Loading...
HomeMy WebLinkAbout04.02.12 Council Minutes COUNCIL MINUTES REGULAR April 2, 2012 1. CALL TO ORDER The meeting was called to order by Mayor Larson at 7:00 p.m. 2. PLEDGE OFALLEGL4NCE Mayor Larson led the audience and Council in the Pledge of Allegiance. 3. ROLL CALL Members Present: Larson, Bartholomay, Donnelly, Fogarty,May Members Absent: None Also Present: Joel Jamnik, City Attorney;David McKnight, City Administrator; Teresa Walters, Finance Director;Randy Distad, Parks and Recreation Director;Kevin Schorzman, City Engineer; Cynthia Muller,Executive Assistant Audience: Tom Flanagan,Annette Kuyper, Drea Doffmg,Mitchell Snobeck, Jim Seed,Jonas Seed, Peter Gualtieri 4. APPROVE AGENDA City Administrator McKnight moved item 12a) 195th Street Assessment to the first item under Petitions, Requests and Communications to accommodate the audience. MOTION by Fogarty, second by Donnelly to approve the Agenda. APIF,MOTION CARRIED. 5. ANNOUNCEMENTS a) Proclaim Earth Day April 22,2012 Mayor Larson proclaimed April 22, 2012, as Earth Day. b) Proclaim Arbor Day April 27,2012 Mayor Larson proclaimed April 27, 2012 as Arbor Day. 6. CITIZEN COMMENTS Ms.Annette Kuyper,20530 Dyers Pass, spoke regarding the Yellow Ribbon Network. The Farmington Warrior to Citizen program has changed their name to the Yellow Ribbon Network to reflect the yellow ribbon which is a symbol of military service families. They have several events including public safety night on April 12,2012; monthly veteran dinners have been held to honor all local veterans at Farmington churches. The last one will be May 7,2012, and will start again in September. The military mother/grandmother luncheon will be held May 12, 2012. 7. CONSENT AGENDA MOTION by Fogarty, second by Donnelly to approve the Consent Agenda as follows: a) Approve Council Minutes(3/19/12 Regular) 5 Council Minutes(Regular) April 2,2012 Page 2 b) Approved Temporary On-Sale Liquor License St.Michael's Church- Administration c) Adopted RESOLUTION R13-12 Approving Gambling Event Permit St. Michael's Church-Administration d) Adopted RESOLUTION R14-12 Accepting Donations to the Rambling River Center Improvement Project—Parks and Recreation e) Approved School and Conference—Parks and Recreation f) Approved Agreement with Marschall Bus Lines for 2012 Swim Bus Program— Parks and Recreation g) Adopted RESOLUTION R15-12 Accepting Donation Marschall Bus Lines— Parks and Recreation h) Approved Bills APIF,MOTION CARRIED. 8. PUBLIC HEARINGS 9. AWARD OF CONTRACT 10. PETITIONS,REQUESTS AND COMMUNICATIONS a) 195th Street Assessment-Engineering City Engineer Schorzman explained the developer has requested the entire assessment be placed on the south portion of the property that is still under their direct ownership. Staff recommended Council direct staff to prepare the necessary PUD amendment and assessment resolution based on the pre-payment of$441,144. If Council decides they would prefer to stay with the existing PUD arrangement,they could direct staff to prepare the assessment resolution per the existing PUD. The budget impact of both options was presented to Council in terms of the fmal ending balance in the road and bridge fund. Mr.James Seed, developer of the Fairhill property, stated they have had 1,000 acres in Farmington for 50 years. They sold the northern half of the property to Mr. Dave Finnegan. The Seed's retained and intend to develop the southern half amounting to 470 acres. In selling the north half, which is the furthest out in terms of development potential,they indemnified Mr. Finnegan from any responsibility for the special assessment which is about to be imposed. It was not planned that there would be a substantial pre-payment on the obligation which would go into a holding fund and used to ultimately pay the bonds. The Seed's do not have a choice regarding any assessment against Mr.Finnegan's land. According to their agreement with Mr. Finnegan,they are required to pre-pay the special assessments for the northern property. This amounts to$2.2 million. An independent appraisal was done and came in at a number that was not satisfactory to Mr. Seed. In discussions with staff, Mr. Seed suggested pre-paying one of the installment payments of$441,144. It is the Seed's objective to have the City comfortable with the land values and their willingness to make all of the assessment payments with the southern half of the property. The $441,144 would be the first annual payment of 2013. Thereafter,all the interest accumulates and 6 Council Minutes(Regular) April 2,2012 Page 3 the Seeds' will make payments twice annually. If Council is not comfortable with accepting the installment pre-payment,then the Seed's would have to pre-pay a substantial amount on the northern half. The Seed's would like the assessments moved to the southern half so they are paying them against their land over