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Edina struggles with the ‘d-word’ — density

Edina developers want vertical density. Some residents don’t.

Ryan’s proposed Estelle project had 170 condo units across two towers across the street from the Galleria.
Ryan Companies

The Estelle was going to be like nothing Edina had seen before, a $250 million project with two towers — 26 stories and 22 stories, respectively — at 69th and France, across the street from the Galleria, the region’s most upscale shopping mall.

The city’s first condo project in a decade, it offered 170 units and had a waiting list of about 150 “very interested” potential owners, according to its developer, Luigi Bernardi, president of Edina-based Arcadia LLC. The project was designed to appeal to Edina empty-nesters who wanted to stay in the city but didn’t have other appealing options. It also was designed to appeal to the general public: The Estelle included pedestrian-friendly design elements at the ground level with “walkable tree-lined interior streets, plazas, green space and generous setbacks from France and 69th,” according to a press release from the development team.

If such a project had been floated in downtown Minneapolis, it likely would have been heartily embraced by city leaders as another strong sign of the area’s strength and vitality. But in Edina, it quickly ran into a buzz saw of strong objections from neighbors in the single-family residential neighborhood just west of the proposed towers. Homeowners banded together to speak out against it, and petitions circulated citing concerns about the buildings’ height and density, and a potential increase in traffic.

At an emotional mid-October meeting of the Edina City Council that ran past midnight, a proposed amendment to the city’s comprehensive plan that would have cleared way for the project was voted down. In similar cases, developers might come back to the city with revised plans in an effort to secure approval. But not here; Bernardi abandoned his plans for the Estelle.

The ‘D-word’

The “D-word” — density — looms over many debates about new multifamily housing. In its simplest terms, density means more people on the same amount of land. Strategies for achieving density include constructing taller buildings, making housing units smaller and redeveloping infill property sites that had been home to non-residential uses.

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The debate over density is intensifying throughout the Twin Cities, and even in outstate locations such as Rochester. “As a region, we’re becoming more dense; you can see it happening everywhere. We developed as a prairie land-use pattern, and after the [financial and residential real estate] crash, the market shifted substantially,” says Caren Dewar, executive director of Urban Land Institute Minnesota.

As the population continues to rise, younger and older generations are opting to rent at record levels. People increasingly want to live closer to work, stores and other services, says Dewar. They don’t necessarily want to have to get in the car to go everywhere.

“Before the crash, you could build anything anywhere and it would sell,” she says, recalling a time when developers kept pushing farther and farther from the metro core, buying up comparatively cheap agricultural land for projects. “The market has changed, and developers are responding to that.”

The trend is expected to continue. Statistics from the Metropolitan Council show that between 2009 and 2016, multifamily construction in the metro increased more than 500 percent. The bulk of the permits issued in 2016 were concentrated in 30 large-scale projects with more than 100 units each. Meanwhile, more than 6,000 new apartments are expected to open in the Twin Cities in 2018, with the potential for more than 7,000 units in 2019, according to Minneapolis-based research and advisory firm Marquette Advisors.

Increasingly, those units are showing up in the suburbs. While Marquette Advisors expects half of the new units in 2018 to be in Minneapolis and St. Paul, they say that ratio is expected to fall to about 30 percent in 2019. Also likely to continue: residents opposing higher-density projects, especially when proposed for properties near or adjacent to their own.

Perhaps nowhere is the conflict more publicly evident than in Edina, a first-ring suburb that borders Minneapolis to the west. Since 2014, more than 900 new multifamily units have been added in Edina. Nearly 700 apartments are currently under construction, and more than 900 additional units have been proposed there. Edina ranked eighth in the metro for the total number of multifamily units permitted between 2014 and 2016.

“I don’t think in our history we’ve seen anything like this from a commercial or multifamily standpoint,” says Edina Mayor Jim Hovland.

Nora Davis has lived in the Lake Cornelia neighborhood west of France Avenue for more than 40 years. She was among the residents who organized to oppose the Estelle proposal. She says neighbors garnered more than 700 resident signatures against the project. She was originally concerned about additional traffic and lights on the tower, but ultimately objected to “just the massiveness of the building.”

