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ITEM 1 City of Otsego│13400 90th Street NE, Otsego, MN 55330│Tel. (763) 441 -4414 Fax (763) 441-9163 TO: Mayor and City Council FROM: Adam Flaherty, City Administrator & Finance Director DATE: August 28, 2017 SUBJECT: Otsego Apartments Financial Assistance Request On Monday, the City Council will be receiving a formal request for financial assistance from Otsego Apartments, LLC for a multi-family housing project within Riverbend North. The applicant has submitted the required application and has made the required escrow deposit. The City has engaged Ehlers as the Tax Increment Financing (TIF) consultant for this request. The applicant has submitted a PUD amendment development application to the Otsego Planning Commission. The applicant requested continuation of that application being considered to allow for submission of a financial assistance request, and has yet to be reviewed by the Planning Commission. The request for financial assistance from Otsego Apartments, LLC is for the TIF generated on the multi-family housing development to be diverted towards the sewer utility availability and connection charges (SAC) on the new development, and that the City waives the SAC on the existing mobile home park for connection to the municipal system. The City’s goal in considering the request for financial assistance would be that the existing mobile home park and all future developments would be connected to the City’s municipal utility systems rather than the private systems currently in place. Materials Attached for Discussion 1) Completed Application a. Request for Financial Assistance Form b. Concept Plan c. Summary Pro-Forma d. Estimated Market Value from the Wright County Assessor 2) Ehlers & Associates a. Analysis of Riverbend North TIF Request b. Financial Calculations 3) Memorandum from TPC (8-23-2017) MEMORANDUM TO: Adam Flaherty FROM: D. Daniel Licht, AICP DATE: 23 August 2017 RE: Otsego – Riverbend North; TIF Application/Development Proposal TPC FILE: 101.02 BACKGROUND Darkenwald Corporation has submitted application to amend the Riverbend North PUD District proposed and agreed to by the developer and approved by the City Council on 22 September 2014. The proposed development consists of multiple family residential uses, commercial buildings and self-storage buildings. A public hearing to consider the PUD District amendment and PUD Concept plan was opened at the Planning Commission meeting on 17 July 2017 . At the developer’s request, the public hearing was continued. The developer has subsequently submitted an application for financial assistance to be considered concurrent with the development application. ANALYSIS CIC Plat. The developer recorded a Common Interest Community (CIC) Plat for the subject site with Wright County on 7 February 2017. The CIC Plat divides the subject site into four units, one of which includes the existing private WWTF. Minnesota Statutes 515B.1 -106 states that use of a CIC plat for subdivision of property ownership does not invalidate or modify applicability of the City Code, Zoning Ordinance and/or Subdivision Ordinance. The CIC plat was recorded without City review and approvals and is not recognized as having standing for the purposes of providing entitlements for development of the subject site. It is recommended that development of the subject site comply with all requirements of the City’s Zoning Ordinance and Subdivision Ordinance, including payment of development related fees, as a condition of TIF assistance. 2 Private WWTF. Riverbend Mobile Home Park is currently connected to municipal water service and served by an existing private WWTF. The developer originally proposed that the new development within Riverbend North would be served by the existing private WWTF and connected to municipal water. The City’s goal in considering the TIF application is the elimination of the existing private WWTF and connection of Riverbend Mobile Home Park to municipal sewer and all new development to municipal sewer and water utilities. The subject site is located within the East Sewer District designated by the 2012 Comprehensive Plan. Section 6-1-3 of the City Code requires all new development to connect municipal utilities where available. The 2014 PUD District as agreed to by the developer and approved by the City Council requires all new development within the PUD District to connect to municipal sanitary sewer and water utilities. Sanitary sewer and water utilities are adjacent to the east line of the subject site to serve the proposed development. The operation of the existing private WWTF is subject to a permit issued on a periodic basis by the Minnesota Pollution Control Agency every 5-years. The MPCA permit is an operating license that does not provide the developer the right to serve additional development superseding the City’s authority regarding land use and utilities as Minnesota Rules 7001.015, Subp. 3.C incorporated in the MPCA permit for the existing private WWTF states “this permit does not convey a property right or an exclusive privilege”. The City’s WWTF Engineer has reviewed the facility plans for the private WWTF as outlined in their memorandum dated July 11, 2017. The existing private WWTF in need of substantial rehabilitation to continue operating in service to the Riverbend Mobile Home Park to protect public health, safety, and welfare, much less providing service to the proposed apartment and mini-storage uses. The ongoing operation of the existing private WWTF is a liability for the City which is identified on the MPCA permit as being the jurisdiction ultimately responsible for provision of sanitary sewer service under the permit in a manner that protects public health safety and welfare. CONCLUSION An agreement between the City and developer that results in removal of the existing private WWTF serving Riverbend Mobile Home Park is in the City’s interest. The removal of the existing private WWTF eliminates an existing non-conforming use, provides for utilization of City infrastructure capacity already in place, and removes City liability for on-going operation of the private WWTF to protect public health, safety and welfare in the most effective way. Removal of the private WWTF also allows for redevelopment of the entire property subject to compliance with the Comprehensive Plan, Zoning Ordinance, and Subdivision Ordinance. c. Andy MacArthur, City Attorney Ron Wagner, City Engineer Scott Schaefer AE2S