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HomeMy WebLinkAbout2.A. Senior Housing Update 4 ROSENIOUN1T EXECUTIVE SUMMARY CITY COUNCIL City Council Work Session Date: August 15, 2012 AGENDA ITEM: Senior Housing Update AGENDA SECTION: Discussion PREPARED BY: Kim Lindquist, Community Development AGy NO. Director ATTACHMENTS: August 6, 2012 letter from William APPROVED BY: Stoddard, Doran Development, August 9, 2012 letter from William Stoddard, Doran Development p� RECOMMENDED ACTION: Discuss and Provide Staff Direction ISSUE At the Council's work session in July, it was decided to begin discussions with Doran Development about developing the senior housing project on the Steeple Center site. Staff met with Bill Stoddard of Doran since that time to discuss timing, project scope, and economics of the project. The general parameters of the project had not changed from that of the RFQ or what has been conveyed to the Council previously. One issue that arose in the discussions is that the Doran group requested the land necessary for the senior housing portion be conveyed for $1. Staff indicated that the City is bringing a lot to the table; grants, school building demo, any environmental remediation, and enhanced public spaces that would benefit the senior housing residents that the City expected some compensation for the land dedication. It was explained that the City was interested in having the same contractor construct both the senior housing and the senior center (assuming cost savings for mobilization and coordination) and the City would pay cash for the senior center. However the financial arrangement had not been agreed to previously with Mr. Trucker, and the City would expect some reduction in overall cost of the senior center construction based upon our contributions to the project noted above. In light of the fact that Doran wanted the land for free, staff requested they submit a formal request which could be brought to the Council for discussion. It was suggested that information be provided indicating what offsets would be gained by the City which could compensate for giving away the land. On Monday August 6, staff received a letter from Bill Stoddard, Doran VP of Development requesting a development agreement reflecting the proposal below or purchase agreement for the land prior to expending large amount of money designing the facility. The letter proposal is summed up below: • Doran Companies will develop a senior housing complex with 80 to 92 units which will be a combination of independent living, assisted living, memory care and possibly care suites. • Doran Companies would be the owner of the senior housing which will include resident amenities such as cafe, library, theatre, marketplace and pub. • Doran would obtain a site survey, updated market study, and pay design fees for the senior housing and senior center project. • Doran Companies would own and operate the senior center and include health and wellness, occupational therapy and rehab (including facilities such as a pool and fitness equipment). They may offer memberships to the public. • Doran Companies would program the private senior center and perhaps the Steeple Center. • Doran Companies would pay for parking on -site that could be shared with the Steeple Center. • Doran Companies would pay taxes on the senior housing and senior center as they would be privately owned. • The City would provide the land for free to Doran Companies to permit construction of senior housing and senior center. • The City would demolish the school addition and address any environmental concerns on the property. • The City would contribute $1,000,000 to the private senior center. • The City would reimburse Doran up to $200,000 for site stormwater and rain gardens. • The City would reimburse Doran up to $95,000 for burying electrical wiring and street lights. • The City would reimburse Doran up to $70,000 for installing public sidewalks. • The City would reimburse Doran up to $7,500 for benches and sidewalks within the plaza. • The City would reimburse Doran up to $17,500 for the plaza. In total, the proposal anticipates the City would pay approximately $1,500,000 (based upon the Doran calculation for land costs and other expenses) for providing the private senior housing and private senior center on the site. There are two main issues associated with the proposal outlined above and in the August 6, 2012 letter. The first is the amount of money requested by the developer. At this point the City would be spending 1.5 million to entice private development on the site. Further, there is very little information about the project making it difficult to commit the expenditure of these funds at this time. When the City entered into the Development Contract regarding Waterford, the city had significantly more information to base its decision upon. The final development contract, where there was commitment of payment, included a site plan and building elevation, the developers pro forma, TIF qualifying reimbursables, and the minimum site improvements were identified; 12,000 square feet of office retail space and no more than 110 rental housing units. Currently, there is not enough information about the project size, density, site plan, building design and architecture, number of units and type to base a thorough development agreement on. Staff would be uncomfortable negotiating an agreement when so little information is available to determine if the developers vision and execution will be consistent with the goals and desires of the City Council. Secondly, and more importantly, the proposal before the Council is inconsistent with the stated goals of the Council and the previously distributed RFQ. Part of the anticipated project is to have a public senior center that would allow programming for city seniors but could also be used for other community groups such as RAAC. It was envisioned that the senior center could complement