HomeMy WebLinkAboutMarch 17, 2003 Work SessionCITY OF COLUMBIA HEIGHTS
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ADMINI$ TRA TION
NOTICE OF CITY COUNCIL MEETING
to be hem in the
CITY OF COL UMBI,4 HEIGHTS
as follows:
Mayor
Julienne Wyckoff
Cocnc[lmerobers
Robert A. Williams
Bruce Nawroda'
Tammera Ericson
Bruce Kelzenberg
City Manaoer
Walt Fehst
Meeting of:
Date of Meeting:
Time of Meeting:
Location of Meeting:
Purpose of Meeting:
COLUMBIA HEIGHTS CITY COUNCIL
MARCH 17, 2003
7:00 P.M. (FOLLOWING THE ZONE 6B IMPROV. HEARING)
CITY COUNCIL CHAMBERS
WORK SESSION
/1GEND.4
1. Industrial Park plan review
,
City agreement with Dahlgren, Shardlow, & Uban Planning Consultants for planning
services for the K-mart site
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employment in, its services, programs, or activities. Upon request, accommodation will be provided to allow individuals with
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EQUAL OPPORTUNITY EMPLOYER
MEMORANDUM
Hoisington Koegler Group Inc.
k-tH
To:
From:
Subject:
Date:
Columbia Heights City Council and Staff
Mark Koegler
Industrial Park Master Plan
March 12, 2003
Introduction
The city of Columbia Heights is undertaking the preparation of the Columbia Heights Industrial
Park Master Plan in order to identify a redevelopment plan that has elements that can be
implemented in a relatively short period of time (1-5 years). Essentially, the planning process is
seeking to answer the question, "If the City is interested in redeveloping portions of the existing
industrial area, what types of uses have the highest probability of success, and what can be
implemented in the short term given current market conditions?" Accordingly, the process being
used involves an assessment of the market for various types of uses and the formulation of a land
use plan that accommodates both short term and longer term uses.
In November, the project consulting team had the opportunity to meet with the City Council in a
workshop session to review preliminary market and environmental information. HKGi reviewed
existing land use patterns. Maxfield Research Inc. reported on initial residential market findings,
United Properties talked about the market for industrial and office development and STS
Consultants provided initial commentary on their work in assembling a Phase I Environmental
Assessment for the site.
Since the meeting in November, the project team has refined preliminary information and
assembled a future land use concept for consideration by the City Council. Prior to presenting
details about the plan, some additional background information may be helpful.
Since the focus of this effort is to answer the aforementioned question, the format of this
memorandum is focused on posing and addressing a series of interim questions that are designed
to lead to a final master plan and implementation approach. The following are addressed herein:
· What will the market support?
· What environmental concerns exist?
· What land use pattern should be considered?
· How can redevelopment occur and how should it be phased?
This memorandum provides evolving answers to each of these questions. The approach in
compiling the Master Plan is to assemble initial information, obtain City Council comments,
prepare more detailed information, obtain City Council comments and then to assemble final plan
details and conduct a final review. At this time, we are at the mid-point in this process. The
123 North Third Street, Suite 100, Minneapolis, MN 55401-1659
Ph (612) 338-0800 Fx (612) 338-6838 www. hkgi.com
Direct (612) 252-7120 Email mkoegler@hkgi.com
Memorandum
March 12, 2003
Page 2
information contained herein and the upcoming City Council discussion is not focused on final
recommendations, but rather on evolving recommendations that will be refined and embellished in
the final component of the work.
What will the market support?
Efforts to address the probable market for the project area have been focused on residential,
industrial and office uses. Neither Maxfield Research nor United Properties see the project area as
having any commercial retail potential. Regarding industrial and office uses, there is a general
belief that the industrial market will see an improvement in 2004 with office market improvement
by 2005. The Columbia Heights site, however, is not felt to be a probable location for multi-
tenant uses. Rather, it may be able to attract "build to suit" uses. Such users may find the area
attractive because they are looking for an infill site within the 494/694 beltway, would like to be
near downtown Minneapolis but not actually in downtown, need access to vendors, and need good
road access (University Avenue). The supply of such sites throughout the Metro Area is limited.
Build to suit users typically may have 10 to 20 percent office and the balance in distributing or
light manufacturing.
The residential market shows significant promise. Investigations by Maxfield Research fred
demand for over 1,000 housing units in Columbia Heights over the next 10 to 13 years. A
breakdown of these potential units follows:
· For Sale Condominiums 309 - 411 units
· Senior Housing
o Limited Care 40- 50 units
o No Services 100- 125 units
o Subsidized 129- 162 units
· Rental Housing 170- 326 units
Based on this level of probable demand, the site has the potential to accommodate a wide range of
housing types. Appropriate housing products include:
· For-sale townhomes
· For-sale condominiums/lofts
· Market rate rental units
o Two-story units with third story flats
o Two-story with detached garage and carriage house apartment
o Possible four story design
· Adult/independent senior living
o Senior cooperative
o Standard apartment-style
o Single level empty nester
o Single level villa-style with detached garage and breezeway
· For-sale single-family homes
o Potential to incorporate rental granny flats at rear of property
Memorandum
March 12, 2003
Page 3
Affordable rental units could be incorporated in granny fiat/carriage house concepts and
also in two-story units and flats.
