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2011-06-28E iDiAN~-- IC~AHO CITY COUNCIL REGULAR MEETING AGENDA Tuesday, June 28, 2011 at 7:00 PM 7:02 PM 1. Roll-Call Attendance X David Zaremba X Brad Hoaglun X Charlie Rountree X Keith Bird X Mayor Tammy de Weerd 2. Pledge of Allegiance (Pg. 1) 3. Community Invocation by Tim Pusey with Valley Shepherd of the Nazarene (Pg. 1-2) 4. Adoption of the Agenda Adopted (Pg. 2) 5. Consent Agenda Approved (Pg. 2-4) A. Approve Minutes of June 7, 2011 City Council Special Meeting B. Approve Minutes of June 7, 2011 City Council Regular Meeting C. Approve Minutes of June 14, 2011 City Council Special Meeting D. Approve Minutes of June 14, 2011 City Council Workshop Meeting E. Final Order for Approval: AP 11-001 Southridge Subdivision Gravel Mining by Idaho Sand & Gravel Company Located South of W. Overland Road; Southwest of the Ridenbaugh Canal and East of S. Ten Mile Road Within Future Development Areas of Southridge Subdivision Request: City Council Review of the Director's Decision to Deny the Conditional Use Permit Modification to Allow Audible Back Up Alarms on Construction Equipment Used on the Site Meridian City Council Meeting Agenda -Tuesday, June 28, 2011 Page 1 of 3 All materials presented at public meetings shall become property of the City of Meridian. Anyone desiring accommodation for disabilities related to documents and/or hearing, please contact the City Clerk's Office at 888-4433 at least 48 hours prior to the public meeting. F. Water and Sewer Easement for Olson Avenue Road Extension Including New Water and Sewer Infrastructure; Mains, Hydrants, and other Appurtenances G. Award of Bid and Contract to Power Plus for Main Street Corridor Street Light Conversions for aNot-to-Exceed Amount of $112,931.00 H. Task Order #10002c for the Wastewater Treatment Plant Headworks Odor Control Design with Brown and Caldwell Under the Master Agreement Dated April 13, 2010 for aNot-To- Exceed Amount of $57,433.00 I. Addendum (Exhibit C/Task Order #3) to Master Agreement for Professional Services with Access Idaho for Electronic Transactions and Access to PayPort Electronic Payments for All Departments J. First Addendum to Agreement with Accela, Inc. for Professional Services for Implementation and Configuration of a City Wide Planning, Permitting, Licensing, and Code Enforcement System K. Addendum to Development Agreement for Approval: MDA 11- 002 Meridian Town Center by Meridian CenterCal, LLC Located at Northeast Corner of E. Fairview and N. Eagle Road Request: Amend the existing Development Agreement (Instrument #108131103)to Include an Updated and Expanded Development Plan and Minor Edits to the Text of the Agreement L. Development Agreement for Approval: MDA 10-010 Scentsy Campus by Sam Johnson, H.O.T. 1, LLC Located Southwest Corner of E. Pine Avenue and N. Eagle Road Request: Modify the Existing Development Agreement to Update the Owner Information and Development Plan M. Resolution No. A Resolution of the Mayor and the City Council of the City of Meridian Authorizing the City Clerk to Destroy Certain Semi-Permanent and Temporary Records of the Meridian Public Works/Building & Development Services Divisions Vacated From the Agenda Meridian City Council Meeting Agenda -Tuesday, June 28, 2011 Page 2 of 3 All materials presented at public meetings shall become property of the City of Meridian. Anyone desiring accommodation for disabilities related to documents and/or hearing, please contact the City Clerk's Office at 888-4433 at least 48 hours prior to the public meeting. 6. Items Moved From Consent Agenda 7. Action Items A. Continued from June 21, 2011: Public Hearing: ZOA 11-002 Unified Development Code (UDC) Text Amendment by City of Meridian Public Works Department Request: Amend the Surety Section, UDC 11-5C to Include Clarifications, Increase Surety Amounts and to Provide for Bonds as a Form of Surety Continued to July 19, 2011 (Pg. 4-31) B. Continued from June 21, 2011: Public Comment: Ordinance No. 11-1485: An Ordinance of the City of Meridian, Enacting a New Section, Title 8, Chapter 6, Section 2, Relating to Performance and Warranty Surety for Public Infrastructure (First Reading) Continued to July 5, 2011 (Pg. 4-31) 8. Future Meeting Topics None (Pg. 31-32) Adjourned at 8:27 PM Meridian City Council Meeting Agenda -Tuesday, June 28, 2011 Page 3 of 3 All materials presented at public meetings shall become property of the City of Meridian. Anyone desiring accommodation for disabilities related to documents and/or hearing, please contact the City Clerk's Office at 888-4433 at least 48 hours prior to the public meeting. Meridian City Council Meeting June 28. 2011 A meeting of the Meridian City Council was called to order at 7:03 p.m., Tuesday, June 28, 2011, by Mayor Tammy de Weerd. Members Present: Mayor Tammy de Weerd, Brad Hoaglun, David Zaremba, Keith Bird and Charlie Rountree. Others Present: Bill Nary, Jacy Jones, Pete Friedman, Jamie Leslie, Kenny Bowers, Tom Barry, Warren Stewart, Bruce Freckleton, Robert Simison and Dean Willis. Item 1: Roll-call Attendance: Roll call. X David Zaremba X Brad Hoaglun X Charlie Rountree X Keith Bird X Mayor Tammy de Weerd De Weerd: I'd like to welcome everyone here this evening and thank you for joining us. For the record it is Tuesday, June 28th. It's a few minutes after 7:00. We will start tonight's meeting with roll call attendance. Madam Clerk. Item 2: Pledge of Allegiance De Weerd: Item No. 2 is our Pledge of Allegiance. If you will all rise and, please, join me in our pledge to our flag. (Pledge of Allegiance recited.) Item 3: Community Invocation by Tim Pusey with Valley Shepherd of the Nazarene De Weerd: Okay. Item No. 3 is our community invocation. Tonight we will be led by Pastor Tim Pusey and he is with Valley Shepherd Nazarene Church. If you would, please, join us in the community invocation or take this as an opportunity for a moment of reflection. Welcome. Pusey: Let's pray. Heavenly Father, as this meeting begins tonight we acknowledge our human need for your divine strength and wisdom and we pray for Mayor Tammy and for our City Council and we ask that you would give them insight to rightly discern the true needs of our community and courage to respond accordingly. I pray your blessing upon the people of the community of Meridian, the young and the old, all of us in between. I ask that you'd teach us to live out Christ-like love and compassion for one another and may we be the kind of community that you long for us to be. We thank you, Father, for your many blessings in our lives, including the privilege of calling upon you as we are this evening. We trust our needs to your care and your keeping, in Christ's name, amen. eridian City Council June 28, 2011 Page 2 of 32 De Weerd: Thank you. And thank you for joining us this evening. Item 4: Adoption of the Agenda De Weerd: Item No. 4 is the adoption of the agenda. Hoaglun: Madam Mayor? De Weerd: Mr. Hoaglun. Hoaglun: On tonight's agenda, the Consent Agenda, Item 5-M, there is a request to vacate this item from the agenda and that is the only item to note. With that, Madam Mayor, I move adoption of the agenda as printed. Rountree: Second. De Weerd: I have a motion and a second to adopt the agenda as amended. All those in favor say aye. All ayes. Motion carried. MOTION CARRIED: ALL AYES. Item 5: Consent Agenda A. Approve Minutes of June 7, 2011 City Council Special Meeting B. Approve Minutes of June 7, 2011 City Council Regular Meeting C. Approve Minutes of June 14, 2011 City Council Special Meeting D. Approve Minutes of June 14, 2011 City Council Workshop Meeting E. Final Order for Approval: AP 11-001 Southridge Subdivision Gravel Mining by Idaho Sand & Gravel Company Located South of W. Overland Road; Southwest of the Ridenbaugh Canal and East of S. Ten Mile Road Within Future Development Areas of Southridge Subdivision Request: City Council Review of the Director's Decision to Deny the Conditional Use Permit Modification to Allow Audible Back Up Alarms on Construction Equipment Used on the Site F. Water and Sewer Easement for Olson Avenue Road Extension Including New Water and Sewer Infrastructure; Mains, Hydrants, and other Appurtenances Meridian City Council June 28, 2011 Page 3 of 32 G. Award of Bid and Contract to Power Plus for Main Street Corridor Street Light Conversions for aNot-to-Exceed Amount of $112,931.00 H. Task Order #10002c for the Wastewater Treatment Plant Headworks Odor Control Design with Brown and Caldwell Under the Master Agreement Dated April 13, 2010 for aNot-To- Exceed Amount of $57,433.00 Addendum (Exhibit C/Task Order #3) to Master Agreement for Professional Services with Access Idaho for Electronic Transactions and Access to PayPort Electronic Payments for All Departments J. First Addendum to Agreement with Accela, Inc. for Professional Services for Implementation and Configuration of a City Wide Planning, Permitting, Licensing, and Code Enforcement System K. Addendum to Development Agreement for Approval: MDA 11- 002 Meridian Town Center by Meridian CenterCal, LLC Located at Northeast Corner of E. Fairview and N. Eagle Road Request: Amend the existing Development Agreement (Instrument #108131103)to Include an Updated and Expanded Development Plan and Minor Edits to the Text of the Agreement L. Development Agreement for Approval: MDA 10-010 Scentsy Campus by Sam Johnson, H.O.T. 1, LLC Located Southwest Corner of E. Pine Avenue and N. Eagle Road Request: Modify the Existing Development Agreement to Update the Owner Information and Development Plan M. Resolution No. : A Resolution of the Mayor and the City Council of the City of Meridian Authorizing the City Clerk to Destroy Certain Semi-Permanent and Temporary Records of the Meridian Public Works/Building & Development Services Divisions De Weerd: Item 5. Consent Agenda. Hoaglun: Madam Mayor? De Weerd: Mr. Hoaglun. Meridian City Council June 28, 2011 Page 4 of 32 Hoaglun: As noted, 5-M, there is a request to vacate this item from the agenda. So, with that removed I move approval of the Consent Agenda and the Mayor to sign and Clerk to attest. Rountree: Second. De Weerd: I have a motion and a second to approve the Consent Agenda as changed. If there is no discussion, Madam Clerk. Roll-Call: Bird, yea; Rountree, yea; Zaremba, yea; Hoaglun, yea. De Weerd: All ayes. Motion