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Home My WebLink About05/16/2000 TENTATIVE AGENDA CITY OF SHAKOPEE ADJ. REGULAR SESSION SHAKOPEE, MINNESOTA MAY 16, 2000 LOCATION: 129 Holmes Street South Mayor Jon Brekke presiding 1] Roll Call at 7:00 p.m. 2] Pledge of Allegiance 3] Approval of Agenda 4] Mayor's Report 5] Approval of Consent Business — (All items noted by an * are anticipated to be routine. After a discussion by the Mayor, there will be an opportunity for members of the City Council to remove items from the consent agenda for individual discussion. Those items removed will be considered in their normal sequence on the agenda. Those items remaining on the consent agenda will otherwise not be individually discussed and will be enacted in one motion.) 6] RECOGNITION BY CITY COUNCIL OF INTERESTED CITIZENS — (Limited to five minutes per person/subject. Longer presentations must be scheduled through the City Clerk. As this meeting is cablecast, speakers must approach the microphone at the podium for the benefit of viewers and other attendees.) *7] Approval of Minutes: April 4, 2000 *8] Approval of Bills in the Amount of$717,792.85 9] 7:00 p.m. Public Hearings A] Currency exchange license for Chex Services, Inc. dba/Fastfunds—Res. No. 5360 B] Transfer of cable franchise to merged AOL/Time Warner—Res. No. 5361 10] Communications 11] Liaison Reports from Council Members 12] Recess for Economic Development Authority meeting 13] Re-convene TENTATIVE AGENDA May 16, 2000 Page -2- 14] Recommendations from Boards and Commissions A. Text Amendment to City Code Regarding Floodplain Overlay Zone— Ord. No. 568 15] General Business A] Community Development 1. Final Plat of Savanna Oaks at Southbridge 3'a, located north of Dean Lake, south of US 169 and west of Southbridge Parkway—Res. No. 5363 2. Final Plat of Southbridge 5th Addition, located, located north of Dean Lake, south of US 169 and south of Southbridge Parkway—Res. No. 5364 B] Public Works and Engineering 1. Award of Contract for Gorman Street Improvement, 2000-1 —Res. No. 5362, memo on table • v-a..r K).- //lt J bC)i , nv Z,/,/� t, -G0 C] Police and Fire D] Parks and Recreation 1. Condemnation Proceedings—Eugene Hauer Property Adjacent to Sun Path School—Res. 5355 —tabled 2/29 E] Personnel *1. Hiring of Engineering Technician III and Engineering Technician II Positions F] General Administration: 1. Major Expenditures/Funding Discussion 2. City Hall Lease Space 3. MnDOT Parcels 31/43 Request for Proposals (RFP) 16] Council Concerns 17] Other Business 18] Adjourn TENTATIVE AGENDA ECONOMIC DEVELOPMENT AUTHORITY IN AND FOR THE CITY OF SHAKOPEE, MINNESOTA Adjourned Regular Meeting May 16, 2000 1. Roll Call at 7:00 p.m. 2. Approval of the Agenda 3. Approval of Consent Business-(All items noted by an 4 are anticipated to be routine. After a discussion by the President,there will be an opportunity for members of the EDA to remove items from the consent agenda for individual discussion. Those items removed will be considered in their normal sequence on the agenda.Those items remaining on the consent agenda will otherwise not be individually discussed and will be enacted in one motion.) 4. 4 Approval of Minutes: April 4,2000 5. Financial 4 A.)Approval of Bills 6. Other Business: 7. Adjourn edagenda.doc OFFICIAL PROCEEDINGS OF THE ECONOMIC DEVELOPMENT AUTHORITY SHAKOPEE, MINNESOTA REGULAR SESSION APRIL 4, 2000 Members Present: President Amundson, Brekke, Morke, Link, Sweeney Members Absent: None Staff Present: Mark McNeill, City Administrator; R. Michael Leek, Community Development Director; Judith S. Cox, City Clerk; and Jim Thomson, City Attorney; and Gregg Voxland, Finance Director. I. Roll Call: President Amundson called the meeting to order at 7:36 p.m. Roll call was taken as noted above. H. Approval of Agenda Sweeney/Link moved to approve the agenda as presented. Motion carried unanimously. III. Consent Agenda Sweeney/Link moved to approve the consent agenda. Motion carried unanimously. IV. Approval of Minutes: February 1,2000 Sweeney/Link moved to approve the February 1, 2000, meeting minutes. (Motion carried under the Consent Agenda.) V. Other Business There was no other business V1. Adjournment Link/Brekke moved to adjourn the meeting to Tuesday April 18, 2000 at 7:00 p.m. Motion carried unanimously. The meeting adjourned at 7:38 p.m. CiA,4/i)Ck . OiC J4Ii h A. Cox, EDA Secretary Carole Hedlund, Recording Secretary SQ"4 1 CITY OF SHAKOPEE Memorandum TO: President & Commissioners Mark H. McNeill, Executive Director FROM: Gregg Voxland, Finance Director SUBJ: EDA Bill List DATE: May 11, 2000 Introduction Attached is a listing of bills for the EDA for the period 4/14/00 to 05/11/00 . Action Requested Move to approve bills in the amount of $2, 215 . 98 for the EDA General Fund and $0 . 00 for Seagate (code 9450) . 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Also present: R. Michael Leek, Community Development Director; Gregg Voxland, Finance Director; Jim Thomson, City Attorney; Judith S. Cox, City Clerk; Mark McNeill, City Administrator; Dan Hughes, Chief of Police; Mark McQuillan, Parks and Recreation Director. Also Present: Chuck Rickart, City's traffic consultant. The pledge of allegiance was recited. The following item was added to the agenda: 15.E.5. Authorizing Sale of the Eagle Creek Thrift Shop Parcel. Link/Amundson moved to approve the agenda as modified. Motion carried unanimously. Mayor Brekke acknowledged Mark LaBarbera's part in the Home Safe Gun Program, gun safety in the City of Shakopee. Mr. LaBarbera was successful in securing 1,000 gun locks which will be distributed at the Shakopee Showcase. Mayor Brekke, in the absence of Fire Chief, Mary Athmann, read the Resolution of Appreciation to Robin McCullough for 15 years of professional and dedicated service to the Shakopee Fire Department and to the community and presented Robin McCullough with a framed copy. Link/Morke offered Resolution No. 5344 A Resolution of Appreciation to Robin McCullough, and moved its adoption. Motion carried unanimously. The following items were added to the Consent Agenda 15.A.1. The 2000 Reconstruction Project West 3rd Avenue Reconstruction Delay. 15.E.5. Authorizing the Sale of the Eagle Creek Thrift Shop Parcel. The following item was removed from the Consent Agenda: 15.E.4. The application of a Pawnshop License for Frank's Pawn, Inc. Sweeney/Link moved to approve the Consent Agenda as modified. Motion carried unanimously. Mayor Brekke asked if there were any interested citizens in the audience who wished to address the City Council on any item not on the agenda. Gary Gandrud, Faegre Benson Law Firm, approached the podium and read a letter to the City Council, in opposition to the establishment of a Shakopee Franchise Fee. He was representing Rahr Malting Co., Anchor Glass Container Corp. Inland Paperboard and Packaging, Inc., Certain Teed Corp; and Valleyfair Family Amusement Park. These five commercial industries were OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 2 opposed to this proposed fee and it was felt that this fee should not be imposed on electric and gas utilities. This franchise fee would be an extreme burden on industries, businesses and residents. It was thought that there is enough growth in Shakopee that this franchise fee is not needed. This could in fact drive out businesses and industry. Mark McNeill updated the City Council on the proposed Franchise Fee Ordinance. He reported that there are a number of issues involved with this Franchise Fee Ordinance and it will probably be another 90 days before there is a proposal that is acceptable to all. This Franchise Fee Ordinance will come back at a future meeting. Mayor Brekke abstained from discussion on this item because of the nature of his employment. Sweeney/Link moved to approve the minutes of February 1, 2000, and February 15, 2000. (Motion carried under the Consent Agenda). Sweeney/Link moved to approve the bills in the amount of$344,383.36. (Motion carried under the Consent Agenda). Cncl. Sweeney gave a short report on the water concerns in the City of Shakopee. Some of the concerns were expressed at the public utilities meeting held April 3, 2000. The concerns at this point are wells Nos. 6, 7, 10, and 3. Well No. 3 is out of commission right now but it is expected to be back in service shortly. Wells Nos. 6 & 7 at times have a high but acceptable level of nitrates. These two wells are best off being blended with Well No. 10. to lower the level of nitrates. At this point Shakopee Public Utilities is capable of procuring 10,000 gallons of water per minute and the maximum Shakopee usage is 9,000 gallons per minute. It appears that the City of Shakopee has plenty of water through the summer of 2000. Shakopee Public Utilities has an elaborate water emergency plan in place if it is needed. The intent of this emergency plan of Shakopee Public Utilities is to be able to fight fires and keep the water pressure up for the businesses and residential residents. Two new wells are being discussed; they are wells nos. 11 and 12. These wells would be in the Jordan aquifer. Well No. 11 is slated to be ready in the summer of 2001, and well No. 12 is slated to be ready in the summer of 2002. The storage tanks are for emergency purposes and to maintain pressure. This is only a temporary fix. Mayor Brekke addressed some of the water restrictions that the City of Shakopee has. The City of Shakopee is on an odd-even restrictive watering ban. There needs to be better communication to the residents regarding the water restrictions as to what is allowed and not allowed. There is enough water available through the summer of 2000, that is why he is supportive of the plats on the agenda this evening. Cncl. Amundson reported on Vision Shakopee. Vision Shakopee is committed to revitalizing the Shakopee downtown area. A recess was taken at 7:36 p.m. for the purpose of conducting the Economic Development Authority meeting. The meeting was reconvened at 7:38 p.m. OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 3 Sweeney/Link offered Resolution No. 5338, A Resolution of the City of Shakopee, Minnesota, Approving the Final Plat of Brittany Village 2nd Addition, and moved its adoption. (Motion carried under the Consent Agenda). R. Michael Leek, Community Development Director, approached the podium and reported on the preliminary plat of Christmas Creek, located north of CR 72, south of CR 14 and east of CR 79 - Resolution No. 5339. This proposed plat offers the creation of six lots. This preliminary plat was before the Planning Commission at their March 23, 2000 meeting. It had been tabled and brought back for the Planning Commissions approval after the trail dedication had been discussed before the Park Advisory Board. The Park Advisory Board recommended that trail dedication be made. The Planning Commission determined to take cash for park dedication in lieu of the trail dedication, as there is no trail identified in this area in the City's Plan. Resolution No 5339 incorporates the Planning Commission recommendations. Mayor Brekke inquired as to why the Planning Commission did not take the recommendation of the Park Advisory Board. Mr. Leek addressed this question. He reported that the Planning Commission agreed with Mr. Brown, owner of the property, that there was no identified plan for this particular area regarding a trail system and also they viewed this trail dedication would be detrimental to the property value in this area. Mark McQuillan, Park and Recreation Director, approached the podium and responded as to why the cash for park dedication fees in lieu of the trail dedication decision was made by the Planning Commission. He reported that there was no written identified trail plan in place at this time for this area and the City would probably get another chance to require this trail dedication when/if this plat for a subdivision came before the Planning Commission again. Cncl. Amundson addressed the width of the driveway. She expressed concern if the driveways were wide enough. Mr. Leek said this would be looked at again at the time of building permit issuance. Mr. Leek reported that park dedication is based on the numbers of persons anticipated to use the park system not the size of the parcel. Mr. Brown, 1227 Pioneer Lane, owner of the parcel, approached the podium. He explained that he has worked on this proposed project for sometime and had several meetings with City staff regarding this project. He said he objected to the trail dedication in part because he felt where the proposed trail was placed on two of the proposed lots was injurious to their property value. He did hear from Mark McQuillan on March 22, 2000, regarding the trail dedication. At that time there were no specific trail plans designed for this area. He had a procedural objection for the trail dedication also. He felt there would be ample opportunity to get this trail dedication at a later time. OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 4 Morke/Amundson offered Resolution No. 5339, A Resolution of the City of Shakopee, Minnesota, Approving the Preliminary Plat of Christmas Creek, and moved its adoption. Cncl. Sweeney wanted to know how the trail impacted the property value. Mr. Brown replied the trail goes through the entire property and in significant places. Cncl. Link and Jim Thomson, City Attorney, dialogued on fees for land purchase for Park and Trail dedication. In the future this parcel can be revisited if brought before the BOAA, Planning Commission or City Council for further subdivision. Cncl. Morke believed the land value was impacted by the trail dedication. Mr. Sweeney wanted the record to show that park dedication fees were accepted in lieu of trail dedication because of the character of this parcel. This is not setting a precedent. This is a policy decision that is being made tonight. Mayor Brekke liked the trail dedication idea, however, he was supportive of the plat. Motion carried unanimously. R. Michael Leek approached the podium and reported on the Planned Unit Development for Shakopee Valley Marketplace, located north of 17th Avenue and east of Marschall Road, Resolution No. 5340. Originally when this parcel was before the Planning Commission the size of the development was 190 thousand square feet. Now the development size has changed to 280 thousand square feet. An EAW was triggered when the size of this plat was changed to 280 thousand square feet. The application for a PUD was reviewed at the March 23, 2000, meeting of the Planning Commission. The Planning Commission is recommending approval of the PUD application with many conditions. These conditions have been carried forward from the original CUP into Resolution No. 5340. Cncl. Sweeney abstained from this PUD issue. Paul Tucci, representing Oppidan the applicant, approached the podium to discuss this issue with the City Council. Oppidan did agree that a PUD was the correct avenue rather than a CUP for this development. This PUD is phase two of their project. They have had numerous meetings with the planning and engineering City staffs and have taken their recommendations and suggestions. They have the indirect source permit required from the State and they have received a negative declaration from the City Council on the EAW. The traffic study done by WSB, City traffic consultants, took this size parcel into consideration when they did make their traffic projections for this area. Cncl Morke questioned the fence around the Lawn and Garden supplies. The outdoor screening appeared to be problematic to Cncl. Morke. OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 5 Mr. Leek said the Lawn and Garden area was not adjacent to any residential area. Because of the grade something other than the building wall was desirable. The BOAA and/or Planning Commission and/or City Council looks at each individual site individually so the fact that a wall is not used for this particular lawn and garden site is not precedent setting. Link/Amundson offered Resolution No. 5340, A Resolution of the City of Shakopee, Minnesota, Approving Planned Unit Development# 17 for Shakopee Valley Marketplace, and moved its adoption. Motion carried unanimously with Cncl. Sweeney abstaining. Sweeney/Link offered Resolution No. 5341, A Resolution of the City of Shakopee, Minnesota Approving the Preliminary Plat of Boldt Acres, and moved its adoption. (Motion carried under the Consent Agenda). Mr. Leek approached the podium and reported to the Council on the proposed preliminary and final plat of Shakopee Valley Marketplace West, located north of 17th Avenue and west of Marschall Road. He gave a slight background regarding this plat. Originally the applicant asked that the preliminary and final plat be reviewed concurrently. This is a proposed seven lot plat with two separate sets of owners owning the area comprised of this proposed plat. Also the applicant of the proposed plat has dedicated two public streets. These public streets are Weston Court and Greenwood Court. This area is commercially zoned. The Planning Commission heard the preliminary hearing of the CUP for the proposed auto dealerships on March 23, 2000. At this Planning Commission meeting there were also applications for other underlying proposed uses for Shakopee Valley Marketplace West. One of the CUP's was approved with additional conditions. Scott County made substantial comment on the design of this plat regarding turning movements. Scott County wanted the entrance to Daimler/Chrysler eliminated and the second entrance to be moved to the west as much as possible to leave room for the right turn lanes when they were needed. The new plat design shows the elimination of the entrance and the second drive moved, allowing adequate dedication for the future right turn lanes. Mr. Leek brought two items in the conditions to the attention of the City Council. These items were related to levied assessments and park dedication. Conditions in the proposed resolution D & E address the levied assessments. He requested that if Resolution No. 5336 be approved this evening that the issue of park dedication and levied assessments be addressed as amendments to the resolution. Staff did receive letters this day from Chrysler Realty and Oppidan requesting that park dedication fees be deferred until time of building permit application. Mayor Brekke said Resolution No. 5336 has been amended regarding the park dedication. There was slight discussion on the headlight wash along Marschall. This was addressed in the CUP that the Planning Commission heard on March 23, 2000. There will be berming along 17th Ave called for in the CUP that was approved for Chrysler/Daimler and staff was given direction to look at the headlight wash onto Marschall Road relative to the Chrysler Realty site. The issue of headlight wash on Marshall Road relative to the aforementioned site will be back before the Planning Commission on Thursday April 6, 2000. In the future there may be some potential users in the commercial areas where a sidewalk could be beneficial. There are commercial users in the area now and the area to the west is guided OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 6 residential. It may be better not to have the commercial traffic go through the residential area. However, Scott County would like some of the traffic relieved off from 17 via the residential area. There is a trail on 17th Ave now. Cncl. Link asked when 17 Ave is improved and the right turn lanes are needed and put in can the assessments at that time be assessed back to the property owners. Chuck Rickart said the volume of traffic on 17th Ave. is low now and does not warrant that turn lanes be put in at this time. Right of way for the future turn lanes will be asked to be dedicated now. When the right turn lanes are needed, they will then be very easy to do. The proposed site generates very little traffic; we planned for a much higher traffic flow. Mr. Thomsen said it was legally possible at this time to get an agreement regarding future payment of the right turn lanes. Cncl. Morke felt now was the time to put in the right turn lanes. Cncls. Link and Sweeney agreed with Cncl. Morke. Mayor Brekke disagreed. He said the right turn lanes need to be warranted before they are put in. The right-of-way for right turn lanes into Greenwood Court and Weston Ponds is shown on the drawings. According to Cncl. Link we need an agreement that the City will not have to pay for these right turn lanes when they are warranted. Mayor Brekke said one way to do this is to get an agreement that when the time for these right turn lanes comes as determined by the City's traffic engineer that the property owners would pay for these right turn lanes. Larry Barrett, Oppidan Investment Company, approached the podium to address the right turn lanes. Mr. Larry Barrett said if the property owners have to pay for the right turn lanes, they can come to some agreement. There is a verbal agreement this evening. And if an agreement can be accomplished then language will need to be incorporated into their agreements of land sale in this area addressing the future payment of these noted right turns. According to Mr. Barrett the use of a sidewalk is minimal for a bank drive-up and a gas convenience store. He did not see a real need for a sidewalk but it can be considered in the CUP. Jim Thomsen, City Attorney, wanted language imposed as a condition on the plat that there be an agreement entered into by the developer regarding future payment of right turn lanes and that this agreement be acceptable to the City Attorney. The City Attorney wanted it agreed upon this evening that the future assessments of the right turn lanes would run with the title of the property, and he needed the street name clarified for the dedication language. The correct name of the street is Weston Court. Fred Neuman, from Chrysler Realty, a subdivision of Daimler/Chrysler and co-developer with Oppidan, described two of the dealerships. The buildings will be modern, attractive, and office like. The Daimler/Chrysler building which will house the Chrysler/Jeep dealership will be located OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 7 on 17th Ave. facing south and the Dodge dealership will be located facing east on the northeast corner. The third dealership is still an unknown but it is key to the development. Negotiations are going on to procure a dealer. These three dealerships are proposed to be built on approximately 3/4 of the parcel or approximately 18 acres. This type of business is a low traffic generator. There are few employees, low pedestrian traffic, high ticket items are stored outside, space use is intensive, and the hours are reduced. Because most of the vehicles are stored outdoors the building will be small. Mayor Brekke asked if anyone else would like to address this issue. There was no response. Sweeney/Link offered Resolution No. 5336, a Resolution of the City of Shakopee, Minnesota, Approving the Preliminary and Final Plat of Shakopee Valley Marketplace West, and moved its adoption with conditions. Sweeney/Link moved to amend Resolution No. 5336, condition I.E. to read that the levied assessments are to be paid at this time. Motion carried unanimously. Sweeney/Link moved to amend Resolution No. 5336, by adding condition I.F. to read that the City Attorney will draft and City staff will get an agreement on record that the developers will pay for the right turn lanes when needed. Mayor Brekke asked the City Attorney if this amendment to Resolution No. 5336 was clear to him. He replied YES. Motion carried unanimously. Brekke/Amundson moved to amend Resolution No. 5336, by adding condition I.G. to require a sidewalk on Weston Court within the street right-of-way. Mayor Brekke and Cncl. Morke dialogued slightly on this amendment. Mayor Brekke asked if there was any more discussion on the motion to amend. The motion to amend carried 4-1 with Cncl. Morke dissenting. Mayor Brekke asked if there were any further motions to amend Resolution No. 5336. Mayor Brekke asked if there was any further discussion on Resolution No. 5336. Motion carried unanimously on Resolution No. 5336 as amended. Sweeney/Link moved to direct that the Third Avenue Reconstruction Project be delayed until the 2001 construction year, and directed staff to notify affected parties. (Motion carried under the Consent Agenda). OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 8 Sweeney/Link offered Resolution No. 5337, a Resolution of the Shakopee City Council Authorizing the Acceptance of a $11,000 Grant for the Minnesota Auto Theft Prevention Program, and moved its adoption. (Motion carried under the Consent Agenda). Sweeney/Link moved to authorize the appropriate City officials to enter into an agreement with IPS, Inc. to perform the necessary repairs to the Municipal Swimming Pool's Waterslide with funding from the Recreation Operating Budget. (Motion carried under the Consent Agenda). Mark McNeill reported on the concession stand agreements that the City had with other organizations in the City. He reported that just last year$500,000 worth of improvements were done on Joe Schleper Baseball Stadium at Tahpah Park. Mr. Mark McNeill contacted Coca Cola and Pepsi Cola to see what type proposals these two soft drink vendors would come up with for the town teams. It was the City Attorney's belief that these negotiations should be between the City and the soft drink company rather than the town teams and the vendors. There would be pop machines installed at Tahpah Park and these machines would be available 24 hours a day. Mr. McNeill felt the profits from these sales should be discussed in lieu of the financial help received from the City for the baseball stadium improvements. There are still more improvements to the baseball stadium that need to be done. The Pepsi proposal came in much better than the Coca Cola proposal. According to the Pepsi proposal, Pepsi will offer $7,500 to be used to help purchase a scoreboard. Where Coke only offered $4,000. and choose to go no higher. Pepsi would provide two lockable coolers and would reimburse the contract signator 32% of the proceeds. This issue needs direction from the City Council as to how the concessions should be handled along with the handling of the 32%. There was dialogue on the safety issues of having these vending machines at Tahpah Park. Cncl. Amundson thought perhaps a certain percentage of the profits should be dedicated to Tahpah Park improvements. It was Park Reserve funds that were used for the Tahpah Park improvements. There was dialogue as to which fund, the monies received from the concessions and vending machines should go to. Bill Schleper, 634 Moonens Avenue, approached the podium to address the City Council on the concessions at Joe Schleper Baseball Stadium. Pepsi machines are able to be bolted down and Pepsi will take full responsibility for vandalism. It would need to be in the Pepsi contract that the vending machines are to be bolted. He had no problem with the monies from the vending machines going into the park reserve fund but he would like the monies from the concessions to be earmarked for the Tahpah Park Complex. Sweeney/Link moved to direct staff to execute a contract with the Pepsi Bottling Group, for pop machines at Tahpah Park. Morke/Sweeney added a friendly amendment to the motion that the vending machines be bolted down. OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 9 The friendly amendment carried unanimously. The main motion carried unanimously. Mr. McNeill said he needed to negotiate a separate use agreement with the two town teams and he needed direction on the proceeds from the vending machines and for the concessions the town teams will be selling. Mr. McNeill recommended that 15% from the ball players concessions be given back to the City. Sweeney/Morke moved that the 32% reimbursement from the vending machines that is given to the contract signator be added to the Park Reserve fund along with 15 % of the net profits realized by the concessions operated by the town teams be given to the Park Reserve fund. Cncl. Morke felt there should be some language on the $7,500 that pepsi offered to help purchase a scoreboard. The record reflects this $7,500 dollars is to be used for the scoreboard. Charlie Fonder of the Shakopee Coyotes approached the podium and addressed the City Council on the proceeds from the sales at the concessions. We will work this concession reimbursement to the City out with City staff. The profits from the concessions is used to help pay operating expenses. It is hard to monitor net proceeds. It was impressed upon the ball teams that putting some money back into the Park Reserve fund was a way to say "Thank You" to the City and taxpayers for helping with the needed Tahpah Park improvements. Motion carried unanimously. There was a recess taken from 9:05 p.m. until 9:12 p.m. Mark McQuillan reported to the City Council on the architectural services for the park shelter in the John P. Wermerskirchen Park. Mr. McQuillan received park shelter plans from other communities as directed by the City Council at its January 18, 2000 meeting. He toured the park shelters within the City of Burnsville and was most impressed with the Hiawatha Park Shelter in the City of Burnsville. The City of Burnsville said the City of Shakopee was welcome to use their plans but was later informed that the drawings are protected under copyright laws and would need Mr. Forberg's, the architect, permission. Those plans would need minor modifications. Mr. McQuillan recommended that Mr. Forberg be hired to provide drawings and construction documents that include electrical, mechanical and structural engineering work. The cost for Mr. Forberg's services would be approximately 8% of the construction costs. The construction costs are estimated at $65,000. This cost is approximately one third of the cost of the proposal presented in January. Mr. McNeill could see a conflict of interest if this was done with current City staff. This does need to be inspected and this could be where a conflict of interest could arise. OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 10 Cncl. Link asked the City Council if he could provide a bid for the park shelter. It was answered yes, he could. Cncl. Link still felt this bid was high. Morke/Sweeney moved to direct the appropriate City officials to enter into an agreement with James Forberg Architects, Ltd. to provide architectural drawing and construction documents for a park shelter in John P. Wermerskirchen Park at 8% of construction costs unless a bid from a competitive bidder comes in lower on or before Friday April 7, 2000. Motion carried unanimously. Sweeney/Link offered a motion authorizing the appropriate City officials to execute Contract No. SG-99-161, Metropolitan Council Private Vehicle Capital Funding Agreement with the City of Shakopee. (Motion carried under the Consent Agenda). Sweeney/Link offered Resolution No. 5343, A Resolution Establishing A Cooperative Agreement Between the Lower Minnesota River Watershed District and the City of Shakopee, and moved its adoption. (Motion carried under the Consent Agenda). Mr. Leek approached the podium and addressed the City Council on the garden center that the new Big K store felt had been approved for them originally. Continental Properties attorneys disputed the need for a separate CUP for the garden center. Staff noticed this garden center being constructed along with the new Big K building. Staff went out and inspected and determined this was not an approved use. This garden center had been moved from the south side of the building to the north side of the building after the auto service area was deleted. The garden center was surrounded by a chain link fence including the top and the outside lights for the garden center were of a higher radiance than the rest of the lights. It was agreed that the garden center would not operate until this issue was resolved. However, because the garden center season is fast approaching Big K would like to open the garden center on a temporary basis now. The separate CUP issue regarding the garden center has not been resolved as of this time and therefore it is the City Council's decision to allow this garden center to open on a temporary basis until the separate CUP for the garden center has been determined. In the meantime, Big K has agreed to take down the chain link fence and to shield the lights thereby directing the lighting downward. Big K would like a permanent decision on this at the April 4th meeting of the City Council, however, staff feels the neighbors should have some input on this issue. They are recommending that this garden center be opened on a temporary basis and that Continental Properties make application for a regular CUP. Mayor Brekke wanted some type of letter of credit or escrow fund set up. Cncl. Morke did not want temporary approval granted. He wanted the proper process to be gone through. Jerry Severson, Executive Vice President for Continental Properties, approached the podium and addressed the City Council. He said Continental Properties and Big K had been before the Council and Planning Commission many times, this was quite a lengthy process. Big K is one of the largest taxpayers in this area and their plan clearly shows the garden center along with OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 11 elevations. They had neighborhood meetings and staff meetings and negotiated many items. They are within the parameters of the easement. Resolution No. 5132, the original CUP resolution, has some 20 plus conditions and from that we thought the garden center was approved and needed to be fully enclosed. We never received notice that an additional CUP was needed. Because this was attached to the building they felt that another CUP was not needed. They believed they had a CUP for the garden center; it was on their site plan. Mayor Brekke wanted to get this garden store worked out. He wanted good faith between the City and the Big K store. Mr. Severson said that Big K can remove the chain link fence and they can shield the lights and direct them downward so the lighting is close to what the rest of the lighting is. He would be happy to provide a letter of credit for $75,000 if that is what the City wanted. Cncl. Morke talked with neighbors of the Big K and according to the neighbors, there are several items that Big K has in their conditions that have not been followed up on. Some of these items include, lighting, semis, P.A. System, alarms going off during the night, and litter in the back of the store. Mr. Severson was unaware of this and said it would be addressed. Morke/Sweeney moved to authorize Big K to operate the garden center on a temporary basis pending consideration for a CUP with conditions: 1)Continental/K-Mart makes application for a permanent use, 2) Sheilds be placed on exterior lighting so the light is directed downward, and will not interfere with the enjoyment of adjoining property, 3) The chain link fence is replaced with wrought iron. Brekke/Amundson moved amend the motion by deleting condition# 3 and replace it with the condition requiring submission of a letter of credit or an escrow fund with language acceptable to the City Attorney in the amount of$85,000 to cover the cost of follow-up with corrective action to some existing conditions and any new conditions placed on a conditional use for a garden center, if that is allowed. Motion carried unanimously. Mr. Thomson said with the letter of credit a condition can cover Big K following up on addressing any violations of the current CUP and any conditions if a new CUP is granted for a garden store. Dave Benson, neighbor of Big K, approached the podium and advised the City Council that in fact there was debris behind the store. There were the old semi storage bins back there. Mr. Severson asked for the opportunity to remedy this problem. Mr. Morke was against the temporary opening of the garden store, he felt the proper steps should be taken to get a new separate CUP. Cncl. Sweeney felt the opportunity should be given to fix the problems and that a temporary license should be granted with the understanding, if the CUP is not granted the garden store is closed. OFFICIAL PROCEEDINGS OF THE APRIL 4,2000 SHAKOPEE CITY COUNCIL PAGE 12 Mayor Brekke encouraged the City Council to allow the garden store on a temporary license because enough conditions had been put in place to protect the City. Sweeney/Morke moved to amend the motion to grant a temporary license to K-Mart for a garden center for a period not to exceed 90 days and that the proper CUP process be initiated for the garden store. Motion carried unanimously. The main motion as amended carried unanimously. According to the City Attorney, there is no action required on the Franchise Fee update at this time. This item will be brought back before the City Council when there is further information. Sweeney/Link moved to authorize the acceptance of$5,000 from the Lions Club and authorized the funds to be placed in the Escrow Fund for use in Lions Park. (Motion carried under the Consent Agenda). Cncl. Link inquired into the rate of interest monies could be charged on loans from pawnshops. He thought perhaps this should be monitored by the Police Chief. Jim Thomson believes there is a statute on this but he will check this interest rate out and get back to the City Council. Morke/Link moved to table the application for a pawnshop license from Frank's Pawn, Inc. dba/Shakopee Pawn, 1147 Canterbury Road, Shakopee, Minnesota. Motion carried unanimously. Sweeney/Link offered Resolution No. 5345, A Resolution Authorizing Sale of Real Property to Valley Green Business Park Limited Partnership, and move its adoption. (Thrift Shop) (Motion carried under the Consent Agenda.) The dates for the workshop meetings will be set at the next City Council meeting. Traffic issues by the Junior High school were discussed. The traffic is not stopping for pedestrians in the crosswalk. Mr. McNeill noted that this is a serious problem. Morke/Link moved to adjourn the meeting to Tuesday, April 18, 2000, at 7:00 p.m. Motion carried unanimously. The meeting adjourned at 9:54 p.m. �'J ith S. Cox ity Clerk Carole Hedlund Recording Secretary CITY OF SHAKOPEE Memorandum TO: Mayor and Council Mark McNeill, City Administrator FROM: Gregg Voxland, Finance Director RE: City Bill List DATE: May 11, 2000 Introduction and Background Attached is a print out showing the division budget status for 2000 based on data entered as of 05/11/00. Also attached is a regular council bill list for invoices processed to date for council approval . Included in the checklist but under the control of the EDA are checks for the EDA General Fund (code 0191) in the amount of $2, 215 . 