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City Council Minutes 12-14-1992MINUTES REGULAR MEETING - MONTICELLO CITY COUNCIL Monday, December 14, 1992 - 7 p.m. Members Present: Ken Maus, Shirley Anderson, Clint Herbst, Brad Fyle, Dan Blonigen Members Absent: None 2. Approval of minutes of the special meeting held November 23, 1992, the regular meeting held November 23, 1992, and the special meeting held December 2, 1992. Clint Herbst requested that the minutes of the November 23, 1992, be amended by including the recommendation as to the favored candidate for the Planning Commission. special meeting held Planning Commission's vacant position on the After discussion, a motion was made by Brad Fyle and seconded by Dan Blonigen to approve the minutes of the special meeting held November 23, 1992, the regular meeting held November 23, 1992, and the special meeting held December 2, 1992, with modifications to the November 23 minutes as proposed by Clint Herbst. Motion carried unanimously. 3. Citizens comments/petitions, requests, and complaints. None forthcoming. 4. Consideration of a resolution awarding the sale of $535,000 general obligation refunding bonds, Series 1993A. Rick Wolfsteller reported that the City received bids on the sale of $535,000 general obligation refunding bonds. Proceeds will be used to prepay the balance of the fire hall bond issue for $475,000 and $40,000 of a 1984 general obligation improvement bond. These two older bond issues have a higher interest rate of 8.8% or more and can be paid off February 1, 1993. Wolfsteller reported that the bids received have been favorable, and the City will reap a savings of $41,000 in debt service cost by this refinancing. Wolfsteller recommended that Council award the sale of $535,000 G.O. refunding bonds, Series 1993A, to the low bidder, Park Investment. The ''ark Investment bid called for an interest rate of 3.9673%, which results in a net interest cost of $51,758. Page 1 Council Minutes - 12/14/92 After discussion, a motion was made by Shirley Anderson and seconded by Brad Fyle to adopt a resolution awarding the sale of $535,000 general obligation refunding bonds, Series 1993A, to Park Investment. Motion carried unanimously. SEE RESOLUTION 92-36. 5. Consideration of an offer to purchase vacant 7th Street right-of-way from City - Land Projects Partnership. Rick Wolfsteller reported that in 1990 when 7th Street was extended, a realignment occurred at the intersection of Locust and 7th Street. The realignment resulted in a portion of 7th Street being no longer needed for street purposes. The total square footage of the 7th Street remnant area in question amounts to 11,000 sq ft and is located in what could be a very desirable commercial location at the corner of 7th and Locust. Land Projects Partnership owns the property directly to the north of the 7th Street parcel, and they have approached the City in the past as to the availability of the property and request that City Council consider selling the 11,000 sq ft parcel for $10,000. Wolfsteller noted that this item is for discussion purposes only, as the City needs to formally conduct a public hearing and officially vacate the 7th Street right-of-way before a transaction could occur. Wolfsteller reported that Land Projects Partnership obtained an appraisal from Jack Maxwell which indicated a value of $8,250. Likewise, the City had an appraisal completed on the property, and our appraisal indicates a value of $26,400. Wolfsteller stated that the property has potential for development of a small drive-through restaurant site or for a small office building but would probably achieve its highest and best use if combined with the property to the north as proposed by Land Projects Partnership. George Phillips, representing Land Projects Partnership, indicated that the City's appraisal is high, as the property has soil problems that will require correction prior to development. In addition, there are no sewer and water stubs serving the 7th Street parcel. He also noted that the value of Land Projects Partnership property has suffered because the realignment of 7th Street has now eliminated 7th Street access. Ken Maus noted that it makes sense for the City to sell the property, as it could encourage development; but at the same time, we want a fair price for the property for the sake of the community. Maus asked how have we established previous land values when it comes to vacating street right -of -way- -what have we done in the past? Page 2 N Council Minutes - 12/14/92 Rick Wolfsteller responded by stating that in the past, the price charged for vacated street right-of-way land has been linked to the market value of the land at the location of the street vacation. After discussion, a motion was made by Brad Fyle and seconded by Shirley Anderson to offer the property to Land Projects Partnership in the amount of $17,000, with the offer expiring in 30 days and subject to the street vacation process. Voting in favor: Brad Fyle, Shirley Anderson, Clint Herbst, Ken Maus. Opposed: Dan Blonigen. Consideration of an increase in sewer and water rates. John Simola reported that based on the 1993 budget projected revenue, at the current rates we are projecting shortfalls of both the sewer and water operation