HomeMy WebLinkAbout5H PLate SAC Deferral Report
4646 Dakota Street SE
Prior Lake, MN 55372
CITY COUNCIL AGENDA REPORT
MEETING DATE: MAY 21, 2018
AGENDA #: 5H
PREPARED BY:
PRESENTED BY:
CASEY MCCABE, COMMUNITY DEVELOPMENT DIRECTOR
CASEY MCCABE
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION APPROVING AN APPLICATION
FOR THE SEWER AND WATER FEE DEFERRAL PROGRAM
DISCUSSION: Introduction
The purpose of this agenda item is to consider approval of an application from
PLate, LLC for the sewer and water fee deferral program related to the develop-
ment of the PLate restaurant at 16323 Main Avenue SE.
History
On February 11, 2013, the Prior Lake City Council adopted the Metropolitan
Council Sewer Availability Charge (SAC) deferral program and approved the City
of Prior Lake Sewer and Water Fee Deferral Program Policy to mirror the Met
Council’s SAC deferral program. The city’s program policy was later amended
by the City Council on May 27, 2014. Rather than requiring the full Metropolitan
Council SAC and City of Prior Lake sewer and water fees to be paid when a
building permit is issued, the Sewer and Water Fee Deferral Program allows the
city to enter into an agreement with eligible businesses to spread these payments
over a 5-year term at a low interest rate established by the Met Council; currently
2.23% in 2018.
Eligible businesses or properties can apply for the deferral of a portion of one or
more sewer/water fees, including:
➢ Metropolitan Council Sewer Availability Charge (SAC) – Regional Program
sewer fee;
➢ Prior Lake Sewer Connection Charge – Local Program sewer fee;
➢ Prior Lake Water Connection Charge – Local Program water fee; and
➢ Prior Lake Water Tower Charge – Local Program water fee.
The City of Prior Lake has previously issued three sewer and water fee deferral
loans; recipients were Artisan Coffee Bistro, Honest-1 Auto Care and Charlie’s
on Prior. Twenty percent of the local and regional SAC fees are paid by the
applicant when the building permit is issued and the remaining 80% is paid over
a five-year term.
Current Circumstances
PLate, LLC received a determination of 15 SAC units from the Metropolitan
Council and has applied under Program A of the Sewer and Water Fee Deferral
Program. The applicant is seeking deferment of 80% of the Metropolitan Council
SAC ($2,485/unit); Prior Lake sewer connection charge ($799/unit); Prior Lake
2
water connection charge ($1,136/unit); and Prior Lake water tower charge
($1,452/unit); total cost of $5,872 per unit.
Fee Per Unit Total
(15 SAC Units)
20% Payment
w/Building Permit Balance
Met Council SAC $2,485.00 $37,275.00 $7,455.00 $29,820.00
City Sewer Connection $799.00 $11,985.00 $2,397.00 $9,588.00
City Water Connection $1,136.00 $17,040.00 $3,408.00 $13,632.00
City Water Tower $1,452.00 $21,780.00 $4,356.00 $17,424.00
Total $5,872.00 $88,080.00 $17,616.00 $70,464.00
If approved, 20% of the total cost ($17,616) would be paid up-front by the appli-
cant at the time of building permit issuance. The remainder of the fees (City =
$40,644 and Met Council = $29,820) are secured by Deferred Payment Agree-
ment. Loan repayments, at 2.23% interest over a five-year term, would be used
to reimburse the appropriate trunk funds and the Metropolitan Council.
Conclusion
The sewer and water fee deferral program is established and regulated by a
master deferral agreement executed between the City of Prior Lake and the Met-
ropolitan Council. The deferral amount can equal up to eighty percent of the total
sewer and/or water fees due and the deferment term is five years. The interest
rate is determined annually by the Metropolitan Council; currently 2.23%. The
attached Deferred Payment Agreement will be executed between the owner
(PLate on Main, LLC) operator (PLate, LLC) and City of Prior Lake. The agree-
ment, which will be recorded, identifies all conditions and requirements of the
parties for the program.
ISSUES: The funding source for the Sewer and Water Fee Deferral Program will come
from deferring immediate revenue to the individual trunk funds, and rather, each
fund will receive revenue over five years, plus interest. The finance department
will modify their recordkeeping accordingly.
