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062011completeagendaCITY OF RICHFIELD, MINNESOTA MONDAY, JUNE 20, 2011 REGULAR HOUSING AND REDEVELOPMENT AUTHORITY MEETING RICHFIELD CITY HALL COUNCIL CHAMBERS 6700 PORTLAND AVENUE AGENDA Call to order Roll call 1. Approval of minutes of Regular HRA Meeting of May 16, 2011 2. HRA approval of agenda 3. Consent Calendar contains several separate items which are acted upon by the HRA in one motion. Once the Consent Calendar has been approved, the individual items and recommended actions have also been approved. No further HRA action is necessary. However, any HRA Commissioner may request that an item be removed from the Consent Calendar and placed on the regular agenda for HRA discussion and action. All • items listed on the Consent Calendar are recommended for approval. • A. Consideration of approval of resolution transferring funds from Richfield Rediscovered A-1, B-1, A-2, B-2, A-3, B-3, A-4, B-4, A-5 and B-5 and Richfield Rediscovered II Tax Increment Financing Districts to Development Account S.R. No. 18 B. Consideration of approval of award of contract to Otting House Movers, LLC for sale and removal of house and structures at 2517 76th Street West S.R. No. 19 C. Consideration of approval of allowing HRA -owned parcel at northeast corner of 66th Street and Lyndale Avenue be included in proposals for redevelopment of 6501 Lyndale Avenue (former Kmart site) S.R. No. 20 D. Consideration of approval of changes to Subordination and Satisfaction Policy S.R. No. 21 E. Consideration of approval of affirming City Council's call for public hearing on proposed modification to redevelopment plan for Richfield Redevelopment Project Area and proposed establishment of Lyndale Garden Center site Tax Increment Finance District S.R. No. 22 F. Consideration of approval of resolution affirming and ratifying submittal of application to Minnesota Housing Community Fix -Up Fund Program and Community Revitalization Program Fund and authorizing program development creating program to write down interest rate on home improvement loans S.R. No. 23 Notes: 4. Consideration of accepting 66th Street Corridor Revitalization Plan Staff Report No. 24 Notes: i 5. Discussion of housing and redevelopment goals for upcoming year Staff Report No. 25 Notes: 6. HRA discussion items Notes: 7. Executive Director report Notes: 8. Claims and payroll Adjournment Auxiliary aids for individuals with disabilities are available upon request. Requests must be made at least 96 hours in advance to the City Clerk at 612-861-9738. 0 richfield: June 2011 Page 1 of 1 City of Richfield Calendar • Calendars Net Navigate: 2010 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2012 June 2011 • Monday Tuesday Weda Thursday Friday 30 May 31 1 Jun 2 3 City Administrative 8:00a Civil Service 7:O0p Transportation 7:O0p Arts Commission CITY ADMINISTRATIVE Offices closed -- Commission Meeting Commission @ 6335 Portland Ave OFFICES CLOSED -- Memorial Day observed (Police Briefing Room) CANCELED MOVING TO NEW MUNICIPAL CENTER - REOPEN JUNE 6 6 7 8 9 10 6 PM Special City 11:30a Richfield Tourism Council/HRA/Planning Promotion Board @ Commission 6601 Lyndale Ave, Suite Worksession regarding 106 Lyndale Garden Center 7:00p Human Rights @ Oak Grove Lutheran Commission @ Church, 7045 Lyndale Community Center Avenue 13 14 15 16 17 7:O0p Planning 5:30 PM Special City 7:00p Friendship City Commission Study Council Worksession Commission in Heredia Session Room in Municipal 7 PM Regular City Center Council Meeting 20 21 22 23 24 6:O0p Advisory Board of 7:00p Community 7:00 p.m. Transportation Health Services Commission @ Commission 7:OOp Housing and 7000 Nicollet Ave Redevelopment Authority (HRA) 27 28 29 30 1 Jul 5:30p Human Services 5:30 PM Special City Planning Council Council Worksession 7:OOp Planning Commission 7 PM Regular City 6 PM Special City Council Meeting Council/HRA/Planning Commission Worksession regarding Lyndale Garden Center site @ Oak Grove Lutheran Church, 7045 Lyndale Avenue Display: Year Month Week Day Block List Condensed Abs Slide Calendars: Search Add Events: Dailv Duration Periodic Administer: This Calendar All meetings held at City Mall (6700 Portland Avenue) unless indicated otherwise Calendars Net free online interactive web calendars http://www.my.calendars.net/richfield 6/16/2011 J CALL TO ORDER HOUSING AND REDEVELOPMENT AUTHORITY MEETING MINUTES Richfield, Minnesota Regular Meeting May 16, 2011 The meeting was called to order by Vice Chair Quam at 7:03 p.m. ROLL CALL HRA Members Sue Sandahl, Chair (arrived at 7:04 p.m.); Joan Heimberger, Doris Rubenstein, Debbie Goettel, Present: and Steven Quam Staff Present: John Stark, Acting Executive Director/Community Development Director; Christine Costello, Community Development Coordinator; John Dean, HRA Attorney and Nancy Gibbs, City Clerk. Item #1 APPROVAL OF MINUTES OF (1) SPECIAL HRA WORKSESSION OF APRIL 18, 2011 AND (2) REGULAR HRA MEETING OF APRIL 18, 2011 M/Goettel, S/Quam to approve the minutes of the Special HRA Worksession of April 18, 2011 and the Regular HRA Meeting of April 18, 2011. Motion carried 4-0. (Rubenstein abstained.) Commission Member Rubenstein abstained from voting due to absence from April 18, 2011 meeting. Item #2 HRA APPROVAL OF AGENDA M/Goettel, S/Quam to approve the agenda. Motion carried 5-0. HRA Meeting -2- May 16, 2011 Item #3 CONSIDERATION OF CONTRACT FOR PRIVATE DEVELOPMENT WITH SHERMAN ASSOCIATES DBA SKYLARK APARTMENTS LIMITED PARTNERSHIP FOR SOUTH PORTION OF FORMER PUBLIC WORKS MAINTENANCE FACILITY (STAFF REPORT NO. 16) Acting Executive Director Stark presented Staff Repot No. 16. Ryan Sailer, Vice President of Sherman and Associates, was available for questions. M/Sandahl, S/Goettel to approve the contract for private development with Sherman Associates dba Skylark Apartments Limited Partnership for south portion of former Public Works Maintenance Facility. Motion carried 5-0. Item #4 CONSIDERATION OF RESOLUTION AUTHORIZING HRA TO AFFIRM MONETARY LIMITS ON MUNICIPALITY TORT LIABILITY ESTABLISHED BY MN STATUTES 466.04 (STAFF REPORT NO. 17) Acting Executive Director Stark presented Staff Report No. 17. M/Rubenstein, S/Quam that the following resolution be adopted and that it be made part of these minutes: HRA RESOLUTION NO. 1092 RESOLUTION AFFIRMING MUNICIPAL TORT LIABILITY LIMITS ESTABLISHED BY MINNESOTA STATUTES 466.04 Motion carried 5-0. This resolution appears as Resolution No. 1092. Item #5 HRA DISCUSSION ITEMS None. Item #6 EXECUTIVE DIRECTOR REPORT Acting Executive Director Stark reported that he is putting together an affordable inventory and needs analysis as well as a master planning process for development at 77th and Pillsbury Avenue. He also reported that this is the last public meeting in the current City Hall. The next meeting of the HRA will take place on June 20th in the newly constructed Municipal Center. Commission Member Goettel asked staff to look at more up housing and affordability housing study. 0 0 HRA Meeting -3- May 16, 2011 Commission Chair Sandahl asked if a goal session or planning meeting has been set for the HRA. Acting Executive Director Stark responded that staff will put together a couple of dates and get back to commissioners. Commission Member Quam talked about "WEE" houses and how he liked the idea of an affordability study. Item #7 CLAIMS AND PAYROLL M/Helmberger, S/Goettel that the following claims and payrolls be approved: U.S BANK 05/16/2011 Section 8 Checks: 120471-120592 $ 155,002.60 HRA Checks: 31191-31215 $ 56,548.93 TOTAL $ 211,551.53 Motion carried 5-0. ADJOURNMENT The meeting was adjourned by unanimous consent at 7:25 p.m. Date Approved: June 20, 2011 Nancy Gibbs City Clerk Suzanne M. Sandahl Chair John Stark Acting Executive Director • U AGENDA ITEM#: 3A REPORT #: 18 =- STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 209 2011 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: MYRT LINK, COMMUNITY DEVELOPMENT ACCOUNTANT IVAmE, Tari F JOHN STARK, COMMUNITY DEVELOPMENT DIRECTOR 4 ITEM FOR HRA CONSIDERATION: Consideration of a resolution to transfer funds from the Richfield Rediscovered A-1, B-1, A-2, B-2, A-3, B-3, A-4, B-4, A-5 and B-5 and Richfield Rediscovered II Tax Increment Financing Districts to the Development Account. RECOMMENDED ACTION: By Motion: Adopt a resolution authorizing the transfer of funds from the Richfield Rediscovered A-1, B-1, A-2, B-2, A-3, B-3, A-4, B-4, A-5 and B-5 and Richfield Rediscovered II Tax Increment Financing Districts to the Development Account. II. BACKGROUND Between July 23, 1990 and October 11, 1999 The Richfield Housing and Redevelopment Authority (HRA) created the Richfield Rediscovered A-1, B-1, A-2, B-2, A-3, B-3, A-4, B-4, A-5 and B-5 and Richfield Rediscovered II Tax Increment Financing Districts (TIF Districts). The TIF Districts were established to finance the creation of the Richfield Rediscovered Program which promoted the development, redevelopment and construction of new single family homes within the City of Richfield. 6202011 RR Transfers Initial funding sources for the TIF Districts were loans from the Water Fund, the Sewer Fund, the Lyndale-Hub-Nicollet (LHN) Tax Increment District and the Development Account. The HRA was to repay these loans from tax increment derived from the TIF Districts and land sale proceeds. The loans to the Water Fund, Sewer Fund and a portion of the LHN loan have all been repaid. The HRA forgave the remaining portion of the LHN loan in 1999. The HRA's internal accounting and the annual reports created for the Tax Increment Plans and submitted to the Minnesota Office of the State Auditor indicated that, during the duration of the TIF Districts, $2,215,676 was transferred into the Richfield Rediscovered Accounts from the HRA's Development Account to pay for costs of the HRA's expanded New Home Program and has not been repaid. On December 20, 2011 the HRA adopted a resolution decertifying the Richfield Rediscovered TIF Districts as of December 31, 2010. There is approximately $639,000 remaining in the in the funds related to the TIF Districts. A recent analysis of the accounting for the Richfield Rediscovered Accounts preformed by HRA staff and consultants indicated that the funds remaining in the accounts are not tax increment and can be used to reimburse the Development Account. III. BASIS OF RECOMMENDATION A. POLICY • The HRA's auditors recommend that all non -budgeted transfers be approved by the HRA. B. CRITICAL TIMING ISSUES • Authorizing this transfer makes these funds available to the HRA for use in other potential redevelopment projects. C. FINANCIAL • Analysis of the Richfield Rediscovered Accounts has been completed by HRA staff and HRA financial and legal consultants. It has been determined that the funds remaining are not tax increment and can be used to reimburse the Development Account. D. LEGAL • HRA legal counsel drafted the attached resolution. I l V . ALTERNATIVE RECOMMENDATION(S) I the Richfield Rediscovered TIF Districts to the Development Account. V. ATTACHMENTS VI. PRINCIPAL PARTIES EXPECTED AT 1VIEETING Is • 0 • HRA RESOLUTION NO. RESOLUTION AUTHORIZING TRANSFER OF FUNDS REMAINING IN RICHFIELD REDISCOVERED ACCOUNTS TO DEVELOPMENT FUND WHEREAS, between July 23, 1990 and October 11, 1999, the Housing and Redevelopment Authority ("the HRA") created the Richfield Rediscovered A-1, B-1, A-2, B- 2, A-3, B-3, A-4, B-4, A-5, and B-5 and the Richfield Rediscovered II Tax Increment Financing Districts (the "TIF Districts") within its Richfield Redevelopment Project Area (the "Project"); and WHEREAS, the TIF Districts were established to finance in part the HRA's expanded New Home Program, which promoted the development, redevelopment and construction of new single family homes within the City of Richfield (the "City"); and WHEREAS, the public redevelopment costs delineated in the tax increment plans related to the TIF Districts (the "Tax Increment Plans") included acquisition of land and existing homes, demolition, and site preparation and the HRA anticipated that these public redevelopment costs would be paid with a loan from City to be repaid with tax increment derived from the TIF Districts, the proceeds of the sale of Land within the TIF Districts, and other available revenues; and iWHEREAS, pursuant to a_' memorand'um included in the materials for the HRA meeting held on July 16, 1990 attached hereto as Exhibit A (the "HRA Letter No. 19"), the HRA anticipated that the City would loan the HRA approximately $1,620,950 to help finance the costs of the public redevelopment costs set forth in the Tax Increment Plans, which the HRA would repay over 25 years from tax increment derived from the TIF Districts and land sale proceeds; and WHEREAS, on July 16, 1990, the HRA Board adopted Resolution 385 attached hereto as Exhibit B (the "1990 HRA Resolution), which approved the Redevelopment Plan for the Project, certain Tax Increment Plans for the initial TIF Districts, and the loan from the City to pay public redevelopment costs; and WHEREAS, on December 20, 2011, the HRA Board adopted a resolution decertifying the TIF Districts as of December 31, 2010; and WHEREAS, on the date hereof, there is approximately $639,000 remaining in the funds related to the TIF Districts (the "Richfield Rediscovered Account"); and 0 S A - ;- • WHEREAS, a Financial Reporting Analysis regarding the Richfield Rediscovered TIF Districts was delivered to the HRA for consideration on May 16, 2001, and such report indicated that, at that time, $4,187,381 had been expended to accomplish the goals set forth in the Tax Increment Plans and such expenditures had been funded with $501,262 considered to be tax increment and $3,686,119 from other funding sources, including $2,145,819 in net transfers in from other funds; and WHEREAS, as of December 31, 2009, the HRH's internal accounting and the annual reports created for the Tax Increment Plans and submitted to the Minnesota Office of the State Auditor indicated that, during the duration of the TIF Districts, $2,215,676 was transferred into the Richfield Rediscovered Account from the HRA's Development Fund to pay for the costs of. the HRA's expanded New Home Program and had not been repaid; and WHEREAS, a recent analysis of the accounting for the Richfield Rediscovered Account performed by HRA Staff and the HRA's consultants indicates that the funds remaining in the Richfield Rediscovered Account are not tax increment; and WHEREAS, in 2001, Minnesota Statutes, Section 469.178, subd. 7 (the "TIF Interfund Loan Statute") was enacted and made effective July 31, 2001, and provided particular procedures for interfund loans made in relation to tax increment districts; and • WHEREAS, the TIF Interfund Loan Statute ratified interfund loans made prior to the effective date of the statute with the following conditions (i) the interest accrued or paid after July 31, 2001 could not exceed the statutory limitation set for in the TIF Interfund Loan Statutes, and (ii) if there was no resolution or other document created contemporaneously with the making of the interfund loan that specifies a principal amount of the loan, the loan is limited to a maximum amount equal to the largest negative cash balance that existed at any time -in the fund that received the loan; and WHEREAS, the 1990 HRA Resolution ' and accompanying HRA Letter No. 19 represent contemporaneous documentation establishing a tax increment interfund loan for purposes of the TIF Interfund Loan Statute; and WHEREAS, the HRA has determined to apply the remaining funds in the Richfield Rediscovered Account toward reimbursing the HRH's Development Fund for a portion of the principal amount of the interfund loans made to the Richfield Rediscovered Account to help finance the HRA's New Home Program; and NOW, THEREFORE, BE IT RESOLVED, by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: 1. HRA staff is directed to transfer all remaining monies in the Richfield Rediscovered Account to the HRA's Development Fund to reimburse the Development Fund for a portion of the principal amount of the interfund loans made to the Richfield Rediscovered Account to help finance the HRA's New Home Program. 2. If the funds remaining in the Richfield Rediscovered Account are characterized as tax increment in the future, HRA staff is directed to apply such funds to 3A -L the repayment in part of the principal amount of the tax increment interfund loans provided • by the City, as described in the 1990 HRA Resolution and the HRA Letter No. 19. Adopted by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota this 20th day of June, 2011. ATTEST: Joan Helmberger, Secretary �J 0 Suzanne M. Sandahl, Chair I� EXHIBIT A 3 A - HRA Meeting Minutes -3- July 16, 1990 item #4 CONSIDERATION OF APPROVAL OF THE EXPANDED NEW HOME PROGRAM AND REQUEST OF THE CITY COUNCIL TO APPROVE AND PROVIDE FINANCING. HRA LETTER NO. 19 Executive Director Prosser reviewed HRA Letter No. 19 regarding consideration of approval of the expanded new home program and request of the City Council to approve and provide financing. Commissioner Ludeman asked where the City portion would come from. -Executive Director Prosser answered that funding.would come from the TIF repayment, sale of the property and loans from City funds. He added that while staff was confident that principal repayment would be provided, interest payments were uncertain. He stated that these loans would necessarily be a good investment from a financial perspective but rather would support a public policy to upgrade the City's housing. Commissioner Ludeman asked what specific sources would be used for the funding and if the HRA Capital Fund could be used. Executive Director Prosser stated that water, sewer, and LHN fund balances are some potential sources and that the $1,000,000 trust fund portion of the Capital Fund could also be used. Commissioner Ludeman stated that he was opposed to making loans from the City's General Fund. Larry Wozniczka asked why the cost was $60,000 per property. Executive Director Prosser responded that the amount also included lot assembly costs such as appraisals and legal fees. Larry Wozniczka asked what the lot size would be. Bruce Palmborg responded that most were fifty foot lots. M/Garcia, S/Ludeman that the following resolution be adopted; that it be spread in the resolution book and that it be made part of these minutes: 3P-5 HRA Meeting Minutes -4- July 16, 1990 HRA RESOLUTION NO. 385 RESOLUTION APPROVING THE REDEVELOPMENT PLANS AND TAX INCREMENT FINANCING PLANS FOR THE EXPANDED NEW HOME - SCATTERED SITE HOUSING PROGRAM; REQUESTING THE RICHFIELD CITY COUNCIL TO CONDUCT PUBLIC HEARINGS THEREON; RECOMMENDING APPROVAL OF THE PLANS Motion carried 4-0. This resolution appears as Resolution No. 385 in Resolution Book No. 3. • • EXHIBIT B 3 A 4147 HRA RESOLUTION NO. 385 THE HOUSING AND REDEVELOPMENT AUTHORITY IN AND FOR THE CITY OF RICHFIELD, MINNESOTA RESOLUTION APPROVING THE REDEVELOPMENT PLANS AND TAX INCREMENT FINANCING PLANS FOR THE EXPANDED NEW HOME - SCATTERED SITE HOUSING PROGRAM; REQUESTING THE RICHFIELD CITY COUNCIL TO CONDUCT PUBLIC HEARINGS THEREON; RECOMMENDING APPROVAL OF THE PLANS BE IT RESOLVED by the Housing and Redevelopment Authority in and for the City of Richfield, Minnesota as follows: Section 1. Recitals. 1.01 The Housing and Redevelopment Authority in and for the City of Richfield, Minnesota (HRA) has identified areas within the city as being in need of development, redevelopment, and construction of new single family homes in order to provide families and individuals living in a substandard, poor quality environment an opportunity to move to standard housing by establishing a cash market for their existing housing and to provide an opportunity for Richfield to accommodate families currently residing in Richfield or elsewhere who are seeking larger housing units with features popular in today's market. 1.02 The HRA has conducted a study of physical conditions within Redevelopment Project Area "A" and Redevelopment so Project Area "B" (Project Areas) and has considered the need for public assistance in order to encourage development, redevelopment, and new construction of single family homes. 1.03 The HRA has caused to be prepared a Redevelopment Plan for Project Area "A", Redevelopment Plan for Project Area "B", Tax Increment Financing Plan for Tax Increment District "A-1" and Tax Increment Financing Plan for Tax Increment District "B-1", dated July 16, 1990, all relating to the Expanded New Home - Scattered Site Housing Program (collectively, Plans), and on file with the HRA. 1.04 The executive director of the HRA on June 19, 1990 transmitted copies of the Plans to the school boards of Independent School District No. 280, Intermediate School District No. 287, and the board of commissioners of Hennepin County for review and comment and notified said public bodies of the public hearings to be held on the Plans by the City. 1.05 The Richfield Planning Commission has reviewed the Plans and on the 26th day of June, 1990, concluded that the Plans are consistent with the plans for development of the City as a whole. HRA RESOLUTION NO. 385 Page 2 Section 2. HRA Approval. 2.01 The HRA finds that the objective of encouraging development, redevelopment, and new construction within the Project Areas will be advanced by adoption of the Plans. 2.02 The Plans are hereby approved and adopted by the HRA. 2:03 Staff is directed to formulate procedures which will result in implementation of this program. Section 3. Further Proceeding. 3.01 The HRA requests the City to hold the public hearings on the Plans required by Minn. Stat. Section 469.028 and Minn. Stat. Section 469.175, subd. 3 at the City Council meeting of July 23, 1990, and recommends that the Plans be approved by the City. Section 4. Financing. 4.01 The HRA intends to request that the City assist from time to time in financing the public redevelopment costs identified in the TIF Plans by a loan payable from capital proceeds from land sale and tax increment from the TIF Districts, and other revenues. 4.02 The HRA intends to'pay interest on the borrowed funds if the cash flow from the TIF Districts is sufficient after the payment of principal. 4.03 The HRA also intends to request that the City from time to time consider various other actions necessary to the implementation of the Plans and pledges its cooperation with the City in achieving the objectives of the Plans. Adopted by the Housing and Redevelopment Authority in and for the City of Richfie2.masE. t sota this 16th day of July, 1990. C. Harms, Chairperson A EST: an Helmberger, Secretaty 3 A -q C� • • AGENDA ITEM#: 3B REPORT #: 19 STAFF REPORT r HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 209 2011 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: 0 JULIE URBAN, HOUSING SPECIALIST NAME, TITLE KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE ITEM FOR HRA CONSIDERATION: Consideration to award a contract to Otting House Movers, LLC for the sale and removal of the house and structures at 2517 76th Street West. I. RECOMMENDED ACTION: By Motion: Award a contract to Otting House Movers, LLC for the sale and removal of the house and structures at 2517 76th Street West. II. BACKGROUND —771 On October 18, 2010 the Housing and Redevelopment Authority (HRA) authorized the purchase of 2517 76th Street West for the future development of 7 to 10 townhome units. The house currently located on the property is a large six bedroom split level house in good condition. Rather than demolishing it, a request for quotes (RFQ) was issued for the sale and removal of the house. The RFQ was issued on May 31, 2011 and one quote was received for the house. Otting House Movers, LLC submitted the only quote of $200. When compared with . a typical residential demolition cost of approximately $10,000, acceptance of this bid would result in significant savings. 06202011 2517 76th St W House Move.doc III. BASIS OF RECOMMENDATION A. POLICY 1 • • Moving the house instead of demolishing it conserves a housing resource. • Selling the house to be moved reduces demolition costs and uses the Community Development Block (CDBG) funds more efficiently. B. CRITICAL TIMING ISSUES • The successful bidder is expected to conduct all necessary abatement activities and to demolish and fill the basement. • The house move must be completed by September 20, 2011. C. FINANCIAL • Awarding the bid to move the house saves money on demolition costs; average demolition costs for the HRA since 2009 have been about $10,000 for houses with an average of 1,033 square feet. • CDBG program income (sales proceeds less eligible expenses) can be reused on CDBG-allowable activities. D. LEGAL • The HRA legal counsel reviewed the contract. IV. ALTERNATIVE RECOMMENDATIONS • • Reject the bid. V. ATTACHMENTS • Quote Form and Description Sheet • Contract for Sale of Building VI. PRINCIPAL PARTIES EXPECTED AT MEETING • NA • QUOTE )FORM • Sealed quotes must be received in the office of the Richfield HRA, 6700 Portland Avenue South. Richfield. MN 55423, not later than 10:30 a.m. on Monday, June 13, 2011. The Richfield HRA will be asked to award the successful bid on June 20, 2011. The successful Quoter shall execute a ContrctcLfnr,S�le of wilding incorporating the terns described in the form attached hereto with respect to each house. and make all required deposits no later than June 27, 2011. If Quoter does not close on the required date, the quoter shall forfeit the ability to acquire the house. The forfeited house shall then be awarded to the next highest quoter. Back-up quoter will then have two (2) business days to execute a Conlruci for Sale of Building incorporating the terms described in the corm attached hereto with respect to each house, and make all required deposits. In the event of a tie quote amount, the award shall be determined by a lottery. Hie specifications governing this sale are set forth in the form of Contract fn- Serle of lBuilding attached hereto. flhe property flor sale is listed on the attached description sheet and may be inspected upon request. :\II property sold must be removed from the site on or before the removal date of September 20, 2011. The Richfield MRA reserves the right to accept or reject any or all quotes or parts ofquotes and to waive deformities therein. in response to the terms herein specified, the undersigned, if award is tendered, agrees to purchase the item of•property on the attached description sheet at the price quoted, sul?ject to the terns of the ('ntatrucl fn- Sale ofBztilding. • l� u Name: ��'TT't r t'�� c an2(^,Llnv s (i �- (Individual, partnersh/ip, or corporation submitting this quote) Address:Z iCo ZC City. State, Get L+ Zip: Signature E- i» ail Address its:L.... trA" t Title Date: _ �, Enclose all of the following in an envelope: V-2- - Y&r-"3 Phone (1) 'chis sheet, signed by Quoter (2) Description Sheet, with amount quoted per house (3) Quote security (51% of quote amount per house) `-Security for each house must be attached to each Description Sheet I.,abei the envelope as follows: Attention: Julie Urban/Michelle Lewis, Housing Specialists House Move Quote "�;-isnc�omroe�•s,co:,a�,nniirn�siucu�r�_�.�o,.,ods•��;��.,c'o�a�.