EDA 2001 11 01CHANHASSEN ECONOMIC
DEVELOPMENT AUTHORITY
SPECIAL MEETING
NOVEMBER 1, 2001
Chairman Boyle called the meeting to order at 6:30 p.m.
MEMBERS PRESENT: Gary Boyle, Linda Jansen, Robert Ayotte, Craig Peterson, and Jim Bohn
MEMBERS ABSENT: Steve Labatt
STAFF PRESENT: Todd Gerhardt, City Manager; and Bruce DeJong, Finance Director
PUBLIC HEARING:
PROPOSED LAND SALE OF CHANHASSEN BOWL PROPERTY, 581 WEST 78TM STREET.
Boyle: We have two presentations to be limited to 15 to 20 minutes each. Do you want to brief before this
Todd anything?
Gerhardt: No. I think if we go through the presentations and let each of the presenters give to the public
their proposals and then open it up for comments I think would be a good process.
Boyle: Okay. The presentation by Big Bear would be first then please.
Vemelle Clayton: Thank you Mr. Chairman. My name is Vemelle Clayton. I live here in Chanhassen as
you know, and we're going to be attempting to do tonight in about 15 to 20 minutes what is normally done
in days and weeks. That's not only to explain the benefits of our, of the Big Bear proposal but also to
discuss the concept behind our design process. We want to create a dynamic urban infill, mixed use project
on what is now an under utilized area here in Chanhassen. A recent buzz word commonly used now is
place making. This is really an important project for the city. You all had the foresight to acquire the
bowling alley site which created this opportunity, and prior plans for the bowling site have been
discouraged on a stated basis that there needed to be an overall plan for the area which is encompassed in
our proposal before a specific plan for the bowling alley site could be approved. Those same discussions
which took place during the review of the cinema proposal also suggested that there should be some way to
assure that Pauly Drive could continue on through to Great Plains. Our proposal is intended to provide you
with that vision and with that access. We at Lotus Big Bear and the adjacent land owners are willing to be
involved. It doesn't have to be Lotus, but we do have a proven track record and we think it makes sense.
You do need Bloomberg. As to Lotus' prior involvement in our downtown and to a large extent
Bloomberg's, I have a small map which I'll show you. The blue is an outline of our downtown area with
Powers Boulevard over here on the left...there is Axel's. This little spot is the new Remax building. This
is the Hanus project. The Village on the Ponds project on the south. The blue area indicates the area in
which Lotus has been the coordinating developer and put together the folks that put together the projects in
all of that blue space. The hatch mark blue space is an area where Lotus...buffer. And the hatch mark
here indicates Bloomberg, and the hatch mark through here indicates the folks which included Bloomberg
and other development in our project. Bloomberg was involved in this part, and this part and others
developed here, others developed here. Some of the folks that have also been involved with us in this
project.., and we're continuing basically with our same team. In addition, Lotus has been involved in other
communities including Chaska's downtown, a couple of blocks there, and currently an exciting residential
development of 300 units and a civic center called Cloverfields in Chaska. You'll hear from Michael Lam
Economic Development Authority - November 1,2001
later. He's involved as the planner on that project. Tonight's consideration is really about 3 key issues.
One, planning for the future of the Dinner Theater. Two, economics. And three, adding a new dimension
to our downtown. Taking those items briefly in order. As to the Dinner Theater, to some extent
Chanhassen's downtown has come full circle in our proposal. In 1968 the Dinner Theater was the first
major downtown improvement. It put Chanhassen on the map, and it's kept us there for 33 years. In total
bringing millions of visitors and their dollars to Chanhassen. This project is necessary in order to assure
that we keep the Dinner Theater on our downtown map. At some point it's needs will have to be addressed
and it is our judgment that dealing with them within this proposal will be the most cost efficient, both for
the Dinner Theater and for the city. If the economics, you're the economic folks here tonight so I won't go
into a lot of specifics. Suffice to say, it's about tax base and spending power. An expanded tax base
results in tax relief for our homeowners. The spending power of residents of up to 300 dwelling units all
within walking distance of our business help assure our businesses success. And I have a little spread sheet
that shows what, a sheet that shows what we'll be doing. The capacity of this.., important things to the
cinema owner is that he be able to add 2 new screens and reconfigure his entrance and.., accommodating
that so there would be an enhanced value for the city. The frontier building.., that would be totally
renovated or partially renovated. It'd be upgraded and.., increasing the density to 120,000 square feet
approximately of office and commercial. And within the area, 275 to 300 residential units. The Dinner
Theater, as I mentioned, would be primary... As I said, the spread sheet doesn't attempt to compare the
actual tax dollars gained compared to what are being collected now but from your experience you can tell
that it would be a dramatic. And the letter that I handed out indicates that there is real interest in the
housing component. As to the third issue, our place based strategy, I'll be turning the podium over to Mike
Lam but before I do that, I just want to mention that we have some important comments regarding the pros
and cons listed in the staff report. I don't feel that I have time to discuss them with you, or Mike won't
have time, but I hope that you can find time to read my handout. Among the most important points in the
handout is that our's is also a 1 year proposal and that triggers a rebuttal I guess for some of the other
comments that suggest it might take longer, might cost more and that sort of thing. And also that it would
be very difficult to accommodate the Dinner Theater's needs if we took control of that bowling alley site.
