HomeMy WebLinkAboutAugust 7, 2006 Work Session
590 40th Avenue N.E., Columbia Heights, MN 55421-3878 (763) 706-3600 TDD (763) 706-3692
Visit Our Website at: www.ci.columbia-heights.mn.us
Mavor
Gary L. Peterson
Councilmembers
Robert A. Williams
Bruce Nawrocki
Tammera Ericson Diehm
Bruce Kelzenberg
City ManaCler
Walt Fehst
CITY OF COLUMBIA HEIGHTS
A DMINISTRA nON
NOTICE OF CITY COUNCIL MEETING
************
to be held in the
CITY OF COLUMBIA HEIGHTS
as follows:
Meeting of:
Date of Meeting:
Time of Meeting:
Location of Meeting:
Purpose of Meeting:
COLUMBIA HEIGHTS CITY COUNCIL
AUGUST 7,2006
7:00 P.M.
CONFERENCE ROOM 1
WORK SESSION
AGENDA
1. Liquor Store on 3 ill Avenue
2. Charter amendment ballot wording
The City of Columbia Heights does not discriminate on the basis of disability in the admission or access to, or treatment or
employment in, its services, programs, or activities. Upon request, accommodation will be prOv'ided to allow individuals with
disabilities to participate in all City of Columbia Heights' services, programs, and activities. Auxiliary aids for handcapped
persons are available upon request when the request is made at least 96 hours in advance. Pbase call the City Council Secretary at
706-3611, to make arrangements. (TDD/706-3692 for deaf or hearing impaired only)
THE CITY OF COLUMBIA HEIGHTS DOES NOT DISCRIMINATE ON THE BASIS OF DISABILITY IN EMPLOYMENT OR THE PROVISION OF SERVICES
EQUAL OPPORTUNITY EMPLOYER
TO:
Mayor and City Council Members
FROM:
Robert Streetar, Community Development Director
DATE:
3 August 2006
SUBJ:
Possible Acquisition Property for New Liquor Store at 3ih and Stinson
The City Council is asked to discuss an offer by Pratt Ordway Properties to sell
approximately 46,000 square feet of land to the City. This land is located on the site of
the vacant Apache Theatre and would be used to construct a new municipal liquor
store.
Background
The Apache Theatre, located at 2101 37th Avenue, closed permanently in September of
2003. On March 28, 2006 the EDA entered into a preliminary development agreement
with developer Pratt Ordway Properties granting them six months to prepare a
redevelopment plan.
Initial Development Concept
Initially, Pratt Ordway Properties, the developer, and Comforts of Homes, the builder,
prepared a redevelopment concept that contemplated two - two to three story senior
buildings. The first building included between 45 and 65 assisted living units, with 15
units serving memory care clients. The second building included between 45 and 65
independent senior units, where residents could purchase assisted living services on an
al a carte basis.
Modified Development Concept
The Finance Department has indicated a desire to construct a new municipal liquor
store at this location. Subsequently, in discussions with the developer, the developer
agreed to offer approximately 46,000 square feet of space adjacent to 3ih Avenue and
Hart Boulevard to the City for $11.00 per square foot or about $506,000. Under this
modified concept Comforts of Home would build one 64-unit three-story building that
would provide assisted living services and 15 memory care units. The acre adjacent to
3ih would include the City's new municipal liquor store. Please find attached a concept
plan. The concept plan is illustrative as there would be some modifications made as the
site plan is finalized. If the Council decides not to purchase the property the developer
would build the initial concept. Daryl Gemar, of Pratt Ordway Properties, will be at the
work session to answer Council Member questions.
Recommendation: Staff recommends the City Council discuss the offer.
12 JULY 2006
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COMFORTS OF HOME
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COLUMBIA HElGI:ITS
MINNESOTA
PROJECT NO.
PHASE ONE
REDUCED DRAWING
DATE:
TO:
FROM:
RE:
MEMORANDUM
AUGUST 3, 2006
MA YOR PETERSON
COUNCILMEMBER WILLIAMS
COUNCILMEMBER NAWROCKI
COUNCILMEMBER ERICSON
COUNCILMEMBER KELZENBER? ~
WALT FEHST, CITY MANAGERt0<V
CHARTER AMENDMENT BALLOT WORDING
The City Clerk, City Attorney, Anoka County Elections Supervisor, and I
are communicating regarding the Charter amendment ballot wording
recommendation. This wording will be presented Monday evening for
your review.
Nature
Page 1 of 1
Bill Elrite - Proposed Ballot Language
Date:
Subject:
"James D. Hoeft" <jhoeft@bgs.com>
< bill.elrite@ci.columbia-heights.mn.us>, <patty. muscovitz@ci.columbia-
heights.mn.us>
8/7 /2006 1 :43 PM
Proposed Ballot Language
From:
To:
Bill:
Per our phone conversation, try the following language:
"Shall the home rule charter of the City of Columbia Heights be amended to establish a ward system of
representation and create two additional council member positions, with the transition schedule of one
council member elected from each ward in 2008 and two council members elected at-large in 2010."
