1993 03 18CHANHASSEN HOUSING AND
REDEVELOPHENT AUTHORITY
REGULAR MEETING
NARCH 18, 1993
Chairman Bohn called the meeting to order at 7:30 p.m.
MEHBERS PRESENT: Jim Bohn, Don Chmiel, Mike Mason, Charlie Robbins and
Gary Boyie
STAFF PRESENT: Todd Gerhardt, Asst. Executive Director; and Paul Krauss,
Planning Director
APPROVAL OF MINUTES: Chmiel moved, Mason seconded to approve the Minutes
of the Housing and Redevelopment Authority meeting dated February 18, 1993
as presented. All voted in favor, except Robbins who abstained, and the
motion carried.
VISITOR PRESENTATIONS: None.
UPDATE ON THE PROPOSED CHRNHASSEN CONFeRENCE/COmITY CENTER.
Gerhardt: Mr. Chairman, HRA members. Included in your packet was a short
update from Don. Right now staff is completing the recreational needs out
to the year 2010 and 2000. I talked to Todd today about it and he's
almost done. He expects to get something over to Curt by next Monday and
then after Curt has a chance to digest some of the information, we'll be
scheduling a meeting between the HRA, Planning Commission and Park and Rec
and City Council. Also, Bill Morrish is going to start gearing up here
early part of June to do his, start his 2002 Vision of the downtown area.
Other than that Jim had a chance to go down and meet with Gary Reitz and
Curt Green and Dick Durner from Mortenson to review some concepts and
layouts. Other than that, that's where we're at to date on the community
center.
Mason: June is the earliest Bill can get going on that?
Gerhardt: He's got some commitments over the next couple of months that's
taking him out of the State and I think he's kind of working on it. I
know with the students coming on this summer, they can put more time and
effort into it this summer than right now.
Bohn: I don't understand why that would be a hold up with what we're
going to do with the development with the entertainment complex.
Gerhardt: It's not a hold up. It's a part of the project. The next part
of continuing to include the programming that Todd's working on and
incorporating that into the long term vision for the community center.
Will there need to be an expansion? Is two gyms satisfactory? Is one gym
satisfactory? Is the pool that we're proposing satisfactory? It was I
think brought up by the HRA and Planning Commission and Park and Rec that
they wanted to look at those long term recreational needs. And Would
there ever need to be an expansion on this facility? Is this an
appropriate spot? Can we expand? Is there enough parking? And we just
couldn't start to look at those issues until Todd could finish his long
range park and rec needs analysis. So that's what we've been waiting for.
Housing and Redevelopment Authority
March 18, lgg3 - Page 2
Chmiel: Mr. Chair I agree with that synopsis because we met with some of
the questions I think that we did not really address originally up front
and I think we have to have all that additional factual information before
we can really come to any decision. At least knowing can we expand. Are
we going to have the proper amount of parking spots within that location?
And we're looking at the projection as to what the growth is going to be
as far as the city's concerned. At some time I think we're going to wind
up with 32,000-34,000 people within this city and I think we should at
least take some of those things into consideration.
Bohn: What I wonder is how is this going to affect Mr. Bloomberg doing
his additions. Along with the hotel...put him on hold.
Gerhardt: No question. It probably will and that's one of the problems
that we're going to have to work out here in the next couple of ~onths. I
know Clayton's working on financing and wants to put t'he addition on and
we're waiting for Curt to come back and work with Clayton on where the
touchdown points might occur over there if the community center was to go.
And I do not think that meeting's occurred between the two is the last
thing I remember us discussing and you know, we've got to answer some
questions. Can the community center physically exist back there if Todd's
study shows that he's going to need 3 gyms or whatever. There's some
questions that need to be answered yet there.
Bohn: How about the bowling alley? John's got to make commitments for
fall leagues. How's it going to affect them?
Gerhardt: Well again, I don't know if there's clear direction. I mean if
it's the HRA's intent for us to move ahead and acquire the bowling center
and to move ahead in those areas, we've got things in place. I think some
of that, we came back and we wanted to take a step back and see where the
downtown's going and that was that Vision 2002 study. Do we want to see
potential movie theatre, restaurant, bowling center remain in that area
and some other points and that we were going to take some more citizen
input on these locations. I think that's what I remember us last talking
about. Mike, you sat in on some of that-stuff when we talked about the
Vision 2002. Was that a little bit of what we-were talking about?
Mason: Yeah, it was. I think you've hitI it on the head Todd. A question
I guess that I have, I'm not sure how it's related. What's preventing or
why can't Country Suites go ahead and add on? Regardless of what happens
to the conference center. I guess I'm just trying to get some things
really clear here.
Gerhardt: We're not stopping Country Suites from expanding. The question
remains is, you know we may have to adapt our building to what Country
Suites does and I think what we were trying to do is to try to coordinate
both together. And it seems as if we're not going to be able to do that.
If Clayton wants to make application you know in the next. couple of
months, you know we're just not prepared to make decisions with this right
now until we complete our studies and determine what we're going to do
back there yet.
Housing and Redevelopment Authority
March 18, 1993 - Page 3
Boyle: I would guess that we should probably complete the studies as
rapidly as possible...
Bohn: Clayton, you had a question?
Clayton Johnson: Clayton Johnson from the Bloomberg Companies. As I
recall we left off last meeting, I made a request that consideration be .
given to try to figure out a way to phase this project so that the public
sector 'didn't interfere with our plans. I repeated that we've been here
for a year and a half now requesting approval to redevelop that side of
the street. I did not get a copy of tonight's packet. I don't know, as
far as I know nothing's happened...and Todd I have to take issue with...
our redevelopment plan is a total one addressing all the issues on the
south side of the street including replatting our land. And we would love
to proceed with the project but I can't proceed...there's two things we
asked. One was to review the issue of Filly's and the bowling alley. And
number two, to deal with the issue of what are you going to do with the
back side? Are you going to put the road thru or aren't you? And that's
what we've been looking for for...we got sidetracked over on the public
side of the project. I'm trying my best to stay out of it. I thought we
had very specific direction two weeks ago to have a special meetin9 where
the charge was, can we phase this thing so we can proceed. '°I"m still
waiting for an answer.
Chmiel: I think that that's a valid point but with the phasing segment, I
think we indicated that the phasing probably could be done but in addition
to that, what the basic needs are going to be which would really address
for the long term future as to what's going to be the need of the city. I
think that's what's really holding it up right now.
Clayton 3ohnson: Well Don, I...
Robbins: Todd, with regards to the bowling alley. This goes back to 3ohn
Dorek. I think I was on record last fall and probably still am, the way I
understand it we have not formally purchased that bowling alley yet?
Gerhardt: That's correct. We're approximately, oh I'd say $200,000.00
different.
Robbins: And I think I also asked or whatever about having an appraisal
or some type of a value given to that property. We've had. a request from
the seller but have we come into an appraisal? In fact, what is that
actually worth for us to buy it. Selling and buying are two different
options and I happen to be in the business so I.do know that. $o do we
really know that we need to buy that? That is the question. I think it's
a very firm question. Not to derail the project. That isn't what I'm
saying. We want to make sure we've got fair value on the dollar yet
coordinate it with the rest of the development. I can't speak for
what Clayton's saying on the.development. I think that issue is separate.
I do realize the cognizance to make sure they're all built together but as
far as the buyout, I think we want to make sure we have an appropriate
value of what in fact we are buying. If in fact we do buy it at all. Has
that been started yet?
Housing and Redevelopment Authority
March 18, 1993 - Page 4
Gerhardt: No, we haven't started an appraisal on it.
Chmiel: I think too Charlie we have a certain amount of dollars in that
facility in itself and I think that's what lends us to looking at the
actual purchase of that. Whatever we would do with it after that, that's
another question.
RobbinG: At this point we do not have a mandate to buy that?
Chmiel: No. No, they're in negotiations and trying to determine as to
the total dollars and the separation, as he says is still there. And I
think once that's determined, then that purchase will probably take place.
Gerhardt: We have a very good idea of what the market value is and we're
looking at acquiring that underneath that market value. 8ut no, we have
not completed an appraisal.
Bohn: When is this study supposedly going to be done?
Gerhardt: The park and rec study?
Bohn: Right.
Gerhardt: Todd is almost completed. He's been working on it for the last
3 weeks. He's doing an overall park and rec 2010, 2000 study for the
recreational needs in Chanhassen. And he should be getting that down to
Curt for Curt to review here next week.
Bohn: What is preventing us from, or I should say from Clayton Johnson to
do the front half of those buildings with the .hotel additions. Maybe a
restaurant or where the hardware store is, retail space .... for us to buy
the land? The backside?
Gerhardt: I guess Clayton, .he wants to package the deal all in one. He
wants assurances that we're going to have control of the bowling center.
Two, he wants us to be able to push a road through the backside over to
Great Plains. Three, he wants to plat his property. Right now if he was
to try to break off pieces and develop things, he couldn't do so unless it
was platted and.
RobbinG: Todd, and Clayton also, back to what you were saying about the
control of the road and having different things because I know you had
talked about hotel expansion and doing some things. Do you need all of
that to expand the hotel or would part of it work or do you, what do you
need to just expansion of the hotel before you get others? I mean what do
you need?
Chmiel: And in addition to that, has any design been even looked at?
Have you architecturally looked at anything or do you have drawings that
we could even see?
Clayton 3ohnson: ...the last year and we are hesitant to spend about, the
next commitment is $15,000.00 if we did a preliminary drawing to the point
where we can even submit for financing.
Housing and Redevelopment Authority
March 18, 1993 - Page 5
Robbins: But assuming we don't have control of the bowling alley tomorrow
and you want construction today of the hotel, could you start construction
of the hotel today and expand 28 rooms or 30 rooms in the area you want to
do it without anything going on...
Clayton Johnson: Can I or should we?
Robbins: That's up to you I guess.
Clayton Johnson: The investment in the hotel is over a million dollars.
We will be providing about $400,000.00 of that ourselves through the
contribution of our land...address a couple of issues. One is, what is
happening with Filly's. Tell us. Tell us what .the answer is. Is that
problem going to be solved or isn't it? The second thing is, the issue...
are you going to put the road through? Are you going to, not do it.
We're saying are you. We're asking, you know I would think after all.the
time and effort we've spent in the downtown, that some consideration
should have been given by the planning staff as to whether that road
should go in...So it's very difficult for me to invest a million dollars
in the addition to the hotel without knowing how I'm going to be able to
plat my land or whether I can sell off the remaining parcels. So the
question, can I? Yes. Should I? No. And we want to separate the issue
of the public project from the private redevelopment. And I don't know,
if it can't be done, it can't be done. That was where we were a month ago
and that was the request I made and that was the purpose or the reason we
were going to have a special meeting. To address this issue of can we
make certain decisions that allow us.to proceed with the private part of
the project while the City tries to make this decision as to whether they
want a convention center or whether they want a recreation center or
whatever.
Robbins: Is the plan for the hotel expansion at this point a model to the
east?
Clayton Johnson: Yes. Fill in the hole.
Robbins: Fill in the hole. Basically that's still kind of this whole
concept yet expand that corridor. So assuming that we couldn't give you
an answer on the rest of it, on the bowling and related, if you said fine.
We want to still do our expansion of that parcel and the road was driven
or something, we could figure out a road answer for you, without the
bowling, would some combination of these parts of the puzzle work for you?
Clayton Johnson: We would hope that those answers...we cannot do both.
...West 78th Street, we will not be able to have...and that's fine but
then you are involved in buying that building and it raises the price a
million dollars. So again, the only thing that's unfair...
Bohn: I agree. It is unfair but I also thought.that we had some kind of
decision coming up at this meeting because we did talk about a meeting in
2 weeks at our last meeting. I never heard a thing about it and I thought
maybe by this meeting we might have heard something. And now it's going
to be like maybe another 2 weeks.
Housing and Redeveiopment Authority
March 18, 1993 - Page 6
Gerhardt: Well there's no question there's probably been some confusion
and I mean, it's not a simple project. I mean Clayton stands up there and
he's got some projects he wants to do and he's got'some empty buildings
but I mean it's not an easy process to go through. You've got elected
officials out there that are hearing, I think the Mayor had a letter out
to solicit input from residents on the idea of a community center back
there. I've heard people say today that they're not interested in seeing
a community center back there. And I heard Clayton say that we shouldn't
look at that issue. Well, what are you building a road for? Why are you
punching a road for? What are you building this road for? Who's it going
to serve? Their parking lot? Because that's what you have back there.
You almost have to tie it in with something. You've got to have a use or
something back there. You just don't build roads to go to the back side
of the Dinner Theatre or to a dance studio. We're going to buid some
parking lots. We talked about buying the bowling center. There's some
questions that need to be answered and there needs to be some decisions
and some direction given on these decisions. I think we've got to weigh
out some of these options. I Just have a tough time seeing us divorce
ourselves from this civic center idea. If it's not going to be a civic
center, then we should start planning on laying the road out and the
parking back there for what's going to happen back there.
Bohn: You say Todd's going to come up with something 'like in a week? Two
weeks?
Gerhardt: As I said, Todd should be completed as of tomorrow and getting
that to Curt Green on his 2000-2010 recreational uses for Chanhassen. Long
range planning. There are some difficult decisions here and those are the
ones we're struggling over, as I just commented on.
Bohn: Well when do we get the information back and when does Clayton get
the information?
Gerhardt: I think Don laid out in his memo that we were going to be
meeting in the next couple of weeks to review Todd's and Curt's analysis.
of the 2000-2010 review.
Chmiel: Just a last question Clayton. With your property, Dinner
Theatre, have you done any subdividing of that property?
Clayton 3ohnson: The Dinner Theatre parc'el? No. That's part of the
replatting. That includes the replatting of the Dinner Theatre parcel.
We have a transaction pending there. I should have gotten this platted 6
months ago in anticipation of this...when it happens it's going to be very
difficult. I don't know.
Chmiel: I'm trying to see if direction can be given here but there seems
to be the cart is ahead of the horse and vice versa. I'm not sure because
of you indicating that a road. should be you know possibly put back through
that particular area. If the property isn't subdivided, we don't even
know where we would locate a road. We have to have someone come back to
us and say, this is what we're looking at, I would think to determine what
we're going to do with that.
