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HomeMy WebLinkAboutAttachments SCOTT COUNTY COMMUNITY DEVELOPMENT AGENCY'S RESPONSE TO CITY'S QUESTIONS REGARDING DOWNTOWN REDEVELOPMENT PROPOSAL 1. How does the proposal provide for structured public parking as specified in the RFP? Would it be possible to include a three story parking structure behind the building or incorporate it with the building design itself? We did not propose structured parking as we have experienced a reluctance for structured parking to be market acceptable for retail / commercial in downtown areas. We would like to have further discussion with the City on this topic. Also we would need a funding source to be identified for public parking. 2. It would appear that the site plan does not reflect future planned road improvements, turning lanes, etc). How is the proposed development impacted by the planned CR 21/ Main Avenue intersection (allowing only right in and right out locations)? We are confident that through the dialogue of the development process that we can adopt a plan to conform to the required road and intersection improvements. 3. Has thought been given in respect to the timing of road improvements and the construction of the building? The construction of the building will be developed in the proper sequence approved by the City and CDA. 4. What are the estimated land costs? We were unable to establish a land cost at this time. The cost of land should be based on the type of use that can be built on the property and the cost to get the site to a buildable state for the project. Who will be responsible for these costs? We will be proposing a Joint Powers Agreement to work with the City for land acquisition. 5. Since the CDA would be the owner of the building, does this imply that the residential and retail components would be tax exempt? By statute the CDA is required to pay real estate taxes on the retail / commercial It would be market rate taxes on the retail / commercial space and on the housing it would be payment in lieu of taxes (P.LL.O.T.) 6. Please provide more detailed information regarding the anticipated financing for both the residential and retail components. The financing structure we would anticipate would be taxable bonds for the retail / commercial component and tax exempt bonds backed by the City, CDA and County for the residential portion. 7. Is a consultant being used to do the retail market analysis? What is the status of the retail market analysis? At this time, we did not secure a market analysis as it is our sense that we would not receive a favorable analysis in light of the current economic conditions. 8. Do you have any preliminary findings regarding the market demand in downtown Prior Lake? Currently we are finding that the market in downtown Prior Lake is soft at this time. 9. Does the CDA intend to use eminent domain if necessary? If yes, will the CDA be responsible for this action, or will the CDA request that the City conduct this process? We would like to have future discussion on this topic. In the past, the CDA has used eminent domain in other communities. 10. Is there strategy for assembling the necessary property? We would like to determine these strategies for land assembling with the City under a Joint Powers Agreement. 11. The proposal indicates the need to confirm that all environmental conditions are resolved prior to the development proposal proceeding. Will the CDA or City be responsible for this and when? Environmental conditions would be handled under the Joint Powers Agreement. 12. In the proposal a reference is made to "clearly understanding the City's entitlement process", what is meant by "entitlement process"? The entitlement process simply refers to the approval process at the City or any other governmental agency that would require a permit to proceed with the development such as Watershed District, Met Council, etc. 13. Is the retail component of the project condo or lease, or a combination thereof? In the past we have condominiamized the retail/commercial and residential to provide for more flexibility in the event of a future sale. However it is contemplated that the space would be leased initially. 14. Are there projected lease rates for the end-use/ tenants ofthe commercial space? We need to determine the type of lease rates that can be generated in the market. Once a plan is established it can be taken to the market to determine the actual lease rates that can be secured. 15. In respect to the reference of service related businesses, what is the projection for square footage devoted to service and to retail goods? We cannot distinguish between square footage. Basically we would be looking for tenants, service or retail that would be able to pay the rent levels necessary to make the project economically feasible. 16. More detail would be helpful in respect to the Master Tenant arrangement, i.e.: Who would the Master tenant be (as an example), what would happen ifthe Master tenant was unable to perform with regards to absorption / lease-up? At this time, we would not be able to describe the profile of the Master Tenant. 17. What would the proposed rate be for the Master Tenant? At this time we would be unable to describe the proposed rate of the Master Tenant. 18. What percentage ofthe space within the building needs to be pre-leased? In light of today's market conditions we are hearing that commercial banks are requiring close to 70% pre-leased in retail / commercial before financing could be secure. 19. How does the CDA propose to finance the retail portion of the project. Taxable bonds. 