“It was just too much in that location. We are a neighborhood of single-family homes. It was like 400 feet to our homes in a lot of places,” says Davis. “I understand Edina is changing, but I think it needs to be well-planned and respectful.”

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The Estelle’s lone supporter on the Edina City Council was Hovland, now in his fourth term. “It was going to be a magnificent sort of project, and I think a lot of people on the council thought the same thing — they just thought it was in the wrong place,” he says.

Meanwhile, the density debate didn’t end with the rejection of the Estelle. Hovland expects to see more proposals for tall buildings, such as the one for the Guitar Center site,where plans have been floated for an 18-story apartment tower.

Too high, too dense, too everything

Fights over tall buildings are nothing new in Edina. During the condo boom, plans for a tower on the eastern end of the Galleria prompted heated debates. The 18-story tower, which combines the Westin Edina Galleria hotel with condo units, was completed in 2008.

“That was pretty nasty. It was quite a brouhaha at the time,” recalls Hovland. He says the issues were the same as those that residents had about the Estelle condos: “Too much height, too much density, people didn’t want to look at it.”

Hovland says the fractious debate over the Westin led to such a schism on the City Council that the city had to hire a facilitator to help mend fences. But today, Hovland says, people in Edina recognize the Westin as a strong asset: “It’s added great value.”

More recently the Minneapolis-based Boisclair Corp. floated a comparatively modest redevelopment plan for 7200 France. Plans called for replacing an unremarkable 1960s-era office building with a six-story mixed-use project including 160 apartments, some affordable-housing units and ground-floor retail space. (The existing building is three stories, but one is below grade.) The plan stalled on the City Council. Among the concerns was that it called for too many units and might set a precedent for future development. As with the Estelle, the proposal was for a site on the west side of France Avenue.

“It was a difficult process,” says Lori Boisclair, president of Boisclair Corp., of wrangling with the city. “It’s just such a wonderful location and the city still is ambiguous as to what they would approve there.”

Frustrated by the uncertain development future of the site, Boisclair sold her interest in the property in March.

“Despite what people say, Edina is an urbanized area, and we’re going to see development,” says City Councilman Mike Fischer. Fischer was among the majority that did not support the Estelle. He says that he liked everything about the condo tower plan except its location overshadowing the residential neighborhood. But he sees other locations as good options for future development.

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“If you look at the Southdale area, it’s a lot of big parking lots,” says Fischer. “Developers find [Edina] a desirable place to build, and that’s a good thing.”

While the Southdale area is drawing the largest number of projects, there is development in other corners of Edina. Along Highway 169 in the city’s southwestern corner, Minnetonka-based Opus Development Co. is close to finishing construction of the Loden, an apartment project with 246 units. The site was home to an office building. While the project is only four stories high, it still prompted some debate. There are residential neighborhoods to the east and south of the site.

“There were some reservations about ‘Is this too high?’ ” says Phil Cattanach, Opus senior director. Striking the “right balance” between a developer’s goals and residents’ concerns was a key part of the process. “You have to get enough density to make the economics work while being sensitive … to how is it going to work with the overall community.”

That appears to be happening with the old Guitar Center retail store, a one-story, largely windowless bunker east of France Avenue on Hazelton Road (effectively 71st Street) dating to the mid-1970s. Veteran developer Tom Lund is pitching an 18-story tower with 186 apartments for the site. While he has not secured final approvals, the response from Edina so far has been encouraging. The site is mostly surrounded by retail properties.

“The city of Edina had seen a couple of the proposals on the west side of France, and I think they had made it pretty clear … that they were going to push taller properties to the east side of France. So that gave us confidence,” says Lund, owner of Edina-based Lund Real Estate Partners. “They’ve been very supportive of the project. This is where they want to see density.”

The Edina Planning Commission approved the plan in late March.

“Where Tom Lund is proposing his project makes perfect sense,” says Fischer.

The new project also would be just steps away from a new Lunds & Byerlys grocery store and 71 France, a three-building apartment complex with 241 units that opened in phases in 2015 and 2016.

Retail replacements

Lund’s plan underscores the trend of new residential development displacing vacant retail properties on some Edina sites.