carried. MOTION CARRIED: ALL AYES. Item 6: Items Moved From Consent Agenda De Weerd: Item -- there were no items moved from the Consent Agenda. Item 7: Action Items A. Continued from June 21, 2011: Public Hearing: ZOA 11-002 Unified Development Code (UDC) Text Amendment by City of Meridian Public Works Department Request: Amend the Surety Section, UDC 11-5C to Include Clarifications, Increase Surety Amounts and to Provide for Bonds as a Form of Surety B. Continued from June 21, 2011: Public Comment: Ordinance No. 11-1485: An Ordinance of the City of Meridian, Enacting a New Section, Title 8, Chapter 6, Section 2, Relating to Performance and Warranty Surety for Public Infrastructure (First Reading) De Weerd: So, we will move to Item 7 under Action Items. To action -- or Action Item 7-A, which is continued from June 21st, a public hearing on ZOA 11-002 and I will also open up 7-B, which is a public comment on Ordinance No. 11-1485. Friedman: Thank you, Madam Mayor, Members of the Council. As the Mayor indicated, you have both an amendment to the UDC and an amendment to the -- I think it was Title 8. The amendment to the UDC is adjusting the amount of sureties that we would be obtaining for the installation of infrastructure, as well as the non-life safety elements of development, such as subdivision amenities and so forth. We have also -- what we are proposing to do is change the current 110 percent that we assess for performance for the non-life safety and we are recommending -- or the Planning Commission recommended to make it 125 percent, consistent with the amount that the Public Works Department has recommended for -- for warranties and pertormance for Meridian City Council June 26, 2011 Page 5 of 32 the installation of utilities. We have also added the ability to incorporate bonds as an acceptable form of surety, in addition to cash and letters of credit. So, with that I think the bulk of the presentation or the bulk of the matter for discussion and deliberation by the Council is really the amendments that were proposed by the Public Works Department. I would add one -- one comment at this point. I guess it's a comment. Last week Council Member Rountree, in discussing the UDC amendment, had suggested a change of amending the language of -- that we would prefer -- that was recommended so that the sureties would not exceed 125 percent. In thinking about it over the course of the last week that 125 percent would, in essence, form a ceiling, but we don't have a floor, and I was concerned that, at least from a staff perspective, we wanted to be able to treat everyone equitably and provide some guidance for them, so that we -- you know, we are not going in different directions for different -- different applicants or different levels of amenities. So, I have talked with the city attorney, we have got some suggestions if you want to follow along those lines, but we would respectfully request that we somehow develop some language that provides staff some guidance or we -- we establish a floor. We certainly -- if Council agrees that 125 percent is the appropriate amount or see that as a ceiling or what you choose to go long with. So, that --those are really my comments on the UDC text amendment. De Weerd: Thank you, Pete. Council, any questions? Bird: I have none at this time. Rountree: Madam Mayor, just a comment on Pete's last comment is that the way it's written now it doesn't -- it establishes 125 percent as the fee for any surety. That may not be the right surety for non-infrastructure type of activities. Something less might be appropriate for landscaping or something else. This ordinance applies to other things than just infrastructure. I suggested that maybe some language be added to this that would say a level established by Council resolution and, then, establish a table, if you will, for the various kinds of activities that would require a surety and establish those rates by resolution, so we don't have to amend the ordinance and require those be updated just like what's been done for infrastructure and that at some point in time when it needs to be raised or lowered we can do that by resolution change. I just throw that out, but I think we need some flexibility in this instead of just establishing one fixed amount that may not be applicable to some other activities in the city. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: Mr. Rountree, as I understand you -- you wanted to set a fee for job -- types of jobs and not to exceed 125? Rountree: Correct. Bird: And everything -- every time we go job by job -- is that how we do it or by -- Meridian City Council June 28, 2011 Page 6 of 32 Rountree: Well, now if we pass the ordinance as written it's cast in concrete at 125 percent. Bird: Yeah. Rountree: But if you can afford to in say subdivision amenities or landscaping or those kinds of things in a classification and say based on an analysis it's 115 percent and, then, establish that rate by resolution, then, when that needs to be changed, when it's costing more to do that, then we can just do it with a resolution change, as opposed to an ordinance amendment. Bird: I agree one hundred percent with that. If they can figure out a way to write it up. Rountree: If it can be done. Bird: It can be done. Rountree: What we don't want to do is put staff in a situation where every application they got to come up with a fee and, then, justify it. Bird: And bring it to us. Rountree: Yeah. Bird: No, I don't want that. That's what I was afraid we was getting into. Rountree: I don't want to do that. Nary: Madam Mayor? De Weerd: Mr. Nary. Nary: Madam Mayor, Members of the Council. So, if I'm understanding correctly Council Member Rountree, basically, what you're suggesting -- I think it's certainly doable. I mean we can certainly put as established by resolution of the Council and, then, you would want the staff to bring back aproposal -- I think like Pete stated -- infrastructure -- of sewer and water infrastructure, either type or both, versus non-life safety issues like landscaping or something -- fencing, those types of things and what the appropriate level is for one versus the other. That's what I'm understanding that -- Rountree: Yeah. That's Nary: Yeah. I don't -- I mean certainly it's -- changing the ordinance to reflect that is not -- not a problem. Meridian City Council June 26, 2011 Page 7 of 32 Rountree: Okay. De Weerd: Okay. Mr. Zaremba Zaremba: I'm mulling that over. It's a new idea to me and I'm trying to be open to new ideas. And I think I'm understanding what we are talking about, we are talking about the resolution would be a chart where there would be no variability among sewer projects. A sewer project is always going to be 125, but if what we are having them bond for or indemnify for -- or something is. For instance, a landscape project. That might be a 110 percent. But all landscape projects would be 110 percent and all fencing projects would be whatever we pick -- 105 or 110 or something. And I agree with the idea that -- referring to that as a resolution and making it easier to adjust might be a good idea. I think the one thing I want to make sure -- and I think it's what I am already hearing is that there is no decision or variability -- if somebody is going to put a sewer line in there is a fixed percentage that's not decided project by project. If it's a sewer it's 125. Hoaglun: Or -- Madam Mayor. Whatever we decide tonight that amount -- Zaremba: Yes. Hoaglun: -- is, yes, but that would -- that's my understanding and I completely agree with that --that approach. I think that would work. De Weerd: Okay. Any further discussion? Mr. Barry, did you have comments on this -- on Item 7-B? Barry: Thank you, Madam Mayor, Members of the Council. With regard to the conversation that's just been had by the Council, you know, the percentage that was recommended to the Council of 125 percent was recommended in the UDC for four types of utility infrastructure. Storm water infrastructure, reclaimed water infrastructure, water infrastructure and sewer or wastewater infrastructure. We have established that percentage based on a formulaic approach, which I have shared with you in the past, and if you buy into that particular formulaic approach, then, I would urge you not to deviate from that in those four infrastructure areas. The 110 percent change for all other types of surety was -- as memory serves, occurred simply to try to bring uniformity to the percentage amount and to not have a variety of different percentages for the performance surety introduced. There is nothing wrong with having different amounts, cities all over the country do that, a different amount for landscaping or for surface improvements, so on and so forth. So, if that's something the Council would like to do, then, I mean it's certainly your prerogative to do so. The UDC, however, which we have adopted, does recommend and have contained in it 110 percent as the minimum. So, I guess that's all I would say to that. Hoaglun: Madam Mayor? De Weerd: Mr. Hoaglun. Meridian City Council June 28, 2011 Page 8 of 32 Hoaglun: Tom, what were those four again? It was storm water, reclaimed water, sewer and -- Barry: And water. Hoaglun: And water. Okay. Barry: Right. De Weerd: Okay. Any questions for Mr. Barry? Bird: I have none. Rountree: Madam Mayor, I -- just thinking of the concept of having it broken out by categories and you have the formula for those four. I assume we can develop formulas for others. Would it be better and more clear in the ordinance to just state, as opposed to a percentage, that the percentage will be established by Council resolution and that the resolution establishes 125 percent for those four -- in three years it might need to be 130 percent, as opposed to going through an ordinance change, just like we do with fees. Barry: Sure. Rountree: To just be -- you have run the formula, it's now more or less -- you know, it could go either way. Probably won't, but it could. Barry: Yeah Rountree: Likewise, do that for the other categories that we establish and I -- I don't know, Bill, is that easier to administer and handle that way, as opposed to having to go through an ordinance change every time and -- Nary: Madam Mayor, Members of the Council, I don't anticipate it probably changing very often, so I don't -- it's doable either