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1981 08 24 I I I SPECIAL CHANHASSEN CITY COUNCIL MEETING AUGUST 24, 1981 Acting Mayor Neveaux called the meeting to order at 7:30 p.m. with the following members present: Councilwoman Swenson and Councilman Horn. Mayor Hamilton and Councilman Geving were absent. APPROVAL OF AGENDA: Councilwoman Swenson moved to approve the agenda as presented with the addition of Baltic Permit and Apple Valley Red-E Mix. Motion seconded by Councilman Horn. The following voted in favor: Acting Mayor Neveaux, Councilwoman Swenson and Councilman Horn. No negative votes. Motion carried. PUBLIC ASSESSMENT HEARING KERBER BLVD. STREET IMPROVEMENT Acting Mayor Neveaux called the hearing to order with the following interested persons present: Thomas Connelly, 2296 Apache, St. Paul Bernard and Helen Kerber, Box 57, Chanhassen Theresa Kerber, 600 Lyman Place, Excelsior Harold Kerber, 7216 Frontier Trail, Chanhassen Joseph Carbonneau, 6921 Chaparral Lane, Chanhassen Martin Docherty, 6920 Chaparral Lane, Chanhassen Edwin, AdelIa, and Vernon Kerber, 7241 Powers Blvd., Chanhassen Loretta Kerber Connelly, 2296 Apache St., St. Paul Richard Brose, Route #1, Waconia Bob Waibel, 1110 Chaparral Court, Chanhassen Dale Campbell, Schoell and Madson Jim Orr, Schoell and Madson Russell Larson Bill Monk, City Engineer, discussed the costs of the project and methods of assessment. Total cost of the project is $846,376.22 and of this amount $281,369.95 will be funded through State Aid for oversizing. The project is proposed to be assessed on a front foot basis with the urban section being $53.45040 a front foot and rural section $32.166.17 a front foot. The project is presented funded with temporary bonds at a low interest rate. However, within the next year, permanent bonds will be sold to replace the existing temporary bonds and the rate of interest will be considerably higher. Acting Mayor Neveaux - Mr. Larson can you explain to the audience the legal ramifications involved in deferment of assessments and/or partial deferments versus full deferments and interest on deferments, etc. as might be considered by the Council as an option. Russell Larson - With respect to the matter of deferment, there is the right under the law to invoke, if the properties are eligible, the Green Acres Law which is perhaps not adaptable to a lot of the properties here. However, it is an election that the property owner can make. The deferment that is allowable under the law, subject to the approval of the Council, is found in Minnesota Statute 429.061 subd. 2 which provides: "Except that the payment of the first installment of any assessment levied upon unimproved property, may be deferred until a designated future year or until the platting of the property or the construction of improvements thereon upon such terms and conditions and based upon such standards and criteria as may be provided by resolution of the Council. If special assessments against a property have been deferred pursuant to this subdivision the governmental unit shall file with the County Recorder in the County in which the property is located, a certificate containing the legal description of the affected property and of the amount deferred. In any event every assessment, the payment of which is so deferred, when it becomes payable shall be Council Meeting August 24, 1981 -2- divided into a number of installments such as that the last installment thereof will be payable not more than 30 years I after the levy of the assessment." With respect to total or partial deferments, the law does not permit a municipality to assess part and defer part. It has to defer from the first instance, that is the first installment. That is not an option to this Council. The property owner does have the right to make partial payments under an ordinance which was passed by the City in 1973 but, again, if there are such prepayments, I mean, the ordinance provides: "The owner of any property special assessed for public improvements may partially prepay said special assessments in an amount prior to certification of the assessment or the first installment thereof to the County Auditor. All said partial prepayments shall be made to the Village Treasurer and any such prepayment shall be credited to the principal amount of said assessment." What that means is that a property owner would be, in this instance, permitted to prepay a portion of that special assessment but thereafter there would be no option to make partial payments. As Mr. Monk pointed out, the assessments shall bear interest at such rate as the resolution determines not exceeding 8% per year. Except that the rate may in any event equal the average annual interest rate on bonds issued to finance the improvement for which the assessments are levied. Mr. Monk advised you that this was initially financed under temporary bonds which must be refunded and quite probably at a higher rate than 8%. The law further provides that when payment of an assessment is deferred interest on that assessment for the period of the I deferment may be made annually at the same times as the principle installments of the assessments would have been payable or interest may be added to the principle amount of the assessment when it becomes payable or if so provided in the resolution levying the assessment, interest thereon to