Background on Resolution 16-50

I received a question from a citizen yesterday asking why was One University Place divided into two parcels, and two condominium regimes. The questioner wondered if it had to due with who would control a home owner's association, commercial owners or residential owners. Below is my response. Of course after sending it, I remembered the most important reason, for this occurring, which is this:

In December, 2015 the development team was informed that if the property was to be assessed on Jan. 1, 2016, then a condominium regime had to be filed with the State of Iowa by Dec. 31, 2015. The simplest way to file that was to make the south building, already under construction, a separate entity. Without a filing by 12/31 there would be no assessment of the property as commercial or residential and to be taxable until Jan. 1, 2017, meaning any taxes generated would come an entire year later. Remember than an assessment on Jan 1, 2016 will result in an initial property tax payment in Sept. 2017. Since the property had previously been assessed at $0 valuation due to it's use as a church, there would have been no taxes paid.

The issue of dividing the property into two plats really has nothing to do with commercial owners vs. residential in a condo association. Council first heard about this at the Dec. '15 council meeting. At the Jan. 2016 Council meeting there is a considerable explanation of why this was done. In the Jan 16 Legal Report the city attorney explains what the issues are at length. Look at his report, item 6, are on pages 6-8 of the linked document.

In the Feb 16 Legal Report city attorney also outlines details of what should happen to ensure that all PUD and TIF document details are carried out by two condominium regimes instead of one. Item 2, pages 8-13 outline these opinions.

The March 16 legal report states that the city attorney and developer's attorney had begun working through those details. The April 16 legal report says the process between the attorneys is still underway but not complete. The May 16 legal report says the process is close to completion and a chart showing all provisions of the PUD and TIF agreement and how they are addressed in North and South condo declarations is being created.

The June 16 Legal Report states that due to the fact that the financing proposals (GO Bond and special assessment) being considered will also include amending the PUD and TIF documents, council should wait until those actions are complete so as to consider all amendments to the PUD and TIF at the same time. Item 6 on page 65 outlines this.

That brings us to the September meeting when the GO bond work was complete, so council was to consider all the PUD and TIF amendments. What Resolution 16-50 does is finish that process and allow us to go forward with a special assessment of OUP to repay the Public Works project, which is the larger portion of the general obligation bond that was let on 8/29. It also allows us to take advantage of better pricing on the community center due to that special assessment. I've written in more detail about that on my blog: What is the Impact?

The Sept. 16 Legal report gives a summary of the process and more details. Item 2 pages 188-191 refer to this. The chart mentioned in the May legal report can be found on pages 61-64.

What is the Impact?

Defeating Resolution 15-60 at last night's council meeting has serious impacts on future planning in University Heights. Here's a quick summary and recap:

With a 2 yes, 0 no, and 3 abstention vote, this resolution failed due to all resolutions needing to have 3 yes votes to pass. An explanation of the resolution can be found in the attorney's report section of last night's agenda and attachments.  Basically this was to amend the PUD to allow for 2 separate condo regimes for the North and South buildings. This change, has negligible affect  on city business. Defeating this resolution means that:

• Occupancy permits cannot yet be issued for the south building, which has residential units ready to be sold.

•  The special assessment which would be placed on OUP to repay the costs of the Public Works Project cannot be assessed.

• Without the special assessment, the city cannot proceed on our reduced price acquisition of the community center.

 

Here is what's critical to the financial well being of our residents. Without the special assessment ALL U-Heights taxpayers will have to pay for the $650K portion of the Public Works Project. With a special assessment in place ONLY property inside the OUP development will make payments on that. Without the special assessment in place our purchase price for the Community Center increases from $275K to $395K. The price of the Community Center will be paid by ALL property tax payers throughout U-Heights.

Jim Lane and I voted "yes." on resolution 15-60. Dotti Maher, Silvia Quezada, and Jerry Zimmermann all voted "abstain." Jerry said his abstention was due to his exploring purchase of a commercial space in OUP. Silvia said her abstention was due to her being opposed to TIF funding. Dottie declined to explain her vote at the time.

