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EDA 2004 09 27 CHANHASSEN ECONOMIC DEVELOPMENT AUTHORITY SPECIAL MEETING SEPTEMBER 27, 2004 Chairman Furlong called the meeting to order at 8:00 p.m. COUNCIL MEMBERS PRESENT: Tom Furlong, Bob Ayotte, Steve Labatt, Brian Lundquist and Craig Peterson STAFF PRESENT: Todd Gerhardt, Justin Miller, Elliott Knetsch, and Kate Aanenson PUBLIC PRESENT FOR ALL ITEMS: Deb Lloyd 7302 Laredo Drive DEVELOPMENT PROPOSAL FOR MEDICAL ARTS ADDITION AND CHADDA SECOND ADDITION. Miller: Thank you Mr. Chair, EDA members. Back when we started looking at marketing the old village hall site, it was actually Dunn Brothers Coffee that initially came to us and they brought with them Goddard Learning Center who we eventually ended up signing the purchase agreement with. Because of different reasons we just couldn’t put the Dunn Brothers into that development but at the time we did tell that we’d like to see them, or they wanted to see a place in downtown and we agreed to help them try to find a site. One of the sites that they looked at was right across the street, so this would be Axel’s right here. These are the two Medical Arts buildings. These are the two Medical Arts buildings. Axel’s. The Cameo Cleaners building. If you keep that in mind, I’ll show you kind of the ownership now. This would then be Axel’s. The two Medical Arts buildings… The polka dotted lots are basically the parking lots in the area and that’s what the city owns. The shaded gray are owned for the most part by Thiese and Talley, but also is represented by Lotus Realty and so Dunn Brothers, the developer for Dunn Brothers has coordinated with Lotus Realty to come forward tonight with this development proposal. The area outlined in black then are the areas, city owned parcels that we would be looking to sell if we did this proposal. The city owns these lots for a number of reasons. Mainly it’s the downtown parking lot system that the city owns. When these developments were coming in we wanted to be sure that future developments did have adequate parking and so the city took ownership of those lots. So that brings us to this point and they have brought together a proposal which incorporates two buildings, and I’ll go ahead and put this on there. This is just a quick drawing they put together and it would be built on these two lots right here, and then the parking would also encompass this area. This would be the view as you look from the east toward City Hall or downtown. You can see the clock tower and then this would be the Dunn Brothers building and this would be what they are considering now, potential restaurant. This would be the view from the other side. You can see there, this is the entrance to those buildings. In the background you can see where the Cameo Cleaners building would be. Economic Development Authority – September 27, 2004 Maybe you can zoom in a little bit. And then this would be an actual, just a site drawing of it. The coffee shop would be right here. The restaurant would be there. This is assuming that the coffee shop would have a drive thru, which would be right here. So I th imagine the motion, if you’re coming in off of 78 Street you’d come in like this. Turn around like that and then this is only right-in/right-out so you’d have to go out like that, or if you came through the drive thru, have to come back out there to Great Plains and th then go out to the West 78 like that. Again this is just a development proposal. What we’re looking for from EDA tonight is if this is something that you think carries any weight, before we spend too much time going through it, before the developer spends too much time and money in it we just wanted to get an idea of where the EDA thought this was a proposal worth looking at. Be happy to answer any questions. Furlong: Thank you. Questions of staff. Gerhardt: Mayor if I could, I just wanted to add one thing. Justin can you show your th polka dotted map. The small lot that you see there along West 78 Street. Okay, I was involved in this many years ago but the small little lot with the polka dots, the other one Justin. Right there. That was what was called the Pauly building. It was a little blue building that sat in downtown and there was a hair salon in there. The EDA purchased that lot from the Pauly’s and relocated the salon. The one next to it was the Union 76 gas station. We also purchased that property and relocated Loren Anderson into our industrial park and he still operates there today. And then the larger lot to the north, before we started either of the two phases to the Medical Arts we were going to place a daycare on that site, and. Furlong: Where the parking lot is now? Gerhardt: Yes. The larger polka dotted lot, and would not connect to the Colonial Center or old Kenny’s building to the east of that site. So that’s how we became owners of those three parcels. Miller: Just one clarification as well. This little shaded piece right here would need to be combined with this lot, so the restaurant alone couldn’t fit on this site. It would need to be combined to this parcel. Peterson: Who owns that piece? Miller: That’s owned by Thiese and Talley. That was always, that was put there so they could expand the Medical Arts building. Peterson: A couple questions. So am I correct in understanding that we’re considering selling the parking lot space also? Miller: That’s right. 