If for some reason the business is unable to complete all repayments, the City
would spread the unpaid amount against the property as a special assessment,
as provided for in the Deferred Payment Agreement.
Few cities in the metrop[olitan area have initiated a program of this nature. Prior
Lake’s experience with program has been positive. As indicated above this pro-
gram has helped three desirable commercial facilities (This request will make the
fourth) to successfully develop in Prior Lake by defraying significant “up front”
development fees to assist in financing such developments. The program does
result in full payment of the fees including interest over a five year period. .
FINANCIAL
IMPACT:
The proposed funding source for the deferred portion of the city related sewer
and water fees would be:
➢ $9,588 of the total $11,985 City Sewer Connection Fee would be paid into
the Sewer Trunk Fund over five years rather than in the first year.
➢ $13,632 of the total $17,040 City Water Connection Fee would be paid into
the Water Trunk Fund over five years rather than in the first year.
3
➢ $17,424 of the total $21,780 City Water Tower Fee would be paid into the
Water Tower Fund over five years rather than in the first year.
All funds would be reimbursed through loan payments received from the appli-
cant plus interest of 2.23%.
ALTERNATIVES: 1. Motion and a second, as part of the consent agenda, to approve the resolu-
tion approving an application from PLate, LLC for the Sewer & Water Fee
Deferral Program.
2. Remove this item from the consent agenda for additional discussion.
RECOMMENDED
MOTION:
Alternative #1
ATTACHMENTS: 1. Sewer & Water Fee Deferral Program Summary
2. Sewer & Water Fee Deferral Program Application
3. Sewer & Water Fee Deferral Agreement
4646 Dakota Street SE
Prior Lake, MN 55372
RESOLUTION 18-___
A RESOLUTION APPROVING AN APPLICATION FOR THE
SEWER & WATER FEE DEFERRAL PROGRAM
Motion By: Second By:
WHEREAS, On February 11, 2013, the Prior Lake City Council adopted the Metropolitan Council
Sewer Availability Charge (SAC) deferral program and approved the City of Prior
Lake Sewer & Water Fee Deferral Program Policy, which was amended on May 27,
2014; and
WHEREAS, PLate, LLC has applied under Local Program A of the Sewer & Water Fee Deferral
Program for deferment of 80% of the Metropolitan Council SAC ($2,485/unit); City
sewer connection charge ($799/unit); City water connection charge ($1,136/unit);
and City water tower charge ($1,452/unit); total cost of $5,872 per SAC unit; and
WHEREAS, PLate, LLC has received a determination from the Metropolitan Council
Environmental Services Division that the proposed development at 16323 Main
Avenue SE will be charged fifteen (15) SAC Units; and
WHEREAS, The Prior Lake City Council has reviewed and approved the PLate, LLC Sewer &
Water Fee Deferral Program application.
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 Prior Lake City Council approves the PLate, LLC application for the Sewer & Water Fee
Deferral Program based on fifteen (15) SAC Units.
3. Repayment to the corresponding City Sewer, Water and Water Tower funds will occur over
five years based on the Program Policy.
4. The Prior Lake City Council authorizes the Mayor and City Manager to execute the
Repayment Agreement and other related Sewer & Water Fee Deferral Program contracts and
documents.
Passed and adopted by the Prior Lake City Council this 21st day of May 2018
VOTE Briggs McGuire Thompson Braid Burkart
Aye ☐ ☐ ☐ ☐ ☐
Nay ☐ ☐ ☐ ☐ ☐
Abstain ☐ ☐ ☐ ☐ ☐
Absent ☐ ☐ ☐ ☐ ☐
______________________________
Frank Boyles, City Manager
The Metropolitan Council has established a SAC Deferral Program (SAC refers to Sewer
Availability Charge) which allows for the deferment of SAC fees for eligible businesses that
receive SAC determinations between three and 25 units.