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A development team including Kelly Doran of Bloomington-based Doran Cos. is now under construction on Aria, a 184-unit apartment project on the site of a former Best Buy store at the southeast corner of 66th Street and York Avenue. Not far from there, the new 240-unit Onyx apartment project stands on a site long occupied by a Wickes Furniture store. One Southdale Place, a 232-unit apartment development, opened in 2014 on the southeast corner of the Southdale site. The 71 France project was made possible when Lunds & Byerlys exited its former store on that site, opening up land for residential development.

Southdale remains an iconic property in Edina. When it opened in 1956, it was the first enclosed shopping mall in the U.S., and became a symbol of sorts of the migration from Minneapolis to the suburbs. While some observers contend that Southdale is not the retail jewel that it once was, the mall’s owner, Indianapolis-based Simon Property Group, is piloting several new developments on the site to raise its profile.

“We used to be a retail real estate company and now we are a real estate company,” says Michael McCarty, Simon’s chief operating officer for its malls. “Now we’re talking to residential developers, we’re talking to office developers, we’re talking to hotel operators.”

As brick-and-mortar retail atrophies, McCarty says it opens up avenues for new development on Southdale’s site. “One of the things that malls have today is these huge asphalt fields of parking,” says McCarty, who notes that Simon is developing hotels at several malls within its portfolio.

Simon formed a joint venture with Bloomington-based StuartCo to develop One Southdale Place on the southeast corner of the 95-acre site, an area previously home to overflow parking spaces. The 232-unit One Southdale Place drew coverage from the Wall Street Journal when it opened in 2014. The story said that Edina “has long been considered the quintessential American suburb.”

At the northeast corner of the mall’s site, a 146-room Homewood Suites by Hilton hotel is nearing completion and is set to open this fall. At the southwest corner, plans call for a four-story standalone store for Restoration Hardware, slated to open in 2020. The northwest corner will be home to a new location for Shake Shack, the national burger chain.

There’s still plenty of room on the site for more. “We’re not done yet,” says McCarty. “It’s easy to invest in a market that is as strong and vibrant as Edina. We think that there’s a good future still there. …. It’s really kind of an example of what we’re looking at all over the country, it’s just happened there sooner.

“If the only reason to come to one of our properties is to shop,” he says, “then we’ve got some work to do.”

Population explosion

One challenge facing developers is that Edina, like many cities in the seven-county metro area, is in the process of updating its comprehensive plan, as required every 10 years by the state’s Metropolitan Land Planning Act. “Comp plans” are reviewed by the Metropolitan Council, which can require cities to modify plans if “the council concludes that the plan is more likely than not to have a substantial impact on or contain a substantial departure from metropolitan system plans.” The Met Council is also encouraging more density, especially affordable housing, and some cities such as Minnetonka are capitalizing on this by building such projects in exchange for funding assistance from the council.

What’s driving the push for more housing density? The simplest answer is ever-increasing population. Statistics from the Metropolitan Council indicated that in 2016, there were about 1.17 million more people living in the seven-county metro area than in 1970. For many years, local development trends encouraged sprawl, with new development pushing progressively outward from the core.

Between 1970 and 2010, the population of the seven-county metro area increased 52 percent, to 2.85 million people. For 2016, the Met Council estimated the population of the seven-county metro at 3.04 million. But by 2040 that number is expected to climb to 3.74 million—double the population in 1970.

“The idea is development is likely to occur in the area, so let’s develop a plan for how we’d like to see it take place,” says Cary Teague, Edina’s community development director.

“We don’t want to be downtown Minneapolis. We don’t want to be Uptown,” adds Hovland. Referring to ongoing debates about height and density, “we haven’t figured out how to have that conversation yet as a community,” he says.

But the tensions remain. While neighbors who opposed the Estelle said that it was out of whack with the city’s comprehensive plan, the developers believed that they had a project that met many of the city’s stated goals for the Southdale area, with strong attention to walkability, open space and landscaping at ground level.

“We felt we fulfilled all those requirements,” says Bernardi, who is scouting to find another site in Edina for a revised version of the Estelle. “I’d like to use the same plan because I spent so much money … we’re trying to see if we can reutilize those plans on another site.” Bernardi did not elaborate on how much he spent on the Estelle proposal.

The demand is still there in Edina for new luxury condos, he adds. “We haven’t given up yet.”

Burl Gilyard is TCB’s senior writer.

This article is reprinted in partnership with Twin Cities Business.