Loading...
042390 CC Reg Min CITY OF SHOREWOOD REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 COUNCIL CHAMBERS 5755 COUNTRY CLUB ROAD 7:30 PM . MINUTES CALL TO ORDER Mayor Haugen called the meeting to order at 7:30 PM. PLEDGE OF ALLEGIANCE Mayor Haugen opened the meeting with the Pledge of Allegiance. ROLL CALL Present: Mayor Haugen, Councilmembers Gagne, Stover, Brancel and Watten; Administrator Whittaker; Attorney Froberg; Engineer Norton; Planner Nielsen; Finance Director Rolek; and Assistant Clerk Niccum APPROVAL OF MINUTES Gagne moved, Stover seconded, to approve the minutes of April 9, 1990 with the following amendments: ~ Page 6 - Dock License Renewals - line 3 Spelling correction - conforming, not confirming Public Works Site Option Cross considered the City's offer, .. ......... ........... Page 7 - Spring Cleanup addition - Spring Cleanup - Saturday & Sunday - May 5 & 6 - 8:00am-5:00pm Motion carried - 5/0. Minutes of March 12, 1990, will be prepared for the next meeting. AGENDA REVIEW Watten moved, Brancel seconded, to approve the Agenda with the following changes: Item #10A3--addition--Finamart Update Item #10A2b-postponement of Lot 9, Deephaven Shores Acres, water service connection ~ Item #10D3--Additional information Motion carried - 5/0. -1- CITY OF SHOREWOOD REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page two . CONSENT AGENDA RESOLUTION NO. 33-90 Watten moved, Brance1 seconded, to approve: adoption of Resolution No. 33-90 - "A Resolution Approving Final Payment Voucher No.3 in the amount of $1,981.50 to Visu Service Clean & Seal, Inc., 2849 Hedbey Drive, Minneapolis, MN 55343-9940 for City of Shorewood Project No. 89-2"; a purchase order for MnDOT-MSA computer work station, printer and software; an extension to Bruce Prescher for filing a Simple Subdivision (6060 Lake Linden Drive) no later than Friday, May 25, 1990; and, Smithtown Road street signs at all cross-streets between Country Club Road and the Shorewood/Excelsior border on County Road 19. Motion carried by roll call vote - 5/0. PLANNING COMMISSION REPORT No meeting. . PARK COMMISSION Park Commissioner Laberee was present as liaison to the City Council. He reported on the following: Skating Rinks Three rink attendants were present to talk to the Park Commission regarding the rinks. They discussed problems, maintenance, and results. The temporary warming house at Manor Park was well received, no negative comments were made, but many favorable ones were given. . Cathcart Field Relocation-South Tonka Little League South Tonka Little League wanted to come in and strip the infield 8" and lay aglime. The Commission discussed the 1987 plan for relocating the field now-due to the fact that otherwise it would mean moving the aglime and redigging the 8" in another spot. Now they have decided to wait until Fall, or next year. They will wet the infield and roll it. They will repair the backstop, and put in players benches. Freeman Park - Little League Field Dugout Laberee suggested that Zdrazil look at the dugout site. He felt that if it is rebuilt with concrete blocks, they should be filled with concrete. He said it broke easily because the blocks were hollow. Council suggested Watten work with the Commission to come up with a recommendation. Park Dedication Fees The Commission has discovered the current park fees are low. They will be coming to the Council with a survey and recommendation. " REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page three . PARK REPORT - continued Joint Meeting Request Laberee said the Commission has requested a joint meeting with the City Council to discuss various issues. Council directed Niccum to talk to the Commission and the Council, and set up a meeting. Bases - Freeman Park and Manor Park There was a motion three new softball with a cost not to 3 Freeman fields. need a double-base from the Park Commission to purchase bases for the fields at Freeman Park, and the field at Manor Park, exceed $1000. The cost is $265 per field for the Manor will be a little cheaper because they do not at homeplate. Gagne moved, Brancel seconded, to approve the purchase of the bases for Freeman Parkts' new softball fields, and the Manor ballfield, not to exceed a cost of $1,000. Motion carried - 5/0. APPROVAL OF C.ll.P. FOR EXCELSIOR COVENANT CHURCH RESOLUTION NO. 34-90 . Brancel moved, Stover seconded, to adopt Resolution No. 34-90 -. "A Resolution Granting a Conditional Use Permit to Excelsior Covenant Church". Motion carried by roll call vote - 5/0. Stover asked if the certificate of occupancy would be held until the2 1a,p,dscaW"ing and. aite_ impt'ovementsc,are. completed.. Plann.erNie~sensRia that was the recolnItrendation of the Planning Commission. APPROVAL OF AC.U.P. FOR FILL AND GRADING FOR BOULDER BRIDGE HOMEOWNERS ASSOCIATION RESOLUTION NO. 35-90 Watten moved, BraDcel seconded, to adopt Resolution No. 35-90 - "A Resolution Granting a Conditional Use Permit for Filling and Grading to Boulder Bridge Farm, Inc.". Motion carried by roll call vote - 5/0. MATTERS FROM THE FLOOR One resident asked if he could have a copy of the draft Tax Increment Financing Resolution before the hearing began. Attorney Froberg gave him one. Another resident asked if he had to be signed up in order to speak, because he didn't know what issues would come up, and if he would wish to do so. ~ayor Haugen suggested he sign up. When his name was called, he could decline if he didn't wish to speak. . Council Break - 7:50PM - 8:00PM -3- . . . REGULAR COUNCIL MEETING MONDAY, APRIL 23. 1990 Page four PUBLIC HEARING ON THE PROPOSED DESIGNATION AND ESTABLISHMENT OF DEVELOPMENT DISTRICT NO.1. THE PROPOSED ESTABLISHMENT OF TAX INCREMENT FINANCING DISTRICT NO.1. LOCATED WITHIN DEVELOPMENT DISTRICT NO.1. AND THE APPROVAL AND ADOPTION OF THE DEVELOPMENT PROGRAM FOR DEVELOPMENT DISTRICT NO. 1 AND THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO.1 Brancel moved to indefinitely postpone the public hearing so that the City can educate the, community. and answer all the questions and concerns of the citizens, because she had received numerous calls from residents who were not involved with Waterford or with Tax Increment Financing. and do not have any knowledge of what TIF (Tax Increment Financing) is. Motion died for lack of a second. Mayor Haugen opened the public hearing at 8:02PM. She then introduced Mr. Robert Thistl~ from Springsted Compan~ who is very familiar with TIF and has worked with it for many years. A resident, who did not identify himself, asked if they would be able to ask the consultant questions. Mayor Haugen said "yes - during