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City Council - 09/15/2020 - Workshop APPROVED MINUTES CITY COUNCIL WORKSHOP & OPEN PODIUM TUESDAY, SEPTEMBER 15, 2020 CITY CENTER 5:00 – 6:25 PM, HERITAGE ROOMS 6:30 – 7:00 PM, COUNCIL CHAMBER CITY COUNCIL: Mayor Ron Case, Council Members Brad Aho, Kathy Nelson, Mark Freiberg, and PG Narayanan CITY STAFF: City Manager Rick Getschow, Police Chief Greg Weber, Fire Chief Scott Gerber, Public Works Director Robert Ellis, Community Development Director Janet Jeremiah, Parks and Recreation Director Jay Lotthammer, Administrative Services/HR Director Alecia Rose, Communications Manager Joyce Lorenz, City Attorney Maggie Neuville, and Recorder Katie O’Connor Workshop - Heritage Rooms I and II (5:30) I. MAC FLYING CLOUD FIELDS LEASE Getschow stated the original agenda included a cemetery discussion, but the board could not make it to the meeting. Lotthammer will speak on the item if time allows. Lotthammer presented on the current use of the Flying Cloud Fields, the recent demands from the Metropolitan Airport Commission (MAC) staff, and the potential next steps. The history and timeline of the MAC Flying Cloud Fields started when Martin “Pappy” Grill constructed a landing strip on his small family farm. MAC purchased the airport in 1948 and in 1964 there was an official lease with the City for nine ballfields, free of charge. In 1980 the lease was $225 per year for the recreational areas and trails. There was a 22 acre addition with football, soccer, and baseball fields and parking. In 2002, MAC proposed to expand the airport to allow more air traffic and larger aircraft. The City opposed the expansion. In 2002, MAC and the City executed the Final Agreement regarding expansion of the airport. The City and MAC executed a Memorandum of Understanding (MOU) which includes a lease for the Flying Cloud Fields. In 2011, the Flying Cloud Fields were expanded with two baseball and two lacrosse fields. In 2016, the Miracle League field was added, taking the place of a small baseball field. Currently, the fields are used by all volunteer athletic associations: soccer clubs, soccer association, football association, lacrosse association, baseball association, and Miracle League Field. Aho inquired how well utilized the Miracle League Field is. Lotthammer responded it gets a small amount of users. There’s one field in Minnetonka as well, so they use both locations. There has not been much use this year. Aho inquired if there is a way to get more field usage for the Miracle League Field. Lotthammer replied children with disabilities from many different cities make up one team for the Miracle League Fields, so it would be difficult. Lotthammer stated in the past the City has cooperated and has worked with MAC. The MOU waived $1.5 million in infrastructure fees and special assessments for MAC. The City also City Council Workshop Minutes September 15, 2020 Page 2 re-drew the boundaries when the expansion was done to facilitate MAC’s desire to develop a daycare site. The daycare site originally was planned to be an area for field development for the City. The City then moved further south at some cost for additional grading and an expanded storm pond to accommodate the daycare site. Additionally, the City has provided police and fire services at no cost, which is not the case for all airports. Aho inquired if there is a cost associated to the police and fire services provided. Weber responded the majority of the service provided is proactively patrolling. The department can gather some data to put an average cost to the services provided. Gerber added there are an average of eight to ten fire calls per year ranging from an aircraft emergency to a spill on the runway. Calls usually last two hours or less, but the standard response typically includes two engines and one or two chiefs. He can gather more information to determine the cost. Narayanan added the replacement cost should also be taken into consideration rather than just the hours of service. If MAC were to hire or retain a police and fire department to do the same job, consider the cost associated with doing so. Lotthammer noted the intentions are to compel MAC to work with the City on a reasonable solution. Lotthammer stated there have been several meetings between MAC and City staff to discuss the future lease. MAC recently, with the upcoming renewal, wanted to make changes to the agreement. They offered to renew the lease, but at a significantly higher rate. Staff reminded MAC of the previous agreement and history. Many of the MAC staff were not around when the agreements took place and there is currently a focus on real estate. Freiberg noted it may be important for MAC to understand free fire and police services is a bargaining chip. Neuville stated she has done a lot of research on the City’s history with MAC. In 2010, the City executed a Final Agreement with MAC. The City historically opposed expansion of the airport due to noise and environmental issues. They City agreed to not oppose the expansion if MAC agreed to commit to limits on type and weight of aircraft, no additional extension of runways, voluntary restraint on nighttime operations, and noise attenuation testing and sound insulation. New developments around the airport will get a notice about the airport when the property is being developed. The MOU was negotiated and executed at the same time as the Final Agreement. MAC also granted a permanent license for the property now known as Cedar Hills Park. The lease for the ball fields was a three-year renewable lease with one-year recapture rights. The intent of the recapture would be if the airport needed the space for airport use, not commercial. The lease