Later in the meeting council decided to schedule a special meeting on 9/19 to reconsider this item. A major sticking issue was the wording regarding a city seat on the North condo board:  "yes, if desired." Striking "if desired" could likely result in an approval of the resolution. 

In my late night email summary last night I stated that: Only someone who voted on the prevailing side can bring the item up for reconsideration. That is not correct. Since the special meeting is a new event ANY councilor may move the resolution for adoption.

I am hopeful that council will do the right thing and adopt resolution 15-60 on Monday.

The Name is BOND, G.O. BOND...

Unlike James Bond, City Council on Monday night approved General Obligation or "G.O." Bonds to pay for items related to the One University Place project.

There are two parts to the bond, one for the Public Improvement Project (realignment of Sunset/Melrose, turn lane into OUP, etc.) the other for the purchase of unit 103 in the South building to be used for City/Police offices as well as a multi-purpose room. This has been commonly referred to as the Community Center. The combined total of these two projects was estimated at $950,000. 

The largest portion of that is for the public improvements. By letting the bond, the city will pay for these improvements now, and then there will be a special tax assessment on OUP Property ONLY that will repay those costs. No current University Heights property owner will pay for any of the costs of the Public Improvement project. That project was estimated at $625,000.00

The smaller portion is for the community center space. That will be repaid by ALL city property owners via their property taxes. OUP property owners will also pay this assessment.

The city put their 10 year bond out for auction on Monday, Aug. 29th. When that happens banks and other entities bid to get the bond. The lower the bid, the LESS the city has to repay in interest. We were hopeful that we could get bids in the 2% to 2.25% interest range. There were 6  bids submitted. The winner, Banker's Bank of Madison, WI, bid 1.7%. That bid saved the city of University Heights $115,000.00 in projected interest payments. Due to how we structured our agreement with One University Place developers, the lower interest rate reduced the cost of the community center from $390,000.00 to $275,000.00. The lower rates saved U-Heights tax payers 29.5% on the cost of the community center. I remarked at the meeting that we are purchasing a community center for roughly the median house price in University Heights.

Full details of the financing can be found here: 
Aug. 29 Special Meeting Agenda & attachments

Council Webstream/ Construction Update 10

Two posts for the price of one!

Thanks to the folks at Iowa City Cable City Channel 4  U-Heights council meetings are broadcast Thursday evenings at 9:00 PM on Channel 4 AND are available as webcasts. Here is the link to July Council meeting:

Here is a link to the July Agenda and attachments

At our August meeting this week we also heard updates on the One University Place construction project:

OUP Construction Page Index

One University Place Construction Update 10

8/11/16

The One University Place South building is nearing completion. Landscaping for the South Building facing Melrose is underway and will be completed in next two weeks. Pavement for parking on the north side of the South Building for commercial businesses is being installed along with some of the internal roadways for the project. Initial occupancy by residents of the South Building is expected to begin in September. Commercial business announcements are expected in the next two months.

The Sunset/Melrose intersection traffic lights are being installed this week. The City will be working with MPOJC on the timing for the street lights which will take about a month.  The North Sunset road is expected to be open late August before school starts.

 A model unit on 3rd floor of the South building is open for prospective buyers to inspect, through Blank/McCune realtors. U-Heights resident, Clayton Hargrave will coordinate interior design and furnishing for the community space at no charge to the City. 

Excavation of the foundation on the North Building has begun. Footings will be installed in the next few weeks and the foundation for the two tier parking garage will begin after the footings are in place.

Attached is the August City Engineer’s report detailing the upcoming work schedule, and other OUP related items.

Independent Project manager Glen Siders sent council an amended report detailing site work.

 

Construction Update #10

 

  

Melrose Lane Reduction

PUBLIC NOTICE

Weather permitting, beginning Tuesday, August 9, construction crews will be working in Melrose Avenue near the intersection of Sunset Street.  There will be two operations occurring during the day.  Work to fix a water service leak will be underway in the middle of Melrose Avenue  to the west of the intersection.  This work will take place in the turn lane portion of the roadway, which will be barricaded, and two-way traffic is planned to be maintained around each side of the work.  This work is anticipated to be complete by Thursday, August 11.

