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4 PCSR 07-14-1994 `f AGENDA ITEM 4 \, . ity of , 1 lkMEMORANDUM River TO: STEERING COMMITTEE FROM: STEVEN B. ACH, CITY PLANNER,,, DATE: JULY 14, 1994 SUBJECT: RESPONSE TO LETTER SUBMITTED BY TONY EMMERICH HOMES, DATED MAY 25, 1994 At the last Steering Committee meeting, a letter was submitted by Jay Johnson of Tony Emmerich Homes outlining their involvement with the former Lakoduc property and some of the recent development issues they have dealt with. Chairman Minton has requested that a response be prepared for the Steering Committee to assist in clarifying the City's position on some of the points referenced in Mr. Johnson's letter. Tony Emmerich Homes, operating as Country Ridge Partnership, did submit • an application to the City requesting to amend the land use plan and rezone approximately twenty-four (24) acres at the southwest corner of Highway 10 and Joplin to accommodate a large commercial use. This application was denied by both the Planning Commission and City Council based on the City's intentions to see this area developed with light industrial uses that would commonly be found in a business park environment. The overall concept for this "Business Park" area is to accommodate clean industrial uses with a proper mix of compatible commercial uses that compliment the business park. For example, as stated in Mr. Johnson's letter, a sit down restaurant would certainly be an acceptable compatible use in the business park zone. Representatives from the City's Business Park Task Force have met with Mr. Emmerich and Mr. Johnson on several occasions to discuss not only the use of the subject property but also the possible purchase by the Economic Development Authority of the property for business park purposes. It has been the clear message all along that the Business Park Task Force would support the development of a business park either privately by the current property owner, or under the right conditions purchased by the EDA and developed as a publicly owned business park. At this point, the Business Park Task Force negotiating committee has met with Mr. Emmerich and Mr. Johnson to discuss possible acquisition of the • property. These negotiations are on-going at this time. P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 Tony Emmerich Homes Page 2 July 14, 1994 • In response to each of the points made in Mr. Johnson's letter, the following comments are offered: 1. In 1990 the City Council adopted by resolution a Focus Area Study that was prepared by BRW, Inc., which outlines the concept of a business park. Therefore, the proper land use and zoning for the concept of a business park has been in place since 1990. If the property was purchase for a use other than the established land use and zoning designation, the purchaser would have accepted the risks involved in obtaining the appropriate approvals to change the intended use of the property based on the City's current land use and zoning designations. 2. The Planned Unit Development zoning designation is used in a variety of land use situations. Residential, commercial, and industrial developments have all used the Planned Unit Development concept. What is important is the underlying comprehensive land use designation. In the case of the subject property, the underlying land use is LI (Light Industrial) • indicating an industrial land use. Apparently, because this property is zoned PUD similar to Elk Park Center, there has been some misunderstanding that the subject property can also be used as commercial. Based on the underlying land use, this is not true. 3. As discussed earlier, the City has adopted a land use designation and zoning that has set the foundation for a business park development in this area. The property owners certainly have a right to use their property to their benefit, however, cities have also been granted the regulatory powers to establish proper zoning of property to protect and promote the health, safety, morals, and general welfare, conserving the values of properties and encouraging the most appropriate use of land to benefit the city as a whole. 4. Unfortunately, the developers have purchased the property with a land use and zoning designation of industrial. Therefore, it is not a question whether the property should be industrial, it currently is. Unless it is brought up by the Steering Committee, Planning Commission, or City Council, the property will retain • its industrial zoning and land use. emmerich.steering 411.141 - TONY EMMERICH HOMES - May 25 , 1994 Robert Minton , Chair /s/ Comprehensive Plan Steering Committee City of Elk River RE : Input on Industrial Use Portion of the Comprehensive Plan Update . Mr . Minton: We are in receipt of the Notice of Public Hearing letter on the above referenced matter , and wish to have the following comments considered by the Committee in lieu bf our personally attending the May 25th meeting . Just to give a brief overview of our involvement in the City ' s process of updating the Comp. Plan, we own the former Lakoduk property , of which approximately 40 acres is currently zoned P . U .D. The property has Hwy 10 frontage, and is directly along the West side of the Fairgrounds . This parcel has been a "hot" topic • recently because of our sale of 24 acres of this piece to Menards , Inc . for a store, and conversely , the City and the EDA desiring to be the Developer of the property for a Business Park . As you will recall being also a member of the Planning Commission, the City staff , members of the EDA, the Planning Commission , the City Counsel , and even a few well placed area residents all spoke against the Menards proposal and in favor of the Business Park use . In fairness , the Staff does support a restaurant site out along Hwy 10 and possibly 5 to 10 acres near this site for other Commercial users if they are "compatible" with the Business Park concept and zoning . We have offered the property for sale to the City and the EDA. We submitted a proposal and have had several meetings about the potential purchase . Please note the attached EDA Timeline Sheet . Given this History then , we, as the Owners of the property want our desires not only welcomed by the Committee, but given serious consideration : 1 . We purchased the Lakoduk property for a substantial amount of money based on Court appointed and approved appraisals of value and use for the property . These appraisals clearly show the highest and best use of the 40 acres I ' ve described to you as Commercial . The balance of the land has the highest and best use as residential , which no one has challenged . These appraisals were updated prior to • our closing on the property , and we had ever right to rely on the information they contained . 