Sarah Thies
Legal Secretary to Jim Hoeft
Barna, Guzy & Steffen, Ltd.
400 Northtown Financial Plaza
200 Coon Rapids Boulevard
Coon Rapids, MN 55433
DO: 763-783-5154
Fax: 763-783-5194
file:1 Ie: \Documents%20and%20Settings\CCH -U ser\Local %20Settings\ Temp\GW} 0000 1 . H... 8/7/2006
From:
To:
Date:
Subject:
"Rachel Smith" <RacheI.Smith@co.anoka.mn.us>
"Bill Elrite" <BilI.Elrite@cLcolumbia-heights.mn.us>
8/2/2006 1 :23:48 PM
Re: ballot question (Charter Amendment)
Bill,
As discussed, attached are the two Fridley ballots for your reference.
Also, my main recommendation is that the ballot language be limited to
the question only. I believe Minn. Rule 8250.0390 limits ballots to
have the "question" only and does not permit additional information to
be printed. My other reason for that recommendation is that I suspect
that voters will not fully read the question and then automatically vote
"no." Remember that we will have a very full ballot in November with US
Senator, US Rep., State Senator & State Reps, State Constitutional
officers, Judicial officers, etc.
In any event, remember that we should also have some kind of title from
you for the ballot itself (Le. Charter Amendment, see the ballots
below).
I hope this is helpful and please feel free to contact me if you have
any additional questions.
Rachel M.L. Smith
Anoka County Election Supervisor
325 East Main S1., Room W 130
Anoka, MN 55303
Direct Dial: (763) 323-5277
Fax: (763) 422-7526
OFFICIAL BALLOT
Judge
Judge
CITY ELECTION BALLOT
CITY OF FRIDLEY
NOVEMBER 8, 2005
CITY QUESTION
FRIDLEY
To vote for a question, fill in the oval next to the word "YES" for
that question. To vote against a question, fill in the oval next to
the word "NO" for that question.
QUESTION
PROPOSED CITY CHARTER AMENDMENT
Shall the Fridley Charter be amended so as to permit water,
sewer and storm water charges above the rate of inflation
without the passage of a referendum for each such increase?
_ YES
_NO
INSTRUCTIONS TO VOTERS
To vote, completely fill in the oval(s) next to your choice(s) like this: .
SCHOOL DISTRICT QUESTION
INDEPENDENT SCHOOL
DISTRICT NO. 13
(COLUMBIA HEIGHTS
PUBLIC SCHOOLS)
To vote for a question, fill in the oval next to the word "YES" for
that question. To vote against a question, fill in the oval next to
the word "NO" for that question.
QUESTION
REVOKING EXISTING REFERENDUM REVENUE
AUTHORIZATION;
APPROVING NEW AUTHORIZATION
The board of Independent School District No. 13 (Columbia
Heights Public Schools) has proposed to replace the portion of
the school district's existing referendum revenue authorization
which expires after taxes payable in 2005 ($486.51 per pupil)
and to revoke the portion of the school district's existing
referendum revenue authorization which will expire after taxes
payable in 2007 ($65.11 per pupil) and to replace those
authorizations with a new authorization that would increase its
general education revenue by $879 per pupil. The proposed
referendum revenue authorization would be applicable for ten
years unless otherwise revoked or reduced as provided by law.
Shall the school district's existing referendum revenue
authorization be revoked and the increase in the revenue
proposed by the board of Independent School District
No. 13 be approved?
_YES
_NO
BY VOTING "YES" ON THIS BALLOT
QUESTION, YOU ARE VOTING FOR A
PROPERTY TAX INCREASE.
12 JULY 2006
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MINNESOTA
PROJECT NO,
PHASE ONE
REDUCED DRAWING
City of Columbia Heights
Pro- forma on the
Relocation of Top Valu Liquor (37th Ave)
Prepared 9-Jun-06
I ABC
D
Projected Projected Projected Projected
2008 2008 2008 2008
Current
Location Owning Owning Owning
Sales II
1 Liquor, Beer, Wine, Other 2,639,257 2,639,257 2,903,183 3,483,820 I
"
Operating Expense
2 Cost of goods sold 2,058,621 2,058,621 2,264,483 2,717,380
3 Operating Expense 361,597 361,597 361,597 361,597
4 Rent & C.A.M. Expense 165,935 - - -
5 Building Maintenance 1,000 1,000 1,000
6 Bond Interest 60,000 60,000 60,000
7 Depreciation/Bond Principal 100,000 100,000 100,000
8 Equipment Depreciation 13,597 13,597 13,597 13,597
9 Total Expense 2,599,749 2,594,814 2,800,676 3,253,573
10 Net income from operations 39,508 44,443 102,507 230,247
Other income 1,197 1,197 1,197 1,197
11 Net Income 40,705 45,640 103,704 231,444
Note 1 :
Line 7 reflects depreciation/bond principal.
