1992 01 23CHANHASSEN HOUSING AND
REDEVELOPMENT AUTHORITY
REGULAR MEETING
3ANUARY 23, 1992
Chairman Horn called the meeting to order at 7:30 p.m..
MEMBERS PRESENT: Chark Horn, Don Chmiel, Tom Workman, and Jim Bohn
MEMBERS ABSENT: Charlie Robbins
STAFF PRESENT: Don Ashworth, Executive Director and Todd Gerhardt, Asst'.
Executive Director
/.
APPROVAL OF MINUTES: Chmiel moved, Bohn seconded to approve the Minutes of
the Housing and Redevelopment Authority meeting dated December 19, 1991 as
presented. Ali voted in favor and the motion carried.
VISITOR PRESENTATION: None.
PUBLIC HEARING:
CONTINUATION OF THE PUBLIC HEARING FO8 THE pROPOSED CENTRAL PARK CONCEPT
PLAN.
Horn: Todd, do you have anything new on that?
Don: We did have a chance to meet with Mr. Methune. He was on his'way out
of town again and so we were not able to reach any conclusions as to the
potential value that he might look for for that property. However, I feel
very positive about that their involvement and their willingness to be fair
in the potential sale of that property to the city for an expanded park. We
more or less agreed that we would each obtain appraisals for the property
and hopefully use those then as a means to negotiate. It was very clear in
that process that Mr. Methune did not have any intention to sell the
property. He anticipated at some point in time to be able to develop the
property himself. But again there is no eminent development proposals that
are being considered. In looking at the central park plan, he supported it
but he more so felt that that decision was back to the city. Back to the
HRA whether or not that's a good plan or not. If it is a good plan and if
the HRA determines that, they feel that it,s a good plan and it should be,
that we should go ahead with it, he stands ready to sell that property at
what would be the fair market value. So again I felt very, very positive
in that meeting. The next steps are for, which is on the City Council
agenda, is for this coming Monday, to take the process, the revised plan
which would include an amendment to the existing redevelopment plan to show
a new library at the intersection where Paulys/Ponys/Pryzmus is as well as
the central park idea. To officially call for a public hearing on that
plan as the HRA has been doing for the last what, 2-3 months and in their
approval process they must send it to both the school district and the
County. Staff would propose that as a part of the City Council's process,
the HRA dovetail this process in with that one. In other words, your
conclusions as to whether you should do this or not would follow the City
Council's hearing and their determination and then you would reaffirm or.
not whether or not to amend the redevelopment plan. We're looking at a
general date for that hearing of March 9th so I would anticipate then that-
this same item then would be, final consideration of this item including
Housing and Redevelopment Authority
January 23, 1992 - Page 2
then the actual value of the Methune property would be Presented on March
9th. Hypothetically we could be back in February with an update. Official
action on March 9th.
Horn: Are we saying that we're looking at the public hearing on this
particular project? That's a little unusual isn't it?
Ashworth: Well, the public hearings though that have been called for by
the HRA have been discretionary. I mean you've wanted to get as much input
as possible from the business community, etc., etc.. I think that that was
a good idea. Unfort, well I don't'want to say unfortunately but State law
is specific that before a plan can become effective, City Council must
officially call for a public hearing. Send it to the County. Send it to
the School District. Receive their results and make a determination and
we're saying then, bring it back for-final to the HRA. 'So I think the.
hearing process that we've done during the last 2 months is good but it
wasn't mandatory.
Horn: I think the other thing that we're looking for would be a
presentation of this concept to groups like the Chamber and people'around
town rather than just rely on the public hearing process.
Ashworth: We've tried to do that to an extent. In fact we had this plan
at the Live at 5 Tonight with the Chamber and it was.presented at, was'b't
their last monthly meeting but the meeting before. So we've been trying to
take it out to the people.
Horn: You know the sense that we've picked up so far and again we're still
in a public hearing process but the sense we've picked up so far seems to
be that the concept of the park is good but there's some question about
this particular plan. I think those are areas that we'd want to explore
some more in terms of presentation, input from the Chamber and input from
the Council's public hearing process. ~nd maybe you attract a bigger crowd
than we do so you'll get a little more input.
Chmiel: This looks pretty big tonight.
Ashworth: A part of this is the HRA has Continued to say back to Barton-
Aschman, well tell me something more about this gazebo area. What's it
going to look like. How does this really function in the whole area and I
think that's been an excellent question. I think that Barton-Aschman have
continued to respond well, there's .flexiblity. Who knows exactly what it
may develop into. Staff went back to EOS because I think there is a real
question. If this is done wrong, it could set a wrong theme for everything
that is done. And they've come back with some real interesting concepts of
how this stage area could be developed and how that could function along
with the senior center. We've also been looking at the future expansion of
City Hall and will that in fact meet the growing needs of the community.
That was not ready for presentation tonight. We will have that available
for your meeting in February and I think you're going to be very pleased at
what they come back with and I can tell you that the work that they have
done in defining what...and how it should function...
(Don Ashworth walked away from the microphone at this point.)
Housing and Redevelopment Authority
January 23, 1992 - Page 3
Horn: Are we going to approach this as a two step process? In other
words, we're going to have a public hearing on-the concept and then,
because we don't know that this is not going to develop for several years.
I think what we'd like to see happen is that we have another public input
process when this gets closer to becoming a reality and approve the final
plan. Is that something that we could work out? -
Ashworth: Sure. And in fact, one of the things which again the Mayor and
I had talked about with Mr. Sowen was the'recognition that Just' with the
leases that we have in place allowing Pauly/Pony/Pryzmus to stay in their
current locations for an additional 3 year period of time and recognizing
the amount of time necessary to remove buildings, start construction of a
library, finish construction of a library, move the current library, that
means you really can't expand Senior Center or use any of this in a park
like setting for several years into the future. So what we tried to relate
to Mr. Gowen was, let's modify the redevelopment plan which gives you the
legal authority to acquire the land and to adopt a plan. .Let's to the
extent that we can bring in fill and do things inexpensively, let's do
that. To the extent that we can plant some trees in lo~ations where
they're eventually going to be, let's do that. And then one of them we
even discussed was almost make a pledge that we're not going to go ahead
with any form of a plaza until after demand was there. Until after Market
Square was built. Until after the businesses were in. Until after the
businesses had an opportunity to tell us that they wanted an evening in
concert. To tell us how they would use it and up until that point in time,
this would solely be maybe planned when we hoped would work but we're not
going to go ahead with until there's a demonstrated need to put the thing
in.
