6. EDSR 11-13-2006ITEM # 6.
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MEMORANDUM
TO: Economic Development Authority
FROM: Catherine Mehelich, Director of Economic
DATE: November 13, 2006
Development~~
SUBJECT: Consider Contract for Market Analysis of Gateway Business
Center Development Area
Attachments
• Gateway Business Park Work Plan, updated 11/06/2006
• Maxfield Research, Inc. Contract fox Professional Services
Issue
The EDA is asked to review and consider authorizing a contract with Maxfield Research,
Inc. to undertake a market analysis fox the Gateway Business Center Development Axea.
Background
At its September meeting, the EDA reviewed and adopted a work plan fox the land use plan
and development of the City owned Gateway Business pxopext5~ (former Cargill property).
Since that tune staff has been gathering background information on the site. One of the
initial steps in the development of the land use plan is the completion of a market analysis to
provide information on the types of development opportunities fox the area.
Following discussions with staff, Maxfield Research, Inc., has submitted the attached
Contract in the amount of $ 29,500 fox the EDA's consideration. In addition to Maxfield
Research, staff met with McComb Group, Ltd and requested a proposal. A proposal has not
yet been received from McComb Group.
Action Requested
Staff recommends the EDA approve the contract with Maxfield Research, Inc. in the
amount of $29,500 fox the completion of the Gateway market analysis. The next step after
completing the market analysis is for staff to meet with the adjacent individual property
owners, and various board and commission stakeholders to identify the goals and objectives
fox development.
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October 5, 2006
Catherine Mehelich
Directory of Economic Development
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Dear Ms. Mehelich:
Thank you for meeting with us on Monday. Attached is a proposal to provide market research
and consulting services to assist the City of Elk River to analyze the market conditions and po-
tential demand for commercial and industrial development in Elk River, Minnesota. It is our un-
derstanding that the site for potential development, called the Gateway Business Park, is a 76-
acre parcel that would be near the new Northstar Commuter Rail station. The proposed study
would analyze potential demand for highway and other retail and industrial uses at the site.
The attached work program includes an assessment of the demographic and economic trends in
the community and region, a review of the competitive market for retail and industrial space, and
an estimate of the potential demand development at the site.
We welcome the opportunity to work with you. If this agreement meets with your approval,
please sign and return one copy of the agreement to us.
Please call me if you have any questions about the proposed work program or if you need any
other information.
Sincerely,
MAXFIELD RESEARCH INC.
Grand Martin
Senior Research Analyst
Attachment
615 1S1 Avenue NE #400
Minneapolis, MN 55413
(612) 335-0012 (612) 904-7979 FAX
www.maxfieldresearch.com
Inc.
October 5, 2006
Catherine Mehelich
Directory of Economic Development
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
CONTRACT FOR PROFESSIONAL SERVICES
Maxfield Research Inc. proposes to provide market research and consulting services to the City
of Elk River (the Client) to conduct market research and provide analysis regarding current mar-
ket conditions and the potential demand for retail and industrial space at the Gateway Business
Park in the City of Elk River, Minnesota. The following outlines our work program for this as-
signment.
SCOPE OF SERVICES
A. Site Analysis
1. Field visit to assess adjacent and surrounding land uses.
2. Assess community orientation and aesthetics.
3. Assess access and visibility.
4. Assess proximity of the site to transportation options, other business centers, other retail,
and other services.
5. Determine the appropriateness of the site for retail and industrial uses.
B. Economic and Demographic Analysis
L Identify a Market Area(s) for retail and industrial development in Elk River.
2. Present population and household growth trends through 2015.
3. Present demographic and economic information on:
a. historic employment growth trends
b. composition of the labor force
c. employment growth by industry
d. business growth by industry and size of business
e. age distribution (1990 through 2010)
f. household expenditures
4. Summarize links between demographic/economic profile and potential for retail and in-
dustrial development.
615 1s' Avenue NE #400
Minneapolis, MN 55413
(612) 338-0012 (612) 904-7979 FAX
www. maxfie] dresearch. c om
Ms. Catherine Mehelich October 5, 2006
City of Elk River Page 3
C. Analysis of Retail Market Conditions
1. Identify key financial and location factors attractive to retail space users. Include infor-
mation on retail for neighborhood, shopping, and specialty goods.
2. Summarize available published retail market trends in the Market Area and the region.
3. Inventory competitive retail space in the Market Area; include information on total space,
space available, features and amenities, profiles of users, and cost/lease rates.
4. Identify pending retail developments that may affect demand at the site.
5. Interview local business owners, commercial real estate brokers, retail center developers
and other sources familiar with the retail real estate market in the Mazket Area. Interview
sources familiar with the area and those who might be willing to locate or develop in the
area.
