Approve Work Order for Installation of Sign in COR TWO/Sunwood Retail Area per Real Estate Contract with McDonald's USA, LLC

On December 19, 2012, the HRA entered into a Real Estate Contract with McDonald's USA, LLC for the purchase of Lot 2, Block 1, COR TWO. The Contract is attached to this case. Per Paragraph 12 of the Contract, the HRA is responsible for constructing two (2) signs:
 

1. Southeast corner of Sunwood Drive and Armstrong Boulevard, on Lot 2 (McDonald's Site) (150 square feet)
2. At the easterly shared entrance of Lots 1-3, Block 1 COR TWO, on Lot 3 (Convenience Gas Location) (75 square feet)

These two (2) signs will be shared by Lots 1-3, Block 1, COR TWO. Each lot would have one (1) tenant panel on each sign. The signs are illustrated in Exhibts D of the Contract. It is anticipated that the cost of the sign will be divided evenly between the three (3) lots. Under the Contract, McDonald's has agreed to pay for a third of the cost of construction. The remaining two-thirds (2/3) would be anticipated to be reimbursed at time of sale of those two (2) lots. The interim funding for the remaining two-thirds (2/3) would be the land sale proceeds from the McDonald's sale.

The proposed signs comply with the approved Master Sign Plan for The COR. Staff is proposing that the proposed Kasota Stone/Limestone face be constructed as Dryvit as a cost savings alternative. Dryvit is a plaster finish similar to Stucco that can be finished to provide a similar look to the original design of The COR Master Sign Plan.

Staff requested quotes from approximately five (5) sign vendors and received responses from two (2) sign vendors. Staff requested quotes for a Kasota Stone finish as original contemplated in the Master Sign Plan. In addition, Staff requested that vendors provide a lower-cost alternative to Kasota Stone. A summary of quotes is attached to this case for review. The lowest quote was provided by DeMars Signs with an estimated cost of $75,000 (when factoring electrical connection services). Please note: this quote does not include the planter as shown on the attached drawings. The HRA could add said planter at an additional cost of $5,000.

It is hereby noted that the electrical service construction is still estimated and will need to come back under separate contract at a future date. Both quotes received note that the electrical service connection is to be done by others. Staff has received verbal quotes of $15,000 and is generally comfortable with said quotes. It is anticipated that this price may reduce once site conditions are better understood. However, Staff will secure at least three (3) quotes for electrical service and bring that component back for approval at a future date.

No notification is required.

Alternative #1 - Approve the work order for construction of signs with DeMars Signs exchanging the Kasota Stone finish with a dryvit finish. This alternative is the lowest cost option presented to the HRA to date. Although the dryvit finish is not as high quality of true Kasota Stone, the cost-savings outweigh the benefit and are acceptable under The COR Design Framework/Master Sign Plan. The estimated costs for sign construction is approximately $60,000. This alternative is estimated to cost approximately $75,000 total for two (2) signs with electrical included. As noted, this does not include the planter box illustrated in the attached exhibit. The planter would increase the cost approximately $5,000, and also could be added at a later date.

Alternative #2 - Approve a work order with Archetype Signs for construction of signs utilizing Kasota Stone. This alternative would be the highest quality design, but also the highest cost. The quote, when factoring in electrical service, would exceed $100,000 and require the HRA to open a competitive bidding process. Since only one (1) of the three (3) parcels are moving forward with development in the short term, funds are limited to increase the costs of the sign in a fiscally-responsible manner. This alternative is estimated to cost approximately $144,000 for two (2) signs with electrical included.

Alternative #3 - Approve a Work Order with Demars Signs for a Condor Brick in lieu of Kasota Stone. This alternative is estimated to cost approximately $96,000 total for two (2) signs with electrical included.

Alternative #4 - Approve a Work Order with Archetype Signs for a Painted Aluminum surface in lieu of Kasota Stone. This alternative is estimated to cost approximately $108,000 total for two (2) signs with electrical included and would require a competitive bidding process. Note: this design alternative was used for The Draw Sign. Further note: the Summary Spreadsheet and $108,000 estimate for this alternative also removed the illustrated planter bed. Addition of the planter bed using this construction method is estimated to add $13,500.

Alternative #5 - Do not approve a work order for construction of signs. McDonald's does have a 'right-to-cure' under the Contract and may be able to proceed forward with construction of the signs as originally designed. At that point, the HRA would not have control over the design and costs of the signs. The cost to McDonald's to construct the signs under a right-to-cure scenario would be deducted from the land sale proceeds. Not approving the sign request may impact McDonald's decision to proceed to closing at this point. Staff has inquired with McDonald's as to whether they would desire to proceed with a single-tenant sign on their own. Their response was that McDonald's desires to move forward as outlined in the Contract.

Alternative #6 - Postpone action until November 26, 2013 and request additional information.

One-third of the cost of the signs will be reimbursed by McDonald's in addition to the purchase price. The remaining two-thirds will be paid by land sale proceeds from McDonald's and are anticipated to be reimbursed at time of sale of Lots 1 and 3, Block 1, COR TWO of the Sunwood Retail Area.

As the HRA has committed to this obligation under the Real Estate Contract between the HRA and McDonald's USA, LLC, Staff recommends that the HRA adopt Resolution #13-11-194 approving a Work Order for construction of two (2) permanent signs along Sunwood Drive in the amount of $60,554.00, contingent upon completion of the real estate transaction by and between the HRA and McDonalds's USA, LLC. Staff would then bring back a separate contract for electrical service.

Motion to adopt Resolution #13-11-194 approving a Work Order for construction of two (2) permanent signs along Sunwood Drive in the amount of $60,554.00, contingent upon completion of the real estate transaction by and between the HRA and McDonalds's USA, LLC.