Horn: I think one of the things that frustrates, I know it frustrates
people that sit on this side of the desk and I'm sure it frustrates the
public too is that we have a public hearing on some of these things and
nothing happens for 3 or 4 years and by the time something comes around so
many things have changed, it may not be appropriate anymore and we all get
surprised at what happened. As I say, I don't think we've heard any
opposition to this concept but there are some specifics that need to be put
in place and I think a two stage hearing process would be appropriate for
that. Whether it's done at our level. Probably from an HRA standpoint,
the concept is the most important thing. Maybe the public hearing on the
concept is more legitimately left up to the City Council. But I think at
least those are my feelings on this process. Does anybody in the public
want to make a comment on this? Yes 8eh.
Ben Gowen: As you know my name is Ben Gowen and I came into this picture
when they first came up with these designs which I think are a little
gross. But I've asked Chuck Devaney from Northland Nursery from Jordan
who's a friend of mine and sort of a designer to give you some of his ideas
of what else we could do besides these particular pictures. He's made up
three different ones here which are extremely different. I'm going to let
him talk about them. I'll pass out his ideas and you can look them over.
I'm glad to hear that it's not going to happen this week because you're
talking about buying the land and holding off for 2 or 3 years, I think
that's fine because when I first saw this thing I thought it was another
Housing and Redevelopment Authority
3anuary 23, 1992 - Page 4
main street, which was a bad thing. Anyway, Chuck Devaney from Northland
Nursery to talk to you.
Chuck Devaney: I know he asked me to make up some designs and again some
of these, it's hard to pick a design unless you know what the criteria or
the goals are, so some of these are kind of inmature. One thing, I saw the
previous design and I saw some faults in it where depending on where you
want to utilize your ground, how the community wants to utilize it. And
I noticed in like this new design it doesn't have the baseball field back
there. I don't know if you want to eliminate a baseball field or keep it.
They have two hockey rinks. If you really need two hockey rinks or you'd
rather have some and utilize that ground for something else like a tennis
court. Also some of these designs, depending on what a person chooses',
it's good to know how many maintenance personnel you're going to have to
take care of it, depending on beautiful you want it. I know 8eh is a great
one for getting gardener clubs and that stuff to maybe, get the community
involved with that to kind of maintain some of these gardens to really make
it beautiful. I just jotted some of these down' so they aren't really very
explanatory. The number 1, the gazebo then has a moot around it. Water
and there's like steps and a bridge to go up to it. And there's paving all
the way around it where you could set table~ and then there's a step up
amphitheatre utilizing the ground. Not building anything in there. Using
grassways and benches. And this way, this plan here makes access to both
open fields so let's say if you do want an area so that people can play
volleyball or football or whatever it is, you have some open areas. That's
the concept there. Some of these others do eat up the areas. .On my plan
number 2, I don't know if you were for sure going to be tearing down that
building or going to be utilizing that fo~ a community center, library or
senior citizen building or whatever but I'm thinking that could be nice and
convenience next to a park and utilize that. And this plan number 2 is
also a pond. There's a circle and then there's a little round island in
the middle. But that is the lowest spot in that area there so utilizing
this concept you'd have the minimum amount of dirt moving and also have a
pond there and maybe if you wanted, utilize that in the wintertime as a
skating rink which takes up that other area in the back which maybe you'd
want to, if you're talking about expanding later or building. Also the
place on the left, the drive you have going up to the upper level I think
is really nice looking the way it is now. I think if you're going to do
future expansion, to center out with your property and to the park, I think
it would make sense if you go that way with the building so you don't have.
Chmiel: Chuck, maybe you could just show what you're talking there to what
the actual plan is down below here.
Chuck Devaney: Oh, right here. Over in this edge. This is nice in here
but if you put a gazebo here and people are supposed to watch this in the
trees, you have ornamental trees which are low branchy trees, anybody
sitting up here they can't see through that real well. And I don't know if
really that's the appropriate way or'you'd want to get it more in the
central part of the property. Accent.the property more. You're-not
accenting anything here and this...it~s not really a community; I don't
know how the community could really utilize that or are you looking just
for an image and not, that's one of the other criterias to figure out what
kind of look you want to get. More of a flowery for the public to walk'
Housing and Redevelopment Authority
January 23, 1992 - Page 5
through or more aristocratic like Washington D.C. or those are the
questions that should be asked. I just don't know. In order to make a
design like this, when I have a customer I have to ask them like 30-40
questions before I can even start a design. And I don't know if you even
know the answers either on some of these but I think how many parking
places are required. You notice on the. different layouts between number
2 and 3 where the parking is. For example, what are the requirements
coming off of the main road coming up there. Can you have parking off of
let's say on number 3? There's parking as you come up' the street right off
of the main and I don't know if you can have parking that close turning off
into there.
Horn: I don't think we'd have a problem with that..
Chuck Devaney: You pull off here. Can you pull out and drive...
Bohn: That would intefere. The same with the other side.
Chuck Devaney: It would? Yeah, I know I put that in and I didn't, these
are just ideas and again I brought some of these things up. Like this
number 2 plan that also the amphitheatre, you're utilizing the contour of
the ground there and again that's not a building structure at all. That's
all that can be mowed. You can have benches there and step down right down
to it. And this could be done in stages. This number 2, the box on the
left lower is actually a sign like a sugar maple leaf upright and a
planting bed all the way around it. And all around the trees and shrubs,
there's plenty of places for perennial beds that can be set in there but
again, before you can lay too many of those beds in, it's good to know how
much personnel you're going to have to maintain it. They can be beautiful
but they take a lot of work. $o far have I confused you? Do you have any
questions?
