EDA Agenda - 09/13/2023UNANIMOUSLY, 6-0.
F. Consideration of Additional Agenda Items
None
2. Consent Agenda
A. Consideration of Approving Funding for the 2023 IEDC Manufacturers'
Armreciation Breakfast Event in the amount of 51.200
TRACY HINZ MOVED TO AUTHORIZE FUNDING SUPPORTING THE IEDC
MANUFACTURERS APPRECIATION BREAKFAST EVENT IN THE AMOUNT OF $1,200.
OLLIE KOROPCHAK-WHITE SECONDED THE MOTION. MOTION CARRIED
UNANIMOUSLY, 7-0.
3. Public Hearing
N/A
4. Regular Agenda
A. Consideration of Resolution #2023-07 Aaarovine First Amendment to Lease
between City of Monticello EDA and the City of Monticello for property located at
349 West Broadway
Executive Director Jim Thares provided a overview of the agenda item to the EDA
and the public. Since 2018, MontiArts has been utilizing the EDA -owned property
downtown at 349 W. Broadway Street. MontiArts has been using the space for
larger art projects, and additional storage in relation to their main location at 213
W. Broadway Street. As there is no anticipation of redevelopment efforts for that
site or surrounding location to occur in the near future, staff was comfortable
recommending an extension of the MontiArts lease to August 31, 2025. It was
noted that the City of the EDA can terminate lease with 45 days' notice. Mr. Thares
also mentioned that due to the City Council's schedule in August, they already
approved the amendment at their last meeting.
OLLIE KOROPCHAK-WHITE MOVED TO ADOPT RESOLUTION 2023-07, APPROVING A
FIRST AMENDMENT TO LEASE BETWEEN THE EDA AND THE CITY OF MONTICELLO
FOR 349 WEST BROADWAY (FRED'S AUTO) IN CONNECTION WITH AND FOR THE
BENEFIT OF THE PARKS & RECREATION DEPARTMENT'S USE OF THE PROPERTY FOR
MONTIARTS ACTIVITIES. RICK BARGER SECONDED THE MOTION. MOTION CARRIED
UNANIMOUSLY, 7-0.
B. Consideration of Resolution #2023-08 Authorizing the 2024 HRA Saecial Benefit
Property Tax Levy in the Amount of $451,000 and the EDA General Fund Budget in
the Amount of $499,000
Mr. Thares provided an overview of the agenda item to the EDA and the public. At
the July 12, 2023, meeting, the EDA reviewed a draft of the budget proposal and
discussed factors and potential changes related to the 2024 budget. Following that
meeting, staff took EDA comments of the draft budget and incorporated any
necessary changes for the final EDA review and approval. Mr. Thares noted that the
change in levy amounts from 2023 to 2024 was due to the almost $300,000,000
increase in taxable market value within the City of Monticello.
Mayor Lloyd Hilgart suggested the EDA may want to sponsor the 2023 Let's Chalk
event taking place the second weekend of September in Monticello. Mr. Thares
said that it could be an opportunity for the EDA to market their redevelopment
efforts downtown. Councilmember Hinz added that events like Let's Chalk are a
great way for the EDA to promote their continued efforts of revitalizing and
improving the City.
Vice President Jon Morphew wanted staff to clarify their availability before
authorizing them to do anything for the Chalk Fest event. Mr. Thares said staff
could make it work. Mayor Hilgart added that he will be in attendance for the event
and can assist if needed.
On the topic of the agenda item at hand, Mr. Thares wanted to let the EDA know
that the proposed budget is balanced (expenditures match revenue), which was a
question brought at time of the EDA reviewing the budget in draft form.
Mr. Morphew asked about a line item in the budget on miscellaneous expenses
through June 2023, and asked for clarification on what those expenses were. Mr.
Thares said that he could not clarify at this time but would refer to Finance Director
Sarah Rathlisberger for an answer and would address this at the next EDA meeting.
JON MORPHEW MOVED TO ADOPT RESOLUTION NO. 2023-08, APPROVING THE
2024 HRA SPECIAL BENEFIT PROPERTY TAX LEVY IN THE AMOUNT OF $451,000 AND
THE EDA GENERAL FUND BUDGET IN THE AMOUNT OF $499,000. HALI SITTIG
SECONDED THE MOTION.
Discussion
Councilmember Tracy Hinz noted that it would be good for the EDA to know what
those miscellaneous expenses are up to this point. Mr. Thares said he would report
back at the next meeting.
MOTION CARRIED UNANIMOUSLY, 7-0.
5. Other Business
Prior to item 5A of the agenda, the EDA continued their discussion on potentially donating
money towards the Let's Chalk event happening in September, in conjunction with their
continued redevelopment and marketing efforts.
LLOYD HILGART MOVED TO AUTHORIZE A DONATION BY THE MONTICELLO EDA IN THE
AMOUNT OF $5,000 FOR THE 2023 LET'S CHALK EVENT, IN CONJUNCTION WITH THE EDA'S
CONTINUED MARKETING AND REDEVELOPMENT EFFORTS. TRACY HINZ SECONDED THE
MOTION. MOTION CARRIED UNANIMOUSLY, 7-0.
A. Consideration of Economic Development Manager's Report
Mr. Thares provided an overview of the agenda item to the EDA and the public.
6. Adjournment
TRACY HINZ MOVED TO RECESS INTO A CLOSED MEETING. RICK BARGER SECONDED THE
MOTION. MOTION CARRIED UNANIMOUSLY, 7-0. REGULAR MEETING ADJOURNED AT 6:53
P.M.
EDA Agenda: 09/13/2023
4A. Consideration of Accepting the 2023 Hotel Market Study Update prepared by
Hospitality Consulting Group
Prepared by:
Meeting Date:
® Regular Agenda Item
Economic Development Manager
09/13/2023
❑ Consent Agenda Item
Reviewed by:
Approved by:
Community Development
City Administrator
Director, Community & Economic
Development Coordinator
ACTION REQUESTED
Motion to accept the 2023 Hotel Market Study Update report prepared by Hospitality
Consulting Group, Excelsior, MN.
REFERENCE AND BACKGROUND
In June 2023, the EDA authorized a contract with Hospitality Consulting Group for a 2023 Hotel -
Hospitality Study Update. This firm had previously completed Hotel Market Studies for the EDA
in 2015 and 2020. The DRAFT 2023 Hotel Market Study, Monticello, MN is attached to this
report as Exhibit A. Stephen Sherf, principal, Hospitality Consulting Group is attending the
September 13, 2023, EDA meeting to review the report and its findings. The Study identifies a
comparative set of four hotels with locations in Alberville, Rogers and Monticello (1-94 corridor).
The Best Western Plus, Monticello, is among the four hotels. A secondary competitive market
is comprised of hotels in Maple Grove. A brief summary of the Study findings includes:
✓ The four hotels are exceeding the national threshold for annual occupancy at 64.7
percent of rooms (hotels seek to be in a range of between 60 to 70 percent, or more).
✓ Summertime occupancy is above 70 percent.
✓ Occupancy increased steadily except for the pandemic year of 2020.
✓ REVPAR (revenue per available room) increased steadily since 2019, with exception of
2020; current range is $130 to $166.
✓ Market demand exists for a new 80 room upper midscale hotel in Monticello.
✓ Monticello is losing room night opportunity to those seeking upper midscale hotels in
Albertville, Rogers, or Maple Grove.
✓ Recommended amenities for the property with type and ultimate to be determined by
developer.
✓ Public financial assistance may be needed due to high interest rates and elevated
construction material and labor costs.
EDA Agenda: 09/13/2023
✓ Evaluates four potential hotel location sites, noting two of them as more desirable -
acceptable due to proximity to restaurants, convenience stores, and other services: The
Pointes at Cedar and Riverwood Bank parcel along 7t" Street.
Budget Impact: The budget impact from the preview of the Hotel Market Study is
minimal. The EDA previously authorized the report proposal at a cost of $6,000. The EDA
received a $1,000 grant from Minnesota Business Finance Corporation (MBFC), St.
Cloud, MN, in June 2023 to help cover the cost of the Study.
II. Staff Workload Impact: Internal City staff workload related to the preview of the Hotel
Market Study consists of review of the DRAFT Study and communication with the
consultant regarding edits to the report. Staff is involved in the efforts include the City
Administrator, Community Development Director, Community & Economic
Development Coordinator, and the Economic Development Manager.
III. Comprehensive Plan Impact: Completing the 2023 Hotel Market Study aligns with the
City of Monticello 2040 Vision Plan goals; Chapter 5. Economic Development. Language
cited in this chapter includes "Goal 1: Business Attraction and Retention — A successful
business attraction and retention program that attracts new businesses and retains
existing businesses". A new upper midscale hotel serving the community and traveling
public would help boost the economic vitality of the community by retaining room
demand that is currently leaving Monticello and seeking upper midscale hotels in
Albertville, Rogers or Maple Grove, MN.
STAFF RECOMMENDATION
City staff recommend the 2023 Hotel Market Study report be accepted with or without
changes, as determined by the EDA. Several prospective hotel developers have been in contact
with City staff inquiring about potential market demand and viable site options throughout the
spring and summer of 2023. Completing the Study and making it available to the various
developers should allow them to evaluate the hotel market and the viability of various hotel
concepts and take necessary next steps with their specific individual proposals. It will also guide
City staff and policy makers in discussions and decision making with developers related to site
layout, hotel amenities, and potential funding assistance in support of hotel development(s).
SUPPORTING DATA
A. 2023 DRAFT Hotel Market Study, Monticello, MN
B. Professional Services Contract w/ Scope of Work— authorized on June 14, 2023
Hospitality
CONSULTING GROUP
HOTEL MARKET STUDY
MONTICELLO, MINNESOT
August 2023
Prepared for:
City of Monticello
5315 Eureka Road • Excelsior, MN 55331
(612) 867-1649
Hospitality
CONSULTING GROUP
Mr. Jim Thares
Economic Development Manager
City of Monticello
505 Walnut Street
Minneapolis, MN 55362
Dear Mr. Thares:
The Hospitality Consulting Group is pleased to present the accompanying report
entitled: "Hotel Market Study - Monticello, Minnesota" which has been prepared in
accordance with our engagement letter dated June 12, 2023. This report follows our
earlier market study report issued in March 2014, and a partial update conducted in
May 2020.
Incorporated within this report are discussions of the local and area market conditions,
characteristics of competitive hotels, analysis of the potential lodging demand available
to a new hotel, facility recommendations, estimates of utilization for the recommended
facilities, financial projections for the recommended hotel's first five years of operation,
and an analysis of the project's economic feasibility.
Our conclusions are based on information developed from research of the market,
discussions with local government officials, representatives of the business
community, and on our knowledge of the industry. The sources of information and
bases of the estimates and assumptions are stated in the body of the report.
We have no responsibility to update this report for events and circumstances that occur
after the conclusion of our field work, which is concurrent with the report date shown
below. However, we are available to discuss the necessity for revision in view of
changes in the economic and market factors affecting the project.
5315 Eureka Road • Excelsior, MN 55331
(612) 867-1649
City of Monticello
Page 2
Our report is intended solely for the information of the City of Monticello for use in
attracting a hotel developer or furthering its redevelopment efforts. It may also be used
to obtain funding for the hotel. Otherwise, neither the report nor its contents, nor any
reference to our Firm may be referred to or quoted in any registration statement, sales
brochure, prospectus, loan, appraisal or other financial document without our prior
written consent.
August 17, 2023
HOSPITALITY CONSULTING GROUP, INC.
0-
5315 Eureka Road • Excelsior, MN 55331
(612) 867-1649
HOTEL MARKET STUDY
MONTICELLO, MINNESOTA
Letter of Transmittal
CONTENTS
PAGE
1. INTRODUCTION 1
BACKGROUND.................................................................................................................................................. 1
SCOPEOF STUDY............................................................................................................................................ 1
2. EXECUTIVE SUMMARY 3
3. REGIONAL CHARACTERISTICS 11
INTRODUCTION..............................................................................................................................................
12
LOCATION...........................................................................................................................................................
12
DEMOGRAPHICS.............................................................................................................................................
13
BUILDING PERMITS.....................................................................................................................................
16
EMPLOYMENT.................................................................................................................................................
17
SURROUNDINGCOMMUNITIES............................................................................................................
20
TRANSPORTATION.......................................................................................................................................
23
RESTAURANTS................................................................................................................................................
25
TOURISM.............................................................................................................................................................
26
4. AREA HOTEL SUPPLY 29
HOTELSUPPLY................................................................................................................................................ 29
ROOM RATE STRUCTURE......................................................................................................................... 37
MEETINGFACILITIES.................................................................................................................................. 38
S. AREA HOTEL DEMAND 40
HOTEL INDUSTRY TRENDS..................................................................................................................... 40
HOTELDEMAND............................................................................................................................................ 41
HOTEL MARKET PERFORMANCE........................................................................................................ 44
HOTEL DEMAND PROJECTIONS........................................................................................................... 48
HOTEL MARKET STUDY
MONTICELLO, MINNESOTA
CONTENTS (Continued)
6. RECOMMENDED FACILITIES
HOTEL FACILITY RECOMMENDATIONS........................................................................................
7. SITE REVIEW
WI
CRITERIA.............................................................................................................................................................
SUMMARY EVALUATION..........................................................................................................................
8. UTILIZATION PROJECTIONS
PAGE
51
51
54
54
55
59
UTILIZATION ASSUMPTIONS................................................................................................................. 59
PROJECTED OCCUPANCY.......................................................................................................................... 60
PROJECTED AVERAGE RATE.................................................................................................................. 64
PROJECTED ROOM REVENUE................................................................................................................ 66
9. FINANCIAL PROJECTIONS 67
NOTES TO FINANCIAL PROJECTIONS............................................................................................... 67
ECONOMIC FEASIBILITY ANALYSIS................................................................................................... 70
ADDENDUM: CONSULTANT'S QUALIFICATIONS
Hotel Market Study - Monticello, MN Introduction
SECTION 1: INTRODUCTION
BACKGROUND
C�
Monticello, Minnesota is a prosperous community located along Interstate 94,
midway between Minneapolis and St. Cloud. It functions as a sub -regional center
for shopping, business, and healthcare services between St. Cloud and Maple
Grove. Monticello's downtown was originally developed along Broadway
parallel to the Mississippi River. However, more recent retail developments
along the interstate have made this area the focal point for economic activity.
The City of Monticello is encouraging the development of a new hotel to
supplement its aging hotel supply. Accordingly, four potential hotel sites have
been identified, all located near the interstate, that have attracted interest from
hotel developers. The purpose of this study is to provide a current assessment
of Monticello's hotel market.
Hospitality Advisors has extensive experience working with hotel developments
throughout the United States. We were retained to research the market support
for a new hotel and to recommend the size and scope of facilities appropriate for
this market. The scope of our work in conjunction with this engagement is
summarized below.
SCOPE OF STUDY
Our research into the market support for a new hotel included the following:
• Determination of the primary market area and evaluation of pertinent
demographic and economic information;
• Identification of sources of lodging demand;
• Identification and evaluation of competitive lodging facilities;
I Hospitality Consulting Group
Hotel Market Study - Monticello, MN Introduction
• Recommendation of the type and size of hotel and amenities that will
perform best in the Monticello market;
Projection of the lodging demand that the recommended hotel could
reasonably expect to capture; and
• Projection of the average daily rate and resulting room revenue that the
hotel could reasonably expect to achieve.
In performing this study, we obtained performance data for the competitive
hotels, researched current room rates at area hotels, obtained and analyzed rel-
evant demographic and economic data, prepared a penetration analysis for the
recommended hotel, and prepared projections of revenue and operating ex-
penses for the hotel's first five years of operation.
I
2 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
SECTION 2: EXECUTIVE SUMMARY
This section describes, in brief, the findings and conclusions derived from our
study of the market for a new hotel in Monticello, Minnesota. This overview
includes our review of the market area and the competitive environment, our
review of the recommended hotel facilities, and financial projections expected
for the hotel. The estimates and the information presented in this section are
meant as a summary of, not a substitute for, the body of the report which
contains additional information and detail critical to a full understanding of the
basis for the estimates made and the context within which they were formed.
The key findings of our market study are summarized below:
MARKET CHARACTERISTICS
Monticello has a strong economy. Its population, and the population of its
immediate market area, increased by 13 percent over the last decade. Although
Monticello's median household income is below that of Wright County in which
it is located, the county's median income is 29 percent higher than the state-wide
level. It is a retail center for a large area that extends out approximately 10 miles.
Education, Healthcare and Social Assistance makes up the largest employment
category, followed by Manufacturing.
Recent developments in the community include a relatively large number of
single and multifamily housing units. The City is also in the process of developing
a large complex of athletic fields that will allow it to capitalize on the growing
sports tourism trend.
Monticello enjoys a prominent location along Interstate 94 and the Mississippi
River and is midway between Minneapolis and St. Cloud. Two exits on the
interstate provide excellent access to the community's retail and service
establishments for the more than 44,000 vehicles that pass by the city each
day. Highway 25 provides the only river crossing within 13 to 15 miles in
either direction.
3 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
HOTEL SUPPLY
There are three franchised hotels and one older motel in Monticello. The Best
Western Chelsea Plus is an older but well-maintained upper midscale property.
The other two franchised hotels, a Days Inn and a Super 8, are economy motels
and therefore would not be directly competitive with a new upper midscale
property. The fourth hotel, the AmericInn Motel is an older independent econ-
omy property and thus not competitive with a new hotel.
Interviews with the large Monticello employers disclosed that some commercial
lodging demand is displaced to hotels in Albertville, Rogers, and even Maple
Grove. We identified four hotels located along the I-94 corridor that would be
directly competitive with a new upper midscale hotel in Monticello: the Best
Western Prime Chelsea Inn in Monticello; the Country Inn & Suites in Albertville;
and the Hampton Inn & Suites and the Holiday Inn & Suites in Rogers.
Due to the greater distance, hotels in Maple Grove would be secondarily compet-
itive. We identified eight hotels considered to be secondarily competitive with a
new upper midscale hotel in Monticello.
Room rates at the upper midscale hotels in the primary competitive supply
range from $130 to $166 before discounts. Room rates at the upper midscale
and upscale properties in the secondary supply range from $137 to $319, be-
fore discounts.
MEETING SPACE
Meeting facilities allow a hotel to attract additional demand related to area
meetings, merchandise and hobby shows, as well as social functions. Monticello
has two large venues with capacity of up to 300 persons: one is located in the
Community Center and the other is in a bowling alley. Two of the hotels have
meeting rooms: the Best Western has a 1,200 -square foot function room and the
Super 8 has a 1,500 -square foot room.
Several local events have outgrown the available meeting space so are forced to
hold their functions in the community center gym. Several larger groups have
been turned away from Monticello due to insufficient meeting space.
While a large event center at a new hotel would draw new events to the commu-
nity, such a facility would not be economically viable without significant financial
4 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
assistance, given the elevated construction costs and interest rates that presently
exist. Due to the large ballroom space in the community center, a similar large
ballroom at the hotel would likely be under-utilized. We feel that a divisible
meeting room of between 800 to 1,200 square feet would be appropriate for a
new Monticello hotel.
HOTEL DEMAND
The lodging industry was devasted by the Covid-19 pandemic when travel was
severely restricted and many businesses shut down. Industry wide RevPAR
(revenue per available room) was reported to have declined by 50 percent in
2020. Since that low, the industry has steadily been returning back to normal.
Through the first half of 2023, industry wide RevPAR was reported to be
nearly 2 percent higher than the same pre-Covid period in 2019 (in adjusted
dollars). The competitive supply along the I-94 corridor experienced an annual
occupancy of 65 percent in 2022, which was 10 points higher than the statewide
average.
In order to assess the recent trends in the Monticello lodging market, we
obtained detailed performance data for the four hotels in the competitive
supply. This data shows that the competitive set of four hotels achieved an
overall annual occupancy of 64.7 percent in 2022, the highest level achieved in
the last eight years. Generally, a hotel targets a 60% to 70% occupancy to be
successful.
The amount of hotel demand accommodated by the four competitive hotels
has increased over the last two years, documenting the recovery from the ex-
treme impact from Covid-19 felt largely in 2020. The number of occupied
roomnights in 2022 exceeded the 2021 level by nearly 15 percent and was 1.6
percent higher than even the pre-Covid demand in 2019.
Monthly performance data over the last three years for the competitive set
shows that lodging activity peaks in the summer, exceeding 70 percent in the
months of April through September, typical of an interstate location. The fact
that the summer increase is not that large relative to the rest of the year
indicates there is a strong commercial component to the lodging demand
which occurs throughout the year. Turnaways from the market occur during
athletic tournaments and generally on weekends throughout the summer and
fall.
5 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
The ADR for the competitive supply increased by a remarkable16 percent in
2022 followed by an 11 percent increase in 2022. Year-to-date through May, the
ADR for the competitive set is up over 8 percent.
A new hotel in Monticello would seek to capture the upscale lodging demand
that is leaving the community to stay at higher quality hotels in neighboring
cities.
The patronage that will be available to a new hotel consists of commercial
visitors conducting business in the area, travelers on the interstate, people
attending social functions and visitors to area residents, and people attending
meetings and other group functions.
The mix of the lodging demand accommodated by the competitive set is estimated
to consist of the following:
ESTIMATED MARKET MIX (2022)
Market Occupied % of
Segment Roomnights Total
Commercial
34,000
47%
Leisure
31,100
43%
Group
7,200
10%
Totals
72,300
100%
Based on our analysis, we believe that a base annual growth rate of 2.0 per-
cent is a reasonable expectation for continued hotel demand growth for the
competitive supply through 2029. An additional 1.0 percent growth in 2025
and 2026 was factored into our analysis to account for the new hotel rooms
available when the subject hotel opens.
FACILITY RECOMMENDATIONS
Based on our evaluation of the local hotel supply and demand conditions we
believe that an 80 -room limited -service hotel of Upper Midscale quality will
perform best within the Monticello competitive market. A strong national
franchise will be needed to compete with the hotels that exist in Rogers and
Maple Grove. The hotel's amenities should include an indoor pool, a meeting
room of approximately 1,000 square feet, an exercise room, and facilities to
6 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
provide a complimentary breakfast.
POTENTIAL SITES
The City has identified four possible locations for a new hotel. These sites are
shown on the map on page 56. The hotel sites were evaluated on the basis of
visibility from major transportation routes, access, proximity to destinations,
proximity to restaurants, and the suitability of surrounding land uses.
We believe that the two most western sites (Site 1 and Site 4) are both suit-
able for immediate development, due to the suitability of the surrounding land
uses and their proximity to restaurants. Sites 2 and 3 lack surrounding
development and therefore are thought to be premature for a hotel at this
time.
PROJECTED OCCUPANCY
Based on the results of our market study, we estimate that the recommended
hotel would be able to capture a 5.0 percent premium above its fair share of
the primary market demand. This premium will be due to the newness of its
facilities as it competes with the older Best Western Prime Chelsea Hotel. Its
occupancy would be made up of guests upgrading from the current hotels,
guests currently leaving the market to stay in newer hotels in surrounding
communities, guests that are attracted to the market by the new hotel fran-
chise, and guests that are presently turned away from the market on nights
when the hotels are at capacity.
The results of our utilization analysis are presented in the following table,
which shows the subject hotel achieving projected occupancies that open at
54% and reach 64 % by its fifth year of operation. Its market share should sta-
bilize in its third year; occupancies projected for the first two years are lower
than the stabilized level of operation as the hotel will require time to build
public awareness and to develop its marketing program.
7 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
RECOMMENDED MONTICELLO HOTEL
Projected Utilization
80 Rooms
AVERAGE DAILY RATE
The analysis from which we developed our projections of average daily rate for
the recommended hotel included the quality and pricing structure of the other
primary competitive hotels.
We estimate that the average daily rate for the primary competitive hotels will
range between $129 and $146 in 2023. Based on our analysis, we have
determined that the recommended upper midscale hotel should be able to
achieve an average rate of $135 expressed in current 2023 dollars. Factored into
the room rates projected for the subject hotel is an inflation factor of 2 percent
and a real growth factor of 1 percent, for a total annual increase of 3 percent. The
inflated average rate in 2025, its first full year of operation, is projected to be
$143.20.
8 Hospitality Consulting Group
2025
2026
2027
2028
2029
Market Demand:
Base Market
78,200
80,600
82,200
83,900
85,500
Crews
1,000
-
1,000
-
1,000
Total Market
79,200
80,600
83,200
83,900
86,500
Subject Hotel:
Commercial
7,300
7,800
8,500
8,600
8,800
Leisure
7,100
7,500
7,800
7,900
8,100
Group
1,500
1,700
1,800
1,800
1,900
Occupied Rooms
15,900
17,000
18,100
18,300
18,800
Available Rooms
29,200
29,200
29,200
29,200
29,200
Projected Occupancy
54%
58%
62%
63%
64%
Market Share
20.1%
21.1%
21.8%
21.8%
21.7%
Fair Share
20.7%
20.7%
20.7%
20.7%
20.7%
Penetration Rate
96.9%
101.8%
105.0%
105.2%
104.9%
AVERAGE DAILY RATE
The analysis from which we developed our projections of average daily rate for
the recommended hotel included the quality and pricing structure of the other
primary competitive hotels.
We estimate that the average daily rate for the primary competitive hotels will
range between $129 and $146 in 2023. Based on our analysis, we have
determined that the recommended upper midscale hotel should be able to
achieve an average rate of $135 expressed in current 2023 dollars. Factored into
the room rates projected for the subject hotel is an inflation factor of 2 percent
and a real growth factor of 1 percent, for a total annual increase of 3 percent. The
inflated average rate in 2025, its first full year of operation, is projected to be
$143.20.
8 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
PROJECTED AVERAGE RATE
80 Rooms
Year Average Daily Rate
2023 $135.00
2025
$143.20
2026
$147.50
2027
$151.90
2028
$156.50
2029
$161.20
Occupancy 54%
r
FINANCIAL PROJECTION SUMMARY
Our financial projections prepared for the first five full years of operations for
the recommended hotel are summarized in the following table.
FINANCIAL PROJECTION SUMMARY
80 -ROOM UPPER MIDSCALE HOTEL
2020
2021
2022
223
2024
(703,267)
Undistributed Expenses
(641,702)
(715,306)
(777,038)
Occupancy 54%
58%
62%
63%
64%
Average Daily Rate $143.20
$147.50
$151.90
$156.50
$161.20
Total Revenue $2,287,152
$2,518,603
$2,761,343
$2,876,170
$3,043,255
Departmental Expenses
(566,737)
(608,255)
(650,672)
(672,857)
(703,267)
Undistributed Expenses
(641,702)
(715,306)
(777,038)
(803,401)
(840,117)
Fixed Charges
(141,992)
(242,212)
(284,219)
(296,484)
(311,289)
Management Fee
(91,075)
(100,300)
(109,976)
(114,558)
(121,222)
Cash Flow For Debt Service
$845,646
$852,531
$939,438
$988,870
$1,067,360
ECONOMIC FEASIBILITY ANALYSIS
For purposes of analyzing the economic feasibility of the new hotel, Hospitality
Consulting Group assumed the hotel to have a total cost of $11,000,000, or
$137,500 per guest room.
The financing terms utilized in the analysis assumed a 35 percent equity in-
vestment of $3,850,000, leaving a loan principal of $7,150,000 to provide
funds for the $11,000,000 total project cost.
9 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
Source of Funds:
Equity $3,850,000 35%
Debt 7,150,000 65%
$11,000,000 100%
Debt Term Assumptions:
Annual Interest Rate: 8.0%
Amortization: 20 years
Annual Payment: $718,000
The results of the feasibility analysis are presented in the following table.
Economic Feasibility Analysis
Estimated Project Cost: $11,000,000
35% Equity; 65% Debt
Cash Flow Avail. for Debt Servi
Debt Service
Debt Service Coverage Ratio
Cash Flow to Equity
Equity
Return on Equity
2025 2026 2027 2028 2029
$846,000 $853,000 $939,000 $989,000 $1,067,000
$718,000 $718,000 $718,000 $718,000 $718,000
1.18 1.19 1.31 1.38 1.49
$128,000 $135,000 $221,000 $271,000 $349,000
$3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000
3.3% 3.5% 5.7% 7.0% 9.1%
A debt coverage ratio (cash flow/annual debt service) of a minimum of 1.2
times is required and 1.4 times is typically preferred by lenders. This analysis
shows that the hotel is projected to generate sufficient cash flow to minimally
meet its debt service requirements in the first two years, and will not produce
a comfortable debt coverage until its fourth year.
Hotel investors typically like to see cash on cash returns of at least 10 percent.
A hotel development company, who also would manage the hotel, may include
the management fee in its investment decision and thus accept a lower return.
In this simple analysis, the projected cash on cash return on equity only
reaches 9 percent by the hotel's fifth year of operation.
10 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Executive Summary
The project cost and terms of financing assumptions used in this analysis
produces marginal debt coverage in the hotel's early years and does not
provide an acceptable return on investment until its fifth year. There-
fore, we conclude that the hotel project may not be economically feasible
without some measures that either reduces its cost or the interest rate,
or both.
A&
c
11 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
SECTION 3: REGIONAL CHARACTERISTICS
it
INTRODUCTION k 14k
The following section provides an overview of the market environment within
which a new hotel would operate. Included within this section is a review of
selected economic and demographic data, along with a description of the
transportation infrastructure and attractions in the area.
LOCATION
Monticello is located in Wright County, approximately 37 miles northwest of
the Twin Cities of Minneapolis and St. Paul and 27 miles southeast of St. Cloud.
It is located along Interstate 94 at its intersection with State Highway 25.1-94
is a major east -west traffic route that bisects the state. Highway 25 is a north -
south corridor between the interstate and U.S. Highway 10, an important route
to St. Cloud and north central Minnesota. Highway 25 is the only Mississippi
River crossing between Clearwater and Elk River and is on the National Scenic
Byway Route, and the Mississippi River Trail Bikeway.
There are four lodging facilities in Monticello, of which three carry national
franchises. However, these hotels are not able to meet the needs of travelers who
seek newer and/or higher quality accommodations. We have determined the
primary market for a new Monticello hotel by analyzing drive times to the
surrounding towns that have such accommodations. This market area is defined
by the proximity of St. Cloud to the west and Albertville, Rogers and Maple Grove
to the east, and the hotels, restaurants and shopping options available in these
communities.
The hotel market area is smaller than the trade area because lodging accom-
modations are typically selected at the location that is nearest to a traveler's
destination. While people residing in outlying communities may come to
Monticello for shopping, health care and professional services, visitors to these
communities are more likely to stay in the closest hotel that meets their quality
12 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
and service requirements. Thus, Monticello's primary hotel market is restricted
by the proximity of communities that have competitive hotels.
The determined market area for a new hotel, shown on the map on the following
page, includes the neighboring towns of Big Lake and Becker. The irregular red
line on the map depicts a 15 -minute drive time.
DEMOGRAPHICS
Population
C�
The market area experienced a large increase in population over the last decade.
Population data for Monticello, the identified market area, and Wright County is
presented in the table below. Between 2010 and 2020, the county population
increased by more than 13 percent and Monticello increased by the same
amount.
POPULATION CHANGE
Primary Market Area
Monticello, MN
2010-2020
2000 2010 2020 Change
Monticello
8,544
12,759
14,455
13.3%
Big Lake
6,059
10,060
11,688
16.2%
Becker
2,673
4,538
4,877
7.5%
Silver Creek Twp.
2,332
2,335
2,559
9.6%
Total
19,608
29,692
33,579
13.1%
Wright County
89,986
124,700
141,333
13.3%
Source: U.S. Census
The City of Monticello continues to experience population growth. In the spring
of 2022, the Minnesota State Demographic Center estimated its population has
increased to 15,087, which is 4 percent above the 2020 census number.
13 Hospitality Consulting Group
Hotel Market Study - Monticello, MN
Re-gional Characteristics
1
Monticello, Minnesota
Primary Hotel Market Area
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14 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
Wright County's population was 141,333 in 2020 and is estimated to be 147,350
in 2023. Its population is projected to increase by another 9.6 percent to 161,422
by 20301, representing a 1.3 percent compound annual growth for the decade.
The county's population is projected to increase by 12.1 percent between 2030
and 2040. This represents a slightly lower compound annual increase of 1.1
percent.
The Metropolitan CounCi12 reports that the 7 -county Twin Cities Metropolitan
Area increased by 12 percent between 2010 and 2020. It projects that its
population will increase by another 818,000 by 2050. It estimates that the area
population will increase by 9 percent in the 2020-2030 decade, by 8 percent in
the decade 2030-2040, and by 7 percent between 2040 and 2050. This growth
is expected to result in another 626,000 jobs. These increases are relevant as
growth in the outer ring suburbs will continue to stimulate growth in
surrounding communities, such as Monticello, Albertville, and Rogers.
Since 2020, Wright County has been the fastest growing county in the state,
achieving a population increase of 4 percent, according to US Bureau Census
estimates.
Between 2018 and 2021 the number of households in Monticello increased by
686 to a total of 5,3793 households. The number of households has increased
to 5,6751 according to an estimate released in spring 2022.
Household Incomes
The median household incomes for Monticello, the identified market area,
Wright County, and Minnesota are presented in the table below. Between 2018
and 2021, the median household income of Monticello increased by nearly 12
percent, while the county increased by 22 percent. The median is the midpoint
at which there are an equal number of households with larger and smaller
incomes. The median household income in Monticello was estimated to be
$73,651 in 2021, which is 5.2 percent below the state median.
1 Minnesota State Demographic Center
2 MetroStats, July 2021
3 US Census American Community Survey
15 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
Monticello
Big Lake
Becker
Silver Creek
Wright County
Minnesota
MEDIAN HOUSEHOLD INCOME
Primary Market Area
$52,507 $58,125 $64,821 11.5%
$67,963 $81,881 $99,964 l 22.1%
$59,126 $68,411 $77,720 13.6%
Source: U.S. Census;
2021 ACS 5 -Year Estimates
BUILDING PERMITS
New housing construction in Monticello hit a peak in 2021 when 97 multifamily
units and 93 single family units were permitted. Residential development
declined in 2022 with a total of 35 single family units permitted and no
multifamily permits. In 2023 there are 476 housing units under construction and
another 257 residential units planned.
250
200
150
100
50
0
BUilding Permits
2020 2021 2022 2023
—0—Permits (Dwelling Units
Source: City of Monticello
16 Hospitality Consulting Group
2018-2021
2010
2018
2021
Change
$62,891
$65,938
$73,651
11.7%
$61,941
$79,612
$93,524
17.5%
$60,021
$87,083
$80,083
-8.0%
$52,507 $58,125 $64,821 11.5%
$67,963 $81,881 $99,964 l 22.1%
$59,126 $68,411 $77,720 13.6%
Source: U.S. Census;
2021 ACS 5 -Year Estimates
BUILDING PERMITS
New housing construction in Monticello hit a peak in 2021 when 97 multifamily
units and 93 single family units were permitted. Residential development
declined in 2022 with a total of 35 single family units permitted and no
multifamily permits. In 2023 there are 476 housing units under construction and
another 257 residential units planned.
250
200
150
100
50
0
BUilding Permits
2020 2021 2022 2023
—0—Permits (Dwelling Units
Source: City of Monticello
16 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
Monticello is experiencing a significant amount of commercial development.
In 2022 nearly $24 million of commercial developments were permitted, along
with $2.9 million of industrial development. In 2021nearly $14.8 million of
industrial development was permitted.
EMPLOYMENT
Employment is a strong indicator of an area's economic health. The graph below
shows that Manufacturing and Education, Health Care & Social Services are the
two largest employment categories in Monticello, accounting for 42 percent of
the total employment. Manufacturing businesses are generally strong genera-
tors of lodging demand.
Monticello Employment
Ag, fo rest ry, fishing,
Arts, entertair.,lhunting,& mining, 2%
recreation,
accomrnodatio,food Construction, 8%
Svcs, 9%
Educational, health
care, social assistance,
21%
Professional,
scientific, mgmt,
administrative, 4%
Finance,
insurance, real estate,
6%
Information, 0.3%—
Major Employers
Manufacturing, 19%
410 Wholesaletrade, 4%
Retail trade,
11%
LTransportation &
warehousing, utilities, 4%
Monticello has three large companies that provide the largest source of
employment. It also has a number of manufacturers that generate hotel demand.
The largest companies are profiled below.
17 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
MAJOR BUSINESS EMPLOYERS
Company Name
Xcel Energy
Cargill Kitchen Solutions
CentraCare Health -Monticello
Ultra Machining Company
Polaris (WSI, Inc.)
Bondhus
Source: City of Monticello
Product / Service
Employees
Energy
650
Food Products Supplier
425
Health Care
577
Precision Machining
215
Precision Machining & Mfg.
120
Tool Mfg & Distribution
104
Xcel Energy operates an electric generating nuclear power plant in Monti-
cello. It completed a $665 million upgrade in 2013 that boosted output and
extended the life of the facility. Its operating license has been extended
through 2030. This facility needs to be re -fueled and maintenance performed
every two years for which a large number of contract workers (400-600) are
brought in for up to several months. While many of the workers bring campers
or trailers, a large number stay in area hotels.
Xcel also operates three coal-fired generators in nearby Becker. One of these
generators will be shut down by the end of this year, while the other two will
be taken out of service by 2030, as the utility moves toward clean energy
sources.
Xcel received approval in September 2022 to construct a 460 -megawatt solar
farm on 3,500 acres it owns near Becker in an effort to move away from coal
as a generating power source. The development will cost approximately $575
million and create 300 construction jobs and 14 permanent full-time jobs. In
May of this year, Xcel applied for approval to construct another 250 -megawatt
solar array that would make the complex one of the largest in the country. The
addition would create 90 construction jobs. Both of these projects are to be
completed by the end of 2025. They are projected to create $240 million in
economic impact to the area.
Cargill Kitchen Solutions is a leading marketer of further processed egg
products. It operates a protein processing plant in Monticello that processes
over 125 million pounds of eggs annually. It is a subsidiary of Cargill, Inc., the
largest privately held company in the nation, which is headquartered in Wayzata,
MN.
18 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
CentraCare Health -Monticello is centered around a 124 -bed critical access
community hospital. The hospital, one of nine CentraCare hospitals in the
region, offers 25 specialty services. The Center has 150 medical staff members.
UMC (Ultra Machining Corporation) is a precision machining company with a
specialty in the medical and aerospace industries. The company also develops
prototype parts and does some assembly. It has a 72,000 -square foot facility in
Monticello. Founded in 1968, the company recently added a 60,000 -square foot
expansion to its 75,000 -square foot plant.
Polaris (WSI, Inc.) manufactures small precision parts and assembles engines.
It has 1200 employees at the Monticello plant.
Bondhus Corporation manufactures high quality hand tools used throughout
numerous industries. The nearly 60 -year-old company has 104 employees.
Wiha Tools USA manufactures and distributes professional grade precision
hand tools. Headquartered in Germany, the Monticello facility distributes tools
to North, Central and South America. A 90,000 -square foot manufacturing and
logistics center is expected to be completed by the end of this year which will add
40 jobs. An 85,000 -square foot addition is planned for 2028.
Proposed Data Centers.
Data centers that house hundreds of computers require enormous amounts of
energy. Google had announced plans to construct a large data center on land
Xcel owns near its Sherco coal plant. However, in December 2022 Google
abandoned this project.
Last September Elk River Technologies announced it plans to build a data
center on 384 acres near the Google site. The project is estimated to cost up to
a billion dollars and will create 1,200 construction jobs and100 full time
permanent jobs.
Unemployment
The unemployment rate in Wright County as of May 2023 was 2.7 percent, a level
that is equal to the statewide Minnesota rate and significantly lower than the
national unemployment rate of 3.7 percent. The unemployment rate in the local
economy trends very closely with the state.
19 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
14.0%
12.0%
10.0°/
8.0%
6.0%
4.0%
2.0%
0.0%
Unemployment Rate (May)
2018 2019 2020 2021 2022 2023
Wright County Minnesota U5
Source: U.S. Bureau of Labor Statistics
SURROUNDING COMMUNITIES
In order to understand the dynamics of the area lodging market, we have pro-
vided a summary of Monticello's trade area and the surrounding communities,
which are shown on the map on page 14. Monticello hotels capture demand from
Big Lake and Becker, while they lose demand to Rogers and Maple Grove. They
also lose demand to Albertville, but gain demand on occasions when the one ho-
tel there is full.
Trade Area 'k if
Monticello enjoys a relatively large retail market area that encompasses an ap-
proximate 10 -mile radius with a total of more than 100,000 people. The second-
ary trade area extends west to include Clear Lake, Clearwater and Annandale and
has a population of approximately 35,000 people.
20 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
Big Lake
Big Lake is located 3 miles northeast of Monticello on Highway 10. It had a pop-
ulation of 11,688 in 2020. The median household income in the community is 20
percent above the state median. Big Lake has one small independent motel and
one fine dining restaurant and banquet facility, Willy's on the Water. It also has
a Mexican restaurant, El Loro. The Third Rail Bar & Grill, and Trails Grill and
Sports Bar are more informal bistro/pub restaurants. Lodging demand from Big
Lake is accommodated in Monticello due to the greater variety of hotels and res-
taurants there.
Becker
Becker has an estimated population of 4,877 and is located seven miles north
and west of Monticello. The median household income in the community is 3
percent higher than the state median. The Sherburne County Generating Station,
the largest coal-fired power plant in the state, is located in Becker. The mainte-
nance of this facility periodically brings in crews that require lodging in area ho-
tels.
There are two motels in Becker, a 68 -room upper midscale GrandStay Hotel &
Suites and a 32 -room economy Becker Inn & Suites (once a Super 8). Restaurants
are limited to the Pebble Creek Grill, located at the public golf course, which
serves lunch and dinner and can accommodate banquets of up to 225, Los
Ortizes Restaurant which is open for lunch and dinner and the Great Wall Chi-
nese Restaurant. Additional dining options include Charlie's Sports Bar and Grill
and Dueling Brews brewpub that serves sandwiches.
Albertville
Albertville is located seven miles east of Monticello on I-94. It has a population
of 7,896 and a median household income that is 3 percent higher than the state.
Its major attraction is the Albertville Premium Outlets, a popular outlet mall with
more than 65 stores.
The 66 -room, upper midscale Country Inn & Suites is the only hotel in Albertville,
but the hotels in Monticello and the surrounding communities of Rogers, Becker,
Buffalo, and Maple Grove offer "shop and stay" packages for the mall. While the
shopping is an attraction, this hotel draws demand from Monticello primarily
because of the popular D Michael B's Resort Bar & Grill that is located adjacent
21 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
to it. There is also a Willy McCoys, Hong Thai, and The Space Aliens Bar & Grill.
Rogers
Rogers is located 17 miles east of Monticello on I-94. It has a population of 13,295
and a median household income that is 76 percent higher than the state. This
community continues to develop rapidly and is known as a strong family com-
munity with a good school system. It has a concentration of retail that is an-
chored by Kohl's and a Super Target. Its largest retail attraction is a 185,000 -
square foot Cabela's outdoor store.
There are four hotels in Rogers: a Hampton Inn & Suites and a Holiday Inn Ex-
press & Suites upper midscale properties; an AmericInn midscale property; and
a Super 8 economy lodging facility. Food and beverage outlets include supper
clubs Maynard's Restaurant and Bar and Clives Roadhouse. A popular brewpub,
the Short or Tall Eatery & Dining Hall, is located adjacent to the Holiday Inn Ex-
press. Other restaurants include Guadalajara Mexican Restaurant, and two Asian
restaurants: Bo Bo and Hong Thai. In addition, there are over 25 other food ser-
vice options, including a variety of fast-food outlets.
Maple Grove
Maple Grove is a suburb of Minneapolis located 24 miles east of Monticello on I-
94. It has a population of 70,253 and a median household income estimated to
be $117,442 that is 51 percent higher than the state. The community's largest
employer is Boston Scientific with around 3,000 employees. Maple Grove has
one of the largest retail concentrations in the state, making it a regional shopping
destination. Since the Shoppes at Arbor Lakes, a 370,000 -square foot lifestyle
center opened, three additional centers have been added, bringing the total retail
space to nearly 2 million square feet. Only Bloomington with the Mall of America
has more space. Within the retail concentration at Arbor Lakes is a wide variety
of restaurants that include steakhouses, ethnic restaurants, bistros, a brewpub,
coffee shops and fast food.
There are 11 hotels in Maple Grove: six upscale hotels, two upper midscale ho-
tels, one midscale hotel and two economy motels. Three of these hotels carry a
Marriott franchise, two have a Hilton franchise, and two have an Intercontinental
Hotel Group franchise.
22 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
TRANSPORTATION
Highways
The highway network around Monticello is shown on the map on the following
page. The irregular blue line indicates a 30 -minute drive time from Monticello.
This distance reaches St. Cloud to the northwest and Maple Grove to the south-
east. ff
Monticello is located at the intersection of Interstates 94 and State Highway 25.
Interstate 94 is a major route across the upper Midwest that connects Minneap-
olis -St. Paul with Chicago and Detroit to the east, and St. Cloud, Fargo, North Da-
kota and Billings, Montana to the west. At Billings, I-94 connects with Interstate
90 and continues west to Seattle, Washington. Highway 25 is a north -south route
across central Minnesota that connects Monticello with Big Lake to the northeast
and Buffalo to the south.
Traffic counts taken by the Minnesota Department of Transportation in 2022
show that Interstate 94 carries a large volume of traffic: a daily average of 57,300
vehicles to the east of Monticello and 43,900 vehicles to the west. Average daily
travel on State Highway 25 between Monticello and Buffalo to the south is about
15,900 vehicles and between Monticello and U.S. Highway 10 to the north is
about 10,400 vehicles. Highway 10 carries an average of 13,400 vehicles a day to
the west of the Highway 25 intersection and 18,800 vehicles a day to the east of
the intersection. This river crossing is the only one within 15 miles to the west
and 13 miles to the east.
