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Home My WebLink About1E, TCAAP Reimbursable Expenditures MEMORANDUM Item 1.E DA TE: July 20, 2009 TO: Mayor and City Council FROM: Ron Moorse, City Administrator SUBJECT: TCAAP Reimbursable Expenditures BACKGROUND The Preliminary Development Agreement provided for the reimbursement, by RRLD, of City expenditures related to the negotiated sale of the TCAAP property. The PDA included a budget amount of $992,000 for the reimbursable expenditures. The budget was divided into categories for the various consultant services and other expenses. Beginning in 2007, reimbursable expenses were billed to RRLD on a bi-monthly basis, and were paid regularly by RRLD. RRLD challenged a significant amount of the expenditures included in the June and August, 2008 billings. The majority of the challenged expenditures were resolved, but approximately $7,000 from each billing remained in dispute, and $56,500 not in dispute remained unpaid. The next billing, in the amount of$251,190.42, dated 12/31/08, was prepared but retained as the disputes remained unresolved. This billing, along with a March billing in the amount of $68,268.17, was sent to RRLD on March 23, 2009. A billing of $546.98 was sent to RRLD on 4/20/09. The final bill was sent to RRLD on June 26, 2009, in the amount of$109,144.40. The amount of the billings remaining unpaid is $500,414.68. RRLD has provided a letter objecting to a number of invoice items based on whether they match the types of expenditures anticipated by the PDA. RRLD has also provided a letter objecting to invoice items based on the items exceeding the specific budget for the category of expenses, even though the expenses did not cause the overall PDA budget to be exceeded. Both of these letters are attached. I have responded to the initial letter with information to show that the expenditures did match the expenditures anticipated by the PDA. I have also attached our internal PDA Budget vs. Actual tracking sheet. Steve Bubul and I have indicated to RRLD that the objection based on expenses exceeding budget category amounts is not valid for two reasons. First, while the PDA calls for the City to notify RRLD if individual budget categories will be exceeded, it only gives RRLD the ability to Page 2 comment, not to deny the exceedences. Second, the budget exceedences are related to activities that RRLD requested and knew were on-going. As we have received the earnest money refund from GSA, and the refund exceeds the amount of the unpaid reimbursable expenses, the amount of the refund equal to the amount of the unpaid expenses is to be placed into an escrow account while the RRLD objections are resolved. Preliminary DeveloDment Aareement (PDA) TCAAP Property with City of Arden Hills and RRLD, LLC 7/7/2009 Agreement dated: March 30, 2007 Terms: All out -of-pocket-costs incurred after May 9,2005 and according to budget attached to the agreement Prior costs $266,341.14 - billed and paid by Ryan. YTD Remaining Consultant Services Budaet Incurred Balance SRF (Environmental Services) AUAR $ 175,000.00 $ 62,012.88 $ 112,987.12 Spencer Fane Britt & Browne Mike Comedeca Legal Services $ 225,000.00 $ 418,275.37 $ (193,275.37) Kennedy & Graven Stephen Bubul Legal Services $ 150,000.00 $ 119,385.48 $ 30,614.52 BCS Consulting Services Ehlers - Stacie Kvilvang Project Management $ 75,000.00 $ 97,555.00 $ (22,555.00) Engineering Services Engineering $ 40,000.00 $ 63,365.41 $ (23,365.41 ) Ehlers & Associates Financial Consulting $ 150,000.00 $ 261,696.11 $ (111,696.11 ) LHB (TIF Inspection Services) $ 40,000.00 $ $ 40,000.00 Peterson Fram Bergman Jerry Filla City Attorney $ 25,000.00 $ 5,369.61 $ 19,630.39 Additional City Staff Planner I Planning/CD assistance $ 75,000.00 $ $ 75,000.00 Office Support Office Support $ 12,000.00 $ 19,423.96 $ (7,640.21 ) Miscellaneous Legal Notices $ 25,000.00 $ 19,640.21 $ 5,359.79 Mailings PRlAdvertising Office supplies/Equipment Staff Travel/Training Total $ 992,000.00 $ 1,066,724.03 $ (74,724.03) Previously billed 4/25/2007 5/27/2007 7/2/2007 9/4/2007 11/8/2007 11/8/2007 12/31/2007 2/5/2008 3/24/2008 6/19/2008 8/12/2008 12/31/2008 3/23/2009 4/23/2009 6/29/2009 7/7/2009 Current billing $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ 63,178.72 15,496.19 69,108.76 69,075.02 107,188.91 (1,731.77) 125,641.52 7,105.69 60,412.73 58,843.83 Corrected (inc. credits) 64,031.46 Corrected (inc. credits) 251,190.42 68,268.17 546.98 109,144.40 (777.00) Credit - Utility Rate Study WW\v. RYAN COM PAN I ES. CONI RYAN COMPANIES US, INC. 50 South Tenth Street, Suite 300 Minneapolis, MN 55403-2012 ;YAN@ 612-492-4000 tel 612-492-3000 fax BUILDING LASTING RELATIONSHIPS vrlltJl May 27, 2009 Ron Moorse, City Administrator City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 RE: OBJECTION TO CITY REIMBURSABLE EXPENSES OVER BUDGET PER PDA Dear Ron, RRLD is filing a formal objection to any expenses incurred over the approved budget as defmed in Exhibit D of the Preliminary Development Agreement dated March 30, 2007. RRLD acknowledges the amendment the City made to two line items in the budget on March 12, 2008. Based on the 3/12/08 amendment, we find the City to have overspent the following budget categories: Original Amended Actual (based Budget Category on invoice thru Amount Over Budget Budget 4/20/09) Spencer Fane Britt & Browne $150,000 $225,000 $361,546..59 ($136,546.59) Ehlers Project Mgmt $75,000 - $84,255.00 ($9.255) Engineering Services $40,000 - $56,317.91 ($16,317.91) Ehlers - Financial $150,000 - $260,705.61 ($110,705.61) Total ($272,825.11 ) ]:\PRO]-NEW\900\900\900-909 TCAAP 2003\ARDEN HILLS-TCAAP\PURSUIT COSTS\PDA BILLINGS\OB]ECTION TO COSTS IN EXCESS OF BUDGET 5.27.09.DOCjE AZ LICENSE ROC095146, CA LICENSE 800760, OR LICENSE CC8155932 Page 2 ;YAN@ WYi./W. RYAN CO lvIP AN I ES. CO M BUILDING LASTING RELATIONSHIPS Section S(c) of the Preliminary Development Agreement required the following process for changes to line- items in the Budget: "If the City proposes to.. ..(ii)allocate savings in a line-item in the Budget to pay additional expenses over the amount for another line-item, the City will (before engaging the consultant or incurring the additional line-item expense) provide the Developer with at least 10 business days notice, including...a written description of the consultant or staff, the scope of work and the estimated cost; and an explanation of the line-item change; and in either case offering Developer an opportunity to comment within the 10 day period." The City followed this process for its first line-item change on 3/12/2008, but failed to notify the Developer of the line-item changes prior to incurring the expenses that have been billed-to-date. Attached to this letter is a detail of the City Billings broken out by PDA Category and invoice date. As a result, we are formally objecting to the billing of these expenses since we did not have the opportunity to comment. Sincerely, Eric Anderson Director of Development Enc. C: Rick Collins ]:\PRO]-NEW\900\900\900-909 