City Council Agenda Packet 11-10-1986AGENDA FOR THE MEETING OF THE CITY COUNCIL
Monday, November 10, 1986 - 7:30 p.m.
Mayor: Arve A. Grimsmo
Council Members: Fran Fair, 8111 Fair, Jack Maxwell, Dan Blonigen.
1. Call to Order.
2. Approval of Minutes of the special meeting held October 27, 1986,
the regular meeting held October 27, 1986, and the special meeting
held November 5, 1986.
3. Citizens Commente/Petitions, Requests and Complaints.
Old Business
i. Consideration of an Offer to Purchase Land in Oakwood Industrial
Park.
New Business
5. Consideration of a Proposal by NSP to Convert Street Lighting.
6. Consideration of Setting a Special Meeting for the Purpose of
Establishing 1987 Salary/wage Policies.
7. Adjourn.
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MINUTES
SPECIAL MEETING - MONTICELLO CITY COUNCIL
Monday, October, 27, 1986 - 7:00 p.m.
Members Present: Arve Grimsmo, Fran Fair, Bill Fair, Jack Maxwell,
Dan Blonigen.
Members Absent: None.
The purpose of the special meeting was to consider approving the
request for proposals for computer systems and authorizing distribution
of the RFPs. Ms. Anne Carroll, of Carroll. Franck 6 Associates,
the City's Computer Consultant, reviewed with the Council members
the final draft of the Request for Proposals for a computer system.
Ms. Carroll noted that the RFPs have been prepared requesting a comprehensive
software and hardware combination for all of the City -s current and
future anticipated computer needs. She noted that after bide are
received from interested vendors, the City will at that time determine
whether the computerization is implemented in stages or all at once.
The RFP will request software and hardware facilities to cover finance
and deputy registrar functions, along with property activity, public
works, and engineering activities, administration, liquor store functions,
and other computer activities such as word processing and data base
management.
After further discussion, motion was made by Bill Fair, seconded
by Dan Blonigen, and unanimously carried to approve the RFP as presented
and to order the distribution to potential vandors/suppliers.
cz, wez-74—'e�
Rick wolfatolloY
Assistant Administrator
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MINUTES
REGULAR MEETING - MONTICELL40 CITY COUNCIL
Monday, October 27, 1986 - 7:30 p.m.
Members Present: Arve Grimsmo, Fran Pair, Bill Fair, Jack Maxwell-,
Dan Blonigen.
Members Absent: None.
2. Approval of Minutes.
Motion was made by Bill Pair, seconded by Maxwell, and unanimously
carried to approve the minutes of the regular meeting held October 14,
1986.
3. Citizens Comments.
Mr. John Sandberg appeared before the Council to clarify some cost
information that was presented at the League of Woman Voters candidate
forum. Mr. Sandberg noted that it was stated that the City Planner
had boon paid approximately $22,000-526,000 for the recently completed
Orderly Annexation Area Study, when the actual costs ware approximately
$27,000.00. Administrator Eidem confirmed that the actual cost paid
to the City Planner was approximately 527,000.00 and that an additional
$6,000.00 in expense has been incurred since the study was completed
for additional costs incurred in implementing the annexation procedures.
4a. Consideration of Guaranteeing the Provision of Sanitary Sewer and
Municipal Water to the Middle School Site.
Am part of the School District's plans to purchase 80 acres of land
from Mr. Jim Boyle for the now middle school site, a purchase agreement
requires that Mr. Boyle extend sanitary sever and complete Chelsea
Road extension from Oakwood Industrial ;Park to County Road 11810
,service the parcel.
Mr. Boyle'■ engineer. 'Bill Block, prepared plans and specifications
for extending the sewer and constructing the road. ,Public works
Director, John Sisols, along with the City's Consulting Engineers.
John Badalich and Chuck Lepak, eat with Mr. Block and the apparent
.low bidder on the construction project, L G 0 Rehbsin, Inc., to review
the proposed plans and specifications and the cost involved. The
construction cost for the road improvements, along with the needed
water and sewer improvements was estimated to cost 5350,000.00, which
includes all City anticipated administrative and legal cost. It
was noted that the $350,000.00 estimate would be required to be placed
in an escrow account hold by the City for payment of the construction
cost before any work would commence.
Councilsomber Fran Bair questioned the outcome of the recently adopted
joint resolution request from the Township to allow for the immediate
annexation of the school property and an additional 150 plus acres
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Council Minutes - 10/27/86
that directly relates to this planned improvement. Ms. Fair noted
that if the Township does not go along with the joint resolution
requesting immediate annexation of the school property, the City
should enter into a separate agreement with the school indicating
that sewer and water services would be supplied by the City for the
school property, thus eliminating the School District from involvement
in the annexation procedures. The City could then go on with its
original intent to petition for annexation of the entire OAA as previously
planned.
