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HomeMy WebLinkAbout2015-10-11 PACKET 05.00.A. TO: Economic Development Authority FROM: Jennifer Levitt, Community Development Director/City Engineer DATE: November 6, 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 November 6, 2015 Page 2 of 7 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, all the necessary agreements were in place and the EDA purchased Home Depot for $2.25 million on November 4, 2015. As part of the Developers Agreement with Grove-Rainbow, a sale of the Home Depot to Grove- Rainbow must take place by May 1, 2016 (more details on the Developers Agreement are located in the Grove-Rainbow section of the memo). The City is working on the necessary contracts for sweeping of the parking lot, plowing of the snow at the site, and having the lights in the parking lot operational. 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 convenience 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 November 6, 2015 Page 3 of 7 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. The City Council approved the applications on October 7, 2015. The Developers Agreement with Hy-Vee also contains the business subsidy for the $26 million improvement proposed by the grocer. The EDA approved the Developers Agreement with the business subsidy on October 6, 2015, contingent on the public hearing for the subsidy to be held on November 10, 2015. The City Council also approved the agreement on October 7, 2015, contingent on the public hearing on November 10, 2015 as well. The original Developers Agreement with Hy-Vee, Inc. included 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. Economic Development Authority Grove Plaza Redevelopment November 6, 2015 Page 4 of 7 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. 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. Since the meeting, Hy-Vee has been working to achieve a more efficient site design and layout of their proposed store and convenience store. The Amended Developers Agreement includes the following changes: 1. Provides for $450,000 for the relocation of Merchants Bank to an acceptable site approved by the City located in the City of Cottage Grove. 2. Provides for demolition to start on May 2, 2016. 3. Requires that the store must be open by October 1, 2017. 4. If the Merchants Bank property is not acquired by Hy-Vee, there is no business subsidy of $450,000 and the dates of opening revert to the previous commitments in the original Developer’s Agreement. 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 area of acquisition and sale is shown below. Economic Development Authority Grove Plaza Redevelopment November 6, 2015 Page 5 of 7 The necessary action is to hold a public hearing on the land sale of the ISD 833 land, which is part of the Developer’s Agreement with Hy-Vee. The previous action by the EDA on October 6, 2015 approved the Purchase Agreement with ISD 833, which contained 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. The sale of the property to Hy-Vee for $1.00. 7. Closing by May 1, 2016. 8. Contingent upon the following: Hy-Vee closing with Grove-Rainbow, Hy-Vee entering into a Developers Agreement with the EDA, Grove-Rainbow entering into a Developers Agreement with the EDA. The following exhibit shows the proposed improvements: Economic Development Authority Grove Plaza Redevelopment November 6, 2015 Page 6 of 7 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 Developers Agreement with Grove-Rainbow provides for the sale of Home Depot parcel in the value of $1,950,000. The elements of the Developers Agreement are as follows: 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 tenant space by Grove-Rainbow L.P. 4. Contingent upon the following; Hy-Vee closing with Grove-Rainbow, and Hy-Vee entering into a Developers Agreement with the EDA. Recommendation Hold a Public Hearing: 1. It is recommended to hold a public hearing for the business subsidy and land sale of ISD 833 property to Hy-Vee. 2. It is recommended to adopt the resolution approving the contract for private development, approving business subsidy agreement, and authorizing sale of land. 3. It is recommended to approve the Amended Developers Agreement with Hy-Vee. Economic Development Authority Grove Plaza Redevelopment November 6, 2015 Page 7 of 7 Hold a Public Hearing: 1. It is recommended to hold a public hearing for the business subsidy and land sale of Home Depot to Grove-Rainbow, L.P. 2. It is recommended to adopt the resolution approving the contract for private development, approving business subsidy agreement, and authorizing sale of land. 3. It is recommended to approve the Developers Agreement with Grove-Rainbow, L.P.