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HomeMy WebLinkAboutSP August 21, 1986 CITY of ANDOVER SPECIAL CITY COUNCIL MEETING - AUGUST 21, 1986 AGENDA l. Call to order - 7:30 P.M. 2. Public Hearing - Tax Increment Financing District (Shopping Center Site) Continued August 19, 1986 Meeting 3. Approve Specifications for Rural Street Construction 4. Conroy Assessment Split 5. Lower Rum River Water Management Organization Budget 6 . Andover vs. M.R. Olson 7. Request County to Remove Designation from Crooked Lake Boulevard 8 . Joint Meeting 9 . Budget Discussion 10. Comprehensive Sanitary Sewer Plan/Authorization ll. Appoint Deputy Clerk August 21, 1986 Items 12.. Computer Demonstration 13. Meeting Date/M. LaPanta 14. Dehn's Addition/Round Lake Storm Drainge/86-l9 15. 16. Adjournment CITY of ANDOVER SPECIAL CITY COUNCIL MEETING - AUGUST 21, 1986 MINUTES A Special Meeting of the Andover City Council was called to order by Mayor Jerry Windschit1 on August 21,1986,7:35 p.m., at the Andover City Hall, 1685 Crosstown Boulevard NW, Andover, Minnesota. Councilmen present: Elling, Lachinski, Orttel Councilman absent: Kni ght A lso present: City Attorney, William G. Hawkins; City Administrator/ Engineer, James Schrantz; and others PUBLIC HEARING - TAX INCREMENT FINANCING DISTRICT (SHOPPING CENTER SITE) Jeff Wickert, representin~ Boisclaire Corporation - reviewed the proposed Tax Increment Flnanclng Dlstrlct 1-2, notlng the strlp center is to be deleted from the district. He stated they are going through a rep1atting of the site, which will make it easier to describe. Counci 1 also reviewed with those present the substitutions made to the proposal of modifying Tax Increment District 1, which is being redesignated as District 1-1, the addition of the administrative expenses to the budget sheet, and the correction of the one parcel that is to be acquired and sold back to the developer after the improvements have been made. James Casserly, Miller & Schroeder Financial, Inc. - then reviewed the structure of the proJect. ThlS plan lS allowing the Clty to provide an investment in this project by paying for public improvements with funds from the tax increment financing plan. The developers are putting on a project which provides' for an estimated market value of $3,346,833, representing $1.65 per square foot in taxes for a net renta 1 space. The net rental space in the project is 91,500 square feet. To be competitive in the marketplace, the developer is agreeing to $1.65 per square foot as a mjnimum guarantee in taxes. That equates to captured taxes off this project of $1,439,160. Mr. Casserly then explained the size of the bond the City could issue today on that project would be for a value of approximately $812,000 toward the project. The project has contemplated approximately $900,000 would be needed to make it work. The approach has been to use about half that amount for land write-down and the other half for the public improvements. It is also anticipated that approximately $600,000 of those funds would be an outright investment by the City in the project, and approximately $300,000 would be a loan by the City to the project, that loan to be repaid over approximately a IS-year period at 5\ percent interest. The loan repayments could be used to offset any contribution that would be lost as a result of fiscal disparities, so the City would never have an impact from fiscal disparities. I Mr. Casserly went on to explain the contract lays out in detail when the funds are to be expended by the City, and it includes $65,000 for signalization the City feels would be necessary for safety and traffic management next to the project. The costs of establishing the plan, the bond issue, fees, and expenses,1 etc., are to be paid from the bond proceeds. The contract also spells out the method of securities, some of which are still to be determined. Special City Council Meeting August 21, 1986 - Minutes Page 2 (Public Hearing - Tax Increment Financing District/Shopping Center, Continued) r1r. Casserly then outlined the three issues which remain to be resolved: 1) The length of the district and/or term of the bond issue needs to be established. They don't need to be the same, suggesting the district be a couple years longer than the bond issue itself. The term of the bond is 17 years with a call half way through. 2) The level of public support of investment needs to be established. Using current market conditions, the City can support a project investment of $812,000. On top of that is the $65,000 for signalization plus approximately $45,000 for all costs associated with establishing the project. The bond would be sold for $1,025,000. It was est·imated the taxable interest rate at 9.3 percent after discount. 