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HomeMy WebLinkAbout13.D.1. Park Encroachment Agreements I~. D. ,. CITY OF SHAKO PEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Park Encroachment Agreements DATE: September 1,2009 Comment: Introduction: The Council is asked to discuss criteria for an agreement which would allow specific encroachments to remain on city park properties and in conservation easements. Background: At its July 21 meeting, the Council directed staff to look at ways of accommodating certain encroachments into parks or conservation easements to remain, but with restrictions. A variety of options were discussed at that meeting regarding a fairly substantial encroachment at 8051 Horizon Drive. Alternatives included requiring the property owner absorb the cost of drafting an encroachment agreement; to post a bond to either maintain the property, and to remove the encroachment if required at some point in the future. The City Attorney reminded the Council at that meeting that land which has been acquired through a park dedication could not be sold by the City. However, an encroachment agreement could be negotiated that would be similar to the utility encroachment agreement in the Industrial Park that was recently approved by Council. Proposed Encroachment Agreement Document: The City Attorney has drafted a document which would allow the encroachment to remain, with the following conditions: · Homeowner is responsible for the repair and maintenance of the encroachment. . City may use the encroachment area for the purpose for which the area was originally intended. . City assumes no responsibility for the encroachment. · The Agreement runs with the land (the Agreement would be recorded against the property by the City). A 30 day notice to terminate the Agreement may be given ~ ." '. .~ '~ .":' "" . .. ' ~ by either party. Homeowner must remove the encroachment upon direction from the City at their cost. . If the homeowner fails to removes the encroachment, the City may do so and assess the costs of said removal back against the homeowner through a 429 process. The homeowner would agree to waive contesting the assessment, up to a predetermined dollar amount. . The homeowner would agree to hold harmless and indemnify the City. . The property owner would have to purchase liability insurance to cover the impacts of the encroachment, up to $1 million. Note on insurance: Although called for in the Agreement, Council should be aware that most homeowners' insurance policies will NOT cover risks that are off the property- therefore, it is unlikely that the City will have protection for hazards resulting from the encroachments, other than its own City policy. The question is whether the City Council wants to allow the encroachment to remain, when the adjacent property owner may not be the one at risk in the event of injury or damage as a result of the encroachment. The $1 million is below the $1.5 million statutory maximum for damages that the city could payout. Value determination: In consideration for the City allowing an encroachment into park property, the Council would require a property owner to compensate the City for the use of the park property and for the administrative, engineering, and legal costs associated with allowing the encroachment. This would be negotiated separately from the Agreement. In order to determine a fair amount of compensation, I spoke with an appraisal company with whom the City often does business for appraisal services, and with two local realtors who are knowledgeable about land values. It was felt that finding a way to determine a cost per square foot as compensation for the encroachment to remain in place until otherwise needed for its intended public purpose would be appropriate. The question is whether the land should be valued as raw land, or as improved property? The consensus of the discussion was that it would be more appropriate to treat the encroached-upon area as improved property. If so, how should a value be determined? Having a separate appraisal performed for each encroachment would be costly, and might exceed the value of the property in question. It is suggested that determining a land value per square foot, based on today's lot prices, would be a method to start. One of the realtors commented that a 10,000 square foot lot might retail in the $4 to $6 /sq ft. range today -if so, we could use $5 as the average. Because not all of the encroached upon area is as valuable as the buildable area of the lot, and because this is not a sale of the land but rather a long term "use" compensation, a value of one-half ($2.50/sq. ft.) might be appropriate. Administrative costs: In addition to the costs of the park and natural resources staffs to process the action relating to the encroachment, there are the costs for the City Attorney to review and draft the agreement itself, administrative costs relating to processing the Council's consideration; engineering costs for surveying, and recording costs for the agreement. A figure of $550 is proposed. Appellant's Response: The City Attorney's proposed agreement was shared with the attorney representing the appellants in this case. His concerns were as follows: 1. The compensation amount should be adjusted if a 30 day notice to vacate is to be included. His suggestion is that there should instead be a minimum amount of time that the encroachment can be in place in order for the property owner to derive some enjoyment from the encroachment in exchange for payment, but no suggestion was made as to what duration that should be. 2. The amount ofthe insurance coverage is proposed to be changed to $300,000, rather than $1 million (again, which is below the City's statutory maximum for damages). Budget Impact: The intent of this agreement would be to, at minimum, cover the City's costs to accommodate the encroachment. Any proceeds from land compensation could be assigned to go to the Park Reserve fund, or toward natural resources purposes as determined by the Council. As an example of the money involved, for the encroachment on Horizon Drive (which totals approximately 1100 sq. ft,) the proposed fee to allow the encroachment to remain in place would be $3300. Recommendation: The best solution from the standpoint of consistency would be to have all encroachments removed. However, in the event that the Council wishes to allow certain encroachments to continue, it should approve the compensation and cost reimbursement guidelines above, and direct that an Encroachment Agreements be negotiated. Relationship to Visioning: This supports Goal D, "Vibrant, Resilient, and Stable". Action Required: Council should give direction regarding the use of encroachment agreements and compensation amounts for encroachments on City property. '1ANJi... ~\c }J 4J Mark McNeill MM:cn City Administrator /3. LJe ,. 