HomeMy WebLinkAbout10C Resolution Approving Payment Agreement with Le Management PropertiesA P � o �
U fr!
4646 Dakota Street SE
Prior Lake_ MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: MARCH 21, 2011
AGENDA #: 10C
PREPARED BY: JANE KANSIER, BUILDING AND TRANSPORTATION SERVICES DIRECTOR
PRESENTED BY: JANE KANSIER
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION APPROVING A PAYMENT
AGREEMENT WITH LE MANAGEMENT PROPERTIES LLC FOR THE PAY-
MENT OF CITY FEES FOR THE FONG'S BANQUET CENTER
DISCUSSION: Introduction
Le Management Properties LLC has asked to enter into an agreement with the
City for the payment of the City fees for sewer and water service associated with
the establishment of Fong's Banquet Center at 4770 Pleasant Street
His tory
In January, 2011, Leo and Cindy Le opened Fong's Banquet Center at 4770 Plea-
sant Street SE, immediately adjacent to Fong's Restaurant. This space was origi-
nally occupied by a video rental store. The change in use from a retail use to a
banquet facility /assembly use triggered the need for a building permit. This re-
quired a new Sewer Availability Charge (SAC) determination by Metropolitan
Council Environmental Services (MCES).
The Sewer Availability Charge (SAC) is a onetime fee imposed by the Metropoli-
tan Council Environmental Services (MCES) for new connection or increased vo-
lume discharged to the metropolitan wastewater system. SAC charges are not
based on how often the site may be used as a banquet center, but rather on the
maximum potential use. The purpose of the SAC is to pay for the reserved capac-
ity built into the regional sewer system. The SAC is charged to the local govern-
ment, which has the option of passing the cost on to the individual property owner.
The practice in the City of Prior Lake has been to pass the cost on to the property
owner as part of the building permit, rather than have the cost absorbed by the
general taxpayers.
One SAC unit equals 274 gallons of maximum potential daily wastewater flow vo-
lume, the average volume used in a single family residential home. The number
of SAC units is determined based on the occupancy and use of the structure. The
charge for each SAC unit is as follows:
Service Availability Charge MCES
$2,230.00
City Water Connection (City WAC
$900.00
City Sewer Connection (City SAC
$600.00
Water Tower Fee (City)
$1,000.00
TOTAL (per unit
$4,730.00
The MCES reviewed the plans for the proposed banquet center and determined
the maximum occupancy at 156 persons. This equals an additional 14 SAC units
for the new use.
Current Circumstances
The building permit for the new banquet /assembly facility generated the following
fees:
Building Permit (with penalty for
work without a permit)
$ 383.00
Plan Check Fee
$ 124.48
State Surcharge
$ 5.00
MCES SAC 14 units
$31,220.00
City WAC 14 units
$12,600.00
City SAC 14 units
$ 8,400.00
Water Tower Charge
$14,000.00
TOTAL:
$66,732.48
Section 704.500 of the City Code allows a property owner to request payment of
connection fees over a period of three years. This section is somewhat vague,
and is most likely intended to cover the connection fees for new construction.
However, there is nothing in the City Code to prohibit the deferment of building
permit fees over a period of time. With that in mind, the staff has drafted the at-
tached agreement.
This agreement defers payment of the City WAC, City SAC and City Water Tower
charges; it does not defer payment of the MCES SAC, the Building Permit fee, the
Plan Check fee, or the State Surcharge ($31,732.48). These costs have been
incurred by the City, and in the case of the MCES SAC and the State Surcharge,
must be paid by the City to other agencies.
The agreement allows for the payment of the remaining $35,000 over a 3 -year
period. The three equal payments, plus 8% interest on the unpaid balance, will be
certified against the property taxes in 2012, 2013, and 2014. There is no penalty
should the property owner choose to pay off the entire amount early.
Conclusion
The staff recommends approval of the attached agreement.
ISSUES: Approval of the proposed agreement has the potential to set a precedent for simi-
lar requests. In this case, there is an economic development interest in allowing
the deferral of the City fees. This will allow the banquet center to open and begin
generating revenue. The agreement only addresses fees for charges not already
incurred in the building permit inspections, or for fees which are passed through
the City to other agencies. The permit also ensures payment by automatically cer-
tifying the required payments against the property tax each year, along with 8%
interest.
The City Attorney has reviewed and approved the agreement.
FINANCIAL The City is in effect financing $35,000 in fees for the property owner. The 8% in-
IMPACT: terest charge will offset costs associated with the deferment. The agreement also
ensures payment by certifying the balance due against the property taxes.
ALTERNATIVES: 1. Approve the attached resolution authorizing the Mayor and City Manager to
execute the attached Payment Agreement with Le Management Properties
LLC.
2. Deny the attached resolution.
3. Provide staff with specific direction.
RECOMMENDED A motion and second approving the attached resolution authorizing the Mayor and
MOTION: City Manager to execute the attached Payment Agreement with Le Management
Properties LLC.
Frank'Boy(esj pity Manager
U trl
4646 Dakota Street SE
''S Prior Lake, MN 55372
VX ES
RESOLUTION 11 -xxx
A RESOLUTION APPROVING A PAYMENT AGREEMENT WITH LE MANAGEMENT PROPERTIES LLC
FOR THE PAYMENT OF CITY FEES FOR THE FONG'S BANQUET CENTER
Motion By:
Second By:
WHEREAS, The Owner proposes to create an assembly /banquet facility in the existing building
located at 4770 Pleasant Street SE, and legally described as: Lot 3, Block 1,
LANGHORST 1ST ADDITION, except the northeasterly 76.61 feet, thereof (PID #25 -147-
003-0); and
WHEREAS, The assembly /banquet facility ( "Facility ") is a change in use from the previous retail use of
that portion of the property not occupied and operated as Fong's Restaurant; and
WHEREAS, The Metropolitan Council Environmental Services (MCES) Division has determined the
change in use from retail to assembly /banquet will require 14 additional Sewer Availability
Charge (SAC) Units; and
WHEREAS, City Code Sections 704.500 and 705.600 allows .a property owner to make payments of
City permit fees over a period of three (3) years; and
WHEREAS, In order to facilitate the redevelopment of existing commercial structures, the City finds it
appropriate to allow payment of City fees over a three (3) year period.
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. The Mayor and City Manager are authorized to execute the Payment Agreement with Le Management
Properties LLC.
3. The payments plus interest will be deposited into the following funds: 502 -37750 (Water Trunk Reserve
Fund), 502 -37760 (Sewer Trunk Reserve Fund) and 505 -36104 (Water Storage Fund).
PASSED AND ADOPTED THIS 21ST DAY OF MARCH, 2011.
YES NO
M ser
M ser
Erickson
Erickson
Hedber
- Hedberg
Keeney
Keene
Soukup
Souku
Frank Boyles, City Manager
CADocuments and Settingsicgreen\My DocumentslSharePoint DraffsiFongs_ Payment _Agreement_Resolution.doc
(Reserved for Recording Purposes)
PAYMENT AGREEMENT
THIS AGREEMENT, made and entered into this 21 day of March, 2011, by and between Le
Management Properties LLC, a Minnesota limited liability corporation, hereinafter referred to as the
"Owner" and the City of Prior Lake, a body politic and corporate under the laws of the State of
Minnesota, hereinafter referred to as the "City ".
RECITALS:
A. The Owner proposes to create an assembly/banquet facility in the existing building located at
4770 Pleasant Street SE, and legally described as:
Lot 3, Block 1, LANGHORST 1 1T ADDITION, except the northeasterly 76.61 feet, thereof.
(PID #25- 1470003 -0)
B. The assembly /banquet facility ( "Facility ") is a change in use from the previous retail use of
that portion of the property not occupied and operated as Fong's Restaurant.
C. The Metropolitan Council Environmental Services (MCES) Division has determined the
change in use from retail to assembly /banquet will require 14 additional Sewer Availability
Charge (SAC) Units.
D. City Code Sections 704.500 and 705.600 allows a property owner to make payments of City
permit fees over a period of three (3) years.
E. In order to facilitate the redevelopment of existing commercial structures, the City finds it
appropriate to allow payment of City fees over a three (3) year period.
NOW, THEREFORE, IT IS HEREBY AGREED:
1. Recitals. The recitals set forth above are incorporated herein as if fully set forth.
1
2. Fees. The Owner is responsible for the following fees based on the 2011 City Fee Schedule:
a. Cites
City Sewer Connection (SAC): $600.00 /SAC Unit x 14 units = $8,400.00
City Water Connection (WAC): $900.00 /SAC Unit x 14 units = $12,600.00
Tower Charge: $1,000.00 /SAC Unit x 14 units = $14,000.00
b. MCES SAC. In addition to the City fees set out above, the Owner is responsible for all
SAC fees as determined by Metropolitan Council Environmental Services ( "MCES ") at
a rate of $2,230.00 per SAC Unit x 14 units = $31,220.00
c. Total Fees: The total fees for the purposes of this Agreement are:
City Sewer Connection (SAC): $ 8,400.00
City Water Connection (WAC): $12,600.00
Tower Charge: $14,000.00
MCES SAC: $31,220.00
TOTAL $ 66.220.00
3. Payment of Fees Required. All fees set forth in Paragraph 2 shall be paid by the Owner to the
City according to the following schedule:
a. Payment due with permit: $31,220.00
b. Payment certified to 2012 taxes:
balance
$11,666.67 + 8% interest on unpaid principal
c. Payment certified to 2013 taxes:
balance
d. Payment certified to 2014 taxes
balance
$11,666.67 + 8% interest on unpaid principal
$11,666.66 + 8% interest on unpaid principal
e. Interest begins accruing the date the agreement is approved by the City Council.
f. Upon sale or transfer of ownership of the property identified in Recital A on which the
fees are certified, any remaining balance (including interest) will be due and payable to
the City.
4. Recalculation of SAC Units by MCES. In the event the MCES determines the
assembly/banquet facility requires more than fourteen (14) SAC units, Owner agrees, within
thirty (30) days notice of said recalculation, to remit the additional fee to the City. If Owner
2
fails to remit payment for the additional SAC units, the amount owed for said units shall be
certified for payment in the next tax year, plus 8% interest on unpaid principal.
Notwithstanding the waiver of public hearing and assessment provision provided for in
paragraph 5 below, Owner does not waive the right to appeal the assessment of any
additional SAC units above the fourteen (14) herein determined and agreed to by the
MCES. Upon sale or transfer of ownership of the property identified in Recital A on which
these fees are certified, any remaining balance (including interest) will be due and payable
to the City.
5. Waiver of Right to Public Hearing As per City Codes Sections 704.500 and 705.600, in
seeking the benefit of this schedule, the Owner, by executing this Agreement, affirmatively
waives the right to any public hearing or appeal of the assessment.
6. Notice. Notice provided under this Agreement shall be in writing, signed by the officers
signatory to this Agreement or their successors and shall be sent by Certified Mail, Return
Receipt Requested, to the Parties at the following addresses:
a. To the Owner: Le Management Properties
4487 Hickory Hills Trail
Prior Lake, MN 55372
b. To the City: City of Prior Lake
4646 Dakota Street
Prior Lake, MN 55372
Attn. City Manager
7. Hold Harmless and Indemnification The Owner hereby indemnifies and holds harmless the
City from any and all causes of action or claims arising out of or in connection with this
agreement. The Owner further agrees to indemnify the City against, and hold harmless
from those claims, liabilities, demands, damages, costs and expenses arising out of
negligent or willful actions by the Owner or employees which result penalties imposed
against the City, whether by federal, state or local governmental units, for violations of
permits which are required for the City or the Metropolitan Council.
8. Jurisdiction. This Agreement shall be governed by the laws of the State of Minnesota. The
appropriate judicial forum for any dispute between the parties is shall be a venue in Scott
County.
3
9. Successors and Assigns. The rights, privileges and obligations of the Parties under this
Agreement are intended to, and shall remain in full force and effect and shall bind any
successor or assign to which the authorities and obligations of the Parties may be assigned
by law.
10. Effective Date. The Agreement shall be effective upon all of the following having taken place:
(a) this Agreement having been approved by Resolution of the City Council and (b) this
Agreement having been signed by all of the officers designated as signatories below.
11. Material Provision. Unless otherwise specifically provided within a specific paragraph of this
Agreement, every term provision, covenant and provision shall be construed as a "material
provision ".
12. Recording. This Agreement shall be recorded against the property where the Facility is located.
IN TESTIMONY WHEREOF, The parties hereto have caused this agreement to be executed by
their respective duly authorized officers as of the day and year first above written.
CITY OF PRIOR LAKE
(SEAL)
By
Mike Myser, Mayor
Date
an
Date
Frank Boyles, City Manager
Date
OWNER
Date
STATE OF MINNESOTA )
ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this day of , 2011, by Mike
Myser, Mayor of the City of Prior Lake, Minnesota, and Frank Boyles, City Manager of the City of
Prior Lake, Minnesota, a municipal corporation on behalf of the corporation.
Notary Public
STATE OF MINNESOTA )
) ss.
COUNTY OF
The foregoing instrument was acknowledged before me this day of , 2011,
by , by and on behalf of itself.
Notary Public
THIS INSTRUMENT WAS DRAFTED BY:
The City of Prior Lake
4646 Dakota Street SE
Prior Lake, MN 55372