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Home My WebLink About5.a. Update on Theater Development ProposalsCITY OF ROSEMOUNT EXECUTIVE SUMMARY FOR ACTION PORT AUTHORITY COMMISSION MEETING DATE: JULY 6, 1993 AGENDA ITEM: UPDATE ON THEATER PROPOSAL AGENDA SECTION: CONSULTANTS/STAFF REPORT PREPARED BY: JOHN MILLER, ECONOMIC DEVELOPMENT COORDINATOR AGENDA NO. �' A. ✓ . ATTACHMENTS:I.PROPOSAL FROM MULLER FAMILY APPR ED BY: THEATERS INCLUDING PROFORMA AND BUILDING d' ELEVATIONS 2. LETTER FROM GUETSCHOFF THEATERS ra Attached for your review is a proposal to construct a theater in the Rosemount Business Park submitted by Muller Family Theaters. Also attached is a copy of a letter from Guetschoff Theaters outlining a proposal it would like to make to the port authority. Guetschoff has theaters in Apple Valley, Hastings, Shakopee, Elk River, Cambridge, and Roseville. The Guetschoffs have indicated they can get a full proposal to me by July 13, in time for you to review on July 22. With your new standing rules the next meeting is a committee of the whole meeting. You may want to set the July 22 meeting as a special meeting to hear the theater proposals. I would also add that David Drown, our advisor from Springsted, has been on vacation this week and Monday, July 5 is a holiday. Considering the proposals on July 22 would permit a better review by Springsted and would give you more time to consider both the financial review and the proposals themselves. RECOMMENDED ACTION: Motion to set a special meeting for July 22, 1993 to hear and consider proposals for construction of a movie theater in Rosemount. PORT AUTHORITY ACTION: MULLER FAMILY THEATRES 4940 - 54th St. N.W. Mule Lake, MN 55358- 612-963-3041 July 1, 1993 Dan O'Neil Springsted, Inc. 85 East 7th Place S t . Paul, MN Dear Dan: Enclosed are our personal financial statements. We've discussed with John biller and Ed Dunn that your firm should review these statements as it regards our theatre development in Rosemount. We are proposing to provide a personal guarantee of security for the estimated $2,500,000 G. 0. bond we are asking the Port Authority to provide for our development. You should also to aware that we are willing to invest $450,000 as equity into the currently estimated $2,949,000 development. This was agreed to at the request of Ed Dunn in our meeting with him earlier this week. Should you wish clarification on our :statements, please call Mike Muller at 612-963-3041. We're doping that you will have adequate time to assess these statements and be prepared to provide your opinion at the Port Authority meeting of July 6, 1993. Sincerely, Robert Muller MULLER FAMILY THEATRES 4940 - 54th St. N.W. Maple Lake, MN 55358 612-953-3041 July 1, 1993 John Miller Economic Development Coordinator Rosemount Port Authority City of Rosemount 2875 - 145th St. West Rosemount, MN 55068 RE: Rosemount Movie Theatre Development The Muller Family Theatres propose to develop a 20 screen movie theatre, initially with ten screens, in the Business Park in the Southeast Development quadrant of the S.T.H. #3 and C.S.A.H. #42. This development will have value of over $3 M for building, equipment and site improvements, not including the cost of land. Rased on our experience in comparable communities we are projecting some 468,000 patrons annually at this location, with the first phase development. The Theatre will feature first run movies and be open 364 days a year. Initially, there will be a seating capacity of 2,200 seats. A. We have chosen this site for several reasons: 1. based on the new information that has been provided, this site can best meet our time schedule for initiation of construction late this summer with an opening of the facility prior to the Easter season. 