Housing and Redevelopment Authority
March 18, 1993 - Page 7
Clayton Johnson: We were at that point a year and a half ago Don until
the City decided to get involved in the two public proj.ects. And had I
known that this was going to go on this long, it would have been done and
you would have had a plan very specific... Again, I go back to our
original request which was a request to redevelop or be the redeveloper on
that property along that street and I thought we had almost unanimous
agreement amongst the HRA members that they wanted to see that proceed.
Now the question is, we don't have the last brick in place before the
first brick goes down and that's the way every development has been. I
think it's unreasonable...especially when the public projects are
involved...
·
John Dorek: My name is John Dorek. My concern listening to this is a
little mixed. I represent the bowling center portion of that building
they're talking about and I made a commitment that maybe was foolish
personally but I thought it was best for everybody. The bowling center I
feel and the hotel as one building could be done, to the way I understand
it, just as Clayton's suggesting. I understand the City's concern but I
thought the City had basically agreed upon certain facts and the facts as
I see them are this. 8 or 9 years ago when the City Council and some of
the people in the city decided the building was no longer good for renting
cars and storage for cars and boats and something else should be done and
they tried, as I recall, to get Cub Food stores or someone in'and
someone...bowling alley not knowing...And through it all I was contacted
and the plan, the idea of the Council was to get some traffic and it
didn't work. We ran as many as 15,000 people a week in a bowling center
complex which of course you couldn't...which is a bad name. In most
parts. I made a decision and changed the ownership enough to eliminate
that as a problem and then further agreed with some of you folks that
given a new concept Filly's would no longer exist and probably be a
restaurant even though it lowered the potential property... My concern is
two fold I guess. I think time is of...I'm running three bowling
establishments successfully. As far as you're concerned, it seems to me
that you want the bowling center as a place where the community can have a
little enjoyment and a little exercise and so on. Although our numbers
won't be 15,000, we do have a wholesome area for the juniors and the
seniors and your citizens enjoy not only the sociability but they enjoy
the exercise and forming friendships and so on. My concern is that that
could be lowered because the bowling business, as you know, most of every
bowling centers we have couldn't pay it's taxes...and eliminating Filly's
will make that a little more difficult. However, the agreement we had
verbally reached would include now the bowling center's purchase of the
bowling center building which would lower i.t's...purchase the bowling
center the taxes and rent would end up with the city regaining the amount
they purchased it plus owning Filly's. So it seemed like an excellent
thing and I was going to be involved in all of this. In the past 2 years
5 bowling centers have gone under. Just in the past week a place on 60th
and Nicollet called Diamond Lanes South announced they were purchased by
the... The dollars aren't there. The arrangement we had made would
enable the bowling center to exist and you could get your money back and
it...good for the community. The Filly's portion could be a restaurant
and so on and the bowling business is such that you can't wait until
September 1st to start September 1st business. I had thought and hoped
that the building that Clayton is talking about and I am talking about
Housing and RedeveIopment Authority
March lB, 1993 - Page 8
didn't have to wait for the rest of it. Could go ahead with that now and
it would really help from a selfish standpoint, me and from your
standpoint...keeping that going which I, as part of a family business
could where if a chain came in, and they won't, they don't have the same
interest. $o it's a particular concern to me to know whether this is
going to happen or not and I've been waiting for months and years...so I
am concerned and I worry about the hotel...anything could be done and
I personally would appreciate knowing what might be done and when it might
be done and again ask you to try to...I'd like you to keep that in mind.
Any questions?
Bohn: Thank you 3ohn. Don.
Chmiel: Well I think we're in a position right now as to what's going to
be completed and that's going to be completed tomorrow for the information
that's going to be provided to Curt Green. I think if we're going to
proceed with location, directions going to have to be given add a
timeframe set up. In addition to that, I think Bloomberg properties are
going to have to come up with some of their thoughts and ideas and not
just discussion but have something drawn up, and I realize that those are
dollars as well. If all of this is going to take place, and the facility
is going to be able to handle our concerns for the future growth within
the city, I think we're going to have to just proceed in that particular
manner because it is holding up a portion of the hotel and some other
pieces of property that are involved for rental as well. But I think
direction's going to have to be given as to what are we going to do? Are
we going to purchase, number 6ne. Number two. What is the long term of
this? How does all this fit together and proceed with it from there
because this has been going on for what? Year and. a half, two years. And
if it's a viable option to-go with it, then we go. If it isn't, then we
pull the plug and let them proceed and do what they have to do with their
facility.
Boyle: What is our next step...?
Chmiel: Well I think Todd could probably elaborate on that.
Gerhardt: As Don laid out in his memo and as I discussed, Todd will
complete his park and rec analysis this week. Curt will digest that in
the next week, two weeks and I see us having a meeting within the next 2
to 3 weeks to go through the planning elements of this area for
recreational needs. If it's determined that recreational needs will not
be met back here, we'll have an answer on that. If it sees that
recreational needs can fit there, I see us proceeding with the
recreational element back thereI. Separate from that, if it's the HRA's
intent to see us move ahead with the acquisition of the bowling center,
we're very close on that but again, I thought that was a part of our
vision study. Is a movie theatre? Is a restaurant? Is the bowling
center itself? As I look back in the packet, there was real concerns of
long range that the bowling center was an appropriate use.
Bohn: I don't know where that came from. I don't know where that came
from.
Housing and Redevelopment Authority
March 18, 1993 - Page 9
Gerhardt: I think it was discussions at the Planning Commission, Park and
Rec meeting. And it was thrown out for discussion purposes.
RobbinG: Todd maybe when you're drawing up that if you could, in all
fairness to all parties, kind of and I think that probably Gary has
mentioned as well...kind of a matrix of if we do this, then this in terms
of yes, no, yes, no. We buy the bowling. We don't buy bowling. What
happens? We then expand and give them the okay to go ahead on the hotel.
Yes, no, yes, no. $o we know the ramifications of each project, whether
it be combined or not combined. What's the going story here because I
think that's all peopIe are reaIly asking is, fine. If the answer is no,
tell us but if it's yes, tell us too. It's kind of a you know, just tell
me. Give them the infor. Bad news is the bad news. It's just let me
know what it is.
Gerhardt: Yeah, and that's what we're trying to do is to be able to
answer some of those.
RobbinG: And we have in 2 weeks?
Gerhardt: The recreational element should be answered in 2 weeks.
RobbinG: Well the total situation so we can just give these guys an
answer. A directive of yeah, you do it or no you don't.
Gerhardt: We can answer them all but it then comes back to the question
on the Vision 2002 and getting citizen input on some of this.
Robbins: Well that's separate from, let's just start with that.
Gerhardt: I would say yeah. In 2 weeks, without the Vision 2002 taken
into account, you should be able to answer the question regarding
recreation in the area. Direction, can you go in and buy the bowling
center? You're very close in that. But it's tough to say that because
I mean it seemed as if the direction was to do that 2002 Vision and to try
to incorporate some of this into that. So I would say in 2 weeks we could
answer the recreational questions and have clearer direction on this, yes.
Robbins: Clayt, would that work for you if you had some type of an answer
within 2 weeks? Whether you have a go or no go plug, would that kind of
work with you?
Clayton 3ohnson: Sure.
Bohn: Is their meeting?
Clayton Johnson: Our meeting is, I think'our next meeting...
RobbinG: Well 2 weeks from now if you have some kind of answer. Yes,
this is going to work or no, it's not going.to work. If you want to go on
your own to continue to expand the hotel, would that give you the kind of
answer that you want?
Housing and Redevelopment Authority
March 18, 1993 - Page 10
Clayton Johnson: Well I guess the question ! have...is there a way for
the whole thing to go forward in two phases? We can go do our thing and
you can do your thing. I thought that's what we were trying to answer.
RobbinG: That's what I'm saying in this 2 week thing. If we come up with
an answer, can we all work with that answer.
Gerhardt: We probably could look at separating things once we've looked
at this recreational type study.
Robbins: Because I'm just looking at it from this is being a very general
scenario but if you look at downtown Minneapolis, we build buildings and
we connect skyways later. I mean it's each project kind of goes on it's
own. You can connect the skyways later. ! see it's not a lot of
different than this. They might want to proceed anyway and we'll connect
up with them later.
Gerhardt: Well I think Clayton said earlier that, there's no question
Clayton can go in and build a hotel like he said.
Robbins: So Clayton could start tomorrow with building tomorrow?
Gerhardt: No, he couldn't start tomorrow. He'd have to meet with Paul
and get a site plan.
Robbins: Okay, then he can meet on Monday then. But the point is, he can
do it regardless of what we decide tonight?
Gerhardt: That's correct. As long as he meets all the city requirements
but he's hesitant to move ahead is what he said, and I'm putting words in
your mouth Clayton, but he wants assurances that Filly's does not rear up
again.
Clayton Johnson: I want some assurance that there...before I sink anothe~
$400,000.00 into it.
Bohn: Whether we do have the community center or we don't, is Clayton
going to be meeting with Green?
Gerhardt: We've always asked Clayton. I mean Clayton and Herb have both
been a part of this process from the beginning and I think they've been
invited to all the meetings. I think they've attended all of them. The
Planning Commission, Park and Rec meetings.
Clayton 3ohnson: That's a...I don't get the packets. I don't get the
packets...
Bohn: I did see the latest drawings that Green had and I've seen the ones
that Herb had. To tell you the truth, I'm impressed with Herb's drawings
more than Green's and the way it was laid out. Actually you could divide
it up very easily and it would cost us less. His version of what the
community center.
Chmiel: Herb, would you like to come up to the microphone.
Housing and Redevelopment Authority
March 18, 1993 - Page ll
Herb Bloomberg: ...and when I think how Market Square was laid out and
proceeded with across the railroad tracks and we didn't have any shopping
center and it was built and we still didn't have a shopping center and you
wouldn't want to be near the long trials that we went through with trying
to find sponsors and investors and one thing .and another. However, it got
done. Well we have now not only got a shopping center, of course we got
the hotel before that. The hotel is going so well that they're asking for
expansion. It isn't a matter of trying to find a hotel. We've got the
hotel. The hotel wants to go. It's making money. It seems to me to make
that connecting wing along the railroad tracks, which seems to be so
desireable and needed, and it's already built and has the transit stop.
That's all in. The parking in there is all blacktopped and it's just that
little connecting ring. And if that were done, we'd be looking for a
customer to build perhaps some sort of a highrise office building right
next to the theatre. It'd just be a basic thing that would work. The
theatre uses parking at night and we've got a great parking space there
available in the daytime. And we're thinking of course that some sort of
a business center adjoinin.g there would give of course the tax increment
that would more than pay for the city picking up that right-of-way and
building that road. If all we could do with to start was to build the
road and have it platted so that our property runs up-to it. On the other
hand, our problem of developing the 7$th Street, and incidentally I'm
hoping that we do get to changing that name. I might put in a plug right
now. I'd like to see it done with some relationship to the Arboretum.
Something because I think we have an Arboretum now that is actually of
national importance. Of course it's owned by the University of Minnesota
and it's a unique and wonderful facility and here it's Tight at the end of
our, it's in our town and we'll have a wonderful connection here if we put
in these access roads on both sides of TH 5. I think the plan, it just
seems to be so perfect and we're beyond the point where it's a gamble.
But however, we do need some design on servicing a corridor to the back,
whether it's the city's more or less involved, and we did get started of
course with HRK but that seems to have, I don't know. I don't seem to
have much communication with them and I wish they would show up or say
okay, here's what we're doing and why. we're doing it. It seems like they
work real good on 24-48 hours and then they go 48 days and I don't see
nothing else happening. But I hope that they will and I think they have a
lot of good ideas and I think we can help to contribute toward that' But
we're ready to go. I mean I think ~f the terrible problems we had on the
north side of the street. Going way do~n to Kenny's area there and the
old filling station and all that, and the just unheard of problems. And
we just went through. We've got a town now that's a going concern. We've
got the biggest people in the country coming in like Target and now the
restaurants and one thing and another, they want to be here. Now all of a
sudden we've lost our courage to go ahead and do something. So I just
hope that somehow or another I'll make any kind of a meeting. Clayton
will and let's try to get our heads together. We've got investors. We
have people interested in, it looks like the theatre is coming out of
bankruptcy here I think something like the 12th of April and we have 2 or
3 people, there seems to be overtures that somebody wants to take that
over. And if they don't, we'll do it ourselves. We ran it for 25 years.
We've got our 25th anniversary coming up next October, the 28th. Been in
the theatre business in Chanhassen for 25 yeats and the first 15 or 20 of
that for goodness sake we didn't have a road. So now why are we getting
Housing and Redevelopment ~uthority
March 18, 1993 - Page 12
cold feet? Ali I'm saying is I'd like to get a vote of confidence. Let's
do something. That's all I guess I can-say.
Chmiel: Thanks Herb.
Bohn: Anyone else have anything to say? Gary.
Boyle: Well it just seems like there's a lot of issues that we've got to
put in priorities here and address it one at a time. I'm confused quite
honestly as to what's the next step. Let's make that decision and then
move forward on it. Is it 2 weeks and we get the report from Todd?
I guess maybe that's our next step right? And then from that we can
proceed forward with the issues and the alternatives available to make a
decision.
Gerhardt: I think you're right on. I mean in 2 weeks we can sit down
with Hammel-Green, Todd's report. Look at the recreational element back
there and, we never proceeded with a project in the downtown unless we
were working on something that was going to go in. I mean we didn't buy
the Hanus building. We didn't buy the Havelick buildings unless we had
some uses that were going to go back in there or work on those. And we
may have put the road in and worked on it at the same time but we had a
comfort that something was going to happen on those pieces too. And right
now I don't think we have that comfort of knowing what's going to go back
there. It's again, not a simple process just to punch that road through.
You're buying two buildings and demolishing them and buying land and it's
something you've got to really sit down and look at. I think that
recreational element, though Clayton disagrees, you have to look at that
use. And if it doesn't, then we move ahead and we plan for the next.
Robbing: Todd, maybe I'm speaking for Clayt too on this one but in terms
of, okay 2 weeks down. We've had the meeting and we've said, okay fine.
