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2020.09.01 EDA Work Session PacketAGENDA ECONOMIC DEVELOPMENT AUTHORITY OF THE CITY OF CRYSTAL  WORK SESSION  TUESDAY, SEPTEMBER 1, 2020 IMMEDIATELY FOLLOWING THE CITY COUNCIL WORK SESSION FOLLOWING THE 7:00 P.M. CITY COUNCIL MEETING CRYSTAL CITY HALL COUNCIL CHAMBERS 1. Call to order * 2. Roll call * 3. Discuss redevelopment example from Rosemount (The Morrison) 4. Update on Bass Lake Road business district technical assistance * 5. Adjournment * *Items for which no materials are included in the packet __________________________________________________________________________ FROM: John Sutter, Community Development Director TO: Anne Norris, EDA Executive Director (for Sep. 1 work session) DATE: August 27, 2020 SUBJECT: Discuss redevelopment example from Rosemount (The Morrison) __________________________________________________________________________ BACKGROUND AND PURPOSE OF DISCUSSION •Ron Clark Construction is developing The Morrison, a 124-unit market-rate apartment building in downtown Rosemount (aerial photos and three articles attached). •The Rosemount site contains 3 acres comprised of the 1962-built Rosemount Plaza shopping center (f.k.a. Ken Rose Shopping Center) together with Shenanigan’s Pub. •This project required $3.2 million in tax increment financing plus grants from other sources (Metropolitan Council and Dakota County). •The developer has approached Crystal staff about the potential for a similar scenario for the east block of the Bass Lake Road strip (63xx-64xx 56th Ave. N.) containing 1.5 acres. The Crystal scenario would involve construction of a 4-5 story building on top of a basement parking garage, resulting in approximately 110 market-rate units. •The Hennepin County Assessor’s 2020 estimated market value (EMV) for that block is $2,315,000. The owner of 80% of the buildings in that block had listed his holdings for sale at a price of $2,850,000 but was not able to sell at that price. (The 2020 EMV for his holdings is $1,763,000.) It was this for sale listing that caused the developer to be interested. •The main difference from the Rosemount project is the much higher occupancy, property value and base taxes of the existing commercial property in Crystal. •Without doing a detailed TIF analysis, staff opinion is that a comparable TIF would need to use the increment generated for the entire 26-year life of a redevelopment district. •Prior to exploring this scenario further, including having the developer create a detailed financial proforma and proceeding with a TIF analysis, staff would like the EDA to discuss the Rosemount example and provide feedback on the potential project in Crystal. ATTACHMENTS Three Finance & Commerce articles about The Morrison Aerial photos of the Rosemount site (The Morrison) 2018 aerial photo of the potential Crystal site EDA STAFF REPORT Redevelopment Example (The Morrison) Ron Clark Construction is planning a project that could bring up to 120 apartments to a site that includes this shopping center property at 14555 South Robert Trail in Rosemount. (Submitted photo: CoStar Group) Market-rate rentals pitched for Rosemount By: Brian Johnson October 15, 2019 3:47 pm Ron Clark Construction is in the early stages of planning for a project that would bring more housing diversity to Rosemount, a city known mostly for its single-family subdivisions and occasional senior project. Preliminary plans show 110 to 120 units of market-rate apartments and 4,000 to 5,000 square feet of retail on a redevelopment site just off Highway 3 in downtown Rosemount, said Kim Lindquist, the city’s community development director. Representatives of Ron Clark Construction were scheduled to present their plans Tuesday night to Rosemount’s Port Authority. The developer couldn’t be reached for comment Tuesday afternoon. Pending approvals, the project could be in the ground in April, according to city documents. Lindquist said the proposed housing could be a good addition for the community. “We are interested in get some additional market rate apartments,” Lindquist said. “We have typically been more of a single-family community, so we are trying to get some density and some different housing options.” Shenanigans Pub at 14605 South Robert Trail (Submitted photo: CoStar Group) In a staff report, city officials said the developer has reached agreements to purchase two properties for the project. That includes the Ken Rose Shopping Center at 14555 South Robert Trail and the Shenanigans Pub at 14605 South Robert Trail, Lindquist said. The 55,000-square-foot Ken Rose property, also known as Rosemount Plaza, was built in 1962 and is part of a 2.65- acre site with more than 200 parking spaces, according to a sales brochure. The property was listed at $3 million. Built in 1965, the 5,922-square-foot Shenanigans Pub property is a single-tenant building on a 0.42-acre property, according to the