SANDSTONE CITY COUNCIL

REGULAR MEETING

February 16, 2005

CALL TO ORDER

Mayor Atterbury called the meeting to order at 7:00 p.m.

ROLL CALL

Members present:            Johnson, Atterbury, Gafkjen, Bonander

Members absent:

Staff present:                Administrator Griffith, Recording Secretary Hormillosa, Stadin, CATV

Other present:               John Kern, Tim Franklin, Geoff Hilty, Steve Richardson, Judy Britton, Brad Hiler, Tim Raymond, Elsa Ames, Ken Connell, Shannon Connell, Taylor Connell, Chandler Connell, Brannon Best, Patty Atterbury, Andy Spartz

PLEDGE OF ALLEGIANCE

Mayor Atterbury introduced East Central student, Taylor Connell, who led Staff and members present in reciting the Pledge of Allegiance.

ADDITIONS OR CORRECTIONS TO THE AGENDA

Motion Gafkjen, second Bonander to approve the agenda with the deletion of 12E – Consider utility bill adjustment – Ortega, and the addition of 12F – Consider utility bill adjustment – Plumhoff.  Motion carried 4-0.

SPECIAL ITEMS OF BUSINESS

Appoint new Council member

With the resignation of Fred Keller, the City Council needs to choose a new Council member.  Four individuals expressed interest by submitting applications:  John Kern, Steve Richardson, Geoff Hilty, and James Edmond.  Each was given an opportunity to address the Council and to state their reasons for wishing to serve the City in this way.  James Edmond was not present at this time.  The Council voted twice and agreed that there was no consensus.  In accordance with state statute, Mayor Atterbury then appointed James Edmond to the open Council seat, to the EDA, to serve on the Intergovernmental and Development staff committees and as the Council liaison to the CDAC Commission.

PUBLIC HEARINGS

Kettle River Townhomes Tax Abatement

CEPCO, the developer of Sandstone Square, is proposing a 12-unit apartment building in Sandstone.  Financing, which will help make the rents affordable, is contingent on City participation.  This participation would be in the form of tax abatement, a tax rebate for a certain number of years.  The County held a public hearing on the issue and declined participation. 

Motion Gafkjen, second Johnson to open the public hearing at 7:15 p.m.  Motion carried 4-0.

Elsa Ames expressed concern that the Planning Commission rezoned this property from Commercial to Multi-family to allow for this development without the full knowledge of the facts.  She also wondered if the units would constitute competition to the City-owned units. 

Griffith responded that due to income restrictions, this development would not directly compete with EDA-owned housing.

Rene Stadin reminded the Council that the Planning Commission voted the project down.

Tim Raymond questioned the project’s purpose.   Mark Carlson, CEPCO developer, responded that the profit is limited and that the purpose is to provide more affordable housing in the community.

Brad Hiler asked what impact the proposed tax abatement would have on his personal taxes.  Griffith responded that it would not affect market value or tax rate and would have a very limited impact on Hiler’s taxes.

Richardson inquired as to the paving of the road and parking lot and the drainage of the property.  Griffith responded that the property will drain to the southeast and that the parking lot and portion of Old Military Road leading to it would be paved at the expense of the developer as part of the project.

Stadin also wondered about the School District’s position on the abatement.  Griffith responded that a meeting was set with the District and their financial advisor for Friday to discuss the matter.

Motion Gafkjen, second Bonander to close the public hearing at 7:36 p.m.  Motion carried 4-0.

Bonander stated that he felt the project was in the public interest in that it met a need for affordable housing in the community. Atterbury wondered why the County declined participation, to which Griffith responded that this was a new proposal to the Board and it did not wish to set a precedent.   Johnson asked if the amount abated would be levied against the rest of the property owners.  Griffith again explained that providing a tax rebate to this project would not have a direct impact on Sandstone tax payers, based on how the tax rate and tax capacities are calculated but that the amount would be levied as a special levy. 

Gafkjen stated that although the Planning Commission was not in favor of this project, she felt that it would be in the best interest of the City to participate in the tax abatement, consequently allowing the development to proceed, based on the following rationale:  it would provide much-needed affordable housing, it would be paying full taxes after the abatement period, it would bring more people in town, and it would include the paving of a portion of Old Military Road.

CITY OF SANDSTONE, MINNESOTA

RESOLUTION NO. 2005-07

RESOLUTION APPROVING

PROPERTY TAX ABATEMENT FOR

CERTAIN PROPERTY IN THE CITY

            BE IT RESOLVED by the City Council (the “Council”) of the City of Sandstone, Minnesota (the “City”) as follows:

            Section 1.  Recitals.

1.01.         The City has determined a need to grant a property tax abatement to Kettle River Townhomes Limited Partnership (the “Developer”) for an affordable rental housing facility to be located on certain property in the City described in Exhibit A hereto (the “Property”), pursuant to Minnesota Statutes, Sections 469.1812 to 469.1815 (the "Act").

            1.02.            This Council has previously reviewed information concerning the above-referenced facility, including a Contract for Private Development to be dated on or after February 16, 2005 (the (“Development Agreement”) proposed to be entered between the City and the Developer.

            1.03.            On February 16, 2005 the Council conducted a duly noticed public hearing on the City Abatement (as hereinafter defined) at which the views of all interested persons were heard.

            Section 2.  Findings.

            2.01.            It is hereby found and determined that the benefits to the City from the City Abatement will be at least equal to the costs to the City of the City Abatement, because (a) the City Abatement will make possible the development of 12 units of affordable housing for residents of the City, and (b) the long-term taxes collected from the Property after termination of the City Abatement will exceed the amount of the City Abatement returned to the Developer.

            2.02.            It is hereby found and determined that the City Abatement and the execution of the Development Agreement are in the public interest for the reasons described in Section 2.01.

            2.03.            It is further specifically found and determined that the City Abatement is expected to result in the following public benefits:

(a)    Create an estimated $580,000 increase in estimated market value for property tax purposes, which will be available to all taxing jurisdictions after expiration of the City Abatement.

(b)    Facilitate the development of 12 units of housing, 40% of which will be rented to persons with incomes not to exceed 60% of the county median income.

            Section 3.  Actions Ratified; Abatement Approved.

            3.01.            The Council hereby ratifies all actions of the City’s staff and consultants in arranging for approval of this resolution in accordance with the Act.

            3.02.            Subject to the provisions of the Act, the City Abatement is hereby approved and adopted subject to the following terms and conditions:

(a)    The term "City Abatement" means the real property taxes generated in any tax-payable year by extending the City’s total tax rate for that year against the tax capacity of improvements constructed on the Property in accordance with the Development Agreement, excluding the tax capacity of the land, as of January 2 in the prior year.

(b)    The City Abatement will be paid commencing with taxes payable in 2007 and continuing until the Developer receives, the amount of $66,600 or for a period of fifteen years (through taxes payable in 2021), whichever occurs first.  Notwithstanding anything to the contrary herein, all payments of City Abatement to the Developer are subject to the terms and conditions of the Development Agreement, including without limitation Developer’s compliance with certain income limitations for residents of the housing facility as described in the Development Agreement.

(c)    In accordance with Section 469.1813, subdivision 8 of the Act, in no case shall the City Abatement, together with all other abatements approved by the City under the Act and paid in any one year exceed the greater of 10% of the City’s levy for that year or $200,000.

(d)    The City Abatement is subject to modification in accordance with the Act, subject to the terms of the Development Agreement.

(e)    In accordance with Section 469.1815 of the Act, the City will add to its levy in each year during the term of the City Abatement the total estimated amount of current year City Abatement granted under this resolution.

            3.03.            This Council hereby approves the execution of the Development Agreement.  The Mayor and City Administrator are authorized and directed to execute and deliver the Development Agreement in substantially the form on file with the City, subject to modifications that do not alter the substance of the transaction and are approved by the Mayor and City Administrator, provided that execution of the document by such officials is conclusive evidence of their approval.  Such officials are also authorized to execute any and all other documents that are required by the Development Agreement.

Approved by the City Council of the City of Sandstone, Minnesota this 16th day of February 2005.

                        Mayor

Attest:

City Administrator

EXHIBIT A

THE PROPERTY

Lots 6, 7, 8, 9, and 10, Block 2 Sandstone Townsite Company’s Third Addition to the Village of Sandstone.

Motion Gafkjen, second Bonander to adopt Resolution 2005-07, resolution approving property tax abatement for certain property in the City.  Motion carried with a roll call vote:  Johnson – aye, Atterbury – nay, Gafkjen – aye, Bonander – aye.

Newly-appointed Council member Jim Edmond arrived at 7:45 p.m.  He took the oath of office and his seat at the Council.

Sidewalk improvement project

Motion Gafkjen, second Bonander to reopen the public hearing on the sidewalk improvement project at 8:15 p.m.  Motion carried 5-0.

Brad Hiler, after contacted his neighbors, stated that the consensus of property owners on Lark Street is to replace the concrete sidewalk on the north side of the street and to repair the sandstone sidewalk on the south side.

Motion Gafkjen, second Johnson to continue the public hearing to March 16.  Motion carried 5-0.

Motion Gafkjen, second Johnson to direct Staff to notify affected property owners of estimates of the sidewalk improvement assessments and to invite them to the continued public hearing on March 16, 2005.    Motion carried 5-0.

PRESENTATION OF AWARDS, PETITIONS OR COMPLAINTS

Tim Raymond stated that he would like to see the vacated Elementary school playground be developed for continued City use.  He also felt that the City needs tennis and basketball courts.

Hilty suggested that in the absence of participation in the development of the Skate Park, the City might consider developing it into a basketball court.

Brannon Best informed the Council of an accident in which she was involved where she was hit by a dump truck at an uncontrolled intersection.  She is petitioning the City to place a stop sign at the intersection of Park and 6^th Streets.  A lively discussion ensued regarding signage in the City. 

Motion Johnson, second Edmond to solicit a recommendation from Public Works Director, Chuck Vork, regarding the appropriate placement for traffic control signage at or around Park and 6^th Streets and to place this item on the agenda for the next Council meeting.  Motion carried 5-0.

APPROVAL OF MEETING MINUTES

Motion Johnson, second Bonander to approve regular meeting minutes for February 2 and special meeting minutes for February 8, 2005.  Motion carried 5-0.

FINANCE OFFICER’S REPORT

Claims

Motion Atterbury, second Gafkjen to approve and pay claims in the amount of $24,760.47.   Motion carried 5-0.

OLD & CONTINUING BUSINESS

There was none.

NEW BUSINESS

Authorize drafting of tax abatement policy

Currently the City has no policy regarding tax abatement, although it does have policies for tax increment and business subsidy. 

Motion Bonander, second Gafkjen to direct Staff to prepare a draft Abatement Policy for the Council to review.  Motion carried 5-0.

Comp time policy review and enforcement

Current City policy allows for compensatory time in place of overtime and states that unused hours of comp time must be used within 8 weeks.  The City has not budgeted for overtime payments however when employees whose position is to work less than 40 hours work more than their allotted hours they are paid for those extra hours. The request is to clarify what the City will do if the employee with comp time does not use the hours within the stated 8 weeks.

Motion Johnson, second Gafkjen to include in City policy a statement that the City will pay out for all unused compensation time which has not been used within an 8-week period of time at the next pay period.  This is effective with the pay period beginning Feb 28, 2005.  Motion carried 5-0.

Open position on Park & Recreation Commission

The Park & Recreation Commission, which currently has 9 seats, has failed to have a quorum at ten of the last fifteen meetings.  Commission members Johanna Olson and Dick Edwards have not been in attendance at meetings and have not responded to written and phone contacts to ascertain their current interest in the Commission.  The Council may declare these position open and advertise to fill them. 

Gafkjen suggested that the Commission is too large to be effective and that adequate input can still be achieved at the meetings even if the number of Commissioners is reduced.

Motion Gafkjen, second Bonander to amend City Code to reduce the number of seats on the Park & Recreation Commission from nine to seven, continuing to allow for 2 non-residents to be included in that seven.  Motion carried 5-0.

Consider utility bill adjustment – Atterbury

Randy and Patty Atterbury has petitioned the City for a water bill adjustment at 309 Minnesota Street.  A water bill of $1,063.00 resulted from a broken pipe in the basement.  Mayor Atterbury left the room before the Council discussed this situation.  Patty Atterbury explained that their insurance company had directed them to petition the City for a water bill adjustment.

Edmond felt that, although the situation was unfortunate, the decision should be an objective one based on policy and whether or not the City had any responsibility for the situation. Andy Spartz reminded the Council that there is a cost to be borne for the treated water.

Motion Johnson, second Edmond to deny the Atterbury’s request for a water bill adjustment.  Motion carried 5-0.

Consider utility bill adjustment – Plumhoff

Roger Volk, attorney-in-fact for Clara Plumhoff, has petitioned the City to waive her January water bill because she moved into the nursing home and there was nobody living in the apartment.  A final bill was not requested by the apartment owner until February 1^st. 

Johnson pointed out that the property owner is in fact the one responsible for payment.  However, in this case the bill was being sent to the tenant since that had been the arrangement for many years. 

The minimum monthly bill is $29.71, which is the cost to operate the system.  There was no usage recorded.  The City requires notification when an occupant moves out so that a final bill can be issued.

Edmond pointed out that the City was not at fault.

Motion Bonander, second Gafkjen to deny request to forgive Clara Plumhoff’s minimum monthly water bill for January.  Motion carried 5-0.

REPORTS

Motion Gafkjen, second Johnson to accept the reports as follows:  Summary of paid claims; PeopleService operations – February 2; Planning Commission minutes – February 9. Motion carried 5-0.

WRITTEN NOTICES AND COMMUNICATIONS

Local 49 has notified the City of an increase in medical premiums.

ADMINISTRATOR’S REPORT

Griffith reminded the Council and the public of two open houses, February 23 and March 23, the purpose of which is to allow informal question and answer time with Council members.  Atterbury and Bonander will be available February 23 at City Hall between the hours of 6 -8 p.m.

Additionally, March 7^th or 8^th will be an organizational meeting for the Neighborhood Watch.  There is still a need for Skate Park Booster Club.  March 16^th is set aside for a Council workshop on either summer Public Works projects or recommendations from the Park & Recreation Commission.  The Hospital Board is holding its annual meeting on February 22^nd.  MNDOT has postponed repairs on Highway 23/123 until 2007. Griffith then provided updates on recent legislative activity and informed the Council that he will be on vacation the week of March 21. 

ADJOURN

Motion Gafkjen, second Johnson to adjourn at 9:21 p.m.

                                                                        ________________________________

                                                                        Randy Atterbury

                                                                        Mayor

Attest:

__________________________________

Donna Hormillosa

Recording Secretary