Horn: No, I think what we said earlier, I said these are the kinds of
things we need to explore yet. What we've heard so far is everybody seems
to be in favor of the concept but what we need to do is detail what the
plan is going to be and nobody has really'locked into what they really like
for that yet and that's going to stay open. $o this isn't going to be the
last public hearing before this is decided. This wilt be an open issue
after we close our public hearing here and there will be another public
hearing at the City Council level and maybe if this takes 2 or 3 years
before we get into the implementation stage, we'll open up another public
hearing in terms of approving these concepts. $o I think in our minds, at
least specific concepts are a little premature'at this point. We haven't
seen anything we really like and we're not going to decide on that at the
conclusion of this public hearing.
Chuck Devaney: Now what's your thoughts on this design with the
eliminating this front road? Do you think that's a waste or eliminating
access to the area?
Horn: Well I don't know. I think again it's, we really have to look at
the whole concept and see how the whole downtown traffic pattern is going
to work. I'm not so sure that that serves a real useful purpose at this
point. As long as you have some otheK way to.get at the parking areas, but
Housing and Redevelopment Authority
January 23, 1992 - Page 6
as ~ said before, I don't think any of us are really excited about any
particular concept that we've seen. So we can't really lock into a detail
and say yeah, that's something we don't think would, work, It may work. We
don't think this whole plan is going to work yet at this point.
Chuck Devaney: Yeah, and now budgets, is there, I noticed the amount of
trees they had planted there and if they're utilizing the existing trees or
what your limit is? Is there any kind o{ budget requirements?
Morn: We haven't even gotten into that. As we said, we didn't get the
financial portion of this yet and as with any type of concept like this,
there's really a wide range of what you could spend.
Ben Gowen: Well thanks for your time on this and I'm glad this isn't going
to happen today because this is another jungle.
Horn: Yeah, this won't happen today. Any other comments? Anybody else?
Chmiel: No, I think basically what you said is true. We're not looking at
having this go through in the next 6 months. More like probably 2-3 years
before we determine what's really going to be there so there's going to be
a lot of open discussion on it.
Horn: I think though, it may be appropriate at this ~tage and especially
in light of the fact that there will be another review of this, public
hearing at the City Council level, that the HRA could close their public
hearing on the concept of developing a park. I think that's been generally
a positive response. And again, watch the paper for the public hearing at
the City Council level and then gather up a-c~owd. Any other comments or a
motion to close the public hearing?
Workman: I guess I just wanted to interject one thing in relationship. I
would hope that we could get this done as sdon as possible. 2 and 3 years,
I get more and more impatient as I get older I guess.
Horn: You're in the wrong business.
Workman: Which reminds me of when he asked the budget question. I thought
well, we're the government, we don't have a budget.
Horn: Just raise taxes right?
·
Workman: That's right. The qdestion was raised to me by a person who
lives in town and Don brought up the Pauly./Pony/Pryzmus site as far as,
well the person brought it up to me. Well don't you think we ought to find
out what we're going to do with the Pauly/Pony/Pryzmus site before we know
what we're going to do with this site? Now we've got a couple of sites in
limbo kind of thing. Question. And I said, in all likelihood it would
probably be a library and I don't know, maybe a senior center complex
attached. Well, do we know that or don't we know that and the person was
curious as to know what's going on there before we did something else on
another large parcel. Another. large undertaking. If we're 2 yoears away
from Pauly's vacating.
Housing and Redevelopment Authority
January 23, 1992 ,- Page ?
Ashwor th: 3. 3+.
Workman: I thought it was less than that now.
Ashworth: 1994. I believe that's mid-1994.
Workman: It would seem to me that that is a perfect amount of time to Plan
what we're going to do in that time rather than waiting until we tear down
the building and then spending 3 more.years to decide what we're going to
do. That's typical government and typical cost escalation I guess so maybe
it's related, maybe it's not but that person brought it up and so I'm
adding it to the record. But maybe we can get going on that. Again, I'd
like to see something like this going. It's the same thing with community
center idea. Well, if you wait that long my kids are going to be too old
and I don't need a community center in 6 years because my kids will be in
college. So I like to think about it. I don't know that we're maybe that
far off. I appreciate the input with some drawings. I'm not in favor of
leaving the road there. I don't think it's enough of' an effect with the
road left in there. I didn't at first think we should be tearing up a
perfectly good road but I think now that if this is going to have an
impact, I think it needs to be done. But just some of those thoughts about
what we're doing in an overall sense of downtown with this park and
libraries and other things.
Horn: I don't really personally see how this ties in with that. I think
we look at this process and to me we've got the City Hall here. That's
here today. We know that's here and do we want to deal with a park next to
it. As far as, and there are a lot of scenarios on how that could play
out. If that turns into a senior citizen area and maybe we do want to keep
this building here as a temporary senior citizen until we work into a
permanent senior citizen plot on this other property.- I think there's a
lot of scenarios we could work with here but the main thing is do we want
to look at a central park in this area. That's basically what we're
focusing on tonight.
Chmiel: Yeah, and if I could just interject. The two sites are sort of
unrelated from each other but in the planning process to determine What
you're going to do in x number of years, you have to take all those things
into consideration and once you do by 1994, if and when they're out of
there and those buildings do go down, that's when your construction starts
taking hold. $o we're looking at 3 years from that aspect over there.
This one could be, you know could be done in 1993 as well' but it's not
going to be done in the next 6 months or the next year. Because there are
different ideas and concepts that we have to look at'yet for what our basic
needs are going to be for City Hall with that expansion on it and how many
more employees would be necessary to keep the city functioning as we have.
$o there's a lot of things we have to look for.;.
(There was a tape change at this point in the discussion.)
Workman moved. Chmiel seconded that the Housing and Redevelopment Authority
close the public hearing on the Central Park concept plan. All voted in
favor and the motion carried.
