6.0. HRSR 05-27-2003 Item # 6
•
City of
Elk
River
MEMORANDUM
TO: Housing & Redevelopment Authority
FROM: Catherine Mehelich, Director of Economic Developmenb��
DATE: May 27, 2003 11
SUBJECT: Downtown Revitalization Project Update
Attachment
• Downtown Revitalization Q &A Newsletter, 4th edition, May 2003.
• Proposal for sale of property located at 641 Main Street by Richard Hinrichs.
Communications
• The attached Downtown Revitalization Q &A Newsletter was recently distributed to
approximately 7,511 persons as an insert to the May 13th Elk River Star News. In addition,
staff distributed the newsletter to the River's Edge Downtown Business Association Meeting
and persons on the update mailing list.
Redevelopment Concept Plans
A Special Meeting of the HRA is scheduled for Thursday,June 5th at 5:00 p.m. at City Hall,
for the discussion on the draft Comprehensive Plan and to hear a presentation from
MetroPlains Development regarding the Downtown Revitalization Project. The City
Council has been invited to attend the presentation.
The presentation will include:
• project activities to date
• review of the original project goals established by the HRA,
• review of design concepts,market analysis and financial feasibility
• review proposed project timetable
The HRA will not be expected to make a final decision on the project plans or financial
arrangements. However, the HRA will be requested to identify issues that need to be
addressed as part of a final development agreement and grant permission for MetroPlains to
proceed with taking the revised concepts to a public open house for feedback. A tentative
date for the public open house has been scheduled for Wednesday,June 18th from 6:00-
• 8:00 p.m. at Lion's Park Center.
Downtown Revitalization Project Update
May 27,2003 HRA Meeting
Page 2 of 2
As part of the proposed timing, MetroPlains anticipates submitting a financing request to the
MN Housing Finance Agency by July 24th. As part of the submission, some general
consensus issues will need to be reached with details to follow over the next 3 to 4 months.
A special meeting of the HRA in July may be needed to meet this request.
Property for Sale
Staff was recently contacted by Mr. Richard Hinrichs who owns the property located at 641
Main Street, east of the old Star News building. Mr. Hinrichs has indicated to staff his
interest in selling the property and has submitted the attached proposal for the HRA's
consideration.
The HRA's purchase of the property would provide the HRA control of the site for future
redevelopment rather than having to potentially work through a new owner and additional
improvement costs. However, according to the HRA's attorney,Jim O'Meara, the purchase
of the property prior to establishment of the TIF district would make the cost not
reimbursable with TIF revenues due to timing requirements. Also, should the
redevelopment project fall through, the HRA would be left owning the property, similar to
the King and Main TIF project. For this same reason it is also not appropriate for the
developer, MetroPlains, to consider purchase at this time. A second option for the HRA to
consider at this time is to do nothing.
The HRA's attorney and Ehlers &Associates have advised staff that the HRA not purchase
• the property at this time. For these reasons, staff recommends that the HRA consider
denying the proposal for the purchase of 641 Main Street.
•
V o tOU) li 1i
oRI- � MAY 2003
Ve Enhancing Downtown Elk River's Role
As a Vital Retail,Commercial and Residential Area.
Q.What is the latest on the Downtown Q. Do we know at this point what is going to
Revitalization project? happen to the existing businesses in the
A. The Elk River Housing & Redevelopment Authority(HRA) has redevelopment area?
extended its preliminary development agreement with A. Typically in redevelopment projects, some businesses choose
MetroPlains an additional six months to give the developer to stay and some choose to relocate. The developer will work
more time to work out project details. Typically, the preliminary with downtown business owners within the project area to
development agreement phase is a time when the developer identify how they could be incorporated into any plans for revi-
works with the City to identify and work through issues such as talization and redevelopment. For those that do not stay,
financial and market feasibility, project arrangements for acquisition and for relo-
timing, and refinement of a site plan. cation assistance will be offered.
Once the tasks in this phase are com- This Q&A newsletter
pleted, cities enter a final development responds to some Q.When is acquisition of
agreement with the developer. That:is properties likely to occur?
when the planning and zoning o f the recent questions A. It is too early to tell exactly when acqui-
approvals and acquisition and con- about Elk River's sition would occur. Currently, MetroPlains is
struction will occur. working on market and financial feasibility,
downtown revitalization site acquisition details, along with revising
11E.Why did MetroPlains need the project concept. Final acquisition would
and redevelopynent.
an extension? not occur until after MetroPlains and the
A. Typical redevelopment projects can HRA have signed a final development
take six to 24 months to work through issues. For a redevelop- agreement and that will not occur for at least six months.
ment project to work, it must not only meet community goals,
but also make sense from both a market and financial per- Q. If my business or home must be relocated,
spective. Currently, MetroPlains is working on the market and will I receive financial assistance?
financial feasibility of the project, as well as refining the rede- A. Yes. Businesses and residents that must relocate are provided
velopment concept. Redevelopment is a complex process relocation assistance to help assist with moving costs, as
and the extension gives MetroPlains the time to thoroughly required under the Uniform Relocation Assistance Act.Also,
work through and pull together the various elements of the properties that are purchased for redevelopment must be pur-
project. chased at fair market value. That value is determined by a
professional appraisal.
