EDA 2001 02 15CHANHASSEN ECONOMIC
DEVELOPMENT AUTHORITY
REGULAR MEETING
FEBRUARY 1S, 2001
Chairman Boyle called the meeting to order at 6:30 p.m.
MEMBERS PRESENT: Gary Boyle, Linda Jansen, Mark Kroskin, and Craig Peterson
MEMBERS ABSENT: Jim Bohn, Steve Labatt, and Robert Ayotte
STAFF PRESENT: Todd Gerhardt, Assistant City Manager; John Kelly, City Attorney
MORTGAGE FORECLOSURE ON CHANHASSEN BOWL PROPERTY, CHANHASSEN
VENTURES, LLC.
Gerhardt: Mr. Chairman, EDA members, what I'd like to do is briefly kind of go through how we got here.
Go through some options for you and then open it up for any questions that EDA members may have for
Mr. John Kelly from the City Attorney's office. So I'm just going to get right into it. In September of '97,
well let's go back one more month. In August of 2000, the EDA directed the City Attorney's office to go
ahead and exercise the sheriff's sale on the Bowl property because of the delinquency that the Bowl people
had had with the $140,000 loan that the EDA had lent, on probably 20 years ago. And about 4 to 5 years
ago the EDA renegotiated that loan with the Bowl people and moved it into a second position. Prior to that
it was not in any position. It was just a plain loan that wasn't recorded. So we increased the interest on it
at that point and put it into a second mortgage against the property. So at that August meeting the EDA
had directed the city attorney's office to exercise a sheriff's sale against the property to secure that
$140,000 loan. And we did that. We did that in September 21st of 2000. We're here tonight to discuss
direction from the EDA as to the possibility of a closing on that property and physically buying the bowling
alley property. Now back in September 21st what that triggered was for the bowling alley people, that they
had a 6 month period to redeem so that would take them to March 21st of 2001. For them to go out and
find somebody to buy that bowling alley. And what we did in September is made sure that we secured our
$140,000 so if the bowling alley individuals found somebody to buy that property, they would have to
negotiate with us on our $140,000 loan. We have had a couple of people contact us regarding that. I will
let Mr. Kelly talk about that later on, but right now what I'd like to do is go through the options. The EDA
could become the owner of the property is one option. Right now the back taxes as of December 31, 2000,
and I did hand out to you the detailed sheets on all the taxes. What you have is, there's one lot there but
there are two PID numbers that go with the property so there's two parcels on one lot so they didn't
combine the two. The first page kind of shows a summary of one of those parcels. And then you'll get into
a year by year analysis on the rest of the parcels as you go through there. And then I think when we get
page, probably about page 9N, there's another summary page which shows a total of $55,000. Like the
front page you had $329,000. I circled those two. Those are the summaries by year on those two parcels.
If you took the 55 and the 329, you should come up with 385,331. And as of December, the Heritage loan
has a first mortgage on the building and that's for $380,000. So if you were to add the taxes and the loan
we would probably have to come up with $765,331 to purchase the bowling alley. That is the price. Now
I gave you the number down below that, the $154,339. That's money that once the taxes are paid would
come back to the TIF district. And so, and then any specials that are owed to the city, in those detailed
sheets you will see a line in there special assessments. $140 wouldn't come to us. If you looked at one of
those, like the first one in. If you look right here on the second page there's special assessments, $140. But
that goes to the County for their recycling program. But as you sort through some of these you will see,
Economic Development Authority- February 15,2001
there's like one in there for $11,000 to us. I'm sure that's part of the downtown improvement specials.
it could be delinquent sewer and water that we certified against the property.
Kroskin: What page is that on Todd? Oh, I see. The $11,1037
Gerhardt: Yeah.
Kroskin:
Gerhardt:
Kroskin:
Gerhardt:
That's to the city?
That's to the city. Any assessments minus basically $140 will come back to the city.
Who's assessing the penalty, on the penalty line. Who's assessing the penalty?
The County assesses a penalty and interest for delinquent taxes. Unfortunately state law does
not allow a city to retain or receive any of the penalty or interest.
Kroskin: So that's going straight to Carver?
Gerhardt: It goes to Carver and the school district, and they're split out, I don't remember the percentage.
If it's 50/50 or based on the percentage of how they collect taxes. But I know we don't get any.
Kroskin: And in that 154, the 140K in principal and the loan amount is included in that?
Gerhardt: The 1547
Kroskin: Yeah.
Gerhardt: No.
Kroskin: Okay. That's just taxes and special assessments?
Gerhardt: Right. If we were to resale, say we purchase the property and we were to resale it. We would
have to get the $765,331 plus our $140,000 for our loan, so we would have to receive, let's see. At least
$903,331 to come to balance. To recoup our 140, for what we paid the Heritage loan people off at and
then what we paid in back taxes.
Kroskin: Is there any negotiation with Heritage on the 380?
Gerhardt:
bank, but
taxes are.
going to negotiate too much but John and I talked and I said, you know it's worth a try but we haven't
made the call to them yet. It's not a real clean parcel. There are some skeletons on it. There are a couple
of parcels owned by Bloomberg Companies right now that kind of break up the site that you may want to
clear up if you were to fully develop the site in a proper manner.
Kroskin: Has anyone contacted them at all?
Or
Well, Heritage is aware of a purchase agreement that another party has entered into with the
hasn't closed on it of $1.1 million. So John and I have talked and they know how much the back
They know how much we're owed. So for them to back off at 380, we didn't think they were
Economic Development Authority- February 15,2001
Gerhardt: Bloomberg Companies? They're aware and they're here tonight.
Boyle: Excuse me Todd, have you finished with the three options?
Gerhardt: No.
Boyle: Let's do that. Let's finish the 3 options and then let's come back and discuss each one, and maybe
after we hear Mr. Kelly.
Gerhardt: The second option is the EDA could do nothing which would result in forgiving the $140,000.
In this option basically what you're doing is you're not taking any risk. You're going to write off $140,000
owing off your books. You're not going to get in the re-development business. You're not going to get into
the property management business. You're not going to get into owning a bowling alley and a parking lot.
So that is an option. I just wanted to make EDA aware of that. And a third option is that the EDA could
do nothing regarding it's redemption rights under Heritage Mortgage. You know just let the time lapse and
then just negotiate with everybody else in trying to see what the true market value of this property would be
when everybody's positions are basically completed. I believe that would be, you know you're competing
in the open market. Bidding against other people. And then you have forgiven your rights to the 140 so
basically you'd have to try to buy a building and sell it for at least $140,000 more just to get your money
back. So I think if you were going to do that, I think you'd be better off sticking with Option 1 and trying
to market it from that standpoint. Just the summary events. Again, September 21st is when the EDA
foreclosed on the bowling alley. September 26th, this is a key date too. Heritage is 5 days behind us in
foreclosing so if we do not exercise our option by March 25th, Heritage jumps in front of us and we're just,
the 140's gone. So they made their foreclosure on September 26th, so March 26th is when they have full
rights to paying off the back taxes and owning the bowling alley. Another key date that I didn't put in there
is the March 21st. You might want to write that down. That's when the bowling alley 6 month redemption
period ends. So at that time you know they're out of the picture.
Kroskin: Any sense as to what they might do or if anything?
Gerhardt: Well, just that they have signed a purchase agreement with an individual but that individual was,
didn't like the risk that went along with trying to receive city approval on a site plan. Not knowing that
they would receive approval on that. Didn't want to invest the money in going through that process. So,
but they might yet. You know everybody's kind of doing the waiting game here right now. And then again
on March 26th, that's when we lose our option and the 140 and Heritage Bank exercises their option to own
the building.
Kroskin: You said our 140's a second mortgage though?
Gerhardt: Yeah. I'll let John talk about the second.
John Kelly: Your mortgage was a second mortgage. You subordinated to Heritage State Bank's mortgage.
Their's was actually higher at one time. It was about 500 and some thousand but they had a Certificate of
Deposit which they took first which reduced the balance down to about $340. So on the March 26th date
that Todd was talking about, that's the date that Chan Bowl or Chan Ventures' ability to redeem from their
mortgage expires. And it's also the trigger date for you, the EDA to decide whether or not you're going to
pay them off and end up owning the property. You have that absolute ability to do that as a creditor of
Chan Bowl. You actually have under the statute 7 days from that date. Chan Bowl's date expires on the
Economic Development Authority- February 15,2001
26th and you have 7 days, each of, if there mechanic liens against the property or other mortgage holders,
each one has a successive 7 day period until all of them have expired. Your mortgage, we foreclosed ahead
of Heritage for the reason that if Chan Bowl does not redeem from you, they are really out of the picture.