We've done our thing. Assuming we did nothing. Could the hotel still
start their expansion on the land that they've got and giving the
direction and making assumptions that they're going to meet up someplace?
In other words, at least it would allow them to start construction of
doing something.
Gerhardt: I'll leave Clayton to answer that one. I think he said it
before.
Clayton 3ohnson: I think I said it before Chaflie. The answer is, could
I or should I. Could I? Yes. Should .I? No. Until we answer the basic
questions. What are you going to do with Filly's? And what is the
overall, is the road going in or not in and allow me to go ahead and
replat my land. I don't think that's unreasonable.
Robbing: No, what I was just doing is just seeing if in fact we could
come up with the best of two worlds here so if we come up with an answer
that no, we can't do this but yet the hotel can start completion, or
I should say. I'm sorry, not completion. Addition to the project, would
that help you at all? That was the question. In other words, expedite
things. Get things going here faster.
Housing and RedeveIopment Authority
March 18, 1993 - Page 13
Ciayton 3ohnson: ...and we are not concerned about our abiIity, and Todd
I take issue with you. We did not have every one of those buiidtngs on
the north side of 78th Street when we first bought the Hanus property.
When we first bought...none of those things were known. -We took a heIi of
a iot more risk back then. If someone came up...and said boo, everybody's
running scared. We're not concerned. If the pubiic does not want to
buiid a pubIic faciIities in the back, I'm not concerned about our abiIity
to continue and deveIop that. It wiIi develop. Land around here is
seIIing at 3 times what it was 3 years ago because of the efforts that
we've made. Why are we so concerned about being abIe to do something over
there? So I...we wiII come to you with a comprehensive pian of what we
are going to do.
Robbins: And I think your plan, I've seen your plans at one time of your
hotel expansion and I think that makes a lot of sense. I'd like to see
you start as fast as you can personally. Just get it going because we
know the direction we're going.
Mason: I've shared some of Gary's confusion here. There's an awful lot
of history that's been going on for the last year and a half, or whatever,
but I think two pieces just fit in for me. I'm hearing'the city say that
we'll know if in fact we need that area for recreational needs. What I'm
hearing Clayton say is, and I'm going to paraphrase. Clayton essentially
doesn't give a rip. If the City doesn:t have the needs, they'll find it.
And if that's the case, then it seems to me that an awful lot is hinging
on what Park and Rec comes up with. And then at that point we either say
the City's going to do this or go with it. I mean is that a fair
assumption on my part here? And then if that's the case, I say we need to
act on this and if it means holding a special HRA meeting in 5 days or 6
days or whatever, so be it. I think it's worth it because I understand '
and I think rightfully so, the wheels of government need to work very
slowly. On the other hand, I think Clayton probably feels they've been
going backwards as opposed to moving forward and I, we agree to disagree
or whatever but I think you've got a good point and I think we need, as
soon as we get this Park and Rec thing in place, we need to do something
and we need to do it yesterday. So I guess I'm in favor of, as soon as w'e
can find out what Todd has to say about this, what Todd Hoffman has to say
about this, we then say we're either going that way or we're' going that
way and iet's do it.
Bohn: I agree. We will hear something from you within 2 more weeks or
so?
Gerhardt: If that's the HRA's direction on that, we will follow it.
Again, there were discussions were to look at the year 2002 vision at our
last meeting and if this is the way you want to approach it, ! mean we can
move as quickly as anybody on this.
Robbins: But I think we have to, as Mike and 3im and all of us'are
saying, I think we have to be fair to our, we've got people waiting in the
wings here wanting to roll on something. I think again, going back to
what I was saying originally, they want an answer yes or no. Just say
yes, it's going to work or no, it's not. 3ust tell them so we don't spend
Housing and Redevelopment Authority
March 18, 1993 - Page 14
a lot of time here. $o I think the 2 weeks is fair. It's going to go or
it's not. If it's not, we do this. If it's going to go, let's go.
Mason: I guess I want to add one caveat to what I just said there. Just
because somebody has a plan, I mean there's still some processes that need
to be gone through here.-
Robbins: Agreed.
Mason: And I'm a very strong proponent of some sort of vision in 2002 and
I suspect with the development that's going in on that side of Highway 5,
I think we can probably fit that into something. Maybe even before 3une
or what 8ill Morrish has to say. I mean I think we have our own vision of
what's going on here too. I mean I'm not looking at haphazard development
and I don't think Clayton is either. I mean clearly he's not with what's
gone up on that side of the street already. But I think we do need to
move and I think that we can handle some aspects of this. I mean clearly
Country Suites expanding, my feeling is is going to happen regardless of
what 2002. Regardless of whether we put recreation there or not. I mean
they need some space and I think we need to give it to them personally.
So I'm hoping that we can do some things in conjunction with 2002. Not
opposed to.
Gerhardt: Oh no question.
Bohn: Clayton.
Clayton 3ohnson: One other thing that needs to go with that though is-we
do need an answer on the bowling center...redevelop or not redevelop that
site...we want to expand. We want some direction...We've never gotten to
square one until we threaten condemnation because it brings the parties to
the table. That's not happened so you will continue to negotiate the
price of the bowling alley from now until the cows come home, until you
start condemnation proceedings. At that point in time...so that's the
other element that has to happen. A decision on the recreation, fine but
you also have to make...
Chmiel: I don't fully agree with your position on the condemnation
portion. I'd rather have a friendly situation take place and resolve it
that way rather than going into condemnation. Condemnation then puts more
length on that particular time that you're talking about than what it
would with this we're going through right now. And I think we're in a
position right now where that negotiation is going back and forth and
that's what I'd like to see pursued a little quicker to resolve tbs
differences in that price that we're at right now.
Clayton 3ohnson: We never have been in a condemnation court on any one of
the parcels but we've started proceedings on all of them. That brought
the parties to the table because all of a sudden you've introduced an
element that they may get less in condemnation court than an offer and
until you do that, I have this just n'ever ending. I don't know. I don't
know what's to be lost by proceeding.
Housing and Redevelopment Authority
MaTch 18, 1993 - Page 15
Gerhardt: Well we're not negotiating even with the bowling center. I mean
there hasn't even been a counter offer from our first one. From our
meetings, out goal sessions with Council, with the Planning Commission,
there was direction, or somewhat direction that we should be looking at
this 2002 vision. A long range planning for recreational needs back
there. It was put on the shelf and everything is on the shelf. There's
agreements with Bloomberg Companies that are 'sitting o-n the shelf.
There's agreements with the bowIing center. They're sitting on the shelf.
Clayton Johnson: Well I didn't know that. I didn't know that. , I guess
that would have been very helpful. I didn't know it was on the shelf.
I haven't seen any Council action nor have I seen any HRA action that has
put it on the shelf. When did that happen?
Gerhardt: Well we've been in negotiations with the bowling center to
purchase that for a year now.
Clayton Johnson: No, but you said that's on the shelf.
Gerhardt: The purchase agreement's on the shelf. It's been put on hold.
We have not countered OUT previous offer.
Clayton Johnson: Who put it on hold?
Gerhardt: I would say between our goal sessions and the vision 2000 put
it on hold. Not clear direction that we want to own that bowling center
until we know what the long range plans for it are.
Chmiel: Well too, you know other thing that I Just wanted to mention,
with the City going into this, you're saying you're going to involve a
million dollars. The City's going to involve a beck of a tot more than a
million dollars into the complete acquiesce of all those properties. Your
properties as well as to building the conference/community center. So
we're moving rather precautiously to determine what's the best for us as
well and I know that your interests are there because we want to see that
expansion go as well. But the dollars that are going to be involved from
the city's standpoint is going to be anywhere from 5 plus million dollars.
And I'm not talking about the purchase of properties besides that.
Clayton Johnson: I guess that direction, if it has been put on hold would
have been very helpful to us as developers to have been informed. Nobody,
I've never, I haven't attended one of these meetings where that has been
said. I haven't attended a Council meeting where that's been said.
Chmiel: Well, I think that's inmaterial right now.
John Dorek: Just two things. It's been mentioned about recreation. Back
to bowling. The two bowling centers in Edina no longer exist because for'
instance Kraus-Anderson who's a pretty knowledgeable company will not have'
a bowling center without a bar. Filly:s, we agree Will be out of business
on the present plan. However, I'd like to caution you that if it is and
if it doesn't happen, I'd like to caution the Council or whoever it might
be to see that if Filly's remains in business, that you take some
protection so you don't get where the City of Shakopee was and not have
Housing and Redevelopment Authority
March 18, 1993 - Page 16
male strippers, topless and so on. I don't think they have, Shakopee
ended up with that without having any law or whatever against it.
Chmiel: We have ordinances against that John.
3ohn Dorek: And the operation as it exists now could do things like that
and you want recreation, that's a big part of the recreation of the
community and if you lose it, you won't get another one.
Bohn: We' 11 move on to our senior housing then i
Gerhardt: 5o the direction is to meet in 2 weeks to review the
recreational analysis and report back to the HRA with that?
Bohn: Right.
Gerhardt: Okay. We'll send that out.
Mason: It seems to me along with that then, the City or HRA or both...
(There was a tape change at this point in the discussion.)
Clayton Johnson: If you decide not to buy Filly's and Filly's owners sell
it to somebody else...
Gerhardt: Well we can't stop that or encourage it I guess unless we can
go out and find somebody to come in and buy it. I don't know who we could
do to do that part. For us to buy it, I mean they're delinquent on a loan
to the HRA. They're due 3 years back taxes. We are the best person to go
in and buy it for a little cash out of, say you had to buy it for
$800,000.00. We'd ~ave to probably put up $300,000.00 because they're
$500,000.00 in the hole to us already. Because of back taxes and loan
payments.
Krauss: Mr. Chairman, if we could, we're still waiting on Arvid Ellness
to arrive. He had a prior commitment for item number 3..If we could go
over to item number 4 and I think he would be here by the time we're
through with that.
PRESENTATION 8Y JULIE FRICK, CAR%~-R Cf~JNTY HRA EXECUTIVE DIREQT0~, TO
DISCUSS RENTA~ HOU$IN~ OPPORTUNITIES.
Krauss: If I could give a little bit of introduction. Julie Frick is the
Carver County HRA Director and we've been talking with Julie on and off
over I guess the last couple of years abc,mt the possibility of doing some
moderate cost housing in Chanhassen. From time to time we've heard that
there is a significant need for more moderately priced housing in the
community. I think Brad Johnson's got a project going in that partially
meets some of that need but the need is pretty large and I think many of
you have probably bumped into 3erome Carlson and beeo given the story of
how he can't find people who can afford to work for him, who can afford to
live in our community. And significantly there's a lot of legislative
maneuvering right now, I know the Mayor is familiar with the Orfield Bills
and what not, that are probably going to wind up placing some significant
Housing and Redevelopment Authority
March 18, 1993- Page 17
goals if you will, on individual communities to take the'ir fair share.
Chmiel: Burdens.
Krauss: Yeah, however you want to phrase it. But I think quite
rightfully we've always driven to be a full service community. I1 mean
this is a full community in all the sense of the word. I mean we have an
item here tonight to talk about taking care of our senior citizens. We
have very active youth programs. We have a vital employment sector. I
mean this is not a bedroom community by any means. And there's a sector
of our housing market that we're probably not addressing and with that
I'll give you Julie. This is one option that we'd like to look at
possibly, if you're interested in reaching that housing segment.
Julie Frick: We, the Carver County HRA retained Maxfield Research Group
in Minneapolis to do a market study for us. The requested area was the
Chaska-Chanhassen area because that seems to be where a lot of the
industry growth has been and probably will be for the next, until the year
2000. The problem with addressing that area, what happened was when they
came out here they checked with Eden Prairie because there's a lot of
growth there. They don't have any more multi-family land left to develop
so that's pushing the need out to Chanhassen and to Chaska. To our
surprise, they suggested that, or it came up in the study that by the year
2000 we're going to need 1,055 units out here, new units built out in the
Chaska-Chanhassen area to just supply the demand. The growth has been
incredible out this direction and they perceive it to continue to grow.
The workers in the communities are commuting quite a distance to come to
work. They're living out farther. They're going either from Minneapolis
and coming out or they're going out to Glencoe and coming in. Hutchinson.
Where the housing is a little bit more affordable. But my goal is to try
and get the communities to be aware of what's happening and the calls that
my office receives day after day after day of people working out here that
can't live here. We only have so many Section 8 certificates and vouchers
to go around and it's certainly not enough to supply the demand. I think
the housing that we need to try to address are for the incomes anywhere
from $12,000.00 to $26,000.00-$27,000.00 a year. They're having a hard
time making the rental payments. The other issue that we found was that 3
bedroom units were almost nil in existence in either city. I think Chaska
had 73 units and that counts Hazeltine Shores that nobody can afford to
live in. And Chanhassen had $. And if you've got 2 or 3 children and
you're both working, I mean you need a 3 bedroom apartment or a townhouse
or something and there just, they just are not existing out here. I would
like to work with the Chanhassen HRA in a joint powers with the Carver
County HRA to try to develop this housing %bat's needed. We can't build
low income housing. The money is not there anymore but we can try to make
it so the people can afford to live in the community where they work. -We
predicts the rents to be, if you can get a 3 bedroom unit for $700.00 or
less, you'd be doing quite a service to the people that are working here.
And with that, unless you have any questions.
Boyle: 3ulie, at a $12,000.00 to $27,000.00 a year, what's a monthly rent
that's affordable for this income group?
Housing and Redevelopment Authority
March 18, 1993 - Page 18
Julie Frick: They're figuring about $565.00 'to $675.00, depending on the
number of children.
Gerhardt: Those for 2 and 3 bedrooms, and what's the current market rate
in Chanhassen for 2 and 3 bedrooms?
3ulie Frick: They're suggesting that we try and build a 2 bedroom unit
for $$00.00 to $525.00 and a 3 bedroom unit for $600.00 to $625.00. We
realize that utility costs out here are variable so even if you can get in
at $675.00, you're doing a pretty good, I mean you're building a pretty
good unit. At least it will be nice and affordable.