programming for the Steeple Center and would address previously stated concerns by the Rosemount Senior Group that they want their own space outside of the Community Center. The proposal to privatize the center and introduce a fitness center and rehab facility are inconsistent with direction stated for the senior center. The idea of selling memberships is inconsistent with the goal of the center as a space for the seniors, and other community groups, to gather at leisure and also provide some structured programming. In the end, the City would not receive a public senior center but would have 2 expended the funds reserved for that use. It is unclear if the developer believes this proposal is the only financially viable plan to obtain a senior housing project of the caliber they desire. Staff had a preliminary conversation with the developer indicating the above concerns, so they are aware of the inconsistency between their plan and the RFQ and stated Council goals. It is staff's understanding that Doran will have additional internal discussions which might provide additional information for the Council discussion. Staff will provide any additional updates at the meeting. On August 9, 2012 staff received another letter from Bill Stoddard further articulating their intentions regarding the senior housing project and the senior center. He notes that the ownership of the senior center is not the primary concern but rather the amenities available in the Center. Additional information is needed for the Council to make an informed decision about the proposal and how that impacts the site and the financial investment for the community. Based upon the letter, Doran representatives will be a the Wednesday meeting. 3 August 6, 2012 Ms. Kim Lindquist Dwight Johnson City of Rosemount 2875 145 Street Rosemount, MN 55068 RE: City of Rosemount Senior Housing Project Letter of Understanding Dear Ms. Lindquist It was a pleasure meeting with you, Dwight, and Dan last week to discuss our involvement in developing a wonderful senior housing project on the former St. Joseph School site you own. We have been rather busy preparing financial models, interviewing architects and more importantly learning and researching various models of senior, wellness & senior fitness centers that work in tandem with senior housing. At this time we request exclusive development rights in the form of a developer's agreement or purchase agreement for the land on which the senior housing portion of the proposed facility would be located prior to us expending large amounts of money designing the facility. In addition you mentioned that you were looking for about a $200,000.00 discount for our services on the senior center to build it. Instead we would like to form a joint venture with you on the senior /multi - generational center in which you would help us design it, give input on the programming we offer at it, and contribute about $1,000,000.00 to the development of it. We would build, own and operate it with your input. We feel it is an integral part of the success of the senior housing portion, may need to include wellness and rehabilitation/therapy equipment, a swimming/wellness pool, and other items leading to both a larger and costlier center than your budget allows. In Summary, the agreement would spell out the following items not limited to: 1) Doran Companies (Doran) intends to develop, design, build and operate an upscale senior living facility on the Steeple Center vacant property to consist of about 80 -92 units. Units to include independent living, assisted living, memory care and possibly care suites. Doran will submit under a PUD format to the City for the development governed by the Cities Downtown (DT) zoning district; 2) The senior living portion owned by us will include amenities such as a bistro /cafe, WiFi access and internet cafe, library, pub, theatre, activities areas, business center, sundries marketplace, and saloon spa; 3) Doran will be financially responsible for obtaining a site survey, updated Maxfield demand estimate, and outside architecture team for this project; 4) The City of Rosemount (City) has relocated the MERC gas substation and the County has performed a Phase I and II environmental assessment. The City will convey property to Doran that is free from contamination, demolish the school addition and remove asbestos or other hazardous material, and financially manage any other environmentally needs if any; 5) The City will reimburse Doran up to $200,000.00 for rain gardens and stormwater treatment under the parking lot from the LCDA Development Grant (LCDA Grant); 6) The City will reimburse Doran a (yet to be determined sum) for burying electrical wiring from the $95,000.00 LCDA Grant if any funds are left over after the City is first reimbursed from that portion of the Grant for the City's expenses from "Street Lights and burying electrical wiring;" 7) The City will reimburse Doran up to $70,000.00 for installing public sidewalks from the LCDA Grant; 8) The City will reimburse Doran up to $7,500.00 for Benches and sidewalks within plaza from the LCDA Grant; and 9) The City will reimburse Doran up to $17,500.00 for the Plaza between the senior housing, senior center, Robert Trail library, and Steeple Center. Senior Center/Multi- Generational Center We believe a successful community your size needs to offer services beyond just activities in the senior center and needs to include health and wellness, occupational therapy and rehab. It could possibly offer memberships to the public. One example is the Knute Nelson Wellness Center in Alexandria, MN which is connected to senior living, has a small pool and has about 700 members using their facility. We understand Rosemount desires a YMCA in town. We believe it could take ten years or so before something like that materializes and wish to offer some of those amenities in conjunction with our senior housing. Key Points for the City to