City Council - 02/19/1980 F
APPROVED MINUTES
EDEN PRAIRIE CITY COUNCIL
TUESDAY, FEBRUARY 19, 1980 7:30 PM, CITY HALL
COUNCIL MEMBERS: Mayor Wolfgang Penzel , Dean Edstrom, Dave
Osterholt, Sidney Pauly and Paul Redpath '
COUNCIL STAFF PRESENT: City Manager Roger Ulstad; Director of
Community Services Bob Lambert; Planning
Director Chris Enger; Finance Director John
Frane; City Engineer Carl Jullie ; City
Assessor Bob Martz, and Joyce Provo, Recording
Secretary
INVOCATION: Reverend Douglas Dudgeon, Eden Prairie Community Church
PLEDGE OF ALLEGIANCE
ROLL: Edstrom, Osterholt and Penzel present; Pauly and. Redpath absent.
I . APPROVAL OF AGENDA AND OTHER ITEMS OF BUSINESS
The following items were added to the agenda as follows: Discussion on
Hazardous and Solid Waste as item IX. A. 1 . , Tax Increment Financing
as item IX. A. 2. , and Memo from Director of Community Services Lambert
on the City/School Site Trade-Off as item IX. D. 5.
Also the following items were moved from the Regular Agenda to the
4L Consent Calendar: VII . A. Resolution No. 80-35, granting final approval
for Municipal Industrial Development Bonds in the amount of $1 ,075,000.00
for E erichs & Hanson Crown Plastics Project) ; VII . B. Resolution No.
80-34, granting final approval or Municipal Industrial Development Bonds_
in the amount of 2,975,000. 00 for Anderson Lakes Partnersh p; VII . D. Resolution
No 80-33_ approving the City of Eden Prairie participation in the Hennepin
County Cooperative Purchasing Program Deferred Compensation. Plan; IX. D.4. ,
Approval of plans and specifications for grading Homeward Hills Park;
IX. E. 1. Set hear -in for vacation of a Public Roadway in Section 1-116-22
Resolution No, 80-37 ; IX E. 2 Receive feasibility report and set hearing
for im rovements on W. 74th Street, Norseman Industrial Park 4th Addition
I.C. 51 -359 Resolution No. 80-38
MOTION: Edstrom moved, seconded by Osterholt, to approve the agenda as amended
and published. Motion carried unanimously.
II. MINUTES OF THE CITY COUNCIL SPECIAL MEETING HELD MONDAY, FEBRUARY 11 , 1980
Add a sentence to the last motion on page 3 as follows: "Osterholt did not
vote on this item as he left the meeting prior to the motion."
MOTION: Edstrom moved, seconded by Osterholt, to approve the minutes of the
Council meeting held Monday, February 11 , 1980, as amended and published. Motion
carried unanimously.
III. CONSENT CALENDAR
A. Set f uhl is Hearing for Norseman Industrial 4th Ar'-di tion for .larch 1J. 1980
G. Set Public 1:cirind for Sunset Trails fnr ''arch I.I. 1`^l
Council Minutes - 2 - Tues. ,February 19, 1980
,y
C. Set Public Hearing for Rymarland Camp 2nd Addition for March 18, 1980
'1
D. Set Public Hearing for Gonyea PUD for March 18, 1980 }
E. Clerk's License List f
F. Preliminary plan approval for T. H. 169 widening and brid a re lacement
from Leona Road to CSAH 60, Mn/DOT, Project SP 2744-36 Resolution No.
80-367 —
G. Engineerinq Service Agreement with Black & Veatch Consultants
H. Resolution No. 80-39 for no parking on proposed Valley View Road West of
County Road 4, I .G. 51 -325
I . Set Public Hearing for Preliminary Approval for Municipal Industrial
Development Bonds in the amount of $300,000.00 for Alston and Jean
Lundgren for March 18 1980
J. Set Public Hearing for Preliminary Approval for Municipal industrial
Development Bonds in the amount of 4,080,000.00 for Steven and Bruce
Hoyt for March 18, 1980 i
K. Resolution No. 80-35, grantingfinal approval for Municipal Industrial
Development Bonds in the amount of 1 ,07 ,000.00 for Eggerichs & Hanson
Crown Plastics Project -(formerly item VII . A.
L. Resolution No. 80-34, granting final approval for Municipal Industrial
Development Bonds in the amount of 2,975,000.00 for Anderson Lakes
Partnership formerly item VII. B.
