HomeMy WebLinkAbout2013-05-20 PACKET 07.2.Planning Staff Report —Case TAI 3-016
Subdivision Surety Ordinance Amendment
May 20, 2013
Proposal
The Planning Commission is requested to consider an amendment to the City's Subdivision Or-
dinance that allows subdividers of property the opportunity to construct the public improvements
within their project either privately or publicly, with publicly designed plans and specifications.
There are also proposed changes to the financial sureties that developers must submit to the City
for public improvements, site grading, erosion control, and landscaping. It is proposed for all public
improvements that the developer must submit a letter of credit or a third party agreement in the
value of 125 percent of the construction cost.
Background
Prior to June of 2010, the City's Subdivision Ordinance required subdividers to petition the City to
design and construct the public improvements. The City constructed the public improvements un-
der contracts let by the City. The total project costs were then assessed to the properties within
the project area. These projects all followed the rules of State Statute, Chapter 429.
The Planning Commission approved an ordinance change on June 28, 2010 to allow for subdi-
viders to either petition the City for the improvements or construct the improvements privately. As
part of that ordinance change, the subdivider was able to design a public project and the City
would comment and approve the plans and specifications. The City allowed private design and
private construction on Pinecliff 3rd, 4th, and 5th Additions. The City did not have a smooth or
successful experience with this methodology. In order for a project to be built to the City standard,
it is better if the City controls the design for the public improvements which ensures that the proper
specifications are provided and there is design consistency within the public infrastructure. The
goal is to make the project designed and constructed in the most cost - effective manner.
In review of the City ordinances regarding financial sureties that a developer must post with the
City, it was found that our current requirement of 150 percent of the construction cost was out of
line with the market and was making it challenging to develop in Cottage Grove. Staff has re-
viewed a number of other cities in regards to what financial securities are required of developers.
In order for the City to stay competitive in the residential housing market, it is important that our
fees and financial sureties be in -line with the market and economic conditions, yet at the same
time not putting the City at risk for needing to financially cover the cost of public improvements
proposed by new development. It is important to note that development pays for itself, and it is not
an additional burden to existing taxpayers for the new public infrastructure. This still holds true for
the proposed ordinance changes. The following is a list of what other communities are requiring:
• Centerville: 125%
• Rockford: 110%
• Farmington: 125% (use to be 130% percent when Robin and I were working there)
• Carver: 125%
• Maple Plain: 125%
• Forest Lake: 125%
• Maple Lake: 125%
Planning Staff Report — Case No. TA13 -016
Subdivision Ordinance Amendment— Public Improvements
May 20, 2013
Page 2 of 2
• Dayton: 110% (125% after 1 St reduction
• Woodbury: 125%
• Sartell: 125%
• Stacy 125%
• Harris 125%
• Hinkley 125%
• St. Joseph 125%
The process for the development or subdivider's project stays the same. The City Engineer pre-
pares preliminary cost estimates for the public improvements, called a feasibility report. The report
outlines how the development will be served by sanitary sewer, water, storm water, roads, trails,
and parks. The feasibility report outlines all of the costs associated with the public infrastructure
within the development, along with all necessary work for grading, erosion control, and landscap-
ing. The report also outlines the costs associated with engineering, legal, fiscal, and administrative
related to the project. Based upon the feasibility report, a subdivision agreement (or developers
agreement) between the City and the subdivider is then prepared and signed by both parties.
Planning Considerations
The City has adopted the position that subdividers should be given the opportunity to construct the
public improvements either through the public process or privately with public design of the infra-
structure. A development agreement between the City and subdivider will still be agreed by both
parties and the construction of the improvements must comply with city plans and specifications. The
City will inspect the work during construction before the City accepts the improvements upon
completion.