Mayor Grimsmo noted that the Township delayed action until their
next meeting in November regarding the joint resolution for immediate
annexation. Councilman Blonigen indicated his opposition to the
City establishing a policy whereby it would serve properties outside
of the City limits with sewer and water, as he felt it will cause
problems in the future and set a precedent requiring the City to
supply utilities. Mr. Blonigen-s main reason was that he felt properties
outside the City would not be paying their fair share in keeping
the utility systems upgraded since they are not part of the City
tax base.
After further discussion, motion was made by Fran Fair to enter into
an agreement with the School District agreeing to supply sewer and
water services to the school site regardless of the annexation question.
This motion died for a lack of second.
Mr. John Sandberg questioned the Council on how the City could be
discussing the question of servicing the school with utilities, as
it was not an agenda item. Administrator Eidem noted that the Council
could, by motion, amend the agenda item to include an additional
item if it so desired. As a result, motion was made by Fran Fair,
seconded by Bill Fair, to amend the agenda Stems to add an additional
item concerning the adoption of an agreement to serve the school
property with sewer and water utilities. Voting in favor were Fran
Fair, Bill Fair, Arvo Grimsmo. Opposed: Jack Maxwell and Dan Blonigen.
Having established the item as an additional agenda item for the
meeting, Mr. Blonigen than noted that the proposed sewer and water
policy as presented had not been discussed and again noted his opposition
to establishing a policy that would possibly require the City to
servo properties located outside of the City limits. Administrator
Eidem noted that if it was the wish of the Council not to establish
a sower and water service policy, a two-party agreement between the
City and the School only could be pursued that would spell out the
exact cost involved, including hookup chargee and user face. It
was noted that portions of the sewer and water policy regarding billing
charges for user face at 14 times the normal rates could be applied
to an individual agreement between the School and the City, and that
an agreement would and when annexation does occur. This would eliminate
the establishment of a policy that may affect other property owner■
Outeids of the city limits.
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Council Minutes - 10/27/86
Councilmember Maxwell expressed concerns mainly on the proposed extension
of utilities to the school site and wanted confirmation that the
entire cost of the project would be paid for by the developer and/or
the School without City obligation. Again it was noted by the staff
that the project would not commence until the entire amount of funds
was placed in an escrow account.
Again, John Sandberg requested that the Council delay action on any
type of an agreement to service the School property with sewer and
water to allow for further review of the sewer and water policy and/or
an agreement.
After further reviews of the subject, motion was made by Bill Fair,
seconded by Fran Fair, to enter into a separate agreement between
the City and the School agreeing to allow the proposed middle school
site to hook up to City sewer and water at normal hookup rates plus
City cost with the usage rates to be 1� times normal rates. Voting
in favor was Bill Fair, Fran Fair, Arve Grimsmo. Opposed: Jack
Maxwell, Dan Blonigen.
6b. Consideration of Approving Construction Plane and Specifications
for the Extension of Sani Lary Sewer and Chelsea Road from Oakwood
Industrial Park to County Road 118.
In regards to the plane and specifications presented for the extension
of utilities to the school site, City Engineer, John Badalich, noted
that in the future, additional hydrants will have to be added to
the water main existing through Boyle's property at a time when future
development occurs. As a result, motion was made by Fran Fair, seconded
by Maxvell, to approve the plans and specifications as presented for
extension of sanitary sewer and construction of Chelsea Road. Voting
in favor was Arvo Grimsmo, Fran Fair, Bill Fair, Jack Maxwell. Opposed:
Dan Blonigen.
5. Consideration of Change Order No. 5 for 86-1 Project.
As part of the 86-1 Interceptor Sower Project, General Contractor,
L 6 G Rehbein, was responsible for initial testing and evaluation
of the 10 -inch force main located on Elm, Third, and Chestnut Streets,
and the 6 -inch force main located near Ruff Auto Parte on Elm Street.
Because the force mains failed their initial tenting, additional
work performed by the contractor after repairs were made amounted
to 56,218.38, which was not part of the original contract.
As a result, a motion was Dade by Maxwell, seconded by 8111 Fair,
and unanimously carried to approve Change Order No. 5 to L 6 G Rohbain
in the amount of $6,218.38.
6. Consideration of Adoptlnq a Joint Powers Agreement to Enter an Airport
Commission.
The Monticello Industrial Development Committee requested that the
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Council Minutes - 10/27/86
City look into the possibility of expanding and/or construction of
a new airport in the area. An ad hoc committee has previously been
formed comprised of representatives from Big Lake and Monticello
with an invitation extended to the City of Becker to participate.
A joint powers agreement has now been prepared which would establish
s joint airport commission for the express purpose of conducting
the feasibility study and preliminary site selection for an airport.
The members would consist of the Cities of Big Lake and Monticello,'
and an invitation would still be made for the City of Becker to join
the commission.
Motion was made by Maxwell, seconded by Blonigen, and unanimously
carried to enter into a joint powers agreement for the purpose of
conducting an airport study with surrounding jurisdictions.
