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03/20/1990 - City Council RegularMINUTES OF A REGULAR MEETING OF THE EAGAN CITY COUNCIL EAGAN, MINNESOTA MARCH 20, 1990 00060 A regular meeting of the Eagan City Council was held on Tuesday, March 20, 1990, at the Eagan Municipal Center. Present were Mayor Egan and Councilmembers Wachter, Gustafson, McCrea and Pawlenty. Also present were City Administrator Tom Hedges, Community Development Director Dale Runkle, Public Works Director Tom Colbert, and City Attorney James Sheldon. AGENDA City Administrator Hedges recommended the following changes to the agenda: Item 1, Department Head Business, Parks and Recreation Department, Trapp Farm Park Land Acquisition, request to continue to the April 3, 1990, regular City Council meeting. Item I, Consent Agenda, Duckwood Square Final Plat, request to continue indefinitely. Item J, Consent Agenda, Frank's Nursery Crafts Addition, request to continue indefinitely. Item K, Consent Agenda, Park Center Final Plat, request to continue indefinitely. Wachter moved, Pawlenty seconded, a motion to continue Item 1 of Department Head Business, Parks and Recreation Department, Trapp Farm Park Land Acquisition to the April 3, 1990, regular City Council meeting. Aye: 5 Nay: 0 McCrea moved, Wachter seconded, a motion to approve the agenda as amended. Aye: 5 Nay: 0 MINUTES Wachter moved, Pawlenty seconded, a motion to approve the minutes for the March 6, 1990, regular City Council meeting. Aye: 5 Nay: 0 DEPARTMENT HEAD BUSINESS CONSIDER DISPOSITION OF SURPLUS PROPERTY HOUSE AT CLIFF PILOT KNOB ROADS The Director of Public Works reported that only one bid was received for the removal of the house located on the property slated for the Joseph Connolly Addition and that bid is unusually low. The City Councilmembers had questions as to whether any alternatives had been explored for the use of the house; however, because the building will Page 2 /EAGAN CITY COUNCIL MINUTES March 20, 1990 have to be moved and it is economically unfeasible to move the house to another location solely for storage purposes, it was recommended that the bid be accepted. Wachter moved, Gustafson seconded, a motion to receive the bids for the removal of surplus property (house on northeast corner of Cliff and Pilot Knob Roads) and award the contract to Otting House Movers for $375, conditioned upon Otting's obtaining the necessary moving permits. Aye: 5 Nay: 0 VARIANCE TO WORK HOURS COVENTRY PASS GRADING PERMIT /ENEBEK CONSTRUCTION The Director of Public Works explained the necessity for the extended hours of operation for Enebek Construction on the Coventry Pass grading. Councilmember McCrea asked that staff notify the nearest neighbor, the Don Klein's, regarding the variance. McCrea moved, and Gustafson seconded, a motion to approve a variance to Subdivision Ordinance 4.30, 5B, for Enebek Construction Company to allow 24 -hour operations within Coventry Pass for two separate, two -week periods to be defined by City staff between April 16 and July 27, 1990, subject to following condition: 1. If complaints are received from off -site property owners, the applicant will be given an opportunity to address the complaint. However, if the complaint cannot be satisfactorily resolved, the Council reserves the right to revoke the variance. Aye: 5 Nay: 0 FUNDING MAINTENANCE /DAKOTA COUNTY TRAILS A. Personnel Items. CONSENT AGENDA 00081 Wachter moved, Gustafson seconded, a motion that the present program for funding and maintenance of Dakota County trails be continued in its present form unless unforeseen circumstances arise, at which time the Council may wish to reconsider. Aye: 5 Nay: 0 1. It was recommended that an insurance proposal for the City's life, short -term disability and AD D group insurance coverage be accepted. 2. It was recommended that an internship in the Parks Recreation Department for Jennifer Peterson be approved. Page 3 /EAGAN CITY COUNCIL MINUTES March 20, 1990 B. Declare 1985 Ford as Surplus Property /Authorize Sale. It was recommended that the 1985 Ford Crown Victoria be declared surplus property and its sale authorized to Suburban Auto Sale in the amount of $1,016. C. Declare Two (2) K -55 Moving Radar Units as Surplus property and Authorize Sale. It was recommended that two (2) K -55 Moving Radar Units purchased in 1983 be declared as surplus property and their sale by the Police Department be authorized. D. $700 Cash for Trash Winner. It was recommended that Mr. Malcolm Heinle be recognized as the recipient of a $700 Cash for Trash award. E. Contract 90 -2, Park Shelter Buildings for Ohmann, Bridle Ridge, and Northview (Blackhawk Deleted). It was recommended that the plans and specifications for park shelter buildings at Bridle Ridge Park, Ohmann Park and Northview Athletic Fields be approved and the advertisement for bids be authorized with a bid opening on April 24, 1990. F. Purchase of Replacement Vehicles for Parks Recreation Department. It was recommended that the purchase of replacement vehicles through Hennepin County purchasing be approved for the Parks Department for a 3/4 Ton pick -up and a 1 -Ton pick -up chassis and cab and that the advertisement for bids be authorized for a dump box for the 1 -Ton chassis. G. Proclamation, Earth Day, April 22, 1990. It was requested that the Council proclaim April 22, 1990, as Earth Day in the City of Eagan. R 90.13 H. Parks Maintenance Tractor. It was recommended that the bids for a replacement tractor in the Parks Maintenance Division be received and the sale awarded to H W Equipment for $29,780. I. Duckwood Square Final Plat. 00682 When the agenda for this meeting was approved, the Duckwood Square final plat was recommended for continuance. Page 4 /EAGAN CITY COUNCIL MINUTES March 20, 1990 J. Frank's Nursery and Crafts Addition Final Plat. 00083 When the agenda for this meeting was approved, the Frank's Nursery and Crafts Addition final plat was recommended for continuance. K. Park Center Final Plat. When the agenda for this meeting was approved, the Park Center final plat was recommended for continuance. L. Receive Final Assessment Roll /Schedule Public Hearing (Pond AP- 50 Trunk Storm Sewer). It was recommended that the final assessment roll for Project 452A (Pond AP -50) be received and a public hearing scheduled for May 1, 1990. M. Receive Final Assessment Roll /Schedule Public Hearing (Alden Ponds Streets Utilities). It was recommended that the final assessment roll for Project 452 (Alden Ponds Streets Utilities) be received and a public hearing scheduled for May 1, 1990. N. Project 473, Reconsider Final Assessment Objections /Schedule Public Hearing (Pilot Knob Road Trunk Storm Sewer). It was recommended that the final assessments for miscellaneous parcels under Project 473 (Pilot Knob Road Trunk Storm Sewer miscellaneous objections) be reconsidered and a new final assessment hearing be scheduled for May 1, 1990. O. Project 494, Reconsider Final Assessment /Schedule Final Assessment Hearing (Wescott Road Streets Utilities. It was recommended that the final assessment roll for Project 494 (Wescott Road Streets Utilities Miscellaneous Objections) be reconsidered and a new final assessment hearing scheduled for May 1, 1990, for the affected parcels. P. Project 491, Reconsider Final Assessment Roll /Schedule Final Assessment Hearing (Eagan Hill Farms Trunk Utilities Miscellaneous