Anoka City Council

July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 1 of 11 JOINT CITY COUNCIL AND PLANNING COMMISSION WORKSESSION ANOKA CITY HALL CITY COUNCIL WORKSESSION ROOM JULY 22, 2019 1. CALL TO ORDER Mayor Rice called the worksession meeting to order at 5:00 p.m. 2. ROLL CALL Present at roll call: Mayor Rice, Councilmembers Barnett, Freeburg, Skogquist, and Wesp. Absent: None. Also present: Planning Commission Chair Don Kjonaas, Planning Commissioners Borgie Bonthuis, Karna Brewer, James Cook, Shari Nemec, Peter Rech, and Nancy Coleman. Staff present: City Manager Greg Lee; Public Services Director Mark Anderson; Engineering Technician Ben Nelson; Community Development Director Doug Borglund; Finance Director Brenda Smith. 3. COUNCIL BUSINESS and/or DISCUSSION ITEMS ITEM 3.4 WAS HEARD AT THIS POINT IN THE AGENDA 3.1 Discussion; Street Renewal Program; 2020 Assessment Plan. Engineering Technician Ben Nelson shared a staff report with background information stating in 2015, 2016, 2017, 2018, and 2019 the assessment rates were increased approximately 4%, 6%, 2.5 %, 3.5%, and 5.8% respectively for the Street Renewal Program (SRP). He outlined a breakdown of past assessments and said prior to 2015 assessment rates had not been increased since 2010 while historically assessment rates were increased annually. Based on the average Construction Cost Index (CCI) published by Engineering News-Record, from 2018 to 2019, overall general construction costs on average have increased approximately 2.9%. He noted Council should be aware the water service assessment and sanitary sewer assessment are for the new service laterals from the mains to the right-of-way and assessments are not for sanitary sewer main or the watermains, utility fees collected by the city partially fund that work. The water and sanitary sewer assessments are based on the actual construction cost to furnish and install the services and staff does not recommend raising these rates higher than what is proposed, as they would excess the actual construction cost. Also, established by the City’s Street Reconstruction Assessment Policy, the street unit assessment, the front footage and the water service assessment is double the residential rate for four or more July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 2 of 11 unit residential buildings along with commercial/industrial properties. Mr. Nelson said staff recommended increasing the assessment rates a minimum of 3% to 7.5% increase and is seeking direction from the Council regarding the proposed assessment rate increase in 2020, adding the benefit will always exceed the assessment. Councilmember Barnett clarified the forecasts going forward were based on the CCI and were based on experience and supported the 7.5% increase. City Manager Greg Lee said staff uses a percentage increase for draft assessments for planning and noted the City has not kept increases with inflation. Councilmember Wesp asked about last year’s projects assessment totals that differed. Mr. Nelson said the projects included many exempt parcels such as Bonnell Park and the aquatic center as well as some in Coon Rapids. Councilmember Freeburg asked why we do not charge for Street Surface Improvement Projects (SSIP). Mr. Lee said we had $1 million available through the electric fund and used the funds for SSIP, adding in retrospect we should have assessed those projects from the beginning as well. Mr. Nelson clarified there will be no increase to front footage costs as that was increased last year. Councilmember Skogquist noted this year’s projects include many churches and schools. Finance Director Brenda Smith noted special assessments pay the bonds back for accelerated projects and makes up for the exempt projects. Councilmember Barnett said the increase will keep the program sustainable but never go over the benefit of the property. Mr. Lee agreed, adding we can always decrease the assessment rate but noted construction prices are rising rapidly which is why we will always bid early to get the lowest costs. Council consensus was to increase the 2020 street assessment rate by 7.5%. 3.2 Discussion; Lennar Golf Course Townhome Proposal. Community Development Director Doug Borglund shared a staff report with background information stating Lennar has submitted applications for a Planned Unit Development- Residential, Preliminary Plat, and Site Plan Review. The City’s has been working with Lennar and has approved a purchase agreement for the property. Lennar has designed a development plan proposing 30 attached townhouse units fronting onto Green Haven Parkway, Garfield Street, and Green Haven Golf Course. The Planning Commission held a public hearing on June 4, 2019 and tabled the request then held a work session and visited a development in Maple Grove to tour the product being proposed. The Planning Commission was hoping to see a product that was higher in value and/or a different July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 3 of 11 product type and provided feedback after the Maple Grove visit. Lennar has requested a joint conversation with both the Planning Commission and City Council to get some direction. He shared details of the proposed development that included course irrigation, tee box placement, screening, and building positioning and said Lennar was limited in the types of products that could be offered based on the space. He reviewed proposed architecture of the two-story slab on grade units with pergolas and other amenities and how concerns about costs could be affected with different materials. Chair Kjonaas clarified the Commission has no concerns with Lennar as they had a quality product but felt they had one opportunity to do a good project on the golf course and would like to see something more. He said they recognized the lots were too narrow but would rather see fewer higher-end units than many lesser quality units. Planning Commissioner Shari Nemec said after touring the Maple Grove development and comparing to the property in Anoka they were concerned that Lennar may not be the right fit and while the product works well in other cities it may not work well here. Chair Kjonaas stated the project may need to wait for the right time for the entire area to redevelop. Planning Commissioner Borgie Bonthuis noted the homes would be too narrow with garages only 18x19.5 feet and suggested leaving the site for now, clean up the Parkway and see what happens. Councilmember Freeburg said he felt the Hole 16 fairway was not suited for townhomes. Mr. Borglund shared other options that included single family and villas. Ms. Smith added while the property had the draw of a golf course it is also near a cemetery and railroad tracks and not a high-end golf course that matches what people are willing to spend. Joe Jablonski, Lennar, thanked the Planning Commission for their input and noted they were confined in space and layout and said the type of product they could offer would be very limited. He said they want to be part of the planned vision for townhomes but with the parkway the area is constrained even more and their job was to build and sell units to make communities look good and have people stay and be happy but the market for a higher end product here is not great. He said they were struggling with the downtown area now and the Planning Commission wanted a product higher than $260,000- $300,000. Mr. Jablonski said they have a purchase agreement and application and would like to come up with solutions but if not would withdraw as they were not comfortable with the expectations at this point. Mr. Borglund noted staff had also pushed for higher quality finishes and items such as stone and porches and that Lennar said those improvements would increase the costs approximately $60,000/unit. July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 4 of 11 Mr. Jablonski said they could make the changes but the result would be more than what the market could bear. Councilmember Freeburg agreed, stating this area was not premier real estate. Ms. Smith said the City had invested millions into this property and a decision to wait could be detrimental as they need to sell and have it developed as the area was in a 25- year TIF district which was already eight years in with the approved extension of three years. Councilmember Skogquist said the Gramercy co-op was intended to provide some fairly substantial relief and noted while it was important to pay debt TIF sometimes requires cities to do things they may not be ready for and suggested we plan for the neighborhood now that included the triangle parcel to fit better into an overall plan. 3.3 Discussion; Highland Park. Mr. Borglund said staff would like to discuss the vision for the Highland Park area and provide staff with some direction. He outlined the property lines with 10 properties left to acquire with 15 acquired and demolished and eight relocated outside the City, adding ACCAP was open to working with the City on a plan for the four properties owned along Ferndale. Mr. Lee said staff will work with ACCAP on a proposal to acquire based on the best strategy for Council consideration that would be funded through TIF. Ms. Smith noted we could end up short with TIF funds but could use CRTV funds if necessary. Mr. Borglund referred to Lennar and the Connexus tower site and reminded the attendees of the Greens of Anoka plan adopted in 2012 and want to ensure Council direction. Councilmember Barnett clarified if any properties were under contract for deed and could be part of a larger vision. Mr. Borglund said there was a total of 20 acres between all properties and said this project was not even a discussion before Lennar. Councilmember Wesp thanked the Planning Commission and Lennar for their hard work on this project and said it may be wise to take a step back. He said Highland Park is a quagmire with a poor road and could be like Riverpoint in 20 years and while there were some things we could have done better the price point is not what we want. He said he would like to keep Lennar in the conversation while we create a strategy and said Gramercy’s intention is to invest a lot of money in the area and with Lennar as a partner and designing the next stage and parkway we should be able to accomplish even better things this year. Chair Kjonaas asked if Council would like the Commission to continue on a project at a lower price point. Councilmember Wesp said no that he would rather incorporate the property as a whole at 20 acres to make a more appealing site for Lennar overall. July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 5 of 11 Commissioner Bonthuis said similar projects sold well but not in Anoka with Highway 10 and that we will not get the higher price point otherwise. Councilmember Barnett agreed with the Planning Commission that we need to set the standards for everyone for a larger project. Councilmember Wesp encouraged the Planning Commission to come up with a creative project to