2001 03 01FILE COPY
Agenda
Economic Development Authority
Thursday, March 1, 2001, 6:30 p.m.
City Council Chambers, 690 City Center Drive
1. Approval of Februa~T 15, 2001 Minutes.
o
Update on Mortgage Foreclosure on Chanhassen Bowl Property,
Chanhassen Ventures, LLC.
Update on Request for TIF Assistance, Villages on the Ponds Senior
Residential Campus, Presbyterian Homes.
A djoul'nment
CHANHASSEN ECONOMIC
DEVELOPMENT AUTHORITY
REGULAR MEETING
FEBRUARY 15, 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 CHANI-IASSEN BOWL PROPERTY, CHANHASSEN
VENTURES~LLC.
Gerhardt: Mi'. Chairman, EDA melnbers, 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 fol' 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
delinqnency that the Bowl people had had with the $140,000 loan that the EDA had Ient, 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 ally position. It xvas 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 ora
closing on that property and physically buying the bowling alley property. Now back in September 21~t
what that triggered was for the bowling alley people, that they had a 6 month period to redeem so that
would take tl~em 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 propm%,, they would have to negotiate with us on our $140,000
loan. We have had a couple of people contact tls 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 ,vere 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 ill 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
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Ecoaomic Development Authority- February 15, 2001
County for their recycling program. But as you sort through some of these you will see, there's like one
in there foL' $11,000 to tls. I'm sure that's part of the downtown improvement specials. Or it could be
delinquent sewer and water that we certified against the propeL1y.
Kroskin: What page is that on Todd? Oh, I see. The $11,1037
Gerhardt: Yeah.
Kroskin: That's to tile city?
Gerhardt: That's to tile city. Any assessments minus basically $140 will come back to tile city.
Kroskin: Who's assessing tile penalty, on the penalty line. Who's assessing the penalty?
Gerhardt: Tile County assesses a penalty and interest for delinquent taxes. Unfortunately state law does
not allow a city to retain or receive any of' tile 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 tile
percentage. If it's 50/50 or based on the percentage of how they collect taxes. But I know we don't get
Kroskin: And itl that 154, tile 140K in principal and tile loan amount is included itl that?
Gerhardt: Tile 1547
Kroskin: Yeah.
Gerhardt: No.
Krosldn: Okay. That's jnst taxes and special assessments?
Gerhardt: Right. lfxve were to resale, say we purchase tile property and we were to resale it. We would
have to get the $765,331 plus our $140,000 foL' out' loan, so we xvould have to receive, let's see. At least
$903,331 to come to balance. To recoup our 140, for xvhat we paid the Heritage loan people off at and
then what we paid itl back taxes.
Kroskin: Is there any negotiation xvith Heritage on tile 380?
Gerhardt: Well, Heritage is aware ora purchase agreement that another paltry [las entered into with the
bank, but hasn't closed on it orS1.1 million. So John and I have talked and they know how much tile
back taxes are. They knoxv how much we're owed. So fo,' them to back off at 380, we didn't think they
were going to negotiate too much but John and I talked and I said, you knoxv 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?
Economic Development Authority- February 15, 2001
Gerhardt: Bloomberg Companies? They're aware and they're here tonight.
Boyle: Excuse lne 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 knoxv 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 lnore 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 I and trying to market it from that standpoint. Just the summary events.
Again, September 21 st 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 fi'ont of us and we're just, the 140's gone. So they made their foreclosure on
September 26th, so March 26~h is when they have full rights to paying off the back taxes and owning the
boxvling 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 pictt, re.
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 o\vn 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 fi'om 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
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Economic Development Authority - February 15,2001
that as a creditor of Chan Boxvl. You actually have under tile statute 7 days fi'om that date. Chan Bowl's
date expires on the 26th and you have 7 days, each of, if there mechanic liens against the property or other
mortgage holders, each one bas a successive 7 day period until all of them have expired. Your mortgage,
xve foreclosed ahead of Heritage for the reason that if Chan Bowl does not redeem fi'om you, they are
really out of the picture. You own tile property as of the 26~h. Now there are, there is one other lady, and
I forget her name at the current tilne ~vho has a third mortgage on the property. She xvould have the right
to come in and redeem. Pay you the 140 but then she'd have to on tile 26th come in and pa3' 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 didu'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 fi'om ]let'. 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 tile end of Decelnber.
John Kelly: Your 1407
Gerhardt: Yeah.
John Kelly: Tile date you had on there. I kllow wheu we sold tile property at tile sheriffs sale you were
oxved about $137. Something in that area so whatever the interest rate is. Noxv you would tack onto that,
y'ou're entitled to tack onto that at the end to recover it, some fees and expenses that xve file on affidavit
of'. And tile bank by tile 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 ill September.
Kroskin: I have a question. We filed that second mortgage xvitb 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 fl'ont of you, they wipe out
everybody that's behind them. It's the same thing that you do. You xvipe out everybody that is behind
you iu 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 tile 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
Economic Development Authority - February 15,2001
think 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 aud Scott and I believe there is a Mr. Mithun who oxvns the movie theater who is
interested iu purchasing the property and his attorney and I have traded phone calls and depending upon
what lie wants, how he WalltS 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
boxvling 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 ininute meeting that we had, and he wasn't showing his cards and. He
said ~vould you be interested and we go sure and he said well I'll have my lawyer call your lawyer.
Peterson: Didn't lie 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 highxvay and he's trying to protect his corner 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 betwveen the bowling alley and the movie theater. Mr.
B Ioomberg owns a parcel, basically the entrance, the south entrance to the bowling alley and a parking
lot area. And lie also owns a sliver down the middle between the movie theater and the bowling alley.
And lie 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 xvant 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 h~tention 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 fi'om 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
p,'operty 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 Mi'. 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 ansd~ing
like that.
Kroskin: Yeah I know but if another developer xvanted to come in and buy the property fl'Oln us and do a
series of retail shops, you knoxv 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 issne.
Gerhardt: Do you want to talk to that or do you want w,e to call you and find out if they're for sale?
Claylon Johnson: Clayton Johr~son, I represent the Bloomberg Companies. I think there are two issues.