Despite strong residential demand and more limited industrial/office demand, the ultimate success
of any of these uses in a redevelopment scenario is closely tied to the improvement of the physical
appearance of the project area. Residential uses, particularly those that are owner occupied, are
not going to find sites that are adjacent to outside storage and deteriorating buildings acceptable.
Additionally, the industrial/office market has a similar view of the world. Industrial/office users
that seek to build quality buildings demand higher levels of aesthetics and amenities. Fortunately,
the city of Columbia Heights has a major amenity in Huset Park. The location of the park,
adjacent to the existing industrial area is an attractive amenity and could well serve as a catalyst to
help encourage redevelopment in the area.
What environmental concerns exist?
STS Consultants assembled a Phase I Environmental Site Assessment. The results of that effort
indicate that a majority of the sties within the project area have both known environmental
concerns and/or potential environmental concerns due to past and present uses. Foundry releases
in the western portion of the Project area near the former railroad spur lines and industrial
activities consisting of machine shops, plating operations, automotive repair and chemical
manufacturers have resulted in numerous environmental releases, investigations and cleanups (to
various standards). Metals, solvents, petroleum, foundry sand and plating solutions are the types
of releases identified. Phase II Environmental Assessments with soil and/or groundwater
samplings will ultimately be needed to evaluate whether environmental impacts are associated
with sites for which no sampling information exists and to determine realistic cleanup methods
and costs.
Nothing identified in the Phase I Assessment would indicate that existing environmental
conditions preclude redevelopment. Redevelopment efforts will, however, need to be able to
accommodate eventual cleanup costs.
What land use pattern should be considered?
The original approach in preparing the Industrial Area Master Plan was to assemble two
alternative concepts for review and consideration by the City Council. Over the past couple of
months, the project team assembled a number of differing land use and roadway alternatives.
Atler internal review of these concepts and consultation with city staff, it became apparent that
one overall concept best fits the goals of the project. Within this concept, however, variations do
exist.
The attached redevelopment concepts show a potential new land use pattern for the study area.
Concepts A and B differ only in their treatment of the current foundry site. Concept A shows the
foundry site as "build to suit" industrial and Concept B shows the same area as housing. Both
concepts depict an overall pattern of housing, park and industrial uses. The following is an
overview of concepts with a specific focus on suggested land use types and public improvements.
Memorandum
March 12, 2003
Page 4
Park
Huset Park is a tremendous asset in helping to promote the development of new land uses in the
project area. As was mentioned in the market summary, Huset Park is an attractive residential
amenity and one that to a lesser degree is also a positive influence on new industrial and office
uses. At the present time, the City is beginning a separate master planning process for Huset Park.
The Redevelopment Concept Master Plans call for an expansion Huset Park to the south and west.
The purpose of this expansion is to accommodate regional storm water ponds that otherwise
would need to be incorporated into redevelopment projects. Placing ponds in the park and open
space area allows them to become park amenities. The concept plans also call for a park
extension to the west abutting University Avenue. The park extension in this area helps separate
differing land uses and would allow the installation of an internal trail loop that would extend
more than one mile. During the City's last comprehensive plan update, residents indicted a strong
desire for more trails in the community.
Roadways
One of the dominant features of the concept plans is the creation of a parkway that meanders
through the site from 37th Avenue NE to 39th Avenue NE to Jefferson Street NE. As the name
implies, this road would be constructed as a parkway with landscaped boulevards and where
appropriate, landscaped median treatments. Constructing this road as a parkway would be another
way of enhancing the visual appearance of the project area. It would provide an attractive entry to
the new residential areas as well as a connection to 40th Avenue NE.
Housing
At this point, the Redevelopment Concepts identify one category of housing. Housing is shown
on the west side of the project area and in the area generally south of 39th Avenue NE. Within
these housing areas, an overall density of 20 units per acre has been assumed. Consistent with this
overall density, housing in the area could include a variety of styles and could accommodate a mix
of the products identified in the market analysis. The photos attached as Appendix A show a
range of housing products that could be built in the project area.
Industrial
Industrial uses are shown in three locations on Concept A and two locations on Concept B. Along
University Avenue, an 8.5 acre "build to suit" area has been designated (Concept A). North of
37th Avenue NE along 39t~ Avenue NE, an existing industrial area is retained. Another
industrially designated area houses the City's public works building which is expected to remain
at its current location.
Memorandum
March 12, 2003
Page 5
How can redevelopment occur and how should it be phased?
Redevelopment occurs when developers are willing to undertake projects consistent with the City's
plan. The ability to attract private investment that is consistent with the plan will be influenced by
market forces, development setting and financial feasibility. The previous sections of this memo have
discussed market and land use issues. The following section examines the financial feasibility of
proposed redevelopment concepts.
Implications of Property Tax System
The property tax system is a significant factor in planning for the redevelopment of the Industrial Park.
Expanding the tax base of the city is one objective of redevelopment. Property tax value also creates a
financial resource (through tax increment financing) to facilitate redevelopment.
