A-2. Adopt Resolution Approving Modification to Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area and Tax Increment Financing Plan No. 11 )(:
CITY Of CIIANIIASSEN
Chanhassen is a Community for Life-Providing for Today and Planning for Tomorrow
MEMORANDUM
TO: Economic Development Authority
FROM: Todd Gerhardt, City Manager
DATE: September 11, 2017
SUBJ: Modification to the Redevelopment Plan for the Downtown Chanhassen
Redevelopment Project Area and the Establishment of Tax Increment Financing
District No. 11
PROPOSED MOTION:
The Economic Development Authority Adopts Resolution Approving Modification to the
Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area and Tax
Increment Financing Plan No. 11 and;
The contract for Private Redevelopment by and between the Chanhassen Economic
Development Authority and Chanhassen Frontier, LLC.
Staff is requesting Economic Development Authority(EDA) consider the modification of the
Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area, and the
establishment of Tax Increment Financing (TIF) District#11 (see attachment#1). The TIF Plan
will govern the budget and use of tax increment revenues toward this end. The plan also outlines
the EDA's intent to provide$1.3M in assistance in order to help create a 134-unit market rate
apartment complex and 19,000 square-foot specialty grocery store(Aldi). Under the plan, only
the apartment complex will receive assistance.
The EDA is also being asked to approve a Private Redevelopment Agreement with Chanhassen
Frontier, LLC (see attachment#2). The agreement states that the EDA believes it is in the
public's best interest to remove a structurally substandard building and replace it with a new
commercial user and a market-rate apartment building in order to enhance the local tax base.
The agreement also calls for a minimum taxable market value for the apartment complex of
$22,058,410 as of January 2, 2019 for taxes payable in 2020. This value will stay in place until
the termination of the Private Redevelopment Agreement.
PH 952.227.1100• www.ci.chanhassen.mn.us • FX 952.227.1110
7700 MARKET BOULEVARD • PO BOX 147 • CHANHASSEN • MINNESOTA 55317
Economic Development Authority
Downtown Chanhassen Redevelopment Project Area and TIF District No. 11
September 11, 2017
Page 2
The EDA is also being asked to consider approval of the establishment of TIF District No. 11, a
redevelopment district within the Downtown Chanhassen Redevelopment Project Area. It
should be noted that the TIF District is not a housing district. Therefore no income limitations
can be set on either the occupants of the building or the rent charged. Per Section 6.3 of the
Private Redevelopment Agreement, the residential portion of the project will be built and shall
remain a Market Rate Rental complex. The entire agreement will be recorded against the
property and can be changed or released only by City Council and EDA approval.
The Redevelopment Project will include the demolition of the existing structurally substandard
building, and replace it with a 19,000 square-foot specialty grocery store (Aldi) and a 134-unit
market-rate apartment building(Venue) with underground parking. In consideration of the
redevelopment,the EDA will reimburse Chanhassen Frontier, LLC the qualifying costs outlined
below while constructing the"mixed-use development" in the principal loan amount of$1.3M.
No funds will be distributed to the grocery portion of the project, as the reimbursable funds are
designated for the residential user only. The redeveloper must submit evidence, including paid
receipts and lien waivers, for all qualifying costs in the amount not less than $1.3M.
Examples of qualified costs Estimates
Demolition $100,000
Utility upgrades $500,000
Earthwork/grading $480,000
Parking structure construction $3,400,000
Surface parking construction $200,000
Principal and interest payments will be paid on August 1, 2020, and each February 1 and August
1 thereafter until the note has been satisfied. Based on Ehlers' proposed schedule,the note
should be satisfied by February 1, 2025. This note is only payable from "Available Tax
Increment,"which means the redevelopment must pay annual taxes in order to receive 95% of
the tax increment back. If the redeveloper does not make the annual tax payment then they will
not receive any increment, this is known as a"pay-as-you-go"note. Once the taxes are paid,
then the qualified costs outlined in this agreement are reimbursed. Annual available increment is
estimated at $294,468.
ATTACHMENTS
1. EDA Resolution 2017-01.
2. Redevelopment Plan for the Downtown Chanhassen Redevelopment Project Area and the
establishment of Tax Increment Financing District No. 11.
3. Private Redevelopment Agreement between the EDA and Chanhassen Frontier, LLC.
g:\admin\tg\frontier building redevelopment\eda memo 09-11-2017.docx