HomeMy WebLinkAbout06.23.97 Special Council Packet
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, PRAIRIE WATd'tfAY '!;;I/AS,H S~..aET IMPROv!;MENT PRO,JSCT
JUNE'2.3-;}L997' ",.
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a. pu):).1ic He~ri~1'fg - s~,ie' of'.pr.~'Eirt}r}~,~t~t~d'Be~een/;Exchange
Ban~ Bu~lding 'and "Gerster Jeweler.
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2 . ADJO~
3.. CALL TO ORDER - SPECIAL JOINT COUNctL7TO~'pMEETING -"
Prairie Waterway/Ash Street ~ro.ject
4. Overvie'W'of~;C)jec::~
5. Overvle'Wof ProjectFin~ci:ng
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6. 'Sta,pus of .proj ect
7 . Discu$s~()ni.Bet\f.f~~m Imro,lved Entities
8. Conclusions: "
9.
ADJOURN
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Mento To;
From:
HRA Chairp::~d Board,'City
Administratc-. .
Dave Olson, CommUri~ty Development
Director
Subject:
Sale ofHRA OwnedPropettyLocated
NorthofExcharige BltnkiBUilding .
June 23, 1997
Date:
INTRODUCTION
The HRA Board has previously given preliminary approval of the sate o( the vacant lot north of the
Exchange Bank Building to lames Gerster, Sr. This is to faCilitate the constructIon' of an inftll building and
also the development of a ne~ flilCad~ of Mr. G~~~ter' sexistin~bui1ding. Minnesota Statutes require that the
HRA hold a public hearing prior to the sale of lease ofHRA owned property.
DISCUSSION
As stated, Minnesota Statutes, 469.029, subdivision 2, requires that a public hearing beheld prior to the sale
of any HRA owned property and that notice of, theJ1earing be published at least 1 () daY$prior to the hearing.
Notice of this hearing was publishei in the Farinington Independent on June 12, 1991:
Minnesota Statutes also requife~ thatth~purchaser carry out theredevelopmentplan'for the project area
(Downtown TIF District). It is "Staffs opinion that Mr. Ger~ter's plan to construct a: hew infill building and
redevelop the facade of his existing building is consistent with the redevelopment plan for the Downtown
Tax Increment District. .
Mr, Gerster has agreed in the proposed Development Agreement to reconvey any unused portion of the
vacant lot upon request of the HRA at no cost. He also has agreed to provide any necessary easements.
BUDGET IMPACT .
The HRA is required to reimburse the CDBG funds an amount eq]Jivalent t~. the fair market value, of the
land. The Dakota County HAA"has agreedt6 :use a r~cent City' Appraisal of vacant land to determ'ii1e the
value 6f this' tot. The amount of the recentappraisahvas $2.20.per square foot. This amounts to $4;028 for
thelotin question which will need to be Teimbursed totheCDBG fulld. . This amOl.ll1t will be available for
other CDBG eligibleproj~cts in Farmington.
ACTIONREQUESl'ED" ",' " '. ,,' ., ",' '
The HRA Board should close the pU?lic hearing ~dauthorize the, ~Ie of the HRA own~dlothorth of the
Exchange Bank Bililding,contirigenfup<?u the HRA and Mr. Gerstedmtering into a Development .
Agreement. ... . .
?J-;/L a
-
David L: OlsOll
CommUIlity DeVelopment Director
I
CitlJ. of FarminlJton
325 Oak Street. FarminlJton, MN 55024 · (612) 463.7111 · Fait (612) 463.2591
TO:
Mayor and Councilmembers
FROM:
John F. Erar, City Administrator
SUBJECT:
Council Workshop - Project Review
Ash Street Reconstruction
Prairie Waterway III
DATE:
June 23, 1997
INTRODUCTION
A preliminary financial review and assessment of the costs and related process issues associated with the
construction of Prairie Waterway III and reconstruction of Ash Street has been completed. It should be
emphasized that the costs of these two projects were reviewed by the City's Engineering Division and are
the best estimates available at this time. It should be noted that project costs are based on the 1995
Feasibility Study, with various fees and connection charges based on the recently adopted 1997 City Fee
Schedules.
