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HomeMy WebLinkAbout2.b. Rosewood City Council AppealROSEMOUNTEXECUTIVE SUMMARY CITY COUNCIL City Council Work Session: May 12, 2010 AGENDA ITEM: Rosewood City Council Appeal AGENDA SECTION: PREPARED BY: Kim Lindquist, Community Development Director, Dan Schultz, Park and Recreation AGENDA NO. Director ATTACHMENTS: Memorandum from City Engineer, Andy Brotzler dated 5 -3 -2010, email from Luke APPROVED BY: Israelson dated 4 -15 -2010 RECOMMENDED ACTION: Staff does not support the applicants request regarding the engineering for the subdivision. Staff will be reviewing the Park Dedication fees and will be making a recommendation to the Parks Commission and City Council in the near future. ISSUE Public Infrastructure Warren and Luke Israelson have requested that the Council vary from their policy requiring all public projects to be engineered and constructed by the City or their designee. The reason for the request is that the applicant has indicated that they could accomplish the engineering and construction faster and cheaper than the estimated costs found within the draft subdivision agreement. Staff met with the Israelsons on April 30, 2010 to discuss this issue, and the park dedication fee issue. We could come to no resolution and therefore the applicant would like to present their request to the Council during the work session. This request is common as many developers are interested in using their own engineers or contractors for installation of public infrastructure. Should the Council wish to vary from our policy in this instance it would be expected that other developers would want similar treatment. Attached is a memorandum from Andy Brotzler, City Engineer explaining some of the background associated with the policy and enumerating the benefits with City designed and installed infrastructure. Park Dedication Fees Staff also has discussed the current park dedication fees with the Israelsons. Staff has indicated that we will be reviewing the land value assumptions which are the basis for the park dedication fees, however, the study will not be done by the time their subdivision is approved. Staff is recommending that the subdivision agreement allow for a reduction in park dedications fees should the land value study indicate that a reduction is warranted. It is expected that the study will be complete by early summer. CONCLUSION Staff is bringing this item before you due to the applicant's request. We have received similar requests in the past and have not varied from our policy of city designed and installed infrastructure. Staff does not support changing the policy now, even though the economic climate is different than several years ago, as we do not want to compromise the public infrastructure system. Regarding park dedication fees, Staff has indicated they would be reviewing the fees and will make a recommendation to the Parks Commission and City Council. The recommendation will be based upon what is going on in the market and not related specifically to the applicant's property. There will be other properties within the City that will be requesting subdivision approval and any fee adjustment must address all properties equally. N 4ROSEMOUNT PUBLIC WORKS DEPARTMENT M E M O R A N D U M To: Honorable Mayor and City Council Cc: Dwight Johnson, City Administrator Kim Lindquist, Community Development Director From: Andy Brotzler, Director of Public Works /City Engineer Date: May 3, 2010 Re: Policy for Public Street and Utility Improvements within Developments This memorandum is to provide background information for the completion of street and utility improvements within private developments as public improvements designed and constructed by the City. In 1996 the City adopted the attached policy to address the design and construction of street and utility improvements within private developments. As these facilities become part of the City's public infrastructure system for ownership and maintenance, for the reasons enumerated in the policy the improvements are designed and constructed by the City. In addition, since 1996 new technologies and requirements have emerged which add to the importance of these improvements being designed and constructed under the control of the City. These include the development and use of a Geographic Information System (GIS) for the maintenance of record drawings and increased requirements for City locating of utilities with higher levels of accuracy as required by the Minnesota Office of Pipeline Safety (MnOPS). With the City performing the design and construction of street and utility improvements within development projects, the collection and development of this information is able to be completed efficiently and accurately. There are several advantages associated with the completion of street and utility improvements within private developments as City administered projects. Examples include the following: For the design and administration of a construction contract, the City is the single point of accountability for the completion of improvements to City standards and system plans. As the single point of accountability for the project, the City is ensured of receiving the expected completed product with the initial construction effort. This not only includes the physical improvements but the project documentation and delivery of consistent record drawings and electronic information for utilization with the City's GIS system and maintenance operations. • All improvement projects are designed and constructed consistently. This provides for improved and efficient City operation of the facilities in the long -term from a maintenance standpoint. • On past projects, actual engineering costs associated for the design and construction administration have typically varied from 12% to 22% of the construction cost. The actual cost varies based on the size of the project and the phase of the development. Typically larger projects and later phases of the development result in lower percentages and vice versa for smaller projects and earlier phases of the development. The first phase of a development includes a feasibility report for the entire development that is referenced with each additional phase of the development project. • Former developers in Rosemount have provided positive comments on the efficiency and effectiveness of the public improvement process utilized by the city for development projects. With regard to development projects, the subdivision agreement typically identifies estimated engineering costs associated with 1) the review of the preliminary plat, grading plan, and final plat; and 2) the design, construction administration, construction observation and staking for the public street and utility improvements. As these costs can vary significantly from project to project, estimates for plan review are typically derived based on average expenditures from similar past projects. For project design and construction an estimate of 20% of the estimated construction cost is used. A cash deposit for the amount of these estimated fees is required with the subdivision agreement deposited in a city project account. All engineering costs are charged on an actual basis such that any unspent monies at the close out of a project are returned to the developer. Please do not hesitate