�y
23 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Regional Characteristics
Monticello Area Highways
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reen
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24 Hospitality Consulting Group
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24 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Regional Characteristics
RECENT DEVELOPMENTS
The City of Monticello has been instrumental in bringing two recent projects to
the city.
Block 52
This redevelopment project was recently completed on a major downtown block
located at Pine and Broadway Streets. The project consists of 87 residential units,
30,00 square feet of first -floor retail space and underground parking.
Pointes at Cedar
This development will consist of a mix of housing, commercial business, and pub-
lic amenities to be constructed around three interconnected man-made lakes. Lo-
cated along Edmonson Avenue between Chelsea Road and School Boulevard, the
100 -acre site is currently being prepared, with completion of the lake expected
by the end of this year. The first residential project is under development on 10
acres of a 32 -acre site. Permitted this year were 100 units of luxury apartments
and a clubhouse, with another 100 units planned.
RESTAURANTS
Restaurants can be an important hotel requirement, particularly for commer-
cial travelers and for local businesses entertaining customers. There is a short-
age of restaurants of the type that would appeal to a commercial traveler in
Monticello, compared to Maple Grove. At least one quality restaurant exists in
both Albertville and Rogers, and both communities are close enough to the
many restaurants in Maple Grove to support their corporate hotels. Monticello
restaurant alternatives include:
Applebee's Neighborhood Bar & Grill - A national franchised bistro that
serves lunch and dinner. Liquor is available.
Chatters Restaurant and Bar - A locally owned restaurant that serves
lunch and dinner. Evening entrees include steak, fish and chicken, along
with burgers, sandwiches and salads. Liquor is available.
• Bluestone Grill - Casual Mexican restaurant that serves lunch and din-
ner. Beer, wine and margaritas are available.
25 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Regional Characteristics
• Buffalo Wild Wings - A national franchised family-oriented sport bar
that serves lunch and dinner. Liquor is available.
• Cornerstone Caf6 - A locally owned, well-regarded restaurant that
serves lunch and dinner. Liquor is available.
• Pancho Villa Restaurant & Bar - A casual Mexican restaurant with a full
bar that serves lunch and dinner.
• Rancho Grande Authentic Mexican Restaurant - A casual restaurant
with a full bar that serves lunch and dinner.
• Perkins Family Restaurant - A national franchised coffee shop that is
open 24 hours. Liquor is not available.
• Pizza Ranch - an informal family restaurant with a menu centered
around pizza. Liquor is not available.
• Guild Tavern and Social House Restaurant - Located in the River City
Extreme bowling alley. It is a casual restaurant and sports bar that
serves lunch and dinner.
• Beef O'Brady's - a casual table service restaurant and bar located in
downtown Monticello.
• Asian Caf6 - a casual restaurant that features Japanese dishes and sushi.
It is located in downtown Monticello.
It must be recognized that high-quality restaurant options are an important factor
in a new hotel's ability to capture some of the demand that presently leaves the
Monticello market. This requirement was expressed by several of the large
employers and similar concerns have been voiced in other hotel projects located
in smaller cities. While Monticello has a broad range of restaurants and fast food,
it does not have a chef -oriented restaurant or a steakhouse. Thus, some hotel
business will continue to be lost to Rogers and Maple Grove.
TOURISM
Monticello is located along the banks of the Mississippi River and is part of the
National Scenic Byway Route. At this location, the river is not deep enough to
be navigable by vessels larger than small fishing boats. However, with a mild
current, the river is ideal for canoes, kayaks and even paddleboats. Both banks
are tree -lined and the city has developed walking and biking paths that extend
26 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Regional Characteristics
six miles including the length of the city.
The City's most recent Comprehensive Plan cites the community's system of
parks and open space as a major factor in attracting and retaining new resi-
dents. At the present time, the city has three community parks located along
the Mississippi River that are connected by the aforementioned pathway. These
provide picnic facilities, restrooms, fishing piers and boat launches. They also
provide excellent locations from which to observe the flock of over 1,500 Trum-
peter Swans that winter here. The nearby power plant warms the river enough
to keep it open during the winter. Several city residents provide 1,200 pounds
of corn daily to help feed the once endangered birds. The feeding spectacle is a
popular attraction for birders.
Other existing recreational facilities include the Montissippi County Park, a
170 -acre park located along the Mississippi River northwest of the downtown
area. The park features several hundred feet of river frontage, a boat launch,
fishing pier, camping area, picnic grounds and two miles of trails for hiking, bik-
ing and cross-country skiing.
Lake Maria State Park is located six miles west of Monticello. This 1,580 -acre
park of rolling terrain preserves one of the few remaining stands of "Big
Woods" hardwood trees that once covered southern Minnesota. Park activities
include hiking (14 miles of trails), horseback riding, canoeing, fishing and
cross-country skiing. Amenities include camper cabins and backpack camp
sites. The park is open year-round.
The Bertram Chain of Lakes Regional Park was recently completed in a joint
effort by Wright County and the City of Monticello. The park is located about
three miles southwest of the city and consists of 1,200 acres of woodlands,
lakes, wetlands and prairie. The park features a beach, several picnic areas, 7.5
miles of hiking trails and 14 miles of mountain bike rails. The park's camping
facilities include 38 RV sites and six camper cabins.
Monticello Athletic Park is a large field -sports complex located on the north
edge of the Bertram Regional Park. The large athletic park has 22 soccer fields,
five lacrosse fields, and eight football fields. Following the first phase of improve-
ments in 2019, many local athletic teams made Bertram their home field in 2020.
Immediate future plans call for the development of several baseball/softball fields,
permanent restrooms, a concession stand, playgrounds and picnic areas. The
27 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Regional Characteristics
masterplan eventually calls for more fields, ball diamonds and amenities. These im-
provements will be based on community need and potential funding opportunities.
The park is now funded by the municipal liquor fund.
The City has expanded its Pathway to include the entire length of the city up to
the Montissippi County Park and a path along Broadway. It plans to extend the
trails along the west side of the city limits to include the Bertram Lakes Park
complex. This extensive pathway will connect the city's recreational facilities.
This will create a recreational amenity for residents and visitors that will in-
clude and be supported by the Monticello Community Center.
:A
28 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
SECTION 4: AREA HOTEL SUPPLY
A new hotel would seek to capture lodging demand from business activities in
Monticello, visitors to area residents, and travelers on Interstate 94. It should
be an upper midscale hotel that can capture demand currently leaving the mar-
ket due to the lack of upscale hotel rooms, rather than competing directly with
the existing hotels in the community.
Our analysis evaluated the facilities, amenities and pricing structure of the com-
petitive hotels in Monticello and the neighboring communities that are captur-
ing some of the Monticello lodging demand. Interviews with Monticello's large
employers revealed that a large portion of the upscale commercial lodging de-
mand utilizes hotels in Rogers, Maple Grove, and Albertville.
In this section of the report, we present information regarding the area's hotels
that would be competitive with a new upper midscale hotel in Monticello.
HOTEL SUPPLY
The Monticello hotel market is framed by St. Cloud to the west and Maple Grove
to the east. There are several hotels located along U.S. Highway 10 to the north,
but we identified little leakage of Monticello demand to these properties. There
are also two hotels (Country Inn & Suites and Super 8) located along State High-
way 55 in Buffalo to the south. These hotels limit the draw of Monticello hotels
from the south.
There are three franchised hotels and one older motel in Monticello. All three
franchised hotels were visited during our fieldwork. The Best Western Chelsea
Plus is an older butwell-maintainedupper midscale property. The other two fran-
chised hotels, a Days Inn and a Super 8, are economy hotels and therefore would
not be directly competitive with a new upper midscale property. The fourth hotel,
the AmericInn Motel is an older independent economy property and thus not
competitive with a new hotel.
29 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
MONTICELLO HOTELS
Hotel
Quality
Age
Rooms
October 2023 Rack Rates
Regular Suite
Amenities
Best Western Plus
Upper Midscale
23 Years
51
$130
$150-$160
Pool, hot tub, fitness room,
Chelsea Inn & Suites
Meeting room(1,200 so
Super 8
Economy
47 Years
70
$87-$97
$147
Pool, meeting room (1,500so
Days Inn
Economy
37 Years
33
$79-$85
$112
Jacuzzi suite
AmericInn Motel
Economy
42 Years
28
$59-$63
na
Refrigerators, microwaves
131
Source: STR and Hospitality
Consulting Group
The rack rates shown in the above table are for room rates posted for October of
this year. Summer rates are generally about $20 higher.
The three franchised hotels are located near each other on the south side of the
interstate, east of Highway 25. The area is currently more industrial than retail -
oriented, however multi -unit residential projects are being attracted to this area.
Restaurants on that side of the interstate include Applebee's, Chatters, Blue Stone
Grill, Buffalo Wild Wings, Taco Bell, McDonald's and a small oriental restaurant.
Primary Competitive Hotels
Interviews with the large Monticello employers disclosed that some commercial
lodging demand is displaced to hotels in Albertville, Rogers, and even Maple
Grove. We also found that much leisure demand, particularly on weekends, is be-
ing displaced from Monticello due to frequent lack of room availability at the Best
Western Plus.
Albertville is a 15 -minute drive from Monticello, Rogers is 20 minutes, and Maple
Grove is a 25 -minute drive. Within this market area, there are four hotels located
along the I-94 corridor that would be directly competitive with a new upper mid -
scale hotel in Monticello. Due to the greater distance, hotels in Maple Grove would
be secondarily competitive with a new hotel in Monticello.
The locations of these competitive hotels are shown on the following map.
30 Hospitality Consulting Group
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Maple Grove
Hotel Market Study - Monticello. MN Hotel Supply
Best Western Plus Chelsea Inn & Suites
This 51 -room, 23year-old hotel presents
the highest quality accommodations avail-
able in Monticello. It has upgraded to qual-
ify for the franchise's "Plus" premium des-
ignation. It has 14 suites and amenities in-
clude an indoor pool and hot tub, an exer-
cise room and 1,200 square feet of meet-
ing space. A hot breakfast is provided to
guests. Its room rates are $130 for a regu-
lar room and $150 for a suite. Rates generally increase about 15 percent during
the summer and can increase by 45 percent on busy weekends. The hotel fre-
quently fills on Saturday nights and sometimes requires a 2 -night stay over a
weekend.
Country Inn & Suites - Albertville
This 66 -room, 19 -year-old upper mid -
scale hotel features an indoor pool and
hot tub, an exercise room and a small
jowl 525 -square foot meeting room. A hot
���+ ■■ ■� breakfast is provided to guests. Its
1001 room rates are $130 for regular rooms
l'� and $141-$173 for suites. Rates in-
t 4
y °°' crease by about 15 percent during
summers and 20 to 30 percent on
weekends. The hotel offers up to a 10
percent discount for a variety of travelers. The hotel is located adjacent to a pop-
ular restaurant, D Michael B's Resort Bar & Grill, and across the street from the
large Albertville Premium Outlet Mall. This is a Choice Hotels International fran-
chise.
32 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
Hampton Inn & Suites - Rogers
_�-=-I-j
This 16 -year-old, upper midscale hotel has
114 rooms along with an indoor pool, a fitness
center and a 1,012 -square foot meeting room.
A hot breakfast is provided to guests. Its room
rates are $124 - $129 for a regular room and
$145 - $149 for a suite. The hotel offers a 15
percent discount for non-refundable advance
reservations. This is a Hilton franchise.
Holiday Inn Express & Suites - Rogers
This 14- year-old, upper midscale hotel has
75 rooms, an oversized indoor pool area that
■ ■ features several water park elements, an ar-
cade, fitness center and an 806 -square foot
meeting room. A hot breakfast is provided to
- guests. Its room rates are $119-$124 for a
regular room and $129 - $139 for a suite.
Weekend rates are $20 higher. It offers a 15
percent discount for non -cancellable reservations. The hotel is an Intercontinen-
tal franchise.
The characteristics and amenities of the primary competitive hotel supply are
summarized in the following table.
PRIMARY COMPETITIVE AREA HOTELS
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: STR and Hospitality Consulting Group
33 Hospitality Consulting Group
Age
Rack Rates ( Oct. 2023)
Meeting
Hotel
Location
Quality
(Years)
Rooms
Regular
Suite
Space
Amenities
Primary Competition:
Best West Plus Inn & Suites
Monticello
UM
23
51
$130
$160-$170
1,200 sf
Pool, hot tub, fitness room
Country Inn & Suites
Albertville
UM
19
66
$139
$149-$159
525 sf
Pool, hot tub, fitness room
Hampton Inn & Suites
Rogers
UM
16
114
$166-$175
$194
1,012 sf
Pool, fitness room
Holiday Inn Express & Suites Rogers
UM
14
75
$139
$149-$159
806 sf
Pool, hot tub, fitness room
306
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: STR and Hospitality Consulting Group
33 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
Secondary Competitive Hotels
The following eight hotels are considered to be secondarily competitive with a
new upper midscale hotel in Monticello due to their location and/or quality. The
hotels in Maple Grove have a larger commercial component than the primary
competitive hotels and are less reliant on interstate demand.
AmericInn
Cambria Suites -Maple Grove
Hampton Inn -Maple Grove
This 44 -year-old, midscale hotel has 61
rooms along with an indoor pool and a
hot tub. A hot breakfast is provided to
guests. Its room rates are $114-$119 for
a regular room and $174 for a suite.
There is no premium for weekends, how-
ever summer rates are $20 higher. This is
a Wyndham franchise.
This 14 -year-old, upscale hotel has 129
rooms along with an indoor pool, a fitness
center and 2,025 square feet of meeting
space. A hot breakfast is provided to
guests. Its room rates are $137-$153 for a
regular room and $202 - $222 for a suite.
Weekend rates are 20 percent higher.
This is a Choice Hotel franchise.
This 26 -year-old, upper midscale hotel
has 120 rooms along with an indoor
pool, a fitness center and a small 625 -
square foot meeting room. A hot break-
fast is provided to guests. Its room rates
are $188. Weekend rates are 25 percent
higher. This is a Hilton franchise.
34 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
Holiday Inn Hotel & Suites -Maple Grove
This 16 -year-old, upper midscale hotel is
the only full-service hotel in the market
area. It has 136 rooms along with a restau-
rant and lounge, an indoor waterpark that
is popular on weekends, a fitness center,
F- and two meeting rooms with a total of
1,635 square feet. Its room rates are $218
jr !; for a regular room and $298-$343 for a
suite during the week. Weekend rates in-
crease by as much as 50 percent. Rates in-
clude four wristbands for the weekend water park. This is an Intercontinental Ho-
tel Group franchise.
Marriott Courtyard -Maple Grove
Hilton Garden Inn -Maple Grove
This 15 -year-old, upscale hotel has
115 rooms along with an indoor pool,
a fitness center and a 720 -square foot
meeting room. The hotel features a
limited restaurant and bar. It has the
highest room rates in the area at $319
for a regular room and $469 for a suite.
This 20 -year-old, upscale hotel has
120 rooms along with an indoor pool,
a fitness center and 1,400 square feet
of meeting space. The hotel features a
limited restaurant and bar. Its room
rates are $219 - $229 for a regular
room and $249 for a suite. Weekend
rates are 10 percent lower.
35 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
Staybridge Suites
SpringHill Suites
r,
This 23 -year-old, upscale hotel has
119 rooms along with an indoor pool,
a fitness center and a small 176 -square
foot meeting room. The hotel provides
a breakfast buffet for guests and a
cocktail reception three evenings per
week. Its room rates are $199 for a
regular room and $239 for a suite.
Weekend rates are 5 percent lower.
This is an Intercontinental
Hotel Group franchise.
"IF
This upscale all -suite hotel opened in
2019 with 84 rooms. Each suite has a
minifridge and a microwave. A break-
fast buffet is provided to guests and
other amenities include an indoor
pool, fitness center, a convenience
store, and an outdoor grilling area. Its
room rates are $171-$254 for a suite.
Weekend rates are 20 percent lower.
This is a Marriott franchise.
The secondary competitive hotels are summarized in the table below.
SECONDARY COMPETITIVE AREA HOTELS
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: S7R and Hospitality Consulting Group
36 Hospitality Consulting Group
Age
Rack Rates
( Oct. 2023)
Meeting
Hotel
Location
Quality
(Years)
Rooms
Regular
Suite
Space
Amenities
Secondary Competition:
Americhm & Suites
Rogers
M
44
61
$114-$119
$174
none
Pool, hot tub
Cambria Suites
Maple Grove
U
14
129
$137-$153
$202-$222
2,288 sf
Pool, hot tub, fitness room, bistro bar
Hampton Inn
Maple Grove
UM
26
120
$188
na
625 sf
Pool, fitness room
Holiday Inn Hotel & Suites
Maple Grove
UM
16
136
$218
$298-$343
312/1,323 sf
Water park, fitness rm, restaurant, lounge
Marriott Courtyard
Maple Grove
U
15
115
$319
$469
720 sf
Pool, whirlpool, fitness room, limited rest, bar
Hilton Garden Inn
Maple Grove
U
20
120
219-229
$249
1,400 sf
Pool, whirlpool, fitness room, limited rest, bar
Staybridge Suites
Maple Grove
U
23
119
$199
$239
176 sf
Pool, hot tub, fitness room
SpringHill Suites
Maple Grove
U
4
84
na
171-254
558 sf
Pool, fitness room
884
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: S7R and Hospitality Consulting Group
36 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
ROOM RATE STRUCTURE
Current room rates in Monticello range from $66 for economy lodging to $120
for midscale lodging accommodations, before discounts. Demand sometimes
peaks on weekends on account of tournaments and various social events. Room
rates are sometimes increased by up to $40 on these weekends and rates gen-
erally are increased by $10 during the summer.
Room rates at the upper midscale hotels in the competitive supply range from
$130 to $166 before discounts.
The current posted room rates for the competitive area hotels are summ ized
in the following table.
PRIMARY COMPETITIVE AREA HOTELS
Age Rack Rates ( Oct. 2023) Lowest
Hotel Location Quality (Years) Rooms Regular Suite Discount
Primary Competition:
Best West Plus Inn & Suites Monticello
Country Inn & Suites Albertville
Hampton Inn & Suites Rogers
Holiday Inn Express & Suites Rogers
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: STR and Hospitality Consulting Group
UM 23 51
$130
$160-$170
$121
UM 19 66
$139
$149-$159
$118
UM 16 114
$166-$175
$194
$154
UM 14 75
$139
$149-$159
$123
306
Maple Grove has a stronger commercial base than the other communities in the
primary market, and it benefits from the generally higher room rates charged
in Minneapolis. Thus, it is able to achieve higher room rates and support several
upscale properties. Room rates at the upper midscale and upscale properties
range from $137 to $319, before discounts. The current posted room rates for
the secondary competitive hotels are summarized in the following table.
37 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
SECONDARY COMPETITIVE AREA HOTELS
MEETING FACILITIES
Meeting facilities allow a hotel to attract additional demand related to area
meetings, merchandise and hobby shows, as well as social functions. Meeting and
function space in Monticello is provided by two large venues:
• Monticello Community Center - The largest array of meeting facilities in
Monticello is located in the Monticello Community Center. The Mississippi
Room is used for business, entertainment and social functions. It has 4,200
square feet and can accommodate up to 300 people. It is a popular venue
for wedding receptions. In addition, there are three other meeting rooms
of 940, 462, and 168 square feet. The rooms are available for rent to the
public and liquor is allowed at events.
• River City Extreme is a bowling alley and entertainment complex located
in Monticello. In addition to a restaurant, bar and a large game room, the
complex features a ballroom with a capacity for 300 that is popular for
weddings and banquets.
• Super 8 has a 1,500 -square foot meeting space
• Best Western has 1,200 square feet of meeting space.
38 Hospitality Consulting Group
Age
Rack Rates ( Oct. 2023) Lowest
Hotel
Location
Quality
(Years)
Rooms
Regular
Suite Discount
Secondary Competition:
AmericInn & Suites
Rogers
M
44
61
$114-$119
$174
$103
Cambria Suites
Maple Grove
U
14
129
$137-$153
$202-$222
$120
Hampton Inn
Maple Grove
UM
26
120
$188
na
$163
Holiday Inn Hotel & Suites
Maple Grove
UM
16
136
$218
$298-$343
$165
Marriott Courtyard
Maple Grove
U
15
115
$319
$469
$158
Hilton Garden Inn
Maple Grove
U
20
120
219-229
$249
$184
Staybridge Suites
Maple Grove
U
23
119
$199
$239
$170
SpringHill Suites
Maple Grove
U
4
84
na
171-254
$156
884
Key: M=Midscale; UM=Upper Midscale; U=Upscale
Source: STR and Hospitality Consulting
Group
MEETING FACILITIES
Meeting facilities allow a hotel to attract additional demand related to area
meetings, merchandise and hobby shows, as well as social functions. Meeting and
function space in Monticello is provided by two large venues:
• Monticello Community Center - The largest array of meeting facilities in
Monticello is located in the Monticello Community Center. The Mississippi
Room is used for business, entertainment and social functions. It has 4,200
square feet and can accommodate up to 300 people. It is a popular venue
for wedding receptions. In addition, there are three other meeting rooms
of 940, 462, and 168 square feet. The rooms are available for rent to the
public and liquor is allowed at events.
• River City Extreme is a bowling alley and entertainment complex located
in Monticello. In addition to a restaurant, bar and a large game room, the
complex features a ballroom with a capacity for 300 that is popular for
weddings and banquets.
• Super 8 has a 1,500 -square foot meeting space
• Best Western has 1,200 square feet of meeting space.
38 Hospitality Consulting Group
Hotel Market Study - Monticello. MN Hotel Supply
A community needs public space to accommodate such functions as business
meetings, training sessions, seminars, banquets, fund raisers, reunions and re-
ceptions. Several decades ago, most hotels had restaurants and large meeting
spaces to fulfill these needs. However, the development of large numbers of
economy and limited -service hotels, which lack food service and offer only
small meeting space, has diluted the demand for full-service hotels, making
their development difficult. As a result, restaurants, golf clubs and banquet
halls are capturing increasing shares of this business.
The City of Monticello responded to this need by including a large meeting
space within its community center. The executive director of the Monticello
Chamber of Commerce indicated that the community has a need for even larger
meeting space than what currently exists. Several local events have outgrown the
available meeting space so are forced to hold their functions in the community
center gym. Several larger groups have been turned away from Monticello due to
insufficient meeting space.
While a large event center at a new hotel would draw new events to the
community, such a facility would not be economically viable without significant
financial assistance, given the elevated construction costs and interest rates that
presently exist.
Based on this research, we feel that a divisible meeting room of 800 to 1,200
square feet would be appropriate for a new hotel in Monticello. Such a space
would help the hotel attract commercial meetings business and also accommo-
date smaller social functions. Due to the large ballroom space in the community
center, a similar large ballroom at the hotel would likely be under-utilized.
39 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
SECTION 5: AREA HOTEL DEMAND
HOTEL INDUSTRY TRENDS
The lodging industry was devasted by the Covid-19 pandemic when travel was
severely restricted and many businesses shut down. Robert W. Baird & Com-
pany reported that industry wide RevPAR (revenue per available room) de-
clined by 50 percent in 2020. Since that low, the industry has steadily been re-
turning back to normal and it exceeded the performance of most other indus-
tries in 2022. Through the first half of 2023, STR Global reports that industry
wide RevPAR (Revenue Per Available Room) was nearly 2 percent higher than
the same period in 2019 (in adjusted dollars).
