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CCM 04/09/2001 THE MINUTES OF THE REGULAR MEETING OF THE FRIDLEY CITY COUNCIL OF APRIL 9,2001 __.. The Regular Meeting of the Fridley City Council was called to order by Mayor Lund at 7:30 p.m. PLEDGE OF ALLEGIANCE: Mayor Lund led the Council and audience in the Pledge of Allegiance to the Flag. ROLL CALL: MEMBERS PRESENT: Mayor Lund, Councilmember Barnette, Councilmember Billings, Councilmember Wolfe, and Councilmember Bolkcom. MEMBERS ABSENT: None. BOARD OF REVIEW MEETING: Mr. Ed Hervin,Assessor,was present at the meeting to answer any case questions. Mr. Hervin stated that the Board of Review's purpose is to review the values placed on properties as of January 1, 2001. The values were sent out three weeks ago on the tax statements. The Board of Review is authorized under State Statute 274.01. MOTION by Councilmember Bolkcom to open the Board of Review. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. Mr. Hervin stated that the Board of Review should not reduce values by more than one percent (1%) for the whole city unless the Board determines an injustice. The County of Anoka's Assessor, Ms. Janene Hebert is also present to answer any questions. Mr. Hervin stated that they review one-fourth of Fridley properties each year. They are able to review about ninety percent (90%) of the properties. There is a total of about 8,000 parcels of residential land, so they review about 2,000 per year. Mary Smith, Appraiser, gets the brunt of the workload. He stated that the values of every parcel in the City are reviewed every year, but they are unable to go to each property. He indicated that there are three cases for the Board to review this year. The first two cases were submitted by letter, and negotiations are in process. The third request was made by Ms. Nancy Jorgenson. FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 2 Ms. Nancy Jorgenson, 5715 Quincy Street N.E., stated that she spoke with Dave Ryan, a _ real estate salesperson, about what the market value of her property is based on. She • asked whether or not the property tax reductions reflect whether the home is close to TIF districts, redevelopment districts, or busy roads. She said that since they have lived in their home, they have been affected by noise so bad from the surrounding highway and street that it is no longer any fun to be outside any time of day. The noise used to be bad during rush hour only, but now because of the increased traffic, the noise is continuous. The addition of the new gas station has created more traffic and litter distributed throughout the surrounding properties. The Medtronic Development has also affected that area. She stated that she is concerned as to why the City is no longer looking at these circumstances when determining the value of homes. She spoke with someone from the Assessor's office and found out that a home in her neighborhood with a comparable value sold twice in one year. It sold for $140,000. The estimated 2002 market value of $140,100 for her property reflects approximately ninety-two percent (92%) of what an actual sale value would be set for her property. Ms. Jorgenson stated that people are concerned about these values. Many folks who are selling their house are going above the asking price because of demand and supply. There are very few houses for sale in Fridley. Mr. Ryan told her that if her home happened to be located on Rice Creek Terrace, the value would be fifteen percent (15%) more. If her home was located on the Mississippi River or close to it, the value would probably be twenty percent(20%)more. Councilmember Wolfe stated that he was shocked about how much his house was appraised for. The average selling price of homes near his was $145,888. The gas station affects his house too and that bothers him. Ms. Jorgenson stated that the estimated market value is ninety-two percent(92%) of what an average sale price would be. Mayor Lund stated that the overall average did go up eleven percent (11%). Ms. Jorgenson's contention is that her property is less than the average because of factors including the commercial area around her home, increased traffic, and other things. Ms. Jorgenson stated that was correct. Mr. Hervin stated that the properties are valued based on the masses. All the sales in the City are looked at. The neighborhoods are looked at to see how they compare on average. Mayor Lund stated that Nancy Jorgenson's house was appraised in 1999. Do her concerns of decreased evaluation factor into the assessment? Mr. Hervin stated that they have not seen any kind of decrease. Every year they try to determine what would affect the value of the house and try to find the reduced sale for its FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 3 values and they have not been able to. That is why over a twelve-year period, the reductions have been taken out of the system. Mayor Lund stated that this eleven percent (11%) average is one of the highest value increases seen in one year. Mr. Hervin stated that there is so