The traditional assumption is that industrial development creates the most tax base. Under the current
property tax system, this assumption is often not accurate. The chart and table below illustrates the
$600,000
$500,000
s4oo,ooo-
$300,000-
$200,000-
$100,000-
Industrial I:~tail
I
,.~cr Units
EMV per ~iTI. Jrit
Indust~
10
30%
130,680
65
$8,494,200
10 10 10 10 10
30% 90% 25 25 12
130,680 392,040 250 250 120
75 90 115,000 150,000 200,000
$9,801.000 $35,283,600 $28,750,000 $37,500,000 $24,000,000
N~tLocal $101,480 $117,162 $422,953 $517,500 $375,000 $240,000
Tax (3~padty $169,134 $195270 $704,922 $517,500 $375,000 $240,000
Rscal Disparities 40% 40% 40% 0% 0% 0%
Memorandum
March 12, 2003
Page 6
property values created by altemative uses of a ten acre site. In this example, industrial development
produces the least amount of taxable (tax capacity) value. Several factors contribute to this result:
Commercial and industrial properties contribute to the Fiscal Disparities Program. Fiscal
Disparities requires that 40% of all new commercial-industrial value be contributed to the
Program. This contribution reduces the value available for local taxation.
· Typically, other non-residential uses (retail and office) have higher values than industrial uses.
· It is difficult to increase density with industrial development. The office and residential uses
create higher values through density. Industrial uses are typically limited to one floor.
Past differences in taxable values between development types were influenced by the class rates
set by the State Legislature. Reductions in these rates over the past six years have narrowed the
differences between commercial-industrial and residential properties. The estimated market
value of the industrial property in this example produced 56% less tax capacity value in 2002
than in 1997.
These factors influence the planning and evaluation of redevelopment options for the Industrial Park.
Making Redevelopment Feasible
The redevelopment of the Industrial Park rests on the ability to remove physical and financial barriers.
The leadership and financial resources of the city will be needed to remove these barriers.
Need for Public Assistance
Redevelopment will not occur in the Industrial Park without financial assistance from the City. The
additional costs of developing on these sites create a barrier to private investment. The income
potential of development on these sites cannot support the related expense. The additional development
costs associated with the sites include:
· Higher land costs (as compared with vacant sites).
· Expense of demolishing and clearing sites.
· Potential and actual costs of correcting site and building contamination.
Using TIF
The financial assistance required to bring about redevelopment in the Industrial Park will come from
tax increment financing (TIF). Through TIF, the City can capture the growth in property tax revenues
from new development. These revenues can be used to pay for land acquisition, site improvement and
other development costs.
Our initial investigations of property in the Industrial Park suggest that the City will be able to establish
TIF districts. TIF is governed by a complex set of statutes. The key statutory requirement for using
TIF in the Industrial Park involves the presence of"stmcturally substandard" buildings.
Memorandum
March 12, 2003
Page 7
It is important to note that structurally substandard does not mean that a building is deteriorated.
For TIF purposes, this term refers to specific statutory criteria. The TIF Act uses a two-part test for
qualifying a building as structurally substandard. A building must contain structural defects or
deficiencies in essential utilities and facilities, light and ventilation, fire protection including adequate
egress, layout and condition of interior partitions, or similar factors. These deficiencies must be of a
sufficient magnitude to justify substantial renovation or clearance.
The TIF Act sets forth the criteria to be used in detemfining the magnitude of the deficiencies. In
finding a building to be structurally substandard, the city must determine that it is not in compliance
with the building code applicable to new buildings or could be modified to satisfy the building code at a
cost of less than 15 % of the cost of constructing a new structure of the same square footage and type on
the site.
The stmctumlly substandard requirement does not apply to all buildings in a TIF district. In a
redevelopment district, more than 50% of the buildings must qualify. For a renewal and renovation
district, the level drops to 20% of the buildings.
Recent court decisions related to the use of TIF on the Best Buy complex in Richfield emphasize the
need for care in making these findings. In evaluating the potential for establishing a TIF district, it is
desirable to conduct a physical inspection of each building and to provide for thorough analysis of
correcting identified deficiencies.
Such inspection and analysis has not been conducted as part of this planning process. Nonetheless,
simple observation strongly suggests that many buildings in the Industrial Park would meet the
statutory criteria for structurally substandard.
Site contamination may also enable the City to establish a hazardous substance subdistrict. This form
of TIF district captures the tax revenue from the base value of a TIF district. These revenues can be
used to fund cleanup activities.
Preliminary Financial Analysis
A preliminary financial analysis has been performed to evaluate the feasibility of the land use options
for the redevelopment of the Industrial Park. The financial analysis examined four basic elements of a
redevelopment project:
· Development capacity of site
Property value created by new development
· Potential public costs of redevelopment
· Ability of TIF to support public costs
A set of common assumptions were used in conducting the preliminary financial analYSis. These
assumptions include:
Memorandum
March 12, 2003
Page 8
· Land acquisition costs will be equivalent to 170% of estimated market value.
· No change in valuation fi.om inflation or legislative change is part of the analysis.
· No fiscal disparities contributions are made fi'om TIF districts. All captured value is used to
generate tax increment.
· Tax increment is calculated using the Pay 2003 tax rate of 107%.
