Adopt Resolution #20-039 Approving Preliminary Cost Share Framework for Improvement Project #20-04: Development Initiated Puma Street Extension Project

The purpose of this case is to approve a preliminary framework for acceptable funding alternatives for the Puma Street Development Initiated Expansion and Safety Improvement Project. 

The need for this project is being driven by two development projects at the intersection of Puma Street and Alpine Drive.

• Riverstone by Capstone Homes
• Outlot A, Alpha Development by AKM Farm (Paxmar)

This topic was discussed at the February 11, 2020 Work Session with the City Council and Planning Commission. Consensus at that meeting was that this improvement was necessary and that a general cost-share model of an even split between Capstone, Paxmar and the City was desired. That model has since been updated based on discussions with the City Attorney to meet the requirements of Minnesota Statutes Chapter 429 (Local Improvements, Special Assessments). 

As a sidebar, there was some discussion about the City paying 50% of the costs of the improvements and assessing the remaining balance to the development parcels. However, Staff does not believe there was enough support for this alternative, based on discussion. Therefore, Staff has not run this model. However, if the City Council directs, this additional analysis will be completed on this model.

Finally, process is governed by Minnesota Statutes Chapter 429 as well as City Charter Chapter 8. City Charter does not allow for a petition against this project due to size and zoning district (Section 8.4.3). 

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In 2016, the City began exploring infrastructure needs in the area generally north of Highway 10, west of Armstrong Boulevard and south of Alpine Drive. As that infrastructure analysis was being completed, the City received multiple development proposals.

• Bunker Lake Industrial Park by PSD, LLC and Hageman Holdings, LLC (approved, partially complete)
• Riverstone by Capstone - Single-Family Neighborhood (approved, partially complete)
• Northfork Meadows by Paxmar - Single-Family Neighborhood (denied)
• Villas at Northfork by Paxmar - Single-Family Neighborhood (withdrawn, now being reviewed as BK Land Development)

Assessment Method

In discussing this topic with the City Attorney, Staff is recommending that the City employ the 'Per Net-Developable Acreage' model of assessment. This allows the City to scale the assessment based on the true impacts of new development as opposed to the 'Per Front Foot' model. The Per Front Foot model works great for reconstruction of existing residential roads in residential neighborhoods as each lot derives as similar benefit. In the case of development parcel, impacts are driven more by the overall size of the project as opposed to a road frontage calculation. 

The City owns real property (Outlot C, Alpha Development) at the southeast corner of Alpine Drive and Puma Street. This parcel was acquired for park dedication purposes that could either be developed as a park OR any cash received for sale conveyed to the Park Dedication Fund. As owner of real property, the City will be responsible for a portion of the base assessment. 

City Contribution to Collector Road 

As noted above, the City will be responsible for a portion of the base assessment as real property owners of Outlot C, Alpha Development. The City should consider this assessment amount in land sale transactions to adjacent developers. 

At the February 11, 2020 Joint Work Session with the Planning Commission, consensus was that a general City contribution (Municipal Contribution) was appropriate given the status as a collector road. Direction was given that an approximate 33% contribution was desired. This amount is the basis that was used to developed the attached cost share model. 

Total Assessment Amount and Preliminary Assessment Amount

Attached to this case is a detailed breakdown of the proposed Project Proforma. 

Future Discussions

This case is intended to serve as high-level policy direction. Next steps including, but not limited to Feasibility Report, Approving Plans, Awarding Contract and holding Assessment Hearing will provide additional levels of detail. The intent of this step is to limit the number of alternatives Staff should explore. 

Alternatives

Alternative 1 - Approve the preliminary framework as proposed (Contribute $225,000 to the Collector Road and assess remaining balance using the per acre method).

Alternative 2 - Approve the preliminary framework as proposed, but with modifications.

1. Collector Road Contribution Amount
2. Assessment Method (linear frontage vs. net developable acreage)

Alternative 3 - Do not move forward with the project. 

The funding for this project is proposed to be a combination of City Contributions and Developer/Property Assessments as outlined below. As it pertains to the City's Cost Share (Municipal Contribution to Collector Road + Assessment Amount for Ownership of Real Property), several funding sources are available.

1. City's Public Improvement Revolving (PIR) Fund (generated from local property tax revenue)
2. Anoka County Redevelopment Authority (ACHRA)
3. State of Minnesota Municipal State Aid (MSA) Account

Cost Share Breakdown
 

Property/Party	Amount	Percentage
Paxmar/AKM Farm Outlot A, Alpha Development	$225,025	29.21%
City Outlot C, Alpha Development + Municipal Contribution to Collector Road	$254,960	33.55%
Capstone/Riverstone Outlot H, Riverstone	$283,015	37.24%
Total Project Cost minus Trunk Utilities	$760,000	100%

The Public Works Committee recommends that the City Council approve the Preliminary Cost Share Framework for Improvement Project #20-04: Development Initiated Puma Street Extension Project. 

Additionally, the Public Works Committee inquired if the two Developers would agree to pay for their share of the project costs up front rather than being assessed. Capstone has responded that they prefer to be assessed, but would further evaluate once final numbers are available. Paxmar has responded that they would not support an up front payment regardless of the amount. With that in mind, the assessment process will be required in order to move this project forward as presented. 

Motion to adopt Resolution #20-039 approving the Preliminary Cost Share Framework for Improvement Project #20-04: Development Initiated Puma Street Extension Project.