Planning Commission - 09/01/1981 - Joint Meeting 1
A G E N D A
JOINT CITY COUNCIL, DEVELOPMENT COMMISSION & PLANNING COMMISSION MEETING
TUESDAY, SEPTEMBER 1, 1981 6:00* PM, CITY HALL
CITY COUNCIL MEMBERS: Mayor Wolfgang H. Penzel , George Bentley,
Dean Edstrom, Paul Redpath and George Tangen
DEVELOPMENT COMMISSION MEMBERS: Chairman Tim Pierce, Joseph M. D. Adams,
Bill Behrenbrinker, Kent Barker, Robert Hanson,
Donald Opheim and Roy Terwilliger
PLANNING COMMISSION MEMBERS: Chairman William Bearman, Virginia Gartner,
Bob Hallett, Dennis Marhula, Elizabeth RetterW
Grant Sutliff and Hakon Torjesen
CITY STAFF: City Manager Carl J. Jullie, Planning
Director Chris Enger, City Engineer Eugene
A. Dietz, and Karen Michael , Recording
Secretary
I. CALL MEETING TO ORDER
II. DISCUSSION ON THE DEVELOPMENT COMMISSION'S REPORT ON HOUSING COSTS Page 184,
III. DISCUSSION ON PLANNING COMMISSION RECOMMENDATIONS
IV. NEW BUSINESS
9 V. ADJOURNMENT.
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APPROVED MINUTES
EDEN PRAIRIE CITY COUNCIL
DEVELOPMENT COMMISSION
PLANNING COMMISSION
TUESDAY, SEPTEMBER 1, 1981 6:00 PM, CITY HALL
CITY COUNCIL MEMBERS: Mayor Wolfgang H. Penzel , George Bentley, Dean
Edstrom, Paul Redpath, and George Tangen
DEVELOPMENT COMMISSION MEMBERS: Chairman Tim Pierce, Joseph M. D. Adams, Bill
Behrenbrinker, Kent Barker, Robert Hanson, Donal
Opheim, and Roy Terwilliger
PLANNING COMMISSION MEMBERS: Chairman Bill Bearman, Virginia Gartner, Bob
Hallett, Dennis Marhula, Elizabeth Retterath,
Grant Sutliff, and Hakon Torjesen
CITY STAFF: City Manager Carl J, Jullie, Planning Director
Chris Enger, City Engineer Eugene A. Dietz,
Director of Community Services Bob Lambert,
Assistant Planner Jean Johnson, and Recording
Secretary Karen Michael c,
ROLL CALL: Adams, Behrenbrinker, Hanson, and Marhula were absent
I. CALL MEETING TO ORDER
The meeting was called to order by Mayor Wolfgang H, Penzel .
II. DISCUSSION ON THE DEVELOPMENT COMMISSION'S REPORT ON HOUSING COSTS
Tim Pierce, Chairman of the Development Commission, spoke to the issues addressed
in the "Development and Housing Status - June, 1981" Report of the Development
Commission, The report concluded affordable housing is not being provided in
Eden Prairie;some things have to change in order for this to be accomplished, if
that is to be the City's goal . (A copy of the Development Commission's Report is
attached to these Minutes. ) Pierce also cited statistics from the July 31, 1981,
Wall Street Journal article on housing.
Penzel asked how price projections would be affected due to the stagnation in
market prices in 1981, Opheim thought people would adjust to .higher interest
rates and as this adjustment occurs a demand would be created, He pointed out
the high cost of holding land. At one time there was the "one third rule" whereby
one third of the dev-eloper's cost went for the price of the land, one third for
the holding costs, and one third for profit. This is no longer true as the costs
of holding land have risen dramatically,
Bentley questioned controls -- if density were to be increased,
there would be an effect on the value of land throughout the commu-
nity; also, what assurances would there be that developers would build smaller housE
if lots were smaller. Pierce said the Council could control the square footage re-
guirements -- set maximums,
JOINT MEETING September 1. 1981
Redpath stated that historically the two units per acre density was due to
drainfield and well situations; the market had nothing to do with the decisions
made. Barker recalled it was the feeling of the community in the '50's and '60's
that full acre lots were wanted.
a
Torjesen said he has heard three points discussed: recession, high interest rates,
and City policy. Of those three he would rate City policy a low third as far as
market impact. He feels any decisions made by the City would have a minor effect
on the market. Penzel recalled an area in the City where small lots were approved
and a price limitation affixed as a condition of approval . Those lots and houses
were sold out quickly despite the interest rates and the state of the economy.
Bearman said the market force was concentrated in one location: Penzel said the
community was providing a need.
Bearman stated that 67% of the people move to Eden Prairie because of the open
space. To arbitrarily change density will not solve the problem. It is the law
of supply and demand -- single family homes have been the thing and now we see more
duplexes and quads. He feels that the figures shown in the report are straight
line economics and do not hold true; and if they were, he'd take off 10% just for
the sake of argument. He feels the desirability of Eden Prairie adds to the price
�. Bentley noted the vast bulk of the housing stock has been built in the past five
years which adds to the overall cost of the average house.
Edstrom wondered about high rise housing -- is this something the residents of
Eden Prairie are not interested in or is it not affordable due to economics.
Opheim explained the Point of France was not as successful as Lake Point due to
the amenities of the location. He feels Eden Prairie will mature and will have a
central node *for development, the Major Center Area, where we will see something
like this. In the meantime we will see more cluster housing.
Gartner said the statistics have nothing to do with lot size. There is very little
in the statistics to convince her that lot price would go down. Pierce said he
would not say that lot price would go down. The thing they were attempting to poin
out is that new techniques must be used to provide affordable housing. Torjesen
agreed that lower cost housing is needed but pointed out that most of those in the
room did not start out with a new house. You cannot find old housing in a new sub-
urb. Redpath said his children cannot afford to live in Eden Prairie we have
zoned our kids right out, Barker noted Eden Prairie was the least expensive place
to buy a new home when he bought his home in the 1,50s, The very things that allowe
him to buy in Eden Prairie are the things which will keep his children from being
able to buy here.
Torjesen said by reducing garages, driveways, etc, will have a greater impact than
will density,
Bearman asked what it would take for a couple to buy a home today r_ two jobs , nol
family -- density alone will not do it, Opheim said there are some things which
can be controlled by the City -- garages can be built later; basement homes with
the rest to come later; and taxing policy which recently changed and makes the
holding costs very expensive.
JOINT MEETING -3. September 1, 1981
Penzel said the statistics are very interesting whether one agrees with them
or not. If the City is to have an impact on the cost of housing, then the City
must determine where that impact lies. The Council would be interested in form-
ing a Task Force--volunteer members of the Planning Commission, Development Com-
mission, Human Rights & Services Commission, Parks, Recreation & Natural Resources
Commission, Council member(s), and any citizen who wishes to participate -- who
could study that subject for a specified period of- time and then provide a report
to the community so we can all be better informed on this issue and how we can
attack the problem from a community standpoint. The consensus was to go ahead
with the Task Force.
III. DISCUSSION ON PLANNING COMMISSION RECOMMENDATIONS
Penzel stated the concern of the Council recently has been with the voting record
of the Planning Commissioners. The Council has not been able to discern from the
Minutes of the meetings why Commissioners have or have not been voting on certain
items. This has not helped the Council in their deliberations. Hallett said the
concern is legitimate and he noted at the last meeting people who voted "no" gave
a clarifying reason. Bearman said a reason can be required and will be noted; this
will be done with abstentions also.
Penzel asked what the Commission's perception of the Guide Plan is; his own being
that the Commission regards it as unchangeable, while he personally perceives it
to be a gbide which can be adjusted as circumstances warrant. Gartner feels there
has to be a reason for the change. Sutliff doesn't think change can be forced.
Barker noted the Guide Plan is used by people who are moving into an area and is
relied on by them; any changes must be done after very responsible consideration.
