HomeMy WebLinkAbout02/27/2008 Council PacketMemorandum
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Special Worksrm-1oN,
To: City Council
From: Gordon Heitke
Date: February 22, 2008
Re: Charter Amendment Comparison Information
Mayor Bergeson has called for a special council work session to be held on Wednesday,
February 27, 2008 from 5 p.m. to 6 p.m. The purpose of the work session is to continue
discussion of possible charter amendments to be placed on the November, 2008 ballot.
At the February 4 work session, Bond Counsel Stephen Bubul presented a detailed
review of the substitute amendment presented to the City Council by the Charter
Commission. After reviewing and discussing the document, the Council requested that a
simplified "grid" analysis be prepared to assist in further discussions of the alternative
amendments and that the amendments submitted by the Citizen Task Force and Mr. Bob
Bening and Chapter 429 be part of the analysis.
Mr. Bubul has prepared a grid which attempts to identify the major differences between
the alternatives as well as a more detailed narrative comparison that provides more
explanation of the information identified in the grid.
I have included previously distribute materials and a legal review of the Bening proposed
amendment.
Attachments:
Special Council Work Session Notice, February 27, 2008
Citizen Task Force /Council Amendment
Charter Commission Substitute Amendment
Bubul review of Substitute Amendment, Jan. 28, 2008 (previously distributed)
Bubul narrative comparison of amendment alternatives, Feb. 18, 2008
Bubul grid comparison of amendment alternatives, Feb. 19, 2008
Charter Amendment Timeline Chart
Springsted letter, Jan. 29, 2008 (previously distributed)
Bening Proposed Amendment, Jan. 14, 2008
Bubul review of Bening Proposed Amendment, Jan. 30, 2008
of
CITY OF LINO LAKES
NOTICE OF SPECIAL CITY COUNCIL SESSION
FEBRUARY 27, 2008
5:00 P.M.
NOTICE IS HEREBY GIVEN that the Lino Lakes City Council has scheduled
a special session on Wednesday, February 27, 2008, at 5:00 p.m. to discuss charter
amendment options. The meeting will be held at Lino Lakes City Hall, 600 Town
Center Parkway, Lino Lakes, Minnesota and is open to the public.
If you have any questions or need special accommodations, please call
651- 982 -2406.
Julie Bartell, City Clerk
1' Reading:
Publication:
2nd Reading:
Effective:
Council Member
moved for adoption of the following ordinance:
CITY OF LINO LAKES
ORDINANCE NO. 07 -07
AN ORDINANCE AMENDING CHAPTER 8 OF THE LINO LAKES CITY
CHARTER, REGARDING PUBLIC IMPROVEMENTS AND SPECIAL ASSESSMENTS
The City Council of the City of Lino Lakes does ordain:
Section 1. That Chapter 8, Section 8.01, 8.02, 8.03, 8.04, 8.05 and 8.06 of the
Lino Lakes City Charter be and are hereby repealed:
Section 8.01. Power to Make Improvements and Levy Assessments.
cost of the improvement, including all costs and expenses connected therewith, with
interest. No assessment shall exceed the benefits to the property.
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Section 8.03. Local Improvement Ordinances and Regulations. Within one
hundred twenty (120) days after this Charter goes into effect and before local
improvements can be acted upon, the Council shall enact suitable ordinance(s)
governing local improvements and special assessments. The ordinance(s) shall
provide a complete working code covering the determination of assessments and
assessment districts, public h rings, appeals from a collection of assessments,
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certifying of unpaid assessments for collection by the proper County officer. Said
the subject of local improvements and assessments. After the adoption of such
ordinance(s) providing for local improvements, all procedures in compliance therewith
contained in this Charter.
Section 8.04. Special Assessment Procedure.
percent (25 %) in number of the benefitted property owncrs (A benefitted property owner
benefitted parcel can only have one signature.) together with a resolution adopted by an
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four fifths affirmative vote of all of the Council. The Council resolution shall state the
nature and scope of proposed improvement including the number of benefitted property
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of the improvement both in unit price and in total thereof. Upon receipt of such
improvement setting forth therein the time, place and purpose of such hearing. Such
thereto, a copy of such resolution including estimate unit prices and estimated total
price thereof shall be mailed to each benefitted property owner at his /her last known
address at least two (2) weeks prior to the date of said hearing. Failure to give mailed
notice, or any defects in the notice, shall not invalidate the proceedings. At such
for or against the proposed improvement. At such hearing the City Council shall
expected to offset the proposed improvement cost. A period of sixty (60) days shall
process independent of the initiating process, a petition against such improvement bo
such improvement, or when the improvement has been petitioned for, signed by a
number of the owners proposed to be assessed for such improvement, at least equal to
the number of those who petitioned for the improvement, the Council shall not make
appgars on a petition to the Council for a local improvement, may withdraw his /her
name by statement in writing filed with the Council before such petition is presented to
the Council.
Subdivision 2. Regardless of the provisions of Subdivision 1 of this section, when
less than one hundred (100 %) percent of the estimated cost of the proposed
outside funding sources other than the City general fund, the Council shall within ono
hundred twenty (120) days after the conclusion of the public
ring, submit the
shall schedule a special election by which said improvement and its associated
subdivision, and the public record of the proposed improvement contains all of thc
evidence on which the Council shall base their decision, the Council may by resolution,
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hearing, proceed on the improvement. If after bids arc received on the project—the
proposed contract exceeds the estimated cost of thc engineer stated at the public
hearing held under Subdivision 1 by more than ten (10 %) percent, the City Council may
(1) time only.
Subdivision 4. When a- proposed improvement is disallowed under the foregoing
subdivisions, the Council shall not vote on thc same improvement within a period of one
that the cost of City services to streets, sidewalks, or other public or private property
as special assessments. Such -casts shall not be deemed to be "special assessments"
e- • 1 -
Section 8.06. When under the provisions of section 8.04, Subdivision 1, an
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owners, such property owners may after the mailing of notice of a public hearing,
petition to waive fifty (50) of the sixty (60) days waiting period. After such petition, the
City Council may immediately order the proposed project. (Amended)
Section 2. That Chapter 8 of the Lino Lakes City Charter be amended by adding
thereto a new Section 8.01 to read as follows:
Section 8.01. Local Improvements Defined; Charter Provisions Effective.
Subdivision 1. For the purposes of this Chapter, the term "local improvements"
means any public improvements financed in whole or in part from special assessments.
Subdivision 2. For the purposes of any objection or petition under this Chapter,
(a) each parcel is considered to have one owner, and only one person or entity may
sign an objection or petition on behalf of any additional owners of that parcel; and (b) if
the same person or entity owns more than one parcel affected by a local improvement,
that person or entity may sign an objection or petition only once; and (c) for the purpose
of identifying recipients of any notice under this Chapter, owners are determined in
accordance with Minnesota Statutes, Section 429.031, subdivision 1.
Subdivision 3. The City may undertake any local improvements not forbidden by
law and levy special assessments to pay all or any part of the cost of such local
improvements. The principal amount of special assessments for any local
improvements shall not exceed the cost of the improvement, including all design,
financing and related costs, and shall not exceed the benefit to the property determined
in accordance with state law.
Subdivision 4. Local improvements shall be carried out exclusively under the
provisions of this Charter, except to the extent otherwise provided in Section 8.02.
Section 3. That Chapter 8 of the Lino Lakes City Charter be
amended by adding thereto a new Section 8.02 to read as follows:
Section 8.02. Local Improvement Procedure.
Subdivision 1. Local improvements shall be carried out in accordance with state
law, except as provided in this Section.
Subdivision 2. If more than 50 percent of the owners of the real property abutting
on the streets named in the mailed notice of the improvement hearing under Minnesota
Statutes, Section 429.031, subdivision 1 sign written objections regarding the local
improvements, and file such objections with the city clerk prior to the improvement
hearing or present such objections to the presiding officer at the hearing, then after the
hearing the council shall schedule a special meeting to be held at least 45 days after the
date of the hearing. At least 10 days prior to the date of the special meeting, the city
shall publish notice of the special meeting and mail notice of the special meeting to all
owners who received the initial notice under Section 429.031, subdivision 1. Such
published and mailed notice shall include all the information provided in the initial mailed
notice, along with a statement as to the number and percentage of affected owners who
filed objections at or before the hearing. At the special meeting, the council shall hear
additional testimony on behalf of any objecting property owners, and may consider
further written or oral testimony from appropriate city officials and other witnesses, as to
the nature of the local improvements, the advisability of proceeding with such local
improvements, the proposed financing for such local improvements, any proposed
amendments to the plans or financing for such local improvements, and the
methodology used to calculate individual special assessments for such local
improvements.
Subdivision 3. A resolution ordering the local improvements (as such
improvements may have been amended in response to the hearing or special meeting
under Section 8.02, Subdivision 2) may be adopted at any time within six months after
the date of the special meeting by vote of a majority of all members of the council when
the local improvement has been petitioned for by not less than 35 percent of the owners
of the real property abutting on the streets named in the petition as the location of the
local improvement; and when there has been no such petition, the resolution may be
adopted only by vote of four -fifths of all members of the council. The effective date of a
resolution ordering the local improvement must be at least 30 days after adoption.
Within five days after adoption of the resolution, a summary of the resolution must be
mailed to the affected owners. If more than 50 percent of the affected owners sign
written objections regarding the resolution, and file such objections with the city clerk
prior to the effective date of the resolution, the resolution does not become effective and
the local improvement is not ordered. Any objections filed under Section 8.02,
Subdivision 2 will not constitute objections under this Subdivision 3.
Subdivision 4. If timely objections are not filed by the required number of
property owners under Subdivision 2 of this Section, Subdivisions 2 and 3 of this
Section do not apply to the subject local improvements, and all subsequent procedures
for approval of and levying of special assessments for those local improvements shall
be in accordance with state law, except as otherwise provided in this subdivision.
Notwithstanding anything to the contrary in Minnesota Statutes, Section 429.031,
subdivision 1, clause (f), a resolution ordering the local improvement may be adopted at
any time within six months after the date of the hearing by vote of a majority of all
members of the council when the local improvement has been petitioned for by not less
than 35 percent of the owners of the real property abutting on the streets named in the
petition as the location of the local improvement; and when there has been no such
petition, the resolution may be adopted only by vote of four -fifths of all members of the
council.
subdivisions, the Council shall not vote on the same improvement within a period of one
or welfare.
Section 4. That Chapter 8, Section 8.07, of the Lino Lakes City Charter be
amended to read as follows:
Section 8.07. Local Improvement; Special Provisions.
Subdivision 1 . _ _ _ _ _ . _ _ - _ _ _ _ . _ - _, In the geographic areas of
the City described in Subdivision 2, the construction of local improvements, the levy of
special assessment for the financing of those improvements must be conducted in
accordance with procedures specified in state law.
Subdivision 2. Subdivision 1 applies to land within three (3) geographic areas,
each not exceeding 430 acres, legally described as follows:
AREA NO. 1 - Trunk Highway #49 (Hodgson Road) and County State Aid
Highway #23 Intersection (Lake Drive)
-All Government Lot 1, Section 30, T31, R22, PIN. 30- 31 -22- 210001
-That part of Lots 14, 15, 16 and 17, Auditor's Subdivision No. 151 lying south and
east of State Trunk Highway #49 (Hodgson Road) right -of -way
AREA NO. 2 - Interstate 135E and County Road 242 (Main Street)
Interchange
- Northeast one quarter (1/4) of Section 24
- That part of the southeast one quarter (1/4) of Section 24 lying north of Cedar
Street
- East one half (1/2) of the southwest one quarter (1/4) of Section 24
- East one half (1/2) of the northwest one quarter (1/4) of Section 24
AREA NO. 3 Interstate I35W and Trunk Highway #49 (Lake Drive)
Interchange
- North one half (1/2) of the southwest one quarter (1/4) of Section 18
- That part of the south one half (1/2) of the southwest one quarter (1/4) of Section
18 lying north of the Interstate I35W right -of -way
- That part of the southwest one quarter (1/4) of Section 17 lying west of Trunk
Highway #49 (Lake Drive) right -of -way
- All of the northwest one quarter (1/4) of Section 17 with the exception of that part
of the southeast one quarter (1/4) of said northwest one quarter (1/4) of
Section 17 as follows: beginning at a point at the intersection of the south line
of said southeast one quarter (1/4) of the northwest one quarter (1/4) with the
east right -of -way line of Trunk Highway #49; thence northeasterly along said
right -of -way line 938.14 feet (+ or -) ; thence southeasterly 672. 39 (+ or -) feet
to east line of said southeast one quarter (1/4) of the northwest one quarter
(1/4); thence south along said east line 588.5 (+ or -) feet to the south line of
said southeast one quarter (1/4) of the northwest one quarter (1/4); thence
westerly along said south line 1021.59 feet (+ or -) to the point of beginning.
