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1993 12 16CHANHASSEN HOUSING AND REDEVELOPMENT AUTHORITY REGIR,AR MEETING DECEMBER 16, 1993 Chairman Bohn called thc meeting to order at 7:30 p.m. [Note: The recorder did not fimction properly or was improperly configured in Todd Gerhardt's absence. Accordingly, the following minutes are not verbatim and were tak~ from the Executive Director's notes.] MEMBERS PRESENT: lim Bohn, Charlie Robbins, Gary Boyle, Don Chmiel, and Mike Mason. APPROVAL OF MINUTES: Mason moved, Boyle seconded to approve the minutes of the Housing and Redevelopment Authority meeting dated November 18, 1993 as presen~ All voted in favor and the motion carried. VISITOR PRESENTATIONS: No one requested to speak. REQUEST BY CHARLIE JAMES FOR SPECIAL ASSESSMENT ASSISTANCE: The Executive Director presented thc staff report noting that the request by Mr. lames was exactly the same as outlined in the HRA's Redevelopment Plan and exactly the same as given to most businesses locating/expanding in the City of Chanhassen, i.e. Mr. James would be eligible to receive up to 3 years worth of tax increment on a "pay as you go" basis as an incentive for constructing an approximate 75,000 sq. ft, facih'ty in Chanhassem Iacrement would not be reimb~ to Mr. lames until after he had made tax payments in 1996, 1997, and 1998. The amount of increment that would be term'ned to him in each of those years would be exactly the same as the taxes he paid in each of those year~ The Executive Direct~ noted that Mr. lames had significantly higher special assessments against his property than have geaeantlly existed on other projects and had inctm~! si~unificant costa associate! with the realignment of West 78th Street. The initial indications were that the amount of special assessments and costs incuned for the West 78th Street realignment would probably exceed the total incentives being offer~ by the city, i.e. the cost that we have placed against the property approximate the dollars now being provided back to Mr. lame& Finally, the Executive Director noted that the Assistant Executive Director had presented to the HRA the incentive letter provided to Mr. James approximately one year ago which outlined the HRA's policies in regards to our incentive program. The letm' noted that Mr. lame~ was anticipating brin~g to Chanhassen a 75,000 sq. ft. facility which would meet the zoning, setbacks, and all other ordinances of the City of Chanhassem Although oaxent concerns have been raised in regards to Mr. James' teaant being Byerly's, which may to the HRA's policies pro~el_ing incentive to a developer if he would be generating additional taxes for the HRA/city. The current contract being considered by the HRA is with Mr. James and not with Byerly's~ The Executive Director seriously queardoned whether the HRA could deny the assistance to Mr. Iatn~ as he was relying on the assuxances given to him by the HRA from nearly one year ago. In addition, the HRA's policies are clear in that the incamtive program is liRA Minutes December 16, 1993 Page 2 a part of the Redevelopment Plan. Mr. lames was in compliance with all portions of that Redevelo~t Plan. Charlie lames and John Meyers presented the specific development proposal for the propa-ty. Mr. lames relayed that Byerly's would be the primary tenant and that they had signed a multi- year lease with him. The facility which is proposed to be built is the most expensive grocery complex that he has had an oppommity to build after many years in thc construction business. He noted that Byerly's wants this project to be a top-notch project that both the community and Byerly's can be proud of. Mr. Sames then graphically showed elements of the construction which were not typical and why these elernen~ had been added by Byerly's to ensure that this project would be a highly attractive project. Alternative schematics were presented showing sight lines from various locations, planting and landscaping plans, as well as market study information showing thc trade area that they would be drawing from. They showed statistics as to the number of existing Chanhassen residents who are currently leaving Cbanhaasea to shop at Cub and/or R~inbow. It has been their experience that stares have generally upgraded to ensur~ that they can attain a higher percentage of the market to reasonably compete with Byerly's. The following persons spoke in regards to the Charlie Sames development: Lyle and Bob King, owners of Festival Foods; Bernie Hanson, Chanhassen Lawn & Sport; Tim Keane, Larkin- Hoffrnan Law F'~way/Festival; Atnie Pdeve, representing Gateway Foods; Chatlie James, T.F. James Company; John Meyers, representing Byerly's; Tim Menning, representing owners of Market Square Partnership. Although the above speakem presented their concerns in their own words, there appeared to be a great deal of similarity in all of the positions presented, Le: Viability of Festival/Other Stores: Each of the owners admi~ that they were aware of the fact that at some point in time there would be competition for their facility. Additionally they noted that they thought competition was good and that Byerly's was a top notch operaWr which none of them would make disheartm~g comments about. However, most of those speaking wished that the decision to build in Chanbassen could have been held off for one additional year; and Market Study: Although each of the speakem believed that Byerly's had conducteA a market study in advance of making the decision to locate in Chanhass~ speakers wished to see the HRA conduct their own mazket study to determine what the effects of Byerly's would be back to existing bttsines~; and NecessiW for Expansion: Mr. Prieve acknowledged that one of the options which may be open to the existing Market Square development would be to increase the size of that store and to change the name from Festival to Rainbow. His question was whether or not HRA Minutes ~ber 16, 1993 Page 3 the lIRA would be able to help in that type of expansion so as to allow Festival Foods to more reasonably compete with Bycrly's. General A~gist~e: Although most of the ~ acknowledged that they had received assistance through the lIRA, they questioned whether or not a store such as Byerly's should receive a similar level of assistance. At issue was the fact that the msrket was very weak when they made the decision to commit to Chanhassen whereas om'ently Byerly's would not need that similar form of assistanc~ The Executive Dimcwr repeal~l points brought out earlier in that the agreement is between the liRA and Charlie lames--not Byerly's; that Mr. Jmne~ had presented his question as to whether assistance would be available to him if he built a 75,000 sq. ft. facility in conformance with city ordinsnces; that he had received assurances that he would; that those assurances did not place exceptions as to who the tenants might be; and, finally;, the Executive Director noted that Mr. 1ames had been before the HRA/City Council prior to the installation of each of the public improvements surrounding his property, Le. major trunk and latin'al wat~ lines, mink and lateral sewers, Kerber Boulevard upgrade, West 78th Sueet malignrmnt, etc. In each of those instances, Mr. James stated that he could not afford the level of assessments being con~_dcred by the liRA/City Council and that hc would have to be opposed to each of those projects unless hc was reasonably assured that assistance would be available to him if he brought development to that site. In each instance, thc liRA/City Council had restated that their existing policies were in writing, that verbal acknowledgernent of this fact was given to him at each of those healings, and that he was currently requesting that the HRA solely abide by the commiunents that they had made to him in prior years. After significant discussion and anguish over the HRA's desire not to hurt any existing business, but also to conform to the verbal contractual agree.~ents entered into with Mr. James, the HRA came to consensus that their hands were basically tied and that a reversal of their previous position would probably not be upheld either legally or morally. lIRA members discussed the fact that two enclosures showing two different assistance levels had been included in the packet. The Executive Director informed lIRA membem that thc two assistance proposals were based on two different potential building values for Mr. 1ames' new stmcUu-e. The approval being given by the lIRA was really one as to the formula which would be used to set the amount of the assistance; that that formula is exactly the same as the standard model wherein thc county assessor would set the specific building value after having reviewed the detailed building plans; and that Mr. James would agree that that value would represent the minimum building value. Thc formula of calculating the tax cap~ty, using that building value and then multiplying that by the current total tax rate, would represent the incentive being provided to Mr. Sam~ for any one year. That yearly amount would be multiplied by 3 to detemfine the total assistance. Commism'oners ~ that it was the formula that was being adopted, not either of the two examples included in the packet er. HRA Minutes December 16, 1993 Page 4 Gary Boyle moved, Charlie Robbins seconded to approve a development contract with Charlie James which would include the standard assistance formula and that would conform in all other respe~ with thc typical rcq~ts of a standard development contract between a developer and the HRA. Motion was approved unanimously. As noted above, thc HRA did carry out signet discussion as it dealt with assistance which should be provided to new projects. The conclusion reached was that Mr. James should reasonably be allotted the assistance which had been stated