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HomeMy WebLinkAbout1988-11-14 1 MINUTES OF THE MEETING OF THE CITY COMMISSION BOZEMAN, MONTANA November 14, 1988 ************************ The Commission of the City of Bozeman met in regular session in the Commission Room, Municipal Building, November 14, 1988, at 2:00 p.m. Present were Mayor Stiff, Commissioner I Hawks, Commissioner Vant Hull, Commissioner Martel, Commissioner Goehrung, City Manager Wysocki, City Attorney Becker and Clerk of the Commission Sullivan. The meeting was opened with the Pledge of Allegiance and a moment of silence. None of the Commissioners requested that any of the Consent Items be removed for dis- cussion. Minutes It was moved by Commissioner Hawks, seconded by Commissioner Vant Hull, that the min- utes of the regular meeting of November 7, 1988 be approved as amended. The motion carried by the following Aye and No vote: those voting Aye being Commissioner Hawks, Commissioner Vant Hull, Commissioner Martel, Commissioner Goehrung and Mayor Stiff; those voting No, none. Discussion - structure, guidelines and objectives for steering committee to recommend project(s) for beautification during State Centennial Year City Manager Wysocki submitted to the Commission a draft of the "structure, guidelines and objectives for the steering committee to recommend project( s) for beautification during the State Centennial Year." He noted the draft had been prepared by staff, based on last week's discussion. Commissioner Hawks submitted to the Commission a copy of his revisions to the draft as prepared by staff. He briefly reviewed those changes, characterizing them as minor clarifica- tions. He indicated that he has copied all of the guidelines and objectives, underlining all of his I proposed changes. Commissioner Hawks noted that some staff assistance will be provided because of their ex- pertise. He suggested that such assistance should probably be addressed in Guideline No. 1. He then stated that in Guideline No. 2, it states the committee is to concentrate on the entry- ways. He suggested that the word "primarily" be inserted, noting that possibly the entire com- munity should be addressed. The Commissioner then suggested that Guideline No. 3 be broad- ened to address all properties within the city, to raise community consciousness. He fu rther noted that the image of the community is not to be enhanced just for visitors, but for the resi- dents as well. He then stated that volunteerism has not been addressed in the proposed docu- ment; and he feels that issue could be addressed under Guideline No.4. Commissioner Hawks then addressed his proposed changes in the objectives. He suggest- ed that the word "primary" be added in Objective No.2, thus broadening the scope of items the committee may consider. He also noted it will provide consistency between the guidelines and objectives. He also suggested that under that item, coordination with the sign ordinance com- mittee should be encouraged. He then noted that his proposal includes expansion of Objective No. 4 to include recommendations for future organization or implementation considerations. Commissioner Vant Hull suggested that Objective No.2 be expanded to include: "f. oth- er areas consistent with beautification. II Mayor Stiff expressed concern about encumbering the staff to provide assistance whenever possible, noting that the staff does not have time to assume the additional workload. I Commissioner Martel noted that inclusion of that statement could cause the staff to make demands on the staff, which could be rather burdensome. Commissioner Vant Hull asked the City Manager whether he would prefer to not include the proposed statement in the guidelines. City Manager Wysocki stated the staff will monitor the committee's work to some extent. He also noted that the committee will need the staff's expertise in certain areas. He indicated the staff will be involved to whatever extent is necessary, whether it is stipulated in the guide- lines or not. Following discussion, the Commission concurred the statement should be included in 11-14-88 - - ---------- --------- 2 Guideline No.1, recognizing there may be times when the staff is not able to provide the assist- ance requested. The Commission then discussed Commissioner Hawks' proposed changes in No. 2 under both the guidelines and objectives, concurring in this change to broaden the scope of the com- mittee's review. Commissioner Goehrung suggested the committee may wish to discuss any cultural activi- ties with the Arts Advisory Committee members. I Mayor Stiff expressed concern about including the term "primary" in the guidelines and objectives, particularly when this committee does not directly address any of the prioritized goals. He then noted that the City has not been able to move forward with implementation of its goals because of lack of funding. He indicated that if the committee could find a funding source, even on a one-time basis, it could possibly provide the impetus needed for the City to find a way to fund the items on an on-going basis. Commissioner Hawks suggested that formation of this committee will result in recommend- ations from the citizenry; and it may also result in some community participation that may not be possible if the decisions were made by the Commission without going through the process of citi- zen participation. Commissioner Martel noted that the committee will have only three months in which to ad- dress all of the items contained in the guidelines and objectives, expressing concern that to broaden them too much will result in overloading the committee. City Manager Wysocki suggested that the Commission suspend discussion of this item for the present time, returning to it after completing the remaining agenda items. Update re Valley Unit City Manager Wysocki submitted to the Commission a memo from Administrative Services Director Gamradt, providing some background information for this discussion. He noted that the Administrative Services Director and former City Attorney Bob Planalp will update the Commis- sion on the steps which have been taken to date and those which must be taken to address this I item. Administrative Services Director Miral Gamradt stated the City must determine how the monies received from any sale of tax deed property are to be disposed of prior to entering into that process. He reminded the Commission that since Fiscal Year 1987, the City has levied for the SID Revolving Fund, as follows: FY87 - 19.31 mills; FY88 - 13.91 mills; and FY89 - 15 mills, noting that monies from the latest mill levy will not be received until the property taxes are paid in November and May. He noted these monies have been utilized to cover deficits in specific special improvement districts, a majority of which have been for the five special im- provement districts contained within the Valley Unit Subdivision. The Administrative Services Director stated that a recent court decision in Columbia Falls indicated that the City is required to levy taxes for the Revolving Fund in an amount up to 5 percent of the outstanding SID bonds. Administrative Services Director Gamradt reminded the Commission that the bonds for sev- eral special improvement districts, including the five in Valley Unit, were recently refinanced. He noted the prior bonds were term bonds; therefore, no principal payments were required until the end of the term. He noted the new bonds are to be called on a specified schedule; there- fore, the City must have adequate monies in the special improvement district account or in the SID Revolving Fund to cover those costs. He stated that if the City has monies, it may call the bonds prior to the maturity date. He then noted that the refinancing has been beneficial to the property owners because the interest rate on the bonds has been reduced, thus reducing the amount of the assessments. I The Administrative Services Di rector then reviewed the initial transaction for all special improvement districts. He noted that in 1981, the City sold bonds for the five special improve- ment districts for Valley Unit. He stated the construction work was then completed; and the costs were finalized. The Director then reviewed the on-going steps for all special improvement districts. He noted that assessments are paid over a period of nineteen years; and the monies from those as- sessments are then utilized to cover the principal and interest costs paid to the bondholders. He stated that after the assessment period has been completed and all of the principal and inter- 11-14-88 3 est payments have been made to the bondholders, any residual monies are transferred to the SI D Revolving Fund. If the balance is a deficit, monies are transferred from the SID Revolving Fund to the special improvement district fund to close it. Mayor Stiff asked in what manner the loans from the General Fund are addressed in the City's financial statements. The Administrative Services Director stated that the outstanding loans from the SID Re~ I volving Fund to the various special improvement district accounts are listed as a lump sum in the financial reports. He stated that as of June 30, 1987, the outstanding loans totalled approximat- ely $1.1 million; and the vast majority of that was for the districts in Valley Unit. In response to a question from Commissioner Goehrung, the Director stated that State law requires that the SID Revolving Fund balance be equal to 5 percent of the outstanding bonds. He noted that the City has between $8 and $9 million in outstanding bonds; therefore, that bal- ance must be maintained at $450,000 to $500,000. He stated that monies to cover the principal and interest payments must be transferred to the special improvement district funds to cover those costs; and the balance is then reduced to below the 5 percent requirement. City Manager Wysocki noted that another source