7. Sketch Plan Review, Planned Unit Development - Lionel Kull and Steve
Upgren, Applicants.
Mr. Lionel Kull and Steve Upgren were present to present a proposed
Planned Unit Development on 8 acres of land south of the Silver Fox
Motel, which would contain eight 12 -unit apartment buildings for
a total of 96 units. The developers presented the preliminary information
for the purpose of seeking a general concept approval before further
refinements to their proposal are made.
Councilmember Blonigen questioned he. this project would affect the
number of multiple family units compared to single family units in
the City. Mr. Blonigen noted that the percentage of multiple family
units allowed in our Comprehensive Plan is e5% of the available single
family unit lots; and at the current time, the City is almost at
the 45% figure. Mr. Blonigon questioned whether the percentage allowable
for multiple family unite should include only rental units and not
duplexes or townhouses which may be owner occupied. It was noted
by Administrator Eidam that the percentage of multiple family units
an compared to single family units in the Comprehensive Plan was
aetablishod to control density and the resulting strain a higher
density of apartments may cause on public utilities such as .tracts,
sower and water, and other facilities. Mr. Eidam noted that the
Comprehensive Plan can be amended to increase this percentage, or
the Council could decide that onto the porcentago is reached, a moratorium
would be placed on future developments until more single family lots
were availablo. In any case, the proposed PUD presented by Mr. Kull
and Mr. Upgron would result in the percentages being exceeded, and
the Council would have to consider increasing this percentage and
also would be required to rezone the property from its current commercial
B-3 zoning to R-3 to allow for residential apartments.
Councilmombera Maxwell and Bill Fair felt the City should not dictate
what typo of housing occurs in the City, but rather should lot the
market decide how a property is developed. As a result, it appeared
they would be in favor of changing the percentages to allow a development
similar to the one being proposed.
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Council Minutes - 10/27/86
As a result, motion was made by Maxwell, seconded by Fran Fair, and
unanimously carried to approve the concept plan presented for a PUD
for 96 apartment units. it was noted the concept approval only gives
a direction to the developers to proceed with their planning and
that additional public hearings will be necessary on not only the
zoning question, but a Comprehensive Plan amendment to allow for
more apartment dwellings.
B. Consideration of Bills for the Month of October.
Motion was made by Blonigen, seconded by Maxwell, and unanimously
carried to approve the bills for the month of October as presented.
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Rick wolfateller
Assistant Administrator
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MINUTES
SPECIAL MEETING - MONTICELLO CITY COUNCIL
Wednesday, November 5, 1986 - 7:15 a.m.
A special meeting of the Monticello City Council for the express
purposes of canvassing the results of the General Election held November <,
1986, was duly held at 7:15 a.m., Wednesday. November 5, 1986.
Members Present: Arve Grimsmo, Fran Fair, Bill Fair, Jack Maxwell,
Dan Blonigen.
Members Absent: None.
The special meeting was called to order by the Mayor. City Administrator
Eidem presented the summary sheets of all votes cast in the General
Election. He gave a brief synopsis of the day's events indicating
that no major problems occurred, and that the election was conducted
in accordance with lay. Councilmember Bill Fair moved the adoption
of the following resolution:
RESOLUTION 86-26
The motion was duly seconded by Jack Maxwell. Voting in favor of
r the motion: Arve Grimemo, Fran Fair, 8111 Fair, Jack Maxwell, Dan
Blonigen. Voting in opposition: None.
There being no further business for the special canvassing meeting,
the meeting was adjourned.
Thomas A. Eid ett
City Administrator
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Council Agenda - 11/10/86
4. Consideration of an Offer to Purchase Land in Oakwood Industrial
Park. (T.E.)
A. REFERENCE AND BACKGROUND:
The offer to acquire the remaining lots in Oakwood Industrial Park
was first presented to the City Council two meetings ago. The staff
indicated at that time that we believed we could assemble enough
data for a sound decision for the November 10th meeting. I hope
what we have assembled and prepared for you provides you with the
background required to make a sound decision. The entire issue
is filled with open ended questions and "what ifs" and "ya, buts."
This agenda item is being prepared adjointly by both Tom and Rick.
The format is primarily in two parts, the first part being
narrative discussion followed by tables and charts and projections.
We have attempted to be as objective as possible. We hope that we
have covered all bases. I wish to also note that after reading all
of the material, if you have more questions or find the material to
be incomplete, please contact Rick or I on Monday prior to the
meeting and we will attempt to go over it with you. Similartly,
if you discover gaps in the material, let us know and we will
try to acquire the information for everyone by meeting time.