Housing and Redevelopment Authority
January 23, 1992 - Page B
CONSIDER ACQUISITION OF THE GATEWAY CENTER (HANUS FACILITY}.
Ashworth: ...and today the Hanus site has become really an eyesore a~
you're going down the highway simply because of how they've now expanded
the highway over into that area. For the past several, oh I'd say 3 to 4
years Brad has been working with various people in trying to maintain that
as a viable area for businesses within the community and getting investors
in and I think Gary Kirt who previously wa~ a part of the In~tant Webb
building has continued to support Chanhassen and has held an equity
position in that property. Mr. Kirt really wants to get out of that
position. I am very, very concerned that future ownership of that just
lends itself to exactly what we saw occur in what was referred.to as the
Loballo Building on West 78th Street. You had an absentee owner. He
leased the property for the greatest number of dollars he could and that
provided all kinds of outside storage problems. That's when we had the
boats down there. We had two car dealerships. We had the'furniture
repair. We had one nice one was we had a donut shop but most of the uses
were inappropriate for our downtown area. I can assure you that in 5 years
from today, that Hanus property will be leased to people who will want to
take advantage of that frontage on TH 5. You'll see a Winnebago
dealership. You'll see whatever it is that can take and act as a sales
area for those businesses. It's going to continue to be a problem for you.
For the City. It also represents the entry into what would be our
properties which are the Taco and the Red-E-Mix property. So whatever use
we come up with for that 500 strip of' property that's 200 to 300 feet wide
at that point, you have to recognize that that's our main entry to our
property. I think that we have an opportunity at this point in time,
recognizing that you have an owner who is-willing to sell at literally, he
just simply wants to get back t~e capital that he's put into it. We've got
an opportunity to acquire this for virtually nothing. Within using the
taxes, increment off of the property itself, I can't remember what I used.
I think a 5 year period. That that entire acquisition would pay itself off
without any other dollars going into the property without the use-of any
other type of.
Chmiel: How many years would that take Don to pay it off?
Ashworth: I just said 5.
Chmiel: You said 5 years here.
Ashworth: 5 years was in the report. 'I knew I had calculated it out and I
couldn't recall what I had actually gone through.
Horn: Maybe you need to show us how that works. It seems like we're
paying $225 and then assuming an outstanding debt of $508 which comes up to
$713 and we can receive $30,000.00. Is that per year? I don't know how
that works out in 5 years.
Ashworth: The basis for that. There's two factors. One, you have the
$30,000.00 per year. The current taxes from that facility because when you
pay them, this would still be taxable during this entire 5 year period of
time. Taxes that are being paid off of that facility come back to
yourself. So by the end of the, I think it's slightly more than a 5 year
Housing and Redevelopment Authority
January 23, 1992 - Page 9
period, but the $508,000.00 loan is down one-third by that point in time
and the taxes generated off of the facility plus the positive amount per
·
year will equal then the amount you initially put up plus the balance at
that point in time. Do you follow me?
Chmiel: I got lost. If we own that property, how do we get taxes off of
that?
Ashworth: With current leases in place, we could not not have it taxable.
$o right now Harry Pauly pays taxes.
Horn: So you're talking about $30,000.00 in addition to taxes?
Ashworth: $30,000.00 in addition to taxes, yes.
Chmiel: Okay.
Workman: Who'd manage the leases o-n this?
Ashworth: We would propose a management agreement basically similar to
other types. In this case we would look to Lotus Realty and they would be
paid on a basis of the gross leases but that would be to the extent that
positive balances were received off of the property.
Horn: That says we'd' collect what, over $130,000.00 a Year taxes on that?
Ashworth: No.
Brad Johnson: $30,000.00.
Horn: $30,000.00 in taxes, plus $30,000.00 Positive cash flow? We need a
banker or something.
Brad Johnson: You've got 3 different types of returns. You've got cash
flow of about $30,000.00. You've got taxes of about $30,000.00 and then
you've got equity built up in the mortgage of another $30,000.00.
Horn: Okay, so that's 90.
Brad Johnson: And that's, I've been trying to find the equity build up
factor in here but I think what Don was trying to. say is, if you paid off
the mortgage, could conceptually pay off the mortgage...
Workman: Maybe you can explain how the equity build up works.
Brad Johnson: In that particular loan has a 15 year term.
Workman: But if you don't sell the building,' if you tear the building
down, how do you pay to recover your.equity?
Brad Johnson: The land is worth today about $400,000.00. Just the land.
Ashworth: That was it. I had factored in.the value of th'e raw land at the
end of the transaction period.
Housing and Redevelopment Authority
January 23, 1992 - Page 10
Horn: Yeah, that works.
Brad Johnson: If that building wasn't there, it would be best site in town
for any kind of development because...
Chmiel: So I'm figuring with the raw land you could almost have it be 8
years rather than 5 years. If you factor that in then it should bring back
down.
Ashworth: With the leases in place and the way time seems to fly by, I
doubt very much that you'd consider knocking that down in a '5 year period
but you would have that ability and that's the reason I've thrown that
number in. In my own mind you're probably looking 'closer to a 10 year
period. But that's going to be a future decision back to this group.
Horn: So what are we looking to do tonight?
Ashworth: Well if generally the terms, I should have noted, the previous
memo had brought up an amount of approximately $200,000.00 plus outstanding
loan of $600,000.00 and the actual getting the documents back. The overall
numbers still fall in place but the mortgage at this point remaining is the
$508,000.00. The amount to be paid over to them would be $225,000.00 so we
would then establish an escrow account as a part of this to insure, I mean
we don't want to leave that-property as it is for the next 5 year period of
time. You want to see fencing go back on there. You want to see
landscaping. You want to insure that during the next 5 or 10 year period
of time that it looks as nice and so again, the total dollars are really
the same as had previously been presented. They're just kind of in
different buckets.
Horn: Okay. Comments from the group.