On February 11, 2013, the Prior Lake City Council adopted, and later amended, the
Metropolitan Council SAC deferral program and approved the City of Prior Lake Sewer and
Water Fee Deferral Program Policy, which amended the city’s previous sewer and water
fee payment program to mirror the Met Council program. Instead of requiring the full SAC
payment to be paid when a building permit is issued, the City of Prior Lake can now enter
into an agreement with eligible businesses to spread the SAC payment over a five-year term
at a low interest rate. Interest rates are established annually by the Met Council and are
locked in as of the agreement date; interest rates have historically been +/- 2.23%.
Eligible businesses or properties can apply for the deferral of a portion of one or more
sewer/water fees, including:
➢Metropolitan Council Sewer Availability Charge (SAC) – Regional Program sewer fee;
➢Prior Lake Sewer Connection Charge – Local Program sewer fee;
➢Prior Lake Water Connection Charge – Local Program water fee; and
➢Prior Lake Water Tower Charge – Local Program water fee.
For any SAC deferral, the three (3) unit minimum and the twenty -five (25) unit maximum
are determined before application of any credits on the site. The Local Program also allows
anyone to apply for a deferral of sewer/water fees when the SAC determination is greater
than twenty-five (25) units, before application of any credits on the site.
THE APPROVED PROGRAM IS DIVIDED INTO THREE SUBGROUPS:
➢MET COUNCIL SAC DEFERRAL PROGRAM: 5-year term; +/- 2.23% interest (interest rate will
vary); 20% paid up-front; secured by assessment agreement against the property; eligible
only to business with a SAC unit determination between three (3) and twenty-five (25) units.
This program is established and regulated by a Master Deferral Agreement executed
between the City of Prior Lake and the Metropolitan Council.
➢CITY SEWER/WATER FEE DEFERRAL PROGRAM A: 5-year term; same interest rate as Met
Council program; 20% paid up-front; secured by assessment agreement against the
property; eligible only to business with a SAC unit determination between three (3) and
twenty-five (25) units. This program is established by city ordinance and is intended to
parallel the Metropolitan Council program guidelines.
➢CITY SEWER/WATER FEE DEFERRAL PROGRAM B: 5-year term; interest established
identical to the assessment rate method; 20% paid up-front, secured by assessment
agreement against the property; eligible to anyone with a SAC unit determination greater than
twenty-five (25) units. This program is unique to the City of Prior Lake and is established
and regulated by city ordinance.
DEFERRAL STRUCTURE:
The structure of the Regional and Local Program deferrals include, but are not limited to, the following
provisions:
➢The deferral amount can equal up to eighty percent (80%) of the total sewer and/or water fees due.
➢The deferment term is five (5) years.
➢Each deferment liability will be effective the first day of the subsequent month (e.g., for an April
building permit that is due and typically reported in May, interest will begin accruing June 1).
➢Interest rate for the Regional Program and Local Program A is determined using the Metropolitan
Council’s SAC Deferral Program rate, which is determined annually and set for the deferment period.
Interest is amortized over the term of the deferment period using whole months.
➢Interest rate for Local Program B is determined using a rate of two (2) percentage points higher than
the net interest cost of the most recent bonds sold by the City.
➢A “Payment Agreement” will be executed between the eligible business, the fee property owner, and
the City stating all conditions and requirements of the parties for the Regional and Local Programs;
this document shall be recorded.
INELIGIBLE CONDITIONS:
The following conditions create ineligibility for a business or property to apply for the Regional or Local
Programs:
➢The fee owner’s property taxes are delinquent.
➢The business is not in good standing with the State of Minnesota, or is in violation of a Prior Lake City
Code.
➢The SAC determination (before credits) is less than three (3) units.
➢The business does not meet the definition of eligible commercial properties in the Metropolitan
Council’s SAC Deferral Program (for the Regional Program and Local Program A).
➢The property is not located within the City of Prior Lake.
➢The property is located on tribal lands.
SAMPLE SCHEDULE:
Below is a sample payment schedule, assuming an eligible business has a SAC determination of three (3)
units before credits. Under the terms of the agreement with the City of Prior Lake, the owner, or
operator on behalf of the owner, shall pay to the city an initial payment of $3,523.20 at the time of
issuance of a building permit. The remaining deferral payments of $14,092.80 will be repaid at +/-
2.23% interest (interest rate is determined annually) over a 60-month term.
