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02-05-2007 DTMIN MEETING OF THE ELK RIVER DOWNTOWN REDEVELOPMENT PLAN TASKFORCE HELD AT ELK RIVER CITY HALL MONDAY, FEBRUARY 5, 2007 Members Present: Stewart Wilson, HRA Chair; Louise Kuester, HRA Commissioner; Larry Toth, HRA Commissioner (arrived at 7:00 p.m.); Jean Lieser, HRA Commissioner; Lance Lindberg, Heritage Preservation Commissioner; Dana Anderson, Planning Commissioner; Mike Niziolek, Parks & Recreation Commissioner; Dave Rymanowski, Business Representative (First National Bank); Keith Holme, Business Representative (Kemper Drug); Mark Urista, Business Representative (Coldwell Banker Vision); Molly Nadeau-Peterson, Resident Representative; John Anderson, Resident Representative Members Absent: Dan Tveite, EDA Commissioner Staff Present: Community Development Director Scott Clark, Director of Economic Development Catherine Mehelich, Assistant Director of Economic Development Heidi Steinmetz and Planner Chris Leeseberg Others Present: Stacie Kvilvang of Ehlers & Associates, Inc., Frank Dunbar of Dunbar Development and Mark Moorhouse of Dominium, Inc. 1. Welcome Stacie Kvilvang of Ehlers & Associates welcomed the taskforce members to their fourth meeting. She mentioned that both the developers and the City Engineer Terry Maurer were supposed to attend tonight’s meeting, however Mr. Maurer was asked to attend the City Council meeting instead. Ms. Kvilvang stated that Mr. Maurer will provide background information/discuss MnDOT’s plans for Hwy 10 at the March meeting. 2. Approve January 2, 2007 Minutes/Recap of Last Meeting Including Discussion of Focus Areas The January 2, 2007 minutes were approved with the following change: Member Dana Anderson’s first name will be added on page two (third paragraph). Ms. Kvilvang referenced the redevelopment focus area map on display at the front of the room. She stated that the map would change over the course of the taskforce process but that the four focus areas highlighted provide a visual indication of the importance that each area “flow” together to improve the “greater downtown” concept. She also reiterated that the last meeting represented the “dream” side of the redevelopment spectrum and that tonight’s meeting would represent the “reality” side of the spectrum. 3. Purpose of Meeting Ms. Kvilvang explained that the format of tonight’s meeting was for the taskforce to ask the developers questions about the marketability of the redevelopment area. The developers would not be providing a presentation or development concepts but were in attendance as a resource to the taskforce. 4. Market Perspective Presentations: Frank Dunbar of Dunbar Development and Mark Downtown Redevelopment Plan Taskforce Minutes Page 2 February 5, 2007 ------------------------------------------ Moorhouse of Dominium, Inc. Ms. Kvilvang introduced guest speakers Frank Dunbar and Mark Moorhouse. She stated that the main goal of tonight’s meeting is to gain a market perspective of the redevelopment area. Mr. Dunbar and Mr. Moorhouse provided brief backgrounds of their development experiences and answered questions over the course of one hour and forty minutes. Mark Moorhouse added that he grew up north of Becker, and attended/played sports at Elk River High School. The developers’ responses are listed below: Frank Dunbar, Dunbar Development  The natural barrier of Hwy 10 and the railroad will be a tough issue to deal with no matter how the highway and railroad may change over the years.  Focus on redeveloping south of Hwy 10 as the core downtown. Developers, investors and marketers will prefer this area.  North of Hwy 10 would be a good place to develop employment centers because the daytime users would support the retail located in the core downtown. A medical office building would be perfect for north of Hwy 10.  Retail does not work by train depot stations because people are only there for one hour in the morning and one hour in the evening and they’re typically not shopping during those times.  Future developers will look at MetroPlains as the pioneers of redevelopment in downtown Elk River. They will decide what to do based upon how MetroPlains’ project succeeds.  Redevelopment is difficult and trying to redevelop both sides of Hwy 10 will be doubly difficult.  The next redevelopment project logically should be along the river on Main Street, west of the current project.  Downtown employees should not park in the core downtown as those spots should be available to customers.  Parking lots are better than ramps for customers.  Seniors will be the primary housing market for downtown. Seniors of 60-75 years will likely occupy the units. A grocery store downtown is not crucial because seniors typically have a lot of visitors who always bring them food.  Fine dining may not work in downtown Elk River because restaurants need more than weekend customers to survive. In addition, for a restaurant to be successful, it needs to be supported by the community, not just people working or living nearby. It’s also rare to locate fine dining establishments in the northern suburbs. The restaurant business is extremely tough. It’s even tougher for restaurants who don’t serve alcohol.  Otsego does not provide competitive threat to Elk River.  Better utilization of the river will make future downtown redevelopment successful.  Even in metro area redevelopments, it is very tough to keep retail spaces occupied unless they are corporate users.  If developers break even on retail projects, they are happy.  Established neighborhoods are good for retail in addition to convenient parking.  The businesses downtown are currently and will be in the future destination oriented in nature and do not depend on Hwy 10 traffic.  The funeral home may not be a good occupant for supporting the downtown as a retail area since it is destination based. The funeral home may be a good user for north of Hwy 10. Mark Moorhouse, Dominium, Inc. Downtown Redevelopment Plan Taskforce Minutes Page 3 February 5, 2007 ------------------------------------------  The natural barrier of Hwy 10 and the railroad will be a tough issue to deal with no matter how the highway and railroad may change over the years.  Focus on redeveloping south of Hwy 10 in the core downtown. One reason is because it’s important to focus on a cluster of activity in one area.  The way to maintain historical character on new projects is through design standards.  Redeveloping existing buildings to new uses is expensive and can be cost prohibitive.  