5.5. SR 05-08-2006
City of Elk River Item Number
REQUEST FOR COUNCIL ACTION 5.5.
Agenda Section Meeting Date Prepared by
W orksession May 8, 2006 Scott Clark, Community Dev. Director
& Catherine Mehelich, Director of
Economic Development
Item Description Reviewed by
Discussion of Briggs Proposal
Introduction
The following memo discusses the "Briggs Proposal" that was addressed by the City Council on April 10,
2006.
Discussion
The attached memo discusses the economic policy considerations, commercial and industrial inventory in
the City, and zoning issues.
Financial Impact
None
Attachments
. Staff memo date May 4, 2006
. BP Business District Use Standards
Action Requested
See attached memorandum.
Council Action
Motion by _
Second by _
Vote
Follow Up
5: \Community Development \Scon aark \Request Connell Action Brigs proposal. doc
MEMORANDUM
TO: Mayor & City Council
FROM: Scott Clark, Community Development Director
Catherine Mehelich, Director of Economic Development
DATE: May 8, 2006
SUBJECT: Discussion on Briggs Proposal
Introduction
l\.t the April 10, 2006 City Council \vork session direction \vas gi\ren to staff to revle\v
options regarding what \vas called dle "Briggs Proposal." There \vere a number of issues
tllat \vere discussed:
1) ...A. concern dlat certain types of businesses (in dlls case "educational \Tenues" sucll as
dance, gytIUlastics, music, etc ) ha,re a difficult time in finding commercial space tllat
lla,re lo\v enouglllease rates to make their businesses profitable. There \vas an
assumption during the discussion that converting some industrial property to
commercial \vas a method to create tlle necessary economics in order for tlle
aforementioned types of uses to be profitable.
2) The second discussion centered on concerns of converting scarce industrial property
into commercial space. One idea dlat \vas brought fot\vard \vas creating a "Tier 1"
type of zoning \vhere both commercial and industrial land uses could be elected.
TIllS report is \vritten in hvo parts; the first section discusses tile "economic policy"
considerations regarding the City's ability to affect lease rates to a point of making businesses
profitable and as part of this revie\v, a look at the City's commercial and industrial in,rentory.
Tile second part discusses zoning, and if the Council \vants to create a commercial/industrial
zone, and the policy issues that need to be discussed and agreed upon.
Inventory and Economic Issues
The proposed "educational venues" are currently allo\ved to locate \vithin the commercially
zoned areas. The attached table indicates that there appears to be sufficient inventory of
commercial land sites and building lease space, \vith \Tarying lease rates, in \vrncll these types
of uses \vould be allowed. At the same time there is an extremely limited a"\lailability of land
sites for light indus trial/ manufacturing uses.
Discussion on Briggs Proposal
lvfay 8, 2006 City Conncil \'\Torksession
Page 2 of 5
Commercial Land & Lease
Hartman Corrunercial C4 1.5 acres
\Y.1 est High\vay 10 $7.00/ square foot
Guardian Angels Conunercial C4 2.56 acres
West H\vy 10 .i-\ccepting offers
Elk Path Business Center C3 1.5 acre lots
\V/ est High\vay 10 $7.00/square foot
Ivlississippi Ridge PUD 1-3 acre lots
East H\vy 10 $8-12.00/square foot
Carson Business Park C3 2.5 acres
S\V:; corner Ivlain St & H\vy 169 $12.50/ square foot
Lease rate: $20-25.00/ sf
Elk Ridge Center PUD 1-5 acres pads
North H\vy 169 $12.00/square foot
Lease rate: $13-22.00/sf
Hillside Crossing Ivlall C3 1,800 - 10,000 square feet
Nortll H\V)T 169 Lease rate: $14-15.00/ sf
Elk Park Center PUD 3,500-3,900 square feet
Freeport Street Lease rate: $12-14.00/sf
Country Crossing IvIall C3 1,100-2,100 square feet
West H\V}T 10 Lease rate: $13.00/sf
Houlton Commercial DD 3,400 square feet
IvIain Street Lease rate: $9.00jsf+ C~~~/f
Industrial Land & Lease
Northstar Business Park BP 4 to 9 acre lots
T\vin Lakes Road approx. $2.50/square foot
Elk River Business Park BP 6 acre and 4.46 acre lot
T\v1.n Lakes Road $1.90-2.S0/square foot
Industrial Lease Space BP III 3,500 - 10,000 square feet
$4.75/ sf - \varehouse
$9.50/sf - office
$1.75/sf - CAiYI
E,Ten ,vith the lo\ver cost of entry (land price) to locate in a Business Park/Light Industrial
zone rather than Commercial zone, it is questionable whether any "savings" \.vill ultimately
be passed on to the end business tenant of a multi-tenant building. \V'hile tlle land cost Ilas
some affect on the end lease rate, the majority of cost to lease is attributed to tlle expense for
constructing the building and interior build-out, in addition to the common area
maintenance expenses (taxes & insurance). E,Ten if the "savings" can be passed on to dle
end tenant the City does not have the ability to control or enforce lease rates into the future
for these types of situations. It also seems tllat other commercial retail I sel\Tice businesses
Discussion on Briggs Proposal
IvIay 8, 2006 City COW1cil Worksession
Page 3 of 5
could seek similar requests in the future based on affordability (e.g. daycare, hair salon, etc.)
so a key concerns should be \vhat retail/ senrice uses are compatible \vith an industrial park.
Second, from a policy standpoint a key consideration is \Vllether or not the City \vants to
con,rert industrial areas to more commercial uses due to the limited a,railability of industrial
land. In 2005 the eity experienced a great surge in the de,relopment of light industrial land;
SL"X different sites \vith a combined total of 45.78 acres \vere de\Teloped \vith a total of
273,000 square feet and creation of 184 ne\v jobs at minimum hourly \vages of $15.
Currently there exists 31 acres of Business Park property (including the specific lot in
request) that is a,railable for new industrial de,relopment in 2006.
Finally, specific to this request to locate in the Elk River Business Park, it should be noted
that allo\ving such use could affect the Redevelopment .i\greement bet:\veen dle City and
.L~ssociated In,restors of Elk Ri,rer, Inc., Fischer Sand & Aggregate, LLP and Elk Ri,rer
Business Park, LLC (the "Rede\reloper") dated July 21, 2000 \vhich outlines a Development
Schedule for the build out of specifically "light industrial building space".
Zoning Issues
From a zoning standpoint, the City already has a zone dlat allo\vs (\vith some qualifications)
commercial and industrial uses. Zoning Ordinance Section 30-1294 establishes a "BP
business park district" \vith the purpose of the district being industrial, office and
commercial. (Use sections attached. It should also be noted that the current zoning of tlle
City's Northstar Business Park is "BP." Commercial uses are only allo\ved in the "BP" zone
if the land use designation on the City's Comprellensive Plan is HigIl\vay Business.
TIlere are a number of issues associated with tlle current wording of the "BP" district:
1) Since no current "BP" zoned property exists along a high\vay, and in turn no
underlying high\vay business land use exists on these types of zoned properties, tile
City elected to remo,re from the district (summer of 2005) a \vhole series of retail
uses (including health athletic clubs ), both permitted and conditional.
2) i\lthough the retail uses \vere eliminated no amendments \vere made to tlle pUlpose
statement that still references commercial uses, albeit \vith tile proper underlying land
uses.
3) Again, \vith the idea of eliminating retail uses, no amendments \vere made to tile
accessory uses which still allo\v retail sales for a portion of any industrial space.
Under the accessory uses, there are t\vo separate pro\rl.sions for subordinated space,
one section for retail space (allO\VS for ten percent of the building) that is incidental
to the products being manufactured on site (Section 30-1294 (c) 4 f.) and a separate
section that allo\vs any type of retail activity based on the space not occupying more
than 150/0 of the gross floor area and capped at 5,000 sq ft. (Section 30-1294 (c) 4 b.).
4) Another inconsistency in the "BP" zoning district is that under the accessory use
section a complementary freestanding retail facility can be consttucted up to 20,000
sq.ft. (Section 30-1294 (c.) 4 e.). Since the purpose section \vas not amended, \vh.ich
Discussion on Briggs Proposal
j\'Iay 8, 2006 City Council Worksession
Page 4 of 5
dictates the need for a correct underlying zoning, it is a debatable issue as to \vhedler
this type of use could be constructed \,vithin the definitions of the Ordinance. It is
also an interesting note that this section is listed under "accessory uses" as a
freestanding retail of 20,000 sq ft, does not meet the definition of accessory use.
