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HomeMy WebLinkAbout7B Rolling Oaks Prep CIS Ip4 rn 4646 Dakota Street SE Prior Lake, MN 55372 Dtc CITY COUNCIL AGENDA REPORT MEETING DATE: MAY 27, 2014 AGENDA #: 7B PREPARED BY: LARRY POPPLER, CITY ENGINEER/INSPECTIONS DIRECTOR PRESENTED BY: LARRY POPPLER AGENDA ITEM: PUBLIC HEARING TO CONSIDER APPROVAL OF A RESOLUTION ORDERING THE IMPROVEMENTS AND PREPARATION OF PLANS AND SPECIFICATIONS FOR THE ROLLING OAKS IMPROVEMENT PROJECT, CITY PROJECT #14 -013 DISCUSSION: Introduction The purpose of this agenda item is to hold the Public Hearing to consider approval of a resolution ordering the Rolling Oaks Improvement Project and the preparation of plans and specifications. A super majority (4/5) is needed to approve the resolution. History The City uses the Five Year Capital Improvement Program (CIP) to plan its infrastructure improvements and the financing for capital improvements. The Rolling Oaks Circle Improvement Project is part of the 2014 CIP and proposes to extend utility connections to developed properties on Rolling Oaks and ultimately serve undeveloped adjacent properties. Rolling Oaks Circle is currently a gravel roadway that is experiencing erosion of the gravel roadbed during rain events and requires additional maintenance. The M.S. Chapter 429 process applies to all projects that will be financed in whole or in part through special assessments or bond proceeds. At the September 9, 2013 meeting, the City Council authorized the City to prepare the Feasibility Report for this project. The Rolling Oaks Circle neighborhood is considered in the report and includes improvements to Eagle Ridge Acres. These properties were platted and developed in 1959, fifty -five years ago. A map of the project area (Figure 1) is included in the Feasibility Report. The proposed improvements include the extension of sanitary sewer and watermain, street construction, storm sewer, storm water quality, concrete curb and gutter, and appurtenant work. The Feasibility Report includes total estimated costs, preliminary assessment amounts, and a project financing summary. Also included in the report are design criteria, estimates and information on watermain, sanitary sewer, storm sewer, and streets. Details on each can be found in the Feasibility Report. On October 28, 2013, the motion to accept the feasibility report for Rolling Oaks failed on the basis that the city council was concerned about the proposed assessments (an estimated $38,000 per unit) to benefiting properties. Some councilors did not sense that there was any compelling reason to proceed as no case was made regarding the septic systems. There was concurrence with the councilors and the residents that the gravel roadway needed work. Councilors also commented that consideration of this project would be appropriate when the adjacent undeveloped property (Meadow Lawn) developed since costs could be mitigated in this way. On April 28, 2014, the City Council renewed the motion to accept the feasibility report and call for the public hearing. A memo to the original feasibility report was prepared. Current Circumstances The properties deemed to specially benefit from the improvements, in most cases the properties abutting the streets located in the project area, are subject to assessment. Each of the affected property owners have been notified in accordance with the statute regarding tonight's Public Hearing. A Public Information Meeting was held on May 20, 2014 to provide the property owners an opportunity to discuss the project in an informal setting prior to the Public Hearing. Staff presented the proposed improvements, project costs, estimated assessments and answered general questions regarding the project. Comments will be presented at the Public Hearing. Conclusion City Staff is prepared to discuss each of the concerns presented at the Public Hearing. If the Council deems the issues that have been brought up need to be addressed in the project plans and specifications, direction could be given to staff. The purpose of this Public Hearing is to determine whether the project should move forward to the next step, which is preparation of plans and specifications which will provide greater information about expected project cost and, therefore, the assessments associated with the improvements. Once the plans and specifications are completed, they will be submitted to the City Council for approval and authorization to advertise for bids. The Council could decide not to continue with the project upon receipt of bids. A separate Assessment Hearing will be conducted following review of the proposed assessments by the City Council's Assessment Review Committee. In summary, the project is feasible from an engineering and economic standpoint. If the preparation of the plans and specifications is approved, the work will be completed by City staff. ISSUES: Property owners on Rolling Oaks Circle have communicated through e-mails to the City, personal meetings with the City, letters to the editor, and the public forum concern over the assessment amount and the proposed changes to the roadway. Assessment Review Committee The Assessment Review Committee has spent a lot of time this year reviewing several city projects. The committee has debated the costs of the 2 improvements, number of units, fairness of the assessments, and mechanisms for assisting property owners. The City Council must weigh the precedence of these projects, historical methods of assessments, and unique characteristics of each project with the overall costs. Project Costs The Assessment Review Committee has spent time evaluating project costs. The total project cost may be reduced by $30,000 by utilizing the existing