much demand for housing, particularly the lower valued homes that used to be $90,000. There has been a sixteen to eighteen percent (16-18%) increase this year. Mayor Lund stated that we have the benefit of paying higher taxation because of those increased values. Mr. Hervin stated that taxing would not necessarily go up unless more money is asked for. This year taxes went up one to two percent (1-2%) on values of a ten percent (10%) increase. Next year taxes should not go up much. Mayor Lund asked Ms. Jorgenson if Mr. Ryan did a market value on her home. Ms. Jorgenson stated that he has not and they are still exploring their options of selling and are researching homes that are comparable. Mayor Lund asked if she thought she could sell her house for$140,000. Ms. Jorgenson stated that she is not sure, she would have to put it on the market to find out. Mayor Lund stated that the realtor's rule of thumb is to make an offer that is ninety-seven percent (97%) of what people are asking for. In today's market, homes are selling so quickly they are getting more than the asking price. Councilmember Bolkcom stated that not everyone considers noise as a detractor. Brand new homes were built on Highway 96, which is very busy. Councilmember Wolfe stated that some houses within a block of his house sold for $175,000. Councilmember Billings stated that he thinks that the assessor is pointing out that some homes have more to offer and they need to compare homes that are similar in style. Do we take fireplaces and numbers of bedrooms into consideration when appraising? Mr. Hervin stated that they are taken into consideration. Councilmember Billings asked if in recent years comparisons had been done on sales on Central Avenue in the neighborhood with actual selling prices compared to the appraised value. FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 4 Mr. Hervin stated that they have not done anything on Highway 65. Over the last several years,they have taken a look at busy streets and found no difference in selling price. Councilmember Billings stated that intuitively and emotionally one could agree with Ms. Jorgenson that being by a busy intersection should bring a home's value down, but historically,the facts do not bear that out. Mr. Hervin stated that it would seem logical that prices would be lower, but they cannot find any proof. Councilmember Billings asked if Mr. Hervin was bound by State statutes to determine the fair market value of the home based on statistics, and historical data, and not based on emotions. Mr. Hervin stated that was correct. They do a mass appraisal. There are 8,000 homes that need to be appraised this year. Councilmember Billings stated that when one comes to the Board of Review, comparable sales are researched that justify the value placed. Mr. Hervin stated that similar values have been placed on homes in similar neighborhoods. Councilmember Billings asked if it would be possible between now and the next meeting for Mr. Hervin to find adjacent sales to Ms. Jorgenson's house. Mr. Hervin stated that they could do two things. The first is to see how the values compare in general. The second is to compare the sale of three or four other houses to Ms. Jorgenson's. Councilmember Billings stated that Ms. Jorgenson could do her own appraisal and work with staff to try and find some comparables to demonstrate to the Council that the assessor's value is not accurate. Mayor Lund stated that the first case does not have a recommendation on it. Mr. Hervin stated that he has not made a recommendation. He stated that he sent the property owner a letter explaining how the value of the property was increased but that it is still below the selling price of similar properties. This is commercial property on Ashton Avenue west of the railroad tracks in the north part of the City. He said he believe that there are lower values in that area. Six to eight sales were compared, and the lowest was probably $23 to $30 per square foot. FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 5 Councilmember Bolkcom stated that the address for the first case is 8251 Ashton Avenue. She said she thought that it might be a good idea to look at the building before the next Council meeting. Mr. Hervin stated that if the owner responds, he would look at it. With respect to commercial property, no value is placed on any of the extras. They will certainly go into the building if they are allowed to do so. One of the owner's contentions is that the value should be reduced because of a small piece of his property that encroaches on the railroad property behind him. It has for 30 to 40 years. Apparently the Community Development staff told the owner that he would have to tear the building down. The value is based on January 2, 2001. The owner has not torn the building down since that time so it has to be valued at the condition it was in at that time. Councilmember Bolkcom asked why the owner would possibly have to tear the building down. Mr. Hervin stated that he did not know. Mr. Hickok stated that Mr. Norris is