09/30/2003 - Acquisitions & Private Property Improvement CommitteeAGENDA
CITY COUNCIL COMMITTEE ON
ACQUISITIONS AND PRIVATE PROPERTY IMPROVEMENTS
CONFERENCE ROOMS 2A & 2B
September 30, 2003
7:30 A.M.
I. CALL TO ORDER
II. OVERVIEW OF COMMITTEE DIRECTION
III. DISCUSSION OF BACKGROUND INFORMATION
IV. DISCUSSION OF POLICY ISSUES AND RECOMMENDATIONS
V. NEXT STEPS AND FUTURE MEETINGS
VI. ADJOURNMENT
Auxiliary aids for persons with disabilities will be provided upon advance notice of at least 96
hours. If a notice of less than 96 hours is received, the City of Eagan will attempt to provide such
aid. Please contact City Administration at 651-675-5001 with requests.
MEMO
s
city of eagan
TO: CITY COUNCILMEMBERS PEGGY CARLSON AND MEG TILLEY
TOM HEDGES, CITY ADMINISTRATOR
GENE VANOVERBEKE, DIRECTOR OF ADMINISTRATIVE SERVICES
MIKE RIDLEY, SENIOR PLANNER
JIM PROSSER, EHLERS AND ASSOCIATES
BOB BAUER, SEVERSON SHELDON LAW FIRM
FROM: JON HOHENSTEIN, COMMUNITY DEVELOPMENT DIRECTOR
DATE: SEPTEMBER 24, 2003
SUBJECT: COMMITTEE MEETING TO DISCUSS ACQUISITION AND PRIVATE
PROPERTY IMPROVEMENT POLICIES FOR REDEVELOPMENT AREAS
At its workshop meeting of September 9 and the regular meeting of September 16, the City Council
was briefed about the need to better clarify the City's policies with respect to the acquisition of
properties in redevelopment areas and the potential private improvement of property that is
anticipated to be purchased in the future. As part of the background to this discussion, the issue
statements outlined in the Council packets were:
A. Potential Property Acquisitions — The City has been approached by a number of
property owners or prospective developers of subdistricts asking City consideration of
acquisition of additional properties. In some cases, this has been in contemplation of a
specific redevelopment project. In others, it has been from property owners who have
determined to relocate from the area, who are aware of the City's redevelopment
activities. In particular, the City has been approached by owners of Jim Cooper's
Goodyear and the Eagan Pet Clinic, among others. In addition, the Nicols Ridge Project
contemplates the acquisition of additional properties in the South District. To date, the
City's decisions regarding acquisitions have been on a case by case basis and they should
continue to be, but it would be beneficial to review and clarify the criteria on which those
decisions should be made so that we are better able to give reasonable expectations to
willing sellers.
B. Potential Property Improvements — Staff has been approached by two property owners,
the Mediterranean Cruise and Minsk Market (former Pizza Hut and ProWire building),
with plans to remodel existing buildings within the district. While the City wants private
sector interest and reinvestment in the future of the district, a stated goal has been to not
encourage piece -meal, lot by lot redevelopment. The C ty has chosen not to im lement a
moratorium in the district and, as a consequence it is necessary to respond to these
requests on their merits at the present time.
As additional guidance in this regard, particularly with respect to acquisitions, a copy of a set of
guidelines prepared by the City's redevelopment consultant, Ehlers and Associates, is attached. At
this time, the background information being provided is intentionally broad and basic to permit us
to hold a first meeting with the Committee to focus the policy issues, to identify additional
information that may assist in the discussion and prepare for a follow up meeting that will permit us
to reach some conclusions and recommendations for consideration by the full City Council. I
apologize for the brevity of this background, but I believe that the first discussion will permit us to
focus our efforts for subsequent ones.
If you have any questions between now and the meeting, please contact me.
EHLERS
& ASSOCIATES INC
Redevelopment Project Elements and Policies
Successful redevelopment requires three basic elements; a clear goal, a market for the redevelopment
concept and financial resources to pay for the redevelopment and an effective communications and public
input strategy with the community. Most redevelopment projects that falter are the result of failure to
develop a primary redevelopment goal. As a result the redevelopment effort is forced to achieve multiple
(and sometimes conflicting) goals. Removal of a blighted area, development of a "gateway", new housing
options, and development of neighborhood retail are all examples of potential redevelopment goals. The
key is to select one primary goal. That is the goal that will be used to measure whether a proposed
development is appropriate for the community. Secondary goals can be identified with the understanding
that achieving these subsidiary goals is not a prerequisite to project approval.
Once the redevelopment goals has been identified a planning process that includes analysis of the market
and financial feasability is essential. Development of a concept plan that is not marketable to the
development community or cannot be financed, even with public assistance, is politically risky. Once the
community has been engaged in a planning process there is an understandable expectation that the
development will occur. Inviting developers to participate and comment during the planning process helps
increase the likelihood of a successful redevelopment and also serves to market the project to potential
developers.
In a similar manner inclusion of a financial advisor during the planning process will clarify the financial
feasability of the project. Project revenues may include land sale proceeds and public assistance (including
grants, TIF and tax abatements).
It is important to note that this approach accommodates a situation where the development authority has
identified a goal that is not currently marketable. For example a may city determine that it wants to have
a signature office building as a gateway to the community. If the market feasability indicates that there is
not a market for this type of space, the city may decide to delay development until the market is ready.
Likewise, if a project is market feasible but not financially feasible the city may decide to augment normal
funding to achieve the desired goal.
Developing the informed consent of the community for redevelopment is extremely important to a city's
ability to complete any redevelopment. To develop informed consent, the city needs to design a
communications and public input strategy that enables the community to understand and accept the
redevelopment. This involves communicating regularly and frequently utilizing a variety of tools that have
been crafted to forecast issues, acknowledge controversy and honestly address issues and concerns. The
strategy involves the development and implementation of a communications plan and design of planning
proccess which provides the appropriate level of community input at critical points. In cases where
referendum is a part of the redevelopment process, it involves an even more complex and skilled handling
of communications issues to aggressively and impartially inform the public.
Redevelopment Project Framework
Redevelopment projects basically occur within five phases. These phases often overlap. The time frame
for each phase may vary significantly from project to project. It is essential to recognize that redevelopment
Redevelopment Process and Policies
Page 2
programs are inherently controversial because they involve change. Redevelopment is also disruptive to
those within and adjacent to the project area. While efforts are made to minimize this impact some level
of disruption is unavoidable. An effective communications strategy that focuses on forecasting issues,
reiterating key massages and addressing concerns plays a major role in the redevelopment process.
The phases of redevelopment include:
Phase I --Need Identification
The city identifies an area or areas in need of redevelopment. In this phase, the public has little or
no awareness of the potential redevelopment project and may or may not agree with the need for
redevelopment or what role the city should play. A communications plan should be developed at
this phase because it will assist the city's policymakers with identifying and agreeing on the one goal
of the redevelopment and the key messages of the redevelopment. Also, communications tools need
to be developed immediately which will enable the city to forecast key messages about the need, and
the primary purpose for the redevelopment, whether that is blight removal, improved tax base,
enhanced "gateway" image of a community or something else It important to settle on one prime
goal for the redevelopment. While there can be secondary goals, settling on a primary goal will help
to avoid measuring the redevelopment's success using different yardsticks. That primary goal will
need to be reiterated and underscored throughout the project. A decision is made in this phase to
proceed with a redevelopment concept.
Phase 2 -- Concept Development
This phase encompasses the planning process, beginning with the design of a redevelopment
concept. A group is identified to assist with concept development, and broad-based community input
is received. Consistent and frequent communications utilizing a variety of tools enable the city to
inform and educaate the public and offer opportunities for feedback ,in addition to publicizing open
houses The city should continue to forecast the need and purpose for the redevelopment and the
planning process. The redevelopment process identifies desired outcomes, potential redevelopment
uses and design ideas, and designates the redevelopment area.
