6.1. SR 02-11-2008Item # 6.1.
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MEMORANDUM
TO: Mayor and City Council
FROM: Lori Johnson, City Administrator
DATE: February I I, 2008
SUBJECT: Highway 169 Land Acquisition
'Phis item is returning to the Council for discussion following brief discussions at two
previous meetings. The issue of beginning to acquire property for the Highway 169
improvements was prompted along by a property owner with property for sale in the
proposed right of way who offcrcd the property to the City before listing it fox sale. On
December 17, 2007, the Council agreed not to pursue purchasing that piece of property.
Attached is the memo from the December 17, 2007, meeting explainuig MnDOT's policy on
early acquisition and addressing City funding. Since there is no timeline for beginnuig the
project and the early acquisition needs to be funded by the City, early acquisition does not
appear to be to the City's advantage at this time.
Ji
Elk REQUEST FOR ACTION
..._.
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To Item Number
Ci Council 5.2.
Agenda Section
Public Works Meeting Date
December 17, 2007 Prepared by
Lori ohnson, Ci Administrator
Item Description Reviewed by
Acquisition along TH 169
ht-of-Wa
Llliscuss Ri
y
g Reviewed by
Action. Requested
Discuss whether the City wants to pursue acquiring right-of--way along Highway 169 as it becomes
available.
Background/Discussion
At a previous meeting, staff made the Council aware of a property along Highway 169 that is fox sale that
will be required as right-of-way for the Highway 169 improvement project. The Council briefly discussed
the acquisition of right-of-way property prior to the project being authorized. The purchase of land prior
to an approved project is not MSA eligible until the project is approved and would need to be funded
through City reserves. At the meeting we did not have information from MnDOT regarding how it
would value the property the City acquires early when it becomes eligible fox MSA reimbursement, so the
discussion was delayed until that information was available.
MnDOT representative Craig Robinson responded stating that MnDOT's policy "is to deterxntue a
property's value at the time MnDOT obtains it, not the value at the tune the City purchased it. In most
cases the property will appreciate in value, although in some cases, it could go the other way." Again, the
City would need to fund this purchase until the project is approved and the land is eligible for MSA
reunbursement. Considering these two facts, in order for the City to come out ahead fmancially on an
early acquisition, the value of the property would need to appreciate more than the interest cost for
holding the property plus the costs fox maintenance, repair, and staff time of maintaining the property
until it is needed fox this project. Since this project is not programmed in MnDOT's long range plan, the
City may hold this property for many years before it is needed for the project. Further, although
ownership of this land may be advantageous when applying for federal funds, it is unlikely that the City
will be in a financial position to purchase much of the needed right-of-way property. Therefore, the
question is whether holding one or two properties will help in the quest to obtain federal funding since
the majority of the right-of--way will still need to be acquired.
Financial Impact
The Capital Improvement Plan (CIP) includes $250,000 in both 2011 and 2012 for Highway 1691and
acquisition. If the council chooses to proceed with the purchase of the property currently available, the
2008 CIP would need to be adjusted by reducing one of the programmed projects by an amount equal to
the land acquisition cost.
S:\Council\Lori\2007\TH 169 ROW Accquisidon 12 17 07.doc
Attachments
Nonc
ACtIOn 1blotion by Second by Vote
Follow Up
S:\Council\Lozi\2007\TH 1l9 ROW Accquisition 12 17 07.dac