M. Resolution No. 80-33, approving the City of Eden Prairie participation in
the Hennepin County Cooperative Purchasing Program Deferred Compensation
Plan formerly item VII . D. ,
N. Aeproval of plans and specifications for grading Homeward Hills Park
(formerly item IX. D. 4.
0. Set hearing for vacation of a Public Roadway in Section 1-116-22
Resolution No. 80-37 - formerly item IX. E. 1 .
P. Receive feasibility report and set hearing for improvements on W. 74th
Street, Norseman Industrial Park 4th Addition, I .C. 51 -359 Resolut n
No. 80-38 - formerly item IX, E. 2
MOTION: Edstrom moved, seconded by Osterholt, to approve items A - P on the
Consent Calendar. Motion carried unanimously.
IV. PUBLIC HEARINGS
A. Request for Municipal Industrial Development Bond approval for Tekcom Properties
in the amount of 1 ,250,000.00 Resolution No. 80-21 Continued from
January 22, 1980
City Manager Ulstad referred to the communication from the proponents asking
that this item be continued to the March 18th Council meeting.
MOTION: Edstrom moved, seconded by Osterholt, to continue the Public Hearing
for Tekcom Properties to the March 18, 1980 Council meeting. Motion carried
unanimously,
-
Council Minutes - 3 - Tues. ,February 19, 1980
B. Request for Municipal Industrial Development Bond approval for S. K.S.
Properties in the amount of 1 ,000,000.00 Resolution No. 80-22 —'
Continued from January 22, 1980 p
City Manager Ulstad explained the proponents called Finance Director
Frane and requested that this item be withdrawn from the agenda.
MOTION: Osterholt moved, seconded by Edstrom, to close the Public Hearing
for S.K.S. Properties and table their request. Motion carried
unanimously.
If�
V. PAYMENT OF CLAIMS NOS . 7333 - 7588
MOTION: Edstrom moved, seconded by Osterholt, to approve Payment of Claims
Nos. 7333 - 7588. Roll Call Vote: Edstrom, Osterholt and Pen7el voted "aye" ,
w'th Osterholt "abstaining" on Claim No. 7528. Motion carried unanimously.
VI. REPORTS OF ADVISORY COMMISSIONS
No reports.
VII. ORDINANCES & RESOLUTIONS
A. Resolution No. 80-35, grantin2 final approval for Municipal Industrial
Development Bonds in the amount of 1 ,075,000.00 for Eggerichs & Hanson
Crown Plastics Project).
This item was moved to the Consent Calendar (III . K. ) .
B. Resolution No. 80-34, granting final approval for Municipal Industrial
Development Bonds in the amount of 2,975,000.00 for Anderson Lakes
Partnership
This item was moved to the Consent Calendar (III . L. ) .
C. Ordinance No. 80-05, allowing the sale of liquor on the days' of "special "
elections
City Manager Ulstad spoke to Ordinance No. 80-05 , recommending the Council
consider approval of same.
Finance Director Frane added City Staff initiated this request.
MOTION: Osterholt moved, seconded by 'Edstrom, to give a 1st Reading to
Ordinance No. 80-05 , allowing the sale of liquor on the days of "special"
elections. Motion carried unanimously.
D. Resolution No. 80-33, approving the City of Eden Prairie participation in the
Hennepin County Cooperative Purchasing Program Deferred Compensation Plan
This item was moved to the Consent Calendar (III. M. ) .
VIII . PETITIONS, REQUESTS & COMMUNICATIONS
A. B±quest for an extension of the developer' s agreement for Master's
Condominiums for 1 year Continued from February 5, 1980
Joe Weis, President of Weis Development, explained they have been involved
in the Master' s Condominiums project since 1972, and it has been a very
frustrating experience for them as .they haven 't been able to q(?t it off the
ground. When they initially started ,on the project they had financing arranged
Council Minutes - 4 - Tues. ,February 19, 1980
A. Master's Condominiums (continued)
It took them well over a year to get the project approved in its present
form, and by that time in 1973 the money market was probably as horrible, +a
if not wo rse,than it is today. Mr. Weis added they are actively pursuing
all attempts to get the project started. 1
Osterholt asked Mr. Weis if his company owned the property. Mr. Weis replied
they are purchasing the property from Eden Land Corporation on a contract
for deed and have invested money in land, architects fees, financing costs , 11
attorney fees, etc. , and have about $150,000.000 cash out of pocket in the
project right now.
i
Penzel commented he has seen some marketing being done on this property , and
asked what kind of effort has been made getting the project started from that I.
standpoint.