DISCUSSION
PRAIRIE W A TERW A Y III
Costs associated with the construction ofthe final or third phase of the Prairie Waterway are estimated at
$1,028,755. Project costs are attached and will be reviewed with Council at the June 23, 1997 Special
Joint Council Meeting. Some of the more significant issues are as follows:
. Property acquisition costs are estimated at $323,500 for channel right-of-way. Acquiring easements
at this point should also be considered as a potential option in terms of reducing land acquisition
costs. However, should the cost of acquiring the easements be equivalent to the costs of purchasing
right-of-way, the later would be highly preferable to obtaining an easement. Furthermore, the City
would still need to be prepared to deal with a similar variety of legal issues and implications in
negotiating easements, including negotiating long-term waterway maintenance agreements and costs;
and securing a holding pond site on County Fairgrounds property.
. In terms of Township and Fair Board project cost participation, will these separate jurisdictions be
agreeable in assuming an appropriate share of project costs. According to engineering estimates, non-
city generated storm sewer run-off accounts for the majority of total storm sewer drainage into the
third phase of the Waterway. Of the total acreage of 449 acres, developable assessable land area
which would drain into the third phase is approximately 406.7 acres, with 42.3 acres reserved for
holding ponds. Of that amount, 318.4 acres is outside of the City's corporate limits representing
78.3% of the total land area. In total project dollars, a corresponding percentage would be
appropriately applied against total project costs resulting in a project charge to non-City related
jurisdictions of approximately $805,515.
. A revised engineering review of the area suggests that the Dakota County Extension Office
represents approximately 1.86 acres of the drainage area. Accordingly, the estimated cost for the
Extension Office, based upon total acreage, is $4,704. This reallocated charge will reduce the Fair
Board's original cost estimate by a corresponding amount.
CitlJ. of FarminlJton 325 Oak Street. FarminlJton, MN 55024 · (612) 463.7111 · Fait (612) 463.2591
Mayor and Councilmembers
Prairie Waterway III and Ash Street Project Workshop
Page 4
A financial overview of the project's costs will be reviewed at the June 23, 1997 joint meeting. The only
changes to date are the revised cost allocation figures associated with the Dakota County Extension
Office property. The total project costs for Ash Street and Prairie Waterway ill are consistent with past
estimates.
Budget Impact Update on Castle Rock Memo dated May 28, 1997
Since our last joint meeting, the City has received a letter from Castle Rock Township identifying their
position on cost participation ratios (attached). Accordingly, the Township's position does create
additional concerns regarding how the projects will be financed. In particular, the Township Board has
indicated they would not be willing to assess property owners for the Prairie Waterway ill project due, in
their opinion, to a lack of benefit to the subject property owners. Again, as a reminder, the reconstruction
of Ash Street could not take place unless Phase ill ofthe Waterway is completed.
The Township Board also suggests that the undeveloped properties could pay City storm sewer
management charges once development occurs. According to the City Attorney, the Township could
enter into a permanent joint powers agreement to establish this fee, however, the issue of financing the
improvement in the present remains a significant concern. Essentially, the City would have to finance the
township's entire portion of the project and then wait for development to occur. This type of financing
scenario would not be in the best interests of the City given the high risk associated with development
and the fact that the City would have to levy for improvements occurring in areas outside the City's
jurisdiction. This type of financing scenario would not be possible with respect to the Fair Board or
Extension Service portion since it is highly unlikely that any private development would ever occur on
those properties.
In addition, the Township Board has indicated that assessments for Ash Street could not exceed $7,000 to
$8,000. Preliminary costs for water, sewer and storm sewer suggest that an average per household
assessment, exclusive of Highland Circle, would be approximately $11,448. A difference of between
$4,400 to $3,400 per household that would obviously need to be financed through some alternate means.
In addition, this does not take into account project increases which have occurred since the 1995
Feasibility Study was conducted. This, in turn, would raise assessments for all affected entities an
average of3% to 5% per year.
ACTION REOUESTED
A review of the financial cost implications for the City, as well as legal, political, administrative and
fiscal impacts will need to be thoroughly explored prior to moving forward with the project. In order to
proceed with the two projects, project financing issues will need to be thoroughly addressed.