98 . Also included in the checklist but under the control of the S.W. Metro Drug Task Force (code 9825) are checks in the amount of $25, 362 . 83 . Action Requested Move to approve the bills in the amount of $717, 792 . 85 . CITY OF SHAKOPEE EXPENSES BY DEPARTMENT 05/11/00 CURRENT YEAR ANNUAL MONTH TO PERCENT DEPT DEPT NAME BUDGET ACTUAL DATE EXPENDED 11 MAYOR & COUNCIL 80,130 2,544 25,778 32 12 CITY ADMINISTRATOR 249,600 13,278 86,308 35 13 CITY CLERK 219,290 7,097 62,187 28 15 FINANCE 429,990 16,451 115,511 27 16 LEGAL COUNSEL 298,500 4,069 136,953 46 17 COMMUNITY DEVELOPMENT 574,780 34,320 185,550 32 18 GENERAL GOVERNMENT BUILDINGS 253,840 4,921 52,146 21 31 POLICE 2,173,740 72,430 739,336 34 32 FIRE 705,840 8,363 204,426 29 33 INSPECTION-BLDG-PLMBG-HTG 428,070 18,183 167,268 39 41 ENGINEERING 541,650 14,341 166,901 31 42 STREET MAINTENANCE 904,850 19,898 219,447 24 44 SHOP 156,240 10,613 52,503 34 46 PARK MAINTENANCE 535,430 14,123 146,791 27 91 UNALLOCATED 557,010 11,163 60,482 11 TOTAL GENERAL FUND 8,108,960 251,793 2,421,587 30 17 COMMUNITY DEVELOPMENT 509,990 14,367 90,358 18 TOTAL TRANSIT 509,990 14,367 90,358 18 19 EDA 247,380 4,533 27,902 11 TOTAL EDA 247,380 4,533 27,902 11 a) a) ro C14 a aaaaaaa a a a aaaa a as a a a a a a a a a a a a a a a a a M H H H H H H H H H H H H H H H HH H H H H H H H H H H H H H H H H H (r) X O1 0 x w o o m 0 ax 0 N Z X oz I 0 `r 1 C.W.) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 HH 0 0 0 000000000000000 CD H 010HNM V m L.0 0 NNNN 0 NN 0 000000000000000 d. 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H W H H cn cn rx x H m w .7". H V' In M In O N a0 01 Cl 0 0 O 0 0 In U O H H N N N (I d' W In H M d, In 00 N O H H M M W W W d' •cr N N N r` N a) a H *k it it *k 1k *k it it *k It *k it It 7k it 4k U 00 0 0 0 0 0 0 0 A 0 0 0 0 0 U G. ri. G4 rr, ii. 1)) r4 rt. G. w ix W G. G. G. CITY OF SHAKOPEE Memorandum TO: Mayor and City Council Mark McNeill, City Administrator FROM: Judith S. Cox, City Clerk SUBJECT: Currency Exchange License - Chex Services, Inc. , dba/Fastfunds DATE: May 8, 2000 INTRODUCTION: City Council is asked to consider an application from Chex Services, Inc. for a currency exchange license at 1100 Canterbury Road. BACKGROUND: The City has received notice that James Wellbourn and Lewis Mirviss have applied to the State of Minnesota Department of Commerce for a currency exchange license at Canterbury Park. The license will ultimately be issued by the State of Minnesota. Current law allows the local municipality to approve or deny the issuance of a license, after published notice and a public hearing. If the local municipality does not advise the State within 60 days of receipt of the notice of the application, the State can issue the license. Chex Services, Inc. will replace the current licensee, Game Financial Corporation. The applicants have provided the State with the required $10,000 Currency Exchange Surety Bond. As part of the application, the Department of Commerce requires the applicants to undergo a background investigation through the State of Minnesota, Department of Public Safety, Bureau of Criminal Apprehension. Because of the requirement of this background investigation, the Shakopee Police Department does not need to conduct a background investigation. RECOMMENDED ACTION: Offer Resolution No. 5360, A Resolution Approving the Application of Chex Services, Inc. dba/Fastfunds, 1100 Canterbury Road, and move its adoption. C001.4 I:\clerk\Jeanette\licenses\Chex Services RESOLUTION NO. 5360 A RESOLUTION OF THE CITY OF SHAKOPEE,MINNESOTA, APPROVING THE APPLICATION OF CHEX SERVICES,INC. dba/FASTFUNDS FOR A CURRENCY EXCHANGE LICENSE AT 1100 CANTERBURY ROAD WHEREAS, in 1992 Minnesota Statute Section 53A.04 was amended to require a City to approve or disapprove a proposed currency exchange license; and WHEREAS, Chex Services,Inc. dba/Fastfunds applied for a currency exchange license for a location at 1100 Canterbury Road; and WHEREAS,the City has given published notice of its intention to consider this issue,has solicited testimony from interested persons, and finds that the application should be approved. NOW, THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA,AS FOLLOWS: That the City approves the granting of a currency exchange license to Chex Services, Inc. dba/Fastfunds at its location at 1100 Canterbury Road. Adopted in Adj. Regular Session of the City Council of the City of Shakopee,Minnesota, held this 16th day of May,2000. Mayor of the City of Shakopee ATTEST: City Clerk CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Transfer of Ownership—Cable Television Franchise DATE: May 8,2000 INTRODUCTION: The City Council is asked to hold a public hearing, and then consider a resolution which would allow for the transfer of the City's cable television system from Time Warner,to the newly merged AOL/Time Warner group. BACKGROUND: Attached is a memorandum dated April 28th which went to the Shakopee Cable Communications Advisory Commission,regarding a proposed transfer of the City's cable franchise to a new company formed by the merger of America Online and Time Warner. The City received notice of this February 9th . The Cable Commission retained Attorney Adrian Herbst to review the impact of this on the City. His report is attached. He has recommended approval,with certain caveats. Upon review,Kim Roden,Vice President of Public Affairs and Marketing for Time Warner, did initiate contact with Mr. Herbst's office, expressing come concerns on issues in the resolution(the original copy is in the attached report). As a result,there have been some changes which clarify who is the parent company, and who is the responsible party with whom the City would seek redress in the event of a non-performance issue. It is possible that Time Warner will continue to have a concern on this; Ms. Roden is expected to be at the public hearing on May 16th. A copy of the revised resolution as recommended by the City's attorney as attached. RECOMMENDATION: I recommend that the City Council hold the public hearing,take any input, and then consider the proposed transfer. Subject to any public testimony to the contrary,the City Council should approve the conditions as outlined in the attached resolution. ACTION REQUIRED: If the Council concurs, it should hold the public hearing, and then,by motion, adopt the following resolution: RESOLUTION NO. 5361 A RESOLUTION OF THE CITY OF SHAKOPEE APPROVING THE TRANSFER OF THE CABLE COMMUNICATIONS FRANCHISE Mark1d1 City Administrator MM:tw I RESOLUTION NO. A RESOLUTION OF CITY OF SHAKOPEE APPROVING THE TRANSFER OF THE CABLE COMMUNICATIONS FRANCHISE I WHEREAS, Time Warner, Inc. ("Franchisee") is duly authorized to operate and maintain a cable communications system in Shakopee, Minnesota (the "System") by City of Shakopee ("City") pursuant to a franchise (the "Franchise") granted by the City; and WHEREAS, pursuant to the Merger Agreement between Franchisee and AOL Time Warner, Inc. ("AOL Time Warner"). AOL Time Warner will become the owner of the cable system owned and operated by Franchisee, including the cable system serving the City, subject to approval by the City of a transfer of the Franchise; and I WHEREAS, FCC Form 394 with respect to the Transactions has been filed with the City; and WHEREAS, the parties have requested consent by the City of Shakopee to the Transactions; and WHEREAS, after review of FCC Form 394, and evaluation of a report prepared by consultants for the City, the City Council of the City of Shakopee, consents to the Transaction subject to the written acceptance, on the form included as an attachment to this Resolution, Notice and Acceptance, and their filing the acceptance with the City Clerk on or before the closing of the Transaction between Franchisee and AOL Time Warner. The acceptance is part of this Resolution and attached hereto. NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS: SECTION 1. The City Council of the City of Shakopee hereby consents to and approves the Transactions subject to execution of the attached written acceptance by AOL Time Warner and execution of the Acceptance on or before the date of closing between Franchisee and AOL Time Warner. SECTION 2. The Franchise Authority hereby consents to and approves the assignment, mortgage, pledge, or other encumbrance, if any, of the Franchise, the Systems, or assets relating thereto, as collateral for a loan. SECTION 3. This Resolution shall be deemed effective in accordance with applicable law, and upon receipt of written acceptance. SECTION 4. The City Clerk shall mail the attached Notice and Acceptance to Franchisee and AOL Time Warner the next day after passage of this Resolution. I I PASSED, ADOPTED, AND APPROVED this day of , 2000. By: ATTEST: Clerk CITY OF SHAKOPEE Memorandum TO: Shakopee Cable Communications Advisory Commission FROM: Mark McNeill, City Administrator SUBJECT: Transfer of Ownership—AOL/Time Warner Inc. DATE: April 28,2000 INTRODUCTION: The Commission is asked to review the report on the transfer of ownership of AOL and Time Warner,prepared by Adrian Herbst,and make a recommendation to the City Council. Note that Mr. Herbst will not be in attendance at the May 3.d meeting. BACKGROUND: In March,the Commission authorized retaining Attorney Adrian Herbst to review the information contained in FCC Form 394,relating to the announced merger of AOL and Time Warner Inc. The results of Mr. Herbst's inquiry is attached in the report dated April 26, 2000. The conclusions and recommendations are found on pages 14 and 15. In that,he opines that: • AOL/Time Warner appears to be legally qualified. • The change in ownership will not adversely affect Shakopee's cable system operation. • The merged company appears to have the financial qualifications to operate the cable system. • Franchise fee payments by TWI have been in compliance with the franchise. In summary, he feels that subscribers will probably not experience a negative impact from the transfer. As such, Herbst recommends that the Cable Commission close the public information portion of the meeting, which began at the March 29th meeting,and recommend to the City Council that, following a public hearing to be held May 16th at the regularly scheduled City Council meeting,a resolution be adopted with the following provisions: 1. The provisions of the existing franchise remain in full force and effect; 2. The City provide written notice to the merged company requesting that it accept the terms of the Resolution; 3. This approval is conditioned with the understanding that the transfer will not have an adverse impact on the operation of the Shakopee Cable Television System, including any impact on rates; 4. That the AOL/Time Warner transfer continue with the existing and future financial and technical obligations in the franchise, and if the merged company creates a local subsidiary,the City will require a performance guarantee from AOL/Time Warner; and 5. Any other terms that the Commission or Council may wish to impose. ACTION REQUIRED: If the Commission concurs, it should close the public information portion of the meeting, which was continued from March 29th, and recommend to the City Council that it adopt a resolution containing the five items described above. Mark McNeill City Administrator MM:tw 1 I I REPORT REGARDING A REVIEW OF THE LEGAL, FINANCIAL AND TECHNICAL 1 QUALIFICATIONS OF AOL TIME WARNER, INC. IN CONNECTION WITH THE APPLICATION ' FOR FRANCHISE AUTHORITY CONSENT TO TRANSFER CABLE TELEVISION FRANCHISE FROM TIME WARNER, INC., d/b/a TIME WARNER CABLE TO AOL TIME WARNER, INC. 1 1 PREPARED FOR THE CITY OF SHAKOPEE, MINNESOTA 1 April 26, 2000 Prepared by: ' Adrian E. Herbst, Esq. The Bailer Herbst Law Group, P.C. 1 953E Grain Exchange Building 400 South Fourth Street Minneapolis, Minnesota 55415 Telephone: (612) 339-2026 Telecopier: (612) 339-4789 With assistance from: Charles Gramlich ' Charles Gramlich & Associates 8105 Chardonnay Cove Austin, Texas 78750 ' Telephone: (512) 342-7848 Telecopier: (512) 342-7844 1 1 1 111 TABLE OF CONTENTS I I EXECUTIVE INTRODUCTION 1 I. TRANSFER OVERVIEW 2 A. SUMMARY 2 I B. FEDERAL LAW 2 1. Cable Act and FCC Rules 2 2. Form 394 3 I 3. Determining Whether to Approve or Disapprove 3 C. LOCAL LAW 4 II. THE TRANSACTION 6 I III. AOL TIME WARNER'S LEGAL QUALIFICATIONS 7 IV. FINANCIAL AND TECHNICAL QUALIFICATIONS AND REVIEW OF I FRANCHISE FEE COMPLIANCE -- PREPARED BY CHARLES GRAMLICH 8 A. EXECUTIVE SUMMARY 8 B. CURRENT FRANCHISE 9I C. TECHNICAL QUALIFICATIONS OF AOL TIME WARNER, INC 9 D. FINANCIAL QUALIFICATIONS OF AOL TIME WARNER, INC. 11 E. CONCLUSIONS 13 I V. CONCLUSIONS AND RECOMMENDATIONS 14 A. AOL TIME WARNER'S QUALIFICATIONS 14 I 1. Legal Qualifications 14 2. Technical Qualifications 14 3. Financial Qualifications 14 I B. IMPACT ON SERVICE AND RATES 15 C. RECOMMENDATIONS 15 I EXHIBIT A. Resolution, Notice and Acceptance I APPENDIX I I I I EXECUTIVE INTRODUCTION The City of Shakopee receives cable television services from a Franchisee, Time Warner, Inc., d/b/a Time Warner Cable ("TWI"). TWI proposes to transfer ownership control of the Franchise to AOL Time Warner, Inc. ("AOL Time Warner"). ' At the request of the City, Adrian Herbst, of The Bailer Herbst Law Group, P.C., together with Charles Gramlich & Associates has prepared this Report to the City to ' assist the City in the transfer process. This Report includes a complete review of the information provided by TWI and AOL Time Warner in the Federal Communications Commission ("FCC") Form 394 and in response to request for additional information that were made to TWI and AOL Time Warner representatives. The analysis and conclusions, as well as recommendations, contained in this Report are meant to assist the City in deciding whether to approve or disapprove the proposed transfer of ownership. Pursuant to the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act"), Minnesota law and the current franchise with TWI ' ("Franchise"), the City has until approximately June 3, 2000 to approve or disapprove the proposed transfer of the cable television system and the Franchise in the City. The City must evaluate the legal, technical, and financial qualifications of AOL Time Warner. Additionally, the City can also review the affect of the transfer on rate and proposed changes and services. ' To evaluate the transfer of ownership, The Bailer Herbst Law Group and Charles Gramlich & Associates reviewed the following documents: t • The Franchise; • The information provided in Form 394; and • The information provided in response to information requested from TWI and AOL Time Warner representatives. The proposed transfer will result in a change of the current Franchisee, TWI to AOL Time Warner. AOL Time Warner appears to have the legal, technical, and financial ' qualifications necessary to operate and control the cable television system. Approval should be conditioned upon the representations to the City that the transfer will not have an adverse impact on the operation of the local cable television system, including any ' impact on rates, and that AOL Time Warner will promptly correct all deficiencies in operations comply with all the terms of the Franchise. 1 1 I I TRANSFER OVERVIEW A. SUMMARY , Shakopee Minnesota ("City") receives cable television service from TWI pursuant to an agreement between the City and TWI ("Franchise"). On February 9, 2000, the City received Federal Communications Commission ("FCC") Form 394 from TWI, requesting approval to transfer the Franchise and the cable system serving the City to AOL Time Warner. In determining whether to approve the transfer, the City must evaluate the legal, technical, and financial qualifications of AOL Time Warner. The City asked The Bailer Herbst Law Group ("BH") to assist in the evaluation of AOL Time Warner's qualifications. BH prepared this Transfer of Ownership ' Report ("Report"), describing the transfer process and examining AOL Time Warner's qualifications. BH also used the assistance of Charles Gramlich, a cable television consultant, to examine AOL Time Warner's technical and financial qualifications. In addition, BH and Charles Gramlich requested information from TWI and AOL Time Warner regarding the potential impact of the transfer on subscribers, service, and other issues. The questions and ' responses are included in this Report. Based on our review of the information provided to BH and Charles Gramlich, BH advises the City to approve the transfer request based on the conditions and recommendations contained in this Report. We have included a draft Resolution for consideration and approval, and a draft Acceptance to be signed by AOL Time Warner, Exhibit A. B. FEDERAL LAW ' 1. Cable Act and FCC Rules The Cable Television Consumer Protection and Competition Act of 1992, as amended by the Telecommunications Act of 1996 ("Cable Act"), regulates the transfer and sale of cable systems.' The Cable Act states that if a franchise requires franchising authority approval of a sale or transfer, the franchising authority has 120 days to act upon the request for approval that is accompanied by such information as is required by FCC regulations and by the franchising authority.' In addition, if the franchising authority fails to render a final decision on the request within 120 days, the request will be deemed granted 1 47 U.S.C. §537. 1 2 Id. 111 unless the requesting party and the franchising authority agree to extend the time period.' In response to the transfer provision contained in the Cable Act, the FCC promulgated rules regarding transfers and sales of cable systems.` If a franchising authority does not act within 120 days, the request for transfer is automatically granted unless the parties have agreed upon an extension of the 120-day deadline.' ' The City received Form 394 from TWI on February 9, 2000. Under federal law, the City must approve or deny the transfer within 120 ' days of the request for approval. (However, this is subject to state law or local law requirements; and, as set out below, the review period for ' Shakopee is limited to 90 days, unless extended by agreement.) 2. FCC Form 394 FCC rules require that the proposed transferor and transferee submit Form 394 to the franchising authority.6 The FCC created Form 394 to assist franchising authorities in obtaining information regarding proposed transfers and the legal, technical, and financial qualifications of transferees. The filing of the completed form, together with exhibits ' and any additional information required by the Franchise, state law, and local law, commences the running of the 120-day time period for approval or disapproval of the proposed transfer. ' 3. Determining Whether to Approve or Disapprove ' The Cable Act does not specify how a franchising authority should decide to approve or disapprove the transfer. A 1993 FCC Report and Order issued in July 1993 states that a franchising authority should review the legal, technical, and financial qualifications of the transferee.' These are the same qualifications that the franchising authority reviews when granting a new franchise or renewing a ' franchise. A 1995 FCC Order states that a franchising authority may also review the effect of the proposed transfer on rates and services.' 3 Id. ' 4 First Report and Order and Further Notice of Proposed Rule Making, MM Docket No. 92-264, 8 FCC Rcd No. 19,(released July 23, 1993);47 C.F.R. §76.502. ' 47 C.F.R. §76.502. 6 47 C.F.R.§76.502(a). ' First Report and Order and Further Notice of Proposed Rulemaking, MM Docket No. 92-264, 8 FCC Rcd No. 19(released July 23, 1993). 8 Order on Reconsideration of First Report and Order, MM Docket No. 92-264, FCC 95-21 (released Jan. 30, 1995)¶55. I 3 C. LOCAL LAW ' Minnesota cities are required to comply with the following provisions of the state law. The Franchise Ordinance in Shakopee is consistent with this law. Minnesota Statutes Section 238.083, Sale or Transfer of Franchise ' provides: Subd. 1 - Fundamental Corporate Change Defined. For ' purposes of this section, "fundamental corporate change" means the sale or transfer of a majority of a corporation's assets; merger, I !I including a parent and its subsidiary corporation; consolidation or creation of a subsidiary corporation. Subd. 2 — Written Approval of Franchising Authority. A sale or transfer of a franchise, including a sale or transfer by means of a fundamental corporate change, requires the written approval of the franchising authority. The parties to the sale or transfer of a franchise shall make a written request to the franchising authority for its approval of the sale or transfer. The franchising authority shall reply, in writing, within 30 days of the request and shall indicate its approval of the request or its determination that a public hearing is necessary if it determines that a sale or transfer of a franchise may adversely affect the company's subscribers. The franchising authority shall conduct a public hearing on the request within 30 days of that determination. ' Subd. 3 — Notice of Hearing. Unless otherwise already provided for by local law, notice of the hearing must be given 14 days before ' the hearing by publishing notice of it once in a newspaper of general circulation in the area being served by the franchise. The notice must contain the date, time, and place of the hearing and must briefly state the substance of the action to be considered by the franchising authority. Subd. 4— Approval or Denial of Sale or Transfer Request. PP q Within 30 days after the public hearing, the franchising authority shall approve or deny, in writing, the sale or transfer request. The approval must not be unreasonablywithheld. PP Subd. 5 — Sale or Transfer of Franchise Without System. The ' parties to the sale or transfer of a franchise only, without the inclusion of a cable communications system in which at least substantial construction has commenced, shall establish that the sale or transfer of only the franchise will be in the public interest. 1 4 Subd. 6 — Sale or Transfer of Stock. Sale or transfer of stock in a corporation so as to create a new controlling interest in a cable communications system is subject to the requirements of this section. ' The term "controllinginterest," as used wherein, is not limited to ' majority stock ownership, but includes actual working control in whatever manner exercised. ' In accordance with the above Minnesota statute, incorporated and made part of this Shakopee franchise, the City through its Cable Communications Advisory Commission conducted a public hearing on the ' 29th day of March, 2000. A notice of the public hearing was made in the general manner in which the Cable Communications Advisory Commission provides notice of meetings to the public, including posted ' notice at the City Hall and notice through the cable communications system serving the residents in the City of Shakopee. At the public hearing, representatives of Time Warner were present to present ' information to the Commission concerning the transfer of ownership and the impact on the City. As a preliminary matter, the City furnished Time Warner representatives with a list of questions. The list of questions is included in the Appendix to this Report. Representatives of Time Warner addressed the questions and responded to additional matters of concern raised by members of the Commission at the meeting and public hearing. ' At the conclusion of the public hearing, a motion was made to continue the public hearing held by the Commission to May 3, 2000 at which time the Commission would receive the Report from The Bailer Herbst Law Group and determine whether or not to advise the City Council to accept The Bailer Herbst Law Group Report and to act on the transfer request a meeting of the City Council in June. Minutes of the Cable Communications Advisory Commission are also attached for reference in the Appendix to this Report. In further reference to the requirements relating to public knowledge and information regarding the change of a controlling interest from Time Warner to AOL Time Warner, the City published notice in the legal newspaper of the City for the scheduled meeting of the City Council. The recommended notice for the public hearing before the City Council is on the form attached in the Appendix to this Report as a Notice for Public Hearing for the City Council. 1 ' 5 1 II. THE TRANSACTION THE TRANSACTION TWI and AOL Time Warner entered into an Agreement and Plan of Merger("Merger ' Agreement") dated as of January 10, 2000, included in full in the 394 filing. According to the terms of the Merger Agreement, AOL Time Warner will become the owner of the cable system serving Shakopee, subject to approval by the City of the transfer of the Franchise. The attached brief description is from Exhibit 1 of the FCC Form 394. I1 1 1 1 1 6 1 EXHIBIT 1 Thea applicable specifyadditional information or material that is PP cable franchise does not any required to be provided to the franchising authority in connection with a transfer of control of the franchise. 1 1 EXHIBIT 2 Attached hereto is the Agreement and Plan of Merger("Agreement") between America ' Online, Inc. and Time Warner Inc., dated as of January 10, 2000, including all associated exhibits. The Agreement and exhibits embody the full and complete agreement between America Online, Inc. and Time Warner Inc. with respect to their pending merger, and thus all documents necessary in order to understand the terms of this transaction are being provided. Various schedules referenced in the Agreement contain confidential trade, business, pricing or marketing information, or other information not publicly available, and are not necessary in order to understand the terms of this transaction, are thus are not required to be included. Nevertheless, such documents are available for inspection by appropriate franchising authority officials at any mutually convenient time and in a manner that ensures protection of confidentiality, by contacting the individual listed in Part II, Section I, Question 1(b) of this Form. Pursuant to the Agreement, America Online, Inc. and Time Warner Inc. will each merge into wholly-owned subsidiaries of a new Delaware corporation, AOL Time Warner Inc. Thus, as a result of this merger of equals, AOL Time Warner Inc. will become the new ultimate parent of both America Online, Inc. and Time Warner Inc. The Time Warner related entity that holds the cable franchise for your community will remain in existence and will continue to be the franchise holder and operator of your system, just as before. 1 1 1 III. AOL TIME WARNER'S LEGAL QUALIFICATIONS Based on our review of the attached information furnished to the City concerning ' the legal qualifications of AOL Time Warner, Inc., we have concluded that there is no reason to believe that AOL Time Warner, Inc. does not have the legal qualifications necessary to own and operate the cable communications system serving the City of Shakopee, Minnesota. 1 1 1 1 7 PART II-TRANSFEREE/ASSIGNEE ' 1. (a) Indicate the name,mailing address, and telephone number of the transferee/assignee. I Legal name of Transferee/Assignee(if individual, list last name first) AOL Time Warner Inc. I Assumed name used for doing business(if any) I C/O Time Warner Cable Mailing street address or P.O. Box 290 Harbor Drive City State ZIP Code Telephone No. (include area code) Stamford CT 06902 (203) 328-0600 (b) Indicate the name, mailing address, and telephone number of person to contact, if other than transferee/assignee. Name of contact person(list last name first) 1 I David Auger, President Firm or company name(if any) I Time Warner Cable- Minneapolis Division Mailing street address or P.O. Box 801 Plymouth Avenue North City State ZIP Code Telephone No. (include area code) Minneapolis MN 55411 f612) 522-5200 (c) Attach as an Exhibit the name, mailing address, and telephone number of each additional person Exhibit No. I who should be contacted, if any. N/A (d) Indicate the address where the system's records will be maintained. Street Address 801 Plymouth Avenue North , I City State ZIP Code Minneapolis MN 55411 2. Indicate on an attached exhibit any plans to change the current terms and conditions of service and operations of the system as a consequence of the transaction for which approval is sought. Exhibit No. I 3 I FCC 394(Page 2) September 1996 ISECTION II. TRANSFEREE'S/ASSIGNEE'S LEGAL QUALIFICATIONS I1. Transferee/Assignee is: © Corporation a. Jurisdiction of incorporation: d. Name and address of registered agent in Delaware jurisdiction: I b. Date of incorporation: CT Corporation February 7, 2000 111 8th Ave., 13th Floor c. For profit or not-for-profit: IFor profit New York, NY 10011 ❑ Limited Partnership a. Jurisdiction in which formed: c. Name and address of registered agent in Ijurisdiction: b. Date of formation: I C] General Partnership a. Jurisdiction whose laws govern formation: b. Date of formation: ' I ❑ Individual I ❑ Other. Describe in an Exhibit. Exhibit No. N/A I 2. List the transferee/assignee, and, if the transferee/assignee is not a natural person, each of its officers, directors, stockholders beneficially holding more than 5% of the outstanding voting shares, general partners, and limited partners holding an equity interest of more than 5%. Use only one column for each individual or entity. Attach additional pages if necessary. (Read carefully-the lettered items below refer to corresponding lines in the following table.) I (a) Name, residence, occupation or principal business, and principal place of business. (If other than an individual, also show name, address and citizenship of natural person authorized to vote the voting securities of the applicant that it holds.) List the applicant first, officers, next, then directors and, thereafter, remaining stockholders and/or partners. I (b) Citizenship. (c) Relationship to the transferee/assignee(e.g., officer, director, etc.). (d) Number of shares or nature of partnership interest. I (e) Number of votes. (f) Percentage of votes. I(a)(See Attachment 1) (b) (c) (d) (e) (f) I I ICC 394(Page 3) September 1996 I I I I. a a • - o z may. ^ i >' o I V J v A ,3 '.Q .ice+ 1. V :1 co :3.'.�• r Z r�i �... .moi -r .3i I-, r. z .moi .... .... ..... > I)_ .� ,� - v - I o 0 0 ^ u j _• - � • - 3 eI j _ -fa - C� - �, - S. ? e n 0 �+ — _ : — Z rn. i:. J L r y =T 7 e- Z ..... 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C. `S O G. 3 e e p 3 T�O 0 :O Q Q O n _ O z a if C/1 �' j y j 0 i. O v 0 d Ors * '� .�- • + i n * y L L .0 T� o e o O _ C .3 Q •'v O r L t o L cO > y L o y I Q vi C/1 C O L = .1 ...3 9 3 3 O L N = J 7 I) ^ y 2 • I I, 3 .- �_ - - e o O r .- p GO. -aQ .- O s r s CI • Q > .a a r I - * • * I 3. If applicant corporation a , is fmr 0 Yes EI No I lawsthe of, or duly qualified to transaorct business limited in, the Statepartnershiporthe othertransjurisdictioneree/assigniee in whichfored the systemundethe operates? If the answer is No, explain in an Exhibit. Exhibit No. I 4 4. Has the transferee/assignee had any interest in or in connection with an applicant which has been El Yes 0 No I dismissed or denied by any franchise authority? If the answer is Yes, describe circumstances in an Exhibit. Exhibit No. 5 I 5. Has an adverse finding been made or an adverse final action been taken by any court or ® Yes 0 No administrative body with respect to the transferee/assignee in a civil, criminal or administrative proceeding, brought under the provisions of any law or regulation related to the following: any I felony; revocation, suspension or involuntary transfer of any authorization(including cable franchises)to provide video programming services; mass media related antitrust or unfair competition; fraudulent statements to another government unit; or employment discrimination? I If the answer is Yes, attach as an Exhibit a full description of the persons and matter(s) involved, Exhibit No. including an identification of any court or administrative body and any proceeding(by dates and file 6 numbers, if applicable), and the disposition of such proceeding. I 6. Are there any documents, instruments, contracts or understandings relating to ownership or futureYes 0 No ownership rights with respect to any attributable interest as described in Question 2 (including, but not limited to, non-voting stock interests, beneficial stock ownership interests, options, warrants, I debentures)? Exhibit No. If Yes, provide particulars in an Exhibit. I 7. Do documents, instruments, agreements or understandings for the pledge of stock of the ® Yes No transferee/assignee, as security for loans or contractual performance, provide that: (a) voting rights will remain with the applicant, even in the event of default on the obligation; (b) in the event of default,there will be either a private or public sale of the stock; and (c) prior to the exercise of any I ownership rights by a purchaser at a sale described in (b), any prior consent of the FCC and/or of the franchising authority, if required pursuant to federal, state or local law or pursuant to the terms of the franchise agreement will be obtained? IIf No, attach as an Exhibit a full explanation. Exhibit No. ' 7 • SECTION III.TRANSFEREE'S/ASSIGNEE'S FINANCIAL QUALIFICATIONS 111 1. The transferee/assignee certifies that it has sufficient net liquid assets on hand or available from J Yes ❑ No committed resources to consummate the transaction and operate the facilities for three months. I2. Attach as an Exhibit the most recent financial statements, prepared in accordance with generally Exhibit No. accepted accounting principles, including a balance sheet and income statement for at least one full 8 year,for the transferee/assignee or parent entity that has been prepared in the ordinary course of I business, if any such financial statements are routinely prepared. Such statements, if not otherwise publicly available, may be marked CONFIDENTIAL and will be maintained as confidential by the franchise authority and its agents to the extent permissible under local law. ISECTION IV.TRANSFEREE'S/ASSIGNEE'S TECHNICAL QUALIFICATIONS Set forth in an Exhibit a narrative account of the transferee's/assignee's technical qualifications, experience Exhibit No. I and expertise regarding cable television systems, including, but not limited to, summary information about 9 appropriate management personnel that will be involved in the system's management and operations. The transferee/assignee may, but need not, list a representative sample of cable systems currently or formerly Iowned or operated. I _ ce....,...`,e.1oca 1 IV. FINANCIAL AND TECHNICAL QUALIFICATIONS AND REVIEW OF FRANCHISE FEE COMPLIANCE — PREPARED BY CHARLES GRAMLICH A. EXECUTIVE SUMMARY INTRODUCTION The City of Shakopee, Minnesota (the "City") receives cable television service from a Franchisee, Time Warner, Inc. ("Transferor"). Transferor proposes to transfer control of its Cable Television Franchise to AOL Time Warner, Inc. ("Transferee"). The Transferee is a new entity created as a result of the Agreement and Plan of Merger ("Agreement") between America Online, Inc. and Time Warner, Inc., dated as of January 10, 2000. ' At the request of the City's legal advisor, Adrian E. Herbst, Charles Gramlich and Associates ("CGA") prepared this Report to the City to assist the City in the transfer process. The Report includes a complete review of the information regarding the financial and technical qualifications of the Transferee that was provided by the Transferee and the Transferor in the Federal Communications Commission ("FCC") Form 394. The analysis and recommendations contained in this report are meant to assist the City in deciding whether to approve or disapprove the proposed transfer of the Cable Television Franchise. SUMMARY OF FINDINGS ' Pursuant to the Cable Television Consumer Protection and Competition Act of 1992 (the "1992 Cable Act"), the City has approximately 120 days after receipt of the Form 394 to approve or disapprove of the proposed transfer of the Cable Television Franchisee. The franchising authority must evaluate the legal, technical, and financial qualifications of the proposed Transferee. The franchising authority can also review the effect of the transfer on rates and proposed changes in services. To evaluate the technical and financial qualifications of the Transferee, CGA reviewed: 1. The information provided in the Form 394. 2. Other information acquired by CGA (copies attached). The Transferee certifies the following in the Form 394: (a) Transferee has a current copy of the FCC's Rules governing cable ' television systems. 