Objections. It was recommended that the final assessment roll for Project 491 (Eagan Hill Farms Trunk Utilities Miscellaneous Objections) be reconsidered and a new final assessment hearing scheduled for May 1, 1990, for the affected parcels. Page 5 /EAGAN CITY COUNCIL MINUTES March 20, 1990 00084 Q. Project 505, Reconsider Final Assessment Roll /Schedule Final Assessment Hearing (Country Hollow Trunk Utilities Miscellaneous Objections). It was recommended that the final assessment roll for Project 505 (Country Hollow Trunk Utilities Miscellaneous Objections) be reconsidered and a new final assessment hearing scheduled for May 1, 1990, for the affected parcels. R. Contract 89 -14, Final Payment /Acknowledgement of Completion (Coachman Water Treatment Plant Dehumidification). It was recommended that the completion of Contract 89 -14 (Coachman Water Treatment Plant Dehumidification) be acknowledged, that the fourth and final payment to Enviro -Con, Inc., in the amount of $3,000 be authorized, and the project be accepted for maintenance subject to any warranty provisions. S. Contract 90 -04, Resolution Restricting On- Street Parking (Rahn Road Diffley to Beau D'Rue Drive). It was recommended that a resolution restricting on- street parking for Contract 90 -04 (Rahn Road Diffley to Beau D'Rue Drive) be approved and the Mayor and City Clerk be authorized to execute all related documents. R -90.14 Pawlenty moved, Wachter seconded, a motion to approve the Consent Agenda except as described with the adoption of the agenda. Aye: 5 Nay: 0 At this time, Mayor Egan recognized the achievement of one of Eagan's residents, Bea Blomquist. Ms. Blomquist was the recipient of the Athena Award, given each year to a Woman of Distinction in Dakota County. PUBLIC HEARINGS RESOLUTION FOR DEVELOPMENT PROGRAM AND TAX INCREMENT PLAN FOR DEVELOPMENT DISTRICT NO. 3 /TRI -LAND PROPERTIES RESOLUTION FOR DEVELOPMENT AGREEMENT FOR DEVELOPMENT DISTRICT NO. 3 The public hearing for this item began with the Mayor reviewing the procedures to be followed for the public hearing. Following the Mayor's review, the City Administrator discussed the process for this application and the complexity of the issue before the Council. After a brief presentation, the City Administrator called the audience's attention to an informational fact sheet prepared by the City which explained the TIF proposal in more detail. Page 6 /EAGAN CITY COUNCIL MINUTES March 20, 1990 4('C 5 Dave MacGillivray, the City's bond counsel, addressed his remarks to the on -going negotiations on the development agreement. He said that an acceptable development agreement has not yet been completed. Mr. Rollie Crawford, counsel for the developer, then made his presentation. He pointed out that he had brought a court reporter to record the details of the meeting. Mr. Crawford outlined the issues before the Council but, in addition, pointed out that the proposal is not a zoning issue or a question about proper land use; it is not a request to spend tax dollars on behalf of the developer but a tax increment financing plan, and it is not a question of whether this proposal offers competition to other businesses. Brad Swenson addressed his remarks to the physical layout of the proposal. He described the proposal as consisting of 95,000 s.f. of retail with a grocery at one end, a theater at the other, with convenience and specialty shops in between; a medical /bank building; an outlot reserved for a service station; and an ice arena. Sid Inmann from PubliCorp was the next to address the Council. Mr. Inmann confined his remarks to the financial aspects of the proposal. He briefly discussed the taxes, the "but for" test and said he was available for questions. Mr. Rollie Crawford again spoke. He said this was a culmination of a lot of hard work. He urged that the public hearing go forward and that the details would be nailed down. He said that perhaps the wording in the development agreement was not there yet but he believed they would have an agreement completed. Mayor Egan then suggested that the Council collect questions and then field the answers all at once at the end of the public portion of the hearing. The first of the public to address the Council was Doug Lee. He is a hockey parent and he has recently run ads in the local newspapers regarding the tax increment financing. He introduced Bob Utecht who has been active in hockey in Minnesota for many years. Mr. Utecht encouraged the development of ice rinks. He discussed the average costs for these rinks and stated that the average contruction costs for a rink in the Metro area was $721,000, not including land costs. Mr. Utecht said that the cost figures he used had not been updated for inflation. Mr. Lee then returned to the podium and pointed out that the original project for Eagan Center, which was brought to the Council on August 15, 1989, did not mention an ice arena nor tax increment financing. Because of this, Mr. Lee said the development failed the "but for" test. He also acknowledged that the bank /medical building grading Page 7 /EAGAN CITY COUNCIL MINUTES March 20, 1990 00086 began late in the fall of 1989 and a permit was issued for this grading. He said that tax increment financing provides that any prior construction must be excluded from a tax increment financing district. When asked, the City Administrator stated Mr. Lee was correct. Mr. Lee then expressed concerns that if the ice arena were a tenant of the shopping center, that in the future, the developer could have someone else move into this space. Mr. Lee was also concerned about school district budget cuts and asked why the City would subsidize a shopping center when this money could be used in a different direction. He asked what would happen if the ice arena could not keep going? Would the City then subsidize the operation of the ice arena? He also said it was difficult for existing merchants to compete with a center that was built with government subsidies. Mr. Lee stated that the ice arena was used as a smoke screen to get tax dollars to build a shopping center and urged the Council to vote against this project. Mr. Paul Taylor, who lives on Heine Strasse, was the next to address the Council. He said it is a myth that the project would not cost tax dollars. Further, he stated that if nothing else, the project would require additional City services. Mr. Taylor mentioned that the Legislature is proposing a bill at this time that would require the cities to make up any lost revenues to the school districts due to tax increment financing. He then quoted losses regarding ice arenas. He mentioned the Burnsville arena and said that perhaps in the future there would be pressure to bail out the ice arena if the project failed. Mr. Taylor said that City support through tax increment financing would be a big mistake. The next person to address the Council was Ben Bartel, a young man who spoke on behalf of his hockey team. He said that school district #196 had built a high school and a middle school without a hockey rink but that other sports teams had received their arenas: basketball, tennis, football. He said the fate of the hockey team was in the Council's hands. Next to speak was John Gustin who lives on Woodlark. Mr. Gustin said the major issue in this case is the tax increment financing and he urged the Council to vote no. Next was Sue Grousz who urged the Council to