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5.B. HRSR 08-27-2001 fi Item# 5b City of Elk - -- River MEMORANDUM TO: Housing & Redevelopment Authority 9� FROM: Catherine Mehelich, Director of Economic Developmen�t'��% DATE: August 27, 2001 (/ SUBJECT: Riverfront Redevelopment Proposal -- Update The HRA and Planning Commission identified the redevelopment of the old Star News and Riverfront property as a priority project within the Downtown Redevelopment Plan. At the July 23, 2001 meeting the HRA briefly discussed inviting additional developers to submit redevelopment concepts for the downtown riverfront area. At this time staff has provided information about the redevelopment opportunity upon the request of three developers • including: Best&Hempel, Dynamics Design, and recently AMCON Construction. Should the HRA choose to request concept proposals from a broader range of developers, staff recommends the HRA define a vision and parameters for the desired redevelopment project. The parameters may include: • Amount and type of housing component desired • Amount and type of retail/office space desired • Scope or area to be included in the project • Project relationship to the River • HRA role and involvement in the project At this time developers are simply responding to a vague vision for the downtown/project area and information provided from the Market Analysis. Most successful redevelopment projects include a specific vision for the redevelopment prior to a request for concept proposals. This may be accomplished either by awaiting the completion of the Downtown Redevelopment Plan (Fall 2001), or separately as a special worksession of the HRA and incorporated into the Redevelopment Plan. Elk River 11111 Downtown Riverfront Redevelopment Project History Fall 2000 HRA authorizes staff to complete Downtown Redevelopment Plan to identify priority redevelopment sites and guide desired development. 2001 March HRA directs staff to research details of two Main Street properties for sale (ECM Publishers) April HRA considers information on property sale and directs staff to work with private developers for redevelopment proposals for the site/area. Staff sends listing agent a list of developers specializing in retail/office mixed use developments. April Staff receives interest in redevelopment from property owner, Nadeau's, and interest from two developers: Kraus-Anderson/Best&Hempel and Marly Glines/Dynamics Design. May Joint worksession between HRA,Planning Commission &River's Edge Assoc. Staff presents results of market analysis, and assessment of building condition&historic significance for discussion of redevelopment opportunities. May Staff request preliminary development concepts from two interested developers for review • and discussion by HRA. Riverfront property owners notified of developer interest. June Joint worksession with HRA,Planning Commission &River's Edge Assoc. Group identifys the redevelopment of ECM Publisher/Riverfront property as a priority project. HRA considers presentation of development concept by Best&Hempel. HRA provides feedback on development concept including: • sufficient parking • amount of housing • sufficient land area for proposed project • financial feasibility HRA directs staff to work with developer to present financial feasibility and proposal for HRA assistance. July Heritage Preservation Commission (HPC) recommends completion of historic context study prior to HRA action on development proposal for downtown Elk River. August AMCON Construction requests information on any redevelopment opportunities. • S:\EDA\HRA\DOWNTOWN\RI V ERFRO NT\P ro j His t ory.d o c EHLERS & ASSOCIATES INC • Redevelopment Project Elements and Policies Successful redevelopment requires three basic elements; a clear goal, a market for the redevelopment concept and financial resources to pay for the redevelopment and an effective communications and public input strategy with the community. Most redevelopment projects that falter are the result of failure to develop a primary redevelopment goal. As a result the redevelopment effort is forced to achieve multiple (and sometimes conflicting) goals. Removal of a blighted area, development of a "gateway", new housing options, and development of neighborhood retail are all examples of potential redevelopment goals. The key is to select one primary goal. That is the goal that will be used to measure whether a proposed development is appropriate for the community. Secondary goals can be identified with the understanding that achieving these subsidiary goals is not a prerequisite to project approval. Once the redevelopment goals have been identified a planning process that includes analysis of the market and financial feasibility is essential. Development of a concept plan that is not marketable to the development community or cannot be financed, even with public assistance, is politically risky. Once the community has been engaged in a planning process there is an understandable expectation that the development will occur. Inviting developers to participate and comment during the planning process helps increase the likelihood of a successful redevelopment and also serves to market the project to potential developers. In a similar manner inclusion of a financial advisor during the planning process will clarify the financial feasibility of the project.Project revenues may include land sale proceeds and public assistance(including grants,TIF and tax abatements). It is important to note that this approach accommodates a situation where the development authority has identified a goal that is not currently marketable.For example a city may determine that it wants to have a signature office building as a gateway to the community. If the market feasibility indicates that there is not a market for this type of space, the city may decide to delay development until the market is ready. Likewise, if a project is market- feasible but not financially feasible, the city • may decide to augment normal funding to achieve the desired goal. Developing the informed consent of the community for redevelopment is extremely important to a city's ability to complete any redevelopment. To develop informed consent, the city needs to design a communications and public input strategy that enables the community to understand and accept the redevelopment. This involves communicating regularly and frequently utilizing a variety of tools that have been crafted to forecast issues,acknowledge controversy and honestly address issues and concerns. The strategy involves the development and implementation of a communications plan and design of planning process, which provides the appropriate level of community input at critical points. In cases where referendum is a part of the redevelopment process, it involves an even more complex and skilled handling of communications issues to aggressively and impartially inform the public. • Redevelopment Project Framework • Redevelopment .ro'ects ba ' . c within five phases. These phases often overlap. The time frame for each phase may vary significantly from project to project. It is essential to recognize that redevelopment programs are inherently controversial because they involve change. Redevelopment is also disruptive to those within and adjacent to the project area. While efforts are made to minimize this impact some level of disruption is unavoidable. An effective communications strategy that focuses on forecasting issues, reiterating key massages and addressing concerns plays a major role in the redevelopment process. The phases of redevelopment include: Phase I --Need Identification The city identifies an area or areas in need of redevelopment. In this phase, the public has little or no awareness of the potential redevelopment project and may or may not agree with the need for redevelopment or what role the city should play. A communications plan should be developed at this phase because it will assist the city's policymakers with identifying and agreeing on the one goal of the redevelopment and the key messages of the redevelopment. Also, communications tools need to be developed immediately which will enable the city to forecast key messages about the need, and the primary purpose for the redevelopment, whether that is blight removal, improved tax base, enhanced "gateway" image of a community or something_else. It is important to settle on one prime goal for thg redevelopment. While there can be secondary goals, settling on a primary goal will help to avoid measuring the redevelopment's success using different yardsticks. That primary goal will need to be reiterated and underscored throughout the project.A decision is made in this phase to proceed with a redevelopment concept. Phase 2-- Concept Development This phase encompasses the planning process, beginning with the design of a redevelopment concept. A group is identified to assist with concept development, and broad-based community input is received. Consistent and frequent communications utilizing a variety of tools enable the city to inform and educate the public and offer opportunities for feedback,in addition to publicizing open houses. The city should continue to forecast the need and purpose for the redevelopment and the planning process. The redevelopment process identifies desired outcomes, IIIpotential redevelopment uses and design ideas, and designates the redevelopment area. Phase 3--Concept Refinement In this phase the conce.t is to ted for market and financial feasibili I with the hel. of develo•ers and market specialists. The redevelopment conce t is then refined based on the financial and market analysis. A critica pus is participation issue in this phase is the need to involve the community in the refinements of that concept. At this phase there may be some growing awareness of the potential redevelopment project in the community. Communications efforts must increase knowledge about the project, especially as it relates to the need, the purpose, the plans,the process and public participation. This phase is often combined with concept development. Phase 3--Developer Selection At this phase the city contacts qualified developers and discusses the redevelopment concept and program, identifying developers for a qualification process. Developers' experience and financial capabilities are assessed. One or more developers are selected for further analysis of the redevelopment feasibility. The city reviews generpl plans including uses design cnncepts,_densities and financial feasibl} with developers Phase 4--Development Agreement Most of the planning is completed and a developer has been selected, but the project is still months from construction. A pre-development agreement is negotiated with one or more developers, providing a period of exclusive rights for development. In that agreement, the developer refines plans and assesses market feasibility. In the development agreement, the developer secures a lease commitment and financing for the project. The developer also completes land use and other regulatory reviews. Finally, the development agreement occurs when the developer removes development agreement contingencies and initiates land acquisition and building design. At this phase, communicating the vision for the redevelopment is critical and helps the community focus on future benefits. The vision is especially critical where communities may initially be uncomfortable with a type of redevelopment, such as multi-family housing,in part because of an inaccurate and negative perception. • Phase 5-- Construction All development agreements are fmal, acquisition has begun and even some initial demolition of existing properties has occurred. Recommended Redevelopment Policies 1. A primary redevelopment objective should be identified by the City Council. This will provide the framework for evaluating redevelopment proposals. The Council may select several secondary objectives however it is understood • that these secondary objectives are not required for project approval. 2. A communications plan should be prepared and approved the City Council for each redevelopment project. The plan should include a variety of methods used to provide information to the public, target audiences,forecasting key issues and decision points, methods to receive feedback, key messages and time frames. Because the plan identifies key concerns/issues for the community and the primary purpose of the redevelopment it is important to develop it very early in the process. The plan must be implemented to ensure frequent and consistent communications that inform,forecast, acknowledge controversy, address issues and communicate the vision. 3. Developer selection should be competitive whenever possible. Competitive selection will increase the available options and provide greater assurance that the City is providing the right level of assistance. 4. Developer selection should be based on the following factors: • Proposal ability to achieve the primary objective identified by the City Council. • Financial feasibility. • Demonstrated ability to achieve design guidelines. • Demonstrated ability of developer to access required project equity and financing. • Developer experience with similar projects. • Developer ability to demonstrate design and process flexibility. • Developer experience with incorporating existing businesses into new project. • Developer experience with acquiring property without condemnation. • Developer experience with communicating with public. 5. The redevelopment process should follow the "Redevelopment Process Framework" as reasonably possible. This process has been designed to increase the potential for successful redevelopment. . 6. Eminent domain will not be authorized to assist a developer in property acquisition except where an independent third party certifies that best faith efforts have been unsuccessful in attempts to acquire property required for development. Use of alternative dispute resolution helps avoid the perception that the city and/or the developer will take advantage of existing property owners. 7. The City/EDA/HRA should consider purchasing property within the redevelopment area when the following conditions are met: • Acquisition costs are reasonably close to estimated market value. • It is possible that the property would be acquired and developed for a use inconsistent with development goals or design guidelines without the assistance of the City/EDA/HRA. • A method to finance the acquisition and holding cost can be identified. • The parcel is key to achieving redevelopment objectives of the City. 8. Developers entering into preliminary development and fmal development agreements will be required to deposit funds to defray development review costs. This would include legal,finance,planning and communication costs. 9. Public assistance in the form of tax increment, grants, reduced fees or other means of assistance will comply with the City's Business Subsidy Policy. In addition an independent "rate of return" analysis will be prepared prior to granting any assistance. N:\General\Project Management\dev.process.policies.2.doc • s E L. 4.4 E o E 0, 0 © Cd . 0 - o E es es e C a E C Ccn .� cd = s' o = "d ° tIzt o Eaa) CE . 0 E E .� cu � < > U UQ a/ � M ---+ 'C3 N .-- N M U O • 6 a acn 0 04 O 0 vi Z a t' c U aCa) .- al a3 �� (° U U OFi . ct 7175) - Q • > 2 L � >' ° d cn 3," .fl 0U C C) 2 5 U Q •.. il 'C7 N N U U N� ? ^° vo> vDU dQ � b � 7A 1— .� , G UO.- •-+ - c'I re v U.. v - l� 0 O 5 —` O i rt ¢, _m: O z bD U a Y at u4=1 a w s U VI 6i - 5. m! • .0 U W Cl.) 0 O u E ec z.. 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