6.2. SR 12-04-2006
City of Elk River
REQUEST FOR COUNCIL ACTION
Agenda Section Meeting Date
Communi Develo ment December 4, 2006
Item Description
Gateway Business Park planning budget and work plan
Item Number
6.2.
Prepared by
erem Barnhart, Plannin
Reviewed by
Scott Clark, Community Development
Director
Attachments
. Work Plan, dated November 29, 2006
. Maxfield Research, Inc proposal
. McComb Group, Ltd proposal
Introduction
The Council is asked to approve the budget for the Gateway Business Park-planning, authorize the
contract to complete the market study, and authorize the City Engineer to complete preliminary
engineering work to prepare for platting and construction documents.
Discussion
After Council direction, Staff developed a work plan to outline the planning process for the Gateway
Business Park. On September 7th, 2006, this plan was approved by the Economic Development Authority
(EDA). At this same time, it was determined that the EDA will sevre as the 'agent' for the Council in
terms of providing future direction, while at the end of the process the City Council will be asked to
formally approve the plan.
A Market study was included in the work plan to better identify the market opportunities for the
property, and to guide the design of the plat. To date, Staff has received two quotes for the completion
of this study: Maxfield Research, Inc ($29,500), McComb Group, Ltd ($53,000). Copies of the proposals
are attached.
Additionally, authorization to begin preliminary engineering work is suggested. The City Engineer will
begin the process to determine sanitary sewer and water pipe size and depth, determine feasibility of
servicing the Youth Area Complex and the Commercial Reserve area on US 10, storm water needs, etc.
No report will be generated, but this information will allow for a running start toward completion of
more detailed plans once the land use pattern has been established.
Lasdy, an updated version of the work plan is attached for the Council's information. The planned
opening date for the park remains Summer 2008, with marketing to start in earnest Summer 2007.
C\Documents and Settings\jbamhart\Desktop\Request for Council action 12-4-06.doc
Financial Impact
These planned expenditures will be held in the City's Development Fund account, to be replaced by
revenue generated by sale of the lots.
Action Reauested
Staff recommends the Council:
1. Approve the Gateway Business Park planning budget;
2. Authorize Maxfield Research, Inc to complete the market study;
3. Authorize the City Engineer to complete preliminary engineering work.
Council Action
Motion by _
Second by _
Vote _
Follow Up
C:\Documents and Settings\jbarnhart\Desktop\Request for Council action 12-4-06.doc
4-4
QJ
>
~
~
~
~
C+-e
o
~
· ...-4
U
c:
~
'"'"'"
~
~
o
~
~
4-c
~
~
00
00
Q)
c:
0..-1
00
='
j:Q
~
~
Q)
iooI
~
~
""
o
o
'"
",
'"
'"
~
"
,.
o
Z
1l
1;1
."
0..
;:l
QJ
-
.rJ
0",",
f/J
c:
o ~
~~
f/J
QJ
~
QJ QJ
::s .....
QQ
f/J
QJ
.....
o
Z
."."."."
(J,) QJ QJ V
~~~~
" " " "
000 0
U U U u
\1,) v (l) v
.0.0.0.0
8 B B B
.,f .,,^ .,f .,,^ ."
E E ~ B B
~~~~~
~
'"
;.:1
~
~
o
U
8
r:>.
'"
'"
<l)
'"
'"
<l)
ill '"
(J,) ""0 [i
8 ~ 8
~~~
."
a
~ '"
f/J .~
~
~ g
u
..CJ 1J
u '"
~ u ]
~ ..9
~ ." C/l ."
a B
C/l
0 ;.;l ~
1:: ..0 ..0 ~
<l) " "
.s <l) JJ '"
::s <l) ~
~
.....
CJ
::s
"'t:l
o
'-c
~
~
f/J
~
.....
I
.rJ
::s
en
8
8
,s
,s
'" '"
~ ~
] ~
~ .::
<l) <l)
u <l)
~ ~
'"
'" '"
o 0
~ ~
z z
q98
5 5 g
zz
.~
~~
..
0>
.,
ll..
