11-30-85 agenda /
CITY OF RICHFIELD, MINNESOTA
• Office of City Manager-
Council Letter No. 373
Agenda September 30, 1985
TheeHonorable Mayor
and
Members of the City Council
City of Richfield
Subject: Public Hearing for Issuance of Industrial
Development Revenue Bonds for an Office Service
Center Project on the Cedar.Avenue Liquor Store
Sine.T'o Be•Developed by Lincoln.Companies~
Council Members:
. On September 9, 1985 the City Council was- asked to set a
date for the public hearing for the use of IDRB's for the
Lincoln Companies development. Trey would form a partnership
known as Richfield Office Showroom Developers. An overview
presentation of.the. Office/Service Center proposal was made
at that meeting. Upon completion of the presentation, Mr.
Robert Hall, of Nacon Properties expressed their interest in
developing the site as well. He was instructed to prepare a
presentation for the September 30th meeting. The Nacon proposal
is discussed in another council agenda letter.
Lincoln Companies would purchase from the city the existing
liquor-store facility and construct on this site a 30,000 square
foot one story office/service center facility. The existing
trees will be retained and there will be no site access from
18th Avenue. Mr. DuFresne will present his proposal on
September 30th. The City would retain the southwest corner for
construction of a liquor store.
On April 15, 1885, the City Council and the HRA selected
Lincoln Companies to be the developer of this site and gave
first reading to the ordinance providing for the sale of the
land. At this time in the process, the future site. of a new
liquor store was undetermined but was assumed to be away from
this site.. This was the result of a lengthy process which
involved evaluation of several reuse concepts by staff, the
neighborhood, the City Council and HRA. The reuse concepts
included multi-unit housing, an entertainment center, and, the-
office/service center. The neighborhood, staff, HRA and Council
found the Lincoln Companies concept to~be the most desireable.
• Thus, staff was authorized. to initiate negotiations on a
developerTs agreement. -Discussions have been underway, for
sometime. In August of 1885, the developer and the..City reached
an informal agreement whereby the City liquor 'store would be
buil at the southwest corner (66th Street and Cedar Avenue) and
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the developer would build a smaller facility (30,000 sq. ft.).
The developer also agreed to continue .h is efforts to try and
acquire additional land south of 67th Street.
• The initial development concept envisioned that the existing
liquor store would be relocated to another site adjacent- to 66th
Street in east Richfield and Lincoln Com anies would construct
~ P
a 45,000 square foot one story office/service center type
facility on the Cedar Avenue Liquor. Store site.. The row of
trees along. 18th Avenue would be retained. All of these
- features heaped to`make the development compatible to the
neighborhood. In meetings with the adjoining community, the
response to this concept was very favorable.
This concept has been difficult to implem$nt because of the
problem in identifying an alternative liquor store site and
coordinating the timing of the two developments. This
difficulty has been resolved by slightly redefining the
development concept as discussed above. The former service
station property would be retained by the city and a liquor
-store built on it. •
A decision on the city's final IDRB entitlement must be
made by October 31, 1985. This concept is consistent with the
"Guidelines for the Issuance of IDRB's". A developers agreement
is being negotiated based on the previous authorization given to
staff. The con truetion of a new liquor store would be financed
substantially by the land sale proceeds received from Lincoln
Companies. In a separate council agenda letter is a City staff
• analysis for-your review and formal action concerning the
.options on: (1) financing of a new liquor facility;
(2) leasinga new facility; (3) rehabilitating the Cedar store;
(4) operating just two liquor stores; and, (5) the sale of all
three municipal liquor stores.
In considering. whether to proceed with the Lincoln company
proposal, or the Nacon concept, the Council should consider the
reputation. of the community with developers. The Council has in
effect by past actions, already selected Lincoln Companies.
It is recommended that the City Council hold the public
hearing and consider adopting the attached resolution
authorizing .the use of ID.RB's for .this. project and the execution
of certain agreements by the Mayor and City Manager including
the attached Memorandum of Agreement.
R pectfu y bmitted,
' a r_._..
. ohn G. Cartwrig t
City Manager
JGC/eja
•
RESOLUTION N0.
RESOLUTION GIVING PRELIMINARY APPROVAL TO A
PROJECT UNDER THE MUNICIPAL INDUSTRIAL
DEVELOPMENT ACT: REFERRING THE PROPOSAL TO
'THE DEPARTMENT OF ENERGY, PLANNING AND DEVELOPMENT
FOR APPROVAL; AND AUTHORIZING EXECUTION OF A MEMORANDUM
OF AGREEMENT AND PREPARATION OF NECESSARY DOCUMENTS
BE IT RBSOLVED By the City Council of the City of Richfield,
Minnesota (City), as follows:
1. It is hereby found, determined and declared as follows:
1.1 The welfare of the State of Minnesota requires active
promotion, attraction, encouragement and development of
economically sound industry and commerce through governmental
acts to prevent, so far as possible, emergency of blighted lands
and areas of chronic unemployment,. and the state has encouraged
local government units to act to prevent such economic
deterioration.
1.2 Richfield Office Showroom Developers, a Minnesota
general partnership (Company), has advised this Council of its
desire to acquire land and construct and-equip thereon an
approximately 30,000 square food office showroom facility for
lease to various tenants (Project).
• 1.3 The existence of the Project within the City would
significantly increase the tax base of the City and School
District and enhance opportunities for employment for residents
of the City and surrounding area.
1.4 The City has been advised by the Company that
conventional, commercial financing to pay the capital cost of
the Project is available only on a limited basis and at such
high costs of borrowing that the economic feasibility of
operating the Project-would be significantly reduced, but that
with the aid of municipal financing, and its resulting low
borrowing cost, the Project is economically more feasible.
1.5 This Council has been advised by
Minnesota, investment bankers,
that on the basis of information submitted to it and the
discussions with representatives of the Company that bonds or
notes to finance all or part of the cost of the Project can be
successfully sold, and that it will undertake to purchase such
bonds or notes.
1.6 The City is authorized by Minnesota Statutes, Chapter
X74, to issue its revenue bonds, notes or other obligations
(Bonds) to finance capital projects consisting of properties
used and useful in connection with a revenue producing
enterprise, such as that of the Company, and the issuance of
. such Bonds by the City would be a substantial inducement to the
Company to construct the Project within the City.
2. On the basis of information given the City to date, it
presently appears that it would be in the best interest of the
City to issue its industrial development revenue Bonds under the
provisions of Minnesota Statutes Chapter 474. (Act) to finance
the Project of the Company at a cost presently estimated to be
approximately $2,900,000.