Workman: Are we, I don't know maybe it was a year ago when we were talking
about this whole parcel as an entire piece and Hardee's and whatever~ Am I
sounding like a cynic tonight?
Horn: That's because you don't have your tie on.
Workman: My wife grabs that. You know we talked about the thing as an
entire site and we kind of didn't do that and now Amoco upgraded, not that
they needed our permission or anything and now we've got a little orange
box sitting there when they're changing oil and you know, if we buy this,
does that do enough to this entire site? I consider it gasqline alley now.
You know we're talking about 5 to 10 years. Would it be better for us just
to buy fencing and landscaping and take care of that and go or are we going
to buy this and maybe buy it down? I suppose tear it down 5 or 10 years
and then you're just looking at something else or again what would go
there. What would we finance to go there? 10 years from now we'll
probably be in another cycle. Who knows.
Horn: I guess my only response is that we asked our'selves these same
questions the last time we looked.at a bigger portion of this and we said
well, maybe we really don't"want to bite off quite that much and look what
we got.
Housing and Redevelopment Authority
January 23, 1992 - Page 11
Workman: Now this building's not moving.
Horn: We could look at it that way again and say well, gee. It' couldn't
get any worst but we might be surprised again.
Chmiel: Somebody else come in and rip it.down and'put up a bunch of.
Horn: Those are the legitimate questions. The right questions to
consider. Don, your comments.
. .
Chmiel: Well, I had some of my comments. I didn't quite understand what
the financing was on it. Here again we open ourselves up for possibly a
lot of controversy on this but there again 'if that existing facility
remains, anybody can come in there and decide to maybe rip it down or leave
it as it is or not have the maintenance and upkeep of that building. And I
think too that, it's 9oing to need something done with it. That fencing's
going to have to go back up. Some of that maintenance upkeep is going to
have to be there. As I look at it, I think it puts the City'in a very
positive position for making sure that we get-what we want rather than not
getting something that we don't want, as we've had.to swallow every once in
a while. So from that standpoint I thimk it would be well spent dollars to
look at it from that point.
Horn: And the return time is not all that bad. If you look at what you
get if you invest your money in other places or get your 3~ interest or
whatever, I guess the other investment options aren't all that attractive
either. And here you can get about the same return and keep control of
what's going on.
Chmiel: And the other thing I'd like to see is what are the additional
costs if we were to have somebody take care of this facility. I'd like to
see what those costs would entail as well as a part of the full picture.
Horn: Well I think we'd like to see that stay within this 5 year frame. It
looks like there's some built in room there to do some improvements and
still stay within that 5 year period. But we wouldn't want it to move that
5 years to 10 years for instance. I think that's what the Mayor's asking.
Chmiel: Yes.
Horn: Jim.
Bohn: I agree with Don. As far as owning that property and seeing what
goes on it. Having control over that property. We.don't want another
surprise. Another orange building or purple one. Sateway to downtown.
I think in the best interest for us to own the property.
Horn: Okay. Is anyone ready to make a motion to accept staff's approval
on this recommendation?
Ashworth: Mr. Chairman, I was going to say. I haws but one regret and
that is that we were not in a position or did not bring this in front of
you a year ago or 2 years ago. Whatever the timeframe was that would have
Housing and Redevelopment Authority
January 23, 1992 - Page 12
been prior to the orange box going up 'because we had that same opportunity
then.
Horn: Well I would accept a motion for staff's recommendation if someone
is willing to move that.
Bohn: I'll make the motion.
Horn: Is there a second?
Chmiel: I'll second it.
Horn: Further discussion.
Bohn moved, Chmiel seconded that the Housing and Redevelopment Authority
authorize the City Manager to proceed with acquisition of the Gateway
Center as stated in the staff report.- All voted in favor-and the motion
carried.
REQUEST FROM ROBERT DITTRICH (OWNER OF AMERICAN BANK) TO PURCHASE OF
PORTION OF WEST 79TH STREET PROPERTY,
Ashworth: In presenting this 'item I Would like to take a backdrop for a
minute and to talk about our West 79th Street property. I think that we
have received probably rightly so, criticisms in terms of the previous
agreements as they dealt with Mr. Weir and the potential sale of that
property to what he thought was going to be Crossroads Bank. .He had
presented his plans as to how he would do a phased development on the
second portion of that property. The easterly half of that property. As
you're aware, those plans fell through and the HRA, we literally received
no money for taking that property off of the market for a 2 year period or
maybe a 3 year period of time. But following that, the HRA did authorize
staff to attempt to market that property and for the past year we have been
trying to receive interest in that. We've taken out ads in, what are some-
of the magazines?
Gerhardt: Rural State 3ournal, Minnesota Business and Minnesota Corporate
Report.
Ashworth: I thought Todd did an excellent job of putting in the graphics.
The locational area of the property in relationship to Chanhassen, the
metro area, etc.. Those publications did not receive any form of response.
As of today we had not or did not generate response from those. We have
felt that American National Bank or Community Bank, Arcana was-and would be
constructing on the Market Square property. They had received approval
from the Planning Commission and Council for that site and as far as staff
was concerned, that's where they were going and we h~ve never approached
them in terms of them being considered for the 79th Street property. So it
was by their own decision and without Prompt from us that they presented
this proposal to you which is to purchase a portio~ of the 79th Street
property. In doing that they conveyed to staff that the agreement, that
existed between them and Bloomberg Companies was void and that regardless
of a sale to them on the 79th Street property of not. That they would not
relocate at Market Square. I do not know why. What their decision process
Housing and Redevelopment Authority
January 23, 1992 - Page 13
was nor did we verify that the option agreement with Bloomberg was or was
not void but that was their presentation. Randy Schultz is here. I'm sure
he wishes, would like to' take and speak to the Commission. I believe that
3ohn Rice is here and would also like to speak to the Commission. The
proposed sale agreement includes and did we include a copy? No, we did
not. They did present a specific purchase agreement. Maybe you could make
a copy of that Todd and distribute that. I was gone late in the afternoon
when this packet went out and so I did not see that we had not included
that purchase agreement. Proposal as it differs from the Crossroads
proposal would show them purchasing approximately 70,000 square feet
instead of the previous 110,000 square feet. The price Mr. Weir had
proposed, $4.00 a square foot. Americana is proposing $3.75. I~ terms of
terms. Terms, we don't know if Mr. Weir would have come in with some type
of a last minute proposal asking that the HRA carry that for a portion of
time or not. Everything appeared to be presented in the form of a cash
purchase. Americana proposes to carry the contract, and this is solely my
error. It shows a 2 year period. It's 7 1/2. There is a provision in
there for a portion of it to be paid, a portion would be down, a portion
paid in 2 years and a portion 2 years after that. My recollection is that
the $50,000.00 to $60,000.00 initially paid. I thought it was $100,000.00
at the end of the 2 years and $100,000.00 in the final.
