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03-07-89 Development Comm Minutesti CITY DEVELOPMENT COMMITTEE MARCH 2, 1989 5:00 PM City Hall/Conference Room ATTENDING: Wayne Saverud, Jim Atkinson, Noel Furlong, Ed Gallagher, Mayor Kennedy and Joanne Speelman of the Daily Interlake, Cary Weyraech and Roger Hopkins. C. Saverud opened the meeting with a summary of the negotiations with the college board for the purchase of college properties. The total net cost is $530,000 for all four properties, the college will be able to use the buildings for two years, until their new campus is constructed, FVCC will be responsible for all insurance and maintenance and upkeep during that two year period. Also that they will proceed with the sprinkler system in their new campus, and that the city will be responsible for demolition and asbestos abatement at the appropriate time. Noel stated that he wanted it stated exactly two years, not until they vacate. If they are not able to vacate in two years, there needs to be renegotiations. Mr. Cary Weyraech who was in attendance has expressed concern over the purchase of the college properties, so C. Saverud stated that if at anytime during the discussion he would like the floor, he was certainly welcome to it. Wayne stated for the committee the reason the city and/or this committee was willing to take a look at this project is not that those pieces of real estate are such gems that we want to have in our possession, but it does fit in the overall scheme of things in that we are acting as an urban renewal agency. If we just let them sit, it could be years before anything is done and if we can get them back into private ownership they are some of the highest taxed properties in the county, right now they are tax free. We are not just anxious to generate parking lots, but to get some good use out of that area at its highest and best use and get them back on the tax roles. Noel stated that he did not want the impression left to the public that the city is going to immediately tear down all four buildings, if there is a better offer of higher and better use, so be it, but because there have been funds withheld for demolition that is not proof positive that the money will be spent to tear down brick and mortar, the city is not in any position to refund monies. C. Saverud stated that as soon as the city has title to the properties then it should be made known through legal advertisements or whatever method we have available • that those properties are on the market and we have two years to entertain proposals, if nothing comes by the time the college has to move, then we can decide if we want to proceed with demolition and try to sell it as cleared property If that is more saleable, or if we want to continue to advertise them for sale with buildings on them. Ed Gallagher had been asked to put together a budget scenario, which is as follows: $850.000 tax increment bond and usage of the monies does fall within the intent of the bond issue, of the $500,000 in land assemblage, $380,000 go toward land assemblage and the remaining $120.000 go toward demolition and asbestos abatement. From the parking commissions $350,000, $150,000 go towards acquisition and $108,000 for demolition and asbestos abatement. When the bonds were sold one of the things to be concerned about is, we are deriving interest from those monies, but we have to follow the intent of the internal revenue, so working with the City Accountant, the monies for demolition and asbestos abatement be placed in a separate account, possibly a CD, and the interest from that stays within that line item. We know that no matter what happens with the buildings in two years, we have to remove the asbestos. And if all four buildings go, at least the line item is there for demolition, and we have committed the bond monies and we're doing it within the intent of the bond. Ed also stated that if it is the desire of the Mayor and Council to purchase the O'Neil property, there is $92.000 left in the Parking Commission funds and $28,000 could be added to that from the redevelopment fund line item to provide the $120,000 for the purchase. All closing costs for the FVCC purchase can come out of this fund also. Improvements and paving will come in the next fiscal year. C. Saverud referred to the third paragraph in the letter from Howard Fryett stating FVCC is in the final stages of negotiating a contract payoff with Concordia College. FVCC hopes to be able to pick up some extra funds through this negotiation. Wayne stated he had indicated to the If college that what the city is interested in is a clear title, we are willing to pay the $530,000 and if they are able to pay less then the $275,000 to Concordia for that property it would be to their benefit, but the city is not going to come back and reduce our purchase price because of this probability. The committee agreed with this completely. Ed Gallagher stated that the city can work with the college, go to a title company and get clear title, the check is made out to the title company, they may want to put specific amounts to certain buildings, which is needed for bookkeeping records and title insurance, but what the city wants is the four buildings, with no restrictions and title insurance on all of them. Wayne stated that his concern has always been that the city needs to write an ironclad lease stating that the college will indeed be responsible for everything. Wayne asked to have a packet made up for the council for Mondays council meeting showing asking price for the four properties, showing discounting for asbestos abatement and demolition line items, etc. Wayne asked Cary to ask any questions, make any comments, etc, if he cared to at this time. He then asked why the city wants the buildings, how can the city sell the buildings quicker then the college. Wayne stated that in all likelihood, the college would have had difficulty unloading enough of the buildings to help their cash flow through this critical time frame before their bond income comes on board. Also, the community has realized the college is a very Intrical part of economic development, if this area is going to stabilize and improve, it is going to take a viable community college. When the college gets on its own site and an identifiable campus, its going to blossom and the