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30 EHLER;) & ASSOCIATES INC ® To: Mike Momson— City Manager 2 From: Stacie Kvilvang—Associate Financial Advisor WSubject: Stonehouse Redevelopment 2 Date: June 17, 2003 Overview: On December 12, 2002, Amcon Construction submitted a proposal to the City to redevelop the Stonehouse/SAV I and Fire Station site. The proposal outlined the construction of 26,000 sq/ft of retail in two buildings. One building will be located on the northern portion of the property, at the intersection of County Road 88 and Kenzie Terrace and will accommodate a 5,000 to 6,000-sq/ft restaurant. The second retail building, consisting of 20,000 sq/ft, will be located on the southern portion of the site where the existing strip center is located. It is anticipated that the new 9,000 sq/ft municipal liquor store will be located on the end cap fronting along County Road 88 and the remaining 11,000 sq/ft of retail space will span over to Kenzie Terrace. At the time they submitted their proposal, the City informed Amcon that the size of the site was approximately 50,000 sq/ft. Based upon this, Amcon proposed to purchase the land from the City for $8 - $10 sq/ft or $400,000 to $500,000. In addition to submitting a purchase price for land to the City, Amcon presented the following four(4) options on how to proceed with the redevelopment: 1. Sell the property to Amcon. Amcon would construct the new buildings and lease the City space for its Liquor Store. The City could utilize the land sale proceeds for lease payments or for other uses they deemed appropriate. 2. The City retains ownership of the land. Amcon would construct the improvements and lease the land back from the City and the City would lease their space for the Liquor Store from Amcon. The City could utilize the land lease payment they received from Amcon to offset their lease payment. 3. Deed the Land to Amcon. Amcon would construct the new buildings and lease the City space for its Liquor Store. The City would receive a reduced lease payment, in lieu of payment for the land. 4. Retain a portion of the land for the City's Liquor Store and sell the remaining land to Amcon. Amcon would construct the facility and the City would utilize the land sale proceeds to offset the cost of purchasing the new Liquor Store.