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08-02-1982 CCMMINUTES SPECIAL MEETING - HUTCHINSON CITY COUNCIL MONDAY, AUGUST 2, 1982 1. CALL TO ORDER Mayor DeMeyer called the special meeting to order at 7:05 A.M., with the follow- ing present: Alderman Mike Carls, Alderman John Mlinar, Alderman'Ken Gruenhagen, Alderman Ted Beatty, and Mayor James G. DeMeyer. Absent: None. Also present: City Administrator Gary D. Plotz, City Engineer Marlow V. Priebe, and City Attorney James Schaefer. (NOTE: Alderman Beatty left at 8:45 A.M. and Alderman Gruenhagen left at 9:40 A.M.) 2. CONSIDERATION OF SALE AND DEVELOPMENT AGREEMENT BETWEEN CITY OF HUTCHINSON AND HUTCHINSON S&L REHAB. LIMITED PARTNERSHIP The Sale and Development Agreement between the City of Hutchinson and Hutchinson S&L Rehab, Limited Partnership was given considerable review, with several changes recommended. The matter of additional security for the difference ($90,000.00) be- tween the purchase price of the property and the sale to Hutchinson S&L Rehab, Lim- ited Partnership was discussed. City Attorney Schaefer pointed out there were two methods that could be used, ie: 1) security mortgage from the developer, or 2) a letter of credit from the developer in the amount of $90,000.00. Either alternative would be acceptable. It was moved by Alderman Mlinar to instruct the City Attorney to prepare an amended copy of the Sale and Development Agreement to be finalized at a special City Council meeting on August 4, 1982 at 7:00 A.M. Seconded by Alderman Gruenhagen, the motion carried unanimously. 3. CONSIDERATION OF PROPERTY OPTION WITH PARK SQUARE CO. This item was deferred at this time. 4. CONSIDERATION OF AWARD OF BID FOR $135,000 TAX INCREMENT FINANCING (G.O. TAX INCREMENT BONDS OF 1982) Mr. Bill Fahey of Ehlers & Associates presented the one bid received from M. H. Novick & Co. on the $135,000 G.O. Tax Increment Bonds of 1982. The question was raised whether the Mayor would, in fact, sign the tax increment bonds. Mayor DeMeyer stated he did not intend to sign any documents until such time as he had received an independent opinion regarding the classification of the tax in- crement district. The City Attorney then pointed out that the signing of bonds and contracts was required under the City Charter to be signed by the Mayor and City Clerk. Signing is ministerial in nature and does not indicate whether or not ap- proval was given to the project and/or terms of the project. It only indicates COUNCIL MINUTES AUGUST 2, 1982 a particular matter was duly passed, a quorum was present, and the purpose of the rules were followed. In the event the Mayor declines to sign the bonds and contracts relating to tax increment financing, the only alternative would be to get a court jurisdiction to bbtain such signature. It would be up to the court to interpret the City Charter. The Mayor responded he was aware of this procedure, and he would not defy a�court order. Attorney Schaefer stated he thought the matter could be resolved within 40 days if it did reach the court level. However, the issue brought before the court would re- late strictly to the Charter provision requiring the Mayor to sign bonds and con- tracts and not include a question on the clas61fication on the tax increment district. The latter issue could not be resolved within a 40 -day timeframe. The sole concern was that a lengthy court case would further delay the S&L project. Developer Jim McClure commented that the City is being offered an opportunity to pro- vide the community with a project that would benefit the downtown as well as outside areas. The issue the Mayor has raised took place two and one-half years ago, but it has delayed the S&L project. It would be delaying the project further if the Mayor did not sign the documents. Considerable time and money have been spent on the proj- ect, and it was his opinion the Mayor had tried to block the project. The solution would be to either resolve the issue now or go to court. The motion was made by Alderman Gruenhagen to waive reading and adopt Resolution No. 7236 entitled Resolution Relating to $135,000 General Obligation Tax Increment Bonds of 1982; Awarding the Sale Thereof. Seconded by Alderman Mlinar. Upon roll call vote, the motion carried with Aldermen Gruenhagen, Carls and Mlinar voting aye and Mayor DeMeyer voting nay. It was moved by Alderman Carls, seconded by Alderman Mlinar, to defer Resolution No. 7237 to the special City Council meeting on August 4, 1982. Motion unanimously ap- proved. RECESS: Upon motion by Alderman Carls, seconded by Alderman Mlinar, the Council took a short recess at 9:40 A.M. Motion unanimously approved. 5. THROUGH -9. The following agreements were reviewed, with minor changes: PLEDGE AGREEMENT, CONSTRUCTION LOAN AGREEMENT, COMBINATION MORTGAGE AND SECURITY AGREEMENT AND FIXTURE FINANCING STATEMENT, LOAN AGREEMENT, and ASSIGNMENT OF RENTS AND LEASES. 10. CONSIDERATION OF FORM OF RESOLUTION Alderman Carls moved to waive reading and adopt Resolution No. 7238 entitled Resolu- tion Relating To An $900,000 Commercial Development Revenue Note (Hutchinson S&L Rehab, Limited Partnership Project); Authorizing the Issuance Thereof Pursuant To Minnesota Statutes, Chapter 474. Seconded by Alderman Mlinar, the motion carried unanimously. -2- COUNCIL MINUTES AUGUST 2, 1982 It was noted that Resolution No. 7238 incorporated approval of the agreements men- tioned in Agenda Items No. 5 through 9. 11. DEFERRAL OF AGENDA ITEMS Alderman Mlinar made the motion to defer the remainder of the Agenda items to the August 4, 1982 special meeting. The motion was seconded by the Mayor and carried, with Alderman Mlinar and Mayor DeMeyer voting aye and Alderman Carls voting nay as he would be on vacation. 12. ADJOURNMENT It was moved by Alderman Mlinar to adjourn at 11:50 A.M. Seconded by Alderman Carls, the motion unanimously approved. -3-