HomeMy WebLinkAbout9D - TJ Towing Site
AGENDA ITEM:
DISCUSSION:
ISSUES:
CITY COUNCIL AGENDA REPORT
February 5, 2001
9D
Frank Boyles, City Manager
01-/3
CONSIDER APPROVAL OF A RESOLUTIO/ PURSUANT TO MINNESOTA
STATUTES 469.174 SUBD. 10 DECLARING BUILDINGS LOCATED UPON
CERTAIN PROPERTY TO BE STRUCTURALLY SUBSTANDARD.
Historv: The City has entered into a purchase agreement to buy the .83 acre T J
Towing property. Pursuant to the terms of that agreement, the owner has paid for a
Phase II Environmental Study. The staff has reviewed the study which concludes
that there is no contamination on the site. A survey of the site has been acquired.
Title insurance has also been secured. The property owner needs to obtain a
Warranty Deed to the property from the fee owner, Mr. and Mrs. Bonsack. Prior to
closing on the property, the owner is to remove all vehicle bodies, parts, tires, and
the fence, building and foundation. In short, the City is purchasing the site as
vacant land.
Prior to cleaning the site, the City has advised the owner of its intent to conduct an
inspection of the building on the parcel and based upon the findings of that
inspection, declare the building structurally substandard under Minnesota Statutes
Chapter 469. Once this declaration has been made by resolution, the owner is free
to complete site cleanup and a closing can be scheduled.
Current Circumstances: Building Official Bob Hutchins conducted an inspection
of the property and building on January 29, 2001. A copy of his inspection report is
attached.
Conclusion: The City Council must determine whether the building is structurally
substandard as set froth by Minnesota Statutes. Attached is a memo from Rusty
Fifield on this subject.
The statute prescribes three steps which the City must use in its determination of
whether the building is structurally substandard.
1. The building must contain identified defects and deficiencies.
2. The building must fail the 15% economic test.
3. The City must follow the statutory process for evaluating the building.
The City has in its possession numerous pictures of the property exterior including
the building. The building is a 28x40 foot single story metal building possessing
garage doors on both ends and at least one pedestrian door. The building appears
to be heated and served by City sewer and water. Under the City zoning
ordinance, the building would be considered a non-conforming building, If
16200 Eagle Creek Ave, 5,E" Prior Lake, Minnesota 55372-1714 / Ph. (952) 447-4230 / Fax (952) 447-4245
1:\CQUNCIL\AGNRPTS\2001\T J TOWING BUILDI~OAL OPPORTUNITY EMPLOYER
-_... 'T- T 1
'Ii
. 1
.'iT
ALTERNATIVES:
RECOMMENDED
MOTION:
damaged beyond 50% of the value, it could not be repaired, Under the ordinance,
the building would be demolished and replaced with a structure which conforms
both with the zoning ordinance and Uniform Building Code.
Building Official Bob Hutchins conducted an on-site inspection of the building
interior and exterior on January 29, 2001, Attached is a copy of Mr. Hutchins'
report, addressing each of the three statutory prerequisites.
Mr. Hutchins finds that there are seven areas of deficiency which require
improvement. These seven areas together require an investment of $16,094,
Using Minnesota Department of Administration calculation criteria, the value of the
existing building is $53,648, Comparing the cost to resolve the deficiencies of
$16,094 and the building value of $53,648, the cost to cure the building
deficiencies is 29,99%. By using State of Minnesota Department of Administration
valuation data, the City has followed the statutory process for evaluating the
building. Mr, Hutchins indicates in his report that he believes that both the
electrical and plumbing systems are deficient, but his estimate to cure does not
include costs to correct these systems.
In addition to Mr. Hutchins' inspection, an appraisal of the property including the
building was conducted by Mr. Lee Racine on April 7, 2000, Mr. Racine's appraisal
report states in part,
There is a small metal repair shop located within the
northwesterly section of the subject site..... The current
improvements have no value to the subject's site. The
subject's site in its highest and best use is considered to be
vacant. "
By adopting a resolution declaring the building to be structurally substandard, the
Council is not obligating itself to the use of tax increment financing for any use,
including reimbursing the City for its purchase costs, but just reserving the
flexibility to do so should the Council desire.
