Developer’s proposal includes three-level parking ramp that features two levels underground

by Jim Boyle

Editor

Jesse Hartung is a man on a mission for the community he calls home.

The owner of Modern Construction and Tipsy Chicken has presented his latest proposal for a mixed-use commercial and housing development for downtown Elk River. It would come complete with long list of amenities surrounding a three-story parking ramp that would include two stories of underground parking and increase public parking downtown by nearly 50%.

The Elk River resident says he is ready to begin work on next steps, which would include a feasibility study to see if the land he’s proposing to use for the nearly $40 million project could handle such development. Traffic studies would also be needed, and he has ideas that he would like vetted.

But first he needs consent from the Elk River City Council to move forward in any way, shape or form.

The council and Elk River Housing and Redevelopment Authority heard his proposal on Sept. 8, but there was no time for discussion or to answer four big questions Hartung posed to the city.

He asked for an agreement in principle on incentives, an acceptance of proposed parking quantities as worst-case minimums, a willingness to consider alternative street and traffic flows if studies indicate improvements are possible and a commitment to work expeditiously to get final documents back to the council for review.

Elk River Mayor John Dietz made it clear more information and more meetings would be needed to flesh out the details and hear from the public.

Dietz thanked Hartung for all the hard work.

“I think you presented a lot of good ideas, but a lot of this will have to be fleshed out,” Dietz said.

“You’re revamping the whole downtown Elk River. The council has to take that very seriously and consider all of the ramifications before we take any steps.”

City Administrator Cal Portner said on Sept. 17 the topic will go before the council at a work session on Sept. 21.

“Hartung was meticulous in discussing/mitigating traffic and parking concerns,” Portner said. “Unfortunately, this caused his presentation to go longer than we had expected.

“I know the council has a number of follow-up questions.”

Hartung proposed timelines that called for presenting final drawings in February 2021 and construction beginning in July 2021 to allow for a Jan. 2023 grand opening.

The Elk River City Council heard a presentation on Sept. 3, 2019, by Hartung on a high-density, market-rate, mixed-use development concept in downtown Elk River. Hartung followed it up with a request at a Sept. 16 work session for time to explore his ideas and come back with a comprehensive proposal, and he got majority support to do that — provided his efforts didn’t bind the city to moving ahead if it decides against it.

The same governmental body that was cool to the idea of soliciting proposals for downtown redevelopment the previous year with a tax increment financing component expressed a willingness to have Hartung put together a concept plan. The council directed Amanda Othoudt, the director of economic development, to negotiate a preliminary development agreement.

Hartung’s vision called for acquiring land owned by the city of Elk River and its Housing and Redevelopment Authority that is currently used for parking and a farmers market. Council members made it clear one element that could make or break his proposal is a failure to address parking well enough. They also wanted to know if his firm, Modern Construction, and the players he works with could carry out a project of this scope and bring it to a successful conclusion if given the go-ahead.

On Oct. 7, 2019, the Elk River City Council entered into a preliminary development agreement with the developer that allowed him to explore the idea of a multi-family, mixed-use development concept in downtown Elk River. The Elk River Housing and Redevelopment Authority, which owns some of the downtown property, was also listed as a party to the agreement.

The preliminary development agreement specified that the city would not work with another developer interested in the same area for the length of the agreement.

Hartung’s latest plan addresses some of the council’s stated concerns, but council members need considerable more data and answers before they are willing to give any sort of nod to the project, Dietz said at the Sept. 8 meeting.

Hartung was disappointed more didn’t come of the Sept. 8 meeting, but he’s excited to see the discussion unfold starting with the Sept. 21 meeting.

“First and foremost I’d like to thank the large group of residents and business owners that showed up (Sept. 8) in support of the project and thank the city for giving me the opportunity to present my project,” Hartung said in a statement. “I’m truly excited at the possibility of expanding the amenities and features of our great downtown area that I was lucky enough to call home for five years and build a business out of.

“I’m just a hard-working veteran trying to set a good example for my family and run two small businesses right here in Elk River. I hoped the council could have heard from all the supporters in attendance, and I certainly didn’t need the lecture on how governments work. I’ve proudly served my country and own two heavily regulated businesses; I know full well how governments work. That being said, I look forward to the opportunity to continue the discussion with my fellow residents and business owners and hope to see the council again soon.”