Penzel said it is not a land use plan, but one which identifies concepts thought
to be appropriate at the time of adoption. Circumstances can change things. The
Zoning Ordinance specifies land use. Barker recalled how many arguments in the
community had resulted from spot zoning. Torjesen said much of the land in the
City if based on a two-price system: one price based on how it is shown in the
Guide Plan, the other based on "if we can get the Guide Plan amended." Redpath
said the Guide Plan is a two-edged sword; the person who has lived here for ten
or more years knows about the Guide Plan, while the newcomer does not know it
exists -- this provides for problems with development. Gartner said if develop-
ment of the Major Center Area (MCA) is a goal , then changing the Guide Plan to
allow development of MCA-type activities outside that area because land is cheaper
departs from this and we might as well forget the Guide Plan and the MCA. Penzel
said unless the transportation system is provided, it won't matter anyway. Opheim
stated the market place will determine the value -- there are not two prices, as
Torjesen suggests, because if there is to be a change in zoning or the Guide Plan,
the sale is contingent on the change being made and the price is based on that.
Bearman noted the Development Commission's Resolution which specifically addressed
support of development of the Major Center Area and the completion of Schooner
Boulevard.
IV. NEW BUSINESS
Pierce requested the Task Force be given a specific charge. The concensus was
"What situations have to exist to bring affordable housing to Eden Prairie" should
be addressed.
V. ADJOURNMENT
MOTION: Barker moved, seconded by Bearman, to adjourn the meeting at 7:23 p.m.
Motion carried unanimously,
RESOLUTION ADOPTED BY THE DEVELOPMENT COMMISSION
REGARDING DEVELOPMENT COSTS
WHEREAS, the Development Commission has received and discussed the
Development and Housing Status June 1981 and other reports generated by City
Staff, and
WHEREAS; the housing costs are projected to continue to rise drastically,
and
WHEREAS, the percentage of people capable of affording the typical single
family home is becoming smaller and smaller each year, and
WHEREAS, it is important to the people of Eden Prairie to continue
development in both residential and industrial-commercial in order to continue
with a stable tax base and reduce trunk utility debt,
WE RESOLVE THAT:
Higher density be allowed in residential development and the
two units per acre requirement be rescinded; `
The City Council and Commissions keep the benefits to the
community as a whole in mind when considering Development
and/or rezoning and not be swayed to deny by pressure from
neighborhood groups;
To continue with the present policy of granting Developers
the right to improve land through special assessments;
To continue the process of Industrial Revenue Bonds for
owner/occupied buildings; and
That the City Council and Staff continue its action to
complete Scbooner Boulevard in its entirety because this
is critical to future development in the Major Center
Area.
ADOPTED by the Development Commission this 29th day of July, 1981 .
T' Pierce, Chairman
evelopment Commission
DEVELOPLE T AND H&JSD4G STATUS — June, 1981
O The report to the City Council dated 4--13-.78 and entitled "Associated Land
and Development Costs" has provided the basis for evaluating the effects of
recent inflationary pressures on the development of land and the construction of
housing in Eden Prairie. A close analysis of the current data indicates that the
nation in general and Eden Prairie in particular are entering an extremely critical
period of time -when demand for housing is on the increase and the supply is be—
coming less affordable. The increase in family income is not keeping pace with
the increase in the cost of housing.
In the past decade incomes have doubled and the cost of owning a home has quad—
rupled. The cost of heating a home has likewise risen 400lo. The median family
income in Eden Prairie during 1980 was $23,600. At today's rates this income
would allow a family to purchase a $62,000 home and carry a $49,000 mortgage,
that is if the family had a $13,000 dow:m payment. According to recent Multiple
Listing Service data the present median sales price of a home in Eden Prairie is
$103,000. Today a family buying this home, with a 20jZ, down payment of $20,600
would need a $60,00o,anival income. This means that the median priced home in
Eden Prairie has risen at a compounded rate of 1S'; over the last 3 years compared
with 14.6 for the general metropolitan area. Holding this present rate of
increase constant the following will be the median cost of housing in Eden Prairie
for the next 5 years.
Year Average Cost
• 1982 $121000
1983 143,500
1984 16g,200
1985 199,700
1986 235,600
With interest rates presently averaging 16% and unlikely to be substantially
--- reduced over. an extended period of time, affordable housing, as we have knoin it,
will be passing out of the American dream.
If income requirements follow the expected path of housing costs a. look at income
requirements to purchase the median priced home in Eden Prairie would resemble the
following figures (assuming 20% down payment).
Year Average Cost PITI Income
1982 $121,500 - $1,391 $ 67,000
1983 �43,500 1,741 84,000
1984 169,200 2,005 97,000
1985 199,700 2,372 114,000
1986 235,60o 2,750 132,000
The average price of a lot in Eden Prairie in the past 3 years has risen from
s16j000 to $26,000. There is presently market pressure to reduce inventory and
as a result lot prices have stabilized. But at today's cost of financing improved
lots, which varies between 20 and 25a, the price of homesites will likely follow
or exceed the percentage increase in housing. If lot price increases average 18%
per year the following will be expected lot prices in Eden Prairie for the next
5 years.
Year Lot Price
1982 $30,680
1983 36,200
1984 ',r2,750
1985 50,400
1986 5�,480
Taxes on lot inventory improved in 1978 and unsold in 1981 have quadrupled from
$200 to $800. At this rate taxes alone will add nearly -$10,000 to the price of
an unsold lot over a 5 year period of time. If the cost of taxes and money i.s
not reduced we are more likely to see the average lot in Eden Prairie range between
$701000 and $80i000 by 1986.
The most urgent message coming from the marketplace today is that people's
expectations must be reduced to conform to present day realities. Size must be
made smaller, extras eliminated, amenities reduced and diversity expanded.
Estimates for the 1980ts indicate that 801,,'fo of the dwelling units will be built
for 1 and 2 person households. Already in 1977 family composition in this country
showed that only .13 of households conformed to the traditional image of working
husband, housewife mother and children under 18 years of age. Today 60a of all
households have no children =der 18. Housing in the 801s will not receive the
attention from the federal government that it enjoyed in the 70's. As a result,
capital markets, as presently structured, will not be able to accommodate the
demand as household formations expaaid faster than the population.
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CITY OF EDEN PRAIRIE
ESTIMATED DEVELOPMENT COSTS
June '81
Rate Cost Per Lot($)
PLANNING:
PUD $200 Lump Sum
Zoning $200
Plat, preliminary $25+$1/lot or acre 20
' $200 Lump Sum
E.A.W. � .
Deposit $200 average
Consultant fees $7,500 (50 lots) `' 150
170
---------------------------------
----------- --------------------------SERVICES:
Cash Park Fee $325 single family 325
$250 multiple
$1,400/acre other j
Totlot
(if 50 units or more) $10,000
Totlot structure . $10,000 500
Site work and plantings $ 5,000
Loscaping bond (2 yr.) $18/$1,000-5.000 •
[� 1la1 Try+1 C - 100
Esti• Development Costs . Page Two -
Rate Cost Per Lot
ENGINEERING:
Final plat review $30/lot, or
(min. $100) $20/acre 30
•t
Street signs $120/sign 20
Lighting $322/light 40
Bonding •
120
'210
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BUILDING INSPECTION:
Permit fee
$50,000-100,000 $283 first 50,000 + $3/$1,000 after 440
$100,001 $433 first 100,000+ $2.50/'$1,000 after
Sewer hookup
residential . $200 I 200
industrial .03061/sq.• ft. ($400 minimum)
commercial • ' • .04591/sq. ft.
Water hookup '
residential $200 200
industrial .03061/sq. ft. ($400 minim m)
commercial .04591/sq. ft. ( )
S.A.C. charge
single family or multiple $425 425
other-determined by MWCC $425 minimum
Plan Check 50% of permit fee 220
65% of pe'rmi t• fee '
State Surcharge .50/$1 ,000 50
1,535
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Esti, evelopment Costs PP-- -hree
• • Cost. Rate 0 t P Lot -
.r
GRADING, UTILITIES &'- STREETS: $8,000-16,000 12,000
depending on topography,
soil conditions & lot size
-------------------------7---------------------------------------------------------------r--------------------------
PROPERTY TAXES: $720/lot/yr (assuming 2 yrs. holding) 1,440
------------------------------- -------------------------------------------------------------------------------
LAND COST: $8,000/acre 4,000
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-
OTHER COSTS:
Sales Commissions 1,750
Interest Charges ($20,000 @16% 3,200
for 2 years) .
Final Plat & Recording Fees 200
Profit 500
5,650
------r r r r -r---_----------------rr
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TOTAL 25,930
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