(1) Adopt the attached resolution declaring the building on the T J
Towing property as structurally substandard under Minnesota
Statutes Chapter 469.
(2) Take no action and request additional information,
Alternative (1). In order to preserve the City's option to use tax
increment financing, this resolution must be adopted before the
building is demolished.
1:\COUNCIL\AGNRPTS\2001\T J TOWING BUILDING,DOC
RESOLUTION 01-XX
..l ,~;:
A RESOLUTION DECLARING THE BUILDING ON THE
T J TOWING PROPERTY, 16675 FRANKLIN TRAIL SOUTHEAST,
PRIOR LAKE, MN, TO BE STRUCTURALLY SUBSTANDARD
PURSUANT TO MN STAT. CH. 469.
Motion By:
Second By:
WHEREAS, the City has entered into an agreement to purchase the property at 16675 Franklin Trail
Southeast, Prior Lake, Minnesota and commonly known as the T J Towing property; and
WHEREAS, the City has acquired the Subject Property to facilitate the redevelopment of the parcels and
the surrounding area; and
WHEREAS, the City anticipates the need to establish a tax increment financing district in order to make
development of the Subject Property and adjacent parcels economically viable; and
WHEREAS, the building located on the Subject Property will be demolished and removed as a condition
of the acquisition by the City; and
WHEREAS, the City has undertaken an inspection of the buildings to determine the presence and extent
of defects in structural elements and other building deficiencies pursuant to Minnesota
Statutes Section 469.174, subd. 10,
NOW THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE, MINNESOTA that:
1. The recitals set forth above are incorporated in their entirety as if fully set forth herein.
2. The City Council finds that the Subject Property is more than 70% oCCLupied by buildings, streets,
utilities or other improvements. fr6pefTy
3. The City Council finds that the building located on the Subject ~ is structurally substandard
as defined in Minnesota Statutes Section 469.174, subd. 10. The'information used to make this
finding is set forth in the staff agenda report and attachments dated February 5, 2001 and shall
be retained and incorporated into the plan for a tax increment financing district, if necessary.
4, The City shall record the date of building demolition. Unless otherwise authorizd by state law, the
request for certification to include the Subject Property within a tax increment financing district
shall not occur later than three (3) years after the date of demolition.
PASSED AND ADOPTED THIS 5TH DAY OF FEBRUARY, 2001.
Mader Mader
Ericson Ericson
Gundlach Gundlach
Petersen Absent Petersen Absent
Zieska Zieska
YES
NO
City Manager, City of Prior Lake
16200 Eagle Creek Ave. 5,E" Prior Lake, Minnesota 55372-1714 / Ph, (952) 447-4230 / Fax (952) 447-4245
AN EQUAL OPPORTUNITY EMPLOYER
Iii
11
.
IIII
'.~~
Memorandum
DATE: January 30,2001
TO:
Frank Boyles
FROM:
Robert D. Hutchins
{-I \'..L\ -
kv0
;
,
RE: TJ Towing Inspection
This is the result of an inspection to determine the structurally substandard elements of the TJ
Towing building. In a memorandum from Rusty Fifield of Ehlers and Associates Incorporated,
states that Minnesota Statues, Section 469.174, Subd. 10 outlined criteria for establishing a
redevelopment TIF district. The statute contained three steps to make a finding. The following
are listed in the memorandum.
1. To be structurally substandard, a building must contain identified defects and
deficiencies. The following items would need to be included in constructing of a new structure,
which the present structure is now lacking.
I. Ventilation for the building must meet UBC chapter 12. Provide IS CFM of ventilation
per occupant in the Reception area and 3/4 CFM per square foot of floor area of
ventilation air in the Repair Garage.
2. Provide an HDCP accessible route to a HDCP accessible toilet facility. UBC
A1112.1.2
3. Provide minimum of one HDCP parking stall and sign. MSBC 1341.0403 Item E, Subitem 1
4. Two 36" exit doors which swing in exit travel path are required from Repair Garage
H-4 occupancy. UBC 1007.4
5. Repair Garages shall have a separator installed into which all oil, grease, and sand
bearing and/or flammable wastes shall be discharged before emptying into the building
drainage system. Minnesota State Plumbing Code 4715.1300 Subpart 6 and 4715.1120
6. Provide emergency lighting and exit signs. UBC 1003.2.8
7. Provide fire extinguishers minimum 2A1OBC rated, within 75 feet travel distance of all
areas. UFC 1002.