the public portion of the hearing, and after Thistle has given an explanation~ Thistle said the Tax Increment Financing project is basically a process that has been established by state government to allow cities to fund a variety of projects that they may ordinarily be unable to fund because of limited resources or provisions of law that prohibits the use of other funding mechanisms because all the conditions for its use are not met. A tax increment project allows the City to capture the increased tax value from new development in a defined TIF district and use those new taxes to pay for improvements in the TIF project area. Taxes on the district area before development continue to be shared with all taxing districts. The value of this existing area is adjusted each year using a factor of the average inflation over the previous five years. This increased value on the existing property also continues to go to all the taxing districts. There are several types of TIF Districts that can be established: housing districts, soil districts, redevelopment districts, and economic development districts. This project is being developed as an economic development district. This type of district.'s time length is 10 years, and the way the State tax structure works, the City could only capture the taxes for eight years. Within the tax increment law, cities are allowed to apply that incremental tax growth to a variety of activities. They can either be public activities such as sewer, streets, water, sidewalks, trees, or other City projects in the project area; or, they can be applied to the developer's project. The City Council, in November of last year, approved the Development Stage Plans for the project - agreeing on its land use, pUblic improvements, and zoning. They then directed staff to look at different types of funding for the public improvements. The Council and staff then looked at a number of alternatives; General Fund, ad valorem taxes, assessments, and Tax Increment Financing. They directed staff to pursue and develop the potential of using TIF to pay for the public improvements that are associated with this project. None of the TIF money is going into the internal improvements. -4- REGULAR COUNCIL MEETING MONDAY. APRIL 23. 1990 Page five . TIF - ESTABLISHMENT OF DISTICT NO. 1 - continued Robert Thistle The City then asked Springsted to assist them in assessing whether or not the increased value of the project would generate sufficient taxes to pay for the improvements over the ten year period. In Springsted's findings it appears that, based on the proposed project and the value of that project, sufficient funds are available. If the City Council approves the TIF District and plan, the next step would be to negotiate a development agreement with the developer. This would layout improve- ments to be made, the developer's responsibilities, and the City's role. This contract would be reviewed by the City Council, Bonding Counsel, Attorney, and staff. At that point the City would be able to move ahead. If a district is approved this evening, and the development contract and the assessment agreement cannot be negotiated, the development agreement could be negotiated with another buyer at another time. . . Jay Wein - 5305 Elmridge Circle asked if Springsted has a vested interest in this transaction, or if their conclusions are independent. A resident that did not identify himself, asked if they would be involved initially in the bond, or doing any of that work after this meeting. Mayor Haugen said it is her opinion that they will be assisting the City in selling the bonds. Wein - will they be compensated for that? Haugen - they get compensated for whatever they do, just like anyone else. They have been doing this for the City for many years. Robert Thistle of Springsted said they are an independent financial adviser. They do not at any time own, buy, or service bonds. What they do is review whether or not the financing the City is proposing to do is in the City's best interests. If the City chose to move ahead with the process, they, on behalf of the City, would take it to market independently, and take bids on that issue. They would recommend, based on the low bid, who should be selected. Residents then asked how much Springsted had made so far, and what they stand to make if this goes through. A resident said that generally, in a business setting, when you have a consultant that is going to make a recommendation, they should be independent of the rest of the process. Haugen reiterated that the City has followed this procedure for years, and most cities do it this way. Haugen reminded the residents that they are limited to 3 minutes, a group representative will receive 10 minutes. Bruce Ebner - 5670 Vine Hill Road said it was determined in 1984 when Waterford was being planned that the intersection would be required. The intersection has been re-evaluated and is still needed. He urged the Council to vote for TIF. -5- ~ ~ . REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page six TIF - ESTABLISHMENT OF DISTRICT NO. 1 - continued Ja for two rou s "Shorewood Residents for Safe Nei hbor- hoods" and "Water or Homeowners Association" and individuals includin~ Steven Dzurak-19570 Vine Rid~e Road, Harold Ness-19605 Vine Rid~e Road, Barbara Christensen-19545 Vine Rid~e Road, Cathy Swanson-19535 Vine Rid~e Road, Martey Snyder-19855 Chartwell Hill, and Stuart and Gail Finney- 19710 Chartwell Hill said he had a list of questions that he will present to the Council and hopes that when the hearing closes the Council will answer the questions (attached) and give the residents an opportunity to interact with the Council. He said he would discuss TIF, the City letter, the Springsted study, who pays for the intersection, what relative risks are, and who pays if it fails. He began by quoting two newspaper articles regarding TIF...The Minneapolis Star Tribune, 3/24/90 - "they said that TIF is a method which enables the City to subsidize the developer by using the increased property taxes that the project would pay after it has been built"; and the Sailor, 2/7/90 - "The increased taxes a new development generates do not flow to the City, do not flow to the School District, do not flow to the County, until the project is paid for". He said the Springsted report has not addressed one risk. He asked why the City is considering this? He com- pared the amount of the project to the 1990 City budget. He said they were approximately the same. He asked the City to take more time to consider this important issue. He pointed out that the City has never done TIF before, and it should be studied carefully. He asked why the City's Financial Advisory Board had not been consulted. He referred to the City letter, saying it was misleading, did not tell the whole truth. The Ci ty says the existing property tax revenues continue to be shared by all the taxing districts--He said Springsted's projection for 1991 and 1992 is $18,000. The incremental property taxes caused by the development will be $230,000. Over 93% of generated taxes will go to pay for the intersection. The City also :said they will not finance this from the General Fund. This is true as long as the project doesn't fail. He then sited several cases of failures--Endotronics, Midwest Federal, Canterbury Downs........ He said the land was overpriced when Trivesco sold it to Sherman, so Sherman came to the City for help. He said the City said services to the property would be paid for through user fees but this did not include police, public works, streets, snow removal, traffic control, street lights, sanitation and tree maintenance. These services will be paid for by Shorewood taxpayers. He referred to the specific TIF goals mentioned by the City saying it is a joke. He referred to the Springsted report, saying a 1% cushion would be provided and suggested the audience pullout their checkbooks. He said the City refused to use the pay-as-you-go method at 9%. They couldn't do it, so they went with the risky Traditional TIF. He asked if the City Council wanted to be remembered for "financing a strip mall"? He said these questions should be answered before any action is taken. -6.;.. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page seven . TIF - ESTABLISHMENT OF DISTRICT NO. 1 - continued Les Anderson - 5385 Shady Hills Circle ~ said the allusion has been made that the intersection is for the business development only. It is his understanding that the idea is safe roads. He said the City of Chaska gets $.65 for every $1.00 in commercial development and it should work about the same for Shorewood. He is for the intersection and the TIF. He said it is important_that the TIF be done prop€rly, butiurged the City to vote for it. . Rick Rosow-19835 Waterford Place said he is against TIF as I1"oposed. He had reviewed Springsted's plan. He questions certain statements: reducing employment and the loss of skilled and unskilled labor, and other human resources in the City; owners of property within the development district will be encouraged to rehabilitate their property...; the City may provide such rehabilitation assistance as may be available from State, Federal, and Local Services. When you read the plan as a whole it doesn't make sense. He asked the developer if he would be willing to personally, as an individual, guarantee the assessment agreement. He asked if the City would be willing to hire an appraiser of its choosing to appraise the: fair market value of that property, and compare it to the selling price of the property to determine whether the statements that the project would not advance without this funding are correct. He urged the City to only use tax increment bonds that are revenue generated, rather than general obligation generated so that the burden, if there is a default, falls on the investors rather than on the taxpayers of the City. He urged the City to consult with other cities to see how they insured themselves against losses, and if they have incurred any. He said after these things have been done, to go ahead. Gagne asked Rosow if he would be interested in getting involved? Rosow said after hearing some of the remarks tonight, he would have to think about whether it would be a "conflict of interest". Patrick Nalmsten-Shady Hills related to the history of all the meetings held before the development. He said all the people surrounding the development were aware of the intersection. He referred to all the people that had presented such eloquent speeches with such detail this evening, and really questioned why these people that spent such large amounts of money did not bother to find out where the road was going when they bought their property. He feels now they are trying to blame it on something else. He said he doesn't know all the details of TIF but he is for the project and for the intersection. He said thewaterford residents should handle their own traffic. Roy Seamans-Seamans Drive asked what shape the City is in financially? Haugen said the City is ingoo~ shape. He said he felt there is too much building going on. . Simon Oosterman-19365 Waterford Place- said he has always been for the intersection. He said if the City does have to pay for it, thats a large amount of money and maybe they should see if they can do without the intersection, however if they do decide to put it in, he agrees with Rosow. the City should use revenue generated bonds, not general obligation bonds. -7- . . . REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page eight TIF - ESTABLISHING DISTRICT NO. 1 - continued Ed Bergslein-24785 Smithtown Road said he is against TIF, if the developer wants it, let him pay for it, not the taxpayers. Jay Wein-5305 Elmridge Circle-_said he came because of the letter. He wondered if the Councilwas forthcoming in preparing that document, that caused him to come. He said he is against the proposal. He said it says very specifically in the letter that the City required the developer to provide a collector street. He said in the next paragraph it says the TIF includes the completion of the collector street. He said either the developer pays for it or he doesn't. He said the developer could provide for a performance bond. If it is too expensive for the developer to do this, it is too expensive for the taxpayers to do this. Louise Bonach-19625 Sweetwater Curve-representing a group of people that are concerned that the Council is acting fiscally irresponsibly by using TIF to subsidize the intersection. They believe the community has many other uses for the increased tax dollars. The group realizes that the City can put in the intersection, and can implement the TIF, however, the grou~ has found something they can do that the City cannot control, they will boycott the businesses associated with the development. They want to know why the developer can't pay for the project. They feel the money generated from the development should go for roads, water improve- ments, and education. Penny Vogel-Minnetonka Blvd said the smell in her house from cars starting and stopping at existing intersections is bad enough, another intersection is not needed. She also said that her house had been left to her so