First of all, Todd your draxving'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 bnt I mean out' concern is we own 10 acres of land in downtoxvn Chanbassen which we
eventually envision being redeveloped in one way, shape or form and we want to have some amount of
control over xvhat goes on. I think the bigger issue as iai' as, and now I'm expressing my opinion on what
you guys should do. The biggest issue I see in the HRA acquMng this parcel is I think this easement
makes this laud vitntually xvorthless. 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 redeeln 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 ah'eady exceeding the easement that they're entitled to. They're parking all over that place. So
as a bnyer or as a potential buyer you look at the use. Everybody that comes to town loves that cornel'. I
mean it's been the prime site of most everybody we've talked to in terms of future developlnent. But
until that Park and Ride thing is resolved, it's totally out of control. And I think I would just be terribly
fl'ightened of the availability of parking, unless it was a use that was totally complimentary iu terms of
the time. But that's what I see as the biggest isstle. And I know that staffhas worked at that fi'om many
different angles but I don't really know where it stands today. Any other questions?
Jolm Kelly: I have one. Do you own a strip? Do you know if you own the strip?
Clayton Johnson: Yeah we oxvn the strip.
Johll Kelly: Between the two buildings?
Econo~nic 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 ~vith all the title issues, which they can very easily be handled and we're not going to
obstruct that in any ~vay 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 ~vould 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.
Jolm 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 ~X,hat are moi'e 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 m~d 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.
7
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 t6wn roi' commercial uses, and
as our population grows and a need for more commercial type activities, that's a key corner. Like
Clayton said, it is worth $9.00 a square foot. 10 years ago you probably couldn't get $2.00 a square foot
roi' 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 fi'om that.
Boyle: ! think one of the other pros is the fact that it gives us control oil what does go ill 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, aud I knoxv 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 tile commercial and retail and if this parcel is such a key focus to
our xvhole 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 xvith it. That it
would actually need to be a strategy and a focus then to really go after it as far as whatever draxv. I had
inq¢ired earlier today, and I forgot to print off the e-mail, the demolition costs of taking the boxvling alley
off the property. Am I remembering it xvas 25 to 40?
Gerhardt: It was about $25,000 to $40,000, and that's pulling it out of the ail'. What you have is
basically half of the building is a tilt tip 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 xvas Instant Web Companies' original manufacturing facility and the city
purchased the building fi'om Instant Web and relocated them into the industrial park. And fi'om 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 xvas to teat' the building
down so. For it to stand and be used roi' 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?
Gerhardt: They have approximately 100 stalls that are within that area that they can park in and they
were given a pe,'manent easement by the city.
Economic Development Authority - February 15,2001
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 wonld 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 wonldn't demo it. We would leave it up to whoever would purchase it because ifI 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 fi'om there.
Gerhardt: The only thing I can come up with is the Pony-Pauly-Pryz~nus 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.
Jansen: Well and we can go back on the original proposal that almost went through, and parking was
part of the issue, but l'm recalling it was at least close.
Economic Developmeut Authority - February 15,2001
Boyle: Are you referring to tile movie theater?
Jausen: 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 tile variance because we still
thought it would be an issue. Their numbers, they did their analysis of how lnany spots they would need,
as did plauning departmeut, aud there wasn't agreement there. That was really the big difference. And I
don't thiuk anybody's going to build additional movie theaters based upofi 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 parkiug ramp for this area and that
was going to work in coucert with the Dinuer Theater redevelopment. They were planuing on, their
plans over there are to build an office building. So for them to build ail office buildiug to the scale that
they were talking., they were going to need a parkiug ramp. So there was an idea that you would
concentrate the two parking ramps kind of together, but we weren't successfitl in that grant application.
And I dou't believe that we are goiug to solve the park and ride clilemma xvithiu a month.
Kroskin: Yeah but couldn't you get a good idea which way the wiud's going to blow on that? Contact
all the parties and.
Gerhardt: \Veil I think the key thing is, I don't think the park and ride's a problem until you know what
kiud of user you're going to have ou that site.
Kroskin: My point is if you cau 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 uot, but if you could structnre a deal that
would give the city the option.
Jausen: I'm the couucil representative on the Sonthxvest Metro Transit Commission and I would say,
judging by the amicable relationship that all parties have in that agreement, if this community bas a need
in this area and we start working with them as to any sort of a shift or negotiation, I don't see xvhere
we're up against a group that isn't going to be at the table negotiatiug. 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
uuless you've had a negotiation.
Gerhardt: In my conversations xvith them they would really, I think they've got 100 people they've got...
Kroskin: You never kuow what you're going, what you can get uutil 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.
Boyle: Todd, have we had any offers on tile property next to Tires Plus? Is there any interest shown on
that property?
10
Economic Development Authority- February 15, 2001
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 sigued 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 yo.u 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 Southxvest Metro going to be knocking at our door iii the next 2 or 3 years for
more spaces anyxvay? 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 oil the number of residents I've talked to, people are
screaming for, they'd like a more pedestrian fi'iendly 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 or'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 tile 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 oil
the top and then a ramp on tile 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
tile point where ~ve 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 21 ~t, it appears
to me. And with that I think ~ve need to at this point decide what we want staff to do before that meeting
so we can make a decision.
Brad Johuson: May I say so~nething?
Boyle: Yes you may Brad.
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
11
Economic Development Authority - February 15,2001
trying to figure out xvhat to do with it. Tile down side on that particular property is that probably the only
oue that can really clear the title is tile city. You knmv 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 ill scale. Mixed use projects that communities
probably a little older thau our's are doing xvith their dowutown, but it generates a combination of
honsing, retail, office, on about 15 acres that could be a cousiderable sort ora place to put if you don't
waut reutal out in the booudocks here itl the downtown area. But two tlli~?gs, we're in the retail business
itl toxvu. Tile two things that help our retail the most is residents who live downtown, and businesses
downtowu because one of the glowing things for Chanhassen is our lunch crowd beats just about
auyplace in the conlmunity. All 27 restaurants we've added since xve first came here, or have been
added, are all beiug very snccessfi~l. 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 trausit authority, Lyun aud he was on his way out to
a, what they call transit oriented developmeut, i'm going to two of them. One in Portland and one itl
Calgary next week. That are built around the idea of transit. People who take transit generally do uot
like to drive to trausit. They like to walk and that's what's beeu proven to be the most successful trausit,
so that means that people have to live close to that. So your transit, what you call transit oriented
developulents have people 1Mng 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 dohlg at their transit center
currently over there. How big is that grant he got fox' tile parking lot? I can't remember.
