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HomeMy WebLinkAbout01/22/1996City Council Work Session January 22, 1996 5:30 p.m. Large Conference Room Members present: Mayor Rooff, Jordan, Murphy, Anders, Getty, Krizek, Collier, Mollenhoff. It was moved by Jordan, seconded by Collier to approve the agenda as proposed. Ayes: Seven. Motion carried. Deputy City Clerk Nancy Eckert reviewed a proposed rate increase for monthly parking customers using the City's parking ramps and lots. Staff is proposing a five dollar per month increase for all monthly parkers. A recent survey has shown that Waterloo parking fees are on the low end of the fees charged in the other major cities in Iowa. The increase in fees is needed to offset increased operational costs for major renovations to the city's bots and ramps. The parking fund operates as an enterprise fund, with revenues used to offset expenditures which include both capital and budgeted operations costs. A list of the needed capital improvements and their estimated costs for parking improvements in the downtown area was provided. Staff presented the information to the Waterloo Downtown Council and the Waterloo Redevelopment Authority. Both boards voted to support the five dollar per month increase. The Downtown Council also prioritized their needs for parking improvements and provided a list of priorities to the council for review. It was moved by Mollenhoff, seconded by Jordan to approve the proposed rate increase. Further discussion was heard as Councilperson Krizek stated her support for the rate increase to assist with defraying the cost of improvements. She attended the Waterloo Redevelopment Authority meeting and expressed the support of the group with one dissenting vote noted. Councilperson Getty called for the question. The vote on the question was taken with the following results. Ayes: Seven. A vote on the above motion to approve the rates was taken with the following results. Ayes: Seven. Motion carried. With no further business before the council it was moved by Jordan, seconded by Murphy to adjourn the meeting at 6:45 p.m. Ayes: Seven. Motion carried. Susan Fangman City Clerk City Council Work Session January 22, 1996 4:00 p.m. Large Conference Room Members present: Mayor Rooff, Mollenhoff, Krizek, Getty, Anders, Jordan Members absent: Collier, Murphy It was moved by Jordan, seconded by Mollenhoff to approve the agenda as proposed. Ayes: Five. Absent: Murphy, Collier. Motion carried. City Attorney Jim Walsh presented the final draft of the marketing agreement between Koll Real Estate Group and the city. The contract period is two years with the right to ninety days' notice for cancellation without cause. The contract defines the general duties, costs and responsibilities of KREG. It adopts a general plan and defines the City or Airport Development Authority's responsibilities and obligation to transfer land at farmland value when needed. The Airport and City must give an option to Koll for all land not used for the airport facility. The option to lease or purchase property requires development within a three to five years time span. If Koll makes a profit on the sale of a development, then Koll gets seventy-five percent of the profit and the city receives twenty-five percent. The contract provides for marketing and consulting fees. Other sections also define insurance responsibility, hazardous materials liability and a non -competition clause. The Airport Development Authority will be established to have similar functions as the Library Board of Trustees or the Airport Commission. The authority is being set up to oversee management of the development area. Murphy now present at 4:20 p.m. The Authority will have established attendance requirements and provide for appointment of alternatives so that action may always be taken in a timely manner. Councilperson Getty requested that a single alternate be approved by the council and/or authority. The authority has power to spend only the funds as budgeted by the city council or raised for economic development. Mayor Rooff issued a chronology of events which lead to the partnership with Koll. Koll was brought into a couple of economic development efforts with American Propolia and Micron. Koll provided assistance or analysis for both proposals. After working on those projects Koll expressed interest to the City and the Airport Commission for development of the airport. Mayor Rooff appointed an Airport Development Review Committee in the spring and they along with the Airport Commission reviewed the marketing plan that Koll developed. The plan received approval from both the committee and commission late this summer and a visit to Koll was set for the fall. After visiting California the six member negotiating team returned with a tentative agreement. Mayor Rooff presented the agreement to the metropolitan economic development groups and to the city council. That agreement is what is before the mayor and council for discussion. Mayor Rooff invited general questions from the council about the agreement. Councilperson Krizek asked if anyone contacted other projects Koll has done? City Attorney Jim Walsh indicated that he has no knowledge of anyone personally contacting other Koll clients and stated that Koll has indicated that this is the first public/private cooperative effort that they have undertaken. Airport Commissioner Bob Petersen stated that in his opinion the client list for Koll speaks for itself. Major companies such as Mercedes-Benz and Frito Lay have worked with Koll on major projects world wide. Council Work Session January 22, 1996 Page 2 Councilperson Anders asked Walsh to review section 6 which details how the Authority will recover the cost of development. The city leases the land to Koll and then if Koll sells a development, Koll receives a 7.5% management fee and then splits any profits 75/25 with the City. He asked what other financial responsibilities the City would incur. Walsh stated that through economic development the City already creates opportunities such as assisting with cost of purchase or subsidizing improvements. With this proposed contract the City recovers in three possible ways. First through the sale of the farmland, secondly in the receipt of twenty-five percent of profit on any sales and thirdly through property tax revenue on all developments. It was suggested that in section 1.2, Koll should establish within forty-five days a list of potential users and specific details about possible jobs or developments. Councilperson Murphy asked that if the termination clause is optioned at ninety days what would be the disposition of land that is optioned. Walsh explained that if any part of the contract is completed then the project can continue with the city's obligation to comply with the other terms of the contract outside the marketing arrangements. Councilperson Krizek asked for an explanation of the purpose of the Airport Development Authority. Mayor Rooff explained that the Authority would be reviewing contracts proposed by Koll and approving contracts that fit in with the master plan of the Airport. The Authority would also act as an economic development arm of the city to determine if a tax increment financing agreement is needed but the council will still have final approval. City Planner Don Temeyer provided copies of a proposed budget and cost benefit analysis of the