Committee Minutes

MINUTES/FINANCE COMMITTEE
Tuesday, June 25, 1996 - 3:45 p.m.

Members present: Carpenter, Babinchak.

1. Matter of offer to purchase City lot (Lot 3, Auditor's Sub- division No. 27.
John Schmisek, city auditor reported his office had received offer from Bill O'Keefe to purchase this lot, assessors have lot valued at $9,900 based on $0.40 sq.ft.; Mr. O'Keefe's offer is $7,450.00 or $0.30/sq.ft.; and their recommendation is to authorize sale of the property. Moved by Babinchak and Carpenter to accept the offer of Bill O'Keefe. Motion carried.

2. Application for abatement of 1995 taxes:
a) E. Dale and Janis M. DeRemer, 1323 Noble Cove
Mel Carsen, city assessor, reported this is single-family home, assessor's had assessed value of $173,700, and applicant asking for reduction in value to $149,700 based on sale of the property in December, 1995 for that price. Mr. Carsen reported they made a new appraisal based on market approach and his recommendation is to approve abatement as submitted.

Moved by Babinchak and Carpenter to approve application for abatement and approve reduction in value to $149,700. Motion carried.

3. Application for 3-year remodeling exemption:
a) Ardell and Connie Fladeland, 1623 8th Avenue South
Mr. Carsen reported that Mr. Fladeland is a contractor and did work himself (replaced brick, windows, etc. and addition to west side of building), and est. increase in value of about $11,000, which includes some added space which does not qualify for exemption, increase of $7,000 which qualifies. He reported that Mrs. Fladeland works in the assessor's office. He stated that the application meets all criteria set out in November of 1995 and only item that doesn't qualify is additional space.
Moved by Babinchak and Carpenter to approve the 3-year remodeling exemption of improvements that qualify. Motion carried.

4. Temporary and overtime statement for May, 1996.
The committee reviewed statement. Moved by Babinchak and Carpenter to approve the statement. Motion carried. (comm. only)

5. Matter of Acme Electric property on N. Washington Street.
Chairman Carpenter presented an item in regards to the property on North Washington Street that Acme Electric purchased from the City, that there has been some discussion over condition of the property and their thoughts as to things that City should have disclosed, ie., one was the fact that there was a landfill on part of the site, they say they weren't aware of that although they had a copy of environmental report before closing which very clearly did say there had been a landfill there, cost an

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additional $40,000 for construction because of that. The second item under discussion was the fact that there had been a fire in the building a number of years ago, with no work by the City to bring property back up to condition, with cost to them of approx. $70,000 which will bring property up well above what would have been normal wear and tear on the building. He reported that he and Mr. O'Leary met with Mr. Kuhlman last week to discuss this matter, and he would like some resolution; that he feels that the City should compensate him for not disclosing outright those facts in manner he thought was appropriate. Chairman Carpenter stated that City probably in completely defensible position in not disclosing or not outwardly disclosing, but sold in as is condition.

Mr. Swanson stated he was not involved in recent discussion, but about year ago when they were upset about another issue, reviewed documents, and Acme did pre-closing soil tests, that they had inspection and buildings sold as is, and City is in a defensible position. He stated that at that time made recommendation to John that if issues involved Acme that ran into additional cost for developing the property, that perhaps should be looked at under economic development but didn't see as liability.

Mr. Carpenter reported that discussions they have had with Mr. Kuhlman, what might settle this, that as member of city government and city, didn't want to have someone extremely unhappy about purchase that occurred between them and City, but also thinks Acme had some obligation in this whole process, and wanted to recommend to committee, and to council, that we offer Mr. Kuhlman a cash settlement of $15,000 to be paid out of Loan & Stabilization Fund and that the building that was used for bike storage that was to be moved, not be moved, and be allowed to become property of Mr. Kuhlman and that satisfactorily resolves any issues or problems. He stated that he didn't know if Mr. Kuhlman acceptable to those terms. Mr. Swanson noted that building already being prepared to be moved to the street department building (council approved at last meeting, and there is public hearing requirement). He also noted that council could stop it. Mr. Carpenter stated he understood that they could make arrangements for storing bikes in building where storing cars, and probably bigger topic is whether City should be storing bicycles and doing this, or contract out with someone else. Mr. Swanson stated they would need storage for evidence. Mr. O'Leary reported he had visited with Capt. MacCarthy, that bid to move building $2800, est. $4,000 for new slab, and $1,000 for electrical service, close to $8,000, that original cost of building just over $10,000 4-5 years ago; and that Capt. MacCarthy thought there would be room in Valley Motors building to store bikes but would need some monies to move bike racks, acceptable alternative. He stated he just talked to Dan Kuhlman about this whole issue, that they did determine that he was

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notified before building closed, stated in report. He reported that Mr. Kuhlman indicated that when he bought the building, he submitted bid for $200,000 and the then chair of the finance committee asked him to increase his bid to $250,000, which he did though there weren't any other bidders, and he felt should recover some costs. Mr. O'Leary stated he thought that $70,000 high to bring to condition of rest of the building, that Mr. Kuhlman interested in building (bike storage) which according to assessing has $10,000 tax value and is on site; building would be used for storage. Mr. Kuhlman suggested settlement of $30,000 cash payment and the bike storage building was fair. Mr. O'Leary stated that he indicated to Mr. Kuhlman that $30,000 was beyond what this committee was prepared to do, that he could meet with committee, or place on agenda for later consideration.

Mr. Swanson stated they had notice, whether Mr. Kuhlman did personally he didn't know, and reason he says that is that there were two items particularly sensitive about this sale: one was that City would do Phase II audit, and 2) the title of that property had unusual covenant, property had been gifted to the City by the Griffith family, and covenant had unusual clauses and their attorney at the time, Doug Christensen, was involved in discussion whether or not with that property's given history could be transferred to private owner. He stated he probably has file that shows Acme's agent was well aware before closing date; that he has no objections to type of settlement discussed, that all things considered would not be out of line; only thing he would recommend is that whatever settlement is reached be documented.

Mr. O'Leary suggested building with $10,000 value, and $20,000 cash settlement, which is less than half of cost to repair building, but part of this is Mr. Kuhlman's responsibility.

Moved by Carpenter and Babinchak that we offer Acme Electric $20,000 cash settlement plus (bicycle storage) building and that be full and complete settlement of all claims or issues in relation to this property. Motion carried.

Meeting adjourned at 4:15 p.m.

Alice Fontaine
City Clerk

Dated: 6/25/96