Jansen: $600,000.
Brad Johusou: I think $6 nlilliou, for tile parking lot. Yeah, I think tile parking lot grant fi'om tile federal
goverlmmnt just for tile transit orieuted portion of that was $6 million. And they're now in the process of
adding housing and retail to make it xvork. We thiuk that will work. Bloonlberg's are interested in
developing their 10 acres over time. Probably iu tile long ruu, 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 thiuk
about that aud tile only people that can do it. We're williug to option the property and pay for it. You
know you take it down and take possessiou of it and we're williug to come back and help carry the cost
of it, and even look at contiuuing operatiug the bowliug alley. So that kind of thing we can't put together
unless somebody says that's what you'd like to do. As you kuow we've done quite a bit of development
itl that area. Tile Diuner Theater sooner or latex' ]las to be redeveloped. So all those things are real life
kind ofthiugs that could be beneficial to the city so that's xvhat we'd like you to thiuk about and maybe
we could meet with tile staff about it. Thanks.
Jauseu: Thauk you Brad.
Boyle: Do we have any other questions of Brad before...you'd be iuterested in. Did you say even
managing the bowling alley? Did I hear that?
Brad Johnson: You've got to realize, we've really ahnost bought that 2 or 3 times and...we're the only
people that even understand tile title issues.
Boyle: That's probably true.
Brad Johnsou: Yeah, it's all up in our office you know and yeah, we'd be interested in sitting down and
saying, let's do SOulethiug. And it could work. It's going to take a little imagination. The reason they
12
Economic Development Authority- February 15, 2001
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 oppoi~tunities 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 wotild, I think we're willing to talk
about it this week and we know why people haven't made the offer on the propm~ty 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 ~vhat 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 problelns 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 doxvn 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 6nly entity that's really going to bring
this together quickly would be the city.
Brad Jolmson: 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...casb 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 kuow 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
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.
13
Economic Development Authority - February 15,2001
Boyle: But we don't have a lot of time.
Kroskin: I guess I would say two things. I would like to go andjust 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
aloug. And then also I'd like to, let's see where things where the rubber meets the road with that hank.
And if we can work some type of a binding agreement for them to stand still for a period of time, that
will buy ns 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 carl get doxvn ill a short period of time.
Gerhardt: I don't want to look at it as if we're trying to run axvay fi'om it either, but do you want the
private sector to try to deal with the issue with Mr. Mithun ah'eady contacting us. Do you xvant us to
pursue that area or, that's kind of the direction I'm looking for? Do you want to tackle tile issues at hand
out here or do you want us to pursne negotiating with Mr. Mithun, who's contacted us? Or do you want
to try to taclde tile site?
Kroskin: I don't think it's, that's a parallel deal. Go ahead and see what lie 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: Ill understand your question Todd, I agree with Mark but when you said the private sector you're
referring to Ray Mithun.
Gerhardt: \Veil he'd have to buy onr interest out and.
Boyle: Then let him deal with tile bank, right?
Gerhardt: Well yeah. That's basically why he's saying you guys deal xvith the problems in tile area and
we'll sit down and do what we can with the park arid ride. Or do you want to try to go in there and try to
coutrol the whole site and not have staff, I don't want to say waste their time with Mt'. Mithun but do you
want to control yonr destiny? And maybe yon're riot, 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 inforn~ation we need to know as far' as purchasing tile 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 xve'll need to do just simply big picture to move forward the development, or
redevelopnmnt of the site. So whether it's us or someone else.
Kroskin: Right now keep tile option open for the city to take the site.
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 Call be explored but I
thinl( the immediate answers of finding out what can be done with the park and ride and the bank are tile
most short term immediate impact. You can rtln that other option.
14
Economic Development Authority - February 15, 2001
Boyle: I think the feeling right now is that we definitely don't want to give up the $140,000. And
second, that ~ve would like some type of control over what's going to go in there, if economically
feasible. Aud 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: Ob 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 Johnsou: I raise a question that maybe our legal counsel could help us. Is there any xvay 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.
Jolm Kelly: I would think that you could negotiate ~vith 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
lnay be very willing to negotiate a stand still period which would allow you to pay them off at a later
date.
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?
15
Economic Development Authority - February 15,2001
Johll Kelly: By a written agreement with them prior to March 26~h is tile 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 uotice of tax sale at this point. It didn't show up in
O1.11'.
Clayton Johnson: So if they did, how long xvould 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 tile date you had your sheriff's sale.
Boyle: That's tile 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 tile taxes on March 21~t, unless Chan Boxvl 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 tile owner but you've got 5 days to pay offthe
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 all agreement with you that gives lis 6 months. Even though yon become the
oxwmr, you give us all option what it is. If we don't exercise it, pay yon off in 6 months or some number,
then you own it and away you go.
Kroskin: That'd be tile simplest xvay to do it.
Boyle: I sure do agree. Who's going to make tile contact with the bank? Is that a legal or?
John Kelly: Well let me clarify this because Todd knoxvs this and I also talked xvith 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 ]lave to boxy out of it. Now that's not to say that we can't draft the agreement that
you arrive oil, or agree to or whatever but.
Brad Johnson: I don't think it's.., discussion with the bank that they realize what they have.
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 xvant to go with it. And all this
was disclosed up front that we were going to handle the foreclosure pall of it and...
16
Economic Development Authority - February 15,2001
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 Imow 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. Theyjust 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 arid 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 oil where to go?
Gerhardt: Got it.
Kroskin: Okay, so can we get an e-mail back tomorroxv on this? Just the Southxvest Metro, the Park and
Ride, the bank.
Gerhardt: The pros and coils, that's what I have.
John Kelly: Ifl 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.
Jansen: Do we maybe though need to set a meeting time like for the 8th? On like Thursday the 8th so that
we are coining back together and reviewing what the options are so you've got a feel for whether we're
goiug forward with the city looking for a purchase or.
Gerhardt: Schedule an update meeting.
