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08-12-1985 CC MIN ~ Regular Weekly Scheduled Meeting of the Elk River City Council Held at the Elk River City Hall Monday, August 12, 1985 Members Present: Mayor Hinkle, Councilmembers Gunkel, Schuldt, Williams and Engstrom Members Absent: None Staff Present: Tom Bublitz, City Administrator; Phil Hals, Street Superintendent; Tom Zerwas, Police Chief; Terry Maurer, City Engineer; and Ron Langness, City Bond Consultant 1. The August 12, 1985 City Council Meeting was called to order at 7:40 p.m. by Mayor Hinkle. 2. Consideration of Agenda Items added were 3~ - sidewalks on Jackson Street, and Gambling license applica- tion from Youth Hockey Association - item l2C. COUNCILMEMBER GUNKEL MOVED TO APPROVE THE AGENDA OF THE AUGUST 12, 1985 CITY COUNCIL MEETING AS AMENDED. COUNCILMEMBER WILLIAMS SECONDED THE MOTION. THE MOTION PASSED 4-0. 3. Demonstration of New Front End Loader Equipment The Council convened the meeting to the City Hall parking lot where Mr. Phil Hals, demonstrated a new "quick attach" front end loader. 3~. Sidewalks on Jackson Mr. Phil Hals explained that there had been a bond posted for reconstruction of a sidewalk on Jackson between 6th and 7th for the State highway project. He explained that for the most part, sidewalk is nonexistent in this area and that if the area was restored with sidewalk, it would be the only strip of sidewalk in the area. He pointed out the State would not object to the City putting a sidewalk in, but the State would not pay for it. He pointed out that the State is going to hold the contractor to replacing the sidewalk along Jackson between 6th and 7th. Councilmember Gunkel inquired whether MSA funds could be used to construct sidewalk in the area. Mr. Maurer explained that MSA funds could be used only if the street meets MSA standards. The Street Superintendent pointed out that all sidewalk repairs done in the City have been accomplished using maintenance funds. Councilmember Gunkel suggested taking out the sidewalk completely. member Engstrom suggested putting the sidewalk on the west side of to service the park. Councilmember Gunkel then suggested that the review its sidewalk policy. Council- the street City should There was a general consensus among Councilmembers not to require the replacement by the contractor of the ten feet of sidewalk that the State is requiring and ., City Council Minutes August 12, 1985 Page Two to have the remainder seeded by the contracteD. Mr. Hals stated that he would follow up on this item with MN/Dot. 4. Consideration of Proposal for Downtown Redevelopment The City Administrator noted that on Tuesday of the past week, the City Staff was presented with a development proposal for a portion of downtown Elk River. He explained the proposal comprehended a building of approximately 10,000 square feet located at the corner of King and Main Street. The Administrator indicated that the development group proposing the project requested to present their proposal at this evening's Council Meeting. Mayor Hinkle recognized Mr. Mike Leary who stated that his firm was hired by the Downtown Development Group to review development for downtown. He ex- plained that projects in other cities were surveyed including Red Wing and Granite Falls. Mr. Leary reviewed the proposed project for Elk River and pointed out that it would address the corner of King and Main with a three story structure with the partial closing of King. He pointed out the project would involve the demolition of Marty's Auto, the Lundberg building and the Public Utilities building. He explained the City is being asked to become involved in the project through the use of tax increment financing. Mr. Cliff Lundberg reviewed the issue of the partial closing of King and noted that the proposal would be to maintain two-way traffic to the parking lot. He added that his group is looking for general concept approval from the Council including the vacating of the portion of King and also the use of tax increment financing. Mr. Lundberg requested the City to authorize the necessary studies to accomplish the tax increment financing for the project. Mr. Rob VanVaulkenberg commented that the group is currently under a time pressure regarding the use of Marty's Auto since the building is currently owned by the First National Bank. The City Administrator briefly reviewed the feasibility study which would be required for the project and pointed out that the feasibility study would essentially focus on the financial feasibility of the project to determine whether or not there were adequate tax increments to fund all the various elements of the project. He recommended the feasibility study be paid for entirely by the group proposing the project. Mr. Cliff Lundberg requested that the feasibility study be paid fifty percent (50%) by the City and fifty percent (50%) by the Developer's Group. The Council continued to review the proposal for the project proposed for King and Main. COUNCILMEMBER WILLIAMS MOVED TO AUTHORIZE THE CITY STAFF TO PROCEED WITH THE REQUIRED FEASIBILITY STUDY FOR THE PROJECT PROPOSED FOR KING AND MAIN AND TO AUTHORIZE THE CITY TO PAY FIFTY PERCENT (50%) OF THE COST OF THE STUDY WITH THE DEVELOPER'S GROUP PAYING THE REMAINDER, AND TO AUTHORIZE THE STAFF TO NEGOTIATE WITH MR. ZACK JOHNSON TO PROVIDE THE REQUIRED SERVICES TO COMPLETE THE.FEASIBILITY STUDY. COUNCILMEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 4-0. City Council Minutes August 12, 1985 Page Three 5. Consideration of Feasibility Report on Industrial Park Improvements Mr. Terry Maurer, the City's Engineer, reviewed