You own the property as of the 26th. Now there are, there is one other lady, and I forget her name at the
current time who has a third mortgage on the property. She would have the right to come in and redeem.
Pay you the 140 but then she'd have to on the 26th come in and pay off Chan Bowl, or I'm sorry, Heritage
Bank also.
Boyle: Do we know how much that is?
John Kelly: Well originally it was $80,000 of record. Now I don't know if, I'm assuming she never got
paid a penny because the city didn't get paid a penny and the bank didn't get paid a whole lot of money and
taxes didn't get paid so, she was in fourth position basically. I'm assuming nothing has been paid. She has
not foreclosed. I've not heard from her. I don't know that anybody else has.
Kroskin: The 140 is P & I through what date? What's that Todd, the end of January?
Gerhardt: Yeah. I think it was the end of December.
John Kelly: Your 1407
Gerhardt: Yeah.
John Kelly: The date you had on there. I know when we sold the property at the sheriff's sale you were
owed about $137. Something in that area so whatever the interest rate is. Now you would tack onto that,
you're entitled to tack onto that at the end to recover it, some fees and expenses that we file on affidavit of.
And the bank by the way, their's is Todd has used 380 as the amount, and I think that probably includes
interest and expenses. We kind of have been guesstimating what it would be based upon what it was when
they foreclosed back in September.
Kroskin: I have a question. We filed that second mortgage with the County, right?
John Kelly: Yeah. You're of record, yeah.
Kroskin: So if Heritage, if we lose, if we don't foreclose and Heritage Bank takes and let's say they take
this offer for $1.1, there's enough room in there to take us out of the 140.
John Kelly: They don't have to. Once they foreclose, because they were in front of you, they wipe out
everybody that's behind them. It's the same thing that you do. You wipe out everybody that is behind you
in order of priorities. So they, if you don't exercise your rights.
Kroskin: And if it's sold before foreclosure, then we get taken out.
John Kelly: If it's sold before foreclosure, then you'd have. If the people that were negotiating with them
came in and decided to buy it and close before the foreclosure date, they would have had to pay you off,
that's correct. I think they were trying, and the numbers I heard at a million one indicated, even the
current owner of the property after paying real estate commission and whatever, was going to get some
money out of it. I think they tried to knock us down, knock the EDA down a little bit too but I don't think
Economic Development Authority- February 15,2001
anybody was too willing to do that if he was going to get any money out of it. There is one, I talked with
Todd the other day and Scott and I believe there is a Mr. Mithun who owns the movie theater who is
interested in purchasing the property and his attorney and I have traded phone calls and depending upon
what he wants, how he wants to do it, he could buy the city's position, or the EDA's position by doing
what we call an Assignment of the Sheriff Certificate of Sale. He would then be owed the 140 and he
would have to pay off the back taxes. He would have to take care of Heritage Bank and he would be in the
bowling alley business or whatever else business he wants to run over there. More than likely not a
bowling alley business but.
Boyle: Do we have a feeling of the odds of that? At this time.
John Kelly: I don't know. Todd met.
Boyle: Have you spoke with him Todd?
Gerhardt: I think it was like a 5 minute meeting that we had, and he wasn't showing his cards and. He said
would you be interested and we go sure and he said well I'll have my lawyer call your lawyer.
Peterson: Didn't he present a plan about 2 years ago for the whole?
Boyle: That was Copeland, wasn't it?
Gerhardt: Bob Copeland and Ray Mithun are partners in the movie theater and I don't want to get into
their personal business but there's something going on there and I think Ray did not specify that he would
try to come back and double the theaters. He saw how that process worked. I think he would probably
look for trying to redevelop the area in some other type of use. I think he's trying to preserve his visibility
along the highway and he's trying to protect his comer and that kind of makes sense. So I would think he
would be real interested in purchasing that. You know like us too, I think that would be something that we
would be interested in. We own basically, well maybe I should kind of go through this. I'm pretty good
with white boards. I was explaining to John how the area kind of laid out. This being Market Boulevard
here. This is Pauly Drive here. Nothing's to scale so. This is the bus turnaround area. This is the little
bus stop area. We own what is the park and ride area so everything, I mean this pink line this way and this
pink line this way is owned by the city. And it basically goes up to about where the edge of the movie
theater wall is between the bowling alley and the movie theater. Mr. Bloomberg owns a parcel, basically
the entrance, the south entrance to the bowling alley and a parking lot area. And he also owns a sliver
down the middle between the movie theater and the bowling alley. And he also owns the pin setters... And
the reason he owns the pin setters is back 20 years ago when they were trying to redevelop downtown, there
was preserved a walkway through here and as you go to the front of what is Milly's and that area, there's a
walkway there so kind of theme was that this was going to be a hotel. People would stay at the hotel and
stay in an enclosed walkway during our winter and go to the Dinner Theater. So this was going to be a
preserved walkway to get there so, and Mr. Bloomberg has retained rights into that. So the bowling alley
parcel is this piece here, with what is basically the parking lot to the west. And the movie theater owns the
building and this little bit of parking here. Bloomberg Companies owns the Frontier Building, which are
offices and a recreation center, and then the parking that goes in front of there, with cross easements with
the movie theater for parking. Country Suites is up here. They own everything basically from their south
wall, north and then they also own the 2nd Addition to Country Suites that sits in this location. And then
Mr. Bloomberg also owns what is the conference rooms and the Timber Lounge that they lease back to the
Country Suites. So that's kind of the real estate monopoly of who owns what in that area.
Economic Development Authority- February 15,2001
Boyle: Mr. Kelly, did you have anything else you wanted to add?
John Kelly: No. Just want to make sure everybody was informed that those dates are coming up and we
will file, you have to file what's called a Notice of Intention to Redeem and we will file that as to the
Heritage Bank mortgage and then that gives you the right to do whatever you want to do. You don't have
to do anything. And like Todd said, if you don't do anything and just let it go, Heritage will own it on the
26th and you go from there.
Boyle: It seems like it'd be a shame to give up $140,000 but I think the issue at hand is do we want to be
property owners, and that's us to Option 1 for discussion I believe so.
Kroskin: I don't even know if we can discuss that before we find out the sections that Mr. Bloomberg
owns. Are they for sale?
Gerhardt: Well they're not buildable lots so he couldn't go in there and put in a Dairy Queen or anything
like that.
Kroskin: Yeah I know but if another developer wanted to come in and buy the property from us and do a
series of retail shops, you know we're talking about creating a city center, and obviously change the
footprint of the building that went down to the south, I mean then that's an issue.
Gerhardt: Do you want to talk to that or do you want me to call you and find out if they're for sale?
Clayton Johnson: Clayton Johnson, I represent the Bloomberg Companies. I think there are two issues.
First of all, Todd your drawing's great except I don't think it's totally to scale. The issues as I see it is,
obviously our parcel here and these parcels which very honestly you could condemn us out. I mean that's
not an issue but I mean our concern is we own 10 acres of land in downtown Chanhassen which we
eventually envision being redeveloped in one way, shape or form and we want to have some amount of
control over what goes on. I think the bigger issue as far as, and now I'm expressing my opinion on what
you guys should do. The biggest issue I see in the HRA acquiring this parcel is I think this easement makes
this land virtually worthless. Until you deal with the Park and Ride and you find another location for that
Park and Ride, believe me we've looked at it. We've looked at how we might redeem everybody out but I
wouldn't touch this parcel with a 10 foot pole with the Park and Ride there because the Park and Ride is
already exceeding the easement that they're entitled to. They're parking all over that place. So as a buyer
or as a potential buyer you look at the use. Everybody that comes to town loves that comer. I mean it's
been the prime site of most everybody we've talked to in terms of future development. But until that Park
and Ride thing is resolved, it's totally out of control. And I think I would just be terribly frightened of the
availability of parking, unless it was a use that was totally complimentary in terms of the time. But that's
what I see as the biggest issue. And I know that staff has worked at that from many different angles but I
don't really know where it stands today. Any other questions?
John Kelly: I have one. Do you own a strip? Do you know if you own the strip?
Clayton Johnson: Yeah we own the strip.
John Kelly: Between the two buildings?
Economic Development Authority- February 15,2001
Clayton Johnson: These are title issues which we've stayed, we've tried to accommodate all of the uses and
not deal with all the title issues, which they can very easily be handled and we're not going to obstruct that
in any way but we are in fact in title on all of it. But anybody who comes in to buy it would obviously
have to deal with it. In terms of it being for sale. Yes, it's for sale but more than that we'd want to know
what the use is. And lacking knowing what the use is and that it's complimentary to what we would like to
do long term obviously we'd have to be condemned out of.
