The Shakopee City Council has approved construction of a gated luxury housing complex near Canterbury Park, the first phase of a $400 million project on the racetrack's grounds.

Once completed, Canterbury Commons will be the largest mixed-use development in the southwestern suburb's history. It will be co-owned by the racetrack and developer Doran Cos.

The upscale complex on the racetrack's west side will eventually include 599 apartments with amenities, about 100 units of owner-occupied townhouses and senior condominiums, and a boutique hotel.

Doran will build the development's housing, which city officials hope will alleviate an apartment crunch and draw more young professionals to town.

"The Doran apartments are the catalyst to attract other users," said Canterbury Park President Randy Sampson, who envisions a bustling hub of specialty retail shops, eateries and office space. "By [spring] 2019, we expect to see tangible progress."

Construction will not begin until the fall, he said, so there won't be disruptions to this year's live racing season.

Council members on Tuesday voted 4-1 in favor of the preliminary design. The first phase will include construction of 295 apartments, a posh clubhouse and a gatehouse on a nearly 24-acre parcel; the second phase calls for an additional 304 units.

Council Member Mike Luce praised the design plans, which include a parking ramp hidden at the center of the four-story complex where residents can drive right up to their floor.

"I think this project will further our city quite a bit," he said. "The parking is a fantastic sales idea. How much nicer can you have it?"

Council Member Matt Lehman, who has long opposed the project as having too much density, cast the lone dissenting vote and said he needed more information before he could support it.

Last month, the council established a tax-increment financing (TIF) district around Canterbury Park, a crucial step toward breaking ground on the project. The TIF district will help fund up to $33 million in public infrastructure improvements, with the exact amount to be determined.

Future tax revenue from the district will reimburse Canterbury Park for costs related to repairing public roads, walkways and utilities over the next 25 years or until the note is repaid.

Canterbury Park itself is likely to invest upward of $20 million to build private roads, relocate horse barns and demolish old structures.

"We will have significant skin in the game," Sampson recently told the council.

The last major hurdle for the development will come this summer when the finalized TIF contract goes before the council.

Liz Sawyer • 612-673-4648