the feasibility study for utilities and street construction for the Elk River Industrial Park. He reviewed the proposed sanitary sewer improvements, the proposed water main improvements, and the proposed street improvements. He noted the report divided the improvements into those necessary to make the Industrial Park usable now and also those required in the future. He also reviewed the site grading comprehended by the project. Mr. Maurer then reviewed the cost summary of the project which totaled $651,500. He next reviewed a letter from Mr. Ron Langness, the City's Bond Consultant, which addressed the use of tax increment bonds and assessment bonds for finan- cing the project. Mayor Hinkle requested Mr. Langness to address the financing options for the project. Mr. Langness stated that, once the tax increment district is estab- lished, the City would have eight years, or ten increments, to conclude the project. He added that the assessments could be delayed for a year but this would entail more capitalized interest. He pointed out that the City could use tax increment to abate the assessments and treat the project the same as for an improvement bond. Mayor Hinkle recognized Mr. Dick Gongoll, who stated that the Investors Group began the discussion with the City regarding the Industrial Park in 1983, that in 1984 they requested the City to take over the property and at that time dis- cussed the deferral of assessments for three years. He added that he is re- questing the City to take the property over or put in the utilities. He added that the Investors Group would establish a wholesale price for the property. He pointed out that the Investors Group now has a negative cash flow on the pro- perty and that he does not know that the Group could take additional assessments. Mayor Hinkle inquired of Mr. Langness what kind of building would be needed to generate a tax increment of $111,000, the amount required to make the project work. Mr. Langness replied that a building of approximately 3.5 million dollars in value would be required. In response to a question from the City Admin- istrator, Mr. Langness stated that it would be difficult to make the site meet the test of extending the tax increment district to a 24 year period. Councilmember Engstrom suggested that the Council get a reaction from the Investor's Group regarding the proposed assessments. Councilmember Gunkel inquired whether the area could be considered a blighted area. Mr. Langness replied that, in order to qualify, 70% of the parcels must be blighted. Mr. Maurer commented that the area is not platted to date and Mr. John Oliver stated that the total area is approximately 35 acres. Mayor Hinkle again recognized Mr. Dick Gongoll who inquired whether there was any chance to see whether the assessments could be deferred or whether the Council would look at what it would take to purchase the property. He added that the Investors Group would sell it for what it would take to recover what they have invested in the project, but that he does not know what is owed on the platted part. ~ City Council Minutes August 12, 1985 Page Four Mayor Hinkle inquired whether there was any way to obtain tax increment from another area. Councilmember Gunkel suggested looking at the Tescom expansion to use for tax increment financing. Mr. Ron Langness stated that there is no basis for deferrment of assessments once the improvements are in. The Council continued its discussion of the feasibility study. The repre- sentatives from the Investors Group stated that they would address the issue with their board and return to the Council with their comments. 6. Resolution Accepting Bid, Authorizing Issuance and Establishing Terms For $2,640,000 General Obligation Refunding Improvement Bonds, Series 1985 Mr. Ron Langness noted that the estimated interest rate for this issue was established at 8.24% and that the actual came in at 8.06% which also includes the new money for the Ridgewood Bituminous Overlay Project. He pointed out that the refunding issue means a savings to the City, of $452,000. .. He noted that the original estimated savings was $373,000. He added that these figures are still estimates since government securities will have to be purchased to accomplish the project. COUNCILMEMBER SCHULDT MOVED TO ADOPT RESOLUTION 85-32 A RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $2,640,000 GENERAL OBLIGATION REFUNDING AND IMPROVEMENT BONDS, SERIES 1985. COUNCILMEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 5-0. 7. Resolution Accepting Bids, Authorizing Issuance and Establishing Terms For $850,000 General Obligation Tax Increment Bonds, Series 1985-A Mr. Langness stated that the estimated interest cost on this issuance was 8.7% and that the actual interest rate was 8.39%. As a result, he pointed out the City is saving $24,000 on this issuance. COUNCILMEMBER ENGSTROM MOVED TO ADOPT RESOLUTION 85-29 A RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $850,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1985A. COUNCILMEMBER WILLIAMS SECONDED THE MOTION. THE MOTION PASSED 5-0. 