3. The Council .declares that it is its present intent to
issue the Bonds. The Project above referred to is hereby given
preliminary approval by the City and the issuance of Bonds for
such purpose and in such amount approved, subject to approval of
the Project by the Minnesota Energy and Economic Development
Authority (Authority) and to the mutual agreement of this body,
the Company and the initial purchasers of the Bonds as to the
' details of the Bonds and provisions for their payment. In all
events, it is understood, however, that the Bonds shall not
constitute a charge.,.. lien or encumbrance legal or equitable upon
any property of the City except the Project, and each Bond,
when, as and if issued, shall recite in substance that the
Bond,including interest thereon, is payable solely from the
revenues received from the Project and properly pledged to the
payment thereof, and .shall not constitute a debt of the City
within the meaning of any constitutional, charter or statutory
limitation thereon.
4. The form of Memorandum of Agreement relating to the
issuance of the Bonds to finance the cost of the Project is
hereby approved, and the Mayor 'and City Manager are hereby
authorized and directed to execute the Memorandum of Agreement
in behalf of the City.
5. In accordance with Minnesota Statutes, Section 474.01,
Subdivision 7A, the Mayor and City Manager are authorized and
directed to submit the proposal for the Project to the Authority
for approval. The Mayor, City Manager, City Clerk, City
Attorney and other officers, employees, and agents of the City
and LeFevere, Lefler, Kennedy, O'Brien & Drawz, a Professional
Association, as bond counsel and City Attorney, are hereby
authorized to provide the Authority. with any preliminary
information needed for this purpose, and the City Attorney is
authorized. to initiate and assist in the preparation of such
documents as may be appropriate to the Project, if it is
approved by the Authority.
John Hamilton, Mayor
ATTEST:
Thomas Ferber, City Clerk
~s
[Draft]
MEMORANDUM OF AGREEMENT
THIS MEMORANDUM OF AGREEMrtvl, dated as of 1985 between
the City of Richfield, Minnesota (City) and Richfield Office Showroom
Developers, a Minnesota general partnership .(Company) provides as
follows:
1. Preliminary Statement. Among the matters of mutual induce-
meat which have resulted in this Agreement are the following:
(a} the Citq is authorized and empowered by the provisions
of Chapter 474, Minnesota Statutes, as amended (Act), to issue
revenuebonds to defray the. costa of a project as defined in the
Act;
(b) the Company has proposed that the City, pursuant to the
Act, issue its revenue bonds to defray the costs to be .incurred
in connection with the acquisition of land and the construction
and equipping thereon of as approximately 30,000 square foot
office showroom facility for lease to various tenants (Project),
and that the. City and the Company enter into a lease, sale or
loan agreement or similar agreement satisfying the requirements
of the Act (Revenue Agreement);
(c) the Company wishes to obtain satisfactory assurance
from the City that the proceeds of. the sale of the revenue bonds
of the City will be made available to finance the costs of the
Project;
(d) subject to due compliance. with all requirements of law,
the City by virtue of such s'tatutorq authority as may now or
.hereafter be conferred by the Act, will issue and sell its reve-
nue bonds or other obligations, in an amount not exceeding
$2,900.,000 (Bonds) to pay the costs of the Project;
(e) the~Boads shall be limited obligations of the City and
the principal of and interest on the Bonds shall be payable
solely out of the revenues derived from amounts payable to the
City by the Company pursuant to the provisions of the Revenue
Agreement.
2. Undertakinsts oa the Part of the Citv. Subject to the con-
ditions stated in (d) of paragraph 1 hereof, the City agrees as
follows:
(a) that it is its present intent to authorize the issuance
and sale of the Bonds,. pursuant to the terms of the Act as then
is force, and the terms and conditions of this Agreement..
(b) that, if it issues and sells the Bonds, it will as
requested by the Company eater into the Revenue Agreement with
the Company. The lease rentals, installment sale payments, loan
payments or other amounts payable under the Revenue Agreement
wil]. be sufficient to pay the principal and interest and redemp-
tioa premium, if any, on the Bonds as and when the same shall
become due and payable.
3. Undertakinas on the Part of the Company. The Company agrees
as follows: '
(a) that it wi21 use all reasonable efforts to find one or
more purchasers for the Bonds.
(b) that contemporaneously with the deliverq of the Bonds
the Company will enter into the Revenue Agreement with the City
under the terms of which the Company wail provide security to the
Gity for payment of sums sufficient is the aggregate to pay the
principal of and interest and redemption premium, if any, on the _
Bonds as and when the same shall become due and payable.
(c) that it will pay all costs of the Citq in connection
with the financing of the Project whether or not the Project is
carried to completion or approval by the Minnesota Energy and
Economic Development Authority.
k. General Provisions..
(a) All commitments of the City under paragraph 2 hereof
and of the Company under paragraph 3 hereof are subject to the
condition that within 12 months from the date hereof (or such
other date as shall be mutually satisfactory to the City and the
Company, and as set forth in an amendment to this Agreement), the
City and the Company shall have agreed to mutually acceptable
terms. and conditions of the Revenue Agreement, the Bonds and of
the other instruments and proceedings relating to the Bonds.
(b) If the events set forth, in (a) of this paragraph do not
take place within the time set forth therein, or any modification
thereof, and the Bonds are not sold and delivered within such
time, the Company agrees that it will reimburse the City for all
reasonable and necessary direct out-of-pocket expenses-which the
City may incur arising from the execution of this Agreement and
the performance by the City of its obligations hereunder, and
this Agreement shall thereupon terminate.
(c) This Agreement may be terminated by mutual consent of
the .parties at nay time,. provided, however, that the City
i
•
reserves the right, at its sole discretion, to withdraw its ap-
proval of the,Project if at any time the City Council determines
that the public interest and the purpose of the Act will not be
served. by the Project.
IN WITNESS WHEREOF, the parties .hereto have entered into this
Agreement by their officers thereunto duly authorized as of the date
first written above.
CZ~Y OF RICHFIELD, MINNESOTA
By
Zts Mayor
By
Its City Manager
RICHFIELD OFFZCE SHOWROOM
ur,vr,i.OPERS
By
Its general partner
CITY OF RICHFIELD, MINNESOTA
Office of .City Manager
Council Letter No. 372
Agenda September 30, 1885
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: The Future for the Ricr~field Municipal Liquor
•Stores
Council Members:
There are five opt-ions to consider wren addressing the
question of what should tree city do about the future of the
Cedar Avenue Liquor Store. The options are':
1. Repair the existing store and continue to operate
from the present location. -The former service
station site could be leased as has been past
practice;
2. The city could sell off a part of the site and
build a new store on the southwest corner of 66th
Street and Cedar Avenue;
3. The city could sell the entire site and lease back
a store for municipal liquor sales;
4. The city could sell the entire site and continue to
operate two stores (Penn Avenue-and Lyndale Avenue).