•�cq,��<��,�;=sr.air,s.,e-:n„�.,��a,.,.an,�o'n:n<ai ��,n„� 39-t DESCRIPTION SHEET FOR THE SALE AND REMOVAL OF BUILDING ON RICHFIELD HRA OWNED PROPERTY ADDRESS: 2517 76`x' Street West Richfield, MN DESCRIPTION: Split level, 6 bedrooms, 2 1/2 baths, 2+ car attached garage The home was built in 1968. QUOTE AMOUNT: $ 2— , 00 QUO fI{ SECURITY -5% of QUOTE AMOUNT: *(see below) OR $250_ WHICHEVER IS GREATER " Quoter is required to submit this security with each house quoted on. If security is in the form of a personal check or cashier's check, a separate check must be issued for each house. $5.000.00 surety deposit will be required at closing (surety deposit shall be in the form of cash. letter of credit, or certified funds made payable to the Richfield HRA) 13UVer is responsible for city sewer and water disconnects at the main and for restoring the street per City requirements. Please contact the City of Richfield Inspections Division at 612-861-9860 for a permit. All accessory structures and features shall also be removed. Removal/Completion date: September 20, 2011 Liquidated Damages on Delay in Removing Building & Debris: $500.00 per day Inlormation deemed reliable but not guaranteed. 'The house will be opened far inspection upon request; for further information call the Housing Specialist at 612/861-9778. I hereby quote the above amount. Srg7nature Date 3$-;L • C7 3b- 3 BUILDING # CONTRACT FOR SALE OF BUILDING This Contract for Sale of Building made as of the day of 2011, by and between the Housing and development Authority in & for the City of Richfield (hereinafter referred to as the "HRA"), and (hereinafter referred to as the "Buyer"). RECITALS: For good and valuable consideration, the sufficiency of which is hereby acknowledged, HRA, as owner of the full legal beneficial title to the Building described herein, has this day sold, and agrees to convey by Bill of Sale, said Building. The terms and conditions of this purchase and sale are as follows: 1. Sale Property. The property to be conveyed (hereinafter referred to as the "Building") consists of the house located at 2517 76"' Street West, Richfield, Minnesota, legally described in Exhibit A, but not the land upon which such Building is situated (which land shall be referred to herein as the "Property"). 2. Consideration. Buyer agrees to purchase said Building and to pay therefor the sum of $ (dollars) upon the following terms: DOWN (THE "DEPOSIT", WHICH IS $500 OR 30% OF PURCHASE PRICE, WHICHEVER IS GREATER), and a cash balance of payable within five (5) business days following the Bid Award date of ' The entire deposit will be forfeited if the balance of the purchase price, Surety Requirements, and Proof of Insurance are not paid and delivered within five (5) business days following the Bid Award date of , in accordance with Section 3 below. 3. Closin . Closing must occur within five (5) business days following the Bid Award date of June 20, 2011 at a location designated by HRA. At closing, Buyer shall: (a) pay to HRA the balance of the purchase price in cash or certified funds; (b) deliver surety in the form required by Section 7 below; (c) deliver the certificates of insurance required by Section 8 below. Upon receipt of the foregoing, HRA shall execute and deliver to Buyer a Quit Claim Bill of Sale in the form attached hereto as Wxl hbiB, conveying the Building to Buyer subject to the provisions of this Contract, which shall survive the delivery of the Bill of Sale. If yert fails to meet the requirements of this Section 3 within five (5) business days after the Bid Award date of June 20, HRA may terminate this Contract, by written notice to Buyer and retain the Deposit as liquidated damages. 4. Post -Closing Requirements,• Removal of Building. Buyer shall complete, on September 20, 2011 or before this date (the "Completion Date"), each of the following requirements: (a) Buyer shall give all notices and obtain and pay for all permits, licenses, bonds, and franchises which may be required for the removal and transportation of the Building by federal, state, county or city laws, rules, statutes, regulations and ordinances, before Buyer begins to remove the Building from the Property. Buyer shall provide HRA with copies of all required pen -nits before Buyer commences work on moving the Building; (b) Buyer shall have the municipal water service and sewer service connections into the Building cut off pennanently at the main shut-off valve and sealed in accordance with applicable ,regulations and ordinances of the City of Richfield. In this regard, Buyer acknowledges being cautioned that the City requires pennits to be issued for disconnection of water and sewer prior to any work being performed. For utility disconnects contact the Inspections Division at 612-861-9860 and for street cut permits contact the Public Works Department at 612-861-9760; (c) Buyer shall remove the Building s), which shall include all structures at -grade level or higher such as: house, garage and outbuildings, from the Property; (d) Immediately upon removing the Building from its foundation, Buyer shall post a sign on the Property stating "NO TRESPASSING," which shall be clearly visible from the street; (e) hmnediately upon the removal of the Building from its foundation, Buyer shall furnish and erect on the Property a wood slat snow fence or an approved substitute, either one being in good repair and reasonably acceptable to HRA. The fence shall be at least four feet in height, shall completely enclose the open basement, and shall remain in place until the basement is filled, at which time it shall be removed; (f) The furnace, laundry tubs, appliances, ducts, pipes, wiring, wood, wallboard, columns, flooring, and any other non - masonry items shall be removed from the basement prior to filling the basement; (g) After the Building has been removed from the Property, Buyer shall remove all foundation walls and the basement • floor slab, and shall remove all other at grade masonry, concrete slabs, sidewalks, steps, and driveways from the Property. ALL ASPHALT, MASONRY, AND NON -MASONRY MATERIAL MUST BE TRANSPORTED AWAY FROM THE SITE. (h) After removing all foundation walls and the basement floor slab, as provided above, Buyer shall fill the basement to Page I - Buyer's Initials CA AV ground surface level with clean compactable soil. The basement hole MUST BE inspected by HRA prior to filling, and any unauthorized debris removed. The fill must not contain any hazardous substance or disposed building material. (i) Buyer shall remove all other personal property or debris from the Property; (j) All sheds and other accessory structures, clothesline and other poles, and landscape structures shall be removed from the • Property. (k) Any trees cut or felled in the moving process shall be removed immediately, and the tree stumps may remain; (1) As directed by HRA, a silt fence shall be erected around the perimeter of the Property to prevent erosion and unwanted run-off onto adjacent properties, streets, and alleys. Silt fences must conform to standards set by the Minnesota Pollution Control Agency and the City of Richfield. General Covenants. (a) Buyer represents and warrants to the HRA that Buyer is in the business of house moving and has all the necessary qualifications and abilities to perform the obligations under this contract award. Buyer will not subcontract or otherwise assign the responsibility of moving the building without the prior written consent of the HRA. (b) Buyer is purchasing the Building in "AS -IS" condition, with all faults, without representation or warranty of any kind, including, but not limited to, implied warranties of merchantability or fitness for a particular purpose. (c) HRA makes no representation or warranty, express or implied, that the Building will conform to the building code or permit restrictions of any local jurisdiction having control over the relocation of the Building. (d) Buyer shall have sole responsibility for weather -proofing the Building; HRA makes no representations as to the work which may have been done by HRA in this regard, and cautions Buyer to make its own inspection and determination as to the need for additional steps to be taken. (e) The Buyer assumes all risk that the Building can be moved over any contemplated route, that necessary permits for relocating the Building can be obtained, that a Building can be removed in any weather conditions, and that the Building can be moved off the Property within the time period allowed in this contract. (f) The Buyer shall furnish and pay for all labor, material, and equipment which is required for the removal of the Building and required work on the Property. All work shall be done in accordance with this Contract and in accordance with City of Richfield ordinances and regulations. The contact person at Richfield is Rick Repier, Public Safety Department: 612/861-9862. In the event there is a conflict between this Contract and Richfield Ordinances and regulations, the Richfield ordinances and regulations shall govern. (g) No work may be done on the job site, nor any showing of the Building to prospective buyers, except for complete • removal of the Building off of the Property, between the hours of 7 p.m. and 7 a.m. (h) A Sign stating "FOR SALE" may be posted on the Building. Sign must be no larger than six (6) square feet and must be made professionally. No hand written signs may be used. Any other signs of any kind posted anywhere on the site is strictly prohibited except for no trespassing signs. (i) Any materials removed from the Building or Property must be stacked neatly behind the Building and removed from the Property within 48 hours. 0) A suitable container must be kept on the job site to be used for trash disposal. Buyer shall at all times keep the Property free from the accumulation of waste materials and debris caused by Buyer's operations. (k) Buyer may not cut or remove a tree from the Property without prior permission from HRA. If any trees are cut or destroyed by Buyer without prior approval, Buyer will pay to HRA damages of $200 per tree. Any such damages shall be deducted from Buyer's surety. (1) Any reported damage to other lots, rights-of-way or property of others, be it real or personal property caused as a result of or in connection with the Building removal is the responsibility of the Buyer. Buyer shall promptly inform the HRA of any such reported damage. HRA will retain all surety until all such damage is satisfactorily repaired and inspected by HRA. (m) Buyer and/or House Mover shall not store any Building and/or house moving related equipment on property owned by HRA other than the property where the Building is located, nor on City of Richfield streets, rights-of-way and easements. Any violations shall result in the Buyer and/or House Mover being disqualified from future bidding on buildings and/or removal of buildings. (n) If the Building has not been moved and/or the Property has not been cleared by the Completion Date, or if any other requirements set forth herein are not satisfied within the time required by these specifications, damages of five hundred dollars ($500.00) will be collected per day that has not fulfilled the terms and conditions set forth herein and surety will be retained by HRA until such time as Buyer has fulfilled the requirements undertaken in this contract to the reasonable satisfaction of HRA. After Buyer has complied with the requirements described herein, HRA will return the surety deposit, minus any damages assessed. (o) If the Buyer sells the Building before it has been removed from the property, the Buyer shall continue to be responsible to HRA for all of the obligations of the Buyer contained in this Contract. In addition, the Buyer agrees to hold harmless HRA, its • officers and employees from any clai ns brought by the subsequent buyer which arise as a consequence of HRA exercising its rights under this Contract to dispose of the Building. Page 2 - Buyer's Initials 3g--5 (p) Neither Buyer nor any representative of Buyer shall enter the Property until closing has occurred and the Bill of Sale has been delivered. Alteration or removal of any item on the Property prior to delivery of the Bill of Sale shall constitute trespass and/or theft. • (q) Buyer shall comply with any road weight restrictions unposed by the Minnesota Department of Transportation or any other weight restrictions imposed by other applicable entities of government. Buyer shall not receive any extension of the Completion Date by reason of road weight restrictions, however long the period of restriction may be. (r) Any damage done to street pavement, or adjacent properties may result in money being withheld from surety bond to recover cost of repair of said damage. 6. Default; Remedies. In the event Buyer defaults in the performance of any of its obligations under this Contract, HRA shall be entitled to the following remedies, in addition to those provided elsewhere in this Contract or by applicable law: (a) In the event Buyer fails to complete all of the requirements of Section 4 and 5 on or before the Completion Date, HRA shall be entitled to liquidated damages equal to the full purchase price (which HRA shall retain), plus an amount equal to $500.00 per day for each day after the Completion Date during which the requirements set forth above remain unsatisfied. In this regard, the parties agree that the actual damage which will be realized by HRA shall be difficult to determine, and that the liquidated damages provided for herein represent a reasonable estimate of such damage; and (b) Buyer shall be deemed to have abandoned the Building and any other items remaining on the Property after the Completion Date, and Buyer authorizes HRA to dispose of such items in any manner HRA deems appropriate, including, without limitation, demolition or removal. Buyer shall reimburse HRA for all costs incurred by HRA in disposing of such property and otherwise completing the requirements of this Section 4 and 5, and any other costs incurred by HRA as a result of Buyer's default; and (c) HRA may take all action necessary to cure Buyer's failure to perform and collect from Buyer the costs incurred in doing so; and (d) HRA may enjoin Buyer from further activities on the Property until Buyer's default is cured; and (e) All sums which HRA is entitled to collect from Buyer may be collected from Buyer's surety deposit. If the surety is not adequate to cover such obligations, Buyer shall be directly liable to HRA or the excess; and (f) Nothing herein shall be construed as a waiver of HRH's right to seek specific performance of Buyer's obligations hereunder. Surety Requirements. Surety in the form of cash, certified funds, or an irrevocable letter of credit acceptable to HRA in the 0ount of Five Thousand Dollars ($5,000.00) shall be provided by Buyer to HRA as a condition precedent to the issuance of a Bill of Sale for the Building by HRA. Any surety provided by Buyer, other than cash, must be executed by an appropriate financial institution licensed to do business in the State of Minnesota and acceptable to HRA. In the event a letter of credit is provided, the term of said security shall at a minimum extend thirty days (30) beyond the Completion Date. After all of the conditions set forth in Section 4 and 5 have been met and HRA has inspected and accepted the Property, the Buyer's surety will be returned. If any or all of said conditions have not been met within the tune limit set forth in Section 4 and 5, the surety shall be applied by HRA in accordance with Section 6. Insurance Requirements. The Buyer shall provide insurance coverage as follows: Comprehensive General (Public) Liability: $1,000,000 Each Occurrence (Bodily Injury & Property Damage) - $1,000,000 Personal & Advertising Injury - $5,000 Medical Expenses - $2,000,000 General Aggregate - $2,000,000 Products & Completed Operations Aggregate Automobile: - $1,000,000 - Combined Single Limit - with symbol 1 -Any Auto Workers' Compensation: Statutory Limits Umbrella: $10,000,000 A minimum AM Best Rating of: A- VIII HRA requires the following to be named as additional insured: Housing and Redevelopment Authority in and for the City of Richfield 0oMinn insurance company or companies providing such coverage must be acceptable to HRA and be licensed to conduct business in the State esota. Certificates evidencing such coverage must be furnished to HRA at closing. Payment will not be accepted at closing without valid certificates of insurance. Page 3 - Buyer's Initials s 9. Hold Harmless. The Buyer shall be responsible to HRA for the acts and omissions of Buyer, the Buyer's building mover, any other person or organization performing any of the work under a contract with or at the direction of the Buyer and any individual purchasing the building from Buyer prior to its removal from the property. The Buyer agrees to indemnify and hold harmless HRA, its ffi• ocers and employees from all suits, actions, and claims of any character brought because of injuries received or damages sustained by any person, persons, or property arising out of the removal of the Building or the performance or non-performance of Buyer's obligations under this Contract; or in consequence of any neglect in safeguarding the Building or Property; or because of any other act or omission, neglect, or misconduct of the Buyer, or by any person or organization employed directly or indirectly by the Buyer. In addition, Buyer shall indemnify and defend HRA from and against any mechanics' liens or other claims asserted by any parry who claims to have performed work or provided materials in connection with the removal of the Building or restoration of the Property. 10. Hazardous Materials Deport. The Buyer acknowledges receipt of a Hazardous Materials Report of the Building, a copy of which is attached to this Agreement as Exhibit A, with attached notification form. Buyer acknowledges that the Building may contain known and/or unknown hazardous materials. It is the Buyer's full responsibility to remove, abate, mitigate and dispose of any hazardous materials and conduct such activities in accordance with state and federal regulations. Buyer is hereby notified that the Minnesota Pollution Control Agency (MPCA) requires the attached notification form be submitted to the MPCA prior to initiating building moving activities. Buyer agrees to accurately complete the notification form, submit the form to the MPCA, and provide a copy to the HRA. Buyer shall indemnify the HRA for any cost, loss, or damage resulting from Buyer's failure to comply with this Section 10. 11. Pavment of Subcontractors. Contractor agrees to pay every subcontractor within 10 days of receipt of payment from the HRA pursuant to Minn. Stat. § 471.425. IN WITNESS WHEREOF, the Buyer and HRA have executed this Contract as of this day of 2011. By: Buyer By: Seller Company Name: Address: Telephone: By: Housing and Redevelopment Authority in and for the City of Richfield 6700 Portland Avenue South Richfield, MN 55423 By: Its: Executive Director By: Its: Chairperson Page 4 - Buyer's Initials • • • • AGENDA ITEM#: 3C REPORT #: 20 STAFF REPORT wMadd HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 20, 2011 REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAME. Ti7zc KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of consent to allow the Housing and Redevelopment Authority owned parcel at the northeast corner of 66th Street and Lyndale Avenue to be included in proposals for redevelopment of 6501 Lyndale Avenue South (former Kmart site). I. RECOMMENDED ACTION: By Motion: Consent to allow the Housing and Redevelopment Authority owned parcel at the northeast corner of 66th Street and Lyndale Avenue to be included in proposals for redevelopment of 6501 Lvndale Avenue (former Kmart site). II. BACKGROUND Wellington Management, Inc., has secured a purchase agreement for the former Kmart property located at 6501 Lyndale Avenue and is proposing to redevelop the property to include a new 45,000 square foot LA Fitness, a 22,000 square foot retail building, and a 5,000+ square foot restaurant pad. The Housing and Redevelopment Authority (HRA) owns a small parcel on the northeast corner of Lyndale Avenue and 66th Street, immediately adjacent to the former Kmart property that is currently used as a public sitting area. The area includes a sculpture, benches, and a number of ornamental trees. The parcel is not 06202011 Consent to PUD 66th and Lyndale assigned an address but is designated by the following Hennepin County property identification designation: 2702824230080. As part of Wellington Managements proposal, they are seeking to incorporate the HRA's property into the site plan and are requesting the HRA's consent to do so. The developer is proposing to redevelop the HRA -owned property into a public interaction area and outdoor seating space for the restaurant. Consenting to allow the HRA -owned parcel to be included in the proposal for redevelopment in no way obligates the HRA to sell or otherwise transfer this parcel to the developer. Should the redevelopment plan be approved, negotiations for the sale or transfer of the HRA -owned property would happen at that time. However, the HRA still would not be obligated to sell or transfer the property to the developer. III. BASIS OF RECOMMENDATION A. POLICY • A stated goal of the Richfield Comprehensive Plan is to "Develop the Lakes at Lyndale area as a City Center" by o Continuing to develop and redevelop the Lakes at Lyndale area as a mixed-use center of living, commerce and recreation. o Providing appropriate density transitions from the intense uses at 66th Street and Lyndale Avenue to the surrounding neighborhoods. o Providing the means to calm vehicular traffic at the intersection of 66th Street and Lyndale Avenue to enhance safety and livability for residents and visitors. B. CRITICAL TIMING ISSUES • Wellington Management's proposed redevelopment plan is scheduled to go before the Planning Commission on June 27, 2011. C. FINANCIAL • N/A D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATION(S) uo not consent to wow the H proposals for redevelopment. V. ATTACHMENTS • Map I V1. PRINCIPAL PARTIES EXPECTED AT MEETING I property to be included in the • • 0 Hennepin County Property Map - Tax Year: 2011 The data contained on this page is derived from a compilation of records and maps and may contain discrepancies that can only be disclosed by an accurate survey performed by a licensed land surveyor, The perimeter and area (square footage and acres) are approximates and may contain discrepancies. The information on this page should be used for reference purposes only. Hennepin County does not guarantee the accuracy of material herein contained and is not responsible for any misuse or misrepresentation of this information or its derivatives, yiNr_ �II� 6SOG {I 6501' tr� 66TH ST W 6601 Selected Parcel Data Date Printed: 6/8/2011 11:09:02 AM Parcel ID: 27-028-24-23-0080 Current Parcel Date: 6/7/2011 Owner Name: THE H R A OF RICHFIELD Parcel Address: 42 ADDRESS UNASSIGNED, RICHFIELD, MN 00000 Property Type: RESIDENTIAL Sale Price: $0.00 Homestead: NON -HOMESTEAD Sale Date: / Area (sqft): 9668 Sale Code: Area (acres): 0.22 A -T -B: TORRENS Market Total: $0.00 Tax Total: $0.00 3G-1 • AGENDA ITEM#: 3D REPORT #: 21 =' STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING .TUNE 209 2011 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE A JULIE URBAN, HOUSING SPECIALIST NAME, TITLE KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAMF, TITLE ITEM FOR HRA CONSIDERATION: Consideration of changes to the Subordination and Satisfaction Policy. I. RECOMMENDED ACTION: By Motion: Approve changes to the Subordination and Satisfaction Policy. II. BACKGROUND In March, the Housing and Redevelopment Authority (HRA) directed staff to make changes to the Subordination and Satisfaction Policy to allow subordinations in cases where the Loan to Value (LTV) ratio exceeded 80 percent but the amount of financing ahead of the HRA's lien did not increase. The following additional changes are being requested by staff: • Require that a copy of the mortgagor's loan application be submitted with a subordination request. • Update the Fee section to reflect the current policy of charging an additional fee for subordination appeals to the HRA. • Change the staff person in charge of staff -level appeals from the Housing & Redevelopment Manager (a position that no longer exists) to the Executive Director. 06202011 Subordination Policy Changes.doc • Eliminate the requirement for financial counseling in cases of appeals to the HRA. The HRA continues to have the ability to require financial counseling in cases where appropriate. • • Eliminate the appeal language limiting subordinations to one every five years. This is a duplicative requirement; the standard policy limits subordination requests to one every five years. III. BASIS OF RECOMMENDATION A. POLICY • The HRA's Subordination and Satisfaction Policy was last revised in 2008 to allow staff to grant appeals in cases where the LTV exceeds 80 percent but is more than 85 percent. The proposed policy change would allow staff to grant appeals in cases where the LTV exceeds 85 percent as long as the HRA's financial position stays the same or improves. B. CRITICAL TIMING ISSUES • Requiring an appeal to the HRA in cases where the HRA's financial position stays the same or improves causes a delay for homeowners that can result in higher loan interest rates. C. FINANCIAL • • The Executive Director would have the ability to grant an appeal to the standard subordination policy in cases where the HRA's financial position stays the same or improves. • Approving subordinations and allowing homeowners to refinance can improve their ability to make their mortgage payments; thereby helping to prevent foreclosure. D. LEGAL • The HRA Attorney reviewed the proposed changes. IV. ALTERNATIVE RECOMMENDATION(S} • Approve the proposed changes to the Subordination and Satisfaction policy with revisions. Do not approve the proposed changes to the Subordination and Satisfaction policy. V. ATTACHMENTS • Subordination and Satisfaction policy showing the proposed changes. VI. PRINCIPAL PARTIES EXPECTED AT MEETING NA 30 - k RICHFIELD HOUSING AND REDEVELOPMENT AUTHORITY SUBORDINATION & SATISFACTION POLICY EFFECTIVE JUNE 2011 Sutaordinations Richfield Housing and Redevelopment Authority (HRA) loan recipients requesting subordination of the interest of the HRA in real property must submit a Subordination Request Form, the required supporting documentation, and a processing fee. Forms are available on the City of Richfield website (http://www. G .FiG f'eld. FnR-.-u tvofrichfield.orgs/) or by calling the Community Development Department at 612-861- 9760. Requests will not be considered until all documents and the processing fee have been received. Required Documents' The following information must be submitted with the Subordination Request Form: A typed letter dated and signed by the mortgagor, stating the reason for the requested subordination and the use of any equity being removed as part of the loan transaction. 2. A copy of the current appraisal (dated within six months of application) or other evidence of market value of the property that is acceptable to the HRA. 3. A copy of current title work (must indicate all debt against the property). 4. Explanation of remaining debts or liens with supporting documentation (i.e. most recent mortgage bill). 5. Estimated closing costs/settlement statement, where applicable. 