8 (b) Transferee has a current copy of the franchise that is the subject of this application, and of any applicable state laws or local ordinances and related regulations. (c) Transferee will use its best efforts to comply with the terms of the franchise and applicable state laws or local ordinances and related regulations, and to effect changes, as promptly as practicable, in ' the operation of the system, if any changes are necessary to cure any violations thereof or defaults thereunder presently in effect or ongoing. ' Based upon my review as outlined in this Report, I conclude that the Transferee, AOL Time Warner, Inc. has the financial and technical qualifications to control the ' operation of the cable television system in the City. The City may wish to consider approving the transfer of the Cable Television ' Franchise subject to certain terms and conditions. Those terms and conditions may include the obligation to comply with the FCC Customer Service Standards and the assessment of penalties if the Transferee does not comply with those Standards ' and a guarantee of the proposed Transferee. B. CURRENT FRANCHISE ' CGA has not been asked by the City or Adrian Herbst to make any determination regarding franchise compliance ' C. TECHNICAL QUALIFICATIONS OF AOL TIME WARNER. INC. ' To determine the technical qualifications of Transferee, Charles Gramlich reviewed the information provided with Form 394 and other information that was acquired by CGA (copies attached). ' In reviewingthe technicalqualifications, CGA normallyseeks to answer the following questions: ' 1. Does thero osed Transferee have experienced, qualified technical and P P P managerial staff, and sufficient personnel to run the operation? 2. What is the level of technical expertise in the proposed Transferee other ' operations? 3. How do other franchise authorities rate the proposed Transferee's ' service? Section IV of the FCC Form 394 requests a narrative account of the Transferee's technical qualifications, experience and expertise regarding I cable television systems, including, but not limited to, summary information about appropriate management personnel that will be involved in the system's management and operations. ' According to information supplied by Transferee in the FCC Form 394: Time Warner Cable is the cable management arm of Time Warner, Inc., and will continue as such for AOL lime Warner, Inc. As more fully described in Exhibit 8, Time Warner, Inc. SEC Form 10-K for the fiscal year ended December 31, 1998 at 1-3-4, 1-22-32, Time Warner Cable and its affiliates own or manage cable systems serving a total of approximately 12.6 million cable subscribers, geographically concentrated in 35 groupings of more than 100,000 subscribers each. Time Warner Cable is one of the largest and most experienced ' multiple system cable operators in the United States. Through all Time Warner cable systems draw on the expertise ' of the Corporate staff, we recognize that providing a quality product and good customer service must be accomplished locally. The subject system will be managed by experienced and qualified personnel at the local level. The office and technical staff who are now responsible for the management and operations of the franchise will continue to operate as heretofore. The Time Warner related entity that holds the cable franchise ' for your community will remain in existence and will continue to be the franchise holder and operator of your system, just as before. We are aware of no instance in which an application by Time Warner Cable or its affiliates for renewal of a cable television franchise has been finally denied. Sometimes, during the transfer process, CGA surveys franchising authorities ' of the proposed Transferee. CGA did not do a survey in preparation of this report. CGA was not asked to survey other franchising authorities that have a cable television franchise agreement with the Transferee or Time Warner Cable. According to the FCC Form 394 Time Warner Cable will continue to be , responsible for the cable television system in the City, and office and technical staff who are now responsible for the management and operations of the franchise will continue to operate as heretofore. Therefore, not much 10 is changing in term of the technical operations of the cable television system in the City because of this proposed franchise transfer. Evidentially, the local or corporate management personnel directly responsible for the operation of the cable television system in the City is not changing as a result of the Agreement and requested franchise transfer. ' Further information regarding Time Warner Cable is available on the Internet. Attached to this Report is some of that information. Based upon my review as outlined in this Report, I conclude that the proposed Transferee has the technical qualifications to control of the operation the cable television system in the City. ' D. FINANCIAL QUALIFICATIONS OF AOL TIME WARNER. INC. ' Section III-1 of Form 394 requests that the Transferee certify that it has sufficient net liquid assets on hand or available from committed resources to consummate the transaction and operate the system for three months. ' Transferee answered yes to that question. Section III-2 of Form 394 requests that the Transferee attach as an exhibit the most recent financial statements, prepared in accordance with generally accepted accounting principles, including balance sheet and income statement for at least one full year, for the proposed transferee or parent ' entity. Transferee submitted with FCC Form 394 the most recent SEC Form 10-K and SEC Form 10-Q, as submitted to the Securities and Exchange Commission by each of Time Warner, Inc. and America Online, Inc., as well ' as the respective Annual Reports of each. The Form 394 requests no other information regarding the proposed ' transferee's financial qualifications. To determine the technical qualifications of Transferee, Charles Gramlich ' reviewed the information provided with Form 394, and other information that was acquired by CGA (copies attached). ' In reviewing the financial qualifications of Transferees, CGA normally looks for information on the following factors: ' 1. All financing documents particularly those that identify the type and amount of debt and the debt to subscriber and debt to cash flow ratios. ' 2. The current and historical audited financial statements of the transferee. 1 ' 11 3. Filings with the Securities and Exchange Commission ("SEC"). ' 4. Financial pro forma for the transferee and the system. Many of the companies that operate cable television systems also own other assets. One way to measure the financial qualifications of a proposed Transferee is to compare its financial performance in the operation of its cable television systems to other companies that operate cable television systems. The most common operating ratios, which are used to get an understanding of a company's financial profile in the cable industry, are: 1. Cash Flow Margin - Cash Flow/Revenues; and, ' 2. Debt-to-Cash Flow Ratio - Adjusted Total Debt (defined as total debt adjusted for certain credits, for certain debt and preferred U instruments)/Cash Flow. It is not unusual in the cable television industry for companies to have a net , loss. In most cases the net loss is due to large amounts of amortization and depreciation expense that are not cash items, and large amounts of interest expense, which is cause by the debt levels of the companies. Most cable television systems and cable television companies are valued based on a multiple of Cash Flow. Cash Flow being defined as - Earnings ' Before Interest Taxes Depreciation Amortization ("EBITDA"). According to the financial information referenced above, Time Warner ' Cable's Cash Flow Margin and Debt-to-Cash Flow Ratio are within industry standards. America Online, Inc. does not currently own or operate cable television systems. However, according to information provided in the FCC Form 394, specifically America Online Inc.'s 1999 Annual Report: • America Online's brands include AOL service, Netscape, CompuServe, ICQ, Digital City and MovieFone. • Revenues reached $4.8 billion, a 55% increase over the previous fiscal year. ' • Net Income increased from $59 million to $396 million. • EBITDA increased from $302 million to $968 million. 12 I Io • Advertising, commerce and other revenues climbed 84% to $1 billion Iwith a backlog of committed revenues of$1.5 billion. • AOL was introduced in Australia, and is being launched in Latin IAmerica and Hong Kong in FY 2000. Provide below is a summary of America Online Inc. company performance I ' for the last three years. (In millions unless otherwise noted) Year Ended June 30 I 1999 1998 1997 Total Revenues $4,777 $3,091 $2,197 Operating Income $ 578 $ 66 $ 6 I Net Income $ 396 $ 59 $ 10 Earnings per Share $ .034 $ 0.06 $ 0.01 EBITDA $ 968 $ 302 $ 111 I AOL Members (in thousands) 17,619 12,535 8,636 Employees (in whole numbers) 12,100 8,500 7,400 I The growth and financial strength of America Online Inc. as illustrated above is substantial. I The "merger" of this company, America Online Inc., with Time Warner, Inc., which among many other things is the largest or second largest (depending on how you count subscribers) cable television operator in the USA should produce a new entity, AOL Time Warner, Inc., the proposed Transferee, that is very financially sound and certainly qualified to operate the cable television system in the City. I Based m upon review as outlined in this Report, I conclude that the P Y proposed Transferee has the financial qualifications to control the operation Iof the cable television system in the City. E. CONCLUSIONS ICURRENT FRANCHISE ICGA has not been asked by the City to make any determination regarding Franchise compliance. ITECHNICAL QUALIFICATIONS I Based upon my review as outlined in this Report, I conclude that the proposed Transferee, AOL Time Warner, Inc., has the technical qualifications to control the operation of the cable television system in the I City. I13 I FINANCIAL QUALIFICATIONS Based upon my review as outlined in this Report, I conclude that the proposed Transferee, AOL Time Warner, Inc. has the financial qualifications to control the operation of the cable television system in the City. V. CONCLUSIONS AND RECOMMENDATIONS A. AOL TIME WARNER'S QUALIFICATIONS 1. Legal Qualifications Based on the information furnished to the City, we conclude there is no reason to believe AOL Time Warner, Inc. is not legally qualified. 2. Technical Qualifications Charles Gramlich's review of AOL Time Warner provided information regarding the technical expertise of AOL Time Warner and information, concluded the change in ownership will not adversely affect the operation of the cable system in Shakopee. 3. Financial Qualifications A. Charles Gramlich reviewed Form 394, which contained ' financial information regarding AOL Time Warner. Based on his review of information submitted, Charles Gramlich concluded AOL Time Warner has the financial qualifications to operate the cable system. B. Charles Gramlich prepared a separate report regarding I payment of franchise fees by TWI and concluded franchise fee payments have been in compliance with the Franchise. B. IMPACT ON SERVICE AND RATES AOL Time Warner does not have present plans to change the services or rate structure in Shakopee. Therefore, subscribers will probably not experience a negative impact from the transfer. , C. RECOMMENDATIONS The City may adopt a Resolution, including at least the following. We ' have provided a draft for your review: 14 1. The provisions of the Franchise between the City and TWI, when transferred to AOL Time Warner, and based on the written acceptance by AOL Time Warner shall remain in full force and effect 2. The City will provide written notice to TWI and AOL Time Warner, ' after adoption of Resolution, Exhibit A, including a request for written acknowledgement and acceptance by AOL Time Warner of the terms of the Resolution. ' 3. Further, approval should be conditioned upon the representations to the City by TWI and AOL Time Warner, that the transfer will not have an adverse impact on the operation of the local cable television system, including any impact on rates. ' 4. Approval of the transfer must ensure that AOL Time Warner will be responsible for carrying out the existing and future financial and technical obligations in the Franchise, should AOL Time Warner ' create a local subsidiary and, under those circumstances, the City should require a performance guarantee from AOL Time Warner. ' 5. The City may wish to incorporate other terms to a Resolution to ensure compliance with the Franchise and resolution of all outstanding issues. 1 1 1 i 1 15 I Exhibit A ' Resolution, Notice, and Acceptance i 1 1 1 1 i 1 RESOLUTION NO. ' A RESOLUTION OF CITY OF SHAKOPEE APPROVING THE TRANSFER OF THE CABLE COMMUNICATIONS FRANCHISE WHEREAS, Time Warner, Inc. ("Franchisee") is duly authorized to operate and maintain a cable communications system in Shakopee, Minnesota (the "System") by City of Shakopee ("City") pursuant to a franchise (the "Franchise") granted by the City; and WHEREAS, pursuant to the Merger Agreement between Franchisee and AOL Time Warner, Inc. ("AOL Time Warner"). AOL Time Warner will become the owner of ' the cable system owned and operated by Franchisee, including the cable system serving the City, subject to approval by the City of a transfer of the Franchise; and I WHEREAS, FCC Form 394 with respect to the Transactions has been filed with y; and ' WHEREAS, the parties have requested consent by the City of Shakopee to the Transactions; and ' WHEREAS, after review of FCC Form 394, and evaluation of a report prepared by consultants for the City, the City Council of the City of Shakopee, consents to the Transaction subject to the written acceptance, on the form included as an attachment to this Resolution, Notice and Acceptance, and their filing the acceptance with the City Clerk on or before the closing of the Transaction between Franchisee and AOL Time Warner. The acceptance is part of this Resolution and attached hereto. ' NOW, THEREFORE, BE IT RESOLVED AS FOLLOWS: SECTION 1. The City Council of the City of Shakopee hereby consents to and approves the Transactions subject to execution of the attached written acceptance by AOL Time Warner and execution of the Acceptance on or before the date of closing between Franchisee and AOL Time Warner. ' SECTION 2. The Franchise Authority hereby consents to and approves the assignment, mortgage, pledge, or other encumbrance, if any, of the Franchise, the Systems, or assets relating thereto, as collateral for a loan. ' SECTION 3. This Resolution shall be deemed effective in accordance with applicable law, and upon receipt of written acceptance. ' SECTION 4. The City Clerk shall mail the attached Notice and Acceptance to Franchisee and AOL Time Warner the next day after passage of this Resolution. 1 I I PASSED, ADOPTED, AND APPROVED this day of , 2000. I By: I ATTEST: I Clerk I I I I I I I I I I I I I I [CitY Letterhead] Kim Roden Vice President of Public Affairs AOL Time Warner, Inc. 801 Plymouth Avenue North Minneapolis, MN 55411 Re: Notice of Resolution Approval Transfer of Control (Shakopee, Minnesota) ' Dear Ms. Roden: Attached to this letter is a copy of the Resolution adopted by the City Council of ' the City of Shakopee on the day of , 2000. Please note the requirement that AOL Time Warner provide written acknowledgement of the terms and conditions of the Resolution and furnish written acknowledgement by signing the below ' Acceptance and filing with the City Clerk, Attention: at . The Acceptance must be filed with the City Clerk on or before , 2000, as required by the Resolution, to ensure that the ' Resolution adopted by the City shall be effective. If you have any questions regarding the Resolution or the requirements of your ' acknowledgement and acceptance, kindly contact Mark McNeill, City Administrator, 129 Holmes Street South, Shakopee, Minnesota 55379, telephone (952) 496-9662. Sincerely, [City Representative] 1 1 1 ACCEPTANCE: , AOL Time Warner, Inc. ("AOL Time Warner"), provides the following acceptance: ' A. AOL Time Warner agrees to the requirements contained in the City's Resolution No. approving the transfer of ownership and to the existing Franchise held by Time Warner, Inc. AOL Time Warner has read and understands the terms of this Franchise and the Resolution, including the following: , 1. AOL Time Warner will comply with the customer service standards of the FCC. ' 2. AOL Time Warner will provide at minimum the same quality of customer service that TWI is currently providing, but in all events no less than the quality of service required by the Franchise and FCC regulations. 3. AOL Time Warner will not make changes in the location of its offices servicing subscribers in the area or significant changes in the staffing of those facilities without the prior written approval of the City, which will not unreasonably be withheld. 4. AOL Time Warner acknowledges that the transfer, the consent U process, the City's Resolution granting consent, and this Acceptance Agreement do not provide any basis for increasing the amounts paid by subscribers through cost pass-through as , so-called "external costs" or a new franchise requirements and the consent process, Resolution, and this Agreement do not provide any basis for increasing the amounts paid by subscribers in any other manner. 5. AOL Time Warner will become a signator to the Franchise and has ' delivered to the City with this Acceptance, an executed copy of the Franchise, together with a company resolution authorizing this acceptance and execution of the Franchise. 6. AOL Time Warner will provide to the City a performance Guarantee to ensure full performance of all the terms of the Franchise by a subsidiary created by it to operate the cable system in Shakopee. B. AOL Time Warner agrees that, as of the closing of the transfer, they will ' be bound by the Franchise and will timely and fully perform all of the duties and obligations thereunder. 1 C. AOL Time Warner agrees that, as of the closing of the transfer, they will be able to provide, and agree to provide to the City and subscribers within the City, all services set forth in the Franchise, and agrees to the recommendations of the City Consultants. ' D. AOL Time Warner acknowledge that the City does not waive its right to receive compliance with any provisions of the Franchise relating to past or future performance of any obligations in the Franchise. E. AOL Time Warner agrees that, as of closing of the transfer, they will be ' subject to lawful regulatory authority of the City as set forth in the Franchise. F. AOL Time Warner represents and warrants as follows: 1. AOL Time Warner has the legal, technical, and financial ability to operate and maintain the cable system serving City of Shakopee pursuant to the terms of the Franchise. ' 2. On the date of the closing of the transfer, AOL Time Warner will be qualified to conduct business in Minnesota and has authority necessary to fully perform all of the duties and obligations of the ' Franchise. 3. AOL Time Warner will take all actions necessary to authorize the ' execution and delivery of this Acceptance and to perform all obligations and duties under the Franchise. ' G. AOL Time Warner agrees that all representation, warrantees, and agreements contained herein and in the Franchise, shall be binding upon ' its lawful successors and assigns. H. AOL Time Warner agrees to provide the following within 30 days after the ' closing of the transfer of control. 1. A copy of the written instrument evidencing the transfer of control of the Franchise; 2. Evidence of its authority to conduct business in Minnesota. ' 3. This written Acceptance. 4. A signed copy of the Franchise with a company resolution authorizing the signing of this Acceptance and the Franchise on behalf of AOL Time Warner. I I Dated: AOL TIME WARNER, INC. By: Its: I I I I I I I I I I I I I I I 1 ' APPENDIX 1. Notice of Public Hearing 2. Written Questions of Shakopee Cable Communications Advisory Commission. ' 3. Minutes of Shakopee Cable Communications Advisory Commission Meeting of 29th day of March, 2000. 4. Articles and News Information NOTICE OF PUBLIC HEARING ' Notice is thereby given that on May 16, 2000, the City Council for the City of Shakopee, Minnesota will conduct a public hearing at the City Council Chambers at the City Hall for the City of Shakopee at 129 South Holmes Street, Shakopee, Minnesota. The public hearing will commence on or after 7:00 p.m. The public hearing relates to a change of a controlling interest of the cable television system franchise from Time Warner, Inc., d/b/a Time Warner Cable, to AOL Time Warner, Inc. At the public hearing, the City Council will receive a report furnished to it the Shakopee Cable Communications Advisory Commission for the City, reviewing information furnished to the City relating to the change in control of ownership of the cable system and the operation of the cable system in the City of Shakopee. The report was prepared by consultants for the City, reviewed by the Shakopee Cable Communications Advisory Commission, and is based upon information furnished by Time Warner, Inc. and AOL Time Warner, Inc. through a filing based on a form of the Federal Communications Commission, Form 394, which provides the legal, technical, and financial qualifications of AOL Time Warner, Inc. The filing of AOL Time Warner, Inc. and the 394 Form together with the report that will be considered by the City Council are available for inspection in the City Hall in the City Administrator's Office during regular business hours. This Notice will be published according to the regular procedures of the City prior to a public hearing before the City Council. Publication will be made on the 4th day of May, 2000. 1 By: Mark McNeill, City Administrator City of Shakopee, Minnesota ' 1 • 1 111 THE BALLER HERBST LAW GROUP, P.C. A PROFESSIONAL CORPORATION 953E GRAIN EXCHANGE BUILDING 400 SOUTH FOURTH STREET MINNEAPOLIS,MINNESOTA 55415-1413 (612)339-2026 ' FAX:(612)339-4789 ADRIAN E.HERBST WASHINGTON,D.C.OFFICE: (612)339-2018 1820 JEFFERSON PLACE,N.W,SUITE 200 aberbssdballer.com WASHINGTON,D.0 20036-2507 ' March 24, 2000 VIA E-MAIL mmcneill(a,ci.shakoaee.mn.us Mark McNeill City Administrator City of Shakopee 129 South Holmes Street Shakopee, MN 55379 Dear Mark: Please find an attachment that provides some preliminary questions that may be asked by the ' Cable Commission at the upcoming meeting with Kim Roden and representatives from AOL/Time Warner. Call me if you have any questions. Certainly, if you or members of the Committee have additional questions that you believe should be added, I am sure that will be helpful. Otherwise, it will undoubtedly result during the meeting in ideas and suggestions from the presentation by Kim Roden that ' would result in additional questions. Very truly yours, achacut E.Media ' Adrian E. Herbst AEH/dnd Attachment L-Mark McNeill(Preliminary Questions)(3-24-00) i SHAKOPEE CABLE ADVISORY COMMISSION PUBLIC INFORMATIONAL MEETING Shakopee CityHall P Wednesday, March 29, 2000 7:00 p.m. The following is intended to provide some preliminary questions that the Cable Advisory Commission is requesting AOL/Time Warner to address at the upcoming meeting. The intent is to enable members of the Commission, as well as any members of the public who may be present, to understand more fully the nature of the change and what the potential impact will be as a result of it. Further, inasmuch as the City is currently involved in the renewal of its franchise with AOL/Time Warner, it will be important to understand whether or not that process is affected in any way as a result of this change. At least the following questions should be addressed: 1. What is the effect of this transfer on the pending renewal process? 2. Does the transfer or change result in a change in the construction or rebuild of the cable system contemplated to occur this spring and summer? 3. Will the franchisee be the same or different as a result of this change? 4. Can you briefly describe what the organizational structure is after the change occurs? the franchisee have the same authority 5. Will and will it be funded to secure the operation and the performance of the franchise differently after the change than it was before? 6. Will the local organization and management change as a result of this transfer to AOL? 7. Will services, rates, and charges be affected by the transfer to AOL? 8. Considerable national debate is occurring relating to open access to the interne. Inasmuch as AOL was a supporter of the position of Portland, Oregon in the litigation, will it be supporting an open access requirement in the franchise and ensuring that competing internes service providers have the ability to connect to the cable system modem? 9. What will be the closing date between AOL and Time Warner? 1 1 ' 10. Have issues been raised that are pending before the Federal Communications Commission or other government agencies that may have an affect on the change of control in ownership to AOL? 11. Has AOL announced any policies, procedures, or practices that may affect the operation of the cable system in Shakopee? 12. Will you describe, as best as you can, the nature of the change in control and any matters that might not otherwise be addressed as a result of the questions outlined above? It is likely that at the Cable Advisory Commission meeting answers or comments relating to each of the above questions will result in additional questions. The Cable Advisory Commission looks forward to meeting with Time Warner and AOL representatives to have a better understanding of the change in control and what the impact might be on the subscribers in the City of Shakopee as a result of the change. Thank you for your cooperation and assistance. t LII 1 : ' SHAKOPEE CABLE COMMUNICATIONS ADVISORY COMMISSION REGULAR MEETING MARCH 29, 2000 1. Convene ' Chair Patricia Langdon called the meeting to order at 7:00 p.m. 2. Roll Call Those present were: Bill Anderson, Ken Scannell,Larry Moonen,and Patricia Langdon. Also present were Mark McNeill, City Administrator and Kim Roden,Vice President for ' Public Affairs and Customer Service for Time Warner. 3. Approval of the Agenda Anderson/Moonen moved to approve the agenda. Motion carried unanimously. 4. Approval of the Minutes of March 1,2000 ' Scannell/Moonen moved to approve the February 2, 2000, minutes. Motion carried unanimously with Ken Scannell abstaining. 5. Special Item of Business Public Information Presentation to Consider the Proposed Assignment of Transfer of Control of Shakopee Cable Television Franchise,from Time Warner Inc.to Time Warner/AOL Mark McNeill introduced this item. Time Warner sent a letter dated February 2, 2000, informing the City that Time Warner was going to merge with American Online and this would result in a new company. A FCC Form 394 accompanied this letter. Adrian Herbst has requested that Kim Roden attend the March 29th meeting of the Cable Commission and address the impact this merger would have on the present customers in Shakopee. The public hearing regarding the impact of this transfer of ownership will be May 16, 2000 at the City Council meeting. There has been a notice on Channel 34 of the proposed change of ownership. Kim Roden, Vice President of Public Affairs and Customer Service for Time Warner, addressed the Cable Commission regarding the transfer of ownership. She said that this is simply a change of control. According to her, there would be no negative impact on the local customers; everything was positive that would result from this transfer;no management and organizational changes are anticipated at this time because of the transfer; all franchise agreements will be honored. ' Time Warner is anxious to get the rebuild done as soon as possible. With the transfer of ownership,Time Warner will be able to offer more choices. There will also be open access to the Internet for customers. This transfer of ownership is proposed to be done sometime in 2001. According to Herbst,the City has 120 days to act on this transfer of ownership. He said the City has the option to deny change of control to the new parent company, Time Warner/AOL, if the City feels the franchise obligations cannot be met. I 1 Roden said the Cable Company will be run basically as before but now there will be greater resources for the customers. This transfer of ownership will have no impact on ' cable pricing. This is a debt free transfer,therefore, there well be no fee increases to the customers, she said. ' Larry Moonen inquired as to how this transfer of ownership would affect the customer service that people are receiving. Ms. Roden replied that customer service staff is being ' added. Time Warner has added the Road Runner as a separate entity of Time Warner/AOL, and staff is being added to this line. The Road Runner is a high speed on line service. There still are some bugs in the system,but hopefully by the time this service ' gets to Shakopee most of the bugs will be worked out, she said. There will be no analog changes at this time. Ken Scannell questioned Ms. Roden on the upgrading. The upgrading is achieved through a rebuild of the cable system and by adding channels to the cable system. Ms. Roden said some tiers to the channel selection will be added, because of digital tiers. On the digital channels there will be many more options. They will provide good competition to the 18" dish. The quality will be much better, there will be many more choices, and the digital box will be far superior to the analog. There will be the basic tier, an analog tier, and a ' digital tier. Bill Anderson was concerned about the security of the access to the Internet from Time Warner/AOL. He questioned if any security controls were built into the Network. Kim Roden responded that a separate security package will be sold. Their customers will be ' educated in security safeguards. Time Warner/AOL are concerned about the privacy rules, security procedures and they will try to do more. As a cable company, Time Warner/AOL have very stringent rules regarding privacy rules. This will always be worked on. Roden said that Time Warner/AOL will be fair in the way they negotiate contracts. Any item offered over a cable channel is considered to be cable and is subject to the franchise fee which the City receives. After the upgrade was completed in other neighboring cities there were very few complaints. Mark McNeill addressed the issue of the I-NET. Kim Roden said to get the plan to her quickly, because once Shakopee's upgrade is designed and built, problems can arise if anything else is requested. She wanted to be clear and fair up front. Telephone may be added at some time, according to Ms. Roden. ' Ken Scannell asked Kim Roden when she saw Shakopee being finished with the upgrade. Kim replied, she saw Shakopee being done with the rebuild upgrade in the third quarter of 2000. The cut over of cable services will happen in the third quarter. Mark McNeill said Adrian Herbst recommended that a recommendation be made to the City Council prior to the to the City Council May 16, 2000 meeting. 1 2 moved to recommend that thispublic hearing be continued to the May ' Anderson/Scannell 16, 2000,meetingCity of the Council. Motion carried unanimously. 6. Communications A] Letter from Time Warner dated March 1,2000 re: Restructuring of Premium Services/Packages This was a letter informing the City how the premium services/packages will be restructured and how current and new customers will be notified of the new premium services/packages. B] Letter from Time Warner dated March 2,2000 re: Knowledge TV discontinued Roden said this was not Time Warner's decision. It was the decision of the parent company of the cable channel. The channel will no longer exist in its present form. No new channel has been selected as of this date. CJ Letter from Time Warner dated March 6,2000 re: Basic Signal Leakage This was a letter informing the City that Time Warner had Martech Engineering do the required testing for the signal report that Time Warner is filing with the Federal Communications Commission and all the samples were within specifications. DI Letter from Time Warner dated March 10,2000 re: National Cable 111 Television Association Seal of Customer Service Excellence This was a letter to the City informing them that Time Warner again received the award for the sixth time. Kim Roden commented that this award is very ' important to them. This award means that customer service has been found to have been met or exceeded. They have received this award six out the seven years. 7. Old Business A] Quote to Provide Property Coverage for SCAC Mark McNeill received a quote from the League of Minnesota Cities and Corporate Trust to insure property coverage for SCAC. The insured properties have a value of$150,000 with a premium of$2,261. B] Revised Franchise Agreement/Access Support Agreement 3 Year Cable Capital Equipment List The above mentioned documents are now in their final form. These documents can be sent to Kim Roden at Time Warner. Bill Anderson did provide some ' additional changes to the Access Support Agreement. Scannell/Moonen moved to adopt the changes in the Access Support Agreement ' as present by Bill Anderson. Motion carried unanimously. 3 I 8. New Business There was no new business. 