and maintenance funds for 1993. In the water fund, there is a projected shortfall of $21,950. In the sewer fund, there is a projected revenue shortfall of $18,080. Therefore, the City needs an approximate increase of 4.2% in our revenue to cover the shortfall. Simola went on to review the program for the sewer and water rate increases as outlined in the tables below. SANITARY SEWER RATE Rate/100 cf Page 3 1992 1993 Parameter Rate Rate Flow/100 cf $0.811 $0.877 BOD $0.150 $0.160 Total $0.273 $0.218 Suspended Solids Combined $1.515 $1.65 Rate/100 cf Page 3 7. TATAMWD DAMW Charge Usage/Qtr Per 100 CF in Cu Ft 1992 Rate 0-500 cf $ 7.50 minimum 501 cf to $ 0.50 4000 cf 4001 cf to $ 0.30 75,000 cf 75,001 cf $ 0.20 and over Council Minutes - 12/14/92 Charge Per 100 CF 1993 Rate $ 7.50 $ 0.55 $ 0.35 $ 0.35 Simola went on to recommend that the sewer rate increase should be 8.9% as indicated above. Ken Maus noted that the heavy users of water will see the greatest increase under the proposed program due to the fact that the proposal calls for eliminating the discount for higher volume users. Maus noted that the Industrial Development Committee reviewed this aspect of the program and supported it. After discussion, a motion was made by Dan Blonigen and seconded by Clint Herbst to approve the rate increase as proposed. Motion carried unanimously. Consideration of a resolution authorizing issuance and sale of a general obligation tax increment bond - Suburban Machine. Rick Wolfsteller reported that as part of the tax increment financing plan for Suburban Machine, TIF 1-14, a TIF grant in the amount of $50,000 for land write down and site improvements will occur when the new building is 30% complete. In addition, a TIF loan in the amount of $19,575 will be disbursed at 30% completion of the building, making the total assistance directly to Suburban $69,575. The $19,575 loan will be repaid by Suburban over the life of the district to reimburse the City for anticipated loss of HACA aid that the City may experience due to the tax increment financing. Based on the projected tax increment revenue for this project, a $35,000 bond issue would likely be the maximum financing amount available. A $75,000 bond issue would also include $6,075 for capitalized interest to cover interest expense through February 1, 1994, the first year the tax increment revenue would be received. Page 4 Council Minutes - 12/14/92 Wolfsteller noted that at the time the original financing plan for Suburban Machine was adopted by the City Council, the HRA proposed to borrow $75,000 from the City's general fund to finance the up -front expenditures. The reason for the proposed loan from the City's general fund rather than selling a bond issue was due to the small amount of funds necessary and the large cost of issuing an actual bond that would be for sale to the public. Wolfsteller recommended that the original plan be changed by setting up the loan as a normal G.O. taxable bond issue with the actual purchase being done by the City as an investment rather than selling it to the general public. Under this scenerio, the City would actually be lending $75,000 to the HRA at a rate of about 6 1/2%, which is better than the City could get if it invested the money on the open market. Structuring the bonds internally would allow the City to sell them on the open market if need be in the future and would save the City $10,000 to $12,000 in issuance cost. After discussion, a motion was made by Clint Herbst and seconded by Dan Blonigen to approve the proposed resolution authorizing the issuance and sale of $75,000 in G.O. taxable increment bond, Series 1992D, for the Suburban Machine TIF District. Motion carried unanimously. SEE RESOLUTION 92-37. S. Consideration of a resolution commenting on proposed permanent rules governing enforcement of Wetland Conservation Act of 1991. Jeff O'Neill reported that since February 1991, the City has been administering the interim rules governing the Wetland Conservation Act of 1991. Permanent rules have been developed in draft form and are now being reviewed via the public hearing process at the state level. O'Neill went on to review the proposed rules and the potential impact on development in the city of Monticello. O'Neill noted his concern that the rules are highly technical and understandable only after careful study and training. The average citizen will find it very difficult to understand the rules and follow the processes outlined. The ability of the City to efficiently and effectively administer the no net loss program will be hampered by sheer complexity of the rules. It was his view local government commitment to proper administration of the rules will not likely occur without considerable funding assistance from the State of Minnesota. In addition, O'Neill informed Council that the rules require a 2 to 1 replacement ratio and do not allow "created" wetlands to be included in a "banking" program. Page 5 Council Minutes - 12/14/92 After discussion, a motion was made by Brad Fyle and seconded by Shirley Anderson to adopt the resolution as proposed with the additional statement that cities should be able to recover the cost to review individual wetland mitigation plans and should not be limited to charging $75 per application. Motion carried unanimously. SEE RESOLUTION 92-38. 