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12/14/1999 - City Council Special lei ' AGENDA SPECIAL CITY COUNCIL MEETING Tuesday December 14, 1999 4:45 p.m. EAGAN MUNICIPAL CENTER City Council Chambers I. ROLL CALL & AGENDA ADOPTION II. VISITORS TO BE HEARD III. CONSIDER JOINT APrC/APC TASK FORCE TO REVIEW OFF-STREET PARKING , TREE PRESERVATION & MITIGATION ORDINANCES & DEVELOPMENT/ REDEVELOPMENT ISSUES IV. CEDAR/HWY 13 AREA TASK FORCE REPORT (CEDARVALE & TH 13 AREA) V. SALARY COMPENSATION STUDY VI. OTHER BUSINESS VII. EXECUTIVE SESSION VIII. ADJOURNMENT f f MEMO city of eagan TO: HONORABLE MAYOR& CITY COUNCILMEMBERS FROM: CITY ADMINISTRATOR HEDGES DATE: DECEMBER 10, 1999 SUBJECT: SPECIAL CITY COUNCIL MEETING/TUESDAY, DEC. 14, 1999 There are three (3) items listed on the Special City Council agenda including: 1) provide direction to study ordinances as recommended by APrC Chair Lee Markell and the Development Impervious Services/Tree Preservation Study Group Chair Terry Davis; 2) receive and discuss the Cedar/Hwy 13 Area Task Force report; and 3) receive a report from the City's consultant, Riley, Dettmann & Kelsey, who prepared the City's salary compensation study. CONSIDER A TASK FORCE TO REVIEW CERTAIN ORDINANCES RELATIVE TO NEW DEVELOPMENT At the December 6 Special City Council meeting, Lee Markell, Chair of the APrC, and Terry Davis, Chair of the APrC Development/Impervious Services/Tree Preservation Study Group, appeared and shared a request that the City Council give consideration to forming a joint study group between the APrC and APC to review off-street parking, tree preservation and mitigation ordinances and development/redevelopment issues. The purpose for reviewing the ordinances is to consider regulations that would enhance the City's ability to avoid excessive tree loss and promote greater green space preservation and expansion. Mr. Davis appeared before the APC on Thursday, December 9, at their work session and informed them of the desire by the APrC to jointly study possible ordinance changes that would promote greater green space preservation and expansion. The APC was very receptive and, as stated by the City Council at the December 6 meeting, since ordinances will be reviewed, City Council policy requires a directive to their two (2) advisory commissions to form a special task force to consider ordinance revisions. At the December 6 meeting, this item was directed for consideration at the December 14 special meeting. Enclosed on page is a copy of the presentation notes that Terry Davis shared at the Special City Council meeting on December 6. 1 ACTION TO BE CONSIDERED: r To direct the APC and APrC to form a joint work group/task force to review the City ordinances and/or policies for the purpose of enhancing the City's ability to avoid excessive tree loss and promote greater green space preservation and expansion for new and expanded development. CEDAR/HWY 13 AREA TASK FORCE REPORT During 1997 and 1998, a series of meetings were held by the Cedarvale Service District Committee, consisting of business owners and merchants,with City staff to discuss the need for a Greater Cedarvale Area study. It was agreed by the business group that once the TH77/TH13 interchange was constructed - the community built new commercial nodes at Cliff Lake Center and the Promenade/Town Centre, and the population concentration was moving east in the community - the viability of retail at Cedarvale substantially changed. There was general agreement that a portion of the Greater Cedarvale Area was being underutilized and had changed to a destination use, i.e. the bowling alley, barber shop, veterinarian clinic and other similar uses. The Cedarvale Special Service District business owners group made a recommendation to the City Council that a study be initiated that would review the viability of retail for Cedarvale and consider redevelopment options for the Greater Cedarvale Area. An RFP was prepared during the summer/fall of 1998 and distributed to several consulting firms who submitted proposals to be hired for the redevelopment study. Following the interviews, conducted by a twelve member interview team, SRF Consulting was hired in January, 1999 to begin their consultation to the City. The City Council had also initiated the formation of a Cedar/13 redevelopment study group, consisting of a fifteen member task force, to oversee the study. Meetings began in the spring of 1999 and the work was scheduled to conclud in late September/early October; however, the task force requested a fourth scenario which required City Council action to allocate additional resources for SRF. This additional study delayed the Open House and generated the need for additional time to prepare the draft report. A moratorium was initiated on May 11 to expire November 11. Due to the needed extension by SRF to complete the study, the moratorium was extended for 90 days at the November 1 City Council meeting and will now expire in early February, 2000. The fifteen member task force, chaired by Margaret Schreiner,has held seven meetings and one Community Open House to complete the Cedar/13 Study Area Report. With the assistance of SRF and staff input under the facilitation of Assistant City Administrator Verbrugge, the task force will be presenting the Village Plaza Redevelopment concept for the Cedar/13 Area Report at the work session on Tuesday. Enclosed without page number are copies of the Village Plaza report that include the information that was requested by the City Council of SRF and the study task force. SPECIAL NOTE: A special congratulations and thanks again for the efforts of the Cedar/13 Redevelopment Task Force. V2 s ACTION TO BE CONSIDERED: To receive the report from the task force and place the item on a future regular City Council agenda to direct implementation of the concept scenario which is outlined on pages 17 and 18 of the report. SALARY