And I also want to say that John Rice is here. He's the legal counsel for Bloomberg and he's here in
Clayton Johnson's place. Clayton had to be out of town. Brad also had to be out of town as you know
he's part of our team who very much like to be here and called me half a dozen times today with more ideas
of what I could say about the economic value and the intrinsic value of a pedestrian oriented. He listens to
tapes and was driving along all day and I got the feedback but I don't have time to tell you. Mike Lam then
of Hammel-Green-Abrahamson. He's had a lot of experience in designing this type of project and he has
the most interesting part of our presentation and I'd like to introduce Mike.
Mike Lam: Thanks Vernelle. Mike Lam with HGA and I just want to take a few minutes to talk a little bit
about, so the idea behind what we're proposing tonight with Big Bear. When Vernelle first mentioned this
to me and I took a look at the site, which you see up on the screen, I just thought it was a pretty incredible
opportunity. Everything in gray there is surface parking and really is rather under utilized. If you're
keeping up with what's going on in the country today and in the Twin Cities, redevelopment is a very big,
growing issue and especially in the Twin Cities. There's lots of communities are working on
redevelopment plans, realizing just the fact that this is much too valuable a resource and an asset in a local
community to continue. So the idea of thinking about how do we take advantage of and better utilize that
to make a better place for the local community is something I'm going to address tonight. One other thing I
want to mention too is, we're looking at this entire site from the standpoint that there has to be a first step
in any implementation plan for accepting any plan and that first step is the Chan Bowl site and we do want
to emphasize that. It really is the basis for who this entire site, this entire area, this district in downtown
Chanhassen can successfully be implemented so it's really key in terms of our proposal. The other thing I
Economic Development Authority - November 1,2001
just want to mention as a caveat very quickly is the fact that we're dealing with not just one site. This site
that's for sale tonight, but the entire area. The Country Inn and Suites obviously would remain. I think the
cinema we're talking about providing some additional screen area for, but otherwise we're looking at this
from a long term standpoint. A really big vision for a longer time period. So with that in mind there's a lot
of moving parts here. There's a lot of program that isn't completely defined yet. We understand that. I
think there's been some good discussions by Vemelle and her associates in terms of, and her partners in
terms of making this as close as we can. We realize more definition has to come and we're relying on
really a collaborative process from the city and stakeholders too for that to occur. Let me just quickly go
over this. If you can see in the left hand side here, can this move around? There you go. The Chan Bowl
site. It is outlined there. And again that would be Phase I and what we're looking at here are, in orange are
a couple of mixed use buildings. That would be phased in different phases. The orange or really more
commercial retail office type uses. As you can see the Dinner Theater's pushed up onto 78th Street really to
reinforce the notion of the main street in Chanhassen. The pale yellow buildings, this curvy one here, and
this pair here to the right are primarily residential buildings. And the whole thing really is sort of pinned
together with 2 major parking structures that would allow shared parking throughout the site. Not only for
Southwest Metro but patrons, users, shoppers, and so forth here and here. And obviously those would be
phased at different times with the notion that there would be some shared parking facility that would allow
implementation throughout the course of the project. And you can see here, this is very roughly obviously
we would want to think about phases within these larger phases. Phase I would obviously be comprised of
maybe a couple smaller phases, including a structured parking ramp in addition to the cinema, the mixed
use building that you see there, and put an aspect that we're thinking of in terms from a long term
investment, from a long term value for this site is looking at a slight realignment of Pauly Drive so that you
could double load that street. Would provide value on both sides of the street and really emphasize that as
a city street that commerce and business and activity is taking place on as opposed to doing away with it.
There's also a couple of green spaces you'll see in the center and over towards Great Plains Drive. Or
Great Plains Boulevard, that really could act as gathering places in front of the cinema, near the Dinner
Theater. Small intimate places that would provide some backdrop and setting for future development. Let
me just summarize a couple things about our proposal. I think you're looking at a home town team, and
Vernelle mentioned that. That is very interested in a collaborative, proactive approach here. I mean so
many times you talk about proactive and reactive events in our communities. We're suggesting and
offering a very interested and motivated team that wants to act proactively now as opposed to waiting and
reacting in a longer term vision where there is willing and active participation and cooperation now as
opposed to the potential having obstacles occur further down the road. Secondly, the idea that's central to
our notion here is that the Chan Bowl site is critical to Phase I. It allows all the other phases to
subsequently be phased in in terms of not only the first building but parking. It allows sort of the domino
effect of, if you will, of tenants and existing businesses to be relocated providing a suitable site for the
Dinner Theater and that chain of events to continue on. The third thing that I want to make a closing
comment about is a notion that we're offering and suggesting in a very enthusiastic way that we're
suggesting of building a place here as opposed to just building a project.
Councilman Ayotte: Building what? Say that again please.
