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2003 07 28 Agenda Economic Development Authority Monday, July 28, 2003 Immediately Following the Regular City Council Meeting City Council Chambers, 7700 Market Blvd. 1. Consider Redevelopment Proposals for Red-E-Mix Site. 2. Approval of Minutes. C YOF 7700 Market Boulevard PO Box 147 Chanhassen, MN 55317 Administration Phone: 952.227.1100 Fax: 952.227.1110 Building Inspections Phone: 952,227.1180 Fax: 952.227.1190 Engineering Phone: 952.227.1160 Fax: 952.227.1170 Finance Phone: 952.227.1140 Fax: 952.227.1110 Park & Recreation Phone: 952.227.1120 Fax: 952,227.1110 Recreation Center 2310 Coulter Boulevard Phone: 952.227,1400 Fax: 952.227.1404 Planning & Natural Resources Phone: 952.227.1130 Fax: 952.227.1110 Public Works 1591 Park Road Phone: 952.227.1300 Fax: 952.227.1310 Senior Center Phone: 952.227.1125 Fax: 952.227,1110 Web Site www. ci.chanhassen.mn.us MEMORANDUM TO: Todd Gerhardt, Executive Director FROM: Justin Miller, Assistant to the Executive Director<.5~ DATE: July 17, 2003 Former Apple Valley Red-E-Mix Site Redevelopment Proposals BACKGROUND In spring 2003, New Horizons Day Care approached the City in regards to the City owned property at the comer of Highways 5 and 101. The City acquired this land, the former location of an .Apple Valley Red-E-Mix plant and the Chanhassen Taco Shoppe, for the purposes of road relocations and the redevelopment of a blighted area. The land has been vacant since this time, with little interest from developers. At the request of the EDA, staff prepared a Rec determine what other interest there was in this the City's website, advertised in'the Chanhassen various the Chanhassen received. Proposal gl - 1 This proposal facility with foot office (RFP) to RFP was posted on was distributed to were uare :~, According to $543,747, or rou New interested in of the former This developed in and would be buildin used for common areas provide for office uses. They however they would also give but being level levels will foot for the land, clear title to The City of Chanhassen * A growing community with clean lakes, quality schools, a charming downtown, thriving businesses, winding trails, and beautiful parks. A great place to live. work, and play. approximately 6,000 square feet of fully furnished office space in this development, which the City could use or lease. The developer claims that this contribution brings the actual purchase price closer to the $9.00 - $11.00 that was discussed in the RFP. Staff and legal counsel have discussed this proposal and are not totally comfortable with the idea of accepting title to a building in lieu of a cash payment. Further negotiations would need to occur before accepting this proposal. RECOMMENDATION While staff believes that these proposals may be suitable for the location, the purchase prices offered by the developers are far short of what staff was expecting. If the EDA wishes to pursue either proposal, it is recommended that the EDA direct staff to further negotiate with one or both developers in terms of purchase price. Otherwise, staff is comfortable with leaving this property as its current use. June 30, 2003 Mr. Justin J. Miller Assistant to the City Manager City of Chanhassen 7700 Market Blvd Chanhassen, MN 55317 Dear Justin, Enclosed please find the Proposal from Amir Marafie through his Company, ARIMA, LLC. We are pleased and grateful for your help in this matter. If there is anything else that should be done to complete our proposal, by all means get in touch with me. My phone number is (952) 646-9290. Sincerely yours, E-MAIL: info@graphica.or§ PROPOSAL CHANHASSEN GATEWAY TOWNOFFICE PARK by ARIMA, LLC June 30, 2003 ARIMA, LLC is pleased to offer this proposal to develop the strip of land of approximately 2.5 to 3.1 acres in size stretching along Highway 5 immediately West of Highway !01. Chanhassen Leaders have indicated that this parcel of land, properly developed, could serve the community well as a beautified Gateway to Chanhassen. ARIMA, LLC concurs with this vision and feels that its Proposal will satisfy this expectation. The Proposal consists of four larger buildings tied together with four smaller buildings. The lower level of the buildings will house the mechanicals, and provide storage areas for the occupants of the offices. Ground level space will be used as a reception area, a large conference room, common areas and several luxury professional offices. The second level will provide some common areas, a smaller conference room, and several spacious offices for a professional clientele. The smaller buildings provide exciting flexibility to the project. Areas for relaxation, cafeteria/internal restaurant space, exercise areas, etc., can easily be designed into these unique features to the project. The submitted rendering provides greater definition to our proposal. ARIMA, LLC is prepared to offer the City of Chanhassen $4.00 per square foot for'the land. We further propose