2619 Coon Rapids Blvd., Suite 201, Coon Rapids, MN 55433 T� Alir# � - TONY EMMERICH HOMES - 411.1.4. 2 . We have had a major commercial user purchase 24 acres of this area, setting a value per acre appropriate within a P . U . D . zoning for this area . The use they intended could be and has been allowed in a P . U . D . within the City . 3 . Unless the City and/or the EDA acquire this parcel from us shortly , we are not the least bit interested in changing the zoning to any industrial use. In fact , we will need to pursue uses for the property for our , the Owners , benefit . We will need to utilize any means available to us to do this . What really causes us some concern is reflected on the attached copy of a recent City printed brochure that indicates this area as already Business Park ! This is very presumptuous on the part of whoever authorized the printing of this as a fact ! 4 . Finally : We are asking the Steering Committee to file our remarks as they are written here. It is our desire to not have this property included as an existing or a potential industrial land use . This has been all along the desire of the City and the EDA, not ours ! If they want to develop this parcel for a Business Park , then they should promptly purchase the property from us . • If any of the Committee members wish to respond, please direct any comments to myself at the address listed below. S ' cerely P74?// and Development Manager cc : Steve Ach, City Planner Tony Emmerich , Country Ridge Partnership • 2619 Coon Rapids Blvd., Suite 201, Coon Rapids, MN 55433 • PROPOSED TIMELINE RE: ACQUISITION OF VACANT LAND ELK RIVER BUSINESS PARK PROJECT DATE COMMENTS May 9th Authorize appraisal of 34 acres of vacant land, RE: Business Park Development 1�Iay 10th-12th Meet with appraisal company to finalize issues, etc. May 12th-20th Appraisal in progress May 20th-27th Draft of appraisal completed, findings/conclusions documented May 28th-June 3rd Appraisal in final form • June 8th Appraisal due June 13th EDA accepts appraisal; authorizes counter-offer June 14th Counter-offer presented Decision: Go/No Go • -RCCommerrialan -Incrust,-iat • "Sites CV'R 11[r• '4 t;---!y w. 193RD AVE • ` 0 15 COMMERCIAL ©On ) o z SCHOOL SZ ® Central Business District �� 10 © © 0 Elk River Plaza Mall �/ 1 © Barrington Retail/Office MAIN SL ©_ 0 Elk Park Center (1994) O MIssrss\?Pl R1VC*. 0 INDUSTRIAL 0 Elk River Industrial Park ® I��^� B McChesney Industrial Park 13 q> 3 © Rail 10 /� []i R.R. Industrial Park © Ar-Mon Industrial Park • Elk River Business Park (1994) ir is INF \' ,C4 r: tocai'g =CbmmuniOrContects Chamber: Elk River Area Economic Development Chamber of Commerce Agencies: Elk River Economic (612) 441-3110 Development Authority Local Development (612) 441-7420 Organizations: Elk River Associated Elk River Housing and Investors Redevelopment Authority Elk River Downtown (612) 441-7420 Development Corp. Jackie Schuelein Bill Rubin Executive Vice President Economic Development Coordinator Elk River Area Chamber of Commerce City of Elk River 729 Main Street P.O. Box 490 Elk River, MN 55330 13065 Orono Parkway (612) 441-3110 Elk River, MN 55330 (612) 441-7420 BusinessFatanciwand. IncentivePrograms The City of Elk River and its EDA and HRA participate Minnesota Initiative Fund Loan Program, and DTED • in, and has access to the following programs: Tax Small Cities Grant Program. In addition, Elk River Increment Financing, Industrial Revenue Bonds, SBA Municipal Utilities offers an economic development Loan Programs, Local Micro Loan Fund, Central rate to large users of electricity. The 1994 Elk River Community Profile is ajoint publication of the Elk River Area Chamber of Commerce and the Elk River Economic DevelopmentAuthority. tyof 4 R• iver MEMORANDUM TO: STEERING COMMITTEE FROM: STEVEN B. ACH, CITY PLANNER. 2 L DATE: JULY 14, 1994 This next meeting will focus on commercial development in Elk River. Over the past few years commercial activity has been brisk. With the addition of road improvements to Highway 10 and Highway 101/169, Elk River has become more accessible and attractive to prospective home builders and future residents which in turn fuels the commercial growth. Unlike industrial development, commercial activity follows growing markets that occur along with residential growth. Elk River is in a fortunate position to have the opportunity to take advantage of the strong commercial interest in this area. The challenge will be to manage this activity and maintain a high level of quality, project a positive image of the City, and enhance the City's • tax base. The following is a brief description of agenda topics for the scheduled meeting: ITEM 5: RETAIL SALES ACTIVITY Exhibits A through Exhibit G illustrate general information regarding commercial activity. Exhibit A should not be a surprise because of the growth in Sherburne County. Basically, since the median household income has increased over the years, total retail sales and effective buying income has followed a similar