HomeMy WebLinkAbout9C Welcome Ave Funding Approval Report
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4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: FEBRUARY 22, 2016
AGENDA #: 9C
PREPARED BY: DON URAM, FINANCE DIRECTOR
KATY GEHLER, PUBLIC WORKS & NATURAL RESOURCES DIRECTOR
PRESENTED
BY:
DON URAM
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION AUTHORIZING FINAL
FUNDING FOR THE WELCOME AVENUE INDUSTRIAL PARK
IMPROVEMENT PROJECT, CITY PROJECT #12-102
DISCUSSION: Introduction
During the process of closing the financial records for 2015, various
operating transfers are necessary to account for the funding of construction
projects. These transfers need to be acted on by the City Council before the
proceeds can be transferred to specific funds.
The purpose of this agenda report is to consider a resolution for the final
funding of the Welcome Avenue Industrial Park Improvement Project. The
work associated with this project is fully complete. Additionally, the City has
received a final decision from the Minnesota Court of Appeals indicating they
would not hear an appeal of the Scott County District Court’s ruling on two
property assessments.
History
On May 28, 2013 the City Council adopted the assessment roll for the
Welcome Avenue Industrial Park Improvements. The City received two
objections to the assessments which were later filed with the Scott County
District Court. These objections included real property located at 6000 Credit
River Road SE, also known as the Prior Lake Mini Storage and 16801
Industrial Circle SE, also known as Prior Lake Machine.
On May 20, 2014 the Court issued an order in the case of Prior Lake Mini
Storage v. City of Prior Lake, which required that the original assessment
amount of $375,000 be withdrawn, and that the City reassess this parcel in the
amount of $52,000. The City appealed this decision to the state court of
appeals.
On August 22, 2014 the Court issued an order in the case of Archie J Pavek,
Trustee for the Archie J. Pavek Revocable Trust v. City of Prior Lake, which
required that the original assessment of $76,479 be withdrawn, and that the
City reassess this parcel in the amount of $24,829.The City also appealed this
decision to the state court of appeals.
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On February 23, 2015, a closed executive session was held to discuss the
status of the two special assessment appeals and the potential financial
impact.
On January 12, 2015, the City held a public hearing and approved a resolution
reassessing the Prior Lake Mini Storage Parcel. On October 26, 2015, the
City held a public hearing and approved a resolution reassessing the Pavek
Parcel.
The Minnesota Court of Appeals has issued their decision on bothappeals
upholding the decision of the Scott County District Court.
Current Circumstances
Staff has identified the final funding needs for this project as follows:
Construction Fund (Fund 501):
Total project costs are $2,725,569.
Staff has detailed below the unplanned costs and the final transfers to be
made for this project in order that it will be fully funded in light of the
reassessments required by the courts.
12,139
159,257 Assessment appeal for two properties
171,396
271,014 Transfers for final contract costs
442,410 Total
Condemnation of two properties for
right-of-way purposes.
Subtotal unplanned professional services costs
Staff recommends final funding of the project costs by the transfer of dollars
into the Construction Fund as follows:
Fund Amount
Water Fund 402,410
Water Quality Fund 40,000
Total $ 442,410
Savings from the 2015 water projects will cover the transfers as noted above.
Funding from these sources are appropriate as the final project included
extension of water in compliance with the Wellhead Protection Plan (Water
Fund) and flood mitigation for Markley Lake (Water Quality Fund).
The capital project transfers for professional services have been previously
approved by Council through the Capital Improvement Plan process when
the funding sources for construction projects are identified. However, the
resolutions authorizing the professional services contracts, inadverdantly, did
not specify the transfers for these costs. Staff is detailing the funding here,
so we have a resolution documenting approval of the transfer for final
contract costs.
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Debt Service Fund for 2013 Bond Issue (Fund 560-Welcome Ave):
This project included a tax levy and special assessment component for a
total of $1,122,112. However, the funding for debt service was reduced by a
total of $497,740, (principal of $374,650 and estimated interest of $123,090),
due to Court ordered special assessment reductions as shown below:
Original
Council
Approved
Assessment
Final Court
Ordered
Assessment
Additional
Debt Service
Funding
Needed
Minstorage 375,000 52,000 323,000
Pavek 76,479 24,829 51,650
Total Assessment 451,479 76,829 374,650
Minstorage 128,890 17,873 111,017
Pavek 17,877 5,804 12,073
Total Interest 146,767 23,677 123,090
Grand Total 598,246 100,506 497,740
The estimated funding needed by assessment type is shown below:
Original
Council
Approved
Assessment
Final Court
Ordered
Assessment
Additional
Debt Service
Funding
Needed
Street/SW:
Ministorage Assessment 179,000 24,821 154,179
Interest 41,841 5,802 36,039
Pavek Assessment 76,479 24,829 51,650
Interest 17,877 5,804 12,073
315,197 61,256 253,941
Water/Sewer:
Ministorage Assessment 196,000 27,179 168,821
Interest 87,049 12,071 74,978
283,049 39,249 243,799
598,246 100,505 497,740
Street/SW Subtotal
Water/Sewer Subtotal
Grand Total
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Staff recommends funding the 2013 bond issue Debt Service Fund 560 as
follows:
Assessment Fund Amount
Street/SW Debt Service Tax Levy The annual debt service
tax levy would be
approximately $36,277
for seven years,
beginning in 2017.
Total debt service over
the remaining
assessment period
would be $253,941
Water/Sewer Water Fund $243,799
Conclusion
The two objections to the project special assessments resulted in
unanticipated costs in the construction fund, and a debt service funding
shortfall that need to be addressed. Typically construction projects have
multiple funding sources, which makes it necessary to perform transfers
between funds to the make the project funding whole. Staff recommends final
funding of the project costs and debt service as outlined above.
ISSUES:
The transfers to the Construction Fund and Debt Service Fund need to be
approved by the City Council before the proceeds can be transferred to the
specific funds.
The proposed debt service funding also needs to be approved by the City
Council before Staff can incorporate it into the debt service budget.
ALTERNATIVES: 1. Approve a resolution authorizing the transfer of funds and debt
service funding.
2. Deny this item for a specific reason and provide Staff with direction.
RECOMMENDED
MOTION:
Staff recommends Alternative #1.
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 16-XXX
A RESOLUTION APPROVING WELCOME AVENUE IMPROVEMENT PROJECT FINAL FUNDING
Motion By: Second By:
WHEREAS, The City Council ordered improvement project #12-002, the Welcome Avenue Industrial Park
Improvements.
WHEREAS, The City Council adopted the assessment roll for the Welcome Avenue Industrial Park
Improvements. The City received two objections to the assessments which were later filed
with the Scott County District Court.
WHEREAS,
WHEREAS,
The Scott County District Court issued an order in each case which required that the original
assessment be withdrawn, and that the City reassess the parcels pursuant to Minn. Stat. §
429.071.
On January 12, 2015, the City held a public hearing and approved a resolution reassessing
the Prior Lake Mini Storage Parcel. On October 26, 2015, the City held a public hearing and
approved a resolution reassessing the Pavek Parcel.
WHEREAS, The City appealed the Scott County District Court decision. Minnesota Court of Appeals has
issued their decision on the appeals upholding the decision of the Scott County District Court .
WHEREAS, The two objections to the project special assessments resulted in unanticipated costs in the
construction fund, and a debt service funding shortfall that need to be addressed.
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 transfer of funds into the Construction Fund (501-43500.00 project TRN13-000004) is hereby
authorized to be made from the Water Fund in the amount of $402,410 and from the Water Quality
Fund in the amount of $40,000, effective December 31, 2015.
3. Funding of the 2013 Bond issue debt service in Fund 560, due to the Court Ordered reduction in
Water/Sewer special assessments is hereby authorized to be made from the Water Fund in the amount
of $243,779, at the time of the next debt service payment.
4. Funding of the 2013 Bond issue debt service shortfall in Fund 560 of $253,941, due to the Court
Ordered reduction in Streets/Storm Water special assessments, is hereby authorized to be made by
debt service tax levy, and will be incorporated into the the annual debt service budget.
N:\City Council\Resolutions\2016\Welcome Ave Imrpovement Project Final Funding Resolution.docx
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PASSED AND ADOPTED THIS 22th DAY OF February 2016.
VOTE Hedberg Keeney McGuire Morton Thompson
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Frank Boyles, City Manager