Q. How does this extension impact the time
frame for the project? Q. Are the tax increment financing (TIF) inspections
A. If all the work of the preliminary development phase is com- of downtown properties completed yet?
pleted within six months, the project can then move to the final A. Yes, the TIF inspections for the redevelopment area have been
development phase. The final development agreement phase completed. The City is in the process of establishing a TIF
is the time during which activities such as planning and zon- District for downtown that will encompass the Downtown
ing approvals, acquisition and construction occur.As a result, Revitalization area and extend beyond it. Developing a TIF
the earliest construction could begin would be sometime in District will enable the City to use TIF funding if it is needed for
2004. the project.
Q. Is it true that MetroPlains has been meeting Q. My property was inspected. Does that mean
with property owners in the revitalization area? I am a part of the redevelopment project?
W. Yes, MetroPlains has been making initial contacts with proper- A. No, the TIF District will be larger than this redevelopment proj-
ty owners through Ken Brooks of KJB Real Estate Services. ect. The HRA is now in the process of determining the bound-
aries of the TIF district.
CITY OF ELK RIVER DOWNTOWN REVITALIZATION Q&A NEWSLETTER MAY 2003
Q. Exactly how will this project be funded and concept in the form of a preliminary site plan to the HRA,
will it impact my property taxes? there will be an open house for the public. The Open
41p. The project will be funded primarily through land payments House would likely occur sometime in June.
by the developer and probably by tax increment finance.
The exact funding structure has not yet been determined. Q.Will the redevelopment address the
traditional character of downtown?
Q.What is TIF? A. Yes, MetroPlains has been directed to capitalize on the
A. Tax increment financing is a tool created by the traditional character of downtown while at the same time
Minnesota Legislature in the mid-1970s to help encour- looking into the future.
age development and redevelopment. Under TIF, proper-
ty tax revenue equivalent to what the current property Q.Why is the City pursuing redevelopment
generates continues to go to all taxing jurisdictions. A revitalization of downtown?
portion of the tax revenue that results from the increased A. For more than 30 years studies have emphasized the need
value of the new development, also called the "tax incre- to better utilize the riverfront, capitalize on the traditional
ment," goes to pay site costs such as acquisition, demoli- character of downtown, and ensure safe pedestrian and
tion, water, sewer, utility, and street improvements. Once vehicle movement. Investment in downtown has stagnated
the site costs have been paid, the tax increment goes to and the riverfront is underutilized. The revitalization will
the taxing jurisdictions. enhance downtown Elk River's role as a retail, commercial,
and residential area and revitalize the investment made in
Q. Is this redevelopment a "sure thing"? the downtown business district.
A. No. Redevelopment is complex. A redevelopment project
must meet the goals of the community and pass the test of Q. How can I stay informed?
both market and financial feasibility. In the preliminary A. Copies of this and future newsletters will be provided at
development phase, the developer is still working through City Hall, the Chamber of Commerce and Elk River
these issues. Municipal Utilities. In addition, information will be pro-
vided in the Elk River Star News and on ERTV Channel
Q.Will.there be another Open House for 12, and the city website at www.ci.elk-river.mn.us. if you
0 the public to comment on the revised have questions about the revitalization process, please
redevelopment concept? feel free to contact Economic Development Director
A. Yes, after MetroPlains brings a revised redevelopment Cathy Mehelich at (764) 441-7420.
. •1/
City of
Elk -�-�
River
13065 Orono Parkway, Box 490
Elk River, MN 55330
III
To Whom It May Concern:
I am writing this proposal so that the city and others concerned are aware of the situation of the
property at 641 Main Street.
Plat 405 Village of Elk River Sec. 34 T33N R26W E 56.5 Ft of Lot 2 Blk 4
This property has two buildings on it attached by a breezeway. 641 is on Main Street and has a
renter with a one year lease at$800 per month. (800 Square feet main 400 square feet storage) I
have had more than 15 potential rental customers inquire and express interest until they are aware
of the unstable situation in the downtown development. I have not been able to sign a high
quality long-term agreement.
The other building facing the river houses three companies that I am involved with 1000 square
feet. My intent was to expand this building to accommodate our growth. We have 5 full time
employees and are growing quickly and are now in need of more storage space within Elk River.
I have also had 4 folks inquire about selling the property without advertising...they also back off
when they find out about the development plan. I am going to list this property for sale in the
near future but wanted to contact the city/developers because it would be in their best interest
to purchase this property now instead of later.
I would consider an offer of$260,000 by June 15th if it would close within 60 days. I have
attached a legal description and map.Please contact me for further information.
S
Richard Hinrichs
Garage-Toys.com
641 Main Street, Suite#2
Elk River,MN 55330
1-877-812-0272 toll free
info @garage-toys.com
707-248-2608 Fax
5/20/2003
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May 20 03 01 : 03p Richard Hinrichs 7072482608 p. 2
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