'"
<l)
.~
u
N
'0
~ <r:: <r:: <r:: ~ <r::
~ooo'OBO<r::
oUlUlUl 5"3UlO
. 8.......... -.................. 0 ~ -.... ~
"........OOOu 00
UlOUlUlUl uUl
Ul
~ ~2~~~~
~ uuuvQ.)~
...... 00000
c- c- c-
000
~~~
"
o
..0
'"
N
."
o
ii
g
r;:I
g
o
U
~
~
~
~
<l)
." <l)
..5 0
<l) ~
.~ 0
S <l
1J I>
<l) <l)
00
en
QJ
~
0
z
~
CJ
~
"'Q
0
~
~
QJ
-
.t::J
o..-l ~
en
c: ~
0 ~
~~
en
QJ
~
QJ QJ
~ ~
QQ
~
en
~
~
I
.t::J
~
00
~
en
~
~
~
~.
N
'0
N
G>
0>
'"
Q.
~
..0
5
1;
z
"0
%J
'R
"
'"
~
'"
Gateway Business Park
Budget
Updated 11-29-06
Plan preparation
Market Analysis
Economic Dev. Feasibility
Preliminary Engineering
Final Engineering
Final Plat
Legal
Plan preparation total
Budaet
Approved Actual
$ 30,000.00 $ 29,500.00
$ 5,000.00
$10,000.00 $10,000.00
$ 20,000.00
$ 10,000.00
$10,000.00
$ 85,000.00 $ 39,500.00 $
Infrastructure Improvements
.field
Researcb me.
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 1st Avenue NE #400
Minneapolis, MN 55413
(612) 338-0012 (612) 904-7979 FAX
www.maxfieldresearch.com
eId
Rest'Jlrcb 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 ofthe site for retail and industrial uses.
B. Economic and Demographic Analysis
1. 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 1 st Avenue NE #400
Minneapolis, MN 55413
(612) 338-0012 (612) 904-7979 FAX
www.maxfie1dresearch.com
Ms. Catherine Mehelich
City of Elk River
October 5, 2006
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 Market 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 Market 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 summary 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 research review meetings.
5. Report preparation.
Total Cost for Commercial-Industrial Market Feasibility Study:
$29.500.00
COST OF SERVICES
The work outlined under Scope of Services will be performed for Twenty Nine Thousand Five
Hundred Dollars ($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
City of Elk River
October 5,2006
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 in bound 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 staffhours 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 com;idered 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
City of Elk River
October 5, 2006
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 may be 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 of90 days from the date
shown at the top ofthis document.
Agreed to this
day of
2006.
MAXFIELD RESEARCH INC.
CITY OF ELK RIVER
{/!JtlB:~L
President
Catherine Mehelich
Director of Economic Development
MAXFIELD RESEARCH INC.
000 MCCOMB GROUE Ltd.
O.D REA L EST ATE AND
ODD R ETA I Leo N 5 U L TAN T 5
November 20,2006
Ms. Catherine Mehelich
Director of Economic Development
CITY OF ELK RIVER
13065 Orono Parkway
Elk River, Minnesota 55330
Dear Ms. Mehelich
In response to your request, we have prepared a proposal to conduct research to determine
market potential for retail and industrial development for the proposed Gateway Business Center
located in the southeast quadrant of the intersection of TH -10 and 171 st Avenue in Elk River.
OBJECTIVES
The market research program is designed to determine market potential for retail and/or
industrial development in the Gateway Business Center and vicinity. Research objectives
include:
· Evaluate the location of the proposed Gateway Business Center and its suitability for
retail and industrial use over the next five to ten years.
· Review and summarize published retail and industrial market trends.
· Identify competitive retail areas, tenant mix, anchor stores and rental rates.
· Delineate a trade area of Gateway Business Center, evaluate its demographic
characteristics, and estimate retail and service resident purchasing power.
· Estimate retail development and service potential for Gateway Business Center for
2010 and 2015 including potential anchor stores and smaller business establishments.
· Identify competitive business parks, programs and incentives, land prices and rental
rates, and overall competitive climate.
· Identify demand for business park/industrial space and recommend programs to
stimulate development.
· Evaluate potential for short-term development (five years) compared to future
development (ten years) at Gateway Business Center.
The above objectives are designed to determine market demand for retail or industrial
development in Gateway Business Center.
222 South Ninth Street Suite 380 Minneapolis, Minnesota 55402 · (612) 339-7000 Fax: (612) 338-5572
Ms. Catherine Mehelich
November 20, 2006
Page 2
WORK PROGRAM
The work program outlined below is designed to meet the above objectives. The work program
will address the items contained in the scope of services provided by the City of Elk River.
