7. Authorize feasibility study for street & utility improvements 1 1
M. 4iCouncil CITYOF
_1
I la : - ' CHANHASSEN
690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
1 (612) 937 -1900 • FAX (612) 937 -5739
1
1 MEMORANDUM
TO: Mayor and City Council
I FROM: Don Ashworth, City Manager
.1 DATE: April 27, 1992
SUBJ: Feasibility Study for Lundgren Brothers Project, Affects of Such on Overall
1 City Bonding
1 Development activity in 1991 was relatively minor. This statement cannot be made for 1992.
The City Council, since the first of the year, has approved public improvements for the
I upper Bluff Creek sewer area, trunk water extensions as they would occur north of Highway
5, public improvements for the Klingelhutz properties. Many of these improvements are
serving a multitude of individual developments, i.e. Hans Hagen, Ryan (weather station
property), Rod Grams, Ryan (school site), Opus, etc. -Other public improvement projects
I are also well underway, i.e. West 78th Street detachment, Market Square, Powers Boulevard
south of Highway 5, TH 101 realignment, etc. At our last meeting, we considered adding
I to this list the public improvement extensions for the Lundgren Brothers development. Staff
requested, and the Council approved, a delay in authorizing the feasibility study in order to
review the cumulative affects of all of these bonding requests.
1 Reasonably, the Council, Commissions, and staff recognized that by expanding our
developable area by 3,000 acres we would assuredly generate the necessity for infrastructure
I to support that new developable area. At issue has been one of when that would likely
occur and their affect on the overall bonding authority of the city if improperly managed.
This concern is again heightened recognizing the development activity which has been
1 brought to the table.
I have had an opportunity to meet with our auditors, finance department, and financial
1 advisor to analyze our current position. During the past years, we have attempted to keep
bonding proposals under the $5 million mark (key if arbitrage penalties are to be avoided).
Given the time requirements associated with public improvements, we are really looking to
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1 ti4, PRINTED ON RECYCLED PAPER
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1 Mayor and City Council
April 27, 1992
Page 2
combined authority for 1992 and 1993, i.e. keeping issues to under $10 million for the two
' year period. The process of prioritizing projects within the overall limitation has to consider
the city's priorities. Traditionally, the city has looked at the prioritization process as one of
ensuring our bonding authority was used to accomplish programs in the following order:
- M to _proved Bonds: These bonds include monies approved by voters to expand
Lake Ann Park, purchase Bandimere Park, expand the Fire Station, etc.; and
' - Revenue Bonds: For our city, this group includes water tower bonds or the major
sewer bonds which would be paid via utility revenues; and
' - Redevelopment Bonds: The past 5 to 10 year period has seen a major amount of
our overall bonding slotted into this category. Street, sewer, water, redevelopment
contract monies, realignment of TH 101, Rosemount land acquisition, etc., are but
a few of the projects that fall into this type of bonding; and
1 - Public Improvement Bonds (Multi - party): Projects involving a multitude of property • owners are almost impossible to occur without the city being the primary coordinator
' and person determining who receives benefit. Projects such as Frontier Trail, Powers
Boulevard upgrade, Klingelhutz water, upper Bluff Creek sewer, are all examples of
this type of bonding authority; and
- Developer Initiated Public Improvements: Although it can be argued that the Song's
will benefit from the construction of a new collector road from CR 117 to TH 41 and
' the extension of sewer and water, they are not currently petitioning for the project.
The opposite is true in that their properties are under green acres, and any form of
assessments established by the city would not currently be required to be paid. The
' sole party benefitting from the improvements appears to be Lundgren Brothers.
Accordingly, they have been placed into the category of "developer initiated bonding
requests."
