12/19/1995 - City Council Special AGENDA
SPECIAL CITY COUNCIL MEETING
Tuesday
December 19, 1995
5:00 p.m.
Municipal Center Building
(Lunchroom Facility)
L ROLL CALL & ADOPTION OF AGENDA
II. VISITORS TO BE HEARD
III. FINANCING OPTIONS/PROMENADE DEVELOPMENT PROJECT
IV. LIVABLE COMMUNITIES GOALS UPDATE
V. OTHER BUSINESS
VI. ADJOURNMENT
MEMO
_city of eagan
TO: HONORABLE MAYOR & CITY COUNCILMEMBERS
FROM: CITY ADMINISTRATOR HEDGES
DATE: DECEMBER 14, 1995
SUBJECT: SPECIAL CITY COUNCIL MEETING/TUESDAY, DECEMBER 19, 1995
A Special City Council meeting is scheduled for Tuesday, December 19, 1995 at 5:00
p.m. to consider financing alternatives for the Opus Promenade development project as
directed at the Visitors To Be Heard portion of the December 12 Special City Council
workshop. A second item is to discuss goals relative to the Livable Communities
objectives.
FINANCING ALTERNATIVES/OPUS PROMENADE PROJECT
Enclosed on pages through /Q is a copy of a financial analysis prepared by
the Director of Public Works in response to questions raised by the City Council at the
December 12 work session. Also enclosed on page // is a copy of a letter from
Byerly's concerning the Opus Promenade Project.
LIVABLE COMMUNITIES GOALS
According to the Livable Communities Act, goals are determined by each participating
City Council during the month of December. For additional information on this item,
including direction by the Advisory Planning Commission, refer to the attachments
provided in the regular City Council agenda under Old Business, Item F. The Director
of Community Development, if time permits, will provide an update for discussion
purposes at the work session on the proposed goals.
OTHER BUSINESS
There are no items to be discussed under Other Business at this time.
/S/ Thomas L. Hedges
City Administrator
YANKEE DOODLE CORRIDOR/35E MODIFICATIONS
PROJECT 695
FINANCIAL ANALYSIS
ISSUE
The City Council must decide how the transportation improvements to the Yankee Doodle Corridor
and 35E interchange modifications are to be financed as necessitated by the Eagan Promenade
Development Proposal. In particular,the amount of the developer's contribution must be determined
and how the City's corresponding participation will be financed.
BACKGROUND
Approximately 7+years ago,the City recognized that the intersections of Pilot Knob Road, Yankee
Doodle Road and their interchanges with I-35E would eventually need some relief from the 20 year
projections of traffic volumes. As a result, a Ring Road concept was envisioned. The Council had
also directed staff to pursue investigations regarding the possibility of constructing a new northbound
ramp from Yankee Doodle Road to 35E.
As development inquiries were received regarding large vacant land parcels, investigation of this Ring
Road concept and new entrance ramp was intensified. In November of 1993, detailed traffic counts,
turning movements and vehicle classification analysis were performed during peak hours at nine
critical intersections within the Yankee Doodle Road/Pilot Knob/35E area. At four of these nine
intersections,there were periods of the day that traffic volumes exceeded the current capacity. Two
additional intersections exceeded 85% of available capacity. Normal background traffic growth
unrelated to any specific development would quickly lead to congestion and unacceptable levels of
service and air quality standards.
In April of 1994, an interim traffic study report was presented detailing specific roadway
improvements necessary to accommodate the projected growth in traffic from the community in
general(background traffic)as well as the anticipated traffic generated from approximately 600 acres
of remaining undeveloped commercial, industrial, office and/or high density residential properties.
These improvements were put into two basic categories of modifying the existing transportation
system to increase efficiency and capacity and expanding the system with new construction(i.e. new
ramps, bridge overpasses, interchanges, "Ring Road" reliever construction, etc.).
During this time frame, the Opus Corporation submitted a development proposal for the Eagan
Promenade to be located on the 120-acre O'Neil parcel consisting of approximately 480,000 sq. ft.
of retail commercial and 294 multifamily residential units with an estimated total daily trip generation
of approximately 27,00()vehicles per day by 2005. The existing 1995 traffic volumes on Yankee
Doodle Road are approximately 22,000 vehicles per day between 35-E and Lexington Avenue.
