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1988-02-01 CC Agenda/PacketALBERTVILLE CITY COUNCIL AGENDA There was no agenda found for meeting. CITY OF ALBERTVILLE P. O. BOX 131 ALBERTVILLE, MINNESOTA 55301 PHONE: (612) 497-3384 COUNCIL MINUTES FEBRUARY 1, 1988 The regular meeting of the Albertville City Council was called to order by Mayor Loretta Roden. Members present included Gary Schwenzfeier, Donatus Vetsch and Bob Braun. Council member Don Cornelius was absent. Others present included Maureen Andrews, Bob Miller and Brad Farnham. There was a motion made to approve the agenda. The motion was made by Donatus Vetsch and seconded by Gary Schwenzfeier. All were in favor and the motion carried. The minutes of the January 19, 1988 Council meeting were reviewed and a question was raised regarding Darken wald's wish that the City be involved with a share of getting the other half of the interchange built. The Council member asked if this reference was money or just political support to the project. Maureen stated that it was not clear, but that Darkenwald's could be looking at bonding support, but would definitely be looking for local political support. The records should note that at this time no monetary amount has been discussed nor has there been any discussion about the full extent. of the Cit.y's involvement. There were no other questions regarding the minutes, so a motion was made to approve the minutes. The motion was made by Gary Schwenzfeier and seconded by Bob Braun. All were in favor and the motion was approved. The Council called the following feasibilities reports on the following motions: *.HIGHWAY 37 TRUNK SEWER IMPROVEMENT - The motion was made by Gary Schwenzfeier and seconded by Bob Braun. All were in favor and the motion carried. * BARTHEL MANOR - 2nd ADDITION STREET IMPROVEMENT - The motion to order was made by Donatus Vetsch and seconded by Gary Schwenzfeier. All were in favor and the motion carried. * PSYK'S 4th ADDITION STREET IMPROVEMENT - The motion to order the feasibility report on Psyk's 4th Addition, pending Doug Psyk's request for improvements, was made by Bob Braun and seconded by Donatus Vet.sch. All were in favor and the motion carried. * HACKENMUELLER'S ROAD IMPROVEMENT - The motion was made by Gary Schwenzfeier and seconded by Bob Braun. All were in favor and the motion carried. CITY STREET MAINTENENCE IMPROVEMENT - The motion calling for the feasibility report was made by Donatus Vetsch and seconded by Bob Braun. All were in favor and the motion carried. Make our City ........ Your City We invite Home, Industry. Business COUNCIL MINUTES "PAGE 2 * DARKENWALD - PHASE I IMPROVEMENT - The motion was made by Gary Schwenzfeier and seconded by Donatus Vetsch. All were in favor - and the motion carried. The next item discussed was the request by St. Albert's for a limited 3.2 Beer license for the Valentine Dinner/Dance to be held February 13, 1988, at the St. Albert's Parish Center from 6:30 to midnight. The Council approved the license on a motion made by Bob Braun and seconded by Gary Schwenzfeier. There was a unanimous vote of approval. A representative of the Wright County Sheriff's Office was present to see if the Council had anything they wanted to discuss. It was pointed out that there is again some problems with three and four wheelers, and that the deputies should keep an eye out for problems. The Sheriff's representative was asked how they interpreted Ordinance 1988-1, an ORDINANCE RELATING TO SNOW REMOVAL, REPEALING ORDINANCE 1985-4, AND PROVIDING A PENALTY FOR VIOLATION THERE OF. A question had been raised by Ken Lindsay regarding whether or not the Ordinance gave the Sheriff's office the authority to ticket vehicles or would the vehicle have to be towed. The representative at the meeting said that the deputies had looked over the Ordinance earlier and felt that it provided for 3 options: I. Ticket the vehicle in violation 2. Tow the vehicle 3. Ticket and tow the vehicle ( It was the Sheriff's Department's feeling that the Ordinance was clear on this issue. The only other point that they asked to have clarified was whether or not the City still wanted to enforce the "Snowbird" Ordinance. The answer to this question was yes. The representative of the Sheriff's Office explained that there had been some confusion about Ordinance 1988-1, when the City wanted to enforce throughout the daytime (or non -restricted hours) or during the earlier morning hours of the Snowbird Ordinance. The Council stated that the new Ordinance was adopted to deal with cars parked on the street during daytime clean up. The Deputy said he would relay this information back to the office. The Council next appointed Juran and Moody, Inc. as the City's financial advisor. The motion to approve was made by Gary Schwenzfeier and seconded by Bob Braun. All were in favor and the motion carried. Maureen was then instructed to notify Springstead, Inc., in writing, informing them that the City wished to discontinue their services as financial advisor. Brad Farnham stated that he was aware that Springstead, Inc. sometimes has a contract with the cities they serve that do not specify the life of the contract. It appears that the City is not under such an obligation with Springstead at this time. No other Council action was taken on this issue. The next item discussed by the Council was the Pat Me;er.rax Increment Financing project for the gas station/convenience store. COUNCIL MINUTES PAGE 3 Bard stated that he felt it was importnat tha prior