City of Grand Forks, North Dakota

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17289
October 23, 2000

PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
October 23, 2000

The city council of the city of Grand Forks, North Dakota met in its adjourned session in the council chambers in City Hall on Monday, October 23, 2000 at the hour of 7:00 o’clock p.m. with Mayor Brown presiding. Present at roll call were Council Members Brooks, Bjerke, Hoff, Hamerlik, Burke, Glassheim, Gershman, Christensen, Klave, Bakken, Kreun - 11; absent: Council Members Lunak, Martinson - 2.

Mayor Brown announced that anyone wishing to speak to any item may do so by being recognized prior to a vote being taken on the matter and reminded audience that this meeting is televised.

APPROVE ASSESSMENTS, PARKING RAMP PROJECT
NO. 4796, DISTRICT NO. 11

The city auditor presented and read the assessments as made by the Special Assessment commission and the approval and confirmation of these assessments by the Commission on Project No. 4796, Parking Ramp District No. 11, in the amount of $1,730,300.00, and reported that the public hearing had been continued until this evening.

The city auditor presented information that is being proposed, that the City has some funds that were generated from the prior ramp project in the amount of $442,387.00 and the intention is to apply those funds against the private property and against the Growth Fund line item because that property will be privatized and applied the dollar amount against those properties, leaving a net amount to be assessed, and as they went through the annual assessments for the first five (5) years of the project, they have suggested that the City would pick up those dollar amounts of annual cost to the private property owners and the Growth Fund properties that will be privatized; that there are several sources for those funds, and would not want to tie ourselves to the future for one source, but do need to tie a source up for this year and payment in the next year but as time moves on we do have some cause for change and may have different priorities and different funds, and for the first year the $90,412.00 under the annual assessment plus $6,803.00, suggest would come from the parking operations fund where we capitalized the $200,000 amount into that fund and can use those funds to start, but need to think about the future and the uses of the funds to make sure all of our needs will be met, the sources identified as various alternatives are sales tax and hasn’t designated that as excess sales tax nor as economic growth or as infrastructure because all three of those have potential to fund this annual amount going into the future. He also stated that the rental payments from the Corporate Center tenants is a possibility, both current and future rental payments from there because we still have some additional space in the Corporate Center to lease, and as a final alternative parking operation funds. He stated the other information they need to be aware of is that on the Corporate Center property, the tenants are responsible for payment of special assessments, and have basically split this into what was the original annual assessment of $259,974.00 with its appropriate annual assessment and those will be picked up by the tenants per their lease agreement, and that will average out to about $0.28 a sq. ft., a little higher than the original estimates were but not significantly higher.

COUNCIL MEMBER BABINCHAK REPORTED PRESENT

The city auditor reported that the additional estimate after the Assessment Commission met and made a re-evaluation of benefits, the $298,000, the suggestion will be that that be paid by the revenue stream of the base rent being currently collected, and there are sufficient dollars in that to pay those assessments without an increase to the tenants, and that is also an area where we would have future revenue streams if we lease out additional space. He stated that the keynote of this is on the private property and when you get to the year 2005, the assessment left at that point in time after these adjustments will be about 45% of the original assessment, and it will also be a 10% assessment to those areas of the total cost when include the $2.7 million that went into this out of CDBG funding.

Mayor Brown asked if there was anyone in the audience who had comments to make on these assessments.

Dan Samson, 100 North 3rd Street, stated this is not their parking ramp and not used by other people downtown, and used by people in the Corporate Center, and not fair to assess them anything for this ramp. He asked that they reconsider and put all the special assessments on the Corporate Center.

Mary Weaver, 23 South 3rd Street, asked if when the parking ramp was paid for the City was going to give it to the Corporate Center. The city auditor stated he had not heard discussion relative to that. It was noted that the Corporate Center building only could be sold in the future, and it was noted that giving the parking ramp to the Corporate Center was never in any discussions.

Council Member Kreun stated he had asked question at last meeting how distributed and how we require parking on the other ends of town, and businesses in other ends of town are required to purchase their own parking, maintain their own parking and buy their own property, and becomes a fairness issue that everybody that is in business that has customers is required to have some type of parking, whether public parking lot or whether private parking lot, and did some comparisons and in most cases works out to a little more than $2,000 per parking stall outside of the downtown area, goes all the way from $1700 to $3000 per parking stall in other areas, and if downtown businesses were located in other areas of the city and had to provide their own parking would, and at some point in time have to pay for parking no matter where located, and ramp does have an indirect effect on every business in town, and have to see that it’s fair for the people and the business in town all over town.

Council Member Hamerlik asked why they were not required to have parking lots downtown, that normally any home, business, etc. there is a requirement.

Tom Burris, Best Western Townhouse, stated they have ample parking, and if parking is the issue then need to re-assess the credit on those that do have parking, that the Townhouse was built with ample parking, and with adjustment they are still paying over $25,000 for a block that’s 6 blocks away and has ample parking.