Randy Schultz: That was initially at closing...
Ashworth: And that is in the proposed purchase agreement that they did
submit to my office and so my dictation here was not clear. I saw the
first 2 year payment portion and that's my error in not seeing that there
was the carry to the 4 year timeframe. 2 and 2. I personally do not see
where the issue of the terms, in terms of how they would pay you should be,
the decision to sell to them should be based on whether or not these are
favorable terms or not. For those who might contend that we're someway
subsidizing their purchase by providing literally a loan at a below market
interest rate, I would counter that type of statement saying'if they came
in with cash, recognizing the current financial position of the HRA, we
would end up going back out into the market trying to find some investment
vehicle to put that money to use for you and in today's market you're
talking about 4~ to 5~. In fact I don't know if you can get a 5~ over that
period of time. In fact I asked our finance department to go through a
calculation as to the differences and there's no question we would be in a
much better position carrying-this as they've shown it. Conditions.
They're basically stating that they will purchase the property, the
previous one with Mr. Weir. I had, it was referred to as soil corrections
but if you read into the specific contract further you could see where that
could easily be used to include site grading associated with the bank.
Work that might typically be done; I personally think that the value of
that previous contract had to be reduced somewhat recognizing that in fact
Mr. Weir had placed that in there in an effort to reduce his landscaping
costs. Future development. This is an issue that the HRA spent a lot of
time in trying to determine which of the three proposals that have been
presented 3 to 4 years ago, which ones were the best. Mr. Flaherty's, Mr.
Weir's or our good friend, Tony Pfi'efer. And at issue was is, which of
those did we think would be able to develop out' the entire site. Current
proposal is solely to purchase the westerly 70,000 square feet. But who
knows again, Mr. Weir is under no requirement to build out that second
Housing and Redeveiopment Authority
January 23, 1992 - Page 14
. .
phase. He simply had that option. Since he didn't build out that first, I
kind of question whether or not we would have built out the second. As a
summary type of position I' would state that again, we di~ not go out and
try to solicit Americana to this site. We did not in any way want to be
involved with negotiations that they might have with Bloomberg as it might
deal with the Market Square property. And again I think the question back
to Mr. Schultz and Mr. Rice may be why they made that decision and whether
or not it's a valid decision. But I think from an HRA standpoint, our
primary objective has been one of trying to bring businesses within in the
community. Expand the opportunity for our citizens to be able to shop' Be
- .
able to have services available to them. We have never tried to take a
position that 3 restaurants are not enough and 4 restaurants are too many.
We've always looked to really the private a~ea to make some of those types
of decisions. I guess what comes to mind is when the Rigeria had
approached us. We could have had concerns raised by the Prairie House that
the HRA shouldn't help the Riveria make their property look better because
that might create a form of competition for them.' That never happened.
When the hotel was proposed, we could have had a lot of opposition by
Larry Zamor and that didn't happen. As time went on, it's kind of ironic
because we then did turn around and help the Prairie House and we did turn
around and help the hotel. We have over the years questioned different
developments and I think Mr. Chairman, you might have been one that
questioned the necessity for the storage facility-out in the business park
and what type of image that might create and should we really get in and
subsidize that type of a business or encourage them into the community. I
think the bottom line decision that we made was,' if in the free marketpiace
that is their decision that they want to locate in Chanhassen and at'that
location, we should solely be trying to encourage business into the
community and not trying to take a position as to if location in one area
maybe hurts somebody or helps another business or whatever it may be. I
don't think we've ever looked at our role from that side of the coin a~d I
don't think that we should. I think that if we ever got to thelposition of
saying 4 restaurants are too much, I don't think we'd be doing our job. In
conclusion, we've always supported Americana's position to go on Market
Square but if at this point in time they feel that they cannot and will not
build on that site and if it's determined that that previous agreement is
null and void and if it is their position that they would like to build on
that West 79th Street parcel, the westerly 70,000 square feet, I believe
that we should approve that proposed sale. Again I do not think that the
terms should be a factor in the decision as to.whether or not it should be
approved or not. With that again I'm.sure that Mr. Schultz or Mr. Dittrich
would like to make a presentation as well as Mr. Rice.
Horn: Well you answered my first question and that's the counsel on what
the HRA's role should be in'this whole proposal. And the only thing that I
would ask after we get our presentation is a recommendation on what-our
next step should be. Would you like to start?
(There was a tape change at this point in the meeting..
Robert Dittrich: ...when the Market Square project was planned or when it
was near planning. When we finally talked to these people last year. As
it was just indicated, our particular outlot was never iD any of the
financing arrangements. If plans were being made that funds from our
Housing and Redevelopment Authority
January 23, 1992 - Page 15
purchase were going to fund the necessary equity of the Bloomberg
Companies, I don't believe that that kind of reliance by the Bloomberg'
Companies was appropriate considering that all we had was an option
agreement. Please, let me state again we had an option agreement. We did
not have a purchase agreement. Let me address the fact that We, Mr. Ribs
has indicated that our option agreement is not void and I guess I'm totally
flabbergasted and surprised by that comment because I have the option
agreement right here in front of me. I can read the clause, this agreement
was written by Mr. Rice. I'll just read one sentence. Americana may
cancel this option agreement by notice as provided in paragraph ll hereof
in the event that Bloomberg is not able to record prior to or
comtemporaneously with the time of closing of the contemplated transaction.
