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HomeMy WebLinkAboutItem 06City of Lakeville Liquor Operations Memorandum To: Lakeville City Council From: Allyn Kuennen, Assistant City Administrator Brenda Visnovec, Liquor Operations Director CC: Justin Miller, City Administrator Jerilyn Erickson, Finance Director Date: July 27, 2020 Subject: Keokuk Building Design and Budget Estimates. Background/Design/Cost Estimates - In 2019, the City Council authorized the Liquor Department to hire Shenehon Companies to complete a market study in anticipation of constructing a fourth liquor store. This study indicated the market was ready for a new store and the City-owned property located on Keokuk Avenue was the optimal location. Earlier this year the City Council entered into a contract with Tushie-Montgomery Architects (TMA) to prepare preliminary building and site design concepts for City Council consideration. At the April 29th work session, City Council reviewed three design options and directed staff to continue to work with TMA to prepare detailed plans for a single level store with an attached event/educational space. Over the past several months, staff and TMA have been working through various interior and exterior design details including civil, mechanical, electrical and site design as well as interior fixture layout and material finishes. See attached exterior building elevations and interior design plans. These detailed plans were also reviewed by Greystone Construction to prepare cost estimates. They are estimating the cost of constructing the building, as proposed, to be between $5.2 and $5.3 million. Factors Driving the Construction of a Fourth Liquor Store - Sales Per Square Foot: Within the Shenehon Study, it is stated that the threshold for sales per square foot is $495. All stores exceeded this threshold last year. When you exceed these thresholds, it becomes more 2 difficult to purchase products properly, customer satisfaction decreases, product selection declines and there is potential for more employee injuries. As you see in the chart below, relief with the construction of a fourth store is particularly needed at the Heritage location which will exceed $650 in sales per square foot this year. Continued Residential and Commercial Growth: Through the first six months of the year residential growth continues to be very comparable to last year with the City issuing building permits with a total valuation of $156,715,893 through June 2020 compared to $156,185,228 through June of 2019. The City has issued 265 single-family home permits through June with a total valuation of $79,312,000. This compares to 243 single-family home permits with a total valuation of $75,510,000 during the same period in 2019. The City has also issued 65 townhome permits with a total valuation of $11,742.000 through June compared to 44 townhome permits with a total valuation of $9,821,000 during the same period in 2019. The City has issued eight apartment permits through June totaling 200 units with a valuation of $27,833,000. This residential growth, in addition to commercial and industrial growth, is anticipated to continue and would further support the three existing stores as well as the new Keokuk store. 