TCAAP 2003\ARDEN HILLS-TCAAP\PURSUIT COSTS\PDA BILLINGS\OB]ECTION TO COSTS IN EXCESS OF BUDGET 5.27.09.DOC IE TCAAP PDA BilliNG SUMMARY BY CATEGORY 3/12/2008 received 3/23/09 received 3/23/09 Amendment Original Revised 4/26/2007 5/25/2007 7/2/2007 9/6/2007 11/8/2007 12/31/2007 2/5/2008 3/10/2008 6/19/2008 8/12/2008 12/31/2008 3/23/2009 4/20/2009 PDA Budaet Cateaories Budaet Amendments Budaet Total Billed (Over)/Under Billina Billina Billina Billina Billina Billina Billina Billina Billina Billina Billina Billina Billina SRF Environmental Svcs $ 62,012.88 $ 112,987.12 $ $ ISpencer Fane Britt & Browne 1 $ 150,000.00 1 $ 75,000.00 1 $ 225,000.00 1 $ 361,546.59 ."i~I;w.~!;w.~11 $ 39,545.21 1 $ 14,466.69 1 $ 16,208.99 1 $ 24,965.93 1 $ 31,033.57 1 $ 42,664.54 1 $ 7,073.69 1 $ 30,368.49 1 $ 12,695.50 1 $ 21,871.41 1 $ 85,831.59 1 $ 34,820.98 1 $ 1 Kennedy & Graven 1 $ 150,000.00 1 $ 1 $ 150,000.00 1 $ 93,900.84 1 $ 56,099.16 1 $ 11,710.761$ 1$ 14,685.69 1 $ 4,408.05 1 $ 2,337.00 1 $ 14,779.25 1 $ 1$ 5,785.50 1 $ 2,329.27 1 $ 2,366.71 1 $ 26,293.11 1 $ 9,205.50 1 $ $ 84,255.00 $ 8,436.25 $ $ $ 56,317.91 $ 1,848.00 $ $ 260,705.61 $ 23,514.00 $ ILHB 1$ 40,000.00 1 $ 1$ 40,000.00 1 $ 1$ 40,000.00 1 $ 1$ 1$ 1$ 1$ 1$ 1$ 1$ 1$ 1$ 1$ 1$ 1$ Peterson Fram Bergman $ 5,369.61 $ 19,630.39 $ 316.50 $ Addt'l City Staff $ 18,103.05 $ 56,896.95 $ IMisc 1$ 25,000.00 1 $ 1$ 25,000.00 1 $ 16,113.141 $ 8,886.86 1 $ 1$ 1$ 9.481 $ 21 .06 1 $ 11.161 $ 7,354.51 1 $ 1$ 1$ 5,765.31 1 $ 1$ 1,353.09 1 $ 1,575.87 1 $ 22.661 ITotal 1 $ 980,000.00 1 $ 1 $ 980,000.00 1 $ 958,324.63 1 1$ 63,178.72 1 $ 15,496.19 1 $ 69,108.76 1 $ 69,075.02 1 $ 105,457.14 1 $ 119,073.33 1 $ 7,073.69 1 $ 66,980.92 1 $ 58,843.83 1 $ 64,031.46 1 $ 251,190.421$ 68,268.17 1 $ 546.98 1 1 RRLD Payments 1$ 63,178.72 1 $ 15,496.191$ 69,108.76 1 $ 69,075.02 1 $ 105,457.14 1 $ 119,073.33 1 $ 7,073.69 1 $ 66,980.92 1 $ 51,610.58 1 $ 1$ 1$ 1$ Challenges Challenged: Challenged Challenged Challenged $ 1,731.77 $ 6,568.19 $ 25,887.24 $ 35,700.60 $ 30,607.32 $ 6,023.32 $ 524.32 Credits Credited Credited Credited Credited $ 1,731.77 $ 6,568.19 $ 18,653.99 $ 28,172.51 Disputes In Dispute In Dispute In Dispute I n Dispute $ - $ - $ 7,233.25 $ 7,528.09 IOutstanding Not in Dispute 1 Cumulative Outstanding incl Disputes 1 1 $ 56,503.37 1 $ 7,2331 71,265 1 220,583.10 1 $ 322,455 1 62,244.85 1 $ 390,723 1 22.661 391,270 1 6/24/2009 RRLD, LLC ;YAN@ ..WWW.RYANCO]\1PANIES.C01\l1 BUILDING LASTING RELATIONSHIPS June 24, 2009 Ron Moorse, City Administrator City of Arden Hills 1245 West Highway 96 Arden Hills, MN 55112 RE: OBJECTION TO CITY REIMBURSABLE INVOICES DATED 6/19/08, 8/12/08, 12/31/08 AND 3/23/08 Dear Ron, RRLD is filing an objection to a number of the invoice items in the above stated City Reimbursable Cost invoices. This objection is in addition to the PDA budget objection that we submitted to you via separate letter. The June and August 2008 invoice objections are a restatement of the prior objections that were submitted to the City last fall. The December and March 2009 invoices were just provided to us on March 25th and it has taken 60 days to review nine months worth of expenses Listed below is a detail of objections by invoice: June 19,2008 Invoice - total amount challenged - $7,,233.25 Attached is the email that was submitted to you and Stacie l<.vilvang with the questions we had regarding this invoice. We paid $51,610.58 of this bill which represented the amount we were not disputing. To reiterate our questions: 1. $4,,294 of WSB