of revenue for the SID Revolving Fund is the 5 percent up-front charge assessed against all new special improvement districts. He stated those monies reduce the amount of the levy which must be assessed to generate a 5 percent bal- ance in the Revolving Fund. Administrative Services Director Gamradt stated the City has approximately 250 individual special improvement district accounts at the present time. He stated the SID Revolving Fund provides an umbrella account from which monies can be borrowed as necessary by a district to cover debt retirement costs incurred. He noted that if there were no outstanding bonds for any special improvement districts, the balance in the SID Revolving Fund may be transferred to the General Fund, where there are no restrictions on use of the monies. City Manager Wysocki noted that each year, the staff submits to the Commission requests for authorization to transfer monies between specific special improvement district accounts and I the SID Revolving Fund to zero the balances for those where the assessments and payment of bonds have been completed. Administrative Services Director Gamradt then reviewed the process for sa Ie of tax deed properties and the alternatives for disposition of those funds. He noted that alternatives for disposition of the monies include calling of outstanding bonds for the special improvement dis- tricts, repaying loans to the SID Revolving Fund, and repaying loans from the SID Revolving Fund by transferring monies to the General Fund. City Manager Wysocki stated that sale of individual lots will eliminate the delinquent as- sessments on those lots and will hopefully result in people paying the current assessments over the next thirteen years. He noted that will result in a decrease in the mill levy required to cover the delinquencies. Mayor Stiff asked if acceleration of bond redemption would have any effect on the assess- ments; the Administrative Services Director indicated it would not. Administrative Services Di rector Gamradt stated there are approximately $2.5 million in outstanding special improvement district bonds for the five districts in Valley Unit. He stated that approximately $200,000 in future assessments is owed by individuals who have purchased lots and constructed residences within the subdivision; and those individuals generally pay their assessments when due. The Administrative Services Director then indicated the total amount of delinquent assessments plus future assessments is approximately $4.5 million. Administrative Services Director Miral Gamradt stated that when sufficient lots have been sold to individuals so that the legitimate receivables for each assessment are equal to the prin- I cipal and interest payments on outstanding bonds, then the City may consider transferring mon- ies to the General Fund, which wi II reduce the mi II levy to city residents. Commissioner Vant Hull asked about an advertisement in Sunday's newspaper concerning lots for sale in Valley Unit. She then asked if these are the same lots which the Commission is presently discussing. The Director indicated they are the same lots. He stated the City staff is currently con- sidering various options for disposal of the lots; and this is one method of determining interest in them. 11-1 4-88 4 Commissioner Goehrung asked if the delinquencies on the subject parcels have been accel- erated. Administrative Services Di rector Gamradt indicated they have not been. He stated that review of a recent Attorney General's opinion revealed that when a parcel with accelerated as- sessments is sold through the tax sale process, the entire unpaid balance is written off. He noted that when the assessments are certified delinquent, only those assessments are written off; and the new owner of the parcel assumes responsibility for all future assessments. I Mayor Stiff indicated an interest in receiving reports concerning the status of delinquent assessments on these special improvement districts, asking when those could be most appropri- ately given. The Administrative Services Director stated that the staff could provide a report at the end of the fiscal year, and possibly at the end of the calendar year as well if lots are being sold at a more rapid pace. B rea k - 3: 1 0 to 3: 1 5 p. m . Mayor Stiff declared a break from 3:10 p.m to 3:15 p.m., in accordance with Commission policy established at their regular meeting of March 14, 1983. Update re Valley Unit (continued) Former City Attorney Bob Planalp gave a brief history of the Valley Unit Subdivision. He noted that in 1979, several hundred acres generally bounded by Durston Road on the north, U.S. Highway 191 on the south, and west of the Fish and Game site, was master planned and zoned. He stated development was to be completed in four phases; and only Phase I was sub- divided into lots; and the remaining three phases have not yet been subdivided. He stated that five special improvement districts were subsequently created, with the bonds being sold in 1980. The construction was then completed, and assessments were levied. He noted that a protest to the assessment process was filed by Valley Unit Corporation in late 1981; and subsequently, they filed suit alleging several errors in the creation and allocation of monies in the districts. He I briefly reviewed the actions which have been taken since that time, noting that the courts have generally upheld the City.s position. The Former City Attorney stated that in 1987, the Legislature approved legislation which allows undeveloped parcels to be sold at public auction if the assessments are over eighteen months old. He stated that he has been working closely with the City staff to develop a propos- ed process for sale of lots at the appropriate time, noting that the disposition of funds must be determined prior to that time. He noted that sale of the lots will diversify the ownership, with futu re assessments being less likely to become delinquent. He also noted that the sale of lots should be done in a manner to encourage construction on the site, thus increasing its value, as well as the subdivision's. Former City Attorney Planalp stated that those parcels in Valley Unit Subdivision upon which the assessments were delinquent were sold at tax sale by the County on or about July 7, 1987; and the 18-month redemption period expires on January 7, 1989. He stated that until that date, the owner may redeem those properties by bringing all assessments current. He noted that prior to the sale, a fair market value must be determined; and the lots may not be sold for less than that amount. He stated that the delinquent assessments are satisfied from those pro- ceeds; and any remaining delinquencies must then be written off. He also stated a determination must be made on how many lots, and which ones, are to be sold at the public auction. He noted all of the lots could be placed on the market at once; however, that could be detrimental to the market as well as the ability to sell the lots. The Former City Attorney noted that the staff wishes to see a successful sale, especially I on the first one; therefore, the fair market value should not be established at an unrealistically high level. He noted that the fair market value must be established prior to each sale, noting it may fluctuate with the market. Former City Attorney Planalp stated that the Legislature also provided a financing mech- anism for cities in this process. He noted a city may accept a minimum of twenty percent as a down-payment, with the remainder being financed over a period not to exceed five years, at an interest rate of eight percent. He suggested the City may wish to consider a financing option of twenty percent down, with the balance due upon construction or within two years, whichever 11-14-88 5 happens first. He noted that the financing could be secured through a real estate mortgage or trust indenture, following a process similar to that used by a bank. The Former City Attorney noted that a recent market analysis revealed that 1988 values were higher than the 1987 values; and that trend may affect the first few months of 1989. He then stated that the fair market value of those lots targeted for sale must be determined, noting the staff will seek an appraisal to help in that effort. He indicated the staff has targeted the I last half of January 1989 as the time to conduct the first public auction sale of lots, noting that all publication requirements can be met for that timeline. He then indicated that subsequent sales could be conducted every few months or on a more occasional basis, depending on the mar- ket and what is determined to be in the best interests of the City. Former City Attorney Planalp stated that Bozeman is the first city to undertake the sale of lots under this recently-adopted legislation; and he wishes to proceed with caution, ensuring that all steps are followed correctly. He also suggested that to consider selling only a few lots initially could be helpful in establishing a process which can be followed in future sales. Mayor Stiff asked it if would be beneficial for the current property owner to bid at the auction. The Former City Attorney stated the current property owner would not be precluded from bidding; however, he does not believe it would be economically feasible. Commissioner Martel asked if the lots are to be marketed under the present zoning des- ignations, suggesting it may be beneficial to change the zoning on some of the lots prior to sale. Former City Attorney Planalp stated that the lots will be sold under the present zoning. City Manager Wysocki noted that the current property owner or the future property own- er could request a zone map change after purchase of the property; and the Commission would then act upon that request. The Former City Attorney stated that, according to the timeline drafted earlier by the staff , this is the week