The intent of identifying and reviewing these key issues is not designed to impede, delay or obstruct
progress on these two very important projects, but to identify, address and resolve outstanding
engineering, legal and financial cOncerns.
Respectfully submitted,
Jt:.3
F.~
Mayor and Councilmembers
Prairie Waterway III and Ash Street Project Workshop
Page 3
. How will the Township specially assess properties? This is a key concern for the City Council since
the City would most likely be issuing General Obligation improvement bonds. Similarly, how would
the Fair Board specially assess its property? The City would need to have a very clear understanding
and financial assurances of how these other jurisdictions would accomplish these fiscal objectives in
order to ensure adequate assessment income to meet City debt service repayment requirements on the
bonds. (The attached memo from John Kirby, City Bond Counsel responds to this concern.)
. Again, in terms of Township and Fair Board project cost participation, will the Township and Fair
Boards be cooperative in assuming an appropriate share of project costs as may be determined by
respective engineering studies.
. In what manner will the City, Township, Extension Office and Fair Board negotiate issues ranging
from storm sewer management issues and fees to sharing bond issuance and legal expenses. These
issues would obviously need to be resolved prior to finalizing project financing.
. Again it should be emphasized, that while the reconstruction of Ash Street can take place without
sanitary sewer and water connections, the City Engineer has indicated that these utilities should be
constructed concurrently with improvements to Ash Street to eliminate having to "tear up" the road
at a later date. Similarly, if utilities are not put in place at this time, the cost of placing these utilities
at a later date will be significantly higher.
. In addition, Council has indicated that township properties who desire water connections must be
incorporated into the City prior to service connection. Accordingly, all affected township properties
must be willing to be voluntarily incorporated or annexed into the City. Among other considerations,
this will allow the Water Board to authorize the service which would be underwritten by recovering
water connection user fees. Consequently, prior to installing utilities and street reconstruction,
affected township properties would have to be willing to be annexed through a legally binding pre-
commitment in order to avoid other complications. This aspect would have to thoroughly researched
by the City Attorney, and approved by Council.
. The provision of sewer service to the township would also necessitate expanding MUSA, and
incorporating connected properties into the City. In order to provide sewer service, the township
properties would again need to be incorporated into the City to meet Metropolitan Urban Service
Area policy requirements. Consequently, prior to installing utilities and street reconstruction,
affected township properties would have to be willing to be annexed through a legally binding pre-
commitment in order to avoid other complications. Again, this aspect would have to thoroughly
researched by the City Attorney, affirmed by the Metropolitan Council, and approved by Council.
. Finally, if the project does not proceed, the Council will need to provide direction to staff on how to
treat project expenditures to-date. Invoiced expenditures through 12/31/96, researched by the City's
Finance Department, for costs associated with this project, are approximately $33,001.33. This figure
does not include staff engineering and/or administrative time. In that project feasibility studies have
been completed, and other miscellaneous expenditures have been made since 1993, should these
costs be allocated and billed to the involved entities on a pro-rata basis.
BUDGET IMP ACT
Combined project costs, exclusive of County contributions to the township, are approximately $1.6
million dollars for both projects. In order to sell bonds, and guarantee the City's ability to pay debt
service, a legally binding, taxing or assessment commitment would need to be negotiated with the
affected entities. This agreement will, of course, need to be reviewed and accepted by the City Council,
subject to stated staff approvals by the City Attorney, Bond Counsel, the City Finance Director and the
City's Fiscal Advisor.
Mayor and Councilmembers
Prairie Waterway III and Ash Street Project Workshop
Page 2
. In what manner will the City, Township, Dakota County Extension Office and Fair Board negotiate
issues ranging from storm water management issues and fees to apportioning bond issuance costs and
legal expenses.
. If the Township agrees to fund project costs, how will the Township and/or Fairgrounds secure
financial commitments from its property owners. With respect to City bonds, the City pledges it
taxing authority using its good faith and credit to fund debt service. Would the Township, as a non-
incorporated government entity be willing to facilitate this same legally binding taxing pledge?