Charges - The bills indicated "TCAAP General Services," and "TCAAP Sanitary Sewer and Water Review". Please provide detail on what was done. 2. $21,593.24 of Salary and Fringe Costs - per the 12/31/2008 invoice, you gave us a credit for $18,653.99 of the total. What does the balance represent ($2,,939.25)? Per the email, we were not performing any Master Planning during that time period and were working with multiple City Administrators and no Community Development Director during that time period. As a result, we were asking what the Staff was doing that was a billable expense to us at that time. The spirit ofth;e PDA (as defined in the Scope of Services & Budget Exhibit) was to assist with planning and community development activities that allow the CD Director and planning director to devote time to TCAAP. Given that there was no CD director how were they taken away from their jobs that required staff to supplement their normal activities? In addition, the PDA (section 5.2(i)) required that the City and Developer to agree on hourly rates for these activities. There was no such J:\PROJ-NEW\900\900\900-909 TCAAP 2003\ARDEN HILLS-TCAAP\PURSUIT COSTS\PDA BILLINGS\PDA COST OBJECTION LETTER TO MOORSE 4.23.09.DOCjE May 28, 2009 Page 2 WWW.RYANCOMPANIES.COM ;YAN@ BUILDING LASTING RELATIONSHIPS agreement, and the invoice detail provides no detail with respect to how many hours were spent. The only detail is a lump sum dollar amount. August 12, 2008 Invoice - total amount challenged - $7,,528.09 Attached to this letter is an email that was submitted 10/15/08 to you and Stacie Kvilvang along with Sue Iverson's response. We questioned $44,580.60 worth of expenditures. Per the e-mail from Sue, she responded to the rate study question and reduced that category of charge by $6,216. You reduced the staff expense by $28,172.51. That leaves $7,528.09 left to resolve ($1,522 in Grade Separation Charges and $6,049.09 in Staff Time). The question from the attached e-mail applies to both of these items. December 31" 2008 Invoice - total amount challenged - $30,,607.32 The following addresses our objections and clarifications needed by cost category: Project Management - Ehlers - $2,050.00 In reviewing the three invoices from Ehlers, there are numerous line items that the description indicates "various discussions and project management'~ These items total 9.25 hours or $2,050. We would like clarification as to what the project management activities were for these items. We regularly challenge invoices that do not provide enough detail on the specific activity; we would ask that you question these charges as well. Engineering Services - $17,925.93 1. Bolton and Menk Invoice dated 11/28/08: a. TH 10/CSAH 96 charges - $1,747. This is a grade separation/County Project. Through the planning process it was made clear that this project was not a TCAAP project. Therefore RRLD should not be required to pay for it. b. TH 10@ TCAAP - -$315.00 - no detail on the invoice, it shows staff time at 2.5 hours, please provide backup c. I-35W /CR H - $378.00 - no detail on the invoice, it shows staff time at 3.0 hours, please provide backup 2. Bolton and Menk Invoice dated 10/31/08 a. TH 10/CSAH 96 - $1,449.00 - this is a grade separation expense, not a TCAAP issue b. I35W /CR H - $779.00 - no detail on the invoice, it shows staff time at 6.5 hours, please provide backup 3. Bolton and Menk Invoice dated 9/30/08 a. TH 10/CSAH 96 - $1,785 - This is a grade separation/County Project. It is not a TCAAP issue