ORIGINATING DEPARTMENT
To Committee(s)
| # | Committee Name | Meeting Date |
|---|---|---|
| 1 | Business, Inspections, Housing & Zoning Committee | Sep 28, 2021 |
Action Item(s)
| # | File Type | Subcategory | Item Description |
|---|---|---|---|
| 1 | Action | Development Project | Approving the Upper Harbor Terminal (UHT) Coordinated Plan. |
| 2 | Action | Budget | Approving dedication of net ground lease payments into a special revenue fund to support North Side anti-displacement and wealth creation initiatives. |
Previous Actions
2021-00448 - Upper Harbor Terminal exclusive rights extension and appropriation
2021-00231 - Draft Upper Harbor Terminal Coordinated Plan Update
2020-00033 - Upper Harbor Terminal Collaborative Planning Committee appointments
2019-00812 - Upper Harbor Terminal Collaborative Planning Committee Appointment
2019-00584 - Upper Harbor Terminal (UHT) Collaborative Planning Committee
2019-00550 - Upper Harbor Terminal Community Planning and Engagement Committee Appointments
2019-00111 - Upper Harbor Terminal Concept Plan
2018-01465 - 2019 Legislative Agenda and Policy Positions
2017-01467 - 2018 State Legislative Agenda
2017-01262 - 2018 Legislative Policy Positions
2017-00507 - Contract for Upper Harbor Terminal redevelopment exclusive rights
2017-00032 - Upper Harbor Terminal redevelopment master developer team selection
Ward / Neighborhood / Address
| # | Ward | Neighborhood | Address |
|---|---|---|---|
| 1. | Ward 4 | Camden Industrial | 3800 First St N |
| 2. | Ward 4 | McKinley | 3360 First St N, 51 34th Ave N, 51 36th Ave N, 2 36th Ave N, 3639 Washington Ave N, 3648 Washington Ave N, 3700 Washington Ave N, 3701 Washington Ave N |
Background Analysis
The City Council approved a Concept Plan for redevelopment of the City-owned Upper Harbor Terminal (UHT) site in March 2019. At that time the Council established the Upper Harbor Terminal Collaborative Planning Committee (UHT CPC) to work with City of Minneapolis (City) staff and the development team to advance the Concept Plan into a more detailed Coordinated Plan for redevelopment of the UHT site. Staff and UHT CPC members presented a draft Coordinated Plan to the City Council in February 2021. This report describes the planning and community engagement activities informing the Coordinated Plan since approval of the Concept Plan, summarizes the final Coordinated Plan, and outlines the next steps towards the multiple phase redevelopment of the UHT site.
In previous reports to the City Council on this project, staff have estimated the need for between $15 million to $20 million in City-funded support to implement Phase 1 of the Coordinated Plan, not including competitive affordable housing resources. This need includes approximately $10 million of funds from the City to support the infrastructure and site preparation for Phase 1, as discussed further below. Among other future actions detailed below, staff will bring forward appropriation resolutions for future City Council consideration for the City funding required to realize the plan.
Background
The City is a party to an Exclusive Rights Agreement for redevelopment of the UHT site together with the Minneapolis Park and Recreation Board (MPRB) and a local development team consisting of United Properties and First Avenue Productions. The Exclusive Rights Agreement is a result of multiple past City Council actions and requires the parties to create a Coordinated Plan for the development of the entire 48-acre UHT site. The parties developed this plan through an extensive community engagement process to identify a framework for the redevelopment of the UHT site based on the Concept Plan, including land uses, a real estate plan, public infrastructure, a park boundary, anticipated phasing, and an implementation strategy. The Coordinated Plan must balance multiple, sometimes competing priorities, and respond to the UHT site’s many real opportunities, challenges and constraints.
Redevelopment of the UHT site will bring multiple benefits to the City and the North Side community, including opening almost a mile of riverfront to long over-due public access. The final Coordinated Plan offers other public benefits, including:
- proposed sustainable revenue streams for the North Side;
- new affordable housing (with a focus on affordability levels attainable to current North Side residents while creating a mixed-income community);
- wealth building and community ownership opportunities;
- living wage jobs; entrepreneurial opportunities;
- sustainability improvements; and
- new community spaces:
- a new North Side riverfront park,
- a Health and Wellness Hub, and
- a Community Performing Arts Center (CPAC)
These benefits align with the City’s Minneapolis 2040 plan, Green Zone and Promise Zone efforts.
