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Home My WebLink About4.a. Consideration of Proposals from Muller Family Theaters, Inc. and Guetschoff Theaters, Inc. to Develop a Theater in Rosemount MEMO TO: Chair Dunn Commissioners Anderson, Carroll, Edwards, McMenomy, Sinnwell, Wippermann FROM: John Miller, Economic Development Coordinator DATE: July 30, 1993 RE: Staff Report for Theater Proposals You will note that the staff report for the theater proposals is not in the agenda packet. It will be hand delivered to you on Monday. Yesterday, Thursday, Steve Ji1k, David Drown, Mike Miles, and I met with both proposers for appro�mately two hours each. The response to the "criteria" were reviewed in detail and in several instances we asked for clarification. Today I met with Steve and Mike and we had a conference ca11 with David Drown to discuss the staff report. Another meeting is scheduled for Saturday. Because of our concern with thoroughly reviewing the proposals, we will not have the staff report done until Monday. dw ,� ` s � � � M E M O R A N D U M r � � � TO: Rosemount Port Authority �`� FROM: Steve Ji1k and John Miller d�`� � DATE: August 2, 1993 ' � � RE: Staff Recommendation Regarding Selection of a Theater Complex Proposal BACRGROUND As you will recall, the Rosemount Port Authority directed staff to -prepare criteria and solicit reactions to that criteria for a , theater complex from Guetschoff Theaters, -Inc . ( "GTI" ) , Nuller Family Theatres ( "Mullers" ) and any other party interested in, locating a theater complex in the City of Rosemount. The requested staff criteria, attached as Exhibit A, were distributed to GTI and the Mullers on Wednesday, July 21 , 1993 , and both parties responded on Wednesday, July 28 , 1993 . Copies of the GTI and Mullers ' proposals are attached as Exhibits B and C, respectively. Steve Jilk, John Miller, Mike Miles and David Drown, of Springsted, met with representatives of both GTI and Mullers on Thursday, July 29 , 1993, for extensive discussions on the proposals received, including further refinement and clarification of the �� proposals . On the strength of these meetings and further staff � 0 �� discussions and the Fort Authority' s stated request �or a staff -t�- recommendation as to which, if any, theater complex proposal the �,,.�.�,^�'u"'� Port Authority should aecept, the following material is offered. ��:�� RECOMMENDATION SUI�Il�IARY Both the GTI and Muller proposals provide solid alternatives I', and good proposals for consideration by the Port Authority. The Mulier proposal was found to be superior' to the GTI proposal in the fol].owing areas : ( 1 ) Nature and quality of the theater complex facility proposed; ( 2) The level of interest demonstrated by the Mullers; ( 3 ) The favorable impact on the Rosemount Business Park; and ( 4 ) The potential general benefits to the City of Rosemount. The GTI proposal was found to be more favorab�e than ' the Mullers' proposal in terms of the financial risk which the City of Rosemount would be required to assume. However, it is staff ' s recommendation and the view of our financial consultant, Springsted, that the degree of municipal risk contained in the Mullers ' proposal is acceptable, and this risk, in any event, is outweighed by the other advantages of the Mullers ' proposal . Therefore, staff recommends ' acceptance of the Mullers ' theatre complex submission. SPECIFIC BASES FOR STAFF RECOMMENDATION NATURE 0F FACILITY At its. meeting of July 20, 1993, the Rosemount Port Authority adopted a motion which, among other things, stated that "We're looking for information regarding the construction of a ten-screen movie theater. " The Mullers ' proposal not only provided for, but strongly advocated, an initial facility of ten screens . 2 , �•, Conversely, while the GTI proposal expressed a willingness 'to provide ten screens if necessary, it proposed an initial complex of eight movie screens . An examination of the preliminary plans and specifications provided by GTI and the Mullers caused us to conclude that the proposed Muller Theatre was more interesting and attractive in its architectural design. Architectural considerations are, by nature, subjective in nature, and Port Authority members are, of course, invited to arrive at their own conclusions . The Mullers' proposal provided for expansion for up to a" 20- ` screen facility and their wi`llingness to achieve this outcome is : buttressed by