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01-26-1998 CC MINMEETING OF THE ELK RIVER CITY COUNCIL HELD AT THE ELK RIVER CITY HALL MONDAY, JANUARY 26, 1998 Members Present: Mayor Duitsman, Councilmembers Dietz, Thompson, Farber, and Holmgren Members Absent: None Staff Present: Pat Klaers, City Administrator; Lcd Johnson, Assistant City Administrator; Terry Maurer, City Engineer; Steve Ach, City Planner; Phil Hals, Street/Park Superintendent; Tom Zerwas, Chief of Police 1. Call Meefin.q To Order Pursuant to due call and notice thereof, the meeting of the Elk River City Council was called to order at 6:00 p.m. by Mayor Duifsman. 2. Consider Aqenda It was the consensus of the City Council that the agenda was acceptable as presented. 3. Open Mike No one appeared for this item. 4. Capital Improvement Pro.qram Worksession Chief of Police Tom Zerwas reviewed his 1/22/98 memo on the requested purchase of a four wheel drive pick up. Funds for this purchase are in the 1998 equipment certificate budget. The Council discussed the general use of this vehicle by the community service officers versus the use of a spods utility vehicle. COUNCILMEMBER FARBER MOVED TO APPROVE THE PURCHASE OF A 1998 FORD PICK UP, F-150 SERIES FROM ELK RIVER FORD IN THE AMOUNT OF $21,304.60. COUNCILMEMBER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 5- O. East Elk River Improvement Project - The City Engineer provided the Council with an overview of current activities that are taking place on this project. These activities include work on the signal at 171,t, the tSTEA application for the street, work on the railroad crossing at 171,t, the effods of Patchin and Associates (appraisal firm) and Evergreen Land Service Company (land acquisition firm), and preliminary surveys for utilities. Additionally, the City Engineer reviewed what staff understood to be the direction of the City Council on January 5, 1998. This understanding is outlined in the 1/21/98 memo to the City Administrator. The direction from the City Council on 1/5/98 included: design of the trunk water Elk River City Council CIP Worksession January 26, 1998 Page 2 and sanitary sewer facilities; design of the transportation corridor; applying for permits for construction; completing soil surveys and additional survey work; continuing to work with the railroad for a crossing at 171,t and the closing of the 173rd crossing; and updating the assessment estimates based on revised appraisals as prepared by Patchin and Associates. The Council concurred with the content of the memo and that the memo accurately outlines the direction it intended to give city staff regarding work assignments on the east Elk River improvement project. The City Administrator stated that there are a lot of variables involved in both a large or small east Elk River project which make it very difficult for the City Council to make a decision on which project is desired. The variables include: 1 .) the cost estimates as not all of the large or small project identified in the feasibility report will be constructed at once, and 2.) which funding sources will be available to address the financial shortages in the utilities, storm drainage, and street components of the project. The Administrator noted that regardless of these uncertainties, if the Council wanted "pipes in the ground'" as soon as possible, then this direction needs to be received soon. In order to get "pipes in the ground" in 1998-99, the city needs to conduct public hearings on the project, to conduct public hearings for the assessments, and to negotiate with a number of property owners for right-of-way (this may include negotiating for homes and could include relocation expenses). The Administrator noted that the timeline is getting tight in order for anything to be under construction in 1998, especially when a proposed TIF District being considered, and that the city still has not received a valid petition for improvements from the owner of the trailer court. Trunk Utilities - The difference between the cost of trunk sewer and water and the assessments for these utilities for the large project, Area C, is $1.1 million. This shortage may increase to $1.3 million when deductions are made for the Cargill property, which is to be put into land trust, and for the single family homes in this area. This shortage is "only" $1.3 provided that the City Council assess the petitioners (Earl and Waddy - 273 acres) and all the other property owners (approximately 400 acres) in the benefited area. The most likely funding source for this .