9. Other Business ' There was no other business 10. Adjourn Monnen/Scannell moved to adjourn to May 3,2000. t Carole Hedlund Recording Secretary 1 1 I 4 AOL, Time Warner Merge Page 1 of 2 I Just how MESMERIZING can a channel be? if 0 a ;_ �a.:: ter :: - . Home Daily Update for January 10, 2000: Weekly Preview DTop Stories AOL, Time Warner Merge Search The Archive I DThrough The Wire DProgramming New York -- In a stunning deal that Steve I DPay Per View Case said would shake up old-media and new- DMarketing search Tins Dlntemational media valuations, America Online Inc. and DOp-Ed Time Warner Inc. said Monday that they will I merge. Broadband Week DTop Stories The deal helps cable and programming Top Stories I Industry powerhouse Time Warner-- the nation's AOL.Time Warner Merge DEvents largest MSO, with a pro forma 13 million DPeople subscribers -- to execute an Internet strategy. Senate Hearing Planned I Associations AOL buys more content and a pathway to AOL Time Warner Open Operators broadband access for its 22 million dial-up Networks customers. ' DVendors Deal Could Affect lobbying Services AOL chairman Case said he thought the deal Cable Stocks Boosted DSubscribe could help to move the huge differences in I DAdvertise market valuations assigned to Internet and Dish Names Nets DEditorial Calendar media companies. Such disparities doomed Cosby to Kick Off Benefit DCustomer Service last year's attempt by USA Networks Inc. to I DMasthead DContact Us 0 buy Lycos Inc. with stock. CTAM Names Agency DFeedback Underscoring the differences, Time Warner's SBC Messes with Texas I share price soared,rising$28.38 to $93.13 MORE» per share in afternoon trading, while AOL was down 75 cents to $75. I Case will be the chairman of the combined AOL Time Warner Inc., Time Warner I chairman Gerald Levin will be CEO and Time Warner vice chairman Ted Turner--who owns 9 percent of Time Warner and backed I the deal-- will retain his current role. Time Warner president Richard Parsons and AOL president Bob Pittman will be co-chief I operating officers. AOL shareholders will own about 55 percent I of the new company,with Time Warner stockholders getting 45 percent. I http://www.multichannel.com/daily/ld.shtml 01/10/2000 I APR-27-2000 15:25 FROM:BALLER HERBST LAW 6123394789 TO:612 445 6718 P.002'917 IIs AOL Paying Too Much for Time Warner?by James Surowiecki Page 1 of 4 I I II wrw.slate.cow r 41110kLikfillear L - - CONTENTS SECTIONS gotomsn.com IC Slate' ► New Today 1► Complete tniefing v ' features v 24/seven v 1 utilltles v I ,i , , - . • -- MSN Investor Ticker IL cu►rentfy Is AOL Paying Too Much for Time Is AOL Paying Too Warner? Much for Time Warner? By: James Surowiecki I Posted Monday, Jan. 10,2000,at 3:24 p.m. More on the AOI- t E-Mail This Article Time Warner Deal M> n Up tot Free E-Mail Auto-Delivery IWeekend Cocktail The most telling--and remarkable-line in all the reams Chatter (virtual and real) of commentary and analysis already written I about America Online's$184 billion acquisition of Time Why High Interest Warner was this one, by Justin Lahart of TheStrect.com: Rates Are_Bad for "The high price that AOL is willing to pay for Time Warner Stocks, I How CNBC suggests that media companies can carry much higher valuations." Exacerbates Swings.rice Now,whether it really suggests that at all is an interesting ' Swings question, which we'll get to in a minute. But the important thing about this line is the way it illuminates just how More Moneybox dramatic the ship in power inthe media world has been over the past three to four years,and how real certain of these supposedly inflated Internet valuations have become. Because in Lahart's formulation, it's not Time Warner that's I TODAY IN SLATE validating AOL's business by merging with it. On the contrary, it's AOL that has that power of validation,not just I Did AOL Pay Too for Time Warner but apparently for the entire world of Much? offline media. By acquiring Time Warner,AOL seems to be saying, "Content still does matter. There is a market for more You're Avoidingtraditional forms of journalism and entertainment This is a I the Ouest/on. nice thing for"content providers"to hear.But what's Senator. So What? awesome--in that old sense of the word--is that it took AOL Ito TV Club:AMOb say it for the market to believe it. Expert Si es up From this perspective, what's really impressive about the deal The Sopranos is that it's an all-stock acquisition(aside from Time Warner's I debt,which AOL will assume). In other words,this Who Stole Hafez http://www.slatc.com/Code/Moneybox/Moneybox.asp?Show=1/10/00&:idMessage=4344 01/10/2000 P.0 APR-27-2000 15:25 FROM:BALLER HERBST LAW 6123394789 TO:612 445 6718 Page 2 oi'03/017 Is:AOL Paying Too Much for Time Warner?by James Surowiecki agI gssaa_s urine? performing is being done with a currency that old-media I types always used to slag as "debased"or"over-inflated." MSN links But neither Time Warner's management nor the market T� 'isce2,ais02 seems to have any problem with that. As Gerald Levin, Time ' Warner's CEO and the prospective CEO of the new O`4"'k love Dog's company, put it, "We think 45 percent of AOL Time Warner [which is how mu ch Time Warner shareholders will get in the new company] is worth more than 100 percent of Time Warner." And since Time Warner's shares ended the day up about 40 percent, investors do,too. Internet money,it I seems, is now real money. AN INFORMED I LOOK AT That is, as it happens, how it should be. Although there are NEWS plenty of Net stocks whose shares are overinflated just don't POLITICS ask me which Net stocks--AOL is not one of them. The CULTURE company is generating huge amounts of free cash flow every I year, its return on invested capital is only going to risc in the future, its subscriber growth remains startling,and switching costs for Internet subscribers are actually higher than people I ._ imagine. If Time Warner was worth$83 billion at the end of last week(which the market said it was), AOL was probably worth the$161 billion at which the market was valuing it. I If you think that last sentence is pure madness, then the rest of this will seem equally nutty. But for the sake of argument, I let's say that AOL really is worth what the market says it's worth. If it is,then the obvious question is: If AOL was twice as valuable as Time Warner on Friday, why is its I management making a deal on Monday that treats it as only 1.2 times as valuable as Time Warner? I There are two answers. The first is that Steve Case and Bob Pittman really think their stock is overvalued,and that this is I their chance to acquire some assets with real value before the Internet bubble bursts. But I don't believe they think this at all(and you know Jerry Levin is hoping they don't). The I second, obviously,is that they believe the combination of AOL's assets with Time Warner's--both its content (magazines, publishing,TV,movies,and music) and its cable I lines—will create more value than the two companies would have created had they remained apart. In other words, they think there actually will be real synergy between the two sets I of assets. Synergy is the great will-o'-the-wisp of mergers,and I although I think there's a plausible case that some real value will be created because of this deal than otherwise would have been (click here for some thoughts on this issue), the I only question that matters is whether that value will be equal http://www.slate.com/Code/Moneybox/Moneybox.asp?Shown=1/10/00&idMessage--4344 01/10/2000 I Is AOL Paying Too Much for Time Warner? by James Surowiecki Page 3 of 4 I to the premium AOL is paying for Time Warner's shares. And given that AOL's shares actually fell almost 4 percent today, the market's initial answer is that it won't. Right now, I the market thinks AOL overpaid--as acquirers almost always do—for Time Warner. I Let's be clear about what it would mean if the market's right. It wouldn't mean that AOL Time Warner won't become the most powerful media company in the world. It wouldn't I mean that the company won't be incredibly profitable in the future. It wouldn't even mean that AOL Time Warner isn't going to create lots of shareholder value in the future. What I it would mean is that the difference between the value AOL Time Warner will create and the value AOL would have I created on its own(and that includes whatever return it could get on the $184 billion it's shelling out) will be less than what AOL just paid for Time Warner. IThe problem, of course, is that no one keeps track of these things, and a decade from now, when AOL Time Warner has 200 million global Intemet/cable TV/wireless subscribers and Ia market cap of$700 billion, it's going to be hard to say the deal was a mistake, even if it was. But before we jump to the I conclusion that this deal means that other media companies are worth a lot more than we thought they were, it's worth remembering that if the stock market has been valuing Time Warner and other media companies at X--and has been Ivaluing them that way for a while, since Time Warner's share price essentially didn't move in 1999--and AOL comes along and says Time Warner is actually worth almost 2X, our Idefault assumption should not be that media stocks have been undervalued. Steve Case and Bob Pittman are, no I doubt about it, brilliant guys. But if you want to know what CBS and Disney are really worth,you're better off trusting the market than trusting them. I Join The Fray 8 What did you think of this article? I POST A '1ESSA3.E REaC MESSAGES I4 PREVIOUS TOP NEXT I Got a thought for Moneybox? Drop a line to moneybox@Slatecom. I Ihttp://www.slate.com/Code/Moneybox/hioneybox.asp?Show=1/10/00&idMessage=4344 01/10/2000 AOL Corporate Page 1 of 3 I 1Q libbeialla P .s ors istraiklaANSIER 410.101 nIa 'on 174We '''..T-n-r. 11=1'. r Who We Are .,.„. ,t;•;, • .'!4't •Our Breeds AO`' Who We Are 1 CompuServe Digital City , �� Founded in 1985, America Online, Inc., based in Dulles, Virginia, is the world's leader in interactive services, Web brands, Internet iPlanet technologies, and e-commerce services. America Online, Inc. operates: Moviefone two worldwide Internet services, America Online, with more than 22 Netscape I million members, and CompuServe, with more than 2.5 million Spinner members; several leading Internet brands including ICQ, AOL ant 1 Who's Who Messenger and Digital City, Inc.; the Netscape Netcenter and I AOL.COM portals; and the Netscape Navigator and Communicator •Data Points browsers; and AOL MovieFone, the nation's largest movie listing guide and ticketing service. Through its strategic alliance with Sun •Thn•Una I Microsystems, the Company develops and offers businesses operating •Public Polky in the Net Economy easy-to-deploy, end-to-end e-commerce and enterprise solutions under the alliance iPlanet brand. Under Chairman I, •Our Partners and CEO Steve Case and Chief Operating Officer Bob Pittman, America Online -- the world's first $4.7-billion multi-brand new media company -- has taken a leadership role in developing the new I interactive medium and will continue to do so into the future. "AOL Anywhere" i AOL Anywhere(sm) is AOL's strategy to make AOL's industry-leading interactive brands, services and features available to consumers across a I range of products and devices. Through"AOL Anywhere," AOL's members, online consumers of its other Web brands, and millions of other consumers will be able to access popular AOL features whenever I and wherever they need them- from the Web, and when using their television, Internet-ready phones, handheld computers, and other personal wireless devices. I AOL's valuable and consumer-friendly features available through "AOL Anywhere" will include AOL E-Mail, AOL Instant Messenger(sm), as 111 well customized news; financial information and stock quotes; movie information; driving directions; localised entertainment information and more. I Interactive Services Group I The Interactive Services Group operates the AOL and CompuServe services and their related brand and product extensions;Netscape Netcenter; and the Netscape Navigator and Communicator browsers. I ` http://corp.aol.com/whoweare.html? 04/13/2000 R-27-2000 15:26 FROM:BALLER HERBST LAW 6123394789 T0:612 445 6718 P:006/017 iir AOL Corporate IThis group also includes broadband development, AOL Devices like AOL-TV,and Integrity Assurance. I --Barry Schuler is President of the Interactive Services Group.Mayo, Stuntz. Jr., serves as Chief Operating Officer of this group, reporting to IBarry. —Jonathan Sacks is Senior Vice President and General Manager of the AOL service, Audrey Weil is Senior Vice President and General I Manager of the CompuServe service,and Tm Martin is Senior Vice President and General Manager of Netscape Netcenter. IInteractive Properties I The Interactive Properties Group's mission is to continue to seek out opportunities to build or acquire branded properties that operate across multiple services or platforms. it oversees ICQ,Digital City, AQL Mov_iefone, and Spinner. --Ted Leonsis is the President of this group. --Donn Davis is the group's Chief Operating Officer. IThe Netscape Enterprise Group The Netscape Enterprise Group serves Netscape's enterprise customers I and contributes to America Online's part of the alliance with Sun. In combination with dedicated resources from Sun, the Netscape Enterprise Group operates our strategic e-commerce alliance. I -- Our strategic alliance with Sun gives us an opportunity to deliver what no one else can right now: End-to-end solutions- from hardware I to software to audiences-to help companies put their businesses online. With nearly every company in the world realizing that they need develop an Internet operation, the potential for this alliance is huge. Ito This group is led by Senior Vice President Steve Savignano. IAOL International As the interactive medium becomes a global mass-market phenomenon, I America Online and it's international brands are leading the way. AOL International, headed by Michael Lynton, operates the AOL and I CompuServe branded Internet online services in 14 countries and in seven languages. Their non-U.S. membership has surpassed 3.2 million, making AOL the#1 global Internet online service. In addition, AOL International has launched Netscape Online, as subscription-free I service,to meet the needs of the "value" market segment in the United Kingdom. ICQ,the world's#1 and fastest-growing communications Ihttp://corp.aoLcom/whoweare.html? 04/13/2000 AOL Corporate Page 3 of 3 portal, is America Online's biggest international brand. More than two- thirds of[CQ's 53.1 million registrants live outside the United States. I Strategic Partners ' World-class strategic partners are central to the growth and success of � AOL International. They include: I Bertelsmann AG: The world's third largest media company, 50% partner in the venture with America Online, Bertelsmann is a joint the AOL, CompuServe and Netscape Online services in which operates p P Europe, and the AOL Australia service. Other Local European Partners: Local partners in Europe also include Cegetel, the leading private telecommunications operator in France, and European television and giant Canal+. ' The Cisneros Group of Companies: One of the premier media, entertainment and telecommunications organizations in Ibero-Latin ' America, Cisneros and AOL are 50/50 join venture partners in AOL Latin America. Later this year, we will launch AOL Brazil --the first AOL Latin American service--with additional launches expected in Mexico and Argentina in 2000. Royal Bank: Canada's leading financial institution with a premier I global financial services group is AOL's most recent joint venture partner. Royal Bank has a 20% equity stake in operating AOL Canada, Inc. Mitsui & Co.,Ltd. and Nihon Keizai Shimbun (Nikkei): Established in 1876, Mitsui is one of the world's largest and most successful global trading companies. Nikkei is the primary business information source for top corporate executives and decision-makers in Japan and is known worldwide for the Nikkei stock index. Mitsui owns 40% of AOL Japan, and Nikkei owns 10%of AOL Japan. China.com: China.com and AOL launched a Chinese and English ' language AOL service in Hong Kong in 1999. Back to top I t • http://corp.aol.com/whoweare.html? 04/13/2000 1 1 AOL Corporate Page 1 of 9 I I i"...;•• viari Nan Immo ailughilainlise Aat issardugao stwrito ....7"^-r. T.7-env ; AO1_.'� Ful l l)i,,10 Investors w4 •Press,FAQ's le Mil.stoa.s I Press Releases FAQs AMERICA ONLINE POSTS RECORD EARNINGS Timeline I Subscribers COMPANY'S FY2000 THIRD QUARTER INCOME, Materials Request FULLY TAXED AND EXCLUDING ONE-TIME GAINS, ' RISE•Stock Information S 161% TO $271 MILLION, OR$0.11 PER SHARE Stock Q&A's Historical Prices Consolidated Revenues Increase 47% to S1.8 Billion; Stock Splits Advertising, Commerce & Other Revenues •ACL Time Warne More Than Double to $557 Million Merg.r Information I Press Release FAQsAOL Service Adds 1.7 Million New Members for Total of 22.2 Million •AOL Latin America I Information EBITDA Climbs 120% to $492 Million Press Release FAQ's I •Financials Financial Q&A's View the Financial Statements Latest Release I Financial Statements Annual Reports SEC Filings DULLES, VA, April 18, 2000 -- America Online, Inc. (NYSE: •Financial Community AOL) today announced record results for the third quarter of fiscal I Analysts 2000, ended March 31, 2000 --reaching new highs for consolidated Largest Stockholders revenues. advertising and commerce revenues, operating income, and I •Archives EBITDA . Fact Book 1999 Cvberstudy The quarter's net income, fully taxed and excluding one-time items, PresentationsNewsletotaled $271 million, or$0.11 per diluted share. up from$104 million, ' Conferenceters or$0.04 per diluted share, on the same basis last year. The Company Conference Calls reported net income of$438 million, or$0.17 per diluted share, up I from$411 million, or $0.16 per diluted share, in fiscal 1999's third quarter. Reported net income included one-time gains from the sale of investments totaling $275 million this quarter and $567 million in last I year's third quarter. The year-ago quarter also includes one-time charges of$103 million. Excluding these items. operating income for the quarter climbed more than 155% over the year-ago quarter to I $383 million. Third quarter revenues rose to $1.8 billion, or 47% over last year's I March quarter. Advertising, commerce and other revenues climbed 103% over fiscal 1999's third quarter to $557 million- marking a Ihttp://www.corp.aol.com/earningspress.html? 04/19/2000 AOL Corporate Page 2 of 9 record $120 million increase, or 27%, over this year's second quarter. The AOL service added 1.7 million new members worldwide, and finished the quarter with 22.2 million subscribers. During the quarter, the CompuServe 2000 service added 373,000 members, bringing the combined CompuServe 2000 and CompuServe Classic membership to 2.7 million. Gateway.net added more than 100,000 subscribers for a worldwide total of more than 850,000.In total, the Company added 2.0 million new subscribers worldwide and ended with 25.8 million subscribers of its family of interactive services. Steve Case, Chairman and Chief Executive Officer, said: "This quarter's results underscore the tremendous strength of America Online's operations, and demonstrate that we are on a clear path to continued strong growth and increased profitability. Since we announced our landmark merger with Time Warner, we haven't missed a beat." 111 Mr. Case added: "At the same time, we have taken major strides to expand our success by leading the Internet's next wave of growth. Specifically, we are fast turning the great promise of'AOL Anywhere' into reality, we've launched breakthrough Netscape browser technology to enrich the Internet experience, and we are actively ' building the medium in key markets around the world. In short, our results highlight just how strong America Online is today, and how well-positioned it is for the future." Bob Pittman. President and Chief Operating Officer, said: "This quarter is an excellent example of how America Online is uniquely positioned in the Internet industry. We have built an unmatched collection of interactive brands,which will be further enhanced by the Time Warner merger, and we have an unparalleled connection to consumers. We're taking online advertising and commerce to new heights,yet we've barely scratched the surface in terms of the impact our medium can have." Mr. Pittman added: "Looking to the future, we are rolling out our 'AOL Anywhere' strategy on multiple fronts - from wireless to broadband content, Internet appliances to AOL TV - delivering even more value and convenience to our members. We have stepped up 111our international expansion, with AOL Europe growing at a record pace and several Latin American launches planned over the next year. With Netscape 6 and the Gecko technology, we are driving the Internet experience to multiple devices and stimulating a new generation of Web-based applications for the PC and other devices. All these initiatives will help ensure that we make the most of Time Warner's assets, and our transition team is already working to identify the most promising opportunities." http://www.corp.aol.com/earningspress.htmi? 04/19/2000 AOL Corporate Page 3 of 9 For the nine-month period ending March 31, 2000, fully taxed net income, excluding one-time items, was$679 million and total ' revenues were $4.9 billion, compared to fully taxed net income, on a comparable basis, of$240 million and total revenues of$3.4 billion in the corresponding period of fiscal 1999. ' Key operating metrics from the quarter included: ' **Subscription Revenues: Quarterly subscription revenues reached $1.15 billion, up 33%, from$869 million during fiscal 1999's corresponding quarter. ' **Advertising, Commerce and Other Revenues: Revenues from advertising, commerce and other revenues climbed to $557 million - ' an increase of 103% from$275 million during the year-ago quarter, and an increase of 27%, or a record$120 million, over this year's second quarter. **Backlog: The Company brought its consolidated backlog of advertising and commerce revenue to more than$2.7 billion at the ' end of the quarter, up from$2.4 billion on December 31, 1999. **AOL Member Usage: AOL members averaged 64 minutes daily ' online during the quarter, an increase of 16% over last year's third quarter. ' **Sales and Marketing Expenses: Consolidated sales and marketing expenses declined to 14.5% of revenues, compared with 17.4% in ' fiscal 1999's third quarter. **Operating Income: Operating income grew 155% to $383 million, ' or 20.9% of revenue, up from 12.0%, excluding one-time charges, a year ago. ' **EBITDA: EBITDA rose to a record$492 million for the quarter, a 120% increase over a year ago, with EBITDA margins at 27%. AOL Time Warner Merger Update Working closely together in anticipation of their merger, America Online and Time Warner this quarter launched a number of cross- promotional agreements involving their world-class brands. These joint initiatives include: Record-setting Warner Music downloads through America Online's Winamp and Spinner; Time Inc.'s Real Simple magazine signing up a record 27,000 subscribers in ' just five weeks through promotion on the AOL service; AOL Keywords appearing on the covers of Time, Fortune, Money, People, ' http://www.corp.aol.com/earningspress.html? 04/19/2000 AOL Corporate Page 4 of 9 Entertainment Weekly, Real Simple and Teen People -- reaching 88 million readers; CNN Interactive becoming the premier news partner for Netcenter and ICQ; and Warner Bros. movies and Entertainment Weekly being featured on AOL MovieFone. The companies also announced a Memorandum of Understanding that sets out a framework for "open access" agreements to offer the AOL service and other ISPs over Time Warner's broadband cable systems. The Companies expect to close the merger in the fall. u Hi Interactive Services Group Highlights ghts During the quarter, the Company advanced its "AOL Anywhere" strategy through a number of key initiatives: • AOL Wireless: In the US, America Online announced seven major agreements with a range of wireless carriers and device manufacturers - including Sprint PCS, Nokia, Motorola, Research in Motion,BellSouth Wireless Data, RTS Wireless and Arch Communications - to deliver popular AOL features and services to millions of wireless consumers. The Company also announced the new "AOL Mobile Messenger" service, which will offer wireless access to AOL's e-mail and AOL Instant Messenger (AIM) applications over personal, mobile paging devices. To lead this wireless initiative, America Online named former FCC Chairman and CEO of Time Warner Telecommunications, Dennis Patrick, President of AOL Wireless. . AOL/Gateway Internet Appliances: At Spring Internet World 2000 earlier this month, the Company unveiled the groundbreaking AOL/Gateway family of special»ed Internet appliances - AOL Gateway countertop appliance, wireless Web pad and desktop appliance - that will extend the "AOL Anywhere" strategy. Using Netscape's Gecko browser engine technology and the Linux operating system, these appliances with the "Instant AOL" feature - which automatically launches the service as soon as the device is switched on - will make AOL's content, features and services conveniently available to consumers in every room of their homes. • AOL TV: The AOL TV service is scheduled to begin shipping in June. AOL TV will provide state-of-the-art navigational services, a new genre of interactive programming and a new marketing platform--taking full advantage of Time Warner properties. • AOL Plus Broadband Content: This month, AOL Plus http://www.corp.aol.com/earningspress.html? 04/19/2000 tAOL Corporate Page 5 of 9 I launched to deliver rich multimedia content and features, such as streaming audio and video, to AOL members using AOL 5.0 over any high-speed connection- TCP/IP, DSL, cable or 111 satellite - while still enabling them to access regular AOL 5.0 content when using narrowband connections. I Extending its advertising and commerce leadership, the Company announced a series of significant advertising/commerce alliances this I quarter with such market leaders as General Motors, American Airlines, Sears, Kinko's, Footlocker.com, Oxygen Media, and PurchasePro.com. UAmong the newest AOL member benefits is AOL AAdvantage - the world's largest online customer loyalty program- scheduled to launch this summer in partnership with American Airlines through America IOnline's digital marketing service DMS -to provide members more ways to earn miles and redeem them. In addition, the Company launched its AOL Insider Savings Club, an exclusive new program Uthat enables members to save money on a wide range of popular goods and services. IIn addition, the Company's other interactive brands enjoyed substantial growth and made themselves even more valuable. ISince its launch just over a year ago, CompuServe 2000 has continued its strong momentum in the value segment, adding 373,000 new members in the quarter for a total of nearly 1.4 million members Iworldwide. Average member daily usage also achieved an all-time high during the quarter. IDuring the quarter, the Netscape Netcenter service surpassed 28 million registered users worldwide, more than doubling its total over a I year ago. And Time Warner's CNN Interactive became the premier news partner for Netcenter. I This month,Netscape announced the preview release of its next- generation Netscape 6 Internet browser and communications software suite, powered by the innovative Netscape Gecko browser engine. I The new browser enhances the consumer experience by integrating popular communication and information services in a faster, more flexible and easier to use format.A s announced in March, IBM, Intel, I Liberate, NetObjects,Nokia, Red Hat and Sun Microsystems will use Gecko technology to extend the convenience and power of the Web a wide range of Internet devices. Ito This quarter, AOL Instant Messenger and AOL's Buddy List service added 21 million registrants for a worldwide total of 91 million. Last I week, the Company launched its next-generation AOL Instant Messenger, AIM 4.0, featuring AIM Talk, which enables online voice I ress.html? 04/19/2000 http://www.corp.aol.com/earningsp AOL Corporate age o 1 communication between AIM users, and Instant Images, which allows users to exchange images and sounds. Interactive Properties Group Highlights ICQ, already the world's largest online communications community and the biggest international service, continued to add an average of more than 100,000 registered users daily- adding a total of 9.3 million during the quarter to finish with 62.4 million registered users. Over the quarter, peak simultaneous users of ICQ climbed from 1.2 million to 1.4 million. The average user kept ICQ on the desktop for nearly three hours, actively using it 75 minutes each day. Next week, ICQ will launch its newest version, ICQ 2000A, that will offer enhanced community features, improved navigation and user interface, and the capability of operating in the workplace. In addition. DMS partnered with Netcentives, a leading developer of e-marketing infrastructure software and services, to bring "ICQ ClickRewards" - a rewards program for ICQ users. During the quarter, Digital City continued to widen its lead in the fast-growing local online market. Digital City launched its new version of the service - Digital City 2000 -which sets the gold standard in consumer convenience and compelling services for both local residents and visitors. Tomorrow, Digital City will complete its expansion from 60 markets to more than 200 markets to create the first "local everywhere" coast- to-coast network. Advancing the "AOL Anywhere" strategy, Digital City also announced the planned launch of Digital City Wireless to deliver the service's most popular features to wireless phones, pagers and other handheld devices. Finally, Digital City posted record growth in local advertising and e-commerce with more than 2,000 partners. With the Internet music market exploding, the Company's Web music brands, Winamp and Spinner, continued to record strong growth in users.Winamp remains the#1 favorite music player and ranked#2 - behind#1 ICQ - in 1999 downloads on Download.com. Together, Winamp and Spinner reach a total of 10 million unique users each month. Duringthe quarter, Spinner, Winamp and Warner Music's Elektra ' Entertainment Group partnered to deliver secure downloads from The Cure's latest album, "The Last Days of Summer." In just a month, there were 58,000 downloads—the most licenses ever issued for a digital song in a one-month period. In addition, Spinner and Winamp are promoting such Warner Music artists as Madonna and Faith Hill http://www.corp.aol.com/earningspress.html? 04/19/2000 1 AOL Corporate Page 7 of 9 I with featured downloads of their popular singles as well as artist- created music channels. I In addition, Winamp and Spinner partnered with Myplay, Inc., the first online digital music service to provide their users with a virtual "locker" that allows them access to their music collections anytime, Ianywhere. AOL MovieFone, the nation's largest movie listing guide and ticketing Iservice, attracts about 20% of all moviegoers through both its 777- FILM phone service and the MovieFone.com Web site. IAOL MovieFone announced several new services during the quarter- including the ability to print bar-coded movie tickets at home to avoid lines at the theater, and the AOL MovieFone/American Express Iindustry-wide frequent moviegoer program. I AOL International Group Highlights During the quarter, AOL International's membership in its AOL and CompuServe services increased by 434,000 to a total of 4.4 Imillion.Extending its standing as Europe's leading multinational Internet provider, AOL Europe's AOL and CompuServe services reached nearly 3.5 million members with record growth in the UK, I Germany and France. In addition, registered users of the subscription- free Netscape Online service in the UK increased to 519,000. IUnderscoring the Company's commitment to global expansion, America Online announced in March an agreement with Bertelsmann I AG to restructure their interests in the AOL Europe and AOL Australia joint ventures. At the option of either company after January 31, 2002, America Online would acquire Bertelsmann's interest in I AOL Europe. America Online and Bertelsmann also launched a new $250 million, four-year strategic global alliance to expand the availability of Bertelsmann's leading media content and e-commerce Iproperties over America Online interactive brands. Following the Bertelsmann agreement, America Online formed a I 50/50 joint venture with AAPT Limited, Australia's third largest telecommunications company, to operate AOL Australia's interactive services and to develop a fully integrated Internet portal to deliver I AOL-branded content services to Australia's emerging consumer wireless market. I AOL Europe extended the Company's "AOL Anywhere" strategy with key wireless agreements with Nokia, Ericsson and RTS Wireless ensure its mobile portals are compatible with current SMS and Ito WAP protocols and handsets, as well as next-generation General Packet Radio Service. Ihttp://www.corp.aol.com/earningspress.html? 04/19/2000 APR-27-2000 15:27 FROM:BALLER HERBST LAW 6123394789 TO:612 445 6718 145 P.,008/017 AOL Corporate I Netscape Enterprise Highlights Third quarter revenues for Netscape Enterprise--including software I licenses and services-grew 8%sequentially to $126 million. Of that total,revenues from international licenses more than doubled to $47 million. During the quarter, the Sun-Netscape Alliance- under the"Owlet E- Commerce Solutions" brand-launched a global initiative to solidify I its position as the world's largest and broadest supplier of e- commerce software. I The Alliance announced new agreements, valued over one-million dollars each,with twenty-three companies and governmental adgeehncies I worldwide, including CentreComm,Xerox, Telestra, Eplus Department of Defense. The Alliance also launched new strategic partnerships with: I • Palm., Inc. to provide global wireless access to enterprise I applications and services via Palm OS handheld computers; • Red Hat Linux to add iPlanet Messaging Server and iPlanet I Web Server to the portfolio of products available on Linux; and • GE Global eXchange Services,a division of General Electric, I to incorporate their RMS data transformation technology into iPlanet ECXpert software. I The Company's earnings conference call can be heard lived n the Internet via AOL.COM at 5:00 p.m EDT on Tuesday,Ap I listen to the call, visit hitt ?:'Acww•corp.ad com/investors.shtml?or AOL Keyword: IR. About America Online Inc. I Founded in 1985, America Online,Inc.,based in Dulles,Virginia, is I the world's leader in interactive services, Web brands,Internet technologies,and e-commerce services. America Online,Inc. operates: two worldwide Internet services, America Online,with I more than 22 million members, and CompuServe, with more than 2.7 million members;several leading Internet brands including ICQ,AOL Instant Messenger and Digital City,Inc.;the Netscape Netcenter nteand and AOL.COM portals;Netscape 6 and the Netscape Navigator Communicator browsers;AOL MovieFone,the nation's#1 movie listing guide and ticketing service;and Spinner.com and Null$oft's I Winamp, leaders in Internet music. Through its strategic alliance with http://www.corp.aoLcomiearningspress.html? 04/19/2000 I AOL Corporate Page 9 of 9 ISun Microsystems, the company develops and offers easy-to-deploy, end-to-end e-commerce and enterprise solutions for companies Ioperating in the Net Economy. This release contains forward-looking statements within the meaning I of the "safe harbor"provisions of the Private Securities Litigation Reform Act of 1995.These statements are based on management's current expectations or beliefs and are subject to a number offactors and uncertainties that could cause actual results to differ materially Ifrom those described in the forward-looking statements.The forward- looking statements in this release address the following subjects:future financial and operating results; the proposed IAOL/Time Warner merger; subscriber, usage and commerce growth; new markets, products, services,features and content; timing and benefits of acquisitions and other alliances; and availability, Ibenefits, and timing of deployment, of new access and distribution technologies. IThe following factors, among others, could cause actual results to differ materially from those described in the forward-looking I statements:inability to obtain, or meet conditions imposed for, governmental approvals for the merger;failure of the AOL or Time Warner stockholders to approve the merger; the risk that the AOL I and Time Warner businesses will not be integrated successfully; costs related to the merger; inability to further identify, develop and achieve commercial success for new products and services and I access and distribution technologies; increased competition and its effects on pricing, spending, third party relationships, the subscriber base and revenues; inability to establish and maintain relationships I with commerce, advertising, marketing, technology and content providers; risk of accepting warrants in certain agreements; risks of new and changing regulation in the U.S. and internationally. IFor a detailed discussion of these and other cautionary statements, please refer to the Company's filings with the Securities and I Exchange Commission, especially in the "Forward-Looking Statements"section of the Management's Discussion and Analysis section of the Company's Form 10-K for the fiscal year ended June I 30, 1999 and the Risk Factors section of the Company's S-3 filing that became effective in November 1999. I ## # Ii!l1 t H ,m- II Ihttp://www.corp.aol.com/earningspress.html? 04/19/2000 APR-27-2000 15:27 FROM:BALLER HERBST LAW 6123394789 TO:612 445 671.8 P.009/017 I h1J I r c•rP°r sir Tisie. fanner Inc:75 Roa xfciler Pleas New York.NY 101/1,11d 21At466:111 I For Immediate Release I TIME WARNER BUSINESSES REPORT RECORD FIRST QUARTER —Normalized EBITA Growth was 13%for First Quarter— I —Normalized Revenue Growth was 8%for First Quarter- -Normalized EPS for First Quarter Improves to$.05— I—Cable Networks, Publishing, Filmed Entertainment and Cable Post Record First Quarters— ' NEW YORK, April 12, 2000--Time Warner Inc. (Time Warner, NYSE:TWX) reported operating income before amortization of intangible assets (EBITA) of$1.171 billion on revenues of$6.549 billion for the first I quarter of 2000. In the first quarter of 1999. EBITA was$1241 billion on revenues of$6.091 billion. EBITA grew 13%for the first quarter when normalized for certain Items described e cribedi bed baelow sis. Cable cting e comparability of operating results. Revenue grew 8%for the quarter on111Networks, Publishing, Filmed Entertainment and Cable all posted record operating results for the quarter. Below are EBITA results for the first quarter on both an actual and normalized basis (in millions): I FIRST QUARTER I Actual(1) Normalized Ill 2 1999 1999 Cable Networks 5364 $ 309 $ 364 $ 109 117 94 117 i Music Publishing 80 89 80 89 Music Filmed Entertainment 194 375 194 160 I Broadcasting—The WB Network (31) (41) (31) (41 Cable 485 8 Intersegment Elimination (8) 412 _L1 —22 1.201 1,241 1.173 1,038 I EBITA Before Digital Media (301 +_ Digital Media TOTAL EBITA _ 71 1614241 Llagl Ll. I (1) The comparability of the operating results for publishing,filmed entertainmery and cable has been affected by certain I transactions and nonrecurring items,as described more fully In the discussion of divisional results. in order to enhance comparability,normalized results have been preserved that exclude the effects from such transactions and nonrecurring items. as well as digital media activities. In addition,effective on January 1,2000.management reclassilled Time Warner's share of the operating results of Columbia House.a 50%-owned equity investee.from Its music division 10 Interest and other.net. Accordingly.music operating results for 1999 have been reclassified to conform to the 2000 presentation. I IPR-27-20130 15:27 FROM:BALLER HERBST LAW 6123394789 TO:612 445 6718 P.010/017 Time Warner's First-Quarter Earnings 2000, page 2-- III Commenting on the company's performance. Time Warner's Chairman and CEO Gerald M. Levin said,"I I am pleased with our record operating results and strong EBITA growth rate of 13%for the first quarter of 2000.which puts us on an early track for another record-breaking year. We remain focused on delivering impressive quarterly results, coupled with realizing all the opportunities presented by our pending merger I with AOL. In the three months following our agreement to merge with AOL.we have collaborated on dozens of commercial relationships. This has set the tone for the creation of a vibrant and fast-growing company, a world leader in content,communications and commerce." IFor the first quarter. basic net income per common share, when normalized to exclude the aggregate effect of the nonrecurring items,(1)was$.05 in 2000, compared to breakeven in 1999. On a reported basis.Time Warner had a first-quarter net loss of$.08 per common share in 2000. compared to net income of$.10 per common share during the same period in 1999, I CABLE NETWORKS First-quarter EBITA for the Cable Networks division was a record S364 million, up 18%, versus $309 million a year earlier. The Turner Cable Networks' 20% EBITA growth resulted from 23% revenue Igrowth led by strong gains in both subscription and advertising revenues, partially offset by lower results at World Championship Wrestling. HBO's 15% EBITA growth reflects increased subscription revenues I for HBO