Horn: Excuse me, I think that'S really not relevant to what we're doing
here. I'm sure it's very relevant for you two but I don't"think.
Robert Dittrich: I just want you to know that we have canceled the option
agreement per the terms and that is no longer a condition.. We are no
longer interested in the Market Square site. We want-to pursue with the
HRA site. We believe that would be the best site for us in town. That's
what I'd like to say. I could go on to mention that we could have canceled
this option agreement back in August and I doubt if there would have been
any of these arguments at this time but we chose to give the additional
time to the project. But we do believe the HRA site is the best site for
us and we would like to get started.
Horn: Okay. Any other questions? 3ohn or Randy or anybody else? This is
not a public hearing but we'll open it to any other' comments that anybody
in the audience would have.
Chmiel: Tom had something.
Workman: I don't know where even this letter is relevant. I guess it
doesn't have anything to do with us.
Horn: I agree.
Workman: Cutting off Mr. Schultz or whoever, it has nothing. Well maybe
we're technically partners in the Market Square site really. Not the
outlot I guess. It gets confusing but I don't know where any of Mr-Rice's
comments really have anything to do with us. I guess if there's some
question as far as that agreement being void or not void has not to do with
us but separate legal action. I don't know where that would go but it is a
dilemma and even to the point where as an HRA and a developer, where we own
land and we're kind of players along side of the free market and in this
situation we have a bank in town and we're helping another bank in town.
maybe that's good for us and how many banks, you know. And it could be
switched to any man or maybe we help another doctor's clinic in town. Is
that good or is that hurting the other clinic in town? But those legal
questions, I don't dare touch. I have the same questions and concerns as
the Mayor. Is this enough of a structure, it's very difficult for me to
tell the bank how much or how little space they need. I don't know if
I have anything to compare it to. Maybe Mr. McShane can tell me how many
square foot he has on his bank level. That would give me an idea.
Housing and Redevelopment Authority
January 23, 1992 - Page 16
Kevin McShane: We have a 10,000 square foot total.
Workman: Okay. And that's by no means a huge building. And this being,
I guess what kind of eats at me a little bit is that this building is what
was to fit in a small lot. It is now on .a larger lot, what was the square
footage on that outlot?
Gerharat: 40,000.
Workman: Okay. And now it's on a.much bigger lot and obviously they're
doing something, impervious surface and everything else. From the TH 5
perspective, is this going to look like much of a buildi.ng or a building
that we want to have. Or should we care I guess. That's kind of an
elusive question. I have great concerns about lots to the east. If at
this stage we're breaking up those lots, maybe that's the only way we can.
do it and building a mall there probably sounds like it will work real
soon. I guess I still have some concerns and maybe Don and Todd you can
tell me where we're going to head next with the remaining lots. From there
to MGM right? And then I'm assuming that we do'not have some of the same
concerns or for whatever development contract we develop with these people
that we had with the other bank site in that the outlot across the street
and their monument and how high it's going to be, etc..
Horn: We don't want to get into that again.
Workman: Yeah, and so I'm refreshed that these folks are anxious to get in
and will probably have the wherewithal and the means to do it and we aren't
going to be held hostage by an agreement that will tie up what we have
planned for the city. But with that monument out front and their smaller
bank behind all of that, what do I see and I don't know that I know that.
Horn: What was the size of the Crossroads proposal again?
Gerhardt: 12,0'00.
Horn: 12,0007
Chmiel: 12,000 total square feet?
~udience: Two floors.
Bohn: Crossroads only had one floor I thought.
Gerhardt: It's a one floor structure. It was a 10,000 with a 2,000 square
foot expansion.
Chmiel: Okay, total of 12,000 is what you're saying. If we look at what
they have here it's about 11,468 with their extension Of Phase II and that
would also give them, with Phase I and Phase II, 5,744 square feet total.
Workman: What was the ground floor of Crossroads?
Gerhardt: I always thought it was a one story.
Housing and Redevelopment Authority
January 23, 1992 - Page 17
Bohn: It was a one story. Crossroads was one story.
Workman: The Phase I ground floor, well.
Gerhardt: And that was on 110,000 square feet of lot.
Chmiel: Larger size, yeah.
Horn: So the ratio.
Workman: It's difficult to tell a bank, build it bigger because that
doesn't maybe make sense.
Gerhardt: That was with a one story facility and this is a two story.
Chmiel: And you've got 35 feet in height.
Horn: So if you're talking about worrying about covering up something with
an entry monument, you'd be more likely to cover up a one story building.
Workman: Well, this is a key lot. All I'm saying is it's a key lot and
entry lot, you come down the bridge from the west and you see.
Gerhardt: Randy and Bob have both seen the entry monuments and they're
aware that we're going to put a sign and a similar type clock tower that we
have in the downtown but about 10 feet taller than that. They had no
problem with that as long as you didn't put another structure, or a
building there. What our comments were...
Bohn: I have a comment.
Horn: I'm sorry, are you finished Tom?
Workman: Yeah. Just that I do wrestle with the question on how you pick
sides because eventually you have to do that. 3 years ago this past
December when I was, was it 3 years ago? I was just getting on the Council
and we had the whole deal with this lot. If we tell Americana people about
the ghosts on that lot they'll probably bolt. But just the concerns about
the long range plan of that whole area and how it will look. Apparently
staff feels comfortable with that.
· Horn: 3im.
Bohn: By the way the bank, the view you see the bank coming over that
bridge. You're going to see it on an angle. This is going to give it a
larger appearance because you're going to see two sides at'one time. Like
the drawing shows here so it's going to look bigger than what it probably
really is. See it from the bridge.
Horn: Anything else?
Bohn: No. I'm quite satisfied.
Horn: Don, any further comments?