The journey

Hartung moved to Elk River for the first time in 2001 after getting out of the military. He is a veteran who served in the U.S. Army’s 82nd Airborne Division.

He didn’t attach himself to downtown Elk River immediately. He was a young guy, and the places to be for nightlife in Elk River he found to be Time Out Bar and Restaurant on Highway 169 and Broadway Bar on Highway 10.

“To be honest I don’t have a single memory from downtown Elk River from those early years here,” he said.

It was at that time he got started in housing construction, and then life took him to Arizona for a time. He found himself back in Elk River in 2012 and began living in Granite Shores. He also founded Modern Construction in Elk River.

“That’s when I found the charm of downtown,” he said.

The charm also got him thinking about how it could be even better. His Elk River-based business, Modern Construction, kept him plenty busy though. He was building a home for a real estate broker when he came across an opportunity to open a restaurant.

The broker was looking to lease the former El Amigo’s restaurant in a strip mall along west Highway 10 in Elk River and asked Hartung if he knew anyone who would be interested.

Hartung was.

He favors organic food but discovered it was difficult to find that when eating out. He also likes to have a cocktail with some of his meals. Those two passions led to the creation of the Tipsy Chicken, which opened Jan. 1, 2018, at 13479 Business Center Drive.

Majority owners are Hartung and his fiance, Sarah Curley. Manager Christine Gunnarson also joined them as a partner in the venture.

The Tipsy Chicken serves craft cocktails and farm-style dishes. Almost everything is made from scratch from predominantly organic ingredients. The restaurant itself was remodeled by Hartung’s company and features LED lighting, barn wood and reclaimed birch floors as well as tin from a barn in Nowthen. The tables, chairs, booths and lighting were all reused from the previous restaurant to save money and reduce waste. Most of the decorations in the restaurant are for sale.

In the same way he applied his interests, passions and business acumen, his mind has been churning on downtown Elk River’s charm and what he could do if given a chance to take on a redevelopment project.

“I care deeply for this community,” he said.

Upon signing the development agreement with the city last fall, he said, “I’m excited and confident that I can help make downtown safer for pedestrians, reduce traffic, add some truly state-of-the-art amenities, and probably most importantly solve the parking problems once and for all.”

The agreement allowed Modern Construction to explore feasibility and finance options for the development. After a couple of extensions to the agreement to allow for more time and further study in the face of a pandemic, Hartung finally presented his vision and the mission behind the project he has labeled The Ecology Project.

He said he set out to create a space that functions as a community hub and regional attraction; one that embodies all the great characteristics that make Elk River a vibrant place to call home, run a business and raise a family.

“My ultimate goal was to pay respect to the historic feel of downtown while expanding the appeal,” he said. “The Ecology project brings together outdoor and indoor spaces, recreation and work, old and new, and raises the bar for responsible community-driven development.”

His vision was to prove that private development can fulfill public aspirations while providing a high return on taxpayers’ dollars.

His mission is to grow downtown Elk River to become the best place to live, shop, relax, and thrive in the local area and beyond, he told council members and members of the HRA.

He said his hope was to respect the downtown feel. All street facing portions of the building are capped at two stories tall. The use of unique storefronts and zero building setbacks would match existing buildings.

The building reaches five stories after it retreats away from Main Street, Jackson Avenue and Highway 10. Views of the Mississippi River from 70 feet in the air would be phenomenal, Hartung said.

Local connections would be created through building murals done by local artists that pay tribute to the town. Updates to rear entries of Jackson Avenue buildings would maintain uniform and cohesive design.

The proposal includes more than 100-plus jogs, stepbacks, and height changes.

“This is not a square,” Hartung stated. “We want the sunlight to shine on Elk River.”

The development would offer five-plus new storefronts, each with its own charm. There would be a significant expansion of downtown green space, both public and private, in place of the current parking lot, and the project could achieve more than 40 goals of Elk River’s comprehensive plan.

Hartung said the project would allow for improved parking, better parking on the streets and more support of local businesses.

