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1988-02-01 CC Minutes CITY OF ALBERTVILLE . POBOX 131 ALBERTVILLE, MINNESOTA 55301 PHONE (612) 497-3384 COUNCIL MINUTES FEBRUARY 1, 1988 The regular meetlng of the Albertvllle Clty Councll was called to order by Mayor Loretta Roden Members present lncluded Gary Schwenzfeler, Donatus Vetsch and Bob Braun. Councll member Don Cornellus was absent Others present lncluded Maureen Andrews, Bob Mlller and Brad Farnham. There was a motlon made to approve the agenda The motlon was made by Donatus Vetsch and seconded by Gary Schwenzffler. All were ln favor and the motlon c8r-rled . The mlnutes of the January 19, 1988 Councll meetlng were revlewed and a questlon was ralsed regardlng Darken wald's wlsh that the Clty be lnvolved wlth a share of gettlng the other half of the lnterchange bUllt. The Councll member asked lf thlS reference was money or Just polltlcal support to the proJect. Maureen stated that lt was not clear, but that Darkenwald's could be looklng at bondlng support, but would deflnltely be looklng for local polltlcal support The records should note that at thlS tlme no monetary amount has been dlscussed nor has there been any dlScusslon about the full extent of the Clty'S lnvolvement. There were no other questlons regardlng the mlnutes, so a motlon was made to approve the mlnutes. The motlon was made by Gary Schwenzfeler and seconded by Bob Braun. All were In favor and the motlon was approved. The Councll called the followlng feaslbllltles reports on the followlng motlons: * HIGHWAY 37 TRUNK SEWER IMPROVEMENT - The motlon was made bv Gary Schwenzfeler and seconded by Bob Braun. All were In favor and the motlon carrled. * BARTHEL MANOR ~ 2nd ADDITION STREET IMPROVEMENT - The motlon to order was made by Donatus Vetsch and seconded by Gary Schwenzfeler. All were In favor and the motlon carrled. * PSYK'S 4th ADDITION STREET IMPROVEMENT - The motlon to order the feaslblllty report on Psyk's 4th Addltlon, pendlng Doug Psyk's request for lmprovements, was made by Bob Braun and seconded by Donatus Vetsch. All were In favor and the motlon carrled. * HACKENMUELLER'S ROAD IMPROVEMENT - The motlon was made by Gary Schwenzfeler and seconded by Bob Braun. All were ln favor and the motlon carrled. . * CITY STREET MAINTENENCE IMPROVEMENT - The motlon call1ng for the feaslblllty report was made by Donatus Vetsch and seconded by Bob Braun All were ln favor and the motlon carrled. Make our City Your Ct/y We myt/e Home Industry Busmess COUNCIL MINUTES "PAGE 2 f<11t!n 1- 1 i 1 i III ~ it t * DARKENWALD - PHASE I IMPROVEMENT - The motlon was Schwenzfeler and seconded by Donatus Vetsch. All and the motlon carrled. made by Gary were 1n favor . The next ltem d1scussed was the request by St. Albert's for a Ilmlted 3.2 Beer llcense for the Valent1ne Dlnner/Dance to be held February 13, 1988, at the St. Albert's Par1sh Center from 6:30 to m1dn1ght. The Counc1l approved the 11cense on B mot1on made by Bob Braun and seconded by Gary Schwenzfe1er. There was a unanlmous vote of approval. A representatlve of the Wr1ght County Sher1ff's Offlce was present to see 1f the Counc1l had anyth1ng they wanted to d1SCUSS. It was p01nted out that there lS aga1n some problems w1th three and four wheelers, and that the deput1es should keep an eye out for problems. The Sherlff's representatlve was asked how they lnterpreted Ord1nance 1988-1, an ORDINANCE RELATING TO SNOW REMOVAL, REPEALING ORDINANCE 1985-4, AND PROVIDING A PENALTY FOR VIOLATION THERE OF. A quest10n had been ralsed by Ken Llndsay regardlng whether or not the Ord1nance gave the Sher1ff's offlce the author1ty to t1cket veh1cles or would the veh1cle have to be towed. The representatlve at the meet1ng sald that the deput1es had looked over the Ord1nance earl1er and felt that 1t prov1ded for 3 opt1ons: . 1. Tlcket the vehlcle 1n v1olatlon 2. Tow the vehlcle 3. T1cket and tow the vehlcle It was the Sherlff's Department's feellng that the Ordlnance was clear on thlS lssue. The only other pOlnt that they asked to have clar1f1ed was whether or not the C1ty stl11 wanted to enforce the "Snowbud" Ord1nance. The answer to thls quest10n was yes. The representat1ve of the Sher1ff's Off1ce expla1ned that there had been some confuslon about Ordlnance 1988-1, when the Clty wanted to enforce throughout the daytlme (or non-restr1cted hours) or durlng the earller morn1ng hours of the Snowb1rd Ord1nance. The Councll stated that the new Ord1nance was adopted to deal wlth cars parked on the street durlng daytlme clean up. The Deputy sald he would relay th1S 