Saturday, Nov. 15


City holds public hearing on
'Business District' and 'Plan'    
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[NOV. 15, 2003]  Council members and those in attendance at the public hearing on the proposed business development at the former Stage and Staples location got into some of the nitty-gritty and sorting out of the "Plan" details. The agreement is mostly still in the hands of the lawyers. Jim Grice, representing Diversified Acquisition, and City Attorney Bill Bates have been in frequent contact. It is hoped that the agreement will sufficiently firmed up to take to a vote at the Monday, Nov. 17, council meeting.

see archives Two great retail businesses ready to come to Lincoln &
City opens discussion on $5.8M business proposition

At present the agreement says that Lincoln is going to give the developer $510,000 to do the project. The developer is asking that those funds be paid in advance of the developer's expenditure of those funds.

One unresolved issue at the moment is that the proposed method of attaining those funds will not meet the requested timetable of the project. The suggested alternative bond, according to the bonding company, would not be available for sale until January in the best-case scenario, Bates said. Contractors are already getting permits to begin work in December as scheduled.

Bates highlighted important provisions within the agreement with the developer.

The developer asks for:

  • Control of the development in its entirety. They do what they wish to do within the confines of the general redevelopment plans.
  • Commitment that the first occupants of the property will be Goody's and Dollar Tree.
  • Retaining the right to change tenants.
  • Retaining the right to sell the property.

The developer commits to:

  • Be responsible to repay the debt service if for any reason Goody's or Dollar Tree close during the 10-year term.
  • Limit the use of the funds received from the city to making the improvements on the property.
  • Be obligated to make those changes to the property.

The city commits to:

  • Obtain the money.
  • Give the developer the money.
  • Pay the debt service on the money.
  • Pay down the debt using 100 percent of the newly generated retail sales tax revenues.

Grice clarified that the developer is submitting an agreement that gives them control of the development in terms of what work is done in developing, leasing and possible sale of the property. What's most important is that the developer is obligating itself to limit the expenditures exclusively to the improvements on the property. "It is not an open check to spend where-you-may," Grice said, "It has to go on this project."

The "Plan," as submitted by the developer, is requesting $510,000, plus the cost of a traffic signal device if one is approved by IDOT, as well as the cost of finance, cost of interest on the city's portion and an estimated $25,000 marketing fee or some kind of fee related to the debt obligation, depending on where the financing comes from.

The $25,000 fee may be less if done through a third party other than the one considered for alternative bonds. Some other borrowing source may even advance the financing quicker, as is needed at this time.

A Lincolnite, Philip Dehner from A.G. Edwards, came forward and said, "I think this is a good move. These are good companies."

Dehner also said that the investment company he works for would probably be willing to help settle some of the financing issues with the project.

The request that the developer is making from the city is less than half of the investment that it will be making. The developer will cover all extra costs. One additional cost that is already known will be incurred by working through the winter. The outside of the building will need to be plastic-sheeted while stucco is applied, in order for it to dry properly and prevent cracking.

Speaking as the developer, David Christie said he knows that he will be investing more than his 50 percent of the estimated costs, but he is willing to do that and get it done well. This will benefit him and the city.

Permits have already been taken out for construction on the property. Christie said he has entered into agreements with the stores and committed to begin work by Nov. 20. Beginning work by that date will allow him to turn the property over to the stores for a Feb. 1, 2004, opening.

The dates are driven by Goody's commitment on Wall Street that they would be opening 10 stores, and one of those stores is in Lincoln. "They have to work that far in advance," Christie said.

The aldermen and city managers presented a number of specific questions to the developer and his representatives.

Building and safety officer Les Last asked how rehabilitation costs were estimated and if the figures in the proposal are hard numbers.

It was explained that costs have been averaged and may go up or down. For example, the Dollar Tree is estimated at a cost of $90,000 for 15,000 square feet.


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Alex Glenn, a broker for Christie Inc., said that they generally estimate costs on prior experiences. "We do a number of these projects; we know what it costs," he said.

He also said that they know what ceiling tile and other building supplies cost. "We're very comfortable that these numbers are going to be every bit of that."

Renovation costs on the interior of the Goody's store are on the high side at $475,000. Goody's will occupy 24,797 square feet. But, this is a high-profile business with nicer than usual fixtures, Christie said.

Alderman Verl Prather asked if the projected Dollar Tree store is what is referred to as a "racetrack."

A racetrack is a store where the aisles are wide and in a circular fashion.

A representative responded, yes, a racetrack store has higher sales projections. They can carry more merchandise. This will be one of the bigger Dollar Tree stores in the country.

Alderman Buzz Busby said that he has some background in retail as a factory rep, and he feels that the projections of sales based on square footage are on the high side. That figure normally runs between $50 and $100. The Dollar Tree projections are listed between $150 and $160 per square foot. Busby asked if they know the average figures for the stores being proposed.

A. Glenn said that the figures presented are actually lower than the nationwide average of these stores. "We used a pretty conservative approach," he said.

The "Plan" projects that the 1.5 percent sales tax revenue will be sufficient to pay off the debt in a 10-year period even with 0.5 percent of the 1.5 percent being used only for infrastructure.

Several amortization tables were provided for the aldermen to review.

The "Plan" includes an estimate suggesting the city will gain a small but additional revenue through the real property tax, which is at 1.128 percent. That increased assessed evaluation is about 30 percent over what is there now, Grice said.

However, Last pointed out that the property sits in an enterprise zone and will not bring in the $1,500 property tax that was estimated in the "Plan."

Details of the "clawback" are still being worked out by the lawyers. The clawback is basically that in the event one of the stores closes before the loan is paid off, the individual store would be responsible to pay off their portion.

The developer is asking for some flexibility on this. The developer would like a six-month deferment from the city, which is what they have in their agreements with the stores, allowing opportunity to re-lease the premises. The six months would allow some breathing time, and it would be far better for everyone to get a new tenant in there to pick up that revenue stream again.

Glenn Shelton said that he has received some calls about the project. In light of job layoffs and tight on finances for the city, he questioned if the developer would consider financing the project and then the city pay the developer with the sales taxes that the businesses bring in.

The developer responded: "That's called a pay-as-you-go TIFF. I think I'm making a large enough investment in this property. I am investing over half the investment. I'm taking less rent than I'm currently getting [Goody's lease is $20,000 per year less than Staples unexpired lease, which is still being paid], but it's not helping anybody.

"So I think I'm doing my part to make this thing work," Christie added. "And you will not be disappointed. We think it adds a lot of credibility to your community."

A. Glenn pointed out that this is a great opportunity to jump-start the economy here, with other businesses sure to follow and the jobs that will be made available, all at no risk to the city, since they are guaranteeing payback should the businesses go awry.

Other like questions about sales figures and business stability were asked and answered by the developer and representatives.

The developer and representatives summarized saying that the stores have done their homework about opening here in Lincoln. "The stores feel good about the market," A. Glenn said. "We feel very comfortable with them [the sales projections], but if you'd like us to provide more information, we can get that," he added.

Christie summarized his belief in the stores and his commitment to Lincoln, saying: "I'm here tonight because I believe in Goody's. I wouldn't be signing a lease with them and making a huge investment and guaranteeing I'm going to pay this money back if I didn't believe in their operation."

[Jan Youngquist]

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