curve. Exhibit B provides a breakdown of retailers within Elk River according to their standard industrial classification (S.I.C.) code and associated gross sales for 1992. Food stores ($ 35,890,525) followed by auto dealers/service stations ($ 27,870,304) and general merchandising ($ 12,420,013) lead the list according to gross sales. With the development of Elk Park Center and other proposed general merchandising stores, this category should experience and increase in upcoming years. • Exhibit C gives a comparison of retail sales within Sherburne County as well as Elk River's share of the County activity. The City's percentage of sales P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330 • (612) 441-7420 • Fax: (612) 441-7425 Agenda Review Memo Page 2 Steering Committee Meeting July 14, 1994 • has decreased over the past five (5) years, however, with the development of Elk Park Center, Hillside Crossing Commercial, and possibly the property at Highway 169 and Main Street, Elk River's share is likely to increase in the future years. Exhibit D is a memo from Bill Rubin to the Economic Development Authority explaining in more detail the preceding two exhibits and the overall retail sales activity from 1992. CONSTRUCTION ACTIVITY Exhibit E illustrates commercial/industrial construction valuations since 1988. Last year, 9.5 million dollars worth of commercial/industrial construction occurred in the community. 1994 is expected to be another banner year for commercial construction. Elk Park Center, Hillside Crossings, and surrounding commercial activity should certainly surpass last year's numbers. FISCAL IMPACT IIIExhibit F gives a perspective of commercial and industrial contribution to the City's tax capacity. In total, $3.85 million in taxes representing 44.5% of the City's tax capacity is generated by commercial and industrial development. As discussed at the last Steering Committee meeting, both industrial and commercial development provide a majority of taxes and job opportunities for a community. The importance of these two land uses for a community should not be under estimated. The next exhibit was taken from a Growth Management study for the City of Lakeville. The analysis illustrates how industrial and commercial positively benefited a community's tax base. Even though these numbers reflect Lakeville's situation, the net result would be similar in Elk River. Generally speaking, commercial and industrial development are "gainers" for cities and school districts. These two land uses generate a majority of revenue for the cities and school districts. On the other hand, single family development demands a considerable amount of services (expenditures) and contributes less tax revenues. INVENTORY OF COMMERCIAL PROPERTY II Exhibit H gives a breakdown of commercial property within the City. Acreage for each zoning district has been calculated along with a calculation memo.steering Agenda Review Memo Page 3 Steering Committee Meeting July 14, 1994 • of total developed and vacant property. The last chart highlights commercial activity over the past five (5) years whereby an absorption rate can be calculated and projections for future commercial development needs can be made. ITEM 6: OVERVIEW OF COMMERCIAL DISTRICTS The City has four (4) commercial zoning designations in affect. The designations are as follows: A. Central Commercial (Cl) B. Office District (C2) C. Highway Commercial (C3) D. Planned Unit Development (PUD) CENTRAL COMMERCIAL DISTRICT The downtown commercial area is a very important and vital part of the community. Because of the issues associated with the downtown, this area • will be discussed separately under Agenda Item 7. OFFICE DISTRICT The Office District is basically set up to accommodate governmental, business and professional offices, and other financial related businesses. The two identifiable office corridors extend east and north out of the downtown area. The first is along Main Street between Highway 10 and Highway 169. Recently, development activity has included removing single family homes and constructing new low profile office space along the Main Street corridor. This corridor has a considerable amount of potential to become a high quality corridor, both visually and in terms of its location. East Main Street also provides the link between downtown and the Highway 169 commercial corridor. The second office corridor is along the west side of Jackson extending north from the downtown area. This area has a few office buildings on the south end, however, is primarily undeveloped at this time. Some issues that may be associated with both of these identified office corridors include: • • Development standards memo.steering Agenda Review Memo Page 4 Steering Committee Meeting July 14, 1994 • • The conversion of land use from existing single family residential to commercial uses. • Providing adequate off-street parking to serve the development of office space. • Maintaining the integrity of these office corridors without allowing office uses to escape to the Highway 169 corridor. HIGHWAY COMMERCIAL The Highway Commercial zoning district is the most intensive commercial district. This zoning district is primarily found along the Highway 10 and Highway 169 corridors. The purpose of this zoning district is to provide high impact commercial uses that typically require access onto the highway system and may provide commercial opportunities for a broader area than the City of Elk River. Issues associated with this district include the following: • Development standards. • Avoiding the appearance of strip commercial along the major corridors. • • How far north along Highway 169 and east and west along Highway 10 should the Highway Commercial district extend. • Re-evaluating some of the uses that are currently allowed within the C3 district that may be more appropriate in other zoning districts (i.e., light