- The north 720 feet of that part of the southwest one quarter (1/4) of the
northeast one quarter (1/4) of Section 17 lying west of the Anoka County Park
property
- That part of the north one half (1/2) of the northeast one quarter (1/4) of Section
17 lying west of the Anoka County Park property
- That part of the north one half (1/2) of the northeast one quarter (1/4) of Section
17 lying west of the Anoka County Park property
- The south one half (1/2) of southeast one quarter (1/4) of the southeast one
quarter (1/4) of Section 8
- The southeast one quarter (1/4) of the southeast one quarter (1/4) of the
southwest one quarter (1/4) of Section 8
- The east 330 feet (+ or -) of the northeast one quarter (1/4) of the southeast one
quarter (1/4) of the southwest one quarter (1/4) of Section 8
Subdivision 3. When construction of local improvements, the Icvy of special
assessments for the financing of those improvements specially benefit a parcel of real
property, in an area described in subdivision 2, on which a single family, owner
occupied residential unit existed on September 30, 1993, the owner /occupant of such
residential unit may file a petition with the City Clerk objecting to the special assessment
to be levied against his /her parcel. Such petition shall be filed with the City at or before
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may not specially assess such owner's property for the improvements constructed
unle'., the owner, at his /her option, in the future elects to connect to or use the
improvements constructed by the City. Any notice of hearing mailed to such single
family, owner occupied units shall include notice of the property owner's right to object
to the assessments as granted in this paragraph. This exception terminates on the first
Attest: Julianne Bartell, City Clerk
John Bergeson, Mayor
Adopted by the Lino Lakes City Council this day of , 2007.
The motion for the adoption of the foregoing ordinance was duly seconded by Council
Member and upon a vote being taken thereon, the following voted in favor
thereof:
The following voted against same:
Whereupon said ordinance was declared duly passed and adopted.
The Lino Lakes Charter Commission has completed its review of Ordinance 07 -07, proposing
amendments to Charter Chapter VIII, Public Improvements and Special Assessments. We understand
the concerns being raised by the City Council. Rather than simply approve or reject the Council
proposed amendment, we have prepared a substitute amendment that we believe strikes a better
balance between the concerns of the City Council and the concerns shared by many Lino Lakes
residents. We also recognized the opportunity to clean up confusing language, clarify procedures, and
generally make Chapter VIII of the Charter more readable and useful to everyone.
Attached is the substitute amendment proposed by the Charter Commission. The most
significant provisions are as follows:
1. A referendum is no longer required for a road reconstruction project. When a project would be
paid for out of the general revenue fund, taxpayers may petition for a referendum. This
preserves the rights of the taxpayers to stop projects, while also requiring that enough taxpayers
sign a petition.
2. Special assessment projects may be initiated in three ways. One, if all the property owners
agree to pay all of the cost of the project, as in the existing Charter, the City Council may
approve the project just as described in state law. Two, if more than 25% of the property
owners (but less than 100 %) petition for a project, the City Council may order a feasibility
study by a 3/5 majority. Three, the City Council itself may initiate a project by a 4/5- majority
vote.
3. After the feasibility study is done, notices are sent to the affected property owners with enough
detail to let them know how the public improvements will change the look and use of property
around them, and an estimate of their special assessment.
4. The feasibility study will need to include alternatives, so that the residents and the City Council
can see what it would cost to do some, rather than all, of the project. Those alternatives also
would be included in the information sent to the affected property owners.
5. Property owners would be given a chance to indicate which alternative they prefer. Rather than
building or rejecting an entire project, this will give the City the flexibility to do special
assessment projects approved by the neighborhoods.
The Charter Commission respectfully recommends that the City Council place this amendment
on the ballot in November of 2008.
Respectfully submitted,
)14 .
Cori M. Duffy
Chair, Lino Lakes Charter Commission
SUBSTITUTE AMENDMENT TO CHAPTER 8
RECOMMENDED BY THE CHARTER COMMISSION
Section. 8.01. Power to Make Improvements.
Subdivision 1. Power. The City may make any type of public improvements not forbidden by
law.
Subd. 2. Local nature of improvements. All public improvements funded in part through either
general revenue or special assessments shall be primarily designed to give a direct benefit to
property currently occupied by residents or businesses in the City. Public improvements
primarily designed to open up new areas of the City for development may not be funded in part
through general revenue or through special assessments (except as provided in Section 8.04,
Subd. 3 below).
Section 8.02. Relation to State Law.
Except as otherwise specified in this Charter, the City shall follow the procedures set forth in
state law relating to local improvements and special assessments.
Section 8.03. Power to Impose Special Assessments.
Subdivision 1. Need a special benefit. The City may impose special assessments to pay for all or
a part of the cost of the public improvements when the public improvement provides a special
benefit to adjacent or nearby properties, except as provided in Subd. 2 below.
Subd. 2. Street maintenance. The City shall not impose special assessments for maintenance of
its streets. Maintenance includes overlays, sealcoating, and other improvements to care for the
street surface between the date the street was constructed and the date the street will be
reconstructed.
Subd. 3. Sanitary sewer connections. When public improvements include sanitary sewers, the
City shall not require an adjacent or nearby property to connect to those sewers if the property is
served by a properly working private sewage disposal system (e.g., a septic system). The
property may be required to connect to the sanitary sewer system when either the private sewage
disposal system fails, or the property is conveyed to a new owner, whichever occurs first.
Subd. 4. Uniformity and maximum. Special assessments shall be imposed uniformly on similar
properties. The special assessment on each property shall not exceed the benefit to that property.
Section 8.04. How to lnitiate Public Improvements for Which Special Assessments may be
Imposed.
Subdivision 1. Policy. The City desires to protect existing residents and businesses from having
to pay special assessments for public improvements they do not want. Therefore, the process for
initiating public improvements is restrictive.
Subd. 2. Three ways to initiate public improvements. Special assessments may not be imposed
for public improvements unless the public improvements are initiated in one of the ways
described in subdivisions 3, 4, and 5 below.
Subd. 3. Petition signed by 100 %. The owners of 100% of the property proposed to be specially
assessed for public improvements may present a petition to the City Council. The petition shall
generally describe the public improvements to be studied, and specifically identify the property
proposed to be specially assessed. The petition must be accompanied by an agreement that these
owners agree to pay 100% of the cost of the public improvements. Upon receipt of such a
petition and agreement, the City Council may adopt a resolution to initiate these public
improvements by a simple majority vote. These public improvements need not comply with
Section 8.01, Subd. 2 above. Aside from the requirements of this subdivision., state law shall
govern these public improvements.
Subd. 4. Petition signed by 25% or more. The owners of more than 25 %, but less than 100 %, of
the property proposed to be specially assessed for the public improvements may present a
petition to the City Council. The petition shall generally describe the public improvements to be
studied, and specifically identify the property proposed to be specially assessed. The City
Council may adopt a resolution ordering a feasibility study for these public improvements by a
majority vote of all members of the City Council. In determining whether sufficient signatures
are present on the petition, the following four rules shall be followed:
(1) The signers must own at least 25% of the total number of lots proposed to be specially
assessed. For unplatted property, each existing parcel of land shall be considered one lot.
The owner of a small lot gets one vote, the same as the owner of a large lot.
(2) If more than one person owns a particular lot, only one signature will be counted for
that lot.
(3) If more than one lot is owned by a person, that person's signature will be counted only
once.
(4) If multiple owners of a lot also own an additional lot or lots, only one signature will
be counted for all the owners and all their lots. This is intended to keep any one owner
from dominating the process.
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Subd. 5. No petition. The City Council may initiate public improvements without a signed
petition. The resolution shall generally describe the public improvement to be studied, and
specifically identify the property proposed to be specially assessed. The City Council may adopt
a resolution ordering a feasibility study for these public improvements by the affirmative vote of
four -fifths all members of the City Council.
Section 8.05. Feasibility Study.
Subdivision 1. Contents. Once public improvements have been initiated under Section 8.04,
Subd. 4 or Subd. 5, the City Council shall direct staff to do a feasibility study. In addition to any
requirements under state law, the feasibility study shall contain the following information: (1) a
list of the recommended public improvements; (2) changes in the appearance or use of property,
such as trees to be removed, easements acquired, and new or changed storm water facilities; (3)
the projected cost for the recommended public improvements; (4) a list of the properties
proposed to be specially assessed for the recommended public improvements; and (5) an
estimated special assessment per lot for the recommended public improvements.
Subd. 2. Alternatives. If more than a single public improvement (e.g., street lights) is proposed,
the feasibility study shall include information on alternatives, such as doing individual
improvements or doing different combinations of the improvements (e.g., just streets, streets and
street lights, streets and curb and gutter, streets and sanitary sewers, etc.). If one of the public
improvements is reconstruction or other work to improve an existing street, one alternative must
be to do only the street. The feasibility study shall contain the information listed in Subd. 1
above for each of the alternative combinations.
Section 8.06. Public Hearing.
Upon being notified that staff has completed its feasibility study, the City Council shall adopt a
resolution scheduling a public hearing on the proposed public improvements. The hearing shall
be scheduled for a date at least two weeks away. In addition to the requirements in state law, the
notice of the public hearing that is sent to the property owner shall be sent by certified mail, and
shall include the information described in Section 8.05.
Section 8.07. Indication of Preferences.
Subdivision 1. Waiting period.. After the public hearing, there shall be a period of at least 60
days prior to the next City Council action on the proposed public improvements. Property
owners proposed to be specially assessed are given this 60 -day period so that they may indicate
their preference regarding the proposed public improvements. Each indication of preference
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shall be in writing, signed by the property owner, and state whether the property owner prefers
all, a specific one of the alternative combinations, or none of the recommended public
improvements.
Subd. 2. Preferences counted. Property owners who signed a petition to initiate the public
improvements shall be considered to have indicated a preference for all of the public
improvements described in the petition, unless they indicate a different preference during the 60-
day waiting period. The restrictions on who may sign a petition, described in Section 8.04, Subd.
4 above, also apply to determine who may indicate a preference. If multiple owners of a lot or
lots indicate different preferences, no preferences shall be counted for that lot or lots.
Subd. 3. Utilities in streets. Some utilities typically are installed during street improvements,
which usually costs less than constructing the streets and utilities separately. If property owners
prefer an alternative which results in a street being improved without utilities recommended by
staff, then the utilities may not be installed in that street within five years after completion of the
street, unless the installation of utilities and any related street repair will be paid for without
using any of the City's general revenue.
Section 8.08. City Council Action.
Subdivision 1. Approval of preferred alternative. At the first regular City Council meeting
occurring after the 60 -day period ends, the City Council shall approve the alternative which was
preferred by the largest number of property owners. If the largest number of property owners
indicated a preference that none of the recommended public improvements be constructed, then
the City Council shall not approve any of the proposed public improvements.