Take the proceeds from the land. sale, invest the
principal, and appropriate the annual interest
earnings to the Special Revenue Fund for capital
outlay projects. Profits from the two stores would
also be transferred to the Special Revenue Fund; and,
5. The city could-test the water to see if the city could
sell all three stores and combine the land sale
proceeds with the cast fund balances from the Special
Revenue and Liquor Funds for a long term investment.
The interest earnings would be used to fund the
Capital Improvement Budget (CIB).
~I
An Analysis of ,the Five Options
Option 1 - Repair the existing Cedar.Avenue store.
• The Cedar Avenue liquor store needs a new roof-and
walk-in cooler. The parking. lot needs resurfacing.
The estimated cost to upgrade this site is estimated
tc be $120,000.
This option has a number of disadvantages:
{a) the site is too large and: therefore underutilized;
(b) the store area is twice the size that is ideal;
(c) the area needs a project that may spark additional
redevelopment along the east side of Cedar Avenue
north of 66th Street..
The. principal advantage is:
(a) the site may become more valuable in the. future
when the City of Bloomington Airport South/Met
Stadium site is developed.
Option 2 - City Build a New Store '
It is estimated that the new store would be more cost
effective to operate. The estimated savings in the
.first year is approximately $20,000 in operating
• expenses.
If the city sold part of the site, it is anticipated,
depending upon the type of use that would be built on
the site, that the city could get $250,000 or more.'
The cost to build a new store including fixtures is
$375,000. The land sale proceeds and Special Revenue
Fund cash balance could easily finance the project. 'The
SRF is expected to be $305,000 by December 31, 1985. The
Liquor Fund cash balance is $375,000.
Revenue from the investment of SRF or Liquor Fund would,
of course, be less because some funds would be used to
help pay for the new building. Tr~is interest revenue i
reduction would be .more than offset by the savings -from
operating a new energy efficient store.
Option 3. - Sell the Entire Site and Lease Space for
A Municipal Liquor Store
The cost to lease a new fully equipped liquor store is
nearly $60,000 more per year to operate than a new store
owned by the city including depreciation expense for a
new store. This estimate is based upon a $11.00 per
square foot rental rate.
•
~-3
The city would have land proceeds to invest with the
interest earnings fore transfer to the SRF.
The.. advantage is:
(a) if competition or other out ide forces caused
a continual decline in profits, the city could
walk away "at the end"of the lease or sell its
lease .interests..
The principal disadvantage is the higher annual operating
costs.
Option 5. - Sell the Cedar Avenue Site and Operate
Two Stores
The cityfs consultant, Beverage Marketing, Inc. (BMI),
believes the sale of the Cedar store would see only
one third of the Cedar Avenue sales going to our other
two stores.
There would be savings in operating expenses... The cost of
personal services as a percent of sales which now averages.
around 7.4~ would probably drop to $.5~ or so. Staff's
initial. judgment is that with a two store operation, one
of the two remaining liquor store manager positions could.
be replaced by the Director of Liquor Operations.
Option 5. - Sell A11 Three Stores
If all three stores were sold at their fair market value,
and the land sale proceeds were added to the cash fund
balances of the SRF and Liquor~Funds, the city could
anticipate an annual net income of $390,000 (assumes a
10..33 yield on the investments).
The advantages of selling all three stores are:
(a) avoid the risk of lower net profits because of:
1-more competition; and, 2- increasing expenses
with no increase in sales
(b) the potential of greater insurance premiums could
be avoided. The recent history for city-wide.
insurance premiums is:
1984-$104,000
1985-$385,000
1986-$435,000 estimate
(c) without the need for dram shop insurance, the city
may be-able to lower its overall insurance premiums
since more bidders might be attracted.
Tree key to this option is the question can the city achieve
$3.1 million for the liquor-business, the land and stores?
• If_not the option to sell only the Cedar Avenue store may
be the next best option.
LI ANALYSIS
""'"tted)
sell Penn &
~ Lyndale at
3 stores 2 stores sell 3 stores Market Value,
Cedar at less
than MV.
1983 1984 1985 R 1986 19.86 1986
Resources
Net Revenue F~oan Sale $1_.142 $1.091 $1.158 $1.158 $ .908 .000 .000
Misc. Revenues + 60 + .087 + .062 + .062 + -.110 + _.360.. + .306
Net Revenues 1.202 1.178 1.220 1.220 1.01••8 .360 .306
Zbtal Operating Expenses - .682 - .698 - .802 .843 .662 .000 .000
Gross Profit .520 .480 .418 .377 .356 .360 .306.
Minus Transfers
Zb General Fund .057 .060 .064 .067 .055
'Ib Self Insurance .004 .004 .004 .004 .003
Capital Outlay .004 .010 .015 .004 .004
Total Transfers .065 .074 .083 .075 .062 .000 .000
Net Profits
'IO Working Capital .055 .012 .095 .002 .000 .000 .000 ~
Zb Special Revenue Fund .400 .39.4. .240 .300 .294 .360 .306
Zbtal Net Profit .455 .406 .335 .302 .294 .360 .306
AssL.~~.ions
1. Assumes there is m purchase of a new ~~~.ater system. •
2. .Assumes no construction cost in 1985 for a new stAre; misc. interest increased $25,000.
3. Assumes 1986 interest earnings greater than presented in 1986 budget.
4 . Total net profit figures do mt include the potential interest earnings from investing the cash balance
' in the Special l~venue Fund.
Conclusions
Based upcin the analysis which estimates total net profit fore
the various options, the conclusions are:
1. If the three liquor stores could be sold for the
business value .plus the market value for the land and
the buildings, the potential for earning the greatest
annual profit lies with this option. This could be a
big IF !
If the city were successful in selling all three stores
for
$3 1 million and invested the sale roc ed
p e s at
10.33 interest rate and add to '
this the cash balance
in the Li uor Fund
q ($375,000),- the city could expect to
receive $3b0,000 for capital improvements. li
Also, the Special Revenue Fund cash balance ($305,000)
could be invested at higher yields than at present.
These earnings could be added to the $3b0,000 to make a II
grand total available of $390-,474.