20. What is the proposed form and level of municipal financing for this project? (i.e.: TIP). The form and level of TIF funds cannot be determined at this time. However we would contemplate TIF funds being usedfor demolition, site cleanup if any, streetscape and streetscape enhancements and potential infrastructure modifications. 21. What would municipal financing be used for? Refer to response in question 20 plus if additional parking is needed in the area. 22. More details regarding the sources (and uses) of an anticipated structure of financing for the proposed residential and retail uses would be helpful. We will need to bring on financial advisors to determine a more detailed financial structure once a defined concept is agreed upon in the Joint Powers Agreement. 23. How and when does the CDA propose to handle the contingency factor for the retail so the project is neither unduly delayed, nor vacant for an extended period oftime. This question can not be answered at this time. 24. What is the plan for using community outreach and public relations to engage, solicit input from, and inform the community about the redevelopment project? The CDA is receptive to neighborhood meetings and the input of the community to make sure the development meets the goals and objectives of the community. 25. Is it viable to incorporate a portion ofthe residential component as non-senior housing to include a mix of residents within the building? Our experience would suggest that combining senior and non-senior residents would not lend itself to a successful development. The CDA has built senior and non-senior projects but have done so in separate developments. 26. Would the CDA be open to making modifications to the proposed architecture of the building to incorporate more elements ofthe Prior Lake Downtown Design Guidelines? The CDA would be more than willing to work with the City of Prior Lake to incorporate Downtown Development Guidelines provided that everything falls within an acceptable and feasible financial structure. 27. It should be noted that in the beginning ofthe proposal it refers to the southeast comer of Eagle Creek Avenue and Main Avenue. The redevelopment area in the RFP does not include this area. From other illustrations and references in the proposal, it is evident that the development is proposed for the southeast comer of the Block 4 (which is actually the northeast comer of Eagle Creek and Main Avenue). We concur. :EO:E c !!.! ~CJ) ::J CJ) f] f] "tl 0 0 0 ;:: ;:: <- ::J 000 ~ is' 0 ;0 f" g> '" )> ~ ~ m. :!. 0 11I9- p 0 iil =1 "tl "tl !l !l r- m c: 0 c: CJ) ;:: ::J. III ;:: ~ 0" 0" '" ::J ~ ,.. 3 ::J ::J III -0 III m ::J lH: III '" '" '" :j" c c a a iil 0""8'" ;:: " <g- o g 0 ~ III a. '" ~ CJ) CJ) b' ::J S. ~~g Q 0 ~ ;:l. ;:l. 0 -I "tl "tl 6i !!l iil ;0 b' 0 :? 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C/l g '" ~ ill 0 l:l ;: ~Q S. ~~ ::l lR III "0 "0 Q. Q. iir iii. ;: ;:(1) z z""l '" "'t:! ~ ~1l 0 '" '" m to> m ;;; ;;; ;;; w ~ ;.., ~ to> g: to> .... :,. :,. ;.., ~ '" m ~ .... 0 .... m ~ ;;; '" w ;.., to> ~~ to> ~ ~ to> ~ :x: " I n 2' ~ ~ :!> 3 ::l ~ III n ~ ~ ~ 0 i= 0 3 3 lD 2 " 0 3 ill ;g III 9J ~ ::! i1l ;g ~ 0 Cil Memo To: City Council; Economic Development Advisory Committee - Downtown Redevelopment Subcommittee Paul Snook, Economic Development Director 9/24/2008 From: Date: Re: Why developers did not submit proposals for downtown redevelopment In follow-up to publishing and distributing the Request for Proposals for Downtown Redevelopment, staff contacted developers on the developer list (attached) for the Downtown Redevelopment RFP. The intent of the follow-up was to answer developer questions, gauge interest in the request, and determine which developers would submit proposals. As you know, one developer, the Scott County Community Development Agency in partnership with Dunbar Development, submitted a proposal. In conversing with other developers in great detail, staff assembled the following comments and some reasons for not submitting a proposal at this time (the comments are categorized). Sluaaish economv: State of the residential and retail markets · Being cautious and very selective due to the economy · Difficult time for residential and retail markets · Not at this time; market not good; waiting for turnaround · Developers (including those doing mixed use) are being cautious at this time due to the state of the residential and retail markets · Would be interested in submitting proposal in future, when housing and retail markets make a rebound · Retail has pulled back in expanding · Housing is "in the tank" · Market is tough right now · New start-ups are opting for established markets / areas with higher traffic counts and a larger market (such as Bloomington) · Real estate investors are currently pulling back on new construction since a better deal could be had on existing real estate · Example of local market - anticipate that The Wilds will have 100 foreclosures by year's end; not good for the local economy Future limited access of Main Ave / Hwv 21 (riqht-in / rioht out) · Future RI/RO at Main & 21 is a major drawback; Arcadia is too far from the 13/21 intersection to be feasible for redevelopment · Traffic counts and visibility for retailers are and will be at 13/21 in the foreseeable future. Development financino market · Tight credit market Other · Firm is resource constrained at this time · Currently busy with existing projects / can't take on another at this time · Have hands full with other projects / have a lot on plate right now and can't devote resources necessary to pursue Prior Lake project · Too busy with other existing projects; won't be able to submit now · Currently trying to put fires out / salvage other projects · City did a fine job on RFP; very thorough · City has done the right things to take DT redevelopment to the next level i.e. new City Hall, Police Station, Rock Creek Building, etc. · Appreciate follow-up on RFP · Suggestion: re-issue the redevelopment RFP after market rebounds · Downtown redevelopment needs to land a number of regional and national retailers such as Panera's, Starbucks, and the like in order to make redevelopment work (they are willing and able to pay new construction lease rates, whereas local/existing businesses are likely not willing to pay lease rates commanded by new construction) . Page 2 EHLERS & ASSOCIATES INC 0 To: Paul Snook, City of Prior Lake From: Rebecca Kurtz, Ehlers & Associates :E Date: September 22, 2008 W :E Subject: Downtown Redevelopment Proposal As a follow-up to the City Council work session on August 18, I wanted to share some thoughts and comments. Redevelopment is challenging even when the market is good, and the City has spent a lot of time and thought in developing its 2030 Vision. While the City only received one proposal for the downtown redevelopment, the City also needs to be comfortable that its vision and goals are being met as they move forward. At the time a proposal is accepted, they are entering into a partnership, and they need to be comfortable with the relationship that is being formed and that their vision and goals for both housing and commercial redevelopment will be met. The City has been proactive with its downtown redevelopment efforts, and is in a good position to move forward when the market rebounds. The City's proactive approach with the development of the City Hall and police facility, along with the redevelopment of the downtown buildings that has occurred and the development of new housing units shows a commitment from the City. Additionally, the City's acquisition of land also puts the City in a favorable position for redevelopment when the market changes. If the City believes that the Scott County CDA proposal meets the goals and the 2030 Vision, I believe the CDA would be able to develop a successful project. However, while the City only received a proposal from the CDA, I do not believe that accepting the proposal is the only option for the City, if they choose not to move forward with redevelopment at this time. The following are a few questions for the City to consider as it evaluates the redevelopment proposal: . The proposal includes 54 senior apartment units. Over the past several years the City has developed senior housing in the downtown area. Does the City want additional senior housing in the downtown, or is it looking for housing that would provide a mix of ages? . The proposal also includes 11,225 square feet of service retail. Does this mix of housing and retail meet the goals of the City? What mix would the City like to see with retail versus housing? . Will seniors be a big enough base to support the retail goals of the City? . The City has discussed the development of a parking structure. The CDA proposal does not include the parking structure, and in the discussions, they believe that it is not necessary. During the discussion, it was stated that customers do not want to park at a higher level and walk down stairs to shopping opportunities. It was also suggested that employees may need to park at a different location in order to provide adequate parking for customers. Is there adequate parking in LEADERS IN PUBLIC FINANCE .. . . ... .pj,one:651~69i:8516mFax: 651~697:8555J rkurtz@ehlers-inc.com 3060Cent:re Point:e Drlve .. Roseville, MN 55113-1105 the downtown area to support employees and customers with at-grade parking? Are there other areas that could be used for employee parking if a structure was not built? . Is it important to the City to have a redevelopment proposal that accommodates both Blocks or a greater area of the downtown? . The CDA would pay a PILOT on the housing portion of the development. This would most likely reduce the costs and lower the rents for the housing units. However, it also would most likely eliminate the City's ability to create and use tax increment financing. While the CDA project may not need TIF assistance if the costs are lower, the project would not generate TIF to use in redeveloping other areas of the downtown or assisting with the parking concerns. . The CDA has limited resources, like all government entities, and may not have the financial resources to assist with the redevelopment costs that private development entities may have. Therefore, the City may need to absorb more of the development costs and/or provide more assistance, such as waiving fees. Several options were outlined in the Council work session memo. The following summaries those options: . The Council may accept the Scott County CDA proposal and move forward with the redevelopment. . The Council may wait to take action after the market changes and re-send the RFP. The market will rebound; however, we do not know the timing of the market change. Therefore, if the Council chooses to wait for the market, it may be 6 months or it may be a couple years before the economy rebounds. . The Council may identify specific developers that have projects that the City believes are similar to their goals and speak with them about future opportunities. Would they be interested in the redevelopment when the market changes? Were there specific items in the RFP that were barriers for them submitting a proposal at this time; and if so, could those items be modified to accommodate both the City and developer? . The Council may choose to do nothing at this time. Please do not hesitate to contact me if you have questions.