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HomeMy WebLinkAbout2016-06-15 PACKET 07.B. Cottage J Grove ��er� Pride and Qro�P�rity Me�t Clt�/ COUI'1CII CONSENTAGENDA Acfion Request Form �'B' Meeting Date 6/15/2016 Department Administration Title of Request City Council Meeting Minutes - June 1, 2016 Regular Meeting Staff Recommendation Approve the June 1, 2016 City Council Regular Meeting Minutes. ATTACH MENTS: Description Type Upload Date Draft Minutes Backup Material 6/8/2016 Cottage J Grove �here Pride and Pr�sperity Meet MINUTES COTTAGE GROVE CITY COUNCIL June 1 , 2016 COUNCIL CHAMBER 12800 RAVINE PARKWAY SOUTH REGULAR MEETING - 7:00 P.M. 1. CALL TO ORDER The City Council of the City of Cottage Grove, Washington County, Minnesota, held a regular meeting on June 1, 2016 at Cottage Grove City Hall, 12800 Ravine Parkway. Mayor Bailey called the meeting to order at 7:00 p.m. 2. PLEDGE OF ALLEGIANCE The audience, staff, and Mayor and City Council Members recited the Pledge of Allegiance. 3. ROLL CALL The following were present: Mayor Myron Bailey, Council Member Steve Dennis, Council Member Justin Olsen, Council Member Jen Peterson, Council Member Dave Thiede. Also present were: Charlene Stevens, City Administrator; Bridget Nason, City Attorney- LeVander, Gillen & Miller, PA; Becky Ahlvin, Management Assistant; Les Burshten, Public Works Director; Joe Fischbach, HR Manager/City Clerk; Jennifer Levitt, Community Development Director/City Engineer; Robin Roland, Finance Director; Craig Woolery, Public Safety Director. 4. OPEN FORUM Mayor Bailey asked if anyone in the audience wished to address the Council on any item that was not on the agenda. As no one wished to address the Council, Mayor Bailey closed the Open Forum. 5. ADOPTION OF AGENDA Motion by Council Member Olsen, second by Council Member Peterson, to adopt the agenda. Motion carried: 5-0. 6. PRESENTATIONS CITY OF COTTAGE GROVE • 12800 Ravine Parkway • Cottage Grove, Minnesota 55016 www.cottage-grove.org • 651-458-2800 • Fax 651-458-2897 • Equal Opportunity Employer City Council Meeting Minutes June 1, 2016 Page 2 A. Recognition of K9 Blitz Retirement Director of Public Safety Craig Woolery stated Blitz has been with the Police Department for nine years and is now retired with the next K9, Gunnar, taking over. Director Woolery recognized Officer Vandervort for his work with Blitz in a very public and dedicated program. Mayor Bailey presented a plaque to Officer Vandervort and Blitz for their service to the community. Officer Vandervort thanked his fellow officers, the citizens, and the businesses in Cottage Grove for their support of the K9 program. He stated it had been a very rewarding experience working with Blitz, and Officers referred to Blitz as a "locating tool," whether that was finding narcotics, a wanted person, a lost child, or an elderly person. Officer Vandervort asked the Council to support the K9 program going forward, with Officer Torning and Gunnar, as he thought it was a great public relations tool for the community. B. Comprehensive Annual Financial Report 12/31/15 Finance Director Robyn Roland stated Matt Mayer, of the City's auditing firm, BerganKDV, would present the City's 12/31/15 Annual Financial Report. Mr. Mayer reviewed key points of the Financial Report with the Mayor and Council Members. Mr. Mayer stated this was the 25th consecutive year the City had received an award for its Comprehensive Annual Financial Report. He stated the City passed the audit with flying colors. Mr. Mayer stated he would address the General Fund, which provides the main services for the City, including Public Safety, Public Works, Administration, etc. There was more revenue than anticipated, mainly in licenses and permits, which is great news for the City, as that reflects building and growth. Expenditures came in under budget, so Department heads did an excellent job keeping an eye on their budgets. There was an increase in the General Fund balance of approximately $740,000. Mr. Mayer stated the City was right in line with the Council's expectations for financial health. The Enterprise Funds are intended to be run like a business; whether they're generating operating income or generating an operating loss. There was an operating loss for 2015, mostly in street lighting expenses. The EMS Fund had a decline in revenue; EMS calls were down and, along with that, write-offs were up. The Water Fund expenses continue to increase, but the fees for services in the Water Fund have been sufficient to cover the cost of doing business. The Sewer Fund rates were up a little bit, which helped fund revenue, but personnel costs were also up, as well as the increased Met Council fees for sewer processing. Mr. Mayer stated a city the size of Cottage Grove normally has a property tax levy of approximately $427 per person; Cottage Grove's tax levy is approximately $379 per person. A typical city spends $645 per person on its main operations; Cottage Grove spends $567 per person. Across the seven-county metro area a typical tax rate is 43%; City Council Meeting Minutes June 1, 2016 Page 3 a typical city in the State of Minnesota has a property tax rate of 47%; Cottage Grove's property tax rate is 41%. In summary, Cottage Grove is doing more with less, spending less than a typical city might for the services provided, and the tax rate is comparable to cities in the geographic region. Mr. Mayer answered questions about the change to the accounting method used at the River Oaks Golf Course. Mr. Mayer stated he felt it was appropriate to represent it as a government fund, as opposed to the enterprise approach, due to the capital expenditures. 