5) Another interesting note for these aforementioned uses is that no outside retail
signage is allowed (Section 30-1294 (c) 4 d. ) \vruch seems counter productive since
the intent is to allow some type of retail, and in turn, there needs to be a \vay to
convey to the public, that a product (s) is for sale.
6) The last note is that although dle "BP" district \vas changed to minimize, if not
eliminate commercial uses, motor vehicle repair is allo\ved as a conditional use
permit (Section 30-1294 (d) (1) f.).
In re,riewing the "BP" district staff \vould conclude the follo\ving:
1) Based on the number of inconsistencies \vithin the district a re\vrite of this section
should be undertaken. The key planning policy question is should retail uses be
allo\ved, regardless of the underlying land use designation. .l\ strong argument can be
made that, at a minimum, provisions should be made to allo\v some complimentary
retail and service uses with an established business park. The entire concept of a
business park is that of an integrated land area \vhere industrial and offices
employees can obtain services and other benefits as part of the park itself.
2) The second staff conclusion is that "education uses," as described in the
introduction of this report, could be interpreted to be allo,ved under the "BP"
zoning district that allo\v retail sales activity up to 150/0 of the buildings gross floor
,vith a cap of 5,000 sq.ft. As an example, if an industrial user had a 30,000 sq.ft.
building 4,500 sq.ft. could be allocated to retail. TIllS interpretation of "retail sales"
concludes a broad definition of retail including retail, personnel sel\Tices, food shops,
etc. as the term retail is not defined \vithin the Ordinance and carries ,vith it a
common usage of definition that includes the aforementioned uses.
3) _As discussed in the first part of this report, the allo\vance of subordinated
commercial space into an industrial building may still not achie,Te the desired
econotn1cs.
Conclusions and Recommendations
The question of \'vhether or not "educational 'Tenue" type of uses can afford lease rates
appears to be a market deri,red question that is extremely complex. The issue of \Vlletller or
not sufficient commercial space exists in the City, and at a lease rate structure ihat can make
a business viable, is only part of the equation. The operation of any business including dle
rates charged, marketing, general operations, etc, all are considerations that hav"'e to be
matched \vith the operating costs attributed to lease rates.
Discussion on Briggs Proposal
I\.fay 8, 2006 City Council Worksession
Page 5 oE5
Staff has included in this report ,rarious lease rates in the community and it appears that
tllere is significant space a,railable and at, or slightly belo\v, market rates. Staff vie\vs that
the rates that would be charged for commercial space, as part of any industrial space or on
industrial zoned property, \vould not be significandy lower (and for ne\v const1uction could
be significandy higher) than what could be found in the City's commercial market. The
other concern is eliminating scarce industrially zoned property for commercial activities.
If the Council desires to pursue this issue, and vie\vs that the solution is conversion of
industrial space to commercial, it appears that this option is currendy a,railable in the
"Business Park" zoning as previously discussed. Staff is recommending that the Planning
Commission review this situation regardless of the outcome of this specific item as there
appears to be many \vording and intent inconsistencies in the Business Park District
ordinance.
S 30-1293
ELK RIVER CODE
cipal use of the property changes or
the o\vnership of either the property
or the principal use of the property
changes.
(17) Temporary structures.
(18) Government buildings and facilities.
(19) Ministorage.
(20) All uses allowed as a conditional use in
the I-I zone.
(21) Governmental offices.
(e) Architectural standards. No provisions of
section 30-938 except subsection 30-938(2) per-
taining to exterior building finish and subsection
30-938(3) pertaining to roofing standards applies
to this district.
(Code 1982, S 900.12(15); Ord. No. 05-08, 9 1,
4-4-2005)
Sec. 30..1294. BP business park district.
(a) Purpose.
(1) The business park district is established
to encourage a planned, integrated envi-
ronment for certain industrial, office, and
commercial uses, which are compatible
with and complement each other as \vell
as the surrounding land uses. The under-
lying land use designation \vithin the dis-
trict may vary and may be either light
industrial or highway business. Develop-
ment within the business park district
will correspond with the land use desig-
nation. Industrial and office uses are al-
lowed where the land use designation is
light industrial, and commercial uses are
allo1ved \vhere the land use designation is
high1vay business.