vote no as the project failed the "but for" issue and the development would occur anyway. She granted that the City needs and wants a hockey rink but she didn't want tax increment financing used as the means to get one. She said this was a bare minimum project. The next person to speak was Mark Springer and he also urged the Council to vote no. He reported that for the last 4 or 5 years, his taxes have been going up and he wondered whether tax increment financing was a fancy word for tax increase? Page 8 /EAGAN CITY COUNCIL MINUTES March 20, 1990 0008 Jim Curry then spoke to the Council. Mr. Curry does not own the present Eagan Center property but did own it from 1968 -1986. Mr. Curry developed much of the surrounding property. He briefly discussed the environmental impact statement done earlier on the PUD and that the infrastructure was in place. He said Mr. Swenson had put together a good project and that while it was controversial, Eagan would love the arena. Next was Bill Duggan who lives on Gabbro. He is a member of the Economic Development Commission and gave Tri -Land Properties credit for creative marketing. Mr. Duggan also stated that he had voted against the project when it was before the Economic Development Commission. He wondered how many jobs would be created by the use of this tax increment financing. He would appreciate a detailed explanation of the "but for" test. He also questioned whether the development would take place, with the exception of the ice arena, even if the tax increment financing were not used. He said history would indicate that it would although perhaps not how or on the schedule that Tri -Land Properties would wish. He said that approval of tax increment financing for this type project would set a dangerous precedent. He questioned whether the Economic Development Commission would then hear proposals for community swimming pools, basktetball courts, etc., all tied to other strip malls. He said Eagan was being placed in a difficult situation and not in a favorable light at the Legislature because of this proposal. While he agreed that the City needed an arena, he did not think this was the best way to finance one. Allen Benning, 4174 Blueberry, stated that the ice arena is a project that meets the "but for" test. He then chronicled the times that they have tried to get an ice arena in Eagan: a school with an ice arena was denied, a community center with an ice arena was denied, a group also approached the City about donated land on which to build an ice arena, and that was denied. He said tennis courts had been built in the City, parks, basketball courts, etc., and all had been paid for with taxes. He said only $1 per year would be necessary for fiscal disparities. He said this would allow the City to control the site where this development was taking place. He mentioned Don Fraser, Mayor of Minneapolis, tearing down houses to build townhouses with tax increment financing dollars. TIF will also be used in Apple Valley to build the Target. He urged the Council to vote yes. Next to speak was Jim Joinly who said he represented students of the school system. He also questioned whether tax increment financing should be used to build this project. Mr. Joinly asked several questions: 1) what is the best /worst scenario for taxes that would be paid? 2) would students playing hockey have an equal opportunity for ice time? 3) would the ice arena go forward if tax increment financing was not approved? Jack Johnson who lives on Flicker is a member of the Advisory Parks Recreation Commission. He is a citizen and businessman in the City of Eagan and has been a "hockey" parent. He understands the need but Page 9 /EAGAN CITY COUNCIL MINUTES March 20, 1990 O('C88 questioned whether this was the way to obtain an ice arena. He also asked whether the City needed another shopping center and said tax increment financing dollars would give this development an unfair advantage. He added there are many shopping centers currently with open space and questioned whether other centers would come to the City and ask for relief from their taxes? He urged the Council to vote no. Ray Nutzman stated the City Council had no right to vote on this issue. He said the issue should be put in front of the people through a referendum like the community center. He asked if the project failed, whether the taxpayers would have to pay? Dennis Bartel is a 16 year resident. He said because of schools, parks, and ballfields, his taxes have tripled in the last 16 years. Mr. Bartel said the ice arena should have been built as part of the high school and he questioned why hockey always had to suffer. He urged the Council to vote yes, otherwise, he didn't think it would happen. Mark Olson stated that he is for a hockey arena but not the use of tax increment financing to pay for it. He asked the Council to do their homework and vote no on TIF. Terry Davis who lives on Safari said tax increment financing was inappropriate for development of this type of property. Mr. Davis said the only times TIF should be used are when inducements are needed to attract a particular type of business to the City, when employment is low and additional jobs are needed, when the development offers a high potential for success, or when there is a critical need for the type of development. Jessica Hoven is not a hockey player but a figure skater. She said the new high school has no arena and wondered how students could support a school without one. Ken Cody lives on Ticonderoga and said the Council couldn't appreciate what 360 families go through trying to take their kids to an ice sheet. He offered his schedule in support of his statement. Arlene Krecklau said that TIF should be used. She said the Council couldn't look at just one segment of this development. Ms. Krecklau also added that other communities have used TIF and if Eagan didn't use tax increment financing, it would just go back into a fund for others to use. She said the money should be kept at home and spent on Eagan development. Gerald Thurston said that the business of a building is to make money. He asked why hockey parents didn't petition the City Council for an arena or pool their money and build one. Page 10 /EAGAN CITY COUNCIL MINUTES March 20, 1990 00089 Ken Walsted lives on Marble Lane said tax dollars were used to pay for other sports. He brought an article with him citing the use of TIF for the construction of the Midway Shopping Center. He said the City has a chance for an ice arena for $1 a year versus a community center for $20. Tom Novitsky of Jefferson Lane is in favor of an ice arena but does not agree with financing it with tax dollars. Because of the limited space in the shopping center, he said it had limited potential for cross utilization and was afraid another facility would be needed in the future and have to be built across town. He said a city managed facility would be the way to go to insure an equitable use of the facility. Mr. Monroe lives on Strawberry Lane and moved to Eagan from Hawaii. He drives his daughter to Apple Valley for figure skating and his son elsewhere for hockey. He supported use of TIF for the arena and he thought it met the "but for" test. He then made the following points: it was a chance for Eagan to get an arena as he didn't think the citizens would support a community center, the arena needs a private developer, and fiscal disparities