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32 Mike Mornson June 17, 2003 Page 3 2. What development option meets the City's financial goals with regards to the redevelopment? The underlying objective that is driving the financial decision of the City on the redevelopment of this site is that the new Liquor Store needs to generate at least $125,000 - $150,000 net profit on an annual basis. This is the amount that both SAV I and the Stonehouse currently generates for the City's General Fund and needs to be maintained. Based upon this, following is an analysis of the options: `,+L`' 'i' ';'urrs, w,�,�,t' :n.41,� O tion,hrr� .•:t�.<<...a�4},_c __� �A_nnu_a_IrNet�Incometo�C� r 1. Sell Land and City Leases Space $10,608 2. Own Land, Developer Constructs Improvements, City $95,608 Leases Space & the Developer Lease the Land 3. Deed Land to Developer, City. Leases Space for $82,608 Reduced Price 4. Own Land & Liquor Store and Sell Remaining Land to $142,664 Developer 5. Current Status $117,000 The reason Option #1, #2 and #3 do not meet the City's financial goal is because the City is required to lease space back from the developer. The annual lease amount is higher then the annual amount the City would pay if it financed the construction of a new facility on its own. Based upon the above referenced chart, it clearly shows that option #4 is the only one that meets the City's financial objectives. 3. How will the city pay for the acquisition of the new Liquor Store? If land sale proceeds are not adequate to finance the purchase of the new Liquor Store, the City has the following three options: 1. Finance the remaining balance from internal City funds 2. Sell bonds or combine this bond amount with another bond issue 3. Negotiate a loan with a local bank The preferred option on financing the acquisition of the Liquor Store will be presented to the City Council when they are considering approval of the Development Agreement between Amcon and the City.