1 To be sure that the City of Chanhassen maintains its financial strength and stability, it is
important that we continue discipline in how we use our bonding authority for each of the
' different types of bonds. For example, Moody's will look to the overall tax base of the
community, our existing debt level, and anticipated future general obligation bonding in
determining whether we are wisely using that authority in making a decision to expand Lake
1 Ann Park or purchase the Bandimere Park. Moody's saw our continued reduction in debt
in this category as a plus, and that the new debt being created by projects such as Lake Ann
and Bandimere resulted in an overall debt margin lower than previously existing. It can
1 reasonably be argued that no additional debt would be even better, but the bottom line was
one of decreasing overall debt levels. Each of the other categories of bonding are reviewed
in a similar manner, i.e. revenue bonds looking to the financial strength of the enterprise
1
Mayor and City Council 1
April 27, 1992
Page 3
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funds, redevelopment bonds based on the financial strength of the TIF districts, etc. As it
deals with ' requested public improvement extensions, GFOA (Governmental Finance
1
Officers Association) /our auditors /Moody's suggest that projects such as these be reviewed
in terms of:
How Realistic Are They ?: If at the time for bonding these types of projects,
Moody's can physically see that activity is occurring on the site, they will not
downgrade the city's overall financial position. In essence, the city needs to ensure
that developer petitions will in fact produce the construction that they are
proclaiming; and
Financial Integrity of the Proposal: The original ro osal was one of constructing
g ty p p p
a collector street from CR 117 to TH 41, including trunk sewer and water from CR
117 to the Lundgren development. Although Lundgren Brothers is not opposed to
the collector roadway, my guess is that it was staff's position to build the entire
roadway as Lundgren Brothers would not be in a position to build a road across I
someone else's property. The proposal as presented does not meet the financial
security test. With Song's not wanting the roadway, the city would solely be paying
an exorbitant amount to obtain the right -of -way and to build an extensive length of
unused roadway. There would also be no one, except the city, to pay for this section.
A fairness test has also failed in that Lundgren Brothers would be required to donate
their portion of the roadway, while the Song's would be paid. The agreement
reached with Lundgren Brothers is one that is similar to the development technique
in their Near Mountain development, i.e. build that portion of the collector from TH
41 to between 200 ft. and 300 ft. into the property (including adjacent cul -de -sac
streets), and build first phase housing. When that phase is complete, build another
100 ft. to 200 ft. of the collector roadway (including abutting cul -de- sacs), and build
Phase H homes, etc. At some time, Song's will develop their property and the
collector roadway will be built between CR 117 and TH 41. However, in the interim,
the city has not been unduly burdened with making payment for land and public
improvements so as to allow a private party to speculate on the value of the land.
As it deals with trunk sewer and water extensions, Lundgren Brothers has agreed to
pay the trunk sewer and water fees associated with their development, and it appears
as though the aggregate trunk charges will meet the financial security test allowing
1
their portion of the project to remain as a public improvement project. Lundgren
Brothers would seek an 8 year assessment period with first payment not occurring
until two years after the bonds were sold (1993 anticipated). In discussing with our
financial advisor /auditors, they are jointly recommending that the developer be
required to post a letter of credit guaranteeing that that level of assessments for the
trunk sewer and water was paid. The letter of credit would remain in force until
such time as at least 25% of the development has been built out. Although I am
s ,
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Mayor and City Council
Y tY
April 27, 1992
' Page 4
1 anticipating some opposition to this latter requirement, it is not unusual and currently
is being met by Joe Miller Homes, Van Eeckhout, 41 and 5 Partnership, etc.
The purpose of requesting tabling of the feasibility study for Lundgren Brothers was to
ensure that we were meeting much larger goals than solely the Lundgren proposal. I feel
comfortable, at this point, that we have not violated any of the basic tenets of good financial
' management. However, we are at the $10 million mark right now. What this means is we
must scrutinize each additional proposal very carefully and, similar to the Lundgren
proposal, re -think how both the developer and City can develop win /win conclusions. The
' projects included in the existing $10 million have met the tests associated with their category
of bonding, i.e. each TIF project has been measured in comparison to the financial strength
of the TIF district, and its ability to pay that cost. In fact, the projects on the table are so
' realistic as to potentially support balancing the overall $10 million non - penalty limitation
to allow for $7 to $8 million to be issued in 1992. The arbitrage penalties do not come into
place if the dollars for the proposed bonding are spent within specific limitations.