would mean a very minor loss to the City. He said the City should take a chance and move ahead with the project. He added that the TIF would benefit the City and its children and that the competition between shopping centers would benefit the citizens. Larry Schmidt of Reindeer Lane is a 15 year resident and mentioned all the lawsuits being brought against the City by developers. He wondered what the legal liability would be for the City if the developer met the criteria for TIF and it was not approved. Mark Johnson of Strawberry Lane cited Councilmember Gustafson's question at an earlier meeting wondering how many people in Eagan would like to see TIF used to build an ice arena. In response, Mr. Johnson and several others circulated a petition and collected 2500 signatures, which he pointed out were about the same number as those needed to elect each of the Council. He told of approaching the City Administrator, Director of Parks and Recreation and former Mayor with a request for two acres of public land on which to build an arena. He reported that the request was denied. The City Administrator then spoke to this issue saying such a request would have had to go to the entire Council and they would not have made such a decision without doing so. Mr. Johnson then asked why other cities could use TIF and not Eagan. He granted that the project did involve a shopping center but the kids need an arena. He said that memberships could be sold to help operating expenses. He said if the developer wasn't permitted to put the entire project together it could be another project such as the one developed by M. G. Astleford where parcels were eventually sold to other developers Page 11 /EAGAN CITY COUNCIL MINUTES March 20, 1990 0 (}09() and the area became a hodgepodge of different projects. He said that if the development got into trouble, the parents would help keep the arena alive. He then discussed the present park system where he said the pavillions and ballfields were poorly kept and many things were not used. He said Parks and Recreation money could be put to better use than another pavillion. He asked if all monies from the TIF would come from Eagan, #196 or Dakota County. He suggested if the need to expand arose that the land is right there. He asked the Council to look at the issue openmindedly and to think of the children. Mr. Dave Robecki is a 19 year Eagan resident. He stated that the issue is not an ice arena but rather one of tax increment financing. He asked where the hockey parents were when the high school was built? He said the arena should have been built as a part of the school. He said he spoke against all three instances of TIF in the City: the race track, Unisys and Northwest. He then added that if we had gone for TIF in the race track, today we would be Shakopee. Lucy Monroe lives on Strawberry Lane. She would appreciate not having to get up early to drive to Burnsville to use their ice arena; it could be right here in Eagan. Norb Rother asked if TIF was proper for this development. He asked why now? Mr. Richard Ericson asked: why Brad Swenson? why not another developer? why can't the arena stand on its own? Mr. James Shaffert of James Court had concerns about TIF. He asked if the shopping center went broke, would bonding money have to be paid back? He said small businesses were being hurt by competing shopping centers on every corner and such competition had caused a good many small businesses to go under. He asked what kind of leases are being signed. He asked why another grocery store; Eagan already has Cub and Rainbow. He also added that Eagan had a movie theater at one time and it went broke. He didn't think tax increment financing was necessary. He said banks and insurance companies had money and the City should let them build the project. He said he voted for many on the Council because they were against that sort of thing (TIF). Vote no. Kevin Sanfors likes the area, parks, and sports and said that the City needs an arena but TIF was not the way. He said he hadn't heard anyone say that we needed another shopping center. He said to find another way. Mr. Dennis Bartel then returned to the podium to ask why the City didn't have an ice arena. He asked if the project complied with the law and was available at not a lot of cost to the taxpayers, why not (build the arena)? He asked why #196 had not been involved with the project. Page 12 /EAGAN CITY COUNCIL MINUTES March 20, 1990 00091 Mayor Egan then closed the public portion of the hearing. Dr. John Hanson of School District #196 was next to address the Council and began by thanking Eagan's residents for supporting #196 building projects. He said the school district's position has been that the ice arena and TIF are City issues and not one the school district should interfere in. He then briefly discussed several issues: Would they rent ice time? The school district would be a strong candidate. They have reached an agreement with Burnsville for next year's ice time. The ice rental in #196 is $15,000 per season and since their ice time is for junior varsity and varsity hockey, the actual ice time is not likely to change a great deal. Hockey at the bantam, peewee, etc., level is usually sponsored by local athletic associations, not the school district. The ice arena in Apple Valley was built cooperatively with the City of Apple Valley and the school district shares arena time with City sponsored activities. Councilmember McCrea then asked why the school district had not come to Eagan with a plan to build a facility similar to that at Apple Valley High School? Dr. Hanson replied that a bond referendum including a hockey arena was attempted before but had failed. He also stated that experience indicated that community center referendums with hockey arenas also usually failed. The school district said that ice arenas are too divisive an issue to include in their referendums. He thought perhaps it could be a separate issue. Councilmember Wachter then asked if there would be a school bond referendum for additional schools this fall. Dr. Hanson replied that numerous bond issues were coming up. The District projects the student population in #196 to be 30,000 students by the year 2000. They are even contemplating a fourth high school and year round school to meet the needs of the district. He couldn't pinpoint the dates, but the District would need additional referendums in the near future. Councilmember Gustafson said the City had received two letters from the school district on the ice arena. He stated that he had originally been critical of the District's lack of involvement in the tax increment financing of the arena, but said Dr. Hanson had answered that criticism by stating the District did not want to interfere and comment on a City issue. While the Councilmember understood the District's position, he would have preferred that #196 was with the City on the issue. The City Administrator then directed two of the public's questions involving #196 to Dr. Hanson. While the question as to why the school district had not been involved in the ice arena had been answered, the City Administrator asked Dr. Hanson, who uses the Apple Valley arena? Page 13 /EAGAN CITY COUNCIL MINUTES March 20, 1990 00092 Dr. Hanson explained that #196 shares the facility with the City and that in addition to hockey, the arena is used for other activities such as