December 31 of the year before the first installment is payable may be forgiven. The hearing was opened for comments from those in attendance. Thomas Connelly - I represent the John P. Kerber Estate. I would like to address a question to Mr. Monk and ask him to explain the charges for the rural and the urban section. Bill Monk - Contract number one was for the grading and miscellaneous work. Contract number two was just the paving of the rural section. Contract number three was the paving and curb and gutter of the urban section. Those costs were then brought back in and charged back to the different sections. The rural and urban were broken down. The only overlap that we had was in contract number one where we had to break out the grading costs between all three of the designations. The rest of the costs for the paving, there was a separate contract for the rural and a separate contract for the urban. They did not overlap. We then took the percentage of the construction over the total and that percentage with State Aid was then carried through these other items. It came out to a little bit over 30%. Thirty percent was then taken out of the total amount for these different areas and these numbers were then brought down. Every effort was made to keep the rural and urban completely separate and not to overlap the costs in any way. The curb and gutter was only charged back to the urban and does not show in the rural construction costs because it was under a separate contract. The State Aid percent is based on oversizing costs for width and depth of all the construction that was done. If the pavement was I I I I Council Meeting August 24, 1981 -3- six inches deep and our normal residential section was only 3~, 2~ inches of blacktop was taken off and put against State Aid because it was required above and beyond the normal section. Thomas Connelly - Could you illustrate on the map what is the rural section and what is the urban section. Bill Monk - The urban section starts at County Road 17 and carries through the New Horizon section and one piece owned by Hansen and Klingelhutz. The rural section starts at the north line of the John Kerber and Bernard Kerber properties and extends all the way to West 78th Street. Mrs. Bernard Kerber - I would like to have Mr. Larson explain what he did explain before one more time. I didn't understand exactly what he was reading about deferment, partial prepayment. Russell Larson - The law does give the Council the right to defer special assessments commencing with the first installment. That would be the one due and payable with taxes in 1982. This is solely within the discretion of the City Council whether or not it will defer assessments. To be eligible for such deferment, the property has to be unimproved property and it would lose its deferred status when the property is improved by the construction of improvements on it or the platting of the property. Now the deferments that the Council can consider at its discretion would be based on such terms and conditions and such standards and criterias as the Council might adopt by resolution. The Council may make a determination that an assessment be deferred for a period of x number of years provided, however, that the property is not improved in any way within that x number of years and if it were improved by the construction of improvements thereon or by platting or perhaps by sale then the deferment would be lost and the assessments would come on line and be payable along with the taxes. There is also available the benefits of the Green Acres Law which might be utilized by one or more of you here. That is a very technical bit of legislation and is under pretty much the control of the County Assessor. That is found in Minnesota Statute 273.111 and the kicker in that one is that if the property no longer eligible as agricultural land, that is it's used actively and exclusively for agricultural use and is the homestead or contiguous to the homestead or becomes the homestead of the surviving spouse of the owner, then when it loses that agricultural status under that Statute all deferred special assessments plus interest are payable in 90 days. That's a rather harsh application of the Green Acres Law. Acting Mayor Neveaux - Does the decision on that status rest with the local government or the County Assessor? Russell Larson - That would very likely rest with the County Assessor and the County Auditor. Acting Mayor Neveaux - This portion of the project, from B to C, is essentially, outside the school district, the city and the bank, pretty much all rural unimproved agricultural land. If we deferred the whole thing for ten years, who's going to pay? If we don't make the payments then we go to general obligation. Mrs. Bernard Kerber - What do you mean by further improvements? Russell Larson - An improvement on the site. For example, if you attempted to sell off four acres and somebody wanted to build a house on it, that would be an improvement. Utilizing that property of which you speak for agricultural purposes in putting on another granary, certainly in my view would not be an improvement. Councilwoman Swenson - I notice in here we are levying at 8%, who picks up the cost of the additional interest in the event that we have to sell bonds? Council Meeting August 24, 1981 -4- Russell Larson - We certify each year