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HomeMy WebLinkAbout10C - Jeffers Pond Environmental Learning Center Project MEETING DATE: AGENDA #: PREPARED BY: March 3, 2008 . I\~' 10C (\~^ \ Frank Boyles, City Manager'( AGENDA ITEM: CONSIDER APPROVAL OF A REPORT REGARDING THE JEFFERS POND ENVIRONMENTAL LEARNING CENTER PROJECT. DISCUSSION: Introduction The purpose of this agenda item is to solicit direction from the City Council regarding how to proceed with the Jeffers Pond Environmental Learning Center construction project. History In 2004 through the sale of 12 acres of property to the school district for Jeffers Pond Elementary School, $500,000 in securities were set aside in the name of the City of Prior Lake to be devoted to an environmental learning center project. The document provides that the project must be accomplished by January 18, 2011 or this funding will be lost. Rather than require a letter of credit to guarantee this amount, as is the City's practice, we allowed the developer to place bonds and stocks in an account in the name of the City of Prior Lake. This approach allowed Jeffers the ability to retain the interest earned from the stocks and bonds while providing a security to the City with minimum financial impact to the Jeffers. Subsequent to the land sale, Jeffers Foundation was established and began to sponsor environmental projects around the metropolitan area and State utilizing the interest received from funds garnered through the sale of Bob Jeffers land. A building committee was formed representing the City, school district and Jeffers Foundation, to identify what the environmental learning center should include. They identified a needs list which totals up to approximately $1.6 million. In 2006, the Jeffers Foundation approached the City with a proposal intended to move the environmental learning center construction project forward. They offered to donate another $200,000 toward the environmental learning center project if the City would allow 28 acres in the Five Hawks nature area to be placed into conservancy. Jeffers Foundation would pay all associated costs. The City Council approved this request. The Foundation also agreed to contribute an additional $420,000 if the City would provide $280,000. The City Council authorized the City contribution. Between the various parties, the funds available to construct the learning center included: The original securities in the purchase agreement Funding offers in exchange for the conservancy at Five Hawks Jeffers Foundation contribution City match Total $500,000 $200,000 $420,000 $280,000 $1,400,000 www.cityofpriorlake.com Phone 952.447.9800 I Fax 952:447.4245 The school district was to provide $200,000 for fixtures and other capital items as well as program, operate and maintain the building. The relationship between the City as building owner and school district as lessee was to be memorialized in an agreement. The school's contribution brought the total funds available for the project to the amount needed to fulfill the building committee's identified needs. The City hired Bill Wolters, dba Constructive Ideas, to act as the owner's representative for the project. Bill prepared requests for proposal for architect selection and led the previously-formed building committee through the selection process. 1&8 Engineers and Architects was selected for the project. Since their selection, 1&8 representatives, Bill Wolters, and the building committee have completed the design development phase. Current Circumstances When the school district referendum failed, it became apparent that there would be significant repercussions to the environmental learning center project. The school district was building a new elementary school with previously approved referendum bond funds, but would not be able to open the school because of the most recent operating referendum failure. How could they then open an environmental learning center? Meetings were conducted between Superintendent Westerhaus, Jeffers Foundation representative Paul Oberg, and Mayor Haugen. The discussion focused upon whether Jeffers Foundation would pay for the operating funds until the school district could do so. Oberg confirmed that Jeffers Foundation would not assume this responsibility. Other parties such as the Watershed were asked. To date we have not found a party to assume this responsibility. We next considered at what point the project should be discontinued. Bill Wolters provided a memo regarding the pros and cons of terminating the project at the present stage (design development) vs. completing contract documents. He recommended that the project be completed through the contract document stage so it could be bid at any time in the future. We also met to discuss payment for services rendered to date. On February 8, 2008, Mr. Oberg wrote a letter to Mayor Haugen and superintendent Westerhaus explaining that, for a variety of reasons, he and Jeffers Foundation had taken the following actions: 1. The Foundation would not extend the 2011 project completion deadline by four years as he had indicated he would do in an earlier meeting. 