05/17/1995 - City Council Special AGENDA
CAPONI LIAISON COMMITTEE
Wednesday
May 17, 1995
7:30 a.m.
Office of the City Administrator
Police Facility
(second floor)
L ROLL CALL & ADOPTION OF AGENDA
II. CAPONI ART PARK/LEGAL INTERPRETATION OF CITY FUNDING
III. OTHER BUSINESS
IV. ADJOURNMENT
ROUGH DRAFT
May 16, 1995
ANTHONY CAPONI
1215 COUNTY ROAD 30
EAGAN, MN 55123
Re: Caponi Art Park
Dear Tony:
At the request of the City Council, I have been asked to write this letter to you on their
behalf addressing any involvement of the City Council with the Caponi Art Park.
As you know, the City received a copy of an internal memo from the City Attorney's office
which basically stated that the City could not use public dollars to form a foundation/hire
an executive director to raise money so that your non-profit corporation could purchase your
land for the Art Park. A copy of that memo was given to you.
We then asked the City Attorney to further research what, if anything, the City Council
could do. We have now received a memo from him. To our disappointment, it is his
opinion that it would be illegal for the City to expend public funds to establish a foundation
to raise money solely for the benefit of a non-profit corporation. A copy of that memo is
enclosed for your information.
It seems that the City can expend public funds in regard to the Art Park only if the City
buys the land to be used as a part of the City's park system. If this were to occur, then the
City would operate the park.
As you know, the City Council has stated to you that it does not intend to buy the land.
That was when the Council asked that an item concerning establishing a foundation be
placed on a regular City Council agenda. As you know, that did not happen because of the
City Attorney's opinion.
ANTHONY CAPONI
May 16, 1995
PAGE TWO
The Liaison Committee met to discuss the City Attorney's memo. It seemed to the
members of the committee that the only possible alternatives available to the City were to
buy all the land and operate the park, to buy part of the land and operate the park or to
not expend any City dollars for the park, with the exception of staff time which would be
offered to any developer.
Unfortunately, I must tell you that the Council does not have the funding to purchase the
land and does not think it appropriate that the land be included in the City's park system.
As you know, the City has supported your vision of an art park. However, you have made
statements to the City Council regarding the Council's "commitment" to the art park. The
City Council has reiterated to you that there is no "commitment" on the part of the City.
Beginning in 1986, City Councils and City staff have made numerous good faith efforts to
assist you in making your vision of an art park become a reality. This is the type of support
and assistance we would give to any major private project seeking to develop in the City of
Eagan.
We will continue to try to aid you with staff time insofar as staff can effectively provide any
aid. Of course, if you do decide to proceed with the park, we will review your plans and
work with you toward the development of the park itself.
The contents of this letter were directed by the Mayor and members of the City Council.
On their behalf, the Council Liaison Committee, consisting of City Councilmembers Awada
and Masin, will meet with you at -7. -30 q wt on M.A y 17, 199 5 to present this
letter to you and to discuss the contents. Assistant to the City Administrator Duffy and I
will also be present at that meeting.
Sincerely,
Thomas L Hedges
City Administrator
cc: Honorable Mayor & City Councilmembers
Assistant to the City Administrator Duffy
Director of Parks & Recreation Vraa
City Attorney Sheldon
TLH/vmd
101° MEMO
_city of eagan
TO: HONORABLE MAYOR & CITY COUNCILMEMBERS
FROM: CITY ADMINISTRATOR HEDGES
DATE: MAY 12, 1995
SUBJECT: CAPONI ART PARK
I am writing this memo on behalf of the Caponi Art Park Liaison Committee. On May 2,
1995, the committee met prior to the City Council meeting with City Attorney Sheldon,
Assistant to the City Administrator Duffy and me to discuss a memo from the City
Attorney which basically stated that it would be illegal for the City to expend public funds
to establish a foundation and to raise money solely for the benefit of a non-profit
corporation. A copy of that memo is attached for your information.
At that meeting, the members of the committee did some brainstorming as to what the
City Council could or could not do. At that time, the committee came up with five ideas.
They were:
1. The City cannot do anything to help that involves the expenditure of public funds.
2. The City could buy all of the Caponi land, make it part of the City's park system
and operate the park. This would mean that Tony's non-profit corporation would
not be involved.
3. The City could purchase all the land and then lease or sell the land to the non-
profit corporation. (City Attorney Sheldon needs to check this option to determine
whether or not it would be legal.)
4. The City could encourage another public entity to purchase some or all of the land
for a public purpose, such as the HRA for senior housing. (But then it would not
be part of the Art Park. However, we can follow up this possibility if the Council
so desires.)
5. The City could buy 26 acres of the Caponi land. This would be the northern 20
acres of Tony's land just to the south of Diffley Road and Remo's six acres. The
City could then encourage Tony to sell the southern 20 acres south of Diffley in
order to solve some of his "money problems."
Caponi Memo
May 12, 1995
Page Two
In the past, the Council has stated that they did not intend to buy land from Mr. Caponi.
Given the fact that the City Council now knows that it cannot expend public dollars to hire
an executive director and establish a foundation so that money can be raised for the non-
profit corporation to purchase the land from Mr. Caponi, the Liaison Committee, in
conjunction with the rest of the Council, would like to discuss the above options.
The Liaison Committee has directed that I revise the letter that we originally intended to
send to Mr. Caponi in early April. I have written the letter using the Council's current
position which is to expend no public dollars toward the project. It the Council wishes to
revise its position, it will be easy to further revise the letter. A copy of the draft letter is
also enclosed for your information.
Once the Council establishes its position, it is the intention of the Liaison Committee to
meet with the Caponi's and to give them the letter and discuss its contents with them.
I await Council direction.