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An analysis was performed of the existing transportation system to determine what improvements
would be necessary to accommodate this significant development proposal.
IMPROVEMENTS
The public transportation system improvements necessary to accommodate the Eagan Promenade
Development proposal were split into two categories fiwther described as follows:
A. INTERNAL This consisted of the extension of Denmark Avenue north from Yankee Doodle
Road, the construction of Promenade Avenue north of Yankee Doodle Road and the construction
of Northwood Drive from Lexington Avenue with its intersection with the Denmark Avenue
extension. While Northwood Drive and Denmark Avenue are considered part of the ultimate Ring
Road concept and will be classified as community collector roadways, all three are considered local
improvements and the full financial responsibility of the adjacent undeveloped property being directly
served by their construction.
B. EXTERNAL The "external" improvements relate to those modifications, expansions and/or
additions to the Yankee Doodle corridor and 35-E interchanges as necessary to accommodate the
traffic generated from the Eagan Promenade with an estimated total cost of$6.6 million and further
identified as follows:
Yankee Doodle Road Corridor
• Pilot Knob Road Intersection $ 917,000
• Denmark Intersection $ 652,000
• Promenade Intersection $ 231,000
• Third Lane and Bridge Widening $2,365,000
• Streetscape and Landscape $ 648,000
• Trails $ 161,000
• Permanent Right-of-Way $ 314.000
Subtotal $5,288,000
INTERSTATE 35E MODIFICATIONS
• New Northbound Ramps $ 937,000
• Northbound Exit at Pilot Knob $ 36,000
• Southbound Exit at Yankee Doodle Road —
Signal Revision $ 81,000
• Southbound Exit at Yankee Doodle Road —
Add Right-Turn Lane $ 201.000
Subtotal $1,355,000
2 •
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1'I - - 1- _ -- - - -f--=- 1- -- - - -
COST PARTICIPATION SCENARIOS
At a special Council workshop held on November 14,the estimated costs associated with the Internal
and External improvements associated with the Eagan Promenade Development was presented to the
Council with a determination that a 15%excess capacity credit would be provided for the external
improvements but all remaining costs for the Yankee Doodle Corridor and 35E modifications would
be the responsibility of the developer, Opus Corporation. The developer then requested the City
Council to consider a funding formula that would reduce the developer's obligation to only 42% of
the improvement costs that relates to their proportion of the"incremental" excess capacity being used
by their new development traffic generations.
With this"incremental"excess capacity analysis being validated as another acceptable approach by
City staff and its traffic consultant; two additional variations of this 58%incremental approach was
offered by staff for Councils consideration at a follow-up workshop on December 5. Attached Table
1 summarizes the resulting four scenarios with the estimated cost participation between the City and
Opus.
At that December 5 workshop, the Council directed staff to prepare the feasibility report with a
financing formula in accordance with Scenario No. 2. The Opus corporation indicated that they could
not financially accommodate Scenario No. 2 and requested the City Council to reconsider Scenario
No. 3.
At the December 12 Special Council workshop,the City Council directed staff to evaluate the City's
ability to finance either scenario and to provide the Council with information as to how the City's
share would be financed. This information would then be reviewed by the Council at the special
workshop scheduled for December 19.
MAJOR STREET FUND
A. PURPOSE The Major Street Fund as it is known today was established in the early 1980's as an
evolution from the earlier Road and Bridge Fund from the Township days. Since that time, its
purpose has been to provide a common source of funding to finance transportation related
improvements to the City's collector and arterial transportation system (local, county and state)
providing benefit to the community as a whole. It is a discretionary source of funds for the City
Council to finance Renewal and Replacement(R&R),Expansion and Modification(E&M) and new
construction that either provide community wide benefit or necessary local improvements that can't
be fully financed through special assessments to benefitted properties.
B. REVENUE SOURCES There are several sources of income to the Major Street Fund described
as follows:
1) 5% of the annual City wide property tax levy.
