Menard Proposal 2012 - City of Richmond Heights

REDEVELOPMENT PROPO SAL :
Developer:
Menard, Inc.
5101 Menard Drive
Eau Claire, Wisconsin 54703
(7ts) 876-2391
(7ts) 876-s998 (fax)
www.menards.com
www.menardsrealestate. com
Hadley Township
Richmond Heights, MO
Project Manager:
Scott R. Nuttelman
Menard, Inc.
5101 Menard Drive
Eau Claire, Wl54703
snuttelm@menard-inc. com
(7ts) 876-2383
(7ts) 876-see8 (fax)
Property Acquisitions Agent
Peter O. Sheahan
NAI DESCO
8235 Forsyth Blvd., Ste 210
St. Louis, MO 63105
psheahan@naidesco. com
(3r4) ee4-4081
(314) 994-4088 (fax)
:
Submitted: February 23, 2012
February 21,2012
m
Vrl Hmo Dnr-rvrny
City of Richmond Heights
Attn: Ms. Amy C. Hamilton
City Manager
1330 S. Big Bend Blvd.
Richmond Heights, MO 63117-2202
RE:
Redevelopment Proposal
-
Hadley Township
Dear Amy
I
have been authorized on behalf of Menard, Inc. ("Menards"),
to submit the following proposal with
respect to redevelopment of an approximately 19.0-acre portion of the Hadley Township redevelopment
site located at the northeast corner of the S. Hanley Road and W. Bruno Ave. intersection. The following
is a summary of Menards' redevelopment proposal, including a brief history of the company and its past
development experience, a description of its vision for the Hadley Township redevelopment area, and a
list of the major benefits of the proposed project and the advantages of selecting Menards as the City's
preferred developer for the site. I believe this proposal will demonstrate that Menards' vision for this area
is perfectly aligned with the City's stated objectives and that working with an end-user with the financial
strength of Menards is the best way to turn the City's hopes for this area into a reality.
Menards is a family-owned home improvement company based in Eau Claire, Wisconsin. Our founder
and President, John Menard, Jr., stafted the corporation in 1960 and in the following 52 years we have
grown to be the third largest home improvement retailer in the country with over 270 locations in 13
states. Menards is not only an established retailer but also an experienced developer, having completed
the acquisition, design and successful development of over 150 retail, mixed-use and residential projects
ranging from 20 to over 300 acres. Of these developments, approximately 25o/o have been multi-owner
site acquisitions, where assemblage challenges like those presented by the Hadley Township
redevelopment have been overcome.
Menards handles many development functions internally, including site and landscaping design, building
design, legal reviews and drafting, and construction bidding and management. A dedicated team of
experienced real estate, legal and design personnel is assigned to each project. As the designated Real
Estate Representative for Menards, I will serve as the City's primary point of contact throughout the
project and will be responsible for coordinating all of the efforts of Menards' project team.
Menards has chosen to partner with NAI DESCO to assist with the assemblage of the properties
comprising the project site. NAI DESCO is a locally owned third party brokerage firm located in St,
Louis. The firm was founded in 2000 and currently has 28 licensed real estate professionals. NAI
DESCO is owned by several well established real estate brokers and the supermarket family, the
Schnucks. Peter Sheahan, a principal and one of original founders of NAI DESCO, will be the point of
contact for the assemblage of the properties. Peter is a licensed real estate broker and has held his real
estate license since 1986. Peter specializes in retail real estate and some of his current clients include
Menards, Kohls, Schnucks Supermarkets, Commerce Bank, Chick-Fil-A, as well as other regional and
national clients. Peter's track record of assemblages includes Kirkwood Commons, a three hundred and
twenty parcel residential and commercial assemblage; Schnucks Waterloo, a fourteen parcel residential
and commercial assemblage; and Bridgeton Crossing, a sixty-six parcel residential and commercial
assemblage.