On a cash basis of accouting we recognize the principal
payment as an expense to the income statement.
On an accrual basis of accounting depreciation of the
building would be recognized.
INote 2:
Building maintenance is projected at a minimum for the
first 20 years. After the bonds are paid off a larger
amount should be reserved each year for major repairs
and renovation, such as roof and hvac replacement etc;
Note 3:
This proforma does not include building and land
appreciation which will be an additonal signifcant gain to
the City.
Based on Based on Based on
land & land & land &
building building building
costs of costs of costs of
2,000,000 2,000,000 2,000,000
and and and
No increased increased
Increase sales of sales of
in sales 10% 20%
From:
To:
Date:
Subject:
"Stacie Kvilvang" <SKvilvang@ehlers-inc.com>
<Bill. Elrite@ci.columbia-heights.mn.us>
7/25/20063:28:56 PM
Liquor Store Feasibility Studies
Hi Bill. Attached are the proposal from the 2 firms along with a excel
chart that outlines what they each entail (please note there are two
additional pdfs from McComb Group which are samples of mapping work,
etc).
Please review and Mark and I would be happy to meet with you to go over
them.
Stacie
Stacie Kvilvang
Ehlers and Associates
3060 Centre Pointe Drive
Roseville MN 55113-1105
Phone: 651-697-8506
Fax: 651-697-8555
This email has been scanned for all viruses by the MessageLabs Email
Security System.
cc:
"Mark Ruff' <mark@ehlers-inc.com>
City of Columbia Heights
Liquor Store Market Study
Service McComb Group GVA
x
X
X
X
X
X
X
X
X
X
$11,850
$1,475
$13,325
$6,500
$100-$250
$13,500
$0
$13,500
$6,750
$125-$225
GVA Marguette Advisors
Real Estate Counselors
Th: Valuation Group
Th: Hospitality Group
Th: Residential Analy tics Groop
Th: Corporare and IlIVestmetU Groop
The Aviation Group
July 13,2006
Mr. Bill Elrite
CITY OF COLUMBIA HEIGHTS
590- 40th A venue NE
Columbia Heights, MN 55421
R.E.: Market & Financial Feasibility Study for Proposed New Liquor Stores
Dear Mr. Elrite:
Pursuant to our your request, we are pleased to submit this proposal to provide a market and
financial feasibility study for proposed city-owned liquor stores in Columbia Heights. This proposal
presents our understanding of the engagement, the scope of services we propose to provide, the time
and fees required, and the conditions and limitations under which we would work.
BACKGROUND AND UNDERSTANDING
We understand that the City of Columbia Heights currently owns and operates off sale liquor stores
at 37th & Stinson and 44th & Central. The City is now considering the construction of two new
stores to replace these existing businesses. You are considerini the development of a new store as
part of a redevelopment project at 37th and Stinson, while the 44 & Central store would be replaced
with a new store at 50th & Central. In evaluating these redevelopment opportunities, we understand
that the City is seeking the services of a consultant to exam ine the proposed locations, the
surrounding demography, the historical operations of both stores and their market positioning, and
the competitive supply of off-sale facilities in the relevant trade area to determine the marketability
and economic feasibility of the new liquor store operations. To that end, you have invited GV A
Marquette Advisors to submit this proposal to provide a study to assist you in this regard. We thank
you for this opportunity and present in the following paragraphs a proposed work plan, timeframe
and fee schedule for this assignment
GV A Marq uette Advis ors OffICes:
Mlnneapolli; OffICe: 333 South Seventh SIree~ Suite 2300, Minneapolis. MN 55402-3200
Phore: 612-335-8888; Fax: 612-334-3022
Seattle Office: 22525 SE64lhPlace, Suire 180, Seattle, WA98027
Phore: 425-392-7482; Fax: 425-392-7330
Mr. Bill Elrite
City of Columbia Heil'!;hts
July 13,2006
SCOPE OF SERVICES
Proiect Team
Mr. Brent Wittenberg, Vice President, will be the project manager and will personally provide
all research, analysis, and report development. Brent has 10 years of experience as a real estate
consultant based in Minneapolis, and has completed hundreds of market and financial feasibility
studies pertaining to commercial, residential and mixed-use development projects throughout the
United States. Mr. Louis Frillman, MAl, eRE, President, with more than 30 years in
commercial real estate, will provide project oversight, analysis and review throughout this
process.
Professional biographies fur Mr. Frillm an and Mr. Wittenberg are attached hereto.