Main level parking in a ramp would be covered but open air with enforced time limits for specific uses and curbside pickup options. There would be dedicated space for FedEx, UPS and other delivery services. There would also be a spot for short-term storage with a flow to it for the businesses.

Two levels of parking below the main level of parking could provide for long-term parking for employees and residents, and three elevator bays would provide access to a 24-hour public lobby, the downtown and a public terrace on the second floor. There could even be yard games on real grass. There would be a private terrace, too, for tenants.

Hartung said the Ecology project could set a new standard for meeting required on-site parking needs, which currently do not meet city code, and the project would offer almost 50% more public parking capacity.

“That’s huge,” Hartung said, noting there would be 11 handicap spaces, 25 electric chargers and 18 oversized spots and two ride-share spots. Hartung’s parking ramp design includes lockers for bikes for people traversing a trail between downtown and Lake Orono.

Parking and traffic are two of the biggest hurdles city officials highlighted before sending Hartung on his way to develop a comprehensive plan to develop a project. The development agreement required him to communicate with nearby property owners and businesses to determine support as well as look at how the development would affect parking and traffic.

Hartung told the Star News he has done that, and he felt good heading into the Sept. 8 meeting with the city and HRA.

He explained he has created several renditions of the proposal in working with the downtown businesses and had quite a buzz going on in downtown Elk River before the Sept. 8 meeting.

Hartung has been in direct contact with the Downtown Elk River Business Association, the Elk River Area Chamber of Commerce and individual business and building owners. He has devised plans to market downtown during and after construction. He has a plan to provide $15,000 per business on Jackson Avenue to improve their rear entrances. He said he has reached out to anyone and everyone with an interest in the downtown and been willing to sit down and go over his plans and made changes along the way.

“We think we have done a really good job of overcoming hurdles, especially for parking,” Hartung said. “We have added a ton of capacity, even though many of the people we talk to say downtown doesn’t have a parking problem.”

Those who work downtown or would live there would have covered, heated, well lit and safe parking with the convenience of elevators to take them to the main floor and lobby, he said. The list of amenities is long and includes a 24-hour lobby with restrooms, a public terrace above, a banquet hall, pedestrian greenway, a 20-unit hotel, and a rooftop restaurant.

The public lobby would be sustainable with a green roof, living walls and efficient building technologies, he said. Solar panels, runoff treatment and waste recycling would also be significant features.

A banquet space would provide for a farmers market in the winter, and there would be a gym and a dog park for residents. Couples that get married in Rivers Edge Commons Park would have an option right across Main Street for their wedding reception, Hartung said.

Between 20 hotel units and other residential options, there would be about 127 units in all.

Residential living would include 28 studio apartments as low as $899 a month, 84 one- and two- bedroom apartments for $1,450 to $1,825 per month, and 15 two- and three-bedroom townhomes for $2,225 to $3,200 per month. Twelve of them would have direct street access. There would also be private rooftop decks.

The monthly fee for all of the apartments and townhomes would include the cost of utilities.

People who live in the units and the public would have the opportunity to enjoy a different way of living, with access to breakout rooms to grab a coffee and find a quiet place to work, Hartung said.

“People should be able to responsibly enjoy their life,” Hartung said.

In addition to these living arrangements, there would be a hotel, a Tipsy Chicken organic restaurant and plenty more commercial and retail space.

To top the development project off, literally and figuratively, there would be a resort-style pool, a European-style sun pool and a rooftop theater for residents opened up throughout the year for movies-in-the-park events.

The total investment comes in at $40 million. Shawn Carlson from Carnegie’s Commercial Lending would broker the construction and permanent financing for the project, according to Hartung’s presentation documents.

Twenty to 30% equity would be supplied by a small group of investors. There would be a bank mortgage. And Hartung is asking for incentives in the form of a trade of in-kind improvements to cover permit, utility, zoning and related fees in return for the public improvements to parking, restrooms, streets/sidewalks, green space and informational lobby at a rate of $3 for every $1 credited toward fees.

“This partnership greatly benefits the city, because taxpayers will receive an instant 300% return on their money,” Hartung said.