2 Economic Development Authority – September 27, 2004 Peterson: So how does that follow with our earlier philosophy of wanting the city to keep parking space for future growth? I mean there’s been discussion with the Cameo building being redeveloped and it seems to be going against what our earlier philosophy was. Keeping the parking to help downtown parking. You can answer that question and then I’ve got a couple more. Miller: Sure. There’s also been discussions between staff and Mr. Johnson about actually turning over or selling the rest of the lots to the properties that have benefits, and this would be in my opinion just maybe the first step toward that. Before we do that we need to make sure that there was sufficient agreements in place so that all the businesses, including Axel’s would have sufficient parking and be able to do that but right now the city maintains it. We do assess back the cost of those improvements to the businesses anyway. Peterson: Okay. Second question, has there been any discussion as to type of restaurant? What’s the floorplan going to be with that space potential? I mean how big of a restaurant could it be and the types and Brad can maybe answer that when he comes up but. Miller: Maybe it’s better for him. Peterson: Probably hold that for him but, alright. I’ve got another question now. I’m trying to re-phrase it in my mind so go ahead if somebody else has got questions. Ayotte: In the formulation of the recommendation Justin that you, that is written down here, it says details of the proposal and if possible bring back a more. Why do you have the if possible there? I mean if we’re going to, was there a reason, is there something that we don’t know that there’s some question as to whether or not the preparation for proposals is even doable? Is that why you say if possible? Miller: I say if possible, only reason I say if possible is that the terms between staff and the developer weren’t something that the city, that staff was comfortable bringing back to the EDA. We wouldn’t bring it back unless we were comfortable and so if terms couldn’t be agreed upon, in terms of price. Ayotte: Okay, so embedded in that is there, there’s a requisite that staff and others would reach a mutual understanding, then it would come back to council. Miller: Much like we did with the old Village Hall site. Ayotte: Yeah, and the other question is, negotiate the details within a period of time. Is there a sense as to when you believe everyone would want to get to the table and have discussions? Formulate a recommendation. A proposal. Staff it. Then bring it back. What kind of time line are we talking? 3 Economic Development Authority – September 27, 2004 Miller: Well I think Dunn Brothers obviously is ready to go. We’re getting to the point now, by the time you get site plan approval, purchase agreement in place, you wouldn’t be able to start construction until this spring, but if you gave us a deadline of 30 to 60 days to come back with a report to the EDA, we could do that. Ayotte: So 30 to 60 days is a realistic, that’s what I was trying to feel. Okay. Furlong: Yeah, for a deadline per se. You just wanted an idea of the timeframe, is that it? Ayotte: No, I’m just trying, I’m just wanting to know why there hasn’t been some sort of a feel as to how long it would take to formulate a proposal. Staff can bring it back. Lundquist: Justin, I don’t know if you can get them to go to $20 bucks a square foot. Ayotte: …seriously at the table if he’s wearing that tie. I’m sorry. Peterson: Generation X Bob. That being said, have you talked price range yet? I mean Brad, if you are talking 5, then discussion is over from my perspective but if you’re talking 20 then we can talk. So I mean have you discussed it at all? Miller: Briefly but we’re not in agreement yet. Lundquist: Somewhere inbetween 5 and 20. Miller: Obviously we sold the land across the street for $11 a square foot. We think that price range is probably reasonable. Peterson: Okay. Furlong: But isn’t the supply of buildable land in the downtown diminishing… Miller: That’s true. That’s true too. That can drive the cost up. Furlong: Okay. Peterson: Well this is a better spot. Furlong: Other questions for staff? Peterson: Has access off of main street. Gerhardt: Best spot in town. Furlong: A couple just for clarification. The zoning in this area. What is the zoning and what’s allowed within the zoning? 