Project Initiation Meetinl!:
To begin the project, we would meet with you and the managers of the existing liquor store
operations. The purpose of this meeting will be to exchange infonnation on the existing and planned
businesses, including both market and financial information.
The very important first step in evaluating the viability of liquor store operations is developing a
clear understanding of the competitive trade area We will work with you and the store managers to
identify the relevant trade area( s)( from which the majority of customers are draw n) and competitive
liquor store operations within and near this area
Site!Location Analvsis
We will analyze the proposed development locations in terms of access, visibility, traffic volume,
and proximity to the customer base and supporting development, clearly identifying the strengths
and weaknesses of each location for liquor store development.
Analvsis of Kev Demol!:raDhiclEcon omic Indicators
We will analyze relevant demographic and economic indicators for the trade area, particularly
population and household growth trends, population age data, and consumer spending & retail sales
information. This will include a comparison of consumer spending on beer/liquor in the trade area
with beer/liquor retail sales data. This will assist in determining the amount ofleakage of consumer
spending on beer/liquor to stores outside the trade area, and the potential to recapture some of these
consumer expenditures within the trade area through the development of modern, well located off
sale facilities.
GV A Marquette Advisors
Page 2
Mr. Bill Elrite
City of Columbia Heights
July 13, 2006
Analysis of Competitive Market Conditions
We will profile and analyze the historical financial performance of both stores, including a review of
income and expense ratios and profitability in comparison with industry averages. We will also
identify primary and secondary competitive liquor stores within and near the subject trade area(s).
We w ill analyze the strengths and weaknesses of the existing and planned liquor stores compared to
competitive off sale operations in the trade area.
Financial Projections & Feasibility Analysis
We will develop a projection ofliquor/beer purchases by census tract for the defined trade area, and
provide a market share analysis for the subject facilities among a competitive set of off sale
operations within and near the trade area. From this analysis, we will develop five-year financial
projections for both liquor store operations, including income and expense projections to the level of
cash flow available for debt service. Based upon project cost estimates and financing assumptions
provided by you and other members of the project team, we will analyze the financial feasibility of
the new liquor stores through a debt service coverage analysis.
Meetin l!S
One "project initiation meeting" at the beginning of the assignment to exchange information
and clarify the objectives and desired outcomes from the study.
Through meeting or conference call we will discuss the results of analysis with the client
prior to delivery of written report.
One meeting/pres en tat ion with the client, if desired, to discuss the findings of the market
study.
Work Product
Our research findings and conclusions will be presented in a bound report. The report will
summarize our research methodology and findings. GV A Marquette Advisors will provide five
(5) copies of the final bound report. If needed, additional copies will be provided at cost to the
client.
GV A Marquette Advisors
Page 3
Mr. Bill Elrite
City of Columbia Heights
July 13,2006
TIMING AND FEES
Based on the Scope of Services outlined above and our current scheduling, we estim ate the
market assessment will be completed within four to five weeks of our receipt of a signed contract
and initial retainer payment, unless delayed by unexpected emergencies, forces beyond the
control of the parties, or by written agreement of the parties.
The fee required to complete the proposed Scope of Services is $13,500, payable as follow s:
$ 6,750
$ 6,750
$13,500
retainer, due at engagement
due at delivery of report in draft form
total fee
All fees and reimbursable expenses must be paid prior to our release of the report in final bound
presentation fmu. This fee quote includes a total of three meetings with the client, and a total of
five (5) copies of the report. Additional copies of the report wi\l be produced, if requested, at
cost to the client Additional meetings requested by the client will be billed at our standard
hourly rates for staff time, as follows:
Louis W. Frillm an, President
Brent E. Wittenberg, Vice President
Associate Professionals
$400/hour
$225/hour
$125/hour
TERMS AND CONDrnONS
Our report will be based on estimates, assumptions and other information developed from our
research of the market, knowledge of the industry and meetings with you. The sources of
information and bases of our estimates and assumptions will be stated in the report. The terms of
this engagement are such that we will have no obligation to revise the report or the projected
operating results to reflect events or conditions which occur subsequent to the completion of our
fieldwork. However, we will be available to discuss the necessity for future revision because of
changes in the economic or market factors affecting the project
No effort will be made to ascertain the impact of energy shortages and the legal and regulatory
requirements applicable to this project, including zoning, other state and local government
regulations, pennits and licenses. Further, no effort w ill be made to determ ine the possible effect on
this project of present or future federal, state or local legislation relating to environmental or
ecological matters or interpretations thereof
Some assurrptions inevitably will not materialize, and unanticipated events and circumstances may
occur; therefore, actual results achieved during the period covered by our projections will vary from
those described in our report, and the variations may be material.