Gerhardt: But aren't the 2 bedrooms right now going over $700.002
3ulie Frick: Some of the units-in Chanhassen are over $700.00 for a 2
bedroom.
Robbins: I guess could I ask Brad, I see Brad 3ohnson. Would you like
to, you're in the real estate rental area. Comment on the market of what
Chanhassen, the 2 bedroom'apartments are here in this area? Is that
something reachable?
(Brad 3ohnson's comments were not being picked up on the microphone very
clearly. )
Brad Johnson: To build a 2 bedroom apartment in Chanhassen today without
any type of assistance...and to build a 3 is up around $$50.00. Without
any assistance. There are no housing units being built here...I'll
address that a little later... There are ways of solving it. It's just a
matter of...
Krauss: I really think you need to look at a lot of different options. I
mean we've been working with Brad on his project for quite a while and if
done right, his project can start to edge into meeting that need. I mean
Julie's got some other proposals to do it. The fact is is there are no
government housing programs out there like there used to be in the last
couple decades. The fact is, Chanhassen did not get it's share of the
multi housing boom that occurred because of tax law gimicks that ended in
the mid 80's. And demand was high too. And also the fact is, we have
very few older apartment buildings that have, in a life cycle of housing
kind of meets the needs because it's Just older and rents for less.
Nobody's suggesting that, I mean clearly we have some pretty high
standards for what a project has to look like and how it fits into our
community. And nobody would ever suggest that we compromise on that but
we do have a section of our community, and I don't know Mayor, when your
kids get old enough to move out of the house, they've got to move into
Minneapolis because they can't afford to live here. It is becoming a
problem and as I say, anybody who's been button holed by 3erome can hear
it at length. When some of the major industrialists in our community are
saying that they can't find employees because they're trucking them in
from 20-30 miles away, that represents a pretty significant cap on how
this community's going to develop in the future.
Housing and Redevelopment Authority
March 18, 1993- Page 19
Robbins: Not to complicate the issue but I am in the mortgage lending
business and it doesn't matter who I'm with, it's irrelevant but 'it turns
out that we've got kind of a catch-22 here because through the Minnesota
Housing Financing Authority and MFHA there's a lot of funds available for
a variety of housing options, etc, etc. County driven. State driven. I
do bond loans, etc. The point is, you come under an income restriction as
well as a sale price restriction. Unfortunately Chanhassen, we're above
the sale price restriction so we can't physically do that because our
housing here is above the sale price of what a person can do anyway. So
we've got ourselves caught up here. The person you were mentioning their
rentals are $700.00, $720.00. Based on just a qualifying ratio, that
would be bigtime as far as a house payment. Unfortunately it doesn't fit
into your housing to buy a place yet. You have to rent one to fall under
these guidelines. So we've got ourselves caught.
Mason: I hope I'm not, I don't think I'm speaking off the cuff here but I
think since I've been involved in city government in Chanhassen I found
our city to be extremely progressive. I think of the SWMP fund. I think
of what we're trying to do along Highway 5. With the ratio of people
working, with the amount of jobs that we have in Chanhassen, I think it's
paramount that HRA and City Council find ways to alleviate that situation -
I know one of the reasons we have tax increment financing in this city is
so we get dollars back and we can spend them in Chanhassen instead of
giving money to the State and then never seeing it again. I think there's
some options we really need to look at here. I share the concerns that
I'm hearing from people here. I think it's really important that we take
a really long hard look at this and we need, I think we need to do
something about it.
robbins: Just coupling on that is that, if you look at our letters HRA.
H stands for housing and we've been kind of heavy into redevelopment for a
while and I'm not going to totally ascertain that we've been looking into
housing necessarily and perhaps that's a point we should address also.
Because H is within our Housing Authority to do this.
Bohn: Sounds goodi Gary.
Boyle: I was kind of under the impression it was a project, or one of the
projects listed, and I haven't seen a whole list of projects yet. Am
I out of line? I mean does anybody know...list of projects that we're
supposed to address?
Chmiel: No, I don't think it's on our specific one at this particular
time.
Mason: It sounds like maybe it needs to be.
Gerhardt: Well it's on your agenda tonight as one of the items. And I'm
sure between Brad and I will explain that later on in the agenda as a
stepping stone.
Mason: I guess if I just could. I've also been doing some reading on
what our friend Mr. Orfield is trying to do and it seems to me, anything
we can do to counteract that would be really good and I think perhaps
Housing and Redevelopment Authority
March 18, 1993 - Page 20
there's more than one way to skin a cat or whatever you want to call it
and if we start taking some initiative on some issues, it seems it would
take the wind out of some of his sails. And I guess ! see that as a
pretty positive step for a whole number of different reasons.
Gerhardt: Well I think M~. Orfield has his reasonings but I'm saying the
market's here now. 5 years ago you know.
Mason: It wasn't; yeah.
Gerhardt: The pressures weren't there. I mean. Jerome would have loved to
have to pick and choose from employees but I think the pressures are great
and I think 3ulie will say, well Todd, 5 years ago there was a problem
then too. But I think it's at the point where we really have to make some
tough decisions and start working on some projects and laying out some
goals.
Krauss: Well if you're comfortable, I mean it sounds like you're
interested, we'd like to continue to talk to folks like 3ulie and Brad and
come up with some ideas for you to consider. It sounds like we should be
going out there and beating the bushes and trying to put some things on
your plate to consider.
Mason: I'd like to see that.
Chmiel: Yeah, I think it's something we should look at. As Paul has
said, each of my kids who have had an opportunity to leave home and come
back home and leave home and come back home, and go somewhere else, or try
to acquire properties somewhere, they all have had to move out of town
because they couldn't afford those things. But at the same token, 3ulie
does the County have any dollars that would be available to even
supplement some of this through the city in proposing what we're looking
at right now?
3ulie Frick: Well we're just now working on our first housing deal. I
mean up until now the County Board hasn't even let us do any housing
either. I mean we've only done the rental assistance and housing rehab so
we are just now going to close on our first housing project on May 1st and
that's acquiring an existing 72 unit building and we're going to be
building 20-3 bedroom townhouse units'on the adjacent land that comes with
the project. We are putting right now $100,000.00 in reserve out of our
levy to do projects with. If that's going to right the ramstone, I don't
know. I can't, I would hate to say to ~ou that the Carver County HRA is
going to commit $50,000.00 worth of our levy every year and then I've got
to go back to the County Board every and ask for that levy and if they
don't give it to me, then.
Chmiel: Yes. I know, I've worked with your County .BOard.
3ulie Frick: Then I would feel pretty bad, and not only for you but for
the residents that are in there counting on it. I think that there are
some other options that we can look at to try and get.some, Northwest Area
Foundation dollars into it or Federal Home Loan bank dollars into it to
get the project costs down initially to keep the rents, even though the
Housing and Redevelopment Authority
March 18, 1993 - Page 21
market rate, at least at a rate that the people working here can afford to
pay without worrying about a yearly subsidy.
Chmiel: Are the total amount of units normally dictated by population and
what are those numbers involved as you look at it, or percentage?
3ulie Frick: I'm not sure I understand the question.
Chmiel: Well I think Paul understands.
Krauss: You mean the total number of units in that price range that we
should be looking at?
Chmiel: Well, in that particular price range but also as you look at the
community, how many of these should be put within the city?
Krauss: Oh! I don't know if there's a good guideline Mayor. You know
our Comp Plan speaks about diversity. Metro Council speaks about
diversity. I think it means a lot of different things to a lot of people.
When Orfield speaks about it he views, and with some justification, that
the older urban areas have become almost a dumping ground if you will. If
you can't afford to live in the suburbs, that's where you live. And yet
we have the better schools. We have the employment opportunities. We
have the parks. We have the lifestyle that's good and healthy and I think
there has to be a middle ground. I mean there has to be some mechanism
for the urban areas to bounce back and there has to be some regional
understanding that we're all part of the same region. We all have to
provide some amount of housing. It's one of those intractable problems. I
mean this country has never managed 'to resolve it's housing situations. I
think it's pretty much of a national disgrace honestly. And I don't think
we can do it here. I mean Chanhassen's never going to be in a position,
nor should we try to fix all the problems but I think we can make a start.
I mean clearly there's a lot of sensitivity around these types of projects
and calling them projects is probably the wrong word to use because that's
not what anybody's envisioning. What we're talking about now is housing
for working people. There may well be some'opportunities in the next year
or two as well. I mean we keep hearing about rumblings that the new HUD
Secretary is trying to reinfuse programs. They found several billion
dollars that had never been appropriated. Well it was appropriated but
never spent. Says something for their accounting system. So you know I
think if we keep our eyes open and work with 3ulie, work with Brad and
work with other folks, I think we can bring to you some ideas for your
consideration. And at this point that's all we can ask because we don't
have anything to give you with certainty.
Bohn: Thank you.
Chmiel: Thanks for coming 3ulie. Appreciate it.
SENIOR HOUSING MARKET STUDY. PHASE II. SITE SELECTION.
Krauss: Mr. Chairman, if you don't mind, I'll take a shot at giving you
the housing market study since I don't see Arvid here and he's... At your
last meeting we talked about the Phase I of the senior housing study.
Housing and Redevelopment Authority
March 18, 1993 - Page 22
You'll recall that what we did is broke the study into two phases. The
first phase was to ascertain, is there really a need for senior housing in
Chanhassen. And if so, how many and what should it look like and what
kind of price range. And we came back with an answer with our folks at
McComb Group and Gall Davidge is here again this evening. She presented
to you last time. That was a little bit different than what we had
thought about going in. I mean originally the Senior Commission had
envisioned kind of a one story garden townhome type of project. And that
wasn't what we heard back. What we heard back is the need, and there's
very distinct categories of senior housing. That the need was for
something that's called a more congregate housing style, and that's kind
of a tough word to chew on as well because this is not the highrise
building that you see on Park in Minneapolis. This is not even a highrise
building that you'd see in Edina down by Southdale or that kind of thing.
What we're looking at is a 2 to 3 story building with very reasonably
sized apartments. Oversized really for the senior market because we're
going to have people who are coming from single family homes coming into
these things. With underground parking. With a lot of public open spaces
inside the building. Very airy feel. Very attractive units and it was a
little different than the Senior Commission originally thought and I think
it was because we have some very active, this is our original Senior
Commission, with very active women who were in single family homes and
they were thinking well what's the next step they're looking for. Well,
this turned out to be what the demand was and the Senior Commission has
been traveling all across the State looking at comparable projects and has
a long list of ones that thew like in this type of range. We then kicked
the study over to it's Phase II and Phase II was to use Arvid Ellness and
his staff to develop some sort of a prototypical footprint. What kind of
space needs would such a project have and where would you look to site
one. And then to take a variety of sites around the community and check
them out. Now there were some parameters in locating these things. First
of all it was clear that it had to be in the TIF district because it's
been clear to us that we needed to have the availability to tap into those
funds to make this affordable. The key for this thing has always been to
develop an affordable senior housing project that protects people's
dignity. That offers a valuable full continuity of housing for our
community. That unlike many federally sponsored programs, doesn't require
the individual to destitute him or herself. You know to spend.down to
give away their money so they qualify and that kind of thing. So clearly
it had to be in the TIF district. Secondly we felt it was reasonable, or
there should have been a goal to have it someplace close to our CBD, or in
it preferrably. We have a great business district that's pedestrian
accessible. People can walk to everything they need to. It would be a
shame if you put a group of our, a sector of our population that maybe
didn't around as well or was a little bit more sensitive to the weather
out where they had to drive to everything'or take a bus or whatever else.
So it's preferable that it be in downtown and that was even boosted more
firmly by the, when we opened up the Senior Center because that's
something that a lot of them are spending time at. Anyway, we sat down
with Arvid Ellness and Gayle Davidge and Todd and Sharmin and I and came
up with a long list, surprisingly long list of potential sites. Now this
was including all the possibilities.and we realized that some of them were
pretty far fetched but we wanted to have it looked at. On about the 4th
or 5th page in you see what a footprint of the building might look like in
Housing and Redevelopment Authority
March 18, 1993 - Page 23
terms of the unit mix. It's been shown as a U shaped builidng with
underground parking. Very airy. Well lit units and that sort of thing.
Arvid's staff then took the sites, we gave them site information. You can
see that in your packet. Each site was assessed. Does the unit fit on
it? Is it appropriate? What kind of criteria does it meet? How does it
work? And then it was summed up in terms of which are the primary 3
sites. Which are the next 3 and so on. Basically our primary 3 sites
were called 8, 13 and 5, in that .order. 8 is the, well right across the
street from City Hall. It's owned by Charlie 3ames. It's really
perfectly situated in terms of a housing project. It's across the street
from the shopping center. It's across the street from Target. It's
across the street from the city park. It's across the street from the
senior center. There's some, I mean none of these sites is perfect and
one of the downsides here is it's'expensive. It's commercially zoned and
Todd and I really haven't had a chance to sit down with Charlte and go
through it but did you suggest'it to him briefly?
Gerhardt: I had an opportunity to meet with Mr. 3ames and I guess I broke
the water and let him know that we were considering'his site for a future
senior housing project. He was delighted, to say the least. Not. He was
however after, I'm used to this.' I've talked to him several times and we
have a good working relationship and after he settled down and we started
to laugh again, he said you know, I've always wanted to own an apartment
building and he said, if I was ever to own an apartment building, I'd love
to own a senior housing apartment building. So he's receptive to the idea
of senior housing somewhere on his site and would consider trying to
incorporate it somewhere into his overall development plan and I think
there is an opportunity, if that is a site that is considered, that I
think the HRA would work with Mr. 3ames in trying to make his life long
dream of owning an apartment building on his site somewhere. And I think
Paul and I will probably be meeting with him in the future to discuss some
of those things. It may not be on the larger portion of the land but
somewhere within his development I think we could look at some
possibilities and he's got a user right now that I guess is looking at it.
There's a market study being done on the larger piece of his property and
I think that's the best way that we work together with people. Trying to
incorporate it in everybody's overall development and we may not see eye
to eye on a lot of things but I think we, downtown is the result of
working together on things.
