HomeMy WebLinkAbout04/26/1979 MP Plaza Project -K-MartThe Monadnock Building
53 W. Jackson Boulevard
HAN, BARNES & ASSOCIATES, INC. Chicago, Illinois 04
(312) 922-73-7300
TO:VILLAGE OF MT. PROSPECT
FINANCE COMMITTEE
MEMORANDUM
FROM: ELLEN L. BARNES, PRESIDENT
NATHAN BARNES & ASSOCIATES, INC.
REPRESENTING: E.N. MAISEL & ASSOCIATES
SOUTHFIELD, MICHIGAN
SUBJECT: MT. PROSPECT PLAZA -- K MART PROJECT
1.Project Description:
April 26,1979
The developer proposes to construct a 68,337 square foot K Mart
at the site of the original Goldblatt's store. The cost of con-
struction is expected to be $2 million.
The owner of the center has entered into a ground lease with the
developer (E.N. Maisel & Associates),, conditional upon the
developer obtaining a K Mart lease and project financing within
the constraints of financial feasibility.
2.Basis for Requesting Revenue Bond Financing:
This property has been vacant and unproductive. The owner has
been unable to obtain a replacement anchor for the destroyed
department store. The present building configuration and the
dimensions of the "gap" are difficult to work with using modern
department store prototypes. The construction of a single free-
standing store is not a highly profitable project; most develop-
ments depend upon the combined revenues of large and small stores
to make a project financially attractive.For these reasons the
project has been considerd marginal in the commercial marketplace.
However, K Mart has indicated a willingness to approve a lease at
the site. The developer last year prepared preliminary construction
estimates which showed the project marginally feasible and sub-
mitted a preliminary rent proposal to K Mart. However, final cost
estimates show an escalation in cost of construction of 18% since
the original estimates were prepared.
To offset these increases and maintain project feasibility the
developer requests consideration by the Village of Mt. Prospect
of the use of Commercial Development Revenue Bond financing.
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MEMORANDUM: VILLAGE OF MT. PROSPECT Page 2.
FINANCE COMMITTEE
3.Public Purposes to be Served by Project:
The site is a distressed property currently operting at less
than its most productive level. The absence of the department
store anchor is detrimental to the other merchants and to the
sales performance of the overall center.
The new K Mart will provide a strong shopper attraction. It is
expected to produce in excess of $14 million per year in gross
sales, which will rise further if current inflation continues.
This rate of sales will produce an annual revenue of $140,000
in sales tax rebate to the Village. It is believed that most
of this sales potential is now lost to the Village and is being
captured by neighboring communities.
The new store is expected to have a positive impact on the sales
performance of the small stores in the center. Based on compara-
ble experience by the developer and K Mart, the introduction of
such a store into an existing center will raise sales by the
other merchants by up to 20i,-25%.
The new store will employ approximately 175 full and parttime
workers. K Mart will make an effort to hire first from the
local community.