Jansen: That way if we need more inforlnation you've got another week and a half. So either the 1st or
tile 8th. I'm looking at those two.
17
Economic Development Authority - February 15,2001
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 l~t.
Kroskin: Well, at tile 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 sa5, as fat' as, I mean you should be able to get this informatiou pulled together in 5 to
6, 7 bnsiness days.
Jansen: So is everybody open, everyone's calendar open oil Thursday tile l~t?
Boyle: Okay. Okay, if there's ilo other questions or discussions, we'll move on to item 2 on tile agenda.
Mt'. Kelly, thank you very much.
Jansen: Thank you.
Kroskin: And Todd, you're going to send us an e-mail tomorroxv?
Gerhardt: Yep, I'll give you tile list.
Kroskin: Thauk 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
wanted to introduce basically the team that's been working on tile project. Vemelle, representing the
land owners, Alan Black representing Presbyterian Homes, and kind of just get a name xvith a face arid
give you a little overview of the proposed project for the Village on the Ponds. I really don't want to get
iuto tile numbers tonight. I think we're a couple weeks away from trying to really solve some of those
thiugs. I think we've tackled the affordability issue, but we're still trying to work out the debt. The gap
financiug for tile 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
lg
Economic Development Authority- February 15, 2001
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 tile 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 ~vith 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~vhich 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
corner a bit so we have about 11,000 square feet of proposed retail, with no definition as to how that
retail ~vould break up at this point. Nor do we have any specific documents that have entertained an
interest yet. Vernelle 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
out' 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 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 itl 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
19
Economic Development Authority - February 15,2001
in tile project. We'll knoxv 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 knoxv 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 ~ve 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 staffto provide services to both xvays for all residents to enjoy the
spaces of both buildings so to accomplish that...an elevated bridge ora skyway. The main goal here, we
worked in cooperation with Vernelle'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 housiug 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 xvith memory impairments
that would need 24 hour care and supervision and security environment so there's a total of 70 uuits
broken down to about 54...roi' those memory impaim~ents.
Jansen: Is that the 4 story building then?
Alan Black: Yes ma'am. It might be easy roi' me to put through the fotmth 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 call see, this would be limited to 3 stories itl this area above retail. 2 stories above retail,
for, a total of 3 stories. This portion of the independent living bnilding would only be 3 stories and then
this area here would be 4 stories and one of tt{e things that's happening...is dropping off fairly rapidly in
the back corner 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 roi' outdoor play equipment so... not a commercial
use but a little bit different...One of out' challenges here is to try to maintain some reasonable econotnics
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 articulatiou 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 ill the area
posing the church and tile other off of Lake Drive.
20
Economic Development Authority - February 15,2001
Boyle: And the bridge is the one by the church?
Alan Black: Yes sir. The bridge kind ofelevates...fi'om 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 bu!ldings, 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 fi'om 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 dol!'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.
Vernelle Clayton: A couple of things have occun'ed. 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.
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
ilnpaired 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
21
Ecouomic Development Authority - February 15, 2001
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 fioor. 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 xvon't spend a lot of time boring you with demographics but right
now 1 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 xvest 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 aud 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 pe~iiod.
Boyle: Is senior classified as 65 or older?
Alau Black: Yeah, I'ln using 65 and over for that. A couple other nmnbers I found kind of interesting.
We look forward fi'om the 3,eat' 2000 to 2005, 65 to 74 year age group typically is a decline. The baby
boomers kind of aging out. Typically they decline ill this part, a growth of ahnost 10% in that group.
Age 75 to 84 is projected to grow 22.5%. The 85 plus is going to gro~v 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 ou aud that trend will
likely occur onward to tile 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 ou tiffs. 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 iucremeut financing would be eligible. They need the
affordable bousiug. This figure is going to be market rate. And a quick observation, it's kind ora 1/3-
2/3 kind of scenario. About a third of yotlr population is going to really be...affbrdable housing. 2/3 that
I tbiuk are probably in tile position to be able to be...market rate situation.
Jansen: And I'm sorry, did you say where this sampling was fi'om? Is that specifically Cbanhassen or is
that just metropolitan area?
Alan Black: No, we tried to look at all area, because we know that out' buildings will serve greater and I
tried to get that data for you but it includes portions of Excelsior, Greeuwood, as far west as Victoria and
portions of Eden PraMe.
Jauseu: Okay, thank you.
Alan Black: Western portions of that.
Boyle: Mr. Black it might be worthwhile ifxve had copies at least of some of this.
Gerhardt: I've got a copy tonight so I can run up and, is it ah'ight ifI 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.
22
Economic Development Authority - February 15,2001
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
Bloomiugton 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 conveuience 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 kiud 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 iuformation 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 turued 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
IMng. 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, 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.
23
Economic Development Authority- February 15, 2001
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 Vernelle's organization are
planuing to kind of do a kind of a net lease arrangement with tls on that. And she might be better able to
express the type of interest she may have or thought she may have roi' that.
Vernelle Clayton: Mark, 1 think for your benefit, number oue. This has been, this is a relative complex
project. We've beeu working on it for a uumber of years and any of you are welcome to come over to
our office aud I call show you where we've been and where we plan to go. But just briefly, what we're
dealing with touight is hoxv xve might work xvith 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 iu the PUD that need to be made. We'll come in to, through tile 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 thiugs of those, and re-organizing tile density. Our plan came in with the idea that we'd have, we can
have X uumber 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 aud then I should say, he'll then come through with his specific site plan. We'll have to have another
site plau at the same time and it will all fit together. What we're trying to accomplish here ou this corner
is that we have a little bit of retail coming around this comer. A little bit of retail coming around this
coruer. A little bit more housing above that. A fail' 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 corner anchored with retail. And we'll
have one group workiug with tls that will be master leasing this fi'om these folks and master leasing this
floor fi'om the owner of the property here. And then overall plan, which you know ifxve should say this
kind of store be that xvould 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 roi' the whole project. Does
that answer at all or?
Alau Black: ...those kind of professional supports that come in.
Veruelle Clayton: And there are those kil~ds of people that might be looking too.
