HomeMy WebLinkAbout1998 03-02 CCP Work Session AGENDA
CITY COUNCIL WORK SESSION
MARCH 2, 1998
7:00 P.M.
CONFERENCE ROOM B
1) Presentation by TOLD regarding development proposal at Highway 252 & 66th (SW
quadrant): movie theater
2) Discussion of development proposal at Highway 252 & 66th (SE quadrant): Senior Market
rate cooperative
3) Discussion of 69th & Brooklyn Blvd.
4) Discussion of 53rd Avenue Project M
5) Discussion of Liquor store options
6) Miscellaneous Items
MEMORANDUM
TO: Michael McCauley, City Manager
FROM: Brad Hoffman, Community Development Director
DATE: February 27, 1998
SUBJECT: Miscellaneous Development Projects
Staffhas been in discussions with developers for a number of key redevelopment areas in Brooklyn
Center. The areas include the Lynbrook Bowl area (west of 252, south of 66th and east of Camden);
the EDA owned property (east of 252, north of 65th and west of Willow Lane); 69th and Brooklyn
Boulevard (east of Brooklyn Boulevard, north of 69th and south of 70th Avenue) and the 53rd
Avenue housing project. Monday evening I would like to update the Council on the status of each
project and receive direction so that we might conclude agreements where appropriate with the
respective developers.
Lynbrook Bowl Area
The area designated as 91 on the aerial photo with the exception of the Super America property is
the subject of a proposal from TOLD Development. TOLD proposes to build a sixteen (16) screen
stadium style theater on the site. The theater would be approximately 58,000 square feet and would
seat 3,000 people. In addition, TOLD would create two (2) additional lots for future commercial
development.
The site itself is approximately 15 acres and is zoned C2. A movie theater is an allowable use under
the current zoning. According to representatives of TOLD, they currently hold options to purchase
all of the properties designated #1 on the attached map and they are prepared to acquire the tax forfeit
parcel #2. Area #5 is owned and /or controlled by the City of Brooklyn Center. In order to pursue
this project the City would have to agree to sell its land and vacate 65th Avenue and North Lilac
Drive. Property 44 has indicated a willingness to sell but no agreement has been executed. Finally,
the City would need to agree to acquire parcel 43 (Beacon Bowl) through eminent domain. TOLD
would have to underwrite the cost of the acquisition prior to any actions to acquire the property on
the part of the EDA/City.
TOLD has inquired if any financial assistance (TIT) would be available. I have informed them that
assistance would be highly unlikely for this project. Further, we (staff) would like to target a
development with a value in the area of $22,000,000 on the site. Site restrictions might make this
impossible. The theater, according to the developer would be architecturally unique and photos I
have seen of other projects done around the country by this group tends to confirm that statement.
Monday evening the development will have renderings of their proposal. According to the
developer the theater and two (2) outlots for tax purposes would have a value of $10,500,000. The
current assessed value for the site is $2,156,500. If we assume the value of the developer is correct
it would generate a TIF cash flow of approximately $330,000 annually.
There are a number of questions the Council should consider about this project. First, while the
current zoning allows for the proposed use, is this the type of development desired for the site.
Again, for this development to work the City has to agree to sell its land. A previous Maxfield study
did suggest as an alternative that the City consider this site as an entertainment site. Traffic
considerations for the intersection of 66th and 252 will inhibit or make difficult heavy traffic
generators during rush hours. From a traffic perspective a theater is a good fit. An office
development could require significant infrastructure investment. The site is perhaps the most visible
site in the whole city and is the gateway to northwest Hennepin so its development should be a
statement. Second, the owners of Brookdale are proposing a similar theater with up to thirty (30)
screens. Will the development of a theater on the 252 site adversely affect the repositioning of
Brookdale? This is a concern to me that it has the potential to adversely affect what we hope to
accomplish at Brookdale. The owner of Brookdale expressed concern with any theater development
at this time.
TOLD will be resent Monday evening with elevations of their proposal and to answer Council
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questions.
EDA PROPERTY
Area 92 on the aerial photo is the subject site. Skyline Developers has made an offer to the EDA to
purchase the site to construct up to 116 owner occupied senior co -op units. (We will have elevations
for you Monday). The units will range in price from $65,000 to $150,000. The buildings will have
underground parking and will be primarily masonry on the exterior. The purchase offer from Skyline
is 1.15 per square foot or approximately $255,000. Skyline would start construction this year.
The City/EDA would have the right to approve a pallet of materials i.e. types of doors, windows,
shingles, etc. With this right we have greater control over the quality of the building. There would
be two (2) buildings built in separate phases. Should the second phase not happen the EDA would
have a right to repurchase the property at a pre - agreed price should the EDA so elect. The developer
would also receive from the EDA/City the exclusive right to develop town homes in area #3 for a
period of four (4) years. This means the City/EDA would not actively participate in the development
of that site with anyone but this developer. The current owner of the property would be free to
develop the site or sell it to others for development. The City/EDA would not participate with
financial assistance or eminent domain should we elect to develop the site. The developer sees this
as crucial to protect his investment in the senior building.