Subd. 2. Second waiting period. If the preferred alternative is to have some or all of the public
improvements constructed, then there shall be a period of at least 60 days between the day the
City Council approves the preferred alternative and the date of the next City Council action on
the proposed public improvements. Taxpayers are given this 60 -day period so that they may
petition for a referendum as provided in Section 8.09 below.
Section 8.09. Taxpayer Referendum.
Subdivision 1. Petition. When a proposed public improvement is to be funded in part through
general revenue, the taxpayers of the City may petition for a referendum on the public
improvements. Any registered voter may sign the petition for a referendum. To trigger a
referendum, the number of valid signatures on the petition must equal or exceed 12% of the
number of votes cast for mayor in the last mayoral election.
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Subd_ 2. Timing. Prior to the first regular City Council meeting occurring after the end of the
60-day period described in Section 8.08, Sub& 2, the taxpayers must submit their petition for a
referendum to the City. If the petition is not submitted prior to that meeting, or does not have
sufficient valid signatures, no referendum is required. If the petition is timely submitted, with
sufficient valid signatures, the City Council shall order the public improvements to be placed on
the ballot at the next general or special election.
Subd. 3. Voting. The ballot shall ask voters if they want to use general tax dollars to pay for a
portion of the described public improvements. The actual ballot language shall give a general
description of the public improvements proposed to be constructed.
Subd. 4. Public improvements rejected.. If a majority of those voting on the issue are opposed.,
the City Council shall not proceed with the proposed public improvements. The City Council
may not initiate the same or substantially similar public improvements within the next 12
months.
Subd. 5. Public improvements approved_ When proposed public improvements are allowed
under Subd. 3, the City Council shall adopt a resolution approving the public improvements. If,
after bids are received on the public improvements, the proposed contract exceeds the estimates
described in Section 8.05 above by more than ten (10 %) percent, the City Council may not award
the contract for the proposed improvement. The City Council may rebid the public
improvements once.
Section 8.10. Specified Commercial Area.
Subdivision 1. Not as restricted. The area described in Sub& 2 below is not subject to the
restrictions set forth in Sections 8.04 through 8.09 above. However, certain single family
residences are protected in this area as indicated in Subd. 3 below.
Subd. 2. Area description. This is an area generally known as the intersection of Interstate 3 5W
and Trunk Highway #49 (Lake Drive). More specifically, this area is described as follows:
- the north one half (1 /z) of the southwest quarter (1/4) of Section 18; and
- that part of the south one half (Y2) of the southwest quarter (1/4) of Section 18 lying
north of the Interstate 35W right -of -way, and
- that part of the southwest quarter (1/4) of Section 17 lying west of the Trunk Highway
#49 (Lake Drive) right -of -way; and
- all of the northwest quarter (1/4) of Section 17, except that part of the southeast quarter
(1/4) of said northwest quarter (1/4) of Section 17 described as follows: beginning at a
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point at the intersection of the south line of said southeast quarter (1/4) of the northwest
quarter (1/4) with the east right- of-way line of Trunk Highway #49; thence northeasterly
along said right- of-way line 938.14 feet (+ or -) ; thence southeasterly 672. 39 feet (+ or -)
to east line of said southeast quarter (1/4) of the northwest quarter (1/4); thence south
along said east line 588.5 feet (+ or -) to the south line of said southeast quarter (1/4) of
the northwest quarter (1/4); thence westerly along said south line 1021.59 feet (+ or -) to
the point of beginning; and
- the north 720 feet of that part of the southwest quarter (1/4) of the northeast quarter
(1/4) of Section 17 lying west of the Anoka County Park property; and
- that part of the north one half (1/2) of the northeast quarter (1/4) of Section 17 lying west
of the Anoka County Park property; and
- the south one half (1/2) of southeast quarter (1/4) of the southeast quarter (1 /4) of Section
8; and
- the southeast quarter (1/4) of the southeast quarter (1/4) of the southwest quarter (1/4) of
Section 8; and
- the east 330 feet (+ or -) of the northeast quarter (1/4) of the southeast quarter (1/4) of
the southwest quarter (1/4) of Section 8.
Subd. 3. Single family residences protected. Special assessments shall not be imposed on a
single family residence if the residence meets all three of the following criteria:
(1) The residence is located within the area described in Subd. 2 above; and
(2) At least 80% of the residence is used exclusively as the owner's residence, and not
for a business; and
(3) The residence has been owner- occupied since at least September 30, 1993. If the
residence was empty between owners, this still counts as owner occupied.
Subd. 4. Notice and objection. When public improvements are proposed which would result in
special assessments on a single family residence located in the area described in Subd. 2 above,
the City shall send a certified letter to the owner of the residence prior to the first public hearing
on the proposed public improvements. In addition to the requirements in state law, the letter
shall inform the owner that the owner will not be specially assessed if (a) the owner's residence
meets the three criteria in Subd. 3 above (which shall be listed in the letter), and (b) the owner
gives the City Clerk a written statement, prior to the close of the public hearing, that the owner
objects to being specially assessed.
-6-
Subd. 5. Effect of objection. The City shall not assess an owner who submits a signed written
statement objecting to being specially assessed, as described in Subd. 4, unless the City can prove
that the single family residence does not meet the criteria in Subd. 3 above.
Subd 6. Later connection. If the public improvements include utilities and the owner connects
to one or more of those utilities within five years after the completion of construction of the
improvements, then the owner shall be considered to have consented to being specially assessed
for the public improvements. The City may impose the special assessments at that time, in the
amount that would have been imposed had the owner been specially assessed when the public
improvements were constructed.
Kennedy
Graven
C H A R T E R ED
Offices in
Minneapolis
Saint Paul
St. Cloud
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337 -9300 telephone
(612) 337 -9310 fax
http://www.kennedy-graven.com
Affirmative Action, Equal Opportunity Employer
STEPHEN J. BUBUL
Attorney at Law
Direct Dial (612) 337 -9228
Email: sbubul @kennedy- graven.com
January 28, 2008
Gordon Heitke
City Administrator
City of Lino Lakes
600 Town Ceriter Partway
Lino Lakes, Minnesota 55014
Re: Responses to Charter Commission Amendment to City Charter
On July 9, 2007, the City Council of the City of Lino Lakes (the "City ") approved the
first reading of an ordinance amending Chapter 8 of the Lino Lakes City Charter.
Subsequently, the Charter Commission submitted to the City Council an alternative
amendment to Chapter 8 of the City Charter (the "Commission Amendment ").
You asked us, as the City's bond counsel, to review the Commission Amendment and
report to you regarding any legal or financial concerns we might have with that proposal.
My report follows.
Section 8.01. Power to Make Improvements.
Subdivision 1: This subdivision is a simple statement empowering the City to make any
type of "public improvements" not forbidden by law. It is identical to the first clause of
the first sentence in existing Chapter 8 of the City Charter. However, the term "public
improvements" is not defined anywhere in the Commission Amendment. By contrast,
existing Chapter 8 defines the term "local improvement" as any public improvement
financed partly or wholly from special assessments. That is, the current City Charter
clearly explains that Chapter 8 is relevant to public improvements only if some portion of
the cost will be financed with special assessments.
The lack of a defined term introduces a significant question about the applicability of the
charter to improvements that are not specially assessed, which in turn creates a potential
problem for City financing of improvements generally.
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Subdivision 2. This subdivision heightens concerns raised above about the scope of
Chapter 8. I will address the two sentences separately.
First Sentence. The first sentence states that all public improvements, whether financed
from general revenues or special assessments, "shall be primarily designed to give direct
benefit to properly currently occupied by residents or businesses in the City."
This language creates several difficulties. First, it purports to lay down a general
principle for all improvements, whether financed by assessments or "general revenues."
As such, it suggests that Chapter 8 now governs almost all improvements the City might
undertake, including (potentially) parks, public works and city administrative facilities.
That result makes little sense, as there is no apparent reason why special assessment rules
and procedures should have any relevance to improvements financed without special
assessments. (Indeed, Minnesota Statutes, Section 429.021, subd. 3 expressly states that
improvements financed without assessments are not governed by that chapter.) This
result also raises significant questions about the City's ability to finance any type of
improvement supported in part by general revenues: if all such improvements must be
primarily designed to benefit currently occupied property, many types of improvements
will fail that test (a new fire station is one example).
Aside from the problem of scope, the language itself is ambiguous, requiring that
improvements financed with "general revenues" be "primarily designed" to give "direct
benefit" to property "currently occupied." Each phrase is fraught with difficulty. The
term "general revenues" is not defined —is it broader than general tax dollars? Does it
include utility revenues? When is an improvement "primarily designed" to benefit
property? Is the council's intent a factor in the analysis? What is a "direct benefit" as
compared to an indirect benefit? A large body of Minnesota case law provides guidance
about how "benefit" is determined in the context of special assessments (i.e., by an
increase in market value), but these new terms would raise questions about whether some
new standard applies under this charter. And if the improvement must benefit properties
that are currently occupied by residents or businesses, what happens to property that
enjoys an increase in market value but is not "occupied ?" Nor is it clear what the term
"currently occupied" means. It could mean "developed with existing improvements," but
there are other interpretations. Suffice it to say all these ambiguities would raise
questions of fact and interpretation, in turn hampering the ability of citizens, staff and
legal counsel to understand and use the Charter.
Second Sentence. The second sentence seems to prohibit the use of assessments to
finance "public improvements primarily designed to open up new areas of the City for
development." As in the first sentence, the key terms are undefined, leaving large
questions of interpretation (particularly regarding whether an improvement "opens up
new areas" and whether it was "primarily designed" to do so). Further, this sentence
goes beyond the arena of special assessments, barring the use of any general revenues for
these types of improvements. In effect, the charter would prevent the city from
undertaking these types of improvements at all unless funded with resources that are
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neither assessments nor the undefined "general revenues." The result would be a
significant impairment of the city's ability to undertake improvements in these areas.
A more fundamental question is whether the City Charter may absolutely prohibit special
assessments for all or certain types of improvements that would otherwise be assessable
under Chapter 429. Minnesota Statutes, Section 429.021, subdivision 3 indicates that
when the cost of any improvement is defrayed by special assessments, "the procedure in
this chapter shall be followed unless the council determines to proceed under charter
provisions." Clearly, a charter may establish an alternative procedure for carrying out
special assessment financing (as the Lino Lakes Charter has done in the current Chapter
8). It is not clear, however, that a charter may supersede the substance of Chapter 429
and flatly prohibit the use of assessments as a financing tool.
A full discussion of the relationship between city charters and state law is beyond the
scope of this letter. However, in our view Subdivision 2 creates the potential for
litigation based on a claim that the charter is preempted by (or conflicts with) state law.
Section 8.02. Relation to State Law. This subdivision clarifies that state law "relating
to local improvements" applies except as otherwise provided in the charter. However,
this subdivision uses the term "local improvements" without definition, while the rest of
the Commission Amendment uses the term "public improvements." As noted above, the
lack of defined terms creates ambiguity and uncertainty.
Section 8.03. Power to Impose Special Assessments.
Subdivision 1. This subdivision partially reiterates state law regarding the general rule
of special assessments, i.e., they can be imposed only when the improvement provides a
"special benefit." The only concern we have is the statement that such special benefit
must be enjoyed by "adjacent or nearby properties." As noted above, there is a large
body of law about measurement of benefit, and the proximity of a property to the
improvement is not always critical in that analysis. Arguably, adding these terms in the
charter limits the ability to find benefit where it would otherwise exist under state law
(i.e., where the property's market value is increased by the amount of the assessment).
As such, this provision could impair the city's ability to undertake certain kinds of
improvements, and could also raise the question about preemption by state law (similar to
the issue raised under Section 8.01, subdivision 2).
Subdivision 2. This provision prohibits the use of special assessments for maintenance
(except in the case of a 100% petition). As with the prohibition on assessments for
improvements designed to open up new areas of the city, this provision might conflict
with or be preempted by state law.