Jansen: And Councihnan, I might share with you that as a council, because we have numerous new
council people, as Vernelle 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 all overview of the PUD so that everyone is familial' with what
the original fi'amework is that this is fitting into. And that goes to where Vernelle was saying that there's
more pails to it and there's the shifting around so that's xvhy it's not that firm.
Kroskin: I'm not really looking roi' 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.
24
Economic Development Authority- February 15, 2001
Vernelle 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 l~eople 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 corner of
98~h and Lyndale has...a retail including a bank on the opposite, or Byerly's and a good portion of
convenience retail on the third corner 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.
Vernelle 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 goodwith 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 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, ! realize when we were doing all
25
Economic Development Authority - February 15,2001
our number work, we didn't bring an), 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 fat' away are we fi'om seeing those numbers?
Gerhardt: I would say, we want to meet ~vith 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 updat~ to you on the first. On the
other project. I hate to bring you together for another meeting if I 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 ansxvered 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 tile debt portion of
it. Their participation is the Section 8 vouchers that would go along witl5 this. It doesn't help on the
capital side of the ledger so what xve're looking at noxv 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 be 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 all 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 xve're xvorking 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 trader that area, if it's 95%
of this I thin it will be a pretty quick pass through so.
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 knoxv you've got our senior community behind you 150% so we certainly appreciate it.
26
Economic Development Authority- February 15, 2001
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?
Vemelle 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
CITYOF
690 CiO' G~la'~' D;ive
PO Box 147
ChmJhase,, Mimmottt 55317
Phone
952.937.1900
Genera/Fax
952.937.5739
Engineering Deparm~ent Fax
952.937.3152
Building Department Fax
952.934,2524
I~b Site
WIUIt ti. £hdll/)dSSfll. l?lIl, ll5
MEMORANDUM
TO:
Economic Development Authority
FROM:
DATE:
SUB J:
Todd Gerhardt, Assistant City Manager
February 26, 2001
Update on the Bowling Alley Property (Chanhassen Ventures, LLC),
Mortgage Foreclosure
Staff was directed at our last EDA meeting to follow through with the following
action items:
Negotiate with Southwest Metro Transit on the relocation or reduction of the
parking easement located on the City's property next to the bowling alley.
Action taken by staff: Staff talked with Mr. Len Simich, Director of Southwest
Metro, and he was receptive to our needs but he was not willing to release the
permanent easement unless we could find a cmnparable site in the area.
Some alternative sites are Lake Ann Park, Red-E-Mix site, and the Pony-Patfiy-
Przymus site (next to old St. Hubert). Each of these sites is not perfect and have ;omc
limitations. We concluded our conversation by keeping each of these sites in mind as
we move towards the redevelopment of the bowl property and maybe incorporating
the redevelopment around a transit station. The attached article gives some examples
of how other city's have located housing and shops within walking distances of transit
stations (see Attachment #1).
Negotiate with Heritage Bank to give a six month extension to the EDA for
additional time to investigate the purchasing of the property and reducing the
$380,000 first mortgage.
Action taken by staff: Staff talked with Tom Jacobsen at Heritage Bank and he was
not interested in providing an extension or a reduction in their first mortgage. He
feels he can sell the property for $1.1 million and close before June 1, 2001. Staff
explained all the title issues, ownership of the outlots and the need for city site plan
approval. Mr. Jacobsen was not fazed by staff's statements and is willing to take the
risk of owning the building.
Continue to negotiate with Ray Mithun or any other parties interested in
buying the EDA's interest.
Action taken by staff: Staff sent the title work to Mr. Mithun's attorney but has not
heard from them to date.
The (7it~, o£U. lm,ha,e,. A am,,i,a cra,mn,itl, ,,itl~ rbm~ lal,~,r m~alit~, *rl~on/*. a r/~a;~,i,a ffmtmimmI, tln'itd,a hml,e~.ec a,d heatttiftd om'3, A vi'eat ~bre m/i,e, mark. mid o/att
Economic Development Authority
February 26,2001
Page 2
4. Write an analysis of the pros and cons of the EDA purchasing the property.
Pros
· Control the redevelopment of the site (land uses, design, transit options, etc.)
· Possibility of securing the EDA's $140,000 second mortgage
Possibility of earning more money on the resale of the propelnty.
Find a secure owner who will pay their taxes and utilities on a timely basis
COilS
· Coming up with $610,991.30 cash
· If we cannot find financing we have to take $610,991.30 out of city reserves
· Possibility of losing some equity in the project
· It is not kalown how long it will take to redevelop the site
This is staff's progress to date on the bowl property and a verbal update will be provided at
Thursday's meeting.
gSadmin',lg~,bowl update.doc
4 Planning January 2001
By Christine Kreyling
Walking is
good for
you~and it's country
Hug
good for your
conununity.
Everyone
from the
American
Medical
O~ssociation 'to
the Congress
for the New
Urbanism
says so.
No~v transit agencies across the
That
in New Jersey, Atlanta, the
Transit
San Francisco Bay region, and
Station
else;vhere
An ambitious planned community
called Orenco Station is being built
around a light rail station in
Hillsboro, Oregon, about 10 miles
west of Portland. When complete in
2002, the new development will
include more than 1,800 housing
units, plus shops and of~ces, on 200
acres of what was originally zoned
'~ as industrial land.
are taking up the cause.
heir hope is that by locating housing and
shops within walking distance of stations,
they can increase ridership and rejuvenate
surrounding communities.
Bay Area partners
"The railroads of the 19th century built their
markets as they built their systems," says Jeffrey
Ordway, manager of property development
and real estate services for Northern California's
Bay Area Rapid Transit system. "That's what
we're trying to do with joint development
around our stations."
There's plenty of land. Since its inception
in 1969, BART has been an aggressive pu?-
chaser of land around its stations, most of it
used for parking. Today, as the owner of more
than 40,000 spaces, BARTis one of the region's
largest parking providers.
In the 1970s, BART officials hoped that
developers would be standing in line to con-
struct projects near the stations. "The theory
then was that all you had to do was build a
BART station and development would oc-
cur,'' says Ordway. That didn't happen. In
1980, the BART board adopted a resolution
committing the transit district to a more ag-
gressive role in promoting development around
the stations. The resolution called for joint
development in "sale or lease agreements in-
volving District-owned property or air rights."