This developer, I believe, is bringing a superior product to this site. It is a development that will help
kick start redevelopment in the area. Two (2) problems need to be addressed. First, the building
height is 54 feet. The regulations of the Minnesota River Act have a 45 foot height limitation. I
believe this building and site would qualify for an exemption but at this time we do not have that from
the DNR. Monday we will cover this point in more detail. Second, the road on the west side of the
property is turnback land form MNDOT. We believe we have ownership of the land to include it in
the development. It is probable that the City already has the site but if not acquiring the property
should be a formality.
69th/BROOKLYN BOULEVARD
In the year 2000, Brooklyn Boulevard is to be widened. The widening of Brooklyn Boulevard will
require a 30 foot easement of the westerly portion of this site. The easement would be approximately
18,000 square feet. In order to acquire the easement all properties along Brooklyn Boulevard will
have to be acquired in whole which will include the relocation of five (5) businesses.
At a minimum Brooklyn Center along with Hennepin County would have to acquire a site totaling
89,300 square feet. The easement would represent 20 percent of the site. The proposed cost sharing
for that would be 50/50 on the 20 percent of the total acquisition and 50/50 on the relocation.
There are eight (8) properties that would have to be acquired. The EDA currently owns three (3) of
the properties at a cost of $300,000. The remaining properties have an estimated market value of
$438,400. Our estimate of the acquisition price of the remaining properties would be about $570,000
through eminent domain.. The relocation costs would be about $150,000 and demolition about
$100,000 for a total of $820,500. The City/EDA would have $1,120,500 in the purchase of all eight
(8) properties. Under our agreement with Hennepin County (we still have not seen the new draft)
the City would receive $87,000 for right -of -way acquisition, $75,000 in relocation and $50,000 for
demolition for a total of $212,000. If Hennepin County and the City proceed with the widening of
Brooklyn Boulevard, the City will pay an estimated $908,500. The value of the remaining land would
be about $4.00 per foot or $285,200. The cost to the City will be about $623,300 if the EDA can
sell the land. However, the City/EDA will end up with a long narrow parcel approximately 100 feet
wide by 600 feet long. To develop the site would require the acquisition of the remaining seven (7)
parcels. The EDA currently owns one (1) of the properties at $76,900. The approximate cost of
acquiring these additional properties would be $735,000 not including demotion or acquisition. The
additional land would have a land value of about $350,000.
In summary, if we proceed with the redevelopment of 69th and Brooklyn Boulevard we have an
obligation up to $1,500,000 in land write down. If we don't do the development we would have
$908,500 tied up in land worth $285,200 and it would require further acquisition to develop.
- .HENNEPIN CITY
EMINENT COUNTY, HOLDING LAND . CITY
ADDRESS EMV : DOIWAIN RELOCATION DEMOLITION SHARE COST SALE COST
4300 69th Ave. N. $46,500 $60,500 NIA N/A
6900 BroakYyn Blvd. $45,000 $58,500 N/A N/A
Unassigned $45,000 $58,500 N/A N/A
6912 Brookyn Blvd, $209,900 $273,000 $120,000 $45,000
693$ Brooklyn Blvd. $92,000 $120,000 $30,000 $10,000
6944 Brooklyn Blvd. N/A $300,000 N/A $10,000
i
6950 Brooklyn Blvd. $15,000
6956 Brooklyn Blvd. $20,000
TOTAL $870,500 $150,000 $100,000 $212,000 $908,500 $285,200 $623,300
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Cost of acquisition, demolition, etc. for Redevelopment $2,800,000
Value of land per square foot $4.00
Land in square feet 291,236 Both sides of June Ave.
Market Value $1,164,944
TIF will service Pay as You Go
1OYr (11) $957,194
Cost of acquistion for Brooklyn Blvd.
already acquired $375,000
remaining to be acquired $870,000
$1,245,000
(working on renegotiating) Potential County reimburse ($200,000)
$1,045,000
sale proceeds at $4 /sq.ft. ($285,000)
Net Cost to City $760,000
Development: Cost of Acquisition $2,800,000
Value of land cleared $1,164,944
Redevelopment shortfall $1,635,056
TIF generated $957,194
County Reimbrusement unknown
Shortfall TIF to redev. cost ($677,862)
Comparison with City Acquire without development for Brooklyn Blvd.
Brooklyn Blvd. Cost $760,000
Shortfall w/ TIF redevel. ($677,862)
Higher cost w/o redevel. $82,138
Cost of acquisition, demolition, etc. for Redevelopment $2,500,000
Value of land per square foot $4.00
Land in square feet 291,236 Both sides of June Ave.
Market Value $1,164,944
TIF will service Pay as You Go
IOYr (11) $957,194
Cost of acquistion for Brooklyn Blvd.
already acquired $375,000
remaining to be acquired $870,000
$1,245,000
(working on renegotiating) Potential County reimburse ($200,000)
$1,045,000
sale proceeds at $4 /sq.ft. ($285,000)
Net Cost to City $760,000
Development: Cost of Acquisition $2,500,000
Value of land cleared $1,164,944
Redevelopment shortfall $1,335,056
TIF generated $957,194
County Reimbrusement unknown
Shortfall TIF to redev. cost ($377,862)
Comparison with City Acquire without development for Brooklyn Blvd.