and Cinemax. TBS Superstation and Turner Network Television (TNT) ended the first quarter with seven of the 10 highest-rated theatrical motion pictures on basic cable. Cartoon Network posted its best-ever first quarter in prime-time ratings and delivery among households, kids 2-11 and kids 6-11. HBO also won six George Foster Peabody Awards, including one for the hit original series The Sopranos. PUBLISHING I First-quarter EBITA for Time Inc. was a record of$117 million, up 14%, versus$103 million on a normalized basis for the comparable 1999 period. The 1999 reported results of$94 million included losses from Time Inc.'s Book-of-the-Month Club,which was deconsolidated in 2000 after being I contributed to a joint venture with Bertelsmann's Doubleday Direct book dub business during the quarter. The first quarter was Time Inc.'s 26th straight quarter of year-over-year EBITA growth.Contributing to the results were double-digit advertising revenue gains. led by Fortune, In Style and Entertainment Weekly. ITime Inc.'s results included a gain of approximately$30 million related to the partial sale of its stake in Martha Stewart Living Omnimedia. This gain did not affect operating trends as it was more than offset by the combination of startup costs associated with the launch of several new magazines, severance costs Irelated to certain restructuring efforts. including Life magazine, and an investment gain recognized in the comparative period in 1999, New magazine launches in the quarter included Real Simple, Sports IIllustrated For Women, In Style Australia and Time Large Print Edition. i (1) The comparability of Time Warner's Income(loss)per common share is affected by certain significant and nonrecurring Items recognized In each period. For 2000.these Items Include$2B million of gains relating to the sale or exchange of cable television systems and investments.a noncash charge of$220 million that reduced the carrying value of Time Warner's Interest in Columbia House and one-time transaction costs of 546 million relating to the America Ordine-Time Warner merger. For 1999.significant and nonrecurring items Include a$215 million net gain from the early termination of a long-term video Idistribution agreement. I I APR-27-2000 15:29 FROM:BALLER HERBST LAW 6123394789 T0:612 445 6718 P.011'817 Time Warner's First-Quarter Earnings 2000, page 3— I MUSIC in the first quarter I Warner Music Group posted first-quarter EBITA of$80 million, compared to$89 million of 1999. The results reflect a decline in domestic recorded music partially offset by DVD manufacturing I profits. Top sellers for the quarter include Kdk, Red Dan,Hot Chili 7ihe Next Best Peppers, soundtrack. Geraldlanis Levert, Morissette. Cher. Faith Hill,Tracy Chapman. Steely Eric Clapton.Tim McGraw, Drama and Pantera. Warner Music Group labels and artists won 20 Grammy I Awards in February. FILMED ENTERTAINMENT I First-quarter EBITA for Filmed Entertainment was an operating record of$194 million, up 21%, versus $160 million on a normalized basis for the comparable 1999 period. The 1999 reported results of $375 million included a net pretax gain of approximately$215 million recognized in connection with the I early termination and settlement of a long-term video distribution agreement. The current quarter's results benefited from improvements in Warner Bros.'home video and television businesses and TBS's film library operations, partially offset by lower results from Warner Bros.'consumer products operations. I First-quarter theatrical revenues benefited from the domestic box-office success of Warner Bros.' The Green Mile($136 million to date) and The Whole Nine Yards(S57 million to date). In home video, DVD revenues grew over 75% led by The Matrix, Eyes Wide Shut and Pokdmon. I BROADCASTING--THE WB NETWORK I The WB Television Network posted a loss of$31 million in the quarter. an improvement of 24% over the loss of$41 million a year ago. The results reflect higher broadcast revenues, as well as reduced start-up costs for The WB Network 100+ Station Group. On a season-to-date basis, the Kids'WBI weekend line- up continues to be the number one network as compared to its broadcast and cable competition. CABLE ' In the first quarter.Time Warner Cable posted record EBITA of$485 million, up from$403 million a year ago. EBITA grew 13%when normalized for the effects of certain transactions, including net pretax gains of$28 million recognized in 2000,relating to the sale or exchange of cable television systems and I investments. The cable division's strong double-digit growth reflects significant increases in revenues from basic cable, deployment of digital and high-speed Internet services and advertising. At the end of the quarter, Time Warner Cable had approximately 613.000 digital video subscribers, representing more I than 40%growth compared to year-end 1999. Time Warner Cable also added approximately 117,000 high-speed Internet customers during the quarter. up 35%compared to year-end 1999, resulting in 447,000 total customers at the end of the quarter. Time Warner Cable serves approximately 12.7 million 111 and passes 20.7 million homes. which is over 20% of total U.S.television households. DIGITAL MEDIA Time Warner Digital Media posted a loss of$30 million, reflecting start-up activities associated with the company's digital media businesses. Time Warner Inc. (NYSE:TWX,www.timewarner.com) is the world's leading media company. Its businesses include cable networks, publishing, music, filmed entertainment. cable and digital media. I I The Wall Street Journal [nteractive Edition Page 2 of 2 I Messrs. Case and Levin expressed hope that other cable companies would follow their example. I Opening Time Warner's cable systems to multiple ISPs "has to be very good policy," said Mr. Levin. "I'd like my colleagues in the cable industry to join me." Over the past year, AOL has been spearheading a campaign pushing for a government-mandated open-access policy. But the Time Warner deal and t AOL's revised position that there was no need for government regulation on the - ''=s . ' issue raised questions about its commitment to open access and about online - ;-. , rivals' ability to access cable's fat pipelines that can provide consumers with - I superfast access to voice, video, data and other services. L Open-access proponents responded positivelyto the memo. "We feel this is a .'_ I P P P P _:< huge leap forward," said Greg Simon, co-director of the OpenNet Coalition, a pro-open-access lobbying group that was organized by AOL and represents -i ISPs and some Baby Bells. "This is not an agreement to have just three or four �. .-= partners on their network. This is an agreement for everyone who wants to Gerald Levin 1 strike commercial relations with them." However, while the memo says the combined AOL Time Warner won't place any "fined limit" on the I number of ISPs it will accommodate, how many ISPs it will ultimately sign deals with and how soon it can do so will be contingent on technological limitations. It also remains unclear how the company will I ensure a diverse choice of small and large Internet concerns for consumers, as the memo promises. Write to Kathy Chen at kathy.chen@wsj.com4 and Nick Wingfield at nick.wi-ngfield@a,wsj.com5 I URL for this Article: II http://interactive.wsj.co /arci`:e/rotrteve cgi'lid=SE95183363727v`7e136 dim Hyperlinks in this Article: I(1) http://interactive.wsj.com/archive/retrieve.cgi?id=S8951794224907262201.htm (2) http://interactive.wsj.com/archive/retrieve.cgi?id=SB951745227584331870.djm (3) httpJlinteractive.wsj.corn/arch ive/retrieve.cgi?id=5887'512940512C63500.djm 1 (4) mailto:kathy.chen@wsj.com I(5) mailto:nick.wingfield@wsj.com Copyright C)2000 Dow Jones&Company,Inc.All Rights Reserved. I Printing,distribution.and use of this material is governed by your Subscription Agreement and copyright laws. For information about subscribing,go to http://wsj.com I Close Window I i I I http://interactive.ws.../retrieve.cgi?id=SB95 1833637873276136.djm&template=printing.tmp 03/01/2000 I The Wall street Journal Interactive Edition Page 1 of 2 I Sponsored By: savin. —Aa DOCUMENT OMIT ISOLUTIONS March 1,2000 ITech.Center IAmerica Online, Time Warner Vow To Give Rivals Access Via Cable Lines IBy KATHY CHEN and NICK WINGFIELD Staff Reporters of THE WALL STREET JOURNAL IWASHINGTON -- America Online Inc. and Time Warner Inc. vowed to open their systems after their merger is completed to both rival Internet companies and programmers. saying the move makes for smart business policy. Testifying Tuesday before the Senate Judiciary Committee, AOL's chief I executive, Steve Case, and Time Warner's chairman. Gerald Levin. sought to allay concerns over the deal's potential impact on everything from the independence of the media to access for content providers. They also II expounded on a memorandum of understanding unveiled by the companies f: ':.ti; earlier in the day that pledges to open Time Warner's cable lines to multiple ' W Internet-service providers, including allowing them to offer video-streaming and 1 . '` Internet-telephone services over Time Warner networks. • ``.i-• Although some senators and critics noted that the memo was vague and not Ilegally binding, the announcement generally won positive reactions. That could Steve Case help smooth the way for the merger as it undergoes review by the Federal Trade Commission and the Federal Communications Commission. IFCC Chairman William Kennard hailed the announcement. "I commend America Online and Time Warner for their leadership," he said. Scott Cleland, a telecommunications analyst at Legg Mason IPrecursor Group in Washington. said. "This makes the merger approval much. much easier." The anncum:�mera could also put pressure on AT&T Corp. and other I , Icable companies to strike similar agreements, or could serve as a model for a o Open Cable Lines cable concerns considering opening their networks to other ISPs. I think it to Other ISPs in Move to does a pretty goodjob of articulating the principles of open access,"said Curb Concerns I Charles Brewer. chairman of EarthLink Inc., an Atlanta ISP. 2AOL Forges Several He said it was "more complete" than an open-access agreement signed in ''fiances to Major I December by AT&T, which has acquired several cable companies, and Wireless Carriers MindSpring Enterprises Inc.;a company Mr. Brewer formerly headed thatI . 3Company Profile: is now merged with EarthLink. But he cautioned that the "devil really is in America Online I the detaiis." such as how the companies will price their services for ISPs. http:.'interactive.w s....'retrieve.cgi?id=SB951833637873_76136.djm&template=printing.tmp 03/01/2000 1 ;PR-27-2000 15:30 FROM:BALLER HERBST LAW 6123394789 10:61.2 445 6718 P.016/017 I Note 5: Columbia House Investment Write-Down l to In July Time announced videl an pe��of Columbia with Corporation Hou a with CDNOW, Inc. CDNOW"l mergea I their jointly owned music and the receipt of music and video e-commerce company. Since that time, the parties had been pursuing regulatory approvals. While awaiting these approvals, the March 13th termination date In the merger agreement was reached. and the parties terminated the agreement Accordingly, the merger will not occur. I Time Warner is continuing to evaluate strategic alternatives for Columbia House's operations. Those alternatives are focused primarily on ways to improve Columbia House's declining operating performance. and other I onlineinitiatives, joint ventures strategic Management believes trafegies are important to achieve a turnaround n Colubouse's operating performance and to position it for long-term growth in a highly competitive and rapidly changing business environment. I With the termination of the CONOW merger in March 2000, the risk associated with the timely execution of s these strategies and the transformation has conclumbia uded that�the declinse's e inl usiness mbia House'Ito s busrinesline one s s going ao increased. As a result, managementI continue through the near term. Aa such,carryingleWarner recorded a $220 million va ue of its investment in Columbia House to an estimate of as the first quarter of 2000 to reduce fair value. The charge has been included in interest and other, net, in the accompanying consolidated statement of operations. I Note 6: Income Taxes I e of me Warner is The relationship n betweenfincome beforeiother financial statement expensme taxes and income tax es that areinot deductible forrincomd e the amortization of goodwill and cert tax purposes. I Note 7: Income (Loss) per Common Share Basic income (loss) oer common share is based upon the net income (loss) applicable to common shares I after rdDi to inc income r comand mon shareon the 'adjusts for the effect ofnted average of un convures ertibleysecu securities,the period. Diluted income (loss) p options and other potentially dilutive financial instruments only in the periods in which such effect would have been dilutive. Note 8: Comparability of Income (Loss) per Common Share As described more ?ully above, income (loss) per common share has been affected eby approximatelyainn significant, I nonrecurring items recognized in 2000 and 1999.Those items consist of(i) pretaxgains million in 2000 relating to the sale or exchange millions inrelating te �onththe write-down investments.stems and eWarner's i) a noncash pretax charge of approximately approximately3215 million in I 1999 carrying value °earlf its y terminationent nand settlement of a Columbia House, (log-terma net ,home retax gviideof distribution ageement and (iv) one-time relating to iyI transaction costs of approximately items mr the firstOqu quarter relatings to decrease basic and diluted net merger. The aggregate net effect income per common share by $.13 in 2000 and to increase basic and diluted net income per common share by 5.10 in 1999. I I I I APR-27-2000 15:28 FROM:BALLER HERBST LAW 6123394789 TQ:612 445 6718 P.013/017 I TIME WARNER INC. CONSOUDATED STATEMENT OF OPERATIONS BY BUSINESS SEGMENT (In millions;unaudited) I Three Months Ended Marek 31. 1999 I Revenues: 11.586 (1.364 939 974 Musk Cable Networks g19 936 Publishingn' 1,917 1,697 880 102 79 Cable' Filmed Entertainment 1,,47 1.296 Broadcasting-The W9 Network 24 Intersegment elimination 6,091 I Digi Before Digital Media 6.547 2 Digital Mea dia Total revenues 206111 IfiaLL I Business segment operating income before S 340 depreciation and amortization{^EBITDA:I $ 397 113 Cable Networks 136 Pu Music 100 106 Music 216 Filmed Entertainment'" (98 405585) Broadcasting-The'NB Network 698 I Cab1e"' _S81 12 Intersegment elimination 1,512 1,508 EBITDA Before Digital Media X29 20 I Digital Media g-52.0 Total EBITDA I Business segment operating income before S 364 S 309 amortization ("EBITAl: 94 Cable Networks 117 I publishing'" 80 89 Music 1 g4 375 Filmed Entertainment`" {37) (41) Broadcasting-The WB Network (31 441 111 Cable'" 485 _03 Intersegment elimination 1,201 1,241 �t?4� EBITA Before Digital Meeia 30 Digital Media Total EBITA i ----_. (1) The comparability of the a eratin results for publishing, filmed entertainment and cable has been affected by p 9 certain transactions and nonrecurring items.See accompanying notes. II I I 1 1PR-27-2000 15:28 FROM:8Al_L.ER hERBST LAW 6123394789 T0:612 445 6718 P.012'017 in 2000, page 4— 1 Time Warner's Firs-Qum*Earnings ,don Concerning fa"xd'Loo ing Statements nener Wilde die meaning of Me Private S M 9er� dots and ars namely stmt to uncenalnly and Thisn Ream,Act of document includes aro atements�an management's current eerpucra ns eonra�herein deo to in economic,business, co ��results may 1 and i proposed radon of Time Wiener and Inc More the with die saetaieas and Eaefwtge "�+� denied competitive ardor factorsormedon about those i set ram it Thee wama's rto(and expressly s annual tgidre oo tOdi and cornett forward-looking reports rt Feint es result of htt don' events dbMOSI WMtu any such op/Qadon to)update or after Its�+'ar'd'tOObng ori To receive a copy of this press release through the Internet.access Time Warner's corporate website located at hardwww.ritnevauner.com Attachments: (1) Consolidated Statement of Operations ortion (2) Notes to Statement of Op Contact: Edward Adler (212) 484-6630 1 1 1 1 1 1 1 1 1 1 1 I R-27-2000 15:c9 FROM:BALLER HERBST LnAW 6123394789 T0:612 445 6718 P.a15,017 ITIME WARNER INC. NOTES TO STATEMENTS OF OPERATIONS Note 1: Basis of Presentation concis: le al of interests in Time Warner classifies its business interests !rno six fundamental� areas:consisting a peeworics, consisting I principally of interests in cable television programming; Music, consisting principally of interests in magazine publishing, book publishing and direct marketing; tin I of interests in filmed recorded music and music publishing; Filmed Entertainment, consisting principally ly of interests of interests in ' cable television televisionproduction uD ontal Media cons sti g prion broadcasting; ipallY�terestss nng Internet-related and digital cable television systems; and � media businesses. IA majority of Time Warner's interests in filmed t�nteres�n cable televisiteievision on programming sion and digital media broadcasting and cable television systems, and a portion The 1 ggg operating results reflect the I are held through Time Warner Entertainment Company, L.P. ('TWE")• consolidation of TWE and certain related companies (referred to as the Entertainment Group), retroactive to the beginning of 1999. I he ear's l ormation to Certain reclassifications have been made n of hetMus c div clonic`operaung�esults for 1999 to reflect eflect a change rm to the 2000 presentation, including l a s flies Time Warner's in how management classifies Tima 5°aownedaequity investee.l Effective on JanuaryColumbia 1. 2000. management Partnerships ('Columbia House, I andreclassified ter, Time isWarner'sreclassification share son esultedthe tngmar ly fromresults of othe planned restructuring of Columbia House's and other, net. This reclassificaU P traditional direct-marketing business and an increasing dependency on the sale of video product. INote 2: Book-of-the-Month Club Joint Venture I In enelsmann AG the first quarter of 2000. Time the domesticr formed a oop rations oownedfTime ook club Warner'sventure Sook Book-of-the-Month( -t-the-Month Club 'BeRelsmann'�. The venture combinedfined with consumer book the p owned book club operations In onnection1ewith tday Oirect, Inc.his transactioDoubleday"), a n, Time Warner hasndecon deconsolidated its club group owned by Bertelsmann its interest in the under the equity methodic book clubun i operations. Timearerin r'00 and' share sof the operatingrresults of the joint Jvoenture fore the first quarter of I 2000 of accincluded Time 2000 has been included in interest and other, net, in the accompanying consolidated sul�tsment of included ns. revenues During the three months ended March 21, 1999. the Publishing division's operating of S66 million, EBITA losses of $9 million and operating losses of 310 million relating to Book-of-the-Month I Club. Note 3: 1999 Gain on Termination of MGM Video Distribution Agreement I In March 1999, Warner Bros. and Metro-Goldwyn-Mayer. Inc. (MGM') terminated a long-term distribution os. had exclusive s /United Artists agreementmunder which War�ionrwith the early termination worldwide ariddistribution sett settlement of thiisfor d distribution n agreement. I Warner video product. In conn Warner Bros. recognized a ne�lamer'sgain F Filmed Enterra rimer t division. million, which has been included in the 1999 operating results of Time I Note 4: Gains on the Sale or Exchange of Cable Television Systems and Investments es. Time In largely in to ongoingexchange effort an to enhance its o various cableete geographic on systems and investments.cable stelevision Inconnectionwith I Warnersetransactions. , sell or rah g results of Time Warner's Cable division include pretax gains of these transactions. the operating approximately $29 million in the first quarter of 2000. I II 'PR-27-2000 15:2B FROM:BPLLER HERBST LAW 6123394789 TO:612 445 6718 P.014/017 I TIME WARNER INC. I CONSOLIDATED STATEMENT OF OPERATIONS (tn millions,except per share amounts) (Unaudited) Three Months Ended I arch ,991 16.549 $6.091 I Revenues (5,736) (5.371) Goiand expenses and investments 28 • Gain on sale or exchange of cable television systems 215 Gain on early termination of video distribution agreement 841 25 I Business segment operating income (8(043) (506) (40) Interest and other.net I Corporateexpenses _AL 11AImoMy Interest (64) 304 Income(loss)before income taxes (� 04 I Income taxes (96) 138 Net income(loss) $ 1381 Preferred dividend requirements �, S (78 I Net income(loss) applicable to common shares 1.a 08 LinBasic and diluted net income(loss) per common share IAverage common shares LAlba 13.41; I I I I I I See accompanying notes. I I I I /Y /J CITY OF SHAKOPEE Memorandum TO: Mayor and City Council Mark McNeil, City Administrator FROM: Julie Klima, Planner II RE: Text Amendment for Floodplain Overlay Zone DATE: May 16, 2000 DISCUSSION On February 29, 2000, the City Council approved an ordinance revising the Floodplain Overlay Zone. After adoption of that ordinance, the City received notification from the Minnesota Department of Natural Resources(DNR)that several changes would be necessary for the ordinance to comply with state regulations. The changes do not significantly alter the newly adopted Floodplain Overlay Zone regulations. Copies proposed ordinance and the May 4 Planning Commission report are attached for the Council's information. PLANNING COMMISSION RECOMMENDATION The Planning Commission has recommended to the City Council the approval of the proposed ordinance. ALTERNATIVES 1. Approve the ordinance, as presented. 2. Approve the ordinance, with revisions. 3. Deny the ordinance. 4. Table action on the matter and request additional information from staff ACTION REQUESTED Offer a motion to approve Ordinance No. 568, An Ordinance Amending Chapter 11, Section 11.56, Floodplain Overlay Zone, and move it adoption. Julie Klima Planner II g:\cc\2000\cc0516\fldpin.doc ORDINANCE NO. 568,FOURTH SERIES AN ORDINANCE OF THE CITY OF SHAKOPEE AMENDING CHAPTER 11,ZONING,SECTION 11.56, FLOODPLAIN OVERLAY ZONE THE CITY COUNCIL OF THE CITY OF SHAKOPEE,MINNESOTA, ORDAINS: Section 1 —That City Code Chapter 11, Zoning, Section 11.56, Floodplain Overlay Zone, is hereby amended by the following. Language to be deleted is shown in stfikethfetigh and language to be added has been underlined. 2.2 Establishment of Official Zoning Map: The Official Zoning Map together with all materials attached thereto is hereby adopted by reference and declared to be a part of this ordinance. The attached material shall include the Flood Insurance Study for the city of Shakopee prepared by the Federal Insurance Administration dated September 29, 1978 therein, the Letter of Map revision, issued by the Federal Emergency Management and dated October 23. 1997. and all of the attachments thereto relating to revisions to the Flood Boundary and Floodway Map.Flood Insurance Rate Map. and Floodway Data Table. The Official Zoning Map shall be on file in the Office of the City Clerk and the Community Development Department. 5.55 Flood plain developments shall not adversely affect the hydraulic capacity of the channel and adjoining flood plain of any tributary watercourse or drainage system where a floodway or other encroachment limit has not been specified on the Official Zoning Map. 10.45 Time for Acting on Application. The Board of Adjustment and Appeals shall act on an application in the manner described above within 120 days from receiving the application, except that where additional information is required pursuant to 10.44 of this ordinance. The Board of Adjustment and Appeals shall render a written decision within 60 days from the receipt of such additional information. Section 2—Effective Date. This ordinance becomes effective from and after its passage and publication. Adopted in session of the City Council of the City of Shakopee, Minnesota held the day of , 2000. Mayor of the City of Shakopee ATTEST: City Clerk Published in the Shakopee Valley News on the day of , 2000. i' CITY OF SHAKOPEE Memorandum TO: Shakopee Planning Commission FROM: Julie Klima, Planner II RE: Text Amendment for Floodplain Overlay Zone DATE: May 4, 2000 DISCUSSION On February 29, 2000, the City Council adopted Ordinance No. 567. This ordinance approved revisions to the Floodplain Overlay Zone. After adoption of Ordinance No. 567, the City received comment from the Minnesota Department of Natural Resources (DNR). The comments included modifications necessary for the Floodplain Overlay Zone ordinance to be in compliance with State regulations. The proposed modifications are general revisions and do not significantly alter the recently adopted ordinance. Section 11.83, Subd. 2 of the City Code states "the City Council may grant a zoning ordinance amendment when it finds that one or more of the following criteria exist." Based on these criteria, staff has prepared the following draft findings. Criteria#1: That the original zoning ordinance is in error. Finding#1: The original zoning ordinance is in error. The ordinance has not been updated consistent with changes required by the Minnesota Department of Natural Resources (DNR). The proposed amendment would bring the Floodplain regulations into compliance with the requirements of the Minnesota DNR. Criteria #2: That significant changes in community goals and policies have taken place. Finding#2: Significant changes in community goals and policies have not taken place. Criteria #3: That significant changes in City-wide or neighborhood development patterns have occurred; or Finding#3: Significant changes in City-wide or neighborhood development patterns have not occurred Criteria#4: That the comprehensive plan requires a different provision. Finding#4: The proposed amendment is not in conflict with the comprehensive plan. The proposed revisions are as follows. Language to be deleted is shown in stfikethreugh and language to be added has been underlined. 2.2 Establishment of Official Zoning Map: The Official Zoning Map together with all materials attached thereto is hereby adopted by reference and declared to be a part of this ordinance. The attached material shall include the Flood Insurance Study for the city of Shakopee prepared by the Federal Insurance Administration dated September 29, 1978 therein, the Letter of Map revision, issued by the Federal Emergency Management and dated October 23_ 1997. and all of the attachments thereto relating to revisions to the Flood Bound. and Floodwa Ma. Floo• Insurance ' • e Ma• and Floodwa D•to Table. The Official Zoning Map shall be on file in the Office of the City Clerk and the Community Development Department. 5.55 Flood plain developments shall not adversely affect the hydraulic capacity of the channel and adjoining flood plain of any tributary watercourse or drainage system where a floodway or other encroachment limit has not been specified on the Official Zoning Map. 10.45 Time for Acting on Application. The Board of Adjustment and Appeals shall act on an application in the manner described above within 120 days from receiving the application, except that where additional information is required pursuant to 10.44 of this ordinance. The Board of Adjustment and Appeals shall render a written decision within 60 days from the receipt of such additional information. The DNR also identified 5 typographical/grammatical errors in the original ordinance. These are general housekeeping revisions which staff will remedy without specific review by the Commission. ALTERNATIVES 1. Recommend approval to the City Council of the text amendment, as presented. 2. Recommend approval to the City Council of the text amendment, as revised. 3. Recommend denial to the City Council of the text amendment. 4. Continue the public hearing. 5. Table action on this item to allow staff to provide additional information. STAFF RECOMMENDATION Staff recommends that the Planning Commission review the proposed text amendment and recommend approval to the City Council (Alternative Nos. 1 or 2). ACTION REQUESTED Offer a motion to recommend approval of the proposed text amendment to the City Council, and move its adoption. / t6Lti LL. ulie Klima Tanner II g\boas-ac12000\mayoavxaamfloodpin..doc /6T , • / . CITY OF SHAKOPEE Memorandum TO: Mayor and City Council Mark McNeill, City Administrator FROM: Beth Thorp, Planner I SUBJECT: Final Plat of Savanna Oaks at Southbridge 3'd Addition MEETING DATE: May 16,2000 APPLICATION DATE and REVIEW PERIOD DEADLINE: April 12, 2000—August 10, 2000 Site Information Applicant: D.R.Horton Location: North of Dean Lake and south of Highway 169 Current Zoning: Low Density Residential(R1A)Zone/PUD Adjacent Zoning: North: Highway 169 South: Low Density Residential(R1A)Zone/PUD East: Low Density Residential(R1A)Zone/PUD West: Business Park(BP)Zone 1995 Comp. Plan: Single Family Residential Area: 30.69 Acres MUSA: The site is within the MUSA boundary. Attachments: Exhibit A: Location/Zoning Map Exhibit B: Savanna Oaks at Southbridge 3A Addition Final Plat Map Exhibit C: Natural Resource Director's Comments Introduction D.R. Horton is requesting Final Plat approval of Savanna Oaks at Southbridge 3'' Addition. The proposed development is generally located north of Dean Lake and south of Highway 169(Exhibit A). Considerations Savanna Oaks at Southbridge 3'a Addition received Planned Unit Development(PUD)and Preliminary Plat approval from the Planning Commission and City Council. The submitted final plat is in substantial conformance with both the PUD and Preliminary Plat(Exhibit B). The Natural Resources Director has commented that curb cuts shall be installed for the eight foot wide trail that crosses Oxford Road(Exhibit C). The Assistant City Engineer has provided comments and those comments have been incorporated into the conditions of approval. The Scott County Environmental Health Department has commented that the proposed area of development is highly susceptible to ground water contamination and that precautions should be taken to minimize the potential for such contaminations. The MPCA has commented that it shall be the responsibility of the developer to provide any noise mitigation from existing highway noise. Shakopee Public Utilities Commission (SPUC) has not responded with comments. As a result, staff is not recommending approval of the Final Plat at this time, but has provided a draft resolution of approval (Resolution No. 5363) for the Council's consideration in the event the Council chooses to approve the Final Plat of Savanna Oaks at Southbridge 3'd Addition. Alternatives 1. Approve the Final Plat of Savanna Oaks at Southbridge 3'd Addition, subject to the following conditions: a) The following procedural actions must be completed prior to the recording of the Final Plat: i) Approval of title by the City Attorney. ii) Execution of the Developers Agreement for construction of required public improvements: a) Street lighting to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. b) Electrical system to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. c) Water system to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. d) Installation of sanitary sewer and storm sewer systems, and construction of streets in accordance with the requirements of the Design Criteria and Standard Specifications of the City of Shakopee. e) Street signs shall be constructed and installed by the City of Shakopee at a cost to the developer of$270 per sign pole. iii) The developer shall provide easements, as required by City Code. iv) The cover page of the Final Plat shall be revised to eliminate the signature block for the Planning Commission, as final plats are no longer reviewed by the Planning Commission. v) The developer shall be responsible for payment of Trunk Storm Water charges, Trunk Sanitary Sewer charges, engineering review fees, and other fees as required by the City's adopted Fee Schedule. vi) Final Construction Plans and Specifications, building construction and locations, as well as sewer and water services must be approved by City 2 Engineer, City Building Official and Shakopee Public Utilities prior to construction. i) Any necessary future noise mitigation shall be the responsibility of the Homeowners Association(s). b) The following conditions shall apply after the recording of the Final Plat: i) The developer shall install all subdivision monumentation within one year from the date of recording the plat. At the end of the one year period from recording of the Plat, the developer shall submit to the City Engineer written verification by a registered land surveyor that the required monuments have been installed throughout the plat. Monumentation may only be installed on a per lot basis at the time of building permit issuance with prior approval of the City Engineer. ii) The developer shall install curb cuts for the eight foot wide trail that crosses Oxford Road. 2. Approve the Final Plat of Savanna Oaks at Southbridge 3"' Addition with revised conditions. 3. Do not approve the Final Plat of Savanna Oaks at Southbridge 314 Addition. 4. Table a decision in order to allow time for the applicant and/or staff to submit additional information or make any necessary revisions. Staff Recommendation Because staff has not received comments from SPUC relative to water capacity, no recommendation will be made at this time. Action Reauested Offer and pass a motion consistent with the wishes of the Council. ILe th Thorp Planner I g:1cc\2000\cc0516\savanna oaks at southbridge 3rd fp.doc 3 RESOLUTION NO. 5363 A RESOLUTION OF THE CITY OF SHAKOPEE, MINNESOTA,APPROVING THE FINAL PLAT OF SAVANNA OAKS AT SOUTHBRIDGE 3RD ADDITION WHEREAS,D.R. Horton, is the owner and applicant of said property; and WHEREAS, the property upon which the request is being made is legally described as follows: Outlot B, Savanna Oaks at Southbridge 2nd Addition, according to the plat on file and of record in the office of the Registrar of Titles, Scott County, Minnesota; and WHEREAS, all notices of the public hearing for the Preliminary Plat were duly sent and posted and all persons appearing at the hearing have been given an opportunity to be heard thereon. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE, MINNESOTA, as follows: That the Final Plat of Savanna Oaks at Southbridge 3"d Addition is hereby approved subject to the following conditions: a) The following procedural actions must be completed prior to the recording of the Final Plat: i) Approval of title by the City Attorney. ii) Execution of the Developers Agreement for construction of required public improvements: a) Street lighting to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. b) Electrical system to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. c) Water system to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. d) Installation of sanitary sewer and storm sewer systems, and construction of streets in accordance with the requirements of the Design Criteria and Standard Specifications of the City of Shakopee. e) Street signs shall be constructed and installed by the City of Shakopee at a cost to the developer of$270 per sign pole. iii) The developer shall provide easements, as required by City Code. iv) The cover page of the Final Plat shall be revised to eliminate the signature block for the Planning Commission, as final plats are no longer reviewed by the Planning Commission. v) The developer shall be responsible for payment of Trunk Storm Water charges, Trunk Sanitary Sewer charges, engineering review fees, and other fees as required by the City's adopted Fee Schedule. vi) Final Construction Plans and Specifications, building construction and locations, as well as sewer and water services must be approved by City Engineer, City Building Official and Shakopee Public Utilities prior to construction. i) Any necessary future noise mitigation shall be the responsibility of the Homeowners Association(s). b) The following conditions shall apply after the recording of the Final Plat: i) The developer shall install all subdivision monumentation within one year from the date of recording the plat. At the end of the one year period from recording of the Plat, the developer shall submit to the City Engineer written verification by a registered land surveyor that the required monuments have been installed throughout the plat. Monumentation may only be installed on a per lot basis at the time of building permit issuance with prior approval of the City Engineer. ii) The developer shall install curb cuts for the eight foot wide trail that crosses Oxford Road. BE IT FURTHER RESOLVED, that the Mayor and City Clerk are hereby authorized and directed to execute said Plat and Developer's Agreement. Adopted in session of the City Council of the City of Shakopee, Minnesota, held the day of , 2000. Mayor of the City of Shakopee ATTEST: City Clerk 4:x k1,i laiq' 4- - _7_._ I 12I 11 1 ,J BP i. STH 169 HHHHR itir .0. HHHHR 0 411444 X11►�limit � 1 B u� O® BP �IIs (a Iii N®E HII war manialtS ME gurgal&R1A „,„.9,1 , le g 10 141 .--7 Illi. 1 * 41.1114 1 # .. 'Wks"' II t**�� Asoell •i ,1Ielad• — ri. t - .- No. up wA t. •1 i 6 • on. 0t di•Dean Lake 1•10 •� •�``•' X111 Ibitt AILIIS► 4-m, 11 CSA y'6 AG AG N SHAKOPEE W E COMMUHInYPRIE SINCE 1857 S Proposed Final Plat of Savanna Oaks at Southbridge 3rd Addition Parcel Boundaries 0 Zoning Boundaries 05/10/00 £ Athi7i- CITY OF SHAKOPEE MEMORANDUM To: City Planner Beth Thorp From: Mark J. McQuillan,Natural Resources Director Subject: Savana Oaks 3`d Addition Date: April 20,20000 RE: Plan Review Place curb cuts for 8 foot wide trail that crosses road. See drawings. I f /1/'/..hr i+/I Si Mark J. c• Tan, Natural Resource D erector ,T •,-,,,-••,-„;,••. : "c ,�si t . R--Li-4‘i: tq kir �• : -� '2y 4,nii, 4 .