09-08-2020 Special Joint HRA CCMSpecial Meeting of the Elk River City Council
and the Housing and Redevelopment Authority
Held at Elk River City Hall
Monday, September 8, 2020
Council Present: Mayor Dietz, Councilmembers Garrett Christianson, Matt
Westgaard, Nate Ovall, and Jennifer Wagner (5:50 p.m.)
HRA Present: Chair Larry Toth, Commissioners Michelle Eder, Jayme Swenson,
and Denny Chuba
City Staff Present: City Administrator Calvin Portner, Economic Development Director
Amanda Othoudt, and Planning Administrative Assistant/Recording
Secretary Jennifer Green
Others Present: Jesse Hartung, President of Modern Construction
. Call Meeting to Order
Pursuant to due call and notice thereof, the meeting was called to order at 5:46 p.m.
2. Modern Construction — Development Concept Proposal
Ms. Othoudt presented the staff report and introduced Jesse Hartung of Modern
Construction, who outlined a presentation called The Ecology Project, a 127-unit
mixed -use development project in downtown Elk River. He explained the
components of the project, addressing improvements to parking, street, pedestrian,
and trail traffic, outlining ways to support small business owners during and after the
proposed construction, and his proposed project timeline. He stated he is working
on financing partnerships and lenders who would like to support this project. He felt
once contractors and permits were in place, a January 2023 project completion is
feasible.
Mr. Hartung reviewed the specific amenities, buildings, building features and
outlined millions of dollars in public improvements proposed by private parties.
Amenities included: bicycle lockers, a public terrace, public restrooms, pedestrian
walkway, hotel, banquet hall, a retractable glass rooftop restaurant, a public lobby
showcasing green building construction and sustainability of buildings and include
information kiosks showcasing the use of solar panels, rainwater runoff treatment
collection that's used for irrigation, and how waste is recycled. He stated this project
overall would be a $40 million dollar investment and is partnering with Shawn
Carlson of Carnegie Commercial Lending to broker the deal. Mr. Carlson is
reviewing the proforma costs and plans associated and stated there would be many
lenders who would want to get involved into this development project. Mr. Hartung
outlined how he proposed the city would play in this project and proposed:
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Private Equity — 20-30% equity supplied by very small group of investors
(himself and a few others)
Bank Mortgage — mortgage financing will take over after occupancy
(construction financing will convert over to mortgage at a point of a certain
occupancy level, slating to be a 20-year mortgage)
Incentive — public incentives to offset some costs of public improvements
Mr. Hartung outlined the public incentives and proposed a trade in -kind
improvement of land and all permits, utilities, and related fees in return for the
public improvements being made to parking, restrooms, street/sidewalks,
greenspace, and informational lobby. Mr. Hartung stated he wants the city and the
taxpayers to win on this project and stated for every $3 of public improvements, $1
is credited towards fees. He feels this partnership would greatly benefit the city
because taxpayers would receive an instant 300% return on their money. He
explained in addition to the expansion of public amenities and services, the city will
save millions in cash, labor hours, and equipment time for the long-term upkeep of
the existing lot. He stated if this project does not happen, the city will have the same
parking problems, lack of additional public amenities, and pass over a wealth of
economic activity and population growth. He then outlined the project against the
Comprehensive Plan and stated he felt this project fulfills many of the plan's goals
and objectives.
Mr. Hartung asked the City Council and the HRA to consider the following:
1. To agree in principle to the incentives with the final decision and dollar amounts
based on 3' party ROI determinations.
2. To accept parking quantities proposed as a worst -case minimum, with an
understanding that additional improvements may be possible.
3. Have a willingness to consider alternate street and traffic flows downtown if
studies indicate improvements are possible.
4. Offer a commitment that the city will work as fast as Mr. Hartung can to get
final documents back to the city council for review and approval.
Mr. Hartung stated his original request was going to be to merge the Planning
Department with the Street Department as he felt those departments are good at
putting up roadblocks but felt that request was bold. He stated he simply wants the
council to direct Mr. Portner to direct city staff to say, let's make this thing happen,
let's not put up roadblocks, let's not fight along the way.
Chair Toth asked how many feet down the proposed parking levels go.