All risks of competition, increasing insurance premiums
and the unknown state legislative actions could be '
avoided.. I
2. If the city were unsuccessful in selling all three.
stores for $3.1 million., the next best option is to
• sell all three stores for $2,597,500. This assumes '
that~the Penn and Lyndale Avenue stores would
sell for a price that includes the liquor
business a
v lue as well as the value for n
la d and
buildin s. t a
I lso assumes the Ce r
g da Store would onl
Y
sell for the market value of the land and buildings.
3. The next best option appears to be to sell only the
Cedar store and continue to o crate the Penn and
p
Lyndale stores because the difference in total net
rofit is les
s than
P 10 OOO from o eratin al
$ , 1 three
P B
stores.
This conclusion differs from the BM2 analysis (see
council backup).
However, -the trends over the past four years all
point to minimal growth in sales, increasing
expenses, and declining net profits. These trends
support the position of selling the Cedar store site
over the option. of continuing to operate three stores.
4. The fourth option, if the city is unable to obtain the
sale prices outlined in this Council Letter, would be
to continue operating all three stores.
Recommendations
1. First, employ professional help to offer all stores.
.for sale.
2. If the city is unalbe to obtain. the sale proceeds at
the values given in this report, proceed with the
~ sale of the Cedar site.
3. If Council concurs. with the first two recommendations,
then the request for IDRB financing .should. be turned
down at this time to slow the city time to test the
water for purchasers of our liquor operations.
4. The city auditor should be contracted with to either
con-firm or modify these preliminary financial
projections.
5. If a future developer .seeks IDB financing for.
the Cedar Avenue site, the city can apply in 1986
to the pool. Changes of success are unknown.
pectfu u fitted,
~
,7.1i~
ohn G. ~ ar Wright
City Manage /
JGC/eja v
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ANALYSIS OF OPERATING TWO STORES (LYNDALE-PENN)
Sales & Costs of Sales
Sales $4,432,000
Cost of Sales 3,523,440
Gross Profit $ 908,560 (20.50
Operating Expenses
Personal Services $ 285,000
Other Services & Charges 331.,710
Supplies 19,401
Depreciation 25,680
Total Operating Expenses $ 661,791
Operating Income $ 246,769
Nonoperating Revenue (Expenses)
Interest $ 60,000
Interest from Cedar Proceeds 45,111~~
Telephone & Cigarette Commiss. 1,792
Misc. Revenues 100
Misc. Expenses (2,697)
Nonoperating Revenue (Exp) $ 104,306
Income Before Operating
Transfers $ 351,075
Operating Transfers (Out)
Capital Outlay $ 4,000
General Fund 47,650
Payments in Lieu of Taxes 7,730
Self Insurance Fund 2,994
Sub-Total $ 62,374
Available for Transfers to the
Special Revenue Fund or Working
Capital $ 288,701
~ Assumes personal services costs of 6.4~ of sales
~*Assumes sale of Cedar property at $442,512 and investment
return of 10.33 - current 10-year Treasury Bond rate
LIQUOR FUND FINANCIAL TRENDS (1984-1986)
Four Year
Sales increased + 3.4~
Net revenue remains nearly same + 1.5
Expenses increased +23.6
Gross Profit-before transfers
decreased -35.2
Net profit decreased -42.3
(3-Year - 32~)
NEW CEDAR STORE ~ ~ `
5,500 Sq. Ft.
. Leased Store Owned
1986 1986
Sales $1,761,815 $1,761,815
Cost of Sales 1,409,452. 1,409,452
GROSS PROFIT $ 352,363 $ 352,363
Operating Expenses
Personal Services $ 137,779 $ 137,779
Utility Services 10,421 10,421
Rent & Leases 60,950 450
Data Processing 28,620* 28,620
Advertising 18,500 18,500
Maintenance & Repairs -13,200 3,000
Professional Services 4,200 4,200
Alarm Services 700 ~ 700
Other Charges 3,200 3,200
Communications 3,500 3,500
Travel-Conf-Schools 1,500 1,500
Subscriptions & Memberships 170 170
Insurance 37,607*~ 37,607**
Taxes & Licenses 800 800
Other Contract Services 2,500 2,500
Supplies 7,100 7,100
Total Operating Expenses $330,747 $260,047
Depreciation 0 11,364
Profit Before Transfers $ 21,61b $,80,952
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MUN3CIPAL LIQUOR OPERATION ANALYSIS
Property Tax Evaluation
1) The first portion of the analysis examines .the revenue that could be gained
by the City if the liquor operation was privately owned, contributing
property taxes..
• Assumption 1: According to Hennepin County Property Appraiserfs staff,
the Estimated Market Value of the Liquor Store properties
are as follows:
Penn Ave. Store $ 300,000 E.M.V.
Lyndale-Ave. Store (incl. north lot) 538,200 E.M.V.
Cedar Ave. Store (.incl. car lot corner) 589,600 E.M.V.
. $1 ,427,800
$613,954 - Assessed Value
Assumption 2: 1985 - Total Mill Rate 107.94
' 1985 City Mill Rate 19.47
27 Based on the above-stated assumptions, the .total taxes for the property
are: $66,270.19
3) The City~s portion of the Total taxes paid is $11,953.68.
t 19.47 x 66,270.19 = 11,953.68)
(107.94
4) The municipal liquor operation makes payments to the City in lieu of taxes.
For~1985, the payments in lieu of tax for all three stores amounted. to
$12,240.
Thus, the City's 1985 payment in lieu of taxes exceeds the estimated City
property tax revenue by $286.32.
($12,240.00 - Payment. in Lieu of Takes )
( 11,953.68 - Estimated City Sr~are of Property Tax)
X86.32 - Difference ~ )
~Ju~' avo C.on~-~/ ~L,u-},o~J o'~'"~Pf ~x~~l~ UIJ~TS - ?~rn(~'~' 5c~ ar~~S
Gv u ~ ~.-t-c.
MUNICIPAL LIQUOR OPERATION ANALYSIS
Investment of Liquor Stores Sale Proceeds
Assumption: Sale of Liquor Operation yields the following:
(Yearly Sales $ value of Bldg. Approx. market )
( 12 x 2.5 + inventory + and value of liquor)
at cost Land operation )
$5 ,600 ,000
12 -$466,667 x 2.5 = $1,166,667 + $500,000 + $1,427,800 = $3,094,467.
If we are to assume that the sale of the business would net $3,094,467, the
proceeds could be invested, as in the following example:
$1,000,000 - Treasury Note (3 year) @ 9.35 yield
$1,000,000 - Government National Mortgage Association (2 year) g.35~ yield
$1,094,000 - 30, 60, 90 day top rated commercial paper.
