HomeMy WebLinkAboutCC 11-08-1984
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Minutes of Special Council Meeting
Village of Arden Hills
Thursday, November 8, 1984 - 8:00 p.m.
Village Hall
Call to Order
Pursuant to due call and notice thereof, Mayor Woodburn called the
meeting to order at 8:00 p.m.
Roll Call
Present - Mayor Robert Woodburn, Councilmembers Dale Hicks.
Kathleen Rauenhorst. Nancy Hansen, Thomas Mulcahy
-- (8:10 p.m.)
Absent. - None
Also Present - Bond Counsel Thomas Deans,.Treasurer Donald Lamb,
Clerk Administrator Charlotte McNiesh, Deputy Clerk
Dorothy Zehm
Canvass City Election - November 6, 1984
Rauenhorst moved, seconded by Hicks, that Council certify the
results of the November 6, 1984 Election as per Statment of Result
of Canvass, declaring Robert L. Woodburn elected Mayor for a two
year term; declaring Gary M. Peck and Thomas Sather elected
Councilmen for term of four years; declaring Nancy K. Hansen
elected Councilman to fill the unexpired term ending December 31,
1986. Motion carried unanimously (4-0).
McNiesh reported that 5114 voted, 822 registered on election day;
reported that none of the precincts experienced long lines, except
at 7:00 a.m.; reported that the election crews were overy efficient,
and the cost of the election is about $1000 under budget, as a
result. Council extended its thanks and appreciation to the
election crews.
December Council Meeting Schedule
Hicks moved, seconded by Rauenhorst, that December Council meetings
be scheduled on December 3rd and 17th. Motion carried unanimously
(5-0 )
Claims and Payroll
Rauenhorst moved, seconded by Hansen, that Council approve the
Claims and Payroll as presented. Motion carried unanimously (5-0).
PUBLIC HEARING (8:30 p.m.)
Case No. 84-5. Public Hearing on the Issuance of Industrial
Develo~ment Revenue Bonds for Proposed Veterinary Care Facility by
Richar H. Routhe
Mayor Woodburn opened the public hearing at 8:30 p.m. and Clerk
Administrator McNiesh verified publication of the Notice of Hearing
. in the New Brighton Bulletin and St. Paul Dispatch on October 24.
1984.
Bond Counsel Thomas Deans was asked to explain the nature of the
project, and its proposed financing. Deans referred Council to a
Preliminary Information Statement. advised that the applicant is
Dr. Richard Routhe; reported that from the proceeds of the
industrial revenue financing, Dr. Routhe proposes to acquire land
for, construct and equip an approximately 2400 square foot
building for use as a multipurpose veterinary care facility. The
construction period is estimated to be from December 31. 1984 to
May 1, 1985. The facility will be located on 1/3 acre at 1261 West
County Road E. Deans said it is estimated that approximately 5
new jobs will be created by the project at an annual payro 11 of
approximately $75.000.
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Minutes of Special Council Meeting
Thursday, November 8, 1984 - 8:00 p.m.
Page Two
Deans reported that the applicant has submitted the breakdown as
to the use of the financing proceeds; noted that it is not the entire
amount that will be spent on this project; it is just the way the
proceeds will be used; costs will be closer to $500,000 - $525,000
In addition, all City expenses not specified, will be part of that
$400,000, including the City Administrative Fee in the amount of
$5,000. and ~npaid assessments pending on the facility will have
to be ascertained and paid at the time of closing. Proposed
financing is over a ten-year term commencing December 15, 1984.
Deans reported that the applicant has submitted a projected
annual budget and projected beginning balance sheet for the project .
for the City's review.
Deans said we have received a feasibility letter from Price Consult-
ing stating that the project is economically feasible and the
revenue bonds can be successfully issued and sold. Deans said it
is his understanding that we will be receiving, in the ftext few
days, a feasibility letter from a financial institution stating
that it would be willing to purchase the bond or note.
Deans said, if the project is of the type of construction for which
the City wishes to utilize this financing, then he makes the
recommendations as specified in his report of 11/8/84:
(a) A 1 ega 1 opinion relating to the title of the property
should be supplied prior to the time of closing.
(b) A personal and corporate guaranty of payment by the
applicant and his corporation is recommended.
