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CITY OF NEW BRIGHTON <br />COMMUNITY DEVELOPMENT <br />rhe citytnat works lw yrw DEPARTMENT <br />MEMOR!NNDUM <br />DATE: July 23, 2010 <br />TO: Dean Lotter, City Manager <br />FROM: Grant Fernelius, Community Development Director 4f <br />Janice Gundlach, City Planner <br />SUBJECT: Update on Housing Developer Discussions <br />Over the course of the last couple of months, staff has been talking with several <br />developers about opportunities to redevelop in the Northwest Quadrant. Most of the <br />interest has focused on apartments and senior housing. As you recall, in early May the <br />Council and staff toured projects developed by Dominium, TOLD and Dunbar <br />Development. In mid-June, a second tour took place of projects developed by United <br />Properties, Ecumen and Stuart Company. <br />Staff has contacted each of the developers and asked a series of follow-up questions <br />intended to gauge their development interest, especially within the next 12 months. The <br />fallowing is a summary of the discussions to date. <br />TOLD <br />Bob Cunningham of TOLD Development did some preliminary analysis and concluded <br />that a gap still exists between the cost of construction and market rents. Cunningham <br />believes that current market rents for newer apartments are in the $1.25 to $1.30 per <br />square fool range; which is 25 to 40 cams less than what is needed to make a project <br />viable. TOLD tends to be more conservative in their assumptions demands slightly <br />higher returns on its projects. Right now they are simply not interested in pursuing a <br />project. <br />United Properties <br />Bran Carey from United Properties cited some of the same concerns about rent levels <br />and development costs, not to mention the challenge of financing a project. United has <br />been interested in the Northwest Quadrant for many years, but does net have a specific <br />project or user in mind. Carey was less enthused about Me prospects for the market to <br />