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HomeMy WebLinkAboutCC 11-08-1984 , . 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. ------ --------.-- ---- ----- . .. ~ '\ 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. \../-- . . . 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. ,~ ------- . . 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 ---------- ". . 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; " /- -- - ------------- --- --- . " 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 . , . 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 <' -------- ------------ ---------- . .' . 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). - - ---------- ,..- . . 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.) . ~@.I'fLL ~~~ '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. . -- -----------------------