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HomeMy WebLinkAbout2002 07-02 Special Meridian City Council Special Meeting July 2, 2002 The Special Meeting of the Meridian City Council was called to order at 6:05 P.M. on Tuesday, July 2, 2002, by Council Member Tammy De Weerd. Members Present: Mayor Robert Corrie, Keith Bird, Bill Nary, Cherie McCandless, and Tammy de Weerd. Staff Present: Gary Smith, Brad Watson, Bill Nichols, Tom Kuntz, Mike Worley and Will Berg. Item 1. Roll-call Attendance: X Tammy de Weerd X Bill Nary X Cherie McCandless X Keith Bird X Mayor Robert Corrie Item 2. Adoption of the Agenda De Weerd: Thank you. We do have a quorum. I’m sure Mayor Corrie will be joining us shortly. Item number two, Adoption of the Agenda. Do I hear a motion? Bird: Madam President? De Weerd: Mr. Bird. Bird: I move that we adopt the agenda as published. Nary: Second. De Weerd: It’s been moved and second to adopt the agenda as presented. All those in favor say aye. All ayes. MOTION CARRIED Item 3. Discussion of water and sewer latecomer agreements with Sundance Company for Silverstone Subdivision project: De Weerd: Okay. Item number three is the discussion of water and sewer latecomer agreement with Sundance Company for Silverstone. Staff? Watson: Thank you Council President and Council Members. This is a little out of sequence as you’re probably aware and if you’ve read the memo, you kind of understand the background. We’ve been trying to develop a latecomer’s agreement with the Sundance Company and what they’re insisting be included in the agreement is different than what we have done with every latecomer agreement in the past. Usually, we bring a signed agreement to you for approval and it’s all well and good and it’s approved and we move on. This one has some things that have just not been approved Meridian City Council Special Meeting July 2, 2002 Page 2 of 9 before and rather than wasting their time and signing something that doesn’t conform to the past and bringing it before you and having it subject to some criticism, I thought we’d just get these questions answered. I’ll get on with preparing an agreement. They can get it signed and we’ll get it back to you for approval. There are looks like five different questions that I posed in that memo. The first one has to do with eligible cost. Traditionally, we have included only construction, our cost, engineering cost and easement acquisition, although that’s somewhat rare. Sundance has submitted—if I can find it here. I think it’s on the third sheet back—some other costs, including what they term general conditions and construction manager that amount to about 15% of the total reimbursement amount. They’ve also included a minimal amount on an architect and then some for testing and inspection. These numbers are very large. This was a large project. They extended sewer. I think the total footage is probably a mile, mile and a quarter, maybe even more than that. It was very deep. It was in Overland Road, went to the Eagle intersection and the total water that they installed, I think, was almost two miles of water all together. So, these costs are high. I did review them and I didn’t have anything on file that was comparable in terms of size, depth or difficulty. The unit prices are higher than what we’ve seen. That’s not really the question. The question more has to do with eligible cost, specifically construction management and the architect and the testing and inspection. The ordinance from my reading of it is somewhat ambiguous. Section 94-19, Part A is sort of the introductory paragraph to the reimbursement agreement. It says that the City may enter into an agreement that all or a portion of the costs will be reimbursed. Then in Part 2, it says no reimbursement agreement shall pay to the user extending the line more than 100% of his actual engineering and construction costs. That’s where the question lies. De Weerd: Okay. Council, do you have any questions? I guess I do. None of this was talked about prior to the application or going through the process. Is this something that all came up after approval? Watson: Council President De Weerd and Council Members. We—I’ve had this information for probably—I had preliminary information around the first of the year. Then once they ended up finished construction, final cost. So, yes, these have been in there from the very—well, pretty much since the project has been completed or almost completed. As I said, we’ve been going around for three or four months on this. If you’re talking about when they initially proposed the project, we never got into this detail. I noticed the letter here that they sent today that they gave us a budget last July and I don’t have that in my files. Perhaps they did, but at that point, it’s merely a budget. Nary: Madam President? De Weerd: Mr. Nary. Nary: Brad, the question I guess I have is—and you’re right. I think the ordinance is pretty broad as to what are eligible costs and I understand the reason that you’re here is because our interpretation of what that means is what we’ve used in the past and this is a little different. In Sub-Part B of both the water and the sewer, they’re both—both of these are identical aren’t they? I mean, when I look at them, they look the same. It’s Meridian City Council Special Meeting July 2, 2002 Page 3 of 9 just ones for water and ones for sewer. When it talks about reimbursement from the City, do we have other examples from the City? Have we built any of these and gotten reimbursement? Did we include that type of cost that they’re