Dennis Potter, city planner, reported that some time in the past the City made a decision that they would have a downtown parking district and part of that process is that when we have a development in downtown come to the Planning Office and when they do their analysis, they would not require them to have the same amount of parking that somebody in other areas of the city would have because the City made a commitment to provide parking, either in the form of surface parking or in the existing parking ramp; that was the trade-off and that is why the Planning Office doesn’t require them to provide their own surface parking like other commercial areas of town.

Henry Valdur, former business owner downtown, stated that if the council allows this, will raise taxes higher and have more of a ghost town than have today.
Don Olson, 3302 Belmont Road, member of Camrud Law Firm and representing the Camrud Law Firm and on behalf of Brady Martz, that they occupy the fifth floor of the Corporate Center, that Brady Martz is on the third and fourth floors; and First National Bank is on the first and second floors. He stated that going back to 1997 the Urban Land Institute, professional planning organization, came into Grand Forks following the flood and studied downtown Grand Forks and concluded in their report that without a lead anchor downtown and other key tenants coming into downtown, that they wouldn’t have a downtown, that’s the news that existed in this community in 1997, that they were approached as was First National Bank as lead tenant by the City on whether they could come back downtown, that we were in the First National Bank building downtown, which was burned down and Brady Martz was across the street and that was burned; that these three tenants could bring 150 people downtown, the City was playing catch up at that time because First National Bank had on the drawing boards two sets of plans to locate in the southwest quadrant of the city, that First National said they would take a look and then his firm and Brady Martz said they would also look; the City came through with a plan called the corporate center, it moved from corner to corner on 4th and DeMers and plan stayed the same, two buildings and a crosswalk, that they had many meetings and rents would be equivalent to pre-flood rents, that their rents pre-flood were $10.00/post-flood $10.00 inclusive of everything (janitorial, real estate taxes, utilities) and they were paying that for the fifth floor of the US Bank, and their current rental is substantially more than that, they talked to the City about other common area expenses, which would include real estate taxes, and emphasized that the Corporate Center is paying close to $150,000 in real estate taxes to the City of Grand Forks, they talked about special assessments and at that time believed that the people from the City they were talking to employed the same methodology that was used for the downtown ramp on 1st Avenue and came up at $0.20/ft. as the amount that the Corporate Center tenants would be paying, and that they agreed, heard the figure $0.28/ft. and that’s not a problem, and that is within reason, and has heard that they are going to take excess funds (over payments made for the downtown parking ramp) and use that to off-set the assessments on other private projects, but overlooks the fact that the First National Bank, their law firm were in that assessment district from beginning and paid their fair share as property owners assessed for that, that they don’t have a problem paying their fair share for a second parking ramp, that they have 29 people and most of them park in the ramp and eat in downtown cafes, as well as people in other businesses in the corporate center, and people using the parking lots downtown are providing business not just to the restaurants but other small businesses downtown. It isn’t their intent to be heavy with any other business downtown, that their intent is to make downtown go and grow and make it bigger and better. He stated they were told at the outset of what their special assessments were going to be, part of that assessment they will pay out of their own pocket, and part of that assessment needs to be paid out of the rents because that’s what they bargained for, that within the $7.25 per sq.ft. that they are paying they paid for 60 parking spots, and that’s what was agreed upon, that they and every tenant in the Corporate Center will pay their fair share but don’t want to pay more than their fair share.

Council Member Hamerlik asked if there were any parking lots that were owned or paid for by any other firms but now in the hands of the City. The city auditor stated that Project 2053, when several of the surface lots were put in the downtown area that were assessed back against various property owners, and the furnishing of parking is one of the reasons there is a credit back for parking to those who provide spaces, and he didn’t recall if there were lots that were owned privately and now owned by the City.

Council Member Bakken stated that there has been a lot of money in infrastructure that was put in downtown for these businesses (renovation of buildings, streets, watermains, sewer separations, paid $2.7 million for the ramp), thinks we have a good solution worked out and everybody downtown benefits each other.

Loyd Samson, 100 North 3rd Street, stated that all the money that Grand Forks received was because of the downtown, that they didn’t want the corporate center, that their tenants were in prior to the corporate center, and since the corporate center moved downtown they haven’t received any tenants at all, and hasn’t helped them.

Todd Burris, Best Western Townhouse, stated he feels the Corporate Center is going to be a big influence in the downtown and is needed, doesn’t have problem with paying for this but does think that $25,000 is too high as they have ample parking, that they have 140 spaces with 101 rooms, and would like extra credit for that space and take off approx. $11,000 and bring down to approx. $15,000, and feels that’s fair and wouldn’t mind paying that.

Lonnie Laffen, Special Assessment Commission, clarified that they did take into consideration number of parking stalls that any individual business has in downtown, and number of stalls taken as a credit back against their assessment, and if had adequate parking stalls you received credit off the assessment, and everyone’s current parking is figured into the formula.

It was moved by Council Member Brooks and seconded by Council Member Babinchak that these assessments be and are hereby accepted and confirmed, and to move ahead with the special assessment plan as outlined by the city auditor; and that they be levied against the property benefited in 19 years of principal together with interest on the unpaid balance yearly, to be collected with other taxes by the proper authorities.

Council Member Gershman, Council Member Christensen and Council Member Glassheim asked to abstain from voting on this matter, and it was so moved by Council Members Babinchak and Kreun. Carried 9 votes affirmative.

Council Member Bjerke stated that according to his figures the non-Corporate Center people after 2004 would owe in principal $264,000, and moved to take $264,000 from the Growth Fund this year and use those funds to pay that amount. Council Member Hoff seconded the motion.

Council Member Hoff stated that the proper way to do this is to bring it through committee to see if that might work, and withdrew his motion. The amendment died for lack of a second.

Upon call for the question and upon roll call the following “aye”: Council Members Brooks, Hamerlik, Burke, Klave, Babinchak, Bakken, Kreun - 7; voting “nay”: Council Members Bjerke, Hoff - 2; Council Members Gershman, Glassheim and Christensen abstaining. Mayor Brown declared the motion carried.

REVIEW MATTER OF SPECIAL ASSESSMENTS AND
TAPPING FEES BACKGROUND, HISTORY AND OPTIONS

Mr. Grasser, acting city engineer, reported on the tapping fees general policies and read the statement of intent - “When deemed necessary for the proper and timely installation of public utilities, roadways, and associated items, the City Council may impose tapping fees for area which will be served, but will not provide an immediate contribution to project costs. It is intended that the total project costs associated to the tapping area be reimbursed to those entities providing the up-front funds for each project. The intent is to prevent an undue financial burden on those entities providing the up-front costs and to minimize a windfall benefit to those entities benefiting from a project, but not contributing financially.” He stated that this is written so that the monies could come from either the City or private individuals/companies. He stated that there is a depreciation schedule on the tapping fees so as time goes by, the City does not recoup all of the capital costs, and do not recoup any of the financing carrying charges. A listing of the tapping fee projects had been included in their packets; and have identified that there’s about $18 million in outstanding tapping fees for the city. He reviewed the special assessment policies and the basic theory is as follows: Infrastructure improvements are recognized as benefiting a property by increasing the quality of life through delivery of infrastructure services. The City of Grand Forks has a tradition of allocating the costs of those improvements directly to properties receiving the benefit. Each property that has developed in the past has paid for their portion of the infrastructure which fits the overall long-term development plan of the City. Each future development is expected to continue this process. In this way, individual projects will contribute their portion to the overall growth and quality of life of the entire community. He noted that also included was how special assessment benefits are allocated and districts established.

Mr. Grasser reviewed map and outlined steps that the City has taken to try to minimize special assessments in the southend in general, and showed that the City has tried to make considerations wherever they can to help keep those to a minimum. He noted that annexation was done in strips rather than annexing entire parcels. He noted several ways they tried to minimize the impacts to the property owners: our basic City policy when using federal dollars would have us using 80% federal dollars and 20% special assessed; using CDBG funding, etc.; allowed a temporary rural section road on 44th Avenue South to the Stadter property at their cost (also watermain); that some of the properties received benefit from projects funded by the School District; that some of the assessments have been delayed by several years; and also noted the payments that were made to individuals on the southend drainway and was attached so they could see what the land values were when acquired.

Mr. Grasser reported that a FAX had been received from Grant Shaft attorney for Useldinger Brothers, withdrawing the protests on Projects No. 4838.1 and 4839.1.

Mr. Grasser reported that information showing potential impacts to various utility rates if the City chose to take some of the special assessments and turn them into tapping fees, because somebody has to pay the cost of the bonds, bonds have already been sold.

Mr. Grasser reported that there were a series of 7 individual projects that have been protested, showing total assessment amount and total protested amount, and copies of the engineer’s report showing original scope of the project, time table and original assessment district.

Mr. Grasser reported that under the southend drainway project, Project No. 4669.3, the City was paying $15,000/acre for purchase, some $17,500/acre. The city auditor also reported that the City does recover administrative fees on a project, engineering fees on a project, interest during construction, and also recover miscellaneous advertising, etc. through the 21% mark up; Mr. Grasser noted that with a 21% markup that the City had an outside consultant do most of the engineering, otherwise 27-28%.

Council Member Hoff asked if property owners wished to donate land and see their assessments lowered; Mr. Swanson advised that there would be no provision in special assessment laws to do that, maybe able to jump through some hoops in calculating whatever that purchase price is, and rather than pay the property owner the City would hold those funds as a credit back against the assessments; but no provision to in lieu of determination of benefit forgive assessments or to exclude assessments entirely, the assessments would be based upon total project cost.

RECEIVE AND FILE WITHDRAWAL OF PROTESTS ON
PROJECTS NOS. 4838.1 AND 4839.1

Council Member Hamerlik moved to receive and file the withdrawal of protests on Sewer Projects No. 4838.1, District No. 399.1 and Watermain Project No. 4839.1, District No. 264.1; the motion was seconded by Council Member Glassheim. Carried 12 votes affirmative.