CoStar Group. Lindquist said the properties are part of an area that has long been targeted by the city for redevelopment. In November, the Port Authority is tentatively scheduled to have a tax increment financing “discussion” regarding the project, according to a staff report. If and when the project gets the green light, the city may begin to apply for redevelopment grants through the Minnesota Department of Employment and Economic Development, the Metropolitan Council, and the Dakota County CDA, the report said. Rosemount was established as a township in 1858. The downtown area saw a growth spurt in the 1860s and 1870s with the opening of a general store, hardware store, blacksmith, and wagon shop, according to the city’s website. Waves of downtown redevelopment occurred in the mid-1980s and early 2010s. Recent examples include two senior housing projects: the 93-unit Steeple Center/Rosemount Senior Living (2015) and the 60-unit Cambrian Commons (2016). Rosemount has seen its share of new housing this year. Through September, the city has issued 120 permits for 155 new housing units with a combined value of $39 million, according to the Keystone Report. Homebuilding is running ahead of last year by each of those measures. Permits are up 135%, planned units are up 68%, and value is up 111%, according to the Keystone data. Most of the new units are single-family houses. Herb Tousley, director of real estate programs at the University of St. Thomas, said market-rate apartments might be a good fit for downtown Rosemount as long as the monthly rents aren’t too high. “If they can do some moderately priced, moderate-rent market rate, I think they will do very well,” he said. Potential next steps include submittal of a formal planning application in November, a neighborhood meeting and Planning Commission review in December, and City Council review in January. 📥 “We are starting to look at potentially putting together a TIF district and talking about potential schedule for planning approvals so the developer has an idea of what their schedule might be,” Lindquist said. “They want to try to start construction next spring.” Certificates of real estate value [PDF] Like this article? Gain access to all of our great content with a month-to-month subscription. Start your subscription here. ABOUT BRIAN JOHNSON Brian joined Finance and Commerce in February 1998. His primary beat has been construction and development. Copyright © 2020 Finance & Commerce | Suite 900, Campbell Mithun Tower, 222 South Ninth Street, Minneapolis, MN 55402 | (612) 333-4244 Ron Clark Construction and Design would replace an outdated shopping center at 1455 Robert Trail S. in Rosemount with a 148-unit apartment building, known as The Morrison, and a detached retail building in a later phase. (Submitted image: Kaas Wilson Architects) New apartments planned for downtown Rosemount By: William Morris February 19, 2020 4:38 pm Correction: A previous version of this article misstated the number of units in The Morrison. The correct number is 124. Ever since Rosemount leaders launched a revitalization of their historic downtown in 2004, they’ve had their eyes on the Rosemount Plaza Mall. The onetime Ken Rose Shopping Center at 1455 Robert Trail S. was built in 1962, according to CoStar Group, and is widely considered obsolete. Community Development Director Kim Lindquist said in an interview that the property has long gone without updates and needs “dramatic improvements” to reach par with modern retail properties. At a January Planning Commission meeting, commission member Michael Reed was more blunt. “Anything is an improvement,” Reed said. Now the city has a project to look forward to. On Feb. 4, the City Council approved a master development plan and up to $3.2 million in tax increment financing for Edina-based Ron Clark Construction & Design. Ron Clark, in partnership with Bader Development, plans to tear down the mall and Shenanigan’s Pub, immediately south, to build a 124-unit market-rate apartment building and, in a second phase, a detached 4,000 square foot retail building. Ron Clark is well acquainted with Rosemount, CEO Mike Waldo said. The company is building a 49-unit affordable apartment building at the corner of Chippendale Avenue and 160th Street, expected to open this summer, and Waldo has worked on other projects in the city previously. The idea for the downtown project, first pitched last year at roughly 120 units, arose over the course of that collaboration with the city. “We’ve talked off and on with the city probably the past three or four years,” Waldo said in an interview. “I know the city has been trying to develop this parcel for 15 to 20 years. … We just feel really good about Rosemount as a town and feel there will be a good market for the apartments.” The project, known as The Morrison, is estimated to cost between $25 million and $28 million, and Ron Clark hopes to begin demolition