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HomeMy WebLinkAbout2015-10-06 PACKET 04.01. TO: Economic Development Authority FROM: Jennifer Levitt, Community Development Director/City Engineer DATE: October 1, 2015 RE: Grove Plaza Redevelopment Background/Discussion The City of Cottage Grove has been actively working on redevelopment plans for the Grove Plaza Center since the vacating of the site by Home Depot and Rainbow. A redevelopment opportunity was presented when those anchor tenants left the site. The current plan involves multiple entities to make this redevelopment a success. This memo will outline the steps and agreements neces- sary to enable the redevelopment to move forward. The site is bounded by 80th Street and East Point Douglas Road. The Turbo Nails/Starbucks, Noodles & Company/AT&T/Chipotle, and Merchants Bank properties will not be impacted by the re-development project with the exception of shared access drives, off-street parking, and land- scaping. Hy-Vee is proposing to redevelop the former Rainbow Foods’ 10.66-acre site by demol- ishing the former 65,000 square foot grocery retail store, the 19,000 square foot former Bingo Hall, and that portion of the retail strip center that is currently occupied by American Motor Sports Bar and Grill. The existing stormwater drainage basin in the west corner of the site will be filled in and a new underground storage system will be installed. All of the impervious parking and drive aisles and most of the green space/landscaped areas will be reconstructed. An aerial showing the businesses within and nearby the proposed project is below. Economic Development Authority Grove Plaza Redevelopment October 1, 2015 Page 2 of 6 Home Depot The EDA provided direction to staff to move forward with the purchase of Home Depot on July 17, 2015, if agreements with Hy-Vee and Grove-Rainbow could be achieved. Since that time, commitments and agreements have been drafted to facilitate the EDA moving forward with a purchase of Home Depot for $2.25 million. At this time all contingencies to the purchase agree- ment have been exhausted and the EDA is at a point that the $50,000 earnest money is lost if a closing with Home Depot does not occur. Staff is currently working on the title work for the site to prepare for closing. A closing has been scheduled with Home Depot for November 4, 2015. As part of the Purchase Agreement with Grove-Rainbow, a sale of the Home Depot to Grove- Rainbow must take place by May 1, 2016 (more details on the Purchase and Developers Agreement are located in the Grove-Rainbow section of the memo). Hy-Vee Hy-Vee, Inc. is proposing to redevelop the former Rainbow Foods building within the Grove Plaza Shopping Center. The development will include preliminary and final plat, boundary line adjust- ments, site demolition and the construction of a new 92,800 square foot grocery retail store and a 3,100 square foot motor fuel station/convenience store. Hy-Vee filed the following five planning applications to redevelop the west half of the Grove Plaza Shopping Center: 1. Preliminary and final plat applications to re-subdivide Lots 1 and 2, Block 1 in the Grove Plaza 2nd Addition, except for that parcel where Merchants Bank (PIN 17.027.21.21.0047) is located. The affected parcels are generally described as 7210 East Point Douglas Road (former Home Depot), and 7280 East Point Douglas Road (former Rainbow Foods). 2. A site plan review for the redevelopment of the west one-half of the Grove Plaza Shopping Center for purposes of constructing a motor fuel station with a 3,100 square foot conven- ience retail store, 92,800 square foot grocery retail with a pharmacy, restaurant with liquor license, banking, off-sale liquor retail, outdoor garden center, and 569 off-street parking spaces. 3. A conditional use permit for each of the following uses: a. Restaurant with on-sale liquor (160 indoor seating capacity) b. Drive-through lane for pharmacy pick-up c. Grocery pick-up lane d. Comprehensive sign plan for the overall site development e. Motor fuel/convenience store with outdoor displays f. Outdoor display in front of the grocery store g. Vertical designed wind turbines 4. A variance to the City’s minimum parking setbacks, minimum landscaping regulations, off- site signage, and outdoor temporary/seasonal sales. 5. An interim conditional use permit for a seasonal garden center with a 2,000 square foot plastic shell over a hoop-framed temporary structure, which is proposed to be set-up in the westerly corner of the proposed Hy-Vee site between May 1 and July 1. The expiration date for this interim conditional use permit is proposed as July 1, 2020. Economic Development Authority Grove Plaza Redevelopment October 1, 2015 Page 3 of 6 The proposed Hy-Vee project site is located at 7280 East Point Douglas Road and is shown on the location map below. The Planning Commission approved the applications on October 28, 2015, and they are scheduled to be before the City Council on October 7, 2015. The Developers Agreement with Hy-Vee, Inc. includes the following elements and business subsidies: 1. Minimum improvements to the site are per the enclosed plan set. 2. Creation of 50 full-time or full-time equivalent jobs with wages of at least $11/hour, exclusive of benefits. 