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HomeMy WebLinkAbout9D Fee to Trust Work Group Report OsC .P�0 H V 4646 Dakota Street SE Prior Lake,MN 55372 jNN ESO �� CITY COUNCIL AGENDA REPORT MEETING DATE: NOVEMBER 23, 2015 AGENDA#: 9D PREPARED BY: FRANK BOYLES, CITY MANAGER PRESENTED BY: VARIOUS AGENDA ITEM: CONSIDER APPROVAL OF A REPORT FROM THE FEE TO TRUST WORK GROUP DISCUSSION: Introduction The purpose of this agenda item is to consider whether the City Council wishes to: 1. Approve as submitted or revise a letter to the Bureau of Indian Affairs with respect to the Meadows Fee to Trust Application. 2. Authorize retaining special counsel Don Baur, Perkins Coie to assist the city in preparing a response to the BIA regarding the ICO (Mender Property et al) Fee to Trust Application. 3. Authorize the staff to prepare an amendment with respect to the city's Comprehensive Plan regarding SMSC land owned within the corporate limits of Prior Lake. 4. Direct the Fee to Trust Work Group to initiate discussions with the newly elected SMSC Business Council before initiating compensable work with Perkins Coie. History The Shakopee Mdewakanton Sioux Community owns a total of 1886 acres land in Prior Lake of which 960 acres is in trust. The land presently held in fee as well as any future land purchased will be converted to trust and as a matter of SMSC policy and practice. Land held in fee by the SMSC is treated like property owned by private citizens or businesses. Land held in trust for the SMSC by the Federal Government is subject to fewer state and local laws, receives most if not all services from the SMSC and is not subject to city zoning laws, comprehensive plan or state property tax laws. Fee land is placed into trust to assure the tribal community that it will remain in their ownership in perpetuity. Current Circumstances The City Council became aware that the SMSC would be submitting applications to the Bureau of Indian Affairs (BIA) regarding various properties. They have already done so with respect to the former 80 acre YMCA property. The city submitted a letter to the BIA which expressed Phone 952.4479800 / Fax 952.447.4245/�www.cityofpriorlake.com concerns but was neutral regarding the fee to trust request. The YMCA property was approved for trust. Two properties remaining for BIA action are the 249 acre Meadows property and the 219 acre ICO property. This agenda item addresses three issues with respect to one or more of these applications which require council direction. The issues below have been identified by Mayor Hedberg and councilor Keeney who together comprise the City Council's Fee to Trust Work Group. Letter to the BIA Regarding the Meadows Fee to Trust Application The city has until December 19, 2015 to send comments to the BIA regarding the Meadows application. To provide adequate time before submission is due the Fee to Trust Work Group is submitting a draft letter for City Council input and direction. The proposed letter(Attachment 1) follows the format which was established for the YMCA request. It was understood that this format would be a template for future letters. The council should discuss the contents of the letter as submitted and provide direction with respect to desired modifications. If desired the council could reserve final approval until the December 14th meeting. Authorization to Retain Special Counsel for the ICO Fee to Trust Application The Fee to Trust Work Group has had the opportunity to discuss legal issues both with the City Attorney's office and with Don Baur of the law firm of Perkins Coie. Mr. Baur represented Scott County, Shakopee and Prior Lake some years ago with respect to the 800 acre MWCC and 110 acre Tesmer property fee to trust request. In addition to this work Mr. Baur has considerable nationwide 20 year experience addressing Indian law matters. In a letter dated October 26, 2015 (Attachment 2) Mr. Baur outlines the likely elements of the work and the possible costs related to fee to trust requests. At the time of the proposal we contemplated that Perkins Coie could be active in both the Meadows and ICO application. Subsequently we have concluded and recommend to the City Council that their focus be directed to the ICO application only. This would substantially reduce the initial $25,000-$30,000 quote to research and prepare the initial letter to BIA regarding this application by about one half. If an appeal is necessary to challenge a decision of the BIA it is estimated that the cost would be $90,000. Such an appeal typically requires 18 months to resolve. 