industrial). PLANNED UNIT DEVELOPMENT The Planned Unit Development zoning district should be established at the time a development proposal is made. Because of the permits required, the City has greater control reviewing PUD projects. Elk Park Center is one example of a commercial PUD development. Under the right conditions, a Planned Unit Development can be used to benefit both the developer and the City in achieving a quality project. Issues associated with PUD's: • Use Planned Unit Development where appropriate. • Establish Planned Unit Development's that can be administered effectively. • Planned Unit Development's should provide flexible standards while at • the same time creating a project that has overall qualities greater than a typical development. memo.steering Agenda Review Memo Page 5 Steering Committee Meeting July 14, 1994 • AGENDA ITEM 7 Please refer to Exhibits I-L for additional information. ITEM 8: GOALS & POLICIES FOR COMMERCIAL DEVELOPMENT The current Growth Management Plan lists the following goals and policies: 1. Goal: Encourage the development of a quality community which retains a semi-rural atmosphere while providing necessary commercial development to serve a growing residential population. Policies: • Guide the type and location of development to achieve an • orderly development pattern consistent with the semi-rural character of the community. • Provide for a Planned Unit Development approach which, through the use of site design standards, allows for a mix of compatible commercial and residential development in appropriate areas. 2. Goal: Maintain and encourage the continuation of a well designed employment and business opportunity in close proximity to the community. Policies: • Direct future commercial development to those sites which support and strengthen the existing downtown area. • Limit development of strip or scattered site commercial and industrial operations along the City's major roadways. • Allow commercial expansion only in close proximity to existing services. • memo.steering Agenda Review Memo Page 6 Steering Committee Meeting July 14, 1994 • • To evaluate all proposals for commercial and industrial development to determine impact on municipal and natural systems. 3. Goal: Preserve, maintain and/or strengthen the physical and visual qualities unique to the community. Policies: • Adhere to controls as to the size and placement of signage and landscaping for commercial and industrial applications within the City limits. While evaluating the current goals, the Steering Committee may want to consider some of the following issues: • Consider establishing a neighborhood commercial zoning district which • allows uses that are convenience oriented and compatible with the residential areas. • Consider establishing a commercial zoning district that would fall between the office district and highway commercial zone. This district would allow an intermediate type commercial district in locations where the most intensive highway commercial zones are not appropriate yet provide exceptional retailing opportunities for uses other than office. • Consider what planning or redevelopment efforts could occur to maintain vitality in the downtown area. • memo.steering Labor Force Data EXHIBIT A December 1993December 1992 Civilian Unemployment Civilian Unemployment Labor Force Rate Labo III Force Rate Sherburne County 25,411 6.7% Minneapolis-St. Paul SMSA 1,457,768 3.544, 27 4.1 Minnesota 1,444,8827 4 1 2,482,182 4.4 2,455,258 4.9 Source: Minnesota Department of Jobs and Training. 1993 data is preliminary. Retail Sales and Effective Buying Income for Sherburne County Total Effective Buvino Income for Sherburne County Retail Sales Total Median 5000 Median ($000) �Z Household' Ace 1992 $225,204 $607,527 1991 220,726 $37,467 28.9 557,3769Q 1990 205,564 488,115 2 ,119 28.8 1989 199,444 422,579 29,2 29,201 28.6 1988 120,149 395,711 28,0033 2 228.0 8.8 The 1992 Median Household EB/for the State of Minnesota is$37,585. Source: 'Survey of Buying Power,'Sales&Marketiro Management, 1989 through 1993 editions. • Summary of Building Permits Total Permits New Single-Family Homes Number Value Number Value 1994 (3-31) 23 $ 2,170,426 1993 528 25,300,852 18 $ 1,017,086 1� 13,01 1992 444 7,086 1991 16,013,048 107 . 10,710,796 429 19,704,961 107 1990 459 24,563,956 1,081,650 1989 259 22,814680 198 1 ,087,650 297 29,520,782 19,189,770 1988 1987 261 38,350,394 236 19,189,770 1986 187 17,385,463 213 �7,628,657 1985 147 149 11,086,054 1984 13,733,831 191 7,600,220 118 , 20,378 5 1983 130 95 5,2210,378 4,952,228 64 3,888,452 Recent Development Elk River's largest taxpayer and non-public employer is United Power Association ("UPA"), which has its corporate headquarters and a coal-fueled electrical tinfaility in the City. UPA is a generation and transmission cooperative which suppliesgenerelectricity to the 15 member distribution cooperatives located in Minnesota and Wisconsin. These cooperatives serve customers in a 28,000 square mile area. In 1988, the UPA completed construction of a 28,800 quare-foot receiving and storage building, which, along with a 110,000 0 square-foct NSF refuse - 15 - EXHIBIT B Elk River Retailers • 1992 Retail Sales Type of Number of Retailer S.I.C. Retailers Gross Sales Lumber, Hardware, etc 52 11 $7,313,894 Food Stores 54 9 35,890,525 Auto Dealers, Service Stations 55 17 • 27,870,304 Apparel and Accessory Stores 56 5 1,135,819 Furniture/Home Furnishings 57 13 883, 7 5 Eating Sc. Drinking Establishments 58 20 6,981,394 Miscellaneous Retail II (including General Merchandise Stores) 59 & 53 147 12,420,013 TOTAL 222 $92,495,224 • Source: Tax Research Division,Minnesota Department of Revenue EXHIBIT C Retail Sales • 1988-1992 City of Percent of Sherburne County Elk River County Sales 1988 160,929,963 113,335,852 70.4% 1989 165,364,778 112,182,838 67.8 1990 177,604,594 115,815,747 65.2 1991 152,444,328 96,058,726 63.0 1992 174,765,296 92,495,224 53.0 • • Source: Tax Research Division, Minnesota Department of Revenue EXHIBIT D ELK RIVER ECONOMIC DEVELOPMENT AUTHORITY MEMORANDUM TO: ECONOMIC DEVELOPMENT AUTHORITY • FROM: WILLIAM RUBI � --i ECONOMIC DE\ ;r, OPMENT COORDINATOR DATE: MARCH 10, 1994 SUBJECT: 1992 RETAIL SALES ESTIMATE FOR ELK RIVER, MINNESOTA • Staff is in receipt of the 1992 gross retail sales for Elk River businesses. These- numbers were derived from the Tax Research Division of the • Minnesota Department of Revenue. Highlights of this information include: - Retailing in Elk River is approximately a $92.5 million endeavor _ - 222 businesses helped generate the retail sales during 1992 . - Elk• River possesses approximately 53% of Sherburne County's gross retail sales: The County's 1992 sales were estimated at $174.76 million. • - Elk River's 1992 gross retail sales were down slightly from the 1991 estimate of$96.07 million. The decline is estimated at 5.1% - The largest decline.from. 1991 to 1992 occurred in the "Food Stores" category where a $3.34 million decline was reported. This represented an 8.5% decline from 1991 to 1992. Auto dealers and service stations had a small decline of less than $172,000 from 1991 to 1992 Eating and drinking establishments declined just over $274,000 in • gross sales from 1991 to 1992— yet the number of establishments increased from 18 to 20 in Elk River P.O. Box 490 • 13065 Orono Parkway • Elk River, MN 55330-1743 • (612) 441-7420 • Fax: (612) 441-7425 Equal Opportunity Housing and Equal Opportunity Employment • Nearly 39% of Elk River's gross retail sales in 1992 was attributable to food stores. This represented $35.89 million in sales - Another 30% (or $27.87 million) is derived from automobile dealers and service stations - After the food store category and the automotive category, the retail sales in Elk River drop off sharply. "Miscellaneous retail" (which includes "general merchandise stores") accounted for $12.42 million (or 13.43%) of the 1992 sales in Elk River. Lumber and hardware stores generated $7.3 million in gross sales (or 7.9% of Elk River's total). This was followed closely by the $6.98 million reported by Elk River's • eating and drinking establishments which accounted for 7.54% of the 1992 total retail sales. Apparel and accessory stores realized $1.13 million in sales (or 1.23% of the total). About 1% ($883,275) was reported by the furniture and home furnishing businesses in Elk River The Standard Industrial Classification (or SIC Code) categorizes retail • businesses as follows: _ • • TYPE OF RETAILER • SIC • • •• • Lumber, hardware, etc. 52 • General merchandise stores 53 Food stores 54 • Auto dealers, service stations 55 Apparel and accessory stores . - • 56 Furniture/home furnishings 57 Eating and drinking establishments 58 Miscellaneous retail 59 RETAIL OPPORTUNITIES IN ELK RIVER It is difficult to estimate how many "retail dollars" are leaving Elk River for the regional shopping malls which are "home" to retailers such as general merchandise stores and apparel and accessory stores. It is _these general categories where Elk River's sales numbers tend to drop off. However, as power centers such as Elk Park Center open, it is likely that additional apparel and accessory stores and general merchandise stores will be located in Elk River. This in turn, will help attract retail dollars in to the community from the surrounding area. Elk River residents will still rely perhaps on regional malls for the primary shopping experiences. • The other elements which help drive retail sales are that of population growth and disposal income. Given Elk River's rapid growth over the past ten years, it is easy to see that the community can support new discount • retailers. The disposable or "after tax" income also goes a long way in determining an area's retail sales. eda-item • • • • • • • • Elk River Retailers • 1992 Retail Sales Type of Number of Retailer S.I.C. Retailers Gross Sales Lumber, Hardware, etc 52 11 $7,313,894 Food Stores 54 9 35,890,525 Auto Dealers, Service Stations 55 17 • 27,870,304 Apparel and Accessory Stores 56 5 1,13 5,819 Furniture/Home Furnishings 57 13 883,275 Eating & Drinking Establishments 58 20 6,981,3 94 Miscellaneous Retail • (including General Merchandise Stores) 59 & 53 147 12,420,013 TOTAL 222 $92,495,224 IISource: Tax Research Division,Minnesota Department of Revenue • 1992 Elk River Retail Dollar Will! (. 111111 - !!fI(((R m 1 1 i d...,.. a / CW\ ___,c i<Q.-j ) 1 '-J.,,.-.' it-0-- _-9) City of +, 41 xi - . ey/, /,, ,,-1. 1 , , ,:.,1 ,a . Iiaii,-- /�� FAIN.) River1 . .;: 1. 11.WO1111111 �i ..,,..a lllllkwiJJJ//// . •ai Type of Retailer Value • Lumber, Hardware, etc. • 7.91 cents Food Stores 38.80 cents Auto Dealers, Service Stations 30.13 cents . Apparel & Accessory Stores 1.23 cents Furniture/Home Furnishings 0.96 cents Eating & Drinking Establishments 7.54 cents Miscellaneous Retail (including General Merchandise Stores) 13.43 cents TOTAL $1.00 . • Sherburne County Retailers 1992 Retail Sales Type of Number of Retailer S.I.C. Retailers Gross Sales Lumber, Hardware, etc. 52 36 $30,372,104 General Merchandise Stores 53 4 6,870,643 Food Stores 54 21. 46,346,396 Auto Dealers, Service Stations 55 35 42,970,553 Apparel and Accessory Stores 56 6 1,136,703 Furniture/Home Furnishings 57 30 6,974,796 • Eating & Drinking Establishments 58 5� 14,141,527 Miscellaneous Retail 59 305 25,952,574 TOTAL 468 $174,765,296 4110 Source: Tax Research Division,M4iruiesota Department of Revenue EXHIBIT E Construction Value • Residential 1988-1993 30 1 yJ $24,452,604 25 >, •::`:` " $17,896,422 . '-- $15,781,856 $15,725,504 15 —7 }:^}^ $11,827,354 Miii::':' �:4K1,1,: :4 ti'}:'3': :4Yr:: :4: _.... '4,':,!-iii >.i ? :.....k:. $9,736,806 ::.....: i. 10 AN:,:::::•i v:.ii..Yr s ril,�ir%I!Or ";::•,:g:::..:;,'.... 4Ni. v'nti .Nh.\4i .::J� f"v: .