way. Rountree: Okay. Nary: Certainly it easier if we find with more data that the ordinance needs to change and -- or the amounts need to be changed and there is an easier method to do it. So, certainly it can be done. I mean we haven't changed it for as long as I can remember, so we probably won't change it very much. But it's certainly doable. Rountree: Okay. Zaremba: Madam Mayor? Meridian City Council June 28, 2011 Page 9 of 32 De Weerd: Mr. Zaremba. Zaremba: Probably a question for Mr. Nary or anybody else that remembers. About every six months we re-approve park fees as -- are we doing that as a resolution? That's not an ordinance change, is it? Nary: Madam Mayor, Members of the Council, Council Member Zaremba, you're correct, if we do it by resolution -- Zaremba: Okay. Well, to follow up, I think I can support the idea that the ordinance word should be established by resolution of the Council and that the -- and that the resolution that goes with that would be a chart that lists those four items at 125 percent and a list or just a category that says all else 110 percent. Demonstratable and doable? Nary: Uh-huh. Zaremba: I could support that idea. De Weerd: Okay. Anything else that -- this is a continued public hearing, so I would open this up to any additional public comment. Okay. Thank you. Okay. I do have a person who has signed up. Amanda Schaus. If you would -- signed up against. If you will, please, come forward. Thank you, Amanda, for being here. If you will, please, state your name and address for the record. Schaus: Amanda Schaus. General Council for Brighton Corporation. 12601 West Explorer Drive, Suite 200, Boise, Idaho. De Weerd: Thank you. Schaus: Thank you. Madam Mayor, Members of the Council, it's my pleasure to be here today. Mr. Turnbull wished he could be here, but he's out of town again. It is summertime. De Weerd: Sorry, your time's already up. We were just trying to save him money while he was out of town. Schaus: Okay. De Weerd: Please continue. I'm sorry. Schaus: We would like to recognize the staff's hard work on this ordinance and all of the resources that they have consulted. We are here today, though, to request a remand to staff or a continuance to discuss a few of the issues that have come up with regard to the development community that we don't really feel have been adequately vetted at this point. We are concerned about some of the unintended consequences. I Meridian City Council June 28, 2011 Page 10 of 32 know there is a few documents in the record that lodge concerns from the development community. For us this is a -- we consider this a major policy shift and it's complicated, as -- as I'm sure you're all aware, to try to get a grasp on some of the issues involved. We are trying to avoid a funnel into a certain point of view and we want a little bit more time to be able to evaluate some of the city's resources and information that they have provided -- provided to you and provided to us. In our discussions with staff it's our understanding that there is no particular rush to pass this ordinance and we think it's appropriate to spend a little more time exploring some of our concerns. Four -- I will categorize them in kind of four major points. One is whether or not the scope of the ordinance as it's written is appropriate. At this point due to problems with two -- two developments necessitate this type of ordinance and this type of answer or is it a sledge hammer being used to -- to take care of an ant? We would like to know a little bit more about what problems specifically have been caused -- obviously, we are familiar with one of the developments, I'm not familiar with the other one, and what type of issues those were and whether or not this actually really addresses that -- those issues for those two projects. We did have a conversation with the city of Boise engineer, which was interesting, and before this ordinance was even mentioned he just said they have not had problems with -- with warranty work and warranties and so that it's -- warranty bonds are not even on their agenda at this point to -- to introduce or to administer. I don't know if it's the City of Meridian's bad luck or what the cause is, but it's something that we want to explore a little bit more. And also I note that the ordinance was written to -- to affect all public infrastructure and it's -- my understanding is that -- well, mainly the issues have been with sewer and water improvements. My second -- our second area is whether or not the cited jurisdictions that the staff is using are actually persuasive. Are these jurisdictions that promote economic and -- economic development, are they friendly, is it a place like Portland where most developers cringe when they think about developing in Portland. I know the city's worked hard to promote economic development and we just want to take a look at what type of jurisdictions are providing these bonds and what type of bonds are they, are they for public infrastructure or private infrastructure? Third, an issue that we have is whether or not it's appropriate for a developer to be responsible for warranty work. We have heard that the developer is responsible for all of the project and we certainly have a management component, but when you actually breakdown the process, who is most involved in the actual improvements? There is a licensed engineer who comes up with the plan, the city reviews and approves the plan, the contractors build and do the plan -- do the work and the city inspects the work and, then, they own the work. The developer is really not involved that much, except to hire a contractor and to make sure that they get -- that they get paid and if it really makes sense in the back end, once that's done, to still require a developer to come back in and be a part of a contractor's warranty and their performance under that. And, additionally, on that point I think our understanding is that contractors have a better relationship with bonding companies and developers. They are in the process -- they are in the business of regularly providing these warranties and providing bonds and that's not something that developers are familiar with. We don't have that relationship with the bonding companies that the contractors do. The fourth area that I'd like to cover generally that we still have some concerns with are whether or not a contractor to provide a warranty bond specifically is a reasonable request for Meridian City Council June 28, 2011 Page 11 of 32 accommodation in this ordinance and flexibility by the city. It's our understanding and our belief that it can be done. I think the staff's -- at first it couldn't be done, but now maybe it can be done and it's not recommended, that's just an issue that we want to explore just a little bit more. If it's something that is in the ordinance and it's not -- we can't find contractors who are able to provide the bond, then, it won't happen. But at this point we are just asking for some flexibility with these new requirements to be able to -- if we have the ability to require acontractor to -- to provide the warranty bond to be able to do that. Our view is that the city is really in no worse position, the -- they have a warranty, they have warranty provisions in force, and they have the bond to back it up. It will encourage the use of more bondable -- it actually benefits the city, because it encourages the use of more bondable qualified contractors, because only very good contractors with a good relationship with their bonding companies would be able to provide such a bond and it's on a case-by-case basis. For us -- it's better for developers, because it places the responsibility with who produced the product, the responsibility to warranty work and correction with -- with the contractor and it really -- possibly contractors can get a better rate for their bonds than a developer can due to that relationship. So, that's an economic benefit. I know there is a lot of management concerns that the staff has raised that we would like to also address. I have discussed that with Mr. Nary a little bit in that I think a lot of those concerns can be addressed in the development agreement. There still remains having a contractual agreement with the developer. We are not proposing that we -- that we abdicate any sort of responsibility to see the prospect through, it's merely just who -- who can provide the bonds. We are open to having requirements to manage the warranty work in a development agreement if it becomes necessary, so the city is also protected in that way and still gets all of the benefits of the bond. And, then, of course, there is always the ultimate issue of being able to get a building permit if the city is not happy with the way the warranty work is going. It still affects the developer and the developer is not going to step back and say, oh, well. It just provides us a little bit of flexibility in that we can require, hopefully, a contractor to provide that bond for their own work and we don't have to step in when we haven't been involved in the process and do it -- do it for them. Another issue that I have been aware of with the city is the phased development issue and a possibility of issues between phases. That's going to be an issue either way. I mean I -- I would have a hard time -- we would have a hard time coming up with a project in which a developer is able to provide a uniform bond for an entire project in all phases up front. A lot of times, depending on the economic climate a project can change, the infrastructure changes, usually do development in phases. So, there will be more than one bond involved either way, regardless of whether a developer provides it or a contractor provides it. And, again, we are just asking for the option, whether or not the market bears it or able to do it will depend on what good contractors we can get and what qualified contractors we can get to provide that. In closing, we believe there is some substantive issues that we need to further address. I understand staff feels like that they have been there, done that, but we still have some --some information that we are getting in from our -- our contacts and our resources and we'd like to provide a better, more balanced representation of the developer in the process. The surety companies they have, they deal a lot with their contractors and we want to explore more of a development oriented balance to some of these agreements that we have and the Meridian City Council June 28, 2011 Page 12 of 32 substantive issues -- no need to expedite as far as I know and we have been -- there is no urgency. All we are asking for is a little more time to make sure we are heard and that our contractual obligation and development agreement may be explored a little bit further to address some of the staff's concerns. We think it's a major policy change and we want to make sure there is a full exploration for us and for the city to make sure there is no unintended consequences of these new requirements that we have on our development community and so we think a remand or deferral is appropriate in this case and would be greatly appreciated. Thank you. De Weerd: Thank you. Council, any questions? Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: Excuse me. Amanda? Schaus: Yes. Bird: Can you think of anytime that a developer bond -- you bring up a very good point. A lot of your fee on bond is -- is the experience of bonding and I can't think -- I'm just thinking about it, but I haven't even thought of that before. Is there anytime that -- that you can think of when a developer has to bond unless this is passed? Schaus: No. And it's a new animal for us. When Mr. Turnbull asked me to research this, Idon't -- we didn't have a relationship with a bonding company. I called Tom Bowser, who I know has been involved in the project. I called our insurance company. We are just not -- we are just not familiar with the process at all and we don't have the relationship and we don't get the rates and it's not something that we feel like we should be -- we should be involved in, except for the management in the development agreement, but I mean as far as actually providing the bond to the city, I think that we -- the contractor provided the product and provides the warranty and it makes sense for them to provide the bond, because they have that relationship. Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: As I understand the bond discussion, that is adding one more choice to choices that are already there. There are other choices, like a letter of credit or other kinds of surety that have not been in our ordinance before and this isn't restricting those choices, it's adding one more choice to it and I think the discussion that we have had -- some of it in response to the point that you bring up, because we have been told that that is an issue for you and I appreciate your studying it thoroughly, but one of the issues is that we only have the relationship with a developer. We don't have a relationship with contractors that the developer has hired and administering athird-party Meridian City Council June 28, 2011 Page 13 of 32 relationship has a great number of pitfalls. The one that I could see that it might have for you is that if, in fact, the city does create a relationship with a contractor that's going to work on your site, because of our requirements in that relationship you may have to put it out to bid and take the lowest bidder and I would see that as being problematic for you. Schaus: To elaborate on that a little bit, I haven't been familiar with that -- Zaremba: Any contractor that we develop a relationship with has to be because of a bidding process -- Schaus: Uh-huh. Zaremba: -- and, then, we are restricted to who we can choose out of those bids -- Schaus: What we are suggesting -- Zaremba: -- for our own projects and I suspect that rule might apply if we get involved in somebody else's projects. Schaus: And that's another issue that I think has been alluded to, but I'm not -- Mr. Nary, did you want to -- Nary: Madam Mayor? De Weerd: Yes. Nary: Madam Mayor, Members of the Council, Council Member Zaremba, Ithink -- I think that problem goes away, because that would only be an issue on the performance side and we have already gotten a legal opinion from our ICRMP counsel that we can't even get abond -- we can't -- we can't get involved and be a part of the bond from a -- from the contractor in regards to pertormance. So, that's where I think where you're talking about using the lowest bidder would come into play if we were going to be involved in the pertormance side. We have to get the bond from the developer for the performance, because they are the owner of the project until it's complete. So, that issue I don't think is a concern on the warranty side, because it's already -- it's complete. So, I don't think that's a problem. But, again, the developer has to get a bond for performance. All we are asking and all we are talking about is a bond for the warranty. So, I agree with Mrs. Schaus that they currently maybe don't have a relationship with a bonding company to get a bond, but they are going to have to get the pertormance bond. So, I don't see that as that significant an issue. They are already going to have to do it anyway. We cannot get a bond from a contractor for pertormance. We have to get it from the developer. But you're correct, it's only an alternative. They can use cash, letter of credit, instead for the warranty piece. I hope that answers your question. Meridian City Council June 28, 2011 Page 14 of 32 Stewart: Madam Mayor? Zaremba: Thank you. Schaus: Council Member Zaremba -- may I speak, too? Zaremba: Sure. Schaus: I -- what we typically do for performance is we do letters of credit, so that's why we don't have the relationship with a bonding company. This would allow us to continue to do that, we could still provide the surety for performance through a letter of credit and, then, what we would propose is upon the completion of the work and the contractor gets paid and when the city accepts the improvements, that's when the warranty, by that letter of acceptance, that's when the warranty provisions would kick in and when -- that's at the point at which the bond -- you have agreed up front to do that, but that's at the point in which the bond -- the contractor would be able to get a bond directly for the city after the acceptance of the improvements and the warranty. Stewart: Madam Mayor? De Weerd: Yes. Stewart: Madam Mayor, Members of the Council, I just want to make sure that it's clear that in both the performance side and on the warranty side bonds are not required, they are one form of surety that is allowable. So, both on the performance, as well as on the warranty, they can bond, they can do a letter of credit or cash equivalent. So, developers would not be required to develop a relationship with a bonding company to provide the warranty surety. De Weerd: Thank you, Warren, for that clarification. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: That's very true, but letters of credit and cash tie up their cash, so they are -- what we -- we are doing them a favor by allowing bonding now, because bonding don't tie up that much cash and especially in these times I don't know too many developers that got a lot of cash flow. So, my question to you if -- Madam Mayor? De Weerd: Yes. Bird: In your -- in the letter from David he said he had talked to Morton and Company. Schaus: Yes. Meridian City Council June 28, 2011 Page 15 of 32 Bird: And I believe they probably are the largest bonding -- write the most bonds in this valley by far. Did -- what was their answer, if you talked to them, on two years? Schaus: On whether or not it's available? Bird: Getting a bond for two years, whether it's you or the contractor or who? Schaus: I believe it's available for an additional charge. For -- I would imagine it would be for either the contractor or the developer. That, obviously, increases the cost. Bird: Yeah, that -- well, I got the same answer out of mine, I just wondered what -- what you had got out of Morton. Okay. Thank you.. De Weerd: Any further questions from Council? Rountree: I have none. De Weerd: Okay. Schaus: If I may add one more comment, Madam Mayor? I do also want to point out that Morton did provide to us -- and I have not yet had a chance to provide it to staff, but they did provide us with an actual -- a copy of an agreement from the city of Anchorage where they allowed the -- a contractor -- there were provisiohs in the development agreement for a contractor to provide the warranty bond. I have not had a chance to see if that was ever requested or how that worked out, but I do -- I do have one agreement so far that shows that it can be done and at least has been permitted in the past in a development. Bird: Madam Mayor, that brings up one more question. De Weerd: Mr. Bird. Bird: You know. And you're legal. We have got very good legal here. But I want your opinion. If you're -- if I'm the developer and I hire this contractor to put in my infrastructure and I -- the city is requesting the warranty bond and stuff goes to them, but I'm the one paying him until it's done, until the city takes it, how do you protect yourself as a developer? Do you-have -- is the city -- as I understand in bonds this can't happen. Is that just an additional rider for the city or an additional rider for the developer? Which I understand you can't do that with a bond. Schaus: As far as protection for a developer? Bird: Yeah. Meridian City Council June 28, 2011 Page 16 of 32 Schaus: The -- our -- we would rely on our contract with the contractor and we haven't completely vetted out what all we would have in there, probably, to deal with this, but they would be required us to perform your warranty work as required by the city. Bird: But wait a minute. If the city is holding the bond, you hire this contractor, he gets 70 percent done and you paid him 70 percent and he goes belly up and the work falls part, what's protecting you? The city's protected, but you're not, because the city hasn't bought the project yet. Schaus: Well, in a performance construction scenario usually there is retainage and you have to make sure that you retain enough until the work -- until the work is complete. Bird: But your retainage is either five or ten percent. Schaus: Uh-huh. Bird: You can hold ten. We can only hold five. But -- and that isn't going to -- that isn't going to pick up if he's done a lousy job because he's going broke, because he's working and he's just -- trying to get cash, that isn't going to cover it. What's covering the developer? Do