3 Bidding/Construction/Material Costs: TMA and Greystone have indicated the current bidding climate is good and bidding the project in the fall for a late winter/early spring construction is optimal in obtaining good competitive bids. They also indicated if the project is delayed a year, until the next optimal bidding time, it would most likely increase the construction cost by approximately 3 percent. Bidding projects in the fall for a spring construction also helps to ensure the availability of contractors prior to their schedules filling up for the rest of the year Location, Location, Location: The Keokuk property is located adjacent to several high traffic retail and office developments including Walmart, Aldi’s, Emagine Theater, Hampton Inn, Candlewood Suites, Speedway gas station and several medical and office buildings. The area also includes several existing higher density residential neighborhoods. Future development in the area is proposed to include additional office, commercial and high-density residential neighborhoods that will further support the continued growth of this store. This site is also conveniently located directly off Interstate-35 drawing customers from throughout southern Dakota County, as well as areas within Scott and Rice counties. Providing Continued Community Support: Lakeville Liquors has historically served the community well. As shown below, and from information reported within the Minnesota State Auditors Annual Reports of 2014-2018, Lakeville Liquors has transferred over a million dollars, or 33.6% more revenue back into the community, than any other metro area municipal liquor store. It is largely due to transfers such as these that has allowed the City of Lakeville to maintain one of the lowest tax capacity rates in all of Dakota County. CITY Net Operating Income 2014-2018 Lakeville $3,720,295 Edina $2,784,776 Eden Prairie $2,635,503 Apple Valley $2,490,000 Richfield $2,190,850 Project Pro Forma and Financing - City staff prepared a conservative ten-year pro forma for the liquor operation which included the addition of the Keokuk store opening for business in October 2021. See attached report. Some key points and assumptions from the pro forma: 1) Debt issuance: a. $5.3 million in 2021; first principal payment in 2023. b. Use $1 million in reserves to pay for furniture/fixtures and initial inventory. c. 20-year term 4 d. Revenue bonds at 2.55% APR (could potentially use tax abatement bonds with a general obligation pledge which could significantly reduce the interest rate) 2) Payment in lieu of taxes (PILT) has been included in the calculation. 3) Net operating income (NOI): a. Has averaged about $1 million from 2015-2019. b. Is estimated to average about $1 million for 2020 and 2021 (2020 included about $250k of design costs for Keokuk). c. Is projected to increase from $1.1 million in 2022 to $1.5 million by 2030. 4) Net Income After Transfers (NIAT): a. Is slightly negative for years 2021-2023 and then positive through 2030. b. Is not sufficient to cover bond principal payments from 2020-2030. c. To eliminate further draw down of reserves, transfers to Equipment Fund and Debt Service Fund (police station debt) may need to be adjusted until the Galaxie store debt is paid off in 2027. 