09-09-85 agenda/-/
CITY OF RICHFIELD, MINNESOTA
Office of City Manager
Council Letter No. 326
HRA Letter No. 46
Agenda of September g, 1985
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Amendments to the Market Plaza Corporation
Developers Agreement and Related Agreements.
Council Members:
On May 14, 1984,. the City of Richfield (City) and~the
Housing and Redevelopment Authority (HRA) entered into a
contract for the Sale of Land for Private Development with
Market Plaza Corporation (Developer), Arkell Development
Corporation (Co-developer) and E.J. Plesko Association Inc.
(Co-developer).
On August 26, 1985, certain contractural documents were
presented to the City. The agreements had not been presented
in time for sufficient review and it is, therefore, expected
that they will be reviewed, revised and presented again at the
September gth meeting of the City Council. 'The first of these
is an amendment to the DeveioperTs Agreement, Exhibit H which is
attached. Some of the revisions were previously approved and
others are being presented for the first time.
In November, 1984, an increase in the number of condominium
units from 136 to 157 was approved along with the mix of number
of bedrooms and unit size.
On July 22, 1985, a number of revisions were made:
-a reconfiguration of the building on the east end;
-an increase in the gross floor area from 316,400 square
feet to 322,659 square feet;
-the building 'has been pivoted southward slightly;
-an addition of a maintenance building on the west side of
the structure;
-a reconfiguration of•commercial spaces and a reduction in
the mall width;
-a reconfiguration in the apartment guest parking area and
in the commercial parking area adjacent to Wendys; and,
-2 /~
-a revision in the exterior facade materials.
-an increase in the number cf aprtments from 162 to 166.
For your consideration on September 9th are the following
modifications in Woodlake Point:
1. The use of a flat roof on the elevator penthouse on the
roof instead of a pitched hip roof.
2. The use of metal siding instead of wood on the sides of
the balconies.
3. The reconfiguration of the pedestrian walkway west of
.the building so that the sidewalk is totally on~the
subject site. .
4. Minor adjustments in the access- road to Bridgemans and
adjacent landscaping.
The documents to be presented Monday evening will amend
other portions of the developerfs agreement as follows. The
amendment consents to the assignment by Market Plaza Corporation
and E.J. Plesko of their rights under the Developer's;
Agreement. The assignment is to two limited partnerships, The
agreement releases the limited partners from any obligation with
reference to the condominium component. It also provides for
revised assessment agreements and deficiency agreement which
have the effect of dividing up the obligations among the various
entities which are involved in the Market Plaza Development.
The second agreement is a form of Subordination Agreement
between the City, the-HRA, Midwest Federal and the partnerships
that will be developing the two components of the Market Plaza
project, i.e., the commercial component and the rental housing
component. There will be a suggested Subordination Agreement
for each of the two components. The general purpose of the
Subordination Agreement is to protect the lender against any
prior right of the municipality to recapture the Market Plaza
project site. In the event that Market Plaza is unable to
complete the project in accordance with the Developer;s
Agreement, the lender wants to be able to step into the
situation and salvage its investments.
A third form of agreement is an Assignment and Assumption
Agreement. These agreements are for your information only.
They provide for the assignment of the Developers
responsibilities under the Developers Agreement to the limited
partnerships. There is an Assignment and Assumption agreement
for each of the two components of the Market Plaza project. No
council or HRA action is required on these agreements but they
da constitute notice to the City that the identity of the
developers has changed (even though the principal parties
involved are largely unchanged).
-3-
/-3
In addition, attached to this letter is the bond sale
,.T. resolution praviding for the sale of the housing bonds. Our
bond counsel has reviewed the resolution and finds it to be
acceptable. However, you will notice on page 9, paragraph 7
that the line-for the purchase price of the bonds is blank. That
information will be provided to the Council on Monday evening.
The bond sale is scheduled for Monday.
It is recommended that the HRA and City Gouneil take the
following action:'
1) The HRA approve the amendments to the developers
agreement as discussed above.
2) The City Council approve the amendments to the
developerts agreement as discussed above and the
resolution approving the housing revenue bond sale.
Respectf y ubmitted,
:~.'
ohn G. Car wr ht
City Manager
HRA .Executive Director
JGC/eja
Revised 9/85
MARKETING PLAN AND 'TENANT MIX
PROJECTIONS: WOODLAKE POINT (~NDOMINIUMS
5
i
HOUSING CAMPONENr B MARKET PLAZA APARTMENTS
SHOPPING t~NTER MARKED PLAZA CbMMERCIAL
EXHIBIT H
12
11
32
11
21
10
13
11
10
22
2
1
1
1 Units
WOODLAKE POINT CONDOMINIUMS
TYPICAL MIX.
One Bedroom .
One Bedroom
One Bedroom
One Bedroom
One Bedroom and Den
One Bedroom and-Den
One Bedroom and Den
One Bedroom and Den
Two Bedroom
Two Bedroom
Two Bedroom and Den
Two Bedroom and Den
Two Bedroom and Den
610 square feet
741 square feet
786 square feet
843 square feet
.9'15 square feet
' 944 square feet
976 square feet
985 square feet
1,060 square feet
1,106 square feet
1,435 square feet
1,490 square feet
.1,600 square feet
.,``.
•
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.:- /l
WOODLAKE POINT ~QNDOMINIUM
The older adult market can be subdivided into thrEe grcups i
1. Healthy, active empty nesters that are simply Iooking to escape
the, responsibility of homeownership ;
~2. Independent living elderiy that are often retired, have some
health concerns, and are Iooking to escape the burden of
homeownership; and ~~
3. The frail elderiy that require considerable care .for the
satisfaction of their basic needs.
:,
The elderly building component of the Alarket Plaza Development is
directed towards the first ttwo groups listed above. 'Both the building
plans and marketing approach have- been desi#,*ned to meet their special
requirements.
S
The experience that Knutson organization gained by developing Lake
Shore Drive, a 178 unit condomir_um in Richfield, provides insight into
the development of market rate elderiy housing. This project, marketed
in difficult economic times, opened in the Fall of iJ82 and was sold out
within six months.. The key ingredients to the success were:
1. Involving the market into the design development phase,
assuring a fit between supply, demand, and cost. , This process
lasted nearly one year before ground was broken in the Fall of
1J81;
2. Gaining the trust of the market and the community by keeping
them informed of progress through regular newsletters ' and
community meetings. Included cvithin this category cva ,the
development of a sponsoring relationship cvith a~ local .church,
which facilitated of the creation of a cvorking relationship ~ with
other local churches and organizations; and
. /~
3. Understa.*~ding the special needs of this .market segment, such
as providing independent consultants to assist the buyers in •`
dealing with the seemingly overwhelming task of selling their
' hone. These consultants explained the. process of selling real
estate in today's market, provided an estimate of expected
selling price and review realtor's performance and proposals if
necessary.
The Lake Shore Drive product that evolved out of .this process was first
of all a condominium versus a cooperative.. ~~:ith some minor modifications,
the operations of these two structures are. virtually identical. The
preference for the condominium form of ownership was based primarily on
.financial considerations. 1Ylost .important among them was .that .each buyer
can finance his or her unit in a manner that best fits their, particular
situation; small downpayment, large. downpayment or cash, and, this
money is not req~ured until closing.
The apartments themselves ranged in size from 550 square fee to II30. \'
square feet and cost from ~4fi , 000 to $94 , 000. Covered parking cost an ~'
additional 55,.000. The most popular. units were the deluxe ono .bedroom
at 750 square feet for $fi4,000 and the 1 bedroom den. at 950 square feet
for X78,000.
Thefinancing that was available included conventional, FIiA, or VA.
..Most of the owners preferred to transfer thee. equity they had in their
current home to their new home,. resulting in little or ~ no mortgages.
This desire to trade equity made the sale and cash out of their existing
hone vital to the .success. of Lake Shore Drive and reinforced the reed for
the .earlier mentioned Homesale Consultants.
The buyers themselves were almost entirely drawn from a two mile
distance of the project. Nearly 90% were homeowners, two-thirds of them
were married, and. their average age was 71.
The recommendation for the primary design features and approach to
marketing of the ~'Iarket Plaza follows those developed at Lake Shore
/- ~
Drive. That experience provides an excellent foundation on which to
build an even. better facility.
An important first step in the marketing of an elderly facility is
establishing credibility. Central to this is the development of a working
relationship with respected community organizations for the purpose of
sponsoring the project. This helps to establish credibility and provides
early access to a group of the market that has a real interest in working
together to improve the project and spread the. word. The feeling of
trust and confidence that is built with the community and marketplace
through the early involvement of the sponsor is vital to the overall
success of the development.
The recommended apartment plans range in size from 600 to ' I;~00 square
feet and are priced at approximately $90 per square foot. Features th~a
we have .found. very important include storage clo.~;ets, within the units,
Lever handles in place of all Itnobs, outlets raised to a height of two feet,
full size kitchens, including- a .breadboard, a definable dining area., 36"
wide doo: s throughout the accessibility, balconies , air conditioning , and
emergency call. buttons.
The community space in a building for older adults , many of whom are
retired,. is particularly important. .These areas become an extension of
their living space and provide an opportunity to interact with others.
Amenities that will be available within the building include a library,
cvori~shop, gameroom, diniilgroom serving a daily meal, guestrooms, 24
hour a day security and emergency response system, underground
parking. Upon announcerient, it is anticipated that individuals on the.
c~aiting list at Lake Shore Drive and others that. have heard of its success
will express interest.
The formal marketing program would begin shortly after the Development
Agreement has been signed. At that time, reservations would be taken
as the: plans are firmed up through market interaction. These cvouid later
be converted to Purchase Agreements on specific units. Throughout the
marketing period, the sales staff i~~ould be working with the particular
i9
concerns .and problems facing the buyer. One of these will likely be the '`
selling of their current home. The development of a program similar to
that utilized at Lake Shore Drive ~ /
and discussed earlier, would be
instituted. Based. on our current projections, all units will be sold and
closed within 18 months of building completion.
•
•
Revised 9/85
MARKET PLAZA APARTMENTS
(A Targeted Adult Community)
TYPICAL MIX
32 Standard One Bedroom o29. square feet
39 Deluxe One Bedroom 715 square feet
39 One Bedroom Den/Office 850 square feet
56 Two Bedroom 1,050 square feet
1~-
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iV1AtZKk~rTNG ~ PLALA AE'ANI'1~9ENTS
~//
'the targeted. adult community can .be_.factored into.a diverse group. of people who
reflect the population .mix of the surrounding community:
--~
Seniors (55+); single and couples •
*Empty Nesters (45-55); middle management; craftsman; sales people and
sunshine commuters.
*Young to middle age couples (27-44) with established careers.
*Young couples (21-26) with first professional jobs.-
*Young to middle age single (27-28) with established careers..
*Young singles (19-26) with first professiona]. jobs.
The apartment. building component is directed to this heterogenous group. Both
the building plans and marketing approach have been designed to meet many of
their requirements including:
1. Common ,Areas such as laundry and community/social room
2. Restaurant (Commercial Component) .
3. Covered parking
4. Drug/variety store and other retail and service uses.. .(Commercial
Component)
5. Apartment unit design with 2 bedroom/2 bath, 1 bedroom and 1 bedroom
office/den.
6. Location, entrance,. view including the path around Richfield Lake,
natural areas, and the proximity to bus lines,. employment and shopping.
7. Direct and secure connection to the shopping service center.
The apartments range in size from the one bedroom 629 square foot unit to the
two bedroom 1,050 square foot unit. These units are expected to rent for:
32 Standard One Bedroom
39 Deluxe One Bedroom
39 One Bedroom Den/Office
56 Two Bedroom
629 square feet
715 square feet
-850 square feet
1,050 square feet
$453 to $472
$515
$595
$714
1~
The garages. will probably. rent for $35 to $40 per month. Rents should include
use of all common areas and other incentives.
MARKETING ~ APPROACH
~~~
Our marketing approach._is._based_on preliminary. market analysis: While a.great
deal is known about the features .that generally appeal to this diverse housing
market; there are a number of specific questions we are answering. at the
present 'time: These questions relate to preferences, desires and profiles of
the immediate market: A detail personal interviews and group meetings are
being completed to the finalized unit layout; amenities and mix. We do not
expect the unit mix or layout to change . We do expect to make sure. the
features, bath design, kitchen design and common areas attract future tenants.