APPROVE ASSESSMENTS FOR SEWER PROJECT NO.
4838.1, DISTRICT NO. 399.1 AND WATERMAIN PROJECT
NO. 4839.1, DISTRICT NO. 264.1

The city auditor presented and read the assessments as made by the Special Assessment Commission and the approval and confirmation of these assessments by the Commission as follows:

Sewer Project No. 4838.1, District No. 399.1 in the amount of $241,854.00
Watermain Project No. 4839.1, District No. 264.1 in the amount of $102,900.00

and reported that the legal notice to the public that these assessments would be presented to the city council at its meeting on October 16, 2000 and continued until this meeting had been published as required, and further that protests and grievances had been withdrawn.

It was moved by Council Member Hamerlik and seconded by Council Member Babinchak that these assessments be and are hereby accepted and confirmed and that they be levied against the property benefited in 14 annual installments of principal together with interest on the unpaid balance yearly, to be collected with other taxes by the proper authorities. Carried 12 votes affirmative.

CONSIDER PROJECTS UNDER PROTESTS; AND APPROVE
ASSESSMENTS FOR SEWER PROJECT NO. 4669.3, PAVING
PROJECT NO. 4807, SEWER PROJECT NO. 4939.0, PAVING
PROJECT NO. 4940.0, WATERMAIN PROJECT NO. 4919.1,
SEWER PROJECT NO. 4939.1 AND WATERMAIN PROJECT
NO. 4706.1

Mayor Brown asked for discussion on the matter of projects under protest: Storm Sewer Project No. 4939, District No. 401; Storm Sewer Project No. 4939.1, District No. 401.1; Paving Project No. 4807, District no. 564; Paving Project No. 4940, District No. 570; Watermain Project No. 4919.1, District No. 265.1; Storm Sewer Project No. 4669.3, District No. 386.3; and Watermain Project No. 4706.1, District No. 260.1.

Grant Shaft, 2850 24th Avenue South, attorney representing Useldinger Brothers Farms, distributed handout to the council members of area that Useldinger Brothers farm, assessments against the properties and how they apply to the Useldinger property. He noted an area that has been platted as Southern Estates First Addition to the city sometime ago in conjunction with the School District moving their offices out in that area, and when that property was platted it triggered some improvements out there which run up and down 45th Avenues South and South 25th Street, except drainway; and what concerns them is the assessments as they attach to the land that’s currently being farmed. he stated that the Land use development plans for 2015 has been adopted by the City and within that plan sets forth a criteria as to when property is to be annexed, and at the time of this annexation there were a number of individuals who were part of this annexation that were protesting that the City was leaping over large areas of undeveloped land to bring in lands that would make them contiguous to the city, annexing them and then improve and assess. He stated that did pass but the Useldinger’s lands were annexed even though they didn’t meet the minimum criteria under the land use plan. He stated that land is customarily annexed slowly and contiguous to the city and when ready for development, so don’t have problem have here today; and that his client’s land is not going to be developed for residential purposes for 15-20 years down the road, not immediately developable, he can’t sell this property and recoup enough to pay the specials; and the annexation was brought in to make the golf course area contiguous to the city. He stated that when the City annexes, the engineering department has a policy of stretching 140 ft. beyond the limits of the annexation and bringing that strip in and subjects that strip to special assessment. he stated these would normally have been subject to a tapping fee, and for any other reason than the golf course, this land would have been tapped; and that’s the protest that have is that it is his client’s position that the special assessments that have applied should be assessed as a tapping fee and not an immediate special assessment.

Council Member Glassheim asked if we have the legal ability to have a tapping fee to something that is already in the city limits. Mr. Swanson stated that the determination of whether you utilize a tapping fee or a special assessment is a legislative determination, you can impose a tapping fee on property within the city limits or without the city limits if you in your legislative capacity choose that you will carry that cost until whatever the trigger mechanism is; that the city council can do that however, that is a decision at the time the project moves forward to be made, it is not a basis for a protest for the hearing you have this evening. He stated that the council could rescind all proceedings with regard to a particular special assessment and start from the beginning, the down side of that is that you also have to have the financial ability to carry those costs for the entire project for whatever period of time you delay it, and in this case would be a minimum of one year; that you have already adopted your 2001 budget and do not have any ability within that 2001 budget to carry projects of that nature.

Mr. Swanson stated that the property owners or the council could have made those decisions. Mr. Shaft stated it wasn’t in relation to the creation of the district, but in relation to the amount of the assessment, that not aware of what the assessments were going to be; that the land doesn’t make that kind of money and it’s not saleable, that if you can’t sell the land to pay the taxes; that this land is going to be used as agricultural land, either cash rent or farm, and his clients pay about $51,000/year on the installment of specials.

