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HomeMy WebLinkAbout13.D.1. Discussion on Completing Church Addition Public Improvements J 3. c. 1. CITY OF SHAKO PEE Memorandum TO: Mayor & City Council Mark McNeill, City Administrator FROM: Bruce Loney, Public Works Director SUBJECT: Discussion on Completing Church Addition Public Improvements DATE: June 16, 2009 INTRODUCTION: This agenda item is to discuss the alternatives in completing the public improvement project for the Church Addition subdivision, in which the developer is in default and in foreclosure and has not completed the public improvements. BACKGROUND: Church Addition final plat was approved on June 1, 2004 and the public utilities, curb and gutter and the first layer of pavement was completed in 2004. Much of the building was also completed in the following years and staff has been working with the developer to complete the public improvements, which consists mainly of the final bituminous wearIng course. Over the past year staff has been trying to complete the remaining improvement projects that are still outstanding and the last three are Countryside, Ridgeview Estates and Church Addition. Countryside and Ridgeview Estates subdivision still have bonds current and the City has made claims on those bonds to complete the public improvement projects. With Church Addition the security was a Letter of Credit from a bank; that bank is no longer in business. In addition, Tollefson Development is being foreclosed on its develppment by the bank that did the financing for the development. Staff has been in consultation with the City Attorney and the four alternatives available to the City are as follows: 1. Do nothing. 2. Complete the public improvement project and the City pick up the cost from the Capital Improvement Fund. 3. Complete the public improvement project with a 429 assessment project and assess the properties in the Church Addition for these improvements. I 4. Complete the public improvement project and sue the developer for that obligation. In review of the alternatives, staff would have the following comments: Do Nothing Alternative - If the City chose to leave the wear course off and allow the bituminous base course to deteriorate, at some point the City would need to reconstruct the pavement, the City's assessment policy currently 30% assessed and 70% picked by the City. Without the bituminous wear course, the bituminous base course would deteriorate at a faster level and also the concrete curb and gutter would be exposed to damage from snow plows without the wear course. Complete the public improvement project and the City pick up the cost from the Capital Improvement Fund Alternative - The City would then be putting the burden on completing the development to the general taxpayer. Complete the public improvement project with a 429 assessment project and assess the properties in Church Addition Alternative - One fact in this subdivision is that there are 166 residential units platted of medium density housing, in which 87 of those units have been constructed and 79 units have not been built upon. Also, the approximately 6.9 acres of commercial property has not been developed at this time. Complete the public improvement and sue the developer Alternative - The City would have a cost to recoup those costs. The City Attorney estimates approximately $15,000 to $75,000 for legal costs and more than likely would go to a collection agency to recoup the costs and a minimum of 20% would be the fee to collect a judgment cost against the developer. A very rough preliminary estimate would put the final wear course cost at approximately $166,000.00, including some staff time to administer the project. It is also estimated that Kinlock Way is approximately 28.5% of the public streets in the subdivision and is totally adjacent to the commercial property and would be assessed to the commercial property. The rest of the public streets would be assessed to residential property. Staff would ask Council for discussion and direction on how to handle this situation, which is the result of the economic times. Weare aware of a few other similar situations in other cities At this time staff is exploring these alternatives with the City Attorney. Staff is also reviewing to assess only undeveloped parcels and undeveloped being those parcels which have not been built on. Many of these parcels have been sold to another company, as the previous builder has gone bankrupt. The 87 units that have been built on and most are occupied, did pay a higher price for the lots and building and the question remains is if the City should assess those lots for the improvements in which they supposedly have paid for. Staff would like to discuss these options with City Council and get direction from Council on how to proceed. Essentially, if a 429 Special Assessment Project is ordered, the timeline would be as follows: Item Date 1. Order Feasibility Report June 16,2009 2. Accept Feasibility Report and Establish July 7, 2009 Public Hearing and Assessment Hearing 3. Conduct Public hearing and Adopt Assessments August 4, 2009 4. Approve Change Order to 2009 Bituminous August 4, 2009 Overlay Project 5. Work Completed October 1, 2009 ALTERNATIVES: 1. Discuss the various alternatives on completing the public improvements for Church Addition and provide staff direction on which alternatives to proceed with. 2. Table for additional information. RECOMMENDATION: Staff would recommend Alternative No.1 and based on the City Attorney's opinion feels that the alternative (#3) to assess the remaining improvements would be the best alternative for the City in the long term. Other discussion questions should be whether or not the City should participate in any of those costs for completing the improvements or to assess the entire subdivision or to assess only parcels that are vacant or not built upon yet. ACTION REOUESTED: Discuss the various alternatives on completing the public improvements for Church Addition and provide staff direction on which alternatives to proceed with. If the direction is to proceed with an assessment project, then approving a motion to prepare a feasibility report for the completion of Church Addition improvements would be in order. b~. Public W s Director ENGR/2009-PROJECTS/2009-COUNCILICHURCH-ADDITION I I! I I ". - "~; .- ,'" .,~ Iilk. ." it: \\ '.. "'Cl..' . 1~~ ~. .... .~ . ~ .,.~' ~ 1tfif'; fj " , 1'i! ~ KEY Church -Addition Vacant Lots = 79 N SHAKOPEE CJ Building Lot~ Building Lots = 87 + Vacant Lots ~. ~ COMMUNITY PRIDE SINCE 1857 Commercial Development = 6.9 acres