Specific work tasks are summarized below:
1. STUDY AREA EVALUATION
The study area will be inspected to evaluate its physical characteristics, location, and
suitability for retail or business park/industrial use. Factors to be studied include, but are not
limited to: location, size, access, ingress and egress, visibility, vehicular traffic patterns,
traffic counts, and relationship to other uses in the area. Adjacent uses will be identified and
evaluated.
2. RETAIL MARKET ANALYSIS
Retail market analysis will, as requested in the scope of work, identify market demand for
retail space in Elk River and the Gateway Business Center.
. Competitive Centers Evaluation
Competitive shopping centers and retail clusters serving the market area will be inspected
and evaluated to determine competitive impacts on the retail uses at the proposed
Gateway Business Center. Principal competitors will be analyzed to evaluate tenant mix,
retail gross leasable area (GLA), and anchor stores. Competitive shopping centers will be
classified by type. Rental rates, CAM and property taxes will be identified when
available. Proposed and planned competitive shopping centers will be identified to the
extent possible.
. Broker Interviews
Brokers and shopping center owners familiar with the Elk River area will be interviewed.
These interviews will address retailers interested in locating in Elk River and retail
impressions of the area.
. Market Area Analysis
Gateway Business Center's retail market area will be delineated based on road network,
geographic barriers, competitive shopping areas and McComb Group experience. The
economy of the trade area will be analyzed to identify and quantify those factors that
generate support for retail establishments.
McComb Group maintains a proprietary database of historic growth trends in the Twin
Cities Metropolitan Area since 1970 by growth corridor. Each growth corridor tends to
maintain a consistent market share of residential growth over time unless some event
occurs to cause a change such as a new river crossing or MUSA line expansion. Historic
market share trends for each growth corridor are evaluated to determine those factors that
will influence future residential development in each growth corridor. The resulting
Ms. Catherine Mehelich
November 20, 2006
Page 3
information is utilized to determine future residential growth patterns within each growth
corridor.
Market areas for shopping centers in Elk River and the proposed Gateway Business
Center are located in the North Highway 10 and Northwest 1-94 growth corridors.
Historic residential growth patterns for communities within the retail market area will be
reviewed to determine historic residential market share trends. Growth trends for those
corridors that overlap the proposed trade area will be used to estimate future residential
market share and growth.
Market area residential growth likely to occur over the next 15 years will be estimated.
This analysis will result in a market driven estimate of residential development potential,
population, and household growth that differs from estimates prepared by the
Metropolitan Council and the State Demographer. This analysis will reflect development
trends based on market trends and experience.
When household projections through 2020 are completed, future demographic
characteristics will be evaluated. This will include: population, households, age
distribution, and household income levels for the years 1990, 2000, 2005 and 2010.
Retail purchasing power within the trade area will be estimated by merchandise category
from 2005 to 2020 to determine future trends in retail and service spending. McComb
Group's proprietary purchasing power model, which contains household spending
potential for over 100 retail stores and services, will be used for this analysis.
+ Retail Development Potential
Market area retail sales potential will be estimated taking into consideration trade area
purchasing power, competitive shopping centers, retail sales potential and market share.
This will include retail sales estimates and supportable square feet of retail space for over
100 types of retail stores, food service, services and office service establishments for a
IS-year period using McComb Group's proprietary purchasing power model. Retail sales
potential for the proposed Gateway Business Center will be identified including sales
potential and supportable square feet by business type.
3. INDUSTRIAL MARKET RESEARCH
Industrial market research includes both multi-tenant and single tenant buildings in the
market area. T databases for office and industrial buildings include only multi-tenant
buildings. Single tenant buildings need to be identified by field research. Single tenant
buildings can represent as much as 50 to 75 percent of the total industrial absorption. If
analysis of the single tenant buildings is not included, the demand for space will be
understated. This work program is designed to identify single tenant buildings.
Ms. Catherine Mehelich
November 20, 2006
Page 4
. Competitive Business ParkslIndustrial Areas
Business parks and industrial areas that are competitive with Elk River and the proposed
Gateway Business Center will be identified and evaluated to determine building size and
types of tenants. Developable land available for future development will be identified.
Research will be conducted to identify incentive packages that are available at
competitive business park/industrial developments. Planned and proposed industrial
development areas that may affect demand at Gateway Business Center will be identified.
Information to be identified includes: acreage available, features and amenities, profiles
of users, and costsllease rates.