2 Mr. Baur has offered to reduce representation costs by 10% based upon billing attorney. We would expect that the primary attorney would be Don Baur. Mr. Baur's services would not be initiated until and after: 1) The Fee to Trust Work Group initiates discussions with the newly elected Tribal Council in January, or 2) The BIA 30 day notice is received, whichever is first. Authorization to Prepare a Comprehensive Plan Amendment The City Council has talked about preparing a comprehensive plan amendment to delete parcels of property owned by the SMSC from the city's comprehensive plan since such properties are not under the city's control. The question is, which comprehensive plan should be amended, the 2030 or 2040 plan? Based on recent meeting with Met Council staff, they support the city's effort to amend its Comprehensive Plan to better recognize SMSC property, including both fee and trust holdings. They agree that trust property should not be identified in our plan with any land use that impacts city growth related to population, households and employment. They also agree that the city should consider a land use designation for fee property that may provide for a lower density land use(s), since those properties will likely becomes trust property eventually. The Met Council's latest population projections did not include the SMSC trust property, but it does include their fee property. Based on the city's likely future changes to how it identifies SMSC fee property, Met Council staff recognized that the City may propose an adjustment to its 2020, 2030 and 2040 forecasts. However, they strongly support doing this as part of the 2040 Comprehensive Plan update process rather than to propose an amendment to the existing 2030,plan. They appear to use the following rationale for waiting to the 2040 update process: i 1. Changes to the SMSC land use designations can impact how other land uses in the city are viewed (i.e., number and density of housing units and planned commercial development). 2. The city must maintain a minimum of three housing units per net acre density throughout the residentially planned areas, including future annexed property within the OAA. Lowering densities within SMSC fee property may result in increasing densities in other non- SMSC residential areas. 3. The city should work more with SMSC to understand their future planned land use and development between now and 2030 or 2040. 4. The local 2040 plan update process can start now, so the city may actually be reviewing the SMSC issue twice if it tries to isolate the SMSC issue as part of the 2030 plan. 3 5. SMSC property is a large piece in the overall land use planning for Prior Lake, and as such, the Met Council will look at it from a high- level city planning perspective. This type of evaluation may take a long time, and with further requests for information, it may lengthen the review well into the local 2040 plan update process anyway. The work group has not wrestled with this question. There have been comments both at work sessions and by individual council members that they would prefer the amendment be made to the 2030 plan but no formal direction has been provided. It would be helpful for the City Council to provide direction on this matter. Discussions with the Newly Elected SMSC Business Council Prior to Initiatinq Compensable Services with Perkins Coie. The work group is hopeful that a resolution of differences can be accomplished through discussions with the newly elected Business Council in January rather than resorting to legal actions through Mr. Baur's firm. Consequently they recommend council direction to this effect. FINANCIAL IMPACT: If Perkins Coie assist with the BIA letter and if an appeal is prepared by them to the BIA, the cost for legal fees could be in the range of$90,000. This expenditure has not been budgeted for but could be paid from the legal account. Any year end overage expended for this purpose would reduce the amount of funds (if any) which are moved into reserve at the end of the year. ALTERNATIVES: Council action in three areas are desirable: 1. Provide feedback and direction on the Meadows BIA letter. 2. Determine whether to appoint Perkins Coie special counsel for Indian matters and the maximum dollar amounts. 3. Provide staff direction on whether to prepare an amendment and if so whether the amendment is to the 2030 or 2040 Comprehensive Plan. 4. Direct the Fee to Trust Work Group to initiate discussions with the newly elected SMSC Business Council before initiating compensable services with Mr. Baur, unless the 30 day BIA notice is received prior to the initiation of such discussion. RECOMMENDED As determined by the City Council. 