Amount Due
If you have any questions or would like to receive an application for the Metropolitan
Council SAC deferral program or the City of Prior Lake Sewer and Water Fee Deferral
Program, please contact Casey McCabe, Community Development Director, at
952-447-9815 or cmccabe@cityofpriorlake.com.
Fee Total Payable
w/Building
Deferred over
5-year term
Permit (20%) (w/interest)
Metropolitan Council Fee $7,455.00 $1,491.00 $5,964.00
City Sewer Connection Fee $2,397.00 $479.40 $1,917.60
City Water Connection Fee $3,408.00 $681.60 $2,726.40
City Water Tower Fee
Calculation (2018)
3 SAC units x $2,485 per unit
3 SAC units x $799 per unit
3 SAC units x $1,136 per unit
3 SAC units x $1,452 per unit $4,356.00 $871.20 $3,484.80
Total Fees $17.616.00 $3,523.20 $14,092.80
DEFERRED PAYMENT AGREEMENT
This Deferred Payment Agreement (“Agreement”) is entered into this ____ day of _____________,
2018 by and between the City of Prior Lake, a Minnesota municipal corporation with an address of 4646
Dakota Ave SE, Prior Lake, MN 55372 (“City”), PLate, LLC, a Minnesota limited liability company with
an address of 350 West Burnsville Parkway, Suite 150, Burnsville, MN 55337 (“Operator”), and PLate on
Main, LLC, a Minnesota limited liability company with an address of 350 West Burnsville Parkway, Suite
150, Burnsville, MN 55337 (“Owner”).
WHEREAS, the Operator proposes to operate a restaurant (“Restaurant”) on property located at
16323 Main Avenue SE, Prior Lake, Minnesota (“Property”) and legally described as follows:
Lot 2, Block 1, Cates Addition (PID 250020030); and
WHEREAS, Owner is the fee owner of the Property; and
WHEREAS, the Owner is subject to charges for sewer and water from the Metropolitan Council
Environmental Services Division (“MCES”) and the City. The charges are based on Sewer Availability
Charge (“SAC”) units; and
WHEREAS, MCES has assessed the Restaurant regarding SAC units and has determined that the
Property shall be charged fifteen (15) SAC units; and
WHEREAS, City Code Section 704.500 allows qualified property owners to defer the payment of
water connection charges and water tower charges. City Code Section 705.600 allows qualified property
owners to defer the payment of sewer connection charges; and
WHEREAS, Owner and Operator seek to have the water and sewer fees owed for the Restaurant
deferred.
NOW THEREFORE, BASED ON THE FOREGOING, the parties hereby agree as follows:
1. Recitals. The recitals set forth above are incorporated herein as if fully set forth.
2. Fees. The Owner is responsible for the following fees in relation to the establishment of the
Restaurant on the Property:
3. Payment of Fees. Owner, or Operator on behalf of Owner, shall pay to City all fees set forth in
Paragraph 2, including interest, according to the following schedule:
a. Initial Payment. $17,616.00 due at the time of issuance of a building permit.
b. Deferral Payments. $70,464.00 with interest at an annual rate of 2.23% due in equal
monthly payments of $1,242.18 over 60 months. Interest shall begin accruing on June 1,
2018. The first monthly payment shall be due on July 1, 2018. All future payments shall
be due on the 1st day of each month in lawful money of the United States to City at its office:
City of Prior Lake, Attn: Finance Department, 4646 Dakota Street SE, Prior Lake, MN 55372,
until the fees and interest are paid in full. The final monthly payment shall be due on June
1, 2023. The final monthly payment shall consist of any and all amounts remaining due
under this Agreement. If the City has not received the full payment described in Paragraph
3 by the end of ten (10) calendar days after the payment is due, the City may collect a late
charge in the amount of ten percent (10%) of the overdue amount of such payment.
c. Prepayment. The amounts due under this Agreement may be prepaid without penalty.
Interest shall accrue on the balance due at the rate set forth above u p and to the date all
amounts due under this Agreement are paid in full.
4. Recalculation of Credits. In the event the SAC units for the Property change for any reason after
execution of this Agreement, any new fees assessed shall be due and payable pursuan t to the City
Code and shall not be subject to this Agreement.
5. Sale or Transfer of Property. If the Property is sold or transferred to any other party, any balance
remaining due under this Agreement, including interest, shall become immediately due and payable
without demand or notice by the City. Owner must notify City in writing at least thirty days prior
to any such sale or transfer.
6. Default. “Default” shall mean the failure to make payments pursuant to the terms herein or any
other breach of this Agreement and failure to cure said default within ten days of the mailing of
written notice by City to Owner and Operator by United States Mail.
7. Remedy. Upon Default, any balance remaining due under this Agreement, including interest, shall
become immediately due and payable without demand or notice by the City. In addition, Owner
and Operator agree that the full balance due, including interest and any applicable collection or
administrative costs incurred by the City, may be certified to the taxes on the Property pursuant to
Minn. Stat. 444.075 or any other applicable law. Owner and Operator waive any and all procedures
Fee Per Unit Total
(15 SAC Units)
20% Payment
w/Building Permit Balance
Met Council SAC $2,485.00 $37,275.00 $7,455.00 $29,820.00
City Sewer Connection $799.00 $11,985.00 $2,397.00 $9,588.00
City Water Connection $1,136.00 $17,040.00 $3,408.00 $13,632.00
City Water Tower $1,452.00 $21,780.00 $4,356.00 $17,424.00
Total $5,872.00 $88,080.00 $17,616.00 $70,464.00
related to certifying amounts due to the Property’s taxes including but not limited to notice, hearing
and appeal of the assessment.
8. Costs of Collection. To the extent permitted by law, Owner and Operator agree to pay all costs of
collection, including reasonable attorneys’ fees and legal expenses, incurred by the City in
collection of any amounts due herein.
9. Notices. Notices to be given under this Agreement shall be given by enclosing the same in a sealed
envelope, postage prepaid and deposited in the U.S. Postal Service, addressed to the parties as listed
above.
10. Assignment. None of the parties shall assign this Agreement, nor any interest arising herein,
without the written consent of the other parties.
11. Governing Law. This Agreement shall be controlled by the laws of the State of Minnesota.
12. Severability. The provisions of this Agreement are severable. If any portion hereof is, for any
reason, held by a court of competent jurisdiction to be contrary to law, such decision shall not affect
the remaining provisions of this Agreement.
13. Entire Agreement. The entire agreement of the parties is contained herein. This Agreement
supersedes all oral agreements and negotiations between the parties relating to the subject matter
hereof as well as any previous agreements presently in effect between the parties relating to the
subject matter hereof. Any alterations, amendments, deletions, or waivers of the provisions of this
Agreement shall be valid only when expressed in writing and duly signed by the parties, unless
otherwise provided herein.
14. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be
considered an original.
IN WITNESS WHEREOF, this Agreement has been executed as of the day and year first above
written.
[Remainder of Page Intentionally Left Blank. Signature Pages Follow.]
City of Prior Lake
By:
Kirt Briggs
Its: Mayor
By:
Frank Boyles
Its: City Manager
STATE OF MINNESOTA )
(ss.
COUNTY OF SCOTT )
The foregoing instrument was acknowledged before me this ____ day of ,
2018, by Kirt Briggs and Frank Boyles, the Mayor and City Manager, respectively, of the City of Prior
Lake, a Minnesota municipal corporation, on behalf of the corporation and pursuant to the authority granted
by its City Council.
__________________________________________
Notary Public
PLate, LLC
By:
William Peterson
Its: Chief Manager
STATE OF )
(ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this ______ day of ,
2018, by William Peterson the Chief Manager of PLate, LLC on behalf of the Operator.
__________________________________________
Notary Public
PLate on Main, LLC
By:
William Peterson
Its: Chief Manager
STATE OF )
(ss.
COUNTY OF )
The foregoing instrument was acknowledged before me this _____ day of ,
2018, by William Peterson, the Chief Manager of PLate on Main, LLC on behalf of the Owner.
__________________________________________
Notary Public
DRAFTED BY:
Hoff Barry, P.A.
775 Prairie Center Drive, Suite 160
Eden Prairie, MN 55344