Also on Tuesday, crews from CenturyLink will be accessing two manholes directly at the Melrose and Sunset intersection.  Flaggers will be used to direct traffic through the intersection while crews work within these manholes.  This work is anticipated to last for a couple hours on Tuesday, and will occur sometime between 9:00 AM and 4:00 PM.

Drivers are asked to use caution around the work site, expect delays, allow extra travel time, and find alternative routes when possible.  As always, caution should be exercised when traveling through all construction areas.

Two Roads Diverged in a Wood...

Our city is at a crossroads right now regarding the development project One University Place. Which path we take will make a great deal of difference. 

One topic that was discussed at tonight's council meeting was the possibility of a special assessment being levied on One University Place to pay for the Public Improvements to Melrose/Sunset interesection and left turn lane on Melrose Ave.  

In a nutshell, here is what has brought us to this fork in the road. Following negotiations last year the final TIF agreement said the developer would pay for public improvements directly, while the Developer's Agreement said that they would be paid via a special assessment. Those two documents should have agreed with each other, but they did not. The long and short of all of this is, it was a major mistake on the developer's part not to have caught this. 

However, this is an opportunity for both the City and the developer to find a silver lining. By the City agreeing to a special assessment to be levied ONLY on property inside the development, we can reduce the amount that would need to be paid back for the construction because we can get a lower interest rate. In exchange for the City agreeing to this, the developer will reduce the cost of the community center by approximately $95K, which roughly translates to 90% of what they would save in interest if they were to pay back the City via a commercial loan. In addition, the City would be able to include the property tax from inside OUP for the Community Center costs, so that the repayment for a community center would be spread across all property owners, which is a fairer method in my opinion.

This path is one that this nuanced, is a good compromise, and has led to cooperation among residents who haven't always seen eye to eye on this project in the past. Below is a summary of that path from Finance Chair, Jim Lane, with analysis from Zoning Commission Chair Pat Bauer. And while it is 12 pages long, the high points on page one are very concise.

Special Assessment memo

The other path is follow that of Councilor Silvia Quezada who sent this email on Monday evening to some city residents:

New Financing Request by Maxwell/OUP Policy Issues Alert

Councilor Quezada has every right to express her own opinions in whatever forum she chooses. What I would like to point out here is that Silvia was not able to convince any fellow councilors to take her path in the summer of 2015 and vote against the TIF and Development Agreement. With a new council, including two brand new councilors, she has still been unable to convince any fellow councilors to follow her path. 

The bottom line here is that her path is one that will cost every resident higher property taxes, because not by being able to bond, the cost of the community center will be borne by only current residents, and OUP property will not be included.

I hope we will take the path that is cooperation and compromise, that will help our entire City become an even better place than it is already.

It will make all the difference...

April Council Meeting Webstream

Thanks to the folks at City Channel 4 in Iowa City U-Heights council meetings are broadcast Thursday evenings at 9:00 PM on Channel 4 AND are available as webcasts. Here is the link to

Here is a link to the Agenda and attachments

Melrose LANE CLOSURE!

This is a public notice posted on the University Heights City webpage

PUBLIC NOTICE

Weather permitting, beginning Wednesday, April 13, 2016 the westbound lane of Melrose Avenue will be closed between Sunset Street and Birkdale Court so crews can begin work on roadway widening and pavement repair work. This means that westbound traffic on Melrose Avenue will not be allowed to continue past the Sunset Street intersection. Westbound traffic will be detoured south on Sunset Street to Benton Street, west on Benton Street to Mormon Trek Blvd, and north on Mormon Trek Blvd back to Melrose Avenue.

Eastbound traffic on Melrose Avenue will continue through the work area on the remaining open lane. There will be no detour for eastbound traffic.

This is the first stage of work for a project that will widen Melrose Avenue in this location to construct a left-turn lane, rebuild and realign the north leg of the Melrose and Sunset intersection, and replace the existing traffic signals at the intersection. This first stage of work, and the associated detour describe above, is anticipated to be in place for approximately 1-week.

Drivers are asked to use caution around the work site, allow extra travel time, and find alternative routes when possible.