Network Strategy - In the early stages of development, a marketing
coordinator experienced in leasing housing to a diverse age group will be
involved in the project and will implement the network strategy. This strategy
uses a "word of mouth approach".
Presentations to targeted groups and organizations
*Working with employees and Ioca1 businesses
One to one visits with pastors and community leaders
This approach could develop community awareness and support for,the .housing.
Advertising - Direct mail, newspaper and newsletters will be used to appeal
to residents in the Richfield Market-area. Newspaper and radio advertising may
be used to reach the larger market area. Use~of selected.; magazines (Twin City,
Freeway News,. The Guide) may be used to target the market segments.
Rental Office - A rental office. will be located near or on the site. The
office hours will be opened as deemed by the marketing coordinator to maximize
the marketing program. The developers anticipate the office hours will include
some weekday evenings and weekends. The office will be staffed with a
professional marketing coordinator.
MARKETING MARKET PLAZA SERVICE CENTER
The shopping/service component of this mixed-used project will be diversified
to capture trade from various market segments within the market area. The
market analysis demonstrates that the retail/service uses in the 66th and
Lyndale area are predominately budget to moderate neighborhood convenience and
service. Lyndale Garden Center, Lyndale Hardware, K-Mart and Marshalls are the
strongest retail draw. Richfield Bank and Trust is the strongest service
draw. This combination of retail uses and market orientation provides the
opportunity to create a life style service center.
This center will 'nave a classier look and feel than any of the existing retail
facilities. The focus of the center will be on convenience, restaurants, life
style stores and neighborhood service.
There are a number of office/service type businesses in the area that are
interested in better accomodations at reasonable rents. These uses along with
traditional office uses will be accomodated within the new complex. Other
primary uses will be recruited from outside the area.
fJ
The service center concept can. achieve rents in the $S:OO.to $14:00_per..squar_e
foot range: The .amount of space which will be absorbed by the center relates
to the market area consisting of primary and secondary areas having the ~'•
following characteristics: •-~
*Populations 156,023 people
*Employment ~ 154,800 people
*Average household income $23,357
MARKETING APPROACH
We are. presently refining the market study to discover more detail. design
considerations and to insure that the. proposed market approach will be
successful. Our marketing approach will be to:
Regional Store Recruitment - E.J. Plesko and Associates are responsibile
for recruitment of national and regional store franchise or owner
locations. .This approach involves marketing directly to major business
.headquarters in Chicagq, New .York, Kansas City and St. Louis.'
Local Store Recruitment - A local broker will be contacting local stores
in the in City Metropolitan area to interest them in Market Plana. The
professional broker, with assistance from E.J. Plesko and Associates, will
also provide onsi.te assistance and staff the local leasing office. A
broker participation program will be available. to provide an incentive to
other brokers to bring clients to Market Plaza
*Advertising -Ads are being place in trade journals and local papers, A
marketing booth should be set up at local and regional meetings of trade
associations.. A site sign will be used to identify the broker and the
shopping/servi.ce center.
"o ter~ti a l
YPICAL TE~lAYT MIX
~_:._-_r1ARKET PLAZA=COMMERCIAL
SFtOPPING/SERVICE' CENTER`
(a neighborhood servfce center).
Restaurants
Delicatessen/Snack Bar
Sporting Goods •
Hair Stylist
Health and Sports Club
Jeueiry
Electronics
ilomen's clothing
Men's clothing
Computer Service/Store
Professional Offices
Doctor
Dentist
Insurance
Legal
Financial
Printing/Secretarial
Instant Photo/art Gallery
Drug Store/Variety Store Pharmacy
Trsvel Service
Shoes
Optical
Ice Creaca
Card and Specialty Store
Other Retail Uses
Gross Square Footage.:
Cross Leasable Area:
74,.000 square feet
68,000 square feet
i ~y
TYPICAL SIZE (square f
5,000 to 10,000
300 to 400
2,000 to 3,000
1,000
7,00.0 to 10,000
1,000 to : 2,000
2,000 to 3,000
5,000
2,000 to 4,000
;.2,000 to 3.,000
2,,000 to I0, 000
1,000 to 2,000
400 to 1,000
15,000 to 20,000
3,000 to 5,000
2,000 to 3,000
1,500
1,000
1,000
1,000 to 10,000
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EXHIBIT H
FLOOR PLANS
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