5.2. SR 06-10-2002Item # 5.2.
MEMORANDUM
TO:
Mayor and City Council
FROM:
Stephen Rohlf, Building and Zoning Administrator
DATE:
June 10,2002
SUBJECT:
Request by the City of Elk River for Ordinance Amendment;
Section 900 Regarding Building Permit Escrows Requirements
P.H. - Case No. OA 02-02b
At their April 15, 2002 meeting, the Council tabled an ordinance amendment that
required escrows for non-safety items left unfinished when a certificate of occupancy
(C.O.) is requested. Unfinished yards are a common complaint from adjacent residents,
which consumes a lot staff time. The Planning Department also has a great deal of
trouble getting compliance on issues at commercial facilities.
Currently the city has the ability to require an escrow for up to 50% of the value of the
unfinished landscaping when a C.O. is requested. Landscaping is currently the only item
that may be left unfinished prior to a C.O. being issued, except for grading in the winter
months.
The Council wanted input from builders prior to adopting this ordinance change. City
staff has talk to several residential builders. The typical response is that the ordinance
will not affect them. If an improvement is their responsibility (i.e. grass), they have to
have it completed at closing anyway or escrow for the unfinished work. Under the new
ordinance it will typically be the homeowner who will be escrowing money for
improvements that are their responsibility.
The builders indicated that they need to know what the escrow requirement is at the front
end of the project. If the ordinance is passed, staff will place notice of the new
requirements in with each building permit.
There are a couple of distinct advantages with the new language:
Compliance - The 100% escrow amount (more money at stake) makes
compliance more likely, without lots of staff follow up time.
Flexibility - An escrow can be required for more issues (unfinished retaining
walls, driveways, etc.). If the homeowner/builder wants to move in without
certain items being finished and they are willing to put up an escrow, the new
language gives staff flexibility to allow them to. A common example is a
retaining wall that the homeowner is going to construct to save money.
Ability to avoid escrow - Escrows for landscaping, etc. are becoming fairly
common. Attached is a sample of what some other cities require for escrows.
These cities require the e~.,crow when the building permit is issued. With the
proposed language in front of the Council, a builder/homeowner (at least for
residential) can avoid the issue of an escrow account all together by getting the
work done prior to requesting a C.O.
Recommendation
Staff recommends the adoption of the attached amendments to the City of Elk River Code
of Ordinances, Section 900.30 of the, tiled "Regulations on Screening, Landscaping,
Storage and Outdoor Displays" and Section 900.38, titled "Building Permits, Certificate
of Occupancy, Fees" (Case No. OA 02-02b).
LANDSCAPING REQUIREMENTS
FOR OTHER CITIES
Rogers-(763) 428-2253-$2500 escrow to city for sod or seed and $3000 if a corner lot all
lots require four (4) trees.
Monticello-(763) 295-2711
Champlin-(763) 421-2629-$1000 sod, $100 for 2 trees, $1500 for as-built if no final
grade at final, and $750 for drivexvay
Maple Grove-(763) 494-6060-They have a Grading Inspector/Bldg. Dept. does not
monitor-Developers agreement for $200 each lot for tree and boulevard sod and before
plat is ok'd and money is not released until done. Corner lots $350
Ham Lake-(763) 434-9555- Front needs to be sodded and/or seed with 4" of black dirt-
Different escrows depending on date of project.-If erosion control not up all inspections
stop for that house until up. Cash deposit to be determined by City Council-Driveways
$2250 escrow
Andover-(763) 755-5100 Have until May 1st to get sod in/escrow depends on size of lot
(right noxv $160-$900 (but person said they would like to raise) If not done by June t st
letters sent to get done-S1500 for final grade(as-built)/driveway/steps, etc. They have to
do 15' of boulevard also
Blaine-(763) 784-6700-Escrow varies due to size of lot and if they do not do sod, hydro
seding is only other alternative but they must also have irrigation system in-Trees are
$250 each
Coon Rapids-(763) 767-6476-At issuance of permit the builder pays $700 (which they
say is too low. They need to sod first 30' before money is released annd a Certificate of
occupancy is issued.
Ramsey-(763) 427-1410- Trees and sod required before CO is issued-S600 escrow
Zimmerman-(763) 856-4666-Letter of credit from developer-no final until 4" of black
dirt and seed or sod put down
Big Lake-(763) 263-2107-They a~:e now in the process of looking into options for escrow
on new home construction
Princeton-(763) 389-2040
Annandale- (763) 274-3055-They have nothing in place
Dayton-(763) 427-4589-$1250 Must have sod/seed w/2-21/2" black dirt 600 sq ft
adjacent to house, They do not give escrow back until grass is established ~..
