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1997-05-06 Council minutesPage No. 1 May 6, 1997 CITY OF MENDOTA HEIGHTS DAKOTA COUNTY STATE OF MINNESOTA Minutes of the Regular Meeting Held Tuesday, May 6, 1997 Pursuant to due call and notice thereof, the regular meeting of the City Council, City of Mendota Heights, Minnesota was held at 7:30 o'clock p.m. at City Hall, 1101 Victoria Curve, Mendota Heights, Minnesota. Mayor Mertensotto called the meeting to order at 7:30 o'clock P.M. The following members were present: Mayor Mertensotto, Councilmembers Huber, Krebsbach and Smith. Councilmember Koch had notified Council that she would be absent. Ayes: 4 Nays: 0 Ayes: 3 Nays: 0 Abstain: Huber Councilmember Krebsbach moved adoption of the revised agenda for the meeting, amended to move item l Oh to the beginning of the regular agenda. Councilmember Smith seconded the motion. Councilmember Smith moved approval of the minutes of the April 15, 1997 regular meeting. Councilmember Krebsbach seconded the motion. CONSENT CALENDAR Councilmember Smith moved approval of the consent calendar for the meeting, revised to move items i and j to the regular agenda, along with authorization for execution of any necessary documents contained therein. a. Acknowledgment of the minutes of the April 29, 1997 Planning Commission meeting. b. Acknowledgment of the Fire Department monthly report for March. c. Acknowledgment of the Code Enforcement monthly report for April. Page No. 2 May 6, 1997 d. Authorization for the Public Works Department to hire up to five seasonal helpers for the summer. e. Authorization to hire Jeffrey Lonsink as a temporary engineering aide through the summer construction season at the rate of $9.00 per hour. f. Approval of the appointment of Richard Gill as Assistant Weed Inspector. g. Acknowledgment of receipt of the Uniform Settlement Agreement Form and approval of the 1997 Labor Contract Settlement between the city and Minnesota Teamsters Local 320 (Public Works), along with authorization for execution of the agreement by the Mayor and City Clerk. h. Acknowledgment of receipt of $1,000 contributions from Mr. Joseph Schaefer and Mr. Gregory Boyle in appreciation for Sgt. Dorance Wicks' service to the community and direction to staff to place the contributions in the Special Police Fund. i. Adoption of Resolution No. 97 -15, "A RESOLUTION ENDORSING INDEPENDENT SCHOOL DISTRICT NO. 197 REQUEST FOR REMOVAL OF MANUAL PULL STATIONS AT HENRY SIBLEY HIGH SCHOOL." j. Acknowledgment of a memo from Code Enforcement Officer Berg and approval for the issuance of a sign permit for York Associates for 2010 Centre Pointe Boulevard. k. Acknowledgment of receipt of the Davis and Lagerman appraisal of the McNeill site. 1. Approval of the list of contractor licenses dated May 6, 1997 and attached hereto. m. Approval of the List of Claims dated May 6, 1997 and totaling $40,149.99. n. Authorization to schedule public hearings for 8:00 p.m. on May 20 for consideration of the renewal of liquor licenses for Mendota Liquor, Marriott Corporation, Heritage Inn and Mendakota and Somerset Country Clubs. Page No. 3 May 6, 1997 o. Approval to reschedule the starting time of the May 20 Council meeting to 8:00 p.m. so as not to conflict with the hours of the school board election. Councilmember Krebsbach seconded the motion. Ayes: 4 Nays: 0 PRE - ARRIVAL Council acknowledged a memo from Administrator INSTRUCTIONS PROGRAM Batchelder regarding proposed agreements between the City of West St. Paul and Health East and West St. Paul and Dakota County for the addition of Emergency Medical Services Pre - Arrival Instructions service to the West St. Paul dispatching service. Mayor Mertensotto stated that there is no proposed contract between Mendota Heights and West St. Paul, but the model with Dakota County contains an automatic renewal clause. He stated that he does not want the city's agreement with West St. Paul to have automatic renewal, pointing out that the first year is to be funded by Dakota County but there may not be funding in subsequent years. Councilmember Smith moved to authorize staff to negotiate a similar type of contract to provide an Emergency Medical Services Pre- Arrival Instruction Agreement through the dispatching facility with the City of West St. Paul through 1997 with no automatic renewal. Councilmember Krebsbach seconded the motion. Ayes: 4 Nays: 0 POLICE DEPARTMENT Council acknowledged a memo from City Hall Building Manager REMODELING Guy Kullander requesting approval for the addition of two work stations in the police department, replacement of the squad room carpeting with vinyl tile, repairs to the exercise room shower and reupholstering of 21 squad room and management chairs. Mayor Mertensotto stated that he would like to have the lower level storage room finished at the same time as the modifications are made in addition to the police area. He suggested that the ceiling in the room be lowered, that flooring be installed and that lighting be improved so that the room can be made available for community use. Treasurer Shaughnessy responded that staff will take bids and return to Council for approval. Page No. 4 May 6, 1997 Councilmember Huber moved to authorize the recommended improvements to the Police Department area and to authorize staff to request quotes for improvements to the lower level unfinished area. Councilmember Smith seconded the motion. Ayes: 4 Nays: 0 SPRING CLEAN -UP Administrative Assistant Hollister informed Council and the audience that the third annual Spring Clean -Up Day will be held on Saturday, May 17. He briefly reviewed some of the types of items that will be accepted and those which cannot be accepted. HEARING: TAX INCREMENT Mayor Mertensotto opened the meeting for the purpose of a public PLAN AMENDMENTS hearing on proposed amendments to the city's Tax Increment Plan. Council acknowledged receipt of the proposed plan modifications along with a memo from Treasurer Shaughnessy. Mr. Walt Hartmann, the Dakota County HRA Tax Increment Consultant, was present for the discussion. Treasurer Shaughnessy informed the audience that the hearing was called to consider amending the spending plan for the Tax Increment District because the majority of the work in the original plan is either completed or fully funded. He stated that Mr. Hartmann has assisted city staff in developing the spending plan amendment, which has been submitted to the school district and county for comment. He informed Council that he has not received any comments from either agency. Mr. Hartmann explained that in 1981 he and city staff took a look at using the tax increment law to assist in the development of the city and since that time there has been a good development history. Because the tax increment law requires that after all of the spending has been completed in the original plan, the city must either modify the plan or return money to the county and school district. He explained that