What's significant, says Ordway, is that the
board recognized that joint development has
other values "beyond just making money. I
call them soft objectives: linking the station
into the community rather than to cars, put-
ting eyes on the street for safety, supplying
goods and services to commuters that can cut
additional trips, especially car trips, out of
their'schedules."
After two slow decades, BART's joint de-
velopment projects are taking off. The differ-
ence, says Ordway, is B.ART's commitment
to collaborative planning, and particularly the
community visioning process. "We try to build
on the existing strengths of each community,
which may be cultural or physical," he says.
"The only ones who can identify those Strengths
are the people who live there."
For BART, joint development now mea~s
partnering with nonprofit organizations and
private developers to link transit facilities to
private real estate.
In Fruitvale, a predominantly Hispanic com-
munity in Oakland, BART is working with
the nonprofit Unity Council (formerly the
Spanish Speaking Unity Council) and its off-
shoot, the Fruitvale Development Corporation.
In the mid-1990s, the corporation received
$450,000 in seed money from the U.S. Depart-
ment of Transportation to plan a mixed-use
transit village on about 20 acres of land.
The project has taken years to put together.
To assemble the land, the corporation was
obliged to secure agreements with the Union
Pacific Railway, the city of Oakland, and
BART. Financing was complex, with grants
and loans from more than 15 sources, includ-
ing the U.S. Department of Housing and
Urban Development, the city of Oakland, the
Ford Foundation, Citibank, and the Federal
Transit Administration's Livable Communi-
ties Program.
feet of space to house offices for nine organil
zations, meeting rooms,'recreaiion space, a
library, and possibly shops.The complex will
be built over the parking lot, providing
direct link to the transit system.
Ordway admits that some BAR:-T stations,
such as .MacArthur in Oakland, still don't
connect well to the people they s.erve. "BART
built MacArthur in the middle of the freeway,
which itself had ripped the community in
half. Sometimes we have to heal not only the
· wounds left by car-oriented infrastructure,:
but rebuild a lost sense of trust. That's why
the community visioning process is so impor-
tant. You need to listen to what the citizens
say--what development they want in their
community--if it's ever going to work."
Ordway explains that BART begins to plan
its joint developments by asking the commu-
nity members near individual transit stations
to identify what they want to see, what ser-
vices the community lacks, and what unique
assets should be stressed. In Fruitvale, the
community identified public health and edu-
cation services along with retail that would
capitalize on Hispanic culture. At Ashby, BART
concentrated services for the disabled that
had been scattered around Berkeley.
Individual projects proposed by private de-
velopers are presented to the public for com-
ment. Sometimes, as with the proposal for a
multiplex cinema near BART's Del Norte
station in El Cerrito, these proposals don't get
Good lleWS
Now for the good ne~vs', Ground was broken
in late 1999 for a $100 million mixed-use
development. When development is complete
in 2001, a pedestrian plaza next to the BART
station will be flanked by housing, new and
renovated retail and office space, and a variety
of community facilities, including a new li-
braty, day care and senior care facilities, a
community resource center, and a clinic. A
parking structure will replace surface lots lost
to the development.
About a third of the estimated $I00 mil-
lion needed to complete the project has been
secured, including a recent construction loan,
Ordway says. BART's contribution has in-
cluded land transfers and staff time.
At its Ashby station in Berkeley, BART has
joined with a series of nonprofit groups to
transform the station's east parking lot into a
campus for organizations that serve persons
with disabilities. The Ed Roberts Campus,
named for a founder of Berkeley's Center for
Independent Living, will offer 110,000 square
It is citizen
commitment rather
than government
support that pushes
joint development
from plan to
reality.
a very good reception.
At the Del Norte station, citizen concerns
about traffic and the developer's failure to
secure financing for retail as well as housing
made for a less than perfect TOD, Ordway i
admits. "It was a difficult site to begin with.
East of the station is predominantly low-den-
sity, single-family housing. West is. big box
retail along a large arterial, and a freeway."~
6 Planning January 2001
'While the Del Norte Place offers fairly
dense residential development--135 units on
four acres, with 20 percent affordable and 20
percent for seniors-- it doesn't create a neigh-
That's partly because of the place-
ment of a parking structure near the station,
says New Urbanist Peter Katz, who uses Del
Norte as a negative example to illustrate that
housing and transit don't necessarily add up
to a community.
But BART officials have learned from their
mistakes, and are actively encouraging vil-
lage-like projects with a pedestrian emphasis
at a third of their 91 stations, including the
one in Richmond that will link BART with
Amtrak. In 1999, California Gov. Gray Davis
signed a bill allowing BART and other transit
agencies in the state, previously limited to
buying property solely for transit purposes
like parking, to buy land within a quarter mile
of their stations for transit-oriented develop-
ment.
Ordway says that it is citizen commitment
rather than government support, however,
that pushes joint development from plan to
reality. "In each joint development, we've
found you need a champion. In the case of
Fruitvale it was .Arabella Martinez, the Unity
Council's CEO. I doubt that the village would
be happening without her."
Atlanta thinks big
Atlanta's Metropolitan Area Rapid Transit
Authority successfully survived a legal chal-
lenge to move ahead with its tlansit-oriented
development plan for Buckhead, the upscale
business and residential area north of the city.
The development is one answer to Atlanta's
well-publicized traffic-related air quality prob-
lems.
A group of neighbors worried about con-
gestion had challenged MARTA's right to
develop its land. In late November, the Geor-
gia Supreme Court upheld a lower court rul-
ing favoring MARTA, clearing the way for
the project to proceed. MARTA had already
agreed to reduce the number of structured
parking spaces serving the development from
more than 10,000 to a maximum of 9,000,
and to upgrade the area's sewage system.
The Lindbergh Center, on 51 acres sur-
rounding MARTA's Lindbergh station, will
total 4.8 million square feet of development:
2.7 million square feet of office space, 330,000
square feet of retail space, 566 apartments,
388 condominiums, and a 190-room hotel.
The station is currently the system's second
busiest, serving 26,000 riders a day, according
to MARTA communications officer Dee Baker.