1nformat1on back to the off1ce. The Counc1l next appo1nted Juran and Moody, Inc. as the C1ty'S f1nanc1al adv1sor. The mot1on to approve was made by Gary Schwenzfe1er and seconded by Bob Braun. All were 1n favor and the mot1on carrled. Maureen was then lnstructed to notlfy Spr1ngstead, Inc., 1n wr1t1ng, lnformlng them that the C1ty w1shed to dlscontlnue thelr serVlces as flnanclal advlsor. Brad Farnham stated that he was aware that Sprlngstead, Inc. sometlmes has a contract wlth the clt1es they serve that do not speclfy the 11fe of the contract. It appears that the C1ty lS not under such an obllgatlon w1th Spr1ngstead at thlS tlme. No other Counc1l actlon was taken on thlS lssue. . The next 1tem dlscussed by the Councl1 was the Pat project for the gas statlon/convenlence store. Mer ~J~~' Tax ~ , I~ t. "" ,j'1 f <. Increment Flnanclng . . . COUNCIL MINUTES PAGE 3 "IP ~ ~~ ' Ii" .1< 1< lj II< l' Bard stated that he felt It was Importnat that he revIewed the CIty'S optIons prIor to the tIme that the developer was on the agenda. In order for thIS dIScussIon to take place, Juran and Moody, Inc. ran some prelImInary schedules to determIne what type of Tax Increment money would be avaIlable. USIng the InformatIon supplIed to the County Assessor's OffIce, It was deter~Ined that the project would generate $50,000.00 In Bond proceeds mInus $15,000 to $20,000.00 needed to cover Insurance cost (capItalIzed Interest, Bond Counsel fees, Bond prIntIng, etc ), leavIng only $30,000 to $35,000 00 In workIng capItal. Brad stated that he felt that thIS was a very weak project because the numbers dId not support the project. Brad went on to explaIn that the theory behInd tax Increment fInancIng IS that a project should stand on ItS own two feet to be sound and should pass the "But not for" test, - that IS, but not for tax Increment the project would not proceed. In addItIon, Brad cautIoned the CouncIl on uSIng tax Increment as reactIonary response to a proposal rather than an Incentatlve to attract busIness. The purpose of tax Increment IS to be used as a tool to make somethIng the CouncIl wants to happen somethIng specIal, not a common everyday occurance. Donatus Vetsch asked why a range of assessed values has been prOVIded by the County and how would the hIgh end effect other sImIIlar propertIes. Brad explaIned that If the developer agreed to be assessed at the hIgher level that It would be done thru a one tIme agreement wIth the County, there- fore wIll not effect any other propertIes. There was some dIScussIon regardIng the general oblIgatIon tax Increment bonds vs an Increment pass thru. It was pOInted out that If a T.I. bond was Issued on a project WhICh later falls, the CIty IS oblIgated to make the bond payment through the general tax levy. In the Instance that the "pass thru" IS used, the CIty passes the Increment generated by the project onto the developer over the same number of years of a T.I. bond Brad agaIn stressed to the CouncIl that he dId not belIeve that a tradItIonal tax Increment bond should nor be structured because of ItS sIze, but rather see the CouncIl havIng two optIons: * PrOVIde a pass thru of the Increment generated from the project over a perIod of 8 years * PrOVIde no fInancIng on project AddItIonal dIScussIon on the tax Increment project later In meetIng, once the developer IS present. The next Item dIscussed was the new cash flows for the projects dIscussed at the work meetIng on January 26, 1988. The CouncIl revIewed the Impact of the follOWIng G.O.SEWER REVENUE BONDS - At the workshop, a request was made to Increase the SAC charge over a perIod of years to see what Impact It has on the Interest charges and lIfe of the bond The schedule was stru~tlred wIth a $50.00 Increase to the SAC charge on the even years (88,901921 .) basIs, keepIng the number of permIts at 50 per year, whIch reSUlteSl1 .~he bond beIng shortened by 7 years (from the fust schedule) In addI bon t' ~rtemng the 11 fe of the bond, the CIty WIll save approxImately $56,0 ~ ,In Interest payments. \; ~I f H · , l COUNCIL MINUTES PAGE 4 ~~'] It was also pOInted out that at the end of the repayment schedule there WIll be a surplus of about $20,000.00 wIthout any addItIonal Interest Income added to that amount. . The CouncIl dIscussed thIS schedule In some detaIl. One of the members asked what would happen to the bond structure If the SAC charge was Increased at a slower rate or If the number of annual bUIldIng permIts was decreased. Brad pOInted out that In both Instances the bond lIfe would be extended, but, In any case, the CouncIl needs