the city is under some duress to approve the amendment because the legislature is considering provisions in the Omnibus Tax Bill addressing both new and senior TID's. He suggested trying to approve the amendment prior to June 19 so that if there are things the city wants to do they could be chronicled. He stated that staff has developed a list of items that are desired to be accomplished and if the amendment is approved this evening, there is still no absolute assurance that the legislature will not do something that will not allow it. He informed Council that he fully expects the tax bill to require all districts that are funded to return the taxes to the other tax entities. Page No. 5 May 6, 1997 Mayor Mertensotto stated that there have been assertions made in the press that the city used tax increment to lure the Brown Institute to the Cray building. He informed the audience that the assertions are not true. He stated that the building is in the tax increment district because the city identified the need for storm water improvements. He pointed out that the tax increment funding would have been available to anyone wishing to purchase the building regardless of who it was, and Brown chose the site. Mayor Mertensotto asked for questions and comments from the audience. There being no questions or comments, Councilmember Huber moved that the hearing be closed. Councilmember Smith seconded the motion. Ayes: 4 Nays: 0 Councilmember Huber moved adoption of Resolution No. 97 -16, "RESOLUTION APPROVING MODIFICATION OF MUNICIPAL DEVELOPMENT DISTRICT NO. 1 and MODIFICATION NO.2 OF TAX INCREMENT REDEVELOPMENT DISTRICT NO. 1 AND MODIFICATION OF THE TAX INCREMENT FINANCING PLAN RELATING THERETO." Councilmember Smith seconded the motion. Ayes: 4 Nays: 0 SOD COMPLAINTS Council acknowledged a memo from Engineer Mogan regarding sod complaints relating to the Friendly Hills improvement project. Council also acknowledged a letter from Mr. J.W. Burke, 707 Decorah Lane, regarding the condition of the sod in his boulevard area. Mr. Burke was present for the discussion. Engineer Mogan informed Council that Mr. Burke had called him last October to complain about the sod which was installed as part of the Friendly Hills project, and that he has also spoken to several other people in the neighborhood who have expressed complaints about the condition of the sod. He stated that after receiving the complaints, staff viewed the area and saw about 40 spots which had sod problems. Engineer Mogan informed Council that in some of the cases, the sod had already been replaced and the condition of the lawns was bad as well. He stated that the contractor was responsible for watering the sod for the first thirty days and the property owners were they would be responsible for watering beyond that time. He Page No. 6 May 6, 1997 explained that the problem is not universal: there are many property owners who have green yards and sod. He expressed two concerns: that the problem is that staff's definition of what is dead sod may be different from what the home owners think, and if the city starts a program to replace the bad sod, the number could grow beyond the forty that staff has identified. Mayor Mertensotto stated that the project was done in 1995, so after one year the contractor was released and there is no warranty on the sod. He explained that any corrective action must be at the city's expense, and there is no funding budgeted. He asked Mr. Burke whether he felt that the poor sod condition is the result of the dry weather conditions or if people did not take care of the sod, or if there was another problem. Mr. Burke responded that he watered his sod so much that his water bill was a record high. He further stated that he assumes that sod should be good for at least one growing season, but most of his sod was bad by early spring. He informed Council that he was not favorably impressed by the quality of the sod contractor's work. He stated that one property may have good sod and the next bad sod. Mr. Burke informed Council that his neighbor at 708 Decorah wanted to attend the meeting but could not, and that this neighbor's sod is even worse than his. Councilmember Huber stated that he received a call from the property owner at the northwest corner of Creek and Aztec complaining about his sod. He expressed concern about how the city decides what is really bad sod and what is not. Mayor Mertensotto responded that staff has done a survey and found 40 properties with bad sod. He suggested that staff determine what needs to be done to correct the conditions without resoling entire blocks. Mayor Mertensotto stated that Council will have to develop some type of criteria to take care of the problem. Staff was directed to prepare a report on corrective action alternatives for Council consideration on May 20. BID AWARD: TILSEN Council acknowledged a tabulation of bids received for STREET M'ROVEMENTS the Tilsen Highland Heights street reconstruction project. Page No. 7 May 6, 1997 Responding to a question from Mayor Mertensotto regarding the qualifications of the low bidder, Engineer Mogan stated that he has contacted many of the metro area communities where the firm has worked and received favorable responses from most. He informed Council that the only complaint was that the city may need to provide constant supervision — which city engineering does provide on projects through its full time inspector and full time engineering department. Mayor Mertensotto expressed concern over the spread between the low and high bidders. He stated that staff will need to make sure that any requested change orders are proper. Councilmember Krebsbach asked what concern the other communities had that required more supervision. Engineer Mogan responded that in some aspects of their work they need more supervision but they were more than willing to do what was asked of them. He further stated that he has already had discussions with the president of the company. He informed Council that he does not feel this contractor will require more supervision than has been given on other projects, and noted that city staff has worked with most of the subcontractors who will be working on this project. He explained that the engineering staff is very active in inspecting projects, and stated that he feels the city would be better served by choosing the low bidder than the next low bidder. He also informed Council that the City of Northfield gave the low bidder a glowing reference. Councilmember Huber moved adoption of Resolution No. 97 -17, "RESOLUTION ACCEPTING BIDS AND AWARDING CONTRACT FOR CONSTRUCTION OF STREET RECONSTRUCTION AND APPURTENANT WORK TO SERVE TILSEN' S HIGHLAND HEIGHTS, TILSEN' S HIGHLAND HEIGHTS PLAT 2, TILSEN' S HIGHLAND HEIGHTS PLAT 3 AND SURROUNDING AREAS (IMPROVEMENT NO. 96, PROJECT NO. 4)." Councilmember Smith seconded the motion. Ayes: 4 Nays: 0 CASE NO. 97-27, WOOLSEY Council acknowledged an application from Mr. Chris Woolsey, 