for selection of an appraiser if lots are to be sold in late January. He stated an auctioneer must then be selected and the fair market value of the lots established. He I noted that when the figure is established, it must be with the real ization that the lots wi II be sold for not less than fair market value, with the new owner assuming responsibility for those assessments which will become due and payable over the next thirteen years. I n response to a question from Commissioner Hawks, the Former City Attorney indicated the staff has researched the various closing costs, and has a good estimate of those. He noted that the cost of the appraisal and the auctioneer's fees are the only unknown figures at this time. In response to a question from Mayor Stiff, Administrative Services Di rector Gamradt stated that approximately $2.8 mi II ion in assessments is delinquent; and $1.7 is deferred, or future assessments. He noted the City will probably not realize the entire $4.5 million balance, even when all of the lots are sold; but sale of the lots will decrease the amount which the City must write off. Former City Attorney Planalp cautioned the Commissioners about the potential discussion of a specific figure on the fair market value, noting that numbers tend to stick in the public's mind. He noted that the fair market value must be stated, suggesting that the beginning of the auction might be the appropriate time to make that announcement. I n response to a question from Commissioner Martel, the Former City Attorney stated that the City is not the owner of the subject lots. He stated the City is the first lien holder, and is liquidating its collateral through the public auction process. Administrative Services Director Gamradt stated that for the City to acquire the lots for tax deed sa Ie I it must pay the delinquent property taxes to the County. He noted as the City I acquires the lots, it will pay the taxes from the General Fund; and those costs can be reimburs- ed after the sale has been finalized. Former City Attorney Planalp stated that when the City pays the delinquent property tax- es on the lots, it receives a Certificate of Assignment. He noted that the City will complete a title review on the parcel; and following the auction, the individual will get the property free and clear. The Former City Attorney encouraged the Commissioners to submit any ideas for proceed- ing with the various steps in this process to the City Manager following this meeting. 11-14-88 6 Mayor Stiff noted that an appraisal report from a highly respected appraiser with the ap- propriate credentials could aid in the sale of the subject lots. He then indicated support for following that type of process, at least on this initial sale. Commissioner Hawks noted that it is important for the sale of the lots to generate enough revenue that the taxpayers feel they are being fairly represented, especially since the City has imposed mill levies on them to cover these delinquencies for several years. Commissioner Martel asked who purchased the property from the tax deed sale. I Former City Attorney Planalp stated that the County acquired the property through the tax sale; and the redemption period began at that time. He stated that if no one redeems the property, the County takes title. He noted that at the present time, the record owner has not changed, but remains in the name of the one with the delinquency. In response to a question from Commissioner Hawks, the Former City Attorney stated that anyone may pay the delinquent taxes and assessments and acquire title to the property without the City going through the public auction process. Mayor Stiff asked if there is a definition of fair market value in the State Statutes. The Administrative Services Director indicated there is not; however, it states that no bid of less than $10 can be accepted. I n response to a question from Commissioner Martel, the Commission concurred that the objective of selling lots is to make the City as close to whole as possible on these special im- provement districts, recognizing the delinquencies are large enough that this may not be possi- ble. The Commissioners then discussed various aspects of the procedure for sale of the lots. Following that discussion, they concurred that the staff should proceed with establishing a fair market value, with the assistance of an appraiser or a real estate agent familiar with the market or both, and selection of an auctioneer, submitting reports back to the Commission as appropri- ate. Consent Items I City Manager Wysocki presented to the Commission the following Consent Items. Claims Authorize absence of Commissioner Martel - meeting of November 21, 1988 - in compTiance with Section 7-3-432212T, M.C.A. It was moved by Commissioner Vant Hull, seconded by Commissioner Martel, that the Com- mission approve the Consent Items as listed, and authorize and direct the appropriate persons to complete the necessary