3) The Council needs to determine the securities desired. Persona 1 guarantees on this have always been contemplated, but the Council may wish to consider something additional. Counci 1 agreed to leave the term of the bond at 17 years and to set the length of the district at 20 years. Council then discussed the level of public support. Because of the negative arbitrage, Mr. Casserly advised the bonds not be sold immediately. Under the terms of the agreement, the funds from the tax increment financing bond would be the last dollars going into the project, anticipating those funds would not be needed until next April or May. Therefore, the bond would not be sold until March, which could mean a variation in the dollar amounts because of a~ change in interest rates. Th e concept is any increment from this project over and above the debt service payments and the loan payments to the City would go to pay the difference between the bond issue and the $900,000. Mr. Wickert - stated they have submitted a completed set of drawings and specifica- tlOns to the City. He stated they are committed to building according to those plans unless there are changes requested by the City or themselves, and that insures the quality of the project and the amount being spent. Council generally agreed with the terms of the contract relative to public support of the project, but also agreed to tie the TIF documents to the submitted plans and specifications as a baseline for dollars spent on the project. It was noted on Page 18 of the Contract for Private Redevelopment between the City of Andover and Andover Limited Partnership, Section 6.3 Assessment Agreement, the last sentence, "If the City issues tax exempt Bonds, the effect of the Assessment Agreement sha 11 be suspended...." shou 1d be deleted as it refers to tax exempt bonds and this will be a taxable bond. Council then discussed the third issue raised by Mr. Casserly, that of guarantees and securities desired. Section 6.5 Guaranty, Page 18 of the contract, should guarantee the note as well. Mr. Wickert stated with the taxable bond, they have been asked and agreed to a full-term personal guarantee of the debt service. He also stated they would be willing to supply the appropriate financial information of the parties for examination by the City or its representatives as to the quality of those guarantees. He suggested appointing an independent CPA firm to do that assessment. Discussion as also on what happens in the event of default, reviewing Article IX in the document, Pages 24 and 25. Dave Kenned , LeFevere, Lefler, Kenned , O'Brien & Drawz - stated in many instances a etter 0 re lt lS lssue to cover t e lrst ew years to cover the critical time of construction. Once the project is built, there is no need for that kind of assurance. He recommended one year's increment, a Letter of Credit for $150,000 until the project is built in addition to the personal guarantees. Special City Council Meeting August 21, 1986 - Minutes Page 3 (Public Hearing - Tax Increment Financing District/Shopping Center, Continued) Mr. Casserly - felt a Letter of Credit should be outstanding until one full year's taxes would have been paid, feeling the Letter of Credit should be in place to guarantee the payment on the bond debt service. He stated such guarantee wouldn't be needed prior to the issurance of the bond because there is no risk on the part of the City until that point. Further discussion with the developers was it is their intent to put in the footings yet this fall. They have signed the major tenants of the grocery store and drug store but are still working on leases of smaller tenants to gain the required 70 percent pre lease agreements prior to construction. Cbuncil was concerned that this document not be held open indefinitely. The intent is to do the project, suggesting the possibility of adding a sunset clause in the document. Council recessed at 9:00; reconvened at 9:16 p.m. The Hearing was then opened for public testimony. Walt Sonners - has been successfully running a small supermarket in northeast Mlnneapo11s which has been in his family for 67 years. He has been on this project for about six months, stating he can't wait for Andover to get started with the grocery store. He felt Jeff Wickert, Wayne Rademaker, and Boisc1aire are the right people to put the project together, hoping it will work. Rick Lund, 13864 Si1verod - stated the homeowners in that area are excited to see somethln9 going. They are happy with what has taken place so far and the things Boisclaire has done for them. Council discussion returned to the issues of the security of a Letter of Credit and a sunset clause in the contract. Mr. Casserly and Mr. Kennedy reviewed their opinions as to