2316 Lake Lemay Road, for a wetlands permit to allow construction of a house addition 66.7 feet from Lake Lemay. Council also acknowledged associated staff reports. Page No. 8 May 6, 1997 Mr. Woolsey explained that he would like to construct an addition to the north of his home and a porch between the addition and the home. He explained that the parcel of land to the east is owned by another party and that he has granted that party an easement so that the parcel would not be landlocked. He informed Council that the owner has agreed to sell the land to him. Responding to a question from Mayor Mertensotto, Mr. Woolsey stated that he agrees to all of the conditions recommended by the Planning Commission. Councilmember Smith asked if acquisition of the adjacent parcel will occur within sixty days, since one of the conditions recommended by the Commission is that construction begin within 60 days. She also asked whether Mr. Woolsey has any plans to add a deck or any other structure close to the lake. Mr. Woolsey responded that he will purchase the property immediately. He stated that he has no future plans and cannot imagine adding anything more on his property. ( Councilmember Huber moved adoption of Resolution No. 97 -18, "A -- RESOLUTION GRANTING A WETLANDS PERMIT ALLOWING THE CONSTRUCTION OF A HOME ADDITION TO WITHIN 66.7 FEET OF LAKE LEMAY." Councilmember Smith seconded the motion. Ayes: 4 Nays: 0 CASE NO. 97-06, SKEMP Council acknowledged an application from Mr. Charlie Skemp for a conditional use permit to allow construction of a detached double garage at 1060 View Lane. Council also acknowledged receipt of a revised plan for the proposal and associated staff reports. Mr. Skemp informed Council that he would like to replace his existing single detached garage that is about 45 years old with a detached 24' by 22' double garage. He explained that the garage needs to be moved five feet east of the existing structure in order to save an apple tree and to meet the 10 foot setback. He stated that there is an existing 10 by 7 1/2 foot storage shed which also needs to be moved further from his neighbor's property line. Mayor Mertensotto asked if it is Mr. Skemp's intent to park cars in front of the garage. Page No. 9 May 6, 1997 Mr. Skemp responded that he is not planning to park cars on the slab. He stated that the existing garage is only wide enough for one car, and the new double garage and the driveway will be wide enough so that both cars can enter the garage. Mayor Mertensotto asked what the purpose is for the additional concrete that is proposed. Mr. Skemp responded that he thought a twelve foot concrete apron in front of the garage would be better than a four foot apron. Councilmember Smith informed Mr. Skemp that she does not want to approve something with the implication that Mr. Skemp will be parking two cars in front of the garage as well as vehicles in the garage. Mr. Skemp responded that he does not plan to do so. He explained that the slab would not be for additional parking, as he just has two cars. He also informed Council that the garage will match the style of the garage to the east. Mayor Mertensotto stated that often times people add a concrete area to the side of their garage and store things on it. He pointed out that the slab cannot be used for storage. Mr. Skemp responded that he promises he will never buy or park a recreational vehicle on the concrete. He asked if he would be restricted from constructing a concrete walk around the garage the width of a sidewalk. Mayor Mertensotto responded that a walkway would not be a problem as long as it is no wider than a standard sidewalk. Councilmember Krebsbach moved adoption of Resolution No. 97- 19, "A RESOLUTION GRANTING A CONDITIONAL USE PERMIT FOR A DETACHED DOUBLE GARAGE AT 1060 VIEW LANE." Councilmember Huber seconded the motion. Ayes: 4 Nays: 0 CASE NO. 97-07, SWEENEY Council acknowledged an application from Mr. Ed Sweeney for preliminary plat approval for the division of property located at the �, ) northeast corner of Wentworth and Wachtler Avenues into three Page No. 10 May 6, 1997 single family lots. Council also acknowledged associated staff reports. Mr. Sweeney, and Mr. William Brown, from Paul McLagan Land Surveyors, were present for the discussion. Referring to the Planning Commission minutes and staff report, Mr. Brown stated that Mr. Sweeney recently purchased the land and proposes phasing the subdivision. He explained that in about a year Mr. Sweeney will be subdividing the easterly lot for his son, and at some time in the future the other lot would be sold to Mr. Sweeney's brother. He explained that Mr. Sweeney will be coming to Council for approval of a final plat for two lots and then in the future would come back with a second final plat. He stated that Mr. Sweeney does not want to have to come back in the future and go through the Planning Commission and Council, but that he does not wish to plat the property as three lots at this time. He informed Council that Mr. Sweeney would like Council to approve a preliminary plat that would allow two final plats. Mayor Mertensotto responded that a final plat must be consistent with the preliminary plat and stated that it would not be consistent unless three lots are shown on the final plat. Mr. Brown stated that Mr. Sweeney is asking that the preliminary plat be regarded as a phased subdivision. Attorney Hart stated that it would be possible that Mr. Sweeney could file a final plat with Lot 1 and an outlot that he wishes to plat in the future, which would then require replatting. He stated that the preliminary and final plat would have consistency if there were an outlot that could be divided in the future. Responding to a question from Mayor Mertensotto, Mr. Sweeney stated that there will be two driveways for the three lots, one being a joint driveway access for Lots 1 and 2. He explained that the reason why he does not want to divide the property into three lots right away is that if his brother does not relocate for some reason, he would not want to divide Lot 2. Councilmember Smith stated that just the entrance to the street would be shared. Mr. Brown explained that the preliminary plat shows two separate driveways that come together about five feet from the property line to share an access onto the county road. He explained that Mr. Page No. 11 May 6, 1997 Sweeney felt that a combined access would be the safest way to introduce traffic onto the road. Mayor Mertensotto was concerned about whether the platting of one lots as an outlot for future division without future Planning Commission review and Council approval is appropriate under the zoning ordinance. Public Works Director Danielson responded that normally this type of proposal occurs on a much larger scale in the industrial park, and that the Sweeney proposal is unusual in that it relates to only three lots. Attorney Hart stated that phased platting frequently occurs in larger