Isanti- $1500 seed/sod with black dirt
Cambridge-S1500 full sod
St. Michael-Putting into place I believe Cliff said
D. R. HORTON INC., - MINNESOTA
20860 Kenbridge Ct.
Suite 100
Lakeville, MN 55044
June 4,2002
Mayor Stephanie Klinzing and
City Council Members
Ms. Michele McPherson, Director of Planning
City of Elk River
13065 Orono Parkway
Elk River, MN 55330
Re: ORDINANCE AMENDMENT TO IMPOSE RESIDENTIAL ESCROWS
Dear Mayor Klinzing, City Council Members and Ms. McPherson:
REQUEST
The City Council is being asked to consider an ordinance amendment to impose residential escrows with
a title company, bank or other financial institution.
CURRENT ORDINANCE
As part of the requirements within the Zoning Code - Ordinance Section 900.30 Regulations on
Screening, Landscaping, Lighting, Storage and Outdoor Displays - 5.D., Performance Guarantee.
requires--
"landscape improvements to be completed at the time a certificate is requested for occupancy of a
property -- the financial guarantee shall be in an amount equal to approximately 50% of the value
of the uncompleted landscape improvements -- developers who have posted a previous financial
guarantee in connection with the installation of public improvements shall not be required to post
a separate guarantee, but the financial guarantee shall remain in place in an amount equal to
approximately 50 % of the value of uncompleted landscape improvements until all required
landscape improvements are completed."
UNDER CONSIDERATION
It is being suggested that the current ordinance referenced above be deleted from the landscape area of the
ordinance and be expanded to include all exterior improvements such as grading, detention ponds,
blacktop and curbing, in addition to landscaping.
The escrow requirement is being proposed to appear in Section 900.38, Building Permits, Certificates of
Occupancy, Fees - 2.B., states --
"For residential dwellings, monies equal to the value of exterior improvements not made,
including but not limited to, exterior finishes, grading, topsoil, concrete work, paving, seeding or
sodding, shall be escrowed with a title company, bank or other financial institution. The City
shall verify completion of said work prior to issuance of thefinal Certificate of Occupancy and
the release of escrowed monies."
Mayor Stephanie Klinzing and
City Council Members
Ms. Michele McPherson, Director of Planning
June 4, 2002
Page 2
D.R. HORTON CONCERNS
It is our opinion that the current Zoning Code Ordinance Section 900.30, very much fulfills the intent by
the City to guarantee completion of the required on site improvement items. We would not oppose an
increase in the value of the letter of credit requirement or an additional letter of credit guarantee for the
completion of the landscape requirements. Typically, all landscaping and other site improvement items
are completed prior to the issuance of a certificate of occupancy. The only time these items are not
completed are typically during the winter months.
In our experience, to escrow separate funds with a title company, bank or other financial institution would
be a hindrance to the future homeowners, title company processes and closings and financial institution
processes. In additional, homeowners will likely see an increase in closing fees and expenses, and
undoubtedly get tied up in arcane processes.
D.R. HORTON RECOMMENDATION
We suggest that you modify the performance guarantee section of the zoning code to meet the intent by
the City and completion of all the required exterior lot improvement items. In addition, the City could
require at the time of Building Permit issuance, monies to be escrow with the City, equal to the value of
exterior improvements not made (example $2,000 - typical in other metro cities we are developing in).
Once the items have been completed the monies are returned back to the developer/builder. By collecting
the monies upfront at the time of building permit issuance this would not require the future homeowners
to come up with additional funds and wound not affect the title and financial institutions processes as
currently recommended by this ordinance amendment.
In reviewing the Statutes of the State Building Code and Municipal Code and speaking to members at the
State offices, it is agreed that building code items and lot improvement items are not to be intertwined.
Building Code items are for building construction related items and Zoning Code items are for
improvements of the land.
We look forward to discussing this in more detail with you on June 10. If you should have any questions,
please call me at 952-985-7826 (office) or 952-292-1527 (cell).
Sincerely yours,
D.R. HORTON~INC. --~INNF, SOTA DIVISION
Tom Bakritges [
Project Manager Isa, fid )pment
CC:
Patrick Klaers, City Administrator
Neil Hansen, MN Division President
Don Patton, Vice President Land Development
ORDINANCE 02 -
CITY OF ELK RIVER'
AN ORDINANCE OF THE CITY OF ELK RIVER AMENDING
SECTIONS 900 AND 1008 OF THE CITY CODE OF ORDINANCES
Case No. OA 02-02b
The City Council of the City of Elk River does hereby ordain as follows:
Section 1. Section 900.30 titled, REGULATION ON SCREENING, LANDSCAPING,
LIGHTING, STORAGE AND OUTDOOR DISPLAYS, of the City of Elk River Code of
Ordinances shall be amended and replaced as follows:
900.30 - REGULATIONS ON SCREENING, LANDSCAPING, LIGHTING, STORAGE
AND OUTDOOR DISPLAYS
5. Enforcement.
A. Installation. Ail landscape improvements required by
this subsection shall be installed by the owner no later
than one year after the issuance of a building permit for
the subject property.