project over a five year period. The development fees are estimated at 2.7 Million dollars, infrastructure improvements for water, sewer and road work should be in the area of 2.8 Million dollars and the airport improvements are estimated at 2.88 Million dollars with the airport budget funding ten percent of the improvements and the FAA providing ninety percent matching funds. It is estimated that $287,000 will be needed to pay the debt for all the first year improvements which would mean that a minimum of 7.5 Million dollars of new building values will be needed for generating taxes. Mayor Rooff explained that the purpose of the public hearing Wednesday is to gain information on the willingness of parties interested in economic development. City Attorney Walsh suggested the council decide what share of the development cost the City agrees to finance and to make those funds available contingent upon other groups raising the remaining funds. Walsh also identified the Rath Revolving Loan program as a source for the city's share of funds. The loan could be repaid with tax revenues or the profit sharing on the sale of land. Mayor Rooff also reported that the city of Cedar Falls has not agreed to support the plan and it is estimated that their only participation will be when improvements are needed for Leversee Road. Councilperson Jordan asked why the $25,000 monthly cost for a marketing agreement is needed with no guarantee of performance. Airport Commissoner Bob Heaton explained that no one is happy about the $25,000 fee and members have tried to negotiate this out of the contract but they are not able to do so. However during the trip to California KREG agreed to a 75/25 split on any profits. The Airport has had a plan for development for over twenty years. They tried to option land to Ryan development but there are no visible developments to date. No other developers have surfaced during the six months of negotiation with Koll on this contract. Koll's expertise is in development and they look on it as a way to expand Council Work Session January 22, 1996 Page 3 efforts out of the West Coast. Heaton stated that Koll is risking their reputation. There is no way to guarantee performance and he feels that we must have the faith to believe Koll has the capacity and the commitment to complete this project. Jordan asked if this a common contract for Koll. Heaton stated that contracts had not been developed in this manner however they are normally paid to develop a project. Jim Walsh added that when the contract was presented to Koll's attorney in California he was surprised at the agreement. The president of Koll also stated that this is not their usual agreement but they are starting to develop fee for service agreements. Collier now present at 5:10 p.m. Mayor Rooff opened the meeting to public comment after all the questions from the council had been answered. Tunis Den Hartog stated that there is no solace in a three month cancellation clause because of the need to allow a minimum of twenty-four months for development time. Den Hartog pointed out that much of the documentation from Koll referenced all divisions of the Koll group but only one company is signing the contract. Den Hartog asked for a copy of the limits that the Airport Development Authority would operate under. He stated that if funds are being budgeted then that would mean there is an investment of city funds. He is concerned with the possibility that appointment to the authority would be perhaps limited to only economic development investors. Councilperson Anders asked if the review committee agreed with a two year measurement for economic development success. Bob Heaton stated that some measurement will be available with Koll staff assisting in the plan development and budget. Everyone hopes that it is a long term contract but the city will be able to see development action and the costs associated with it. Kathy Oberle stated that she has many unanswered questions right now. She feels that the public will be asking for answers to questions that the city staff states are unknown at this time. She reminded everyone that economic development funds take time to get awarded. Funding prospects such as RISE grants require at least a one year time lag. Oberle stated that she feels Koll shouldn't be treated any differently than any other business asking for economic funding. They should be required to present a prospectus and economic development plan. Oberle raised the issue whether being aggressive in one section of the community will conflict with the ability to develop other areas such as downtown or Crossroads. She reminded everyone that even if economic development funds are used the taxpayers will ultimately pay for these costs. Art Hellum supported Councilperson Krizek's recommendation to check on Koll's performance. He stated that he perceives a lack of due diligence by the city. Hellum fails to see the need for appointment of the Airport Development Authority until the agreement has been approved by the Airport Commission and the city council. Hellum stated that the Community Development Board stated it would fund only infrastructure improvements, demolition or neighborhood improvements. Rick Young asked if other real estate firms had been offered the same chance as Koll. He reported that he contacted some Chicago real estate brokers to get their analysis of Koll's proposal. One broker reported that Koll has been very strong in the management business but is new in providing development services. He knows that they bought one firm in Chicago and is aware that many employees have left the firm since its acquisition but that could be reflective of the change in culture. He knew of no firm Council Work Session January 22, 1996 Page 4 entering into such agreements and stated that it is common practice for the development company to get an option and then receive payment upon performance. The second broker he spoke with had provided marketing for an office building in Madison, Wisconsin and reported that the marketing agreement was for much less than $300,000 and even after heavy marketing and mailings there was a lack of performance. He didn't believe anyone could guarantee results in the economic development arena that would provide value for the investment of $300,000. The third person Young spoke with was very high on Bob Koll, stating Koll doesn't like to invest his own money in this type of project. He feels that if Koll is committed to the project he would perform. He was suspect of the contract stating in his opinion it was too loose. He recommended shortening the contract cancellation clause because once canceled the business will probably stop working for you. Kevan Cortright stated that in the real estate business this type of contract is very unusual with no performance required on the front end of a deal. He encouraged interviewing major midwest real estate brokers for gaining interest in the development of the area. He stated that as a broker in the area he did not have the contacts needed to attract the development that is needed. Cortright perceives that the biggest hurdle will be to find a definite way to recoil and recover expenses if there is no concrete evidence of performance. With no further public comment it was moved by Getty, seconded by Jordan to adjourn the meeting at 5:40 p.m. Ayes: Seven. Motion carried. Susan Fangman City Clerk