The master plan, created by Atlanta con-
sultants Cooper Carry, has the look of a small
city. The MARTA station sits at the corner of
a Main Street, part of a new street grid lined
by mid-rise buildings and connected to the
surrounding neighborhood. 15iedmont Road,
a major Atlanta arterial, becomes a boulevard
with a tree-lined median.
quarters from its current midtown location,
atop another MARTA station, to two build-
ings at the heart of the Lindbergh Center.
New Jersey village
The transit village planned for New Jersey
Transit's Morristown station is much smaller
in scale than Atlanta's Lindbergh Center. And
Lindbergh Center will be built on land
leased from MARTA, which will also float
bonds to cover about half of the $81 million
total project cost. The authority selected a
local firm, Carter & Associates, as master
developer because its plan "offered the most
mixed-use development pattern," Baker says.
Bell South will be the anchor tenant. The
communications giant will relocate its head-
the new development is designed to fit into a
neighborhood rather than create a new one.
Last October, the statewide public transit
agency awarded a long-term ground lease to
the Roseland Property Company of Short
Hills andWoodmont Properties of Parsippany
for a transit-oriented development called
Lafayette Commons. The lease will allow the
oint venture to build, a $35 millign.develop-
ment: 226 market-rate rental units, more than
8,000 square feet of ground-floor retail, and
structuredparkingwith 780 spaces. The parking
will be screened from the street by 10
rownhouses.
The three-acre site, 'across the street from
the Morrlstown station, is owned by the tran-
sit agency, which currently provides 300 com-
portation provided seed money for develop-
ment near transit stations in those communi-
ties. Morristown officials followed up by re-
zoning property around its historic rail station
to allow for a village development.
The transit village plan is part of New
Jersey's statewide antisprawl program, which
includes Gov. Whitman's plan to acquire a
Three unusual projects
mark a trend toward
flexible financingfor joim
development around
transit statians: the
Fruitvale Transit Village
in Oakland. California
(upper left), the Ed Roberts
Campus in Berkeley,
California (left), and
Atlanta's Lindbergh
Center (above).
muter parking spaces there. New Jersey Tran-
sit will receive at least $230,000 a year in rent
plus additional rent from retail properties,
parking proceeds, and a percentage of the
residential income, according to spokesper-
son Anna Farneski.
In 1999, New Jersey Gov. ChristieWhitman
designated five "transit villages" throughout
the state, and the state Department o£Trans-
million acres of open space within the next
decade. The village plan also conforms with
the New Jersey's development and redevelop-
ment plan, which encourages growth in areas
where roads, utilities, and mass transit are in
place.
' Morristown officials hope that a transit
village six blocks from the center green will
spark further downtown revitalization. Lafayette
i:;, ":'. .:' '= ....... : 7 .';-:~_'.~
Commons three four-storybuildlngs, designed
by the Hillier Group of Newark, reflects the -.
station's architecture.
Strategies - , ~
S. B. Friedman & Company, a Chicago-basl~i~
real estate consulting firm, surveyed six com-
munities with high transit riders.hip in a study
completed last year for the Chicago area's
Metro commuter roll system. The firm sur-
veyed land uses surrounding each community's
commuter station and polled riders concern-
ing their trips to and from the stations.
According to Stephen Friedman, AICI', and
associate Tanya Vartivarian, many commut-
ers walked to the train in five of the six
suburbs. Eighty percent of those who lived
within a quarter mile of the stations arrived
on foot, but foot traffic diminished sharply
for commuters who lived more than three-
fourths of a mile from the station. Most com-
muters who came from a mile or more away
arrived by car or bus. At that point, "the
impact of residential or community design
diminishes," the Friedman study notes.
The study found that a rider's decision to
walk is affected by a "pleasant walking atmo-
sphere"pdefined as an interconnected net-
work of streets (with sidewalks) and a con-
tinuous architectural fabric, with stores m
to the station. In most cases, the
surroundings of the highly used stations do
not include huge parking lots or parks, both
of which can act as barriers between the sta-
tion and the surrounding neighborhoods.
The survey questions the commonly held
view that parking lots attract more transit
riders. Pedestrians are actually discouraged by
wide belts of asphalt, the Friedman group
found. The firm recommends instead that
parking facilities be scattered throughout the
adjacent business district, with provisions for
shared use outside commuter rush hours.
The Friedman study singles out two devel-
opment models that achieve high levels of
ridership. The first, the moderate-density neigh-
borhood model, resembles the early 20th cen-
tury railroad suburbs. It is characterized by
single-family housing at a density of four to
five units per acre, scattered low-rise apart- ...
ment buildings, and convenience retail and'
services.
The'second model is the higher density
suburban' center. It offers larger scale retail
and commercial uses in mid-rise and
high-rise buildings and residential develo
ment at a density of up to 60 units per acre.
In both models, the key factors in attract-
ing riders are the same~.In the critical half mile
8 Planning January2001
~'.' surrounding the station, the blocks are short,
..... development is compact, housing is diverse
and oriented to the street, and streets and
sidewalks are pedestrian-friendly.
e:Planners ~;hould not base all their transit
idership hopes on high-density development,
ay Friedman and Vartivarian. More impor-
tant, they note, is to establish a sense of place,
with the train station as a focus.
More advice comes from San Francisco-
based architect and planner Peter Calthorpe,
a pioneer of transit-oriented design develop-
ment. At Aggie Village in Davis, a university
' town near Sacramento where buses and bi-
cycles provide much of the transportation,
and in Mountain View in Silicon Valley,
Calthorpe has designed developments that
weave closely and densely around transit and
retail.
In his 1993 book, The Next American Me-
tropolis, Calthorpe wrote of the need for coor-
dinated land-use policies. Without them, he
warned, "increasing transit investments will
only lead to underutilized facilities." But with
planning that supports alternatives to the car,
anything is possible. "People may choose to
walk, bike, and use transit more often," he
wrote.
joderal favors '
creasingly, transit agencies are entering into
nt ventures with private developers. Those
transactions may involve leasing or selling
land or development rights, imposing station
connection fees, sharing facilities, and build-
ing over air rights.
To fund such activities, local transit au-
thorities are getting major support from the
'federal government--the traditional sugar
daddy of transit projects. And finally, the feds
are recognizing station-area land use as a key
factor in guaranteeing the effectiveness of transit
investments. The 1998 Transportation Eq-
uity Act for the 21st Century (TEA-21) re-
quired the Federal Transit Administration to
assess existing and planned land use in the
project area in evaluating applications for star~-
up funds.