Our comments are based on the Minnesota State Building Code (MSBC) which adopted
with amendments the 1997 Uniform Building Code (UBC) with handicap regulations of
the Minnesota Accessibility Code Chapter 1341. Also requirements of the 1998
Minnesota State Fire Code (MSFC) which adopted with amendments the 1997 Uniform
Fire Code (UFC). Also, the building in its present state appears to have plumbing and
electrical deficiencies.
2. The substandard factors must pass an economic test.
The Valuation of a new building: Structure 1120 S.P. x $47.90 $53,648
To establish the cost of a new building, the State of Minnesota Department of
Administrations May 2000 Building Valuation Data was used which states that a
Service Station Type V-I Hour building costs $47.90 per S.P.
Included in the base price are the
following items:
Structure 50% of base $26,824
Plumbing 15% of base $8,047
Mechanical 15% of base $8,047
Electrical 10% of base $5,365
Site/Pavement 10% of base $5,365
Total $53,648
The costs below are the costs to upgrade the existing building to the building code.
They are number as the listed item in Number I requirement above. The costs are
derived by using the above costs.
1. $8,047
2. $4,000
3. Negligible
4. Negligible
5. $4,047.00
6. Negligible
7. Negligible
Total Upgrade Cost $16,094.00
The statue will not allow a building to be classified as structurally substandard "if it is in
compliance with the building code applicable to new building or could be modified to
satisfy the building code at a cost ofless than 15 percent of the cost of construction a new
structure of the same square footage and type on the site". 15% of the cost of a new
2
IIi
~
I
III
building is $8,047.20. The estimated costs ofthe upgrades to the existing building would,
be $16,094.00, which is over the 15% threshold allowed by the statute.
3. The City must follow the statutory process "for evaluating the building. To
establish the cost of a new building, the State of Minnesota Department of
Administrations May 2000 Building Valuation Data was used which states that a Service
Station Type V-I Hour building costs $47.90 per S.P. The Mechanical, Plumbing,
Electrical and Site work estimates were obtained by percentages of the cost ofthe new
building. A site inspection was performed on January 29,2001.
3
.
EHLERS,
& ASSOCIATES INC
To:
:E From:
W Date:
:2 Subject:
Frank Boyles
Rusty Fifield
January 11,2001
Redevelopment Findings
This memo addresses the steps to make and to preserve the findings necessary to establish a
redevelopment TIF district on the TJ Towing property.
Basic Findings
I have attached the text of Minnesota Statutes, Section 469.174, Subd. 10 that outlines the
criteria for establishing a redevelopment tax increment financing district. The statutory
definition of the basic redevelopment criteria requires that the TIF district be made up of
"parcels consisting of 70 percent of the area of the district are occupied by buildings, streets,
utilities, or other improvements and more than 50 percent of the buildings, not including
outbuildings, are structurally substandard to a degree requiring substantial renovation or
clearance". The "improved" criteria will not be a problem for this parcel. More attention
needs to be given to the "structurally substandard" elements,
This statute contains three steps to make this fmding:
1. To be structurally substandard, a building must contain identified defects and
deficiencies. The statute defines these factors as "defects in structural elements or a
combination of deficiencies in essential utilities and facilities, light and ventilation,
fire protection including adequate egress, layout and condition of interior partitions,
or similar factors, which defects or deficiencies are of sufficient total significance to
justify substantial renovation or clearance".
2. The substandard factors must pass an economic test. The statute will not allow a
building to be classified as structurally substandard "if it is in compliance with the
building code applicable to new buildings or could be modified to satisfy the
building code at a cost of less than 15 percent of the cost of constructing a new
structure of the same square footage and type on the site".
3. The City must follow the statutory process for evaluating the building. The
statute sets forth two steps and qualifications for making the finding of structurally
substandard.
!he Ci~~halt~~~~~r~~~91!~1>ly availabl~ eyi_d~nce, such as the size, type,-.am:L~ge__Q(the
buildi~, the average..c.osLof.plumbing, .ele_ctric.al..Qu.trn9tur.~Lr~IJilj!~.I_()!_p..th~_simjJ~.
reliable evidence" to make the finding,
...---.....--.--.,-----.-....-"-'"..---.-.'