9. Consideration of preliminary engineering report for chlorination/dechlorination at the Monticello Wastewater Treatment Plant. John Simola reported that the State of Minnesota is requiring that the City update its wastewater treatment plant to eliminate discharge of chlorinated water. The state has required that the City complete the design and installation and start-up of a dechlorination system by the end of the current permit, which is December 31, 1994. As a first step in meeting this deadline, we should acquire the services of a registered civil engineer familiar with chlorination and dechlorination. The design should be done in 1993 so that we can obtain bids over the next winter and have a spring 1994 construction start. After discussion, a motion was made by Brad Fyle and seconded by Clint Herbst to direct OSM to provide the City of Monticello with cost estimates for engineering fees associated with preparing a plan for development of a dechlorination facility. Motion carried unanimously. 10. Consideration of purchase of leak detector for water department. John Simola reported that when a water main or water service leak occurs, the exact location is often difficult to find due to the sandy soils in Monticello. The leak must be significant, and the sandy soils must become saturated before the water finds its way to the surface. Most of the time, the location where the water finds its way to the surface is not the location of the leak. The water changes course as it hits the denser materials near the surface and surface improvements such as blacktop or concrete. Simola proposed that the City purchase a leak detector to aid us in the location of water leaks. It is important that one gets as close as possible to the actual leak prior to excavation so that disturbance of city improvements such as streets and other utilities may be kept to a minimum. Often getting within 2-5 ft of the leak versus 10-12 ft of the leak can save a couple thousand dollars. Brad Fyle did not believe that the leak detector would significantly assist City crews in finding the precise location of the leak. After discussion, a motion was made by Shirley Anderson and seconded by Ken Maus to approve the purchase of a leak detector in the amount of $1,354. Voting in favor: Shirley Anderson, Ken Maus, Clint Herbst. Opposed: Brad Fyle, Dan Blonigen. Page 6 Council Minutes - 12/14/92 11. Consideration of reducing retainage for City Proiect 92-06, Public Works Vehicle Storage Facility. John Simola reported that the public works facility is now virtually complete. The items remaining are a few minor punch list items. The total value of the contract with Rochon Corporation, including change orders #1 and #2, is $518,017. Our standard 5% retainage amounts to $25,900. Ron Rochon has requested that we reduce the retainage to 1.5% and keep a total of $20,871 to cover the cost of items yet to be completed. In addition, we have the contract bond with Rochon for the original amount of the contract; therefore, the City is well protected. The City Engineer and John Simola went on to recommend that the City Council reduce the retainage from 5% to 1.5%. After discussion, a motion was made by Brad Fyle and seconded by Clint Herbst to reduce the retainage on City Project 92-06, Public Works Vehicle Storage Facility, from 5% to 1.5%, keeping a total of $20,871 until completion of all remaining punch list items. Motion carried unanimously. 12. Consideration of final payment to LaTour Construction for Project 91-01, Fallon Avenue; 91-02, Briar Oakes Estate; and 91-03, Cardinal Hills Phase I. John Simola reported that 1991 projects dragged into 1992 due to the big Halloween blizzard of 1991 and due to delays in completion of Briar Oakes grading. All the work is now complete with the exception of gravel and bituminous paving for the pathways in Briar Oakes Estate. There are sufficient funds left in the project assessment to have the gravel portion placed on these pathways in the spring. It is proposed that the paving of the pathways occur in conjunction with development of future phases. Simola noted that it is staffs recommendation that Council authorize final payment to LaTour Construction for the above -referenced projects in the amount of $12,891 with the final payment contingent upon receiving final lien waivers and other documentation from LaTour. After discussion, a motion was made by Clint Herbst and seconded by Dan Blonigen to authorize final payment to LaTour Construction for said projects in the amount of $12,891 contingent on the City receiving final lien waivers and other documentation from LaTour. Motion carried unanimously. Page 7 Council Minutes - 12/14/92 13. Consideration of extension of final completion date with change order #1, reduction of retainage for City Project 92-02, School Boulevard, and 92-07, Cardinal Hills Second Addition. John Simola reported that the final completion of School Boulevard and Cardinal Hills Second Addition is requested to be extended to June 15, 1993. Construction activities for both projects were hampered by the relatively wet construction season. The wet season resulted in slower than anticipated progress and created problems associated with both