looking at a non-conforming existing situation that needs to be addressed. Mr. Hervin stated that he cannot include this is in the valuation until he actually tears the building down. If the builidng is not torn down, it will possibly reduce the valuation. Councilmember Barnette stated that it seems that the building has been there a long time and the railroad apparently does not have a problem with this. Mr. Hickok stated that the City cannot issue a building permit when all the setbacks are relative to their own property line. This case has something hanging over the property line by four feet. It is a question of law. Mayor Lund stated that issuing a building permit would perpetuate the problem. Councilmember Bolkcom stated that it would not hurt to contact this property owner. Mr. Hervin stated that he would like to see the inside of the building. Mayor Lund asked about the second case. Mr. Hervin stated that is an apartment building on 57th Place. It contains seven, one bedroom units. The owner thinks that the value of $239,000 is too high. His property was misassessed because the apartment building was listed as being on Lot 1. He owns three lots, 1, 2, and 3. The building looks like it is on Lots 2 and 3. There is a street easement on the west side that takes up about 20 feet of the lot, making the other two lots non-buildable. The land is not big enough to build anything on and it has been rezoned to R-1 for single family homes. The only option to rebuild is to tear down the apartment FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 6 building and build one single family home. The value of the two 40 foot lots has been _ reduced from $17,000 each to $5,000 each. It adds value to the overall parcel, but the lots are not buildable. Mayor Lund asked if the owner was happy with the assessment. Mr. Hervin stated that the owner has not said anything. Councilmember Bolkcom asked if it was worthwhile to continue this one too. Mr. Hervin stated that he has already reduced the value of the two lots by $24,000. They can continue this until the next meeting. MOTION by Councilmember Bolkcom to continue the Board of Review meeting until the next City Council meeting on April 23. Seconded by Councilmember Wolfe. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF PROPOSED CONSENT AGENDA: Councilmember Billings stated that he wanted the minutes from the City Council meeting of March 26 moved to the regular agenda. — MOTION by Councilmember Barnette to approve the Proposed Consent Agenda as amended with the removal of the approval of the Minutes of the City Council Meeting of March 26,2001. Seconded by Councilmember Wolfe. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. APPROVAL OF MINUTES: City Council Meeting of March 26, 2001. THIS ITEM WAS REMOVED FOR DISCUSSION AND PLACED AFTER ITEM NO. 9 OF THE CONSENT AGENDA. OLD BUSINESS: 1. ORDINANCE NO. 1152 AMENDING CHAPTER 7 OF THE FRIDLEY CITY CHARTER PERTAINING TO TAXATION AND FINANCES: Mr. Burns, City Manager, stated that the proposed amendment provides technical suggestions to the starter amendment that was approved by the voters on November 7, 2001. These suggestions clarify the capability of the amendment as FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 7 it relates to the City and special fees and other areas of jurisdiction. The first reading of the ordinance was approved at the City Council meeting of March 26. Staff recommends approval of the second and final reading. • WAIVED THE READING AND ADOPTED ORDINANCE NO. 1152 ON THE SECOND READING AND ORDERED PUBLICATION. 2. RESOLUTION NO. 19-2001 RECEIVING FINAL PLANS AND SPECIFICATIONS AND ORDERING ADVERTISEMENT FOR BIDS: STREET IMPROVEMENT PROJECT NO. ST.2001 - 1: Mr. Burns, City Manager, stated this pertains to plans for the 2001 street improvement project. The project includes Woody Lane, Hillcrest Drive, Tennison Drive and Gardena Place. The work to be completed includes street reconstruction, replacement of water mains and replacement of bituminous asphalt with concrete curb and gutter. Only curb and gutter will be assessed to the property owners. Staff recommends Council's approval. ADOPTED RESOLUTION NO. 19-2001. NEW BUSINESS: 3. RESOLUTION NO. 20-2001 REQUESTING MUNICIPAL STATE AID SYSTEM CONSTRUCTION FUNDS FOR OTHER LOCAL USE: Mr. Burns, City Manager, stated that this releases funds for the 2001 street improvement project. The total amount of the funds is $337,000, or about 60 percent of the project's costs estimated this year for that purpose. Staff recommends approval. ADOPTED RESOLUTION NO. 20-2001. 4. RESOLUTION NO. 21-2001 IN SUPPORT OF AN APPLICATION FOR A MINNESOTA LAWFUL GAMBLING PREMISE PERMIT FOR SPRING LAKE PARK LIONS CLUB (SANDEE'S RESTAURANT, 6490 CENTRAL AVENUE N.E.) (WARD 2): Mr. Burns, City Manager, stated that this is a renewal application that goes from August 1, 2001 to July 31, 2003. Staff recommends Council's approval. ADOPTED RESOLUTION NO. 21-2001. 