Mr. Hartung stated each level would be 11' so approximately 22' below. He stated
Bogart and Peterson are providing historical site data as he has heard there is a
stream running underneath the proposed area, but they did not feel it would be a
huge concern. He stated before spending money on drilling, he would await their
findings.
Chair Toth asked where the Farmers Market would be held.
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Mr. Hartung stated he met with Karen Wingatd who manages the Farmers Market
and felt they came up with some great ideas on keeping the market downtown, and
where to hold it in the new development as well as provide a space for a winter
market.
Chair Toth asked about the proposal for a one-way Main Street and where would the
traffic exit.
Mr. Hartung explained a traffic study would reveal more details about the best traffic
routing design.
Chair Toth asked about the future of the Elk River Meats building.
Mr. Hartung stated he has had ongoing discussions with the owners of Elk River
Meats and discussed mutual goals of enhancing their building and increase their
business if they chose to remain in that location. He stated when the owners are
ready to retire, he has designed a plan to offer them a premium for their land and
building and incorporate the space into the project. He stated the owners are not
ready to make any decisions at this time.
Commissioner Swenson asked for clarification on the residential parking spaces for
the 127 mixed units, and Mr. Hartung clarified one parking unit is proposed for each
�r studio, 1- and 2- bedroom units, and two parking units for the townhouses and 3
bedrooms. He stated they could sell additional spots as they will have additional
spots available.
Several members of the audience spoke.
The owner of Olde Main Eatery expressed concerns with the lack of parking for his
restaurant as well as other area businesses during the first six months of construction
and how that would negatively affect his business, stating his business needs at least
30-40 parking spots for operation.
Mr. Hartung stated the parking ramp would be open in a matter of months. He
stated if the Council and HRA could come to an agreement tonight, and when he
comes back for official vote, he could present some options to the affected
businesses and seek ways to stage the project to minimize parking impacts. He stated
he would like the local business' feedback. He discussed a creative marketing budget
to include some incentives and assist in parking off -site.
Frank Galli felt a six-month project of this size in a small community can be
devasting and asked what could be done.
Mr. Hartung provided a suggestion to mitigate the effect of decreased parking by
r making Jackson Avenue a one-way and doubling the parking along both sides of the
4V►) street. He stated he hopes and will push for a shorter timeline and will guarantee that
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contractually. He also asked what the effect of the 169 Redline have on the
downtown. He stated he recognizes this will impact the downtown businesses but
will do his best to mitigate them. He again stressed feedback from business owners.
Beth, owner of Antiques Downtown, stated the construction of this project would
kill her business. She explained how her 50 vendors transport their wares into the
building and with this proposed plan, their ability to do so would be taken away. She
felt her vendors would disappear without the ability to access the building during
construction. She felt she heard similar promises during the building of Granite
Shores and Jackson Place.
Mr. Hartung suggested a dedicated loading dock could be proposed and
improvements can be made for an even better transport of vendor wares. Mr.
Hartung stated he understood the fear of having the businesses affected during
construction and looked forward to sitting down and helping business owners find
ways to overcome these obstacles. He discussed marketing proposals and incentives
to draw patrons into their businesses during and after construction.
Chair Toth stated the meeting time limit had been reached and understood there
would be many questions and concerns with a project proposed of this magnitude,
stating the HRA and Council would need time to digest this project proposal. He
stated at some point there would also have to be some public hearings to ask and
answer these questions.
Mayor Dietz thanked Mr. Hartung for his time and effort into creating and
presenting this proposal. He stated a formal decision or commitment would not be
made that evening, stating there is a due diligence process to follow. He stated he
heard a lot of great ideas and the Council will take everything from all affected
parties very seriously before formal adoption would take place. He asked Mr.
Hartung to be patient as this proposal needs to take the proper course. Mayor Dietz
asked for a detailed proposal from Mr. Hartung outlining all aspects of the project.
Mr. Hartung asked the council and HRA to digest his project presentation and not
allow it to get caught in a government gridlock. He felt there was a wealth of
supporters of this project and he would love to have their voices heard. Mr. Hartung
stated he would put together a detailed project outline.
3. Adjournment
There being no further business, Mayor Dietz and Chair Toth adjourned the joint
meeting of the Elk River City Council and Housing and Redevelopment Authority
6:54 p.m.
Minutes prepared by Jennifer Green.
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j j. ietz, � �yor
Tina Allard, City Clerk
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