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HomeMy WebLinkAbout1991.12.27 CITY COUNCIL MINUTES Public Hearing 12/27/91 12:OOp.m. ~I _J 1 State of Idaho ) County of Madison :ss City of Rexburg ) Present were the following: Mayor: Nile Boyle Councilmember: Brad Liljenquist Darlene Peterson Farrell Young Bruce Sutherland Nyle Fullmer (1:OOp.m.) Also Present: J.D. Hancock, City Attorney Richard Horner, Treasurer Absent: Glen Pond Rose Bagley Janet Williamson was present to take minutes in the absence of Rose Bagley, City Clerk. Pledge to the flag. Mayor Boyle read for the third reading Ordinance 728 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF REXBURG, IDAHO, APPROVING THE NORTH HIGHWAY URBAN RENEWAL PLAN WHICH PLAN INCLUDES REVENUE ALLOCATION FINANCING PROVISIONS; AUTHORIZING THE CITY CLERK TO TRANSMIT A COPY OF THIS ORDINANCE AND OTHER REQUIRED INFORMATION TO COUNTY AND STATE OFFICIALS; AND PROVIDING AN EFFECTIVE DATE. Ryan Armbruster - Attorney with the law firm Elan, Burt, and Boyd in Boise and has served as agency legal council for Rexburg Redevelopment Agency. Mr. Armbruster went through the ordinance step by step and hit the high points of the plan. Back on November 6, 1991 this Council approved Resolution 91.8 which found a need for an urban renewal agency in the City of Rexburg. At that same meeting the mayor appointed the members of the redevelopment board. In brief the purpose of the redevelopment plan and the urban renewal agency is to encourage private development and prevent further deterioration and to provide overall for the health, safety, and welfare of the citizens living in that area. The agency and City are two separate entities. The Council will maintain that separateness. They have made it very clear in the plan that the agency is not contemplating any acquisition by itself of any real property in the area either for the eventual private development or for public improvements. For the most part, it appears that all of the necessary public improvements the property is already available or that we would be able to enter in to agreements voluntarily with the property owners if any addition easements or right of ways are necessary. The actual uses within the property area comply generally with the current zoning ordinances. The plan is there for 30 years if necessary. They have provided a change in the plan from its first draft and that is to provide the opportunity for a "pay as you go" basis for the public improvements instead of bonding if that turns out to be the best way to accomplish the improvements that are necessary in that area. Harland Mann - Community Development Consultant from Boise, explained the plan as it relates to the financial aspects. Brad Liljenquist asked him how he arrived at the estimated $10,000 a year administrative costs. Mr. Mann said it was just what he thought was a conservative plug in figure and it would need to be documented. One other question Brad had was on the unspecified projects that may happen in the future - you have a substantial sum budgeted for that. Have you made any provisions for not specifying any future projects and shortening the time frame a little bit? Mr. Armburster said they intend to put in a call provision in any bonds, that is typically in any bond issue up front. The problem is all of these things are projections. If the projections don't live up to the estimates right ~1 now the underwriter will not allow the bonds to call - there won't be enough money there. There typically are some very straight forward - 5, 10, years out where there are call provisions so that if the agency does have excess funds a portion or all the bonds could be called at that time and repay the debt extinguish and then the remaining tax increment funds would flow back to the other tax entities. Jim Long asked J.D. Hancock or Ryan Armbruster - if we identify the widening of the bridge as a definite traffic hazard and purposefully put it off for 5 years and there are accidents which occur there in that time span, what is the Cities or the agencies liability? Jim felt this was a good reason for taking out bonds. J.D. said he would have to prove that the cause of the collision was the size of the highway or the safety hazards that were there and not his own negligence. Also it is a State Highway and they would assume some of the responsibility. The Mayor said he has met several times with the State Highway Department trying to convince them that they should pay for most of these costs and they agree that they should. They recognize the problem both with the bridge and the intersection but it is not even on the 10 year plan and they don't for see money to do those under the state system. He also said that everything that comes from this tax increment goes back in to that area. He doesn't feel it will go pass the projected things that are here now (a little over $900,000) and in about 6 to 7 years it will be ended. He also said there is plenty of water there but there is not .enough water pressure for their sprinkler systems. If we work with the developers we can keep the cost down. Marilyn Fife - Member of the Redevelopment Agency - said they talked a little in one of their meetings about bonds verse doing it step by step and it didn't seem as high as Mr. Mann's. The Mayor said if you took Mr. Mann's figures and cut them off at about 6 or 7 years they would be close to the same numbers and Jeff said that was right. Jim Long asked what is the time table on your new impact committee between the county and your people? It still concerns him that as a board member that that line runs up the highway and there is that big piece of property that someone is going to buy in to - have we got the controls to require them to do the things in that piece that adjoins the piece that we have now? The Mayor said the impact committee is going to meet after the 1st of the year and we will start that impact zone but we had a preliminary question develop on that area that if they did any thing else they would want it annexed so it would have to comply. The City can make them comply not the agency. If something is built behind Wendy's then that money would go in to tax increment and help to retire the bond quicker. Ryan Armburster said that typically in redevelopment areas, tax increment areas, there are "spin off" developments that are generated outside the boundaries and that goes to the benefit of the other taxing entities. Chris Mattocks - Madison School District 321. He said he was there representing Madison School District 321 and he must speak in opposition to the North 2nd East Urban Renewal Plan as it is currently structured, if bonds are the desired revenue source.