More than one big deal in Anoka

by Mandy Moran Froemming
Union Editor

While city staff may describe the convergence of nearly $50 million in private investment and more than $11 million in public infrastructure and capital projects as a perfect storm for 2012, it is welcome weather in Anoka.

Construction is underway on The Homestead at Anoka, a $35 million senior care community being built by Volunteers of America in Anoka.

Last week the community celebrated the ground breaking of the The Homestead at Anoka, a senior care campus being built by Volunteers of America. It is likely the single largest private development investment in the city’s history.

“I’ve been trying to think of another private project of this size in Anoka’s history and I can’t,” said Community Development Director Bob Kirchner, counting public projects like the construction of Highway 10 or the Anoka County Government Center as some of the larger investments in the area. Kirchner has spent the last 34 years working in community development for the city of Anoka.

This record-setting $35 million investment from the not-for-profit VOA, along with other major accomplishments like attracting ATK’s relocation and expansion of its security and sporting group in the industrial park and the decision of HealthPartners to build a new RiverWay Clinic in the city, will have widespread benefits by generating tax dollars and creating jobs.

“We’re looking at some substantial tax benefits that we haven’t actually quantified yet,” said Kirchner. He also estimates there could be as many as 150 new jobs tied to these developments.

While portions of the VOA project are tax-exempt, the organization has also worked out a deal for a payment in lieu of taxes with the city of Anoka.

 

Keeping it in Anoka

All of these “big three” as Kirchner calls them, are retentions of current businesses.

“Some could actually say that’s not significant,” said Kirchner. “But it is because what it says is the core economy of the city is really strong because we have three different sectors here that were here before, were strong here before, that are growing and expanding.”

He said chasing down and attracting new companies to the community can be risky and expensive.

“They were all strong parts of our existing economy and we’re facilitating their growth here,” said Kirchner. “To me, that’s about as good as it gets.”

Mayor Phil Rice said the importance of the VOA’s investment in the city of Anoka can’t be underlined enough.

“Here we are in an economy that is still really quite difficult and the VOA is investing more money than any other company ever has in Anoka,” said Rice.

He sees the current long list of development successes as a combination of coincidence and luck, but most important a commitment to planning.

Rice said the city has a history of sticking with projects for the long haul – including the Rivers Pointe town homes which took 30 years to develop and the condos built by Rottlund Homes near city hall, which required decades of land acquisition and planning by the city.

He doesn’t think that strategy is going to change, Rice said. Last month the Anoka City Council adopted the “Greens of Anoka” plan that has short-, mid- and long-range visions for both the golf course and surrounding neighborhood that include new housing and redevelopment.

Rice said it could be 40 years before this newest redevelopment plan comes together.

It’s also not surprising that a hub city like Anoka would see development during tough times, he said.

“We’ve been graced by being a historic center with a lot of population around us,” said Rice. “And being the county seat for 100 years doesn’t hurt us one bit. Anoka really is a center, a center of development and activity. It draws a lot of people.”

 

City investments

“It is going to be a banner year for public works projects in 2012,” said Greg Lee, the city’s public services director and city engineer.

Lee has spent 20 years working in city government and has never seen the kind of investment Anoka is planning for 2012.

The three-page list of projects the city is taking on this year will run a tab of $11.2 million.

“For a city of 18,000 to have more than $11 million in projects in one year is really incredible,” said Lee.

Lee worked for the city of Woodbury back in the 1990s when it was the country’s fastest growing suburb and still didn’t see the kind of public investment Anoka is planning this summer, he said.

They range from a $4 to $5 million upgrade to East Main Street to the start of the River Front Park project, north of city hall. This project schedule also will include the start of constructing a new Castle Field and the renewal of more than a mile of streets in the southeast corner of the city.

Why is so much going on in 2012? Some projects like the East Main construction have been pushed back for several years because of the economy, said Lee.

“A lot of the projects have funding that have been in the accounts waiting until we’re ready to go,” said Lee.

A typical budget year has Anoka doing $1.5 to $2 million in capital projects and infrastructure improvements, he said.

There has also never been a better climate for low construction bids. Over the past few years the city has been taking advantage of this, adding to its street renewal and mill and overlay projects.

“I think that when people look back five or 10 years from now they will say Anoka spent money at the right time,” said Lee.

This year Anoka County will also be spending $15 million on road projects within the city of Anoka, according to Lee.

At Monday’s meeting, the city council approved $6 million in spending, accounting for more than half of this year’s infrastructure improvements and capital projects.

Rice agrees that with the city in healthy financial shape, it’s wise to keep pace, reinvesting in infrastructure, he said.

“That financial health is not a coincidence,” said Rice. “It happens with good planning and good investment.”

It is also tied to a city council that is in general agreement on where to focus the city’s resources.

“We have the luxury (as a council) to be in the position where we’re all marching in the same direction and agree on the importance of making these investments,” said Rice.

 

Sticking with it

In cases like the VOA project, that perfect storm of development has a lot to do with the willingness to stick with a vision for a new care facility for more than a decade.

The city, and specifically Kirchner, had been working with the organization for 11 years to find a suitable location for the facility, which will replace the current Anoka Care Center. The first phase will include a nursing home, memory care and assisted living. They evaluated dozens of sites during those years.

“I thought Anoka was just a rumor,” joked VOA President Mike King at ground breaking ceremony for The Homestead at Anoka, after hearing for years about plans to build a new nursing home in the city.

It took a city-initiated purchase of state land and then a property swap with Anoka County for the city to be able to assemble a big enough piece of ground for the VOA to build on near the Northstar Commuter Rail station.