she could live in it the rest of her life, but due to constantly rising taxes, when her husband retires they will have to sell their home and move out of Shorewood. Kathy Hare read Jay Hare's list of questions (attached) Gary Swanson-19535 Vine Ridge Road is opposed to TIF. The City of Minn- etonka just voted down a similar project. He feels TIF is inappropriate. Who will benefit? Does the Council think the majority of the population wants TIF? He says go with the majority. Who will pay? No one wants to pay more taxes, including the Council. He asked the Council to get more facts and information. Jim Slaughter-5570 OldM~rket Road referred to paragraph 5 in the City letter where the City said they will own all the improvements-he asked how they could own part of Highway 7? He said MnDOT can bulldoze this intersection before it is completed, and they intend to do so. The "strip mall" will go right down the drain and we'll all be in trouble. He said he hopes the Council will decide tonight not to use TIF. If they do he is determined the City will not use TIF. The people that signed the petition are going to make sure that TIF is not viable. They don't want this--they will keep coming back--they are funded--they are determined- its not needed--its not wise. Bob Snyder-19855 Chartwell Hill-who is on the Financial Advisory Board, referred to the City Letter. He said it says in 1984 the City entered into a contractual agreement with the developers of Waterford, then at the bottom it seems to infer that the agreement was to help finance that intersection. He quoted from a letter from Attorney Froberg date 8/25 (no year) "the City shall pursue the availability of outside funding". ... . . REGULAR COUNCIL MINUTES MONDAY, APRIL 23, 1990 Page nine TIF - ESTABLISH DISTRICT NO. 1 - continued Bob Snyder-continued He said it does not say the City shall be required to pursue the funding, it says they will pursue it. He did not know if the~ouncil was aware that the Financial Advisory Board was convened by Alan. Three issues were discussed, one was whether or not they would give blanket approval for TIF? The Board said no, they would not, each development had to be evaluated on its merits. He said you don't take a prime piece of real estate along Highway 7 and turn it into TIF. He asked the Mayor and Council if they were aware of what was going on in the Legislature today? Haugen said yes, they are. He explained to the audience that the Legislature is considering a "but for" clause for TIF, meaning "but for" TIF, the property would not be developed. He submits that this property would develop without TIF. He submitted a list of questions to the Council pttached to and hereby made a part of these minutes. Amy Burchardt-6050 McKinley Place~ said she is against TIF. What is it going to do for the residents? Its strictly a business venture that is going to be profiting, she isn't, put she's going to be the one getting increased taxes, she has every year, and wanted to know how many years that will be going on. David Dean-5690 Old Market Road said TIF is to be used for decayed, depressed, dilapidated areas. This does not fall into this catagory. He pointed out that people from neighborhoods other than Watertord are here objecting to TIF. He said this does affect everyone in Shorewood. He also said that taxes in Shorewood affect both young and old, no one will be able to stay here long if taxes keep going up. The developer has said this "strip mall" is for the neighborhood, he has based his projections on neighborhood use. He said the developer has to have the intersection because if TIF is used the neighborhood will not support the "strip mall". He said speed vs.careful deliberation is another issue. He said the City may deliberate on this for months, then the Legislature may kick it right out of existence. He said some valid questions and risks have been discussed here tonight. Robert Daugherty-19670 Sweetwater Curve asked what the average "strip mall" rents are in western suburbs. He understood that they are $10-12 and the developer is asking $14. He felt the developer was asking high rents because of the high land price. He referredto several malls in the area, saying they are not fully rented. He said the City seems willing to deliver the traffic to the developers door. He felt that the developer should guarantee 90% rental prior to TIF. He said if the development was economically viable the developer could provide a letter of credit and TIF would not be necessary. If the project fails, it will create an imbalance in money slated for the County, School District, City and other things, who makes up the difference? He also mentioned that the City has a triple A bond rating, and wondered if they would jeopardize this through TIF. Karen Sigmund-Echo Road said she is a business woman in Excelsior. Excel- sior, 7 Hi, Westwind Plaza, and the new center on 7 and 41 are all having a tough time. The City better make sure there is a need for this before they become "over-maIled". Mayor Haugen closed the public hearing at 9:55PM. -9- REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page ten . Council Break 9:55 - 10:05 TIF - ESTABLISHMENT OF DISTRICT NO. 1 - continued Gagne suggested they begin answering questions. Haugen began on the "Tax Increment Financing (TIF) Questions" submitted by Jay Hare (attached). Question No.1 Haugen - Any services will be paid residential or commercial people. developed, there will be taxes and needs just like the rest of us do, kids in school anymore. One resident said that isn't fair, all the taxes developed will go to payoff the bonds. for by Shorewood taxpayers, be they When the multi-family portion is they will pay part of the school even though some of us don't have . Haugen - the original portion of the development will be assessed by the Hennepin County Assessor. He will decide what the value of the land is, he will then assess the value, and a portion will go to the schools, the City, and the County according to the percentage that is there now. He will also put on an inflationary value of 13.7% every year, which is more than others go up every year, on that original portion. Wein - thats still misleading, what you're talking about is an incon- sequencial amount in relation to what we are really talking about. You are absolutely and intentially misleading. Haugen - Intentionally misleading you how? Wein - to even remotely allude to the fact that the amount of taxes that will be assigned by the Hennepin County Assessor will even remotely pay for the cost of educating any number of children that would be housed in