(c) The City Clerk-Administrator and staff should review
whether any significant City expenditures will be required
for any sewer, utility, street or other improvements and,
if so, all of the costs thereof. A determination should
be made as to the time frame and method of financing
these improvements, including the review of any developer
agreements which may be necessary. All connections to
existing improvements should be paid for by the applicant
as well as any connection or hook-up charges in compliance
with City ordinance. Any existing or pending assessments
to the property where the project equipment and fixtures
are to be installed should also be paid at closing.
(d) All costs of the City and its agents, as well as all other
attributable costs .of the financing should be paid at the
time of closing. The City Administrative fee should also
be paid at closing.
(e) If a 1% deposit is necessary to retain the City's indust-
rial revenue bond authority allocation for this project.
the applicant should provide the necessary funds.
Deans said if the project receives preliminary approval tonight.
a $10,000 refundable deposit will be paid tomorrow; noted that the .
applicant has already paid the 1% deposit for this project to go to
the State; reported that the City has received notice from the State
that his allocation from the competitive pool, in the amount of
$400,000 has been approved. If the Preliminary Resolution, before
the Council tonight, is approved, the application materials will
then be signed by the Mayor and Clerk Administrator and submitted
to the Energy and Economic Development Authority for its approval;
when the project terms are finalized, the project will be brought
back before the Council for its final approval, before the bonds
are issued. for consideration of the details of financing.
Written or Telephone Comments
McNiesh reported that none have been received.
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Minutes of Special Council Meeting
Thursday, November 8. 1984 - 8:00 p.m.
Page Three
Comments from the Floor Relative to IRB Financing
Bob carlsoni 1482 Bussard Court asked the purpose of funding the
enterprise n this manner. Deans listed some of the items from the
Resolution:
1. To assist in selective development of the community.
2. Sustain and improve the tax base.
3. Help provide the range of services and employment
. opportunities required by the population.
4. Assist the City in achieving these objectives.
5. Increase the assessed valuation in the City.
6. Help maintain a positive relationship between .assessed
valuation and debt.
7. Enhance the image and reputation of the community.
Deans noted that statutory policies include promotion, attraction
and encouragement and development of economically sound business;
to prevent the emergence of blighted and marginal lands; to prevent
areas of chronic unemployment; to prevent the movement of talented
and educated persons, to provide for an adequate tax base; to
redevelop marginal land; to aid in the correction and persistence
of unemployment - anyone of these, State might accept.
Dr. Doug Jensen (Minnesota Veterinary Hospital)
Who would be administering the use of these bonds?
Deans - I guess I'm not entirely certain as to your question,
Doctor, but what happens when bonds are issued, they are purchased
generally by a financial institution - a major bank; the City signs
all its rights to the bank, and the bank administers it.
Jensen - Doesn't someone for the City oversee to see that the funds
are disbursed? Would you also comment on the guidelines for IRBs
pertaining to percentage that can be used for land, the job ratios,
the amount of money issued? - some of those factors - a breakdown
of where this money goes.
Deans - There are no specific requirements on the number of jobs to
be created.
Jensen - No guidelines?
Deans - No, there are not. There are guidelines when you apply to
the competitive pool. I don't think I have all the stuff for the
pool. We got the allocation from the State. We only had three
points, but there was sufficient money available and the State
. felt it was an appropriate project to grant $400,000 out of the
total State allocation for this purpose. There were changes in
the tax law this summer that deals with the percentage of land
that can be purchased - I don't have the material in front of me,
but, as I recall, this project is within the guidelines estimate
total amount of the project - total amount of project is somewhere
over $500.000 - It is within that limitation on the land, as I
unders tand it.
Jensen - This will be re-submitted to the State for more complete
review?
Deans - Yes.
Jensen - The State then makes its decision on the quality of the
project.
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Minutes of Special Council Meeting
Thursday, November 8, 1984 - 8:00 p.m.
Page Four
Deans - Yes
Woodburn asked if Or. Routhe would care to say anything about the
project.
Dr. Routhe
Yes, I will, your honor. I think mainly for those people who have
not heard the presentation before. I'll make it very brief, but I
think there are a number of questions I would like to address. I
understand that the purpose of the meeting tonight is primarily
to address the issue of, is it appropriate for Industira1 Revenue
80nds to be used for this project. There are other questions that .
have arisen, such as is there a need for an animal hospital in
Arden Hills and secondly. is this a feasi.ble type of a project.
