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The City is providing a land space of 27,200 square feet, including parking space. This land is the <br /> equivalent to at least two good sized City housing lots. Prime residential lots in Roseville bring <br /> $601000- $100,000 each. Capitalizing a middle value estimate (using $160,000) at 9%, <br /> reasonable annual land rentals would be in the range of$12,000. Based on a 20 year period with <br /> a 3% rate of inflation,the City's total value of contribution is approximately$320,000. <br /> The approach by the Center has been to not create any cost to the City for having its location in <br /> Roseville. However,we have already seen costs being created..Those costs include staff time, <br /> legal costs, and a request that Ciiy building fees of nearly $25,000 be waived. This waiver means <br /> that building and plan inspections will be provided at no cost to the Center. <br /> Conclusion <br /> Based on the facts above,that unless the Center secures a sizeable endowment and strengthens its <br /> annual revenue sources, it is, in our opinion, highly doubtful that this organization will be able to <br /> continue in the short to mid-tern without public funding. <br /> As one looks at the current information, it seems apparent that a strong dependence on animal admits <br /> creates an unstable revenue stream. Such payments are voluntary and may well be closely related to <br /> the current economic conditions. Additionally, there is no endowment fund to provide for funding <br /> shortfalls where a down year may occur. Unless there are relevant facts, which are not included in our <br /> material from the Center,we see no other major source of stable revenue. <br /> As you are aware, a lease has been drafted which provides for the City to take over the building, <br /> should the organization fail. However, given the current legal environment and the nature of the lease <br /> negotiation process, we suspect that the Cii may have to involve itself in considerable legal work and <br /> cost,in order to have a dear tie upon foreclosure. <br /> An important consideration,we believe, relates to the building location.It is doubtful, given the number <br /> of high priority needs,that the Cii would recommend spending public funds to locate a public facility in <br /> this particular location. We are suggesting that the question here may be , Does the Council feel <br /> comfortable enough to absorb any resource risk in foreclosing on a facility at a location which <br /> is not among the Council's highest priorities? <br /> 0 Page 2 <br />