to give to the City of Chanhassen with clear title approximately 6,000 square feet of fully furnished office space in this office park. This will exceed the asking price of $9.00 to $11.00 per square foot for the land. This proposal will create a substantial increase in tax revenues for the City. The presence of this Townoffice Park will create numerous job opportunities that will enhance the growth of Chanhassen. Along with its lending beauty to Chanhassen's Gateway, Chanhassen Gateway Townoffice Park will also provide much-needed affordable, high tech, high quality office space to one of the premier communities of the Greater Twin Cities Area. Thank you for your consideration. We would welcome the opportunity to meet with representatives of the EDA to address questions and negotiate any aspect of our Proposal. ALLENDORF COMMERCIAL REAL ESTATE, INC. June 27, 2003 Mr. Justin J. Miller Assistant to the City Manager City of Chanhassen 7700 Market Boulevard Chanhassen, Mn. 55317 Dear Mr. Miller: On behalf of Mr. Gene Pederson, real estate developer, investor, and owner of sixteen New Horizon Child Care facilities, I am pleased to respond to your Request for ProPOsal to develop the former Valley Red-E-Mix and Chanhassen TaCo Shop Site. Attached please find a narrative describing the two building proPOsed development, with · associated visual material, which can be summarized as follows: · A 10,500 square foot New Horizon Child Care facility to replace the existing' smaller current New Horizon Child Care facility, thus retaining this service for the citizens of Chanhassen; · A two-story, 25,000 square foot professional office building, designed to be compatible with the child care facility, and meant to serve the small business professionals within Chanhassen; · Quality landscaping, to include perimeter fencing which uses materials which will' visually extend the Chanhassen Bridge architectural element to and around the site, as well as a prominent entry feature on the east end of the site. · A desired timeline which would allow construction to begin as soon as the city planning and approval process could be completed. The developer is not asking for any city subsidy, and has designed the development in a quality manner where no variances are. requested. We appreciate the opPOrtunity to work with the city on this highly visible site and stand ready to answer any questions which you might have. Richard K. Allendorf 4624 MOUNTHALL TERRACE M1NNETONKA, MINNESOTA 55345-3833 Telephone: 952-935-6017 Email: rallendor~jmrrr. Com NEW HORIZON PROPOSAL Former Apple Valley Red-E-Mix Site Proposed Use: The developer proposes_to construct both a New Horizon Child Care facility and a Class "A" office building on the site. The 10,500 square foot New Horizon ChiM Care facility would enable New Horizon to continue to provide childcare service to the citizens of Chanhassen, replacing the existing smaller New Horizon Child Care facility located at 310 Lake Dr. E. The two-story, 25,000 square foot office building would be marketed to local professional users who want quality office space, including underground parking, within the Chanhassen community. It would present an architectural statement to Highway 5 users, while blending in with both the New Horizon building to the east, and the topography to the west. Building Description: New Horizon Child Care and the Office Building both will be designed using the same materials and design elements to make an architectural statement that will be compatible with surroundings and will do justice to the Gateway location oftbe City of Chanhassen. Materials and colors- All materials as outlined in City's Design Standards Brick- beige color as selected Stucco - light color as selected Windows - at least 50% of building elevations that are viewed by the public Roofs - limited mount of blue metal roofs' only 50% of building elevations that are viewed by the public. Metal roofs will be used to accent pitched comer elements, rais6d roofs over entry and central great mom and mansard roofs as well as to enclose rooftop equipment. · Durability - all materials will be pre-finished that can take certain amount of abuse and will be maintenance free. Building design - · Faqade modulation by stepping forward portions of faqade. · Vertical division using different materials. · Variation of window sizes and shapes. Variation ofrooflines using pitched and mansard roof elements. Site Design: The site is in a prominent location and has great visibility but has certain limitations, such as awkward shape, limited access and considerable slope in grade elevations. . ~..~'~, .