reach our goals and objective. Josh Metzer, Lennar, said that is why they were here as they were concerned about what the market could handle and said they could better coordinate efforts with ponding, etc. with the golf course involved and said while they do not like to walk away from a project a coordinated effort would be best. Councilmember Wesp stressed the importance of making something work as this is a good site and we have the ability. Councilmember Skogquist agreed that the plan was good but we need to start over and noted it will take time to plan for properties we do not own that will tie into roads and other areas. He said we could explore other ideas such as townhomes, single family and others and that we need to focus on the road. Councilmember Barnett said we should partner with the developer and ACCAP on their properties as well as look at the neighborhood’s properties as they are significant. Mr. Metzer said they will withdraw their application at this time but hoped to work with the City again in the future. Mr. Lee said staff will continue to work on the road alignment to ensure it works with any future project and come back with a plan to acquire the remaining properties. 3.4 Discussion; Inland Development Partners Proposal/2nd Avenue and Van Buren Street. Mr. Borglund shared a staff report with background information regarding the City- owned parcels located in the south east quadrant of Van Buren Street and 2nd Avenue next to the parking ramp. He said the project had three primary development objectives to increase the number of people living in and visiting the core downtown area frequenting and supporting the businesses, encourage and increase activity in the downtown area in general, and incorporate the building to the greatest extent possible with the surrounding architectural treatment, particularly with the architectural theme of the adjacent City parking ramp. He said Inland Development Partners (IDP) is in the very early stages of the design/development process but the project would be a multi- family building with approximately 143,000 square feet. The 128 units will consist of a mix of studio, 1- bedroom and 2-bedroom units. An interior amenity space of over 6,000 square feet is planned as well as an outdoor amenity space. IDP’s market research professional believes average rents will be approximately $1.80 per square foot and they July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 6 of 11 anticipate monthly market rate rent for studio units will range from $1195 to $1250; 1- bedroom units from $1375 to $1595 and 2-bedroom units from $1925 to $2295. Additionally, IDP is working with a restaurant/bar owner who has interest in locating in Anoka. This owner has a well-established concept currently operating in a similar downtown suburban location and is committed to achieving the three development objectives outlined earlier. Mr. Borglund shared examples of a proposed development and noted no formal application has been made. He reviewed TIF impacts of a project and how it could help with future bonds payments on the existing City parking ramp on 2nd Avenue, stating the City only has 11 more years in this TIF district to capture TIF revenues. Steven Schwanke, IDP, thanked Mr. Borglund for his assistance then said they had experience with these types of market rate projects and felt the market study supported this type of project. He said they would do more work on a breakdown of units and architectural elements but would work to emulate the feel of the nearby parking ramp. Councilmember Skogquist said he visited the list of similar sites and asked how IDP had done. Mr. Schwanke said they did none of those sites but shared them to provide a feel for the different types that would work in downtown Anoka but noted they are working on a 316-unit building in Richfield and will be starting another in Robbinsdale this fall. He noted those two projects were completely different than what is being proposed in Anoka but were shared to show how they can work to match existing areas. Planning Commission Chair Don Kjonaas asked about the basis for their proposal and what would work in Anoka. Mr. Schwanke said the marketing firm they contract with knows the metro and submarket areas and they believe there is an unmet need for market rate apartments for people currently working in the area as well as for those who want to stay in the area but not want to maintain a home any longer but do not want a townhome. Councilmember Barnett asked if IDP had other current developments in Minnesota. Mr. Schwanke said IDP was a small development company created to address this niche of types and product sizes in areas other than downtown Minneapolis or St. Paul. He said they also do redevelopment projects such as the Osseo landfill relocation and an office development project very soon. Councilmember Barnett inquired about anticipated variances that will be requested. Mr. Borglund said a variance would be needed to the five-story building height and parking but the general discussion this evening is based on the proposed use and the Council’s position on additional rental housing in the City. Councilmember Freeburg asked if the developer would need to have a certain number preleased before construction begins. Mr. Schwanke said they just needed to show market interest and that no pre-lease would be required. July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 7 of 11 Councilmember Freeburg asked about the 2nd Ave and