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8.0. HRSR 08-26-2002 Item # 8 • )4i/ City of Elk --. -, River MEMORANDUM TO: Housing & Redevelopment Authority Mayor & City Council FROM: Catherine Mehelich, Director of Economic Development DATE: August 26, 2002 SUBJECT: Downtown Revitalization Project Attachments • Ehlers&Associates memo regarding Post Development Selection Actions Background • In early May the HRA received five proposals in response to its request for proposals for the Downtown Revitalization Project. In July the HRA and City Council completed an interview of the three selected finalist developers -TOLD Development, MetroPlains Development, and Best&Hempel. Jim Prosser, of Ehlers &Associates will be present at the HRA meeting to discuss the preliminary development process. Requested Action Staff recommends that the HRA authorize staff and Ehlers &Assoc. to negotiate a Preliminary Development Agreement with a selected developer for the Downtown Revitalization Project. A draft Preliminary Development Agreement will be presented to the HRA for review and consideration at its regular meeting in September. The City Council is asked to ratify the HRA's selection of a developer at the regular City Council meeting immediately following the HRA meeting. • S:\Downtown Revitalization\Memos\devselection.doc EHLERS • & A S S O C I A T E S I N C 0 To: Catherine Mehelich, City of Elk River From: Jim Prosser& Stacie Kvilvang, Ehlers &Associates W Date: August 21,2002 Subject: Post Development Selection Actions The following describes the process and activities once a preliminary development selection is made: 1. Preliminary development agreement. A preliminary development agreement is drafted for HRA review. The agreement will address the issues that must be addressed prior to final development agreement preparation. These items typically include preparation of a refined site plan, financial and market feasibility analysis and project timing issues. In addition the developer will be required to deposit funds with the City to cover "out of pocket" expenses incurred by the City for legal, planning and financial review and coordination. Negotiating this agreement is • typically accomplished within 30 days. 2. Preliminary development activities. This phase typically requires six to twelve months. During the preliminary development agreement phase the developer is focused on the following activities: a. Land acquisition status. It is desirable for the developer to make contact with property owners in order to reach comfort levels regarding the feasibility and cost of acquisition and relocation. Review of this status will be used to determine project feasibility as well as the need for any city assistance with land assembly. b. Financial feasibility analysis. The City and the developer need to assess project financial feasibility. Outside funding and financing sources should be identified and preliminary commitments secured prior to final development agreement. City development fees and anticipated costs should be identified at this point in order to develop an accurate cost analysis. c. Site planning. A review of the site plan should be completed to be assured that the development program (number of units, retail space, parking, etc.) that serves as the basis of the financial feasibility remains within acceptable limits. This will not replace final planning review as required by City Ordinance. In addition, preliminary survey review should determine if there • LEADERS IN PUBLIC FINANCE N 3060 Centre Pointe Drive Phone: 651-697-8503 Fax: 651-697-8555 Roseville, MN 55113-1105 Email: jim @ehlers- inc.com • will be need a to address issues such as relocation or abandonment of publicly owned utilities, easements, right of way, etc. d. "But For" analysis. State law requires an analysis to determine that the project would not proceed "but for" the assistance being provided through tax increment assistance. This is basically the basis for the tax increment negotiation. The issues that need to be resolved include the level of assistance provided, timing and form of the assistance. These discussions are part of the financial feasibility analysis. e. Environmental review. The City and developer should identify the need for any environmental review, which may be prompted by the proposed development. f. Land use review process. The type of process to be used for land use approvals and estimated time frames need to be identified. g. Preparation of final development agreement. The negotiation of the final development agreement typically takes at least 90 days once the major issues identified above have been addressed. The HRA will review both the final development agreement and the refined site plan as part of this process. In order to prepare the refined site plan, Ehlers recommends that the developer conduct a community open house prior to submitting a refined site plan for review with the final development agreement. The significance of the final development agreement is that it commits both the City and the Developer to a course of action based on conditions set within the agreement. These commitments typically include providing financial assistance upon completion of the project, assistance with land assembly if necessary and similar actions. To qualify for the assistance the Developer must meet conditions including securing land use and other regulatory approvals and obtaining financing commitments. Concurrent with the development agreement process the City should initiate the establishment of a Redevelopment Tax Increment District. This process includes evaluation of the qualifications for establishing a district according to State Statutes including inspections of properties that may be included within the district. Prior to beginning inspections a letter to property owners would be provided explaining the purpose of the inspections. • S:\Downtown Revitalization\Memos\Predevelopment8.22.02 r � t r ..i.' IIIIIIIII'u,I ail II a IIIA li■ rte,t:Mil • iis 1 i Ais 1/4.... t „ir The Elk River business owners who have signed below would like to encourage the HRA and City Council to choose MetroPlains to develop Downtown Elk River. We feel that they demonstrate a good understanding of the needs of our community and they have experience in revitalizing downtowns. MetroPlains has been successful incorporating new buildings among existing structures and enhancing the historic character of the downtowns they have developed. We feel that they would be a good choice for revitalizing Downtown Elk River. 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