Krauss: The two other primary sites, actually one of them is kind of a
dual site. The number 2 rated site was right next to City Hall, right
north of the building and I don't have the board handy but if you recall,
the full development of City Hall concept with the City Center, you know
the park, Town Square Park and the gazebo and all that. The north side of
it was putting the road through and the parking area and the proposal
basically would locate a senior housing project just north of that new
parking lot. Either where the hockey rinks sit now or where the open
skating area is...
Gerhardt: Charlie took it better.
Krauss: Todd, well let me say this. Todd is obviously, he's very
concerned about his park. This is one of the primary high activity parks
Housing and Redevelopment Authority
March 18, 1993 - Page 24
in the city and he clearly wants to protect it's continued utility. One
of the things that we tossed on the table is there's about 5 acres of
land, vacant land next to the apartments on the north'side of .the park. Is
kind of buying that and giving it-to the city park and relocating some
facilities and essentially swapping. The site has some neat advantages. I
mean it's up high. You can almost drive into a lower level without too
much difficulty. Depending on how you think about it, the mix of seniors
and the recreation can either be neat or not. I tend to think it would
work pretty well. It's also pretty close to everything in town and to the
senior center, although you've got to walk around the hill and that. 8ut
that's got some potential as well. The third rated site's a'little
tougher and I think you can see where you very rapidly start to dwindle
the sites down. The third site is on 79th Street and it's the property
that you own next to the bank. It meets the criteria of being in town and
it's not too awful far away from the senior center, although the walk's
getting a little tougher because you've got to come across the train
tracks. That site has a couple of problems. The first being that it
really isn't adjacent to a residential area. It's smack in the middle of
a commercial area. And the second one being that it's got a high water
table and we really didn't have the budget at this point to ask Arvid to
explore, you know is it really possible to do underground parking there.
You may have to bring in a lot of dirt and raise up the building but.it's
a possibility. I won't take up your time going into the other sites. I
.
mean you can possibly ask questions if you have them there but those are
really the 3 primary ones. If you have any that we missed, I'd appreciate
knowing. What we're asking tonight is basically for you to accept the
document or change it and accept it and kind of give staff the nod to do a
couple things. We'd like to start talking seriously to property owners to
see if we can put together something that we can bring back to you. We'd
like to have some dollars so we can continue, you know honing in on, yes
Mayor, some dollars. Once the, selecting a site's kind of tough unless we
have some, you know we can massage a design around to know that as we're
closing in that the thing works and it's going to be what we'.re looking
for so I was looking for some dollars set aside for that. The last thing
I wanted to ask you for is. some dollars so that we can bring in some
financing expertise on this. We've talked to a few people about it.
There's lots of different ways to package this kind of project. I mean
from full public ownership to full private ownership which isn't likely to
happen. The full private ownership isn't going to happen. Not in the
price range that we're looking for managed how we want to. Full public
ownership is certainly a possibility. I mean we never envisioned managing
the kind of a project like this where you hire a professional manager. An
Ebenezer or Lutheran Brotherhood, or one of those kinds of things. To do
that but there's a lot of variance in the middle we find. I mean when
Todd and I and Don have talked about this project over the years, we've
tried to be real creative. We've tried to set it up in a way that meets
the guidelines of offering a very economical project. Housing option for
our seniors but may offer an income stream for the city. Once you build
it with tax increment dollars, if you write off those expenses you can
charge them modest rates and feed back revenues into the general fund over
a long period of time. Then we became aware of a number of financing
options that were sell the tax write offs to private developers. I think
the power companies in fact have some kind of a deal where they buy into
these things. So you know a mixed public/private partnership is starting
Housing and Redevelopment Authority
March 18, 1993 - Page 25
to sound pretty good. And you know maybe something'with Charlie. Maybe
something with NSP. There's a lot of things out there. And we are, we
just don't have the expertise to put together the best palette of options
for this thing so we were looking to have the opportunity to bring
somebody in who could advise us on this. Tell us'what current tax laws do
and tell us what the advantages and disadvantages are. With those three
items I think we've got a lot of work ahead of us but it would put us in a
position of being able to come back to you 3 months, 6 months from now,
whatever, with a pretty concrete proposal of how to bring this thing off.
With that we'd like to have your comments and any direction you can give
US.
Robbing: What I'd like to comment on is on the staff recommendation'
section of the, it lists dollars. I'm sure we've all read the, in the
future the matrix of people, their aging, etc. I guess I would, the issue
of say the seniors, the way we define that, is going to be a larger and
larger picture as each year goes on in Chanhassen. It will be a larger
and larger part of our city. It talks about dollars exceeding, what I
would like to do is to make a motion on the staff recommendation of the
dollars on senior housing. Changing the figure of not to exceed 5. I'd
like to change that to $8,000.00 and then secondly, where it says a figure
not to exceed $7,500.00. I'd like to change that to $10,000.00 and for
senior housing exploratory. Not exploratory. Research for this because
this will be a major factor within our city. $o I make that as a motion.
Chmiel: Before I would second the motion, I guess I have a question.
Regarding the total amount of dollars that staff is asking for. It seems
to have been a figure that they came up with which they thought might be
substantial.
Robbing: The reason why I'm saying that, I just don't want to see this
killed because of one dollar difference.
Chmiel: Right. No, and I understand that. I would be comfortable in
seeing that motion if you could accept a friendly amendment to it from
that $5,000.00 to the figures you have indicated but not to exceed.
Robbing: Agreed.
Chmiel: In other words, if there's that leeway in there, they would have
those dollars to just basically be able to go back to if that need is
there.
Robbins: I will amend mine on exceeding of to $$,000.00 and exceeding of
the $10,000.00 figures respectively.
Chmiel: That doesn't mean you have to spend that.
Boyle: I had a question. Paul, for .some reason you suggested $5,000.00
and $7,500.00. Do you feel pretty good about these dollars?
Krauss: Well Gary, I'd like to tell you that all my recommendations are
based on scientific fact.
Housing and Redevelopment Authority
March 18, 1993 - Page 26
Gerhardt: Scarey thought when planners start working with numbers, isn't
it?
Mason: Did you amend that Don?
Chmiel: Yeah.
Robbins: I did amend mine to...Don's comments.
Mason: I ' 11 second it.
Robbins moved, Mason seconded that the Housing and Redevelopment Authority
authorize staff to retain some further architectural assistance in
refining'site plans with a figure not to exceed es,o00.O0 to provide
additional design input. Secondly, a figure of not to exceed $10,000.00
to develop financing strategies for senior housing in the Phase II
studies. All voted in favor and the motion carried.
Chmiel: I guess I'd just like a little discussion if I could Mr. Chair.
Bohn: Okay.
Chmiel: I think some of the thoughts of trying to provide this senior
housing is basically needed within our community. No question. Ne have
over 1,000 plus seniors living within our community and each are getting
to a point where those who live within their own homes, pretty much are
thinking about selling those and going somewhere. Being able to do
something other than what they're doing because they can't provide the
kind of services they'd like to do themselves. So the maintenance of
things would be done within this particular facility. But in addition to
that, I believe that the kind of housing that we're looking at, with the
different combination of apartments that are in the packet, I think that's
good because some have those needs and some don't. Some need 700 square
feet. Some need 800 square feet and so on. Total square footage of that
building would consist of how much? Do you have any idea from what you're
looking at? Is there any total concept with the 72 units?
Krauss: Well I'm sure if Arvid was here he probably could give you a
ballpark figure for the thing.
Boyle: I think it says 82,000 in there. I thought I read it.
Bohn: Yeah, 82,000.
Chmiel: Where was that? Oh yeah, that's that first floor plan. Yeah,
that would be the 82,000 square feet.
Krauss: Then you're going to have to multiply that. I mean I think
that's the.
Chmiel: That would be a double to go, if we're going 2 story.
Krauss: What Arvid has told us is that, and I think he put the figures in
here, that they priced these things on a per unit basis and in fact
Housing and Redevelopment Authority
March i8, i993 - Page 27
there's some projects that Arvid has just completed that our Senior
Commission felt very highly, felt good about for the Dakota County HRA.
There was one in Eagan...and they're bringing them in between $45,000.00
and $50,000.00 a unit. I live near one of the ones, the one that's in
Eagan and it's really a nice looking project. It's very residential in
nature. It's a large building but it's kind of friendly looking and it
has a porch and pitched roof and it's the kind of thing that would
probably fit in well with our community.
Boyle: Paul, what do these units rent for?
Krauss: Gayle, do you want to, do you remember off hand what our ranges
were going to be? It was.
Boyle: Is it in here Paul?
Krauss: Well the Phase I report I think has it.
Chmiel: Yeah. We've had that somewhere along the line but I don't
remember those particular figures.
Krauss: Oh here. Oh that's square footage. If you look on that very
last page in your packet. Estimated rents. Well, it's saying should not
exceed those found in the market $520.00 to $884.00 for a I bedroom unit.
$570.00 to $1269.00. I mean what needs to be done here is, there needs to
be a public policy decision of what we want to charge. What is a fair
price for this and again, the City in this, we're in a very unique
situation. A private developer does not have the ability obviously to
write off the cost of acquisition and.development whereas you do. So that
gives you quite a bit of latitude here and what you need to do is figure
out what's the happy medium of offering this thing at a reasonable price.
Paying for itself so that it's not a burden to anybody and ideally, giving
an income stream back to the community and to whatever private investors
there was.
Chmiel: I think on that table 12 that we have on page 15, it shows the
households by income. That could probably be a guideline as to what those
incomes are and what the charges would be accordingly. And I think that
it's not the kind of subsidized kind of housing but it's something that's
going to be, I like it from the standpoint that if we become involved in
it...new innovative ways that cities have to come up with making the
dollars rather than going back to the general public and charging more
taxes. This is another new way for us to go into it and a public/private
kind of partnership I think might be something that can also be looked at.
But I also like the site that's being, one of the sites, and as I told
Todd to talk to Charlie James on that particular piece of property. Of
course Todd said, oh that's just what I want to do. Go talk to Charlie
3ames but he did and he came back with it, just with the idea that
potentially that might be a site. And the reason I like that site is
because of the proximity and you've indicated it. It's close to the
shopping center. Close to the drugstore. Close to. the churches and the
post office availability is right there. $o they have that whole full
sweep just within a very short distance and I think that in itself is
something that makes those successful kind of facility. If you put it
Housing and Redevelopment Authority
MaTch i8, 1993 - Page 28
somewhere away, far away, that doesn't make it that successful. So I
think that's something we should keep in mind with that. That's all I
have.
DESIGNATE RYAN AS THE MASTER REDEVELOPER FOR OUTLOT S OF THE TAR,~ET
DEVELOPNENT.
Gerhardt: Mr. Chairman, HRA members. Included in your packet tonight is
a development contract for the redevelopment of Outlot B adjacent to the
Target development. This development contract would be a contract between
the HRA and Ryan Construction. I'd like to give sort of a brief
background on some of the history and the processes that we went through.
Maybe for Gary's sake and to refresh some people of where we've been,
where we're going. After I've completed that I'd like to introduce Gary
Winter from Holmes and Graven. Gary was legal counsel for the HRA
regarding the Target development and Gary can provide some insights.on how
some of the negotiations have gone through and where we stand on
designating Ryan as the master redeveloper of these outlots and answer any
questions you may have on this contract. To start on some of the history.
Bill McHale contacted me approximately oh a year and a ball ago to tell me
that he had Target is considering locating in Chanhassen and that he would
represent them as a developer in locating here. That they were looking at
several sites. One being the James piece. The other being the Burdick
piece and the third being the Legion property. Making the Council, HRA
and Planning Commission aware of this, it was the HRA's decision and the
other two bodies to take more of a proactive stand in determining where
the location of this site would be best fit for this city. What the HRA
directed staff to do was to hire Barton-Aschman and to work with the
University of Minnesota, Bill Morrish in putting together concepts
together for both the Charlie 3ames piece and the Burdick piece. At that
time we decided that it'd just be real tight to try to fit Target over on
the Legion piece and we didn't pursue that area. That was eliminated from
the process. From that Barton-Aschman came back with several schematics
of how the sites could lay out. If I remember right there were three
plans and of the three plans they selected the Burdick site with the
Target building to be located adjacent to the trees and that it was the
HRA and the Planning Commission and the groups decision to preserve those
trees and that we create the outlots on the. west end of the site. I mean
that's a short synopsis of where we've gone with that process. There were
some things that Ryan was almost taken out of the picture to be the master
redevelopment. That the City would come in and negotiate with Burdick in
acquiring the property and reselling it back to Target. Not to eliminate
Ryan completely from this. They were in the process from the get go. We
understand the conditions and the restrictions that lend itself to Outlot
B. They know the restrictive covenants that Target has placed on the
site. They know the utilities that exist out in the area. They know of
the PUD agreement. They were a part of all that process. They negotiated
on a good part of it. They accepted the way the street would be laid out.
They were a part of that. They were a part of the special assessments'and
how they would be allocated. They were just a part of it all the way
through and staff is presenting this development contrac~ to you tonight
in making them the master redevelopers of those outlots. From that, if
you have any questions of me, I'll be ready to answer those. I would like
Housing and Redevelopment Authority
March 18, 1993 - Page 29
to introduce Gary after, if you have any questions on the statements that
I 'ye said.
Boyle: I have one question. Does that include the pitched roofs on those
buildings?
Gerhardt: In the PUD agreement we have said that they would have to meet
a lot of the architectural mtatements in the downtown area and I think
pitched roofs were highlighted in there. It was similar materials that
were used in the downtown area and color. And the site also got to the
uses. No more than 2 fast food restaurants. No bar elements. No
gasoline sales. There's sight restrictions that Target placed on them.
There's certain places where you can locate these buildings on the site.
There were restrictions as to us preserving an entry monument area. There
are restrictions up and above what the present zoning is on the site.
They have to meet a 37~ green area where the ordinance before met a
green area. So that means you're going to have some expensive land that's
going to be growing grass. And Bill throughout the process has agreed
with that. I'd say i'd like to pass that on to Gary if there's any other
questions that I may highlight as part of the PUD or development contract
or redevelopment contract.