multiple family dwellings. . Haugen said they have no way of knowing - even if there will be any kids in the housing. Thistle said Springsted structured the TIF Plan on revenues from the commercial value and the property that was improved and does not include taxes from residents. They took the position of very conservative construction. They could not guarantee how fast those housing units would develop. Assuming any of the residential units get built, the increment that you see from them will be much higher than~ what's projected. The point that you are making is if there is a child in one of those units, that a base tax on the unit will not support that child in the school system. That's a fair assumption. However, the City Council could pass some of that tax back through to school districts and County when they have met their base obligation in paying for the TIF bonds. -10- REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page eleven . TIF - ESTABLISHMENT OF DISTRICT NO. 1 - continued Question No.2 Haugen - the improvements that we are making are public improvements. It's an intersection. We are not paying for any improvements on the property itself, the developer has to do that himself. These are only public improvements that we are using the TIF for. Hare asked if it wasn't common procedure for the developer to pay for the roads. Didn't they do so in the other developments in the area. Haugen said they required the developer to put in a collector street with the understanding that the City would help with the intersection. Hare asked, if each developer is required, according to Shorewood's policy, to put in their own streets, then whose development is Waterford III? Hau~en said the intersection is everybody's, it's there to direct the tra fic out of all of those areas. A resident suggested they take a vote on who wanted the intersection. He said they didn't. Haugen said there are those who do, and the Council will do the voting. . One resident informed Haugen that might be true, but they would be doing the voting in the Fall. Haugen said that was their privilege. Question 2b Attorney Froberg said that Chapter 429 provides that special assessments must benefit the property, and the property would have to be shown to appreciate in value to the extent of the improvement. Haugen said that this will not be applicable in this situation. Question 2c Haugen said she thought that it was a matter of opinion that the City is lining the pockets of Trivesco. It is a fact that Trivesco did place some of the assessments for your property on the front portion of the development. this is some of the cost that Sherman-Boosalis has to deal with. A resident said, then, the property is overpriced. . Haugen said she is not saying it is overpriced because she does not even know what the price of the property was. This means the residents do not have to pay as much in assessments as they would have had to pay if this had been spread over the residential area. A resident asked if the developer owns the property or if it is subject to Council approval with a purchase agreement? -11- REGULAR COUNCIL MEETING APRIL 23, 1990 Page twelve ~ TIF - ESTABLISHING DISTRICT NO. 1 - continued Attorney Froberg said the developer had a purchase agreement to purchase the property subject to certain contingencies, the agreement set a certain time limit. . George Sherman of Sherman-Boosalis said Shernam-Boosalis has a contract to purchase the property from Trivesco, and with that contract to purchase they are purchasing certain development rights and contract obligations that Trivesco entered into in 1984. Specifically in that original development contract was an approved P.U.D. (Planned Unit Development) that called for multi-family housing on this site along with commercial devleopment on Highway 7. Our proposal that was submitted to the City over 15 months ago included developing multi-family housing at a lesser density and commercial as it applied to the original 1984 P.U.D. We have met those obligations. The original development contract also said that Trivesco, the developer, would put in a collector street, and that the City would assess the cost of the intersection against all who benefi ted. What was used to determine" all who benefi ted" was a traffic study that said that unless there was an intersection at this location, the City should not go ahead with Waterford and the rest of the development at that site. It's been our position all along that the intersection benefits, at least, people beyond the Waterford neighborhood. It benefits all the development that has occurred since 1984. The property value is an appropriate property value for the parcel. It's zoned for multi-family and commercial, and includes the intersection as was approvEfdJ in the 1984 development contract. Another question came up that Springsted addressed briefly, is the risk to the City on this particular project for TIF. The values used in the Springsted study anticipate only raw lots, no buildings. If a child is going to be going to school you assume he will be living in a building. If a house is built on the lot, that additional tax increment is going to be available to the City above and beyond what is needed to pay for the bond. A resident asked if they would supply a performance bond that would prevent financial risk to the City? Sherman said they wouldpro~de guarantees that the multi-family housing and the commerical that were part of the TIF plan would be developed. He said the City has asked them for a variety of guarantees. He expects these will be up for public review if the TIF is passed. Sherman-Boosalis has offered a level of guarantees that they think will be necessary to pay the bonds off. They are talking about actually having the improvements built, that kind of guarantee. Hare said they want iron clad guarantees, why should they take any risks? Sherman said two reasons--one, you don't have to take any risks if there are appropriate guarantees from the developer; and, two, it is an obliga- tion of the City to provide financing for this project by assessing all that benefit from this intersection. . Hare asked if the developer is "putting the screws to the City", how is the City responding? Haugen said the developer is not "putting the screws to the City". When the 1984 development agreement was approved, the City agreed to certain things. -12- REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page thirteen ~ TIF - ESTABLISHING DISTRICT NO. 1 - continued Attorney Froberg said the development agreement speaks of this specific- ally in two places: the original