8. Resolution Accepting Bid, Authorizing Issuance and Establishing Terms for $130,000 General Obligation Tax Increment Bonds, Series 1985-B Mr. Langness pointed out that the original interest rate was estimated at 8.72% and that the actual interest rate on this issuance is 8.40%. COUNCILMEMBER WILLIAMS MOVED TO ADOPT RESOLUTION 85-31 A RESOLUTION PROVIDING FOR THE ISSUANCE AND SALE OF $130,000 GENERAL OBLIGATION TAX INCREMENT BONDS, SERIES 1985-B. COUNCILMEMBERENGSTROM SECONDED THE MOTION; THE MOTION PASSED 5-0. Recess The Elk River City Council recessed at 10:10 p.m. and reconvened at 10:20 p.m. City Council Minutes August 12, 1985 Page Five 9. Consideration of Ambulance Service Mutual Aid Agreement The Council reviewed the memorandum from Chief of Police, Tom Zerwas, re- garding the proposal for Mutual Aid Agreement for Ambulance Service with Health Central Emergency Medical Services. He added that there is no out-of-pocket cost to the City for this Mutual Aid Agreement, and that he is recommending approval. COUNCILMEMBER SCHULDT MOVED TO APPROVE THE MUTUAL AID AND BACK-UP AGREEMENT BETWEEN HEALTH CENTRAL EMERGENCY MEDICAL SERVICES AND THE ELK RIVER FIRE DEPARTMENT AMBULANCE. COUNCILMEMBER ENGSTROM SECONDED THE MOTION. THE MOTION PASSED 4-0. 10. Consideration of Animal Impound Fees Police Chief Zerwas stated that in reviewing the City of Elk River Ordinance on animals, it was noted that the City Council is supposed to set the impound fee for impounded animals from time to time. He added that at the present time the Police Department is charging citizens $15.00 for the impound fee to recover the City's costs of pick-up and transportation to the dog pound. He added that he is recommending the impounding fee be set at $15.00. COUNCILMEMBER ENGSTROM MOVED TO APPROVE THE ESTABLISHMENT OF THE ANIMAL IMPOUND FEE AT $15.00. COUNCILMEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 4-0. 11. Consideration of Request for Part Time Police Secretary Police Chief Zerwas noted that both the full time secretary and the Community Service Officer are working overtime in order to catch up with the clerical backlog. He added that there are more police officers now than ten years ago, but that the office staff is taking more phone calls and typing more police reports as a result of the increase in the number of officers. As a result, he stated he is requesting additional part-time clerical help. COUNCILMEMBER WILLIAMS MOVED TO AUTHORIZE THE CHIEF OF POLICE TO ADVERTISE FOR A PART TIME CLERICAL POSITION AT $5.00 PER HOUR AT 20 HOURS PER WEEK. COUNCIL- MEMBER GUNKEL SECONDED THE MOTION. THE MOTION PASSED 4-0. 12. Administrator's Update A. Finance Officer Recruitment The City Administrator updated the Council on recruitment of the Finance Officer for the City and noted that he had received 77 applications for the position. He added that he will be conducting interviews for the position within the next couple of weeks and will be recommending candidates for interview by the City Council. B. 1986 Budget Schedule and Capital Improvements Program Review The City Administrator stated that he wanted to address the status of the budget schedule and capital improvements review with the Council to City Council Minutes August 12. 1985 Page Six get their input. Councilmember Gunkel stated that she thought the Council may want to review the five year plan in conjunction with the budget. Councilmember Schuldt stated that he would like to address the fund balance issue in particular with regard to this year's budget. Council- member Gunkel suggested that perhaps the Council could set a work session for a review of the Capital Improvements Program. C. Gambling Lincense Application From Elk River Youth Hockey Association The City Administrator noted that the Elk River Youth Hockey Association had applied for a gambling license application to the Minnesota Charitable Gambling Control Board. He noted that gambling licenses are no longer approved by municipalities. but cities do have the authority to veto any gambling license application. After brief discussion by the City Council there was general consensus among Councilmembers that the gambling license application submitted to the State by the Elk River Youth Hockey Association would not be vetoed by the City Council. 13. Public Facilities Options The City Administrator briefly reviewed his memorandum to the Council regarding options for financing public facilities. He reviewed the specific requirements for leasing or purchasing facilities by municipalities. Mayor Hinkle noted that he was reluctant to purchase the Assembly of God building as a City Hall because of the possible problem of resale. Councilmember Gunkel commented that. since the Elk River School District is growing. the school may be a future market for the site. Mr. Ron Langness, the City's Bond Consultant, pointed out Chapter 475 of the Statutes which indicates that if a municipality enters into a lease for more than one year. it becomes an obligation to the City and as a result, the City is required to pass a referendum. The Council discussed various financing options for City facilities including renting and purchasing the Assembly of God building. and holding a referendum on the public works garage. The City Administrator noted that in his discussions with other cities. there seemed to be a common factor among the cities who had passed a referendum. that being a citizen's group which had campaigned for the passage of the referendum. The Council discussed reactivating the Citizen's Advisory Committee and Council- memberjGunkel suggested that the staff draft a letter to the past members of the Citizen's Committee to meet with the Council at their August 26. 1985 City Council meeting to discuss the options for city facilities including the option of the Assembly of God church for a City Hall. City Council Minutes August 12, 1985 Page Seven 14. Adjournment COUN~ILMEMBER SCHULDT MOVED TO ADJOURN THE MEETING. COUNCILMEMBER ENGSTROM SECONDED THE MOTION. THE MOTION PASSED 4-0. The Elk River City Council adjourned at 11:45 p.m. Respectfully submitted, /~~CZ:~.. Thomas R. Bublitz City Administrator TRB:st