The leisure market segment was the first to recover, driven by pent-up demand
after Covid restrictions, supported by excess cash from savings and govern-
ment payouts. The business and group segments have been slower to recover.
Business demand is expected to be back to 80 percent of normal by the end of
this year. A full recovery is projected to occur in 2026. Industry wide occu-
pancy in 2023 is projected to reach 64 percent with a 4 percent increase in ADR
(average daily rate) resulting in a 5.5 percent RevPAR increase.
Future revenue growth is expected to come mostly from room rate increases,
although some occupancy increase is expected due to the emerging commercial
and group market segments. PwC projects a 3.5 percent increase in RevPAR for
2024.
Overall occupancy at Minnesota hotels increased from 48 percent in 2021 to 55
percent in 2022, according to STR Global data obtained from the Minnesota
Lodging Association. The competitive supply along the I-94 corridor experienced
an annual occupancy of 65 percent in 2022, which was 10 points higher than the
statewide average.
40 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
The statewide occupancy through May of this year was 57 percent compared
to 61 percent for the competitive supply. The statewide numbers are influ-
enced by the low occupancy experienced at Downtown Minneapolis hotels.
Statewide RevPAR in Minnesota increased by 11.4 percent through April of this
year.
Airbnb has eroded hotel demand in some markets, particularly resort locations
and large cities. Cofounded in 2008, Airbnb now has 2.9 million hosts and 8
million listings around the world. Hotels offer consistency while Airbnb offers
more amenities, sometimes unique accommodations, and a different lodging
experience, often at a lower price. These lodging options have the greatest im-
pact on hotels in markets where the supply of hotel rooms is limited, as in large
cities. For example, Airbnb is estimated to capture more than 10 percent of ho-
tel demand in Paris, London and New York City. In response to this competition,
some hotels are successfully listing rooms on the Airbnb platform. The largest
impact is felt by midscale and luxury hotels: a study of the industry between
2008 and 2017 found that Airbnb rentals resulted in an estimated RevPAR de-
cline of 4 percent and 2 percent in these segments respectively. It is important
to note that many rentals occur in markets when hotels are full, so they do not
result in reduced hotel revenues. A search of the Airbnb platform found only
four listing in Monticello.
HOTEL DEMAND
A new hotel in Monticello would seek to capture the upscale lodging demand
that is leaving the community to stay at higher quality hotels in neighboring
cities, upscale demand from the interstate, and a portion of the demand that is
presently accommodated by local hotels. In order to quantify the amount of
local demand that can be expected, we interviewed representatives of area
businesses, local government, and local hotels. In addition, we obtained historic
performance data for the four franchised hotels in the competitive supply.
The patronage that will be available to a new hotel consists of commercial visitors
conducting business in the area, travelers on the interstate, people attending
social functions and visitors to area residents, and people attending meetings and
other group functions. In conducting our market analysis, we looked at the
characteristics of each demand component. A description of these characteristics
follows.
41 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
Commercial Demand
Commercial demand occurs steadily throughout the year with little seasonal fluc-
tuations other than a decline in business travel during holiday periods. This segment
of demand occurs mostly during weekdays. It originates from travelers conducting
business in the area and passing through on the interstate. Commercial travelers
generally seek out franchised hotels that are located near their business destina-
tion. Because much of this segment travels frequently, they are more likely to par-
ticipate in hotel loyalty clubs.
This segment is estimated to be approximately 80 percent of its pre-Covid base.
The return of the business traveler will be an important factor in the future
growth in lodging demand.
Interviews with the large employers in the area revealed a typical number of
visitors from corporate personnel, management, vendors, potential employees
and customers.
• Cargill Kitchen Solutions has fewer visitors than previously since its
corporate headquarters was moved to the Minneapolis suburb of
Wayzata. It sponsors some training events and is visited by personal from
other locations and maintenance specialists. The administrator
interviewed indicated that some of the visitors stay at the Best Western
Plus in Monticello, while most of the upper-level visitors stay in Maple
Grove, attracted by the Hilton, Marriott, and Intercontinental hotel
products and the variety of restaurants and shops.
• UMC (Ultra Machining Corporation) produces precision machined
components. Am administrator at the company indicated they do get
some out-of-state visitors, but was unable to estimate the number.
• Polarus (WSI, Inc.) estimates that it has an average of one visitor a month
that require lodging. These visitors typically utilize local hotels, but
sometimes go to hotels in Maple Grove. Brand loyalty, loyalty club points
and variety of restaurants were noted as reasons for leaving the
Monticello market. The company has multiple meeting rooms in its plant,
so has little need for outside meeting space.
• Xcel Energy operates a nuclear energy plant on the northwest edge of
Monticello and a coal-fired energy plant in nearby Becker. The nuclear
42 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
plant is shut down every two years for re -fueling and maintenance. Crews
of 400 to 600 workers are brought to the area for around 45 days in the
spring during these scheduled power outages. While many of these
workers bring campers and trailers, lodging contracts for the crews are
negotiated by the contractor and this demand can fill area hotels that
participate. Such an event occurred in April 2023, with the next outage
scheduled for Spring 2025. Even if the hotels in the competitive supply do
not participate in the worker contracts, they benefit from overflow
demand from the economy hotels that are filled with workers. The nuclear
plant just completed a $665 million project that will extend the life of the
generator (licensed through 2030) and increase its output.
Several business executives mentioned that a lack of restaurants in Monticello
that are suitable for entertaining would be a detriment to a new hotel for some
types of their visitors. In contrast to the limited restaurants in Monticello, there is
a wide variety of restaurants and fine dining options in Maple Grove.
Leisure Demand
The Leisure demand segment consists primarily of visitors to local residents by
friends and relatives, visitors attending weddings, reunions and other social gath-
erings, participants in sports tournaments that are hosted in town, and visitors
to Monticello's special events.
Sports tourism is a growing segment of leisure hotel demand. A survey conducted
by the University of Minnesota found that about 5 percent of event participants at
the Bertram Chain of Lakes Park utilize hotels in the area. Local hotels should in-
creasingly benefit as the athletic facilities develop more state-wide and regional
tournaments
Leisure travelers passing through the area on Interstate 94 are estimated to account
for approximately 30 percent of the total demand accommodated by the four com-
petitive hotels. The Leisure market segment is largest during the summer months,
when vacation travel is at its peak, and reaches its low point in December and Janu-
ary. Leisure demand is typically the most price sensitive demand segment.
Monticello is in the process of enhancing its outdoor recreational amenities in an
attempt to attract tourists who seek more active experiences. These efforts include
expanding the bike paths throughout the city and linking its parks, and improving
access to the Mississippi for fishing, canoeing and kayaking. We believe these
43 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
efforts should be viewed as amenities that will enhance Monticello's attractiveness
as a destination, but are not strong enough to generate a significant amount of addi-
tional hotel demand. This is because the proximity to the Twin Cities area reduces
the probability of an overnight stay from area visitors to these amenities.
Group Demand
Group business is generated by meetings, seminars and training sessions held
by area employers, government agencies, associations and businesses.
Monticello's location midway between St. Cloud and the Twin Cities makes it a
good location for regional groups and hobby shows. Demand from this segment
has yet to fully recover to pre-Covid levels.
F_,
HOTEL MARKET PERFORMANCE
In order to assess the recent trends in the Monticello lodging market, we
obtained detailed performance data from STR, a well-known research firm that
collects and provides lodging data to the industry. The competitive supply
consists of the one upper midscale hotel in Monticello (Best Western Chelsea
Inn) and the three upper midscale hotels located along the I-94 corridor in
Albertville (Country Inn & Suites) and Rogers (Hampton Inn & Suites and
Holiday Inn Express & Suites)
This data shows that the competitive set of four hotels achieved an overall annual
occupancy of 64.7 percent in 2022, the highest level achieved in the last eight
years. The hotels achieved an average daily room rate of $126.87, which
represents an 11 percent increase over the previous year. Generally, a hotel
targets a 60% to 70% occupancy to be successful.
Lodging Demand
The amount of hotel demand accommodated by the four competitive hotels has
increased over the last two years documenting the recovery from the extreme
impact from Covid-19 felt largely in 2020. The number of occupied roomnights
in 2022 exceeded the 2021 level by nearly 15 percent and was 1.6 percent
higher than even the pre-Covid demand in 2019. The recent trend in occupied
hotel rooms is shown in the following graph.
44 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
Lodging Demand
(Occupied Rooms)
2015 2019 2020 2021 2022
Source: STR
This demand resulted in the annual occupancies of the competitive set shown
below. The market achieved about a 65 percent annual occupancy in 2022,
which was one point higher than the pre-Covid level in 2019.
Occupancy
2018 2019 2020
Source: STR
2021 2022
A graph depicting monthly occupancies is shown below. Occupancies tend to
peak during the summer months which is a pattern typical of an interstate lo-
cation. The fact that the summer increase is not that large relative to the rest
of the year indicates there is a strong commercial component to the lodging
demand which occurs throughout the year.
45 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
90.0
80.0
70.0
> 60.0
u
50.0
CL
u
4 0. 0
a 30.0
20.0
10.0
0.0
Source: STR
Seasonality of Demand
4k'0 0 oet Qec
2019
2020
2021
2022
2023
The graph shows the recovery from the large downturn in demand experienced
in 2020. It also marks the impact of the Xcel Energy work crews in April of 2021
and 2023. Demand in 2022 exceeded 2019 pre-Covid demand. The rush to
travel experienced in 2022 has subsided slightly: year -to -date through May to-
tal demand is nearly equal to the demand experienced during the same period
last year.
The seasonality of demand is an important component in determining the size
of a new hotel and in projecting its annual occupancy. Monthly performance
data over the last three years for the competitive set shows that lodging activ-
ity peaks in the summer, exceeding 70 percent in the months of April through
September. V
46 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
■ 2021 ■ 2022 ■ 2023
Source: STR
Average Daily Rate
The average daily rate over the last five years is shown in the graph below.
The increase in ADR since 2020 is remarkable with a 16 percent increase in 2021
followed by an 11 percent increase in 2022. Year-to-date through May, the ADR
for the competitive set has increased over 8 percent.
These large increases were a combination of hotels trying to recover from the
poor 2020 performance, along with the necessity to cover increasing labor costs
necessary to attract workers after Covid.
V
47 Hospitality Consulting Group
Occupancy by Month
90.0
80.0
70.0
60.0
50.0
CL
� 40.0
U
30.0
20.0
10.0
0.0
■ 2021 ■ 2022 ■ 2023
Source: STR
Average Daily Rate
The average daily rate over the last five years is shown in the graph below.
The increase in ADR since 2020 is remarkable with a 16 percent increase in 2021
followed by an 11 percent increase in 2022. Year-to-date through May, the ADR
for the competitive set has increased over 8 percent.
These large increases were a combination of hotels trying to recover from the
poor 2020 performance, along with the necessity to cover increasing labor costs
necessary to attract workers after Covid.
V
47 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
Source: STR Global
HOTEL DEMAND PROJECTIONS
Growth rate assumptions were developed from analysis of the area's popula-
tion forecasts, historic demand growth trends, and industry forecasts.
Market Mix
It is important to identify the mix of business in a lodging market since the different
segments are likely to be growing at different rates and have different room rate
characteristics. The mix of the lodging demand accommodated by the competitive
set is estimated to consist of the following:
\0 ESTIMATED MARKET MIX (2022)
Market Occupied % of
Segment Roomnights Total
Commercial
34,000
47%
Leisure
31,100
43%
Group
7,200
10%
Totals
72,300
100%
48 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
We estimate that 47 percent of the competitive set market is generated by com-
mercial activity, 43 percent is generated by local and leisure travelers, and 10 per-
cent comes from meetings and other group functions.
We estimate that approximately 30 percent of the lodging accommodated by the
competitive hotel set is business that comes off the interstate that is approxi-
mately equal parts commercial and leisure demand.
Growth in Lodging Demand
In estimating future levels of lodging demand that would be available to a new
hotel, we considered the following factors:
Factor 1: The continued recovery from the Covid impact will result
in more lodging demand, particularly in the commercial and group
segments. The hotel industry is tied directly to the regional and na-
tional economy. As business activity continues to pick up, salesmen,
executives and other business travelers will return to the road in
increasing numbers. The recent increases in disposable income re-
sulting from higher wages will support increases in vacations and
other leisure travel. Hotel industry analysts expect the hotel indus-
try to fully recover by 2025.
Population projections for Wright County show an expected 14 per-
cent increase between 2020 and 2030. This represents a compound
annual rate of 1.3 percent. A 12 percent growth is expected for the
decade between 2030 and 2040.
The addition of more hotel rooms will allow for more guests to be
accommodated on the nights in which the hotels are at capacity.
This situation occurs on many nights during the summer and fre-
quently on weekends throughout the year. An additional 1,000
roomnights have been added to the competitive market demand in
the odd years to account for the demand from the Xcel work crews
that can be accommodated by the additional available hotel rooms.
4. The addition of a new national franchise will draw more travelers
off the interstate and discourage local commercial and leisure de-
mand from leaving the Monticello market.
49 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Hotel Demand
Based on these factors, we believe that a base annual growth rate of 2.0 per-
cent is a reasonable expectation for continued hotel demand growth for the
competitive supply through 2029. An additional 1.0 percent increase in 2025
and 2026 was factored into our analysis to account for the additional hotel
rooms available when the subject hotel opens.
The amount of lodging demand projected to be captured by the competitive
set of hotels is summarized in the following table. This demand includes de-
mand that is presently leaving the market due to insufficient hotel quality and
capacity and demand that will be attracted to the Monticello market by a new
franchised hotel.
MONTICELLO AREA LODGING MARKET
Projected Growth (With 80 -Room Hotel)
Note 1. Assumes subject hotel opens with 80 rooms
Note 2. Assumes crew business results in 1,000 additional roomnights in 2025, 2027, and 2029
Source: Hospitality Consulting Group
50 Hospitality Consulting Group
Available
Demand
Growth
Market
Year
Rooms
(Roomnights)
Rate(2)
Occupancy
Historic:
2018
306
69,200
62%
2019
306
71,100
2.7%
64%
2020
306
46,100
-35.1%
41%
2021
306
63,000
36.4%
56%
2022
306
72,300
14.8%
65%
Projected:
2023
306
74,400
2.9%
67%
2024
306
75,900
2.0%
68%
2025(1)
386
79,200
4.3%
56%
2026
386
80,600
1.8%
57%
2027
386
83,300
3.3%
59%
2028
\ 386
83,900
0.7%
60%
2029
\� 386
86,500
3.1%
61%
Note 1. Assumes subject hotel opens with 80 rooms
Note 2. Assumes crew business results in 1,000 additional roomnights in 2025, 2027, and 2029
Source: Hospitality Consulting Group
50 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Recommended Facilities
SECTION 6: RECOMMENDED FACILITIES
This section of the report presents the facilities that are recommended for a hotel
that will be most successful given the area market characteristics. Estimates of
the utilization of the recommended hotel are presented in the next section of the
report.
HOTEL FACILIITY RECOMMENDATIONS
Building both quality and amenities into a hotel adds cost and therefore, higher
quality hotels with a restaurant and meeting space must charge higher room
rates. Thus, the price sensitivity of a market must be assessed in order to
determine the type of a hotel project that can be supported by the subject market.
The full-service hotel has all but disappeared in recent years for locations other
than urban areas, large office parks, and corporate centers. This is due to their
higher cost (and higher room rates) relative to limited -service hotels that can
offer the same quality room but at a lower rate. Due to the challenges of staffing
and operating a restaurant, full-service hotels are also considered to be of greater
risk by lenders and investors.
Based on our evaluation of the local hotel supply and demand conditions we
believe that an 80 -room limited -service hotel of upper midscale quality will
perform best within the Monticello competitive market.
Guest Rooms
The guest rooms should be finished with high quality floor and wall coverings and
appropriately furnished. Bathrooms should be tiled and have granite counter-
tops. Most of the bathrooms should have a walk-in shower, rather than a tub.
Rooms should include smart televisions with at least one popular streaming
service, a coffee maker, and free high-speed internet. We suggest the hotel's room
complement should include some interconnecting rooms to better accommodate
51 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Recommended Facilities
family travelers. Four 1 -bedroom suites are recommended to accommodate
relocations, wedding parties and guests celebrating special occasions. At least one
of the suites should offer full kitchen facilities suitable for long term stays.
Meeting Facilities
The hotel should include a public function room of approximately 1,000 square
feet. A room of this size could accommodate 50 to 80 for a meeting, 50 for a
banquet, and 100 for a reception. This amenity will allow the hotel to attract an
additional demand segment made up of area meetings and social functions.
Other Amenities
Other amenities that are recommended for the hotel include:
• An indoor pool that will improve the hotel's competitiveness for leisure
travelers and for visitors to area residents;
• An exercise room with several high-quality exercise machines and a
television;
• A business center with a computer and printer available to guests 24
hours a day;
• Complimentary breakfast for guests; and
• High speed wireless internet access throughout the hotel.
Parking
Adequate and convenient parking will be required for the success of the hotel. In
order to meet local code requirements, we estimate that the hotel should have at
least 100 parking spaces. Additional parking may be required to accommodate
attendees at functions that are not staying at the hotel.
Franchise Discussion
There is an emerging trend within the hotel industry whereby guests select a
hotel based on its company's rewards program, rather than on convenience of
location, room rates or amenities. The large franchise companies award points
52 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Recommended Facilities
for staying in their hotels which can then be redeemed for free or discounted stays
at any hotel within their respective chains. Thus, it is not unusual for travelers to
drive an extra distance to stay at a hotel whose rewards program they participate
in. This factor can distort the competitive environment within a particular hotel
market.
Marriott, Hilton, and Intercontinental Hotel Group have the most popular
programs, as they have hotels throughout the world, including a number of
popular resorts, where rewards can be redeemed. Choice Hotels has a liberal
rewards program that provides free hotel rooms, but its inventory of hotels and
resorts is not nearly as extensive as the three aforementioned hotel companies.
Because these hotel brands are represented in nearby Albertville, Rogers and
Maple Grove, we recommend that a hotel carrying a well-recognized national
franchise should be considered for Monticello in order to achieve maximum
market penetration. The stronger the subject hotel's franchise, the less business
will be lost to these hotels in the surrounding markets.
V
53 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Site Review
SECTION 7: SITE REVIEW
The City has identified four possible locations for a new hotel. The general
suitability of these sites is discussed below.
CRITERIA
Hotel sites are evaluated on the basis of visibility from major transportation
routes, access, proximity to destinations, proximity to restaurants, and the
suitability of surrounding land uses.
Visibility and Accessibility
All of Monticello's existing hotels are located near the Pine Street/Highway 25
intersection with the interstate. Their locations provide visibility from the
interstate and easy accessibility for highway travelers. The technology of
smart phones and GPS systems has reduced the importance of visibility and
accessibility as they allow for a guest to easily book a hotel in advance and find
its location. Thus, the need for visibility is diminished as fewer travelers stop
at a hotel on impulse.
Proximity to Destinations
The largest industrial area is located on the southern side of Interstate 94
along Chelsea Road. Businesses located in this vicinity include UMC, Polaris, and
Aroplax Injection Molding.
Businesses located on the northern side of the interstate along Broadway include
BondHus and the CentraCare medical complex.
Proximity to Restaurants
Most of the community's restaurants are located along Highway 25, with three
of the more popular ones (Applebee's, Chatters, and Buffalo Wild Wings) on
the south side of the interstate. All three are located approximately 0.5 miles
54 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Site Review
or more from the existing hotels, so are beyond a comfortable walking dis-
tance. There is also a variety of fast-food restaurants in this area. A table ser-
vice restaurant within easy walking distance would create a competitive ad-
vantage for a new hotel.
Suitability of Surrounding Land Uses
Generally, a retail or residential neighbor is preferable to an industrial land
use. These typically are more compatible with a hotel as they are quieter, have
pedestrian activity, and external lighting.
SUMMARY EVALUATION
As with any real estate development, the cost of the site and its necessary
improvements ultimately has the greatest influence on selection.
The four identified site locations are shown on the map on the following page.
Site 1 has several potential hotel sites within the new Pointes at Cedar
commercial/residential development. These sites are desirable because of
their proximity to the restaurants located nearby along State Highway 25 and
their proximity to the existing hotels. There are several potential hotel sites
within the masterplan, however, we favor the site that is closest to Chelsea
Road. This would be across the street from the Best Western Plus and very
near the two franchised economy motels. The combination of these hotels, all
within walking distance of each other, would provide a large number of rooms
at varying price points that would be attractive to larger groups meeting in the
city.
The two potential sites along Cedar Street are less desirable because of the
incongruous nature of the commercial establishments on the west side of the
street.
Site 2 is a large tract of agricultural land located at the eastern exit on I-94 and
bounded by the interstate on the north, Chelsea Road on the south, and Ferning
Avenue on the east. It is known as Freeway Adjacent Parcel (south side). With
the exception of a Mill's Fleet Farm, the land uses along the south side of Chelsea
Road are industrial. Businesses located here include UMC, Polaris, and Aroplax
55 Hospitality Consulting Group
4BEtE
1
oll
lir .0 _ � _ •-1�
F ,Y`
rIN�J f'
Ja■ ,, f .,.
„� fl i�.-+'- �� � #■ 'f,��• * +>iLG � it
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Hotel Market Study - Monticello, MN Site Review
Injection Molding. A hotel at this location would be convenient for visitors to
these businesses. Because of the proximity to the interstate, noise abatement
would be an important consideration in the construction of a hotel.
The site is visible for traffic eastbound on I-94 but is blocked for westbound
traffic by the overpass. Fenning Avenue, which runs along the site's eastern
border, provides convenient access to the CentraCare medical center and
downtown Monticello.
A recent proposal (Big River) for commercial development has been submitted
for the 10 acres on the eastern side of this parcel. Preliminary plans include 3 or
4 food outlets, a coffee outlet, 3 auto -related services, and possibly a bank. A
second development phase on the western portion of the parcel would consist
of larger shopping outlets.
This site seems premature for a hotel at this time but its viability will improve as
the surrounding area develops.
Site 3 is located east of the eastern I-94 exit on the edge of the city. It is bordered
by the interstate to the north and Broadway Street (Old Highway 152) on the
south. The site lacks any commercial development in the immediate area, but has
excellent access to downtown via Broadway Street as well as the businesses
along Chelsea Road.
The site has excellent visibility and accessibility for westbound travelers on I-94
as they would pass by the hotel before having to exit the interstate. Eastbound
travelers would have to exit before encountering the property, but would also
have good access to reach the hotel.
This site seems even more premature for hotel development than Site 2 and will
benefit from commercial development in the surrounding area. Because of the
proximity to the interstate, noise abatement would be an important
consideration in the construction of a hotel on this site.
Site 4 is located on the north side of I-94 and west of State Highway 25, which is
the main road into downtown Monticello. It is bordered to the north by 71h Street
West, and is separated from the highway by a Runnings Home, Farm & Outdoor
Store and a Cub Foods grocery store. Residential development lies to the north
and further west.