7. CONSENT AGENDA A. Approve the May 18, 2016, City Council Regular Meeting minutes. B. Approve the April 25, 2016, Planning Commission Meeting minutes. C. Accept the minutes from the February 9, 2016, meeting of the Advisory Committee on Historic Preservation. D. Receive and place on file the approved minutes for the April 28, 2016, Public Service Commission meeting. E. Authorize issuance of temporary intoxicating liquor licenses for August 13, 2016, and September 16-18, 2016, and a single-occasion gambling permit for September 16-18, 2016, to the Church of St. Rita. F. Adopt Resolution 2016-106, accepting the donation from LSP Cottage Grove. G. Adopt Resolution 2016-107, authorizing the preparation of a feasibility report for the 2017 Pavement Management Project for District C-3, a portion of District F-3, and a portion of District B-1. H. Approve the contract with NEXT Generation Consulting for Cottage Grove's 2016 Community Engagement project. I. Adopt Resolution 2016-108 authorizing the preparation of a feasibility report for the reconstruction of East Point Douglas Road from the intersection with CSAH 19 to a point 1,500 west of CSAH 19. J. Adopt Resolution 2016-109 and send a letter in support of Washington County's application for Fiscal Year 2018 Metro Municipal Agreement Program funds to construct a roundabout at the intersection of CSAH 19 (Keats Avenue) and Trunk Highway 61. K. Adopt Resolution 2016-110, approving the Cooperative Agreement with the Minnesota Department of Transportation and authorize execution of the agreement. L. Adopt Resolution 2016-111, approving the variance to allow a second driveway and curb cut at 8614 Hyde Avenue South. M. Authorize issuance of a single occasion gambling permit to the Cottage Grove Lions for a raffle on September 20, 2016. N. Adopt Resolution 2016-112, approving EDA application for MIF loan (American Logistics). City Council Meeting Minutes June 1, 2016 Page 4 O. Adopt Resolution 2016-113, awarding quote for the 2016 Trail & Parking Lot Seal Coating and Crack Sealing project to Fahrner Asphalt Sealers, LLC, in the amount of $54,406.00. P. Accept quarterly update on the 2016 Strategic Plan. Council Member Olsen wished to pull Item F, and Council Member Thiede wished to pull Item H for a separate vote, for further comment and/or discussion. Council Member Olsen stated LSP Cottage Grove was making a donation for the Economic Development Trust Fund. He wanted to know the very unique and important difference between the Economic Development Trust Fund and the EDA Fund. He thanked LSP for their generosity in contributing to the Economic Development Trust Fund year after year, along with many other businesses in the community. Director Roland stated the EDA Fund is a component unit of the City government; it has a portion of the tax levy and staff expenses, but the EDA Fund is much smaller and more focused on the actual staffing and activities that go along with developing economic development in the community. The Economic Development Trust Fund began in 1999 when donations were received from LSP in recognition of some assistance that the City gave to them in a legislative decision that was made. There was a commitment by LSP to donate to the City, not only in a donation to the actual City proper, but in the donations that they give to other local charities. Council Member Olsen confirmed with Director Roland that the EDA Fund has a taxpayer component to it, while the Economic Development Trust Fund does not. Motion by Council Member Olsen to approve the Consent Agenda, except for Item H, second by Council Member Thiede. Motion carried: 5-0. Council Member Thiede stated regarding the 2016 Community Engagement Project, he felt the community had already gotten more involved. He thought perhaps they wanted to get more sustainable processes for the future. Administrator Stevens stated an RFP was sent to four firms, three of which responded. Two firms were interviewed for a more robust community engagement process. Rather than do phone surveys of citizens, NEXT Generation would engage a consultant to help host community-wide meetings, as well as receive information electronically, and/or use community-wide chalkboards in strategic locations. NEXT Generation Consulting was chosen; their proposal was $57,200 with some travel expenses not to exceed $6,000. Council Member Thiede stated he'd like to see more data from communities NEXT Generation has previously worked with, which gave measurements of the work results they had provided, before spending that amount of money. Council Member Olsen stated the goals of the Strategic Plan created earlier this year included increasing community engagement and to hire a facilitator to help that process, which they hoped to accomplish with the partnership with NEXT Generation. Council Member Thiede asked Administrator Stevens how they had gauged success in Willmar; she stated NEXT Generation gained input from and engaged people, from youth to City Council Meeting Minutes June 1, 2016 Page 5 senior citizens. They also engaged the diverse populations of the community. They used chalkboards in the community, an electronic survey, and judged success by the number of people willing to work on the initiatives after that. Becky Ahlvin, Management Assistant, stated all of the references they had talked to were thrilled with the results that NEXT Generation had produced for them. Mayor Bailey commented that he was excited because NEXT Generation would actually be communicating with the people of Cottage Grove and would be attending various events to speak with citizens. Motion by Council Member Dennis to approve the contract with NEXT Generation Consulting for Cottage Grove's 2016 Community Engagement project, second by Council Member Peterson. Motion carried: 5-0. 