2. The $200,000 set aside in exchange for allowing the 28 acres in Five Hawks to be placed into conservancy was withdrawn. Jeffers Foundation was to be responsible for this action, but elected not to complete it. According to Oberg, these funds are to be used for projects which, "...now have a higher priority..." 3. The $420,000 matching grant was also withdrawn. 4. Jeffers Foundation agreed to pay for bona fide costs incurred for the project to date with the understanding that such fees would reduce the original $500,000 set aside for the project in the purchase agreement. 2 ISSUES: FINANCIAL IMPACT: ALTERNATIVES: RECOMMENDED MOTION: 5. Jeffers Foundation would pay up to $25,000 for the installation of a floating bridge around the rock cascade if completed by May 1, 2008. Mr. Oberg's letter represents a dramatic turn around for the Jeffers Pond Environmental Learning Center construction project. In essence, this million-dollar project which would benefit our community for decades to come is stymied for lack of $20,000 - $30,000 annually to operate the building. Mr. Oberg's letter does not equivocate regarding the position of the Jeffers Foundation on this project. In light of the letter, the Council is being asked to address at least the following: 1. The Foundation withdrew funds unilaterally after the City acted in reliance of the offer. Does the Council desire to have the City Attorney take any and all actions appropriate to protect the City's interest? If such action were taken, there would be legal fees and the City would be obliged to keep the $280,000 dedicated to this project. 2. If the Council agrees to discontinue this project because of the actions of Oberg and the Jeffers Foundation, no action is necessary as the $280,000 will lapse back into the City's general fund balance since there is no project to which the funds are pledged. 3. Even with the withdrawal of project funds by Oberg and the Foundation, there remains some $650,000 +/- pledged to the project. Should the staff investigate how a scaled-down version of the environmental learning center, with presumably fewer operating costs, could be designed and constructed before 2011? 4. Jeffers has agreed to provide up to $25,000 to purchase, construct and install a floating bridge around the rock cascade if completed by May 1, 2008. Does the Council want the staff to move forward with this project? This project was part of the 2007 Capital Improvement Program, but could not be completed due to cash flow problems which occurred as a combination of the Pike Lake Park acquisition and drop in building activity. Should we reschedule the bridge in the Capital Improvement Program for 2012 (given the current project load) or utilize the money offered by the Foundation assuming it will not be withdrawn before May 1, 2008? Some of the alternatives such as legal action or the construction of the floating bridge represent expenditures of an unknown magnitude. Other alternatives result in additional fund availability for other City projects. 1. The City Council is being asked to consider four issues. The City Council could address each by individual motion, or use one motion to address all four. In any case, the City Council should record Resolution 07-178 dated October 15, 2007. As determined by the Council. 3 4646 Dakota Street S.E. Prior Lake, MN 55372-1714 RESOLUTION 07-178 A RESOLUTION AUTHORIZING THE JEFFERS FOUNDATION TO PREPARE A CONSERVATION EASEMENT FOR EXECUTION BY THE MAYOR AND CITY MANAGER OVER PROPERTY OWNED BY THE CITY AT FIVE HAWKS (WESTBURY PONDS PARK AND CREEKSIDE PROPERTY) Motion By: LeMair Second By: Millar WHEREAS, The City received a donation of land from the developers of Creekside Commons and Westbury Ponds; and WHEREAS, The City has allowed Independent School District 719 (School District) to use this land as part of the Five Hawks Outdoor Learning Center facility; and WHEREAS, The Jeffers Foundation has asked the City to permit a conservation easement to be placed over this property to preserve it in perpetuity for outdoor learning center purposes; and WHEREAS, Jeffers Foundation has offered to have the conservation easement prepared subject to the review of the City Attorney; and WHEREAS, Jeffers Foundation has offered to pay the City two-hundred thousand dollars ($200,000) for agreeing to the conservation easement subject to the $200,000 being used towards the construction of the Jeffers Pond Interpretive Center building project before January 18, 2011; and WHEREAS, A meeting was conducted on August 8,2007, which is memorialized in a letter signed and agreed to by both parties dated August 14, 2007. NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA as follows: 1. The recitals set forth above are incorporated herein. 