. While this phase of the waterway can be constructed without the reconstruction of Ash Street, Ash
Street should not be reconstructed without completion of the third phase of the prairie waterway.
Consequently, in order for Ash Street to progress, the third phase of the waterway will need to be
constructed concurrently or preceding to Ash Street.
. The use of MNDOT funds in the amount of $173,000 is specifically for the City's share of the
construction and engineering of the third phase of the waterway and other related area projects.
Consequently, the township's cost share of $805,515 would remain unchanged. These funds, due to
the fact the City has applied and received this contribution, should be applied only towards the City
portion of costs exclusively. MNDOT's funding commitment expires on June 30, 1997.
ASH STREET RECONSTRUCTION
A preliminary financial review of special assessments and fees associated with the Ash Street Project
suggest that Castle Rock Township's and the Dakota County Fair Board's share of costs would be
approximately $1,075,193 in special assessments, charges and fees. This figure does not include Dakota
County's financial contribution of approximately $667,500 for street and bikeway construction in the
township.
As Council is aware, the County's position relative to funding storm sewer on Ash Street has remained
unchanged in its new transportation plan policy. In essence, the County will contribute an insignificant
amount, less than $6,000, of the $379,593 necessary for appropriate storm sewer improvements that will
need to be constructed with Ash Street. Some of the more significant issues are as follows:
. According to past conversations, Township representatives have suggested that storm sewer
improvements are needed due to City development activities, and consequently, should be the City's
sole financial responsibility. According to the City's engineering review, approximately $379,593
worth of storm sewer drainage improvements, including lateral and trunk construction, are needed
due to development in Castle Rock Township and drainage from Dakota County Fairground and
Extension Office properties. The engineering review specifically indicates that the majority of storm
water runoff is generated from township and fairground properties. It is my understanding that this
still remains a major point of contention with township representatives.
. It is recognized that City residential development does contribute to storm sewer runoff. According
to engineering staff review, approximately 142 city lots have been identified at a total cost of
$156,692 or approximately 29% of the total storm sewer cost improvements.
. A revised engineering review of the Dakota County Extension Office for this portion of the project
includes costs for lateral and trunk storm sewer estimated at $8,284. It is the City's understanding
that the Extension Office already has water and sewer service.
. In addition, the City has been contacted by Westview Townhomes who have raised issues involving
the upgrading of the railroad crossing. Preliminary cost estimates to upgrade the rubberized
component of the crossing suggest a potential cost of $45,000 to $55,000. Again, cost participation
ratios and financial responsibility would need to be resolved between the City, County, other
jurisdictions and potentially the Railroad.
PROJECT COST ANAYSIS
PRAIRIE WATER WAY III
February 10, 1997
PROJECT CONSTRUCTION
332,630
WETLAND DELINEATION & MITIGATION
51,600
PERMITS/SURVEYS/SOIL TESTING
95,445
CONSTRUCTION SUBTOTAL
479,675
CONSTRUCTION CONTINGENCY
47,968
LEGAL/ADMIN/ENGINEERING
94,976
PROJECT SUB-TOTAL (ESTIMATE)
$
622,618
EASEMENTS/ROW
323,500
CONSULTANTS-FINANCIAL & ENG
79,507
MISCELLANEOUS
3,130
*TOTAL PROJECT COST
$
1,028,755
CITY PORTION @ 21.7% of total drainage contributed to Phase 11\
(MNDOT Funding of $173,000 may be applied against the City's cost share)
$
223,240
NON-CITY PORTION @ 78,3% of total drainage contributed to Phase III
$
805,515
Total drainage calculated by City Engineering Division based on 1996 Surface Water Management Plan
*project Costs are based on the 1995 Feasibility Study and will need to be updated due to inflationary factors,
ashPWW3.xls --6/23/97
PRAIRIE WATER WAY III
SPECIAL ASSESSMENT COST ANALYSIS
23-Jun-97
TOTAL ASSESSABLE ESTIMATED
ACREAGE ACREAGE ASSESSMENT
CITY OF FARMINGTON 88,30 88.30 223,356
FAIRGROUNDS 81.42 81.42 205,953
CASTLE ROCK ALONG ASH STREET 4.15 4.15 10,508
HIGHLAND CIRCLE 9.00 9.00 22,766
CASTLE ROCK EAST OF T.H. 3 221.97 221.97 561,467
DAKOTA COUNTY EXT. OFFICE 1.86 1.86 4,705
PONDING AREA 42,30 0
TOTALS 449.00 406.70 $ 1,028,755
"PROJECT COST PER 1995 FEASIBILITY
$
1,028,755
TOTAL DEVELOPABLE LAND (ACRES)
406,7
ASSESSMENT PER ACRE
2,530
"1995 Project Cost Is estimated and Is subject to change based on actual bids received, Inflation and land costs.