Mike Lam: A place as opposed to just one project. We realize that place is a combination of many
components. We feel like we can bring all those components together. Sort of the old adage that 1 + 1 here
equal 3 as opposed to looking at this as just one project and we see the Chan Bowl site as the opportunity
to move forward. Forward towards a great place for Chanhassen. Let me just close by talking about the
city and, I'm no poet but I would quote William Shakespeare about the fact that a city is, what is a city but
the people and I think we're talking about creating a people oriented place that the Dinner Theater is
Economic Development Authority - November 1,2001
obviously a very important place today. Important destination. Not only for the community but for the
Twin Cities. We want to suggest taking those qualities of place and spreading them over the entire site.
Create a place that allows people to be here on a regular and routine basis. To provide a great setting and
future investment and development for the City of Chanhassen. Thanks.
Boyle: Thank you Mike. And thank you for a lot of information in a short period of time. Next we'll
entertain Kraus-Anderson. 15 to 20 minutes please.
Scott Schmitt: Good evening. My name is Scott Schmitt. I'm with Kraus-Anderson Realty Company.
We are, the realty company with Kraus-Anderson is an arm of our construction company. We are most
well known for our construction business that we have primarily in the Midwest and even more located here
in the Twin City area. I work for the realty division and I head up the development arm of Kraus-Anderson
Realty. And when we first took a look at this project, we actually had called on another site in Chanhassen
and after having some discussions with Todd, he sort of steered us in this direction toward the site because
it offers some interesting opportunities for what we're trying to do there. Our project was originally tenant
based with, coming from a desire for Northwestern Book Stores to be in the area. And that was the cause
of the original call. The plan that we're looking at putting forth is not quite as broad based as these folks
have. We really are looking at how this project, specifically the Chanhassen Bowl can fit into what's
already there. There's some parameters that, with regard to the Southwest Metro Transit and the
permanent easement they have over the south side of the property as well as the building there that you
folks own, and the site so after having several discussions with Todd and kind of the general direction that
the city would like to see, we have put together a plan. And I have Kathy Anderson with me from KKE
Architects who is probably better suited to go through the actual plan with us, but just to give a little bit of
background. What we're intending to do with this site is we've had a, I might as well put the plan up here
and let everybody... Kraus-Anderson has been involved in several mixed use projects and this one is not
too dissimilar from some of the other ones that we've worked with. We recently completed in Shakopee
down on the river, I'll get to the site plan.., we did the River City, which is 52 units of independent living.
3 stories of, it's a 3 story building with 2 levels consisting of 52 units of residential and then there's retail
on the first floor and I believe there is about 25 to 30,000 square feet of retail on the first floor. It's right
on the river downtown. And this is very similar to the type of use that we're thinking about on this project
for the Chanhassen Bowl site. Another project that we worked with KKE on in St. Louis Park is the Park
Village Center. This project has medical along with a theater, 26,000 square foot theater, 7,000 square feet
of retail, the Timber Lodge and the Boston Market and Caribou Coffee. It's right on Excelsior Boulevard
and Highway 100. A third project, this one is downtown, it's Laurel Village that has been an ongoing
project for quite some time. There are 370 units of apartments over 22 stories which is the taller building
in the back, and then there's some retail on the first level over some townhomes and I believe we're in our
second round of redoing that. So that one's been a very successful project. So back to the Chanhassen
Bowl project. What we're following along the same lines on this project. There's a strong retail demand in
Chanhassen, as I'm sure you're all aware. This site would facilitate a 28,000 square foot first floor of
retail. Now we're too far back. But this level here is a level of retail, and this would be the south elevation
and this is the west elevation here. Might get you a better look at what we're trying to do here. And
because our project is focused and we, on this site, and in tying it into the overall area, we have since, we
first came at this project from the Northwestern Book perspective and they wanted 12,000 square feet on
the first floor. They have since backed away because of market conditions. They typically have some
growth every year and this year it's been pretty flat. So they've put offa project until 2003 so them as an
anchor tenant on the first floor has gone away. But after having, doing some market studies and looking at
what's happening in Chanhassen, we still feel that there's a viable retail element that could be
accomplished on this site and we envisioned on the 28,000 square feet to be primarily small tenant users.
Economic Development Authority - November 1,2001
Anywhere between 2 and 5,000 square feet more than likely. With the Southwest Metro Transit, after
having some discussions with them on the site, and trying to capitalize on that local traffic that's there
every day, our site plan has accommodated their need for 120 spaces and we've run our site plan by them
and had some, I'd say more than preliminary discussions with them and they are, we haven't gone through
a formal approval because we don't control the site but they are in agreement with the plan that we've
come up with. And the site, the circulation on the site, it comes. The buses will right now they have a loop
that comes around here and out and they pick it up here at the bus hut. I don't know how can I put this
more properly for it, but in any event, with the proposed changes that we've got here, the bus circulation
would come through this direction and then pick them up at the same spot and then an easement for the, I
don't know if you can see it but there's a dashed line right through this area so this would be the easement
area. Creating 120 spaces for the transit hub. So really our intention on marketing to the retail is to cater
to the local needs of the community as far as this being the CBD if you will of Chanhassen. And then also
catering to the transit because there's 120 people that are coming and going so it would be neighborhood
service, convenience type. I don't mean convenience as in a c-store. But your coffee shops, your dry
cleaners, small financial offices possibly, insurance, retail, a little bit of office in there would be mixed in.
And then above that, what we're proposing to do is, correct me if I'm wrong, 48 units? 48 units of
housing, and I'll let, the intent is to partner, is to create a partnership with Shelard Group and Lynn
Wyffels is here and she can fill you in on some of the details and where they're, the market that they're
going after on the site. And would now be an appropriate time to go through some of the architectural, as
to what we considered when we did the planning? This is Kathy Anderson from KKE Architects. She's an
architect that we've worked on I think half of these projects that I brought up, plus some more and we've
got a long relationship with Kraus-Anderson.
Kathy Anderson: A lot shorter than Scott. Good evening. It's exciting to be here. I personally have been
working on this site for years going back to trying to solve, working with the planning staff and the vision
you had for your downtown area, as far as expanding the theater or really creating and keeping the
downtown. I think what you're looking at here is a very strong team that we put together. We've worked
with Kraus-Anderson for 33 years. The length of our firm, and I think their knowledge in the commercial
market with the amount of retail shopping centers that they've owned and the ability to be connected in
leasing for the high quality retailers they can bring to this site, combined with how we've worked with the
Shelard Group on the apartment housing side for so many years, that's a very unique team because often
times when we try to do the mixed use projects of the housing above, retail below, you end up unbalanced
on the knowledge base of those two coming together but I think our history really will help that. Again, as
Scott pointed out, from a site planning standpoint, again we're looking at this L-shaped building and we
know and understand some of the concerns with the existing theater and I think when we get to the
architecture part, how the massing of this building and the new character can tie in, yet even heighten some
of the things that are happening here. We've got more of the passive, softer parking entrance, drop off to
the housing side, on the back side let's say of the building. And then on front, again we still looked at
access and visibility and we know it's very viable. We can really study the parking ratios was appropriate
and not over killing but what is important for making and delivering very high, desirable tenants to this site.
And again we worked very closely with Southwest Metro to work out their needs and accommodate
everything in that manner. We are expecting a streetscape, high extensive landscaping on both the front
and back sides. We think we're creating a very safe, walkable environment so that people move through
the site from a pedestrian standpoint through the whole downtown, as well as people arriving from the
automobile having that convenient for them as well. And then architecturally, and it might be, we might
have to zoom differently but I think this is a better, the reproductions are a little flat. We're very excited
about what we can do architecturally with the building. You'll see the massing of the theater to the right
and what we're looking at is having a very strong, play up some of the reddish brick character. And in the
Economic Development Authority - November 1,2001
past years of working with the city and the staff, those have been important elements of getting it to be
more of a permanent looking building. Something that seems like it's been there forever, yet address all the
new concerns so you see from a storefront standpoint, retail wise.., in working with your staff on what this
vision has been on this particular site. And I don't know, maybe Lynn can also address some of the
housing.
Lynn Wyffels: Thank you. Just to piggy back on what Kathy and Scott said. I'm with the Shelard Group.
My name is Lynn Wyffels. We're very excited to be here. We're excited about the possibility of working
in Chanhassen again. For those of you that don't know, I worked with the group that, we just completed
the development of the 162 Lake Susan Apartment homes right off of 101 and 5. It's been a great
experience for us. It leased up very quick. It was very exciting. It was everything and more that we hoped
for. We also own about 2,000 units in and around the cities. A similar project to what we're proposing
tonight in Chaska. Right off of Highway 41 and 212. What we're proposing here, as Scott mentioned, was
48 units market rate apartments. They vary in size from 900 square feet up to 1200 square feet. 1, 2 and 3
bedroom units. And then the rents accordingly are similar to like what we have at Lake Susan. Anywhere
from $900 for a 1 bedroom up to $1,00 to $1,200 for a 3 bedroom. I guess that's pretty much it in terms
of housing. If you have any specific questions I'd be happy to address those.
Boyle: Thank you. At this point I think what we'll do is open it up for public hearing. Then we'll come
back to discussion afterwards so it's open for public hearing.
John Rice: My name is John Rice and I'm an attorney. I have my office here in Chanhassen and I'm the
attorney for Bloomberg Companies Incorporated. I'm here because Clayton Johnson is not available and
he is out of town. A letter was submitted to the authority setting forth Mr. Johnson's views and comments
regarding these proposals. And I don't have any great expostation or addition to those. The most
important thing from the standpoint of Bloomberg Companies is that the Kraus-Anderson proposal deals
with one part of the entire area between West 78th Street to the railroad and Great Plains Boulevard and
Market Boulevard. And there is a lot of other land to the east owned by Bloomberg Companies. The
difficulty that we see as to that proposal by Kraus-Anderson does not take into account anything that would
happen to the east. And the concept that is offered by Big Bear and Lotus is at least putting before the city
economic development authority and the city council the question of what's to be done in the future with
that property that's along the railroad track and is right now under utilized. And what's to be done in the
future and how is that going to be of benefit to downtown Chanhassen. And how also do we deal with the
ultimate question of the Chanhassen Dinner Theater. I am not in any position to speak about what
Chanhassen Dinner Theater or Mr. Scanlon or the other tenants, other than me, would want from any
redevelopment on this entire site which is I think 11, 12, 13 acres. And so that's why those things are, I
can't speak to those but I think it also, in view of the position that Chanhassen Dinner Theater has had in
this town for 33 years now, and it intends to be here in the future, that the not only the Dinner Theater for
the other tenants have some say and should have the opportunity to hear and to participate in any public
hearings regarding the development that would occur. And if the purchase agreements that are proposed
are going to affect that future development of the entire parcel, then it's my thought that the proposition and
the purchase agreement that should be accepted by the city is the one that's going to take those factors into
account and take the future development into account. And obviously from that standpoint would favor the
Lotus proposal. And that's why we think with the long term view to the future, rather than to a one shot
development of one site is no doubt going to have an impact on whatever is going to be done in the future
because then you've got to build around that for anything that is going to come in the future. Thanks.
