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HomeMy WebLinkAbout1987 05-06 EBFAMEMORANDUM TO: Earle FROM: Brad DATE: April 1 SUBJECT: Earle Brown Farm Subcommittee :ioffman, HRA Coordinator„ 27, 1987 1 ;6 Brown Farm Development ' The Earle Brown Farm was acquired by the Brooklyn Center HRA in response to a significant community desire, as expressed in a survey, to preserve a dominant part of the City's historical ' roots. So, in 1985, when the Farm was purchased, it was done with the expressed intent to preserve the existing buildings. At that time, it was determined that the preservation of the buildings would hold precedence over the use of the buildings. ' Specific uses for the individual farm buildings would be subject to a study and recommendation from a citizens advisory committee. The task of the advisory committee was to consider various proposals for the development of the Farm. The committee established a number of criteria by which a prospective development would be judged. First, to the extent possible, the buildings were to be preserved and restored to their original character. Second, any development was subject to specific traffic generation limitations. A study by Short-Elliott for the immediate area described in numerical fashion the traffic capacity of the surrounding streets at peak hour traffic. A total of 229 peak hour trips (automobile) was established for the ' Earle Brown Farm. Third, while the community has indicated its willingness to support, maintain and operate the Farm on an ongoing basis, priority would be given to developments capable of supporting itself. It was the intent to have the Farm generate enough income to avoid the necessity of requiring general property tax support. Fourth, because of the historical significance of the Earle Brown Farm and its part in the ' development of northwestern Hennepin County, developments providing the greatest public access to the grounds and access to the buildings was to be considered desirable. With these ' guidelines .in hand, Brooklyn Center was, and is prepared to accept the Earle Brown Farm as a "park" but would prefer to see the Farm returned to a level of economic vitality it once enjoyed. Because of the manner in which the Farm became available to the HRA (through Al Beisner and a senior housing development), initial consideration was given to a senior center. In December of 1985, a market study was commissioned to determine the appropriateness of such a use. The study differentiated between R -2- April 27, 1987 ' young seniors (55-64) and older (65 plus). Centers catering to the older population (65 plus) tended to be dominated by that ' group. The market analysis indicated that it was possible to market to the 55-65 age group, however, it would not be an easy task. The proximity of a senior development adjacent to the development would tend to influence the direction and use of the Farm. The concern was that the Farm, once developed, would serve only a small segment of the population. The market analysis of the senior center demonstrated the need for a publicly-funded transportation system in order to assure adequate numbers of people at the center. The transportation system would add another fiscal burden to the operational expense of the Farm. overall, it is very questionable whether a senior center would generate adequate revenues to offset the annual operating costs of the Farm. Since receiving the market analysis, the committee has broadened its scope of potential uses. Again, the study ' noted that seniors do not necessarily want to be isolated from other age groups. ' The market study provides other information that has proven to be worthwhile. While recognition and identification with the City of Brooklyn Center diminished with distance from the City, identification of the Earle Brown Farm (those red buildings by the old belt line) remained very high. People know where and what the Earle Brown 'Farm is. Just as important, they know how to get there. This is extremely beneficial to any development one might consider for the Farm. Throughout 1986, the committee discussions relative to uses ' broadened considerably. Restaurants, offices, convention centers, recreational facilities, rental halls, board and breakfast, and others were considered. By November the committee agreed to focus on a multipurpose facility for the hippodrome and stable with the other out buildings as either support facilities or as office space. From that point, the focus has been increasingly on a trade show center. ' As a final check, a Request for Proposal (RFP) was sought from private developers for the development of the Farm. It was intended to see if the private sector, with sufficient inducement, could provide the community with a better plan. With the limitations previously described, the HRA solicited proposals with all terms and conditions negotiable. There were significant tax credits available, even under the new law, as well as a ' negotiable "blank check" relative to financing and assistance from the HRA. In essence, we asked what they, the developer, would need to make the project work. ' A total of twenty-seven 27 different