5. A copy of the mortgagor's loan application t�_% _ _ _ Additional documentation may be required. Evaluation Criteria The Richfield HRA will subordinate its mortgage interest if all of the following conditions are met, to the extent that they are applicable: Closing costs are reasonable. Generally this shall mean that the sum of all discount points, origination fees, and lender ancillary fees generally shall not exceed 3% of the new first mortgage amount. If the HRA believes that the payment terms of the refinance are within the financial means of the borrower. 3. The total debt secured by the property, including the HRA lien and all superior mortgages, does not exceed 80% of the documented market value of the property. 4. Any equity being removed beyond the cost of the loan transaction will be used to improve the property. A typed letter, dated and signed by the applicant, must be submitted stating the use of any equity being removed. 5. The overall value of superior debt must not be increased by more than 50%. Exceptions may be granted by the HRA in cases where superior debts are found to be unusually low with sufficient equity protection. 3b -a If no more than one subordination request has been approved by the HRA in the past five years. 0 Property taxes, if not escrowed by the superior mortgage holder, must be current. The HRA will not subordinate to reverse mortgages. In most cases, interest -only loans or loans with interest -only options, revolving lines of credits or debt consolidation will not be allowed unless the HRA determines that an acceptable reason warrants this type of loan. The HRA may approve other subordination requests not meeting the conditions above on a case-by-case basis that are clearly in the best interests of the HRA, where the security of the HRA loan remains acceptable, and denial of the request will cause or contribute to a documented hardship on the part of the borrower. As a condition of approval, the HRA may require the Borrower to receive financial counseling. While many courses are available at no charge, the Borrower is responsible for any costs associated with the counseling. The course must be approved by the HRA. Fees The fee for a subordination request is established by the HRA. If the subordination request is denied, the fee will be returned with thea letter explaining the reason(s) for denial. If ars appeal }, =hsequently requested the foo he reatainea An additional fee is required for an appeal to the HRA and is non-refundable. Processing Subordination requests will be processed by HRA staff, who will submit the request with a • recommendation for action, to the How6inq & RedeveiGpment Mana W!E;xecutive Director. The Maeager Executive Director may request review and final decision by the HRA. Requests for subordination should be submitted 30 days prior to the date the agreement to subordinate is needed. Exceptions may be made on a case-by-case basis. Appeal Process In cases where a subordination request does not meet the Policy, staff -the Executive Director may grant an administrative appeal under the following circumstances: • Loan -to -value (LTV) ratio is greater than 80%, but no greater than 85%, and all ^fhor HR pAl±6+e6 areme; or • Equity being removed for anything other than property improvements does not exceed $5000; or • The amount of financing ahead of the HRA lien does not increase If an application is denied, the applicant may request an appeal in writing. Appeals will be submitted by staff to the HRA at the next regularly scheduled meeting, provided the request is made at least 10 days prior to that meeting. The HRA meets on the third Monday of each month. Satisfactions When a loan made by the HRA is paid in full, a document satisfying the lien will be prepared by the HRA and delivered to the borrower for recording. The borrower is responsible for the cost of recording the satisfaction. • • AGENDA ITEM#: 3E REPORT #: 22 W0' STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 209 2011 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR NAME, TITLE JOHN STARK, COMMUNITY DEVELOPMENT nM P1-T(1R ITEM FOR HRA CONSIDERATION: Consider an affirmation of the City Council's call for a public hearing on the proposed Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and the proposed establishment of the Lyndale Garden Center site Tax Increment Finance District. I. RECOMMENDED ACTION: By Motion: Affirm the City Council's call for a public hearing on the proposed Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and the proposed establishment of the Lvndale Garden Center site Tax Increment Finance District. I. BACKGROUND In March of this year The Cornerstone Group (the Developer) entered into a purchase agreement for the acquisition of the former Lyndale Garden Center site at 6400 Lyndale Avenue. The Developer is scheduled to close on the property in August of this year. The site is approximately 10 acres. The Developer is proposing a mixed-use is development that will include redevelopment and reuse of the former garden center building to provide retail, restaurant, and community uses. The development will eventually likely include multi -family rental housing as well. 06202011 LGC TIF Affirmation The Developer has contracted with the Local Initiative Support Corporation (LISC) to conduct public workshops to help guide the vision for the future redevelopment of • the site. The first of these workshops was held on June 6, 2011 and was attended by approximately 65 residents. Until that process is complete and a more comprehensive development plan is established, the exact financing needs will not be known. Every development scenario that the Developer has analyzed thus far, however, would need public assistance in order to be financially feasible. Given that, the Developer is currently seeking up to 85% of the available Tax Increment Financing (TIF). Calling the public hearing does not commit the City Council to approve the establishment of the TIF District. The decision whether or not to approve the TIF District can be made only after the Council has had an opportunity to fully consider the matter with public input at the public hearing. If the call for a public hearing is approved, the next steps would be: a) To inform the County, School District and other taxing jurisdictions of the proposed TIF District and give them an opportunity to comment; and, b) For the Planning Commission to determine whether the establishment of such a district would be consistent with Richfield's Comprehensive Plan; and c) For the Housing and Redevelopment Authority (HRA) to consider modifications to the Richfield Redevelopment Project Area; and Establishment of the Lyndale Gardens TIF District; and finally d) The holding of a public hearing by the City Council on July 26, 2011. The HRA is being asked to consider, and staff is recommending affirmation of the City Council's call for a public hearing on the proposed Modification to the Redevelopment Plan for the Richfield Redevelopment Project Area and the proposed establishment of the Lyndale Garden Center Site TIF District. III. BASIS OF RECOMMENDATION A. POLICY • A public hearing is required for the modification of the Richfield Redevelopment Project Area and for the creation of a TIF District. • The City Council is the body that must hold a public hearing to consider approval of the proposed modifications to a redevelopment plan and establishment of a TIF District. B. CRITICAL TIMING ISSUES • The HRA is scheduled to consider a resolution recommending that the City Council call for this public hearing at their June 20, 2011 meeting. • State Statute requires that the County, School Districts and other • affected taxing jurisdictions receive notice of the proposed Tax Increment Plan and other information on fiscal impacts related to the modification/establishment of a Redevelopment Project Area and/or TIF District at least 30 days prior to that hearing. • The Planning Commission must determine whether the establishment of such a district would be consistent with Richfield's Comprehensive Plan; this is tentatively scheduled for the July 25, 2011 Planning Commission meeting. • The timing of this consideration would allow for the prospective developers to maintain their tentative acquisition and construction schedule (if the project is ultimately approved). C. FINANCIAL • The Developer is seeking up to 85% of the available TIF. • The assistance will provide gap -funding and allow the project to be financially feasible. • Without the tax increment financing, this project would unlikely come to fruition. D. LEGAL • The City's legal counsel has been involved in all staff discussions relating to tax increment financing for the proposed project. • IV. ALTERNATIVE RECOMMENDATIONS) Delay the call for a public hearing to a later City Council meeting in order to seek further information. Do not adopt the attached Resolution. Adopt the attached Resolution with modifications that meet the desires or concerns of City Council members. V. ATTACHMENTS • Resolution VI. PRINCIPAL PARTIES EXPECTED AT MEETING Representative from The Cornerstone Group 0 2- -1 RESOLUTION NO. RESOLUTION CALLING FOR A PUBLIC HEARING BY THE CITY COUNCIL ON THE PROPOSED MODIFICATION OF THE REDEVELOPMENT PLAN FOR THE RICHFIELD REDEVELOPMENT PROJECT AREA AND THE PROPOSED ESTABLISHMENT OF THE LYNDALE GARDEN TAX INCREMENT FINANCING DISTRICT THEREIN AND THE ADOPTION OF THE TAX INCREMENT FINANCING PLAN THEREFORE BE IT RESOLVED by the City Council (the "Council") for the City of Richfield, Minnesota (the "City"), as follows: Section 1. Public Hearing. This Council shall meet on July 26, 2011, at approximately 7:00 P.M., to hold a public hearing on the proposed modification of the Redevelopment Plan for the Richfield Redevelopment Project Area, the proposed establishment of the Lyndale Garden Tax Increment Financing District, (a redevelopment district), and the proposed adoption of a Tax Increment Financing Plan therefore, all pursuant to and in accordance with Minnesota Statutes, Sections 469.001 to 469.047, and Sections 469.174 to 469.1799, inclusive, as amended, in an effort to encourage the development and redevelopment of certain designated areas within the City; and Section 2. Notice of Public Hearing, Filinq of Plans. City staff is authorized and directed to work with Ehlers and Associates to prepare a modification to the Redevelopment Plan for the Richfield Redevelopment Project Area.' and a Tax Increment Financing Plan for the Lyndale Garden Tax Increment Financing District and to forward documents to the appropriate taxing jurisdictions . including Hennepin County and Independent School District No. 280. The Community Development Director is authorized and directed to cause notice of the hearing, together with an appropriate map as required by law, to be published at least once in the official newspaper of the City not later than 10, nor more than 30, days prior to July 26, 2011, and to place a copy of the Plans on file in the Community Development Director's office at City Hall and to make such copy available for inspection by the public. Adopted by the City Council of the City of Richfield, Minnesota this 14th day of June, 2011. Debbie Goettel, Mayor ATTEST: Nancy Gibbs, City Clerk • • r� AGENDA ITEM#: 3F REPORT #: 23 =' STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 209 2011 REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: MICHELLE LEWIS/JULIE URBAN, HOUSING SPECIALISTS A'AmF, Tirr r: KAREN BARTON, ASSISTANT COMMUNITY DEVELOPMENT DIRECTOR ITEM FOR HRA CONSIDERATION: Consideration of support for an application to Minnesota Housing for Community Fix -Up Funds and a Community Revitalization Program grant and establish a program to write down the interest rate on rehabilitation loans. I. RECOMMENDED ACTION: By Motion: 1) Approve the submission of an application to Minnesota Housing for Community Fix -Up Funds Designation and a Community Revitalization Fund grant; 2) Approve the establishment of a program to write down the interest -rate on rehabilitation loans. II. BACKGROUND Since the early 1990s the Richfield Housing and Redevelopment Authority (HRA) has worked to encourage homeowners to invest in their properties to maintain and improve property values in the City of Richfield. Since 2008, the rate of foreclosures and subsequent decrease in consumer confidence in the housing market has had a dramatic effect on property values throughout the United States. Between 2008 and 2010 the foreclosure rate in Richfield was 6%; the property value decreased citywide by 21 %. This decline in property value in Richfield (and 06202011 CFUF Write -Down Funding Support.doc the partnering communities), has reduced home equity and owners' ability to invest in their homes. At the same time, the housing stock continues to age and will deteriorate without proper maintenance and improvements. Additionally, the is presence of vacant properties throughout the city has had a detrimental effect on the quality of housing that Richfield, and the partnering communities, can offer to homebuyers. On April 25, 2011 Minnesota Housing (MN Housing) issued a Request for Proposals for its Community Revitalization Fund (CRV). The HRA staff has been working with the Greater Metropolitan Housing Corporation (GMHC) and the cities of Brooklyn Center and Crystal to develop an additional tool to respond to the effects of the broader market changes on our cities. Staff is requesting the HRA offer its support and matching funds to develop a loan program to write down the interest rate on rehabilitation loans that would be available in these three communities. Working with Brooklyn Center and Crystal strengthens the application because the communities have similar housing stock in terms of price and age. Additionally by working together the application will have a larger impact to improve housing stock in each city, again strengthening the chance of receiving funding approval. The proposed program would work as follows: • GMHC, a Richfield partner since 2004, would apply to MN Housing for Community Fix -Up Funds (CFUF) to be used in Richfield, Brooklyn Center and Crystal. Administrative costs are paid on a per loan basis by the CFUF. . • GMHC and the cities of Richfield, Brooklyn Center and Crystal would apply to MN Housing for approximately $125,000 in CRV funds to write down the interest rate on the loans from the current rate of 5.75% to 3%. • The three cities would pledge matching funds to write down additional loans to three percent. Richfield is proposing to complete 30 loans (at an average of $15,000) over the 20 -month contract period. The application would request about $37,000 in CRV for Richfield and offer about $37,000 in local HRA funds. It is anticipated that this investment will leverage $450,000 in home - improvements. Loans would be available to homeowners earning less than 115 percent of the area median income ($96,600 for a family of four) in any of the three cities. The terms of the loans are attractive, allowing recipients to borrow up to $35,000 at a fixed interest -rate, with a term up to 20 years. The loan underwriting allows a loan -to -value ratio up to 110 percent of the after -rehabilitation value. Loans would be initiated by the non-profit administrator and would then be sold to MN Housing at a discounted rate. The balance of the loan amount would be paid to GMHC by the CRV and city funds. After the loan is sold, MN Housing holds it for the term of the loan. III. BASIS OF RECOMMENDATION A. POLICY 0 0 The proposed loan program will help accomplish Goals and Policies from the Richfield Comprehensive Plan. Goal #1 is to "Maintain and enhance Richfield's image as a community with strong, desirable and livable neighborhoods." The policies supporting this goal include: 1. Support the rehabilitation and upgrading of the existing housing stock. 2. Encourage the creation of `move -up' housing through new construction and home remodeling. 3. Support ongoing maintenance and upkeep of residential properties. Goal #2 is to "Ensure sufficient diversity in the housing stock to provide for a range of household sizes, income levels, and needs." The policies supporting this goal include: 1. Promote the development of a balanced housing stock that is available to a range of income levels. 2. Encourage improvements to the housing stock to better serve families with children and seniors. 3. Promote additional housing diversity to serve families at all stages of their life -cycle through assistance, incentive programs, and the exploration of possible partnerships. 4. Promote the development, management, and maintenance of affordable housing in the City through assistance programs; alternative funding source; and the creation of partnerships whose mission is to promote low to moderate income housing. B. CRITICAL TIMING ISSUES • The application for CRV funds is due to MN Housing on June 30, 2011. • The CRV funds are awarded once per year. • Evidence of local support must be submitted with the application and commitment of matching funds must be submitted by August 12, 2011. • MN Housing typically awards CRV funds in October 2011. • Funds must be spent within a 20 -month time period after contracts are signed. C. FINANCIAL • The HRA contribution of $37,000 from the HRA General Fund would leverage $450,000 in home improvements, if the CRV application is funded. • If the program is not awarded CRV funds, the cities may elect to go forward with the program using only local funds in conjunction with the CFUF designation. I LEGAL • N/A ALTERNATIVE • Deny su V. ATTACHMENTS n MMENDATION(S) for the application and proposed matching funds. VI. PRINCIPAL PARTIES EXPECTED AT MEETING .0 NA RESOLUTION NO. • RESOLUTION AFFIRMING AND RATIFYING SUBMITTAL OF AN APPLICATION TO MINNESOTA HOUSING COMMUNITY FIX -UP FUND PROGRAM AND COMMUNITY REVITALIZATION FUND AND AUTHORIZING PROGRAM DEVELOPMENT TO CREATE A PROGRAM TO WRITE DOWN ON THE INTEREST - RATE ON HOME IMPROVEMENT LOANS • WHEREAS, Minnesota Housing has issued a Request for Proposals for the Community Revitalization Fund; and WHEREAS, the cities of Richfield, Brooklyn Center, and Crystal are working together with Greater Metropolitan Housing Corporation to create a home -improvement incentive loan program to stabilize neighborhoods affected by foreclosures and declining property values; and WHEREAS, the participating entities have the institutional, managerial and financial capability to ensure adequate project and grant administration; and WHEREAS, the Housing and Redevelopment Authority in and for the City of Richfield certifies that it will comply with all applicable laws and regulations as stated in the contract grant agreements; and WHEREAS, local matching funds are required for the application and the Housing and Redevelopment Authority in and for the City of Richfield seeks funding to complement locally -funded single family housing programs; therefore NOW, THEREFORE BE IT RESOLVED, that the Housing and Redevelopment Authority" in and for the City of Richfield is supportive of making an application with Greater Metropolitan Housing Corporation to receive Community Fix -Up Fund designation and Community Revitalization Funds, and is supportive of including local funds in the 2012 budget in the case that the application is approved. BE IT FURTHER RESOLVED, that the Executive Director is hereby authorized to execute such agreements as are necessary to implement the program on behalf of the applicant. Adopted by the Housing and Redevelopment Authority in and for of the City of Richfield, Minnesota this 20th day of June, 2011. ATTEST: Joan Helmberger, Secretary Suzanne M. Sandahl, Chairperson • • AGENDA ITEM#: 4 REPORT #: 24 =Oda STAFF REPORT HOUSING AND REDEVELOPMENT AUTHORITY MEETING JUNE 209 2011 REPORT PREPARED BY: REPORT PRESENTER: DEPARTMENT DIRECTOR REVIEW: REVIEWED BY EXECUTIVE DIRECTOR: KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR NAML, KAREN BARTON, COMMUNITY DEVELOPMENT ASSISTANT DIRECTOR ITEM FOR HRA CONSIDERATION: Acceptance of the 66th Street Corridor Revitalization Plan. I. RECOMMENDED ACTION: By Motion: Acceptance of the 66th Street Corridor Revitalization Plan. II. BACKGROUND In July 2010 the City of Richfield, in conjunction with Hennepin County, contracted with the firm of Damon Farber Associates to conduct a planning and revitalization study for the 66th Street Corridor between Cedar Avenue and Portland Avenue. 66th Street is a significant corridor within the City of Richfield, spanning between Cedar Avenue to the east and the City of Edina to the west. The 66th Street Planning process was conducted to develop a plan for the eventual revitalization and/or redevelopment of this segment of 66th Street. This area was established in the 1950's and 1960's and is characterized by traffic • congestion, a lack of parking, an unfriendly pedestrian environment, and aging buildings. It is also home to a number of iconic businesses frequented by residents of Richfield and the surrounding communities. 06202011 66th Street Revitalization Plan Acceptance A series of public meetings and workshops were held to gather input from residents, businesses, property owners and other stakeholders. These meetings included a walking tour of the corridor in July of 2010, a planning workshop held in September, • a public meeting in November to present the preliminary plan, and an open house in January to present the final Revitalization Plan. Staff and Damon Farber have also held meetings with the City Council, Planning Commission, Housing and Redevelopment Authority (HRA), City Department Directors, Richfield Public Works, and Hennepin County, in an effort to incorporate ideas, comments, and concerns from all potentially impacted parties. Based upon all of the information, input, and feedback gathered, Damon Farber has created a final draft Revitalization Plan ("Plan") for the 66th Street Corridor. The purpose of the Plan is to guide the revitalization and redevelopment of the 66th Street Corridor as it occurs to create a cohesive, inviting, and pedestrian -friendly environment. Representatives from Damon Farber Associates will present the final 66th Street Revitalization Plan to the HRA at the June 20, 2011 meeting. Staff is recommending the HRA accept the 66th Street Corridor Revitalization Plan. III. BASIS OF RECOMMENDATION A. POLICY • Without a plan to guide the revitalization and redevelopment of the 66th Street Corridor, the area is likely to remain a disjointed and disconnected commercial area that will continue to decline. • • The Planning Commission will be considering the 66th Street Corridor Revitalization Plan at their meeting on June 27, 2011. • The City Council will be considering the 66th Street Corridor Revitalization Plan at their meeting on July 12, 2011. B. CRITICAL TIMING ISSUES • As the area declines, property values will also decline. C. FINANCIAL • N/A D. LEGAL • N/A IV. ALTERNATIVE RECOMMENDATIONS) • Do not accept the 66th Street Corridor Revitalization Plan TTACHMENTS PRINCIPAL PARTIES EXPECTED AT MEETING • Representatives from Damon Farber Associates 0 Land Use Planning Services Prepared For Damon Farber Associates, Inc. • M cot;jurcticin %with Marquette Advisors Wenck Associates May 24 . 2011 0 E t4( 9— • Contributors Andrew Gillett - Principal Planning Analyst Kaye Lockrem - Housing, Community Works & Transit Karen Barton - Community Development Manager Jeff Pearson - Transportation Engineer Kristin Asher - City Engineer John Stark - Community Development Director P4a1'1nina team Tom Whitlock, ASLA - Principal in Charge - Damon Farber Associates Lance Schuer, LEED AP - Damon Farber Associates Brent Wittenberg - Marquette Advisors Ed Terhaar - Wenck Associates We would like to thank the many concerned citizens, business owners, City and County staff and local politicians who contributed their time and ideas to the Master Plan. It is the dedication and hard work of such individuals that make Richfield a thriving community today and will provide vision for it's future. 66th Street Corridor. 14 -3 Executive Summary The Plan Location and Context 1 Purpose of Master Plan 2 Goals and Objectives 4 Existing t widitions Transportation 7 Land Use and Zoning 7 Parks and Open Space g Architecture and Visual Aesthetics g Planning Process Purpose 11 Public outreach and participation 12 0 Master Pic, Exploration of Alternatives 15 Factors Influencing Future Street Reconstruction 15 Land Use Strategy 21 Connecting Community 24 Summary Conclusion 27 Next Steps 27 Appendix A - Market Assessment Appendix B - Walking Tour Minutes Appendix C - Open House 1 Minutes Appendix D - Open House 2 Minutes Appendix E - Open House 3 Minutes • 0 „ aeri CO,., , , �,a��r,g 1our: 66th STREET CORRIDOR PLAN -- ; tv -W)' • M r � rl - ti .s a � � r h1,ister Plan Study Area, 66th Street L _ - _ _Y a .. _ - ". a • - . . f Executive Summary Purpose The 66th Street Master Plan seeks to improve the economic viability and market position of existing and future uses on the 66th Street Corridor, while enhancing the pedestrian character and enhancing the multimodal opportunities of the corridor. The plan addresses land use, transportation and open space aspects of the corridor and provides recommendations for future improvement. 