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11/21/02 Kukulski to Beard/ClarificationsCity of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax(406)758-7758 November 21, 2002 Stan Beard Mountain View, LP 2121 Sage Road, Suite 380 Houston, TX 77056 Re: Mountain View Plaza Dear Stan: Thank you for coming to town to meet with us yesterday to discuss your proposal. I regret that you did not have the time for a longer meeting. I believe that a more thorough discussion of the issues would have been beneficial for every one involved. Some clarification, however, remains to be made on certain issues that you have raised. The terms of the PUD Agreement seem very clear to me and my professional staff and need to be settled with you and your professional staff. Your proposal of September 19, 2002 seeks to resolve several disparate issues by balancing one against another. While I find the offer intriguing, in a sense, such a broad brush approach to the problems will only tend to create further difficulties for the City down the road. It is necessary, therefore, to separate the matters out and deal with each on its own terms. I acknowledge that you have requested a modification concerning signage as addressed in Section 3.11 and Section 5.01 of the PUD Agreement. Consideration of that request was placed on hold when you followed up with your proposal of offsets shortly thereafter. After our meeting on Tuesday it became apparent that we need to move your request along and I have had the matter placed on the agenda for the Site Review Committee for this Thursday, November 21St. The Committee will determine whether the modification is major or minor and, if major, direct the matter.to the City Council for further determination. If it is minor, your request will be considered and determined by the Committee. I was frankly looking forward to discussing your terms 2 and 3 of your proposal with you and was disappointed that we didn't have that opportunity. In my view, the PUD Agreement was well negotiated and both the City and the developer received sufficient benefit from the agreement. The agreement should therefore not be modified unless both the City and the developer receive additional benefit from such modification. While it is clear to me how Mountain View would benefit from your proposal, I was looking for some persuasion from you as to how the City will benefit from the modifications you are proposing. Stan Beard 11 /26/2002 Page - 2 In your letter dated August 27, 2002 you requested reimbursement for certain utilities pursuant to Section 4.01(C) of the Mountain View Plaza PUD Agreement. As stated in our previous correspondence, it is the City's view that the submitted items and costs are inconsistent with both the engineer's Design Report for Mountain View Plaza and the signed MVP PUD agreement. The basis for this view is as follows: WATER: Section 3.04, paragraph (B) of the signed PUD agreement specifically requires the extension of an existing 12 inch diameter City water main from its terminus near Flathead Valley Community College. This paragraph also states the requirement for installation of a parallel water main along the west side of US 93 and its connection to a main of the same size for the purpose of providing a looped system to serve the development. Water mains within the development are similarly required to be looped to ensure uninterrupted service. Based on the Design Report, prepared by TD & H, in order to satisfy the water demand for domestic, irrigation and fire protection it was determined that a 12 inch main, not 10 inch as indicated in your letter, was required. The engineer's determination is further validated by the fact that the primary water distribution mains installed to serve the Home Depot and Target parcels are 12 inch diameter while others installed to serve different areas of the site are of lesser size. The City placed no additional or supplemental requirement on the developer for up -sizing water mains beyond that stipulated in the signed PUD agreement or as recommended in the engineer's design report. As a result, there is no basis for the request for the cost of up -sizing the water main from 10 inch to 12 inch or for the cost of the installation of the 12 inch main on the west side of US 93. SEWER: Section 3.04, paragraph (A) of the signed PUD agreement specifically requires sewer service via an extension of the existing main from its then current terminus at FVCC. Size of the main is not specified in the PUD agreement. The TD & H Design Report proposes installation of an 8 inch diameter sewer main to run from the development to the required point of connection to the City system. However, in order to optimize the installation with respect to the terrain and the need to provide adequate pipe cover with minimum amounts of fill material, the design submitted by the engineer showed installation of a largerl2 inch diameter main. This main is installed on a flatter grade than allowed for an 8 inch main and extends to the drop manhole at station 35+00 where the size changes to 8 inch diameter for the remaining distance to the site. This design was approved with the following change. In order to allow for increased flows in the future, the City required up -sizing the main from station 35+00 to the site from 8- inch