He also noted that in addition to the expansion of public amenities and services, the city will save millions in cash, labor hours and equipment time for the long-term upkeep of the existing lot estimated at more than $1.4 million over the next 50 years assuming $20,000 a year for equipment and man hours to plow, haul away snow and sweep.”

There will be lots to consider for the council and HRA, including the views of downtown business and building owners.

Parking, traffic and the construction timeline will be among the major topics of discussion. So will feasibility, based on comments from HRA Chair Larry Toth who questioned if the water table would allow such a deep project to be entertained.

The financials, the financing, the players and their pedigrees will also be of concern.

“I think this is a good first step, but I think you’re going to have to be a little patient,” Dietz said.

Hartung agreed, sort of.

“I want everyone to be able to digest it, but I don’t want it to get stuck in government bureaucracy,” he said. “There’s a wealth of supporters for the project and I would like for you to hear all their voices, too.”

Dietz asked if there was any documentation with more details that didn’t focus just on the high points. He also said a formal proposal would need to be made.

“I’m not ready to make any kind of commitment to what you’re asking,” Dietz said. “We have to hear the other side of the story on all these issues. We don’t move that fast. We have a due diligence process to move through and flesh out.”

Hartung said he believes the mood downtown about the project is good, and most certainly better than it was a year ago or even two years ago.

Two local bankers have expressed a keen interest in seeing if the proposal can stand up to the scrutiny of the city and other players who will have a say as they analyze the data before them and consider the project’s feasibility.

“As a banker I can’t help but look at the underpinnings,” said John Babcock, the president and CEO of The Bank of Elk River, while talking about feasibility studies and the builders and financial backers of the project. “If it can be done and done right, it would be a real benefit to downtown Elk River. I don’t have enough details to fight for it, but I am definitely interested and intrigued.”

Hartung has been working with some of the individual business owners and others who have spoken out in the past against redevelopment projects. Frank Galli, the former owner of Pompeii Pizzeria who owns space downtown, and Deborah Leedahl, the owner and pharmacist at Kemper Drug, have been among those he has consulted.

Leedahl told the Star News she had heard two presentations on the plan as a member of the downtown business group and the chamber and also sat down with Hartung in a one-on-one setting.

Her initial reaction has been there’s a lot a project for the amount of space that’s there, she said.

“It was interesting to see how it all could fit with the drawings,” she said. “It’s nice to see it’s an attraction to bring people to downtown and not just an apartment.”

Leedahl said she’s curious about whether the plan is realistic.

“I’m a pharmacist and not a developer,” she said, acknowledging she will continue to follow the project proposal closely and to see what future studies show. “According to the drawings it works, but I just want to know what the feasibility studies say about it.”

Galli said he is not against development but said he does worry about the businesses who are struggling during COVID-19 and wondering if the construction of the project would be a double-whammy too big for them to stay afloat.

“It’s an ambitious proposal,” he said. “I don’t know if the citizens are calling for a hotel and townhomes and apartments, but it’s important businesses have a chance to be successful.”

The operator of Antiques Downtown came to the meeting on Sept. 8 and expressed concern that in the time it takes to construct the parking lot could be enough to cause her to lose her vendors, whose access would be cut off for three to six months, and ultimately her business.

Hartung is optimistic the parking ramp can be done in closer to three months.

“We have a lot of respect for the businesses downtown, and I hope people can see from the presentations we’re not some big developer coming in here to make a buck,” he said. “We’re going to own the building and our businesses are here. We’re not building it to sell it. We’re moving Tipsy Chicken downtown. This is an opportunity for us to help the community thrive and grow. We want to make it enjoyable for everyone,” Hartung said.

Hartung told the Star News downtown Elk River has such a charm, and with its location on the river, a few more pieces could really help the downtown for a lot of years to come.

He said the Ecology project takes into consideration the future of Highway 10 and would give people more reasons to come downtown, especially when Highway 169 becomes a freeway.

“We’re pitching an idea to bring the focus back on Elk River,” he said.

The Ecology Project at a glance

•$40 million total investment

•20-unit hotel

•Tipsy Chicken restaurant

•Up to 17,000 square feet of commercial/retail space

•28 studio housing units

•84 one- and two-bedroom housing units

•15 townhomes/penthouse units

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