66th Street between Cedar and Portland Avenues has seen significant change with the addition of Cedar Point Commons, upgrades to the Crosstown Highway, expansion of the airport and the changing demographics of the community. The proposed reconstruction of 66th street circa 2015 by Hennepin County provides an important opportunity to begin planning for the improvements. The timing is right to be ahead of the change and create a long term vision for land use, transportation and open space on the corridor that maintains 66th Street as a gateway to the community and a vital neighborhood and regional amenity. Planning is vital to the economic health and safety of the corridor. The 66th Street Corridor Master Plan outlines land use, transportation, and open space goals. The Plan explores roadway configuration alternatives that strive to make 66th Street a more pedestrian friendly street with an improved visual character. It identifies new market driven land uses and patterns that seek to strengthen the unique districts within the corridor by encouraging growth of existing uses and introduction of new and complimentary ones. It seeks to strengthen Veterans Memorial Park as a community destination and enhance connections to it and other open spaces north and south of the corridor. This study is intended to be a resource for decision makers, City and County staff and potential private investors on the corridor. What (?oesr't it Do? The Plan does not propose the specific redevelopment of anysite along the corridor but seeks to guide future market driven redevelopment over a twenty year period. The Plan does not immediately change the road alignment or close any access drives for businesses/residents. Whnt MAW Hennepin County and the City of Richfield will use the Plan to guide economic development, transportation and land use decisions along 66th Street. Potential next steps include preparing a right-of-way strategy and roadway plans for the reconstruction of 66th Street, determining the City's financial role in redevelopment, and reviewing strategies for the redevelopment of City owned and vacant parcels. • .7 14r(o 0 The 0 Exisrfnga�rtornr„'ar:;�•i,;ct: u�is��n�4s. ne vacam i7(;ai ; i ,5 6uitr scv,,: ; )wvo(:s an A Plan Based on �_Qivifiiumj-v i,.PU+ Hennepin County and the City of Richfield have partnered together to lead the Master Plan study with the Damon Farber Associates team. Business owners, land owners, and residents were involved in a walking tour of the corridor to assess existing conditions. Three open houses were held to provide input on plan direction and outcomes. The Richfield Planning and Transportation Commissions provided input and various City Council members also attended open houses. The following recommendations were developed in conjunction with community input. IlnfIPrcfnnrirr fhp, This 66th Street Corridor planning study comes at a period following a serious economic recession and contraction within the local and regional economies. Land -use and economic factors are current impediments to redevelopment along the Corridor. However, with sustained economic improvement and through creative public-private partnerships, there is potential for small scale infill and redevelopment projects which will enhance 66th Street as a commercial corridor, providing an increased mix of goods and services and housing for the East Richfield community. As well, the planned reconstruction of 66th Street may also function as a catalyst for new property investment in this area. Hnucinc, The Corridor currently contains several market rate apartment buildings, particularly in the western portion of the study area around Veterans Memorial Park. These properties appear to be generally well maintained. Our assessment of rental market data indicates that these and similar "workforce" affordable rental units throughout the area maintain high occupancy levels. The preservation and upgrade of existing workforce housing units will be important elements of planning along the Corridor. Meanwhile, due to a short supply of developable land, limited parcel depth, and market factors new housing development along 66th Street will be challenged. Rather, the City has established a TIF district just north of 66th Street and west of Cedar Point Commons and is evaluating proposals for the construction of varied senior housing products in this area. Our analysis suggests that there is in fact demand for additional senior housing in East Richfield. Next steps include the refinement of the product mix and market positioning (prices/rents, and service level). Cedar Point Commons, with Target and Home Depot, have greatly changed the complexion of the eastern portion of the Corridor, expand ingthe trade area bydrawingcustomersfrom South Minneapolis and East Bloomington. Some businesses in the immediate area have experienced significant synergistic benefits, such as the Richfield Liquor Store and others in the area of 66th Street and Cedar. The Corridor is also home to several well-established retail and service businesses, many of which have served the immediate neighborhoods and the Richfield communityfor manyyears. Although many businesses continue to maintain and invest in their properties, several buildings are in a state of disrepair, as owners struggle to sustain their operations. Commercial rental rates are low, which is a factor in some businesses choosing to locate here. New retail and restaurant concepts in the short-term (2-3 years) will likely be focused within or near Cedar Point Commons, although new retail and restaurant concepts eventually may consider other locations along the Corridor. Target shoppers, however, must have a reason to travel westward along 66th Street. Through this Corridor Planning effort, Hennepin County and the City of Richfield can help to "set the stage" for new and existing businesses to better cultivate an expanded trade area related to Target customers. This will include market -related, transportation and land use elements as described in this report and the Corridor Plan. The lack of developable land, paired with traffic, access and parking issues will likely preclude large-scale corporate or multi -tenant office development along the Corridor. Small-scale infill office development and mixed-use developments with a small office component may become viable over the long-term (3-5+ years out). However, public- private partnerships will be required. Daveloorr�:�rt L.:Ke^ , eet anti Voest Piwr Parkway ;r, wtr?rasl;n 1)Wa. (Yf-ler Sr; rr'ixW : ties. G^ srreef ano nUi,C,I, lP !ear J)Wkith. 0 • • Demand for medical office space/clinics may increase if new senior housing is constructed in the area as is being contemplated near 66th Street & Cedar. A development which clusters existing health care providers in close proximity to senior housing would be appropriate and complementary to both land use categories. iiunsportation 66th Street serves the needs of local residents by providing access to local businesses, open space and Cedar Avenue. It also plays an important role in the regional transportation network. High traffic volumes, difficult access, and narrow sidewalks all contribute to visibility and convenience challenges facing business owners and residents. These challenges will only mount as volumes increase over time, threatening the economic viability of the corridor in the future. A comprehensive solution that addresses these issues and creates a vision forthe corridor will make 66th Street a good place to do business an amenity for the neighborhood and a destination for visitors. One of the key aspects that emerged during the Master Plan study was the importance of maintaining and enhancing Veterans Memorial • park as a vital community asset but also as an important anchor on the west side of the corridor to compliment the Cedar Point Commons development at the east end. The plan also strives to improve connections to Taft and Christian Park, and expand quasi public open space on the corridor to reinforce a pedestrian character that does not exist today. Recommendations to enhance the open space along the corridor include the following: Mal Caiv±ry Limb.,',)!: :.I:..p. -r ■ Reinforce Veterans Park as a regional draw on the corridor. Enhance facilities and programmed activities to draw people to the park and corridor throughout the year. ■ Consider public private partnerships to provide community recreation facilities, amphitheater and other park amenity additions. ■ Strengthen connectionsfrom 66th Streetto nearby neighborhood parks by adding sidewalks/trails as necessary. ■ Support regional storm water management strategies to compliment the Taft Park storm water management study. Reconstruction plans for 66th Street should incorporate the City of Richfield's desire to protect existing City wells. Infiltration approaches should be reviewed with City of Richfield staff prior to implementation. ■ Encourage developers and existing business owners to provide quasi -public spaces or outdoor dining areas along 66th Street to reinforce the pedestrian character of the corridor. ■ Explore grant programs which provide business owners with financial support for improving the exterior of their buildings and u -q also the exterior parking lot edges and outdoor spaces of their properties. The land uses along 66th Street are an eclectic mix of uses that provide a wide range of services to the community, a range of housing, and a diverse base of jobs. The 66th Street Corridor Plan seeks to create a flexible framework that provides opportunities for existing businesses to grow and identifies strategies for new private investment to be improved on the corridor. The intent is to capitalize on the unique attributes of the varied areas of the corridor. The 66th Street Corridor can be broken down into three distinct land use districts: - This area is the eastern portion of the district closest to Cedar Avenue and consists of land uses that draw a broader market area. The plan recommends to continue to work on the successful build out of the Cedar Point Commons project and actively pursue other development opportunities to the south of 66th Street that are synergistic with existing uses and with the adjacent neighborhood. - This area is the central portion of the corridor that primarily serves neighborhood and local service needs. The plan suggests that existing businesses expand on the corridor and reinforce this six block stretch as a neighborhood service district within a mix of compatible uses. Consider the introduction of higher density residential on the corridor as a catalyst for future commercial/office redevelopment and reinforce the corridor as a good place to live, work and shop. The scale and character should reflect sensitivity to the adjacent neighborhood. :, ,._ 1;r, . iviemorial Par: - Continue to have Future Land bse Diagram 06": �;;t & 13.'h Avenn �ni,th. 14— itb LJ • Existing comm orciw onDperties Uarovcen 15th & Bloomington A"eff 'Jc Exrstxrg:7us%.;as:;,., strong residential presence on corridor and better define opportunities for higher density housing on the south side of 66th Street overlooking Veterans Memorial Park. Reinforce the 66th Street and Portland Avenue intersection as in important mixed-use community node. ■ Address challenges of parking, future expansion of existing businesses and redevelopment with small parcel sizes. ■ Work with property owners adjacent to existing City owned parcels to maximize future development opportunities. ■ Consider potential future right-of-way expansion when reviewing new redevelopment proposals. ■ Define building setbacks to provide for consistent right-of-way in the future. There are 53 structures on the corridor today with over half of them constructed before World War Il. A number of the businesses on the corridor have become cherished community destinations but this loyalty is due to the services provided within and not the architectural character of the buildings in which they are provided. Each district along the corridor possesses a distinct character, made of buildings, streets and open spaces that structure the patterns of activity and influence our impressions of the place and the quality of goods and services sold within. Development should be sensitive to the community context: ■ Buildings should respond sympathetically to the scale, massing, materials and height of nearby buildings. ■ To local development patterns. ■ There should be visual and functional continuity of street frontages to help define the street and provide improved visibility to all businesses. The areas around Veterans Memorial Park will continue to be desirable spaces for a mix of uses but also provide new opportunities for residential uses that will further support the central neighborhood service district and reduce the overall quantity of retail uses, improving the market position of others on the corridor. A comprehensive streetscape that builds on elements for 66th Street is also envisioned to create a quality first impression as you enter the city as well as improve the identity for all land uses along the corridor. Studies show that streetscape improvements are not just about aesthetics but have shown the ability to increase a businesses bottom line by making a corridor more friendly for pedestrians and customers. The 66th Street Corridor Plan provides a long term vision of a vibrant 4-11 community `Main street' that reflects community input, is based on a thorough market analysis, and provides a flexible framework for future decision making. The plan provides for the continued growth of existing business and the information that will help sustain this corridor and community well into the future. • An enhane ) , -,.al character can improve a business bottom tine. The Canal Park street irnprovernern i:; Duluth inibroved local business sates by 2`;F: over a 3 -year p.ar,oa 66th STi CORRIDOR PLAN !A. _` - • � j, a _ � � L ,.. i al. STREET r _ t 1 •�i r f s a �rAu 3 t PESIDE'JiIAL - } 3 L� S _ - lE ,^cr,RnOo[l -- pJRISiIAN ${ 3• t maTI I Introduction 0 E .1 Location and t.trrittext The study area is located along 66th Street (County Road 53) in Richfield, Minnesota, between 5th Avenue and Cedar Avenue For the purpose of this study, the parcels located along the corridor were reviewed to one half block north and south of 66th Street. The corridor carries 12,400 vehicles at the east end, and 11,200 on the west end per 2009 traffic counts. The 2030 forecast from Hennepin County Transportation Plan predicts 11,300, while the Richfield Comprehensive Plan forecasts 15,900 daily travelers. The traffic volume is likely to increase slowly over the next 20 years. The volume increase will likely vary depending on intensity and type of development/redevelopment that occurs in Richfield. The 66th Street corridor is comprised of a diverse mix of uses, from multi -family and single family homes to offices, neighborhood commercial businesses and regional commercial. The corridor is also home to a few unique amenities like Veterans Memorial Park, the Richfield Ice Arena and a public pool and recreation center. If you live in the northern half of Richfield it is likely you travel on 66th Street a number of times a day. It is one of the primary vehicular corridors within the city and its future success is important to residents and business owners alike. Most anytime of the day it is a vibrant street with high volumes of vehicles and patrons accessing local businesses to purchase goods and services. If you are looking for anything from a bouquet of flowers or an exotic fish or to fix your car or see your dentist, your needs can be met on 66th Street. It is a long and diverse corridor to say the least. One of the most recently completed projects on the corridor is the Cedar Point Commons retail center, located just off Cedar Avenue on the east end of the corridor. There are also a number of vacant or undeveloped properties that exist along the corridor. The two roundabouts, located at Portland Avenue and 17th Avenue have also been recently completed, and have changed the face and function of both intersections. The BP Gas station and Mr. Tire auto service centers have been removed at the Portland Avenue interchange, and the Sinclair station on that corner is currently not in use. The corridor has been separated into three distinct districts for this study. The districts are: ■ Residential Park District (from 5th Ave to 11th Ave). ■ Mixed -Use Neighborhood (11th Ave to Bloomington Ave). ■ Regional Commercial/Office (Bloomington Ave to Cedar Ave). Resiciential Park District The Residential Park District begins at 5th Avenue and extends east to 11th Avenue. This district has a mix of mostly residential (single 11 • q - iu 0 0 and multi -family), public facilities, Veterans Memorial Park, and a few business on the south side of 66th Street. Most homes along the corridor were built in the nineteen forties, continuing into the nineteen fifties further south. Following the nineteen forties the corridor has seen a steady transformation into a diverse mix of uses. Some of the homes have disappeared and been replaced with commercial businesses or office space. The fifties and sixties development tended to build buildings closer to the street when 66th Street carried far less volumes of traffic and parking was on the street. The seventies and eighties saw a suburban model of development with buildings set back from the street with off-street parking located in front of buildings. More recent development has continued the suburban model of development with a number of exceptions. The neighborhood mixed-use district is a unique section of the corridor with many diverse uses from restaurants and single family homes to Montessori schools, auto repair shops, and dental offices. A residential neighborhood borders the corridor on both the north and south sides, and to the east is the Regional Commercial District with the MSP International Airport beyond Cedar Avenue. Similar to the Residential Park District, residential development began in the late thirties and forties, and continued intothe nineteen fifties. Commercial redevelopment has followed in the more recent decades. The lot depths in this district tend to be narrow and make redevelopment a challenge without acquiring additional properties to provide the necessary parking for today's development. Rectional C.:om.merclai/:)tticQ nistrirt The most recent and only multi -block redevelopment project has been the installation of Cedar Point Commons. Cedar Point Commons occupies over six blocks extending north of 66th street, and serves as the gateway to those entering the corridor from Cedar Avenue. This area draws from a significantly wider market area than the neighborhood mixed-use district, bringing people from south Minneapolis to the corridor. Unfortunately, these visitors typically do not frequent other businesses on the corridor. The area to the south of 66th Street consists of the Citv'.R linum ctnra tha laresact nffirro the area, develops a future vision based on input from residents and business owners of the area and then formulates specific goals, objectives and policies that will help implement that vision. This plan is intended to identify and develop a long-range plan ensuring that the 66th Street Corridor continues to grow and change while addressing the needs and desires of the community. This master plan provides City decision makers and the community with a policy manual to guide future public improvements and private development in the corridor and provides a set of standards for developers, builders, architects and planners. As the City of Richfield spread southward and 66th Street became a heavily traveled county road, the corridor filled with an eclectic mix of uses. Adjacent to the corridor, single family neighborhoods emerged with ample park space, making the area appealing to families. The neighborhoods have matured into attractive and desirable places to live. Richfield, with it's proximity to Minneapolis, the airport and the Highway 494 commercial strip, make it a great place to live and do business. The residents and businesses owners know that the area possesses the qualities and attributes of community life that so many new communities across the region are trying to create. Today, however, 66th street is surrounded by diverse neighborhoods with varied needs and the corridor that was designed for nineteen sixties traffic is now carryingtraffic far greater than it was designed for, making access to businesses, homes and offices a challenge. Traffic volumes will continue to increase and there are concerns it will further impact public safety, economic development and deteriorate the overall visual character of the corridor. Some of the concern focuses on the lack of pedestrian space on the corridor and speed of traffic, while other concerns stem from the lack of positive impact on local business from recent redevelopment in the Regional Commercial/ Office District. 66th Street requires new investment and an updated vision for the future. These concerns have raised important questions regarding the mix of uses, building location, architectural character and functional aspects of the corridor. Others acknowledge that change is inevitable, particularly for an area of the city laced with inherent assets and amenities such as Veterans Memorial Park, Swimming Pool, Ice Arena, proximity to neighboring parks such as Taft and Christian, and the appeal of established neighborhoods with public transportation to downtown Minneapolis and the greater metro area. The 66th Street Corridor has experienced its share of change over the years. Sometimes it is the sale of an established property for private n u -- I( r- 7 cor'9CIorScafely, 1,7i oac4'�7'0 Sntr access to hcfSlREsa:;S. 4 development (such as the Cedar Point Commons development), other times it is exterior changes to a business, such as the remodel of Richfield Floral & Garden. No matter what the change, there will always be people who are concerned about the overall direction the corridor is headed. Change will occur, and it is usually a sign of a strong, healthy community. It means that residents and business owners want to live and invest there. It also means that property values will likely grow - an important asset to most families and land owners. In response to these concerns, The City of Richfield and Hennepin County commissioned the assembly of the 66th Street Corridor Master Plan. The 66th Street Corridor Master Plan provides more detailed recommendations than are provided in the comprehensive plan. The master plan does not function to replace the comprehensive plan but rather to augment it. It builds on the goals, policies and implementation steps in the comprehensive plan to provide a finer level of detail. ii.3 Goals and Obiecj}ves As a result of discussions with the community and the Richfield Transportation and Planning Commissions during the planning process, a set of goals and objectives for the master planning process and recommendations were developed. These include the following: Corridor as Community Builder ■ Supports a compatible mix of commercial, cultural, office, institutional and residential uses. ■ Enhances the economic viability of businesses. ■ Enhances the integrity of adjacent residential neighborhoods. ■ Maximizes opportunities to contribute to a high quality of community life. ■ Supports the physical connection to local trails, open space and other community institutions. ■ Provides the `first step' in collaborative discussions with Hennepin County regarding the future reconstruction of 66th Street by exploring adequate vehicular circulation as well as pedestrian and bicyclist movements for a "Complete Street". ■ Actsasa north/south[in kagecon nectingadjacent neighborhoods and parks, including safe crossings for pedestrians. ■ Provides adequate access and parking for businesses and residents. ■ Performs a high-capacity/moderate speed road function for cars and trucks. ■ Provides convenient access to mass transit. it, 1-7 An Opportunity to Provide People Friendly Public Spaces ■ Provides a safe environment for pedestrians. ■ Creates strategically located human -scaled spaces which are engaging to the eye. ■ Includes an attractive streetscape that is good for business, good for pedestrians and can be maintained for the long run. ■ Celebrates the historic role of 66th Street as a gateway and one of the main arteries within the City of Richfield. The hensingwn Park cievetopment at 76th Street & Ly+ Jaz that has creared a quaiity aesthetic image. ritOd'JC`;iCY'.� • • r: 66-5 i� 83'R.O.W. Existing9 r a + a r � • � - - � moo'` Existing Conditions F '0 2,1 Trans>nortation The segment of 66th Street through the City of Richfield is designated as County Road 53 and is under the jurisdiction of Hennepin County. The study segment of this roadway extends for a distance of about 1.2 miles, and roughly a half a block deep north and south. Throughout this entire length, 66th Street provides two lanes of traffic in each direction, with no center medians, or turn lanes, and a speed limit of 30 mph. Full access is provided at all public street intersections and private driveways. Vehicles making right turns are required to slow down quickly and enter small parking lots, which force trailing drivers to move into the left lane to pass the turning drivers. The same is true for drivers making left turns. Trailing drivers are required to move into the right lane to pass. Many communities with historic four lane configurations have determined that a three lane configuration provides the same level of service but safer turning movements for left turns. One of the most unique and challenging aspects of the corridor is the varied right-of-way widths. There are three main right-of-way widths that exist on the corridor; 66 feet wide, 83 feet wide and 100 feet wide. The 83 and 100 wide right-of-way widths provide a wide range of opportunity. 2.2 land rinri 7nninri A variety of commercial uses exist within the study area consisting of neighborhood service retail and destination retail serving the larger Richfield and south Minneapolis community. The neighborhood mixed- use district in the center portion of the corridor has mostly small-scale shops and services typical of a neighborhood shopping district. The variety of businesses include: specialty grocery, dentist, auto oriented services, a laundromat, Montessori schools and miscellaneous office ba-& ipnes of oC-nier 4-ao • • Existing multi ' ,osiny unit a: IGM Avenue space round out the commercial mix in this district Anchoringthe retail area east of the neighborhood mixed-use district is Cedar Point Commons. The Cedar Point Commons retail development was completed in 2008 with roughly 350,000 square feet of leasable area, sitting on 30 acres that was previously neighborhood retail and single-family residential. The Home Depot and Target stores within Cedar Point commons development are a regional draw, pulling in visitors from south Minneapolis and the neighboring suburbs. Other retail services here include a bank, shoe store, chain restaurants, coffee shop, and a vacant lot owned by Ryan Companies awaiting development. The area to the south of 66th Street consists of the largest office building within the study area, the Richfield Liquor store and a large area of City owned property that is awaiting redevelopment. Located west of the neighborhood mixed-use district is the residential park district. This portion of the corridor has the least amount of commercial retailers. The construction of the roundabout at Portland Avenue removed two of the four auto service/gas stations on that corner, leaving one abandoned and one still in operation. A floral and convenience store is located between Chicago & Elliott Avenues, on the south side of 66th Street. To the north are Veterans Memorial Park, Ice Arena, and swimming pool. The study area is surrounded by well-established single family neighborhoods that offer convenient access to nearby shops and services. Multi -family apartment structures are located primarily on the western section of the corridor closest to Veterans Memorial Park, and single family homes are in good condition and streets are lined with trees and sidewalks. The neighborhoods on the north side of the corridor are bound by Highway 62 to the north, Cedar Avenue to the east, and Veterans Park Single family residence at Park .Avenue Existing T&T gas/service station at PGrtiarid avenue r* Zoning Avlap to the West. 66th Street is the southern border to that neighborhood, and is busy enough to isolate that pocket from the larger neighborhood south of 66th Street. Safe, well marked intersections are critical to the connection of these neighborhoods to the corridor and across it. A number of residential properties still exist directly on the corridor providing opportunity for commercial reuse. Single family residential is even more scarce east of Columbus Ave, making redevelopment on that end more likely with the availability of either abandoned or public owned lots, and the additional traffic visiting the Cedar Point Commons development. Located within the study area are Richfield Ice Arena, Outdoor Pool, Mt. Calvary Lutheran Church and School, and two different Montessori schools. Also located close to the corridor is the new Richfield Municipal Center at the corner of Portland Avenue and 67th Street. arks and open space One of the biggest assets of the corridor is Veterans Memorial Park located between Portland Avenue and 11th Avenue South. Home to numerous trails, a picnic shelter, playground, and mini -golf course, Veterans Memorial Park serves as a destination to visitors and residents alike. Located three blocks north of the corridor is Taft Park, and two blocks south is Christian Park on the east end of the corridor. A connection to these two parks could be enhanced through the corridor at Bloomington Avenue which could tie into the plan being created by the Richfield Bicycle Task Force. 