Economic Development Authority - November 1,2001
Boyle: Thank you Mr. Rice. Any other comments please. If there are no more comments we will close
this public hearing at this time. Todd.
Gerhardt: If we could have a motion to close the public hearing.
Boyle: Oh, would probably be more appropriate?
Peterson moved, Bohn seconded to close the public hearing. All voted in favor and the motion
carried. The public hearing was closed.
Boyle: Now it is officially closed. Before we go into further discussion Todd, did you have anything else
that you want to say at this point?
Gerhardt: From staff's perspective, we're very proud of both proposals. To think that we were able to put
together two viable development proposals in front of the EDA in the last 6 months, I think that's a nice
accomplishment. On behalf of John and Bruce and the two proposals, I think both of them are great ideas.
But they are from two different sides. One is kind of a long range vision of the area, and another one is to
take the entire site and complete a development as a stand alone project. And from staff's perspective, we
felt that was kind of the marching orders when we purchased the property. In your packet are a list of
parameters that we put together that we felt were kind of the marching orders from the EDA when we
considered purchasing the property back in March. And with that I guess I would like to hear from EDA
members what their thoughts on the two different proposals are.
Boyle: Craig, can we start with you? If we could please Craig.
Peterson: Sure. In general I don't disagree with Todd's comments that we've got two interesting and
intriguing alternatives to look at. What's going through my mind is, it really goes back to timing. Big Bear
is a concept. Kraus-Anderson is more the bird in the hand so to speak and essentially we're dealing with a
million dollar decision. That it seems on the surface at least that Kraus-Anderson's proposal is more
current. More, we will have a redevelopment done potentially sooner, and I may be erroneous in that but
the inference I have is certainly that. And the concept that they're presenting I like and it certainly, if we go
with Kraus-Anderson, it certainly doesn't preclude us from working to develop the whole area east of it.
Now is it conceptually better to do it all at one time? Yes. However, that's extremely difficult to do. We
don't own the land. We own this land and there's a variety of interest that own the other property. So it's
a challenge to get those together. To get a concept that will stay current. So as far as being able to
pragnosticate what will really happen, it's a difficult task at best. And I admire Big Bear for trying to take
on that challenge. As it relates to the agreement itself, so essentially I'm leaning towards Kraus-Anderson.
I'll be interested to hear other members comments. You know to that end I'm concerned about a couple
things on their proposal. On the restrictions of use. I'm referring now to the comparison if you want to
reference that. I'm concerned about, it states here they want ability to propose liquor sales and fast food.
Neither of those concepts are endearing to me. I don't sincerely like either of those concepts. And in
addition, you know they're asking for a contingency longer term and I think that I'd be more amenable to 6
months as a contingency. I really don't like us hanging it out there for another 12 months and then having
it fall apart. I would be more amenable to approving it on a 6 month basis versus what's currently being
proposed. So I think that probably encapsulates my thoughts on the surface. I'd be interested to hear other
comments.
Boyle: Bob.
Economic Development Authority - November 1,2001
Ayotte: Along with Councilman Peterson's comments, I'll start with Kraus-Anderson. More deliberate. A
more compressed schedule. I believe the tax base would be there sooner which would offset that $100,000
delta. I think it's got a strong mix, a proper balance. I like the fact that they've addressed the issue with
the park and ride. They have a site plan in place. I don't think there would be much babysitting with
respect to the city staff. I think there would be an indirect cost that we would experience by not going with
Kraus-Anderson. The fact that Kraus-Anderson is big would put some concern with respect to where we
are on the pecking order for getting attention. So that is something that I would be concerned about. I'm
particularly interested in Councilman Peterson's point. The sooner the better for me too. The 6 month time
window. I'm not as concerned with the fast food issue, but it is a concern. Big Bear, I don't know who all
makes up Big Bear quite frankly. I know part of who makes up Big Bear but not totally. I like Big Bear's
comments with respect and.., with the Dinner Theater, but it does not offset my favoring at this point
Kraus-Anderson. It's a more ambiguous set with Big Bear and so for that reason the $100,000 enticement
is not as appealing to me from that viewpoint. Those are my comments.
Boyle: Thank you. Linda.
