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Home My WebLink About06.13.11 Work Session Packet City of Farmington 430 Third Street Farmington, MN 55024 Mission Statement Through teamwork and cooperation, the City of Farmington provides quality services that preserve our proud past and foster a promising future. AGENDA CITY COUNCIL WORKSHOP June 13,2011 6:30 P.M. 1. CALL TO ORDER 2. APPROVE AGENDA 3. DISCUSSION ITEMS a. Liquor Store Five Year Plan b. Engineering Items 4. ADJOURN PUBliC INFORMATION STATEMENT Council workshops are conducted as an informal work session, all discussions shall be consideredfact-finding, hypothetical and unofficial critical thinking exercises, which do not reflect an official public position. Council work session outcomes should not be construed by the attending public and/or reporting media as the articulation of aformal City policy position. Only official Council action normally taken at a regularly scheduled Council meeting should be considered as aformal expression of the City's position on any given matter. Farmington Liquor Store Five Year Plan Year One Preliminary . Determine if the City wants to remain in the business . If not wanting to stay in business then transition to getting out of the liquor business by allowing the leases to expire . If staying in the business determine if the City wants to continue to lease space or if it should purchase and own space. Leasing Downtown Liquor Store Space . If wanting to continue to lease space then negotiate with existing landlord at the downtown liquor store or look for other space to lease in the downtown area . Approve lease agreement for space prior to May 31, 2012 for downtown store Owning Downtown Liquor Store Space . Develop criteria to be met when researching properties to be considered for new liquor store site . Complete analysis of potential sites for a City liquor store and determine the top three properties based on which properties best meets the criteria . Narrow focus to the property best meeting criteria and begin negotiation of property . Approve property acquisition . Depending on the property acquired, either build new liquor store building or renovate building on purchased property so it functions well as a liquor store . Before May 31, 2012 notify landlord of downtown liquor stores, the City's intent to not renew lease for the downtown liquor store . Hire architect to develop plans and specifications for downtown liquor store construction project . Develop plans and specifications for downtown liquor store construction project . Approve plans and specs and authorize ad for bid . Receive bids and award contract . Issue revenue bonds to cover project costs Year One to Year Two . Complete construction project for downtown liquor store . Move into new downtown store before December 1, 2012 Year Two to Year Three Preliminary . Determine if the City wants to lease space or own space for the current Pilot Knob liquor store Leasing Liquor Store Space in North Area of Farmington · If wanting to continue to lease space then wait to negotiate with existing landlord until beginning of year four while also completing research on other possible space that may be available to lease in the north area of Farmington Owning Liquor Store Space in North Area of Farmington · Develop criteria to be met when researching properties to be considered for new north liquor store site · Complete analysis of potential sites for a north liquor store and determine the top three properties based on which properties best meets the criteria · Narrow focus to the property best meeting criteria and begin negotiation of property . Approve property acquisition · Depending on the property acquired, either build new north liquor store building or renovate building on purchased property so it functions well as a liquor store · Hire architect to develop plans and specifications for north store liquor store construction project · Develop plans and specifications for north liquor store construction project Year Three to Year Four . Approve plans and specs and authorize ad for bid for north store . Receive bids and award contract . Issue revenue bonds to cover project costs · Notify landlord of intent to not renew lease for the Pilot Knob liquor store and that it will expire on December 1, 2016 Year Four throuf!h Year Five . Complete construction project of north liquor store · Move into new north liquor store before December 1, 2016 Desired Site Criteria to Meet If City Wishes to Purchase and Own Liquor Store Property · Immediately adjacent to road/streetlhighway that has a traffic count of at least 7,500 vehicles per day . Has existing parking or has space to include parking · Has existing building of at least 5,000 square feet that could be renovated as a liquor store or has the capability of allowing the construction of a building of at least 5,000 square feet · On the comer of a full intersection with higher preference given for either a fully controlled intersection or partially controlled intersection · Existing parking lot has at least two access points or if the site does not have a parking lot there is capability of building two access points to a future parking lot · Property is currently zoned for commercial use o z ro :>. . 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I Financial Impact of Continuing Liquor Operations and Ownership versus Leasing Additional Income Available for Use with Average Annual other City Income Pilot Knob Downtown Income Average Programs before Pilot Knob Store Store Available for Transfers to After GF and Transfers and Store Lease Ownership Ownership Use In Lieu of General Fund Pool Year Depreciation Savings Savings Savings Tax Levy and Pool Transfers 2012 $ 50,000 $ 72,000 $ - $ 122,000 $ 139,000 $ (17,000 2013 $ 50,000 $ 72,000 $ 66,000 $ 188,000 $ 139,000 $ 49,000 2014 $ 50,000 $ 72,000 $ 66,000 $ 188,000 $ 139,000 $ 49,000 2015 $ 50,000 $ 72,000 $ 66,000 $ 188,000 $ 139,000 $ 49,000 2016 $ 50,000 $ 72,000 $ 66,000 $ 188,000 $ 139,000 $ 49,000 2017 $ 50,000 $ 95,000 $ 66,000 $ 211,000 $ 139,000 $ 72,000 2018 $ 50,000 $ 95,000 $ 66,000 $ 211,000 $ 139,000 $ 72,000 2019 $ 50,000 $ 95,000 $ 66,000 $ 211,000 $ 139,000 $ 72,000 2020 $ 50,000 $ 95,000 $ 66,000 $ 211,000 $ 139,000 $ 72,000 2021 $ 50,000 $ 95,000 $ 66,000 $ 211,000 $ 139,000 $ 72,000 Comparison Annual Cost of Leasing vs. Owning Downtown Liquor Store Item Owning Leasing Difference loan Amount 1,000,000 NA $1,000,000 Interest Rate 5.00% NA 5% loan Term 15 years NA 15 years AnnualleaselDebt Payment Amount $94,895.28 $124,999.92 ($30,104.64) Annual CAM Amount NA $36,096.00 ($36,096.00) Total $94,895.28 $161,095.92 ($66,200.64) Comparison Annual Cost of Leasing ys. Owning Pilot Knob Liquor Store Current Difference Owning vs. Future Leasing Item Owning Leasing Current Leasing Dec 1, 2011 Difference loan Amount 1,000,000 NA 1,000,000 NA $1,000,000 Interest Rate 5.00% NA 5.00% NA 5% loan Term 15 years NA 15 years NA 15 years Annuallease/Debt Payment Amount $94,895.28 $129,579.96 ($34,684.68) $76,128.00 $18,767.28 Annual CAM Amount NA $60,698.04 ($60,698.04) $42,346.22 ($42,346.22) Total $94,895.28 $190,278.00 ($95,382.72) $118,474.22 ($23,578.94)