We must begin evaluating this issue using the assumption that the
acquisition of these lands to of interest to the City. Assuming
that the City is interested in the acquisition, it is now
essential to evaluate what is the best decision. Obviously,
If the City is not interested in getting into property ownership,
then the following material is Irrelevant. The question of how
the City buys the land could be addressed either at the beginning
of the discussion or at the end of the discussion. If we discover
that there is no way for the City to acquire the land, regardless
of whether or not it is a good deal. then the rest of the discussion
becommea Irrelevant. Or the City could evaluate the wisdom of the
acquisition, and if It finds that it is a sound decision, then
discuss how the City will buy the land. I will discuss the how
first.
We must keep in mind that the offer that was made to the City is
based on, in part. a desire by the current owners to sell before
the end of the year to take advantage of existing tax lave. This
time frame, if it must be adhered to, will have an effect on
the funding possibilities. One possible way for a City to acquire
Innd Is for the City Council to issue general obligation bonds
in the required amount. According to Springsted, a referendum
would be required for the City Council to issue general obligation
bonds for the purpose of buying land. Time constraints eliminate
this possibility. There is no possible way for the City to set e
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Council Agenda - 11/10/86
referendum, give all proper notices, conduct an election, then
authorize the issuances of bonds and receive the proceeds in
order to make the acquisition in the waning days of 1986.
Also, there is a risk that such a referendum would not even pass
such that the City incurs the expense of conducting a special
election without voter approval to proceed.
A second bonding option would be for the Housing and Redevelop-
ment Authority to issue bonds for the acquisition of land under
the approval and scrutiny of the City Council. Springsted
advises me that bonds issued by the Housing and Redevelopment
Authority requires a pledge of revenue to retire those bonds
rather than general levy. Since the HRA does not currently have
bona fide development prospects, the HRA cannot document a
specific source of projected revenue to retire the bonds. Hence,
this alternative seems unlikely.
The third alternative is made possible under new State legislation
which allows cities to create Economic Development Authorities.
Economic Development Authorities (EDAs) can issue a form of general
obligation bond, not unlike tax Increment bonds, which can be
retired through a combination of tax levy and non tax revenue.
There must be the ability to prove that at least 20S of the bond
amount will be generated through non tax revenue. I.e., land
sales. Again, having no specific project, the EDA would be
betting on the come. Also, the City would need to create and
certify with the State an Economic Development Authority prior
to even starting the bond process. This, again, makes this
procedure unlikely because of the time restrictions.
The fourth alternative to acquire the land would be to use
surplus cash that the City has on hand. For general discussion
purposes. Rick and I are using the figure of approximately
$1.1 million dollars and unencumbered cash surplus, excluding
the debt retirement funds. These are monies that In our
estimation have no previous dedication of use nor do they cover
any planned expenditure in the forseeable future. These
monies are general purpose monies that can legitimately be used
for the purchase of land.
I think this is the appropriate place to present the asking
price. Rick will be supplying additional Information and evalua-
tion of the asking price and what it means. For the purposes of
this discussion, the asking price for the 79 acres is $400,000.00.
In addition, the City would be expected to repay itself (bond funds)
the delinquent assessments and taxes. This amount totals approxi-
mately $267,000. Total land price would be $667,000.00. During
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Council Agenda- 11/10/86
our discussions with each other as well as with Springsted and others,
we have been using the rounded figure of $700,000.00. That figure
is especially accurate when dealing with a bond issue, but for
pure cash expenditures we are better off using the figure of
$670,000.00 to $675,000.00. Using the figures just as presented,
if the City spent $675,000.00 for acquisition, the surplus cash
amount would be reduced to $425,000.00.
Returning to the discussion on surplus cash, the following infor-
mation should be considered. Currently, we have surpluses in
some of our bond accounts that allow us to keep our payments
current in other bond accounts where assessments are delinquent,
but payments still need to be made. In essence, advanced payments
in some bond accounts allow the City to make payments in bond
accounts where the revenue is delinquent. This may not always
be true, in which case, in order to stay current with our required
bond payments we may have to go to the surpluses in other funds.
This is virtually impossible to predict whether or not it might
happen. It is simply being presented as a consideration.
Let us now assume that the City elects to purchase the land. If
we somehow figure out a way to issue a $700,000.00 general
obligation bond to cover the purchase, then the City would be
required to levy $96,000.00 per year for 10 years at 6.255 to
retire the bond. This levy is the City's exposure; that is. if
the City is unable to sell land to generate the $96,000.00 annual
payment, then it must levy it to guarantee payment. Obviously.
if the City can sell the land the levy would not be needed. I
provide the number only to indicate the potential exposure to tax
levy.
Considering the other possibility that the City elects to buy the
land using surplus funds. there needs to be a decision whether or
not to recover that surplus through levy or simply wait until the
land is sold to recover the surplus. Again, using $700,000.00,
If the City wishes to recover that amount of money over 5 years
the City would need to levy $140,000.00 per year. Over 6 years
the levy would be Sllb.670.00 and over 7 years it would be
$100,000.00 a year. If the City opted to levy for surplus
recovery, at the end of the projected term the surplus would be
back up to the $1.1 million. Any land that the City may have
been able to sell would be additional surplus accruing to the
City treasury. Conceivably, the surplus could approach $2.2
million if the Council opts to recover the expenditure through
levy and successfully Sell all of the land.
