HomeMy WebLinkAbout02-26-07-WS
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Approved: 4/9/07
CITY OF ARDEN HILLS, MINNESOTA
CITY COUNCIL WORK SESSION
FEBRUARY 26, 2007; 6:00 P.M.
ARDEN HILLS CITY COUNCIL CHAMBERS
CALLTOORDERlROLLCALL
Pursuant to due call and notice thereof, Mayor Stan Harpstead called to order the City
Council Work Session meeting at 6:03 p.m.
Present:
Mayor Stan Harpstead, Councilmembers David Grant, Brenda Holden,
David McClung, and Fran Holmes.
Absent:
None.
Also present were City Administrator, Michelle Wolfe; City Attorney, Jerry Filla; City
Attorney, Steve Bubul; Community Development Director, Karen Barton; City Attorney,
Mike Comodeca (via teleconference); and Recording Secretary, Dianna Wise.
Representatives ofCRR were present when the meeting reconvened at 7:22 p.m.
1. APPROVAL OF MEETING AGENDA
MOTION: Councilmember Grant moved and Councilmember Holden seconded a
motion to approve the meeting agenda as presented. The motion carried
unanimously (5-0).
2. TCAAP PRELIMINARY DEVELOPMENT AGREEMENT DISCUSSION
Mayor Harpstead asked the group to agree upon a process and raise issues as this is discussed.
Councilmember Grant asked to talk about the wording on Page 9, Section 6, relating to the
Terms of Agreement. He suggested taking out a phrase in the second line: "designates developer
as the sole master developer of the development property, and agrees that the City will not
negotiate or contract with any other party."
City Attorney Bubul replied the developer would like to be sure he is the sole developer.
Councilmember Holden asked what the difference is between a sole developer and a master
developer.
ARDEN HILLS CITY COUNCIL WORK SESSION - FEBRUARY 26, 2007
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A discussion ensued on the definition of a master developer.
City Attorney Bubul stated that from a City perspective, it wants a master developer to make the
process easier. He indicated the negotiating position is the same no mater what term is used.
City Administrator Wolfe stated it is not so much the term used, but being assured that this is the
only developer the City is dealing with for the duration of the contract.
Councilmember Grant said it has always been important to the developer to put the term master
developer status in the contract; however, it might be premature at this point.
Councilmember McClung stated he felt it was appropriate for the MDA.
Mayor Harpstead stated he would like to add a sentence on Page 10, Section 10(d): "If after the
concerted efforts of the City and the developer, the City is unable to collect earnest money... the
developer will hold the City harmless. . . "
City Attorney Bubul stated it would be a great sentence to add and has been in previous drafts.
He indicated, relative to the no liability issue, CRR wants language that if the City defaults, the
City is obligated to pay the earnest money back to CRR. He stated he objected to this. He
indicated that, in his judgment, when looking at the language it is hard to see where CRR would
have a claim against the City. City Attorney Bubul said it is a better compromise by leaving the
City liability out, as CRR would want their language back in. He stated the City would be in the
middle, but CRR would direct all the actions. Given this, it is inconceivable that CRR could sue
the City if they do not get their money from the GSA.
City Attorney Filla stated CRR, pursuant to Section lOB, must give the City, a written
explanation of the reason for rescinding and therefore a return of the earnest money. If there is a
valid reason for rescission, the GSA has no legal basis for retaining the earnest money.
Councilmember Holden replied it would be cheaper to pay them off than to fight if CRR chose to
sue.
City Attorney Filla replied that if the City must sue the GSA, the City can recover its costs from
CRR.
Councilmember Holmes indicated she believed everything is silent, so they would be able to sue
the City any way. She mentioned she thinks the language about the earnest money should be
added.
City Attorney Filla added that he felt the sentence is too dangerous and he believes this is drafted
as good as it could be.
Councilmember Holmes asked what if it were non negotiable.
ARDEN HILLS CITY COUNCIL WORK SESSION - FEBRUARY 26, 2007
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Councilmember Grant stated that to take on a project of this magnitude was a risk to the City,
given that is the reason. He indicted it should not surprise CRR that the City did not want to be
held liable.
City Administrator Wolfe stated no one anticipated the GSA's position that CRR would find
themselves in a position to fulfill an agreement they are not a party to.
City Attorney Comodeca stated the intent was to add language that the City would not take title
to it until it is ready to transfer to the developer. He said he was not sure it impacted CRR's
dilemma in this case.
Councilmember Grant said regardless of the scenario, it is a risky situation.
City Attorney Filla stated CRR tried to add language that was not comfortable to them.
Mayor Harpstead said to eliminate "hold City harmless" says the developer would have no
recourse to request the earnest money from the City.