(2) It is the intent of this section that devel-
opment reflect common themes using com-
patible architectural design and consis-
tency in signage, landscaping, and lightinge
It is also the intent to encourage busi-
nesses, \vhich generate a high number of
jobs per square foot rather than predom-
inantly warehouse type uses.
Supp. No.8
CD30:138
(b) Permitted uses. Permitted uses in the BP
district are as follows:
(1) Permitted uses allo\ved are as follo\vs:
a. Light manufacturing.
b. Research and development laborato-
ries.
c. Business and professional offices.
d. Mail order operations.
e. Telecommunication operations.
f. Sherburne County fair.
g. Warehouse space not exceeding 50
percent of the entire building.
h. Sho'\VToom space.
1. Repair and maintenance, excluding
auto repair.
ermitted uses allo\ved whe
lyin d use is high T
follo\vs:
Financial institutions.
(c) Accessory uses. Accessory uses in the BP
district are as follows:
(1) Off-street parking lots or facilities.
(2) Private recreational facilities.
(3) Public shelters and essential services.
(4) Retail sales, provided the follo\vmg condi-
tions are met:
a. The retail sales activity shall not be
located in an administrative office
facility, but shall be located \vithin a
business, the principal use of which
is not commercial sales.
b. The retail sales activity shall not
occupy more than 15 percent of the
gross floor area, or a maximum of
5,000 square feet of the occupied
quarters, whichever is less.
c. The retail sales activity shall be re-
lated and subordinate to the princi-
pal usee
LAND DEVELOP1YIENT REGuLATIONS
d. No sign identifying or promoting that
retail sales occur within the building
shall be visible from outside the build-
ing.
e. Freestanding retail shops and stores
shall be limited to those \vhich com-
plement other uses within the busi-
ness park and provide a service to
those other businesses, and shall not
exceed 20,000 square feet in size.
f. Retail/\vholesale sales incidental to
products manufactured, assembled,
or warehoused on the premises may
be permitted as an accessory use
provided no more than ten percent of
the building is used for retail/\vhole-
sale sales.
(5) Therapeutic massage \vhen offered \vithin
the confines of a medical or chiropractic
clinic.
(6) Temporary signs as permitted in section
30-851 et seq.
(7) Permanent signs.
(d) Conditional uses. Conditional uses in the
BP district are as follo\vs:
(1) Conditional uses are as follo\vs:
a. Warehouse space exceeding 50 per-
cent of the total building floor area
up to a maximum. of 65 percent.
b. Vocational, technical and trade
schools.
c. Loading areas/overhead doors when
located in front yards.
d. Aboveground storage tanks.
e. Government buildings and facilities.
f. Ivlotor vehicle repair shops, provided
that they meet the follo\vmg condi-
tions:
1. All repair services shall be con-
ducted inside the building.
2. 11erchandise shall be stored in-
side the building.
3. All damaged vehicles stored on
the premises shall be stored
Supp. No.8
S 30~1294
\vithin an area which is screened
by a six foot high 100 percent
opaque fence constructed offac-
tory finished metal or vinyl ma-
terial.
4. The building shall comply \vith
the material requirements of
this section, and 30 percent of
any building face and all over-
head doors facing any public
street shall be constructed of
glass material.
5. No sales or display ofmerchan-
dise outside the building.
6. The building shall be a mini-
mum of 15,000 square feet.
g. Governmental offices.
Conditional uses allowe \v en uncle
lying land use is highway business are
llows:
a. Hotels and motels.
b. . ensed day care fa . ties.
c. Ret shops and ores which com
plemen d se e the business par
subject to standards set forth .
subsecti s (c 4)e and f of this see
tion.
d. tor vehicle speci
tions.
Loading areas/overhead door ;vhen
located in front yards.
I
service sta-
(e) Additional standards. The following addi-
tional standards apply in the BP district:
(1) Loading spaces and overhead doors.
a. Loading spaces/overhead doors shall
be located in designated rear yards
and secong.arily in designated side
yards. Loading areas/overhead doors
shall not be located in designated
front yards urUess approved as a
conditional use.
b. Loading spaces and overhead doors
shall be designed to be compatible
\vith the principal building. Architec-
CD30: 139