Jansen: I think my comments are going to largely be consistent with what has been said. I do want to
emphasize that I know we all appreciate the fact that we do have a local group that has come together in the
interest of the community and is looking at this more global than just as a project and I certainly can
appreciate that and that you've put that effort into it. As I'm looking at the two proposals. I'm continuing
to come back to what I perceived or what I heard the EDA and the council say when we moved forward to
purchase this property. You know what was our intent. And the intent, as I understood it, was to have
control over the use that might end up on this particular piece of property, and we were very specific to
staff what it was we were looking for. The mixed use. Making sure it was transit friendly. We used the
Southwest Metro Transit hub as an example of the type of development that we were looking for and I have
to compliment staff on coming forward, you've obviously expressed our wishes very clearly to both groups.
Both proposals I think address what we were looking for. The added element from the local group is that
it's looking at the entire site and that's the part of that concept that I'm not entirely convinced has to
happen at this point. I'm not positive as to whether it's a perceived or real constraint on the redevelopment
of the Dinner Theater. Because I'm looking at Phase II and Phase III, and in concept I can see where that
might work, though I come back to the questions that we had when we were looking at the expansion on the
cinema. We had issues with parking. The traffic count at the intersections and I think the other one was
the impervious surface. And in looking at this, I'm not convinced that it's going to come through the
planning process as it appears on paper today with all of those constraints. I'm looking at two large
parking ramps right in the center of our downtown. That concerns me. As far as the visual impact on our
downtown and whether we, again you've got a huge financial commitment for the ramps. Relying
somewhat on Southwest Metro Transit to maybe accomplish one of them. Whereas the concept from
Kraus-Anderson has the underground parking, and I don't know if that compliments the site better than
potentially trying to plan on ramps to do that. So I guess as I'm looking at the two concepts, I'm wanting
to come back to what we were trying to accomplish initially in purchasing the property. We didn't want to
hold it for long. We, our intent was more to just control the uses, which again I come back to I think both
of them meet that. I very much want to see mixed use happen in Chanhassen. I think there's a great
opportunity for it. I know we've had it planned for the Village on the Ponds for what's that been, 4 years.
And to have a piece or at least a development come in with that mixed use maybe it triggers the total. Just
wanting to see the downtown really happen. In our last strategic, I shouldn't say last. Our first strategic
planning meeting with Mr. Gerhardt as our new city manager there was a real emphasis on the council and
hopefully EDA wanting to stimulate development and move development quickly, the right development so
Economic Development Authority - November 1,2001
that at least we're helping to relieve some of that tax burden on our current residents. So my perception of
the two proposals is that, though the Kraus-Anderson is just focused on the one piece, I see that as being
consistent with what the intent was of the council and the EDA and potentially coming in more quickly. I
do like that concept as it's proposed and as it looks. And I'm intrigued with Craig's comment about
whether we can get it to move from a 6 month versus the 1 year as far as the contingency to see about
making sure that it just keeps moving forward and we get this thing completed. I think those are the bulk of
my comments but I don't want to downplay how important I thought it was that we did have a local group
pull together and really take a look at that. That really is an important factor for us to realize that we had a
group interested in pulling that together. That's all Mr. Chair.
Boyle: Thank you Linda. Jim.
Bohn: I like both groups. Both proposals. I like the idea of Big Bear's utilizing the whole site, but our
original goal when we purchased the property for the bowling alley was to sell it and sell it as fast as we
could because it wasn't making any money for the city and it was costing us money. I like the Kraus-
Anderson proposal. I don't like the Phases I, II and III. We don't know when II and III are going to be
built. They're phases. So we don't know when they're completed, and that land's been sitting there for
quite a few years. It could have been developed years ago but it hasn't been. But we have somebody that
wants to do, to develop the bowling alley site now, and I would like to see that developed. Thank you.
Boyle: Thank you Jim. Well I probably would reiterate, I've got to repeat everything that everybody said.
I think there's a few key points that's come out here. Number one is time is of the essence. It's in the best
interest of the city to do something as quickly as we possibly can. It's also in the good interest of the city,
I'll say on the other hand I think to have a global perspective on something but, and I like the plan that Big
Bear put together, but I think if you take 3 phases and we keep considering the time and the intent of what
we're doing, that this could take 5, 6, 7, 8 years and we need to build that tax as quick as we can. Start
generating some taxes from that property so with that in mind I also am leaning towards the Kraus-
Anderson proposal. I guess we can open this for a motion. Oh, one other thing too on the 6 months versus
12 months. We'd probably take it back to staff. Are there any other portions of the purchase agreement
that we have any issue with? Todd, are there any that you see? Go ahead.
John Rice: One thing I'd like to point out to the council and the EDA, and it was pointed out in the
Bloomberg letter to the council today is there is, to really put this site together there is other property that
needs to be acquired and I want to make sure that everybody understands that. That's going to take some
doing with, between Kraus-Anderson and the council and those parties that own it, which I believe are the
Bloomberg group so to speak so that has to be taken into account in your time line of 6 months because
how fast that will happen, I don't know type of thing. I think Todd, I've heard it mentioned here is the use
on the property, the original agreement that went out to Kraus-Anderson had some restrictions in it that the
fast food, the liquor type things. They have taken that back out and I think if you're going to, you want to
control those uses, then we have to put something in the agreement, back into it if you want to call it that
and do it. The original contract that they sent to us also did not have the leasing contingency, although
there were other out's if you want to call it that. Financing out's and other things that would allow them to
get out, but now they have come back and I think because they've lost the book store as a major tenant,
they put that back in and so that, I don't know how you want to deal with that but I think staff and our law
firm as your counsel should negotiate whatever you want with them on those types of issues.