Boyle: Thank you.
John Kelly: One other thing I should tell you, and I'm sure you all know it but we're fast approaching May
and taxes.
Jansen: March.
John Kelly: No May. And the taxes come due again so there's another, on those two parcels there's
another $90,000 due starting, well May and October. So whoever is going to buy this or do anything with
it is again caught in that also. Which adds money to it so, just. Now if you own it the taxes go away but
anybody else that comes in is going to have to pay them.
Boyle: Mark, were your questions or concerns satisfied at this time?
Kroskin: Yeah.
Boyle: Okay.
Jansen: ... kicking around the fact that it is a key comer in the community, and wanting to see it developed
as part of the city center, but what are more of those, the down sides of the city actually doing that?
Gerhardt: Well down sides are, that you might not be able to sell it for the $900,000 that you invested in it.
That's always a down side. How long you're going to have to hold it to try to recoup your $900,000 that
you've invested in it. Carrying that $900,000, interest on there and carrying that interest. Will the market
be able to bear that interest earnings? The positive on it is that you own the city park and ride area there.
It could become the park and ride area for the downtown. You could expand that. It's expensive land for a
park and ride, but it's getting utilized as that now. We have talked to Southwest Metro regarding their
permanent easement on that parcel owned by the city and they're willing to listen to what our needs are, but
there's really never been a reason to correct the park and ride issue because we never really had a concrete
redevelopment plan that's moved ahead. And I've never heard that the park and ride has killed any of those
deals so, but I would agree with Clayton that any type of daytime use looking at that site might shy away
from it. Or would have to be very restrictive in those people parking outside of the easement area. That's
physically towing them. Putting up signage and really delineating where the boundaries are. So it's an
issue but I think like a lot of issues, they can be solved.
Boyle: Well that's kind of my feeling too. I mean if somebody really wanted that property and they saw
that park and ride area, let's negotiate. I mean do they just walk away saying well we can't, it's there. We
can't change it? I would hope not.
Economic Development Authority- February 15,2001
Gerhardt: Well the restaurant people are probably the most concerned. The ones that operate a breakfast
or a lunch. When people drive by and see that sea of cars, they get the feeling that they're all there eating
at the restaurant so they're going to try to find some other place that isn't.
Boyle: Or it might be a good place to eat.
Gerhardt: Yeah, it could be a positive too, yeah. 100 cars there every day. Might not be eating there but
they're there. But you also control probably one of 4 or 5 parcels that are left in the downtown area. If
you look at your land use guide plan, you don't have a lot of sites left in town for commercial uses, and as
our population grows and a need for more commercial type activities, that's a key comer. Like Clayton
said, it is worth $9.00 a square foot. 10 years ago you probably couldn't get $2.00 a square foot for it and
today Chanhassen, with the income levels we have in this community, there is a need for more commercial
space. So it has an up side from that.
Boyle: I think one of the other pros is the fact that it gives us control on what does go in there. Some
control.
Jansen: I guess I could actually get very excited about having that be a parcel that the city did have some
input to, and I know one of the things as a city council that we haven't gotten to as far as the discussion yet
is the whole economic development strategy. As far as trying to stimulate more of the interest and
marketing of the community to bring in the commercial and retail and if this parcel is such a key focus to
our whole downtown strategy, you know there could be some real up side to having it be in city ownership
and we then just having to commit ourselves to moving forward aggressively with it. That it would
actually need to be a strategy and a focus then to really go after it as far as whatever draw. I had inquired
earlier today, and I forgot to print off the e-mail, the demolition costs of taking the bowling alley off the
property. Am I remembering it was 25 to 40?
Gerhardt: It was about $25,000 to $40,000, and that's pulling it out of the air. What you have is basically
half of the building is a tilt up concrete structure, so those are panels that you can take down. You're going
to need a crane and take them down but they can be re-used again. If you can find somebody that's
interested in that kind of product. But they are re-usable. And basically the northerly piece is cinder block
so that's basically demolition and trucking costs there. And that's if we don't have any environmental
asbestos or leakage from a printing operation that.
Peterson: When was it built?
Boyle: The 70's.
Gerhardt: I would say so. It was Instant Web Companies' original manufacturing facility and the city
purchased the building from Instant Web and relocated them into the industrial park. And from that they
have done a variety of different adaptive re-uses for the site. They looked at a grocery story. Looked at rec
centers and this was about 20 years ago and a recommendation at that time was to tear the building down
so. For it to stand and be used for 20 years is kind of amazing.
Kroskin: Todd explain to me the park and ride land. What exactly is the deal on that with Southwest
Metro?
Economic Development Authority- February 15,2001
Gerhardt: They have approximately 100 stalls that are within that area that they can park in and they were
given a permanent easement by the city.
Kroskin: Okay, what kind of agreements do we have with them? Any, like a lease or?
Gerhardt: No. They have a permanent easement to park there. For a Park and Ride. So if for some reason
they would relocate their park and ride.
Kroskin: Well can we dictate that?
Gerhardt: We can dictate it to the tune of 30%, because we're.
Kroskin: 30% of?
Jansen: We're in a joint powers agreement.
Gerhardt: Joint powers. We're 30% of Southwest Metro so you've got Eden Prairie and Chaska. And
Southwest Metro, like anybody else, they're saying you know those are our customers and we can't just do
away with it. They've got to go somewhere. So we have to find a home for somebody to park the 100 cars,
and I would say within a half mile radius of that location.
Boyle: So this is a big issue tonight... This could be a major issue... Much bigger than I thought it was.
Gerhardt: Well and demoing the building is not an easy process either. My suggestion on the demolition is
that we wouldn't demo it. We would leave it up to whoever would purchase it because if I understand it
right, the bearing wall for the movie theater sits about 10 feet into the bowling alley. So you'd have to
build a new wall basically for the movie theater to support itself.
Boyle: If we left it up, what about the upkeep and repairs?
Peterson: Todd, a half mile radius of there, the Park and Ride, I can't see any place a half mile from there.
A mile from there.
Gerhardt: The only thing I can come up with is the Pony-Pauly-Pryzmus parking lot.
Peterson: That doesn't get you 100 does it?
Gerhardt: No. I'm trying to think of how many we have there.
Peterson: Could you cut a deal with Chapel Hill and, they never use that parking lot and fill it up.
Gerhardt: Could.
Peterson: I mean I think we need to deal with that before we make a million dollar decision.
Kroskin: I agree.
Boyle: Oh I do too.
Economic Development Authority- February 15,2001
Jansen: Well and we can go back on the original proposal that almost went through, and parking was part
of the issue, but I'm recalling it was at least close.
Boyle: Are you referring to the movie theater?
Jansen: Yeah, with the retail shops that were also proposed along side of that.
Peterson: I think we were short like 50 or 75 and we didn't grant them the variance because we still
thought it would be an issue. Their numbers, they did their analysis of how many spots they would need,
as did planning department, and there wasn't agreement there. That was really the big difference. And I
don't think anybody's going to build additional movie theaters based upon what's happening to other movie
theaters right now so, it's going to have to be something else.
Jansen: Right.
Gerhardt: One of the other things too is, we made application for a parking ramp for this area and that was
going to work in concert with the Dinner Theater redevelopment. They were planning on, their plans over
there are to build an office building. So for them to build an office building to the scale that they were
talking, they were going to need a parking ramp. So there was an idea that you would concentrate the two
parking ramps kind of together, but we weren't successful in that grant application. And I don't believe
that we are going to solve the park and ride dilemma within a month.
Kroskin: Yeah but couldn't you get a good idea which way the wind's going to blow on that? Contact all
the parties and.
Gerhardt: Well I think the key thing is, I don't think the park and ride's a problem until you know what
kind of user you're going to have on that site.
Kroskin: My point is if you can work out a flexible, some type of an agreement that would depending on
what the use would be, you could exercise the option to move it. Then you wouldn't need to know what's
going to go in there. They may stay there. They may not, but if you could structure a deal that would give
the city the option.
Jansen: I'm the council representative on the Southwest Metro Transit Commission and I would say,
judging by the amicable relationship that all parties have in that agreement, if this community has a need in
this area and we start working with them as to any sort of a shift or negotiation, I don't see where we're up
against a group that isn't going to be at the table negotiating. So if the concern is that we might have an
arrangement that's going to be difficult to work with, I just don't see it being that way Todd unless you've
had a negotiation.
Gerhardt: In my conversations with them they would really, I think they've got 100 people they've got...
Kroskin: You never know what you're going, what you can get until you ask for it.
