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Home My WebLink About2017-03-21 HRA Work SessionAgenda Housing and Redevelopment Authority Work Session Meeting City of Edina, Minnesota Edina City Hall Community Room Tuesday, March 21, 2017 5:30 PM I.Call to Order II.Roll Call III.49-1/2 Street Redevelopment - Update IV.Adjournment The Edina Housing and Redevelopment Authority wants all participants to be comfortable being part of the public process. If you need assistance in the way of hearing ampli*cation, an interpreter, large-print documents or something else, please call 952-927-8861 72 hours in advance of the meeting. Date: March 21, 2017 Agenda Item #: III. To:Chair & Commissioners of the Edina HRA Item Type: Advisory Communication From:Bill Neuendorf, Economic Development Manager Item Activity: Subject:49-1/2 Street Redevelopment - Update Discussion Edina Housing and Redevelopment Authority Established 1974 CITY OF EDINA HOUSING & REDEVELOPMENT AUTHORITY 4801 West 50th Street Edina, MN 55424 www.edinamn.gov ACTION REQUESTED: No action requested. INTRODUCTION: This discussion pertains to the potential sale of real estate to enable new investment on W. 49-1/2 Street. Staff has continued to meet with the Preferred Development Partner to prepare terms of a potential real estate transaction. This is a complex transaction and staff strives to keep the HRA Board up-to-date to avoid surprises when the final term sheet is completed. Staff will present the current status of the project and real estate negotiations. There are several aspects of the negotiations where general direction would be helpful to staff. Representatives from Buhl Investors and Saturday Properties will attend to answer questions. Representatives from HRA Special Council, Dorsey & Whitney and HRA Public Finance Advisors (Ehlers Associates) will also attend to answer questions. ATTACHMENTS: Description Memo: Edina Collaborative 3-21 Update PowerPoint E-C Progress Update 3-21-17 City of Edina • 4801 W. 50th St. • Edina, MN 55424 Economic Development / HRA Phone 952-826-0407 • Fax 952-826-0390 • www.EdinaMN.gov Date: March 21, 2017 To: Chair and Commissioners of the Edina Housing and Redevelopment Authority cc: Scott Neal, Executive Director From: Bill Neuendorf Economic Development Manager Re: 49-1/2 Street Redevelopment – Project Update Staff has continued to make progress on refining the potential redevelopment project on the north and south sides of W. 49-1/2 Street with the selected Preferred Development Partner (Buhl Investments / Saturday Properties). As the pathway to a successful real estate project continues to evolve, there are four issues that should be discussed at the Work Session. 1) Construction Phasing – Based on input from the adjacent businesses, the phasing of the project may be changed. We are currently exploring an alternative to construct the new mixed-use building on the site of the Center Ramp first beginning immediately after the holiday season in January 2018. The North Ramp site would be expanded immediately after completion of the first building. The developer would lease the vacant 3930 and 3944 parcels for construction staging and public parking during this time. Contractors and sub-contractors would be required to park off-site. Deliveries would be temporarily relocated to the bus stop areas on 50th Street. This may result in a temporary shortage of parking during the peak periods, but is anticipated to reduce the overall construction impact to the area since only one holiday season would be impacted. This arrangement would also complete the most desirable and challenging portions earlier. This is intended to minimize construction impacts to the neighboring businesses and bring more customers back sooner. Housing and Redevelopment Authority Established 1974 49-1/2 Street Redevelopment Update March 21, 2017 Work Session Page 2 2) Use of Tax Increment Financing (TIF) on Center Parcel – A preliminary study by Stantec Consulting indicates that both the vacant Hooten building and the existing Center Ramp are considered “substandard” and thus qualified to establish a Redevelopment TIF District. The use of incremental taxes from the site would resolve a financing gap due to limited rent- producing elements and the high level of public amenity. The developer is willing to bear the risk and cost in constructing the privately owned building and then provide a permanent easement for public parking and public use of the plaza. In accordance with Edina policy, a Pay-as-you-go TIF Note would be delivered upon project completion. The site has been tax exempt for several decades. The “new” taxes would be used to reimburse the developer for qualified costs. After the qualified costs are repaid, all “new” taxes would contribute to the tax base of the City, School District, County and other taxing authorities. 3) Construction and Financing of the North Ramp Expansion – Since this portion of the project is essentially a publicly-owned element, a modified approach to construction has been pursued. We are considering an arrangement whereby the Preferred Developer would be engaged as a Construction Manager on behalf of the Edina HRA. They would oversee the design, bidding and construction of the expansion. The Edina HRA would retain control in the design features and maximum budget. All construction work would be bid as with any normal City-HRA project. The proceeds from the land sale would be combined with approximately $4 million of monies from the Centennial Lakes TIF Fund to pay for the North Ramp Expansion. Upon completion, the Development Partner would own the commercial tenant spaces but the Edina HRA would retain ownership of the land and parking structure. 