HomeMy WebLinkAbout2006.02.21 EDA Packet AGENDA
CITY OF HUGO
ECONOMIC DEVELOPMENT AUTHORITY MEETING
TUESDAY, FEBRUARY 21, 2006 - 8:30 AM
HUGO +CITY HALL
8:30 am 1. Call to Order
8:31 am 2. Roll Call
• Introduction of New Commissioner—Tom Denaway
8:32 am 3. Approval of Minutes
• EDA Meeting of January 17, 2006
8:35 am 4. Report on Outcome from January 18, 2006 Downtown
Redevelopment Plan Open House
9:00 am 5. Discussion on Next Steps toward Implementing the
Downtown Plan
• Informal Meetings with Perspective Developers
• Solicit Proposals through RFP, RFQ or Other Selection
Process
• Discuss Qualifications and Information Required from
Prospective Developers
9:25 am 6. Report on February 16, 2006 Meeting w/Springsted & Building
Inspectors
10:00 am 7. Hugo Kidz `n Biz Fest Schedule for April 30,2006
10:15 am 8. Community Development Intern Position Update
10:30 am 9. Adjournment
CITY OF HUGO
COMMUNICATIONS LIST
FEBRUARY 2006
Economic Development Authority
Name Term Expires Fax Number Home Phone
Address (six year terms) E-Mail Address Office Phone
Fran Miron, President
15250 Homestead Ave. 12-31-2006 (651)429-5961
Hugo, MN 55038
Michael E. Granger (651)426-8171(home)
12715 Ethan Ave. N 12-31-2008 (651)653-4631 (651)653-4648(work)
White Bear Lake, MN 55110 megranger(a usinternet.com (612)805-5751 (cell)
Jan Arcand, Treasurer
1850 Cedar Avenue, 12-31-2006 (651)653-6402 (651)429-2930
White Bear Lake, MN 55110
Jim Bever (651)426-2240(home)
7131 132nd St. N 12-31-2008 (651)426-5809 (651)307-3578(cell)
White Bear Lake, MN 55110
Phil Klein, Vice President
6760165 1h St. 12-31-2009 philklein7(@aol.com (651)653-7152
Hugo, MN 55038
Nick Skarich
6265 Egg Lake Rd. N 12-31-2010 (612)851-4920 (612)851-5907
(a�
Hugo, MN 55038 nskarichnorthiandsecurities.com (651)429-3463
Tom Denaway
4385 Empress Drive N.#1 12-31-2007 tdenaway(aahoo.com (763)218-4338(cell)
Hugo, MN 55038
CITY STAFF: Community Development Director Bryan Bear— Executive Director
City Administrator Mike Ericson — Secretary
Finance Director Ron Otkin — Assistant Treasurer
\Documents and Settings\intern\Local Settings\Temporary Internet Fi1es\0LK6F\01 1906(2).doc
Hugo downtown redevelopment progresses
by Jeffrey Ayer Chuck Haas, Becky Petryk, • Approved the encroach- county engineer, Sandberg
and Frank Puleo, along with ment agreement for Pineview held that "(t)he 33-foot pre-
Correspondent City Attorney Dave Snyder, Meadows 2nd Addition Home scriptive right of way does
Community Development Owners Association to build a allow us to utilize this corridor
Without any hitch,the Hugo Director Bryan Bear, City 340-by-4400t retaining wall for transportation purposes,
City Council on Feb. 6 unani- Engineer Jay Kennedy, and behind the town homes on the but does not allow a lot of flex-
mously approved the overall City Clerk Mary Ann Creager. east side of Flay Avenue, just ibility. to route snowmobiles
Downtown Redevelopment Councilman Mike Granger south of 104th Street, to pre- other than where they current-
Process, setting in motion the was absent. vent soil erosion. ly operate."Sandberg also said
possibility that construction In other actions, the coun- • Approved the application current snowplow procedures
could begin by late 2006 across cil: from Ricci's of Hugo for renew- and signage are adequate.
from City Hall. • Approved a home occupa- al of its 2 a.m.closing time. •Approved scheduling the I- r.„
The process includes the tion ordinance amendment •Approved mechanic David 35W/E Coalition meeting, ' F
following steps,many of which that allows for owners of large Greeder's successful comple- which includes Hugo, Lino
will be done during February parcels in the urban residen- tion of his probationary period Lakes, Centerville, Forest ' V
and March: Building inspec- tial districts to apply for inter- and appointed him as a regular Lake, Columbus Township,
tions and analysis of findings; im use permits, which in turn city employee. Public Works and Washington and Anoka ' Ni
drafting Tax Increment allows for rural residential Director Chris Petree recom- Counties, for May 18, 2006,
Finance district plans and home occupations to exist.The mended the appointment cit- beginning at 7 p.m. '
budgets; public hearings in amendment comes on the heels ing Greeder's efficiency which • Approved the 2006 City
April or May 2006; additional of a request by resident Ann allows the city to have repairs Focus Goals and Ongoing '
public information meetings Thompson during a public completed "in-house" and Priorities lists. Items include
as necessary; having the EDA hearing session held during a saves money a focus on economic develop- '
determine how to proceed with City Council meeting on Jan. • Approved the regular ment, transportation plan-
developers; public hearings to 16. meeting date change for both ning, public safety, multiple
develop a TIF district; and • Approved the purchase of the City Council and the park projects, updating the
selecting the developers for the two vehicles for the Hugo Fire Economic Development comprehensive plan, Rice
first phase of construction, Department, which includes a Authority to Tuesday, Feb. 21, Lake Management Plan, set-
which will likely begin across Ford Expedition XLT 4x4,Ford as the second regular meeting ting up council workshops,
from the current city hall. F-350 pickup, and an of the month falls on and recodification of city r•
In related action, the coun- ATV/trailer-grass rig. Fire Presidents Day. code.
cil approved a letter be sent to Chief Jim Compton will use •Directed staff to communi- On a related note,the coun-
property owners within the the first vehicle, the second cate the city's efforts regarding cil also approved allowing
confines of the proposed TIF will be used as a water tank snowmobile safety along Mayor Fran Miron to work
district requesting permission truck,and the latter will serve CSAH 57 to citizen Larry Ehret directly with City Attorney
for interior inspections as as part of a grass fire rig.After in the form of a letter. While Dave Snyder in reviewing cur- I R�
required to establish the dis- the subtraction of a $2,000 the city had shared Ehret's rent legislation and then
trict. Department of Natural concerns with Washington developing a plan regarding
In attendance at last week's Resources grant, the total cost County officials, in a response the Rice Lake Management
meeting were Mayor Fran of all vehicles and equipment letter by Wayne Sandberg, Plan to the council in the near
Miron, council members came to$105,145. deputy director and assistant future.
I
COUNTY BRIEFS I
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Counties apply for improve communication. to students in a mandated selling 14 pieces of property
waiver The Web address will remain peace officers skills program, which were forfeited to the W
equipment the same, www.co.ramsey two-year law enforcement state for nonpayment of
Both the Washington and mn.us. program, vocational-techni- taxes. The properties are
Ramsey County boards Highlights of the new site cal police program, or four- located in Forest Lake, New 1
requested the Minnesota include: year college criminal justice Scandia, Oakdale, Pine
state auditor waive require- •User-friendly format. program.To qualify,students Springs and Lake Elmo.
ments about the brand of vot- • Navigation bar with top- must have completed at least For more specific informa
ing equipment they must ics geared toward the general one year of a two-year pro- tion on the sale, potential
purchase to comply with the public. gram or two years of a four- buyers may call Bogdan
federal Help America Vote •Improved search engine. year program. Filipescu at 651-430-6197.
Act.The federal act mandates • Consistent layout, fonts, Applications will be Information will also be
that all voters must be able to colors and use of photo- received until March 11. available on the Washington
cast their ballots without graphs. Application forms and a County Web site,
assistance, regardless of • Reader options to sup- statement of procedures are www.co.washington.mn.us,
physical ability port the visually impaired. available by contacting Jill closer to the sale date. Iw
The secretary of state is • GovDelivery e-mail sub- Strong at the Washington
An Analysis of the
Market Potential for
Housing, Retail, and
Office Uses in
Downtown Hugo, Minnesota
[Draft for Discussion]
Prepared for:
City of Hugo
Hugo, Minnesota
December 2005
Vield
Research Inc.
615 First Avenue NE
Suite 400
i
Minneapolis, MN'S5413
612.338.0012 %�
Aeld
Research Inc.
1
December 27,2005
Mr. Bryan Bear
Community Development Director
City of Hugo
14669 Fitzgerald Avenue North
Hugo,Minnesota 55038
Dear Mr. Bear:
Attached is a draft of the study entitled"An Analysis of the Market Potential for Housing, Retail, and
Office Uses in Downtown Hugo, Minnesota." Our research includes a review of the demographic
characteristics and growth trends in the Hugo area,and of the existing supply of and market conditions for
housing,retail, and office space.
Based on this analysis,we find that Downtown Hugo can support a variety of housing products and
additional commercial space, consistent with uses outlined in the Downtown Redevelopment Plan. Our
calculations show demand for 596 to 726 additional housing units through 2015,more than Downtown
can likely accommodate with its available supply of land. Our calculations also indicate that the Down-
town can support 145,500 additional square feet of retail space through 2015, and 30,900 to 37,775
additional square feet of office space through 2015. Detailed findings and recommendations for each land
use can be found in the Conclusions and Recommendations section of the report.
We have enjoyed performing this study and are available if you need additional information.
Sincerely,
MAXFIELD RESEARCH INC.
Mary C. Bujold Grant Martin
President Senior Research Analyst
Matt Mullins
Senior Research Analyst
Attachment
//Q
612-338-0012
612-338-0012(fax)612-904-7979 /
615 First Avenue NE,Suite 400,Minneapolis,MN 55413
www.maxfieldresearch.com ��
EXECUTIVE SUMMARY
Introduction
Maxfield Research Inc. was engaged by the City of Hugo to conduct an analysis of the market
potential for the redevelopment of Hugo's Downtown. Our research includes an analysis of the
demographic characteristics and growth trends in the Hugo area, and of the existing supply of
and market conditions for housing, retail, and office in the area. Based on this data, we quantify
demand for additional housing units, retail space, and office space through 2015 in Downtown
Hugo. Our demand calculations and recommendations are intended to serve as a guide in
developing a strategic plan for the Downtown.
Downtown Overview
► Hugo is a suburban community of approximately 10,000 people located on the northeastern
fringe of the Twin Cities Metro Area. Hugo is starting to see significant growth because of
demand for new housing and its supply of developable land. But the City and its Downtown
still retain a rural feel.
► Dramatic growth in the next ten year will drive demand for housing, office, and retail in
Downtown. Between 2000 and 2010, Hugo is projected to add approximately 12,000 people
and 4,500 households. These figures represent a population growth of 190% and a house-
hold growth of 215%.
► Downtown Hugo is approximately ten blocks along Forest Boulevard (Highway 61) which
runs at a slight angle from south to north through the city. Historically, the Downtown, like
downtowns in many other small communities, contained businesses that serviced the sur-
rounding agricultural economy. The small town character of Hugo's Downtown remains to-
day, despite the fact that Hugo is transforming into a rapidly growing suburban community.
► Downtown strengths include:
o Existing Downtown Infrastructure;
o Adjacent Residential Base;
o Adjacent Business Parks;
o Traffic Volume (Visibility);
o Existing Downtown Draws; and
o Room to Expand.
► Downtown weaknesses include:
o Lack of Larger"Supporting Retail";
o Access to Surrounding Communities; and
o Absence of Downtown Draws.
Two critical factors will drive demand for housing, retail, and office uses in Downtown Hugo,
and will affect the types of uses that will be feasible in the area.
MAXFIELD RESEARCH INC. 1
EXECUTIVE SUMMARY
1. Dramatic household growth in Hugo and the surrounding communities.
The City of Hugo is projected to add approximately 4,600 households between 2000 and
2010. These households will want a variety of housing options, ranging from single-
family homes to various multifamily housing product types. Many will be attracted to
housing in close proximity to services and in a pedestrian-oriented neighborhood, as en-
visioned in the Downtown Redevelopment Plan.
In addition, new households in the City of Hugo and surrounding communities will in-
crease demand for retail goods and services, thereby increasing the need for commercial
space in Hugo.
This growth represents an opportunity for Downtown Hugo, bringing new households in
the area and new businesses to serve these households.
2. The availability of better commercial sites nearer to Interstate 35E.
Demand for commercial space—both office and retail space—in the City of Hugo and
surrounding communities will be strong. However, there is a good deal of undeveloped
land available near the intersection of County Road 14 and Interstate 35E to accommo-
date this demand. Downtown Hugo may present a second-best alternative for many busi-
nesses looking for commercial space in the area.
While this fact represents a liability for Downtown Hugo, commercial development can
still thrive in Downtown Hugo, as long as an appropriate amount of commercial space is
developed, the right types of users are targeted, and lease rates are appropriate given
Downtown's location. In order to be competitive, lease rates in Downtown Hugo will
have be lower than higher profile sites along Interstate 35E.
MAXFIELD RESEARCH INC. 2
EXECUTIVE SUMMARY
Demand Summary
The following table summarizes our total demand calculations for the amount of each use that
could be captured by Downtown Hugo during the remainder of this decade and through 2015.
Detailed recommendations, including timing and appropriate lease rates and pricing are found in
the Conclusions and Recommendations section near the end of the report.
SUMMARY OF DEMAND
DOWNTOWN HUGO
DECEMBER 2005
Type of Use 1 1 1 1 1 1 I
Housing
General-Occupancy
Single-family For-Sale Units 19 to 39 38 to 75
Townhome For-Sale Units 49 to 58 176 to 207
Condominium For-Sale Units 0 to 0 47 to 70
Rental Units 14 to 17 25 to 32
Age-Restricted(Senior)
Adult/Few Service For-Sale Units 10 74
Adult/Few Service Rental Units 11 10
Congregate Units 29 40
Assisted Living Units 16 20
Memory Care Units 8 10
Total Housing Supportable 156 to 188 440 to 538
Retail
Neighborhood Retail(sq.ft.) 26,900 71,100
Specialty Retail(sq. ft.) 13,600 33,900
Total Retail Supportable(sq.ft. 40,500 105,000
Office Space Su ortable s .ft. 13,900 to 17,000 17,000 to 20,775
Source: Maxfield Research Inc.
Housing Market Recommendations
We recommend a ten-year phased approach that focuses on mid-density housing in the first
five years and gradually moves to higher-density housing in the second five year period.
Phase I—2005 to 2010
Single-Family Homes and Detached Townhomes—We recommend building 20 to 40 new
single-family or detached townhome units in Downtown in the first phase. Pricing for the
single-family homes, which typically range is size from 2,000 to 4,000 square feet, should
MAXFIELD RESEARCH INC. 3
EXECUTIVE SUMMARY
start at $325,000, or about $165 to $200 per square foot. Pricing for detached townhomes,
which are typically smaller in size (1,400 to 2,000 square feet), should start at $250,000, or
about $150 to $165 per square foot.
► Twinhomes and Main-Level-Living Styled Townhomes—We find demand for between 49
and 58 townhome units in Downtown Hugo in the first phase. We recommend building
about one-third of these units (between 16 and 20) as twinhome or main-level-living town-
homes. These units typically start at $250,000, or between $120 and $180 per square foot.
Units are typically between 1,600 and 2,200 square feet.
► Side-by-Side Townhomes and Back-to-Back, Entry-Level Townhomes—We recommend
that two-thirds of the townhome units be side-by-side and back-to-back townhome units—
between 32 and 40 units. Typically, back-to-back units are priced more modestly—starting
at $175,000, or $120 per square foot. Back-to-back units range in size from 1,200 to 1,700
square feet. Pricing for side-by-side units should start at $190,000, or $120 per square foot.
Sizes are typically between 1,200 to 2,000 square feet.
Phase II—2010 to 2015
► Single-Family Homes—We find demand for 38 to 75 units of single-family homes in Down-
town Hugo between 2010 and 2015. We recognize that there may not be land to develop
such housing after the first phase.
► Townhomes—We find demand for between 176 and 207 townhome units in Downtown
Hugo over the period. As with the single-family, we recognize that there may not be land
available to develop such housing over this period.
► For-Sale Independent Senior Housing—For-sale senior housing, either age-restricted con-
dominiums and townhomes or cooperatives, has become a growing trend in senior housing
in the last few years. Through our demand estimates, we find demand for about 70 units of
for-sale senior housing in Downtown Hugo. We do not recommend the development of an
age-restricted for-sale project and a general-occupancy for-sale project at the same time.
► Condominium—If an age-restricted, for-sale senior project is not built, we recommend
considering a general-occupancy condominium building with 50 to 70 units.
► Rental Apartment—Based on our demand calculations, we recommend building 25 to 32
rental units in the second phase. We recommend considering two options for the rental
housing, either a single affordable rental building or mixed-use buildings with rental units
above retail.
MAXFIELD RESEARCH INC. 4
EXECUTIVE SUMMARY
Retail Market Recommendations
► Downtown Hugo currently has about 132,500 square feet of retail space. Our calculations
show that the Downtown can support about 40,500 square feet of additional retail space, be-
tween 2005 and 2010, and up to 105,000 square feet of additional retail between 2010 and
2015. We estimate that two-thirds of the new demand will be for neighborhood retail serv-
ing the local population base.
► The types of stores that will be successful in the Downtown will be those that are able to
market their unique Downtown location as an experience that cannot be found at shopping
centers (the most likely store type will be specialty retailers). It will be more difficult for the
Downtown to attract retailers of shopping goods, which typically require either a larger size
store than can be accommodated in the Downtown(such as a discount merchandise store) or
which require a greater number of stores in a small area carrying similar items for which
customers can comparison shop (such as apparel).
► Based on the lease rates at new competitive shopping centers in the Market Area and sur-
rounding communities, we find that new space in Downtown Hugo must be priced lower
than higher-profile sites closer to Interstate 35E. Therefore, we believe net lease rates of
$13.00 to $15.00 per square foot should be attractive to many of the potential retail tenants.
Currently, many of the Downtown's current retail tenants own their buildings outright or are
paying very low rents and would not be able to afford net rents of$13.00 or more. It will be
important for the Downtown to retain some lower priced space, since the Downtown would
not be able to support its full potential entirely with space priced at$13.00 per square foot or
more.
► Redevelopment of existing commercial properties may require a public/private partnership.
The rents necessary to make redevelopment feasible would be higher than what potential re-
tail and office tenants could or would be willing to pay initially. Public assistance to help
reduce the cost of redevelopment to the private sector will almost certainly be necessary for
the commercial portion of the redevelopment to be successful in the next five years.
► Due to the increasing traffic counts and the realignment of County Road 8, we recommend
the first phase of Hugo's Downtown retail development to be located at the Highway 61 and
County Road 8 intersection. Furthermore, this intersection would result in the least amount
of acquisition costs and would not displace any of the existing Downtown tenants.
Office Market Recommendations
► There are no actively marketing office buildings in Hugo at this time. However, the recently
completed Victor Gardens Shops includes a mix of medical office and a daycare center.
Victor Gardens Shops net rents average $18.00 per square foot.
► Typical tenants occupying office space in Hugo are businesses serving the local household
and business base, such as dentists, chiropractors, optometrists, financial advisors, insur-
MAXFIELD RESEARCH INC. 5
EXECUTIVE SUMMARY
ance, and accounting and tax services. The average size of the space these businesses oc-
cupy is usually less than 2,000 square feet. Some potential users will seek space in tradi-
tional office buildings, while some may prefer space located above retail stores and some
may prefer street level retail space.
We identified seven multi-tenant office buildings in the Secondary Market Area. We
believe that many of the businesses in these office buildings serve households and busi-
nesses in Hugo. Over the long-term, new office space in Downtown Hugo would have the
ability to capture some of the tenants that are either currently in these buildings or would
consider moving into these buildings.
Net rents in selected SMA office buildings range from $9.00 per square foot to $16.00 per
square foot. Currently, most office users in Hugo are paying rents that are lower than the
current costs to construct new traditional office space.
Our calculations show that the Downtown can support an additional 31,000 to 37,700 square
feet of office space through 2015. We estimate that up to approximately 15,000 square feet
of office space could be built immediately to satisfy pent-up demand. We recommend
bringing the space on-line in several buildings with 10,000 to 15,000 square feet over the
remainder of the next ten years.
New office space in Downtown Hugo should capture net lease rates priced from $10.00 to
$13.00 per square foot. These lease rates are likely higher than what current tenants are pay-
ing at this time, as Hugo lacks newer office space and a number of professional office ser-
vice firms office out of their homes. However, these rates are lower than those found in
higher-profile sites in the Secondary Market Area. Rent for office suites is typically higher
than traditional office space. We believe that rents that range from $300 to $800 per month
would be competitive.
Office locations along Highway 61 and the newly redesigned County Road 8 will be most
appealing to potential office tenants. This is particularly true for a stand alone office build-
ing. Due to the increasing traffic counts and the realignment, we recommend the first phase
of office space development to be located near the Highway 61 and County Road 8 intersec-
tion.
MAXFIELD RESEARCH INC. 6