phy ed and tennis. The ice arena is used by the school from 2:30 p.m. to 6:00 p.m. each day during the hockey season and evenings when games are scheduled. The City of Apple Valley recently came to the District with a request for additional time and the District gave up some of theirs. The City Administrator then asked several of the audience's questions of fiscal consultant, Steve Rosholt of Faegre and Benson, and bond counsel, Dave MacGillivray of Springsted, Inc. Why do we subsidize a development when our schools are cutting their budgets? When the City is going through budget cuts? Is tax increment financing a subsidy? What amount would the City have to pay in fiscal disparities? What is the "but for" test and does this project meet that test? Is tax increment financing a tax increase? Will taxes go up? Dave MacGillivray was the first to address these questions. He said the best way to answer the tax questions was to explain the flow of tax dollars. Property taxes go to various entities including the City, the County, and the school districts. Tax dollars from this project will continue to go to those jurisdictions plus their inflationary growth. What will not go to them is the increase in property taxes that would result from the increased value once the project is built. The difference between what is paid now and what would be paid is the "increment." Since this is a "pay as you go" arrangement, the new taxes will go to the City, the City will subtract their costs, and then pay what is left to the developer who will use it to pay land costs. If one makes the assumption that this project would be built anyway, a case could be made that the City could be using those tax dollars. Fiscal disparities is a sharing of the commercial /industrial tax base in the seven county metro area. A new development must contribute 40% of that industrial /commercial tax base back to cities in the fiscal disparities pool based on the ratio of residential to commercial property in their communities. In this instance, it appears that fiscal disparities would have an insignificant impact on the taxpayers. As far as the subsidy question, one would have to go back to the "but for" test. Steve Rosholt stated that the "but for" test comes down to statutory interpretation and would be a matter of judgment for the Council. When asked what the legal liabilities of the City would be if the City turned down this project, Mr. Rosholt replied there would be none as the use of tax increment financing is a matter of city council discretion. Would the City bail out the arena if it failed to generate enough income to meet operating expenses? This question was answered a year ago when the taxpayers turned down the community center referendum citing the cost of operating and maintaining the center as one of their reasons. Page 14 /EAGAN CITY COUNCIL MINUTES March 20, 1990 00093 The development agreement specifically outlines that no tax monies will be used for operating or maintaining the ice arena. The next question was one of jobs. How many jobs will be directly attributable to the project? Mr. Crawford estimated that based on other arenas and retail centers, there would be 600 full and part -time jobs. In the best /worst case scenario, what would the tax liability be to citizens? The best case would involve minimizing the public and maximizing private involvement to mitigate liability to the taxpayer. While there would be no return to the taxpayers as a result of the present method of financing, breaking even could be viewed as the best case. Even in the worst case, i.e., the project failed, there would be no obligation to the taxpayer. The downside risk is basically zero. Will other shopping centers ask for tax reductions if their centers are not full? The shopping center in this project will pay taxes just as any other center. They will not be relieved of their tax obligations. Why don't the people petition the City for an ice arena? A bond referendum to build a community center with an ice arena was defeated. Controversy seems to surround any proposal to build an ice arena with tax dollars. Can it be guaranteed that this facility will stay as an ice arena and for how long? Steve Rosholt stated that a guarantee could be negotiated as a part of the development agreement. The subject has come up but, in its present form, the development agreement does not contain this provision. The Community Development Director also added that a change in the use of the facility would have to come back to the City Council for review. Mr. Crawford said if a decision had to be made as to the continuance of the arena, its (the arena's) governing board would decide its future. Councilmember Pawlenty asked if the 501C3 ownership was intended as a method of avoiding state and federal income taxes? Mr. Crawford said there were a number of reasons for the 501C3 status in that the arena was not intended for profit and its nonprofit status would make more money available for its operation and maintenance. The tax exemption was not a determining factor. Councilmember Pawlenty then expressed concerns about an entity owning the facility which will have no assets. Do the funds from the tax increment financing come from Eagan alone or from a broader base? The increment itself represents property taxes received by all taxing districts. Does bonding money have to be paid back if the arena goes broke? The TIF in this case is "pay as you go;" no bonds will be sold. Page 15 /EAGAN CITY COUNCIL MINUTES March 20, 1990 If the City does not use tax increment financing, what are our other options? This is a difficult question to answer but other avenues will be explored if it is turned down. The City would continue to face the question of an ice arena. The Mayor then turned to the Council for their questions and discussion. Councilmember Wachter wished to address some of the issues raised earlier. He stated that we had heard why #196 had not included the arena in the school bond issue. He also pointed out that the City built many of the parks, trailways and pavillions because the voters had expressed a desire for them through their approval of a referendum for those amenities. He stated that bond issues and referendums were for schools and other important things for the community. Even though tax increment financing was approved for the race track, he personally did not vote for it. Councilmember Wachter still thinks the TIF would be preferential treatment for the developer and its use is a policy issue for Eagan. The Mayor then asked Mr. MacGillivray to answer three feasibility questions: 1) construction financing, 2) covering operating deficits, and 3) insurance. Mr. MacGillivray said that the developer is assuming maximum funds available through tax increment financing but, in his opinion, it is difficult to project the increment available to support the arena. Even though the applicant has given improvement on the construction schedules, all development would have to be in place by January 2, 1991, for full value on the increment. Other funding will have to be specified and "in place" defined. The Mayor asked if the arena couldn't fund operating costs, would the developer approach the City for assistance. Would they use the operating reserve for operation costs? Mr. MacGillivray said the developer would probably reserve the right for the lender to use gross revenues. The