8. APPROVE DISBURSEMENTS A. Approve payment of check numbers 196300 to 196532 in the amount of $1,240,442.54 and EFT Payment of $485,641.14. Motion to approve disbursements by Council Member Olsen, second by Council Member Dennis. Motion carried: 5-0. 9. PUBLIC HEARINGS — None. 10. BID AWARDS A. Award Bid for the Business Park Grading Project Adopt Resolution 2016-114 awarding the bid for the Business Park Grading Project to Enebak Construction Company in the amount of $375,954.26. City Engineer/Community Development Director Jennifer Levitt stated this grading award will be to grade approximately 20 acres in the business park to make it pad ready and be able to add additional marketable sites to the business park. There were 14 bidders for this project; this bid by Enebak is below the engineer's estimate. Council Member Peterson stated she's often asked why they don't make new businesses go into vacant places throughout the City; she asked Director Levitt to respond. Director Levitt said many times they're trying to attract new businesses and businesses want to have raw land where they can build their facility to their specifications. Many times people are confusing commercial and retail with the business park and those needs. They want to build the tax base, and one way to do that is to expand the business park, which also brings jobs, which raises the number of people in the City in the daytime, which then helps the City's commercial and retail areas. Director Levitt stated the City's in need of marketable land to attract new businesses to the community and attract jobs. City Council Meeting Minutes June 1, 2016 Page 6 Motion by Council Member Olsen to adopt Resolution 2016-114 awarding the bid for the 2016 Business Park Grading Project to Enebak Construction, second by Council Member Thiede. Motion carried: 5-0. B. Award Bid for Hadley Avenue & 95th Street Improvements Project Adopt Resolution 2016-115, awarding the bid for the Hadley Avenue & 95th Street Improvements Project to Ryan Contracting Co. in the amount of $4,718,765.36. Engineer Levitt stated this bid award is a result of producing growth in the City. The area next to Pine Hill Elementary School is growing into homes, which necessitates road improvements in that area. There will be curbs, gutters, streetlights, and trails, with better access to the school, the park, and other amenities. This project will be constructed in two phases: In 2016, 2/3 of the construction between 90th and 95th Street will occur; in 2017, 1/3 of the construction of Hadley Avenue from 95th Street to 100th Street will take place. The split of the work between two years made this a very competitive and attract project for contractors, and they received six bids. They're recommending the bid award be given to Ryan Contracting in the amount of $4,718,765.36. Engineer Levitt was asked to give a brief engineer's perspective on what the road improvements will do relative to controlling the traffic flow, speed, etc. through that corridor. She stated safety and enhancements were really multifaceted; the pedestrian traffic on the trails would be separated from the traveling motorists, which was a huge improvement, especially in a school zone. There will be additional lighting to provide safety enhancements for the school children. The roundabout will naturally reduce speeds of vehicles traveling through that area, which has been a big concern, as well as LED stop signs at 90th and Hadley Avenue, and automatic radar feedback signs entering the school zone district. She felt this project will improve all of the safety concerns expressed in that area. Motion by Council Member Olsen to adopt Resolution 2016-115, awarding the bid for the Hadley Avenue & 95th Street Improvements Project to Ryan Contracting Co. in the amount of $4,718,765.36, second by Council Member Peterson. Motion carried: 5-0. C. 80th Street Quadrant Project Bid Award Adopt Resolution 2016-116, awarding the 80th Street Quadrant Project to Pember Companies, Inc. in the amount of $808,949.95, which includes Bid Alternate No. 1 (Base Bid of $660,228.45 and Bid Alternate No. 1 of $148,721.50). Engineer Levitt stated there was a base bid for this project, which included landscaping, new trail improvements, additional signage, and monuments, which actually spans three quadrants of 80th Street and Hadley Avenue. They are making enhancements to that area with the 80th Street Crossing development; also, with the Presbyterian Homes City Council Meeting Minutes June 1, 2016 Page 7 project being expected to make application this year for construction this fall or in the spring of 2017. They wanted to improve the esthetics of the 80th Street bridge, so this project will also do that. Instead of a Welcome to Cottage Grove rock, it will be somewhat more enhanced with unique columns, vegetation, landscaping, and a background with