ten years. Mayor Larson asked if Council does not approve the$441,144 pre-payment would Mr. Seed pre-pay the entire assessment for the northern half. Mr. Seed stated they would have no choice but to do that. It accelerates a payment that would have been made over the term that matches the bond maturity. Staff's analysis shows if the City receives the accelerated payment,we do not earn the interest we intended to use to pay the bonds. Mayor Larson asked if there was a timeline for development. Mr. Seed stated there has been no active interest for this season. Councilmember May stated she did not understand about the requirement and isn't that the reason the escrow was set up. What does he mean that he is required to pre-pay? City Attorney Jamnik stated that has to do with Mr. Seed's transaction with Mr. Finnegan. They need to clear the assessments off the northern property to close that deal. Councilmember May asked if that was the purpose of the escrow and where is it saying the payment is required to be made? City Attorney Jamnik stated that was set up between Mr. Seed and Mr. Finnegan. There must be a provision in their land transaction. Mr. Seed stated the escrow was funded mid-2011 when they closed the sale. Mr. Seed needed to make good the warranty that Mr.Finnegan would not be part of the assessment. They cannot pay it until it is levied. There is no incentive for Mr. Finnegan or Mr. Seed to pay it when it is levied. Councilmember May asked why they cannot pay what is due in the year it is due? Mr. Seed stated then there is a special assessment lien on the property which is not allowed in the contract with Mr. Finnegan. The way to avoid that is to pay the special assessment as billed. You can voluntarily pay any part of your assessment any part of the year. Councilmember May noted when the agreement was presented to the Council,that was not brought to our attention. Council was told an escrow would be set up for the assessment and now unless we release the lien you will pre-pay the full amount. Mr. Seed agreed and noted he does not have a choice. Councilmember May was not in favor of releasing the lien and needed to protect the taxpayers. She was disappointed in staff's recommendation and when the sale was presented to Council, not all the facts were there. It should be made clear to the Council, especially by the City Attorney,that there could be this pre-payment. We are looking at what the road and bridge fund will look like in 2027 and that is too far out to be overly concerned with. Mr. Seed stated it is not a pre-payment; it is a payment as billed. We are suggesting a pre-payment of the$441,144. Councilmember May stated Council should have been made aware of the full payment requirement when the sale occurred. We would not want to be in the position of releasing collateral. The City has fulfilled all obligations with this development. Mr. Seed stated as have we. 7 Council Minutes(Regular) April 2,2012 Page 4 Councilmember Bartholomay recalled a conversation he had with staff,that it has to do with a percent not a requirement,but that Mr. Seed can earn more money by having access to the money versus it sitting there. City Engineer Schorzman stated the point of our discussion was to show you that there was an obligation there. It still makes financial sense for them to do this. Councilmember Fogarty stated she understood protecting the taxpayer and there are a lot of different ways to do that. Your best prediction of future behavior is past behavior. This developer has been nothing but solid with the City and worked very well with the City. She is willing to consider their request. Pre- payments are always a possibility. We were not misled. In the past,people have pre-paid more than predicted and we have lost out on interest. It is not a possibility she would like to encourage. She realized 2027 is a long time out,but our job is to look long term. Councilmember Donnelly stated the developer retains development rights over land they sold. So do they have to buy it back? Mr. Seed stated that is exactly right. Mr.Finnegan has no interest in being a developer. The Seed family is the developer and the land owner. Development will come from 195th Street;from south to north. In approximately 25 years,Mr. Finnegan's land would be available for development. If the Seed family is still interested,we would have to repurchase the land from Mr. Finnegan. We are accountable to the City through the PUD Agreement. Councilmember Donnelly stated as soon as the assessment is levied on the northern half,then Mr. Seed has to pay it as billed. On the south half,they will go according to the billing and have no intention of pre-paying. Councilmember Donnelly stated the only way to prevent that trigger from happening is for the Council to move the entire assessment onto land that Mr. Seed owns,then it would not trigger