subdivisions, and it is not uncommon for developers to submit preliminary plats and then come back to final plat outlots as they develop. He stated that Mr. Sweeney would have preliminary plat approval and could seek final plat approval without starting the planning process over again. Councilmember Smith asked why the county would want the curve area, shown as dedication to the county on the plat, to remain. Mr. Sweeney responded that when the county reconfigured the roads to a "t" intersection, the county no longer had a need for the crescent shaped parcel, but the city constructed trail and utilities there. He stated that he would just be providing a dedicated location for those facilities. Councilmember Huber stated that he does not understand the purpose of the Planning Commission wanting ten feet of additional right -of -way. Mr. Brown responded that he does not know. Mayor Mertensotto stated that it could be dangerous building driveways onto Wentworth, and the second lot split might not be routine. He felt that Council should impose a condition that the preliminary plat for the additional lot division would only be good for two years. He further stated that if there are any changes to the plat the applicant would have to return to Council. Public Works Director Danielson stated that the county must grant approval to the driveway access, and city approval of the plat should be subject to county approval of the driveway. Page No. 12 May 6, 1997 Mr. Sweeney stated that he would be willing to grant the ten foot easement recommended by the Planning Commission and asked if it would be right -of -way that would go to the county. Mr. Brown responded that it would be dedicated to the city, along both Wentworth and Wachtler. Councilmember Smith stated that she would be comfortable leaving the decision on the easement up to the county. Mayor Mertensotto pointed out that if the road is turned back to the city, the city could have a problem if Mr. Sweeney came back in three to five years for division of the outlot and the county no longer had jurisdiction. Mr. Brown informed Council that Commissioner Tilsen's recommendation for the additional ten feet was only related to drainage. Public Works Director Danielson stated that the commission was concerned that the county might not approve any driveway access, which is why the commission suggested that driveway locations not be a part of the plat approval. Mayor Mertensotto suggested that approval be subject to county approval of access points and if the county turns back the right -of- way to the city, the access would be subject to city approval. Attorney Hart stated that the county has the right to review all final plats, and if there is a change in circumstances that affect public safety, health and welfare, the Council certainly has the right to require a change. He stated that Council can reserve discretion to review whether there has been any change in circumstances that would affect the public welfare, etc. Mayor Mertensotto directed staff to modify the proposed resolution approving the preliminary plat, as it relates to access and the delayed platting of Outlot A, for Council approval on May 20. He stated that Council can give Mr. Sweeney an indication that the plat is approved this evening by consensus but the official approval would be on May 20. CASE NO. 97 -08, SATHER Council acknowledged an application from Mr. Steve Sather for a �. wetlands permit to allow construction of a three season porch Page No. 13 May 6, 1997 Mr. Cook explained that AMB, on behalf of Ameritech, is the developer of record and that Ameritech also owns the former R.L. Johnson building on the adjoining property. Responding to a question from Mayor Mertensotto, he stated that there had been discussion at the last Council review of the matter about combining the two properties for shared truck access for the two buildings, but that is a long -range plan which he is not seeking approval for at this time. Mayor Mertensotto stated that if the owner wishes to combine the two projects in the future that would be a separate issue with separate addition and deck replacement at 1902 South Lane, which would bring the deck to 70 feet from the wetlands area. Council also acknowledged reports from the city planner and administrative assistant. Mayor Mertensotto informed Council that he would not participate in the discussion or action because the home is owned by a member of his family. Mr. Sather stated that he met with each of the adjacent property owners to explain what was being proposed and that he also met with the architectural committee and received its approval. He informed Council that the proposed porch is in the exact location of the existing deck. Councilmember Huber moved adoption of Resolution No. 97 -21, "A RESOLUTION GRANTING A WETLANDS PERMIT ALLOWING A DECK REPLACEMENT AND A NEW ADDITION TO THE HOUSE AT 1902 SOUTH LANE." Councilmember Smith seconded the motion. Ayes: 3 Nays: 0 (� ) Abstain: Mertensotto CASE NO. 97-09, OPUS Mr. Arne Cook and Mr. Dave Bangasser, representing OPUS and AMB, were present to request approval of a building permit and tax increment fmancing assistance for the redevelopment of the George's Golf Tee property. Council also acknowledged a memo from Administrative Assistant Hollister and Treasurer Shaughnessy and letters from Mr. Cook and Mr. Martin Coyne, AMB Vice President, regarding the proposed Mendota Heights Gateway Commons development. Mr. Cook explained that AMB, on behalf of Ameritech, is the developer of record and that Ameritech also owns the former R.L. Johnson building on the adjoining property. Responding to a question from Mayor Mertensotto, he stated that there had been discussion at the last Council review of the matter about combining the two properties for shared truck access for the two buildings, but that is a long -range plan which he is not seeking approval for at this time. Mayor Mertensotto stated that if the owner wishes to combine the two projects in the future that would be a separate issue with separate Page No. 14 May 6, 1997 requirements. He pointed out that any site development cannot have more than 75% site coverage (building and impervious surface). Mr. Bangasser reviewed the site for Council and the audience. He explained that there is about fifty to sixty feet between the site and the R.L. Johnson building. He stated that the site has a great deal of visibility from T.H. 55, which is a critical issue, and it is understood that the city considers the property a gateway into the city. He stated that the proposal is for an office /warehouse facility with an entrance and parking along the front and truck docks to the rear. He informed Council that the building has been "bent" at a 45 degree angle to break up the 150,000 square foot building and architectural interest has been added as well as screening of the truck dock area from the highway. He showed architectural renderings of the proposed building