Phase 3 -- Concept Refinement
In this phase the concept is tested for market and financial feasibility with the help of developers and
market specialists. The redevelopment concept is then refined, based on the financial and market
analysis. A critical public participation issue in this phase is the need to involve the community in
the refinements of that concept. At this phase there may be some growing awareness of the potential
redevelopment project in the community. Communications efforts must increase knowledge about
the project, especially as it relates to the need, the purpose, the plans, the process and public
participation. This phase is often combined with concept development.
Phase 3 -- Developer Selection
At this phase the city contacts qualified developers and discusses the redevelopment concept and
program, identifying developers for a qualification process. Developers' experience and financial
capabilities are assessed. One or more developers is selected for further analysis of the
redevelopment feasibility. The city reviews general plans, including uses, design concepts, densities
and financial feasibly with developers.
Phase 4 -- Development Agreement
Redevelopment Process and policies
Page 3
Most of the planning is completed and a developer has been selected, but the project is still months
from construction. A pre -development agreement is negotiated with one or more developers,
providing a period of exclusive rights for development. In that agreement, the developer refines
plans and assesses market feasibility. In the development agreement, the developer secures a lease
commitment and financing for the project. The developer also completes land use and other
regulatory reviews. Finally, the development agreement occurs when the developer removes
development agreement contingencies and initiates land acquisition and building design. At this
phase, communicating the vision for the redevelopment is critical and helps the community focus
on future benefits. The vision is especially critical where communities may initially be
uncomfortable with a type of redevelopment, such as multi -family housing, in part because of an
inaccurate and negative perception.
Phase 5 -- Construction
All development agreements are final, acquisition has begun and even some initial demolition of
existing properties has occurred.
Recommended Redevelopment Policies
A primary redevelopment objective should be identified by the City Council. This will provide the
framework for evaluating redevelopment proposals. The Council may select several secondary
objectives however it is understood that these secondary objectives are not required for project
approval.
2. A communications plan should be prepared and approved the the City Council for each
redevelopment project. The plan should include a variety of methods used to provide information
to the public, target audiences, forecasting key issues and decision points, methods to receive
feedback, key messages and time frames. Because the plan identifies key concerns/issues for the
community and the primary purpose of the redevelopment it is important to develop it very early in
the process. The plan must be implemented to ensure frequent and consistent communications that
inform, forecast, acknowledge controversy, address issues and communicate the vision.
Developer selection should be competitive whenever possible. Competitive selection will increase
the available options and provide greater assurance that the City is providing the right level of
assistance.
4.- ---- _Deve oper -selection s oul - e based on e- ollowmg -factors: -- ----- -- -- --- --- -
• Proposal ability to achieve the primary objective identified by the City Council.
• Financial feasability.
• Demonstrated ability to achieve design guidelines.
• Demonstrated ability of developer to access required project equity and financing.
• Developer experience with similar projects.
• Developer ability to demonstrate design and process flexibility.
• Developer experience with incorporating existing businesses into new project.
• Developer experience with acquiring property without condemnation.
• Developer experience with communicating with public.
5. The redevelopment process should follow the "Redevelopment Process Framework" as reasonably
possible. This process has been designed to increase the potential for successful redevelopment.
Redevelopment Process and Policies
Page 4
Eminent domain will not be authorized to assist a developer in property acquisition except where
an independent third party certifies that best faith efforts have been unsuccessful in attempts to
acquire property required for development. Use of alternative dispute resolution helps avoid the
perception that the city and/or the developer will take advantage of existing property owners.
7. The City/EDA/HRA should consider purchasing property within the redevelopment area when the
following conditions are met:
• Acquisition costs are reasonably close to estimated market value.
• It is possible that the property would be acquired and developed for a use inconsistent with
development goals or design guidelines without the assistance of the City/EDA/HRA.
• A method to finance the acquisition and holding cost can be identified.
• The parcel is key to achieving redevelopment objectives of the City.
8. Developers entering into preliminary development and final development agreements will be
required to deposit funds to defray development review costs. This would include legal, finance,
planning and communication costs.
9. Public assistance in the form oftax increment, grants, reduced fees or other means of assistance will
comply with the City's Business Subsidy Policy. In addition an independent "rate of return"
analysis will be prepared prior to granting any assistance.
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