Rum River Hills Development Proposal

PURPOSE
General/ initial feedback on the proposal (identify any red flags, major concerns, major questions, etc.)?  Purpose of this case is not to formally decide anything/ approve anything.  This is a concept/ preliminary proposal. 


BACKGROUND
Rum River Hills is interested in a multi-party, multi-parcel, redevelopment project for their golf course.  The project would require moving two of their golf holes from the east side of Highway 47 to the west side of Highway 47, onto city-owned land.  The project would include a new pedestrian underpass, under Highway 47, to allow golfers access the two new golf holes.  This project would require the extension of a city trunk sewer line to the area.  This area is already served by a trunk city water line.  

As proposed by RRH, this project would create 165 new housing units (mix of housing types).  RRH believes this project will not only help revitalize their golf course, but will help revitalize the 167th/ Highway 47 Node. 
**Attached is background information and context maps**

COMPARING NEW REQUEST TO ORIGINAL REQUEST
Below is a quick overview, comparing the original 2013/2014 RRH's request to the current request.  The City rejected the 2013/2014 request, as it was too much to consider at the time (city contribution).

	Original Request	New Request
Quick Silver St ($680K, 2016)	City pay 100%	City pay 50%
Hwy 47 Ped Underpass ($550K, 2016)	City pay 100%	City pay 100%
City Owned Land	City provide for free	RRH negotiate a fair market value  purchase agreement
Extension of Sewer	Line not shown in Ramsey's Trunk Sewer Plan (not trunk fund eligible)	Line is shown in Ramsey's Trunk Sewer Plan (trunk fund eligible)
Zoning Amendment	Will require a zoning and comp. plan amendment.	Will require a zoning and comp. plan amendment.

This case was reviewed last by the City Council in February of 2017.  At that time, staff was asked to continue working with RRH on this project.  Since February 2017, this project has been put on hold--RRH wanted to wait for the City's new Trunk Sewer Plan to be adopted (which now includes a trunk sewer line running up to the 167th/ Hwy 47 node).  In November of 2017, the Trunk Sewer Plan was updated and adopted.  Hence, the RRH project is now back before the City.
 

 

FAQs:
Attached to this case are questions, with answers from Rum River Hills, asked by staff/ policy makers/ the public regarding this project over the years.


OBSERVATIONS
Listed below is a summary of observations, feedback, and questions raised RE this project to-date.  This input has been provided by the public, staff, the Planning Commission, and the EDA.
 

(1) Proof of Real Market Interest.
Staff would suggest RRH bring a developer, or primary financing agency, to the table based on the currently proposed deal. Staff want's to know if this proposal is "real" and that a developer and/or equity investor is legitimately interested.  Staff is concerned, even if the City was able to provide assistance as requested, the project still won't move forward.  Staff seeks to avoid wasting time and resources for all parties involved with this project.  Staff would recommend RRH provide a cover letter from the proposed developer/ financing agency involved-.  Staff would connect with said developer/ financing agency to verify.  The EDA reaffirmed this suggestion on 12/14/2017.

(2) Ensure Viability of RRH
The City may also want to consider requiring Rum River Hills to open their financials for review.  Although Rum River Hills won't be the primary developer on this project, Rum River Hills will be directly involved, and will have a major stake in the success of the project.  Staff would suggest this review be done confidentially, by a third party.  Financials includes: development project proforma (10-year), development project sources/ uses, and past three years financials for Rum River Hills.  The EDA reaffirmed this suggestion on 12/14/2017.

(3) Big Picture Benefit for Community
Staff would also note, we are concerned about equitable treatment to the City's two different golf courses.  If we move forward with this project, the City assistance proposed should have clear community benefits (i..e. safe pedestrian connections across 47 via a second pedestrian underpass, new road entrance to Elmcrest Park, revitalization of the 167/47 Node, and beyond, etc.).  If the Council in not comfortable with how this project shows up from an equity perspective, it would be helpful to hear that now.

(4) Cost-Benefit Analysis for the City
The payback period for this project is unclear at this point.  If the Council wanted to further investigate this project, staff would recommend creating a detailed payback analysis (i.e. cost-benefit analysis).  Staff would recommend working with Ehler's to put this together.  This cost-benefit analysis would show both financial benefits (i.e. property taxes, development fees, land proceeds, etc.) and qualitative benefits (safe crossing for Hwy 47, improved business climate, improved entrance to Elmcrest, etc.).  The EDA reaffirmed this suggestion on 12/14/2017.

(5) Identify/ Confirm City Funding Ability 
As proposed by RRH, the City would need to come up with funding for various assistance requests ($1,230,000 at this point).  Because the City has already committed our traditional economic development funding sources for the foreseeable future (ACHRA and EDA Fund), we will have to look elsewhere for funding this project.  This may or may not be a problem.  Staff would suggest this item be further investigated as well, and a list of options be established.

(6) Performance Requirements
These assistance requests are being made by RRH based on how this project will help the 167/47 Node.  Staff feels it's appropriate to make performance requirements a part of this project.  Meaning, the developer must deliver XYZ by ABC date in order to receive City assistance.  If the developer doesn't perform, what penalties/ claw-backs should exist?  Staff wants to avoid this item being an afterthought, and come up at the end of the negotiation process.  Staff thinks the City's expectations should be set upfront.  Staff would also ask for direction to develop a recommendation on this item.  The EDA reaffirmed this suggestion on 12/14/2017.

(7) Get the Deal on Paper
Staff would suggest the Council provide general direction to negotiate a 'draft version' of a formal purchase agreement.  Depending on where we settle, this too will effect staff's recommendation on this project.  At this point, Rum River Hills is informally offering about 30K per usable acre, and about $7,500 per acre for non-buildable land.  From a very preliminary perspective, this seems like a reasonable deal for the city, based on the land transaction only.  However, until we review an actual agreement, we are only speculating.  The PA would also cover other important items (proposed cost-share agreements, performance requirements, infrastructure improvements, etc.).  A draft PA will help everyone involved with this project better track, within one document, what the deal looks like.  The EDA reaffirmed this suggestion on 12/14/2017.

(8) Planning Commission: Land Use Items to Address
This project will require a zoning change and a comprehensive plan change.  The Planning Commission reviewed this case on 12/07/2017.  The Planning is generally supportive of further reviewing this project.  Attached to this case is the suggested land use review process.  Staff would note a few items upfront that will need to be addressed during the land use review process: (A) the proposed Quicksilver alignment cuts through two private property owners parcels that have yet to be contacted, (B) the proposed width and length of roads don't comply with existing city code, (C) much of the proposed project is located in areas near wetlands and staff would recommend a delineation be completed ahead of time to avoid surprises, and (D) the project will likely require a traffic study for Highway 47, and may trigger intersection improvements at 167th.

(9) EDA Comment: Cost Share for Pedestrian Underpass
As proposed by the developer, the City would pay 100% for the pedestrian underpass.  At the EDA meeting on 12/14/2017, a couple EDA members suggested the pedestrian underpass be cost-shared.  EDA members felt the underpass serves two functions: (A) a public use, and (B) a private golf course use.  As a result, is was suggested costs should be split.  Staff will ask Rum River Hills to respond to this request before this case is brought back again.  The EDA has also requested the developer better indicate how this underpass will serve the greater community (i.e. clearly map out the proposed connections).

(10) Review by other Commissions
The EDA, Planning Commission, and staff have suggested this project be reviewed by other appropriate boards and commissions as well, moving forward.  Specifically, the Parks Board has been identified--due to the proximity of this project to Elmcrest Park.

Staff, the Planning Commission (12/07/2017), and the EDA (12/14/2017) have reviewed this case.  Please see observations section for a summary of feedback.  It appears all three parties generally feel the preliminary concept proposal has merit and are generally comfortable with further reviewing this project--assuming the 10 items identified in the observation section can be addressed. 
 

Provide general direction:
1. From a high level, what do you think of the project? 
2. Should staff continue to pursue this project with Rum River Hills?
3. Do you support further investigation of the 10 items outlined in the observations section?  Do you have amendments?