Gary Winter: Thank you Todd. Mr. Chairman. Members of the Board of
Commissioners. I guess I'd just like to start with addressing some of the
policy or process questions that may have arisen as a result of this
decision that's before you. Whether or not to adopt the redevelopment
contract or do something else. Just from a legal standpoint,, in terms of
public exposure. Negotiating with one developer makes a lot of sense in
that the negotiations can be kept relatively private and under the
. .
government Data Practices Act in Minnesota, the only things you release
until you have a signed contract is the name, address and telephone number
of the developer. That's essentially it. Once you have a signed
contract, then everything becomes public information so you're well
within, procedurally well within the realm of what's expected under the
law to negotiate in private and then make it all public once you have a
signed agreement. Secondly, in terms of disposition of the property.
I know at one point a decision was made to acquire the entire site from
B.C. Burdick instead of maybe just acquiring part of it from Target. For
Target for disposition of Target. And after sitting through a closing
with Mr. Burdick, I can see why you wanted to acquire the whole site and
not have to deal with him a second time. I certainly understand that and
I think it was a wise decision. Anyway, once you made a decision to buy
property, own it and then turn around and sell it to a developer, there's
no requirement that you have to advertise for proposals. The only
requirement is for disposition that a public hearing is held so %hat
everyone in the community knows what the'HRA is doing. It's all above
board and that as a result of that public hearing, there's an
advertisement or publication in the newspaper of general circulation here
in Chanhassen that says, we're considering selling property that we own.
Here's someone who's made us an offer to sell it and you publish it for at
least 10 and no more than 30 days before the meeting where you make the
decision itself. And as far as establishing value, it can be what the
City Assessor says or what an appraiser says or what the HRA says and
again, you're well within, from what I've seen in this transaction, you've
Housing and Redevelopment Authority
March 18, 1993 - Page 30
certainly been well within the procedural and legal guidelines~ Turning
to HRA policy for use of tax increment financing. I know the policy that
the HRA adopted was to grant no more than 3 years of tax increment
assistance and it's preferable to do it on a pay as you go basis so you
aren't plagued by costs that would be associated with issuing bonds so
you'd have a lot of money on hand to be able to turn over to a developer
in advance. Actually a developer likes that because the carrying costs
are cut on the front end instead of getting money in increments over time.
Like the Target proposal, this one falls well within those policy
guidelines so I think from a legal standpoint and policy standpoint, the
HRA has fulfilled all the expectations of statutes and the policy
guidelines it's adopted and I think- in the report submitted by staff,
they've outlined a number of valid reasons for dealing ~ith Ryan
Construction Company as the master developer and I think your final policy
decision is whether or not you want to go ahead and agree to sign this
development agreement which essentially boils down to the negotiating.
sessions that the HRA, staff has had on behalf of you Commissioners with
· Ryan and I'm certainly here to answer any questions you might have
regarding the process or the development agreement that's before you.
Robbins: Just based on what I've read and because I've been involved with
this project a while, Ryan has come in and done this thing and made a
proposal to us and I've read through our comments. No one else seems to
be looking to do this. We've got 5 parcels that we could divide. If we
take that in theory, we could have 5 developers then doing those parcels,
which would be kind of basically ludicrous. No sense to do that. Ryan
knows what's involved on that. We've done everything we can to get a
request to do it I think would delay it. Not that time's of the essence
but I think just a master plan, just the economics of the whole thing. $o
I would encourage designating or as it says in...Ryan to be the developer
because in fact it is laid out that way. $o I would encourage staff's
recommendation of Ryan as being the developer. It just makes sense all
the way around.
Gary Winter: Yeah I don't disagree. I think the sooner you have.
Robbins: Well I don't want to go against another one of our Councilmen
but that isn't the question here. It's more of just the pragmatics. I
can't speak for his comments on what he's saying about the dollars or
land, it's just a matter of let's get it done with. We've got a person
that wants it. They're going to do it. Go. Because that's about the way
that I would see it.
Gary Winter: Yeah, I think it makes sense to go forward and the sooner
you have buildings up on the sites within what constitutes Outlot B, the
sooner you'll have additional tax increment that you can use to roll over
for the next project in downtown or you might even have an opportunity to
designate new districts and pool from the downtown district into other
districts. As long as that downtown district is in existence and it can
continue to exist until the year 2009.
Chmiel: I'll have a question but I'll get to it. I guess I wrote down
several things as I looked at the list. The first thing being is that the
HRA really took I think a proactive stand on this particular site. We
Housing and Redevelopment Authority
March 18, 1993 - Page 31
held all the publlc hearings that we had to. Went through the process of
the Planning Commission, Park and Rec and the developers were also in on
this whole situation. The HRA determined the location for this and the
City determined the types and numbers of uses for those outlots as well.
For each of those outlots that we looked, we had no more than 2 fast
foods, no gas stations, and no bars within that particular locations, if
I remember right. Ryan was all part I think of this approval, if I
remember correctly. The process from the very beginning. They were the
ones who really brought Target to Chart and...the site in itself is not a
simple site to really take care of and I think Todd you touched on a
couple of things that you included. Working around the existing utilities
and the watermains and so on. But in addition to that, with the purchase
price that they're getting it from us for, it does not include the soil
corrections that they're going to have to go through. - They found a lot of
'problems with the existing soil corrections over at Target. $o that's
going to cost them some money. How much, I don't know. But there's still
going to be some. The site coverages you mentioned. This will have about
37.7~ green area within as opposed to what it was before. Ne have
restrictive covenants placed on the site by Target. Uses that are going
to agree to. The sight lines are things that we had.by placing no
building easements within. And I feel that with a lot of t~,~se things
that we've done, from a legal-aspect as well, how, better yet, take the
situation of the City of Minneapolis. How can we use that in comparison?
My concern is that we, as a city, would not have a suit initiated against
them whereby with all these things I think we have involved with those
parties, how does this really, how could this affect us.
Gary Winter: Well I think if, until the agreement is signed, there's no
contract really to breach. On the other hand, a 1o~ of discussions have
been held. Impressions have been left that because Target ~anted to break
ground in November because they want to be able to open for next years's,
or this year's holiday season, and they had to be in by November lOth at
the latest So we made darn sure that we closed'by November 9th. At the
time both Target and Ryan were moving in lock step together and Target
accelerated their end and Ryan said, well we're still interested but we
thought this was going to progress and we were going to be with Target
come spring when we plan the construction season, the next construction
season logically began. And because Target accelerated their end, we went
ahead with Target and held the other parcel in reserve and continued to
talk with Ryan and so I think under that set of circumstances and leaving
Ryan with the impression that they should contact possible tenants for the
site once that Outlot B is subdivided, I think while you wouldn't be on
thin ice, the possibility is always there. You don't know if a suit is
brought and something goes before a 3ury, you 3ust don't have control over
that. It's an unknown and the City of Minneapolis was very confident that
they were going to win and look what happened. A $31 million verdict
that's probably going to result in a big turnover amongst the elected
officials of the city as a result of that. I would say a prudent course
is, and again this is a decision you have to make, is you've come this far.
and you have someone on line who's ready to go. There's really, from a
legal standpoint, if you could make the proper findings as to why you
wanted to stop this process, you could do it because you don't have an
agreement yet. On the other hand, everyone is under the impression that
-.
Housing and Redevelopment Authority
March 18, 1993 - Page 32
this is going to lead to the culmination of the development of that site
by the party you've been negotiating with. $o the risk that.
Chmiel: That's there.
Gary Hinter: Yeah.
Chmiel: I guess one of the other things that the report, the reason we
purchased that site from Burdick, if I remember correctly, was that we
didn't want to see 5 fast food places located on that corner. At least I
didn't. And I think everybody here felt the same way. And that was
another reason why we did purchase that particular site. I know that was
a relief to you but it was good for the city again because we have to plan
our own downtown, area and make sure that it's going to be viable and
operable enough to not cause as much impact within that particular area
and by having the variations of different businesses withiN, will.prove to
be as such I think. $o I guess I don't have anything more to say but I.
Gerhardt: The key in this is again, I think Gary touched on it but...when
Target needed to get in the ground in November so they could have their
store open by Thanksgiving and that's when'Bill McHale stepped down from
the pro3ect. He was not going to Jeopardize Target opening by next
October because the Planning Commission and City Council was having a
difficult time envisioning what would happen on the outlot. To ease
everybody's concern, Bill stepped down and instead of trying to introduce
the uses at that time, and planning ~or the unknown, we went directly
ahead and created what is now Outlo% B, one large outlot and Target. And
that we would deal with Outlot 8 down in the future. What staff was
under the impression that Ryan would be the master re~veloper of that
outlot. No, at that time we did not work out'all the details and that's
why they're here in front of us today. $o I think that's one of the key
things that led to where we are today and why Ryan stepped-down from
proceeding with Outlot B so we could stay on schedule with getting Target
closed and...
Bohn: Gary?
Boyle: I don't have any comments. I do have a question on, and I
probably should ask Todd. Todd, how was the..'.established for those?
Gerhardt: That is what we purchased the property for. It's a break even
scenario. It was I think getting the individual that raised it, and I
think it was Charlie 3ames or somebody raised the issue that it should be
a break even scenario...3 year policy on this...only write down the
specials. That there will not be additional land write downs. This site
will potentially create approximately $75,000.00 a year in additional
increment and based on...retain approximately $225,000.00...
Bohn: Mike.
Mason: Earlier this evening the HRA has been accused'of dragging their
feet and being unable to make decisions. Now we have a situation where we
have a letter before us from one of the Councilmembers saying that we need
to rethink this whole thing and kind of start all over again from square
Housing and Redevelopment Authority
March lB, 1993 - Page 33
one. With as long as this project has been in the hopper and considering
the fact that everything is in place, I would certainly concur with the
opinions that have come forth tonight. We have a developer that's ready
to go and we have a hunk of land that's ready to get developed and I see
Target looking I hope better and better and ! think it will. I'm real
comfortable with what's gone on here. I'm very comfortable...
Robbing: What I'd like to do is make a motion that we accept the
recommendation of staff on item number 5 of designating Ryan to be the
developer for Outlot B.
Bohn: Is there a second to the'motion?
Boyle: I'll second the motion.
Gerhardt: Mr. Chairman, if I could add that maybe we solicit citizen
input and discussion from Mr. McHale. He may not agree with everything
that we've put in this agreement. Or have additional comments about it
before you make your final decision.
Bill McHale: Mr. Chairman, members of the HRA. My name is Bill McHale,
Ryan Construction. I appreciate the opportunity to talk to you. Todd's
given you-most of the background. I laid out...ahead of time. Everything
has been said and I agree with... We were aware of Target's interest in
the city based on a previous deal 3 or 4 years ago that didn't go through.
And in fact there were some hard feelings at that time. Based on our more
recent relationship with the City of Chanhassen and the fact that I've
done most of the Targets in the Twin Cities, we approached Dick Brooks at
Target and determined that there might be interest but I think both
parties were gun shy.' We proceeded to do some site work in the city and
when we had an idea of what was going on, we approached Todd and discussed
what the city would like to see and if they would be open to a Target...
As he indicated, after a lot of different discussions, there was focus on
a particular site and Target had some criteria that they didn't want to
deviate from. In the first understanding that we had with Target and the
HRA, would have had Ryan buyin~ the entire parcel for $3.00 a foot. The
balance of the price that Burdick had written down included in the special
assessment TIF reductions over what the special assessments, land write
downs, any extraordinary site costs, building design costs, and soil
corrections and in fact that...Target and Ryan's consulting'engineers came
up with what was determined today to be called a matrix that's floated
around for a long time that was a very complicated piece of paper so
Target could get their arms around what would happen if we did it here
versus moving it. And one of the pieces available.at that time was
the 3ames piece. The 3ames piece was $3.00... At that point we agreed to
go ahead. We worked with staff very diligently and came forward to your
Planning Commission about 9 months-ago with a Target plan and an Outlot 8
plan. It wasn't Outlot B at this point, it was 5 outlots. In fact, that
document is now 4 outlots. One went away because of staff, because of
Target, because of sight lines, etc. And it was at that point'that we
thought things might get uncomfortable. The Planning Commission
specifically was very uncomfortable dealing with both issues, especially
what essentially was almost...diagram but staff didn't have any problem
with it but they're professionals and maybe more visionaries. Certainly
Housing and Redevelopment Authority
March 18, 1993 - Page 34
they've got the talent to do it. And we ran into the same problem with
Council to a certain extent where it was obvious the parties involved
wanted to deal with the Target here and now and if we were to try to keep
pursuing the course that we had, it was obvious that'Target would be late.
The project may be in jeopardy, etc. so we elected to,'.as Todd indicated
at that point, to back away and we' all agreed What we'll do is we'll get
Target taken care of now and we'll come back in a... Subsequent to that,
Target was made, did go under construction and we all along continued to
discuss and negotiate with staff, with Mr. Gerhardt and Mr. Ashworth, etc.
and I know most of that information was passed on. Somewhere along the
line I got a call from Don or Todd and it was because of some city
concerns, public concerns I think, political, concerns, etc. and they
indicated to me that we'd have to raise the price to $4.00. At that point
the City was taking on some of the risk. I was still going forward. It
certainly made sense and then there wouldn't be an issue of land write
down which was delicate at that point. We agreed to that. I guess we've
been working for a document for quite a while now and I don't, I have one
minor problem with the document and it's probably a moot point anyway.
But as the Mayor indicated, we anticipated soil corrections early on.
They turned out to be much more severe than anybody, including the
geotechnical engineers could understand. They discovered it was...some
bad soils had spread out where it wasn't ~upposed to be and cost Target
over a quarter of a million dollars. It would be my understanding that
when we finalize the special assessments, that our'project would also be
open to 3 years of special assessments rebate for special assessments and
anything...soil corrections...because we have to do it once the building
pads are established. But certatnly...that was something that Todd and I
had talked about a couple of days ago... Otherwise I ~uess all I can say
is we feel like we've been ready, willing and able 'and we think we've got
a good relationship with the city and we'd like to get going on this
project...The restrictions between the City's PUD and Target, what's
called an...that's all I have to say.
Bohn: Thank you. Anybody else have any questions?
