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HomeMy WebLinkAboutCCMin_95Apr12CITY OF FALCON HEIGHTS REGULAR CITY COUNCIL MEETING MINUTES OF APRIL 12, 1995 ~.~J- Mayor Baldwin convened the meeting at 7:04 p.m. PRESENT Baldwin, Gehrz, Gibson Talbot, and Jacobs. Also present were Hoyt, Asleson, Maurer, Sampson, Martin, and Jans. ABSENT Hustad. COMMUNITY FORUM There were no comments from the floor. MINUTES OF MARCH 22, 1995 Minutes were approved unanimously as presented. CONSENT AGENDA APPROVED Upon unanimous consent, item C-7 was added to the consent agenda. Motion was made by Councilmember Gehrz to approve the following consent agenda. Motion carried unanimously. 1. Disbursements a. General disbursements through 4/6/95: 573,858.89 b. Payroll, 3/16/95 to 3/31 /95: 51 1,124.37 2. Licenses 3. Approval of ADA modifications to the Community Park building and city hall door 4. Authorization for the purchase of a copy machine for use in the city office 5. Approval of purchase of office products from Facility Systems, Inc 6. Approval of purchase of ventilators and stretcher chairs for the rescue department 7. Authorization for purchase of 94 boulevard trees PUBLIC HEARING SECOND HEARING REGARDING THE 1995 ALLEY RECONSTRUCTION PROJECT Mayor Baldwin explained that due to improper notification of ten properties in the affected assessment area, a second public hearing was being held. Engineer Maurer gave a brief review of the project's scope and estimated cost. [; ~' J City Council Minutes April 12, 1995 Page 2 -, - 1.9 Mayor Baldwin opened the public hearing at 7:10 p.m. Mr. Richard Kranz, 1484 Crawford Avenue, asked if any of the alleys north of Larpenteur Avenue were scheduled for reconstruction. Maurer replied that the five alleys being reconstructed were all south of Larpenteur Avenue. Mr. Kranz commented that the alley behind his house had some drainage problems and needed some maintenance. Mayor Baldwin stated that the purpose of the public hearing being held was to address only the reconstruction of the five alleys south of Larpenteur. Reconstruction of other alleys can be considered at another time. Mayor Baldwin told Mr. Kranz that he would be sent a letter by Administrator Hoyt describing the maintenance that may be performed on .his alley this year. There being no one else wishing to be heard, Mayor Baldwin closed the hearing at 7:14 p. m. POLICY AGENDA PRESENTATION OF BIDS RECEIVED FOR 1995 ALLEY RECONSTRUCTION PROJECT Engineer Maurer presented the council with bids received for the alley reconstruction project. Nine bids were received, with the low bidder being F.M. Frattalone at $1 1 1,306.55. This bid will keep the assessment rate at $22.58 per front foot. Maurer noted that included in the specifications was an alternative bid to add storm sewer improvements to one of the affected alleys. This additional work, if completed, will not change the final assessment amounts by more than a few dollars per lot. Maurer recommended including the extra amount in the cost to be assessed since the city can choose at a later date. to assess less but cannot assess more once the resolution has been passed. The decision over whether to include the storm sewer work is best made at the time of construction. Maurer noted that this bid presentation was for the council's information only; the bids should be accepted after the assessment hearing of May 10. CONSIDERATION OF RESOLUTION NO. 95-08, DECLARING COSTS TO BE ASSESSED AND. ORDERING PREPARATION OF THE ASSESSMENT ROLL. Motion was made by Councilmember Jacobs to approve Resolution No. 95-08 and order preparation of the assessment roll with a 7% annual interest rate and a payback period of ten years. Motion passed unanimously. City Council Minutes April 12, 1995 Page 3 R~ 1 ~ CONSIDERATION OF RESOLUTION NO. 95-09, SCHEDULING ASSESSMENT HEARING FOR THE 1995 ALLEY RECONSTRUCTION PROJECT Motion was made by Councilmember Gehrz to approve Resolution No. 95-09, scheduling the assessment hearing for May 10, 1995. Motion passed unanimously. REQUEST TO CONTRACT FOR PROSECUTION SERVICES Administrator Hoyt reported that staff had sent out letters of inquiry to four law firms regarding providing prosecution services for the city on a retainer basis due to an anticipated increase in prosecutions with a 24 hour police officer in the city's limits. Letters of inquiry were sent to firms with some affiliation with the city or the St. Anthony Police Department. Of the firms that responded to the inquiry, the lowest bid was from the Hughes and Costello firm. Hughes and Costello provide prosecution services for many cities (including Lauderdale, Maplewood, New Brighton, Mounds View, and Richfield) and received positive reviews from those cities. By contracting on a retainer fee basis, the city should see significant savings. Motion was made by Councilmember Gehrz. to contract with the Hughes and Costello law firm, effective June 1, and to notify the current prosecutor of the change. Motion passed unanimously. REQUEST TO AMEND THE ASSESSMENT AGREEMENT ON FALCON CROSSING Administrator Hoyt gave the initial background on this request. In 1984, the city gave financial assistance in the form of $1,400,000 of commercial revenue bonds and 5600,000 of general obligation bonds to improve blighted commercial property at the northeast corner of Snelling and Larpenteur Avenue (now known as "Falcon Crossing"1. This is the only retail center that has ever received public assistance and the only retail center with an assessment agreement (the city also has an assessment agreement on the 1666 Coffman project). The current owner, Mr. Steven Wellington, is asking for termination of the assessment agreement in 1999 to reduce his property taxes after 1999 and, in turn, to reduce rents to his tenants. Since the request had financial implications for the city, Springsted Public Finance Advisors was asked to analyze the request to determine if termination of the agreement would be in the best public interest of the city. Keith Jans, Springsted, reviewed the reasons for the request and its financial implications. Mr. Wellington's stated reasons for the request are to 1) a desire to reduce the negative financial impact to the property (taxes are higher on this property than they would be without the assessment agreement because the assessment agreement has a minimum market value) and 2) to expedite TIF revenue back to the county and the schools. Mr. Wellington states that r '~ City Council Minutes April 12, 1995 Page 4 j,. ~ v termination of the assessment agreement is a reasonable request since it will not affect the city's ability to repay the bonds that were issued. Mr. Jans's analysis found that without termination of the assessment agreement, the projected TIF fund balance in 2005 would be 5950,284. If the agreement was terminated in 1999, the fund balance in 2005 would be 5135,952. Using a present value basis, the tax savings to the applicant would be 5414,068 while the city would lose 5646,953 in anticipated TIF revenue and interest to use for planned TIF projects. Rich Martin, the city's legal counsel, made two comments. First, the city is permitted to grant the applicant's request, but it is not required to do so. Secondly, the assessment agreement is enforceable. The applicant has already filed an assessment appeal with the tax courts. The applicant argues that the development agreement and assessment agreements state that TIF funds generated from Falcon Crossing should be used only to fund improvements on the Falcon Crossing site. Mr. Martin stated that the city is legally permitted to use the TIF funds generated at Falcon Crossing for any project within the TIF district. To conclude the consultant's and staff's analysis, Administrator Hoyt noted the following findings: 1) the city and Mr. Wellington have the same goal to maintain and enhance a healthy business community; 2) the city frequently provides business owners with non-financial assistance on solving land-use issues; 3) Falcon Heights is a fully developed city with no opportunities to generate additional tax base and 66% of its land is tax-exempt. Therefore, the city must rely on its tax increment revenue to maintain the tax base for all tax-paying jurisdictions; and 4) past requests for assessment adjustments by individual property owners have been denied because of the possible detrimental effect granting them might have on all city taxpayers. From these findings, staff recommends denial of the request. Alternative proposals would be considered with the applicable escrow fees to cover the city's financial and legal costs. Mr. Bob Long, attorney for the applicant, explained that his client purchased his property on the belief that the assessment agreement and development agreement only guarantee repayment of the bonds, not financing for public improvements within the commercial district. Furthermore, Mr. Long argued that "minimum improvements" are specified only to those to be performed to the Falcon Crossing (Bullseye) site itself, not to other public and private properties. Mr. Long also stated that the city currently has no specific, formally approved plans for the projects described in the TIF plan. He suggested that the city may be able to find other funds for projects planned for TIF revenue. For example, the Larpentuer Avenue improvements and improvement of the southeast corner of the business district could be funded through other programs, including county/state aid money, Community Development Block Grant funds, Housing Redevelopment Authority funds, and special assessments. n ~~ 1 City Council Minutes April 12, 1995 Page 5 1.9 Continuing on, Mr. Long stated that Mr. Wellington is paying much higher taxes than other commercial centers in the area. Any tax savings realized after 1997 would be passed along to tenants in the form of lower rents. Mr. Long admitted that Falcon Crossing is not going "under" but commented that when leases come due, some tenants may be leaving to cheaper rents unless the council takes action to lower the property taxes on this property. The goals of the council and applicant are the same - a healthy business community. Mayor Baldwin stated that the council expects any property owner to attempt to improve their financial situation and they expect that the city will be asked for help. The city, however, has several restrictions on helping in this situation, including a small staff, limited funding, and covenants made with the taxpayers of the city. This project was originally part of an agreement between the developer and the citizens of Falcon Heights that, in return for financial assistance, additional revenue would be generated for the project and development that the city could not otherwise finance. Baldwin noted that the policy issue is that a covenant was made with city taxpayers -the city took on the financing of this project with the promise of a payoff to the public. The council needs to deliver to the public on the $650,000 beyond the initial investment. Baldwin stressed that he does not want to cut off discussions with Mr. Wellington about how to improve his business situation but that in order to terminate the assessment agreement, the applicant will need to find funds not otherwise available to the city to replace the $650,000 lost to TIF revenue. Since the city's legal counsel has stated that the city is legally entitled to enforce the agreement, the city's obligation is to litigate if necessary to avoid termination of the assessment agreement. Councilmember Jacobs asked Mr. Wellington for the meaning of the term "negative economic impact", outside of increased property taxes on the project. The applicant, Mr. Wellington, made several comments in reply. These included that he was not part of the original agreement on the property and that the property taxes on this property are burdensome. Falcon Crossing is not about to "tip over" but some tenants are having problems with their rent levels. Mr. Wellington stated that he would like to see the special assessment approach to public improvements rather than the use of TIF funds and that the amount of proposed improvements might be extreme. Mr. Wellington also noted his dissatisfaction with being asked to pay for the city's consultants in order to continue discussions. Continuing on, Mr. Wellington asserted that the tenant base at Falcon Crossing needs to be solidified and that he would like to be able to compete effectively for quality tenants. The property will always have limitations in attracting new tenants, particularly limitation in parking and vehicular access. Finally, Mr. City Council Minutes ti April 12, 1995 Page 6 Wellington stated that this proposal will not put taxpayers at risk because TIF funds would be used defease the bonds and terminate the assessment agreement. Councilmember Jacobs thanked Mr. Wellington for the improvements that he has made to the appearance of Falcon Crossing. Jacobs commented that he is impressed with Mr. Wellington's entrepreneurial spirit but that he is also impressed with the fact that Mr. Wellington bought a retail building for 5330,000 when Mr. Wellington's appraisal gave it a value of 5749,000. Jacobs also noted that some tenants have recently moved from across the street to Falcon Crossing and therefore, the rents and relative commercial. space must be somewhat competitive. He noted that Mr. Wellington chose not to release rent rates to the city when requested and that when the property was purchased in July 1994, Mr. Wellington knew what the taxes were, he knew it was in a TIF district, and he had been told by the City Administrator that it was unlikely that the city could find a public purpose to amend the assessment agreement. Jacobs stated that if the assessment agreement is terminated, the city stands to lose 5650,000 and Mr. Wellington stands to gain over 5414,000. Finally, Jacobs said that at this time he doesn't believe Mr. Wellington will allow the property to deteriorate and that the tenants will stay even if the city does nothing. Jacobs concluded by asking Mr. Wellington "What's really in this for the city?" Mr. Wellington replied that his building's appraisal was done without information about the TIF and debt arrangements, so it is really not reflective of the buildings value. He chose not to release rent information to the city because it would become public information that his competitors would use against him. Councilmember Gibson Talbot commented that, in her mind, there is a single policy question: "What is the benefit to the public?". She noted that she can't find any specific public good in the current proposal as presented. She agreed with Councilmember Jacobs' appreciation for the site improvements done and the quality of tenants attracted thus far. Other individual assessment amounts have not been reduced and it would not be fair to reduce this one unless a positive public good can be served. Mr. Long asked the council if they felt that Larpenteur Avenue improvements would be the best use of this money when compared to what the county and school district could do with the funds. He said that he believes that TIF itself is questionable as a public policy tool since it redirects taxes from counties and school districts and gives them to cities for development projects. Councilmember Gehrz remarked that the future of TIF is an unknown -the legislature might change the use rules, for example. Gehrz said that she would be open to looking at a new proposal in the future, but that she could not support the proposal presently before the council. The city council is responsible to all city taxpayers. r City Council Minutes April 12, 1995 Page 7 aCJO (a.) Mayor Baldwin concluded the discussion by noting his satisfaction with the current owner of the Falcon Crossing site. He reiterated that the taxes on the site may be a burden to the owner, but that burden was known to the applicant when the property was purchased. Baldwin stated that he would like to get the property off of the TIF roll without breaking the financial covenant made with taxpayers. If new funds that could not otherwise be available to the city are available to get the property off the TIF roll, those funds could be dedicated to relieving this property's tax burden. Councilmember Jacobs moved the following: "The city council denies the applicant's request to defease the bonds and amend the assessment agreement on the Falcon Crossing property (formerly Bullseye Plaza) because of the potential negative impact that it would have on all city property taxpayers from the loss of anticipated tax increment revenue to implement planned public improvements and revitalization efforts in the city as identified in the tax increment plan, including the reconstruction of Larpenteur Avenue and the commercial revitalization of the southeast corner." Councilmember Jacobs stated that he does not want to bring to end any discussions of apublic-private partnership on this issue. However, he also stated that he hopes the motion brings to an end any discussions regarding "cutting a deal" regarding the TIF arrangement. Councilmember Gibson Talbot remarked that she would not be in favor of amending the assessment agreement even if there is $650,000 in other funds (like CDBG) available. Mayor Baldwin asked Gibson Talbot if she would favor a termination if the money came from a new source, such as funding from the legislature specifically to pay off the bonds. Councilmember Gibson Talbot replied that would be acceptable, provided that the funds come from a source not already available to the city. The motion to deny the applicant's request, as noted above, was voted upon and unanimously approved. CITY INFORMATION AND ANNOUNCEMENTS Councilmember Gehrz announced that the Ramsey County League of Local Governments would be holding a session on crime at their April 19th meeting. The public was invited to attend. Mayor Baldwin reported that he'd recently attended the AMM Urban Issues Task Force and had participated in a good discussion on common concerns such as affordable housing. He also reported on a compliment he'd received from a resident about the city's excellent police and rescue service. LJI City Council Minutes April 12, 1995 Page 8 2~: Councilmember Gibson Talbot reported that attendance was good the first of two Neighborhood Watch block captain meetings. She also announced that Falcon Heights Elementary would be holding a community parade on May 18th. Administrator Hoyt made several announcements regarding park and street maintenance and upcoming community events. ADJOURNMENT The meeting was adjourned at 9:22 p.m. ~~~ Tom Baldwin, Mayor ~ ~ C~_o~--Y--, Carla Asleson Recording Secretary