57 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Site Review
There is a Rancho Grand Mexican restaurant, a Pancho Villa restaurant and a
Kentucky Fried Chicken outlet in the immediate area. The site has excellent
visibility for eastbound travelers on I-94 as they would pass by the hotel before
having to exit the interstate. Visibility for westbound travelers is partially
blocked by the Highway 25 overpass.
We think this site is suitable for new hotel development.
58 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
SECTION 8: UTILIZATION PROJECTIONS
Our analysis of the Monticello lodging market concluded that the community is
losing the more upscale demand to higher quality (upper midscale and upscale)
hotels and franchises of the larger hotel companies that are located in
neighboring cities. In order to assess the viability of a higher quality hotel, we
quantified the amount of demand that such a hotel could capture, given the
dynamics of the market, and estimated the average daily rate it could achieve.
UTILIZATION ASSUMPTIONS
As presented in the Hotel Demand chapter, annual lodging demand in the
competitive market recovered in 2022 from the Covid downturn and the market
occupancy was approximately one point higher than the peak years of 2015 and
2019.
The focus of a new hotel in Monticello should be to capture the demand that is
currently leaving the market due to the lack of higher quality hotel
accommodations and to capacity constraints. While the Best Western Prime
Chelsea Hotel is an upper midscale hotel and well maintained, it is still more than
20 years old. It also sells out frequently on Saturday nights and business is strong
enough that it requires a two -night minimum stay on some weekends.
A new, upper midscale hotel would benefit from local demand that would
upgrade from the economy motels when they are full with the Xcel work crews.
The hotel could participate in the worker contract business at a discounted rate
if it had capacity and chose to do so.
Based upon an assessment of the market demand, we have estimated the
potential utilization for the recommended hotel's first five full years of operation,
assumed to begin in 2025 and stabilize in 2027. In developing the utilization
estimates, several key assumptions were made including the following:
59 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
• The hotel will obtain and be operated under a strong national fran-
chise;
• The hotel will be managed by competent personnel;
• Hotel management will implement a comprehensive program of on-
going maintenance covering all facilities, furnishings and equipment;
• Management will conduct an aggressive program of pre -opening
marketing and will continue an effective program of advertising and
group promotions targeted toward area groups and social gatherings
throughout the projection period; and
• No new hotels, other than the subject, will be constructed in Monti-
cello during the projection period.
In addition, all findings, estimates, assumptions and conclusions discussed in this
report are integral parts of the analyses and estimates that follow.
PROJECTED OCCUPANCY
In order to calculate the occupancy that the subject hotel is likely to achieve,
we looked at the performance of the other competitive hotels in the primary
market and analyzed the lodging demand that is generated by employers and
activities in the Monticello area and by travelers on the interstate.
Further insight into the market can be gained by analyzing the weekly demand
patterns. As shown below, on average an occupancy greater than 70 percent
was achieved on Tuesday, Wednesday and Saturday nights throughout the
year. The high weeknight occupancies indicate that a strong commercial de-
mand component exists in the market.
60 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
Annual Day -of -Week Occupancy
° 72.3% 70.1%
62.0%
43.Z76
Sun Mon Tues Wed Thurs Fri Sat
Source: STR
For the months of June 2022 and through May 2023, an average occupancy of
greater than 70 percent was reached on Tuesday in six months, on Wednesday
in eight months, on Thursday in five months, and on Saturday in nine months.
The competitive market ran at near capacity in June 2022, with the monthly
average for every night except Sunday achieving occupancies greater than 79
percent. Average occupancies at these levels indicates that the market is
unable to accommodate all of the demand on certain nights, resulting in
demand leaking out of the market, most likely going to hotels in Maple Grove.
Based on the forecasted continued economic improvement and growth in local
population, we have assumed that the amount of lodging demand accommo-
dated by the subject hotel will increase at a base annual rate of 2.0 percent
throughout the projection period. An additional 1.0 -point demand growth is
projected for the new hotel's first two years of operation due to the additional
capacity it provides, as well as increased marketing efforts among the
competitive hotels in response to the new competitor.
The sources of this new demand included:
Additional commercial demand that is presently deterred from staying
in Monticello (and goes to Maple Grove) due to lack of high-quality ac-
commodations;
61 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
• Additional demand from travelers on I-94 attracted by a new hotel car-
rying another national franchise and offering additional capacity on
nights when the local hotels fill up;
• Additional demand from meetings and training sessions held by area
companies, associations, and organizations;
• Additional demand from sports tournaments held at the Monticello
Athletic Park; and
• Additional demand generated by social functions such as weddings and
reunions which will be attracted by the new facilities.
Projected Hotel Utilization
Based on the results of our market study, we estimate that the recommended
hotel would be able to capture a premium above its fair share of the primary
market demand. By calculating the ratio of the rooms available at the new ho-
tel to the total number of rooms available within the market, its "fair share"
percentage of demand may be determined. The fair share calculation reflects
the market share that the hotel could expect to capture if all available rooms
in the market were favored equally by potential guests and choices were made
on a purely random basis. The recommended 80 rooms represent 20.7 per-
cent of the competitive supply (80/386 = 20.7%). Our analysis found that the
hotel can expect to achieve a market share that has a 5.0 percent premium over
its fair share. This premium will be due to the newness of its facilities as it
competes with the older Best Western Prime Chelsea Hotel.
The results of our utilization analysis are presented in the following table,
which shows the subject hotel achieving projected occupancies that range
from 54 percent in its first year to 64 percent in its fifth year.
62 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
RECOMMENDED MONTICELLO HOTEL
Projected Utilization
80 Rooms
Occupancies projected for the first two years are lower than the stabilized
level of operation, as the hotel will require time to develop its marketing pro-
grams, particularly for group business, and to maximize public awareness of
the hotel facilities. The hotel is expected to achieve its full market share of lei-
sure demand in the second year and its full market share of the commercial
and group demand in its third year. Thus, its market penetration will stabilize
in its third year of operation.
It must be recognized that some local demand will still choose lodging in Maple
Grove because of the restaurants, shopping and variety of Upper Midscale and
Upscale hotels that exist there.
Market Mix
The mix of the hotel's lodging demand at its stabilized level of operation is shown
in the table below.
63 Hospitality Consulting Group
2025
2026
2027
2028
2029
Market Demand:
Base Market
78,200
80,600
82,200
83,900
85,500
Crews
1,000
-
1,000
-
1,000
Total Market
79,200
80,600
83,200
83,900
86,500
Subject Hotel:
Commercial
7,300
7,800
8,500
8,600
8,800
Leisure
7,100
7,500
7,800
7,800
8,100
Group
1,500
1,700
1,800
1,800
1,900
Occupied Rooms
15,900
17,000
18,100
18,200
18,800
Available Rooms
29,200
29,200
29,200
29,200
29,200
Projected Occupancy
54%
58%
62%
62%
64%
Market Share
20.1%
21.1%
21.8%
21.7%
21.7%
Fair Share
20.7%
20.7%
20.7%
20.7%
20.7%
Penetration Rate
96.9%
101.8%
105.0%
104.7%
104.9%
Occupancies projected for the first two years are lower than the stabilized
level of operation, as the hotel will require time to develop its marketing pro-
grams, particularly for group business, and to maximize public awareness of
the hotel facilities. The hotel is expected to achieve its full market share of lei-
sure demand in the second year and its full market share of the commercial
and group demand in its third year. Thus, its market penetration will stabilize
in its third year of operation.
It must be recognized that some local demand will still choose lodging in Maple
Grove because of the restaurants, shopping and variety of Upper Midscale and
Upscale hotels that exist there.
Market Mix
The mix of the hotel's lodging demand at its stabilized level of operation is shown
in the table below.
63 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
ESTIMATED MARKET MIX
New 80 -Room Hotel (Stabilized)
Market
Occupied
% of
Segment
Roomnight
Total
Commercial
8,500
47%
Leisure
7,800
43%
Group
1,800
10%
Totals
18,100
100%
PROJECTED AVERAGE RATE
The analysis from which we developed our projections of average daily rate for
the recommended hotel included the quality and pricing structure of the other
primary competitive hotels.
As shown in the table below, current weeknight rack rates for regular rooms at
the competitive area hotels range from $130 to $179. Room rates are very
flexible and can change daily depending on bookings. All the hotels charge a
premium for Friday and Saturday nights (ranging from 5 to 45 percent) and
during the summer (premiums ranging from 5 to 15 percent). The Best Western
Plus in Monticello tends to charge the highest weekend premium (of up to 45
percent). It was estimated to achieve an average rate of about $120 in 2022.
The average daily rate at a hotel falls below the rack rates due to the numerous
discounts that are offered to guests and to lower rates charged during periods of
slack demand. Some of the competitive hotels offer a 10% discount for seniors
and AAA members; some offer a 10% to 15% discount for their loyalty club
members, and a 10% to 15% discount for advance non-refundable purchase.
Performance data obtained from STR shows that the competitive supply
achieved an overall average rate of $126.87 in 2022. This rate is more than 11
percent higher than the average rate achieved in the previous year. For the first
five months of 2023, the average rate was nearly $128, which is 8.3 percent
higher than the same period last year.
64 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
We estimate that the average daily rate this year for the primary competitive
hotels will range between $129 and $146. Based on our analysis, we have
determined that the recommended upper midscale hotel should be able to
achieve an average rate of $135 in current 2023 dollars.
XQ619NoIN VAW.11:7X.111:[oil N� 91
Note 1: Posted rates October 2023
Source: Hotel web sites and Hospitality Consulting Group
The large increases in ADR that occurred in the last two years is not expected to
continue. The industry -wide ADR is forecasted to increase between 3.0 and 4.0
percent in 2024. Accordingly, we believe that a 3.0 percent annual rate growth is
reasonable for projecting future room rates in the Monticello competitive
market. Factored into the average room rate projected for the subject is an
inflation factor of 2 percent and a real growth factor of 1 percent, for a total
increase of 3 percent annually. The inflated average rate in 2025, assumed to be
its first full year of operation, is projected to be $143.20.
PROJECTED AVERAGE RATE
80 Rooms
Year Average Daily Rate
2023 $135.00
2025
$143.20
2026
$147.50
2027
2023 Rack Rates(1)
Weekend Summer
Estimated
Estimated
Hotel
Location
Quality
Age
Rooms
Regular
Suite
Premium
Premium 2022 ADR
2023 ADR
Primary Market
Best Western Chelsea Inn
Monticello
Upper midscale
18
52
$130
$150-$160
45%
15%
$120
$130
Country Inn &Suites
Albertville
Upper midscale
14
66
$130
141-173
20%
15%
$119
$129
Hampton Inn &Suites
Rogers
Upper midscale
11
114
$179-$189
$194
5%
15%
$135
$146
Holiday Inn Express & Suites
Rogers
Upper midscale
9
75
$139
$149-$159
5%
5%
$125
$135
Note 1: Posted rates October 2023
Source: Hotel web sites and Hospitality Consulting Group
The large increases in ADR that occurred in the last two years is not expected to
continue. The industry -wide ADR is forecasted to increase between 3.0 and 4.0
percent in 2024. Accordingly, we believe that a 3.0 percent annual rate growth is
reasonable for projecting future room rates in the Monticello competitive
market. Factored into the average room rate projected for the subject is an
inflation factor of 2 percent and a real growth factor of 1 percent, for a total
increase of 3 percent annually. The inflated average rate in 2025, assumed to be
its first full year of operation, is projected to be $143.20.
PROJECTED AVERAGE RATE
80 Rooms
Year Average Daily Rate
2023 $135.00
2025
$143.20
2026
$147.50
2027
$151.90
2028
$156.50
2029
$161.20
65 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Utilization Projections
PROJECTED ROOM REVENUE
Based on the occupancy and average rate projections developed in this market
study, we project that the recommended hotel facilities should be able to
achieve the levels of room sales shown in the table below.
PROPOSED MONTICELLO HOTEL
Projected Room Revenue
80 Rooms
2025 2026 2027 2028 2029
Available Rooms
29,200
29,200
29,200
29,200
29,200
Occupied Rooms (Rounded)
15,900
17,000
18,100
18,300
18,800
Annual Occupancy
54%
58%
62%
63%
64%
Occupied Rooms (Rounded)
15,900
17,000
18,100
18,300
18,800
Average Daily Rate
$143.20
$147.50
$151.90
$156.50
$161.20
Room Sales (Rounded)
$2,277,000
$2,508,000
$2,749,000
$2,864,000
$3,031,000
W
66 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
SECTION 9: FINANCIAL PROJECTIONS
Estimates of cash flow from operations before debt service have been prepared
for the first five years of operation for the hotel, expected to open in 2025. The
major assumptions as to the hotel occupancy and room rates are noted at the
top of the projection columns and have been developed from an analysis of the
local lodging market. The operating expense projections are derived from
industry data for small limited -service hotels.
Room revenues reflect an annual increase of 3.0 percent in average daily rate
and expense categories have been inflated at an annual rate of 2.0 percent, with
the exception of labor and real estate taxes that were inflated at 3.0 percent.
Many of the expenses were projected on an amount per occupied room basis,
while the relatively fixed expenses reflect only inflationary increases. The pro-
jected utility expense has both a fixed and a variable component.
The financial projections on the following page are presented in the reporting
format suggested by the Uniform System of Accounts for Hotels.
NOTES TO FINANCIAL PROJECTIONS
Revenue
Guest Room Revenue projections are based upon the occupancy and average
rate estimates previously presented.
Miscellaneous Income consists of meeting room rentals, movie rentals, guest
laundry, pool rentals, interest and other ancillary revenue sources presented
net of associated costs.
Departmental Expenses
Rooms Departmental Expenses include payroll and related benefit expenses
for the front desk, housekeeping, and laundry. It also includes other miscella-
neous rooms expenses such as breakfast expense, cleaning and guest room
67 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
RECOMMENDED 80 -ROOM UPPER MIDSCALE HOTEL
PROJECTED CASH FLOW FROM OPERATIONS BEFORE DEBT SERVICE
2025
2026
2027
2028
2029
OCCUPIED ROOMNIGHTS 15,900
17,000
18,100
18,300
18,800
OCCUPANCY 54.5%
58%
62%
63%
64%
ADR $143.20
$147.50
$151.90
$156.50
$161.20
AMOUNT
AMOUNT
AMOUNT
AMOUNT 0AMOUNT
0.2%
REVENUE:
Guest Rooms
$2,276,880
99.6%
$2,507,500
99.6%
$2,749,390
99.6%
$2,863,950
99.6%
$3,030,560
99.6%
Vending
5,642
0.2%
6,153
0.2%
6,682
0.2%
6,891
0.2%
7,221
0.2%
Miscellaneous Income (net)
4,630
0.2%
4,950
0.2%
5,271
0.2%
5,329
0.2%
5,475
0.2%
Total Revenue
2,287,152 100.0%
2,518,603
100.0%
2,761,343
100.0%
2,876,170
100.0%
3,043,255
100.0%
DEPARTMENTAL EXPENSES:
Rooms Departmental Expenses
565,044
24.8%
606,409
24.2%
648,667
23.6%
670,790
23.4%
701,101
23.1%
Vending Expenses
1,693
30.0%
1,846
30.0%
2,005
30.0%
2,067
30.0%
2,166
30.0%
Total Departmental Expenses
566,737
24.8%
608,255
24.2%
650,672
23.6%
672,857
23.4%
703,267
23.1%
Total Departmental Profit
1,720,415
75.2%
1,910,349
75.8%
2,110,671
76.4%
2,203,313
76.6%
2,339,988
76.9%
UNDISTRIBUTED OPERATING EXPENSES
Administrative & General Expenses:
207,767
9.1%
218,495
8.7%
229,668
8.3%
236,329
8.2%
244,899
8.0%
Information & Telecommunications
17,973
0.8%
18,333
0.7%
18,322
0.7%
18,688
0.6%
18,685
0.6%
Marketing Expenses
102,460
4.5%
112,838
4.5%
123,723
4.5%
128,878
4.5%
136,375
4.5%
Franchise Fee
136,613
6.0%
150,450
6.0%
164,963
6.0%
171,837
6.0%
181,834
6.0%
Utilities
104,476
4.6%
113,938
4.5%
123,736
4.5%
127,606
4.4%
133,714
4.4%
Property Operations & Maintenance:
72,414
3.2%
101,253
4.0%
116,626
4.2%
120,064
4.2%
124,611
4.1%
Total Undistributed Operating Expenses
641,702
28.1%
715,306
28.4%
777,038
28.1%
803,401
27.9%
840,117
27.6%
INCOME BEFORE FIXED CHARGES
1,078,713
47.2%
1,195,043
47.4%
1,333,633
48.3%
1,399,912
48.7%
1,499,872
49.3%
FIXED CHARGES
Insurance
32,782
1.4%
35,822
1.4%
39,143
1.4%
42,773
1.5%
46,739
1.5%
Real Estate Taxes
63,672
2.8%
131,165
5.2%
135,100
4.9%
139,153
4.8%
143,328
4.7%
Management Fee
91,075
4.0%
100,300
4.0%
109,976
4.0%
114,558
4.0%
121,222
4.0%
Replacement Reserve
45,538
2.0%
75,225
3.0%
109,976
4.0%
114,558
4.0%
121,222
4.0%
Total Fixed Charges
233,067
10.2%
342,512
13.6%
394,195
14.3%
411,042
14.3%
432,512
14.2%
CASH FLOW BEFOR DEBT SERVICE
$845,646 37.0%
$852,531 33.8%
$939,438 34.0%
$988,870 34.4%
$1,067,360 35.1%
supplies, cable TV fees, linens and cleaning supplies, and other direct operating
costs for the rooms department. The payroll component of this expense is rela-
tively fixed, varying only slightly in response to changes in occupancy, as house-
keeping staff and certain other hourly workers have variable schedules.
Undistributed Operating Expenses
Administrative and General Expenses include management and administrative
payroll and the general costs associated with operating the hotel facility, including
68 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
credit card commissions, bank charges, professional fees, travel and entertain-
ment and other miscellaneous costs.
Marketing Expenses include the costs associated with advertising, sales and pro-
motion, and include travel agent commissions, promotional materials, and other
promotional expenditures. This expense is calculated at 5 percent of total revenue
and includes a franchise marketing fee of 2.5 percent of room revenue.
Franchise Fees are fees paid to the franchise company as a royalty. The expense
is calculated to be 5.0 percent of room revenue, an amount typical for most fran-
chises.
Utilities expense includes costs related to heating and cooling, electricity, gas, wa-
ter and sewer. Utilities expense is projected from a base of $6.20 per occupied
room and includes both a fixed and a variable portion.
Property Operations & Maintenance expenses includes the costs associated
with repairs, maintenance, grounds keeping, and other related property operating
costs. This expense is reduced over the early years as the facility will be new and
the equipment under warranty.
Management Fee
Management Fee - We have assumed that the hotel will be managed by a profes-
sional management company for a fee equal to 4.0 percent of total revenue.
Fixed Charges
Insurance expense is projected to be $375 per room, similar to the premiums
paid by other hotels with pools.
Property tax expense is projected from an estimate of $1,500 per room, an
amount derived from industry data, and was increased by 3.0 percent each year.
This expense amounts to approximately 5.0 percent of total revenue. In the first
year, the tax expense assumes the hotel is only half completed at the time of as-
sessment.
Replacement Reserve represents funds that will be set aside from operating
cash flow to fund the future cost of replacing and upgrading furnishings and fix-
tures in the facility that will be required to maintain its competitive standing in
69 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
the market on a continuing basis. This reserve is calculated at 2.0 percent of pro-
jected total revenue in the first year, increasing by an additional 1.0 percent of
revenue in the second year, stabilizing at 4.0 percent in the third year.
ECONOMIC FEASIBILITY ANALYSIS
In order to test the economic feasibility of the project, we prepared an analysis of
the hotel's ability to generate sufficient funds to cover its estimated debt service.
Project Cost
The following development budget estimate was prepared by Hospitality Consult-
ing Group for purposes of testing the preliminary economic feasibility of the pro-
ject. It is based on budgets from other upper midscale hotels from projects on
which we have worked, However, the quality and scope of amenities selected for
the actual project could cause the costs to vary significantly.
For analysis purposes, we have assumed the hotel to have a total cost of
$11,000,000, or approximately $137,500 per guest room.
Recommended 80 -Room Upper Midscale Hotel
Monticello, Minnesota
Building Specifications: 80 -unit Upper Midscale Hotel
with indoor pool, hot breakfast, meeting room, and exercise room.
Total Per Room
d$ 1
Lan
880,000
$1 ,000
Building and Improvements
6,930,000
86,625
Site Work Allowance
960,000
12,000
Fixtures, Furnishings, and Equipment
1,200,000
15,000
Financing & Amortizable Costs
340,000
4,250
Contingency & Working Capital
240,000
3,000
Development/Other Fees
450,000
5,625
Total Project Costs
$11,000,000
$137,500
70 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
Financing Scenario
The terms for hotel financing depend on the experience and financial strength of
the developer and the operator. At the present time, conventional hotel loans are
being made at 8.0 to 8.5 percent interest rate with the requirement of between 30
to 40 percent equity. For analysis purposes we have assumed an 8.0 percent in-
terest rate and a 35 percent equity investment or $3,850,000, leaving a loan of
$7,150,000 to provide funds for the $11,000,000 total project cost.
Source of Funds:
Equity $3,850,000 35%
Debt 7,150,000 65%
$11,000,000 100%
Debt Term Assumptions:
Annual Interest Rate: 8.0%
Amortization: 20 years
Annual Payment: $718,000
The results of this analysis are presented in the following table.
Economic Feasibility Analysis
Estimated Project Cost: $11,000,000
35% Equity; 65% Debt
Cash Flow Avail. for Debt Servi
Debt Service
Debt Service Coverage Ratio
Cash Flow to Equity
Equity
Return on Equity
2025 2026 2027 2028 2029
$846,000 $853,000 $939,000 $989,000 $1,067,000
$718,000 $718,000 $718,000 $718,000 $718,000
1.18 1.19 1.31 1.38 1.49
$128,000 $135,000 $221,000 $271,000 $349,000
$3,850,000 $3,850,000 $3,850,000 $3,850,000 $3,850,000
3.3% 3.5% 5.7% 7.0% 9.1%
A debt coverage ratio (cash flow/annual debt service) of a minimum of 1.2 times
is required and 1.4 times is typically preferred by lenders. This analysis shows
that the hotel is projected to generate sufficient cash flow to minimally meet its
71 Hospitality Consulting Group
Hotel Market Study - Monticello, MN Financial Projections
debt service requirements in the first two years, and will not produce a comfort-
able debt coverage until its fourth year.
Hotel investors typically like to see cash on cash returns of at least 10 percent. A
hotel development company, who also would manage the hotel, may include the
management fee in its investment decision and thus accept a lower return. In this
simple analysis, the projected cash on cash return on equity only reaches 9 per-
cent by the hotel's fifth year of operation.