4 Economic Development Authority – September 27, 2004 Miller: The central business district, and allowed in those are restaurants, specialty retail. I think both these uses would be allowed in there. Furlong: Okay. This has a drive thru, or at least on one of the buildings. That’s allowed. Aanenson: That’s correct. Furlong: Okay. From a, do we, we don’t have design standards in the central business area do we or don’t we? Aanenson: Yes we do, and that’s one of the things with the purchase agreement, there’s two ways. If you want to narrow down the uses, which we’ve done on some. As part of the purchase agreement, direct staff to limit kind of goes back to Craig’s question is type of restaurant, whatever. Otherwise it’s just handled by the underlying zoning district, and we do have architectural standards and staff already commented on for what’s the building. Furlong: Okay. I guess we’ve got some different standards. One, we’ve got the Dinner Theater across, kitty corner from the site. We’ve got the medical building which is. Aanenson: Wood, pitched roof. Furlong: Wood, pitched, and I think the Goddard is going in, that was mostly brick, which I think is similar to some of our other. Aanenson: Correct. We’ve given some direction on what we think the materials should be but. Furlong: But that would be, when you’re talking your proposal here about bringing back some more detailed site plans…little more detail than just these sketches of what they might be, what they will be proposing. Miller: Right. For instance when we brought back the Goddard School, we didn’t have the detail that’s needed to go Planning Commission but we had some site pictures of what they’re intending. Basic exterior appearance. Furlong: Okay. Traffic. One of the issues, and it’s just the configuration, that entrance. A right-in/right-out inbetween these two buildings as near as I could tell there’s behind th the stop light there, the restaurant on West 78, there’s room for 2 cars before you get to that driveway entrance, and I guess my question is, if the traffic flow is coming through the drive thru to pick up the coffee. Turning to coming out there, are we looking at congestion and bottle neck? If you drive by the building with your passenger side along the building, you’re not going to reach across to get your coffee. The drive thru should come. 5 Economic Development Authority – September 27, 2004 Miller: You would go around like, kind of this way and drive through. Your driver side would be. Furlong: Sure, and I guess my point is, after they get their cup of coffee then, they’re going to be taking a left across that incoming traffic but there isn’t much room behind that stop light. Labatt: For stacking. Furlong: For stacking, yeah. Thank you. Miller: That’s something we need to look at. Labatt: You need to put a right in, right only sign there. Miller: And make them go out towards. Furlong: That’s not going to work. I mean the median specifically prevents that. The other thing is you’ve got two traffic lights there. You’ve got a left turn and a right turn th off of westbound West 78, so anybody coming out of there wanting to go south on what is that, Great Plains there? Going down towards 5. They’re going to have to cut across to get across. I’m concerned about the stacking and it probably wouldn’t be throughout the day but at peak times it could be a challenge. I mean is that something Brad you thought about or you think works as well? Okay, other questions for staff at this point? Peterson: Just one more. How many square feet are we talking about for sale? Miller: It’s less than an acre. I think it’s around 35,000 square feet total. Peterson: Okay. Furlong: Does that include the parking lot? Miller: That does. That’s all three parcels. Furlong: Alright, any other questions? If there’s not right now, Brad. Would you like to address the EDA? Brad Johnson: I arrived about 5 minutes late. I’m not used to you guys being on schedule. Brad Johnson. I live at 7425 Frontier Trail. I’m here to talk about the proposed site that you have before you. Did you show them the plans? So where we stand is that we own, as a group, own what we’ll call the Cameo Cleaners or Colonial Square. We’ve got, this group because we are redevelopers, it about redeveloping it. It’s basically, his value has increased so dramatically because of rents that we receive there that we really can’t redevelop it to anything at this point in life that would make any sense. The building is configured in such a way that on the right hand side is legitimate 6 Economic Development Authority – September 27, 2004 retail. And on the left hand side is office, and that office is a result of the school that was put in there. I think what was in there originally was District 112 put in first and then St. Hubert’s operated it for some time, and it is basically to demolish that and reconfigure it, it’d probably cost as much as to build a whole new building. So we have leased it out as office and it’s currently operating as office except for the barber shop. Everything else to the left, and then the Cameo Cleaners is slowly becoming a real business and they seem to be, they’re in the process of renewing their lease for 5 years. Paul Communications would like to enlarge their space there and we just don’t have any, and then