2. a movie theatre development at this location would be mutually beneficial to both the existing retail businesses in the Central Business District and for future development in the "Business Park". It has been observed that our patrons will shake additional purchases both before and after attendance at theatres, for at a minimum meals and refreshments; and 3. our development on this site is intended to be compatible with the Design Criteria recommended by the Downtown Scoping Committee. Rosemount, Port Authority Page 2 July 1, 1993 Muller Family Theatres owns and operates theatres in the following cities: Monticello (4 screens), Delano (5 screens), Waconia (6 screeds) and East Bethel (6 screens). Currently we are adding 4 screens to our East Bethel Theatre, with a completion date of July 15, 1993, providing an aggregate 25 screens in four cities. The Mullers have been the responsible parties for the construction and development of these Theatres, B. The complex will be awned by Muller Family Theatres. Michael and Robert Muller are the principal owners. Michael Muller, age 52, is married with three children. HE has a B.A. degree in accounting from St. Cloud State University. He had worked for the U. S. Government for 17 years. Bob Muller, age 48, is married with three children. He has a B.A. in Business Management from St. Cloud State University. He and his partner own and operate Muller-Pribly Utilities, a Minnesota- based corporation. C, Management of this and the other Theatres will be handled by .Michael Muller. Mr. Muller has been in the theatre business for over 40 years, the last 15 years os owner/manager. His son, Ken Muller, age 26, will assist in some of the management duties. Robert Muller will consult and be involved with the building of the project. The current owners have been responsible for the development of three of their theatres and are currently expanding the East Bethel Theatre. D. No appraisals have been made. However, based on our experience in comparable communities we would estimate the value of this site if it were prepared for development to range $0.15;per square foot to $0.56 per square foot. E. The costs of the proposed private development, site costs and preparation coupled with conventional lending rates and terms are prohibitive to proceeding with this project. Therefore only with public financing assistance and site assembly and preparation can the development achieve feasibility. F1. The ori -site management of the Rosemount Theatre, besides Mike. and Ken Muller, will consist of 2 fulltime ticket sellers, 6 part time ticket sellers, 2_full time projectionists and. 10 part time projectionists. Opportunities for youth employment will be provided by the 40 part-time concession stand attendant positions. At other Muller Family Theatres, the positions are filled primarily by high school honor students. Also, a fulltime janitorial position will be employed. Rosemount Port Authority Page 3 July 1, 1453 F2, We estimate the initial project costs to be $2,544,000, which includes the building, equipment and parking lot installation. This does not include the cost to us for the site. The city :staff has estimated that our development will generate $135,000 in property taxes. F3. The initial complex can be expected to attract 468,000 patrons annually, approximately 5,000 people per week, based upon Muller Family Theatre's experience at other theatres. Our studies have shown that about 70 to 75 percent of the people attending a movie will either stop for meals or other refreshments. A key element in the success of Muller Family Theatres operation has been its ability to obtain first run features usually on the national release dates which coincide with their showings at other Metro theatres. Ticket prices are lower than what other metro -area theatres are charging for the same shows at the same time. Prices for concession items are also lower than our competitors. Muller Family Theatres are known for their clean and friendly atmosphere, smoking is not allowed anywhere in the theatre building. Disturbances by individuals that might affect enjoyment of a show by others are not tolerated. Each auditorium will Have "cry room" for parents with young children. All seats will have pap cup holders. The auditorium flours will be covered with vinyl tile. Regulations pertaining to underaged people attending R- rated movies are strictly enforced, signed notes from parents are requir=ed for admittance and verified by phone, Muller Family Theatres do not play X-rated or NC -17 rated movies. Each of the 10 screens will feature 5 showings daily with the complex being open from about 11:45 am to midnight. G1. Based on our experience, we estimate the vehicle count to be 4,000 cars per week_, spread over the time period described, G2. We propose vehicles will access the site primarily from CSAH #42 with four lanes, G3. As the site has changed, we are only able to provide a preliminary plan at this. time. H. The entrances to the site will meed a minimum of 2 entrances and 2 exit lanes at each location, ergo 4 lanes for each point of ingress and egress. 