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Home My WebLink About3A CDA Response to RFP 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 ECONOMIC DEVELOPMENT ADVISORY COMMITTEE AGENDA REPORT MEETING DATE: AGENDA # PREPARED BY: OCTOBER 1, 2008 3A PAUL SNOOK, ECONOMIC DEVELOPMENT DIRECTOR SCOTT COUNTY COMMUNITY DEVELOPMENT AGENCY {CDA} RESPONSE TO REQUEST FOR PROPOSALS FOR DOWNTOWN REDEVELOPMENT AGENDA ITEM: DISCUSSION: The Scott County Community Development Agency (CDA) has submitted a response to the City's Request for Proposals for Downtown Redevelopment. Attached are the following: 1. Redevelopment Proposal from the Scott County CDA 2. A list of the questions presented by City staff and the corresponding response by Scott CDA and Dunbar Development. 3. List of developers RFP was sent to 4. Memo regarding developer feedback 5. A memo from the City's financial consultant, Ehler's & Associates, in follow-up to the CDA's presentation at the August 18th City Council work session. The City Council held a work session August 18th to review and discuss the proposal, and ask questions of the CDA and Dunbar Development. Features of the proposal include: General · A four story mixed use development of independent senior housing and neighborhood retail · Scott CDA has been successful in developing, owning and operating senior housing in New Prague, Savage, and Shakopee · The concept for neighborhood retail would be to provide a retail location that would be acceptable in the marketplace for neighborhood business owners to conduct their service related businesses. · A condition of proceeding with the development would be to secure either a master tenant or have a significant amount of the retail space pre-leased. Develooment Plan · 54 senior apartment units (18 one bedroom; 18 one bedroom + den; 18 two bedroom) · 11,225 square feet of neighborhood service retail www.cityofpriorlake.com Phone 952.447.9800 / Fax 952.447.4245 Land Acauisition · CDA would work with the City in the acquisition of parcels · CDA is confident of arriving at a land cost that will allow economic viability of the proposal. Market · For residential/housing, CDA has secured a third party independent analysis from Maxfield Research · Analysis shows that a market exists for this development proposal in this location in Prior Lake at this time. · For retail, CDA views this to be the most challenging market, and is ongoing in its market analysis for the space. · A master tenant or significant level of pre-leased space will be a contingent factor in allowing CDA to move forward with this development. Desian · Southeast corner of Main Avenue and Eagle Creek Avenue (Hwy 21) · A plaza at the corner of the building · Public, surface parking behind the building · Amenities such as benches, public gardens and a fountain · Architecture takes cues from older and newer buildings in downtown Prior Lake · Design is in keeping with the Downtown Building Design Guidelines · Storefronts open on to Main Ave . Common areas for the apartments are at street level and include a community room with kitchen, exercise room, library, and woodshop. · Apartments will meet the needs of residents, including extra wide entry doors, handicapped adaptable kitchens and bathrooms, individual heating, ventilation and air conditioning, and remote storage lockers . Concept drawings do not suggest final development; CDA is open to input to clearly define the final design Financina · CDA will use Springsted, Inc. as the financial advisor . Housing component - CDA will use its tax exempt authority for bonding . Commercial/Retail - will use more conventional financial model Challenaes · Land acquisition · Potential relocation · Acceptable neighborhood retail tenancy · Potential environmental conditions; need for abatement/clean-up ISSUES: Number of Prooosals Received After sending out forty-one request for proposals, we received one response, from the Scott Count CDA. Staff followed up with a majority of the developers. Many of the them suggested that they are interested in submitting a proposal and see potential in downtown Prior Lake, but for a variety of reason~, the timing is not right to submit at this time. It is difficult to know the potential for redevelopment when only one proposal is received. See related attachments: Senior Housina Senior housing has a significant presence in the downtown area with Lakefront Plaza, which has seventy-nine living units. Does the city want another 54 units of senior housing in the downtown? A range of housing elements makes for a more vibrant downtown in terms the mix of people inhabiting downtown and the wider retail market that downtown residents would support. o Retail The goal as outlined in the Request for Proposal is to have a downtown that has a mix of uses and design character rich enough to attract people to live downtown, and cause people to linger, visit more commercial and retail establishments, and spend more money. The CDA proposal lacks a detailed market analysis for the retail portion. The CDA states that it is ongoing in their market analysis for retail, that this is the most challenging market, and that the retail component, working through a master tenant, will be a contingent factor in allowing the CDA to move forward with the project. In the workshop meeting with the City Council, the CDA stressed that service related businesses, medical related (clinics 1 offices), and public uses would be a good fit in the ground level retail space at this time (similar to the Hamilton building in downtown Savage), until the retail market rebounds. The CDA proposal falls short of the RFP goal of having a strong retail component to the project. Parkina The CDA proposal includes underground parking dedicated to residents. The proposal would not include a general public parking structure as specified it he RFP. The CDA and Dunbar Development are of the opinion that the suburban market is not comfortable with an urban style parking ramp. A ramp would be more conducive to an office setting. In addition to not providing for a parking structure, the proposal does not provide a significant number of surface parking for the 11, 000 square feet of retail. Ownershio / Financina The CDA, a public entity, would be the owner of the building. By statute the CDA is required to pay real estate taxes on the retail 1 commercial portion of the project. Taxes would be market rate on the retail 1 commercial portion, and on the housing portion it would be payment in lieu of taxes (PILOT). Typically, PILOT is 1/3 of what taxes are for a ALTERNATIVES: privately developed and owned project. Public ownership by the CDA and consequent PILOT would likely eliminate the City's ability to create a TIF district and use tax increment financing, whether it be for this project, to assist in creating additional downtown parking, or to use in redeveloping other areas of the downtown. The financing structure the CDA anticipates would be taxable bonds for the retail! commercial component and tax exempt bonds backed by the City, CDA and County for the residential portion. Offer and pass a motion recommending that the City Council not move forward with Scott County Community Development Agency's Downtown Redevelopment Proposal; and 1. As outlined by Ehlers & Associates, direct staff to identify specific developers that have projects that the City believes are similar to their goals. Find out if they will be interested in future opportunities for redevelopment when the market improves, and if there are specific items in the RFP that are barriers for them submitting a proposal; work to modify those barriers to accommodate both the City and developer; and, authorize re- issuance of the Request for Proposals for Downtown Redevelopment at a future date; - or- 2. Do nothing at this time