community will benefit over all. Jim Atkinson stated that the city would have play in aestheticly what that block looks like in the future. The college is interested in selling the land, and would do so to anyone who had the funds. The city however can see that this be a prime development used at its highest and best use. Mr. Weyraech added that he hopes the city doesn't get into the real estate business, and that they keep beautification in mind. Roger Hopkins asked how to deal with the issue of speculation with land assemblage. Ed explained that the city is encouraging economic development by helping the college reduce their indebtness. He also feels that within the two year period there will be some real legitimate offers for the property. This particular area also falls into blight, so we fall within so many categories that it makes us eligible. Wayne stated that this property is already off the tax roles, we are not taking anything off in hopes of putting something back on, we're holding and/or cleaning up what's already totally nonproductive, and doing everything we can to get it • productive. Roger also stated that when Griffin Field was relocated there had to be public hearings, and asked if that had to be done in this project. Ed answered that the college asked for a report from DA Davidson and Dorsey Whitney, and what is being done here falls within the legitimacy of our bond. Roger also said he'd received a call asking where the asbestos was to be disposed of, the county landfill requirement of how they dispose of that material is very specific, and the government could at anytime revoke their permit to dispose of this material. Then if it has to be trucked elsewhere, will the costs of that be covered with the funds set aside now in two years. Ed stated that the report was a study and Bison knew the projection and that was figured into the bid specifications. Wayne said that our proposal is that the line item for asbestos abatement will be set aside in earmarked funds bearing interest, and hopefully that rate of interest will at least keep up with the inflationary factor that would go into those escalating costs. Roger asked if it did not, what resources would be used. Wayne stated that it would be the cash flow in the increment district, and we had better keep the increment district alive until the project is complete. Ed explained that the city has the obligation and once you acquire the buildings you assume that responsibility and we're hoping we're building into this reserve enough money to cover all costs. Hopefully, when you go out on competitive bid, the demolition will come in less, if demolition does occur. Roger asked if cash flow will remain if the tax increment district is due to expire. Ed explained that the district, up to the city council, will remain for the lifetime of the bond which was sold three years ago, so there is twelve years left. Ed stated that prior to this meeting he met with the KDC Tax Increment Committee and they approved what the committee has negotiated with the college. Noel moved that the committee accept the recommendation of the KDC Committee and recommend back to City Council with all caveats that both sides agreed to. Motion was seconded and carried. Wayne asked if the committee wanted to endorse the budget scenario Ed has provided at this point, committee agreed unanimously, motion carried. 2 ■-- Noel had asked the salary matrix be placed on the agenda at the beginning of the meeting, he gave the secretary the choice of staying or leaving as it concerns her position on the salary matrix. She chose to stay. Noel explained the clerk II positions were to be given 5 cents per hour annual raise times longevity. He felt at the time putting the two clerk II nonunion positions on the matrix and taking the 5 cents per hour out , over a three year period they would receive about $30 more than if they stayed as they were. However, he feels now that $30 Is not sufficient for confidentiality. He would like to consider two things, either they be advanced one step on the matrix in teh beginning, or reinstate 5 cents per hour times lingevity. Now] asked that this committee make ka recommendation to the Finance committee. Jim Atkinson, being Chairman of the Finance Committee, stated he would put it on the agenda for Mondays meeting. Ed stated that he would like to have the Finance Committee also look at Susan and Ross's salaries as they are diversified, they do everything within the area of redevelopment, which is in their updated job descriptions sent in one year ago. He said he realized its tough to get the adjustments up where they should be, but they have been with the city for a number of years and get on teh job training as well as seminars with monies from our program. He wanted it on the record that he speaks very highly of his stall. Snow removal was also put on the agenda. There are certain businesses that do not clear their sidewalks. The Mayor has identified two problem people and has contacted them, he also plans to get some public service announcements out in the next couple of days. Noel feels it not only is unsafe but is unsightly. The Mayor said it is a city ordinance to keep sidewalks cleared which he is trying to enforce. Ed discussed the CDD annual report which is due the end of March, TIF requests that will be upcoming, etc. Wayne asked of the committee wanted to address the O'Neil property purchase now or later, the committee agreed to wait until the FVCC purchase is completed. There was discussion of the report from FRDO on Griffin Field regarding type of housing, etc. There is a letter from the Housing Director in Helena regarding 'payment in lieu of in the CDD office which will be distributed to the committee before next meeting. Roger stated the developers are just waiting for committee review and recommendations to council. Wayne stated there • will be another committee meeting before the second meeting in March at which this will be addressed. Roger also asked where the money would go if this project takes place. Noel stated that it should be returned, as council said, to the fund which build the new Griffin Field. Roger suggested the possibility of using the monies to retire the city airport debt and Wayne suggested having the Mayor and City Attorney to review that option. Meeting adjourned at 6:45 PM. 3