Gerhardt: They have a permanent easement. They have a solid clad permanent easement on there and no
reason to give it up.
10
Economic Development Authority- February 15,2001
Boyle: Todd, have we had any offers on the property next to Tires Plus? Is there any interest shown on
that property?
Gerhardt: Yeah, I get calls on it. You know it's typically, it's designed for a restaurant and I've had two
restaurants call me in the last 6 months. Sit down, similar to Applebee's type restaurants. But nobody has
signed on the dotted line yet.
Boyle: The reason I ask the question is say an alternative for possibly getting some room for parking.
Probably not.
Gerhardt: Well I think that you would, to develop that site down there you would probably just max it out
at 100. Because that's 81,000 square feet and with a restaurant there, they typically take 85 parking stalls
and then the back lot I think supported about 20 there so that's about 100. 105.
Peterson: In reality, isn't Southwest Metro going to be knocking at our door in the next 2 or 3 years for
more spaces anyway? I mean traffic gets worst. I mean look at Eden Prairie's transit center. They're
busting already.
Gerhardt: They have plans for a park and ride down as a part of the 212 corridor. They have agreements
with MnDot as a part of their right-of-way acquisition that they would plan for a park and ride down there.
And how many of these people would park down there, instead of parking here? I don't know. But we're
talking how far out on that?
Kroskin: Well I think that if, you know just based on the number of residents I've talked to, people are
screaming for, they'd like a more pedestrian friendly downtown area and this is one of the last areas, if
we're going to put some retail shops and bring in some variety of restaurants or things of that nature that I
think, you know I would personally like to see as much of our community as possible spending their dollars
inside Chanhassen and parking ramps and office buildings aren't going to get it.
Gerhardt: Well the location where they were planning the office building isn't a retail location. It's hidden,
back in the middle of the railroad tracks back there and it lends itself, if you've ever been behind the Dinner
Theater, you kind of go down in a hole and they were going to build the office building into that bank and
then connect it to the Dinner Theater and utilize some of their parking during the day on the top and then a
ramp on the other side.
Boyle: I think we ought, obviously tonight we need to give staff some kind of marching orders of where we
want to go on this. Maybe we should focus in on their concerns at this time where we want to go with this.
So otherwise we can sit here and a lot of if's, and's, but's and obviously we're not, I don't think at the
point where we can make a decision. Yeah, we want to buy or no we don't or we're going to give up the
$140,000. So based on that we'll probably have to have another meeting before march 21st, it appears to
me. And with that I think we need to at this point decide what we want staff to do before that meeting so
we can make a decision.
Brad Johnson: May I say something?
Boyle: Yes you may Brad.
11
Economic Development Authority- February 15,2001
Brad Johnson: I'm Brad Johnson with Lotus Realty. We have been studying that site for probably now 15
years. That was the original community center a number of years ago. It has a fairly, if you kind of move
yourself out of what it is at the present time and realize there's about 15 acres back there that's
developable. But it would take the Bloomberg's, that's why Clayt is here. Copeland, the City, and the
transit authority to kind of get together. I did, since that's been on the market for a while we've been trying
to figure out what to do with it. The down side on that particular property is that probably the only one
that can really clear the title is the city. You know if somebody were to buy it tomorrow, there's a number
of other problems that currently exist there. For example, the Bloomberg's own parts of the property and
stuff like that and it's going to take a concentrated effort to put it all back together again. There are a
number of projects that are sort of bigger in scale. Mixed use projects that communities probably a little
older than our's are doing with their downtown, but it generates a combination of housing, retail, office, on
about 15 acres that could be a considerable sort of a place to put if you don't want rental out in the
boondocks here in the downtown area. But two things, we're in the retail business in town. The two things
that help our retail the most is residents who live downtown, and businesses downtown because one of the
glowing things for Chanhassen is our lunch crowd beats just about anyplace in the community. All 27
restaurants we've added since we first came here, or have been added, are all being very successful. So
we'd like the opportunity to work with the staff a little bit and come up with a couple of ideas. I have met
with the transit authority, Lynn and he was on his way out to a, what they call transit oriented development.
I'm going to two of them. One in Portland and one in Calgary next week. That are built around the idea of
transit. People who take transit generally do not like to drive to transit. They like to walk and that's
what's been proven to be the most successful transit, so that means that people have to live close to that.
So your transit, what you call transit oriented developments have people living there and then they walk.
And he could see in his program, and you're on the board, which was very open to it I guess, the concept
much like they're doing at their transit center currently over there. How big is that grant he got for the
parking lot? I can't remember.
Jansen: $600,000.
Brad Johnson: I think $6 million, for the parking lot. Yeah, I think the parking lot grant from the federal
government just for the transit oriented portion of that was $6 million. And they're now in the process of
adding housing and retail to make it work. We think that will work. Bloomberg's are interested in
developing their 10 acres over time. Probably in the long run, if you actually looked at Chanhassen, that's
probably the most valuable piece of property we currently have outside of the Village if we ever complete
what we're going to do next. So I think that's the kind of thing you're going to have to think about that and
the only people that can do it. We're willing to option the property and pay for it. You know you take it
down and take possession of it and we're willing to come back and help carry the cost of it, and even look
at continuing operating the bowling alley. So that kind of thing we can't put together unless somebody says
that's what you'd like to do. As you know we've done quite a bit of development in that area. The Dinner
Theater sooner or later has to be redeveloped. So all those things are real life kind of things that could be
beneficial to the city so that's what we'd like you to think about and maybe we could meet with the staff
about it. Thanks.
Jansen: Thank you Brad.
Boyle: Do we have any other questions of Brad before.., you'd be interested in. Did you say even
managing the bowling alley? Did I hear that?
12
Economic Development Authority- February 15,2001
Brad Johnson: You've got to realize, we've really almost bought that 2 or 3 times and.., we're the only
people that even understand the title issues.
Boyle: That's probably true.
Brad Johnson: Yeah, it's all up in our office you know and yeah, we'd be interested in sitting down and
saying, let's do something. And it could work. It's going to take a little imagination. The reason they
haven't sold that so far is one, I don't think the developments going to sell that would be a real benefit...
One was a liquor store I believe and maybe a restaurant. Nobody has really come up with any imagination
of what that parcel could be if it was transit oriented. And the transit authority understands that. I mean
that's what they've been studying. They know what makes their buses go and that would be, and later on
we've got a rail running right by there. Someday we may, you know 2025, there's all kinds of
opportunities in that area and it is the downtown. We have very limited commercial property, as you know,
in the whole community left and the tendency is to want to focus it in the downtown area. There's nothing
wrong with building a higher density downtown. More retail and stuff over time. It just takes a long time.
Things just don't happen, especially... I think they would, I think we're willing to talk about it this week
and we know why people haven't made the offer on the property is simply it's very complicated, as you just
found out. I mean it's a real, right Todd? It's a really complicated thing. And it takes everybody getting
together and saying hey, like you have your joint powers agreement to manage it. You have to put together
a joint development agreement among the players there, sort of stand still while you're doing it. And if the
city's taking on a huge risk at that time, maybe we should measure the risk and see what the reward could
be. The land itself, just empty of the building and everything is worth, and could be built on, the 2 ½ acres
and you could park. Today is worth easily the $800,000 you're talking about. Just the land. But the
problems are getting it done. Even if the bank foreclosed and tried to take title, they have a headache. It
will be years before anybody can do anything. Do you agree with me?
Clayton Johnson: Yeah, I mean again the people that are working, have tried hard for the last to put
something together in that.
Brad Johnson: ... so I think if we sat down and said here's how to do it, I don't think the risk to the city is
huge. And that's if everybody is working together.
Boyle: So, and that's what you said earlier. The only person, the only entity that's really going to bring
this together quickly would be the city.
Brad Johnson: Yeah, if anybody can do things quickly. The city has the power of eminent domain. They
can do certain things that could straighten these title issues. You're about to lose $140,000 note I guess. I
think in return though, whoever pays off the taxes, gives you $150,000 back in taxes as far as the
transaction. So it's not, it's a bigger risk...cash you know, and I don't think the bank can do much. When
they think about it. The bank has to satisfy all those underlying liens and then try to get title. And I know
they don't want it.
Boyle: That sounds to me like we have a negotiation. I mean we could negotiate with the bank possibly on
that.
Brad Johnson: Maybe they'll stand still, which I think they might.
Boyle: It seems obvious, and correct me if somebody sees something different here, we really don't have
13
Economic Development Authority- February 15,2001
the data right now to make the decision to purchase or not purchase and give up $140. It seems to me that
we need to look at other options within the first option, and that's purchasing and what some of the
problems could be with that. And get back in another week. That's kind of where I'm leaning right now.