developer states the arena would generate operating reserves, however, the City would want an up- front, cash reserve to draw on to cover operating deficits. The Mayor reported that there are $100,000 in operating deficits annually at the Burnsville arena. How could $30,000 $40,000 cover? Mr. MacGillivray said the City would want to require a performance bond and /or cash deposit. The Mayor then questioned insurance and reconstruction. The developer would have to commit to rebuilding subject to the agreement of the lender. Councilmember Pawlenty then questioned if one sheet of ice with seating for 1,000 1,200 generates $250,000 in revenues and $313,000 in operating expenses, how would $70,000 in operating deficits be funded? If reserve funds are used up with no hope of replenishing, is there a redraw? Mr. MacGillivray said this was an area of concern that they are trying to work out in the development agreement with an up -front cash deposit. Page 16 /EAGAN CITY COUNCIL MINUTES March 20, 1990 00095 The Councilmember then questioned the 501C3 ownership. If one of the reasons to use the 501C3 is to exempt the arena from income taxes and there is likely no income to tax, it appears one of the rationale to use evaporates. Are there any other reasons for 501C3 ownership? Mr. Rosholt sees no advantage in the 501C3 if there is no assistance on taxes. Also, if they move away from the 501C3 ownership and the operating entity is not the developer, it should be someone financially responsible with some community involvement to provide additional funding. Councilmember Gustafson addressed the Council. He had received numerous phone calls the previous evening regarding the ice arena. He discussed the various possibilities but there did not seem to be one ideal solution for providing an arena. He stated he was not interested in using tax increment financing for a "half- baked" arena. With no development agreement to vote on, the options open to the Council were to vote the proposal down or to vote a continuance. Councilmember McCrea then spoke to broadening the scope of the issue by proposing a "win /win" situation. Next to Brad Swenson's proposed development are 66 acres of City parkland acquired from the Department of Housing and Urban Development. She suggested the City donate land at no cost to the YMCA. Perhaps some type of land swap between the City and the developer could be worked out. Former Mayor Ellison is presently heading up a million dollar campaign to raise the funds to build a Y in Eagan. The Councilmember had called the Executive Director of the YMCA and they would consider expediting a YMCA with ice on a donated site. If the City donated 15 acres of the adjoining parkland and a YMCA was built, a joint advisory board could also operate the ice arena. This proposal would lessen the City's liability. In order to get the ice arena as soon as possible, she suggested the City go ahead with the TIF for the ice arena and then the YMCA would get underway after that approval was in place. She reported that the Executive Director of the Y is extremely interested. The Mayor then asked about the costs of infrastructure to the site. The Director of Public Works said the City has major services on site but any additional costs would depend upon extension of those services. The Mayor then asked Mark Johnson about fund raising on behalf of the Y. Mr. Johnson said when they originally discussed funding an ice arena, they had approached Coca Cola and other businesses in Eagan about donations. A lender told them at that time that if they could raise half the money needed, the bank would loan the remainder. Councilmember Pawlenty asked Mr. Johnson if the City donated the land, how long before a facility could be in use? Mr. Johnson said two years. Page 17 /EAGAN CITY COUNCIL MINUTES March 20, 1990 0 0 0 96 Mayor Egan stated that if the City were to consider this latest proposal, it should be considered separately and not tied to the present development. Councilmember Wachter agreed that they could not be tied together. Councilmember Pawlenty asked if the land price had been finalized. The City Administrator stated that the appraisal had been delivered to the Finance Department today. The total for the four parcels is $2,770,830; the total excluding the ice arena is $2,406,675. Mr. Rollie Crawford first addressed the status of the development agreement and was confident an agreement could be reached. He said the approach brought up by Councilmember McCrea was new and perhaps could be integrated into their proposal. He mentioned the letter before the Council requesting a continuance of two weeks and said that may be optimistic; however, respectfully requested the continuance. The Mayor appreciated the request and mentioned his personal concern that 4 of the 6 meetings in 1990 had the Tri -Land proposal on their agendas. Mr. Crawford concurred but said the people wanted a correct decision and the new information could change the approach. Councilmember Gustafson moved, Pawlenty seconded, a motion to continue for 30 days. Councilmember Pawlenty remarked that if questions regarding this development were not satisfactorily resolved, each issue would be a deal breaker. The developer should not take a continuance as necessarily favorable. Mr. Crawford said the developer would need more specifics with regard to the YMCA proposal; however, it certainly has merit. He wishes they could have worked with it sooner. The developer has no burning desire to own an arena and he hoped to find an alternative that would make the City and the developer happy. Councilmember Wachter asked in what way was the YMCA interested in an ice arena. Councilmember McCrea replied not in financing bricks and mortar but in land on which to build a Y. Councilmember Wachter asked why the hockey association and the YMCA didn't work together on some type of arrangement. Aye: 5 Nay: 0 OLD BUSINESS EXTENSION /PRELIMINARY PLAT COUNTRY HOLLOW 2ND ADDITION The Director of Community Development said staff had gone back and attempted to reconstruct the events surrounding the original request for continuance. While the minutes are vague, it appears the plat approvals Page 18 /EAGAN CITY COUNCIL MINUTES March 20, 1990 were extended to November 30, 1989. In addition, the fees were inadvertently collected in 1989 at 1988 rates. He, therefore, requested that all fees be collected at the 1990 rates. Gustafson moved, Wachter seconded, a motion to approve an extension of the preliminary plat for the County Hollow 2nd Addition and that all fees collected in 1989 be at the 1989 rate and all fees collected in 1990 be at the 1990 rate. Aye: 5 Nay: 0 ON -SALE LIQUOR LICENSE /XAVIER'8 INC.' 00097 Concerns were expressed regarding the financial report submitted by Xavier's, Inc. No Police Department recommendation was included with this Council item as part of the corporation with close ties to Xaviers is in a foreign country and could not be investigated. City ordinance does not permit issuing a liquor license to anyone who is not a citizen of this country. Mr. Richard Gabriel, representing the restaurant owners, stated that the owners of the restaurant are the individuals requesting the liquor license. Mr. Gabriel also went on to add: Both are citizens of the United States. It is only the parent corporation, Food and Beverage, Inc., that is located in a foreign country. Two