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ITEM 3.5 Igloo Utility Fees'01 OtCI�egoF MINNESOTA CDP DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT: REQUESTOR: MEETING DATE: Planning City Planner Licht 9 February 2015 PRESENTER(s): REVIEWED BY: ITEM #: Consent City Administrator Johnson 3.5 — Igloo Utility Fees City Attorney MacArthur AGENDA ITEM DETAILS RECOMMENDATION: City staff recommends approval of an agreement regarding utility charges applicable to the Igloo Bar and Restaurant to be located at 15850 87th Street NE. ARE YOU SEEKING APPROVAL OF A CONTRACT? I IS A PUBLIC HEARING REQUIRED? Yes. I No. BACKGROUND/JUSTIFICATION: The Igloo Restaurant and Bar is under construction with a planned restaurant, bar and indoor ice rink facility at 15850 87th Street NE within the Great River Centre. Sanitary sewer and water utility charges are due for the build out of the space in accordance with the Chapter 6, Section 1 of the City Code. City staff calculated the following utility charges based on the submitted building plans: Utility Charges REC Calculation Proposed RECS Utility Fees Availability/ Due Connection Charges Restaurant 1 REC/ 10 seats 166 seats 16.6 $11,930/REC $249,377 Ice 4 REC / Ice Resurfacer Ice resurfacer 4.0 (2014) 1 REC / 17 fixture 5 fixtures 0.3 units The business owner also wants to have the ability to clear the tables for live music events. Utility charges for such a facility would be substantially higher and based on the building code occupancy limit of 749 persons. To this end, the City Attorney has drafted an agreement that would allow the business up to 10 events per calendar year where the restaurant would be cleared of tables to increase capacity up to 749 persons. The business owner is required to provide advance notice to City staff of each event. The business owner is also requesting that the utility fees be assessed. The agreement drafted by the City Attorney would assess the utility fees for 7 years at 4.5% interest, which is 1.5 percent above the largest bond the City has issued for the sewer and water utility systems consistent with City assessment policy. The assessment will be against the property to insure payment and the property owner will be required to consent to the assessment as a signatory to the agreement drafted by the City Attorney. SUPPORTING DOCUMENTS: ❑ ATTACHED ❑ NONE A. Draft agreement POSSIBLE MOTION Please word motion as you would like it to appear in the minutes. Motion to approve an agreement between the City of Otsego and the Igloo LLC D/B/A Igloo Bar and Restaurant regarding utility fees for facilities at 15850 87th Street NE, Otsego. BUDGET INFORMATION FUNDING: I BUDGETED: ❑ YES NA ACTION TAKEN ❑ NO ❑ APPROVED AS REQUESTED ❑ DENIED ❑ TABLED ❑ OTHER (List changes) COMMENTS: CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA AGREEMENT BETWEEN THE CITY OF OTSEGO AND THE IGLOO LLC D/B/A IGLOO BAR AND RESTAURANT REGARDING UTILITY FEES FOR FACILITIES AT 15850 87" STREET NE, OTSEGO AGREEMENT entered into this day of February, 2015 between the City of Otsego (CITY), a Minnesota municipal corporation and The Igloo LLC, a Minnesota Limited Liability Company, DB/A, IGLOO Bar and Restaurant (IGLOO). WHEREAS, IGLOO, on behalf of property owner OTSEGO GRC, LLC, has applied for a building permit to construct facilities for restaurant use at 15850 87th Street NE within CITY; and WHEREAS, said construction as indicated on the plans dated September 17, 2014includes 5,412 square feet of floor area to be used as a restaurant and bar and 8,375 square feet to be used as a recreational activity (hockey) area; and WHEREAS, CITY currently has in place Utility Fees which include Water Availability Charges, Water Connection Fees, Sewer Availability Charges and Sewer Connection Fees which are charged to users based upon Residential Equivalent Connections (RECS) as determined by CITY as provided for by Chapter 6, Section 3 of the Otsego City Code; and 11 WHEREAS, CITY has calculated total utility fees at current rates for the building expansion at 20.9 RECs, for a total amount of $249,000.00; and WHEREAS, IGLOO has indicated that at this time they are going to provide 166 restaurant seats, which would result in 16.6 RECs as well as 4.0 RECs for an ice resurfacer and 0.3 RECs for 5 fixture units for a total of 20.9 RECs at $11,930.00 per REC for total utility cost of $ 249,000.00 which includes both Availability Charges and Connection Charges. NOW, THEREFORE IT IS AGREED BETWEEN THE PARTIES as follows; 1. CITY agrees that at the time a building permit is issued for the bar and restaurant as currently contemplated total utility fees for the proposed restaurant and facility will be 20.9 RECS, in the total amount of $249,000.00 which includes Availability Charges and Connection Fees. 2. IGLOO and the property owner OTSEGO GRC, LLC hereby petition the CITY to assess the above listed Availability Charges and Connection Fees in the total amount of $249,000.00 against the property at 15850 87th Street NE (PID No. 118-239-001030 ) for a period of seven (7) years at an interest rate of 4.5 % per annum commencing with taxes payable in 2016. IGLOO and the property owner OTSEGO GRC, LLC on behalf of both of them, their heirs, assignees or successors in title do hereby waive any and all hearings, irregularities in procedure and any right of appeal of any nature, including the right to appeal the assessment under Minnesota Statute 429.081, common law or the Minnesota Constitution. Both IGLOO and OTSEGO GRC, LLC agree that the property is benefited in at least the amount of the assessment. 4. In the event of future expansion of the facility utility fees shall be paid at the time that any additional seats are provided in a pro -rated basis based upon the number of seats added as determined by CITY. Additional City utility fees shall be adjusted based upon the City fees in force and effect at the time the seating is expanded. 5. IGLOO shall be responsible for immediately contacting the CITY to make additional payment when seats are added. CITY reserves the right to periodically inspect the premises regarding the number of seats being provided in the build out area. Additional payments are immediately due to CITY, which may add interest at the rate of 6% per annum to any amount Pa not timely paid (within 30 days) as well as City administrative costs, Planning fees, Engineering fees or Legal fees. 6. In the event that IGLOO fails to make timely payment of any additional utility fees owed, IGLOO agrees that, at the direction of the CITY, it will immediately terminate any service or seating for which it has not paid the allocated utility fees. In the event that CITY must take legal or other action to enforce this Agreement, IGLOO shall be liable to CITY for any costs incurred by the CITY in enforcement including, but not limited to, Administrative costs, Planning fees, Engineering fees and legal fees and costs. 7. IGLOO and OTSEGO GRC, LLC do hereby waive any and all claims or causes of action against the CITY, of whatever nature, related to this Agreement unless caused by the willful, wanton or intentional misconduct of the CITY or anyone acting on behalf of the CITY. 8. To the fullest extent permitted by law, IGLOO agrees to defend, indemnify and hold harmless CITY, and its employees, officials, and agents from and against all claims, actions, damages, losses and expenses, including attorney fees, arising out of IGLOO's performance or failure to perform its obligations under this Agreement. IGLOO agrees this indemnity obligation shall survive the completion or termination of this Agreement. 9. As additional remedies, and at the sole discretion of CITY, CITY may assess any amounts not paid to the CITY against the real property or may lien the property. In the event that CITY determines that an unpaid amount shall be assessed against the real property, IGLOO and the property owner, OTSEGO GRC, LLC, agree to any such assessment in the amount determined by CITY and waive any hearings, any irregularities in procedure, and any appeal of the assessment including the right to appeal under Minnesota Statute 429.081. 10. IGLOO shall be allowed to clear tables from the restaurant and utilize the building to a capacity not to exceed 749 persons up to ten (10) times per year. IGLOO shall notify the CITY prior to any of these events. In the event that IGLOO violates this specific paragraph CITY may, at its sole discretion, impose additional restrictions on the number of such events allowed per year. 11. This Agreement may not be amended except by written Agreement of all parties. 3 12. In the event that any portion, sentence, paragraph or clause of this Agreement is held to be invalid by a court of competent jurisdiction the remainder of the Agreement shall be modified and interpreted to be as close as possible to the original intent of the Parties. Dated: CITY OF OTSEGO Jessica Stockamp, Mayor Tami Loff, City Clerk Dated: THE IGLOO LLC By: Its CONSENT 4 OTSEGO GRC, LLC as owner of the real property identified in this Agreement, 15850 87th Street NE, Otsego, Minnesota, hereby consents to and agrees to be bound by the terms and conditions of this Agreement. Dated: OTSEGO GRC, LLC By: James R. Anderson Its: Operating Manager