The Final Coordinated Plan reflects the intensive planning and community input collected over the past two years through the UHT CPC and Learning Tables engagement events (convened by the Public Policy Project with support from Pillsbury United Communities and the McKnight Foundation) and from many more who participated in multiple previous planning efforts. As the development process for this site is far from complete, community engagement will continue into the next stage of planning to gather input from more stakeholders in the community, particularly during the design process for the individual developments.
Process Update
A. Exclusive Rights Agreement and Milestones
The City, MPRB and the development team entered into an Exclusive Rights Agreement in June 2017. The Exclusive Rights Agreement sets forth the process, milestones, timeline and deliverables needed to reach redevelopment terms for the initial development parcel(s) by the development team and the conveyance of a portion of the site as park land to MPRB.
The Exclusive Rights Agreement included three milestones regarding the redevelopment planning process:
- Approval of a Concept Plan for the entire site, which defines the boundaries of the park and public space, general circulation patterns (with location of street network), the area and general type of anticipated private development (housing, office, commercial, etc.), the expected phasing and an initial implementation strategy;
- Approval of a Coordinated Plan for the entire site, which will further refine and detail the Concept Plan and public benefits for the use of land for private redevelopment and the dedication of land to MPRB; and
- Approval of at least two initial development agreements (one between the City and the MPRB and another between the City and a member of the project team for a non-park development) and exclusive rights agreements for later phases.
The deadlines in that Exclusive Rights Agreement were extended to December 31, 2021 due to the unforeseeable delay caused by the pandemic and the peacetime emergency declared by the Governor of Minnesota.
B. Community Engagement in Creating the Coordinated Plan
The UHT CPC is a 17-member body established by the City Council in March 2019. Members were appointed by the City Council and Mayor to represent defined North and Northeast communities, diverse cultural groups, and other stakeholders. UHT CPC was the primary community engagement body for the City for this phase of planning. Since its first meeting in June 2019, the UHT CPC has met 36 times, collaborating with City staff and the development team to arrive at a recommended development scenario for the UHT site.
These meetings have provided the space for the UHT CPC to:
- learn about the site and Concept Plan;
- refine the project values and the Equitable and Resilient Inclusive Development Matrix that are informing the redevelopment planning;
- review and discuss in-depth multiple topics such as affordable housing, community ownership options, economic inclusion and other community benefits; and
- review, refine and recommend community benefits and a real estate plan.
UHT CPC members and the broader North Side community have also participated in 11 Upper Harbor Learning Tables; concurrent community engagement events convened by the Public Policy Project and Pillsbury United Communities. Learning Tables provided monthly long form community discussion on specific topics related to the UHT site, such as housing development, community benefits, public infrastructure and parks, and workforce and business opportunities. Learning Tables provided a place to develop relationships, create partnerships, and make commitments to explore ideas for incorporation in the development.
MPRB led a concurrent planning effort for the park portions of the UHT site, including input from an MPRB-appointed Community Advisory Committee (CAC). The MPRB approved the UHT park boundary as part of its approval of the Above the Falls Regional Park Master Plan in 2019. MPRB approved other park-related aspects of the Concept Plan in May 2020. The park concept plan is currently out for public comment.
The draft Coordinated Plan was released on December 5, 2020. A public comment period to accept feedback on the draft Coordinated Plan was open from December 5, 2020 through January 15, 2021. Feedback was collected during the duration of the public comment period via:
- Q & A from 13 online events and project updates throughout December and January
- An online survey that yielded 259 survey responses
- 23 public comments received via email during the comment period
From December to July 2021 the UHT CPC reviewed multiple updates to the draft Coordinated Plan, based on UHT CPC and public comment feedback, as well as the Alternative Urban Areawide Review (AUAR) process – the environmental review process used to look at the cumulative impacts of anticipated development scenarios. Throughout this process, City and MPRB staff, the development team and their various design consultants have met regularly to share information, coordinate activities, discuss the technical aspects of the draft plan and prepare materials for the UHT CPC. The result of this process is the attached final Coordinated Plan. The UHT CPC charge will be fulfilled at the time the Coordinated Plan is approved by Council, as provided for in the resolution that established the Committee.
Final Coordinated Plan
The Final Coordinated Plan provides the framework for the community benefits and recommended development objectives for the entire 48-acre site. City staff will continue to coordinate with the MPRB regarding the MPRB aspects of the Coordinated Plan.
Community for the purposes of the Coordinated Plan means the North Side community including people who have a vested stake in the outcomes of the development of the UHT site, specifically American Descendants Of Slaves (ADOS) and Black, Indigenous and People of Color (BIPOC) individuals, those living nearest to the project site, those in historically marginalized communities who typically experience displacement due to unfair banking practices (predatory lending & redlining), low- and medium-income individuals who have been forced out due to increased rents, those who experienced displacement due to the 2011 tornado, and those who also experience cultural disruption resulting from public and private investments.
The Final Coordinated Plan outlines a Summary of Community Benefits proposed to be generated by the redevelopment:
- Public land ownership – The City is being asked to maintain public ownership of the entire UHT site. It is recommended that the City own the private development parcels, conveying development rights through a financeable long-term ground lease structure which will ensure continued involvement and influence by the City in the long term. It is recommended that the City maintain ownership of the CPAC parcel and own the CPAC facility, entering into an operating agreement with a venue operator. The City will convey the park land to MPRB.
- Sustainable revenue streams back to the Community – Two major sources of revenue generated by private development would be used to support ongoing Community priorities and initiatives:
- Annual ground lease payments from the private developments to the City are recommended to be placed in a dedicated City fund to be used on anti-displacement initiatives or wealth creation initiatives.
- First Avenue has agreed to impose a $3.00 CPAC ticket fee for all First Avenue events at the CPAC, and the revenue will be redistributed back to a Community fund, controlled by a Community Entity who will subsequently allocate the funds to subsidize commercial spaces for Community business within the UHT project, provide support for Community arts programming, enhance programming in the Community Hub, or further support anti-displacement efforts or wealth creation initiatives in the Community.
- Economic Inclusion – A primary objective of the proposed redevelopment is to prioritize the hiring of Community businesses and residents for preconstruction, construction, and post-construction jobs generated by the UHT development projects.
- Opportunities for community ownership through a Community Entity – The development team will seek a partner or partners to assist with the following:
- Community Fund Manager – Managing the revenue generated by the CPAC ticket fees as well as coordinating other potential financial resources to assist Community entrepreneurs and small businesses
- Community Advisor – To the development team and project owners; assisting in the execution of the Community Benefits strategies, Community outreach, and/or real estate programming strategies
- Real Estate Partner – An owner or partner in the community focused real estate projects—Community Hub and/or the ground floor commercial spaces
- Environmental Justice and Sustainability – This plan provides several strategies to repair environmental injustices through sustainable development, including mitigation of existing environmental conditions, shoreline restoration, natural landscapes and vegetation, creating critical bicycle and pedestrian network connections, reconnecting North Side neighborhoods to the Mississippi River, district infrastructure and stormwater improvements, and action steps towards reducing citywide greenhouse gas emissions through LEED for Cities and Communities certification and potential net-zero/ carbon-free development.
- Affordable housing – The final Coordinated Plan reflects a goal developed with the UHT CPC to create a mixed-income community, with the project at final completion providing approximately 1/3 of units affordable to and occupied by households at 30-50% of Area Median Income (AMI), 1/3 of units affordable to and occupied by households at 50-70% AMI, and 1/3 of units at market rental rates. The Phase 1 housing is anticipated to be 100% affordable, with 245 rental mixed-income units priced for residents earning 30-70% of AMI, including 160 units attainable to Northside residents earning 30-50% of AMI. The UHT CPC has further recommended that the City impose its Community Preference Policy to all rental and ownership housing to be developed on the site.
- Riverfront access – The proposed Phase 1 public realm and infrastructure improvements include pedestrian and bicycle upgrades to Dowling Avenue and a new 19.5-acre regional park, and will provide a culturally relevant, safe and inviting experience for residents to access and experience the river.
- Wealth creation opportunities – The proposed redevelopment is expected to generate several wealth creation opportunities for Community residents, workers, and businesses. These include a mix of attainable and living wage jobs, priority for Community businesses to occupy commercial and Community Hub spaces, affordable housing and affordable homeownership opportunities, as well as ongoing revenue streams that will support Community-selected initiatives.
- Community programming – All publicly accessible spaces, including the ground floor commercial space, the CPAC, and Community Hub will prioritize inclusion of Community-based residents, business, and organizations in the programming and activation of these spaces. This will ensure a culturally relevant experience that celebrates and promotes the Community’s resources, history, and heritage.
The Introduction of the Final Coordinated Plan addresses the vision behind the plan, the historical and social context of north Minneapolis, definition of Community, the summary of community benefits and the six project values (as follows):
- Economic inclusion, jobs and careers;
- Disrupting gentrification and displacement;
- Environmental justice and sustainability;
- Affordable housing;
- Wealth creation and community ownership; and
- Mobility, public space and infrastructure.
The Project Values, Outcomes and Strategies section describes the desired objectives, outcomes and strategies for each of the six project values, in order to maximize the community benefits for the Community for every component of the plan: the real estate development, procurement and contracting opportunities, programming, ownership and ongoing operations.
The Development Plan section identifies the proposed land uses and real estate program for the private development parcels, along with feasibility requirements for each development. Assuming availability of the necessary funding, the goal is to have a mixed-income residential community that offers housing that will be affordable to those making 30% of the metro area’s Average Median Income (AMI) up to market rate. This mixed-use residential community will include a mixture of rental and ownership opportunities.
The Public Realm & Infrastructure Plan section outlines Phase 1 and Phase 2 infrastructure improvements that would be needed to facilitate the final Coordinated Plan, including: reconstruction of the Dowling Ave and 33rd Ave N access into the site, a new north-south parkway, bike and pedestrian trails, streetscaping, utilities to support the development and a variety of strategies to enhance the community’s ability to access the site and park. The proposed stormwater management plan will improve the quality of the stormwater that enters the Mississippi River from the site. A new alignment is identified for the relocation of existing overhead electrical transmission lines.
The Regional Park Plan section describes the park concept plan that will be implemented by the MPRB and notes the tentative phasing plan. The total park area remains the same as the 19.5 acres included in the Concept Plan.
The Implementation Plan section includes which partners would be responsible for various implementation activities, an anticipated timeline and tentative budgets and funding strategies. This includes information about how the City can fund its investments in infrastructure, powerline relocation and site preparation.
In addition, the following changes occurred between the Concept Plan and the draft Coordinated Plan:
- The proposed alignment of the north-south parkway and the location of the CPAC shifted in response to UHT CPC, MPRB CAC and community input.
- The riverfront parcel at Dowling and the riverfront park space was recommended as hospitality use in the Concept Plan and is being recommended as part of the Draft Coordinated Plan as affordable mixed-use housing development.
- In response to UHT CPC input to accelerate job-generating development in Phase 1, the southernmost parcel (Parcel 5) is recommended as part of Phase 1 development.
- The City was asked to maintain ownership of the land, conveying development rights through a financeable long-term ground lease structure for the private development parcels, with the exception of the CPAC parcel and facility. The City was asked to dedicate annual ground lease payments to anti-displacement and wealth creation initiatives in north Minneapolis.
The following changes occurred between the presentation of the Draft Coordinated Plan and the Final Coordinated Plan:
- Updated the UHT CPC Approved Motions page in the Plan to reflect the work of the UHT CPC
- The UHT CPC recommended that the City retain ownership of the CPAC parcel and facility, thus the UHT site would remain in public ownership either by the City (private development parcels) or MPRB (park land). The Plan was updated accordingly to reflect this recommendation.