To provide this option, it is suggested that the the current Subdivision Ordinance be amended to
allow a subdivider to request that they construct the public improvements either publically or pri-
vately. The proposed ordinance amendment also establishes a set of regulations that requires the
subdivider to provide certain financial sureties to the City. These sureties cover the total cost of the
public improvements, landscaping, lot grading, mailboxes, utility repair /adjustment, etc. An engi-
neering /administrative escrow must also be deposited with the City to cover city services and
expenses performed in the processing of the improvements. The ordinance still allows a subdivider
the option to petition the City for the construction of the public improvents and have the total con-
struction costs assessed to each benefited parcel. A copy of the proposed ordinance amendment is
attached.
Recommendation
That the Planning Commission review and comment on the proposed ordinance amendment. A
public hearing on these changes will be scheduled for the Planning Commission meeting on June
24, 2013.
Prepared by:
Jennifer Levitt, PE
Community Development Director /City Engineer
1 ORDINANCE NO. XXX
2 AN ORDINANCE FOR THE CITY OF COTTAGE GROVE, MINNESOTA AMENDING
3 TITLE 10, CHAPTER 3, SECTION 1, GENERAL OVERVIEW OF THE
4 SUBDIVISION ORDINANCE OF THE CITY CODE
5
6 The City Council of the City of Cottage Grove, Washington County, Minnesota, does
7 hereby ordain as follows:
8 SECTION 1. AMENDMENT Title 10, Chapter 3, Section 1; General Overview, of the
9 City's Subdivision Ordinance is amended and shall read as follows:
10 10 -3 -1: GENERAL OVERVIEW:
11 Minnesota statutes section 462.358, subdivision 2A, authorizes the city to condition
12 approval of the subdivision of property on the construction and installation of certain utilities. The
13 intent of this chapter is to specifically set out the required improvements which promote and
14 protect the public health, safety and general welfare. The city reserves the right to require
15 additional improvements if deemed necessary by circumstances and conditions unique to these
16 particular lands. No subdivision of land is allowed unless storm sewer; sanitary sewer, a
17 municipal water supply, streets and other public improvements are constructed to serve the area
18 being divided unless some other ordinance or statute specifically authorizes said division. (Ord.
19 880, 7 -21 -2010)
20 SECTION 2. AMENDMENT Title 10, Chapter 3, Section 3; Subdivision Agreement, of
21 the City's Subdivision Ordinance is amended and shall read as follows:
22 10 -3 -3: SUBDIVISION AGREEMENT:
23 A. Contents of Agreement: The city shall enter into a contract, known as a subdivision
24 agreement, with the subdivider /developer. The agreement shall provide for the completion of
25 the improvements required by this title. Prior to the subdivider or city initiating the
26 improvements, the final plat and resolution shall be recorded, the subdivision agreement and
27 petition under Minnesota statutes chapter 429 shall be signed, all cash deposits paid, the
28 financial guarantees shall be posted and approved by the city attorney, and land required to
29 be dedicated is conveyed to the city. Until completion of the foregoing, only rough grading or
30 other minor forms of construction can begin.
31 B. Public Improvements:
32 1. The agreement shall require the subdivider /developer to furnish and construct at the sole
33 expense of the subdivider and at no expense to the city all the public improvements in
34 accordance with the plans and specifications prepared reviewed and approved by the city
35 engineer or require the subdivider /developer to petition the city to furnish and construct
36 improvements in accordance with the plans and specifications prepared by the city
37 engineer. The city engineer shall prepare preliminary cost estimates for the public
38 improvements, together with the costs for engineering, legal, fiscal and administrative
Ordinance No. XXX
Page 2 of 7
39 costs related to the project, which shall be incorporated into the subdivision agreement.
40 (Ord. 880, 7 -21 -2010)
41 2. (Rep. by Ord. 880, 7 -21 -2010)
42 3. The completion date for the public improvements shall be reasonable, considering the
43 work to be done, the season of the year and proper correlation of the improvements with
44 construction activities in the subdivision and other projects which are included within the
45 city improvement contract(s).
46 4. No subdivider who has previously defaulted on work or commitments on the phases of
47 the original preliminary plat or other projects in the city less than five (5) years old shall
48 be permitted to start work on any other subdivision until the defaults are remedied.
49 5. The subdivision agreement shall contain provisions for park dedication as required in
50 section 10 -4 -3 of this title.