\ v % :: :ti•p :vi v4 k,::}:jtiv}: ?i:i:v.r••:ti infix:•V 0 1988 1989 1990 1991 1992 1993 Commercial/Industrial 1988-1993 15 $9,968,155 $9,505,348- 10 ......_.... $6,968,178 •::::::r>:::-• ' .....i .. i wvR:}+. . >............v.$4,746,100 " .:.$4,185,694 : . 5 0:-A-'•'..$3,178 258 : tiiii3rti! >: r i':i;:i ii j:::: • 0 1988 1989 1990 1991 1992 1993 EXHIBIT F CITY PROPERTY VALUES • 1993 Indicated Market Value of Taxable Property: $463,888,473* * Calculated by dividing the county assessor's estimated market value of $478,427,403 by the 1992 sales ratio of 90.2%for the City. (1993 sales ratios are not yet available.) 1993 Taxable Net Tax Capacity: $8,051,412 Real Estate: Residential $2,953,015 34.0% Commercial, Industrial and Public Utility3,855 846rriptrrmimmmirrf.44,5 Non-Homesteadesi en is Agricultural 430,697 5.0 Other 304,481 3.5 Personal Property 51,037 0.6 Subtotal $8,673,154 100.0% Less: Captured Tax Increment Tax Capacity (621,742) Total $8,051,412 Trend of Values Assessor's Indicated Estimated e Tax Market Value(a) Market Value Caoalcitv(b) III 1993 $463,888,473 $418,427,403 38,051,412 1992 444,688,339 401,108,882 7,923 444 1991 441,409,535 381,819,248 7,961,315 1990 409,776,812 354,456,943 7,653,019 1989 351,048,380 309,273,623 , 6,331,671 (a) Calculated by dividing the assessor's estimated market value by the certified sales ratio for each year, as determined by the State Department of Revenue. (1993 sales ratios are not yet available.) (b) For an explanation of tax capacity rates, see Appendix II. • Ten of the Largest Taxpayers in the City Taxpayer Type of Business 1993 Net Tax Capacity United Power Association Utility Northern States Power and Utility (Resource $ 920 438 United Power Association Recovery Facility) ' Scherer LTD Partnership Shopping Center 11119,572 19,573 CHW Properties, Inc. Apartments Anoka Electric Cooperative Utilitysg 119,000 Elk River Shopping Center Shopping Center 103,817 Alitool Manufacturing Co., Inc. Metal Stamping Plant 194, ir Iowa Public Service 94,453 Commercial 86,058 Individual Apartments A< Anoka Medical Clinic 69,119 II Total 67.984 32,236,945` Represents 27.8%of the City's 1993 taxable net tax capacity. - 7- EXHIBIT G Commercial and Industrial Areas The commercial area is located on 1-35 and Highway 50. The industrial properties are in the Air Lake Industrial .?ark located southeast of the City. Both areas are near full development and in somewhat stable financial situations. Zoning: B-4 and I-2 School District: Lakeville Industrial Market Value/Acre: 5178,010 Commercial Market Value/Acre: S330,233 ANALYSIS: Commercial and industrial development provides solid positive net fiscal impacts. Standard street and fire service is provided to this area. Police services are very minimal. This particular commercial area represents current suburban development. The commercial area includes Mills Fleet Farm, which is a tax increment financed project. Industrial properties mainly contain light industry. INDUSTRIAL COMMERCIAL Annual Operating City School City School • Figures District District Expenditures $120,819 NA $88,583 NA Revenues 188, 926 547, 972 136,258 395,209 Net Impact 68,108 547, 972 47, 675 395,209 Overall Net 616,080 442, 884 Per Acre Impact 626 5,037 1, 109 9, 191 Overall Net per Acre 5, 663 10,300 FINDINGS: Commercial and industrial developments are primary sources of revenue for the City and school districts. Excess revenues from commercial and industrial developments balance the costs of lower value residential developments. Residents provide labor and customers. The City should promote a proper mix of commercial/industrial with affordable residential development. • 28 Banks: Downtown and I35 •One bank is in downtown Lakeville, the other is located at I-35 and Hwy. 50. Zoning: B-4 School District: Lakeville Downtown Market Value: $725,000 I-35 Market Value: $350,000 ANALYSIS: At the request of the Economic Development Commission, the downtown bank and the I-35 Bank are compared. They wanted to know how two fundamentally different commercial areas compare. The net fiscal impact of these sample areas is positive on a total and per acre basis. Police services are primarily for money escort and costs are nominally recovered through fees. DOWNTOWN I35 Annual Operating City School City School Figures District District • Expenditures $4, 523 NA $2, 088 NA Revenues 6, 978 20,240 3, 082 8, 939 Net Impact 2,455 20,240 994 8, 939 Overall Net 22, 695 9, 933 Per Acre Impact 3, 168 26,116 1,247 11,216 Overall Net per Acre 29,284 12, 463 FINDINGS: The downtown bank has twice the positive returns because its building value is considerably higher. Downtown development should be encouraged; as the desirability of the property increases, so will the market value and tax base. Also, residential developments should be encouraged which are serviced by Lakeville commercial properties in order to balance the costs of maintaining residential development. • 29 EXHIBIT H • INVENTORY OF COMMERCIAL PROPERTY • TOTAL ACRES ZONED COMMERCIAL 873 ACRES 0 C1/ Central Commercial - 55 Acres 0 C2/ Office District - 56 Acres 0 C3/ Highway Commercial - 622 Acres 0 Planned Unit Development (Business Park) - 140 Acres • TOTAL ACRES DEVELOPED 469 ACRES • TOTAL ACRES VACANT 404 ACRES` 0 Restrictive Areas for Development - 27 Acres • TOTAL 27 ACRES • TOTAL NET ACRES AVAILABLE FOR DEVELOPMENT 377 ACRES • HIGH ABSORPTION RATE 377 ACRES 14 AC/YR Years Worth of Commercial Property 26.9 Years • LOW ABSORPTION RATE 377 ACRES 2 AC/YR Years Worth of Commercial Property 188.5 Years • Page 1 of 2 • ♦ TOTAL ACRES WITHIN CURRENT URBAN SERVICE AREA 375 ACRES 0 Developed - 227 Acres 0 Vacant - 148 Acres 0 Restricted - 10 Acres 0 NET AVAILABLE ACRES - 138 ACRES TOTAL ACRES OUTSIDE CURRENT URBAN SERVICE AREA 499 ACRES 0 Developed - 242 Acres 0 Vacant - 257 Acres 0 Restricted - 17 Acres • 0 NET AVAILABLE ACRES - 240 ACRES Page 2 of 2 • r STEERING COMMITTEE City of Elk River I New Commercial Development (Total Acres) - 1988 1989 1990 1991 1992 1993 Total 3.5 2 11 1.5 8 14.2 40.2 1 • Number of Acres Per Year 16 - 14 - 12 - / 10 / -.