GV A Marquette Advisors
Page 4
Mr. Bill Elrite
City of Columbia Heights
July 13, 2006
Our report is intended solely for your infonnation. It may also be shown to a lending institution
and/or a limited number of sophisticated investors interested in the project. Otherwise, neither the
report nor its contents may be referred to or quoted in any registration statement, prospectus, loan,
appraisal or other agreement or document without our prior written consent. Such consent will not
be unduly withheld.
ACCEPTANCE PROCEDURES
If this proposal meets with your approval, please contact us and we will promptly draft a contract for
the engagement. If you would like to discuss this proposal further prior to accepting, please do not
hesitate to call. We appreciate the opportunity to submit this proposal, and look forward to hearing
from you.
Sincerely,
GV A MARQUETTE ADVISORS
&t-ttt5
Brent E. Wittenberg
Vice President
GV A Marquette Advisors
Page 5
PROFESSIONAL QUALIFICATIONS OF
BRENT E. WITTENBERG
Vice President
G VA Marquette Advisors
Brent E. Wittenberg is vice president of GV A Marquette Advisors, a Minneapolis-based firm
providing comprehensive real estate consulting services to residential, retail, industrial, office,
hospitality, gam ing, entertainm ent and recreational developments.
Over his 10-year career, Mr. Wittenberg has experience both as a real estate consultant and in
city and regional planning. Prior to joining GV A Marquette Advisors, he worked as a research
analyst with Maxfield Research Inc., a Twin Cities real estate research firm. He has also worked
in land use planning with Region Nine Development Commission in Mankato, Minnesota and in
community development at the City of Spartan burg, South Carolina.
Mr. Wittenberg has a diverse background and has completed numerous consulting assignments for
income producing real estate developments. H is assignments have included market analyses,
feasibility studies, appraisals, and economic and fiscal impact studies. Brent is known as an expert
in the field of real estate research. He has completed numerous consulting assignments related to
single-family and multifamily housing developments, seniors housing, golf courses, casinos, hotels,
industrial warehouse and manufacturing facilities, multi-tenant office buildings, medical office
buildings, retail shopping centers and individual retail store operations, gas station/convenience
stores, truck stops, community centers and health clubs, and aviation-related real estate operations
such as corporate hangar facilities and FBOs. Brent has developed an expertise in providing
feasibility studies fOr complex mixed-use projects, redevelopment projects, and downtown
development
Brent has spoken at Urban Land Institute conferences and seminars sponsored by the Minnesota
Multi-Housing Association and Institute of Real Estate Managem ent He has also been a guest
lecturer at local universities. Mr. Wittenberg is regularly quoted in The Business Journal of
Minneapolis-St. Paul, Minnesota Real Estate Journal, Finance and Commerce, The Minneapolis
Star and Tribune. The Saint Paul Pioneer Press, Heartland Business Real Estate. National Real
Estate Investor, and Apartment Finance Today regarding for-sale and rental housing market trends,
and has provided articles for several of these publications. Brent has also served as a "Best in Real
Estate" judge on behalf of The Twin Cities Business Journal in 2002 and 2003. Brent currently
serves on the Board of Directors of the Minnesota Multi-Housing Association.
Mr. Wittenberg earned a Master of City and Regional Planning Degree (MCRP) from Clemson
University, where hewas recognized by the American Institute of Certified Planners (AICP) for
outstanding attainm ent in the study of planning. He earned a Bachelor of Arts Degree in Local
and Urban Affairs at St. Cloud State University.
PROFESSIONAL QUALIFICATIONS OF
LOUIS W. FRILLMAN
President
G VA Marquette Advisors
Louis W. Frillman has been engaged in the real estate business nationwide since March 1975.
During this time, he has developed skills in all areas of real estate practice including the acquisition,
disposition, asset management, development, leasing, sale, financing, and valuation of industrial,
commercial, and residential properties, including all major types of income-producing real estate. .
Currently, Mr. Frillman is President ofGV A Marquette Advisors, a national commercial real estate
consulting firm.
GV A Marquette Advisors currently operates a national real estate counseling practice with offices in
Minneapolis and Seattle. GV A Marquette provides comprehensive solutions to complex real estate
problems and is practiced at managing and overseeing large real estate consulting projects
nationwide. Mr. Frillman formerly was Executive Vice President of Marquette Partners, a 490-
employee firm that managed and oversaw 45 million sf of investment properties of all types,
including primarily regional and community shopping centers nationwide, and also office properties
and industrial investment and corporate portfolios.
In 1973, Mr. Frillman graduated from the College ofSt Thomas with a Bachelor of Arts Degree in
Finance. He has completed all courses relating to earning and maintaining real estate valuation
designations, licenses, and brokerage licenses, in multiple states. Mr. Frillman regularly attends
professional educational seminars and has completed courses in a variety of related subjects
including market feasibility analysis, syndication structure and analysis, subdivision development,
the valuation of industrial real estate, the valuation of multiple-family properties, analysis of
deminimus P U D s, methods of joint venture financing, valuation of bus inessenterprises, and others.