(SEE PAPERS AT THE END OF THE MINUTES.) The Mayor said he felt we need to be up front with everything we spend in that area. These funds cannot be spent out of that designated area. He feels we have thought of everything we need to do to improve the public safety in there. Sherwood Ricks - Owner of Wendy's, was concerned with the property behind Odell's, Wendy's and the bowling alley and what provisions have been made for access to that property? If the access is to be between Wendy's and Odell's that almost eliminates his drive thru. The Mayor said there is a 30 foot easement that the property owner gave to get back of that property and it is right between Odell's and Wendy's. When the engineer and the Mayor went out to measure it it looked like the minimum to do that right would have to be 40 feet which would be about 10 more feet. It looked like it would impact Wendy's very little but it would make it so that Odell's could not park on the north side of their building. The Mayor said that is one reason the redevelopment !~ \ comes in - there shouldn't be big areas of City land without proper access. Mr. Ricks asked what the possibility was of the access being further north and the Mayor said they have said they would deed to the City property just north of the bowling alley for an easement but they the property owners are not willing to give up the that 30 foot easement (by Wendy's). Mr. Ricks asked where the stop light was going to be - it hasn't been determined yet. Brad Liljenquist asked Mr. Mann to look at Mr. Mattock statements, page 2 the second paragraph. If you look at this he talks about the mill levy and the revenue available through this project. Is he right on that or is there a misunderstanding? Mr. Mann said he couldn't answer that without further study but he did disagree with the general analysis. He said if there is a proposed bond issue everything will have to be checked and rechecked and the market place will determine whether or not the issue can be sold. Brad asked if he felt he had made provisions to fund the bond issue and he said he did and in no way would the City be asked to backstop a bond issue. If it can't stand on its own it won't go. Chris Mattock said their projection was based on the fact of the .017254 being applied against the growth - the growth will be 7 and 3/4 million dollars - not against the entire value of the property. Mr. Cyril Burt - Tri County Equipment asked if the State will not participate at all and the Mayor said they might help with the intersection if they get some political pressure. Mr. Burt said that he remembers that right after the flood they anticipated having to widen that road because they bought a strip of property from him and Lyle Robinson and at that time they anticipated having to spend some money there. The Mayor asked him, as a former representative, if he could get anything done - because if we have State Highway dollars there would be very little that we would have left for us to do. Ken Burt - Tri County Equipment was concerned with development behind Wendy's. Ryan Armburster said this plan does not allow the agency to acquire property for private redevelopment at this point; if that opportunity were to surface we would have to come through this whole process all over again and get City Council to approve it. Del Barney - County Commissioner said he felt there was a major decision to make before we could ask the people to accept the plans and that was which way we are going to finance - are going to bond or are we going to pay-as-we-go. Brad Liljenquist asked Marilyn Fife what the agency wanted to do. She didn't know and said that was her concern too, which way to go. Brad asked Mr. Mattock if we do limit this to the work specified here, the 900 and something thousand, and we limit the time frame of the bonds to 6 or 7 years, wouldn't that effect your $700,000 figure. Mr. Mattock said yes, it would. He said he would be willing to go along with bonding with the shorter time frame. Brad said he just has a problem with the extra money that is in there. Jim Long said the worst scenario would be that we get half of it done incrementally and get 5 years down the road and don't have enough money to finish it, then the school district's in trouble, the development is in trouble and everybody is in trouble. This would be a positive reason for bonding - you could commit to a certain length of time and know how much money you've got and what your expenses are going to be. Also this is the lowest interest rate in 5 years. Ken Burt made a comment in favor of pay as you go. If the State sees the increased traffic problem caused by the new shopping center they might be willing to find the money to help with the problem. Ordinance 728 was then placed before the council. The mayor then called for the voting for final passage of the ordinance and the motion was made by Brad Liljenquist and seconded by Bruce Sutherland that ordinance 728 be passed; Those voting aye: Farrell Young Brad Liljenquist Darlene Peterson Bruce Sutherland s~ ~' ~, Nyle Fullmer Those voting nay: none Absent: Glen Pond The roll showed all councilmen present voting "Aye" carried, the Mayor declared that the majority of all the members of the City Council had voted for the passage of said ordinance was duly and regularly passed. Mayor Boyle declared the motion carried. Brad recommended that if they go with bonding that they limit it to the work they have identified and keep the time frame as short as possible. Jim Long asked how the council felt about eliminating the Horkley intersection and they said they had no problem with that. Mayor Boyle said the meeting would stand adjourned. ~~ Mayor, Nile L. Boy City Clerk, Rose B ey STATEMENT IN OPPOSITION TO NORTH 2ND EAST URBAN RENEWAL PLAN by 