Routhe showed an artist's drawing of the Arden/Shoreview Animal
Hospital proposed at the Flaherty's old gas station site on County
Road E. To give you a brief history, in February of 1982, I
attended the American Animal Hospital Association of Office Design
and Market Analysis. In November of 1982. I hired the primary
speaker at that conference, John Knapp, a veterinary marketing
consultant, to come from Madison, Wisconsin to explain his method
of site selection for establishing new hospitals. From this study.
I found a need for additional veterinary services in a 5 city area,
and I chose Arden Hills primarily for four reasons:
1. Central to other cities he had mentioned (Arden Hills,
Shoreview, Vadnais Heights, North Oaks and Rosevi11e).
2. Central to existing clientele that I have established at
this time.
3. Flaherty's gas station site is an excellent business site;
has an excellent location and that would benefit the
business in that regard.
4. Arden Hills has no animal hospital to date.
On March 21st of this year, after satisfying the Arden Hills
variance committee and the Planning Commission, the City Council
voted 5-1 in favor of issuing a Special Use Permit and approval
for the construction of Arden/Shoreview Animal Hospital on this
site. Last month the City Council heard my presentation concerning
the use of Industrial Revenue Bonds for this purpose as an
available means of financing this project - Council vote was 4-1
in favor of applying to the State general pool for these funds.
As of the day before yesterday, the application was given preliminary
approval by State, meaning that this is a feasible project and that
it is a credible attempt to provide a service that they feel IR8s
can be used for according to their standards. These bonds will be
issued. as Mr. Deans said, pending the outcome of the public hearing
tonight. Again, the purpose of the hearing, as I understand it, is
to address the issue of IRBs. but the other factors that I feel
should be addressed. along with the idea of the need, is to sub- .
stantiate that need. I think one of the things that I offer is
that I'm presently offering veterinary service to existing clients.
on a house call basis, and I wish to provide a much fuller service,
and therefore need a facility to do so. I have a mobile house
call answering service, and, since January of this year. I've had
1543 calls to that service asking me for my professional service.
I have had an ad in the yellow pages for the Arden/Shoreview
Animal Hospital since July, and have received 426 calls on our
answering machine, with the majority of inquiries as to when we
will be open. Arden/Shoreview Animal Hospital will be a first
class facility offering the following services:
1. Medical and surgical care for small animals.
2 . Quality boarding facility.
3. House call service
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Minutes of Special Council Meeting
Thursday, November 8, 1984 - 8:00 p.m.
Page Five
4. 24-hour emergency service.
5. City pound facility, if the City so desires.
The question arises also - why is this a good use for IRBs? I
think we have satisfied a number of the State's requirements in
that regard. and I believe Tom Deans addressed the majority. It
does increase the tax base for the City. It does create, I believe,
5 new jobs for the City. It develops an expensive piece of property,
which small size has prevented it from being developed. It has a
price tag which most people cannot afford to tackle with conventional
. financing. The structure is attractuve, compatible with other bus-
inesses and buildings in the area. The structure has potential for
use as another business. It provides a convenience service to
animal owners in Arden Hills, and the surrQunding area. The project
has no adverse affect on environmental quality and places no
excessive demands on Arden Hills for any Arden Hills City services.
The City of Arden Hills will have no financial liability in this
project. Routhe is liable for all indebtedness.
The other question Routhe addressed briefly was the idea of
feasibility. He stated that a number of people have suggested this
might be an expensive undertaking. Routhe agreed that it is. Routhe
said he's had five years of experience practicing in this area and
therefore does have an existing clientele base; otherwise he would
not consider trying to do something on this large a scale. Routhe
said he has a strong interest in community activities; thinks the
service he will bring to the City makes him interested in community
affairs to the extent that he become a marketable item, and thinks
that's good from a business standpoint. Routhe said he attended
Ramsey High School in Rosevi11e. His parents live in the City. He
and his family have a good reputation in the area and he wants to
continue this and deliver this reputation to his clinic and clients
and provide good service to our animals. Routhe said he has
surrounded himself with professional people that can handle things
he has not too much experience and knowledge in. All those assisting
him have agreed this is a feasible project. Richard Hiner. Hiner
Homes, has aided him in the architectural design. Willy Price
(Pi 11 sbury) is a financial consultant and planner, and he has been
advising us on the area of IRBs and the feasibility of using them.
Price is working with their business lawyer,Rick Johnson, who is
experienced in business development and IRB financing. Routhe publicly
thanked all those who have helped him and for the support they
have given him. Routhe said this lends a lot of credibility to the
application for IRBs; noted it is not something he has done on a
whim, but something he has put a lot of work into; feels his advisors
are very qualified.
Genera 1 Comments
Lt. McDonald, St. Paul Police Dept. said they have 21 dogs now
kenneled in Maplewood; said the new proposed Routhe location would
. be advantageous; said he is a resident of Arden Hills and a client
of Dr. Routhe; said we need him in the community.
Jean Lemberg. 1401 Skiles Lane, said she is sorry that private
funding fell through; because of this she is not sure Arden Hills
should provide the bonds; feels,the facility is not appropriate
in downtown Arden Hills - it doesn't fit in; questioned having 30
extra dogs kenneled; 5 Jobs are not necessary for Arden Hills.
Tom Johnson said he is a customer of Dr. Routhe's; has a very good
feeling taking his animals to him; he is a very competent veterinar-
i an.
Brad Lemberg. 1401 Skiles Lane, said the project looks identical to
the unit at Cleveland and County Road C; there are 2 additional vet
clinics in 2~ miles of Arden Hills; asked what else this building
could be used for; asked if unit is air conditioned and will we
~ear barking dogs? asked if there is a need for another vet clinic;
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Minutes of Special Council Meeting
Thursday, November 8, 1984 - 8:00 p.m.
Page Six
will windows be closed; will dogs be exercised out doors: feels it
is not appropriate service for downtown Arden Hills because of
noise and ventilation.
Routhe said that there will be no noise or odors: a fence will surround
the yard and any boarding will be in the lower unit; exerCising will
be in the fenced area - no animals will be unattended' outside.
Dr. Jensen said Routhe worked for him for four years: said he isn't
going to comment on Routhe's competency: said what brought this
to his attention was articles in the papers and calls wondering
what was going on. Jensen said, as he understands government revenue 4It
bonds,' their intent is to creat new business - they are not intended
to cut into existing business: feels there are some guidelines ~
that's what I was trying to find out about - guidelines such as
1 job for each $30.000 of money issued: project should not exceed
18% for land purchase: there are tremendous administrative feeS for
that $400,000.00. I would like that to be addressed. ,IRBs are
not cheap financing and where this becomes a public issue vs private
funding, I would not even be here: the fact that taxpayer's money
is gOing into this and the need is a very strong issue that hasn't been
addressed. There are at least five or six clinics all around
this area within a 2-3 mile diameter, and the Council is endorsing
this project - you have to be aware of your reputations with the
State and funding providers, that they are viable, and the type of
dollars you are talking are astronomically high figures. In the
paper, the reporter commented that Dr. Rich has 300 clients - well,
you try to figure how he's going to pay for all this - I mean, I
wish him well, but I don:t see how he's going to make it. If you
estimate $30/call and 300 clients, its going to take 200 clients
at $30/call/month to just pay the land costs - no taxes, no salaries
no drugs - all the overhead is very very costly. When you think of
endorsing the project at this tremendous cost, it has to come from
somewhere, Most of us started out very small - has taken 15 - 20
years to become viable.
Bob Carlson said he concurs with that approach; said this is a
free enterprise system, he respects the doctor and understands he
is a good doctor - no question there; the question he has is it a
viable project and why has private financing fallen through; thinks
this is a situation where it's viable and possible only if it has
IRB funding. There is other property available in the City where
he can service his customers at a lesser cost. This is prime
property; is one of the very few properties in Arden Hills which
is commercial, which is retail and which can address a service
enterpri se: an animal hospital can be placed almost anywhere.
Carlson said he's been a resident for 20 years: in that course of
time has had 5 animals and has never had a problem getting them
serviced; there are plenty of animal hospitals around the area.
There might be a market place to support another one. I don't
question that. Are we cutting the same pie smaller or are we
appealing to the market place or an expanding market place. I don't
think IRBs are intended to compete with existing businesses. They
say these won't cost the taxpayers a cent. I don't believe that. 4It
I can take you around the State and show all kinds of empty
buildings where IRBs were used for small businesses. Taxpayers
pay for it; so, I'm on record as saying no. I don't think this
project should be approved.