we have another resident that operates an audio distribution center in there and training, and it’s quite a place and so that’s, it doesn’t make any sense at this time to make it retail again because there’d be no economic advantage. We’re going through the process of remodeling Ridgeview, where they moved out and it’s costing us about $700,000. That’s about 70 bucks a foot, which is about what it cost us to build a new building. Just to redo the first floor…medical building. We feel that the access question would primarily off Great Plains and most people, I live right in that area, would enter, go through and go out th 78 Street going toward work. And then the other ones would come in and go toward, where they work, if they’re coming through town, they’d go more toward the west. I don’t see a lot of turns, I may be wrong, that would lead them back to Highway 5 because there’s a Starbuck’s down there already that most of the people would take, and personally I never take that particular route, and I’m there all the time so I don’t think that is a real issue. th Furlong: Which route? Taking out. Where it goes out to West 78 to go south? Brad Johnson: Yeah, I would say that unless I’m going to the Holiday or something like that I’d never go that way. And when I come to town, which I do quite often, I never th take either Great Plains or Market. I always come in on 78 because I think it’s quicker. Just the way it is. The good news and the bad news is there will be a lot of traffic there in the morning because there’s a lot of customers. That’s the good news. And the bad news I think. There is a lot of people that deliver their children, they don’t bus their kids to the school there and Chapel Hill so there is traffic in that case and I think that’s primarily why they want to be there. Probably a good reason to have something there. There’s been interest on our part, since we’re down at that end of town, to bring some vitality back. Dunn is a very good example. This will help a lot of people as you know, they get a drive thru anyplace. It’s allowed. You know it can be done there, and so we figured we could do that. They have a lot of excess parking. The parking there is not a problem. If you go over there any time during the day, there is, even with Huntington because they’re, Huntington’s parking is at, after 4:00 I suppose. Who have kids. And in the evenings. And they take up a third of our first floor on the other building. So if you go check on parking, I think we have some people from the school parking there during the day, which as long as they don’t park right in front of the spots for the customers of Cameo, that’s fine. That’s sort of where we are. We don’t see that being redeveloped. It just, it’d be a good idea but there’s better places to spend a lot more money maybe over on the Dinner Theater side or someplace because it’d take a lot of city participation but even to make sense out of it I think, in that case. We bought that space primarily because we thought Ridgeview would probably enlarge on the site. And they concluded that the 7 Economic Development Authority – September 27, 2004 site wasn’t bit enough for what they did and they built their building over there. And so we’re going through the transition of changing the uses in our building, which are a lot less intensive from a parking requirement than Ridgeview was. We have I think through agreement the right to build an additional 2 or 3,000 square feet onto our, the building that we have on the lot that we have. We have tried to market that idea. That didn’t work, for the last year. So now we think that we could design some nice building there that would put something on the tax rolls and that was the idea. As far as what type of restaurant, about 33,000 to 3,500 is somewhere between a fast food restaurant and Axel’s. A lot of the Chipotle’s and those are in the 2,500 square feet. This would be bigger. Our intent would be, you know you always say the ideal thing, I would guess 5 out of 10 residents that talk to me about restaurants want white table cloth and you know something like that, but I would say would be something in that area. Just because they’re going to be a very nice building and they have the benefit of designing something for somebody. I couldn’t, there are, oh I think we worked with 2 or 3 restaurants for the other side of the street now. They would actually fit here you know if we were marketing this, and that would be an intent. Peterson: The other side of the street, what do you mean? Brad Johnson: The Dinner Theater. That whole complex is, will be coming in I’m sure for redevelopment here within 2 years. Furlong: When, 2 years? Brad Johnson: Oh I’m sure it will, yeah. In fact you’re just looking at Phase I right now. From what I have seen, and we’re not, be advised, we’re going to be directly participating with Kraus-Anderson of Bloomberg. Furlong: Are you talking about the Market Street Station or the Dinner Theater. Brad Johnson: Complex. All of that land I think will be redeveloped over