Replacement of any dead trees, shrubs, ground covers and
sodding shall be responsibility of the property owner.
B. Inspection. Twelve (12) months after the date of
issuance of a building permit, the City may conduct a field
inspection of the subject site to assure compliance with
the requirements of this ordinance and implementation of
the approved landscape plan.
C. Exceptions and Adjustments. Where a strict application
of this subsection is not possible due to unique
topographic landform, irregular lot shape or historic
features worthy of preservation, the applicant may present
an alternative landscape and screening plan to the City for
alternate approval.
.... ~ .................... su cd pr:or ~^~v issuance cf the
uncorLp!ctcd landscape irLprovamcntz, ~ o~ ] ~ released
..................................... o= public ir~provcmcnts
uncom ctcd
landscape
Section 2. Section 900.38 titled, BUILDING PERMITS, CERTIFICATES OF
OCCUPANCY, FEES, of the City of Elk River Code of Ordinances shall be amended and replaced
as follows:
900.38 - BUILDING PERMITS, CERTIFICATES OF OCCUPANCY, FEES.
Building Permits.
A. No person shall erect, alter, wreck or move any
building or structure or part thereof without first
securing a building permit.
B. An application for a building permit shall be made to
the Building and Zoning Administrator on a form furnished
by the City. Ail building permit applications shall be
accompanied by a site plan drawn to scale showing the
dimensions of the lot to be built upon and the size and
location of the building and accessory buildings to be
erected, off-street parking and loading facilities and such
other information as may be deemed necessary by the
Building and Zoning Administrator to determine compliance
with this and other land use ordinances. No building
permit shall be issued for activity in conflict with the
provisions of this Ordinance except activity for which a
variance has been granted in accordance with Section
900.40(5). The Building and Zoning Administrator shall
issue a building permit only after determining that the
application and plans comply with the provisions of this
Ordinance, the State Building Code and other applicable
laws and ordinances. Building permits for commercial and
industrial properties shall not be issued until a letter of
credit in the amount of 3% three percent) of the valuation
is submitted. Said letter of credit shall ensure
compliance with the grading, drainage, hardsurface, and
landscaping requirements of the ordinance. Said letter of
credit shall not exceed $50,000 (fifty thousand and 00/100)
dollars.
C. If the work described in any building permit is not
begun within one hundred eighty (180) days or substantially
completed within two (2) years following the date of
issuance thereof, said permit shall expire and become void.
Written notice thereof shall be transmitted by the Building
and Zoning Administrator to the permit holder, stating that
activity authorized by the expired permit shall cease
unless and until a new building permit has been obtained.
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o
D. No building permit shall be issued for the development
of commercial, industrial or multifamily structures of four
(4) dwelling units or greater for property that is not
platted in accordance with the requirements of Chapter X of
the City Code.
Certificates of Occupancy.
A. A certificate of occupancy shall be obtained before:
i. any nonagricultural building, except an accessory
building, hereafter erected or structurally altered is
occupied or used; and
ii. the use of any existing nonagricultural building,
except an accessory building, is altered.
B. Application for a certificate of occupancy shall be
made to the Building and Zoning Administrator as part of
the application for a building permit. A certificate of
occupancy shall be issued by the Building and Zoning
Administrator following completion of the building permit
activity and a determination by the Building and Zoning
Administrator that the building and its proposed use
complies with this Ordinance and the provisions of any
permit issued pursuant hereto. To the extent practicable,
a certificate shall be issued within ten (10) days after
the completion of building permit activity. The Building
and Zoning Administrator may issue a temporary certificate
of occupancy for a period not to exceed six (6) months when
only required improvements remain unfinished, when %l$Ork
......... ~ ~^ ~"~ ...... ~ is in progress. For
residential dwellings, monies equal to the value of
exterior improvements not made, including but not limited
to, exterior finishes, grading, topsoil, concrete work,
paving, seeding or sodding, shall be escrowed with a title
company, bank or other financial institution. The City
shall verify completion of said work prior to issuance of
the final Certificate of Occupancy and the release of
3. Fees. Fees and charges for processing applications shall be
established by resolution of the Council and collected by the
Building and Zoning Administrator for deposit in the City's
accounts. Fees shall be established for at least the following:
building permits, conditional use permits, subdivisions, zoning
amendments, variances and appeals.
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Section 3. That this ordinance shall take effect upon publication as provided by law.
Passed and adopted by the City Council of the City of Elk River this 17th day of
June, 2002.
Attest:
Stephanie Klinzing
Mayor
Sandra A. Peine
City Clerk
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