CCP 10-27-1997 - Laserfiche WebLink

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4 , > " L,/J ., <~'h'~A j ARDEN HILLS EDA MEETING - OCTOBER 14.1997 , -' . Mr. Zehring stated the "bottom line" is that the deal for the Apache Group on the Phase IV project (which is close to a build-to-suit) was a break even project for them. He advised that if they have to absorb the soil corrcctions, the Phase III project would also be a break-even project. Mr. Zehring reported that with Phase II they have talked to AmberJack about a sale price of the 7.99 acres and the price quote was at $2 per square foot prior to knowing about the soil corrections. He explained there are no fixed targets in the Phase III portion and, in looking at the Phase III proforma and Phase II, the rate of return as a result of the extraordinary amount needed to get it ready for construction drives the return on Phase III well below market levels. Mr. Zehring explained that commercial real estate does not work at a 9% or 9.5% rate of return because other available lower-risk investments produce higher rates of return so the project would not be considered feasible due to those increased costs relating to soil corrections. Mr. Zehring reviewed documentation he has made available to the Authority and staff and the finding that the numbers presented are accurate. He stated in their discussion with the City, they talked about how to solve this problem and he proposed that, since it was an unforseen condition, they would entertain increasing valuation assessments to provide an assurance of debt service coverage on the outstanding bonds, if necessary. He reviewed why a pay-as-you-go option does not work for them since they need the capital costs covered up front. Mr. Zehring stated they have been working on exterior design treatments that are mutually agreeable, attractive, and lent themselves to the further development of the southwest quadrant of the site for higher uses. One . option raised is to solve the problem of the soil conditions and also engage in significant upgrade of the exterior of the project so as to better fulfill the original concept of the Gateway Business District. He explained that over the last 24 hours, they have developed additional drawings that represent significant upgrades (20,000 square feet of brick for the three phases) which he believes creates the most attractive office/warehouse project he has ever seen. Mr. Zehring stated these upgrades will transition from Phase I into a higher use on the neighboring parcels. Lynn Sloat, Welsh Development Company, presented a colored artist rendition of what had originally been proposed on the front and west elevations and their new proposal of continuous brick along the sill and to connect the windows along the front elevation. He stated this creates a nicer focal point at each entrance point. Mr. Sloat eXplained other design features as well as the continuation of this brick treatment to the west and east sides of the building. He asserted that this upgraded proposal will present a nicer view from Round Lake and explained that Phase IV will be similar to this proposal. Commissioner Hicks asked about the area above the doorways. Mr. Sloat stated it will be precast, painted, with reveals to create shadow lines, accentuate the brick areas, and focus on the entryways. Mr. Zehring stated they experimented with filling in that area with brick but found it did not present as well. He stated this allows them to create buildings in the GBD that conform to the original concept of the quality of structures that would be located within the District. .