· Tax increment is used for the maximum 25 years allowed by state law.
· An interest rate of 8.00% is used to calculate the present value of the tax increment revenues.
Using these assumptions, the TIF funding capacity of redevelopment alternatives has been estimated.
This estimated funding capacity is intended solely as an initial assessment of the capacity to provide
public financial assistance. Comparing the present value of the tax increment revenues with potential
public costs provides an indication of the development feasibility.
The costs of demolition and clearance used in this analysis are very broad estimates. The actual costs
will be detemfined by the size of the structure, the presence of hazardous materials and the
requirements for the disposal of debris. These costs will vary fi.om building to building. A more
detailed assessment of these costs is beyond the scope of this study. Similarly, the costs of
environmental cleanup are not included in the analysis.
The redevelopment concepts consist of several specific project sites. The analysis examines the
implications of development at each location.
37th Avenue NE/Univemity Avenue
NE
The first development site is located on
the northeast comer of 37th Avenue NE
and University Avenue NE. This site
consists of three parcels. The
redevelopment concept calls for high
density housing on this site. At a density
of 20 units per acre, redevelopment
would result in 127 units.
The preliminary analysis assumes that
the housing would be owner-occupied
with an average estimated market value
of $175,000 per unit.
This project produces $2.44 million is
estimated TIF funding capacity. This
funding covers the estimated costs of
acquisition and clearance. The estimated
surplus could be used for environmental
Hou~ Project - 37th Averuel~Univemity Averue NE
Devebpment Project
Type QNne'~ied housing
Number of units 127
Ste densi~ (units/ao'e) 20
EMV per unit 175,000
E~imated Market Value
O~rr~nt $832200
,z~ter ~d oprnent 22,154,349
In(tease in Value $21,322,149
E~imated Devebprnert E~3ense
I.and a~:luisiiton $1,414,740
Da'nolitior~/d earanoe 500,000
Total $1,914,740
E~imatedTIFCaladty
2,435,418
Surl~usf(~p) $520,678
Memorandum
March 12, 2003
Page 9
costs, public improvements and support for other redevelopment projects.
Foundry
The second development site involves the old foundry property. Two parcels form this site.
The initial financial analysis evaluated the redevelopment of the site with a new industrial user. At a
30% lot coverage milo, the site will support approximately 105,000sfin new development. If the
development creates estimated market value at $65/sf, the redevelopment cannot cover the anticipated
public costs. Land acquisition and clearance is estimated to be $2.9 million with $1,000,000 allocated
to demolition and removal of building materials. The estimated TIF capacity is $1.3 million, falling
$1.6 million short.
An altemative industrial use would be a "built-to-suit" development consisting of a mix of office and
light manufacturing. This use results in two important changes from a financial perspective. This use
increases development density to 35% of lot area. More importantly, the development results in greater
property values. High-tech and medical uses could create estimated market values in a range of $150 to
$200 per square foot.
The table on the right presents the
m/nimum threshold for redevelopment.
This analysis assumes that the potential
public costs on this site are $1,900,000
for land acquisition, $1,000,000 for
demolition and clearance and
$1,000,000 for remediation and other
site improvements. TIF funding
needed to cover these costs requires
development at $150/sf in estimated
market value.
The significant expense for site
clearance and development represents
the unknown nature of these costs. If
the actual cost of site preparation is less
or outside funding can be obtained for
these purposes, then development
producing lower property values can
support redevelopment.
Timing is another financial
consideration in the development of
Office/Industrial Project - Foundry Site
Devebpment Proje(t
Type
Square feet
Roots
EMV per unit
E~imated Market Value
OJrrent
After Rm~dopment
Ino-___mse__-in Value
$1,131,600
18,358,137
$17,226,537
ESimated Devebpn~nt E)pense
Land acquisition $1,923,720
Da~itiorVdearan~ 1,000,000
Ra'n~iation 1,000,000
,
Total $3,923,720
E~imated TIF Caladty
3,935234
Surpl ual(Ga p) $11,514
this site. It is unlikely that the city can achieve its objectives by recruiting a user and then addressing
the site. A proactive approach would require the city to acquire and prepare the site in advance of
attracting a developer. In this approach, the city would issue bonds to finance the costs of acquisition,
Memorandum
March 12, 2003
Page 10
clearance and improvement. The bond issue would include capitalized interest needed to make initial
debt service payments. With this approach, capitalized interest and finance expense must be considered
with development costs in evaluating the feasibility of redevelopment.
The alternative use for this site is
housing. With an overall site density of
20 units per acre, a rental housing
product with an average EMV of
$126,000 per unit creates a "break-
even" scenario. This form of
development produces TIF funding that
supports estimated costs of acquisition,
clearance and cleanup.
Higher densities and unit values will
increase the capacity of public
assistance for this site.