1.,4 Architecture and Visual Aesthetics Building architecture in the corridor includes an eclectic mix of styles, materials, heights and massing, representing many decades of construction without a coherent vision or standard. Buildings range from 1-2 stories and are randomly set back throughout the corridor making visibility to some businesses a challenge and contributing to the lack of a consistent district identity. The largest massing of new buildings is located at Cedar Point Commons on the east end of the corridor. Cedar Point Commons has a cohesive building material palette in comparison to the rest of the corridor. Many of the older buildings have few windows or entrances facing the street or are set back too far from the sidewalk, perhaps separated by parking or service areas. Many service areas are not properly screened from adjacent residential uses. Most of the older buildings are stick frame with wood siding or made of masonry block. Cosmetic improvements like new paint, new windows, doors or awnings would contribute to an improved pedestrian and visitor experience. tt'g E IND ' 0 66th STREET CORRIDOR PLAN 4 — owl% • , � / r pr a "!i► ep t z zt a �_ Lr -013 Planning A Purpose The planning process for the 66th Street Corridor Master Plan had the oversight of Hennepin County, Richfield City Staff, and was organized around a public consensus building process. The combination of these three perspectives provided the consulting team with wealth of both strategic insights and community aspirations that could be incorporated into the plan. The project team members who live, work, shop and recreate in the 66th Street Corridor provided direction on the planning process, participated in community open houses, and a corridor walking tour. They reviewed the design solutions as they were refined between meetings and offered insights about the feasibility of plan components and recommendations. The consultant team met with the community four times total offering input and guidance between August of 2010 and February 2011. The Master Plan for the 66th Street Corridor seeks to establish a vision for the future based upon the wishes and desires of the community and the realities of a market driven approach. At times, various community members expressed concerns over specific elements of the Master Plan, but the vision seeks to define a broad set of ideas for the future of the corridor. In fact, as people shared their views about the future of the corridor, it became evident that they all share a great desire to improve a corridor that is highly treasured and critical to the future health of the community. Issues regarding access, multi -family housing, location of commercial infill, future maintenance of street improvements and overall visual character are often contentious, but people recognize their positions are often highly charged because they truly care about the future of the corridor and the long term economic viability of their business. It is the goal of this Master Plan to reflect the common vision shared by the community and provide positive direction for the future of the 66th Street Corridor. While community members may continue the debate after completion of the Master Plan, it should be done in the context of a commonly held vision. In this way, a statement of purpose should provide the way for shared values and a basis for cooperation as the community addresses future development chanes. J] • 0 0'Pq • L Participants in rye A, _gust _)_, - Najhing roar: ,2 A corridor walking tour, three public meetings and a meeting with the Transportation and Planning Commission were held and attended by members of the consultant team and the surrounding community. Information regarding these events was publicized on the City's website, and by postcards mailed to citizens. The first chance for business owners and neighborhood residents to comment on the study was at a walking tour of the corridor held on August 12th, 2010. Twenty people were in attendance for the tour, including business owners, residents alongthe corridor, and interested land owners. The purpose of this tour included the following: ■ An opportunity to meet business owners and residents on their turf and discuss issues where they occur. ■ An opportunity for business owners and residents to provide input to the process at the very beginning prior to any concepts being developed. ■ Present the planning process. ■ Discuss the purpose of the Master Plan. ■ Inform participants how they could stay involved in the process. Participants were asked to make general observations regarding each block. The information gathered at the walking tour provided planning insights and direction for the preparation of concepts that followed and influenced recommendations made in the following open house. Please see Appendix B for Walking Tour Minutes and participant recommendations. Open House One The first community open house was held at Mt. Calvary Lutheran Church on September 15th, 2010. The purpose of this open house was an introduction and visioning session which included the following: ■ Introduce purpose of the plan. ■ Present study process & Schedule. ■ Provide a project background. ■ Answer Questions. ■ Visioning session. Members of the community were asked to review findings to -date and provide insight and comment on the direction of the concept. The visioning session asked attendees to identify corridor assets, liabilities, and what their vision was for the future of the corridor. The input gained from this effort moved the direction of the plan closer to a preferred master plan which was presented at the second community open house. See appendix C for open house one minutes and participant recommendations. Open House Two The second community open house was held November 30th, 2010 at Mt. Calvary Lutheran Church. The purpose of this meeting included the following: ■ Present preliminary Right -of -Way sections. ■ Present preliminary Land -Use diagrams. ■ Present preliminary District concepts. ■ Discuss refinements and next steps. ■ Gain additional input regarding Plan recommendations. This open house allowed community members the opportunity to review roadway sections, land use diagrams, and district concepts. The attendees were encouraged to ask questions regarding plan components or process issues, express concerns, and discuss likes and dislikes of the exhibits. Those comments were reviewed by Project Team members and influenced the recommendations made in the revised diagrams. See appendix D for open house two minutes and participant recommendations. ljuuJ ie irile The third community open house was held January 31st, 2011 at Mt. Calvary Lutheran Church. The purpose of this meeting included the following: ■ Present revised Right -of -Way sections. ■ Present revised Land -Use diagrams. ■ Present revised District concepts. ■ Discuss refinements and final steps. ■ Gain additional input regarding Plan recommendations. This open house allowed community members the opportunity to review roadway sections, land use diagrams, and district concepts. The attendees were encouraged to ask questions regarding plan components or process issues, express concerns, and discuss likes and dislikes of the exhibits. Those comments were reviewed by Project Team members and influenced the recommendations made in the summary document. See appendix E for open house three minutes and participant recommendations. 66th STREET CORRIDOR PIAN IF - 'A" IF • _ 0— $iRIIT park • b. - 6atn ETREEi !' t V •� � T� a ". ■4 s y .f- 811ft ■iREET I fi WT ttY _ • -L! ' P. .� -'.> � _ .)lJ�iiYY�ilifl�■r • .Yrf-tltrau •sY_t s.�:--. • Y YllYs: a s" at 1p -a 4 -a7 The 66th Street Master Plan is intended to act as a framework for future decision making regarding public and private investment in the corridor. The community driven planning process began with an exploration of a wide range of alternatives regarding transportation, land use and open space. The plans were then refined based upon community and staff input to arrive at a Master Plan that provides a more clear understanding of the street configuration trade-offs related to future reconstruction of the roadway, new land use alternatives that provide a synergy of uses to support new and old business development on the corridor and improved community linkages that support neighborhood desires for a safer and more connected community. . a Exploration of Alternatives treetscape and Pedestrian Improvement, This study explores the trade-offs between the desire to make 66th Street a multi -modal street with provisions for on -street bike lanes, on -street parking and an enhanced and walkable pedestrian realm within the varied right-of-way configurations of the corridor. The study does not recommend a specific solution but, rather provides the information necessary to continue the discussion with Hennepin County as they begin to formulate a plan for the reconstruction. 66th Street is currently made up of three different right-of-ways (R.O.W.), 66', 83' and 100'. Part of this Master Plan study was to explore different road alignments for the corridor and allow the community to comment on the different ways 66th Street could be reconfigured. Six different sections were presented at the second open house in November, two sections illustrating a 66' right-of-way configuration, and four more showing an 83' right-of-way option. The 100' right-of-way portions along the corridor would use the 83' right- of-way street configurations. Two additional 66' right-of-way sections were created in response to the feedback gathered. One of the primary decisions moving forward as the County begins to formulate a right-of-way strategy is to determine an approach to the areas of the corridor that have a 66 foot wide right-of-way today. This width is too narrow to accommodate all of the alternatives related to bike lanes, parking and a quality pedestrian environment. Acquiring additional right-of-way to expand to 83 feet is also problematic because it will impact existing businesses parking and buildings in certain locations. One strategy communities have implemented in the past is to implement setbacks in these areas that require new development to be set back to the desired right-of-way width and wait until the future when all parcels in an area are compliant and then expand the improvements. This is the primary challenge for redevelopment occurring prior to the roadway design effort by County. t-( - a g • 0 aiaewaiic Couievara urive Lane Median With Lett Turn Lane Drive Lane Boulevard Sidewalk 4 odentiul Park UISVlCi - 66 KA.),VV This street section would accommodate a 6' wide sidewalk on both sides, 4' boulevards, 15' drive lanes, and a center turn median with extensive planting. This section does not accommodate bike traffic. Shade Trees Street 1-I0t- ', Sidewalk Bike Lane Drive Lane Median with Left Turn Lane Drive Lane Bike Lane Sidewalk RPSEt"!l�ti?i!y� Ri-�r�r �9e C9f# 41' F? !4 4A! _.tSi• nt4 ,. ! This section would lose the 4' wide boulevards on both sides, but gain 6' bike lanes on the street. The sidewalks are also extended to 9' wide. Existing Rr,,,'rl of .;gay L„_aroits. ih q -al R.O.W. wit' -jrkinc This street section in the Neighborhood Mixed -Use District would accommodate an 8' wide sidewalk on both sides, 8' wide on -street parking, 11' drive lanes, and a 12' center left turn lane. Sidewalk - Blvd. Bike Lane Shade Trees Street Light I MIR row"I e Lane Left Turn Lane Drive Lane Bike Lane Blvd. Sidewalk 4 IF Mixed -Use Corridor - 66' R.O.W. with Rike gone Similar to the previous section, this section would provide an 8' sidewalk, it would also accommodate a 4' wide planted boulevard, and a 6' wide bike lane. On -street parking would be lost in this scenario. C7 fY�Si(9r r'iC1'�'. 7 t( - 30 • - = Shade Trees - - Shade Trees • Street Light _ Street Light r L, � { t _ Y t ) Multi -Use Trail Boulevard Drive Lane Median with Left Tum Lane Drive Lane Boulevard Sidewalk The 83' right-of-way accommodates more uses and generous proportions compared to the 66' right-of-way This section has a multi- use trail off the street on the park side, 11' wide boulevard on both sides, 15' drive lanes, a center turn median, and a 6' wide sidewalk on the south side. Existing Right-Of-t;'ay LOCat;Olts 18 - - Shade Trees • Street Light r Sidewalk Boulevard Bike Lane Drive Lane Median with Left Turn Lane Drive Lane Bike Lane Boulevard Sidewalk i r ?7 7 R?sidpntini Pork Distrilr# 011' 0 n All" ass+.,; t Similar to the previous section, this section would not offer the multi- use trail, but rather an 8' wide bike lane in both directions on street. Both sides of the street would have a 6' sidewalk, 8' boulevards with shade trees and pedestrian scale lighting, and the drive lanes would be reduced to 12' wide. _ VETERANS _ 66 R.O.W. Existhg MEMORIAL PARR = 83' R.G W Existing 100' R OW Existing /� Residential Park District - - Neighborhootl Mixed -Use - Existing Right-Of-t;'ay LOCat;Olts 18 14_61 Shade Trees Street Light _ 41. 4 I 4 -, i S'd Ik i ewa Boulevaid Bike Lane Drive Lane Left Turn Lane Drive Lane Bike Lane Boulevard Sidewalk t Use District - 83' R.O.W. with Bike Lane This 83' right-of-way section in the neighborhood mixed-use district section has 8' sidewalks, 6' planted boulevards, 6' bike lanes, 12' wide drive lanes and a 13' center left turn lane. Shade Trees Street Light- i _• Sidewalk Parking Drive Lane Left Turn Lane Drive Lane R.0 with Parkin: Similar to the previous section, this section would not offer the on - street bike lanes, but would have a 10' wide lane for on -street parking. 14' sidewalks would extend from the curb to the buildings. The drive lanes would be reduced to 11', and left turn lane would be 13' wide. Parking Sidewalk VWX 66 R.OW Existing Existing fi 9 01 11 9 0 14 - 1-,;)- Alternative #1 This alternative of neighborhood ni:No.l use �ijc;i g th(, ' ' I I � , cOrridoi and specifically at the roundabout a, Portland Avc-)),,f? and 66th Street. An cr.Vancl�(l civic draev at *Veteta!)s Memorial Park's i0luOdeki ic, create 1l complimenra!) destination to the Cedar P(,i!i,, ^onpl-,ons property on the eastern edge of --0 v,,;rf,dcj. Alternative #2 oetail ;l,lit; iarmly housing a!; r s;.)edestrian frienaly. neighborhood It also eohaiwes h011sing Oj)pCNwi&t7S aauncj Veterans Park. Alternative #3 This alternative baih','s ;r tt � f,' ".& re.-vu!lai mix of uses at the Cedar P, -,,i ; -ueveiopineni and proposes the wtstOP , ..K,",„Ir;,,,Kw, of this mix of uses. It also exPiOrOS a is oresence on the northeast cornet of the -,'anue and 66th Street intersection. 20 -ovosev iaoa rise magraw expanded c.,)! Proposed li.3rciiis(.,di,4grat,,-j expanded regional commercial if -33 4.3 Land Use Alternatives and Strateav The existing land uses on the corridor subdivide into three unique districts previously identified. The land use alternatives explored below reflect a variety of approaches to how these districts can grow and where the borders between districts should extend or retract. The intent is to explore opportunities for existing business to grow on the corridor and opportunities for new private infill development. One of the primary challenges facing the corridor currently is the low rental rates that existing businesses operate under. The price of new construction may price existing businesses out and new businesses find it difficult to compete with adjacent low rates. One of the strategies explored introduces new office and residential uses to reduce the overall amount of retail, reinforce this area as a good place to work and live and continue to provide an eclectic mix of uses within the corridor. r'riFr C4t1-{3-1 The 66th Street Corridor Master Plan does not propose the specific redevelopment of any site along the corridor but seeks to guide future market driven redevelopment. However, a number of case studies were developed to test what redevelopment in the corridor might look like and to further study the potential challenges and opportunities. Sites within each of the three districts were chosen to test the feasibility of the master plan recommendations and to illustrate how the recommendations could be implemented within the corridor. Sites one and four were chosen because they anchor the corridor, Cedar Point Commons on the east, and the Richfield Pool, Ice Arena, and gateway to Veterans Memorial Park to the west. Site two was chosen because of it's proximity to the park, multi -family residential units, and beginning of the neighborhood mixed use district. Site three was chosen because it represents the most diverse mix of uses within the corridor. Opvor;- w;ty site iocatrons. 21 • 0 14— 3cl • r r J. 00,Lj Destinations should be crnx,ecterl to each other and bof e. ec! ?turn parking. Open spaces shotdn bil. crt ,. ; :, range of activities. 22 The 66th Street and Portland Avenue intersection is the western border of the study area and will continue to serve as an important node on 66th Street. This case study explores the potential of adding a community health and fitness center to the existing recreation center, further supporting the western edge as a community and regional draw. The intersection itself will continue to be a mix of residential and commercial uses. One of the primary challenges of development on a roundabout is providing safe and convenient access for users. The plan also illustrates the opportunity to provide quasi -public spaces to promote pedestrian use of the corridor. The introduction of small plaza spaces for outdoor dining and gathering can go a long way in creating a unique sense of place. medium-high density residential public/quasi-public quasi -public plaza neighborhood mixed use _ regional commercial This study explores the edge between the Park District and the Neighborhood Commercial/Office District. The mixed use building to the north of 66th Street incorporates the existing Montessori school at ground level and introduces new residential uses above that take advantage of this close proximity to retail and Veterans Memorial Park this site offers. The building is brought up to the street to reinforce the architectural edge of the corridor and provides parking behind the building. The residential buildings shown to the south of the corridor expand the Park District to the east to capitalize on it's proximity to Veterans Memorial Park and reduce the amount of retail on the corridor further enhancing the core of the neighborhood service district. Buildings are set back from side streets to reflect the single family residential setbacks further south and maintain important view sheds to the park. R This study explores the opportunity to enhance a portion of the Neighborhood Mixed -Use District as a pedestrian oriented neighborhood gathering location. Many comments were made during the open houses and meetings with the planning commission to create a destination similar to more urban destinations like the area around 48th and Chicago Avenue or the neighborhood destinations at 43rd and Upton in Linden Hills. This study introduces mixed use buildings facing the street that provide access points to parking behind. This concept also explores the idea of providing on -street parking and limited access. The western edge of the concept explores the possibility of providing apartments of higher density residential on the corridor. The narrow lot widths make redevelopment in this area a challenge but, developing a new pattern that emphasizes this area as a community destination should be a factor with any redevelopment proposal. w : P 0r�' h • Ll'3(0 • U • One o; the,)rimaty aspec s c? tr,0 ; ,;ao is ro enhance cclo; Iectioos. LL'. This study focuses on the City owned property to the south of 66th Street in the regional commercial/office district. The plan extends Richfield Parkway to the south and expands the regionally focused uses along the southern edge of 66th Street. It also introduces new higher density housing to the south as a transitional use back towards the existing neighborhood to the south. Similar to the Portland Avenue and 66th Street roundabout, this plan seeks to mark this intersection as an important community node and gateway into the City of Richfield. 4 4 ronnPr lno rnmmitriftt One of the primary aspects of the plan is to link existing and proposed uses on and around the corridor with surrounding amenities and into a regional system of trails. There is a Bike Study running parallel to the development of this plan that will provide more detailed information but, the diagram below illustrates potential pedestrian and bike connections to the north and south of the corridor. The community recognized that on -street bike lanes, although desired, did not serve the needs of families and nearby residents. The desire was to have safer off-street connections away from the traffic and cars of 66th Street. There was also a desire to improve pedestrian connections across 66th Street and in direct connection with Metro Transit bus stops. This would concentrate crossings at important connections and provide a consistent rhythm of crossings on the corridor. 4-37 The other aspect of community connection that lacks today is the opportunity for public space on the corridor that reinforce this area as a community destination and a place for pedestrians. The plan suggests new development on the corridor consider contributing these spaces as the opportunities arise. PrOr>OSOC, ',;nd use diagram with bike route and pedestrian connectrOvs. • C 66th STREET CORRIDOR PLAN The 66th Street Corridor master plan proposes to improve the economic viability and market position of existing and future uses on the corridor by providing strategic guidance related to transportation improvements, land use and community access to open space. Specifically, the plan provides: ■ A resource for decision makers as they begin to strategize the approach to reconstruction of 66th Street. It provides a greater level of understanding related to the trade-offs between the desire to provide `Complete Street' solutions, minimize right-of- way acquisition and minimize impact to existing land owners. ■ A more focused approach to growth of existing businesses and opportunities for new investment that provide synergy with the neighborhood and with adjacent uses. ■ Improved community linkages that will inform the Bicycle Planning Study and the 66th Street reconstruction. ■ The further investment in Veterans Memorial Park as a regional draw on the west end of the study area. ■ The continued growth of residential uses and the reduction of under utilized retail uses in an effort to provide a more focused neighborhood destination. The plan is a reflection of the input received from stakeholders, residents, public officials and County and City staff members. It is a living document that should be used as a tool and resource for staff, public officials and potential developers to better understand the desires of the community and the potential that exists on this historic stretch of 66th Street. 5 1 !!bait} C41110 - Urban corridors are in a constant state of change and 66th Street is no different. There exists a number of immediate opportunities to revitalize the corridor. The planned reconstruction of the corridor will provide improved traffic flow, improved aesthetics and a new focus on multi -modal opportunities. The vacant and City owned parcels on the corridor that have already been cleared are `shovel ready' sites that developers are exploring. The recommendations coming from the Bicycle planning study also offer an opportunity to reinforce the concepts developed in this plan. Potential steps moving forward include: ■ The City of Richfield, Hennepin County and affected property owners should work corroboratively to create a strategic vision for improvements on 66th Street that will produce a 50 year vision for the Street and further reinforce 66th Street as a good place to do business, live and work. ■ Explore with local providers the potential of a public private • • • partnership to provide increased health and fitness opportunities within the Veterans Memorial Park area for residents and strengthen the western anchor of the corridor as a community and regional destination. ■ Continue to actively partner with developers on City owned parcels on the corridor that further the goal of providing a safe, dynamic and eclectic mix of uses on the corridor that coincide with existing uses. ■ Provide an interim strategy for potential redevelopment occurring on parcels adjacent to areas with 66 feet of right-of- way to minimize potential issues prior to the final determination of the right-of-way strategy with Hennepin County. ■ Explore opportunities for grant support of existing uses to invest in the exterior of their buildings and sites. 0 W1 ,4-qf On Lake Street. pr, -, ,,I16ca, tht,3rnourlt of remi ana active. -good place to On Jbusrness. and reinforces ii as an important community destu'vion. 29 0 0 C! -u3 1 Appendix A - Market Assessment C • 0 REAL ESTATE MARKET ASSESSMENT, EAST 66TH STREET CORRIDOR PLAN RICHFIELD, MINNESOTA September 2010 GVA File #10017 PREPARED FOR: Mr. Tom Whitlock Damon Farber Associates 929 Nicollet Mall Minneapolis, MN 55402 PREPARED BY: Marquette Advisors Kra! Estate Consultants Marquette Advisors Offices: Minneapolis Office: 50 South Sixth Street, Suite 1370, Minneapolis, MN 55402 Phone: 612-335-8888; Fax: 612-334-3022 Seattle Office: 2723 California Avenue SW, Seattle, WA 98116 Phone: 425-392-7482, Fax: 425-392-7330 Marquette Advisors Real Estate Consultants • September 30, 2010 Mr. Tom Whitlock Damon Farber Associates 929 Nicollet Mall Minneapolis, MN 55402 RE.: Richfield — E. 66th Street Corridor Plan Real Estate Market Assessment Dear Tom: We are pleased to present this summary of our analysis and findings pertaining to the real estate market along the E. 66th Street Corridor in Richfield, MN and the surrounding area. Included in the report is a summary of real estate market conditions along the corridor and the broader market area, together with a review of relevant demography and economic conditions. Additionally, we have provided a summary of the potential for new commercial and residential development and/or redevelopment along the corridor, as well as key issues and suggestions . derived from our analysis that have relevance to the 66th Street Corridor Plan now in process by the consulting team led by Damon Farber Associates. Thank you again for inviting us to assist you with this important planning effort. We remain available to answer any questions you may have regarding our analysis, and look forward to working with you again in the near future. Sincerely, MARQUETTE ADVISORS Brent E. Wittenberg Vice President Marquette Advisors Offices: Minneapolis Office: 50 South Sixth Street. Suite 1370. Minneapolis. MN 55402 Phone: 612-335-8888: Fax: 612-334-3022 . Seattle Office: 2723 California Avenue SW, Seattle. WA 98116 Phone: 425-392-7482: Fax: 425-392-7330 qI(-if E. 66t1i Street Corridor Planning Richfield, MN Real Estate Market Assessment 0 TABLE OF CONTENTS INTRODUCTION.......................................................................................................................... I EXISTING CONDITIONS........................................................................................................... 3 West (Portland to 1 I"' Avenue South)............................................................................................. 