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.  The Council will use EDA feedback, when they consider this case in January.  At the January Council meeting, they will give very preliminary direction to Rum River Hills, on how to move forward, through the City's various processes/ boards (what will be the required review process/ steps).  Also, the Council will give preliminary feedback/ comments/ raise any red flags.


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.
**Attached is a process outline

 

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.

Assuming the EDA/ Council still have interest in further pursing this project, staff would make the following recommendations, from an EDA perspective.

(1) Proof of Real Market Interest.
Staff would suggest RRH bring a developer 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 wants to avoid wasting the City's time and resources.  Staff would recommend RRH provide a cover letter from the proposed developer/ financing agency involved--indicating they have genuine interest/ ability to work on this project.  Staff would connect with said developer/ financing agency to verify.

(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.

(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 sewer is not considered City assistance, the payback may be reasonable.  If the Council wanted to further investigate this project, staff would suggest providing direction to further refine the City's proposed payback (i.e. cost-benefit).  Staff would recommend working with Ehler's to put this together.

(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.

(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 by a developer, and come up at the end of the negotiation process--then the developer feeling upset the city is not being reasonable.  Staff thinks the City's expectations should be set upfront.  Staff would also ask for direction to develop a recommendation on this item.

(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.

Provide recommendations for the City Council:
1. What do you think of the project?  What are your thoughts?
2. Should the Council/ staff continue to pursue? 
3. Do you support staff's recommendations/ do you have changes?