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HomeMy WebLinkAboutSP June 23, 1980 [ ~ 01 ANDOVER SPECIAL CITY COUNCIL MEETING - JUNE 23, 1980 AGENDA 1. Call to Order - 7:30 P.M. 2. Agenda Approval 3. Interviews - Planning & Zoning Commission Members (Select two persons - One term to expire 12/31/80, the other 12/31/81) 7: 40 - David Fife (Mr. Fife's hours have been changed; he called today requesting his name be withdrawn.) 8:00 - Jerry Johnson 8:20 - Peter Rauen 8:40 - John Schirer 4. Springsted, Inc. (General Discussion) a. Policy - Industrial Revenue Bonds b. Financing - Southwest Area c. Trunk Connection Charges 5. Change Date/1980-4 Public Hearing A change in the Public Hearing Date from July 9 to July 14, or July 16 will not cause any problems with the project completion. 6. 7. - --.'-- - . [ ~ 01 ANDOVER SPECIAL CITY COUNCIL MEETING - JUNE 23, 1980 i~INUTES A Special Meeting of the Andover City Council was called to order by Mayor Jerry Windschit1 On June 23, 1980, 7:30 p.m., at the Andover City Hall, 1585 Crosstown Boulevard NW, for the purpose of interviewing applications for appointment to the Andover Planning and Zoning Commission; to meet with the City's fiscal consultant to discuss several financing matters; and to change the public hearing date for the 1980-4 improvement project. Councilmen present: Jacobson, Lachinski, Orttel, Peach Councilmen absent: None Also present: City Clerk, P. K. Lindquist and Planning and Zoning Chairperson, d'Arcy Bose11 SOUTHWEST AREA Ii1PROVEt·IENT PROJECT - TRUNK CONNECTION CHARGES There was a brief discussion on the question of oversizing costs of the sanitary sewer trunk line in this project. It was felt that the oversizing costs of that trunk line were not included in the $870 per acre assessment for trunk charge, the estimated cost presented at the public hearing. It is the Council's intent that this and future projects would contribute to the oversizing costs that were borne in total by the previous pro- jects; thereby allowing for a rebate to those in the original projects to equalize the charges among all those being served by the trunk line. It was also noted that the feasibility y·eport does not indicate the number of undeveloped areas within the project area that would oe assessed the trunk connection charge. Discuss10n was on the pyocedure of assessing for the oversizing costs as it relates to this project, previous projects, and future projects, including the suggestion of possibly constructing the trunk line to its termination to simplify the assessment and calculation of any rebate to past projects. It was noted that undeveloped land in previous projects have not yet paid the trunk assessment as those projects were charged on a connection-charge basis to be paid at the time of development; but those properties were not included in the public hearing for this project to change the assessment to an area basis for the trunk cOnnection charges. It may be that the $1,070 per-acre assessment estimated at the informational meeting by TKDA is the more accurate figure, in which case there would be a $200 per-acre difference in estimated per-acre assessment for trunk charge. (Coijnci1man Peach responded to a fire call at 7:45 p.m.) Discussion on this item was continued after the Planning and Zoning Commission interviews. PLANNING AND ZONING COMMISSION INTERVIEWS Jerry Johnson, John Scherer, and Peter Rauen were interviewed by the Council. Each applicant was asked a series of pre-determined questions alternately by the Councilmen, plus several other questions relative to individual work, conflict of interest, reasons for applying for the position, and whether or not they feel they have the time necessary to carry out the duties of the position. Recess at 8:52; reconvene at 9:03 p.m. SELECTION OF P & Z MEMBERS MOTION by Orttel, Seconded by Jacobson, that we appoint Jerry Johnson to fill the P & Z term to expire 12/31/81. Motion carried on a 4-yes, 1-absent vote. MOTION by Jacobson, Seconded by Lachinski, that we appoint John Scherer for the term to expire 12/31/80. Motion carried on a 4-yes, l-absent vote. [ Special City Council Meeting June 23, 1980 - Minutes Page 2 SPRINGSTED, INC. - POLICY - INDUSTRIAL REVENUE BONDS (Councilman Peach returned to the meeting - 9:08 p.m.) King Forness of Springsted, Inc., discussed Industrial Revenue Bonds with the Council, their affect on the City, their purpose, etc. He explained that Industrial Revenue Bonds permit the City to lend its name and its ability to finance on a tax exempt basis, which is at a lower interest rate, to certain businesses. He estimated on today's market that the interest rate for industrial revenue bonds would be 10 to 11 percent. The benefit for the municipality is that it hopefully will provide jobs, provides shopping facilities, provides increased tax base, etc., and can be a tool to help bring in the kinds of businesses the City wants to have in its community. Mr. Forness stated that it is not necessary, but he strongly recommends that the City have a policy of specific guidelines to use when considering applications for Industrial Revenue Bonds. He presented copies of two or three samples of the kinds of things the City may wish to consider incorporating into a policy. Mr. Forness stated he has talked to Roger Gordon, who is the attorney for Wayne Anderson, developer for the proposed Rademacher shopping center. From their standpoint, they apparently have an option on the land, which expired June 1 and which has been extended for 60 days to August 1. If the land costs are to be included in an Industrial Bond issue, the City wi 11 have to have adopted the "comfort reso lution", the pre 1 imi nary reso 1uti on indicating the City intends to go along with the Industrial Revenue Bonds,before they exercise the option to buy the land. Therefore, if it is the City's desire to consider Industrial Revenue Bonds for the Rademacher shopping center, from a time standpoint, it is important that the City proceed within that time frame. A public hearing must be held before the Resolution is adopted; and in this case, before August 1. Mr. Forness answered questions Councilmen had about Industrial Revenue Bonds, stating that the purpose is to help businesses where, technically speaking, no other financing is available. Tax Exempt Mortgages come under the same law. Mr. Forness felt it would be better for the application to get a Tax Exempt note if possible, as it is simp1ier to process the application and in the information that has to be given to potential investors. A Tax Exempt note will be placed with only a few institutional investors, whereas the sale of Industrial Revenue Bonds are marketed pub1ica11y and sold, often times, to private investors, and more thorough information on the application is needed. There is no direct financial obligation on the part of the City. And there is no authority for the City to levy taxes to support this bond; although there may be a moral responsibility to look for a tenant in the event the application would default, but there is no direct obligation to do so. Mr. Forness didn't think that approving one applicaton for Industrial Revenue Bonds would necessarily set a precedent for approving other applications. Without any cause whatsoever, the Council can accept or rejct any application. Also, there is no direct effect on the City's credit rating from Industrial Revenue Bonds or Tax Exempt Mortgages. There is no correlation between the interest paid on IRBs and the interest rate paid on normal municipal bonds for improvement projects in the City, although supply and demand may dictate the City may have to pay more on its street bonds to make them attractive enough to compete with the IRBs. However, everyone else is doing it, and he felt that it would be better to establish the policies for things desired in the community. He also felt these policies would relate to what type of public service costs the City is apt to incur in terms of fire protection, streets, etc. The City can also charge a flat fee for its preliminary expenses. Some cities require a specific amount (anywhere from $200 to $1,000) at the time of application, plus an escrow of 1/2 of 1 percent of the bond amount used to pay attorneys, financial advisors, etc. Whatever is left would be returned to the applicant. If there is not enough, the applicant agrees to pay the difference. The cost of processing the application is not necessarily related to the amount of the bond. The City will not incur any more costs relative to the bond once it has been issued and the bond signed. I . Special City Council Meeting June 23, 1980 - Minutes Page 3 (Springsted, Inc., - Policy - Industrial Revenue Bonds, Continued) Mr. Forness gave the Council sample policies of several municipalities, plus a sample of the application form for Savage. Council then discussed the procedure to establish a policy. It was generally agreed that the City policy for the issuance of IRBs or Tax Exempt Mortgages can be done through a Resolution; that the Councilmen will review the sample policies and give their recommendations to the City Clerk at the July 1 Council meeting, after which the Clerk and Mr. Forness will finalize a City policy for Council discussion and adoption at the July 15 meeting; and that the application form used by Savage be modified for Andover's use. Generally, once a policy is established, those wishing to apply for IRBs or Tax Exempt Mortgages would be given copies of the application and the policy and be required to have the information back within a specified time period, 30 days for example, prior to a public hearing. In the Rademacher case, the Council may want to make an exception because of the time period involved, with the understanding that the City is just establishing the procedure. With the adoption of an application form, Rademacher and Associates would begin gathering data immediately while the Council establishes the policies and guidelines. Mr. Forness will contact Mr. Gordon relaying the Council's position, noting that at this point it is the understandi~g that the City is not approving the application, but that it is a beginning to determine the type of things the City is wanting to know and is bending somewhat to help them comply with the August 1 time frame. Council also agreed that at the July 1 meeting, they will schedule a public hearing on the Rademacher application to be set for approximately the last week in July. Rademacher's application should be back to the City by July ,15. They will be required to pay the application fee and escrow funds with the application. MOTION by Lachinski, Seconded by Peach, that we adopt the questionnaire as presented by Springsted, Inc., for our application for issuance of Industrial Revenue Bonds and that the escrow provision for application be set at $500 plus 1/2 of 1 percent of the requested bond amount, and· all references to the City of Savage be changed to City of Andover. Motion carried unanimously. SPRINGSTED, INC., - FINANCING - SOUTHWEST AREA Mr. Forness stated that TKDA is still proposing taking bids for the Southwest Area project On August 22, with Council acting on the bids on August 26. Discussion was on the date for the bond sale; that it may be in the City's best interest to have the bond sale prior to Council action on the bids so that