5101 MENARD
DRIVE
EAU CLAIRE,
Wt 54703-9625 PHONE (715)876-5911
FAX (715) 876-2868
Redevelopment Project Concept
Menards proposes to construct a 246,346 sq. ft., 2-story Menards Home Improvement store, with
associated yard and covered storage areas and approximately 406 parking spaces on the project site. In
addition, outlot space would be available for three to four complementary retail and/or restaurant uses to
be located on approximately 4.1 acres in the southwest and northwest corners of the site, as shown in the
accompanying plans. Menards will endeavor to partner with national users that create high sales tax
volumes for the available excess property and will draw on its extensive list of retail and restaurant
contacts derived from decades of marketing outlots adjacent to its stores.
will be designed to buffer and minimize impacts to the residential properties to the east. A
14' to 24' fence/wall on the back side of the development is an integral part of Menards' use and will
substantially limit potential impacts to neighboring properties. It provides a totally opaque screen
eliminating views of the back side of the store, trash enclosures, loading docks and parking areas. The
wall reduces noise transmission and prevents trash from blowing onto surrounding properties. It also
prevents light pollution from headlights, parking lots and other light sources. Substantial landscaping will
also be provided to screen the view of the wall and provide further buffering. Furthermore, Menards is
proposing to leave Berkley Avenue in place, which will provide extra separation between the commercial
and residential uses. It is also important to note that Menards does not operate 24-hours or allow
deliveries past 10:00 PM at night.
The site layout
The proposed project is designed to allow coordination and cooperation with one or more developers of
the adjacent portions of the redevelopment area to create an integrated and cohesive shopping center
development. Many details of Menards concept plan are flexible and are capable of adjustment to allow a
seamless combination with other projects. At the same time, Menards' proposal is also capable of
functioning as a stand alone development and is not dependent or contingent on the success of any other
proposal or user.
Market Impacts
Menards currently does not have a store presence in the St. Louis metro area, but it has been conducting a
detailed analysis of the enti¡e metro area for the last year with the goal to open its first store in the region
by early 2013. During the course of its market analysis, Menards identified Richmond Heights as an ideal
location to serve much of central St. Louis County as well as traffic from western and southern portions
of the City of St. Louis. This determination is based on the thriving retail district already present in the
community, close access to several major traffic corridors including I-64 and l-170, and population
density and other favorable demographic indicators for Menards' use. The character and density of the
uses surrounding the Hadley Township redevelopment site also make it a perfect candidate for a twostory prototype store, which would complement existing uses in the area and serve as a flagship location
for Menards in the metropolitan area. This store format has been used by Menards with great success in
several urban locations including St. Paul,
(Chicago); and Waukesha,'WI (Milwaukee).
MN; Eden Prairie, MN (Minneapolis); Hodgkins, IL
Menards generally uses fewer stores spaced farther aparl to serve a given population than its competitors
or most general retailers, and the St. Louis market will follow this pattern. This will give our stores a
more regional draw, bringing in more sales from surrounding communities where our competitors may
have another store location, but Menards does not. This has obvious benefits for the success of each of
our stores by preventing undue "cannibalization" among locations and also will benefit the communities
which Menards calls home in terms
of additional sales tax revenues
and secondary benefits to
surrounding businesses like restaurants and gas stations. This also makes Menards an ideal co-tenant for
other retailers that are looking for a greater regional presence, because customers will be able take
advantage of several unique shopping opportunities that may only be available in Richmond Heights.
Traffic and Circulation
Trafhc is proposed to be accommodated using four access points to the development: (i) an entrance on
the south side off of Bruno Avenue aligned with the existing Maplewood Commons Drive serving the
Wal-Mart Development; (ii) an entrance from Hanley Road in the same location as the current Alabama
Avenue intersection (iii) a second access from Hanley Road to the outlot at the northeast corner of the site
in the same location as the current nofthernmost access point; and (iv) a north side entrance from Elinor
Avenue. Menards will coordinate with any developer of the northern portion of the redevelopment site to
line up the proposed Elinor access to allow easy circulation of traffrc between the north and south
projects. All other existing entrances and curb cuts within the proposed site boundaries will be closed.
