax increment financing. He shared concerns that individuals living in the Roers Companies development would not be paying taxes to help develop roads and schools. He stated he did not understand the purpose of publicly subsidizing a large project. He encouraged connecting Laredo Drive to Market Street to improve business opportunities. Andrew Klinknerl 7606 Kiowa Avenue, shared concerns about people bringing pets down to the south side of the building and having to walk across the traffic flow. He questioned why the city would provide money to a company that did not construct the pet area correctly the first time. He stated Roers Companies has previously developed property and historically sold the property for others to manage. He stated Roers Companies did not listen to residents with concerns about the floors of the building. Residents were not in favor of the building being 5 or 6 floors. He commented there needs to be more communication with residents in the future about project development. Mark Frisbee, 7460 Longview Circle, stated concerns about the timeline of the project. He shared the hotel property has not officially been sold. He shared concerns about weddings booked at the hotel being impacted by the sale. He requested clarification of the timeline. 6 City Council Minutes—March 11, 2024 Mark Engebretson, 7605 Iroquois, shared concerns about the height of the proposed building. He stated Chanhassen would no longer feel unique and be the quaint, small-town feel. He would like to see a limit on the building height. He stated concerns about Laredo Drive not being a through- street and would make traffic congested. Mr. EngeDretson was not in favor of the tax increment financing for the residents of Chanhassen since Roers Companies is financially stable. He stated curiosity about the market value of the hotel. Bill Maloney, 7211 Frontier Trail, encouraged the developers to carry through the theme of the maple leaf in the construction. He questioned where the bicycle parking would be located in the project development. Sue gibe, 541 West 78 1h Street, shared that parking costs $75 at The Venue Apartments. She was in favor of the walkability of Chanhassen as a retired individual. She shared that if property owners do not clean up their dog waste at The Venue Apartments, they receive a fine. Anna Erickson,, 18658 Kristie lane, Eden Prairie, stated a desire to hear about the timeline of the hotel closing since her daughter is getting married at the Arboretum in May. Mark Frisbee, 7460 Longview Circle, asked whether the project could be put to a vote for residents, so they have a say in changes within the city. Mayor Ryan closed the public hearing. Mr. Maass stated there would be 184 units in the west building and in the east building there would be 126 units for a total of 310 units. Mayor Ryan asked how the units were being marketed. Mr. Maass stated the units were market-rate units and were not restricted by age. Mayor Ryan questioned whether The Venue Apartments were at capacity. Nick Asta, Roers Companies, responded that The Venue Apartments was at capacity and has stayed above 95 percent since it was built. It is general occupancy at the market rate. Mayor Ryan questioned what the market rate was in Chanhassen for a one- and two-bedroom apartment. He stated a one-bedroom was $1,500 to $1,700, a two-bedroom was in the lower $2,,000, and a three-bedroom was $3,,000. Mayor Ryan asked for comments about the approach to hiring subcontractors with violations. Mr. Asta stated there was a separation between the general contractor and subcontractor. Boers Companies has become the general contractor to have more control over the subcontractors who were being hired. Boers Companies is actively working on hiring appropriate subcontractors. City Attorney Andrea McDowell-Poe ler stated the issue is a state issue and the city has no authority over approval of a plan like this. There may be authority due to the tax increment 7 City Council Minutes—March 11, 2024 financing, but this would be determined by the bond. She responded that the staff could investigate bow to address this option with tax increment financing. Mr. Maass answered that when a project is proposed that is this lame, the city considers the local track record. He stated Roers Companies has completed many projects throughout the metropolitan successfully. Mayor Ryan asked whether the ordinances for parking were changed for this project. Mr. Maass responded that the Planning Commission bad a plan to review the ordinances in 2023 to ensure they were appropriate for the times. The Planning Commission aligned ordinances with neighboring communities. Mayor Ryan asked for comments about the perceived deficiency with parking. She explained the concern based on previous projects. Mr. Maass stated the number of parking spots throughout the area at the various shopping areas. Mayor Ryan shared concerns about parking spots at The Venue Apartments with the additional residential units and retail. Mr. Maass responded that the traffic study considered the demand for parking at different times to ensure adequate parking spots. Mayor Ryan asked for the process for handicap stalls. Mr. Maass answered that handicap stalls would be determined by the State of Minnesota code. Mayor Ryan asked if there was any need for the city to get involved in the price of parking spots charged to residents. Mr. Maass answered that the city should not be involved with this decision, but the code does clarify that one spot should be included in the base rent. He stated there is no net difference in charging $50 or including this in the rent. Mayor Ryan asked about the role of the city in this decision. Ms. Mc Dowell-Poebler answered that the city should not get involved in rent-related costs or fees. Mr. Maass responded that peak parking demand would be at 92 percent of the parking proposed. This was before the additional spots were added. There would be eight percent excess parking at the peak demand. Mayor Ryan asked whether the city wanted Laredo Drive to connect with other roads. 