and cleanup in May. A separate building on the northeast corner of the site with two retail tenants will remain until at least 2022, when their current leases expire, and be redeveloped at that time. Rosemount’s downtown redevelopment, launched by a council that came into office in 2004, has seen a number of successes, including several senior housing projects and the 108-unit Waterford Commons apartments built in 2008 across the street from Shenanigan’s. But finding a project for the mall property has never been far from the city’s mind, Lindquist said. “The mall site was one of the top priorities, but at that time, the property owner wasn’t interested in selling for a price that could be a financially viable project,” she said. “And so we’ve facilitated some redevelopment of particular sites as well as, as we all hope, when there’s investment, then other private entities have also significantly invested in their property.” The Morrison, which will include a second-floor pool deck and other amenities, will have 127 parking stalls in a garage under the building, and an additional 75 surface spaces that will serve the apartment building and future retail. Bloomington-based Kaas Wilson Architects is designing the project, which will be operated by St. Louis Park-based Steven Scott Management. Waldo said the building should be ready for first occupancy by late summer of 2021. Related: Market-rate rentals pitched for Rosemount ABOUT WILLIAM MORRIS Economic development reporter for Finance & Commerce. Construction is underway on The Morrison, a 124-unit market-rate apartment building at 1455 Robert Trail S. in downtown Rosemount, replacing the Rosemount Plaza mall. (Submitted image: City of Rosemount) Just Sold: Rosemount mall makes room for apartments By: Anne Bretts June 16, 2020 2:13 pm Editor’s note: “Just Sold” is a Finance & Commerce feature based on the newest certificates of real estate value filed with the Minnesota Department of Revenue for commercial sales throughout Minnesota and reports of sales across the country involving local parties. Research includes company and broker documents, online real estate listings, F&C archives, CoStar and other research. More than 15 years after Rosemount leaders started talking about redeveloping its downtown, their successors have picked up shovels and broken ground for a key $28 million piece of the plan. Edina-based Ron Clark Construction & Design, in partnership with Bader Development, has started demolition of the Rosemount Plaza Mall at 1455 Robert Trail S. and Shenanigans Bar, directly to the south of it. Work started after The Morrison Partners LLC, a Ron Clark entity, closed May 15 on the $2.075 million purchase of the site from E&E Enterprises in South St. Paul. The sale report included no down payment and a new mortgage. Once cleared, the site will be home to The Morrison, a 124-unit, market-rate apartment building. In a second phase, Ron Clark will replace a 4,000-square-foot, two-tenant commercial building in the northeast corner of the site in 2022, when the tenant, leases expire. “This is really important to us,” said Community Development Director Kim Lindquist. Over the years the city has seen several new apartment buildings and other projects downtown but met resistance when the former owner of the mall was asked to make improvements. “The mall was such a large building and it wasn’t kept up for so long,” Lindquist said. Just having the mall gone will give a boost to the area, she said. Rosemount Plaza was known as Ken Rose Shopping Center when it was built in 1962. The City Council approved the master development plan for The Morrison in February and supported it by agreeing to up to $3.2 million in tax increment financing. The Morrison will include a second-floor pool deck and other amenities, as well as underground and surface parking. Bloomington-based Kaas Wilson Architects designed the project, and St. Louis Park-based Steven Scott Management will operate it when it’s completed in summer 2021. RELATED: New apartments planned for downtown Rosemount Place: 1455 Robert Trail S., Rosemount Price: $2.075 million, with no listed down payment and new financing Buyer: The Morrison Partners LLC, Edina Seller: E&E Enterprises, South St. Paul Date: 5-15-20 Page 1 of 3 View Summary for Preliminary eCRV ID 1092409 County:Dakota Auditor ID: Submit Date: 05/15/2020 9:53 AM Accept Date: 05/26/2020 9:04 AM Buyers Information Organization name: The Morrison Partners, LLC Address: 7500 West 78th Street, Edina, MN 55439 United States Foreign address: No Phone number: (952) 947-3037 Email: *** MN Revenue does not display SSN/Tax ID fields due to privacy. *** Sellers Information Organization name: E & E Enterprises Inc. Address: 1185 North Concord Street, South St. Paul, MN 55075 United States Foreign address: No Phone number: (651) 201-7241 Email: *** MN Revenue does not display SSN/Tax ID fields due to privacy. ***  