ITEM 7.1 Septic System at Riverwood Conference Center10
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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
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