the clause in the contract with Mr. Finnegan that requires them to pay the assessment. Mr. Seed stated that is correct and we would amortize it as it is billed. We thought it would be a positive suggestion to pre-pay the first year of$441,144 so the City would have that margin of safety and we would have more equity into the land. If the entire$4.6 million is spread over the entire property, it will require a substantial advance payment. Mayor Larson asked what kind of safety net does the City have if this is approved and things go bad with the land owner. City Engineer Schorzman stated the land is the first safety net. The second is the MSA funds that were collected for the project that can cover a large portion of the bond payments while we are liquidating land should that become necessary. Councilmember May stated for that reason alone, this discussion is about cash. Speaking for the residents, she wants the cash to protect the residents. If that is what has to happen,then pre-pay. That protects the residents more,than staffs recommendation. There is no comfort level in today's market with vacant land. The Council needs to think about VRC and the situation with that development. 8 Council Minutes(Regular) April 2,2012 Page 5 Councilmember Bartholomay stated with the pre-payment option it looks like numbers are based off of bonds we could pay in 2018 and later. Are there any bonds coming due before 2018? Finance Director Walters stated Vermillion River Crossing will come due in 2013. City Engineer Schorzman noted that is what they discussed last week. Councilmember Bartholomay asked if that would change this scenario. City Engineer Schorzman stated it would change things by switching the pre-payment amount over to a bond that is not associated with it. It gets closer to the$441,144 option,but only with a complete pre-payment which the developer has indicated they do not intend to do. To pre-pay the Vermillion River Crossing bonds you would need almost$4 million. If you only get$2.2 million in the pre-payment you will not have the ability to pre-pay those bonds in 2014. Councilmember Bartholomay asked if we could pay part of them off. Finance Director Walters stated you can refund half of it. Mayor Larson asked how is this similar to Vermillion River Crossing? City Engineer Schorzman explained the similarity is the City issued debt to fund infrastructure improvements that were to be paid by the development as it developed. Councilmember May added and it fell on the residents, so it could be the same. Mayor Larson asked about the differences. City Engineer Schorzman explained the difference is in Vermillion River Crossing the assessments were levied and then deferred numerous times and moved to the point where they are not an active assessment. The land has to change hands before we have an opportunity to collect on those assessments and there is no additional safety net for funding like on the 195th Street bonds as far as bond payments with MSA dollars. Councilmember Donnelly stated regarding MSA dollars,they are set up for many purposes including building roads which is one of the main reasons for those funds;not to make bond payments. If we use MSA funds to make bond payments,then we don't fix roads. City Engineer Schorzman stated that is why they are the third line of defense and not the first. Councilmember Donnelly added then if we would have to fix roads,we have to get the money from the taxpayers. City Engineer Schorzman stated the MSA funds are the 2027 ending balance in the road and bridge fund. Councilmember Donnelly stated he understands the Seed family has been around for a long time. His obligation is to the taxpayers. If we were a bank,what would a bank do? Mr. Seed stated there are not rational things done by many banks. This panel is more rational than banks. He welcomed Councilmember Fogarty's memory of the Seed family. There are trails that have been given,there was this window of opportunity between the City, county and the Seed family to get 195th Street built, construct the bridge,re-route the trout stream and accomplish this in a manner of cooperation. We have that with the City. There is nothing that is going to impede the responsibility of this land owner to make the payments of this obligation. The land values have stabilized and there are uses for land now. Houses are being built in the neighborhood and it is imminent we will be in business. Mr. Seed did not know how they are tarred with someone else, 9 Council Minutes(Regular) April 2,2012 Page 6 Vermillion River Crossing. That is not the style of their family and they have 55 years to prove it. They are not walking away from this project because it is too much of an opportunity. The Seed family has not gone down with the recession and we will build on this property in Farmington. The bridge and 195th Street would not be there