rate is subject to negotiation but in the same order of magnitude as current lease payments. The original lease payment was around $500 to $600, tied to the change in federal revenue diversion policy. The Federal Aviation Administration (FAA) approved the MOU. There have been no changes in federal revenue diversion policy since 2002. The lease for the ball fields was initially signed in 2010. In 2010, the City also did a development MOU with MAC, prezoning properties they want to develop in the future. The rent escalation for the leases was determined to be three percent per year. As of today, rent would be about $4,500. Last year MAC stated they wanted a one year lease for 2019 without a renewal option. They can decide to recapture or terminate before the end of the lease term but the renewal option offered has to be within the same order of magnitude. This would be considered a violation of the MOU and lease. The proposed rate with land release is $3.4 million. Without the land release is $273,261 by 2025. City Council Workshop Minutes September 15, 2020 Page 3 Aho inquired if the lease rate would apply towards purchasing the land. Neuville replied no. Aho noted although it is based on market value, there is really no market for the land. Neuville noted the appraisal stated although the land is zoned public right now, the highest and best usage would be commercial. As a commercial site it is appraised at $3.4 million. This is not one of the prezoned properties. A point of contention has been whether or not the City has the authority to zone airport property. In the past, the attorney general had stated the City cannot zone or regulate airport property put to aeronautical use but can zone and regulate other properties under their ownership. Aho stated it would understandable if they had sold or developed their current properties, but that has not been the case. Neuville stated in 2010 they agreed to have the City zone their properties. MAC’s position is the market value has increased on the property. The initial lease was not tied to market value. Aho inquired if they are open to negotiation. Neuville replied they may be. The first step is an informal discussion between the City Manager and Executive Director. If we cannot come to an agreement, there would be a formal mediation. These steps are required before anyone can file suit. Lotthammer noted if the lease is not renewed and MAC decides to recapture, the City has 90 days to restore the property back to MAC’s satisfaction. This could be costly at upwards of $1 million. Without the fields, many of the games played there would move to neighborhood parks. The times of the games may not be convenient, and there would be more wear and tear on the turf. There would likely need to be upgrades to current fields. Aho inquired about reaching out to the chair of the board. Getschow added he had heard a comment from one of the board members indicating he already knew about the proposal. Case added he had considered meeting with the chair and executive director but was not certain it would be beneficial prior to the dispute resolution. Lotthammer stated Staff do not recommend executing a short-term lease for $50,000 as a next step. Other options are to reach out to the MAC board members, invoke the dispute resolution process, engage athletic associations, or recapture and evacuate the site. Case stated his initial concern was the flight-based operators (FBO) wanting to eliminate the weight restrictions as part of the agreement. According to the executive director, this is not the motive. The second concern was the FAA is forcing the issue, which is also not the case. Aho inquired when the lease needs to be executed. Neuville stated the lease expired, but a lease extension through the end of the year will be on the consent calendar on October 6. Another option she wanted to highlight is the ability to cancel the development MOU and to rezone property. Case added he believes the executive director is proud of our partnership. Nelson inquired if the City can charge MAC the $1.5 million if the MOU no longer exists. Neuville responded she was previously referring to the development MOU, but the infrastructure MOU would likely be in default rather than canceled. Case added Council and Staff should quickly strategize and create a flow chart of different options or paths the City could take in negotiations. Narayanan added it may be better to meet with a board member first rather than going directly to the chair and executive director. City Council Workshop Minutes September 15, 2020 Page 4 II. CEMETERY BOARD PROPOSAL Lotthammer stated a few months ago Mike Rodgers from the Eden Prairie cemetery stated he and the board would like to dissolve and be done managing the cemetery. To transfer the cemetery, the City Council would need to accept the property. Staff inquired about the work load and cost to maintain. Late last week, they had a change of heart and now want to continue to manage the cemetery in order to complete some projects. There is currently no known timeline for when they would like to be done managing the cemetery. Narayanan inquired if the City has a preference. Lotthammer responded although there is a cost associated, much of that is covered by selling plots and perpetual care funds. Case noted it would be beneficial to have an agreement in writing when they do decide to dissolve and transfer the property. Aho inquired if we have contracts to manage the City cemetery. Lotthammer responded yes. Staff do 10 to 15 hours a week of administrative work. With the additional cemetery, staff time would likely increase to 22 to 25 hours per week. Open Podium - Council Chamber (6:30) III. OPEN PODIUM IV. ADJOURNMENT