Peterson: I would agree. I think you presented 3 or 4 things Todd that you could spend the next week or
two or three doing.
Boyle: But we don't have a lot of time.
Kroskin: I guess I would say two things. I would like to go and just see if there's a deal with Southwest
Transit. And possibly with the Mayor being on the board, I think she should be involved in moving that
along. And then also I'd like to, let's see where things where the rubber meets the road with that bank.
And if we can work some type of a binding agreement for them to stand still for a period of time, that will
buy us some time to get our arms around this. I guess those are the two things that make the biggest
impact on this deal that you can get down in a short period of time.
Gerhardt: I don't want to look at it as if we're trying to run away from it either, but do you want the
private sector to try to deal with the issue with Mr. Mithun already contacting us. Do you want us to
pursue that area or, that's kind of the direction I'm looking for? Do you want to tackle the issues at hand
out here or do you want us to pursue negotiating with Mr. Mithun, who's contacted us? Or do you want to
try to tackle the site?
Kroskin: I don't think it's, that's a parallel deal. Go ahead and see what he wants to do. I mean you can
do that along with it but, and just have that option out there. Have that information out there.
Boyle: If I understand your question Todd, I agree with Mark but when you said the private sector you're
referring to Ray Mithun.
Gerhardt: Well he'd have to buy our interest out and.
Boyle: Then let him deal with the bank, right?
Gerhardt: Well yeah. That's basically why he's saying you guys deal with the problems in the area and
we'll sit down and do what we can with the park and ride. Or do you want to try to go in there and try to
control the whole site and not have staff, I don't want to say waste their time with Mr. Mithun but do you
want to control your destiny? And maybe you're not, you know I'm not saying you have to answer that
question, but do you see where I'm going with this?
Kroskin: Yeah but I don't think, it shouldn't take a lot of time to sit down with Mithun and see what he
wants to do with this.
Jansen: But if the city were to decide to move forward, and if tonight we direct you to bring us back all the
information we need to know as far as purchasing the site, it doesn't necessarily eliminate.., whether it's the
city that's taking the site or private sector, we will have to work out that parking issue so I see that being
something we'll need to do just simply big picture to move forward the development, or redevelopment of
the site. So whether it's us or someone else.
Kroskin: Right now keep the option open for the city to take the site.
14
Economic Development Authority- February 15,2001
Peterson: And Brad brings in another unique alternative that we need to look at too.
Kroskin: I think that's more mid-range, down the road. That's something that can be explored but I think
the immediate answers of finding out what can be done with the park and ride and the bank are the most
short term immediate impact. You can run that other option.
Boyle: I think the feeling right now is that we definitely don't want to give up the $140,000. And second,
that we would like some type of control over what's going to go in there, if economically feasible. And
what are some more of the pros and cons of arriving at that decision. One of which being Metro Transit
input and what Mark said also, and I'm not quite sure how you feel the bank out but.
Kroskin: Well I think Brad brought up, I mean there's your leverage. Regardless of who we're going to
deal with, whether it's Park and Ride, the bank, okay, Mithun, look for your leverage first.
Gerhardt: Oh yeah, I mean I've given John a list...
Kroskin: Okay. And I mean based on just some of the things I've heard here tonight, there's some leverage
in there just to enter into discussion. You know so let these people think the city is initially, wants to buy
the property and take it from there. You know let the bank know, and this is where the attorneys are going
to have to be careful, but let the bank know that you take this over you could have, you know it could be
years before, you've got to deal with the city on the title issues and you could make them squirm a little bit.
I mean that's what I'd be doing.
Boyle: I don't think the bank wants to take the property personally. Clayton.
Clayton Johnson: I raise a question that maybe our legal counsel could help us. Is there any way that the
bank can cooperate and extend this thing because the bank doesn't want to come into title.
Kroskin: Well that's what I'm talking about. Get a binding agreement for the bank to sit back, as Brad
was talking about, and just freeze this thing for a period of, shoot for 6 months and try to get 90 days out of
them.
Clayton Johnson: But still maintain your $140,000 interest.
Kroskin: Well maintain our current option.
John Kelly: I would think that you could negotiate with them on something that would allow you to have a
6 month period to just pay them off at that time and negotiate a price equal to what they have today and
maybe interest. Maybe, with the title problems, would they know that? I don't believe they know that.
Kroskin: Well let's make them aware of it.
John Kelly: ... and I believe everybody probably thought that that bowling alley included the piece between
the movie theater and also the, where the pins are and the entrance on the south and they don't know that.
A lot of banks don't do surveys and know what they really own and so, knowing that they may be very
willing to negotiate a stand still period which would allow you to pay them off at a later date.
15
Economic Development Authority- February 15,2001
Boyle: But what if we elected not to pay them off...
John Kelly: Well then they own it. I've seen deals like that where they'll wait 6 months to give you the
opportunity and.
Boyle: So in essence we could, it's feasible we could extend this deadline by 6 months?
John Kelly: By a written agreement with them prior to March 26th is the date, yeah. You'd have to
negotiate that.
Clayton Johnson: One other issue is when does the County into it? When does it go back for taxes?
John Kelly: I don't think the County has given any notice of tax sale at this point. It didn't show up in our.
Clayton Johnson: So if they did, how long would that take?
John Kelly: Well they've got a period of redemption on that, so a year or something like that. I don't, I
haven't looked at that.
Boyle: What established the first 6 months?
John Kelly: That's the date you had your sheriff's sale.
Boyle: That's the law?
John Kelly: Oh yeah. That's, and as far as the EDA is concerned, you will become the owner of that
property subject to Heritage Bank and the taxes on March 21st, unless Chan Bowl comes in with a check to
you for $140,000 or something like that.
Boyle: So getting back to this extension.
John Kelly: Well you need to get that done, you become the owner but you've got 5 days to pay off the
bank before their 6 month period puts them into, actually you've got a little more than that. You've got 7
days by statute but I think what we were talking about is that you contact them now and say, okay look.
We'd like to enter into an agreement with you that gives us 6 months. Even though you become the owner,
you give us an option what it is. If we don't exercise it, pay you off in 6 months or some number, then you
own it and away you go.
Kroskin: That'd be the simplest way to do it.
Boyle: I sure do agree. Who's going to make the contact with the bank? Is that a legal or?
John Kelly: Well let me clarify this because Todd knows this and I also talked with Scott before. Heritage
Bank is a client of mine, and I said I'll go through the foreclosure and get you that far but we have to bow
out, or I have to bow out of it. Now that's not to say that we can't draft the agreement that you arrive on,
or agree to or whatever but.
Brad Johnson: I don't think it's.., discussion with the bank that they realize what they have.
16
Economic Development Authority- February 15,2001
John Kelly: And I've given, I believe Todd I gave you the loan officer's number.
Gerhardt: Yep, I have his number.
John Kelly: And said you know, the two of you talk and go where you want to go with it. And all this was
disclosed up front that we were going to handle the foreclosure part of it and...
Boyle: But Todd do you feel, are you comfortable now what the direction is to go?
Gerhardt: I only have one question for John, and I'll probably talk to him later, but you should know it too.
Brad made a comment that if for some reason we forgive our redemption period and the bank takes it over,
the bank doesn't need to pay the other creditors as a part of this, do they?
John Kelly: No. They just have to pay the taxes. You have to pay the taxes. They have to pay the taxes.
You have to pay them and that's it. You don't pay anybody else and they don't have to pay.
Gerhardt: There's a bunch of unsecured debtors against this property and so they have no security at all. I
thought I heard Brad say that somebody's going to have to deal with them and I didn't believe we had to.
Kroskin: No.
Boyle: Okay. Do you have any other questions then?
Gerhardt: No.
Boyle: Direction on where to go?
Gerhardt: Got it.
Kroskin: Okay, so can we get an e-mail back tomorrow on this? Just the Southwest Metro, the Park and
Ride, the bank.
Gerhardt: The pros and cons, that's what I have.
John Kelly: IfI talk to Mithun's attorney, I'll see what he wants to do and let you know. We have been
trading telephone calls.
Boyle: Then if you feel, as things start to progress, if you feel another meeting possibly might have to
happen between the 21st, obviously you'll call us.
Gerhardt: Oh I think that we'll probably have, let's see the 21st is kind of the key date here to see you know
who the bowling alley's working with. We know one party but who knows how many other people they're
trying to market this to. I know they've tried to market it to other bowling alley users and so, I think that's
a key date too because they really stand in the first position on this until after that 21st. But I'll definitely
keep you up to date prior to that, how the Mithun negotiations... I'll give you updates.