8 City Council Minutes—March 11, 2024 Mr. Howley answered that they were setting up the project so Laredo Drive could connect. The plans submitted allow for the future extension. If Kraus-Anderson decided to allow Laredo Drive to extend, there would be an opportunity to do this. He stated the vision is for Laredo Drive to go through and the plans could be modified as such. Mayor Ryan asked whether Kraus-Anderson has expressed interest in connecting Laredo Drive. Mr. Maass stated that Kraus-Anderson is not currently considering developing and is not focused on the road connecting at this time. Mayor Ryan asked whether the city could pursue a through road currently. Mr. Howley responded that the only option to do this would be condemnation if Kraus-Anderson was not interested. Mayor Ryan asked for input about pet areas at The Venue Apartments. Mr. Asta stated creating pet exercise areas in this project would be beneficial for The Venue Apartments and the new project. Mr. Maass responded that there are sidewalks to travel safely with or without a pet. The south area for pet exercise is a net positive. Mayor Ryan asked the applicant to provide input about managing property based on their historical management trends. Mr. Asta answered that all projects are set up for long-term holding. Previous projects allowed for selling at opportune times based on interest rates. Boers Companies still owns multiple pro ects created. Mayor Ryan clarified whether The Venue Apartments could provide a pet space. Mr. Maass answered that this requirement would be outside of the scope of the project proposed. Mayor Ryan stated that this development is not a legacy project and is being considered like any other project. She shared that the Avienda project was 160 acres of empty land which has allowed the developer the opportunity to build from scratch. This specific project has more confines, and the downtown is meant to be walkable. Mayor Ryan questioned whether the hotel had been sold and the timeline. Mr. Asta stated the project is under contract. He anticipates closing on the property at the end of the second quarter and construction would begin at the start of the third quarter. Mayor Ryan questioned bow the hotel handles rental agreements in the city. Ms. Mc Dowell-Poebler stated the city has no control over the rental agreements and it is a private matter. 9 City Council Minutes—March 11, 2024 Mayor Ryan commented that there was opposition to the building height, but the building height is not out of the scope of the city code. She appreciated the suggestion to incorporate the maple leaf into the buildings. She voiced the importance of identifying areas for bike parking. She encouraged residents to stay involved in the conversation regarding the design of the roads, especially in terms of cyclists. Ms. Mc Dowell-Poehler shared that the statute provides a certain process towards development and residents cannot vote in this manner. The city council needs to apply reasonable conditions and ordinances to the applications. Councilwoman Schubert asked whether the out West Transit Station would open with the additional apartment buildings. She asked how this would impact the parking in this area. Mr. Maass answered that the station was closed due to a lack of ridership. The staff can follow up with SouthWest Transit staff to determine what level of residents would allow the station to open again. Councilman von Oven asked how much of the tax increment financing money would go towards Roers Companies. Nick Anhut, Ehlers and Associates, 3060 Centre Pointe Drive, Roseville, shared that $6.36 million would be paid out as a loan and should take 13 years to pay off. At that time, the city could eliminate the tax increment financing district. The city could close the tax increment financing district at that time or utilize those funds towards another project that met certain criteria. This is not anticipated currently. Councilman von Oven asked once the tax increment financing was finalized, it would be eliminated. He asked whether he understood the increased tax base after the project. Mr. . nhut responded that the increased tax value should grow by 1.6 percent. Councilman Kimber asked whether another developer requesting tax increment financing for this location would be granted the option. Mr. Anhut answered that in a similar downtown setting, tax increment financing is often expected. The financial analysis he provided of projects in other cities is like this project. Councilman Kimber asked if the developer could ask for more financial assistance. Mr. Anhut stated the developer did ask for more assistance. The requirements are that the council makes a finding to determine the amount needed to make the development happen. The initial request was for a larger number. The amount provided was the necessary amount for the project to take place. Councilman Kimber asked whether the eight percent coverage of parking spots included the parking spots in the easement overlay. 