CITY
OF
SPECIAL CITY COUNCIL MEETING
SPECIAL
COUNCIL MEETING
CITY
OFFICES
PRESIDING Council Chair Casey R. Fitts
COUNCIL MEMBERS PRESENT:
William Anderson, Marilyn Brusch, Casey Fitts, Rea Goddard,
Michael Rutter, L. Shane Siwik and John Weaver
STAFF PRESENT:
Mayor Robert D. Gray
David Carlson, City Attorney
Dennis Pay, PW Director
Larry Gardner, Director, Community/Economic Development
Kyle Kershaw, Finance Director
Craig Burton, City Recorder
Karen Rynearson, Deputy City Recorder
OTHERS PRESENT:
See attached list
Council Chair called
the Special City Council Meeting to order at
ITEM FOR DISCUSSION
AND VOTE:
1. Market Station Development Agreement
(a) A Resolution of the City of
South Salt Lake City Council Authorizing the Mayor to Enter into a Development
Agreement with Utopia Station Development Corporation
Council Chair Casey
Fitts announced that the item on the agenda is to discuss the Market Station
Development Agreement. Council Members
were given documentation to review. Council Chair Fitts is curious about the
“loose ends” that need to be tied up, as referred to by City Attorney David
Carlson at the last Council meeting.
Council Chair Fitts remarked that the Council as a whole is absolutely
behind this project. We think it is a wonderful thing to have in the City and
will do everything we can to make the project a success. We need to clearly
understand what’s going to take place and what we are promising the City will
do.
City Attorney David
Carlson noted the only substantive change was to wait and see what the Council
was going to do with the street lighting.
The other things were mainly cosmetic in nature – minor details that
need to be ironed out. There were still
discussions about the impact of the development on the City’s main sewer line
and how much would be contributed by the developer to pay for the upgrade to
the sewer line.
Council Member
Rutter noted that the high rise facility (apartment/condominium) that is
proposed to be built in the future would likely require the City to obtain
emergency equipment of a different nature.
Who is going to incur the cost for that?
Mr. Carlson said he
has had some discussions with the Fire Chief on this, and his understanding is
that the equipment needed for the high rise is probably air packs. If firefighters need to fight a fire in a
high rise they would have to have extra air packs to get to the higher
floors. Usually the way you fight a fire
in a high rise is with a sprinkler system and the right building design.
Council Chair Fitts
remarked that in such a case there really is not an apparatus that would reach
something of that nature.
Mr. Carlson advised
that the City does not have any impact fees at all. Right now the only impact fee that’s
permitted by state law for fire issues would be a fire station, if we had to
add a fire station, or a ladder truck that costs more than $1,250,000. We don’t have that impact fee on our books,
but we could because state law allows it.
Council Chair Fitts
said that from his perspective, whether it is sprinkler systems or added
apparatuses that are needed in the City, this project will fundamentally change
the way that many of the fire services are provided in the City. It might be worth exploring what the
developer would be interested in doing.
Mr. Fitts doesn’t want to say this is something we demand out of the
pockets of the developer. It seems there
is so much of the sewer system improvement (as an example), that if we had
public safety type projects that would benefit this area that would require
additional dollars, that if this project were not in place we would not need,
it would seem those would fall under an umbrella of dollars that very clearly
benefit the community more than they benefit the developer. He thinks that would be something of mutual
interest to ensure that the development that goes in is state-of-the-art as far
as safety is concerned. We look to
pursue that similarly to the sewer improvement, that those are dollars that are
prioritized for RDA reimbursement. We’re
not saying specifically that we want this money out of the developer’s
profits. As we pursue the RDA project,
those are dollars that could clearly be identified as beneficial to the
community and ultimately would help the City.
Council Member Fitts
added that this needs to be a meeting where we have as much dialog as possible
as to how to create this agreement that benefits both.
Council Member
Anderson said that, related to using RDA money to line the pockets of
developers is a sensitive issue, but we need to look at what the City
contributes to the RDA, not the developer.
Are we making investments in appropriate public expenses that may help
this development, but that the City gets value back in return? We shouldn’t be worried about managing the
profits of the developer. He’s entitled
to that for conducting his business. Our
job is to make sure the expenditure of public funds is for reasonable public
purposes and that we get appropriate value in return. If the investments we make in this project
meet those criteria, that’s the end of our responsibility.
Council Member
Weaver noted one of the aspects of the agreement is enhancement of public input
on the design of the project. He asked
what is the mechanism for enhancing public input on the design of the
project. David Carlson replied that part
of the ordinance is design review, which means that the City has some say about
the design of the buildings. Council
Member Weaver noted that later in the agreement it says that city staff will
assume that responsibility. Mr. Carlson
said the way the North District Zone ordinance works is that one of the
features beneficial to the developer was to expedite the approval process. With development, time is money, and with
multi-million dollar development, it’s a lot of money. There was an effort made in the North
District Zone ordinance to expedite the zoning process to allow as much of the
approval to be done at the staff level so we don’t have to go through the
public hearing process each step of the way.
First of all the concept has to be approved, which it has. Then the details are left to staff to work
out. The project has to be built
substantially in conformance with the concept plan that has been approved.
Council Member
Weaver noted that preliminary plan approval requires only the approval of the
City’s Director of Community and Economic Development. The agreement also mentions a “single point
of contact,” but does not designate who that is. Larry Gardner said that has
not been worked out yet. Council Member
Weaver appreciates the desire to expedite the process. Mr. Carlson pointed out that the preliminary
approval by the Director of Community/Economic Development isn’t something that
the development agreement creates. That’s
already in the zoning ordinance enacted by the Council. It just mirrors the zoning ordinance already
enacted.
Mr. Gardner pointed
out that every one of the residential buildings are condominiums. We cannot take out the requirement that the
subdivision of those condominiums goes through the Planning Commission and City
Council. He said the Council was going
to see this a lot.
Council Member
Weaver indicated his concern is that duly elected and appointed officials will
have opportunity for participation in the project as it goes forward, to keep
abreast and insure that things are moving forward appropriately. The agreement comes across that those
prerogatives are being delegated for a period up to 12 years solely to City
staff.
Mr. Carlson added
that a lot of the decisions are, such as the preliminary plat approval and the
final plat approval. The agreement just
reflects the language in the zoning ordinance that has already been adopted. The Planning Commission, in the concept plan
approval, approved the density, the types of buildings, the road layout, the
open areas, so when it comes to staff for approval, staff still will be
referring back to those continually.
They can’t change significantly.
There are design guidelines that will be worked out in the future. The design will follow the ordinance as
adopted and the Development Agreement.
This is a project that will last for decades.
There was discussion
about the “substantial completion” of all phases no later than 12 years after
final approval of the Phase I Final Plan.
Mr. Carlson said no one could predict exactly how long it will take to
build this project. The City certainly
would like to see it completed in seven years as discussed by Mr. Aste, but we
can’t predict future economic conditions, etc.
Twelve years in the agreement was reached through negotiation. The City wants as short a time period as
possible, and the developer wants as short a time period as possible. Twelve years was the period the parties came
to agreement on. The developer’s goal is
to have it completed sooner than that, but 12 years leaves a window of time in
case there is a down turn in the economy that we can’t predict that affects the
progress of the development.
Council Member
Rutter asked if the City has seen a financial statement of the developers and
others involved regarding their credit worthiness. Mr. Carlson said the City has not seen a
financial statement. We are basing our
trust on them on their track record.
Council Chair Fitts said he is comfortable with 12 years because the
developer wants this completed as soon as possible.
Council Chair Fitts
asked how far the single point contact has latitude to deviate from the
direction established by the Planning Commission and City Council. Mr. Gardner explained that in the ordinance
it says it has to be based on the ordinance, design principles and Development
Agreement. The types of changes that may
be discretionary would be the type of texture used on the exterior of a
building that meets the design criteria.
It would not be density, nor deviating from the mixed use nature of the
project, not going beyond the 30 percent commercial. As the project continues, it will come both
before the Planning Commission and City Council for subdivision approval for
the condominiums.
Council Member
Weaver remarked that the Council has a charge to be stewards over the public
funds for the City. We have some
difficult challenges from the legislature.
We created a window of opportunity to grow out of those challenges. He wants to make sure we execute this
appropriately so the City does not over extend and further burden the
taxpayers. Under number 12 of the
agreement, City Obligations, the City will be vacating portions of streets, may
be granting the right to close public streets for special events, etc. Mr. Carlson said a lot of the public places
in this development will be dedicated to and owned by the City (pocket parks,
streets). The City will also have the
obligation to maintain them. They will
be public places and public rights-of-way.
The developer wanted the ability to provide an enhanced level of service
for the public
places within the development. They
wanted the ability to have balconies that overhang a sidewalk, the ability to
have outdoor cafes. Those kinds of
encroachment by private development on public rights-of-way are handled through
a licensing agreement where the City specifies the terms under which the
private property owner can use public property.
That includes holding events within the public parks. There probably would be some City involvement
with such events, even though we may license them to hold the event. There would be notice required to the City. The City bargained that we would handle such
things through a licensing agreement and that we would work with them in good
faith to give them a license, rather than have it in the Development
Agreement. It has been talked about, but
it has not yet been negotiated.
Council Member
Rutter read from the Development Agreement that before the City expends any
monies on this project, the development corporation will have in place their
funding sources so they have in place their financial wherewithal to enter into
demolition, starting up, etc. and asked if that is correct.
Mr. Carlson said
that was correct. The City has already
funded the sewer. The City discussed
making a commitment to the developer to do street lighting. The developer will bond for the public
infrastructure they are required to put in.
They will have to bond with the City that those public places will be
built within two years, or the City has recourse to go against the bond to have
those built. The public investment
that’s going in this is coming through tax increment, to the extent it becomes
available. There is no tax increment
until they actually build something, that it’s been there and has its
certificate of occupancy and it has showed up on the tax rolls. No tax increment is generated from the
project until things are built and occupied and a tax assessment has been made
by the County. The developer has more
incentive than anyone to get the project built.
The budgets are being worked on now, but nothing has been settled.
Mr. Gardner said the
increment generated would be a small percentage of the infrastructure that’s
installed.