Brooklyn Blvd. Cost $760,000
Shortfall w/ TIF redevel. ($377,862)
Higher cost w/o redevel. $382,138
Memorandum
To: Michael J. McCauley, City Manager
From: Brad Hoffman, Community Development Director
Date: January 21, 1998
Subject: 69th and Brooklyn Boulevard
The council has requested an update on the status of the redevelopment of the northeast corner
of 69th and Brooklyn Boulevard. As a general overview, the EDA staff and developer have
developed upon a general development concept, have drafted an agreement detailing the basic
terms and conditions of the project and currently either the developer or EDA controls through
acquisition or option approximately 64 percent of the project area. The obstacles to developing a
complete proposed agreement have included the changes in property tax classification rates, the
location of a storm water retention pond, the priority of the City's commitment to Brookdale and
the financial feasibility of this project from the City's perspective.
The proposal is for a minimum development of 50,000 square feet of new retail space. However,
to date the drawings and pro forma provided by the developer calls for a 60,000 square foot
development. The EDA would retain an easement for the widening of Brooklyn Boulevard. An
agreement would have the EDA write down the cost of the land to a maximum $1,500,000 of
property acquisition costs. TIF contributions are on a Y a as you go basis. The City /EDA would
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acquire all properties that the developer is unable to acquire by a given date to be determined in
the agreement to maximum of $1,500,000.
Staff looks to structure development agreements with a ten year pay off on bonds or pay as you
go. With the enactment of property tax reclassification system, this project has gone from a 4.6
percent classification to an anticipated 3.5 percent classification rate or an approximate reduction
of 24 percent. This has had a significant impact on the TIF cash flow from the project and is part
of the delay in developing an agreement. While it is preferred than all TIF projects generate
sufficient cash flow by itself to amortize any debt incurred by the EDA, this project may not be
able to do this due to the class rate drop and the redevelopment costs of acquiring and removing
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the blighted properties and other properties. This project, when completed, will require a cash
flow larger than that generated by the project itself or the term or length of TIF financing wold
have to be increased to amortize the debt. It would be preferable to maintain the ten (10) year
debt service term.
Because of the size of the proposed project area, the requirements of the Watershed District for
storm water retention must be met. With this redevelopment we are attempting to locate a
retention pond that would serve a greater area and in turn accommodate other developments.
There are two locations that accomplish this goal. The best site is on St. Al's property. Staff has
been in discussions with St. Al's and several developers that have expressed interest in
developing the Church's excess land. St. Al's has indicated some interest in selling their excess
land. Any developer of the land would also be faced with the storm water retention issue.
Coordination with the development of St. Al's property provides the best overall solution to the
issue and the development of the entire area. If the pond were located on the project site the size
of the project would be reduced tremendously.
Brookdale has been and continues to be the first redevelopment priority for the City. Until now
the financial resources available to projects such as the redevelopment of 69th and Brooklyn
Boulevard has been unavailable until some of the Brookdale issues were resolved. The scope of
potential commitment to Brookdale beyond a retention pond is just starting to be defined based
upon the proposed repositioning of the mall. In the past year we have received a $2 million grant
from the state to help construct the retention pond. Until then the only monies available to the
EDA to undertake the Brookdale pond issue was the remaining bond issue dollars. We now have
some latitude (financially) to responsibly proceed with several development projects including
69th and Brooklyn Boulevard.
As previously indicated, the reduction in property tax classification has had a major impact on all
projects under current consideration. At the outset this project at 60,000 square feet of retail
would have a market value of approximately $4,500,000. With a 4.6 % classification rate the tax
capacity was about $207,000. With the reclassification to 3.5 %, the tax capacity is reduced to
approximately $157,500 or about a 24% reduction. If we assume that the 69th Avenue deal will
require $1,500,000 to make it feasible then we have some decisions to make. The base capacity
of the project area is about $49,000, meaning the TIF district would capture about $108,500 in
capacity or about $144,000 in TIF. It would take about 26 years to retire this debt. In order to
close this development out in ten (10) years it will require payments in the area of $226,000. The
EDA has purchased some properties already. If we provide that land up front as part of
$1,500,000 write down and we have a pay as you go on the balance of $1,123,500 the length of
time to return the obligation is approximately thirteen (13) years. A ten (10) year pay -off would
be about $170,000. Any write down of the land for this project will require TIF monies other
than those created by this project and will come from other developments in the district.
Mr. Nelson has provided the EDA with a pro forma for the project. The pro forma assumes a
land acquisition cost of $2,453,000. It does not include relocation costs.
We are working with the developers to refine the proposal and its financing. Mr. Nelson has
commitments for portions of the project.
Before public monies are committed to this project, Mr. Nelson and his partner will still have to
provide the City/EDA with partner backgrounds and proof of financial commitments. They will
also have to provide all monies necessary to undertake any condemnations to the City before
such activities will commence. I believe the remaining issues of this agreement can be concluded
in the next 30 to 60 days so that the public review process can go forward.
