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HomeMy WebLinkAbout07/25/1969 Council MinutesBILLS: July 14, 1969 2495 Centennial State Bank of Lexington 2496 Commissioner of Taxation 2497 State Treasurer, PERA account 2498 State Treasurer, Soc. Sec. acct. 2499 North Central 2500 Village of Circle Pines 2501 Ronald J. Jaworski 2502 Robert Koch 2503 Commissioner of Taxation 2504 Bruce Fleming 2505 Anoka County Union & Shopper 2506 Miller- Davis Co. 2507 International Business Machines 2508 Donald Wilber 2509 Joe LaTuff 2510 Elwood West 2511 Marvin B. Myhre 2512 Richard Hauer 2513 NSP 2514 Oskey Bros. Petroleum 2515 Uniforms Unlimited 2516 Gordon's Corner Inc. 2517 T. A. Schifsky & Sons 2518 Inter -State Lumber Co. 2519 Hugo Feed Mill & Elevator Co. 2520 Mobil Oil Corp. 2521 M. & I. Auto Supply 2522 The New Miner Ford 2523 Columbus Township 2524 Lino Lakes Mileage 2525 Western Auto 2526 Centerville Garage 2527 Northway Hardware U.S. deductions for June Withholding tax for 2nd quarter Employee deductions & Village contributions. Employee ded. & Village contribu- tions. Gas for Lino Lakes Park Gas for Sunrise Park Motor fuels for parks Gopher bounty Sales tau for 2nd quarter Animal control for June Legal printing Clerk's supplies Clerk's supplies Relettering of doors on police car .357 mag. revolver Clothing allowance Clothing allowance Clothing allowance Service for hall, streets & parks Fuel for police, parks, roads & CD Clothing for CD members Supplies for float MC mix for roads Lumber Weed spraying supplies & shop supplies. Motor fuels Switch and bearing Parts Grading, May 1 to 27 Loading culverts onto truck Supplies Motor fuels Parts for shop and CD truck Minutes approved at the meeting of July 28, 196 ?07 $ 155.10 62.40 191.07 153.32 4.30 1.44 1.35 5.75 5.74 7.00 80.50 4.50 25.38 7.50 101.92 30.00 30.00 30.00 113.53 68.86 146.80 11.88 117.75 8.23 54.56 24.99 5.81 10.32 52.00 10.00 19.92 12.50 10.17 CYerk- Treasurer A special meeting of the Lino Lakes Village Council held on July 25, 1969 was called to order at 8:10 p.m. by Mayor L'Allier with those present being Mr. Jaworski, Mr. Bohjanen and Mrs. L'Allier. Those absent were Mr. Cardinal and Mr . Rosengren. Mr. Jaworski moved to waive the requirement of prior written notice for the special. meeting. Seconded by Mr. Bohjanen Carried. Mr. Bohjanen inquired whether this special meeting had been announced at the last regular council meeting and Mr. L'Allier answered yes. The meeting was called for the purpose of questioning Mr. Osmon Springsted on matters relating to the bond market and the franchises which are now pending from U.S. Lakes Development Company. 908 Mr. Springsted advised against granting the proposed franchises to a private operator if it could possibly be avoided. He stated that it is an intriguing proposition new,but can lead to difficulties in the future. Difficulties can best be avoided by the Village never having any part of the proposed systems. Mr. L'Allier asked him if this would be true if Jandric 'gave' the systems to the Village. Mr. Springsted doubled that this would ever be the situation and thought the Village would be faced with acquiring the systems more quickly than anticipated. If this were the case the Village would be better off owning the systems from the start. Mr. L'Allier stated that if the franchises were granted they would have to protect future Councils with a buy -back of a give -back feature so there mould not be a private system in the center of a municipal system. Mr. Springsted thought the Council would be held responsible even if it were a private system, because the homebuyers would automatically come to the Council with their problems. He was not aware of this contractor ever turning over a system 'free' and could not name any companies that had done so. Concerning obtaining monfey for the buy - back Mr. Springsted stated people not serviced are disinclined to make a con- tribution and the people who are served will feel they have paid for the system in spite of any written agreement. They will insist that they are paying for the system twice, which could be reality. Mr. $pringsted declared again that unless the system is turned over completely it could be an unhappy experience for the Village. The Developer could turn over the systems 'free' after he has assessed each homebuyer, the same as the Village would assess the homebuyers. Mr. L'Allier felt it would be difficult to obtain money for municipal systems as our assessed Village valuation is only one million dollars and a cost of $350- 450,000 for water and $1,300,000 for sewer would be a burden on the community. Mr. Springsted thought it would be possible to work out a principal retirement program that the area benefitted could support. The ideal situation would be for Jandric to assess each house its share for the facilities, bury the debt and turn over the systems to the Village. Mr. L'Allier mentioned that Jandric had told the Council this was not possible because the initial investment would have to include a plant to handle the entire area and the few homes at the be- ginning could not be assessed for this complete system. The Clerk read a letter from Drovers State Bank of South ST. Paul, stating it was their opinion Jandric could not obtain financing for a utilities system unless the company had unencumbered title to the Utility properties involved and if its franchise arrangements required that it convey title to the utilities to the community for less than the fair value at a future date. Mr. L'Allier questioned if we could grant the franchise as proposed, giving them perhaps ten years to obtain financing and after ten years they turn over the system without cost. Mr. Springsted answered no, as this would impose too large a rate for the customers at the beginning of the development and would be too Much of a burden on them. From previous experience banks know that the fact that the Village would take over the systems is a 'pretty safe bet' under the proposed franchises and in essence they are 'betting on the community' or extending credit to the Village. Mr. Springsted thought it was better to accept a development with some kind of sewer and water which was 'less than desireable' than to accept a development with no sewer and water. He recommended trying to get municipal sewer and water from the beginning, that this probably would be cheaper in the long run. 2 09 Many people think a greater population brings affluence but in reality more people only bring more problems which cost more money, so the Village may or may not be better off financially in a few years. Mr. L'Allier wondered assuming we are not in a financial position to put in munic- ipal water and sewer, would it be possible for the developer to sell the system back to us at the original cost of construction minus depreciation. Mr. Springsted thought this would be a good deal for the Village, but judging from the letter from Drovers State Bank thought they would not look favorably on this. He recommended a prudent contract on the part of the Village regarding the buy -back feature. Mr. Springsted mentioned the proposed tax disparity law, equalizing funds distributed to all cities and villages whereby the day may come when the Village without .industry will be the more fortunate one. We do not know how long this will take. Also the Metro Sewer Bill is a factor to consider, whereby the cost of the main interceptors will be carried by everyone. Mr. Springsted could not report anything good in the bond market and stated that the index had jumped four points higher than the historic high. There is a bill before Congress to repeal the tax exemption on Municipal bonds. If they remove the tax exempt feature it will put an end to all municipal financing in Minnesota until the Legislature meets again to raise the 7% limit. The Federal Government will get a tax increase by taking away the tax exemption. He suggested the Council send a resolution to all Congressmen saying they don't like the proposed bill. If the bill is passed it will mean an end to selling bonds for sewers,etc. and this serious situation is almost upon us. Mr. Springsted assumed the Council had negotiated with Jandric at length but men- tioned a man who had had experience in the acquisition of private systems and in particular with Jandric. He suggested the Council talk with Mr. Bob Bell, an at- torney in St. Paul and a Representative in the Legislature, as he regarded him as an expert on franchises and particularly on the buy back of the systens. Mr. Bell has had experience with Jandric in Inver Grove Heights and also another system in Roseville and Mr. Springsted felt he could give the Council some insights into the Jandric franchises. Mr. L'Allier thought this was a good idea, but mentioned that our Attorney and Eng. had spent many hours on the proposed franchises and thought they were the best they had seen. Mr. Springsted asserted the more advice they had the better advantage they would have. He was surprized that the Council had control of the rates and suggested the Council impose a franchise payment to the Village if net earnings justify it. Mr. L'Allier answered we would be getting some tax income from the pipes, etc., but we could perhaps impose a payment if earnings reach a certain point. Mr. Springsted mentioned that in Inver Grove Heights the Council had been highly confused by the Accounting method used by Jandric. They couldn't really tell what the earnings were, the books weren't complete and left a lot to be desired. He thought the Village should have them spell out their accounting method. Mr. Bohjanen questioned the Inver Grove Heights franchise and Mr. Springsted answered that it was a lot less strict than the one proposed for Lino Lakes. Mr. Bohjanen felt we should try to get real clear accounting methods from Jandric. Mr. Bohjanen wondered if Jandric were to put in a water system or wells for 300 homes how he could finance for future expansion. Mr. Springsted thought he could structure a repayment schedule on an oversizing basis and pay off the debt as future homes are sold. (This could also be true for the Village.) 21.0 Mr. L'Allier questioned Mr. Springsted on the time element in preparing a bond issue. Mr. Springsted stated this could be an election if they desired, but did not have to be. There are two methods of issuing bonds: 1.) If 20% of the bonds were to be assessed, the Council could have an assessment hearing which would require publishing notice of a public hearing in the paper once each week for two weeks, with the hearing held 10 days from the time the hearing is called. By a 4/5 vote of approval by the Council they could order in improvements, proceed with contracts and then financing. This would take a minimum of 60 days. 2) The Council could issue general oblication revenue bonds. (This is not likely to be the case.) The Council be Resolution could determine that reven- ues from the assessments will be sufficient to pay the debts, if not they will levy taxes. They would then hear from the taxpayers at assessment hearings, so they would be much better off using method no. 1, as a majority of the Villages do. Mr. L'Allier mentioned the fact that most of the land Jandric 'owns' is under contract for deed and held by different villagers and wondered if we had to assess these owners for the main line. Mr. Springsted stated the land is assessed not the person; that a small assessment could be charged and explained to the owner by stating the sewer line is now closer to his property therefore making his property more valuable. To discourage premature platting the Village could require the land owner to pay the rest of his assessment at the time the plat is approved or at the time building permits are granted. Mr. Bohjanen wondered if this assessment was made on a per acre basis if it couldn't be made in three steps with connection charge payable at the time the house is connected. Mr. Springsted thought one of these payments should be at the time the plat is okayed as some plats could remain undeveloped for years. Mr. L'Allier asked if the Village could arrange financing by paying the interest gearly, with the principal to be delayed until later. Mr. Springsted said this could be done by issuing temporary improvement bonds, whereby interest could be paid for three years, with principal delayed that long. Advantages of this would be: 1) I would buy time to evaluate the situation as to how to pay off the principal and to watch the development grow. 2) Some assessments might be pre -paid thus lowering the principal needed to be obtained. 3) It is 'possible' that money would be cheaper = =but not likely. The interest over a three -year period on $400,000 would be about $25,000. This is one -third of our annual budget. The bond issue should include enough money to cover the interest so this wouldn't have to be taken out of the budget. Mr. Springsted advised against going into financing that isn't sufficiently funded where they may have to go into the General Fund for the necessary money. Mr. Springsted declared that it is impossible to have an assessment that is 100% equitable; somebody will pay more or less than others. Jandric should be re- quired to pay his fair share. Mr. L'Allier stated that Jandric preferred a municipal system. Mr. Gotwald should have definite figures on a Municipal system by Monday, July 28 and Mr. L'Allier will call Mr. Springsted with specifics. Mr. Springsted stated the question seemed to be 'can the area support it' and that we are sure we do not want to levy this assessment on the rest of the Village. Mr. Bohjanen thought everyone should have more time to get their facts straight, maybe have a couple more meetings, even if it meant by- passing the developers deadlines. Mr. Springsted agreed and stated that a year from now a week will not make that much difference and could save the Village a lot of future grief. 2 11 He thought the Village was lucky Jandric was sticking to residential homes as a lot of developers are switching to multiple dwellings. Single residence financing is most difficult to obtain, and having their own sewer and water systems makes it even more difficult. Mr. L'Allier thought the Village may be better off putting in the water system and perhaps,they could get by for a few years with spetic tanks. Mr. Springsted agreed, at the same time stating that politically people are more enthused about sewer systems than they are about water. Mr. Bohjanen felt Jandric's share for the lateral assessment should be written into the franchise so their portion would be taken care of. Mr. Springsted thought this could be worked out. Mr. Gotwald had told Mr. L'Allier that Jandric had been given tentative approval by the PCA for a temporary system. Mr. Springsted mentioned that if Jandric could get approval the Village could get similar approval for a temporary disposal plant, perhaps a used one that could be moved around to other areas of the Village as it is needed. Mr. L'Allier answered that we should wait for response == perhaps a used one would not qualify if a more elaborate plant was needed. Mr. Bohjanen thought we.could make additional changes to a used one. Even if the PCA approved it for Jandric the3plant still had to be approved by the Metro Council.. Mr. Bohjanen felt if the PCA approved it for Jandric there was something wrong someplace as they had turned down Forest Lake. Mr. L'Allier asserted that was under different circum- stances. Mr. Bohjanen mentioned that the PCA had gotten stiffer on their improve- ments and requirements. - Mr. Karth in the audience questioned the assessment to the land for which Jandric held a contract for deed. Most contracts allow for the assessments to be paid by the buyer. Mr. Springsted emphasized that this was a big undertaking and many will wonder how the area will support it. It is amazing how property seems to support im- provements by making the land more valuable. Mr. L'Allier felt sure that once Jandric's development is a success more de- velopers will be right behind him and home building will gofast. Mr. Bohjanen thought the whole financial picture should be gone over with the entire Council, Mr. Springsted, Mr. Locher, Mr. Gotwald, etc. Mr. Springsted was thanked for attending the meeting. Mr. Jaworski moved to adjourn at 9:25, seconded by Mr. Bohjanen. Carried. Minutes approved at the meeting of August 11, 1969 Deputy Crk