4 U r� 4646 Dakota Street SE �rrNso�� Prior Lake,MN 55372 RESOLUTION 15-xxx A RESOLUTION APPOINTING A SPECIAL COUNSEL TO ASSIST THE CITY WITH RESPECT TO SMSC RELATED ISSUES Motion By: Second By: WHEREAS, The city has appointed a City Attorney to address civil and criminal matters; and WHEREAS, From time to time issues which require legal training in certain specialty areas arise; and WHEREAS, One such area is Indian law; and WHEREAS, The City Council desires to preserve its relationship with the SMSC and act with prudence and equity in Indian related matters; and WHEREAS, The law firm of Perkins Coie and specifically Don Baur possess considerable expertise on Indian law matters. 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 law firm of Perkins Coie and specifically Don Baur esquire are hereby appointed as special City Council on Indian law matters. 3. This appointment is limited to costs not to exceed $90,000. It is understood that the city will receive a 10% reduction in hourly representation costs. PASSED AND ADOPTED THIS 23th DAY OF NOVEMBER, 2015. VOTE Hedberg Keeney McGuire Morton Thompson j Aye ❑ ❑ ❑ ❑ ❑ Nay ❑ ❑ ❑ ❑ ❑ Abstain ❑ ❑ ❑ ❑ ❑ Absent ❑ ❑ ❑ ❑ ❑ Frank Boyles, City Manager Attachment 1 4646 Dakota Street SE Prior Lake,MN 55372 �INNESO�� United States Department of the Interior Bureau of Indian Affairs Midwest Regional Office Attn: Regional Director 5600 West American Boulevard,Suite S00 Bloomington, Minnesota SS437 Re: Shakopee Mdewakanton Sioux Community Fee to Trust Application- Meadows Dear Ms. Rosen: Pursuant to the Notice of Non-Gaming Land Acquisition Application ("Application") for the Meadows Parcels dated October 13, 2015 and the 30 day extension invoked by the City on November 19, 2015, the City of Prior Lake submits the following response no later than i December 19, 2015: I. INFORMATION REQUESTED BY BIA: In answer to specific questions asked by the BIA in the notice dated October 13, 2015: a. Property Taxes. Of the 249.879 acres requested for Trust States, 104.891 acres are within the city of Prior Lake corporate boundaries. This includes the following parcels: Meadows Prior Lake Parcels PID Total Tax Prior Lake Tax 253010010 $992 $108 253010020 $36,360 $3,991 253010030 $102 $11 2SS120010 $13,026 $1,928 2SS120020 $8,654 $2,239 259320083 $1,S60 169 Total 60 694 8 446 b. Assessments.There are no existing assessments on these Properties. c. Services. The City approves annual Beverage Cart Liquor service. In addition, the City provides all police services and joint powers assistance for fire services to this property. Phone 952.447.9800/Fax 952.447.4245/www.cityofpriorlake.com Regional Director, Midwest Regional Office U.S. Dept. of the Interior, Bureau of Indian Affairs Page 2 d. Zoning. The land is guided in our 2030 Comprehensive Plan as R-RD which means rural residential.This is the guiding typically used for land which does not and may never be served by public utilities.The zoning for all parcels is agricultural. H. POSITION WITH RESPECT TO THIS APPLICATION: The City objects to the transfer of this Property into trust for the following reasons: a. Need for Property. The Property proposed to be transferred into trust which is located in the City of Prior Lake consists of a golf course, one house, and open land. The SMSC cites several reasons the Property is needed: self-determination; economic development; housing; cultural restoration; and wetland. The City recognizes that there are uses which are needed by the tribe and thus are appropriate for transfer into trust such as the Pow Wow grounds which are part of this application but are located in the City of Shakopee. However, the SMSC has not established that the Property in Prior Lake satisfies needs that make it appropriate for transfer. The house is one house located on the golf course. It does not provide self-determination or economic development or a significant source of housing. The golf course has been successfully operated by the SMSC in fee status since 2005, already creating the economic diversity the SMSC seeks. The wetlands and natural areas are a benefit not just to the SMSC but to the entire area and are currently protected by both State and local law. The SMSC indicates that it intends to continue to operate the Property as it is currently operated,as such transferring the Property into trust is actually a detriment to the SMSC. The State wetland regulations and the City zoning and land use regulations ensure that the Property will continue to be used as wetlands and a golf course. A change in use of the Property while in fee status would require significant public process and input. However, if the Property is transferred into trust there are no safeguards to ensure that the Property remains a golf course and a wetland since it is no longer subject to city zoning ordinance and the comprehensive plan. In addition,allowing the SMSC to transfer a golf course into trust establishes an unfair economic advantage. The SMSC is one of the most economically successful tribes in the Country and has already shown that it is able to operate a successful golf course. If the SMSC is permitted to transfer the golf course into trust it will no longer be required to pay property taxes or comply with State or local regulations.The transfer of the golf course into trust improves the SMSC's competitive position and raises the competitive disadvantages of similarly situated private enterprises. b. Impact on City.The removal of the Property from the City tax rolls is significant. Each time the SMSC transfers property to trust the tax burden is shifted from the SMSC onto the other residents of the City. This is despite the fact that the SMSC continues to benefit from many of the services provided by the City including roads, emergency Regional Director, Midwest Regional Office U.S. Dept. of the Interior, Bureau of Indian Affairs Page 3 services, and parks. This transfer does not reduce the services the City must provide but does transfer the burden onto other residents. c. jurisdictional Problems. The transfer of the Property into trust also creates jurisdictional problems. The SMSC itself notes that one of the advantages to the transfer will be to avoid State and local regulations relating to improvements. This means that the SMSC would be able to avoid the health and safety regulations that exist for the protection of all residents. In addition,the City of Prior Lake is under the jurisdiction of the Metropolitan Council in regards to land use planning and sewer and water provision. The regulations imposed by the Metropolitan Council are meant to ensure safe and healthy development. The Metropolitan Council imposes regulations relating to land use density, requiring that the City ensure certain population densities are met. The Metropolitan Council also imposes sewer and water regulations,requiring the City to serve certain areas of the City by certain dates. In addition,the Metropolitan Council has the authority to approve or reject the City's comprehensive plan. The property owned by the SMSC issued by the Metropolitan Council to establish such regulations. Transferring the Property into trust will make it practically impossible for the City to comply with the regional regulations. d. Cumulative Impact. The SMSC has actively been purchasing land within and surrounding the City of Prior Lake and transferring that property to trust.In addition, the SMSC has expressed an intent to continue transferring all of the property it owns into trust. The cumulative effect of multiple transfers of property within and surrounding the City into trust is significant.The SMSC has indicated that it currently owns approximately 4122 acres in the Prior Lake / Shakopee area and that 1844 of those acres are held in trust.It is clear that one day all 4000 acres will be held in trust. In Prior Lake,the amount is 1886 total acres owned of which 1047 acres are in trust. The numerous transfers have created a significant impact on the City in regards to several of the factors to be considered for fee to trust transfers. The transfers have had a significant impact on the City's tax base, shifting the tax burden onto other residents. In addition, the extensiveness of the transfers is creating jurisdictional conflicts in which the City is unable to comply with regional regulations and unable to ensure safe and orderly development. The continuation of trust transfers includes a substantial amount of property and will have an extensive impact on the City's planning,land use,tax revenue, operations and ability to provide necessary services. The City requests that the BIA consider the cumulative impact of trust transfers on the City of Prior Lake as shown below: Regional Director, Midwest Regional Office U.S. Dept. of the Interior, Bureau of Indian Affairs Page 4 Trust Request Total Acres Total Acres Total Acres Total Acres in Trust Date/Name Owned (PL) in Trust(PL) this Request if this Request Approved (PL) 01/20/2015 1886 960 87 1047 YMCA 10/13/2015 1886 1047 104.891 1151.891 Meadows The City appreciates the BIA's consideration of these matters and encourages the BIA to contact the City if it has additional questions. Respectfully submitted, Kenneth L. Hedberg Mayor, City of Prior Lake cc: Charlie Vig, Chair,SMSC PeRKINScoie October 26, 2015 TO: Mark Johnson FROM: Donald C. Baur RE: Proposal for Representation Thank you for contacting me about representing the City of Prior Lake regarding the currently pending trust land acquisition requests by the Shakopee Mdwakanton Sioux Community(SMSC) for the Meadows and Inyan Ceyaka Otonwe parcels. This memorandum sets forth our proposal for representation. As we discussed, Perkins Coie is very familiar with the trust acquisition history and practices of I the SMSC,having been involved with previous requests for affected local governments for nearly 20 years. We previously have represented, and include as current clients, Scott County and the City of Shakopee, although we are not working on any active matters for them. The City of Prior Lake previously served as a non-client contributing "payor" in some of this representation in 2002. We have conducted a conflict check, and are clear to undertake this work. As a courtesy,we would like to provide notice of our representation of the City of Prior Lake to Shakopee and Scott County, should we be retained. Our proposal has three discrete stages. First, we would review the applications and other pertinent information and assist the City in developing written comments on both applications. These comments will provide the record for subsequent litigation, should that be necessary. It is often necessary to engage technical assistance and consultants at this stage on environmental, transportation, land use, and other impacts of the proposed trust land request. We estimate that legal fees and disbursements associated with developing both sets of comments would be in the $25,000 to $30,000 range. This estimate could be reduced if the comments overlap to some ewe. The secondhase would be an appeal to challenge each decision at the Interior Board of Indian p pp g I Appeals (IBIA). This appeal would be necessary for any decision issued by the BIA Regional Director, which is likely to be used here,before a challenge could be filed in federal court. Each appeal would entail a notice of appeal and two briefs. Each IBIA appeal is likely to cost $90,000, If SMSC files its own motions on standing or other affirmative defenses,the cost of --v each appeal would be higher. Filing an IBIA keeps the action from becoming final and the trust transfer occurring. A typical IBIA appeal takes 18 s_to resolve. The third phase would be litigation in federal district court. In our experience, lawsuits challenging trust land decisions are strongly contested by tribes and the federal government and Perkins Coie LLP 128336242.1 affirmative defense motions are often filed by those defendants. It also is possible a preliminary injunction or other form of interlocutory relief could be needed. We believe such a case would cost around $225,000 in mts-fio-L.Summary iudgment_based on the record ed loser_o_$ 00_,000 if a preliminary injunction is needed. Depending on timing, it is possible that the two decisions could be consolidated into a single lawsuit,which would reduce the cost associated with separate lawsuits. A coordinated legal challenge to both trust acquisitions at the same tim_e would be around$3_50,000. We would, of course, coordinate all of our legal work with you as locaJ_counsel and look for every way to reduce costs to the City. We would call upon four attorneys at Perkins Coie with experience on Indian law as needed to provide the most effective and cost-efficient representation to the City. The administrative comment and appeal work would be undertaken by me,partner Jena Maclean(who has worked on SMSC issues for many years) and senior counsel Odin Smith. We are all in the Washington DC office. Lead litigation counsel would be Chuck Curtis, from our Madison Office. Our hourly rates are as follows: me ($660), Jena($550), Odin($525), and Chuck($795). As necessary,we would use experienced associates and paralegals in an effort to reduce costs. We would reduce these our by 10 percent to reflect the local government nature of the client and us recognition� of our prior er a ionship with the City. As a final note,we observe that the City may want to consider a legislative avenue. Congress is considering a number of bills that relate to trust land. The situation in the Prior Lake area is extreme, as the SMSC continues its methodical, steppingstone approach to adding more and more land to trust status. It is difficult and expensive to fight these battles incrementally under the existing legal precedent. Many other local communities around the country are experiencing similar problems. It may be possible to develop a broad-based political strategy to seek federal legislation to address this situation by putting some checks on unlimited trust acquisition by wealthy tribes. If theCt --is-interested, we.coulddevelop a legislative strategy and an estimate of costs, including recommendations for lobby support. We hope this proposal contains the information needed by the City. Please let us know if we can be of further assistance. Thank you for considering Perkins Coie on this matter. cc: Chuck Curtis Jena A. Maclean Odin Smith Perkins We LLP -2- 128336242.1