and informed Council that it is very similar to a project that OPUS completed in Eden Prairie. He stated that the exterior will be smooth panel pre -cast panels with reveals cast into the panels so that the product looks like Drivit. He further stated that there will be more glass in the building than is typical and there will be decorative grillwork with recesses at each entry. He informed Council that approximately 20% or more of the building will be office, depending on tenant interest. He stated that the Eden Prairie facility was anticipated to be 20% office but ended up with a considerably higher percentage of office finish. Councilmember Krebsbach asked if there is sufficient parking planned should the building have a higher ratio of office space. She also asked about the ratio of green space. Mr. Bangasser responded that if the office space ends up to be greater than 20 %, there would not be the need for the planned number of truck docks, so adequate parking could be provided. He informed Council that building panels are knocked out for parking bays, and wherever bays are not needed, the blacktop can be striped for parking. He stated that each time there is a new tenant, a building permit will be required to finish the tenant space and the city code will have to be met for parking as well as other requirements. He indicated that 28% to 29% of the site will be green space. Mr. Cook stated that the cost of the construction is such that the facility could not be just warehouse — the owner will need to get a certain price per square foot and that price would not be competitive with bulk warehouse space. He informed Council that the Eden Prairie facility is approximately 50% office space, and because of the Page No. 15 May 6, 1997 high quality of the proposed project is likely to attract more office, particularly the portion of the project facing T.H. 55. Councilmember Smith stated that Council would be delighted if there were a higher percentage of office space but would like to know that the project can accommodate the parking that would be needed. Mr. Cook responded that the worst thing the owner could do is not provide enough parking for employees. He stated that OPUS and AMB have agreed to the Planning Commission requirement that there will be no on- street parking. Councilmember Krebsbach asked if the plan is to operate the project as a unit with the R.L. Johnson building in terms of trucks being in the common area in the back. Mr. Cook responded that all he is asking for now is approval of this project on a stand -alone basis and would come back to the city in the future if anything else is proposed. Mayor Mertensotto stated that the project must stand on its own — at 1 such time as a request is made to combine the two projects, the City Council which is seated at that time would have to make a decision on combination. He pointed out to the applicants that once Council approves a project, it is expected that the project will be constructed in accordance with the approved plan. Mr. Cook responded that he understands the requirement and does not anticipate that there will be any changes in the design of the building. Responding to a question from Councilmember Smith, he stated that the rear of the building will be finished the same as the front except that there will not be decorative grills or recesses. He also confirmed that all required setbacks will be met. Councilmember Krebsbach stated that she feels the tax increment request is too high. Treasurer Shaughnessy responded that the proposal before Council estimates taxes at $1.60 per foot in the finished building, which over the life of the tax increment district would amount to $1,200,000. He explained that the present value of that amount is $769,000, but the figures used by the applicants are higher because they project a five percent increase in taxes each year. He pointed out that taxes on the two projects that are the oldest pay -as- you -go projects, Lennox Page No. 16 May 6, 1997 and VGC, are lower than they were in the first full year of assessment. He stated that another aspect which could impact the tax increment request is legislation changes. He explained that there has been some discussion by the legislature on changing the tax capacity on industrial facilities, which would result in reduced taxes. Councilmember Smith agreed, stating that the legislature is considering reducing the tax capacity of commercial and industrial buildings, which could ultimately affect the actual increment that is available and which would mean that the applicant would actually be receiving less back in pay -as- you -go TIF. She further stated that if the property owner ultimately pays less taxes and would receive less TIF, he would still not be in a worse position. Mr. Cook responded that there are a number of assumptions that go into the request and it is the developer's risk. He stated that the city's tax rates are less than he has found in any other city, and he understands the equation. Councilmember Smith pointed out that the Planning Commission asked about setbacks and the planner indicated that the property abuts railroad trackage. She asked if that reference is to the trail and abandoned Soo Line property and further asked how that has been treated in other developments. Administrator Batchelder responded that the developer on the east side received a setback variance of 11 feet from the 50 foot requirement. He stated that in previous cases, like the R.L. Johnson building, the rear yard setback was not required in cases where there is a train track running along the rear of the property. He ftuther stated that he believes it was the interpretation of the city planner that no variance is required for this project. Councilmember Huber pointed out that the property is no longer railroad right -of -way. Mr. Bangasser responded that if Council's interpretation is that a variance is required he would like to ask for a variance. Councilmember Smith stated that the landscaping for the front of the property is nicely designed but that she has not seen any landscaping for the back. Mr. Bangasser responded that what is proposed puts an emphasis on screening of the docks and the front of the building, but that he sees Page No. 17 May 6, 1997 no value in providing screening to the rear. He explained that there will be grass at the rear and trees along the lot lines but no trees at the rear of the property. Mayor Mertensotto stated that AMB has requested that assignment and transfer of TIF proceeds to related entities or third -party future owners be permitted. He informed Mr. Cook and Mr. Bangasser that the city does not permit TIF transfers. Mr. Roger Simpson, from AMB, stated that AMB is an advisor to Ameritech. He stated that AMB has a fiduciary responsibility to AMB to manage this property in the most prudent manner possible and, while the business strategy of AMB and Ameritech is to hold properties long term, there could