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08/10/2009 - 29240CITY COUNCIL MEETING CITY OF FRIDLEY AUGUST 10, 2009 The City Council meeting for the City of Fridley was called to order by Mayor Lund at 7:30 p.m. ROLL CALL: MEMBERS PRESENT: Mayor Lund Councilmember-at-Large Barnette Councilmember Saefke Councilmember Varichak Councilmember Bolkcom OTHERS PRESENT: William Burns, City Manager Fritz Knaak, City Attorney James Kosluchar, Public Works Director Julie Jones, Planning Manager PARKS AND RECREATION UPDATE. APPROVAL OF PROPOSED CONSENT AGENDA: APPROVAL OF MINUTES: City Council Meeting of July 13, 2009 (Tabled July 27, 2009). THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. City Council Meeting of July 27, 2009. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. OLD BUSINESS: 1. Second Reading of an Ordinance Amending Chapter 206, Building Code of the Fridley City Code Pertaining to the Minnesota State Building Code. William Burns, City Manager, stated staff recommends Council adopt the Energy Code amendments that were added to the State Building Code during the last legislative session. These things relate to things like insulation in walls and precautions that need to be taken between separating an extra screened-in porch from the rest of the house to make sure the rest of FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 2 the house is not compromised energy wise and a variety of energy-type things related to roofing and other matters that are part of this new Energy Code. We have to enforce it whether we adopt it as part of our Code or not. Staff recommend's Council's approval. WAIVED THE READING OF THE ORDINANCE AND ADOPTED ORDINANCE NO. 1261 ON SECOND READING AND ORDERED PUBLICATION. NEW BUSINESS: 2. Resolution Authorizing Changes in Appropriations for the 2009 Budget for January through July 2009 William Burns, City Manager, stated the adjustments in the budget are largely as a result of numerous reimbursements. Staff also corrected an item that should not have been budgeted. Additionally, staff reallocated the $107,300 that was previously budgeted for parks capital improvements to the general fund. Nearly all the $32,215 in expenditure increases are for Police Department items for which they have received some grant money or some other form of reimbursement. The $3,276 in unbudgeted emergency management supplies are intended for use in the Emergency Operations Center for an additional projector, screen and sound system. It would be paid from a federal grant. Staff recommends Council's approval. ADOPTED RESOLUTION NO. 2009-30. 3. Approve Antenna Site Lease Agreements Between the City of Fridley and TTM Operating Corporation, Inc., for Water Tower No. 1 and Water Tower No. 2. William Burns, City Manager, stated Telecom Transport Management (TTM) has asked us to allow space for antennae on the Commons Park and Highway 65 elevated storage tanks. They will require an 18-inch by 13-inch equipment panel on a concrete bed and a single two-foot wide antenna at each site. This equipment is much less large and imposing than some of the other equipment we have from the other providers. In return, the City will be getting $300 per month for the first antenna and $200 a month for any additional antennae. Our rates will escalate by 3 percent annually. If TTM chooses to sell these two existing antennae, they agree to pay the lease of the existing tenant and their own lease. The other tenants in Commons Park are T-Mobile and Met Council. The tenants at the Highway 65 tower are T-Mobile and AT&T. If the leases are approved, TTM will begin a design approval process with staf£ Staff recommends Council's approval. THIS ITEM WAS REMOVED FROM THE CONSENT AGENDA AND PLACED ON THE REGULAR AGENDA. 4. Claims (142703-142896). APPROVED. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 3 5. Licenses. APPROVED THE LICENSES AS SUBMITTED AND AS ON FILE. 6. Estimates: Colt Construction Services, LLC 285 Forest Grove Drive, Suite 126 Pewaukee, WI 53072 85th Avenue Trail Project No. ST. 2007-4 Estimate No. 6 ............................................. $132,926.47 Ellingson Drainage Co. P.O. Box 68 West Concord, MN 55985 2009 Watermain Rehabilitation Project No. 386 Estimate No. 2 ............................................. $ 70,828.30 APPROVED. APPROVAL OF PROPOSED CONSENT AGENDA: Councilmember Bolkcom asked that the approval of the City Council Meeting Minutes of July 13, 2009, and July 27, 2009, along with Item No. 3, be removed. MOTION by Councilmember Barnette to approve the consent agenda with the removal of the City Council Meeting Minutes of July 13, 2009, and July 27, 2009, and Item No. 3. Seconded by Councilmember Varichak. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. ADOPTION OF THE AGENDA: MOTION by Councilmember Bolkcom to approve the agenda with the addition of the City Council Meeting Minutes of July 13, 2009, and July 27, 2009, along with Item No. 3. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 4 OPEN FORUM: Councilmember Bolkcom thanked everyone who attended the open house related to the signal intersection and the Northstar corridor improvement. She asked Mr. Kosluchar whether he has heard anything back from the County. They had made some comment at the meeting related to looking at changing the timing of the signals on Mississippi. James Kosluchar, Public Works Director, stated he believed that the analysis is ongoing. He thought the timing will be looked at sometime during the next two to three weeks. William Burns, City Manager, stated we received a copy of the letter from Pete Borman to Dennis Berg, Chair of the Anoka County Board of Commissioners, outlining his points of contention on the signal and promising to appear at the County Commissioners meeting. NEW BUSINESS: 7. Consideration of a Revision for Special Use Permit, SP #09-01, by Glenn Nelson, for Samir Awaijane, of 7570 Inc., (Sam's Auto World), for Automobile Repair for a Multi-Tenant Business, Generally Located at 7570 Highway 65 N.E. (Ward 2). Julie Jones, Planning Manager, stated there are two buildings on the site. Special Use Permit, SP #09-01, was approved by the City Council on February 9. A previous special use permit for the site was revoked last November due to problems the business owner had with meeting the stipulations of that special use permit for auto repair. Council approved a new special use permit in February with 17 stipulations. Some of the stipulations had 30-day deadlines and some had 60-day deadlines. The property owner, Samir Awaijane, has moved back from Florida and has now decided to operate Sam's Auto World out of this location again. Previously he had indicated that he was not going to be operating that business any longer. Ms. Jones stated staff is generally pleased with the changes they have seen at the site over the past six months. They have received no complaints of any kind that she is aware. They have made quite a bit of progress and done some work above and beyond what was in the stipulations. There were several tenants that were a problem to the property owner. With some great difficulty the petitioner removed some of those tenants. They are also being very cautious about re-leasing the space, and they have contacted staff to make sure any uses they consider do fit within the Code. Ms. Jones started reviewing the 30-day stipulations. One was for the removal of an outside storage area in the rear building, which is in Stipulation No. 4. This was delayed primarily because a lot of the material was frozen into the ground. However, the site is now all cleared within that storage area, except that they now have some vehicles stored in the back storage area. Ms. Jones stated there was also an outside storage area along the south side of the front building. This is the side that abuts Fridley Terrace Mobile Home Park That area had been full of parts which have now been removed. However, they do still need to remove the fencing that blocks FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 5 the view of this area from the front of the property as well as landscape the area which was part of the stipulations. Ms. Jones stated another 30-day stipulation was in regards to the spray booth and sprinkler system. The latest information she has from the Fire Marshall is that he had been contacted by the contractor in regards to this issue, but he has not been called back to inspect nor has he seen any more reports on the spray booth and the sprinkler system. Ms. Jones stated the structural lintels over the top of many of the garage doors were severely damaged and needed repair. Those have now been repaired. Also, the building owner repaired some damage to the northwest corner of the front building. They repainted both of the buildings, which was not one of the stipulations. They also repainted the framing for the sign which was not one of the stipulations. They have submitted a revised sign plan as required which includes the rear building and mention of the freestanding sign. It was ready in time to put on the consent agenda for this Council meeting but staff thought they would delay that item. Staff can bring this forward at the next Council meeting if Council would like them to. Ms. Jones stated another stipulation completed was they were required to store their customers' vehicles that are in a state of disrepair or awaiting payment in the back of the building. As far as staff can see, that is being done consistently. They have also submitted a revised site plan as requested. They were supposed to submit a site plan showing room for an additional five parking spaces. They have submitted a site plan that shows an additional seven parking spaces between the rear and the front building. Ms. Jones stated, there are some stipulations that are still incomplete. Staff is awaiting verification of the makeup air for the spray booth exhaust. Staff still needs a balance report and ventilation rates per the mechanical code. Also, the owner still needs to remove the rear storage fencing. The owner has