RECEIVE INFORMATION & UPDATE: 15153 Nowthen Blvd Property Development

General Background
The City was approached by Connexus Energy in the fall of 2012 regarding the development of City owned land located at 15153 Nowthen Boulevard; known as the Old Municipal Center Site (“Subject Property”).  The Subject Property is 21.24 acres in size and is currently zoned Public/Quasi-Public.

The City is considering two general development scenarios for the Subject Property: data center and single family residential.  The City completed a feasibility study on said development scenarios in early 2013.

The next step in the process to develop the Subject Property is to consider the appropriate land use and zoning.  Staff was directed to conduct a public open house regarding a potential zoning amendment and future development of the Subject Property in April 2013.

Purpose of Case

• Receive feedback from the April public open house (including other public input)
• Receive updated site concept plans and feasibility study (mitigated to address public input)
• Receive EDA input regarding the future development of the Subject Property
• Receive timeline from Staff (see attached)

Detailed Background
Connexus Energy identified the Subject Property as the best available data center site in the entire County of Anoka in the fall of 2012; and, proposed the City partner with their organization to pursue development of the Subject Property for a data center user(s).

Previous to receiving Connexus Energy’s proposal, the City Council identified the Subject Property as surplus City owned land; as it is unneeded for current or future City functions (summer of 2012).

Both the EDA and City Council directed Staff to pursue the proposed partnership with Connexus Energy in the fall of 2012.  However, a number of key development issues would need to be resolved before either the EDA our City Council were able to pledge their full support for a data center development.  Major items included: a feasibility study (cost-benefit analysis) and Zoning/Comprehensive Plan Amendment for the Subject Property.  The EDA and City Council were both interested in how the proposed data center use would fit in with surrounding properties.

Feasibility Study
In early 2013, the EDA and City Council reviewed a feasibility study for the development of the Subject Property.  Said study compared three general development scenarios: a single data center user, two data center users and a single family residential development.  In summary, said study identified a data center development to be considerably more beneficial to the City than a single family residential development from a financial standpoint.  The following sections of this case will discuss compatibility with surrounding properties from a land use perspective. Additionally, a data center development provided the City with a funding source for the City’s new Fire Station #2.  NOTE: Fire Station #2 is temporarily located on Subject Property.  Attached to this case is the feasibility study. 

Upon review of said feasibility study, Staff was directed to move forward with identifying a zoning solution for the Subject Property.  Staff was directed to conduct an open house prior to formally bringing forward a zoning amendment for the Subject Property; as the EDA and City Council were interested in feedback from surrounding property owners. This was an important step in determining any issues the neighborhood would have with a Zoning and Comprehensive Plan Amendment.

Public Open House
On April 18, 2013 the City hosted an (“Open House”) regarding the future development of the Subject Property.  Nearly 250 surrounding property owners were contacted via direct mailings. 

Comments were received from Open House attendees as well as written and verbal comments received outside of the Open House. In total, the City received twenty-six (26) comments. Of those that responded, twenty-three (24) preferred the residential concept (92%) and three (2) preferred the data center (8%).  A detailed analysis is included in the attached Power Point. Staff received a petition in opposition of a data center development, and in support of a residential development, from surrounding property owners on April 26. Said petition included 69 signatures and has not been reviewed or analyzed by Staff.

General common inquiries included, but were not limited to the use of the site as a school, park, or renovated Fire Station #2 in place. There were also multiple inquiries as to whether the data center could be sited elsewhere in the community. It should be noted that the Anoka-Hennepin School District does not currently have plans to develop the site as a school for the foreseeable future. The Parks and Recreation Commission has reviewed park needs for the area in the past, and has focused on safe pedestrian connections to other recreation areas in close proximity. The City continues to review future trail and safe pedestrian connection needs for the area.

For those opposed to the data center concept, common comments included concerns with decrease in property value, presence and view of data center being undesirable, compatibility with the character of surrounding properties, noise, and long term risk/potential re-use of the site.

For those accepting of a data center, common comments include traffic impacts for residential uses being undesirable as well as residential development reducing the privacy of surrounding property owners (hours of operation).

Attached to this case is extensive information attained through the public input process.

Data Center Prospect Update
Over the past few months, Staff has received inquiries from national developers/builders, commercial real estate agents, Connexus Energy and the State of Minnesota regarding the development of the Subject Property for a data center user(s).  Although Staff has not worked directly with a data center prospect, the market remains active and interest in the Subject Property remains significant.

Upon completion of the public open house in April, Staff analyzed input received from surrounding property owners and attempted to address common concerns raised in relation to the proposed data center development.  The purpose of the information below is to (A) identify concerns that were raised; and, (B) attempt to provide the Council with a options to mitigate said concerns.

This information is broken down into two sections.  The first section (open house) outlines specific concerns with specific mitigation options.  The second section (revised feasibility and concept maps) includes updated analytical information based the mitigation options presented by Staff.

SECTION 1: OPEN HOUSE
Concerns listed below were raised at the public Open House regarding the development of the Subject Property for a data center user(s).

Noise
A number of residents raised concerns regarding the noise generators and air conditioning units would create.

Data centers do require significantly sized backup power generators. Additionally, data centers create a significant level of heat due to the extensive use of computer servers; therefore, significant use of air-conditioning units is required. Both types of equipment, generators and air conditioning units, do create noise pollution.

Noise pollution concerns can be resolved with proper land use regulations. For example, increased building setbacks, requiring enclosed/indoor storage of generators, requiring air conditioning units to be located at the center of building rooftops and establishing noise restrictions on the Subject Property.

For example, the Cities of Anoka and Chaska have noise decibel (dB) restrictions; 65Db and 55dB respectively. The City of Ramsey could consider adopting a noise decibel (dB) restriction on the Subject Property of 55dB. 55dB is often compared to office noise, normal conversation, living room in suburban area, typical business office, library, moderate sound and a quiet house. It should be noted that the City currently has dB restrictions within the existing City Code that are fairly close to the above samples. The City could choose to establish site-specific noise regulations through a number of tools.

It is important to note, generators will only be operational in situations where regular power supply is lost/threatened and during monthly testing. Generators are not run regularly.

Visual/Aesthetics
A number of residents raised concerns regarding the “look” and “presence” of a data center facility. Further, it has been stated a data center building would be an "eye sore."

At full build out, a data center structure would be significantly sized when compared to surrounding single family residential structures. It is staff’s estimation the site could sustain a maximum 195,000 square foot building.

Visual/Aesthetic concerns can be mitigated through land use regulations. For example, the City could require larger building setbacks, dictate a maximum building height, require a high standard of building materials and mandate proper screening (e.g. landscaping, berming plantings, etc.). In addition, the City has the ability to establish architectural standards in addition to the above bulk standards to make the architecture more conducive of a residential surrounding.

It is important to note, the City can mitigate the visual/aesthetic effect of a data center development; however, it cannot not eliminate said concern.

Traffic
A number of residents raised concerns regarding traffic. Some residents were concerned that busy employees would drive carelessly through surrounding neighborhoods and decrease safety.

At full build out, a data center development would have significantly lower traffic impact on surrounding properties than would a residential development. It is estimated a data center development would create 48 vehicle trips per day and a residential development create 470 trips per day (at full build out). It is proposed, a data center development would attain road access exclusively from Nowthen Boulevard; and that a residential development would attain road access to Helium Street.

The City did receive a response from the Anoka County Highway Department on the preliminary sketches. Anoka County's response was that they desire to eliminate the access onto Nowthen Boulevard, as the current alignment interferes with future turn lanes and restricted turn movements.

Spot Zoning
Several residents indicated using the Subject Property for a data center would be considered “spot zoning.” NOTE: “spot zoning” is not addressed in State Statute; it is a part of case law and planning literature. Therefore, even if the City were “spot zoning” it is not explicitly illegal (based on State Statute).

Staff had a chance to review the Subject Property with the League of Minnesota Cities, the City’s Planning Division, and the City Attorney. Considering the follow factors, Staff does not believe the City is in violation of "Spot zoning": large size of the Subject property, the City is using the property for a rational use, there is a public purpose for developing the Subject Property, the previous/anticipated use of the subject property was for either a school/municipal center complex and the City would enforce strict land use regulations to ensure a data center use would transition/be compatible with surrounding properties.

Property Values
Nearly all residents indicated the establishment of a data center development would reduce the value of their homes; and therefore is undesirable.

It is possible the establishment of a data center development could reduce the value of surrounding properties. However, it is also possible the establishment of a data center development could sustain or even increase the value of surrounding properties; depending on the quality of the project and the required screening/land use regulations (when compared to the alternative). This item is subjective.

Staff had a chance to review the Subject Property with the League of Minnesota Cities and the City Attorney. Most case law indicates this conclusion is subjective and unclear.

Staff would recommend the City update their comprehensive plan to reflect the desired zoning before moving forward with either development scenario (residential or data center). This was already contemplated by the Planning Division as part of the Zoning Amendment and Open House process, although not expressly stated.

Risk/Market Failure
A number of residents are concerned that a data center development will eventually fail; and that another type of user would eventually take over. Said user may not work well with surrounding properties.

Like any business, the risk of a data center development failing is real. The City does not have the ability to mitigate this risk. However, in the event a data center user failed, the City does have the ability to regulate the next user. It is likely, an office type reuse would fit in best with surrounding properties. The City has the ability to control the use of the Subject Property through land use regulations; in this case, a Planned Unit Development (PUD) or an Overlay District. A PUD would be the preferred tool if a specific user and site plan were identified. An Overlay District would be the preferred tool if a specific user or site plan was not identified, but the City chose to move forward with the Shovel-Ready Certification.

Use of Subject Property for a Park
Several residents indicated the City should develop the entire Subject Property into a park.

Over the course of the last decade, as new single family homes and town-home developments have been platted near the Subject Property, the Park and Recreation Commission has examined the need for recreational amenities and associated trail connections. Finding that there is adequate recreation and open space in the larger vicinity of the former Municipal Center, the City has focused on trail development; and, this part of Ramsey now has the most comprehensive trail and connected trail system within the entire City.

A summary of park amenities nearby the Subject Property includes the two community parks of Elmcrest and Alpine; and play equipment at Alpine, Woodland Green, Solstice and the school. Athletic fields at Alpine, Elmcrest, the school, Solstice, Woodland Green and Bear Park. Open space at all of the above, plus Sunfish Lake Park and the scout camp as well as other city-owned lands. In addition to the common recreational amenities at these parks, at Alpine there is a concrete skate park, free canoes and kayaks at Sunfish Lake, and ice skating and a warming house at the 60-acre Ramsey Elementary immediately west of the former Municipal Center.

Better Locations
Residents at the public open house indicated there are "better locations" for a data center in Ramsey; and that the Subject Property should not be considered.

Considering the requirements of a data center development, the Subject Property is the only substantial available site in the City of Ramsey. Requirements include: redundant fiber, redundant electricity, city utilities, minimum distance from city services, minimum distance from train tracks, minimum distance from a river, minimum distance from an electrical substation and a substantially sized site.

Anoka Hennepen School District Use
Several residents indicated the Subject Property should be used for an Anoka Hennepen School District school campus. Staff made contact with the School District and has received word their organization is not interested in the Subject Property now or into the foreseeable future.


SECTION 2: REVISED FEASIBILITY STUDY/CONCEPTS

As a result of the public input process, staff made a number of revisions to the proposed data center development scenarios as follows:

Building setbacks
Building setbacks are proposed to be increased from 125' to 200'; which is over three times the distance normally required by City Zoning Code.  Increased building setbacks help mitigate noise, safety, visual/aesthetics and compatibility concerns.

Placement of generators and air conditioning units
It is proposed all generators be enclosed or placed within a data center facility.  It is also proposed air conditioning units be enclosed or located at the center of data center facility roof tops.  Proper location of generators and air conditioning units help mitigate noise and visual/aesthetics concerns.

Establish 55dB noise regulations
It is proposed the City establish noise regulations making 55dB the maximum decibel of noise allowed from the Subject Property (similar to Chaska).  Noise regulations help mitigate noise concerns.

Provide public open space 
It is proposed the City utilize land located in the northeast corner of the Subject Property as public open space.  Various options exist for utilization of the proposed open space.  Public open space mitigates safety and compatibility concerns.

Other Updates
Staff was able to attain updated employment estimations and parking requirements for a data center development.  In both cases data center needs are less than previously stated.  It is estimated 6-12 employees would work at a data center; and that an estimated 60 parking stalls would be required.  Reduction of employment numbers mitigates traffic and safety concerns.

Updated Feasibility Study & Concept Maps
As a result of revisions to the site map concepts (reviewed above), and a recent market value appraisal for the Subject Property, Staff made a number of revisions to the feasibility study for the development of the Subject Property. 

In summary, results of the revised feasibility study are similar to the the original feasibility study: a data center development is significantly more beneficial to the City (financially) than a residential development.  Estimated City tax revenues from a data center development range from $213,108 to $202,503 annually; whereas, a residential development is estimated to produce $28,263 annually.  Other taxing jurisdictions would also benefit proportionately.  The estimated market value of the Subject Property was slightly reduced for data center scenarios ($1,350,000 to $1,275,000); and the estimated market value of the Subject Property for a residential development was drastically reduced ($1,350,000 to $650,000).

Attached to this case are the original and revised site concept maps and feasibility studies.

EDA Input
On May 16 the EDA reviewed information collected from the April public input meeting and the revised (mitigated) site plan concepts and feasibility study.  The EDA had the following comments to provide the City Council:

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NO ACTION -- Receive Information Only