the financing is secured prior to awarding contract; also noting there is a possibility of another street improvement project in the northwest area of the City, which, if ordered, could be included in this bond sale. The problem with selling bonds prior to receiving bids is that the specific costs of the project are not yet known, and there could be an arbitrage problem if bids are considerably under the amount of bonds sold. However, by waiting until awarding contract for the project before selling bonds, the City would have to make the first payment to the contractor prior to receiving monies from the bond. Council generally agreed to have Mr. Forness talk with John Davidson relative to the project and its costs and to have the bond sale for August 26. Council also agreed to change the date of the Public Hearing for the northwest area improvement project (1980-4) because of the holiday week to the July 15 regular Council meeting, which will also be enough time to have that project included in the Southwest Area bond issue should any portion of the northwest project be ordered. [ Special City Council Meeting June 23, 1980 - Minutes Page 4 (Springsted, Inc., - Financing - Southwest Area, Continued) MOTION by Orttel, Seconded by Jacobson, that we change from July 9 to July 15, 7:30 p.m., at the Andover City Hall as the time and place for the public hearing on the northwest area street improvements, with the public portion of the public hearing to last no longer than to 8:30 p.m., with the Council discussion to last not more than 30 minutes. Motion carried unanimously. Mr. Forness stated that it would be agreeable that the bond sale for August 26 be set at the first regularly scheduled council meeting in August. Council agreed to have the City Engineer determine how the various methods of assessing would affect individual assessments in the northwest area street project, such as having a maximum assessment of 200 feet on a lot and either having the City pick up the remainder or spreading that cost back among all property owners in the project. Mr. Winner is to have that information available for the public hearing on July 15 on the 1980-4 project. SPRINGSTED, INC. - TRUNK CONNECTION CHARGES Mayor Windschit1 explained the problem to Mr. Forness which was discussed at the beginning of the meeting. It was agreed that a separate meeting will need to be set to discuss this further with Mr. Forness and with TKDA Engineers. It is intended that after the trunk line is constructed to its termination, that every- one will have paid equally for the oversizing costs. Therefore, those paying the connection charges in prior projects will need to be given a rebate, as the disparity is so great, and monies for that rebate should be coming from the extension of the sewer. The City must also establish some method of returning the money to those paying connection charges in previous projects. Mr. Forness was asked to research the following questions: Can the City hold a supplemental assessment hearing to reduce the assessment for those previous projects? Can those in the new projects be charged a higher sewer user rate to, in effect; pay for their own sewer user rates plus for those in the previous project area until it is evened out, that is until they have paid for their share of the trunk oversizing costs? At this time, after the project has been done, can the City legally reassess those undeveloped lands that were included in previous projects but that have not yet paid the trunk connection charges, to reassess them On an area assessment basis as is being proposed for the trunk charges in the Southwest Area Improvements Project? Those undeveloped lands, vacant lots, etc., basically east of Coon Creek were not included in the public hearing for the Southwest Area project. Is there going to be a problem in the 75-1 project with changing the assessment policy or giving rebates, as that project is under FHA financing? In addition, the following information will be needed: Is the acreage of the undeveloped land in the Southwest Area Improvement project used to arrived at the $870 per acre area trunk charge assessment in TKDA's feasibility study? Does $870 per acre include any oversizing costs? How many acres of undeveloped land is being included in this project? What amount of the oversizing cost is going to be absorbed by this project and how is the City going to deal with the entire sewered area relative to oversizing costs? It will be necessary to have an itemization of all the properties in the sewered area, what has been charged each property so far, and how many acres per lot there is. What other potential areas can be included? What is the dollar figure that the original projects paid for in oversizing costs, that difference in what they would have needed if there was no oversizing built into the system? Special City Council Meeting June 23, 1980 - Minutes Page 5 (Springsted, Inc., - Trunk Connection Charges, Continued) It was agreed that Mr. Winner can review the TKDA Feasibility Study for the Southwest Area to determine whether the oversizing is included in the area trunk assessment charge. Mr. King can report on establishing a policy On this item, and wi 11 work with TKDA to obtain the necessary figures. It was also agreed that the Clerk would work on this further, with authority to use whatever resources are needed to obtain information, attempting to have it resolved for Council discussion by July 15 or the August 5 regular City Council meeting. MOTION by Orttel, Seconded by Lachinski, to adjourn. Motion carried unanimously. Meeting adjourned at 10:59 p.m. \~~,~~",:::2¿~_ Marc~la A. Peach Recor ing Secretary