Ayotte: I don't know if I understood the point of the 6 months. Is that constraint, is imposing a constraint
in the proposal something we want to?
Economic Development Authority - November 1,2001
Boyle: Council made a good point of that in discussing the 12 months versus 6 months might put us at a
disadvantage also if they couldn't do it.
Peterson: Or we could put a caveat in there that the leasing aspect of it would be reduced to 6 months from
12 with the additional caveat that the purchase of the land may be extended for 9 months or, and give them
an out for that to give the city and Kraus-Anderson the time to work with Bloomberg to make that purchase
happen.
Boyle: I don't know if this is proper procedure or not but it seems to me that the purchase agreement
should be reviewed again and we reconvene to go over that at a special meeting or whatever so that we
could, before we would throw a motion to approve, I mean with certain stipulations at this time. I think
there's probably, we need to dig into it a little deeper.
Gerhardt: Mr. Chairman, EDA members. I agree with Chairman Boyle on his comments. There's enough
issues on the table that I think we need to sit down with the Kraus-Anderson people, if that's the group you
select tonight, which it sounds like you may. We need to establish some dates. In our memo we talked
about environmental and soil testing completed by a certain date. We'd like to sit down with them and
establish that date. Acquire all other properties necessary and have a serious conversation with Mr. Rice or
Bloomberg Companies regarding the availability of that land and their willingness to sell that. Also work
with the Kraus-Anderson regarding the financing for the project. Establish a date when they can have that
secured by. File all the necessary applications with city staff for site plan approval. Sit down with Kraus-
Anderson and talk about the 6 month option versus a 12 month option. And I think those are the key
elements that should be included and brought back to you with confirmation that we have established those
dates and that you see those dates. And I would suggest that we meet either prior to a City Council meeting
or after a City Council meeting. They'd take formal approval of that purchase agreement after we've tied
up those dates.
Jansen: Mr. Chair, the only other part that I think maybe we need to review would be the permitted uses.
Mr. Gerhardt has provided us the list of zoning on the CBD district as to the allowable uses, and of course
if we want to alter that as a part of the purchase agreement, we would need to have that conversation as to
whether there are things in here we would not want to see in that particular development.
Boyle: Thank you Linda, that's a good point. Are there any others that we'd like to. So the direction I
believe tonight Todd is for you to go forward with everything you said, and it appears apparent that we're
leaning towards the Kraus-Anderson proposal so if you would please review and then, with council, and we
will meet again prior to a session at your disposal. Okay.
Jansen: And I guess the other part that I would like to maybe ensure is that the public has some time to get
familiar with what it is that we're considering on this site. I know that the Villager of course would like to
do a story giving some of the detail of what exactly we're considering. So maybe we need to make sure
that as we're scheduling the follow-up review of the purchase agreement, that we definitely get that
publicized as to when we'll be having those discussions so that if there are comments to be shared, they
have that opportunity. I of course realize we'll all receive the normal flood of e-mails as some of the
specifics come out to the public, but just to make sure that we're coordinating and getting that public input
I think is important.
Boyle: Another good point.
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Economic Development Authority - November 1,2001
Gerhardt: Sure, we can do that.
Boyle: Jim, did you have anything else to add?
Bohn: No.
Boyle: Okay. Alright.
Ayotte: We've got to formalize a motion, don't we to give the detail necessary? I mean we just talked
about usage. We just talked about the 6 month time line.
Boyle: I think what we're done, and correct me if I'm incorrect but I think what we've done is given staff
direction to go forward to put together usage and other things in a purchase agreement and then bring that
review again. At a follow-up, is that correct?
Gerhardt: That's correct. We'll bring back an executed purchase agreement for you to take action on.
Boyle: Okay, thank you. And thank Kraus-Anderson and Big Bear. Thank you very much.
CONSIDER RESOLUTION ADOPTING MODIFICATION TO THE REDEVELOPMENT
PLAN~ ESTABLISHING TIF DISTRICT NO. 8~ PRESBYTERIAN HOMES.
Todd Gerhardt presented the staff report on this item. (There was a tape change at this point in the
discussion.)