. Industrial Market Area
The market area for business park and industrial in Elk River will be identified. The Elk
River market area economic base related to industrial development will be evaluated and
compared to Metro Area trends. This will include household labor force and employment
trends, and growth trends from 1990 to 2005. Future household and labor force growth
will be estimated for 2005 to 2015. Historic employment growth trends by industry will
be analyzed. Future labor force and employment trends will be estimated and evaluated.
. Historic Business Park/Industrial Absorption
Market analysis will be conducted to determine the historic absorption of office, office
showroom, office warehouse and bulk warehouse space in Elk River and the northwest
Metro Area. The portion of absorption that has been captured by Elk River will be
quantified.
. Broker/User Interviews
Developers, brokers and industrial space users familiar with the Elk River market area
will be interviewed. This will include sources familiar with the area and those who might
be willing to locate or develop in Elk River.
. Future Business ParklIndustrial Demand
Future absorption for office, office showroom, office warehouse and bulk warehouse uses
in Elk River will be estimated. Estimated future absorption of each of these development
types for the northwest Metro Area and the portion that can be absorbed in Elk River will
be identified. Estimated future Elk River business park/industrial absorption will be
analyzed by type of product and allocated to Gateway Business Center.
4. CONCLUSIONS AND RECOMMENDATIONS
Results of the retail and business parks/industrial market research will be evaluated to
determine the best development alternatives for Elk River. This will include potential
timing, both short-term and long-term, for each use.
Ms. Catherine Mehelich
November 20, 2006
Page 5
The results of our work will be documented in a final report designed to meet client needs. The
report will contain appropriate graphics and explanations of our principal findings, conclusions
and recommendations.
MEETINGS
Four meetings are planned during the course of the engagement to keep the client informed of
research results and findings. These meetings include the following:
+ Start-Up Meeting will be held at the beginning of the engagement. The purpose of this
meeting will be to finalize research objectives for the engagement and obtain client-
provided information. Additional research objectives can be incorporated in the work
program, if desired, at this meeting.
+ Progress Meeting to review results of retail and business park/industrial market research
including site evaluation, competitive, market areas, historic absorption and trade area
demographics.
+ Progress Meeting to review all previous tasks, supportable retail space, industrial
potential and preliminary recommendations.
+ Final Report Meeting will cover all aspects of the research assignment including
presentation of a draft final report.
The budget provides for four client meetings as described above. The budget includes 18 hours
of meeting time. Additional meetings will be billed at our normal hourly rates plus expenses.
QUALIFICATIONS AND EXPERIENCE
McComb Group, Ltd. is a full-service retail and real estate consulting firm specializing in market
research and financial feasibility. The firm has extensive experience in retail and business
park/industrial development.
Maus Group will participate in the industrial work tasks. Bruce Maus, President, is
knowledgeable about industrial locations and opportunities in the northwest Metro Area
including Anoka and Sherburne Counties. Information on Maus Group is attached. Maus Group
will be a subcontractor to McComb Group.
McComb Group, Ltd. has a team that is qualified to conduct the research described in this
proposal. McComb Group's professional staff associated with this engagement includes the
following:
+ James B. McComb, President, founded the predecessor of McComb Group in 1974
following six years as a member of the corporate staff with Dayton Hudson Corporation.
His experiences at Dayton Hudson and daily association with merchants and shopping
center developers provided the impetus for McComb Group's approach to shopping
center and retail market research and financial feasibility, which includes strong elements
Ms. Catherine Mehelich
November 20, 2006
Page 6
of design and merchandise sensitivities. The firm's approach to shopping center research
and marketing has undergone continuous development and refinement over the past 20
years.
. William A. Gorton, Executive Associate, has over 25 years experience developing
supermarkets and retail shopping centers, representing supermarket chains as well as
prominent independent supermarket owners. Mr. Gorton provides advice and assistance
related to real estate development, leasing and contract negotiations, business
acquisitions, project management, sales forecasting, site evaluation and market analysis,
financing, capital planning, financial forecasting, business planning, strategy
development, business development and the marketing of programs and services.
Mr. Gorton has provided these services while by employed Fairway Foods, Inc.,
subsidiary of Holiday Stationstores, Inc.; Kohl's Food Stores, Inc., subsidiary of the
Great Atlantic & Pacific Tea Company; SuperValu, Inc.; Loblaw's, Inc.; and Stearns
Bank N.A. St. Cloud, MN. He received a JD from William Mitchell College of Law and
is a member of the Minnesota State Bar Association.
. Linda Oie, Senior Associate, conducts market research, demographic and consumer
analysis for client engagements. Ms. Oie manages the firm's geographic information
systems (GIS) and demographic databases using a variety of computer platforms and
proprietary software.