The project cost and terms of financing assumptions used in this analysis
produces marginal debt coverage in the hotel's early years and does not pro-
vide an acceptable return on investment until its fifth year. Therefore, we
conclude that the hotel project may not be economically feasible without
some measures that either reduces its cost or the interest rate, or both.
:A
72 Hospitality Consulting Group
ADDENDUM
NY
73 Hospitality Consulting Group
CONSULTANT QUALIFICATIONS
HOSPITALITY CONSULTING GROUP
Stephen Sherf — President, Hospitality Consulting Group
Stephen Sherf has over 30 years of consulting experience in the hospitality industry. He
spent 15 years with a large national public accounting firm, where he was the partner -in -
charge of the hospitality consulting division for the Upper Midwest. He also started a gam-
ing consulting company where he worked for 15 years, and in 2000, founded a hospitality
consulting company. He has also worked as a sales agent for hotels with Minneapolis-based
Leines Hotel Advisors.
Mr. Sherf has an extensive background in hospitality consulting that encompasses market
studies, valuations, appraisals, acquisitions and sales. He has performed market studies and
other advisory services for over 200 hotel projects located mainly throughout the Midwest
for clients that include developers, lenders, hotel companies, and municipalities.
He also has particular expertise in development consulting to the gaming industry and has
worked on numerous income-producing real estate projects that include nursing homes, el-
derly housing, subsidized and market rate housing, office buildings, retail developments,
convention centers, ice arenas, restaurants, convenience stores, bowling alleys and cinemas.
Operating positions held during Mr. Sherf s career include restaurant manager, auditor, Vice
President of Development for a hotel company with 13 properties, and Treasurer for a gam-
ing company where he oversaw the operations of three Colorado casinos.
Mr. Sherf is known for his hands-on involvement and realistic conclusions. Where appro-
priate, development recommendations are backed by an economic feasibility analysis and a
sensitivity analysis to assess risk.
He has provided expert witness testimony relating to the valuation of hotels and restaurants
and business interruption claims. He has taught continuing education seminars and spoken
at gaming, investment, and state appraisal conferences. He has been a guest lecturer at the
University of Minnesota Graduate School of Business and Stout University.
Mr. Sherf received an undergraduate degree in economics and an MBA in finance from Cor-
nell University. He has held a Minnesota real estate license and has completed several Amer-
ican Appraisal Institute courses. He is a Certified Public Accountant (inactive), has partici-
pated in the Minnesota Lodging Association, served on the planning commission for the City
of Minnetrista, and has held a Colorado gaming license.
74 Hospitality Consulting Group
Hospitality
CONSULTING GROUP
June 12, 2023
Jim Thares
Economic Development Manager
City of Monticello
505 Walnut Street
Monticello, MN 55362
Dear Mr. Thares:
Hospitality Consulting Group is pleased to present the following proposal to update
the hotel market study for Monticello, Minnesota that we conducted in August 2015
and partially updated in May 2020 before the study was halted due to the disruption
that Covid was having on the hotel industry. We understand that the City is interested
in re-examining the economic feasibility of a new hotel to be located within the
community and that four potential sites have been identified. The purpose of this study
will be to re-evaluate the market potential that exists for a new hotel and, if market
justified, identify the type and quality level of hotel that will best meet the lodging
demand and prepare operating and financial projections for the recommended hotel
concept. This letter presents our understanding of the assignment, the services which
we propose to provide, the timing and fees required and the conditions and limitations
under which we would work.
BACKGROUND AND UNDERSTANDING
We understand that the City of Monticello is interested in encouraging the
development of a new hotel. Accordingly, the City is interested in determining
whether a new lodging facility can be market justified.
Based on its findings from the study performed in 2020, the Hospitality Consulting
Group concluded that a new upper midscale hotel would have the greatest
possibility for economic success. Key findings of the study included:
1. The Monticello lodging market experienced a number of capacity nights in
the summer when tourist traffic on I-94 peaked, during certain community
events, and when maintenance crews were working at the Xcel Energy power
plant; and
5315 Eureka Road
Excelsior, MN 55331
Phone (612) 867-1649 hcgroup2@gmail.com
Mr. Jim Thares
Page 2
2. Upscale demand was leaving the market in favor of higher quality hotels in
Albertville and Maple Grove.
SCOPE OF SERVICES
The scope of services that we propose to update our evaluation of the hotel
development potential in Monticello is detailed below:
- Meet with you and other city officials to obtain information on recent and
proposed developments that may have an impact on lodging demand;
- Obtain information regarding the future plans for changes at the Xcel power
plants that may impact area lodging demand;
- Update current economic and demographic data pertaining to the local and
regional market to evaluate the present economic climate and to estimate
future growth potential, particularly as it relates to lodging demand;
- Obtain current data regarding the performance of the local hotel market and re-
interview several of the local employers who utilize lodging accommodations in
order to quantify the current overall demand for hotel rooms in the market
area and demand that is deterred from the market;
- Inspect the existing hotels in Monticello and evaluate them with respect to their
age, facilities and amenities, rate structure and their relative competitiveness;
- Identify other proposed hotel developments in the area and assess their
probability of completion and the degree to which they would compete with a
new hotel in Monticello;
- Identify the type and quality of hotel that would be most successful, given the
nature of Monticello's lodging demand and the existing hotel supply;
- Prepare estimates of future lodging demand and likely market penetration for
the recommended hotel, from which utilization (occupancy and average rate)
will be prepared for their first five years of operation;
- Comment on the suitability of the four potential hotel sites that have been
identified;
5315 Eureka Road
Excelsior, MN 55331
Phone (612) 867-1649 hcgroup2@gmail.com
Mr. Jim Thares
Page 3
Prepare estimates of room revenue, other revenue, and operating expenses
for the recommended hotel project to the level of cash flow available for debt
service, for their first five years of operations; and
- Based on estimated hotel development costs, prepare a feasibility analysis that
evaluates the ability of the recommended hotel to meet its debt service
obligations under likely financing assumptions.
At the conclusion of the market study we will review our findings, conclusions and
recommendations with you.
Final Report
We will prepare a final written report that will contain our findings, conclusions, hotel
facility description and financial projections, as well as the underlying data and
documentation supporting the analysis. The report will contain sufficient information
and analysis to assist potential developers in determining their level of interest in
pursuing a hotel development. The report will be provided in draft form for your
review and comment, prior to finalization.
ESTIMATED FEES AND TIME FRAME
Based on the scope of the work outlined, the fee required for this engagement will be
$6,000. This fee includes the cost or purchasing hotel data and all other expenses
associated with the assignment. Our fee includes three bound copies of the final report
along with an electronic copy. If additional bound copies are requested, we will
provide them to you at our reproduction cost.
Our fees for this engagement will not exceed $6,000 unless the scope of our work is
significantly expanded. If additional work in excess of the scope described above is
requested, we will discuss the matter with you so that a mutually acceptable revision
may be made. Of course you may terminate this engagement at any time by so
informing us, in which case you would only be responsible for the fees and expenses
incurred to that point.
The remaining $6,000 fee will be due upon receipt of the draft report and must be paid
prior to release of the final report. If the project is halted at any time, we will refund
any unused portion of the retainer received.
We anticipate this assignment will take four weeks to complete.
5315 Eureka Road
Excelsior, MN 55331
Phone (612) 867-1649 hcgroup2@gmail.com
Mr. Jim Thares
Page 4
TERMS AND CONDITIONS
Our report will be based on estimates, assumptions and other information developed
from our research of the market, knowledge of the industry and meetings with City
officials. The sources of information and bases of our estimates and assumptions will
be stated in the report. The terms of this engagement are such that we will have no
obligation to revise the report or the projected operating results to reflect events or
conditions that occur subsequent to the completion of our field work in the market.
However, we will be available to discuss the necessity for future revision because of
changes in the economic or market factors affecting the proposed project.
Some assumptions inevitably will not materialize, and unanticipated events and
circumstances may occur; therefore, actual results achieved during the periods
covered by our prospective analyses will vary from those described in our report, and
the variations may be material. Our report will contain a statement to this effect.
Further, we will not be responsible for future marketing efforts and other management
actions upon which actual results will depend.
Our report is intended for the information of the City of Monticello and may be
provided to interested hotel developers. It may also be used in its entirety in support
of financing efforts for a specific hotel project in the community. However, neither the
report nor its contents may be referred to or quoted in any registration statement,
prospectus, private placement memorandum, appraisal or other investment document
without our prior review and written consent. It is agreed that the liability of
Hospitality Consulting Group and its employees is limited to the amount of fee paid
as liquidated damages.
ACCEPTANCE PROCEDURE
If this proposal meets with your approval, please return a signed copy of this
engagement letter along with a retainer check as authorization to proceed with the
engagement.
5315 Eureka Road
Excelsior, MN 55331
Phone (612) 867-1649 hcgroup2@gmail.com
Mr. Jim Thares
Page 5
If you have any questions or would like to discuss this proposal further, please feel free
to call. We look forward to working with you on this project.
Sincerely,
HOSPITALITY CONSULTIING GROUP
Stephen W. Sherf
President
ACCEPTED BY:
TITLE:
DATE:
5315 Eureka Road
Excelsior, MN 55331
Phone (612) 867-1649 hcgroup2@gmail.com
Mr. Jim Thares
Page 6
Profile
Stephen Sherf - President, Hospitality Consulting Group
Stephen Sherf has over 30 years of operational and consulting experience in the hospitality
industry. He spent 15 years with a large national public accounting firm, where he was the
partner -in -charge of the hospitality consulting division for the Upper Midwest. He also
started a gaming consulting company where he worked for 15 years, before founding the
Hospitality Consulting Group in 2000.
Mr. Sherf has an extensive background in hospitality consulting that encompasses market
studies, valuations, appraisals, acquisitions and sales. He has performed market studies and
other advisory services for over 200 hotel projects located mainly throughout the Midwest,
for clients that include developers, lenders, hotel companies, and municipalities.
Prior operating positions held during Mr. Sherf s career include restaurant manager,
auditor, Vice President of Development for a hotel company, and Treasurer for a gaming
company where he oversaw the operations of three Colorado casinos.
Mr. Sherf is known for his hands-on involvement and realistic conclusions. Where
appropriate, development recommendations are backed by an economic feasibility analysis
and a sensitivity analysis to assess risk.
He has provided expert witness testimony relating to the valuation of hotels and
restaurants and business interruption claims. He has taught continuing education seminars
and spoken at gaming, investment, and state appraisal conferences. He has been a guest
lecturer at the University of Minnesota Graduate School of Business and Stout University. He
is frequently quoted in local newspapers and business magazines.
Mr. Sherf received an undergraduate degree in economics and an MBA in finance from
Cornell University. He has held a Minnesota real estate license and has completed several
American Appraisal Institute courses. He is a Certified Public Accountant (inactive), has
participated in the Minnesota Lodging Association, served on the planning commission for
the City of Minnetrista, and has held a Colorado gaming license.
5315 Eureka Road
Excelsior, MN 55331
Phone (612) 867-1649 hcgroup2@gmail.com
EDA Agenda: 09/13/2023
413. Consideration of Adopting Resolution No. 2023-09 authorizing a Purchase Agreement
with James and Cheryl Wolff for the acquisition of 216 Pine Street in the amount of
$465,000
Prepared by:
Meeting Date:
® Regular Agenda Item
Economic Development Manager
09/13/2023
❑ Consent Agenda Item
Reviewed by:
Approved by:
Community Development Director,
City Administrator
Community & Economic Development
Coordinator, Finance Director
/_N V1:91i:1:419111*11tcp
Motion to adopt Resolution 2023-09 authorizing a Purchase Agreement with James and Cheryl
Wolff for the acquisition of 216 Pine Street, Monticello, MN (PID #155010034010), in the
amount of $465,000.
REFERENCE AND BACKGROUND
Recently, James and Cheryl Wolff approached City staff offering to sell their commercial
property located at 216 Pine Street to the EDA. The property is located in the southwest corner
of Block 34 and is 10,897 square feet. It has 166 feet of linear frontage along MN-TH25. The
proposed purchase price of $465,000 is $42.67 per square foot. The 2023 Wright County tax
value is $316,200. Finders Keepers, a small boutique gift consignment shop, is located in the
1,644 square foot retail store. The business is owned and operated by property owner Cheryl
Wolff. Her intent is to close the business as part of the property sale.
The purchase includes all fixtures in the building. The seller is required to remove all personal
property, including a small storage shed, from the premises. The Purchase Agreement includes
language requiring a cash escrow in the amount of $3,000 to be held back from the seller
proceeds at closing to allow City staff to determine if the escrow dollars are needed to pay for
personal property removal and disposal costs. The exterior white light in front of the building is
to be removed and retained by the sellers.
The City and EDA combined currently own approximately 71 percent or 1.68 acres of the entire
2.36 -acre +/- Block 34 land area. EDA acquisition of this property would increase the total
publicly held land area to 82 percent of Block 34. This block is identified as a future
redevelopment opportunity. The 2017 Small Area Plan envisions Block 34 as future
redevelopment opportunity because of the presence of several economically obsolete
buildings, high visibility along MN-TH#25 and County Road 75 along with its location being in
EDA Agenda: 09/13/2023
the traditional core downtown area. The Small Area Plan envisions a future Block 34 as a mixed-
use commercial and residential development similar to Block 52. The EDA last acquired
property (Montgomery Farms) in this Block in 2012 to facilitate future redevelopment.
Key terms of the Purchase Agreement include the following:
• Section 3a. Purchase price: $465,000
• Section 3b. $5,000 Earnest Money Deposited with Title Company — Preferred Title;
credited to the buyer's purchase price at closing; refundable to the extant provided in
the Purchase Agreement
• Section 3b. Warranty Deed/Marketable Title conveyance at closing
• Section 8. Proposed closing date and property vacate: October 31, 2023
• Section 9. $3,000 Seller cash escrow deposited with Title Company - in favor of the EDA -
to cover potential personal property removal and disposal costs incurred by the EDA.
• Section 12. 2023 Real Estate Property Taxes - pro -rated between the Seller and the EDA
• Section 12. Special Assessments - EDA to assume the balance of the post 2023 Special
Assessments in the amount of $1,724.29
• Section 12. Typical Seller -Buyer 50-50 split of closing costs, including Deed Tax
• Section 16 - Relocation Benefits under the URAA to the sellers and Finders Keepers, the
retail business owned and operated by the property owners, are included in the
purchase price offer.
Budget Impact: The budget impact from the proposed purchase of the property will
decrease the EDA General Fund in the amount of the purchase price of $465,000 plus
closing costs estimated to be approximately $3,750 +/-, including the special assessment
payoff balance. The cost of legal fees related to drafting the purchase agreement is
estimated to be $1,875 to $2,150. The EDA General Fund cash reserves are sufficient to
cover the proposed purchase by the EDA.
II. Staff Workload Impact: Internal City staff workload related to the proposed property
purchase is modest. Staff involved in the property acquisition discussion includes the
City Administrator, Community Development Director, Finance Director and the
Economic Development Manager. Consultant staff involved in tasks related to the
proposed purchase include the EDA attorney and Northland Securities staff.
III. Comprehensive Plan Impact: EDA acquisition of the property is in alignment with the
City of Monticello 2040 Vision + Plan goals; Chapter 5. Economic Development.
Language cited in this chapter includes "Goal 3: Downtown Vitality - "A vibrant and
thriving Downtown that contributes to the City's economic development and housing
objectives", and "Goal 4: Redevelopment and Reinvestment - "Redevelopment of vacant
and underutilized parcel consistent with meeting the City's economic development, land
EDA Agenda: 09/13/2023
use and community development design objectives". The acquisition is further
supported by the Downtown Small Area Plan and its identification of Block 34 as a
redevelopment opportunity area. Comprehensive Plan excerpts are attached as Exhibit
F and G.
The Planning Commission is required to review the proposed property acquisition for
conformity with the Comprehensive Plan. That review is scheduled to occur at the
regular October 3, 2023, Planning Commission meeting.
STAFF RECOMMENDATION
City staff recommends that the EDA authorize the purchase agreement for the commercial
property located at 216 Pine Street. The opportunity to consolidate land and add to the City
and EDA publicly held ownership in Block 34 is supported by the City's adopted goals for the
Downtown. Moving forward with the purchase of the property is consistent with the City of
Monticello 2040 Vision + Plan's goals of revitalizing the downtown area, creating a vibrant and
dynamic local economy.
SUPPORTING DATA
A. City Council Resolution 2023-09
B. Purchase Agreement
C. Aerial Site Image
D. Wright County Beacon Property Info Report
E. Illustration -Block 34 public (EDA and City) ownership
F. Monticello 2040 Vision + Plan, Excerpts
G. Monticello Downtown Small Area Plan, Excerpts
EDA RESOLUTION NO. 2023-09
RESOLUTION APPROVING A PURCHASE AGREEMENT
FOR THE ACQUISITION OF 216 PINE STREET BY THE
CITY OF MONTICELLO ECONOMIC DEVELOPMENT
AUTHORITY
BE IT RESOLVED BY the Board of Commissioners of the City of Monticello Economic
Development Authority (the "Authority") as follows:
Section 1. Recitals.
1.01. The Authority and Central Minnesota Realty, Ltd., a Minnesota corporation (the
"Seller"), desire to enter into a purchase agreement (the "Purchase Agreement") pursuant to which
the Authority will acquire certain property located at 216 Pine Street (the "Property") in the City of
Monticello (the "City") from the Sellers for economic development purposes. The Property is
described in Exhibit A attached hereto.
1.02. Pursuant to the Purchase Agreement, the Authority will purchase the Property from
the Sellers for a total purchase price of $465,000, plus the Authority's share of the closing costs as
defined in the Purchase Agreement.
1.03. Pursuant to Minnesota Statutes, Section 462.356, subd. 2, the Planning Commission
of the City will meet on October 3, 2023, to review the proposed acquisition and its conformity to
the City's Comprehensive Plan (the "Comprehensive Plan").
1.04. Subject to the Planning Commission's formal finding, the Authority finds that
acquisition of the Property conforms to the Comprehensive Plan and further finds that it will
facilitate the economic development of the City by allowing the Authority to convey the Property to
a private developer.
Section 2. Purchase Agreement Approved.
2.01. The Authority hereby approves the Purchase Agreement in substantially the form
presented to the Authority, subject to the required finding by the Planning Commission that the
acquisition conforms to the Comprehensive Plan, and further subject to modifications that do not
alter the substance of the transaction and that are approved by the President and Executive
Director, provided that execution of the Purchase Agreement by those officials shall be
conclusive evidence of their approval.
2.02. Authority staff and officials are authorized to take all actions necessary to perform
the Authority's obligations under the Purchase Agreement as a whole, including without
limitation execution of any documents to which the Authority is a party referenced in or attached
to the Purchase Agreement, and any other documents necessary to acquire the Property from the
Seller, all as described in the Purchase Agreement.
MN325-48-828364.v1
Approved this 13th day of September, 2023 by the Board of Commissioners of the City of
Monticello Economic Development Authority.
President
ATTEST:
Executive Director
MN325-48-828364.v1
EXHIBIT A
Legal Description of the Property
Lot 1, Block 34, Original Plat of Monticello, County of Wright, State of Minnesota.
PID 155-010-034010
MN325-48-828364.v1
PURCHASE AGREEMENT
216 Pine Street, Monticello, Minnesota
This Purchase Agreement (this "Agreement") is made as of this day of September,
2023, by and between James B. Wolff and Cheryl A. Wolff, married to each other ("Sellers") and
the City of Monticello Economic Development Authority, a public body politic and corporate
under the laws of the State of Minnesota ("Buyer").
1. PROPERTY. Sellers are the owners of property located at 216 Pine Street in the City of
Monticello, Minnesota, which is legally described on the attached Exhibit A (the "Property").
2. OFFER/ACCEPTANCE. In consideration of and subject to the terms and provisions of
this Agreement, Buyer offers and agrees to purchase, and Sellers agree to sell and hereby grant to
Buyer the exclusive right to purchase the Property and all improvements thereon, together with all
appurtenances. All fixtures located on the Property on the date of this Agreement are included in
the purchase of the Property, whether attached or detached, such as light fixtures (with the
exception of the exterior white light in front of the building which may be removed by Sellers),
shades, rods, blinds, awnings, windows, storm doors, screens, plumbing fixtures, boilers, water
heater, water softener, air conditioning equipment, built-in items, outside television antenna,
fencing gates, and landscaping. Personal property is not included in the sale of the Property.
3. PURCHASE PRICE FOR PROPERTY AND TERMS.
a. PURCHASE PRICE: The total purchase price for the Property, representing the
fair market value of the Property plus any compensation attributable to Sellers'
relocation benefits pursuant to paragraph 16 hereof, is: Four Hundred and Sixty -
Five Thousand and 00/100ths Dollars ($465,000.00) ("Purchase Price").
b. TERMS:
1. EARNEST MONEY: Earnest money in the amount of Five Thousand and
no/100 Dollars ($5,000) (the "Earnest Money") shall be deposited by Buyer
into escrow with Preferred Title ("Title") within five business days after this
Agreement has been executed by both parties. The Earnest Money is
refundable to the extent provided herein.
2. BALANCE DUE SELLERS: Buyer agrees to pay the Purchase Price to the
Sellers by check or wire transfer on the Closing Date (defined hereafter)
according to the terms of this Agreement.
3. DEED/MARKETABLE TITLE: Subject to performance by Buyer, Sellers
agrees to execute and deliver to Buyer a Warranty Deed conveying
marketable fee simple title to the Property, free and clear of any mortgages,
liens, or encumbrances other than matters created by or acceptable to Buyer,
subject only to the following exceptions:
MN325-49-898201.v2
Building and zoning laws, ordinances, state, and federal regulations;
ii. Reservation of minerals or mineral rights to the State of Minnesota,
if any; and
iii. Public utility and drainage easements of record which will not
interfere with Buyer's intended use of the Property.
4. DOCUMENTS TO BE DELIVERED AT CLOSING BY SELLERS. In addition to the
Warranty Deed required at paragraph 3.b.3. above, Sellers shall deliver to Buyer at closing:
a. An affidavit from Sellers sufficient to remove any exception in Buyer's policy of
title insurance for mechanics' and materialmens' liens and rights of parties in
possession;
b. A "bring -down" certificate, certifying that all of the warranties made by Sellers in
this Agreement remain true as of the Closing Date;
C. Affidavit of Seller confirming that Sellers are not foreign persons within the
meaning of Section 1445 of the Internal Revenue Code;
d. Well disclosure certification, if required, or, if there is no well on the Property, the
Warranty Deed given pursuant to paragraph 3.b.3. above must include the
following statement: "The Seller certifies that the Seller does not know of any wells
on the described real property;"
e. Any notices, certificates, and affidavits regarding any private sewage systems,
underground storage tanks, and environmental conditions as may be required by
state or federal statutes, rules, or regulations;
f. An escrow agreement in order to escrow $3000 of the Sellers' proceeds at closing
with the title company to ensure that all personal property is removed by Sellers
from the Property; and
g. Any other documents reasonably required by Title or Sellers' attorney to evidence
that title to the Property is marketable and that Sellers have complied with the terms
of this Agreement.