diameter to 12-inch diameter, a distance of 2,329 linear feet. The remaining 2,501 linear feet of 12-inch diameter pipe from the point of terminus near FVCC to station 35+00 was installed per the engineer's recommendation for the reasons cited above. The City agrees that installation of the 2,329 linear feet of 12-inch diameter pipe is a potentially reimbursable cost. The eligible cost of this installation has not been determined. INSPECTION and ENGINEERING: These expenses were necessary for the proper design and installation of facilities required under the previously cited terms of the PUD agreement. The facilities were installed in a location dictated by the utility requirements of the Subject Stan Beard 11 /26/2002 Page - 3 Property and, except for the overall diameter of the pipe, were incidental to a normal installation and are unaffected by the changed pipe size. In other words, it does not cost any more to design and inspect a 12-inch diameter sewer main than to design and inspect an 8-inch diameter sewer main. Had the City ordered the installation of other pipe in another location not related to meeting the utility requirements of the Subject Property, then those engineering and inspection costs may have been appropriate to consider for reimbursement. The request for reimbursement of $20, 000 for engineering to cover the additional costs of design and inspection is ineligible for reimbursement. REIMBURSEMENT: Section 4.01, paragraph (C), sub -paragraph 1) of the signed agreement states that no reimbursement will be allowed for any costs related to meeting the utility requirements for development of the Subject Property. As outlined above and in accordance with the terms of this section, we have determined that the requested water facility costs and the requested engineering and inspection costs are directly related to meeting the utility requirements of the Subject Property and therefore are ineligible for reimbursement. With respect to sewer facilities, and also as outlined above, the undetermined as -installed incremental cost to install 2,329 linear feet of 12 inch diameter sewer main in place of an equal length of 8 inch diameter sewer main is potentially eligible for reimbursement. However, as clearly detailed in section 4.01, paragraph (C), sub -paragraph 1), the request for reimbursement and submittal of the costs and reimbursement agreement are required to be made within 30 days of substantial completion of the work. Thomas Dean & Hoskins engineer, Mark Munsinger, provided via letter dated April 23, 2002, the engineer's certification of Substantial Completion for MVP Phase I utility facilities. A request for reimbursement with the required supporting data was required to be submitted not later than May 23, 2002. Your letter dated August 27, 2002 wherein you made a formal request for reimbursement was not submitted in a timely way. It failed to adequately detail the eligible costs to be reimbursed, and did not include the engineer's submittal of the required reimbursement agreement. Therefore, in accordance with the terms of the signed Mountain View Plaza PUD agreement, reimbursement of the previously cited potentially eligible sewer costs could be denied. However, in an effort to work with the developer, I propose extending this deadline to December 6, 2002 and ask that this issue be given full attention by both engineering staffs. As you were leaving our meeting you indicated that Mountain View was no longer interested in paying the City $50,000.00 in lieu of a parcel as previously agreed upon. I am somewhat perplexed how that issue entered into the equation. However, I simply refer you to Section 2.03(D) of our agreement to remind you of the specific requirements of the exchange and will await the identification of this parcel. Throughout the long process of developing Mountain View Plaza, the City and its Public Works staff have sought to foster and maintain a cordial and professional working relationship with Mountain View and its engineer. With few exceptions we feel this has succeeded. The single most troubling exception has been in the area of gaining complete responses and timely Stan Beard 11 /26/2002 Page - 4 action from Mountain View on matters of seemingly great importance to Mountain View and its representatives. The subject matter of this correspondence is the most recent and troubling of these occasions. With respect to the MVP PUD agreement, we have consistently sought to abide by the terms of the agreement and have expected no more of Mountain View. With respect to the matter at hand, we feel compelled to do so again and hope that your careful appraisal of the facts supporting our position will enable you to look forward, as do we, to working together again on projects of mutual benefit to this community and to Mountain View. I look forward to discussing this with you further, hopefully in a face to face meeting here. Perhaps your engineer could be with you and we could hopefully have more time and be more productive than our last meeting. Be assured that the City Council and I are earnest in our desire to be fair and receptive in our dealings with you and expect, as we should, the same consideration from you. Sincerely, C"- 4. �X�- Chris Kukulski, City Manager cc: Charlie Harball Jim Hansz Mayor/City Council