requesting when we do it? Watson: Council member Nary. We have agreements but we’ve always just included our costs, construction costs and the engineer. We don’t have project managers. I’m not sure what they do on a sewer project. I know what the engineer does and maybe our engineer functions as the project manager. I don’t have any objection to these costs. The potential pitfall is that people that come in subsequent and hook on and are charged this fee, they want to go through this calculation and find out what they’re being charged for, what they’re being asked to reimburse. I don’t know if I can defend that one way or the other. To answer your question, we don’t have— Nary: We just don’t have a (inaudible) from the City side. Okay. Bird: Madam President? De Weerd: Mr. Bird. Bird: Brad, I see on this formula that they sent that their architect, engineer, surveying, testing and inspection was 7.5%. I’ve been checking over what our engineers are charging us on projects and it’s running 15-16%. I don’t know if these guys did the same thing or if you had some engineering done on it or if they did all of the engineering or— Watson: Councilman Bird, all we did was plan review. Bird: Beg your pardon? Watson: All we did was plan review on this particular project. The White Trunk, I think our engineering, surveying and I guess you would call it construction management, is probably going to run 15% of the total project. Bird: I think that’s probably some of the construction manager part of the cost. The general conditions, I don’t know what Petra did at that point. I don’t know what they call general conditions on that. Also, Brad, you say they did not give you a budget like other states that you can find or recall? Watson: Well, I didn’t look for one specifically after I got this late this afternoon but they very well may have given us a budget but really at the time and quite honestly it doesn’t mean anything to me when a project is just being proposed. I’m not thinking latecomer. In fact, I’m sure they won’t agree but this is about the fastest we’ve ever even attempted to turn around a latecomer agreement after construction is done. Nichols: Mr. Mayor? Corrie: Mr. Nichols. Meridian City Council Special Meeting July 2, 2002 Page 4 of 9 Nichols: Mr. Mayor, if I can ask a question of Brad? Brad, typically, don’t we look at the latecomer agreements in terms of the increased capacity to serve other lands? In some of these, are you satisfied with these costs they’ve listed or tied in to their increasing the capacity of those lines? Watson: Mr. Nichols, this was—I don’t know that they increased any capacity. They created some capacity in an area that had zero. The way that these are structured is that the entire benefit area served by that extension is projected and their proportionate flow is taken out of the equation. In other words, they’re responsible for their percentage of that total number of units that they would contribute. The remaining costs are divided out over everyone else’s projected units of flow. Did I evade your question? Nichols: Brad, what I’m looking at is, if there was nobody upstream from them at all and they just install the line just to serve their project, they would be the only one that would have cost for that project, but when they do something to where additional folks can hook in, like putting in a pipe that’s larger in size than what would be required to serve that development or maybe contributing something that’s going to increase the City’s ability to serve a bigger area. The difference between what it would cost them to serve themselves and what they put in is what’s ordinarily looked at for the latecomer. At least, in my mind, that’s the concept. They’ve done something more than what’s required for their development and as a result, those that would benefit from being able to use that system, would have to pay a proportionate share of that benefit. Watson: Well, Mr. Nichols, that may be the way it’s supposed to work but that isn’t the way they’ve been calculated in the past. It’s like when they build the line. There’s one big piece of pie. However much flow they have, they’re responsible for that slice and the cost associated with that. It may not even be half of an eight-inch line that they would have extended just for themselves. We just take the total number of projected ERU’s in that service area or the benefit area and divided by the total number of projected ERU’s, generally. If Council would like, I can talk to them and get some more specifics on exactly what general conditions and construction manager consist of and bring that back if— Bird: Mr. Mayor? Corrie: Mr. Bird. Bird: Yes. I’d like to see Brad work with them. See what that is, Brad, and see if we can’t hammer out an agreement that’s beneficial to the City and satisfactory to the developer, to the contractor. I would ask them for their budget figures that they gave you July of 2001. Watson: I can certainly look for that. Bird: They should have it on record. Nary: Mr. Mayor? Meridian City Council Special Meeting July 2, 2002 Page 5 of 9 Corrie: Mr. Nary. Nary: Brad, I guess the bottom line—what’s—I understand this is different than we have interpreted that ordinance previously. What’s your concern about if we were to change that interpretation and going forward? Because it appears, to me, that it’s pretty open-ended the way the ordinance is written and what they’ve asked for isn’t outside of what the way the ordinance is written. It’s outside of the way we’ve read it previously. What’s your concern if we were