Housing and Redevelopment Authority
January 23, 1992 - Page 18
Chmiel: No, I guess I made my comments.
Bohn: Oh, I had one more comment or question. What would make you decide
to put Phase II on?
Bob Dittrich: Phase II we would hope that We are received' positively in
the community and that as soon as the growth dictates it, that's when Phase
II happen9 and we hope that would be within a matter'of years. Our present
facility in the inside drawing that we have a number of offices and as soon
as we have found that we need to hire additional load officers to handle
the customer business, that would obviously dictate that we need to expand.
We hope that we're back to get approval for an expansion in a very short
period.
Bohn: Would the bank be using the second floor or w6uld that-just be
rental space?
Bob Dittrich: At this point our initial plans would be to rent out the
second floor.
Bohn: And you would use the second floor for bank use?
Bob Dittrich: No. Second floor would be rental.
Chmiel: That raises a question.
Horn: Yes, signage. Goldstar signs?
Chmiel: With renting the upper portion, I don't know how many offices can
go up there. The parking spaces that are designed. Will that accommodate
those tenants?
Bob Dittrich: Well, what you're seeing is a proposed, just original, the
beginning proposed site but we would obviously abide by any regulation of
the city for the necessary parking. I believe Klm had visited with Paul on
our previous site with the same' building and they came up with the
.necessary parking.
Klm: Those parking requirements are for the offices.
Horn: Other questions? You probably picked up our concern here if the...
rental property for the type of signage. 'Obviously none of us have been
too enthralled with some of the gold big signs that we've seen on some of
.
our buildings.
Bob Dittrich: You can be assured gentlemen that we will'not be putting up
gawdy signs and I'm sure we have to go through Paul to make sure that
that's appropriate. And we would plan a very extensive landscaping plan...
We'd be very happy to...
Horn: Further questions? Comments?
Workman: I'm assuming this would all have to go through Planning
Commission?
Housing and Redevelopment Authority
January 23,' 1992 - Page 19
Chmiel: Yeah.
Horn: What's our next step-Don? What's our action tonight?
Ashworth: Should the HRA agree that this is a reasonable idea, you 'could
move to actually authorize the Chairman and myself to enter into that
purchase agreement. With all of our properties, as we've done sales and
development proposals, we have prepared a development contract that's been
a part of that actual sale or our participation. I would see your action
being one to authorize the preparation of development contract in
accordance with what has been presented here. Updating the, providing the
abstract over to them in preparation for closing and again having the City
Attorney verify that the purchase agreement that they have drafted
coincides with the actions that, the recommendations being made by staff
and the action of the HRA. I would anticipate having those documents back
before you for our next meeting. I think your action tonight would be
either to say you're in agreement with the terms that have been presented
and you're ready to move to the next step of the purchase agreement and
development contract or not.
Horn: Do I hear a motion one way or the other?
Workman: I'd move to prepare the documents.
Bohn: Second.
Workman moved, Bohn seconded that the Housing and Redevelopment ~uthority
direct staff to prepare a purchase agreement and development contract
between the HR~ and Americana Bank. ~11 voted in favor .and the motion
carried.
Ashworth: I should note that I will try working with Mr. Schultz and Mr.
Dittrich in terms of some of the concerns I've heard here this-evening
regarding the size of the facility. You asked if staff was comfortable
with the proportion of it and again I would state, the developme'nt of
11,500 is exactly the same size as the original portion of City Hall or if
you take the first 40 feet of City Hail'going the other'direction. We've
all stated that City Hall has a very dominate type of position from TH 5
and within the downtown areas. I think if the size is basically two-
.
thirds of that, yes. It's going to be smaller. You also have to recognize
·
that they're proposing to put on a very high roof element which is
literally the same as adding almost a third floor to this structure so I
don't think that this is a small structure. But again we will attempt
during this next 30 day period to see if there's a means by which we can
assure that that additional, what do they call it, the optional-area does
get developed. Maybe there's means by which we can encourage that and have
this back to you for your next meeting.
CONSIDER APPROVA~ OF 1992 MEETING SCHEDULEI.
Horn: Okay, any problem with the proposed 1992 meeting schedule?
Workman: I'd move to approve it.
Housing and Redevelopment Authority
Sanuary 23, 1992 - Page 20
Horn: [s there a second?
Bohn: Second.
Workman moved, Bohn seconded to approve the 1992 Housing and Redevelopment
Authority meeting schedule as proposed. All voted in favor and the motion
carried.
Horn: Last item on our agenda is approval oi= the bills.
Chmiel: [ only had one problem with the calendar. [ had one night that
will be HRA and, [ can't think of it. But, Scott I~IaTT'S bunch..
Horn: Oh, Public Safety?
Chmiel: Yeah.
Horn: Is that every month or once during the year?
Chmiel: No. There's only one in there.
Horn: Okay. Well we can consider moving-that when it comes up. We may
want to move that. We may have to.
Gerhardt: Would you 'like to modify that to the 14th?
Horn: Which date is that Don?
Gerhardt: Is that in May?
Chmiel: Yeah, I think it ~as May. I got through putting my whole time
frame. No, it wasn't May. Wel-1, we can look at that and probably discuss
it at the time.
Horn: Okay. Any comments on the bills?
Workman: I move to approve the bills.
Chmiel: Second.
Workman moved, Chmiel seconded to approve the Housing and Redevelopment
Accounts Payable as presented. All voted in favor and the motion carried.
Workman: Mr. Chairman? I was not at the December 19th meeting and it
shows me present so.
Horn: In the Minutes?
Workman: Yeah. I showed up about that time.
Chmiel: Yeah, you came in late.
Horn: We'll approve the Minutes wit~ the noted exception.
Housing and Redevelopment AuthoT£ty
~anuary 23, 1992 - Page 21
Chmiel moved, Workman seconded to'adJourn the meeting. All voted in favor
and the motion carried. The meeting Nas adjourned.
Submitted by Don Ashworth
Executive Director
Prepared by Nann Opheim