17
Economic Development Authority- February 15,2001
Jansen: Do we maybe though need to set a meeting time like for the 8th? On like Thursday the 8th so that
we are coming back together and reviewing what the options are so you've got a feel for whether we're
going forward with the city looking for a purchase or.
Gerhardt: Schedule an update meeting.
Jansen: That way if we need more information you've got another week and a half. So either the 1st or the
8th. I'm looking at those two.
Kroskin: That's too far out.
Jansen: Excuse me?
Kroskin: I think that's too far out.
Jansen: Meaning you want one sooner?
Kroskin: Yep.
Boyle: Like the 1st.
Kroskin: Well, at the latest.
Jansen: I mean right now we're at the 15th so that would be 2 weeks if we came back on the 1st.
Kroskin: Yeah I'd say as far as, I mean you should be able to get this information pulled together in 5 to 6,
7 business days.
Jansen: So is everybody open, everyone's calendar open on Thursday the lSt?
Boyle: Okay. Okay, if there's no other questions or discussions, we'll move on to item 2 on the agenda.
Mr. Kelly, thank you very much.
Jansen: Thank you.
Kroskin: And Todd, you're going to send us an e-mail tomorrow?
Gerhardt: Yep, I'll give you the list.
Kroskin: Thank you.
Boyle: Clayton, Brad, thank you.
UPDATE ON REQUEST FOR TIF ASSISTANCE~ VILLAGES ON THE PONDS SENIOR
RESIDENTIAL CAMPUS, PRESBYTERIAN HOMES.
Gerhardt: Chairman, EDA members. Again this is just an update. Staff has been working with
Presbyterian Homes seriously probably for the last 4 months and reviewing their performas. Tonight we
18
Economic Development Authority- February 15,2001
wanted to introduce basically the team that's been working on the project. Vemelle, representing the land
owners, Alan Black representing Presbyterian Homes, and kind of just get a name with a face and give you
a little overview of the proposed project for the Village on the Ponds. I really don't want to get into the
numbers tonight. I think we're a couple weeks away from trying to really solve some of those things. I
think we've tackled the affordability issue, but we're still trying to work out the debt. The gap financing
for the debt ratio on the project so that's where we are basically on the financial side. And right now I
guess I'd like to introduce Alan Black to kind of give you an overview of his proposed project. I did write
a summary of the two buildings and kind of how their rent range is for those and give you definitions of the
3 different elements that would be included as a part of the project. The independent living, the assisted
living, and the dementia facility. Alan?
Alan Black: Thank you. I'm Alan Black, with Senior Housing Partners, part of the Presbyterian Homes. I
think we have some other people that can answer questions we might have. Mark Eckle representing
Senior Housing Construction, who's co-developing and actually the general contractor on the project.
Currently owns a land option, and another associate of mine, John Merkins has been working with Todd. I
want to express our appreciation and the opportunity to come and just show this project at kind of an early
stage yet. And acknowledge the city's done a lot of work in trying to help us sort through issues and we
continue to do that and we'll continue to cooperate as best we can. After tonight's earlier discussion I
realize the discussion of housing over retail has more merit than we know. It seems to be a trend and I'm
thinking that maybe senior housing over a bowling alley might create the opportunity for Chanhassen to
have it's first Senior Bowl. It could be famous. The parking will of course be the problem with that also.
Maybe what I would do Todd, and you guide me, is give me an overview of the actual project. How it sits
on the site might be a good place to start. And as I present, feel free to interrupt me and ask questions.
What we have on the site, as kind of point of reference. This is the actual church right here. These current
streets and improvements have all been done and they establish a very, very nice aesthetics for the site as it
sits. The site is vacant. There's been a little excavation of soils done but we are really starting with a
blank site, and the challenge we had was to try to incorporate some of the goals of the developer and the
city as a combined both housing and commercial on this same site. And in order to accomplish that we've
had to deal with some additional issues with some of the cross easements that are involved with both retail
and church so we're working with about 3 components which is parking, to address the community needs.
Retail requirements for the Lake Drive frontage, and to provide the kind of housing that we think is going
to fit. Our challenge has been, there's a few existing wetlands on it and creating your own retention ponds,
it's quite a small site for the amount of density that we're trying to get on it for parking and so we've had to
do some creative exercises. One of which is we brought parking to meet all of our structures. What I show
you here is really almost two separate buildings that we have shown on the site plan. One of which is an
independent living building here. A good share of which is a 3 story structure. I guess there is one
component of that that's proposed to be a fourth floor. Underneath parking under through this whole area.
This would have about 97 apartments, ranging in size from a one bedroom with approximately I think 700
square feet, upwards to 2 bedrooms in excess of 1,500 square feet. Some common areas in the middle for
residents to use for socialization and dining. Then we have another building on the site. The site has on
ground level a retail on the northern area facing Lake Drive. The goal was to have that retail turned and
come around the comer a bit so we have about 11,000 square feet of proposed retail, with no definition as
to how that retail would break up at this point. Nor do we have any specific documents that have
entertained an interest yet. Vemelle may have that. This portion of the lower level of this building, this
building is our assisted living building. As we move up into this area. This is where we house our kitchen.
We have our dining space for residents of assisted living, and a large multi purpose room is used to hold
chapel services, large group activities, maybe our own theater night, entertainment and so forth.
Management offices and so forth. So our first floor is kind of our main entry. It's where we provide
19
Economic Development Authority- February 15,2001
reception, security and management services. And then the key services to residents. Conversely, the
independent has units down on the main floor. One of our challenges for marketing of this is we're going to
have a lot of units that are going to face into a courtyard and those are some of the things that we have to
address to make sure that we have the aesthetics in line so that people will find it still pleasing. So we're
going to have some challenges in trying to provide that opportunity. I think you can see the relationship to
the church. We have engaged some discussions with the church as being a partner in this project. We're
continuing those discussions. They have a lot of interest, provide a lot of support for the project. From the
standpoint of giving us some suggestions and may or may not choose to become an active participant in the
project. We'll know here in a couple of weeks. There has even been some questions about how...
penetration across main street here. To the extent the residents of our facility would like to get into the
church. We haven't attempted to solve those problems but at least the level of interest that you know we
might have.
Boyle: We could build a bridge. Just kidding.
Jansen: Another one.
Alan Black: That's what I will probably show next is the bridge that we proposed.
Jansen: Our first skyway.
Alan Black: Nice segway, thank you. We are trying to connect our two structures as well and we're trying
to establish an opportunity for staff to provide services to both ways for all residents to enjoy the spaces of
both buildings so to accomplish that.., an elevated bridge or a skyway. The main goal here, we worked in
cooperation with Vemelle's group to try to have this match and assimilated into the rest of the commercial
and retail area that we have coming into the area. We have a large structure. The assisted living building,
I failed to mentioned has approximately 70 units of housing in the assisted living building. The actual
housing units are on 3 floors above the retail and it comprises, actually that 70 units breaks down to about
50 units of traditional assisted living. That type of people that need support and care on a regular basis,
but we have 20 units of housing for those residents with memory impairments that would need 24 hour care
and supervision and security environment so there's a total of 70 units broken down to about 54... for those
memory impairments.
Jansen: Is that the 4 story building then?
Alan Black: Yes ma'am. It might be easy for me to put through the fourth floor so you have a perspective
of where that occurs on the site. A portion of it is 3. This is the fourth floor plan for the building. You
can see, this would be limited to 3 stories in this area above retail. 2 stories above retail, for a total of 3
stories. This portion of the independent living building would only be 3 stories and then this area here
would be 4 stories and one of the things that's happening.., is dropping off fairly rapidly in the back comer
of the site. So we tried to use the 4 stories there.
Peterson: There is or isn't retail on the first floor of the 4 story style?
Alan Black: The total retail on the first floor and it's in this area here facing Lake Drive. The only
exception to what might be described as retail is there has been some expressed interest by the church in
trying to extend their daycare services so we have thought about trying to get a daycare program down into
this portion of our site with maybe an opportunity for outdoor play equipment so... not a commercial use
20
Economic Development Authority- February 15,2001
but a little bit different... One of our challenges here is to try to maintain some reasonable economics but at
the same time we realize this is your key focus of your downtown and the types of materials and the level of
interest and repetitiveness is of great concern to the city. As well as to the owner of the other retail
components so we've been challenged to take our building and begin breaking them down in mass and
structure so it would appear to be more of a community type development retail so we provided a lot of
change in facades and articulation to the building, including roof lines. This is our skyway bridge. As you
recall we have a main entrance to the site.., there are two entrances into the site. One is in the area posing
the church and the other off of Lake Drive.