development agreement states that the City should pursue the availability of outside funding for the funding of the Old Market Road/State Highway 7 intersection. It also states that the City staff, City Council, City consultants and developer will at all times expedite all work involved in the development of the property and any development in execution of the proposed Highway 7 intersection. It does not specifically determine how the intersection is to be financed, but states that the developer shall share in the cost. We could legally assess any property that benefits from the intersection. Haugen said the City does not chose to use this option. Penny Vogel talked about the previous plan for the mall and asked why it was turned around. ~ Haugen said the developer had the right to design the mall as he wished to, providing it met City code, and this is what he did. P. Vogel said you couldn't do anything unless MnDOT had given approval. Haugen said that's right--and MnDOT did approve of the intersection. Hare said Sherman had said there would be guarantees, and he'd like to hear what those guarantees are, or "is he going to give us the keys to his Mercedes"? Haugen said this part of the meeting is for Council deliberation, the residents have had their chance to speak, now it's the Council's turn. Question 3 George Sherman said again that it is the developer's opInIon that the development contract between Trivesco and the City anticipates and calls for the intersection to be installed as part of the total development district. The cost of that intersection is to be borne by all who benefit from the development of Waterford. The cost of that intersection was not to be borne by commercial property alone. The value of that property is based upon the intersection being in there. Question 4a Administrator Whittaker said there is risk in every type of financing: special assessments and G.O. Bonds, or if people don't pay their taxes. A resident asked what the risks are in special assessments. ~ Whittaker said if the assesssments are not paid, the City bears the cost. It's is up to the City Council to decide what part of a public improvement is attributable to a development, what part is attributable to a neighbor- hood, and what part belongs to the entire City. -13- . . . REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page fourteen TIF - ESTABLISHMENT OF DISTRICT NO. 1 - continued Hare, again speaking out of order, referred to a memo of August 24, 1989 written by Whittaker, stating the developer has agreed to be assessed a portion of the cost in building this intersection. However, Chapter 429 of the State statute does not permit special assessments in excess of the actual increased value of the property. The increased property value to the developer and other parcels would not be sufficent to justify assess- ment of the entire cost. He said in other words - it's overpriced. Whittaker said that is not the conclusion of that memo. He suggested the hearing return to the City Council so they can deliberate on the questions. Hare again interrupted to say that if the Council wants to serve the pur- pose of a kangaroo court, that's just fine. Whittaker said this has been discussed since July, 1989. There have been three major public hearings and four other public meetings on it. A resident said what about answering the questions. Haugen said the Council listened to the public. Now it is the Council's time. They are trying to answer the questions, but due to constant inter- ference, it has been difficult to do so. Whittaker said the entire cost cannot be assessed back to the project. All the internal costs of the development are still being borne by the developer. A part of the cost was never included in the cost for the TIF District. Just so the public is aware of that. Question 4b Thistle said at one work session we looked at pay-as-you-go because it would be the preferable way to finance. The problem that arose is that in pay-as-you-go, the developer has to own the property. They take a note on that private property, and the City issues a revenue m>-l:~ to them which is taken to the bank to borrow money to pay for whatever improvements are done. In this case they would be public improvements; so this is not a practical approach. The developer would have no collateral for a loan. The Council is now deliberating on TIF. If they pass it, the next step is the development agreement which is negotiated between the City and the developer. Thistle said, after this meeting tonight, he feels in a stronger position on the part of the City to negotiate what some of the conditions are. Nothing has been discussed in any detail as yet. The City can negotiate for a number of things: assessment, letter of credit, cash, and securities. The numbers put in the plan are very conservative, they are the minimum numbers that are needed to make it work. You will also see the TIF Plan does not include inflation in the value of the improvement. You know that in 10 years that property is going to increase in value from inflation as well as construction. Attorney Froberg - answering a resident that asked if there would be another public hearing - said there will not be another public hearing. He said the development agreement would be drafted based on the project requirements. It would also include time of completion, the time of commencement, the amount of secutity, and type of protection the City would get, which items would be negotiated primarily between the staff and the -14- REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page fifteen . TIF - ESTABLISHMENT OF DISTRICT NO.1-continued developer, and subject to approval by the Council. It would be an open Council meeting but not a public hearing. If the Council passes the Resolution approving the plan tonight, it does not mean that the project would necessarily go ahead, only that the tax increment district would be in place. IF an agreement were reached with the developer a number of steps would have to be taken. A TIF assessment agreement would have to be prepared and approved. A TIF development agreement would also have to be drafted and approved. These things would have to be done subsequent to any action taken tonight. If there is a breakdown on any of the steps along the way the project will not go through. Froberg said that notice of all meetings will be properly given. Wein said he is still confused as to whether the City has a contractual obligation or not. He felt the City should not move forward until they are sure of that. He said sitting still has a lot of merit. That would leave the