why a Letter of Credit should be required and the length of time it should be in place, those opinions being different as to the length of time it should be in place. After some discussion, the Council generally agreed with the $150,000 Letter of Credit from the developers from the time the bond funds are disbursed to cover the first tax year, the dates to be set when the bonds are issued. Given the nature of the contract whereby the City's funds would be the last dollars going into the project, it was felt the length of the Letter of Credit could be from 12 to 18 month's depending on when the funds are disbursed. Council also agreed the payment for the Letter of Credit would come out of the tax increment bond, as it should be a relatively small amount. Council ther discussed a sunset provision in the contract. Mr. Wickert - again stated they expect to have footings in the ground this fall and wou Id 11ke to build the building faster than two years, but he'd like some fleðibi1ity. He estimated the time ofl construction to be 12 months, possibly quicker. The building is out for bids. He suggested a starting construction date of June 1, 1987 be used for a sunset clause, with the right for him to present progress reports to the Council should theY1 not meet that date. Further discussion with the developers was that another 15,000 feet needs to be pre leased before they can begin construction, hoping that can be done by September or October, though there is no way to predict when those leases will actua 11y be signed. Council discussed various methods for establishing a sunset clause. It was final1ylagreed to insert on Page 28 of the Contract, Article XI, Termination of Agreement, a new Section 11.3, that the contract would terminate if construction does not start as of May 1, 1987. Special City Council Meeting August 21. 1986 - Minutes Page 4 (Public Hearing - Tax Increment Financing District/Shopping Center, Continued) Discussion was then on the maps provided in the Development Program for Development District No.1, noting the corrections to the map made at the public hearing for District No.1 have not been incorporated into the Development Program dated August 21, 1986. Also. the strip center of the shopping center, Lot 1, Block 3. is not to be included in Tax Increment Financing District No. 1-2. Lot 1, Block 1 is to be included. Council then agreed to continue the public hearing to September 2 at which time the final documents with the changes agreed to this evening will be acted upon. MOTION by Elling, Seconded by Lachinski, to continue the hearing to the September 2 meeting. Motion carried unanimously. Public Hearing continued to September 2, 1986. 10:08 p.m. CONROY ASSESSMENT SPLIT Attorney Hawkins didn't know whether the County has the ability to subdivide the property without going through the City's Lot Split ordinance. Council expressed disagreement that the County has the right to subdivide land within the City contrary to the City's ordinance. In discussing the item further, it was noted an 80-foot strip is a developable parcel, questioning wehther it should then receive a full assessment. That area was assessed on a front-footage basis. Council directed the staff to prepare a report noting the assessments prior to and after the 80-foot split done by the Cwn~. LOWER RUM RIVER WATER MANAGEMENT ORGANIZATION Mr. Schrantz reported the Lower Rum River Water Management Organization's budget will remain at $12,500 for 1987. Council agreed. ANDOVER VS. M.R. OLSON Attorney Hawkins noted the proposed settlement agreement with M. R. Olson which . basically states Mr. Olson agrees to have all the cars off the property and stop operating as a used car lot by October 1. MOTION by Elling, Seconded by Lachinski, that we accept the settlement stipulation as presented fram the Attorney for the City of Andover versus M. R. Olson property, and authorize the Mayor and Clerk to sign the agreement. Motion carried unanimously. REQUEST COUNTY TO REMOVE DESIGNATION FROM CROOKED LAKE BOULEVARD MOTION by Ortte1, Seconded by Lachinski, introducing a Resolution requesting Anoka County to change the State Designation of Crooked Lake Boulevard and designate the Verdin Street alignment as proposed in the Hidden Creek plat to 133rd, the City limits. (See Resolution R136-86) Motion carried unanimously. JOINT MEETING WITH COON RAPIDS Council directed Mr. Schrantz to attempt to set up a joint meeting with the Coon Rapids City Council for September 8, 1986. Special City Counci 1 Meeting August 21, 1986 - Minutes P age 5 BUDGET DISCUSSION Mr. Schrantz highlighted the proposed rough draft of the 1987 budget. After reviewing several aspects of the proposal, Council generally felt the mill rate for 1987 should not