Approx. 8.05 yield - 8.10
Total Annual Yield:
T--Note (3 YR) - $ 93,500
GNMA (2 YR) - $ 93,500
Commercial Paper 30 day - $ 88,067
Total $275,067
If all of the funds were invested in the 3 year yield rate of 9.35, the result
would be an approximately $14,000 additional interest.
If all of the funds were invested at 10.35 yield, the total interest would be
$320,.229• (10.35 yield is approximately 10-year Treasury Bond rate.)
If all of the funds were invested at 12.35 yield, the total interest would be
$382,109.
If you were to further assume that a liquor fund cash balance of $375,000 was
available at the time the operation was sold, a total amount of cash available
for investment could be as follows:
$3,094,467
375 .,000
$3,469,467 - total cash available after sale
$3,469,000 invested at: 9.35 would render annual interest of $324,352.
¢tv 10.35 would render annual interest of $359,042.
~~'S~ ~
Lid ~rv"~~ ,~r~ 12.35$ would render annual interest of $428,422.
~ ~~~r~~ I~Q-v~v~
LIQUOR opE sis
goo
.
s~:
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j 83 19$4 1985
Est.
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-,..,....-f TRAM
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LIQUOR OPERATION FINANCIAL ANALYSIS
~ ; i i i i Est.
1980 1981 1982 1983 ~ 1984 ~ 1985
~ ~ ~ . ~ ~ ~
PROFIT i i i i i i i
(BEFORE ; ; ; ; ; ; ;
TRANSFERS) ; 386,808 ~ 255,787 ~ 487,996 ; 520,163 ~ 479,871 418,220 ;
~ ~ ~ ~ ~ i i
~ ~ ~
TRANSFER TO THE; ; ; ;
SPECIAL REVE- i i i i i i i
NUE FUND ~ 351,349 ; 300,000 ; 379,377 ~ 400,000 ; 393,000 ; 241,000
LIQUOR FUND ;
CASH AVAIL- ; ; ; ; ; ; ;
ABLE 12/31 ;(128,126);(143,298). 101,795 ~ 254,700 ~ 371,549 ~ 459,000
1
MUNICIPAL LIQUOR OPERATION. ANALYSIS
Insurance Comparison
Home LMG
Property Insurance $ 65,000 $ 86,098
General Liability 11,000 75,957
Auto Liability 26,~~3 30,175
Public Officials Liability 6,68 13175
Police Liability 17,83 12,008 .
Sub-Total $ 229:925 $ 217,13
$5 million Umbrella Liability 50,985
$1 million Umbrella Liability 50,000
TOTAL $ 280',910 $ 267.' ~ 13
MUNICIPAL LIQUOR OPERATION ANALYSIS
Sale of Operation Pros and Cons
PROS ; CONS
1) Increased insurance costs reducing ;1) Possibly little advantage to over-
profits. ; all insurance program costs in
eliminating Dram Shop insurance
according to 1985 costs.
~ ~
2) Increased competition -new ;2) Question-about the financial
discount liquor stores at approxi- ; strengths of certain competitors.
mately 98th & Lyndale-Bloomington.
i
3) Potential sale of wine in grocery ;3) Lose dollar payments to general
stores passed by legislature in ; fund for Administrative, Data
next few years. ; Processing and Public Safety
services.
Uncertain contribution. to Special ;4) Average past 5-year contribution to
Revenue Fund. ; Special Revenue Fund exceeds
current annual investment
potential. .
5) Need significant capital invest-
went at Cedar Avenue.
1 9 9 0 ri I N N E S O T A L I QUOR P R O J E C T I O N S
A N D
A N A L Y S I S O F V A R I O U S A L T E R N A T I V E S F O R
-
-
I
THE R I C H F I E L D M U N I C I P A L L Z~ U O R STO R E S
1`.
CONDUCTED BY: Beverage Marketing,'Inc.
3927 W. 63rd Street
Chicago, IL 60629
•
~~-1~
R
SECTION I
1 9 9 0 L I Q U O R SALE S
PROJECTI O NS FOR M I N N E S O T A
SECTION I ~
1990 Liquor Sales Projections For Minnesota
A. INTRODUCTION
Various factors must be taken into consideration when producing projections
for state figures for five years. BMI has attempted to estimate these figures for
the categories which exist in the Richfield Municipal Liquor stores (liquors,
cordials, beer, wine, other).
In short, what is happening is that the trend is toward hard liquor sales
dropping; while wine and beer consumptions are on the upward trend. When the
gross markups are taken into consideration the least profitable (hard liquor)
is decreasing while the more profitalbe items to the store (wine and beer) are
on an upward trend. Our calculations shwo.that there should be an overall increase
in. sales dollars of 8.49% from 1984 to 1990. These calculations for the various
liquor categories are summarized on page two of this section. These percentages
are then used in section two to analyze the alternatives facing the Richfield
Municipal Liquor stores.
*Sources for state and national figures and charts in this section:
3obsons Liquor Handbook 1985
Jobsons Wine rlarketing Handbook 1985; 1984
„
~fI
Page. 2
SECTION I - 1990 Liquor Sales Projections for Minnesota
_i~ B. HARD LIQUOR TRENDS
The following chart breaks down the increases and decreases from 1983 to
1984 for various types of hard liquor qn a state and .national basis..
Overall hard liquor .is expected to be down (-7.1°!.) in 1990.
MINNESOTA ~ NATION
Cases Per Percent Cases Per Percent
1,000 1,600 Change 1,000 1,000 Change
Cases Persans `8~-`84 Cases Persans `83-`84
TOTAI, 2.417,76 556.8 +0.4~ 156,718.012 66.6 (-O.lrol
~S 15.700 X2.6 . 6~ 11, 825.000 50.1 . ~io)
STRAIC?~'i'S 16.700 32.4 (-14.91) tt 19, 299.500 81. ~ (-4.0°~ )
sCOTC:-i 18.500 ~5.? l -5.1°I 1 17.076.600 72. q (-2.4°~ 1
CS.t:ADIAN 550.904. 1'2.4 (-~.&al 'i 21.168.600 89.6 +2.~0
IRZSx 2.500 0.6 1. 1 ~ ~ X06.600 1. ~ +4 ..7°1
OTHi WHISKEY 2.100 0.4 (-2~.7~1 778.600 ~.3 (-15.2°0
GIN 115.800 27.8 (-6.'T~~) _ 1.806. q00 _ 58.5 (-2.7~ 1
RUM 142.700 ~ +1. C~1 ~ 12, 846.700 54. ~ +l.