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MEMORANDUM
TO: Michael J. McCauley, City Manager
FROM: Tom Bublitz, Community Development S eciali��
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DATE: February 25, 1998
SUBJECT: Review of 53rd Avenue Development and Linkage Project
The primary purpose of this memorandum is to provide a summary of the 53rd Avenue
Development and Linkage project, including the acquisition and clearance phase and re-
development activities. The memorandum also includes information regarding development
options for the 53rd Avenue project along with neighborhood issues relative to the development
of the 53rd area.
• The 53rd Avenue development and linkage project was approved by the Brooklyn Center
Economic Development Authority in October 1996. Community Development Block
Grant (CDBG) funds for the project became available at the end of November and the
acquisition and relocation phase began in December 1996. The acquisition and relocation
phase lasted approximately eight months through July 1997.
• The demolition phase began in June 1997 and was complete by the end of October 1997.
0 In February 1997, staff developed a Request For Proposal (RFP) for the development of
the 53rd Avenue project. Proposals specified single family, owner occupied housing
approximately 1,550 sq. ft. above grade. The RFP was sent to 24 builders and
developers.
• By the end of March 1997, three proposals were received in response to the RFP. The
proposals are summarized below:
1. Ecklund and Swedlund Designers and Builders submitted a proposal with two site
plans. Site plan A was for 37 detached courtyard homes (single and multi- level). Site
plan B had 46 attached townhomes (single and multi - level). Copies of both site plans
are included with this memorandum.
2. Dunbar Development Corporation of Minneapolis responded to the RFP by proposing
a factory built home manufactured in Minnesota. The design of the factory built
home did not meet the intent of one of the redevelopment goals to provide move -up
type housing.
Page 1
3. Sherman Associates of Minneapolis submitted a proposal to build two story single
family homes on the site. Sherman Associates did not submit a site plan, but of the
three proposals, Sherman Associates submitted a home design that was appealing and
compatible with the neighborhood. Also, with an estimated base price of
approximately $130,000, Sherman Associates' proposal was well above the median
home values in the southeast neighborhood and provided a move -up type of house
option. Examples of the homes proposed by Sherman Associates are attached to this
memorandum.
• Staff met with Sherman Associates and Ecklund and Swedlund in May 1997. Ecklund
and Swedlund reduced the density of their proposed development to 30 units, but this was
still too dense a development. Sherman Associates' proposal provided homes that would
meet the design criteria of the RFP and the intent of providing move -up housing.
• Both Ecklund and Swedlund and Sherman Associates' proposals specified that the land
for development be written down to zero. In addition to no land costs, Sherman
Associates specified that "the EDA would turn over a buildable lot. The trail
landscaping, curb cuts, city sidewalk and utility hookups to each home would be paid for
or completed by the EDA ". In continued discussion with Sherman Associates, they
indicated that they had constructed similar homes for the City of Minneapolis and that
land had been written down to zero, and in addition, a construction subsidy of up to
$30,000 was offered for each property. In other words, if the actual sale price of the
home constructed by Sherman Associates in Minneapolis did not meet expectations, the
.� City or Minneapolis Community Development Agency would subsidize the difference
between the actual sale price and the projected sale price up to $30,000 per home.
• Sherman Associates explored options for grants or loans to provide gap financing for the
project from the Minneapolis Family Housing Fund of Minneapolis, a non - profit
corporation. The Family Housing Fund did not include single family housing outside the
central cities in its funding program. Minnesota Housing Financing Agency (MHFA)
financing programs were also reviewed and were not considered amenable to the type of
housing project proposed to the 53rd area.
• Staff proceeded to finish the acquisition/relocation and clearance phase of the project by
November 1997.
• On November 7, 1997 a letter was mailed to the neighborhood adjacent to the 53rd
project area. The letter provided an update on the 53rd Avenue Development and
Linkage Project. A copy of the November 7th letter is included with this memorandum.
• Due to the apparent expectation of developers that significant subsidies would be
included as part of the development process for the 53rd Avenue properties, staff
explored the option of developing the lots using a private firm to design and manage the
construction of the homes. Using this option, the EDA would contract with a firm to
Page 2
provide the home design and construction management, but the EDA would buy the
lumber, pay subcontractors, etc. and assume the risk of marketing the homes.
• In December, 1997 staff contacted a representative of Architectural Network
Incorporated, to provide a proposal for design and construction management, ifcluding a
proposal outlining construction costs. Staff also approached Sherman Associates to
request a proposal from them to provide design and construction management services.
Staff received the proposal from Architectural Network Incorporated (Archnet) in January
and Sherman Associates in mid February 1998.
A cost comparison summary of Archnet and Sherman Associates construction
management proposal is shown below:
Per House Cost Item Architectural Sherman. Associates
Network; Inc:
Development costs including $11,856 $17,500
design and project management
Construction Costs $110,198 $135,600
(3 Bedroom)
Total Per House $122,054 $153,100
• If the EDA chooses the option of a construction management approach, two to three
model homes could be built to begin the project. Marketing would be the responsibility
of the EDA and it would be necessary to determine how the units would be marketed,
either through a realty company or some other marketing firm.