Brad 3ohnson: I was part of this whole transaction indirectly and
directly because I represented Mr. Burdick and for your own comfort I'd
like to agree with what Mr. McHale has said and Todd is that that was the
deal and at one point there they did pull back in trying to pursue the
outlot development simply because it is a PUD and if you don't know what
you're going to put on a PUD, it's difficult to go forward with it and in
the interest of solving the Target problem, I think they did the correct
thing. We too have run into soil correction problems, as you well know
it's cost us $300,000.00 over on the Market Square one to correct it and
we missed that one by about $50,000.00 so that's a very sort of common
area along, common problem along that side of the street. So you should
be concerned and sensitive to their needs. And then finally, as far as
pricing is concerned, developers normally make their money raising the.
price of land. So if they buy it for $4.00, like to sell it for $6.00.
And that's where they make their profit. They don't necessarily make it
building the building. I know in Bill's case, and in many cases you won't
even build the building. Isn't that right? You're just there to put the
deal together and so I think it's a very realistic thing. Today probably
the highest priced piece of land that we've sold, or have been involved in
Housing and Redevelopment Authority
March 18, 1993 - Page 35
is buying it for $3.00 or $4.00 and selling it for $6.00. $6.00 is
probably the highest number that we've seen. Maybe you'll see a $7.00 or
something like that in a sale but the retailers today aren't paying the
big bucks so you're not going to have that big separation of 2, 2 1/2
times the $10.00, $11.00, $12.00 and $15.00 lands deals here in Chanhassen
just don't exist. I'm just saying that's a comfort. We got aD offer
today of something around $6.00 for w~at we consider to be the best corner
in town and that's what the market is we feel for the very best corner.
Maybe because once Target's going we'll see a different change. Charlie
3ames has been around for $3.00, $4.00, $5.00 so it's not something you
should be concerned about. I don't think and we think we're the experts
in town about that because we've been involved in every single deal that's
happened here so I'd encourage you to go ahead with it. We wouldn't come
in as a developer and try to bid on that. I think you've got as I think
the letter from the lawyer said, you have one of the best developers in
town. They are going to be able to attract good quality development to
that particular corner. I know they're working hard at it and I think
it's a good move on your part to do it. Thank you.
Bohn: Thank you. Does anyone else have any questions? We had a motion.
Robbins moved, Boyle seconded that the Housing and Redevelopment Authority
designate Ryan Construction as the Master Redeveloper for Outlot B of the
Target Development and to approve the development contract as proposed by
Holmes and Grave. All voted in favor and the motion carried.
!
REQUEST FOR SPECIAL ASSESSMENT REDUCTION ASSISTANCE FQR OAK pONDS, BRAD
JOHNSON.
Gerhardt: Mr. Chairman, HRA members. Over the past oh 6 months Brad and
I have discussed on and off bringing this in front of the HRA. The Oak
Ponds development that Brad was a part of. Oak Ponds is another multi-
family residential development with a .mixture of owner occupied townhomes
and rental townhomes. In this project it's been broken out into 2 to 3
different phases of development. Throughout the process I think the
Planning Commission, the City Council were aware that the Oak Ponds
developers were going to ask for HRR assistance. We did not want to bring
this back before the HRA until we got approval from the Planning
Commission and the City Council for the development and Brad is here
tonight to present to the HR~ the final approved documents from the City
Council and Planning Commission. From that Mr. Johnson will be requesting
for what I'll call his Phase I develo~ent. The 3 year special assessment
write down program. ~ pay as you go program and Brad will explain why
he's requesting your assistance in this project.
Brad Johnson: I don't thtnk that you're aware of...Todd said for various
reasons so not to get amuck of other people's territory, we didn't bring
this project to the HRA until it was through the Planning Commission and
through the Council so it was not a downtown type of project or anything
like that. But what we have basically is the, you're familiar with where
the 3ames property is. This is basically the north side of the 3ames
property. Those of you that are on the-City Council were aware that we
were bringing this through, f%nd what we have is on the bluff that
Housing and Redevelopment Authority
March 18, 1993 - Page 36
overlooks, I guess now what we'll call Target. I can say it overlooks the
Minnesota River Valley. We have some for sale townhouses that are I
believe now we have a sales trailer over there that will open this
weekend. And their design...is much like this. Arvid Ellness
Architecture did the design for the project itself and they're basically 8
unit buildings...They have about 1,350 square feet. They're 9 stories
high and with this lower floor, there's going to be a walkout...Minnesota
River Valley. This is the type of unit that...prices start at $70,000.00
which makes them "affordable housing". I think the monthly payment one
time I figured out with taxes was about $650.00 which is less than you can
build a rental unit in and it just has to do with the fact that the
today's rates are, Charlie quick. Give me a rate. 6 1/2. 4 1/2. 7 1/2.
Robbing: Close enough.
Brad 3ohnson: ...and the taxes are homesteaded so you get some benefit on
the tax side which you do not get on the rental side. So this is that
type of unit. It fits sort of the affordable type of thing that Julie was
talking about and she's very excited about it. Average income to qualify
for that...per household is probably around $24,000.00. That we feel fits
into the average income of somebody working here in town... It also turns
out that that kind of housing is also very...and I know Clayton, he lived
in one of these. This is a very popular unit for people who are sort of
becoming empty nesters and don't want something big and don't want to go
buy something on the lake. Plenty adequate to live in and so both of
these types of units would be available for that and so a lot of people we
think are going to move in it are about 30~ of them will be empty nesters
moving over here from Excelsior where the older people in town live. The
north part of Chanhassen. A lot of people. And a tot of people that are
moving out this way from £dina and so forth just to find something that
they can retire to. Many of them have cabins so they're not really
looking for a big house. So it should fill a void that exists and attract
...called me the other day and said, this project is going to go
gangbusters because there's nothing within 10 miles of Chanhassen with the
quality and the pricing that this has. And that really means one good
thing. It's going to be built quickly. You won't have to sit around and
watch it kind of age in segments. So that would be this portion here. On
the north side we have, for a period of time I was looking...primarily
small buildings. 8 to 12 unit type buildings that are designed with
quad...stacked, 4 and 5 unit type buildings, That will fit onto the site
I think very well and we initially .had two phases to the project... These
particular units have...there are 22 3 bedroom units which I just
discovered is a 300~ increase in the number of 3 bedroom rental units that
exist in Chanhassen. We did that because we knew there was a shortage of
3 bedroom types. Not just in-C6anhassen but throughout the whole
metropolitan area. We have a number of 2 bedrooms.-There is a, what
we'll call...we are looking at the potential of putting a daycare center
in here. That would allow people then to drop their kids right in the
neighborhood. Small one. It'd be run by one of the local daycare
operators. About 2,500 square feet... And that's generally what the
project is. We think it's going to be kind of an exciting project. We're
in the process .of financing it and that brings me to where I'm at. These
particular units sort of support themselves. Our whole site improvements
are $650,000.00, which are probably pretty normal but this happens to be
Housing and Redevelopment Authority
March 18, 1993 - Page 37
one of the few projects or parcels in the community where you have rental
housing that is also in the tax increment'district. A'nd so it was natural
for us to presume from the very beginning that we would get the 3 year,
the write down for that. We anticipated_ that we would because there's no
reason this parcel versus Target or somebody like Bernie downtown or
whatever would not use that. What we would be using that for in real life
is to buy down the rental here. An average unit cost to build today is
about $62,000.00. $52,000.00 and that means that the rents would go
beyond the $705.00 you currently have here in the community. We'd have to
be up around $740.00 to make the whole thing work. So with the additions
of the increment that we were really using then to spread around ove~ the
site, our net cost to do the project would be lower and that would allow
us then to put more equity into this particular size of project. When we
get all done, as this is kind of a funny business in the rental market.
When you build a $52,000.00 unit, when it's done, if you're totally taxed
and getting market rate rents in Minnesota, the unit's only worth 42 and
that's just a quirk of the world. The hard costs are 52 .and therefore you
have to use things like tax increment. On this particular site the equity
in the land is there already so we don't have to go raise it. It's going
to be staying with the project. And that basically would be in my
justification, it makes the parcel work. We have gone ahead on the first
phase, we have two taxes so we get a reduction automatically for the first
64 units of about $400.00 a unit in taxes. Sometime, if you're interested
in kind of how housing works, and how cities help finance it to get it
back to where it will work, I can take you through a whole process but
that's probably, it's too late tonight to do it. It's an interesting
thing. That's basically what we're asking for. We have'at the present
time almost a $3,000.00 sort of tax at the time you build the units in
town that's called your water and sewer hook-up charge, your trail fees.
$3,000.00 per unit amounts to almost an additional need for $30.00 to
$40.00 rent so we're saying we'd use the increment that's there to...of
that fee assessed against the property and then the HRA would pick that up
as a public assessment. We've done that in the past with other water and
sewer hook-up charges. Creating sort of a cashflow for us and the balance
would be as a pay as you go to help us cover the costs of all the public
improvements. And we'd actually take that income .stream then and pledge
it against this project. That would 'create a rent of about $705.00, which
is market rate here in town. We're not trying to necessarily solve
3ulie's or the HRA, this particular problem of trying to drop it down into
the $570.00 or the $600.00 with this type of increment package. My third
proposal that you have there suggests bow to do it and then Don has
written a letter or in his memo says, if you are interested in providing
housing that is truly affordable, which is .probably in the $570.00 you
know for a 2 to $670.00 for 3. The way you can do that is that they have
what is called an interest rate write down and other things create a new
district. Write the interest rate down on a few of the units and then
we'd pass that write down right on through to the occupant which would
mean then a reduction of up to maybe $100.00. And the way you do that is
you just forgive the taxes. It's a tax increment thing. That's a policy
you haven't got yet. I mean you haven't had any housing policies. We're
doing 'a project, two projects in Duluth and they're so anxious to get some
new housing up there that's affordable, that we are, and we're in a market
nobody can pay more than $550.00 so we're basically doing that and I
brought along some letters that we just signed our development agreement
Housing and Redevelopment Authority
March lB, 1993 - Page 38
up there. Really I think until the Federal government or the State does
something, if you're going to be in housing and you want to assist it and
see it happen, and good quality. Remember when you do a project and you
feed something into it, you normally get it back in bricks and mortar. In'
other words, the project itself is built better. It's designed better. It
looks better. We'd anticipate that this project here could handle and
still fit all our economic needs. Up to 20~ of the units could be sort of
set aside for what we'll call moderate moderate. Not affordable housing.
You could do more but at that point you'd want to think sociologically
whether you want to keep, you know we're not talking about a building.
We're talking about units...that be set aside and mix it up so you didn't
create another kind of social problem where you've got all the kids in one
building or all in the same neighborhood. And that's our request. As I
said, there's three parts to that. One is that we get what I think is
normal. Is the 3 year increment, actually from the whole project as we go
primarily to buy down the, you're not putting any-public improvements in
here. Ne're doing it all. It just helps us pay for it. And we did
request that the City do it but they felt that at this time that would be
a precedent setting and you shouldn't do it because you're not doing it
for other developments. You're not bonding for other people's roads and
sewers currently. The second thing is, and these are all can go back to
staff for discussion. Nas that we'd be able to assess a portion of the
sewer and water hook-up. Not all of it but maybe $1',500.00 or something
like that. And the third one is, if you're truly interested in doing
something to truly make it affordable as a picture, this project offers
you the opportunity to do that and as Don pointed out, to do it you might
as well do it correctly which would be to create a housing district or
something that we do which would have a life of 12 years or 15 years and
we'd use one of the vehicles that are available in that type of district
to make those truly affordable. Much like we've done over at Heritage
Square. I mean we have some units over there. Jim, you live in that
building. I think approximately 40~ of the units have been indirectly
subsidized over time.
Bohn: 26 that are.
Brad 3ohnson: That's 40~. And you live there.- I think it's turned out
fairly well and you know, it's been a good project for the city. I think
we can do the same type of thing here with the same type of quality
management we think we have over there.
Bohn: There's more seniors living there than the 26 units there is.-
Brad 3ohnson: Yeah. Ne think, as I said, this whole project will, this
side and this side because of the way it's laid out, will'attract probably
30~ families, 30~ singles, which could be swingles or singles. You know
boy-girl or guy-guy or girl-girl. And then 30~ empty nesters. That's
going to be the mix and that'd be kind of ideal actually. With that I'm
open to questions.
Robbins: Just echoing what Brad was saying. I guess my own-observation !
see as similar as to Heritage Square where we gave assistance on that.
Maybe the time elements aren't the same but I think the concept's the
same. I think we ought to be cognizant of that.
Housing and Redevelopment Authority
March ~$, 1993 - Page 39
Chmiel: In that Phase II, that third unit is out of there. Just so
everybody is aware up here.
Brad 3ohnson: The third unit, you mean this one?
Chmiel: That one.
Brad Johnson: Yeah.
Chmiel: That's the one that's eliminated.
Brad 3ohnson: This is our colored drawing. The plans that are to the
city don't have it on there.
Chmiel: Todd, let me ask you a question.
Brad Johnson: You guys lost $12,000.00 in taxes there but that's up to
you.
Chmiel: Could you, or could We, if we go ahead with this approval, one of
the objections after it was done before my time with that Heritage is that
we didn't take any consideration for seniors. Is there any way that we
could have a percentage of this for seniors if we condition this with
the...?
Brad Johnson: Should I answer that?
Chmiel: No, I just asked him first and then I'll let you answer.
Gerhardt: I mean we tried to do that with the downtown and it's real
difficult financing people out there and the private sector won't allow
you to do it. And I think that's what Brad would tell you.
Brad Johnson: No, it's against the law. You cannot discriminate by age.
Chmiel: Yeah, but if that is a government project though, from what I
understood.
Brad 3ohnson: No, no, no. That's just a housing rule.
Chmiel: Is it a housing rule per se?
Bohn: You can't discriminate by age.
Robbing: HUD does that.
Brad 3ohnson: Yeah, we were very.unhappy with it, because we had promised
you we'd delivered you a project that was for seniors down here and we'd
isolate those and then when we took it over, nothing goes very quickly in
this town, as Clayton said earlier. So we were into that 3 years. Well
it was the third year that they wrote a new rule that said you couldn't
discriminate against, by age or by family size. You can do it but you
have to provide services.
Housing and Redevelopment Authority
Hatch 18, 1993 - Page 40
Robbins: Yeah, if it's an all senior, 55 or over, that's the whole
complex.
Brad 3ohnson: And then you've got to say, okay we've got buses and stuff.
In real life they do get a chance at it because their normal income, if
they do qualify. The problem we have in this community is most of the
seniors have too much money. Too much of an income.
Chmiel: Hum, I wonder who's house he's talking about.
Brad 3ohnson: No, I mean it isn't hard not to qualify. I mean that's the
funny part of the whole deal.
Robbins: What happens is with the over 55 you end up...akin to an Edina
where...Avenue and 75th and York, etc. where they're all 55 and over but
the minimum price is x the services so your rentals are $1,000.00 a month,
$1,500.00 a month which then takes out the low income people or the family
people because just of virtue of what you're doing.
Brad Johnson: One of the things you learn is in the project that you're
thinking about doing for the seniors, if you do do that that way, that
will look like a senior project and you can even set aside units within
that project, if the money's available. You know by using'just the tax
increment process or the financing'vehicles that are available to you, to
provide variable rent structure within that project specifically for
seniors. And you can do all that stuff. It's just the problem is, as
I understand it is the service level that.
Chmiel: I get a lot of seniors that I had a lot of flack because they
couldn't get into Heritage Square.
Brad 3ohnson: Yeah, that was our's. We admit that when we came and
presented the project that's what we were trying to accomplish and by the
time we got it built, the law had changed. I don't think anybody still
understands that.
Bohn: Of the 26 units that are there, there's more than 26 senior
citizens living in that building.
Brad 3ohnson: Oh sure.
Bohn: But 6 or 7 of them are seniors, of those 26 units are subsidized
units, they aren't seniors. ~
Brad 3ohnson: Yeah, right. Because you can't discriminate.
Gerhardt: You either I guess I wasn't clear but you either have to,
there's funding mechanisms out there for solely the 55 and older, like
Charlie had said or what Julia would like to accomplish. More the
moderate type affordable housing for the area. So you have those two and
if you're going to go back to HUD or Farmers Home to try to finance those,
you can't break out, like Brad said, it's discriminative to break out just
seniors and low or moderate into percentages within certain projects.
It's either got to be seniors or it's got to be moderate.
Housing and Redevelopment Authority
March 18, 1993 - Page 41
Chmiel: Aren't we assured once we go through the process and we do this
approval, how are we assured that the supplement is going to be given back
to those people moving back in? How is that done?
Gerhardt: Gary can answer. He's done several of these. I didn't know
that but we've got an expert here.
Gary Winter: Well I don't know. Experts.
Chmiel: Anybody a mile away from home.
Gary Winter: That's right. On that definition, maybe I qualify. Anyway,
there are a couple of ways. You can have an agreement, it essentially
would be like a covenant or mortgage or an encumbrance that says that the
developer is obligated to provide this form of assistance. Once the ~RA
is a public body provides this assistance. They're obligated to do it and
the means of assurances that you have that contract and you're going to
have to have someone to make sure it's enforced which means you survey the
rents every year and make sure that they're not jumping up expedentially
so that they're no longer affordable to that target population you wanted
to serve.
Brad 3ohnson: Yeah, we just completed a development agreement in Duluth
and it's a combination of 12 years of interest rate write down which had a
whole bunch of rules. We had a whole bunch of categories we had to meet
there and then because Minnesota Housing Finance Agency ~s providing a
little bit of cash for that deal, we also have to meet their standard and
maybe not all the units have to be that way. but that's kind of how you
approach it so. And then you're just like a, it's like an agreement and
it's a pain because you've got to provide, I think you get the rent roll
from Heritage all the time and it has to meet certain standards or
otherwise we lose the, in this way you lose the TIF. It's just an
annualize thing. You just quit making payments. And so that's a fairly
heavy penalty. I'm just saying that I want to draw the line is that we. do
need some assistance just to bring this into moderate Chanhassen rent
level which is $705.00 but if we wanted to carry it one step further,
which we're more than happy to do with the needing to creating another
district...longevity, then we can go ahead. I've discussed with both
3ulie and Todd that in the absence of that district in place, if you would
go ahead with this, we'd try to initially set some aside anyway just to,
because she's got a real problem. I mean you sit down and listen to her
phone ring down there and the people wondering where they're going to-go
so I think we can provide some units and start the.process. Our first
phase, the second phase of this does need that type of assistance to be
even getting a mortgage. I mean it's hard to. believe but as I said, when
we get done building a $52,000.O0.for mortgage purposes, it's going to be
worth $42,000.00. And that's no fun and that's why you have to do all
these types of things, or in our particular case, because the equity, the
net profit on these because of Minnesota taxes. You know. taxes in
Chanhassen have gone up 33~. Not because of the City Council, over the
last 4 or 5 years. Rents have not kept up. They just don't and until
they change, this is the vehicles, I think they're trying to change it but
we're trying. Have I explained it all clearly? As I said, I think
sometime we can come back and just, I was working out a deal where you
Housing and Redevelopment Authority
March 18, 1993 - Page 42
just sit down and we talk about how you can, this. senior project you're
thinking about is the same way. What vehicles are available to you to use
that you have totally under city control? So you don't have to worry
about Minnesota Housing Finance Agency for tax credit.. See a senior
project doesn't qualify for tax credits. It's a very difficult thing to
do.
Bohn: Gary, do you have any questions?
Boyle: In reference to collection of the tax increment and again, forgive
me for being the rookie here but is this a concern? Should it be a
concern? Don had mentioned in his memo something about today facing the
reality the HRA is nearing the end of it's existence. So in 1999 is the
last year we can collect full tax increment.
Brad 3ohnson: That you will collect full.
Boyle: Right. So with that in mind, should that be a concern?
Gerhardt: I think it should be. I mean when we sat dowb in 3anuar.y and I
gave you your list of goals, you went through them and added 5 more onto
them. I mean you've got hopes of providing senior housing. You've got
hopes of building a community center and you've got hopes to widen West
78th Street and building a new library. Looking at the possibility of a
new post office somewhere. You've given us a list of capital .improvements
that you want to see in the city. Everytime you provide assistance back
to a developer, that's less money that you have to do these projects. But
the 3 year policy is getting one where you help people out and in the
past, but we've benefitted in the long run. We've captured the 10 years
of excess increment from a development. We're getting to the point where
you're not going to even benefit from that excess increment because the
district will run out in the 2001 timeframe. So that window is closing
in. In Brad's case, staff is recommending to, or making a recommendation
to the HRA that you break it out into two phases. Brad is anticipating to
do the owner occupied, getting a good percentage of the first phase
completed this year. Sold. If his projections are correct. That means
they would be paying full taxes in '95-96-97 giving you '98-99-year 2001
to benefit from the excess increment from the owner occupied homes. As to
the apartments, I think Brad's anticipating to get those built in the
'94-95 timeframe.
Brad Johnson: No, this year. Phase I of the apartments.
Gerhardt: Well in that case, still we would suggest that you look at a
long range approach in trying to provide assistance that 3ulie had
mentioned earlier and that Gary had mentioned in creating a housing
district and giving that project l0 years of assistance and making sure
those rents are at a moderate to almost market rate percentage. And we're
not asking for a decision tonight. I guess we're looking for some type of
concept approval of this approach and providing the pay as you go for the
owner-occupied and then having staff sit down with Holmes and Graven and
bring back to you regarding creating a housing district for the rental
units.
Housing and Redevelopment Authority
March 15, 1993 - Page 43
Brad 3ohnson: I might also mentioned that if you did select the site. that
the Mayor mentioned for your senior project, you could tie the two
together at least physically and have that discussion because again I
don't think the senior project will swing if you're looking at a public
ownership. Private ownership without being in a district of some kind. If
it's in public ownership, that's different. But I'll go along with Todd's
recommendation because the angle of having a housing district set up might
solve our problem just as well as what we were thinking about and give you
some additional tax increment that you can use-for someplace else. It's
just a matter that was a wrinkle that Don came out with which I simply
said I haven't heard a lot about the H yet. And if you guys had a heart,
and we'd probably sit down and talk about it and probably come back and
show how that all works because it does do the job.
Chmiel: I'd like to see the County, some involvement with the County
within this as well.
Gerhardt: I agree and Gary and I have been whispering in each other ears
and writing notes back and forth and you know, some of the fears might be
that this area would turn into a low to moderate income housing type area
and I see social services down at the County playing a bigger role in this
and putting in some programs. Training programs. The daycare thing that
Brad has talked about. Working on this project you could write that
daycare down so these people can put their kids in that daycare and go get
a job to make it feasible. I think this could be a real creative area and
I think Brad's got a quality project here. It's made the test through the
Planning Commission and City Council and I think this is a great area to
try to do something.
Chmiel: Yeah. One other thing I think we're going to see with this
development. Not that making any suggestions per se with the type of-
people coming in. We're going to find that there's going to be more
domestic problems within these areas as we find in the other areas where
we do have the complexes. This is where we have much of the domestic
problems. And that's going to, by putting in that many more, I don'~ know
if, I'd like to Public Safety to sort of look at that to understand what
the needs might be for providing those kinds of services that we're going
to have to provide.
Gerhardt: We're not suggesting to put more units in.
Chmiel: Other than what's there?
Gerhardt: Right. We're saying to make it more feasible rent Wise.
Chmiel: Yeah, and I understand that. But I think if yOU understand what
I'm saying, there's going to be more problems. There's no question.
Brad Johnson: Per square foot.
Chmiel: That's right.
Brad Johnson: You have higher density. Probably has more to do with the
problem. Per square foot.
Housing and Redevelopment Authority
March 18, 1993 - Page 44
Chmiel: That's right. At least they don't have to 'come to our house.
Yet.
Gerhardt: Well the thing they've found out is these townhomes are the
approach to go with these. When they've got into the enclosed structure
of what everybody thinks of an apartment today with the elevator and
interior corridors, those seem to-have a little more problem than what is
the townhouse scenario. Where they take more of a ownership. This is my
unit here and got two walls instead of 4 on the bottom and top.
Chmiel: In the rentals, is that going to require any handicap? Are there
any conditions that are required within?
Brad 3ohnson: Absolutely. What you do is, ail the first floor units all
have to be handicap compatible. You don't have to necessarily handicap
them initially but if a handicap person, whatever handicap they have
applies, then you have to have the ability to transform that unit into a
handicap unit. They don't necessarily build them that way now but they do
later come in. That's part of both the legislation that allows us to
build here.
Chmiel: Yeah, there is some there but.
Brad 3ohnson: And then all the parking and everything has to be, all
those types of things are, it's mainly the first floor level ' Which are a
lot of units in our case. We are submitting this to the final financing.
That's this first phase here. I think we have to be under construction
with the apartments by September so part of our financing package has to
include the assistance that we're getting.
Chmiel: I see the trailer but I don't see the trees.
Brad 3ohnson: It's hard to plant them right now. I guess the City can't
sell trees now so you can just bring them over there.
Chmiel: We weren't in the business of selling trees.
Brad 3ohnson: Alright, how do you feel about all this? I guess that's
where I'm at. Because we'll come back with a formal proposal. We. just
held up doing that.
Chmiel: I'd like to see more.
Boyle: I'd like to pursue it.
Mason: We'd be hard pressed after what we said earlier this evening.
Chmiel: That will cover some of the concerns of some legislators out of
Minneapolis.
Brad 3ohnson: Yeah, and we can show you how the rents can be monitored.
Thew normally set them up based upon, Chanhassen is pretty easy to make
all the regs because our average family income is $56,000.00. Duluth's
it's $32,000.00 so I mean you've got a different kind of problem to meet
Housing and Redevelopment Authority
March 18, 1993 - Page 45
the low and the moderate. Low and moderate in our town happens to be
$56,000.00. So you know, that doesn't solve the problem.
Mason: That's average income in Chan is 56?
Brad 3ohnson: Median. Okay, so we'll come back. As I understand it,
we're going to come back with a proposal next time to deal with both. Is
that okay?
Gerhardt: Is that the feedback I'm getting that you'd like to see the two
broken out into separate, look at the working-with Holmes on creating a
housing district and then one, going with the pay as you go scenario with
the owner occupied?
Chmiel: Let me just ask one other question. We have this development and
we move ahead with it, and somebody else wants to come in in another
location and do the same thing, but it has to be within our ¥tF district
right?
Brad 3ohnson: You can create a district too if you want.
Gerhardt: Well what we're doing on the rental side is we're going to
create a housing district so that will be a brand new tax increment
district for just that project.
Chmiel: Okay. But then would we be hard pressed to proceed with another
kind of unit as such or as many as we're looking at now?
Gerhardt: I don't think there'd be any legal precedent that we'd have to
create another housing district someplace else if somebody came in.
Brad 3ohnson: Yeah, I think what you do is you have to think out your
policy. I mean really what Mike was saying is that, as part of your
planning process, he used it very well. You have a policy. You stick to
all your policies in dealing with the Target situation. You just have to
sit' down and say do we have a policy. How many units would we like to
create within this community and then a developer will come in and, tike
myself or somebody and say yeah, we'll do it. But if you don't have a
policy to do that, I don't think you're...anything by not'allowing to do
that. Am I right?
Gary Winter: Right.
Brad Johnson: I mean so part of your planning has to be, which I don't
think you've really addressed is that. Secondly, there isn't a lot.of
places to do this. Currently most people who are going to do it for low
to moderate are going to use it for sale. I mean I think you'll see some
more projects proposed like this because they are kind of hotcakes with
the low interest rates right' now. And that's not a bad solution because
it doesn't involve a lot of assistance. We just happen to be in the
district that allows it. You gave it Rosemount and you've given it to all
the big guys. Now we're interested in our share. Thank you.
Bohn: Thank you.
Housing and Redevelopment Authority
MaTch 18, i993 - Page 46
APPROVAL OF BILLS:
Chmiel moved, Mason seconded to approve the Housing and Redevelopment
Authority bills as presented. All voted in favor and the motion carried.
Robbins moved, Boyle seconded to adjourn the meeting. Ail voted in favor
and the motion carried. The meeting Nas adjourned.
Submitted by Don Ashworth
Executive Director
Prepared by Nann Opheim