HomeMy WebLinkAboutA031 - Council Action Form dated February 13, 2001 Item# I.7
DATE I '61
COUNCIL ACTION FORM
SUBJECT: EASTGATE DEVELOPMENT BANKRUPTCY
BACKGROUND: The Developer of the Eastgate subdivision, at the northwest corner of
13th Street and Dayton Avenue, is under the jurisdiction of the Federal Bankruptcy Court.
Proposed and pending sales of lots, and the disbursement of proceeds from the sale of
those lots is under the control and approval of the Federal Bankruptcy Court. The city
ordinance on subdivisions does not allow building permits to be issued unless all
requirements set by ordinance, and agreement for public improvements under the
ordinance are met. (See city brief attached.) The City staff worked with the Developer and
the Developer's creditors to devise an arrangement by which the obligations under the
subdivision ordinance could be met from proceeds of pending lot sales. An arrangement
was approved by the Bankruptcy Court on February 7. It is now submitted to the Council
for approval.
ANALYSIS: The arrangement provides for payment of$44,746.39 for the city street lights,
escrowed funding of$20,000 for a bike path on East 13th Street, and payment to the City
of$18,746.39 to reimburse the City's engineering and inspection costs. The cumulative
utility tapping fees of$12,901 will be paid on a lot by lot basis as a condition of service as
lots are developed. That is in accordance with the city Code, although the development
agreement called for a lump sum payment for all lots at the time the first was built upon.
The most challenging item was the contingent improvements on Dayton Avenue that
will not be required unless the city determines a need in the future. To meet that
requirement a covenant to pay special assessment for those improvements is proposed.
Staff believes the arrangement is reasonable. It enables the closure of pending
sales for three lots that will produce cash for the city and for the Developer's creditors.
Most importantly, it keeps the development alive with hope for new vitality and completion
in accordance with the approved development plan.
ALTERNATIVES:
1. Enact a resolution approving the proposal for payments as stated in the attached
documents; and, approve the covenant for assessment as signed and submitted.
2. Not approve the arrangement as submitted.
MANAGER'S RECOMMENDED ACTION:
It is the recommendation of the City Manager that the City Council adopt Alternative #1
enacting a resolution approving the proposal for payments and the covenant for
assessments as submitted.
COUNCIL ACTION: