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HomeMy WebLinkAbout7A Rolling Oaks Public Hearing Report 4646 Dakota Street SE Prior Lake, MN 55372 CITY COUNCIL AGENDA REPORT MEETING DATE: JULY 24, 2017 AGENDA #: 7A PREPARED BY: LARRY POPPLER, ASSISTANT PUBLIC WORKS DIRECTOR / CITY ENGI- NEER PRESENTED BY: LARRY POPPLER AGENDA ITEM: PUBLIC HEARING TO CONSIDER APPROVAL OF A RESOLUTION ORDER- ING THE ROLLING OAKS IMPROVEMENT PROJECT DISCUSSION: Introduction The purpose of this agenda item is to receive public input on the Rolling Oaks pro- ject and if appropriate order the project. Ordering the project requires a superma- jority (At least 4 of 5 votes). In a separate action tonight is authorization to ap- prove the plans and specifications and authorize advertisement for bids in hopes that the improvement be coordinated with neighboring development and minimize the disruption to property owners. History The City uses the Five Year Capital Improvement Program to plan its infrastruc- ture improvements and the financing for capital improvements. The Rolling Oaks Improvement project proposes to extend utility connections and improve the road- way for properties within the project area. In 2014, a feasibility report for this project was prepared. On April 28, 2014, the City Council approved a resolution accepting a feasibility report for the project. On May 27th, 2014, the City Council held a Public Hearing and on June 23rd author- ized the preparation of plans and specifications. Soon after these authorizations were approved, the developer for the neighboring property retracted their develop- ment application. Since the developer contribution was and is an important fund- ing source for the Rolling Oaks project, work on the city project for Rolling Oaks stopped. A grant application was submitted to the Minnesota Public Facilities Au- thority but was not selected for funding. On May 9th, the City met with property owners from Rolling Oaks. After much dis- cussion, there was consensus that a feasibility report update was needed to fully evaluate options for a project. At its May 22, 2017 meeting the City Council adopted Resolution 17-074 authoriz- ing staff to prepare a Feasibility Report for the Rolling Oaks Improvement Project as outlined in the CIP. In this case a feasibility report was originally prepared in 2014 and a memo amendment was prepared to update the feasibility report. On June 12, 2017, the City Council adopted Resolution 17-090 accepting the fea- sibility report and calling for the public hearing. The City Council also adopted Resolution 17-091 authorizing the preparation of plans and specifications for the project. 2 The M.S. Chapter 429 process applies to all projects that will be financed in whole or part through special assessments or bond proceeds. Rolling Oaks Circle is considered in the report and includes first time improve- ments to Rolling Oaks located within the Northeast quarter of section 26, Town- ship 115 North, Range 22 West, Scott County Minnesota. Structures in this area were built in the 1960s and 1970s. A map of the project area (Exhibit 1) is in- cluded in the original Feasibility Report. The proposed improvements include street construction, storm sewer, storm water quality, sanitary sewer, watermain, concrete curb and gutter, and appurtenant work. Current Circumstances The properties deemed to specially benefit from the improvements are subject to assessment. Each of the affected property owners have been notified in accord- ance with the statute regarding tonight’s Public Hearing. A Public Information Meeting was held on July 12, 2017 to provide the property owners an opportunity to discuss the project in an informal setting prior to the Pub- lic Hearing. Staff presented the proposed improvements, project costs, estimated assessments and answered general questions regarding the project. The plans were also reviewed with property owners to discuss impacts and locations of im- provements. Commentary included questions on the cost formula, discussion on the cul-de-sac area, overhead power burial, street lights, and service locations. It appears that the property owners preferred a design which restores the cul-de-sac as it is today. 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 bidding the work. Once the bids are re- ceived they will provide better clarity on the overall cost and would be provided to the City Council for award of a contract. The Council could decide not to continue with the project upon receipt of bids. A separate Assessment Hearing will be con- ducted following review of the proposed assessments by the City Council’s As- sessment Review Work Group. 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 com- pleted by City staff. ISSUES: A developer is now proceeding with a preliminary plat for the nearby developable area. The development is known as Trillium Cove and received preliminary plat approval on May 22. Considering the cost formula developed in 2014, it is advan- tageous to have a city project on Rolling Oaks coincide with the development pro- ject. 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 3 concern over the assessment amount and the proposed changes to the roadway. The Assessment Review Work Group had spent a lot of time in 2014 on this pro- ject to find a creative way to complete the project yet respond to concerns raised by the property owners. The work group debated the costs of the improvements, number of units, fairness of the assessments, and mechanisms for assisting property owners. The City Council must weigh the precedence of this creativity for this project with the histori- cal methods of assessments, and unique characteristics of the project with the overall costs. Project Costs and Funding The Rolling Oaks project is different than most other city projects. The primary dif- ference is the gravel nature of Rolling Oaks and the large acre lots. 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 Work Group had reviewed the costs of similar types of projects in 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 work group also had re- viewed neighboring City policies for first time improvements. It was f ound 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 Work Group. 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 sug- gests an assessment of $26,900 per unit using updated numbers The Assessment Review Work Group has evaluated updated project costs. The costs increased by $110,000 since 2014 based on current pricing for similar pro- jects. The total project cost may be reduced by $59,072 by utilizing the existing granular fill on the south portion of the project, using the city standard cul-de-sac design, and using seeding instead of sod. The work group is also recommending 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 chal- lenge. Additional, Trunk funds ($200,000) were allocated to the project as amended with the City Assessment Policy in 2014. Also as a result from the developer’s pay- ment of previous special assessments, an amount of $191,600 of those old as- sessments are proposed to be applied against the cost of the Rolling Oaks project. The developer is also proposing to fund the amount of the cost for sewer and wa- ter connection from CSAH 42 to their connection to Rolling Oaks. Based on the current estimate this amount is calculated to be $123,200. 4 Without the development, the city would not have $581,800 in funds to mitigate project costs. At least financially speaking, because of the contributions of the de- veloper, and the fact that the improvements will not likely be cheaper in the future, this is an opportune time to complete the project A significant issue for several property owners, (five of the ten properties to re- ceive improvements) is the number of assessable units calculated as a part 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 inten- tion 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 Work Group had originally recommended an option of administrative subdivision for these larger lots which would allow them to defer the assessment for the undeveloped units. Staff has performed additional research into this approach. Unfortunately, this option would mean a significantly higher im- mediate cost to the property owner including: surveying costs, fees, and the per- petual increase in taxes for the created lot. As a result, the Assessment Review Work Group is recommending assessing ten units at the proposed assessment rate ($26,900 a unit) and when lots are subdi- vided, 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 2017 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 collec- tion of connection fees would be deposited back into the Trunk Fund. Lastly, the Assessment Review Work Group is recommending that hookup fees for the nine developed units in Rolling Oaks project, as was done for 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 one 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 Ordering the project is significant step towards moving forward with a project but it is not the final step. Once bids are received, the funding for the project is more clearly outlined. The City Council can then elect to move forward with award of a contract for construction or not. FINANCIAL IMPACT: The funding table below for the Rolling Oaks Circle Improvement Project shows contribution from the following sources: Assessments, Trunk Fund, Street oversize Fund, 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 option: 5 Funding Source Original Amount Revised Amount Assessments (Current) $819,431 $269,000 Street Oversize Fund $60,000 $67,200 Water Quality Fund $25,000 $112,000 Trunk Fund $8,000 $200,000 Developer Contribution $123,200 Developer Paid Deferred As- sessments $191,601 Project Total Cost* $912,431 $963,001 *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 re- flects the alternative roadway section, city standard cul-de-sac, and seed instead of sod which reduces the overall cost of the project. 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 Improve- ment Project. 2. Deny this item for a specific reason and provide staff with direction. 3. Table this item until some date in the future. RECOMMENDED MOTION: Staff recommends a motion and approval of alternative #1. Approval of this agenda item requires a 4/5 vote. 4646 Dakota Street SE Prior Lake, MN 55372 RESOLUTION 17-___ ORDERING IMPROVEMENTS FOR THE ROLLING OAKS IMPROVEMENT PROJECT (PROJECT #TRN13-000006); 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 Improvements for the Rolling Oaks Improvement Project; and WHEREAS, On June 12, 2017; the City Council accepted the Feasibility Report and called for a Public Hearing to be held for 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 24th day of July, 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 Council by the required statutory 4/5ths vote does hereby order the project as outlined in the feasibility report. 4. The City Engineer is hereby designated as the Engineer for these improvements and is authorized to record engineering expenses in the Construction Fund (#501-43500.00- 55020-TRN13-000006). 5. The City Council authorizes the following preliminary funding sources and corresponding transfers to the Construction Fund for the project: Funding Source Amount Assessments (Current) $269,000 Street Oversize Fund $67,200 Water Quality Fund $112,000 Trunk Fund $200,000 Developer Contribution $123,200 C:\Users\aschroeder\Desktop\17-XXX Rolling Oaks Public Hearing.docx 2 Developer Paid Deferred Assessments $191,601 Project Total Cost* $963,001 6. The City has determined to make a declaration of official intent (“Declaration”) to reimburse certain estimated costs for this project from proceeds of bonds expected to be issued in an amount not to exceed $1,000,000 in accordance with the Internal Revenue Service Reimbursement Regulations (Treasury Reg. 1.150-2). Passed and adopted by the Prior Lake City Council this 24th day of July, 2017 VOTE Briggs McGuire Thompson Braid Burkart Aye ☐ ☐ ☐ ☐ ☐ Nay ☐ ☐ ☐ ☐ ☐ Abstain ☐ ☐ ☐ ☐ ☐ Absent ☐ ☐ ☐ ☐ ☐ ______________________________ Frank Boyles, City Manager