3. The project must be started by May 1, 2016. 4. Provides $400,000 for regional stormwater improvements to be made on site, which includes the removal of the existing regional stormwater basin and constructing an underground filtration system. 5. Provides for $980,000 for site infrastructure improvements, sanitary sewer, water and storm- water. Economic Development Authority Grove Plaza Redevelopment October 1, 2015 Page 4 of 6 6. If a future building pad, not depicted on the attached drawings, is proposed the EDA will assist financially to provide the public infrastructure to facilitate development of the building pad site. 7. A public hearing will be held on November 10, 2015 on the business subsidy. 8. Provides conveyance of 30,140 square feet of ISD-833 property for $1.00 following a public hearing on November 10, 2015. 9. Contingent upon the following: the EDA closing on Home Depot, Hy-Vee closing with Grove- Rainbow, Grove-Rainbow entering into a Purchase Agreement with the EDA. ISD 833 On October 1, 2015, Independent School District 833 approved the purchase agreement with the EDA for the acquisition of 30,140 square feet of property. The property acquisition is necessary to facilitate the larger grocery store and parking needs for the site. The property is proposed to be sold to Hy-Vee following a public hearing in November pending the execution of the agreements with Hy-Vee and Grove-Rainbow. The property acquisition area is shown below. The Purchase Agreement with ISD 833 has the following elements: 1. The purchase price of $6.25 per square foot multiplied for 30,140 square feet, bringing the total land price to $188,375. 2. The EDA agrees to relocate the northern access drive to the site. 3. The EDA agrees to remove the chain link fence, install curb and gutter, and repair the asphalt pavement. 4. The EDA agrees to relocate the school district’s private fiber optic line to avoid a conflict with the proposed Hy-Vee improvements. 5. The EDA shall provide payment to the school district if referendum for the middle school does not pass. If the referendum passes, then the City would provide a credit in the value of the land price to the proposed improvements on 65th Street if the improvements are ordered. 6. A public hearing will be held on November 10, 2015, for the sale of the property to Hy-Vee for $1.00. Economic Development Authority Grove Plaza Redevelopment October 1, 2015 Page 5 of 6 7. Closing by May 1, 2016. 8. Contingent upon the following: the EDA closing on Home Depot, Hy-Vee closing with Grove- Rainbow, Hy-Vee entering into a Developers Agreement with the EDA, Grove-Rainbow entering into a Purchase Agreement with the EDA. The following exhibit shows the proposed improvements: Grove-Rainbow The proposed redevelopment includes Grove-Rainbow selling Rainbow to Hy-Vee. As part of the agreement with Hy-Vee and Grove-Rainbow, Grove-Rainbow will retain the spaces occupied by Sports Clips, Hallmark, and the former MGM Liquor. This area will be added to the former Home Depot parcel. The EDA will then sell the Home Depot parcel to Grove-Rainbow in the value of $1,950,000. The elements of the Purchase Agreement and Developers Agreement are as follows: Economic Development Authority Grove Plaza Redevelopment October 1, 2015 Page 6 of 6 1. The EDA will hold the property, as a maximum, until May 1, 2016 and sell to Grove-Rainbow. 2. The EDA provides for utility costs associated with the Home Depot building and the property taxes until closing. 3. The sale price provides for a business subsidy of $300,000 due to the loss of leasable square footage. 4. A public hearing will be held on November 10, 2015 for the business subsidy. 5. Contingent upon the following; the EDA closing on Home Depot, Hy-Vee closing with Grove- Rainbow, and Hy-Vee entering into a Developers Agreement with the EDA. Recommendation 1. It is recommended to approve the Developers Agreement with Hy-Vee, Inc. with authorization given to the City Attorney to make any necessary language modifications which do not impact financial obligations. 2. It is recommended to approve the Purchase Agreement with ISD 833. 3. It is recommended to approve the Purchase Agreement with Grove-Rainbow with authoriza- tion given to the City Attorney to make any necessary language modifications which do not impact financial obligations. 4. It is recommended to approve the Developers Agreement with Grove-Rainbow with authori- zation given to the City Attorney to make any necessary language modifications which do not impact financial obligations.