5) Proceeds from the potential sale of the 1.9-acre pad-ready site adjacent to the Keokuk store location have not been included in the calculations. Estimated sale value is $749,275 or $9.00 per square foot. Next Steps – If City Council directs staff to move forward with the project the tentative schedule would include: • August – review construction manager proposal, interview and hire a construction manager • August thru November– sign a contract with TMA and work with them and the construction manager to further refine costs and interior finishes, prepare final construction plans, specifications and bid documents • December - bid project • January 2021 - award bid at CC meeting • February 2021 - start construction as weather permits • October 15, 2021 - store fixtures completed and stocked • October 25, 2021 - store opens If the City Council wishes to delay moving forward with the project, staff will notify the construction management companies and will shelve the plans until a later date. When or if City Council moves forward with the project in the future the City will need to obtain updated construction estimates and a revised schedule as these were based on current material costs, availability of construction crews and the current bidding climate. City of Lakeville 06/25/2020 COVER 20880 KEOKUK AVE. LAKEVILLE, MINNESOTA 55044 LAKEVILLE LIQUORS SOUTH 00 Lakeville Liquor South Keokuk Ave. Lakeville, Minnesota 55044 City Council Work Session.............04/10/2020 DRAWING ISSUESHEET INDEX 00 COVER 01 SITE PLAN 02 EXTERIOR ELEVATIONS 03 3D VEIWS Exterior Design Approval...............06/25/2020 10' BUILDING SETBACK FUTURE NORTH LOT ACCESS MONUMENT SIGN LOADING DOCKS STORMWATER POND (POND TO BE CONSTRUCTED AS OART OF THE CONSTRUCTION FOR THE LIQUOR STORE PROJECT. POND TO BE SIZED FOR BOTH LOTS) PYLON SIGN PROPOSED LIQUOR STORE 1 02 2 02 3 02 4 02 SIDEWALK (Part of Project Scope) SIDEWALK (Part of Project Scope) SHARED ACCESS DRIVE CONCRETEASPHALTBOX TRUCK DRIVING TURNING RADIUS 3 0 ' B U IL D IN G S E T B A C K 1 5 ' P A R K IN G S E T B A C K 10' BUILDING SETBACK 5' BUILDING SETBACK SIDEWALKCARDBOARD COMPACTOR TRUCK LOADING DOCK BIG BLOCK RETAINING WALL WITH SURFACE MOUNTED FENCE 122 PARKING STALLSCONCRETEASPHALT 16 18 24 09 09 11 11 12 12 (7) TA (21) ODG (24) ODG (24) ODG (145) LBS (51) FRG (17) ODG (45) BFS (105) BFS (49) ODG (21) FRG (40) BFS (15) ODG (9) FRG (6) QA (6) FDD (4) FDD (1) ABSC (5) BL (4) AFD (4) AFD (4) AFD (24) ODG (10) AFD (24) ODG (4) AFD (22) ODG (6) AFD (66) FRG (73) BOG (80) FWP (222) FEB CANOPY ABOVE 02 6 02 7 Site Legend SOD AREA 4" OF HARDWOOD NATURAL COLOR MULCH ROCK MULCH City of Lakeville 06/25/2020 SITE PLAN 20880 KEOKUK AVE. LAKEVILLE, MINNESOTA 55044 LAKEVILLE LIQUORS SOUTH 01 SCALE 1" = 20'-0"1 Site Plan Planting Schedule Count ID Common Name Botanical Name Size 1. Deciduous Tree 1 ABSC Autumn Brilliance Serviceberry Amelanchier x grandiflora 'Autumn Brilliance' 6' Tall Ball and Burlap 5 BL Boulevard Linden Tilia americana 'Boulevard' 2.5" Caliper Ball and Burlap 6 QA Quaking Aspen Populus tremuloides 2.5" Caliper Ball and Burlap 2. Evergreen Tree 8 TA Techny Arborvitae (TA) Thuja occidentalis 'Techny' 6' Tall Ball and Burlap 3. Shrub 32 AFD Arctic Fire Dogwood Cornus stolonifera ' Farrow' #5 Container 10 FDD Firedance Dogwood Cornus sericea 'Bailadeline''#5 Container 4. Perennial 190 BFS Blue Fescue Festuca cinerea 'Elijah Blue' #1 Container 72 BOG Blue Oat Grass Helictotrichon sempervirens 'Saphire' #1 Container 216 FEB Eilers Beauty Grass Festuca ovina ' Eilers Beauty' #1 Container 78 FWP Flame White Phlox Phlox paniculata 'Bartwentynine' #1 Container 147 FRG Karl Foerster Feather Reed Grass Calamagrostis x acutiflora 'Karl Foerster' #5 Container 145 LBS Little Bluestem Schizachyrium scoparium #1 Container 220 ODG Overdam Feather Reed Grass Calamagrostis x acutiflora 'Overdam' #5 Container 1130 LEVEL 01 0" T.O. 1ST LEVEL PARAPET 