City negotiating with weakness rather than strength, and they need to be on the other side of the coin. . Attorney Froberg referred to the amended development agreement of August 12, 1985. Members of the audience said they did not understand what he was saying. Froberg read the terms of the agreement several times and some members of the audience still said they did not understand whether the City was responsible for the financing. Froberg said that decision had been made that the City would participate in the funding and the only issue to be decided is whether or not to pass a Resolution to put a TIF District into place. Bonach said the Council isn't listening to them. The Council said they have listened to them---that they are supposed to be listening to the whole City---thats what they are doing. . Question - Why is the City rushin~ this alon~ anyway? Haugen said the City has not been rushing this along: September 12, 1989 the Planning Commission held a hearing at the school; October 24, 1989 the hearing continued, and the Planning Commission made a recommendation to the City Council; November 13, 1989 the Council reviewed the recommendations, and agreed on the conditions for approval of Waterford III; November 20, 1989 the Council reviewed the findings of fact and adopted Resolution No. 99-89 including the project; February 1, 1990 the Council had a 4 hour workshop to review options for financing the public improvements in the Southeast Area and Waterford III, and ordered a draft TIF plan; March 19, 1990 The Council had another long meeting for review of the draft TIF plan, and adopted Resolution 29-90 setting this public hearing on the plan; the Council reviewed an EAW and passed another Resolution declaring an EAW unnecessary, they have had review after review, they've studied at home, read pros and cons, and, now, they are trying to make a decision on whether TIF is a viable solution. _ 1 l';._ REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page sixteen ~I TIF - ESTABLISHMENT OF DISTRICT NO. 1 - continued Stover said one way they could finance would be a General Obligation Bond, she said this means we pledge the assets of the City to repay a bond and we acquire the right to pay the bond by your taxes, everybody's. Another way would be to assess the benefited properties. This appears to be an extremely difficult way to do it, almost impossible. We could attempt to fund it from the General Fund, this is money you have already paid in taxes, but this would mean we'd have to replenish it with more of your tax dollars. Whittaker said we are still pursuing MnDOT's participation regarding the service roads along Highway 7. Stover said that if the Council establishes TIF District, one of the things they want to try to do is use the additional revenue, if there is any, for other public improvements. She said the estimates from Springsted were very conservative. The public projects considered were a water treatment plant, park improvements, and turning some of the funds back to the County\and School District. She made it very clear that she was not promising these things, but that they had been discussed. She said they would like very much to have the developer and MnDOT pay part of the cost, the City would still have some financial obligation. She said, at the workshop; the Council had decided that TIF had the least impact on all the residents. She said if no buildings were put on the land, the County and the School District would still get what they ~re getting now, if buildings are put on the land, in the. future the School ..,istrict will end up with more money. She said by using TIF the City did not make people that don't live in the area, and don't benefit from it, pay for it. Stover told the residents that the whole Council has acquired as much informa+ tion as possible on this, besides the workshops, they have talked with consult- ants, and gathered information individually. A resident asked what was wrong with waiting 6 months or a year to see if MnDOT and the developer would raise their levels of monetary participation. Stover said they will continue to look into funding sources, they are not deciding a dollar figure tonight, only whether or not to establish a district. Haugen said the City has to participate to some extent. MnDOT has their funds allocated years in advance, and their percentage of participating with cities is not that low. She said because the City population reached 5,000, the state aid for highways was increased considerably. That was considered but there are other streets in the City that need repair at this time. Many different ways have been considered. The Council has been trying to find a way so the burden did not fall upon the taxpayers, and that it did fall upon the developer. By TIF and working with the development agreement, it was the Council's opinion that this would be the best way to do it. When they negotiate with the developer, many things will be considered, one of them a letter of credit, which was mentioned tonight. Some of the other things men- tioned tonight have also been discussed. Before they can negotiate with the developer, a district has to be established. .are referred to the Legislative deliberation on TIF, and asked the entire Counell individually if TIF was declared illegal by the Legislature if they would still do it. The entire Council said if it was illegal, they would not even vote on it. -16- REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page seventeen IF - ESTABLISHMENT OF DISTRICT NO. 1 - continued Stover told Hare that she did not feel they were talking about the same thing, he keeps referring to the "strip mall", she is talking about the intersection and other public improvements. watten said he would like a little more proof than Hare's opinion about what is going on in the Legislature. He said the City has an obligation to investi- gate financing. Gagne said it is his job to make sure that the negotiations with the developer will protect the City and the taxpayers. Brancel said she is against TIF, and was not in favor of the intersection. Stover said according to the original development contract they had to start building in a certain year, 1990, and the City can not hold up the developer. Stover said the things the City is attempting to finance are public improvements such as service roads, the intersection, water, sidewalks, qndpossibly park improvements. A resident asked if the program is sucessful, can the payment schedule be accelerated? Thistle said yes. nother resident asked if the "strip mall" was dropped, would the intersection till