be a future need to sell off properties to match funds to meet their obligations. Mayor Mertensotto responded that Council's position is that there can be no transfers. He stated that pay -as- you -go increases the value of the project and the city will not contribute TIF to enhance the resale value of properties. Mr. Simpson stated that in this case, this is a pension fund that is purchasing property as a core investment for long -term holding. Mayor Mertensotto responded that Council cannot grant the request. He stated that if the property is sold, the TIF would terminate, as has always been Council's policy. Responding to a question from Councilmember Krebsbach, Treasurer Shaughnessy stated that the calculations for the requested $768,695 in pay -as -you go are based on a projected 5% annual tax increase, and that is the developers' risk. Mr. Cook stated that the developers are asking for less than what the project generates at 5 %. He stated that at the 5 %, the project would generate $981,000 and the total TIF request is for $883,000 including $114,500 up front. He explained that the $114,500 is to cover part of the cost of soil correction. Mr. Bangasser stated that the results of recent soils testing indicate that the soil corrections will cost about $150,000, but the developers are not revising their request for up front TIF. Mayor Mertensotto stated that the letter from Mr. Cook and Mr. Coyne spoke about a request for $98,163 for costs related to land Page No. 18 May 6, 1997 acquisition. He informed Mr. Cook that the city does not do land write- downs. Mr. Cook responded that the reference in the letter is to the triangular site that is not part of this development. He explained that the city's staff had suggested that it be acquired and developed as part of the project because it would be a very difficult site to develop and serve with utilities. He stated that the Gateway Commons project cannot afford to acquire the site but if the city finds that it would be beneficial, the developers would acquire, landscape and maintain it and incorporate it into the development. He stated that the up front cash that is requested is for the acquisition and improvement of the parcel, based on a negotiated asking price, is $98,163. Responding to a question from Mayor Mertensotto, Mr. Bangasser stated that acquisition of the parcel is not needed in order to meet the green space requirement. Mr. Cook stated that if Council finds that it would be in the city's best interest, the developers would purchase and landscape the triangular parcel and maintain it. Otherwise, they would not purchase it. Mayor Mertensotto responded that there is no public purpose in using TIF for the parcel. He stated that there is serious concern about whether the city should invest $98,000 to acquire the parcel when it has no public purpose. He pointed out also that given the experience older projects have had, the project will not experience a 5% annual tax increase and the developers have no guarantee from the city — the project would receive the increment it produces. Mr. Bangasser responded that if the project ends up with more office it will generate more taxes, which makes him feel more comfortable about the risk. Mayor Mertensotto stated that the most the city could guarantee is the $114,500 up front payment and that he does not think that Council could justify the $980,000 TIF from a public purpose standpoint. He asked with the developers could live with a TIF contribution of $500,000. He stated that if the tax growth percentage were scaled back, this would be an appropriate amount, but that the city could not justify $900,000 without greater public purpose. Page No. 19 May 6, 1997 Mr. Simpson responded that he would have to take that offer back to .Ameritech to see if they would want to move forward with the project. Councilmember Huber stated that there are several issues: from a tax inflation standpoint, anticipated tax capacities that are considered to be more correct should be used; Council questions whether it would want to put $900,000 in the TIF agreement; and, there can be no transfer of TER Mr. Cook asked if he understands correctly that Council would approve $114,500 up front and $500,000 in pay -as- you -go and would not like the developers to pursue acquisition of the triangular parcel. Mayor Mertensotto responded that he does not see a public purpose to the extent of $98,000 for the acquisition of the triangular parcel. Mr. Bangasser stated that the developers have a $50,000 up front soil correction cost that they did not know about two weeks ago. He stated that Council is suggesting that the developers come back with a package that is less on pay -as- you -go and that he would ask Council to consider the additional $50,000 in soil correction up front, making the up front TIF $164,000. He explained that the soil will have to be excavated down fourteen feet, which is not a typical soil cost. Councilmember Smith responded that Council is usually willing to compensate for soil correction, but other items on the list are not normally included, so there is no trade -off. Mayor Mertensotto stated that the applicants are requesting $980,000 and he is suggesting scaling the request back to $500,000 in combined up front and pay -as- you -go. Mr. Bangasser asked if the project meets Council's approval so he can go back to the investment board and tell them it has been approved except for the TIF. Mr. Simpson stated that he would have to go back to Ameritech to see if they wish to proceed and would notify the city in writing prior to the next meeting. Mayor Mertensotto stated that Council cannot commit itself to the project or the TIF but that he would be willing to consider $500,000 Page No. 20 May 6, 1997 in combined TIF for this project on the condition that the developers enter into a developers agreement. Attorney Hart stated that he has provided the developers with a sample of the developers agreement which has been used for other projects. Mr. Cook asked if Council would give approval of the project as proposed with $500,000 in TIF so that he could go to the board and give them that information. Mayor Mertensotto responded that the applicants have submitted a landscaping plan, have indicated that the plan meets the green space requirement and the plans and specifications for construction of the building are on file and a precedent has been set for the setback. He stated that the only question that remains is on the TIF participation. Mr. Cook responded that he understands that if the Council approves TIF it would be tied to the project as it was designed and presented to Council this evening. Councilmember Huber stated that if the applicants came back with the same project he would support approval. Councilmember Krebsbach stated that her concerns have been addressed but that she would like to see the triangular parcel included. Mayor Mertensotto responded that he has a serious concern with