requested a change in this stipulation. He has discovered that his insurance requires he have a secure area to store vehicles that are awaiting payment from his customers. He would like to keep that rear storage area for storage of customer vehicles. The petitioner has presented staff with four different options as to how that fencing could be modified. Ms. Jones stated staff recommends modifying Stipulation No. 6 to allow the fencing area to remain in its current location but require the removal of the boards and replacement with chain link Staff also recommends modifying Stipulation No. 4 to allow the rear structure to remain. The property owner claims he did not understand that stipulation at the time. Staff has agreed that now that the outside storage around that area is removed, it does appear reasonable to allow them to keep that area for interior storage and keep the storage inside and out of view. Staff recommends that since they have made significant progress, the petitioner be allowed another 30 days to come into compliance with the stipulations, which seems to be a reasonable time frame. This item would be brought back at Council's September 14 meeting. Councilmember Bolkcom asked Ms. Jones when she got the option to modify Stipulation No. 6. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 6 Ms. Jones replied staff received them a couple weeks ago. She stated the whole reason the City wanted the storage area removed, besides the fact they did not have a special use permit for outside storage and the Code does not allow it, was there was some concern about having adequate area to turn vehicles around in the rear of the building. Once they reduced the number of vehicles in the back, they could move around and turn around in the back of the building with the storage area in its current location. Councilmember Bolkcom asked why not let them keep it as big a storage space so they can keep the vehicles that are back there waiting to be repaired or be picked up. Why would they want to reduce that and maybe cause more clutter in the whole overall plan? Ms. Jones replied, she thinks the reason was to avoid the reoccurrence of it becoming a storage area for vehicles parts and other problems. Councilmember Bolkcom stated it is very clear in the stipulations that it is to be only for vehicles. Staff could actually monitor that, correct? Ms. Jones replied, correct. The other option was to reduce the size of the storage area in line with the rear building. They could make use of the current panel that they have on the site now, and they could just move that rather than purchase all new fencing material. Councilmember Bolkcom stated but even if they moved it to be in line with the building, staff is still recommending that it be a chain link fence, correct? Ms. Jones replied, correct. The other option was to place fencing along the rear of the front building. Councilmember Bolkcom asked, and why they would want that option. Ms. Jones replied staff found it more aesthetically pleasing to have less fencing on the site. However, they can understand the petitioner's issue with security. Councilmember Bolkcom asked about the question from the Fire Marshal. Ms. Jones stated the Fire Marshal heard from a contractor who had been working on the site, but the Fire Marshal had not been called back for an inspection as was expected. Stipulation No. 12 states the Fire Marshal would be called back for an inspection or there would be some sort of report that would verify that the spray booth and the sprinkler system were functioning. Staff has not received verification on that. Councilmember Varichak stated Mr. Nelson has been here a number of times and asked over and over again about the 17 stipulations and whether he had any problems getting those corrected. He stated he did not have a problem meeting those 17 stipulations. Here we are on August 10 and all of the 17 stipulations have not been met. He is asking for another 30 days to get this all in line. She asked if all of this would be done in 30 days. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 7 Glenn Nelson, property manager at 7570 Highway 65 N.E., said he underestimated his tasks. Part of his problem was with the ownership of the property, part of his problem was weather- related, and part of his problem was his own inability to fully grasp how long these items take to get done. The last problem was with the existing tenants. He had to do some legal maneuvering to eliminate three problems they had on the site with tenants. He tried his best to move tenants around and thought it would resolve the problem and found it did not. He said it was a difficult time right now. Mr. Nelson stated within the next 30 days he will be able to complete his tasks and do the job correctly. When he first came here he thinks he was adorned with an improper chip on his shoulder especially with reference to working with Fridley's staff inembers. It became very clear to him right away that the more transparent he was, City staff were much