Council Member
Weaver remarked that in the Development Agreement, paragraph (e), page 7, the
City is required to cooperate with the developer particularly with seeking
federal urban housing development grants, community development block grants,
federal transportation grants, urban development action grants, etc. He asked if the City has current staffing
levels adequate to respond appropriately to the needs of the development. Mr. Carlson answered that there would be a
correction in that paragraph in the final agreement. The developer actually can’t apply for the
federal funds; only the City can. Mr.
Gardner said the only thing the developer needs from the City for new market
tax credits is entitlement. The developer
applies for those through the banks that have those funds available. Mr. Gardner does not believe these things
would tax the City’s staffing levels.
There were questions
and discussion regarding some of the other paragraphs of the Development
Agreement.
Council Member Siwik
asked if the developer acquired additional property adjacent to the current
parcels, or across the street, and started another phase, would this
Development
Agreement include
any amendments to the project. Mr.
Carlson said the Development Agreement could be amended to include areas the
developer may acquire in the future.
Council Member
Brusch asked if that would have to be done within the 12-year period. Mr. Carlson explained that the 12-year
period could be amended. By the mutual
agreement of the developer and the City, things in the agreement can be
modified at any time as the need arises.
Council Member
Anderson remarked that the kinds of things the City is agreeing to participate
in are appropriate uses of public funds.
They will represent assets that the City will have ownership of and that
they relate to appropriate public purposes.
David Carlson added
that the City has tried to put the findings that are needed to support the
Council’s decision to spend public funds on this project.
Council Chair Fitts
asked if it would be more convenient for the Council to take a recess and
reconvene after the
Mr. Gardner asked
what would be the purpose of a public meeting on this now. This is about an agreement with the
Council. There has already been a public
hearing on this. Council Member Weaver
said that opportunity has already been given.
It was decided to continue this meeting and the scheduled
Council Member
Weaver asked about “predatory lenders.”
If the City at some time went after such a business, would this development
be exempted from that? Mr. Carlson said
it would not. That’s part of the City’s police power and we can never contract
away our police power.
Council Member
Weaver inquired about Exhibit C – Fees to be Paid by City/Developer. Mr. Carlson had indicated there was a “range”
that had been estimated as to what the value of those things are. Mr. Carlson said the building permit fee is
based on square footage of the development.
If the City were to charge its standard building permit fee to this
project it would be about $360,000.
Water hook-ups would be at the City’s cost. Our agreement with the developer is that such
costs will be at cost to the City.
Council Member
Weaver asked if it would be possible to include in the agreement a preference
for locally provided materials businesses, developers, etc. Is it possible to design an agreement where
we could make some attempt to show local business and service providers some
preference that does not damage the developer?
Mr. Carlson said those are contractual relationships that the City is
not involved in between contractors and the developer. If we were to do something like that, it
would have to be by ordinance. Mr. Carlson
said he would have to research to see if such an ordinance would be legal. Council Member Weaver observed that we
have many businesses
in the City that are engaged in the construction industry. He encouraged the developer to include local
business people in this project and development.
Council Chair Fitts
said he has a concern about public safety.
Mr. Carlson commented that we don’t reference impact fees because we
don’t have any. That would be the only
way we could require the developer to contribute to the fire safety
issues. We’re on that path right
now. One of the jobs the newly hired
consultants have is to look at impact fees.
Impact fees require a rather detailed economic analysis as the first
step. Then it requires the City to adopt
a “capital services plan.” That’s a
public process with public hearings. The
third step is to create impact fees, and that’s another public process that
requires public hearings, notices, etc.
It takes several months if everything goes smoothly to get that
done. We don’t have any impact fees on
our books now. That’s the only method by
which we could require the developer to “pony up” some of those future
costs. You can’t make them pay for
equipment, with the exception of a ladder truck that costs more than
$1,250,000. Generally, impact fees are
only for things that are considered capital expenditures. The state legislature has taken a restrictive
view of what that means. Mr. Carlson
believes the best thing that can be done is for the Council to recognize that
there will be some impacts and that may be a contribution to the project that
the City has to make – to make sure the Fire Department has what it needs to
service this area.
Council Chair Fitts
asked if tax increment funding can be used only to reimburse the developers.
Mr. Carlson responded he didn’t know the answer, but the City can look at that
to see if it is an allowable use of tax increment funds. Mr. Carlson added that we have to keep in
mind that the infrastructure needs of this project are greater than the tax
increment that will be available. We’re
not going to have any extra. It will be
a matter of negotiating with the developer to prioritize the funds that are
available.
Council Member
Anderson moved that the Council adopt the Development Agreement.
MOTION: William Anderson
SECOND: Marilyn Brusch
Roll Call Vote:
Brusch Aye
Fitts Aye
Goddard Aye
Rutter Aye
Siwik Aye
Weaver Aye
Council Member
Weaver moved to adjourn.
MOTION: John Weaver
SECOND: William Anderson
Motion carried
unanimously
Special Council
Meeting adjourned at
__________________________________________
Casey R. Fitts, Council Chair
____________________________________
Craig D. Burton, City Recorder