A discussion on protecting the City and some conditions as to when CRR would get their money
back arose.
Councilmember Holmes mentioned she assumed the government wants this to go through as
does everyone else.
City Attorney Comodeca indicated that if the City defaults and GSA keeps the earnest money, the
City is at risk of being sued by CRR under the terms ofthe Funding and Guaranty Agreement.
City Attorney Bubul stated this is true if the City tells GSA it would walk away.
Mayor Harpstead asked if there is ever a time where CRR could sue the City on the lost
opportunity.
City Attorney Bubul replied no.
City Attorney Filla pointed out, under Paragraph 5( c), Offer to Purchase, there are three
opportunities for the City to rescind. He stated that if at any time during the process and before
closing, information which is received by the City allows it to conclude that it cannot
economically develop the property pursuant to the framework plan, it can rescind.
City Attorney Comodeca stated that is correct.
City Attorney Filla pointed out, under Paragraph 10, the City or CRR had to come to the
conclusion there is a reason for rescission under the offer to purchase. He indicated this clearly
states the earnest money is returned to CRR. He stated if GSA disagrees, the burden should fall
on CRR.
City Attorney Comodeca replied it would.
ARDEN HILLS CITY COUNCIL WORK SESSION - FEBRUARY 26,2007
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City Attorney Bubul stated all contracts are subject to interpretation; it is better to leave the
comment out.
Councilmember McClung asked City Attorney Filla if he was more comfortable with the added
language or the way it is currently written.
City Attorney Filla replied he is more comfortable the way it is currently written.
City Attorney Bubul indicated he and City Attorney Comodeca agree the way the language is
currently written is the best.
City Attorney Comodeca stated the language about the earnest money is addressed throughout
the document and if the earnest money comes back to the City, it would be returned to CRR.
City Attorney Filla pointed out what a default would be and the exposure to CRR. He said it is a
given that negotiations would be conducted in good faith.
City Administrator Wolfe stated this has been months of negotiations and neither party ever gets
everything it wanted. She indicated that the City's representatives feel the proposed agreement is
a safer position than the additional language that both sides wanted.
Mayor Harpstead asked for a way to reach consensus on this issue. He suggested adding the
sentence that excluded the "hold harmless" language, but that the City would not carry financial
liability if the GSA determines that the City defaults.
Councilmember Holden asked how much the relationship between CRR and GSA weighed into
this.
City Attorney Comodeca stated he was not aware of anything.
Councilmember Holmes clarified that because we are the City, in as much as CRR does not want
the language, there must be some significance to it. She stated the language should be added
under Paragraph (d).
Councilmember Holden pointed out the attorneys stated the most viable way for the City to
protect itself is to leave it the way it is written.
Councilmember McClung said he did not want the additional language III the document;
however, would this be doing what is best for the citizens.
Mayor Harpstead stated that if, after the best efforts at the Council's direction, CRR could not
hold the City liable.
Councilmember Holmes asked for an explanation of the terms associated with 30 days and 60
days under Section I O(b).
ARDEN HILLS CITY COUNCIL WORK SESSION - FEBRUARY 26,2007
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City Attorney Filla explained the statements in Section I O(b), defined a period of time during
which the developer can select an option which the City must follow.
City Attorney Bubul explained the options. He mentioned he could clarify the language and state
the choices.
Councilmember Holmes brought up her concerns on two day rule, given open meeting law
requirements.
Councilmember Grant suggested adding a sentence to Paragraph (d): "If, after the best efforts of
both City and Developer, as described in this agreement, the City is unable to collect all the
earnest money from GSA, the Developer will have no recourse to collect any of the earnest
money from the City". There was consensus amongst the City Council that the sentence be
added.
Mayor Harpstead suspended the City Council Work Session meeting at 7:00 p.m.
Representatives of CRR were present when Mayor Harpstead reconvened the meeting at 7:22
p.m.
Mayor Harpstead reminded Council it was talking about the confusing language before the break.
City Attorney Bubul mentioned there is confusion as to whether it is the City's option to repay
the money.
Councilmember Holmes restated her question about how the 30 and 60 days under Section 10
(b).
City Attorney Bubul explained that a 90-day notice is what was wanted. He pointed out CRR
expressed concern that if the City waited and rescinded towards the end, GSA might say rights
had been waived because the City was on notice for 90 days from CRR.
City Attorney Bubul explained the ultimate goal was to give the City 90 days to make a decision.
City Attorney Bubul indicated he would attempt to make the language regarding the 30, 60-day
notice clearer. He stated the City could begin negotiations with another developer if or when
notice was given by CRR.
The reference to two day rule was discussed by Council and Staff.
Mayor Harpstead asked what must be in place before the CDR is signed.