10 City Council Minutes—March 11, 2024 Mr. Maass stated the eight percent does not include the easement overlay. They considered moving the pet exercise area to service commercial tenants and provide an increased amount of parking. Mayor Ryan asked whether the surface parking was for the east building or the retail. Mr. Maass answered that the surface parking was for the east building. Mayor Ryan shared that they received emails asking about the corn stand associated with the Country Inn& Suites. She asked whether there were conversations with the grower. Mr. Maass stated they would find an alternative spot for this vendor to sell sweet corn. Mayor Ryan appreciated the opportunity to look at color palettes. She shared that the building was nicely designed. She wants the development to be on the higher end as the city continues to develop the downtown. She stated the building was flat and plain. She encouraged different design elements to be considered by the City Council at a later date. Bob Loken, ESG Architecture & Design, 500 Washington Avenue S., Suite 1080, Minneapolis, responded that they were open to conversations about change but would want to understand the direction of the changes as they advance the plans to not delay the progress. Mayor Ryan stated they are under obligation to move the project forward. The architectural changes would be minimal. She did not want to delay the project and asked about timing. Mr. Maass stated the city needs to act on a formal application within 60 days. The city can extend this time by an additional 60 days. The original deadline is March 19. If the City Council were to act on the plat and site plan and condition it, there could be requirements to update the plan post-City Council action. Ms. Mc Dowell-Poebler stated if a condition is too vague, it cannot enforce the plan. The better action would be to extend the time of review. Councilman McDonald stated concerns with the parking and voiced concern for the staff to have additional time to answer the questions. Mayor Ryan shared that a City Council meeting was scheduled for March 18, or they could move the decision to April 8. Councilman McDonald was in favor of moving the decision to April 8. Mr. Maass stated the extension is a formal written notice and he could provide this to the applicant tomorrow. Mayor Ryan asked whether the City Council would prefer to add a meeting to the work session on March 25 or April 8. 11 City Council Minutes—March 11, 2024 Mr. Loken stated they could work quickly to respond to the changes. Mr. Maass stated that the March 18 meeting to review the architecture would work for staff and they could allow March 25 or April 8 to present the changes. Councilman McDonald voiced a preference to have two work sessions to review the architecture and the final plat and parking before April 8. Mr. Maass stated if the application is tabled, it would have to be the plat and the site plan to work on the architecture. The action would be to approve the final site plan and architecture at a later date. Mayor Ryan stated there would be a work session on March 18. On March 25, they could review the material during the work session if needed. On April 8, it will be added to the agenda. Councilman McDonald moved, and Councilwoman Schubert seconded that the City Council, continue the discussion until,the final,plat and site plan on, April, 8 with two work sessions on March 18 and March 25. All voted in favor, and the motion carried unanimously with a vote of 5 to 0. 2. Resolution, 2024-�XX: Approve a modification to the Redevelopment Plan, for the Downtown Chanhassen Redevelopment Project Area and Approve a Tax Increment Financing Plan, for Tax Increment Financing District No. 1.3. Nick Anhut, Ehlers and Associates, 3060 Centre Pointe Drive, Roseville, reviewed the requirements for the renewal and renovation tax increment financing district. He outlined the project requirements and requests by Roers Companies as the contractor. Councilwoman Schubert asked if the property was purchased and sold within the timeline of the tax increment financing, how would it be impacted. The city could provide a lookback requirement if they determined to sell the property after the tax increment financing was in place, it could be reduced or eliminated if they receive a profit on the sale. Councilman McDonald clarified the purpose of the vote. Mr. Anhut stated the authority to create the tax increment financing is with the City Council. The administration of the tax increment financing district is by the economic development authority. He answered that if there was a change to the architecture that changed the scope of the units, it could be wise to wait for formal action until the site plan is resolved. Mayor Ryan opened the public hearing. Mark Engebretson, 7605 Iroquois, asked for clarification on the numbers of the acquisition costs for the hotel and the theater. He requested the market value of the hotel compared to the purchase price. He stated concerns with a company requesting tax increment financing if they offered above market value on the property. 12