08-27-1984 SpecialCITY OF RICHFIELD
HOUSING AND REDEVELOPMENT AUTHORITY
SPECIAL MEETING AUGUST 27, 1984
MEMBERS PRESENT: Thomas Harms, Chairman
Commissioners: Joan Helmberger, Vern
Luettinger, Donald Hassenstab and Ivan
Ludeman
MEMBERS ABSENT: None
STAFF PRESENT: John Cartwright, Executive Director;
John Dean, Assistant City Attorney
The meeting was called to order at 6:47 p.m. by Chairman Thomas
Harms.
Chairman Harms noted that all members were present.
1.~ N S D R 0 0 T '~A~~P 0~'1~~ P
ETCETRA WHICH IS LOCATED IN THE GODFATHER BLOCK
REDEVELOPMENT AREA
Clty Attorney John Dean revewe the his-t-o-ry on staff
efforts to relocate Fet Etcetra from the Godfather Block. At
one time Lincoln Properties, which operates Richfield Shoppes
North and South, had worked with the owner of Pet Etcetra on the
possibility of moving the business to Richfield Shoppes North on
Nicollet Avenue. Negotiations between Pet Etcetra and Lincoln
Properties were broken off by Lincoln Properties in the spring
of 1984 when Lincoln Properties questioned the viability of the
business.
The city staff and its relocation consultant again
approached Lincoln Properties in the late spring of 1984 to seek
reconsideration for relocating Pet Eteetra to Richfield Shoppes
North. A relocation proposal was worked out which, among other
things, called for a two-year prepaid rent by the city to
Lincoln Properties for Pet Etcetra to locate at Richfield
Shoppes North. This proposal appeared on the HRA agenda•of
August 20, 1984. The Chairman requested before action was taken
or. the matter to have the question of relocation of Pet Etcetra
removed from the agenda and the matter be given reconsideration
at a later date.
Following the August 20, 1984 HRA meeting, a meeting between
Chairman Harms, City staff, and a representative of Lincoln
Properties met and worked out a new relocation proposal. The
essential basis for the new relocatior. proposal was that the
Page two HRA Minutes Special Meeting August 27, 1984
city in place of prepaying rent for a two-year period, would
guarantee the rent if the tenant went into default and until a
replacement tenant could be found for the space.
Lincoln Properties agreed to the following proposal:
1. City pay for Pet Etcetra move ($10,000 Est.);
2. City pay for remodeling space ($95,000 Est); and,
3. A two-year guarantee by the city to have the rents
paid if Pet Etcetra was unable to make all or part
of their rent payments until Lincoln Properties could
find a new tenant. ($45,000 Est.)
Lincoln Properties also asked the city to consider this
additional relocation item:
1. That the city pay an agency fee of $b,300 to their
leasing agent for the lease of space to Pet Etcetra.
The $b ,300 was arrived at on the basis of $1.50 per
square Foot.
John Dean said that the proposal for monthly rent would be
determined over the two-year period on the following basis:
1. The monthly rent is $2,8OQ,-n•ot including taxes-or
utilities. Pet Etcetra would pay $1,150 per month
(first year)or 15~ of gross revenues, not too exceed
$2,800 per month, whichever is greater;
2. In year two, the rent increases to $3,500 per month.
Pet Etcetra would pay $1,380 per month or 20~ of
gross revenues not to exceed $3,500 per month,
whichever is greater.
John Dean reported that under this formula the city~s
maximium exposure would run $45,000. It was noted that Pet
Etcetra currently pays a smaller rent, but the relocation to
Richfield Shoppes North gives the tenant a better location for
increased sales. Also, Lincoln Properties management will work
with Pet Etcetra owner to improve their marketing and inventory
to help Pet Etcetra increase sales.
Pet Etcetra, at its location in the Godfather
currently grosses about $8,000 per month. If Pet
gross approximately $18,000 to $20,000 per month
first year of their lease, they should be able to
monthly rent of $2,800 during the first year.