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Council Agenda - 11/10/86
I think the other major consideration the City needs to consider
is the overall marketing strategy and benefit derived. The
appraisal that was provided by the Oakwood Partnership shows
cost adjustments for a six year period. A separate sheet has
been provided indicating what the sale's history has been in
Oakwood. The Council ought to consider the risk factor with
respect to the years it takes to liquidate the land. One question
Rick and I have asked is why was six years chosen as the projected
sell out. Rick will be providing additional information with
respect to the value and return spread over different lengths
of time. Clearly, if the City could sell off the entire avail-
able land in less than six years, our return is much greater
than what the appraiser projects, depending on the terms.
If it takes longer than six years to sell the land, then our
return is substantially less. The appraisal accounts for
approximately 172 in marketing costs and has reduced the
asking price accordingly. This amount covers the actual
marketing efforts and the holding cost, or basically the
cost of using our money to acquire the land. Rick and I
believe, based on conversations with others, that it would be
more realistic to anticipate a 102 cost for realators and
a 1OZ City cost for a total of 202 marketing expense.
Some of the other theoretical questions are should the City be
In competition with private land owners. It has been mentioned
that other cities in Minnesota have acquired land to establish
Industrial parks and sur.cessfully marketed them. Based on my
general background knowledge of these instances, cities have
generally established an industrial parks when there has been
no private enterprise to do so. Monitcello currently has
Industrial land along Louring Lane and other industrial land
in Thomas Park which private parties are attempting to market.
If the City owned Oakwood, we would go Into direct competition
with private developers. it should also be noted that there is
industrial land available out near Electro Industries. Generally,
cities that have gotten into the industrial land business have
done so because they identified a need and there was no party
available to address that need. I am not sure that we can document
that need in Monticello in light of all the land that is available.
Let us assume at this point that you have no difficulty with the
City entering the competitive real estate market. That being the
case, we must consider whether or not this is a good site to own
to be in o competitive market. This mornings issue of the
Monticello Times indicates that the proposed site for the middle
school may change. One of the sites included in the reconsidera-
tion is the original alto selected which includes part of Oakwood
Industrial Park. if the school should locate in this area, the
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Council Agenda - 11/10/86
City needs to ask whether or not it wants to own industrial land
close to the school. Will such land be easily marketable? To
further confound the issue, after the paper was published, I
received a call from Shelly Johnson of the school district
who indicated that Mr. Boyle had secured the additional finance
necessary to make his site workable. Thus, if the middle school
goes back to the Boyle property and Mr. Boyle installs all of
the necessary improvements across his property, then we have
approximately 200 * acres of additional land zoned and improved
for industrial development. Suddenly, the land available for
industrial development is substantial and the competition will
be very strong.
On final element should be noted. If one assumed a very "hard
line" posture, disregarding all personality and attending only
to pure dollars and cents, one can ask why should we buy this
land when within a short period of time it can become the City's
simply through tax forfeiture. Technically, the term of
delinquency currently lying on the land has exceeded the
statutory limits, and the City could call for a tax forfeiture
sale. please understand [hat none of us are an advocate of
this procedure, but simply feel that it needs to be mentioned
for full evaluation possibilities. While the tax forfeiture
question is brought up, the City Council should note that there
other lands with substantial delinquencies such as the outlot
in Country Club and portions of Meadow Oak and surrounding lands
which could conceivably come to the City by forfeiture. If the
City acquired all of this land through forfeiture as well as
purchased more lands, the City could end up owning several
hundred acres.
Before going Into the heart of the financial tatters, I wish to
spend just a few sentences on the acquisition effect on 1987
budget. If we assume that the acquisition makes sound financial
sense to the City, there still must be a separate consideration
about the budget. The interest lost during the years the City
holds the land is projected to be recovered upon sale. However,
there Is an immediate effect in 1987 budget by the loss of
$38.500.00 of Interest income. The City would need to sell
4 acres at $10,000.00 per acre to simply regain the 1987
budgeted interest. Lose of the interest creates an imbalanced
1987 budget. With respect to other budgets, there Is a con-
ceivable loss of $10,065.00 1n tax revenue, which would be
respread over the taxable part of the City, once the City takes
ownership and applies Its tax exemption to the land. As the City
sells the land, of course, the land goes back on the tax rolls.
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Council Agenda - 11/10/86
This then concludes the general comments section on this proposed
acquisition. The following material is provided by Rick to cover
more specific data which is then followed by charts and additional
financial data. Again, I wish to emphasize that you should feel
free to contact us if this information is not clear or if you wish
to further debate the merit or demerits of such an acquisition.
(R.W.):
As was mentioned earlier, the asking price for the 79 acres is 5400,000.00
plus the City would be assuming delinquent taxes and assessments
along with future unpaid assessment balances totaling 5268,000.00.
The actual total asking price is then a little over $668,000.00.
A breakdown on the delinquent assessments, etc., is included in the
supplement.
Some additional charts have been included and show the expected
sales revenue and the resulting wholesale value of the property
assuming different sell off periods rather than the six years projected
by the Oakwood Partnership's appraisal. Examples were prepared
aosuming an B -your sell off poriod, a 10 -year sell off period, and
a15 -year period. The charts were prepared using the same information
presented in the appraisal report and assume the estimated market
value today is 30t per square foot with an inflation factor of 3%
per year and a deduction of 17% for sales and marketing cost with
an expected rate of return of %%. An you can see by the charts,
if it took the City 8 years to call off the 79 acres, today's value
of the property, assuming the appraiser's assumptions are correct,
would be $637.000.00. 1f the property took 10 years to liquidate,
the present value is only $603,000.00; and over 15 years the value
would be $527,500.00. In all three assumptions, the present value
lase the amount of unpaid and delinquent assessments totaling 5268,000.00
would be deducted with the not result being the amount the City
would immediately have to come up with if the property was purchased.
At this point, We anybody's guess an to whether the property would
sell in 6 years, or 10 years, or 15 years, but the information is
being presented, as it would have a direct bearing on the purchase
price.
As noted earlier, if Mr. Boyle's 120• acres lying east of the present
industrial park are improved with newer and streets, it is assumed
that Mr. Boyle will be actively trying to &all his property and
be in direct competition with other industrial and commercial property
in Monticello. It in assumed that when the appraisal was completed
for the Oakwood Partnership and an estimated 6 -year sell off period
was used, the appraiser was not aware that Mr. Boyle's 120+ acres
may be readily available as marketable property. Since Oakwood
Industrial Park has bean in existence for over 14 years with the
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Council Agenda - 11/10/86
majority of the property improved with utilities for approximately
10 years, now that additional industrial property may be available
as direct competition, in it realistic to assume that it will only
take 6 years more to sell the other half of Oakwood.
If the property is to be considered for purchase and the financing
method would be to use surplus funds for the purchase, the closing
of a sale before the end of the year may cause a strain on the City
finances in that the majority of the City's investments have not
been scheduled to mature by the end of the year, but at other time
periods during 1987, etc. Although a large amount of investments
have been scheduled to mature on January 30, 1987, these funds are
earmarked for bond payments. Depending on the actual cash outlay
necessary, enough current cash may be available in December from
the second half tax settlements. A large expenditure of this nature
was not anticipated and, therefore, the money is not currently available
in the checking account. Some way or another, if it's the Council's
desire to complete a purchase before year end, I am sure I could
come up with the necessary funds without incurring too much of a
penalty for cashing investments early.
The proposal as submitted by the Partnership is for a cash buy out
of $400,000.00 plug the assumption of delinquent assessments; and
if it is the Council's opinion that the property would not sell
in a 6 -year time period as indicated in their appraisal report but
over a different time period, this naturally affects the selling
price. No discussions have taken place with the Partnership regarding
a different sell off period assumption, and the Partnership may
not be acceptable to a reduced price below their asking price, although
the Council could make a counter proposal if it so desired. As
noted in the supplement, if an offer was made based on an 8 -year
sell off time period, the actual cash to be received by the partnership
would be 5369,700.00 all the way down to $259,500.00 if a 15 -year
sell off was anticipated. No indication has been made by the Partnership
that they are even willing to consider offers and may not be interested
in selling the property at leas than their original asking price.
B. ALTERNATIVE ACTIONS AND STAFF RECOMMENDATIONS:
The staff has not prepared any recommendation for thin item, and
the alternatives have been outlined in the agenda.
D. SUPPORTING DATA:
Please refer to the October 14 Council agenda for a copy of the
appraisal report; additional charts indicating wholesale value of
property assuming different length of sell off periods; and listing
of actual cost of property including delinquent assessments.
-7-
GENERAL LEVY
TO RECOVER SURPLUS EXPENDITURE
5700,000.00 - 5 years • 5140.000.00/yr. (1.3 mil) -
$700,000.00 - 6 years • 5116,670.00/yr. (1.1 mil)*
$700,000.00 - 7 years . 5100,000.00/yr. ( .94 mil)*
-mill rate projections based upon 1987 estimated valuation of $106 million.
Mill rate is, of course, totally meaningless. Provided simply for
reference.
.........•.......•.............••...........*........................*.•
LEGAL:
According to the City Attorney, we can estimate an expense of $500.00
for each parcel conveyance. This assumes no problems with title
or closing.
15 (platted lots) x $500.00 - $7,500.00
ADDITIONAL COSTS OF PURCHASE
Delinquent taxes and assessments (1981-1985) $166,523.91
Additional penalty (Nov. -Dec.) 1,783.16
1986 Assessments due 22,323.94
Penalties 6 interest 2,678.86
Remaining unpaid assessments 76,718.69
TOTAL DELINQUENT 6 UNPAID ASSESSMENTS $268,028.56-
-The above total assumes Oakwood pays 1986 taxes of $10,065.58, which
they indicated they would be doing.
Asking price $400,000.00
Delinquent taxes, assessments, etc. $268,028.56
ACTUAL TOTAL ASKING PRICE $668,028.56
79 acres
S 8,456.00 per acre
Using the same estimated market values of 5.30/sq.ft. with an inflation factor
of 38 per year, a 178 sales and marketing cost and an expected rate of return
of 958.
As outlined by their appraiser, the following charts show the present value
of the property if the sell-off period would take 8 years, 10 years, or 15 years
(rather than 6 years as projected in appraisal rerport.)
ESTIMATED PRESENT WORTH
PRICE PER SQUARE FOOT:
PRICE PER ACRE
10 YEAR SELL-OFF PROJECTION
After Deducting
Sales 6 Marketing
Expense
S 85,691
68,260
90,889
93,602
96,402
99,287
102,257
105,314
108,484
111,740
Present
Goras-
8 YEAR SELL-OFF PROJECTION
Sales Revenue
1
After Deducting
2
Gross•
Sales 6 Marketing
Year
Sales Revenue
Expense
1
$129,052
5107,113
2
132,923
110,326
3
136,881
113,611
4
140,968
117,003
5
145,184
120,503
6
149,528
124,108
7
154,002
127,822
8
158,605
131,642
TOTAL
ESTIMATED PRESENT WORTH OF
PROPERTY
PRICE
PER SQUARE FOOT:
PRICE
PER ACRE:
ESTIMATED PRESENT WORTH
PRICE PER SQUARE FOOT:
PRICE PER ACRE
10 YEAR SELL-OFF PROJECTION
After Deducting
Sales 6 Marketing
Expense
S 85,691
68,260
90,889
93,602
96,402
99,287
102,257
105,314
108,484
111,740
Present
Goras-
Year
Sales Revenue
1
$103,242
2
106,338
3
109,505
4
112,774
5
116,147
6
119,623
7
123,202
8
126,884
9
130,704
10
134,627
ESTIMATED PRESENT WORTH
PRICE PER SQUARE FOOT:
PRICE PER ACRE
10 YEAR SELL-OFF PROJECTION
After Deducting
Sales 6 Marketing
Expense
S 85,691
68,260
90,889
93,602
96,402
99,287
102,257
105,314
108,484
111,740
Present
Wholesale
Worth Factor
Value
.913242
597,820
.834011
92,013
.761654
86,532
.695574
81,384
.635228
76,547
.580117
71,997
.529787
67,718
.483823
63,691
Present
Worth Factor
.913242
.834011
.761654
.695574
.635226
.580117
.529787
.483823
.441847
.403513
$637,702
$637,700
5 -1a53
S 8,072
WholonaI a
Value
$78,257
73,609
69,226
65,107
61,237
57,598
54,174
50,953
47,933
45,088
$603,162
5 .1752
5 7,635
15 YEAR SELL-OFF PROJECTION
-All sales figures assume a 3% annual increase and assume an equal t of property
is sold each year of the sell-off period.
SUMMMY
After Deducting
Actual Cash
If Sell-off
Wholesale
Grose-
Sales S Marketing
Present
Wholesale
Year
Sales Revenue
Expense
Worth Factor
Value
1
$ 68,828
S 57,127
.913242
$52,171
2
70,893
58,841
.834011
49,074
3
73,003
60,592
.761654
46,150
4
75,183
62,402
.695574
43,405
5
77,431
64,268
.635228
40,824
6
79,748
66,190
.580117
38,398
7
82,134
68,171
.529787
36,116
8
84,589
70,208
.483823
33,968
9
87,135
72,322
.441847
31,955
10
89,751
74,493
.403513
30,059
11
92,435
76,721
.368505
28,272
12
95,188
79,006
.336534
26,588
13
98,033
81,367
.307336
25,007
14
100,970
83,805
.280672
23,521
15
103,999
86,319
.256321
22,125
ESTIMATED PRESENT WORTH OF
PROPERTY
$527,533
PRICE
PER SQUARE FOOT:
$ .1532
PRICE
PER ACRE:
S 7,635
-All sales figures assume a 3% annual increase and assume an equal t of property
is sold each year of the sell-off period.
SUMMMY
,J
Assessments
Actual Cash
If Sell-off
Wholesale
Assumed by
Needed
Period in:
Value
City
Immediately
6 years
$668,000
S 1268,000)
$400,000
6 years
637,700
(268,000)
369,700
10 years
603,200
(268,000)
335,200
15 years
527,500
1268,000)
259,500
,J
OAKWOOD INDUSTRIAL PARK SALES HISTORY
(Supplied by Oakwood Partnership)
Year
Legal
Purchaser
9/73
Lot 2, Block 2
State of Minnesota
5/76
S', Lot 1, Block 1
Joyner
6/76
W12 Lot 1, Block 2
Independent Lumber
9/76
Lot 5, Block 1
City of Monticello
4/77
SS Lot 2, Block 1
Joyner
7/77
S11 Lot 4, Block 1
Larson Manufacturing
9/77
N5 Lot 1, Block 1
Pemberton
10/77
ES Lot 1, Block 2
Schackor
3/78
Ny Lot 2, Block 1
Doerr
6/78
" Lot 3, Block 1
B B 6 K, Ptr.
3/79
Sh Lot 3, Block 1
SMA Elevator
11/79
Lot 5, Block 2
Clow
1979
E Part Lot 3, Block 2
Golden Valley Purn.
11/82
Lot 7, Block 3
City of Monticello
1XI
9/83
Lots 5 6 6, Block 3
City of Monticello
1KI
G
Council Agenda - 11/10/86
5. Consideration of Convertins Mercury Vapor Street Lights to High
Pressure Sodium. O .S.)
A. REFERENCE AND BACKGROUND:
Several years ago. Northern States Power ceased to install mercury
vapor street lights for new installations. All new installations
utilized high pressured sodium. The high pressured sodium
lights produce more light per watt of energy consumed than the
mercury vapor lights. The main difference is that the mercury
vapor lights tended to be a nice white light and the high
pressure sodium are more of a yellow light.
NSP now feels that it is more cost effective for them to replace
all of the mercury vapor lights at their own expense. Evidently
the lover cost of operation of these lights will pay for not only
the fixture but the change over as well. The City currently has
88 mercury vapor lights which would be changed. The current
monthly chargee for the high pressure sodium lights are similar
to those of the mercury vapor and therefore, there will be no
significant increase in monthly costs.
B. ALTERNATIVE ACTIONS:
1. Authorize the change over as requested by NSP.
2. Retain the existing mercury vapor lights.
C. STAFF RECOMMENDATION:
It is the staff recommendation of the public works director that we
approve NSP's request for change over of these lights. The change
over to high pressure sodium in the downtown area which was done
several years ago has not met with any negative comments that I
know of. In addition, I have received no negative input from any
residents in areas where high pressured sodium lights have been
installed.
D. SUPOORTING DATA:
Letter from NSP.
-a-
PAP
October 30, 1986
Mr John Simola
Public Works Dir
P 0 Bax 83A
Monticello MN 55362
Dear Mr Simola
Northern States Power Company
Northwest Division
3515 10 street NOnh
P.O. Bo. BOB
Beim Cbuo. Minnema 56302
Telephone (612) 255.8600
Northern States Power Company is in a street light conversion program that
changes NSP owned mercury vapor street lights to high pressure sodium.
This light is more energy efficient by using less wattage, but also pro-
duces more light (lumens) than the old mercury vapor.
NSP will convert these mercury vapor street lights to the new high pressure
sodium at no additional cost to the City.
NSP will be replacing as follows:
Mercury Vapor
Lumens
H.P.
Sodium
Lumens
175 watt
81100
WITH 100
Watt
9,500
250 Watt
12,000
WITH 150
Watt
16,000
400 Watt
22,000
WITH 250
Watt
25,000
NSP would like to schedule your city for this conversion in the year 1987.
Please bring this request before the City Council for approval. Also please
send me a letter of authorization so design of the project can be completed
this year.
If you have any questions, please give me a call.
Thank you
1
Rodney R,'Bemis
Assoc Customer Service Representative
612-255-8641
C
D
Council Agenda - 11/10/86
6. Consideration of Setting a Special Meeting for the Purpose of Establishing
1987 Salary/wage Policies. (I.E.)
A. REFERENCE AND BACKGROUND:
For the last couple of years, the City Council has met with me in
special session to determine what would be an acceptable pool of
money to be used in creating increases in wages and salaries for
non-union personnel. It is now that time of year again. I think
it might be most beneficial to meet in special session prior to the
November 26 meeting. If the general guidelines are established at
that time. I will then be able to prepare new salary proposals for
final ratification on December 8. I do think, however, that the
special session will require slightly more than an hour's time.
What I would like to do is brief you on the comparable worth findings.
The comparable worth study is nearly complete with a class hierarchy
established. I have also prepared certain rationale for certain
discrepancies in salary scales that the City Council needs to review.
Once the comparable worth hierarchy has been reviewed, then the Council
might have a better feel for what kind of a salary pool should be
established for 1987 to make the mandated adjustments. The only
action required at this meeting is a motion to set the special meeting.
No other debate or discussion is required until I can gat the material
out to you.
-9-