•, -ev. 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Attachments: Exhibit A: Location/Zoning Map Exhibit B: Southbridge 5th Addition Final Plat Map Introduction Shakopee Crossings Limited Partnership is requesting Final Plat approval of Southbridge 5th Addition. The propertyis located north of future CountyRoad 21 and south of Southbridge Parkway (Exhibit A). Considerations Southbridge 5th Addition received Planned Unit Development (PUD) and Preliminary Plat approval FinalPlat is in substantial from the PlanningCommission and CityCouncil. The submitted o conformance with both the PUD and Preliminary Plat(Exhibit B). The Assistant City Engineer has provided comments and those comments have been incorporated into the conditions of approval. Shakopee Public Utilities Commission (SPUC) has not responded with comments. As a result, staff is not recommending approval of the Final Plat at this time, but has provided a draft resolution of approval (Resolution No. 5364) for the Council's consideration in the event the Council chooses to approve the Final Plat of Southbridge 5th Addition. Alternatives 1. Approve the Final Plat of Southbridge 5th Addition, subject to the following conditions: a) The following procedural actions must be completed prior to the recording of the Final Plat: i) Approval of title by the City Attorney. ii) Execution of the Developers Agreement for construction of required public improvements: a) Street lighting to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. b) Electrical system to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. c) Water system to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. d) Installation of sanitary sewer and storm sewer systems, and construction of streets in accordance with the requirements of the Design Criteria and Standard Specifications of the City of Shakopee. e) Street signs shall be constructed and installed by the City of Shakopee at a cost to the developer of$270 per sign pole. iii) The developer shall provide easements, as required by City Code. iv) The cover page of the Final Plat shall be revised to eliminate the signature block for the Planning Commission, as final plats are no longer reviewed by the Planning Commission. v) The developer shall be responsible for payment of Trunk Storm Water charges, Trunk Sanitary Sewer charges, engineering review fees, and other fees as required by the City's adopted Fee Schedule. vi) The developer shall pay existing levied special assessments or may request that they be reapportioned against the new lots. The developer shall pay the current fee for reapportioning each assessment code and agree to the City Engineer's reapportionment. vii) Final Construction Plans and Specifications, building construction and locations, as well as sewer and water services must be approved by City Engineer, City Building Official and Shakopee Public Utilities prior to construction. viii) Any necessary future noise mitigation shall be the responsibility of the Homeowners Association(s). ix) The developer shall submit Area Plat drawings to staff as required by City Code. b) The following conditions shall apply after the recording of the Final Plat: 2 i) The developer shall install all subdivision monumentation within one year from the date of recording the plat. At the end of the one year period from recording of the Plat, the developer shall submit to the City Engineer written verification by a registered land surveyor that the required monuments have been installed throughout the plat. Monumentation may only be installed on a per lot basis at the time of building permit issuance with prior approval of the City Engineer. 2. Approve the Final Plat of Southbridge 5th Addition with revised conditions. 3. Do not approve the Final Plat of Southbridge 5th Addition. 4. Table a decision in order to allow time for the applicant and/or staff to submit additional information or make any necessary revisions. Staff Recommendation Because staff has not received comments from SPUC relative to water capacity, no recommendation will be made at this time. Action Requested Offer and pass a motion consistent with the wishes of the Council. eth Thorp Planner I g:\cc\2000\cc0516\southbridge 5th fp.doc 3 RESOLUTION NO. 5364 A RESOLUTION OF THE CITY OF SHAKOPEE,MINNESOTA,APPROVING THE FINAL PLAT OF SOUTHBRIDGE 5th ADDITION WHEREAS, Shakopee Crossing Limited Partnership, the property owner and applicant has filed an application dated and received April 21, 2000 for Final Plat approval; and WHEREAS, the property upon which the request is being made is legally described as follows: Oudot B, Southbridge 4th Addition;and WHEREAS, all notices of the public hearing for the Preliminary Plat were duly sent and posted and all persons appearing at the hearing have been given an opportunity to be heard thereon. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE,MINNESOTA,as follows: That the Final Plat of Southbridge 5th Addition is hereby approved subject to the following conditions: a) The following procedural actions must be completed prior to the recording of the Final Plat: i) Approval of title by the City Attorney. ii) Execution of the Developers Agreement for construction of required public improvements: a) Street lighting to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. b) Electrical system to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. c) Water system to be installed in accordance with the requirements of the Shakopee Public Utilities Commission. d) Installation of sanitary sewer and storm sewer systems, and construction of streets in accordance with the requirements of the Design Criteria and Standard Specifications of the City of Shakopee. e) Street signs shall be constructed and installed by the City of Shakopee at a cost to the developer of$270 per sign pole. iii) The developer shall provide easements, as required by City Code. iv) The cover page of the Final Plat shall be revised to eliminate the signature block for the Planning Commission, as final plats are no longer reviewed by the Planning Commission. v) The developer shall be responsible for payment of Trunk Storm Water charges, Trunk Sanitary Sewer charges, engineering review fees, and other fees as required by the City's adopted Fee Schedule. vi) The developer shall pay existing levied special assessments or may request that they be reapportioned against the new lots. The developer shall pay the current fee for reapportioning each assessment code and agree to the City Engineer's reapportionment. vii) Final Construction Plans and Specifications, building construction and locations, as well as sewer and water services must be approved by City Engineer, City Building Official and Shakopee Public Utilities prior to construction. viii) Any necessary future noise mitigation shall be the responsibility of the Homeowners Association(s). ix) The developer shall submit Area Plat drawings to staff as required by City Code. b) The following conditions shall apply after the recording of the Final Plat: i) The developer shall install all subdivision monumentation within one year from the date of recording the plat. At the end of the one year period from recording of the Plat, the developer shall submit to the City Engineer written verification by a registered land surveyor that the required monuments have been installed throughout the plat. Monumentation may only be installed on a per lot basis at the time of building permit issuance with prior approval of the City Engineer. BE IT FURTHER RESOLVED, that the Mayor and City Clerk are hereby authorized and directed to execute said Plat and Developer's Agreement. Adopted in session of the City Council of the City of Shakopee, Minnesota, held the day of ,2000. Mayor of the City of Shakopee ATTEST: City Clerk • 0._ '"Aili,,•1;i1- ...... if At BigiSHHOMil R1A �gNi�® I1 �` %,.,,,,,.�; R1 B ft tut?_ '®® .. es itioA ♦It ♦ �1 •Nt� 401 IV's♦ 111. �� A 1 NV En N% il.tr; ViVtg tt . 1 S.:7V. %,:."A , . _ ,.,„„„„„„„iwii, co,, AG I 1h. Ro- - " 6 in Arl 'm i .4 • r-rl N WILIAll . W E SHAKOPEE Proposed Final Plat of Southbridge 5th Addn 0 Zoning Parcels 04/21/00 .....? 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(• "114 i'7 .. /§t `�--4errarJ�•-?T 6�•6 'r" ,� ��% r4�4 .Yld5544 � e In tM1 ,rE1y g�h1 p epi•a, • ys,498 4,, wyi.\` ,,rte; SEA, yY •P , IC dk0450 4 Y II �,Ly , / .y'r-D f-ii r- r•i5.i 1 \�\rt //, ';�n . d'.•a s O / ^ ,'�/G.y W f iL : ', 1I \ ' ,+ 13M1/ ; •9 /ark ,�\d/ ,(9�.P• ate)"_ -E t . $ I .9 \ d ��/ atr4 1 civ ""; e�1 \ T' fi t '� `NmJ 'm*m • ire-: ' }, \l ,\f",-4,'?'' ^ I FF � // 1 N -1-r - - gal , ..i!e ''k' 2.6 irras - -- -, < W „ .1,41 143 1 ro 134 I )11°/)'ar, 4 a c F1: 111 e Q b O v I ' �h It i 1 ....„ N 8 ,.,_ ) , CITY OF SHAKOPEE Memorandum TO: Mayor& City Council Mark McNeill, City Administrator FROM: Bruce Loney, Public Works Director SUBJECT: Gorman Street, from 4th Avenue to County Road 17 Project No. 2000-1 DATE: May 16, 2000 INTRODUCTION: Attached is Resolution No. 5362, which accepts the bids and awards the contract for Gorman Street, from 4th Avenue to County Road 17, Project No. 2000-1. BACKGROUND: On March 21, 2000, Resolution No. 5331 was adopted approving the plans and ordering the advertisement for bids on Gorman Street, from 4th Avenue to County Road 17 (Marschall Road). The plans have been prepared by City Engineering staff to reconstruct Gorman Street to an urban roadway with the installation of watermain and reconstruction of sanitary sewer and storm sewer utilities. Also, with the roadway is the installation of sidewalk, trail, boulevard trees and street lighting. On May 15, 2000, sealed bids were received and publicly opened for this project. A total of four bids were received and are summarized in the attached resolution. The low bid was submitted by S.M. Hentges & Sons, Inc. of Jordan, MN in the amount of $584,800.44. The Engineer's estimate for this project was approximately $600,000.00. Staff had previously received waiver of assessment appeal from all property owners and Shakopee Public Utilities Commission approval for this project. The low bid is in line with the feasibility report, thus the recommendation from staff is to proceed with the project. In addition to awarding the contract to the low bidder, S.M. Hentges & Sons, Inc., City staff will need to authorize consultant engineering services to provide construction surveying and administration services as necessary for this project. Attached to this memo is an extension agreement with WSB & Associates, Inc., to perform the surveying services, inspection and administration services as needed to complete this project. If the Council awards this project, staff is also requesting that City Council authorize a contingency amount equal to 5% of the contract to cover minor change orders or quantity adjustments that may occur on the project ALTERNATIVES: 1. Accept the low bid of $584,800.44 and adopt Resolution No. 5362, awarding the contract to S.M. Hentges & Sons, Inc. 2. Reject the low bid and award the bid to another bidder. 3. Reject all bids and rebid. 4. Authorize the appropriate City officials to execute an extension agreement with WSB & Associates, Inc. to provide consultant services on this project for the City of Shakopee. 5. Authorize a 5% contingency amount for use by the City Engineer in authorizing change orders or quantity adjustments on this project. RECOMMENDATION: Staff recommends Alternative No.'s 1, 4 and 5. ACTION REQUESTED: 1. Offer Resolution No. 5362, A Resolution Accepting Bids on Gorman Street, from 4th Avenue to County Road 17,Project No. 2000-1 and move its adoption. 2. Authorize the appropriate City officials to execute an extension agreement with WSB &Associates, Inc., to provide consultant services for the City of Shakopee. 3. Authorize a 5% contingency amount for use by the City Engineer in authorizing change orders or quantity adjustments on this project. Bruce Loney Public Works Director BL/pmp MEM5362 RESOLUTION NO. 5362 A Resolution Accepting Bids For Gorman Street, From 4th Avenue To County Road 17 Project No. 2000-1 WHEREAS, pursuant to an advertisement for bids for Gorman Street, from 4th Avenue to County Road 17, Project No. 2000-1, bids were received, opened and tabulated according to law, and the following bids were received complying with the advertisement: S.M. Hentges & Sons, Inc. $584,800.44 Minger Construction, Inc. $650,903.75 S.R. Weidema, Inc. $667,569.84 Barbarossa& Sons,Inc. $695,449.15 AND WHEREAS, it appears that S.M. Hentges & Sons, Inc., Box 69, Jordan, MN 55352 is the lowest responsible bidder. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SHAKOPEE,MINNESOTA: 1. The appropriate City officials are hereby authorized and directed to enter into a contract with S.M. Hentges & Sons, Inc. in the name of the City of Shakopee for Gorman Street, from 4th Avenue to County Road 17, Project No. 2000-1, according to the plans and specifications therefore approved by the City Council and on file in the office of the City Clerk. 2. The City Clerk is hereby authorized and directed to return forthwith to all bidders the deposits made with their bids, except that the deposits of the successful bidder and the next lowest bidder shall be retained until a contract has been signed. Adopted in session of the City Council of the City of Shakopee, Minnesota,held this day of ,2000. Mayor of the City of Shakopee ATTEST: City Clerk A 50 Westwood Lake Office B.A.BMittelsteadt,P.E.Bret A.Weiss,P.E. WSB 8441 Wayzata Boulevard Peter R.Willenbring,P.E. Minneapolis, MN 55426 Donald W.Sterna,RE. Ronald B. Bray,P.E. AIIIMIIIIIIM 612-541-4800 &Associates, Inc. FAX 541-1700 May 15,2000 Mr.Bruce Loney,P.E. Public Works Director/City Engineer City of Shakopee 129 Holmes Street South Shakopee,MN 55379-1376 Re: Extension Agreement to Provide Construction Surveying Services Gorman Street Reconstruction(C.P. 2000-1) Shakopee,MN WSB Project No. 1014-00 Dear Mr. Loney: According to our Agreement for Professional Services within the City of Shakopee and Section I-C-2(Major Projects),this extension agreement is written to provide for construction surveying services for the above- referenced project. The surveying needs for this project will include construction staking for all project items. We are proposing to complete this work on a cost-reimbursable basis according to our fee schedule. As you are aware, construction work is somewhat variable depending on the contractor and the actual field conditions. Consequently,the engineering costs for the construction phase will be determined according to the actual hours necessary to complete the project; however,we have estimated a fee of approximately 4% to 8%of the construction cost. The City of Shakopee agrees to reimburse WSB for these services in accordance with Section IV of the Agreement for Professional Services. If this agreement meets with your approval,please sign below and return one copy to our office. Sincerely, W &Associate ,Inc. -,4 (Ai _ ret A.Weiss,P.E. President City Administrator kd City Clerk Mayor Date Minneapolis • St . Cloud F.IWPWIM 1014-001051500-h1.wpd Infrastructure Engineers Planners EQUAL OPPORTUNITY EMPLOYER e. a CITY OF SHAKOPEE Memorandum TO: Mayor& City Council Mark McNeill, City Administrator FROM: Bruce Loney, Public Works Director SUBJECT: Payment of Mn/DOT Linear Pond Right-of-Way for Southwest Quadrant of T.H. 169 and CSAH 17 DATE: May 15, 2000 INTRODUCTION: This memorandum is for Council to consider authorizing payment of $160,777.05 ($161,310.00 minus $332.95 deed tax) for right-of-way of linear pond adjacent to the commercial district south of T.H. 169 and west of CSAH 17. BACKGROUND: On February 6, 1990, the City of Shakopee and Mn/DOT entered into a Letter of Understanding for the construction, right-of-way and maintenance of the Shakopee Bypass, from T.H. 169 to C.R. 83. Included in this letter is the purchasing of right-of-way by Mn/DOT for the City's linear retention pond along T.H. 169. Another letter has been received by Mn/DOT on the acquisition amount of each parcel for City linear ponds. The price of acquisition is the amount Mn/DOT paid for the parcels several years ago at no adjustment for land value or interest. In order for the Shakopee Valley Marketplace West Plat to be approved, Mn/DOT will allow a drainage permit connection, however, they want the City to act on the right-of-way conveyance. For linear pond #4, right-of-way acquisition was needed from parcels 55 and 57B at a cost of$161,310.00. Mn/DOT will begin the conveyance process for all panels from C.R. 79 to C.R. 16. The total cost of reconveyance is estimated at $682,193.00. The City has developed a storm water ponding fee which will recoup these costs. For instance,the Target site paid $275,000.00 in storm water fees and Shakopee Valley Marketplace West will pay $235,000.00 in storm water fees. ALTERNATIVES: 1. Authorize the payment of $160,777.05 for Parcel 55 and 57B upon the conveyance of these parcels to the City as per the Letter of Understanding between Mn/DOT and the City of Shakopee. 2. Do not authorize payment. 3. Table for additional information. RECOMMENDATION: In order to proceed with the Shakopee Valley Marketplace West development, a payment of$160,777.05 is needed. Staff will be working with Mn/DOT on the timing of the other parcels to complete all conveyance of Mn/Dot right-of-way for the City. Future payments will be brought back for Council approval when deemed ready. ACTION REQUESTED: Approve a motion authorizing payment of$160,777.05 out of the Storm Drainage Fund for Mn/Dot for the conveyance of Parcel 55 and 57B right-of-way to the City of Shakopee. 457 Bruce Loney Public Works Director BL/pmp MN/DOT MNDOT Fax:651-582-1496 May 16 '00 8:31 P. 01 May 16, 2000 Mr. Bruce Loney INVOICE City of Shakopee 129 Holmes Street S. Shakopee, MN. 55379 In reply refer to: 7300 C.S. 7005(101=187)901 Scott County Parcels 55 & 57B - Linear Ponds Reconveyance Dear Mr. Loney: As per fulfillment of part of the agreement of January 1, 1990 between Mn/DOT and the City of Shakopee regarding the conveyance of the Linear Ponds tracts, this invoice covers the subject parcels - 55 & 57B. The value of said 14.70 acre tract is $161,310.00. Please submit payment of$160,777.05 ($161,310.00 minus $532.95 deed tax)in the form of a cashier's check, certified check or money order made payable to "Commissioner of Transportation-Trunk Highway Fund". You will be responsible for payment of the deed tax at the time of recording of the Quitclaim Deed. Upon receipt of payment the State will issue a Quitclaim Deed to the City of Shakopee The above described conveyance is subject to the rights of existing utilities, if any, as provided in Minnesota Statutes §161.45, Subdivision 3. Please submit payment and any questions you may have regarding this transaction to Neal Bartelt, Transportation Building, 395 John Ireland Boulevard, Mailstop 632, St. Paul, MN, 55155 (phone 651-296-.8647). Sin -rely, ,Keith Slater-Manager Metro Division R/W Section MNDOT Fax:651-582-1496 Rpr 2? '00 13:3? P.02 bo Minnesota Department of Transportation aff Metropolitan Division °°ip Waters Edge 1500 West County Road B2 Roseville, MN 55113 Telephone No. 651-582-1635 • April 27, 2000 Mr. Bruce Loney Public Works Director City of Shakopee 129 Holmes Street South Shakopee, MN. 55379 SUBJECT: C.S. 7005 (101=187) 901. Scott County Parcels 55, 57B, 61A, 63 , 63A & 66 RECONVEYANCE AGREEMENT (LINEAR PONDS) Dear Mr.Loney: On January 31, 1990 , the City of Shakopee and Mn/DOT entered into •n the conveyance of the subject Linear Ponds an agreement regarding y 7 to the City of Shakopee by Mn/DOT. The agreement stated that, among other items, the following would occur: 1 . Mn/DOT would acquire the necessary right-of-way to cover the pond areas . 2 . Mn/DOT would construct the ponds as part of the Shakopee By-pass Project. 3 . Mn/DOT would convey the ownership of the ponds to the City of Shakopee after construction completion as follows : a. The City would reimburse Mn/DOT for the cost of the permanent right-of-way and temporary easements. b. The City would reimburse Mn/DOT for the cost of constructing the ponds . Up to this point, the subject agreement has not been facilitated. The City of Shakopee wants to allow development to utilize the ponds for drainage purposes. Mn/DOT wants to convey the subject areas to the City before allowing developments to use the ponds. In order to facilitate the subject reconveyance in a timely manner, the valuation of the subject conveyance does not include the cost of construction. The total amount paid by Mn/DOT for the permanent right-of-way, temporary easements and severance damages for each parcel has been determined. The total costs were added and divided by the acreage acquired for each parcel. Therefor, for each parcel, a cost per acre value has been assigned. An equal opportunity employer MNDOT Fax:651-582-1496 Apr 27 '00 13:37 P.03 . • April 27, 2000 Page two The amount of acreage to be conveyed for each parcel has been multiplied by the per acre acquisition value . Parcel 55 . $9, 025 per acre times 11.28 acres = $101, 802 Parcel 57B. $17, 400 per acre times 3 .42 acres = $59, 508 Parcel 61A. $13 , 350 per acre times 18 . 02 acres = $240, 567 Parcel 63 . $17, 365 per acre times 7 . 93 acres = $137, 704 Parcel 63A. $20 , 200 per acre times 7. 06 acres = $142, 612 Parcel 66 . $0 per acre times 0 . 012 acres = $0 Total amount of valuation for reconveyance = $682,193 . Mn/DOT will convey the linear ponds areas to the City of Shakopee for $682, 193 . The process for the conveyance will take time to facilitate. In order that the development project located in the southwest quadrant of T.H. 169 at Co.Rd.17 might proceed forward, Mn/DOT will issue a permit for construction upon receipt of a check from the City of Shakopee in the amount of $679, 940 . 75 ($682, 193 . 00 minus 2, 252 . 25 deed tax) . Please make the check payable to "Commissioner of Transportation - Trunk Highway Fund". Please call me if you have any questions. Sin erely, 1111 Jim irchner Conveyance Specialist cc : Neal Bartelt - C.O. MNDOT Fax:651-582-1496 May 1 '00 7:50 P.02 / On."'(-rq Minnesota Department of Transportation Y A tiQ Metropolitan District Transportation Building St. Paul, Minnesota 55155 rOF TO Oakdale Office, 3485 Hadley Avenue North, Oakdale, Minnesota 55128 Golden Valley Office, 2055 North Lilac Drive, Golden Valley, Minnesota 55422 Reply to January 31, 1990 Telephone No. 591-4646 Mr. David Hutton City Engineer City of Shakopee 219 East First Avenue Shakopee, MN 55379 Re: S.P. 7005-53, 7005-57 & 7005-58 (TH 101) Shakopee Bypass from TH 169 to CR 83 Construction, Right of Way, and Maintenance Letter of Understanding Dear Mr. Hutton: This letter shall serve as a letter of understanding between the City of Shakopee and the Minnesota Department of Transportation concerning construction, right of way acquisition, and maintenance for the above referenced project. Attached are eight color coded maps of the project included for clarification. The State of Minnesota agrees to the following: 1. Proposed Trunk Highway 101 (from T.H. 169 to Old T.H. 101) and Overpasses (CSAR 15, C.R. 77, C.R. 79, CSAH 17, CSAR 16, C.R. 83) (highlighted yellow on sheets 1,2,3,4,6,7 & 8) : a) Construction shall be designed, let, and supervised by Mn/DOT. b) All right of way shall be acquired and maintained by Mn/DOT. fel City's Linear Retention Pond (C.R. 79 to CSAH 16) (highlighted pink on sheets 1,4,6 & 8) : zr ) Mn/DOT shall acquire all right of way required. b) Mn/DOT shall construct the linear retention pond. c) A deed to convey fee ownership rights of the property on which the retention pond is constructed shall be forwarded to the City after construction is complete. d) Limited access to the pond from highway right of way for maintenance purposes shall be granted to the City (access from � ) . 5-1-06/42P 4,,, MINNESOTA •••.1 7990 An Equal Opportunity Employer MNDOT Fax:651-582-1496 May 1 '00 7:50 P.03 January 31, 1990 Mr. David Hutton Page Two 3. Upper Valley Drainage Project (Phase III) (highlighted blue on sheets 1,2,3 & 4) : a) Project shall be designed by the City's consultant. b) Construction shall be let and supervised by Mn/DOT. c) Mni/DOT shall acquire all right of way (except for Tahpah and Lions Parks). d) Permanent maintenance of the drainage system within City limits shall be the responsibility of the City and, as the City annexes additional property into it's corporate limits, the drainage system included shall also become the City's responsibility. e) Rights shall be granted to the City to enter onto Mn/DOT's drainage system for maintenance purposes. f) The drainage ditch system in Jackson Township limits shall be maintained by Mn/DOT. 4. Connector System (highlighted green on sheets 1,3,4,5,6 & 7) : a) Project shall be designed by the City's consultant. b) Construction shall be let and supervised by Mn/DOT. c) Mn/DOT shall acquire all drainage ditch right of way except as dedicated in the platting process (Ditch 114 through the Meadows First Addition). d) Permanent maintenance of the drainage system within City limits shall be the responsibility of the City and, as the City annexes additional property into it's corporate limits, maintenance of the drainage system included shall also become the responsibility of the City. e) Rights shall be granted to the City to enter onto Mn/DOT's drainage system right of way. f) The drainage system in Jackson Township limits shall be maintained by Mn/DOT. MNDOT Fax:651-582-1496 May 1 '00 7:50 P.04 January 31, 1990 Mr. David Hutton Page Three The City of Shakopee agrees to the following: -0T City's Linear Retention Pond (C.R. 79 to CSAR 16) (highlighted pink on sheets 1,4,6 & 8) : fa)!The City shall reimburse Mn/)OT for the cost of constructing the retention pond. U3bPThe City shall reimburse Mn/bOI for the cost of the permanent right of way and easements acquired for construction of the pond. 2. Dpper Valley Drainage Project (Phase III) (highlighted blue on sheets 1,2,3 & 4) : a) The City shall dedicate drainage easements to the State at no cost to the State, through Lions Park and Tahpah Park for the proposed drainage facility. b) Permanent maintenance of the drainage system within City limits shall be the responsibility of the City and, as the City annexes additional property into it's corporate limits, maintenance of the drainage system included shall also become the responsibility of the City. 3. Connector System (highlighted green on sheets 1,3,4,5,6 & 7) : a) Ditch 4 - The City shall require the developer of "The Meadows First Addition' subdivision to dedicate all right of way necessary for ditch construction and permanent maintenance prior to plat approval. b) Permanent maintenance of the drainage system within City limits shall be the responsibility of the City and, as the City annexes additional property into it's corporate limits, maintenance of the drainage system included shall also become the responsibility of the City. MNDOT Fax:651-582-1496 May 1 '00 7:50 P.05 January 31, 1990 Mr. David Hutton Page Four City of Shakopee hereby accepts and agrees to the terms and conditions set forth in this letter of understanding. City of Shakopee By ... AIM � Its . By * ...� /_ • By .1 4 . G, 1' It- ty Clerk a-6_of p Its City Administ a or The State of Minnesota Department of Transportation hereby accepts and agrees to the terms and conditions set forth in this letter of understanding. State 9nnesota BY \9 Its A-5/. Sincerely, nEV v 4(1\ W. M. Crawford Metro District Engineer MNDOT Fax:651-582-1496 May 1 '00 7:51 P.06 , . - ., . _ _ f infr -: :: ----: . ii .i.i ,__.... „...„...7... .... . _ - . Cdl1`.r� L.. .•r. r�� 1�r`�f I _�SflP,t.'. �•/\1' ` L....•.-�' c �% • 7-: 1 ": .•__=.:..----- •-I _ '...r..c•-: : } • . a"-- a ••=1"'"... ft; :'./ . 1 •• 11 • 1 • d ± Li & ...... L • Ya•.e�. .------- —..... - —v ,.:.�•• • Cts . • • ._ • .'. Lt.",• 1�4 +• . ., ,-,,,.. il i ....- 4.. • Jc'� `- •v t: 1• _ ::-• •••x•\�. • '---.i fN �. • ~ — •.r_.•.i.a.. 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Shakopee bypass ( f`, oJ E PROJECT 0`� 1-. 1 ' Y EW '.�= %;ec I 0 S CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Condemnation Proceedings—Eugene Hauer Property DATE: May 9, 2000 INTRODUCTION: The Council is asked to take action, which would commence condemnation proceedings to acquire 10 acres of land from Eugene Hauer, for public park purposes. This item was tabled at the February 29th City Council meeting. BACKGROUND: Previously,the City Council has authorized staff to first obtain, and then offer the results of an appraisal to Gene Hauer for the purchase of 10 acres of property adjacent to Sun Path School,which will ultimately be consolidated with additional acreage,which will be part of park dedication from the Ames Development. The appraised value was $37,500 per acre. This was relayed to owner Gene Hauer, who verbally rejected that offer. He noted that he has already an offer to purchase that same land as part of a larger package, at$52,000 per acre. Mr. Hauer is also investigating a land swap with a adjacent property for these acres, so it is important that the City move on this soon. At the February 29th City Council meeting, action was tabled so that the City Council could evaluate its inventory of proposed land acquisitions, and determine how these are to be funded. A comprehensive inventory of land acquisitions is underway; however,this location,property near O'Dowd Lake, and MnDOT parcel 75 in the Southbridge area are the three major issues at this time. Staff is also providing a report elsewhere on this agenda which discusses funding issues for major expenditures currently being considered. If the City is going to acquire these 10 acres from Mr. Hauer while they are available,the next step would be through the process of eminent domain. Mr. Hauer is comfortable with that,as he states that the results will provide him with additional time with which to invest the proceeds. Because this is not a"quick take"action,there would no obligation on the part of the City to proceed with this, if the condemnation panel would establish a price that was above the amount for which the City was willing to pay. However, costs for an appraisal and any attorney fees incurred by Mr. Hauer would need to be reimbursed by the City. The City Attorney has provided the attached resolution,which finds a public purpose in this taking, and authorizes the process to begin. That finding should be made by resolution. BUDGET IMPACT: The current CIP and Budget for FY 2000 for this project shows $500,000 as coming from the Park Reserve Fund for land acquisition at this location. Any difference between what is budgeted in the park reserve fund and the acquisition costs will need to come from other sources. It is possible that extra revenues maybe available as a result of a sale of a portion of MnDOT Parcel 75. However,the Park Board will need to examine this, and make a recommendation regarding prioritization— there stated position has been to use all of Parcel 75 for park purposed; if a portion of this is sold,those excess revenues would be eligible for use elsewhere, such as acquisition of this property. RECOMMENDATION: If the Council wishes to proceed with condemnation to acquire this 10 acres, it should adopt the attached resolution. ACTION REQUIRED: If the Council concurs, it should,by motion, adopt the following resolution: RESOLUTION NO. 5355 RESOLUTION AUTHORIZING ACQUISITION OF PROPERTY BY EMINENT DOMAIN FOR PARK PURPOSES kuStAlAauut-th Mark McNeill City Administrator MM:tw CITY OF SHAKOPEE RESOLUTION NO. 5355 RESOLUTION AUTHORIZING ACQUISITION OF PROPERTY BY EMINENT DOMAIN FOR PARK PURPOSES WHEREAS,the City of Shakopee is a municipal corporation organized and operating under Minnesota law, and is authorized by Minnesota Statutes Sections 412.211 and 465.01 to acquire private property for an authorized public purpose, using the procedure prescribed by Minnesota Statutes,Chapter 117; and WHEREAS, the City is authorized by Minnesota Statutes Sections 412.221, subdivision 6 and 412.491 to establish public parks and recreational facilities; and WHEREAS, the City Council finds that its citizens desire that the City provide additional open space,parks and recreational facilities to meet the demands of its citizens for leisure activities; and WHEREAS,the acquisition, construction,operation,and maintenance of public parks,open spaces, playgrounds and recreational facilities and improvements are necessary and convenient for the promotion of the public health and welfare of the City's residents; and WHEREAS, the City has identified the need to acquire fee simple title to a portion (the "Property")of a larger tract of land,legally described on the attached Exhibit A; and WHEREAS,the City staff has been unable to obtain a negotiated agreement with the owner of the Property. NOW,THEREFORE,BE IT RESOLVED by the City Council of the City of Shakopee: 1. The City Council makes the following findings: a. The construction of the new Highway 169 has triggered significant residential development within the City, which in turn has created a demand for additional park and recreational facilities. b. The City has a particular need for youth soccer facilities, due to a growth in population and a growth in the popularity of youth soccer. c. The City currently has no youth soccer facilities available at any of its community parks in the City. CAH176830v1 SH155-23 d. The City Council prefers that its park facilities be located in close proximity to public school facilities, in order to maximize efficient use of public park facilities by the schools and the general public. e. The City's comprehensive plan and its current capital improvement plan both identify the need for an additional public park to be located south of Highway 169. The capital improvement plan calls for the land to be assembled in the year 2000,with construction of park facilities to be completed by 2003. f. The City's Parks and Recreation Advisory Board has recommended that the City acquire a total of approximately 30 acres adjacent to Sun Path elementary school. g. The proposed 30-acre park facility includes a 10-acre tract of real estate (the "Property"), legally described on the attached Exhibit A, which is part of a larger 38.6 acre tract located immediately east of Sun Path elementary school. h. The proposed 30-acre park, when assembled and developed, will be a community park improved for the following uses: playground, baseball , youth soccer, and general recreational use. The park is expected to serve residents from across the entire community and not only those within the immediate neighborhood of the park. i. The Property's close proximity to Sun Path elementary school and to land already dedicated to the City for park use makes it particularly suitable and convenient for inclusion within the proposed community park. j. The Property is in private ownership and use. There is no existing public use of the Property,with the exception of a utility easement. 2. The City Council determines that it is necessary, convenient and reasonable to acquire the Property for public park purposes. The City Council further determines that it is in the public interest to authorize and direct the acquisition of the Property for the establishment of a public park and related facilities. 