ashPWW3.xls
PROJECT COST ANAYSIS
ASH STREET RECONSTRUCTION
June 23, 1997
PROJECT CONSTRUCTION 1,221,035
WETLAND DELINEATION & MITIGATION 31 ,000
PERMITS/SURVEYS/SOIL TESTING 8,983
CONSTRUCTION SUBTOTAL 1,261,018
CONSTRUCTION CONTINGENCY 126,102
LEGAUADMIN/ENGINEERING 249,682
PROJECT SUB-TOTAL (ESTIMATE) $ 1,636,801
EASEMENTS/ROW $ 67,850
CONSULTANTS-FINANCIAL & ENG $ 68,494
MISCELLANEOUS $ 6,500
*TOTAL PROJECT COST
$
1,779,645
*Project Costs are based on the 1995 Feasibility Study and will need to be updated due to inflationary factors.
ashPWW3.xls 6/23/97
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CASTLE ROCK TOWNSHIP
BOARD OF SUPERVISORS
Alyn Angus, Township Chair, 463-3182
Norbert Kuhn, Supervisor, 463-7813
Gordon Wichterman, Supervisor, 463-3599
Township Office, 460-2221
C.;f i.,.
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U1;;{ ~AY
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2 9 1997
\ :
May 28, 1997
City of Farmington
Mr. John Erar, Administrator
325 Oak Stn:ei
Farmington, MN 55024
Mr. Erar:
The Board of Supervisors has reviewed your proposals regarding the reconstruction of
Ash Street, installation of storm sewer, sanitary sewer, and water to the residents of
Castle Rock township along Ash Street and in Highland Circle. We feel that this is a
project that should go forward for the betterment of the community. We are not in favor
of having these residents annexed to the city, but understand that it is city policy to
provide water service to city residents only. Although, this policy has not been strictly
adhered to in the past.
Again, in keeping with the spirit of working for the betterment ofthe community, we are
prepared to work with you on this project. After receiving input from the involved
residents, the consensus is that the total cost of the project to them must not exceed
$7,000 to $8,000 per resident.
Your proposal includes installing storm sewer, curb, and gutter in the Highland Circle
area. This could be eliminated to reduce project costs. Highland Circle has been in
existence for more than 45 years and due to the open space and large lots has not
experienced any water problems during its existence. Therefore, it is reasonable to
consider the waste of monies to install storm sewer, curb, and gutter in this area
especially since the residents prefer the type of street construction they now have
compared to curb and gutter.
Regarding the sanitary sewer: It is our understanding that you propose to run a trunk line
from Sunnyside to eliminate the lift station there and proceed through Section 5 on the
south side of the established commercial businesses along Highway 50. Castle Rock, as
previously agreed verbally, is willing to work with you to accomplish this. Comments by
Mayor Ristow at our public meeting was that these businesses may want to pursue paying
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for the cost of stubbing sewer to their properties at this time to avoid future de-watering
costs, if they should want to connect in the future. Several of these businesses have
indicated that they would be interested in negotiating these costs.
Regarding the Prairie Waterway proposal: We fail to justify the cost ofthis project as
worthy of eliminating the expense incurred to handle the occasional flooding problem at
Sixth and Ash. Included in your original proposal were the golf course and all properties
in the NE 1/4 of Section 5. At the April 1 st public meeting Mayor Ristow agreed with us
that the golf course should not be included. Also, after reviewing the property in the S
1/2 ofNE 1/4 of Section 5, we find that there is a ponding area located on this property
where run-off drains to, and therefore, would not be feeding into the proposed waterway.