Housing Proje(t - Rx.x~ Ste
Bevdopment Projed
Type F~ntal housing
Nurrber of units 161
Ste density (units'acre) 20
EMV per unit 126,000
E~mated Market Value
OJrrent $1,131,600
/¥ter I~]e/dq3mmt 20~,352
Ino'___~__-in Value $19,097,752
E~imated Devebpment E)pense
Land acquisition $1,923,720
Da'mlition/dearax~ 1,000,000
Rm'ediation 1,000,000
Total $3,923,720
Edimated'l'lF Caladty 3,926,425
Surp~(eap) $2,7o5
3~h Avenue NE
The development area along 39th
Avenue NE south of Huset Park is
proposed for housing. This site consists
of six parcels. With owner-occupied
housing at 20 units per acre, an average
trait EMV orS180,000 produces enough
TIF funding to cover estimated
acquisition and clearance costs.
Cleanup costs would require additional
value or outside funding.
Hou.dng Project - Honeywell Building Site
Devebpn~r~ Project
Type ONr~-o(~pied housing
NuTber of units 218
Ste density (units/acre) 20
EMV pa' unit 180,000
E~i mated Ma rket Value
GJrr~nt $2,163,100
After ~doprmnt 39238,311
Increase in Value $37,075,211
E~imated Devebprnert E~ense
Land ao:iuisition $3,677,270
Da'nditi~d~~ 500,000
Total $4,177,270
E~imated TIF Caladty 4,234,734
Surplud(Gap) $57,464
Memorandum
March 12, 2003
Page 11
Condemnation
In discussing the feasibility of redevelopment, it is important to address the issue of acquiring property
through condemnation. All of the identified redevelopment projects occur on sites assembled from
multiple parcels. The inability to assemble these sites could prevent redevelopment. Smaller sites
reduce the development area and the economic capacity for public participation. Failure to assemble
the necessary may also leave physical barriers to redevelopment. Allowing incompatible land uses to
remain could limit the city's ability to attract new investment.
The use of condemnation does not mean that the city will condemn and acquire every development
parcel. The first objective should be to acquire land through negotiations. The willingness to condemn
becomes an important aspect of negotiations. The property owners know that the city is intent on
assembling the site. In the long term, it discourages stonewalling by property owners.
Phasing
Implementing the redevelopment concepts requires a clear understanding of the relationship between
land use and the need for phasing. The proposed phasing of redevelopment is depicted in the diagram
on the following page.
Phase 1
The initial phase of redevelopment consists of the housing project at 37th and University and the
foundry site. There is strong agreement among the consulting team that the 37th/university site offers
the best opportunity for immediate redevelopment. This project also creates a strong gateway for future
redevelopment of the area~
The redevelopment of the 37th/University site and the foundry site are connected. The presence of the
foundry poses a strong physical barrier to redevelopment on adjacent sites. The buildings and site are
not compatible with creating new residential neighborhoods. The consulting team believes that the
current condition of the foundry site would prevent new owner-occupied housing.
The parkway and park improvements are also part of Phase 1. These public investments help to
redefine the development setting for the Industrial Park.
The current plan anticipates that Phase 1 will occur over the next one to five years. The market
research suggests that demand exists to support this quantity of development over the next five years.
Phase 2
Phase 2 moves to the east along 39th Avenue. This phase is projected to occur over the next one to ten
years.
The Phase 2 projects become a logical extension of the redevelopment in Phase 1. The Phase 1
initiatives begin the evolution of the area. They open the possibility development within the heart of
the Industrial Park.
Memorandum
March 12, 2003
Page 12
The key to Phase 2 redevelopment is the outdoor storage on the southeast comer of the 38th/39th
intersection. The physical condition of this property is a barrier to the proposed housing in this area.
Removal of this property becomes the catalyst for Phase 2. The timing of Phase 2 will be influenced by
the capacity of the housing market to absorb more units.
Of the six properties contained in phases 1 and 2 of the project, two owners have recently contacted the
city about redevelopment interest and/or property sale plans.
Phase 3
Phase 3 consists of those parcels facing redevelopment potential ten years or more into the future.
Unlike Phases 1 and 2, these parcels do not constrain short-term possibilities. The city does not need to
facilitate change in the Phase 3 area to achieve the desired result in other locations.
As the development pattem in the Industrial Park evolves, the development potential of Phase 3 will
become clearer. These changes should increase the value of the remaining parcels. Market conditions
could push for continuation of redevelopment into these locations. On the other hand, limited demand
may impede future changes in Phase 3.
Next Steps
The purpose of presenting the information on the concept plans at this time is to obtain City Council
comments and direction. Assuming that the Council finds merit in the general approach, the next step
in the planning process is to assemble more detailed information and to create the final redevelopment
master plan. This final level of plan detail will include:
A refined master plan graphic showing more definitive locations for proposed uses
· General design guidelines for buildings and site amenities
· Assembly of a more detailed implementation strategy including key public actions
· Final redevelopment plan report
Completion of the final components of the plan is expected to take 30 to 45 days.
Memor~dum
M~ch 12, 2003
Page 13
Appendix A
:
COLUMBIA HEIGHTS CITY COUNCIL LETTER
Meeting of: March 17, 2003
AGENDA SECTION: ORIGINATING DEPARTMENT: CITY MANAGER'S
NO: Community Development APPROVAL
ITEM: City-DSU Agreement for BY: Robert Streetar BY: ]
Redevelopment Planning Services DATE: March 13, 2003 ~ ~ ~// ]
for the Kmart Site ~~'~1~ ~--~5'~-
BACKGROUND: This memorandum provides an overview of an agreement betw{ellR~he City of
Columbia Heights and the planning finn of Dahlgren, Shardlow and Uban (DSU) forYedevelopment
planning services related to the Kmart site.