special lighting. There will be wrought iron fencing, which will be higher at some places due to the railroad's requirement of a 10-foot section. The D.O.T. also had requirements for traffic control, so Highway 61 will need to be closed down during non-peak hours as the work is completed. Alternate No. 1 is actually the nine features that are enhancements to the esthetics of those areas, including the combination of the stone column with the wrought-iron fence on all three quadrants. The highest overruns were related to the bridge fencing, with the increased height over the railroad tracks, and additional traffic control. The decorative columns are custom workmanship with quality elements that need to be coordinated. They're recommending award to Pember Companies for the Base Bid and the Bid Alternate, for a total of $808,949.95. Mayor Bailey stated that with the 80th Street Crossing project, the intent is that they were going to incorporate the City's designs that are being put on the other three corners and are extending across the bridge; Engineer Levitt affirmed that with the 80th Street Crossing project, they have been provided with the full specifications, so the exact stone and masonry construction would be mimicked on that fourth quadrant. The wrought iron fence would also be tied in so the esthetic features would complement one another and would blend together on those four quadrants as people enter the Cottage Grove community. Council Member Thiede stated he felt the bid was extremely costly, and he felt the City could do something for a lot less money and the citizens would be just as impressed. He felt they should not use $200,000 out of the Park Trust Fund, but that money could be used elsewhere in a City park, where it would get more use and value from the community. Regarding the bridge, he felt funds should not be used to replace something that's functionally okay, albeit not beautiful. He liked the plaques that will be installed regarding the history of Norris Square, but he felt there were other places where they could use this money and this was just all esthetics. He felt the cost in the alternate bid for the stone columns (approximately $125,000) was very high; he thought ornamental fencing would lookjust as nice. The decorative metal columns proposed were $50,000 more than what had been estimated. He felt they were putting way too much money into esthetics that could be used more effectively in other places. Motion by Council Member Olsen to adopt Resolution 2016-116 awarding the 80th Street Quadrant Project to Pember Companies, Inc. in the amount of $808,949.95, which includes Bid Alternate No. 1 (Base Bid of $660,228.45 and Bid Alternate No. 1 of City Council Meeting Minutes June 1, 2016 Page 8 $148,721.50), second by Council Member Peterson. Motion carried: 4-1 (Nay by Council Member Thiede). 11. REGULAR AGENDA A. Strawberry Fest Events Authorize 2016 Strawberry Fest events on public property contingent on compliance with staff recommendations. City Clerk Joe Fischbach stated Strawberry Fest is the annual city-wide celebration in the City of Cottage Grove. It meets the definition of something that would need a special event permit. There's an exception since it's such a city-wide event with the governmental entity providing many of the services, (e.g., Police Department provides security and crowd control, Public Works provides staffing and trash removal, the Park & Rec Department provides staffing for the parks), so a Public Notice was sent out if anybody wished to speak on this event. The Strawberry Fest is coming to Kingston Park and also at Lamar Fields, and there will be increased activity at both of those places. They wanted to give citizens due notice that there might be some more traffic, more noise, etc. and provide them with an opportunity to give some feedback. To date, no feedback has been received. More information is available at www.cottaqeqrovestrawberryfest.com to view the schedule of events. Council Member Thiede stated there were some new things for this year's Strawberry Fest, including some new magic shows, a harmonica show, a story stroll (in association with the Cottage Grove library) that's like a storybook walk around the paths of Kingston Park, and the Saturday band, Uncle Chunk, will start at 7:00 p.m. The theme this year is "one sweet deal" and the button displays a deck of cards with a straight strawberry flush. Mayor Bailey thought perhaps the Strawberry Fest Committee could give a presentation at the next City Council Meeting on June 15, as that will be right before the Strawberry Fest begins. Administrator Stevens said they would get that coordinated. Motion by Council Member Thiede to authorize 2016 Strawberry Fest events on public property contingent on compliance with staff recommendations, second by Council Member Olsen. Motion carried: 5-0. 