D. Analysis of Industrial Market Conditions
1. Identify key financial and location factors attractive to industrial space users. Include in-
formation on office showroom, office warehouse, and bulk warehouse industrial uses.
2. Summarize published industrial real estate trends in the Mazket Area and the region.
3. Inventory competitive industrial space in the Market Area; include information on acre-
age available, building space available, features and amenities, profiles of users, and
cost/lease rates.
4. Provide summazy of incentive packages available at competitive industrial developments.
5. Identify pending industrial developments that may affect demand at the site.
6. Interview industrial space users, commercial real estate brokers, developers and other
sources familiar with the industrial real estate market in the Market Area. Interview
sources familiar with the area and those who might be willing to locate or develop in the
area.
E. Conclusions and Recommendations
1. Identify potential demand for retail and industrial space in the Market Area as whole and
the potential for such development at the Gateway Business Center.
2. Discuss timing issues relative to the development and each potential use.
3. Provide recommendations for development at the Gateway Business Center.
4. One reseazch review meetings.
5. Report preparation.
Total Cost for Commercial-Industrial Market Feasibility Study:
COST OF SERVICES
The work outlined under Scope of Services will be performed for Twenty Nine Thousand Five
Hundred Dollazs ($29,500.00), including up to ten copies of the report and all incidental ex-
penses (photocopying postage, long-distance telephone). An executed copy of this agreement
MAXFIELD RESEARCH INC.
Ms. Catherine Mehelich October 5, 2006
City of Elk River Page 4
will be required prior to the commencement of work. The contract amount will be due in
monthly installments and invoiced to the Client as work is completed.
Any meeting time or additional research requested by the Client beyond that outlined in the
above Scope of Services will be billed in addition at our standard hourly rates for staff time
which range from $55.00 to $150.00 per hour.
WORK PRODUCT
The Market Feasibility Study will be completed inbound report format. The Market Feasibility
study is accepted by many lenders, government agencies and others who require such informa-
tion to satisfy their lending criteria.
COMPLETION TIME
The work outlined under Scope of Services will be completed in draft form within seventy-five
(75) days of the execution of this agreement unless delayed by unexpected emergencies, forces
beyond the control of the parties, or by written agreement of the parties.
PAYMENT
All invoices are payable to Maxfield Research Inc. within fifteen (15) days of receipt of an in-
voice showing the work completed and the direct costs for expenses. A finance charge of one
and one-half percent (1.5%) per month will be added to the unpaid balance of each invoice not
paid within thirty (30) days.
DISCLAIMER
The objective of this research assignment is to gather and analyze as many market components
as is reasonable within the time limits and projected staff hours set forth in this agreement.
We assume no responsibility for matters legal in character. The property/land is assumed to be
free and clear of any indebtedness, liens or encumbrances; and good and marketable title and
competent management are assumed, unless otherwise stated.
If building plans or site plans are included in the report, they are to be considered only approxi-
mate and are submitted to assist the reader in visualizing the property. We assume no respon-
sibility for the accuracy of any building or site plans.
MAXFIELD RESEARCH INC.
Ms. Catherine Mehelich October 5, 2006
City of Elk River Page 5
Certain information and statistics contained in the report, which are the basis for conclusions
contained in the report, will be furnished by other independent sources. While we believe this
information is reliable, it has not been independently verified by us and we assume no respon-
sibility for its accuracy.
The conclusions in the report are based on our best judgments as market research consultants.
Maxfield Research Inc. disclaims any express or implied warranty of assurance or representation
that the projections or conclusions will be realized as stated. The result of the proposed project
may be achieved, but also may vary due to changing market conditions characteristic of the real
estate industry, changes in facts that were the basis of conclusions in this report, or other unfore-
seen circumstances.
In the event payment is not received on a timely basis, Maxfield Research Inc. shall be entitled
to a lien against the subject property.
This agreement will be construed according to the laws of the State of Minnesota.
TERMINATION
This agreement maybe terminated upon written notification of either party to the other. In the
event of termination, the Client will pay Maxfield Research Inc. for staff hours performed at the
firm's normal hourly rates, plus all expenses incurred through the date of termination.
If this proposal meets with your approval, please sign and return one copy to the offices of Max-
field Research Inc.
The price terms of this agreement shall remain in effect for a period of 90 days from the date
shown at the top of this document.
Agreed to this day of
MAXFIELD RESEARCH INC.
~/~ ~ ~/E.
Mary C. Bujold
President
2006.
CITY OF ELK RIVER
Catherine Mehelich
Director of Economic Development
MAXFIELD RESEARCH INC.