Harrison St site. Mr. Schwanke said they looked at the site but felt there were gaps in the area across the street and liked this site better because of the urban environment. Mr. Borglund reviewed potential financial impacts with 11 years left in the TIF district which would bring $2.7 million in TIF revenue if completed by the end of 2020. Mr. Schwanke said they would start construction in 2020 and be open for leasing by 2021 then stabilized by 2022. Councilmember Wesp asked how soon after build out would they sell the building. Mr. Schwanke said their goal was to be long-term owners for most likely 10 years. A member of the audience inquired about rent guarantees. Mr. Schwanke said based on their operating experience they work hard to maximize rents and expect to increase rents over time. Mr. Borglund said this would be closer to a $30 million project based on the proposed rents. Mr. Schwanke agreed, stating they had no plans to include affordability units in this project as they anticipate a complete market rate project with rent growth of 2-2.5% each year. Councilmember Barnett asked who would manage the project. Mr. Schwanke said they would subcontract the management of the project to a professional management firm. Mayor Rice spoke about parking concerns in urban areas and a formula of one stall per apartment unit then commented about the cost of adding a floor to the parking ramp of $3.3 million. Mr. Schwanke said a full floor of parking is possible and that they anticipate calculating one stall per bedroom. A member of the audience asked what government unit determines whether a project should include affordable units or not and shared an example in White Bear Lake that began as market rate then changed to affordable units in the future. Mr. Schwanke said rental rates are based on income levels for an area and that it would be up to Council to include affordable units but that they did not have an interest in that type of project at this time. Mr. Borglund said mandated requirements for affordability were based on some financing plans but this project would not include funding mechanisms, adding the City owns the site and has the discretion to allow a project based on its criteria. Discussion was held on the available parking now, both above and below ground and TIF impacts. Mayor Rice said the Council would not agree to any project without sufficient proof of parking. Mr. Schwanke agreed, adding sufficient parking was necessary in order for him to lease the building. July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 8 of 11 A member of the audience shared concerns about project scale, the number of variances requested and the potential for crime with a new apartment complex. A member of the audience said they would not want a building like this next to them either was thought the area was going to be developed as townhomes or nothing over three stories. A member of the audience spoke about the type of tenant and if families and children would be leasing and the need for playgrounds. Mr. Schwanke said they did not intend to include age restrictions but did not anticipate many families in this project based on the size of units and the lack of three-bedroom units. A member of the audience spoke about traffic from Van Buren which was already high then spoke about how the street design was poor with too much on street parking. A member of the audience spoke about the number of activities on the river now and the parking impacts if this complex was constructed. Mr. Schwanke said they anticipated approximately 150 residents in this project as there were not many two-bedrooms units as well. Mr. Borglund noted these details would be part of the formal review process should an application be submitted and that they were very early in the process and here to gauge Council interest at this time only. Councilmember Wesp said part of the City’s objective is to have more people live in the downtown at some point and asked if IDP was interested in owner-occupied units. Mr. Borglund referred to the Gladstone project that fell through and how staff worked with Ron Clark Construction on a condominium project but felt that condos was not feasible at this time. Councilmember Skogquist asked about a mixed use site with residential above and said the market is here for this project but did not see condos or coops being constructed next to a bar/restaurant. He noted younger people do not buy $300,000 condos so developers are limited in options. He said he liked the mix of products in the area and felt this project would work and while he liked more of a rooftop garden type project, he did not envision a project like those in Ramsey at The COR then asked where four-story buildings were allowed in the City. Mr. Borglund said all commercial districts allow for higher density with a Conditional Use Permit and Planned Unit Development review to ensure it was the right fit for the City. Councilmember Freeburg asked how many one-level units would fit on this site. Mr. Borglund said not many based on the 100-foot depth and driveways that take up a lot of room. July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 9 of 11 Discussion was held on the high number of rental units already and the need for snowplowing and other maintenance. Mayor Rice said the market is changing and rental is becoming more viable for young people. A member of the audience spoke about the developments on Harrison Street that fell through. Mr. Borglund spoke about