Mr. Weis responded in August they were very optimistic about consummating
a construction loan with First Minneapolis . In anticipation of that they
geared up their marketing and make arrangements with Edenland to set up a
sales office, and the response was beyond their expectations. They took
reservation agreements on something like 56 units during the period of about
months, and then they were not able to consummate the construction loan.
They then felt they couldn' t give the people any definite time when they were
going to start or when they were going to have the units ready, so they
ceased the marketing in October. Of those original agreements ; there are still
42 of the original people that signed reservation agreements that have not
cancelled them out. They were very encouraged by the original marketing
efforts.
Osterholt asked how many units are anticipated. Mr. Weis replied the original
plan was developed with 96 units: They have several three bedroom units in the
project, several 1 bedroom and some 2 bedroom units. The 1 bedroom units
were practically sold out right away. They hadn't sold over 3 or 4 three
bedroom units , so the marketing people suggested the proponents consider
redesigning some of the 3 bedroom units into 1 bedrooms, which they were able
to do without increasing the size of the building. At this time Mr. Weis
asked the Council to consider, along with the request for the extension,
approval of increasing the number of units from 96 to 102. Mr. Weis added he
has discussed this possibility with Planning Director Enger and Mr. Enger
apparently discussed this with staff and they really don't see any particular
problems with it. There would be requirements that the proponents increase
the onsite parking because they would be increasing the number of units , which
Mr. Weis stated they would be willing to do.
Penzel added in this situation the Council has two separate concerns:
1) whether to extend the agreement, and 2) the question of the change
of the number of units because that affects the very basic approval that
was given. '
MOTION: Osterholt moved, seconded by Edstrom, to refer this matter to the
City Attorney for a recommendation on the 18-month extension. Motion carried
unanimously.
Council requested Planning Director Enger to make a recommendation regarding
the additional units requested based upon a review of the original proposal-
and rationale that went into the approval of the original number of units .
Council Minutes - 5 - Tues. ,February 19 , 1980
IX. REPORTS OF OFFICERS, BOARDS & COMMISSIONS
A. Reports of Council Members
i,
1. Councilman Edstrom gave an indepth report on legislation before
the State House and Senate on solid and hazardous waste. Edstrom
stated he will continue to keep the Council up-to-date as things `
progress. Edstrom added, the committee the Council appointed him
to serve on with Hennepin County is also about to begin their
meetings and he will also report back to the Council as they t
progress. Also Hennepin County is holding Public Hearings to t;=
consider amendments to ordinances which affect solid and hazardous '
waste disposal within the County. I'
2. Mayor Penzel explained the Council has been looking at the potential
of tax increment financing for some time and there are still some questions
remaining. Penzel requested that those questions be brought forward
to the Council and Staff so some answers might be developed. However,
in the interim, Penzel requested the Council ' s consideration of
instructing the City Manager to go forward to the owners in the Major
Center Area, as one of the potential districts , merely advising them
of the fact the Council is looking at this potential means of financing
and soliciting their response as to their feelings about this approach.
Council concurred with Penzel 's request.
B. Re ort of City Attorney
• No report.
C. Report of City Manager
No report.
D. Report of Director of Community Services
1. Park Use Ordinance
City Manager Ulstad reported that the Parks , Recreation & Natural Resources
Commission have in the past talked about an ordinance regulating
what should or should not be done in the parks . Mr. Lambert has included
an ordinance on this subject for the Council ' s review, and hopefully the
Council will refer the ordinance to our City Attorney for any corrections
or editing that might be necessary if the Council feels the request is a
justifiable one.
MOTION: Osterholt moved, seconded by Edstrom, to refer the Park Use
Ordinance to the City Attorney and the Parks , Recreation & Natural
Resources Commission.
2. Approve Contract for Hiring Architect for Community Center
City Manager Ulstad requested, upon the advice from the City Attorney,
that the Council not take any action on approving the contract for hiring
an architect for the Community Center until all the items are worked out
and the architect signs the contract.
No action taken.
Council Minutes - 6 - Tues. ,February 19, 1980 ,
L
3. Swedlund Property on Riley Lake
City Manager Ulstad spoke to memo submitted by Director of Community
Services Lambert dated February 14, 1980, which outlined the background
on Riley Lake Park. Ulstad explained Mr. Swedlund has informed the City
he is putting his property on the market for sale and asked if the City
had any interest in purchasing the property for park purposes at a
proposed selling price of $400,000.00. Ulstad added that the Parks , ' .