J:\PROJ-NEW\900\900\900-909 TCAAP 2003\ARDEN HILLS-TCAAP\PURSUIT COSTS\PDA BILLINGS\PDA COST OBJECTION LEITER TO MOORSE 4.23.09.DOC IE May 28, 2009 Page 3 WWW.RYANCOMPANIES.COM ~YAN@ BUILDING LASTING RELATIONSHIPS b. TH 10 @ TCAAP - $343.00 - no detail on the invoice, it shows staff time at 4.0 hours, please provide backup c. I35W /CR H - $567.00 - no detail on the invoice, it shows staff time at 4.5 hours, please provide backup 4. Bolton and Menk Invoice dated 8/29/08 a. TH 10 @ TCAAP - $252.00. Unaware of any work, please provide backup. 5. Bolton and Menk Invoice dated 7/30/08: a. TH 10/CSAH 96 - $1,200 - unaware of what was done, please provide backup 6. Chris Giga invoice 7/1 to 9/30/08 - $1,467.31 - Please provide hours associated with grade separation. This should not be charged to TCAAP 7. Bolton and Menk Invoice dated 12/31/08 a. TH10/CSAH 96 - $1,008 - grade separation is not a TCAAP issue b. I35W /CR H - $570.00 - Unaware of any work, please provide backup 8. Giga/Bloom invoice dated 10/1-12/31/08 - $287.18 - please provide backup, no design work was being done during this time and grade separation is not a TCAAP issue. 9. Barr Engineering Invoice dated 12/2/08 - $764.42 - Task 002 - "Begin drafting confidentiality agreement in preparation of reviewing RI reports" Comment: We (City and RRLD) agreed that Barr was not reviewing RI Task 005 - "Attendance at the TCAAP technical review committee meeting on 10/7/08" Comment: We (City and RRLD) agreed Tom Reppe would attend so if City decided to s.end someone" it would be at their cost 10. Barr Engineering Invoice dated 6/16/08 - $5,014.02 - "Task 005 Continuing Advice" - Please provide more detail. Ehlers and Associates (Financial Consultant) - $4,648.25 1. 10/10/08 Invoice: Update Utility study for 2008 budget - $138.75 - Why are we getting charged for an update for the 2008 budget? TCAAP was not going to be developed for another 2-3 years. 2. 11/10/08 Invoice - 9 hours or $1,845 - "various discussions" line items with no details, please provide additional details. 3. 12/10/08 Invoice - 1.75 hours or $358.75 - "various discussions" line items with no details, please provide additional details. 4. 7 /15/08 Invoice - 2.75 hours or $563.75 - "various discussions" line items with no details, please provide additional details. 5. 1/9/09 Invoice - TCAAP Resource Study - .75 hours or $138.75 - "Updated FY07 FMP"- what is this and why are we being charged for a fiscal year 2007 expens,e? 6. 12/10/08 Invoice - Project: Storm Water Utility Rate Study $1,110 - Two issues: 1. why are we being charged for a storm water study? We are handling that with our consultants 2. If this was mis- labeled and should be Utility Rate study we were charge for 1000/0 rather than the 300/0 outlined in Sue Iverson's 10/15/08 email to me. j:\PROJ-NEW\900\900\900-909 TCAAP 2003\ARDEN HILLS-TCAAP\PURSUIT COSTS\PDA BILLINGS\PDA COST OBJECTION LEITER TO MOORSE 4.23.09.DOC IE May 28, 2009 Page 4 ~YAN@ WWW.RYANCOIv1PANlES.COM BUILDING LASTING RELATIONSHIPS 7. 12/2/08 Invoice - $83.25 - 2008 sewer and water rate study - meeting with staff on final rates for Council - why are we being charged for fmal rates when the TCAAP development has not occurred? 8. 