A local traffic engineering firm with experience in the project area will be hired by Menards to develop a
detailed set of recommendations for improvements to be made to the surrounding road network. It is
anticipated that improvements will include right turn lanes on Hanley Road at the west side entrance,
overall intersection and signal improvements at the Elinor Avenue and Hanley intersection, and widening
of Elinor to three lanes with an additional right tum lane at the development entrance. Menards will work
cooperatively with any other developers of other portions of the redevelopment area to design a
comprehensive traffic study to analyze multiple development scenarios including development of only the
Menards project site as well as a full build-out of the entire Hadley Township redevelopment site.
Public Financial Assistance
Menards will request approval of up to $24,000,000 in land acquisition, demolition, sitework and
infrastructure costs to be reimbursed through the TIF Redevelopment Plan previously approved for the
redevelopment area. We are not proposing a re-approval of the Plan to extend the current expiration date.
Menards will ask that a sales tax rebate be established to allow continued capture of eligible sales tax
revenues generated within the development beginning on the date the TIF expires and continuing until a
date which is 23 years after the effective date of the redevelopment agreement between Menards and the
City. This additional rebate period will only be used to help aftain a full repayment of the eligible project
costs, and will not be an additional incentive about the maximum amount set forth above.
will
accept a "pay-as-you-go" arrangement for reimbursement of the eligible project costs up to
the amount of the reimbursable cost maximum. This will do away with the need to issue bonds or other
Menards
financial obligations for project debt, and will eliminate all administrative and underwriting costs
with bond issuances. As a result, a maximum amount of public money will go to pay for
infrastructure improvements and tax base creation instead of legal fees and higher interest costs.
associated
In addition to the financial assistance outlined above, Menards will require the City's cooperation and
agreement to vacate the public streets, alleys, and rights-of-way with the project boundaries. The City's
assistance will also be required to accomplish the necessary release and/or relocation of the numerous
utility corridors affecting the property.
Land Assembly
Menards and NAI DESCO will enter into direct negotiations with all landowners within the project
boundaries and will communicate with the owners in an open and straightforward manner. We are
proposing to start discussions with the home owners by holding an open house at a convenient location so
that the project plans can be presented and questions can be answered. In the following weeks, NAI
DESCO will endeavor to meet with each homeowner individually to further discuss the proposal and
present offers to purchase. All offers will be in excess of established fair market values and will be
comparable with the purchase prices offered by the last party to attempt the assemblage of the site. A1l
reasonable efforts will be made to avoid the need for further condemnation of properties within the
project area. Ultimately, I believe the advantages of working with an end-user like Menards, which are
discussed more fully below, also constitute a significant benefit to the property owners and will make the
land assembly more viable. Most importantly, Menards' contracts will not include any contingencies for
financing, co-tenancy, or a requirement that a commitment be obtained from one or more retailers. This
will provide an opportunity for Menards and NAI DESCO to differentiate this proposal from the failed
projects ofthe past.
Developer Qualifications
In addition to our long history of success in retail and development ventures discussed above, Menards
has many other qualifications and advantages that will guarantee the near term and long term success of
the Hadley Township redevelopment:
Menards as Developer and End User: From the outset of a Menards developed project, the
City and the landowners will be working with the primary tenant for the site. This will establish a
clear vision of how the site will be developed and how the space available for additional tenants
will be arranged. Most importantly, we do not need to fmd and negotiate agreements with other
tenants to make the project viable. Menards is the anchor tenant, so there will no contingency for
tenant commitments/approvals in the agreements between Menards and the City or in any of the
real estate contracts. This is particularly important during the current economic climate, when
very few major commercial users are looking to expand.