~ ;~ Site design for this proposal considers the characteristics of the site and will compliment the visual interest: Layout - Buildings are sited not to provide a continuous wall look. · With two building complex, parking lot is split in two smaller lots, thus reducing the impact of surface parking. · Surface parking is also reduced by providing underground parking for the office building. Topography - · Site layout is designed to work with the natural slope of the site, thus reducing considerably the need to level the site. For example, exposing part of the lower level for the office building, thus providing shorter ramp for the underground parking. · There is a possibility that at East end of the site (at Highway 101) there might be "official" wetland. Site layout accommodates such a wetland. If the wetland is not designated, this area could be designed as retention pond or rain garden. In any case, this can be a site feature instead of a problem. Land: The development would be built on the three parcels and constructed without any request for a variance. Outlot A (the western-most parcel) would retain the current open feeling in perpetuity, because the developer is willing to grattt to the city a Conservation Easement over the parcel. The developer wig also agree to pay full Estimated Market Value for the three parcels. Landscaping/Entry Feature: The developer intends to fence the development using elements of the Chanhassen Bridge as materials, The materials would be clad in decorative vines and backed with evergreens. to totally screen all parking from adjoining streets. An entry feature on the east end of the property would include the Chanhassen "Leaf" logo along with the words Chanhassen New Horizon Child Care. Outlot A on the west would be enhanced by relocating two existing rows of evergreens to the south. Developer/Owner: The Developer/Owner will be Mr. Gene Pederson, 6915 W. 146t~ Street, Apple Valley, Mn., 55124. Mr. Pederson is a long-term investment property owner, with office, warehouse and retail property holdings throughout the Twin Cities area. Mr. Pederson currently owns sixteen New Horizon Child Care facilities. Timeline: The current New Horizon prP. t0type proposed has been built in a number of communities. Therefore, architectural drawings exist, and adaptation to individual sites is not difficult or time consuming. In addition, the existing New Horizon site on Lake Dr. E. is being offered to Park Nicollet to allow them to move forward with their construction. Any delay in building this childcare facility would delay Park Nicollet's plans. For those masons, the developer would intend to begin construction as soon as the city planning and approval process is completed. The office building would commence construction when fifty percent of the space has been leased. The developer is already in contact with a professional firm interested in leasing 5,000 square feet. CHANItASSEN ECONOMIC DEVELOPMENT AUTHORITY SPECIAL MEETING JULY 14, 2003 Chairman Furlong called the meeting to order at 9:45 p.m. MEMBERS PRESENT: Tom Furlong, Steve Labatt, Brian Lundquist and Bob Ayotte MEMBERS ABSENT: Craig Peterson and Jim Bohn STAFF PRESENT: Todd Gerhardt, Roger Knutson, JUstin Miller and Bruce DeJong CERTIFICATE OF COMPLIANCE~ BYERLY'S DEVELOPMENT, T.F. ~[AMES COMPANY. Justin Miller presented the staff report on this item. Furlong: The one question i have, is there any reason why we wouldn't accommodate this request? Miller: Only if there was something outstanding that they hadn't performed, but they've done everything. FUrlong: And there's not? Miller: That's right. Furlong: Thank you. Any discussion? If not is there a motion? Labatt: Move approval. Furlong: Is there a second? Lundquist: Second. Furlong: Any discussion on the motion? Labatt moved, Lundquist seconded that the EDA approve Certificate of Compliance for Lot 4, Block 1, West Village Heights 2"a Addition. All voted in favor and the motion carried unanimously with a vote of 4 to 0. APPROVAL OF TAX INCREMENT FINANCING AGREEMENT? PRESBYTERIAN HOMES. Miller: This is a TIF agreement that's been alluded to in a few of the items already. Basically Presbyterian Homes is building a 161 unit senior care facility across the street in the Villages on the Ponds development and we are providing them, or hope to provide them with T]F assistance to help make a percentage of those units affordable. Basically for the first 6 years of the agreement, Presbyterian Homes will receive 90 percent of the increment produced and for the 2 Economic Development Authority - July 14, 2003 years after that they will receive 50 percent. This is a pay as you go note, which means that they will only receive the money that is generated so if they don't generate enough taxes and they only get back 90 percent of what they produce. There is a total issue amount on the note of $1,060,000. That is a maximum amount, and that is there's a deadline at the end of 8 years. If we haven't paid off that entire amount, there's no obligation of the city to continue to do that, but the important thing is that we pay 90 percent for the first 6 years and 50 percent for the next 2 years. There are two changes to the TIF agreement. They're real simple. That was in, or changes to the agreement that was in your packet. It's on page C-2, which