granular fill on the south portion of the project for reuse under the road section in this area. The committee also authorized the allocation of additional funding from the Water Quality Fund based upon the commonly acknowledged fact that the road in its current condition degrades the adjacent wetland and is a maintenance challenge. Additional Trunk funds were allocated to the project which result from the developer's payment of previous special assessments in the amount of $90,000. Finally while the law strictly prohibits the city from mandating such action, the developer has increased the voluntary contribution they are willing to donate to the project from his initial offer of $85,000 to $110,000. Without the development of this property, the city would not have $200,000 in funds to mitigate project costs. At least financially speaking, because of the contributions of the developer, and the fact that the improvements will not likely be cheaper in the future, this is an opportune time to complete the project These costs are further discussed in "Financial Impact ". Project Funding The Rolling Oaks project is different than the Mushtown Road project. The primary difference is the gravel nature of Rolling Oaks. Because of the lack of pavement, this project is assessed at 100% for street and storm sewer costs as dictated in the assessment policy. The Assessment Review committee has reviewed the costs of similar types of projects in Prior Lake and other surrounding communities. They have also reviewed first time improvement costs for developments within Prior Lake. It was discovered that the cost of these types of projects are large but not out of line with other City projects or first time improvements on developments. The committee also reviewed neighboring City policies for first time improvements. It was found that the neighboring communities follow the same assessment formula (i.e. 100 %) for first time improvements. The funding table discussed below was also reviewed by the Assessment Review Committee. The use of different funding from the original feasibility report can assist in reducing the assessment amounts. The original assessment based on the feasibility report was close to $38,000 per unit. The revised funding table suggests an assessment of $27,000 per unit. A significant issue for several property owners, (five of the ten properties to receive improvements) is the number of assessable units calculated as a part 3 of the assessment calculation. While property owners may not choose to subdivide their property, once the sewer and water is available, these property owners would have every right to subdivide the property into multiple units in accordance with city minimum lot criteria. On one hand these property owners may have no intention on subdivision. On the other hand, it isn't fair to only assess one unit for those properties when subdivision is possible. The Assessment Review Committee originally recommended an option of administrative subdivision for these larger Tots which would allow them to defer the assessment for the undeveloped units. Staff has performed additional research into this approach and has met with the Scott County Appraisers Office. Unfortunately this option would mean a significantly higher immediate cost to the property owner including: surveying costs, fees, and the perpetual increase in taxes for the created lot. As a result, the Assessment Review Committee is now recommending assessing ten units at the proposed assessment rate ($27,000 a unit) and when Tots are subdivided, each new lot would incur a separate connection charge in effect at the time of development. This connection charge is currently $18,000 on the 2014 City Fee Schedule and is subject to change each year. Initially the funds necessary to pay for the project which are not reimbursable by special assessment will be drawn primarily from the trunk fund. The future collection of connection fees would be deposited back into the Trunk Fund. Considering the proposed greater use of Trunk Funding and the use of the Connection Charge for this project, the Assessment Review Committee is also recommending that the Trunk Acreage Charges and City Connection Charge be re- evaluated in the near future. Lastly, the Assessment Review Committee is recommending that hookup fees for the nine developed units in Rolling Oaks project as well as the Mushtown Road project be allowed to be assessed over a 5 year period if the property owner waives their right to appeal all the assessments on their property and connects within the calendar year of the assessment. This option allows property owners to spread out the connection charges over a five year period which may assist them with cash flow for the initial year. FINANCIAL The funding table below for the Rolling Oaks Circle Improvement Project IMPACT: shows contribution from the following sources: Assessments, Trunk Fund, Street oversize Fund, grant, developer contribution, developer -paid deferred assessment, and the Water Quality Fund. There is no question that if financed in this manner this project will set a funding precedent for future projects. Funding source amounts are shown for the original feasibility report and current options: 4 Funding Source Original Amount Revised Amount Assessments (Current) $819,431 $270,000 Street Oversize Fund $60,000 $60,000 Water Quality Fund $25,000 $100,000 Trunk Fund $8,000 $200,000 Grant $60,000 Developer Voluntary Contribution $110,000 Developer Paid Deferred Assessments $90,000 Project Total Cost* $912,431 $890,000 *The funding amounts shown on the above table are estimates. The final costs would be determined based on final design and bidding. The Revised Amount reflects the alternative roadway section which reduces the overall cost of the project. Considering that a major source of funding for this project comes from the adjacent development, final approvals for the project should occur after final platting of the adjacent property and collection of the appropriate contributions by the developer. Once the City has ordered the improvements, the City has one year to award the project unless the approving resolution specifies a different timeframe. ALTERNATIVES: 1. A motion and a second to approve a Resolution Ordering the improvements and the preparation of plans and specifications for the Rolling Oaks Improvement Project, City Project #14 -013. 2. Deny this item for a specific reason and provide staff with direction. 3. Table this item until some date in the future. RECOMMENDED Alternative #1. MOTION: 5 O PRJ0 4646 Dakota Street SE 'tr1vj sol Prior Lake, MN 55372 RESOLUTION 14 -xxx A RESOLUTION ORDERING IMPROVEMENTS AND PREPARATION OF PLANS AND SPECIFICATIONS FOR ROLLING OAKS (PROJECT #14-013); FINANCING THE ROLLING OAKS IMPROVEMENT PROJECT TO BE UNDERTAKEN BY THE CITY AND ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE Motion By: Second By: WHEREAS, the Prior Lake City Council on its own initiative has determined that it desires to complete the Public Improvement Project to Rolling Oaks Circle; and WHEREAS, on April 28, 2014; the City Council adopted Resolution 14 -070 accepting the Feasibility Report and calling for a Public Hearing to be held on the Rolling Oaks Improvement Project which includes sanitary sewer, watermain, storm sewer, aggregate base, concrete curb and gutter, bituminous surfacing, and appurtenant work; and WHEREAS, ten days mailed notice and two weeks published notice of the hearing was given, and the hearing was held on the 27th day of May, 2014, at which time all persons desiring to be heard were given an opportunity to be heard thereon; and WHEREAS, since the project was initiated by the City Council it must be approved by 4 /5ths vote in accordance with Minnesota Statutes 429.031 Subdivision 1(f). 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. Such improvement is necessary, cost - effective, and feasible as detailed in the feasibility report. 3. The City Engineer is hereby authorized to prepare plans and specifications for the improvements delineated in City Council Resolution 14 -070 adopted on April 28, 2014 and by the required statutory 4 /5ths vote does hereby order the project. 4. The City Engineer is hereby designated as the Engineer for these improvements and is authorized to record engineering expenses in the Construction Fund ( #501 - 48380). 5. The Engineer shall prepare plans and specifications for the making of such improvements for Rolling Oaks Circle. 6. The City Council authorizes the following preliminary funding sources and corresponding transfers to the Construction Fund for the project: Funding Source Amount Assessments $270,000 Water Quality Fund $100,000 Street Oversize Fund $60,000 Trunk Fund $200,000 Grant $60,000 Developer Voluntary Contribution $110,000 Developer Paid Deferred Assessments $90,000 Project Total Cost $890,000 7. The City has determined to make a declaration of official intent ( "Declaration ") to reimburse certain estimated costs for this project from proceeds of bonds in accordance with the Internal Revenue Service Reimbursement Regulations (Treasury Reg. 1.150 -2). 8. The City may declare other separate statements of reimbursement intent in connection with specific public improvements projects as they are initiated under Minnesota Statutes Chapters 429 and 444, or for other capital projects, with the understanding that such additional declarations of reimbursement intent will supplement this resolution. All reimbursed expenditures will be capital expenditures, costs of issuance of the bonds, or other expenditures eligible for reimbursement under Section 1.150- 2(d)(3) of the Reimbursement Regulations. 9. This Declaration has been made no later than 60 days after payment of any original expenditure to be subject to a reimbursement allocation with respect to the proceeds of bonds, except for the following expenditures: a. costs of issuance of bonds; b. costs in an amount not in excess of $100,000 or five percent of the proceeds of an issue; or c. "preliminary expenditures" up to an amount not in excess of 20 percent of the aggregate issue price of the issue or issues that are reasonably expected by the City to finance the project for which the preliminary expenditures were incurred. The term "preliminary expenditures" includes architectural, engineering, surveying, bond issuance, and similar costs that are incurred prior to commencement of acquisition, construction or rehabilitation of a project other than land acquisition, site preparation, and similar costs incident to the commencement of construction. 10. This Declaration is an expression of the reasonable expectations of the City based on the facts and circumstances known to the City as the date hereof. The anticipated original expenditures for the Projects and the principal amount of the bonds are consistent with the City's budgetary and financial circumstances. No sources other than proceeds of bonds to be issued by the City are, or are reasonably expected to be reserved, allocated on a long term basis, or otherwise set aside pursuant to the City's budget or financial policies to pay such Project expenditures. 11. This Declaration is intended to constitute a Declaration of the Official Intent for the purposes of the Reimbursement Regulations. PASSED AND ADOPTED THIS 27th DAY OF MAY 2014. VOTE Hedberg Keeney McGuire Morton Soukup Aye ❑ ❑ ❑ ❑ ❑ Nay ❑ ❑ ❑ ❑ ❑ Absent ❑ ❑ ❑ ❑ ❑ Abstain ❑ ❑ ❑ ❑ ❑ Frank Boyles, City Manager 2