18' -0" CANOPY, COVER STRUCTURE WITH DECORATIVE PANELS METAL PANEL #1 METAL PANEL #2 DECORATIVE SIGNAGE WITH HALO LIGHTING ALUM. STOREFRONT - CLEAR GLASS / BLACK FRAME ALUM. SLIDING ENTRY DOOR SYSTEM TRASH COMPACTOR & CONTAINER OVERHEAD DOOR, DOCK BUMPERS, AND DOCK LEVERER @ DELIVERY OVERHEAD DOOR @ DELIVERY ROOF 16' -0" PREFINISHED METAL COPING, TYPICAL AT ALL WALLS BRICK #1 SOLDIER COURSE METAL PANEL #1 METAL PANEL #2 PREFINISHED METAL COPING, TYPICAL AT ALL WALLS CANOPY, COVER STRUCTURE WITH DECORATIVE PANELS CANOPY, COVER STRUCTURE WITH DECORATIVE PANELS EXTERIOR LIGHTING ALUM. STOREFRONT - CLEAR GLASS / BLACK FRAME PRECAST BASE BELOW METAL PANEL AND OPENINGS PRECAST BASE BELOW METAL PANEL AND OPENINGS CITY OF LAKEVILLE SIGNAGE LEVEL 01 0" SOLDIER COURSE BRICK #1 PREFINISHED METAL COPING, TYPICAL AT ALL WALLS METAL PANEL #1 CANOPY, STRUCTURE COVERED WITH DECORATIVE METAL PANEL, TYPICAL DECORATIVE SIGNAGE WITH HALO LIGHTING ROOF 16' -0" CANOPY, COVER STRUCTURE WITH DECORATIVE PANELS METAL PANEL #2 PRECAST BASE BELOW METAL PANEL AND OPENINGS LEVEL 01 0" T.O. 1ST LEVEL PARAPET 18' -0" SOLDIER COURSE PARAPET BEYOND PREFINISHED METAL COPING, TYPICAL AT ALL WALLS ROOF 16' -0" BRICK #1 PRECAST BASE BELOW METAL PANEL AND OPENINGS METAL PANEL #1 CANOPY, STRUCTURE COVERED WITH DECORATIVE METAL PANEL, TYPICAL WITH DECORATIVE SIGNAGE WITH HALO LIGHTING ALUM. STOREFRONT - CLEAR GLASS / BLACK FRAME LEVEL 01 0" T.O. 1ST LEVEL PARAPET 18' -0"ROOF 16' -0" SOLDIER COURSE BRICK #1 PREFINISHED METAL COPING, TYPICAL AT ALL WALLS METAL PANEL #1 CANOPY, STRUCTURE COVERED WITH DECORATIVE METAL PANEL, TYPICAL METAL PANEL #2 PRECAST BASE BELOW METAL PANEL AND OPENINGS ALUM. STOREFRONT - CLEAR GLASS / BLACK FRAME BRICK #1 METAL PANEL #1 METAL PANEL #2 PRECAST WAINSCOT BASE EXTERIOR FINISH SCHEDULE MATERIALS BRICK #1 METAL PANEL #1 METAL PANEL #2 MANUFACTURER: SIZE: COLOR:WHITEFORD RANGE MANUFACTURER: PRODUCT TYPE FIRESTONE DELTA 16F MANUFACTURER: PRODUCT TYPE: COLOR: LONGBOARD 6" CHANNEL, SOLID EXTRUDED ALUMINUM RAIN SCREEN DARK CHERRY GLEN-GERY UTILITY COLOR:BLACK MANUFACTURER: PRODUCT TYPE: TBD PRECAST WAINSCOT PRECAST BASE COLOR:CHARCOAL EXTERIOR FINISH SCHEDULE - OVERALL BRICK #1 METAL PANEL #1 METAL PANEL #2 8,740 SF 13,375 SF 65.3% 14.2% 9.3% TOTAL 100% 1,900 SF 1,245 SF PRECAST BASE 2.8%370 SF GLAZING 8.4%1,120 SF POWER COATED I BEAM STRUCTURE WOOD GRAIN METAL PLATE 30' - 0"FROST FOOTING CONCRETE BASE FROST FOOTING CONCRETE BASE COLORED CONCRETE WALL - CHARCOAL BACK LIT LETTERS WOOD GRAIN METAL PANEL 11' - 4"City of Lakeville 06/25/2020 EXTERIOR ELEVATIONS 20880 KEOKUK AVE. LAKEVILLE, MINNESOTA 55044 LAKEVILLE LIQUORS SOUTH 02 SCALE 1" = 10'-0" 1 West Elevation SCALE 1" = 10'-0" 2 North Elevation SCALE 1" = 10'-0" 3 East Elevation SCALE 1" = 10'-0" 4 South Elevation SCALE 3/16" = 1'-0" 6 Pylon Sign - Elevation SCALE 3/16" = 1'-0" 7 Monument Sign - Elevation City of Lakeville 06/25/2020 3D VEIWS 20880 KEOKUK AVE. LAKEVILLE, MINNESOTA 55044 LAKEVILLE LIQUORS SOUTH 03 DELIVERY LOCKED STORAGE (226 LIN. FT) CHECK OUT LANES CARTS CUSTOMER SERVICE/TASTING WINE CHECK OUT STAGING TASTING STATION (33 DOORS, 25 PALLETS) ICE CHEST LIQUOR KIOSK (2) 8x8 CUBES EXIT CARDBOARD COMPACTOR TV TV ICE CHEST SEATING: 144 TEACHING STATION EXIT TV TV TV TV COUNTER TRASH DRINKING FOUNTAIN & WORK SINK SALES FLOOR 110 COOLER 106 LIQ STORAGE 104 LOADING 102 WOMEN 130 MEN 132 JANITOR 136 CLEAN UP ROOM 140 STORAGE 138 ADMIN./MARKETING OFFICE 126 CLASSROOM 142 ACCOUNTING OFFICE 124 MEN 122 WOMEN 120 BREAK ROOM 116 MANAGER OFFICE 118 BOX STORAGE 114 VESTIBULE 144 VESTIBULE 112 HALL 134 T U S H I E MO N T G OM E R Y A R C H I T E C T S 7645 LYNDALE AVENUE SOUTH, #100 MINNEAPOLIS, MINNESOTA 55423 -4084 612 . 