3 East(Cedar to 16t1i Avenue)............................................................................................................. 6 Central (Bloomington to I Vh Avenue South).................................................................................. 8 RETAIL MARKET UPDATE....................................................................................................... 10 RetailTrade Area............................................................................................................................. 10 An Expanded (Secondary) Trade Area........................................................................................... 12 TradeArea Demographics............................................................................................................... 13 RetailMarket Trends....................................................................................................................... 15 RetailDemand Analysis.................................................................................................................. 24 The"Target Impact.. ........................................................................................................................ 28 Key Conclusions: Retail Analysis................................................................................................... 29 OFFICE MARKET UPDATE...................................................................................................... 30 Regional Office Market Trends....................................................................................................... 30 East Richfield Office Buildings....................................................................................................... 34 Key Conclusions: Office Analysis.................................................................................................. 36 HOUSING ANALYSIS......................•.......................................................................................... 37 Senior Housing Market Area ................. 38 Senior Housing Product Types........................................................................................................ 39 Demographics.................................................................................................................................. 40 HomeValues.................................................................................................................................... 44 ExistingSenior Housing Supply...................................................................................................... 46 Senior Housing Demand Estimates.................................................................................................. 50 • KEY ISSUES RELEVANT TO E. 66TH CORRIDOR PLAN .................................................... 55 ADDENDA Profileof Marquette Advisors......................................................................................................... l Marquette Advisors Page ii q-ql E. 66"' Street Corridor Planning _Richfield. MN Real Estate Market Assessment • INTRODUCTION 66th Street is a significant corridor within the City of Richfield, spanning from Cedar Avenue on the east to the City of Edina on the west. The East 66th Street Corridor Planning effort is a process to develop a plan for the eventual revitalization/redevelopment of the segment of 66th Street between Cedar Avenue and Portland Avenue. In July of 2010, the City of Richfield, in conjunction with Hennepin County, contracted with the planning firm, Damon Farber Associates ("DFA") to lead this planning effort. Marquette Advisors ("Marquette") was retained by DFA to provide a summary analysis of real estate market conditions and key issues impacting the E. 66th Street Corridor. The work by Marquette will be utilized by DFA and other members of the project team to guide land use planning (the "Corridor Plan") on behalf of Hennepin County and the City of Richfield. The "Corridor," as defined by Hennepin County and the City of Richfield, spans from Cedar Avenue on the east to 5th Avenue on the west. . Specifically, Marquette Advisors was retained to provide the following services related to the Corridor Plan: 1. Marquette Advisors has reviewed all relevant planning documents as previously completed by or on behalf of the City of Richfield, together with current planning and property information related to the corridor planning area and the surrounding relevant market area. 2. Marquette has and continues to attend regular planning sessions with DFA and other members of the project team, as well as community meetings and workshops. 3. Marquette has reviewed of all relevant 'demographic and economic data, as well as residential and commercial real estate market information such as market pricing, rent levels, recent and historical supply and demand trends. • Marquette Advisors Page 1 L4 -w$ E. 66"' Street Corridor Planning Richfield, MN Real Estate Market Assessment • 4. This document summarizes the market assessment and conclusions derived from this analysis. Specifically, the report identifies key issues related to the real estate market and current land use patterns which impact the current and /or future viability of residential and commercial development, redevelopment and/or revitalization along the Corridor. 5. It is important to note that this is NOT a market or financial feasibility study related to any specific development project(s) along the Corridor. Rather, this is a market assessment used to inform and guide the Corridor Plan by Damon Farber Associates. The Corridor Plan is being positioned as a long-term (20+ years) planning document. Thus,; the market assessment is intended to provide a snapshot of current real estate market conditions, identify trends and the potential for future complimentary infill and/or redevelopment along the corridor over the long-term. This research was completed during August and September of 2010. . Next Steps • Further input and consulting such as development financial feasibility modeling will be provided separately to DFA by Marquette. Marquette will work with DFA, the City of Richfield and Hennepin County to identify opportunity sites (a/k/a "opportunity" sites or nodes) to be evaluated for future development/redevelopment. Opportunity sites will be identified based on the outcome of the market study, land use and transportation planning, and City/County goals and objectives related to the long-term development of the Corridor. As well, Marquette will provide pro forma analyses as appropriate to assess financial feasibility of development/redevelopment of the opportunity sites. From here, the project team can assess the potential need for gap financing and suggest mechanisms (public/private partnerships) to support development which is in line with City/County goals and is appropriate within the context of the Corridor Plan. Marquette Advisors Page 2 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment E. 66TH ST. CORRIDOR - EXISTING CONDITIONS is The E. 66th Street Corridor spanning from Cedar Ave. on the east to 5th Avenue on the west contains a mix of both commercial and residential uses. An aerial view of the corridor and existing land use is provided on the following page. There are a total of 55 parcels which front 66th Street within the defined Corridor. These parcels contain a total of 892,000 square feet (sf). Note that this excludes the 108 -acre Veterans Memorial Park in the western portion of the Corridor and the Target & Home Depot parcels totaling 30 acres at the east end of the corridor (Cedar Point Commons). Total valuation of the corridor's 55 parcels was $19,006,000 in 2009 according to Hennepin County Assessor's records. Total land value as assessed was approximately $8,600,000 ($9.64 per sf), with total building and related improvements valued at $10,400,000 according to County Assessor's records. The following paragraphs discuss land use patterns within each segment of the Corridor. • West (Portland to 11" Ave. S.) The western portion of the corridor contains a significant community and regional attraction, that being Veterans Memorial Park, along with the Richfield Ice Arena, a number of well-maintained single family homes, and medium -density multifamily housing. The majority of structures in this area were constructed during the 1950s and 1960s. Commercial development in this area includes Richfield Floral and Cinco de Mayo, a small Mexican grocery and c -store operation at 66th & Elliott. These improvements, too, are well maintained and have seen considerable investment/upgrade in recent years. Additional commercial development includes gas station/c- store operations on the south side of 66th at Portland Avenue. One of the stations (SW corner) was recently closed and vacated. A funeral home exists at the NE corner of 66th & Portland, immediately north of the transit stop. Marquette Advisors Page 3 q —.sc O 3 ''7 N >= F- 0.:.i rn 0.�PliQ ,'S • • 0 rtl El -_- I _ _ I J � r � Ql � a Go) c a 3 - -- 7-T] snUGAv jtugyQd - -- I FT _ • • 0 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • We find that properties in the west portion of the corridor are generally well maintained and P g Y complimentary to the larger corridor and surrounding neighborhoods. Veterans Memorial Park is a very significant community and regional asset. East (Cedar to 16th Ave.) The eastern segment of the corridor is mainly commercial, anchored by Cedar Point Commons, a 30 -acre development by Ryan Companies at the NW corner of Cedar & 66th. Cedar Point Commons contains a 175,000 sf Super Target, as well as a 103,000 sf Home Depot. In-line space as constructed to date includes 31,300 rentable square feet, of which 15,250 sf remains vacant. Current tenants include Famous Footwear (5,671 sf), Chipotle (2,124 sf), Subway (1,653 sf), Verizon Wireless (3,421 sf), Caribou Coffee (1,875 sf) and Great Clips (1,251 sf). A 4,500 sf TCF Bank is also located within Cedar Point Commons. A pad site (Building 1 as shown on the plan) is now being marketed for a full-service restaurant user in the southeast corner of the • development. 0 A second development phase is planned for Cedar Point Commons west of 17th Avenue, calling for four additional retail/restaurant buildings totaling 21,600 sf. We understand that the developers have recently been in discussions with an investor to construct a McDonald's at the SW corner of 66th and 17th Cedar Point Commons is a major commercial hub in eastern Richfield. Because of the drawing power of Target and Home Depot, which extends into South Minneapolis and East Bloomington, this development brings an entirely new customer profile to the E. 66th Corridor. This is a very significant trend, and its implications are discussed in forthcoming sections. Marquette Advisors Page 6 �t -S3 0 E 0 PC 0 E 0 • t, r S 1 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment Additional development in the eastern portion of the study area includes the Richfield Liquor Store at the SW corner of 66th & Cedar, as well as a low-rise multi -tenant office building just west of the Liquor Store, a larger 84,000 sf multi -tenant office building immediately behind the Liquor Store (6636 Cedar Ave. S.), and Mount Calvary Church and its affiliated pre-school building fronting both sides of 16th Avenue on the north side of 66th St. Two dental offices are located on the south side of 66th and there are two shallow vacant land parcels on the south side of 66th Street between 16th and 17th. These parcels back up to single-family residential neighborhood immediately to the south. Additionally, there'is an existing TIF district just north of 66th and west of Target which will include future multifamily residential development for a two -block area currently comprised of single family homes. These blocks are bound by 17th Avenue on the east, 16th Avenue on the west, Taft Park on the north and 65th Street on the south. 0 Central (Bloomington Ave. to 11th Ave.) 0 The central portion of the Corridor contains a mix of mostly older (1950s & 1960s) commercial buildings, including several small stand-alone retail and office structures, and two commercial strip centers. There is one gas station and several auto -repair and related businesses in this area, two dental offices, a commercial printing business, a small multi -tenant office building, three barber/beauty shops, a bar, and a commercial Laundromat. There are two Montessori pre-school and child care operations in the central portion of the E. 66th St. Corridor. Other unique businesses include two pet (fish) stores, a pet hospital and two ethnic grocers (one Mexican and one African). Several (not all) of the existing buildings are showing signs of disrepair as documented separately by the planning team. Aesthetics and curb appeal are generally inferior within this portion of the corridor as compared to the east and westerly segments. Nonetheless, the central portion of the corridor contains several retail and service businesses which have operated here for several years and continue to provide good service to the surrounding neighborhoods and Marquette Advisors Page 8 61-S-5, E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • broader Richfield community. The business mix includes a number of property owners, while others are leasing space. The affordability of the real estate (relatively low rent levels) is one reason why these businesses continue to operate here. Several businesses have operated here for many years and have a well established customer base at this location, although they may not be able to afford significant property upgrades or higher rental rates as would be required in a new building. We note that there is also some vacant land and vacant buildings within the central portion of the E. 66th St. Corridor. For one, there is a vacant parcel at NW corner of 66th & 14th. Additionally, we understand the Richfield HRA recently purchased two small vacant buildings (a former mortgage office and another residential structure) on the south side of 66th between 14th and 15th Avenues. We also note that infill and redevelopment projects in this area will be a challenge due in part to the lack of depth of parcels here. Active public sector participation through land assembly would • almost certainly be required in order to make redevelopment viable in this area. 0 Marquette Advisors Page 9 0 �7 q —4 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment RETAIL MARKET UPDATE The following is a snapshot of retail market conditions along the Corridor and throughout Richfield and the broader Twin Cities Metro Area. As well, we provide a summary of retail market conditions along the subject corridor and assess the demand for additional retail and restaurant development in this area presently and over time. Retail Trade Area The very important first step in evaluating the demand for retail development at any location is accurately defining the primary trade area. The primary trade area is the geographic area from which stores and restaurants at a particular location will attract the majority of their customers. Certainly the trade area will vary, often substantially, depending on the type of business. Still, we know that most small businesses and those located in neighborhood commercial centers of less than 30,000 square feet (as would typically be found along the E. 66th St. Corridor) generally include a mix of restaurant(s), convenience stores, service businesses and specialty shops. While specialty shops can sometimes draw customers from a much larger geographic area, depending on the goods sold, the majority of business types located in neighborhood shopping centers attract most of their customers from within about a one -mile radius, or a five-minute drive time, along with some drive-by customers. We have defined the primary trade area for retail development along the E. 66th Street Corridor based on our review of existing household and income data, traffic patterns and an examination of existing retail configurations and spending patterns in the area. The map on the following page shows the primary trade area surrounding the E. 66th Street Corridor in Richfield. The population residing within the primary trade area will be the primary source of business for stores and restaurants along the Corridor (Cedar Point Commons is an exception, as discussed later). Based on our review of traffic patterns, man-made and natural boundaries, and the location of existing retail centers and nodes, we know that there is considerable "leakage" of consumer dollars from the persons residing in the primary trade area to retail shops and restaurants at commercial Marquette Advisors Page 10 1-(-5-7 E. 66th Street Corridor Planning Richfield MN Real Estate Market Assessment centers throughout the surrounding market, notably Southdale Mall, Southtown, the Mall of America and various Richfield and Bloomington shopping centers. The focus of our analysis was to examine consumer spending patterns and retail sales in the primary trade area, as well as leakage of consumer dollars to competing retail centers/nodes outside this area. The point of this analysis is to determine whether additional retail or restaurant development is supportable within the corridor at this time, and then to evaluate how this may change over time. ;h st W G e 57th St W 1 58th St W rn ¢ 59th Si W� m - W 6th Sf W 61 M St N a�M 63rd Si 65th 66th mm 3' W 651h Sl G Primary Trade Area E. 66th Street Corridor, Richfield, MN Red line = 66th St. Corridor Planning Area Green line = Primary Trade Area a 57th St E DW—WL"- E 58th S1 m E 59th St Minneapolis hestar St <' e E 61h St N' - � t E 61st St Q a D - _ 3 n o x re«rrs " m n 57th St E Heil rn 57th St E 36 m 0 581h S! E_ Z 62 !L ;; -- D Wei8e18Ad `9th St E W 6th St E h St Fn a Q rn rn FWSn by rn n W 691h St ,�,.. E 69tH St q E W w Q Q Q t S wxwta.te Wawa 4es N 1Hnre Cmaer W 70th st E m x � a r n i� E 62nd St _ a p-�—sE 71st St c I Q t E 53rd st E 72nd St Q '- %AL 'W :3rd St 0'6 E 731 St m - 66M St W 661h St 0 - h St E h St N E 66th St' E h St 36 m 0 Q of m a W 6th St E h St Fn a Q rn rn rn n W 691h St ,�,.. E 69tH St q E W w Q Q Q t S wxwta.te Wawa 4es N 1Hnre Cmaer W 70th st E m x � a r n i� _ a p-�—sE 71st St c Q i 6 ,� aNrMW E 72nd St Q '- D 'W :3rd St 0'6 E 731 St m - a Q W 711h St cn in to c t q m m .LE 74th St E W 75th St m VL .-��-- E 701h St f A � p _ E 73rD Si D eay seer rears cc*ae,W a An Expanded Trade Area -- "Secondary Trade Area" (Target Impact) The Cedar Point Commons development has had a significant impact upon the customer point of origin and profile in this area. Developer representatives and local retail brokers have noted that the Target store, in particular, has quickly developed a strong draw into South Minneapolis and East Marquette Advisors Page 11 • 9 • • 0 ZI - S8 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment Bloomington. Because of this, we believe there may be an opportunity for current and/or future stores and restaurants along the E. 66th St. corridor to also benefit synergistically from Target's presence and its attraction of customers from a much broader geographic area. The map below shows the primary trade area for the E. 66t1' St. Corridor (green line), as well as the secondary trade area, which we estimate to comprise the approximate area from which the Target store draws most of its customers (blue line). We have estimated the trade area for Target based upon the location of other Target stores in the region, the surrounding transportation network, neighborhood demographics, commuting and shopping patterns. Primary and Secondary Trade Areas Primary Trade Area = Green Line Secondary Trade Area (approx. Target trade area) = Blue Line H lyrdde&991 Y+7fiu, s: ai s - a A�Iatt:.an Lakes L Pork Ptawrve 1r HytaLakc Park preservr. N M PUMyt 1] "I St orP. emlfw is aWalera. All 62N rettrvatl Gren] Ave SL RAMad Y1/ m 1: �Ni9Hlen.1 Jd Pmll-- aa �: • Fart Seri 1Rra<,i % `i a5 IleMala Paw Int at nal �An,R Ito Nwaa Heilel a " Rtanetlbt $lCapillary NtlMY Caenq�Ig 1 d C.,..: - lafe D- A RIO i X/I To date, this "synergistic" benefit has been experienced primarily by businesses located within the Cedar Point Commons development itself, as franchise restaurants and small businesses located in the in-line space here benefit from patronage by persons coming to the area for the primary purpose of shopping at Target. Our review of store financials indicates that the Richfield Liquor Store has Marquette Advisors Page 12 L*Uis PlVk . { t; im t Lake 3Btll S E P_ftM re Calmat L� Park IM�A��Nf Lk b. NIM ! maal. � Park ainvh., ta..'.�Sph 5t I] -'IRokittttna Lake lWl1011klla Y I. N E S O T A Perk v1 nM u Velvar H� H lyrdde&991 Y+7fiu, s: ai s - a A�Iatt:.an Lakes L Pork Ptawrve 1r HytaLakc Park preservr. N M PUMyt 1] "I St orP. emlfw is aWalera. All 62N rettrvatl Gren] Ave SL RAMad Y1/ m 1: �Ni9Hlen.1 Jd Pmll-- aa �: • Fart Seri 1Rra<,i % `i a5 IleMala Paw Int at nal �An,R Ito Nwaa Heilel a " Rtanetlbt $lCapillary NtlMY Caenq�Ig 1 d C.,..: - lafe D- A RIO i X/I To date, this "synergistic" benefit has been experienced primarily by businesses located within the Cedar Point Commons development itself, as franchise restaurants and small businesses located in the in-line space here benefit from patronage by persons coming to the area for the primary purpose of shopping at Target. Our review of store financials indicates that the Richfield Liquor Store has Marquette Advisors Page 12 L -t si E. 66th Street Corridor Planning Richfield MN Real Estate Market Assessment • also benefited, seeing approximately a 20% increase in store sales since the opening of the Target store. From our interviews with E. 66th St. Corridor businesses, we understand that this positive impact related to Target's customer draw has generally not accrued to businesses located to the west along the Corridor. There are a variety of reasons for this, which are addressed later in this report and as part of the larger Corridor planning exercise. At the same time, we understand that to -date the Target development has also not had a significant negative impact upon existing businesses along the corridor, since they are generally differentiated from Target and its product mix. At this stage it is most important to note the positive impact of Target upon the corridor in terms of the expanded customer draw. A focus of this analysis and future planning initiatives should be to set the stage for the balance of the Corridor to benefit from the presence of Target as a major anchor and customer draw at the Corridor's east end. Trade Area Demouraphies The following are key points regarding the trade area demographics. Data for 2000 is from the U.S. Census, while estimates (2010) and projections (2015) are from ESRI Business Information Solutions, a nationally recognized demographic and econometric forecasting firm. A table showing key demographic data for the primary and secondary trade areas is provided on the following page. • The primary trade area has a 2010 resident base estimated at 6,022 persons and 2,501 households. With a median age of 41.4, the population base in the primary trade area is slightly older than the secondary trade area, which features a median age of 39.3. • Nominal population and household growth is expected throughout the primary and secondary trade areas. This is due to the fact that the area is fully urbanized. However, it is important to note that these forecasts do not consider growth in the resident base through infill and redevelopment efforts. • Marquette Advisors Page 13 • is 4 _('a E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment Demographic Characteristics Richfield - E. 66th St. Retail Trade Area • The estimated 2010 median household income for the primary trade area is $68,394, compared to $66,376 for the secondary trade area. Household incomes are forecast to increase at a rate of about 2.5% annually through 2015. Marquette Advisors Page 14 Primary Trade Area Secondary Trade Area Population 2000 6,348 79,518 2010 6,022 79,487 2015 (projected) 5,961 81,557 2010 - 2015 Annual Growth Rate -0.20% 0.52% Median Age in 2010 41.4 39.3 Households 2000 2,575 34,158 2010 2,501 35,358 2015 (projected) 2,486 35,995 2010 - 2015 Annual Growth Rate -0.12% 0.36% Median Household Income 2000 $52,388 $48,852 2010 $68,394 $66,376 2015 (projected) $77,364 $75,150 Median Home Value 2000 $126,794 $124,386 2010 $161,340 $157,102 2010 Households by Income Level Household Income Base 2,501 35,358 < $15,000 3.7% 4.9% $15,000 - $24,999 4.7% 5.4% $25,000 - $34,999 8.0% 8.2% $35,000 - $49,999 14.0% 15.0% $50,000 - $74,999 27.3% 25.7% $75,000 - $99,999 19.5% 18.1% $100,000 - $149,999 15.8% 16.5% $150,000+ 7.0% 6.4% 2010 Per Capita Spending on Retail (NAICS 44-45) $10,600 $11,200 2010 Per Capita Spending at Restaurants (NAICS 722) $1,900 $2,100 Sources: U.S. Census, 2000 Census of Population and Housing. ESRI BIS estimates for 2010 and 2015. • The estimated 2010 median household income for the primary trade area is $68,394, compared to $66,376 for the secondary trade area. Household incomes are forecast to increase at a rate of about 2.5% annually through 2015. Marquette Advisors Page 14 4--(,, E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • • Annual per capita spending on retail goods and services is estimated at $10,600 for persons residing in the primary trade area, compared to $11,200 for the secondary trade area. Annual spending at restaurants and drinking establishments is estimated at $3,750 and $2,100 per capita for the primary and secondary trade areas, respectively. Retail Market Trends In this section we address regional trends, focusing specifically on the performance of shopping centers in the region, as well as the supply of retail centers within the primary trade area, and several at its periphery which also attract shoppers who reside within the primary trade area. Regional Retail Trends The following are key points regarding the Twin Cities retail market environment, based on our review of market information and published reports such as the recent Nortmarq Compass report for mid -year 2010. Summary tables and graphs are also provided. 