is actually the note. Instead of the interest at a rate of 6% accrue on the note, that should actually be 0%. There will be no interest accruing on the note. And then on page C-6,'where it says 4.01 pledge, and about the fourth line down it says in no event more than 124%. That should be 125, just to match at other places in the agreement as well. We went over those changes with the developer and they're fine with those too. Staff is pleased with this agreement. Thinks that we're getting a great deal out of this and we'd recommend approval. Furlong: Thank you. Any questions for staff?. Lundquist: Yeah a question, in essence what the note is doing, is that the maximum obligation in return increment that we would give back to the developer? Miller: That's right. Lundquist: So if they generate the taxes, rate changes or whatever happens and in 3 years 90 percent of the increment that we've returned meets $1,060,000, then we're done paying. Miller: We would keep track of that and that is a maximum number. Lundquist: Okay. So that million 60 is calculated based on what we anticipate the revenues to be on that and what we would return in increment based on that 90 percent and 50 percent. Miller: That's fight. Lundquist: Okay. Furlong: Other questions? I guess as point of clarification, just as if we reach the million 60 before the end of the 8 years, we stop. If we don't reach the million 60, since this is a pay as you go, by 8 years we still stop. Miller: That's fight. Furlong: So a million 60 is an estimate at this point based upon current laws and regulations. Miller: Based on current tax rates and tax structures. Furlong: And we're not taking on any liability from this beyond the million 60 that we're, I mean I don't even want to say that's a liability. Miller: There' s wording in the note that says this will only be paid out of available .tax increment. Furlong: Thank you. Okay, any other questions? If there' s none, is there a motion? 2 Economic Development Authority - July 14, 2003 Lundquist: Motion to approve the Redevelopment Agreement with PHM/Chanhassen Inc. as stated in the memo. Labatt: Second., Furlong: Any discussion? Lundquist moved, Labatt seconded to approve the Redevelopment Agreement with PHM/Chanhassen Inc. (Presbyterian Homes) as presented. All voted in favor and the motion carried unanimously with a vote of 4 to 0. APPROVAL OF MINUTES: Lundquist moved, Labatt seconded to approve the Minutes of the Economic Development Authority meeting dated June 9, 2003 as presented. All voted in favor and the motion carded unanimously with a vote of 4 to 0. Lundquist moved, Labatt seconded to adjourn the meeting. All voted in favor and the motion carried. Submitted by Todd Gerhardt Executive Director Prepared by Nann Opheim 3 ALLENDORF COMMERCIAL REAL ESTATE, INC. June 27, 2003 Mr. Justin J. Miller Assistant to the City Manager City of Chanhassen 7700 Market Boulevard Chanhassen, Mn. 55317 On behalf of Mr. Gene Pederson, real estate developer, investor, and owner of sixteen New Horizon Child Care facilities, I am pleased to respond to your Request for Proposal to develop the former Valley Red-E-Mix and Chanhassen Taco Shop Site. Attached please find a narrative describing the two building proposed development, with associated visual material, which can be summarized as follows: A 10,500 square foot New Horizon Child Care facilityto rePlace the existing smaller current New Horizon Child Care facility, thus retaining this service for the citizens of Chanhassen; · A two-story, 25,000 square foot professional office building, designed to be compatible with the child care facility, and meant to serve the small business professionals within Chanhassen; · Quality landscaping, to include perimeter fencing which uses materials which will visually extend the Chanhassen Bridge architectural element to and around the site, as well as a prominent entry feature on the east end of the site. · A desired timeline which would allow construction to begin as soon as the city planning and approval process could be completed. The developer is not asking for any city subsidy, and has designed the development in a quality manner where no variances are requested. We appreciate the opportunity to work with the city on this highly visible site and stand ready to answer any questions which you might have. Richard K. Allendorf 4624 MOU1VTHALL TERRACE MINNETONKA, MINNESOTA 55345-3833 Telephone: 952-935-6017 Email: rallendo~n, rr. Com NEW HORIZON PROPOSAL Former Apple Valley Red-E-Mix Site prOposed Use: The developer proposes_to construct both a New Horizon Child Care facility and a Class "A" office building on the site. · The 10,500 square foot New Horizon Child Care facility would enable New Horizon to continue to provide childcare service to the citizens of Chanhassen, replacing the existing smaller New Horizon Child Care facility located at 310 Lake Dr. E. The two-story, 25,000 square foot office building would be marketed to local