tTOAKA 257.100. 61.8 1-0.8°11 X0.685.804 129.4
B3aNDY & COGNAC 511.200 122.8 (-4.5101 ~ 6,742.500 28.6 +2.5~
CORDIALS `LiAUEU'RS 257,100. 61.8 +22.~n 15,8~4.~00 67.1 +7.1~
TEdUIL.A X6.200 8.7 +x.2°1 , 3.29.500 1~.7 +4.Ob
P~~paRFn coc~^~Alis 20.400 5.0 1-17.c'11 2.48.400 12.6 (-2.4~~1
~.~IzAi OUS 214, 200 0.4 ,
a•
page 3
SECTION I - 1990 Liquor Sales Projections for Minnesota
This chart documents graphically the changes from 1979 to 1984 and
1989 projections.
t979, t984 & 1e89 (proje~t~d) Spirits Sales
tltiuions or cases (millions of cases)
2s--
• ~ 1979
20 . ~ ~ ®1984
\
• \ ~s \
a \ \ ~ 1989
• ~ T •
10 r ~ \ S~na- TY'$+. \ alb \ ,t+ . '
~ ` V~~.
5 • s• \ ~ \ j \ 1 •a1.i~ \ 'y
~ S.y. \ ~W • ~ \ fir. \
A'.
Blends Gin Card 8 Liq Canadian Scotch Straights '
Category
1vlilGons of Cases
15 - ®1979
12 . N~z ®1984
• \ . t 989
Yt.'^~
x,,,: .
Irish Bonds Tequila Cocktails &andy b Coq Rum
Category
Millions of Cases
115 - •
• ®1979
150 - \ ~ ®1984
125 - \
~yF*~. yr1989
100 - \ i;`"t
n
• Vodka Imp Whislu;y Am Whiskey Non-Whiskey Total Spirits
Category
~i
page 4
SECTION I - 1990 Liquor Sales Projection for Minnesota
C. WINE TRENDS
The following chart documents wine trends by type of wine for the nation
and Minnesota for 19$3, 1.984 and projections for 1990.
W I N E T REND S i
MINNESOTA NATION MIiVNESCII'A NATIOTd
1983 Cases Per 1983 Cases Per 1984 Cases Per 1984 Gases Per
1,000 1,000 1,000 1,000 1,000 1,000 1,000 1,000
Ca„
ses Persons Cas,~,~es Persons Cases Persons Cases Persons
TOTAL 2,33.2.1 557.9- 182,594.9 780.3 2,417.4 470.3 193,355 818.7
TABLE 1,844..9 445.2. 142,o82.g 607.2 1,957.4 32.6 152,407 645.4
sSERT 159.7 ~ 38.5 22,156.9 94.7. 135.5 72.2 21,779 92.2
_ARKLING~
CHA21IPAGNE 282..2 68.1 15,219.7 65,0 300.4 5.8 16,176 68.5
v~;RMOUTx 25.3 6.1 3,135.4 13.4 24.1 580.8 2,993 12.7 '
. Percent 1990 1990
National Nation Minnesota
Projected 1,000 1,000 .
1990 + (-1 Cases Cases '
TOTAL +24.72°fo 229,281.62 2,883.65
TABU +26.03 179,432.3 2,375.54
DESSERT (-17.18) 18,375.2 132.26
SPARKLING
CHAMPAGNE +42.27'0 28,038.5 401.48
. VERMOUTH (-10.51p) 2,807.14 22.64.
i
' page 5
w.
flN I - 1890 Liquor Sales Pra,jections for Minnesota
SECTI
wine consumption by category for 1984 VS 1989•
This chart documents graphically
Wu jg84ttsu1989 (proj~
tcd~ ry
244.9
millions of gallons (millions ai gallons) ,
250
74.6
. tmporfed 193.4 ` ~
6 241.0 lei / ;
f/ tiC / ~f~ c .
200 . / Domes .x~.v, ~
~
JJ >t y:,.
7 ~'~'M1w Ji
47.7 - ~ ~ '};Y~'tr + ~F { t'` x:
/ ~ Ry
~ti ° es~-. +v.z';?y,~vJ„~,f u~;`~' { T#' a~< b,t
.`a r', r..,
~ xK~('~~"`i} .^sr~,. 1915 ~ e„ ~
~ iN - f ~j ~ y ~1~
b4 -~.s~i1~<~e!• u g ' t ~k;1~~ ~7 x„_ yl~ St^ i ~y, ±±JJ=~~jj
~ ~ rt * r*`~k _..e , f 37 8 a ;~f'~ ..Y'om'
c ~ t~ 8 ~ . ti i i b afic~"`Sn"r~l.~+'~~3' r 'i r~ +Yr'~''!..
. ~ s ~4 y. 1~..ry~~ ra. f 1984
. 0 f939 Tota{yUines
19£4
tabie
Y~'ine Consumption by Caiego~Y
jg84 v~.1989 (pro}ecied)
millions of gauons (millions of galSons)
l 25 _ ~ 2t.9 .
2t.8 ~ / ' / 14mPortad
20 . 19.5 / ~ Domestic
' ' < l 18.9 G..r+..
.Yi , ~ }}~~~ryry~e l~ /
~ ~Kl'V a •.F. ~ lYSiu C.. ~1ee.'. ff//
qtr <
.mow- .;,r / ~ ~
i~l~M~,`~ q ~
¦ 14 r t~l ~ ~,r ~ as w~ -tiS'~ r' ..^I
¦ µw,,~ 2 ~=x~ ~ ~,l~ip4~f .~t27~r•
t+, t. `
O.. ~ r ?r~~F w"!'r~' ~ t ;F. .r'~ a~,~ ~`at Fi Yt.' ~ i.~ Y~~~ -
n t ~~=~y._.::-s---- ~ 1984
a~
page 6
SECTION I - 1990 Liquor Sales Projections for Minnesota '
D. BEER AbTD OTHER CATEGORY TRENDS
Beer projections are estimated to increase by 15.29° by 1990.
.The following chart shows beer consumption by type and price group for
the. pas few years.
8ecr Cansumption by Type and Pricc Group Bcer Market Shares by Type and Pricc Group
1980 - 1984 1980 - 1984
(minions of barrels) Category 1980 19131 1982 1983 1984•
Category 1980 1981 1982 1983 1984• Super Premium 6:8';0 6.9 6.8"~ 6.3"b S.OSS
Super Premium 11.9 12.6 12.4 11.6 9.2 Premium 56.5 51.6 48.5 46.9 45.0
Premium 98.6 94.2 88.7 86.5 82.4 Light 13.0 13.8 17.8 18.5 19.9 .