'T. C. Mattocks, Ed.D. Superintendent ofi Schools Madison School'District #321 Rexburg, Idaho December 27, 1991 Mayor Boyle, Members of the Rexburg City Council, my name is Chris Mattocks, and 'I am here representing Madison School Dis- trict #321. I speak in opposition to the North 2nd East Urban Renewal Plan as it is currently structured. I must state up front that the Madison School District IS NOT • against economic growth in Rexburg~or Madison County. Obviously, the School District has benefited from the growth that occurred during the 1980's in the form of larger student enrollment, new and refurbished buildings, and a greater number of employees who, in turn, contribute to the economic growth of the area. 4~e have both benefited firom, and been a benefactor of, this period of sustained growth. However, the tax implications fior the School District under the North, 2nd East Urban Renewal Plan cause a greater financial harm to our organization titan any other. Basically, this Plan asks the School District, which represents 35% of the taxing entity in the Renewal Zone, to forego almost $700,000 in anticipated revenue over the duration of the project. This financial burden is being thrust upon the School District without regard to any impact that the Project may have on the • School District, and without regard to any projects that the School District itself may have that could benefit. from this Project. This is a burden that the School District cannot agree to_ As of the current school year, the Madison School District has one ofi the three lowest spending rates per pupil in Idaho_ Put another way, we rank 113th out of 115 school districts in the state when it comes to spending per pupil. 'Asking us to do with- out this revenue would only further aggravate our pathetically . low spending level. The Plan anticipates a two percent increase in taxable valuation each year but makes no allowances for depreciation of the build- ings and equipment as part of the Plan, something clearly allowed by the Idaho Department ofi Revenue and Taxation. The bond market will require that the Plan recognize and evaluate existing state • tax regulations and assessment practices ifi this is the desired fiunding source. 3'~ Remarks ~ T. C. Mattocks on Urban Renewal Plan December 27, 1991 Page Two The Madison School District was fortunate to pass a $7,500,000 bond issue for a new .Middle School recently, and part of the Board of Trustee's pledge to the taxpayers of this school dis- trict was that they would bring this new building "on line" without an increase in local school taxes. The School D,i~stric.t.,. used a very conservative tax growth figure when projecting the impact of the bond payments on local taxpayers. ~ Included in this projection was the assumption that ,the WalMart property being assessed at par value from, 1993 on. The Urban Renewal Plan, as it is currently structured, undercuts the Trustees' pledge to the public -- - a pledge that gained a 74% approval rating during the election - - and may make it impossible for them to keep that pledge_ i ~~ There are also other problems with the Renewal, Plan as it is currently structured. Zf a 15 year bond issue is anticipated as the funding scheme for this Plan, it cannot be funded at the ..mill levy anticipated in Attachment SC. The projected mill rate :~ of .017254 will only produce a ratio ofi revenue available to revenue required of .65, substantially below the minimum of 1.0 ratio just to meet current costs, and far below the desired • revenue available to revenue required ratio of 1.50_ Unless the ' City ofi Rexburg plans to supplement the annual. levy with at least • ~ an additional $25,000 from some other funding source,' the bonds are underfunded. Attachment 5D states that there is a need to set aside $10,000 per year for "Administration" costs. Z find this to be substan- tially higher than what is normally deemed necessary. Any admin- istration of a bond will be provided by a bank registrar/paying agent for approximately $400 to $500 per year., Dther auditing and financial reporting will be provided by the city treasurer and auditor, Attachment 5D also provides $1,341,127 for "unspecified project casts/future redevelopment projects." In a meeting held on November 22, the speaker noted that if this money is• not needed fior "future redevelopment", as determined by the Redevelopment Board, that excess revenue could be rolled back for early debt retirement, After 27 years in the public sector, one thing is crystal clear to me: Expenses always rise to meet income avail- . able. Z guarantee you that you will have a long line of people at your door with projects that have the highest need fior any extra dollars this bond generates, and the pressure to fund these projects will be extreme. ~~~"~ 1 [i Remarks ~ T. C. Mattocks on Urban Renewal Plan December 27, 1991 Page Three AlI needs fior public money should be specified up firont, and in as much detail as possible, as I can .attest to you from a person- al experience that occurred only last May. As you will remember, the School District tried to gain voter approval of a Plant Facility Levy of $10,000,000 over ten years. I was able to prove the need fior $8,000,000 of the total need, but because I was unable to clearly point out what the remaining $2,000,000 would be used for, the Levy lost. The situation in this Plan is strik- ingly similar. S ecif~r what all of the monev will be used for. As an alternative to forcing the Redevelapment Board into this kind of "pressure cooker",..may I suggest that there'be,a joint powers agreement specifying that any surplus money be reallocated back to each taxing entity each year? Federal tax law prohibits the buildup of any tax exempt funds, and states that such funds must approach a zero balance annually, As another possibility, designate a major portion of the surplus to' ro at will be needed in the 7th S South area along Old Ye sto zghway w en a new Middle School is constructed. pa ve already approached you about the pos zties for some relief i ea, and this would inly be a way to take care of two distinct n with one ax effort if it is legal. Thank you, Mayor Boyle and Council Members., .for allowing me the time to make these comments.