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Item 3.1 Darkenwald EAW3601 Thurston Avenue Anoka, MN 55303 763.231.5840 TPC@PlanningCo.com 1 MEMORANDUM TO: Otsego Planning Commission FROM: D.Daniel Licht DATE: 16 October 2026 RE: Otsego – D&Y/Quaday Avenue Mixed Use; EAW TPC FILE: 101.02 BACKGROUND Darkenwald Corporation proposes to develop three parcels with an area of 137 acres in the southwest quadrant of TH 101 and Northeast River Road (CSAH 42). The EAW reviews the proposed development of these three parcels, collectively referred to as the “Project”. The developer divides the Project into two components, referred to as “RES 100” and “MXD 35.” •RES 100 is comprised of PIDs #118-500-274202 and #118-500-271400 west of Quaday Avenue. RES 100 surrounds a large existing natural environment lake that would be protected, and new park space and greenways will be provided as part of the development. In total, 122 single-family homes are proposed in this portion of the Project. •MXD 35 involves development of PID #118-500-262201 with multifamily housing and a senior living campus on the southern portion and 65,000 square feet of commercial space on the northern portion. The multifamily component will include 230 units. The senior living campus will include 32 townhomes, 47 assisted-living apartments, and 34,000 square feet of memory-care space. The combination of residential dwelling units, institutional square footage, and commercial square footage requires Environmental Review through a mandatory Environmental Assessment Worksheet (EAW) in accordance with Minnesota Rules Part 4410.4300, Subp. 32. The EAW was approved by City staff for publication by the Environmental Quality Board on 22 September 2026. Notice of the EAW was provided to agencies as required by the Environmental Quality Board and notice of availability was published in the Elk River Star News inviting public comment. The Planning Commission will hold a public hearing on 19 October 2026 to receive comments and questions regarding the EAW. The EAW comment period ends on 22 October 2026. Item 3.1 2 Exhibits: § Subject Property Map § EAW dated September 2026 (https://www.otsegomn.gov/DocumentCenter/View/2500) ANALYSIS Comprehensive Plan. The City has adopted the 2023 Comprehensive Plan to guide future development within the City. The Project is located within the East Sewer District, where City sewer and water utilities are available to support the urban development guided by the Future Land Use Plan. The 2023 Comprehensive Plan guides the RES 100 portion of the project for Low Density Residential land uses. Low Density Residential land uses are to consist of single family neighborhoods with a density of less than 3.0 dwelling units per acre served by City sewer and water utilities. Within areas guided for Low Density Residential land uses, the 2023 Comprehensive Plan encourages a range of lot sizes and housing types within individual neighborhoods to expand housing choice within Otsego. The MXD 35 portion of the project is guided by the 2023 Comprehensive Plan for commercial uses. This commercial area is intended to be a secondary location to the node of commercial development surrounding the TH 101 and 90th Street (CSAH 39) interchange to the north, due to the more limited access to TH 101 at Northeast River Road (CSAH 42). The Future Park and Trail System Plan of the 2023 Comprehensive Plan also identifies that the City will acquire land adjacent to the natural environment lake and creek within the RES 100 area to continue the Lefebvre Creek Greenway corridor east of Parell Avenue to Quaday Avenue and 78th Street. Zoning. The 2023 Comprehensive Plan establishes an Interim Land Use Plan that directs that properties remain zoned A-1, Agricultural Rural Service Area, until a development proposal is received for a use guided by the Future Land Use Plan. Consistent with the Interim Land Use Plan, RES 100 is zoned A-1 District. MXD 35 is zoned R-3, Residential Long Range Urban Service Area, a pre-incorporation residential zoning designation that allows one-acre single-family lots. Surrounding Uses. The Project is surrounded by the existing and planned land uses shown in the table below: Project Direction Land Use Plan Zoning Map Existing Use RES 100 North Medium Density Residential Low Density Residential R-6 District R-4 District Prairie Creek Townhomes Prairie Creek East Commercial R-3 District Undeveloped (MXD 35) South Low-Medium Density Residential A-1 District R-5 District Undeveloped Emerson Pointe Boulder Pass West Low Density Residential R-5 District Boulder Creek MXD 35 North Commercial A-1 District Undeveloped East -- -- TH 101 South Mixed Use A-1 District VFW Soccer Fields West Low Density Residential Low Density Residential A-1 District RES 100 Emerson Pointe 3 Environmental Review. Environmental Review is an information gathering process to assess the potential environmental effects of a proposed development and recommend avoidance or mitigation measures to be implemented during the development process. Environmental Review is not an approval process, but the information gathered is meant to inform decision making for zoning and subdivision actions and governmental permitting. Environmental Review allows the City and government agencies involved in the development review process to make more informed decisions on projects and gives the public an opportunity to participate and provide input to decision makers. The requirements for Environmental Review are established in Minnesota Statutes, chapter 116D, and Minnesota Rules, chapter 4410, which describe: • when Environmental Review is required; • who conducts the Environmental Review; • procedures for conducting the Environmental Review; and • criteria that must be used for making decisions for Environmental Review documents Preparation of an EAW is mandatory under Minnesota Rules, part 4410.4300, subpart 32, based on the combination of proposed residential dwelling units, institutional square footage, and commercial square footage. The City is the Responsible Governmental Unit for the environmental review process under Minnesota Rules, part 4410.0500, subpart 1. Minnesota Rules 4410.1700, Subp. 7 establishes that in deciding whether a project has the potential