COMPENSATION STUDY As a part of the 1999 budget deliberations and compensation review by the City Council in late 1998, it was determined that a compensations practices review covering non-collective bargaining unit positions was needed. In order to bring greater equity in the City's overall compensation program and to establish a fair rate of compensation to retain and attract new employees, it was the City Council's action to hire a consultant to perform a compensation study for all non-collective bargaining unit positions. The study is complete and ready to present to the City Council. Mr. Rod Kelsey, representing Riley, Dettman &Kelsey,will be present at the special City Council meeting to provide a brief overview of the salary compensation plan and answer any questions the City Council might have regarding the study. DIRECTION TO BE CONSIDERED: To review the compensation plan and place the item on the December 20 regular City Council meeting for formal approval OTHER BUSINESS At this time, there are no items for other business. EXECUTIVE SESSION Staff is proceeding with negotiations to acquire land from Duke Weeks Realty for the Community/Central Park. The November 16 motion included, as an alternative, condemnation for the acquisition of the property. Since condemnation may be an alternative, the City Council can discuss options that are available for acquiring the land in executive session. The City Attorney, Director of Parks & Recreation, Director of Public Works and City Administrator will outline various options that are available to the City Council at the executive session on Tuesday. Also, the City Administrator will present an update and ask for direction on various collective bargaining groups' proposals. /S/ Thomas L. Hed2 City Administrator TLH/vmd 1 APrC Proposal for consideration by December 6, 1999 the Eagan City Council Background. While reviewing several development proposals in recent months,the APrC has encountered an increasing number of situations where developers' proposals and the city's off-street parking requirements are creating a more noticeable reduction in effectiveness in tree preservation and mitigation in the few remaining undeveloped parcels. The Commission is hearing from developers that their large parking areas are caused by the City of Eagan's requirements which creates a larger"footprint"than the off-street parking requirements of other cities. Other cities allow 9'stalls whereas our policy requires 10'stalls. The Commission has also noted strong resistance to consider underground parking and multi- story building construction to further reduce the"footprint"effect. Last September,the APrC directed a study group of four Commissioners from its Natural Resources and Acquisition/Development Sub-Committees to do a preliminary review of our off- street parking, our tree preservation and mitigation ordinances,development/redevelopment issues, and make recommendations to City Council if appropriate. The study group has met with staff in October and November to: • review comparison data collected by staff; • generate ideas for alternative and/or supplemental approaches to reduce the impact of development on trees, natural areas and greenspace;and • to determine if additional study is appropriate. Issues: The study group concluded that our current tree preservation and mitigation ordinance is overall probably the best from our comparison sampling which included other local and national cities. It has served us well since its approval in 1996. However,much of the remaining undeveloped land is not easily developed in many cases and will require substantial alteration to the terrain without creative project designs that complement the land. Furthermore, redevelopment in the older sections of Eagan will likely provide new challenges and opportunities. As a result,we believe creative supplemental approaches in the City's ordinances and/or policies will be required to enhance our ability to avoid excessive tree loss and promote greenspace preservation and expansion. This has to be in concert with meeting planning and development needs. Pro osal: We propose that the Eagan City Council authorize the continuation of the APrC study by a joint work group comprised of designated representatives from APC,APrC,and city staff. Final recommendations should be.provided to the City Council by April 30, 2000. Submitted by: Lee Markell, Chair-APrC Terry Davis, Chair-APrC Development/Impervious Surfaces/Tree Preservation Study Group SPRINGSTED Public Fftww Advisors CITY OF EAGAN, MINNESOTA VILLAGE PLAZA REDEVELOPMENT CONCEPT PRELIMINARY FINANCIAL VIABILITY ESTIMATE December 9, 1999 City of Eagan, Minnesota Village Plaza Redevelopment Concept Preliminary Financial Viability Estimate The City of Eagan has under consideration a redevelopment concept for the Cedar Avenue/Highway 13 interchange area (the "Cedarvale Area"). Redevelopment, by its nature, can be costly and the City is interested in determining the financial viability of the project. This report establishes a groundwork for addressing the financial aspects of the project and provides a preliminary perspective on the cost of redevelopment in the Cedarvale Area. Redevelopment involves the acquisition by public or private parties of previously developed properties, the clearing of outdated structures, updating/upgrading of public infrastructure, and the construction of new facilities. Acquisition costs will depend on the location of the property and the financial viability of the existing building uses. Public infrastructure costs will depend on the age and adequacy of existing infrastructure and the design parameters for the redevelopment area. In the end, development will be driven by the developer's assessment of the viability of the location and its cost compared to comparable alternative sites. One way to conceptualize the financial viability of a redevelopment