justifying $98,000 in up front TIF for the parcel in terms of public purpose. He also pointed out that the parcel is in separate ownership. CASE NO. 97 -10, Council acknowledged a request from Mr. Cory Tollefson for TOLLEFSON a pre- application conference regarding development of a townhome project on four tax - forfeit lots immediately south of Centre Pointe Drive. Mr. Tollefson stated that before he makes a presentation, he would like an indication of whether Council would consider the rezoning of the property from B -1 to R -1 or MR -PUD. It was the consensus of the Council that the property should remain B -1. Page No. 21 May 6, 1997 MN/DOT AGREEMENT Council acknowledged a memo from Public Works Director Danielson regarding an update on the Mn /DOT cooperative agreement projects for Dodd Road/T.H. 110 and the Lexington Avenue Frontage Road. Dakota Bank President John Seidl was present for the discussion. Mr. Seidl stated that retention of the right -in, right -out access to the frontage road is a very important element of the bank's development. Mayor Mertensotto responded that the decision by Mn/DOT to finance only 25% of the frontage road improvement if the access to the highway is retained means that the city contribution must be much greater than anticipated. He pointed out that Mn/DOT would pay 100% of the frontage road cost if the access is eliminated from the design. He informed Mr. Seidl that if the city is faced with an additional $50,000 project cost, the only way construction could be accomplished is if the developers share that cost equally with the city. Mr. Seidl responded that he does not know what the breakdown of percentage of cost sharing is, but that he unerstood that the city had committed to the access. Councilmember Krebsbach suggested that the city negotiate further with Mn /DOT. Mayor Mertensotto responded that further negotiation would delay the project. Mr. Seidl stated that fmding out the day before groundbreaking for the bank that it may cost the bank and SuperAmerica $50,000 more is a real blow. He asked Treasurer Shaughnessy if the project will be generating greater TIF than expected. Treasurer Shaughnessy responded that the building that is now proposed is larger than the original proposals that the tax increment assumptions were based on. Mayor Mertensotto stated that the city could delay payment of the $25,000 from the bank, pointing out that the bank will be selling the residential lots in the future. Mr. Seidl asked if the tax increment note will increase. Mayor Mertensotto responded that it will not, since the developers' agreement is complete and has been signed by all parties. He stated Page No. 22 May 6, 1997 that designing the access in the project was based on negotiations with the state, which had agreed to keep it open. Public Works Director Danielson informed Council that he has been dealing with the Mn/DOT traffic department for months and they have allowed the city to keep the access open. He explained that during the final review process at Mn/DOT, he was informed that if the city keeps the access open the state would only contribute 25 %. Mr. Seidl stated that he just received all of the construction bids for the bank and the Kasota rock has come in over budget by about $50,000. He stated that he would be willing to put Kasota on the sign, and stone, but not Kasota not on the bank, and SuperAmerica and Dakota Bank would be willing to pay $20,000 for the frontage road. He further stated that he felt the bank had a commitment from the city to the access. He stated that he knew about the participation of Mn/DOT and thought it was committed also but that he received notice yesterday about the Mn/DOT response. Mayor Mertensotto asked Mr. Seidl if the bank would put the Kasota stone on the building if the city finances the street. ( ) Mr. Seidl responded that he would not and that he just wants to raise the issue this evening because he cannot do the stone and because he thought everything could be handled this evening rather than at the next meeting. Councilmember Huber expressed his concern over Mn/DOT's change in position. Public Works Director Danielson responded that Mn/Dot very much wants the access closed. Mr. Seidl stated that he would hate to see Mn/DOT not fund the project and then come back in a few years and close the access. Mayor Mertensotto responded that Mn/DOT would have to use inverse condemnation proceedings to close the access in the future. He stated that if the bank puts the Kasota stone on the building the city will fund the street. Mr. Seidl responded that if the other stone is used, the bank would save $45,000 on the building. He informed Council that SuperAmerica has indicated that it will contribute $10,000 for the frontage road and the bank would do the same. He informed Council Page No. 23 May 6, 1997 that he was planning to appear before Council in two weeks to discuss the stone. He also stated that in his opinion there was an agreement with the city regarding the access. Mayor Mertensotto responded that if the access is installed, the city would be protecting the bank's future interests and not the city's interests. Attorney Hart stated that in his recollection, the city agreed to put in a frontage road and there is no obligation from the city to construct any particular access points. Public Works Director Danielson stated that he met with Mn/DOT early in the process and Mn/DOT committed to the access. Councilmember Krebsbach asked if there are any minutes from the discussions with Mn /DOT and felt that the city should pursue the matter. Public Works Director Danielson explained that the people he met with were traffic people and they said that the access could remain and still agree that it does not present a safety problem. The finance staff at Mn/DOT are the people who say that Mn/DOT will not fund the project unless the access is closed. He informed Council that a contract for construction of the road must be awarded in June if the project is to be completed this year. Treasurer Shaughnessy informed Council that the original memo estimated a $169,000 cost for the frontage road and the TIF participation in the project was based on that figure. He explained that at that time staff had no idea how much state money the city would receive, and whatever state contribution there is would reduce the amount of TIF. Mayor Mertensotto pointed out that financing is at least $45,000 short now but the city would keep the participation by the bank at $20,000, and now Mr. Seidl is saying the bank will not use the stone that was required. Mr. Seidl responded that he would use the stone that runs around the building instead because the bids for Kasota for the front came in $45,000 above what was expected. He felt that any money the bank contributes to the frontage road is to benefit the city. Page No. 23 May 6, 1997 that he was planning to appear before Council in two weeks to discuss the stone. He also stated