the next 2 years. A lot of leases run out. The Dinner Theater has always had this wish for a better theater. I don’t know if they’ll ever get one but they’re doing very well and they have limited times that people and not seats and the more seats they have during that time, the better. And there’s a lot of family issues going on there with Bloomberg’s. Not issues but you know he’s getting kind of old. A bunch of stuff they’d like to get accomplished over the next 5 to 10 years. So that’s kind of where we’re at. We had originally proposed this to Dunn Brothers and then they went across the street, to our surprise, and so now we’re just coming back with what we thought might work for them. And I think we tried to do something architecturally significant, you know from your end of it. I don’t know. These are things, you should have seen the first one that we came up with. We liked the idea of brick but since part of the buildings on that street are not brick, the architects thought we should have a blend of both. But other than that the staff will have their own ideas too of what, or tell us what they want but we’d like to have it be a nice building. Basically Talley is our primary partner in that and he owns most of that side of the street so, you know he wants to retain, he’s a long term hold type person. His 8 Economic Development Authority – September 27, 2004 corporate offices are there. He’s got a growing company so it’s probably one of our better you know offices in downtown so, that’s the idea. I think we’re working through this pricing deal. You know because it’s just a parking lot, we have to think about those kinds of things and we own half of everything that we’ll be building on so together we can make something out of it. If we don’t cooperate, there will be nothing there and then what’s there, and I don’t think that there’s any, I think we could enhance the look of Colonial Square. I would guess if we did anything else, second phase of this might be to do something to Colonial Square ultimately but Todd did such a great job originally that, I think that was the first redevelopment wasn’t it? Gerhardt: Where we physically put the addition on, yep. Brad Johnson: Right. We’re happy with the building as it is. It’s an economic, viable. Needs a little repair. Paint stuff like that. The tenants are all doing very well which is good. Anything else? Furlong: Thank you. Any questions? Peterson: Knowing that Dunn Brothers is chomping at the bit, what’s your prognostication on the restaurant? How far behind would a restaurant probably be? Brad Johnson: I would say a year. You know next summer. We haven’t tried to market that. I’ve got some ideas that I would go look at some white table cloth kind of restaurants that exist either downtown or over in Excelsior or someplace that I know there seems to be missing you know. We’ve got a lot of, about 27 restaurants in town now so the fact that we need restaurants is probably not so much as we need something. We have a lot of competition in Eden Prairie. I would guess they’re adding a restaurant a month now. They just started a Fountain Place which is about 3 or 400,000 square feet of retail. Next to the center there. And a lot of stuff. Costco’s going in there. So it is our regional center. I guess we’ll have to live with that. Maybe with Eden Prairie, I don’t know. Furlong: Sounds like a different discussion Brad. Brad Johnson: Yeah. Anything else? That’s, I mean we’ll work it out with you. I think the main thing and purpose of tonight was, is it something we should consider and I think we’ve had it on the table for a while but we kind of…while Dunn Brothers went through their process. Furlong: So based upon the timing, it’d be your expectation that these two buildings would be built at different times? Brad Johnson: At different times. Furlong: Coming first with the Dunn Brothers. 9 Economic Development Authority – September 27, 2004 Brad Johnson: Yeah. We could actually put in Dunn Brothers this winter. There’s a parking lot there already. We’ve got a guy figuring out how to do that. And that could come pretty quick, I guess. We’re pricing it out. We just have to cut the pavement. Most the times the problem with construction is you never get the paving in. You can’t park there. We’re starting with a parking lot. That’s good. Furlong: Okay, thanks. Any other questions, I’m sorry. Okay. Follow-up questions for staff or for comments for staff? Settle for 15? Alright. See you already worked him down from 20 so that’s good. Comments. Discussion. Thoughts. Ayotte: I’d like to see a proposal while this EDA is still the same as it is so, rather than channel their timeframe I’d like to see something back in terms of timeline. Furlong: Because we’re sitting here on September. Try to get something back in the November timeframe. Is that, 30-60. Try to, rather than dragging it out. Let’s, if we’re going to do it, let’s do it and that should be. Brad Johnson: …what you’d like to see on the site plan… Furlong: Okay. Any thoughts? Steve, anything? Labatt: No, I mean I like it. Let’s explore it and look at it you know, and I’m keeping my ear to look at and forecast and see what’s coming up and talk about terms and plans and that stuff but that’s more City Council stuff and, but I’m not opposed to selling it. If the price is right Brian. Right? Peterson: Amen. Furlong: Alright. Any additional thoughts? Lundquist: No, I think it’s worth exploring. We’ll see what we can come up with for the details. Furlong: So some more details, alright. Peterson: Yeah, I agree. The only unrelated but related thing is, I could have swore I asked a year ago or 6 months ago, I said what other land do we have in the city that we could sell and this didn’t come up. Just let me finish first. And are there others? I mean from my perspective I really don’t want to be owning land. EDA or otherwise and are there others like this that are out there? Parking lots are a different thing. We talked about that before and I think it’s reasonable that we start negotiating or continue negotiating but if there are other city owned land that is marketable, let’s talk about it and decide whether we should market. We’ve got a developer coming to us on this, but are there other things that we should, should we have been marketing this in the last 2 years? Probably if we’re considering selling it, I’d rather not have somebody come to us. I’d rather have us go out and use somebody like Brad or retain them. Let the professionals 10 Economic Development Authority – September 27, 2004 market it and see what we can get. So anyway, sorry I shut you up so now you can talk. Please. Gerhardt: No, that’s good to hear and the reason we haven’t marketed this piece is that, there’s cross access easements on it. You really need to work with Ken Talley on this, utilizing their parking along with their land because if you look at the site plan, a big portion of Dunn Brothers is going to end up on the parking lot of Colonial Center, and they need to combine the remnant piece for their expansion to the Medical Arts to the piece that we own which was a combination of the Union 76 gas station and the little blue building. And so we could have marketed it but nobody would have been able to buy it with the exception of Ken Talley or somebody working with Ken Talley to redevelop this site. Peterson: Okay. Furlong: Any other comments on the concept itself? Peterson: No. Furlong: My comments are similar. I think it’s worthwhile pursuing and continue the discussions. Especially if we can, I agree with Mr. Ayotte in terms of trying to move it forward quickly rather than just having it sit there and drag. Either we’re going to be able to work it out or not. And I think as part of that, bringing it back, you know in addition to the price, which will be a significant decision but bring back some more than just the concepts. You know work it into the site plan part of it too, which is what Brad, is exactly what you were talking about. It’s working with the design standards and stuff like that so I think that will be helpful and understanding as best as we can, without going through a traffic study, how we collectively think this traffic flow’s going to work but those are different times so. So those are my thoughts. Peterson: Mr. Mayor, the only additional comment that I would have is, I wouldn’t be motivated to sell city property for a fast food restaurant, drive thru or not. You know we have the ability to have some leverage here for what we all want, which is a higher quality restaurant. Again, market forces are going to control that but I don’t know if you say you’re going to sell it, how much can we. Aanenson: We can put a restriction in there. We’ve done it on other ones. Miller: We did it on the bowling alley. We did it on old village hall. Aanenson: On the purchase agreement. Furlong: So you’re saying like, I mean, obviously there’s a Dunn Brothers drive thru coffee shop there. What you’re saying the other restaurant. Peterson: Exactly. 11 Economic Development Authority – September 27, 2004 Furlong: Don’t move that through with another drive thru, another fast food restaurant. With a blue metal roof or something. Peterson: Exactly. Ayotte: As long as it isn’t orange. Furlong: Okay. Peterson: I think he’s had some collage issues with orange and things moving around. Furlong: He has had some problems with orange this evening, yeah. Okay. Any comments or questions or request for clarification? On our part. Got what you were looking for as far as some direction. Okay, very good. I don’t think we require a motion for that. Therefore we’ll move on. APPROVAL OF MINUTES: Ayotte moved, Labatt seconded to approve the Minutes of the Economic Development Authority meeting dated August 23, 2004 as presented. All voted in favor and the motion carried unanimously with a vote of 5 to 0. Lundquist moved, Peterson seconded to adjourn the meeting. All voted in favor and the motion carried. The EDA meeting was adjourned at 8:35 p.m. Submitted by Todd Gerhardt Executive Director Prepared by Nann Opheim 12