Hwy 169 has become the core retail area in Elk River and will continue to be in the future.  Purchasing single family homes for redevelopment is very difficult due to higher costs of assembling enough property to make the economics of a new development work.  It is not a problem for residential to be located near railroad tracks.  You won’t see new market rate rental projects being built in Elk River because the location is “too far out”. This is not a demand issue, it is a financial feasibility issue. Mixed income projects work better in this area.  Townhomes and apartments would work well along Jackson Avenue north of Hwy 10.  Young families want to live close to schools, day cares and amenities. 5. Small Groups The taskforce broke into three small groups and discussed items which “stood out” over the course of the first four taskforce meetings. A summary of those items are attached, however the following items were mentioned more than once:  There is interest in exploring long-range redevelopment opportunities for the funeral home and nursing home.  MetroPlains’ 20,000 SF of retail will take time to absorb so there is limited demand for more retail in the near future.  Hwy 10 and the railroad is a natural barrier and the areas north and south of Hwy 10 should be redeveloped separately.  The taskforce did not realize the extent of the senior housing and high density market in Elk River. 6. Next Steps Ms. Kvilvang reiterated that City Engineer Terry Maurer would be attending the March meeting to provide background information/discuss MnDOT’s plans for Hwy 10. She also reminded the group that they would be reviewing the photos taken as part of January’s “homework” assignment. 7. Final Comments Ms. Kvilvang asked each taskforce member to talk about his/her reactions to tonight’s presentation. The comments are listed below:  Dave Rymanowksi: Tonight’s meeting was a good version of reality. It was like someone poured cold water on us.  Louise Kuester: Tonight was the best meeting so far, however there seems to be no correct answer for redevelopment in general.  Larry Toth: It was good to hear from the developers and he would like to hear from more developers.  Keith Holme: Retail will follow residential. He is hoping to see many customers resulting from the new MetroPlains’ residential.  Dana Anderson: It is important to think “sectionally” (north vs. south of Hwy 10). Residents drive retail success.  John Anderson: Tonight was his favorite meeting so far. Downtown Redevelopment Plan Taskforce Minutes Page 4 February 5, 2007 ------------------------------------------  Stewart Wilson: He was reminded that we can’t be so quick to judge MetroPlains and was glad to hear from Frank Dunbar that MetroPlains “knows what they’re doing.”  Jean Lieser: She agreed with Stewart (was glad to hear good things about MetroPlains). She was interested in Frank’s comments that job creation and housing would work well north of Hwy 10 downtown. She didn’t view Hwy 10 as a “natural barrier” until tonight.  Molly Nadeau: She would like to hear more about the redevelopment market for north of Hwy 10 downtown. She thinks we may be “dodging the subject” by not focusing on redevelopment in that area.  Lance Lindberg: He agreed that tonight’s meeting was the best one so far and that the developers were “real world people.”  Mike Niziolek: He reiterated the importance of the river and agreed with Molly that he is disappointed with the developers’ suggestions for focusing south of Hwy 10 rather than north of Hwy 10 downtown.  Mark Urista: He learned that high density housing will support more retail, that Dares may not be the best retail generator for the core downtown and that it may be better to redevelop the north and south sides of Hwy 10 separately. Submitted by, Heidi Steinmetz Assistant Director of Economic Development Downtown Redevelopment Plan Taskforce February 5, 2007 meeting Small Group Question: “What are some of the policy issues that stand out after the first four taskforce meetings?” Group1 1) Redevelopment planning is more difficult than anticipated. 2) There is a need for higher density housing than was originally anticipated (scale as well). 3) Long-range redevelopment opportunities for the funeral home and nursing home should be explored. 4) MetroPlains’new 20,000 SF of retail will take time to absorb so the City shouldn’t look to more right now (access issues/profitability). 5) A“wow” factor/amenities are needed to attract families/early baby boomers to shop downtown. 6) There is a need to spread the value of the river view heading west along Main St. (capture and share the value). 7) Single-family rehab is necessary to strengthen redevelopment and infill has to have concurrent flow with existing neighborhoods. 8) The best land use from a market standpoint for north of Hwy 10 should include uses with greater employment opportunities. 9) Can the City get a rail station downtown to support higher density housing north of Hwy 10 and more retail? Group 2 1) Outside experts have expressed two different opinions on the necessity and accessibility of parking (park less vs. park more). 2) Hwy 10 and the railroad are natural barriers and perhaps the north and south sides of downtown should be redeveloped separately. 3) The river is much more crucial to the success of downtown than originally anticipated. 4) There is a need to recognize that it is difficult to fill retail space and some turnover is expected. 5) There is a larger market for senior housing than originally anticipated. 6) Some members didn’t understand why the redevelopment focus area was so large but now they understand why and that one reason is to rehab the single family neighborhoods that support the downtown. 7) Hwy 10 will always be a barrier regardless of what MnDOT does with it. Group 3 1) Specialty uses for downtown like medical (not just “mom and pop” shops) should be explored. 2) It was interesting to learn about lease terms for retail and how difficult it is to break even financially on those projects. It would be interesting to figure out the “normal” amount of retail turnover. 3) It is important to analyze daytime vs. evening/weekend customers and how they affect the success of downtown. 4) Market rate rental housing projects are difficult to make work financially in Elk River’s market at this time. 5) There is a difference between the areas where employees vs. customers are comfortable parking (e.g. customers won’t use a parking ramp).