Lrght 22.7 25.2 32.5 34.1 36.4 Popular 18.0 21.3 20.1 21.3 23.0
Popular 31.4 38.9 36.7 39.3 42.1 Malt Liquor 3.1 3.5 3.6 3.6 3.2
Malt Liquor 5.4 6.4 6.6 6.6 5.9 :,Imported ~ 2.6 2.9 3.2 3.4 3.9
Imported 4.5 5.3 5.8 6.3 7.1 Total Volume 174.5 182.5 182.8 iS4.4 183.1
Total Volume 174.5 182.5 182.8 184.4 T83.1 (millions of barrels)
•-Estimated. •-Estimated.
Source: Beverage Industry. Source: Beverage Industry.
The calculations for the other category was based on the trend in sales
that Richfield has experienced due to the fact that there is not national or
state wide figures on this. According to our calculations, other will increase
by 11.9% from 1984 to 1990. '
, - ~
page 7
SECTION I - 1990 Liquor Sales Projections for Minnesota
•
E. OTHER Ft1CTORS
1. Family income is moving upward, this trend leads to greater market
affluency and high desposable income. The trend for household formations
and increasing affluency is also up; this leads to more buying power.
and a tendency toward more home entertaining.
25 Mosi Affluent Markets in 1983 ,
- Household Efi::ctivc
Projected Chingos in f)istrihuticn ~ Buying Pov~er
of Family income 1933-8E
(1977 dollars) Market 1933 1938 °Jo Ghsnge
Distribation ~ 1 tJassau-Suffolk, NY 541,462 SG5,478 57.E
Income Range 1984 1994 ~ 2 Lake County, IL 39,926 62,G87 55...
3 Bndgeport-Stamford-
UnderS5,000 5.8"/° ~ ~2.4",o Norwalk-Danbury, CT 41,091 80,974 48.4
S5,000-14.999 21.8 18.2 4 Washington O.C. 36,875 56,609 53.5
515.000-24,999 23.3 27.2 S Grand Forks, N0 34,704 55,495 59.9
525,000-45,999 3G.5 39.0 6 San Jose, CA 36,521 55,254 51.3
550,000-74,999 9.1 7.8 1 tvtiddiesex-Somerset-
Over575,000 3.5 5.q Hunterrfon,NJ 37,t00 55,244 48.9
Total 100.0°0 100.0"/0 8Bergen-Passaic, NJ 36,220 .54,976 51.8
Source: Estimated from U.S. Department of Commerce data. 9 Anaheim-Santa Ana, CA 36,134 54,300 50.3
t~Anchorage,AK 38,159 53.757 0.9
ttPoughkeepsie,NY 34,329 52,158 1
12 FJew London-Norwich, CT 33,396 52,692 7.8
131~tewark, NJ 34,4G4 52,680 52.9
t4 Oxnard-Ventura, CA 33,811 51,350 51.8
t5 San Francisco, CA 33,634 50,84~i 51.2
t6 Kenosha, WI 31,437 50,693 6 i .3
1 r' Richland-Kennewick-
Pasco, WA 32,032 50,443 57.5
t8 tinnoluiu, Ht 33,802 50,066 49.2
t9 PA~nneapolis-St Paut, h9N 31,728 .49,767 56.9
?OKalamazoo, Mf 30,577 49,GG6 62.4
2t Seattle, WA 31,433 49,522 57.5
22Wtlmington,OE 31,547 49,230 56.1
23 Hartford•New Britain-
' P,4iddletown-Bristol, CT 33,461 49,183 47.0
2a Rochester, MN 30,747 48;819 5~.8
25V'Utchtta, KS ~ 31,160 48,788 SG.G
Snurce: S8MM 1^,°,4 Survey of Buying Power.
2. The older population is growing with higher disposable income and are ,
_ generally more affluent. _
Prajet:ted Changes in Age f)istributitm _
of Adults
19$4 1994 1984-94
Age Group Miltfons °lo of Total Millions °lo of Total °!o Change
18-24 29.1 12.3% 24.1 9.4°ro -17.2°.~
25-34 40.9 17.3. 41.1 16.0 0.5
35-44 30.7 13.0 41.1 16.0 33.9
45-54 22.4 9.5 30.1 11.7 34.4
55-64 22.3 9.4 21.0 8.2 -5.8
Over 65 28.0 11.9 33.6 13. t 20.0
Total 236.2 100.0"~ 25G.7 100.OM, 8.7°~
i
page 8
SECTION I - 1990 Liugor Sales Projections for Minnesota
F. SUMMARIZATION OF STATE PROJECTIONS
The .following charts graphically summarize the 1990 trends in Minnesota.
1990 PROJECTED 1984 1990
MINNESOTA NNNESOTA PROJECTED SANS
CATErORY + SALES MINNESOTA
LIQUOR (-7.1~) 2,317,37& Thousand Cases 2,152,$42 Thousand Cases
(yb0 Per Case)
~i~q.o42.560 ~i29.170.520
kTIIti, +24.72 2,423.0 Thousand Cases 2,883.65 Thousand Cases
($35 Per Case) ($35 Per Case)
$84.805.000 $200.927.750
K~:,~.n +15.2°fo 3, &b2, 000 Barrels 4, 21$, 624 Barr el.s
($7 Per Case}
7 Cases Per 15.5 Gal.
Barrel~-
$1.7~. 4q,8.000 X206.712.576
OTHERS +11.g% $22,121,148 $24,753,565
TOTAL +8.4g~ ~425,4ob,7o8 $461,5b4,411
Estimated
~ Data Nat Available -Estimated From Richfield Past Figures.
~ ~ gip`:~i~r,~s
oa ~~l;.ohel ~ -
v~ditates
a _ ;ru~~sr---CQrsu~'~ S ~llt~~?ors~
Inc, ~ t
c 3:: ''S
::j
^~O{
;r2 ~ r a.
L•
•.n -
r
r~
i ~ ~,^y
' ' ' J , ~ ' G
.r I~ r~~~'f G~ ~3r~ ,~y '36 'b7 g
' '6~ '31 ~82
- ~ " ~ 'i7 X73
' ~ ~ y 71 • i S i ~
L1
~ ~icuR~s
~ ON t3A'~~Q~AL
~ ~ BASED
I '
,r ~ I~ /
' S E C T I O N I I
A N A L Y S I S O F A L T E R N A T I V E S F O R
'T H E R I C H F 'I E L D M U N I C I P A L L~I S U O R S T O R E S
~ .