Financial Resources: Menards has continued to experience strong sales and growth throughout
its history, even under difficult economic conditions such as those experienced over the last few
years. At all times it has taken a prudent approach to expansion and has stressed fiscal restraint
with the result being that Menards is currently in a position of utmost financial stability. Menards
can complete the acquisition of the site and construction of all public and private infrastructure
required for the development without the need for any bank or other third-party financing. There
will be no lender approvals or other financing arrangements needed for Menards to complete the
development the site and there will be no financing contingency in the agreements between
Menards and the City or in any of the real estate contracts. Again, with the current lending
climate, this fmancial strength constitutes a substantial advantage over projects involving thirdparty financing and necessary approvals for the same.
Commitment to Quality and Long Term Success: Unlike the typical developer, Menards will
have a vested interest in the success of this development for the long term, not just until all of the
lots are sold and developed. As an end-user making a large investment in the site and that will
make the property its home for decades to come, Menards will demand high quality uses next to
its store and a high standard of maintenance for all improvements within the development.
Moreover, Menards
will
become
a corporate resident of the City and will have local
store
management in place to monitor the operation of our store and the overall development, and the
store manager will be readily available to address the concerns of the City and its residents.
The following is a list of supporting materials that accompany this letter:
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
Exhibit
A
B
C
I)
E
F
G
Generalized Project Cost Estimates
Projected Development Schedule
Estimated Employment and Tax Revenue Generation
Financial Pro Forma
Conceptual Site Plan
Prototypical Elevations & Store Photo
Conceptual Buffer Area Plan
If
there is any other information that I can provide to aid in your review of our proposal, please do not
to contact me. I look forward to the opportunity to work with you, all of the City staff and
officials and everyone in the community on the development of this exciting project. Thank you for your
consideration of our proposal.
hesitate
Very truly yours,
Inc.
N
Real Estate Representative
Phone: (715)876-2383
Fax:
(715)876-5998
Mobile: (715) 577-0363
snuttelm@menard-inc. com
Enclosures
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EXHIBIT A
Generalized Project Cost Estimate
Acquisition
Demolition
Site Work - On Site
Site V/ork - Off Site
Building
.)
$
$
Design
Administration/Fees
Financing (Cost of Capital)
Continsency
$
$
$
$
$
$
$
Total
$
19,000,000
3,ooo,ooo
8,000,000
2,000,000
18,000,000
500,000
1,ooo,ooo
2,000,000
2.675.000
56,175,000
EXHIBIT B