-- 8 - 8 - 7 N / 6 - 7 N / 4 = / N -- --� / 2 - 0 r 1988 1989 1990 1991 1992 1993 Page 1 Ill EXHIBIT I • CHALLENGES AND OPPORTUNITIES IN THE CENTRAL BUSINESS DISTRICT I. THE VALUE OF A VIBRANT CBD • Traditionally, the CBD is the heart of: • Financial • Government • Entertainment • Hospitality • Legal • Medical • Services • Retail • The CBD is a barometer of a community's health. • II. INVESTMENT/REINVESTMENT IN THE CBD • Reinvestment likely requires extraordinary costs not found elsewhere (demolition, site prep, undersized utilities, etc.) • Without available incentives, investment will locate elsewhere III. CHALLENGES/OBSTACLES TO CBD INCENTIVES • TIF law; i.e. narrow definition of blight, state aid losses, etc. • Limited or finite pool of funds (public and private). IV. ROLE OF CITY/HRA/EDA A. Facilitate • Act as a conduit for development or redevelopment 0 Create TIF Districts; provide TIF grants for extraordinary costs, etc. 0 Assemble land in anticipation of redevelopment 0 Willingness to absorb some redevelopment costs to • ensure investment in the CBD occurs. • B. Regulate ♦ Enforce traditional "police powers", i.e., building code, zoning ordinance, public safety, etc. V. CALL TO ACTION -- OPPORTUNITIES FOR PUBLIC SECTOR PARTICIPATION • Public sector willingness to assemble land on behalf of developers; willingness to absorb some redevelopment costs - recognizing the value of a vibrant CBD ♦ However, public dollars not repaid or left on the table should not place a burden on the taxpayers. • Commitment must be long term. • Financial pockets should be deep enough to ensure a long term commitment. • The City Council must identify revenue sources if it agrees that: ♦ Reinvestment in the CBD is a high priority; ♦ Reinvestment in the CBD contributes to the City's overall vitality; • ♦ Reinvestment is necessary because of the extraordinary costs of undertaking redevelopment projects; ♦ Similar projects will occur elsewhere unless public funds encourage projects in the CBD. • RSSl1BDIVI i Vii:::::::::::::: I f 4 • f `- • 1 II 1 :w f1 : �� ..... 4Th STREET N.W. •'•• f :%.::: //4 s:j��'i• 6 7 8 1 � - 10 I .';s :r /44 / // / g 4TH I .: /• / r,arl: .\ III .t,Ott:•' _:. 5 W• GS•Y A y\ / t• $3wkd: :;;r . 1.tsnmro .-" '';:' 1 ,•., . 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' :rw f M1 WI/_ ,` MAIN STREET � � o -_ ,• ,,,.,,,,A-,,,,,,,,., .'WI r4 1.4‘w4,*”,:**744 ir..:;::::::::.4...t.tii.i..i.:••••::;.:::4! > :\:\\\\\\ -0.,t°,.., ili /*' '4111/ Nio I"141 P/N `V•••••:::44:::: -444..:4 t'•;:::::.$4 . •\ \ 0 �: 15 II „kb \ \ 1 9 8 6 EXHIBIT K • CSD LAID USES , PUBLIC PARKING `c4,000/ fjof� RIVATE" PARI� INC y ; At: VACANT COMMERCIAL ._.... . • FINANCIAL - �'-'-'- OFFICE SERVICE • .......... .________ 1 RETAIL .;.;•;•;•; MEDICAL ...J GOVERNMENT II 3AS / SERVICE / CONV . RESTAURANT / HOSE:) , .,r EXHIBIT L EXECUTIVE SUMMARY • THE IMPACT OF WAL-MART STORES ON RETAIL TRADE AREAS IN IOWA* The Wal-Mart Company is one of the most remarkable success stones in modern day retailing. It has grown from its original store in Rogers, Arkansas in 1962 to over 1750 stores by early 1992. In the past decade, its sales grew from $1.2 billion in 1980 to $43.9 billion by 1992. In 1990, Wal-Mart narrowly passed K Mart and Sears to become the largest U.S. retailer, in terms of sales. In 1991 Wal-Mart had a 35 percent growth in sales and pulled ahead of K Mart by $10 billion. All this was accomplished by locating in small to mid-size towns, beginning in the South and Midwest and expanding to both coasts. In the last few years the company has also enlarged its location strategy to include some larger cities. Wal-Mart is rapidly expanding to the remaining contiguous 48 states at the rate of 160 to 170 new stores per year. Business people in Wal-Mart trade areas are very concerned about the impact of this rapid growth and how to deal with it. This study used sales tax data to document changes in trade area size in 30 Iowa towns between 5,000 and 30,000 population, over the last five years. The purpose of this study is to give business people and other community leaders a better understanding of the probable impacts of a Wal-Mart store in their area, based on the findings of the Iowa study. The results are • discussed below. In most towns where Wal-Mart located, sales and trade area size increased in the first few years after the store opening. Two simple rules of thumb were developed from the study: 1) Businesses that sell goods or services other than what Wal-Mart sells tend to experience higher sales because of the "spillover" effect of the additional traffic attracted to town by Wal-Mart. 2) Businesses that sell the same goods as Wal-Mart sells tend to experience some reduction in sales after Wal-Mart opens. CAUTION! These results apply to a state that has had static population, resulting in a fixed size retail "pie." In this situation, when a large well-known retail store enters a town, it captures a significant slice of the pie, thereby leaving less sales for the other businesses. In areas of growing population and in cities, the retail pie is typically expanding, thereby diluting these effects. Table 1 shows the cumulative real percentage change in retail sales for businesses in Iowa Wal-Mart towns compared to the same size towns without Wal-Mart stores. The shaded cells indicate business types showing sales gains in the years following the opening of a Wal-Mart store. The three year figures are probably the most meaningful since 15 towns had Wal-Mart stores in existence that long. After examining the table, the following conclusions can be made. • A study by Kenneth E. Stone. Professor of Economics, Iowa State University, 1992. 7 .. Tablet: Sales Change in Wal-Mart Towns vs. Same Size Towns (real % cumulative) Wal-Mart Towns Same Size Towns 1111 Business Type After Years After Years 1 3 5 1 3 5 Building Materials - 9 . 1 - 8 . 1 -5 . 8 -2.4 - 1 3.9 - 1 9.6 General Merchandise 42_$ "43.4. 38.7, L.a -6.6 -9 .5 Food -6 . 1 -3 .3 .. E .2 2"':9 Apparel -0 .9 - 9 .4 - 1 8. 1 -4.4 -6 . 9 - 1 1 .4 Home Furnishings - 4 : 85 > D5 - 1 .3 - 1 3 .9 - 1 8.3 Eating & Drinking ' 4.4 3.5 6.9 - 4 -6 .3 Specialty -8 .8 - 1 1 .2• - 1 8 .7 -3. 8 - 1 1 .4 - 1 8.6 TOTAL SALES 3' fi 4.3 6.'.5 :8', -6 .2 - 9 .7 = Gainers Wal-Mart Towns • General merchandise sales increased strongly. • Home furnishings gained, compared to non Wal-Mart towns. • Eating and drinking firms had substantial gains. • Total sales steadily increased in comparison to state sales. • Food (grocery) sales decreased, compared to non Wal-Mart towns. • Specialty store sales decreased substantially. Non Wal-Mart Towns of Same Size • After the first year, only food (grocery) sales gained. • Building materials sales decreased rapidly. • • Apparel sales declined, but not as much as in Wal-Mart towns. • Home furnishings sales decreased substantially. • Specialty sales decreased about as much as in Wal-Mart towns. • Total sales showed some decrease, compared to Wal-Mart towns. Netting out Sales To get a better idea of the internal impact of a Wal-Mart store on a host town, it is useful to "net out" the sales. Basically, this means making an estimate of the Wal-Mart store's sales. It was estimated that for the average town in Iowa, Wal-Mart sales were $17 million last year. Figure 1 shows the netting out process based on this estimate and actual sales changes for all other businesses. The following conclusions can be made based on Figure 1. • If the Wal-Mart store had sales of $17 million and the total sales of the town only increased by $7 million, then there had been a total reduction of sales in the town of $10 million for existing merchants. • If the Wal-Mart store had sales of $17 million and the general merchandise category (of which they are a part) increased by only $11 million, then existing general merchandise dealers suffered sales reductions of $6 million. • If general merchandise stores accounted for $6 million of the total $10 million reduction, then the net reduction in sales for other existing merchants must have been $4 million. • 11« 3 Figure 1 • AVERAGE NET SALES CHANGE AFTER 3 YEARS IN WAL-MART HOST TOWN- wAL-MART SALES EST. tT 1 TOTAL SALES INCREASE 11111 1 SALES LOSS BY OTHERS ' -10 GEN MOSE NET GAIN r 11 LOSS BY OTHER G.M. L -6 LOSS BY NON GEN MOSE -4 \\\ -16 -10 -6 0 6 10 16 20 MILLIONS OF DOLLARS • Through FYi1 Small Towns Smaller towns between 500 and 5,000 population within a 20 mile radius of each Wal-Mart town were compared to all other similar size towns further away from • Wal-Mart towns. Figure 2 shows the results over five years. It is fairly obvious that nearby small towns lose trade more rapidly than others. After five years, the towns within a 20 mile radius of a Wal-Mart store had cumulative net sales reductions of 25.4 percent while the same size towns much further away had sales reductions of only 17.6 percent. Figure 2 Sales of Iowa Towns Within 20 Miles of Wal-Mart vs. Others of Same Size- % CAanpe From am Yew EL -6.21 4.61 -16- -11.41\ -20%^ '17.61 -1T t1 , -26% 11. - -26.4% -30% 1 Yew 3 wart 6 Yews • IIII Same Slss Towns ®20 Mlle Towns Towns 600-4,000 FsOulatlon 4 Larger Cltle� At the time of this study, there were few Wal-Mart stores in cities above 50,000 population in Iowa, although they are currently entering. There were only two areas where the cities appeared to be affected by Wal-Mart stores in the surrounding areas. General merchandise sales were down nearly eight percent and grocery store sales were down nearly three percent after three years of Wal-Mart stores. The apparent major reason for these reductions is the strong presence that Wal-Mart stores make in outlying communities, causing local residents to make fewer trips to the cities to shop. Strategies for Co-existing in_ a_ Vital-:dart Environment Many small retailers will need to develop new business strategies after a Wal- Mart store opens in their area. The following suggestions are based on extensive observations in Iowa and study of situations in other states. Assess Your Attitudes and Actions. In general, it is best to take a positive attitude toward the opening of a new Wal- Mart store in your area. The following thoughts are offered in this regard. • In a free enterprise economy, all firms are free to compete. • Recognize that a Wal-Mart store will probably enlarge your town's retail trade area size. • It is possible to co-exist in a Wal-Mart environment. • You may need to change your methods of operation. Develop Superior Service. Superior service can become an important competitive advantage for many • smaller businesses. Large chain stores usually don't have the flexibility to offer many of these services. • Emphasize expert technical advice. • Offer deliveries where appropriate. • Offer on-site repair of certain items. • Develop special order capability. • Offer other services needed by customers. Manage Your Inventory Better. • Try not to handle the exact same merchandise. • Look for voids in Wal-Mart's inventory. • Try to handle complementary merchandise. • Find a niche that you can fill. • Consider upscale merchandise. Improve Your Marketing. • Extended opening hours are a necessity! • Look for ways to improve your returns policies. • Sharpen your pricing skills. (Eg; lower prices on items that people purchase frequently or tend to know the price) • Focus your advertising. Stress your competitive advantage. Make Customer Relations Top Priority. • Make sure that customers are "greeted." • • Offer customers a smile instead of a frown. • • Make employees "associates" and train them often. • Solicit complaints.