Further, reading this provision together with the first sentence of Section 8.01,
subdivision 2, the charter leaves almost no authority to undertake street maintenance at
all. Section 8.01, subdivision 2 indicates that all improvements funded with general
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revenues (even absent special assessments) must be designed to give a direct benefit to
property currently occupied. Under Section 8.02, subdivision 2, the city may not assess
any property for maintenance, which presumably means that maintenance is not
"primarily designed" to provide a direct benefit. As such, this work may not funded with
general revenues either. Even if maintenance is construed as "primarily designed" to
provide a direct benefit (and thus eligible for funding with at least general revenues), that
would apply only to property that is currently occupied by residents or businesses; streets
adjacent to unoccupied property could not be maintained unless financed with some
revenue source other than general revenues or assessments. The net result, under these
two charter amendments, is a significant limitation on the City's ability to carry out
routine street maintenance. If the charter inhibits the City's ability to perform street
maintenance, the useful life of streets will probably be shortened, fill? reconstruction will
probably be needed more often, and total costs will probably be higher over the long
term.
Finally, aside from the above obstacles, there is no "bright line" that distinguishes
maintenance from reconstruction. Many projects involve some elements of both, even
within the same stretch of a street. Determining when a project is "maintenance" that
falls under this subdivision would be difficult.
Subdivision 3. This subdivision prohibits the city from requiring properties to connect to
sanitary sewers if the property has a working private system, unless the system fails or
the property is conveyed to a new owner. This provision is similar to policies or
ordinances in some cities. My only observation is that by including this language in the
charter, the City is precluded from revisiting this policy decision in the future without the
cumbersome process of a charter amendment.
Subdivision 4. Like subdivision 1, this subdivision partially reiterates state law
regarding how assessments should be calculated. However, the reiteration contains two
apparent variations from state law. One is the statement that assessments shall be
imposed "uniformly on similar properties." Case law on the spread of assessments is
well - developed, and generally requires that similar properties are treated similarly. The
new phrase may or may not represent a change in law; the intent is not perfectly clear.
The other variation is the statement that special assessments not exceed the "benefit,"
without a qualifying reference such as "in accordance with state law." Under state law,
the test is whether a property receives a "special benefit," as acknowledged in Section
8.03, subdivision 1 of the Commission Amendment. Again, it is not clear whether the
intent is to follow the standards of state law or to create some new test.
Since state law governs all procedures except as otherwise provided in the charter (see
Section 8.02), these phrases are not necessary if they are not intended to vary from state
law. If these phrases are intended to vary from state law, they are unclear and troubling.
In our view, the entire subdivision introduces another element of uncertainty that is best
avoided.
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Section 8.04. How to Initiate Public Improvements for Which Special Assessments
may be Imposed.
Subdivision 1. This subdivision describes the city's desire to protect residents from
having to pay assessments for improvements they do not want. As such, it is a statement
of philosophy and policy rather than a rule or procedure. While broad statements of
policy were once common in legislation, they are typically avoided now because they add
nothing of legal significance and could have unintended consequences in future litigation.
Subdivision 3. This section describes the process for a 100% petition. The only concern
relates to the Council's action on receipt of a petition. The subdivision indicates that the
council may adopt a resolution to "initiate" the relevant improvements by a simple
majority vote. It is not clear what the term "initiate" means. Under Chapter 429,
improvements must be "ordered" by the council before bonds may be issued. Also, since
the subdivision also indicates that state law governs these improvements aside from the
requirements of this subdivision, the language should be clarified to harmonize better
with Chapter 429 (which, for example, calls for a resolution finding that the required
number of signatures has been filed with the city).
Subdivision 4. This subdivision describes the process for a 25% petition. Our concerns
relate to the technical language. First, the language calls for a petition by owners of more
than 25% of the "property proposed to be assessed." Under this language, petitioners
identify who should be assessed for the subject improvement. However, which properties
benefit is a question of fact that must be determined by the city. In Chapter 429, the 35%
petition requirement calls for signature by owners of at least 35% of property abutting the
named streets. See, Minnesota Statutes, Section 429.031, subd. 3. In the existing
Charter, the petition requires signature by 25% in number of the benefited property
owners. See City Charter, Section 8.04, subdivision 1. In either case, the required
owners are identified objectively, not by the petitioners themselves. The proposed
language could lead to the undertaking of improvements that in fact benefit property
beyond that identified by the petitioners, and the petitioners may not represent 25% of the
actual benefited property. Further, this language could permit manipulation of a petition
to exclude certain property in order to reach the 25% requirement.
Second, the rules on signature are ambiguous. Clause (1) calls for signers to own at least
25% of the total number of lots to be assessed. The body of subdivision 4 calls for
signers to own more than 25% of the property. More importantly, it is very difficult to
reconcile the clause (1) statement that signers must own 25% of the lots, with the clause
(3) statement that the signature of a person who owns more than one lot will be counted
only once. What happens to the "vote" of an owner who owns multiple lots? The
dilemma is best explained by an example:
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Assume the area "proposed to be assessed" contain 100 lots, 77 of which
are owned by one person. Each of the remaining 23 lots is owned by a different
person. If the owner of the 77 signs a petition, that signature is counted only
once. But what does that mean? One possibility is that, even though this person
owns 77 lots, he or she gets only one vote out of 100. If 22 of the remaining 23
lots also sign the petition, there are a total of 23 votes out of 100 lots. The
petition fails even though the owners of 99 out of 100 lots approve. Likewise, the
petition fails if the owners of all 23 separate lots sign the petition but the owner of
77 lots does not.
Another interpretation is that when a person owns multiple lots, those lots are
"collapsed" into one, and the petition becomes measured by the percentage of
owners. In our example, the result would be a total of 24 owners. If the owner of
77 lots signs the petition, that would be one out of 24, or 4.2% of the total. Unless
another 5 lot owners sign (in order to reach the 6 votes needed to reach 25 %), the
petition would fail even though the owner of 77 lots approves. Or, if all 23
separate owners sign and the owner of 77 lots does not, the 23 would make up
95.8% of the 24 total owners. The petition succeeds even though the signers own
only 23% of the actual number of lots. (This is the result under the existing
charter as well, but is opposite the result under the interpretation of the proposed
amendment described in the previous paragraph).
Both interpretations raise questions of fairness, but it is more troubling that the
rules are so unclear. As a practical matter, the City would probably need to treat
all projects as City- initiated (and thus approved with a 4/5 vote) unless this matter
were resolved judicially.
Third, clause (4) is simply difficult to understand. It seems to describe a situation where
a lot is owned by a group of joint tenants, and the same group owns another lot. In that
case, the apparent intent is to clarify that the lots will be treated as one —that is, it will not
matter if one owner sign for one lot and different owner signs for a different lot. This
result would already be implied by clauses (2) and (3) and could be more easily handled
by revising those clauses accordingly. Another interpretation is that this clause describes
one lot owned by a group of joint tenants, and another lot owned by some of those joint
tenants but also an unrelated party. In that case, this clause might require that the two
lots are treated as one, despite the fact that ownership is not identical. In sum, the intent
of this clause is unclear, leaving uncertainty about the validity of a petition under this
subdivision. Further, the second sentence of Clause (4) is a commentary that is
inadvisable in the body of a city charter.
Section 8.05. Feasibility Study.
Subdivision 1. This subdivision describes the feasibility study process for projects
initiated by 25% petition or by the Council. We observe one technical problem and one
practical. The technical problem is that the subdivision begins by stating that the City
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Council shall direct staff to do a feasibility study "once the public improvements have
been initiated" under Section 8.04. However, under Section 8.04 the Council will have
already ordered the feasibility study. Section 8.05 suggests that the council must take a
second action to order the feasibility study. Moreover, the reference to staff is
inappropriate (or requires a definition), as feasibility studies may be undertaken by
consultants instead of (or in cooperation with) staff.
The practical problem is that the list of items to be included in the feasibility study may
not be available at this early stage in the process -- especially clause 2 (changes in
appearance) and clause 5 (the assessment per lot). Chapter 429 now requires that the
methodology of spreading assessments must be available at the improvement hearing, but
the actual dollar amount per lot may depend on many factors that are unknown at the
feasibility stage.
Subdivision 2. This subdivision calls for the feasibility study to address various
alternatives in any case where more than a "single public improvement" is proposed. As
in other portions of the Commission Amendment, the major difficulty with this approach
is that compliance will be difficult (if not impossible) to determine with certainty. There
is no guidance as to what constitutes a "single public improvement," and what
combinations or alternatives must be considered. This provision would invite claims that
the feasibility study did not describe all possible alternatives or all possible combinations,
or that a "single public improvement" was not really single and therefore the alternative
scenarios should have been triggered. If the proposal calls for multiple improvements,
and every possible combination must be addressed, the total number of combinations
increases almost exponentially —it is possible that literally dozens of options must be
addressed, each with a full scale feasibility analysis.
A further problem is a mixture of practical and legal concerns. Some alternatives may be
literally impossible, financially infeasible or not cost - effective. Examples might include
a street -only project where utilities must be replaced, or a utilities -only project that would
only be financially prudent as part of a street project. Assuming the provisions of
Chapter 429 govern except as otherwise specified in the Charter (See Section 8.02 of the
Commission Amendment), the engineer is required to advise whether the proposed
improvement is necessary, cost - effective and feasible. The engineer may not be able to
make such a certification for all alternatives, leaving a question whether an alternative not
so certified should be submitted to the preference process under Section 8.07.
Section 8.06. Public Hearing. This subdivision describes the public hearing process
after completion of the feasibility study. There are two technical concerns. First, the
language mixes specific charter provisions and state law, creating uncertainty as to what
rules apply. The language calls for the hearing to be "at least two weeks away," and
references a mailed notice, but does not specify a time period for the notice or reference a
published notice. Under Minnesota Statutes, Section 429.031, subdivision 1, the notice
must be published twice a week a part, and the hearing must be at least three days after
the second publication. The mailed notice must be sent at least 10 days before the
hearing. To avoid confusion, the notice provisions should explicitly reference this statute
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or describe the rules directly in the charter (including rules on who is an owner for
purposes of receiving notice).
Second, this subdivision requires that the hearing notice shall contain, in addition to the
requirements of state law, all the information described in Section 8.05. However,
Section 8.05 describes the contents of and requirements for the entire feasibility study.
Literally, this notice provision might require that the substance of the feasibility study be
included in the mailed notice. This provision would leave doubt about the adequacy of
the mailed notice unless the actual feasibility study were mailed to each owner. Such a
mailing is possible but would increase the cost of all projects.
Section 8.07. Indication of Preferences.
Subdivision 1. The presentation of alternatives is problematic for the reasons discussed
above under Section 8.05. Further, it is not clear how preferences would be expressed
and counted. Does the language mean that owners have only three choices —all
alternatives, one specific alternative, or no alternatives? If so, is a vote for two out of
three alternatives rejected as invalid? Does a vote for "all alternatives" mean that each
alternative gets a vote, which is then added to any individual votes for each alternative?
And what if the highest number of votes goes to "all alternatives ?"
There is also confusion about the timing for filing of preferences. Subdivision 1 indicates
that "there shall be a period of at least 60 days prior to the next Council action." It goes
on to say that owners are given "this 60 -day period" to indicate their preferences.
However, the Council meeting is unlikely to be scheduled exactly 60 days after the public
hearing, and the language does not directly state when the owners must file a
preference — presumably, within 60 days after the hearing, but one might also argue that a
petition could filed by the date of the council meeting. (See similar problem under
Section 8.09) Any requirement for petitions or preferences should clearly state when the
action must be taken.