4) Deadline to complete Negotiations – Last week, the Development Partner submitted preliminary plans for consideration by the Planning Commission in early April. At this point we intend to present a full Term Sheet for consideration on April 18th, to satisfy the 120 day negotiation period originally offered in December 2016. If significant changes to the preliminary plans are necessary, it will take time to make revisions and understand the budget implications. As such, it may be necessary to extend the deadline by 30-60 days. While we hope to remain ‘on schedule”, additional time may be needed. 49-1/2 Street Redevelopment Update March 21, 2017 Work Session Page 3 In conclusion, staff believes the strategies outlined above will result in new public amenities and new commercial space that will help 50th and France retain its place as a desirable and successful destination for Edina residents as well as guests from throughout the Twin Cities. We look forward to your comments and suggestions as we complete the negotiations that will be delivered to you in a few weeks. END Edina Collaborative Potential Redevelopment of 3925 and 3930-3944 W. 49-1/2 Street Progress Update to Edina HRA Work Session Discussion March 21, 2017 Executive Summary •Weekly meetings with staff, advisors, consultants & development partner •Very complex public/private project •Ongoing refinements to concept •Direction needed to continue negotiations –4 topics to discuss Progress Update - March 21, 2017 2 Background •HRA acquired property and constructed public parking structures to enable business growth •HRA acquired 3930 and 3944 parcels for parking expansion/redevelopment •RFP issued to pursue parking improvements while simultaneously improving vitality on W. 49-1/2 St. •Full expansion of the North Ramp enables transformational change on both sides of W 49-1/2 St. –Eastern and western expansion –Add one additional level Progress Update - March 21, 2017 3 Project Overview •300+ new public parking stalls •New public plaza (approx ½ acre) •New commercial space (approx 38k SF) •New luxury apartments (approx 110) Progress Update - March 21, 2017 4 Project Overview Progress Update - March 21, 2017 5 D’Amicos Spalon Montage Bespoke Salon Talbots Dana’s Project Overview Progress Update - March 21, 2017 6 D’Amicos Spalon Montage Bespoke Salon Talbots Dana’s Parking – 3944 Parking – P4 Retail 3944 Existing North Ramp Parking – 3930 Retail 3930 North Ramp Overview Long Term Outcome 1)Edina HRA retains ownership of land and parking ramp 2)Developer purchases two commercial parcels on street level 8 Private Parking – P2 Easement for Public Parking – P1 Retail – 1B Retail – 1C Street Level Center Ramp Overview Long Term Outcome 1)Edina HRA sells land and retains public easement over Level P1 and street level plaza 2)Developer purchases the site and owns new commercial/residential building Residential – 2 thru 6 Retail – 1A 9 W 49-1/2 St Hali fax Ave. W. 50th St. At Home, etc Spalon, etc Mozza Mia, etc D’Amicos, etc Retail A Retail B Retail C Private property with public easement Public right-of-way Private property Center Ramp Overview, continued Long Term Outcome: Same as previous page 10 1) Construction Phasing Progress Update - March 21, 2017 10 D’Amicos Spalon Montage Bespoke Salon Talbots Dana’s 1) Construction Phasing Progress Update - March 21, 2017 11 2018 2017 2019 2020 Construction approvals; securing financing Complete first building (summer) Build temp. surface parking Demo Center Ramp and build new mixed-use building (18 mos) Expand North Ramp (9-12 mos) Complete North Ramp (late spring) 1) Construction Phasing •At the request of neighboring businesses, evaluating different phasing than first anticipated •“Yank the Band-aid” Approach –Step 1 – build temporary surface lots on 3930 and 3944 –Step 2 – demolish Center Ramp and construct new mixed-use building –Step 3 – expand North Parking Ramp •Deliver desirable elements first •Reduce impact to adjacent businesses •Impact only one holiday season with the most disruptive work Progress Update - March 21, 2017 12 2) Use of TIF for Center Site •Stantec consultant review indicates that the Hooten Site and the Center Ramp qualify as “Redevelopment District” •First step towards returning some of these parcels back to the property tax rolls •26-year term, subject to MN TIF Statutes •Developer incurs risk and construction responsibility •TIF Note anticipated to reimburse developer for extra-ordinary costs •Payments made from NEW taxes generated on-site Progress Update - March 21, 2017 13 Parking – 3944 Parking – P4 Retail 3944 Existing North Ramp Parking – 3930 Retail 3930 3) North Ramp Expansion Long Term Outcome 1)Edina HRA retains ownership of land and parking ramp 2)Developer purchases two commercial parcels on street level 8 3) North Ramp Expansion •North Ramp expansion would be bid and awarded as a regular public project •Development Partner would be hired by Edina HRA to function as Construction Manager –Coordinate work on north and south parcels –Minimize impacts to neighbors –Pursue on-time completion –Complies with MN bidding laws •Funding Sources: proceeds from real estate sale (approx $6 M) plus existing incremental taxes from Cent. Lakes Fund (approx $4 M) Progress Update - March 21, 2017 15 4) Deadline for Completion •Edina HRA authorized exclusive negotiations with Preferred Partner for 120 days (expires April 20th) •All work currently ‘on track’ to meet this deadline •Public Hearings scheduled on April 5 and April 18 •Is 30 to 60 day extension available in case significant changes are needed in response to input from Planning Commission and City Council? Progress Update - March 21, 2017 16