At a joint City Council, EDA and Planning Commission work session on February 18, 2003, the City
Council directed staff to prepare an agreement with DSU for redevelopment planning services related to the
Kmart site. Please find a draft of the agreement attached. DSU will lead the City, and the furore owner and
developer of the site, through 90-120 day planning process to produce a redevelopment plan that best meets
market opportunities and the goals of the City's Comprehensive Plan. It is important that the planning
process begin as soon as possible to take advantage of this significant redevelopment opportunity. The
planning process could begin in late March and be completed by the end of July. Specifically, the plan
includes:
· Establishing a redevelopment advisory committee to the City Council.
· Reviewing the site characteristics and related oppommities and constraints.
· Determining the redevelopment potential for different types of uses such as residential, commercial
office, and retail.
· Developing feasible redevelopment scenarios and presenting the scenarios to the community and
affected stakeholders for feedback.
· Identifying a preferred redevelopment concept.
· Determining the public actions necessary to implement the preferred redevelopment concept, such as
changing the Comprehensive Plan land use designation, amending the Zoning Ordinance, and the
necessity of public financial assistance.
· Presenting the City Council with a preferred redevelopment concept and receiving approval of the
concept, and authorization to proceed with redevelopment.
DSU agrees to provide redevelopment-planning services for an amount not to exceed $50,000 plus
reimbursable expenses. Nedegaard Construction, the future owner and developer of the property, has
agreed to pay 25% or $12,500 of this amount. Subsequently, the City's cost will not exceed $37,500. This
amount could be paid with monies from Fund 420, which are funds the City Council established for
redevelopment purposes earlier this year. In the event, a tax-increment district is created to implement the
redevelopment, all of the City's costs ($37,500) for planning services are reimbursable through the tax
increment payments. Staff welcomes and encourages Council feedback on this agreement.
COUNCIL ACTION:
H:XRedevelopment 2003XCL-City-DSU Agreement
DAI-tI,.GREN
S[tARDLOW
AND'UBAN
INCORPORATBD
March 11, 2003
Mayor and Members of the City Council
c/o Mr. Bob Streetar, Director of Community Development
City of Columbia Heights
590 40th Avenue North
Columbia Heights, MN 55421
Re: Agreement for Planning Services
Dear Mr. Streetar:
This letter of agreement between the City of Columbia Heights, MN (the City) and Dahlgren, Shardlow
and Uban, Inc. (DSU) is for planning services to guide the redevelopment of the site containing, and
potentially surrounding, the K-Mart shopping center.
OBJECTIVES OF SERVICE
DSU will work with the future owner and his representatives to develop a redevelopment plan that
responds to market opportunities and furthers the objectives of the Columbia Heights Comprehensive
Plan. The objectives of this service area as follows:
· Redevelop an outdated retail center by allowing creative reuse
· Determine the most cost effective method of redevelopment.
· Explore the opportunity to provide more employment opportunities for residents within walking
distance of transit and other uses
· Provide new housing choices within the city, in particular life cycle housing
· Reestablish, if not increase, the use of transit, and provide more amenities to encourage walking and
biking
· Involve the community in determining the best type of redevelopment for the Subject Property
· Cooperatively work with affected units of government and, in particular, establish the basis for
funding through the Metropolitan Council's Livable Communities Grant Program.
PROJECT DESCRIPTION
The project description responds to the objectives of the project. We believe that our methodology will
produce a meaningful, cost effective and responsive plan for the City of Columbia Heights. The project
consists of the following four phases:
Phase I:
Phase II:
Phase HI:
Phase IV:
Community Goals / Articulation of Public Purpose
Preliminary Concept Plan Development / Affirmation of Community Goals and Public
Purpose / Establishment of Design Principles
Evaluation of Alternatives
Review & Evaluate Developer's Redevelopment Master Plan
300 FIRST AVENUE NORTH SUITE 210 MINNEAPOLIS, MN 55401 PHONE (612)339-3300 FAX (612)337-5601
City of Columbia Heights
March 11, 2003
Page 2
Redevelopment Advisory Committee meetings and City Council updates will take place at regular
intervals throughout the project. Financial feasibility analysis, and communications activities will also
occur during all stages. DSU will work with the City, and the future owner of the subject site and his
representatives, to complete the redevelopment planning process by July 31, 2003.
PHASE I: COMMUNITY GOALS / ARTICULATION OF PUBLIC PUROSE
An important element of Phase I is the establishment of a Redevelopment Advisory Committee to act as
an advisory group to the project and ensure effective communications between interested parties. Another
early component to the project is the adoption of a communications plan. A planning analysis will be
undertaken that focuses on existing conditions in the project area in terms of land use, transportation,
public services, natural systems, infrastructure, plans and regulatory controls. The McCombs market
study will be consulted to evaluate the potential for residential, commercial office and retail uses within
the project area.
