Property Acquisition in Support of Trader Joe s. May 7, 2012

Transcription

1 Property Acquisition in Support of Trader Joe s May 7, 2012

2 Activities to Date Local Developer: Terraco/Gendell WNB, LLC Site Considered: 1211 Chicago Avenue Signed Lease: February 2012

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5 Consideration by City Council Acquire Two Parcels Chicago Avenue 1229 Chicago Avenue Enter into Parking License Agreements at each newly acquired parcel

6 Draft Site Plan 1211 Chicago Ave Chicago Ave Chicago Ave.

7 Property Ownership of Site

8 Proposed Property Acquisition Chicago Avenue 1229 Chicago Avenue Seller: Sona Realty Seller: Northwestern University

9 PARKING FUND 12/31/2011 (Unaudited Statement) ASSETS CASH AND INVESTMENTS 12,676,319 RECEIVABLES 5,603,922 FIXED ASSETS 84,549,132 ACCUMULATED DEPRECIATION (17,530,565) NET FIXED ASSETS 67,018,566 TOTAL ASSETS 85,298,807 LIABILITIES BONDS PAYABLE (22,714,037) OTHER PAYABLES/LIABILITIES (1,393,649) TOTAL LIABILITIES (24,107,686) RETAINED EARNINGS 61,191,121 (NET ASSETS)

10 Impact of Transaction Purchase of Land: Reduces Cash by $2,050,000 Increases Fixed Assets by $2,050,000 Building parking lot increases land value by $500,000 Total impact of transaction is an increase in Parking Fund assets of $500,000, which will be depreciated over parking lot life.

11 Impact of Transaction Investment Income is presently approximately 0.30% for short term investments Income on $2,050,000 per year is $6,150 Income on 24 spaces at $35/mo. is $10,080, but we have not guarantee of full usage Lot license fee deposited into the Parking Fund at $50,000

12 Impact of Transaction Alternative revenue sharing options would cost $125,000 to $250,000 per year, assuming City shared less than 50% of revenue City would have no asset at end of transaction Return on investment time frame could double from current estimate of 4 to 6 years

13 Estimated Revenue Projections Revenue Source City s Portion (Low Estimate) City s Portion (High Estimate) Home Rule Sales Tax $234,000 $325,000 General Merchandise Tax $23,400 $32,500 Liquor Tax $210,600 $292,500 Property Tax $19,500 $19,500 Total New Revenue $487,500 $669,500 Assumptions for Estimated Revenue Projections: Store is 13,000 square feet Annual sales range from $1,800 (low estimate) to $2,500 (high estimate)

14 City s Return on Investment Total Investment: $2,050,000 Range of Annual Income: $487,500 to $669,500 Annual Income Investment = Return on Investment (ROI) City s ROI ranges between 23% and 32% Investment recovered between 2016 and 2018

15 Trader Joe s in Other Communities Clockwise from Top Left: Prescott, AZ (2012) Park Ridge, IL (2002) Arlington Heights, IL (2001)

16 Parking License Agreement Financial Deal Points Initial License Fee of $25,000 per parcel Developer will fund site work and construction (Approx. $500,000) Property will remain taxable Term & Usage Deal Points License term of 70 Years Maintenance and repair developer responsibility City is protected in event of store vacancy City retains rights to 24 parking spaces at north end of lot

17 City Permitted Parking Spaces

18 Questions and Answers

19 Questions & Answers Q1: What happens to the Chicago Avenue property prior to demolition? A1: L.A. Tan will continue to rent and operate prior to demolition. Vacant space could be used for a pop-up store, Art Under Glass, or other short-term use.

20 Questions & Answers Q2: What happens to the house at 1229 Chicago Avenue? A2: Developer will work with leasehold tenant to relocate residents. Developer and City will determine the feasibility to relocate the house.

21 Questions & Answers Q3: What impact will this new store have on the sales of area grocery stores? A3: There is likely to be a short-term impact lasting six to nine months, however overall the addition of store is likely to bring new shoppers to the market.

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24 Questions & Answers Q4: What about previous developments and deals for a Trader Joe s? A4: The development at 1890 Maple was most recently slated to be home to a Trader Joe s. The City had entered into agreement to provide $1.9 million in assistance for this project. Due to real estate market downturn, the developer was unable to obtain financing to complete project.

25 Questions & Answers Q5: When will the store open? A5: If this project moves forward, it is expected to open Spring 2013.

26 Development Timeframe Design & Plan Review 1. Commence May/June Community Meeting 3. City: Site Plan & Appearance Review Committee 4. City: Plan Commission 5. City: Planning & Development Committee/City Council Summer 2012: Design & Site Plan Finalized Construction Process 1. Commence Summer/Fall Chicago Avenue Streetscape 3. Subject to Green Building Ordinance 4. Review and Address Chicago Avenue Traffic Complete Construction Spring 2013 Trader Joe s Opens Spring 2013

27 Lee Street Beach Despite reports, Lee Street Beach (and all Evanston beaches and parks) will remain Evanston assets.