$1.1 to $1.3 million shortage is TIF monies from the trailer court redevelopment project. Funds need to be accessed in order to finance the bringing of utilities through 169 to the project site. Another 'source of funds for the shortage could be the water utility for the water shortage and the sewer utility for the sewer shortage. The last alternative for the shortage may be a city wide tax levy. It was noted that if the Patchin Appraisal update shows benefit in excess of $6,000 per acre, the shortage can then be reduced. For example, if the benefit is at the $7,000 range, then an additional $650,000-700,000 can be generated through the assessment process. It was noted that the shortage for the smaller project, Area A, is actually worse and is in the $1.45 million range. However, the shortage in Area A includes about $1.1 million in deferred trunk assessments which can be ELk River City Council CIP Worksession January 26, 1998 Page 3 collected and which would make the actual shortage in the $350,000 range. Nonetheless, even if only Area A was constructed, TIF funds from the redevelopment project would still be necessary in order fo make up the utilities shortage. Storm Drainaqe - The total cost for the large project, Area C, was estimated at $1.7 million. Of this amount, approximately $500,000 can be collected through assessments and impact fees charged to the developers of the Earl H. and Waddy S. properties. This leaves a shortage of approximately $1.2 million. However, it was noted that not all of the storm drainage system will be built at once and that parts will be constructed as development happens and as the water runoff requires facilities to be installed. Additional assessments and impact fees may also be able to be collected as development takes place. Initially it is estimated that only about $1.1 million in expenses will be required for the storm drainage system (instead of $1.7 million), and this amount minus the assessments/impact fees will leave a shortage of $600,000. The additional shortage for the total project, which is up to another $600,000, will need to be dealt with as these improvements are required. It is hoped that sufficient TIF funds from the Hohlen trailer court redevelopment project would be available to help offset this shortage, but the TIF figures are not known at this time. If no additional funding from a TIF project is available, the only other sources of monies that the city has to finance this shortage is its surface water management (SWM) fund or a city wide tax levy. The SWM fund has approximately $55-60,000 available per year for the next four years. This amount excludes any impact fees that may be received. In the year 2002, the City Council is scheduled to move some of its development fund levy back into the SWM fund so that a total of approximately $190,000 per year would then be available for SWM projects. Using only the SWM fund for the $600,000 shortage may require all available funds up to and maybe through the year 2003. This could eliminate the use of SWM funds for other drainage projects. Additionally, up to another $600,000 in shortages is anticipated which could use all the available SWM tax levy funds for an additional three years. The shortfall with Area A, the smaller project, is in the $325,000 range and could require all of the SWM tax levy for the next 4-5 years. Paying off the shortage of either project over a longer period of time by bonding for the project may provide the city with some flexibility in funding other SWM projects. Other SWM projects on the horizon may include the Western Area Phase III project, improvements to Ditch 28, and work required with any core village reconstruction program. Streets - The total cost of the street for Area C from County Road 13 through County Road 12 to 171,t Avenue, constructed to four lanes, is estimated at $3.7 million. Approximately $1.5 million of this total would be assessed to the developers. This leaves a shortage for the total street Elk River City Council CIP Worksession January 26, 1998 Page 4 project of $2.2 million. In addition to this expense and shortage, is the acquisition of right-of-way for the street construction. Developers will donate the right-of-way as part of their projects, but the city may be required to acquire up to 25 additional acres and up fo three homes for the street. Cost for this acreage and these houses may be in the $900,000 range and has to be taken into consideration when looking at the finances of the project. Additional street work includes Main Street/Highway 169 improvements, all of which will be financed by the developer of the trailer court area, and a local signal at the County Road 12/13 location which should be a county and developer expense, but may require some city contribution. The last known street component is the signal af Highway 10 and 171,t Avenue, of which the city and state will equally share the estimated $210,000 expense. Accordingly, the city shortage for the street project is estimated af $3.2 million. However, it could conceivably be higher depending on the value of the houses that need to be acquired as right-of-way property for the street project. Funding options for the street shortage include Tlr funds from the trailer park redevelopment project, but, as noted above, these figures are not yet available. Additionally, the priority for use of the Tlr funds that are available are for the utilities first, storm drainage second, and street third. Another source for the street shodage is an ISTEA grant. The city and county have requested assistance in the amount of $1.4 million for this project. Another possibility to help with the shodage is a request to Congressman Oberstar to have this project included in a federal transportation funding bill. The city will not know the status of the ISTEA grant application until March, the Congressman Oberstar request until September, and the availability of Tlr funds until late spdng or early summer. Under the worse