- Through the AUAR process, added a section on Environmental Justice and Sustainability in the Summary of Community Benefits to directly address the specific Environmental Justice and Sustainability benefits that are in the Coordinated Plan
- Through the MPRB, provided an updated Regional Park Plan section with Park Concept Design page based on the MPRB Park Concept Plan
- Updated Implementation schedules and timelines for the Community Entity Selection process and Community Hub
Additional Project Updates
- This staff report includes an action for the City Council to dedicate collected net lease payments to the Upper Harbor special revenue fund. The final Coordinated Plan, following a recommendation from the UHT CPC, recommends that the City dedicate the annual ground lease payments to North Side anti-displacement and wealth creation initiatives. While the City Council has ultimate authority to determine the use of these funds, staff will return for approval of fund use guidelines and structure for a community advisory committee to assist the City Council on how to deploy these funds.
- The City, Developer and MPRB continue to work with Mississippi Watershed Management Organization (MWMO) on a district stormwater system for the site.
- United Properties issued a Call for Community Partners to respond to an Expression of Interest (EOI) for a Community Entity/Entities to fulfill the real estate and programmatic roles related to Community ownership and entrepreneurial opportunities in the redevelopment as identified in the Coordinated Plan. The EOI selection criteria was based on criteria developed with the UHT CPC.
- The term sheets, future redevelopment agreements, and future long-term ground leases will include multiple community benefits (as outlined in the Community Benefits section of the final Coordinated Plan). However, because there are Community Benefits contained in the Coordinated Plan that the City cannot legally enforce, United Properties and First Ave Productions are entering into a Community Benefits Agreement with McKinley Community to ensure the balance of Community Benefits contained in the Coordinated Plan can be formalized and delivered.
Project Feasibility and Public Investment
During the approval of the Concept Plan, staff identified a need for City investment for this project into the affordable housing, infrastructure, and commercial elements of the plan. Staff has sought multiple funding sources, such as the State Transportation Improvement Program (STIP) and Transportation Economic Development Infrastructure (TEDI) Program, to address this need and identified additional sources, such as Tax Increment Financing, that it plans to formally present to the City Council at the appropriate time in the planning process.
The development team has worked with the City’s housing team and private experts to structure housing proformas that would be competitive in conventional housing funding programs. The discussion of budgets in the paragraphs that follow does not include public investments that are likely to be made in the affordable housing components of the plan.
At this point in the planning, the expected cost of first phase of the infrastructure development is $20.15 million. This phase of work includes:
- a reconstruction of Dowling Avenue North from Lyndale to I-94 and from I-94 to the parkway;
- reconstruction of 33rd Avenue North from 2nd Street into the site;
- a north-south parkway running from the north end of the site to a cul-de-sac between the future parcels 3 and 4; and
- water, sanitary and stormwater utilities.
A main source for these expenses is $9 million in State bonds, which will be matched by $6 million of Capital Improvement Program (CIP) funds, $2.25 million in State, Federal and other partner funds and approximately $2.95 million from other City sources. The updated table below depicts the estimated sources and uses for the construction of the first phase of infrastructure. Public Works continues its planning process for these elements with more refined cost estimates expected.
|
Public Infrastructure |
Cost Estimate |
Sources |
Total |
||
|
Dowling Avenue North |
$ 7,550,000 |
State Bonds |
$ 9,000,000 |
||
|
New North-South Parkway |
$ 4,400,000 |
CIP |
$ 6,000,000 |
||
|
33rd Avenue North |
$ 4,250,000 |
Federal Funds |
$ 750,000 |
||
|
Water Utilities |
$ 1,300,000 |
TEDI Grant |
$ 1,000,000 |
||
|
Sanitary Utilities |
$ 250,000 |
Partner Matching |
$ 500,000 |
||
|
Stormwater Utilities |
$ 2,400,000 |
Other City |
$ 2,950,000 |
||
|
Phase I Subtotal |
$ 20,150,000 |
Total |
$ 20,150,000 |
||
Note: Costs include construction, engineering, and overhead
As stated at the beginning of this report, previous reports to the City Council on this project have estimated the need for between $15 million to $20 million in City-funded support for Phase 1 of the UHT project, not including competitive affordable housing resources. In addition to the $2.9 million in Other City funding required for the Phase 1 public infrastructure (as noted in the previous table), the project will also require support to prepare the site for development and support Community components of the plan. The City has pooled funds restricted to real estate development uses available for this need.
