02-13-2007 (2) - Laserfiche WebLink

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money marketing the sites and will prefer exclusive rights to the property. He added that the sale of the land is just one step of the entire process; there are many steps required in order to get the most revenue out of the development. Delaune asked staff to explain why some developers have been telling us that the location is wonderful, yet so few developers have shown interest in the development. Black suggested that the City is looking for a particular type of use and the office market is still somewhat soft. If the City chooses to offer small office or warehouse sites instead, there would be substantially more interest. He stressed that we only need one developer and tenant to make a project possible, however he acknowledged that it would be better if there was more competition for the site. Property Acquisitions Black reported that the Postal Service has hired local architects to design the interior of the new retail space; the developers have their own architects to design the exterior. Kaufhold inquired if the City owns the land that the retail site will be built on. Black replied that the City owns the land to the south of Dalco where the annex building will be built, and Ryan will purchase that property; Pratt Ordway already owns the retail site. Kaufhold stated that he is concerned with the cost of the development and wants this to be a profitable development. He inquired where the money will come from to help pay the difference between the new site and the old site. Black replied that there are three cost factors: the actual cost to move the post office operations, the buildout, and the differential on the lease. While exact figures are not known, these costs could be up to $3.1 million. He added that there are benefits to be considered that the City will be receiving for this move: the Northwest Quadrant would most likely not advance if the post office is not moved, new residential and commercial developments do not want to go into an area with older decaying buildings, and the City will receive a higher tax return for the site and the new tax revenues from the new retail and annex buildings. It may not completely add up in the long run,but the City will have a new vibrant development. Flahave inquired if the TIF District 26 is being rolled into the TIF for the Northwest Quadrant. Black replied that the City cannot roll the districts together; there is the possibility of using the surplus increment from TIF 26 to help offset some the costs in the Northwest Quadrant; however it would require special legislative approval. Sculthorp inquired if those funds are included in the $10 million that is being rolled into the development. Black replied that it would be used to help offset deficit costs and is not included in the $10 million. Larson added that it can not be included unless the state gives approval; at this point there is nothing from TIF District 26 included in cash flow analysis. Nelson asked where in the eminent domain process is for the post office and when it will move. Black replied that values are still to be determined and they plan on moving by the end of the year. Kaufhold inquired to the benefits of Ryan being the developer and not the City. Black replied that the City is not a developer, there are too many risks involved for the City, and the City would lose any tax revenues from the property. Kaufhold stated that he is looking for a way to justify a $39.00 per square foot lease. Black replied that though the tenant improvements could be as high as $39.00 per square foot, they most likely won't be that high. Larson added that that rate would not be for the whole project, but only for the retail space,which is roughly 1900 Page 3 of 6