The City has been asked to explore alternative ways to provide security that required improvements are completed. One such method suggested was to agree to hold the building code required Certificate of Occupancy until required improvements are completed. Under this scenario, a building would not be occupied until the required improvements were completed. The City could then collect a financial surety in the amount of 125% of the remaining/uncompleted required improvements if a Certificate of Occupancy is issued. It should be noted that the Certificate of Occupancy is legally tied to only the building code and extends only ten (10) feet beyond the foundation of the building. The Building Official has stated this scenario would only be viable if the developer agreed to withhold the Certificate of Occupancy within the Development Agreement/Contract, which would be recorded against the property. This way, the City has a legal avenue to withhold the Certificate of Occupancy for activities not ordinarily part of the Certificate of Occupancy. City Staff's only concern with this scenario is in the event of developer default once a Building Permit has been issued but before a Certificate of Occupancy is issued.

 

 

This may be a tool to spur economic development; however the City should take care to ensure that the City is protected in the event of developer default. The City has had to, on occasion, call on these financial sureties even after construction has commenced and certificate of occupancies have been issued within project. The City needs to ensure that the City will not end up being responsible for completing required public improvements without a financial surety to pay for these improvements.

 

 

Staff researched a sample of metro cities (Edina, Maple Grove, and Minnetonka) with significant experience dealing with financial sureties. Each of these three communities, based on Staff's interpretation of these codes, required a financial surety of at least the amount of the required improvements until such time the improvements were completed. Staff will be prepared to illustrate impacts to pending developments in the City with different alternative surety scenarios at the meeting. There is a further concern that without the financial surety the developer of the project may may not require a Certificate of Occupancy for awhile, dragging out the project. This could impact the completion of the City's required improvements, such as roadways and utility trunk systems, that may impact the timing of development for adjacent properties.

 

The ordinance was introduced by the City Council on April 5, 2011.  The proposed ordinance was scheduled for review by the Planning Commission on April 7th.  The Planning Commission recommendation was not available at time of this agenda.  Staff will provide an update at the meeting of the Planning Commission recommendation.