resident, non nationals have invested money in Xavier's but are not included in the operations of the restaurant. Federal Land Company holds the lease for the restaurant and will not list Xavier's, Inc., as the leaseholder until they obtain a liquor license. At present, Food and Beverage, Inc., is carried on the lease. The City Attorney pointed out that the City received two financial statements from Xavier's, one dated March 6 and one March 15. The City Attorney said that the statements contain conflicting information and are incomplete and inaccurate. Mr. Gabriel then again tried to explain the relationship of the two corporations. He added that Xavier's is struggling and needs the on -sale license. The Mayor told Mr. Gabriel that because accurate financial information could not be obtained, no recommendation from the Police Department had accompanied the application. The Council would be hesitant to act favorably without this recommendation. The Police investigation is on- going. Ms. Carmen Cannesa said she had thought the Police report was completed. Councilmember McCrea told her that the financial report was a part of the Police Department investigation. Page 19 /EAGAN CITY COUNCIL MINUTES March 20, 1990 CONDITIONAL USE PERMIT /XAVIERS, INC Wachter moved, Egan seconded, a motion to deny a liquor license for Xavier's, Inc. at 1260 Town Centre Drive, Town Centre Shoppes. Councilmember Gustafson said he understood the City's questions about the financial statements but was unsure of corporate ties. The City Attorney said that based on information supplied by the applicant, it appeared there are strong ties between Food and Beverages, Inc., and Xavier's. The Mayor asked if this was sufficient to deny the application. The City Attorney said there were a myriad of reasons to deny in light of the fact there seems to be two sets of numbers. Mr. Gabriel said the original statement of March 6 was preliminary and that adjustments were made in the March 15 statement to reflect requests made by the City. Aye: 4 Nay: 1 (Gustafson) Councilmember McCrea wished to point out that she voted for denial based on her original desire to reserve this license for a larger, perhaps hotel, restaurant. Wachter moved, Egan seconded, a motion to deny a conditional use permit for Xavier's Restaurant to allow on -sale liquor in a CSC District, 1260 Town Centre Drive /Town Centre Shoppes. Aye: 4 Nay: 1 (Gustafson) FINAL PLAT EXTENSION /EAGAN EVANGELICAL CHURCH McCrea moved, Pawlenty seconded, a motion to approve an extension of the final plat until April 30, 1990, for Eagan Evangelical Covenant Church. Aye: 5 Nay: 0 APPOINTMENTS /CORRIDOR BLUE RIBBON PANEL After discussing the agressive schedule anticipated for the Eagan/ Mendota Heights Corridor Blue Ribbon Task Force, it was decided that at least one councilmember should be appointed as one of two representatives on this panel. Councilmember Gustafson, while concerned about the time commitment, agreed to accept appointment. Jon Hohenstein was recommended as the other representative. Mayor Egan and Councilmember Pawlenty agreed to serve as alternates. Egan moved, Wachter seconded, a motion to appoint Councilmember Gustafson and staff member Hohenstein, to the Eagan Mendota Heights Corridor Blue /Ribbon Task Force, with Mayor Egan and Councilmember Pawlenty serving as alternate members. Aye: 5 Nay: 0 SIMILAR USE DETERMINATION /TEEN CLUB BLACKHAWR PLAZA The City Administrator introduced this item by reporting on a meeting held yesterday between the Police and the Community Development Page 20 /EAGAN CITY COUNCIL MINUTES March 20, 1990 Q1C99 Departments. The Chief of Police had concerns about this proposal and recommended that it be continued to allow for further study. The Director of Community Development then outlined the request before the Council as 1) a determination as to whether this is a similar use within a neighborhood district and, if not, 2) a determination as to where it would best be located. The proposal is for a 10,000 s.f. center with operating hours from 3:30 p.m. to 1:00 a.m. The club would have 400 seats, a dance floor, and video games. Parking spaces required for this facility would be 135 stalls and approximately 177 spaces are available. Staff concerns include traffic control, the number of teens and young adults using the facility, the curfew and hours of operation, and the large scale of the project. Mr. L. Swanson of TC Teens, Inc., then elaborated on the proposal before the Council. He said the club is a multifaceted, entertainment center. Their hours of operation would adhere to all curfews. There would not be more than 300 -400 persons on site at any one point. The center would draw from other suburbs but is designed to work within the City. The center will provide educational assistance after school and would involve parents and teachers. They would also operate a job placement service. Since the club would have 501C status, a portion of the profits would go into a scholarship fund. Adjoining the club would be a pizza take -out operation which would also serve the club. The club would be non alcoholic and non smoking. Mr. Swanson listed the requirements for admission including the fee, identification, breathalizer tests, etc. Individuals would not be allowed to loiter or mingle outside. He stated that the City of Fridley was pleased with their operation. Many inner City kids come out to the centers. There have been six minor incidents at the Fridley facility in their nine months of operation. The Center's security handled all incidents. The center employs security for both inside and outside of the facility. The Mayor asked why they had chosen this particular center. Mr. Swanson stated that one of the principals of the corporation is Mr. Steve Ramsey, who owns Blackhawk Plaza. They had not anticipated the need for a special use permit to utilize the facility and had already begun some minor remodeling. Councilmember Gustafson asked about the square footage at the Fridley center. He was told it is 4,800 s.f. expansion. With weekends being the busiest nights, 400 -500 visit at those times. The closest facility similar to the one planned for Blackhawk Plaza is the Back to the Goldrush in Cottage Grove which is attended by 900 -1,200 individuals on a weekend evening. Councilmember Gustafson expressed concerns about parking for such large numbers. Mr. Swanson said they anticipate 100 -150 cars in an evening. Page 21 /EAGAN CITY COUNCIL MINUTES March 20, 1990 SPECIAL USE PERMIT /PRAISE FELLOWSHIP CHURCH CONDITIONAL USE PERMIT /FEDERAL LAND COMPANY OUTSIDE STORAGE 00100 Ms. Sharon Hanson presented a petition against locating the teen club at Blackhawk Plaza. She stated she was not opposed to a teen club but did not agree that an NB district such as Blackhawk Plaza was the place for one. She defined an NB district as small business areas to serve daily needs of adjoining residents. She said the center did not fit the definition. The adjoining neighborhoods are made up of 25 -year residents and new homeowners. 