entities requested the RFP specs. The group included developers, architects, engineers, and i V -3- April 27, 1987 finance people. Only one (1) proposal was received. The fact that the HRA received only one (1) proposal indicated that the project is a difficult and complex development. In a follow-up, I contacted eight (8) of the entities that had requested the RFP specs in order to determine why they had not submitted a proposal. The response was that it was too small, (40,000 plus ' square feet) to make good economic sense or their inability to come up with a good development concept. Jim Ryan, Ryan Construction, stated that it was not the kind of construction he does. He felt that they would not be the appropriate developer t for the site. However, Ryan Construction for obvious reasons remains very interested in the development of the site. John Buzek, AEC Engineering, was unable to interest anyone in the project because there are other developments that are less complicated and more economically rewarding. The same was true for Dennis Batty, Architects and Associates. Greg Watson, AHW- Bandana Square, has been very interested in the project from the beginning and is still interested in the actual construction. However, AHW was not interested in an equity position or a long- term lease commitment. He did indicate a desire to put together ' a development and/or management proposal. Others contacted included: Mike Podawiltz, Dick Gelyard, Dick Krier, and Dennis Houck. The general tone of the responses was that the investment return was not sufficient. The one proposal received by the HRA was from Al Beisner. He ' proposes to develop the Farm in the fashion last described by the committee. The hippodrome-stable would function as a trade show center with banquet facilities and office space. The other buildings would become leasable office space. No plan for the house--was-contemplated: Al's `offers to provide the construction management and be the operations manager thereafter. The exact terms would be subject to negotiation, but he sees a partnership between himself and the HRA. The HRA would have to finance the restoration and any shortfalls in the operation. Al Beisner would not have an equity position in the project. ' The proposal at first glance appears to be very one-sided, and that is to be expected at this point. It would allow for immediate (this year) construction with an individual well-known to the community. It would relieve the HRA of the obligation of managing both the construction and operations of the Farm. At this juncture, the HRA will have to finance and operate the Farm. As noted, the exact relationship between Al Beisner and the HRA would be subject to a contract negotiation. The concern that the committee and the community must address is the appearance of a conflict of interest for Al. If the HRA were to proceed with an agreement, there would always be some level of concern, whether justified or not, that the Farm development -4- April 27, 1987 would function to support his adjacent development. Scheduling of events could easily reflect the needs of his development. Also, there would be a perception that AI)has had an inside track to the Farm. To the extent that he was the one who brought the Farm deal to us originally and created the opportunity for Brooklyn Center to obtain the Farm, this is true. However, relative to the development and operation of the Farm property, ' the project has been wide open to everybody. I make these points so that everyone is aware of the possible conflicts. I believe that most of these concerns could be addressed contractually. As to the concept of a trade show center,~\ Al's proposal included ' an economic analysis of operation costs and-, income projections (see attached). His projected operations cost is not significantly different than an earlier one submitted to the committee by myself. The difference is reflected in a more defined use for the Farm, primarily management costs. -O erating p costs will be approximately $350,000 annually. AI' costs ($857,650) include a principal and interest payment' on the ' restoration of the Farm. It has always been the HRA's intent to restore the buildings with tax increment financing thus income , from the Farm would not have to support that payment. Income projections for the Farm could range from $611,000 annually to $880,000. Approximately 20,000 square feet is available for lease at $11.50 per foot net. The key is the trade ' show center. Al projects income on 200 event days (not an unrealistic figure) at $2,700 per day or $.20 per foot. At a very low figure of 100 event days the center along with banquets would still generate $350,000 annually. ' Since the trade show center is key to the successful operation (financial) of the Farm development, the design and layout should ' place a priority on this case. In the event the concept failed, the facility would easily accommodate other civic uses. However, approximately 100 booths could be set up in the hippodrome. To ' the extent possible we should try to expand on the number of potential booths. In Minnesota, there are ten (10) facilities listed in the Trade Show and