IDP’s interest in the restaurant site across the street. He said this was a 17,000-square foot site marketed by the City where staff parking is closest to the river with some permit stalls. He said they were proposing a brewpub restaurant of 10,000 square feet with a patio on the river open for lunch and dinner. He said the brewpub would be a 10,000-barrel brewer and the restaurant would have brick exterior to match the downtown architecture. Mr. Schwanke said they have not had a lot of experience with brewpubs but have a relationship with someone who has operational experience with breweries, adding they would be interested in what goes in across the street and if purchased now they can ensure it is operated successfully and complements the apartments. He said they would own the building and lease the brewpub operation through a long-term lease and should something go wrong they can still control the asset. Ms. Smith said the restaurant development would be above and beyond the $2.7 million TIF projections. A member of the audience shared additional concerns about parking with a brewpub developed. Mayor Rice said the businesses on Jackson Street are served by the parking ramp very well by a City asset and that parking studies say we have sufficient parking but just not within a block. A member of the audience asked about the size of the building and if smaller would this work and if the City conducts independent studies on proposed uses. Mr. Borglund said this proposal was very early and was a concept only and that staff wanted direction first from the Council before the applicant proceeded with any application. He noted the City typically does not conduct such market studies but added the developer’s studies were likely sound because they did not want a project that fails either. A member of the audience asked about the number of vacancies in The COR in Ramsey and shared concerns about traffic congestion. Councilmember Skogquist said most apartment complexes now have a 2-3% vacancy rate which is why so many are being built because there is currently a demand for this type of housing. A member of the audience thanked the Council for allowing the neighborhood the opportunity to speak. Mayor Rice left the meeting at 6:00 p.m. July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 10 of 11 3.5 Discussion; Development Update. Mr. Borglund provided the Council with a development update stating the 7th Avenue and Buchanan Street site was under construction with a preconstruction meeting on Thursday and store opening in December. He said the 11th Avenue and North Street sold for walk- up storage and is going well and the Eastview Meadows Phase I was complete with all units sold and Phase II closing soon. He said the Rum River draft was done and given to David Weekly Homes for consideration then spoke about the 4th Avenue and Johnson Street site with Lennar and the Bunker Lake Boulevard and 7th Street purchase agreement in process. Mr. Borglund said the Gramercy purchase agreement will be signed soon with a lease in place for their sales office opening soon then spoke about the 2nd Avenue and Van Buren Street site. He reviewed the 2nd Avenue and Van Buren Street site and Inland Development’s interest then noted the 2nd Avenue and Harrison Street site is still in progress as staff was speaking with other parties. 3.6 Discussion; 2040 Comprehensive Plan. Mr. Borglund said staff would like to discuss the changes made to the Comprehensive Land Use Plan during the approval process with the Metropolitan Council. Staff would like to discuss the need for an additional public hearing at the Planning Commission level to allow land owners and public to be heard. He provided an aerial highlighting the subject land area between River Lane and 2nd Avenue, north of Madison Street, south of Walker Senior Housing. He said a future public hearing would be held after we get comments back from the Met Council in the coming weeks. Mr. Borglund said they would bring the item back for a public hearing with Madison Street and others for single family. Mr. Lee said the hearing would provide the public a chance to share any concerns that their zoning had changed. Commissioner Bonthuis shared comments about how the area should not have been changed and commented about spot zoning. Mr. Borglund noted if land use changes then zoning has to change. Councilmember Wesp confirmed the active marketing of the City site. Mr. Borglund said they currently are not marketing the site due to Park Board direction for Akin Riverside Park events and future use of area. Councilmember Skogquist said the neighborhood has felt threatened by the City for 20 years and felt there has been no plan in place. He said the residents would like to retain the neighborhood as it is and do not want higher density but felt ignored and were fearful the of neighborhood being bought out and should replace with something that fits the neighborhood better, noting there were three different zonings in this area now and that they should all be changed to single family only. July 22, 2019 (Joint City Council and Planning Commission Worksession) Page 11 of 11 Councilmember Barnett asked how far will the notices be sent as it should be farther than 350 feet. 4. OTHER BUSINESS 4.1 Staff Update. None. 5. COUNCILMEMBERS COMMENTS None. 6. ADJOURNMENT Mayor Freeburg adjourned the meeting at 7:42 p.m. Submitted by: Cathy Sorensen, TimeSaver Off Site Secretarial, Inc. Approval Attestation: Amy T. Oehlers, City Clerk