99% of the adjoining neighborhood would not use the center at all, let alone on a daily basis. She appreciated the center being drug, smoke and alcohol free, but wondered who would patrol the area once the teens were off the Blackhawk Plaza property. Pawlenty moved, McCrea seconded a motion to deny a similar use finding for the teen club use in a neighborhood business district. Aye: 4 Nay: 0 (Gustafson abstain) It was recommended that TC's Teen Club work with staff to find a more suitable location. Gustafson moved, McCrea seconded, a motion to approve a special use permit for Praise Fellowship church to allow the church to locate temporarily at 3103A Sibley Memorial Highway. The special permit will expire on March 20, 1992. Aye: 5 Nay: 0 The City Administrator prefaced this item by saying the Advisory Planning Commission had recommended denial of this conditional use permit on the basis that the applicant was in violation of City ordinance. The applicant stated they had tried to control the parking and admitted that at times the number of cars parked at the Agency Rent A Car site was 20- 30 cars rather than the allowable 8 -10. Councilmember Gustafson said that the applicant should be cited if in violation but it should not be a deciding factor in considering their application for conditional use permit. The applicant said the rental site was beneficial if the numbers could be controlled. Councilmember Pawlenty asked if the conditional use could carry a sunset provision. The City Attorney said the Council could tie the approval to an event but it would be difficult to set a time limit. Gustafson moved, Wachter seconded, a motion to approve a conditional use permit for the outside storage of up to 10 cars in the Yankee Square Center for Agency Rent A Car. Approval is subject to the following conditions: Page 22 /EAGAN CITY COUNCIL MINUTES March 20, 1990 00101 1. That the cars will not carry for sale signs nor be available for sale at this site. 2. That signage shall be provided delineating the rental car parking from the shopping center parking. 3. That the permit shall be subject to all applicable ordinances. Aye: 4 Nay: 1 PRELIMINARY PLAT GOPHER EAGAN INDUSTRIAL PARK 3RD ADDITION Councilmember Gustafson asked about the variance request for less parking stalls than would ordinarily be required of this site. He asked as to the hardship. Director of Community Development Runkle stated that the additional spaces were not needed as the site only supports 30 employees. The applicant will be required to supply proof of parking. Gustafson moved, Wachter seconded, a motion to approve a preliminary plat entitled Gopher Eagan Industrial Park 3rd Addition subject to the following: These standard conditions of plat approval as adopted by Council action on September 15, 1987, shall be complied with: Al, B1, B2, B3, B4, Cl, C2, C4, C5, D1, El, F1, and G1. 1. The required conservation easement for the north property line shall be properly conveyed and recorded simultaneously with the final plat. 2. A variance of 42 parking stalls shall be approved with the plat subject to proof of parking if needed for future use. 3. No outside storage shall be allowed. 4. No outdoor speakers shall be allowed. 5. The development is required to provide a 5 cfs storm sewer outlet to the storm sewer system in Kutoff Court. 6. The development is required to submit detailed plans and specifications for the construction of the proposed retaining wall for staff review and comment. 7. The development is required to limit nutrient loadings to Burr Oak Pond to predevelopment levels. Aye: Page 23 /EAGAN CITY COUNCIL MINUTES March 20, 1990 ADMINISTRATIVE AGENDA MPCA ADVISORY COMMITTEE Wachter moved, Gustafson seconded, a motion to appoint Phyllis Riesland as a regular member of the MPCA Advisory Committee subject to her acceptance. Aye: 5 Nay: 0 CLERICAL SETTLEMENT McCrea moved, Gustafson seconded, a motion to approve ratification of the clerical bargaining unit settlement for 1990, 1991, 1992. Aye: 5 Nay: 0 GROSS REVENUE AUDIT OF CABLE TV NORTH CENTRAL Wachter moved, McCrea seconded, a motion to authorize the Chair of the Burnsville /Eagan Cable Commission to execute a contract on behalf of the cities of Burnsville and Eagan for the purposes of conducting an audit of Cable TV North Central. Aye: 5 Nay: 0 ACQUISITION OF MCCARTHY PROPERTY Pawlenty moved, McCrea seconded, a motion to approve the acquisition of the Lillian McCarthy property as directed in negotiations in 1988, and the Mayor and City Clerk be authorizedto to execute all related documents. Aye: 5 Nay: 0 LEASE AGREEMENT /OPERATION OF COMPOST SITE CITY OF EAGAN /DAKOTA COUNTY McCrea moved, Pawlenty seconded, a motion to approve the lease agreement between the City of Eagan and Dakota County with respect to operation of the compost site. Aye: 5 Nay: 0 PROCLAMATION /HEALTH FAIR 11 Egan moved, McCrea seconded, a motion to approve a resolution entitled, Health Fair 11, proclaiming March 31 April 14, 1990, as the dates for a Health Fair 11 site in the City of Eagan. Aye: 5 Nay: 0 PROCLAMATION /FAIR HOUSING MONTH 00102 R -90.15 Egan moved, Wachter seconded, a motion to approve a resolution entitled, Fair Housing Month, proclaiming the month of April 1990 as Fair Housing Month in the City of Eagan. Aye: 5 Nay: 0 R -90.16 Page 24 /EAGAN CITY COUNCIL MINUTES March 20, 1990 McCrea moved, entitled, American American Home Week PROCLAMATION /AMERICAN HOME WEEK Pawlenty seconded, a motion to approve Home Week, proclaiming April 29 May in the City of Eagan. Aye: 5 Nay: 0 VISITORS TO BE HEARD 00103 a resolution 5, 1990, as R -90.17 Mr. Gordon Byers of 4825 Eriks Boulevard, approached the Council requesting a 1' variance to the sideyard setback requirements in order to extend his home 1'. Mr. Byers had obtained his neighbor's approval but was unaware he needed to go through the variance application process. Wachter moved, Gustafson seconded, a motion to continue the variance to the April 3, 1990, regular City Council meeting contingent upon the applicant going through the variance process. Aye: 5 Nay: 0 RAHN ROAD PROJECT /PROJECT 584 After discussing the results of the neighborhood meeting, it was determined that all facets of the original approval would remain in effect with the exception of the materials used to complete the trailway on the east side of Rahn Road. Bids will be obtained for both bituminous and concrete surfacing of the trailway and the affected property owners notified of the change in assessments to allow them to determine which material they wished installed. WILDERNESS PONDS PETITION /PROJECT 86 -RR The Director of Public Works reported that a petition had been received from the developer of the Wilderness Ponds subdivision requesting a feasibility report for the installation of storm sewer. City staff reports that the existing system was designed and installed privately and is inadequate for the development. Because any redesign and upgrade of this utility under a public improvement project could result in assessments to adjacent property owners, it should be the responsibility of the developer. An alternative would be to have the developer declared in default of the development agreement. McCrea moved, Wachter seconded, a motion to declare the developer of the Wilderness Ponds Addition in default of the development agreement. Aye: 5 Nay: 0 CHECKLIST Wachter moved, Egan seconded, a motion to approve the checklist dated February 28, 1990, in the amount of $556,069.21 and the checklist dated March 20, 1990, in the amount of $661,571.33. Aye: 5 Nay: 0 Page 25 /EAGAN CITY COUNCIL MINUTES March 6, 1990 00104 ADJOURNMENT The City Council meeting was adjourned at 2:10 a.m. on March 21, 1990. KF C TY OF EAGAN E. J anOverbe e, City Clerk