3. The City Attorney is authorized and directed on behalf of the City to acquire fee simple title to the Property described on Exhibit A by the exercise of the power of eminent domain pursuant to Minn. Stat. Chapter 117. The City Attorney further is authorized to take all actions necessary and desirable to carry out the purposes of this resolution. Dated: February 29,2000. CAH176830v1 SH155-23 Jon Brekke,Mayor ATTEST: Judy Cox,City Clerk CAH176830v1 SH155-23 EXHIBIT A Legal Description of Subject Property: The Northwest 1/4 of the Northeast 1/4 of Section 17, Township 115, Range 22, Scott County, Minnesota Legal Description of Portion to be Acquired: The South 660 feet of the West 660 feet of the Northwest 1/4 of the Northeast 1/4 of Section 17, Township 115,Range 22, Scott County,Minnesota Interest to be Acquired: Fee simple absolute title, subject only to existing easements for street and utility purposes, if any. CAH176830v1 SH155-23 i 15 ; c. I. CITY OF SHAKOPEE Memorandum CON3ENTI TO: Mayor& City Council Mark McNeill, City Administrator FROM: Bruce Loney, Public Works Director SUBJECT: Hiring of Engineering Technician III and Engineering Technician II Positions DATE: May 16, 2000 INTRODUCTION: Interviews have been held with four candidates for the Engineering Technician III and three candidates for the Engineering Technician II position and at this time, I am recommending that the City Council authorize the hiring of John DeLacey to fill the Engineering Technician III position. BACKGROUND: Mr. DeLacey is currently an Engineering Technician for Avalon, Inc. in Cape Coral, Florida and has previously worked for the City of Shakopee for over 12 years. I am recommending Mr. DeLacey will be hired at Step 7 of the 2000 Pay Plan for the Engineering Technician III position, and after a six-month successful probation period, be promoted to Engineering Technician IV. Previously, Mr. DeLacey was an Engineering Technician IV when he left the City in October, 1998. The one issue that may need Council direction is what are the years of service for Mr. DeLacey in regard to vacation leave. According to the City's Personnel Handbook, Section V, Paragraph C2, the measurement of years of service is calculated to be each twelve months of employment with the City of Shakopee as one year of employment for the purpose of vacation leave. The Council may have an option of giving new employees credit for each twelve months of related employment with another employee, which may be counted as up to one-half year of employment. Mr. DeLacey has worked for the City of Shakopee for over 12 years and has 23 years of related employment including working for the City of Shakopee. Staff is recommending the previous years of service with the City be utilized for the purpose of vacation leave measurement. If Council does not agree with this, direction should be given as to the interpretation of the policy. For the Engineering Technician II position, the decision of the interview team which consisted of the City Administrator, Public Works Director and Assistant City Engineer is not to fill the position at this time. Staff intends to evaluate the needs of the Engineering Department further and would bring back a proposal for Council consideration at a future meeting. The Engineering Department will have three engineering interns this summer to assist staff and have consultants that can assist as necessary to meet the needs of the department. RECOMMENDATION: It is recommended that the City Council authorize the hiring of John DeLacey for the position of Engineering Technician III, starting at Step 7 of the Non-Union Pay Plan ($43,811.00/Yr.) effective June 5, 2000, subject to the successful completion of a pre- employment physical and background check. ACTION REQUESTED: Move to authorize the hiring of John DeLacey for the position of Engineering Technician III, starting at Step 7 of the Non-Union Pay Plan ($43,811.00/Yr.) effective June 5, 2000, with the vacation accrual based on the prior years of service with the City of Shakopee subject to the successful completion of a pre-employment physical and background check. ruce Loney Public Works D ector BL/pmp EMPLOYMENT ISS E, CITY OF SHAKOPEE Memorandum TO: Mayor and City Council Mark McNeill, City Administrator FROM: Judith S. Cox, City Clerk SUBJECT: Authorize Filling the Receptionist Position DATE: May 16, 2000 INTRODUCTION: City Council is asked to authorize the process to fill the receptionist position. BACKGROUND: Terry McDonald has accepted a position with Scott County and has submitted her resignation effective June 2. This creates a vacancy in the receptionist position. Staff is asking City Council to authorize filling this position in order that the normal recruitment process may be commenced with the Scott County Employee Relations Department. ALTERNATIVES: 1. Authorize filling the vacant receptionist position 2. Do not authorize filling the vacant receptionist position RECOMMENDATION: Alternative 1, fill the vacant receptionist position. RECOMMENDED ACTION: Accept the resignation from Ms. Terry McDonald and authorize the appropriate persons to proceed with the recruitment process to fill the receptionist position. ,11 Ju ith Cox, City lerk h:\judy\receptionist2 May 16, 2000 To: Judy Cox From: Terry McDonald RE: Resignation I am giving my resignation notice as of today, my last day will be June 2,2000, I would to thank you for the opportunity to be employed with the City of Shakopee, I enjoyed working here, and enjoyed everyone I worked with, although I have excepted a job with Scott County and am looking forward to my new position. T•ank you, rtTerry McDonald cc. M. McNeill, M. Remer, G. Voxland RECEIVED MAY 1 6 2000 CITY OF SHAKOPEE 2000 And Forward i I Project Funding 5/2/00------ Source GeneralIEEE '- �. : IIII Building Bonds 71E Unreseved Fund Balance 1/1/00 1,918,000 3,522,119 1,630,632 3,934,612 154,120 Future 5 Year Revenue?? 2,500,000 ' 2,000,000 4,000,000 ! - Total Est.Available 1,918,000 I 6,022,119 3,630,632 7,934,612 - 154,120 projects _Pool Reconstruction 386,118 -- 386,118 Baseball Stadium 241,651 87,531 -- 154,120 MDOT Parcel 75 800,000 I 800,000 MDOT Parcel 43&39 740,000 740,000 Land By Sunpath(Hauer) 700,000 700,000 ! - CR 17 220,000 220,000 _mac a� ;w 111111111111111111111111111111 000 2,600,000 2,soo, LibraryPolice Station 3,000,000 , 3,000,000 ! - Fire Station 1.1 1,280,000 1,280,000 PW/Police Building Update/Repairs 1,400,000 � 1,400,000 PW Facility 2,600,000 , -- 2,600,000 - SPUC Building Acquire ?? ?? , City Hall Expansion 1,500,000 1,500,000 is2.2`-,. • ,- • - . , • 6,569,500 200,000 1,880,500 2,489,000 2,000,000 - IIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIIII i i d s* ek Aie a-`,..��a�� xa,'' gy..: �.:. '"1;2. ''. a ,. aj !1,`- 'a�,.:m ,.,.. >. v .",-..k S a,�. tom '. I New Projects Stans Park Tennis Courts 200,000 100,000 100,000 1 CR 17 Landscaping 60,000 60,000 CR 17 Noise Abatement O'Dowd Lake Property (Boldt) 1,000,000 1,000,000 Block 25/Downtown Improvements - ! I River Front Development - ' --- Future Facility Site - Future PW Site - ! , Future Library Site - Subtotal 1,260,000 , 100,000 60,000 1,100,000 1 - - - • • r�zr.-�� k.., �±..w.-� s,�:�.... e.s,,a �� , �zy,...0',•a� 7 Operating Cost Increases 20002001 ---- -Five Police Officers (+2 in budget) 20,000 110,000 , -Ice Rink Operator 22,000 40,000 1 Recreation Director 5,000 10,000 I i_ Monens Bldg Rent/furnish 35,000 30,000 82,000 190,0001 Sale of Eagle Creek Hall 90,000 I Levy Factor Pay 2000 Levy 3,592,048 Percent Increase 00-01 $ 2.28% 5.29%i ProjBob.xls Sheetl 5/16/00 2:03 PM /5p I CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Major Expenditures/Funding Discussion DATE: May 9,2000 INTRODUCTION: The purpose of this memorandum is to provide a report as requested by Council regarding major projects which have been discussed recently, and sources of funding for those. BACKGROUND: At the February 29th City Council meeting,before acting on a request to have a preliminary design done for the potential use of MnDOT Parcel 75 (Southbridge) as a park, and to make an offer on 10 acres of land(also for park purposes) in the vicinity of Sun Path School,the Council directed that a report be made on all major projects, and list sources of funding for same. Obviously,the City has a Five Year Capital Improvements Plan(CIP) in place that is intended to provide for logical sequencing and funding for these major expenditures. There are,however, opportunities/challenges which come up that may not have been anticipated in the CIP,but should be considered otherwise, if funding permits and they are the desire of Council. Obviously, in a high growth community such as Shakopee, those situations come up more frequently than a fully developed community. I have,with the assistance of department heads and specifically Finance Director Gregg Voxland,identified projects which have been discussed by the Council over the past year, some of which have been included in the CIP, and others which have not. They are described on the attached sheet. DISCUSSION: Obviously,there are many major expenditure items which are underway,budgeted, or being considered but not budgeted. As alluded to previously,the preferred timing would be to have each of these issues addressed through the Capital Improvements Plan. Several of them have been, at least in part—baseball stadium improvements, Sun Path park property, Parcel 75 improvements, City facilities. There are others,however,that have come up,either as a result of emergency situations (such as the pool improvements),unanticipated availability(such as MnDOT Parcels 39/43), or other projects which are being suggested by others(O'Dowd Lake park property and C.R. 17 landscaping). Other issues are those being requested by City Council. There is an opportunity that exists that one of the projects,the sale of MnDOT Parcels 39/43,which could be a net revenue producer for the City. Depending upon the amount land to be used for park on MnDOT Parcel 75,there could also be some available revenues from that sale. Overall,the City has only a set amount in each fund to spend. If it is determined by the City Council that an unbudgeted item is of high priority,other projects which were intended to be funded through that source will have to be deferred, or not made at all. Obviously,the major expenses for which there,have not been provisions made at this point are the City's facilities issue. (City Hall,Public Works, Police,Library). With the architectural studies,more firm numbers will be able to be worked into the Capital Improvements Project. Potential sources of funding other than referenda will need to be identified, and will be recommended at the time of CIP consideration. ACTION REQUIRED: The Council should review, and discuss. 744 • Mark McNeill City Administrator MM:tw 2000 And Forward ------- Project Funding ------- 5/2/00 ----- Source General Q.E .71171771141.7rIfirrnril Bonds IlE Unreseved Fund Balance 1/1/00 1,918,000 3,522,119 1,630,632 3,934,612 - 154,120 Future 5 Year Revenue?? 2,500,000 2,000,000 4,000,000 - - Total Est.Available 1,918,000 6,022,119 3,630,632 7,934,612 - 154,120 Projects ------- Pool Reconstruction 386,118 --- 386,118 Baseball Stadium 241,651 -- 87,531 -- 154,120 MDOT Parcel 75 800,000 800,000 ----- MDOT Parcel 43&39 740,000 740,000 ----- Land By Sunpath(Hauer) 700,000 -- 700,000 --- CR 17 220,000 - 220,000 Library 2,600,000 2---- -_- ,600,000 Police Station 3,000,000 --- 3,000,000 Fire Station 1.1 1,280,000 _-- 1,280,000 Public Service Building Update 1,400,000 --- 1,400,000 PW Facility 2,600,000 --- 2,600,000 City Hall Expansion 1,500,000 --- 1,500,000 ,. tee._�. ->- r. -• 1z' Other Projects In CIP 6,569,500 200,000 1,880,500 2,489,000 2,000,000 -New Projects ------- Stans Park Tennis Courts 200,000 200,000 ----- CR 17 Landscaping 60,000 - 60,000 ---- CR 17 Noise Abatement ------- O'Dowd Lake Property (Boldt) 1,000,000 -- 1,000,000 --- Block 25/Downtown Improvements - ------ River Front Development - ------ Future Facility Site - ------ Future PW Site - ------ Future Library Site - ------ Subtotal 1,260,000 200,000 60,000 1,000,000 - - - �,��'■ .._. .fix � ---- Operating Cost Increases 2000 2001 Five Police Officers 20,000 110,000 ---- -Ice Rink Operator 22,000 40,000 ---- -Recreation Director 5,000 10,000 ---- -Monens Bldg Rent/fumish- 35,000 30,000 ---- 82,000 190,000 ---- -_ Sale of Eagle Creek Hall- 90,000 ---_-_-_-_ Levy Factor ------- Pay 2000 Levy 3,592,048 ----- - Percent Increase 00-01 $ 2.28% 5.29% ProjBob.xls Sheetl 5/8/00 8:34 AM MONNENS CONTRACTING, INC. 2315 West 133` Street Shakopee, MN 55379 License #20091018 Phone/Fax 445-8400 May 15, 2000 City of Shakopee Holmes Street Shakopee,MN 55379 Mark Mcneil: 2600 Square feet of rental space at 132 South Holmes Street, Shakopee, Minnesota Work to be completed on building, per plans and discussion with Mark Mcneil and Bruce Loney $70,000.00 36 months amortization with 10% leasehold improvements $2058.71 60 months amortization with 10% leasehold improvements $1487.30 Monthly Fees Base Rent: $2600.00 Taxes: $708.00 Water, Gas and Electric: (approx.) $600.00 Total Monthly Rent: 36 month's $5966.71 60 month's $5395.30 Total square footage of building 4711' Price of building $425,000.00 -.. 4.' • .e...•• . 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V) - ?.. . r..-........... ..........% 1 c 0 •t I Cd ! .7 5 ili.I 1 .4 I rs 6:1 twilimi"—a."8 7 3 ' , . t.) 2 0 •_.- 0 . . „1 , o i •.: .. ‘,......... .S gi = i 1 I il V) i >9 timmeminr.c r4 .- '5 : _ 1 I I Tel cii Ts' Cii id. i -4.1 I . . o ...v ! , • 3 3-.mum __.; 0.1. 1 APAZ .0,141 I Alt . ..,.. • CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: City Hall Lease Space DATE: May 9,2000 INTRODUCTION: The Council is asked to consider leasing approximately 2,500 sq. ft. of office space in the building across the street from City Hall. This is not a budgeted expenditure. BACKGROUND: Late in 1999 the City Council approved an architectural study of City facilities,to provide better information relating to the future of several City facilities, including City Hall. JEA Architects was hired to do that work, and has been working with staff to provide information as to what will be needed by the City during the next 10 years. City Hall is one of those facilities which is reaching capacity. Recent additions to the Engineering and Building staffs especially have filled to capacity the amount of space that can be utilized on the main floor. There is space available in the basement;the finished part of that is currently be leased to Scott Joint Prosecution Association,with a lease that expires June 30th of this year. Recently, staff became aware of the availability of the space that is located immediately across the street from the west entrance of City Hall. This was to have been a pizza restaurant,but financing fell through on that, and the contractor, Jeff Monnens,has now become owner of the property. A portion of that building is anticipated to be leased to a catering company;the remainder,2,506 sq. ft., is unfinished, and could be finished into office space. Public Works Director Loney and I have looked at this location. It would house the existing staff,and perhaps one additional position,upon completion. The attached draft facility programming notes from the JEA Architectural study, show that engineering currently has 1,480 sq. ft. In ten years, it is anticipated that they will need over 3,000 sq. ft. If the Council is open to leasing this now, it would provide a readily accessible space which will allow more time to transition into a larger facility. As stated previously,the downstairs of City Hall is available,but may not be ideally suited for the type of business that most Departments transact at City Hall, with a lot of walk in traffic. (Conversely,the basement location is ideal for the SJPA, as they have very little usage from walk in clients). Ultimately, assuming the City Hall stays at the same location, a one or two story addition in a portion of the parking lot east of City Hall will be needed. A one-story addition and partial remodeling of the existing building is estimated to cost$815,000; a two-story addition, and partial remodeling of the existing building,would cost just under$1.5 million. The lease space as proposed would allow several years of usage at City Hall before having to look at a major addition. This would allow the City an opportunity to phase in some of the higher need facility improvements;most likely Police or Public Works. It has also been suggested that the City may wish to look at acquiring this space permanently, so as to not impact the current City Hall parking lot. BUDGET IMPACT: The amount that has been proposed by Mr. Monnens is $10.00 per sq. ft., or$25,000 annually for lease. Yet to be established are utility costs(which might be negotiated into the$10.00 per sq. ft.),taxes(as it was an undeveloped lot previously),phone lines, and the cost to furnish. Some of the work area partitions could be moved from City Hall,but since those match other partitions in the building,and they will be used in over time, it probably makes more sense to order additional partitions for the work spaces at the proposed lease site. We are estimating $35,000 rent and set up costs for the FY 2000 budget. If the Scott Joint Prosecution lease is terminated,that would mean$ 10,200 less revenue annually(or$5,100 for one half of 2000)as their rental which would no longer be coming into the City annually. Therefore,this would be an unbudgeted expenditure of up to $35,000 this year. It is anticipated that staff would negotiate a three to five year lease, or possible purchase with Mr. Monnens, should the Council be interested in this property. DISCUSSION: Obviously, each year the City seems to have unbudgeted expenditure requests. Is this one which could have been anticipated? One of the reasons that Council commissioned the facilities study was go give the City better information so that it could make informed plans for future budgets. However,what was not anticipated was the availability of this particular space at this time. It is doubtful that a more convenient or better-suited lease space near City Hall would become available. If the decision is made not to pursue this at this time, and it is leased to another party,at some point in the near future the City will probably again be looking at leasing space. Having engineering in this location will still afford ready use of other support areas in City Hall (the conference rooms, City Council Chambers, etc.). While the ongoing annual lease cost would need to be built into future budgets,the set up g g costs could be offset by undesignated revenues elsewhere in the City budget. For example,the City will net approximately $90,000 from the sale of the Eagle Creek Thrift Store. No designated recipient of that revenue was identified in the 2000 budget. That could be used to offset the setup costs, and if directed by Council also the unbudgeted portion of rental fees for FY 2000. RECOMMENDATION: I recommend that the Council approve negotiating a contract with Jeff Monnens for 2,506 sq. ft. of rental space in the former Jerry's Pizza annex, and that a contract be brought back for consideration. ACTION REQUIRED: If the Council concurs, it should,by motion, direct staff to negotiate a lease agreement with Jeff Monnens for leased office space for City facilities. Mark McNeill City Administrator MM:tw JEA ARCHITECTS 9352102 P. 02 FACILITY PROGRAMMING SUMMARY NOTES __-__ T.,3{, pv. .1,_ 1 : _ , PROJECT: Shakopee City Facilities Study 1 FACILITY: City Hall GENERAL NOTES: 1. The study is to be for 10 year projected needs (City population of 25,000—30,000). 2. The available area in the basement should be investigated for Engineering Dept. to be located. ` 3. During after-hours use,the other areas should be secured from public access,e.g., during Council Meetings. 4. The City should verify if hazardous materials are present in the building. 5. Regarding the location of various departments, note the following: a. Administration, Finance and City Clerk should be located together. b. Community Development and Engineering should be located adjacent to each other. c. If space allows, Engineering could be located In the basement. AREA SUMMARY(inside dimenslonsl: Existing Proposed Personnel Square Sq. Ft Existing Future Area Feet (Total) Personnel (Total) Administration 1,092 1,928 4 6 City Clerk 791 1,168 3.5 5 Community Development 2,052 2,592 10.83 14.5 Engineering 1,480 3,034 9 15.5 General Areas 8,127 10,912 r,:r�r � .• qr "p:.w•�.,,. � �+r..:., � r, q :+!.4 lY,r;;�t'i Net'Totals.. ;:ti;G` � '4?"13;64 !i► °►; "�; 9 ".,. `..h,, . . . . y; :.•: . Proposed additional Net SF = 6,092 Proposed additional Gross (circulation and walls @40%) = 8,529 Proposed additional SF including 15% contingency = 9,808 SF available at City Hall (bsmt) - 3,411 Total additional SF required = 6,397 .-- ADDITIONAL NOTES: 1. Existing Building Gross SF Total =22,146(This Includes the former SJPA offices and Park and Rec Storage Area,which are all to be moved from City Hall.) JEA ARCHITECTS 9352102 P. 04 SHAKOPEE CITY HALL PRELIMINARY COST STUDY JEA Project No. 1061A April 3,2000 I. New City.Hall Building 30,000 Sq. Ft. X $92 /SF = $2,760,000 Construction Total $2,760,000 901 Ra*9e( )s :VQ9115113_a :. 0,1I'`, Additional Costs: See Below(2) II. nne Story Ci y HaILAdditlon Addition 6,500 Sq. Ft,X $110 /SF= $715,000 Remodeling 2.000 Sq. Ft.X $50 /SF = $100,000 Construction Total $815,000 Coat'1*9 (0,`"`''$6 k i ,• Additional Costs: See Below(2) III. Addition 12,800 Sq. Ft.X $100 /SF = $1,280,000 Remodeling 4,000 Sq. Ft.X $50 /SF = $200,000 Construction Total $1,480,000 CostRange(1)a:xx:$.1gcja' ,xw§'1.0,9,a;0g, :':..:.i;U..::::, Additional Costs: See Below(2) NOTES: (1) Cost range is obtained from research of similar building costs in the Twin Cities area. (2) g (itional Cgsts InClu_ : • Existing Building Maintenance Costs • Architectural/Engineering Fees • Equipment/Furniture • Asbestos Abatement • Testing 1�. 3 R�vts ® -- REQUEST FOR PROPOSALS TO DEVELOP A COMMERCIAL COMPLEX ON PARCELS 43 AND 39,AT U.S. HIGHWAY 169 and SCOTT COUNTY HIGHWAY 69 IN SHAKOPEE,MINNESOTA Submit Response To: City of Shakopee Attn: Paul Snook Economic Development Coordinator 129 Holmes Street South Shakopee, MN 55379 Table of Contents 1. Introduction 2. General Objectives 3. The Redevelopment Property 4. The Price 5. Standards and Controls 6. How to Participate 7. Submission of Proposals rfpprc143.DOC Introduction The City of Shakopee is seeking proposals for development of an important site in the southwest portion of the City. The site is strategically located at the intersection of U.S. Highway 169 and Scott County Highway 69,with excellent access to the Minneapolis—St.Paul metropolitan area and southwestern Minnesota. The site is excess property that the City intends to acquire from the Minnesota Department of Transportation(MnDOT). General Objectives The general objectives of this request for proposal are two-fold: 1 The City of Shakopee desires to make known to the development community that the above referenced property is available for purchase and development. 2 The City of Shakopee wants to ensure that the potential buyer or buyers are capable and willing to develop the property in a manner that will promote industry and provide employment,and will be consistent with the City's Comprehensive Plan.As part of this transaction,the City will require the developer to comply with certain limitations and restrictions that ensure development of the property in accordance with the City's objectives. The Redevelopment Property Attached to this request for proposal is a site map showing the subject property. The property contains 26.42 acres and is zoned for highway business uses.The City of Shakopee has entered into an agreement with MnDOT to acquire the property. One parcel of this site is a former truck stop and has a history of petroleum and non-petroleum related contamination.In 1989,an investigation of the site revealed leaking underground petroleum storage tanks.Ultimately,this contamination issue was resolved and the Minnesota Pollution Control Agency (MPCA)has closed its file with respect to this matter.This means that no further investigation or clean up is required based on the current use of the property, i.e.vacant land.It is possible that if the site is redeveloped, additional contaminated soil may be encountered and would need to be remediated. In addition,the MPCA found that there were possible non-petroleum contaminants in the groundwater into the site, but concluded that the source of these contaminants was likely an off-site source.In 1998 the MPCA concluded that no further monitoring was required because the monitoring done by the previous owner had indicated a steady decrease in the non-petroleum contaminant levels. The MPCA therefore issued a"no action" letter dated June 26, 1998. Under Minnesota Statutes,the City is exempt from responsibility for cleaning up petroleum and non- petroleum contaminants on land acquired from MnDOT(that MnDOT initially acquired through eminent domain). If remediation were necessary,the purchaser of the property from the City of Shakopee would be required to remediate any contamination that is discovered as part of the redevelopment of the property. There are programs available through the State of Minnesota to assist in the clean up of land that is to be redeveloped(Contamination Cleanup Grant;MN Petrofund).If necessary,the City of Shakopee may assist the purchaser of the property in accessing these programs. rfpprc143.DOC 2 1 The Price The City prefers a cash sale of the property for not less than$50,000 per acre,totaling$1,321,000. All developers selected by the City to submit detailed proposals must submit with their proposals an earnest payment of at least %of the minimum asking price,totaling $ . Those developers not selected to develop the site will receive a full refund of the earnest payment. Standards and Controls To assure the best utilization of the site in accordance with the City's comprehensive plan for development of this property,the following conditions are part of the offer: 1 The developer shall agree: 1.1 To use all property for uses and purposes designated in the proposal; 1.2 To begin the development within a period of time which the City determines as reasonable. Specific milestones include: 1.2.1 Closing and execution of development documents. 1.2.2 Start of Construction-Within 12 months from the closing date of the City's transfer of interest to developer.If work has not started by the agreed upon timeframe,the City reserves the right to terminate any development agreements and re-purchase the property at the original purchase price and take other measures to ensure its development. Site preparation shall not constitute "start of construction"within the meaning of this paragraph. 1.2.3 Project Completion-Within 24 months of start of construction 1.3 That the legal documents shall incorporate such obligations of the developer as the City deems necessary,proper,or convenient to effectuate the provisions of this proposal. Such provisions shall be for the sole use and benefit of the City of Shakopee. 2 The City of Shakopee specifically reserves the right to review and approve the developer's plans and specifications for development. Such review and approval shall be concerned primarily with, but not necessarily limited to conformance with standards set in the City's zoning ordinance. 3 All applicable land use and zoning regulations of the City of Shakopee shall apply to the development area. rfpprcl43.DOC 3 How to Participate The submission of proposals will be in two specific phases. The information shall be in sufficient detail to enable the City to give adequate consideration to the developer's proposal for the property being offered. These include: 1 Letters of Intent-All parties interested in the proposed redevelopment project shall submit a letter of intent to the City of Shakopee which contains the following information: 1.1 A detailed narrative statement describing the previous experience of the developer, especially with regard to projects that are similar in scale and character to the proposed development and emphasizing aspects in which the developer's qualifications are believed to be unique. 1.2 A list of the names and description of the experience of the consultants who would be used, such as the architect, landscape architect,attorney,accountant,contractor, and real estate management firm. 1.3 Financial information verifying that adequate net worth and/or liquid assets are available to the developer for the proposed project including the most current financial statement. (All financial documentation will be considered confidential until final approval of a purchase agreement and development agreement.) 1.4 A statement explaining how the project would be funded including the sources and amount of debt and equity financing.If funds are to be obtained from sources other than the developer,a statement should be obtained from such sources expressing interest in providing the necessary funds. 2 Detailed Proposals-After reviewing the letters of intent the City will then select a maximum of four(4)developers to submit more detailed proposals. These proposals will include but not necessarily be limited to the following information: 2.1 A detailed development plan showing the types of commercial uses and other potential uses which will occupy this development, including square footage and estimated market value. Include three(3)copies of graphic site plans and elevations to explain development proposals. 2.2 A schedule of design,construction and initial occupancy period. 2.3 An itemized estimate of construction costs and complete development costs, including acquisition. 2.4 A ten-year operating projection and assumptions. 2.5 A narrative statement explaining why the proposed use is economically feasible and consistent with the General Objectives outlined above.A description of the anticipated debt service; expected return on equity presented in ten year projections; and market assumptions which support your revenue projections.The opinion of qualified market analysts should be provided. 2.6 Detailed jobs and wage projections. 2.7 Earnest payment of %of the minimum asking price,totaling$ . rfpprc143.DOC 4 Submission of Proposals 1 Letters of Intent: All initial Letters of Intent,whether mailed or hand-delivered, must be received by the City of Shakopee no later than close of business,4:30 p.m., . Letters of Intent shall be mailed or submitted to: City of Shakopee ATTN: Paul Snook,Economic Development Coordinator 129 Holmes Street South Shakopee,Minnesota 55379 Ten(10)copies of the Letter of Intent and support documentation shall be submitted for our review. If you have any questions,please contact Paul Snook,Economic Development Coordinator at(612)496-9661;FAX(612)445-6718;E-Mail: psnook@ci.shakopee.mn.us. 2 Detailed Proposals: Those selected to submit detailed proposals will be notified by written correspondence from the City of Shakopee. The deadline for receipt of the detailed proposals by the City of Shakopee will be stated in this notification. The City of Shakopee will review the detailed proposals and offers after their submission and notify all proposers of the results. The City of Shakopee reserves the right to reject any and all proposals. The developer selected by the City shall proceed with due diligence, in cooperation with the City,toward the execution of a Purchase and Development Agreement. All proposal information shall become public information unless otherwise noted above. rfpprc143.DOC 5 F. 3 CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Paul Snook, Economic Development Coordinator SUBJECT: MnDOT Parcels 43 & 39 MEETING DATE: May 16, 2000 Introduction: As a follow-up to direction given by the City Council at the May 2'd meeting, staff was to confirm the status of MnDOT Parcel 39 (near the former K-Mart site). In addition, Council is asked to re-approve the enclosed Request for Proposals for development of parcels 43 and 39. Council is asked to re-approve the RFP since there is new language added to the RFP related to parcel 39 contamination and remediation. Background: At the May 2nd meeting there was made known multiple parties' interests in the 26 acres of MnDOT-owned property,which are remnants from the U.S.169 project. The City Attorney has been able to confirm that the environmental issue that had been delaying the closing of the parcel 39 sale appears to now be rectified(See Exhibit A). We will need to disclose in the Request for Proposal that a subsequent purchaser of the property from the City may be required to remediate any contamination that is discovered as part of the redevelopment of the property; however the City would not be responsible for that. Based upon this information, staff is bringing the Request for Proposals (Exhibit B) back to the City Council at the meeting on May 16th for re-approval. Options 1. Approve the revised Request for Proposals document for seeking development of parcels 43 and 39, and direct staff to post in appropriate publications. 2. Do not approve the revised Request for Proposals document. 3. Table for additional information. Recommendation Option 1. Approve the revised Request for Proposals document for seeking development of parcels 43 and 39,and direct staff to post in appropriate publications. Action Required Offer and pass a motion to approve the revised Request for Proposals document for development of parcels 43 and 39, and direct staff to post in appropriate publications. EXHIBIT A MEMORANDUM TO: Mark McNeill.City Administrator FROM: Jim Thomson, City Attorney DATE: May 11, 2000 RE: MnDOT Parcel 37 Background The City Council has previously authonzed the acquisition of the above referenced parcel from MnDOT. MnDOT is prepared to issue a deed to the City upon payment of the negotiated purchase price of$95,1(10. When the City Council authori,.ed the acquisition. it directed that the acquisition not be finalized until the City was assured that it would not be responsible for any costs associated with remediating any environmental contamination nn the property. I have researched the background to the environmental contamination issues and the following is a summary of my research. Petroleum—Related Contamination The parcel is commonly known as the "Gopher State Truck Stop" site. The site was used as a fuel outlet facility from approximately 1957 to 1989. In 1989, an investigation of the site revealed leaking underground storage tanks. Ultimately. this contamination issue was resolved and the Minnesota Pollution Control Agency has closed its file with respect to this matter. I am attaching a letter from the PCA dated June 9, 1998 documenting that the PCA's file has been closed. PCA's "closing" its file means that no further investigation or clean up is required bascd on the current use of thc property. i.e., vacant land. It is possible that if the site is developed. additional contaminated soil may he encountered and would need to he cleaned up. Non Petroleum-Related Contamination As part of its investigation into the site.the PCA determined that there were possible non-petroleum contaminants in the groundwater on the site. The PCA concluded that the source of these non- petroleum contaminants was likely an off-site source. (See PCA letter dated August 23, 1994 attached to this memo). The PCA concluded that other than long-term ground water monitoring. no additional actions were required on the site with respect to the non-petroleum contaminants. The PCA stated in its August 23. 1994 letter that no further action would need to be taken with respect to non-petroleum contaminants if ground water monitoring for at least 3 years indicated that the non- petroleum compounds were at levels below the Department of Health standards. The former owner of the site agreed to the long-term monitoring and in 1998 the PCA concluded that no further monitoring was required because the monitoring had indicated a steady decrease in the non-petroleum contaminant levels. The PCA therefore issued a"no action"letter dated June 26. 1998, a copy of which is attached. 