go above 15 mills, suggesting the most probable figures be used for the proposed budget. APPOINT OEPUTY CLERK MOTION by Elling, Seconded by Lachinski, that we appoint Victoria Vo1k as Deputy Clerk. Motion carried unanimously. COMPREHENSIVE SANITARY SEWER PLAN/AUTHORIZATION MOTION by Orttel, Seconded by Elling, that we authorize the firm of TKDA to prepare an update as needed to our Sanitary Sewer Plan for an amount not to exceed $5,800. DISCUSSION: Councilman Elling reported on a meeting he attended regarding the remedial action of the Waste Disposal Site. The Agency and CRA are taking a close look at the gradients underneath the landfill as to what happens to the lower sand aquifer with all the surrounding residential wells. Th ey defi nite ly fee 1 a municipal water system would not influence the gradient system as having the many private wells does. Vlith the other possible developments along Hanson and north of Andover Boulevard, it could affect the water table so it no longer has the upward gradient; and they are asking that the City not al low private residentia1s wells in the lower aquifers within 4000 feet of the landfill. Council briefly discussed the matter, the potential development northeast of the 1andfill.site, and the possible future location of a new elementary school within Andover. Mo t ion carried unanimously. COMPUTER DEMONSTRATION It was agreed Councilman Lachinski will attempt to schedule a demonstration at Ameridata for September 10 at 4:30 or 5 o'clock for the Council and Office Staff. MEETING DATE/M. LAPANTA f1r. Schrantz reported Mr. LaPanta has stated he is being harrassed and wants to meet with the Council regarding the tire operati on and request for zero count on the tires. Discussion noted that the County is the agency which has licensed the operation; and if the license requirements are not being met, the County should be dealing with that matter. Council also noted the apparent pile of tires that have accumulated on site and other violations of the licensing requirements. MOTION by Lachinski, Seconded by Orttel, that we request Anoka County to consider the wlthdrawa1 of the license of the LaPanta Tire Operation if he is not meeting all current requirements. VOTE ON f10TION: YES-Lachinski, Orttel, Windschitl; NO-Elling as he felt the Council should meet with Mr. LaPanta on this matter first; ABSENT-Knight. Motion carried. PROJECT 86-19/DEHN'S ADDITION/ROUNO LAKE STORM DRAINAGE Mayor Windschitl noted the County is starting the County 116 project. Counci 1 briefly reviewed the problem of assessing the project in a reasonable manner and to be able to meet the debt service on the bond, on the possibi 1ity of receiving sane dollars fran the County or Good Va lue Homes toward this project; on the question raised at the previous meeting regarding the City's participation in the Special City Council Meeting August 21, 1986 - Minutes Page 6 (Project 86-19/Dehn's Addition/Round Lake Storm Drainage, Continued) cost of any future replacement of the Rum River outlet as proposed by the City of Anoka, and on the possibility of establishing a storm drainage taxing district. Council asked that the assessment against the larger property owners in the district be determined. This is to be discussed at the August 27 special meeting. L. JOHNSON PROPERTY/BUTTERNUT STREET Mr. Schrantz asked the Council's opinion as to whether a proposed parcel is a legal lot because Butternut Street is not a full-width roadway. Counci 1 thought Mr. Johnson was going to dedicate the other 30 feet fran the other side so there would be a full 50-foot wide easement for Butternut. Because the property in question has already dedicated two rods for the roadway, it was felt it is not appropriate to require the remainder of the easement from this parcel. Council di rected th e proposed lot is a le ga lone and that the remai nder of the easement for Butternut would be dedicated fran the property across the road when that develops in the future. APPOINT ENGINEERING SECRETARY Mr. Schrantz stated he has not yet been able to check the references of those applicants interviewed for the Engineering Secretary position. Council agreed to authorize Mr. Schrantz to hire the secretary at his discretion following reference checks. MOTION by Orttel, Seconded by Lachinski, that we authorize the City Administrator to offer employment to either of the two employees fran the list of names, either Nancy Sue Howland or Janet Chamberlain, whose resumes were reviewed this evening, salary not to exceed $6.50/hour. Motion carried unanimously. MOTION by Elling, Seconded by Orttel, to adjourn. Motion carried unanimously. Meeting adjourned at 11:38 p.m. Respectfully submitted, ~.~~.~~ Ma cella A. Peach Reco ,~ing Secretary