Council Member Gershman stated where there are similar arguments made each time by the public, it suggests that we have a problem that we should address, and not sure that we shouldn’t revisit how we do special assessments in Grand Forks, maybe all projects need to be spread on a greater amount of the city. He stated he would like to see task force with staff and council members that have some expertise to study what we are doing and come up with something that might be more equitable. He stated that if we were to develop in the next 6 to 8 months a new system of special assessments and we approved this tonight the way it stands, would we be able to revisit if it was a more equitable position had we had it in place to help these people, and be able to revisit it or once it’s bonded it’s over. Mr. Swanson stated that once you certify the assessments you do not have the opportunity to go back except in some limited circumstances where you have additional land brought into the city limits, future assessment districts or future assessment areas or if you have another source of revenue, you can commit additional revenues to a project to pay down those assessments. He stated that has typically occurred toward the latter years of a project when you have either generated by interest or otherwise prepayments, additional funding, or city council has forgiven remaining years on an assessment, but not inconceivable that if you had additional funding you could put that in to lower the assessments, and would have to do that on some type of pro-rata basis, however, the perfect example is 32nd Avenue South, the improvements that occurred along 32nd Avenue South, both for Columbia Road and utilities going east and west from Columbia Road, 32nd Avenue South intersection could not be assessed to the southside of 32nd Avenue South because they were outside the city limits and you had the same issues; your observation that there are always objections on special assessments is not unique to Grand Forks, that he could give a series of appellate decision that literally transverse the State of North Dakota from towns such as Surrey, ND to Bismarck, Grand Forks, Fargo where special assessments are challenged and attacked. It is particularly difficult when you are attempting to do projects on the outskirts of the community because you run into the situation of what areas within the city and what areas outside the city limits.

Mr. Shaft stated that what they have in front of you would be passed on in higher utility rates, etc., but for a golf course there would have been no annexation, and if no annexation no special assessment. He stated when asked what could be done differently, when Mr. Grasser was speaking he showed the Psychiatric Building, that they were allowed to put a non-conforming road in, that might be situation that the City could contemplate using a little more often, might run into objections from the engineering department, but the bulk of the assessments, esp., paving assessment result from little paved streets going around the School District building, that’s project where there could be more rural road use for period of time until the city came out that far, nothing going to link up to that for many years. Mr. Swanson stated that with the golf course driving the development, the converse argument to that is that new schools, the golf courses, those amenities also are likely to increase the value of the land because it’s more attractive for development in the future. The other alternatives you have which other communities in different areas of the United States use - some have totally abandoned special assessments and have gone to development impact fees where developers are required to pay an entire fee up front, they all have impacts on development; another approach that the City does allow is that developer puts in the entire project or portion of projects and avoids some of the markup and other costs, that couples with Mr. Shaft’s comments about what standard of development do you require.

Council Member Hamerlik stated this is an unusual situation with the development, the educational center, middle school, golf course and should step back and wait a year and find the money for the year and get into the tapping fees.

Council Member Christensen stated that on the projects that Mr. Shaft listed, asked what the total annual payment next year - it was noted that it was $350,000 for the projects involved. He stated he believes the statute in questions is Section 40-23-19, and had questions re. tapping fees, because that’s not the game we should play any longer, a tapping fee suggested depreciation, that if there’s depreciation for a storm sewer project we have a 50-year depreciation and first 5 years the property is brought into the city there is no depreciation, that for streets it’s a 25-year depreciation, that when a sewer breaks we pay that out of our general revenues, and that it would be fair for this group of people because they protest, that we re-think our tapping fee situation and require that when the property is annexed then they have to pay going forward as if they paid today the amount of assessment plus interest and if the City pays that for a period of time, and then you pay it back over a period of time and then re-assess it, delay paying but pay when you use it. He stated that’s how other states do it and that’s what we should do rather than a tapping fee where we talk about depreciation; and that’s what he would recommend that we do here, that we have other sources of money to fund that this year; but the problem with this is that we knew that we would be having this conversation 18 months ago, and that the issue could have been brought to them sooner; that the Statute says that once you have an idea of what the project is and costs are, we should spread the assessment and then have that conversation rather than hurry up - this rush to judgment and thinks it’s a process that’s somewhat flawed, and that we should form a task force but have to address it because it isn’t right and believes these people are the victims of leap frog development and would ask the city auditor to help find the money for the next year or two until we get this handled.

Mr. Swanson stated that they would not be able to do that only for the property that was protested, and if inclined not to do it don’t certify the assessments but going to have to find funding for the projects for the year 2001, these properties are within the limits of the city.

The city auditor stated that we have sold bonds based on an on-going revenue stream, if we are going to do something here you need to tell him what that on-going revenue stream is, not one-time money, but on-going revenue stream.

Richard Warne, administrative coordinator, stated that as they put together a task force to try to work on these special assessments, asked if there was any other source of revenue that can pay these special assessments that hasn’t been identified, answer was no, and had Ms. Jerath prepare the sheet that outlined what you would have to do on utility rates and some future mill levy increase so council could make a choice, that you have one of three choices: 1) certify the assessments as proposed; 2) exclude a group of people which means you will spread the assessments over others, or 3) increase utility fees or mill levy unless there is some other suggestion. The city auditor stated that the problem with the mill levy is that we have already certified the budget to the County and so for the first year may have to take money from Highway Users, but we have to show an on-going revenue stream.