12. COUNCIL COMMENTS AND REQUESTS Council Member Peterson thanked the community for attending the Stone Soup Thrift Shop's "Soup-er Bowl" in April; they hit their goal of $50,000 in funds raised. Council Member Peterson stated that Sunday, August 7, is the Stone Soup Fashion Show, which will take place at the John P. Furber historic farm in old Cottage Grove, by City Council Meeting Minutes June 1, 2016 Page 9 Lamar Fields; Wayne and Angi Butt donated the venue for Stone Soup to have the fashion show there. She stated if you're interested in being a model in the fashion show, they are now recruiting models. To apply, go to the website,www.stonesoupthriftshop.orq, to learn how you can become a model, or stop in at the Stone Soup Thrift Shop to get the forms there. Council Member Peterson thanked everyone who attended the Cottage Grove Third Annual Memorial Day ceremony, held outside of City Hall, by the Veterans Memorial. U.S. Senator Amy Klobuchar made an appearance and spoke. It was a beautiful day and there was a good crowd on hand. Council Member Peterson stated the next Fare For All will be on June 9 at All Saints Lutheran Church; Fare For All is open to the public and is a buying opportunity for frozen meat and fresh produce to help stretch your budget and also support a great nonprofit organization, The Food Group. Council Member Peterson stated June 9 is the start of the Cottage Grove United Church of Christ's Farmers' Market, right across the street from Lamar Fields; it's open to the public and that will take place every Thursday throughout the summer months. Mayor Bailey thanked Council Member Peterson and the Beyond the Yellow Ribbon Committee for putting together the Memorial Day ceremony at the Veterans Memorial at City Hall. Council Member Peterson gave credit to Steve Campos, a Cottage Grove resident and retired military member, for recruiting Senator Amy Klobuchar to speak at the ceremony. Mayor Bailey thanked the Public Safety Department, specifically, Sergeant Gwen Martin, his son, Officer Nick Bailey, and the Fire Paramedics who attended to his dad, who had recently become ill at his home. His dad was transported to Regions Hospital and was discharged this evening. He asked Director Woolery to please pass his thanks on to all of the Public Safety personnel involved, especially to Sergeant Gwen Martin for getting there so quickly and basically demanding that his dad go to Regions Hospital when he really didn't want to, as she was very helpful. 13. WORKSHOPS — OPEN TO PUBLIC (CONFERENCE ROOM) A. Business Enterprise Center (BEC) Disposition Mayor Bailey stated that the EDA had a meeting on May 10 at the BEC to discuss the future of the BEC, and the EDA recommended that the City move forward with an exit strategy. What was recommended at that time was to have a joint meeting with the City Council to talk collaboratively to make sure that everyone was on the same page regarding the future of the BEC. City Council Meeting Minutes June 1, 2016 Page 10 Christine Costello, Economic Development Director, stated at the meeting at the BEC they discussed challenges, current tenant issues, and then they took a tour of the facility. At that meeting, they directed staff to create an exit strategy, which prompted tonight's meeting. She reviewed the current tenants and noted most leases expire this year. Also, East Ridge Robotics uses the large garage; there are also the Verizon Clear Wire cell tower and the solar panels that are on the property/building. There are two tenants who are behind in rent. One is four months behind; they said that they had not gotten the funding through a grant program for their space. The plan was that they'd be given until May 31, 2016, and if Director Costello hadn't heard anything, she would start the termination process for nonpayment of rent. The other tenant was three months behind; they stated they'd have a check sent as soon as possible. However, as of today, no check has been received. Again, the termination process will be started, and that's a 30-day process, as they're given reasonable time to attempt to make that payment. If not, the lease would be terminated and they'd be evicted. The other tenants are up to date on their rent. East Ridge Robotics does not pay any rent at all, as they're a high school robotics team. Director Costello spoke to all of the tenants, none of whom had a problem with being out by the end of 2016. She'll assist the Chamber of Commerce in finding new office space, as well as training room space for Wakota CAER, as they use the training room at the BEC on a monthly basis. They're already looking in the community to find space. For the Chamber of Commerce to relocate, they'd be looking for something to make them more visible. With Premier Biotech's current lease ending this summer, they asked for at least a December or January extension. Director Costello said that was something that could be done on a monthly basis. She asked them multiple times if they'd be interested in relocating or building within the community, but they had an age demographic for their employees, recent college grads, so they'd rather be closer to the University of Minnesota. They expressed their appreciation for the ability to get off of their feet, but at this time they have not expressed an interest in staying in Cottage Grove. There's nothing that would need to be done with the lease for Verizon Clear Wire, as they have no employees on site, just the equipment and a small equipment room so they'd be able to continue. That's also the case with the solar panels, as again there are no employees on site, and they do all of their wattage checking remotely. The EDA had reviewed ideas of what could possibly be done with the BEC building. One option was a public-private partnership. For that to happen it would require getting more stakeholders involved. They've met with somebody who would be potentially interested in that; they were given until June to provide us a written proposal, but nothing's been received. An incubator could work, but there's additional funding and City Council Meeting Minutes June 1, 2016 Page 11 services we'd need to provide; currently, the only thing the City provides is cheap rent, and there are no additional services to graduate a tenant into the community or to provide them services for business planning or financials. The other possibility is to work with Washington County. They're looking at their facilities plan, and there would potentially be some sort of redevelopment of that area, to include the library, the BEC location, and potentially two parcels across the street; one is vacant and the other houses a small retail center. With the majority of the leases ending in December, that would allow the City to mothball the facility, which would be less expensive, and give us the ability to focus on the strategic plan, to get more businesses in the business park, etc. This also reserves the option to work with Washington County and start that planning process, with the BEC as a viable location for the Washington County library to consider rebuilding. Washington County is not bonding for that until 2019, but it's a possibility for a redevelopment site. The City would retain the tower lease, and that would cover the basic utility costs and maintenance costs for mothballing the facility. The City receives just over $48,000 for the cell tower rental, and with insurance, utilities, some lawn care, snow removal, pest control, and minor building repairs, and those total costs are approximately $26,000-$27,000. The facility maintenance staff would do what they had done for the Home Depot building in terms of checking the site, making sure it's still operating, or that it's not falling into disrepair if it was mothballed. Staff's recommendation is to authorize us to proceed with the closure of the BEC and then authorize City Administrator Stevens to submit a letter to Washington County to begin the planning process. Council Member Olsen stated that Washington County had previously expressed an interest in the redevelopment of the aforementioned properties, including the BEC, and the Washington County Commissioner seemed extremely excited about that possibility. The only issue was making sure that everybody's calendar could synchronize to make that a reality. He asked if there had been any additional conversation about the timing, especially from Washington County's perspective. Administrator Stevens stated she'd had follow-up conversations with Washington County Administrator Molly O'Rourke, and she, Director Levitt, and Director Costello had also met with Administrator O'Rourke and her staff to even discuss that possibility. She hopes that the City and the County can align their goals and potentially plan for a 2019 Washington County bonding schedule. Administrator Stevens stated 2019 would be the earliest they could bond for a project, such as a library, or possibly in a 2023 cycle, which was why they had suggested beginning the planning process now. Washington County is still interested and that is a potential site. Council Member Olsen stated if we proceed, there's a two-year timeframe where the building would essentially sit empty. He asked how Administrator Stevens felt about that. Administrator Stevens stated if the facility is mothballed, she felt that was a reasonable time for it to be maintained in its state and an opportunity to plan. If it doesn't appear that this is the most viable site for Washington County, then that gives the City the opportunity to just market the building and see what would happen. Council City Council Meeting Minutes June 1, 2016 Page 12 Member Olsen felt it was a great site but he was struggling with the two years. From a financial perspective, though, it made perfect sense because expenditures would be extremely low to put the building in stasis. He wondered what the risks would be to allow some limited use of the facility, although that would involve maintaining water usage, heat/air, etc. He knew how much the East Ridge high school students loved using the garage space. He felt partnering with Washington County would be an ideal location if the City wanted to move forward with some sort of community center. The Mayor and Council Members discussed the previous financial history for the site and how and if they should continue forward. Mayor Bailey stated he didn't have a problem working with Washington County, but he was not interested in waiting beyond 2019. He stated they're going to have a City facility that's going to be empty, so he felt they should just tear down the building, as it probably isn't going to be reused. If Washington County states it might not work until 2023, then they should put the building on the market and let the highest bidder come in and tell us their plans for the property. Mayor Bailey said he likes the potential ideas he's heard for that site. Administrator Stevens stated they could convey that to Washington County and work through that in the planning process. She felt that perhaps the land has greater value than the building, but there is a cost to removing the building, so the hope is to maybe find a greater redevelopment way, either public or private, to take down that building that's a less-direct cost to the City. Washington County isn't interested in the building, so they'd be looking to have the land. Council Member Olsen asked about the impact on City staff with operating the facility, from a time and headache perspective. He's heard that sometimes there's a degree of frustration with maintaining the grounds, the leaking ceiling problems, etc. Director Levitt stated it's one of those resource-absorbing buildings as you're dealing with tenant needs and challenges. Even dealing with a toilet roll dispenser that's broken, a leaky faucet, etc. are greater than had been anticipated. The HVAC system problems have caused the City to spend a lot of time with a maintenance person up there, attending to those needs. Economic Development staff and the assistant spend a lot of time dealing with leases, especially with tenants not paying rent, and working with Finance. There are a lot of challenges that are taking the focus away from what the Strategic Plan is focused on. If the plan is to free up staff to move that vision forward, the City needs to let go of some of the dead weight. Council Member Olsen stated after the time with the BEC, there haven't been any fruitful graduations. Past performance is generally a pretty good indicator of future performance so if we continue to operate the facility the way that we have and utilize the resources, the expectation for improved future performance is probably slim to none. Council Member Thiede stated they had a meeting with a current member of the BEC and his partner. They've developed businesses and are actually interested in taking over the building, keeping the City as cost neutral, and he was talking about getting four or five of his own businesses. He's developed 12-to-15 businesses over the years; City Council Meeting Minutes June 1, 2016 Page 13 some have taken off, and some of them have not. He'd actually take over the building and he'd probably negotiate with the current tenants. If the City negotiated with that gentleman, there'd have to be something in that contract that if we pulled the building out from underneath him in three years, the City would possibly reimburse him. Council Member Thiede stated, rather than mothballing the building, we should take the next step to actually work out the details of a contract on how that gentleman would go about doing it and making it a break even for the City. If the City somehow ends up with Washington County not going through with the plan, and it becomes 2023, at least he could very well be in business and could be spitting out baby companies into other parts of Cottage Grove. He felt that was a better alternative than mothballing the building. Mr Jurgens asked Council Member Thiede to what end because we're still de facto landlords; even though we have someone managing it for us, it's still our building. Being a landlord was never the purpose of doing this; the purpose of doing this was so that we would grow these businesses, and they would graduate out within Cottage Grove. Mr. Jurgens felt if they started a wind-down process, the end of 2016 was too soon, with the hope that some of these current tenants, if given more time, would not just run out and find the next best location for themselves. The City could still work with them to try to get them to relocate within Cottage Grove and just maybe we could still get a win out of this. However, those that are near graduation have no intention of staying in Cottage Grove. Council Member Thiede asked what actual buildings we had right now would make good manufacturing buildings; there are not any pre-made buildings. There aren't any buildings ready for those people to go into. Mr. Jurgens said that we might be better off, instead of putting more money into the BEC, or letting this float, then they could put a spec building somewhere. Council Member Thiede asked about the timing on the northeast industrial building. Director Levitt stated they don't have a current tenant for that, but they obviously are shovel-ready and have approved site plans. Council Member Thiede stated that would be one possibility, a flex building, where somebody could rent a chunk of it, which is something we really don't have right now. Council Member Thiede said there could be something put in the contract that the companies this gentleman graduates out of there must be located in Cottage Grove. Attorney Land was asked if a contract could state that a business must be located within Cottage Grove. She stated that might be possible, although she'd not seen that done before. Director Woolery asked when the last independent appraisal of the value of the property and building was; Director Levitt felt that was probably done in 2013. Director Roland had spoken with the commercial appraiser at Washington County; she spoke with him under the guise of determining a required tax amount that the City might have to pay. Director Roland stated that he had said the building at the low end would be possibly worth $800,000, at the high end $1,000,000. The rents that we are talking about and the space that would be there to be rented is really on the low end of value in the community, they're more in the $10 per square foot range. The commercial appraiser's comment to Director Roland was, "You know that what the City is doing in that space City Council Meeting Minutes June 1, 2016 Page 14 has caused a lot of animus around for leased buildings around that, because we are lower than the market." The City insures that building for a larger amount of money than what it's actually valued at. He said it would not be easy to get that amount because it is not a new, gutted, open facility. A significant amount of work would need to go into it. Council Member Olsen stated it's probably cost prohibitive to go to market with the building, and the land has more value than the building. Mr. Jurgens stated, at least to his knowledge, that Washington County has no interest in all four quadrants discussed; they're interested in one quadrant. If the library is a tear down, rebuild, the former City Hall/current BEC site, is more attractive because of visibility from 80th Street. He would be curious to know what the tear-down cost would be; he felt it would be more valuable if it's gone, but then the plans with solar and the Verizon tower would have to be expedited, and the tower is generating some revenue now. If the building is mothballed, cash flow would continue. Council Member Thiede stated perhaps the solar panels could be moved to the new Fire Station or Public Works. Administrator Stevens said they could have the architects look at that for the Fire Station planning. Council Member Olsen asked if they were looking for a decision this evening; Director Levitt stated that yes, they were. Mayor Bailey stated he'd like to have a firmer commitment from Washington County regarding their time frame planning because he wasn't interested if they moved forward with mothballing to have the building remain empty for more than just a couple years, and maybe less, depending on the timing of the leases and extensions, etc. He'd like to know what the cost would be for tearing it down. He wondered if the property held the same value as the building, i.e., if the building is valued at $800,000 to $1,000,000, what value does the property alone hold? He also wondered if that valuation was still accurate. Director Roland stated for Washington County purposes, when they evaluate property, on a commercial building, it's based on the potential for income production, meaning the rents that we could charge. That's where the $800,000 to $1,000,000 valuation came from; assuming that you could rent out all that space at a certain dollar value, that's what that building would be worth for tax purposes. Mayor Bailey stated with the Majestic, as far as taxable market value, the owner had stated there was no difference to tear it down or keep it up. So, it would still hold its value as a blank piece of property with an option for somebody to develop it, should Washington County decide they don't want to go that route. Administrator Stevens stated in fairness to both sides, Washington County has been wondering what the City is going to do, and the City wonders what Washington County is going to do, and that's why there's a little bit of maybe not being in concert. The value of the planning is to kind of get to that point. If Washington County isn't going to City Council Meeting Minutes June 1, 2016 Page 15 move with the urgency that the City wants it to, then the City can begin to make decisions accordingly and so can Washington County if they know where the City's direction is. Council Member Olsen felt the Washington County Commissioner and the Washington County Administrator should be invited to an EDA meeting to actually open that dialogue once they have a little more certainty around where we stand. Mr. Jurgens stated he'd recommend including the library director, Keith Ryskoski, in that meeting. Administrator Stevens stated as we got further into that discussion, we'd certainly do that. Mayor Bailey looked for a motion to proceed with closure of the BEC; Council Member Olsen asked Director Costello if she was confident that was the most cost effective and reasonable solution to this situation. She stated that she was, particularly after studying this and speaking with the tenants. Asking for a small business(es) to invest money to upgrade the facility that the City left, and then having to recoup that, without having something in place to have them graduate into the community, with all the rules and regulations to follow, she had a hard time seeing it be successful. Mr. Jurgens asked if it would be possible to accommodate the robotics team for a longer period of time. Director Costello said yes, that could be possible. Council Member Thiede felt we didn't have enough information for that decision. Council Member Thiede felt we should push the decision off for at least another month to see what else we could do. Director Levitt stated the robotics team only uses the garage from February to April, and so they'd only have to use temporary heating for those months for the facility. She felt there would be a way to accommodate their needs. Motion by Council Member Olsen to authorize staff to proceed with the closure of the Business Enterprise Center (BEC) at 7516 80th Street South, as outlined in the timeline for exit strategy, second by Council Member Dennis. Motion carried: 4-1 (Nay by Council Member Thiede). Motion by Council Member Olsen to authorize the City Administrator to submit a letter to Washington County that the City of Cottage Grove would like to engage in a planning process for the future of a park or a library, second by Council Member Peterson. Motion carried: 5-0. 14. WORKSHOPS — CLOSED TO PUBLIC — None. 15. ADJOURNMENT Motion by Council Member Olsen, second by Council Member Peterson, to adjourn the meeting at 9:11 p.m.. Motion carried: 5-0. City Council Meeting Minutes June 1, 2016 Page 16 Minutes prepared by Judy Graf and reviewed by Joe Fischbach, HR Manager/City Clerk.