City Attorney Comodeca replied the RAA between MPCA and CRR.
Mayor Harpstead asked if the MOA would stand and could be enforced and how the two-day rule
was chosen.
ARDEN HILLS CITY COUNCIL WORK SESSION - FEBRUARY 26, 2007
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City Attorney Bubul replied because, in this scenario of rescission after the CDR is signed, CRR
wanted this to happen immediately as quickly as possible since closing on the property would be
imminent.
Councilmember McClung stated Council must think about the notice requirements for a public
meeting. He said flexibility must be maintained by the City.
City Attorney Filla asked City Attorney Comodeca what would happen if CRR decided, after the
CDR is signed, they wanted to terminate their participation.
City Attorney Comodeca replied CRR would be the one at risk.
City Attorney Filla indicated that if the Governor signs the CDR, the time given to the City to
return the earnest money or provide Notice of Rescission is shortened.
Councilmember Holmes asked if there is precedence that it could not be rescinded after it was
signed by the government.
City Attorney Comodeca replied he had not seen one.
City Administrator Wolfe indicated staff wanted to reserve the City's flexibility if CRR were to
back out. She said the meeting notice was a good point.
City Attorney Filla asked if the City needed to say anything about the decision or pursuant to
terms of the Offer to Purchase (OTP); is this an escape clause for CRR.
City Attorney Bubul replied CRR directs the action, but must also pay all costs.
A discussion on the changes ensued. City Attorney's Bubul and Filla will change the language to
satisfy the special meeting requirements.
City Administrator Wolfe clarified the budget at this stage is similar to adopting the regular
budget in that items would come back to the City Council for approval. She explained it is a
scope of the City's spending needs during the term of the preliminary agreement with CRR. She
stated staff would come back to Council with an agreement and dollar amount for approval. She
explained that agreements and consulting contracts would be brought back for approval. She
pointed out discussion would be needed on how the project would be managed and what
additional stafflllg might be needed.
Mayor Harpstead informed Council it is not approving expenditures by approving the budget.
Councilmember McClung stated the goal is to work diligently towards an MDA.
Mayor Harpstead stated that once the wording changes are made to the PDA it would come back
to the City Council for approval.
ARDEN HILLS CITY COUNCIL WORK SESSION - FEBRUARY 26, 2007
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Councilmember Holden asked if the staffing needs indicated on the budget are meant to be a full
time equivalent (FTE). She asked if the $150,000 budgeted would be enough for the positions
needed.
City Administrator Wolfe replied staff is still trying to flesh out the role and the time required.
Community Development Director Barton stated this was the best estimate at the time for what
was needed for project management.
City Administrator Wolfe indicated she enVlSlons it would be one FTE equivalent plus
consulting services from someone who has done a great deal of economic development project
management or had the expertise needed.
Mayor Harpstead said it is important to say the projected is structured and designed for success.
He indicated he would like City Administrator Wolfe to have the time to think this through.
City Administrator Wolfe stated there is wording about what CRR would pay for that needed to
be reviewed by CRR.
Councilmember McClung pointed out that what is needed is someone who could focus on
everything that needs to be completed within a specific time period.
Mayor Harpstead stated the City would not hire a full time project manager.
Councilmember McClung stated he would like to see this fleshed out more.
City Administrator Wolfe replied it is difficult because she did not have a final plan on this
aspect and could not get into the specifics yet.
Councilmember McClung stated that it is a huge task to manage this project.
City Administrator Wolfe asked Council to keep in mind that it is a large project and would
impact the community. She stated she knows how other cities are managing growth and is
looking at their models as reference for Arden Hills. City Administrator Wolfe stated she is
looking to add staff and a consultant. She provided the scope leading up to closing or an MDA.
Mayor Harpstead stated the budget is a good first cut.
City Administrator Wolfe stated she is comfortable with the numbers at this point and because
there is no other proj ect like this, it would need to be managed as we progress.
Mayor Harpstead pointed out that City Administrator Wolfe would work out more of the plan for
the Council.
City Administrator Wolfe indicated she is comfortable with wording in agreement concerning the
budget. She stated that the City being effective in project management is as important to CRR as
it is to the City.
ARDEN HILLS CITY COUNCIL WORK SESSION - FEBRUARY 26, 2007
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Councilmember Holden stated she is comfortable approving it with this budget.
Mayor Harpstead asked Council members if, based on work session discussion, it is appropriate
for this to come to the City Council at the second meeting in March for a vote or if merited, hold
a special meeting. Consensus reached. Attorneys Bubul and Filla were tasked to redraft portions
of the agreement.
the Work'~:\sion Meeting at 8:13 PM.
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Michelle A.Wolfe
City Administrator