go in? The answer was yes. Brancel moved that the Council wait until the Legislature acts before ruling on TIF. Motion died for lack of a second. Gagne said the City is obligated to put in the intersection. Sherman said he had wanted to start building by this Spring. He also said TIF is a viable method of financing the public improvements. Brancel moved, Gagne seconded for discussion purposes, that the Council answer the questions received. Stover said she would be glad to answer the questions if the members of the audience that kept interrupting would be quiet and let the Council answer the questions, Watten agreed and asked why they couldn't abide by the rules. Could the TIF affect the bond rating of the City? Thistle said the individual development agreements are looked at to reach this decision. Thistle said, regarding rental capacity, that the City can set a policy requir~ ing a rentage percentage, Springsted uses a minimum of 65%. He said you also consider the lease length. ~again called the Council a kangaroo court. Attorney Froberg, when asked, said he could have a draft of a development agreement ready by the next meeting. He has been working with the League of Minnesota Cities on the agreement. -17- REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page eighteen IF - ESTABLISHMENT OF DISTRICT NO. 1 - continued Thistle said the Council will review the proposed development contract after this evening's comments to see if they want to make any changes. Sherman said he has three leases, and several letters of intent. He said they plan to rent to high quality professionals. Hare continued to interrupt and harrass the Council at 12:02PM. even though he was repeatedly told the public portion of the hearing was closed. Stover moved, Watten seconded, to adopt Resolution No. 36-90 - "A Resolution Designating and Establishing Development District No.1; Establishing Tax Increment Financing District No. 1 located within Development District No.1; and approving and adopting the Development District Program for Development District No. 1 including Tax Increment Financing Plan for Tax Increment Financing District No.1". Stover asked what this committed the City to. Thistle said if the City decided not to carry it any farther, they could pass a resolution recinding the action and certify it to the ~ounty. Motion carried bv roll call vote - 4 ayes - 1 nay (Brancel . Council Break 12:15 - 12:20 The following items will be dealt with at the next meeting: 7E and 7F. APPEAL NOTICE TO REMOVE Applicant: Location: Darlene Y. Dollmann 4830 Ferncroft Drive Stover moved, Gagne seconded, to postpone the Appeal to Remove for Darlene Dollman, 4830 Ferncroft Drive, until Monday, April 30, 1990 at 7:00PM. Motion carried - 5/0. STAFF REPORTS ATTORNEY'S REPORT . Agreement for Water Service to Deephaven Attorney Froberg drew thp Council's attention to certain parts of the agree- ment. He said any extension that the City of Deephaven wishes to make to the water system have to be approved by the Ci ty of Shorewood, primarily the City Engineer, to make sure the existing system will handle it. He said all residents, outside of those in Amesbury North, would be required to pay a $4,000 hookup charge. He also said that it is important for the City of Deephaven to understand that if they put in a water system at a later date, the $4,000 fee paid to the City of Shorewood will not be refunded. The City of Shorewood will not terminate water to anyone that has paid the $4,000 fee. The users in Amesbury North are excluded because they have already been assessed. -18- REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page nineteen . STAFF REPORTS - ATTORNEY'S REPORT - Agreement for Water Service to Deephaven Stover asked Engineer Norton about the pump. Norton said that had been one of his concerns when he received the contract. He said they will have the cost estimates to the City soon, they are working on them. A rough estimate was $50,000-100,000. Norton said there are only one or two people outside of Amesbury North that will be hooking up. Whittaker questioned whether there was a provision in the contract for controlling individual hookups where no extension is required. Council asked Attorney Froberg to add a provision to this affect in the agreement. Gagen moved~ Brancel seconded. to approve the Agreement for. Water Servi~e to the City of Deephaven. Motion carried - 510. Water Hookup - Lot 2, Block 1, Sutherlin Addition - 4715 Old Kent Road Gagne moved~ Stover seconded. to apprive a hookup of Lot 2. Block 1. Sutherlin Addition-4715 Old Kent Road into the Shorewood water system contingent upon Deephaven'sapproval of the Agreement for water service to Deephaven. Motion carried - 510. . Finaffiart Update YES Property is now composed of Larry Youngsted and Mr. Eastland. Frober~r::;:: talked with Larry Youngsted on Thursday. Youngsted said they are working to payoff all the leins on the property and they will be able to file a plat without any encumberances except for possible mortgage encumberances which would also be co-signers on the plat, and they will be able to file that within 60-90 days. Gagne asked if their final blacktopping was done because it lS so uneven. Planner Nielsen will check into this. Brancel asked what happens with the Dairy Queen foundation? Haugen said we are stuck with it. Brancel said next time an Occupancy Permit should be held. Gagne asked about the aeration. Nielsen will check on it. ENGINEER'S REPORT Postponed until next meeting ADMINISTRATOR'S REPORT Proposals for Yard Waste Collection and Disposal Postponed until next meeting Option for Public Works Site . Administrator Whittaker brought the Council up-to-date on the option. Gagne moved, Watten seconded, that the Administrator and the Planner talk to Mr. Cross and offer him $150,00 for the property, Mr. Cross keeps the trees. a restrictive. covenant be placed on the back 50'of Cross' property to protect the trees. that a 3 mo~th opti~1l of $5 .~OObe ~ i~ I>l~ce ~hicb~M._. would be subtracted from the price,upon City purchase. Mot1on carr1ed-510. CITY OF SHOREWOOD REGULAR COUNCIL MEETING MONDAY, APRIL 23, 1990 Page twenty . PAYMENT OF CLAIMS AND ADJOURNMENT Gagne moved, Brancel seconded, to approve the claims for payment and to adjourn the Regular Council Meeting at 12:40AM on Tuesday, April 24, 1990. GENERAL AND LIQUOR FUNDS - ACCOUNT NO. 00-00166-02 General Liquor Checks I 4175 - 4254 $ 89,239.85 $ 63,692.51 Payroll Checklist: Checks I 203958 - 203993 TOTAL 12,692.38 101,932.23 2,853.51 66,546.02 Motion carried - 510. RESPECTFULLY SUBMITTED, . Sue Niccum Assistant Clerk .