In a 1999 Urban Landarticle,"Developing
Near Transit," Maria Zimmerman described
TEA-21's incentives for joint development.
Zimmerman, who is senior policy adviser for
livable communities to U.S. Rep. Earl
Blumenauer (D-Ore.), noted that, before TEA-
21, federal rules imposed severe limitations
transfer of transit-owned land to private
restricting the types of projects devel-
opers could pursue and still qualify for federal
In 1999, Morristown, New
Jersey, was one offive
communities in the state that
received seed money j3r
development around transit
stations. The next step wasa
joint venture between two
private developers and New
Jersey Transit, the statewide
transit agency~to create a
$35 million mixed use project
on a three-acre site near the
Morristown train station.
Future Canopy
Train Station Pedestrian
To Town Green
Moreover, since most of the revenue gener-.
ated by joint development had to be returned
to the feds, the agencies had no financial
incentive to engage in such projects.
Before 1998 a transit agency could only
lease its land for joint development; today it
can lease or sell. If the agency sells the prop-
erty but retains control of the development in
the form of an easement or covenant, thus
ensuring its physical or functional relation-
MorristownTrain Station
Main Pedestrian Entry
ship to transit, it may keep a good share of the
revenues generated.
"A project is physically related if it provides
a direct connection with transit services facili-
ties, such as an adjacent location or air rights
90%
80%
70%
60%
50%
40%
30%
20%
~o%
0%
Zone one (within one-half nfile of a station)
All other zones (beyond one-half mile from a station)
over a transit station. A functional relation-
ship exists if the activity and use of a joint
development project provides a beneficial ser-
vice to the public and enhances use of or
access to transit," Zimmerman wrote.
Moreover, she added, TEA-21 funds may
be used for projects like housing adjacent to a
station. And the Federal Transit Administra-
tion will fully fund non-transit projects that
directly serve the public: day care and senior
care centers, public health, safety and security
facilities. An even greater incentive, according
to Zimmerman, is that "FTA now permits
transit agencies--in fact requires them--to
use income from joint development for tran-
sit purposes, such as for the purchase of new
equipment and for operating costs."
Joint development can contribute substan-
tially to a healthy bottom line for developers
and transit agencies. The Washington Metro-
politan Area Transit Authority, which has
aggressively promoted joint development near
its stations in the D.C. region, states that
"joint development has generated nearly $6
million in annual revenue and more than $60
million in real estate income," Zimmerman
reported.
The bottom line: Today's transit-oriented
planners increasingly acknowledge the wis-
dom of history, that what worked for the train
spotters of yesterday holds the best promise of
working for future rail riders. And in linking
transit to users, these planners are connecting
to the American past of sensible town plan-
ning-and putting increasing weight on the
oldest 'of transportation vehicles: the human
foot.
Christine Kreyling writes about planning and archi-
tecture for the Nashville Scene.
A recent survey ofsix
Chicago suburbs
confirmed that
commuters will walk or
bicycle to the train
station if getting there
is a pleasant experience.
History. Peter Hall points out in "Retro Ur-
banism'' (HarvardDesignMagazine, Fall 2000) .
that communities like NewYork's Forest Hills
Gardens, built in 1909, "were self-consciously '
planned as railway suburbs." Typically, rail-
road suburbs have similar forms: a central rail
station, adjacent shopping st[eet, and net-
work of streets branching out into the sur-
rounding residential neighborhood.
More reading. The New Urbanism: Toward
an Architecture of Communi{y (1994),
ter Katz, and Suburban Nation: The Rise
Sprawl and the Decline of the Araerican Dream
(2000), by Andres Duany, Elizabeth Hater-
Zyberk, and JeffSpeck, offer plans and devel-
opment checklists for transit-oriented plan-
ners and developers. Also see The NextAmerican
Metropolis (1993), by TOD guru Peter
Calthorpe, and "Developing Near Transit"
by Maria Zimmerman (Urban Land, Decem-
ber 1999), "BART's Village Vision" (Plan-
ning, January 1995), and "The First Pedes-
trian Pocket," (Planning, December 1989).
The pedestrian pocket was a Peter Calthorpe
invention.
Reports. S.B. Friedman & Company, "Metra
Rail Service and Residential Development
Study," July 2000; for a summary, call 312-
424-4265 or see www.friedmanco.com For
information on the Lindbergh Center, con-
tact Kimberley Krug at Communications 21
in Atlanta: kkrug@c21pr.com
On the web. The BART web site is
www.barcorg For information about the
Fruitvale Transit Village, see www.
unitycouncil.org To learn about Berkeleyi~ll
Ed Roberts Campus, see www. mtc.ca.go~
publications For more on transit-oriented
development in Portland, Oregon, see http://
tri-met.org/reports To learn more about New .
Urbanism, see www. cnu.org
CITYOF
CHANHASSEN
6YO Ci0, Ce,ret Orive
?0 Box 147
Cha,hassen, Mi,,esota 55317
Phone
952. 937.190O
General Fax
952.937.5739
Engineering Department Fax
952.937.9152
Building Department Fax
952.934.2524
Web Site
chailha$$eil.
MEMORANDUM
TO:
Economic Development Authority
FROM:
DATE:
SUB J:
Todd Gerhardt, Assistant City Manage. r
February 27, 2001
Update on Presbyterian Homes
Staff met with the Presbyterian Homes project team on February 26, 2001 to
further discuss the options available to solve the financial gap between the
affordable units and meeting the debt service ratios needed to receive financing.
We have scheduled another meeting for March 5, 2001 to continue to define the
gap financing options.
Staff is also in the process of constructing a timetable for everyone to follow and
to be aware of upcoming deadlines. Staff will hand out the proposed schedule at
Thursday's meeting. No action needs to be taken on this item.
The Gn, of Chanhassen. A t,;owiue comm,,itl, wit/, ch, a, lakes, o,alitl, schoob, a cl~an,i,e dow, tow,, tlwivi,a bu~i, esse(, and beautiful om'ks. A ¢;'eat o/ace to live. work. mid