' Additionally, Moody's position will be much more favorable if in fact the proposed bonding
projects are literally in progress at the time of Moody's review. The financial security test
is one that is vitally important, especially as it deals with developer requested improvements.
' Again, not through the request of Lundgren Brothers, the original project did ma meet this
security test. Should the Council and Planning Commission agree to the staged approach •
for road construction, we will then have modified this project from one that did not meet
the financial security test to one that does meet the financial security test.
The issues presented in this report have been discussed with Terry Forbord, representing
' Lundgren Brothers. To the best of my knowledge, they are generally in support of the
position of this office. Accordingly, this office would recommend that the City Council
authorize the feasibility study for Project 92 -5 (Lundgren Brothers).
1_0‘."
CITYOF
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690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55
SO 55317
3
_ (612) 937 -1900 • FAX (612) 937 -5739
1
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1
MEMORANDUM
TO: Don Ashworth, City Manager '
FROM: Charles Folch, City Engineer
1
DATE: April 22, 1992
SUBJ: Authorize Preparation of Feasibility Study for Street and Utility Improvements ,
p ty y ty
to NWl /a of Section 10 and NE1 of Section 9 (Lundgren Brothers) I
Project No. 92 -5
This item was tabled at the City Council's regular meeting on Monday, April 13, 1992 to I
allow staff the opportunity to review the list of capital improvement projects currently
scheduled for 1992 and 1993 as it relates to the City's overall bonding capacity to accomplish
the work.
As I discussed at the work session meeting with Tom Chaffee, it is not likely that any of the
I
infrastructure improvements associated with the Lundgren petition would be able to start
this year given the normal project planning, design and approval process required. I would
foresee this project as truly being a 1993 capital improvement. Considering our discussions
I
at this meeting, it appears that this project would schedule satisfactorily with the anticipated
bonding and financial position for 1993.
With the understanding of this time schedule, I would not foresee a problem in authorizing I
the feasibility study. At this time, conducting the necessary feasibility hearings during the
summer and if appropriate, authorizing the preparations of plans and specifications during
1
the fall. This would allow for a late winter, early spring bidding in 1993, a time which is •
typically very favorable for bidding projects.
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a rt
e PRINTED ON RECYCLED PAPER
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1
1 Don Ashworth
•
April 23, 1992
1 Page 2
' It is therefore recommended that authorization be given to prepare a feasibility study for
street and utility improvements to the NW% of Section 10 and NE% of Section 9, Lundgren
Brothers, Project No. 92 -5, contingent upon receiving a cash escrow or letter of credit from
' Lundgren Brothers to guarantee payment of this feasibility study and that the consulting
engineering firm of Bonestroo, Rosene, Anderlik & Associates be assigned as the project
engineer.
' jms
' Attachments: 1. Staff Report from April 13, 1992 Agenda
c: Dave Hempel, Sr. Engineering Technician
1 Bob Schunicht, Bonestroo, Rosene, Anderlik & Associates
Terry Forbord, Lundgren Brothers Construction
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.IF, 690 COULTER DRIVE • P.O. BOX 147 • CHANHASSEN, MINNESOTA 55317
(612) 937 -1900 • FAX (612) 937 -5739
MEMORANDUM 1
TO: Don Ashworth, City Manager
II
FROM: Charles Folch, City Engineer
DATE: April 9, 1992 TT 1
SUBJ: Authorize Preparation of Feasibility Study for Street
and Utility Improvements to NW ; Section 10 and NE ; I
Section 9 (Lundgren Bros.) - Project No. 92 -5
Over the past nine months City staff has had a number of meetings II
with Lundgren Bros. Construction, Inc. to discuss their intentions
to acquire property for development located in the northern
portions of Sections 9 and 10. It has recently come to City
I
staff's attention that Lundgren Bros. has secured purchase options
for a large area encompassing portions of three parcels known as
the Johnson, Turner and northern portion of the Dolejsi property.
I
Lundgren Bros. has since presented to the City a formal petition
for the construction of trunk utilities and an east -west roadway
between TH 41 and CR 117 (Galpin Boulevard). This east -west road II connection was previously defined as a needed transportation
element of the Comprehensive Plan. These improvements are needed
in order to develop the described properties.
