Cost of Land, Construction, Equipment, and Development

Factors that would have to be taken into consideration in the establishment of a new central retail market, if the project were to be made self-liquidating, would include the purchase price of the land, cost of preparing the land for construction, cost of construction, cost of the equipment provided in the market building, other developments, and operational costs.

Cost of Land in Market Sites

In the layout as shown in figure 4, it has been estimated that a plot of land, approximately 200 feet in width and 312 feet in length, would be required to construct the market house, including the outside stands, outer drive, and streets to the market house. This area does not include all the outside space for parking that cay be desired. The need for additional parking space would depend upon the site selected. It either site No. 1 or No. 2 were selected, the city-owned perking lot immediately adjacent to the Widlar Company would be readily accessible to the market. On the basis of 180 percent of the assessed value, the comparative cost of land, including the buildings on it, would be as follows.^[1]

It has been estimated that the cost of placing the land in condition for construction on either site would be approximately the same. Under present conditions, a wrecking company might raze the buildings on the sites for the materials to be salvaged therefrom. Since both sites are relatively level, it is not anticipated that any fill would be required; therefore, no extra cost is included to cover this item.

Estimated Cost of Buildings and Equipment

The estimated cost of constructing the facilities as described and as shown in figure 4, and of the equipment recommended would be the same on either of the proposed sites. Based upon costs of labor and materials in the Cleveland area as of January 1948, these costs would be as follows:

Engineering fees are not included in the above estimates because the city provides this service.

These estimates are used for illustration and are not intended to replace any estimate that might be made by local architects or contractors who bid on the final plans. Cost of labor and materials in Cleveland for the market house structure and the equipment recommended may vary somewhat from costs shown for the area as a whole, and at the time of construction they may differ from the costs at the time of the estimate.

Taxes

Since the city would own the facility, no taxes would be levied against it.

Annual Interest and Principal Payments

It the market is to be self-liquidating, the investment must be amortized from market revenue. Since existing legislation in Ohio prevents the city from issuing bonds with a maturity date of more than 25 years, the calculations shown herein are based upon a 25-year liquidation period. It should be pointed out that there is no urgent need to attempt to liquidate in a short time the cost of land and structural developments of a market in a city like Cleveland. The city would own the land under any circumstances, and land has a tendency to increase in value over a long period. If it were not for the existence of the legislation requiring the liquidation within 25 years, a longer period would be recommended.

It is contemplated that the city would issue bonds to cover the cost of the proposed new retail market. These bonds should be made subject to call on any interest payment date so that in years when revenues exceed expenses, including principal and interest payments, a larger amount of bonds than planned may be paid off. Host city bonds at the time of this study were being sold at about 2 percent interest. For purposes of this report, a rate of 3 percent is used because the bonds should be made callable and it may not be possible to secure the funds needed at the present going rate under these circumstances.

If the land were purchased at 180 percent of the assessed value, the total investment in land, buildings, and equipment would be $1,151,615 on site No. 1 and $904,961 on site No. 2. It the cost of the land and buildings approximate these estimated values, the city will not have sufficient funds to build a market on site No. 1 with the $1,000,000 bonds earmarked for this purpose.

The annual interest and principal payments needed to liquidate the $1,151,615 investment on site no. 1, in a period or 25 years at 3 percent interest, would be $66,137. For the total investment of $904,961 on site No. 2, an annual interest and principal payment of $51,972 would be required.

Estimated Annual Cost Management

In any market provision must be made for funds to pay for salaries, the upkeep of facilities and equipment, and other miscellaneous expenses. For the proposed market in Cleveland, these costs are estimated to be $48,800, as shown below.

No allowance was made for the cost of operating the parking-lot facilities because the officials of the city stated that State legislation prevented the city from operating parking facilities for income; the parking facilities therefore would have to be leased to a private operator.