0 • The Twin Cities Metro Area has a total of about 67.5 million square feet of rentable retail space. Of that total, 20.1 million square feet (about 30%) is located. in neighborhood shopping centers. Neighborhood centers are generally less than 30,000 square feet, representing the type of retail centers that might be located at infill sites or through redevelopment along the E. 66th Street Corridor. Those which are anchored by grocery stores or drug stores are typically somewhat larger. Neighborhood centers usually include a mix of restaurants, necessity/convenience retail, service businesses and specialty shops. • Successful neighborhood shopping centers are supported by strong neighborhoods and/or nearby larger community or regional shopping centers or big -box stores which draw additional shopping demand to the area from outside what would otherwise comprise the primary trade area for a smaller neighborhood center. • Marquette Advisors Page 15 11 LC -6d- E. W" Street Corridor Planning Richfield, MN Real Estate Market Assessment • The Twin Cities overall retail vacancy rate (including sub -lease availability) jumped from 8.9% in 2008 to 11.4% in 2009, before leveling off. Vacancy remained at 11.6% at mid- year 2010. Neighborhood centers showed a 15.7% vacancy rate, as many centers have struggled due to store closings/bankruptcies related to the recent economic recession. Re-leasing these vacant spaces remains difficult for shopping center owners, even though economic conditions have improved. Retail Vacancy and Absorption Twin Cities Metro Area (2010 1st half) Absorption - • The region experienced negative absorption of -8,882 square feet (sf) of retail space during the first half of 2010. Gains in some areas were offset by dramatic negative absorption in Neighborhood Centers, which lost tenants totaling -118,176 sf during the first half of 2010 alone. This was primarily the result of continued store closings within and near Brookdale Center, as well as Hollywood Video and Blockbuster store closings throughout the metro area. Limited positive absorption was noted in some Community and Specialty centers, as well as Downtown Minneapolis. Marquette Advisors Page 16 Total Net Rentable Vacant Vacancy % Absorption Absorption trailing 12 Center Type Bldgs. Area Space w/sublease 2010 1st half 2009 2nd half mos. Community 120 30,839,543 2,775,559 9.0% 49,559 41,986 91,545 Minneapolis CBD 17 1,574,001 346,280 22.0% 43,935 (11,554) 32,381 Neighborhood 311 20,075,962 3,151,926 15.7% (118,176) 7,023 (111,153) Outlet Mall 3 788,440 37,845 4.8% 3,000 (7,100) (4,100) Regional Mall 9 11,808,064 1,204,423 10.2% (28,991) 141,793 112,802 Specialty 17 2,027,969 251,468 12.4% 41,791 306,786 348,577 St. Paul CBD 9 355,390 34,117 9.6% 0 0 0 Total Market 486 67,469,369 7,801,618 11.6% (8,882) 478,934 470,052 • The region experienced negative absorption of -8,882 square feet (sf) of retail space during the first half of 2010. Gains in some areas were offset by dramatic negative absorption in Neighborhood Centers, which lost tenants totaling -118,176 sf during the first half of 2010 alone. This was primarily the result of continued store closings within and near Brookdale Center, as well as Hollywood Video and Blockbuster store closings throughout the metro area. Limited positive absorption was noted in some Community and Specialty centers, as well as Downtown Minneapolis. Marquette Advisors Page 16 E. 66`h Street Corridor Planning Richfield MN Real Estate Market Assessment 10 9 8 7 6 5 LL 4 3 2 1 0 Twin Cities Metro Area —_—_ Retail Vacancy & Absorption Absorption 1995-2009 _ .. 12.0% 1.4% 10.0% 8.0% a� m 6.0% c U 4.0% 2.0% 0.0% 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 • Average Net Rental Rates Twin Cities Metro Area 0 Marquette Advisors Page 17 Avg. Quoted Net Rental Rates Center Type 2009 - 2nd Half 2010 - 1 st Half Community $19.23 $19.39 Minneapolis CBD $21.36 $24.00 Neighborhood $15.29 $15.45 Outlet Mall $15.19 $15.19 Regional Mall $58.59 $63.64 Specialty $39.06 $35.39 St. Paul CBD $16.39 $16.39 Total Market $26.28 $26.86 Source: NorthmarQ Compass, 2010 Mid -Year 0 Marquette Advisors Page 17 r] E. 66`" Street Corridor Planning Richfield, MN Real Estate Market Assessment • Because of the recent economic recession, new development activity has been very limited. Rates have dipped below the point that will support new speculative development. Some build -to suit activity continues, along with user -driven demand, although developers have shelved several large speculative projects throughout the region. Only 290,000 sf of retail development is expected to be completed this year throughout the Twin Cities Metro Area. • Landlords have been left with significant vacancies due to bankruptcies and store closings. According to Northmarq statistics, more than 70 empty big -box and junior boxes (spaces with 15,000+ sf) remain vacant. Meanwhile, Neighborhood Centers have been particularly hard hit. As a result, landlords are aggressively pursuing opportunities to re -lease now vacant space. Some have reduced rates, while many are offering concessions in an effort to lure new tenants. So, while asking rents averaged $26.86 (triple net), reportedly unchanged from a year ago, landlords in many cases are . converting leases at a significantly discounted rate. • Landlords have also become more accommodating of value -oriented retailers and deep discounters (i.e. dollar stores, thrift shops, consignment shops, etc.) and are more willing to divide larger boxes and junior box spaces to accommodate smaller stores. • Some Neighborhood and Community Centers have fared better, as many grocers continue to do well. A number of casual dining restaurants have also expanded in the Twin Cities market. Grocery stores generally did well through the recession and continue to perform, as consumers are eating at home more frequently. However, grocers continue to compete for market share, with Wal-Mart and Target adding additional grocery, and smaller concepts such as Aldi, Save -A -Lot and Trader eying new locations in the Twin Cities. • Casual dining concepts have also fared well in some submarkets, as consumers are opting down for less expensive dining options. We understand that SmashBurger, Five Guys, Burger Time and Burger Jones are all burger concepts actively considering sites in the Marquette Advisors Page 18 —[ —6s - E. 66"' Street Corridor Planning Richfield, MN Real Estate Market Assessment Twin Cities. Other restaurant concepts considering new outlets include Panera Bread, Buffalo Wild Wings, McDonald's, Little Caesar's and Panda Express. • Mixed-use developments incorporating street level retail along with multifamily housing in upper floors were popular during the early to middle part of the decade. Local retail experts note that while mixed-use development, particularly vertical mixed use, is sometimes popular with planners, as well as nearby apartment and condo dwellers, they are susceptible to failure if they are not supported by a strong demographic base, offer easy access and high visibility, and ample parking. A small amount of retail can be successful within mixed-use developments, although the region now has several examples of failed mixed use projects with a commercial component that was too large, overpriced, insufficient surrounding customer demographics and/or failed to provide sufficient access or parking. E. 66th St. Corridor Retail and Area Shopping Centers Table 4 shows a listing of retail and service -retail businesses located along the E. 66th Street Corridor from Cedar Avenue on the east to Portland Avenue on the west. There are two small neighborhood commercial centers located within the East 66th Street Corridor, as well as the large Cedar Point Commons development near Cedar Avenue. The Flick Business Center is located on the south side of 66th between 13th and 14th Avenues. The strip retail center was constructed in 1968 and contains 10,000 sf. The property is occupied by five tenants, including an office user (TKDA Architects) and five service businesses, including Distinctive Cleaning, DePaul Lettering, A-1 Vacuum and Chuck's Body Shop. The property is currently 100% leased. Net rental rates here are estimated to be in the range of $8 to $10 psf. Marquette Advisors Page 19 • 171 • E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment Current Retail Businesses E. 66th Street Corridor - Cedar Ave. to Portland Ave. Department Stores Barber/Beauty Shops Other Businesses Target Dick's Barber Shop VCA Animal Care Hospital Ohana Styling Adon Balloons and Signs Home & Garden Expressions Salon A-1 Vacuum Home Depot Distinctive Cleaning Floral DePaul Lettering Grocery Richfield Floral Clinton Press Printing Cinco de Mayo Ecuadorian Roses Maytag Laundry Jalapeno's Market ADOM African Market Food & Beverage Liquor Target Frenchman's Pub Richfield Liquor Store Chipotle Auto Oriented Subway Richfield 66 (gas & repair) Caribou Coffee Sinclair (gas) (closed) T&T Automotive (gas & repair) Clothing/Shoes Carlberg Radiator Famous Footwear Crest Auto Repair Exhaust Pros Pets/Pet Supplies Chuck's Body Shop Something Fishy A World of Fish 0 1 Source: GVA Marquette Advisors 0 The East End Center, located on the north side of 66th between 12th and 13th Avenues, contains 13,100 sf and is also currently 100% leased. Tenants include an ADOM African Market, VCA Animal Care Center, Something Fishy, and Adon Balloons and Signs. Net rental rates average $12 psf. Additional street retail along the E. 66th Street Corridor includes two gas stations (T&T Automotive and Richfield 66), three small ethnic groceries, three barber/beauty shops, three auto repair/service centers, two floral shops, Frenchman's Bar, the Richfield Liquor Store, Maytag Laundry (Laundromat), and the Richfield Liquor Store. Table 5 summarizes neighborhood and community retail centers, both within and near the primary trade area. Cedar Point Commons includes a 175,000 sf SuperTarget and 130,000 sf Home Depot, as well as a TCF Bank branch. Other rentable space constructed to date contains 31,233 sf, of which 48.8% (15,526 sf) remains vacant. Current in-line tenants include two quick Marquette Advisors Page 20 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • service restaurants (Chipotle and Subway), Caribou Coffee, Verizon Wireless and Famous Footwear. Asking rental rates range from approximately $25 to $30 net. A pad site is also being marketed currently to full service and casual restaurant concepts under a proposed ground lease arrangement. A second phase is planned for the west side of 17th which will include another four retail and restaurant buildings totaling 21,600 sf. The following are key points from our survey of area retail centers. • The combined vacancy rate for the surveyed commercial centers was 3.4% at the time of our survey. However, this calculation includes several occupied big -box stores and anchor tenants. All of the current vacancy (50,425 sf), is in-line space. This includes 15,256 sf currently vacant at Cedar Point Commons. Another 21,000 sf is scheduled for Phase I1. Current inline vacancy is indicative of a recent downturn in tenant demand related to a serious economic recession. • Each of the area's neighborhood and community shopping centers is considerably larger is than that which could be supported along the E. 66th Street Corridor, which is comprised of smaller, shallow parcels. Nonetheless, these centers provide an indication of retail market conditions, tenant demand and supportable rental rates at prime commercial locations within and near the East Richfield market. • Tenant demand at this time is weak. Cedar Point Commons, the area's newest retail center with successful anchors Target and Home Depot, has more than 15,000 sf remaining in Phase I and another 21,000 sf to be built, plus an additional restaurant pad. We expect that market -leading retail and restaurant concepts will ultimately be drawn to this location first, prior to any general interest in infill or redevelopment sites along the 66th Street Corridor. Cedar Point Commons is asking $24.00 to $30.00 net at this time. This is representative of the benchmark that is required to support new construction in this market. 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El age Rd PAIG WON PAle GI.PLI.LLUI;'� 6 �,p QAV �49(] P8 )PL10:1 P8 laiPL40 Tracy Ave J)undew O'V 0 Lakerev, Rd Vr 6i a� U a C E E 0 v ea 0 0 4—&f z 5 0 0 o a o 0 0 0 0 e u', G O It (O r 0 f'- n T v o o u', a 0 0 0 v N c U, r f+ 0 0 u; w u�, .: I 0 0 0 0 0 0 0 0 0 L" 0 0 0 o N r n7 o Cy CO r r- M N N to J) p U r r Z Z Z Z J a R etj etf elf 0 eti 0 'a 0 L ccLpp (L_�p cpL_cp ��L_pp ��pp L_ � � tp 1 1 p a� y E QI v n a E w n o fA A U U C w (L .1) J C U L C a32 L a 00 O c U) ftp U an U ) L L O U U lu )i 0 0 a, � a �m m a, LI LLI L U al .n C W C O C J Ul ` U N m g`) > _ o E A C V Q m x o t g X L Q > U � �m °0 n i Q U m 6 ai E m U Z v a1 UT n 1- im w ai o LL -ca- a=o E v m GI a W v) S a, Q Wo W�!t0 U U m !0° y o 0 0 0 C, o Q o o N o 00 u; M w1 V) V) V, V1 VI N 0-3 L O O O p C y o O o O (U N N u N y z 5 0 0 o a o 0 0 0 0 e u', G O It (O r 0 f'- n T v o o u', a 0 0 0 v N c U, r f+ 0 0 u; w u�, .: I 0 0 0 0 0 0 0 0 0 L" 0 0 0 o N r n7 o Cy CO r r- M N N to J) p U r r Z Z Z Z J a R etj etf elf 0 eti 0 'a 0 L ccLpp (L_�p cpL_cp ��L_pp ��pp L_ � � tp 1 1 p a� y E QI v n a E w n o fA A U U C w (L .1) J C U L C a32 L a 00 O c U) ftp U an U ) L L O U U lu )i 0 0 11 t,l -10 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • Other Richfield shopping centers such as The Hub and Market Plaza, as well as shadow PP� g centers and free-standing retail in the areas of 66th & Lyndale and 66th & Nicollet provide a full range of retail goods and services. This includes grocery, convenience retail, personal care products, clothing, and casual and full service dining. Rates at these centers vary greatly, from as low as $4.00 for small interior spaces to around $18 net for well located end -caps. • Meanwhile, a wider variety of goods, including big box department stores, clothing and electronics is available at Southtown and the Shops at Lyndale, all within a five minute drive of the primary trade area. Southdale Mall, The Galleria and Mall of America offer a full array of goods and services, as well as entertainment and dining options typical of regional and super -regional shopping centers. All of these centers can be accessed within a 10 -minute of the E. 66th Street Corridor. Retail Demand Analysis Table 6 on the following page illustrates an analysis of the purchasing power of consumers residing in the primary trade area. The analysis involves a comparison of retail sales (i.e. store performance) in the trade area with consumer spending data for the trade area's resident base. • The trade area (i.e. customer draw area) for various store types certainly varies. However, for purposes of our analysis we assume that the majority of demand for goods and services and restaurants located within neighborhood shopping centers along the E. 66th Street Corridor will come from persons residing within the defined "primary trade area." Supplemental demand will come from persons working in or around this area (i.e. daytime population), as well as those customers arriving from the "secondary trade area," which includes many of those shopping at Target and Home Depot who originate from South Minneapolis or East Bloomington. Marquette Advisors Page 24 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • Retail Sales & Consumer Spending Analysis East 66th Street Primary Trade Area ILW811911111� Supply Resident Demand Industry Summary (Retail Sales) (Consumer Spending) Total Retail and Food & Drink (Selected Store Types) $78,350,000 $46,210,000 Total Retail (selected store types) $75,350,000 $35,945,000 Total Food & Drink (restaurants) (NAICS 722) $3,000,000 $10,265,000 Selected Retail Store Types NAICS 4413: Auto Parts, Accessories, and Tire Stores $0 $670,000 NAICS 442: Furniture & Home Furnishings Stores $0 $2,050,000 NAICS 443: Electronics & Appliance Stores $0 $2,315,000 NAICS 444: Building Materials, Garden Equip. & Supply Stores $25,000,000 $2,900,000 NAICS 4451: Grocery Stores $3,500,000 $10,920,000 NAICS 4452: Specialty Food Stores $0 $380,000 NAICS 4453: Beer, Wine, and Liquor Stores $4,300,000 $970,000 NAICS 446: Health & Personal Care Stores $0 $2,160,000 NAICS 4481: Clothing & Clothing Accessories Stores $800,000 $2,770,000 NAICS 4511: Sporting Goods/Hobby/Musical Instrument Stores $0 $485,000 NAICS 4512: Book, Periodical, and Music Stores $0 $375,000 NAICS 4521: Department Stores (Excluding Leased Depts.) $35,000,000 $5,000,000 NAICS 4529: Other General Merchandise Stores $1,000,000 $3,625,000 NAICS 4531: Florists $750,000 $185,000 NAICS 4532: Office Supplies, Stationery, and Gift Stores $0 $180,000 NAICS 4533: Used Merchandise Stores $0 $40,000 NAICS 4539: Other Miscellaneous Store Retailers $5,000,000 $920,000 Food & Drink NAICS 722: Restaurants & Bars $3,000,000 $10,265,000 Column A: Selected store types. Column B: Supply represents annual retail sales by business establishments within the defined trade area. Column C: Resident demand potential represents expected annual expenditures by consumers currently residing within Sources: ESRI Business Information Solutions; GVA Marquette Advisors • Column A of Table 6 shows a variety of retail store types by NAICS code, while Column B illustrates the current retail sales performance for each store type within the primary trade area. We reviewed retail sales estimates from ESRI Business Information Solutions, a nationally recognized econometric forecasting firm. The ESRI estimates are based on adjusted 2007 data from the Census of Retail Trade. However, several businesses are new to the corridor, specifically those within Cedar Point Commons. Therefore, for several NAICS categories, Marquette Advisors developed sales estimates i Marquette Advisors Page 25 E. 66"' Street Corridor Planning Richfield, MN Real Estate Market Assessment based on our review of the current retail business mix alongthe Corridor and an analysis Y of nationally reported statistics for these stores. Retailers such as Target, Home Depot, Chipotle, Subway and Caribou Coffee do not report sales data for individual stores. However, SEC flings and other published reports provide statistics regarding average store performance and average sales levels per square foot for these businesses. Therefore, Marquette Advisors sales estimates reflect our review of these industry reports based on our analysis of the business mix and traffic within the Cedar Point Commons development. Our sales estimates for Target, Home Depot and the various restaurants and retail stores within Cedar Pont Commons equate to about 75% of the national average per store type. We believe that these estimates are somewhat conservative. • Column B shows that total sales at the selected retail stores and restaurants along the corridor are estimated to be approximately $78,000,000. This includes an estimated $65,000,000 in combined sales at Target and Home Depot, with other businesses on the 0 E. 66th Street Corridor generating about $17,000,000 in annual sales. El • Column C presents estimates of annual spending by persons residing within the primary trade area. Trade area residents spend an estimated $46,000,000 on the selected product categories annually. Here we are effectively measuring the "demand" for retail goods and restaurants from residents of the primary trade area. When demand (consumer spending) exceeds supply (retail sales), this can be indicative of a situation where the area could possibly support the development of a new store. However, by comparing the data in Columns B & C we see that the primary trade area is probably not "under -retailed." The fact that total sales at stores and restaurants along the corridor actually exceeds consumer spending by a significant amount is reflective of the impact of the Cedar Point Commons development. This development (Target, especially) attracts significant consumer spending from outside the primary market area. With a few exceptions, the other stores along the corridor serve a much more localized customer draw. Marquette Advisors Page 26 ,4 - 73 E. 66`x' Street Corridor Planning Richfield, MN Real Estate Market Assessment • • There are exceptions to the trend noted above, where consumer demand appears to exceed store sales in the trade area. This means that there is current "leakage" of consumer dollars to businesses located outside the boundaries of the defined primary trade area. For example, consumers in the primary trade area spend an estimated $10.9 million at grocery stores, although estimated grocery store sales within this area are just $3.2 million. However, this does not mean that the trade area needs another grocery store. The $3.2 million in grocery store sales is understated, because it does not account for grocery sales which are actually captured at the SuperTarget, which is designated as a department store per NAICS classification. Moreover, it is unrealistic to assume that grocery stores located along the E. 66t" Street Corridor will capture all grocery expenditures by trade area residents. Some of this spending will continue to flow to well- established nearby stores such as Rainbow and Cub Foods, which are outside the primary trade area but still quite convenient for trade area residents. • Based on our review of consumer spending and retail sales estimates, one category which appears to be under -represented within the primary trade area is restaurants. Total • restaurant and bar sales within the primary trade area are estimated at approximately $3,000,000 annually. Meanwhile, annual consumer spending by trade area residents at restaurants and bars is estimated at $10,265,000. We are also aware that there is significant additional demand from the secondary trade area, related to Target and Home Depot customers coming to this area, as well as airport employees. We expect that additional restaurant concepts will be introduced over the next 12 to 24 months which will accommodate this demand for restaurants. We expect that these new restaurant concepts will locate within the Cedar Point Commons in-line space (current vacancy), pad sites or the Phase II buildings. • Marquette Advisors Page 27 L4 -7q E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment 9 The "Target Impact" Nationally, Target store sales averaged $287 per square foot last year. Even if the Richfield Target generated sales at just 75% of the national average ($215 psf), this would equate to more than $35,000,000 in annual sales. We know from our review of annual consumer spending that residents of the primary trade area spend about $5,000,000 collectively at department stores each year. Only a portion of this, say 50% at the high-end, is captured by the Richfield Target store. This means that the Richfield Target is importing more than 90% of its customers from outside our primary trade area, including significant penetration into South Minneapolis and also East Bloomington. Clearly Target and other discount retailers can in some circumstances have a negative impact upon businesses within the same area that offer a similar product line. However, this does not appear to be the case with respect to East Richfield and the E. 66th Street Corridor. Rather, the fact that Target is importing customers from a much expanded trade area could present an • opportunity for synergistic benefit and increased sales at E. 66th Street Corridor businesses in the • future. This positive "synergy" associated with a nearby location is thus far accruing primarily to those businesses and restaurants within or very close to Cedar Point Commons. The Richfield Liquor Store has already benefited significantly from Target and its expansion of the trade area. Liquor Store sales have increased by approximately 20% since the opening of the Richfield Target store. We also examined consumer spending by residents of the broader secondary market area. This analysis showed that these consumers spent an aggregate of about $75,000,000 at department stores last year. Our sales estimates suggest that the Richfield Target store captured approximately 40% to 50% of department store spending by persons residing in the secondary trade area. Meanwhile, the $600,000 sales increase at the Richfield Liquor Store equates to just 4% of consumer spending at liquor stores by residents of the secondary trade area. Capturing just a small share of the much expanded secondary market can have a significant impact for smaller retail businesses. This $600,000 sales increase is very substantial from the standpoint of Marquette Advisors Page 28 Z4 -7s E. 66"' Street Corridor Planning Richfield, MN Real Estate Market Assessment the Liquor Store operation and the City, although its "market share" of overall liquor spending by persons in the secondary trade area is quite small. Persons residing in the secondary trade area spend an estimated $675,000,000 annually at retail stores and restaurants, excluding department stores and gas stations. If those same consumers allocated 3% to 5% of their expenditures to stores and restaurants within the E. 66th Street Corridor (similar to the Liquor Store capture rate) this would equate to between $20,000,000 and $30,000,000 in annual sales. This should equate to about 50,000 to 60,000 sf of additional store space supportable in the area. We expect that a large share of this demand will be accommodated within existing and planned new space in Cedar Point Commons. Key Conclusions — Retail Analvsis Current market data suggests that demand for new retail space is suppressed at this time. • Moreover, rental rates have declined to a point that will not support new construction of retail space for -lease. Residents of the primary trade area surrounding the E. 66th Street Corridor are generally well served by existing retail along the Corridor or within a short distance to nearby shopping centers. We have calculated "short term" potential for approximately 50,000 to 60,000 sf of retail and restaurant space along the corridor over the next two to three years. We expect that new retail and restaurant concepts will focus initially upon the remaining space within Cedar Point Commons, but eventually may consider other locations elsewhere along the Corridor as this space is absorbed. City and/or County participation in development through land assembly and public-private partnerships in financing will likely be required to support infill and redevelopment, however. The new Target store continues to import customers from a much expanded draw area, although synergistic benefits to -date have accrued mostly to other businesses within or very near to Cedar r� Marquette Advisors Page 29 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • Point Commons. A longer-term opportunity may exist for more businesses located westward along the E. 66th Street Corridor to capture additional sales from Target customers coming to the area to shop. Target shoppers, however, must have a reason to travel westward along 66th Street. Through this Corridor Planning effort, Hennepin County and the City of Richfield can help to "set the stage" for existing businesses and new businesses to better cultivate an expanded trade area related to Target customers. This will include market -related, transportation and land use elements as described in this report and the Corridor Plan. OFFICE MARKET UPDATE The following is an overview of office market conditions along the E. 66th Street Corridor, throughout Richfield and the broader Twin Cities Metro Area. Included is a summary of existing office properties along the Corridor, as well as current market rental rates and occupancy levels • for multi -tenant office buildings here and in the surrounding market. This provides valuable insight regarding the current and potential future demand for additional office development on or near the E. 66th Street Corridor, and supportable rental rates. 