• Once the EDA selects an approach for constructing the homes, the Bellvue neighborhood
would be invited to provide input on the development plan. Specific neighborhood
concerns and issues include:
1. Site plan and housing design.
2. Landscaping the area between 53rd and the rear lot lines of the new homes.
3. Access and usage of Bellvue Park.
4. Traffic flow and volume on Camden Avenue and surrounding streets.
Page 3
DELLVUE PARK
CITY OF UP130K. YN CENTER
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City of Brooklyn Center
A great place to start. A great place to stay.
November 7, 1997
RE: Update on 53rd Avenue Development and Linkage Project
Dear Resident:
I would like to take this opportunity to update you on the progress with the 53rd Avenue Project.
Unfortunately, as you are aware, we are somewhat behind our projected pace. There have been a
number of reasons that the process of clearing the site has taken longer than expected. The process
of asbestos removal and coordination of schedules with private contractors has been somewhat
longer than anticipated. We did send out requests for proposals to developers. Those proposals were
reviewed. City staff is in the process of continued discussions with developers and other
governmental agencies to review potential development. As previously indicated, our first
preference is for single - family detached owner - occupied housing. Proposals that did not offer an
aesthetically pleasing concept for owner- occupied housing, either single- family detached or
townhome, would not be pursued. We hope to determine if we are in the position to have a viable
development proposal fully developed by the end of the year.
3
Now that all of the structures have been removed in the project area, we will be placing additional
topsoil on the area and spreading it out. This topsoil will originate from the Regional Pond Project
being constructed to provide storm water drainage for the Brookdale area. This topsoil will be
seeded in the spring, except in areas where construction activity will begin in the spring. If we do-
not have construction activity scheduled to begin immediately in any portion this spring, then the
entire area will be seeded. We want this area to be maintained" with a complete grass cover next
summer, except in areas of actual construction.
During the week of November 3rd, materials from a construction site were dumped in the. project
area just west of Camden area. These multiple loads were not authorized to be dumped there. We
are investigating to try to find out who did this dumping. Most of those loads will. have to be
removed. If anyone has information on this unauthorized dumping, please call Tom Bublitz at 569 -
3433.
I am enclosing for your information an alternate concept for dealing with street closure that was
developed by members of the Bellvue Park Neighborhood Association. This alternative
configuration, City staff believes, has several. advantages over the original concept that would have
closed Camden Avenue and left Bryant Avenue and 4th Street open. As we work to come up with
a specific development proposal with a developer, we anticipate using this alternative design as the
basic framework. That framework then would have 4th Street closed and Camden Avenue open.
While we have not progressed as far as we would have hoped at this point, we are taking a careful
look at development proposals to maximize the benefit to the neighborhood. The replacement
housing is designed to be owner- occupied and to be an asset to the area.
6301 Shingle Creek Pkwy, Brooklyn Center, MN 55430 -2199 • City Hall & TDD Number (612) 569 -3300
Recreation and Community Center Phone & TDD Number (612) 569 -3400 • FAX (612) 569 -3494
An Af)'zrmatiue Action /Equal Opportunities Employer
53rd Avenue Development and Linkage Project
Page 2
November 7, 1997
As an additional note, I would like to bring you up -to -date on one of the components of the City's
proposed 1999 street improvement plan. We are proposing to reconstruct Dupont, Colfax, Bryant,
Camden Avenues, and 4th Street between 53rd and 55th and reconstruct 55th Avenue from James
Avenue to 4th Street. This will be a continuation of the water and sewer utility replacement and
storm water handling system. The reconstructed streets would also have curb and gutter. The
treatment would be similar to the project in 1996 on Logan, Knox, and James Avenues.
As previously indicated, we plan to have a neighborhood meeting to discuss any specific,
development proposal that would be developed for neighborhood input and information. If you have
any questions or concerns in the interim, please feel free to contact Tom Bublitz, Brad Hoffman, or
me. If you have any questions regarding the proposed street improvement project, please feel free
to contact Diane Spector or Scott Brink.
Sincere
V lchael J. McCau
City Manager
MJM:sk
enc.
53rd Avenue Development and Linkage'Project: 4th Avenue Closure Option
June, 199]
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53RD AVE
February 23, 1998
MEMO
TO: Michael J. McCauley, City Manager
FRO Jane A. Chambers, Assistant City Manager/HR Director
SUBJEC Cost Estimates for Relocation of Liquor Store #2, Brooklyn Blvd.
At its Work session of January 20, 1998, the City Council discussed options for moving of Liquor
Store operations at 6250 Brooklyn Boulevard due to the construction of improved fire facilities
on the site. Finance Director Charlie Hansen, Liquor Store Manager Jerry Olson, and I have been
working together to secure cost estimates for moving of the liquor store to a new site in the
vicinity of Brooklyn Boulevard and 63rd Street. Attachments to this report are spread- sheets
showing estimated moving and rennovations costs, proformas for each location and different sales
projections, as well as a memo from Charlie Hansen, Finance Director outlining the basis upon
which the proformas were completed.