“The argument I made to the county was right now we each have a piece of ground and neither one of us can sell them for very much money because of their carved up condition,” said Kirchner on the deal that had the city acquiring land near Fourth Avenue in exchange for a parking lot and vacant lot that went to Anoka County.

In his 34 years with the city, it is the largest financial deal he’s ever been a part of, according to Kirchner.

“To wrap that up that is the single largest financial project the city has had,” said Kirchner. “Back during the industrial park hay days we six or eight projects going at once, I think that if we took our best year and added them all up together we might get to that number.”

Kirchner was speaking about the enterprise park boom between 1995 and 1998.

 

Being ready when the time was right

But when it came to HealthPartners’ decision to build a new RiverWay Clinic in Anoka, being able to offer the Highway 10 site that is home to Castle Field was the result of the community getting to a place where it had consensus on relocating the historic field.

“It was fortuitous and concurrent when they were getting serious about looking that’s when Castle Field became an available project site,” said Kirchner.

When HealthPartners had first looked for relocation opportunities, this particular location had not been an option.

“But by early last year the move of the ball field had started to move forward on its own,” said Kirchner. “Knowing where we were going and what we were doing gave us the ability to legitimately market that ball field site to HealthPartners. I think they quickly realized the potential of that site for them.”

According to Bob VanWhy, senior vice president of primary care with HealthPartners, the company had internally been discussing either renovating or relocating downtown Anoka’s RiverWay Clinic for a couple of years.

He said HealthPartners considered both rehabilitating the current clinic site, which was nearing the end of its useful life, or building a new facility.

VanWhy said HealthPartners wanted to be sensitive to the many patients in nearby senior housing facility that are patients of the clinic.

RiverWay Clinic has 35,000 active patients (seen in the last 18 months) that make as many as 60,000 visits a year.

“We looked up and down the Highway 10 corridor,” said VanWhy.

HealthPartners also operates clinics in nearby Coon Rapids, Andover and Elk River.

The Anoka site near Green Haven Golf Course had the advantage of high visibility and easy access.

Current plans are for the construction of a 50,000 square-foot medical clinic that will expand on the current services provided by RiverWay, including primary care, visiting and on-site specialties.

At this time, HealthPartners is not willing to give an estimate on what construction of this clinic will cost. But VanWhy said job creation will come with the new clinic. RiverWay currently employes approximately 80 people.

VanWhy also said the clinic should be a good fit with the city’s future plans for redeveloping the area around Green Haven Golf Course.

 

Quickly filling a vacancy

It was also good fortune that Anoka was able to accommodate ATK’s need to expand and relocate its sporting and securities division.

“That was not a known project as of earlier last year,” said Kirchner.

Federal Cartridge Company, acquired by ATK back in 2000, has been synonymous with Anoka’s economy for most of the last 100 years.

Last year Eniva Corp. was forced to move out of if its newly renovated headquarters at Highway 10 and Thurston, in a building that was once home to the Cornelius Company. Vacant for more than six years after Cornelius left, at one time it was one of the largest vacant commercial properties in the metro.

Eniva, a neutracuetical company, as a tenant to building owners Premier Commercial Partners failed to fully use that property. They had a big vacancy so they didn’t get the cash flow out of that property – the whole financial structure was failing, according to Kirchner.

Premier then sold out to the second position lender, Austin Grove LLC, said Kirchner.

Eniva moved out of the building and ATK, which had also been strongly considering a Champlin location for its expansion, was quickly secured as a tenant.

“The Cornelius property became a prime property because of its size and we worked through the ability for them (ATK) to expand there,” said Kirchner. “The city worked through the process of changing our plan for our property and adjusted where the road would go through because they wanted to expand the building and realign the plans for the road.”

Before Eniva had moved in, significant investments of up to $5 million had been made in that commercial property, said Kirchner. He expects ATK to add another $1 million as part of its expansion and relocation.

“In just the last year or two we’ve had a substantial investment in that property, bringing it back to full use and full occupancy which is really a key thing,” said Kirchner.

 

Still challenges ahead

Riding high on these accomplishments, Anoka still has challenges ahead.

Like all cities, said Rice, the housing crisis will remain a hurdle for the city.

The ouncil has been working along with Anoka’s Housing and Redevelopment Authority to tackle neighborhoods that have been hit hard with foreclosures, substandard rental housing and crumbling vacant properties.

Initiatives like the HRA’s scattered site program buys foreclosed and vacant properties the private market will not take care of. Often, the current houses are demolished creating a vacant lot ready for new construction.

Last year the city learned Rottlund Homes was going into receivership control and has since been mandated to liquidate its assets, including the last available six or seven senior living condo units in the Anoka building near city hall, said Kirchner.

The city had entered into a development agreement with Rottlund that had been amended numerous times to try to keep the project moving in a stagnant market.

The city is moving ahead on marketing the available properties near city hall, which Rottlund had intended to develop in a mix of residential and commercial real estate.

“We would like to pursue another developer to do that sister building that would look and be a lot like that Rottlund building,” said Kirchner. “We know there were people waiting for that next building to be marketed. They were people that looked at the first building and for whatever reason, timing wise or maybe they just wanted to be a little farther north from the downtown wanted to be in the next building.”

Kirchner said the city is also putting together marketing materials to highlight city parcels and other private parcels available, in particular the Historic Rum River District. The HRA-owned RiverWay Clinic as well as property the HRA has acquired at the corner of Benton and South Ferry streets will also be available for redevelopment. The city has at least eight high quality sites that are largely ready to develop, said Kirchner.

“But it’s a prime target to see if we can’t find a developer to pick up that companion (Rottlund) building,” he said. “It’s more than shovel ready, it’s prospect anticipated.”

Mandy Moran Froemming is at editor.anokaunion@ecm-inc.com


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