case scenario, the city may need to take all of the shortage and fund it with municipal state aid (MSA) monies that are allocated to the city. As with other components of the project, it is anticipated that the total street improvement would not be constructed initially. Part of the street improvement may be constructed only to a two lane standard and the northern connection may not be constructed until later. Accordingly, the shodage for the street project, under a 1998- 99 construction timeframe, may be in the $2.2 to $2.5 million range. If all of this shortage for the street improvement has to come from MSA funds, then the city will be allocating most of its available funds toward this improvement. The City Administrator stated that almost all of the 1998 and 1999 MSA funds have been allocated toward projects that are under construction or which have been authorized, or which are scheduled to be authorized in the near future. The city receives approximately $$50,000 in MSA funds each year. Use of the 1998 and 1999 MSA funds include: repayment of the 1992 bond issue; finalizing the 171 st Street improvement project; Business Center Drive extension through the Government Center; the 197th signal: the 171st signal: the Opticon system; and some limited land acquisition in the 171,t - 173rd street area. Elk River City Council CIP Worksession January 26, 1998 Page 5 The city has the ability to bond for approximately one-half of its annual MSA allocation for ten years. Using this method, the city could bond for about $1.75 million worth of 1998-99 improvements which could be financed with MSA funds in the amount of $275,000 annually for ten years (note the interest expenses). This bonding approach would fund most of the shodage identified above, however, the shortage identified above ($2.2 - $2.,5 million) is less than the total project shortage and, additional MSA funds would need to be accessed. This relates directly to the other $27,5,000 per year that is available (which is not in the bonded project) and is also being used for this street construction in addition to the future completion of the street to four lanes. The use of MSA funds for the east Elk River project is in direct competition with use of MSA funds on the School Street expansion project and the Business Center Ddve/Waco project. The total cost of the School Street expansion project is in the $325,000 range and the total cost of the Business Center Ddve/Waco project, which will not be state funded, is in the $800,000 range. These two projects and the balance of the shortages of the east Elk River street project, are in competition for the same MSA funds. The only part of this project that is moving forward is the street connection work between 171,t and 173rd. The developers will be responsible for funding the street improvements within their project boundary. Council direction to obtain additional right-of-way and appraisals of the right-of-way need to be considered for the area between 173,d and the trailer court project. The shortage for the street improvements with Area A is less than $100,000 as almost all of this project will be financed by the developments. Nonetheless, if only Area A is authorized, the city will still be faced with the street financial shortages as noted above, but it may be advantageous for the city to save and reserve some MSA monies for this undertaking. It was noted that some of the shodage may be recaptured through assessments to other benefited property owners. An issue associated with the east Elk River improvement project, but technically not considered part of the improvement project, is the potential acquisition of business park land by the city. The city could potentially acquire parts of the Brown property, the Eull property, and the Vandenberge property for business park developments. It is anticipated that the Vandenberge property will be part of the trailer court redevelopment project and be developed into business park lots in cooperation with the developers. Regarding the Brown property, it is anticipated that approximately 80 acres of land will be west of the future street. Of this 80 acres, approximately half, or 40 acres, is developable and will receive assessments for the trunk utilities. The balance of the property will be used for storm drainage and is in a wetlands condition. The acreage in the wetlands needs to be confirmed and, hopefully, will be less so that more business park property can be developed. Including Elk River City Council CIP Worksession January 26, 1998 Page 6 assessments for the trunk utilities, it may be able to be assumed that for the entire 80 acres, the value would be in the $10-$15,000 per acre range. This would make the acquisition in the $800,000 to $1.2 million range. The funding source for business park land is the city development fund. This fund is scheduled fo have in excess of $1 million available by the year 2001. The goal of the development fund is to recapture ifs expenditures so that the fund will always have monies available for economic development purposes. As an overview statement, the City Administrator noted that the airy can finance the large east Elk River project if it decides to apply its MSA and SWM funds toward this project. These funds are