In addition to attending courses in real estate, Mr. Frillman has lectured and taught real estate
valuation for the University of St Thomas and has been a guest lecturer at numerous continuing
education seminars for the Law Board, NAlOP, American Society of Real Estate Counselors, and
CO REN ET.
Mr. Frillman is a licensed and bonded real estate broker in the State of Minnesota and is an affiliate
member of the National Association of Industria and Office Parks (NAIOP), and has served on
multiple committees of that association. He has also served as judge for the NAlOP "Awards of
Excellence".
PROFESSIONAL QUALIFICA nONS OF LOUIS W. FRILLMAN - Continued
His community activities include being a full member of the Greater Minneapolis Board of Realtors,
a member of the Urban Land Institute, a member of the National Trust for Historic Preservation, the
Ramsey County Historical Society, the Ramsey HilI Association, and the Riverfront Development
Committee of the D ow n tow n Council of Minneapolis.
Mr. Frillman is a member of the American Society of Real Estate Counselors, the real estate
counseling affiliate of the National Association of Realtors. He is an elected member of the
Appraisal Institute, has served on the MAl Demonstration Appraisal Reports Committee nationally,
and was a member of the Board of Directors fer the local Institute Chapter as well as on the local
admissions committee. He has also served as Chairman of the Candidate Guidance Committee.
He is an invited member of both the Real Estate Counselors (CRE) and Lambda Alpha, the
international Land Economics Fraternity.
H is charitable activities include eight years as board director of Catholic Charities for the Elderly. In
that capacity, he served as development coordinator of Marion Center, a skilled care and assisted
living care facility. He was responsible for coordinating all aspects of development including facility
design and review, construction management, marketing programming, and ongoing management
supervision.
He has completed counseling assignments dealing with significant decisions regarding real property
utilized fur real estate tax petitions, market feasibility and absorption analysis studies, valuations and
disposition of major business properties, and investment analyses for acquisition of property by
investors of all types. Geographically, he has been active in providing counsel on complex property
issues with no boundary limitations for over 20 years. He ahs completed projects in Europe, the UK,
Bermuda, Hawaii, Canada, Mexico, and parts of Central America.
He has developed all types of income properties, and in addition, has developed single-family
custom housing. Finally, he has provided counsel to real estate buyers, sellers, investors and lenders
concern ing virtually all types of real estate, w orldw ide.
Currently, he resides at 24642 SE 36th Ct, Issaquah, Washington. He and his wife maintain a pied' a
tierre at 459 Portland in St. Paul, Minnesota. Mr. Frillman is married to the former Carol A
Motsinger, and has four children.
UOO MCCOMB GROUE Ltd
B~B : EET^^ ~ L ECSo TN~ ~ C T /NNT ~
July 21,2006
Ms. Stacie K vilvang
EHLERS AND ASSOCIATES
3060 Centre Pointe Drive
Roseville, Minnesota 55113-1105
RE: COLUMBIA HEIGHTS LIQUOR STORE RELOCATION
Dear Stacie:
In response to your request, we have prepared a work program to conduct market analysis and
fmancial feasibility for two new locations for Columbia Heights liquor stores. The objectives of
this engagement are summarized below.
Evaluate the proposed liquor store locations.
IdentifY and evaluate competitive liquor stores.
Conduct customer spotting surveys for the two existing stores.
Delineate trade areas for existing Columbia Heights liquor stores.
Delineate trade areas for the proposed new liquor stores.
Determine retail sales potential for the proposed new stores.
Prepare a proforma income statemen t for each of the tw 0 new stores.
The work program described below is designed to fulfill the above objectives.
WORK PROGRAM
The work program outlined below is designed to identifY market potential for two new municipal
liquor stores in Columbia Heights. Specific work tasks are summarized below.
. Location Evaluation
The proposed location of each of the new liquor stores will be evaluated. Factors to be
studied include, but are not limited to: access, ingress and egress, visibility, traffic counts,
site configuration and size, and relationship to adjacent land uses and traffic generators.
. Competitive Liquor Stores
Locations of competitive liquor stores in adjacent commumtJes will be identified to
evaluate their location and market position relative to Columbia Heights liquor stores.
Competitive stores will be evaluated for size, merchandise, display techniques, and
overall appearance.
222 South Niuth Street Suite 380 Miuneapolis, Minnesota 55402. (612)339-7000 Fax: (612) 338-5572
Ms. Stacie K vilvang
July 21, 2006
Page 2
. Customer Spotting
Customers at each of the existing liquor stores will be asked to complete a short survey
questionnaire as they pay for their purchases to obtain their home address and why they
shopped at the store. The survey will be conducted by store employees under the
direction of McComb Group. Geographic distribution of existing customers of each
liquor store will be geocoded and plotted by address to determine each store's trade area.