5. CONTINGENCIES. Buyer's obligation to purchase the Property is contingent upon the
following:
a. Approval of this Agreement by Buyer's governing body;
b. Written findings by the Planning Commission of the City of Monticello that the
acquisition of the Property conforms to the City Comprehensive Plan;
2
MN325-49-898201.v2
Buyer conducting environmental investigations on the Property and receiving
reports that are satisfactory to Buyer; and
d. Buyer's determination of marketable title pursuant to paragraph 6 of this
Agreement.
Buyer shall have 30 days from the date of approval of this Agreement by the Buyer to remove or
waive the foregoing contingencies (the "Due Diligence Period"). These contingencies are solely
for the benefit of Buyer and may be waived by Buyer. If Buyer or its attorney gives written notice
to Sellers that all contingencies are duly satisfied or waived, Buyer and Sellers shall proceed to
close the transaction as contemplated herein.
If one or more of the contingencies is not satisfied, or is not satisfied within the Due Diligence
Period, and is not waived by Buyer, this Agreement shall thereupon be void at the written option
of Buyer, Buyer and Sellers shall execute and deliver to each other documentation effecting the
termination of this Agreement, and the Earnest Money shall be refunded to Buyer in full. Buyer
shall also deliver to Sellers copies of all documentation gathered during the Due Diligence Period,
including without limitation all surveys and any environmental or soil tests.
6. TITLE EXAMINATION/CURING TITLE DEFECTS. Buyer will, at its expense,
obtain a commitment for title insurance ("Commitment") for the Property from Title. Buyer shall
have 10 business days after the later of execution in full of this Agreement or receipt of the
Commitment to examine the Commitment and to deliver written objections to title, if any, to
Sellers, or Buyer's right to do so shall be deemed waived. Sellers shall have until the end of the
Due Diligence Period (or such later date as the parties may agree upon) to make title marketable,
at Sellers' cost. In the event that title to the Property cannot be made marketable or is not made
marketable by Sellers within the Due Diligence Period, then this Agreement may be terminated at
the option of Buyer.
7. ENVIRONMENTAL INVESTIGATIONS. Buyer acknowledges that it has been
authorized by Sellers to enter the Property and conduct environmental investigations of the
Property. Sellers shall provide to Buyer any environmental reports or information concerning the
Property in Sellers' possession at the time of execution of this Agreement. Buyer hereby agrees
to indemnify and hold Sellers harmless from and against any and all losses, claims, causes of
action, liabilities and costs of defense incurred by Sellers arising out of the actions of Buyer, its
agents, employees, contractors or invitees in carrying out Buyer's environmental investigations,
unless due to the negligence or willful misconduct of Sellers or its agents, employees or
contractors.
8. CLOSING DATE. The date of closing shall be October 31, 2023, or such later date as is
mutually agreed by the parties ("Closing Date"). Delivery of all papers and the closing shall be
made through escrow with Title, or at such other location as is mutually agreed upon by the parties.
All deliveries and notices to Buyer shall be made as provided in paragraph 17 of this Agreement.
9. POSSESSION. Sellers agree to deliver possession of the Property to Buyer on the
Closing Date. All personal property must be removed by Sellers prior to the Closing Date,
including but not limited to, the shed located on the Property. Any personal property or debris left
MN325-49-898201.v2
on the Property after the Closing Date will be disposed by Buyer at the expense of Sellers. The
amount of $3000 of the Sellers' proceeds shall be escrowed at the Closing by the title company in
oder to reimburse Buyer for any costs incurred by Buyer in removing and disposing of the Sellers'
personal property after the closing, including the shed. Any costs incurred by Buyer that are in
excess of $3000 shall be the responsibility of Sellers. In the event that Buyer's costs are less than
$3000, the remaining amount shall be refunded by the title company to Seller.
10. SELLERS' WARRANTIES AND REPRESENTATIONS. Sellers hereby represent
and warrant to Buyer and Sellers will represent and warrant to Buyer as of the Closing Date that:
a. Sewer and water. Sellers represent that to the best of Sellers' knowledge; the
Property is connected to City sewer and water.
b. Mechanics' Liens. Sellers warrant that, prior to the closing, Sellers shall pay in
full all amounts due for labor, materials, machinery, fixtures, or tools furnished
within the 120 days immediately preceding the closing in connection with
construction, alteration, or repair of any structure upon or improvement to the
Property caused by or resulting from any action of Sellers.
C. Notices. Sellers represent that Sellers have not received any notice from any
governmental authority as to violation of any law, ordinance, or regulation in
connection with the Property.
d. Tenants. Sellers warrant that there are no tenants or third parties in possession of
the Property. Sellers represent that the "Finders Keepers" shop that is currenly
operating on the Property is solely owned and operated by Sellers and is not a third
party in possession or a tenant.
e. Broker Commission. Sellers warrant that as of the date of this Agreement, there
is no agreement in effect with any broker, agent, or representative who shall be
entitled to any commission in connection with this transaction. Sellers agree to
indemnify, defend, and hold Buyer harmless from the claims of any broker, real
estate agent or similar party claiming through Sellers. Sellers further agree to
indemnify, defend, and hold Buyer harmless for any costs incurred by Buyer as a
result of any legal process to adjudicate any fees claimed by any broker, agent, or
representative in connection with this transaction.
f. Condemnation. Sellers have received no notice that there is any pending or, to the
actual knowledge of Sellers, threatened condemnation or similar proceeding
affecting the Property or any portion thereof, and Sellers have no actual knowledge
that any such action is contemplated.
g. Legal Proceedings. There are no legal actions, suits or other legal or
administrative proceedings, pending or threatened, that affect the Property or any
portion thereof, and Sellers have no knowledge that any such action is presently
contemplated.
4
MN325-49-898201.v2
h. Legal Capacity. Sellers have the legal capacity to enter into this Agreement.
Sellers have not filed, voluntarily or involuntarily, for bankruptcy relief within the
last year under the United States Bankruptcy Code, nor has any petition for
bankruptcy or receivership been filed against Sellers within the last year.
i. Methamphetamine Production. To the best of Sellers' knowledge,
methamphetamine production has not occurred on the Property.
Underground Tanks. To the best of Sellers' knowledge, the Property does not
contain any underground storage tanks of any size or description.
k. Wells. Sellers certify that the Sellers do not know of any wells on the Property.
Sewage Systems. Sellers do not know of any individual sewage treatment systems
on or serving the Property, or if any individual sewage treatment systems exist,
Sellers shall comply with all applicable statutory disclosure requirements regarding
such individual sewage treatment systems.
Sellers' representations and warranties set forth in this paragraph shall be continuing and are
deemed to be material to Buyer's execution of this Agreement and Buyer's performance of its
obligations hereunder. All such representations and warranties shall be true and correct on or as
of the Closing Date with the same force and effect as if made at that time; and all of such
representations and warranties shall survive closing and any cancellation or termination of this
Agreement, and shall not be affected by any investigation, verification or approval by any part
hereto or by anyone on behalf of any party hereto. Sellers agree to defend, indemnify, and hold
Buyer harmless for, from and against any loss, costs, damages, expenses, obligations, and
attorneys' fees incurred should an assertion, claim, demand, or cause of action be instituted, made,
or taken, which is contrary to or inconsistent with the representations or warranties contained
herein.
11. BUYER'S ACKNOWLEGEMENT. Buyer acknowledges and agrees that, except as
otherwise provided herein, having been given the opportunity to inspect the property and review
available information and documentation affecting the property, Buyer is relying solely on its own
investigation of the Property and review of such information and documentation. Buyer
acknowledges and agrees that no representations or statements have been made by Sellers in order
to induce Buyer to enter into this transaction other than as expressly stated herein, and that Buyer
has not relied upon any representations or statements other than as expressly stated herein. Buyer
further acknowledges and agrees that, except as expressly provided herein, the sale of the Property
as provided for herein is made on an "as -is, where is" condition and basis with all faults and
conditions (environmental and all other), and that Sellers have no obligation to make any
remediation, repairs, replacements, or improvements whatsoever.
12. CLOSING COSTS/RECORDING FEES/DEED TAX. At Closing, Sellers shall pay:
(a) prorated property taxes due and payable in the year of Closing through the Closing Date; (b)
any special assessment payments due and payable in the year of Closing; (c) the cost of any
documents required to clear title or to evidence marketable title, including fees and charges to
5
MN325-49-898201.v2
record such documents; (d) any operating costs of the Property up to the Closing Date; (e) one-
half of all closing fees customarily charged by Title; (f) one-half of any transfer or deed taxes due
as a result of this transaction; and (g) Sellers' legal fees. Buyer shall pay: (a) the costs of any
environmental investigation and survey costs ordered by Buyer; (b) costs of an initial title
commitment, title insurance and endorsements; (c) recording fees and charges related to the filing
of the Warranty Deed from Sellers; (d) one-half of any transfer or deed taxes due as a result of this
transaction; (e) prorated property taxes due and payable in the year of Closing on and after the
Closing Date; (f) special assessment payments due and payable in the year after Closing; (g) one-
half of all closing fees customarily charged by Title; and (h) Buyer's legal and accounting fees.
13. INSPECTIONS. From the date of this Agreement to the Closing Date, Buyer, its
employees, and agents, shall be entitled to enter upon the Property to conduct such surveying,
inspections, investigations, soil borings and testing, and drilling, monitoring, sampling, and testing
of groundwater monitoring wells, as Buyer shall elect. Buyer shall also be entitled to a general
walk-through inspection within five days of the Closing Date. Buyer shall immediately repair any
damage caused by its inspection activities.
14. INSURANCE; RISK OF LOSS.
a. If there is any loss or damage to the Property between the date hereof and the
Closing Date, for any reason including fire, vandalism, flood, earthquake or act of
God, the risk of loss shall be on Sellers. If the Property is destroyed or substantially
damaged before the Closing Date, this Agreement shall become null and void, at
Buyer's option. At the request of Buyer, Sellers agree to sign a cancellation of
Purchase Agreement.
b. Following the Closing Date, the Buyer shall procure and maintain property
insurance, with a minimum coverage of $600,000, against the Property. Buyer shall
assume all risk of damage or destruction to the Property following the Closing Date.
Sellers shall maintain commercial general liability insurance and renter's insurance
in an amount adequate to protect Sellers' interest in the Property until the Vacation
Date.
15. DEFAULT/REMEDIES. If Buyer defaults under this Agreement, Sellers have the right
to terminate this Agreement by giving written notice of such election to Buyer, pursuant to
Minnesota Statutes, Section 559.21. Time is of the essence of this Agreement. The termination
of this Agreement and retention by Sellers of the Earnest Money will be the sole remedy available
to Sellers for such default by Buyer, and Buyer will not be further liable for damages. If Sellers
default under this Agreement, Buyer shall have the right (i) to terminate this Agreement and
receive reimbursement of the Earnest Money, or (ii) to enforce and recover from Sellers specific
performance of this Agreement. The termination of this Agreement and reimbursement of the
Earnest Money or the enforcement and recovery from Sellers of specific performance of this
Agreement shall be the sole remedies available to Buyer for such default by Sellers, and Sellers
shall not be further liable for damages.
16. RELOCATION BENEFITS; INDEMNIFICATION. Sellers acknowledge that in the
6
MN325-49-898201.v2
event that Sellers are eligible for relocation assistance and benefits, the Purchase Price includes
compensation for any and all relocation assistance and benefits for which Sellers may be eligible,
including benefits for loss of going concern. The provisions of this paragraph shall survive closing
of the transaction contemplated by this Agreement.
For purposes of this Agreement, "relocation assistance and benefits" shall have the meanings
ascribed to them by the Uniform Relocation Assistance and Real Property Acquisition Policies
Act, 42 U.S.C. Sections 4601-4655 (the federal URA) and the regulations implementing the federal
URA, 49 C.F.R. Sections 24.1-24.603.
17. NOTICE. Any notice, demand, request, or other communication which may or shall be
given or served by the parties, shall be deemed to have been given or served on the date the same
is personally served upon one of the following indicated recipients for notices or is deposited in
the United States Mail, registered or certified, return receipt requested, postage prepaid and
addressed as follows:
SELLERS: James B. Wolff and Cheryl A. Wolff
P.O. Box 215
Monticello, MN 55362-0215
BUYER: City of Monticello Economic Development Authority
505 Walnut Street, Suite 1
Monticello, MN 55362
Attn: Executive Director
18. ENTIRE AGREEMENT. This Agreement, including exhibits attached hereto, and any
amendments hereto signed by the parties, shall constitute the entire agreement between Sellers and
Buyer and supersedes any other written or oral agreements between the parties relating to the
Property. This Agreement can be modified only in a writing properly signed on behalf of Sellers
and Buyer.
19. SURVIVAL. Notwithstanding any other provisions of law or court decision to the
contrary, the provisions of this Agreement shall survive closing.
20. BINDING EFFECT. This Agreement binds and benefits the parties and their successors
and assigns.
21. ELECTRONIC SIGNATURES; EXECUTION IN COUNTERPARTS. The electronic
signature of the parties to this Agreement shall be as valid as an original signature of such party
and shall be effective to bind the parties hereto. For purposes hereof, (i) "electronic signature"
means a manually signed original signature that is then transmitted by electronic means; and
(ii) "transmitted by electronic means" means sent in the form of a facsimile or sent via the internet
as a portable document format ("pdf ') or other replicating image attached to an electronic mail or
internet message. This Agreement may be simultaneously executed in several counterparts, each
of which shall be an original and all of which shall constitute but one and the same instrument.
7
MN325-49-898201.v2
(The remainder of this page is intentionally left blank)
MN325-49-898201.v2
IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date
and year above.
Buyer: Sellers:
City of Monticello Economic Development
Authority
LIZ
LOW
Its: President
M.
C
James B. Wolff
Its: Executive Director Cheryl A. Wolff
9
MN325-49-898201.v2
EXHIBIT A
Legal Description of ProppM
Lot 1, Block 34, Original Plat of Monticello, County of Wright, State of Minnesota.
PID 155-010-034010
A-1
MN325-49-898201.v2
i rd
Beaco "1 Wright County, MN
Overview
Parcel ID 155010034010 Alternate ID n/a
Sec/Twp/Rng 11-121-025 Class 233-3A COMMERCIAL LAND AND BUILDING
Property Address 216 PINE ST Acreage n/a
MONTICELLO
District (1101) CITY OF MONTICELLO-0882
Brief Tax Description SECT-11TWP-121 RANGE -025 ORIGINAL PLAT MONTICELLO
LOT -001 BLOCK -034
(Note: Not to be used on legal documents)
Date created: 9/7/2023
Last Data Uploaded: 9/7/2023 7:30:26 AM
Developed by(,, -`Schneider
GEOS43ATIAL
Legend
Roads
— CSAHCL
— CTYCL
— MUNICL
— PRIVATECL
— TWPCL
Highways
— Interstate
— State Hwy
— US Hwy
City/Township Limits
F1
❑t
❑ Parcels
Torrens
Owner Address JAMES B & CHERYL A WOLFF
5704 JACKSON ST NE
FRIDLEY, MN 55432
9/7/23, 11:06 AM
Wright County, MN
Summary
Beacon - Wright County, MN - Report: 155010034010
Parcel ID
155010034010
Property Address
216 PINE ST
MONTICELLO MN 55362
Sec/Twp/Rng
11-121-025
Brief
SECT -11 TWP-121 RANGE -025 ORIGINAL PLAT MONTICELLO LOT -001 BLOC
Tax Description
034
Dim 1
(Note: Not to be used on legal documents)
Deeded Acres
0.00
Class
233 - 3A COMMERCIAL LAND AND BUILDING
District
(1101) CITY OF MONTICELLO-0882
School District
0882
Note: Class refers to
Assessor's Classification Used For Property Tax Purposes
Owner
Primary Owner
JAMES B & CHERYL A WOLFF
5704 JACKSON ST NE
FRIDLEY MN 55432
GIS Acreage
Parcel: 155010034010
Acres: 0.25
Acres USAB: 0.25
Acres WATE: 0.00
Acres ROW: 0.00
Sq Ft:10,896.91
Land
f _.
https://beacon.schneidercorp.com/Application.aspx?ApplD=187&LayerlD=2505&PageTypelD=4&PagelD=1310&KeyValue=155010034010 1/5
Unit
Eff
Seq Code CER
Dim 1
Dim 2 Dim 3
Units
UT
Price Adj 1 Adj 2
Adj 3
Rate
Div %
Value
1 DOWNTOWN 0
0
0
0
10,897.000
S
11.000 25.00 0.00
0.00
13.747
1.000
149,800
2 BLACKTOP 1.50 SF 0
0
0
0
3,650.000
U
1.500 0.00 0.00
0.00
1.507
1.000
5,500
Total
10,897.000
155,300
Buildings
Building 1
Year Built 1974
Architecture N/A
Above Grade Living Area 0
Finished Basement Sgft 0
Construction Quality 06
Foundation Type CONC BLOCK
Frame Type (C) Frame with Concrete
Size/Shape
Exterior Walls FACE BRICK
Windows N/A
Roof Structure FLAT
Roof Cover N/A
Interior Walls N/A
Floor Cover N/A
Heat FORCED AI R
Air Conditioning CEN.EVAP
Bedrooms 0
Bathrooms N/A
Gross Building Area 1584
Sales
Multi Instr Qualified
Sale
Sale
Adjusted eCRV
Sale
S.S.
S.S. Rjt.
Transact
Parcel Type Sale Sale Date
Book Page
Type
Buyer
Seller
Price
Sale Price # eCRV
Type
Rcmd.
Rsn.
Num
N WD U 4/21/2005
1-
WOLFF
US
$145,000
$145,000 95623
1
14-
95623
Improved
JAMES
BANK
CFD/INT
NA
PA
https://beacon.schneidercorp.com/Application.aspx?ApplD=187&LayerlD=2505&PageTypelD=4&PagelD=1310&KeyValue=155010034010 1/5
9/7/23, 11:06 AM Beacon - Wright County, MN - Report: 155010034010
Recent Sales In Area
Sale date range:
From:
09/07/2020
To:
09/07/2023
lle�, by Neighborboo:
gales by Subdivision
1500
Feet
Sales by Distance
Transfer History
Grantor
Grantee
Recorded Date Doc Type
Doc No
CENTRAL MINNESOTA REALTY LTD
WOLFF JAMES
B; WOLFF CHERYLA
8/21/2023
QCD
1536702
WOLFF JAMES B; WOLFF CHERYL A
CENTRAL MINNESOTA REALTY LTD
11/3/2008
QCD
1101780
US BANK NA
WOLFF JAMES
B; WOLFF CHERYL
6/10/2005
LWD
962682
Note: Transfer History data is from LandLink beginning 01/01/2003.
Valuation
2023 Assessment
2022 Assessment
2021 Assessment
2020 Assessment
2019
Assessment
+ Estimated Land Value
$155,300
$116,100
$116,000
$116,000
$123,900
+ Estimated Building Value
$160,900
$128,000
$121,000
$114,000
$106,100
+ Estimated Machinery Value
$0
$0
$0
$0
$0
= Total Estimated Market Value
$316,200
$244,100
$237,000
$230,000
$230,000
Taxation
2022 Payable
2021 Payable
2020 Payable
2019 Payable
Estimated Market Value
$237,000
$230,000
$230,000
$224,000
- Excluded Value
$0
$0
$0
$0
- Homestead Exclusion
$0
$0
$0
$0
= Taxable Market Value
$237,000
$230,000
$230,000
$224,000
Net Taxes Due
$5,196.27
$4,985.27
$5,078.28
$5,043.29
+ Special Assessments
$689.73
$712.73
$735.72
$758.71
= Total Taxes Due
$5,886.00
$5,698.00
$5,814.00
$5,802.00
% Change
3.30%
r i r
0.21%
0.00%
Taxation (Preliminary 2023 Taxes Payable)
2023 Proposed
2022 Payable
Estimated Market Value
$244,000
$237,000
- Excluded Value
$0
$0
- Homestead Exclusion
$0
$0
= Taxable Market Value
$244,000
$237,000
Net Taxes Due
$4,677.26
$5,196.27
+ Special Assessments
$666.74
$689.73
= Total Taxes Due
$5,344.00
$5,886.00
% Change
3.30%
Taxes and Special Assessments Payable in 2023 are preliminary.
Taxes Paid
https://beacon.schneidercorp.com/Application.aspx?ApplD=187&LayerlD=2505&PageTypelD=4&PagelD=1310&KeyValue=155010034010 2/5
9/7/23, 11:06 AM
Beacon - Wright County, MN - Report: 155010034010
Receipt #
Receipt Print Date
Bill Pay Year
Amt Adi
Amt Write Off
Amt Charge
Amt Payment
1804486
10/17/2022
2022
$0.00
$0.00
$0.00
($2,943.00)
1770104
5/13/2022
2022
$0.00
$0.00
$0.00
($2,943.00)
1729213
10/14/2021
2021
$0.00
$0.00
$0.00
($2,849.00)
1694778
5/12/2021
2021
$0.00
$0.00
$0.00
($2,849.00)
1655320
10/15/2020
2020
$0.00
$0.00
$0.00
($2,907.00)
1620971
5/14/2020
2020
$0.00
$0.00
$0.00
($2,907.00)
1580499
10/16/2019
2019
$0.00
$0.00
$0.00
($2,901.00)
1540519
5/13/2019
2019
$0.00
$0.00
$0.00
($2,901.00)
1495122
10/11/2018
2018
$0.00
$0.00
$0.00
($2,770.00)
1452637
5/7/2018
2018
$0.00
$0.00
$0.00
($2,770.00)
1424687
10/17/2017
2017
$0.00
$0.00
$0.00
($3,195.00)
1372033
5/8/2017
2017
$0.00
$0.00
$0.00
($3,195.00)
1319498
10/6/2016
2016
$0.00
$0.00
$0.00
($2,902.00)
1274310
5/4/2016
2016
$0.00
$0.00
$0.00
($2,902.00)
Photos
Sketches
https://beacon.schneidercorp.com/Application.aspx?AppID=187&LayerlD=2505&PageTypeID=4&PageID=1310&KeyValue=155010034010 3/5
9/7/23, 11:06 AM
Map
Beacon - Wright County, MN - Report: 155010034010
CAN
0 'F
No data available for the following modules: Land GARP, Extra Features.
https://beacon.schneidercorp.com/Application.aspx?AppID=187&LayerlD=2505&PageTypelD=4&PagelD=1310&KeyValue=155010034010 4/5
i r.
(4,,,,Beacon Wright County, MN
Date created: 9/7/2023
Last Data Uploaded: 9/7/2023 7:30:26 AM
Developed by" Schneider
GEOSPATIAL 13 Loc
Overview
3
Legend
Roads
— CSAHCL
— CTYCL
MUNICL
— PRIVATECL
-- TWPCL
Highways
Interstate
-- State Hwy
._- US Hwy
City/Township Limits
F -1c
F]t
Parcels
Torrens
o 1 /o? 2.12-3
FAub(; ("',
e�5� � p =
AREAS OF ECONOMIC DEVELOPMENT FOCUS AND INVESTMENT
The following areas represent opportunities in the city to help drive
economic growth and further support the community's goals related to
economic development.