Council Member Babinchak stated that if we do something on these projects what other projects that we haven’t set up the special assessments for are we going to hear, talked about 42nd Street, and now talking about these, going on to 5 more projects that were done this year and have to assess and hear the same things, and asked if there was anything else in the southend that hasn’t been assessed yet that we will hear about in the near future. Lonnie Laffen, Special Assessment Commission, stated that there is the dike assessment that is up-coming, that they’ve been working on that for about a year trying to understand how to assess that, that is uniquely different from typical assessments, and reason having trouble with assessments, doesn’t have problem with re-thinking and would welcome a task force to look at how they do this; that this is the first year that he has been on the Commission where they’ve had any discussion about an assessment being a certain way; and thinks what has been unusual for this year is there have been some unusually large assessments that affect a wide area and different than typical storm sewer, street and not a lot of precedent on how to assess these, and City staff decide how a project should be done and an assessment is an integral piece to that but not enough thought in the early process as being developed as to what that is going to mean for some of those landowners. He stated they get the project to assess after the project is pretty much decided how it will be done, and that council certifies the district that they get and also decide whether there is a tapping area or not, and perhaps have to weigh the idea of tapping area, maybe a good way to do the farmland, that can’t say they shouldn’t get the assessment because if we say no benefit to them, they could start developing that land and have free utilities; and tapping areas make sense.

Mr. Warne stated that he favors doing a comprehensive analysis and study; he stated in places where he has worked if there were extensions and infrastructure they came out of the general tax revenues or part of the utility rate structure; and impact fees that were charged on all development that took place within the corporate limits of the city regardless of where it took place - there are some options they can look at but relive this every time they have one of these as long as there are existing property owners in place.

Ms. Leila Olson, 814 Stanford Road, protested three special assessments on the first Curran property because the land was illegally annexed and distributed copies of her protest; that notices of annexation were not properly given to property owners - notification received on public hearing was for land south of their land. Mr. Swanson stated he has reviewed the materials provided to the council , and found that the letter that Mrs. Olson referred to was inaccurately drafted in its description of area to be annexed, however, the map that was attached to the letter was accurate and did show the land, furthermore the resolution of annexation which was published in the Herald did have an accurate map as well and the hearing date on the protest was May 18, 1998. He stated that the appeal period was established by statute which was 60 days from the action of the city council of May 18, 1998 and an appeal not taken within 60 days from the action of the city council on a notice issue is precluded by law. He stated that by state statute the official notice is the publication.

Council Member Christensen stated that we have a choice of paying this year, accept this district, certify it and get on with and pay it out of some source of revenue this year, and next year if we don’t want to do that again, then raise taxes a mill and a half and/or raise rates about 24% for period of time. Mr. Swanson stated he didn’t agree with the mill rate increase because the payment is about $350,000/year and mill generates somewhere in the neighborhood of $82,000 and then looking at 4 ½ to 5 mills, but other than the numbers think options are correct; and fourth option is if you have some other source of revenue and avoid special assessments and tapping fees entirely.

Dean Curran, 3503 Belmont Road, and parcel of land protesting is the NW Quarter of the NW Quarter of Section 28, a 150 ft. strip that the City annexed across the road even though it’s still farmland and it’s a quarter mile long minus the highway right of way, which is about 100 ft., and talking about a parcel 1200 ft. by 150 ft. wide and $50,000 assessment against that which is about 3 acres, about $15,000/acre against that parcel and this is just the watermain, still haven’t paved it, sanitary sewer, street lighting, and this is the beginning, and asked that they put this on a tapping fees.

Council Member Glassheim stated that some of these parcels are extremely valuable or will become extremely valuable and it is true they don’t have the income now and maybe several years, but those parcels because of the development the city’s putting in will be very valuable and could be loaned against so don’t have to sell the land and will realize in the future money for land adj. to the city, and need to keep that in mind. He stated that the Useldinger property has received $167,000 for the drainway against the $400,000 total.

The city auditor stated that there is not an easy answer to this problem because as we continue to have assessments and we are an expanding community we are going to annex properties that aren’t ready to develop and if we do this for these projects, then say that’s a new policy on-going, and every time we do this we will increase the rates accordingly for those tapping fees and to put it on the table, charge those people who have already paid for their storm sewer, etc. until such time as the property develops and if it doesn’t develop within a certain amount of time, they are depreciated and don’t pay anything. He stated that they have a policy in place that was followed in this process, the special assessment policy, and doesn’t know that we can change it in an hour meeting on the floor.

Council Member Gershman stated that if they certify the assessments tonight, and if they can back up on this. Mr. Swanson stated that once you certify the assessment, you certify it for the life of the bond, the only way you could cancel that would be to pay the entire assessment off, and his suspicions are that these bonds are not callable for a period of time, and would have to have sufficient funds not only to pay off the bond but whatever interest would accrue to that call period, and would then cancel and have some other mechanism, and run into the theory that you have already assessed these property owners for the same project, and would be very difficult, that he has never seen it done and would like to do more research on that if heading in that direction, and probably would not have the ability to convert it to some other form of collection. He stated that this particular assessment was delayed a year by the prior council because of this problem; that the City has carried this particular load for more than a year, that as the project continued the overall costs were reduced and reduction spread across the entire district, and there was some hope that there would be additional funds after the project was completed and cold be rolled back in, and that was done, and there was a hope to reduce the assessments, and if go back would find that the projection for these assessments was substantially higher than what you have before you.

Mr. Laffen stated that one option that hasn’t been discussed and to put it on the table is to - that the Special Assessment Commission decides who benefits within a district, and that option is that they could assess certain properties a half or quarter benefit, zero benefit, and certify the whole project and the money that you are relieving those properties goes to the other property owners within that district, and that option hasn’t been discussed. Mr. Swanson stated that may be true if you have a factual basis to determine that certain parcels do not receive the benefit from the project, but to move the assessments, you have to move them to other parcels within the district and then open the door to a very strong argument of a capricious and arbitrary act because you have not equated parcels with like value. Your role tonight is to act as an appeal body, you are not making the initial determination of benefit or assessments and as that appeal body you are to determine whether there are errors in what the Special Assessment Commission has done and if so to correct them and take whatever increase in a parcel to offset it by decreasing another parcel or vise versa.

After considerable discussion it was moved by Council Member Glassheim that we certify the specials as given to us and that we request the mayor to appoint a task force to examine the special assessment procedures. Council Member Christensen seconded the motion.

Upon roll call the following voted “aye”: Council Members Glassheim, Babinchak. Bakken, Kreun - 4; voting “nay”: Council Members Bjerke, Hoff, Hamerlik, Burke, Gershman, Christensen, Klave, Brooks - 8. Mayor Brown declared the motion defeated.

Council Member Hoff moved that we meet on this matter next Monday, October 30, at 6:00 p.m. and in the meantime ask all appropriate City officials to find suitable revenue stream, if one can be found. Council Member Hamerlik seconded the motion.

Upon roll call the following voted “aye”: Council Members Hoff, Hamerlik, Burke, Gershman, Christensen, Klave - 6; voting “nay”: Council Members Glassheim, Babinchak, Bakken, Kreun, Brooks, Bjerke - 6. Mayor Brown declared the motion tied, and voted against the motion, which was then defeated.

Council Member Hamerlik moved that we table this matter until next Monday, October 30, 2000, at 7:30 p.m.; Council Member Hoff seconded the motion. Council Member Hamerlik and Hoff withdrew their motion.

Council Member Glassheim moved that the City certify the assessments and that the City dedicate 2 mills to pay half of the certified assessments. The motion died for lack of a second.

After further discussion it was moved by Council Member Brooks and seconded by Council Member Hoff that we certify these assessments with the first year’s revenue source being excess sales tax.

Council Member Christensen stated that if we started over and paid the $350,000 out of sales tax, could we create a different district, including the Park District and the School District, and would create a 640 acre district so the direct benefit would be picked up by other taxing entities, and wouldn’t come out of revenues where we have to pick up out of utilities and not out of our mill levy. Mr. Swanson stated that there are 7 different projects you are dealing with and some of those projects are subject to a joint powers agreement between the City and the School District with respect to how certain funds were allocated and paid for different portions of the project, and could not do that on several of those projects, but with respect to the drainway projects which are some of the largest assessments you will find that the district is the entire area, and no additional land that you can add to the special assessment district, and that is his recollection on the southend drainway and those districts literally extend from the freeway to the river, from 32nd Avenue South to the farthest reach of the city limits; and contrary to what was said earlier the council has heard almost on an annual basis objections to special assessments.

Upon call for the question and upon roll call the following voted “aye”: Council Members Brooks, Bjerke, Hoff - 3; voting “nay”: Council Members Burke, Glassheim, Gershman, Christensen, Klave, Babinchak, Bakken, Kreun, Hamerlik - 9. Mayor Brown declared the motion defeated.

Council Member Babinchak moved that we approve and confirm the assessments for Storm Sewer Project No. 4669.3, District No. 386.3, Phase 2B, in the amount of $1,463,723.00 (amount protested $56,238.00), and that they be levied against the property benefited in 20 annual installments of principal, together with interest on the unpaid balance yearly, to be collected with other taxes by the proper authorities. Council Member Gershman seconded the motion. Upon roll call the following voted “aye”: Council Members Brooks, Hamerlik, Burke, Glassheim, Gershman, Christensen, Klave, Babinchak, Bakken, Kreun - 10; voting “nay”: Council Members Bjerke, Hoff - 2. Mayor Brown declared the motion carried.

Council Member Babinchak moved that we approve and confirm the assessments for Paving Project No. 4807, District No. 564, in the amount of $416,600.00 (amount protested $19,433.00), and that they be levied against the property benefited in 19 annual installments of principal, together with interest on the unpaid balance yearly, to be collected with other taxes by the proper authorities; the motion was seconded by Council Member Bakken. Upon roll call the following voted “aye”: Council Members Brooks, Hoff, Hamerlik, Burke, Glassheim, Gershman, Christensen, Klave, Babinchak, Bakken, Kreun - 11; voting “nay”: Council Member Bjerke - 1. Mayor Brown declared the motion carried.