to be comfortable WIth the structure before the bond IS sold. Bob Braun stated that he was comfortable WIth the 50 bUIldIng permIts, but after some addItIonal dIScusSIon, It was suggested that a new schedule be run for 40 permIts. Another questIon was asked about what happens If the CIty falls short In the number of permIts Issued. It was pOInted out that the CIty WIll need to reVIew thIS Issue annually and may have to accelerate the SAC charge Increases. There was also a questIon raIsed about what the CIty should charge for apartments and duplexes. It was pOInted out that thIS IS truly a CouncIl's call, but It was suggested that we look at the gUIdelInes set forth by the MetropolItan Waste Control CommIssIon (MWCC) when establIshIng some sort of POlICY, . G.O IMPROVEMENT BONDS OF 1988 - PAGE 1 - The fIrst change made was to adjust the CIty'S share of the Hackenmueller Improvement. The CounCIl had requested that thIS share be reduced from 40% to 10%, resultIng In the amount to be assessed at $8,700.39. PAGE 2 - The Issue was also shortened up to 12 years from 15 years. When coupled WIth Increase of assessments for Hackenmueller's, the follOWIng ll'lpact occurs. 1 Assessment prInCIpal IS Increased by $2,192.94 2. Decreases the Interest payment by $97,351.52 3 Changes the total assessment InCOl'le by a decrease of $95,158.58 4. Decreases the total Tax Levy by $25,000.00 5 Decreases the average mIll Increase by 08% 6. Decreases the Overall Average Annual Increase and Monthly Increase across the market value schedule Brad pOInted out that these current cash flows are strong and make good fIscal sense. The new changes WIll be reflected In the next set of schedules run by Juran and Moody, Inc. The representatIves on the Meyer project were present to dISCUSS the Issue WIth the CounCIl. Mr. John GrIes, the attorney for Meyer, presented theIr stand on the Issue Mr GrIes' openIng remarks reflected baslcly what Brad had presented earlIer to the counCIl; that there IS not a large enough assessed valuatIon to warrant the Issuance of a bond . Mr. GrIes stated that It was theIr feelIng that the County Assessor had gIven the property a much lower assessed valuatIon then what It IS worth, but WIthout a commItment for a hIgher valuatIon, el1mlnated. bOr~ffi~,r.;l19 optIons are almost fl" W I At thIS pOInt In the dIScussIon, Mr GrIes suggested'~ .d the CIty prOVIde a pass thru of Increment WhICh would be generated by tMe proJect. He went on to explaIn that there would be no commItment of up front money WIth optIon COUNCIL MINUTES PAGE 5 t;HHf i~ ~1 " r, and that the CIty would be at no rIsk wIth thIS type of proposal. . John went on to say that at thIS pOInt the bank mayor may not be wIllIng to fInance the remaInIng portIon of the project wIthout the tax Increment, and that the Ideal sItuatIon would be that the CIty would use the $25,000.00 In excess tax Increment bond proceeds along wIth the pass thru money to help fInance the project. A questIon was asked what would have to be done In order to do a pass thru to the developer. It was explaIned that a new dIstrIct would have to be created or an old dIstrIct would have to be amended, that some type of an agreement would have to be worked regardIng the money transfer John pOInted out that thIS project IS a $650,000.00 Investment In the communIty and that the CIty should be comfortable wIth provIdIng the Increment. Brad stated that he dIsagreed wIth thIS statment because the project faIled to pass the "but not for" test Wh1Ch 1S what the leg1slature IS so cnt1cal of. Brad went on to say that If the Counc1l would dec1de to pass on the 1ncrement to the project, that they would need to make a determ1nat1on on how the up front expense would be taken care of and whether or not the C1ty would want to share In a percentage of the 1ncrement. In addItIon, he cautIoned agaInst the CouncIl author1z1ng the use of the $25,000.00 untIl the C1ty makes sure that those funds are ava1lable . There was also some d1Scuss1on about the bank's Involvement 1n the 1ssue. It was expla1ned that the bank was 100k1ng for the C1ty'S Involvement 1n a tax Increment project as a form of equ1ty prIor to the1r makIng a dec1s1on on the amount of rIsk they are wlll1ng to support. The d1Scusslon then went back to the 1ssue of up front costs and who would be respons1ble for paY1ng for them. Brad est1mated that these costs could run as hIgh as $8,000.00 to $10,000.00, but felt these are not costs that the C1ty should pIck up. Would the project be wIllIng and able to support these costs or would they need to be spread across the years of 1ncrement, plac1ng that burden onto the tax payers because general fund dollars would be beIng used to cover these expenses. In summary the followIng 1ssues are raIsed 1. Legally, the Counc1l may pass the Increment on to the developer over the Ilfe of the 1ncrment 2. Would the project happen wIthout tax 1ncrement and does 1t pass the "but not for" test 3. Does the C1ty want to be 1nvolved w1th th1S Increment project 4 If Involved wIth the project, does the CIty want to share In a percentage of 1ncrement passed on John GrIes asked at thIs t1me why the C1ty would want to benefIt from the project by takIng a share of the 1ncrement. Brad stated that there may be some longer term goals and ObjectIves that the C04n(',~1 may w1sh to cons1der when mak1ng thIS dec1s1on. Furthermore, Brad expla1ned It hat shar1ng 1n Increment . provIdes the Counc1l wIth just1f1cat1on for dOIng th~~' oject, that IS, the C1ty benef1ts from the new development and 1t ma~', add1tlonal funds ava1lable 1n return. ' ~ \ , 1 COUNCIL MINUTES PAGE 6 tM JI 11~1, . At thIS pOInt In the dISCUSSIon, Maureen suggested to the CouncIl that they mIght lIke to thInk the Issue through In more detaIl and that It mIght be helpful to have a specIal work meetIng to dISCUSS the Issues In more detaIl before makIng a deCISIon. John IndIcated that he dIsagreed WIth thIS proposal and that the CouncIl should take actIon on the Issue as soon as pOSSIble. John stated that he felt the Counc~l has already establIshed a POlICY on the Issue of tax Increment through past projects. Brad dIsagreed WIth thIS theory statIng that each project must be looked at on an IndIVIdual baSIS and that no two projects are ever exactly the same. WIth no other dISCUSSIon the CouncIl set a work meetIng for February 9, 1988, at 7.00 p.m Brad Farnham and Bob MIller WIll be attendIng as well. After the representatIves of the Meyer's project left, Brad told the CouncIl that he hoped that he had not overstepped hIS role as adVIsor and that the CouncIl should feel free to gIve hIm some IndIcatIon on what they want hIS role to be. Brad saId that at the work meetIng the CouncIl should conSIder developIng gUIdelInes for tax Increment projects and WIll need to deCIde what to do WIth thIS project. In an effort, he agreed to send out some InformatIon that Juran and Moody has developed on tax Increment. . There was no other dISCUSSIon on thIS Issue so the CounCIl went on to developIng a Developer's Agreement for the Darkenwald project. After some lImIted dISCUSSIon regardIng the need for an agreement, a motIon authorIZIng the CIty Attorney and CIty AdmInIstrator to work on the Developer's Agreement. The motIon was made by Gary Schwenzfeler and seconded by Donatus Vetsch. All were In favor and the motIon carrIed. The next Item dIscussed was the Munltec contract. Bob MIller was asked to contact the JOInt Power's attorney to express the CIty'S concern about the contract. No other actIon was taken on thIS Issue. Maureen Informed the CounCIl that Ken had been asked to present a report on the CIty'S Wastewater Treatment FaCIlIty. The CounCIl authorIzed Ken's partICIpatIon In the program but held off makIng a deCISIon whether or not Ken should attend the entIre school untIl more InformatIon IS avaIlable on the program. The CounCIl reVIewed the Income receIved and bIlls to be paId. Donatus Vetsch asked why the NSP bIll appeared to be much hIgher than the month before. Maureen explaIned that the Increase IS the result of hIgher than normal bIll at the wastewater treatment faCIlIty There were no other questIons so a motIon was made by Gary Schwenzfeler and seconded by Bob Braun to approve the bIlls. All were In favor and checks 8460 through 8504 were approved. . Maureen next and would be Informed her Informed the CounCIl that she had checked WIth the MEED OffIce able to get a secretary under a SIX mont~ fontract. The CounCIl to go ahead and try to fIll the posltI01jap soon as pOSSIble. I . . . COUNCIL MINUTES I PAGE 7 I p~ ! The Councll was lnformed that the Clty had recelved notlflcatlon that the Wastewater Treatment Faclllty contract had been completed on the federal level. The Councll dlscussed the lssue of dog catchlng. Maureen was asked to contact Davld Stromberg regardlng a contract for the next meetlng. The Malntenance Department's overtlme calendars were revlewed. The Councll commented on how well the overtlme lS belng kept down. There was no other buslness so a motlon to adJourn was made by Gary Schwenzfeler and seconded by Bob Braun. All were In favor and the motlon carrled. 'iYl~~~ . ~l I,