001—d El/ZO d 660-1 OlE6AEEZ19+ N3AYN9 7 A03NN3N—Woad tE:9l 00-11-50 City's Risk if J'roperty is Acquired from MnDOT Minnesota Statutes. Chapter 115C.which is known as the "Petroleum Tank Release Clean-Up Act' sets forth the liability for owners of underground petroleum tanks. This statute establishes the responsibilities of the owner or operator of such tanks with respect to releases from the tanks. Section 115C.021, subdivision 3(a ) exempts MnDOT from responsibility for any release if MnDOT acquired the property by eminent domain. That provision also exempts persons. including governmental entities, who acquire such property from MnDOT. (MnDOT acquired Parcel 37 by eminent domain as part of the Highway 169 project.) Minnesota Statutes. Chapter 115B. which is known as the Environmental Response and Liability Act ("MERLA") sets forth the responsibilities for property owners on which a "hazardous substance" is located. Hazardous substances do not include petroleum products. MERLA gives the PCA the authority to require "responsible persons" to pay for the costs associated with cleaning up property that has been contaminated with hazardous substances. Again. however. Chapter 115B contains an exemption for property that has been acquired by eminent domain,either by the State or a political subdivision. Section 115B.03. subdivision 5(h) extends that exemption to anyone who acquires property from MnDOT if MnDOT acquired the property by eminent domain. Conclusion it appears that the nsk of further environmental contamination on the Parcel 37 is extremely small. in addition. because of the exemptions contained in Minnesota Statutes Chapters 115B and 115C. the City would not he responsible for the future costs associated with remediating any environmental contamination on Parcel 37 if the City acquires it from MnDOT. It is possible that a subsequent purchaser of the property from the City would he required to remediate any contamination that is discovered as part of the development of the property. I would therefore recommend that the City fully disclose the environmental history of the property to all potential buyers of the property. Jti-1So345v1 2 su i 5S.R5 001—d El/EO d 660-1 OlE61EEZ19+ N3AVNn7 4303)I—Woad P5:51 00-11—SO 05-12-00 10:27 From-KENNEDY 1 GRAVEN +6123379310 T-114 P.02/11 F-131 111 Minnesota Pollution Control Agency June 9, 1998 Mr. John Tracy JFT Corporation P. O.Box 4218 St.Paul,Minnesota 55104 RE: Petroleum Tank Release File Closure Site: Fortner Gopher Truck Stop, 11551 Johnson Memorial Drive, Shakopee Site 1D#: LEAK00000701 Dear Mr.Tracy: Response Section staff The Minnesota Pollution Control Agency (MPCA)Tanks and Emergency P has determined that the cleanup performed in response to the petroleum tank release at the site referenced above hasadoquatel addressed the petroleum contamination,and therefore the file closure letter applies only to the petroleum release at ' this release will be closed. The PP regarding the site. Based on available information,the MPCA staff concurs with the conclusions of your consultant that these actions have adequately addressed ed the petroleum tank release. Because you performed the requested work,the state may reimburse you for a portion of your costs accrued to date in relation to the petroleum tank release. The Petroleum Tank Release Cleanup Act establishes a certaincircumstancesprovides partial reimbursement for petroleum tank release fund which in trc eligibility cleanup costs. This fundis administered by the Petro Board. More specific � tY rules arc available from the Petro Board(612/297-4017 or 612/297-4203). or cleanupwork in response MPCA staff does not intend to require any more investigation � The cq status has been assignedto the petroleum release. Even thoughclosure to the petroleum tank release,the MPGA reserves the right to reopen this file and require additional work if in the be necessaryto address the petroleum tank contamination at future more work is determined to the site. This letter does not release any party from liability for the petroleum contamination l laws. andanyother applicable state or fedora Stat. ch. 11 SC (Supp. 1997), pP Minn- under ( PP The MPCA staff is closing only the petroleum release portion of this site.Additional information should be sent to the Ground Water and Solid Waste Division for regulatory oversight of the nonfuel contamination at the above-referenced site. This letter does not release any party from liability for the nonfuel contamination under state or federal law. 520 Lafayette Rd.N.:St.Pact,MN 55155-4194:(812)296-6300(Voice):(612)282-5332(TTY) Regional Offices:Duluth•Brainerd•Detroit Lakes•Marshall•Rochester Equal Opportunity Employer•Pane=on recycled Asper mnse.Nng st newt 20%leers tram paper roeyeteo by oenaumer:: 05-12-00 10:29 From-KENNEDY & GRAVEN +6123379310 T-114 P.03/11 F-131 • • U Mr.John Tracy Page 2 June 9, 1998 Questions pertaining to the Voluntary Investigation Cleanup program should be directed to Rick Jolley,at 612/297-5573. If you have any other questions regarding this letter,please contact me at 612/297-8611 or the site hydrologist, Stephen Thompson,at 6121297-8603. Sincerely, v 1 k Koplitz Project Manager Cleanup Unit Y Tanks and Emergency Response Unit Section MEK:U cc: Judith Cox, City Cleric Shakopee Terry Link,Fire Chief,Shakopee Al Frechettc, Scott County Solid Waste Officer Rick Jolley,MPCA, Site Response Section,,Voluntary Investigation and Cleanup Unit Minnesota Department of Commerce,Petrofund Staff TOTAL P.08 05-12-00 10:29 From-KENNEDY i GRAVEN +6123379310 T-114 P.04/11 F-131 4111 igir • Minnesota Pollution Control Agency August 23, 1994 1 Mr. John Tracy Foreston Oil Company,Inc. P.O. Box 4218 St.Paul,Minnesota 55104 RE: Former Gopher State Truck Stop, 11551 Johnson Memorial Drive, Shakopee,Minnesota Dear Mr.Tracy: The Minnesota Pollution Control Agency(MPGA)staff in the Voluntary Investigation and Cleanup Unit(VIC)has reviewed the following reports for the Former Gopher State Truck Stop property(the Site),located at 1511 Johnson Memorial Drive in Shakopee. The reports reviewed (the Site Documents)include: 1. '`Remedial Investigation Report,"Gopher State Truck Stop,prepared by Delta Environmental Consultants,Inc. (Delta),dated December 29, 1989; 2. "Screening Site Inspection Report for Gopher State Truck Stop, U.S EPA ID. MN985712744" prepared by the MICA,dated January 1993; 3. "Project Status Report/Site Monitoring Worksheet?'Former Foreston Oil Company/Gopher State Truck Stop, prepared by Delta, dated January 4, 1994; 4. Site Monitoring Worksheet-Fact Sheet#7,"Former Gopher State Truck Stop,prepared by Delta,dated April 1994;and, 5. "Environmental Assessment-Phase 1, forma.Gopher State Thick Stop,prepared by Delta Environmental Consultants,Inc.,June 14, 1994- The Site was used as a fuel outlet facility from 1957 to 1989;currently,the Size is vacant. In 1989,following an investigation of leaking underground storage tanks,volatile organic compounds (VOCs)of both petroleum and non-petroleum origin were identified in ground water az the Site. The VOCs benzene, 1,2-dichloroedo, 1,2-dichloropropane,trichloroethane and 1,2- dibromoethane have been detected in the ground water of the Shakopee Limestone at the Site above their Minnesota Department of Health's recommended Allowable Limits (RAIs) (the Identified Release). In 1991,this Site was placed on the U.S.Bnvironmeutal Protection Agency(EPA) Comprehensive Environmental Response,Compensation,and Liability Information System 52Q Lafayette Ra.N.;St.Paul, MN 55155.4184;(612)296-6300(voice);(612)282-5332(TTY) Regional Offices: Duluth•Brainerd•Detroit Lakes•Marshall•Rocr ester Equal Opportunity Employer•Prinked on recycled paper containing at least 10%fibers from paper recycled by consumers. 05-12-00 10:29 From-KENNEDY & GRAVEN +6123379310 T-114 P.05/11 F-131 Mr. John Tracy Page 2 August 23, 1994 (CERCLIS)inventory of potential hazardous waste sacs. The compound 1.2-dichlaroethane can be associated with petroleum fuels as an anti-knock additive. This compound,however,was found at the Site in higher concentrations compared to other petroleum compounds which suggests that the source for the 1,2-dichloroethanc is not likely the petroleum release at the Site. The Site Documents include a limited Phase I Investigation that outlines historical environmental conditions that exist at and near the Site. The Site Documents do not provide documentation that conclusively supports a specific off-site source,nor do the Site Documents document the absence of a source for the Identified Release at the Site,other than the area of the Site investigated far the underground storage tank release. Based on the results from the Site Documents the MPGA scarf concludes that the rum-petroleum associated VOCs 1,2-dichlomethanc and trichloroethane are likely from an off-site source. This conclusion is based on the limited soils investigation at the Site That has not indicated the presence of these cont minants,and also on the limited Phase 1 Investigation that concludes that Site activities did not include the use of the compounds found in the Identified Release. Based on the information provided in the Site Documents,the MPCA will not require additional response actions of the Site other than longterm ground water monitoring. The long-term monitoring shall include quarterly sampling of the five Sire ground water monitoring wells for 6 VOCs using Minnesota Department of Health's Method 465 D and collection of ground water elevations. Quarterly sampling of ground water wells shall be at least three times annually - during the spring, summer and fall. The results of the quarterly monitoring shall be documented in an annual ground watcrmonitoring report that shall include laboratory analytical reports,a summary ground water analytical table with a compilation of all previous data,a table summarizing ground water elevations,figures of the Site and of ground water elevation contours and a discussion of results. The Site Monitoring Worksheet(Fact Sheet#7)from the LUST Cleanup Program in the Hazardous Waste Division at the MPGA may be used as general guidance for this annual report for the VIC Program requirements. The ground water monitoring shall continue for at least three successive years unless three ground water sampling events indicate that all levels of compounds are below either their Minnesota Department of Health's RALs or their Health Risk Limits or the Maximum Contaminant Level of each respective non petroleum compound. This additional in$armation is requested in order to better establish trends in ground water quality and ground water flow direction. If this long tam monitoring is followed,no further action under Minn Stat. §§ 115B.01 to 1158.18,will be taken with respect to the Identified Release. This means that the MPCA will not recommend the Identified Release at the Site to have a Hazardous Ranking Score conducted nor recommend the Identified Release to placed on the Permanent List of Priorities. This determination to take no action applies only to the Identified Release at the Site. This determination to rake no further actions shall become invalid if the long terns monitoring requirements are not followed. Please also be advised that all statements, conclusions,and representations in this letter are subject to the disclaimers in Attachment A,and the MPCA Commissioner shall seek reimbursement for the casts incurred in the staffs review of reports and oversight of Site activities in accordance with Minn. Stat. § 1158.17,subd_ 14(1988). 05-12-00 10:30 From—KENNEDY & GRAVEN +6123379310 T-114 P.06/11 F-131 Imp Mr.John Tracy Page 3 August 23, 1994 If you have any questions about Jolley contents G 12)297SSSie73 or Jor oe would at(612)2964411. the site further,please contact Richard eY Sincerely, eedki (31"4.1 James L.Wainer.P.E. Division Manager Ground Water and Solid Waste Division /LW'kka Enclosures cc: Mr.Mark Klopitz, MPCA Mr.Brad Kraemer,Delia Environmental Consultants Mr.James Gallagher,Maun&Simon i . 05-12-00 10:30 From—KENNEDY & GRAVEN +6123379310 T-114 P.07/11 F-131 11, ATTACHMENT A p1SCLA1MELS Former Gopher State Truck Stop Site 1. Reservation of Authorities The MPCA Commissioner reserves the authority to take any appropriate actions with respect to any release,threatened release,or other conditions at the Site. The MP A Commissioner also sibed reserves the authority to take such actions if the voluntary party does not proceed in the manner deschis letter or if actions taken or omitted by the voluntary party with respect to the Site contribute to any release or threatened release,or create an imminent and substantial danger to public health and welfare. 2. No MPCA Assumption of Liability threatened release The MPCA,us Commissioner and staff do not assume any liability for any release, with regard e or other conditions at the Site or for any actions taken or omitted by the voluntary party the release,threatened release,or other conditions at the Site,whether the actions taken or omitted are m accordance with this letter or otherwise. 3. Letter Based on Current Information All statements,conclusions and representations in this letter are based upon information known to the MPCA Commissioner and staff at the time this letter`as issued. The MPCA Commissioner and staff reserve the authority to modify or rescind any such statement,conclusion or representation and to take any appropriate action under his authority if the MPCA Commissioner or staff zcquires information after issuance of this letter that provides a basis for such modification or action. 4 Disclaimer Regarding Use or Development of the Property The MPCA,its Commissioner and staff do not warrant that.the Site is suitable or appropriate for any particular use. 5. Disclaimer Regarding Investigative or Response Action at the Property Nothing in this letter is intended to authorize any response action under Minn. Stat. $ 1158.17, subd. 12. • Page 1 of 1 05-12-00 10:30 From-KENNEDY & GRAVEN +6123379310 T-114 P.08/11 F-131 - ilk1111 111 Minnesota Pollution Control Agency '111111111110". r— Poat•1r Fax Note 9671 Dmestir Idd June 26, 1998 To o �/ g Frain Vie, r'4t'A`1 cdajiliPtInge-irc,OO 'w -h • 6 ii 337 9 2.7 Si1 Pnond a&SI 1.-A1 S`S73 Mr.John Tracy JFT Corporation P.O.Box 4218 St.Paul,Minnesota 55104 RE: Former Gopher State Truck Stop MPCA Project Number 4510 Dear Mr.Tracy: The Minnesota Pollution Control Agency(MPCA)staff in the Voluntary Investigation and Cleanup Unit(VIC)has determined that actions requested by the MPCA in regards to non-petroleum releases identified at the Former Gopher State Truck Stop property(the Site),located at 11551 Johnson Memorial Drive in Shakopee,have been completed. The MPCA Tanks and Emergency Response Section(TERS)staff issued a closure letter for petroleum release for Leak No.701 at the Site an Junc 9, 1998. The reports reviewed that this decision was based on the documents (the Site Documents)which include: 1. "Remedial Investigation Report,"Gopher State Truck Stop,prepared by Delta Environmental Consultants,Inc. (Delta),dated December 29, 1989; 2. "Screening Site Inspection Report for Gopher State Truck Stap,U.S.EPA ID:MN985712744," prepared by the MPCA,dated January 1993; 3. "Project Status Report/Site Monitoring Worksheet,"Former Foreston Oil Company/Gopher State Truck Stop,prepared by Delta,dated January 4, ]994; 4. "Site Monitoring Worksheet-Fact Sheet#7,"Former Gopher State Truck Stop,prepared by Delta, dated April 1994; 5. "Environmental Assessment-Phase I,"Former Gopher State Truck Stop,prepared by Delta,dated June 14, 1994; 6. "Quarterly Monitoring Fact Sheet No-7 Report,August and November 1994,"prepared by Delta,dated February 7, 1995; 7. "Closure Request-Annual Monitoring Report,"prepared by Delta,dated January 25, 1996;and 8. "Annual Monitoring Report,TERS Fact Sheet 3.26,"dated April 1996. 520 Lafayette R . N.: St. Paul, MN 55155-4194:(612)296-6300(Voice);(612)282-5332(TTY) Regional Offices:Duluth•Brainerd•Detron LaKes•Marshall•Rochester Equal Opportunity Emproyor•Rental on recycled paper containing at least 20%fibers from paper rocyee4 oy consumers 05-12-00 10:31 From-KENNEDY & GRAVEN +6123379310 T-114 P.09/11 F-131 fir 41111r W Mr.John Tracy ' Page 2 June 26, 1991 The Site was used as a fuel outlet facility from 1957 to 1989.Ol volatile organic compounds(VOCs)of in 1989,following an investigation of leaking underground storage tanks for TEM Leak site No.both petroleum and non-petroleum origin were identified in groundgrdwater p�eSAe weredeDSpecifically,the in non-petroleum VOCs 1,1,2-trichloroethene, 1,2-di chloroethane, water of the Shakopee Limestone at the Site(the identified Release)above their respective +a Minnesota Department of Health's(MDI3)Health Risk Limits(HRLs). e Based on the likelihood that the Identified Release originatedfrom off-site,Site MFCA issued la No releases Action Letter(the Letter)for the non-petroleum of the Site ground water wells. The Letter conditioned upon conducting long-term monitoring r uired that the long-term monitoring was to continue for at least three successive years for the No eq Action Determination to apply. ons f VOCs in Based on the results from the Site Documents and the hatCSdt oY fug further monitoring shalin ii beor�uired for the Site momitorsng wells,the MPCA staff concludes t issued to the non-petroleum associated VOCs at the Site. Therefore, 111SBo18,with respect to the Identified ed Release.take no further action under Minn.Stat. §§ 1158.01e r This means that the MPGA will not require additional responseess:at the nse of o heaSita other than ground water monitoring,will not recommend the Identified ous Ranking;Score conducted,nor recommend the Identified Release to be placed on the Permanent List of Priorities. The MPCA staff appreciate the cooperative actions that about the contents ou have taken to evaluate of this letterVar would environmental issues associated with this Site. U you have any questionsat(612)297-isr Joe Otte at like to meet to discuss the Site further,please contact Richard Jolley (612)296.0892. Sincerely, James L. Warner,P.E. Division Manager Ground Water and Solid Waste Division ILW:tac cc: Mark Klopicc,MPCA Scott Williams ` iii. , TOTAL P.22 EXHIBIT B REQUEST FOR PROPOSALS TO DEVELOP A COMMERCIAL COMPLEX ON PARCELS 43 AND 39,AT U.S. HIGHWAY 169 and SCOTT COUNTY HIGHWAY 69 IN SHAKOPEE,MINNESOTA Submit Response To: City of Shakopee Attn: Paul Snook Economic Development Coordinator 129 Holmes Street South Shakopee, MN 55379 Table of Contents 1. Introduction 2. General Objectives 3. The Redevelopment Property 4. The Price 5. Standards and Controls 6. How to Participate 7. Submission of Proposals rfpprc143.DOC 1 Introduction The City of Shakopee is seeking proposals for development of an important site in the southwest portion of the City. The site is strategically located at the intersection of U.S.Highway 169 and Scott County Highway 69,with excellent access to the Minneapolis—St.Paul metropolitan area and southwestern Minnesota. The site is excess property that the City intends to acquire from the Minnesota Department of Transportation(MnDOT). General Objectives The general objectives of this request for proposal are two-fold: 1 The City of Shakopee desires to make known to the development community that the above referenced property is available for purchase and development. 2 The City of Shakopee wants to ensure that the potential buyer or buyers are capable and willing to develop the property in a manner that will promote industry and provide employment, and will be consistent with the City's Comprehensive Plan.As part of this transaction,the City will require the developer to comply with certain limitations and restrictions that ensure development of the property in accordance with the City's objectives. The Redevelopment Property Attached to this request for proposal is a site map showing the subject property. The property contains 26.42 acres and is zoned for highway business uses. The City of Shakopee has entered into an agreement with MnDOT to acquire the property. One parcel of this site is a former truck stop and has a history of petroleum and non-petroleum related contamination.In 1989,an investigation of the site revealed leaking underground petroleum storage tanks.Ultimately,this contamination issue was resolved and the Minnesota Pollution Control Agency (MPCA)has closed its file with respect to this matter. This means that no further investigation or clean up is required based on the current use of the property, i.e.vacant land.It is possible that if the site is redeveloped,additional contaminated soil may be encountered and would need to be remediated. In addition,the MPCA found that there were possible non-petroleum contaminants in the groundwater into the site,but concluded that the source of these contaminants was likely an off-site source.In 1998 the MPCA concluded that no further monitoring was required because the monitoring done by the previous owner had indicated a steady decrease in the non-petroleum contaminant levels.The MPCA therefore issued a"no action"letter dated June 26, 1998. Under Minnesota Statutes,the City is exempt from responsibility for cleaning up petroleum and non- petroleum contaminants on land acquired from MnDOT(that MnDOT initially acquired through eminent domain).If remediation were necessary,the purchaser of the property from the City of Shakopee would be required to remediate any contamination that is discovered as part of the redevelopment of the property.There are programs available through the State of Minnesota to assist in the clean up of land that is to be redeveloped(Contamination Cleanup Grant;MN Petrofund).If necessary,the City of Shakopee may assist the purchaser of the property in accessing these programs. rfpprc143.DOC 2 The Price The City prefers a cash sale of the property for not less than$50,000 per acre,totaling$1,321,000. Each proposal should include the following: 1 A detailed description of the type of commercial businesses and other uses which will occupy this development, including square footage and estimated market value; 2 The developer's acquisition and development costs, 3 Operating costs; 4 Anticipated debt service; 5 Expected return on equity presented in ten-year projections;and 6 Number of jobs to be created on the site,and estimated wages. The proposal should demonstrate the feasibility of the project and support the proposed acquisition price. Standards and Controls To assure the best utilization of the site in accordance with the City's comprehensive plan for development of this property,the following conditions are part of the offer: 1 The developer shall agree: 1.1 To use all property for uses and purposes designated in the proposal; 1.2 To begin the development within a period of time which the City determines as fi reasonable. Specific milestones include: 1.2.1Closing and execution of development documents. 1.2.2Start of Construction-Within 12 months from the closing date of the City's transfer of interest to developer.If work has not started by the agreed upon timeframe,the City reserves the right to terminate any development agreements and re-purchase the property at the original purchase price and take other measures to ensure its development. Site preparation shall not constitute "start of construction"within the meaning of this paragraph. 1.2.3Project Completion-Within 24 months of start of construction 1.3 That the legal documents shall incorporate such obligations of the developer as the City deems necessary,proper,or convenient to effectuate the provisions of this proposal. Such provisions shall be for the sole use and benefit of the City of Shakopee. 2 The City of Shakopee specifically reserves the right to review and approve the developer's plans and specifications for development. Such review and approval shall be concerned primarily with, but not necessarily limited to conformance with standards set in the City's zoning ordinance. 3 All applicable land use and zoning regulations of the City of Shakopee shall apply to the development area. rfpprcl43.DOC 3 How to Participate The submission of proposals will be in two specific phases. The information shall be in sufficient detail to enable the City to give adequate consideration to the developer's proposal for the property being offered. These include: 1 Letters of Intent-All parties interested in the proposed redevelopment project shall submit a letter of intent to the City of Shakopee which contains the following information: 1.1 A detailed narrative statement describing the previous experience of the developer, especially with regard to projects that are similar in scale and character to the proposed development and emphasizing aspects in which the developer's qualifications are believed to be unique. 1.2 A list of the names and description of the experience of the consultants who would be used, such as the architect, landscape architect,attorney, accountant,contractor,and real estate management firm. 1.3 Financial information verifying that adequate net worth and/or liquid assets are available to the developer for the proposed project including the most current financial statement. (All financial documentation will be considered confidential until final approval of a purchase agreement and development agreement.) 1.4 A statement explaining how the project would be funded including the sources and amount of debt and equity financing.If funds are to be obtained from sources other than the developer,a statement should be obtained from such sources expressing interest in providing the necessary funds. 2 Detailed Proposals-After reviewing the letters of intent the City will then select a maximum of four(4)developers to submit more detailed proposals. These proposals will include but not necessarily be limited to the following information: 2.1 A proposed development plan showing utilization of the property. Include three(3) copies of graphic site plans and elevations,to explain development proposals. 2.2 A schedule of design,construction and initial occupancy period. 2.3 An itemized estimate of construction costs and complete development costs, 2.4 A ten-year operating projection and assumptions. 2.5 A narrative statement explaining why the proposed use is consistent with the General Objectives outlined above and economically feasible.A description of the market assumptions,which support your revenue projections.The opinion of qualified market analysts should be provided. 2.6 Detailed jobs and wage projections. All proposal information shall become public information unless otherwise noted above. rfpprc143.DOC 4 Submission of Proposals 1 Letters of Intent: All initial Letters of Intent,whether mailed or hand-delivered,must be received by the City of Shakopee no later than close of business,4:30 p.m., .Letters of Intent shall be mailed or submitted to: City of Shakopee ATTN: Paul Snook,Economic Development Coordinator 129 Holmes Street South Shakopee,Minnesota 55379 Ten(10)copies of the Letter of Intent and support documentation shall be submitted for our review. If you have any questions,please contact Paul Snook,Economic Development Coordinator at(612)496-9661;FAX(612)445-6718;E-Mail:psnook@ci.shakopee.mn.us. 2 Detailed Proposals: Those selected to submit detailed proposals will be notified by written correspondence from the City of Shakopee. The deadline for receipt of the detailed proposals by the City of Shakopee will be stated in this notification. The City of Shakopee will review the detailed proposals and offers after their submission and notify all proposers of the results. The City of Shakopee reserves the right to reject any and all proposals. The developer selected by the City shall proceed with due diligence, in cooperation with the City,toward the execution of a Purchase and Development Agreement. rfpprc143.DOC 5 • CITY OF SHAKOPEE Memorandum TO: Mayor and City Council FROM: Mark McNeill, City Administrator SUBJECT: Recycling Program Agreement DATE: May 16, 2000 INTRODUCTION: The Council is asked to authorize an agreement between Scott County and the City for reimbursement of recycling expenses. BACKGROUND: This year, as in previous years, Scott County has provided reimbursement to participating cities for recycling efforts. Monies are provided to Scott County from the Minnesota Office of Environmental Assistance. This goes to help cover some of the expenses incurred on Clean-up Day, which occurred April 29th,regarding recycling such things as tires,used appliances, and other solid waste recyclables. This is actually for expenditures which have occurred on April 29th,however,we did not get the agreement from the County until after that date. RECOMMENDATION: I recommend that the City enter into the agreement. ACTION REQUIRED: If the Council concurs, it should,by motion, authorize the appropriate officials to sign the "Recycling Program Agreement"by and between Scott County and the City of Shakopee. Mark McNeill City Administrator MM:tw RECYCLING PROGRAM AGREEMENT THIS AGREEMENT made and entered into between the COUNTY OF SCOTT, State of Minnesota, hereinafter referred to as COUNTY by and through the Scott County Board of Commissioners, and THE CITY OF SHAKOPEE, Scott County Minnesota, hereinafter referred to as CITY, by and through the City Council. WITNESSETH: WHEREAS, Minn. Stat. Sect. 473.8441, establishes the Local Recycling Development Program providing grants to counties to be distributed by the Office of Environmental Assistance; and WHEREAS, Minn. Stat. Sect. 115A.557, establishes the COUNTY Waste Reduction and Recycling Funding program to be distributed by the Office of Environmental Assistance; and WHEREAS, Scott County has received funding from the Office of Environmental Assistance identified as Local Recycling Grant; and WHEREAS, These funds are to be used for the activities specified in the Office of Environmental Assistance Grant Agreement and approved by the Scott County Board on May 2, 2000; and NOW, THEREFORE, in consideration of the mutual covenants and promises contained in this Agreement, the parties mutually agree to the following terms and conditions: 1. PURPOSE This Agreement shall establish a mechanism for distribution of funds obtained from the Minnesota Office of Environmental Assistance in accordance with respective agreements related thereto for implementation and/or enhancement of recycling programs in Cities and Townships within Scott County consistent with the COUNTY Solid Waste Master Plan. 2. SCOPE OF SERVICES The CITY is obligated and agrees to the following: a. Recyclable materials will be collected by a hauler licensed by Scott County; b. Recyclables will be delivered to a licensed recycling facility; c. Organic materials (yard and tree waste) will be processed into compost at a licensed/permitted yard waste compost facility or a permitted land application site; d. Upon completion of the event, a report will be submitted to the COUNTY identifying the quantities of materials recycled, the facility to which they were delivered and processed at; including actual expenditures and revenues. In the event that another jurisdiction (city or township) participates with the CITY's event, the COUNTY will transfer the participating jurisdiction's allocated share in the program funding to the CITY upon receipt of a resolution from the participating jurisdiction indicating involvement. The CITY shall advertise the neighboring jurisdiction's participation and allow their residents to participate in the collection. In the event that a neighboring jurisdiction participates with the CITY's event, the CITY shall provide the Authorized Agent of Scott County a copy of any and all such advertisements. 3. EFFECTIVE DATE OF AGREEMENT This Agreement shall be effective upon execution by all parties to the Agreement. 4. TERM OF AGREEMENT This Agreement shall remain in effect until December 31, 2000, or until all obligations set forth in this Agreement have been satisfactorily fulfilled, unless earlier terminated as provided in Section 20 herein. 5. GRANT PAYMENT The COUNTY shall pay to the CITY a percentage of the grant money available through the COUNTY for this program, determined by each Scott County municipality and township population; to be used for the development and/or enhancement of recycling programs. 2 6. AVAILABILITY OF FUNDS Notwithstanding any provision of this Agreement to the contrary, the maximum amount of grant payment available to the CITY under this agreement is $6.915.00. Any funding availability for future years or for other recycling projects shall be at the complete discretion of the COUNTY. 7. UNEXPENDED FUNDS Any grant payments provided to the CITY under this Agreement shall be returned to the COUNTY in the event the grant payment is not used according to the requirements of this Agreement or has not been used within twelve (12) months of receipt by the CITY, whichever occurs first. 8. AUTHORIZED AGENT OF SCOTT COUNTY Scott County shall appoint an authorized agent for the purpose of administration of this Agreement. The CITY is notified of the authorized agent of Scott County as follows: Steve L. Steuber Environmental Health Department 200 Fourth Avenue West Shakopee, MN 55379-1393 9. RECORDS -AVAILABILITY AND RETENTION Complete and accurate records of the activities performed pursuant to this Agreement shall be kept by the CITY for a minimum of three (3) years following termination of this Agreement. The retention period shall be automatically extended during the course of any administrative or judicial action involving the COUNTY of Scott regarding matters to which the records are relevant. The retention period shall be automatically extended until the administrative or judicial action is finally completed or until the authorized agent of the COUNTY notifies the CITY in writing that the records need no longer be kept. Pursuant to Minn. Stat. Section 16B.06, Subd. 4, the books, records, documents, and accounting procedures and practices of the CITY relative to this Agreement shall be subject to examination by the COUNTY and the State Auditor. 3 10. INDEMNIFICATION The CITY shall save and protect, hold harmless, indemnify, and defend the COUNTY, its commissioners, officers, agents, employees and volunteer workers against any and all liability, causes of action, claims, loss, damages or cost and expense arising from, allegedly arising from, or resulting directly or indirectly from any errors and omissions and/or negligent acts and omissions of the CITY in the performance of this Agreement. 11. SUBCONTRACTS The CITY shall not subcontract any portion of the work to be performed under this Agreement nor assign this Agreement without the prior written approval of the authorized agent of the COUNTY. The CITY shall ensure and require that any subcontractor agrees to and complies with all of the terms of this Agreement. Any subcontractor of the CITY used to perform any portion of this Agreement shall report to and bill the CITY directly. The CITY shall be solely responsible for the breach, performance or nonperformance of any subcontractor. 12. COMPLIANCE WITH REQUIREMENTS OF THE LAW In performing the provisions of this Agreement, both parties agree to comply with all applicable federal, state or local laws, ordinances, rules, regulations or standards established by any agency or special governmental unit which are now or hereafter promulgated insofar as they relate to performance of the provisions of this Agreement. In entering into this Agreement, the CITY, its agents, employees and any subcontractors of the CITY in carrying out the terms and conditions of this Agreement, agree to abide by the provisions of the Minnesota Governmental Data Practices Act, Minn. Stat. Ch. 13, as amended, and Minn. Rules promulgated pursuant thereto. 13. SUCCESSORS AND ASSIGNS The COUNTY and the CITY, respectively, bind themselves, their partners, successors, assigns, and legal representatives to the other party to this Agreement and to the partners, successors, assigns, and legal representatives of such other party with respect to all covenants of this Agreement. Neither the COUNTY nor the CITY shall assign, sublet, or transfer any interest in this Agreement without the prior written consent of the other. 14. ACCESS TO PREMISES The CITY shall arrange access, as necessary, to work sites for the COUNTY for the purpose of verification of any requirements as described in this Agreement. 4 15. INDEPENDENT CONTRACTOR It is agreed that nothing contained in this Agreement is intended or should be construed as creating the relationship of co-partner, joint venturers, or an association with the COUNTY and the CITY. The CITY is an independent contractor and neither it, its employees, agents, subcontractors nor representatives shall be considered employees, agents or representatives of the COUNTY. Except as otherwise provided herein, the CITY shall maintain, in all respects, its present control over the means and personnel by which this Agreement is performed. From any amounts granted to the CITY, there shall be no deduction for federal income tax or FICA payments nor for any state income tax, nor for any other purposes which are associated with an employer/employee relationship. Payment of federal income tax, FICA payments, state income tax, unemployment compensation taxes, and other payroll deductions and taxes are the sole responsibility of the CITY. 16. NOTICES Any notices to be given under this Agreement shall be given by enclosing the same in a sealed envelope, postage prepaid, and depositing the same in the United States Postal Service, addressed to the CITY at its address stated herein, and to the authorized agent of the COUNTY at the address stated herein. 17. CONTROLLING LAW This Agreement is to be governed by the laws of the State of Minnesota. 18. AMENDMENTS The Parties agree that no amendments, alterations, variations, or modifications to this Agreement, or any attachments hereto, shall have any force or effect unless the change is reduced to writing and duly signed by the parties. The execution of the change shall be authorized and signed in the same manner as for this Agreement. 19. ENTIRE AGREEMENT It is understood and agreed that this Agreement constitutes the entire Agreement of the parties and that this Agreement supersedes all oral agreements and negotiations between the parties relating to the subject matter hereof as well as any previous agreements presently in effect between the COUNTY and the CITY relating to the subject matter hereof. 5 20. TERMINATION This Agreement shall terminate under the following circumstances: a. By mutual written Agreement of the parties; b. By either party, with or without cause, giving not less than thirty (30) days written notice, delivered by mail or in person to the other party, specifying the date of termination; c. This Agreement shall automatically terminate without notice on December 31, 2000. 21. PROPERTY DISTRIBUTION Assets acquired in whole or in part with grant payments provided under this Agreement shall be the property of the CITY so long as said assets are used by the CITY for the purpose stated in this Agreement. In the event the CITY discontinues use of the assets for said purpose, any remaining assets shall, at the COUNTY's discretion, either be returned to the COUNTY or sold, and the net proceeds of such sale returned to the COUNTY. 22. SEPARABILITY In the event any provision of this contract shall be held invalid and unenforceable, the remaining provisions shall be valid and binding upon the parties unless such invalidity or non-enforceability would cause the contract to fail its purpose. One or more waivers by either party of any provision, term, condition or covenant shall not be construed by the other party as a waiver of a subsequent breach of the same by the other party. 23. EQUAL EMPLOYMENT AND NONDISCRIMINATION In connection with the work under this Agreement, the CITY agrees to comply with the applicable provisions of state and federal equal employment opportunity and nondiscrimination statutes and regulations. In addition, upon entering into this Agreement, the CITY certifies that it has been made fully aware of Scott County's Equal Employment Opportunity and American's with Disabilities Act, attached hereto and incorporated herein as Exhibit A through both oral and written communications, that it supports this policy and that it will conduct its own employment practices in accordance therewith. Failure on the part of the CITY to conduct its own employment practices in accordance with COUNTY Policy may result in the withholding of all or part of regular payments by the COUNTY due under this Agreement unless or until the CITY complies with the COUNTY Policy, and/or suspension or termination of this Agreement. 6 IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed intending to be bound thereby. CITY OF SHAKOPEE COUNTY OF SCOTT • By: By: -1 . -� Title: Michael Sobota Community Development Director SCOTT COUNTY Community Development Division Date: Date: SiSlaTi ATTEST: ATTEST: By: By: Title: Allen J. Frechette, Environmental Health Manager SCOTT COUNTY Community Development Division Date: Date: ) � a°00 APPROVED AS TO FORM By: Thomas J. Harbinson, County Attorney Date: 7