51 C. Boulevard And Yard Improvements:
52 1. The subdivider /developer shall be required to assure the performance and /or installation
53 of the following:
54 a. Rough grading of all public rights of way.
55 b. Grading and seeding of vacant lots.
56 c. Cutting of grass and weeds, in excess of eight inches (8 ") in height, on vacant lots.
57 d. Street sweeping and cleaning of storm sewers and holding ponds.
58 e. Installation and maintenance of erosion control devices.
59 f. Boulevard sod, boulevard trees, and yard sod.
60 g. Replacement of trees removed from the right of way.
61 h. Monument replacement.
62 i. Surveyor's certification of individual lot grading compliance.
63 j. Drainage and erosion control plan compliance.
64 k. Final grading of each lot in subdivisions in compliance with the approved plan.
65 I. Driveways compliant with section11 -3 -9, "Off Street Parking And Loading,"
66 requirements of this code.
67 2. The subdivider shall not transfer or assign its obligations to install and pay for boulevard
68 trees, sod and hard surface driveways to the home builder or purchaser of any lot.
Ordinance No. XXX
Page 3 of 7
69 D. Pub!' Private Utilities:
70 1. New Lines To Be Underground: All electrical distribution systems (excluding main line
71 feeders and high voltage distribution lines), telephone service lines, gas lines,
72 telecommunications lines, cable lines and services constructed within the confines of and
73 providing service to customers in a newly platted area, shall be buried underground;
74 unless the city council, by resolution, determines that:
75 a. Such requirement would result in unnecessary duplication of facilities where the
76 property to be served abuts an existing development already served by overhead
77 facilities; or
78 b. That based upon engineering considerations, underground installation of such facilities
79 is not feasible in a particular plat or portion thereof; or
80 c. That the size of the subdivision is too small to justify the underground installation of
81 such facilities. (Ord. 880, 7 -21 -2010)
82 10- 3 -4 -1: SUBDIVIDER PETITIONED PROJECTS:
83 A. Financial Guarantees Required Generally: The subdivider shall be required to post financial
84 guarantees to ensure completion of all improvements required by this title, the preliminary
85 and final plat resolutions, and the subdivision agreement. The financial guarantees shall be
86 in the form of cash, escrow, of letter of credit or third part" aareement
87 B. Public Improvements: One hundred percent (100 %) of improvements including, but not
88 limited to, street lighting, pubk sanitary sewer, water, storm sewer, curb and gutter, street
89 grading and street bituminous surfacing, shall be assessed against properties in the
90 subdivision. The developer shall provide the city with a letter of credit in an amount of forty
91 percent (40 %) of the estimated cost of the improvements, which letter of credit shall
92 guarantee payment to the city of the assessments.
93 C. Boulevard And Yard Improvements:
94 1. The subdivider shall be required to post financial guarantees in the amount of one
95 hundred fifty percent (150 %) of the estimated costs to assure completion of the items
96 listed in subsection 10 -3 -3C1 of this chapter. The financial guarantees shall be subject to
97 approval by the city attorney before acceptance by the city. The subdivider shall deposit
98 with the city, from a bank or other reputable and financially sound institution subject to the
99 approval of the finance director, a letter of credit guaranteeing performance and
100 completion of improvements /work required by the subdivision agreement.
101 2. If there is noncompliance with the requirements of this title, at any time, the city
102 administrator can direct the performance of any work required of the subdivider.