to contact me with questions or comments regarding the process for the installation of public infrastructure within development projects. Public Works Policy No. E -2 IMPROVEMENT POLICY Adopted by Council FOR on: 7 -2 -96 PUBLIC INFRASTRUCTURE INSTALLATION Jj PURPOSE: It is the City's responsibility to provide and ensure the public health, safety and welfare through the City's infrastructure including the sanitary sewer system, potable water system, storm water drainage system, transportation systems and related appurtenances. These facilities are owned, operated, maintained and ultimately reconstructed by the City which has enormous amounts of money invested in these systems. Because of these financial obligations it is important for the City to clarify the City's policy towards constructing new public improvements in developments. �i 1 • ' • It is the policy of the City Council of the City of Rosemount that it is in the best interest of the City that all new streets and utilities added to the public system shall be designed and inspected by engineers employed by the City, hereinafter referred to as the "City Engineer ", for the following reasons: 1. To ensure consistency and compatibility with the City's existing utility system. 2. To ensure consistency and compatibility with the City's Comprehensive Plan, including the Storm Water Management Plan, the Sanitary Sewer Plan, the Potable Water System Plan, the Transportation Plan and its Wetland Management Plan. 3. To ensure maximum control by the City of system components that will ultimately be operated, maintained and reconstructed by the City. 4. To ensure quality construction acceptable to City Standards. 5. To ensure that the City's tax dollars are not spent in educating numerous design personnel about City ordinances, standards and procedures. All plans and specifications for improvements will be prepared by the City Engineer or the Consultant designated by the City Engineer and there will be two options for which the developer and City Council may choose for actual construction of the improvements. Last Revision: IMPROVEMENT POLICY The only exception to this rule is where trunk facilities are to be constructed through a developing area. In this case, Option 1, the State Chapter 429 process will be followed which will allow for the most appropriate cost spreading of the project benefits. In all cases, construction observation will be completed by the City or its designated consultant and a two year warranty will be provided by the contractor after final acceptance of all utilities and streets by the City. This option is the basic City financing and construction of all improvements which is completed through the State Statute, Chapter 429, Public Improvement Process. In this process the Developer /Land Owner will be required to sign a petition (Exhibit A) requesting public improvements, waiving their rights to the preliminary hearing and requesting that the entire cost of all engineering, planning, legal or other required work be assessed against their property, including Feasibility /Preliminary Reports, even if the project does not proceed past this point. If the Developer /Land Owner desires, they can submit a petition and include funding to pay directly for the Feasibility /Preliminary Report and then for the preparation of Plans and Specifications in lieu of assessing the costs, per the attached Schedule A. In the Development Contract the Developer will be required to submit security for 25% of the public improvements and appurtenances. 11-20�•� This option is where the Developer /Land Owner will finance the construction. The Developer will submit in writing its request and will be required to submit funding which will establish a "Construction Account" for the project. Initially the Developer must submit funding for the Feasibility /Preliminary Report stage, then the preparation of the Plans and Specifications per the attached Schedule A. If the project proceeds to construction the Developer will have to submit the bid amount plus a 10% contingency to pay the Contractor for construction, plus any other costs including: • Construction Engineering 4% • Construction Surveying 4% • Testing Services 2% • Attorney Fees As Determined • Administration Fees 5% The percentages at the right are estimates of construction costs as based on past experiences and could increase or decrease depending on the individual projects. 2 IMPROVEMENT POLICY The City will have the sole authority and responsibility to pay the construction costs plus those described above from the "Construction Account ", in the same manner as is done with Option 1. The Development Contract may describe other requirements, financial or otherwise, which the Developer is responsible for, above and beyond the "Construction Account ". 3 From: Luke Israelson [mailto:luke @kjwalk.com] Sent: Thursday, April 15, 2010 11:54 AM To: Lindahl, Jason Subject: Rosewood Village 3rd Addition Hello Jason, After reviewing the Development Agreement and Engineers Estimate we have a serious concern with regard to the cost of the project. When we look at a project we think about what it is going to cost us, we have all our own equipment and have the expertise within the company to both complete final design and install the utilities ourselves. We figured this would be a very simple and cheap project to complete, it is just 6 small lots with less than 500' of pipe (sewer, water and storm combined) and a cul -de -sac. However, you have $24,000 for final design and an additional $5,000 for engineering review, that's almost $30,000 for a final design that I could finish in 8 hours. Costs are a huge factor for us as developers right now, with current market conditions we are selling lots at roughly half of what we were selling them a few years ago, and if the construction estimate, which is extremely high from our perspective, is indeed accurate after paying all the city fees and paying for construction we will lose money on the lots that we're selling, and that's not including land cost! As a result we are requesting an opportunity to speak to the city council to express our concerns and request a variance from the requirements of having the city do final design and the public bid process for utility install. With respect to the park fees, we have an appraisal on the property across the tracks, Outlot B of Rosewood Estates, which came in at $40,700 per acre of developable land. If you use 10% of land value for the 2.03 acres as park dedication it comes to about $8,350. As a result we don't think it is unreasonable to request that the city follow the current market conditions when assessing park dedication fees, and all other fees for that fact. The cities that adjust their costs to reflect the drop in raw land and completed lot values are the ones that will draw interest from developers, the ones that remain stubborn with high charges will continue to languish with no new development. I've attached the summary from the appraisal. I look forward to hearing back from you. Thanks, Luke Israelson President KJ Walk !Inc 6001 Egan Drive suite 100 Savage MN 55378 Phone: 952- 826 -9068 Electronic Pm-acy hiaice. This wmail, and " alucNnems, contaft Informist" the +s. or mey be. covered by the aectrronic ConKnuucatims Prwacy Act. 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