you know what -- do you see where I'm coming from? Schaus: I do. I do. Bird: I'm not being very clear, I understand, but -- Schaus: Well -- so, generally speaking, my understanding -- and I certainly don't have the depth of construction knowledge that Mr. Turnbull does, so we may ask for follow up from him to make sure this is accurate, but my understanding is that we would -- we would make progress payments for work done and they would need to make -- there would be inspections up to a point and if we manage it well they don't get paid until the actual work is in the ground and we pay them and at the end if there is an issue we have our contract and potentially additional security, but I'm not sure what -- what exactly it would require at that point. You want me to have Mr. Turnbull follow up with you on that? Bird: No. No. I know the answer. I just -- I just personally want to protect our payers, our taxpayers and also want to protect the developer that is -- that is our bread and butter and if they tell me that you can't get a bond with an additional insured, one of us has got to be left out. You see what I mean? Now, if it's insurance -- if I'm giving you my insurance policy, Ijust -- be on as an additional insured, but I was told you can't do this with a bond and I -- my bond guy that I talked to about bonds I forgot to ask him on this, so I just wondered if somebody else -- Stephanie back there, she can probably tell us. Meridian City Council June 28, 2011 Page 17 of 32 Schaus: I'm sure -- I'm sure she could. Another -- I'm not that familiar with insurance and maybe she can clarify this, but I do know that there is a completed operations insurance coverage, but, I don't know, that may be something that might apply to this -- to that scenario, but I think we might need to leave it to the experts. Bird: Okay. Thank you very much. Schaus: Thank you. Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: This may be the same question that Councilman Bird is asking, but can a bond or a letter of credit have beneficiaries? Schaus: I think that's probably a question for Mrs. Barnes as well. She -- I know that there is a -- a dual obligee concept and I'm not sure what that's about. I mean this all comes back to the issue of we are still trying to work through this and we just want to make sure that it's not an undue economic burden on development and that we have as many options as we can to -- to operate in these economic times and the ultimate structure of it, like I said, I would like to further investigate maybe what the city of Anchorage has done and some other jurisdictions to see if we can come up with a solution that protects the city as well. Bird: I'm done. I asked enough stupid ones. De Weerd: Okay. Anything further from Council? Thank you. Schaus: Thank you very much for the opportunity. De Weerd: Thank you. Freckleton: Madam Mayor? De Weerd: Like where did that voice come from. Yes, Bruce. Freckleton: Madam Mayor, Members of the Council, I just wanted to point out today we did receive a letter from W.H. Moore Company. It should be in your packets in your record. Bird: We got it. Freckleton: Had some comments regarding their supporting the idea of bonds. So, just wanted to point that out and make sure you did have that and had an opportunity to see it. Meridian City Council June 28, 2011 Page 16 of 32 De Weerd: Yes, we did. Thank you. Additional testimony? Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: I'd like to ask Stephanie if she can answer that, if you -- if you can do to a bond like you do to your liability and comp --and insurance and all that, workmen's comp and everything, if you can just have an additionally insured on a bond. Because I forgot to ask my agent when I talked to him. Barnes: Mayor and Council, Stephanie Barnes, All American Insurance, Meridian. You can have a dual obligee. That is something the bonding does allow for. Again, that was something that -- I wanted to kind of go back to something I kind of missed telling you the last time when we started this about seven months ago and they asked me all these questions, of course, because we discovered it really wasn't done much in Idaho or really hasn't been done. Had to do a lot of investigation. So, I contacted bond brokers who are kind of like myself, independent agents that work with multiple companies. So, I contacted bond brokers in New York, Arizona, locally here in Boise. I was the one that got ahold of Tom Bowser and brought him in, because Insco Dico was so familiar with subdivision bonds and we found out that subdivision bonding is not new. I mean this is something they do all over, it's just not in Idaho yet. So, it's something that we are kind of behind the times on. But that was one thing that they mentioned to me that they have discovered in the past it creates all kinds of legal -- legal problems and I think it's something Bill looked into as well and it's not recommended. So, everything that I have given to you is not just from my experience, but what I have obtained through all of these different resources, the underwriters, agents and companies. So, I just want to let you have that background, so it's not just coming from me. I have been bonding for 16 years and worked for one of the other largest bonding agencies in the valley, Post Insurance, for years as a bonding agent. So, you know, it's something contractors, yes, they definitely have a relationship with the bonding companies. That is also something developers can build exactly the same, they provide the same information regarding their financial background, their experience, their workloads, banking relationship, bank letters, and they can build those same relationships and get bonds specific to what their industry is just like the contractors do. As far as the protection for the developer, a lot of their bonding companies will suggest that the contractor bond back to them if they feel that there is a concern with that contractor, if they, you have, have been in business 40 years, their financials are great, they haven't -- you know, they have made it through the economy no problems, they may say, yeah, you don't need to worry about it, this guy's great, you know. But a lot of times they will come back and say we are seeing they are dropping in their financials and we would suggest that you, then, in turn, get a bond to yourself. Bird: I'm sure there is some of the developers out there that keep their own buildings and stuff that insure through insurance companies, so that their bonding is nothing. The Meridian City Council June 28, 2011 Page 19 of 32 bonding just is thrown in because they insure all their buildings and everything, the developers. A lot of that is thrown in. Barnes: Not typically, actually, because usually the companies that handle the surety are different underlying companies and -- Bird: Same agent. You usually go through the same agent. Barnes: Yes. You would typically go through the same agent. That's correct. Bird: Thank you very much, Stephanie. Barnes: No problem, Mr. Bird. Anything else? De Weerd: While Stephanie is up here any further questions from Council? Thank you. Council, any further information needed or staff? Information needed to be provided? Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: I have a comment. I know this is something that staff's really been working hard on and stuff, but right -- I -- I don't know if we -- I think the suggestion might -- to go back and see if we can't get with the developers and get this thing a little better, I -- I know W.H. Moore, Van Auker, all them and they -- the reason they like it is because we added bonds to it. They basically say that, because where there is credit and cash, tie up cash. They like the UDC change, because I -- I haven't heard anybody really complain about the two year length or the 25 percent -- 125. But I'm really concerned about the developers and private businesses, but I'm also very concerned about our rate payers being a rate payer and a taxpayer. I -- I think we got to be able to sit down -- I know we have. I know you have had meetings -- and, Tom, I appreciate the paper, the hard copy give us of the history and everything. But I'm for one right now that I would like to see us go back, maybe invite these guys back in. BCA -- you went to BCA. And let's see if we can't work out some detail and bring in some bonding companies. I mean, you know, Stephanie can bring in an expert at bonding, you know, or something like that to answer some real good questions and take a look at what these other states -- how they are doing and stuff, because I guess we don't have a track record in Idaho. And I'm not scared of being the first in line, but I do want to do it right and I want to be fair to the taxpayers, rate payers, and the developers or the contractors. I don't care what you call it. That's my two cents worth. De Weerd: Mr. Barry. Barry: Madam Mayor, I don't know if you want me to a -- as the applicant for the city to make closing remarks or just respond to some of the questions and issues that have been raised and comments of the evening, so I will ask you what your pleasure is. Meridian City Council June 28, 2011 Page 20 of 32 De Weerd: I think certainly a response is -- is good. That might elicit some further questions, but -- Barry: Great. Thank you. Glad to do it. Mr. Bird, the suggestion that you have made is -- I appreciate very much, but I do want you to know that that work has been done and we have, again, worked 20 meetings internally on this issue. We brought four bonding experts to the meetings. We have had meetings with the developers on multiple occasions. We have had private meetings with specific developers as well. Exchanged numerous e-mails. Had numerous phone calls with many developers. Have also talked with counsel for ICRMP. We have also gotten information from -- from the International Risk Management Agency. All of that work has been done and it's a ten month project, as you know. The developers were brought in in December and given our proposal. That has been discussed and discussed and discussed since December. I believe that -- and it's difficult for me to say this, because I think the Council all know my desire in trying to achieve awin-win and I will go virtually to the ends of the earth to try to find a win-win and I'm