more open to working with him. He has found the staff here are excellent people and have helped him. If he had to do it over again, he would have asked for nine months. Councilmember Bolkcom stated she understands what he is saying, but in their staff report it says that the petitioner and his manager were unaware of the stipulations related to No. 4, which refers to the existing racking and structure to be removed. Mr. Nelson replied that is his fault. When he looked at that item, he thought that it referred to the racking as the structure that had to be removed. He did not understand that staff was looking at removing the $30,000 garage. That was his misunderstanding. Councilmember Bolkcom asked about the fence. Mr. Nelson said he is asking for an exception to what he had agreed to because the owner is back in charge in his ownership capacity, and they found that insurance companies are requiring they have a secure area on this site. When a car is brought to the property, in the time between when it is towed onto the site and they get the adjuster there and get the parts ordered and they fix it, they have to have a secure area. He did not properly address that until about 60 days ago. Councilmember Bolkcom stated but he knew the fence was supposed to come down. Sixty days ago when he decided to start running Sam's Auto Body, Mr. Nelson found out the insurance company said they had to have a secure area and that is when he started talking to staff about it. Mr. Nelson replied, yes, and staff was good enough to come out and meet with him when the owner was in Minnesota on the site so they talked about options for the fencing. He is very comfortable with taking staff's suggestion and taking the opaque slats off the fence and covering that up with a very transparent chain link fence. Councilmember Bolkcom asked what would he think of allowing the fence to stay there but allowing City staff to come in and inspect it on a regular basis. The only thing that could stay back there are cars. No parts or pieces of cars. Mr. Nelson replied he would be ecstatic. He had quite a challenge with the owner and other tenants that are no longer there trying to operate as a salvage yard, rather than an auto body shop. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 8 He threw away between $25,000 to $30,000 worth of usable parts. He does not know what the end result will be, but they have one or two former tenants who are contacting their attorneys about him improperly taking property. He gave them warnings in writing to get the parts out of there. They are now just operating as a standard body shop or auto repair facility. They are not going out and buying extra things and hoping that a car matches the junk they have. Councilmember Bolkcom stated she understands staff saying a chain link fence would be good because they can drive by and observe whether there are auto parts in the back On the other hand, she is okay with the fence being where it is at and remaining the way it is. They would obviously have to change the stipulation to say something about staff being able to go back there on a regular basis until this site actually has a good record. She knows Mr. Nelson was not the manager then, but they can only go by the past history. Mr. Nelson replied he understands that. They would be most appreciative of leaving the fence where it is and removing the boards and replacing it with very transparent chain link. Councilmember Bolkcom asked if they wanted to put a chain link fence there. Mr. Nelson replied, absolutely because then there is no question. City staff can see what is going on. He is very comfortable with that. Councilmember Bolkcom asked if they were to allow the existing racking and structure on the south side of the rear building which is Stipulation No. 4, they would include that it could remain for internal storage only. There could be nothing on the outside of the building. Mr. Nelson said all of the racking is gone. There is nothing out there. Councilmember Bolkcom stated but the structure is still there. Mr. Nelson stated the approved garage is still there. It is attached to the building. Councilmember Bolkcom stated the stipulation now says existing racking and structure on the south side of the rear building must be removed. We could change that stipulation to say structure on the south side of the rear building may remain but for internal storage only. Mr. Nelson replied, correct. He is very comfortable with that. Councilmember Bolkcom said they would also have to change Stipulation No. 6. Mayor Lund suggested changing Stipulation No. 4 by removing the words "and structure." The stipulation would read "Existing racking on the south side of the rear building must be removed within 30 days of issuance of the SUP." If you want to add something about the garage structure, maybe that should be added as another stipulation. For Stipulation No. 6, delete "interior" and then after "fencing" delete "around previous outside storage area and." It would now read, "Existing site fencing on south side of front building must be removed within 30 days of issuance of SUP." He asked if the fencing on the front building has been removed. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 9 Mr. Nelson replied, no, it is about three feet wide and he guessed he would remove that himself. Mayor Lund suggested creating a Stipulation No. 19 which would read "The existing interior fencing that encloses the outdoor storage area would be for cars only. The wood fencing would be removed and chain link fencing installed." Councilmember Bolkcom said there could be a stipulation stating the structure on the south side of the rear building shall remain for internal storage only. Councilmember Bolkcom asked if he will be able to do this by the end of September. Mr. Nelson replied, yes, he can. Councilmember Bolkcom suggested the stipulation regarding the fence read, "Existing wood fence shall be replaced with chain link at current location." Councilmember Bolkcom asked about Stipulation Nos. 12 and 13, regarding the ventilation and the Fire Code. Mr. Nelson replied the paint booth contractor has been hired and the required sprinkler heads have all been replaced. He will call the Fire Inspector and have him come back All the work is complete. Councilmember Bolkcom stated so as of tomorrow he will call and all buildings shall be compliant with all applicable fire building codes including verification that the spray booth and sprinkler systems are functioning as designed? Mr. Nelson replied, correct. He has one other thing that is going to take him about a week and a half longer. He has to meet with their engineers to recalculate the ventilation numbers. It was done under a different set of statutes. He used an International Building Code, and it is a different system than what the City requires. Councilmember Bolkcom asked if they are just giving an extension tonight. Ms. Jones replied that is how she understood it. They would be continuing the item until September 14. Her understanding from talking with the City Attorney is that a lot of the wordsmithing of the stipulations they are talking about could be put into a resolution that could then be brought back before them at the September 14 meeting for their adoption. We do need to make the record clear as to what the stipulations are. The special use permit does go with the property even if the property sells. We want to make sure that the requirements are recorded properly at the County level. Mayor Lund asked if they table this for 30 days and approve a resolution on September 14, would that give the petitioner another 30 days from September 14. He asked the City Attorney if that would be an issue. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 10 Fritz Knaak, City Attorney, replied, that is not an issue. Ms. Jones stated a resolution is not like an ordinance. An ordinance has to be published and there are so many days before it goes into effect. A resolution would go into effect immediately. Attorney Knaak stated it would go into effect immediately, and the purpose of the resolution would be as a recordable document. Mayor Lund stated the area along the south is not very defined. He asked about the general condition of the wood privacy fence that separates the petitioner's business from the manufactured home community. Mr. Nelson said they put that fence up. It is a cedar fence and is in good condition. It is structurally sound. Councilmember Bolkcom asked if the fact that Sam's Auto Body is operating again should change any of the stipulations. Ms. Jones replied it does not change any of the stipulations. She said Mr. Nelson has had conversations with staff about doing further beautification of the site and looking at vacating the very end of the street frontage road in front of their property to give them some additional greenspace in front of the building and possibly changing their entrance sign and putting in some landscaping around it. This is something staff has talked to the owner about many times in the past. Councilmember Varichak expressed appreciation to Mr. Nelson for all the positive things done that were not stipulations that have made the property look a lot better. Mr. Nelson stated one of the things that they should be aware of is the transparency with Ms. Jones and Mr. Hickok has really helped him because they have allowed him to contact them. One of the things he has also found in putting together a continuing business plan as a business owner is the misconception about taxes. After looking at it very closely, they are very cognizant of the small amount of their taxes going to Fridley vs. what goes to the County and what goes to the school district. He has made that clear to the owner, he understands the value of the relationship here. MOTION by Councilmember Varichak to table consideration of a revision for Special Use Permit, SP #09-01, by Glenn Nelson, for Samir Awaijane, of 7570 Inc., (Sam's Auto World), until September 14, 2009. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 11 APPROVAL OF MINUTES: City Council Meeting of July 13, 2009. Councilmember Bolkcom stated she had asked to table the minutes until the next meeting as Ms. Reynolds had sent an e-mail requesting some changes to the minutes. She spent some time going over them. As the City Attorney says, it does not need to be word-for-word. She suggested if someone has a long document they might want to actually give the Council a copy of it. It is up to the City Council to decide whether that whole document goes into the minutes. She thinks the changes that were made do reflect some of Ms. Reynolds' concerns. MOTION by Councilmember Bolkcom to approve the minutes of the City Council Meeting of July 13, 2009. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. City Council Meeting of July 27, 2009. Councilmember Bolkcom stated on Page 5 of the minutes, she had asked Attorney Knaak about the minutes being word-for-word and he responded but she also asked if we could substitute a recorded vs. minutes and he said no. She thinks that should be reflected. Mayor Lund stated Attorney Knaak replied, no, it has to be in written form. Councilmember Bolkcom stated on Page 11, it says staff is not happy with the rental people. She thinks that City staff is not happy with the "rental property owners." Councilmember Bolkcom stated on Page 14, Paragraph 6, where it states "Councilmember Bolkcom said she was uncomfortable ordering a public hearing when she did not know a lot about the project." She thinks actually what she did say was, "she was not comfortable because they had just been handed the feasibility report at their pre-meeting." That is why she was asking a question related to the timeline. MOTION by Councilmember Bolkcom to approve the minutes of the City Council meeting of July 27, 2009. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 3. Approve Antenna Site Lease Agreements Between the City of Fridley and TTM Operating Corporation, Inc., for Water Tower No. 1 and Water Tower No. 2. Councilmember Bolkcom stated she has a little concern about the 3 percent. She understands in the past it has been 5 and that there have been other petitioners. If she understands the contract, it states it is good for 5 years. And then it automatically keeps staying. She is FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 12 concerned that it is 3 percent because it has decreased from 5, and it looks like we do not even get a chance to say that 3 percent is not enough. She understands why it went down to 3 percent; however, if she is reading the contract correctly, it just keeps getting renewed and there is really no opportunity to increase the rate. Attorney Knaak replied other than the fact it allows for adjustments as he understands it. Councilmember Bolkcom asked where it said that. Attorney Knaak said he thought they got a rate of inflation or CPI modification. James Kosluchar, Public Works Director, stated their standard lease includes the 5 percent or CPIU language. This is the second or third lease discussion he has had since he has been here, and it is a common theme among the tenants now to request drawing back from that 5 percent or CPI. Looking at the history of the leases since about the early or mid-90's he thinks they have exceeded that 5 percent by the CPIU one time. Basically it is not adjusted for inflation, it is really the 5 percent which is overinflation typically. That is kind of what they are seeing here historically. That is what the telecoms are sensitive to because although 3 to 5 percent is not a lot, if they hold onto their lease which is renewable in a 5-year term and they hold on for 15 to 20 years, interest or additional lease payments on that 2 percent compounded, can be pretty significant. Councilmember Bolkcom stated but it could go the other way. That is her concern. If she is reading this right, the term basically says that the lease will be for 5 years and it will come back on the first. The lessee can terminate it. She asked where it said we can. William Burns, City Manager, stated there is a paragraph that gives us the right to terminate it. Councilmember Bolkcom stated under some circumstances, but it does not give us a chance to really negotiate it. She is concerned that if they place it at 3 percent and never touch it, it could go on for 15 years. We have no idea what is going to happen with the cost of inflation. Mr. Kosluchar said this is one thing they struggled with. Councilmember Bolkcom asked what other cities were doing. Mr. Kosluchar replied most of them are actually tied to a 3 percent. He does not know that a 5 percent minimum is common. Attorney Knaak might have a better idea. Attorney Knaak stated actually this language which is fairly standard to some extent was Fridley language that everybody else adopted at some point. As to the termination by the City, as a practical matter, no, it does not accept that there is a default and non-compliance by the tenant. There is no provision for the City to terminate the lease. That would be fairly standard in most lease language like this. This is simply a matter of somebody leasing a right to piggyback usually onto a city's facility, and they may change the rate for whatever reason. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 13 Councilmember Bolkcom stated and there was one that went belly up and we had to remove their equipment because they were no longer in existence. It seems to her there should be give and take here if they are going to give them 3 percent. There should be something in here that they should be able to negotiate after 5 years. Mayor Lund stated typically we had our standard lease. Other leases prior to this were 5 percent or the CPI adjustment. Historically over the 10 to 15 years or so, what was the CPI average? Mr. Kosluchar stated he had seen it at 5 percent only one time. Mr. Kosluchar replied it would be kind of a guess on the average, but he would say it was less than 3. Between 2 and 3. Councilmember Bolkcom stated but we had it at 5 percent, we are decreasing this to 3 percent, and we are leaving it at that. Attorney Knaak stated, again, he did not recommend one way or another in terms of the monetary remuneration, but he expects the position, as he understands it, of the lessees is that they would rather have a hard number. A single number they can calculate every year, instead of having to do an adjustment or contacting the municipality. In fact one of the ongoing disputes we have is the fact that they are telling us that they their standard lease and would like us to modify our language to conform to their standard lease. Historically Fridley has been reluctant to do so. So the CPI which is really in there to protect the City's interest, they are trying to pull that out for their own reasons. At this point it does not appear, in looking at this, the City would necessarily be prejudiced in that. However, they are right to raise questions about whether this could impact revenue maybe in 2 or 3 years. Say there is a 7 to 8 percent rate of inflation, the City would be prejudiced. Right now that is not the case. If you put the CPI language back in or try and negotiate that kind of language back in, it takes care of that problem, but that is the pushback that you are going to get from the company. Councilmember Bolkcom stated we want them to be there because obviously it is revenue for us, but she is concerned that we are still tying ourselves to 3 percent for the length of that agreement. She would like them to look at the language. Dr. Burns asked how they felt about removing the extended term and making it a 5-year term. We know we would be getting 3 percent over 5 years. If they want an extended term after 5 years, the lease on that would be subject to negotiation. Councilmember Bolkcom referred to Attorney Knaak. Mayor Lund stated he thinks it is more that they are going to put a sizable investment in it and it is only for five years. They would not like that either. Dr. Burns stated this equipment is very minimum. They are not putting much capital investment into the site for a five-year period. Unlike the other tenants we had where there was substantial investment in what they had on our site, this one is small. FRIDLEY CITY COUNCIL MEETING OF AUGUST 10, 2009 PAGE 14 Councilmember Bolkcom asked if we can at least go back and look at it. Mr. Kosluchar said he thinks there are options here and they can go back to the company with alternatives if that is what Council wishes. He does not see it hindering their process as far as getting their equipment installed if it comes back at the next meeting. As a matter of fact one of the towers will be unavailable for them until later in the fall. Councilmember Bolkcom asked how long it would take to negotiate. Attorney Knaak stated he thinks if the petitioner thinks there is reluctance on the part of the City Council to approve this because of the terms, they might show some flexibility. Dr. Burns suggested bringing it back to the September 14 Council meeting. Mayor Lund suggested the next Council meeting. MOTION by Councilmember Bolkcom to table the consideration of the Antenna Site Lease Agreements Between the City of Fridley and TTM Operating Corporation, Inc., for Water Tower No. 1 and Water Tower No. 2 to August 24, 2009. Seconded by Councilmember Saefke. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 8. Informal Status Report. Mayor Lund asked Mr. Kosluchar when the mill and overlay on the west University Avenue Service Road, from 69th to 85th was going to start. Mr. Kosluchar stated they thought in about a week, but had not heard anything. Councilmember Bolkcom asked if there was any way to let them know when there is a date. Mr. Kosluchar stated they will get flyers out prior to the work being done. ADJOURN: MOTION by Councilmember Barnette, seconded by Councilmember Varichak, to adjourn. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MEETING ADJOURNED AT 9:03 P.M. Respectfully submitted by, Denise M. Johnson Scott J. Lund Recording Secretary Mayor