Subdivision 2. This subdivision describes additional rules regarding how preferences are
counted. The first sentence indicates that owners who signed a petition at the outset
(under the 25% petition provision) are presumed to have indicated a preference for "all of
the public improvements described in the petition," unless they indicate a different
preference during the 60 -day waiting period. However, the preference procedure is
essentially a vote on the various alternatives presented in the feasibility study under
Section 8.05. Therefore, it is difficult to understand how a signature on a petition can
constitute a vote for a particular alternative developed after the petition was filed. Must a
petition be treated as a vote for all possible alternatives, whatever they may be? At a
minimum, this provision would complicate the count of votes, and raise questions about
the validity of the preference process if the city relied on the original petition as the sole
evidence of an owner's preference.
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This subdivision also states that the rules for counting signatures under Section 8.04,
subd. 4 apply to preferences under Section 8.07. Section 8.04, subd. 4, clause (3) directs
that where a lot has multiple owners, only one signature will count (so the ambiguities
discussed under that section carry over into this section). However, Section 8.07
subdivision 2 states that if multiple owners of a lot indicate different preferences, no
preferences shall be counted for that lot. These two provisions seem contradictory. It is
true that two owners might disagree and file conflicting preferences, and a question then
arises about which one to "count." But simply discarding the votes from that lot seems
likely to invite challenge. There might be other solutions, but this problem underscores
the practical and legal challenges imposed by the "owner preference" voting system
(which, to my knowledge, has no precedent in the State of Minnesota).
Finally, the preference system is essentially an election, but one without rules regarding
the form of the "ballot," the time and place of filing, canvassing of votes, and similar
issues. Municipal elections are governed by a large body of statues and rules, designed to
address the myriad of problems and disputes that arise in the course of a complex
process. The Commission Amendment creates a new election system, without the
supporting legal or administrative "infrastructure." As such, the system is likely to
generate high legal and administrative costs.
Subdivision 3. This subdivision creates a special rule for utilities in cases where
"property owners prefer an alternative which results in a street being improved without
utilities recommended by staff" In that situation, utilities may not be undertaken in that
street within five years after completion of the street unless the utilities and any related
street repair are financed without general revenue. Apparently, the intent of this
provision is to encourage owners to vote for the most cost - effective improvement, i.e.
street improvements that include utilities (at least where that combination is
recommended by staff).
However, the language leaves many open questions. When are utilities "recommended
by staff?" Who constitutes staff? Does the term include consulting engineers? What
evidence of a staff recommendation is needed? Would one sentence in a staff memo
suffice? If the feasibility study includes an option of streets without utilities (as it must,
under Section 8.05, subdivision 2), and the study concludes that such street -only project
is feasible, necessary and cost - effective (as Chapter 429 requires), does that constitute a
staff recommendation of no utilities? What if the recommendation is qualified in some
way? If those hurdles are overcome, when is the street "completed" and what constitutes
"installation" of utilities" for purposes of measuring the five -year waiting period? Taken
together, these difficulties render this subdivision unenforceable as a practical matter.
Further, the opening sentence of the subdivision is another example of editorial
commentary that is not appropriate in a charter. The charter is a form of legislation, and
comments or explanation should be reserved for background materials
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Section 8.08. City Council Action.
Subdivision 1. This subdivision describes the procedure for council approval of the
preferred alternative. There are three significant concerns with the language. First, the
council acts on the alternative "preferred by the largest number of property owners."
This apparently means that an alternative may be approved —or all the alternatives
disapproved —by a plurality vote of the owners who filed preferences, with no minimum
portion of all owners being represented. The effect is that significant decisions about a
public project could be made by a small minority of affected owners.
Second, the language indicates the council shall approve the alternative with the most
votes, which deprives the council of its legislative discretion altogether. The result could
be that the council is required to undertake a project that implicates city finances (other
than special assessments), perhaps against the wishes of a majority of the elected council
and at the direction of a minority of the affected owners (i.e., those who filed their
preferences). There is some question whether this system represents an unlawful
delegation of legislative power, which conflicts with a fundamental statewide policy and
is therefore beyond the authority of a city charter.
Third, as noted in the discussion under Section 8.07, there are many questions about who
can file preferences and how they are counted. In order to ascertain that an improvement
is properly ordered, bond counsel is presented with a significant challenge of both
interpretation and factual evidence (requiring detailed review of the petition and
preference records, perhaps reaching to review of title to clarify ownership). It may not
be possible to conclude without qualification (which is the standard for a bond opinion)
that projects under this system are properly ordered and bonds secured by related
assessments are validly issued.
Subdivision 2. This subdivision calls for a second 60 -day waiting period after Council
approval of the project, to allow for a reverse referendum described in Section 8.09. This
subdivision contains two significant flaws. First, on its face it applies the reverse
referendum process to all projects approved by the Council under Subdivision 1.
However, Section 8.09 by its terms applies only when an improvement is funded in part
through general revenue. The two provisions cannot be reconciled where a project is
financed with special assessments and other funds that are not "general revenues."
Second, the subdivision states that taxpayers are given "this 60 -day period so that they
may petition for a referendum," implying that a petition must be filed within 60 days after
the date of council action on the improvement. However, Section 8.09, subdivision 2
expressly states that a petition must be submitted "[p]rior to the first regular City Council
meeting occurring after the end of the 60 -day period described in Section 8.08,
subdivision 2." In other words, the filing period is not 60 days, but the period from
council approval of the improvement to the date of the next council meeting after
expiration of the 60 -day waiting period. This is a technical point, but such imprecision
creates confusion for citizens and legal counsel alike.
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Section 8.09. Taxpayer Referendum.
Subdivision 1. This subdivision states the general rules for reverse referendum.
Assuming the conflict with Section 8.08 above was corrected, the petition process applies
only when an improvement is funded in part through "general revenue." That term is
defined nowhere in the charter, leaving significant questions about when a petition for
referendum is called for. Does the term refer only to the City general fund? Or does it
mean any revenues without legal limitations on their use (which might include at least
portions of specialized funds like water and utility funds). Given the significance of this
provision, a more precise definition is imperative.
Subdivision 2. This subdivision describes the council action after expiration of the
petition period; confusion about the length of that period is discussed under Section 8.08
above. The only other concern in this subdivision is that if a valid petition is timely filed,
the Council is required to submit the public improvements to the voters. This result
deprives the council of its legislative discretion to abandon the project or find alternative
financing rather than move forward with an election. It is also inconsistent with reverse
referenda provisions in other areas of law, where a successful petition simply means that
the activity in question may not proceed unless approved by the voters. See, e.g.,
Minnesota Statutes, Section 475.521 (capital improvement bonds) and Section 412.301
(city certificates of indebtedness).
Subdivision 3. This subdivision describes the ballot and I have no comments on the
language. However, it is important for all parties to understand that the actual ballot is
required by state law to contain other information, including the statement "by voting yes
on this ballot question, you are voting for a property tax increase." See Minnesota
Statutes, Section 275.60. Further, if the election is successful, any tax levy will be made
against the so- called "referendum market value" rather than tax capacity. This means
that homestead owners pay at a higher rate than for activities that are not subject to
referendum (such as special assessment bonds that are secured in part by assessments and
in part by tax levies).
Subdivision 4. This subdivision indicates that the "City Council may not initiate the
same or substantially similar public improvements" within twelve months after an
improvement is defeated by referendum. There are two areas of ambiguity. First, it is
not clear if this language limits only an improvement initiated by the Council under
Section 8.04, subdivision 5, or any improvement financed in part with general revenues
(even if initiated by a 25% petition), or even a 100% petitioned project (which is
"initiated" by the council under Section 8.04, subdivision 3).
Second, the phrase "same or substantially similar improvement" is vague. Is an
improvement with a higher or lower cost the same or substantially similar? How much
deviation from the prior project is needed to permit initiation before the end of the
twelve -month waiting period? Similar language in the existing Charter has proven
difficult to interpret, requiring the council to wait for the full period in virtually all cases
to avoid questions about the validity of a project initiated earlier.
327632v3 SJB LN140 -86
Gordon Heitke
January 28, 2008
Page 12 of 13
Subdivision 5. This subdivision describes the final council action on improvements, and
imposes limitations on cost increases. The first sentence states that the Council "shall
adopt a resolution approving the public improvements" when the proposed public
improvements are "allowed under Subdivision 3." First, this language apparently
requires the Council to approve the improvements, which is questionable given that the
Council may have prudent reasons even at this step of the process to abandon the project.
Second, Subdivision 3 simply describes the ballot, so that cross - reference is confusing.
Further, the term "allowed" seems misplaced, as the question is whether a timely petition
was filed, and if so whether the question was approved by voters. Confusion could be
avoided by avoiding the introduction of a new undefined term.
In addition, this entire subdivision seems to address only projects that are subject to
reverse referendum (as it is included only in Section 8.09 dealing with that topic). There
is no comparable final action on improvements financed with special assessments and
other revenues that are not "general revenues." Arguably, in those cases Council's final
action is the approval under Section 8.08, subdivision 1. However, Section 8.08
subdivision 2 seems to call for subsequent action (though as discussed above, that
provision makes sense only in the case of improvements financed in part with general
revenue).
To maintain consistency within the Charter (and with state law), final council action
should be required for all improvement projects, in the form of a resolution "ordering"
the project. Such a resolution is required for bonds to be issued under Chapter 429, so
ambiguity about whether such action has occurred must be avoided.
Regarding cost increases, the major difficulty is one of practicality. Given the time
frames necessary to move from feasibility study to bidding (nearly six months under the
fastest track), cost increases may be reasonably expected. It is important to keep in mind
that before assessments are levied, a second notice and hearing process must be followed,
which gives owners another chance to provide input (and in fact to file legal objections
challenging the amount of the assessment).
A further observation is that this cost increase provision, like the final council resolution,
apparently applies only to improvements that were subject to reverse referendum. This
has the odd result of allowing cost increases where assessments are likely to be the
largest source of funds (i.e., where costs are paid mostly from special assessments and the
balance from non - general revenues), but putting limits on such increase where special
assessments might finance only a fraction of the improvement cost (e.g., where only 20%
of the cost is assessed and the balance paid by a tax levy).
Section 8.10. Specified Commercial Area.
Subdivision 1. This section is similar to the provision in the existing Charter that carves
out special areas of the city where different rules apply. The existing Charter indicates
that those special areas are entirely governed by Chapter 429 (with one exception).
However, the proposed revision exempts the special area only from Sections 8.04 to 8.09.
327632v3 SJB LN140 -86
Gordon Heitke
January 28, 2008
Page 13 of 13
As such, the significant limitations discussed in Sections 8.01 to 8.03, above, would
apply even in the specified area.
Subdivision 2. The revision includes only the Lake Drive /I -35 area, excluding two other
areas given similar treatment under the existing Charter. The excluded areas would now
be subject to all the rules in the amended Charter.
Subivision 3. Similar to provisions in the existing Charter, this subdivision grants a
special exemption from assessments to certain single family residences located in the
special area. We have previously advised the City that the existing provision violates
federal regulations that apply if bonds financed by assessments are issued on a tax -
exempt basis (because one class of property has the right to "opt out" of the assessment).
As a result, any improvement projects financed by assessments in the special area may be
financed only with taxable bonds, which increases the cost to property owners and all
taxpayers in the city (to the extent the bonds require a general tax levy).
The proposed amendment retains this feature, with minor changes. Aside from the
fundamental problem created permitting certain owners to opt out, there is some
confusion about when a property is considered "owner- occupied." The term is not
defined and is not self - evident. The language indicates a residence is deemed owner -
occupied if it was "empty between owners," but property always has an owner —what
happens when property is empty after the current owner moves out? Does that always
count as occupied, or only when the owner expects the property to be sold (or already has
a purchase agreement)? Is a residence considered empty if a short-term renter occupies
the residence? If a bank has title after foreclosure? These interpretive problems exist in
the existing charter and are not resolved by the proposed amendment.