Projected Development Schedule
/
Submission of RFP
February 23,2012
Menards Chosen as Preferred Developer
March 15,2012
Negotiation of Redevelopment Agreement
March 15 - June 30,2012
Negotiation of Purchase Contracts
March l6 - June 30,2012
Due Diligence Period
July 1, 2012 - March 31,2013
Acquisition of Property
April - May,20I3
Commencement of Construction
June 1,2013
Opening of Menards Store
Spring 2014
Full Build-Out of Outlot Areas
Spring 2015
EXHIBIT C
Estimated Employment and Tax Revenue Generation
Estimated Menards Employment
Estimated Outlots Employment
Estimated Total Employment =
:
Estimated
Estimated
Estimated
Estimated
Estimated
Estimated
))
:
200 jobs (minimum 50% full-time)
80 jobs (approximately 25%
full-time)
280 jobs (approximately 120 full+ime)
:
Menards Annual Sales Tax Revenue (2015)
Menards Annual Property Tax Revenue (2015)
Menards Additional License and Permit Fees
Outlots Annual Sales Tax Revenue (2016)
Outlots Annual Property Tax Revenue (2016)
Outlots Additional License and Pennit Fees
:
:
:
:
:
$1,680,000
s
$
$
g
$
522,824
200,000
315,000
140,407
75,000
EXHIBIT I)
Financial Pro tr'orma
Gost Estimate
Public Assistance Revenue
Projected Appraised
Public Assistance
Developer Project Costs
TOTAL
Reimbursable
PRIVATE
Year
2013
2014
Land Acquisition
Land Acquisition
$
LAND ACQUlSITION
$
19,000,000
19,000,000
$
$
5,000,000
5,000,000
$
$
14,000,000
2015
14,000,000
2016
2017
2018
Building Construction
Store, Warehouse & Fence
BUILDING CONSTRUCTION
$
$
18,000,000
18,000,000
$
$
18,000,000
18,000,000
2019
$
50,000
Closing Costs
Legal/TlF Counsel
100,000
Taxes & lnsurance during Construction
150,000
Travel
50,000
Sewer & Water Connection Fees
50,000
Platting, Zoning & Other Fees
Building Permit
TIF PILOTS
Closing/Project Commencement
Yr. 2 Construction/Opening
$
$
2,330,080
$
$
$
$
12,800,000
$
2,330,080
$
4,096,000
$
$
542,500
$
Yr.3
Y¡.4
Yr.5
Yr.6
Yr.7
$
16,000,000
$
2,330,080
$
5,120,000
$
150,305
$
620,000
$
770,305
$
20,820,000
$
2,330,080
$
6,662,400
$
237,461
$
748,650
$
986,1
$
21,236,400
$
2,330,080
$
6,795,648
$
368,741
$
763,623
$
1,132,364
1
$
21,661,128
$
2,330,080
$
6,931,561
$
380,082
$
778,895
$
I
$
22,094,351
$
2,330,080
$
7,070,192
$
391,650
$
794,473
$
1,186,',t24
1,213,813
2,330,080
$
7,211,596 $
403,450
$
810,363
$
$
7,355,828
$
415,485
$
826,570
$
1,242,055
2022
Yr. 10
$
23,446,702
$
2,330,080
$
7,502,945
$
427,762
$
843,101
$
1,270,863
$
2023
$
23,915,636
$
2,330,080
$
7,653,003
$
440,283
$
859,964
$
1,300,247
$
2024
Yr.11
Yr.12
$
24,393,948
$
2,330,080
$
7,806,063
$
453,055
$
877j63
$
1
$
2025
Yr. 13
$
24,881,827
$
2,330,080
$
7,962,185
$
466,083
$
894,706
$
1,360,789
1,391,971
2026
Yr.14
$
25,379,464
$
2,330,080
$
8,121,428 $
479,371
$
912,600
$
$
2027
Yr. 15
$
25,887,053
$
2,330,080
$
8,283,857
$
492,925
$
930,852
$
1,423,777
$
2028
Yr. 16
$
26,404,794
$
2,330,080
$
8,449,534
$
506,750
$
949,469
$
1,456,219
2029
$
s32 890
$
080
$
861
$
1
Yr. 17
IF
TIF TOTALS
Projected Appraised
Year
Project Year
Value
3
Value
2030
Yr.
