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02-28-11 CC WS Mtg MinCITY OF SHOREWOOD CITY COUNCIL WORK SESSION MONDAY, FEBRUARY 28, 2011 MINUTES 1. CONVENE CITY COUNCIL WORK SESSION 5755 COUNTRY CLUB ROAD COUNCIL CHAMBERS 6:30 P.M. Mayor Lizde called the meeting to order at 6:35 P.M. A. Roll Call Present, Mayor Lizee; Councilmembers Hmvet, Siakel, Woodruff and Zerby; Attorney Keane: Administrator Heck; Finance Director DeJong; Planning Director Nielsen; Director of Public Works Brown; and Engineer Landini Absent: None B. Review Agenda Zerby moved, Woodruff seconded, approving the agenda as presented. Motion passed 5/0. 2. EMINENT DOMAIN Mayor Lizee turned control of the discussion about eminent domain over to Engineer Landini and Attorney Keane. Engineer Landini stated the purpose of this session is to educate Council on the various processes used for acquiring land for public purpose. He explained Minnesota State Statute §465 give cities the right to acquire land. Minnesota Statute Chapter 117 governs the procedure for acquiring land through an eminent domain process. A city can acquire land within 90 days through a quick take procedure. The eminent domain process takes a minimum of 140 days. An appraisal is required to move forward with eminent domain proceedings. Landini then explained the City has some stormwater management projects, which have required the City to ask property owners to grant the City easements. The property owners either denied the City the easements or refuse to talk to the City. Acquisition through the eminent domain process is one of the tools that would allow the City to move forward with those specific projects. Administrator Heck explained the City has encountered instances where projects have been cancelled because the City couldn't get the necessary voluntary easements. There may be times when it would be better for the City to consider acquiring land through the eminent domain process rather than cancel a project. He stated Staff thought it prudent to provide Council with information about the process so Council could eventually consider developing a policy that outlines circumstances for which the City may want to consider using eminent domain to acquire the land needed to move a project forward. There is a project in the not too distant future when it would be beneficial to acquire a larger piece of land to implement a better solution and in those instances the property owner may want to be financially compensated for granting use of a larger piece of property. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES February 28, 2011 Page 2 of 4 Attorney Keane stated the preferred approach for acquiring an easement or right -of -way (ROW) is through the negotiation process. He explained he prefers to use City staff to conduct the negotiations. The City could also contract with one of a couple of companies that provide ROW and easement acquisition assistance or use a consulting engineer. Keane explained he prefers staff first because there is a relationship with staff, there is an established ongoing dialogue, and there wouldn't be a great deal of additional out-of-pocket costs. Staff can be more responsive and flexible than a ROW agent. With regard to the easement near Silver Lake, he stated he thought staff could package some flexibility with the property owner that a ROW agent might not have at their disposal. He explained that during the negotiation, phase staff can characterize the voluntary sale as a sale in lieu of eminent domain and that does provide tax advantages to the property owner. The City can avoid or delay the taxable event of that. The property owner can take the proceeds from the sale, put them into other comparable real estate within three years, and not have a taxable event. Keane stated if the City is unable to negotiate a Land acquisition with a property owner and therefore enters into the process of acquiring the land through eminent domain it gives the City the certainty of acquiring the easement within 130 — 140 days. Keane reviewed the risks of the eminent domain process. The City is locked into the process and the process cost money. The City is starting a law suit and it has to go to court to petition to acquire the land interest. The City has to get a formal appraisal prepared. If the City has to go to hearings there is a cost associated with that. The City would have to pay commissioners to assist with determining the damages. Keane noted that the basic premise in the eminent domain process is the property owner's rights are protected by the federal and state constitution. He stated Malkerson Gunn Martin LLC, the firm he works for, collectively has more eminent domain experience on its legal staff than any other firm in town. lie noted the document included in the meeting packet explaining the eminent domain process is extremely comprehensive. Keane explained the first step in the eminent domain process is a determination by the Council, as the governing body, that the City needs the property. This would be in the form of a adopting a resolution declaring a public purpose. The City would notice the property owner(s) and establish a date for the court to adopt the finding of public purpose. Once the court sets a hearing date and issues an order to transfer the title of the property the property owner is entitled to the proceeds. Keane then explained the court appoints three commissioners who are charged with reporting back to the