CONCLUSION
I apologize for the length of this letter, but the issues are many and complex. The City
Charter is the City's most important legal document —in a sense, its "constitution" —and
amendments should be undertaken with great care.
I have not attempted to suggest revisions or corrections for the problems cited. Rather, I
have simply attempted to describe the legal and practical problems that, in my
professional judgment, appear in the language presented.
I will be available for further discussion with the City Council at its work session on
February 4, 2008. If you have questions before then, please contact me.
SJB
327632v3 SJB LN140 -86
COMPARISON OF ASSESSMENT RULES UNDER
CHAPTER 429, EXISTING CITY CHARTER, TASK FORCE PROPOSAL,
CHARTER COMMISSION PROPOSAL, AND CITIZEN PROPOSAL
Prepared by Stephen Bubul
Kennedy & Graven, Chartered
February 18, 2008
1. SCOPE /APPLICAPILITY.
Chapter 429:
Governs the undertaking of all "improvements" "defined
in Section 429.021, but only if financed in whole or in
part with special assessments.
Existing Charter: Substantially same as Chapter 429.
Task Force Proposal: Same as Chapter 429.
Charter Commission Proposal: The terms "public improvements and "local
improvements" are not defined. All public
improvements funded in part through either general
revenue or special assessments must be "primarily
designed to give a direct benefit to property currently
occupied by residents or businesses in the City." Section
8.01, subd. 2. The "direct benefit rule" applies to all
types of improvements, even where special assessments
are not used. However, the balance of the proposal only
describes procedures for special assessments, so the
procedures for improvements funded by general revenue
(without assessments) are unclear.
The proposal goes beyond the scope of Chapter 429 and
the Existing Charter in three additional ways:
(i)
prohibits use of special assessments
and general revenues to fund
improvements "primarily designed
to open up new areas of the City for
development;"
(ii) prohibits use of special assessments
for maintenance; and
(iii) prohibits City from requiring
property to connect to sanitary
sewers if served by a properly
working private sewage disposal
system (with provision for later
connection).
Citizen Proposal: Same as Charter Commission Proposal.
1
2. MEASUREMENT AND ALLOCATION OF ASSESSMENTS.
Chapter 429:
Existing Charter:
Section 429.051 provides that cost "may be assessed
upon property benefited by the improvement, based
upon the benefits received, whether or not the property
abuts on the improvement." Section 429.061 states that
the clerk (with assistance of the engineer or other
qualified person), shall calculate the proper amount to be
assessed against each parcel, without regard to cash
value. Otherwise, the spread of assessments is governed
by case law. Generally, property must receive a "special
benefit," measured by the increase in market value
attributable to the improvement.
Generally consistent with Chapter 429. Indicates that
the total assessment may not exceed the cost of the
improvement, and assessments may not exceed the
"benefits to the property." Section 8.01.
Task Force Proposal: Substantially the same as Existing Charter.
Charter Commission Proposal:
Varies from Existing Charter and state law in three
ways:
(i) As noted above, requires "direct benefit" to
property that is "currently occupied."
Substantially narrower than state law and
Existing Charter.
(ii) Requires a special benefit to "adjacent or nearby
properties." Section 8.03, subdivision 1.
Somewhat narrower than state law and Existing
Charter, as benefit may not always depend on
proximity to the improvement.
(iii) Requires that assessments be imposed
"uniformly on similar properties." Possibly
narrower than state law and Existing Charter.
Case law requires that assessments be uniform
upon the same "class" of property, often
restated as a requirement that the assessments
on various properties be "roughly
proportionate" to the benefits accruing. See,
e.g., Anderson v. City of Bemidji, 295 NW2d 555
(Minn. 1980). Unclear how courts would
interpret the specific language in the Charter
Commission Proposal.
Citizen Proposal: Same as Charter Commission Proposal.
2
3. IMPROVEMENTS INITIATED BY 100% PETITION.
Chapter 429:
Existing Charter:
Petition must be signed by owners of "all real property
abutting upon any street named as the location of any
improvement," requesting assessment of the "entire cost
against their property. Section 429.031, Subdivision 3.
No hearing needed, and council may approve by
majority vote.
Petition must be signed by 100% of the "benefited
owners." The improvement may not be approved until
after a public hearing (described below). After hearing,
another 60 -day waiting period is required before council
action unless all petitioners file a second petition to
waive 50 of the 60 days.
Task Force Proposal: Same as Chapter 429.
Charter Commission Proposal:
Substantially the same as Chapter 429. Petition must be
signed by 100% of the "property proposed to be
specially assessed," and must be accompanied by an
agreement to pay 100% of the cost of the improvements.
No hearing needed, and council may approve by
majority vote.
Citizen Proposal: Same as Charter Commission Proposal.
4. IMPROVEMENTS INITIATED BY LESS THAN 100% PETITION.
Chapter 429:
Existing Charter:
Petition must be signed by owners of at least 35% in
frontage of the real property abutting streets named in
the petition. Public hearing is required (described
below), and council may approve by majority vote. If
the petition is signed by less than 35 %, or the council
itself initiates the improvement, the council must
approve by 4/5 vote (after the same hearing process as
for a 35% petitioned project).
Petition must be signed by 25% "in number of the
"benefited owners." Section 8.04, subd. 1. The council
may initiate the petitioned improvement by a majority
vote. Or, the council may initiate an improvement by a
4/5 vote. In either case, improvements may not be
finally approved until after the hearing and petition
process described below.
3
Task Force Proposal:
Charter Commission Proposal:
In counting the number of benefited owners, an owner of
multiple parcels can only sign once, and each benefited
parcel can only have one signature.
Petition must be signed by 35% of the owners of the real
property abutting on the streets named in the petition.
Public hearing is required as under Chapter 429 (subject
to the objection and petition process described below),
and the council may approve by majority vote. If the
petition is signed by less than 35 %, or the council itself
initiates the improvement, the council must approve by
4/5 vote (after the same hearing and petition process as
for a 35% petitioned project).
In counting the number of owners, the same rules apply
as in the Existing Charter (i.e., owners of multiple
parcels sign once, each parcel gets one signature).
Petition must be signed by owners of "more than 25 %,
but less than 100 %, of the property proposed to be
specially assessed." Section 8.04, subd. 4. The council
may then order a feasibility study by majority vote. Or,
the council may initiate an improvement by ordering a
feasibility study, by 4/5 vote. In either case,
improvements may not be finally approved until after the
hearing and petition process described below.
The rules for counting owners are slightly different from
the Existing Charter and the Task Force Proposal. As in
those other documents, owners of multiple parcels can
only sign once, and each benefited parcel can only have
one signature. However, the Charter Commission
Proposal also indicates that signers must own at least
25% of the total number of lots, and that if multiple
owners of a lot also own an additional lot or lots, only
one signature will be counted for all their lots. Further,
the Existing Charter refers to 25% of the "benefited
property owners," while the Charter Commission
Proposal refers to 25% of the owners (or lots ?)
"proposed to be specially assessed."
Citizen Proposal: Same as Charter Commission Proposal.
5. HEARINGS, SUBSEQUENT PETITIONS.
Chapter 429:
After Council receives feasibility study, public hearing is
required with 10 days mailed notice and published notice
twice in consecutive weeks, with the second one at least
3 days before the hearing. Council may approve
resolution ordering the improvement (by the vote
4
Existing Charter:
Task Force Proposal:
Charter Commission Proposal:
described above) any time within 6 months after the
hearing. [As noted above, this step is not needed for
100% petitioned projects.]
After Council receives cost estimate (the equivalent of a
feasibility study), public hearing required with notice
similar to Chapter 429, except contents are more detailed
and mailed notice is two weeks rather than 10 days.
[This step is needed even for 100% petitioned projects.]
After hearing, owners have 60 days to file a petition
against the improvement (requires at least the same
number who petitioned for the project in a 25%
petitioned scenario, majority of owners in a council -
initiated scenario). If a petition against is filed, owners
who favor the improvement may file a counter- petition
within the same 60 -day period. If the improvement is
not barred by a petition against, Council may by
resolution "proceed on the improvement" at any time
within a year after the hearing (subject to the referendum
requirement discussed below). [This step is needed even
for 100% petitioned projects, except that petitioners can
reduce the waiting period to 10 days, as noted above.]
The hearing and notice requirements are the same as
Chapter 429, except that if more than 50% of the owners
abutting streets named in the mailed notice file objection
at or before the hearing, the council must hold a special
meeting at least 45 days after the first one, and must
provide at least 10 days mailed notice of that meeting.
The council may adopt a resolution ordering the
improvement within six months after the date of the
special meeting (by the vote described above), but the
resolution is not effective for 30 days after adoption. If
more than 50% of the affected owners file objections
within that 30 -day period, the improvements are not
ordered.
The Charter Commission Proposal creates a process
significantly different from Chapter 429, the Existing
Charter and the Task Force Proposal. It contains these
elements:
(i) If more than a single public improvement is
proposed, the feasibility study must include
information on alternatives (including
combinations of alternatives); and if the
improvement consists of street reconstruction,
one alternative must be to do only the street.
5
(ii) The feasibility study must include (for each
alternative) five listed items in addition to any
requirements under Chapter 429. (See Section
8.05, subd. 1)
(iii) A public hearing must be held with (apparently)
the same notice requirements as Chapter 429,
except that the mailed notice must include
detailed information about each alternative from
the feasibility study. (The notice under Chapter
429 requires a description of the general nature
of the improvement, the estimated cost, and the
proposed area to be assessed).
(iv) After the hearing, owners have 60 days to
indicate their preferences for all the proposed
improvements, a specific alternative
combination, or none of the improvements.
(v) The Council must approve the alternative
approved by the largest number of owners, and
shall not approve any of them if the largest
number of owners indicated a preference for
none.
(vi) If owners indicate a preference for a street
improvement without utilities that were
recommended by staff, such utilities may not be
installed using any City general revenue within
five years after completion of the street.
(vii) If the owners preferred some alternative (rather
than "none "), there is a second 60 -day waiting
period for final council action on the
improvements. [This period seems to be
relevant only for projects funded in part with
general revenues, discussed below, but the
proposal literally imposes this waiting period on
all improvements.]
The Citizen Proposal calls for a public hearing that
generally follows the rules of Chapter 429, but with a
more detailed feasibility study and hearing notice
(incorporating most of the language on these topics in
the Charter Commission Proposal).
However, instead of the "owner preference for
alternatives" system in the Charter Commission
Proposal, the Citizen Proposal provides a two -step
opportunity for petitions against the improvements:
6
(i) If more than 50% of the owners file a petition
against the improvements within 30 days after
the hearing, the Council shall not approve the
improvements. (This is essentially identical to
the petition process in the Task Force Proposal.)
(ii) If a street is improved without utilities
recommended by staff, then utilities may not be
installed in that street using any City general
revenue within 15 years after completion of the
street.
(iii) If a valid petition from the owners is not filed,
there is a second 60 -day period to allow for a
petition from all City taxpayers. [As with the
Charter Commission reverse - referendum, this
period seems to be relevant only for projects
financed in part from the general fund, but the
proposal literally imposes this waiting period on
all improvements]
(iv) When the improvement is financed in part
through the City general fund, if more than 19%
of the registered voters in the last City election
file a petition to stop the improvements within
60 days after Council approval, the Council shall
not proceed. If a valid petition is not filed, the
Council may approve the improvements at any
time during the next year. [In the November
2006 election, there were 10,824 registered
voters in the City, so 2,057 registered voters
would be needed to file a successful petition
today]
6. REFERENDUM REQUIREMENTS
Chapter 429:
Existing Charter:
No referendum required for approval of an
improvement. Referendum is required to issue general
obligation improvement bonds only if less than 20% of
the cost to the City is paid with special assessments.
Referendum required if less than 100% of the cost is
paid by special assessments, connection charges, or any
outside funding sources other than the City general fund.
Must submit the proposed improvement, and the
assessment formula, to the voters within 120 days after
the public hearing. If a majority those voting on the
question are opposed, the Council shall not proceed with
the improvement.
7
Task Force Proposal: None; same as Chapter 429.
Charter Commission Proposal:
Reverse referendum only, when an improvement is
funded in part through "general revenue." Section 8.09,
subd. 1. If registered voters equal to at least 12% of the
number of votes cast in the last mayoral election file a
petition before the first regular Council meeting
following the 60 -day period after the public hearing, the
Council shall order the question to be put on the ballot at
the next general or special election. If a majority of
those voting on the question are opposed, the Council
shall not proceed with the improvement. [In the
November 2006 election, 2,116 votes were cast for
mayor, so 254 registered voters would be needed to file
a successful petition today.]
Citizen Proposal: None; see taxpayer petition against the improvements
described above.
7. COST INCREASE PROVISIONS.
Chapter 429:
Existing Charter:
No express provision limiting cost increases over the
amounts estimated at the time of the hearing. However,
Section 429.031, subd. 1 (g) provides that the resolution
ordering the improvement may not increase the "extent
of the improvement" as stated in the notice of hearing.
If bids exceed the cost estimated by the engineer at the
time of the public hearing by more than 10 %, the council
may not award the contract. The Council may re -bid the
improvement one time only.
Task Force Proposal: Same as Chapter 429.
Charter Commission Proposal: Same as Existing Charter.
Citizen Proposal: Same as Existing Charter.
8. SPECIAL RULES IN IDENTIED COMMERCIAL AREAS.
Chapter 429: Not applicable.
Existing Charter:
Chapter 429 governs in identified areas around Hodgson
Road and Lake Drive; Interstate 35 -E and Main Street;
and Interstate 35 -W and Lake Drive. However, owners
of single family, owner - occupied units that existed on
September 30, 1993 may opt out of any special
assessments. This right terminates when an owner -
occupied residential unit no longer exists on the parcel.
8
Task Force Proposal:
Charter Commission Proposal:
Citizen Proposal:
Same as Existing Charter, except that the opt -out for
owner- occupied residential units is deleted. That is,
Chapter 429 governs without exception in the three
areas.
Eliminates two of the special areas, leaving only the area
around Interstate 35 -W and Lake Drive. Also revises the
rules for the single - family opt -out, and applies the new
rules on scope and measurement (described in points 1
and 2 above) within the 35 -W /Lake Drive special area.
Same as Charter Commission Proposal.
9
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Citizen Proposal
Charter Amendment Timelines
The following timeline illustrates the timing required for consideration of proposed City Charter amendments to Chapter VIII of the City Charter (Public Improvements and
Special Assessments).
Charter Amendments
February
September October No
men men erna Ives
(Chapter 429, modified task
force, Bening proposal, or
other
Task Force Proposal
Ordinance No. 07 -07
a omm o
Substitute
e ruary : ounci v T or
Session;
March 24: Council meeting
(for 1St reading & referral to
Charter Commission)
arc — • ay
Statutory 60 day period
for Charter Commission
review (allows time for
delivery to Comm)
ay 7 - August
Statute allows the
Charter Comm to
request an addnl 90
day review period
3: Sept 8: Last council mtg
before ballot submission
deadline of Sept 11 (council
must have 2nd rdg, hearing
and approve ballot language
Nov 4:
General
Election
Day
Before Sept 11, council must have 2nd reading of ordinance, hearing and approve ballot
language
Before Sept 11, council must have 1St and 211d reading of ordinance, hearing and approve
ballot language
Nov 4: General
Election Day
Nov 4: General
Election Day
Timeline is based on the provisions of Minnesota Statutes, Section 410.12 (attached)
For election purposes, amendment would require a 51% approval vote to pass
If approved, amendment would take effect 30 days from election or as fixed in the amendment
Spr used
January 29, 2008
Mr. Gordon Heitke, City Administrator
City of Lino Lakes
600 Town Center Parkway
Lino Lakes, MN 55014 -1182
RE: Responses to City Ordinance Amending City Charter
Mr. Heitke:
Springsted Incorporated
380 Jackson Street, Suite 300
Saint Paul, MN 55101 -2887
Tel: 651 - 223 -3000
Fax: 651 - 223 -3002
www.springsted.com
We have reviewed, the Lino Lakes City Charter substitute amendment as proposed by the Lino Lakes Charter
Commission as well as the draft Review Letter prepared by Steve Bubul, Kennedy & Graven, City's bond counsel.
There are many terms and definitions throughout the proposed Charter that allow for multiple interpretations or are
contradictory. Mr. Bubul has thoroughly addressed these points in his letter. As requested, we have focused on the
financial impact on the City with regard to bonds and the City's credit rating.
The City's bond credit rating, assigned by Moody's Investor Service, is currently an Aa3, which is the second highest
category grouping possible. This bond rating is based on several criteria including: tax base size, infrastructure
management, capital financing strategies, debt management, fund balances, long -term strategic planning, economic
development and growth, financial management, leadership and overall city management. Credit ratings group and
compare cities to each other so losing or gaining in areas may move a city up or down in these ratings. The higher
the credit rating, the lower the city's interest rate on bonds, resulting in lower interest costs. A credit rating is also a
measure of how well a city is managed...
Rather than a section -by- section review of the proposed Charter, there are five areas we address:
• Quality of Roads and Streets
• Reverse Referendum
• Taxability of Bonds for Special Exceptions
• Marketability of Bonds
• Administrative Efficiency and Flexibility
Quality of Roads and Streets
Minnesota cities primarily use two bonding methods to finance roads
• Special Assessment Bonds. Such bonds do not require a referendum under state law. A city council may
vote to use special assessment bonds if at least 20% of the debt service or the total project costs are paid
for with special assessments.
• Street Reconstruction Bonds. Such bonds allow the 20% minimum assessment criteria to be waived for
reconstruction projects if a city approves a five -year road plan following a public hearing and adopts the plan
which identifies reconstruction bonds to be used. Both the plan and bonding amounts must be approved
unanimously by a vote of the entire city council. Street reconstruction bonds are subject to reverse
referendum.
Public Sector Advisors
City of Lino Lakes, Minnesota
January 29, 2008
Page 2
These options are the primary tools to carry out pavement management plans which facilitate street and road
maintenance on a timely basis. Engineers develop optimization plans which identify the most cost effective time to
seal coat, overlay and replace roads and streets. The cost savings resulting from extending the life of each road and
street provide millions of dollars of savings. Such a plan was completed for the City of Lino Lakes calculating
potential savings of an estimated $18 million, if the plan was followed.
By employing more restrictive standards than in state law for approving such bonds, the likelihood of delaying the
improvements increases. As part of the credit review, Moody's uses depreciation of the existing roads to determine
whether a community is deferring maintenance or keeping up with needs by improving infrastructure at a pace equal
to or near depreciation. If the Proposed Charter is subject to interpretation and may be challenged, it may cause
deferment of street and road maintenance. This may place Lino Lakes at a competitive credit rating disadvantage
when comparing to other communities that are more aggressive in maintaining infrastructure. Lino Lakes may also
be at a competitive disadvantage in appearance when potential homeowners and businesses are making location
choices. This may have an impact on tax base overall, which is another important credit factor.
Reverse Referendum
Section 8.08
When a proposal is to be funded, in part by general revenue, the Proposed Charter proposes that the taxpayers may
petition for a referendum on the public improvements. While this is less restrictive than the existing Charter, this
provision could allow taxpayers who do not directly benefit from the improvement to stop improvements if the project
uses general revenue. Mr. Bubul points out that the term general revenue is not defined. This opens the door for
challenges or interpretation.
Street and road replacement plans (pavement management plans) provide for fairness in road conditions, by setting
the city -wide timetable to keep all roads in the same state of repair. Reverse referendums may prevent those streets
most in need of repair from being repaired due to the ability to reverse the decision to follow the plan. Taxpayers,
who do not benefit from the project, may choose to vote it down leaving those who could benefit without the
opportunity to have their road improved to the level that is in place for other neighborhoods or business districts.
Fairness in the level of service or quality of streets for all neighborhoods or projects could be achieved by following a
plan and defining the level of road quality, assessment level and general tax support throughout the city by
improvement type.
The City of Lino Lakes has millions of dollars invested in roads and streets that could be maintained with timely
projects, or they could deteriorate over time to a point where costly replacement is necessary. We encourage the City
to consider all roads and streets as one asset that requires planned maintenance rather than as several small
projects. Deferral and degradation of infrastructure is costly and, if prolonged, it will become a negative factor in the
City's credit rating review.
Taxability of Bonds for Special Exceptions
Section 8.10. This section is similar to the provision in the existing Charter that carves out special areas of the City
where different rules apply. Providing special rules for a specific area of the City that have the ability to opt out or who
are not subject to the bonding criteria other areas of the City are required to adhere to, may result in the bonds
issued to finance their improvements being taxable.
The difference in interest rates between taxable and tax - exempt bonds is somewhere between 0.75% and 1.50%
depending on the market conditions at the time of sale, structure, term and amount. Assuming a $2,000,000 bond
with a 15 -year term, the extra 0.75% to 1.50% for taxable bonds would cost from $120,000 to $240,000 over the life
of the bonds. This extra expense is recovered from assessments and debt service levies from property owners.
City of Lino Lakes, Minnesota
January 29, 2008
Page 3
If the City were to decide to eliminate the geographic boundary exception and instead differentiate by type of
improvement, extra interest costs related to taxable bonds could be avoided. New development could be assessed at
one threshold and redevelopment assessed at another, but all geographic areas could be treated equally in terms of
criteria, process and cost allocation methods in order to avoid special treatment and higher interest costs.
Marketability of Bonds
While the City's high credit rating provides a great deal of comfort in the market place, the complications noted in
Mr. Bubul's letter related to the Proposed Charter increase the likelihood of a legal challenge by citizens or a specific
group. Such challenges may require removing the bond sale from the market before or during the sale or for their
issuance to be challenged after the sale.
It is important for the underwriting and financial community to be comfortable that any City of Lino Lakes debt
instruments they purchase as investments are transferable and remain marketable without any concern of a
challenge or added conditions placed on them. If the City has to cancel a sale at the last minute or after the
purchase but before closing, the bond community may be less likely to bid aggressively on bonds in the future,
lessening competition and possibly affecting interest rates. Challenges after the fact will tarnish the City's name in the
market place and the workout could be expensive. Investors may seek to recover any losses incurred after the sale
due to a cancellation.
We encourage consideration of the streamlined and the well- tested processes already in state law in order to
minimize or avoid any legal or market exposure.
Administrative Efficiency and Flexibility
A charter is difficult to change or modify. There are many administrative details in the Proposed Charter that are
already in state law or they are only slight variations of what is already state law. In cases where the intention is to
follow state law, or to follow it closely, removing it from the proposed charter will make it easier to adopt state law
changes. For administrative and procedural items, using an ordinance rather than a charter as the enforcing
document provides flexibility to allow changes in a timely manner.
Moody's looks for flexibility when rating bonds. The City's ability to adapt quickly, the amount of reserves or available
options to address changes as well as local control by the City Council for efficiency purposes are all important
factors that make the City stronger in the rating agencies eyes.
State laws have been governing road and street improvements effectively for decades. The more restrictive language
in the Proposed Charter restricts flexibility and efficiency.
Closing
From a financial standpoint, the City is more likely to efficiently maintain street and road assets by simplifying the
project approval process to the greatest extent possible while following the state bonding and assessment laws.
Deviations may result in challenges of legality and taxability, increase administrative effort and may dilute the City's
credit rating strengths.
Please let me know if you have any questions or wish to discuss further.