1 , The- first stage of the prfaject will be to construct 30,000 to 35,000 square building out of integrated colored block, glazed block burnished black glass. The building would accommodate 10 ample sized auditoriums, with seating capacity of 2,200 seats. The lobby will serve as a waiting area for triose coining to see shows, this area will accommodate approximately 2.50 people. After seeing a show, people will leave by exits which will allow the departing traffic to be separated from those waiting for the next show. All access and exits will conform to state regulations, including the required allowance for the handicapped. Rosemount Pert Authority Page 4 .July 1, 1993 The parking lot would contain a minimum of 600 parking spaces. The second phase of the project would be to add additional auditoriums and parking spaces when warranted by population increases in Rosemount and a 9 mile radius. . We would nope to have the site available for construction no later than Sept -ember 1, 1993, and have the building enclosed in mid to late October, the parking lot blacktopping clone before freeze up, and selling the first tickets by March 15, 1994. Final landscaping of the site would be done in spring of 1994. K. Due to site change, we have not finalized construction costs, but the estimates are based on our current expansion of the East Bethel Theatre. Upon approval by the Port Authority of this development proposal, we will secure construction bids to accurately size the bond issue we are requesting. We have previously outlined the estimated costs of our development at $2,949,000 which includes construction of the building, equipment and interior furnishings, parking lot and landscaping. L. Public assistance necessary for the development of a movie theatre to proceed is: 1. The Port Authority to issue a taxable G. 0. of $2,500,000 of proceeds to finance construction of the building, equipment, parking lot and landscaping improvements. The Bond tern,, to be 15 years with an interest rate not to exceed 5 1/2 % and a fixed monthly debt service schedule for the term of the bond. The City will provide a 10 acre site in the Business Park by September 1993, with access streets from CSAR #42, appropriate utilities and a Phare I environmental assessment plus soil borings. 2. The Mullers will be responsible for the issuance costs of 2% added to the principal amount. The Mullers will provide $450,000 equity investment for the development and Security in the form of a personal guarantee (our personal financial statement has been submitted to Springsted, Inc.). The Mullers will also pay for the building permit plan review, state Surcharge and Metra SAC fees estimated to co: -_t $35,170 and install initially a septic tank at a cost of $15,000, eliminating the need for a city Sanitary .Newer for our development. Rosemount Part Authority Page 5 July 1, 1993 M1. Title and access for construction on the site by September 1, 1993. M2. Final site grading for a construction pad and pave footings by September 1.5, 1993. M3, Extend utilities to building foundation by September 30, 1993. M4. Parking lot biacktopping by October 10, 1993. M5. Building framed and enclosed by November 15, 1993. M6. Building finished by March 15, 1994. M7. Landscaping of site completed by May 15, 1994. We our confident our proposed development will be a positive addition to Rosemount and act as a strong magnet for drawing people to your community, from a radius of over 10 miles. I've retained Jack Crimmins as our representative to work out the details with you and your Consultants, he may be reached at either 333-0600 or 377-2597.. We look forward to hearing from you at your earliest convenience Sincerely, Robert Muller and Mike Muller Muller Family Theatres CC: Mayor Edward B. McMenony Stephan Jilk, Executive Director, Port Authority Ed Dunn, Chairman, Port Authority Muller Family Theatres Rosemount Motion Picture Theatre Proforma 10 Screen Movie Theatre 30,000 Sq. Ft. Parking 600 Spaces Project Cost: Building $1,941,000 Equipment 759,000 Parking 190,000 Financing Fees -500,000 Legal & Miscellaneous 15,000 Architect 35,000 $2,990,000 Cash Flow Cash Receipts 1994 (9 Months) $1,089,100 Expenses 785,390 Available for Debt