sad to report that in some -- in at least one developer's eyes we haven't achieved the win-win and I'm sorry for that. But we are bound by the state Constitution. We are bound by fiscal policy. We are bond by fiduciary responsibility we have to our rate payers and our taxpayers and I was asked to take the time, develop a process, get the input to develop what is the best recommendation for the rate payers and taxpayers. We expanded that to include what would be least burdensome for development and that's what we believe we have provided for you tonight. This proposal that has been discussed is about options. There is no requirement ever to get a bond with the city. There are a lot of jurisdictions out there that will require a bond and a bond only. There is no letter of credit. There is no cash. There is none of that. There are other jurisdictions like we were and still are, which don't allow bonds. These are all options and we feel like we have brought more options to the table than we have had previously. There were a number of comments that I wanted to respond to that Amanda had mentioned, which I thought were good comments. One of them is regarding the scope of the ordinance. I'll just walk you down these really quick. She asked the question do two problems warrant this ordinance and our answer is absolutely and the two problems we have identified were by looking at a number of projects in the last 18 months. So, in an 18 month period of time we found two major problems. The culmination of the dollar figure the city is going to have to pay out and has already paid out is around 200,000 dollars. I think that's sufficient for us to require a change in what we do. Additionally, would this ordinance have really addressed those two problems and the answer is unequivocally, yes, it would have. We would have had a two year warranty, we would have had a bond in place, and when that project was found to be deficient we would have had in that particular case that was mentioned the financial resources, without the burden of the taxpayer or the rate payer to take care of that problem. So, absolutely it would have been solved. Also are the benchmarking jurisdictions the correct jurisdictions? We did not mask, frame, selectively omit any jurisdictions. We looked at jurisdictions that were adjacent to us with regard to states. Twenty-five of them between 10,000 and 200,000 population. If you look at your list it's in your list of exhibits. There are jurisdictions all over the place. Salt Lake City. Meridian City Council June 28, 2011 Page 21 of 32 Redmond, Washington. Bellevue, Washington. These -- Bend, Oregon. These are cities that have a similar development focus as we do and respect their developing communities as well. So, wanted to comment on that. Also, is the developer really best responsible for the warranty and, obviously, they are. State constitution doesn't allow for the developer in the case of pertormance, which includes warranty, to allow the city to contract with the contractor on that. The development agreement is with the city. The contract is with the city and developer. There are the other jurisdictions, all the other insurance representatives, bond representatives, counsel representatives -- and I'm talking legal counsel representatives -- have advised against it. It's been done all over the country. It's not currently popular here in Idaho, that is true, but we are behind the times. It's not that we are re-inventing the wheel here, we are adopting what are best management practices all around the country. Additionally, we have been told that a developer -- and I would agree that some developers may not walk away from a project if there is a problem relating to their contractor's work, that there would be the kind of professionalism and ethical approach that many developers would take in fulfilling their contract's obligations if the contractor failed that. I would agree, we have very very good developers. The developer who is concerned about this issue I would agree also is very a good developer. However, we cannot selectively choose which developer we are going to trust and which one we can't. We have to be fair across the board with all developers. And, additionally, we also are going to be vulnerable in the case of warranty for the issuance of certificates of occupancy, as well as building permits in event that relationship deteriorates and I have provided you three pages of information about the challenges associated with that. Lastly, there has been a request to remand this back to staff and to spend more time on this and as I have outlined to you before we have spent ten months on this and since December -- what is that? Five months of it, six months of it has been with the developing community. We feel that we have vetted every idea, every concept, and given this our best effort and if this Council so desires to remand this back to staff, we will continue to do that. But I will tell you from where Isit -- and I believe the staff would tell you the same thing -- and the bond agents that we have had at the table would tell you the same thing -- the suggestion that's being brought to you tonight by this particular developer is not one that's been advised by anyone we have talked to and we have talked to a dozen or so professionals beyond the scope or so of our -- of our warranty meetings. So, I don't know if Mr. Nary has anything to add about that, but, honestly, if -- I mean we would be happy to continue to talk with folks about it, but, quite frankly, this is the recommendation where we have landed after the ten months of work and doing just the work that Mr. Bird has described. So, again, the bond is an option. It's not a requirement. Just assure you of some kind of form of the requirement. So, I'll pause there. I don't know if staff has any comment or anything else to add. Freckleton: Madam Mayor? De Weerd: Yes, Bruce. Freckleton: I would just like to add -- and I stated this before on the record, but in my 19 years with the city this particular proposal has -- has received the greatest depth of Meridian City Council June 28, 2017 Page 22 of 32 effort of anything that I have ever been involved with. You know, we have brought in -- we have brought in numerous representatives, you know, 32 meetings now -- 33 meetings now in regards to this. It has -- it has been -- I won't say exhaustive process, but it has been a very in depth, very well thought out, very thorough process that we have gone through. I will just leave it at that. Stewart: Madam Mayor? De Weerd: I'm sorry. Warren. Yes. Stewart: That's okay. Madam Mayor, Members of the Council, I think it's also -- it would be fair to say that we are in no particular hurry in some sense, but I will say this: We have on a consistent basis new projects coming into the city all the time and the longer we wait to protect ourselves against warranty issues the more projects enter the queue that potentially could cause us a problem. So, although on the one hand you can say, you know, we had these two issues and maybe we are not under a lot of pressure, I wouldn't want to give the impression that there isn't benefit in doing it sooner rather than later. Certainly there is a benefit to protecting ourselves on projects that are going through the queue now. De Weerd: Thank you. Bird: Madam Mayor? De Weerd: Mr. Bird. Bird: Tom, I just got one question. Under Industrial Specialists, I know Stephanie writes bonds -- or gets bonds. Brenda Smith from Payne Financial and John Ritchie from Payne Financial, are they -- do they -- are they a bonding company or do they write bonds or -- Barry: As I answer that question I'm going to turn behind my shoulder to make sure that I'm not incorrect, but I believe, yes, they are in the bonding field and they are -- one of them I believe is an underwriter; is that right? Okay. Bird: I can't hear her De Weerd: Well, neither can the record Barry: Yeah. Mrs. Barnes said that they are both agents of bond companies Bird: Okay. They are agents, they are not bonds -- bonding people. Barry: But they have consulted with underwriters; is that correct? Meridian City Council June 28, 2011 Page 23 of 32 Bird: Okay. They are like Mrs. Barnes. And, then, tell us what I-n-s-c-o and D-i-c-o stand for, Tom. Barry: I'm sorry, could you point me to -- Bird: What do those letters stand for? Barry: Where are you at here, Mr. Bird? Bird: I am at Industry Specialists. I-n-s-c-o -- Barry: Oh. Insco Dico. Bird: Yeah. Barry: That's the actual company name. Insco Dico. Bird: And they are an insurance underwriter, too? Barry: Bonding. Yeah. I think she probably should come on up. De Weerd: Yes, please. Barnes: Stephanie Barnes. All American Insurance, Meridian. Yes, Insco Dico is a bonding company that is one of the biggest subdivision bonding companies that there is and Tom Bowser is the underwriter for the local office in Boise. Bird: And they are out of Morton? Barnes: No. Morton is an agency, just like All American Insurance is and Morton accesses Tom Bowser as an underwriter on behalf of Insco Dico, the company. Bird: They are like Allied -- Barnes: Correct. Correct. And I have also talked to underwriters at Hartford Bonding, Travelers Casualty and Surety Bonding, Surety Placement Services, which is another subdivision -- Bird: These are actually the underwriters? Or the bonding? Barnes: Tom Bowser is an underwriter. That's why we brought him in. Bird: And this -- this -- oh, Tom. Okay. He's an underwriter. Barnes: Yes. Correct. And I believe that's who Morton contacted as well. Meridian City Council June 28, 2011 Page 24 of 32 Bird: Yeah. Okay. Thank you very much, Stephanie. Barnes: Sure. Bird: I won't bring you up anymore. Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: I may be expressing an alternate view here, I guess, and to some extent Warren expressed what I'm thinking. It was some time ago -- as a matter of fact, way back when I was liaison to the Public Works Department that Tom mentioned this subject to me one day and my immediate reaction was, oh, you're absolutely right, we need to do this tomorrow. Now, I can't tell you which day we are going to take on too much risk, but this has gone through a pretty serious process of vetting it. Every day we have put it off we do take on another risk possibly or -- and we don't know which one of those is the one that's going to be harmful to us. I personally feel that this has been studied enough that we need to at least get this protection in place and, then, if we need to keep looking at it after that we can keep looking at it. But I think we need to take the other tact of putting this in place. Now, I agree with perhaps putting this off one more week to change the language to -- as approved by resolution of the Council and making that chart for our resolution if we could do that next week. We have a small agenda next week. But this week is a day short for everybody that's working, because there is a holiday in it. But I feel a sense of urgency. I feel a sense of rightness about this and I feel a sense of urgency about this and I'm satisfied that the proper thought has been put into it. It doesn't mean we can't review it after it's an ordinance, but Ithink -- I personally feel we need to come down on the side of lets get this in and, then, tweak it after that if we need to. De Weerd: Mr. Nary, did you have a comment? Nary: Madam Mayor, Members of the Council, Iguess I -- what you have, I think, in front of you, just so the parts are clear, I think we have --Ithink we have resolved your concern in regards to the UDC amendment and the resolution process and separating it out. So, the ordinance only addresses public works infrastructure. So, you don't have to concern yourself about the 110 versus 125. The performance surety portion of the ordinance I think is -- we either -- we either do it or we don't. I don't think there is any way to satisfy -- I was re-reading the letters from the opposition folks that have provided that and they either just don't like it, because there is an additional cost, and they don't want to provide the bond. Again, the bond's an option. We don't have any alternative if they want to provide a bond that it has to be from them, because the state Constitution doesn't allow us to do a dual obligee bond. So, you either would concur to have a bond and it would have to be from the developer or you don't provide that as an option. On the warranty -- on the warranty side. Really, the issue in front of you is who provides it. And as Tom stated, nobody I could find could find in the best interest of the city that Meridian City Council June 28, 2011 Page 25 of 32 someone else other than the developer should provide it. And one of the simplest examples I can see is the one that was relevant to why we began this process. When you have contractors provide bonds -- and counsel for ICRMP had a very similar experience in another city than ours -- when you have a contractor provide a bond you still -- if everything works out great it's not a problem. But when things don't work out great, which occasionally happens, you have to execute on that bond. When you have a contractor provide it what would happen -- what we were concerned with in the city's protection and what had happened in other cities is you have a dispute with a contractor over what is the root cause of the problem. Was it caused by their construction? Was it caused by somebody else? In the project we had in our city that was exactly what the contractor claimed. They had installed the infrastructure properly and somebody else later had caused it to fail, whether it was the person paving the street, whether it's the person that was building houses, whether they were dumping debris into the manhole -- but it wasn't them. They built it right, somebody else messed it up. If they are the bond person we are going to be stuck arguing with them over who was the root cause of this. At the same time the developer is not getting a building permit and I guarantee he was going to be calling all of you. Even if it's in their development agreement, even if it's clear up front, I guarantee he's going to be squawking that he can't control any of this, right, because he's not involved, he's not the person on the bond, he's not in a relationship with the city on this particular point, yet he can't get the ability to develop his property, because this failure happened and nobody could figure out who is at fault for it. The reason we felt -- and why ICRMP and every -- both bonding people, insurance people, and lawyers all say the developer is in the best position is because he is in the best position to make it happen. He has all the -- he has all the stake in the game to make this occur. He has the bond. He's the bonding person with his company to provide it. If there is a dispute over cause, again, from the city's perspective we don't care, we are saying, developer, our bond's with you, fix it or no building permits. Rather than we are going to go over here to the contractor and spend staff's time, money, either managing it or staff's time and money legally fighting it, just to figure out who is at fault and whether we could secure that and at that particular point, honestly, Council, the 20 percent is probably going to get eaten up. They are in the best position to do that and Iwill -- you know, all of these folks that have provided opposition are very good developers and, honestly, if everybody operated like most of these folks that are providing you comment, we probably don't need this. But we have to deal with the people that don't operate as well as these people that have commented to you. We have to deal with everybody and in the best interest of the city that's what we brought to you and that's what everybody has advised us in the best interest of the city. Is it in the best interest or is it -- is it a win-win for everybody? Does it satisfy some of the folks that are in opposition? I know it doesn't. But all I can tell you at the end of the day is in our belief it's the best protection for the city going forward. If we have to execute it, one person, we don't have to argue whether it was your road builder that wrecked your sewer, it wasn't your builders that wrecked your -- that damaged your infrastructure, it doesn't make any difference. It's your project, it's your bond, you take care of it if you want another building permit and I -- I'm assured -- in fact, one of the things Nancy Strickland, ICRMP counsel said, is whenever I have held the line on this they have always been able to seem to get it. So, all I can tell you is we have been through it. I Meridian City Council June 28, 2011 Page 26 of 32 don't think when re-reading what their concerns are, we can certainly meet with them again, but I honestly don't think we can satisfy those concerns in just meeting with them again. I think -- I think realistically we are at a point that we are only talking about the warranty, we are only talking about the length of it, and we are really only talking about who provides it. And in our opinion I don't think any of those things will change by -- by continuing to vet it. I think we have vetted it. I just don't think there is a different answer that's going to be satisfactory. Rountree: Madam Mayor? De Weerd: Mr. Rountree. Rountree: I just have one final question and it really hasn't got a thing to do with this, but, Mr. Nary, what do we put in the development agreement, which is a contractual document between us and the developer, that goes with the property? Because some of these issues come about because the properties exchange hands. Is there language in the development agreement or is there a standard clause that we put in the development agreement that would get to this issue as well? Because to me that's a lot of the problem we have had are because of the exchanges of ownerships and we have been very successful recently in some litigation with respect to actions we have taken that were included in the development agreement and upheld by -- by the courts, all the way to the Supreme Court. So, is there some standard language -- it might be onerous -- that could be added to a development agreement as an -- as yet another option? And the developer could agree to -- I accept that language in the development agreement or be much better to get a letter of credit or to do the surety bonding. But it seems to me if we can get it contractually there that would be the best. Nary: Madam Mayor, Members of the Council, Council Member Rountree, actually, that is part of our project. That's just a piece that hasn't come up yet, because you remember -- if you notice at the tail end of this ordinance there is not -- an effective date hasn't been put in -- Rountree: Right. Nary: -- because we recognize there was some -- a few other parts that need to be implemented, as well as we need to give time to the development community to be prepared for this. So, we did discuss putting this in development agreements. Part of the thought behind an ordinance is we do have developments that come through that are not related to a development agreement. We can only do them at annexation and we do them at -- at rezone. So, we do have some parcels -- not very many, but we think going forward in the future we may have more, because, again, we have -- we don't have a lot of undeveloped land outside the city limits anymore, as we used to. But we did think of that. And we did intend to put that into development agreements as well. I mean I think buttoning it up in both the development agreement and an ordinance certainly makes it crystal clear. What we didn't want is I guess the -- what sometimes happens is that every development agreement that you're going to get -- and we don't Meridian City Council June 28, 2011 Page 27 of 32 have it in ordinance, we haven't made a policy as a city, but we are just going to do it piece by piece -- you're going to have a number of people standing up in front of you saying we don't need it for this one. We are good. It's going to be fine. Don't worry about it. And I think putting the Council or future Councils on that decision point on every single project, with no other policy statements behind it, really puts, again, more of the horns of a dilemma on the Council -- Rountree: I agree. Nary: --that's unreasonable. Rountree: I agree. De Weerd: Anything, Pete? Friedman: Madam Mayor, Council, no. I was just -- I had one of those thoughts going through my head, but it didn't quite reach its conclusion. I think Mr. Nary answered the question for me. Rountree: Yeah. De Weerd: Yes. Other comments, questions from Council? Rountree: Madam Mayor, I -- at this point I read the testimony -- testimony or comments, I guess, if you will, from a number of folks and there are a number of folks in the business that have said that they welcome the opportunity to have this option and they are not upset or openly disturbed by this action being proposed by the city. We have a couple that are. I believe that the comments that we have received in writing from them have been addressed by staff and staff's recommendation is that some of their thoughts and issues have not proven out in their analysis and in their investigation through the bonding underwriters, the bonding agents, other communities, our insurer, et cetera. So, I would suggest that since this is just a comment period, that we calendar this ordinance for its first official reading next week and continue the public hearing on ZOA until after the third reading of this ordinance and, then, take the appropriate action on either approving or not approving the ordinance and depending on that action, then, act on the UDC amendment. Zaremba: Madam Mayor? De Weerd: Mr. Zaremba. Zaremba: I like that suggestion. Are you still including in that suggestion that -- the change to having the percentage set by resolution? Rountree: The change to the UDC to set -- establish the rates by resolution. Meridian City Council June 28, 2011 Page 28 of 32 Zaremba: If that was a motion I would second it. De Weerd: I don't know if it was a motion. It wasn't in the form of one. Rountree: It wasn't in the form of a motion, but open for discussion and -- De Weerd: I guess I just have -- again, it seems odd that the -- that one of the developers who has experienced the -- I mean the -- the risk that you're trying to avoid is the one that is opposed to this or questioning it and I think that Amanda has brought up economic development and we have done a risk analysis, have you not, in what the potential cost is and what the offset is, both to our rate payers or potential job creation. What would be the cost to -- and if you took economic development is -- what is that additional cost? I know Mr. Nary says it does come with additional cost. Is it only in the bonds that you get the additional cost or is it the 125 percent and two year time frame? What is the cost to that? Barry: Is that a question, Madam Mayor? De Weerd: That is a question. Barry: Okay. We did not -- De Weerd: I did say what is the cost to that. Barry: You did, but Ididn't -- De Weerd: Okay. Barry: -- know if it was rhetorical or not. De Weerd: I thought maybe I did, but -- Barry: Yeah. Yeah. So, we did do an analysis on the actual cost of the bond, particularly for the warranty side. All that stuff is in your packet and we said, essentially, it's about 20 to 30 dollars on average per lot that the developer is going to have to carry the bond cost for. So, a hundred lot plat, to get 500,000 thousand dollars worth of improvements covered at the 20 percent rate, just as what was described in your -- in your packets, would cost the developer about 2,500 dollars to get that kind of coverage and get the city two years of protection. Now, on the other side what's the cost to the city? I could tell you the cost to the city currently is 114,000 dollars, with one of these projects in the last 18 months that our rate payers are having to pay for -- have already paid for I should say -- directly resulting from a scenario that we were trying to put this proposal in to avoid. I can also tell you that it appears that we will be spending another 90,000 dollars to correct a similar problem on the second project that we found, again, within the 18 month period. So, this particular program, again, I believe shifts the responsibility, the risk, and the liability from our existing rate payers and citizens back Meridian City Council June 28, 2011 Page 29 of 32 onto the developing community where I believe it belongs under a growth pays for growth scenario. Now, I cannot get to you what the actual cost is for, you know, having to go to 125 percent versus 110. On a bond it's virtually inconsequential, because a bond is a percentage of the amount that's being requested and that percentage, as has been discussed, is about 1.75 percent. So, 1.75 percent of 110 percent or 1.75 percent of 125 percent is virtually inconsequential, regardless of the number in the scheme of things. And on the warranty, again, I just described the example where we know what our cost is, we know what we have -- what we vetted through the insurance providers and the bond agents and I can tell you it doesn't balance right now. The risk is -- without this proposal the risk is entirely on the city's shoulders. So, I don't know if that adequately answers your question or not. De Weerd: Okay. Now, what is the cost for commercial? Barry: Commercial bonding? De Weerd: Uh-huh. Barry: Well, again, we are talking about -- there is lots of different types of bonds again, you know, there is contractor bonds -- De Weerd: No. I mean commercial projects. You mentioned the residential per lot. Barry: It's pretty much the same bonding rates. So, infrastructure is infrastructure, whether it has a commercial end use or it has a residential end use. The installation of water and sewer, storm water, and reclaimed water infrastructure is the same, to provide services to that particular property. De Weerd: Okay. Okay. Anything further? Hoaglun: Well, Madam Mayor, I just wanted to comment that, you know, we have got two major goals -- I know the Mayor and this Council supported all along and that's number one, keeping business costs and regulations as low and as reasonable as possible. I mean that's something we aspire to. We want our businesses to thrive. We want them to go out there and break ground and create jobs and do those things. Our other goal is protecting taxpayers or in this case the rate payers from increasing rates, keeping them as low as possible and what we have here is a collision of two very worthy goals and we have got to figure -- figure that out. One of the options, if developers don't like this and as, Mayor, I think you alluded to this -- is if we are going to protect the rate payers from having to pay, then, if the project goes bankrupt the next developer that comes in, they are going to have to pay that to fix and I don't think they are going to be willing to do that. It wasn't their fault, they are coming in rescuing a project. I'm sure the bank give them a good deal. I'm sure the bank still wants the money and they are going to walk into a situation where I'm going to have to pay how much to fix this? And I think that bond gives them some cover to have a project they can walk into knowing that that infrastructure is ready to go or in the process of being Meridian City Council June 28, 2011 Page 30 of 32 ready to go if repairs are being made and they will not have to bear that cost. But at the same time the rate payers don't have to bear that cost and should not have to bear that cost. We did that for banks a few years back and -- on Wall Street and people were not happy about that. When somebody takes a risk and they fail, what happens? Who pays? And they spoke loud and clear that it shouldn't be -- shouldn't be tax payers or in this case rate payers. So, I like Councilman Rountree's suggestion to -- to move this forward and go through the reading calendars, make that change on that and -- and, then, vote on it at the appropriate time. Rountree: Madam Mayor? De Weerd: Mr. Rountree. Rountree: I move that we move Item 7-B to its first reading for July 5th, 2011, and continue the public hearing on ZOA 11-002 until the third reading of the ordinance number 11-1485, at which point this the city would take action, depending on the action it takes on the pending ordinance. Zaremba: Second. De Weerd: I have a motion and a second. Would you like to repeat that motion? Rountree: One more time. De Weerd: No. Mr. Nary. Nary: Madam Mayor, Council Member Rountree, would you want to make Item A July 19th? That would be the third week? Rountree: If that's at the point of the third reading, yes. Nary: Yes. De Weerd: Okay. Change noted in the motion. Anything further? Discussion? This is a continuation and asked to bring this back for first reading. Do I need a voice vote on that? Nary: Voice vote is enough. De Weerd: Okay. Rountree: Madam Mayor, to clarify my second motion making that my motion also included that the language in the UDC include the resolution table for rates. Nary: Yes. Meridian City Council June 28, 2011 Page 31 of 32 Zaremba: Second agrees. De Weerd: Okay. All those in favor say aye. All ayes. Motion carried. MOTION CARRIED: ALL AYES. De Weerd: Thank you. And thank you for being here this evening. Stephanie, you have been very diligent. Item 8: Future Meeting Topics De Weerd: Council, Item No. 8 is future meeting topics. Does anyone have anything for future City Council meetings? Rountree: I have nothing. De Weerd: Okay. I will let you know today Erin from HR -- and I -- I call her Erin Light. I got it from the Miller -- because she -- she is the blond Erin. So, Erin Light and I went to Communities In Motion and picked up an award that the City of Meridian received, platinum level, for May In Motion 2011 as a transportation champion. Erin has been our champion -- kind of that point person behind alternative transportation program in the city and has been at least the energy behind that and we had some participation this year. There is -- the wellness committee is -- is having discussion on other things that the city can be doing and we are very proud to -- to be representatives of the city to pick this up. So, I wanted you to know that. Rountree: Very nice and thank you. Zaremba: Uh-huh. Rountree: Thanks to Erin. Nary: Thank you, Mayor. De Weerd: Our thanks to HR and for what you're doing there. Zaremba: Congratulations. Yes. Hoaglun: Yes. De Weerd: And the wellness committee, please. Nary: Thank you. De Weerd: If there is no further business, Council, I would entertain a motion to adjourn. Meridian City Council June 28, 2011 Page 32 of 32 Rountree: Madam Mayor, Imove -- Hoaglun: Second. De Weerd: All those in favor say aye. All ayes. Motion carries. MOTION CARRIED: ALL AYES. De Weerd: We are adjourned. MEETING ADJOURNED AT 8:27 P.M. (AUDIO RECORDING ON FILE OF THESE PROCEEDINGS) f~~~?~ MA OR TA De WEERD ATTEST: (N~ JAY EE