utility and street construction. Simola reported that the streets in Cardinal Hills Second Addition received only the first lift of blacktop. This is also the case with School Boulevard. Because of the poor stability in the streets in the Cardinal Hills area, bituminous quantities are expected to increase in the spring along with additional granular material needed in the repair areas. Due to the fact that the second lift was not put on School Boulevard, the contractor was required to lower the manhole castings to allow for winter plowing operations. This was done at a cost of $694. Finally, the storm water pond on the Cardinal Hills Second Addition collected a significant amount of water during the wet construction season, which hampered utility construction in the development. The contractor was required to pump the storm water pond down to allow for continued utility work. The pumping operation was done at a cost of $1,900. The total cost of change order #1 is $10,594. In addition, since the project has been extended in 1993, the contractor has asked the City to reduce the retainage from 5% to 2.5% leaving an entire balance on the job of $89,215. After discussion, a motion was made by Brad Fyle and seconded by Clint Herbst to approve change order #1 as proposed and reduce the retainage on the project from 5% to 2.5%. Motion carried unanimously. 14. Consideration of final acceptance of the Prairie West development improvement project. Rick Wolfsteller reported that the public improvements associated with development of the Prairie West plat have been completed. Although there are a few items that have been noted by the engineer that may need correction in the future, Bret Weiss has recommended that the improvement project be accepted as completed with the recommendation that the maintenance and utilities of the streets now become the City's responsibility. Since the improvements were substantially completed by September 30, 1992, the City is comfortable with using this date for establishing the one-year warranty period and, therefore, recommend that City Council accept utilities and streets as of this date. Page 8 Council Minutes - 12/14/92 After discussion, a motion was made by Brad Fyle and seconded by Dan Blonigen to accept the privately constructed improvements to the Prairie West subdivision and establish September 30, 1992, as the completion date for determining the one-year warranty period. Motion carried unanimously. 15. Consideration of fund transfers for 1992. Rick Wolfsteller reported that with the end of the year approaching, the City Council should consider fund transfers to close out unneeded construction funds and/or transfers to correspond with our budget. He went on to review each fund transfer as follows: 1. This transfer of $605,417.01 is needed to cover the expenditures incurred to date regarding the construction of the public works building project. It was originally planned to utilize surplus liquor store funds for this construction, and this is what this transfer accomplishes for costs incurred to date. During the construction process, a separate building construction fund was established to keep track of all the costs, and a separate transfer is now recommended to cover the cash deficiency in this fund. 2. A transfer of $37,067.54 is needed from the capital outlay fund to cover the expenditures of the City's share of the County Road 75 signal project. Originally, the costs were budgeted in the capital outlay fund, and this transfer officially covers the cost. 3. A transfer of $88,321.14 from the capital outlay fund to cover the construction fund deficit for the ballfield lighting project. These funds were originally budgeted in the capital outlay project. 4. A transfer of $6,524.96 from the capital outlay fund to the bridge park warming house construction fund, which was established to keep track of the cost. This project has been postponed, but a transfer should be made to eliminate the deficit which has occurred from architect and engineering fees to date. 5. A transfer of $39,980.55 from the capital outlay fund to cover the cost of constructing the new parking lot at city hall. For all of the transfers above from the capital outlay fund, the normal budgeting process expected these expenditures to be paid from the capital outlay fund; but internally we have established construction funds in order to better track the cost. These transfers are now technically eliminating deficits in the construction funds and showing expenditures in the capital outlay fund where they were originally budgeted. Page 9 Council Minutes - 12/14/92 6. Annually, the HRA receives all tax increment revenues associated with all TIF districts, and the HRA is required to transfer funds to each tax increment bond issue. The total amount needed for 1992 to various debt service accounts is $224,150. After discussion, a motion was made by Shirley Anderson and seconded by Dan Blonigen to approve the fund transfers as proposed. Motion carried unanimously. 16. Consideration of payment of bills for the first half of December. After discussion, a motion was made by Shirley Anderson and seconded by Brad Fyle to approve payment of the bills as listed. Motion carried unanimously. Jeff OPkill Assistant Administrator Page 10