Regular 7.
Regular City Council Meeting
- Meeting Date:
- 10/25/2010
- TITLE
- Reconsideration of Proposed Alternatives, Inc., Special Reveiw Settlement
- PRESENTED BY:
- Tina Volek
- Department:
- City Hall Administration
Presentation:
PROBLEM/ISSUE STATEMENT
On Sept. 27, 2010, the City Council rejected by a 5-3 vote a proposed settlement with Alternatives, Inc., in regard to a $40,000 annual payment in lieu of taxes (PILT) that was a condition of approval for Special Review No. 813. The Council voted 7-2 at an Oct. 4, 2010, special meeting to reconsider its denial at the Oct. 25, 2010, Council meeting.
Special Review No. 813 permits Alternatives to operate a treatment program on the second floor of its facility called Passages, located in the former Howard Johnson Hotel on South 27th St. The PILT was added as a special condition during a May 22, 2006, Council meeting at which Special Review No. 813 was approved. Alternatives later challenged the legality of the condition and filed a lawsuit against the City, arguing that the PILT had no relationship to mitigating any potential negative land use impacts from the second floor program.
After discussion between the City and Alternatives staff, and consultation with the Council, it was determined that the best action would be for the Council to eliminate the PILT as a condition of special review approval in exchange for Alternatives agreeing to dismiss the lawsuit. In addition, each party would bear its own litigation costs and attorneys' fees, and all other special review conditions imposed on the facility would remain in place.
The Alternatives Board of Directors has agreed to the resolution and submitted two documents, which have been slightly modified by the City Attorney and are again attached and presented for approval by the City Council. The documents are: 1) a Settlement Agreement and Mutual Release that formally settles the case; and 2) a Stipulation and Order of Dismissal with Prejudice, which will be submitted to the presiding District Court Judge for approval and signature.
Special Review No. 813 permits Alternatives to operate a treatment program on the second floor of its facility called Passages, located in the former Howard Johnson Hotel on South 27th St. The PILT was added as a special condition during a May 22, 2006, Council meeting at which Special Review No. 813 was approved. Alternatives later challenged the legality of the condition and filed a lawsuit against the City, arguing that the PILT had no relationship to mitigating any potential negative land use impacts from the second floor program.
After discussion between the City and Alternatives staff, and consultation with the Council, it was determined that the best action would be for the Council to eliminate the PILT as a condition of special review approval in exchange for Alternatives agreeing to dismiss the lawsuit. In addition, each party would bear its own litigation costs and attorneys' fees, and all other special review conditions imposed on the facility would remain in place.
The Alternatives Board of Directors has agreed to the resolution and submitted two documents, which have been slightly modified by the City Attorney and are again attached and presented for approval by the City Council. The documents are: 1) a Settlement Agreement and Mutual Release that formally settles the case; and 2) a Stipulation and Order of Dismissal with Prejudice, which will be submitted to the presiding District Court Judge for approval and signature.
ALTERNATIVES ANALYZED
The City Council may:
- Approve the settlement and dismissal of the case with prejudice; or
- Not approve the settlement and dismissal, which likely would result in the current Alternatives, Inc., lawsuit against the City going forward.
FINANCIAL IMPACT
The $40,000 annual PILT payment to the City never has been made by Alternatives, Inc., so there would be no loss of actual revenue.
Finance reports that, in 2006, total property taxes for the site were $24,393 for all taxing jurisdictions and $26,035 for the original Downtown Tax Increment Financing District (TIFD), which expired in 2008, for a total of $50,428. Of that, the City taxes on the parcel would have been $5,760.54 and the City portion of that TIFD was also $5,760.54, bringing the total City taxes to $11,521.08.
If the lawsuit continues and Alternatives, Inc., prevails, the City could face legal costs for both parties and any damages and penalties determined by the Court.
Finance reports that, in 2006, total property taxes for the site were $24,393 for all taxing jurisdictions and $26,035 for the original Downtown Tax Increment Financing District (TIFD), which expired in 2008, for a total of $50,428. Of that, the City taxes on the parcel would have been $5,760.54 and the City portion of that TIFD was also $5,760.54, bringing the total City taxes to $11,521.08.
If the lawsuit continues and Alternatives, Inc., prevails, the City could face legal costs for both parties and any damages and penalties determined by the Court.
RECOMMENDATION
Staff recommends that the Council approve amid authorize the Mayor and City Attorney to execute the Settlement Agreement and Mutual Release.