861 . 9636 FAX: 612 . 861. 9632 W W W . T M I A R C H I T E C T S . C O M PREPARED FOR: ALL ARCHITECTURAL AND ENGINEERING DRAWINGS ARE IN CONFIDENCE AND DISSEMINATION MAY NOT BE MADE WITHOUT PRIOR WRITTEN CONSENT OF THE ARCHITECT. ALL COMMON LAW RIGHTS OF COPYRIGHT AND OTHERWISE, ARE HEREBY SPECIFICALLY RESERVED. I HEREBY CERTIFY THAT THIS PLAN, SPECIFICATION, OR REPORT WAS PREPARED BY ME OR UNDER MY DIRECT SUPERVISION AND THAT I AM A DULY LICENSED ARCHITECT UNDER THE LAWS OF THE STATE OF MINNESOTA. PRINT NAME: SIGNATURE: DATE: 06/25/20 LICENSE #: 22908 Revisions & Addendums Dan Pellinen © 2020 Tushie Montgomery & Associates, Inc. 06/25/2020 - DD PRICING SET -P R E L I M I N A R Y - N O T F O R C O N S T R U C T I O N City of Lakeville 7/21/2020 10:51:53 AM LAKEVILLE LIQUORS SOUTH20880 KEOKUK AVE. LAKEVILLE,MINNESOTA 55044A9 Floor Plan 219129A SCALE 1/8" = 1'-0"1 LEVEL 01 FURNITURE PLAN CITY OF LAKEVILLE - LIQUOR STORE PROFORMA ORIGINAL SCENARIO Adopted Estimated Projected 2015 2016 2017 2018 2019 2020 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Sales 13,611,294 14,130,830 14,583,514 15,276,433 16,288,986 15,898,952 17,529,589 17,431,752 19,240,190 19,570,881 19,907,537 20,250,270 20,599,194 20,954,422 21,316,073 21,684,266 22,052,390 Cost of goods sold 10,322,174 10,666,687 11,005,245 11,465,639 12,229,562 11,923,215 13,112,132 13,004,088 14,353,181 14,560,735 14,771,392 14,985,200 15,243,404 15,506,271 15,773,894 16,046,356 16,323,751 Gross profit 3,289,120 3,464,143 3,578,269 3,810,794 4,059,424 3,975,737 4,417,457 4,427,664 4,887,009 5,010,146 5,136,145 5,265,070 5,355,790 5,448,151 5,542,179 5,637,910 5,728,639 Gross Profit %24.16% 24.51% 24.54% 24.95% 24.92% 25.01% 25.20% 25.40% 25.40% 25.60% 25.80% 26.00% 26.00% 26.00% 26.00% 26.00% 25.98% Total operating expenses 2,358,249 2,453,328 2,518,277 2,783,557 3,052,447 3,376,520 3,506,516 3,435,661 3,749,126 3,814,438 3,873,184 3,928,552 3,985,642 4,043,698 4,102,021 4,174,949 4,249,879 Net operating income 930,871 1,010,815 1,059,992 1,027,237 1,006,977 599,217 910,941 992,003 1,137,883 1,195,708 1,262,961 1,336,518 1,370,147 1,404,453 1,440,158 1,462,961 1,478,760 Total other revenues/(expenses)(168,973) (129,948) (99,865) 1,645,476 115,053 18,762 19,100 44,800 (111,550) (111,550) (104,793) (98,035) (91,278) (84,520) (77,763) (71,005) (64,248) Net income before transfers 761,898 880,867 960,127 2,672,713 1,122,030 617,979 930,041 1,036,803 1,026,333 1,084,158 1,158,168 1,238,483 1,278,870 1,319,933 1,362,396 1,391,956 1,414,512 Total transfers 1,397,972 1,074,318 536,253 923,260 1,065,062 1,415,253 1,130,445 1,091,531 1,091,531 1,131,004 1,135,176 1,139,473 1,143,900 1,148,459 1,153,155 1,157,991 1,162,973 Net income (636,074) (193,451) 423,874 1,749,453 56,968 (797,274) (200,404) (54,728) (65,198) (46,846) 22,993 99,010 134,970 171,474 209,241 233,964 251,539 Bond principal payments (175,000) (180,000) (2,715,000) - - - (230,000) (240,000) (245,000) (515,000) (525,000) (530,000) (535,000) (545,000) (265,000) (265,000) (265,000) Income after bond principal pmts (811,074) (373,451) (2,291,126) 1,749,453 56,968 (797,274) (430,404) (294,728) (310,198) (561,846) (502,007) (430,990) (400,030) (373,526) (55,759) (31,036) (13,461) 7/23/2020