Mark Ruff: ...the facts are, the actions that's being taken both by the EDA and the City Council at the
next City Council meeting would be to modify the downtown district and the reason they have to modify the
downtown district is because we'll pulling parcels out of the downtown district and putting them into this
particular district. And establish a new tax increment district number 8. The project area, the area which is
the empowering area, the planning area is the downtown Chanhassen redevelopment project area. It's the
area where you can spend tax increment. This is a housing district. It's on one parcel of property. The
attached map of this and the tax increment plan outlines it. The approximate size of the project is 8,000
square feet of retail. 90 units of independent living. 56 units of assisted living and 18 units of memory
care. Those numbers may fluctuate slightly but that's the basic plan. The affordable units that Todd
mentioned will be in the independent units. The estimated annual tax increment is about $185-$190,000
per year. That number is a little uncertain just because of the great property tax reform and none of us are
exactly sure how tax rates are going to come out so we made some guesses but we think those are educated
guesses. In a tax increment plan we put in a budget and even though other than current general proposal,
and by general proposal I mean the business deal that we've come to verbally, but has yet to be put into a
development agreement. That development agreement will come before you at a later date as an EDA, but
the business deal is that the tax increment assistance would only run for 7 years for this particular
development. The maximum term of a housing district is 25 years, and you as the EDA and together with
the City Council could choose to assist other affordable housing developments with this tax increment in
the future if you so choose. And so in this tax increment plan document we have given the authority to run
this tax increment district for a full 25 years. If at the end of this development EDA and the council decide
to shut down the district and you shut down the district and the property goes back on the tax rolls. If you
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Economic Development Authority - November 1,2001
think that there are other affordable housing developments that you'd like to assist that don't need to then
create another tax increment district, we're leaving you the option to do that in the future by taking this
action and having this rather large budget within the tax increment plan. Again a budget and a tax
increment plan is not like a city budget for 2002. Budget and tax increment plan is a not to exceed, telling
the county and the school districts and the citizens that we will never during the term of the district exceed
this dollar amount. It's not what you expect to spend on this particular development. And so that's just a
brief one page overview of what's really in the tax increment plan and the actions that you're taking. The
following pages just highlight the different findings. The following pages after the discussion on the term
of the district and the fact that there is no LGA, HACA penalty or local contribution required anymore are
just defining that the City Council will have to consider when they adopt the tax increment plan. It
basically says that this is a housing district because we have 20% of the units affordable. That you meet
the but for test and the developers have submitted a project proforma and says sources and uses and
financial projections which demonstrate that they have a need for some kind of assistance for the term of
this, of the maximum 7 years. And that you also expect that nothing else of similar size will be built during
the term of the tax increment district. So those are the basic findings along with the fact that the Planning
Commission reviewed this to find it in compliance with the comprehensive plan and that generally you feel
like this is a good thing for the city. So there's 4 findings that the City Council will require. The EDA's
not required to meet those but we just think it's helpful for you to be aware of what the council will be
considering. So that's the action before you. It's just again, just to set up the tax increment district. At a
later date you'll actually have the agreement that you lay out specifically the terms and conditions under
which you give that assistance.
Boyle: Thank you. Very quick and thorough. Questions?
Peterson: At a high level, could you quickly walk us through how you get to the $188,000 number. Is it
just value based on the number of units?
Mark Ruff: Let me get my copy of the tax increment plan. I'll be able to answer that. And the tax
increment plan is a projection that we put together and a basic level is, we assume that the assessor's going
to value each of these units at about $80,000 per unit. Even though it costs more to build it, that's what the
valuation is going to be. For the retail, it's not a lot there but maybe potentially up to 8,000-8,400 square
feet of retail. That market value could be anywhere from $800 to a million. $800,000 to a million dollars
of value so the total value we expect for tax purposes is somewhere in the neighborhood of 13 million
dollars. Again, that's probably a little bit of a high end estimate. So mechanically how we do that is
primarily because this is retail under the new tax system it's 13 million times a class rate of 1.25 percent
times your local tax rate, which we don't know but we're guessing it's going to be about 120. Okay, and
that comes up with the total taxes. We subtract the base value of the taxes that are being paid there right
now, which is a rather small amount. It's less than $15,000 per year. So basically it's taking $200,000 of
new taxes, less the $15,000 of base value is how we come up with about the $185-$188,000. Does that
answer your question?
Peterson: Yep it does, thank you.
Ayotte: Just following, so it goes from an 80K valuation, but you're saying at 120K, you went from 80 to
120K. Why?
Mark Ruff: The 120 relates to when we take the city's tax rate, the county's tax rate, the school tax rate
and the other taxing jurisdictions. It's about 120%. So when I said 120 1 meant, not $120,000. I meant
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Economic Development Authority - November 1,2001
120 percent so the tax system basically is market value times class rate and then class rate now is 1.25
percent times the combined local tax rates, which comes out to 120%. So put those 3 things together, that
will give you about the $200,000 a year in taxes.
Ayotte: Okay.
Boyle: Good. Linda.
Jansen: No questions.
Boyle: Jim.
Bohn: None.
Boyle: I have no questions. Pretty straight forward. I would ask for a motion that we approve the
resolution adopting the modification to the redevelopment plan establishing TIF District No. 8,
Presbyterian Homes.
Jansen: So moved.
Boyle: May I have a second?
Bohn: Second.
Resolution #2001-04: Jansen moved, Bohn seconded that Economic Development Authority approve
the Resolution adopting the modification to the Redevelopment Plan, Establishing TIF District No. 8,
Presbyterian Homes. All voted in favor and the motion carried unanimously 5 to 0.
Boyle: Thank you. Very thorough report. Okay, oh whoops. This is yours.
Jansen: I think you need to close the EDA meeting.
Boyle: May I have a motion to adjourn.
Ayotte moved, Jansen seconded to adjourn the meeting. All voted in favor and the motion carried.
The Economic Development Authority meeting was adjourned.
Submitted by Todd Gerhardt
City Manager
Prepared by Nann Opheim
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