trader joe's city council presentation final 5.7.12
DESCRIPTION
Trader Joe's property acquisitionTRANSCRIPT
Property Acquisition in Support of Trader Joe’s
May 7, 2012
Activities to Date
• Local Developer: Terraco/Gendell WNB, LLC• Site Considered: 1211 Chicago Avenue• Signed Lease: February 2012
Consideration by City Council
• Acquire Two Parcels– 1223-1225 Chicago Avenue– 1229 Chicago Avenue
• Enter into Parking License Agreements at each newly acquired parcel
Draft Site Plan
1229 Chicago Ave. 1223-1225 Chicago Ave.
1211 Chicago Ave.
Property Ownership of Site
Proposed Property Acquisition
1223-1225 Chicago Avenue 1229 Chicago Avenue
Seller: Sona Realty Seller: Northwestern University
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)
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.
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
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
Estimated Revenue ProjectionsRevenue 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)
City’s Return on Investment
• Total Investment: $2,050,000• Range of Annual Income: $487,500 to $669,500
• City’s ROI ranges between 23% and 32%• Investment recovered between 2016 and
2018
= Return on Investment (ROI)__Annual Income__Investment
Trader Joe’s in Other Communities
Clockwise from Top Left: Prescott, AZ (2012)Park Ridge, IL (2002)Arlington Heights, IL (2001)
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
City Permitted Parking Spaces
Questions and Answers
Questions & Answers
• Q1: What happens to the 1223-1225 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.
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.
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.
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.
Questions & Answers
• Q5: When will the store open?• A5: If this project moves forward, it is
expected to open Spring 2013.
Development Timeframe
Lee Street Beach
Despite reports, Lee Street Beach (and all Evanston beaches and parks) will remain Evanston assets.