the fact that they will acquire, at their cost, ten , acres of -property, in order to provide room for this ultimate expansion. For reasons set forth under the categories of impact on the Rosemount Business Park and general benefits to Yhe City of Rosemount, we believe that this expansion potential is very attractive to the City. LEVEL OF INTEREST OF PROPOSER The Mullers have spent a number of months working: with the City of Rosemount, and, in fact, originally approached the City Y about the possibiTity of building a movie complex. We believe that their long-term and ongoing efforts with the City reflect a high degree - of interest in the project and demonstrate a greater commitment than a proposer submitting information only 'when it appears that the Gity was prepared to go forward with the Mullers . This statement is intended in no way to cast a bad reflection on 3 , b•, GTI, but simply to point out that the Mullers have exhibited a lengthy and steadfast interest and time commitment in working with the City. A comparison of the theater complex plans submitted by GTI and _ . `� the#Mullers '�demonstrates that the Mullers' = plan is more�' detailed. ,. _ .and appears' to have been' the product of more intense work. This, again, demonstrates to us the high level of ongoing interest exhibited by the Mullers . IMPACT ON THE ROSEMOUNT BUSINESS PA.RK The Rosemount Port Authority has executed a Purchase Agreement for the acquisition of approximately 80 acres -of land for the creation of a Business Park. As has been frequently stated in Port Authority meetings , it is imp8rative that as rnuch of this land as possible be "put to work for the City" at the earliest possible date . Applying this criterion to the proposals , the Mullers' . proposal provides that they will purchase ten acres o� land from the City immediately, while the GTI proposal calls for' the acquisition of 7 . S acres . Additionally, the Mullers propose to pay for utility and infrastructure costs associated with the ten acres in the Business Park at the outset, by assuming responsibility for payment of bonds issued for necessary improvement to their portion of the Business Park. Once those bonds are sold, the City would immediately receive proceeds attributed to these costs as prepayment far the improvement. GTI proposes to pay for utilities and infrastructure 4 J , . over a period of the next ten years through an assessment agreement, at an interest rate of approximately 7� . GENER.AL BENEFITS TO THE CITY OF ROSEMOUNT Both: in its initial ten-screen format:and� potential 20-screen _ . _ . e expansion, the Muller proposal provides for a larger facility which, if successful, will likely result in more tax sevenues to the City of Rosemount. Furthermore, although it is very difficult to quantify, this larger facility may draw more patrons to the Rosemount area, who then may spend more dollars and patronize other Rosemount businesses . FINANCIAL CONSIDERATIONS The GTI proposal is clearly more financially risk free to the City of Rosemount. In summary, GTI proposes to finance the theater complex entirely through their own and other private sources . Consequently, the City would not have to issue bonds or otherwise assume any direct "lender" risk. Conversely, the Mullers ' proposal, as developed and clarified through staff ' s meeting with them, envisions that the MLllers would put in One Million Dollars in cash, purchase the land and infrastructure and require the City to issue approximately Two Million Dollars in municipal bonds . The Mullers have proposed to secure these bonds by both personal guarantees and the provision of tangible assets . After consultation with Mr. David Drown, of Springsted, Inc . , . staff recommends to you that the Mullers ' provision of cash and the 5 . assets and guarantees to offset the bond issuance risk, provide adequate safeguards to the City to justify the issuance of the bonds . Moreover, it is felt that the City' s provision of fixed rate, long-term financing to the project will be a significant contribution towards its ultimate financial success . Thus , while providing some municipal financial risk, the bonds could also help assure the financial feasibility and profitability of the theater complex. Members of the Port Authority are encouraged to carefully read both the GTI and Mullers ' proposals and to make inquiry of the proposers and staff on August 3, 1993 . SJ:JM:MM/gmo Mike\Rosemount\Port-Aut.Mem 6