needed fo make up the shortfall that is anticipated with the construction of the improvements. The decision by the City Council needs to be made based on priorities for projects. Mayor Duitsman discussed the possibilities of extending utilities under Highway 10 in the 171st Avenue area so that property between the river and the highway can be developed. The Mayor stated that it was his understanding that the Vandenberge property would be part of the trailer coud redevelopment project and that the developers would work with the city for this property being used for business park activities. MAYOR DUITSMAN MOVED TO HAVE THE CITY OF ELK RIVER HIRE EVERGREEN LAND SERVICES COMPANY AND PATCHIN AND ASSOCIATES, INC., TO DETERMINE A FAIR PRICE FOR THE RIGHT-OF-WAY BETWEEN 173"o AVENUE AND THE EARL HOHLEN PROPERTY WHICH MAY INCLUDE TWO SINGLE FAMILY HOUSES. COUNCILMEMBER DIETZ SECONDED THE MOTION. THE MOTION CARRIED 3-2. Councilmembers Farber and Holmgren opposed. The City Engineer reviewed with the City Council his January 21, 1998, memo to the City Administrator outlining the status of current projects. In this regard, the City Engineer reviewed the projects that were completed in 1997, and the projects that are underway for construction in 1998. The projects that are underway for 1998 include the Upland Avenue signalization, the Business Center Drive extension, the 171st signal justification report, the upgrade of County Road 12, work on the County Road 77-33 realignment, the Orono Lake sedimentation project, work on the Highway 169 pedestrian bridge for 1999, and developer initiated projects. The City Engineer and the Council discussed the timing of the signals on Highway 169. The City Engineer noted that MnDOT officials will be in town all week to review the situation and that he expects a report in the near future on their recommendations regarding the city's concerns. Councilmember Farber left the meeting at this time (7:50 p.m.). The City Engineer reviewed with the City Council the January 1998, feasibility study for Boston Street utility improvements. Discussion centered on the total cost of the project and the proposed assessment method which would defer Elk River City Council CIP Worksession January 26, 1998 Page 7 assessments for two of the five and one-half assessment units. Three existing homes are scheduled to be assessed one unit. Two of these homes have the possibility of being subdivided for the construction of another house and these two properties would receive deferred assessments. Additionally, the Orono Cemetery properly would only receive assessments for water and therefore, would receive a one-half assessment unit. No consensus was reached by the City Council on the assessment approach for this improvement pro]eot. The Council requested that this item come back when a full Council is present on February 17, 1998. The City Engineer presented the January 1998, feasibility study for Jarvis Street improvements. The Council discussed the cost of this project, the need for the pro]eot, and whether or not any of the costs can be assessed fo the benefited property owner fo the east. Originally if was the goal of the City Council fo assess half of this improvement project to the property that is zoned commercial to the east, but since this property is currently being used in a residential manner, some concerns were expressed about whether or not b large assessment could be justified. If was noted that the original petitioner for this project had withdrawn his petition and was no longer in favor of the project. COUNCILMEMBER THOMPSON MOVED TO DEFER ANY ACTION ON THE FEASIBILITY STUDY UNTIL THE ISSUE IS BROUGHT BACK UPON REQUEST OF THE PROPERTY OWNERS IN THE AREA. COUNCILMEMBER HOLMGREN SECONDED THE MOTION. THE MOTION CARRIED 4-0. Street/Park Superintendent Phil Hals reviewed with the City Council some possible 1998 assessable overlay and gravel improvement projects. A memo from Phil dated 1/22/98 was distributed. The goal of the city is to put all of the overlay and gravel road improvement projects together and assess each benefited property owner the same amount for the improvements. If is anticipated that the cost per properly owner would be below $1,500 per existing or developable lot. A brief discussion took place regarding the status of Concord Street which is a pdvate road and which had been considered for improvements in previous years. COUNCILMEMBER HOLMGREN MOVED TO DIRECT STAFF TO PROCEED WITH THE NECESSARY WORK FOR AN ASSESSABLE OVERLAY AND GRAVEL ROAD IMPROVEMENT PROJECT IN 1998. COUNCILMEMBER THOMPSON SECONDED THE MOTION. THE MOTION CARRIED 4-0. The City Administrator reviewed with the City Council the 1997-2001 capital improvement program as accepted by the Council last year. It was noted that the vast majority of the 1997 projects have been completed, but also that a number of the projects had been put on hold indefinitely due either to a lack of funds or a lack of petition from benefited properh/owners. 5./6. Other Business/Staff Updates There was no other business or staff updates presented. Elk River City Council CIP Worksession Januar_v 26~ 1998 Page 8 7. Adjournment There being no further business, Mayor Duitsman adjourned the meeting at 9:00 p.m. Patrick D. Klaers City Administrator