Boyle: And the bridge is the one by the church?
Alan Black: Yes sir. The bridge kind of elevates.., from coming right out of the church almost if you will.
Underneath here so we can have access. This bridge is kind of a one story structure and it's not really a
key support area for us but it's one we've tried to enhance and we probably would have lounges.., garden
feeling up there so...utilize that space so it's not just... So part of our dilemma as we moved through is to
try to add some things like balconies, awnings. We've added a lot of things that added some cost to our
project. As we moved, particularly a lot of our buildings, especially those and try to remain the
affordability. We get above 30% brick we begin increasing our costs over our typical buildings. This
because of it's articulations and types of materials we're going to add some costs. We should point out at
this point that we have not completely cost these plans out. We are just raw estimating so we hope that this
is buildable but I wouldn't want to represent that. I think it represents everybody's sincere intentions to get
this type of structure and I think it's coming very close to getting approvals from the owner as we move on.
This portion is the Lake Drive elevation. I'll point this piece out here. You go back and it's kind of the
same image right here. Kind of... Maybe this would be a good point just to stop and say, is this the kind of
plan that you thought or do you see some issues right away that maybe I could address?
Boyle: I don't. Anybody?
Peterson: One of my first reactions was, goes back to my earlier question on retail. I'm trying to, I'm
concerned that we don't have retail on that main thoroughfare, which kind of walks down to the pond.
Alan Black: This area here?
Peterson: Yeah. But we don't want to pocket the retail but I'm looking, farther south there really isn't any
realistically there isn't any retail that's going to be farther south anyway. You know what I'm looking for
Vernelle is, the initial concept of this didn't, you know had retail on both sides of that street. Plausible or
not.
Vemelle Clayton: A couple of things have occurred. One is in looking at this as it goes along down here,
there's such a drop off here that it's very hard to do a practical retail. Because you need to have an open
space that you can from year to year, or every 5 years as tenants turn over, be able to re-lease and have this
space one year and this space another. This one ended up having to have built in step downs made it very
inefficient as a retail building. So the compromise we've come up with here on this one is that they have
agreed to put their sort of active uses here and have it kind of look retail. I think they're thinking about
maybe, and maybe you haven't but I think they're going to have sort of a bistro feel with the outdoor eating
possibly out here so they're doing the best to make it look active so we have an active street feel. And we
think it's a good compromise.
21
Economic Development Authority- February 15,2001
Alan Black: I probably should also point out there's two entrances to underground parking. There's likely
a separation between those areas for security so we would have parking underneath. Typically these are
just slab on grade, the assisted living but we brought parking in here and we're making determinations of
where the parking requirements are for retail. Retail and additional parking would be then separated
underneath the structure. So we tried to maximize the parking that's available on the site but.., spaces that
we have.., second floor of the building you can see, these are the floors that we have our housing units on.
This would be 10 units of memory impaired programming. Our goal.., for memory impaired residents and
so this unit would be a secured unit with only 10 residents living in that area. And we stack right above
there's another 10 units. We're trying to get down to kind of a family center kind of approach for memory
impaired. Alzheimer's being the most predominant... Third floor's kind of a repeat again. Then we're
back to the fourth floor. Just one segment of the building... I thought maybe I'd give you just a couple
other little points of facts. I raised some demographic information so you kind of know a little bit about the
need. I won't spend a lot of time boring you with demographics but right now I have.., market analysis.
I've done an analysis over in this area that's currently shaded in red. Down here. I'm going as far west as
Victoria south to the river. About up to Lake Minnetonka and stopping short of 494. That area has about
6,500 seniors in it and I look back 10 years ago, back in 1990 and there were 4,078 so it's grown nearly
2,000 seniors over a 10 year period.
Boyle: Is senior classified as 65 or older?
Alan Black: Yeah, I'm using 65 and over for that. A couple other numbers I found kind of interesting.
We look forward from the year 2000 to 2005, 65 to 74 year age group typically is a decline. The baby
boomers kind of aging out. Typically they decline in this part, a growth of almost 10% in that group. Age
75 to 84 is projected to grow 22.5%. The 85 plus is going to grow 29%. So we're going to see in addition
to the growth we've seen in the past, we're going to see that continue on and that trend will likely occur
onward to the year about 2030 where it begins to finally stable out so there's a dramatic raise in the
percentage of people over 65 and we're going to see a large actual increase in numbers too. Which is one
of the reasons we think this is probably an area that we should... Senior incomes out here are highly
variable. There's a group of seniors, this graph shows it pretty well. I'll point to a...we have, get my
pencil on this. These are seniors here that are low income. What this basically does is start to show you
those seniors that would be qualifying.., or tax increment financing would be eligible. They need the
affordable housing. This figure is going to be market rate. And a quick observation, it's kind of a 1/3-2/3
kind of scenario. About a third of your population is going to really be... affordable housing. 2/3 that I
think are probably in the position to be able to be... market rate situation.
Jansen: And I'm sorry, did you say where this sampling was from? Is that specifically Chanhassen or is
that just metropolitan area?
Alan Black: No, we tried to look at an area, because we know that our buildings will serve greater and I
tried to get that data for you but it includes portions of Excelsior, Greenwood, as far west as Victoria and
portions of Eden Prairie.
Jansen: Okay, thank you.
Alan Black: Western portions of that.
Boyle: Mr. Black it might be worthwhile if we had copies at least of some of this.
22
Economic Development Authority- February 15,2001
Gerhardt: I've got a copy tonight so I can run up and, is it alright if I share it with them?
Alan Black: Certainly.
Gerhardt: Marketing information...
Jansen: Well not to have you leave the meeting. We can always get it afterwards Todd. Yeah, thank you.
Alan Black: So I bring that up just to make sure that there's a feeling that in fact there's a need in the
community and your need has grown dramatically just over the last 10 years. And the next 10 years it's
likely to see another 2,000 seniors... If we take a look at normal penetration rates of senior housing,
typically about 15% of the people over age 65 will avail themselves of some form of housing. Just off of
sheer growth it begins to set a perspective of what kind of housing demands you might begin hearing about
as we move into the next 10 and by the year 2030 you're going to see a lot of things. The bowling alley
was a joke but it tums out it may be the kind of site people really will be scrambling for. And especially
those sites close to a lot of the retail services. We should mention we have done a project like this where
we have put senior housing over retail. We recently did it on a redevelopment program in Bloomington on
98th and Lyndale and the difference there, we brought the independent living building over the top of the
retail. John was the developer on that and he secured a variety of small shops under one portion of it. I'm
not sure you could even describe the type of shops that we built.
John Merkins: More convenience retail. Travel agency. Jewelry stores. A sign company. Cigar shop.
That type of convenience retail and.., put a Walgreens on the end.
Alan Black: ... site we had a Walgreens... with the drive up and of course Walgreens with their full service
kind of convenience store made a perfect match for us so. We're not adverse. We like to have seniors
having activity and the retail is a real positive for us. I think we've gone over the days of trying to move
people out to quiet pastures.., activity and this represents a good site. The proximity to St. Hubert's
Church is immeasurable for those people who would like to take advantage of that so we're really excited
about some of the.., ministerial programming we might be able to do. So little bit of market information.
Some site information and maybe I should just stop and see how you want to... rest of your time.
Boyle: Besides 98th and Lyndale, what's another spot for a site that you've built on?
Alan Black: Well in this community we build the Beacon Hill project in the Glen Lake area. And I think
maybe we have some people who maybe have heard that. We have a large campus that John actually was
involved in. In Bloomington also and that's over on Penn Avenue and 98th Street, just west of 35W. That
campus involves 86 units of assisted living which is similar size to this and 101 units of cooperative
housing which is now being turned into a rental community. We've got plans for a future nursing home on
that site too so those are a couple right in the immediate area I guess.
John Merkins: Spring Lake Park.
Alan Black: Major campus up in Spring Lake Park that involves nursing home, housing and assisted
living. We believe, maybe it's just for a note is, we are really kind of refraining from doing single purpose
type projects that says we can provide you this service but once you're outside of this zone and your...
change, there's a move pending. Our goal is to try to provide, even in the independent living as much
service as we possibly can, which allows us with the assisted living to provide meals, transportation,
23
Economic Development Authority- February 15,2001
activities or recreation on the base of the assisted living, and to extend those over to the independent living.
And in the Bloomington project I think we have 12 hours a day of home care for the independent living for
those people who just need assistance with daily medications and some assistance getting up and getting
dressed so, the goal is to try to maintain people in their current living situations rather than move them
rapidly through higher expensive and less favorable kinds of housing as we move up the continuum of care.
Recognizing that all the residents here may have needs beyond this campus. They all have first admission
rights to other campuses. We have.., for other types of services.
Boyle: Excellent presentation, thank you. Questions?
Kroskin: Yeah I had a quick question. Can you just run through again the type of retail that you envision
going in there?
Alan Black: We've got about 11,000 square foot to work in here and I think Vemelle's organization are
planning to kind of do a kind of a net lease arrangement with us on that. And she might be better able to
express the type of interest she may have or thought she may have for that.
Vemelle Clayton: Mark, I think for your benefit, number one. This has been, this is a relative complex
project. We've been working on it for a number of years and any of you are welcome to come over to our
office and I can show you where we've been and where we plan to go. But just briefly, what we're dealing
with tonight is how we might work with these folks. The city might work with these folks economically so
they can do what they want to do. When we get to the overall plans, there are some changes in the PUD
that need to be made. We'll come in to, through the Planning Commission and the council with those.
They're not huge. They're not re-organizing or taking up streets or anything but a few things of those, and
re-organizing the density. Our plan came in with the idea that we'd have, we can have X number of square
feet of residential. X number of retail. X number of office. But we're moving that around a little bit and
so we'll explain that to you when we go through that. We'll also explain then where all of the office, all of
the retail will be so that, just to briefly answer your question tonight though. Oh and then I should say,
he'll then come through with his specific site plan. We'll have to have another site plan at the same time
and it will all fit together. What we're trying to accomplish here on this comer is that we have a little bit of
retail coming around this comer. A little bit of retail coming around this comer. A little bit more housing
above that. A fair amount of retail here and a fair amount of retail here with some more over here. So
what we're going to do is have this comer anchored with retail. And we'll have one group working with us
that will be master leasing this from these folks and master leasing this floor from the owner of the property
here. And then overall plan, which you know if we should say this kind of store be that would best work
and where should that store be. Where would we have food? Where do we have coffee? Where do we
have this and that? So we don't have a plan for specifically for this. We're working with some folks and
we'll have an overall leasing plan for the whole project. Does that answer at all or?
Alan Black: ...those kind of professional supports that come in.
Vemelle Clayton: And there are those kinds of people that might be looking too.
Jansen: And Councilman, I might share with you that as a council, because we have numerous new council
people, as Vemelle was saying. This is a very complicated PUD and there are a lot of issues with it. We
have talked as a council of having an overview of the PUD so that everyone is familiar with what the
original framework is that this is fitting into. And that goes to where Vemelle was saying that there's more
parts to it and there's the shifting around so that's why it's not that firm.
24
Economic Development Authority- February 15,2001
Kroskin: I'm not really looking for firm. I was just looking for some squishy is very fine.
Vemelle Clayton: We haven't looked for any specifics yet.
Kroskin: I understand all that. I've seen a couple of these deals. I guess I'm just, when I'm talking about
retail, you're going to have a blend of restaurants, maybe some high end shops. Convenience.
Vemelle Clayton: We want to get as many high end as we can. Exactly.
Alan Black: Typically with the senior housing you don't want a restaurant because of the noise and odors.
Kroskin: I'm not saying necessarily underneath but in the vicinity. On a couple of these type projects that
I've personally looked at, integrating the community as much as possible with the senior community is very
beneficial to make sure that the senior community isn't an island onto itself. Where they're getting
interaction with residents. You know it's just a good thing to get people in there and it's good for the
seniors and it's good for kids. It's good for the community so that's kind of where I was going.
Alan Black: Bloomington I think is a very good example of what you're referring to. On the comer of 98th
and Lyndale has.., a retail including a bank on the opposite, or Byerly's and a good portion of convenience
retail on the third comer so it is a mix of services and amenities that are important to seniors and are
attractive for us to take it to the market and say, you're joining more than just a facility. You're joining
part of a downtown community.
Kroskin: Right. And as far as the restaurants, getting a couple of you know, whatever the number's going
to be of some nice restaurants that will draw, you know seniors like to go out to eat, just like the rest of us,
and it's nice to have that mix of seniors and non-seniors or soon to be seniors in there and just getting the
mixing and getting to know each other. I've seen it and I think it's a good thing.
Vemelle Clayton: I think you have a good idea of what we're looking for. I should also just mention that
the bus stop, or the bus shelter is right here too which is very good with a corridor going through here.
Jansen: Well I'll frame my comments up around the EDA's focus on the financing of the project without
getting into any of the site specifics obviously tonight. I think it looks like a wonderful project. As far as
the city stepping up and participating, obviously still needing to see some of the numbers as this is worked
out. I'm pleased to know that Met Council is taking a look at this and that they're interested and that those
conversations are happening and going forward. I get very excited about this project. We work out all of
the details of course, this being the first meeting that we've had as an EDA. We're primarily just focused
on the finance part of it and all the site plan review and such does occur as it comes through Planning
Commission and up through council so it's more whether or not the city would be participating financially
in the project.
Boyle: Well I sincerely hope that the numbers do work out...
Alan Black: Well we're excited about it. I think it has the capacity to really add, I hope these people will
add some great character and sense of purpose to this area. I think the opportunity with St. Hubert Church
are just insurmountable for people because I think they're a community resource the way they have done it
and with the school program that's there, they have.., for intergenerational kind of programming and it's
25
Economic Development Authority- February 15,2001
just fabulous. What brought us here is the need to try and get some city participation on it and try not to
get into the numbers specific as we talked about with Todd. But just say you know we hope that maybe by
presenting this and people beginning to understand some of the things that we're trying to create from a
perspective, the image, the challenges, the typical kind of housing that we would normally do for this thing.
So hopefully it still has merit and we're going to continue to work with Todd and see what kind of number
solution we have. By the way, I realize when we were doing all our number work, we didn't bring any
numbers to you for the tax base side of the retail. What we forecasted...tax base so...
Jansen: That sounds like a good oops.
Kroskin: How far away are we from seeing those numbers?
Gerhardt: I would say, we want to meet with their underwriter and I don't know when we can get that
meeting together but I think after that, maybe we can get it, another update to you on the first. On the other
project. I hate to bring you together for another meeting ifI have to so maybe we can combine it for the
first. Because I think we're getting a real good feel for how the project is laid out. I asked him a lot of
questions. They answered my questions and killed my wonderful ideas and.
Boyle: But you're used to that.
Gerhardt: Yeah, but Scott has helped out on a lot too and I know Linda's taken a look at some of the
meetings that we've had with Met Council and their participation.
Kroskin: How is that going?
Gerhardt: Well, I think it helps on the affordable side, but it doesn't really help with the debt portion of it.
Their participation is the Section 8 vouchers that would go along with this. It doesn't help on the capital
side of the ledger so what we're looking at now is finding who might have money to try to put towards this
project to reduce that cap financing. And I've got a call into Carver County HRA to see if they have any
money that they can throw to it. Scott has calls into other non-profit organizations that Alan is familiar
with that he would deem acceptable as contributors to it. And we're looking at block grant money too. So
the problem with that is you've got to go through an application process and to say that you can allocate so
much money towards this thing, you don't know until you go through the application process and see how
you point out and do you win. And I don't know when they make those allocations. I know the deadline to
get your application is in a couple of weeks. So we think we can meet that. But is that going to, you know
you can't bet on that money until you find out what the results are so we're kicking every stone we can find
out there and it is, we'd like to call it a hurdle. Sometimes it looks like a high jump bar but you know
we're working on it.
Jansen: Great.
Boyle: Any other questions?
Kroskin: I'm thrilled. I love it.
Peterson: I think the design standard is really, of the projects we've come in under that area, if it's 95% of
this I thin it will be a pretty quick pass through so.
26
Economic Development Authority- February 15,2001
Kroskin: It looks great.
Peterson: Keep the cost down and keep the brick percentage up.
Jansen: And we certainly identify the need. It is in our strategic plan and our seniors remind us of it
constantly so I know you've got our senior community behind you 150% so we certainly appreciate it.
Thank you.
Boyle: Let's adjourn. Did you have something else?
Gerhardt: There's no decision on this item. It was an informational. I know Vernelle, did you want to add
anything more to this item?
Vernelle Clayton: No. I think get together March 1st. I think that would be great.
Gerhardt: So that's all I have.
Boyle: Thank you everybody and we are now adjourned.
Chairman Boyle adjourned the Economic Development Authority meeting at 8:30 p.m.
Submitted by Todd Gerhardt
Assistant City Manager
Prepared by Nann Opheim
27