I have contacted Mr. Bob Schunicht of Bonestroo, Rosene, Anderlik II
& Associates to acquire an estimate as to the approximate cost to
conduct such a feasibility study. I have been informed that this I
study is estimated to cost $11,200. Lundgren Bros. is familiar
with the City's policy to acquire financial sureties from the
petitioners of an improvement project to guarantee payment for the
I
study should the project not proceed.
It is therefore recommended that a feasibility study on trunk
sanitary sewer and watermain facilities and an east -west roadway
I
connection between TH 41 and CR 117 (Galpin Boulevard) in the north
half of Section 9 and the northwest quarter of Section 10 be
authorized to be conducted by Bonestroo, Rosene, Anderlik & I
Associates conditioned upon the City receiving a cash escrow or
letter of credit from Lundgren Bros. to insure payment for the
site.
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t 4, PRINTED ON RECYCLED PAPER
1
1
11 Don Ashworth
April 9, 1992
II Page 2
Attachments: 1. Letter from Lundgren Bros. dated 3/25/92.
1 2. Letter from Bob Schunicht dated 4/8/92.
c: Dave Hempel, Engineering Technician
II Terry Forbord, Lundgren Bros.
I Manager's Comments (4- 8 -92): Over the past five years, the city
has sold bonds at a level of approximately $5 million per year.
Maintaining a position at or below the $5 million figure can
reasonably assure that our current bond rating can be maintained.
I All forms of bonds compete with each other in arriving at the $5
million total. Each year the city must anticipate the amount of
general obligation bonds which may be sold (fire station bonding,
I Lake Ann Park addition, Bandimere Park, etc.); equipment
certificates (current year vehicle purchases); revenue bond needs
(water tower construction, major additions to the sewer system,
I etc.); and finally, special assessment bonding (public improvement
projects for streets, sewer and water extension for development
purposes, etc.). Although I agree with the City Engineer's
position that we should move forward with the feasibility study, I
I should also note that we are in the process of attempting to
prioritize 1992 bonding and we may be forced to bring this item
is
back to the City Council if it is determined that our overall
I bonding ability cannot be met given the total number of projects on
the table. No work would be completed on the feasibility study
until after this determination was made.
II DWA
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LUnDGREn I
BROS.
II
CONSTRUCTION
March 25, 1992
I
INC
Mayor Don Chmiel
I
Members of the City Council
Don Ashworth, City Manager -
Charles Folch, City Engineer -
City of Chanhassen
I
690 Coulter Drive
935E WavzataBlvd Chanhassen, MN 55317
WA): FI
Dear Ladies and Gentlemen:
II
M,nnr•SO!a 55391
Lundgren Bros. Construction is proposing to develop the land known
151.2,47;, 111 as the Johnson, Turner and the northern portion of the Dolejsi
II
property (depicted on Exhibit A) within the City of Chanhassen
At this time we control all of this land with an option to
purchase We hereby formally petition the City of Chanhassen for
I
the construction of public facilities. Namely trunk sanitary
sewer and water and the East/West roadway between Highway 41 and
County Road 117 as depicted on the transportation element of the
II
Comprehensive Plan. Each of these facilities is necessary for
development of our property.
At this time we have completed conceptual plans and have had
II
preliminary meetings with staff to receive their initial comments.
This meeting took place on March 24, 1992
Please contact me if you require any additional material and /or 1
information Please advise me of the date this petition will be
going to the City Council and of the estimated cost of the II feasibility study and its scheduling
Very truly yours
II
. Forbord
II
Vice President
TMF:bw S • ';
Attachment II
MAR 26 1992
p o t urczil : Thrr . our. II
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1 Exhibit A
1 •
IA Otto G onestroo. PE Keah A Gordon. P.E James R. Maland. PE Rene C Plumart, A I.A.
Bonestroo Marvin L. Sorvala. P.E Richard
Bourdon. PE Mark R Ro lsn d derson, PE Agnes
6. Peitz h PE
Richard E Turner. P.E Mark A Hanson. PE Thomas E Angus. PE Ceoho Olivier. PE.
Rosene
- Glenn R. Cook. P.E. David 0 Loskota. PE Daniel J Edgerton. PE Gary W Morien. P.E
Anderlik & Thomas E. Noyes. P.E Robert C Russek, AIA Mdrk A. Seto PE Karen L. Wiemen. PE
VI Robert G Schunicht. PE Howard A Sanford. PE Philip J Caswell. PE Keith R Yapp. P.E.
Susan M Eberlin. C PA Donald C. Burgardt. PE Ismael Martinez. PE Michael P Rau PE.
A ssociates Ted K Field. PE Mark 0 Wallis PE Charles A. Erickson
Michael T Rautmann PE Thomas R Anderson. A IA Leo M Pawelsky
Engineers & Architects Robert R Pfefferle. PE Gary F Rylander. PE Harlan M Olson
Thomas w Peterson. PE Miles 8 Jensen. PE
Michael C Lynch. PE L Phillip Gravel M. PE
April 8, 1992
City of Chanhassen
1
690 Coulter Drive
Chanhassen, MN 55317
Attn: Mr. Charles Folch, P.E.
City Engineer
1
Re: Johnson and Dolejsi Property
City Project No. 92 -5 I
Our File No. 39308
• Dear Charles: 1
As requested, we have prepared a mini -scope of study and determined an estimated cost for
preparing a Feasibility Report for Project 92 -5. The basis for this estimate includes information I
from the Comprehensive Sanitary Sewer and Water Plans, and a conceptual site sketch from
the developer.
-S
The proposed Feasibility Study will define the east -west through street and trunk sanitary sewer
and water main improvements necessary to serve the portion of the project area. It would
involve the following specific items:
1
PROJECT NO. 92 -5 FEASIBILITY STUDY •
1) General description of project area, owners development activities and past III
activities.
2) Summary of the improvements and studies that affect the study area.
1
3) Preliminary design of the proposed east -west collector street from Galpin Blvd.
to T.H. No. 41.
4) Preliminary design of the trunk sanitary sewage system including:
1
a. Lift station location, sizing and phasing
b. Trunk sewer location
c. Force main sizing including economical velocity analysis. I
5) Preliminary design of trunk water distribution mains.
6) Cost estimate of proposed improvements. I
7) Cost recovery (assessment) system.
8) Preliminary assessment role.
Page 1. 1 '
39308.cor
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2335 West Highway 36 • St. Paul, Minnesota 55113 • 612 - 636 -4600
•
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Our proposed method of compensation for the feasibility study and subsequent design and
construction engineering is presented in the following table:
1 PROJECT 92 -5
COMPENSATION SUMMARY
1) Feasibility Study: Lump Sum of $11,200 to be credited against future design fees.
2) Design: 85% of attached fee table. Credit to be given for cost of feasibility study in
proportion to the facilities actually designed.
' 3) Construction Engineering: a. Contract administration - 15% of attached fee
curve.
b. Surveying and inspection - per diem, based on
current approved rates.
We understand that the developer is proposing an accelerated schedule. We would be able to
' proceed with the preparation of the feasibility immediately in anticipation of a public hearing
in June.
' If you have any questions or would like any additional information, please contact Bob
Schunicht or me.
Sincerely,
BONESTROO, ROSENE, ANDERLIK & ASSOCIATES, INC.
s;
! � R tz `-.
L. Phillip Gravel III, P.E.
LPG:Ii
Attachment: Fee Table
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' Page 2.
39308.cor
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Fee Table
Construction Fee
Cost Percentage
$ 50,000 11.64%
100,000 10.32
250,000 8.78
500,000 7.76
•
750,000 7.26
1,000,000 6.88
2,000,000 6.28
4,000,000 5.83
6,000,000 5.65
8,000,000 5.58
1 10,000,000 5.50
Design Fee: 85 percent of the indicated fee percentage. Credit is
given for cost of feasibility study in proportion to the facilities
actually designed.
For construction costs between those listed, the fee is 1
interpolated.
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