Recreation & Natural Resources Commission reviewed the possibility
of purchasing the Swedlund property at their February 4th meeting.
Osterholt commented he was on the Council at the time this property
was supposed to have been Offered to the City. However, this item
never came before the Council . Appraisals were conducted at the request
of staff, but never brought before the Council for consideration.
Edstrom stated he has not actually seen the property other than drive
by from time-to-time; however, it seems like a fairly attractive parcel
and it would be worth at least considering the possibility. Edstrom
added he could see two major questions: 1) price that is being asked,
- and 2) if financing can be arranged.
Council referred this matter to staff for information as to how the City
could pay for this property, and what can be done with the property.4L :
4. Approval of plans and specifications for grading Homeward Hills Park
This item was moved to the Consent Calendar (III. N. ) .
5. Memo from Director of Community Services Lambert on the City/School
Site Trade-Off
Osterholt asked Director of Community Services Camber to develop. on the
basis of what was included in the memo. a rundown on the sites mentioned
as to who owns those properties and how they were acquired , and to
report these findings at a future Council meeting.
E. Report of City Engineer
1. Set hearing for vacation of a Public Roadway in Section 1-116-22
(Resolution No. 80-37
This item was moved to the Consent Calendar (III . 0. ) .
2. Receive feasibility report and set hearing for improvements on W. 74th
Street Norseman Industrial Park 4th Addition, I .C. 51-359 Resolut o
No. 80-38
i ,
This item was moved to the Consent Calendar (III . P. ) .
F. Report of Finance Director
1. Report from Ehlers & Associates on sale of park bonds
Bill Fahey, Ehlers & Associates, referred to his communication to the �
Council dated February 15, 1980 (attached as part of minutes ) , stating
there are no bids. Today was a bad day for the bond market with the
increase in the discount rate by the Federal Reserve, and also with a
Council Minutes - - lues. ,rebruary 19, 1980
1. Report from Ehlers & Associates (continued)
parallel increase in the tax exempt field. Federal securities have been
pushed in the neighborhood of 14 and 14 3/4%. If one considers, for
' example, the relative yield to somebody in the 500% income tax bracket of
a 14 or 14 1/2w security, we would have to have a municipal security well
in excess of 7 3/4% to get them that same yield. What happened today,
they found a mass migration of dollars from the tax exempt field into the
Federal market. On last Monday, Federal securities could not even be
sold for more than 15 years. There were three bond sales scheduled tonight
other than the one for Eden Prairie. One was for only 9 years and it was
debatable at 5:00 PM whether there were going to be any bids for that one
or not - that was an "A" rated City in the metropolitan area . The other
sales were for a medical facility, which Fahey doubts will receive any
bids as they did not have any by 5:00 PM, although their fiscal consultant
was an underwriter and they may get money from them. The other was one
of Ehlers sales which was a General Obligation medical facility in western
Minnesota , "A" rated, and they did not receive any bids. The tax exempt
market in the midwest right now for all practical purposes for "A" rated
cities and below is dead. There is very little space for anybody to market
any kind of tax exempt issues under 7 1/2% and maybe not even then.
As long as there is a movement of total dollars in the Federal market, and
as long as the Federal securities are at 14% to 15%, it is going to be
awfully difficult, unless a good insurance company can be found to take
one issue.
Fahey further commented they had a conference in their office as to what
they might recommend to good credits like Eden Prairie and several others
that they have waiting. One, of course, is to seek insurance to obtain a
4Lhigher credit. For example, they can seek insurance from one of the two
insurance companies across the country and could raise the rating from
a single "A" to a double or triple "A" , which generally would mean a
reduction in the interest costs from a range of 35 basis points to 50 basis
points. 'that means in the first five years we would recover the premium
and more. However, as long as the tax exempt rate is half or less
than half of the Federal rate, it is not going to make a great deal
of difference,because generally people are going to be rather reluctant
to buy into the tax exempt field with the Federal rates as high as
they are.
Penzei stated while he understands the rationale, he has a real problem
with the contravention of the Council 's direction which was to publish
irrespective of what happened in the market. Would assume someone with
the experience of Mr. Fahey and the Ehler's firm would have known the proper
method was to let the Council know, knowing full well it is in the Council 's
capacity to call a meeting within a day's time to take appropriate action
on the knowledgeable advice of Mr. Fahey, as the Council has -taken that
advice conscientiously in the past. Penzel expressed dismay and felt what
has happened is really a breach of all of the Council 's principles of
operation.