Task 101: Project Initiation Meeting / Redevelopment Advisory Committee Formation
The primary purpose of this meeting is to address administrative and coordination concerns related to
carrying out this planning effort:
1. Confirm project goals and objectives;
2. Refine the project description;
3. Clarify contractual interpretation;
4. Review individuals' roles and responsibilities;
5. Confn-m membership of the Redevelopment Advisory Committee; and
6. Establish a project schedule and a basis for all participants to work together to ensure a successful
project.
The project initiation meeting will be held with the Community Development Director and a
representative of Ehlers Associates, Kennedy & Graven, LLP, and Nedegaard Custom Homes.
End Product: A clear understanding of project parameters and process by all parties.
Task 102: Analysis of Existing Conditions and Development Pattern, Review of Existing Studies
and Regulatory Controls
Existing land use, transportation, public facilities, natural systems, infrastructure, plans and regulatory
controls will be analyzed for the area surrounding the Subject Property site.
End Product: Base maps of the project area and a memorandum summarizing the existing site conditions
in the project area, and relevant planning issues and policies.
Task 103: Review Market Analysis to Determine Redevelopment Potential
An examination of the site's location, surrounding land uses, and conditions will be conducted. Potential
market areas and market conditions for different types of uses at the site, including, but not limited to,
residential, commercial office and retail will be identified.
End Product: A recommended mix of uses that optimizes use of the space, recognizes potential synergies
that may occur through a mix of uses, and is sensitive to the City 's policies for project financing.
Task 104: Synthesis of Tasks 101-103
300 FIRST AVENUE NORTH SUITE 210 MINNEAPOLIS, MN 55401 PHONE (612)339-3300 FAX (612)337-5601
City of Columbia Heights
March 11, 2003
Page 3
A synthesis of the analysis conducted in Phase I will be produced that highlights the opportunities and
constraints existing in the project area.
End Product: A summary memorandum describing the opportunities and constraints of the project area.
Task 105: Redevelopment Advisory Committee Meeting - Evaluation of Phase I Findings
A presentation to thc Redevelopment Advisory Committee will be made of Phase I findings.
End Product: An update to the Redevelopment Advisory Committee outlining the key findings of Phase I.
Task 106: Presentation to the Planning Commission and City Council
A presentation will be made to the Planning Commission and the City Council of Phase I findings.
End Product: An update to the Planning Commission and City Council outlining the key findings of
Phase I.
PHASE H: PRELIMINARY CONCEPT PLAN DEVELOPMENT, AFFIRMATION OF
COMMUNITY GOALS AND PUBLIC PURPOSE, STATEMENT OF GUIDING DESIGN
PRINCIPLES
In Phase II a number of concept plans for redevelopment will be developed and presented to a community
forum for input and refinement. Specific tasks in Phase II will include:
Task 201: Development of Concept Plans
A workshop will be held with all consultants involved in the project in order to work through the results
of the Phase I analyses and formulate concept plans for redevelopment of the project area.
End Product: A number of schematic redevelopment plans for the project area. These concept plans will
include schematic depictions of potential land use and development patterns, open space systems,
building types and placement, pedestrian improvements, transit facilities, development alternatives for
the Subject Property, potential use mixes, amenities, streetscape elements, and housing options. The
concept plans will also provide the general outlines of necessary changes to regulatory controls,
available funding options, potential design standards and guidelines, and promotional strategies.
Task 202: Community Open House / Issues Forum
A public workshop will provide a forum to involve local residents and other stakeholders in a meaningful
dialogue about the future of the Subject Property. The primary intent of the workshop is to present the
preliminary concept plans created during task 201 and receive substantive feedback from the community.
This two- to three-hour workshop will be held at a convenient location within the City. The agenda may
include the following items:
Introductory Presentation: Description of the planning process, introduction of the
participants, and project objectives.
II.
Summary of Findings to Date: A brief chronology of relevant dates will be presented
along with the results of Phase I analyses.
IH. Reaffirmation and Prioritization of Issues and Objectives: The participants will go
300 FIRST AVENUE NORTH SUITE 210 MINNEAPOLIS, MN 55401 PHONE (612)339-3300 FAX (612)337-5601
City of Columbia Heights
March 11, 2003
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through an exercise to come to a broad based agreement on the importance and priority of
the pertinent issues in light of the findings of Phase I.
IV.
Wrap-Up Summary: The participants will discuss next steps and the development
schedule.
End Product: Broad-based community awareness of the priority of issues and objectives, community
involvement in the planning and design process, and concept plans responsive to the community
objectives.
PHASE III: EVALUATION OF ALTERNATIVES
Phase III will be used to select a preferred option from the concept plans for redevelopment formulated
and refined during Phase II. Specific tasks in Phase III will include:
Task 301: Redevelopment Advisory Committee Workshop to Evaluate Concept Plans and
Recommend a Preferred Option
The Consultant will present and recommend a preferred alternative for review by the Redevelopment
Advisory Committee. The Committee will review the alternative and develop a recommendation to the
City Council of the preferred option.
End Product: Development of a recommendation of a preferred concept redevelopment plan by the
Consultant and summary of review comments by the Redevelopment Advisory Committee.
Task 302: Presentation to City Council of Preferred Concept Redevelopment Plan.
A presentation will be made to City Council of the recommended concept redevelopment plan and the
Redevelopment Advisory Committee's recommended preferred option.
