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.