to him over the past several years. However, HRA members felt that with the exp~on of the district being right around the comer, that the HRA should limit future assistance to developers to no more than one-half of the amount paid from new development between now and the time the district ceased. Chmicl moved, Boyle seco~ a motion to direct stuff to prepare a Redevelopment Plan amendment which would limit assistance to developers to no more than one=haft of the increment that would be generated from full year tax collections between now and the year 2000 including collections in the year 2000. All voted in favor and the motion carded. CONSIDER APPROVAL OF ARCmTECTURAL CONTRACt WITH JI~.A ARCHIT~ FOR ESTIMATING COSTS FOR ADA COMPLIANCE: Thi~ iem was rdatively clear. Commissioner Robbins moved with Commissioner Mason seconding a motion to approve the architectural contract with JEA Architects for estimating costs associated with ADA compliance. All voted in favor and the motion can'ied. { Note: Executive Director Ashworth was unex~y forced to leave the meeting. As all of thc remaining items were associated with Fred Hoisington of Hoisington-Koegler Group, Inc., Mr. Hoisington agreed to take minul~.s for the remaining portion of the agenda as well as to provide thc staff reports.] LEGION SITF_jTRANSIT HUB: Fred Hoi~ington explained that he is seeking commi~ts from a motel developer, Southwest Metro Transit Commission and the Legion to develop an integrated mote~t hub complex on the Legion/M~ pr~, but that Southwest Metro has not made a commitment and that the access shown with a slip ramp from Highway 5 has not been approved by MnDOT. Mr. Hoisington indicated that commitments are expected on behalf of all parties, at least preliminarily, by January 27, 1994. Hoisington further explained that the project is not in a tax increment district, but the project itself will not generate tax increment to cover its own cost. It was indicated that there would be approximately a $1.00 write-down for all ten acres of the property which could amount to something in the range of $100,000 to $300,000. HoisingWn asked ff the HRA would be willing to participate to that degree and it was indicated that he should continue with the evaluation and come back to the lIRA at its Sanuary meeting to discuss the finan~ details of a variety of alternatives. HRA Minutes ~ber 16, 1993 Page 5 PEDESTRIAN BRIDGE PHOTO IMAGING: Fred Hoisington eatplaln~ that this is at a GO/NO GO point in the process and that the bridge is funded in part by ISTEA ($280,000). He further explained that the requirements are that cons~on be~n in July and be comp. ~ by the end of 1994. Hoi~ington also indicated that SRF and Mayer, Scherer and Rockcastle were selected to design the project. He described the two different alternatives indicating that the local cost could be in the range of $300,000 to $400,~. After answering several questions, it was agreed that the I-IRA could support the lesser bridge, but suggested that we ask the architect about the durability of the mesh on the interior of the slructure, the degree to which it is vandal proof, and whether the mesh could be extended to cover the eotire structure. Mr. Hoisington indicated that hc would check with the architect to make that determination and that the Planning Cornmi.~sion would review it on January 5, 1994. HANUS BUILDING: Michael Schroeder of Hoisington-Koegler Group briefly presented the Hanus plans indicating that bids have already been taken for site improvenm~ts, but that no bids have been taken yet for structural hnprovements which include a new roof and painting of the exterior of the building. He explained that the original cost estimate for b~_ilding i .mprovements would be exceeded by approximately $60,000, vir0_~lly all of which would include the replacement of the existing roof before the new roof is added. There was a real concern on the part of the HRA that the cost differential is so great. The HRA suggested that Mr. Schroeder evaluate alternatives, assess the rent ~, and negotiate with Gary Kirt to see if he would be willing to pick up a large share of the cost. He will, needless to say, have to replace the existing roof at a later date and he may be willing to fund all or a portion of it now in order to get the other proposed improvements complemL The alternative is to do nothing as far as the roof is concerned. The HRA suggesmt that this item be rescheduled to the January meeting to report on the status of the roof. APPROVAL OF BILLS: The HRA questioned the billing fix)m Hohnes and Graven and asked that a future staff report address that itm~ A second bill was questioned but not recarded. A motion was made by Mason and seconded by Robbins to approve all the bills as ~ted. All voted in favor and the motion can-ied. A motion was made by Chmiel, seconded by Boyle to adjourn the meeting. All voted in favor and the motion carried.