0 Regional Office Market Trends The following are key points regarding the Twin Cities office market environment, based on our review of market information and published reports such as the recent Nortmarq Compass report for mid -year 2010. Summary tables and graphs are also provided. • The Twin Cities Metro Area has a total of about 72.3 million square feet of rentable office space in multi -tenant buildings. Of that total, 5.6 million square feet is located within the "South/Airport" submarket, of which Richfield is a part. Marquette Advisors Page 30 4(-77 E. 66`h Street Corridor Planning Richfield, MN Real Estate Market Assessment Twin Cities Metro Area Multi -Tenant Office Vacancy&Absorption._��, 2001.2010 �� V 9C9'ILY 1,5v 1,468 1.35 25.3% 22. .5t4 o.r4 522 602 2-1, : b 500 330 •' 18,4% .3°ro �62.4 W F� 0 15.0% � 2x31 2^:-4 2,X!6 26 5 21-' 21 9 27 ., st C F ~ -KD L 2091>1 tai -1.G� -849 •1.5a;, • The Twin Cities overall office vacancy rate (including sub -lease availability) jumped from 18.4% in 2008 to 22.3% in 2009. At mid -year 2010 the regional office vacancy rate . stood at 22.8%. • Vacancy in the South/Airport submarket, at 25.9%, was second highest among metro submarkets to the Northwest metro. Negative absorption in this submarket totaled - 145,397 sf during the past twelve months. • The Twin Cities office market was overwhelmed with negative space absorption, linked to the serious economic recession of 2008/2009. Negative absorption totaled more than 1.8 million square feet metro -wide in 2009, but slowed to -290,000 sf during the first half of 2010. Economic conditions have improved in the region, triggering some improvement in the job market, although leasing activity continues to lag as office users are slow to pull the trigger on new space. The recent Northmarq Compass report notes that leasing volume is running at about 50% of pre -recession levels, with much of that activity being renewals at discounted rates. C Marquette Advisors Page 31 • L4 - 7 S E. 661h Street Corridor Planning Richfield, MN Real Estate Market Assessment Mult-Tenant Office Vacancy and Absorption T An Cities Metro Area Submarket a Net Rentable Vacant Sublease Percent Percent Vacant Property Class Area(SF) Space Space Vacantyyi Sublease 2nd Half 2009 1st Half 2010 Last 12 Months Twin Cities Total Class A, 34,471,338 5,916,929 1,318,936 17.20% 21.00% -386,206" -66,092 -452,298 Class 6 30,854,721 6,823,398 617,838 22.10°% 24.10% -370,029 -184,173 -554,202 Class C 6,927,558 1,673,559 103,995 24.20°% 25.70°% -110,979 41,470 -c9 F0; Total 72,253,617 14,413,886 2,040,769 19,905% 22,80% -867,214 -208,795 -11076,009 South1Airport Class A 1,752,403 355,542 155,184 2030% 29.10% -55,602 4,980 0,622 Class 6 2,950,308 709,561 53,874 24.10% 25.90% -60,392 -41,766 -102,158 Class C 877,862 139,161 0 15.90% 15.90% 410 6,973 7,383 Subtotal 5,580,573 1,204,264 209,058 21.60% 25.30% -115,584 -29,813 -145,397 Minneapolis CBD Class A 14,459,723 1,983,149 358,102 13.70°% 16.20% -152,965 -8,807 -161,772 Class 6 10,011,538 2,761,262 178,693 27.60% 29.40% -134,067 -152,336 -286,403 Class C 2,318,198 522,394 20,730 22.50% 23.40% F7,396 28,31= -29,082 Subtotal 26,789,459 5,266,805 557,525 19.70% 21.70% -344,428 -132,829 -477,257 Northeast Class k 2,032,059 536,092 49,188 26.40% 28.80°% -197,704 151 -197,5E3 Class 6 4,623,794 813,588 74,334 17.60% 19.20% -101,009 -39,43 -10,452 Class C 1,069.121 27',044 :04 25.50% 2E.60% -6,701 -6,577 -13,278 Subtotal 7,724,974 1,622,724 124,126 21.00% 22,60% -305,414 -45,869 -351,283 Northwest Class A 862,704 190,656 11,283 22.10°% 23.40% -7,672 -85,090 -92,762 Class 6 1,102,734 304,405 35,139 27.60% 30.80% -11,114 95,029 83,915 Class C 399,273 93,393 1,176 23.40% 23.70°% 3,372 10,801 14,173 Subtotal 2,364,711 588,454 47,598 24,90% 26.90% -15,414 20,740 5,326 Southwest Class A 8,431,432 1,849,737 320,926 21.90% 25.70% 110,338 53,636 163,974 Class 6 4,914,821 828,334 154,818 16.90% 20.00% -137,081 -46,628 -183,709 Class C 984,070 282,554 66,662 28.70% 35,50% -�9,ee1 -1,681 -61,342 Subtotal 14,330,323 2,960,625 542,406 20,70:1 24,40% -86,404 5,327 -81,077 St, Paul CBD Class A 2,443,690 424,648 118,429 17.40% 22.20% -10,158 -26,201 -36,359 Class 6 3,702,861 846,333 26,867 22.90% 23.60% 107,186 20,725 127,911 Class C 724,655 261,307 14,823 36.10% 38.10% -6,820 158 -6,662 Subtotal 6,871,206 1,532,288 160,119 22,30% 24.60% 90,208 -5,318 84,890 West Class A, -,489,327 577,105 305,824 12.90% 19.70% -72,413 -1,761 7 7,20= Class 6 3.548,665 559,915 9A,113 15.80% 18.40% -33,552 -19.75- Class C 554,379 101,766 0 18.30% 18.30% 15,317 3,482 19,299 Subtotal 8,592,371 1,238,726 399,937 14.406 19.1056 -90,178 -21,033 -111,211 is Source: tlorthmarq Compass, 2010 mid -year Marquette Advisors Page 32 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment Multi -Tenant Office, Average Rental Rates, 2009-2010 Twin Cities Metro Area Submarketi 2nd Half 2009i Property Class Avg. Net Rate CAIA -axes Avg. Gross Rate Acg Rate C4,11 -axes Avg. Gress Rate Twin Cities Total 515.15 S' 79 St.,!-, 527.38 514.68 57.86 54.52 527.06 Class A. $15.11 57.39 54.44 526.94 514.79 57.42 54.52 526.73 Class 6 $10.70 S`..08 $4.44 520.22 510.55, 54.88 $4.52 519.9e Class C 58.79 $3.06 54.44 $16.29 58.41 53.04 54.52 515.97 Total $12.87 $6.18 54,44 $23.49 572.61 $6.07 54.52 523.20 South%Airport 515.15 S' 79 St.,!-, 527.38 514.68 57.86 54.52 527.06 Class .= 514.22 55 86 54.44 524.52 514.20 55.72 54.52 S24.4 - Class 6 511.90 S4 0- 54.44 520.38 511.77 53.96 54.52 520.2E Class C 58.84 52.99 54.44 516.27 58.81 53.16 $4.52 516.49 Subtotal 512.28 54,51 54.44 521,23 512.20 54.45 34.52 521.17 Minneapolis CBD Class A. 515.15 S' 79 St.,!-, 527.38 514.68 57.86 54.52 527.06 Class 6 59.9- SE. -s 54.44 519.86 59.81 SE.08 54.52 519.41 Class C 59.49 52.80 $4.44 516.73 59.13 $2.83 S4.52 516.48 Subtotal $13.11 $6.67 54.44 $24.22 512.63 56.57 S4.52 523.72 Northeast Class A. 513.87 55.14 54.44 523.45 513.86 55.27 5-.52 523.67 Class 6 510.91 S4.15 S4.44 519.50 510.80 54.08 5-.52 519.40 Class C 58.09 51.65 $4.44 514.18 57.87 51.57 54.52 $13.96 Subtotal $11.90 $4.46 54.44 $20.80 511.84 $4.46 54.52 $20.82 Northwest Class.- 5 1293 55.92 5-.-- $23.29 512.73 56.1A 54.52 $23.39 Class 6 51C.10 $4.26 5-.4- 518.80 59.88 54.17 54.52 $18.57 Class C 57,8 53.30 54.44 515.60 57.84 $2.86 $4.52 $15.22 Subtotal 510,55 54.59 54.44 $19.58 510.38 $4,53 54.52 519.43 Southwest Class A. 51E.80 S7.OE $4.44 $27.29 515.44 57.04 54.52 527.00 Class 6 511 70 S5.43 $4,4a 521.57 511.55 55.20 $4.52 521.27 Class C 5.76 53.44 34,-4 $16.64 58.51 S3.22 $4.52 S16.25 Subtotal S13.90 56,24 54.44 524.58 $13.63 56.14 54.52 S24.29 St. Paul CBD Class A 512.08 57.60 54.44 524.12 512.05 57.79 54.52 Class 6 58.3 S4.85 S4.44 S17.63 58.31 54.63 54.52 517.49 Class C S6.93 S3.10 $4.44 S1-.-7 5E 72 53.20 54.52 513.44 Subtotal $9.77 $5.84 $4.44 520.05 59.85 S6.01 54.52 S20.38 West Class A $16.57 $8.45 54.44 529.46 516.38 $8.32 54.52 529.22 Class 6 511.81 55.93 $4.44 $22.18 511.46 55.84 54.52 521.82 Class C 58.57 53.50 54.44 516.51 58.16 53.-3 5-.52 516.11 Subtotal 514.07 57.08 54.44 525.59 51180 56.97 54,52 525,29 rth Marquette Advisors Page 33 • • • • Z( -SO E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • Employment growth has resumed in the metro area, although regional employment as of August 2010 remained about 100,000 jobs short of pre -recession levels according to Current Employment Statistics (CES) from the MN Department of Employment and Economic Development. Improvement in the office market will be tied to employment growth. Most market observers suggest that the metro vacancy rate will continue to hover around the 20% mark for several months. • Weak demand fundamentals have also created downward pressure on rents. Landlords are working hard to retain current tenants, and to replace those lost over the past several months. Many are cutting rents in an effort to retain or recruit new tenants. Within the South/Airport submarket, Class A net rental rates averaged $14.20 psf as of 2010 'mid- year, compared to $11.77 psf and $8.81 psf for Class B and C space, respectively. • Leasing activity has reportedly been very slow within the South/Airport submarket. However, in the coming months two significant tenants will be seeking to fill large space requirements. Both are Federal Government Service Administration (GSA) and related to the feds' plans to redevelop its office properties at Fort Snelling and the Mpls. Veterans Hospital. The GSA is currently seeking two 250,000 sf spaces and are reportedly considering buildings such as the former 265,000 sf Delta Airlines building in Eagan, a 325,000 sf former US Bank office building on Shepard Rd. in St. Paul, and the Best Buy Corporate Campus, as Best Buy is now marketing a portion of its corporate campus as sublease space. There are no buildings within or near to the E. 66th Street Corridor in Richfield which could accommodate such a large space requirement. East Richfield Office Buildings We also identified and surveyed several office buildings along the subject E. 66th Street Corridor, as well as multi -tenant buildings near 66th at its intersections with both Nicollet and Lyndale. The characteristics of these buildings are summarized on the table on the following page. Marquette Advisors Page 34 L/ -- g r C: 0 1 0 O = o N U J `O L U m U U N OG. N U i6 L U U O U N a m Q N >+ .0 E LO f6 m (O N '5- p N p O (D .X .L.. U y LL L U Q R U N N a o> co 'A O o ai c •N cn N ami 2 m ai 0� •a N c 2 d m N CU U a> (9 W N f6 f6 = _ t �_. E Q C N O a a=x (D 7 U_to a) O O U m Y c H n 2 W m 2 U J 2 U m N m O O O O C C O O O O ♦+ A O O O) O V' O cl: fA E,H fR H3 O O C (D O � � r EH b9 06 m \6 N y y (0 m 5 x = c >> c c O if l0 W A ~ co m U cm m = c <n lA lA r LL O O O O O O O O V) C CC C O (O (O (O N W t0 CO L) p Z A o (O G N LO N a va m m v N o 0 0 0 O W CD It O O O O O M O) W (D _ O V o 0) O) O O co N M t- 00 O Q M N N y C (6 m 3 w R > N L m v C O O O (0 O O O O O (D O O O O a0 0 00 (O V O Ili O N E Co W 0 r` (D N N lL V a N N ' lL O O O O O (O O (O M O N O 00 1- O O N O Ow O O M N st C (O 00 O O O O W O N 0 (+i r` N r` co N O ((DO 0000 00i N O O 00 (6 00 N 0 O 0 P- C co O O N N O N d Q N � _U Z G J O O 6 fC 05 LO O � O V O L N V + y m O (0 v c C7 OLU J a� m U) (e O c N 3 in cn in in U) > c m U M C Q L L L L L \ a V C Z (O L CO (O (O (O m2 N td (O O O O O _ Y m C G W W W W W ? 3 m m `c2(r' `r' 0 O O(n O C: 0 1 0 C E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment • There is an approximately 57,000 sf of office space along the E. 66th Street Corridor from Cedar to Portland. This space is located in six buildings, the largest of which is the MN Evangelical Association building at 1515 E. 66th Street. Two of these buildings are dental offices, at 1537 and 1717 E. 66th Street. Multi -tenant buildings are located at 18th & 66th, as well as 1717 and 1300 66th Street. Rental rates are quoted on a gross basis, at $19 psf. • The largest multi -tenant office building within close proximity of the E. 66th Street Corridor is located 'immediately south of the Richfield Liquor Store at 6636 Cedar Avenue. Built in 1988, the property contains 84,070 sf, of which 28,000 sf (33.3%) is presently vacant. Asking rental rates range from $10.00 to $12.00 psf on a net basis, or about $19.50 to $21.60 psf including common area maintenance expenses (CAM) and taxes. The building is occupied by a mix of legal, professional and medical firms, but has maintained an elevated vacancy rate for several months. • • The Woodlake Center at 66th and Lyndale contains 98,000 sf, with a 7.9% vacancy rate at • the time of our analysis. The property contains a Houlihan's restaurant on the main floor, along with several medical and professional tenants, and the Richfield Chamber of Commerce. Asking rents here are $18.50 psf net, or about $30.00 psf gross. The Bremer Bank Building at 6500 Nicollet contains 22,850 sf, with a 6,581 sf vacancy (28.8%), and asking rents of just $5.50 psf net and $14.00 psf gross. Key Conclusions — Office Analysis Demand fundamentals for multi -tenant office space remain weak. Very few user groups are seeking space in today's market, creating downward pressure on office rental rates. Vacancy in the South/Airport submarket stood at 25.3%, roughly double what is generally considered to be a healthy equilibrium vacancy rate. The largest office building near the E. 66th Street Corridor, at 6676 Cedar, contains 84,070 sf of rentable area, of which more than 28,000 sf is vacant at this Marquette Advisors Page 36 �-83 E. 66"' Street Corridor Planning Richfield MN Real Estate Market Assessment • time. Six smaller office buildings are located along the E. 66th St. Corridor, totaling about 55,000 sf, of which only 2.6% was vacant at the time of our survey. However, this includes a number of modest single -user and owner -occupied buildings. Older multi -tenant buildings along the E. 66th Street Corridor are advertising space available today at a $19.00 psf gross rate. Current tenants along and near the Corridor include mostly small firms and service providers such as insurance agents, counselors, and small service businesses, along with three dental offices. Medical offices tend to be more focused around the 66th & Lyndale area due to the presence of major senior housing communities there. Current demand fundamentals and market rental rates are not supportive of new construction at this time in the East Richfield market. Continued economic improvement and sustained employment growth over a significant period of time will be required to absorb current excess vacancy in this area, and others throughout the region. Long-term demand may support smaller redevelopment or infill construction on a small scale. We would expect demand from professional service firms and possible an uptick in demand for medical office space, particularly • if new senior housing is constructed in the area as is being contemplated near 66th & Cedar. HOUSING ANALYSIS The E. 66th Street Corridor contains several older 1950's and 60's vintage apartment buildings, generally in the western portion of the study area between about 12th and Portland. Our analysis showed that the buildings are generally well maintained and provide quality workforce - affordable rental housing. For two primary reasons, we do not believe that construction of market rate multifamily housing along E. 66th Street will be viable in the near term. For one, parcels have very limited depth. Secondly, market rents in this area are not sufficient so as to ensure financial feasibility. Rather, we have focused our analysis upon the multifamily TIF district which is located just north of 66th Street and west of the Cedar Point Commons development. We expect that future multifamily construction near the Corridor will be focused r -A Marquette Advisors Page 37 • • • GI - $4 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment in this area. Further, we believe that this site is best suited for senior housing, and have thus focused our analysis upon the surrounding senior housing market environment in order to determine what level of demand may be supportable at this location. This analysis follows. Senior Housing Market Area We have determined the primary market area for senior housing in East Richfield based on man- made and geographic boundaries, traffic & commuting patterns, the location of existing senior rental properties in the area, health care facilities, and our general knowledge of the senior housing market in the Twin Cities. As depicted on the map below, we estimate that the market area for senior housing in East Richfield will include the City of Richfield and a portion of south Minneapolis, which includes a section of the Nokomis and Southwest Minneapolis neighborhoods. E. Richfield Senior Housing Market Area ro W 42nd St LindenAns �.4 a W 44th St 20 Ata,'.e Nan.ei ,xE N 4 �� 44 St W N P ;46th St W, b 22 S < Bridge St 31 hist W stSt E f �, <41 ,e - 43rd St E 10 44th 5t E46 $ E 46th SI 4awdim L 46th t .47th St E Gott Coase: .... yii W,'60yjSt "T St W 50th 51 W' w EdOr Cotx4ry V& 52nd St W 3rd St W m a�� 2B i I to W 54th g a E 65111 St Miul Irderrht 66th Street Corridor Sub- d Area 56th St W l N N : W 7th $t W 'oi d' 57th St E o $ 00 a N e '� t2 SBIn'SPW St W'; viii. JZ.A n :< - z (� ,. � 44 — � � � Miane4tetl 7tn M1lo!her - Army Lae Fat �: James Ave k9 'j a Eleanor, Ave c ®. 42 V Ford-Pky N C st, Paul Mordreal Ave m Mordreal Ave m S E 4e have tf1� aP .rn+try Lake Pe �! 204 17 rnj 64th SI ;r E 65111 St Miul Irderrht 66th Street Corridor Sub- d Area otn�l W 6�h St W 66th St BMh WWII St q, E 66th z (� ,. � � � yr OA p$69th S'IW 701h,St, 3f ~ � E 70mRkhftwt Fort 73rd StSi_W L 77th 76th St t ,t M 77 S .f _ O l W i �' p° < Q a o on 82nd St L W 64th St7 W 84th 51 o w o 4, �.. < L a..: m r1 tom Meadow =-W St Co r' ht .)20N tticrosoh Cor andro� rtssu i;crs Gxooro hts'reS=r.cfi. Marquette Advisors Norlh*d p1 31 98 EaDIM o 26 Page 38 q_ss- E. 66'' Street Corridor Planning Richfield, MN Real Estate Market Assessment A Variety of Senior Housing Products Senior Housing is typically defined as an age -restricted housing product designed specifically to service seniors, generally those aged 62+ or 65+, although the market has developed a wide range of product types over the past several years. The four major senior housing product types and a brief description of each are provided below. The choice of product type will depend on the level of care needed on a case-by-case situation, in addition to household income levels and financial assets. Independent Senior Housing — This is the least service -intensive of all senior housing products. These properties offer virtually no support services or health care, but restrict tenancy to those ages 55 or 62 and over. Typically, independent senior housing communities will attract persons aged 65 and older. Apartment -style rentals are most popular, although condominiums, cooperatives and townhomes have also been developed throughout the region. Some of these communities do provide limited activities for residents, as well as scheduled transportation to medical appointments or shopping centers. Congregate Senior Housing — This type of senior housing offers support services such as transportation, meals and housekeeping. These services are offered either for an additional cost (congregate -optional services), although such services are sometimes included in the monthly rents/fees (congregate service -intensive). Congregate senior housing tends to attract an older and more frail resident population compared to independent senior housing. Congregate units are also much more likely to be occupied by a single person (75% to 85%) than independent senior communities, where often times 50% or more of the units are occupied by couples. Assisted Living — Assisted Living is the most service -intensive product type and offers the highest level of services, just short of those available in a skilled care/nursing home environment. Assisted living typically includes at least 2 meals Marquette Advisors Page 39 I'l —2(o E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment i 0 per day, along with all of the support services found in Congregate housing. The most distinguishing features of an Assisted Living community are that it provides 24- hour staffing and emergency response, along with the availability of personal care assistance (bathing, dressing, grooming, etc.). Assisted living facilities tend to attract people age 80 and older who need assistance with the ADL's (activities of daily living) mentioned above. Memory Care — This type of senior housing is a specialized Assisted Living product, specifically designed and programmed for persons afflicted with Alzheimer's disease or other dementias. These facilities include all the same services as Assisted Living, plus additional safety through secured -access doors and/or wander -guard systems. They also feature a higher staff -to -resident ratio. Furthermore, special active (stimulating) and passive (calming) programming is involved to respond to the needs of the resident base. Demographies The potential resident base for senior housing in East Richfield will include mainly income - qualified senior households in the surrounding Market Area who need and/or desire a multifamily living environment, either with or without meals and personal care services. In the forthcoming paragraphs we summarize our analysis of the current and projected senior household base in the Market Area. The purpose of this analysis is to determine the size of the current and projected market demand for senior housing. Household Incomes Table 10 on the following page shows estimated and projected incomes for senior households by age in the 66th Street Corridor Market Area for 2010 and 2015. The figures are based on data Marquette Advisors Page 40 4-g7 E. 66th Street Corridor Planning Richfield MN Real Estate Market Assessment from ESRI Business Information Solutions, a nationally -recognized demographics data services firm. Household income data will be used later in estimating market demand for senior housing. Senior Households by Income, 2010-2015 E. 66th St. Corridor Market Area Household Income No. % I No. % No. % I No. % Less than $15,000 281 4.9% 239 7.6% 605 13.7% 1,125 8.5% $15,000-$24,999 240 4.2% 308 9.7% 722 16.3% 1,270 9.6% $25,000-$34,999 385 6.8% 375 11.9% 637 14.4% 1,397 10.5% $35,000-$49,999 767 13.5% 470 14.9% 711 16.1% 1948, 14.7% $50,000-$74,999 1,277 22.4% 749 23.79/. 729 16.5% 2,755 20.7% $75,000-$99,000 1,199 21.1% 310 9.8% 472 10.7% 1,981 14.9% $100,000-$149,999 93716.5% 21.4% 448 14.2% 339 7 .7% 1,724 13.0% $150,000-$199,999 299 5.3% 134 4.2% 124 2.8% 557 4.2% $200,000+ 3101 5.4% 126 4.0%1 1 90 2.0% 526 4.0% Total Households 5,6951 100.0%3,159 4,240 100.0% 4,429 100.0% 13,283 100.0% Median Income $72,138 $54,299 $39,161 $56,012 Household Income I No. % No. % No. % No. % Less than $15,000 213 3.5% 217 5.1% 477 11.3% 907 6.27 $15,000-$24,999 161 2.6% 254 6.0% 499 11.8% 914 6.2% $25,000-$34,999 315 5.1% 357 8.4% 492 11.7% 1,164 8.0% $35,000-$49,999 574 9.30/0 450 10.6% 486 11.5% 1,510 10.3% $50,000-$74,999 1,419 23.00A 1,067 25.2% 829 19.7% 3,315 22.7% $75,000-$99,000 1,2331 20.0% 417 9.8% 541 12.8% 2,191 15.0% $100,000-$149,999 1,320 21.4% 860 20.30/0 560 13.3% 2,740 18.7% $150,000-$199,999 4731 7.7% 331 7.8% 216 5.1% 1,020 7.0% $200,000+ 462 7.5% 287 6.8% 115 2.7% 8641 5.9% Total Households 1 6,170 100.09' 4,240 100.0%1 1 4,215 100.0%1 1 14.625 100.0% Household Income No. %I No. % No. % No. % Less than $15,000 -68 -24.2% -22 -9.2% -128 -21.2% -218 -19.4% $15,000-$24,999 -79 -32.9% -54 -17.5% -223 -30.90% -356 -28.0% $25,000-$34,999 -70 -18.2% -18 -4 8% -145 -22.8% -233 -16.7% $35,000-$49,999 -193 -25.2% -20 -4.30/0 -225 -31.6% 1438 -22.5% $50,000-$74,999 142 11.1% 318 42.50% 100 13.70/- 560 20.3% $75,000-$99,000 34 2.8% 107 34.5% 69 14.6% 210 10.6% $100,000-$149,999 383 40.9% 1 412 92.00/. 221 65.2% 1,016 58.9% $150,000 $199,999 174 58.2% 197 147.0% 92 74.2% 463 83.1% $200,000+ 152 49.0% 161 127.8% 1 251 27.8% 338 64.3% Total Households 475 8.3% 1,081 34.2% -214 4.8% 1,342 10.1% Median Income $9,188 $13,438 $14,059 $13,773 Sources: ESRI; Marquette Advisors Marquette Advisors Page 41 • *I • 0 E. 66th Street Corridor Planning Richfield, MN Real Estate Market Assessment Studies have shown that seniors are often willing to pay in excess of 40% of their incomes for independent senior housing, compared to roughly 50% to 60% for "congregate" housing, and about 80% to 90% percent or even more for assisted living or memory care housing. Further, the proceeds from the sale of a home, as well as financial assistance from adult children are often used as supplemental income for some seniors to afford the appropriate housing and care environment. • The ESRI 2010 income estimates show a median household income of about $56,012 for Market Area adults aged 55 and over reflecting about a 4.0% annual growth rate. This is up from roughly $36,854 in 2000, The younger senior age cohort (65-74) will typically have higher median incomes when compared to the older age cohorts. This is primarily due to younger couples being married with two pensions and Social Security benefits. In 2010, the median household income for those aged 65-74 was estimated at $54,300, while the median for the age 75+ cohort was $39,160. A senior household earning $54,300 per year (the median income for households aged 65 to 74 in 2010) could afford a monthly housing cost of about $1,810, allocating 40% of the household's annual income towards housing. Comparatively, a senior household earning $39,160 (the median for households age 75+) could afford a monthly housing cost of about $1,630, allocating 50% of income towards housing. By 2015, the median household income for the 65-74 age cohort is projected to increase to $67,740, up about 25% from 2010, while seniors age 75 and over is projected to increase to $53,220, up about 36% from 2010. Marquette Advisors Page 42 4- gj E. 66`h Street Corridor Planning Richfield, MN Real Estate Market Assessment • Tenure by Age of Householder In addition to current income sources, many senior households are able to derive additional income to be used for senior housing by investing the proceeds from the sale of a single family home. This supplemental income can be used to cover the costs associated with residency in a senior housing community. Table I 1 shows data on the tenure by age of householder for the older adult and senior households for the 66th Street Corridor Market Area and the Metro Area, according to Census data. • Homeownership rates typically decline as householder's age. In 2000, about 86% of households age 65 to 74 owned their homes (roughly 2,620 households) in Market Area, compared to about 82% Metro -wide. The 75 and over age group owned about 82% of all households (3,833 households), compared to 66% for the Metro Area. • As seniors age, they may no longer desire, or be able or willing to maintain their single- family homes. Some prefer to move to housing that offers them greater freedom from maintenance and/or offers support services. Seniors typically begin to consider moving into senior housing in their early 7Os. Senior Tenure by Age of Householder - 2000 66th & Portland Market Area 55-64 Age of Householder 65-74 75+ Total 66th 8 Portland Market AreaOwn Rent Own Rent Own Rent 55+ Own Rent Number of Households F3,085 546 2,620 432 3,833 853 9,538 1,831 Homeownership Rate 85% 86% 82% 84% Metro Area Rent Own Rent Own Rent Own Rent Number of Households 224,286 59,932 E1025835 18,205 68,030 14,491 53,673 27,236 Percentage % 82% 660% 79% Sources: ESRI, GVA Marquette Advisors Marquette Advisors Page 43 I/ —qo E. 66`'' Street Corridor Planning Richfield MN Real Estate Market Assessment Home Values Table 12 presents a summary of home resale data for the East Richfield Senior Housing Market Area from 2006 through August of 2010. This data is from the Multiple Listing Service of Minnesota (Northstar MLS). Home values will help dictate the amount of equity a senior will be able to derive upon the sale of their home, which can be utilized towards monthly fees for senior housing. Seniors' homes are often older and therefore, to better gauge the potential equity that seniors would be able to achieve, we have examined sales data for homes that are at least 15 years old. • The East Richfield Market Area has also felt the effects of the financial and mortgage crisis, as the average resale price of single-family homes declined in each of the past three years to a low of about $204,400 in 2009. The market has shown considerable improvement during 2010, however, as the average sale price increased to $228,364, up 0 nearly 12% from 2009. 0 Marquette Advisors Page 44 Single -Family Home Resales (Including sales of homes built prior to 1995) E. 66th Street Corridor Market Area 2006 - 2010 (through August 2010) Single -Family Home Resales Total Median Annual Average Annual Average Days Year Sales Sale Price Change Sale Price Change on Market 66th Street Corridor Market Area 2006 1,193 $239,900 - $274,407 - 53 2007 1,099 $238,500 -0.6% $269,518 -1.8% 55 2008 1,049 $210,272 -11.8% $233,526 -13.4% 65 2009 1,228 $189,400 -9.9% $204,390 -12.5% 53 2010" 644 $203,000 7.2% $226,880 11.0% 55 *Through August Sources: Northstar MLS, Marquette Advisors Marquette Advisors Page 44