project is to determine the all-in estimated cost of assembling and preparing the property, add the infrastructure costs that the developer will be assessed and compare the resultant square footage cost to other similar sites within the City. All-in cost of assembling and preparing the property. There are three primary components of this cost element. They include purchase of the subject property, demolition of existing structures, and relocation of existing users. Broad assumptions can be made regarding the relationship between market value and ultimate purchase price of properties and demolition and relocation costs will vary significantly from parcel to parcel depending on the nature of the structure(s) in place. To provide the City with preliminary information we have assumed a standard write-up of land costs of 1.5 times current market value and a 2.0 times write-up of market value for each building. We have also used a flat$5 against building square footage to provide some allowance for demolition and relocation costs. Obviously, the level selected for any one of these standards can significantly affect the estimate and the City may choose to do a more in-depth analysis of all or portions of the Cedarvale Area as a second phase study to provide more concise information regarding property acquisition costs. To assist in estimating acquisition costs we relied on information provided by the City which includes in part a parcel map of the Cedarvale Area, a listing of current property valuation information for the parcels and buildings, and the draft Village Plaza concept plan. Using the plan, we identified which parcels are the subject of the redevelopment concept. Using the map and listing we were able to determine the owner, size and current value of land and buildings on the redevelopment parcels. In the case of two parcels, the City currently owns the property and no additional land cost nor recovery of initial cost was assumed for the proposed redevelopment. The result of this part of the analysis is summarized on Exhibit A. The parcels are sub-totaled based on whether they are included or excluded from the redevelopment concept as outlined in the draft Village Plaza concept plan. Certain parcels have been identified as needed for designated public areas and are similarly sub-totaled. Using this methodology, the acquisition/demolition/relocation cost of the subject parcels is $6.04 per square foot. Infrastructure Costs. City staff has indicated that the public infrastructure costs will occur primarily southeast of Highway 13. The total estimated cost is $3,365,000. Preliminary funding sources include the use of MSMA funds (estimated in an amount of $1,610,000) and special assessments. Given this preliminary information, the additional cost to properties within the Cedarvale Area affected by the infrastructure improvements will be $1,755,000. We would advise that the City develop a finance plan for the public cost side of the Cedarvale Area that addresses all public costs, including open space and recreational areas, public structures, and street and utility improvements. It should identify available resources and how any unfunded costs will be provided for. The viability of the project should be looked at both from the perspective of affordability for the developer, and knowing that there is an affordable plan for the support of the public cost of the project. Not insignificant in these estimates will be the cost to acquire land for public areas and structures such as the ball fields, park amenities, community center, and transit hub. Comparably priced development alternatives. Land costs will vary from area to area. Using a variety of sources, we would estimate that the market could demand $2.50 to $4.00 per square foot for developable land with the proposed level of public amenities and allow projects to Page 2 develop and be financially feasible. For the purposes of this overview, we have assumed a market price of $4 per square foot. Any costs in excess of that level would need to be offset by incentives. Levelinq the development field. As discussed earlier, the ultimate land cost within the Cedarvale Area will need to be comparable with the land cost in similarly improved areas that are developing without incentives. If the comparable cost figure is $4 per square foot for this area, the incentive cost can be calculated as follows: Total for Area Private Development Public Areas Acquisition Cost $26,804,850 $22,827,600 $3,977,250 Demolition/Relocation Allowance 2,515,490 2,242,465 273,025 Plus Infrastructure Cost 1.755.000 1.495.000 260.000 Gross Cost $31,075,340 $26,565,065 $4,510,275 Assumed Square Footage 4,440,299 3,633,155 807,144 Net cost/square foot $7.31 $5.59 Required Incentive Cost 12,032,447 $12,032,447 Adjusted Net cost/square foot $4.00 Resources available to offet required incentives can include grant funds, tax increment, tax abatement, and other economic development tools. It should be evident that the estimates provided above include a large number of assumptions which need further verification and refining to provide a more accurate assessment. This information should, however, provide an order of magnitude answer to the initial question on financial viability. It would appear based on the assumptions outlined above that a significant level of incentive will be needed to cause the redevelopment of the Cedarvale Area to occur. It may be helpful to the City in its deliberations to also focus attention -on the development gained at this cost. Increasing density and attractiveness of the area can reap rewards for the City. These should be quantified and measured against potential costs. Page 3 r 0 U) > M U m X r O CL a� _W N M N O W m m O N O V m m 1n m N O cJ p m 0 0 c7 m O N V m < O O a M O N� OMM N m V Ci W N � m N n n W C V cq r O N « V O W 01 7 P] c N N N N ? 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