Prior to joining McComb Group, Ltd., Ms. Oie was employed as Marketplace
Information Manager at SuperValu, Inc. Her responsibilities included conducting
strategic consumer-based analysis of existing and prospective supermarkets, profiling
SuperValu customers, and delineating trade areas for existing and proposed stores.
. Susan Nache, Consultant, performs market research, demographic analysis, and
consumer research tasks. Ms. Nache conducts consumer research analysis and cross-
tabulation on McComb Group's survey processing software; and is familiar with software
programs used by McComb Group, Ltd. for financial feasibility and statistical analysis.
Mr. McComb will be responsible for managing and directing the overall research program and
will participate directly in findings and conclusions. Individual work tasks will be assigned to
personnel within the firm based on qualifications and experience.
.
Ms. Catherine Mehelich
November 20, 2006
Page 7
BUDGET
The budget for the work program and work products described in this proposal is shown below.
Professional Services
Study Area Evaluation
Retail Market Analysis
Competitive Centers Evaluation
Broker Interviews
Market Area Analysis
Retail Development Potential
Industrial Market Research
Competitive Business Parks/Industrial Areas
Industrial Market Area
Historic Business Park/Industrial Absorption
Broker/User Interviews
Future Business Park/Industrial Demand
Conclusions and Recommendations
Report Preparation
Meetings
Total Professional Services
Bud2et
$ 4,000
2,250
1,750
4,000
3,250
6,000
2,500
6,600
2,500
5,300
4,300
1,800
5,500
$ 49,750
Expenses (Estimated)
Mileage
Demographics and Database Costs
Computer and Purchasing Power
Report Production
Reproduction
Miscellaneous
Total Expenses
$ 350
1,500
900
1,500
200
100
TOTAL BUDGET
$ 4,550
$ 54,300
The professional fees for the services outlined in this proposal total $49,750 and will be
performed at a price not-to-exceed that amount. Expenses, estimated at $4,550, are to be
reimbursed based on actual cost. The budget is based on the amount of time required to perform
the work tasks and our normal hourly billing rates of $250 for principals, $190 for executive
associates, $125 for senior associates, $100 for associates, and $75-$100 for consultants.
Company policy requires a retainer of approximately one-third the estimated budget for the
project or $18,100. The retainer will be applied to the final invoice as a credit for billing of
professional services and expenses. Invoices for professional services and expenses will be
rendered at mid-month and month-end as our work progresses.
Standard billing terms are net ten days. A finance charge of 1.5 percent will be charged on all
unpaid balances outstanding more than 30 days.
Ms. Catherine Mehelich
November 20,2006
Page 8
REPORT PURPOSE
This proposal was prepared with the understanding that the results of our work will be used by
the client to evaluate retail and industrial development potential for Gateway Business Center
and the merits of near term development on holding for future development in later years
and may be shared with developers, lenders and other investors. Our report will be prepared for
that purpose and will be subject to the following qualifications:
. Our analysis will not ascertain the legal and regulatory requirements applicable to this
project, including zoning, other state and local government regulations, permits and
licenses. No effort will be made to determine the possible effect on the proposed project
of present or future federal, state or local legislation, or any environmental or ecological
matters.
. Our report and analysis will be based on estimates, assumptions and other information
developed from research of the market, knowledge of the industry and discussions with
the client. Some assumptions inevitably will not materialize and unanticipated events
and circumstances may occur; therefore, actual results achieved will vary from the
analysis.
. Our analysis will not evaluate management's effectiveness or be responsible for future
marketing efforts and other management actions upon which actual results are dependent.
. Our report will be intended solely for the purpose described above and should not be used
for any other purpose without our prior written permission. Permission for other use of
the report will be granted only upon meeting company standards for the proposed use.
These qualifications will be included in our final report. If the report is used for purposes other
than specified above, we reserve the right to review the materials for proper use of our work.
ACCEPTANCE PROCEDURES
To indicate acceptance of the proposal, please sign a copy of the proposal and return it to us
together with your check for the retainer as authorization to proceed with this engagement.
We appreciate the opportunity to submit this proposal and look forward to hearing from you
soon. If you have any questions concerning the proposal, please call me at (612) 339-7000.
Accepted By:
McComb Group, Ltd.
Company:
~ tJ.~~(Jrrb/1l0
James B. McComb
President
Title:
Date: