Memo Response To Question - Grocery Store ProjectCITY OF HOPKINS
MEMORANDUM
DATE:
TO:
FROM:
SUBJECT:
8 -7 -91
Mayor and City Council
Jim Kerrigan
Response to Questions RE:
Grocery Store Project
What follows is a response to the 20 questions provided by
representatives of the North Hopkins Community of Concerned
Citizens (NHCCC). Hopefully, this response will assist the
discussion during the August 13 Council work session.
1. What will happen to Tait's current location?
It is anticipated that a new retail use would occupy this
structure. There has already been a certain amount of
interest expressed from a few possible tenants to locate in
this building. Because of the size of this building, it may
be logical to divide the structure to accommodate a couple
of smaller tenants.
Two groups that will be aggressively involved in securing
tenants for this building will be Tait's'and Ryan
Construction. Tait's has,a long -term lease which means they
would have to locate a new tenant or continue to pay rent on
this structure even though they would not be occupying it.
Tait's would be highly motivated to fill the structure
because of the long -term lease.
Ryan Construction has already been told by the City Council
that an important component of this project is to ensure
that the Tait's building is reoccupied. Ryan Construction
has informed the Council that they would be able to work
with.a number of clients which they have dealt with in the
past to see if they could generate some interest.
In conclusion, as work proceeds on this project, the
necessary steps will be taken by all involved parties to
ensure that a tenant is found for the building.
2. What tenants are planned for the other retail spaces?
As this project is still in the preliminary stages, the
developer has not aggressively worked at finding tenants to
occupy the 20,000 square feet of retail space. Prior to
being able to secure financing for this project, Ryan will
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Page 2
be required to have signed leases for the majority of space.
Ryan will be encouraged to obtain tenants which serve local
convenience consumer needs and the destination specialty
market, as recommended by the Laventhol Horwath study
3. What will happen to\ existing businesses? Have any made
a commitment to relocate in Hopkins, and if so, where?
Would they then create more vacant retail space?
The following will serve to respond to the question as it
relates to existing businesses outside of the project area.
One of the major purposes of this project is not only to
maintain the existing customer base in downtown Hopkins, but
also to draw in new shoppers. With this goal achieved, this
will help all businesses presently located in downtown
Hopkins.
The developer has stated that for the 20,000 square feet of
retail space, the majority of interest thus far has been
from businesses presently located outside Hopkins. This
being the case, it is not anticipated that this project
would contribute to any increase in the vacancy rate.
It is true that some of the new business will potentially be
in direct competition to businesses I presently in the
downtown. As a result of this situation, these existing
businesses may be forced to upgrade their operations to
remain competitive. Businesses that are strong should not
experience significant problems as a result of this
increased retail space.
It needs to be understood that vacancies in downtown Hopkins
are occurring basically for two reasons:
1) The existing economic conditions. Because of the
present recession, some businesses do not have the
financial capability to carry them over until such
time as there is again a demand for their goods.
2) Ability for increased business in a different
location. There are retail areas surrounding
Hopkins in every direction. Thirty years ago many
of these did not exist. If the business
environment in downtown Hopkins cannot provide a
business owner with sufficient customer traffic to
support their.business operations, they will look
to a different location. On the other hand, if
Hopkins remains strong and viable in the retail
marketplace, businesses will have a stronger
tendency to stay within the City. A major anchor
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such as a grocery store, along with the proposed
retail, will assist in providing the critical mass
necessary to draw customers to the downtown area,
making the existing businesses more viable and
other businesses more interested in relocating in
downtown Hopkins.
As relates to existing businesses in the project area, none
have thus far expressed an interest in being a tenant in the
proposed project. City staff will work with all of these
commercial tenants to attempt to relocate them somewhere in
Hopkins, if possible in the downtown.'
40 Is it true that Suburban Chevrolet plans to move? If
so, where to and what will happen to that property?
Suburban Chevrolet has indicated over the last several years
that they may be looking at another location outside of the
City of Hopkins. Basically, the owners of Suburban are
happy with their operation and fairly content to be in
Hopkins. However, General Motors would like them to.have a
larger site with highway visibility.
Community Development staff recently spoke with the owners
of Suburban Chevrolet. They have indicated no firm date on
when such a move might take place. They are presently
looking at new locations.
At such time as Suburban would vacate their site, it is
anticipated that the City would probably work in conjunction
with a developer to facilitate a redevelopment project.
Both the City zoning ordinance and comprehensive plan detail
this site for a retail type of use.
A portion of the site located on the south side of
Mainstreet is approximately one acre in size. Construction
of a grocery store facility as currently proposed requires a
minimum of 3.5 acres. Even if both the north and south side
of this property could be utilized, it would still not be
adequate space for the grocery store as proposed.
5. What is planned for the current vacant buildings
downtown?
The City acknowledges that there are some vacancies along
Mainstreet. The City would also acknowledge that it is not
necessarily a negative factor to have the existence of some
vacancies. The City, along with the Business Council, has a
number of incentives and programs which can be used by
owners and tenants to allow for the utilization of these
buildings. Active steps have and will be taken in the
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future to encourage the leasing of these buildings.
Improvement of the present economy will help to address some
of these issues. Developing a state of the art grocery
store as an anchor to downtown is one step the City is
proposing to encourage interest in other vacant retail space
along Mainstreet. Please refer to question #3 concerning
vacancies.
6. What is planned for the vacant lot on County Road 3 and
11th Avenue S.?
The property north of the railroad-tracks is owned by R. L.
Johnson Development Company and the City of Hopkins. This
site, which is zoned B -3 General Business, is approximately
2 to 2.5 acres in size and has somewhat of an odd,
triangular shape. A number of development options have been
previously considered for this site, but to date, nothing
has been approved. R. L. Johnson is continuing to work with
various interested parties on this site. This site is not
conducive to a grocery store project due to its shape and
size.
The vacant property south of the railroad tracks is also
owned by R. L. Johnson. The property presently contains
approximately 13 acres. It is zoned and identified in the
comprehensive plan for industrial or business park
development.
The original concept plan that was submitted for the 13 -acre
site detailed the construction of approximately 290,000
square feet of office warehouse. The owner of this property
is continuing to discuss development opportunities with a
number of potential tenants.
The use of this property for retail purposes has been
discussed in the past by the City Council and Business
Council. Up to this point, the property has not been
allowed to develop as retail in order to maintain the retail
core area of the City which is located along or adjacent to
Mainstreet .
7. Are the streets sufficient for semi traffic? If not,
who pays for upgrade and won't streets have to be made
wider?
It is anticipated that the project-would be designed so that
truck traffic would only utilize streets which are of
sufficient capacity to handle semi truck traffic. Most
nonresidential roads are constructed to standards capable of
handling fairly heavy truck traffic. The traffic study
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which will be undertaken as a part of the project will
analyze specific truck movements.
Specific road improvements that might be necessary as a
result of this project have not yet been discussed.
However, if such improvements would be required, they could
either be paid for with tax increment proceeds, special
assessments back against the project, state aid road funds,
or other City .improvement funds.
8. What route will delivery trucks take, and is one loading
dock enough for this development?
This is a technical question, and no indepth study has been
given to the route which delivery trucks would utilize. It
is anticipated that the majority of traffic movement would
come from the south. Most.of the vehicles servicing the
grocery store would be coming from the Super Valu facility.
Other suppliers for the retail component of the project
would for the most part be taking Highway 169 to County Road
3 and then north to the project site.
The concept plan for the project illustrates two loading
docks from the grocery store. As the review of the project
proceeds, the developer will need to address the adequacy of
the loading area.
As part of the redevelopment agreement with the developer,
they are required to complete an indepth traffic analysis.
The study will detail anticipated traffic movements. As a
result of this study, the project will be revised to
minimize any significant impact to the residential area.
9. Will homeowners near this project be compensated for
decrease in property value? If so, how will amounts be
d termined?
A project of this type, if designed properly, should not
have a negative impact on property values. At the present
time, this area contains a number of older, somewhat
substandard commercial structures. These types of uses can
have a potential of creating a blighting influence on the
surrounding residential neighborhood and, as a result, be
detrimental to property values.
The project as proposed will be designed and landscaped in a
manner to fit in and be complimentary to the neighborhood.
It should help to greatly improve the overall aesthetic
appearance of this area.
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Some individuals, especially elderly and handicapped in the
immediate area, could find it beneficial to be in very close
walking distance to these types of facilities.
10. What will happen if Hennepin County wants the LRT right
of way back when the lease is up?
The City of Hopkins is in the process of negotiating an
agreement with the HCRRA regarding their release of the
right of way in the project area. Current debate centers
around whether the HCRRA would provide the necessary right
of way through a lease or fee title. In either case, the
HCRRA would be requested to commit to not extending the LRT
line along the northwest route. of the southwest corridor for
a minimum'of 20 years. After the 20 -year period, the
railroad authority would agree to either using the 9th
Avenue route as an alternate corridor, or purchase the
necessary property from the developer to allow the LRT line
to be extended through the subject site. If the HCRRA
should decide to extend LRT through the project area, it
would result in the relocation of the grocery store.
11. Why not centrally locate in downtown area instead of
the east end where traffic is already heavy on 5th Avenue
N.?
The subject site was selected for a variety of reasons.
These include the following:
o The Mainstreet commercial structures in this area
are, for the most part, either substandard or
under - utilized. If the project were undertaken in
other parts of the downtown, this would
potentially require the removal of Mainstreet
buildings which are in fairly good condition and
fit the overall character of the downtown.
o Size constraints were a key factor. In order to
undertake this project, the developer needs at
least 5.5 acres. For just a grocery store,
approximately 3.5 to 4 acres are required. It is
very difficult to assemble a parcel of this size
in another portion of the downtown. The cost
alone to facilitate such an assemblage would be.
prohibitive because of the number of .commercial
structures which would need to be acquired.
o The street adjacent to the proposed project
site is adequate to handle traffic generated as a
result of this project. There is direct access
from County Road 3 to the project site, both from
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5th and 8th Avenues. It is anticipated that these
roads in their present design should be able to
handle all of the traffic generated from this
project. The street system and traffic movements
will be looked at in more detail as part of an
overall traffic analysis of the project.
12. Why do you feel this project will save downtown
Hopkins?
It is not being suggested that this project will "save"
downtown Hopkins, nor is it felt that downtown Hopkins is in
need of being "saved." However, both the City Council and
Business Council have agreed that it is essential to retain
an anchor type of development such as a grocery store in the
downtown in order for this area to remain competitive with
surrounding retail areas. The 1988 market study
specifically identified the existing grocery operation as
one of the only anchors for this area. One of the findings
of the Laventhol and Horwath market study was that the
Hopkins trade area would support a larger grocery facility.
The study also recommended that the downtown be oriented
toward a specialty retail market. The proposed project
represents one step of several steps which now or will be
taken to ensure the future strength and stability of
Mainstreet. An example of another step which the City and
business community is taking is the Mainstreet Improvement
Project.
13. Where did this development begin?
See attached memo on project background.
14 Where does this.development stand now and what
timetable is scheduled?
The City has approved a concept plan for this project. A
development agreement has also been executed between the
City and Ryan Construction.
With the above completed, the following are some of the
major steps that need to be completed prior to actual
project implementation:
o Environmental testing
o Negotiation and completion of land sale price
between City "and developer
o Traffic and,engineering studies
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o Approval of conditional use permit
o Acquisition process of subject properties
The goal at the present time is to have the start of
construction take place in either spring or summer of 1992.
15. What plans are there to raise money for this project?
Who qualifies for TIP? Would Tait's alone qualify for this
funding?
Tax increment is a tool used by governmental bodies to
facilitate economic development. The increase in property
taxes from a project over and above what was on that site
prior'to the development can be used to offset public costs.
Normally these public costs include acquisition, demolition,
road improvements, environmental clean up, etc.
The purpose of tax increment is to allow older communities
such as Hopkins to compete from a development standpoint
with newer communities such as Chaska, Chanhassen, Eden
Prairie, etc. In these communities a developer can purchase
bare land at a fairly reasonable cost to undertake
development. However, to accomplish the same type of
development in a city such as Hopkins, the cost for a
developer to assemble a piece of property of any size would
be substantial. This is due to the fact that this land
usually contains buildings, environmental problems, etc.
In the case of these older communities, if the city did not
step in with some financial assistance, some areas would
eventually become substandard and deteriorated with no
chance of redevelopment by the private sector. As a result,
the tax base in the community would continue to fall with
residents and businesses of that community being required to
pay increased taxes in order to maintain necessary public
services.
At the present time, there are a number of existing tax
increment districts within the. City. The City of Hopkins
has adopted a tax increment financing application process.
Any developer has the option of submitting an application
for processing.
Tax increment funds to facilitate the subject project are
presently available. The City sold a bond in 1990, of which
$1.1 million is allocated for a grocery store project.
Additional tax increment required for this project are
available through tax .increment which have been generated as.
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a result of previous redevelopment projects which have been
undertaken in the downtown area.
16. How many names need to be shown to stop the project?
This is a question that cannot be answered by staff. The
City Council has already approved a concept plan and
executed a development agreement with the developer.
Therefore, there are certain legal obligations on the part
of both parties. The City Council would need to make the
final determination on: whether to terminate or alter the
project as proposed.
17. Is there.an alternate site for a grocery store?
This question was addressed to a
responding to question number 11.
extensively at other sites within
determined that the proposed site
terms of the existing development
and the size of the site itself.
-.ertain degree as a part of
The City has looked
the downtown area and has
is most appropriate in
on the property, access,
There are no sites outside of downtown�Hopkins which meet
size requirements, are zoned properly or have been
determined from policy perspective to be appropriate for a
retail development.
Additional information on site alternatives will be provided
during the work session.
18. Why can't the County Road 3 and 11th Avenue property b
rezoned commercial?
The property in this is currently zoned commercial
but is too small to accommodate a large -scale commercial.
project due to the railroad right of way located to the
south of the site. The site's irregular triangular shape
adds to the difficulty of developing the property with a
project such as a grocery store.
If the question really pertains to the large parcel of
property located along 11th Avenue, the City has determined
thus far that this site would not be appropriate for , a
retail development but should be developed industrially.or
as a business park in order to maintain the City's retail
core area along or surrounding Mainstreet.
19. What consideration are you giving the
homeowners who have to live with this in their backyards?
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The City is also concerned about the impacts of the project
on the adjacent residential area. Through the review
process relating to this project, study will be given to a
variety of issues including traffic, sewer, water, storm
sewer, landscaping, building design, etc. All of these
analyses combined are intended to provide for a compatible
development. Abutting homeowners will have direct input in
this review process.
20. How do you really think semis will operate on these
streets?
This has been detailed in question 7. Again, the
engineering and traffic studies which will be completed in
conjunction with the review process will provide information
on both any impact and alternatives available as relates to
this issue and improvements that would be required.
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