HomeMy WebLinkAboutA041 - Council Action Summary with Council Action form dated November 13, 2001 COUNCIL ACTION SUMMARY
Meeting Date November_13,a2.0_Q,1
Agenda Item #: 33
SUBJECT: Eastgate Subdivision Street Paving Project
ACTION TAKEN: To withhold permits for all lots,except for Wolfe Eye Clinic and Freel Office
Complex (lots 1, 2, and 3), until such time as the paving is completed at no additional cost to the
City.
MOTION BY: Wirth
SECOND BY: Goodhue
VOTING AYE: Campbell, Cross, Goodhue, Hoffman, Quirmbach, Wirth
VOTING NAY: None
ABSENT: None
By.
Jill Ripperger, eput} ity Clerk
copy to: Jeff Pearson
Paul Wiegand
Brian O'Connell
Item#
ags-
DATE Nov. 13, 2001
COUNCIL ACTION FORM
SUBJECT: RESOLUTION AUTHORIZING WITHHOLDING OF FURTHER PERMITS
FOR EASTGATE SUBDIVISION
BACKGROUND:
When the subdivision plat for Eastgate Subdivision was approved on October 26, 1999, the City
made an "Improvement Agreement" with the developer, Eastgate Development, Inc., that street
improvements would be completed on or before October 26,2001. The developer gave the City an
"Improvement Guarantee" in the form of a deposit of cash estimated to be sufficient to procure the
needed improvements if the work was not done by the developer. That is all in accordance with
Section 23.304 of the Municipal Code of the City of Ames. Street improvement work has been
done,but the final"lift"of paving has not yet been put in place. Eastgate Development Inc.has been
under the jurisdiction of the federal bankruptcy court since September of 2000. For that reason it
was anticipated that the City would need to procure that work.
You may recall that at the Council's meeting of October 23, staff reported that only one bid was
received, in the amount of$106,915.00. In conversation with representatives of Manatts,the reason
the bid exceeded the expected construction cost of$42,000 was that Manatts wanted to recover
investment and legal fees that are tied up in the bankruptcy proceedings. For that reason the bid was
rejected. Since that time City staff has warned the bankruptcy trustee, lot owners, and the holder of
the mortgage on the land that if the City staff did not have an acceptable arrangement for completion
of the paving,it would recommend to the Council that further permits be withheld until the work is
done.
In the case of K. line Farms v. Waterloo Board of Review, 275 N.W.2d 424, 425 (1979),the Iowa
Supreme Court noted that withholding permits was the remedy that cities have when the public
improvement conditions for a subdivision plat approval are not met. It would be preferable for a
paving contractor to offer a contract to do the work for the amount of the engineer's estimate. Some
of the stakeholders in the subdivision are attempting to have other contractors bid on the work,but
no commitments have been received at this time.
It is appropriate for the City to insist on full performance of regulatory requirements, since any
concessions are frequently noted and asserted as City policy with respect to later developments. The
accumulation of small concessions over time can have a substantial adverse impact as development
costs are shifted to the City general fund. To guard against that, the staff recommends that no
building permits for the start of any new construction in Eastgate Subdivision be issued until such
time as the final lift of paving has been put in place without additional costs over the amount that
is on deposit with the-City. For those buildings that are now under construction,Wolfe Eye Clinic
and Freel Office Complex, completion and occupancy in accordance with City codes should not be
impeded.
ALTERNATIVES:
1. The City could opt to pay the additional $66,000 from available balances and not try to
recoup the funding from the surrounding property owners. This action would establish a bad
precedent, since in all other subdivisions the developer is responsible for bearing the cost of
all subdivision improvements. If this option is selected, the project will need to be re-bid.
2. Withhold all permits,including permits needed for completion or occupancy of buildings in
progress. This alternative would effectively harm Wolfe Eye Clinic and Freel Office
Complex,who proceeded with construction in good faith that they would be able to occupy
their buildings when completed.
3. Withhold permits for all lots except Wolfe Eye Clinic and Freel Office Complex (lots 1, 2
and 3)until such time as the paving is completed at no additional cost to the City.
4. Not withhold any permits, but direct staff to prepare proceedings for a special assessment
project to complete the paving. This action would require the City to set aside an additional
$66,000 of unbudgeted funds to up-front the construction costs. Recovery of those funds
would likely be spread across twelve years under the usual payback period for special
assessments. This action would establish a bad precedent for the City to special assess
subdivision improvements which have always been the responsibility of the developer. It
would also erode the City's available debt capacity. Rebidding of the project and the
appropriate special assessment notices and hearings would also be required.
MANAGER'S RECOMMENDED ACTION:
It is unfortunate that the City has been put into this position to help recover business losses in
Eastgate Subdivision, since the amount originally bid to complete the construction was not
representative of the true cost to do the work. Although we would like to help current and future
purchasers of land in the subdivision, we don't believe that it is appropriate to alter the City's
policies regarding the funding of subdivision improvements, which have typically been the
responsibility of the developer.
Therefore, the City Manager recommends that Council accept alternative#3. That is to withhold
permits for all lots except Wolfe Eye Clinic and Freel Office Complex (lots 1, 2 and 3)until such
time as the paving is completed at no additional cost to the City. This option does not penalize those
who in good faith began construction within the subdivision prior to our receiving bids on the final
pavement lift.
COUNCIL ACTION:
1 L"1 •
FINAL PLAT - EASTGATE SUBDIVISION
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C'ertifi'cation: I hereby certify that this land surveying
-document was prepared and the related survey work was performed
by me or nder my direct personal supervision and that I am a
duly nsed Land Su yor under the laws of the State of Iowa.
LErtpro,} LJate: L. ST
LOT L ME:oM Bolioiulr -Robert�L. u o, Jr. L i ense #6586 � � �P��SCENSFoMoo
LOT LIME. Der 31, 2000
sECTIIIII LYl� ' - My license renewal date is Dec e om
STREET COrtETNLIM
RIBMT Or MAY LINE Iz 6586 p
EASEMENT LINE- Stumbo and Associates-Land Surveying Inc.
IIUILD:MB SETBAIX LINE Box 1664 510 S. 17th Street, Ste 102
SECTION COEYER
1//2• REBAR r/FIN ON I YELLOW CAP/11M SET Ames, Iowa 50010 Q
Ph.# (515) 233-3689 Fax # (515) 233-4403 <4Ho 00
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JOB # 13957FP DATE: 10/15/99 PAGE 1 OF 2