1. Industrial Land: This comprehensive plan designates approximately 1,600
acres of land for industrial uses, including land within the Northwest area,
south along Highway 25, and in the Otter Creek Business Park. In 2020, the
City completed an industrial feasibility study evaluating these areas in greater
detail for their industrial potential. In alignment with the goals and policies
of this chapter, the City should actively pursue the development of additional
industrial land through business attraction.
2. Oakwood Industrial Park: In alignment with the goals for advancement
of living wage employment and intensification of tax base, there is
opportunity to convert some parcels within Oakwood Industrial Park to
light manufacturing from their current heavy industrial uses and/or convert
large areas of unused land or outdoor storage. The City should explore
opportunities to use State redevelopment grants and rehabilitation programs
for these sites.
3. 1-94 Interchange and Highway 25 Interchange Area: The land uses and
parcel configurations in these key intersection areas may not be optimal.
The City should be prepared to work with property owners and developers
as market opportunities arise to better align these visible areas for future
reinvestment and/or redevelopment.
4. Downtown: The Downtown area, identified as Downtown Mixed Use
in this plan, represents a focused opportunity area. This includes specific
attention on the Walnut Corridor, Block 52, Block 34, and the Northeast
corner of Cedar Street and Broadway. Opportunities for improvement
include land uses consistent with the Downtown Small Area Plan as well as
streetscape, landscape and circulation improvements.
5. Mixed Neighborhood Areas: The City should work to maintain the oldest
residential neighborhoods in areas adjacent to the Downtown. Efforts should
be made to maintain housing choices, redevelopment where appropriate, the
introduction of neighborhood centers and the possible introduction of local
specialty retail where appropriate.
6. Highway 25 Corridor South: There are a number of areas and sites that
could present reinvestment and/or redevelopment opportunity along
Highway 25 south between 1-94 and School Boulevard. The Economic
Development Authority (EDA) should continue to work with property
owners on their desire to sell, redevelop and reinvest in their sites for
commercial development.
Downtown Monticello
Monticello Crossing Apartments
Carlisle Village Townhomes, Source: City of Monticello
128 ECONOMIC DEVELOPMENT
IMPLEMENTATION CHART: ECONOMIC DEVELOPMENT
SHORT- LONG- ONGOINGTHEME
TERM TERM
• • = • • •
MONTICELLO 2040 VISION + PLAN 225
Policy 2.3.- Local
Strategy 2.3.1- Proactively support small
Y
Partner Collaboration
business start-up efforts through funding
Work collaboratively with partners
and programs made available by the State
of Minnesota's Department of Employment,
)
i�
to foster the attraction of
Initiative Foundation and Economic
new businesses.
Development (DEED) and Wright County
Economic Development Partnership.
• • • • Policy 2.4:
Industrial and Business
Strategy2.4.1- Identify funding sources for
infrastructure and proactively engage
`•r
Site Analysis and Availability
a variety of partners to help complete the
)''
�■�
development of a new business park.
Identify, plan, and develop new
Strategy2.4.2- Develop partnerships to assist
industrial/business park areas
to ensure site availability for
with marketing and promotion of industrial/
industrial projects as existing
business park areas.
areas fully develop.
Strategy2.4.3- Monitor industrial land
absorption to help prioritize future site
development and readiness.
Strategy2.4.4- Investigate opportunities for
grants, legislation, transition aid, or bonding
funds to support industrial land
area development.
• Policy3.1: Downtown
Small Area Plan
Stmtegy3.1.1- Develop and support the
appropriate policies, programs, and incentives
�``4.
A
�■�
• •
that enable the type of development described
Use and implement the Downtown
in the Downtown Small Area Plan.
Small Area Plan as the guiding
_
• document to improve, develop and
•
redevelop Downtown.
Strategy3.1.2- Install improvements to the
downtown as envisioned in the Walnut Street
,<
(((
Corridor Plan.
JJJ
Strategy3.1.3 - Continue to build a funding
base for use in property acquisition and
redevelopment efforts in targeted areas.
Strategy3.1.4 - Continue to support the
facade improvement program and promote to
downtown business and property owners.
MONTICELLO 2040 VISION + PLAN 225
IMPLEMENTATION CHART: ECONOMIC DEVELOPMENT
SHORT- LONG- ONGOING THEME
TERM TERM
.
Policy 31 Downtown
Small Area Plan
Strategy 3.1.5- Continue to meet with
downtown property owners either in an informal
group setting or individually to understand
Continue to follow and implement
their concerns with traffic, parking, land use,
building improvements and reinvestment in their
!`
the Downtown Small Area Plan.
property as well as willingness to sell, partner,
price, etc.
Strategy 3.1.6- Encourage continued
incorporation of arts as an economic
(((
development tool for Downtown Monticello
)))
and the community at -large.
Strotegy3.1.7- Ensure trail and pedestrian/
cycle connections are considered within the
downtown and from the downtown to other
)
areas within the community.
Strategy3.1.8- Maintain and update annually
property availability maps for downtown
property or property investment parcels.
Policy 4.1.- Redevelopment
Strategy 4.1.1- Continue to focus on site control
for a potential future targeted redevelopment in
' ..
• - -
-
' -
• # - -
Continue to support redevelopment
efforts as identified in the
Downtown Small Area Plan and
in strategic opportunity areas
throughout the Community.
Block 52 as envisioned in the Downtown Small
Area Study Plan.
�((
))
Strategy 4.1.2 -Develop and implement
marketing of city -owned properties identified,,
for redevelopment, including Block 52, 34 and
Cedar Street/Broadway site.
1!
Strategy4.1.3- Reconnect Walnut Street to
River Street in support of redevelopment.
Strategy4.1.4 - Use the Block 52
redevelopment project as a catalyst and
template for future redevelopment projects in
))
)))
the downtown area.
Strategy 4.1.5- Remain open to strategic
opportunities for redevelopment throughout
the community in all land use categories .
226 '� 9 ( («(« IMPLEMENTATION
s4
Three Catalytic Projects in Downtown
Development Site 1—North Half of Block 52
This site is envisioned to be developed as a mixed use development, introducing
housing that fronts on the river, and offering a destination restaurant or other
prominent retail attraction. It would create a new buzz for downtown Monticello,
and draw customer traffic that would support the retailers on Broadway Street.
This site has the potential to be highly attractive for a developer, if certain
preconditions are present. Development is most likely if:
1. The site can be assembled in single ownership or controlled by a common
entity
2. There is a commitment to a special street on the Broadway -to -River block of
Walnut Street
3. A entertainment or restaurant entrepreneur/operator is secured in advance
for the signature retail space
4. Good traffic circulation is maintained around the block, and good access is
available to surface parking in the block interior
5. City and public support is present for development at a reasonable density
6. Public financial support is made available
The City will need to play a proactive and assertive role to advance these
conditions for success.
Development Site 2—South half of block between River and Front
Streets (Block 1)
This site is a premier location for new housing development, given its
proximity to the River and riverfront parks. It is well suited to townhome
development, or three story development with underground parking—with
the latter likely to be more viable financially. It could have larger units,
serving families, or smaller units, serving singles, couples and/or seniors.
New households in this location would support downtown retail stores, and
contributes to the center of energy and activity at River and Walnut.
Developing the site requires surmounting some challenges. It is in the
Shoreland Mississippi Wild Scenic and Recreational River District which
restricts the height of the development unless a variance is granted. The
property is in the ownership of three different property owners. And there
could be resistance to development at a scale that makes financial sense for a
developer.
Proactive work should be pursued to mitigate these concerns, through
additional site assembly, and continued steps to build public acceptance of
new development at a reasonable scale. The development of this site is likely
to require public financial support.
Development Site 3—Walnut Street between 4th and 5th Street
This site is an attractive location for high quality, attractive housing
development with underground parking, which fronts on Walnut Street.
It would contribute to a high-quality frontage along Walnut Street that
makes it feel like a walkable promenade from the river to the freeway. The
development could be targeted to empty nesters, millennials, downtown
workers, and/or seniors.
Proactive work can be pursued to increase development interest. This could
entail negotiating the acquisition of the Walnut Street frontage of the Wells
Fargo property, and replatting and rezoning the property so that it supports
the intended development. A developer will be looking for a sense of City and
public support for development at a reasonable density. The development of
this site is likely to require public financial support.
Retail Vitality Strategies
Retail vitality strategies are presented briefly in a preceding section, and in
more detail in the attached background report. Some key implementation
steps are noted here, which could be considered for initial actions.
• Business and property owner engagement. Successful retail vitality
efforts are almost always spearheaded through an organized stakeholder
group of business and property owners. This group chooses to work
collectively and creatively on a set of priority actions. Fostering this
collective will is the most essential element in effective action.
• Public sector support: Facade Improvement Program and Retail
recruitment : Investment of time and financial resources on the part
of business owners is enhanced by knowing that it is being supported
through a commitment of public sector time and resources. The
establishment of a grant program that matches business investments
with public funds is a great way to demonstrate that shared commitment.
the Plan recommends immediate investment is a facade improvement
program and a retail recruitment strategy.
Near and Mid Term Projects on City owned Properties
A. North Half of Block 52
B. South Half of Block 1
C. Open up Walnut Street, improve Broadway Crossing
D. Housing and public parking on block 35
E. Block 34 Development
F. Housing on Block 53
G. Redesign of Pine Street with County and MNDOT
H. Housing on Block 17
I. Redesign of Riverfront Parks
City of Monticello Downtown Small Area Plan I Implementation
Block 34 (public ownership in blue)
Most of the properties on Block 34 are
publicly owned. In addition, there are two
wells on the block that impact development.
Redevelopment is further challenged by
limitations on property access created by
medians on Broadway and Pine Street. The
site is attractive for "outbound" retail and the
plan recommends such a use to be located in
the base of a multi use building on the corner
of Pine and Broadway.
Bro
°1"StrPPtF
Frontage And Ground Floor Uses
Active (retail) uses are encouraged at
Pine Street and Broadway. Residential
frontages are encouraged on Cedar
Street. The remainder of the block is
flexible.
Active Frontage
Flexible Frontage (either Active or Residential)
Residential Frontage
Active Frontage
Bro
Q0h1
0
..- ... tF
� PPr `•.�.
Qi
i
< � / w
4thstrPPtF .� ` ` ` J,1
Setbacks, Pocket Parks & Open Space
Buildings should define the perimeter of
the block with a front facade zone between
5' and 15' of the front property line. The
two wells on site have 50' setbacks and
shou Id be incorporated into courtyards or
parking areas.
= Building Setback
•.•.....•. Well Setback
eroQ��QystrPe � �Q`re � : � dal .
�
e
i
CQ' "cow„ f _ aaS
4thstrPPt
F
Parking & Servicing
Primary access to mid block parking
should occur from Cedar Street and 4th
Street.
Surface Parking '
Access Way
cow �a�
Options
The two illustrations above show potential options for
development on Block 34 - both adhering to the guidelines.
The top illustration shows a development pattern that
assumes the property on Cedar Street remains.
City of Monticello Downtown Small Area Plan Character Areas a
Economic Development Authority Agenda: 09/13/2023
5A. Economic Development Manager's Report
Prepared by:
Meeting Date:
p Other Business
Economic Development Manager
09/13/2023
Reviewed by:
Approved by:
N/A
Economic Development Manager
REFERENCE AND BACKGROUND
1. The Wright County Economic Development Partnership (WCEDP) Summer Newsletter is
accessible in the link below. There are a variety of informative articles and event notices
included in the newsletter.
http://wrightpartnership.wpmktgengine.net/file red irect. lsp?siteOblectlD=23406915&fname=Septe
mber-2023-Newsletter.pdf&ebid=23406885&ebslid=1841637&upid=21274159&lid=151
2. Various childcare funding assistance programs are available through Initiative Foundation,
Little Falls, MN and First Children's Finance, Minneapolis, MN. Please see attached
information for funding opportunities for up to $10,000, $20,000 and $25,000 for center
or homebased childcare facility renovations. Exhibit A.
3. IEDC Hosted Business Roundtable Showcase Event — 3:00 p.m. to 5:00 p.m. on Thursday
September 14, 2023, at Nordic BrewPub, Monticello, MN; See event program lineup in the
attached Exhibit B.
4. Prospect List Update: See attached Exhibit C.
Jim Thares
From: Jolene Foss <JoleneF@wrightpartnership.org>
Sent: Wednesday, August 30, 2023 3:40 PM
To: Marc Weigle; Kelly Hinnenkamp; jthunander@annandale.mn.us; David Kelly; Taylor
Gronau; Annita Smythe; Brad Potter; Phil Kern; Jennifer Nash; Nick Haggenmiller; Renee
Eckerly; Jim Thares; Angela Schumann; CoM Utilities; Adam Flaherty; Sabrina Hille; Dan
Madsen; Melissa Stenson; Steve Bot; Marc Weigle; City Clerk
Subject: Important Support for Childcare Demand in our Cities
Attachments: 2022-MN-Activities-Impact- Repo rt.pdf
Importance: High
The Initiative Foundation continues to contract with First Children's Finance to help communities understand their
gap, like what the specific needs of their communities are (are you a commuting workforce, or local? Are
extended shifts needed? What is the mix of center and home base care in a community?), and then tailoring
solutions to fit local demographics and economically sustainable business models.
If a provider is willing to seek three bids from qualified vendors, Initiative Foundation can pay for
preliminary design for proposed new or expanded childcare facilities (both home based and center) for
up to $10,000.
Initiative Foundation is a Community Development Financial Institution (CDFI), and would happily lend to
a qualifying provider, including gap lending.
First Children's Finance is a nonprofit, 501c3 organization that for the past 30 years has worked to build
the supply and financial sustainability of excellent childcare in Minnesota. They
focus on the business side of childcare, providing training and consultation services to individual family
childcare programs and childcare centers, as well as working with rural communities to assess and
address their local childcare needs.
Candace at First Children's Finance says that several Wright County communities are in touch with them
now, but the Initiative Foundation feels that Wright County is the most underserved with childcare
supports of any County in our region.
First Children's Finance also still has nearly $8M in grants that they have to award before June 30, 2024
to support facility renovations for licensed providers (typically $25K for a center, $20K for a home)
needed for regulatory compliance.
Please contact me if you have any questions or reach directly to:
Jessica Gilder
CHILDCARE SOLUTIONS PROGRAMS OFFICER
jgilder@ifound.org
(320) 631-2030
Candace Cegla
Business Development Manager
(she/her/hers)
Direct: 320-288-2698
candacec@firstchildrensfinance.org
212 Third Avenue North, Suite 310
Minneapolis, MN 55401
www.firstchildrensfinance.org
Thank you so much and I hope this helps the childcare availability crisis in your Community.
Jolene
Jolene Foss
Executive Director
320.534.8344 Cell
763-496-5593 Office
3650 Braddock Ave NE
Buffalo, MN 55313
0 Ce
p
Wright County
Economic Development Partnership
Pa*.ering !ar opporfun'tVs
First Children's Finance
MINNESOTA
National reach, resources, and expertise for stronger child care
businesses and communities.
2022 Activities and Impact
Delivered
Provided 42 online training events, attended by a total of 958 child care
Onlineproviders.
All of our trainings are free to child care providers, and are
Develop -approved so that providers earn required professional development
Business
credits. Training topics include Precision Pricing; Quality Staffing; Separating
Trainings
Your Personal & Business Finances; Child Care Startup Bootcamp; and Policie
and Practices for your Family Child Care.
acilitated
Business
Facilitated 15 Business Leadership Cohorts for a total of 120 child care
providers. The BLC cohort is an intensive series of four trainings plus two
eadership
consultation sessions including in-depth financial analysis and financia
Cohorts
goal setting.
Supported Provided three Community Conversations Cohorts to 30 BIPOC providers
BIPOC This cohort is tailored to child care business owners of color, leveraginc
Child Care connections within communities of color to build skills in business
Providers management and access to capital.
Provided Provided business consultation and technical assistance to 1,607 child care
Business businesses in Minnesota. Consulting services include financial analysis,
guidance on program pricing and market rates, and child care enrollment
Consultation management using our proprietary financial tools designed specifically for
Services child care businesses.
First Children's Finance
Worked with 9 communities in greater Minnesota through our Rural Child Care Innovation
Program. FCF staff provide a process to measure community child care needs and to bring
community members together to find right -size solutions to address those needs.
Provided consultation services to a further 31 rural communities, such as Strategic Supply Plans,
Child Care Studies and analysis of the local child care supply/demand gap.
FCF is the only Community Development Financial Institution (CDFI) in the US
whose entire lending portfolio is child care businesses. We lend to both
Licensed Family Child Care programs and Child Care Centers. In 2022, our Loan
Fund provided financing to 132 Minnesota child care businesses:
$479,000 in traditional loans to 22 child care businesses
$792,500 in forgivable loans to 110 child care businesses
Provided Facility Revitalization Grants to 1,177 Child Care Business Owners
in Minnesota totaling more than $11.3 million
59% to Greater Minnesota / 41% to seven County Metro
66% to Family Child Care providers / 34% to Child Care Centers
.111111
15% of funds were awarded to BIPOC child care providers
In 2022 FCF's work resulted in the
preservation or creation of 11,451 child care
slots and the preservation or creation of 1,842
�hilrl �nro inhe
201BUSINESS
2 3)) RO N TA LE
Hosted by the City of Monticello I EDC
to highlight funding opportunities for local businesses!
DATE: September 14,2023
� TIME: 3 .5 p.m.
PLACE: Nordic BrewPub
sao Cedar Street, Monticello, Mn
3:15 p.m. Introduction: Event Purpose & Format and Recognize
Sponsors - Sarah Kortmansky, IEDC Chairperson, Jim
Thares, City of Monticello Economic Development Manager
3:25 p.m. Presenter Introductions
3:30 p.m. Initiative Foundation Programs
- Dan Bullert
3:45 p.m. MN Department of Employment & Economic Development
- Dave Heyer
4:00 p.m. Wright County Economic Development Partnership
- Tim Zipoy
4:10 p.m. City of Monticello Economic Development Authority
- Jim Thares
4:25 p.m. Open questions, discussion with all financial resource
providers at tables. (Other financial assistance providers
include: MBFC, CMDC, Women Venture)
5:00 p.m. Event wrap-up and comments
(casual, no formal closing planned)
Date of
Company Name
Business Category
Project Description
Contact
IL
Retained lobs New lobs
Total Investment
5/22/2018
Karlsburger Foods
Food Products Mfg.
Facilty Expansion
11/29/2018
Project Blitzen
Precision Machining
Exist Bldg or New Const.
3/28/2019
Project Nutt
Co -Working Space
Existing Building
5/9/2019
Project FSJP
Light Mfg -Res. Lab
New Construction
8/16/2019
Project Jaguar
Office
New Construction
1/20/2020
Project Panda v3
Service -Child Care
New Construction
12/23/20- 6-
Project TDBBST
Industrial
New Construction
30-22
$1,400,000
Active Search
22,000 sq. ft.
2/16/2021
Project Cold
Industrial -Warehouse -Di
New Construction
10,500 sq. ft.
0
stri
$4,100,000
3/19/2021
Project Orion
Warehouse-Distributi
on
New Construction
2/28/2022
Project Emma II
Light Ind -Assembly
New Construction
6/16/2021
Project UBAA
Child Care Services
New Construction or Exist
6/30/2021
Project Ecosphere
Industrial Tech Mfg.
New Construction
09/08/2023
Project BA710
Lt Assem-Distribute
New Construction 6,500 to 7,000 sq. ft 0
10 $650,000
Building -Facility
Retained lobs New lobs
Total Investment
Project Status
New Construction 42,000 sq. ft.
40 $3,600,000
Active Search
2/7/2022
Project Shepherd
III
20,000 sq. ft. +/-
42
10 to
$4,500,000
On Hold
Project Cougar
Precision Machining -Mfg.
20
38 $4,700,000
Active Search
12,000 sq. ft.
10
$1,200,000
Concept Stage
?
?
?
?
Concept stage
20,000 sq. ft.
0
20+/-
$1,400,000
Active Search
22,000 sq. ft.
22
4
$2,700,000
Active Search
10,500 sq. ft.
0
21
$4,100,000
Active Search
10,000 to 15,000 sq.
0
9
$1,850,000
Concept Stage
ft.
80,000 sq. ft.
0
21
$12,000,000
Concept Stage
832,500 sq. ft.
0
500
$125,000,000
Active Search
20,OOOsq. ff.
0
4
$1,350,000
Active Search
5,000 sq. ft.
0
14 to 19
$2,000,000
Act Search
1,000,000 sq. ft.
0
1122
$85,000,000
Act Search
7/29/2021
Project BA710
Lt Assem-Distribute
New Construction 6,500 to 7,000 sq. ft 0
10 $650,000
Active Search
10/28/2021
Project Stallion
Technology Servicer
New Construction 42,000 sq. ft.
40 $3,600,000
Active Search
2/7/2022
Project Shepherd
III
Lt Assembly Distribution
New Construction 75,000 sq. ft.
75 $10,500,000
Active Search
4/28/2022
Project Cougar
Precision Machining -Mfg.
New Construction 35,000 to 45,000 sq. ft.
38 $4,700,000
Active Search
Date of
Contact
Company Name Business Category Project Description
8/11/2022
Project Sing Precision Machining New Construction
300,000 sq. ft.? 0 50? $70 to $80,000,000 Active Search
10/28/2022
ProjectlAG Mfg. New Construction
20
$5,800,000
11/9/2022
Project Tea
Mfg
New Construction
250,000
12/13/2022
Project Love
Mfg
New Construction
4/20/2023
Project Lodge DH1
Lodging -Service
New Construction
Active Search
4/20/2023
Project Lodge RS2
Lodging Service
New Construction
?
$9,500,000 to
$12,500,000
Active Search
4/26/2023
Project Lodge DO
Lodging Service
New Construction
5/30/2023 Project Flower -M Commercial Concept Expansion
&M
6/9/2023 Project Pez Mfg New Construction 1 6,000 to 8,500 sq. ft. 1 12
09/08/2023
Building -Facility Retained lobs New lobs Total Investment Project Status
400,000 sq. ft. 0 500 $90,000,000 Active Search
300,000 sq. ft.? 0 50? $70 to $80,000,000 Active Search
25,000 sq. ft.
55
20
$5,800,000
Active Search
250,000
130
$24,000,000
Active Search
?
?
?
$9,500,000 to
$12,500,000
Active Search
?
?
?
$9,500,000 to
$12,500,000
Active Search
?
?
?
$9,500,000 to
$12,500,000
Active Search
?
?
?
?
Concept
7/1/2023 1 Project V I ' I New Construction
8/16/2023 Project Lodge RT4 Lodging-Hopsitality New Construction
8/31/2023 Project Enclave- Industrial - Warehouse- New Construction
W300 Distr
2 1 $1.300,000 1 Active Search
150,000 + sq. ft. I I ? 1 $16,000,000 1 Active Search
? N/A ? $11,500,000 to Active Search
$14,500,000
300,000 N/A ? $30,000,000 to Active Search
$34,000,000
09/08/2023
Date of Company Name Business Category Project Description Building -Facility Retained lobs New lobs Total Investment Project Status
Contact
Contacts: M
= 04 YTD =