Option One: Boulevard ShMnine Center Lease Snace
One option available is to move the store to an existing store front facility located in Boulevard
Shopping Center, which is owned and leased by Kraus- Anderson Realty Company. Attached is a
spread sheet outlining both one -time moving and construction costs estimated to be associated
with the move to this site. These costs have been rounded to $50,000 and are included in the
projected proforma for the Boulevard Shopping Center store which factors in rent, sales, and the
one -time construction/relocation costs. It is anticipated that occupancy of the store would take
place by June 1, 1998. City staff has initially discussed a lease period of two years with Kraus -
Anderson, but that was before asbestos abatement for the tile floor in the space was an issue. City
staff has been advised by carpet layers that it would be unwise to lay carpet on top of the existing
tiles because they are loose around the edge of the space, and would prevent a good job of carpet
installation. Kraus - Anderson has indicated that they would make a $10,000 allowance for the
work that needs to be completed in the store, including the asbestos abatement. The attached
proforma related to relocation in the Kraus- Anderson site reflects the $10,000 contribution and
the store's estimated cost of operations. The proforma is based upon a projected 18% increase in
sales over the pre - Rainbow sales at the Fire Station location. This is about half of the current
increase experienced by the Fire Station location since Rainbow opened.
Another possibility for this location has been suggested by Kraus- Anderson, but no discussion of
it has taken place with staff. This suggestion is for the City to commit to a five year rental of the
store and have the owners provide for the $20,000 to 25,000 cost of repairs for the space. A
proforma for this suggestion has not yet been developed as it would need to be based on further
information about costs of the five year lease.
Option Two: Rainbow Sh000inc Center Lease Space
A second option which has been explored by the staff is for moving into new space connected to
the Rainbow Store north of the current liquor store location. This move would involve making
improvements to a currently unfinished space, and taking about 5,000 square feet of an existing
12,000 sq.ft. shell. Costs are projected on the basis of the City making the improvements
necessary to separate the space, provide for a store -front with windows and doors, and installing
all necessary items to make the store operational. The owners of this space are interested in the
City as a tenant for the space, but would want at least a 10 year lease agreement as part of the
deal. Initial discussions on rental costs have been conducted with regard to this space, but serious
negotiations have not taken place. The proforma reflects an annual rent cost of $20 per square
foot rent (including combined area charges) suggested by the owner's agent at our initial
discussion. The proforma is also based upon an estimated 44% increase in sales over the pre -
Rainbow sales at the Fire Station location.
cc: Charlie Hansen, Finance Director
Sheetl
(Estimated Moving and Rennovation Costs I 1
lRelocation of Liquor Store #2 to Boulevard Shopping Center
I
l Moving Expenses I Based on written estimates l 1
1
Moving of inventory I l $ 1,740.00
I I I I 1
(Moving of existing cooler I I I 1
system $ 10,807.00
Signage I I $ 4,100.00 I l
I
Security System ( 1
(disconnect and install I I $ 750.00 I
Cash Register I I I
Idisconnect and install I ( $ 762.00
I I I 1 I
Alarm System I I $ 415.00 ]plus monthly fees of $37
l I 1
Total Moving Expenses I $ 18,574.00'
I I I I I
I Rennovation of Existing Space
to meet building inspector requirements 1
land building function
Contractor estimates
I I I I I I 1
IShelving 1 I $ 1,350.00(
Carpet and Installation ( $ 3,102.00
I I I 1 I 1
(Various Repairs
required by Building Official
and to put store in working
lorder I $ 20,634.00 — Average of 3 bids
I 1 1 1$25,300, and $19,770
(Asbestos abatement $ 7,068.00 '* To be negotiated with Owner
I I
(Total Rehabilitation Work I $ 32,154.00 1
I
(less Owner's Allowance I $10,000 I 1
I I I I I
(Total Estimated Move -In and
(Rennovation Cost 1 $ 40,728.00
Page 1
City of Brooklyn Center
Boulevard Shopping Center
Leased Store Proforma
1997 1998 1999 2000 2001
Budget Budget Budget Budget Budget
Operating Revenues (1) 936,000 1,030,000 1,147,000 1,181,410 1,216,852
Cost of Sales 709,515 780,715 878,719 905,081 932,233
Gross Margin 226,485 249,285 268,281 276,329 284,619
Operating Expenses
Salaries & Wages 102,862 112,894 116,281 119,769 123,362
Fringe Benefits 16,541 19,445 20,028 20,629 21,248
Supplies 3,800 3,800 3,914 4,031 4,152
Consulting (audit) 825 840 865 891 918
Telephone 1,500 1,500 1,545 1,591 1,639
Advertising 2,000 4,000 4,120 4,244 4,371
Repair & Maintenance 2,595 2,210 2,276 2,345 2,415
Building Rent 13,000 27,000 28,000 28,840
LOG IS 1,924 1,811 1,865 1,921 1,979
Other Contractual Service 8,075 5,020 5,171 5,326 5,485
Central Garage Charges 935 571 588 606 624
Insurance 5,385 5,860 6,036 6,217 6,403
Utilities 7,080 9,880 9,000 9,270 9,548
Administrative Services 9,657 8,139 8,383 8,635 8,894
Depreciation 5,580 4,810 25,100 28,000 10,000
Total Operating Expenses 168,759 193,780 232,173 241,475 229,879
Nonoperating Revenues /(Expenses)
Other Revenue /(Expense) 1,000 1,000 1,000 1,000 1,000
Interest Expense 0
Nonoperating Totals 1,000 1,000 1,000 1,000 1,000
Net Income 58,726 56,505 37,108 35,855 55,740
Cash Flow Analysis
Add back depreciation 5,580 4,810 25,100 28,000 10,000
Construction /Relocation costs 40,000
Deduct capital outlay 20,000 5,000
Net Cash Available 64,306 21,315 62,208 43,855 60,740
(1) Sales represent a 18% increase over the pre- Rainbow sales at the Fire Station store.