Dr. Craig Frobum, veterinarian, currently resides in Roseville and
now self-employed as a house call veterinarian, serving St. Paul
and its suburbs, addressing the need for an animal hospital ~
economic indicators are pretty strong for a need. 8 years ago
Dr. Clinton built a new facility: 2 years ago Dr. Sime built a new
facility and now I understand Minnesota Veterinary Hospital is also
expanding to address a larger need. Regarding Dr. Rich (Routhe).
I've known him for five years and have personally worked with him at
an animal hospital in Shoreview for nearly two years. Dr. Routhe
has a reputation of being a kind, caring dedicated practitioner.
I don't believe there is any veterinarian who would dispute his
excellent reputation. Dr. Routhe has served his profession and his
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Minutes of Special Council Meeting
Thursday, November 8, 1984 - 8:00 p.m.
Page Seven
community unselfishly. It is precisely these stronger personal
attributes that have made Dr. Routhe successful in the past and
will ensure his success in the future. The community of Arden Hills
should pride itself in acquiring Dr. Routhe as a veterinarian who
maintains a strict philosophy of honesty and fairness, and I believe
Dr. Routhe would be an asset to this community.
(name inaudible) - a resident of Shoreview for four years and have
taken animals to Dr. Routhe for years; Dr. Routhe is excellent;
said when she tried to encourage friends to take their pets to
Dr. Routhe, they said no - they like Dr. Rich (Routhe); asked why
other vets are afraid of him.
. Brad Lembergf 1401 Skiles Lane said he is ,a consulting engineer; said
he does not eel it appropriate for a vet.on County Road E; has
calculated the building will cost about $83 SF; fails to see how the
project is viable.
Pat (inaudible) ~ said a lot of people have need for Dr. Routhe's
services; sees no problem with the re-use of the site for this use;
feels Dr. Routhe is one of the best vets she has been to in her life.
Bob Carlson - said we are talking about revenue bonds; should not
let our emotions get involved. The question is is there a need.
Jean Lemberq - said she wants to make it clear that she has nothing
to do with animal hospitals; is not a veterinarian. I'm a private
citizen in Arden Hills speaking against the project. I'm expressing
my opinion.
After determining there were no further comments or questions.
the public hearing was closed at 9:20 p.m.
In discussion, Routhe was asked why he did not receive private
financing. Routhe said prime was at 14%, making it not affordable.
Routhe said the site fits his needs; asking price is very high; no
way to negotiate the price - equipment alone is $40,000 - $60,000;
(an expensive building and property); he pursued private financing
and had to close the project down. Routhe said there is a need and
it is affordable with IRB financing. Council reviewed the fees for
which Dr. Routhe would be liable, if Council approves the Resolution.
It was noted that it is the general concensus of Council that the
City's administrative fee would be 1%, but not less than $5000 for
IRB financing. Dr. Routhe has agreed to this fee. It was noted that
the veterinary clinic project has been approved, whether IRBs or
privately financed. The question before us now is whether to approve
Industrial Revenue Bonds.
Mulcahy moved, seconded by Hicks, that Council adopt Resolution No.
84-46, RESOLUTION RECITING A PROPOSAL FOR A COMMERCIAL FACILITIES
DEVELOPMENT PROJECT GIVING PRELIMINARY APPROVAL TO THE PROJECT
PURSUANT TO THE MINNESOTA MUNICIPAL INDUSTRIAL DEVELOPMENT ACT
AUTHORIZING THE SUBMISSION OF AN APPLICATlfrN FOR APPROVAL OF THE
PROJECT TO THE ENERGY AND ECONOMIC DEVELOPMENT AUTHORITY OF THE STATE
. OF MINNESOTA AND AUTHORIZING THE PREPARATION OF NECESSARY DOCUMENTS
AND MATERIALS IN CONNECTION WITH THE PROJECT. with the further
condition that an Administrative fee L~ payable to the City in the
amount of $4000, that the States refundable fee of $4000. paid to
the City, be returned to Dr. Route and in addition. to assure that
the City do'esn't suffer any out of pocket loss as a result of
considering the application. that a refundable fee of $10,000 be
paid to the City in respect to the project.