that in his opinion there was an agreement with the city regarding the access. Mayor Mertensotto responded that if the access is installed, the city would be protecting the bank's future interests and not the city's interests. Attorney Hart stated that in his recollection, the city agreed to put in a frontage road and there is no obligation from the city to construct any particular access points. Public Works Director Danielson stated that he met with Mn/DOT early in the process and Mn/DOT committed to the access. Councilmember Krebsbach asked if there are any minutes from the discussions with Mn/DOT and felt that the city should pursue the matter. Public Works Director Danielson explained that the people he met with were traffic people and they said that the access could remain and still agree that it does not present a safety problem. The finance staff at Mn/DOT are the people who say that Mn/DOT will not fund the project unless the access is closed. He informed Council that a contract for construction of the road must be awarded in June if the project is to be completed this year. Treasurer Shaughnessy informed Council that the original memo estimated a $169,000 cost for the frontage road and the TIF participation in the project was based on that figure. He explained that at that time staff had no idea how much state money the city would receive, and whatever state contribution there is would reduce the amount of TIF. Mayor Mertensotto pointed out that financing is at least $45,000 short now but the city would keep the participation by the bank at $20,000, and now Mr. Seidl is saying the bank will not use the stone that was required. Mr. Seidl responded that he would use the stone that runs around the building instead because the bids for Kasota for the front came in $45,000 above what was expected. He felt that any money the bank contributes to the frontage road is to benefit the city. Page No. 24 May 6, 1997 Mayor Mertensotto pointed out that the access would be to benefit the bank and not the city and also stated that Council did not promise the access. He informed Mr. Seidl that in order to pick up the Mn/DOT contribution, the city could agree to closing the access. Mr. Seidl responded that SuperAmerica and the bank are willing to both pay $10,000 for the frontage road in order to keep the access and that he will come back to discuss the stone at another time. Councilmember Smith stated that Council that Council and the bank both made good faith representations, the bank on the stone and the city on the access, and she felt that Mr. Seidl has made a good faith offer. Mayor Mertensotto asked if Mr. Seidl is asking Council to set aside its requirement for the stone because the bank is willing to pay $10,000 for the road cost. Mr. Seidl responded that he is not, but rather that he is trying to get the project going and there was an error made on the frontage road. Councilmember Huber stated that the bank would not want the city to hold up the entire project while staff negotiates with Mn/DOT on the access so the offer has been made by the bank and SA to pay $20,000 for the road. Mayor Mertensotto informed Mr. Seidl that there is no commitment from Council regarding the stone. He further stated that on the basis of keeping the access open, which means that the reduced participation by Mn/DOT will cost the city $45,000, Mr. Seidl is committing $10,000 on the bank's behalf and $10,000 on behalf of SA. Attorney Hart suggested that Council should stipulate how and when the funds will be collected. Councilmember Huber stated that if NhVDOT comes back in the future and closes the access, the city should get its money back from any settlement. Attorney Hart responded that the city has a letter from Mn/DOT that says there can be a right -in, right -out and while there is nothing the city can do in the future to keep Mn/DOT from closing the access for safety issues, the city would have a basis in the future for compensation should Mn/DOT close the access. Ayes: 4 Nays: 0 Ayes: 4 Nays: 0 i CABLE FEES Page No. 25 May 6, 1997 Mayor Mertensotto suggested that the frontage road project can proceed, with reduced state funding, if the bank and SA agree to pay $10,000 each for the project. Mr. Seidl stated that the funds from the bank and SuperAmerica would be paid at completion of the road project. Public Works Director Danielson stated that he feels the crux of the issue is that Mn/DOT understands that if it has to close the access in the future for safety reasons there will be costs to Mn/DOT. Councilmember Smith moved to proceed with the frontage road project with the understanding that Mn/DOT funding will be reduced to 25% of the cost and Dakota Bank and SuperAmerica each agree to contribute $10,000 towards the project. Councilmember Huber seconded the motion. Councilmember Smith pointed out that the limited use permit with Mn /DOT for the Dodd Road trail is only for ten years. She asked whether the city would want a relocation clause and longer permit term. Public Works Director Danielson responded that the limited use permit protects Mn/DOT, because the city is required to maintain and operate the trail at its expense during the term of the permit. Mayor Mertensotto suggested that Public Works Director Danielson be directed to inform Mn/Dot that Council approves the agreement but wants automatic renewal for two successive ten year periods as a condition. Councilmember Krebsbach moved adoption of Resolution No. 97- 22, "A RESOLUTION AUTHORIZING SIGNATURE OF A LIMITED USE PERMIT FOR SP 1917," with the condition that the agreement for the Dodd Road trail be modified to permit two successive ten year automatic renewals unless the agreement is terminated. Councilmember Huber seconded the motion. Council acknowledged a memo from Treasurer Shaughnessy regarding a request from NDC4 that the city accept and then return Page No. 26 May 6, 1997 its percentage of the franchise tax that NDC4 receives form Continental Cablevision. Mayor Mertensotto pointed out that the City of South St. Paul agreed to return 50% of the contribution and felt that the city should do the same. Councilmember Smith moved to accept $7,438.41 as the city's pro - rata share of the Continental Cablevision franchise fees and authorize the return of 50% of that amount to NDC4 for continued production of Insight 7. Councilmember Huber seconded the motion. Ayes: 4 Nays: 0 COUNCIL COMMENTS Mayor Mertensotto asked that the Public Works Department be informed about a number of potholes which should be filled on Cheri Lane and Bluebill Drive. Councilmember Krebsbach complimented Mn/DOT on the landscaping which is being done along Highway 110. ADJOURN There being no further business to come before the Council, Councilmember Smith moved that the meeting be adjourned. Councilmember Huber seconded the motion. Ayes: 4 Nays: 0 TIME OF ADJOURNMENT: 11:27 o'clock P.M. Kathleen M. Swanson City Clerk ATTEST: Charles E. Mertensotto Mayor