Convention Center Guide similar in size. Five (5) of those facilities are in the metropolitan area. The real competition for our proposed trade show would be the Hyatt ' Regency and the Radisson Hotels. While the hotels negotiate the fee for the trade show area, they do require a minimum number of rooms be rented. Average rents at the Radisson are $.35 per foot net, subject to negotiation based upon the number of rooms rented. I have discussed this situation with Steve Anderson, Ramada Hotel Manager, and I am of the opinion that the local hotels would opt to pay our fee to book events here based on the V -5- April 27, 1987 number of rooms they rent. The Tourism Bureau might function well to coordinate hotel bookings for the center. I also discussed the trade show center with Brede, Inc., a trade show supplier, who indicated that the smaller shows (100-150 booths) are the fastest growing part of the industry at this time. ' There are hundreds of shows constantly in the market. To realize the income projection (minimum) discussed, the center would have to attract approximately thirty (30) to thirty-five (35) shows per year. Again to be successful, the center should give priority in design and scheduling. of great advantage to the community for other events is that such shows are generally booked several years in advance, thus allowing other uses to be ' scheduled for the hall. Other uses would include dinners, dances, recreational activities, weddings, and so forth. ' Assuming the Farm is developed along the lines discussed so far, the question now is "how do we proceed?" The options seem to range from the HRA being in total control of the development and ' management to one where the project is handled totally outside of HRA influence. The HRA could function as the general contractor for construction purposes hiring an architect and a project manager as well as all of the subcontractors. Upon completion, scheduling, leasing, and overall management would be handled by staff. The advantage is the obvious control, however, the HRA is not staffed to take on this project. At the other end, the project could be turned over to a private party (similar to Al ' Beisner's proposal) for development and management. In essence, the HRA provides a general concept and beyond that is uninvolved ' in the design, construction or management of the project or site. I would propose the following development concept. The HRA should contract with a developer selected to help design the 1 facility. The developer in turn would act as the general contractor having a turn-key contract with the HRA to provide a finished product. The contractor would be responsible for hiring all subs independent of the HRA,• and would be paid a fee based ' upon a percentage of the total budget cost. Budgets would be established as part of the design process. Change orders in excess of $30,000 would be reviewed by the Earle Brown Farm subcommittee and approved; change orders in excess of $50,000 would be approved by the HRA. The contractor would be obligated to keep staff advised of all changes. This is a very important area because there will be many changes given the nature of restoration work. 'It is not straightforward like new construction. It will be important to streamline the decision- making process on day-to-day construction in order to keep costs down. The architect and the developer could be a packaged deal or retained separately. However, both should come on at the same time. The most important factor in the restoration of the Farm -6- April 27, 1987 will be selecting an experienced developer and architect, and it would be their contractual responsibility to bring the project in on time and on budget. In the design phase, the eventual manager of the facilities should be on board to take part. I would recommend that the subcommittee interview prospective developers. At a minimum, Al Beisner and AHW should be considered. Others could be identified. The recommended developer(s) would make a presentation to the committee as a whole and to the HRA. Management proposals should also be considered at the same time. It will be important that we select a management firm prior to any design work of the facility. A background in trade show management, while not mandatory, would be a plus. With a development team in place, the actual restoration can begin. The committee should note there are several legal concerns relative to this approach. However, it is not a matter of can it be approached this way, but rather it is a matter of structuring it properly. I should be receiving a report from our Attorneys on the matter by April 29. In conclusion, I would recommend that the committee make a determination relative to the level of participation the HRA should play in the development and operation of the Farm. Obviously, there will need to be some overview power on the part of the HRA. Once the role of the HRA is defined, the committee ' should start the process of selecting a development team (contractor, architect, and management). We will discuss this matter in greater detail at out next meeting. The meeting is scheduled for Wednesday, May 6, 1987 at 7:30 a.m.