City Administrator
cc: City Attorney Sheldon
Assistant to the City Administrator Duffy
Attachments (2)
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MEMORANDUM
TO: City Administrator
FROM: City Attorney's Office
DATE: May 2, 1995
RE: Authority of City to Finance Caponi Art Park
Tile No. 246-8515
INTRODUCTION
This memorandum is submitted in response to your inquiry regarding the City's authority
to raise or otherwise provide funds for the acquisition of additional land for the Caponi
Art Park. It appears from my limited research that the answer to your inquiry is that the
City does not have the authority to raise funds for or otherwise finance the purchase of
land for the Caponi Art Park.
The facts involved are straightforward: The Capon Art Park was organized and is
operated as a non-profit corporation. Capon Art Park seeks the City's financial assistance
to allow the non-profit corporation to purchase additional land for the Art Park. Caponi
Art Park suggested that the City establish a foundation that would raise funds to help the
Caponi Art Park purchase the additional land. In the alternative, it was suggested that
because Caponi Art Park was open to and for the use of the public, the City acquire the
additional land for Caponi Art Park.
UVhile Caponi Art Park seeks the City to basically finance the purchase of the additional
park land, it expects the City to retain no ownership in the land or control or custody of
the Capon Mt Park operation. In other words, the non-profit corporation will own the
additional land and operate and control the Caponi Art Park.
DISCUSSION
Indeed, Minn. Stat §§471.15 to 471.19 authorizes a municipality to operate a 'program
of public recreation' in cooperation with any non-profit corporation, including the right
to acquire, equip, and maintain land, buildings and other recreational facilities. The
Minnesota Attorney General, however, has issued several opinions in which it declared
certain mimicipal expenditures or uses to be impermissible and outside the scope of
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Sections 471.15-471.191. For example, under Minn. Stat. §412.221 and §471.15,
acquisition by a municipality of property must be for public purposes of the municipality.
Op. Atty. Gen., 479-A-12, December 15, 1950. Additionally, the Attorney General has
opined that a program of"public recreation" must be operated for public purposes. Op.
Atty. Gen.,476-B-10, October 29, 1949. Specifically, in addressing the City of Brainard's
inquiry as to whether it could use a ball park owned by a non-profit corporation which
offered to lease the park to the City for five days during each week, the Attorney General
stated that the City Council must determine whether: (1) the use of the ball park was
sufficient to meet the needs of the City for recreational purpose; (2) the proposed
recaeational program came within the preview of this section; and(3)the proposed lease
was one which involved expenditure of public funds for a public purpose. Op. Atty. Gen.
59-B-11,May 11, 1950.
Further, while Sections 471,15 to 471.191 permits the named bodies to enter into a joint
recreational program, it does not authorize a village to simply donate money to a school
district to equip a gymnasium, Op. Atty. Gen., 476-B-10, November 1953 nor does it
authorize a school board to turn over a flat sum of money to a village for the operation of
a skating rink or vice versa, Op. Atty. Oar. 159-B-1, January 27, 1954. The Attorney
General has also opined that a village has no authority to provide a rent-free baseball field
to a privately owned club. Op. Atty. Gen., 59-B-11, July 25, 1956. Nor was a school
district authorized to contribute five of charge to a village the heat, light and water
necessary to maintain a village swimming pool, where the swimming pool was not a
cooperative venture within Sections 471.15 to 471.19. Op, Atty. Gen., 159b-1, July 14,
1965.
Most importantly, Sections 471.15 to 471.19 do not authorize a municipality to allocate
public funds or resources for a use not operated by the municipality as part of its
recreational program. Op. Atty. Gen., 442-A-20, July 18, 1957. For example, the
Attorney General has held that a city had no authority to appropriate money, to a group
flying model airplanes and racing miniature automobiles, to make improvements,
regardless if improvements were installed on property owned by the city in as much as
the City would not be in charge of programs or disposition of money. Op. Any Gen., 59-
A-3, October 3, 1950. Further, a city does not have the authority to build a recreational
building when it was not built as a part of or in promotion of a definite recreational
program, but simply done to provide hockey and skating facilities or to promote hockey
clubs. Op.Atty. Gen., 59-B-11, March 9, 1948.
Accordingly, the authority of the City of Fagan to solicit and raise or otherwise
appropriate fiords for the purchase of land to expand the Caponi Art Park, a nun-profit
corporation, under Minn. Stat. §1471.15 to 471.191, must be determined based on the
following principles as outlined above:
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1. Is the City's expenditure of funds either through a fundraising process or
through the direct allocation for the purchase of the land pursuant to and in
furtherance of a jet recreational program?
2. Is the acquisition of the land by public funds for public purposes of the City
and/or is the Caponi Art Park operated for public purposes?
3. Will the Caponi Art Park be operated by the City as part of its recreational
program?
Finally, Caponi Art Park's suggestion that the City establish a private foundation for the
principle purpose of raising money to purchase additional land for the Caponi An Park is
not financially prudent for the City. The City would not be granted tax exempt status by
the IRS because the foundation will not be engaging primarily in activities of exempt
purposes, i.e. charitable, religious, educational, scientific or literary, rather its primary
purpose is to raise money for the acquisition of additional parkland. Tax exempt status is
granted only to foundations whose primary activities are for exempt purposes.
CONCLUSION
The City may expend money only for public purposes. The establishment of a
foundation and the expenditure of public funds to raise money solely for the benefit of a
non-profit corporation, is not a public purpose and thus, its illegal. Additionally, while
the City may acquire land for a public recreation program in cooperation with a non-
profit corporation, such acquisition mat be a joint investment and recreational fatality
between the City and the Caponi An Park The city cannot simply donate finds to the Art
Park. Based on the facts as understood, the action to be taken by the City as suggested by
Caponi is unauthorized.
SKH/wlct
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