This approach is more precise than using zip codes. The distribution of customers will be
evaluated to determine how they relate to the new store locations.
. Trade Areas
Trade areas for the existing stores and the proposed new liquor stores will be delineated
utilizing customer spotting results and McComb Group experience. Trade area
demographic characteristics will be evaluated including population, households, age
distribution and household income. Demographi c characteristic s will be evaluated for
1990,2000,2005 and 2010. Population and households will be estimated from 2006
through 2010 in each trade area. Liquor store purchasing power available within each
trade area will be calculated using McComb Group's proprietary technology. Purchasing
power will be estimated from 2002 to 2010 to determine past and future trends in
potential liquor store spending. An example of customer spotting mapping and
household income from a recent supermarket study is attached. This task will utilize
microgrids described in the attached description of McComb Group's GIS capability.
. Retail Sales Analysis
Historic liquor store sales will be compared with trade area purchasing power to
determine historic trade area market share for each of the existing liquor stores. The
income and expense statements for the last five years for each of the existing stores will
be reviewed to identifY trends in sales and market share. The proportion of retail sales
derived from the trade area will be identified. Sales derived from inflow customers, or
shoppers outside the trade area, will also be identified. Future retail sales potential for
each proposed store will be estimated for the five-year period 2008 through 2012.
. Financial Feasibility
Utilizing retail sales projections derived from the previous task, an income and expense
statement will be prepared for each of the proposed new stores. These financial
statements will estimate retail sales for beer, wine, spirits, and other merchandise, gross
margin, operating expenses, and estimate operating income for each store. The income
and expense statements will reflect estimates for five years from the estimated first full
year of operation.
The results of our work will be documented in a final report designed to meet client needs. The
report will contain appropriate graphics and explanations of our principal findings, conclusions
and recommendations.
Ms. Stacie Kvilvang
July 21, 2006
Page 3
MEETINGS
Three meetings are planned during the course of the evaluation to keep the client informed of our
progress and findings. These meetings include the following:
. Start-Up Meeting at the beginning of the engagement to finalize research objectives and
obtain client-provided information.
. Work Session to review results of customer survey, trade areas and sales projections.
. Final Report Meeting to present results of financial feasibility analysis and present
results of all work tasks and recommendations. This meeting will cover all aspects of the
market and financial feasibility analysis.
The budget provides for three client meetings as described above. Additional meetings will be
billed at our normal hourly rates plus expenses.
SCHEDULE
Work tasks described in this proposal can be completed within an eight-week period following
authorization to proceed.
QUALIFICATIONS AND EXPERIENCE
McComb Group, Ltd. is a full-service retail and real estate consulting firm specializing in market
research and financial feasibility.. The firm has extensive experience in the retail industry and
has conducted market research for retail stores and shopping centers of all types including
regional malls, community centers and specialty centers.
In the retail industry, liquor is a convenience good that is typically sold in stores located in
neighborhood shopping centers. McComb Group has conducted market analysis and
remerchandising studies for neighborhood and comm unity centers that contain liquor stores.
This provides an understanding of how liquor stores compete for customers and their achievable
market share. The firm's retail background and experience provides expertise related to
merchandising, store operations, and financial analysis. Recent engagements which have
involved liquor stores include the following:
. City of Eden Prairie Liquor Stores
. City of Maple Lake Liquor Store
. City of Fridley Municipal Liquor Store
. Midway Center, St Paul
. Brighton Village, New Brighton
. Village North, Brooklyn Park
. Downtown St Michael
. Prairie View Center, Eden Prairie
. City of New Brighton Liquor Store
. Shoreview Mall
. Chalet Liquors, Crystal
. Valley West Shopping Center,
Bloomington
. Texa- Tonka, S1. Louis Park
. City of Sa uk Rapids Liquor Store
. Downtown Sartell
Ms. Stacie K vilvang
July 21, 2006
Page 4
James B. McComb will direct this engagement and particIpate in all findings and
recommendations. Site evaluations, field research, and competitive eval uation will be conducted
by Bill Gorton. Linda Oie will evaluate survey results and conduct demographic analysis. Their
experience is summarized below.
. James B. McComb, President, founded the predecessor of McComb Group in 1974
following six years as a member of the corporate staff with Dayton Hudson Corporation.
His experiences at Dayton Hudson and daily association with merchants and shopping
center developers provided the impetus for McComb Group's approach to shopping
center and retail market research and financial feasibility, which includes strong elements
of design and merchandise sensitivities. The firm's approach to shopping center research
and marketing has undergone continuous development and refinement over the past 20
years.