LEADERS IN PUBLIC FINANCE
3060 Centre Pointe Drive
Roseville, MN 55113-1105
t
651.697,8506 fax 651,697.8555
rusty@ehlers-inc.com
IH r
]
I
.:\ ~::
nr
Redevelopment Findings
January 11, 2001
Page 2
,J ,~;:
The City must make an interior inspection of the property, except if it finds that (1) it is
unable to. gllIll accesstOtne'pf6perlflrftef\isiiig'ifibesfeftorts'io~obtalnpemllssion fioillthe
party'that owns or controls the property; and (2)tl1e ev.i4~lw.e otherwise supp(}[t~ ~
reasoi'lablecoIlClll~i()ri'thafthe bll.iJ~lng}s.structural1y substand~rd... Items of evidence that
'support 'such'a ci),riCluslon'include recent fire or police inspections, on-site P..IQperty
appraisals or housing inspections, exterior eviden~e..of.d.e.teIiQ!:flJiQ!1-, or other similar reliable
eVIdence. .----....-...-----
The City must document and retain the information used to make the redevelopment
-fi d' .'-......--..-..-----.----...---
III IllgS. ----
Timing
These findings are usually made in conjunction with a pending development project. The
TJ Towing property presents a different situation, The City will acquire the property and
remove the building in advance of new development. State Law does allow for the
preservation of the factors needed to establish a redevelopment district. Th~Sj'!y- can use
the current bui1ding.f9Uh~ test if a'll of the following conditions are met: -,----".-.
_..___ ,.__._~..__>__,"'... _.._.____"....... - --_____.,.__..fi.~l.:.;.:;_.-.-~.....-., ""__'~"''''''''_'"_ m.___',~.~.. ......._,_""..___...._~__.... ,,,..._~_.~.~_"_.._._. __'_" .
1. the parcel was occupied by a substandard building within three years of the filing of
the requestfor"certltlcat'{on"of thej;~i:~ei'asj;a.i(of the: dlstrid. wif.~'the~o.u?:i)i".
auditor;....... .-
2. the substandard building~..Qs;mQhsheJtQu.em9YS;g.by. tbe. authotity .orJhe
..AemQiHiQ!l. Qiii:mQYa.lwas_fil11!n9_~9.bytheautbori!Y .Qrwas,done.hy.a developer
under a deveJ_<?P!l1~l}La.gt:~e.f.l:1~JJt__~~t~ _ t~<?_~!:l!.l}ori!y;..
~.____..~.,~".._~. __03 -0-_'_'_' .<..
3. the authority found by resolution before thedemQlitj,Qn Qr rem9yalth~t thepan::.el c~
,.~as occupied by a snu.ctur.al}ysubstandard bllil.~i!1g llf.l~ _that~fter d~!Eo~~!!<?11a.1'I:~ _. '-
c1e_~~~~~~_~h:"~u.t~ority i~t:l1~~~~?iIl~I~c!~ thep_arc~~~ithin a distri:~;..,~~~_..
4, upon filing the request for certification of the tax capacity of the parcel as part of a
district, the authority notifies the county auditor that the original tax capacity of the
parcel must be adjusted as provided by S 469.177, subdivision 1, paragraph (h).
For TJ Towing, the Ci!)' lllu.st l!llJ.ks:Jb~_~l.1h~!a.114~rd findings l:l!l.<l then adopt a resolution
mJ.proving_the_find1iI~ an.d cl~~~D.lliUh.~int~nt.!9jp2111d~_th~_Pt:QPertyjnJLIIEJ2i~!tict.
This action creates three-year window for redevel~ent.
Redevelopment Findings
January 11, 2001
Page 3
,j ":",
Adjacent Property
It is important to note that this discussion focuses solely on the TJ Towing parcel. As we
have discussed with Crystal Care, it is likely that this parcel will be developed with other
adjacent property. The statutory redevelopment test is tied to a parcel of property, It may
be necessary to reconfigure the parcels before making the redevelopment findings. If this is
a concern, we should meet with Mary Ippel to clearly outline the steps needed to preserve
the findings for the realistic scope of a TIF district.
I hope that this memo clarifies the action to be taken by the City. Please call me with any
questions.
ITI r
~
I
III
Redevelopment Findings
January 11, 2001
Page 4
,:I ,';
State Law (Minnesota Statutes, Section 469.174)
Subd, 10, Redevelopment district.
( a) "Redevelopment district" means a type of tax increment financing district consisting of a
project, or portions of a project, within which the authority finds by resolution that one or
more of the following conditions, reasonably distributed throughout the district, exists:
(1) parcels consisting of 70 percent of the area of the district are occupied by
buildings, streets, utilities, or other improvements and more than 50 percent of the buildings,
not including outbuildings, are structurally substandard to a degree requiring substantial
renovation or clearance; or
(2) the property consists of vacant, unused, underused, inappropriately used, or
infrequently used railyards, rail storage facilities, or excessive or vacated railroad rights-of-
way; or
(3) tank facilities, or property whose immediately previous use was for tank facilities,
as defined in section 115c.02, subdivision 15, ifthe tank facilities:
(i) have or had a capacity of more than 1,000,000 gallons;
(ii) are located adjacent to rail facilities; and
(iii) have been removed or are unused, underused, inappropriately used,
or infrequently used,
(b) For purposes of this subdivision, "structurally substandard" shall mean containing
,/ defects in structural elements or a combination of deficiencies in essential utilities and
,
facilities, light and ventilation, fire protection including adequate egress, layout and
condition of interior partitions, or similar factors, which defects or deficiencies are of
sufficient total significance to justify substantial renovation or clearance.
\
\
( (c) A building is not structurally substandard if it is in compliance with the building code
applicable to new buildings or could be modified to satisfy the building code at a cost of less
than 15 percent of the cost of constructing a new structure of the same square footage and
type on the site, The municipality may find that a building is not disqualified as structurally
substandard under the preceding sentence on the basis of reasonably available evidence,
such as the size, type, and age of the building, the average cost of plumbing, electrical, or
structural repairs, or other similar reliable evidence, The municipality may not make _~.!,lgl1Jl
determ~natiQ!!_~~!__~r:in_t~E~~!.}~~p_€;~jon_Q~9K~he.J~r..2p.~J!Y1-QI;!!_!1QLn.~~(ni~i~~~ii
~epend~~, expeI!ap.l?!aisa.~J?r.e.p~red of ~h~_c:.Q~t QfIepair. and reha.bilitation 0 f-the-
~uil~~_~!~t~ri~~_~~_s~~_c.t!~~_~~t~~_~~~~~~_~~~~!!.e~~i~Ie~~.if the municipality finds that
(1) the municipality or authority is unable to gain access to the property after using its
best efforts to obtain permission from the party that owns or controls the property; and
(2) the evidence otherwise supports a reasonable conclusion that the building is
structurally substandard.
Items of evidence that support such a conclusion include recent fire or police inspections,
on-site property appraisals or housing inspections, exterior evidence of deterioration, or
Redevelopment Findings
January 11, 2001
Page 5
other similar reliable evidence. Written documentation of the findings and reasons why an
interior inspection was not conducted. must be made and retained under section 469.175,
subdivision 3, clause (1).
(d) A parcel is deemed to be occupied by a structurally substandard building for purposes of
the finding under paragraph (a) if all of the following conditions are met:
(1) the parcel was occupied by a substandard building within three years of the filing
of the request for certification of the parcel as part of the district with the county auditor;
(2) the substandard building was demolished or removed by the authority or the
demolition or removal was financed by the authority or was done by a developer under a
development agreement with the authority;
(3) the authority found by resolution before the demolition or removal that the parcel
was occupied by a structurally substandard building and that after demolition and clearance
the authority intended to include the parcel within a district; and
(4) upon filing the request for certification of the tax capacity of the parcel as part of
a district, the authority notifies the county auditor that the original tax capacity of the parcel
must be adjusted as provided by S 469.177, subdivision 1, paragraph (h).
(e) For purposes of this subdivision, a parcel is not occupied by buildings, streets, utilities,
or other improvements unless 15 percent of the area ofthe parcel contains improvements,
(t) For districts consisting of two or more noncontiguous areas, each area must qualify as a
redevelopment district under paragraph (a) to be included in the district, and the entire area
of the district must satisfy paragraph (a),
Hi
~
I
11I1