Sincerely,
Terri Heaton, Senior Vice President
Client Representative
•
•
-H-ecf v
CrfN
Jan. 14, 2008
Lino Lakes City Council and Staff
Request to consider an alternate to amending chapter 8 of the Lino Lakes City Charter that has
been provided by The Citizen's Task Force and another by the City Charter Comm
The Task Force's version is very hard to read and understand and does s not
und -dprovide
b y� special
method
for the Citizens of Lino Lakes to stop a public improvement that is partial
assessments and the rest from the City's general fund.
Except for Sections 8.05 thru 8.09 the Charter Commission's version is easy to understand and
follow.
Sections 8.05 thru 8.09 are unworkable because of micro managing, unwieldy combinations of
improvements, a method by which a minority could force p unrealistic on the majorit
to y,
a
adding excessive costs to a project and provides for an
public improvement.
By replacing sections 8.05 thru 8.09, with the attached replacement to what sections have Howe Charter
Commission's version becomes a very acceptable method
would allow for a Citizen generated petition to stop a project if the number of valid signatures
exceeds 19% of the number of registered voters in the last City election.
I would appreciate the Council and the staff, consider this request during discussions on
changes to chapter 8 of the City Charter.
Robert Bening
6788 E. Shadow Lake Drive
Lino Lakes, Minnesota 55014
651 -429 -3434
Jan. 14, 2008
Section 8.05. Feasibility Study.
Once public improvements have been initiated under Section 8.04, Subd. 4 or Subd. 5, the City
Council shall direct staff to do a feasibility study. In addition to any requirements under state
law, the feasibility study shall contain the following information: (1) a list of the recommended
public improvements; (2) the projected cost for the recommended public improvements; (3) a list
of the properties proposed to be specially assessed for the recommended public improvements;
and (4) an estimated special assessment per lot for the recommended public improvements.
Section 8.06. Public Hearing.
Upon being notified that staff has completed its feasibility study, the City r ^uncil shall adopt a
resolution scheduling a public hearing on the proposed public improvements. The hearing shall
be scheduled for a date at least two weeks away. In addition to the requirements in state law, the
notice of the public hearing that is sent to the property owner shall be sent by certified mail, and
shall include the information described in Section 8.05.
Section 8.07. Property Owners Petition.
Subdivision 1. Waiting period. After the public hearing, there shall be a period of at least 30 days
prior to the next City Council action on the proposed public improvements. Property owners
proposed to be specially assessed are given this 30 -day period so that they may petition against
the public improvements. The restrictions on who may sign a petition, described in Section 8.04,
Subd. 4 above, also apply to this petition.
Subd. 2. Utilities in streets. Some utilities typically are installed during street improvements,
which usually costs less than constructing the streets and utilities separately. If a street is being
improved without utilities recommended by staff, then the utilities may not be installed in that
street within fifteen years after completion of the street, unless the installation of utilities and any
related street repair will be paid for without using any of the City's general revenue.
Section 8.08. City Council Action.
Subdivision 1. Petition against improvements. If a petition against the improvements is signed by
over 50% of the property owners and is presented to the City Clerk before or at the first regular
City Council meeting occurring after the 30 -day period ends, the City Council shall not approve
the proposed public improvements.
Subd. 2. Second waiting period. If the property owners do not present to the City Clerk a valid
petition against the public improvements, then there shall be a second waiting period of 60 -days
to allow for the generation of a petition from all the tax payers of the City.
Page 1 of 2
•
•
•
•
Jan. 14, 2008
Section 8.09. Taxpayer Petition.
Subdivision 1. Petition. When a proposed public improvement is to be funded in part through the
City general fund, the taxpayers of the City may petition to stop the public improvements. Any
registered voter of the City may sign the petition. The number of valid signatures on the petition
must exceed 19% of the number of registered voters in the last City election to stop the public
improvement.
Subd. 2. Timing. Prior to the first regular City Council meeting occurring after the end of the
60 -day period described in Section 8.08, Subd. 2, the taxpayers must submit their petition
to the City. If the petition is not submitted prior to that meeting, or does not have sufficient valid
signatures, the public improvements are allowed. If the petition is timely submitted, with
sufficient valid signatures, the City Council shall not proceed with the proposed public
improvements. The City Council may not initiate the same or substantially similar public
improvements within the next 12 months.
Subd. 3. Public improvements approved. When proposed public improvements are allowed under
Subd. 2, the City Council may approve the public improvements by resolution at any time during
the next year. If, after bids are received on the public improvements, the proposed contract
exceeds the estimates described in Section 8.05 above by more than ten (10 %) percent, the City
Council may not award the contract for the proposed improvement. The City Council may rebid
the public improvements once.
Robert Bening
6788 E. Shadow Lake Drive
Lino Lakes, Minnesota
55014
Page 2 of 2
Kennedy
C H A R T E R ED
Offices in
Minneapolis
Saint Paul
St. Cloud
470 U.S. Bank Plaza
200 South Sixth Street
Minneapolis, MN 55402
(612) 337 -9300 telephone
(612) 337 -9310 fax
http: / /www.kennedy- graven.com
Affirmative Action, Equal Opportunity Employer
STEPHEN J. BUBUL
Attorney at Law
Direct Dial (612) 337 -9228
Email: sbubul@ketmedy- graven.com
January 30, 2008
Gordon Heitke
City Administrator
City of Lino Lakes
600 Town Center Parkway
Lino Lakes, MN 55014
Re: Responses to Citizen Amendment to City Charter
On July 9, 2007, the City Council of the City of Lino Lakes (the "City") approved the
first reading of an ordinance amending Chapter 8 of the Lino Lakes City Charter.
Subsequently, the Charter Commission submitted to the City Council an alternative
amendment to Chapter 8 of the City Charter (the "Commission Amendment "). In
addition, the City received a proposed amendment from an individual citizen (the
"Citizen Amendment ").
In response to a previous request, we provided comments on the Charter Commission
Amendment by a letter dated January 28, 2008. You have also asked us, as the City's
bond counsel, to review the Citizen Amendment and report to you regarding any legal or
financial concerns we might have with that proposal. My report follows.
The Citizen Amendment incorporates Sections 8.01 through 8.04 and 8.10 of the
Commission Amendment, but substitutes revised version of Sections 8.05 through 8.09.
Following are my comments on the revised sections.
Section 8.05. Feasibility Study. This language is identical to the Commission
Amendment, except for the omission of clause (2) calling for the feasibility study to
address various changes to the property. As noted in my letter regarding the Commission
Amendment, that clause would be difficult to comply with in many instances, at least at
the feasibility study stage, so the deletion here is an improvement.
Further, the Citizen Amendment omits the concept of alternatives, which solves the
significant problems posed by that system as described earlier.
Section 8.06. Public Hearing. The language is identical to Section 8.06 of the
Commission Amendment, so my prior comments on that section apply here as well.
However, the absence of alternatives simplifies the notice content. Nevertheless, the
information to be included in the hearing notice is still somewhat ambiguous, as the
cross - reference to "the information described in Section 8.05" could mean just the four
listed items or other information drawn from the feasibility study. A better practice
Gordon Heitke
January 30, 2008
Page 2 of 4
would be to state exactly what needs to be included in the hearing notice, as in Minnesota
Statutes, Section 429.031, subdivision 1.
Section 8.07. Property Owners Petition.
Subdivision 1. This subdivision calls for a 30 -day period in which owners may petition
against the improvement (apparently as an alternative to the preference voting system in
the Commission Amendment). The only technical concern is confusion about whether
the petition period is 30 days or the period from the public hearing to the first council
meeting after expiration of a 30 -day period after the hearing. The latter is expressly
stated in Section 8.08, leaving ambiguity on this point in Section 8.07.
Subdivision 2. This subdivision creates a special rule for utilities that is similar to
Section 8.07, subdivision 3 of the Commission Amendment. However, in the
Commission Amendment the rule was triggered if owners "voted" for a street project
without utilities where staff had recommended that utilities be included in the project (in
which case there was a five -year wait before utilities could be installed in that street
unless no general revenues are used).
Here, the rule applies whenever a street is "being improved without utilities
recommended by staff," in which case the waiting period is 15 years. It is not clear when
this situation would occur, as owners could not petition against just the utility portion of
an improvement. If the feasibility study calls for street and utility project, the council
will either order the improvement or the owners will petition against the improvement.
Presumably, if the owners do not petition against the improvement, the council could
decide on its own to drop the utility portion of the project despite staffs
recommendation, and improve only the street. If so, this subdivision would literally be
triggered, but the 15 -year waiting period seems to penalize the owners for something
beyond their control. Further, a 15 -year period seems unreasonable under any
circumstance.
In any event, the language has the same flaws as the Commission Amendment, which
makes enforcement of this subdivision practically impossible.
Section 8.08. City Council Action.
Subdivision 1. This subdivision states the rules for a petition against the improvements.
Our concern (aside from the confusion about the petition period mentioned above) is how
the 50% requirement is satisfied. The language calls for signatures by "over 50% of the
property owners." Section 8.07, subdivision 1, above, indicates that the rules for signing
a petition under Section 8.04, subdivision 4 apply here as well. Fundamental problems
with those rules are discussed in my prior letter regarding the Commission Amendment.
In addition, those rules are purportedly based on a percentage of property, while this
subdivision speaks of a percentage of property owners. Suffice it to say the rules for this
petition would need to be clarified.
328194v1 SJB LNI40 -86
Gordon Heitke
January 30, 2008
Page 3 of 4
Subdivision 2. This subdivision calls for a 60 -day waiting period if no valid timely
petition is filed, which provides an opportunity for a taxpayer petition against the
improvement (rather than a reverse referendum as described in the Commission
Amendment). The same confusion about the length of the petition period appears in this
version as well. And, as in Section 8.08 of the Commission Amendment, this provision
calls for a 60 -day waiting period for all projects, in conflict with the express limitation on
taxpayer petitions in Section 8.09.
Section 8.09. Taxpayer Petition.
Subdivision 1. This subdivision describes the rules for a taxpayer petition against the
improvements, which applies only when an improvement is to be funded in part "through
the City general fund." The reference to "City general fund" is clearer than the reference
to "general revenue" in the Commission Amendment. My only technical question is
whether the threshold for a successful petition should be based on a percentage of
registered voters "in the last City election," which includes even a special election.
Typically, these types of petition requirements use data from the most recent general
election, as such data is more representative and stable.
A broader question is more one of policy: whether a taxpayer petition to halt the
improvements is appropriate, instead of a reverse referendum (as provided in the
Commission Amendment). The taxpayer petition in the Citizen Amendment occurs only
if there has been no valid petition against the improvements filed by of the affected
owners. That is, the proposed taxpayer petition clause would allow a relatively small
group of taxpayers (approximately 1,900 out of approximately 10,000 registered voters)
to halt the improvements, even though a majority of the affected owners themselves did
not object. By contrast, a typical reverse referendum provision gives all voters in the city
a voice in the decision after the petition threshold is met, so the improvements would be
halted only if the majority of persons voting on the question disapprove. I raise this point
simply to highlight the different consequences of the two provisions.
Subdivision 2. This subdivision describes what happens if the petition is successful. My
only comment is regarding the ambiguity about Council initiation of the same or
substantially similar improvement within the next twelve months after a valid petition
against the improvements. Comments in my prior letter on this topic under Section 8.09,
subdivision 4 of the Commission Amendment apply here as well.
Subdivision 3. This subdivision is similar to Section 8.09, subdivision 5 of the
Commission Amendment, dealing with final council action and bidding. Here, the
council decision to approve the improvement is clearly optional rather than mandatory.
However, some of the weaknesses in the Commission Amendment remain: The term
"allowed" is unclear, the rules (including limitation on cost increases) seems to govern
only projects that were subject to taxpayer petition, and there is no clear requirement for a
final resolution "ordering" the project in all cases.
328194v1 SJB LN140 -86
Gordon Heitke
January 30, 2008
Page 4 of 4
If you have further questions about my comments, please contact me.
Stephen J. Bubul
SJB
328194v1 SJB LN140-86