Council Member Glassheim moved that we approve and confirm the assessments for Watermain Project No. 4706.1, District No. 260.1, in the amount of $318,700.00 (amount protested $78,640.00), and that they be levied against the property benefited in 14 annual installments of principal, together with interest on the unpaid balance yearly, to be collected with other taxes by the proper authorities; the motion was seconded by Council Member Babinchak.

RECESS FOR 5-MINUTES

Mayor Brown called for a 5-minute recess at 10:05 p.m.

The city council reconvened with all members present.
Yvonne Curran Jacobson protested the project, stating that the Park District and the School District benefit from the project, and the small piece of property that her parents live off of is her father’s birthright from his father, that they have been surrounded by a drainway and that it was protested every time they have had a chance, that they did not choose to sell this land or seek to sell it, that the City did a quit claim and took them into eminent domain, and that they cannot levy this huge assessment against her parents.

Council Member Gershman asked if they could assess a lower benefit (a half benefit) to these properties, because of the leapfrogging and that the other half benefit would have to be assessed to the other property owners in that district. Mr. Swanson stated that if you determine there’s an error in the spreading of that benefit, you can decrease that property but increase another parcel or the balance of the parcel; that the Special Assessment Commission makes a mathematical determination of actual benefit, that in this particular case you are dealing with a watermain and concern that he would have is the path of that watermain is adjacent to this property, it sets up a very easy argument for anyone else who has an increase in benefit that is similarly situated the same distance from the watermain as to why their assessment is higher.

Upon call for the question and upon voice vote, the motion was defeated.

Council Member Babinchak moved to approve and confirm the assessments for Storm Sewer Project 4939.0, District No. 401, in the amount of $42,243.00 (amount protested $10,727.00), and that they be levied against the property benefited in 15 annual installments of principal, together with interest on the unpaid balance yearly, to be collected with other taxes by the property authorities; the motion was seconded by Council Glassheim. Upon roll call the following voted “aye”: Council Members Brooks, Hoff, Hamerlik, Burke, Glassheim, Gershman, Christensen, Klave, Babinchak, Bakken, Kreun - 11; voting “nay”: Council Member Bjerke - 1. Mayor Brown declared the motion carried.

Council Member Babinchak moved to approve and confirm the assessments for Paving Project No. 4940.0, District No. 570, in the amount of $321,700 (amount protested $228,251.00); Watermain Project No. 4919.1, District No. 265.1 in the amount of $85,933.00 (amount protested $51,081.00); Storm Sewer Project No. 4939.1, District No. 401.1 in the amount of $175,257.00 (amount protested $71,362.00); and Watermain Project No. 4706.1, District No. 260.1, in the amount of $318,700.00 that they be levied against the property benefited in 19, 14 and 15 annual installments of principal, together with interest on the unpaid balance yearly, to be collected with other taxes by the proper authorities; and further that the City would pay the first year’s assessment out of excess sales which would be approximately $129,000 and that we would look at the assessment process for the next year’s assessments. Council Member Gershman seconded the motion.

Mr. Shaft stated that if the project is certified and the task force comes to some other method of handling this, how would you back out of a project that is certified. Mr. Swanson stated that the only way he knows they can do it is to pay off the assessments on the entire project and then go back and do whatever the alternative is, that if the alternative is that they have additional revenues what can be done with those additional revenues can be paid in and the assessments lowered or years paid, that’s probably the most feasible and wouldn’t require any alteration of the process but if going away from special assessments, you run the risk of having to pay the entire project off and run the risk - that you’ve already charged these property owners for an improvement once and can’t do it again, whether they actually paid it or not.

After further discussion and upon call for the question by Council Member Bjerke and seconded by Council Member Christensen. Carried 12 votes affirmative.

Upon roll call the following voted “aye”: Council Members Gershman, Brooks, Bjerke, Hoff, Hamerlik - 5; voting “nay”: Council Members Glassheim, Christensen, Klave, Babinchak, Bakken, Kreun, Burke - 7. Mayor Brown declared the motion defeated.

Council Member Bjerke moved to approve and confirm the assessments for Paving Project No. 4940.0, District No. 570, in the amount of $321,700; Watermain Project No. 4919.1, District No. 265.1 in the amount of $85,933.00; Storm Sewer Project No. 4939.1, District No. 401.1 in the amount of $175,257.00; and Watermain Project No. 4706.1, District No. 260.1, in the amount of $318,700.00; and that they be levied against the property benefited in 19, 14 and 15 annual installments of principal, together with interest on the unpaid balance yearly, to be collected with other taxes by the proper authorities. Council Member Babinchak seconded the motion.

Council Members Bjerke and Hamerlik called for the question, and upon voice vote the motion carried.

Upon roll call the following voted “aye”: Council Members Christensen, Klave, Babinchak, Bakken, Kreun, Burke, Glassheim - 7; voting “nay”: Council Members Gershman, Brooks, Bjerke, Hoff, Hamerlik - 5. Mayor Brown declared the motion carried.

ADJOURN

It was moved by Council Member Gershman and seconded by Council Member Kreun that we do now adjourn. Carried 12 votes affirmative.

Respectfully submitted,

John M. Schmisek
City Auditor

Approved:
_________________________________
Michael R. Brown, Mayor