0.. v I ~d c::JAu# DRAFT ENCROACHMENT AGREEMENT This Encroachment Agreement ("Agreement") is made as of , 2009, by and between the City of Shakopee, a Minnesota municipal corporation ("City") and John & Jane Smith ("the Smiths"). RECITALS A. The Smiths own the property located at: City of Shakopee, County of Scott, State of Minnesota, legally described as follows: [insert legal description] ("Smiths' Property"); and B. The City owns property ("Park Property") adjacent to the Smiths' Property. The legal description of the Park Property is: [insert legal description] C. The Smiths have installed [insert description of the encroachments] ("Encroachments") that encroach into a portion ("the Encroachment Area") of the Park Property. A schematic drawing of the Encroachment Area is attached as Exhibit A to this Agreement; and D. The City is willing to allow the Encroachments to remain on the Park Property subject to the terms and conditions contained in this agreement. AGREEMENT NOW, THEREFORE, on the basis of the premises and the mutual covenants and agreements set forth in this Agreement, the parties agree as follows: 1. The City grants the Smiths the right to encroach into the Encroachment Area for the sole purpose of using, operating, maintaining, repairing and replacing the Error! Unknown document property name. Encroachments. The permission granted by the City by this Agreement is limited exclusively to such purposes. 2. This Agreement shall not prevent or impair the City from using the Encroachment Area for any use that it is entitled by law to use the Encroachment Area. 3. The City does not warrant that the Encroachment Area is suitable for the purposes for which it is permitted to be used under this Agreement. The Smiths assume all risk with respect to their activities within and use of the Encroachment Area. The City shall have no responsibility with regard to any failure of or damage to the Encroachments. 4. This Agreement shall run with the land and shall inure to the benefit of and be binding upon the parties to this Agreement and their respective successors and aSSIgns. This Agreement shall be for an indefinite term and continue until terminated by either the City or by the Smiths by written notice to the other. Notwithstanding the foregoing, beginning on the date that is years after the date of this Agreement, either party may terminate this Agreement by providing prior written notice to the other. Such notice shall be in writing and shall be given at least 30 days in advance of the effective date of the termination. Such notice shall be delivered either personally or by mail. If such service cannot be made, service may be posted on the Encroachment Area. Before the effective date of termination, the Smiths shall remove the Encroachments from the Encroachment Area at their sole cost and expense, and shall return the Encroachment Area to its preexisting condition or better, unless otherwise directed by the City. 5. If the Smiths fail to remove the Encroachments or to return the Encroachment Area to its preexisting condition upon termination of this Agreement either by them or by the City, the City may enter the Encroachment Area and remove the Encroachments. The Smiths agree that all cost incurred by the City, including administrative and reasonable legal costs, in removing the Encroachments can be assessed against the Property up to a maximum amount of $ . The Smiths understand that the exact amount of the assessments cannot be determined at the present time, and understand that the final assessment will be determined in accordance with the City's adopted assessment policy. The Smiths waive notice of hearing and hearing on the special assessments. The Smiths waive all right to appeal or otherwise contest or challenge the levy of the special assessments. The Smiths further agree that any requirements of Minnesota Statutes, Chapter 429 relating to special assessments are waived to the extent that such requirements are not met. 6. The Smiths shall indemnify, hold harmless and defend the City, its officials, employees, contractors and agents, from and against any and all claims, losses, proceedings, damages, causes of action, liability, costs or expenses (including reasonable attorneys' fees), arising from or in connection with or caused by any act, omission or negligence of the Smiths, their contractors, licensees, invitees, Error! Unknown document property name. 2 agents, servants or employees in connection with the construction, operation repair, maintenance, or removal of the Encroachments. 7. DELETED 8. The Smiths agree not to suffer or allow any liens, claims and processes to be placed against the City's rights to or interest in the Encroachment Area as a result of the use of the Encroachment Area, including, without limitation, any liens for labor or materials provided for the construction, repair or maintenance of the Encroachments. 9. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Minnesota. 10. This Agreement shall constitute the entire agreement of the parties and any prior understanding or representation of any kind preceding the date of this Agreement shall not be binding upon either party except to the extent incorporated in this Agreement. 11. Any modification of this Agreement shall be binding only if evidenced in writing signed by both parties. 12. DELETED 13. Required notices to the parties to this Agreement shall be in writing, and shall either be hand delivered or mailed to the following addresses: a) As to the City: City of Shakopee 129 South Holmes Street Shakopee,~ 55443-4300 Attn: City Administrator b) As to The Smiths: or at such other address as either party may from time to time notify the other in writing. Error! Unknown document property name. 3 IN WITNESS WHEREOF, the parties have executed this Agreement as of the day and year first written above. CITY OF SHAKOPEE By: John Schmitt Its: Mayor By: Mark McNeill Its: City Administrator By: Judith S. Cox Its: City Clerk STATE OF MINNESOTA ) ) ss. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this _ day of , 2009, by John Schmitt, Mark McNeill and Judith S. Cox, the Mayor, City Administrator and City Clerk respectively, of the City of Shakopee, Minnesota, a municipal corporation, on behalf of the City. Notary Public Error! Unknown document property name. 4 John Smith Jane Smith STATE OF MINNESOTA ) ).ss. COUNTY OF SCOTT ) The foregoing instrument was acknowledged before me this _ day of , 2009, by and , husband and wife. Notary Seal This document was drafted by: Kennedy & Graven, Chartered 470 U.S. Bank Plaza 200 South Sixth Street, Suite 470 Minneapolis, ~ 55402 Error! Unknown document property name. 5 EXHIBIT A Schematic of Encroachment Area Error! Unknown document property name. 6