. William A. Gorton, Executive Associate, has over 25 years experience developing
supermarkets and retail shopping centers, representing supermarket chains as well as
prominent independent supermarket owners. Mr. Gorton provides advice and assistance
related to real estate development, leasing and contract negotiations, business
acquisitions, project management, sales forecas ting, site evaluation and market analysis,
financing, capital planning, financial forecasting, business planning, strategy
development, business development and the marketing of programs and services.
Mr. Gorton has provided these services while employed by Fairway Foods, Inc.,
subsidiary of Holiday Stations tores, Inc.; Kohl's Food Stores, Inc., subsidiary of the
Great Atlantic & Pacific Tea Company; SuperValu, Inc.; Loblaw's, Inc.; and Stearns
Bank N.A. St Cloud, MN. He received a 10 from William Mitc hell College of Law and
is a member of the Minnesota State Bar Association.
. Linda 0 ie, Senior Associate, conducts market research, demographic and consumer
analysis for client engagements. Ms. Oie manages the firm's geographic information
systems (GIS) and demographic databases using a variety of computer platforms and
proprietary software.
Prior to joining McComb Group, Ms. Oie was employed as Marketplace Information
Manager at SuperValu, Inc. Her responsibilities included conducting strategic consumer-
based analysis of existing and prospective supermarkets, profiling SuperValu customers,
and delineating trade areas for existing and proposed stores.
. Susan Nache, Consultant, performs market research, demographic analysis, and
consumer research tasks. Ms. N ache conducts consumer research analysis and cross-
tabulation on McComb Group's survey processing software; and is familiar with software
programs used by McComb Group for financial feasibility and statistical analysis.
Mr. McComb will be responsible for managing and directing the overall research program and
will participate directly in findings and conclusions. Individual work tasks will be assigned to
personnel within the finn based on qualification s and experience.
Ms. Stacie K vilvang
July 21,2006
Page 5
BUDGET
The budget for the work program and work products described in this proposal is shown below.
Professional Services
Location Evaluation
Competitive Liquor Stores
Customer Spotting
Trade Areas
Retail Sales Analysis
Financial Feasibility
Report Preparation
Meetings
Total Professional Services
Budl!et
$ 1,000
1,500
2,000
1,500
1,500
2,500
600
1.250
$ 11,850
Expenses (Esdmated)
Travel
Demographics
Computer
Report Production
Reproduction
Miscellaneous
Total Expenses
$ 50
400
150
750
100
--12.
$ 1.475
TOTAL BUDGET
$ 13,325
The professional fees for the services outlined in this proposal total $11,850 and will be
performed at a price not-to-exceed that amount. Expenses, estimated at $1,475, are to be
reimbursed based on actual cost The budget is based on the amount of time required to perform
the work tasks and our normal hourly billing rates of $250 for principals, $190 for executive
associates, $125 for senior associates, $100 for associates, and $75-$100 for consultants.
Company policy requires a retainer of approximately one half the estimated budget for the
project or $6,500. The retainer will be applied to the final invoice as a credit for billing of
professional services and expenses. Invoices for professional services and expenses will be
rendered at mid-month and month-end as our work progresses.
Standard billing terms are net ten days. A fmance charge of 1.5 percent will be charged on all
unpaid balances outstanding more than 30 days.
REPORT PURPOSE
This proposal was prepared with the understanding that the results of our work will be used by
the client to evaluate market and financial feasibility of two new liquor stores. Our report will be
prepared for that purpose and will be subject to the following qualifications:
Ms. Stacie K vilvang
July 21, 2006
Page 6
. Our analysis will not ascertain the legal and regulatory requirements applicable to this
project, including zoning, other state and local government regulations, permits and
licenses. No effort w ill be made to dete rmine the possible effect on the proposed project
of present or future federal, state or local legislation, or any environmental or ecological
matters.
. Our report and analysis will be based on estimates, assumptions and other information
developed from research of the market, know ledge of the industry and discussions with
the client. Some assumptions inevitably will not materialize and unanticipated events
and circumstances may occur; therefore, actual results achieved w ill vary from the
analysis.
. Our analysis will not evaluate management's effectiveness or be responsible for future
marketing efforts and other management acti ons upon which actual results are dependent.
. Our report will be intended solely for the purpose described above and should not be used
for any other purpose without our prior written permission. Permission for other use of
the report will be granted only upon meeting company standards for the proposed use.
These qualifications will be included in our final report. If the report is used for purposes other
than specified above, we reserve the right to review the materi als for proper use of our work.
ACCEPTANCE PROCEDURES
To indicate acceptance of the proposal, please sign a copy of the proposal and return it to us
together with your check for the retainer as authorization to proceed with this engagement.
We appreciate the opportunity to submit this proposal and look forward to hearing from you
soon. If you have any questions concerning th e proposal, please call me at (612) 339- 7000.
Accepted By:
McComb Group, Ltd.
Company:
Title:
James B. McComb
President
Date: