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ITEM 7.1 Septic System at Riverwood Conference Center10 OtsTF eO MINNESOTA g DEPARTMENT INFORMATION Request for City Council Action ORIGINATING DEPARTMENT: REQUESTOR: MEETING DATE: Legal Andy MacArthur, City Attorney August 8, 2016 PRESENTER(s): REVIEWED BY: ITEM #: City Attorney Lori Johnson, City Administrator 7.1 AGENDA ITEM DETAILS RECOMMENDATION: Staff recommends that the attached agreement be approved between the City of Otsego and River Holdings LLC reRardinl; deferred enforcement action against the Riverwood Conference Center. ARE YOU SEEKING APPROVAL OF A CONTRACT? IS A PUBLIC HEARING REQUIRED? Yes. I No. BACKGROUND/JUSTIFICATION: Last summer the City identified problems with the septic systems at the Riverwood Conference Center. On or about August 11 of 2015 the City served a Notice of Imminent Public Health Threat on the owners of the Riverwood Conference Center. The notice gave them one year (August 11, 2016) to fix the non- compliant systems or the City would undertake enforcement action. Over the course of the last year the Conference Center has been pumping wastewater to tanks where it is periodically removed. There was a potential sale of the facility early in this year which fell through. Within the last month representatives of new buyers contacted the City regarding a possible deferment of enforcement for a period of six months and also inquired about possible hookup to City sanitary sewer. The new buyers also contacted Wright County regarding an escrow agreement, insuring that the system would be repaired and submitting escrow funds in order to insure that repairs are done. The new buyers escrowed $218,000 with the County to insure repair of the system. This agreement allowed them to close on the property under the County point of sale ordinance. City staff has been in contact with Wright County staff regarding the issue. The new buyers again contacted the City and City staff indicated that an Agreement would have to include additional security and a tighter time line to fix the system. At this point, the new buyer agreed that they would not conduct regular business at the site during the term of the Agreement, except they asked to be allowed to use the facility for weddings and other gatherings already contracted for up to October 15. The City Building Inspector revisited the site and indicated that continued pumping would not be harmful if only limited use of the site was allowed. The new buyer, River Holdings LLC closed on the property on July 21. River Holdings LLC is currently looking at various ways to use the property. They are also exploring whether or not it is advantageous to request hook up to the City sanitary sewer. The six month deferment will give them some time to determine the future best use of the property and to decide which way they want to go for sanitary sewer service. SUPPORTING DOCUMENTS: X ATTACHED ❑ NONE • Letter requesting City deferment. • Proposed Agreement between the City of Otsego and River Holdings LLC regarding Septic System located at the Riverwood Conference Center. MOTION: (Please word motion as you would like it to appear in the minutes.) Motion to approve Agreement Between the City of Otsego and River Holdings LLC Regarding Septic System at Riverwood Conference Center. BUDGET INFORMATION FUNDING: I BUDGETED: ❑ YES NA I o NO DRAFT- July 27, 2016 CITY OF OTSEGO COUNTY OF WRIGHT STATE OF MINNESOTA AGREEMENT BETWEEN CITY OF OTSEGO AND RIVER HOLDINGS, LLC RELATIVE TO PROPERTY LOCATED AT 10990 95" STREET NE, OTSEGO, MINNESOTA THIS AGREEMENT made this _ day of August, 2016 by and Between the City of Otsego (CITY) a Minnesota Municipal Corporation and Riverwood Holdings, LLC (OWNER) a Minnesota limited liability company regarding certain real property located at 10990 95thStreet, Otsego, Minnesota. WHEREAS, OWNER has recently purchased the property; and WHEREAS, on or about August 2015 CITY reviewed the septic systems located on the property and determined that they constituted an imminent public health threat; and WHEREAS, on August 11, 2015 the CITY sent a letter to the then Owner indicating that the identified Imminent Health Threat must be abated by August 11, 2016; and WHEREAS, OWNER has purchased the property with knowledge of the Imminent Health Threat; and WHEREAS, OWNER has requested that the CITY defer action on the Imminent Health Threat for six months from August 11, 2016; and WHEREAS, OWNER has contacted and had discussions with the CITY regarding possible hookup to CITY sanitary sewer facilities; and WHEREAS, OWNER has indicated that it will not use the property for regular business, but will only fulfill limited event contracts for which it was previously obligated; and WHEREAS, OWNER has entered into an ESCROW AGREEMENT FOR WORK COMPLETION with Wright County in which it has placed in escrow for system repair $217,800.00. NOW, THEREFORE IT IS AGREED BETWEEN THE PARTIES AS FOLLOWS: OWNER shall not use the property for regular day to day hotel or conference business (or any other business) except for certain events for which it is currently contractually obligated and as it provided to CITY on July 20, 2016; as set forth on the attached Exhibit A. 2. As long as OWNER complies with the terms and conditions of this Agreement, CITY will defer enforcement action against the Imminent Health Threat for a period of six months. 3. In the event that OWNER defaults on the terms and conditions of this Agreement CITY may immediately undertake enforcement including, but not limited to, imposition of Administrative fines retroactive to the date (August 11, 2016) that the CITY deferment was granted. In the event of such a default OWNER agrees to waive any and all procedures and right of appeal of any fines and agrees to make immediate payment, with the understanding that any unpaid fees or charges will be assessed against the property. OWNER also agrees to waive any irregularities in procedure, waive any hearings, and waive any and all right of appeal for any said assessment including, but not limited to, the right of appeal under Minnesota Statute 429.081. 4. OWNER shall comply with all terms and conditions of that separate ESCROW AGREEMENT FOR WORK COMPLETION with Wright County. 5. CITY specifically reserves and does not waive any and all remedies available to it under City Ordinance or State Law in the event that OWNER does not comply with this Agreement including, but not limited to criminal prosecution, administrative enforcement, civil enforcement or injunctive relief. 6. This Agreement is to be construed and enforced under the laws of the State of Minnesota. 7. In the event that a court of competent jurisdiction determines that any portion or section of this Agreement is invalid, the remainder of the Agreement shall be enforceable and shall be construed as closely to its original intent as possible without the invalid portion. Dated: CITY OF OTSEGO Jessica Stockamp, Mayor Tami Loff, City Clerk Dated: RIVER HOLDINGS, LLC m Its EXHIBIT A Events already contracted: Gathering- August 13, 2016 Wedding- September 10, 2016 Wedding- September 17, 2016 Wedding- September 17, 2016 Wedding- October 1, 2016 Gathering- October 15, 2016 Masons Lodge rental of banquet room first and third Tuesday and 2"d Thursday of the month up to October 15, 2016 4 RIVERWOOD HOLDINGS, LLC hnllel:l; 'Is.SiPlu.nr 7/5/2016 Jaden Ghylin Riverwood Holdings, LLC 14326 Dove Ct NE Prior Lake, MN 55372 Otsego City Council 13400 90th Street Northeast Otsego, MN 55330 Dear City Council, We are in the process of purchasing the Riverwood Inn and Conference Center in Otsego. As you may be aware, there have been some septic issues on the property in the past couple of years and we are working to bring the sanitary system into compliance with all city, state, and county regulations. We have retained the engineering firm, Wenck Associates to assist in these efforts. On June 23rd we met with city staff and Wenck Associates to discuss our plans for the property. In attendance were Ron Wagner, Daniel Licht, and Andrew MacArthur. We discussed our plans to connect the property's sanitary system to the Otsego city sewer system near the golf course. Our primary purpose for this correspondence is to request an extension to the August 11 th deadline that was given to the current owner to rectify these issues. The letter from the city, dated August 11 th, 2015 is attached for reference. We are requesting a 6 month extension to allow us time for Engineering, Design, and construction of the city sewer hookup. Wenck has discussed with the City Engineer and they are in agreement that the current systems can continue to be safely used until we can get a city hookup in place. In order to meet wedding commitments made by the current owner through the fall season, we request an extension to continue using the current systems to prevent any interruption to these wedding services until we can finalize the city sewer connection. We understand that these septic issues and this property have been a concern for the city and county for some time. We look forward to working with the City to bring this property back to a community asset that we can all be proud of. Preliminary plans for sewer hookup are attached. Sincerely, Jaden Ghylin Chief Manager Riverwood Holdings, LLC Technical Memo To: laden Ghylin, Ascent Equity, LLC From: Peter Miller, Wenck Associates Peter Daniels, Wenck Associates Date: July 5, 2016 Subject: Riverwood Inn and Conference Center Concept Sewer Design Introduction ^A& WENCK Responsive partner. Exceptional outcomes. Wenck Associates was approached by Ascent Equity, LLC to evaluate the existing wastewater infrastructure at the Riverwood Inn and Conference Center and to prepare a concept design for a proposed sewer connection to the City of Otsego collection system. This memo provides discussion on the present state of the existing septic systems, proposed wastewater infrastructure including possible forcemain routes and connections to City infrastructure, permitting and regulatory considerations, and considerations regarding ownership of the proposed system. Existing Infrastructure and Condition The Riverwood Inn and Conference Center is comprised of several buildings. The facility layout is shown on Figure 1 attached to this memo. The buildings and associated wastewater facilities are described below. Conference Center and Restaurant o Includes lodging, meeting rooms, and an indoor pool. o Wastewater is sent to septic tanks on the west side of the building. Effluent from the septic tanks is dosed to a drainfield on the northwest corner of the grounds. Bluffhouse o Provides additional lodging for guests. o Wastewater is sent to septic tanks on the northeast side of the Bluffhouse. Prior to a piping failure, effluent from these tanks was sent down a steep slope to a drainfield to the north. The septic tanks have since been converted to holding tanks and are periodically pumped and hauled. Storage Building o Located just east of the Bluffhouse, this building is used for cold storage. There is no plumbing in this building, so it is not connected to any sewer infrastructure. Wenck Associates, Inc. 1 1800 Pioneer Creek Center I P.O. Box 249 1 Maple Plain, MN 55359-0249 Toll Free 800-472-2232 Main 763-479-4200 Email wenckmp@wenck.com Web wenck.com V^V Jaden Ghylin WENCK Ascent Equity, LLC July 5, 2016 Responsive partner. Exceptional outcomes. Proposed Infrastructure at Riverwood Figure 1 attached to this memo shows the proposed infrastructure to replace the original septic tanks and drainfields. A summary of the proposed work is provided below. Construction of proposed grinder pump station near the location of the existing holding tanks adjacent to the Bluffhouse. The grinder pump will pump to the new lift station constructed adjacent to the Conference Center (see below) o Abandonment of existing holding tanks per MN Rule 7080.2500, The drainfield will remain with all outlets and inlets capped. Construction of proposed lift station on the west side of the Conference Center. This lift station will pump wastewater to the City of Otsego sewer system. o The lift station will receive pumped wastewater from the grinder pump station at the Bluffhouse via a proposed forcemain installed along the north side of the Conference Center. o Installation of new gravity service lines connecting the Conference Center and Restaurant to the lift station. o Abandonment of existing septic tanks per MN Rule 7080,2500. The drainfield will remain with all outlets and inlets capped. Possible Forcemain Routes to City Infrastructure Figure 2 attached to this memo shows two proposed alternatives for the forcemain route from the Riverwood Lift Station to the existing City sewer system. The alternatives are described below. Alternative 1: Route forcemain along County Road 39, Kalenda Ave NE, and 97th St NE Right -of -Way (ROW). Connect to the existing City Lift Station located adjacent to Vintage Golf Course. Alternative 2: Route forcemain along County Road 39 ROW and connect to the existing City forcemain within County Road 39 ROW. Permitting and Regulatory Considerations The existing septic and drainfield systems are permitted through Wright County. Permitting and regulatory approval will be required before construction of the proposed improvements can begin. Below is a list of regulatory considerations for these improvements. • Forcemain construction within County Road 39 ROW will require utility permitting through Wright County (this applies to alternatives 1 and 2). • Forcemain construction within Kalenda Ave NE and 97th St NE ROW will require utility permitting through the City of Otsego (this applies to alternative 1). • A Minnesota Pollution Control Agency (MPCA) Sewer Extension Permit is required. • To connect to City infrastructure, a Sewer Availability Charge (SAC) must be determined and paid to the City of Otsego. • Abandonment of existing septic tanks requires conformance with MN Rule 7080,2500, 2 V:\Technical\6085 Ascent Equity\Reports\Concept Design Memo\Concept Sewer Design Memo.docx Jaden Ghylin Ascent Equity, LLC July 5, 2016 Ownership MCIATES M Responsive partner. Exceptional outcomes. The ownership and operation of the proposed Riverwood lift station and forcemain system was discussed with the City at our June 23, 2016 meeting. Because the proposed system is currently only intended to serve this private facility, it was determined that construction and operation of the system would be the responsibility of the Riverwood Inn and Conference Center. Should other properties be connected to this system in the future, ownership and responsibility may be reconsidered at that time. 3 V:\Technica1\6085 Ascent Equity\Reports\Concept Design Memo\Concept Sewer Design Nemo.docx L C C N O _ Cf) E T N j a 0 J LC7 N N N 0 N N -- O O O a a` r.. I J a tA ice_ t � • �� � yR -..d v O 46 I 4 L a N U Q) U C N L c O U U J -a rJ O r 'O L D > C w i— f6 z w C U .� U Q -J (Q L H Q� O Q 0 N- J J J 1 D D' u