End Product: Endorsement by City Council of the preferred concept redevelopment plan that will be
further refined into the final redevelopment master plan.
Task 303: Preparation of a Technical Memorandum of Key Planning Issues
A working memorandum will be prepared summarizing key elements of the redevelopment process.
These may include necessary changes to the Comprehensive Plan, necessary changes to the zoning map
and related city ordinances, capital improvements funding needs and strategies (streetscape, stormwater
management), development financing issues, design standards and guidelines, and promotional strategies.
End Product: A technical memorandum detailing key aspects of the redevelopment master planning
process to be presented to the Planning Commission and City Council.
Task 304: Redevelopment Advisory Committee Meeting - Evaluation of Technical Memorandum
The memorandum will be presented to the Redevelopment Advisory Committee for evaluation and
referral to City Council.
End Product: Referral to City Council by Redevelopment Advisory Committee of working memoranda of
key redevelopment elements.
Task 305: Planning Commission and City Council Review and Approval of Technical
300 FIRST AVENUE NORTH SUITE 210 MINNEAPOLIS, MN 55401 PHONE (612)339-3300 FAX (612)337-5601
City of Columbia Heights
March 11, 2003
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Memorandum
The memorandum will be presented to the Planning Commission and City Council for review and
approval.
End Product: Approval by City Council of key elements of the eventual redevelopment master plan.
PHASE IV: EVALUATE THE REDEVELOPMENT MASTER PLAN PREPARED BY THE
DEVELOPER
In Phase IV, the final, approved Master Plan will be presented to the public. The Consultant will evaluate
the Developer's redevelopment Plan and make recommendations for refinement and approval.
Task 401: Public Open House
The final redevelopment master plan will be presented to the public at an open house.
End Product: Communication of the intent, goals, and specific components of the final redevelopment
plan to the public at large so that it can view the results of the combined efforts of the community, the
consultants and the City.
ALL PHASE ACTIVITIES
The following activities will take place throughout the planning process:
Task 501: Project communications
Ongoing, effective project communications will be critical to the success of the redevelopment master
planning process. Project communications will begin with the development of a communications plan that
will identify the critical communications issues, audiences and messages and ongoing strategies to
successfully address communications needs. Communications products will include Q&A newsletters to
community members and other stakeholders at critical points in the project. The project Team will hold
regularly scheduled meetings to monitor and ensure progress throughout the process. Individual members
of the team may be called upon to prepare portions of the project communications materials at given
points within the process.
End Product: A communications plan developed in coordination with City staff and officials will layout a
blueprint for effective ongoing communications during the redevelopment master planning process. Q&A
newsletters will be developed at critical points in the project to answer critical questions, forecast key
messages, provide updates and keep the public and other critical audiences informed and involved.
COST ESTIMATE
The cost of DSU's services will be billed to you monthly for the work completed during the previous
month on a time plus materials basis according to the attached Standard Rate Schedule. We estimate and
agree the cost of our services will not exceed $50,000 plus reimbursable expenses.
REIMBURSABLE EXPENSES
DSU will be reimbursed for all direct expenses relating to the professional services described above
according to the attached Standard Rate Schedule. These expenses may include drafting and art supplies,
300 FIRST AVENUE NORTH SUITE 210 MINNEAPOLIS, MN 55401 PHONE (612)339-3300 FAX (612)337-5601
City of Columbia Heights
March 11, 2003
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mileage, postage, delivery charges, photography and reproduction charges, fax, long distance phone, and
other typical and normal expenses associated with this type of planning work. Any unusual or large
expenses will be approved in advance.
ADDITIONAL SERVICES
The following services are not included in our base proposal and will be considered additional services if
authorized by the client. The fees may be adjusted by means of a supplementary agreement to this
contract.
Additional meetings beyond those outlined in the Work Program.
Any other services provided beyond those outlined in the basic scope of services and that are
authorized in writing by the client.
BILLING
All costs incurred will be payable to the Consultant upon receipt of an invoice showing the work
completed and the cost of said work. To each invoice not paid within thirty (30) days shall be added a
service charge of one and one-half percent (1.5%) per month for each month delinquent as per attached
billing policy.
TERMINATION
This contract may be terminated with thirty (30) days written notice by either party. In the event of
termination, the Client shall pay the Consultant for the work completed and expenses incurred to that
point.
If this agreement meets with your approval, please sign and return one copy of this letter to us. We look
forward to working with you.
CONDITIONS HEREIN AGREED TO:
John W. Shardlow, AICP, President
Dahlgren, Shardlow and Uban, Inc.
Date
C. John Uban, ASLA, CEO
Dahlgren, Shardlow and Uban, Inc.
Date
300 FIRST AVENUE NORTH SUITE 210 MINNEAPOLIS, MN 55401 PHONE (612)339-3300 FAX (612)337-5601
City of Columbia Heights
March 11, 2003
Page 7
City of Columbia Heights, MN
Date
Attachment:
Standard Rate Schedule
Billing Policy
300 FIRST AVENUE NORTH SUITE 210 MINNEAPOLIS, MN 55401 PHONE (612)339-3300 FAX (612)337-5601