to read it the way they’re asking? Watson: Councilman Nary and Council members. My only concern, I guess, is the precedent and I guess we don’t see many projects this big that would warrant a construction manager. That’s the first concern. That’s fine if we want to do this for everybody we can do that. Second, is the projects that come in afterward, after this agreement has been executed by the Council and the developers that start questioning, well, I don’t know what costs are. Nary: Wouldn’t our answer to them be tough luck? Watson: It certainly could be. Although, I’m the one that gets the phone calls. Nary: Or you want to build your own pipe, you can pay $500,000 bucks and build the pipe yourself and serve your property and hook it up to our system but if you want to just hook on, that’s the price of this. It’s just a precedent concern really, is what it is to you, right? Watson: There’s a little bit of concern and I’m trying to kind of stay away from it. There is a little bit of concern on the people that come afterward on the maybe the due process. They’re being impacted by a fee that affects the property they intend to develop that they— Nary: Well, they are no matter what cost we associate with it. Their affect is the same as the level of affect that they have is just the higher cost. The fact that they’re affected by having a latecomer’s agreement, that doesn’t change, no matter what. It’s just the amount they have to pay. Thank you. Corrie: Mrs. De Weerd. De Weerd: I believe Mr. Nary pretty much covered with (inaudible). Watson: Can I try to get through these others fairly quickly? Okay. Thank you. The interest cost, number two bullet on there, they’re requesting reimbursement for interest cost on their construction loan. Again, that something we hadn’t done in the past. Item number three, at least in the sewer reimbursement agreement, says a reimbursement agreement may provide for interest to be paid to the sewer user. The way that’s been handled in the past is that the fee annually escalates at a predetermined interest rate. That has been our interpretation, not that we pay for their construction loan interest. I guess the key word in there is may and that’s the question tonight. Meridian City Council Special Meeting July 2, 2002 Page 6 of 9 De Weerd: Mr. Mayor? Corrie: Mrs. De Weerd. De Weerd: You know, I guess a lot of what this comes down to is and I haven’t read our ordinance and how it’s worded and how specific it is on what is recouped under the reimbursement and what costs can be reimbursed to the developer and those kinds of things. Is it specific? Do you sit down prior to applications and kind of discuss how these things are assessed or is it just kind of—how do our applicants understand what all these fees are going to be and how our process is and how to interpret our ordinance? Do we have any kind of information that goes into more detail on that? Watson: Council member De Weerd, ordinarily if someone requests a latecomer’s agreement, it’s usually after the project. What we have done in the past is simply send them a copy of a boilerplate latecomer or maybe an example of one that’s already approved. At no time, until they request a latecomer’s agreement, do we start going over the details. We don’t have enough time in the week, I guess, to go over these until it gets real and we have a real cost to work with. Although, in this case, I did do some preliminary work before the final costs were in, at their request. De Weerd: Is there—is our ordinance not detailed enough to kind of outline what is accept—what is reasonable and what is acceptable in those calculations? Nichols: Mr. Mayor? Corrie: Mr. Nichols. Nichols: Mr. Mayor and members of the Council. The way I put it is, the ordinance is just right because it gives you unfettered discretion. You don’t—you’re not forced to say yes to the latecomer agreement and you’re not forced to say what is exactly in it. So, you can have some discretion. I think, in fact, you’re not required to enter into one. You can tell the developer thank you very much for the increased capacity. I think there may be some fundamental fairness issues with that kind of approach but at least it gives you the ability to tailor to a particular situation. Now, if you want to say we’ll only pay part construction costs or we’ll only pay x, you could certainly do that. Even if you did that, I still would recommend that you continue discretionary approval of such agreements because there may be reasons down the road that you can’t see today where you wouldn’t want to require a latecomer reimbursement. De Weerd: But how do you remain fair and consistent if you don’t have certain guidelines? Nary: Mr. Mayor and members of the Council. That’s why Brad has always approached in the same and always done them the same because that’s what the development community has accepted in the past, both from the reimbursement side and from the paying side. Meridian City Council Special Meeting July 2, 2002 Page 7 of 9 De Weerd: This just seems like you’re opening a Pandora’s Box if you deviate from how you traditionally have figured these and are you going to have people coming back saying, well, you didn’t do that for me and I want you to recalculate these. You know. Can that happen? Nichols: Mr. Mayor and members of the Council. I don’t believe so. Since it’s discretionary and since it’s a negotiated item, I don’t believe that you’re going to have—I mean, you might have folks come back and ask you to reopen it but I don’t think that there’d be a basis to do so. Nary: Mr. Mayor? Corrie: Mr. Nary. Nary: Brad, in the information in the memo that we have it says that this hasn’t been done in the past. Do you know, has it been asked for in the past and been rejected? Have we had this type of discussion previously or has it always been done at the staff level and no one’s ever really pushed the issue about interest or the administrative fees or any of those things? Watson: Councilman Nary and members of the Council. I don’t think either Gary or I can ever remember this being requested. These are usually pretty boilerplate and there’s nothing much new that pops up. Nary: I guess the only other comment I’d have I think Mr. Nichols is right. There’s a lot of discretion here but what they’re asking for isn’t outside what the ordinance is either. It’s just different. I mean, I don’t think the ordinance doesn’t say they can’t get interest. It just says they may. The ordinance doesn’t say that the 10% administrative fee isn’t their own expense. It just says there’s an administrative fee. It doesn’t say it has to be charged to the developer. It doesn’t mean it can’t be charged on top of a 100% reimbursement to them. It doesn’t say. Watson: Councilman Nary, Mayor and Council. You’re exactly right and I read the same thing that these could be allowable. It’s just that it’s so different than anything brought before you before. I wanted to not surprise you— Nary: Sure. I agree. Watson: --at approval point. Nary: Mr. Mayor? Corrie: Mr. Nary. Nary: I guess—I don’t know if we want more information before we try to give some help to Gary and Brad but, I guess my only concern is if—one of these things that benefits the City is having the developers do this and do it this way because we don’t have to front the cost to do it. Now, since they haven’t asked before and it’s not outside Meridian City Council Special Meeting July 2, 2002 Page 8 of 9 of at least what they can ask for, I think at least deserves some discussion about it because what I would feel is that in the future, if I’m a developer I’d say I’m not going to front that cost for you. I’m not going to do that. I’ll build the line to serve my needs but I’m not going to build the line to serve anybody else’s needs and so what are we going to do. Are we going to have ten sewer lines running down the road so that everybody builds their own capacity and that’s it? That doesn’t benefit anybody. That rips the road up ten times. We don’t want to do that. So, I mean—I think there’s obviously some balance we need to find here that’s reasonable and fair. It looks like it’s a first impression issue that hasn’t been addressed before. I don’t think we’re on dangerous ground at least discussing it and figuring out what’s a fair way to resolve it that benefits at least the City and gives Brad and Gary and the Public Works Department some clear direction to tell the other future developments, that this is how we do it. Bird: Mr. Mayor? Corrie: Mr. Bird. Bird: Yes. We’ve always basically been boilerplate and finally we got somebody that’s got some other idea about latecomer’s fee. I agree with Councilman Nary that we certainly need to discuss it and see what is the benefit to the City plus to the developer because at this point right now, we haven’t got in place a fee to expand our sewer by ourselves, which I hope we do but hasn’t been done. I would hope that we would— these developers would continue to front the money for us and then recoup it through the latecomer’s fees. I think we need to work it out for the benefit of the City and the developer. De Weerd: Mr. Mayor? Corrie: Mrs. De Weerd. th De Weerd: I guess I would suggest we table this until the 16 giving staff time to work with the developer because there is no doubt that this is a huge benefit to our community. The creation of jobs and the economic advantages that this development is bringing to Meridian is significant. Brad, do you need anything specific from us, other than please get back to the table and try and work this out? Watson: Council member De Weerd, Mayor and Council members. No. I am not the one pushing this schedule. They are. Although, no one is eminently getting ready to hook on to this so I’m not quite sure why, other than just getting housekeeping done. They want it done now. We have Sutherland Farms and El Dorado coming at a future point. Anyway, I don’t need anything. All I need from, I guess, the developer is to talk about what exactly general conditions and construction manager costs are. I’ve been through this with them many times. De Weerd: I guess I can certainly understand why they would like to do the housekeeping now. I’m kind of like one of those that need the details before I go too th much further. I would make a motion to table this to July 16 to allow staff time to work with the developer to bring something back to us at that time that we can talk on. Meridian City Council Special Meeting July 2, 2002 Page 9 of 9 Nary: Second. Corrie: Okay. Motion has been made and second for further discussion to table to July 16, 2002. Any further discussion? Okay. All those in favor of the motion say aye. Opposed, no. All ayes. MOTION CARRIED Corrie: Okay. Bird: Mr. Mayor? Corrie: Mr. Bird. Bird: I move we adjourn from our special meeting. De Weerd: Second. Corrie: Okay. Motion has been made and second. Any further discussion? There is none. All in favor of the motion say aye. Opposed, no. All ayes. Special meeting adjourned at 6:34 P.M. MOTION CARRIED (TAPE ON FILE OF THESE PROCEEDINGS) APPROVED: / / ROBERT D. CORRIE, MAYOR DATE ATTESTED: WILLIAM G. BERG, JR., CITY CLERK