John Dean also reported that Pet Etcetra will
for a payment of $10,000 for a self-move which is
block,
Etcetra can
during the
meet the
be eligible
considered a
Page Three HRA Special Meeting of August 27, 1984 Minutes
non-documented move. Also, the HRA will be obligated to make a
payment of $95,010 on the maximum side to have physical changes
made to the property at Richfield Shoppes North to aceomodate
Pet Etcetra business. This $95,010 figure could be less since
other remodeling work is underway at Richfield Shoppes North and
there may be some savings.
John Dean estimated that the total relocation expense in
most likelihood would be $150,000 which is made up of the
$10,000 self-move, $95,010 for physical changes and rent
guarantee of $45,000. John Dean reported that if we were unable
to place Pet Etcetra into Richfield Shoppes North or some other
location where the business could carry on, the animals would
have to be placed in storage which could be very expensive, as
high as $215,000, until another store location could be found.
John Dean requested the HRA to authorize city staff to
negotiate further with Lincoln Properties to complete the
relocation of Pet Etcetra based upon the $150,000 estimate
presented this evening.
Chairman Harms noted that the revised relocation proposal is
much preferred since it now places the city in a position of
standing behind Pet Etcetra on the rent issue rather than
prepaying the rent for Pet Etcetra. This should significantly
cut relocation costs. If Pet Etcetra can make it and be a
viable business, it can further cut any city relocation costs:
The percent that Pet Etcetra will allocate from gross monthly
sales towards rents is almost the same arrangement they
currently have. Apparently, Pet Etcetra pays 14 percent of
gross monthly sales towards rent and the new proposal with
Lincoln Properties calls for a payment of 15 percent of gross
sales during the first year up to the maximum of $2,800 per
month,
Chairman Harms noted that the proposal as a minimum reduced
the city}s rental obligation from $75,000 to $45,000 over t'ne
two-year period and if Pet Etcetra is at all successful it will
be less than $45,000.
Chairman Harms recommended to the HRA members the rent
subsidy proposal as presented by Assistant City Attorney John
Dear. with the possible exception of the $6,300 lease or agents
commission fee.. Mr. Harms felt further negotiations should be
undertaken with Lincoln Properties over that fee to see if it
could be eliminated or reduced.
Members of the HRA were in agree,nent that this was a unique
relocation situation since the relocation effort dealt with
unusual and rare animals and insects. If the animals and
insects had to be placed in storage, they would still require
daily care in terms of feeding, watering and general care.
Page Four HRA Special i~eeting of August 27, 1984
The consensus of the HRA members was that they were not in
favor of the $6,300 agency fee. Chairman Harms offered to
contact Lincoln Properties to see if this agency fee issue could
be deleted or amended.
M/Hassenstab, S/Helmberger to authorize the board chairmar.
ar_d the executive director to enter~irito financial arrangements
for the re ocation o~et Etcetra as ,resented by the A_ssis_tant_
CtyM~ttorney :a'~ ;a :_~ ure .up t150,_000.~~'~ ~~
Motion carried. 5-0.
M/Hassenstab, S/Ludeman to authorize the board chairman an
the executive direct__or to enter nto a financial ar_geement with
Linco~n~~Pro"ert~es, Tne. forayfigure up~to~~6,300~f'or a ency
ees w th he unders anding that t ere w 1 be nego_t ations
undertaken to see i ,~~his figure can beMrecTuce~'yor e_ 1~ urinated ._
Motion carried. 4-1. Luettinger voted against motion.
Don Hasser_stab commended Chairman Harms for his efforts on
the Pet Etcetra relocation proposal.
Cha~.rman Harms adjourned the meet' at 7:15 p.m
Date Approv
hom'hor l7
Jo a Berger a etary
1
1984 ~ ~.: ~,~/i? ~ ~_',/%!~~r:~..~ .~........
omas~~Harms, ~~ Chairman