l8
$
27,47',t,548
N/A
$
2031
Yr. 19
$
28,020,979
N/A
$
Rebates
$
'1,000,000 $
2,000,000
2032
Yr.20
$
28,581,398
N/A
$
Grading
$
1,500,000
$
500,000
$
1,000,000
2033
Yr.21
$
29,153,026
N/A
$
Detention
$
$
1,500,000
1,000,000
$
500,000
2034
29,736,087
N/A
$
$
2035
Yr.22
Yr.23
$
I,500,000
N/A
$
I 705 859
$
1,000,000
$
250,000
500,000
$
SITE CONSTRUCTION - ON SITE
$
1,000,000
$
4,750,000
I
$
TOTAL PUBt.IC ASSISTANCE
t
Streets
$
SITE CONSTRUCTION - OFF SITE
$
2,000,000
2,000,000
$
$
500,000
500,000
$
1,500,000
$
1,500,000
2
Engineering
200,000
50,000
$
Architectural
100,000
100,000
$
Survey
50,000
20,000
25,000
10,000
65,000
250,000
$
Geotechnical
130,000
Environm entaliAsbestos
DESIGN/DUE DILIGENCE
$
500,000
$
150,000
25,000
$
10,000
$
65,000
$
250,000
$
2,000,000
lnterest
2,000,000
Cost of Capitol/lnterest Carry
$
Land Loan
$
Construction Loan
$
INTEREST
$
2,000,000
Hard Cost Contingency
$
Soft Cost Contingency
$
TOTAL CONTINGENCY
$
1,605,000 $
1,070,000 $
2,675,000 $
TOTAL
$
$
$
$
$
$
$
2,000,000
Contingency
56,175,000
$
1,605,000
1,070,000
2,675,000
32,17s,000
$
$
$
$
24.000,000
828,819
845,395
862,303
61
$
$
153
Assumes Menards is assessed at 80% of full value in the year project opens & EATS at 75% of full value
Property tax increment lags assessed value increases by one year due to paymenlcollection process
3
Appraised values are assumed to increase 2o/o annually, oulots become fully assessed in 2016
pq year; outlots begin generating sales tax in 2016; EATS based on TIF capture ot 1 .55%of total taxable sales
5
projection
Sales tax rebate
based on a capture oÍ 1.25o/o of total taxable sales
a
Design/Due Diligence
796,635
812,568
SALES TÄ"l( REBA]E TOTALS
6,250,000
Site lmprovements - Off Site
968 459
13,121,389 $
Sales Tax
3,000,000
$
$
$
3
$
$
750
153
Projected Assessed
Base Assessed Value
Demolition
Landscaping/Lighting/Si gns
,330,218
$
8,790,895 $
8,966,713 $
9,146,047 $
9,328,968 $
9,515,548 $
500,000
250,000
58,978
2,330,080
Site Construction - On Site
$
,1
$
$
1,500,000
I
$
$
$
1
22,536,238
15,000
Utilities
542,500
22,986,962
1,000,000
$
$
$
$
$
Total TIF to
Project
1
$
$
Paving/Slabs
T|/F EATS
B
9,000
2,000,000
2,500,000
'
Yr.
126,000
$
Yr.'l
Projected Assessed
Value 3
Base Assessed Value
Yr.9
9,000
1,000,000
$
3
Value
2020
126,000
15,000
Demolition Permits
GENERAL CONDITIONS
450,000
50,000
100,000
150,000
50,000
50,000
450,000
Project Year
2021
$
Administration/Fees
General Project Administration/Overhead
P
Sales projected to increase al2%
208
Total Rebate
Project
$
$
$
$
$
738
4,758,459
17,879,84t
796,63s
812,568
828,819
845,395
862,303
738
$
S
4,759,459
EXHIBIT E
Conceptual Site Plan
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162.086 sa. ft.
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0utlot B (RctailiRestmu ant)
Oudot C' (Rctdl Roshuârt)
5 spnccs,'1000 sq. ft.
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RECE¡VlilC AREA| 12,060 SQ. Ff.
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rcT L HEAIED SU|IONG AREA: 242,Ja6 SQ. FT
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February 20, 2012 CTI
EXIIIBIT F
Prototypical Elevations & Store Photo
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Rich,tnond, Heights, M0
Frototypical Building Eleuations
Scale:
l/6" = l'-0"
Jønunry 20, 2012
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WAREFIOT SE AREA 4¿,700 SC¡. FT.
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IERTICAL 2x6 'IREA'IED SCREENING
SIRUCIURE
WTII'IE UNIIERSAL RIDGE CAP
J'-0'x11'-0'
CI.EAR POLYCARBOiIA'IE PANEL
sc^tE t
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Rinl¿mnttd, Heigltts, M0
Conneptuøl Bufþr Arcø PIøn
Scale: AS NOTED
Febnnry 20, 2012
CT4
EXHIBIT G
Conceptual Buffer Area Plan
MENARDS
-
Bden Prairie, MN