Agenda - Council Work Session - 05/01/2012

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CC Work Session 2. 1. Meeting Date: 05/01/2012 Submitted For: Darren Lazan By: Kathy Schmitz, Administrative Services Title: Consider Requests from Solomon Group Regarding Sunwood Realignment Project Background: The Development Management Team has been meeting with representatives of the Solomon Real Estate Group and Mid -America Real Estate - Minnesota (owners and leasing representatives, respectively, of the grocery -anchored retail center at the corner of Armstrong Boulevard and existing Sunwood Drive) regarding the pending Sunwood Realignment project. A number of issues have been discussed, including access off Armstrong Boulevard at the existing Sunwood alignment, additional signage in and around their site, preservation of a sight -line to the existing retail buildings, and a grocery exclusive on lands owned by the HRA. Previously, representative from Mid -America, the property management firm for Solomon, made a presentation to the HRA. Representatives from the Solomon Real Estate Group (property owners) have requested time before the City Council to make a presentation in regard to thier development interests. Attached to this case is the Grocery Exclusive request letter; an email summarizing Solomon's requests is included in the observation section. As previously discussed by the HRA, an exclusive for grocery uses as proposed by Solomon would have a considerable impact on the marketability of the retail land on the west side of the project. While the threshold for area proposed would allow grocery sales in The COR for smaller users as well as a large format retailer, it would preclude a "super" large format retailer on the HRA property. While the development team recognizes the commitment Solomon has made to the project and the community, the City needs to consider the long term impacts of such a restriction, and the possibility that Coborns may not be the grocery user for the entire duration of such an agreement - typically 20-30 years. Also worthy of consideration, but not addressed in Solomon's request, is the issue of consideration for an agreement of this type. Typically, if an exclusive agreement is granted it is in exchange for some consideration, either monetary or otherwise. Consideration may come in the form of a beneficial deal point in a purchase agreement such as the gas restrictions previously discussed. In this case, the development team believes the request is based in the desire to maintain the viability of an existing business that has remained committed to project. The HRA should consider whether this is adequate consideration, and If the HRA parcels are going to be encumbered in the manner proposed, there should be some discussion as to who ultimately holds such a restriction - the property owner (i.e., Solomon) or the tenant (i.e., Coborns). Observations: Email from Steve Johnson, Solomon. February 23, 2012 Heidi, After our last meeting with you and Darren, and discussing the current construction with some of our tenants, I feel what is best for all parties is to bring closure and certainty to our Tenants. Although I feel strongly about the rt-in access off of Armstrong, I think it best to drop that as an option and pursue the grocery size limitation, additional area on our pad, the visibility corridor we discussed and signage. Please let me know if you want to get together and lay out a plan to accommodate these requests so you may approach City Council as soon as practical and we can give our Tenants certainty on the project. I appreciate all of your efforts to date, and look forward to your earliest reply.