11-30-1981 CCMMINUTES
SPECIAL MEETING - HUTCHINSON CITY COUNCIL
MONDAY, NOVEMBER 30, 1981
The special meeting was called to order by Mayor Westlund at 3:35 P.M. Those in
attendance were: Aldermen Carls and Beatty, in addition to Mayor Westlund. Also
present were: City Administrator Plotz and City Attorney Schaefer.
Personnel Coordinator Sitz inquired about the procedure for interviewing and select-
ing the Coordinator for the Senior Center. She stated there were five applicants to
be interviewed for the position.
Mayor Westlund appointed Aldermen Beatty and Lueneburg as Council representatives,
Gary Plotz and Hazel Sitz as City staff, Carol Haukos and Paul Ackland from HRA to
form the committee for interviewing the applicants on Thursday, December 3, 1981
at 8:00 A.M.
It was moved by Alderman Carls to appoint the above-named committee for interviewing
and selecting the Senior Center Coordinator. Seconded by Alderman Beatty, the motion
unanimously carried.
Mayor Westlund commented that Developer Ken Lever had made a presentation of his pro-
posal to the Downtown Development Advisory Board and to the Council. The recommenda-
tion of the Board was to enter into an agreement with Lever. Subsequently, another
developer, Richard Smith, presented a proposal for the same location in addition to
the area near the Red Owl store and First National Bank. The Downtown Board also put
their "stamp of approval" on his proposal. Today the Council will hear presentations
by both developers.
Proposal of Ken Lever
Mr. Ken Lever presented drawings of his proposed three-story, 20,000 square foot masonry
structure. The exterior of the building would have a mirror finish using brick and
glass, with bronze -type glass for the windows. There would be an enclosed glass ele-
vator, with the possibility of an outside fountain in the future. It was reported the
building would meet or exceed current codes on energy conservation.
The primary entrance to the building would be -located off the parking lot, with an-
other entrance on Main Street. The first floor would be a dining room, lounge, and
tobacco/newspaper stand, with the restaurant facing toward the park. The second and
third floors would contain office space.
Mr. Lever stated he had started his research and study about a year ago. He foresees
the long-range plan for the downtown as being a financial district. In the future,
Mr. Lever hopes to do a housing project in the downtown area.
The time schedule on the project would call for groundbreaking in the spring of 1982.
The contract agreement was put together contingent on leasing activity. Rent for space
COUNCIL MINUTES
NOVEMBER 30, 1981
in the building would be $10 a square foot per year plus utilities. Mr. Lever fur-
ther stated he would need one-third to one-half occupancy commitments for leases to
make the project feasible.
City Attorney Schaefer commented on the agreement drawn up by Mr. Lever and made ref-
erence to paragraph 5 which referred to the public alley to be vacated. He stated
the City could begin proceedings to vacate the alley, but there was no guarantee on
it. There could be public opposition.
City Administrator Plotz remarked on the purchase of the land and resale to the de-
veloper. He stated the financing of the project had not been mentioned, but both
developers intend for the purchase price of the land to be equivalent to the sell-
ing price per acre of land on the fringe area of town, which is approximately $10,000
an acre.
Discussion was given to the cost of the building, cost to the City, and revenue gen-
erated per year.
City Attorney Schaefer inquired about the time table for acquisition of property by
the City. Mr. Lever stated it was 90 days as given in the agreement.
Alderman Carls asked about the City owning the land on which the building would be
constructed. Mr. Lever was not favorable to this type of arrangement. He felt the
City would recoup all of its funds, plus more.
City Administrator Plotz suggested that if the tax increments were not high enough to
cover the cost of the S&L building and Masonic Temple, perhaps the City through its
parking assessment formula could finance the parking lot out of the parking fund.
Mr. Lever responded that he would consider the possibility, but he would have to do
some calculating first.
Proposal of Richard Smith
Mr. Richard Smith stated his proposal would include the one -block area where Red Owl,
Woolworth's, Snyder's and Brock's are located, as well as the S&L/Masonic Temple site.
An old gas station was converted into an office building; however, in order to create
40 more parking spaces, this building would need to be removed. It was his intent to
have the tenants relocate into the new facility and expand the Red Owl store, which
is in need of additional space. Negotiations had been made with First National Bank
in conjunction with its remodeling plans. Mr. Smith stated he owns the two lots be-
hind the Bank. It was further pointed out the road between the office building and
First National Bank has been vacated.
The proposed 24,000 square foot, energy efficient building on the S&L site would have
a turn of the century theme with red bricks and limestone on the exterior. The cost
of the building would be approximately $750,000. Plans called for a proposed walkway
-2-
V/
COUNCIL MINUTES
NOVEMBER 30, 1981
over Main Street to Citizens Bank. The main entry of the building would be off the
alley where the parking lot would be located, with another entry on Main Street.
A full-service restaurant, serving liquor, would be located on the first floor. An
additional floor or one-half floor could be added to the building, if necessary.
Rent for space would be $8 a square foot. The basement would have meeting rooms.
Mr. Smith stated he had met with Masonic Temple representatives, and it was their
thought to hold meetings in the basement of the proposed building and rent a small
office for operational purposes.
A development agreement had been prepared, with the help of Consultant Clarence Simon-
owicz, and attention was called to page 5 which listed 8 items of requests from the
City. It was Mr. Smith's intent to buy from the City the square footage needed for
the building and propose the City use the remaining space for public parking.
City Administrator Plotz stated the City could acquire the Masonic Temple site as
part of the parking program. Developer Smith would purchase only the land where
the S&L building is located at $1.00 per square foot or $42,000 an acre. Mr. Plotz
then asked if there were any conditions attached for the City. Mr. Smith responded
the City would remove the S&L building, the Masonic Temple and the office building
located by the Red Owl store. The City would purchase the 5,000 square foot office
building to be razed for $40 per square foot or $200,000 for additional off-street
public parking.
Mayor Westlund inquired about the agreement for Red Owl and if Mr. Smith would be
willing to work with Mr. Lever on the S&L project.
Mr. Smith responded that something would be done for the Red Owl store regardless
of whether or not the S&L project went through. However, he felt the tenants in
the office building to be removed should be provided other office space. He was
open to considering working with Mr. Lever.
Mayor Westlund commented that the City has to look at the office building as a vacant
lot, and as such it does not have a $200,000 value.
Mr. Smith stated his financing for the proposed project(s) is not locked in. Tax
exempt is planned for this project, with 75% of the cost coming from revenue bonds
($750,000) and the remaining 25% from conventional mortgage (soft cash). The addi-
tion to the Red Owl store would cost about $200-250,000.
Mr. Smith commented that his background expertise included 25 large land developments
in and around the 'Rain Cities, construction of a condominium in Prescott, and several
other projects. His banking firm is Northwestern Bank.
Mayor Westlund concluded the meeting by stating the Council would hold a meeting to
further review the two proposals and reach a decision at the December 8, 1981 City
Council meeting.
The meeting adjourned at 5:00 P.M.
-3-