Mr. Fahey formally apologized to the Council and stated he knows government
law and government practice, and it is the first time this has ever
happened to him and he does not intend to have it happen again. During
the last 3 1/2 weeks he has spent more time studying the market, trends
of the market, trying to find somebody that has some idea. Right now Fahey I
stated he does not see any positive vibs at all , with the exception of a
few people that are just positive thinkers. As long as the Feds see fit
to push Federal rates, or control the economy with the discount rate or the
Federal rate, or both, as they have in the past, it is going to be
f
extremely difficult to see very much positive happening. Fahey commented
.i ►.IA haNn i•n f'lnrt � rs.gr•Lfri- ns'nni-�.A -"� .:...:•.�.__�..-_-. .._,•- m•
Council Minutes - 8 - Tues. ,February 19, 1980
4
1. Report from Ehlers & Associates (continued)
because if we can' t build this facility, we are going to find that inflation
will outstrip the value of the bonds voted. Ehlers right now is in the
process of attempting to find out, if anybody can, where the market is going.
They have one of their officers in Chicago today and have had Mr. Ehlers
on the line to New York trying to find some break as they want to bring the
Council some kind of a positive note. Can' t bring anything very positive
at this point as everything that has happened in the last two or three weeks
.has been absolutely a mess. !
Edstrom asked in today's markets if funds can' t even be raised on a triple "A"
bonds. Fahey replied a triple "A" may be able to so long as they keep the
maturities down to ten years . When the issue in question was put together
back in January, they had the issue for essentially 17 years. That was safe, f
they had plenty of room in the bond market, it simply deteriorated so rapidly.
i
Edstrom questioned if there were any triple "A" bonds on the market today.
1
Fahey replied in the negative, adding the only triple "A" that has come to
market is the City of Minneapolis on February 7th and they only went up to
1992 at 6.68/6. 70%, and that was the week before the big' dropi.
Ulstad asked Mr. Fahey to explain how the insurance aspect works. Fahey
explained it takes about two weeks longer than the normal bond sale. This one
is all prepared so it wouldn't take too much longer. It takes about one week,
seven days , at the insurer. If it is in Milwaukee they are much more
accessible than a New York office. The fee ranges from 1/2 to 1%, and today
from 5/8 to 1 1/8% as they are taking advantage of the market. The
revenue issue is much more expensive. In other words, it is 1 1/8% or even
1 1/4% - they don't exactly put a ceiling on that. However, for a General
Obligation issue for a City such as Eden Prairie, Fahey believes it would
be around 3/4 of 1% of the total. principal and interest paid on the day
of the delivery of the bonds - a one time charge.
Osterholt questioned what if we get to April or May and we still don't get
favorable market conditions. Fahey replied we have a couple of choices.
Fahey explained he is Iooking at sometime in mid-April and he is going to try
from Eden Prairie's standpoint to see where the market will be at about that
time. Then we have to decide whether to seek insurance, if insurance is at
all feasible, or if the market remains where it is at right now it probably
won' t make any difference. We have to wait and see what the Legislature is
going to do. If the rates do not change, then we are simply out of the market
unless we reduce the term of the bonds from 17 years down to 10 years - the
projected mill rates would change from about 3 to about 6 1/2. When the
market becomes a little bit more stable then 10 year bonds will be marketable.
Edstrom asked the lead time between the time the Council takes action to
approve the advertisement for bids and the actual date of the bond sale.
Ulstad replied the time that you take action and notices in the paper, it is
a three week span (advertising twice) .
Fahey added they could have an authorization for a special date from the
Council , then go for that date. If they did not receive any bids within the
7% limitation, the Council then reserves the right to seek then proposals from
anybody and everybody for 30 days on that issue.
Edstrom suggested a memo be drafted of what was discussed this
evening and given to all Council members, especially to those not present
at this evening's meeting, and invite Mr. Fahey to come back before the Council
on March 4th. Council concurred with Mr. Edstrom's request.
Council Minutes - 9 - Tues. ,February 19, 1980
X. NEW BUSINESS
No "New Business".
XI. ADJOURNMENT
MOTION: Osterholt moved, seconded by Edstrom, to adjourn the Council meeting
at 8:55 PM. Motion carried unanimously.
�y
4L
j
14.
�0.
y
' FrjJj
r