our assessments down to the Courthouse and when we come around to refund these temporary bonds, it will probably at a higher rate and then that will go on the I assessment roll and then the properties will pay that increased interest cost. Councilwoman Swenson - If the property is deferred, does that interest compound? Russell Larson - That would be simple interest. The Statute is unclear on that. It would, in my view, be simple interest. Thomas Connelly - I have a statement that I would like to read into the record. My name is Thomas Connelly, 2296 Apache Street, St. Paul, Minnesota. I represent the John P. Kerber Estate and I have with me this evening Adel1a Kerber, Vernon Kerber, Edwin Kerber, Harold Kerber, Bernard Kerber and Mrs. Loretta Connelly. We are appearing in opposition to the proposed Assessment for Project 78-3 t'MSAS 101 Kerber Drive". The assessment roll for the John P. Kerber property indicates a front footage of 4260 feet and a cost of $32.17 per front foot for an assessment of $137,027.89. That ridiculous figure is thousands of dollars more than the estimated market value of the property. On November 7, 1977, at a Public Hearing in Chanhassen I presented a statement expressing our opposition to the proposed project MSAS 101. The objections stated, namely, lack of benefit to the property, lack of public necessity and damage to the farming operation are still valid objections. Special assessments are lawful and constitutional only when founded upon special benefits accrued from the improvement for which the assessment is laid. In other words, the assessment should not exceed the special benefit to the property. In this case there is not special benefit to the John Kerber farm, and this excessive assessment amounts to a taking of private property for a public use without just compensation. This assessment is arbitrary and unreasonable and ignores the constitutional restrictions or guarantees of due process and equal protection of the laws. The John P. Kerber farm is prime farmland and should be protected as agricultural land. On April 15, 1980, Governor Quie signed the Metropolitan Agricultural Preserves Act and Minnesota became the first state to recognize the intrinsic value of farming. The purpose of that law is to give farmers the self-assurance needed to resist the pressure of urban sprawl. This assessment project has beeh a hindrance to the farming operation and has not benefited the property in any way. If this road is a public necessity then the cost should be borne by the people using it. In summary, it is our contention that the John P. Kerber farm has not and will not benefit from this improvement. The property has not increased in value by reason of special benefits derived from the improvement. And, furthermore, this property does not receive any special benefits differing from the benefit that the general public enjoys. We respectfully request that the assessment be reconsidered and they theory of special benefits be applied. I have copies of this statement which I will give to the Manager and everybody on the Council. I Joseph Carbonneau - My concern is about a letter addressed to Mr. Monk from New Horizon Homes stating that they would pay special assessments for properties that have been sold and I am just curious if this letter is legal and if I should sit back and 'vait and see what happens. I I I I Council Meeting August 24, 1981 -5- Bill Monk - While I was doing some research on the project it was mentioned to me that four properties along Kerber Blvd., originally owned by New Horizon Homes had been purchased. After talking to one of the residents I was told that his particular deed or contract stated in it that New Horizon Homes would pick the assessments. I did ask Greg Frank of New Horizon Homes to write me a letter to the effect that he still stood behind that. He did that. I did tell Mr. Carbonneau and some of the other four residents that called that the City was not in a position to guarantee that New Horizon would pay because it was a part of their private contract. The City was under an obligation to assess the property not necessarily the owner. It is my understanding though that New Horizon Homes intends to pay the full amount of the assessments on those four properties during the 30 day prepayment period. Acting Mayor Neveaux - There were no escrow monies? Bill Monk - I am not sure if there were escrow monies set aside or not but it is a private issue between New Horizon Homes and the actual owners and the intent of my letter was just to restate that for the four owners. Don Ashworth - The development contract is with New Horizon and it requires them to pay. Bill is correct in that they have an obligation to pay directly under the contract that you entered into as purchaser. As a further guarantee should they fail to do that the City does have the right to go back to that letter of credit and to make that payment as the contract is between the City and New Horizon, they were the petitioners and stated that that is what they wanted. Richard Brose - I am mostly concerned that it ended up to be so much higher than they had told us at the time they bought the land from us and put the road. Bill Monk - One of major differences between what I show at $32.17 a.foot is the feasibility studys number of $14.88 revolves around the question of what is a standard section. In the feasibility study a standard section was taken as 50 foot of right-of-way and the cost to build a certain standard street with class 5 and blacktop and curb and gutter. There was no provision made for any storm sewer installation or any grading costs involved in that number. When I went back to prepare the assessment roll, the standard section that I used to assess the rural section included purchase of 50 foot of right-of-way, a percentage of the grading and storm sewer and then all the gravel and blacktop costs associated with it. The biggest difference comes in with the grading and increased section that was used to actually construct the street. Since the $14.88 did not include those items I submit to the Council that that number is in error and with one or two differences between the $32.17 and the $14.88 as shown in the feasibility. That is part of the reason for the difference in the cost. The other reason is the change in the sections. The addition of curb and gutter, bikeways, and just the overall increase in costs over a three year period that the contract was done. All those factors added up to a large difference between what was shown in the feasibility and what is being shown here tonight. Councilman Horn - The biggest difference in the rural section is the grading and storm sewer. Bill Monk - Yes. I do not see why that was not included. I can find no documentation on why those numbers were not included in the original $14.88. Jim Orr - I wasn't at the public hearing four years ago. We did give the Council a summary and attempted to explain the differences. There are three columns listed. One was the original October 31, 1977, report and the next column is an updated cost which takes the original numbers from the 1977 feasibility study and uses a compounded 15% annual increase. I think that~_oyeralLCfor the four year period 15% compounded is probably a realistic indication of the escalation of construction costs. It hasn't been for the past year but I think overall it's a reasonable barometer. Council Meeting August 24, 1981 -6- Jim Orr - I think the thing that makes it difficult to compare the feasibility study was that there really were so darn many options in that study that it is rather difficult to tell exactly what was included and there wasn't a specific number in the feasibility study for what actually was constructed so you actually have to go through there and pick out, this was because the Council determined certain things to be added. There were three contracts let over the four year period. The first one had a slight over-run from an estimate and that was about $10,000 on a $250,000 project. The next one was right on and the last one which has not yet been fina1ed is going to be an under-run. I think the majority of it was attributable to just the exca1ation during that period and the fact you have to go through the feasibility study to pick out specifically what was built because over this period things did change. Councilman Horn - You have applied this 15% compounded over four years for all the construction costs? Jim Orr - Yes. You have to keep in mind that in addition to the costs there is interim interest that's added. Acting Mayor Neveaux - How much construction occurred in 1981? Jim Orr - The fall of 1980 had the last contract let and then there was some clean up. In terms of a dollar value I would guess that it was about half of the last contract. Don Ashworth - There were three temporary bonds that financed the total construction. Bill Monk - The capitalized interest was figured only for the percent of the temporary bonds. We did throw back the interest that did gain but it was negligible. Don Ashworth - The machine also calculates the interest lost. We typically bond at a specific time of year. For the most part we were literally deficit financing out of this project. I Richard Brose - What happened to all that state aid? It's a road we never asked to have put in. I don't see where we should get assessed with this heavy assessment. It might improve our land down the road some day maybe but it sure isn't for the time being. I Mrs. Bernard Kerber - Getting back to this initial assessment, deferment, there is something about the Council would set a certain amount for a prepayment and then possibly defer the rest. Russell Larson - You have the right to make a partial payment of the assessment at the outset prior to the time that it is certified to the County Auditor and they that would be applied to the principle due on the assessment. That is a one time partial payment. The law says the Council may by ordinance authorize the partial prepayment of assessments in such manner as the ordinance may provide prior to certification of the assessment for the first installment thereof to the County Auditor. Chanhassen in 1973 enacted a partial payment ordinance which allows for that and that ordinance says just what the statute says, that you may partially prepay any amount prior to the time that the assessment is certified to the County Auditor and that would be by October 10. You would decide on the amount. Thomas Connelly - Has the ordinance every been invoked? Russell Larson - I really wouldn't know that. I would have to check with the Treasurer. It may well have been. Acting Mayor Neveaux - Typically what we do on a project such as this is to hold closure of the public hearing for seven days to allow for written comments to be received by the Council at which time the public hearing would be closed and the Council would deliberate as to the way to handle that. I am sure there I I I I Council Meeting August 24, 1981 -7- are many questions that the Council would like to be asking staff and I do have a letter from one of the affected people and there are some items in there that I would like to have answers to at that next meeting. Councilwoman Swenson moved to continue the public hearing to August 31, 1981, at which time written comments will be considered. Written comments should be received at the City Office by Friday, August 28. Motion seconded by Councilman Horn. The following voted in favor: Acting Mayor Neveaux, Councilwoman Swenson and Councilman Horn. No negative votes. Motion carried. CONDITIONAL USE PERMIT REVOCATION PUBLIC HEARING DON HANUS 229 WEST 79TH STREET The purpose of this hearing is to consider the revocation of the Hanus Conditional Use Permit. The sub-committee met with Mr. Hanus last Saturday and felt that some agreement had been reached. Councilwoman Swenson stated that the sub-committee had been assured by Mr. Hanus that he would conform to the agreements that the Council comes up with. Mr. Hanus would like to purchase a 95' x 200' used steel building to be used for storage. Councilwoman Swenson has viewed this building and recommended that if the Council allows this building to be moved in that Mr. Hanus paint it and that it be maintained and if he doesn't the City will have it done and charge all costs to Mr. Hanus. Mr. Hanus will immediately install web screening in the chain link fence along the north and south sides of the building. Councilwoman Swenson suggested that trees be planted of an adequate height to screen the new building. A parking area was requested on West 79th Street which the sub-committee diG not favor. The sub- committee suggested that Mr. Hanus be permitted to have customer parking along the north side of West 79th Street· Councilman Horn moved to continue the public hearing until September 21 at which time the Council can hear comments and recommendations from staff and the Planning Commission. Motion seconded by Councilwoman Swenson. The following voted in favor: Acting Mayor Neveaux, Councilwoman Swenson and Councilman Horn. No negative votes. Motion carried. It was decided that the Acting Mayor would not sign the "no parking on West 79th Street" Resolution until after September 21 pending the outcome of the public hearing. BALTIC CONDITIONAL USE PERMIT: The City Attorney discussed the status of this court case. It is pending in Carver County District Court at this time. APPLE VALLEY RED-E-MIX: The City Attorney will prepare a letter on this item for the Council. COMPREHENSIVE PLAN REVISION: Mark Koegler discussed proposed reVlSlons to the plan. Metropolitan Council staff has requested additional information prior to their continuing the review of Chanhassen's plan. 1. Timetab1e for the adoption of the Official Zoning Ordinance controls. 2. They have a question about Highway 5. It was shown as a intermediate arterial versus Metropolitan Council's minor arterial. Metro Council staff asked for a reviewal of that point. 3. Additional information on M. A. Gedney Company sewage discharge. 4. Trail connecting Bryant Lake in Eden Prairie to the Minnesota Valley National Wildlife Refuge. 5. Additional narrative on a description of controls and regulations or what the City feels with regard to natural resource protection. Councilman Horn moved to table action on the Comprehensive Plan review until such time as a more definitive staff report is forthcoming and instruct the consultant to proceed Council Meeting August 24, 1981 -8- with resolution of the information requested by Metropolitan Council staff. Motion seconded by Councilwoman Swenson. The following voted in favor: Acting Mayor Neveaux, Councilwoman Swenson and Councilman Horn. No negative votes. Motion carried. SPECIAL MEETING, 1982 BUDGET: Council members will meet Thursday, August 27, 1981, at 7:00 p.m. with members of the fire department to major items requested for 1982. I 1981 PAY CLASSIFICATION REVIEW: Council members requested previous years percentage of merit increases and cost of living increases. CONSENT AGENDA: Councilman Horn moved to approve the consent agenda pursuant to the City Manager's recommendation. a. 1981-1982 Community Development Block Grant Program, Authorize Joint Powers Agreement with Hennepin County. RESOLUTION #81-31. Motion seconded by Councilwoman Swenson. The following voted in favor: Acting Mayor Neveaux, Councilwoman Swenson and Councilman Horn. No negative votes. Motion carried. COUNCIL PROCEDURES ORDINANCE: The Council discussed the significance of the Council Procedures Ordinance and will make an effort, as a body, to stay 'vithin the limits, timewise, of that ordinance, specifically the 11:30 cut-off time for new item discussion. Acting Mayor Neveaux indicated he would make every effort to hold to that ordinance during the next four weeks. Councilman Horn moved to adjourn. Motion seconded by Councilwoman Swenson. The following voted in favor: Acting Mayor Neveaux, Councilwoman Swenson and Councilman Horn. No negative votes. Meeting adjourned at 11:30 p.m. I Don Ashworth City Manager I