actions. The motion carried by the following Aye and No vote: those voting Aye being Commissioner Vant Hull, Commissioner Martel, Commissioner Goehrung, Commis- sioner Hawks and Mayor Stiff; those voting No, none. Discussion - FY I Items City Manager Wysocki presented to the Commission the following "For Your Information" items. ( 1 ) A letter from Howard Busching, Chairman of the Bozeman Committee for the United Nations, along with a copy of his report listing activities for the United Nations Day observance. The Mayor noted that Howard and June Busching have been instrumental in the Un i ted Nations Day efforts over the past several years, as well as encouraging international visitors to come to Bozeman and coordinating their visits. Commissioner Hawks stated he has just been appointed to serve on the Board for the in- ternational visitors. The City Manager suggested that a letter of support for the organization from the City I could be helpful in obtaining funding assistance for that program. (2) A copy of the memo dated August 25, 1988, from Administrative Services Director Gamradt, concerning proposed policies for reserves. Mayor Stiff stated he discussed this item with the Director earlier today, noting it may be easier to discuss this issue after the Commissioners have received the financial reports for Fiscal Year 1988. He then suggested that this not be placed on the agenda before December 12. The Mayor then noted that possible increases in the water rates might also play an integral part in this discussion. 11-14-88 7 (3 ) The City Manager reminded the Commission that he and Mayor Stiff wi II attend the Chamber of Commerce retreat on Wednesday. (4) City Manager Wysocki stated he will be attending an MMIA Board meeting on Friday in Helena. (5) Commissioner Martel asked if the Commission wishes to reconsider the snow removal ordinance at this time. I Following a brief discussion, the Commissioners concurred there is no need to reconsider the ordinance at this time. (6) Commi ssioner Goehrung indicated he will be attending the third session of the Leadership Bozeman seminar on Thursday, noting the session will be on economic development. He stated that the seminar has been positive and has provided him an opportunity to make con- tacts and to share the City's concerns. (7 ) Commissioner Hawks distributed to the Commissioners copies of an article in the November issue of the American City & County entitled "Getting the Nod for Waste Disposal. " He noted it provides tips on approaching individuals with a NIMBY (not in my back yard) atti- tude and seeking cooperation from the public. (8) Commissioner Goehrung noted the City's mill levy for purchase of a new fire truck was approved at last week's election. Mayor Stiff indicated he plans to write a "thank you" type letter to be published in the newspaper; and he will include that in it. Discussion (continued) - structure, guidelines and objectives for steering committee to rec- ommend project( s) for beautification during State Centennial Year City Manager Wysocki remi nded the Commissioners that the discussion on this item was begun early in the meeting. He then suggested that the discussion be completed and any revi- sions submitted for inclusion in the draft under consideration. Mayor Stiff stated he feels the proposed changes submitted by Commissioner Hawks reflect I some substantive revisions, expressing concern that they may change some of the priorities al- ready established by the Commission during the goal setting process. City Manager Wysocki noted that the staff had prepared the proposed document with the intent to keep the scope of the committee's work quite narrow. He stated that Commissioner Hawks' proposed revisions broaden the scope of the committee's considerations substantially. The City Manager then suggested that Guideline No. 5 be revised to caution the committee to remember the Commission's major or priority goals for this fiscal year. He noted this will strengthen the Commission's position and reiterate that this is not one of those priority goals but has been determined an important effort for the State Centennial Year. Following discussion, the Commissioners concurred that the recommended changes submit- ted by Commissioner Hawks and City Manager Wysocki shou Id be included in the structures, guidel ines and objectives. They further concurred that the recommended change submitted by Commissioner Vant Hull should not be included. Adjournment - 5: 30 p. m. There being no further business to come before the Commission at this time, it was moved by Commissioner Martel, seconded by Commissioner Goehrung, that the meeting be adjourned. The motion carried by the following Aye and No vote: those voting Aye being Commissioner Martel, Commissioner Goehrung, Commissioner Hawks, Commissioner Vant Hull and Mayor Stiff; those voting No, none. I ALFRED M. STIFF, Mayor ATTEST: ROBIN L. SULLIVAN Clerk of the Commission 11-14-88