1/9/09 Invoice - 2 hours or $410 - "various discussions" line items with no details, please provide additional details. Additional City Staff - $5,983.14 Salary and Fringe costs for Office Support for July through December. This reflects 8 hours/week or 270 hours. Question: What activities were performed by the office support staff that allowed the Planning or CD Director to devote additional time to TCAAP? In addition during November and December 2008 we asked to stop development activities to figure out economic viability issues with the negotiating team. This did not include any Planning/CD activities. In addition, the PDA (section 5.2(i)) required that the City and Developer to agree on hourly rates for these activities. There was no such agreement, and the invoice detail provides no detail with respect to how many hours were spent. The only detail is a lump sum dollar amount. March 23, 2009 Invoice - Amount in Question $6,023.32 Engineering Services - $455.00 . Bolton and Menk Invoice dated 2/27/09 - $455 - TH10/CSAH 96 - 3.5 hours, $455 - Question: grade separation is not a TeAAP issue. Ehlers & Associates - Financial Advisory Services - $2,520 1. 2/10/09 Invoice - 3.75 hours, $787.50 - "various discussions" line items with no details, please provide additional details. 2. 3/10/09 Invoice -- 8.25 hours, $1,732.50 - "various discussions" and "various discussions & 2 conference calls" - please provide details on discussions and who were the conference calls with? Peterson, Fram & Bergman Gerry Filla) - $44.00 . "legal research re: gifts to public officials - research TCAAP funds - $44.00 - Question: what is this and why is RRLD being charged? Additional City Staff - $3,004.32 "Bill Ryan for $3,004.32 for office support staff costs for 1sr quarter of 2009". Comment: per the PDA, this was intended to supplement planning and CD director during which time they would be spending on TCAAP. During the first quarter, there were no planning activities related to TCAAP. The entire quarter was spent trying to determine solutions to solve the land value issues.. In addition, the PDA (section 5.2(i)) required that the City and Developer to agree on hourly rates for these activities. There was no such agreement, and the invoice detail provides. no detail with respect to how many hours were spent. The only detail is a lump sum dollar amount. J:\PROJ-NEW\900\900\900-909 TCAAP 2003\ARDEN HILLS-TCAAP\PURSUIT COSTS\PDA BILLINGS\PDA COST OBJECTION LEITER TO MOORSE 4.23.09.DOC IE May 28, 2009 Page 5 RYAN COMPANIES US, INC. 50 South Tenth Street, Suite 300 Minneapolis, MN 55403-2012 ~YAN@ WWW.RYANCOlvlPANIES.COM 612-492-4000 tel 612-492-3000 fax BUILDING LASTING RELATIONSHIPS April 20, 2009 Invoice - $524.32 SRF Invoice dated 1/31/2009 - $524.32 - In November 2008, we asked that all expenses cease that were un-related to the negotiation with the Army regarding the economic feasibility of the development. SRF's role on the project was related to the AUAR which had nothing to do with the economic feasibility issues with the Army. Attached to this letter are copies of the invoices that are being questioned. RRLD asks that the City respond to each of the inquiries. We are withholding payment on all invoices until the questions in this letter and the separate letter regarding the PDA Budget Process are resolved. After you have had a chance to review, we would be happy to sit down and discuss a resolution to both disputes. We will await your response. Enc. C: Rick Collins j:\PROJ-NEW\900\900\900-909 TeAAP 2003\ARDEN HILLS-TCAAP\PURSUIT COSTS\PDA BILLINGS\PDA COST OBJECTION LEITER TO MOORSE 4.23.09.DOC .IE AZ LICENSE ROC195813 CLASS B-Ol COM. ROC212330 CLASS B-Ol RES., CA LICENSE 842487, FL LICENSE CGC1506553, CGC1511473, CGC1506271, CHICAGO, IL LICENSE GC04631A, OR LICENSE 161162, WA LICENSE RYANCU1966KK