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Item No: 7K Meeting Date: March 25, 2002 Type of Business: Council Business City of Mounds View Staff Report To: Honorable Mayor and City Council From: James Ericson, Community Development Director Item Title/Subject: Discussion Regarding the Gas & Splash Debt Date of Report: March 25, 2002 Discussion: At the March 11, 2002 meeting of the City Council, Staff and Mr. Mack, president and owner of the Gas ‘n Splash operating company, appeared before you regarding the uncollected $43,050 SAC fee. Mr. Mack explained his position, indicating that he thought the assessment and determination of the Met Council to be unfair and unreasonable, yet understood that the City has already made the payment on his behalf and accepted responsibility for the debt. When asked if he would enter into a repayment agreement with the City, Mr. Mack expressed a willingness to do so. Finance Director Hansen has recommended that if a repayment schedule over time is agreed to, that an appropriate interest rate be included and that the total debt be certified to the property taxes rather than collecting a monthly check from Mr. Mack. The act of certifying the debt to the taxes as a special assessment in effect “secures” the debt so that even if the business were sold, the City would still collect what it is owed, plus interest. Mr. Mack is agreeable to these terms, however at this time is only able to handle installments of $1,000 a month. While the specifics of the arrangement are not yet finalized, to have the payments manageable for Mr. Mack, the term of the repayment schedule would be approximately 48 months with approximate monthly payments of $1,031, for a total approximate repayment of $49,488. While the City works through the certification, Mr. Mack has indicated that he will continue to explore alternative options that would allow him to make a lump sum payment to fully satisfy the debt. It should be noted that interest accrual would begin on the date the City issued the check to MCES, which is January 15, 2002. Recommendation: Staff is seeking feedback and approval from the City Council as to the duration of the repayment schedule and the 7% interest rate. If these proposed terms are acceptable, staff would suggest that the Council leave Resolution 5706 tabled at this point and to direct staff to draft a Repayment Agreement for Mr. Mack’s execution and begin the required steps to effectuate the debt certification to the Gas ‘n Splash property taxes. If there are any questions about this, please contact me at 763-717-4021. _____________________________________ James Ericson Community Development Director C:\WINNT\Profiles\Jime\Favorites\City Council Stuff\Misc Reports\Gas & Splash Report - Mar 25, 2002.doc