liquorlproforma.xis Kraus- Anderson (2) 2/23/98 11:56 AM
Sheetl
Estimated Moving and Improvement Costs I I 1
Relocation of Liquor Store #2 to Rainbow Shopping Center j
I
(Moving Expenses (Based upon Estimates of Costs I
I
Moving of Inventory $1,740 I
I ! I I I
Improvements ( $100,000 lestimated at $20 per sq. ft I
Store Front I
HVAC ! (draw from I $7,500 ! !
existing) I I ( I
Carpet I I I $12,3001 1
Ceiling I I j $5,0001
( Counters I ! I $2,000
+Fire Sprinklers I $6,000
1 Plumbing j I
(Electrical I I ! I
( Bathroom ( $3,000
Shelving I I !
Malls ( ! $8,000
I I i
I (Coolers 1 j $48,0001 I 1
(Estimated total 1$149,740
Page 1
City of Brooklyn Center
Rainbow Shopping Center
Leased Store Proforma
1997 1998 1999 2000 2001
Budget Budget Budget Budget Budget
Operating Revenues (1) 936,000 1,200,000 1,400,000 1,442,000 1,485,260
Cost of Sales 709,515 919,322 1,072,543 1,104,719 1,137,861
Gross Margin 226,485 280,678 327,457 337,281 347,399
Operating Expenses
Salaries & Wages 102,862 112,894 116,281 119,769 123,362
Fringe Benefits 16,541 19,445 20,028 20,629 21,248
Supplies 3,800 3,800 3,914 4,031 4,152
Consulting (audit) 825 840 865 891 918
Telephone 1,500 1,500 1,545 1,591 1,639
Advertising 2,000 4,000 4,120 4,244 4,371
Repair & Maintenance 2,595 2,210 2,276 2,345 2,415
Building Rent 60,000 100,000 103,000 106,090
LOGIS 1,924 1,811 1,865 1,921 1,979
Other Contractual Service 8,075 5,020 5,171 5,326 5,485
Central Garage Charges 935 571 588 606 624
Insurance 5,385 5,860 6,036 6,217 6,403
Utilities 7,080 9,880 9,000 9,270 9,548
Administrative Services 9,657 8,139 8,383 8,635 8,894
Depreciation 5,580 4,810 20,100 23,000 25,000
Total Operating Expenses 168,759 240,780 300,173 311,475 322,129
Nonoperating Revenues /(Expenses)
Other Revenue /(Expense) 1,000 1,000 1,000 1,000 1,000
Interest Expense 0
Nonoperating Totals 1,000 1,000 1,000 1,000 1,000
Net Income 58,726 40,898 28,285 26,806 26,270
Cash Flow Analysis
Add back depreciation 5,580 4,810 20.100 23,000 25,000
Construction /Relocation costs 150,000
Deduct capital outlay 20,000 5,000
Net Cash Available 64,306 - 104,292 48,385 29,806 46,270
(1) Sales represent a 44% increase over the pre- Rainbow sales at the Fire Station store.
liquorlproformaAs Rainbow 2/17/98 3:19 PM
City of Brooklyn Center
Rainbow Shopping Center
Leased Store Proforma
1997 1998 1999 2000 2001
Budget Budget Budget Budget Budget
Operating Revenues (1) 936,000 1,200,000 1,240,889 1,278,116 1,316,459
Cost of Sales 709,515 919,322 950,648 979,167 1,008,542
Gross Margin 226,485 280,678 290,241 298,949 307,917
Operating Expenses
Salaries & Wages 102,862 112,894 116,281 119,769 123,362
Fringe Benefits 16,541 19,445 20,028 20,629 21,248
Supplies 3,800 3,800 3,914 4,031 4,152
Consulting (audit) 825 840 865 891 918
Telephone 1,500 1,500 1,545 1,591 1,639
Advertising 2,000 4,000 4,120 4,244 4,371
Repair & Maintenance 2,595 2,210 2,276 2,345 2,415
Building Rent 60,000 100,000 103,000 106,090
LOGIS 1,924 1,811 1,865 1,921 1,979
Other Contractual Service 8,075 5,020 5,171 5,326 5,485
Central Garage Charges 935 571 588 606 624
Insurance 5,385 5,860 6,036 6,217 6,403
Utilities 7,080 9,880 9,000 9,270 9,548
Administrative Services 9,657 8,139 8,383 8,635 8,894
Depreciation 5,580 4,810 20,100 23,000 25,000
Total Operating Expenses 168,759 240,780 300,173 311,475 322,129
Nonoperating Revenues /(Expenses)
Other Revenue /(Expense) 1,000 1,000 1,000 1,000 1,000
Interest Expense 0
Nonoperating Totals 1,000 1,000 1,000 1,000 1,000
Net Income 58,726 40,898 -8,931 - 11,526 - 13,212
Cash Flow Analysis
Add back depreciation 5,580 4,810 20,100 23,000 25,000
Construction /Relocation costs 150,000
Deduct capital outlay 20,000 5,000
Net Cash Available 64,306 - 104,292 11,169 -8,526 6,788
(1) Sales represent a 27% increase over the pre- Rainbow sales at the Fire Station store.