103 Specifically, if on site improvements have not been installed or structures occupied for
104 forty five (45) days or longer, the city administrator shall direct an inventory for
105 noncompliance on June 15 and September 15 of each year and may direct the
106 performance of any work heretofore required of the subdivider. The cost of the city's
Ordinance No. XXX
Page 4 of 7
107 performance of any such work, including labor, equipment and material, shall be paid
108 from the posted financial guarantees. (Ord. 880, 7 -21 -2010)
109 10- 3 -4 -2: SUBDIVIDER FINANCED AND CONSTRUCTED PROJECTS:
110 A. Sureties: The development contract provided by section 10 -3 -3 of this chapter must require
111 the subdivider to provide sureties to the city by a cash deposit, certified check, or irrevocable
112 letter of credit as follows:
113 1. ^ff °�, s surety Public Improvement
114 a. A surety must be provided to the city in a sum equal to one hundred fifty twenty five
115 percent (150% 125 % ) the total cost of the improvements as estimated by the city
116 engineer. Of the total amount, five twelve percent (&°k 12 % ) or two thousand dollars
117 ($2,000.00), whichever is the greater, must be posted as a cash payment essrAw to
118 °
119 shall be posted as Gash or an irrevocable letter of Gredit. This fiRaRG'al seGurity m
120 be ,",.,.±.°.;°:,'.. i r°r° i° J a nd shall Rat e xp i re u ntil released by the r ty These
121 guarantees must be filed with the city prior to release of the final plat for recording. If
122 the security is a letter of credit, the security must contain a provision that prohibits the
123 issuer or surety from terminating the security without first giving forty five (45) days
124 written notice to the city of the proposed termination or expiration of the security.
125 Failure of the developer to post a substitute security within five (5) days after notice by
126 the city shall constitute a default that shall be grounds for drawing on the letter of
127 credit. The city council may grant a reduction in the security upon written request by
128 the developer based upon the value of the completed work at the time of the
129 requested reduction. The security may not be reduced to less than twenty percent
130 (20 %) of the original amount until all work required of the developer by this agreement
131 has been completed and accepted by the city. Upon failure of the developer to
132 perform, the city may declare the agreement to be in default and the amount of the
133 security shall be paid over to the city. From the proceeds of the security, the city shall
134 be reimbursed for any attorney fees, engineering fees or other technical or
135 professional assistance, including the work of the city staff and employees, and the
136 remainder thereof shall be used by the city to complete the agreement. The developer
137 shall be liable to the city to the extent that the security is inadequate to reimburse the
138 city its costs and pay for the completion of the work.
139 b. Items covered by these guarantees must include, but not be limited to, water mains,
140 sanitary sewers, storm sewers, bituminous streets with concrete curb and gutter,
141 streetlights, and trails sidewalks or park features These financial guarantees are for
142 all of the improvements to be furnished and installed by the subdivider, pursuant to
143 the development contract, and which have not been completed prior to filing of the
144 final plat.
entitled 145 c. The city is to reimburse itself Out Gf the Gash escrow for any nosts and
146 ad by the C for GGMP'etiGR ef the �.A.fn—rk nase of default by t
he
147 n Gempl etien ef the work and termination e Gity by
148 the subd under the contract the balanGe re ma i ning
149 refunded to the subd seek reimbursement for additional - expenses 'if the
Ordinance No. XXX
Page 5 of 7
150
151
152 2. On -site surety (site aradina, erosion control. landscaping)
153 a. A surety to the city must be provided by the subdivider in a sum equal to one hundred
154 M percent (100% 150 % ) of the amounts established for on -site improvements by the
155 department of community development. Fiv percent (5 %) of the to tal estimates m ,s+
156 be esters as a ash escrow tc he held in -a u interest hearing a ..uu.: nt a nd n nety
157 fiv 11ernen# (95%) of the total shall he posted a ooh or an irrnvnnahln In # #nr of
158 e�edit. This financial security must be automatically renewed and shall not expire until
159 released by the city. This surety must be filed with the city prior to release of the final
160 plat for recording.
161 b. Items covered by this surety must include, but not be limited to, landscaping as
162 required by resolution, mailboxes, utility repair, adjustment site grading, erosion
163 control, boulevard trees, landscaping, irrigation, and lot grading, as well as costs for
164 any entryway sign. These financial guarantees are for all of the improvements to be
165 furnished and installed by the subdivider, pursuant to the development contract, and
166 which have not been completed prior to filing of the final plat.
167 c. The city is entitled to reimburse itself out of the cash escrow for any cost and expense
168 incurred by the city for completion of the work in case of default by the subdivider.
169 Upon completion of the work and termination of any liabilities to the city by the
170 subdivider under the contract, the balance remaining of the cash escrow must be
171 refunded to the subdivider.
172 B. Engineering /Administrative Escrow
173 1. The developer must post pay to the city an engineering /administrative cash escrow to be
174 held in a noniRt °rest bearing aGco_ ^t payment in the value of twelve percent (12 %) of the
175 one hundred twenty five percent (125 %) construction cost for the public improvements
176 °
177 ene thousand dellar ($1,000.00), whichever us the greater, This eSGFGW Must be filed
178 wi the city, p rior t re l e as e c f the fi plat for recording Costs of related to this fee are
179 for city services, expenses, and materials provided in reviewing and processing of the
180 final plat, including, but not limited to, staff time, legal expenses, office and field
181 inspections, general inspections, and all other city staff services performed in the
182 processing of the improvements must be charged to the engineering /administrative
183 86G, o w acco gall m he credited to the city of Cottage Grev
184 2. Costs of city services, expenses, and materials provided in reviewing and processing of
185 the final plat including, but not limited to, staff time, legal expenses incurred in plat
186 approval, office and field checking, setting grate and office and field grade verification.
187 erosion control inspection establishing elevations, and drainage requirements, general
188 supervision, staking, inspection, purchase and installation of street identification and
189 traffic control signs, drafting as built drawings, and all other city staff services performed
190 in the processing of the improvements and plats, and administrative and legal expenses
191 in examining title to the property being developed_ must be ^hargpd to the
Ordinance No. XXX
Page 6 of 7
192
193
194
195
196
197
198
199
200
201
202
203
204
time, NORMAN
the balaRGe on the - - - -_e
0. -
- posit additieRa! funds in the aGGOURt in an amount as de t e rmined-by
208 the city administrator, 661ffiGient to Gever - -
0• the final plat.
210 5. If all, or a part, of a development has been completed, inspected and accepted, all cash
211 escrow monies, for that portion accepted by the city, may be reduced by the city council
212 and full or partial payment be returned to the subdivider. Any balance remaining in the
213 account upon completion of all platting conditions must be returned to the depositor by
214 the finance department after all claims and charges thereto have been paid and after
215 approval by city council. (Ord. 880, 7 -21 -2010)
216 SECTION 3. AMENDMENT Title 10, Chapter 3, Section 7; Subdivider Request for
217 Construction of Improvements is amended and shall read as follows:
218 10 -3 -7: CONSTRUCTION PLANS:
219 A. Construction plans for the required improvements conforming in all respects to the standards
220 of the city engineer and the ordinances of the city of Cottage Grove must be prepared at the
221 subdivider's expense by a prefe66ional engineer who is registered in the state of Minnesota
222 and said plans m -st nont2mn th sea! o f th prefessienal engineer The City will publicly
223 prepare plans and specifications.
224 B. SUGh plans together with the quantity Gf GOnStrUction terns must be subrn Red to the G ty
225 engineer for th8 city engineer's approval and estimate of total GGSt of the required
226 0 mprGVernents; upGn approval they will beoeme a part of the development agreemen
227 required in section 10 3 3 of this chapter. Reproducible plans approved by the Gity enginee
228 plus two (2) pFints must all be furnished te the Gity to be filed by the G engineer as a reGeFd
229 0 n the e ng i n ee r i ng d e p ar t men t . At the inspection, all required improvements on the site that
230 are to be installed under the provisions of this chapter must be inspected during the course
231 of construction by the city engineer at the subdivider's expense, and acceptance must be
232 subject to the city engineer's certificate of compliance with the contract. (Ord. 880, 7 -21-
233 2010)
Ordinance No. XXX
Page 7 of 7
234 Section 4. Effective Date. This ordinance shall be in full force and effect from and after
235 its adoption and publication according to law.
236
237
238
239 Attest:
240
241
242
243
244
245
246
247
Passed this day of
Caron M. Stransky, City Clerk
2013.
Myron Bailey, Mayor