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HomeMy WebLinkAbout 03-12-1992 Charter PacketAGENDA LINO LAKES CHARTER COMMISSION MARCH 12, 1992 - 7:00 P.M. 1. 7:00 P.M. Review of City Charter, Chapters 1-12 - Randy Schumacher, City Administrator 2. 7:20 P.M. Review of City Charter, Chapter 8 - Dave Kennedy, Holmes & Graven 3. 8:00 P.M. Questions on City Charter Make-up and Issues 4. 8:15 P.M. Set Agenda and Date for Next Meeting 2000 First Bank Place West Minneapolis Minnesota 55402 Telephone (612) 333-0543 Telecopier (612) 333-0540 Clayton L. LeFevere Herbert P. Lefler J. Dennis O'Brien John E. Drawz David J. Kennedy Joseph E. Hamilton John B. Dean Glenn E. Purdue Richard J. Schieffer Charles L. LeFevere Herbert P. Lefler III James J. Thomson, Jr. Thomas R. Galt Dayle Nolan John G. Kressel Steven B. Schmidt James M. Strommen Ronald H. Batty William P. Jordan William R. Skallerud Rodney D. Anderson Corrine A. Heine David D. Beaudoin Steven M. Tallen Mary Frances Skala Christopher J. Harristhal Timothy J. Pawlenty Rolf A. Sponheim Julie A. Bergh Darcy L. Hitesman David C. Roland Karen A. Chamerlik Paul D. Baertschi Lefe crc Lefler Kennedv O'Brien g llrawz t enac,im al :�titiuCGW�n1 February 29, 1988 Mr. Randall Schumacher City Administrator City of Lino Lakes 1189 Main Street Lino Lakes, Minnesota 55014 Re: City Charter Assessment Procedures Dear Randy: In my letter of December 24, 1987, I spoke in a general way about the difficulties of financing local improve- ments under Chapter 8 of the Lino Lakes Charter. I've agreed to appear before the Charter Commission March 3rd to discuss the matter in more detail, and you have asked me to describe some specific examples of problem areas for the Commission to consider prior to the meeting. As I pointed out in my earlier letter, comments of this kind tend to get quite technical in nature; and I want to assure the Commission members that I am not simply hair-splitting, but rather dealing with things that can fundamentally affect the validity of the special assessment process and the ability of the City to market its bonds to finance local improve- ments. The courts require very strict compliance with assessment procedures in law or charter, and thus we as bond counsel must be confident that those procedures can be and are in fact followed prior to issuing our approving opinion on the bonds. A list of troublesome points in the charter and its implementing ordinance (Ord. Code Sec. 3.03) follow. Comparisons with state law governing assessments (Minn. Stat. Chapter 429) are made where appropriate. 1. Petitions instituting improvement. The petitions must be signed by the benefitted property owner. Benefit can only be determined after the work is done and the assessment roll prepared. It may be that the property included in the petition will be found to have received no benefit. Is the petition valid at the outset? The statute uses the term "owners Mr. Randall Schumacher February 29, 1988 Page 2 of real property abutting on the streets named in the petition". Later in the subdivision the term "owners proposed to be assessed" is used. The statutory language is preferable. 2. Council initiation. a) The resolution must state the "scope" of the improvement and the number of benefitted properties. Does "scope" mean "area", "cost", "size"? Again the term "benefitted" property owners is used, but benefit has not yet been determined. Also the term "benefit- ted property owners" must be intended to mean "property to be benefitted by the improve- ment". b) Who prepares the cost estimate in the resolu- tion? Apparently the engineer, see Subdivi- sion 3. State law requires the council to direct some "competent person" to prepare a preliminary report on the project: this is usually the consulting engineer. c) Notice. (1) The council sets the public hearing by resolution which must include estimated unit prices and total cost. Does this resolution contain the same information as the initiating resolution? Is the intent that the initiating resolution be published? (2) Does the published notice have to say anything about the nature or cost of the improvement or the area proposed to be assessed? How is the general public informed about the improvement? (3) Owners "proposed to be assessed" receive mailed notice but all that is required to be in the notice is details of the hearing and estimated costs. The state law procedure of published and mailed notice of (i) the details of the hearing, (ii) the general nature of the improvement, (iii) the estimated cost, Mr. Randall Schumacher February 29, 1988 Page 3 and (iv) the area to be assessed, is clear and insures that everyone concerned is reasonably on notice that the City is considering undertaking an assessable public improvement and that affected property might be assessed for a portion of its cost. (4) At the hearing the Council must provide a "special assessment formula" and a cost assessment analysis. Suppose in the actual assessment proceeding the proposed formula is found to improperly apportion assessments: can it be changed? (5) Can the Council at the hearing change any detail of the proposed project? State law permits the Council to reduce the extent of the improvement as noticed but not enlarge it. (6) What happens after the hearing? Does the Council take some affirmative action to order the improvement to be con- structed? Subdivision 3 refers to "proceedings on the improvement" and the improvement being "allowed". What vote is required? The Council may institute the project (i.e. give notice) by a 4/5th vote, but is a 4/5th vote required to proceed after the petition period has passed? (7) The protest petition language is un- clear. Does "owners proposed to be assessed" have the same meaning as "benefitted property owners" as used in earlier language of this section? What does the term "at the expense of the property benefitted" mean? Does "in the meantime" mean within the 60 day period? (8) How is ownership of property to be assessed determined? State law allows use of'the tax records of the County Auditor but the charter is silent. Mr. Randall Schumacher February 29, 1988 Page 4 (9) May a person who has signed a petition against a local improvement withdraw his or her name? If the petition is "presented" to the Council, (how is that done?) before the 60 day period has elapsed, may a person withdraw his or her name prior to Council action? 3. Section 8.04, Subdivision 2 and Section 303.05 of the ordinance. These provisions are very troublesome. We think that the charter means that if any portion of the cost of the improvement is to be financed by funds raised by general taxation an elec- tion is required to authorize the improvements. On the other hand the ordinance says that if less than 100% of the cost is assessed an election is required. We think the charter must be followed. This means, for example, that if a project is proposed for a state -aid street and the Council for any number of good reasons feels that the state aid funds available for use on that street should be used elsewhere making general taxes the only source of funds for the City's share of the cost an election is required. But Minn. Stat. Section 429.051, Subdivision 1, made applicable by the ordi- nance, permits that any part of the improvement may be assessed whether or not state -aid funds are used to finance the project. Thus, the Council will be com- pelled to use state aid funds on the project or conduct an election. How can the voters of the City intelli- gently vote on the appropriateness of the "associated assessment formula" when only the owners of property proposed to be assessed are interested? Again, if the voters approve the formula can any other scheme later be used if that if found legally necessary? 4. Section 8.04, Subdivision 3. (a) The word "subdivision" in the second line must mean "subdivisions". (b) What is "all of the evidence on which the Council shall base their decision", and what is the "public record of the proposed im- provement"? The language is so broad that a challenge to the jurisdiction of the Council to proceed with the improvement is rather simple. Mr. Randall Schumacher February 29, 1988 Page 5 (c) The bids on a petitioned project could conceivably not come in until 30 days (for engineer preparation of estimates) plus 14 days (notice) plus 60 days (petition period) plus 21 days (bidding time) after the origi- nal estimates were made. Engineers are good at estimates, but few will think theirs will hold within 10% for such an extended period. There is nothing in the charter permitting the City, as in state law, to advertise for bids prior to the hearing to get a sense of costs. The rebidding provision probably would help only if the project were scaled back but there is no procedure for this in the charter. 5. Section 8.04, Subd. 4. Does "disallowed" mean (i) prohibited by petition, (ii) exceeding the cost by 10%, (iii) voted down or (iv) all of the above? What does "vote on the same improvement" mean - initiate the improvement, order the improvement, let a contract? May the Council consider a petition for the same improvement in the one year period? What does "same improvement" mean - the exact proposal or something like it? 6. Section 8.06. 100% petition. Why is a public hearing with notice required if all of the owners of property to be assessed have no objection? What is the purpose of the ten day waiting period? Does the 10% over -estimate rule apply? Does "order the proposed project" mean let a contract? Does the one year rule about proceeding with the contract apply? 7. Ordinance, Section 303.08, Procedures and financing. Why is not Minn. Stat., Section 429.041, Subdivision 7 adopted by reference? This is most useful and cost saving and the competitive bidding process has been complied with. 'In summary, let me state why these ambiguities cause a bond lawyer (and the bond market) concern. The improvement bonds sold to finance the project pledge the special assessments to payment of principal and interest on the bonds. If the improvement procedure is defective and successfully challenged, the assessments and the bonds are invalid. Although Section 429.071 Mr. Randall Schumacher February 29, 1988 Page 6 contains a procedure for reassessment its purpose is to correct improper assessments not to reverse jurisdictional defects. A partial list of grounds for challenge to the assessments made for projects following the charter process is as follows: 1 Petitions signed by persons owning property not benefitted. Errors in computing required percentages of petitioners. 2. Defects in the Council resolution as to scope of the improvement. 3. Inadequate information in the published and mailed notice of improvement. 4. Modification of the size of the improvement from that described in the notice. 5. Improper assessment formula used in resolu- tion. 6. An election not held where required by Chapter 8. 7. Inadequate public record not showing neces- sary evidence on which Council based its action. 8. Rebidding on a scaled down project. 9. Acting on the "same" project within one year of public hearing. I'll try to answer questions about and elaborate on these comments Thursday evening. s very truly, David J. Kennedy DJK:caw cc: William Hawkins CITY OF Igo L� MEMORANDUM TO: LINO LAKES CHARTER COMMISSION MEMBERS FROM: RANDY SCHUMACHER, CITY ADMINISTRATOR DATE: 4 MARCH 1992 RE: MEETING SCHEDULED FOR 12 MARCH 1992 @ 7:00 P.M. Please find attached an agenda, and a copy of Mr. Dave Kennedy's letter dated 29 February 1988 outlining the financing difficulties associated with our City Charter. As you can see by the agenda, I will spend a short time with you briefly going through the majority of the code. I will be followed by a presentation by Mr. Kennedy and time for questions. If you will be unable to attend this meeting, please contact my office. If you should have questions in the meantime, please do not hesitate to contact my office. cc Agenda Kennedy Letter Roster of Charter Commission Members 1189 MAIN STREET, LINO LAKES, MINNESOTA 55014 612-464-5562 AGENDA LINO LAKES CHARTER COMMISSION MARCH 12, 1992 - 7:00 P.M. 1. 7:00 P.M. Review of City Charter, Chapters 1-12 - Randy Schumacher, City Administrator 2. 7:20 P.M. Review of City Charter, Chapter 8 - Dave Kennedy, Holmes & Graven 3. 8:00 P. M. Questions on City Charter Make-up and Issues 4. 8:15 P.M. Set Agenda and Date for Next Meeting '000 First Bank Place West Ainneapolis Ainnesota 55402 -elephone (612) 333-0543 -elecopier (612) 333-0540 ;layton L. LeFevere ierbert P. Lefler 1. Dennis O'Brien Iohn E. Drawz )avid J. Kennedy Joseph E. Hamilton John B. Dean Tenn E. Purdue (ichard J. Schieffer ;harles L. LeFevere ierbert P. Lefler III lames J. Thomson, Jr. Thomas R. Galt )ayle Nolan John G. Kressel ;teven B. Schmidt lames M. Strommen ionald H. Batty Villiam P. Jordan Villiam R. Skallerud 3odney D. Anderson ;orrine A. Heine )avid D. Beaudoin Steven M. Tallen Jlary Frances Skala ;hristopher J. Harristhal "imothy J. Pawlenty iolf A. Sponheim Julie A. Bergh )arcy L. Hitesman )avid C. Roland :aren A. Chamerlik 'aul D. Baertschi LcFCVcrc Lefler Kennedy' O'Rrien Drawz troth sitrictl Issmiation February 29, 1988 Mr. Randall Schumacher City Administrator City of Lino Lakes 1189 Main Street Lino Lakes, Minnesota 55014 Re: City Charter Assessment Procedures Dear Randy: In my letter of December 24, 1987, I spoke in a general way about the difficulties of financing local improve- ments under Chapter 8 of the Lino Lakes Charter. I've agreed to appear before the Charter Commission March 3rd to discuss the matter in more detail, and you have asked me to describe some specific examples of problem areas for the Commission to consider prior to the meeting. As I pointed out in my earlier letter, comments of this kind tend to get quite technical in nature; and I want to assure the Commission members that I am not simply hair-splitting, but rather dealing with things that can fundamentally affect the validity of the special assessment process and the ability of the City to market its bonds to finance local improve- ments. The courts require very strict compliance with assessment procedures in law or charter, and thus we as bond counsel must be confident that those procedures can be and are in fact followed prior to issuing our approving opinion on the bonds. A list of troublesome points in the charter and its implementing ordinance (Ord. Code Sec. 3.03) follow. Comparisons with state law governing assessments (Minn. Stat. Chapter 429) are made where appropriate. 1. Petitions instituting improvement. The petitions must be signed by the benefitted property owner. Benefit can only be determined after the work is done and the assessment roll prepared. It may be that the property included in the petition will be found to have received no benefit. Is the petition valid at the outset? The statute uses the term "owners Mr. Randall Schumacher February 29, 1988 Page 2 of real property abutting on the streets named in the petition". Later in the subdivision the term "owners proposed to be assessed" is used. The statutory language is preferable. 2. Council initiation. a) The resolution must state the "scope" of the improvement and the number of benefitted properties. Does "scope" mean "area", "cost", "size"? Again the term "benefitted" property owners is used, but benefit has not yet been determined. Also the term "benefit- ted property owners" must be intended to mean "property to be benefitted by the improve- ment". b) Who prepares the cost estimate in the resolu- tion? Apparently the engineer, see Subdivi- sion 3. State law requires the council to direct some "competent person" to prepare a preliminary report on the project: this is usually the consulting engineer. c) Notice. (1) The council sets the public hearing by resolution which must include estimated unit prices and total cost. Does this resolution contain the same information as the initiating resolution? Is the intent that the initiating resolution be published? (2) Does the published notice have to say anything about the nature or cost of the improvement or the area proposed to be assessed? How is the general public informed about the improvement? (3) Owners "proposed to be assessed" receive mailed notice but all that is required to be in the notice is details of the hearing and estimated costs. The state law procedure of published and mailed notice of (i) the details of the hearing, (ii) the general nature of the improvement, (iii) the estimated cost, Mr. Randall Schumacher February 29, 1988 Page 3 and (iv) the area to be assessed, is clear and insures that everyone concerned is reasonably on notice that the City is considering undertaking an assessable public improvement and that affected property might be assessed for a portion of its cost. (4) At the hearing the Council must provide a "special assessment formula" and a cost assessment analysis. Suppose in the actual assessment proceeding the proposed formula is found to improperly apportion assessments: can it be changed? (5) Can the Council at the hearing change any detail of the proposed project? State law permits the Council to reduce the extent of the improvement as noticed but not enlarge it. (6) What happens after the hearing? Does the Council take some affirmative action to order the improvement to be con- structed? Subdivision 3 refers to "proceedings on the improvement" and the improvement being "allowed". What vote is required? The Council may institute the project (i.e. give notice) by a 4/5th vote, but is a 4/5th vote required to proceed after the petition period has passed? (7) The protest petition language is un- clear. Does "owners proposed to be assessed" have the same meaning as "benefitted property owners" as used in earlier language of this section? What does the term "at the expense of the property benefitted" mean? Does "in the meantime" mean within the 60 day period? (8) How is ownership of property to be assessed determined? State law allows use of the tax records of the County Auditor but the charter is silent. Mr. Randall Schumacher February 29, 1988 Page 4 (9) May a person who has signed a petition against a local improvement withdraw his or her name? If the petition is "presented" to the Council, (how is that done?) before the 60 day period has elapsed, may a person withdraw his or her name prior to Council action? 3. Section 8.04, Subdivision 2 and Section 303.05 of the ordinance. These provisions are very troublesome. We think that the charter means that if any portion of the cost of the improvement is to be financed by funds raised by general taxation an elec- tion is required to authorize the improvements. On the other hand the ordinance says that if less than 100% of the cost is assessed an election is required. We think the charter must be followed. This means, for example, that if a project is proposed for a state -aid street and the Council for any number of good reasons feels that the state aid funds available for use on that street should be used elsewhere making general taxes the only source of funds for the City's share of the cost an election is required. But Minn. Stat. Section 429.051, Subdivision 1, made applicable by the ordi- nance, permits that any part of the improvement may be assessed whether or not state -aid funds are used to finance the project. Thus, the Council will be com- pelled to use state aid funds on the project or conduct an election. How can the voters of the City intelli- gently vote on the appropriateness of the "associated assessment formula" when only the owners of property proposed to be assessed are interested? Again, if the voters approve the formula can any other scheme later be used if that if found legally necessary? 4. Section 8.04, Subdivision 3. (a) The word "subdivision" in the second line must mean "subdivisions". (b) What is "all of the evidence on which the Council shall base their decision", and what is the "public record of the proposed im- provement"? The language is so broad that a challenge to the jurisdiction of the Council to proceed with the improvement is rather simple. Mr. Randall Schumacher February 29, 1988 Page 5 (c) The bids on a petitioned project could conceivably not come in until 30 days (for engineer preparation of estimates) plus 14 days (notice) plus 60 days (petition period) plus 21 days (bidding time) after the origi- nal estimates were made. Engineers are good at estimates, but few will think theirs will hold within 10% for such an extended period. There is nothing in the charter permitting the City, as in state law, to advertise for bids prior to the hearing to get a sense of costs. The rebidding provision probably would help only if the project were scaled back but there is no procedure for this in the charter. 5. Section 8.04, Subd. 4. Does "disallowed" mean (i) prohibited by petition, (ii) exceeding the cost by 10%, (iii) voted down or (iv) all of the above? What does "vote on the same improvement" mean - initiate the improvement, order the improvement, let a contract? May the Council consider a petition for the same improvement in the one year period? What does "same improvement" mean - the exact proposal or something like it? 6. Section 8.06. 100% petition. Why is a public hearing with notice required if all of the owners of property to be assessed have no objection? What is the purpose of the ten day waiting period? Does the 10% over -estimate rule apply? Does "order the proposed project" mean let a contract? Does the one year rule about proceeding with the contract apply? 7. Ordinance, Section 303.08, Procedures and financing. Why is not Minn. Stat., Section 429.041, Subdivision 7 adopted by reference? This is most useful and cost saving and the competitive bidding process has been complied with. In summary, let me state why these ambiguities cause a bond lawyer (and the bond market) concern. The improvement bonds sold to finance the project pledge the special assessments to payment of principal and interest on the bonds. If the improvement procedure is defective and successfully challenged, the assessments and the bonds are invalid. Although Section 429.071 Mr. Randall Schumacher February 29, 1988 Page 6 contains a procedure for reassessment its purpose is to correct improper assessments not to reverse jurisdictional defects. A partial list of grounds for challenge to the assessments made for projects following the charter process is as follows: 1 Petitions signed by persons owning not benefitted. Errors in computing percentages of petitioners. 2. Defects in the Council resolution as of the improvement. property required to scope 3. Inadequate information in the published mailed notice of improvement. and 4. Modification of the size of the improvement from that described in the notice. 5. Improper assessment formula used in resolu- tion. 6. An election not held where required by Chapter 8. 7. Inadequate public sary evidence on action. record not showing neces- which Council based its 8. Rebidding on a scaled down project. 9. Acting on the "same" project within one year of public hearing. I'll try to answer questions about and elaborate on these comments Thursday evening. s very truly, David J. Kennedy DJK:caw cc: William Hawkins MINU 1'ES LINO LAKES HOME RULE CHAR 1'BR COMMISSION 14 JANUARY 1992 LINO LAKES CITY HALL Call to Order The meeting was called to order at 7:05 PM by Sally Kuether. Pat Smith was named as temporary Secretary. Roll Call Present were Sally Kuether, Pat Smith, David Storberg, Robert Doocy, Beverly Landers, Matthew Blaylock, Ina Liljedahl, Robert Williams, William Houle, Joyce Scharpen, Raymond Johnson and Rolf Iverson. Robert Rud was absent. There are two open chairs. Elections The following members were elected: Chairperson: Pat Smith, Vice Chairperson: David Storberg, Secretary: Rolf Iverson Old Business None. New Business The commission will ensure that names of persons interested in filling the two Charter Commission vacancies are submitted to the District Court Judge no later than January 31, 1992. It was proposed to have City Bond Attorney David Kennedy review the status of our City Charter and any changes in the legal requirements for Home Rule Charters. The proposal was seconded and passed unanimously. The next meeting of the Charter Commission was set for. Thursday, March 12th, at 7:00 PM in the Lino Lakes City Hall. The meeting was adjourned at approximately 8:15 PM. Respectfully submitted, Rolf Iverson, Secretary