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City Council Minutes September 13, 2004 Page 4 ---------------.-------.----- 5.3 Koehler House and Libra", Expansion Update City Administrator Klaers brought this item to the council for discussion on whether the City should invest money for repairs and rent out the Koehler House or remove the house in anticipation of the library expansion. He explained the costs involved. He stated that this house might not work for Love Elk River to rent because of the expenses per month for rent and in energy costs. Mayor Klinzing stated that this house is not energy efficient, everything is very old, and a lot of water damage has taken place so a lot of repairs would be needed. The house may also have to be rewired. Street Superintendent Phil Hals stated that in evaluating the Koehler house, the garage, the floor areas, and miscellaneous work would cost $10,000 to make this house rentable. He reported that replacement of the nine windows is not included in the $10,000 cost. He stated that there is also asbestos in the basement. He stated that this house would be very difficult to rent out without these repairs. It was the consensus of the council that spending money to repair this house would be a bad investment and it should not be rented out. Mr. Hals stated that there might be a mover interested in buying and moving this house. Councilmember Dietz agreed that this item should go out for bids for someone to either move the house or to tear it down. Council concurred. 5.4 Westbound Liquor Store Discussion Finance Director Lori Johnson distributed the Northbound Liquor Store profit and loss history and end of Year 2004 estimates, the Westbound Liquor Store profit and loss analysis, and 2004 Westbound assumptions used for analyses and general comments. Liquor Store Manager Dave Potvin explained that his resource for the analysis was Jeff Wrede from Tushie Montgomery Architects. (Tushie Montgomery was the architect on Northbound.) He stated that he was given a figure of about $175 per square foot for a "turnkey" structure and based on a 10,000 square foot store it will cost $1,927,500 to build. The current store is 13,000 square feet including the basement. Ms. Johnson explained that the Westbound calculations are all estimates with future year estimates based on the first year estimate. These calculations assume a Westbound bond issue of $1,100,000 payable in ten years. She explained that the scenario provided had a realistic number of $1,800,000 in sales. Liquor Store Manager Dave Potvin stated that there is competition coming so it would help us to get Westbound opened first and it would be nice to get the visibility of a comer lot. The Dakota Study showed that this lot was in a good location. There is the possibility of a liquor store in Otsego, which could affect Northbound. Councilmember Dietz inquired on the interest rate of 60/0. Ms. Johnson stated that this is an estimate and that the actual rate should be lower depending on the market at the time and whether the local banks are interested in underwriting the bond.