Hicks moved to amend the motion that the Administrative fee be $5000
instead of $4000. Amendment was seconded by Mulcahy. Motion on the
amendment carried unanimously (5-0).
Woodburn said his general feeling follows what was said in the
St. Paul Pioneer Press/Dispatch editorial a few years ago. basically,
it is that the taxpayers of the nation pay for these and it benefits
a small segment of one society, not necessarily only the bond
recipient, at the expense generally of the tax payers. I can
amplify that; there are three ways at least that that occurs. but
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Minutes of Special Council Meeting
Thursday. November 8, 1984 - 8:00 p.m.
Page Eight
I won't take the time now to do that since the Council has heard
me before on this. We are dealing here with a government subsidy to
private enterprise. a subsidy of a type I don't think we have to
have in Arden Hills. It is generally deleterious to the free
enterprise system in the United States. particularly when govsrnment
subsidizes one segment against another. I believe in free enterprise
you do it freely. without looking to the government for help if you
can. This is not one of those instances. It's a classic instance
that is non-free enterprise. In fact. it creates no new jobs; it
transfers jobs. One of the basic ideas of IRBs was to create new
jobs. It is a fBct that you can only create new jobs. as far as
the U.S. is concerned, when you change export-import type of things; 4It
otherwise, you transfer where the money goes. The transfer in this
kind of case is to those people who need .a tax deduction; and from
the tax payers. Woodburn said he is concerned also about the
viability of the enterprise. It is my understanding that there are
a lot of ' veterinarians out of work, that have not found Jobs.. '
Furthermore. in a survey. according to my second-hand jnformation,
that the average salary of a veterinarian is $22.000. I can't
believe that. It must include the people that are not working. It
is emphasized to me by a member of our community, a non-vet. that
it's a tough life out there. If indeed this isn't viable, we've had
other commercial enterprises look at this property and find it to be
non-viable; would they find it to be more viable. under the circum-
stances that conceivably could occur, in a few years. I don't know.
we might well have a sore thumb on our hands. We've had them before~
As a matter of fact some of the advantages of this proceeding would
be that we'd get rid of a sore thumb. at least for awhile. that
we've had in Arden Hills. It was a sore thumb to all of us. We'd
like to see something happen there. I count square footage a little'
differently. I'm not an engineer. I just look at the plain foot
print. when we have an average building with a basement. and the
footprint on this comes out to be $90+ SF which is approaching some
of the highest costs. that would have to be recaptured in some way
or other. of any building. Hospitals come a little bit higher.
A doctor's office proposed last night to Arden Hills came. on the
same footprint basis. at $7S/SF. and that's always been emphasized
as being one of the most expensive types of bui1diQg because of the
amount of plumbing they have to have in every cubicle etc. $90/SF
does not include the costs that are labeled as architectural fees.
engineering fees. inspection fees. fiscal. legal and administrative
fees. $90/SF is exceedingly high priced for a building on a foot
print basis. I felt I had to give my view points. Nothing I have
said has anything to do with Or. Routhe whom I admire. I have seldom
seen better and more convincing presentation.
Mulcahy said, because he has a sensitivity to how a record looks after
the meeting I too will give a brief little speech. I think there's
an argument to be made for IRBs. I believe that it is principally
a useful tool on the part of the City to encourage and to enable it
to choose desirable development where it wants to see it. The mayor
has alluded to the difficulties that we have had with this partic-
ular site. I'm persuaded. largely by that factor. that we can secure
a desirable development on this site through the use of this special
financing. For that reason I am willing to support it. although I
do recognize the arguments for it not being available to everyone. 4It
Motion carried (Mulcahy. Hicks. Rauenhorst voting in favor; Woodburn.
Hansen voting in opposition (3-2).
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Minutes of Special Council Meeting
Thursday, November 8, 1984 - 8:00 p.m.
Page Nine
Adjournment
Rauenhorst moved, seconded by Mulcahy, that the meeting adjourn at
9:30 p.m. Motion carried unanimously (3-0). (Woodburn and Hansen
not present at Council table when vote was taken.)
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'R bert . Woodburn
Charlotte. McNies
Clerk Administrator Mayor
Notice of Meeting
The next Regular Council meeting will be held on Monday, November
19th at 7:30 p.m.at the Village Hall.
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