liquorlproforma.xls Rainbow (2) 2/18/98 11:43 AM
MEMORANDUM
TO: Michael J. McCauley, City Manager
FROM: Charlie Hansen, Finance Director C H
DATE: February 19, 1998
SUBJECT. New Municipal Liquor Store Proformas - Underlying
Assumptions
Several versions of a proforma for potential Boulevard Liquor Store replacements have been
prepared. Certain underlying assumptions needed to be made. Some assumptions are constant
in all the proforma versions. Others assumptions have variations with are unique to a proforma
version. This memo is intended to summarize the assumptions.
Inflation
I have assumed
that sales and operating p expenses will increase at an inflation rate of 3 % year
per g P P Y
from the 1998 budget. Sales, building rent and some other items have to be initially set for the
new store locations.
Operating Revenues
The existing Boulevard Liquor Store operates in the building shared with the Fire Station. It has
experienced a 27% increase in sales for the months of September through December 1997,
compared to the sales for the same months in 1996. This 27% increase is used as a benchmark.
I expect that a store on any of the Brooklyn Boulevard and 63rd Avenue corners will have higher
sales due to the Rainbow traffic. The increase fora iven site may a more or g y b less than 27 % due
to issues of visibility and access.
Two proformas were prepared for the Rainbow site. One uses a conservative 27% increase in
sales. The other uses an optimistic 44% increase.
Cost of Sales
The existing Boulevard Liquor Store has experience cost of sales equal to 76.6% of sales during
1997. I have assumed that any of the potential sites with any level of sales will experience cost
of sales equal to 76.6% of sales.
Staffing
The 1998 budget provides for an increase in salaries, wages, and fringe benefits. This is intended
to raise staff levels to the point where two persons are in the store at all times. A third person will
be present on Thursdays evenings and Saturday days. A fourth person will be present on Friday
and Saturday evenings. Unless there is a sales increase of more than 50 %, this staff level is
adequate to operate the store.
Building Rent
Fairly definite rent has been negotiated with Kraus- Anderson for a 4,000 sq ft store front in the
Boulevard Shopping Center. Base rent will be $5.00 per sq. ft. per year during the first year, and
$5.50 the second year. The remaining unknown is common area expense (CAM). CAM covers
the landlord's cost for taxes, insurance, parking lot maintenance, etc. It typically is finalized at
the end of each year. We don't know how much the CAM will be for this site, but I have assumed
it will equal 30% of the base rent. This is similar to our experience at the Northbrook Liquor
Store and similar to what Rainbow quoted.
Only preliminary discussions have taken place with an agent for the Rainbow store. They
indicated the need for a lease with a term of ten years. This conflicts with the sentiment expressed
by the City Council at the January 20, 1998 work session. We felt there was no point in entering
into hard negotiations unless the City Council is open to this long of a commitment.
Rainbow's agent also indicated that they are looking for rent on the order of $15.00 per sq. ft. per
year for a 5,000 sq. ft. store and CAM of $4.00 to $5.00 per sq. ft. per year. They also indicated
that they would like the City to pay the cost of completing the interior finished space of the store.
In hard negotiations, the City could probably get some credit for the cost of completing the interior
against the rent. This would improve the proforma. Rainbow's agent also indicated that some
part of the rent could be dependent on sales. This would reduce the risk to the City of sales not
living up to expectations.
Construction /Relocation costs
We estimated the cost of refinishing the interior and moving the store to the Boulevard Shopping
Center to be $50,000. This cost is depreciated over two years since that is the time limit discussed
by the City Council. If the store remained open in that locations after two years, the depreciation
cost drops and profits increase.
We estimated the cost of refinishing the interior and moving the store to the Rainbow site to be
$150,000. This cost is depreciated over ten years since that is the lease term discussed by
Rainbow's agent.
Capital Outlay
It is assumed that if the store remains open in any location, that the cash register /inventory control
system will need to be replace in the year 2000 at a cost of $20,000. Likewise, the security
camera system will need replacing in the year 2001 at a cost of $5,000.