professional users who want quality office space, including underground parking, within the Chanhassen community. It would present an architectural statement to Highway 5 users, while blending in with both the New Horizon building to the east, and the topography to the west. Building Description: New Horizon Child Care and the Office Building both will be designed using the same materials and design elements to make an architectural statement that will be compatible with surroundings and will do justice to the Gateway location of the City of Chanhassen. Materials and colors - All materials as outlined in City's Design Standards Brick- beige color as selected Stucco - light color as selected · Windows - at least 50% of building elevations that are viewed by the public · Roofs - limited amount of blue metal roofs - only 50% of building elevations that are viewed by the public. Metal roofs will be used to accent pitched comer elements, rais6d roofs over entry and central great room and mansard roofs as well asto enclose roof top equipment. · Durability- all materials will be pre-finished that can take certain amount of abuse and will be maintenance free. Building design - · Facade modulation by stepping forward portions of faqade. · Vertical division using different materials. · Variation of window sizes and shapes. · Variation ofrooflines using pitched and mansard roof elements. Site Design: The site is in a prominent location and has great visibility but has certain limitations, such as awkward shape, limited access and considerable slope in grade elevations. Site design for this proposal considers the characteristics of the site and will compliment the visual interest: Layout - Buildings are sited not to provide a continuous wall look. · With two building complex, parking lot is split in two smaller lots, thus reducing the impact of surface parking. · Surface parking is also reduced by providing underground parking for the office building. Topography - · Site layout is designed to work with the natural slope of the site, thus reducing considerably the need to level the site. For example, exposing part of the lower level for the office building, thus providing shorter ramp for the underground parking. · There is a possibility that at East end of the site (at Highway 101) there might be "official" wetland. Site layout accommodates such a wetland. If the wetland is not designated, this area could be designed as retention pond or rain garden. In any case, this can be a site feature instead of a problem. Land: The development would be built on the three parcels and constructed without any request for a variance. Outlot A (the western-most parcel) would retain the current open feeling in perpetuity, because the developer is willing to graf~t to the city a Conservation Easement over the parcel. The developer will also agree to pay full Estimated Market Value for the three parcels. Landscaping/Entry Feature: The developer intends to fence the development using elements of the Chanhassen Bridge as materials, The materials would be clad in decorative vines and backed with evergreens to totally screen all parking from adjoining streets. An entry feature on the east end of the prOperty would include the Chanhassen "Leaf" logo along with the words Chanhassen New Horizon Child Care. Outlot A on the west would be enhanced by relocating two existing rows of evergreens to the south. Developer/Owner: The Developer/Owner will be Mr. Gene Pedersorg 6915 W. 146t~ Street, Apple Valley, Mn., 55124. Mr. Pederson is a long-term investment property owner, with office, warehouse and retail property holdings throughout the Twin Cities area. Mr. Pederson currently owns sixteen New Horizon Child Care facilities. Timeline: The current New Horizon pmtotyl~ proposed has been built in a number of communities. Therefore, architectural drawings exist, and adaptation to individual sites is not difficult or time consuming. In addition, the existing New Horizon site on Lake Dr. E. is being offered to Park Nicollet to allow them to move forward with their construction. Any delay in building this childcare facility would delay Park Nicollet's plans. For those reasons, the developer would intend to begin construction as soon as the city planning and approval process is completed. The office building would commence construction when fifty percent of the space has been leased. The developer is already in contact with a professional firm interested in ~ leasing 5,000 square feet. Blu me ntals/Architecture Inc PROJECT NAME NEW HORIZON - CITY GATEWAY CHANHASSEN, MINNESOTA I II I JOB CAPTAIN JEFF H REVISIONS PROJ. NO, 603-25 ~5~O~' DATE 06/26/03 Blumentals/Architecture Inc PROJECT NAME NEW HORIZON - CITY GATEWAY CHANHASSEN, MINNESOTA JOB CAPTAIN JEFF H REVISIONS PRO J, NO, 603-25 ISSUE DATE _ 06/26/03 Blu mentals/Architecture Inc PROJECT NAME NEW HORIZON - CITY GATEWAY CHANHASSEN, MINNESOTA I I JOB CAPTAIN JEFF H REVISIONS PROJ. NO. 603-25 ISSUE DATE 06/26/0'3