5. APPOINTMENT - CITY EMPLOYEE: Mr. Burns, City Manager, stated that staff is recommending the appointment of Jon Williams to the Public Services Worker-Parks position that was recently FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 8 vacated by Matthew Lonsky. Jon has been employed for the last 14 years doing grounds maintenance for Macalester College. APPOINTED JON WILLIAMS TO THE PUBLIC SERVICES WORKER- PARKS POSITION. 6. CLAIMS: APPROVED PAYMENT OF CLAIM NUMBERS 98740-98960. 7. LICENSES: APPROVED ALL LICENSES AS SUBMITTED. 8. ESTIMATES: Carl J. Newquist, Esq. Newquist& Ekstrum, Chartered 301 Fridley Plaza Office Building 6401 University Avenue N.E. Fridley, MN 55432 Services Rendered as City Prosecuting Attorney for the Month of January, 2001 $17,172.00 Frederic W. Knaak, Esq. Holstad and Knaak, P.L.C. 1690 Minnesota World Trade Center 30 East Seventh Street St. Paul, MN 55101 Services Rendered as City Attorney for the Month of March, 2001 $ 5,000.00 Greystone Construction Company 1221 East Fourth Avenue Shakopee, MN 55379 Filter Plan Access Platform Project No. 336 Estimate No. 1 $58,557.05 ADOPTION OF AGENDA: MOTION by Councilmember Bolkcom to adopt the agenda with the addition of the _ approval of the minutes of the meeting of March 26 to be placed after Item No. 9. Seconded by Councilmember Wolfe. FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 9 UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. OPEN FORUM,VISITORS: Mr. Pat Carline, 5705 Jackson Street, stated that he hoped to go to the joint HRA and City Council meeting about the junkyards. Apparently that meeting has been resolved and is not going to happen. The HRA never approved this and this was tabled. That meeting will now not be open. Councilmember Bolkcom stated that it would be open. Mr. Burns stated that they are tentatively planning this for May 3 from 6:00 p.m. to 8:30 p.m. It did not occur April 5 because the HRA Chairperson had to go out of town. Mr. Steve Varichak, 1558 Briardale Rd. N.E., stated that he received a letter from the City. He bought a lot on Gardena and Benjamin a few years ago and subdivided it into three lots. He just sold the lots to people who called him that called the City who gave them his name and number. Two of the lots that still need to be built on were the topic of the letters from the City regarding the installation of utilities. He sold these lots as is. These buyers understood that. That was part of the deal and reason for the price on the lots. They were going to put that in themselves. He did not know when they were going to put them in. A letter from the City states that by April 23 the City would assess him the improvements for the sewer and water. Mayor Lund asked if he signed a development agreement. Mr. Varichak stated that he did. Mayor Lund stated that he must be in violation of part of his development agreement between himself and the City. Mr. Varichak stated that it never states in the development agreement when the sewer and water have to be in the lots. Mr. Knaak stated that this has already been a topic of correspondence between himself and Mr. Varichak's attorney. That is not how himself or Staff interprets the development agreement. The development agreement which Mr. Varichak signed says what it says. He has not heard back from his lawyer. Mr. Varichak stated that he got the letter Saturday. Mr. Knaak stated that it was written before that. He would recommend that he would proceed with all due haste and would discourage the City from taking positions on legal matters where someone is already represented by an attorney. FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 10 Mayor Lund stated that under advice of legal counsel, our legal counsel is talking to Mr. Varichak's legal counsel. Mr. Varichak stated that he was just curious about the date. Councilmember Billings stated that the City of Fridley sent Mr. Varichak a letter stating that bids will be received to find contractor's to do the installation of the sewer and water for his properties. It would probably be in order for staff to not proceed along in this direction. Mr. Knaak stated that the City has a right to have expected these improvements to have incurred already. It may be useful for the City to take a certain position that he can discuss with the City at their convenience. Councilmember Billings stated that he would ask the City Manager to temporarily stop the hiring of the contractor until he and staff have discussed this with the City Attorney. Mr. Knaak stated that was reasonable. Mr. Burns stated that he was comfortable with that. Mr. Varichak stated that was okay. Councilmember Barnette stated that one of the people he sold the lots to may want to come in to get a building permit and that would be on hold as well. Mr. Knaak stated that the contract makes Mr. Varichak responsible for making sure those provisions are already taken care of. He would be more than happy to discuss this with his attorney. He discourages playing provisions and obligations and a deal is a deal. PUBLIC HEARING: 9. CONSIDER MODIFYING THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 9 TO REFLECT A REDUCTION OF THE GEOGRAPHIC AREA OF THE DISTRICT: MOTION by Councilmember Barnette to open the public hearing. Seconded by Councilmember Billings. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING WAS OPENED AT 8:35 P.M. t1 4 FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 11 Mr. Hickok stated that this is a request of the City Council to modify the tax increment boundary for Tax Increment District No. 9. We recognize the development as the Onan development. The Onan parcel is being requested to be removed from this district. It was created and certified September of 1989. Since then, the Onan property has experienced $4,000,000 in reduced tax value. Part of that has been due to petitions on their part to reduce their tax burden and the tax amount that has been utilized over the years to determine what the actual tax payment needs to be. Over the course of the life of the district, which is due to expire in 2013, it will generate between $3,000,000 and $3,500,000. If your action were to leave Onan in this district, we would be dealing with the $4,000,000 of lost value, thus losing the momentum gained by the added tax value built by the Murphy project. Pending legislation causes us to act and understand this issue at the next meeting on April 23. If the City chooses not to do this, we may not be able to reconsider the matter after April 23. Staff has talked with the Onan folks who understand the issues. Mr. Burns asked if provisional modifications would modify the budget. Mr. Hickok stated that was incorrect. The tax increment advisors were looking at the budgets for District 7 and 9 because of the year they were created. We wanted to be safe in our notification of the public. As a result,they determined the budgets are fine and are built to accommodate the change. After talking with the analysts and auditors, we have realized that this district has lost money since its creation and boundaries are needed to deal with that loss. Mayor Lund asked if the Onan people had any concerns. Mr. Hickok stated that they had several discussions with Mr. Mike Reid of Onan. His guess is that his questions were answered. Councilmember Billings asked if this required one or two readings. Mr. Hickok stated that it requires a public hearing and one reading. Councilmember Billings stated that he is prepared to amend the agenda and include the resolution. If there is an objection from Onan it could be considered at the next meeting. MOTION by Councilmember Wolfe to close the public hearing. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED AND THE PUBLIC HEARING WAS CLOSED AT 8:40 P.M. FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 12 9A. APPROVAL OF MINUTES City Council meeting of March 26, 2001. Councilmember Billings stated that the minutes left out the swearing in of the witnesses for the Revocation Hearing on the tobacco license of Walgreen's. The minutes on page 7 and 8 should be modified to indicate that the witnesses were sworn in under oath. Mr. Knaak provided the corrections for the revision as follows: Page 7. "Mr. Lenzmeier was placed under oath for the purpose of testifying." Page 8. "Officer Mork was placed under oath for the purpose of testifying." MOTION by Councilmember Billings to approve the minutes as amended. Seconded by Councilmember Wolfe. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. 9B. RESOLUTION NO. 22-2001 TO APPROVE MODIFYING THE TAX INCREMENT FINANCING PLAN FOR TAX INCREMENT FINANCING DISTRICT NO. 9 TO REFLECT A REDUCTION OF THE GEOGRAPHIC AREA OF THE DISTRICT: MOTION by Councilmember Billings to amend the agenda to include a resolution to approve modifying the tax increment financing plan. Seconded by Councilmember Barnette. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. MOTION by Councilmember Wolfe to adopt Resolution 22-2001. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE MOTION CARRIED UNANIMOUSLY. NEW BUSINESS: 10. INFORMAL STATUS REPORT: Councilmember Bolkcom stated that Representative Barbara Goodwin and Senator Satveer Chaudhary have scheduled a meeting at the Fridley Middle School for April 18 in FRIDLEY CITY COUNCIL MEETING OF APRIL 9,2001 PAGE 13 the cafeteria from 7:00 p.m. to 9:00 p.m. to talk about the Northstar Corridor with follow- up to questions. Northstar Corridor representatives will be present also. Councilmember Barnette asked if Fridley may be affected by the flooding. Mr. Burns stated that there has been a substantial rise in the river, but we are not in danger. Mayor Lund stated that houses are first threatened at 819 feet. In 1997 the river reached 818 feet. Mr. Burns stated that after the meeting he would like to review the Adopt-A-Monument program Mr. Hickok is proposing for the monument signs. ADJOURN: MOTION by Councilmember Barnette to adjourn the meeting. Seconded by Councilmember Bolkcom. UPON A VOICE VOTE, ALL VOTING AYE, MAYOR LUND DECLARED THE APRIL 9,2001, CITY COUNCIL MEETING ADJOURNED AT 8:52 P.M. Respectfully submitted, jc42 /11 -7161-1-P13 ) t/164-,4/1 Signe L. Johnson ` Scott J. Lund Recording Secretary Mayor