Site preparation costs include:
- the relocation of the Xcel powerlines at an estimated cost of $2.8 million;
- preparation of the site, including demolition and grading, which is estimated at $3.8 million.
Community components of the plan that may need City financial support include:
- investment into commercial/retail components;
- the Community Hub component; and
- support for district stormwater best management practices
Phase 2 infrastructure including parkway and stormwater is not funded. City and MPRB will work to find conventional local sources and other grants funds for these costs. However, these sources might not be adequate to cover these costs requiring additional support from discretionary sources.
The final Coordinated Plan proposes Community ownership and local entrepreneurship opportunities across the development. As noted above, the development team has undertaken a process to select a new Community Entity partner or partners to fulfill the real estate and programmatic roles related to these opportunities. Newly constructed commercial space, as proposed at the UHT site, will have high rent requirements and can become a barrier to the success of both the community entity and targeted entrepreneurs. The UHT CPC passed a formal request for the City to invest $1 million directly into the selected Community Entity. State law restricts municipalities from making direct equity investments into private entities. Under redevelopment authority powers, however, the City can make investments into commercial real estate to reduce the cost of newly constructed commercial space which will benefit the Community Entity and the local entrepreneurs. After cost estimates are more refined during the next phase of planning, staff will have a better understanding of the need and a more refined recommendation for the proposed investment.
Finally, the City’s operation and property management fund for the Upper Harbor Terminal property is in a deficit of $1.9 million (as of Q3 2021) due to property management expenses being greater than revenues as terminal operations have declined over the years. The City will need to address this fund deficit by finding other funding to fill it. There are no land sale proceeds available to fill the deficit since, under the Coordinated Plan, the property is to be leased and all ground lease payments will be placed into the special revenue fund to benefit the North Side community.
Environmental Review Process
The Minnesota Environmental Quality Board requires that environmental reviews be completed for projects in Minnesota which exceed certain thresholds. The nature, size, and location of the proposed development on the UHT site required an environmental review.
An Alternative Urban Areawide Review (AUAR) was the form of environmental review used for the UHT site. The AUAR disclosed the potential environmental impacts of the development project and identified ways to avoid or mitigate those impacts. The Final AUAR and Mitigation Plan will be published in the Environmental Quality Board Monitor.
As the AUAR is completed, the normal development review process may begin. This includes the final design of the required infrastructure (roads, stormwater management, utilities, etc.) and site and building design for each individual component of the development. Additionally, the terms of any redevelopment agreements and necessary financing will be negotiated and approved after the AUAR is completed with needed mitigation identified.
Next City Council Steps
- Public Works' Concept Plan Approval for Phase 1 public infrastructure. Anticipated to be presented to Council for consideration in October 2021.
- Land Use entitlement actions including rezoning to comply with Minneapolis 2040 plan and replatting of the site in October and November 2021.
- Phase 1 Development Term Sheets - The AUAR and Coordinated Plan will inform the term sheets for the conveyance of the park land to the MPRB and one or more term sheets for the Phase I development parcels as well as the terms of any exclusive rights agreements for later phases. Anticipated to be presented to Council for consideration in Q4 2021.
- Authorization to enter into an agreement with Xcel Energy for powerline relocation and approval of City funding and easements.
- Other upcoming City Council actions within the next two years include:
- Authorization to proceed with site clearance and utility and right of way activities
- Multiple land use entitlement actions (including, but not limited to, development review)
- Authorization to accept the State infrastructure bond funded grant and execute related agreements and appropriation of City funding to fully fund the infrastructure project
- Authorization to accept the State CPAC bond funded grant and execute related agreements and approvals of private matching sources for a fully funded project
- Possible approval of updated redevelopment plan and TIF plan(s) for initial developments
- Approval of funding plan for City activities not included in bond-funded project, e.g., site clearance and preparation, etc.
- Authorization to enter into an agreement with MWMO and MPRB to explore district stormwater on the site
Initial work on the UHT site is anticipated to begin in 2022. This is expected to include powerline relocation and removal of any structures required to complete Phase 1 infrastructure. Under the terms of the State grant that is funding the park and public infrastructure, those projects must be under way by the end of 2024.