2. Resolution 07-135 and 07-152 are hereby declared null and void. 3. The City agrees to place a conservation easement over land adjacent to Five Hawks Elementary School; and further agrees that the Minnesota Land Trust has the authority to enforce the provisions set out in the conservation easement. 4. Jeffers Foundation shall prepare, or cause to be prepared, the proposed conservation easement; including but not limited to any surveying costs necessary to define the property encumbered by the conservation easement. Upon completing preparation of the conservation easement, the document shall be provided to the City Attorney for review, comment and approval. 5. The Mayor and City Manager are authorized to execute the approved conservation easement subject to: 1) confirmation that $200,000 in securities have been assigned to the City of Prior Lake in the same account and subject to the same procedures as the $500,000 presently assigned for the interpretive center building; and 2) upon execution of an agreement with respect to the interpretive center which is satisfactory to the City and School District with respect to the use, costs, responsibilities and maintenance of the facility. WWWo.C\tyQfpriQrl~k~.qom Phone 952.447.9800 / Fax 952.447.4245 6. The City Attorney is hereby directed to prepare the appropriate legal documents to effectuate the terms of this resolution. 7. The City, School District and Jeffers Foundation shall use their best efforts towards assuring the Jeffers Pond Interpretive Center becomes a reality before January 18, 2011. If the Center does not become a reality before that date, the City shall return the securities to Jeffers. PASSED AND ADOPTED THIS 15th DAY OF OCTOBER 2007. YES NO Haugen X Haugen Erickson X Erickson Hedberg X Hedbera LeMair X LeMalr Millar X Millar Fr~~City Manager M:ICOUNCILIRESOLUTllAdmin\2007107-178 Five Hawks Easement 101507.DOC ~. Jeffers Foundation fJirecforJ: Mike Fairbourne Dar Fosse James W. Krause Paul W. Oberg - CEO Fergus R. Woolley - Secretary P.O. Box 408 . Wayzata, Minnesota 55391 · 952.475.9914 · 952.476.7439 (facsimile) www.jeffersfoundation.org . info@jeffersfoundation.org (e-mail) e;<pfori"!J horizons February 8, 2008 Mayor Jack G. Haugen Prior Lake City Council 4646 Dakota Street Southeast Prior Lake, Minnesota 55372 Dr. Thomas M. Westerhaus, Superintendent School Board of Independent School District #719 P. O. Box 539 Prior Lake, Minnesota 55372 I am writing in behalf of the Board of Directors of Jeffers Foundation ("Jeffers") with respect to the $500,000 set aside with the City of Prior Lake for use in the construction of the proposed environmental learning center (the "ELC") at Jeffers Pond, the proposed conservation easement on the property adjacent to Five Hawks Elementary School ("Five Hawks"), the proposed set aside of $200,000 to be held for use in the.construction of the Jeffers Pond ELC in consideration of the grant by the City of such conservp_tioneasement and the proposed pledge by Jeffers of additional funds to be used for the construction of the Jeffers Pond ELC.. The scenario started in 2004 with the execution of the Purchase Agreement on June 19,2004, between the Estate of Robert W. Jeffers and the school district with respect to the sale and purchase ofthe land upon which the Jeffers Pond Elementary School is presently located. Without request or consideration, the estate agreed to set aside with the City the sum of $500,000 for use in the construction of the proposed ELC upon the park land lying to the west of the Jeffers Pond school. This new building was conceived for use in developing and expanding the environmental education program of the school district theretofore existing to a limited degree at Five Hawks and at Glendale Elementary School (the latter program having been supported in large part by the City of Savage and the Glendale parents), and it was at all times contemplated that the school district would bear and pay the cost of operating and maintaining the facility. The referenced Purchase Agreement provided that, unless used for the construction of the environmental learning center by January 18, 2011 (six years from the date of approval by the City of the Jeffers Pond planned unit development), the monies (represented by securities held as collateral in the account of the City at Citigroup Smith Barney) would be returned to Jeffers. Nothing was done by either the City or the. school board to construct the environmental learning center until Jeffers attempted to jump st~ the project in early 2006 by the proposed $200,000 set HaugenlWesterhaus February 8, 2008 Page Two aside grant in connection with the Five Hawks conservation easement and the matching grant pledge made by Jeffers to the City to cover a part of the cost of the proposed construction at Jeffers Pond. The City ultimately agreed to the conservation easement at Five Hawks and further agreed to pay a modicum of the shortfall in the cost of constructing the proposed ELC at Jeffers Pond. Jeffers proceeded with the surveying of the Five Hawks park area. The school district had the responsibility of negotiating with the City an operating agreement for the use of the Five Hawks park, but, to this date, nothing has apparently been drafted or reviewed by either party to the proposed agreement. With respect to the development of the ELC at Jeffers Pond, the City appointed a committee to review the potential parameters ofthe building at Jeffers Pond. It also engaged the services of Constructive Ideas, Inc. to supervise the project. The committee proceeded expeditiously to plan the uses and facilities to be included in the environmental learning center and selected I & S Engineers and Architects as the architect recommended to design the building. To get the project moving with respect to the size of building which could be built on the site, Jeffers agreed to advance the cost of survey and soil borings of the proposed site and paid $3,350.00 to Pioneer Engineering and $2.340.00 to Stork Twin City Testing (the "costs advanced by Jeffers to date") to advance the work on the project. The Jeffers Pond project came to a screeching halt when it became apparent that, with the failure of the voters in Independent School District #719 to approve the funding referendum, the school district would be unable to pay the cost of operating and maintaining the Jeffers Pond building when it was completed. It is conjectural at present to estimate with any certainty when or whether the school district will be able to bear the expense of operating the Jeffers Pond building, and all parties agree that it was never contemplated or intended that either the City or Jeffers would bear such expenses. In discussions with Mayor Haugen and Dr. Westerhaus, I suggested that Jeffers would be willing to extend the cut-out date of January 18, 2011 for the release of funds set aside for the construction of the ELC. The Jeffers Board of Directors has refused to ratify this proposal. So that there is no misunderstanding on this subject, all remaining amounts of the $500.000 set aside by the agreement for the construction of the ELC which are not expended in such endeavor by January 18.2011. must be returned to Jeffers in accordance with the terms and conditions ofthe Collateral Transfer Agreement dated June 27, 2006. Further, the $200,000 of funds proposed to be set aside by Jeffers in consideration of the conservation easement and contract relating to the Five Hawks park is hereby withdrawn. Until Haugen/Westerhaus February 8, 2008 Page Three there is some certainty as to the date of construction of the proposed building, Jeffers is unwilling to expend or commit its funds available for grant purposes. There are other projects which now have a higher priority with respect to the use of such funds. Jeffers hereby also withdraws its proposed matching grant for the construction of the ELC. Jeffers agrees that the reasonable amounts incurred to date by the City for services rendered in the development of the Jeffers Pond ELC will be paid by Jeffers as a charge against the original $500,000 set aside grant, with the clear understanding that the costs advanced by Jeffers to date with also be applied in reduction of such grant. Upon submission of statements for such services, the charges will be paid in full by Jeffers. On a constructive note, we are advised that the bridge crossing the rock cascade at Jeffers Pond has not been built because the funds budgeted for the construction of the bridge have been diverted by the City for some other purpose. In our opinion, this creates a dangerous hazard for the children using the park for environmental education purposes. Jeffers is acutely concerned with the safety of our children in addition to its interest in environmental education. To help insure that injury to them will be avoided to the extent possible, Jeffers will permit the cost of constructing the needed bridge, up to the sum of $25,000, to be charged against the $500,000 in funds set aside for the construction ofthe ELC provided that such project is completed before May 1,2008. The actions set forth in this letter should not be interpreted in any way as a change in the strong support of Jeffers for the environmental education program of the school district. We laud and applaud the past and ongoing efforts ofthe school district in this endeavor. At the request of the Star Tribune, a copy of this letter will be furnished to it after you have a reasonable opportunity to review the contents of the letter in the hope that the public will be made aware of Jeffers' position on the matters covered. Sincerely"" ) ~. /I L"'" ~ e-<- ') Paul W. Oberg, C.If.'O.