Regarding the Nl/2 of the NE 1/4 of Section 5, we do agree as we had previously that any
open land that develops in the future will pay storm water management fees as per
Farmington's fee schedule.
Regarding your proposal to assess these property owners: It is our opinion that Castle
Rock would not be able to show any benefit to property owners, and therefore, could not
assess them for the project.
Lastly, it is our understanding that fill is still needed for the PUD north of Highway 50,
and the material removed South of 50 could be sold to the developer and would offset the
project cost.
Castle Rock Township Board
PO Box 6
Farmington, MN 55024
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MEMORANDUM
cC:
John Erar, City Administrator, Farxnington
Dave Grannis, City Attorney
Tom TtuSZi:nsld, Juran &: oody
TO:
RE:
John Kirby, Do
January 31, 1997
Prairie Waterway III
Ash Street Reconsttuction
FROM:
DATE:
In response to your faxed memo regarding the above, I thought the best
way I could initially respond would be by laying out some general principles that I
think are applicable to these projects. and then responding to any specific questions
or concerns you may have after reviewing this memo. The term "City" herein
means the City of Farmington - the term "Town" means Castle Rock Township.
1. First, under Section 429.011, subd. 2b, for most improvement
projects undertaken under Chapter 429 (including the most common
improvements such as roads, sanitary sewer system improvements, water system
improvements and storm sewer improvements), the legislature has provided
authority to towns to undertake such improvements under Chapter 429 in
substantially the same mannel' as cities. Hence, a town can identify an
improvement, hold a hearing, order the improvement and assess the cost against
benefitted properties in the same manner as a city. Further, the town; under
Olapter 429, can issue general obligation improvement bonds to finance the cost of
the improvement, including pledging the taxing power of the town to pay the bonds
in addition to any special assessments.
2. Under Section 444.075, towns may also undertake the construction
of sewer systems, water systems Of storm sewer systems. The towns may assess rates
and charges to help pay for the systems, and may levy special assessments to pay for
a portion of the cost. Towns can issue general obligation revenue bonds, payable
solely from revenues, or partly from revenues and partly from special assessments,
under said Section 444.075.
3. I assume the Dakota County fairgrounds is owned either directly by
Dakota Comtty or perhaps by a county agricultural society aeated under Cl\apter 38
and operating through a fair board. With respect to the proposed improvements,
the County could contractually agree with the City and/or Castle Rock Township to
pay a portion of the cost of the proposed iInprovements. But, even if the County is
DORSEY & WHITNEYL!.F
...... _...., _""01_ ..._ ____...,...,,_.....
not particularly cooperative, if the fairgrounds are benefitted by the proposed
improvements, then either the City (if the fairgrounds are located in the City) or the
Town (if the fairgrounds is located outside the City but within the Town) can levy
special assessments on the fairground. property just like any other benefitted
property (see Section 435.19).
So, in theory, there are a couple of general ways to approach these
projectS:
1. The City and Town could agree, for instance, by joint powers
agreement (Section 471.59) that the City will be the party to bid and construct the
improvements. The Oty could sell bonds (either under Chapter 429 or Section
444.075, as appropriate) for its share of the project costs and the Town could sell
bonds (either under Chapter 429 or Section 444.075, as appropriate) for its share of
the project costs. H the City was responsible for constructing the improvements, the
Town would turn over its bond proceeds to the City to be used to pay project costs.
The City and Town would impose their own respective assessments/charges on
their own respective residents to repay the bonds issued by the City and Town, as the
case may be. The City and Town could also agree, as part of the joint powers
agreement, as to how the costs of maintaining the improvemmts might be shared
In future years.
2. As an alternative, it may also be possible for the City and Town to
enter into a joint powers agreement whereby the City would bid and construct the
improvements and would agree to issue bonds for the entire cost of the
improvements. The Town would agree to levy ~STT1.ents and impose charges on
its residents to pay its &hare of the project costs and bond debt service, and would
turn those funds over to the City as collected. to be applied to pay the bonds.
. There may be variations on the above approaches which would also
work. After you have looked over this information, we could talk in more detail
about the projects.
DORSEY & WHITNEYLLP
.
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