Service $ 303,710 Debt Service $ 199,919 For further financial detail, consult Springsted, Inc. JUL 02 '93 09:51RM GUETSCHOFF THEATRES ANi Rnm THAN EYFA GTI Guetschoff Theatres, Inc. 130 N. Main Street Cambridge, MN 55008 612/688-2900 or 612/444-8242 John Miller City of Rosemount 2575 - 145ti-. St W PO Hoar 510 Rosemount NN 55088-0510 RE: Proposed Movie Theatre Dear John: P.2 This letter i6 in acknowledgement of our visit with you in regards to building a movie theatre in Rosemount. We are very interested in pursuing this project and propose to. - 1. o: 1. Purchase six acres of improved land in the Rosemount Business Park at a cost of $1.00 per square foot. 2. Construct a six screen movie theatre with possible wcpansion to ten screens. Facade to be brick and block. Parking lot to be landscaped. 3. Purchase all equipment necessary to operate the theatre with its funds. 4. Provide m 25 percent cash equity to purchase the land and construct the building. 5. Open the theatre in 1994. 5. Provide personal and corporate guarantees to the port authority. In light of the above, we (Guetschoff Theatres Inc) request the Rosemount Port Authority to sell a 15 -year taxable bored for the purpose of providing 75 percent of the equity for the land, improvements, and structure. The interest to be at the port authority's rate with a 15 year amortization. We look forward to making this project a success for the Rosemount area. ally, 11 rt L Guetschoff President, G.T.I. RLG:sla Port Authority of Rosemount, Minnesota SPRINGSTED General Obligation Development Revenue Bonds (Mueller Family Theatres Project) pry FNranW AdVftM Series 1993A: $3,000,000 Taxable Bonds (Development Expenses) Series 1"3B: $640,000 Tax -Exempt (Public improvements) " Series A: Uses of Funds Building Construction 1,941,000 0,000 p 19,000 Ardiiledural and Legal 50,400 Land (10 acnes at t 15Awre Sudotal 3,099 Reserve Fund 10.00% 900,000, CAp5e8ted Wer" (6 rno) 99,499 Undarwrllommscouni $1500 45,000 ssuance Expenses20,000 ITotal Uses of Funds 5,475'833 Series A: Soutow of Funds Series A Bonds paxatte) 3,000,000 450,000 intim Fad on Construction Fund 25,833 Total Souroes of Fundis 'm �erie�t3 tisae� nds rtSNc Imprcwmert , at1e-ruts) l Underwriters Dboowt 9,750 Issuance Expenses 18060 Total Application Funds 515.00053,204 Series Bc Sources of Funds Series B Bonds $ax -exempt) 650,000 Consinxtlon Fred Iniorest 3 264 Total Sources of Funds —"`3 Aseumplione: 1) Bonds Delied October 1, 1993 2) DOWA or Paymsrb an $2,550,000 er 8.944 9 S 4 z s r Oct 14 Apr Oct Apr Od Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Od Apr Oct Apr Sanas A Debt SaMoe Series 6 Debt Sella Combined Flowenues PATAred -� Sofia A Swim a Total 5.00% Proposed 'Local Est. Annual Est. AnnUld Bond interest on Developer Ellod Year Principal Rates, mast Partne" Rind ides Ints < Paymebts PQM Be" Peymenls TIP MAN* Funds RWHAMrt , MONS +'o1Kul l'_i111111Sre= lot Port Authority of Rosemount, Minnesota's SPRINGSTEQ General obligation Development Revenue Bonds (Mueller Family TheabW Project Series 1993A: $3,000,000 Taxable Bonds (Development Expenses) Serie 19938: $W,000 Tax -Exempt (Public Improvements) e.t�9a Ssrhs A: thea of Funds BU1WV Co MlDn 1,941,000 Equipment 759,010 par" 190,000 ArCh tedural and Lea 60,000 Lend (10 acres al $.16/wre 65 340 subtotal �*`34V Reserve Fund 10.00% 300,000 Ca Ized IYersst (6 mo) 99;493 tyndenvrrikrs Discount $15.00 45,000 issuance 26 000 "3,47b'`>l9'3 Total Uses of Funds Swiss A: Sourcee of Funds Swiss A Bonds Owteble) 31000.000 Developer` EgaY 460,000 Interest Earon Construction Fund Ear" Total Sources of Funds 3,27ew Series B: Uses of Funds Public Inpro"tner" 690,000 Caplialzod Interest (6 rno) 47,484 Underwriters DWoout4 9,750 tasuanoe Experts" $16.00 — 16 050 '� Total Applostion of funds dM Oeel" B: Sousa of Funds Settee B Bonds (tax -oxer t) sbt1.000 Conetrudlon Fund Interest 3.284 Toed Soufoes of Funds Assumption s: 1) Bonds Daesd Ocftw 1,199:1 2) O&Moper Paymsres on $9,550,000 0 6.5% 1 i Oct Apr Oct Apr Oct Apr Oct Apr Oct OctApr trot Apr Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Oct Apr Swin A Debt Serv)oe Suis B OaM Service Combined FArenues Sodas A Berks B Total 6.00% 'Local Authorty Est. Arulal Est. Arman Bond Interest on Developer Effort Funds Year Prltcipel Rates, Interest Payments Eqgm Rohe Iffiest farnents payment Reserve Paynnents TIF' Required