Consider The area of the private senior housing and senior /multi - generational center owned by Doran would be now added to the tax base compared to the previous St. Joseph School which was not; The current tax base of the overall site may increase by about $12,000,000.00 to 16,000,000; More shared parking paid for by Doran will serve the public Steeple Center; A public plaza will be constructed behind the Steeple center; We will pay for the site survey, updated Maxfield report and architectural and engineering services for both the senior living and senior center; Our Activities Director can schedule and program numerous events in the senior center and Steeple Center (with City input) reducing the manpower needed by the city; and This development will be a focal point for generations to come. One in which the City, residents and surrounding communities will be proud of. Land Market Value and Conveyance The existing taxable land basis from the six existing PIDs is $362,100.00. We estimate that the senior housing portion takes 59.5, say 60% of the total Steeple Center land if we divided it down the current proposed parking lot. We therefore believe the market land price for us would be around $217,260.00 ($362,100.00 X .6). We do not feel it makes sense for us to trade money with you considering we would build the senior center. Therefore for consideration of the above Key Points we propose the city to convey the private portion of the land to Doran for $1.00(replatting fees by Doran). Please note that while we will pay for the surface parking that 20 -30 spots or so will be utilized by the senior center and Steeple Center requiring us to construct expensive underground parking. Underground parking can cost about $65.00/sf and we have budgeted about $1,000,000.00 for this added cost to us due to the small site and shared parking with the City. Other Senior Center Ownership Models and Thoughts We believe the design and integration of the senior center with the senior housing is of utmost importance. If the City shares our beliefs and design needs we feel this project is headed for success. We will incorporate many of the items from your "Space Needs" breakdown for the senior center furnished to us by the City. We would then under this model operate it with the Cities input, encourage the public to use it (offer memberships), and additional land would be added to the Tax Base. We at Doran Companies are excited to be a part of something special in Rosemount. It is now time to make the critical decisions so we can go off to the race tracks with you on this. Sincerely, William J. Stoddard Vice President of Development Doran Development, LLC (952) 288 -2047 bill @dorancompanies.com www.dorancompanies.com Cc: Rosemount City Council Dwight Johnson Dan Schultz File: Rosemount letter of understanding August 9, 2012 Ms. Kim Lindquist Dwight Johnson City of Rosemount 2875 145 Street Rosemount, MN 55068 RE: City of Rosemount Senior Housing Project Senior Center Wellness Component Dear Ms. Lindquist Per our recent conversation since our letter of August 6 we are sending this supplement and desire both to be forwarded to the City Council in regards to the Senior Housing and Senior /Multi- Generational Center we are proposing to develop in Rosemount. We would very much like a chance to discuss it at your upcoming Work Session meeting this next Wednesday August 15 To clarify, we do not care who "owns" the Senior Center." We also respect the offerings you wish to have there including crafts, coffee, computers and meeting rooms. We do care about the other amenities it can offer residents as extensive research with architects, senior housing owners and vibrant Senior Center models show us that seniors desire wellness programs and will use them when available. Wellness has evolved to be more than just fitness equipment rooms and may include aerobic and Pilates programs, therapy components, rehab areas, and even pools with water aerobics. We were under the impression you may not want to be constructing a pool at your Center and have roughly a budget of $1,000,000.00 for the Senior Center. That is why we recently offered as an option for Doran Companies to develop, own and operate it with the City reimbursing us your budget amount to help us equip it. In addition to the Alexandria, MN example I previously mentioned, Willmar, MN is another example of a City offering such amenities and enlisted about 400 new members in less than three months when opened. Only a block away from that Senior Center is a new YMCA which does not compete with it as the water temperatures and other amenities are more geared to seniors at the Senior Center. Their $25.00 /month membership fee is offset by insurance reimbursing residents $15.00 /month. We believe the Senior Center should have free availability for most of your described uses, and possibly could have a paying component for Wellness programs. Regardless, some type of joint venture /mutual programming and understanding needs to be developed for this component. In addition to the above we would like to reach an understanding with the City on the land, City responsibilities and questions of which LCDA Grant reimbursements are available as addressed in our earlier letter. To summarize, recent meetings included five design firms including WAI Continuum, ESG Architects, Kaas Wilson Architects, Pope Architects, and DSGW. These firms have been designing recent senior living communities some with wellness components. Those interviews along with other meetings with senior living stakeholders helped us formulate our strong opinions on the amenities we believe to be important to seniors of today and for the future. We look forward to meeting with you on Wednesday. Sincerely, William J. Stoddard Vice President of Development Doran Development, LLC (952) 288 -2047 bill @dorancompanies.com www.dorancompanies.com Cc: Rosemount City Council Dan Schultz File: Rosemount wellness It