2) Municipal State Aid Street(MSAS)Construction Fund reimbursement. This is the City's
prorated share of the state collected gas tax based on a formula taking into consideration
the City's population and construction needs of our MSA Street system. A maximum of
20%of our local streets can be designated as MSA Streets. It is anticipated the City will
be able to increase its annual construction allotment by approximately $20,000 per year
for 15 years ($300,000) for the bridge widening.
3
3) MSAS annual Maintenance allocation. This is based on $1,500.00 per year per mile of
improved MSA Street designations.
4) A general fund transfer to help finance the City's annual street sealcoating maintenance
program.
5) Road unit charge. In 1977, the City implemented a fee to be collected with building
permits to help finance the expansion and modification of the City's collector and arterial
transportation system to accommodate the new traffic generated by the communities
growth.
6) State and County contributions. These are funds provided to the City on those projects
where the City is the lead agency and there are portions of the improvement eligible for
County and/or State participation.
7) Developer contributions. There are occasions where specific roadway improvements are
required by regulatory agency permits (ISP, EAW, etc.) and/or comprehensive
transportation plans to accommodate significant developments that are either not
anticipated nor programmed by the City. While the City's Major Street Fund may finance
the entire project, development agreements will identify a developer's obligation.
8) Special Assessments. Where local road improvements may be financed entirely or in part
by MSAS eligibility and/or County/State contributions and specific property value benefit
is provided to adjacent property, excess revenue generated by special assessments will go
into the Major Street Fund.
C. MAJOR STREET FUND STATUS At the request of Council Member Hunter, the staff has
prepared a five-year analysis of revenue and expenses of the City's Major Street Fund, copies of
which are attached. This analysis takes into consideration the five-year CIP (1996 -2000) recently
approved by Council action at the special workshop of December 12. This projection does not go
beyond the year 2000 as anticipated expenditures have not yet been programmed.
Three options of this Major Street Fund analysis has been provided. Option 1 assumes no
development of the Eagan Promenade. Option 2 is based on the comparable financial participation
of the Eagan Promenade associated with Scenario No. 2 previously discussed. Option 3 also
correspondently compares to Scenario No. 3 of participation by the developer.
OTHER DEVELOPMENT FINANCIAL CONSIDERATIONS
Several Council members requested additional information regarding the financial impact of this
development beyond it's required participation for transportation improvements.
A ROAD UNIT CHARGE/BUILDING PERMIT FEES With the issuance of building permits for
the commercial and/or residential properties, a Road Unit Charge (RUC) is collected which is
dedicated to the Major Street Fund. 1996 rates are$345.00/unit for R4 and $1,295.00/acre for C-I.
•
For the Eagan Promenade Development, this equates to approximately $102,000 for the R4
residential development and $87,000 for the retail commercial development for a grand total of
$189,000 to be collected with Building Permits.
4 .
B. PROPERTY TAX Based on a estimated market value $35 million for the retail commercial
portion and $14 million for the residential portion, the property taxes payable to the City of Eagan
with the 1996 mil levy rate after fiscal disparities amounts to approximately $330,000 per year, of
which 5% ($16,500)is dedicated to the Major Street Fund each year.
AGENCY CONTRIBUTIONS
The external transportation improvements are being performed on primarily County and State
roadways. As such,certain portions of these costs are eligible for participation. In accordance with
current finance participation formulas, it is estimated that Dakota County will reimburse the City of
Eagan approximately$2.7 million. Their current 5-year CIP(1996 -2000)has already allocated $2.1
million in 1997. Similarly, it is anticipated that MnDot will finance approximately $200,000 for
related improvements that will benefit:the interstate system.
DEVELOPER CONTRIBUTION PRECEDENCE
Council member Mason inquired as to whether developer contributions for similar external
improvements are typical. Historical research has indicated that there are no situations similar to the
Opus Eagan Promenade proposal than can be considered "typical". The closest similarity would be
the recent improvements to T.H. 149, Opperman Drive and the signalization of that intersection as
required by the MPCA under the Indirect Source Permit (ISP) for West Publishing's Campus
expansion. In addition, Elrene Road (neighborhood collector) was improved as an internal street
providing access to their future development phases. Of those two projects combined total cost of
$2,030,000,West Publishing paid the City$523,000 with another$200,000 reimbursement deferred
to an unspecified date of future development expansion. The City's Major Street Fund financed
approximately $517,000. MnDot's participation amount to approximately $153,000 with
approximately $582,000 being levied as a special assessment to other benefitting properties in the
general area.