for significant environmental effects, the following factors are to be considered: A. Type, extent, and reversibility of environmental effects; B. Cumulative potential effects. The RGU shall consider the following factors: whether the cumulative potential effect is significant; whether the contribution from the project is significant when viewed in connection with other contributions to the cumulative potential effect; the degree to which the project complies with approved mitigation measures specifically designed to address the cumulative potential effect; and the efforts of the proposer to minimize the contributions from the project; C. The extent to which the environmental effects are subject to mitigation by ongoing public regulatory authority. The RGU may rely only on mitigation measures that are specific and that can be reasonably expected to effectively mitigate the identified environmental impacts of the project; and D. The extent to which environmental effects can be anticipated and controlled as a result of other available environmental studies undertaken by public agencies or the project proposer, including other EISs. 4 The EAW document is intended to identify potential significant environmental effects and proposed mitigation. Potential environmental effects are, in almost all cases, addressed through Federal, State, and City regulations applicable to proposed development. The key section of the EAW document is Paragraph 21, which identifies potential significant environmental effects and measures to be implemented to mitigate the environmental impact. Process. The developer prepared an Environmental Assessment Worksheet that has been reviewed and approved by City staff. In accordance with Minnesota Rules, part 4410.1500, the EAW was distributed to persons and agencies on the official Environmental Quality Board distribution list and published on the City website. A notice of EAW availability was published in the Environmental Quality Board Monitor on 22 September 2026, initiating a 30-day comment period. A press release and public hearing notice were submitted to the City’s official newspaper, the Elk River Star News. The comment period ends on 22 October 2026. Minnesota Rules Section 4410.1700, Subp. 2 requires the City to determine the need for an Environmental Impact Statement within 30 days of the close of the comment period. The developer will prepare a response to the comments received regarding the Environmental Assessment Worksheet and findings of fact regarding the need for preparation of an Environmental Impact Statement as required by Minnesota Rules Section 4410.1700, Subp. 7. The draft responses are subject to review by City staff prior to presentation to the City Council. Upon approval by the City Council, the Environmental Assessment Worksheet comment responses will be forwarded to the respective agencies, the Environmental Quality Board Distribution List, and the Environmental Quality Board to complete the Environmental Assessment Worksheet process. Development Applications. A determination that an Environmental Impact Statement is not required does not entitle the developer to proceed with the Project. The Project remains subject to approval of zoning and subdivision applications, including, but not limited to, the following: RES 100 MXD 35 Comprehensive Plan Amendment • Zoning Map Amendment • • Preliminary Plat • • Final Plat • • The City retains broad discretion to approve or deny the Project based on the required Comprehensive Plan amendment and Zoning Map amendment applications. The City will exercise this discretion to ensure that the Project is consistent with the Future Land Use Plan and other recommendations of the 2023 Comprehensive Plan, complies with the Zoning Ordinance and Subdivision Ordinance, and can be served by adequate infrastructure. The developer has submitted applications for rezoning and preliminary plat approval for the RES 100 portion of the Project. The submitted zoning and subdivision plans mirror the development shown in the EAW and represent the developer’s initial proposal. The plans are subject to City staff comments before presentation to the Planning Commission and are expected to be revised to comply with the City’s Comprehensive Plan, Zoning Ordinance, Subdivision Ordinance, and other requirements. Based on initial City staff comments, the developer has requested that consideration of the RES 100 applications be deferred while it prepares a response. 5 Applications to amend the Comprehensive Plan and Zoning Map and an application for preliminary plat approval require a public hearing before the Planning Commission. Notice of the public hearing will be published in the Elk River Star News and mailed to property owners within 350 feet of the Project as required by state law and the City Code. The developer is working to complete the information required for these applications for consideration at future Planning Commission and City Council meetings. RECOMMENDATION The only issue being considered at this time is the potential for the project to cause significant environmental effects, not the actual land uses, subdivision layout, or site and building plans. It is rare that a project that is required to comply with the recommendations of a city’s comprehensive plan and applicable development regulations would require undertaking of an Environmental Impact Statement. City staff recommends that the Planning Commission recommend that the City Council adopt findings that the Quaday Avenue EAW Project does not have the potential for significant environmental effects and determine that preparation of an Environmental Impact Statement is not required. POSSIBLE ACTIONS A. Motion to recommend that the City Council adopt findings that the Quaday Avenue EAW Project does not have the potential for significant environmental effects and that preparation of an Environmental Impact Statement is not required, consistent with the EAW. B. Motion to table. c: Adam Flaherty, City Administrator/Finance Director Audra Etzel, City Clerk Ron Wagner, City Engineer David Kendall, City Attorney D&Y Properties EAW Subject Properties 1,051 ft Overview Legend Highways Interstate State Highway US Highway Roads City/Township Limits c t Parcels Torrens