court their determination of damages within 180 days. Hennepin County requires the commissioners be comprised of an appraiser, a licensed real estate professional and an attorney all of whom have experience with property values. Keane went on to explain that in 2006 the State Legislature made significant changes to the eminent domain process. The requisites remained pretty much the same. But a 20/40 rule was implemented in addition to some other nuances. Under the 20/40 rule if the condemning authority makes a certified offer and the final award is 20 percent over the certified offer, the property owner can ask for recovery of all of their fees and costs. If the final award is 40 percent over, the condemning authority must reimburse all of the property owner's fees and costs. The intent of the 20/40 rule is to force the condemning authority to make a more realistic offer in first instance. He explained the property owner has three bites at the apple — the negotiation phase, the hearings before the commissioners, and if the property owner is not satisfied with the commissioners' determination of damages, they can appeal to a jury trial of six lay people. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES February 28, 2011 Page 3 of 4 Keane then stated a lot of care has to go into making the certified offer especially on partial land takes. If the acquisition of part of a lot creates a situation where a lot that could have legally been subdivided can no longer can be subdivided after part of the lot is acquired the property owner is entitled to the damages for the part actually acquired as well as any damages to the remainder of the property that wasn't acquired. It's imperative for the condemning authority to assess the consequences thoroughly, particularly from the vantage point of the property owner. Keane went on to state the power of eminent domain should be used sparingly. But there are times where the land is absolutely needed for public purpose and good. There is no other place for a pipe to go, for stormwater to flow, or for a roadway turn lane to go. He commented he thought the principals of the eminent domain process are fair and equitable, but they are burdensome on the public. He explained he personally goes to every extent possible to negotiate the acquisition of the easement or ROW. Keane noted the document include in the meeting packet explains the eminent domain process in mostly chronological order and it's easy to understand. He encouraged the members of the Council to review the information at their convenience. Couneilmember Woodruff stated the document did not include any examples for applying the process to drainage easements. Attorney Keane explained the process applies to the acquisition of any public interest in private property. Couneilmember Woodruff then stated some past councils decided they did not want to acquire land through the eminent domain process. He recommended Council make a policy decision about what staff should do and in what order. He stated that in the past Director Brown has indicated the City has had a policy not to purchase easements. Director Brown explained the goal has been to negotiate easements through added value. Brown noted the City has acquired land through eminent domain in the past. It was used against seven parcels for the reconstruction of the Trunk Highway 7 and Highway 41 intersection. It was used against 22 parcels for the County Road 19 and Smithtown Road intersection project. Brown noted some past councils thought the amount of emotion attached to the eminent domain / condemnation process was too great and therefore chose not to use the process. Couneilmember Woodruff stated when the Glen Road reconstruction project was being considered a significant number of residents refused to grant easements to the City that were necessary to move the project forward. He explained that from his vantage point the amount of pain and cost that would have resulted from the acquisition of the number of easements needed through eminent domain was not worth it. He again stated the City needs to have a policy that would identify the various steps to go through to acquire land and how to decide the negotiating position the staff should carry out. He noted he was not sure if it could be boiler plate or if it should be talked about on a case by case basis. Administrator Heck noted staff can't negotiate the acquisition of land for a price unless it's been pre - approved by Council through a resolution. Mayor Lizee stated it seems clear to staff that eminent domain is one of the tools in the tool box, but not one of the first ones that should be used. In response to a comment from Couneilmember Woodruff, Attorney Keane explained the City can acquire ownership rights through eminent domain as well as the right to use the property through that process. Keane noted the City can also get a temporary easement. CITY OF SHOREWOOD WORK SESSION MEETING MINUTES February 28, 2011. Page 4 of 4 Director Brown stated if Council moves towards creating a policy or procedure for acquiring land through the eminent domain process the first thing that has to be answered is if the public good is worth acquiring land through that process. 1 • I► Woodruff moved, Zerby seconded, Adjourning the City Council Work Session of February 28, 2011, at 7:02 P.M. Motion passed 510. RESPECTFULLY SUBMITTED Christine Freeman, Recorder Christine Lizde, Mayor ATTEST ria6 Hecl tty Acua mistrator /Clerk