' ~
" SECTION II
_ ANALYSIS OF ALTERNATIVES FOR THE RICHFIELD MUNICIPAL LIQUOR STORES
A. INTRODUCTION AND SUMMARY
The calculations in section one gives us a basis for projecting the 1990
sales for various alternatives for the city of Richfield regarding its liquor
operations.
BMZ evaluated three scenarios:
1. Maintain all three Richfield stores through 1990.
(Part B - page 3)
2. Maintain'Lyndale and Penn stores without Cedar avenue store.
(Part C - page S) ,
3. Se11 aII three Richfield stores.
(Part D - page 8)
For each situation we came up with a figure for 1990 estimated gross profit
and income before transfers for that year. Comparing these shows which choice
will be most profitable to the city of Richfield in the upcoming years. tde must
note our calculations do not include the selling prices of the actual buildings •
or rental revenue estimations. Our focus was just concerned with the liquor
operation.
To summarize the results of the following pages:
OPTION I - Maintain all three Richfield stores through 1990.
Gross Profit $1,346,280
Income Before Transfers $591,959
*In addition property and store values increasing
for sale or re-evalution in 1990..
OPTION IZ - Two Richfield stores without Ce~ar avenue store.
Gross Profit $1,073,044
Income Before Transfers $471,817
*Reflects residual effect on remaining stores of 3.3°I° Cedar .sales.
*(In addition to this the revenue generated from rental
income per year or interest earnings from sale of building
would have to be added to this figure)
~-a~
page 2
SECTION II - Analysis of alternatives for the Richfield Municipal liquor stores
OPTION 3 - Se11 aI1 three Richfield stores.
Total selling price $1,562,812 based on year end 1984.
*Interest earned per year if .invested at I2% - $187,538.
(Not including compound factor of intereS~J
*The additional revenue from rental yearly of three properties
or interest earned on the sale price of property must also
be taken into consideration)
In our estimation maintaining all three stores appears to be the most
profitable option for long term growth and stability for the city of Richfield.
~(J
Page 3
SECTION II - Analysis of alternatives for the Richfield Municipal liquor stores
B. :1AINTAINING ALL THREE RICHFIELD STORES
Based on the percentage increases and decreases outlined in section one,
BPiI was able to project sales and Gross Profits for the year 1990, if all three
stores remained in tact. The chart detailing the calculation on the next page
shows the gross profit for 1990 projects to be $1,346,.280 or a $129,780 increase
•from the 1984 gross profit based on state percentages.
To estimate the 1990 income before transfers we took the 2984 income before
transfers divided by actual 1984 gross profit to get a 43.977. figure which will
be used in each part of this section for a basis of comparison. Through this
procedure we estimate 1990 income before transfers to be $591,959. In addition
to this the value of the three. stores and property values should also be increasing
in value.
1984 Income Before Transfer $ 479,871
Actual Gross Profit $1,092,239 '4397
1990 projected gross proift $1,346,280 x•.4397 $591,959
Income Before Transfers
r_.
R I C H F I E L D ~ R Q J E C T E D R E S U L T S
STORES CONTINUIr~G IN OPERATION
TOTAL PROJECTED TOTAL + PROFIT & 1884 1990 +
SALES PERCENTAGE SALES- DOLLAR MARGIN GROSS GROSS DOLLAR
RICHFIELD + RICHFIELD CHANGE OPTIMUM PROFIT PROFIT GROSS PROFIT
_ ].984 BY 1990 1990 1984-1990 PERCENTAGES BREAKDOWN BREAKDOWN CHANGE '84-'90
$6,070,352 $475,042* 1984
TOTAL $5,595,310 +8.49 With ~ 21.749 +$1,216,500 +$1,346,280 +$129,780
$6,053,717 $466.? 1990
Store Total $458,407 22.2'16
LI~UOR~
coRDlaLS $2,197,156 (-7.].~) $2,041,158 (-$155,998) 18.00 +$395,488 +$367,408 (-$28,080)
WTIiE $1,128,545 +24,72, $1,407,521 +$278,976 33.E +$372,420 +$464,482 +$92,062
BEER $1,980,170 +15.20°,x, $2,281,156 +$300,986 1g.0o~*~ +$376,232 +$433,419 +$57,187
OTHER $289,439 +11.90 $323,882 +$34,443 25.006 +$72,360 +$80,971 +$8,611
* Numbers do not add up exactly due to rounding and store percent variation with state-wide figures.
30 at 5~ + .70 at 20;6 markup = 19;$. "
b.
w
00
m ~
Ga
CITY OF RICHFIELD, MINNESOTA 'I
.Office of~Gity Manager
Council Letter No. 371
Agenda September 30, 1885
The Honorable Mayor
and
Members of the City Council
City of Richfield
Subject: Presentation of Republic Airlines Employees
Federal Credit Union and Nacon Properties.
Development Proposal for the Cedar Avenue '
Liquor Store Site '
Council Members:.
At the September 9th City Council. meeting, the Republic
Airlines Credit Union and Nacon Properties made a brief
presentation of their development concept. .They also are
desirous of developing the Cedar Avenue Liquor Store site. Thee.
Council asked them to make a presentation at the September
30th meeting.
Their basic concept is as follows: 'I
They propose to develop. two structures. One structure would
be a 14,000 square foot,. 2 story hank type facility with drive-
up teller windows. The second structure would be. an 18,000
square foot single story retail/office building located on the
north end of the site. The city could own or rent space in this
facility for its liquor store near 66th Street. Tree estimated
value of the. two projects is $.1,900,000 to $2,400,000.
The project would be developed in two phases:
Phase I - To build the 18,000 square foot building and
relocate the liquor-store into it. Construction
would start late 1985.
Phase II- Existing liquor store would be demolished and
the 14,000 square foot, two story building would
be constructed. Construction would begin in
the summer of 1986.
.The developers will be present on September 30th to review
in greater detail, their proposal.
-2-
As of this writing,.there have been no negotiations with'.
Nacon. However,. the land-for this development would have a
higher per square foot value than it would for the
office/service center proposal. Also, city staff has not been
informed if the developers would seek IDB financing for their
project....
A final consideration regarding tr.is proposal is its
perceived impact on the .surrounding community. The residents.
have not reviewed this concept.
Re pest ully'submitted ,
J~
~ fJ;/rI ,r~ ?"try' rl~
' John G-.' C~rtwrigh
City Manager j
JGC/eja