to the time that the developer was on t discussion to take place, Juran and Moody, In to determine what type of Tax Increment money he reviewed the City's options e agenda. In order for this . ran some preliminary schedules would be available. Using the information supplied to the County Assessor's Office, it was determined 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 incentative 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 similiar 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 fails, 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 struck red with a $50.00 increase to the SAC charge on the even years (88,90,912 ..) basis, keeping the number of permits at 50 per year, which resulte#° he bond being shortened by 7 years (from the first schedule.) In additionhl)rtening the life of the bond, the City will save approximately $56,0(101" 0, in interest payments. COUNCIL MINUTES PAGE 4 It was also pointed out that at the end of the will be a surplus of about $20,000.00 without added to that amount. repayment schedule there any additional interest income 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 40o,to 10°0', 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 impact occurs: 1. Assessment principal is increased by $2,192.94 2. Decreases the interest payment by $97,351.52 3. Changes the total assessment income by a decrease of $95,158.58 4. Decreases the total Tax Levy by $25,000.00 5. Decreases the average mill increase by .0890' 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 basicly 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, bond nq options are almost eliminated. At this point in the discussion, Mr Gries suggestedthat' the City provide a pass thru of increment which would be generated by the project. He went on to explain that there would be no commitment of up front money with option COUNCIL MINUTES PAGE 5 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 may or 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 which is what the legislature is so critical of. Brad went on to say that if the Council would decide to pass on the increment to the project, that they would need to make a determination on how the up front expense would be taken care of and whether or not the City would want to share in a percentage of the increment. In addition, he cautioned against the Council authorizing the use of the $25,000.00 until the City makes sure that those funds are available. There was also some discussion about the bank's involvement in the issue. It was explained that the bank was looking for the City's involvement in a tax increment project as a form of equity prior to their making a decision on the amount of risk they are willing to support. The discussion then went back to the issue of up front costs and who would be responsible for paying for them. Brad estimated that these costs could run as high as $8,000.00 to $10,000.00, but felt these are not costs that the City 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 increment, placing that burden onto the tax payers because general fund dollars would be being used to cover these expenses. In summary the following issues are raised: 1. Legally, the Council may pass the increment on to the developer over the life of the incrment 2. Would the project happen without tax increment and does it pass the "but not for" test 3. Does the City want to be involved with this increment project 4. If involved with the project, does the City want to share in a percentage of increment passed on John Gries asked at this time why the City would want to benefit from the project by taking a share of the increment. Brad stated that there may be some longer term goals and objectives that the Cou.ncll may wish to consider when making this decision. Furthermore, Brad explained that sharing in increment provides the Council with justification for doing th;e oject, that is, the City benefits from the new development and it ma,additional funds available in return. ? COUNCIL MINUTES PAGE 6 is �a At this point in the discussion, Maureen might like to think the issue through in helpful to have a special work meeting to before making a decision. suggested to the Council that they more detail and that it might be discuss the issues in more detail 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 Council 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 Schwenzfeier and seconded by Donatus Vetsch. All were in favor and the motion carried. The next item discussed was the Munitec 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 Schwenzfeier and seconded by Bob Braun to approve the bills. All were in favor and checks 8460 through 8504 were approved. Maureen next informed the Council that she had checked with the MEED Office ^ and would be able to get a secretary under a six montf:ontract. The Council informed her to go ahead and try to fill the positiorr,ap soon as possible. COUNCIL MINUTES PAGE 7 The Council was informed that the City had received notification that the Wastewater Treatment Facility contract had been completed on the federal level. The Council discussed the issue of dog catching. Maureen was asked to contact David Stromberg regarding a contract for the next meeting. The Maintenance Department's overtime calendars were reviewed. The Council commented on how well the overtime is being kept down. There was no other business so a motion to adjourn was made by Gary Schwenzfeier and seconded by Bob Braun. All were in favor and the motion carried. e