Memo- Redevelopment of North Annex Property
"
.
. I I
Economic Development
MEMORANDUM
TO: Honorable Mayor and City Council
/)1
FROM: ~/y(jim Kerrigan, Director of Planning & Economic Development
.'
DATE: August 19, 2004
SUBJECT: Redevelopment of North Annex Property
PURPOSE OF MEMO
. The purpose of this memo is to provide a basis for discussion of a new redevelopment concept
for the North Annex property at the August 24 work session. Representatives from
SUPERVALU and Opus will be present at this meeting. The anticipated outcome is to secure
from the Council an indication as to their interest in the presented concept.
OVERVIEW
SUPERVALU and Opus Corporation recently met with staff to discuss a new redevelopment
concept for the North Annex property. This concept would diverge from the parameters of the
project as described in Sec. 2(b) of the amended redevelopment agreement executed with
SUPERVALU; therefore, to facilitate this, a revised redevelopment agreement would need to be
negotiated and approved.
. What are the specifics of the new development concept?
Attached is a memo from Opus Corporation detailing their development concept. They are
proposing that rather than what has been previously discussed, a large, single-user-take-all
or a good portion of the site up front, that the site would be marketed to smaller users and
developed over a period of time. The following is a summary of their development
concept.
0 Three or four phases of development with approximately 277,500 (this smaller
concept also includes the possibility of a hotel) to 418,500 square feet of office space
are detailed ;n three different options. Opus, in their memo, has also stated that
. their concept could include a non-office type element, such as R & 0 or ancillary
retaiL
0 Two access points to the site-one from Excelsior Boulevard through the new
intersection and one from Second Street N.E,
...- -----
. Memo to Mayor and City Council, August 19, 2004 - Page 2
II Some structured parking, with the majority being surface parking lots.
0 The possibility of a shared used of the three-acre site north of Second Street N,E. for
storm water retention and City snow storage.
0 The period for overall development of the site would be dependent upon demand in
the marketplace.
. What are the specifics of the existing development agreement?
0 450,000 to 600,000 square feet of Class B office space. It has been anticipated this
would be constructed in a single phase.
0 Traffic patterns oriented to the south
0 The three-acre site north of Second Street N.E. would be deeded to the City.
ISSUES FOR CONSIDERATION
The office market has been slow for the last few years. By undertaking such an approach, the
Council needs to be willing to accept the fact that there will probably not be a large, single user-
take-all or a portion of the site in the reasonable future. The development approach that is
being proposed by Opus Corporation and SUPERVALU would allow them to respond to the
. smaller users that are more prevalent in the marketplace. With this approach there are no
guarantees about the total square footage that would be constructed on the site; however, the
City would review and approve each phase based upon conformance to the master plan,
CONCLUSION
If the Council is comfortable with a phased redevelopment concept for the North Annex, City
staff will work with SUPERVALU and Opus Corporation to negotiate and prepare a revised
development agreement. Staff would return to the Council for action on this document only at
such time as there is consensus with all parties involved as to the terms of the agreement. The
Council, in its discussion, may wish to provide direction on various issues of importance,
including the following:
. Future use of the three-acre parcel north of Second Street
. Acceptability of non-office types of uses
. Traffic use on Second Street
. Demolition of existing structure and reimbursement of costs
. Interim use and maintenance of site prior to completion of development
A TT ACHMENTS
. Memo from Steve Stadler, dated 7/20/04
. Memo from Sid Inman, Ehlers & Associates, dated 8/19//04
. Memo from David Menke, Opus Corporation, dated 8/12/04
. . First Amendment to Redevelopment Agreement, dated 2/18/03
. Memo from Bob Deike, dated 8/19/04