SUMMARY
After evaluating the various developer participation scenarios and 5-year projection of impact on the
Major Street Fund, it appears the City will be able to adequately finance any combination that the
Council determines appropriate. If additional information, analysis or explanation would be beneficial
to assisting the Council in their determination, I will be happy to respond accordingly.
Respectively submitted,4(–dte44—
Thomas A. Colbert, P.E.
Director of Public Works
TAC/cb
Attachments: Table 1 Cost Participation Scenarios
Major Street Fund Impact Options
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TABLE#1
Scenario Yankee Doodle/35E/Lexington Av .
"External" Improvement(Millions)
Opus City Others T tal
1. 15% "Residual" Excess Capacity $4.660 $1.319 $0.067 $6.046
Credit applied to all improvements
(City of Eagan's proposal).
2. 58% "Incremental" Excess Capacity $4.134 $1.845 $0.067 $6.046
Credit applied to major bridge widening
and third lane improvements only.
3. 58% "Incremental" Excess Capacity $2.957 $3.022 $0.067 $6.046
Credit appplied to all improvements
except new Yankee Doodle on-ramp
to 35E.
4. 58% "Incremental" Excess Capacity $2.238 $3.743 $0.067 $6.046
Credit applied to all improvements
(Opus proposal).
Note: All scenarios already include a credit of$0.473 for City included improvements unrelated to the
Promenade Development (i.e. HOV bypass lane, Denmark turn lane, 35E exit ramp turn lane).
TABLE #2
Opus Promenade
Improvement "Internal" Improvements (Thousands)
Opus City Others Total
1. Denmark Ave. $663 -0- -0- $663
2. Northwood Dr. $650 $100 $556 $1,306
3. Promenade $621 -0- -0- $621
TOTAL $1,934 $2,590
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FROM :OPUS TO 612 661 4612 1995.12-14 04:07PM #012 P.03/03
ur�J" ry-GJ lRU will u�r.nv�v .....
9 .
December 13 1995
Mayor Tom Flan
(Sty of pagan
3330 Pilot Knob Road
Eagan,MN 55)22
Dear Mayor Egan; '
Pm writing to you following my recent conversation with rum Murrnane of Opus Corporation,
regarding the status of the Ragan Promenade, Twits ooncerncd to'cam that the project may be at
risk and wanted to share our thoughts on the infrastructure improvements.
Over the last 15 months we have negotiated with Opus attempting to below*the economics,
timing and schedule, with our own development planning. We have finalized the lease which
',deluded extended negotiations on the infrastructure improvements and the allocation of the cost
to the tenants,thcrcin agreeing Lo participate in the cos. of these improvements ourselves,
This agreement with Opus reflects Byaly's philosophy of partnering with the Community and
participating in the improvements necessary to ensure that the project will be safe and accessible
ibr our customers,employees and the local residents. It is presently my understanding that the
roadway improvements required as a condition of this development are designed to:
1. Remedy existing trafc conditions that are below genet ally accepted levels,
2. Construct improvements required to facilitate the development of Eagan Promenade.
3. Create increased capacity end allow for future development in the vicinity.
The City administration and the City Council have the challenging task of balancing growth,both
residential and commercial while maintaining the quality environment that Eagan,is known for. I
represent Aycrly's when I express our hopc that the City administration will equitably allocate the
costa necasrary to achieve these improvements,which bring short term and long term benefits.
We remain committed to the Eagan Promenade pending the final resolution of the costs allocated
to the teararres, and look forward to being a member of your community,
Thank you for your partnership. • •
Sincerely,
Jo R.Meyer
Moe President Real Estate and Development
7171 FRANCE AV<=NLIF SOUTH • 6n1NA,MINNESOTA 65436 • (612) 831-3601
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R=96%
612-936-4529 12-14-95 05: 06PM P003 #41