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31 <br /> Mike Momson <br /> June 17, 2003 <br /> Page 2 <br /> Primary Issues to Consider: <br /> 1. What is the square footage of the site and how much will the City sell the land for? <br /> 2. What development option meets the City's financial goals with regards to the redevelopment? <br /> 3. How will the City pay for the acquisition of the new Liquor Store? <br /> 4. What future steps will be required by the City? <br /> Analysis of Issues: <br /> 1. What is the square footage of the site and how much will the City sell the land for? <br /> As stated, it was previously thought that the site was approximately 50,000 sq/ft. Based upon <br /> work completed by WSB for this redevelopment, it was determined the site was actually 104,241 <br /> sq/ft and broken down as follows: <br /> 13,714 sq/ft—Hennepin County Easement <br /> 12,182 sq/ft— Silver Lake Road Easement (City Owned) <br /> 78,345 sq/ft—City property <br /> This is approximately 54,000 sq/ft larger than what all parties thought the site size was. <br /> Amcon will be purchasing approximately 95,000 sq/ft of the site, since the City will own the pad <br /> under which the new Liquor Store resides (approximately 9,000 sq/ft). On April 22, 2003, the <br /> City commissioned an appraisal of the property to ascertain the Fair Market Value (FMV). Based <br /> upon the Appraisal competed by Orion, the FMV of the land was determined to be $6.80 sq/ft <br /> (raw land). If the site was vacant, this would equate to a $646,000 land payment for the 95,000 <br /> sq/ft. However, since the land is not vacant, a buyer would typically subtract the cost to complete <br /> asbestos abatement and demolition of the structures, which is estimated at approximately <br /> $60,000. Based upon this, the purchase price would then be reduced to $6.17 sq/ft or$586,150. <br /> At this time Amcon is proposing to purchase the land for $600,000, plus pay for the costs of <br /> asbestos abatement, demolition and City consultant fees (legal and fiscal), for a total of$670,000 <br /> or $7.05 sq/ft. It should be noted that the negotiations with Amcon have not been completed and <br /> that this may not be the final purchase price. Outstanding issues that will affect the purchase <br /> price are final demolition and asbestos abatement costs, actual size of the parcel to be purchased, <br /> actual lease rates obtained and the terms of Amcon's bank financing. <br /> At the time this final information is submitted by Amcon, Ehlers will complete an Internal Rate of <br /> Return (IRR) analysis to ascertain if the development can support a larger land payment. <br />