except for the land owner cooperating and now wanting to pay his part of it. Councilmember Bartholomay stated Council values the partnership with the Seed family. The decision is about what is fundamentally the right decision. The Seed family should not take Council's decision personally. Past practices with other development has hurt the City. Councilmember Fogarty stated so one developer is going to pay for another developer's mistakes. She understood wanting to protect the taxpayer and there are two ways to do it. There is a right way to do business and a way that gets unwelcoming. Mr. Seed is right;we would not have the 195th Street bridge without their cooperation. They have always had the best interest of the community in their heart. It is a fmancial interest as well. If this community is prospering that is all the better for development in the future. She appreciated what the Seed family has done for the City. This is why cities get the reputation of being difficult to deal with. The assumptions go so far as to assume he will default when he never has before, and that the property will not be valuable enough to collect the claims. That is a terrible assumption to make of someone who has been a great partner with us. Mayor Larson stated the Seed family has owned the land for 50 years. You developed in the City multiple times, you have given everything the City has asked of you as far as money, land, etc.without hesitation. It is has been along time since he has seen someone at a meeting show the amount of integrity that Mr. Seed and his family have shown. That means a lot. He thanked the Seed family for that. Mr. Seed stated you cannot live without integrity. You are the victim of your own behavior if you are anything but honest with all parties. Councilmember May commented on Councilmember Fogarty's comment that the project would not have happened without the Seed family. She understood that, but the City has fulfilled our obligations. It has been a tough few years being a banker. Some of the nicest, smartest people have not survived. That is why her decision is based on risk and nothing to do with integrity. Mr. Seed stated the dream was that we would be in 2012 and have 150 acres developed. All of those closings would have accelerated the payment of the special assessment. Success is creating this problem, for the fact the Seed family does have the liquidity to pay the$2.2 million. Councilmember May makes the argument about what we will have in 2027 for a balance in the road and bridge fund. Mr. Seed stated the perceptual problem for Council, is that you think you are giving us something for the fact you are taking just half the land for all the obligation. If we started with 470 acres it would have been a different discussion. If we did not have the Finnegan portion Council would not be concerned and the 10 Council Minutes(Regular) April 2,2012 Page 7 Seed's are not concerned now. The Seed family simply does not have a contractual choice but to take the assessment on Finnegan's land and pay it as billed. MOTION by Fogarty, second by Larson to approve staffs recommendation to prepare the necessary PUD amendment and assessment resolution based on the pre-payment of$441,144 within 45 days of approval, and the assessment beginning in 2014 for a period of 10 years. Voting for: Fogarty,Larson. Voting against: Bartholomay,Donnelly,May. MOTION FAILED. The assessment resolution will be prepared according to the original PUD to assess in the fall for payment in 2013. The timing of the assessment will be for the 30 days allowed for pre-payment to run out right before the end of 2012 and the assessment would fall to 2013. b) Ice Arena Discussion—Parks and Recreation In October 2011, Council approved reallocating funds from the arena capital projects fund to cover additional capital expenditures that occurred for the arena in 2011. Council also approved closing the arena capital projects fund and transferring the remaining balance for$81,745 to the debt service fund. Recently the public has requested having summer ice, however the arena does not have an adequate dehumidification system. Farmington Youth Hockey Association has stated they would be interested in assisting with improvements if they received a higher priority in scheduling of ice rental time. At a future Council meeting an agreement with FYHA will be brought forward involving a 10-year financial commitment made by FYHA in exchange for a higher priority for ice time. The agreement would provide money for both operational and capital improvement project costs. The Council was interested in using the money transferred to the debt service fund for other improvements to the area. Staff asked if the remaining $81,745 should be transferred back to the arena capital projects fund to be used for other arena improvements. If the money is transferred,what improvements should be completed with these funds? Councilmember Donnelly asked about the options and the costs. Parks and Recreation Director Distad stated the question is does Council want to leave the money in the debt service fund or use it for a dehumidification system and other improvements to the arena. Councilmember Fogarty stated if the school district and FYHA were willing to come up with the difference between the fund amount and the cost of a dehumidification system, are we willing to use those funds in matching with their funds to allow for summer ice. Staff stated when the arena renovations were completed, all the infrastructure for a dehumidification system was installed. The system costs$280,000. Councilmember Bartholomay asked if discussions were going on with other organizations about participating in the funding. City Administrator McKnight stated staff has talked with youth hockey and have an agreement ready to bring to 11 Council Minutes(Regular) April 2,2012 Page 8 the next meeting. Staff has made the same offer to the group that will get bumped in the ice time priority. Mr. Tom Flanagan,President of Farmington Youth Hockey Association, stated currently the agreement is to bump FYHA up one slot in ice preference, so they would be after the high school. The order is City programs,high school,FYHA. FYHA would gain six to eight hours of prime ice every week of the season. In return for that,FYHA's proposal is$10,000/year for operating and repair of the arena for ten years. Councilmember Bartholomay stated we could transfer the money out of the debt service fund until we decide what to do and if we decide not to do the dehumidification system the money can go back in. Mayor Larson stated it would make $81,745 liquid where we could use it for an arena project. It has to be a capital project,not operating costs. Staff clarified the question tonight is does Council want to transfer the money out of the debt service fund for a future arena project. Then Council will need to decide what that project will be,knowing there is more information coming. Councilmember Fogarty would like to discuss, if the school and the hockey association can come up with the difference, she would be interested in using the funds for a dehumidification system and wanted the opinions of other Councilmembers so the other organizations know where the City stands. Mayor Larson and Councilmembers Fogarty and Bartholomay agreed they would use the funds for a dehumidification system. Councilmember Donnelly clarified we are saying we want to transfer the money back for a project yet to be determined. Right now it is sitting in a debt service fund. We cannot pre-pay the bonds. Finance Director Walters stated it sits there and you can reduce the levy next year by making a payment. Then you have to increase it the following year. Councilmember May asked, if you take out a bond for the arena and you don't use it all, doesn't that money have to go to the bond? Finance Director Walters replied it does,but what we want to do is part of the original project. Councilmember May stated once we got the final costs for the arena and there was extra money,at that time we did allocate extra money to some repairs. So we have already done that. Unless we say we are interested in a dehumidification system,then at what point is the money no longer there where you can pull it back for another use? Finance Director Walters stated we can say it was never transferred at the end of 2011 because we have not finalized our financial statements yet. Councilmember May stated that is why we are saying to pull the money out now and decide later. We don't have an agreement before us. It feels like we are putting the money in a pot and see if there is other money that comes in. Even if the hockey association agrees,where will we come up with$200,000 if the cost is $280,000 and we only have$80,000? Finance Director Walters 12 Council Minutes(Regular) April 2,2012 Page 9 explained you are delaying closing the capital projects fund. City Administrator McKnight stated if we can fmd other partners,we would have to come up with the rest of it. Councilmember May noted they will not give us a lump sum of money, so how do we fund the dehumidification system? City Administrator McKnight stated either the other organizations come up with the money or we have another bond. Councilmember May was not interested in that. We are sitting here without something concrete in front of us. She felt that money should be used to reduce the debt to the taxpayer. Councilmember Fogarty noted the dehumidification system is coming up again, because there are new parties involved. Youth hockey was unaware of the problems last summer and that the dehumidification system had such an impact. She knows there have been conversations with the school district, and they were not fully aware of everything either. Now they are re-evaluating once we said no to summer ice. There are new players involved and they were not aware of the summer ice issues. It is fair to allow them some time to have a conversation. Councilmember May asked what happens if we pull the money out and nothing materializes? How do we get the money back into the arena? Finance Director Walters stated you transfer it back in and close out the fund. Councilmember May was not interested in the money going for any other purpose than a dehumidification system. We have to think about what was presented to the taxpayers and that was to put new ice in and that was done. Mayor Larson was interested in doing this if we put a timeline on it. Staff will draft an agreement with youth hockey and the school district and include a timeline whereby the money has to be raised by a certain date. Staff stated it would be preferable if the timeline ended this year so it does not go into another year for audit purposes. It was agreed to include a timeline of nine months. c) 2011 Parks and Recreation Department's Annual Report—Parks and Recreation Parks and Recreation Director Distad presented the 2011 annual report for activities with parks, recreation programs, liquor operations,Rambling River Center,ice arena,outdoor pool, Parks and Recreation Commission, and the Rambling River Center Advisory Board. d) Approve Agreement Purchase and Installation of Playground Equipment for 5-12 Year Old Children—Parks and Recreation Staff solicited proposals from eight companies for the purchase and installation of new playground equipment for 5-12 year olds in Lake Julia Park. Previously,the Council approved in the improvement budget$125,000 to make improvements to the park. New playground equipment was budgeted for$65,000, a new picnic shelter for$35,000,and construction of a parking lot for$25,000. The Parks and Recreation Commission selected the proposal submitted by Minnesota/Wisconsin Playground for$50,000. This includes installation of the equipment and all taxes. MOTION by Fogarty, second by Bartholomay to approve the agreement with 13 Council Minutes(Regular) April 2,2012 Page 10 Minnesota/Wisconsin Playground for the purchase and installation of playground equipment in Lake Julia Park for 5-12 year old children. APIF,MOTION CARRIED. e) Approve Agreement Purchase and Installation of Playground Equipment for 2-5 Year Old Children—Parks and Recreation Staff recommended purchasing playground equipment for 2-5 year olds in the amount of$15,000 from St. Croix Recreation Company for Lake Julia Park. MOTION by Bartholomay, second by Donnelly to approve the agreement with St.Croix Recreation Company,Inc. for the purchase and installation of playground equipment in Lake Julia Park for 2-5 year old children. APIF, MOTION CARRIED. I) Approve Agreement for Purchase and Installation of Picnic Shelter Lake Julia Park—Parks and Recreation A proposal was received for construction of a picnic shelter in Lake Julia Park for $35,000. It will be a 900 sq. ft. shelter that will allow for 10-12 picnic tables. MOTION by Fogarty, second by Bartholomay to approve an agreement with Flanagan Sales, Inc. for the purchase and installation of the picnic shelter in Lake Julia Park. APIF,MOTION CARRIED. 11. UNFINISHED BUSINESS 12. NEW BUSINESS 13. COUNCIL ROUNDTABLE Councilmember Fogarty: The Easter Carnival is April 7, 2012 at Meadowview Park. On April 14,2012, at Celts there will be a spaghetti dinner fundraiser for the Farmington Royalty. Councilmember Bartholomay: Regarding the spill from a scrap yard operating in a B-3 zone,what are our oversight measures? City Administrator McKnight stated we have staff and neighborhood observation. Councilmember Bartholomay asked about having a yearly volunteer recognition event. Councilmember Fogarty noted the Rambling River Center does their own every year. City Administrator McKnight: The date that will work for a Council retreat is April 30,2012. The purpose is to give the City Administrator direction on a number of items and to set Council goals for the year. Councilmembers agreed on this date. Clean-up days start on April 21, 2012. Parks and Recreation Director Distad: The summer edition of the City News and Recreation Guide will be delivered to homes on April 13, 2012. Online registration will begin April 16, 2012. 14 Council Minutes(Regular) April 2,2012 Page 11 Mayor Larson: The Farmington Business Association is collecting $20 donations for flower pots. City information is available on Facebook,Nixie or Twitter. He attended the wine tasting last week. Dakota Lumber is having a deck expo April 26, 2012. He encouraged residents to shop local. Local businesses support youth sports. 14. ADJOURN MOTION by Fogarty, second by May to adjourn at 9:22 p.m. APIF,MOTION CARRIED. Respectfully submitted, Cynthia Muller Executive Assistant 15